Half Year Trading Update

SThree (STEM) SThree: Half Year Trading Update 14-Jun-2021 / 07:01 GMT/BST Dissemination of a Regulatory Announcement, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement. 14 June 2021 SThree plc Half Year Trading Update Performance ahead of expectations in Q2 drives HY net fees up both YoY and vs 2019 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 its scheduled trading update(1) for the half year ended 31 May 2021. Highlights  Profit expectations for FY 2021 recently upgraded, as announced 3 June 2021 Q2 net fees up 22% YoY (21% adjusted for working days(2)), reflecting a very strong underlying performance with sustained improvements in new deal activity and Contractor retention rates Group net fees for H1 up 10% YoY Very strong growth achieved in DACH(3) and the USA Life Sciences and Technology net fees up significantly across the Group Contractor order book(4) up 33% YoY Contract and Permanent net fees for H1 up 8% and 18% respectively YoY Top five countries represent 86% of Group net fees, with Germany being 33% and USA 25%  Strong balance sheet with net cash at 31 May 2021 of circa £48m (31 May 2020: £31m; 28 Feb 2021: £57m) Ranked at 69 out of the top 300 companies across Europe in the FT's inaugural Climate Leaders list Guidance re-instated Andrew Beach to join as CFO on 5 July 2021, also announced separately today As Q2 2020 was significantly impacted by Covid-19, the Group has also provided comparisons against 2019 net fees in the table below. The growth seen in 2021 vs 2019, across several regions and sectors as well as for the group as a whole, demonstrates the very strong underlying performance of the Group and the relevance of its differentiated, STEM-focused offering. Highlights vs 2019 include: Q2 net fees up 8% vs 2019 Group net fees for H1 up 3% vs 2019 Dividend The Board intends to recommend the payment of an interim dividend in the current financial year, to be announced with the Group's interim results on July 19th. Given the continuing degree of uncertainty due to the pandemic, the Group intends that dividend cover for the year as a whole will be in the range of 2.5x to 3.0x and the interim dividend will therefore be set at a level consistent with that target. Mark Dorman, Chief Executive, commented: "We are delighted to announce that our teams have delivered a very strong performance in Q2, driving significant growth across the Group on H1 2020. Very encouragingly, given the Covid-19 impact in Q2 last year, net fees in Q2 2021 were 8% ahead of the equivalent period in 2019. This is a considerable achievement given the ongoing volatility of the external markets we operate in globally and is testament to the hard work of our people, our unwavering focus on the quality of our service and the continued strength of demand for the exceptional candidates we work with and their STEM skills.  We have continued to pursue strategic initiatives and to strengthen our leadership capability across the Group, as we position ourselves to take further advantage of new opportunities within the world of work as they emerge. We have also continued to deliver on our commitment to tackle important ESG issues, as seen in the recent publication (on 29 April 2021) of our 2020 ESG Impact report and our ranking at 69 out of the top 300 companies across Europe in the FT's inaugural Climate Leaders list. Further progress against our ESG targets across the first half will be detailed in our interim results announcement. Although the trading background remains uncertain our continued focus is on execution, whatever the external circumstances, as we continue to provide the critical services which our clients have come to expect." Net Fees H1 2021 H1 2020 H1 2021 YOY Q2 2021 YOY Q1 2021 YOY H1 2021 vs 2019 Q2 2021 vs 2019 Q1 2021 vs 2019 Contract £121.9m £113.5m +8% +18% -2% +3% +6% - Permanent £42.4m £36.4m +18% +36% - +4% +13% -6% GROUP £164.3m £149.9m +10% +22% -1% +3% +8% -1% Management structure DACH £59.1m £50.1m +16% +28% +3% +15% +17% +12% EMEA Exc DACH (5) £59.9m £60.5m -2% +10% -14% -14% -9% -19% USA £40.9m £35.4m +24% +28% +19% +22% +26% +19% APAC £4.4m £3.9m +20% +59% -14% -10% +2% -24% GROUP £164.3m £149.9m +10% +22% -1% +3% +8% -1% Top five countries Germany £54.0m £46.0m +15% +28% +3% +13% +15% +10% Netherlands £25.6m £23.2m +8% +21% -4% +3% +7% -1% UK £17.3m £18.6m -8% +3% -17% -20% -16% -24% USA £40.9m £35.3m +24% +28% +19% +22% +26% +19% Japan £3.3m £2.8m +23% +77% -21% -7% +14% -30% ROW (6) £23.2m £24.0m -4% +10% -16% -16% -11% -21% GROUP £164.3m £149.9m +10% +22% -1% +3% +8% -1% Division mix H1 2021 Contract 74% Permanent 26% Sector mix H1 