Financial Express (Holdings) Limited (“we”, “our”, “us” and derivatives) are committed to protecting and respecting your privacy. This Privacy Policy, together with our Terms of Use, sets out the basis on which any personal data that we collect from you, or that you provide to us, will be processed by us relating to your use of any of the below websites (“sites”).

  • FEAnalytics.com
  • FEInvest.net
  • FETransmission.com
  • Investegate.co.uk
  • Trustnet.hk
  • Trustnetoffshore.com
  • Trustnetmiddleeast.com

For the purposes of the Data Protection Act 1998, the data controller is Trustnet Limited of 2nd Floor, Golden House, 30 Great Pulteney Street, London, W1F 9NN. Our nominated representative for the purpose of this Act is Kirsty Witter.

WHAT INFORMATION DO WE COLLECT ABOUT YOU?

We collect information about you when you register with us or use any of our websites / services. Part of the registration process may include entering personal details & details of your investments.

We may collect information about your computer, including where available your operating system, browser version, domain name and IP address and details of the website that you came from, in order to improve this site.

You confirm that all information you supply is accurate.

COOKIES

In order to provide personalised services to and analyse site traffic, we may use a cookie file which is stored on your browser or the hard drive of your computer. Some of the cookies we use are essential for the sites to operate and may be used to deliver you different content, depending on the type of investor you are.

You can block cookies by activating the setting on your browser which allows you to refuse the setting of all or some cookies. However, if you use your browser settings to block all cookies (including essential cookies) you may not be able to access all or part of our sites. Unless you have adjusted your browser setting so that it will refuse cookies, our system will issue cookies as soon as you visit our sites.

HOW WE USE INFORMATION

We store and use information you provide as follows:

  • to present content effectively;
  • to provide you with information, products or services that you request from us or which may interest you, tailored to your specific interests, where you have consented to be contacted for such purposes;
  • to carry out our obligations arising from any contracts between you and us;
  • to enable you to participate in interactive features of our service, when you choose to do so;
  • to notify you about changes to our service;
  • to improve our content by tracking group information that describes the habits, usage, patterns and demographics of our customers.

We may also send you emails to provide information and keep you up to date with developments on our sites. It is our policy to have instructions on how to unsubscribe so that you will not receive any future e-mails. You can change your e-mail address at any time.

In order to provide support on the usage of our tools, our support team need access to all information provided in relation to the tool.

We will not disclose your name, email address or postal address or any data that could identify you to any third party without first receiving your permission.

However, you agree that we may disclose to any regulatory authority to which we are subject and to any investment exchange on which we may deal or to its related clearing house (or to investigators, inspectors or agents appointed by them), or to any person empowered to require such information by or under any legal enactment, any information they may request or require relating to you, or if relevant, any of your clients.

You agree that we may pass on information obtained under Money Laundering legislation as we consider necessary to comply with reporting requirements under such legislation.

ACCESS TO YOUR INFORMATION AND CORRECTION

We want to ensure that the personal information we hold about you is accurate and up to date. You may ask us to correct or remove information that is inaccurate.

You have the right under data protection legislation to access information held about you. If you wish to receive a copy of any personal information we hold, please write to us at 3rd Floor, Hollywood House, Church Street East, Woking, GU21 6HJ. Any access request may be subject to a fee of £10 to meet our costs in providing you with details of the information we hold about you.

WHERE WE STORE YOUR PERSONAL DATA

The data that we collect from you may be transferred to, and stored at, a destination outside the European Economic Area (“EEA”). It may be processed by staff operating outside the EEA who work for us or for one of our suppliers. Such staff may be engaged in, amongst other things, the provision of support services. By submitting your personal data, you agree to this transfer, storing and processing. We will take all steps reasonably necessary, including the use of encryption, to ensure that your data is treated securely and in accordance with this privacy policy.

Unfortunately, the transmission of information via the internet is not completely secure. Although we will do our best to protect your personal data, we cannot guarantee the security of your data transmitted to our sites; any transmission is at your own risk. You will not hold us responsible for any breach of security unless we have been negligent or in wilful default.

CHANGES TO OUR PRIVACY POLICY

Any changes we make to our privacy policy in the future will be posted on this page and, where appropriate, notified to you by e-mail.

OTHER WEBSITES

Our sites contain links to other websites. If you follow a link to any of these websites, please note that these websites have their own privacy policies and that we do not accept any responsibility or liability for these policies. Please check these policies before you submit any personal data to these websites.

CONTACT

If you want more information or have any questions or comments relating to our privacy policy please email publishing@financialexpress.net in the first instance.

 Information  X 
Enter a valid email address

SThree plc (STHR)

  Print      Mail a friend       Annual reports

Monday 19 July, 2010

SThree plc

Interim Results

RNS Number : 5172P
SThree plc
19 July 2010
 



                                                                                               

SThree plc

("SThree" or the "Group")

Interim results for the six months ended 30 May 2010

 

SThree, the international specialist staffing business, is today announcing its interim results for the six months ended 30 May 2010.   

 

Financial Highlights - six months ended

(unaudited)

30 May 2010

 

31 May 2009

 

% change

Revenue

£221.7m

£280.6m

-21.0%

Gross profit

£74.3m

£93.3m

-20.3%

Operating profit before exceptional items

£7.1m

£11.0m

-35.3%

Profit before taxation before exceptional items

£7.3m

£11.2m

-34.8%

Profit before taxation after exceptional items *

£7.3m

£2.7m

+170.3%





Basic earnings per share before exceptional items

4.0p

6.3p

-36.5%

Basic earnings per share after exceptional items *

4.0p

1.1p

+263.6%

Interim dividend

4.0p

4.0p


 

* Exceptional items relate to a charge for corporate restructuring announced on 15 April 2009 of £8.5m.

 

Operational Highlights

 

·     Year on year comparatives distorted by the average consultant headcount in H1 2010 of 1,057 being 24% lower than the H1 2009 average of 1,387, reflecting the impact of the 32% rightsizing of staff numbers initiated in Q2 2009

·     Satisfactory first half performance in a sequentially improving, but not yet fully recovered, market. Gross Profit down 20.3% year on year to £74.3m (2009: £93.3m). Like for like i.e. at constant currency ("LFL") Gross Profit down 19.4%

·     Sequentially Q2 2010 Gross Profit up 7.8% versus Q1 2010, with Permanent up 12.0% and Contract up 4.4%

·     Permanent placements down by 13.9% to 2,842 (2009: 3,302) - average permanent placement fee up 2.0% LFL to £12,071 (2009: £11,838)

·     Number of active contractors at period end reduced by 12.1% year on year to 3,952 (2009: 4,494) - average gross profit per day rates decreased by 4.3% LFL to £83.91 (2009: £87.67). Average contract margin achieved 21.4% (2009: 22.5%)

