REG - SThree plc - FY24 Half Year Trading Update

SThreeAnnouncement

18/06/2024 07:00

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RNS Number : 7767S  SThree plc  18 June 2024

 

18 June 2024

 

SThree plc

 

FY24 Half Year Trading Update

 

 Contract extensions continue to underpin resilient performance

 

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 half year ended 31 May 2024.

 

H1 Highlights

 

 ·             Group net fees down 7% YoY((1)) despite the ongoing challenging backdrop and
               against a strong prior year performance, with Contract down 4% and now
               representing 84% of net fees.
 ·             Contractor order book((2)) down only 2% YoY to £182 million, representing
               sector-leading visibility, the equivalent of c.4 months of net fees.
 ·             Strong balance sheet with net cash of £90 million at 31 May 2024 (31 May
               2023: £72 million).
 ·             Technology Improvement Programme remains on track, with the phased roll-out
               across Germany well underway.
 ·             Performance for FY24 currently expected to be in line with market
               expectations((3)).

 

 

Timo Lehne, Chief Executive, commented:

 

"Against the challenges experienced by the sector, we are pleased with our
trading performance over the past six months, with strong Contract extensions
partially offsetting continued soft new business activity. The Group's unique
business model, centred on scarce STEM skills and flexible talent solutions,
continues to be a source of strength, aligned to the strategic priorities of
our clients and providing sizeable growth opportunities across all our key
markets. We are well placed to take full advantage when the market returns.

 

We continue to execute our growth strategy, including the phased roll-out of
our Technology Improvement Programme. Following our successful launch in the
US, our deployment in Germany is well underway. We are excited about the
significant enhancements this will bring across our Group over the mid-to-long
term, positioning us at the forefront of our industry."

 

 

Business performance highlights

 

The Group delivered a good net fee performance in the first half of the year
against the backdrop of a strong prior year performance and current market
conditions, with net fees down 7% YoY driven by continued softness in new
business across Contract and Permanent, partially offset by strong Contract
extensions.

 

Across both Contract and Permanent, the Group continued to see strong demand
for Engineering roles, with record net fees for Engineering, driven primarily
by the Energy sector. Renewables remains the fastest growing segment, up 15%
YoY. Life Sciences and Technology performance continues to reflect ongoing
market conditions and record comparatives for Technology.

 

Regionally, the Group saw strong growth in the Middle East and Asia, driven by
an exceptional performance in Japan reflecting growth across all three of our
main skill verticals. Within the Group's largest three markets, which
represent 72% of net fees, the Netherlands achieved robust YoY growth due to a
strong contribution from Engineering, while the USA was down, driven by
declines in Life Sciences and Technology partially offset by a strong
Engineering performance, and Germany was also down reflecting levels of demand
for Technology skills.

 

The Group remains focused on being positioned to respond as the market
changes, with Group period-end headcount down slightly versus the end of the
last financial year.

 

 

 

 

 

 

 

                                  H1        H1            H1 2024              Q2 2024           Q1 2024
 Net fees                         2024      2023          YoY ((1))            YoY ((1))         YoY ((1))
 Contract                         £158.7m   £170.0m       -4%                  -6%               -2%
 Permanent                        £30.0m    £38.6m        -18%                 -15%              -21%
 GROUP                            £188.7m   £208.6m       -7%                  -8%               -6%

 Regions
 DACH ((4))                       £64.2m    £74.5m        -12%                 -10%              -13%
 Netherlands (incl. Spain) ((5))  £41.1m    £39.4m        +7%                  +5%               +8%
 Rest of Europe ((6))             £31.3m    £35.2m        -10%                 -10%              -10%
 USA                              £41.8m    £49.4m        -13%                 -15%              -10%
 Middle East & Asia ((7))         £10.3m    £10.1m        +11%                 +1%               +20%
 GROUP                            £188.7m   £208.6m       -7%                  -8%               -6%

 Top five countries
 Germany                          £56.0m    £65.7m        -12%                 -11%              -14%
 Netherlands                      £37.5m    £37.3m        +3%                  -                 +6%
 UK                               £20.0m    £21.9m        -9%                  -11%              -7%
 USA                              £41.8m    £49.4m        -13%                 -15%              -10%
 Japan                            £4.8m     £4.4m         +27%                 +16%              +41%
 ROW ((8))                        £28.6m    £29.9m        -3%                  -2%               -4%
 Group                            £188.7m   £208.6m       -7%                  -8%               -6%

 Service mix                      H1 2024   H1 2023
 Contract                         84%       81%
 Permanent                        16%        19%

 Skills mix                       H1 2024   H1 2023
 Technology                       48%       49%
 Life Sciences                    17%       19%
 Engineering                      29%       24%
 Other                            6%        8%

 

 

((1)) All YoY growth rates expressed at constant currency.

((2)) The contractor order book represents value of net fees until contractual
end dates, assuming all contractual hours are worked.

((3)) Current consensus PBT expectation is £71.0 for FY24. Source: SThree
compiled consensus.

((4)) DACH - Germany, Austria and Switzerland.

((5)) Netherlands (incl. Spain) - Netherlands and Spain, which is managed from
the Netherlands.

((6)) Rest of Europe - UK, Belgium, France, Luxembourg and Ireland.

((7)) Middle East & Asia - Japan, UAE & Singapore.

((8)) ROW - All other countries we operate in.

 

 

Analyst conference call

 

SThree is hosting a conference call for analysts and investors today at 8.30am
to discuss the FY24 Half Year Trading Update. If you would like to register
for the conference call, please contact SThree@almastrategic.com.

 

Forward looking dates

 

The Group will issue its FY24 Half Year Results for the six months ended 31
May 2024 on 23 July 2024.  In addition on that same day, the Group plans to
host the third in its series of investor briefings at 14:00 GMT. This virtual
webinar will focus on the Employed Contractor Model.

 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 7,200 clients across 11 countries.
Our Group's c.2,600 staff cover the Technology, Life Sciences and Engineering
sectors. SThree is part of the Industrial Services sector. We are listed on
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 -

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