Interim Management Statement

RNS Number : 7144L

SThree plc

07 September 2012

 





Interim Management Statement

SThree plc ("SThree" or the "Group"), the international specialist staffing business, is today issuing an Interim Management Statement for the period from 27 May 2012 to date. The financial data relates to the three month period ending 26 August 2012, being the third quarter of the financial year ending 25 November 2012.

Highlights:

·    Group gross profit up 6%* year on year

·    Contract gross profit up 10%* year on year

·    Permanent gross profit up 2%* year on year

·    Permanent deal pipeline volume level year on year

·    Growth rate in contract runners ahead of same period in 2011

·    Continued strong financial position with net cash of circa £17m at period end, after payment of the final dividend of 9.3p per share (circa £11m) on 6 June 2012

Financial highlights - Group gross profit
	Q3 2012	Q3 2011	Q3 2012 YoY %  CC*		Q1 2012 YoY %  CC*	Q2 2012 YoY %  CC*
Group	£51.3m	£50.2m	+6%		+15%	+9%
Permanent	£25.6m	£26.0m	+2%		+16%	+12%
Contract	£25.6m	£24.3m	+10%		+13%	+7%
UK&I	£17.7m	£18.9m	-6%		+1%	+3%
Non UK&I	£33.6m	£31.3m	+13%		+24%	+13%
	£51.3m	£50.2m	+6%		+15%	+9%
ICT	£26.9m	£30.5m	-8%		+10%	-1%
Non ICT	£24.4m	£19.7m	+27%		+22%	+27%
	£51.3m	£50.2m	+6%		+15%	+9%
Contract / Permanent Split
Permanent	50%	52%
Contract	50%	48%
	100%	100%
Geographical Split
UK&I	35%	38%
Non UK&I	65%	62%
	100%	100%
ICT / Non ICT Split
ICT	52%	61%
Non ICT	48%	39%
	100%	100%
*At Constant Currency

Operating metrics
	Q3 2012 Number	Q3 2011 Number	Q3 2012 YoY %  Var		Q1 2012 YoY %  Var	Q2 2012 YoY %  Var
Permanent Placements **
UK&I			-12%		-4%	-5%
Non UK&I			+2%		+9%	+7%
Group	1,832	1,895	-3%		+4%	+3%
Contract Runners ***
UK&I			+4%		-1%	-2%
Non UK&I			+20%		+14%	+21%
Group	4,998	4,474	+12%		+6%	+9%

** Excludes Retainers

*** Period end number of contractors on site with clients and being billed

Contract performed encouragingly in the period, with strong growth in gross profit in Europe (+12%) and Rest of World (+94%), offsetting a small decline of 2% in UK. The number of contract runners at the end of Q3 was up 7% versus the start of 2012. This compares to an increase of 3% at the end of Q3 2011, indicating a stronger seasonal recovery and run rate into the final quarter of this year.

Average permanent placement fees for the quarter grew robustly year on year, despite continuing weakness in the global banking and finance market which typically generates higher than average fees. Particularly strong performances were seen from Energy & Resources and Pharmaceuticals & Biotechnology. Average contractor gross profit per day rates remained strong during the period.

Group sales headcount at 26 August 2012 was down 6% versus the year end, and level year on year. UK sales headcount was down 16% versus year end and down 17% year on year. Non-UK sales headcount was level versus year end and up 10% year on year. Average sales headcount in the quarter was up 4% year on year.

The permanent deal pipeline at the period end was broadly level year on year (Q2 period end: level) and sequentially up 6% versus Q2 period end.

The Group finished the quarter with 64 offices in 18 countries, of which 42 were outside the UK. Non UK&I now represents 65% of gross profit (2011: 62%).

Russell Clements, Chief Executive, commented:

"The Group has traded satisfactorily in the third quarter, given the difficult macro economic backdrop. Understandably, this was reflected in a slowing of the rate of growth in gross profit in Q3 versus Q2 but nonetheless gross profit in Q3 was 6% ahead of the same period last year. Once again we performed robustly in terms of the value of the business written up, both in terms of average permanent fees and contract day rates.

"Demand in sectors such as Energy & Resources and Pharmaceuticals & Biotechnology remained strong and these businesses continued to increase their contribution to the Group result. We were particularly pleased with the performance of our contract division which, as expected, performed more resiliently than permanent in the more uncertain economic environment. Given that contract makes up half of the Group's business, this positions us well to optimise our performance against current market conditions, as does the fact that 65% of the business is generated outside of the UK&I.

"Our balance sheet remains strong, and we are a cash generative, debt-free business. This strength allows us to continue to make selective investments for the future whilst remaining committed to maintaining our strong track record in terms of our dividend."

 SThree is hosting an analyst conference call today at 0830 BST. The details are as follows:

Telephone number: [phone]

For access to the call please quote passcode SThree

The Group will issue its preliminary results for the year ended 25 November 2012 on 28 January 2013.

* at constant currency

- Ends -

Enquiries:
SThree plc	020 7268 6000
Russell Clements, Chief Executive Officer
Gary Elden, Deputy Chief Executive Officer
Alex Smith, Chief Financial Officer
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 Banking, Engineering & Energy, Pharmaceuticals & Biotechnology, Accountancy 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 eighteen 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. Certain data from the announcement is sourced from unaudited internal management information. Accordingly, undue reliance should not be placed on forward looking statements.

 

END

 

 

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