FY24 Final Results, 28 Jan 2025 07:00

28 January 2025, 07:00

Source - LSE Regulatory

RNS Number : 8675U

SThree plc

28 January 2025

SThree plc

FINAL RESULTS FOR THE YEAR ENDED 30 NOvember 2024

FY24 PERFORMANCE IN LINE

LONG TERM STRATEGIC POSITIONING ADVANCED

SThree plc ('SThree' or the 'Group'), the only global specialist talent partner focused on roles in Science, Technology, Engineering and Mathematics (STEM), today announces its financial results for the year ended 30 November 2024.

FINANCIAL HIGHLIGHTS

Continuing operations	FY24	FY23	Variance
Continuing operations	FY24	FY23	Reported	Like-for-like ⁽¹⁾
Revenue (£ million)	1,492.9	1,663.2	-10%	-8%
Net fees (£ million)	369.1	418.8	-12%	-9%
Operating profit (£ million)	66.2	76.4	-13%	-9%
Operating profit conversion ratio	17.9%	18.2%	-0.3% pts	+0.1% pts
Profit before tax (£ million)	67.6	77.9	-13%	-9%
Basic earnings per share (pence)	37.4	42.4	-12%	-8%
Proposed final dividend per share (pence)	9.2	11.6	-21%	-21%
Total dividend (interim and final) per share (pence)	14.3	16.6	-14%	-14%
Net cash (£ million)⁽²⁾	69.7	83.2	-16%	-16%

⁽¹⁾ Variance compares the reported results for FY24 against FY23 on a constant currency basis, whereby the prior year foreign exchange rates are applied to current and prior financial year results to remove the impact of exchange rate fluctuations.

⁽²⁾ Net cash represents cash and cash equivalents less borrowings and excluding leases.

Full-Year Highlights

·	Group net fees down 9% YoY⁽³⁾, against a strong prior year (FY23: YoY decline of 4% on record performance) and protracted challenging global economic conditions.
	o	Net fees across our three largest countries represent 72% of Group: Netherlands down 6%, Germany and USA both down 12%.
	o	The Group's Engineering net fees for the full year were largely stable, down 1% against a record prior year performance. Technology and Life Sciences performance reflected the tougher market conditions throughout the year, declining 10% and 17% respectively.
·	Contract net fees, which represent 84% of Group net fees (FY23: 82%), were down 7% due to the ongoing softness in new business activity, partially offset by continued strong client extensions; a demonstration of our strength in meeting our clients' needs to retain critical STEM skills and flexible talent.
·	Permanent net fees, representing 16% of Group net fees (FY23: 18%), were down 18% reflecting the challenging market conditions.
·	Contractor order book⁽⁴⁾ of £161.3 million, down 10% YoY, whilst continuing to represent sector-leading visibility with the equivalent of circa four months' net fees.
·	Resilient profit performance, in line with expectations, with operating profit conversion ratio maintained at 18% and profit before tax of £67.6 million, down 9% YoY on a like-for-like basis due to decline in net fees partially offset by cost savings and higher net interest.
·	Robust balance sheet, with £69.7 million in net cash at year end (FY23: £83.2 million). Post period end, commenced a share buyback programme of up to £20m in light of the Group's strong cash generation and balance sheet.
·	Final dividend proposed of 9.2 pence per share (FY23: 11.6 pence per share), taking full year dividend to 14.3 pence per share (FY23: 16.6 pence per share), down 14% YoY. This is in line with the previously communicated dividend cover target between 2.5x and 3.0x.
·	Technology Improvement Programme (TIP) remains on track with around 80% of our business now successfully onboarded and actively using the platform.

Outlook

·	The challenging economic conditions, impacting new business activity, are expected to persist throughout FY25.
·	The financial implication of these challenges is expected to be partly mitigated by the accelerated realisation of further operational efficiencies.
·	As previously announced, the Board expects FY25 profit before tax to be c.£25 million which includes up to £7m of one-off costs to deliver the additional operational efficiencies.
·	The Board remains confident that the Group's strategic focus on STEM and Contract, the completed rollout of the TIP, alongside the actions being taken, will position the Group for sustained profitable growth when markets recover.

⁽³⁾ All YoY growth rates expressed at constant currency.

⁽⁴⁾ The contractor order book represents value of net fees until contractual end dates, assuming all contractual hours are worked.

Timo Lehne, Chief Executive Officer, commented:

"Against a protracted challenging market environment, which has weighed on new business activity, the Group delivered a resilient FY24 performance, testament to the quality of our STEM and Contract focus and supported by careful cost management. As previously reported, whilst Contract extensions remain robust, the Board has taken a prudent view of FY25 given the weak new business environment which is expected to persist through the current year.

"Whilst we navigate this extended cycle, we continue to drive material operational enhancements through the Group to position us in line with the structural opportunities arising as a result of clear trends, such as rapid technological change and new ways of working. We continue to believe this future world of work is based on hard-to-find STEM skills, with 63% of employers identifying skills gaps as the biggest barrier to business transformation over the coming years¹. Our deep experience of identifying niche global talent means we sit at the heart of these global trends, a position which is being further enhanced through the continued roll-out of our TIP programme. We start the new financial year as a stronger organisation, which, combined with a robust business model and energised team, leaves us well placed as we progress on our vision for future success."

¹ World Economic Forum, Future of Jobs Report 2025.

Analyst conference call

SThree is hosting a webinar for analysts and investors today at 08:30 to present the Group's results for the financial year ended 30 November 2024. If you would like to register for the webinar, please contact SThree@almastrategic.com.

Forward looking dates

The Group will present its FY25 Q1 Trading Update on 18 March 2025.

Enquiries:

SThree plc

Timo Lehne, CEO via Alma

Andrew Beach, CFO

Keren Oser, Investor Relations Director

Alma Strategic Communications +44 20 3405 0205

Rebecca Sanders-Hewett SThree@almastrategic.com

Hilary Buchanan

Sam Modlin

Will Ellis Hancock

Notes to editors

SThree plc brings skilled people together to build the future. We are the only global specialist talent partner focused on roles in Science, Technology, Engineering and Mathematics (STEM), providing permanent and flexible contract talent to a diverse base of around 6,000 clients across 11 countries. Our Group's c. 2,700 staff cover the Technology, Life Sciences and Engineering sectors. SThree is part of the Industrial Services sector. We are listed on the London Stock Exchange's Main Market, trading with ticker code STEM.

Important notice

Certain statements in this announcement are forward looking statements. By their nature, forward looking statements involve a number of risks, uncertainties or assumptions that could cause actual results or events to differ materially from those expressed or implied by those statements. Forward-looking statements regarding past trends or activities should not be taken as representation that such trends or activities will continue in the future. Certain data from the announcement is sourced from unaudited internal management information and is before any exceptional items. Accordingly, undue reliance should not be placed on forward looking statements.

CHair's statement

The past year has been another difficult one, as the market backdrop within which the Group has been operating remained challenging. While it has been a tough couple of years for the industry, our people and clients, we have delivered a resilient performance in line with market expectations, supported by our Contract and STEM-focused business model, of which we are proud.

The Board and I appreciate the efforts that have been made by our teams around the world to deliver these results. My thanks go to every member of our team as their hard work, dedication and skill have been instrumental in driving the business forward this year. I would also like to express thanks to our shareholders and other stakeholders for their ongoing support during this challenging period as we continue to strive to deliver growth and shareholder value over the mid-to-long term.

Our unique strategic focus on STEM skills and flexible talent continues to underpin our overall performance, supported by the global megatrends that are driving demand for workers with these specialist skills. This gives us confidence that we are in the right markets and focusing on the right sectors where we can make a real difference, drive growth and increase market share.

In line with the Group's capital allocation policy, the Board is proposing a final dividend at 9.2 pence per share this year. This, combined with the interim dividend of 5.1 pence per share, gives the total dividend for the year of 14.3 pence per share. We remain committed to maximising shareholder value while ensuring effective and pragmatic capital allocation across the Group that allows us to deliver growth in net fees and margin, maintain a healthy balance sheet, invest in our people and technologies and grow through acquisition, should we find the right opportunity to do so.

Post-period end we were pleased to announce the launch of a share buyback programme of up to £20 million to reduce the share capital of the Company; we consider this to be in the best interests of the Company and its shareholders, returning surplus capital to shareholders while maintaining the financial flexibility to invest in the Group's strategy.

In spite of the challenging market dynamics and political change in some of our key markets, the Group has taken great steps forward towards its long-term growth strategy. While cognisant of the market backdrop, we have remained disciplined in our continued investment in our teams, technology and places of work to ensure we are in the best position possible to seize the opportunity as the market improves.

Having had the pleasure of being able to catch up with colleagues in our offices around the world throughout the year, one thing that has clearly shone through is the real sense of pride and community across SThree; something Timo has been instrumental in delivering. April 2025 will mark his third anniversary as Chief Executive Officer of the Group and his clarity of vision and drive are bearing fruit in the form of early signs of benefits from our Technology Improvement Programme, industry recognition and improved staff retention and talent acquisition.

The new leadership team established in the US has had a positive impact and we are confident in the people and platform we have in place to seize our clear opportunity in the region as market sentiment improves. The team there has a clear sense of direction and the opportunities for us are large. Similarly, the Executive Committee has been performing very well and is delivering for the Group. The stability and obvious trust between each member of the Committee is filtering across the business and helping drive the Group forward.

Our Technology Improvement Programme is hugely exciting and is positioning us at the forefront of the industry with a roadmap to deliver cutting edge, Artificial Intelligence (AI)-enhanced tools to our teams. In what is a major achievement, I am pleased to say that the roll-out continues on track and on budget, with around 80% of our team now successfully onboarded and actively using the platform. As a result of the programme, we are starting to see efficiencies across the business, from Placement Support, Payroll and our internal support teams. These benefits are already having a tangible impact, and we look forward to talking further to them in the future.

Our strategy, focused on STEM and Contract talent, and our underlying performance have seen us earn recognition across the industry. Being named a 'great place to work' in Belgium, Japan and the Netherlands is testament to the culture in our offices around the world. I am delighted that this culture, coupled with our focus on STEM, is also creating opportunities for us in the recruitment market, with an increase in experienced hires being made across the Group.

Alongside our people and platform, we have also invested in our offices around the world, including the opening of our new headquarters in London. We are striving to be seen as an employer of choice in our industry and this investment comes in conjunction with our efforts to boost the time our teams spend with clients, both physically and virtually, compared to recent years as we are committed to remaining close to the market.

We remain committed to our pledge to be a responsible and sustainable employer and ESG considerations remain embedded within our strategy. We were proud to be named in the Financial Times' list of Europe's Climate Leaders 2024 and Time Magazine and Statista's World Best Companies for Sustainable Growth, in what we see is a clear indication of our dedication to the environment and a greener economy.

We were delighted to welcome Sanjeevan Bala as a Non-Executive Director to the Board in April 2024. His expertise in customer-centric technology and AI transformation has been invaluable and he has made an immediate contribution to the business. In H2 FY24, the Board commissioned an external Board evaluation to benchmark on various levels. I am pleased to report that the results were extremely positive, with the Board's effectiveness, impact and general governance all being highlighted. I would like to thank the whole Board for their hard work and commitment this year and look forward to continuing to build on this in the period ahead.

In 2019, we set ourselves some ambitions to strive for by the end of 2024. While we did not anticipate Covid-19 and the subsequent challenging market backdrop of the past two years when setting the ambitions, looking back I believe we have done a good job in executing against them.

Looking ahead, whilst FY25 is set to see challenging market conditions persist, I believe there is a lot to be excited about. We are of the view that the recruitment industry will change more in the next five years than it has in the last 20, driven by effective implementation of technology. We have led the industry in harnessing the latest tools available and see this head start as an opportunity for us. This technological advantage, coupled with our strategic focus on STEM and Contract mean we are well placed to grow once the market backdrop improves.

