SThree plc

("SThree" or the "Group")

 

INTERIM RESULTS FOR THE HALF YEAR ENDED 31 MAY 2018

 

An Encouraging Start To The Year

 

 

FINANCIAL HIGHLIGHTS

 

 

 (1)  HY 2018 figures were adjusted for the impact of £2.4 million of exceptional strategic restructuring costs.

(2) All variances compare adjusted HY 2018 against reported HY 2017 to provide a like-for-like view. There were no adjustments to H1 2017.

 

 

 

OPERATIONAL HIGHLIGHTS 

 

*	Encouraging first half performance; Group GP up 11%* year on year ('YoY') to £148.4m (HY 2017: £134.4m), with accelerated momentum in Q2 (up 13%*)
*	Adjusted profit before tax up 6% YoY to £20.3 million (HY 2017: £19.2 million)
*	Reported profit before tax down 7% YoY to £17.8 million
*	Growth in GP driven by Continental Europe (up 18%*) with strong performances in DACH and the Netherlands (GP up by 18%* and up 25%* respectively; and by USA (up 9%*), whilst UK&I remained challenging (-2%*)
*	82% of GP generated outside UK&I (HY 2017: 80%)
*	Contract GP, which represented 72% of Group GP (HY 2017: 70%), ahead by 14%* YoY, with strong growth across Energy up 31%*, Engineering up 17%*, and Life Sciences up 11%* YoY
*	Permanent GP up 4%* YoY, with productivity improved by 3%* YoY
*	Group period-end sales headcount up 6% YoY. Average sales headcount up 10% YoY
*	Move of London-based support functions to Glasgow progressing to plan. £2.4 million of exceptional strategic restructuring costs recognised in HY 2018
*	Net debt** of £6.2 million (HY 2017: net cash £5.2 million)

 

* Variances at constant currency

** Net debt represents cash & cash equivalents less borrowings and bank overdrafts

 

 

Gary Elden, CEO, commented: "We have delivered an encouraging first half performance, driven by further strong growth in Contract, and our two biggest regions, Continental Europe and the USA.

"To build on this growth, we are continuing to invest in our highest performing teams, consistent with our vision to be the number one STEM talent provider in the best STEM markets. The Group is performing well and we are making good progress against our five-year growth plan. 

"Trading in the weeks since the period end has continued the positive trend, leaving the Group well-positioned as we enter our seasonally more significant second half."

 

 

 

SThree will host a live presentation and conference call for analysts at 0900 GMT today. The conference call participant telephone details are as follows:

 

Dial in:                   +44 (0) 20 3003 2666 or 0808 109 0700 (toll free)

Call passcode:       SThree

 

 

This event will also be simultaneously audio webcast, hosted on the SThree website at www.sthree.com. Note that this is a listen only facility and an archive of the presentation will be available via the same link later.

            

SThree will issue its Q3 trading update on 14 September 2018.

 

Enquiries:

 

SThree plc                             020 7268 6000
Gary Elden, Chief Executive Officer
Alex Smith, Chief Financial Officer
Kirsty Mulholland, Company Secretariat

 

Citigate Dewe Rogerson      020 7638 9571
Kevin Smith/Jos Bieneman

 

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.

 

 

 

 

 

 

 

 

 

INTERIM MANAGEMENT REPORT

 

Chief Executive Officer's Review

 

Overview

We are encouraged by our first half performance with GP up 11%*, and a step up in growth achieved in Q2 (up 13%* YoY vs growth of 8%* YoY in Q1). The growing breadth and scale of our international operations, which now account for 82% of gross profit, underline how far the Group has grown from its UK roots. Market conditions are strong across our international business, especially the USA and Continental Europe, and we are maximising our opportunities with selective headcount growth in these markets. We continue to actively manage our business in the UK where Brexit continues to cast an uncertain political shadow. 

