SThree: Half Year Trading Update (824393)

 
 SThree (STHR) 
SThree: Half Year Trading Update 
 
14-Jun-2019 / 07:00 GMT/BST 
Dissemination of a Regulatory Announcement that contains inside information 
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group. 
The issuer is solely responsible for the content of this announcement. 
 
14 June 2019 
 
    Half Year Trading Update 
 
    Encouraging first half performance with good momentum in Contract 
 
  SThree plc ("SThree" or the "Group"), the international STEM(1) specialist 
staffing business, is pleased to issue a trading update(2) for the half year 
        ended 31st May 2019. 
 
        Highlights 
 
  · Performance in the first half of the year in line with management 
  expectations 
 
  · Group net fees up 9% YoY, consistent across both Q1 and Q2 
 
  · 86% of Group net fees generated from markets outside the UK&I (2018: 
  82%) 
 
  · Double digit growth in net fees in all regions outside the UK&I 
 
  · Strong net fee growth in Contract, in line with strategic focus 
 
    · Contract up 12% YoY, with Q2 up 13% 
 
    · Contract represented 74% of Group net fees in H1 (H1 2018: 72%) 
 
  · Permanent down 1% YoY, with Q2 down 2% 
 
  · Group period-end sales headcount up 12% YoY 
 
        Mark Dorman, Chief Executive, commented: 
 
   "In what is my first trading update with the Group, I am pleased with the 
performance we are reporting today, delivered by a strong and talented team. 
The benefits of our model and the structural drivers in our markets are seen 
throughout our results with our key performance indicators demonstrating the 
        continued success of our sector and regional strategic focus. We are 
 particularly pleased to report double digit growth in net fees across three 
of our four regions and have plans in place to drive growth across them all. 
 
  "The scale of the STEM opportunity is both enormous and growing across our 
  key regions and we are uniquely positioned to benefit from this. With this 
backdrop, the structural market drivers for STEM recruitment services remain 
 very attractive and we continue to invest in high performing teams to drive 
growth, in line with our vision to be the number one STEM talent provider in 
        the best STEM markets. 
 
        "Our deliberate focus on Contract, a natural function of our STEM 
specialism, and the continued strength of our performance across key regions 
       and sectors in our well diversified portfolio, provides resilience in 
     today's more uncertain market conditions, whilst also delivering strong 
   growth over the medium term. Following the encouraging start to the year, 
        expectations for the full year remain unchanged." 
 
Financial Highlights 
                                       H1 2019   Q2 2019 Q1 2019 
Net fees               H1 2019 H1 2018 YoY % 2   YoY % 2 YoY % 2 
 
Contract               GBP121.1m  GBP106.7m   +12%      +13%    +12% 
Permanent              GBP41.9m   GBP41.7m     -1%       -2%     +1% 
Group                  GBP163.0m  GBP148.4m    +9%       +9%     +9% 
 
Continental Europe (3) GBP93.9m   GBP83.9m    +13%      +14%    +12% 
USA                    GBP35.5m   GBP29.5m    +13%      +10%    +17% 
UK&I                   GBP23.8m   GBP26.5m     -9%      -12%     -7% 
Asia Pac & Middle East GBP9.8m   GBP8.5m    +13%      +20%     +5% 
Group                  GBP163.0m  GBP148.4m    +9%       +9%     +9% 
 
ICT                    GBP73.1m   GBP66.5m    +11%      +12%    +10% 
Life Sciences          GBP31.5m   GBP30.6m     +6%       +8%     +3% 
Banking & Finance      GBP18.8m   GBP20.1m     -9%      -13%     -3% 
Energy                 GBP18.4m   GBP14.0m    +27%      +29%    +25% 
Engineering            GBP16.3m   GBP14.3m    +14%       +9%    +19% 
Other(4)               GBP4.9m   GBP2.9m     +4%       -3%    +11% 
Group                  GBP163.0m  GBP148.4m    +9%       +9%     +9% 
 
        Business Performance 
 
       Group net fees increased by 9% YoY, consistent across both Q1 and Q2. 
     Performance was driven by Continental Europe up 13% and USA up 13%. The 
   growth in Continental Europe was driven by DACH(5) and the Netherlands up 
   15% and 11% respectively. All regions delivered double digit growth, with 
  the exception of UK&I which, whilst net fees were down 9%, is stabilising. 
      Our major sectors ICT, Life Sciences, Energy and Engineering delivered 
        strong growth. 
 