Chief executive officer's statement

The strength of the Group's operating model and differentiated STEM value proposition has been demonstrated this year with a resilient financial performance in a prolonged challenging market environment. Despite softer trading conditions, which have persisted longer than market participants predicted, the Group was able to withstand the external pressures of this extended cycle through FY24, delivering a financial result in line with expectations. Notwithstanding the trading environment, we have taken the time to strengthen our position for future growth, making meaningful progress in line with our technology and operational enhancement plans.

Our unique business model is rooted in our conviction that the future of work is flexible STEM talent. The Group has grown from a heritage of doing things differently and embracing opportunities arising from a changing world. As industries evolve and shifts in labour markets unfold, driven by the forces of global megatrends, we have acted early and decisively to position our business at the centre. It is this pioneering ethos that continues to govern our evolution today. We proactively took the important step over two years ago to initiate a journey to become a digitally-enabled business through our Technology Improvement Programme (TIP), setting us on a path to be a fitter, more scalable organisation.

Contract and STEM provided resilience in uncertain markets

This year we have connected over 12,150 highly skilled STEM professionals to their next career role, which we facilitate through our unique combination of niche vertical focus and operational scale. As a STEM partner to our customers in diverse markets and sectors, we uncover the scarce, highly skilled STEM specialists needed to power their businesses. We deliver this through an adaptable suite of solutions, whether that be Independent Contractors, Employed Contractors or Permanent placements, coupled with a best-in-class consultative service wrapper. Our strategic focus on flexible talent (representing contract, part-time specialists and project-based teams) now contributes 84% to Group net fees, and is aligned to the needs of our clients and preferences of our candidate communities.

As widely reported across regions and industries, the market backdrop over the year has been characterised by economic weakness coupled with geopolitical uncertainty, with a notable impact on client confidence. With the protracted length of this uncertainty, we believe this has contributed to a rise in status quo bias on the part of decision-makers, exacerbating an ingrained preference for stability and inhibiting investment decisions which could otherwise be beneficial in the longer-run.¹ This heightened, broad resistance to change is resulting in delayed decision-making in the short-term.

The result of this can be seen in softer new placement activity as clients put on hold investment initiatives, particularly acute in permanent roles. This has resulted in net fees for the year of £369.1 million, down 9% YoY on a like-for-like basis, which, together with prudent cost control, delivered an operating profit of £66.2 million. Our bias toward flexible talent underpinned our resilience in the year, providing a visible runway of monthly-recognised Contract net fees in the form on a contractor order book. Whilst Contract extensions continued to be robust through the year, reflecting the desire of our customers to retain key STEM skills, persistently weak new business activity meant that new business did not outpace the rate of Contract finishers, resulting in the contractor order book declining 10% YoY. Despite this, our Contract focus continues to provide sector-leading net fee visibility of £161.3 million, equivalent to around four months of net fees.

Embracing change and aligning to structural opportunity

The unprecedented speed of adoption of new technology is taking hold across industries and we are starting to see this shaping business leaders' views of the skillsets they need. The reported productivity gains and growth potential enabled through Artificial Intelligence (AI) adoption is in turn changing the skills sought by employers.² As we have reported in our own research (How the STEM World Works), AI is no longer the spectre that threatens job security; it is the catalyst for unprecedented growth. Crucially, it has been shown that AI is often performing best in collaboration with people, and that "the biggest performance improvements come when humans and smart machines work together."³ We believe this to be particularly acute in highly complex roles, a view which is supported by industry experts⁴. It is these specialist markets where we focus, and which require experts to find and place.

We believe we are at the centre of this evolving landscape, both in terms of what we deliver to clients, but also our own operations. To our clients, as well as candidates, we provide advice and guidance. Not only are we helping our clients to leverage the benefits of modern technology by finding the skills they need in order to do so, but we are also embracing it ourselves in ways that make work more fulfilling and impactful for our teams. We are on our own journey of creating a bespoke insights and data platform that will deliver exceptional value to our customers, candidates, employees and shareholders.

Working for our communities and the planet

Notwithstanding transient economic cycles, we remain resolute in our focus on executing our ESG commitments. In doing so, we are ensuring we are building a business that works for our communities and the planet, a central component to our sustainable growth ambitions and long-term resilience. Our commitment to the environment is two-fold: as a Group, we are actively transitioning to be a net zero business before 2050 in line with SBTi verified targets, and this year our net zero working group has been working on a five-year transition roadmap (FY25-FY30) to ensure we remain on track. Secondly, our role extends much broader than our own business footprint - the STEM skills we place play a critical role in enabling the transition to a net zero world, and in FY24, we delivered 923 placements within clean energy. Since FY19 we have seen 161% growth in our clean energy business net fees. Clean energy, which now accounts for 11% of Group net fees, remains an exciting growth opportunity for SThree.

In 2019 we set our 2024 sustainable business practice and ESG ambitions (refreshed in FY22). The following provides an overview of our in-year performance and progress towards our overall goals:

·	During FY24, our clean energy business grew by 5% compared to FY23 (FY23: up 28% versus FY22). We have achieved our target of doubling the size of our global clean energy business from FY19 to FY24.
·	In FY24, we achieved a 21% reduction in carbon emissions compared to FY19, our baseline year for our SBTi net zero target. Our goal was to reduce absolute carbon emissions by 25% from FY19 levels. We surpassed this target in FY22 with a 44% reduction, but fell slightly short in FY24.
·	Throughout FY24, we positively impacted over 48,500 lives (FY23: over 25,700). Since FY19, we have positively impacted 163,028 lives and successfully met our ambition of impacting more than 150,000 lives by the end of 2024.
·	As of FY24, 37% of leadership positions are held by women (FY23: 39%) as we progress towards our short-term goal of 40% of women in leadership roles, with the longer-term ambition of achieving 50/50 representation.

We also recognise our responsibility in helping to shape an equitable and diverse STEM talent pipeline. As such, in FY24 our Elevate Careers programme delivered career advice, CV reviews, and sharing our intellectual capital to help 1,739 people at risk of unemployment to access career paths. Internally, we continue to invest in our diversity and in FY24 we welcomed 39 women to be our fourth leadership accelerator cohort.

Strategic execution

Places: To be a leader in the markets we choose to serve

A key component of our growth ambition is ensuring our market coverage remains aligned to the best STEM markets and skills verticals through continuous evaluation under our market investment model. During the year, we remained focused on our active market coverage of 11 countries, giving us access to approximately 71% of the global STEM staffing opportunity, and which we service from our footprint of 33 offices. This deliberate and targeted coverage follows a streamlining of our markets in preceding years, and as a result, this simplified structure has enabled us to channel all of our efforts during FY24 on strengthening our operations in each of our core markets for long-term success.

For example, in the US we have invested in refining our go-to-market strategies to ensure our teams are better positioned to capitalise on growth opportunities there, with a focus on having a more balanced portfolio in each of our core markets, particularly given that we expect the region to rebound faster than other markets. More broadly, other areas of focus in the year have been investing in our technology and capacity to embed data-driven insights throughout our operations, both to enhance the services we provide to clients and to also inform our pricing and skill vertical investments in each market. We have also evolved our global client approach to emphasise greater client collaboration and service. Lastly, we have brought our global Permanent community together to strengthen our Permanent offering in preparation for recovery in the market. These initiatives leave us with stronger foundations to grow both organically and through selected M&A, positioning us well to capitalise when markets recover.

Platform: Create a world-class operational platform through data, technology and infrastructure

This year has marked a considerable step-change in our transition to a digitally-enabled organisation, with the TIP roll-out now initiated across four of our five largest global markets. Importantly, we have taken the learnings from our first major roll-out in the US, and applied it to our subsequent implementations initiated in FY24 in Germany, UK and the Netherlands, helping us to be more efficient in our deployment. This has enabled us to introduce, for the first time, back-office process automation, with the early efficiency benefits highlighting the scale of the potential we can unlock. We now have five AI-enabled processes across placement support, payroll and IT help desks live and working in our four initiated markets, with another five processes to be onboarded in FY25. Taking a look at the US as our first major region to go live, over a 12-month period we have reduced the manual intervention on c.4,400 new placement onboardings or extension updates; removed the need for the manual management and approval of c.43,000 timesheets; and decreased the number of tickets created by the IT help desk by 28%.

In addition, the implications of our global system roll-out is starting to resonate much more broadly. This year we have designed the automation of sales processes and begun digitising the 'SThree Way' best practice blueprint to support sales effectiveness of our consultants. In doing so, we have made a concerted effort in ensuring that our technology roll-out is inextricably delivered together with change management initiatives across our teams, through focus groups, leadership days and training. Already we can see that our new, standardised and accessible systems are tying the whole organisation closer together, helping to bring greater alignment around our strategy. We are becoming better at utilising the power of the Group through knowledge sharing and transporting client relationships across regions, helping to open up new opportunities and build deeper relationships with our clients.

As we enter the new year, we will be completing the rollout out of TIP globally, and introducing new functions onto the platform. As we look ahead to our mid-to-long term opportunity, this is only the start of our journey. The more we do, the more that it is clear that the benefits of TIP will continue to expand, with its global implementation providing the foundational infrastructure for continued enhancement, development and innovation in the years to come. We believe this will position us as game-changers in the industry, driving high margin growth over the medium term.

Position: Leverage our position at the centre of STEM to deliver sustainable value to our candidates and clients

Our go-to market strategy is rooted in our 'house of brands' approach, with a focus on leveraging the strong brand value we have in our specialist vertical markets across the full Group. Through a more unified brand portfolio we are working to tie our brands closer together to elevate the collective power of the Group and enhance our position within our markets and skills verticals. We are already seeing evidence that our proposition as a STEM partner is gaining increased momentum with larger enterprise clients, evidenced by 8% YoY net fee growth within our top client cohort. We see a large opportunity within this customer segment, and we have new initiatives planned for launch in FY25 to build on this momentum further.

To support our efforts, we launched the latest of our thought leadership initiatives in H2 FY24 with our global STEM survey report, 'How the STEM world works: Navigating the new era of AI and trust'. The report is the culmination of an in-depth survey of over 2,500 STEM professionals worldwide, spanning Technology, Engineering and Life Sciences. The report provides insight for our clients looking to create the right environment and workforce to embrace AI and digital transformation to drive productivity and innovation. Findings such as the fact STEM professionals are losing nearly six hours each week due to insufficient AI support, and the prevalence of digital illiteracy in leadership are just some findings that help our clients make the right workforce decisions.

People: Attract, develop and retain great people

Our longstanding relationships and best-in-class consultative service wrapper are made possible by our dedicated global team of c.2,700 people. Our performance culture is guided by an ethos that everyone plays a part in our journey, and I would like to take the opportunity to thank all SThree team members for their continued commitment and determination in delivering outstanding value to our clients and candidates. A highlight of my role continues to be interacting with our teams on the ground across our global markets, and I was particularly inspired following our two-day leadership conference in London where our teams and customers came together to share views on the future of work. We were able to give additional insight on our technology improvement plans and the progress we have made in enhancing service delivery through standardisation of the 'SThree Way'.

During the year we have seen early positive impact from enhanced processes to improve employee retention, including a reduction in sales consultant churn this year. Specific initiatives in the period include the launch of a Global Benefits Network and Reward Governance Group, and the introduction of refined global hybrid working policies. In addition, we have dedicated considerable effort through our change programme, with a focus on upskilling, ensuring that our teams have been prepared for the demands of a new system as we progressed the global roll-out of our new technology infrastructure. In addition, there have been big investments in leadership development and we successfully activated and embedded our new company values.

Looking into FY25, we will be implementing new initiatives with the key objective to impact our retention and productivity of our 0-24 months sales population. With this programme we aim to develop our SThree Way of managing sales by ensuring we develop globally consistent best practices for hiring, onboarding and performance managing sales talent across all regions.

Outlook: bringing skilled people together to build the future

As previously indicated, market conditions continue to be challenging particularly in Europe, and we prudently expect this to persist through FY25. Whilst the wider landscape remains in a state of status quo bias in the short term, we would expect this to transition to tailwinds over the medium term as businesses resume investment to avoid stagnation and pent-up investment demand is unleashed. Importantly, we are not shaping our thinking and decision making around this cycle. We maintain our forward-looking view, focusing on the right markets, with the right people and the right strategy over the mid-to-long term.

