Positive Performance At SThree plc
Positive Performance At SThree plc
SThree plc the international specialist staffing business, has issued an Interim Management Statement for the period from 26 May 2013 to date. The financial data relates to the three month period ending 25 August 2013, being the third quarter of the financial year ending 1 December 2013.
· Group gross profit down 2%* year on year but up 5%* sequentially versus Q2
· Contract gross profit up 7%* year on year and up 6%* sequentially versus Q2
· Good growth in contractor runners - up 8% year on year and up 5% on 2012 year end peak
· Permanent gross profit down 11%* year on year, broadly in line with average permanent consultant headcount down 9% but up 3% sequentially versus Q2
· Permanent deal pipeline volume down 13% year on year
· Strong performance from newer sector disciplines - Energy up 20%* year on year, Pharma & Biotech up 19%* year on year
· Continued strong growth in the Americas (up 30% year on year and up 23% sequentially versus Q2), now represent circa 12% of Group gross profit
Contract performed encouragingly in the period, with strong growth in gross profit in Europe (8%*) and Rest of World (42%*), offsetting a small decline of 3% in the UK&I. The number of contract runners was up 5% versus the start of 2013. Average contractor gross profit per day rates remained robust during the quarter, as a result of new margin controls and positive geographical and sector mix impacts, as newer sectors such as Energy and Pharma & Biotech grew their share of the contract book.
Permanent gross profit declined by 11%* (Q2: down 18%*), but was up 3%* sequentially. UK&I permanent gross profit declined by 19% (Q2: down 26%), Continental Europe permanent gross profit declined by 18%* (Q2: down 18%*) and Rest of World permanent gross profit increased by 6% (Q2: down 10%*).
Group sales headcount at 25 August 2013 was up 6% versus the year end and year on year. UK&I sales headcount was up 4% versus year end and up 3% year on year, Continental Europe sales headcount was up 3% versus year end and year on year and Rest of World sales headcount was up 13% versus year end and up 18% year on year. Sequentially, permanent sales headcount was up 6% versus Q2. Average sales headcount in the quarter was up 2% year on year.
The Group finished the quarter with 58 offices in 20 countries, of which 41 were outside the UK. Non UK&I now represents 69%* of gross profit (2012: 66%*).
During the period SThree disposed of The IT Job Board, a small, non-core part of the Group, for an initial cash consideration of £9.2m (including £1.2m of cash transferred with the business), plus a further £3.0m, dependent upon the achievement of certain financial targets ending in 2014.
Net cash at period end was circa £4m, after payment of the final dividend of 9.3p per share (circa £11m) on 5 June 2013.
The previously announced restructuring of the Group's property portfolio and support functions is being implemented to plan and is expected to be completed during the fourth quarter, generating cost savings of circa £8m per annum.
Gary Elden, Chief Executive, commented: "Our trading momentum was positive in the period, with a sequential improvement in our performance over the second quarter, led by Contract and our newer sector disciplines.
"Contract continued to benefit from a greater strategic focus and is beginning to see the results of our investment in headcount, with further strong growth in contract runners and gross profit, growing its share of the mix by five percentage points to 56%. Our newer Energy and Pharma & Biotech businesses also traded strongly, posting double digit growth as demand in both sectors remained robust.
"Our Permanent business continued to feel the effects of the resourcing issues that we highlighted at the interims, although the rate of decline moderated from that seen in the second quarter. We began re-investing in Permanent headcount during the period and expect to see the return on this investment in the next financial year as these new consultants become productive.
"Overall, while we have seen some improvement in economic confidence in a number of our markets during the period, the picture remains mixed and it is too early to call a broadly-based recovery. As we enter our final and most significant trading quarter, we are continuing to take a balanced approach - investing selectively in our teams where there are opportunities for growth, focusing on improving productivity and controlling costs tightly where market conditions remain challenging. Our experienced management team and strong financial position give us confidence that we will make the best of the market opportunity in the remainder of the year, whilst managing the business prudently for the medium term."