"The dividend is rock solid, bullet proof," said chief executive Russell Clements as the recruitment company SThree announced growth was slowing in its first-half results and that he would be stepping down from the top job in April next year. He will be replaced by current deputy chief executive Gary Elden.
Gross profit - or net fee income (NFI) - grew by 11 per cent, to £99.9m in the first six months of the year as SThree continued to enjoy overseas expansion, which now contributes 66 per cent of group NFI, up from 63 per cent previously. But that growth slowed sharply from the first to the second quarter and establishing offices in Oslo, San Diego, Rio de Janeiro and Brisbane is proving costly; operating profits sunk by 16.7 per cent to £9.1m.
Despite this the underlying business is in good shape, group NFI margins were up from 35.3 to 35.9 per cent as average permanent placement fees hit a record high, there is cash on the balance sheet and a relatively defensive mix of business with a 51:49 NFI split in favour of permanent.
Broker Investec left forecasts unchanged with adjusted pre-tax profits of £25m, giving EPS 13.8p (from £30.3m and 16.4p in 2011)
STHREE (STHR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 263p | MARKET VALUE: | £315m | |
| TOUCH: | 262.5-264p | 12-MONTH HIGH: | 391p | LOW: 195p |
| DIVIDEND YIELD: | 4.2% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 47p | NET CASH: | £31m | |
| Half-year to 27 May | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011* | 255 | 11.2 | 6.20 | 4.70 |
| 2012 | 278 | 9.29 | 5.20 | 4.70 |
| % change | +9 | -17 | -16 | - |
Ex-div: 7 Nov Payment: 7 Dec *Excludes 11p special dividend. | ||||