We are using this time to move further ahead in our positioning, investing in our future, supported by a resilient business model and robust cash position. We believe the actions we are taking are providing us with competitive, first-mover advantage and we will emerge fitter and ready to capitalise when markets recover. Our scale, robust business foundations and deep STEM networks fostered over decades, combined with a plan to drive the benefit realisation of our infrastructure investment, sets us on a path to be game changers in STEM.

¹ https://online.wharton.upenn.edu/blog/status-quo-bias/

² https://www.pwc.com/gx/en/news-room/press-releases/2024/pwc-2024-global-ai-jobs-barometer.html

³ https://hbr.org/2018/07/collaborative-intelligence-humans-and-ai-are-joining-forces

⁴ https://www.peoplemanagement.co.uk/article/1895039/michael-wooldridge-ai-doesnt-depth-replace-complex-roles

Group financial and OPERATIONAL REVIEW

Overview

Our strategic focus on Contract underpinned the Group's performance against a prolonged challenging backdrop for the sector, where conditions have had an ongoing impact on new business activity throughout the year; overall, the Group net fees declined 9% YoY on a like-for-like basis.

Our Contract business, which represents 84% of Group, saw net fees decline by 7% YoY on a like-for-like basis. The contractor order book closed at £161.3 million, down 10% YoY, but continues to provide sector-leading visibility into FY25. Permanent net fees were down 18% reflecting both global market conditions together with our targeted investment towards Contract. Average permanent headcount was down 7% YoY.

From a skill perspective, the Group saw continued demand for Engineering roles, down only 1% YoY, driven primarily by the Energy sector, with the clean energy (renewables) segment still in growth (up 5% YoY), while net fees for placements into Technology roles, our largest discipline, were down 10% YoY and Life Sciences declined 17% YoY primarily driven by the global market conditions in the sector, though still broadly in-line with pre-Covid levels.

Overall, the Group reported operating profit was £66.2 million (FY23: £76.4 million), down 9% YoY on a like-for-like basis, driven primarily by the decline in net fees across key markets, the impact of additional licensing costs as the Technology Improvement Programme (TIP) continued to roll out in FY24, offset by prudent management of discretionary costs. The operating profit conversion ratio for the year remained stable at 18%.

Productivity for the year was down only 4% against the prior year, as the rate of net fee decline was higher than average headcount decline of 6%, reflecting careful management of our business whilst ensuring we are ready to respond when the market improves.

Update against 2024 ambitions

At our Capital Markets Day in FY19 (refreshed in FY22), we announced our 2024 ambitions, which have guided our actions and strategic initiatives in our journey to become the number one STEM talent provider in the best global STEM markets:

·	Grow market share/grow net fees faster than our peer group across the aggregate of our top five markets compared to FY19. Based on the market data available to us as at the end of Q3 FY24, we have outperformed our local peer group on a net fee basis versus FY19.
·	Deliver a sustainable operating profit conversion ratio in excess of 21%. The current macro-economic headwinds have negatively impacted net fees and dampened the overall margin progression, however the Group has continued to invest in its people and platform. While 21% could have been achieved, we have prioritised investing in our longer-term ambitions while still maintaining a sector-leading conversion ratio of 18% in FY24 despite the difficult market conditions.
·	Our aim was to target eNPS scores in the top quartile of the professional services industry. Over the course of the year, we ran two full surveys and our average Group-wide eNPS score was 40 points¹, which is within the top quartile. Survey findings highlighted SThree's strengths in setting performance goals, giving feedback, and performance recognition. Sentiment was influenced in part by the ongoing TIP roll-out. Large-scale transformations often impact eNPS short-term, and the implementation of our TIP is a big change for our people as it takes time to get acquainted with a completely new end-to-end system. Despite this, we are seeing a great commitment from our teams, reflected in above-benchmark eNPS scores for TIP-related questions, demonstrating their understanding and support for the transformation.
·	We aimed to reduce absolute carbon emissions by 25% compared to FY19 levels (the base year). This target was surpassed in FY22 with a 44% reduction. However, in FY24, we fell slightly short of the target, achieving a reduction of 21% compared to FY19.

¹ FY24 average eNPS score based on H1 eNPS of 45 (top quartile 40), and H2 eNPS of 35 (top quartile 36).

Group net fees by geography, skills and service

Group net fees	% of Group	FY24 (£'000)	FY23 (£'000)	Variance
Group net fees	% of Group	FY24 (£'000)	FY23 (£'000)	Reported	Like-for-like⁽¹⁾
Geographical mix
DACH	35%	127,546	148,925	-14%	-12%
USA	22%	82,034	96,410	-15%	-12%
Netherlands including Spain	21%	78,532	82,149	-4%	-2%
Rest of the Europe	17%	61,314	70,439	-13%	-12%
Middle East & Asia	5%	19,653	20,852	-6%	+4%
Total	100%	369,079	418,775	-12%	-9%

Skills mix
Technology	48%	177,694	202,510	-12%	-10%
Engineering	29%	105,330	108,820	-3%	-1%
Life Sciences	17%	60,926	75,516	-19%	-17%
Other	7%	25,129	31,929	-21%	-18%
Total	100%	369,079	418,775	-12%	-9%

Service mix
Contract	84%	310,617	343,502	-10%	-7%
Permanent	16%	58,462	75,273	-22%	-18%
Total	100%	369,079	418,775	-12%	-9%

⁽¹⁾ Like-for-like YoY growth rates are expressed in constant currency.

Business mix

The Group is well diversified, both geographically and by the skills we place across multiple sectors. Our top three countries represent 72% of Group net fees, with Germany accounting for 30%, USA 22% and the Netherlands 19%.

Our Contract business declined by 7% on a like-for-like basis against a record prior year performance and now represents 84% of the Group net fees. Our Permanent business, which now represents 16% of the Group net fees, saw net fees decline 18% in the year on a like-for-like basis, with average Permanent headcount down 7% YoY. Our market invest model enables us to continually review our markets to prioritise investments where we see opportunities for growth and the strongest returns.

Engineering, which represents 29% of the Group net fees, declined by 1%, with the resilient performance against a record prior year driven primarily by the Energy sector. Clean energy business (renewables) remains the fastest growing segment, up 5% YoY. This was offset by the decline in Technology of 10% YoY, and in Life Sciences of 17% YoY due to reduced global sector expenditure. Technology and Life Sciences now represent 48% and 17% of the Group net fees respectively.

Operational review by reporting segment

DACH (35% of Group net fees)

	FY24	FY23	Variance
Performance highlights	FY24	FY23	Reported	Like-for-like
Revenue (£'000)	456,051	524,732	-13%	-11%
Net fees (£'000)	127,546	148,925	-14%	-12%
Average total headcount (FTE)	811	877	-8%	n/a

·	DACH is our largest region comprising businesses in Austria, Germany and Switzerland, with Germany accounting for 88% of net fees. Net fees declined by 12% YoY, with Contract down 6% and Permanent down 28%.
·	Germany, our largest country in the region (88% of DACH net fees), saw Contract down 6%, with overall net fees down 12%, predominantly reflecting lower levels of demand for Technology skills (down 13%). In addition, new business activity and trading in Germany were affected by the fragile state of the German coalition government in Q4 FY24.
·	Switzerland saw net fees decline 7% YoY driven by Life Sciences down 26%, though we did see strong growth in Engineering, up 42% YoY.
·	Austria net fees declined 18% YoY.

USA (22% of Group net fees)

	FY24	FY23	Variance
Performance highlights	FY24	FY23	Reported	Like-for-like
Revenue (£'000)	299,229	328,293	-9%	-6%
Net fees (£'000)	82,034	96,410	-15%	-12%
Average total headcount (FTE)	411	473	-13%	n/a

·	The USA is the world's largest specialist STEM staffing market and our second-largest region on a net fee basis. It remains a key area of focus for the Group, and we will continue to invest in the region as we align our resources with the best long-term opportunities.
·	USA saw net fees decline 12% YoY with trading partly reflecting uncertainty throughout the year relating to the US election at the end of Q4. At the skill level, the decline was led by Life Sciences where an abundance of roles during the pandemic has led to a subsequent decline in demand. Engineering delivered a solid performance with 5% growth YoY driven by both Contract and Permanent.
·	Contract net fees, which now account for 90% of the region's net fees, were down 11%, impacted by declines in Life Sciences and Technology.
·	Permanent net fees declined 24% YoY, due to poor performance in Life Sciences.

Netherlands including Spain (21% of Group net fees)

	FY24	FY23	Variance
Performance highlights	FY24	FY23	Reported	Like-for-like
Revenue (£'000)	343,571	367,643	-7%	-4%
Net fees (£'000)	78,532	82,149	-4%	-2%
Average total headcount (FTE)	411	422	-3%	n/a

·	The region saw net fees decline by 2% YoY, with Contract down 2% and Permanent down 5%.
·	The Netherlands, our largest country in the region (90% of net fees), delivered a resilient performance despite an ongoing challenging macro environment resulting in a drop in new hiring demand. Overall net fees generated in the Netherlands were down 6%, with Contract down 6% and Permanent down 5%.
·	From a sector perspective, Technology in the region was flat, Engineering was down 4% and Life Sciences was down 5%.
·	Spain had another impressive year, with net fee growth of 52% driven primarily by Technology.

Rest of the Europe (17% of Group net fees)

	FY24	FY23	Variance
Performance highlights	FY24	FY23	Reported	Like-for-like
Revenue (£'000)	353,150	399,862	-12%	-11%
Net fees (£'000)	61,314	70,439	-13%	-12%
Average total headcount (FTE)⁽⁹⁾	441	499	-12%	n/a

⁽⁹⁾ Excludes central headcount located in the UK.

·	Rest of Europe comprises businesses in the UK, Belgium and France, where given the persistent market uncertainty, business confidence remained subdued causing many large projects to be put on hold.
·	Net fees saw a decline of 12% YoY. Contract, which represents 97% of net fees for the region, declined 11%, with Permanent declining 41%, driven by both market conditions and the transition towards Contract.
·	The UK, our largest country in the region (64% of net fees), saw net fees decline 14%, with growth in Engineering, up 4% YoY, outweighed by declines in Life Sciences, down 22%, and Technology, down 10%.
·	France and Belgium traded broadly in line with the prior year, with net fees flat and down 1% respectively.

Middle East & Asia (5% of Group net fees)

	FY24	FY23	Variance
Performance highlights	FY24	FY23	Reported	Like-for-like
Revenue (£'000)	40,905	42,637	-4%	+3%
Net fees (£'000)	19,653	20,852	-6%	+4%
Average total headcount (FTE)	202	185	+9%	n/a

·	Our Middle East & Asia business includes Japan and UAE, and accounts for 5% of Group net fees.
·	Overall, FY24 was a good year with stable, consistent growth for the region, net fees increased by 4% YoY. On Permanent we saw our net fees grow by 14% YoY.
·	Japan, which represents 54% of the region's net fees, delivered an impressive performance up 26% YoY, reflecting growth in both Engineering and Technology, up 68% and 16% respectively. Japan's Contract net fees were up 117% and Permanent up 20%.
·	UAE saw net fees decline 11% YoY driven by Engineering.

chief financial officer's STATEMENT

In FY24, the Group was impacted by increased political and macro-economic uncertainty, particularly in Europe, further delaying businesses' investment plans and the anticipated easing of market conditions. The Group's net fees performance, down 9% YoY on a like-for-like basis, was therefore significantly impacted by the continued weak new business activity, partially offset by robust contract extensions.

Income statement

On a reported basis revenue for the year was down 10%[1] and amounted to £1.5 billion (FY23: £1.7 billion) while net fees declined by 12% to £369.1 million (FY23 £418.8 million). The weakening of our two main trading currencies, the US Dollar and the Euro, against Sterling during the year, decreased the total net fees by £9.5 million. Therefore, when presented on a constant currency basis, the net fees decreased by 9% YoY.

