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SThree plc (STHR)

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Friday 04 June, 2010

SThree plc

Trading Update

RNS Number : 0603N
SThree plc
04 June 2010

Trading Update


SThree plc ("SThree" or the "Group"), the international specialist staffing business, today issues its normal update on financial and operating data for the six month period ended 30 May 2010, being the first half of the financial year ending 28 November 2010.


Key highlights:

·    Group Gross Profit up 8%* Q2 2010 vs Q1 2010, consistent with markets showing continuing signs of improvement

·    Headcount growth of 7.9% year on year, driven by market opportunity

·    Fees remain robust

·    Roll out of four additional international offices

·    Non-UK now circa 60% of Group gross profit

·    Non-ICT now circa 34% of Group gross profit


Group gross profit achieved in the period declined by circa 19%* year on year to circa £74m (2009: £93.3m). UK gross profit declined by circa 29% and non-UK gross profit declined by circa 11%*. Non-UK now represents 60% of gross profit (2009: 54%), non-ICT represents 34% of gross profit (2009: 25%).


At 30 May 2010 SThree had 3,952 contract runners, a decrease of 12.1% year on year, a first half seasonal decline of 4.9% on the year end number (29 November 2009: 4,157) and sequentially up 1.2% on Quarter 1 (28 February 2010: 3,906).   Average contractor gross profit per day rates remained strong. During the period SThree made a total of 2,938 permanent placements, a reduction of 11.0% versus the prior year (2009: 3,302) and up 6.5% on the second half of 2009. Average placement fees have remained strong. In the period, permanent placements represented 46% of gross profit (2009: 42%).


At 30 May 2010 UK contract runners at 2,226 were down 21.8% year on year and 7.3% down versus the year end 2009 position (2009: 2,401). UK gross profit per day rates remained robust, being maintained versus the second half of 2009. During the period, UK permanent placements were down 14.9% year on year, but were up 7.4% on the second half of 2009. Average UK permanent placement fees were strong in the period, reflecting improved fees in Q2.


At 30 May 2010 non-UK contract runners grew by 4.8% year on year, with gross profit per day rates remaining broadly stable. During the period, non-UK permanent placements declined year on year by 8.6%, but were up 6.1% on the second half of 2009. Average fees remained robust.


The current deal pipeline indicates that the Group is experiencing improvements across most markets. At 30 May 2010, the number of permanent deals agreed in the period, with candidates due to start in the second half of 2010, were up more than 30% year on year.


Total Group headcount at 30 May 2010 of 1,777 was up 7.9% year on year (2009: 1,647) and up 11.3% on the year end 2009 headcount of 1,597. UK sales headcount was down 8.2% year on year, but up 3.4% on the year end 2009 position. Non-UK sales heads were up 18.4% year on year and up 17.5% on the year end 2009 position. We continue to hire sales consultants into teams where there is market-based evidence to support the investment.  On this basis the Group had circa 100 live sales vacancies at the end of the period.


During the period, the Group continued its roll out of international offices, opening its second Australian office in Perth, adding to its German footprint with further openings in Munich and Düsseldorf and opening its first Indian office in Delhi, focusing on the financial market place. In the second half of 2010, the Group plans to open offices in San Francisco and Qatar.


The Group remains in a strong cash position, with net cash of circa £32m at 30 May 2010, after the payment of the second interim dividend of 8p per share on 31 March 2010. The Group has further committed facilities of £20m, which have not been utilised during the period.


Russell Clements, Chief Executive Officer, commented:


"Our performance is consistent with a market showing some continuing signs of improvement during the period. That said, trading conditions still have some way to go before they can be regarded as normal and consultant productivity, whilst improved, is still somewhat below historical levels.


"Our most recent data is our current deal pipeline, which looks encouraging. This gives us the evidence to continue to selectively grow our sales teams to take advantage of improvements in market sentiment. At the same time the continued focus on sector diversification and the expansion of our international network reflects our commitment to building the longer term future of our business."          


* at constant currency


SThree will be announcing its interim results for the six months ended 30 May 2010 on 19 July 2010.


SThree is hosting an analyst conference call today at 0830 GMT. The dial in number is +44 (0)20 7806 1955 and the password is SThree.


- Ends - 


SThree plc

020 7292 3838

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 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 a number of brands, being Computer Futures, Huxley Associates, Progressive and The Real Staffing Group. It has circa 1,800 employees in twelve 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.

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