TIDMSTEM
RNS Number : 7110W
SThree plc
14 December 2023
14 December 2023
SThree plc
FY 2023 Trading Update
Performance in line, driven by resilience of STEM specialism and
Contract focus
SThree plc ("SThree" or the "Group"), the only global specialist
talent partner focused on roles in Science, Technology, Engineering
and Mathematics ('STEM'), today issues a trading update for the
financial year ended 30 November 2023.
Highlights
-- Group net fees for the full year down 4% YoY(1) (down 3% excluding
restructured businesses(2) ), against a record prior year
performance (3 () and challenging global macro-economic backdrop.
-- Robust client extensions drive Contract net fees up 1% YoY,
now representing 82% of Group net fees (FY22: 78%).
-- Permanent net fees (representing 18% of Group) down 22% YoY,
reflecting both difficult market conditions and our strategic
transition towards Contract in specific markets (average Permanent
headcount down 17%).
-- In our three largest markets, which represent 73% of net fees,
the Netherlands grew 3%, while Germany and the USA were down
4% and 14%, respectively.
-- Against record prior-year comparatives, Engineering up 17%,
whilst Technology was down 2% and Life Sciences down 21%.
-- Contractor order book (4) of GBP184m, whilst down 3% YoY,
represents sector-leading visibility with the equivalent of
c.4 months' net fees, providing a robust platform for the
year ahead.
-- Strong balance sheet with net cash of GBP83 million at 30
November 2023 (30 November 2022: GBP65 million).
-- Technology Improvement Programme remains on budget, and has
now successfully gone live across the US business, with sequenced
rollout across the rest of the Group progressing in line with
plan.
-- Performance in line with FY23 market expectations(5) .
Timo Lehne, Chief Executive, commented:
"Following a record prior year, the Group has delivered a
consistently robust performance within a challenging macro-economic
environment. This gives us confidence that our strategic focus,
aligned to structural growth drivers of critical STEM skills and
flexible talent, gives us a resilient and financially robust
platform from which to deliver our ambitions.
We continue to make good progress with our Technology
Improvement Programme, with our new end-to-end integrated platform
now deployed and live across the whole of our US business,
providing our teams with the technology and tools which will be key
to driving both scale and higher margins over the mid-to-long
term.
As we enter the start of the new financial year, we haven't yet
seen an easing of the macro-economic environment, which continues
to drive soft trading conditions. Our strategic focus, exposure to
long-term megatrends, and progress to date delivering operational
enhancements provide us with a strong platform for sustained
growth. We remain excited by the opportunities ahead."
FY Q4
FY FY 2023 2023 Q3 2023 Q2 2023 Q1 2023
YoY YoY
Net fees 2023 2022 (1) (1) YoY (1) YoY (1) YoY (1)
------------------- ---------- ------- ------ ----------- --------- ---------
Contract GBP343.6m GBP334.2m +1% -2% - -1% +8%
Permanent GBP75.3m GBP96.4m -22% -17% -31% -25% -12%
GROUP GBP418.8m GBP430.6m -4% -5% -7% -7% +4%
Regions
DACH (6) GBP148.9m GBP148.9m -3% -5% -6% -7% +8%
Netherlands (incl.
Spain) (7) GBP82.1m GBP75.7m +6% +5% +9% +4% +6%
Rest of Europe (8) GBP70.4m GBP73.1m -4% -8% -5% -7% +4%
USA GBP96.4m GBP111.5m -14% -14% -19% -15% -6%
Middle East & Asia
(9) GBP20.9m GBP21.4m +3% +16% -14% -5% +19%
GROUP GBP418.8m GBP430.6m -4% -5% -7% -7% +4%
Top five countries
Germany GBP130.9m GBP131.9m -4% -6% -6% -8% +7%
Netherlands GBP77.1m GBP72.9m +3% +2% +5% +1% +4%
UK GBP45.0m GBP46.7m -3% -8% -4% -6% +6%
USA GBP96.4m GBP111.5m -14% -14% -19% -15% -6%
Japan GBP9.3m GBP9.4m +6% +24% -4% -2% +7%
ROW (10) GBP60.2m GBP58.2m +2% +4% -5% -2% +12%
Group GBP418.8m GBP430.6m -4% -5% -7% -7% +4%
------------------- ---------- ------- ------ ----------- --------- ---------
Service mix FY 2023 FY 2022
----------
Contract 82% 78%
Permanent 18% 22%
----------
Skills mix FY 2023 FY 2022
----------
Technology 48% 47%
Life Sciences 18% 22%
Engineering 26% 22%
Other 8% 9%
---------- ----------
Business performance highlights
The Group delivered a robust performance for FY23 against a
record prior year, with net fees down 4% YoY. This performance was
driven by our significant Contract business up 1%, following robust
Contract extensions, offset by Permanent, down 22%, in a large part
impacted by the strategic decision to reduce our average Permanent
headcount by 17% YoY. Excluding our restructured businesses (2) net
fees were down 3% YoY, with Contract, our strategic focus, up 2%
and Permanent down 19%.
