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SThree: FINAL RESULTS FOR THE YEAR ENDED 30 NOVEMBER 2022
SThree (STEM) SThree plc
FINAL RESULTS FOR THE YEAR ENDED 30 NOvember 2022
Record profit performance up 24% driven by continued demand for flexible STEM talent and well-established strategy
SThree plc (‘SThree’ or the ‘Group’), the only global specialist talent partner focused on roles in Science, Technology, Engineering and Mathematics (STEM), today announces its financial results for the year ended 30 November 2022. Financial Highlights
(1) Excludes the impact of £0.2 million in net exceptional income recognised in 2021. (2) Variance compares reported 2022 against adjusted 2021 to provide a like-for-like view. There were no adjusting items in 2022. (3) Variance compares reported 2022 against adjusted 2021 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 bank borrowings and bank overdrafts and excluding leases. Full Year Highlights
Timo Lehne, Chief Executive, commented: “The exceptional, record-breaking, full year performance reported today demonstrates that our well-established strategy, focused on STEM and flexible talent, has continued to deliver and puts us in a unique position to win now and in the future. Our relentless focus on the implementation of our strategy has not wavered. We have a clear strategic vision and an execution plan centred on an analytical and fact-based approach which is widely bought-in to across the Group with our technology improvement programme at the heart of this to drive a future step change in the business. We are focused and committed on building a business of scale with sustainable margins and the targeted investment in our people, talent acquisition and digital infrastructure is moving forward as planned. I would like to thank everyone within our Group for their dedication and hard work throughout the year.” As we enter the new financial year, trading continues to track in line with expectations, supported by a healthy contract orderbook. The macro landscape remains consistent with the softer conditions seen toward the end of the year. However, our global reach combined with a specialist niche focus in structural STEM disciplines is underpinned by a proven resilient business model and a robust balance sheet. This provides us with a strong position from which to pursue our unique opportunity over the medium to long term."
Analyst conference call SThree is hosting a conference call for analysts and investors today at 08:30 GMT to present the Group’s results for the financial year ended 30 November 2022. If you would like to register for the conference call, please contact SThree@almapr.co.uk.
Second Investor Briefing SThree is hosting its second in a series of investor briefings at 13:00 GMT today, which will be focused on the Group’s technology improvement programme. The session will last around 60 minutes and is open to institutional investors and analysts. To register for the webinar, please contact SThree@almapr.co.uk. A recording of the event and presentation materials will be available on the Group’s website shortly after the event at www.sthree.com.
SThree will issue its Q1 trading update on 21 March 2023.
(5) All YoY growth rates in this announcement are expressed at constant currency. (6) The contractor order book represents value of net fees until contractual end dates, assuming all contractual hours are worked.
The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (Regulation (EU) No.596/2014) as it forms part of UK Domestic Law by virtue of the European Union (Withdrawal) Act 2018.
The person responsible for this announcement is Kate Danson, Company Secretary.
