Interim Management Statement

RNS Number : 2819D

SThree plc

12 September 2008

 



Interim Management Statement

SThree plc ('SThree' or the 'Group'), the international specialist staffing business, is today issuing an Interim Management Statement covering the period from 2 June 2008. 

The financial and operational data relates to the three-month period ended 31 August 2008, being the third quarter of the financial year ending 30 November 2008. 

During the period, both the contract and permanent sides of the business posted encouraging growth on the equivalent period in 2007. The Board is pleased with the Group's overall performance, which is in line with its expectations and internal key performance indicators (KPIs)*.

At the end of the third quarter SThree had 5,911 active contractors, an increase of 11.7% on the prior year (2007: 5,293). Average contractor gross profit per day rates also improved compared to the equivalent period last year. During the quarter, SThree made a total of 2,552 permanent placements, an increase of 11.8 % over the prior year (2007: 2,283). Average placement fees also improved on the equivalent period last year. 

The International business has performed very strongly in the quarter. At the end of the third quarter, the number of International contract runners was up by 33.2%, with strong growth in gross profit per day rates. During the quarter, International permanent placements accelerated with a 54.0% increase in the number of placements and with a significant improvement in average fees. This performance reflected a commensurate increase in international sales headcount.

At the end of the third quarter UK contract runners were up 3.4%, with gross profit per day rates strengthening compared to the equivalent period last year. During the quarter, UK permanent placements were down 9.6%. Average UK permanent placement fees were stable, despite the continuing impact of the weak UK banking and finance segment, which traditionally has significantly higher than average placement fees. As expected, UK permanent sales headcount reduced slightly versus last year whilst UK contract headcount was up slightly, leaving the overall UK sales headcount broadly level year on year.

Overall, the performance achieved in the third quarter positions the Group to deliver in line with the Board's previous expectations for the full year. As in previous years the Board expects the Group's performance in the second half will be weighted significantly towards the final quarter. 

The Group remains strongly cash generative with net cash of £8.1m at 31 August 2008. During the quarter, the Group bought back 5.0m shares for £8.9m, a weighted average cost of £1.78 per share. In the year to date, 13.4m shares have been bought back for £25.6m.

Russell Clements, Chief Executive, commented: 'Trading conditions in the UK have become more challenging given the current uncertain economic situation, but this has been more than offset by continued very strong performance from our international businesses. As a result, we believe that we remain on course to make good progress for the year as a whole. We take confidence from the fact that SThree has a seasoned management team and a twenty two year track record of profitability and cash generation throughout the economic cycle. ' 

All Data sourced from SThree MIS. 

* KPIs include Drop out Rates, Time to Hire and Interview to Placement ratios.

SThree will announce its pre close trading update on 5 December 2008.

SThree is hosting an analyst conference call today at 08.30am BST. The dial in number is [phone] and the password is SThree.

Enquiries:

SThree plc	020 7292 3838
Russell Clements, Chief Executive Officer
Alex Smith, Chief Financial Officer
Citigate Dewe Rogerson	020 7638 9571
Kevin Smith / Nicola Smith

Notes to editors

SThree, founded in 1986, is an international specialist staffing business, providing both permanent and contract staff to a diverse, client base of well over 6,000 clients. From its well-established position as a major player in the information and communications technology ('ICT') sector the Group has broadened the base of its operations by building fast-growing businesses serving the banking and finance, accountancy, human resources, engineering, energy and pharmaceuticals sectors.  

Following the establishment of its first business, Computer Futures, in 1986, the Group adopted a multi-brand strategy. SThree currently operates 12 separately managed brands, the four largest being Computer Futures, Huxley Associates, Progressive and Pathway, and has 33 offices in the UK and 19 overseas offices, 15 elsewhere in Europe, the Netherlands, Belgium, France, Germany and Ireland. In 2006, the Group opened its first North American office, in New York, and recently opened offices in Australia, Hong Kong and Dubai.

SThree has a selective approach to clients and focuses on high margin opportunities, predominantly within the small to medium-sized enterprises ('SMEs') market and, from its inception, the Group has avoided the high volume, low margin business model in favour of a focus on high quality business.

 

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