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.
(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."
(4) Other includes Procurement & Supply Chain and Sales & Marketing
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%).
SThree remains in a strong financial position. Net debt at 28 February 2019 was circa £12m (28 February 2018: Net debt £2m). The Group has a £50m 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 -
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.
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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