Contract
-- Contract net fees up 1% YoY.
o Regionally, Netherlands (incl. Spain) was up 7% and Rest
of Europe up 3%, while DACH was down 1%, USA down 4%
and Middle East & Asia was up 29%.
o Strong growth in Engineering, up 18% YoY, with Technology
up 1% and Life Sciences down 14%.
-- The contractor order book closed at GBP184m, down 3% YoY and
accounts for around 4 months' worth of net fees.
Permanent
-- Permanent net fees down 22% YoY, with challenging market conditions
across all regions, together with the planned transition from
Permanent to Contract which started in FY22 , particularly
in the USA and UK. Average Permanent headcount was down 17%
YoY.
o In our strategic Permanent markets, DACH was down 8%,
Netherlands down 1% and Japan up 5%.
o Modest growth in Engineering, up 4%, with Technology
down 12% and Life Sciences down 44%.
Headcount and productivity
-- Group average headcount for the year was down 2% YoY. Year-end
headcount was down 15%, which was partly impacted by the restructure
of the Singapore, Hong Kong and Ireland businesses. On a like-for-like
basis, Group period-end headcount was down 13% vs FY22 Q4
as we navigate the uncertain macro-economic environment.
-- While we are managing costs tightly, targeted investment in
talent acquisition within Contract remains a priority.
-- Productivity(11) for the year was down only 2% YoY with the
impact of a strong prior year comparator for net fees partially
offset by the 2% reduction in average headcount. Productivity
remains 34% above pre-pandemic levels achieved in FY19.
Regional highlights
DACH saw net fees decline 3% YoY.
-- Germany, our largest country in the region (88% of net fees),
saw Contract down 1% with overall net fees down 4%, driven
by Engineering up 13%, offset by Technology and Life Sciences,
down 4% and 16% respectively.
Netherlands (incl. Spain) region saw net fees grow 6% YoY.
-- Strong growth in Contract up 7% YoY, partially offset by Permanent
down 2%.
-- The Netherlands, which represents 94% of the region, saw Contract
up 4% with overall net fee growth of 3% driven by Engineering
up 8% and Technology up 3%.
-- Spain saw strong growth of 82% in the year driven by Technology.
Rest of Europe saw net fees decline 4% YoY.
-- Contract, which represents 95% of net fees for the region,
grew 3%.
-- The UK, our largest country in the region (64% of net fees),
saw Contract up 1% with overall net fees down 3%, reflecting
Engineering up 10%, offset by declines in both Technology,
down 5% and Life Sciences, down 27%.
USA saw net fees decline 14% YoY.
-- Strategic shift toward Contract in region, which now represents
88% of net fees, with Contract net fees down 4% YoY reflecting
Life Sciences, down 16% YoY in line with the market conditions
for that sector, partly offset by Engineering up 19%.
Middle East and Asia saw net fees up 3% YoY. On a like for like
basis (excluding our restructured businesses in Singapore and Hong
Kong) net fees were up 20% YoY.
-- Japan, which represents 45% of the region, was up 6% YoY driven
by Engineering and Life Sciences.
-- Strong performance in UAE with net fees up 41% driven by Engineering.
Balance sheet
SThree retains a strong balance sheet, with net cash at 30
November 2023 of GBP83m (30 November 2022: net cash GBP65m), partly
reflecting the working capital release from the Group's contractor
model. Total accessible liquidity of GBP138m comprises GBP83m net
cash, an undrawn GBP50m revolving credit facility ('RCF'), which
runs until 2025 (with options to extend it until 2027), and a GBP5m
overdraft facility. In addition, SThree has an undrawn GBP30m
accordion facility as well as a substantial working capital
position, reflecting net cash due to the Group for placements
already undertaken.