Our strategic focus on our Contract business continues to deliver good growth across all sectors and most regions, as well as providing greater resilience in more uncertain economic conditions. Contract GP was up 14%* in H1 YoY and up 16% in Q2, with Continental Europe and the USA both delivering double digit growth. Our focus in H2 is to prioritise investment in Contract in our fastest growing markets.

Our Permanent business has continued to increase its productivity and we remain focused on achieving further gains in the remainder of the year. Permanent GP was up 4%* in H1 YoY and up 7%* in Q2, driven primarily by Continental Europe, but also by our small and fast-growing business in Japan.

Adjusted Operating Profit was up 6%* YoY and we are well-positioned for the second half as our investment in headcount in the second half of 2017 continues to mature and we benefit from a strong Contract runner book.

The strategic project to restructure and relocate our London-based support functions to Glasgow is progressing well, with in excess of 70% of roles now hired at the new site. We expect to substantially complete this project during 2018, creating a new Centre of Excellence for the Group, with a clear objective of reducing costs, while improving operational capability.

Our investment in headcount, increased investment in innovation and strategic relocation and restructure of our support functions are driving us forward on our journey to become the number one STEM talent provider in the best STEM markets. We are making good progress against the five-year growth strategy outlined at the Capital Markets Day in November 2017.

 

Group 

   * Variances at constant currency

 

Operating Review

Business Mix

Contract is well suited to our STEM market focus and geographical mix and it remained the key area of focus and growth throughout the period. Improving productivity per head was the prime focus in Permanent.

Our Contract business has continued to go from strength to strength. Contract GP was up 14%* YoY with average headcount up 16% YoY. Q2 was the 18th consecutive quarter of GP growth achieved by Contract since it was given greater strategic focus. We exited the period with runners of 10,292, up 11% YoY and 1% ahead of our 2017 seasonal year-end peak. As well as being an important driver of GP growth, our investment in Contract makes us more resilient in times of economic uncertainty and selective expansion of our Contract teams will be a key focus for the remainder of 2018.

Permanent GP grew 4%* YoY and we have been successful in implementing our strategy of growing Permanent productivity by focusing growth on our high yielding regions and reducing headcount where yields are weak. Yields have increased by 3%* YoY. Permanent GP now represents 28% of Group GP.

Permanent recruitment is more sensitive to overall market sentiment and has seen an improved performance during the first half of the year. Average Permanent fees were up 5%* YoY as we focus on niche recruitment and average sales headcount in our Permanent business was up 1% YoY. We expect to invest in Permanent in the remainder of 2018, predominantly in DACH ("Germany, Austria and Switzerland") and the USA, where there is clear evidence of improving candidate and client confidence.

 

 

Regional Growth

We are encouraged by the improvement across the business in the period. We have seen strong growth in Contract across most regions and Permanent continues to benefit from improved productivity. Although the UK&I remains an important part of our business, the relative maturity of the recruitment market has led us to focus on growth opportunities in other regions and to be cautious with our investment in the UK&I business. We now have 82% of our Group GP generated from outside the UK. We have continued to expand our global footprint with the opening of two new offices in Eindhoven (Netherlands) and Washington (USA) in the period.

 

 

Continental Europe (56% of GP)

 

    * Variances at constant currency

 

Continental Europe is our largest region comprising businesses in Germany, Switzerland, Austria, Netherlands, Belgium, France, Luxembourg & Spain. These regional markets vary significantly in their level of maturity and competition, with Germany remaining the most significant structural growth opportunity.

The region delivered strong growth in the period, up 18%* YoY, with growth across all main country markets. Netherlands performed particularly well, with GP ahead by 25%* YoY and average sales headcount up 17%. DACH, our largest territory in the region was up 18%* YoY and we continued to invest with average headcount up 23%.

We saw double digit growth in contract runners, up 23% YoY, creating strong growth opportunities for H2, with Gross Profit per Day Rate ('GPDR') down by 1%*. Contract GP has posted double digit growth in this region over the last ten consecutive quarters. Contract growth in all sectors remain robust with Energy also showing improvement.

Permanent was up 9% YoY, driven by DACH and Netherlands. Permanent average fees were up 4%* YoY, with average salaries up 3%*, demonstrating strength and confidence in the market.