·     Contract versus Permanent mix of Gross Profit now 54:46 in favour of Contract (Full year 2009: 58:42)

·     Non-UK Gross Profit for the period represented 60% of the Group total (Full year 2009: 55%)

·     Rest of World (excluding UK and Europe) grew Gross Profit to 10% of mix (2009: 3%), up 136% year on year

·     Non-ICT business segments grew by 9.7% LFL, now representing 34% of total Gross Profit (Full year 2009: 28%)

·     Total headcount up 11.3% versus year end 2009 position, as the Group selectively reinvests in the business

·     New offices opened in Düsseldorf, Munich, Delhi and Perth; San Francisco and Qatar offices to open in H2 2010

·     Net cash position strong at £31.6m (2009: £43.9m) after payment of a second interim dividend of 8.0p per share (circa £10m) in March 2010 in place of the final dividend for the 2009 full year. The 2008 final dividend of 8.0p per share was paid in June 2009 after the half year end

·     Interim dividend maintained at 4.0p (2009: 4.0p)

·     Strong start to second half with June GP up 14.9% year on year driven by significant increase in Permanent

 

Russell Clements, CEO, commented:

 

"We are satisfied with a very creditable first half performance achieved in a market which, although much improved on the same period last year, is still some way from being fully recovered. Our year on year comparatives remain challenging given our average consultant headcount during H1 is still some way down on the same period last year. However, the fact that our current consultant headcount is 11% up on the end of 2009 reflects both the sequential improvements seen in recent months, which have allowed us to begin to rebuild established teams, as well as the staffing of our new international offices and teams addressing new market segments.

 

Having a strong sense of where the market is heading remains difficult, but on the basis of the currently available data we remain cautiously optimistic. That said, we are a debt-free, cash rich business with a long track record of consistent profitability and a highly experienced management team who are capable of dealing with whatever market conditions are presented to them. We are also a more diversified business by geography and by sector than at any time in our twenty four year history, increasingly exposed to markets with strong structural growth characteristics. This positions us extremely well both for the short and the longer term".

 

 

SThree will host a live presentation and conference call for analysts at 0900 today. 

 

The presentation will be held at Citigate Dewe Rogerson's offices. 

 

Conference call participant Telephone Numbers:

 

UK: 0845 634 0041 

 

International: + 44 20 8817 9301

 

This event will also be simultaneously audio webcast, hosted on SThree's website at

http://www.thomson-webcast.net/uk/dispatching/?event_id=9afbdb503799ba47e91b7fff4ef5e01e&portal_id=a98192164841f4a39f400936a24cde9c

Please note that this is a listen only facility. 

 

An archive of the presentation will be available via the same link later today. 

SThree will be announcing its Q3 Interim Management Statement on Friday 10 September 2010.

 

Enquiries:

 

SThree plc

020 7268 6000

Russell Clements, Chief Executive Officer


Alex Smith, Chief Financial Officer


Sarah Anderson, Deputy Company Secretary/IR queries




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.

 

 

 

SThree plc

("SThree" or the "Group")

 

Interim results for the six months ended 30 May 2010

 

Operating Review

 

Introduction

 

In H1 2010 the Group operated in a market which although in overall terms was much improved on the same period last year, was still some way from being fully recovered. Although some markets have staged a robust recovery, others are still subdued by normal standards. As such, H1 saw a satisfactory performance from the Group, with Gross Profit ("GP") reducing by 20.3% to £74.3m (2009: £93.3m).

 

Before going into a detailed analysis of the results it is important to recall that the Group undertook a substantial headcount reduction in the second quarter of the previous financial year. Headline Group headcount at the period end was up 7.9% on the previous year to 1,777 (2009: 1,647) but this does not however reflect the fact that average consultant headcount in H1 2010 was lower than H1 2009 by 330 heads or 24%. This was due to the fact that the rightsizing was undertaken during the second quarter of 2009 and total Group headcount at the start of the 2009 financial year was 2,274.

 

Moreover, the more distressed markets in H1 2009 saw the greatest headcount reductions and hence were likely in H1 2010 to have the largest negative variance in average consultant headcount. For example, UK average consultant headcount in H1 2010 was 38% down on the equivalent period in 2009, whereas UK GP in the same period was down by 29% to £30.2m (2009: £42.6m). This clearly indicates a marked year on year improvement in UK consultant yields albeit in comparison with those achieved at the market's nadir and still substantially down on normal market levels.

 

If we consider the performance in the half year sequentially, rather than year on year, then the improvement in trading is clearer. Group Gross Profit was up 7.9% Q2 2010 versus Q1 2010, with Permanent GP up 12.0% and Contract GP up 4.4% in this period.

 

Overview & Business Mix

 

H1 2010 saw a further internationalisation of the Group. Overall GP derived outside of the UK now stands at 60% (H1 2009: 54%; FY 2009: 55%). It was particularly pleasing to see that the percentage of Group GP derived from "Rest of World" ("ROW" i.e. excluding Europe and UK) more than doubled on the same period of 2009. ROW GP was £7.3m, representing 10% of Group GP and an absolute improvement of 136% year on year (2009: £3.1m). Although these are currently relatively small businesses we believe they have great future growth potential and are now well positioned to begin to make an increasingly significant contribution to the Group.

 

In parallel the Group's segmental diversification increased with overall Group GP derived from non-ICT sectors up by 8% to £25.6m (2009: £23.6m). As a result of the remixing of the business in geographical and segmental terms, the Group derives 25% of its GP from the UK ICT market (H1 2009: 33%; FY 2009: 31%). The Group's exposure to Public Sector clients reduced substantially over the period and now represents 7% of total transactions, down from 12% in the full year 2009. Although this reflects some absolute decrease in demand in this segment, it also reflects the Group's agility and ability to re-focus its resources.

 

During the period 54% of Group GP was attributable to Contract compared to 58% during the same period in 2009. This realignment would be expected as markets improve, but was also exacerbated by the geographical remixing of the business away from the UK, which is more exposed to contract, with the latter representing 65% of UK GP during H1 2010. The headline number of Group contractors reduced by 12.1% to 3,952 (2009: 4,494). In terms of the Group's expected seasonal decline in contract numbers from the end of the previous financial year, this was within the normal range at 4.9% (29 November 2009: 4,157). In H1 the Group made 2,842 permanent placements, a reduction of 13.9% (2009: 3,302).

 

 

Breakdown of GP

Six months ended

30 May 2010

%

Year ended

29 Nov 2009

%

Six months ended

31 May 2009

%

Contract

54

58

58

Permanent

46

42

42

Total

100

100

100

Continental Europe

50

49

51

Rest of World

10

6

3

UK

40

45

46

Total

100

100

100

Non ICT

34

28

25

ICT

66

72

75

Total

100

100

100

 

Strategy

 

The Group has a well-established strategy based on rolling out the SThree model to an increasing number of geographies and across a widening range of specialist staffing disciplines. The success of this strategy is reflected in the fact that our businesses outside of the UK ICT sector represented 75% of Group GP in H1 2010 (H1 2009: 67%; H1 2008: 55%). In order to further support the Group's international expansion the Group's most senior operational management is now organised along geographical lines with multiple brand responsibility within a region rather than by responsibility for a particular brand across regions.