Net fees in our Contract business, which represented 84% of the Group net fees for the current year (FY23: 84%), declined by 7%, driven by the ongoing softness in new business but partially offset by continued strong contract extensions. Across our core regions, Netherlands (including Spain) saw a decline of 2% in Contract net fee income, driven by Engineering, down 3% YoY. In the US, Contract net fees, which now account for over 90% of the region total net fees, were down 11% YoY primarily due to its exposure to Life Sciences, while DACH was down 6%, reflecting softer demand for Technology skills. Rest of Europe's Contract performance was down 11% YoY. Middle East & Asia was down 15%. Skills-wise, Engineering was flat YoY, with Life Sciences down 16% and Technology down 7%, reflecting global market conditions. The Group Contract net fee margin, calculated as Contract net fees as a percentage of Contract revenue[2] remained flat YoY at 21.7% (FY23: 21.7%).

The contractor order book closed at £161.3 million, down 10% YoY, and accounts for approximately four months' worth of net fees, providing us with good forward visibility into FY25. Under the contractor model, net fees are earned on a month-by-month basis, with the contractor order book reflecting the value of net fees under contract but yet to be recognised. During softer market conditions, this provides resilience with visibility over the recurring-like nature of monthly contract fees as contracts run their course (contract 'finishers'). In a market recovery context, the Board would expect the contractor order book to gradually increase as and when new placements outpace finishers over a sustained period through the year.

Permanent net fee income was down 18% reflecting market conditions across most regions, together with our targeted investment towards Contract. Our largest Permanent region, DACH, reported a decline of 28%. Rest of Europe was also down 41%, and USA down 24%. Netherlands (including Spain) declined 5% YoY. Meanwhile our second largest Permanent region, Middle East & Asia, delivered a strong performance with growth of 14%. Permanent average fees increased by 9% YoY in the year, with average permanent fee margin (net fees as a percentage of salary) now at 27.2% (FY23: 27.1%).

Operating expenses decreased by 12% YoY on a reported basis, amounting to £302.9 million (FY23: £342.4 million) due to careful management of costs. Overall, the reported operating profit was £66.2 million (FY23: £76.4 million), down 9% YoY in constant currency, while the Group operating profit conversion ratio² remained stable at 17.9% (FY23: 18.2%). Operating profit conversion ratio reflects the decline in net fees across key markets, as well as the impact of additional licensing costs as the Technology Improvement Programme continued to roll out this year, offset by prudent management of discretionary costs. The net currency movements versus Sterling were unfavourable to the operating profit, reducing it by £3.0 million. Fluctuations in foreign currency exchange rates are expected to remain a material sensitivity to the Group's reported results. By way of illustration, each 1% movement in annual exchange rates of the Euro and US Dollar against Sterling impacts the Group's operating profit by £0.8 million and £0.3 million respectively per annum.

Net finance income

The Group received net finance income of £1.4 million (FY23: £1.6 million) which included interest income of £2.9 million (FY23: £2.2 million), earned on the Group's bank deposits, partially offset by the interest charge on lease liabilities, £1.4 million (FY23: £0.6 million).

Income tax

The total tax charge for the year on the Group's profit before tax was £19.9 million (FY23: £21.9 million), representing a full-year effective tax rate (ETR) of 26.5% (FY23: 28.1%). The YoY decrease in the Group's ETR is primarily driven by the release of an uncertain tax provision following settlement of the state aid case heard at the European Court of Justice. The Group ETR can also vary YoY due to the mix of taxable profits by territory, non-deductibility of the accounting charge for LTIPs and other one-off tax items.

Overall, the reported profit before tax was £67.6 million, down 9% YoY in constant currency and down 13% on a reported basis (FY23: £77.9 million).

The reported profit after tax was £49.7 million, down 7% YoY in constant currency and down 11% on a reported basis (FY23: £56.1 million).

Earnings per share (EPS)

The EPS was 37.4 pence (FY23: 42.4 pence). The YoY movement is attributable to the overall resilient trading performance, combined with lower average headcount, tight cost control and net interest income, partially offset by an increase of 0.7 million in the weighted average number of shares.

The diluted EPS was 37.1 pence (FY23: 41.5 pence). Share dilution mainly results from various share options in place and expected future settlement of vested tracker shares. The dilutive effect on EPS from tracker shares will vary in future periods, depending on the profitability of the underlying tracker businesses and the settlement of vested arrangements.

Dividends

The Board monitors the appropriate level of dividend, considering achieved and expected trading of the Group, together with its balance sheet position. The Board aims to offer shareholders long-term ordinary dividend growth within a targeted dividend cover² range of 2.5x to 3.0x through the cycle.

The Board has proposed to pay a final dividend of 9.2 pence (FY23: 11.6 pence) per share, which together with the interim dividend of 5.1 pence (FY23: 5.0 pence) per share, will give the total dividend of 14.3 pence (FY23: 16.6 pence) per share for FY24.

The final dividend, which amounts to approximately £12.2 million, will be subject to shareholder approval at the 2025 Annual General Meeting. It will be paid on 6 June 2025 to shareholders on the register on 9 May 2025.

Balance sheet

Total Group net assets increased to £248.6 million (FY23: £222.9 million), driven by the excess of net profit over the dividend payments and £5.1 million increase in intangible assets attributable to development costs capitalised under the TIP, partially offset by cost of shares purchased by the Employee Benefit Trust (EBT).

Net working capital, including contract assets, increased by £21.7 million on the prior year, driven mainly by increased days sales outstanding (DSO) partially offset by the slowdown in trading, including reduced contractor order book. The year-end net cash position of £69.7 million was robust; the YoY decline reflected the timing of certain client payments related to a small number of clients. As we roll out TIP in each new market, there is a short-term impact as clients get used to a new billing process. It has created a little volatility as we roll out each market, but what we see is that it returns towards more normalised levels over a period of months. In FY24, this resulted in a temporary increase in DSO to 55 days (FY23: 46 days), but we expect to continue to return to a more normalised cash flow profile over the coming months.

Overall, our business model remains highly cash generative, and we have no undue concentration of repayment obligations in respect of trade payables or borrowings.

Investments in subsidiaries

During the year, the Directors reviewed the recoverable amount of the Company's own portfolio of investments. Due to the prolonged challenging market conditions, in December 2024 the Group announced a downgrade to the forecast trading outlook for the Group. As a result, an impairment loss of £46.5 million was recognised in respect of the UK operations. In FY24, both Permanent and Contract divisions across all sectors experienced reduced margins impacting the profitability of the UK region. After booking this impairment, the Company's distributable retained earnings were £44.4 million (FY23: £118.4 million).

For all the other Company's investments in trading subsidiaries, despite the latest trading forecasts having been revised downwards compared to expectations, their impact was absorbed by significant headroom in the recoverable amounts which had accumulated in prior years. The recoverable amounts of the Company's investments in non-UK subsidiaries provided sufficient headroom to not trigger impairment.

In the prior year, an impairment loss of £0.1 million was recognised by the Company in relation to two discontinued businesses, Luxembourg and Canada.

Tracker shares

In FY24, the Group settled certain vested tracker shares for a total consideration of £4.8 million (FY23: £4.5 million) which was determined using a formula set out in the Articles of Association underpinning the tracker share businesses. The consideration was settled in SThree plc shares; 508,396 (FY23: 320,457) new shares were issued and 776,000 (FY23: 928,483) of shares held by the EBT were utilised. The arrangement is deemed to be an equity-settled share-based payment arrangement under IFRS 2 Share-based payments. There was no charge to the income statement as initially the tracker shareholders subscribed to the tracker shares at their fair value.

All current tracker share businesses remaining in existence will continue to be reviewed for settlement based on the pre-agreed criteria each year, until the full closure of the scheme in the next few years. As at the year end, the valuation of the outstanding shareholdings was approximately £2.1 million. These settlements may either dilute the earnings of SThree plc's existing ordinary shareholders if funded by a new issue of shares or result in a cash outflow if funded via treasury shares or shares held in the EBT.

Liquidity management

In FY24, cash generated from operations was £59.8 million (FY23: restated £86.9 million, see note 1 to the consolidated financial statements for details). The decrease was primarily driven by lower profit before tax and a significant increase in working capital as the rate of new placement activity slowed, partially offset by robust Contract extensions. Income tax paid increased to £23.0 million (FY23: £19.5 million).

Capital expenditure increased to £13.2 million (FY23: £8.2 million), due to the Group-wide TIP and related IT hardware costs. The capital expenditure also included costs of leasehold improvements and fitting out certain parts of our office portfolio.

The Group paid £14.4 million in rent (principal and interest portion) (FY23: £14.9 million). The Group spent £10.0 million (FY23: £10.0 million) for the purchase of its own shares to satisfy employee share incentive schemes. Cash inflows of £0.5 million (FY23: £0.3 million) were generated from Save-As-You-Earn employee scheme.

Dividend payments were £15.9 million comprising primarily the final dividend paid in June 2024. This is significantly lower as compared to FY23, when in total £21.0 million in funds were transferred to the share administrator for settlement of the FY23 interim dividend and the FY22 final dividend. £21.0 million in funds transferred for the settlement of dividends in FY23 is a restated amount, reduced by £6.4 million. During the year, the Directors identified a presentation error of the FY22 interim dividend in the FY23 Consolidated Statement of Cash Flows. £6.4 million worth of funds, required for the settlement of the FY22 interim dividend, were transferred to a share administrator before 30 November 2022; this was recorded as a dividend prepayment within trade and other receivables and as an operating cash outflow in FY22. Subsequently, it was determined that £6.4 million accounted for as a dividend prepayment and operating cash outflow in FY22 should have been presented within financing activities in the FY22 Consolidated Statement of Cash Flows, in a separate line item 'Prepayment of dividend', to reflect appropriately the nature of this cash outflow. Accordingly, this £6.4 million would not have impacted the FY23 Consolidated Statement of Cash Flows. For further information, please see note 1 to the Consolidated Financial Statements.

Foreign exchange had a negative impact of only £0.1 million (FY23: positive impact £2.1 million).

Overall, the net cash has declined to £69.7 million in FY24 versus the prior year balance of £83.2 million, driven primarily by reduced EBITDA and increased investments in technology.

Accessible funding

The Group's capital allocation priorities are financed mainly by retained earnings, cash generated from operations, and a £50.0 million RCF. This has remained undrawn during the year, but any funds borrowed under the RCF would bear a minimum annual interest rate of 1.2% above the benchmark Sterling Overnight Index Average. The Group also maintains a £30.0 million accordion facility as well as a substantial working capital position reflecting net cash due to SThree for placements already undertaken.

At the end of the current financial year, the Group had not drawn down any of the credit facilities (FY23: £nil).

On 30 November 2024, the Group had total accessible liquidity of £124.7 million, made up of £69.7 million in net cash (FY23: £83.2 million), the £50.0 million RCF and a £5.0 million overdraft facility (of which only £0.1 million was drawn at the year end).

Capital allocation

SThree remains disciplined in its approach to allocating capital, with the core objective at all times being to maximise shareholder value. The Group's capital allocation policy is reviewed periodically by the Board and was refreshed at the start of FY24:

·	Balance sheet - our intention is to maintain a strong balance sheet at all times to provide operational flexibility throughout the business cycle.
·	Dividend - we aim to pay a sustainable dividend, with a commitment to a through-the-cycle dividend cover range of 2.5x to 3.0x of EPS.
·	Deployment of capital prioritised in the order of:
	1.	Organic growth: investing in our people and ensuring sufficient working capital on hand to fund growth in the contractor order book while developing new business opportunities.
	2.	Business improvement: digitalising our business, putting in place the technology and tools that are key to driving both scale and higher margins.
	3.	Acquisitions: strict inorganic growth discipline, with a focus on complementary and value enhancing acquisitions.
	4.	Capital return to shareholders: after all organic and inorganic opportunities within an appropriate time horizon have been assessed, further cash returns to shareholders may be considered.

