Trading Update & Management Succession

RNS Number : 3752S

SThree plc

30 November 2012

 



Trading Update & Management Succession

SThree plc ("SThree" or the "Group"), the international specialist staffing business, is today issuing a trading update for the financial year ending 25 November 2012.

Highlights:

·    Full year profit before tax expected to be £25m, in line with market consensus

·    Group gross profit up 8%* year on year

·    Contract gross profit up 11%* year on year

·    Permanent gross profit up 6%* year on year

·    Ongoing sector diversification driving growth - Energy & Engineering +48%* year on year, Pharmaceuticals & Biotechnology +39%* year on year

·    Continued strong financial position; net cash of circa £27m at period end, after buying back circa £7m of shares for treasury

·    Handover of CEO responsibilities running ahead of schedule - Gary Elden to succeed Russell Clements as CEO with effect from 1 January 2013

Financial Highlights - Group Gross profit
	FY 2012	FY 2011	YoY % Var*		Q4 2012 YoY % Var*	Q3 2012 YoY % Var*
Group	£205.4m	£195.5m	+8%		+2%	+6%
Permanent	£103.7m	£101.0m	+6%		-5%	+2%
Contract	£101.8m	£94.5m	+11%		+11%	+10%
UK & I	£71.0m	£71.3m	-		+1%	-6%
Non UK & I	£134.5m	£124.2m	+13%		+3%	+13%
	£205.4m	£195.5m	+8%		+2%	+6%
ICT	£111.0m	£116.6m	-2%		-7%	-8%
Non ICT	£94.5m	£78.9m	+23%		+14%	+27%
	£205.4m	£195.5m	+8%		+2%	+6%
Contract / Permanent Split
Permanent	50%	52%
Contract	50%	48%
	100%	100%
Geographical Split
UK & I	35%	36%
Non UK & I	65%	64%
	100%	100%
ICT / Non ICT Split
ICT	54%	60%
Non ICT	46%	40%
	100%	100%
*At Constant Currency

Operating Metrics
	FY 2012	FY 2011	YoY % Var		Q4 2012 YoY % Var	Q3 2012 YoY % Var
Permanent Placements**
UK & I	2,369	2,612	-9%		-15%	-12%
Non UK & I	4,974	4,822	+3%		-3%	+2%
Group	7,343	7,434	-1%		-7%	-3%
Contract Runners***
UK & I	2,452	2,393	+2%		+2%	+4%
Non UK & I	2,670	2,299	+16%		+16%	+20%
Group	5,122	4,692	+9%		+9%	+12%

** Excludes Retainers

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

Group gross profit in the year increased by 8%*. Q4 Group gross profit was up 2%* year on year and up 7%* sequentially versus Q3.

Contract performed encouragingly in the year, with growth in gross profit across all regions. UK&I grew by 3% year on year, Continental Europe by 9% year on year and Rest of World by 98% year on year. Average contractor gross profit per day rates remained strong during the year.

Permanent gross profit grew by 6%* year on year. Q4 was down 5%*, driven by continued weakness in the UK&I (down 9%*) and Benelux and France down (30%* and 9%*, respectively), as these markets slowed.  Rest of World permanent gross profit grew by 16%* in Q4, driven by strong performances from our Energy & Engineering and Pharmaceuticals & Biotechnology teams. Average permanent placement fees for the year grew robustly year on year, despite continuing weakness in the global banking and finance market which typically generates higher than average fees.

Group sales headcount at 25 November 2012 was down 6% year on year. UK sales headcount was down 18% year on year, Continental Europe headcount was down 5% year on year and Rest of World headcount was up 18% year on year, as the Group flexed headcount in line with the market opportunity. Average sales headcount for the year was up 10% year on year, but down 7% year on year in Q4.

The permanent deal pipeline at the period end was 4% down year on year, with weakness in UK&I, France and Benelux offsetting strong performance in Rest of World and Germany.

The Group opened new offices in Oslo, San Diego, Rio de Janeiro and Brisbane during the year, expanding the network to 64 offices in 18 countries, of which 42 are outside the UK. Non UK&I now represents 65% of gross profit (2011: 64%).

Management Succession

In May, the Group announced that Gary Elden would succeed Russell Clements as CEO during 2013.  Since that time Russell and Gary have been working closely together to ensure a smooth handover of responsibilities, with a number of key tasks being completed ahead of schedule. In light of this excellent progress, Gary will succeed Russell as CEO with effect from 1 January 2013, at which point Russell will retire from the Board.

Russell Clements, Chief Executive, commented: "The Group has traded satisfactorily during the year, against a macro economic backdrop that became increasingly difficult across the period and we are pleased to be expecting an outcome for the year in line with market consensus.

"In the more uncertain economic environment, the benefits of the Group's balance of Contract and Permanent business, and the success of its geographic and sector diversification in recent years, were clearly illustrated. Our contract division, which makes up half of gross profits, reported another resilient performance and remains a key area of strategic focus.  

"Energy & Engineering and Pharmaceuticals & Biotechnology, which between them make up about one third of gross profits, continued to experience strong demand. These businesses are making an increasingly significant contribution both to Group performance and to our ongoing geographic diversification, with nearly two thirds of fee income now being generated outside the UK&I.

"As I leave the business after twenty six years, I believe SThree is in good shape, with a clear growth strategy and a strong financial position. As a committed long term shareholder, I look forward to seeing the Group continue to prosper under Gary's leadership and wish him every success in the CEO role."

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

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
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 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 and is before any exceptional items. Accordingly, undue reliance should not be placed on forward looking statements.

 

END

 

 

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