DJ SThree: Final Results
SThree (STEM)
SThree: Final Results
25-Jan-2021 / 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.
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SThree plc
("SThree" or the "Group")
FINAL RESULTS FOR THE YEAR ENDED 30 NOvember 2020
delivered a resilient performance
guided by our purpose and our focus on STem
SThree plc, the only global pure-play specialist staffing business focused on roles in Science, Technology, Engineering
and Mathematics ('STEM'), is today announcing its financial results for the financial year ended 30 November 2020.
FINANCIAL HIGHLIGHTS
2020 2019 Variance
Constant
Continuing operations
Adjusted (1) Reported Adjusted (1) Reported Movement (2) currency
excluding discontinued operations in Australia
movement (3)
Revenue (GBP million) 1,202.6 1,202.6 1,324.7 1,324.7 -9% -9%
Net fees (GBP million) 308.6 308.6 338.0 338.0 -9% -8%
Operating profit (GBP million) 31.3 31.8 60.0 57.7 -48% -48%
Operating profit conversion ratio 10.1% 10.3% 17.8% 17.1% -7.7% pts -7.6% pts
Profit before tax (GBP million) 30.1 30.6 59.1 56.8 -49% -49%
Basic earnings per share (pence) 13.9 14.2 33.2 31.8 -58% -58%
Proposed final dividend (pence) 5.0 5.0 - - n/a n/a
Net cash (GBP million) (4) 49.9 49.9 10.6 10.6 +371% +371%
1) Excluding the impact of GBP0.5 million in net exceptional income (2019: GBP2.3 million in net exceptional cost).
(2) Variance compares adjusted 2020 against adjusted 2019 to provide a like-for-like view.
(3) Variance compares adjusted 2020 against adjusted 2019 on a constant currency basis, whereby the prior year foreign exchange rates are applied to current and prior financial year results to remove the impact of exchange rate fluctuations.
(4) Net cash represents cash and cash equivalents less borrowings and bank overdrafts and excludes leases.
FULL-YEAR HIGHLIGHTS - Group net fees for the full year declined 8% YoY*, demonstrating resilience against COVID-19's impact and the
continued recovery of the underlying business in H2. - Full year adjusted profit before tax of GBP30.1 million (2019: GBP59.1 million). - Significant sequential improvement of underlying Group performance in the second half.
- Contractor order book stabilised
- Sales activity and contractor retention rates increased quarter-on-quarter from Q3
- Productivity per head up 4% in H2 YoY - Continued market share gains in the USA, Germany, the Netherlands and the UK despite disruption, in line with 2024
strategic ambitions. - Contract net fees demonstrating resilience, down 7%*. Contract represents 76% of Group net fees (2019: 74%) in line
with strategic focus. - Permanent net fees also showing resilience, down 13%*. - Customer net promoter score improved by eight points to 52, demonstrating the improving quality of our service. - 89% of Group net fees generated outside the UK (2019: 87%). - Very strong balance sheet, with net cash of GBP49.9 million at the year-end (2019: GBP10.6 million). - Resumption of dividend payments with a final dividend proposed of 5.0 pence (2019: nil pence). - Alex Smith, CFO, will be stepping down from his position during 2021 once a suitable successor has been identified.
* In constant currency
Mark Dorman, CEO, commented:
"In 2020 we faced a once in a century event that provided a series of unprecedented tests. SThree not only dealt with those challenges but is emerging as a stronger business; I am proud of the many achievements we are able to list today. Through our unrelenting focus on our strategy, and guided by our purpose, we have taken market share in several of our key regions and delivered robust financial results which underscore our differentiation from non-specialist staffing businesses. Our USA business, for example, has managed to grow net fees 2%* this year against an overall staffing market decline, which is a testament to the quality of our teams there and the strength of our targeted STEM strategy.
Our focus on improving the way we operate, no matter the environment, has delivered increased sales activity, contractor retention rates and the average productivity of our consultants steadily improving since Q3.
Alongside the positive progress in key performance indicators such as these, we have continued to make a real impact on the lives of the people we work with and the society in which we operate. In 2020, we have placed nearly 14,000 of the skilled people who are coming together to build the future, as well as providing comprehensive support to our consultants, clients and communities. Being part of a responsible and sustainable organisation has never been more important and we have shown this is at SThree's core.
Whilst uncertainty remains, we are confident we have the right strategy in place to continue to drive the Group forward towards our long-term ambitions and are highly focused on ensuring we execute on it. Over the coming year we will continue to invest in our people, data, technology, and our go-to market approach, leveraging the power of our platform to reduce the cost of customer and candidate acquisition. Our aim remains to continue taking market share, working towards our ultimate goal of becoming the number one STEM talent provider in the best STEM markets."
