Chris Heminway, Exec-Chair at Time To ACT, explains why now is the right time for the Group to IPO. Watch the video here.
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Expect there to be renewed interest here as Shares Magazine recommend STHR as a buy with a good write up. Their recommendations are usually spot on, with many of the shares they tip rising. Their last tip UDG has flown away.
Where is the RNS.??? This outfit gets worse fancy if you at to trade shares with them. Oh my god.
Interesting!
Rec expect the recruitment industry to have compound annual growth of 25% for at least the next 4 years. Sthree are a good size. Not too big (ie reed, michael page etc). Good growth potential and in that transition from medium size company to large corporate organisation. They will have to do something serious stupid to not make money in the recruitment industry over the next 5 years....
SThree: Investec raises target price from 340p to 380p, while retaining a buy recommendation.
SThree: Credit Suisse revises target price from 260p to 350p upgrading to neutral.
Gary Elden is taking over as chief executive of SThree at an uncertain time. The recruitment consultant decided in the second half of 2011 to invest in building its team of consultants in expectation of a recovery in the market that did not materialise. That left a legacy of higher fixed costs, while the company opened another four offices around the globe, bringing the total to 64 in 18 countries. So total net fee income was up 5% to £205.3m over the year but administrative expenses grew by 8.8% to £180.2m. This left profits before tax almost 17% lower at £25.3m. The shares, after their strong performance in the second half, sell on 22 times this year’s earnings. That looks toppy; investors should consider taking some profits unless they take a very rosy view of the global economy, Tempus says.
SThree: Seymour Pierce downgrades from hold to buy and maintains a target price of 275p.
SThree: UBS reduces target price from 350p to 335p and maintains a buy rating. Numis downgrades to add and keeps a target price of 350p.
UBS has reiterated its 'buy' recommendation for recruitment group SThree, but has reduced its profit forecasts though this is largely a 'catch-up' with consensus estimates. Fourth-quarter revenues rose 2%, the company announced last week, which was better than specialist recruitment peers (in the calendar third quarter) who registered negative growth, UBS said. "Contract strength saves the day, at +11% y/y in 2012, and +11% in Q4. Perms revenue weakening as to be expected, at +6% in 2012 and -5% in Q4 (after +2% in Q3). Sales headcount was down 6% at the year end with UK -18%. Company expects profit before tax (PBT) in line with consensus at £25m," the broker said. Nevertheless, UBS has cut its 2013 estimate by 10% and now expects PBT to come in at £29, in line with the consensus forecast (£30m). Analysts are looking for modest gross profit growth (up 3%) with flattish headcount. However, the broker said: "As ever with staffing it is difficult to call 12 month earnings at this point." The target price has been lowered from 350p to 335p "which continues to be based on an upside/downside scenario basis , in line with other staffers, reflecting earnings cuts".
"The shares are trading on a prospective price-to-earnings multiple of 21.3 times 2012 fiscal year estimates and at a premium to the peer group average of 16.6 times. The yield is attractive at 5.2%. We reiterate our HOLD recommendation and 275p target price," Seymour Pierce adds.
Group sales headcount on November 25th was down 6% year-on-year. UK sales headcount was down 18%, while in Continental Europe headcount was down 5%, but in Rest of World headcount was up 18%. Average sales headcount for the year was up 10% year-on-year, but down 7% for the fourth quarter when compared to last year. Similarly, the permanent deal pipeline at the period end was 4% down year on year, with weakness in UK&Ireland, France and Benelux offsetting strong performance in Rest of World and Germany. On this point, analysts at Seymour Pierce comment that: "we remain cautious over the outlook: the permanent deal pipeline, a good forward indicator, was 4% down year on year at period end (perm accounts for 50% of the business). This said contract runners (i.e: period end number of contractors on site with clients and being billed) were up 9% at the year end." During the most recent period the Group opened new offices in Oslo, San Diego, Rio de Janeiro and Brisbane during the year. Lastly, SThree indicated that a number of key tasks related to the succession of its Chief Executive were completed ahead of schedule. In light of this excellent progress, Gary Elden will succeed Russell as CEO with effect from the next January 1st 2013 (that is earlier than the date of April 2013 which had previously been set out), at which point Russell will retire from the Board.
International specialist staffing business SThree on Wednesday morning emphasised the company's growing geographical diversification and that its succession plan for top management is running ahead of schedule. However, the group's Chief Executive, Russell Clements, commented: "The Group has traded satisfactorily during the year, against a macro economic backdrop that became increasingly difficult across the period (...)." Even so, full year profit before tax is expected to be £25m, in line with market consensus, according to the the firm. The Group's gross profit was up 8% year-on-year with contract gross profit up 11% and permanent gross profit up by another 6%. Rusell added that its Energy & Engineering and Pharmaceuticals & Biotechnology segments, which between them make up about one third of gross profits, continued to experience strong demand. These businesses are making an increasingly significant contribution both to Group performance and to our ongoing geographic diversification. Nearly two thirds of fee income now being generated outside the UK&Ireland, the company explained.
