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UK – Sthree ready for “whatever market conditions prevail”

09 March 2012

SThree (STHR:LSE), the permanent and contract staffing group, reported on Friday that gross profit in Q1 for the period ended 26 February 2012 has gone up +15% at constant currency compared to the same quarter last year. Gross profit amounted to £47.7 million in the quarter and increased by £6 million from a year ago.

In an interim management statement published today, the firm announced a “strong” financial position with net cash of circa £30 million at the end of Q1 2012.

It was also announced that average placement fees for the quarter “have grown strongly year on year” although there has been weaknesses in the global banking and finance market. Energy and Pharmaceuticals & Biotechnology have performed particularly well as the average contractor gross profit per day rates “also strengthened year on year during the quarter.”

Permanent fees, which made up 51% of the gross profit in Q1 2012, have increased by +16% at constant currency and amounted to £24.1 million, up from £20.9 million last year. Contract fees contributed 49% to the group gross profit and have also seen an increase of +13% at constant currency, rising to £23.6 million in Q1 2012 from £20.8 million in Q1 2011.

The Group recorded a +11% increase year on year in the current permanent deal pipeline.

The firm has offices across the globe whereby the UK and Irish markets saw a marginal increase of group gross profit of +1% (at constant currency) at £16.7 million in Q1 2012 from £16.5 million a year ago. International business, which was responsible for 65% of the group gross profit in Q1 2012, has achieved a gross profit of £31 million, up +24% at constant currency.

The Group also announced that sales headcount at the end of Q1 was up +27% year on year. UK sales headcount increased +8% year on year, and non-UK sales headcount went up +40% year on year. The average sales headcount in the quarter surged +29% year on year.

During the quarter the firm opened new offices in Oslo and San Diego and can now boast a total of 62 offices in 18 countries.

Russell Clements, Chief Executive, said that "For seasonal reasons, the first quarter is the Group's least significant in terms of the year as a whole. Nonetheless, it is pleasing to note that our gross profit growth year on year has improved in Q1 2012 compared to Q4 2011. We are also reassured by our permanent deal pipeline, with deals agreed but yet to start up by 11% year on year. In addition, the normal seasonal recovery in contract runners is following a similar shape to 2011.”

But Mr Clements also pointed out that differences remained in place "within both geographies and sectors in the demand for the Group's services.” Overall, he believes, market conditions remain “in far better shape than we saw in the aftermath of the global financial crisis. We are a cash rich and agile business, with a twenty five year track record of profitability and a seasoned management team. As such, we are well placed to maximise the potential of whatever market conditions prevail in 2012."

SThree plc is a permanent and contract staffing business, operating in in three geographical segments which include the United Kingdom and Ireland, Continental Europe and the Rest of the World. The firm has recently announced that its 2011 full-year profits went up because of business expansion and investment in the year.

In early trading this morning, the company share prices went up +3.24% at £294.75, down -32.16% from a year ago, but +51.46% above the 52-week low of £194.60 set on 14 December 2011. This values the company at approximately £346.69 million. 


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