Q1 Trading Update

RNS Number : 3391H

SThree plc

13 March 2015

 

13 March 2015

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 2014 to date; financial information relates to the quarter ended 28 February 2015.

Highlights

·     Group gross profit up 17%* year on year

·     Contract gross profit up 24%* year on year, with Contract now accounting for 65% of Group gross profit

·     Strong seasonal recovery in contractor runners at 7,409 - up 27%* year on year at the end of Q1

·     Permanent gross profit up 6%* year on year, with Permanent deal pipeline volume up 5% year on year

·     Excluding Energy, Permanent gross profit ahead by 10% and Permanent deal pipeline volume up 12% year on year

·     Group sales headcount in line with the year end position and up 6% year on year

·     Excellent performance in the Americas (up 38%* year on year), now representing 17% of Group gross profit

·     ICT our strongest performing sector up 22%* year on year, driven by a strong performance across all regions, Life Sciences up 17%* year on year and Banking up 8%* year on year

·     Energy gross profit up 14%* year on year, but with deal activity sharply down year on year in Q1, as expected

·     Profitability enhanced by improved productivity and cost base restructuring implemented over the last two financial years     

·     Net debt of circa £25m (£9.9m at year end)

Gary Elden, Chief Executive, commented:

"Overall, we've made a pleasing start to the year, trading in line with our expectations in what is our seasonally least significant quarter.  Our investment in Contract and our drive to rebuild productivity in Permanent is continuing to have a positive impact on Group performance.

"This first quarter outcome demonstrates the inherent strength of SThree's long-established strategy of remaining well-diversified by geography and by sector, with strong growth in ICT, Life Sciences and the Americas helping to offset the weakness in Energy during the period.

"Looking ahead, the expanded Contract book and solid Permanent performance give us a strong base from which to grow this year.  While the outlook for Energy is more challenging and Eurozone uncertainty persists, we have made a good start to 2015 and remain confident that there are significant growth opportunities for us this year across the diverse geographies and sectors that we serve."

Key Metrics & Commentary

With effect from the beginning of the current financial year, SThree will be reporting quarterly on a three month calendar basis, replacing the thirteen week quarter basis previously adopted.  This change is being implemented to improve comparability of periods and avoid the need for 53 week "rebasing" years such as 2013.  

Financial highlights - Group
Group Gross Profit
				Q1 2015		Q4 2014	Q3 2014	Q2 2014	Q1 2014
Gross Profit		Q1 2015	Q1 2014 1	YoY % 1		YoY % 2	YoY % 2	YoY % 2	YoY % 2
Contract		£34.9m	£29.0m	+24%		+36%	+28%	+26%	+18%
Permanent		£18.6m	£18.8m	+6%		+16%	+6%	+7%	-4%
Group		£53.5m	£47.8m	+17%		+27%	+18%	+18%	+9%
UK&I		£15.9m	£14.2m	+13%		+23%	+9%	+10%	+1%
Continental Europe		£24.2m	£23.3m	+14%		+18%	+12%	+12%	+4%
Americas		£9.0m	£6.2m	+38%		+90%	+75%	+74%	+49%
Asia Pac & Middle East		£4.4m	£4.1m	+16%		+12%	+11%	+12%	+13%
Group		£53.5m	£47.8m	+17%		+27%	+18%	+18%	+9%
ICT		£22.2m	£19.1m	+22%		+22%	+8%	+2%	-5%
Non ICT		£31.4m	£28.7m	+11%		+31%	+26%	+31%	+20%
Group		£53.5m	£47.8m	+17%		+27%	+18%	+18%	+9%
Contract / Permanent Split
Contract		65%	61%
Permanent		35%	39%
		100%	100%
Geographical Split
UK&I		30%	30%
Continental Europe		45%	49%
Americas		17%	13%
Asia Pac & Middle East		8%	8%
		100%	100%
Sector Split
ICT		41%	40%
Non ICT		59%	60%
		100%	100%
				Q1 2015		Q4 2014	Q3 2014	Q2 2014	Q1 2014
Operating Metrics		Q1 2015	Q1 2014 1	YoY % Var		YoY % Var	YoY % Var	YoY % Var	YoY % Var
Contract Runners 3
UK&I		2,893	2,576	+12%		+16%	+17%	+14%	+8%
Continental Europe		3,070	2,412	+27%		+24%	+20%	+17%	+10%
Americas		1,049	605	+73%		+97%	+110%	+130%	+96%
Asia Pac & Middle East		397	260	+53%		+104%	+73%	+64%	+67%
Group		7,409	5,853	+27%		+31%	+29%	+26%	+16%
Permanent Placements 4
UK&I		410	346	+17%		+25%	-11%	-4%	-15%
Continental Europe		621	665	+0%		+4%	-11%	-12%	-13%
Americas		156	153	+6%		+60%	+61%	+67%	+23%
Asia Pac & Middle East		235	270	-12%		+2%	-4%	+17%	+33%
Group		1,422	1,434	+3%		+15%	-2%	+1%	-4%
1 Prior year numbers are on a 4/4/5 week basis, variances at constant currency are calculated against restated numbers on a calendar month basis
2 At constant currency
3 Period end number of contractors onsite with clients and being billed
4 Excludes Retainers

Q1 Group gross profit ("GP") increased by 17%* year on year.

Contract performed strongly in the period, with GP up 24%* year on year.  The Group saw a strong seasonal recovery in contract runners, which were up 27% year on year at period end and down only 2% since the traditional year end peak. Average contractor gross profit per day rates excluding Energy remained robust during the period.

Permanent GP was up 6%* year on year. UK&I was up 16%* year on year, Continental Europe up 2%* year on year, Americas up 13%* year on year and Asia Pacific & Middle East up 3%* year on year. Average permanent placement fees remained robust. The Permanent deal pipeline volume was up 5% year on year and up 12% excluding Energy.

Group sales headcount at 28 February 2015 was up 6% year on year. UK&I sales headcount was up 6% year on year, Continental Europe sales headcount was up 2%, Americas sales headcount was up 36% and Asia Pacific & Middle East sales headcount was down 6%. Consultant headcount continued to remix slightly towards Contract during the quarter, with Contract consultant numbers up 14% and Permanent consultant headcount down 3% year on year. Average consultant headcount was up 8% year on year, with Contract consultant average headcount up 16% and Permanent consultant average headcount down 1%.

The Group has a network of 44 offices in 18 countries, of which 32 are outside the UK. The Group generated 70% of its GP for the period from markets outside UK&I (2014: 70%). 

SThree remains in a strong financial position. Net debt at 28 February 2015 was circa £25m. The Group has a £50m revolving credit facility ("RCF") with RBS and HSBC, which is committed to 2019.

* at constant currency and prior year restated to a calendar month basis

SThree is hosting an analyst conference call today at 0830 GMT. 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] / Access Pin: 7767509#

The Group will issue its trading update for the six months ended 30 May 2015 on 12 June 2015.

- 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.

 

END

 

 

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