9th Sep 2016 07:01
SThree (STHR)Q3 Trading Update 09-Sep-2016 / 07:00 GMT/BSTDissemination of a Regulatory Announcement that contains inside informationaccording to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.The issuer is solely responsible for the content of this announcement. --------------------------------------------------------------------------- 9 September 2016 Q3 Trading Update SThree plc ('SThree' or the 'Group'), the international specialist staffingbusiness, is today issuing a trading update covering the period from 1 June2016 to date; financial information relates to the quarter ended 31 August2016. Highlights - Group gross profit ('GP') down 2%* YoY and ahead by 2%* excluding Energy - Robust growth across ICT (+8%* YoY) and Engineering (+9%* YoY) - Strong growth in Continental Europe (+12%* YoY) - USA GP up 14%* sequentially vs Q2, but down 10%* YoY (down 3%* excluding Energy), reflecting tough trading conditions in Energy and Banking & Finance and strong prior year comparatives - UK market impacted by slowdown in Banking & Finance sector and EU referendum - GP down by 9%* YoY - Conditions in the Energy market remain challenging - GP down 32%* YoY - Contract GP up 6%* YoY and ahead by 9%* excluding Energy - Permanent GP down 15%* YoY, broadly in line with average sales headcount down 12%. Permanent GP excluding Energy down 9%* YoY - 76% of Gross Profit generated from markets outside of the UK & Ireland (2015: 72%). - Group period-end sales headcount down 7% on the 2015 year-end position and down 3% YoY - Management's expectations for the full year outcome are unchanged Gary Elden, Chief Executive, commented: 'The mixed trading conditions weidentified at the half-year stage continued in Q3. Our Contract businesscontinued to perform well overall, with GP increasing by 6%* year on year.Continental Europe once again grew strongly, underpinned by a very pleasingperformance in DACH, where GP was ahead by 17%* year on year. However, theuncertainty created by the EU Referendum impacted our UK business, and ourUSA growth rate reflects the ongoing weakness in the Energy and Banking &Finance markets. 'Looking ahead, the continued momentum of our Contract business, thestrength of our performance in Continental Europe and the benefit ofrestructuring measures taken earlier in the year, leave us well-positionedfor our seasonally most significant fourth quarter. Our expectations forthe full year are unchanged.' Financial Highlights -Group Gross Profit Q3 2016 Q2 2016 Q1 2016Gross Profit Q3 2016 Q3 2015 YoY % 1 YoY % 1 YoY % 1 Contract £45.4m £39.3m +6% +10% +11%Permanent £20.6m £21.7m -15% -12% +9%Group £66.0m £61.0m -2% +2% +10% UK&I £15.8m £17.3m -9% -9% -Continental £32.9m £26.0m +12% +16% +20%EuropeUSA £13.5m £13.2m -10% - +14%Asia Pac & £3.8m £4.5m -26% -18% -13%Middle EastGroup £66.0m £61.0m -2% +2% +10% ICT £29.3m £25.0m +8% +15% +20%Banking & £10.5m £11.3m -16% -14% +6%FinanceEnergy £4.8m £6.4m -32% -28% -34%Life Sciences £14.3m £12.3m +4% +7% +19%Other Sectors 3 £7.1m £6.0m +7% +2% +20%Group £66.0m £61.0m -2% +2% +10% Contract / PermSplitContract 69% 64%Permanent 31% 36% 100% 100% GeographicalSplitUK&I 24% 28%Continental 50% 43%EuropeUSA 20% 22%Asia Pac & 6% 7%Middle East 100% 100% Sector SplitICT 44% 41%Banking & 16% 19%FinanceEnergy 7% 10%Life Science 22% 20%Other Sectors 3 11% 10% 100% 100% Q3 2016 Q2 2016 Q1 2016Operating Q3 2016 Q3 2015 YoY % YoY % YoY %Metrics Contract Runners2UK&I 2,693 2,784 -3% -6% -3%Continental 4,174 3,523 +18% +18% +21%EuropeUSA 1,316 1,321 -0% +8% +18%Asia Pac & 411 398 +3% +5% +6%Middle EastGroup 8,594 8,026 +7% +7% +10% 1 At constant currency2 Period-end number of contractors onsite with clients3 Other Sectors includes Engineering, Procurement & Supply Chain andSales & Marketing Group gross profit ('GP') was down 2%* YoY, (up 2%* in Q2), andsequentially up 4%* Q3 vs Q2. Q3 GP was impacted by the ongoing weakactivity in the Energy market and a continuation of the more difficultmarket conditions in Banking & Finance that we identified in Q2. ICTperformed robustly with GP up 8%* YoY. Sales headcount was down 3% YoY anddown 7% on the year-end position, as we reacted to the changing marketconditions. Contract GP was up 6%* YoY, or up 9%* excluding Energy. A large proportionof this growth was driven by Continental Europe up 