PRINCIPAL AND EMERGING RISKS

Principal risks and uncertainties affecting the business activities of the Group will be detailed within the Strategic Report section of the Group's 2024 Annual Report and Accounts, a copy of which will be available on the Group's website www.sthree.com.

Delivering on our strategy requires all parts of our business to work together. In isolation risk mitigation helps SThree manage specific subjects and areas of the business. However, when brought into our day-to-day activities, successful risk management has helped us to maximise our competitive advantage and deliver on our strategic pillars in FY24. While the ultimate responsibility for risk management rests with the Board, the effective day-to-day management of risk is in the way we do business and our culture.

Aligning risks and strategy by using risk to help make the right strategic decisions - in order to deliver our strategy and competitive advantage throughout the business we must ensure that we maintain a balance between safeguarding against potential risks and taking advantage of all potential opportunities.

consolidated income statement

for the year ended 30 November 2024

£'000	Note	2024	2023


Revenue	2	1,492,906	1,663,167
Cost of sales	2	(1,123,827)	(1,244,392)
Net fees	2	369,079	418,775
Administrative expenses	3	(301,972)	(336,076)
Impairment losses on financial assets		(913)	(6,343)
Operating profit		66,194	76,366
Finance income		2,891	2,257
Finance costs		(1,445)	(698)
Profit before income tax		67,640	77,915
Income tax expense	4	(17,948)	(21,864)

Profit for the year attributable to the owners of the Company		49,692	56,051
Earnings per share attributable to shareholders
pence
Basic	5	37.4	42.4
Diluted	5	37.1	41.5

consolidated statement of comprehensive income

for the year ended 30 November 2024


£'000	2024	2023
Profit for the year	49,692	56,051
Other comprehensive loss:
Items that may be subsequently reclassified to income statement
Exchange differences on retranslation of foreign operations	(4,304)	(1,437)
Other comprehensive loss for the year (net of tax)	(4,304)	(1,437)

Total comprehensive income for the year attributable to owners of the Company	45,388	54,614

The accompanying notes form an integral part of these Consolidated Financial Statements.

consolidated statement of financial position
as at 30 November 2024
		30 November	30 November
£'000	Note	2024	2023
ASSETS
Non-current assets
Property, plant and equipment		46,217	31,116
Intangible assets	6	12,122	7,066
Deferred tax assets		3,408	5,799
Total non-current assets		61,747	43,981

Current assets
Trade and other receivables		364,907	345,120
Current tax assets		10,315	-
Cash and cash equivalents	7	69,756	83,202
Total current assets		444,978	428,322

Total assets		506,725	472,303

EQUITY AND LIABILITIES
Equity attributable to owners of the Company
Share capital	8	1,356	1,349
Share premium	8	42,098	39,700
Other reserves		(7,195)	(3,597)
Retained earnings		212,385	185,432
Total equity		248,644	222,884

Current liabilities
Bank overdraft	7	88	-
Trade and other payables		198,223	200,132
Lease liabilities	9, 10	10,419	11,297
Provisions		4,068	7,373
Current tax liabilities		12,275	10,746
Total current liabilities		225,073	229,548

Non-current liabilities
Lease liabilities	9, 10	29,362	17,720
Provisions		2,784	2,151
Deferred tax liabilities		862	-
Total non-current liabilities		33,008	19,871

Total liabilities		258,081	249,419

Total equity and liabilities		506,725	472,303

The accompanying notes form an integral part of these Consolidated Financial Statements.

consolidated statement of changes in equity
for the year ended 30 November 2024
	Share capital	Share premium	Capital redemption reserve	Capital reserve	Treasury reserve	Currency translation reserve	Fair value reserve of equity investments	Retained earnings	Total equity attributable to owners of the Company
£'000
Balance at 1 December 2023	1,349	39,700	172	878	(7,939)	3,305	(13)	185,432	222,884
Profit for the year	-	-	-	-	-	-	-	49,692	49,692
Other comprehensive loss for the year	-	-	-	-	-	(4,304)	-	-	(4,304)

Total comprehensive (loss)/income for the year	-	-	-	-	-	(4,304)	-	49,692	45,388
Transfer of loss on disposal of equity investments through other comprehensive income to retained earnings	-	-	-	-	-	-	13	(13)	-
Dividends paid to equity holders (note 11)	-	-	-	-	-	-	-	(15,860)	(15,860)
Distributions payable to tracker shareholders	-	-	-	-	-	-	-	(44)	(44)
Settlement of vested tracker shares (note 8)	5	1,901	-	-	3,324	-	-	(4,167)	1,063
Settlement of share-based payments (note 8)	2	497	-	-	7,369	-	-	(7,539)	329
Purchase of shares by Employee Benefit Trust (note 8)	-	-	-	-	(10,000)	-	-	-	(10,000)
Credit to equity for equity-settled share-based payments	-	-	-	-	-	-	-	4,894	4,894
Current and deferred tax on share-based payment transactions	-	-	-	-	-	-	-	(10)	(10)
Total movements in equity	7	2,398	-	-	693	(4,304)	13	26,953	25,760
Balance at 30 November 2024	1,356	42,098	172	878	(7,246)	(999)	-	212,385	248,644

Balance at 1 December 2022	1,345	38,239	172	878	(6,581)	4,742	(13)	161,610	200,392
Profit for the year	-	-	-	-	-	-	-	56,051	56,051
Other comprehensive loss for the year	-	-	-	-	-	(1,437)	-	-	(1,437)
Total comprehensive (loss)/income for the year	-	-	-	-	-	(1,437)	-	56,051	54,614
Dividends paid to equity holders (note 11)	-	-	-	-	-	-	-	(27,373)	(27,373)
Distributions to tracker shareholders	-	-	-	-	-	-	-	(94)	(94)
Settlement of vested and unvested tracker shares (note 8)	3	1,198	-	-	3,987	-	-	(4,795)	393
Settlement of share-based payments (note 8)	1	263	-	-	4,655	-	-	(4,870)	49
Purchase of shares by Employee Benefit Trust (note 8)	-	-	-	-	(10,000)	-	-	-	(10,000)
Credit to equity for equity-settled share-based payments	-	-	-	-	-	-	-	4,871	4,871
Current and deferred tax on share-based payment transactions	-	-	-	-	-	-	-	32	32
Total movements in equity	4	1,461	-	-	(1,358)	(1,437)	-	23,822	22,492
Balance at 30 November 2023	1,349	39,700	172	878	(7,939)	3,305	(13)	185,432	222,884
The accompanying notes form an integral part of these Consolidated Financial Statements.

consolidated statement of cash flows
for the year ended 30 November 2024
	Note	2024	2023
£'000			(restated*)

Cash flows from operating activities
Profit before tax		67,640	77,915
Adjustments for:
Depreciation and amortisation charge		15,254	15,914
Loss on disposal of property, plant and equipment other than right-of-use assets		135	160
Gain on lease modification		(69)	-
Finance income		(2,891)	(2,257)
Finance costs		1,445	698
Gain on disposal of subsidiary	3	(135)	-
Non-cash charge for share-based payments		4,986	4,871
Operating cash flows before changes in working capital and provisions		86,365	97,301
(Increase)/decrease in receivables		(28,382)	3,636
Increase/(decrease) in payables		3,667	(11,821)
Decrease in provisions		(1,861)	(2,220)
Cash generated from operations		59,789	86,896
Interest received		2,891	2,257
Income tax paid		(23,002)	(19,495)

Net cash generated from operating activities		39,678	69,658

Cash flows from investing activities
Purchase of property, plant and equipment		(6,830)	(1,975)
Purchase of intangible assets	6	(6,339)	(6,237)

Net cash used in investing activities		(13,169)	(8,212)

Cash flows from financing activities
Interest paid	10	(1,445)	(698)
Lease principal payments	10	(13,111)	(14,250)
Proceeds from exercise of share options		499	264
Purchase of shares by Employee Benefit Trust	8	(10,000)	(10,000)
Dividends paid to equity holders	11	(15,860)	(20,990)
Distributions to tracker shareholders		-	(94)

Net cash used in financing activities		(39,917)	(45,768)

Net (decrease)/increase in cash and cash equivalents		(13,408)	15,678
Cash and cash equivalents at beginning of the year		83,202	65,386
Exchange (losses)/gains relating to cash and cash equivalent		(126)	2,138

Net cash and cash equivalents at end of the year	7	69,668	83,202

* Certain amounts shown here do not correspond to the FY23 financial statements and reflect the restatement made. Refer to note 1 to the Consolidated Financial Statements for further information.

The accompanying notes form an integral part of these Consolidated Financial Statements.

Notes to the Financial information

for the year ended 30 November 2024

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES

Basis of preparation

The financial information in this preliminary announcement has been extracted from the Group audited financial statements for the year ended 30 November 2024 and does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The Group financial statements and this preliminary announcement were approved by the Board of Directors on 27 January 2025.

The auditors have reported on the Group's financial statements for the years ended 30 November 2024 and 30 November 2023 under s495 of the Companies Act 2006. The auditors' reports are unqualified and do not contain a statement under section 498(2) or (3) of the Companies Act 2006. The Group's statutory financial statements for the year ended 30 November 2023 were filed with the Registrar of Companies and those for the year ended 30 November 2024 will be filed following the Company's Annual General Meeting.

The Consolidated Financial Statements have been prepared in accordance with UK-adopted International Accounting Standards (IAS) and in accordance with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards.

Going concern

The Consolidated Financial Statements have been prepared on a going concern basis. The Directors have reviewed the Group's cash flow forecasts, considered the assumptions contained in the budget and medium-term forecasts, and considered associated principal risks which may impact the Group's performance over the going concern assessment period to 31 January 2026.

At 30 November 2024, the Group had no debt except for lease liabilities of £39.8 million. Credit facilities relevant to the review period comprise a committed £50.0 million Revolving Credit Facility (RCF) (with the expiry date of 26 July 2027) and an uncommitted £30.0 million accordion facility, both jointly provided by HSBC and Citibank. All these facilities remained undrawn on 30 November 2024. A further uncommitted £5.0 million bank overdraft facility is also held with HSBC, of which £0.1 million (FY23: £nil) was drawn at the year end.

In addition, the Group has £69.7 million of cash and cash equivalents available to fund its short-term needs, as well as a substantial working capital position, reflecting net cash due to SThree for placements already undertaken.

In FY24, the Group's trading performance declined against the record prior year, driven by persisting challenging market conditions, which have extended beyond the industry's expectations. The total Group net fees declined by 9% YoY on a like-for-like basis, reflecting protracted soft new placement activity across Permanent and Contract, partially offset by ongoing strong Contract extensions. Despite market uncertainties, the Group's long-term prospects and competitive positioning remain strong, underpinned by its strategic focus on STEM and Contract, supported by a robust financial position and significant operational enhancements gradually materialising via our Technology Improvement Programme.

Based on this evaluation, the Directors have formed a judgement that the Group has adequate resources to continue in operational existence for the period to 31 January 2026, there are no plausible downside scenarios that would cause an issue for the Group's going concern status, and considered it appropriate to prepare them on the going concern basis.

Climate change consideration

Climate change is a significant issue for the world and the transition to a low-carbon economy will create both risks and opportunities for the Group. The management team has considered the impact of climate change in preparing these Consolidated Financial Statements in the areas as listed below. These considerations are not viewed to be key areas of judgements or sources of estimation uncertainty in the current financial year.

The management team considered the impact from climate change on the following areas:

- The going concern and viability of the Group over the next five years, including the potential impact of climate-related risks, such as SThree's offices impacted by heightened physical risks affecting our operational ability to place contractors and service the existing contracts, resulting in lower revenue and income. This is subject to the ongoing assessment by the management team performed using three climate-related scenarios for 2024-2040. The assessment helps to continually test SThree's strategic resilience and its flexibility to adapt operations to ever-changing risks and opportunities as a consequence of climate change to drive continued growth.