 

The Group's core strategy will continue to be based on organic growth. Although we are not philosophically opposed to considering acquisitions, we would see any as opportunistic and more likely to be small "bolt-ons" capable of offering niche expertise we would find more difficult to build internally. A further key element of our strategy is to remain highly selective regarding the quality of the business we undertake. We remain healthily sceptical of the value of the "high volume, low margin" model associated with servicing the larger corporate market in more mature markets (particularly in the UK and US). The Group instead prefers to engage with less price-focused clients who value its services.

 

As a result our customer base is wide and varied, with a high percentage of SMEs. This reduces the Group's exposure to a limited number of powerful customers and also ensures that we mitigate the margin pressure associated with "wholesale" buyers such as the major systems integration companies. In this respect it is instructive to note that despite the fact that in H1 2010 66% of the candidates we placed were ICT professionals, only approximately 19% of our transactions are with customers in the ICT sector.

 

This strategy is supported by our multi-brand approach which allows the Group to segment the market around specific niches. This allows us to credibly position ourselves as market experts, which in turn justifies premium pricing. Our entrepreneurial culture is reinforced by our Minority Interest model, which is both a significant retention tool for existing management and a unique proposition to attract the brightest and best talent into the Group.

 

Margins & Value

 

We believe that our choice of client type and clear focus on highly specialised niche markets allows us to defend a premium position in pricing terms. Overall Group gross margin stayed stable year on year at 33.6% (H1 2009: 33.5%) supported by a shift in the business towards permanent and a 2.0% like for like improvement in the average permanent fee to a record £12,071 (2009: £11,838). Moving in the other direction the Group saw a modest decline in the average contract margin to 21.4% (2009: 22.5%) and a reduction in the average Gross Profit per Day Rate (GPDR) of 4.3% to £83.91 (2009: £87.67). Here it should be remembered that the Group's contract margins and values have been consistently strong by comparison with its peer group and hence comparatives are challenging. It is likely that a number of factors rather than any single variable are at work. Suffice it to say that the data is not suggestive of any structural decline and we do not believe this is a major long term issue.

 

Performance by Geography

 

UK Gross Profit at £30.2m was down 29% year on year (2009: £42.6m) reflecting the reduction in the average number of consultants which was down 38% year on year. Permanent placements were down 16.2% and period end contractors were down 21.8% year on year. In terms of value, Permanent fees and GP day rates eased by 1.8% and 4.7% respectively. The latter was affected by the decline in demand for public sector contractors which were typically at higher margins than the UK average.

 

Mainland Europe Gross Profit of £36.8m was down by 23% year on year (2009: £47.6m). Market conditions in Benelux (and in particular Holland) remained challenging and this is reflected in a 34% year on year reduction in Gross Profit. That said, like the UK, the Benelux region was also impacted by a reduction in the average number of consultants compared to H1 2009, which were down 28% year on year. France performed better in the period than Benelux, with GP down 14% on the same period last year and the average number of consultants down 17% year on year.

 

The much less developed German market was broadly level in GP terms despite comparison with a relatively strong H1 2009 during which the Group's German business performed very resiliently. Germany's H1 2010 performance is also a reflection of the headcount investment in what we consider to be a market capable of exceptional medium term growth. As such, the average number of consultants increased by 27% year on year, with consultants hired during H1 2010 having limited opportunity to contribute in the period. As these new hires gain experience we expect them to contribute meaningfully in H2 and beyond.

 

ROW Gross Profit was up 136% year on year, with strong performances in Hong Kong and New York driven by our exposure to the banking sector. New York's average permanent fees in the period improved by 9.1% to £21,537 (H1 2009: £19,741) which compares to a Group average of £12,071 and demonstrates that good quality business can be done in even a highly mature market if the market proposition is compelling.

 

Our developing Oil and Gas franchise helped drive strong performances in Singapore and Perth. The latter office is pioneering the Group's move into the mining sector - a market with substantial potential to be rolled out in other geographies.

 

Geographical & Sector Expansion

 

Of the Group's total of fifty one offices, twenty nine are outside the UK with twenty one in Europe and eight in the ROW. In H1 the Group continued its roll out of international offices, opening in Perth, its second Australian office, which will focus on the Oil and Gas and Mining markets. We also added to our German office network with further openings in Munich and Düsseldorf, making a total of eleven offices in Germany. The Group also opened its first Indian office in Delhi, focusing on the financial market place.

 

These openings illustrate the two parallel strands of our international strategy - on the one hand launching into new territories and markets, and on the other further expanding within those in which we already have a substantial presence. Indeed much of the Group's growth will come from scaling up our operations in our established geographies and markets. In this regard the Group has in many of its territories substantial capacity to scale up without the need to add to the existing office footprint.

 

The strong performance in H1 2010 by ROW was helped by the increasing contribution made by the roll out of newer sectors (i.e. non ICT) into these newer geographies. The long term potential of this approach is increasingly evident. Looking forward we still have substantial scope for more of this type of cross-pollination of sectors with geographies. Markets with global potential such as that addressed by our Oil and Gas and Banking franchises are therefore particularly exciting. The Group recently opened an office in San Francisco and will open in Qatar in H2 2010. In addition, the Group is currently considering a number of further international office openings due to be rolled out during 2011/12.

 

Staffing Levels

 

At the end of the half-year total headcount for the Group was 1,777, an overall increase of 11.3% on the previous year end (2009 year end: 1,597). At the half year versus the year end 2009 position, UK sales headcount was up 3.4%, Continental Europe headcount was up 14.0% and ROW was up 39.6%. The Group continues to hire sales consultants into extant teams where there is objective market based evidence to support the investment and to staff the opening of our new international offices.

 

The Group's strategic preference is for growing headcount primarily through hiring of new graduates or those relatively early in their careers. These hires typically take around six to nine months to become productive. The investment in headcount in 2010 is likely to accentuate the Group's normal H2 seasonal profit weighting.

 

Cash Flow

 

At the start of the period the Group had cash of £45.3m. During the period the Group generated cash from operating activities of £4.3m (2009: cash inflow of £37.3m) being £11.1m of operating cashflow before changes in working capital and provisions (2009: £6.5m) and an increase in working capital requirements and provisions of £6.8m (2009: reduction in working capital of £30.8m). Dividends paid in the period increased by £10.4m as a result of the payment of a second interim dividend of 8.0p per share in March 2010 (2009: nil) in place of the final dividend which is usually paid in June, and dividends to minority interest shareholders of £1.0m (2009: nil). At 30 May 2010 the Group had net cash of £28.6m and assets held to maturity of £3.0m.

