15 June 2018

 

 

Half Year Trading Update

 

SThree plc ("SThree" or the "Group"), the international STEM+ specialist staffing business, is today issuing a trading update for the half year ended 31 May 2018.

 

Highlights

 

	Group gross profit ("GP") up 11%* YoY, with Q2 up 13%*
	­         - Continued strong growth in Continental Europe up 18%*, with DACH++ up 18%* and Netherlands up 25%* ­         - Good performance in USA up 9%* ­         - UK&I GP down 2%* YoY, with Contract GP up 1%* ­         - 82% of Group GP generated outside the UK&I (H1 2017: 80%)
	Contract GP up 14%* YoY
	­         - Strong growth across all sectors, with ICT up 10%*, Life Sciences up 14%* and Energy up 35%* ­         - Strong growth in Continental Europe up 21%* and USA up 16%* ­         - Contract represents 72% of Group GP (H1 2017: 70%)
	Permanent GP up 4%*, with Q2 up 7%*. Permanent productivity up 3%* in H1
	Group period-end sales headcount up 6% YoY, with average headcount up 10% YoY.

 

+Science, Technology, Engineering & Mathematics

++ Germany, Austria and Switzerland

 

Gary Elden, Chief Executive, commented:

 

"We are pleased to have delivered an encouraging first half performance, with our Continental Europe and USA businesses, in particular, showing strong growth through the second quarter.

 

"Our Contract business continues to grow robustly across all sectors, with Continental Europe and the USA both delivering double digit growth in GP.

 

"'Permanent achieved an improved performance during the first half, driven primarily by Continental Europe but also by our small and fast-growing business in Japan.

 

"We are continuing to invest in headcount in our high performing teams, consistent with our vision to be the number one STEM talent provider in the best STEM markets.  We remain on track with the delivery of our five-year growth strategy which we outlined at the Capital Markets Day in November 2017. 

 

"Looking ahead, the continued momentum of our Contract business and improved Permanent yields leaves us well-positioned for the second half and our expectations for the full year remain unchanged."

 

 

 

 

Financial Highlights -
Group Gross Profit
			H1 2018		Q2 2018	Q1 2018
Gross Profit	H1 2018	H1 2017	YoY % 1		YoY % 1	YoY % 1
Contract	£106.7m	£94.2m	+14%		+16%	+11%
Permanent	£41.7m	£40.2m	+4%		+7%	+2%
Group	£148.4m	£134.4m	+11%		+13%	+8%
UK&I	£26.5m	£27.1m	-2%		-2%	-3%
Continental Europe	£83.9m	£69.1m	+18%		+20%	+15%
USA	£29.5m	£29.7m	+9%		+16%	+1%
Asia Pac & Middle East	£8.5m	£8.5m	+8%		+1%	+15%
Group	£148.4m	£134.4m	+11%		+13%	+8%
ICT	£66.5m	£59.7m	+9%		+13%	+5%
Banking & Finance	£20.1m	£20.5m	+1%		+1%	-
Energy	£14.0m	£11.4m	+31%		+28%	+35%
Engineering	£14.3m	£11.8m	+17%		+20%	+14%
Life Sciences	£30.6m	£28.8m	+11%		+12%	+9%
Other 3	£2.9m	£2.2m	+28%		+25%	+32%
Group	£148.4m	£134.4m	+11%		+13%	+8%
Contract / Perm Split Contract	72%	70%
Permanent	28%	30%
	100%	100%
Geographical Split
UK&I	18%	20%
Continental Europe	56%	51%
USA	20%	22%
Asia Pac & Middle East	6%	7%
	100%	100%
Sector Split
ICT	45%	44%
Banking & Finance	13%	15%
Energy	9%	9%
Engineering	10%	9%
Life Science	21%	21%
Other	2%	2%
	100%	100%

 

1 *At constant currency
2 Other Sectors include Procurement & Supply Chain and Sales and Marketing

 

 

Group gross profit ("GP") increased by 11%* YoY, with Q2 up 13%* after growth of 8%* in Q1.

 

Contract continues to deliver a strong performance with GP up 14%* and Q2 up 16%*. A significant proportion of the growth in Contract at the half year was driven by Continental Europe, up 21%*, underpinned by the USA up 16%*. Group contract runners** were up by 11%, with Continental Europe up 23% and the other regions broadly level year on year.

 

Performance in Permanent was pleasing with GP up 4%* (Q2: +7%*), with average sales headcount up 1%. Performance was driven by Continental Europe up 9%* and Japan up 70%*. Permanent productivity improved by 3%* in the first half.

 

Overall, period end sales headcount was up 6% YoY, with Permanent down 4% and Contract up 12%.

 

Average Group sales headcount was up 10% YoY with Continental Europe up 18%, USA up 14% and UK&I down 5%. Average Permanent headcount was up 1% and average Contract headcount was up 16%.  Contract sales headcount represented 68% of total sales headcount at period end (2017: 64%).

 

The Group has a network of 43 offices in 16 countries, of which 37 are outside the UK. The Group generated 82% of Gross Profit for the period from markets outside the UK&I (2017: 80%).

Net debt at 31 May 2018 was £6.2m (31 May 2017: Net Cash of £5.0m). The Group has a £50m revolving credit facility ("RCF") with Citibank and HSBC, which is committed to 2023.

*at constant currency

** Period end number of contractors onsite with clients

 

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

 

Telephone number: +44 (0) 20 3003 2666 or 0808 109 0700   

 

For access to the call please quote passcode SThree

 

A replay facility will be available for seven days on +44 (0) 20 8196 1998 / Access Pin: 1308082#

              

The Group will issue its interim results for the six months ended 31 May 2018 on 23 July 2018.

 

- Ends -

 

Enquiries:
SThree plc	020 7268 6000
Gary Elden, Chief Executive Officer
Alex Smith, Chief Financial Officer  Kirsty Mulholland, Company Secretariat
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 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 2,800 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.