- Useful lives of fixed assets: the impact of climate change is not considered to be material on our existing asset base including on factors like residual values, useful lives and depreciation methods which determine the carrying value of non-current assets. Although the Group invests in low-carbon technology as part of its net zero commitment, there is no immediate risk of material adjustment to the carrying values of the existing assets in the next financial year's results. Over the course of our net zero path, the existing fixed assets are expected to be fully depreciated within the next five to seven years.

- Recoverability of trade receivables and contract assets: the impact of climate-related matters could have an impact on the Group's clients in the future, especially, clients whose businesses/operations could be negatively affected by the introduction of emission-reduction legislation, energy transition plans or by extreme weather and other physical conditions, which could lead to increase in manufacturing costs, dilapidation of their asset base and their ability to pay debts. No material climate-related issues have arisen during the current year that have impacted our assessment of the recoverability of receivables. Given the short-term maturity of trade receivables including contract assets, climate change is unlikely to materially increase our credit risk.

- Share-based payments: some performance conditions of the Long-Term Incentive Plan (LTIP) for members of the Executive Committee are linked and measured against ESG metrics since the 2022 financial year. This could impact the future amount of the recognition of the share-based payment expense in the Group income statement. However, as the ESG-related performance condition constitutes 10% of each grant, the impact is low.

- Segmental reporting: in our response to climate change and transition to a net zero target, there has been yet no change to the management information provided to, and reviewed by, the chief operating decision maker each month.

Whilst there is currently no material medium-term impact expected from climate change, the management team is aware of the ever-changing risks and will continue to regularly monitor these risks against judgements and estimates made in preparation of the Group's financial statements.

Prior year restatement

During the year, the FRC's Corporate Reporting Review Team (CRRT) reviewed the Group's FY23 financial statements. The FRC sought clarification on the recognition and disclosure of the FY22 interim dividend £6.4 million, which was declared in July 2022 but only paid to shareholders at the start of the subsequent financial year (8 December 2022). This review resulted in the Group restating the comparatives for the year ended 30 November 2023 in these financial statements to correct a presentation error of the FY22 interim dividend in the FY23 Consolidated Statement of Cash Flows. The FRC has subsequently closed its review.

Funds transferred to the share administrator before 30 November 2022 were presented in operating cash flows in the Consolidated Statement of Cash Flows for the year ended 30 November 2022. The cash flow was a partial prepayment of the interim dividend paid in December 2022. Consequently, the Directors have determined that this cash flow should have been reflected in financing activities in the Consolidated Statement of Cash Flows for the year ended 30 November 2022 rather than in the year to 30 November 2023 as previously presented.

The cash balance for FY23 was not misstated.

The error has been corrected by restating each of the affected line items in the FY23 Consolidated Statement of Cash Flows, as follows:

£'000	30 November 2023	(Decrease)/increase	30 November 2023 (restated)
Impact on the Consolidated Statement of Cash Flows
Cash flows from operating activities
Decrease in receivables	10,019	(6,383)	3,636
Cash generated from operations	93,279	(6,383)	86,896
Net cash generated from operating activities	76,041	(6,383)	69,658

Cash flows from financing activities
Dividends paid to equity holders	(27,373)	6,383	(20,990)
Net cash used in financing activities	(52,151)	6,383	(45,768)

Accounting policies

The accounting policies used in the preparation of the Consolidated Financial Statements are consistent with those applied in the previous financial year, except for the adoption of new and amended standards effective as of 1 December 2023 as set out below.

New and amended standards effective in FY24 and adopted by the Group

The following amendments to the accounting standards, issued by the IASB and endorsed by the UK and EU, have been adopted by the Group and became applicable as of 1 December 2023. The Group did not have to change its accounting policies or make retrospective adjustments as a result of adopting these amended standards.

- Disclosure of Accounting Policies (Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2).

- Definition of Accounting Estimates (Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors).

- Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction (Amendments to IAS 12 Income Taxes).

- International Tax Reform - Pillar Two Model Rules (Amendments to IAS 12 Income Taxes).

- IFRS 17 Insurance Contracts.

New and amended standards that are applicable to the Group but not yet effective

As at the date of the financial information in this preliminary announcement, the following amendments to existing standards were in issue and endorsed by the UKEB, but not yet effective. These changes are effective for the SThree's financial year beginning 1 December 2024. These amendments are not expected to have a material impact on the Group in the current or future financial years.

- New disclosure requirements for characteristics of supplier finance arrangements (Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures).

- New requirements for measuring lease liability arising in a sale and leaseback transaction (Amendments to IFRS 16 Leases).

- New classification requirements for liabilities as current or non-current (Amendments to IAS 1 Presentation of Financial Statements).

The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

2. OPERATING SEGMENTS

The Group's operating segments are established on the basis of those components of the Group that are regularly reviewed by the Group's chief operating decision making body, in deciding how to allocate resources and in assessing performance. The Group's business is considered primarily from a geographical perspective.

The Directors have determined the chief operating decision-making body (CODM) to be the Executive Committee made up of the Chief Executive Officer, the Chief Financial Officer, the Chief Operations Officer, the Chief Commercial Officer and the Chief People Officer and Regional Managing Directors, with other senior management attending via invitation.

The Group also presents separately the net fees of its five key markets: Germany, the Netherlands, the USA, the UK and Japan, as well as a breakdown of net fees per Contract and Permanent, referred to as 'service mix'.

DACH region comprises Austria, Germany and Switzerland. Rest of Europe comprises the UK, Belgium and France, and Middle East & Asia includes Japan and the UAE.

Countries aggregated into DACH, Rest of Europe, Netherlands (including Spain), and separately into Middle East & Asia have similar economic risks and prospects, i.e. they are expected to generate similar average gross margins over the long term, and are similar in each of the following areas:

- the nature of the services (recruitment/candidate placement);

- the class of candidates (candidates, who we place with our clients, represent skill-sets in Life Sciences, Technology, Engineering and Mathematics disciplines); and

- the methods used in which they provide services to clients (independent contractors, employed contractors and permanent candidates).

The Group's management reporting and controlling systems use accounting policies that are the same as those described in these financial statements and the accompanying notes.

Revenue, cost of sales and net fees by reportable segment

The Group assesses the performance of its operating segments through a measure of segment profit or loss which is referred to as 'net fees' in the management reporting and controlling systems. Net fees is the measure of segment profit comprising revenue less cost of sales.

	Revenue		Cost of sales		Net fees
£'000	2024	2023	2024	2023	2024	2023
DACH	456,051	524,732	328,505	375,807	127,547	148,925
Rest of Europe	353,150	399,862	291,836	329,423	61,314	70,439
Netherlands including Spain	343,571	367,643	265,039	285,494	78,532	82,149
USA	299,229	328,293	217,195	231,883	82,034	96,410
Middle East & Asia	40,905	42,637	21,252	21,785	19,653	20,852
	1,492,906	1,663,167	1,123,827	1,244,392	369,079	418,775

Split of revenue from contracts with customers

The Group derives revenue from the transfer of services over time and at a point in time in the following geographical regions:

2024 £'000	DACH	Rest of Europe	Netherlands including Spain	USA	Middle East & Asia	Total
Timing of revenue recognition
Over time	427,228	351,135	334,802	290,774	27,194	1,431,133
At a point in time	28,823	2,015	8,769	8,455	13,711	61,773
	456,051	353,150	343,571	299,229	40,905	1,492,906

2023 £'000	DACH	Rest of Europe	Netherlands including Spain	USA	Middle East & Asia	Total
Timing of revenue recognition
Over time	483,491	396,354	358,122	316,866	29,382	1,584,215
At a point in time	41,241	3,508	9,521	11,427	13,255	78,952
	524,732	399,862	367,643	328,293	42,637	1,663,167

Major customers

In FY24 and FY23, no single customer generated more than 10% of the Group's revenue.

Other information

The following segmental analysis has been included as additional disclosure to the requirements of IFRS 8 Operating Segments.

The Group's revenue from external customers, its net fees and information about its segment assets (non-current assets excluding deferred tax assets) by key location are detailed below:

	Revenue		Cost of sales		Net fees
£'000	2024	2023	2024	2023	2024	2023
Germany	393,850	453,537	282,082	322,662	111,768	130,875
Netherlands	318,665	350,295	247,706	273,222	70,959	77,073
USA	299,229	328,293	217,195	231,883	82,034	96,410
UK	226,904	263,461	188,575	218,508	38,329	44,953
Japan	13,356	10,813	2,764	1,496	10,592	9,317
RoW⁽¹⁾	240,902	256,768	185,505	196,621	55,397	60,147

	1,492,906	1,663,167	1,123,827	1,244,392	369,079	418,775

	30 November	30 November
£'000	2024	2023
Non-current assets
UK	28,334	11,458
Germany	13,887	11,891
USA	7,553	2,687
Netherlands	4,245	5,678
Japan	1,792	2,730
RoW⁽¹⁾	2,528	3,738
	58,339	38,182

(1) RoW (Rest of the World) includes all countries other than listed.

Non-current assets do not include Deferred Tax Assets as they are not reviewed by the CODM.

The following segmental analysis by brands, recruitment classification and sectors (being the profession of candidates placed) has been included as additional disclosure to the requirements of IFRS 8 Operating Segments.

	Revenue		Cost of sales		Net fees
£'000	2024	2023	2024	2023	2024	2023
Brands
Progressive	560,519	565,938	422,172	422,272	138,347	143,666
Computer Futures	454,982	538,710	338,826	401,119	116,156	137,591
Real Staffing Group	239,976	316,062	176,938	232,322	63,038	83,740
Huxley Associates	237,429	242,457	185,891	188,679	51,538	53,778
	1,492,906	1,663,167	1,123,827	1,244,392	369,079	418,775

Other brands including Global Enterprise Partners, JP Gray and Madison Black are rolled into the above brands.

	Revenue		Cost of sales		Net fees
£'000	2024	2023	2024	2023	2024	2023
Service mix
Contract	1,431,133	1,584,215	1,120,516	1,240,713	310,617	343,502
Permanent	61,773	78,952	3,311	3,679	58,462	75,273
	1,492,906	1,663,167	1,123,827	1,244,392	369,079	418,775

	Revenue		Cost of sales		Net fees
£'000	2024	2023	2024	2023	2024	2023
Skills mix
Technology	747,598	842,634	569,904	640,124	177,694	202,510
Engineering	422,984	415,357	317,654	306,537	105,330	108,820
Life Sciences	221,295	270,235	160,369	194,719	60,926	75,516
Other	101,029	134,941	75,900	103,012	25,129	31,929
	1,492,906	1,663,167	1,123,827	1,244,392	369,079	418,775

3. ADMINISTRATIVE EXPENSES

Operating profit is stated after charging/(crediting):

£'000	2024	2023
Staff costs	234,741	255,007
Depreciation	15,230	15,898
Amortisation	24	16
Loss on disposal of property, plant and equipment	135	160
Gain on lease modification	(69)	-
Service lease charges - Buildings⁽¹⁾	2,464	2,176
Service lease charges - Cars⁽¹⁾	1,903	1,890
Foreign exchange losses	742	1,882
Research and development tax credits⁽²⁾	(1,647)	-
Gain on disposal of subsidiary⁽³⁾	(135)	-
Other income⁽⁴⁾	(2,690)	-

1. Service lease charges represent payments that vary based on factors other than an index or a rate, such as building maintenance, small repairs, cleaning charges, and other management fees, and are not included in the present value calculation of lease liabilities and are recognised in the income statement and presented as operating cash flows.

2. During the year, management assessed the Group-wide Technology Improvement Programme (TIP) for any claim for research and development expenditure credits (RDEC). The claims were determined for TIP-related expenditure incurred in the three years to 30 November 2024.

The underlying qualifying expenditure, based on which the claims were quantified, was a mixture of costs expensed immediately to the income statement for these financial periods, £1.6 million as presented in the above table, and costs capitalised as part of assets under construction (intangible assets in the Consolidated Statement of Financial Position - the RDEC claim reduced the capitalised cost and will impact the Consolidated Income Statement on a systematic basis over the useful life of the assets once the amortisation starts).