 

 

 

 

 

 

 

 

USA (20% of GP)

 

    * Variances at constant currency

 

The USA is the world's largest specialist STEM staffing market and is our second largest region representing 20% of our Group GP. After a slow start to the year, the region showed strong recovery in Q2 against a backdrop of strong comparatives in the prior year.

We saw growth across all sectors except Banking & Finance. Life Sciences, our largest sector in the region, grew 6%* YoY against strong comparatives of 18%* growth YoY in H1 2017. Energy continued to improve in the region with our investment in Power Generation paying off and an increase in the oil price towards the end of the period supporting an improved performance in our Upstream Oil & Gas teams.

Contract GP in the USA was up 16%* YoY with growth across all sectors except Banking & Finance. Energy showed strong growth with GP up 54%* YoY against strong prior year comparatives of 36%* growth YoY. We have invested in our Contract business with average sales headcount growing 17% YoY. Runners increased 1% YoY with GPDR up 14%* YoY, as we focus on higher margin and higher salary roles.

Although Permanent GP was down 5%* in H1 YoY, performance improved in Q2 with GP up 6%* YoY. We are seeing exciting growth in Permanent Engineering with GP up 77%* YoY. Permanent average headcount is up 9% YoY, with average fees up 9%* and average salaries up 8%*.

 

 

 

UK&I (18% of GP)

 

    * Variances at constant currency

 

The UK&I is our longest established region and the business is increasingly Contract focused as we invest in opportunities in the STEM market. GP in the region is down 2%* YoY, despite a 5% YoY reduction in headcount.

Our more resilient Contract business saw an overall improvement in performance with GP up 1%* YoY. We saw good growth in the Life Sciences, Engineering and Energy sectors. This was offset by a decline in ICT, particularly driven by changes in the Public Sector that was impacted by IR35 and rate caps. Average sales headcount in Contract also remained flat YoY. Runners for the region are down 2% YoY, but we saw robust growth in our GPDR, up 4%*.

Our Permanent business is more sensitive to market conditions and declined 15%* YoY. In response we restructured our UK&I Permanent business in the period to service our clients from hubs in Bristol, London, Birmingham and Dublin and average sales headcount was down 16%* YoY. The decline in this division is across all sectors, except Engineering, which was up 30%* YoY. Average salaries for placements appear to be improving, up 2% YoY.

 

 

 

Asia Pacific & Middle East (6% of GP)

 

    * Variances at constant currency

 

Our Asia Pacific & Middle East business principally includes Australia, Singapore, Japan and Dubai. Growth in the region was across all sectors with Banking & Finance, the largest sector in the region, up 10%* YoY. Growth in Permanent in the region was primarily driven by Japan, which was up 70% YoY, with average Permanent fees up 11%* and average salaries up 5%* YoY.

Contract performance was soft in the period with GP down 13%* YoY, as our Australian business underperformed in a competitive market place. However, Dubai Contract was up 15%* YoY, with growth in Energy being driven by a rising oil price. Contract runners have grown 2% YoY in the region, with GPDR down 2%* YoY. Average headcount was down 1% YoY with Contract up 14% YoY and Permanent down 9% YoY. The decrease in average headcount was largely due to a restructuring of our Hong Kong business at the end of FY17. We invested in Permanent headcount in Japan where average sales headcount was up 54%. Our Dubai contract and Japan Permanent businesses are expected to grow, while the rest of the region is being managed to maximise profitability.

 

Sector Highlights

The Group saw growth across all sectors in the period. ICT, our largest sector, grew 9%* YoY, with double digit growth in our second largest sector, Life Sciences, which was up 11%* YoY. Growth in Energy picked up in H1, with GP up 31%* YoY, driven by the USA up 47%* YoY. Strong growth was also seen from Engineering, up 17%* YoY.

