STHREE PLC DGAP-UK-Regulatory: SThree: Q1 Trading Update
SThree (STEM) 16 March 2020 SThree plc Q1 Trading Update Net fees flat in Q1 in line with management expectations SThree plc ('SThree' or the 'Group'), the global pure-play specialist staffing businessfocused on roles in Science, Technology, Engineering and Mathematics('STEM'), issues the belowtrading update(1) covering the period from 1 December 2019 to date; financial information relates to the quarter ending 29February 2020. Highlights
Mark Dorman, Chief Executive, commented: 'Wehave delivered these results despite abackdrop of significant and increasing globalmacro-economic uncertainties and challenges.The performance of our businesses in Germanyand the Netherlandswasparticularly impressive and demonstratesthe benefits of our strategy, focusing on Contract and STEM across diverse markets. This,combined with the efforts of our employees worldwide, hasenabled us tocontinue to deliver a robustlevel of net fees despite the wider economic headwinds. 'Whilst the macro uncertainties are increasinglyapparent, wecontinue to investselectivelyin our business,reflecting our commitment to building for the future and driving the long-term success of our Group. Weremain confident that we have the rightstrategy, as we are uniquely positioned as the only global pure-play STEM specialist. 'The uncertainties the market faces are, however, potentially very significant, given the fast-developing situation with Covid-19, recent large falls in oil prices, and increasing concerns about global confidence and GDP growth. Notwithstanding this, demand for key STEM skills remains robust.' Reporting structure change SThree has changed its reporting structure, as shown in the tables below, in line with the updated strategy announced at its recent Capital Markets Day and internal management structures. Going forward SThree will apply the new groupings of DACH, EMEA excluding DACH, USA and APAC, as well as presentingan analysis of net fees by itsfive key markets: Germany, Netherlands, USA, UKandJapan.On a sector basis, the Energy andEngineering sectorswill be reported under Engineering.
Impact of Covid-19 The Coronavirus outbreak continues todevelop globally,and it is difficult to predict the potential impact it may have on ourbusiness. The Group iscontinuing to monitor the situation closelyand regional management teams areready to react as developmentsunfold. Business performance Group net fees for the year were flat in Q1, in what is our seasonally quietest quarter. Contract, our more resilient business, grew net fees by 2% and now accounts for 75%ofGroup net fees. Permanent net fees declined 6% in the quarter, due to weakerperformances in Japan, USA and UK. Germany, our largest Permanent market, saw solidgrowth of 4%, up from Q4 2019 +3%. DACH saw strong growth in the quarter with net fees up 9%. Germany, which accounts for 92%ofDACH, continues to outperform with growthof 7% driven by Technology up 10%and Life Sciences up 12%.All other sectors also grew and the region saw a strong growth in net fees in Switzerland and Austria. EMEA excludingDACH sawnet fees declining 6%, largely reflecting the UK's performance, which was down 8%. As expected, we have begun to see the impact of IR35prompting change in ourclient and candidate behaviour in the UK business in the quarter, as decision making processes extend ahead of the April 2020 implementation date. The Netherlands, our largest country in the region, saw growth of 3%,which was impressive given the market backdrop,with notable performancesin Engineering and Life Sciences. Net fees in USA were flat in thequarter and short of ourexpectations. Life Sciences saw good growth of 14%with Engineering growing 10%and Technology up a modest 3%. This growth was offset by a decline in Banking & Finance with net fees down 38%, broadly reflecting the challenges faced in this sector globally. As a key area of focus for the Group wehavecontinued to invest in the regionand are aligning our resources with the best long term opportunities. Despite a good performance from the Technology sector, APAC net fees declined 15% in the quarter, impacted by several factors including the wildfires in Australia and the outbreak of Covid-19. Group period end headcount was up 3% with average headcount up 5%, reflecting ongoing investment in Germany and USA offset by reductions in EMEA excludingDACHand APAC. Balance sheet SThree remains in a strong financial position, with net cashat 29 February 2020 ofcirca £9m(28 February 2019: Net debt £12m). The Group has a £50m revolving credit facility ('RCF') with HSBCand Citibank, which is committed to 2023. 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: 31046987# A replay facility will be available for 90 days on 0800 358 2049 Passcode: 301312966# TheGroup will issue its trading update for six months ended 31 May 2020 on 15 June 2020. (1) All year-on-year financial growth rates in this announcement are expressed at constant currency (2) International represents our businesses outside the UK (3) DACH - Germany, Austria and Switzerland (4) EMEA exclDACH - UK, Ireland, Belgium, Netherlands, Luxembourg, France, SpainandDubai (5) ROW- All other countries we operate in excluding Germany, Netherlands, UK, USA and Japan (6) Engineering now includes Energy, which was previously reported separately. Up-stream oil and gas comprises approximately 10% of the new Engineering sector - Ends -
Notes to editors SThree is a leading international STEM specialist staffing business, providing permanent and contract specialist staff toa diverse client base of over 9,000 clients. The Group's operations cover the Technology, Banking & Finance, Engineering and Life Sciences sectors.With a multi-brand strategy, the Group establishesnew operations to address growth opportunities. SThree brands include Computer Futures, Huxley Associates, Progressive and The Real Staffing Group. The Group has a network of 47offices in 16 countries, of which 41are in our international(2)markets, withcirca 3,100 employees. SThree plc is quoted on the Official List of the UK Listing Authority under the ticker symbol STEMand 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: | TST |
| TIDM: | STEM |
| LEI Code: | 2138003NEBX5VRP3EX50 |
| Sequence No.: | 52476 |
| EQS News ID: | 997705 |
| End of Announcement | EQS News Service |
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SThree plc published this content on 16 March 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 March 2020 07:06:05 UTC
