Annual Report and Accounts 2022
Uniquely
positioned to
serve a changing
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SThree is the global talent partner
that connects sought-after specialists
in STEM (Sciences, Technology,
Engineering and Mathematics)
with dynamic organisations across
the world.
Founded in the United Kingdom in 1986 and
headquartered in London, over the years SThree
has expanded into a house of STEM brands,
becoming the number one destination for talent in
the best STEM markets.
Specialist expertise
Our global house of brands provides a unique
combination of specialist recruitment knowledge
and worldwide reach. We had 2,277 recruitment
consultants at the year end, operating from 46 offices
in 14 countries, who place STEM professionals with
the businesses who need them across many sectors -
for both contract and permanent work.
*For more details on megatrends see Market overview on pages 12 to 17.
Igniting progress
There is growing demand for STEM as it is needed
to help solve the toughest challenges of our time:
digital transformation, research-led healthcare,
decarbonisation, demographic shifts and new ways
of working*. Whilst supporting our clients in finding
this STEM talent, we are also helping our candidates
achieve their career goals. We play an important role
in society throughout the world. That is why we define
our purpose as: Bringing skilled people together to
build the future.
Annual Report and Accounts 2022
01
Overview
SThree at a glance
Strategic Report
Market overview
Our investor proposition
Chair’s statement
Chief Executive Officer’s statement
Our business model
Our business model in action
Strategic overview
Strategic progress
Responsible business
Key performance indicators
Chief Financial Officer’s statement
Business review
Stakeholder engagement
(including section 172 statement)
Risks
Compliance information
Governance Report
Chair’s governance statement
Board of Directors
Board at a glance
Board roles and responsibilities
Our Board
Employee engagement
Nomination Committee
Audit & Risk Committee
Directors’ remuneration report
Directors’ report
Statement of Directors’ responsibilities
Financial Statements
Independent auditors’ report
Consolidated Income Statement
Consolidated Statement
of Comprehensive Income
Statements of Financial Position
4
12
18
20
22
26
30
34
36
52
80
84
90
98
106
114
120
122
124
126
127
131
136
140
148
174
178
182
192
193
194
Consolidated Statement of Changes in Equity 195
Company Statement of Changes in Equity
Statements of Cash Flows
Notes to the financial statements
Five-year financial summary
Other information
Results announcement timetable
Shareholder information
196
197
198
248
249
250
Company information and corporate advisers 251
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SThree plc
Chief Executive
Officer’s
statement
22
Scope
SThree’s Annual Report and Accounts 2022 is
our primary report to shareholders. It provides an
overview of the performance of the Group for the
year ended 30 November 2022, disclosures relating
to our financial, operational, environmental and
social performance, and detail on our strategy.
Supplementary information and disclosures are
provided in the following documents and referenced
in this report.
See our full reporting network suite, including our
ESG Impact Report and summary of notices and
policies, at sthree.com.
Board at a glance
124
Responsible business
52
SThree at a glance
4
Strategic
overview
34
Key performance
indicators
80
sthree.com
Business
model
26
Group
performance
84
Annual Report and Accounts 2022
P-03
Overview
SThree at a glance
Providing STEM
talent wherever and
whenever it’s needed
Every sector in every region faces the similar challenges of climate
change, decarbonisation, digitalisation and increased demand for
health and pharmaceutical innovation. They find solutions through
STEM-skilled expertise.
We aim to:
Empower our people
Our Group employs over 3,000
people worldwide. We build
an open and inclusive culture
and offer a flexible working
environment. Our business is full
of proactive, forward-looking
people who bring energy and fun
to the workplace. They care about
each other – collaboration is key
to everything we do.
Be the leading provider
of STEM talent
Create long-term
sustainable value
STEM skills underpin the
increasingly technical,
interconnected and fast-paced
way of life we are living. The
talented people we place are
solving some of the most complex
challenges the world faces today.
We continue to invest in our
business and grow our talent
with environmental, social and
governance (ESG) considerations
embedded in our strategy.
Within our markets we contribute
to economic progress through
delivering employment
opportunities and empowering
business growth. Ultimately, we
work towards a sustainable future
that works for everyone.