 

ICT (45% of GP)

    * Variances at constant currency

 

ICT is our largest and most established sector representing, 45% of the Group GP and 46% of the Group average sales headcount, with the majority of its business in the more mature UK&I and European markets. GP for the period was up 9%* YoY and the sector has delivered 17 consecutive quarters of growth. However, the rate of growth was impacted by the relatively soft performance of ICT in the UK&I, which includes our Public Sector businesses where changes to the IR35 tax legislation reduced GP. Average headcount in ICT was up 10% YoY, with Contract growing 14% YoY and Permanent up 3% YoY. The mix in headcount is weighted towards Contract which accounts for 70% of total ICT headcount.

 

Life Sciences (21% of GP)

 

 

  * Variances at constant currency

Life Sciences represented 21% of Group GP and is our second largest sector after ICT. Total GP grew by 11%* YoY with both divisions showing strong growth. Contract performance was particularly pleasing, up 14%* YoY against strong comparatives of 15%* YoY in 2017. Contract runners increased 19% YoY and average sales headcount was up 16% YoY, with growth across all regions and both divisions. The emergence of new technology and data analytics in this sector is enhancing the ability of our highly skilled people to find the best candidates to support the business and capitalise on the market opportunity.

 

 

Banking & Finance (13% of GP)

 

        * Variances at constant currency

 

Banking & Finance represented 13% of Group GP, making it the third largest sector for the Group. Overall GP for the sector grew 1%* YoY which was driven by Contract, up 7%*. We saw mixed results across our regions with Continental Europe showing strong growth. The UK&I business performance continues to be hampered by Brexit uncertainty leading to cautious hiring decisions. Average headcount for the sector was down 7% YoY.

 

 

Engineering (10% of GP)

 

  * Variances at constant currency

 

Engineering represented 10% of Group GP and has grown very strongly, with GP up by 17%* YoY. The sector is heavily weighted towards Contract which accounts for 70% of GP and showed growth of 12%* YoY with runners up 15% YoY. The majority of our Engineering business is in Continental Europe and the UK&I, which grew across both Contract and Permanent YoY. USA Permanent is a relatively new addition to our Engineering portfolio and was successful in the period, growing 77%* YoY. Average sales headcount is up 9% YoY with growth in Contract, up 11% YoY and Permanent, up 5% YoY.

 

 

Energy (9% of GP)

 

    * Variances at constant currency

 

Energy represented 9% of our overall Group GP and the sector has shown signs of improvement. GP in the sector was up 31%* YoY. Contract which represents 94% of our Energy GP grew 35%* YoY. We strategically supported our Contract business with headcount up 31% YoY. We continue to grow our runners in the sector, up 11% YoY and have exceeded our 2017 year end peak. GPDR for the region also showed strong growth, up 13%* YoY, due to the success we have seen in higher fee Power business and improving oil prices. Continental Europe and USA account for 81% of our total GP in the sector and showed good growth in the period, up 24%* YoY and 47* YoY, respectively. Growth in these regions is predominantly driven by more stable Renewable and Power business. Average sales headcount was up 27% YoY and we will continue to review the Energy business and selectively invest where we can maximise market opportunities given the increasing oil price.

 

 

Outlook

We have delivered an encouraging first half performance, driven by further strong growth in Contract, and our two biggest regions, Continental Europe and the USA.

We are continuing to invest in our highest performing teams, to build on this growth and consistent with our vision to be the number one STEM talent provider in the best STEM markets. The Group is performing well and we are making good progress against our five-year growth plan. 

Trading in the weeks since the period end has continued the positive trend, leaving the Group well-positioned as we enter our seasonally more significant second half.

 

* Variances at constant currency

 

 

 

CHIEF FINANCIAL OFFICER'S REVIEW  

 

Operating profit

Revenue for the year was up 14% on a constant currency basis to £585.9 million (HY 2017: reported £521.0 million) and up 12% on a reported basis. On a constant currency basis, Gross Profit ('GP') increased by 11%, and on a reported basis by 10% to £148.4 million (HY 2017: £134.4 million). Growth in revenue exceeded the growth in GP as the business continued to shift towards Contract. Contract represented 72% of the Group GP in the period (HY 2017: 70%). This change in mix resulted in a decrease in the overall GP margin to 25.3% (HY 2017: 25.8%), as Permanent revenue has no cost of sale, whereas the cost of paying the contractor is deducted to derive Contract GP. The Contract margin remained stable at 19.6% (HY 2017: 19.6%).