 

A committed flexible invoice financing arrangement is in place with Royal Bank of Scotland Group ("RBS") until April 2012. Under this arrangement the Group is able to borrow up to £20m. Funds borrowed under this facility bear interest at the rate of 1.75% above the RBS base rate. The Group has not drawn down any amounts on this facility.

 

Taxation

 

The charge for taxation on profits before exceptional items amounted to £2.5m (2009: £3.5m), an effective rate of 34% (2009: 31.4%), reflecting the remixing of the business towards higher tax geographies.

 

Earnings per Share

 

Basic earnings per share before exceptional items reduced by 36.5% to 4.0p (2009: 6.3p). After taking account of the 2009 exceptional item, earnings per share increased by 263.6% to 4.0p (2009: 1.1p). Diluted earnings per share after the exceptional item increased by 254.5% to 3.9p (2009: 1.1p).

 

Treasury Management, Currency Risk and Other Principal Risks and Uncertainties affecting the Business

 

The main functional currencies of the Group are Sterling and the Euro. The Group has significant operations outside the United Kingdom and as such is exposed to movements in exchange rates.

 

The Board has undertaken a review of its currency hedging strategy to ensure that it is appropriate and currently the Group does not actively manage its exposure to foreign exchange risk by the use of financial instruments. The impact of foreign exchange will become a more significant issue for the Group as we expect the business mix to move further towards international, with international business accounting for 60% of Gross Profit in 2010 (2009: 54%). The Group therefore continues to monitor its policies in this area.

 

Other principal risks and uncertainties affecting the business activities of the Group may broadly be categorised by: the macro-economic environment; competitive environment; commercial relationships/ customer credit risk; availability of candidates; contractual risk; people; information technology; regulatory environment and legislative changes; and foreign exchange. More details are set out in the Directors' Report section of the Annual Report for the year ended 29 November 2009, a copy of which is available on the Group's website at www.sthree.com. In terms of macro economic environment risks, as previously stated, our strategy is to continue to grow the size of our international business in both financial terms and geographic coverage in order to reduce the Group's exposure or dependence on any one specific economy, although a downturn in a particular market could adversely impact the Group's business. In the view of the Board, there is no material change expected to the Group's key risk factors in the foreseeable future.

 

Dividends

 

It is the Board's intention to pay dividends at a level that it believes is sustainable throughout the economic cycle. The Board proposes to pay a maintained interim dividend of 4.0p (2009: 4.0p) per share, which will be paid on 3 December 2010 to those shareholders on the register at 5 November 2010.

 

Outlook

 

Compared to the extremely distressed market witnessed in H1 2009, the Group operated in far more benign conditions during H1 2010. Sequential improvements during the period gave the Group confidence to begin to rebuild established teams on an evidence-led and market driven basis. In addition we invested in the staffing of our new international offices and teams addressing new market segments. This means that the Group is increasingly exposed to markets with strong structural growth characteristics.

 

Currently, having a strong sense of where the market is heading remains difficult. On the basis of the available data and based on our most recent performance, assuming confidence remains positive, we remain cautiously optimistic.

 

That said, we are a debt-free, cash rich business with a long track record of consistent profitability and a highly experienced management team who are capable of dealing with whatever market conditions are presented to them. We are also a more diversified business by geography and by sector than at any time in our twenty four year history, which positions us extremely well both for the short and the longer term.

 

 

 

Consolidated Statement of Comprehensive Income - unaudited

for the six months ended 30 May 2010

 






Audited





Six months ended

Year ended





31 May

29 November





2009

2009



Note


 £'000

 £'000

 £'000

 

Continuing operations






Revenue


2


             280,578

             519,372

Cost of sales




(147,359)

        (187,283)

         (348,217)

Gross profit


2


               74,317

               93,295

             171,155

Administrative expenses




(67,195)

(90,772)

          (162,209)

Operating profit




                 7,122

                 2,523

                 8,946

Finance income




                    284

                    359

Finance cost




-

(96)

     (378)

Profit before income tax




                 7,349

                 2,711

                 8,927

Analysed as:







Underlying profit before exceptional items




               11,175

               17,977

One-off exceptional items


3


(8,464)

(9,050)





                 7,349

                 2,711

                 8,927

Income tax


4


(2,499)

(1,081)

(2,965)

Profit for the period




                 4,850

                 1,630

                 5,962

Other comprehensive income







Exchange differences on retranslation of foreign operations




                 1,663

                    243

Deferred tax on employee share options




                    254

                    620

Current tax on employee share options




                      -  

                 1,042

Employee share award and share option credit




                    600

                 1,448

Employee subscription for share awards




                    333

                      -  

                    182

Other comprehensive income for the period (net of tax)




                 (858)

                 2,517

                 3,535

Total comprehensive income for the period




                 3,992

                 4,147

                 9,497

Profit for the period attributable to:







Owners of the parent




                 1,287

                 4,798

Minority interest




                     67

                    343

                 1,164





                 4,850

                 1,630

                 5,962

Total comprehensive income attributable to:






Owners of the parent




                 4,063

                 9,339

Minority interest




                    208

                     84

                    158





                 3,992

                 4,147

                 9,497







Earnings per share


       6


 pence

 pence

 pence







Basic before exceptional items




                    6.3

                    9.5

Diluted before exceptional items




                    6.1

                    9.2







Basic after exceptional items




                    1.1

                    4.0

Diluted after exceptional items




                    1.1

                    3.9







 

An interim dividend of 4.0 pence (31 May 2009: 4.0 pence) per ordinary share will be paid on 3 December 2010 to shareholders on the register at the close of business on 5 November 2010.

 

 

 

Consolidated Statement of Financial Position - unaudited

as at 31 May 2010

 






Audited





               Six months ended

Year ended





30 May

31 May

29 November





2010

2009

2009



Note


 £'000

 £'000

 £'000








ASSETS







Non-current assets







Property, plant and equipment




                 5,540

                 6,558

                 5,398

Intangible assets




               10,023

               11,479

               10,899

Deferred tax assets




                 8,946

                 5,640

                 5,515





24,509

23,677

21,812








Current assets







Trade and other receivables


7


               85,141

             101,816

               93,229

Current tax assets




                      -  

                      - 

3,309

Cash and cash equivalents


8


               28,645

               43,943

               45,272

Assets classified as held-to-maturity


9


                 2,974

                      -  

                 3,203





116,760

145,759

145,013








Total assets




141,269

169,436

166,825








EQUITY AND LIABILITIES







Share capital




                 1,218

                 1,218

                 1,218

Share premium




                 2,925

                 2,925

                 2,925

Capital redemption reserve




                    168

                    168

                    168

Capital reserve




                    878

                    878

                    878

Currency translation reserve




                     13

                 3,910

                 2,416

Retained earnings




               64,589

               66,613

               72,562

Equity attributable to owners of the company




               69,791

               75,712

               80,167








Minority interest




                 3,888

                 4,366

                 4,650








Total equity




73,679

80,078

84,817








Non-current liabilities







Provisions for liabilities and charges


10


2,740

3,458

2,889





2,740

3,458

2,889








Current liabilities







Provisions for liabilities and charges


10


                 1,491

4,011

3,063

Trade and other payables




62,202

78,923

76,056

Current tax liabilities




                 1,157

2,966

-  





64,850

85,900

79,119








Total liabilities




67,590

89,358

82,008








Total equity and liabilities




141,269

169,436

166,825









 

