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SThree (STHR)
SThree: Final Results
28-Jan-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.
SThree plc
("SThree" or the "Group")
Final results for the year ended 30 November 2018
SThree, the international specialist staffing business, is today announcing its final results for the
year ended 30 November 2018.
FINANCIAL HIGHLIGHTS
2018 2017 Variance (3)
Adjusted Reported Adjusted Reported Actual Constant
(1) (2)
Movement Currency
Movement
GBPm GBPm GBPm GBPm % %
Revenue 1,258.2 1,258.2 1,114.5 1,114.5 +13% +13%
Contract 232.1 232.1 203.5 203.5 +14% +14%
gross
profit
Permanent 89.0 89.0 84.2 84.2 +6% +6%
gross
profit
Gross 321.1 321.1 287.7 287.7 +12% +12%
profit
Operating 53.9 47.5 44.9 38.2 +20% +20%
profit
Conversion 16.8% 14.8% 15.6% 13.3% +1.2% +1.2%
ratio (%) pts pts
Profit 53.4 47.0 44.5 37.7 +20% +20%
before
taxation
Basic 30.7p 26.6p 25.7p 21.5p +19% +20%
earnings
per share
Proposed 9.8p 9.8p 9.3p 9.3p +5% +5%
final
dividend
Total 14.5p 14.5p 14.0p 14.0p +4% +4%
dividend
(interim
and final)
per share
Net (4.1) (4.1) 5.6 5.6 - -
(debt)/cas
h
(1) 2018 figures were adjusted for the impact of GBP6.4 million of net exceptional strategic
restructuring costs.
(2) 2017 figures were adjusted for the impact of GBP6.7 million of exceptional strategic restructuring
costs.
(3) All variances compare adjusted 2018 against adjusted 2017 to provide a like-for-like view.
OPERATIONAL HIGHLIGHTS
* Strong full year financial performance, ahead of expectations
* Growth in gross profit ('GP') driven by Continental Europe (up 20%*), USA (up 8%*), and APAC & ME
(up 11%*)
* Restructured UK&I delivering in line with expectations, with GP down 5%* and productivity up 5%*
* 83% of GP now generated outside UK&I (2017: 81%)
* Contract GP up 14%* YoY, with growth across all sectors
* Permanent GP up 6%* YoY, with Permanent productivity up 7%
* Contract accounted for 72% of Group GP (2017: 71%)
* Successful relocation of circa 240 roles from London to Centre of Excellence in Glasgow
* Final dividend up 0.5p to 9.8p (2017: 9.3p), with cover now in target range of 2.0 to 2.5 times
* Strong Q4 exit run rate underpins expectations heading into 2019
* Variances in constant currency
Gary Elden, CEO, commented: "The Group continued to make good progress throughout 2018. This resulted
in a strong financial performance which, demonstrating our resilience, was delivered despite the
ongoing macro-economic and political uncertainties. Alongside the financial metrics, we delivered
further structural and operational progress which will enable us to attain our vision of being the
number one Science, Technology, Engineering and Mathematics ('STEM') recruiter in the best STEM
markets. We are on track with the delivery of the five-year plan as set out at the November 2017
Capital Market Day."
"Looking forward to the year ahead, our post-year end trading is in line with expectations and we
remain well positioned to benefit from the growth opportunities in our chosen STEM markets."
SThree will host a live presentation and conference call for analysts at 0930 GMT today. The
conference call participant telephone details are as follows:
Dial in: 0800 358 9473
Call passcode: 21768800#
This event will also be simultaneously audio webcast, hosted on the SThree website at www.sthree.com
[1]. Note that this is a listen only facility and an archive of the presentation will be available
via the same link later.
SThree will be announcing its Q1 Trading Update on Friday 15 March 2019.
Enquiries:
SThree plc 020 7268 6000
Gary Elden, Chief Executive Officer
Alex Smith, Chief Financial Officer
Kirsty Mulholland, Company Secretariat
Alma PR 020 3405 0205
Rebecca Sanders-Hewett SThree@almapr.co.uk
Josh Royston
Susie Hudson
Sam Modlin
Notes to editors
SThree is a leading international specialist recruitment 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 & Communications Technology 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
Progressive, Computer Futures, Huxley Associates and Real Staffing Group. The Group has circa 3,000
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. Data from the announcement is sourced from
unaudited internal management information. Accordingly, undue reliance should not be placed on
forward looking statements.
CHIEF EXECUTIVE OFFICER'S REVIEW
Overview[1]
The Group continued to make good progress throughout 2018. This resulted in a strong financial
performance which, demonstrating our resilience, was delivered despite the ongoing macro-economic and
political uncertainties. Alongside the financial metrics, we delivered further structural and
operational progress which will enable us to attain our vision of being the number one Science,
Technology, Engineering and Mathematics ('STEM') recruiter in the best STEM markets. We are on track
with the delivery of the five-year plan as set out at the November 2017 Capital Market Day.
At the start of 2018, I stated that after two years of political, market and economic pressure, we
entered the year in good shape. That turbulence and pressure increased throughout the year and yet we
delivered a creditable performance. As we enter 2019, I believe that we are in even better shape.
The STEM markets in which we operate continue to be affected by the ongoing global shortage of
skilled workers and the resulting supply and demand imbalances which underpin the need for our
services.
Group gross profit ('GP') was up 12%* in the year. The growth was largely delivered, as expected,
through our key territories of Continental Europe and the USA; the former was driven by our
market-leading businesses in Germany and the Netherlands which together saw growth of 20%*, whilst
the latter was up 8%*. We also made improvements in our other target markets, including a stand-out
performance from our growing team in Japan, up 85%*. From a sector point of view, we saw robust
growth across the Group, with Information and Communication Technology ('ICT') up 12%*, Life Sciences
up 8%*, Engineering up 16%* and Global Energy up 30%*.
Our specialist focus on STEM and being in the right STEM markets is helping us to build a growing
reputation, using a multi-brand approach where each brand is well regarded within its own specialist
field. This is a key differentiator for SThree. In technology, for example, where other companies
position themselves as IT specialists, we are recognised as experts in specific fields such as JAVA,
Salesforce or .Net. This approach is the same across all our markets, so clients know that we can
access the very best people for highly skilled positions.
The Group is globally diversified, but at the same time specialises at a local level. We can source
the right people for clients in multiple territories whilst also understanding the nuances and
dynamics of each individual market. These include legislative requirements where our local knowledge
can help us to advise clients on choosing the right contracts and also help successful candidates
navigate the necessary requirements.
The Group's central purpose is 'Bringing skilled people together to build the future', and we have
six core principles that will enable us to achieve this purpose and generate returns for all of our
stakeholders. These are: grow and extend regions, sectors and services; develop and sustain great
customer relationships; focus on Contract, drive Permanent profitability; generate incremental
revenues through innovation and M&A; build infrastructure for leveraged growth; and find, retain and
develop great people. We have made considerable progress against the majority of our strategic
priorities. I will touch on two of them in more detail below with our Chief Sales Officer and Chief
Operational Officer providing further detail on the other four aspects.
Find, retain and develop great people
One of the most pleasing aspects of the year was the ongoing development of the Group's culture.
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