9th Dec 2016 06:01
SThree (STHR)Trading Statement 09-Dec-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 December 2016 FY16 Trading Update SThree plc ('SThree' or the 'Group'), the international specialist staffingbusiness, is today issuing a trading update for the financial year ended 30November 2016. Highlights - Profit before tax for the year expected to be slightly above the top end of the range of current market expectations1 - Group gross profit ('GP') up 2%* YoY and ahead by 6%* excluding Energy - Robust growth across ICT (+12%* YoY) and Engineering (+9%* YoY) - Strong growth in Continental Europe (+13%* YoY), driven by DACH (+17%* YoY) - USA GP level* YoY (up 9%* excluding Energy), reflecting tough trading conditions in Energy and Banking & Finance - 75% of Group GP generated from markets outside the UK&I (2015: 70%). - UK market impacted by slowdown in Banking & Finance sector, Public Sector reforms and EU referendum result - GP down by 8%* YoY - Conditions in the Energy market remain challenging - GP down 30%* YoY - Contract GP up 8%* YoY and ahead by 11%* excluding Energy - Permanent GP down 8%* YoY, broadly in line with average sales headcount down 10%. Permanent GP excluding Energy down 1%* YoY - Group period-end sales headcount down 6% YoY, with Contract sales heads up 1% offsetting Permanent sales heads down 17% - Period end net cash of circa £10m, after share buy backs of £7m (30 November 2015: net cash of £6.2m) 1 The range of market expectations for adjusted pre-tax profit for the yearis £37.3m to £39.0m, with a current consensus of £38.3m. Adjustments relateto restructuring items of circa £3.5m in certain sales businesses andcentral support functions. Gary Elden, Chief Executive, commented: 'We have delivered a solid overallperformance for the year, in the face of mixed trading conditions. OurContract business continued to perform well, with GP increasing by 8%* yearon year and with contract runners reaching in excess of nine thousand, amilestone for the Group. Continental Europe once again grew strongly,underpinned by a very pleasing performance in DACH, where GP was ahead by17%* year on year. 'Looking ahead to 2017, global political and macro-economic uncertaintieshave increased across a number of our key regions. We are managing thebusiness prudently in the light of these market conditions, and continue toinvest in our highest performing teams. The momentum of our Contractbusiness, the strength of our performance in Continental Europe and thebenefit of restructuring measures taken earlier in the year, leave us well-positioned for the future.' Financial Highlights - Group Gross Profit FY Q4 Q3 Q2 Q1 2016 2016 2016 2016 2016Gross Profit FY 2016 FY 2015 YoY % YoY % YoY % YoY % YoY % 1 1 1 1 1 Contract £173.6m £150.9m +8% +5% +6% +10% +11%Permanent £85.1m £84.7m -8% -10% -15% -12% +9%Group £258.7m £235.6m +2% - -2% +2% +10% UK&I £64.0m £69.5m -8% -12% -9% -9% -Continental £127.6m £103.3m +13% +8% +12% +16% +20%EuropeUSA £50.7m £45.4m - +1% -10% - +14%Asia Pac & £16.4m £17.4m -15% -4% -26% -18% -13%Middle EastGroup £258.7m £235.6m +2% - -2% +2% +10% ICT £115.8m £97.3m +12% +6% +8% +15% +20%Banking & £41.7m £42.6m -9% -10% -16% -14% +6%FinanceEnergy £19.6m £26.2m -30% -24% -32% -28% -34%Engineering £23.3m £20.0m +9% +6% +9% +1% +21%Life Sciences £54.3m £45.2m +8% +6% +4% +7% +19%Other3 £4.0m £4.3m +1% -11% -3% +11% +15%Group £258.7m £235.6m +2% - -2% +2% +10% Contract /Perm SplitContract 67% 64%Permanent 33% 36% 100% 100% GeographicalSplitUK&I 25% 30%Continental 49% 44%EuropeUSA 20% 19%Asia Pac & 6% 7%Middle East 100% 100% Sector SplitICT 45% 41%Banking & 16% 18%FinanceEnergy 8% 11%Engineering 9% 9%Life Science 21% 19%Other 1% 2% 100% 100% FY Q4 Q3 Q2 Q1 2016 2016 2016 2016 2016Operating FY 2016 FY 2015 YoY % YoY % YoY % YoY % YoY %Metrics ContractRunners2UK&I 2,663 2,881 -8% -8% -3% -6% -3%Continental 4,572 3,823 +20% +20% +18% +18% +21%EuropeUSA 1,363 1,297 +5% +5% - +8% +18%Asia Pac & 480 411 +17% +17% +3% +5% +6%Middle EastGroup 9,078 8,412 +8% +8% +7% +7% +10% 1 At constant currency2 Period-end number of contractors onsite withclients3 Other includes Procurement & Supply Chain and Sales& Marketing Group gross profit ('GP') for the year was up 2%*, with average salesheadcount up 1%. We experienced strong growth in Continental Europe, ICTand Engineering, but overall growth in GP slowed during the year. Growthwas impacted by the ongoing weak activity in the Energy market, acontinuation of the more difficult market conditions in Banking & Financeand EU Referendum uncertainty and Public Sector reforms within the UK.Against this backdrop, we restructured certain of our businesses during thefirst half and became more selective in our investments in response to theincreasingly challenging market conditions. Contract GP was up 8%* YoY, or up 11%* excluding Energy. A large proportionof this growth was driven by Continental Europe - which was up 17%* andwhich now represents more than half of our contract runners - offsettingUK&I down by 3%*. USA Contract GP was up by 10%*, with ICT growth of 53%*and Life Sciences growth of 20%* offset by Energy down 28%*. Permanent GP was down 8%* YoY, with average sales headcount down 10%.Excluding Energy, Permanent GP was down 1%*. Continental Europe posted a7%* YoY increase, driven by DACH up 11%*, offsetting weaker performances inUK&I down 21%* and USA down 15%*. In the light of challenging marketconditions in Energy and Banking & Finance, and the result of the EUreferendum, we have further focussed on productivity in our Permanentbusiness. Our Permanent productivity per head improved by 3%* over theyear, with an 8%* improvement in Q4. Average Group sales heads were up 1% YoY. UK&I sales headcount was down 7%YoY, Continental Europe was up 7%, USA was up 7% and Asia Pacific & MiddleEast was down 11%. Contract sales headcount represented 63% of total salesheadcount at the end of the year (2015: 58%), up 11% YoY. The Group has a network of 39 offices in 15 countries, of which 30 areoutside the UK. The Group generated 75% of Gross Profit for the period frommarkets outside the UK&I (2015: 70%). SThree remains in a strong financial position. Net cash at 30 November 2016was circa £10m (30 November 2015: £6m). 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 GMT. The detailsare as follows: Telephone number: +44 (0) 330 336 9411 For access to the call please quote passcode SThree A replay facility will be available for seven days on 0808 101 1153 or +44(0) 207 660 0134 Passcode: 7611856 The Group will issue its results for the financial year ended 30 November2016 on 23 January 2017. - 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: 3666 Time of Receipt: 08-Dec-2016 / 16:57 GMT/BST End of Announcement EQS News Service --------------------------------------------------------------------------- 528121 09-Dec-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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