A video overview of the results from the CEO, Mark Dorman, and CFO, Alex Smith, is available to watch here: http:// bit.ly/STEM_FY20_overview
Management Succession
The Board also announces that following over twelve successful years with the Group, Alex Smith, CFO, will be stepping down as CFO and a Board Member. The search for his successor is underway and the market will be updated accordingly.
James Bilefield, Chairman, commented:
"On behalf of the Group, I would like to take this opportunity to thank Alex for his excellent contribution over the past twelve years. Alex has worked diligently and effectively with both the Board and our teams to help make SThree what it is today, astutely guiding the Group's entrepreneurial spirit.
It would be remiss not to highlight his work over the past year, through an incredibly difficult environment, to ensure that the Group has retained its financial strength. We are hugely grateful to him for building and maintaining such a strong platform from which we will continue to deliver, and allowing us to focus on executing against our ambitions as we move into our next stage of growth.
Mark Dorman, CEO, added:
"On joining the Group and wider industry, I could not have asked for a better right hand, providing me with sage insight and guidance. It has truly been a pleasure working together and I want to take this opportunity to thank Alex, both from me personally, but also the whole of SThree, and I know we all wish him all the best for the future."
Analyst conference call
SThree is hosting a webinar for analysts today at 09:30 GMT. If you would like to register for the webinar, please contact SThree@almapr.co.uk
SThree will issue its Q1 trading update on 15 March 2021.
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 is the only global pure play specialist staffing business focused on roles in STEM (Science, Technology, Engineering and Mathematics). It brings skilled people together to build the future through the provision of specialist Contract and Permanent services to a diverse client base of over 9,000 clients. From its well-established position as a major player in the Technology 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 Progressive, Computer Futures, Huxley Associates and Real Staffing Group. The Group has circa 2,600 employees in 15 countries.
SThree plc is quoted on the Official List of the UK Listing Authority under the ticker symbol STEM and also has a USA 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. Data from the announcement is sourced from unaudited internal management information. Accordingly, undue reliance should not be placed on forward looking statements.
CHair's statement
(MORE TO FOLLOW) Dow Jones Newswires
January 25, 2021 02:02 ET (07:02 GMT)
DJ SThree: Final Results -2-
Never has a year been more different than what we had expected. In November 2019 we set out our purpose, strategy and ambitions at our Capital Markets Day with excitement and confidence for the years ahead. Whilst our first year following this path has seen us, and the wider world, face a myriad of unexpected challenges, we have remained resolute in our focus and determination to deliver on those ambitions. I am pleased to say that we have made significant progress along that path. We have delivered financial performance above previous market expectations and are outperforming our peers on many measures, demonstrating the resilience of our model with its recurring revenue and attractive cash characteristics, alongside our strength of focus and clarity of strategy.
We have seen our purpose - bringing skilled people together to build the future - brought to life this year more than ever. Our teams worked closely with our clients and candidates to be their partner through the COVID-19 health crisis and gradual emergence of a 'new normal', filling key STEM roles at a time of extraordinary upheaval.
Internally, our leadership team brought our people together and showed decisiveness, strength and sensitivity. This year has been tough on all of us, and I would like to take this opportunity to thank the exceptional teams around the world at SThree not only for their hard work, but also for their fortitude and endurance in such challenging times.
The Board has worked hard during the year to act in the long-term interests of all stakeholders, balancing complex and sometimes conflicting interests and priorities. We implemented a number of cost management initiatives which were required during the year, but also were able to maintain necessary investment in the future of the Group, notably in technology and some key appointments to drive operational change, project delivery and agility.
Whilst the health crisis and its economic impacts will eventually pass, we believe that the recent acceleration in the two key long-term, secular trends at the heart of our strategy - STEM and flexible working - will continue to grow in importance around the world as we all look to build a better future. That will require ongoing investment in operational scale, agility and effectiveness, together with ever-closer client and candidate relationships.
The effective use of data will be critical to success in that environment. We have already established a comprehensive market intelligence programme to ensure that we understand what is most important to our clients and candidates, both now and in the future, and we plan to grow our expertise, staying ahead of the curve in the coming years.
Lastly, but importantly, during the year we have deepened our focus on the Group's impact on the wider world and the communities in which we operate. Whilst Environmental, Social and Corporate Governance ('ESG') has long been on the agenda at SThree, it is now increasingly woven into everything we do, with particular emphasis on building a green future, developing a fully inclusive workforce and ensuring that we operate our business to the highest ethical standards, overseen by FTSE 250-appropriate corporate governance.
Our opportunity is significant, our strategy is right and the improving sequential trends in our specialist STEM markets are favourable. We remain confident that the Group is primed to deliver for the long-term benefit of all of our stakeholders.
