Interim Management Statement

RNS Number : 5316Z

SThree plc

08 March 2013

 



Q1 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 26 November 2012 to date; financial information relates to the quarter ended 24 February 2013.

Highlights:

·    Group gross profit down 3%* year on year

·    Contract gross profit up 6%* year on year

·    Strong seasonal recovery in contractor runners - up 13% year on year at the end of Q1 and only down 2% on 2012 year end peak

·    Permanent gross profit down 12%* year on year with average permanent consultant headcount down 14% year on year

·    Permanent deal pipeline volume down 13% year on year

·    Good progress made against key strategic priorities - contract, international expansion and ongoing sector diversification

·    Continued strong performance from newer sector disciplines - Energy & Engineering +16%* year on year, Pharmaceuticals & Biotechnology +21%* year on year

·    68% of Group gross profit now generated in markets outside UK&I (2012: 65%)

·    Continued strong financial position with net cash of circa £20m

Financial Highlights - Group Gross profit
				Q1	Q4
		Q1	Q1	2013	2012
		2013	2012	YoY % Var*	YoY % Var*
	Permanent	£20.9m	£24.1m	(12%)	(6%)
	Contract	£24.5m	£23.6m	6%	11%
	Group	£45.5m	£47.7m	(3%)	2%
	UK&I	£14.6m	£16.7m	(12%)	0%
	Non UK&I	£30.9m	£31.0m	2%	3%
		£45.5m	£47.7m	(3%)	2%
	ICT	£24.4m	£27.0m	(8%)	(7%)
	Non ICT	£21.1m	£20.7m	3%	14%
		£45.5m	£47.7m	(3%)	2%
	Contract / Permanent Split
	Permanent	46%	51%
	Contract	54%	49%
		100%	100%
	Geographical Split
	UK&I	32%	35%
	Non UK&I	68%	65%
		100%	100%
	ICT / Non ICT Split
	ICT	54%	57%
	Non ICT	46%	43%
		100%	100%
	Operating Metrics
				Q1	Q4
		Q1	Q1	2013	2012
		2013	2012	YoY %  Var	YoY %  Var
	Permanent Placements **
	UK&I	405	551	(26%)	(15%)
	Non UK&I	1,088	1,123	(3%)	(3%)
	Group	1,493	1,674	(11%)	(7%)
	Contract Runners ***
	UK&I	2,378	2,307	3%	2%
	Non UK&I	2,658	2,154	23%	16%
	Group	5,036	4,461	13%	9%

*At Constant Currency

** Excludes Retainers

*** Period end number of contractors onsite with clients and being billed

Group gross profit decreased by 3%* year on year in Q1 versus an increase of 2%* in Q4 2012.

Contract performed encouragingly in the period, despite the impact of New Year's day 2013 falling later in the working week than it did in the prior year, which led to substantially more contractor holiday days being taken year on year. Contract gross profit grew across all regions apart from UK&I, which decreased by 4% year on year. Continental Europe grew by 6%* year on year and Rest of World grew by 53%* year on year. Average contractor gross profit per day rates remained robust during the quarter.

Permanent gross profit reduced by 12%* year on year. This was driven by continued weakness in the UK&I (down 24%*), Benelux (down 26%*) and France (down 39%*), as these markets continued to slow.  Rest of World permanent gross profit grew by 10%* in Q1, driven by strong performances from our Pharmaceuticals & Biotechnology teams. Average permanent placement fees remained robust during the quarter.

Group sales headcount at 24 February 2013 was broadly level versus the year end and down 5% year on year. Year on year, UK sales headcount was down 13%, Continental Europe headcount was down 7% and Rest of World headcount was up 15%. Consultant headcount remixed towards contract during Q1, with contract consultant numbers up 7% since the year end, offset by a 4% reduction in permanent consultants as the Group flexed headcount in line with the market opportunity. Average consultant headcount for the quarter was down 7% year on year, with contract average headcount up 6% and permanent headcount down 14%.

The Group opened a new office in Tokyo during the quarter, expanding the network to 65 offices in 19 countries, of which 43 are outside the UK. The group now generates 68% of gross profit from markets outside UK&I (2012: 65%).

The Group remains in a strong cash position with net cash of circa £20m at 24 February 2013, after payment of an interim dividend of £5.6m and share buy backs of circa £1m.

Gary Elden, Chief Executive, commented: "Against a backdrop of weaker macroeconomic conditions, we have made a solid start to the year, in what is, for seasonal reasons, always our least significant quarter.

"Our contract division, which comprised 54% of gross profits in the quarter, up from 49% in the prior year, benefited from a greater strategic focus and its  performance was pleasing, with gross profit ahead by 6% year on year.  Permanent had a more challenging quarter, as client and candidate confidence weakened from fourth quarter levels in a number of key markets.

"The success of the Group's diversification in recent years was again illustrated by the performance of Energy & Engineering and Pharmaceuticals & Biotechnology, which continued to experience strong demand and now represent 36% of GP (FY 2012: 33%). These businesses are continuing to make an increasingly significant contribution both to Group performance and to our ongoing geographic diversification, with 68% of gross profit now being generated outside of the UK&I.

"Our balanced business model and experienced management team give us confidence that we will make the best of the market opportunity in 2013, whilst managing the business prudently for the medium term."

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

Telephone number: [phone]

For access to the call please quote passcode SThree

A replay facility will be available for seven days on [phone] / Access Pin: 3147718

The Group will issue a trading update for the six months ended 26 May 2013 on 7 June 2013 and its interim results for the six months ended 26 May 2013 on 15 July 2013.

* at constant currency

- Ends -

Enquiries:
SThree plc	020 7268 6000
Gary Elden, 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 Banking & Finance, Engineering & Energy, and Pharmaceuticals & Biotechnology 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 nineteen 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 and is before any exceptional items. Accordingly, undue reliance should not be placed on forward looking statements.

 

END

 

 

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