Interim Management Statement

RNS Number : 9262N

SThree plc

09 September 2011

 



Interim Management Statement

SThree plc ("SThree" or the "Group"), the international specialist staffing business, today issues an Interim Management Statement for the period from 30 May 2011 to date.  The financial data relates to the three month period ending 28 August 2011, being the third quarter of the financial year ending 27 November 2011.

Highlights: 

·    Permanent gross profit up 23%* year on year

·    Contract gross profit up 12%* year on year

·    Group gross profit up 18%* year on year

·    Improvement in both permanent and contract fees

·    Sales headcount growth of 20% year on year and 11% vs half year 2011

·    New offices opened in Zurich, Luxembourg and Mumbai

·    Strong financial position with net cash of circa £40m at period end

Group gross profit achieved in the period increased by 18%* year on year to £50.2m (2010: £43.0m) and sequentially by 4%* vs Q2 2011. UK gross profit increased by 5% year on year and by 8% on Q2 2011.  Non-UK gross profit increased by 26%* year on year and by 1%* on Q2 2011. Non-UK now represents 64% of gross profit (2010: 60%), non-ICT represents 39% of gross profit (2010: 39%).

At 28 August 2011 SThree had 4,474 contract runners, an increase of 9% year on year, and sequentially up 2% on the half year position (29 May 2011: 4,381), the highest level since Q3 2009. During the period SThree made a total of 1,895** permanent placements, an increase of 12% versus the prior year (2010: 1,690**) and up 3%** on Q2 2011.  In the period, permanent placements represented 52% of Group Gross Profit (2010: 49%).

At 28 August 2011 UK contract runners at 2,271 were up 2% year on year and down 3% versus the half year 2011 position (29 May 2011: 2,340). During the period, UK permanent placements were level** year on year and up 10%** on Q2 2011.

At 28 August 2011 non-UK contract runners at 2,203 were up by 19% year on year and up by 8% versus the half year 2011 position (29 May 2011: 2,041). During the period, non-UK permanent placements increased by 20%** year on year and were level** on Q2 2011.

Average permanent fees and Gross Profit Per Day Rates ("GPDR") both strengthened in the period to record levels, despite the relative weakness of the higher average fee investment banking market. Average permanent fees were up 9%* year on year and GPDRs were up 4%* year on year.

Investment banking accounted for circa 12% of Group transactions during the quarter (Q3 2010: 17%), sequentially down on Q2 2011's level of 15%. Public sector remains stable at 5% of Group transactions.

The current deal pipeline indicates that the Group is experiencing year on year improvements across most markets against strong comparatives. At 28 August 2011, the number of permanent deals agreed in the period, with candidates due to start in the future, was up more than 15% year on year. The pipeline at the end of Q3 2011 had improved by 7% sequentially from the position at the end of half year 2011, which was up at that time by 22% year on year.

Total Group headcount at 28 August 2011 of 2,163 was up 14% year on year (2010: 1,897) and up 7% on the half year 2011 headcount of 2,019. UK sales headcount was up 10% year on year, in part reflecting the key role of the UK as a talent feeder for the non-UK business.  Non-UK sales heads were up 27% year on year.  The Group was actively seeking to fill an additional 100 live sales vacancies at the end of the period, primarily relating to Germany and new offices.

During the quarter new offices were opened in Zurich, Luxemburg and Mumbai, with further offices due to open in Chicago, Boston and Moscow in the final quarter of 2011 / early 2012.

The Group remains in a strong cash position, with net cash of circa £40m at 28 August 2011 after the payment of the final dividend and the purchase of £3m of shares during the quarter. On an opportunistic basis, the Group expects to make further meaningful purchases of shares for treasury. DSOs have remained stable at 37 days (29 May 2011: 37 days).  The Group has committed facilities of £20m, which have not been utilised during the period.

Russell Clements, Chief Executive Officer, commented:

"Seen in the context of strengthening comparatives and the fact that macroeconomic sentiment deteriorated over the quarter, the Group delivered a positive performance.

"We feel that the Group's resources are appropriate, both in terms of scale and the markets in which they are deployed.  Our current deal pipeline reflects a healthy level of demand in most of our markets but we remain mindful of the state of the broader economic backdrop as we enter our final and traditionally, most important quarter.

"Our business remains highly cash generative, allowing us to continue to invest in the Group's excellent medium term potential and to maintain our robust attitude towards dividends."         

* at constant currency

** excludes both the gross profit and placement volumes of retained business

SThree is hosting an analyst conference call today at 0830 BST. The dial in number is + 44 (0)20 8817 9301 and the password is SThree.

SThree will issue a trading update for the year ended 27 November 2011 on Friday 2 December 2011.

- Ends -

  Enquiries:

SThree plc	020 7268 6000
Russell Clements, Chief Executive Officer
Alex Smith, Chief Financial Officer
Sarah Anderson, Deputy Company Secretary/IR enquiries
Citigate Dewe Rogerson	020 7638 9571
Kevin Smith/Nicola Swift

Notes to editors

SThree is a leading international specialist staffing businesses, providing permanent and contract specialist staff to a diverse client base of over 7,000 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 to include businesses serving the accountancy & finance, banking, engineering, oil & gas, pharmaceuticals, human resources, energy, legal and job board 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 Computer Futures, Huxley Associates, Progressive and The Real Staffing Group. The Group has circa 2,200 employees in sixteen countries.

SThree plc is quoted on the Official List of the UK Listing Authority under the ticker symbol STHR and also has a US 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. Accordingly, undue reliance should not be placed on forward looking statements.

 

END

 

 

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