Management Succession In May, the Group announced that Gary Elden would succeed Russell Clements as CEO during 2013. Since that time Russell and Gary have been working closely together to ensure a smooth handover of responsibilities, with a number of key tasks being completed ahead of schedule. In light of this excellent progress, Gary will succeed Russell as CEO with effect from 1 January 2013, at which point Russell will retire from the Board. Russell Clements, Chief Executive, commented: "The Group has traded satisfactorily during the year, against a macro economic backdrop that became increasingly difficult across the period and we are pleased to be expecting an outcome for the year in line with market consensus. "In the more uncertain economic environment, the benefits of the Group's balance of Contract and Permanent business, and the success of its geographic and sector diversification in recent years, were clearly illustrated. Our contract division, which makes up half of gross profits, reported another resilient performance and remains a key area of strategic focus. "Energy & Engineering and Pharmaceuticals & Biotechnology, which between them make up about one third of gross profits, continued to experience strong demand. These businesses are making an increasingly significant contribution both to Group performance and to our ongoing geographic diversification, with nearly two thirds of fee income now being generated outside the UK&I. "As I leave the business after twenty six years, I believe SThree is in good shape, with a clear growth strategy and a strong financial position. As a committed long term shareholder, I look forward to seeing the Group continue to prosper under Gary's leadership and wish him every success in the CEO role."
Group gross profit in the year increased by 8%*. Q4 Group gross profit was up 2%* year on year and up 7%* sequentially versus Q3. Contract performed encouragingly in the year, with growth in gross profit across all regions. UK&I grew by 3% year on year, Continental Europe by 9% year on year and Rest of World by 98% year on year. Average contractor gross profit per day rates remained strong during the year. Permanent gross profit grew by 6%* year on year. Q4 was down 5%*, driven by continued weakness in the UK&I (down 9%*) and Benelux and France down (30%* and 9%*, respectively), as these markets slowed. Rest of World permanent gross profit grew by 16%* in Q4, driven by strong performances from our Energy & Engineering and Pharmaceuticals & Biotechnology teams. Average permanent placement fees for the year grew robustly year on year, despite continuing weakness in the global banking and finance market which typically generates higher than average fees. Group sales headcount at 25 November 2012 was down 6% year on year. UK sales headcount was down 18% year on year, Continental Europe headcount was down 5% year on year and Rest of World headcount was up 18% year on year, as the Group flexed headcount in line with the market opportunity. Average sales headcount for the year was up 10% year on year, but down 7% year on year in Q4. The permanent deal pipeline at the period end was 4% down year on year, with weakness in UK&I, France and Benelux offsetting strong performance in Rest of World and Germany. The Group opened new offices in Oslo, San Diego, Rio de Janeiro and Brisbane during the year, expanding the network to 64 offices in 18 countries, of which 42 are outside the UK. Non UK&I now represents 65% of gross profit (2011: 64%).
Trading Update & Management Succession SThree plc ("SThree" or the "Group"), the international specialist staffing business, is today issuing a trading update for the financial year ending 25 November 2012. Highlights: · Full year profit before tax expected to be £25m, in line with market consensus · Group gross profit up 8%* year on year · Contract gross profit up 11%* year on year · Permanent gross profit up 6%* year on year · Ongoing sector diversification driving growth - Energy & Engineering +48%* year on year, Pharmaceuticals & Biotechnology +39%* year on year · Continued strong financial position; net cash of circa £27m at period end, after buying back circa £7m of shares for treasury · Handover of CEO responsibilities running ahead of schedule - Gary Elden to succeed Russell Clements as CEO with effect from 1 January 2013
Looking at the calendar, Friday is looking pretty quiet on the corporate front with a few small-cap stocks scheduled for trading statements and results. Among these is recruitment agency SThree which is due to give an update on trading in the fourth quarter of its financial year (ended November 25th). The company reported in September that gross group profits were up 6% year-on-year on a constant currency basis in the third quarter (three months to August 26th), down from the 9% growth in the second quarter and 15% growth in the first. The Contract side of the business was driving growth with a 10% increase, compared with Permanent gross profit which rose 2%. The group seems reasonably equally balanced between Contract and Permanent placements, with both divisions producing £25.6m in gross profit each in the third quarter. Meanwhile, international businesses grew profits by 13%, compared with the UK & Ireland division which reported a 6% decline. The company's Chief Executive Russell Clements said that it had "traded satisfactorily" in the third quarter given the difficult macro-economic backdrop. Investec said in September following the third-quarter statement that it expects full-year revenue to rise from £195.5m last year to £209m this year, with profit before tax falling from £30.3m to £25m.
Oriel Securities upgrades SThree from hold to add, target price 315p.