The reported profit before tax was £17.8 million, down 7%. The adjusted profit before tax ('PBT') was £20.3 million up 6% YoY (HY 2017: adjusted and reported £19.2 million). The 'adjusted' PBT excludes restructuring costs of £2.4 million that were incurred in the current period in respect of the relocation of our support function to Glasgow (HY 2017: £nil). The operating profit conversion ratio was down 0.7 percentage points on an adjusted basis and down 2.3 percentage points on a reported basis to 12.1% (HY 2017: adjusted and reported 14.4%). The fall in the conversion ratio was largely driven by a significant investment in headcount at the end of FY17 (average headcount up 10% YoY) and an increased investment in internal innovation to £1.3 million (HY 2017: £0.6 million) in the period. New consultants hired take time to become productive and benefit profitability.

 

Restructuring costs ('Adjusting items')

In November 2017, we announced that we were commencing a strategic restructuring and relocation of support functions away from our London headquarters to a new facility located in Glasgow. The transition to a Glasgow Centre of Excellence is progressing to plan and we anticipate that this restructuring will realise cost savings of approximately £4 million to £5 million per annum.

The restructuring is resulting in certain material one-off costs that are anticipated to be in the region of £15 million, of which an estimated £14 million is operating expenses and approximately £1 million relates to property fit out costs (to be capitalised). The costs are mainly related to people, property and professional advisor fees. The project will be partially funded by a grant receivable from Scottish Enterprise of c£2 million which is receivable and recognisable over several years, subject to the terms of the grant being met within a fixed timeframe.

Exceptional costs for the restructuring of £2.4 million have been recognised in the Income Statement bringing the total costs recognised to date to £9.1 million. The exceptional charge in the period included people costs of £1.5m and other costs (primarily professional fees) of £0.9 million. The additional exceptional cost to complete the set-up of the centre of excellence in Glasgow in 2018 is expected to be between £5 million and £6 million.

The strategic nature and material cost of the restructuring of support functions announced in 2017 continues to be of sufficient magnitude to warrant separate disclosure as an exceptional item on the face of the Consolidated Income Statement, in line with our accounting policies.

A reconciliation of 'Adjusting items' is provided below:

 

 

Investments

During the period, we continued to invest in a number of our in-house innovation incubators with £1.3 million spent on our 'build' programme. By the end of the current financial year, we plan to invest an additional £2 million, bringing our investment in the year to c.£3 million (2017: £2 million). No costs are capitalised on development costs in our new wholly-owned innovation businesses until there are clear indications that the businesses will be profit generating.

 

Taxation

The tax charge on pre-exceptional statutory profit before tax for the period was £5.3 million (HY 2017: £5.0 million), representing an effective tax rate ('ETR') of 26% (HY 2017: 26%). The ETR on post-exceptional statutory profit before tax was 27% (HY 2017: 26%).

The ETR primarily reflects our geographical mix of profits and a cautious approach to recognising deferred tax assets on tax losses. The ETR was also influenced by US Tax Reform legislation passed in December 2017 which saw a reduction in the federal corporate tax rate from 35% to 21%. The full benefit of this will be largely offset in the first year by a reduction in US deferred tax assets.

 

Earnings per share ('EPS')

On an adjusted basis, EPS was up by 0.6 pence at 11.6 pence (HY 2017: adjusted and reported 11.0 pence), due to an increase in the adjusted profit before tax. On a reported basis, EPS declined to 10.1 pence, down 0.9 pence, attributable mainly to an increase in restructuring costs as explained above. The weighted average number of shares used for basic EPS remained broadly stable at 128.7 million (HY 2017: 128.7 million). Reported diluted EPS was 9.6 pence (HY 2017: 10.6 pence), down 1.0 pence. Share dilution mainly results from various share options in place and expected future settlement of certain tracker shares. The dilutive effect on EPS from tracker shares will vary in future periods depending on the profitability of the underlying tracker businesses, the volume of new tracker arrangements created and the settlement of vested arrangements.