See Strategic progress – Our People
on page 42
See Market overview
on page 12
See Responsible business
on page 52
2022 performance highlights1
Our consistent strategic focus on STEM skills and flexible talent delivered record results against an uncertain
economic backdrop. In 2022, sales remained strong, with good new placement activity. Our lead indicators,
including a strong contractor order book, give us confidence in the resilience and ability of our business to continue
to deliver profitable growth in the future.
Net fees
£431m
2022
2021
2020
£431m
£356m
£309m
Basic earnings per share
41.0p
2022
2021
2020
14.2p
eNPS
51
2022
2021
2020 5
41.0p
31.9p
51
43
Lives positively impacted2
32,970
2022
2021
2020
32,970
33,150
22,621
Operating profit
£78m
2022
2021
2020
£32m
£78m
£61m
Net cash
£65m
2022
2021
2020
£65m
£58m
£50m
NPS
52
2022
2021
2020
52
50
52
Employees
3,119
2022
2021
2020
3,119
2,735
2,608
1 The Group also uses alternative performance measures (APMs) to help explain its business performance. Further information on APMs, including a reconciliation to
the financial statements (where appropriate), can be found on pages 244 to 247.
2 Through delivering recruitment solutions and community programmes in 2022 alone.
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Overview
SThree at a glance continued
Our international
presence
Our businesses serve clients and candidates in the most important
STEM markets, throughout the USA, across Europe, the Middle East
and Japan. We have chosen these regions to operate in because they
offer the best possible opportunity for SThree to grow while meeting
evolving client needs.
Net fees mix (2022)
(as a proportion of 2022 total Group net fees)
Recruitment consultants distribution per segment
(based on 2022 average)
EMEA excluding DACH
DACH
USA
APAC
36%
35%
26%
3%
EMEA excluding DACH
DACH
USA
APAC
38%
36%
20%
6%
EMEA excluding DACH
Belgium, Dubai, France, Ireland,
Luxembourg, the Netherlands,
Spain and the United Kingdom
(focus on Technology and Engineering)
DACH
Germany, Austria and Switzerland
(focus on Technology and Life Sciences)
Recruitment consultants (2022 average)
Recruitment consultants (2022 average)
808
750
USA
United States
APAC
Japan and Singapore
(focus on Life Sciences and Engineering)
(focus on Technology and Life Sciences)
Recruitment consultants (2022 average)
Recruitment consultants (2022 average)
1 USA
United States
(focus on Life Sciences and Engineering)
422
134
1 USA
United States
(focus on Life Sciences and Engineering)
1 USA
United States
(focus on Life Sciences and Engineering)
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1 USA
United States
(focus on Life Sciences and Engineering)
Overview
SThree at a glance continued
Making progress
on our ambitions
Our vision:
To be the #1 STEM
talent provider in the
best STEM markets
Our purpose:
Bringing skilled people together to build the future
We deliver our purpose through four strategic pillars
Our Places
Our Platform
Our People
Our Position
To be a leader in markets
we choose to serve.
Create a world-class
operational platform
through data, technology,
and infrastructure.
Find, develop and retain
great people.
Leverage our position
in STEM to deliver
sustainable value to our
candidates and clients.
Focused decision-
making and disciplined
investments into target
regions and STEM skill
verticals.
See Strategic overview, page 34
Enablement priorities
Sales effectiveness and
operations transformation:
• Tech-enabled
transformation (CRM) to
improve sales productivity.
• Foundational capabilities
to strengthen ECM and
replace our ERP.
People transformation:
• Employee Value
Proposition.
• Talent acquisition
strategy.
• Reward and incentives.
• Onboarding and
development.
Marketing and brand
strategy.
These respond to the needs and expectations
of our key stakeholders…
Shareholders
Clients and candidates1
Our People
Local communities
To take advantage of
market shifts and scale
our opportunity, to
enhance shareholder
value.
To adapt our business
and improve and develop
our service proposition
in line with evolving
customer needs.
See Stakeholder engagement, page 98
To enable our people
to be at their best.
To provide quality
inclusive opportunities
for work and economic
growth.
...which help us make progress on our 2024 ambitions
and deliver our vision
Market share
of STEM
To grow Group market
share faster than our peer
group2.
On a net fee basis
compared to 2019.
Operating profit
conversion ratio3
To build a business that
can sustain its conversion
ratio at 21% or higher –
improving our quality in
the long term.
