The 2009 financial year is one SThree is most likely to want to forget. The ICT-focused recruiter reacted to the savage downturn by shedding a quarter of its workforce, which contributed to a £9.1m exceptional charge, while gross profits dived 22 per cent.
However, the tough actions did keep the group in profit and management has remained focused on the future, despite the torrid conditions. What’s more, the group has recently reacted to increased confidence among its clients by boosting headcount in anticipation of a pick-up in demand.
Chief executive Russell Clements is especially optimistic about overseas prospects and believes UK gross profits will only account for 23 per cent of the total in five years' time compared with 45 per cent now. Indeed, during the year, Sthree opened six international offices and for the first time the majority of gross profit came from overseas. Germany has been a particular focus as the specialist-staffing market is benefiting from structural growth as the country's labour regulation is relaxed.
The cash freed up from the reduced amount of contractors needing payment helped support maintenance of the dividend, despite it not being covered by earnings.
Broker KBC Peel Hunt expects underlying 2010 EPS to come in at 10.7p (9.6p in 2009).
| Sthree (STHR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 310p | MARKET VALUE: | £377m | |
| TOUCH: | 309-311p | 12-MONTH HIGH: | 318p | LOW: 153p |
| DIVIDEND YIELD: | 3.9% | PE RATIO: | 77 | |
| NET ASSET VALUE: | 66p | NET CASH: | £49m | |
| Year to 29 Nov | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 393 | -22.1 | -12.9 | 7.2 |
| 2007 | 523 | 50.3 | 25.2 | 9.3 |
| 2008 | 632 | 54.1 | 28.8 | 12.0 |
| 2009 | 519 | 8.9 | 4.0 | 12.0 |
| % change | -18 | -83 | -86 | - |
Ex-div: 24 Feb Payment: 31 Mar | ||||
