Q1 Trading Update

SThree (STHR) Q1 Trading Update 17-March-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. 17 March 2017 Q1 Trading Update   SThree plc ('SThree' or the 'Group'), the international specialist staffing business, is today issuing a trading update covering the period from 1 December 2016 to date; financial information relates to the quarter ended 28 February 2017. Highlights Group gross profit ('GP') flat* YoY in Q1 Robust performance in Continental Europe +7%* (Q4 2016: +8%*) Strong performance in the USA +12%* YoY (Q4 2016: +1%*), now representing 22% of Group GP UK&I performance as expected adversely impacted by the EU Referendum result and Public Sector reforms, with GP -19%* YoY (Q4 2016: -12%*) Continued growth across ICT (+2%* YoY) and Life Sciences (+4%* YoY) 80% of Group GP generated from markets outside the UK&I (2016: 72%)  Contract GP up 7%* YoY (Q4 2016: +5%*) with strong growth across Engineering (+22%* YoY) and Life Sciences (+17%* YoY) Contract represented 70% of Group GP (Q1 2016: 66%)  Permanent GP down 14%* YoY, with average sales headcount down 18% Group period-end sales headcount was 2% below 2016 year-end position and 8% down YoY Gary Elden, Chief Executive, commented: 'Overall, we've made a satisfactory start to the year in what is our seasonally least significant quarter. 'Our Contract business continues to grow robustly. We were also pleased to see momentum re-established in the USA, where GP grew by 12% in the first quarter, a significant acceleration from H2 2016. 'Contract GP increased by 7%* year on year, driven by continued strong growth in Continental Europe, where Contract GP was ahead by 17%* in the first quarter. 'Our Permanent business benefited from a further improvement in productivity, driven by a particularly strong performance in USA, which was up 16% YoY in Q1. Further productivity gains will remain the priority for our Permanent business in 2017. 'Looking ahead, political and macro-economic uncertainty remains at heightened levels in a number of our key regions. Against this background, we are managing the business prudently and continue to invest in our highest performing teams. Our focus on Contract, the continued strength of our performance in Continental Europe, our greater momentum in the USA and firm control of our cost base, leave us well positioned for the future.' Key Metrics & Commentary Financial Highlights - Group Gross Profit       Q1 2017   Q4 2016 Q3 2016 Q2 2016 Q1 2016 Gross Profit Q1 2017 Q1 2016 YoY % 1   YoY % 1 YoY % 1 YoY % 1 YoY % 1                   Contract £45.6m £38.2m +7%   +5% +6% +10% +11% Permanent £19.5m £19.8m -14%   -10% -15% -12% +9% Group £65.1m £58.0m -   - -2% +2% +10%                   UK&I £13.0m £16.0m -19%   -12% -9% -9% - Continental Europe £34.0m £27.5m +7%   +8% +12% +16% +20% USA £14.2m £10.7m +12%   +1% -10% - +14% Asia Pac & Middle East £3.9m £3.8m -14%   -4% -26% -18% -13% Group £65.1m £58.0m -   - -2% +2% +10%                   ICT Banking & Finance Energy £29.5m £9.8m £5.1m £26.0m £9.5m £4.8m +2% -8% -8%   +6% -10% -24% +8% -16% -32% +15% -14% -28% +20% +6% -34% Engineering £5.6m £5.1m -1%   +6% +9% +1% +21% Life Sciences £14.1m £11.5m +4%   +6% +4% +7% +19% Other 3 £1.0m £1.1m +4%   -11% -3% +11% +15% Group £65.1m £58.0m -   - -2% +2% +10%                   Contract / Perm Split                 Contract 70% 66%             Permanent 30% 34%               100% 100%                               Geographical Split                 UK&I 20% 28%             Continental Europe 52% 47%             USA 22% 18%             Asia Pac & Middle East 6% 7%               100% 100%                               Sector Split                 ICT Banking & Finance Energy 45% 15% 8% 45% 16% 8%             Engineering 9% 9%             Life Science 22% 20%             Other 3 1% 2%               100% 100%                                     Q1 2017   Q4 2016 Q3 2016 Q2 2016 Q1 2016 Operating Metrics Q1 2017 Q1 2016 YoY %   YoY % YoY % YoY % YoY %                   Contract Runners 2                 UK&I 2,568 2,795 -8%   -8% -3% -6% -3% Continental Europe 4,390 3,702 +19%   +20% +18% +18% +21% USA 1,419 1,241 +14%   +5% - +8% +18% Asia Pac & Middle East 501 422 +19%   +17% +3% +5% +6% Group 8,878 8,160 +9%   +8% +7% +7% +10%                                     1 At constant currency               2 Period end number of contractors onsite with clients   3 Other Sectors include Banking & Finance and Engineering     Q1 Group gross profit ('GP') was flat* YoY (Q4: flat*). We experienced strong growth in Continental Europe and the USA. However, the overall growth rate was impacted by a continuation of the more difficult market conditions in Banking and Finance, and Brexit uncertainty and Public Sector reforms within the UK. Contract continues to deliver a strong performance, with GP up 7%* YoY. A large proportion of this growth was driven by Continental Europe up 17%* YoY and the USA up 11%* YoY, which together represent 73% of Group Contract GP. Permanent GP was down 14%* YoY with UK&I down 37%* and Continental Europe down 11%* offset by a strong performance in the USA up 16%* YoY. The UK&I Permanent performance reflected a 27% reduction in average sales headcount YoY. Our performance in Continental Europe in part reflects very strong prior year comparatives, with GP in Q1 2016 up 25%* YoY. Permanent productivity per head improved by 6%* YoY with average heads down 18% YoY. Average Group sales headcount was down 8% YoY with Continental Europe up 5%, UK&I down 18% and USA down 21%. Contract headcount now represents 63% of Group sales headcount. The Group has a network of 38 offices in 15 countries, of which 30 are outside the UK. The Group generated 80% of Gross Profit for the period from markets outside the UK&I (2016: 72%). SThree remains in a strong financial position with net debt of circa £1m at period end (29 February 2016: £11m net debt). The Group has a £50m revolving credit 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 details are as follows: Telephone number: 0800 358 6377 or [phone] For access to the call please quote passcode SThree A replay facility will be available for seven days on 0808 101 1153 or [phone] Passcode: 6160488 The Group will issue its trading update for the six months ended 30 May 2017 on 16 June 2017. - 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 2,600 employees in eighteen 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.

Language:	English
ISIN:	GB00B0KM9T71
Category Code:	MSCU
TIDM:	STHR
LEI Code:	2138003NEBX5VRP3EX50
Sequence No.:	3953

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End of Announcement	EQS News Service

554903  17-March-2017