 

Dividends

The Board proposes to pay an interim dividend of 4.7 pence (HY 2017: 4.7 pence), amounting to approximately £6.0 million in total. This will be paid on 7 December 2018 to shareholders on record at 2 November 2018. The Board will review the appropriate level of the final dividend in due course, taking into account, inter alia, achieved and expected trading of the Group, together with its balance sheet position. As previously stated, the Board is targeting a dividend cover of between 2.0x and 2.5x, based on underlying EPS, over the short to medium term.

 

Cash Flow

On an adjusted basis, we generated lower cash from operations of £7.5 million (HY 2017: £11.9 million on a reported basis) due to continued growth of the contract runner book increasing our working capital and an increase in Days Sales Outstanding (from 39 at HY 2017 to 41 at HY 2018). This resulted in a lower cash conversion ratio of 22% on an adjusted basis or 13% on a reported basis (HY 2017: 48%). The cash outflow from exceptional restructuring items was £2.1 million (HY 2017: £0.1 million).

Capital expenditure increased to £3.1 million (HY 2017: £2.6 million) including infrastructure investment in offices in Switzerland, the Netherlands, Germany and UK, and investment in the Contractor Timesheet Portal ('Workflow') of £0.5 million. We expect capital expenditure will decrease in the second half of the current financial year.

Income tax paid increased to £7.4 million (HY 2017: £3.4 million) and dividends remained unchanged at £6.0m (HY 2017: £6.0 million). During the period, the Group also paid £1.0 million (HY 2017: £3.4 million) for the purchase of its own shares to satisfy employee share schemes in future periods.

Foreign exchange had an immaterial positive impact of £0.2 million (HY 2017: negative impact of £0.3 million).

We started the period with net cash of £5.6 million and closed the period with net debt of £6.2 million (HY 2017: net cash £5.2 million). The decrease since the year end primarily reflected increased cash absorbed in working capital as the Contract business continued to grow and also the cash cost of the restructuring of the Support functions in the UK.

 

Treasury management

We finance the Group's operations through equity and bank borrowings. The Group's cash management policy is to minimise interest payments by closely managing Group cash balances and external borrowings. We intend to continue this strategy while maintaining a strong balance sheet position.

We maintain a committed Revolving Credit Facility ('RCF') of £50 million, along with an uncommitted £20 million accordion facility, with Citibank and HSBC, giving the Group an option to increase its total borrowings to £70 million. This facility was successfully renegotiated in the period and extended to May 2023, on similar terms and conditions to the previous facility. At the half year, £22.5 million (HY 2017: £2.5m) was drawn down on these facilities. The RCF is subject to financial covenants and the funds borrowed under this facility bear interest at a minimum annual rate of 1.3% above 3 month Sterling LIBOR, giving an average interest rate of 1.8% during the period (HY 2017: 1.6%). The finance costs for the half-year amounted to £0.3 million (HY 2017: £0.2 million).

The Group also has an uncommitted £5 million overdraft facility with NatWest and a £5 million overdraft facility with HSBC.

 

Foreign exchange

Foreign exchange volatility continues to be a significant factor in the reporting of the overall performance of the business with the main functional currencies of the Group entities being Sterling, the Euro and the US Dollar.

For HY 2018, currency movements versus Sterling had only a moderate impact on the reported performance of the Group with the highest impact coming from the Euro and US Dollar. Over the course of the period, the GBP/USD exchange rate fluctuated from lows of 1.35 to highs of around 1.42, while the GBP/EUR exchange rate experienced less volatile movements from lows of 1.13 to highs of 1.14. As such, the exchange rate movements decreased our reported HY 2018 GP by approximately £0.7 million and operating profit by circa £0.1 million.