 

 

Consolidated Statement of Changes in Equity - unaudited

for the six months ended 30 May 2010

 


Attributable to owners of the company





 Share
capital

 Share
premium

 Capital
redemption
reserve

 Capital
reserve

 Currency
translation
reserve

 Retained
earnings

 Total

 Minority interest

 Total
equity




 £'000

 £'000

 £'000

 £'000

 £'000

 £'000

 £'000

 £'000

 £'000

Audited










 

Balance at 30 November 2008

       1,218

        2,925

            168

            878

        2,331

      78,906

      86,426

        4,147

      90,573

Profit for the six months to 31 May 2009

              -  

               -  

               -  

               -  

               -  

        1,287

        1,287

            343

        1,630

Other comprehensive income





        1,579

            854

        2,433

              84

        2,517

Total comprehensive income for the period

              -  

               -  

               -  

               -  

        1,579

        2,141

        3,720

            427

        4,147

Issue of share capital to minority interest

              -  

               -  

               -  

               -  

               -  

               -  

               -  

            103

            103

Repurchase of minority interest

              -  

               -  

               -  

               -  

               -  

               -  

               -  

          (311)

          (311)

Dividends to equity holders

              -  

               -  

               -  

               -  

               -  

    (14,434)

    (14,434)

               -  

    (14,434)


              -  

               -  

               -  

               -  

               -  

    (14,434)

    (14,434)

          (208)

    (14,642)

Unaudited










Balance at 31 May 2009

       1,218

        2,925

            168

            878

        3,910

      66,613

      75,712

        4,366

      80,078











Profit for the six months to 29 November 2009

              -  

               -  

               -  

               -  

               -  

        3,511

        3,511

            821

        4,332

Other comprehensive income





       (1,494)

        2,438

            944

              74

        1,018

Total comprehensive income for the period

              -  

               -  

               -  

               -  

       (1,494)

        5,949

        4,455

            895

        5,350

Issue of share capital to minority interest

              -  

               -  

               -  

               -  

               -  

               -  

               -  

              57

              57

Repurchase of minority interest

              -  

               -  

               -  

               -  

               -  

               -  

               -  

          (587)

          (587)

Dividends to minority interest

              -  

               -  

               -  

               -  

               -  

               -  

               -  

            (81)

            (81)


              -  

               -  

               -  

               -  

               -  

               -  

               -  

          (611)

          (611)

Audited










Balance at 29 November 2009

       1,218

        2,925

            168

            878

        2,416

      72,562

      80,167

        4,650

      84,817

Profit for the six months to 30 May 2010

              -  

               -  

               -  

               -  

               -  

        4,783

        4,783

              67

        4,850

Other comprehensive income





       (2,403)

        1,404

          (999)

            141

          (858)

Total comprehensive income for the period

              -  

               -  

               -  

               -  

       (2,403)

        6,187

        3,784

            208

        3,992

Dividends to equity holders

              -  

               -  

               -  

               -  

               -  

    (14,160)

    (14,160)

               -  

    (14,160)

Dividends to minority interest

              -  

               -  

               -  

               -  

               -  

               -  

               -  

          (970)

          (970)


              -  

               -  

               -  

               -  

               -  

    (14,160)

    (14,160)

          (970)

    (15,130)

Unaudited










Balance at 30 May 2010

       1,218

        2,925

            168

            878

              13

      64,589

      69,791

        3,888

      73,679

 

 

 

Consolidated Statement of cash flow - unaudited

for the six months ended 30 May 2010

 






Audited





          Six months ended

Year ended





30 May

31 May

29 November





2010

2009

2009



Note


 £'000

 £'000

 £'000








Cash flows from operating activities







Profit before taxation




                 7,349

                 2,711

                 8,927

Depreciation and amortisation charge




                 3,004

                 3,038

                 6,128

Goodwill recognised in the statement of comprehensive income




-  

 -  

               (237)

Loss on disposal of investments




                      -  

                      -  

                    478

Finance income




           (227)

(284)

(359)

Finance costs




                      -  

                     96

                    378

Loss on disposal of property, plant and equipment




                      -  

                    309

                 1,107

Loss on disposal of intangible assets




                      -  

                      -  

                    355

Non-cash charge for employee share options and awards




                    600

                    600

                 1,448

Employee subscription for share awards




                    333

                      -  

                    182








Operating cash flows before changes in
working capital and provisions










               11,059

                 6,470

               18,407

Decrease in receivables




                 6,705

               41,018

               50,952

(Decrease) in payables




           (11,935)

(13,763)

             (7,704)

(Decrease)/increase in provisions




            (1,568)

3,583

2,011








Cash generated from operating activities




                 4,261

               37,308

               63,666

Income tax paid




             (1,354)

 (11,735)

             (18,267)

 

Net cash generated from operating activities


                 2,907

               25,573

               45,399








Cash flows from investing activities







Purchase of property, plant and equipment




                (1,464)

                (1,552)

                (2,726)

Purchase of intangible assets




                (735)

(926)

(2,128)

Purchase of held-to-maturity investment




 -  

-  

(3,203)

Proceeds from disposal of investments




                      -  

                      -  

                     40

Net cash used in investing activities




                (2,199)

                (2,478)

                (8,017)








Cash flows from financing activities







Finance income




                    227

                    284

                    359

Finance costs




  -

 (96)

               (378)

Issue of share capital of subsidiary companies to minority interest



                      -  

                    103

                     10

Repurchase of minority interest




                      -  

(311)

              (1,371)

Dividends paid to equity holders




(14,160)

(4,738)

(14,434)

Dividends paid to minority interest




                  (970)

                      -  

                    (81)

Net cash used in financing activities




             (14,903)

            (4,758)

          (15,895)

Net (decrease)/increase in cash and cash equivalents




              (14,195)

               18,337

               21,487

Cash and cash equivalents at the beginning of the period




               45,272

               24,584

               24,584

Effect of exchange rate changes




(2,432)

1,022

                  (799)

Cash and cash equivalents at the end of the period


8


               28,645

               43,943

               45,272

 

 

