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    STHR   GB00B0KM9T71

STHREE PLC

(STHR)
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SThree: Half Year Trading Update

06/14/2021 | 02:02am EDT
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 GBP48m (31 May 2020: GBP31m; 28 Feb 2021: GBP57m) 
  ? 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     Q2 2021 vs     Q1 2021 vs 
                                                                          2019           2019           2019 
 
Contract            GBP121.9m GBP113.5m +8%         +18%        -2%           +3%            +6%            - 
Permanent           GBP42.4m  GBP36.4m  +18%        +36%        -             +4%            +13%           -6% 
GROUP               GBP164.3m GBP149.9m +10%        +22%        -1%           +3%            +8%            -1% 
 
Management 
structure 
DACH                GBP59.1m  GBP50.1m  +16%        +28%        +3%           +15%           +17%           +12% 
EMEA Exc DACH (5)   GBP59.9m  GBP60.5m  -2%         +10%        -14%          -14%           -9%            -19% 
USA                 GBP40.9m  GBP35.4m  +24%        +28%        +19%          +22%           +26%           +19% 
APAC                GBP4.4m   GBP3.9m   +20%        +59%        -14%          -10%           +2%            -24% 
GROUP               GBP164.3m GBP149.9m +10%        +22%        -1%           +3%            +8%            -1% 
 
Top five countries 
Germany             GBP54.0m  GBP46.0m  +15%        +28%        +3%           +13%           +15%           +10% 
Netherlands         GBP25.6m  GBP23.2m  +8%         +21%        -4%           +3%            +7%            -1% 
UK                  GBP17.3m  GBP18.6m  -8%         +3%         -17%          -20%           -16%           -24% 
USA                 GBP40.9m  GBP35.3m  +24%        +28%        +19%          +22%           +26%           +19% 
Japan               GBP3.3m   GBP2.8m   +23%        +77%        -21%          -7%            +14%           -30% 
ROW (6)             GBP23.2m  GBP24.0m  -4%         +10%        -16%          -16%           -11%           -21% 
GROUP               GBP164.3m GBP149.9m +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 GBP48m (31 May 2020: Net cash GBP31m).

As at 31 May 2021 the Group has total accessible liquidity of GBP103m. This is comprised of GBP48m net cash, a GBP50m revolving credit facility ("RCF") and a GBP5m overdraft facility (RCF and overdraft 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.

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

(MORE TO FOLLOW) Dow Jones Newswires

June 14, 2021 02:01 ET (06:01 GMT)

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Financials
Sales 2021 1 274 M 1 758 M 1 758 M
Net income 2021 34,0 M 46,8 M 46,8 M
Net cash 2021 42,8 M 59,1 M 59,1 M
P/E ratio 2021 19,5x
Yield 2021 1,79%
Capitalization 636 M 875 M 877 M
EV / Sales 2021 0,47x
EV / Sales 2022 0,41x
Nbr of Employees 2 600
Free-Float 90,2%
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Number of Analysts 7
Last Close Price 484,50 GBX
Average target price 533,57 GBX
Spread / Average Target 10,1%
EPS Revisions
Managers and Directors
Mark Dorman Chief Executive Officer & Director
Alex Smith Chief Financial Officer & Executive Director
James Daniel Bilefield Non-Executive Chairman
Denise Collis Independent Non-Executive Director
Anne Kathleen Fahy Non-Executive Director
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