Trading Update

RNS Number : 5722D

SThree plc

04 December 2009

 



4 December 2009

SThree plc

Trading Update

SThree plc ("SThree" or the "Group"), the international specialist staffing business, is today issuing a trading update for the year ended 29 November 2009.

• A solid performance despite highly challenging market conditions

• Full year results expected to be in line with consensus market expectations 

• Gross profit of circa £168m, down 23% year on year (2008: £218.9m)

• Greater geographical diversification, with non-UK share of gross profit now at 55% (2008: 45%)

• Year end net cash of circa £48m (2008: £24.6m)

• Days sales outstanding improved to 37 days (2008: 43 days)

• Most markets stable or modestly improving

SThree closed the year with 4,157 contract runners, down 27.7% year on year but broadly level with the end of Q3 position of 4,190 runners.  Average contractor gross profit per day rates have been stable sequentially Q4 versus Q3. 

SThree made 6,060 permanent placements that started in the year, a decrease of 40.8% (2008: 10,236).  Despite the volume decrease, average placement fees for the year overall have remained strong, with some sequential improvement Q4 versus Q3.

The Group has continued to become more diversified.  For the full year, the Board estimates that non-UK gross profit now represents 55% of the Group gross profit (2008: 45%).  This compares to 54% for the half year to 31 May 2009.  The Board also estimates that contract gross profit now represents 57% of gross profit (2008: 52%) and non-ICT represents 28% (2008: 23%). 

The Board is pleased to report continued progress in debtor management in the year with a reduction in days sales outstanding to 37 days, compared to the closing position at 30 November 2008 of 43 days, along with a further improvement in the ageing of the debtors book.

The Group's net cash position has improved during the year, with net cash of circa £48m at the year end (2008: £24.6m).  In addition, the Group has recently signed a 30 month invoice discounting facility with Royal Bank of Scotland, for £20m of committed financing.  SThree has no debt and does not currently draw down upon this facility.

Given the strong financial position of the Group and the balanced business model, the Board remains robustly committed to its dividend policy.

Total Group headcount as at 29 November 2009 of 1,597 was down 29.8% versus last year (2008: 2,274), but up 6.0% versus the headcount at the end of Q3, as stabilising market conditions have supported selective rehiring.  Full year results will include an exceptional item of £9.0m relating to the rightsizing of the Group in the first half.

During  2009,  SThree  opened  an  additional  office  in  Frankfurt  and  new  offices in Duseldorf,   Hamburg, Stuttgart, Marseille, and Singapore.  We anticipate further expansion in our international footprint next year.

Russell Clements, Chief Executive, commented: "Without question 2009 presented SThree with trading conditions as challenging as any we have faced in our 23 year history.  I am pleased to say that despite this, the Group performed highly credibly, demonstrating the robustness of our business model even in the most difficult of circumstances.  We were able to act decisively where required to modify our cost base while at the same time we continued to prudently invest for the future.

"Although market sentiment has yet to undergo anything like a paradigm shift, we have nonetheless seen recent signs that indicate most markets have stabilised and some are showing improvement.  We will continue to monitor these trends with a view to ensuring the Group is well placed to take full advantage of a broader based recovery.  With this in mind our seasoned management, excellent cash position and increasing international exposure positions us extremely well for 2010 and beyond."

SThree is hosting an analyst conference call today at 0830 GMT.  The dial in number is [phone] and the password is SThree.

SThree will be announcing its preliminary results for the year ended 29 November 2009 on 1 February 2010.

- Ends -

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 one of the leading international specialist staffing businesses, providing permanent and contract specialist staff to a diverse client base of well over 7,000 clients. From its well-established position as a major player in the information and communications technology ("ICT") sector the Group has further broadened the base of its operations by building fast-growing businesses serving the accountancy & finance, banking, engineering, oil & gas, pharmaceuticals, human resources, energy, legal and job board sectors.

Following the establishment of its first business, Computer Futures, in 1986, the Group has adopted a multi-brand strategy, establishing new operations to address growth opportunities. SThree operates through brands including FS Group (Computer Futures/JP Gray), Huxley Associates and Progressive and has 1,600 employees in eleven countries.

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

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.

 

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