SThree Selectively Growing It's Sales Teams
Q1 Interim Management Statement
SThree plc has issued an Interim Management Statement covering the quarter ended 28 February 2010.
Group Gross Profit achieved in the first quarter declined by 27%* year on year to circa 36m (2009: 49.5m). UK gross profit declined by 36% and non-UK gross profit declined by 19%*. Non-UK now represents 60% of gross profit (2009: 55%).
At the end of the first quarter SThree had 3,906 active contractors, a decrease of 22.4% on the same quarter in the prior year (2009: 5,036) and a seasonal decline of 6.0% on the year end number (29 November 2009: 4,157). Average contractor gross profit per day rates remained strong, being maintained quarter on quarter and year on year. During the quarter SThree made a total of 1,389 permanent placements, a reduction of 19.6% over the prior year (2009: 1,728), but up 2.6% on the fourth quarter of 2009. Average placement fees have remained strong. In the quarter, Permanent now represents 45% of gross profit (2009 full year: 42%).
At the end of the first quarter UK contract runners were down 31.1% year on year, or 5.6% quarter on quarter. UK gross profit per day rates remained robust. During the quarter, UK permanent placements were down 25.9% year on year, but were up 4.3% quarter on quarter. Average UK permanent placement fees were down by 8.0% year on year. (Pipeline** UK permanent placement fees in the quarter were ahead of those in both the prior year and the previous quarter).
At the end of the first quarter non-UK contract runners declined by 6.1% year on year and 6.6% quarter on quarter, with gross profit per day rates remaining strong and stable. During the quarter, non-UK permanent placements declined year on year by 15.8%, but were up 1% quarter on quarter. Average fees remained robust.
The current deal pipeline indicates that the Group is experiencing improvements across most markets. First quarter deal pipeline gross profit is up 12.6% year on year and within the quarter deal pipeline gross profit is on an improving year on year trend.
Total Group headcount at 28 February 2010 of 1,675 was up 4.9% versus the year end headcount of 1,597 and down 22.3% year on year (2009: 2,155). UK sales headcount was down 39.2% year on year, but up 2.0% quarter on quarter and non-UK down 10.0% year on year, but up 7.6% quarter on quarter. We continue to hire sales consultants into teams where there is performance-based evidence to support the investment. On this basis the Group had 157 live sales vacancies at the end of the quarter.
During the first quarter the Group continued its roll out of international offices, opening its second Australian office in Perth and adding to its German footprint with further openings in Munich and Dsseldorf.
The Group remains strongly cash generative with net cash of 40m at 28 February 2010.
Russell Clements, Chief Executive, commented:
"Bearing in mind that year on year comparatives are distorted by big differences in headcount and quarter on quarter comparatives are complicated by seasonal factors, the overall picture is consistent with a market showing some meaningful signs of improvement in the first quarter. That said, trading conditions still have some way to go before they can be regarded as normal.
"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 expansion of our international network reflects our commitment to building the longer term future of our business."
* at constant currency
** Deal pipeline includes placements agreed which are yet to start with client