FY20 Trading Update

SThree (STEM) SThree: FY20 Trading Update 14-Dec-2020 / 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. 14 December 2020 SThree plc FY20 Trading Update resilient performance WITH MARKET EXPECTATIONS RECENTLY UPGRADED, DRIVEN BY FOCUS ON STEM AND FLEXIBLE WORKING SThree plc ("SThree" or the "Group"), the only global pure-play specialist staffing business focused on roles in Science, Technology, Engineering and Mathematics ('STEM'), is pleased to issue a trading update(1) for the financial year ended 30 November 2020. Highlights Group net fees for the full year down 8% YoY, demonstrating resilience against Covid-19's impact and the continued recovery of the underlying business in H2 Continued to take market share in the US, Germany and the Netherlands Full year profit before tax recently upgraded, driven by better than expected Q4 which saw net fees down 7% and stand out performances from the US (up 11%) and Germany (down 3%) Significant sequential improvement of Group performance Q4 vs Q3 Contract net fees demonstrating impressive resilience, down 7%. Contract represents 76% of Group net fees (FY 2019: 74%) Permanent net fees also showing resilience down 13% 89% of Group net fees generated from international(2) markets (FY 2019: 87%) Strong balance sheet, with net cash at 30 November 2020 of £50m (30 November 2019: £11m) Mark Dorman, Chief Executive, commented: "FY2020 has been far from what was expected when we entered the year. However, guided by our purpose and our strategy, we have responded thoughtfully and executed well. I am proud to be reporting today on a resilient performance. The crisis has clearly demonstrated, not just for our business but for many businesses, how important it is to be anchored with a clear purpose and a robust strategy. From these foundations our teams have worked incredibly hard to strengthen bonds with clients and candidates whilst quickly adapting their services to suit the dramatic changes in 2020. Our unique position at the centre of STEM and flexible working means we are perfectly poised to capitalise on the opportunities available to us." FY 2020 Q4 2020 Q3 2020 Q2 2020 Q1 2020 Net Fees FY 2020 FY 2019 YOY YOY YOY YOY YOY Contract  £235.3m £254.6m -7% -6% -12% -10% +2% Permanent  £75.6m £87.8m -13% -10% -19% -17% -6% GROUP  £310.9m £342.4m -8% -7% -14% -12% +0% Management structure DACH(3) £105.8m  £109.3m -3% -2% -9% -9% +9% EMEA Exc DACH(4)  £117.8m £141.2m -16% -20% -22% -17% -6% USA  £77.2m £76.7m +2% +11% -3% -2% +0% APAC  £10.1m £15.2m -26% -30% -27% -36% -11% GROUP  £310.9m £342.4m -8% -7% -14% -12% +0% Top 5 countries Germany  £96.9m £101.6m -4% -3% -10% -10% +7% Netherlands  £47.3m £52.3m -10% -15% -13% -12% +3% UK  £35.2m £43.9m -19% -22% -28% -19% -8% USA  £77.2m £76.7m +2% +11% -3% -2% +0% Japan  £5.9m £7.8m -25% -25% -27% -36% -11% ROW(5)  £48.4m £60.1m -17% -19% -23% -19% -7% GROUP  £310.9m £342.4m -8% -7% -14% -12% +0% Division Mix FY 2020 Contract 76% Permanent 24% Sector Mix FY 2020 Technology 45% Life Sciences 23% Engineering(6) 22% Banking & Finance 8% Other 2% Business Performance Group net fees for the year declined 8% with performance across all our markets impacted by declines in aggregate demand as a result of the COVID-19 pandemic. The sequential trend Q4 vs Q3 showed an improvement in performance in net fees across the Group, as the underlying business saw activity levels strengthening. Our Contract-focused business model has shown its greater resilience with net fees down just 7% and now represents 76% of Group net fees. The contractor order book(7) on 30 November has declined 10% YoY, compared to Q3 down 14%. This is a result of increased sales activity levels for the Group along with increased contractor retention levels. Net fees in our DACH region were particularly resilient, down 3% for the year. Its Life Sciences business delivered a strong performance with net fees up 4%. This is in part driven by an exceptional Q1, as well as increased demand in the second half of the year in Clinical Research & Development. Technology was flat for the year with increasing demand for Cyber Security and Data Science skills. EMEA excl DACH saw net fees decline 16% in the year, primarily driven by the UK's performance. The Netherlands, our largest country in the region, saw net fees decline 10%. Our Dutch Engineering business had a strong performance in the year with net fees up 20% and Life Sciences up 6%. We have seen good gains in market share in the Netherlands and Germany(8). The USA is the world's largest STEM staffing market and our business there has demonstrated its strength with net fees up 2% for the year and up 11% in Q4. We also gained market share in the US(8).  