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SThree plc (STHR)

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Friday 06 June, 2008

SThree plc

Trading Statement

RNS Number : 1202W
SThree plc
06 June 2008

Trading Update

SThree, ('SThree' or 'the Group'), the international specialist staffing business, is today issuing an update on trading for the six-month period ended 1 June 2008.

The Group will report a positive first half to its financial year, recording healthy levels of year-on-year growth. The Board expects gross profit for the period to be approximately £100m, an increase of 21% on the previous year (2007: £82.5m). This performance is in line with the Board's expectations for this point in the financial year and reflects robust demand for the Group's services from its customers and a continuation in confidence on the part of the candidates that it places.

SThree made 5,008 permanent placements in the first half, an increase of 9.5% over the same period last year (2007: 4,580). This increase in volume was enhanced significantly by further substantial increases in the average value of the permanent placements, to new record levels.

At 1 June 2008 SThree had 5,743 active contractors, an increase of 15.5% on the equivalent number last year (2007: 4,974). As with the increase in permanent placement fees, the average gross profit per day value of each contractor continued to grow substantially, to also stand at record levels.

The value increases, recorded in both the Permanent and Contract sides of the business, demonstrate that the Group continues to benefit from both healthy levels of wage inflation and from its success in moving up the value chain, placing a greater percentage of higher paid candidates. The Group continued to focus on the placement of specialist candidates in markets where the supply and demand dynamic is structurally in favour of the candidate and hence the supplier.  

The Group's long established ICT business continued to trade strongly in line with newer disciplines such as Engineering, Oil & Gas, HR, and Accountancy & Finance. Demand from investment banks remained subdued in the UK and US but this was offset to some extent by continued demand in this niche from other geographies. However, the Group's exposure to this sector is not a significant part of its overall business. 

During the first half the Board was particularly pleased with the performance of the Group's international business, with early contributions from its newest offices in DubaiHong Kong and Sydney enhancing a strong performance from longer established offices in continental Europe. As a result the Non-UK versus UK split of overall gross profit will show a meaningful change compared with the position at the end of the last financial year.

Since the beginning of the financial year the Group has spent approximately £15m repurchasing shares for cancellation at an average price of 204p. The Board is continuing to buy back shares during its close period and to this end has already put in place an irrevocable, non-discretionary programme that is being executed by UBS Limited.

At the half-year end the Group had net cash of £3m (2007: net borrowings of £40.5m) and has benefited from a significant improvement in its day sales outstanding (DSO) figure, which stands at 51 days (2007: 80 days).  

Russell Clements, Chief Executive commented:

'Once again, we are in a position to report that overall trading conditions remain encouraging and continue to be supportive of healthy growth. Our half-year performance is in line with our internal expectations and our KPIs show no signs of a material change in market sentiment. We remain mindful of the issues facing the financial sector but this is a relatively small market for us and we continue to see no signs that the uncertainty in this area is having an impact more generally.  

'We are particularly happy with the continuing success of our strategy of international expansion and are very excited by the outstanding opportunities that exist for us as we build an increasingly global business.'

SThree will announce its interim results for the six months ending 1 June 2008 on 21 July 2008.

SThree is hosting an analyst conference call today at 0830 BST. The dial in number is + 44 20 3003 2666 and the password is SThree.

- Ends -


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 an international specialist staffing business, providing both permanent and contract staff to a diverse, client base of well over 6,000 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 by building fast-growing businesses serving the banking and finance, accountancy, human resources, engineering, energy and pharmaceuticals sectors.  

Following the establishment of its first business, Computer Futures, in 1986, the Group adopted a multi-brand strategy. SThree currently operates 12 separately managed brands, the four largest being Computer Futures, Huxley Associates, Progressive and Pathway, and has 33 offices in the UK and 19 overseas offices, 15 elsewhere in Europe, the Netherlands, Belgium, France, Germany and Ireland. In 2006, the Group opened its first North American office, in New York, and recently opened offices in AustraliaHong Kong and Dubai.

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

This information is provided by RNS
The company news service from the London Stock Exchange