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DGAP-UK-Regulatory News vom 15.12.2017

SThree: FY17 Trading Update

SThree (STHR)

15-Dec-2017 / 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.


15 December 2017

 

 

 

FY17 Trading Update

 

 

SThree plc ("SThree" or the "Group"), the international specialist staffing business, is today issuing a trading update for the financial year ended 30 November 2017.

 

Highlights

 

  • Strong finish to the year with Group gross profit ("GP") up 8%* in Q4
  • Excellent Q4 performance in Continental Europe up 16%*, including Contract up 24%*
  • Adjusted profit before tax for the year expected to be slightly ahead of current market consensus
  • Group GP up 4%* for FY17
    • Strong growth in USA, up 18%*, with Permanent up 12%* and Contract up 21%*
    • Robust growth in Continental Europe up 9%* driven by Netherlands up 20%* YoY
    • Continued recovery in Energy up 25%* and solid growth in Life Sciences up 7%*
    • 80% of Group GP generated from markets outside the UK&I (2016: 75%)
    • UK&I continued to be challenging, impacted by IR35 in the public sector
  • Contract GP up 10%*
    • Growth across all sectors
    • Continental Europe up 17%* and USA up 21%*
    • Strong exit rate on Contract, with a new record number of runners at year end, up 12%
  • Permanent GP down 8%*, with average sales headcount down 10%
  • Group period-end sales headcount up 10% YoY and up 7% sequentially vs Q3 2017

 

1 Market expectations for adjusted profit before tax for the year ended 30 November 2017 are in the range of £42.0m to £45.6m, with a consensus of £43.8m

 

 

Gary Elden, Chief Executive, commented: "We have delivered an encouraging overall result for the year, and now expect full year profit to be slightly ahead of consensus.  Strong performances in the USA and Continental Europe, particularly from our market-leading business in the Netherlands and our business in Germany, were key to the delivery of this resultOur Contract business continued to perform robustly, with GP increasing by 10%* year on year and with contract runners at the period end reaching in excess of ten thousand, a milestone for the Group.

 

"Looking ahead to 2018, the momentum of our Contract business and the strength of our performances in the USA and Continental Europe leave us well-positioned for growth."

 

 

Financial Highlights -

 

 

 

 

 

 

 

   

Group Gross Profit

 

 

 

 

 

 

 

   

 

 

 

FY 2017

 

Q4 2017

Q3 2017

Q2 2017

Q1 2017

   

Gross Profit

FY 2017

FY 2016

YoY % 1

 

YoY % 1

YoY % 1

YoY % 1

YoY % 1

   

 

 

 

 

 

 

 

 

 

   

Contract

£203.4m

£173.6m

+10%

 

+14%

+9%

+9%

+7%

   

Permanent

£84.2m

£85.1m

-8%

 

-5%

-6%

-6%

-14%

   

Group

£287.6m

£258.7m

+4%

 

+8%

+5%

+4%

-

   

 

 

 

 

 

 

 

 

 

   

UK&I

£55.6m

£64.0m

-14%

 

-12%

-10%

-14%

-19%

   

Continental Europe

£150.6m

£127.6m

+9%

 

+16%

+6%

+7%

+7%

   

USA

£64.4m

£50.7m

+18%

 

+17%

+20%

+20%

+12%

   

Asia Pac & Middle East

£17.0m

£16.4m

-4%

 

-7%

+1%

+5%

-14%

   

Group

£287.6m

£258.7m

+4%

 

+8%

+5%

+4%

-

   

 

 

 

 

 

 

 

 

 

   

 

ICT

 

£124.6m

 

£115.8m

 

+1%

 

 

+1%

 

+1%

 

+1%

 

+2%

   

Banking & Finance

£43.5m

£41.7m

-2%

 

-1%

+1%

-1%

-8%

   

Energy

£26.5m

£19.6m

+25%

 

+51%

+35%

+23%

-8%

   

Engineering

£25.9m

£23.3m

+5%

 

+11%

+5%

+3%

-1%

   

Life Sciences

£62.4m

£54.3m

+7%

 

+13%

+3%

+7%

+4%

   

Other3

£4.7m

£4.0m

+15%

 

+19%

+24%

+13%

+4%

   

Group

£287.6m

£258.7m

+4%

 

+8%

+5%

+4%

-

   

 

 

 

 

 

 

 

 

 

   

Contract / Perm Split

 

 

 

 

 

 

 

 

   

Contract

71%

67%

 

 

 

 

 

 

   

Permanent

29%

33%

 

 

 

 

 

 

   

 

100%

100%

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

   

Geographical Split

 

 

 

 

 

 

 

 

   

UK&I

20%

25%

 