See Key performance measures, page 80
People
Being an employer of
choice in the professional
services sector, with an
upper quartile eNPS.
Planet
To reduce scope 1, 2
and 3 emissions, on our
path to net zero, by 25%
compared to 2019.
1 Throughout this Annual Report we also refer to clients and candidates collectively as customers.
2 Peer group reflects top two to four listed peers in each region.
3 See Alternative performance measures note for details on applied methodology, pages 244 to 247.
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Strategic
Report
Strategic Report
Market overview
Our investor proposition
Chair’s statement
Chief Executive Officer’s statement
Our business model
Our business model in action
Strategic overview
Strategic progress
Responsible business
Key performance indicators
Chief Financial Officer’s statement
Business review
Stakeholder engagement (including section 172 statement)
Risks
Compliance information
12
18
20
22
26
30
34
36
52
80
84
90
98
106
114
The Strategic Report from page 10 to page 117 was approved by the Board on
27 January 2023 and is signed on its behalf by:
Timo Lehne
CEO
Andrew Beach
CFO
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Strategic Report
Market overview
Global economic environment
Global STEM market
This year, we have started to see
a challenging macro-economic
and geopolitical backdrop which
affected consumers as well as
businesses around the world.
Global labour markets have been
subject to fundamental changes
in the past few years.
Although the unemployment rate has remained
low, a global energy crisis has resulted in the cost
of living rising with surging inflation leading to the
decline in real-term incomes in the UK and many
other European countries.
The magnitude and long-term downside risk to
economic growth is difficult to predict, but it is
reasonable to say that the prolonged tightening of
financial conditions to combat surging inflation may,
to some extent, impact the economic activity and
business investment in the short to medium term.
Whilst we are mindful of the wider macro-economic
uncertainties, the demand for STEM talent, and
flexible STEM talent in particular, is structural. Our
position as the number one destination for talent in the
best STEM markets and our strong contractor order
book underpins our continued confidence.
Strong growth in SThree's contractor
order book providing good visibility
+19%
vs 2021
At SThree, we continued to see the benefits of our
resilient business model and strategy, which are at the
centre of two long-term trends: the growing demand
for STEM skills and flexible talent.
Our clients know that they can come to us for the
provision of highly skilled experts, drawing on our
global network and expertise. Similarly, candidates
know that, by coming to SThree, their skills will be
fully appreciated and they will have access to a large
pool of employment opportunities with dynamic
organisations across the world, accelerating their
professional growth.
This has created challenges as well as opportunities
for the recruitment industry and continues to influence
the way we operate. In particular, the structural
demand for STEM skills and flexible working has been
rising, underpinned by a few key global megatrends.
These are powerful, transformative forces that change
the global economy, business and society. These
megatrends, notwithstanding macroeconomics and
political uncertainties, provide enormous opportunity
for SThree.
The global STEM talent market is valued at over £100
billion in annual revenue. Today, SThree chooses to
operate in the world’s top five STEM markets where
we are well positioned: Germany, the Netherlands, the
USA, the UK and Japan.
Although these markets represent 75% of the global
STEM market, they are highly fragmented. Despite
our market-leading positions (we are #1 in the
Netherlands, and #2 in Germany), we have a relatively
small market share (on average, we have reached 2%
of the potential STEM market in the top five markets).
New market share gains will strengthen our position
as the provider of choice in STEM talent and drive
economies of scale. We will leverage our operations to
ensure that top-line growth exceeds associated cost
growth. This will allow favourable incremental drop-
through, driving improvements in our conversion ratio.
Global STEM market
>£100bn
Source: SIA 2022 and SThree estimate of global
staffing revenue within STEM
SThree's top five markets' addressable
share of global market
c.75%
Top five markets: the US, Germany, the Netherlands,
the UK and Japan)
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Strategic Report
Market overview continued
Demand for STEM skills
Digitalisation
Decarbonisation
Research-led healthcare
Digitalisation is enabling businesses to become
more sustainable and resilient. We see businesses
transforming. They are adopting leaner ways of
working, with software-driven production, allowing
more capacity for innovation and cost efficiencies.
The Covid-19 pandemic has also accelerated digital
take-up, allowing some ventures to stage-skip
innovation cycles on a scale and at a pace never
experienced before.
