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UK — SThree sees gross profit rise by +15% led by permanent placement demand

10 September 2010

SThree Plc (STHR:LSE), the international specialist staffing firm, today issues an interim management statement for the period from 1 June 2010 to date. The financial data relates to the three month period ending 29 August 2010, being the third quarter of the financial year ending 28 November 2010.

Group gross profit achieved in the period increased by +15% at constant currency year-on-year to 43.0 million Pounds (2009: 37.6 million Pounds). UK gross profit increased by +2% year-on-year and by +8% on Q2 2010.

Non-UK gross profit increased by +26% at constant currency year-on-year and by +16% on Q2 2010. Non-UK now represents 60% of gross profit (2009: 55%), non-ICT represents 39% of gross profit (2009: 31%). Initially focused on the ICT staffing sector, the company has broadened the base of its operations to include accountancy & finance, banking, engineering, oil & gas, pharmaceuticals, human resources, energy, legal and job board.

At 29 August 2010 SThree had 4,093 contract runners, a decrease of -2.3% year-on-year, but sequentially up by +3.6% on the half year position (30 May 2010: 3,952). During the period SThree made a total of 1,690 permanent placements, an increase of +21% versus the prior year (2009: 1,395) and up 13% on Q2 2010. In the period, permanent placements represented 49% of group gross profit (2009: 42%).

At 29 August 2010 UK contract runners at 2,234 were down by -11.6% year on year but up 0.4% versus the half year 2010 position (30 May 2010: 2,226). During the period, UK permanent placements were up by +22% year on year and up by +11% on Q2 2010.

At 29 August 2010 non-UK contract runners at 1,859 were up by +11.8% year on year and by +7.7% versus the half year 2010 position (30 May 2010: 1,726). During the period, non-UK permanent placements increased by +21% year on year and by +14% on Q2 2010.

In current trading, SThree sees contract performance impacted by more difficult UK and Benelux markets partially offset by France and Germany.

Average permanent fees and Gross Profit per Day Rates (GPDR) both strengthened in the period. Average permanent fees were up by +9% year-on-year and up by +3% on Q2 2010, whilst GPDRs were up by +10% year-on-year and stable on Q2 2010.

The public sector now accounts for circa 5% of group transactions (H1 2010: 7%)

The current deal pipeline indicates that the group is experiencing improvements across all markets. At 29 August 2010, the number of permanent deals agreed in the period, with candidates due to start in the future, were up more than +50% year-on-year.

Total group headcount at 29 August 2010 of 1,897 was up by +26.0% year-on-year (2009: 1,506) and up by +18.8% on the year end 2009 headcount of 1,597. UK sales headcount was up by +17.8% year-on-year, and up by +11.8% on the year end 2009 position. Non-UK sales heads were up by +29.8% year-on-year and up by +22.6% on the year end 2009 position.

During the period further office openings were agreed for Qatar, Houston and Antwerp with expected launch dates in Q4 2010 and Q1 2011.

Russell Clements, Chief Executive Officer, commented "our performance is consistent with improving markets across almost all of the geographies in which we operate. Indeed, all markets with the exception of Benelux are now growing year on year and sequentially. That said, trading conditions, whilst improving, are still yet to fully recover to pre-downturn levels."

"Our most up to date view of the market is provided by our deal pipeline, which continues to look encouraging. In addition we continue to focus on sector diversification and taking further steps towards the globalisation of our business reflecting our commitment to building SThree for the longer term."

In early trading SThree shares were down by -1.25% to 283.40 Pence.



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