2021 Technology 47% Life Sciences 24% Engineering 20% Banking & Finance 7% Other 2% Business performance The Group's performance in Q1 was followed by a further strengthening in Q2 across all regions and sectors. Q2 was up 22% YoY, driving an H1 performance up 10%. We saw strong growth in our Contract business with net fees up 8% YoY. The contractor order book has increased by 33% YoY (Q1 up 1% YoY), reflecting the high demand for skilled contractors across our markets. Our Permanent business was up 18% YoY. DACH and USA, our two largest Permanent markets, were up 13% and 57% respectively YoY. Our Life Sciences business in USA has shown very strong growth and was up 73% YoY, driven by increased placements in Clinical Operations and Quality Assurance. DACH delivered a strong performance in the first half up 16% YoY. Germany, which accounts for 91% of DACH, was up 15% YoY with Technology and Life Sciences both up 24% YoY. Technology was driven by demand in Software Development and Infrastructure. Life Sciences saw demand in Quality Assurance and Clinical Research & Development skills. The results for EMEA excluding DACH saw the Netherlands, our largest country in the region, deliver a robust performance in H1 with net fees growing 8% YoY. Notable performances were achieved in Life Sciences, up 13% YoY, driven by increased placements across Clinical Research & Development and Quality Assurance, and Engineering up 24% YoY, with particular focus on Project Management and Construction. The UK saw progress and we are encouraged by the increasing productivity in the region. The USA is the world's largest STEM staffing market and our business there has demonstrated its strength with net fees up 24% YoY. We have seen high demand in our key sectors in the region. Life Sciences, our largest sector in the USA, saw strong growth of 30% YoY with robust demand in Clinical Operations, Quality Assurance and Product Development. Net fees in Engineering saw a growth of 12% YoY driven by renewable energy-focused Construction. Our growing Technology sector saw net fees increase by 33% YoY with increased demand in Mobile Applications, Adobe, Salesforce and Software Development. APAC net fees were up 20% YoY in H1 with Japan, our largest country in the region, up 23%. The standout sectors in this region during the period were Life Sciences and Technology. Group period end headcount was down 14% YoY with average headcount down 16% YoY. Sequentially, Group headcount is down 3% vs FY20. 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 further strengthen our position by focusing on increasing productivity per sales head. The Group has increased productivity 36% YoY in the period. Whilst we expect this to normalise to some extent, our ambition overall is to utilise the learnings gained over the last year and retain an increased focus on productivity alongside headcount growth, aligned with our 2024 ambitions. Balance sheet SThree remains in a strong financial position, with net cash at 31 May 2021 of circa £48m (31 May 2020: Net cash £31m). As at 31 May 2021 the Group has total accessible liquidity of £103m. This is comprised of £48m net cash, a £50m revolving credit facility ("RCF") and a £5m overdraft facility (RCF and overdraft 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. Analyst conference call SThree is hosting a webinar for analysts and investors today at 0830am to discuss the H1 Trading Update. If you would like to register for the webinar please follow this link: http://bit.ly/SThree_H1_Trading_Update_webinar The Group plans to issue its interim results for the six months ended 31 May 2021 on 19 July 2021. (1)  All YoY growth rates in this announcement are expressed at constant currency and exclude Australia, which we exited in Q4 2020 (2)  Q2 2021 has one more working day vs Q2 2020 and flat vs Q2 2019 (3) DACH - Germany, Austria and Switzerland (4) The contractor order book represents value of net fees until contractual end dates, assuming all contractual hours are worked (5) EMEA excl DACH - UK, Ireland, Belgium, Netherlands, Luxembourg, France, Spain and Dubai (6) ROW - All other countries we operate in excluding Germany, Netherlands, UK, USA and Japan - Ends - Enquiries: SThree plc 020 7268 6000 Mark Dorman, Chief Executive Officer Alex Smith, Chief Financial Officer Rebecca Matts, Group Communications Director Alma PR 020 3405 0205 Susie Hudson John Coles [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 14 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:	MSCU
TIDM:	STEM
LEI Code:	2138003NEBX5VRP3EX50
Sequence No.:	110901
EQS News ID:	1207305

End of Announcement	EQS News Service