The group had net cash of around £17m at the end of the reporting period. Russell Clements, SThree's Chief Executive, described third quarter trading as satisfactory, given the difficult macro-economic back-drop, and he was especially chuffed with the performance of the Contract division, especially as it now makes up half of the group's business. "Demand in sectors such as Energy & Resources and Pharmaceuticals & Biotechnology remained strong and these businesses continued to increase their contribution to the group result," Clements said. "Our balance sheet remains strong, and we are a cash generative, debt-free business. This strength allows us to continue to make selective investments for the future whilst remaining committed to maintaining our strong track record in terms of our dividend," Clements added.
"Contract performed encouragingly in the period, with strong growth in gross profit in Europe (+12%) and Rest of World (+94%), offsetting a small decline of 2% in UK. The number of contract runners at the end of Q3 was up 7% versus the start of 2012. This compares to an increase of 3% at the end of Q3 2011, indicating a stronger seasonal recovery and run rate into the final quarter of this year," the company said. Gross profit in the UK & Ireland (UK&I) declined 6% to £17.7m from £18.9m the year before. Other parts of the world picked up the slack, with gross profit up 13% to £33.6m from £31.3m a year earlier. The depressed state of the banking and financial services industry is having an effect on demand for information and communications technology (ICT) professionals, an area in which SThree specialises. Gross profit from ICT placements slipped 8% to £26.9m from £30.5m in the corresponding quarter of 2011. Non-ICT gross profit shot up 27% to £24.4m from £19.7m the year before. Group sales headcount at 26th August 2012 was down 6% versus the year-end, and level y/y. UK sales headcount was down 16% versus year-end and down 17% y/y. Non-UK sales headcount was level versus year-end and up 10% y/y. Average sales headcount in the quarter was up 4% y/y. The permanent deal pipeline at the period end was broadly level y/y, as it was at the end of the second quarter, but was sequentially up 6% versus the second quarter period-end.
It is tough out there for recruitment agencies but SThree is still making headway around the world, except in the UK and Ireland, where profits took a dip. The group said that in its third quarter (Q3), which runs from May 27th to August 26th, group gross profit was up 6% on a constant currency (CC) basis to £51.3m from £50.2m in the corresponding period of last year. That growth rate represents a slow-down from 9% growth (on a CC basis) seen in the second quarter, and 15% growth in the first. Gross profit from Permanent placements edged up 2% to £25.6m from £26.0m the year before. Growth from this source remains on a steeply declining trend, as in the second quarter gross profit grew 12% year-on-year (y/y/) on a CC basis, which itself was a slow-down from 16% annual growth seen in the first quarter. Offsetting the slow-down in Permanent placings, the Contract side of the business grew gross profit by 10% to £25.6m from £24.3m the year before, an improvement on the 7% y/y improvement in the second quarter, but lower than the 13% growth seen in the first quarter. The split between Permanent and Contract profits is now 50/50, versus a 52/48 split in the fiscal third quarter of 2011.
Russell Clements, Chief Executive, commented: "The Group has traded satisfactorily in the third quarter, given the difficult macro economic backdrop. Understandably, this was reflected in a slowing of the rate of growth in gross profit in Q3 versus Q2 but nonetheless gross profit in Q3 was 6% ahead of the same period last year. Once again we performed robustly in terms of the value of the business written up, both in terms of average permanent fees and contract day rates. "Demand in sectors such as Energy & Resources and Pharmaceuticals & Biotechnology remained strong and these businesses continued to increase their contribution to the Group result. We were particularly pleased with the performance of our contract division which, as expected, performed more resiliently than permanent in the more uncertain economic environment. Given that contract makes up half of the Group's business, this positions us well to optimise our performance against current market conditions, as does the fact that 65% of the business is generated outside of the UK&I. "Our balance sheet remains strong, and we are a cash generative, debt-free business. This strength allows us to continue to make selective investments for the future whilst remaining committed to maintaining our strong track record in terms of our dividend." SThree is hosting an analyst conference call today at 0830 BST. The details are as follows:
Contract performed encouragingly in the period, with strong growth in gross profit in Europe (+12%) and Rest of World (+94%), offsetting a small decline of 2% in UK. The number of contract runners at the end of Q3 was up 7% versus the start of 2012. This compares to an increase of 3% at the end of Q3 2011, indicating a stronger seasonal recovery and run rate into the final quarter of this year. Average permanent placement fees for the quarter grew robustly year on year, despite continuing weakness in the global banking and finance market which typically generates higher than average fees. Particularly strong performances were seen from Energy & Resources and Pharmaceuticals & Biotechnology. Average contractor gross profit per day rates remained strong during the period. Group sales headcount at 26 August 2012 was down 6% versus the year end, and level year on year. UK sales headcount was down 16% versus year end and down 17% year on year. Non-UK sales headcount was level versus year end and up 10% year on year. Average sales headcount in the quarter was up 4% year on year. The permanent deal pipeline at the period end was broadly level year on year (Q2 period end: level) and sequentially up 6% versus Q2 period end. The Group finished the quarter with 64 offices in 18 countries, of which 42 were outside the UK. Non UK&I now represents 65% of gross profit (2011: 62%).