Direct investment in digital transformation is expected
to be $6.3 trillion over the three years to 2024 and this
rate of investment is accelerating, with a 16% five-year
compound annual growth rate (CAGR) reaching $3.4
trillion by 2026.
Coupled with changing customer demands, increased
technological complexity and the adoption of
innovative digital technologies, artificial intelligence
and machine learning are driving an explosion in
demand for specialist technology skills. In fact, it
is forecast that 149 million new digital jobs will be
required by 2025.
Embracing digital transformation will continue to
be a dominant trend across businesses for years to
come, with the aim of creating a new, inclusive global
economy and overcoming any future crises.
Organisations around the world are developing
effective processes and roadmaps towards a net
zero target.
Achieving net zero by 2050 requires a complete
transformation of the global energy system and
will be achieved only through the development and
widespread adoption and deployment of innovative
technologies and engineering skills.
Most of the reductions in carbon emissions to 2030
will come from technologies that already exist. But
in 2050, almost half of the carbon reductions will be
possible only if technologies that are currently at the
demonstration or prototype phase materialise.
Major clean energy innovation efforts must take place
in the next decade to bring these new technologies
to market in time. This will create millions of new
jobs, driving an exponential growth in demand for
engineering and ‘green’ tech talent. According to the
IEA*, by 2030 there will be 14 million new jobs created
in global energy supply, and a further 16 million
in clean energy end-uses, such as more efficient
appliances, electric and fuel cell vehicles, building
retrofits and energy-efficient construction.
*International Energy Agency (IEA) data.
The recent pandemic has led to profound changes
and developments that have significantly accelerated
the pace at which the Life Sciences sector is
progressing towards achieving a future of widespread
health equality.
Research-led healthcare has received a lot of attention
aimed at ensuring that the relevant solutions and
knowledge are developed in good time to address
future healthcare priorities.
During and post the Covid-19 pandemic, we have
witnessed unprecedented global efforts towards
adoption of research findings in combatting the
spread of the disease as well as in developing artificial
intelligence and data indispensable to tackling future
healthcare crises.
The Life Sciences goal, of realising the long-term
health potential of everyone, is inexhaustible. It
creates ongoing demand for highly skilled STEM
specialists, such as those who are capable of filling
roles within Quality Assurance, Clinical Operations,
Medical Affairs and other medical support specialists.
Direct digital transformation investment, 2022-24
Clean energy investment in 2022
Growth in global pharma R&D spend, 2019-2026
$6.3 trillion
Source: IDC
$1.4 trillion
Source: IEA
New digital jobs required globally by 2025
New ‘green’ energy jobs required globally by 2030
149 million
Source: Microsoft
+30 million
Source: IEA
Growth in SThree technology-related net
fees since 2019
Growth in SThree net fees in renewables
since 2019
+39%*
* In constant currency
+88%*
* In constant currency
+48%
Source: Evaluate Pharma
Expected increase in demand for STEM
professionals in US, 2018-2030
+24%
Source: McKinsey & Co
Growth in SThree life sciences-related net
fees since 2019
+40%*
* In constant currency
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Strategic Report
Market overview continued
Demographic
changes
Shifting attitudes
to work
The world is facing a demographic
challenge driven by an ageing population.
We have seen a significant shift in the
societal attitudes towards working habits.
By 2030, 1.4 billion, or one in six people, in the world
will be aged 60 years or over, and this is expected to
double to over 2 billion people by 2050.
The proportion of people of working age globally is
therefore shrinking, while the relative number of those
retiring is expanding, which is driving acute labour
shortages everywhere, across every sector. This is
further compounded by existing STEM talent retiring
and insufficient young people entering STEM roles.
On the one hand, employers will face pressure to get
more out of fewer people, stay lean-staffed and invest
in developing their new young employees.
Changing demographics are one of the driving forces
behind the research and development and greater
use of automation technologies to boost productivity.
This leads to a rise in demand for a highly skilled
workforce, as well as increased rates of pay,
especially in STEM fields.
Shortage of STEM professionals in Germany
320,600
Source: German Economic Institute
Growth of US STEM vs non-STEM
occupations to 2031
x2.2
Source: US Bureau of Labor Statistics
Growth in SThree STEM contractor order
book since 2019
+55%*
* In constant currency
Driven by recent technological advances, many
people are no longer constrained by traditional
working models.
