SThree plc has issued a trading update
SThree plc has issued a trading update for the financial year ended 28 November 2010.
All markets now improving and in growth
Full year results expected to be slightly ahead of market consensus
Group Gross Profit of circa 167m, down 2% year on year (2009: 171.1m)
Permanent Gross Profit up 15%* year on year for the full year and up 53%* year on year in Q4
Contract Gross Profit down 12%* year on year for the full year, but up 4%* year on year in Q4
Greater geographical diversification, with non-UK share of gross profit now at 60% (2009: 55%) and 6 new overseas offices opened during the year
Year end net cash of circa 53m (2009: 48.5m)
SThree closed the year with 4,359 contract runners, up 4.9% year on year (2009: 4,157) and a 6.5% increase on Q3's runners of 4,093. Average contractor gross profit per day rates have remained strong in the period.
SThree made 6,551** permanent placements that started in the year, an increase of 8.3% year on year (2009: 6,060) and sequentially up 20.4% Q4 vs Q3. Average placement fees for the year have remained strong.
The current permanent deal pipeline reflects improvements across all markets. At 28 November 2010, the number of permanent deals agreed in the period, with candidates due to start in the future, were up more than 40% year on year.
The Group has continued to become more diversified. For the full year, the Board estimates that non-UK Gross Profit now represents 60% of the Group Gross Profit (2009: 55%). During the year 6 new offices were opened, in Perth, Delhi, Houston, San Francisco, Munich and Dsseldorf, bringing the total to 52. Further new offices in Qatar and Antwerp are due to open in Q1 2011 and in Sao Paulo in Q2 2011.
The Board estimates that Contract Gross Profit now represents 51% of gross profit (2009: 58%) and non-ICT represents 38% of Group Gross Profit (2009: 28%).
For the full year 2010, public sector accounted for circa 6% of Group transactions versus 12% in 2009. As expected, the proportion of public sector transactions in Q4 remained at 5%, in line with Q3.
Total Group headcount as at 28 November 2010 of 1,863 was up 16.7% year on year (2009: 1,597), and up 4.8% on the half year 2010 position of 1,777 heads. In Q4 we consciously slowed down the rate of hiring, in line with normal seasonality. In 2011 we expect to continue to grow headcount based upon the same objective criteria that we have applied during the current year.
The Group remains in a strong net cash position, with net cash of circa 53m at the year end (2009: 48.5m). DSOs have remained level at 37 days (2009: 37 days). The Group has committed facilities of 20m, which were not utilised during the period.
Given the strong financial position of the Group and the balanced business model, the Board remains robustly committed to its dividend policy.
Russell Clements, Chief Executive, commented: "Our performance remains consistent with improving markets across all of the geographies in which we operate. By the final quarter of the year, all of our markets were showing both year on year and sequential growth.
"During the year we grew our sales headcount substantially and opened six new international offices. We also made further progress in terms of sector diversification. Taken as a whole I am very satisfied with our performance in 2010. We are now a more international and diverse business than at any time in our history, well positioned to achieve our global growth plans."