3. The accumulated foreign exchange net gain reclassified from the Group's currency translation reserve to the Consolidated Income Statement on liquidation of two subsidiary companies.

4. £2.7 million in other income represents the release of accruals for the historically unclaimed invoices by contractors who had delivered service to our clients in prior years. Following a detailed review of the unclaimed invoices, which were older than statutory limitations in each relevant country, the decision was made to release these accruals to the income statement.

4. INCOME TAX EXPENSE

(a) Analysis of tax charge for the year

£'000	2024	2023
Current income tax
Corporation tax charged on profits for the year	18,966	23,679
Adjustments in respect of prior periods	(4,157)	(447)
Total current tax charge	14,809	23,232
Deferred income tax
Origination and reversal of temporary differences	2,414	(1,117)
Adjustments in respect of prior periods	725	(251)
Total deferred tax charge/(credit)	3,139	(1,368)
Total income tax charge in the Consolidated Income Statement	17,948	21,864

(b) Reconciliation of the effective tax rate

The Group's tax charge for the year exceeds (FY23: exceeds) the UK statutory rate and can be reconciled as follows:

£'000	2024	2023
Profit before income tax for the Group	67,640	77,915
Profit before income tax multiplied by the standard rate of corporation tax in the UK at 25.0% (FY23: 23.0%)	16,910	17,920
Effects of:
Disallowable items	1,585	976
Uncertain tax positions - current year	826	261
Uncertain tax positions - prior year	(3,054)	-
Share-based payments	487	483
Differing tax rates on overseas earnings	1,744	2,524
Utilisation of tax losses brought forward	(691)	(454)
Adjustments in respect of prior periods	(396)	(697)
Adjustments due to tax rate changes	124	(1)
Tax losses for which deferred tax asset was not recognised or derecognised	413	852
Total tax charge for the year	17,948	21,864
At the effective tax rate	26.5%	28.1%

A more granular level of analysis has been included above when compared to the prior year financial statements. The total tax charge has not changed.

£'000	2024	2023
Equity-settled share-based payments:
Current tax credit	45	69
Deferred tax charge	(55)	(37)
	(10)	32

The Group expects to receive additional tax deductions in respect of share options currently unexercised. The Group is required to provide for deferred tax on all unexercised share options. Where the amount of the tax deduction (or estimated future tax deduction) exceeds the amount of the related cumulative remuneration expense, this indicates that the tax deduction relates not only to remuneration expense but also to an equity item. In this situation, the excess of the current or deferred tax should be recognised in equity. At 30 November 2024, a deferred tax asset of £0.5 million (FY23: £1.4 million) was recognised in respect of these options.

On 17 November 2022, the UK Government confirmed its intention to implement the G20-OECD Inclusive Framework Pillar 2 rules in the UK, including a Qualified Domestic Minimum Top-Up Tax rule. This legislation, which was enacted on 11 July 2023, will seek to ensure that UK-headquartered multinational enterprises pay a minimum tax rate of 15% on UK and overseas profit for accounting periods commencing after 31 December 2023. As the majority of jurisdictions in which the Group operates are at a tax rate above 15%, the impact of these rules on the Group is not expected to be material. As a result we are not providing for any additional current or deferred tax in relation to Pillar 2.

The Group applies the exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes, as provided in the amendments to Section 29 issued in July 2023.

The safe harbour position has been analysed for each jurisdiction and we would expect all material jurisdictions to pass safe harbour tests, therefore no material impacts are expected.

5. EARNINGS PER SHARE

Basic earnings per share (EPS) is calculated by dividing the profit for the year attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the year excluding shares held as treasury shares and those held in the Employee Benefit Trust (EBT), which for accounting purposes are treated in the same manner as shares held in the treasury reserve.

Diluted EPS is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive ordinary shares arising from exercising employee stock options and tracker shares.

The following tables reflect the income and share data used in the basic and diluted EPS calculations.

£'000	2024	2023
Earnings
Profit for the year attributable to owners of the Company	49,692	56,051

million	2024	2023
Number of shares
Weighted average number of shares used for basic EPS	132.8	132.1
Dilutive effect of share plans	1.3	2.9
Diluted weighted average number of shares used for diluted EPS	134.1	135.0

pence	2024	2023
Basic EPS	37.4	42.4
Diluted EPS	37.1	41.5

6. INTANGIBLE ASSETS

During the current year, the Group increased its intangible assets book value by a net amount of £5.1 million to £12.1 million (FY23: £7.1 million) following the completion of the regional roll-out of the Technology Improvement Programme (TIP) cohorts. This increase includes the £1.3 million in reduction to the capitalised costs representing a deferred benefit from the research and development expenditure credits (see note 3 Administrative expenses for further details).

In FY24, the Group also incurred £2.6 million in costs which were not directly attributable to the assets developed under the TIP (such as project management and other administration-related tasks) and which were expensed immediately to the income statement.

At the reporting date, all the costs capitalised in the statement of financial position were classified as assets under construction.

The asset amortisation is expected to commence early next year at the earlier of (i) US and Germany deployment, including interim ECM solution, be fully completed, or (ii) US and Netherlands deployment be fully completed. Successful resolution of the challenges faced during these deployments will provide management with assurance that any possible insurmountable problems in all other regions will be overcome, and the programme implementation will ultimately succeed across the entire Group.

An amortisation charge for FY24 was immaterial, less than of £0.1 million (FY23: £0.1 million), and was included in administrative expenses.

7. CASH AND CASH EQUIVALENTS

£'000	30 November 2024	30 November 2023
Cash at bank	69,756	83,202
Bank overdraft	(88)	-
Net cash and cash equivalents	69,668	83,202

Cash and cash equivalents comprise cash and short-term bank deposits with an original maturity of three months or less, net of outstanding bank overdrafts.

The Group has four cash pooling arrangements in place at HSBC US (USD), HSBC UK (GBP), NatWest (GBP) and Citibank (EUR).

8. EQUITY

During the year 698,585 (FY23: 409,818) new ordinary shares were issued, resulting in a share premium of £2.4 million (FY23: £1.5 million). Of the shares issued, 508,396 (FY23: 320,457) were issued to tracker shareholders on settlement of vested tracker shares and 190,189 (FY23: 89,361) pursuant to the exercise of share awards under the Save-As-You-Earn (SAYE) scheme.

The Company's issued share capital at 30 November 2024 consisted of 135,606,792 (FY23: 134,908,207) ordinary shares of £0.01 each, of which 35,767 (FY23: 35,767) were held in treasury reserve.

Employee Benefit Trust

The Group holds shares in the Employee Benefit Trust (EBT). The EBT is funded entirely by the Company and acquires shares in SThree plc to satisfy future requirements of the employee share-based payment schemes.

For accounting purposes, shares held in the EBT are treated in the same manner as shares held in the treasury reserve by the Company and are, therefore, included in the financial statements as part of the treasury reserve for the Group.

During the year, the EBT purchased 2,340,585 (FY23: 2,198,735) of SThree plc shares. The average price paid per share was 427 pence (FY23: 455 pence). The total acquisition cost of the purchased shares was £10.0 million (FY23: £10.0 million), for which the treasury reserve was reduced. During the year, the EBT utilised 2,496,991 (FY23: 2,046,423) shares on settlement of vested tracker shares and LTIP awards. At the year end, the EBT held 1,767,052 (FY23: 1,923,458) shares.

9. LEASES

The leases which are recognised in the consolidated statement of financial position are principally in respect of buildings and cars. The Group's right-of-use assets and lease liabilities are presented below:

£'000	30 November 2024	30 November 2023
Buildings	35,577	24,772
Cars	976	1,934
Total right-of-use assets	36,553	26,706

Current lease liabilities	10,419	11,297
Non-current lease liabilities	29,362	17,720
Total lease liabilities	39,781	29,017

The consolidated income statement includes the following amounts relating to depreciation of right-to-use assets:

£'000	2024	2023
Buildings	11,868	11,955
Cars	1,076	1,219
Total depreciation charge of right-of-use assets	12,944	13,174

In the current year, interest expense on leases amounted to £1.3 million (FY23: £0.6 million) and was recognised within finance costs in the consolidated income statement.

The total cash outflow for leases in FY24 was £14.4 million (FY23: £14.9 million) and comprised the principal and interest element of recognised lease liabilities.

10. OTHER FINANCIAL LIABILITIES

The Group maintains a committed RCF of £50.0 million along with an uncommitted £30.0 million accordion facility, both jointly provided by HSBC and Citibank, giving the Group an option to increase its total borrowings under the facility to £80.0 million. During the current and previous year, the Group did not draw down under these facilities. The Group also has an uncommitted £5.0 million overdraft facility with HSBC, of which £0.1 million was drawn at the year end (FY23: £nil).

The RCF is subject to financial covenants and any funds borrowed under the facility bear a minimum annual interest rate of 1.2% above the benchmark Sterling Overnight Index Average (SONIA). As the Group did not draw down under these facilities, the finance costs of £1.4 million (FY23: £0.7 million) were mainly related to lease interest.

The covenants, which the RCF is subject to, require the Group to maintain financial ratios over interest cover, leverage and guarantor cover. The Group has complied with these covenants throughout the year.

Reconciliation of financial liabilities to cash flows arising from financing activities:

£'000
Balance at 1 December 2022	33,702
Cash flows:
Interest paid to bank	(93)
Payments of principal and interest element of lease liabilities	(14,855)
Total cash flows	(14,948)
Lease increases	11,479
Lease termination	(1,558)
Other movements⁽¹⁾	342
Balance at 30 November 2023 and 1 December 2023	29,017
Cash flows:
Interest paid to bank	(108)
Payments of principal and interest element of lease liabilities	(14,448)
Total cash flows	(14,556)
Lease increases	25,311
Lease terminations	(868)
Other non-cash movements⁽¹⁾	877
Balance at 30 November 2024	39,781

1. Other movements in FY24 and FY23 primarily comprised unwind of the discount on lease liabilities and forex revaluation.

11. DIVIDENDS

£'000	2024	2023
Amounts recognised as distributions to equity holders in the year
Interim dividend of 5.0 pence for FY22 per share (note a)	-	6,605
Interim dividend of 5.0 pence for FY23 per share (note b)	494	6,383
Final dividend of 11.6 pence for FY23 (11.0 pence for FY22) per share (note c)	15,366	14,385
	15,860	27,373

£'000	2024	2023
Amounts arising in respect of the financial year
Interim dividend of 5.1 pence for FY24 (5.0 pence for FY23) per share (note d)	6,824	6,383
Proposed final dividend of 9.2 pence for FY24 (11.6 pence for FY23) per share (note e)	12,221	15,327
	19,045	21,710

Note a

The FY22 interim dividend of 5.0 pence per share was paid on 2 December 2022 to those shareholders on the register of SThree plc on 4 November 2022. The £6.4 million of the total £6.6 million in funds required for settlement of the FY22 interim dividend, were transferred by the Group to the share administrator before 30 November 2022. The remaining balance of £0.2 million was transferred to the share administrator post the FY22 year end, in December 2022. In FY23, once the share administrator was in receipt of all funds required for settlement of the interim dividend, the FY22 interim dividend was recognised as distribution to equity holders within the Consolidated Statement of Changes in Equity.

Note b

The FY23 interim dividend of 5.0 pence per share was paid on 8 December 2023 to those shareholders on the register of SThree plc on 10 November 2023. The £6.4 million in funds, required for settlement of the FY23 interim dividend, were transferred by the Group to the share administrator before 30 November 2023.

The £0.5 million shown as distributed in FY24 included £0.3 million in payments to shareholders who claimed the FY23 interim dividend post the FY23 year end. The remaining balance, £0.2 million, relates to the historical unclaimed dividends due to shareholders from prior years. As part of the process of transitioning to the new share administrator, onboarded in January 2024, the £0.2 million in funds were transferred to the share administrator during FY24 and are currently subject to the distribution to shareholders.

