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SThree (STHR)
SThree: Q1 Trading Update
15-March-2019 / 07:00 GMT/BST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
15 March 2019
Q1 Trading Update
Encouraging start to the year with good momentum in Contract
SThree plc ("SThree" or the "Group"), the international specialist STEM(1)
staffing business, is today issuing a trading update(2) covering the period
from 1 December 2018 to date; financial information relates to the quarter
ended 28 February 2019.
Highlights
· Encouraging start to the new financial year
· Group gross profit ("GP") up 9% YoY (Q1 2018: up 8%)
· 85% of Group GP generated from markets outside the UK&I (2018: 82%)
· Growth in both Contract and Permanent GP
· Contract GP up 12%
· Permanent GP up 1%
· Contract represented 74% of Group Q1 GP (Q1 2018: 72%)
· Group period-end sales headcount up 5% YoY
· Continued strong balance sheet
· Mark Dorman to join as CEO on 18 March 2019
(1) STEM - Science, Technology, Engineering and Mathematics
(2) All year on year financial growth rate %s in this announcement are
expressed at constant currency
(3) DACH - Germany, Austria and Switzerland
Gary Elden, Chief Executive, commented:
"We have made an encouraging start to the year, with robust Group GP growth
in what is our seasonally least significant quarter.
"It is pleasing to see growth in both Contract and Permanent, with a
particularly strong performance in Contract, driven by continued progress in
our key markets, Continental Europe and the USA.
"Looking ahead, SThree will continue to invest in our teams to drive growth,
consistent with our vision to be the number one STEM talent provider in the
best STEM markets. Our focus on Contract and the continued strength of our
performance across key regions and sectors provides resilience in today's
more turbulent market conditions. Set against this context, we remain
confident in achieving good growth in the current year."
Financial Highlights -
Q1 Q4 Q3 Q2 Q1
2019 2018 2018 2018 2018
Gross Q1 2019 Q1 YoY % YoY YoY % YoY YoY %
Profit 2018 % %
Contract GBP57.6m GBP50.5m +12% +15% +14% +16% +11%
Permanent GBP20.5m GBP19.8m +1% +6% +8% +7% +2%
Group GBP78.1m GBP70.3m +9% +12% +13% +13% +8%
Continental GBP45.5m GBP40.3m +12% +20% +24% +20% +15%
Europe
USA GBP16.4m GBP13.1m +17% +8% +8% +16% +1%
UK&I GBP11.7m GBP12.7m -7% -4% -10% -2% -3%
Asia Pac & GBP4.5m GBP4.2m +5% +13% +16% +1% +15%
Middle East
Group GBP78.1m GBP70.3m +9% +12% +13% +13% +8%
ICT GBP34.8m GBP31.8m +10% +18% +14% +13% +5%
Life GBP15.8m GBP14.8m +4% +1% +13% +12% +9%
Sciences
Banking & GBP9.6m GBP9.5m -3% +2% -7% +1% -0%
Finance
Energy GBP8.6m GBP6.1m +25% +26% +32% +28% +35%
Engineering GBP7.8m GBP6.7m +19% +16% +15% +20% +14%
Other(4) GBP1.5m GBP1.4m +8% +24% +33% +25% +32%
Group GBP78.1m GBP70.3m +9% +12% +13% +13% +8%
(4) Other includes Procurement & Supply Chain and Sales & Marketing
Business performance
Group GP for the year was up 9% with robust growth in Continental Europe up
12% and USA up 17%. The growth in Continental Europe was driven by Benelux
and DACH(3) up 11% and 12% respectively. UK&I GP was down 7%, although
productivity in the region improved by 2%. ICT, Engineering and Energy
delivered very good growth in the period.
Contract GP was up 12%, with strong performances across ICT, Life Sciences,
Energy and Engineering, and double digit growth in all regions outside of
UK&I. Continental Europe and USA combined now represent 79% of our Contract
GP (Q1 2018: 76%) in line with our strategy to focus on the world's biggest
STEM recruitment markets.
Permanent GP was up 1%, driven by DACH up 7% and Japan up 38%, both against
tough comparatives. This progress was offset by USA which was down 1%, and
by UK&I which, as expected, was down 16% reflecting the previously reported
restructuring. Permanent productivity across the Group improved by 5% over
last year, as a result of the Group's strategy to focus on the best
performing Permanent markets.
The planned relocation of the majority of our London based central support
functions to Glasgow is now complete, with the expected benefits now being
realised.
Offices and People
The Group has a network of 44 offices in 16 countries, of which 37 are
outside the UK. The Group generated 85% of GP for the period from markets
outside the UK&I (Q1 2018: 82%).
Average Group sales headcount was up 4% YoY with Continental Europe up 8%,
USA up 4% and UK&I down 8%. Average sales Contract headcount was up 8% which
was partially offset by a 4% reduction in average Permanent headcount. Group
sales period end headcount was up 5% YoY with Contract up 8% and Permanent
down 1%. Contract headcount now represents 68% of Group sales headcount (Q1
2018: 66%).
Balance sheet
SThree remains in a strong financial position. Net debt at 28 February 2019
was circa GBP12m (28 February 2018: Net debt GBP2m). The Group has a GBP50m
revolving credit facility ("RCF") with HSBC and Citibank, which is committed
to 2023.
Appointment of new Chief Executive
We were pleased to announce on 28 February the appointment of Mark Dorman as
Chief Executive Officer of the Group. Mark brings a wealth of relevant
experience in scaling international business service operations and he will
join SThree on 18th March 2019. As previously announced Gary Elden, current
Chief Executive Officer, will be stepping down from his role and the Board
on that date, and will remain with the Company until the AGM on 24th April
2019 in order to ensure a smooth and orderly handover.
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: 41130199#
A replay facility will be available for 90 days on 0800 358 2049 Passcode:
301282034#
The Group will issue its trading update for six months ended 31st May 2019
on 14th June 2019.
- Ends -
Enquiries:
SThree plc 020 7268 6000
Gary Elden, Chief Executive Officer
Alex Smith, Chief Financial Officer
Kirsty Mulholland, Senior Company Secretary
Assistant/ IR Enquiries
Alma PR 020 3405 0205
Rebecca Sanders-Hewett SThree@almapr.co.uk
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
3,000 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. 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: QRF
TIDM: STHR
LEI Code: 2138003NEBX5VRP3EX50
OAM Categories: 2.2. Inside information
Sequence No.: 7825
EQS News ID: 787801
End of Announcement EQS News Service
(END) Dow Jones Newswires
March 15, 2019 03:01 ET (07:01 GMT)
