Q3 Trading Update

SThree (STHR) Q3 Trading Update 15-Sep-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 September 2017     Q3 Trading Update     SThree plc ("SThree" or the "Group"), the international specialist STEM staffing business, is today issuing a trading update covering the period from 1 June 2017 to date; financial information relates to the quarter ended 31 August 2017.   Highlights   Group gross profit ("GP") up 5%* YoY in Q3, with sustained momentum from Q2 when Group GP grew by 4%* Solid growth across Engineering up 5%* YoY, Life Sciences up 3%* and Global Energy up 35%* Strong growth in USA up 20%* YoY Robust performance in Continental Europe up 6% YoY UK&I remains challenging down 10%* YoY, in line with management expectations Contract GP up 9%* YoY, with strong growth across Engineering up 10%*, Life Sciences up 13%* and Energy up 37%* Permanent GP down 6%* YoY, broadly in line with average sales headcount down 7% 80% of Group GP generated outside the UK&I (2016: 76%) Group period-end sales headcount up 3% on the 2016 year-end position, and up 4% YoY Full year 2017 adjusted profit before tax expected to be ahead of current consensus+   + Consensus for the year ended 30 November 2017 is £42.4m, with a range of £39.3m to £45.6m     Gary Elden, Chief Executive, commented: "We are pleased with our sustained momentum in the period, with gross profit showing a sequential increase over Q2. A robust performance in Continental Europe and further strong growth in the USA were particular highlights and our Contract business is continuing to drive growth across the Group.    "We are well-positioned for the final quarter and now expect to deliver a full year result ahead of current consensus."     Financial Highlights -         Group Gross Profit               Q3 2017  Q2 2017 Q1 2017 Gross Profit Q3 2017 Q3 2016 YoY % 1 YoY % 1 YoY % 1             Contract £53.1m £45.4m +9% +9% +7% Permanent £20.6m £20.6m -6% -6% -14% Group £73.7m £66.0m +5% +4% -             UK&I £14.5m £15.8m -10% -14% -19% Continental Europe £37.9m £32.9m +6% +7% +7% USA £17.3m £13.5m +20% +20% +12% Asia Pac & Middle East £4.0m £3.8m +1% +5% -14% Group £73.7m £66.0m +5% +4% -             ICT £31.6m £29.3m +1% +1% +2% Banking & Finance £11.3m £10.5m +1% -1% -8% Energy £7.1m £4.8m +35% +23% -8% Engineering £6.9m £6.2m +5% +3% -1% Life Sciences £15.6m £14.3m +3% +7% +4% Other Sectors 3 £1.2m £0.9m +24% +13% +4% Group £73.7m £66.0m +5% +4% -             Contract / Perm Split           Contract 72% 69%       Permanent 28% 31%         100% 100%                   Geographical Split           UK&I 20% 24%       Continental Europe 52% 50%       USA 23% 20%       Asia Pac & Middle East 5% 6%         100% 100%                   Sector Split           ICT 43% 44%       Banking & Finance 15% 16%       Energy 10% 7%       Engineering 9% 10%       Life Science 21% 22%       Other Sectors 3 2% 1%         100% 100%                         Q3 2017 Q2 2017 Q1 2017 Operating Metrics Q3 2017 Q3 2016 YoY % YoY % YoY %             Contract Runners 2           UK&I 2,512 2,693 -7% -6% -8% Continental Europe 4,925 4,174 +18% +19% +19% USA 1,631 1,316 +24% +23% +14% Asia Pac & Middle East 489 411 +19% +25% +19% Group 9,557 8,594 +11% +12% +9%                         1 At constant currency         2 Period-end number of contractors onsite with clients 3 Other Sectors includes Procurement & Supply Chain and Sales & Marketing   Group gross profit ("GP") was up 5%* YoY and up 5%* sequentially vs Q2, with Q2 having been up 4%* YoY after a flat performance in Q1. USA GP was ahead by 20%* YoY in the quarter, another strong performance after being up 20%* in Q2. Continental Europe posted a robust performance in the quarter up 6%* YoY. Sales headcount for the Group was up 4% YoY and 3% ahead of the 2016 year end position.   Contract continues to perform strongly, up 9%* YoY with a large proportion of the growth in the quarter from Continental Europe up 12%* and USA up 24%*, offset by a decline in the UK&I, down 10%*. On a sector basis, the Group maintained strong growth in Engineering up 10%* YoY and Life Sciences up 13%*. We continued to prioritise growth in Contract sales headcount, with an average increase in the quarter of 8% YoY.   Permanent GP was down 6%* YoY, broadly in line with average sales headcount down 7% YoY. In the quarter, Permanent GP in UK&I declined by 12%* YoY, Continental Europe declined by 9%*, offset by a strong performance in USA, up 12%*.   Average Group sales heads were up 2% YoY. UK&I sales headcount was down 9% YoY, Continental Europe was up 13%, USA was down 3% and Asia Pacific & Middle East was down 15%. Contract sales headcount represented 65% of total sales headcount at the end of the quarter (2016: 62%).   The Group has a network of 39 offices in 16 countries, of which 32 are outside the UK. The Group generated 80% of Gross Profit for the period from markets outside the UK&I (2016: 76%).   SThree remains in a strong financial position. Net debt at 31 August 2017 was circa £8m (31 August 2016: £14m). The Group has a £50m revolving credit facility ("RCF") with Citibank and HSBC, which is committed to 2019.    * at constant currency   SThree is hosting an analyst conference call today at 0830 BST. The details are as follows:   Telephone number: [phone]   For access to the call please quote passcode SThree   A replay facility will be available for seven days on [phone] followed by 1582104#            The Group will be hosting a Capital Markets Day in London on the afternoon of 15 November 2017.   The Group will issue a trading update for the year ended 30 November 2017 on 15 December 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 2,700 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.  Â

ISIN:	GB00B0KM9T71
Category Code:	TST
TIDM:	STHR
LEI Code:	2138003NEBX5VRP3EX50
Sequence No.:	4635

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End of Announcement	EQS News Service

609909  15-Sep-2017