CHIEF EXECUTIVE OFFICER'S STATEMENT
Our purpose of 'bringing skilled people together to build the future' has never been more relevant and we have the right strategy, positioned at the centre of the secular trends of STEM and flexible working, to best capitalise on this growing opportunity in the future.
As an example, our DACH business explored new opportunities within Life Sciences in the period, working closely with BioNTech - our client in Germany - to place the experts leading the research efforts to find a vaccine for COVID-19. In the UK, we worked closely with Thermo Fisher Scientific - a global life sciences company specialising in pharma, IVD, and medical devices - in placing medical device professionals across validation, quality, and regulatory roles. In the USA, our specialist IT team has worked alongside a higher education institution - Teachers College of Columbia University - to implement the digital infrastructure that enables them to build virtual communities for the incoming college students. Further examples of our purposeful work in the year can be found in our 2020 Annual Report and Accounts.
At our Capital Markets Day in November 2019, we set out a clear strategy and in the first quarter were delivering in line with it. As the global health crisis accelerated, rapid adjustments to our business were made to ensure that we were able to best look after our teams, service our clients and navigate the new economic and working landscape. I am pleased to say that we never lost sight of our purpose or our strategy, and these principles continue to guide us.
This unrelenting focus on our strategy has delivered a financial performance ahead of where we reset our expectations when COVID-19 first hit. Group net fees in the year were down only 8%*, with Contract net fees showing particular resilience with a 7%* decline. We have continued to take market share in the USA, Germany, the Netherlands and the UK and made progress against several of our 2024 ambitions. In the second half of the year, as our strategic management of the crisis took effect, we saw significant sequential improvement of Group performance with sales activity, contractor retention rates and consultant productivity increasing quarter-on-quarter from Q3.
Despite all the challenges this year, it is evident from our performance that we have the right strategy, are in the right markets and our teams are executing well. While 2020 has not turned out as we had thought it would at our Capital Markets Day in November 2019, what is clear is that we are well positioned for the future and for capturing the growth opportunities ahead. The key strategic ambitions we outlined at the Capital Markets Day, if anything, have been reinforced by our experience and actions over the last year.
Our response to the health crisis
As we saw the impact of the virus starting to take shape across the globe, on 28 February we set up a dedicated COVID-19 health crisis team made up of key senior managers from across the business, tasked with monitoring operations and reacting as appropriate. The committee met daily to make sure all possible action to help mitigate any impact were considered and then taken quickly and effectively, ensuring that the Group kept its people safe, could operate regardless of the conditions and maintain its financial strength. So that we would be in a strong position to continue executing on our growth strategy, we created a framework for the organisation to work with. This involved breaking the crisis down into operational phases, each with its own set of priorities; these phases were Emergency Response, Ongoing Crisis Management and Recovery to the Next Normal.
As the virus moved from mainland China and become a global health crisis, we saw an immediate impact across all our markets. Our Emergency Response was triggered, focused on maintaining the safety of our people, candidates and clients whilst at the same time maintaining the full operational capability of the Group. We were able to quickly and efficiently adjust, as around 98% of our employees began working from home. Despite these changes, our teams went above and beyond to serve our customers and meet their objectives.
The wellbeing and engagement of our team has been an ongoing priority. With over 95% of our colleagues continuing to work remotely, we've made sure we are providing them with all the necessary tools to operate effectively. We have supplied support digitally ranging from advice on how to manage remote teams and guidance on remote working, through to full online learning and development programmes. Having the tools to operate effectively doesn't just mean physically, and in order to protect the wellbeing of our employees we launched our THRIVE wellbeing platform in May offering comprehensive support and advice on the areas of identified concern. Under this banner, we've also hosted a number of roundtable discussions on working from home where our people shared their tips on how to get by in lockdown. 'Build trust' and 'Care then act' are two of our three operating principals, and as an organisation, we've whole-heartedly embraced these as working hours have become more flexible to adapt to personal commitments.
We have also created dedicated resources on our digital platforms for our candidates, to ensure that they are fully supported, with information, articles and guidelines on remote working, as well as information on how to contact us and other tips for getting through the health crisis. Illustrating the success of these programmes, our net promoter score ('NPS') from our clients and candidates has improved by eight points to 52.
I am proud to say that our teams have helped to place many candidates whose STEM talent is being utilised to solve the health crisis. As an example, in DACH we were able to place multiple freelancers in key roles with leading pharmaceutical and biotechnological companies, supporting the development of potential COVID-19 vaccine candidates. In the USA we collaborated on a large-scale Clinical Research Associate ('CRA') project, quickly deploying over 50 CRAs nationally to help in the fight to treat COVID-19.
(MORE TO FOLLOW) Dow Jones Newswires
January 25, 2021 02:02 ET (07:02 GMT)