Exchange rate movements remain a material sensitivity. By way of illustration, each one per cent movement in annual exchange rates of the Euro and the US Dollar against Sterling impacted our HY 2018 GP by £0.8 million and £0.3 million, respectively, and operating profit by £0.2 million and £0.1m, respectively.

The Board considers it appropriate in certain cases to use derivative financial instruments as part of its day-to-day cash management to provide the Group with protection against adverse movements in the Euro and the US dollar during the settlement period. The Group does not use derivatives to hedge translational foreign exchange exposure in its balance sheet and income statement.

 

Principal Risks and Uncertainties

Principal risks and uncertainties affecting the business activities of the Group are detailed within the Strategic Report section of the Group's 2017 Annual Report, a copy of which is available on the Group's website www.sthree.com.

In terms of macroeconomic environment risks, our strategy is to continue to grow the size of our international business and newer sectors, in both financial terms and geographical coverage. This will help reduce our exposure or reliance on any one specific economy, although a downturn in a particular market could adversely affect the Group's key risk factors.

In the view of the Board, there is no material change expected to the Group's key risk factors in the foreseeable future.

 

* Variances at constant currency

 

 

DIRECTORS' RESPONSIBILITY STATEMENT

 

The Directors confirm that to the best of their knowledge:

 

(a)	the condensed consolidated Interim Financial Information (unaudited) has been prepared in accordance with IAS 34, "Interim Financial Reporting" as adopted by the European Union; and
(b)	the interim management report includes a fair review of the information required by the Disclosure and Transparency Rules ('DTR') paragraph 4.2.7R (an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed financial information, and description of principal risks and uncertainties for the remaining six months of the financial year); and
(c)	the interim management report includes a fair review of the information required by DTR paragraph 4.2.8R (disclosure of material related parties' transactions and changes therein during the first six months of the financial year).

 

Approved by the Board on 20 July 2018 and signed on its behalf by:

 

Gary Elden	Alex Smith
Chief Executive Officer	Chief Financial Officer

www.sthree.com/investors

 

Interim Financial Information

 

 

 

 

The accompanying notes form an integral part of this Interim Financial Information.

Condensed consolidated statement of comprehensive income - unaudited
For the half year ended 31 May 2018
				31 May	31 May
				2018	2017
				£'000	£'000
Profit for the period				12,984	14,175
Other comprehensive income:
Items that may be subsequently reclassified to profit or loss:
Exchange differences on retranslation of foreign operations				680	337
Other comprehensive income for the period (net of tax)				680	337
Total comprehensive income for the period attributable to owners of the Company				13,664	14,152

 

The accompanying notes form an integral part of this Interim Financial Information.

 

				Unaudited	Audited
		Note		31 May	30 November
				2018	2017
				£'000	£'000
ASSETS
Non-current assets
Property, plant and equipment				7,076	6,746
Intangible assets				10,566	11,386
Investment in associate		10		-	655
Other investments		10		1,940	1,110
Deferred tax assets				3,602	4,199
				23,184	24,096
Current assets
Trade and other receivables				234,876	226,558
Current tax assets				1,961	1,534
Cash and cash equivalents		7		31,848	21,338
				268,685	249,430
Total assets				291,869	273,526
EQUITY AND LIABILITIES
Equity attributable to owners of the Company
Share capital		8		1,319	1,317
Share premium				29,155	28,806
Other reserves				(8,744)	(8,556)
Retained earnings				55,470	59,138
Total equity				77,200	80,705
Non-current liabilities
Provisions for liabilities and charges				1,464	2,172
Current liabilities
Borrowings		9		22,453	12,000
Bank overdraft				15,621	3,717
Provisions for liabilities and charges				12,141	12,352
Trade and other payables				162,990	159,556
Current tax liabilities				-	3,024
				213,205	190,649
Total liabilities				214,669	192,821
Total equity and liabilities				291,869	273,526
The accompanying notes form an integral part of this Interim Financial Information.