Enquiries: SThree plc Timo Lehne, CEO via Alma Andrew Beach, CFO
Alma PR +44 20 3405 0205 Hilary Buchanan Sthree@almapr.co.uk 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 STEM, providing permanent and flexible contract talent to a diverse base of over 8,200 clients across 14 countries. Our Group’s c.3,100 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. CHair’s statement
This has been a challenging year for many. Following the gradual normalisation post the Covid pandemic, a challenging macro-economic and geopolitical backdrop affected consumers as well as businesses around the world. Although unemployment rates in our key markets have remained low, a global energy crisis has resulted in the cost of living rising, with surging inflation leading to a decline in real-term incomes for many across major markets. However, despite these macro challenges, I am proud that our Group has remained resolute in our focus to deliver for our clients and candidates as we continue to make progress towards our 2024 ambitions and beyond. We have delivered an exceptional financial performance, materially above initial market expectations, as we realise the benefits of our well-established strategy, focused on STEM and flexible talent. In April 2022, after a thorough and extensive search process, reviewing both internal and external candidates, the Board was delighted to appoint Timo Lehne as permanent CEO. Since his appointment Timo has shown strategic thinking, drive and passion, drawing on his extensive experience and building a strong team around him. Across our Group there is a renewed sense of energy, unity and excitement which I felt acutely as I had the opportunity to meet again in person with a number of our regional teams during the year across Europe, the US and APAC. I would like to take this opportunity to thank SThree’s exceptional teams around the world for their hard work and dedication which has supported the delivery of our record financial results. Following the strong trading performance in the year, coupled with a healthy balance sheet position, the Board is proposing a final dividend at 11.0 pence per share, which taken together with the interim dividend of 5.0 pence per share, gives the total dividend for the year of 16.0 pence per share, an increase of 45% on the prior year. This is in line with the Board’s aim to offer shareholders long-term ordinary dividend growth within a targeted cover range of 2.5x to 3.0x. We were pleased to appoint Elaine O’Donnell as Audit & Risk Committee Chair and Non-Executive Director in October. Elaine brings to SThree both broad and deep business experience and financial capability, plus highly developed commercial and people judgement. Her extensive experience of working with high-growth, FTSE-listed businesses will serve to strengthen our Board as the Company continues to execute our growth strategy. In addition, we were delighted to welcome Imogen Joss to the Board in November. Imogen has extensive experience of growing global services businesses and driving technology-led change, as well as a strong focus on people, sales and culture. I am also pleased that Imogen’s appointment will ensure that SThree’s Board will have in excess of 40% female representation, in accordance with the FCA’s Board diversity targets. I would also like to extend my thanks to Anne Fahy, who stepped down from the Board in April, for her valued contribution to the Company over many years. The Board has once again worked hard during the year to act in the long-term interests of all stakeholders, balancing complex interests and priorities. The SThree Board aspires to adopt FTSE 250-level governance best practice wherever possible and was an early adopter of the UK Corporate Governance Code. Our purpose, values and culture demonstrate a commitment to taking long-term decisions and to treating all clients, candidates, employees, suppliers and communities with respect as key stakeholders and partners in our business. I would like to thank my Board colleagues for their hard work and engagement during the year. Lastly, but importantly, during the year we have increased our focus on the Group’s impact on the wider world and the communities in which we operate. We continue to invest in our business and grow our talent with environmental, social and governance (ESG) considerations embedded in our strategy, values and culture. We are committed to building a sustainable future, developing a more inclusive workforce and ensuring that we operate our business to the highest ethical standards. Whilst we are mindful of the wider macro-economic uncertainties, the demand for STEM talent and flexible STEM talent in particular, is structural. Our position as the number one destination for talent in the best STEM markets, and our strong contractor order book underpins our continued confidence for the future. Our clients know that they can come to us for the provision of highly skilled experts, drawing on our global network and expertise. Similarly, candidates know that, by coming to SThree, their skills will be fully appreciated and they will have access to a huge pool of employment opportunities with dynamic organisations across the world, accelerating their professional growth. We remain inspired and focused on our mission – bringing skilled people together to build the future.
