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SThree's group gross profit up

&middot    Continued strong performance from newer global sectors - Energy up 52%* year on year, Life Sciences up 43%* year on year

&middot    Encouraging performance from Banking & Finance up 20%* year on year

&middot    70% of Group gross profit now generated in markets outside UK & Ireland (2013: 69%)

Gary Elden, Chief Executive, commented, "As expected, the Group performance improved during the second quarter, as the economic recovery gained momentum in a number of our markets.

"Against this backdrop, headcount growth was an important feature of the period as we moved to ensure Contract was adequately resourced to keep pace with its accelerating growth and as we continued to rebuild our teams in Permanent.  Group sales headcount was up 20% year on year which leaves us well positioned for the future. This investment will inevitably also mean we will be carrying additional costs for the remainder of the current year ahead of these new hires becoming fully productive. 

"Contract made further progress in all territories as it continued to benefit from a greater strategic focus and increasing exposure to new high growth markets, particularly Energy and Life Sciences.  Contract gross profit increased by 22%* year on year and now accounts for 60% of the Group total. 

"The Americas had a very strong first half, growing 62%* year on year and we are doubling our office space in San Francisco and Houston to accommodate our expansion plans.

"Permanent saw a modest pick-up in the period, albeit from a low base, and the pre-deal pipeline is beginning to suggest an increase in activity.  However, more work is required to return this business to the levels of productivity and performance we have seen in the past.

"During the second half, we will be focused on driving up the productivity of new hires, particularly in Permanent, with headcount growth easing somewhat.

"While, as always, we remain cautious about extrapolating the trend for the year from the seasonally less significant first half, the strength of our Contract book and the slowly improving outlook for Permanent underpins our confidence in the medium term prospects for the business."

Key Metrics & Commentary

H1 2014

H1 2013 1

H1 2014 YoY% Var 2

Q2 2014

YoY% Var2

Q1 2014

YoY% Var2

Contract

&pound60.8m

&pound50.6m

22%

26%

18%

Permanent

&pound40.1m

&pound41.0m

2%

7%

-4%

Group

&pound100.9m

&pound91.6m

13%

18%

9%

 

 

 

UK&I

&pound30.5m

&pound28.8m

6%

10%

1%

Continental Europe

&pound47.9m

&pound45.2m

8%

12%

4%

Americas

&pound13.7m

&pound9.0m

62%

74%

49%

Asia Pac & Middle East

&pound8.8m

&pound8.5m

13%

12%

13%

Group

&pound100.9m

&pound91.6m

13%

18%

9%

 

 

 

ICT

&pound40.3m

&pound41.4m

-1%

2%

-5%

Non ICT

&pound60.6m

&pound50.2m

25%

31%

20%

Group

&pound100.9m

&pound91.6m

13%

18%

9%

Contract / Permanent Split

 

 

 

Contract

60%

55%

 

 

Permanent

40%

45%

 

 

100%

100%

 

 

 

 

 

Geographical Split

 

 

 

UK&I

30%

31%

 

 

Continental Europe

47%

49%

 

 

Americas

14%

10%

 

 

Asia Pac & Middle East

9%

10%

 

 

100%

100%

 

 

 

 

 

Sector Split

 

 

 

ICT

40%

45%

 

 

Non ICT

60%

55%

 

 

100%

100%

 

 

Operating Metrics

H1 2014

H1 20131

Hi 2014

YoY % Var

Q2 2014

YoY% Var2

Q1 2014

YoY% Var2

Contract Runners 3

 

 

 

Uk&I

2,745

2,401

14%

14%

8%

Continental Europe

2,586

2,204

17%

17%

10%

Americas

817

355

130%

130%

96%

Asia Pac & Middle East

345

211

64%

64%

67%

Group

6,493

5,171

26%

26%

16%

 

 

 

Permanent  Placements4

 

 

 

Uk&I

801

881

-9%

-4%

-15%

Continental Europe

1,303

1,488

-12%

-12%

-13%

Americas

375

257

46%

67%

23%

Asia Pac & Middle East

578

467

24%

17%

33%

Group

3,057

3,093

-1%

1%

-4%

1 Excluding IT Job Board

2 At Constant Currency

3 Period end number of contractors onsite with clients and being billed

4 Excludes Retainers

As expected, the Group's performance improved across the second quarter, with Group gross profit increasing by 18%* year on year, versus a growth of 9%* in Q1 2014.

Contract performed robustly in the period, with a strong growth in contract runners more than offsetting the normal seasonal weakness. Average contractor gross profit per day rates remained robust during the period.

Permanent gross profit grew by 7%* year on year in Q2, an improved performance on Q1 2014, which was down 4%*. UK&I was up 5%* (Q1 2014 down 12%), Continental Europe was down 6%* (Q1 2014 down 9%*) and Americas, Asia Pac and Middle East grew by 31%* (Q1 2014 up 15%*). Average permanent placement fees remained robust during the quarter.

Group sales headcount at 1 June 2014 was up 12% versus the year end and up 20% year on year. Year on year, UK&I sales headcount was up 19%, Continental Europe sales headcount was up 14% and Americas, Asia Pac and Middle East sales headcount was up 34%. Consultant headcount continued to remix slightly towards Contract during the half year, with contract consultant numbers up 12% and permanent consultant headcount up 10% since the year end. Average consultant headcount for the half year was up 17% year on year, with contract consultant average headcount up 25% and permanent consultant average headcount up 11%. At the end of the period, contract consultant headcount represented 50% of total consultant headcount.

The Group has a network of 52 offices in 21 countries, of which 38 are outside the UK. The Group now generates 70% of gross profit from markets outside UK&I (2013: 69%).

SThree remains in a strong financial position. Net debt at 1 June 2014 was circa &pound10m. The Group has a &pound50m revolving credit facility ("RCF") with RBS & HSBC, committed to 2019.

 

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