Analyst conference call
SThree is hosting a conference call for analysts and investors
today at 8.30am to discuss the FY 2023 Trading Update . If you
would like to register for the conference call, please contact
SThree@almastrategic.com.
The Group will present its results for the financial year ended
30 November 2023 on 30 January 2024.
(1) All YoY growth rates expressed at constant currency.
(2) Businesses restructured in Ireland, Singapore and Hong Kong
at the end of FY22.
(3) FY22 Group Net Fees up 19% YoY to GBP430.6m.
(4) The contractor order book represents value of net fees until
contractual end dates, assuming all contractual hours are
worked.
(5) Current consensus PBT expectation is GBP71.3m for FY23.
Source: SThree compiled consensus.
(6) DACH - Germany, Austria and Switzerland.
(7) Netherlands (incl. Spain) - Netherlands and Spain, which is
managed from the Netherlands.
(8) Rest of Europe - UK, Belgium, France, Luxembourg and
Ireland.
(9) Middle East & Asia - Japan, UAE & Singapore.
(10) ROW - All other countries we operate in.
(11) Productivity calculated as net fees divided by total
average headcount.
Enquiries:
SThree plc
Timo Lehne, CEO via Alma
Andrew Beach, CFO
Keren Oser, Investor Relations Director
Alma Strategic Communications +44 20 3405 0205
Rebecca Sanders-Hewett SThree@almastrategic.com
Hilary Buchanan
Sam Modlin
Will Ellis Hancock
Notes to editors
SThree plc brings skilled people together to build the future.
We are the only global specialist talent partner focused on roles
in Science, Technology, Engineering and Mathematics ('STEM') ,
providing permanent and flexible contract talent to a diverse base
of over 8,200 clients across 14 countries. Our Group's c.2,700
staff cover the Technology, Life Sciences and Engineering sectors.
SThree is part of the Industrial Services sector. We are listed on
the Premium Segment of the London Stock Exchange's Main Market,
trading with ticker code STEM.
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.
- Ends -
Appendix
Following the reporting structure change at the start of FY23
the table below provides the historical reporting structure.
FY FY FY 2023 Q4 2023 Q3 2023 Q2 2023 Q1 2023
Net fees 2023 2022 YoY (1) YoY (1) YoY (1) YoY (1) YoY (1)
-------------------- ---------- -------- ---------- ----------- ---------- ----------
Contract GBP343.6m GBP334.2m +1% -2% - -1% +8%
Permanent GBP75.3m GBP96.4m -22% -17% -31% -25% -12%
GROUP GBP418.8m GBP430.6m -4% -5% -7% -7% +4%
Regions
DACH GBP148.9m GBP148.9m -3% -5% -6% -7% +8%
EMEA excl. DACH GBP163.0m GBP156.5m +3% +1% +3% - +8%
USA GBP96.4m GBP111.5m -14% -14% -19% -15% -6%
APAC GBP10.5m GBP13.7m -15% -2% -30% -22% -4%
GROUP GBP418.8m GBP430.6m -4% -5% -7% -7% +4%
Top five countries
Germany GBP130.9m GBP131.9m -4% -6% -6% -8% +7%
Netherlands GBP77.1m GBP72.9m +3% +2% +5% +1% +4%
UK GBP45.0m GBP46.7m -3% -8% -4% -6% +6%
USA 96.4m GBP111.5m -14% -14% -19% -15% -6%
Japan GBP9.3m GBP9.4m +6% +24% -4% -2% +7%
ROW GBP60.2m GBP58.2m +2% +4% -5% -2% +12%
GROUP GBP418.8m GBP430.6m -4% -5% -7% -7% +4%
-------------------- ---------- -------- ---------- ----------- ---------- ----------
Service mix FY 2023 FY 2022
----------
Contract 82% 78%
Permanent 18% 22%
----------
Skills mix FY 2023 FY 2022
----------
Technology 48% 47%
Life Sciences 18% 22%
Engineering 26% 22%
Other 8% 9%
---------- ----------
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END
TSTEAPADFASDFFA
(END) Dow Jones Newswires
December 14, 2023 02:00 ET (07:00 GMT)
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