 

Notes to the Financial Statements - unaudited

for the six months ended 30 May 2010

 

1              Accounting policies                                                                                           

 

General information                                                                                                          

 

SThree plc ("the Company") and its subsidiaries (together "the Group") operate predominantly in the United Kingdom and Continental Europe.  The Group consists of different brands and provides both permanent and contract specialist staffing services, primarily in the ICT sector and, to an increasing extent, the banking and finance, accountancy, human resources, engineering, pharmaceutical and jobboard sectors.                                                                                                                                                                                                                  

The Company is a limited liability company incorporated and domiciled in the United Kingdom.  The Company is listed on the London Stock Exchange. The address of its registered office is 215 Great Portland Street, London, W1W 5PN.                                                                                                                                                                      

This consolidated interim financial information was approved for issue on 16 July 2010.                                                                                                                                                                   

This consolidated interim financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 29 November 2009 were approved by the Board of directors on 29 January 2010 and delivered to the Registrar of Companies.  The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.                                                                                                                                                                                    

This consolidated interim financial information has been reviewed, not audited.                                                                                                                                                                                  

Basis of preparation                                                                                                          

                                                                                                               

This consolidated interim financial information for the six months ended 30 May 2010 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34, 'Interim Financial Reporting' as adopted by the European Union. The  consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 29 November 2009, which have been prepared in accordance with IFRSs as adopted by the European Union.                                                                                                                                                                      

Significant accounting policies                                                                                                        

                                                                                                               

Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 29 November 2009, as described in those annual financial statements.                                                                                                                                                                                                                                                                                   

The Group has adopted the following IFRS, IFRIC and amendments with effect from 30 November 2009. Apart from presentational changes and revised disclosures, they did not have a material effect on the results or net assets of the Group:                                                                                                                   

-       Amendments to IAS 1 'Presentation of Financial Statements' (effective from periods commencing on or after 1 January 2009). The revised standard affects the presentation of other changes in equity and introduces a statement of comprehensive income. The Group have the option of presenting items of income and expense and components of other comprehensive income either in a single statement of comprehensive income with subtotals, or in two separate statements (a separate income statement followed by a statement of other comprehensive income).

               

-       Amendments to IAS 19 'Employee Benefits' in respect of definition of 'return on plan assets' to require the deduction of plan administration costs only to the extent that such costs have not been reflected in the actuarial assumptions used to measure the defined benefit obligation. Effective from periods commencing on or after 1 January 2009, it also amends the definition of 'short-term employee benefits' and 'other long-term employee benefits' to refer to when the benefits are 'due to be settled', rather than when they 'fall due'.

 

-       Amendments to IAS 23 'Borrowing Costs' (effective from periods commencing on or after 1 January 2009) eliminates the option to recognise all borrowing costs immediately as an expense. To the extent that borrowing costs relate to the acquisition, construction or production of a qualifying asset, the revised Standard requires that they be capitalised as part of the cost of that asset. All other borrowing costs should be expensed as incurred.

 

-       Amendments to IAS 27 'Consolidated and Separate Financial Statements' and IFRS 3 'Business Combinations' are effective from periods commencing on or after 1 July 2009. The amendments relate primarily to accounting for minority interest and the losses of control of a subsidiary. They also address the guidance for applying the acquisition method of accounting.

 

-       Amendments to IAS 32 'Financial Instruments: Presentation' and IAS 1 'Presentation of Financial Statements' in respect to puttable financial instruments and obligations arising on liquidation are effective from periods commencing on or after 1 January 2009. Subject to specified criteria being met, these instruments are classified as equity whereas, prior to these amendments, they were classified as financial liabilities.

 

-       Amendments to IAS 39 'Financial Instruments: Recognition and Measurement' in respect of eligible hedged items. Effective from periods commencing on or after 1 July 2009, it provides clarification on identifying inflation as a hedged risk or portion and hedging with options.                                                                                       

 

-       Amendments to IFRS 2 'Share-Based Payment' (effective from periods commencing on or after 1 January 2009) clarifies terms 'vesting conditions' and 'cancellations' with proposed recognition and measurement criteria.

 

-       Effective from periods commencing on or after 1 January 2009, the amendments to IFRS 7 'Financial Instruments: Disclosures' require enhanced disclosures about fair value measurements and liquidity risk in the wake of the recent financial crisis.

 

-       IFRS 8 'Operating segments' (effective from periods commencing on or after 1 January 2009) sets out requirements for disclosure of information about an entity's operating segments and also about the entity's products and services, the geographical areas in which it operates, and its major customers. This standard replaces IAS 14 'Segment Reporting' and require a change in the disclosure of segmental information.

 

-       IFRIC 15 'Agreements for the Construction of Real Estate' (effective from periods commencing on or after 1 January 2009) applies to the accounting for revenue and associated expenses by entities that undertake the construction of real estate directly or through subcontractors.

 

-       IFRIC 17 'Distributions of Non-cash Assets to Owners' (effective from periods commencing on or after 1 July 2009) provides guidance on the appropriate accounting treatment when an entity distributes assets other than cash as dividends to its shareholders.      

 

-       IFRIC 18 'Transfers of Assets from Customers' (effective from periods commencing on or after 1 July 2009) concludes that when the item of property, plant and equipment transferred meets the definition of an asset from the perspective of the recipient, the recipient should recognise the asset at its fair value on the date of the accordance with IAS 18 'Revenue'.                                                                                                                               

As at the date of authorisation of these financial statements, the following standards and interpretations were in issue but not yet effective. The Group has not applied these standards and interpretations in the preparation of financial statements.                                                                                                                                              

-       The revised Standard IAS 24 'Related Parties Disclosure' is effective from periods commencing on or after 1 January 2011. The standard revises the definition of a related party and clarifies that disclosure is required of any commitments of a related party to do something if a particular event occurs or does not occur in the future, including executory contracts (recognised and unrecognised).

 

-       Amended IAS 32 'Financial Instruments: Presentation' addresses the accounting for rights issues (rights, options or warrants) that are denominated in a currency other than the functional currency of the issuer. It requires that rights, options or warrants to acquire a fixed number of an entity's own equity instruments for a fixed amount of any currency are equity instruments (regardless of the currency in which the exercise price is denominated) if the entity offers the rights, options or warrants pro rata to all of its existing owners of the same class of its own non-derivative equity instruments. The amendment is effective from periods commencing on or after 1 February 2010.

 

-       Amendments to IFRS 1 'First-time Adoption of International Financial Reporting Standards' is effective from periods commencing on or after 1 July 2010. The standard gives first-time adopters the same relief from providing comparative period disclosures required by the IFRS 7 Amendments as the current IFRS preparers.

 

-       IFRS 9 'Financial Instruments' will establish principles for the financial reporting of financial assets that will present relevant and useful information to users of financial statements for their assessment of the amounts, timing and uncertainty of the entity's future cash flows. The standard is applicable for periods commencing on or after 1 January 2013.

