Q1 Interim Management Statement

RNS Number : 2798C

SThree plc

14 March 2014

 



14 March 2014

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 2 December 2013 to date; financial information relates to the quarter ended 2 March 2014.

Highlights

·     Group gross profit up 9%* year on year

·     Contract gross profit up 18%* year on year

·     Strong seasonal recovery in contractor runners - up 16% year on year at the end of Q1 and 1% above 2013 year end peak

·     Permanent gross profit down 4%* year on year

·     Permanent deal pipeline volume up 7% year on year

·     Group sales headcount up 6% versus the year end position and up 18% year on year

·     Strong performance in the Americas (up 49%* year on year), now representing 13% of Group gross profit

·     Continued strong performance from newer sector disciplines - Energy +54%* year on year, Life Sciences +42%* year on year

·     70% of Group gross profit now generated in markets outside UK & Ireland (2013: 68%)

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

"Our contract division made further progress as it continued to benefit from a greater strategic focus and increasing exposure to new high growth markets, particularly Energy and Life Sciences.  Contract gross profit increased by 18%* year on year and now accounts for 61% of the Group total.  Permanent, whilst still negative, saw some improving trends and the pre-deal pipeline is beginning to suggest a pick-up in activity.  We are continuing to invest in the future growth of both businesses to ensure they are appropriately resourced for the market opportunity.

"While, as always, we remain cautious about extrapolating the trend for the year from the quieter first quarter, the strength of our contract book and improving outlook for permanent give us confidence for the year ahead."

Key Metrics & Commentary

Financial highlights - Group Gross Profit
			Q1		Q4 2013 1 & 5	Q3 2013 1
	Q1 2014	Q1 2013 1	YoY % Var 2		YoY % Var 2	YoY % Var 2
Contract	£29.0m	£24.5m	+18%		+4%	+7%
Permanent	£18.8m	£19.8m	-4%		-15%	-11%
Group	£47.8m	£44.3m	+9%		-5%	-2%
UK&I	£14.2m	£14.0m	+1%		-10%	-9%
Continental Europe	£23.3m	£22.2m	+4%		-7%	-8%
Rest of World	£10.3m	£8.1m	+35%		+11%	+15%
	£47.8m	£44.3m	+9%		-5%	-2%
ICT	£19.1m	£20.0m	-5%		-13%	-5%
Non ICT	£28.7m	£24.3m	+20%		+1%	+1%
	£47.8m	£44.3m	+9%		-5%	-2%
Contract / Permanent Split
Contract	61%	55%
Permanent	39%	45%
	100%	100%
Geographical Split
UK&I	30%	32%
Continental Europe	49%	50%
Rest of World	21%	18%
	100%	100%
ICT / Non ICT Split
ICT	40%	45%
Non ICT	60%	55%
	100%	100%
Operating Metrics
			Q1		Q4 2013 1 & 5	Q3 2013 1
	Q1 2014	Q1 2013 1	YoY % Var		YoY % Var	YoY % Var
Contract Runners 3
UK&I	2,576	2,378	+8%		+4%	+1%
Continental Europe	2,412	2,193	+10%		+11%	+3%
Rest of World	865	465	+86%		+76%	+84%
Group	5,853	5,036	+16%		+13%	+8%
Permanent Placements 4
UK&I	346	405	-15%		-20%	-21%
Continental Europe	665	761	-13%		-18%	-15%
Rest of World	423	327	+29%		+9%	+13%
Group	1,434	1,493	-4%		-13%	-10%
1 Excluding IT Job Board
2 At constant currency
3 Period end number of contractors onsite with clients and being billed
4 Excludes Retainers
5 Q4 2013 Variance % calculated using a normalised 13 week period for 2013

Group gross profit increased by 9%* year on year in Q1 versus a decline of 5%* in Q4 2013.

Contract performed encouragingly in the period, with a strong seasonal recovery in contract runners. Average contractor gross profit per day rates remained robust during the quarter.

Permanent gross profit reduced by 4%* year on year, an improved performance on Q4 2013, which was down 15%*. UK&I was down 12%* (Q4 2013 down 25%), Continental Europe was down 9%* (Q4 2013 down 16%*) and Rest of World grew by 15%* (Q4 2013 down 1%*), driven by strong performances in Americas and Asia. Average permanent placement fees remained robust during the quarter.

Group sales headcount at 2 March 2014 was up 6% versus the year end and up 18% year on year. Year on year, UK&I sales headcount was up 15%, Continental Europe sales headcount was up 14% and Rest of World sales headcount was up 28%. Consultant headcount continued to remix slightly towards Contract during Q1, with contract consultant numbers up 6% and permanent consultant headcount up 5% since the year end. Average consultant headcount for the quarter was up 15% year on year, with contract consultant average headcount up 26% and permanent consultant average headcount up 5%.

The Group has a network of 54 offices in 21 countries, of which 39 are outside the UK. The Group now generates 70% of gross profit from markets outside UK&I (2013: 68%).

SThree remains in a strong financial position. Net debt at 2 March 2014, after payment of an interim dividend of £5.7m, was circa £8m. The Group has a £20m revolving credit facility ("RCF") with RBS committed to 2017.

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: 8757052

The Group will issue a trading update for the six months ended 1 June 2014 on 13 June 2014 and its interim results for the six months ended 1 June 2014 on 14 July 2014.

* 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/Jos Bieneman

Notes to editors

SThree is a leading international specialist staffing business, 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, Energy & Engineering and Life Sciences 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 2,400 employees in twenty one 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

 

 

IMSUOSNRSAAOAAR