16%*, offsetting UK&Idown by 4%*. USA Contract GP was up by 5%*, with ICT growth of 31%* andLife Sciences growth of 17%* offset by Energy down 26%* and Banking &Finance 6%* lower YoY. USA Contract GP grew by 17%* in Q3 sequentially vsQ2. Permanent GP was down 15%* YoY (down 12%* in Q2). Although lower overall,Q3 saw robust growth in DACH and France, up 7%* and 3%* respectively,offsetting a weaker performance in the USA, where GP was down 30%* YoY butup sequentially by 8%* vs Q2. UK&I permanent GP was down 23%* reflectingour previous strategic decision to downsize UK permanent headcount andfocus on productivity improvements. Permanent productivity improved in boththe UK and Continental Europe during the period. Banking & Financepermanent GP was down 22%* YoY and Energy permanent GP was down 87%* YoY.Permanent productivity per sales head was down 4%* YoY in the quarter, withaverage heads down 12%. Average Group sales heads were down 1% YoY. UK&I sales headcount was down10% YoY, Continental Europe was up 6%, USA was down 2% and Asia Pacific &Middle East was down 5%. Contract sales headcount represented 62% of totalsales headcount at the end of the quarter (2015: 57%), up 6% YoY. The Group has a network of 43 offices in 15 countries, of which 31 areoutside the UK. The Group generated 76% of Gross Profit for the period frommarkets outside the UK&I (2015: 72%). SThree remains in a strong financial position. Net debt at 31 August 2016was circa £14m (31 August 2015: £22m). The Group has a £50m revolvingcredit facility ('RCF') with RBS and HSBC, which is committed to 2019. * at constant currency SThree is hosting an analyst conference call today at 0830 BST. The detailsare as follows: Telephone number: +44 (0) 20 3043 2002 For access to the call please quote passcode SThree (6999722) A replay facility will be available for seven days on +44 (0) 207 984 7568or 0808 101 1153. Passcode: 6999722 The Group will issue a trading update for the year ended 30 November 2016on 9 December 2016. - Ends - Enquiries:SThree plc 020 7268 6000Gary Elden, Chief Executive OfficerAlex Smith, Chief Financial OfficerSarah Anderson, Deputy CompanySecretary/IR EnquiriesCitigate Dewe Rogerson 020 7638 9571Kevin Smith/Jos Bieneman Notes to editors SThree is a leading international specialist staffing business, providingpermanent and contract specialist staff to a diverse client base of over7,000 clients. From its well-established position as a major player in theinformation and communications technology ('ICT') sector the Group hasbroadened the base of its operations to include businesses serving theBanking & Finance, Energy, Engineering and Life Sciences sectors. Since launching its original business, Computer Futures, in 1986, the Grouphas adopted a multi-brand strategy, establishing new operations to addressgrowth opportunities. SThree brands include Computer Futures, HuxleyAssociates, Progressive and The Real Staffing Group. The Group has circa2,700 employees in fifteen countries. SThree plc is quoted on the Official List of the UK Listing Authority underthe ticker symbol STHR and also has a US level one ADR facility, symbolSERTY. Important notice Certain statements in this announcement are forward looking statements. Bytheir nature, forward looking statements involve a number of risks,uncertainties or assumptions that could cause actual results or events todiffer materially from those expressed or implied by those statements.Forward looking statements regarding past trends or activities should notbe taken as representation that such trends or activities will continue inthe future. Certain data from the announcement is sourced from unauditedinternal management information and is before any exceptional items.Accordingly, undue reliance should not be placed on forward lookingstatements. --------------------------------------------------------------------------- Language: English ISIN: GB00B0KM9T71 Category Code: TST TIDM: STHR Sequence Number: 3392 Time of Receipt: 08-Sep-2016 / 16:30 GMT/BST End of Announcement EQS News Service --------------------------------------------------------------------------- 500261 09-Sep-2016UK-Regulatory-announcement transmitted by DGAP - a service of EQS Group AG.The issuer is solely responsible for the content of this announcement.
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