 

-       Amendments to IFRIC 14 'Prepayments of a Minimum Funding Requirement' (effective from periods commencing on or after 1 January 2011) remove an unintended consequence arising from the treatment of prepayments of future contributions in some circumstances when there is a minimum funding requirement.

 

-       IFRIC 19 'Extinguishing Financial Liabilities with Equity Instruments' (effective from periods commencing on or after 1 July 2010) addresses the accounting by an entity when the terms of a financial liability are renegotiated and result in the entity issuing equity instruments to a creditor of the entity to extinguish all or part of the financial liability.

 

The impact on the Group's financial statements of the future adoption of these standards and interpretations is still under review, but the Group does not expect any of these changes to have a material effect on the results of net assets in the Group.                                                                                                                                                                                                      

                                                                                               

2              Segmental analysis                                                                           

                                                                                               

IFRS 8 requires management to apply the 'management approach' to segmental reporting. This requires management to determine those segments whose operating results are reviewed regularly by the entity's chief operating decision maker to make strategic decisions and assess sector performance.                                                                                              

                                                                                                                                                                                                               

Revenue and Gross profit by reportable segment                                                                                     

                                                                                               

Management has determined the chief operating decision maker to be the Executive Committee. Operating segments have been identified based on reports reviewed by the Executive Committee, which considers the business primarily from the geographical perspective.

                                                                                                                                                                               

The Group's management reporting and controlling systems use accounting policies that are the same as those described in note 1 in the summary of significant accounting policies under IFRS.                                                                                       

                                                                                                                                                               

The Group measures the performance of its operating segments through a measure which is referred to as "Gross Profit" in the management and reporting system. Gross Profit is the measure of segment profit used in segment reporting and comprises revenue and cost of sales.                                                                                   

                                                                                                                                                                               

Intersegment revenue is recorded at values which approximate third party selling prices and is not material.                                                                                                                                                                                                                                                                   






Audited





                Six months ended

Year ended





30 May

31 May

29 November





2010

2009

2009





£'000

£'000

£'000

United Kingdom






Revenue from external customers


106,144

149,449

271,248

Gross Profit



30,235

42,591

76,939

Total Assets



102,332

113,899

130,518

Total Liabilities



49,248

65,997

59,405

Capital expenditure



1,180

1,413

3,411








Continental Europe




Revenue from external customers


105,758

126,497

239,406

Gross Profit



36,753

47,599

86,762

Total Assets



27,752

51,050

27,767

Total Liabilities



16,211

23,051

20,957

Capital expenditure



248

521

918








Rest of the World




Revenue from external customers


9,774

4,632

8,718

Gross Profit



7,329

3,105

7,454

Total Assets



11,185

4,487

8,540

Total Liabilities



2,131

310

1,646

Capital expenditure



771

544

525








Group




Revenue from external customers


           221,676

           280,578

           519,372

Gross Profit



             74,317

             93,295

           171,155

Total Assets



           141,269

           169,436

           166,825

Total Liabilities



             67,590

             89,358

             82,008

Capital expenditure



              2,199

              2,478

              4,854








 

 

The information below is included as additional disclosure to the requirements of IFRS 8 'Operating Segments'.

 




        Revenue

        Gross Profit




        Six months ended

Audited

Year ended


        Six months ended

Audited

Year ended




30 May

31 May

29 November


30 May

31 May

29 November




2010

2009

2009


2010

2009

2009




£'000

£'000

£'000


£'000

£'000

£'000

Brand









Progressive


60,796

 70,298

132,461


     19,953

       22,172

        41,918

Computer Futures Solutions

59,877

82,379

149,247


19,869

       29,514

       51,526

Huxley Associates


57,920

70,234

132,670


20,302

        23,618

       44,839

Real Staffing Group


41,456

54,986

101,679


12,565

16,078

29,557

Others


       1,627

      2,681

         3,315


         1,628

        1,913

          3,315














        221,676

        280,578

        519,372


          74,317

          93,295

        171,155











Recruitment classification







Contract


187,447

241,452

447,077


40,089

54,206

98,816

Permanent


34,229

  39,126

72,295


34,228

        39,089

72,339














        221,676

        280,578

        519,372


          74,317

          93,295

        171,155











Discipline









Information & communication technology

        166,880

        227,663

        411,761


          48,707

          69,674

        122,612

Other(1)


 54,796

52,915

 107,611


25,610

        23,621

          48,543














        221,676

        280,578

        519,372


          74,317

          93,295

        171,155

                               

(1) Including accountancy and finance, banking, engineering, oil and gas, pharmaceutical, human resources, energy, jobboard and legal sectors.

 

 

3              Exceptional items                                                                                                                               

                                                                                                                                               

Corporate and divisional restructuring                                                                                                                                         

During the prior period, the Company announced a number of changes relating to corporate and divisional restructuring. The total cost of this restructuring including redundancy, relocation and consolidation of business, was considered exceptional by virtue of its size. The Group charged the restructuring cost incurred in the prior period to the statement of comprehensive income.                             

 

 

4              Taxation                                                                                                                

                                                                                                                                               

The charge for taxation on profits amounted to £2.5m (2009:£1.1m), an effective rate of 34% (2009: 31% before exceptional items and 40% after exceptional items).

 

 

5              Dividends                                                                                                                                                                                             

 







Audited






          Six months ended

Year ended






30 May

31 May

29 November






2010

2009

2009














£'000

£'000

Amounts recognised and distributed to shareholders in the period











Final dividend per ordinary share



                   -  

              9,696

              9,696

Second interim dividend per ordinary share



              9,575

                   -  

                   -  

Interim dividend per ordinary share



              4,585

              4,738

              4,738














             14,160

             14,434

             14,434









                                               

No final dividend was proposed for the year ended 29 November 2009 (2009: 8.0 pence per ordinary share for the year ended 30 November 2008).                                                                                                     

                                                                                                               

However, a second interim dividend for the year ended 29 November 2009 (2008: nil) of 8.0 pence per ordinary share was paid on 31 March 2010 to shareholders on record at the close of business on 26 February 2010.                                                                                                                                                                 

An interim dividend for six months ended 30 May 2010 of 4.0 pence per ordinary share will be paid on 3 December 2010 to shareholders on the register at the close of business on 5 November 2010 (2009: 4.0 pence for the six months ended 31 May 2009).                           

