3rd Feb 2014 11:59
LONDON (Alliance News) - Specialist staffing business SThree PLC on Monday reported an increase in revenue for the year ended December 1, 2013, but a huge drop in profits due to a "challenging" trading environment, a temporary decline in consultant productivity, and investment costs.
On a like-for-like basis, SThree reported an 18% decline in its pretax profit before exceptional items to GBP20.8 million from GBP25.3 million the year before.
However, after exceptional accounting items, pretax profit dropped 34% on a like-for-like basis to GBP11.1 million from GBP16.8 million a year earlier.
"The reduction in profitability reflects weaker economic confidence for much of the year, a temporary decline in consultant productivity as the group invested in sales headcount in the Contracts business, and the cost of continued investment in new territories," said Chief Executive Officer Gary Elden in in the company's full-year report.
Revenues, on the other hand, increased by 8.2% for the year, on a like-for-like basis, to GBP618.4 million from GBP571.6 million. It said that solid growth in its Contract business was offset by a further decline in its Permanent division.
SThree said group headcount at year end increased by 10% to 2,327, although average headcount at 2,228 was flat year-on-year.
"Contract gross profit grew robustly reflecting our recent investment in headcount. In Permanent, which is now beginning to demonstrate the first signs of recovery, we have addressed the headcount shortfall that became evident in the first half and enter 2014 with the business appropriately resourced," said Elden.
During the year, the group disposed of ITJB, a small non-core business, for an initial cash consideration of GBP9.2 million, a further GBP0.5 million receivable in 2014, and a further GBP2.5 million depending on the performance of ITJB in the current financial year.
It said restructuring of its cost base brought savings of around GBP3.2 million in the second half of the year, and reduced annualised costs by around GBP8.5 million per year.
SThree said it continued to invest in international expansion during the year, opening three new offices and three smaller business development offices in Asia. In 2014 it expects to invest in further territories led by specific client requirements, it said.
The group did not increase its final dividend, and maintained its total dividend for the year at 14.0 pence per share.
"As we look forward, the strength of our Contract book and recent investment in Permanent headcount point to a more encouraging picture, and the restructuring undertaken in the second half of last year provides the group with a solid platform for growth in this new financial year," said Elden.
SThree shares were down 2.4% at 374.25 pence per share just before midday Monday.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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