 Contract continued to deliver a strong performance with net fees up 12% and 
   Q2 up 13%. All regions outside of UK&I delivered double digit growth with 
   Continental Europe up 16%, USA up 22% and APAC & MENA up 15%. Continental 
    Europe and USA combined now represent 80% of Contract net fees (H1 2018: 
76%) in line with our strategy to focus on the world's biggest STEM contract 
        recruitment markets. 
 
  Permanent net fees were down 1% (Q2 down 2%) with UK&I net fees declining, 
   reflecting the previously reported UK restructuring. The USA saw net fees 
     decline by 10%, reflecting previously reported leadership and strategic 
changes made in H1 2018. We saw strong growth in DACH, our largest Permanent 
 region, up 9% and in Japan, which continues to grow at a very fast rate, up 
        49% YoY. 
 
        Offices and People 
 
      The Group has a network of 45 offices in 16 countries, of which 38 are 
     outside the UK. The Group generated 86% of net fees for the period from 
        markets outside the UK&I (2018: 82%). 
 
  Average Group sales headcount was up 7% YoY with Continental Europe up 9%, 
       USA up 8%, Japan up 62% and UK&I down 2%. Average Permanent headcount 
        remained flat and average Contract headcount was up 11% in line with 
   strategy. Period end sales headcount was up 12% YoY, with Permanent up 7% 
and Contract up 15%. Contract sales headcount represented 69% of total sales 
        headcount at period end (2018: 68%). 
 
        Balance Sheet 
 
 Net debt at 31st May 2019 was GBP8.0m (31st May 2018: Net debt of GBP6.2m). The 
  Group has a GBP50m revolving credit facility ("RCF") with Citibank and HSBC, 
        which is committed to 2023. 
 
        Analyst conference call 
 
SThree is hosting an analyst conference call today at 0830 GMT. The details 
are as follows: 
 
        Telephone number: 0800 358 9473 
 
        For access to the call please enter PIN: 55250260# 
 
A replay facility will be available for 90 days on 0800 358 2049 Passcode: 
301289947# 
 
The Group will issue its interim results for the six months ended 31st May 
2019 on 22nd July 2019. 
 
        (1) Science, Technology, Engineering & Mathematics 
 
 (2) All year on year financial growth %s in this announcement are expressed 
        at constant currency 
 
  (3) Continental Europe benefitted from an extra working day in Q2/H1 2019, 
        as the Whit Monday holiday fell in Q2 2018 
 
        (4) Other includes Creative, Procurement & Supply Chain and Sales & 
        Marketing 
 
        (5) DACH - Germany, Austria and Switzerland 
 
    - Ends - 
 
                                  Enquiries: 
 
                                  SThree plc 020 7268 6000 
Mark Dorman, Chief Executive Officer 
Alex Smith, Chief Financial Officer 
Kirsty Mulholland, Senior Company Secretary 
Assistant/ IR Enquiries 
 
                                     Alma PR 020 3405 0205 
 
Rebecca Sanders-Hewett                       [e-mail] 
 
Hilary Buchanan 
 
        Notes to editors 
 
        SThree is a leading international STEM specialist staffing business, 
  providing permanent and contract specialist staff to a diverse client base 
 of over 9,000 clients. From its well-established position as a major player 
   in the information and communications technology ('ICT') sector the Group 
  has broadened the base of its operations to include businesses serving the 
        Banking & Finance, Energy, Engineering and Life Sciences sectors. 
 
 Since launching its original business, Computer Futures, in 1986, the Group 
  has adopted a multi-brand strategy, establishing new operations to address 
        growth opportunities. SThree brands include Computer Futures, Huxley 
    Associates, Progressive and The Real Staffing Group. The Group has circa 
        3,100 employees in sixteen countries. 
 
 SThree plc is quoted on the Official List of the UK Listing Authority under 
     the ticker symbol STHR and also has a US level one ADR facility, symbol 
        SERTY. 
 
        Important notice 
 
  Certain statements in this announcement are forward looking statements. By 
        their nature, forward looking statements involve a number of risks, 
   uncertainties or assumptions that could cause actual results or events to 
      differ materially from those expressed or implied by those statements. 
Forward looking statements regarding past trends or activities should not be 
 taken as representation that such trends or activities will continue in the 
        future. Certain data from the announcement is sourced from unaudited 
        internal management information and is before any exceptional items. 
        Accordingly, undue reliance should not be placed on forward looking 
        statements. 
 
ISIN:          GB00B0KM9T71 
Category Code: TST 
TIDM:          STHR 
LEI Code:      2138003NEBX5VRP3EX50 
Sequence No.:  10105 
EQS News ID:   824393 
 
End of Announcement EQS News Service 
 
 

(END) Dow Jones Newswires

June 14, 2019 02:01 ET (06:01 GMT)