Chief executive officer’s statement
Exceptional year of growth This has been another record year of double-digit growth and strong profitability, materially ahead of initial expectations, together with clear operational achievements. Our focus as a specialist staffing partner in STEM and flexible talent means we are uniquely positioned to service the structural demand of a changing world, work which we significantly progressed during the year. The effort of our dedicated team meant we placed over 20,000 STEM specialists into highly skilled positions in 2022, helping to deliver vital talent that will tackle many of the complex issues facing our world. We are proud of the work we do in delivering our purpose of connecting skilled people with opportunities to build the future. With a heritage as specialist STEM staffing pioneers for almost 40 years, I believe the business has a huge and exciting opportunity ahead as we execute our vision to be the number one STEM talent provider in the best STEM markets. The Group’s strong performance in the year was against a market backdrop characterised by a return to a more normalised trading environment, followed by an increasingly uncertain and weakening macro-economic environment towards the end of the period. Through this, and against very strong post-Covid comparators, the Group delivered net fee growth of 19% in constant currency (21% on a reported basis) to £430.6 million and profit before tax growth of 28% to £77.0 million. Overall, the performance in the year reinforces our confidence in our strategic vision for the long term and demonstrates that our mid-term ambitions are within reach. Strong foundations with a unique and resilient business model Our overarching mission is consistent: placing STEM specialists in markets with high demand and limited supply. Supply constraints of STEM talent continues to intensify, offering huge opportunity in a global market estimated to be worth over £100 billion in revenue and of which we currently have, on average, a 2% share across our top five markets which account for 75% of the addressable share of the global market. We capitalise on the STEM opportunity with a conscious focus on Contract placements, which grew strongly at 23% and now represents 78% of Group net fee income, up from 75% a year ago. This focus enables us to service the changing world of work with a clear and growing preference toward flexible talent, a structure highly suited to STEM roles and a key motivator for candidates. Motivations for work are changing, with candidates aligning their careers to life priorities, of which flexible work is a top consideration. Our own recent survey demonstrated that flexible working options are now expected to be a standard given of employment. Within this context, our core and differentiated value proposition is a deep understanding of our clients’ requirements together with an unparalleled candidate network, meaning we often know of candidates before formal searches are needed and this enables us to be proactive in our approach to clients. Operating across 46 locations in 14 countries from the USA, across Europe to Japan, our combination of global reach and expert local recruitment knowledge across specialist STEM skills means we can deliver quality at speed. We are trusted talent partners, helping more clients to succeed and more candidates to accelerate their careers. In addition, demand for the Employed Contractor Model (ECM) continues to be a strong driver of growth. ECM is a model whereby contractors are directly employed by SThree for the duration of the contract and is an area in which SThree has built a leading position. ECM now represents 45% of all Contract work undertaken by the Group, compared to 43% in 2021. Permanent placements also play an important role in our overall offering, providing clients with a full-service solution depending on their requirements. Permanent grew 6%, and we continue to focus our efforts on Permanent in markets where we can achieve the best returns. Over time the Group has shown that the specialist focus on STEM and flexible talent has proven more resilient and adaptable relative to the generalist staffing market. The strength of our contractor order book, which ended FY22 up 19% YoY, provides a good degree of comfort against a more challenging and volatile backdrop. The strength of our business platform, combining global scale with the flexibility of an agile business able to deploy resources as appropriate, has provided a robust foundation from which we advanced our disciplined and focused strategy during the year. A responsible business for now and the future guided by purpose We believe in empowering a sustainable future through STEM skills, whether that is placing engineers to build wind turbines, medical researchers to create new vaccines or cyber specialists to provide financial security. This purpose is grounded in our ESG commitments, which are focused around promoting green jobs, encouraging diversity in STEM and contributing to a renewable future. We set ourselves targets related to ESG which are aligned to the UN Sustainable Development Goals, and we are pleased to have progressed against these during the year, including:
Building a business for sustainable scale In taking up the CEO role a year ago, I spent my first months, with the senior leadership team across our regions, reviewing, analysing and assessing the Group’s operations and strategy. Working together we agreed our strategic vision and an execution plan centred on an analytical and fact-based approach. We have articulated and collaboratively achieved buy-in to this clear vision across the Group, and in doing so, evolved our 2024 ambitions to be more relevant to our aspirations under a new leadership team. The direction of travel remains the same and we are unanimously committed to these ambitions. We are relentlessly focused on building a business of scale with sustainable margins, driven by our energised team. As we step into execution mode, we look to advance our vision across four main strategic pillars: Our Places – to be a leader in the markets we choose to serve The Group’s performance in the year was driven by broad-based, doub | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||