STHREE PLC
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 GBP50m (30
November 2019: GBP11m)
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 Q2 Q1
2020 2020 2020
Net Fees FY 2020 FY 2019 YOY YOY YOY YOY YOY
Contract GBP235.3m GBP254.6m -7% -6% -12% -10% +2%
Permanent GBP75.6m GBP87.8m -13% -10% -19% -17% -6%
GROUP GBP310.9m GBP342.4m -8% -7% -14% -12% +0%
Management
structure
DACH(3) GBP105.8m GBP109.3m -3% -2% -9% -9% +9%
EMEA Exc GBP117.8m GBP141.2m -16% -20% -22% -17% -6%
DACH(4)
USA GBP77.2m GBP76.7m +2% +11% -3% -2% +0%
APAC GBP10.1m GBP15.2m -26% -30% -27% -36% -11%
GROUP GBP310.9m GBP342.4m -8% -7% -14% -12% +0%
Top 5
countries
Germany GBP96.9m GBP101.6m -4% -3% -10% -10% +7%
Netherlands GBP47.3m GBP52.3m -10% -15% -13% -12% +3%
UK GBP35.2m GBP43.9m -19% -22% -28% -19% -8%
USA GBP77.2m GBP76.7m +2% +11% -3% -2% +0%
Japan GBP5.9m GBP7.8m -25% -25% -27% -36% -11%
ROW(5) GBP48.4m GBP60.1m -17% -19% -23% -19% -7%
GROUP GBP310.9m GBP342.4m -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 & 8%
Finance
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 GBP50m at 30
November 2020 (30 November 2019: Net cash GBP11m).
As at 30 November 2020 the Group has total accessible liquidity of GBP155m.
This is made up of GBP50m net cash, a GBP50m revolving credit facility ("RCF"),
a GBP5m overdraft and GBP50m from the CCFF (RCF, overdraft and CCFF not drawn
down). In addition, SThree has a GBP20m 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
SThree@almapr.co.uk
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 SThree@almapr.co.uk
Susie Hudson
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 (MORE TO FOLLOW) Dow Jones Newswires
December 14, 2020 02:00 ET (07:00 GMT)
