Trading Update

RNS Number : 2148T

SThree plc

02 December 2011

 



Embargoed until 0700

2 December 2011

SThree plc

Trading Update

SThree plc ("SThree" or the "Group"), the international specialist staffing business, is today issuing a trading update for the financial year ended 27 November 2011.

Highlights:

·     Full year profits expected to be in line with market consensus

·     Group gross profit up 17%* for the full year and up 10%* year on year in Q4

·     Permanent gross profit up 24%* for the full year and up 14%* year on year in Q4

·     Contract gross profit up 10%* for the full year and up 6%* year on year in Q4

·     Nine new overseas offices opened during the year

·     Strong financial position with year end net cash of circa £55m, after buying back circa £8m of shares for treasury. DSO improved to 36 days (2010: 37 days)

·     Board expects to declare a final dividend of 9.3p (2010: 8.0p) up 16% year on year

Group gross profit achieved in the year increased by 17%* year on year to circa £195m (2010: £166.4m) and sequentially up 8%* versus Q3 2011. UK gross profit for the year increased by 3% year on year and declined 7% year on year in Q4. Non-UK gross profit for the year increased by 26%* year on year and by 22%* year on year in Q4.  Non-UK represented 65% of Group gross profit (2010: 60%); non-ICT represented 40% of Group gross profit (2010: 38%).

SThree closed the year with 4,692 contract runners, up 8% year on year (2010: 4,359) and a 5% increase on Q3's runners of 4,474. SThree made 7,434** permanent placements that started in the year, an increase of 13% year on year (2010: 6,551**) and sequentially up 10% Q4 vs. Q3. The Board estimates that permanent gross profit now represents 52% of gross profit (2010: 49%).

As at 27 November 2011, UK contract runners at 2,332 were up 1% year on year and 3% Q4 versus Q3. UK permanent placements were level both for the year and in Q4 versus Q3.

As at 27 November 2011, non-UK contract runners at 2,360 were up 15% year on year and up 7% Q4 versus Q3. During the year, non-UK permanent placements were up 22%** year on year and up 15%** in Q4 versus Q3.

Average placement fees for the year have grown strongly, despite a globally weak banking and finance market, which is typically characterised by significantly higher fees. Average contractor gross profit per day rates remained strong for the year.

For the full year 2011, the Group's exposure to investment banking reduced to circa 13% of Group transactions from 16% in 2010. As expected, public sector remained broadly stable at 5% of Group transactions (2010: 6%).

The current permanent deal pipeline shows an increase of 1.4% year on year at P12, versus a 15.3% increase year on year at Q3 2011.

Total Group headcount as at 27 November 2011 of 2,272 was up 22% year on year (2010: 1,863), and up 13% on the half year 2011 position of 2,019 heads. UK headcount was up 5% year on year, in part reflecting the key role of the UK as a talent feeder for the non-UK business. Non-UK headcount was up 41% year on year, biased towards our German and Rest of World structural growth markets. Given the growing macroeconomic uncertainty and declining rates of growth, the Group is applying a prudent methodology for hiring, which looks at recent performances and lead indicators of expected demand at a team level. This approach looks to ensure that Group headcount remains calibrated to the extant market opportunity.

The Group has continued to become more diversified with nine new offices opened during the year in Doha, Antwerp, Sao Paulo, Zurich, Luxembourg, Mumbai, Chicago, Boston and Moscow bringing the total to sixty offices operating in seventeen countries.

The Group remains in a strong net cash position, with net cash of circa £55m at the year end (2010: £55.2m).  DSOs have improved to 36 days (2010: 37 days). The Group has committed bank facilities of £20m, which were not utilised during the period.

The Group today pays its special dividend of 11.0p per share in addition to the 2011 interim dividend of 4.7p per share. Given the strong financial position of the Group, its balanced business model and track record through previous cycles, the Board continues to regard a robust attitude to dividends as a fundamental element of the overall SThree investment proposition. The Board is currently minded to declare a final dividend of 9.3p per share and will confirm this at the time of announcing the audited full year results on 30 January 2012.

Russell Clements, Chief Executive Officer, commented:

"In addition to delivering another strong financial performance in the year, the Group also increased its returns to shareholders through a significant increase in the interim ordinary dividend and payment of a special dividend.

"At the same time we continued to invest in the future of our business through the opening of a further nine new offices, taking our network to sixty offices in seventeen countries and making the Group more international and diversified than at any time in our history.

"The well documented decline in global economic sentiment has in recent months weakened demand for the Group's services in a number of markets. However, we are a cash rich and agile business, with a twenty five year track record of profitability and a seasoned management team. As such, we are well placed to maximise the potential of whatever market conditions prevail in 2012."

SThree is hosting an analyst conference call today at 0830 GMT. The dial in number is + 44 (0)20 8817 9301 and the password is SThree.

SThree will announce its results for the year ended 27 November 2011 on Monday 30 January 2012.

* at constant currency

**excludes retained business

- Ends -

Enquiries:

SThree plc	020 7268 6000
Russell Clements, 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 accountancy & finance, banking, engineering, oil & gas, pharmaceuticals, human resources, energy, legal 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 2,300 employees in seventeen 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. Accordingly, undue reliance should not be placed on forward looking statements.

 

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