 

 

6              Earnings per share                                                                                            

                                                                                                               

The calculation of the basic and diluted earnings per share is based on the following data.                                                                                                                                                                                                                               

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the period, excluding those held in the Employee Benefit Trust which are treated as cancelled.                                                                                                                                                                     

For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares.                                                                                                      

                                                                                                                                                                                               

 








Audited






          Six months ended

Year ended






30 May

31 May

29 November






2010

2009

2009






£'000

£'000

£'000

Earnings







Profit after taxation




              4,850

              1,630

              5,962

Minority interest




                  (67)

                (343)

             (1,164)









Profit after taxation attributable to equity holders


              4,783

              1,287

              4,798









Analysed as:







Underlying profit before exceptional items



              4,783

              7,368

             11,274

One-off exceptional items (net of tax)



                   -  

             (6,081)

             (6,476)






              4,783

              1,287

              4,798














 millions

 millions

 millions

Number of shares







Weighted average number of shares used for basic EPS


              119.8

              117.7

              118.7

Dilutive effect of share plans




                  2.7

                  3.4

                  3.8









Diluted weighted average number of shares used for diluted EPS


              122.5

              121.1

              122.5














 pence

 pence

 pence

Basic






Basic earnings per share before exceptional items


                  4.0

                  6.3

                  9.5

Basic earnings per share after exceptional items


                  4.0

                  1.1

                  4.0








Diluted






Diluted earnings per share before exceptional items


                  3.9

                  6.1

                  9.2

Diluted earnings per share after exceptional items


                  3.9

                  1.1

                  3.9

 

 

7              Trade and other receivables

 








Audited






30 May

31 May

29 November






2010

2009

2009














£'000

£'000

£'000









Current







Trade receivables




             55,410

             72,228

             60,813

Less provision for impairment of trade receivables


             (1,901)

             (3,243)

             (2,473)









Net trade receivables




             53,509

             68,985

             58,340









Other receivables




              3,300

              3,348

              5,392

Prepayments and accrued income



             28,332

             29,483

             29,497














             85,141

           101,816

             93,229

 

Trade receivables do not carry interest. The Group makes judgements on an entity by entity basis as to its ability to collect outstanding receivables and provides an allowance for doubtful accounts based on a specific review of significant outstanding invoices. For those invoices not specifically reviewed, provisions are provided at differing percentages based on the age of the receivable. In determining these percentages, the Group analyses its historical collection experience and current economic trends. Trade receivable balances are written off when the Group determines that it is unlikely that future remittances will be received. Management considers the carrying values of trade and other receivables are equal to the fair value and are deemed to be current assets.                                                                                                                                                           

Trade receivables and cash and cash equivalents are deemed to be all current loan and receivables for disclosure under IFRS 7 'Financial Instruments' - Disclosures.                                                                                                    

                                                                                                               








Audited






30 May

31 May

29 November






2010

2009

2009






£'000

£'000

£'000









The following table shows the development of allowances on receivables:











Allowances at start of financial period



              2,473

              2,772

              2,772

Charge for the period




                 389

              2,275

              1,968

Amounts utilised during the period



                (641)

                (508)

             (1,035)

Amounts released during the period





                (320)

             (1,296)

             (1,232)









Allowances at end of financial period



              1,901

              3,243

              2,473

                                                                                               

 

8              Cash and cash equivalents              

 








Audited






30 May

31 May

29 November






2010

2009

2009






£'000

£'000

£'000









Cash and cash equivalents include the following for the purposes of the cash flow statement:









Cash in hand and at bank




             28,645

             43,943

             45,272














             28,645

             43,943

             45,272

 

 

9              Assets classified as held-to-maturity                           

 








Audited






30 May

31 May

29 November






2010

2009

2009






£'000

£'000

£'000









Fixed rate Euro Bond




              2,974

                   -  

              3,203

 

The Group invested in a fixed rate Euro bond. The interest rate on this security is 1.16% per annum (2009: 1.4% per annum). The bond has a fixed maturity date of 8 November 2010 (2009: 6 May 2010), that is, between 3 to 6 months from the end of the reporting period. The counterparty has a minimum A credit rating. This asset is not past due or impaired.                                                           

 

 

10            Provisions for liabilities and charges                                                                                                                                                                                                                            





Corporate and








divisional








Restructuring

Property

Other

Total





£'000

£'000

£'000

£'000








At 30 November 2008  (Audited)



 -

1,288

2,579

              3,867

Charged/(released) to the statement of comprehensive income

8,464

186

(372)

              8,278

Utilised during the period



             (4,676)

                   -  

-  

(4,676)








At 31 May 2009  (Unaudited)



              3,788

1,474

2,207

              7,469

Charged/(released) to the statement of comprehensive income

                 586

353

65

              1,004

Utilised during the period



             (2,298)

(223)

-

(2,521)








At 29 November 2009 (Audited)



              2,076

1,604

2,272

          5,952

Charged/(released) to the statement of comprehensive income

                   -

184

(289)

               (105)

Transfer



(511)

511

-

-

Utilised during the period



 (1,565)

(51)

 -  

(1,616)








At 30 May 2010  (Unaudited)



-

2,248

              1,983

              4,231














30 May

31 May

Audited

29 November






2010

2009

2009

 

Current / non-current analysis:



£'000

£'000

£'000









Current liabilities




1,491

4,011

3,063

Non-current liabilities




2,740

3,458

2,889














              4,231

              7,469

              5,952

                                                                                               

 

Restructuring                                                                                                      

On the 15 April 2009, the Group announced a number of changes relating to corporate and divisional restructuring. The Group has charged the restructuring cost incurred of £9.1m at 29 November 2009 to the statement of comprehensive income in the previous period. The transfer to 'property' provision represents the residual amounts of £0.5m relating to property rationalisation costs.                                                                                           

 

Property                                                                                                               

Dilapidations - The Group is obliged to pay for dilapidations at the end of its tenancy of various properties.  Provision has been made based on independent professional estimates of the likely costs based on current conditions and these have been spread over the relevant lease term. The liability will crystallise as follows: within one year £0.9m (2009: £0.2m), one to five years £0.7m (2009: £0.9m) and after five years £0.6m (2008: £0.4m).                                                                                                        

                                                                                                               

Other                                                                                                     

The provision meets the definition of a financial liability and arises from a contractual obligation.                                                                                                                                                                                                                       

Other provisions principally include amounts in respect of contractual liabilities resulting from indemnities given to Group clients in continental Europe arising in the normal course of business in respect of the employment status of contractors.                                                                               

The timing of settlement is uncertain but the Directors expect that the provision may be utilised within the average statute of limitation period in the countries to which this exposure relates.                                                                                                             

 

 

11            Related party disclosure                                                                                  

                                                                                                               

The Group's significant related parties are as disclosed in the SThree plc Annual Report for the year ended 29 November 2009. There were no material differences in related parties or related party transactions in the period or prior period.                                                                                                                                                                                                       

 

12            Contingent Liabilities                                                                                        

 

The Group has contingent liabilities in respect of legal claims arising in the ordinary course of business. It is not anticipated to result in a material cash outflow for the Group.                                                                                                  

                                                                                                                                                                                                               


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