This region has shown the benefits of investing in the right vertical niches and understanding customer needs. Performance in our Life Sciences business has been particularly strong with net fees growing 16% in the year as we have seen robust demand in the second half of the year in Clinical Operations, Product Development and Quality Assurance. Our Technology business has grown 9% with increased demand in Mobile Applications & Software Development, and Engineering was up 1%. As a key area of focus for the Group we continue to make targeted investments in the region, aligning our resources with the best long-term opportunities.  APAC net fees were down 26% in the full year, primarily driven by the more transactional nature of our business in Japan, which is 94% permanent. Group average headcount was down 6% YoY, with period end headcount down 17%. We will continue to invest in line with our previously stated strategy to focus on specific niches within sectors and markets where we can gain valuable market share and cement our position. Liquidity and dividends SThree remains in a strong financial position, with net cash of £50m at 30 November 2020 (30 November 2019: Net cash £11m). As at 30 November 2020 the Group has total accessible liquidity of £155m. This is made up of £50m net cash, a £50m revolving credit facility ("RCF"), a £5m overdraft and £50m from the CCFF (RCF, overdraft and CCFF not drawn down). In addition, SThree has a £20m accordion facility as well as a substantial working capital position reflecting net cash due to SThree for placements already undertaken. We continue to recognise the importance of dividends to our shareholders and are keeping future dividend payments under active review. Analyst conference call SThree is hosting a webinar for analysts and investors today at 0830 BST to discuss the FY Trading Update and to present the Group's STEM staffing market pulse check. If you would like to listen to the webinar please contact [e-mail] The Group plans to issue its results for the financial year ended 30 November 2020 on 25 January 2021. (1) All YoY growth rates and business mix percentages in this announcement are expressed at constant currency and exclude Australia, which we exited in Q4 2020 (2) International represents our businesses outside the UK (3) DACH - Germany, Austria and Switzerland (4) EMEA excl DACH - UK, Ireland, Belgium, Netherlands, Luxembourg, France, Spain and Dubai (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 5% of the new Engineering sector (7) The contractor order book represents value of net fees until contractual end dates, assuming all contractual hours are worked (8) The Netherlands temporary technical sector market turnover (ABU Data 2020) and Global Staffing Industry Analysts ("SIA") data August 2020 update and USA SIA September 2020 update - Ends -  Enquiries:  SThree plc 020 7268 6000  Mark Dorman, Chief Executive Officer  Alex Smith, Chief Financial Officer  Steve Hornbuckle, Company Secretary  Alma PR 020 3405 0205  Rebecca Sanders-Hewett  Susie Hudson [e-mail] Notes to editors SThree plc brings skilled people together to build the future.  It is the only global pure-play specialist staffing business focused on roles in Science, Technology, Engineering and Mathematics ('STEM'), providing permanent and flexible contract talent to a diverse base of over 9,000 clients in 15 countries. The Group's c.2,600 staff cover the Technology, Life Sciences, Engineering and Banking & Finance sectors. SThree plc is quoted on the Premium Segment of the Official List of the Financial Conduct Authority under the ticker symbol STEM 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:	TST
TIDM:	STEM
LEI Code:	2138003NEBX5VRP3EX50
Sequence No.:	89597
EQS News ID:	1154782

End of Announcement	EQS News Service