SThree: FY17 Trading Update
15 December 2017 - 6:03PM
UK Regulatory
Dow Jones received a payment from EQS/DGAP to publish this press
release.
SThree (STHR)
SThree: FY17 Trading Update
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 GBP42.0m to GBP45.6m, with a consensus of
GBP43.8m
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 result. Our 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 Q4 Q3 Q2 Q1
2017 2017 2017 2017 2017
Gross Profit FY 2017 FY 2016 YoY YoY YoY YoY YoY
% 1 % 1 % 1 % 1 % 1
Contract GBP203.4m GBP173.6m +10% +14% +9% +9% +7%
Permanent GBP84.2m GBP85.1m -8% -5% -6% -6% -14%
Group GBP287.6m GBP258.7m +4% +8% +5% +4% -
UK&I GBP55.6m GBP64.0m -14% -12% -10% -14% -19%
Continental GBP150.6m GBP127.6m +9% +16% +6% +7% +7%
Europe
USA GBP64.4m GBP50.7m +18% +17% +20% +20% +12%
Asia Pac & GBP17.0m GBP16.4m -4% -7% +1% +5% -14%
Middle East
Group GBP287.6m GBP258.7m +4% +8% +5% +4% -
ICT GBP124.6m GBP115.8m +1% +1% +1% +1% +2%
Banking & GBP43.5m GBP41.7m -2% -1% +1% -1% -8%
Finance
Energy GBP26.5m GBP19.6m +25% +51% +35% +23% -8%
Engineering GBP25.9m GBP23.3m +5% +11% +5% +3% -1%
Life GBP62.4m GBP54.3m +7% +13% +3% +7% +4%
Sciences
Other3 GBP4.7m GBP4.0m +15% +19% +24% +13% +4%
Group GBP287.6m GBP258.7m +4% +8% +5% +4% -
Contract /
Perm Split
Contract 71% 67%
Permanent 29% 33%
100% 100%
Geographical
Split
UK&I 20% 25%
Continental 52% 49%
Europe
USA 22% 20%
Asia Pac & 6% 6%
Middle East
100% 100%
Sector Split
ICT 44% 45%
Banking & 15% 16%
Finance
Energy 9% 8%
Engineering 9% 9%
Life Science 22% 21%
Other 1% 1%
100% 100%
FY Q4 Q3 Q2 Q1
2017 2017 2017 2017 2017
Operating FY 2017 FY 2016 YoY YoY YoY YoY YoY
Metrics % % % % %
Contract
Runners2
UK&I 2,616 2,663 -2% -2% -7% -6% -8%
Continental 5,535 4,572 +21% +21% +18% +19% +19%
Europe
USA 1,552 1,363 +14% +14% +24% +23% +14%
Asia Pac & 494 480 +3% +3% +19% +25% +19%
Middle East
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 GBP13m, with circa GBP7m recognised in 2017 as an exceptional item with
most of the balance expected to be recognised in 2018. Annualised savings of
GBP4-5m are anticipated from 2019.
Foreign exchange impact
The Group experienced a translational FX benefit of circa GBP19m 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 GBP6m (30 November 2016: GBP10m). The Group has a GBP50m 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.
ISIN: GB00B0KM9T71
Category Code: FR
TIDM: STHR
LEI Code: 2138003NEBX5VRP3EX50
Sequence No.: 5022
End of Announcement EQS News Service
639275 15-Dec-2017
(END) Dow Jones Newswires
December 15, 2017 02:03 ET (07:03 GMT)
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