Note c

The FY23 final dividend of 11.6 pence (11.0 pence for FY22) per share was paid on 7 June 2024 to shareholders on the register of SThree plc on 10 May 2024.

Note d

The FY24 interim dividend of 5.1 pence (5.0 pence for FY23) per share was paid on 6 December 2024 to shareholders on record at 8 November 2024. The £6.8 million in funds, required for settlement of the FY24 interim dividend, were transferred to the share administrator after 2 December 2024.

Note e

The Board has proposed the FY24 final dividend of 9.2 pence (11.6 pence for FY23) per share, to be paid on 6 June 2025 to shareholders on record at 9 May 2025. This proposed final dividend is subject to approval by shareholders at the Company's next Annual General Meeting on 29 April 2025, and therefore has not been included as a liability in these financial statements.

12. CONTINGENT LIABILITIES

Legal

The Group is involved in various disputes and claims which arise from time to time in the course of its business. These are reviewed on a regular basis and, where possible, an estimate is made of the potential financial impact on the Group. The Group has contingent liabilities in respect of these claims. In appropriate cases a provision is recognised based on advice, best estimates and management judgement.

The Directors currently believe the likelihood of any material liabilities to be low, and that such liabilities, if any, will not have a material adverse effect on its financial position.

13. RELATED PARTY DISCLOSURES

The Group's significant related parties are as disclosed in the Group's 2024 annual financial statements. There were no other material differences in related parties or related party transactions in the year compared to the prior year.

14. SUBSEQUENT EVENTS

Following 30 November 2024, SThree launched a share buyback programme of up to £20.0 million, which will be completed no later than the Company's FY25 Half Year Results. In light of SThree's cash generation and strong balance sheet, the Board considers it prudent to launch the buyback, in line with its stated capital allocation policy. Following completion of the buyback programme the Group expects to retain a net cash position reflecting the overall capital needs of the business.

15. ALTERNATIVE PERFORMANCE MEASURES (APMs): DEFINITIONS AND RECONCILIATIONS

In discussing the performance of the Group, comparable measures are used.

The Group discloses comparable performance measures to enable users to focus on the underlying performance of the business on a basis which is common to both periods for which these measures are presented. The reconciliation of comparable measures to the directly related measures calculated in accordance with UK-adopted International Accounting Standards (IAS) is as follows.

APMs in constant currency

As the Group operates in 11 countries, and with many different currencies, it is affected by foreign exchange movements, and the reported financial results reflect this. However, the Group business is managed against targets which are set to be comparable between years and within them, for otherwise foreign currency movements would undermine the management ability to drive the business forward and control it. Within this results announcement, comparable results have been highlighted on a constant currency basis as well as the results on a reported basis which reflect the actual foreign currency effects experienced.

The Group evaluates its operating and financial performance on a constant currency basis (i.e. without giving effect to the impact of variation of foreign currency exchange rates from year to year). Constant currency APMs are calculated by applying the prior year foreign exchange rates to the current and prior financial year results to remove the impact of exchange rate.

Measures on a constant currency basis enable users to focus on the performance of the business on a basis which is not affected by changes in foreign currency exchange rates applicable to the Group's operating activities from period to period.

The calculations of the APMs on a constant currency basis and the reconciliation to the most directly related measures calculated in accordance with UK-adopted IAS are as follows:

£'000, unless otherwise stated	2024
	Revenue	Net fees	Operating profit	Operating profit conversion ratio*	Profit before tax
	Revenue	Net fees	Operating profit	Operating profit conversion ratio*	Profit before tax	Basic EPS (pence)
Reported	1,492,906	369,079	66,194	17.9%	67,640	37.4
Currency impact	33,786	9,515	3,043	0.4%	3,018	1.7
In constant currency	1,526,692	378,594	69,237	18.3%	70,658	39.1

£'000, unless otherwise stated	2023
	Revenue	Net fees	Operating profit	Operating profit conversion ratio*	Profit before tax
						Basic EPS (pence)
Reported	1,663,167	418,775	76,356	18.2%	77,915	42.4

*Operating profit conversion ratio represents operating profit over net fees.

To calculate the YoY variances in constant currency, management compared the FY24 results in constant currency versus the FY23 reported results.

Other APMs

Net cash excluding lease liabilities

Net cash is an APM used by the Directors to evaluate the Group's capital structure and leverage. Net cash is defined as cash and cash equivalents less current and non-current borrowings excluding lease liabilities, less bank overdraft, as illustrated below:

£'000	2024	2023
Cash and cash equivalents	69,756	83,202
Bank overdraft	(88)	-
Net cash	69,668	83,202

EBITDA

In addition to measuring financial performance of the Group based on operating profit, the Directors also measure performance based on EBITDA. It is calculated by adding back to the reported operating profit non-cash items such as the depreciation of property, plant and equipment (PPE), the amortisation and impairment of intangible assets, loss on disposal of PPE and intangible assets, gain on lease modification and the employee share options charge. Where relevant, the Group also uses EBITDA to measure the level of financial leverage of the Group by comparing EBITDA to net debt.

A reconciliation of reported operating profit for the year, the most directly comparable UK IAS measure, to EBITDA is set out below.

£'000	2024	2023
Reported operating profit for the year	66,194	76,356
Depreciation of PPE	15,230	15,898
Amortisation and impairment of intangible assets	24	16
Loss on disposal of PPE and intangible assets	135	160
Gain on lease modification	(69)	-
Gain on disposal of subsidiaries	(135)	-
Employee share options charge	4,986	4,871
EBITDA	86,365	97,301

Dividend cover

The Group uses dividend cover as an APM to ensure that its dividend policy is sustainable and in line with the overall strategy for the use of cash. Dividend cover is defined as the number of times the Company is capable of paying dividends to shareholders from the profits earned during a financial year, and it is calculated as the Group's profit for the year attributable to owners of the Company over the total dividend paid to ordinary shareholders.

£'000		2024	2023
Profit for the year attributable to owners of the Company	A	49,692	56,051
Dividend proposed to be paid to shareholders (note 11)	B	19,045	21,710
Dividend cover	(A ÷ B)	2.6	2.6

Contract margin

The Group uses contract margin as an APM to evaluate contract business quality and the service offered to customers. Contract margin is defined as contract net fees as a percentage of contract revenue.

£'000, unless otherwise stated		2024	2023
Contract net fees	A	310,617	343,502
Contract revenue	B	1,431,133	1,584,215
Contract margin	(A ÷ B)	21.7%	21.7%

Total shareholder return (TSR)

The Group uses TSR as an APM to measure the growth in value of a shareholding over a specified period, assuming that dividends are reinvested to purchase additional shares at the closing price applicable on the ex-dividend date. The TSR is calculated by the external independent data-stream party.

pence, unless otherwise stated	2024	2023
SThree plc TSR return index value: three-month average to 30 Nov 2021 (FY23: 30 Nov 2020)	528.47	240.74
SThree plc TSR return index value: three-month average to 30 Nov 2024 (FY23: 30 Nov 2023)	382.78	365.25
Total shareholder return	-27.6%	51.7%

16. ANNUAL REPORT AND ANNUAL GENERAL MEETING

The Annual General Meeting of SThree plc is to be held on 29 April 2025.

The 2024 Annual Report and Accounts and Notice of 2025 Annual General Meeting will be sent to shareholders shortly. Copies will be available on the Company's website www.sthree.com or from the Company Secretary, Level 16, 8 Bishopsgate, London, EC2N 4BQ.

[1] Unless specifically stated, all growth rates in revenue and net fees are expressed in constant currency.

[2] The Group has identified and defined certain alternative performance measures (APMs). These are the key measures the Directors use to assess the SThree's underlying operational and financial performance. The APMs are fully explained and reconciled to IFRS line items in note 15 to these consolidated financial statements.

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END

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FINANCIAL HIGHLIGHTS

Full-Year Highlights

·

Group net fees down 9% YoY⁽³⁾, against a strong prior year (FY23: YoY decline of 4% on record performance) and protracted challenging global economic conditions.

o

Net fees across our three largest countries represent 72% of Group: Netherlands down 6%, Germany and USA both down 12%.

o

The Group's Engineering net fees for the full year were largely stable, down 1% against a record prior year performance. Technology and Life Sciences performance reflected the tougher market conditions throughout the year, declining 10% and 17% respectively.

·

·

Permanent net fees, representing 16% of Group net fees (FY23: 18%), were down 18% reflecting the challenging market conditions.

·

Contractor order book⁽⁴⁾ of £161.3 million, down 10% YoY, whilst continuing to represent sector-leading visibility with the equivalent of circa four months' net fees.

·

Resilient profit performance, in line with expectations, with operating profit conversion ratio maintained at 18% and profit before tax of £67.6 million, down 9% YoY on a like-for-like basis due to decline in net fees partially offset by cost savings and higher net interest.

·

Robust balance sheet, with £69.7 million in net cash at year end (FY23: £83.2 million). Post period end, commenced a share buyback programme of up to £20m in light of the Group's strong cash generation and balance sheet.

·

Final dividend proposed of 9.2 pence per share (FY23: 11.6 pence per share), taking full year dividend to 14.3 pence per share (FY23: 16.6 pence per share), down 14% YoY. This is in line with the previously communicated dividend cover target between 2.5x and 3.0x.

·

Technology Improvement Programme (TIP) remains on track with around 80% of our business now successfully onboarded and actively using the platform.

Outlook

·

The challenging economic conditions, impacting new business activity, are expected to persist throughout FY25.

·

The financial implication of these challenges is expected to be partly mitigated by the accelerated realisation of further operational efficiencies.

·

As previously announced, the Board expects FY25 profit before tax to be c.£25 million which includes up to £7m of one-off costs to deliver the additional operational efficiencies.

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FY24 Final Results

FINANCIAL HIGHLIGHTS

Full-Year Highlights

·

Group net fees down 9% YoY(3), against a strong prior year (FY23: YoY decline of 4% on record performance) and protracted challenging global economic conditions.

o

Net fees across our three largest countries represent 72% of Group: Netherlands down 6%, Germany and USA both down 12%.

o

The Group's Engineering net fees for the full year were largely stable, down 1% against a record prior year performance. Technology and Life Sciences performance reflected the tougher market conditions throughout the year, declining 10% and 17% respectively.

·

·

Permanent net fees, representing 16% of Group net fees (FY23: 18%), were down 18% reflecting the challenging market conditions.

·

Contractor order book(4) of £161.3 million, down 10% YoY, whilst continuing to represent sector-leading visibility with the equivalent of circa four months' net fees.

·

Resilient profit performance, in line with expectations, with operating profit conversion ratio maintained at 18% and profit before tax of £67.6 million, down 9% YoY on a like-for-like basis due to decline in net fees partially offset by cost savings and higher net interest.

·

Robust balance sheet, with £69.7 million in net cash at year end (FY23: £83.2 million). Post period end, commenced a share buyback programme of up to £20m in light of the Group's strong cash generation and balance sheet.

·

Final dividend proposed of 9.2 pence per share (FY23: 11.6 pence per share), taking full year dividend to 14.3 pence per share (FY23: 16.6 pence per share), down 14% YoY. This is in line with the previously communicated dividend cover target between 2.5x and 3.0x.

·

Technology Improvement Programme (TIP) remains on track with around 80% of our business now successfully onboarded and actively using the platform.

Outlook

·

The challenging economic conditions, impacting new business activity, are expected to persist throughout FY25.

·

The financial implication of these challenges is expected to be partly mitigated by the accelerated realisation of further operational efficiencies.

·

As previously announced, the Board expects FY25 profit before tax to be c.£25 million which includes up to £7m of one-off costs to deliver the additional operational efficiencies.

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Sthree PLC (STEM)

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Market Overview

UK 350 Risers and Fallers

Group net fees down 9% YoY⁽³⁾, against a strong prior year (FY23: YoY decline of 4% on record performance) and protracted challenging global economic conditions.

Contractor order book⁽⁴⁾ of £161.3 million, down 10% YoY, whilst continuing to represent sector-leading visibility with the equivalent of circa four months' net fees.

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