 

 

 

 

 

   

Continental Europe

52%

49%

 

 

 

 

 

 

   

USA

22%

20%

 

 

 

 

 

 

   

Asia Pac & Middle East

6%

6%

 

 

 

 

 

 

   

 

100%

100%

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

   

Sector Split

 

 

 

 

 

 

 

 

   

ICT

44%

45%

 

 

 

 

 

 

   

Banking & Finance

15%

16%

 

 

 

 

 

 

   

Energy

9%

8%

 

 

 

 

 

 

   

Engineering

9%

9%

 

 

 

 

 

 

   

Life Science

22%

21%

 

 

 

 

 

 

   

Other

1%

1%

 

 

 

 

 

 

   

 

100%

100%

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

   

 

 

 

FY 2017

 

Q4 2017

Q3 2017

Q2 2017

Q1 2017

   

Operating Metrics

FY 2017

FY 2016

YoY %

 

YoY %

YoY %

YoY %

YoY %

   

 

 

 

 

 

 

 

 

 

   

Contract Runners2

 

 

 

 

 

 

 

 

   

UK&I

2,616

2,663

-2%

 

-2%

-7%

-6%

-8%

   

Continental Europe

5,535

4,572

+21%

 

+21%

+18%

+19%

+19%

   

USA

1,552

1,363

+14%

 

+14%

+24%

+23%

+14%

   

Asia Pac & Middle East

494

480

+3%

 

+3%

+19%

+25%

+19%

   

Group

10,197

9,078

+12%

 

+12%

+11%

+12%

+9%

   

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

   

1 *At constant currency

 

 

 

 

 

 

 

   

2 Period-end number of contractors onsite with clients

 

 

 

 

 

3 Other includes Procurement & Supply Chain and Sales & Marketing

 

 

 

 

                     

 

 

 

 

 

 

Business performance

 

Group GP for the year was up 4%* as we experienced strong growth in Continental Europe and the USA, while UK&I and APAC & ME remained challenging.

 

Contract GP was up 10%*, with growth across all sectors. Contract growth was driven by Continental Europe, which was up 17%* and by USA up 21%*. Continental Europe and USA combined now represent 70% of our contract runners (2016: 65%).

 

Permanent GP was down 8%*, with average sales headcount down 10%.  USA posted a 12%* increase, driven by supportive Energy and Banking markets. This was offset by declines in all other regions, with Continental Europe down 7%* and UK&I down 22%*. Our Permanent productivity per head improved by 3%* over last year.

 

Group period end sales headcount was up 10% to 2,257, with Contract up 15% and Permanent up 3%. Contract represented 65% of total sales headcount at the period end.  Sequentially vs Q3 2017, period end Group sales headcount was up 7%, with Continental Europe up 12%, USA up 4% and UK&I down 2%. Average Group sales heads for the year were down 1%.

 

Support functions relocation

 

A proposed relocation of our central support functions from London to Glasgow was announced in early November at an estimated total exceptional cost of £13m, with circa £7m recognised in 2017 as an exceptional item with most of the balance expected to be recognised in 2018. Annualised savings of £4-5m are anticipated from 2019.

 

Foreign exchange impact

 

The Group experienced a translational FX benefit of circa £19m on GP during the year, as a result of the strengthening of the euro and US dollar versus sterling.

 

Balance sheet

SThree remains in a strong financial position. Net cash at 30 November 2017 was circa £6m (30 November 2016: £10m). The Group has a £50m revolving credit facility ("RCF") with HSBC and Citibank, which is committed to 2019.

Office Network

The Group has a network of 40 offices in 16 countries, of which 32 are outside the UK. The Group generated 80% of GP for the period from markets outside the UK&I (2016: 75%).

 

 *at constant currency

 

SThree is hosting an analyst conference call today at 0830 GMT. The details are as follows:

 

Telephone number: +44 (0) 20 3003 2666

 

For access to the call please quote passcode SThree

 

A replay facility will be available for seven days on +44 (0) 208 196 1998 Passcode: 3205004#

              

The Group will issue its results for the financial year ended 30 November 2017 on 29 January 2018.

 

- Ends -

 

 

Enquiries:

 

 SThree plc

020 7268 6000

 Gary Elden, Chief Executive Officer

 

 Alex Smith, Chief Financial Officer

 

 Sarah Anderson, Deputy Company Secretary/IR Enquiries

 

 

 Citigate Dewe Rogerson

020 7638 9571

 Kevin Smith/Jos Bieneman

 

 

 

Notes to editors

 

SThree is a leading international specialist staffing business, providing permanent and contract specialist staff to a diverse client base of over 7,000 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 2,700 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. 

 




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