One thing is clear: the future of work is changing,
and the opportunities are endless. According to
McKinsey, over one-third of the US workforce
identify as independent workers, while 62% of global
executives polled by Ceridian think that freelancers
will substantially replace full-time employees
within the next five years.
The move towards greater flexibility is a trend that is
consistent with other shifts that have transformed the
world of work since the pandemic struck. It aligns with
our recent ‘How the STEM World Works’ research,
where 55% of respondents stated flexible working as
one of their top three criteria when considering their
next role.
Share of global candidates stating flexible working
as one of their top three job criteria
55%
Source: SThree research ‘How the STEM World Works’ 2022
Share of executives who believe freelancers likely to
replace full-time employees in five years
62%
Source: SIA/Ceridian 2021 survey
Growth in SThree contract net fees since 2019
+34%*
* In constant currency
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Strategic Report
Our investor proposition
Uniquely positioned
to benefit from the
five megatrends
driving STEM demand
We are where the world comes for scarce STEM
talent. This is where we operate. By successfully
focusing on STEM and developing a deep
knowledge of our candidate specialisms and
our clients’ needs, we are able to bring clients
and candidate talent together. The ability to
achieve a perfect fit is highly valued by both
parties. That enables us to maintain our pricing,
invest in enhancing our service, continue to take
market share in a growing market and generate
sustainable returns.
“ Digitalisation is not
restricted to tech-
companies. Every type
of company globally
is going through this
transformation and
needs tech skills to
make it happen.”
Andrew Beach
CFO
Profitable growth
Significant market potential
Operational capability and team agility
We are in some of the largest STEM staffing markets:
the USA, Germany, the Netherlands, the UK and
Japan. This offers us a significant opportunity for
market-share wins.
Focus on continuous improvement across our
operations to drive high-quality execution and
margin expansion.
c.2%
Our share of STEM market in our
top five countries
2,277
Recruitment consultants
See Strategic progress: Our Places, Our Platform for more information on pages 38 to 41
Sustainable business
Clear capital allocation policy
Well-considered ESG strategy
Investments across the business are allocated
in line with strategic value-enhancing priorities,
sustainability-related matters and principal risks.
£30m
Planned investment to increase our productivity
between 2022 and 2024
See Responsible business for more information on page 52
Long-term commitments to the environment and
society aim to deliver positive outcomes for all
our stakeholders and contribute towards the UN
Sustainable Development Goals.
44%
Carbon footprint reduction since 2019
Cash generative business
Strong financial position
Regular dividend
Recurring revenue dynamics of our Contract business
drive sustainable free cash flows. Plus, we maintain a
£50 million revolving credit facility.
£65m
Net cash
In line with the growing trading performance, and
improving market outlook, we are committed to
return between one third to 40%* of our annual
earnings to shareholders.
+45%
YoY increase in total dividend per share
* Based on our dividend cover within the range of 2.5x to 3.0x.
See Chief Financial Officer’s statement for more information on page 84
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Strategic Report
Chair’s statement
An excellent financial
performance in a year
of macro-economic
change
This year, we have delivered an exceptional
financial performance, materially above
initial expectations as we continue to see the
benefits of our well-established strategy,
focused on STEM and flexible talent.
This has been a challenging year for many. Following
the gradual normalisation post the Covid-19 pandemic,
a challenging macro-economic and geopolitical
backdrop affected consumers as well as businesses
around the world. Although unemployment rates in
our key markets have remained low, a global energy
crisis has resulted in the cost of living rising, with
surging inflation leading to a decline in real-term
incomes for many across major markets. However,
despite these macro challenges, I am proud that our
Group has remained resolute in our focus to deliver
for our clients and candidates as we continue to make
progress towards our 2024 ambitions and beyond. We
have delivered an exceptional financial performance,
materially above initial market expectations, as we
realise the benefits of our well-established strategy,
focused on STEM and flexible talent.
In April 2022, after a thorough and extensive search
process, reviewing both internal and external
candidates, the Board was delighted to appoint Timo
Lehne as permanent CEO. Since his appointment
Timo has shown strategic thinking, drive and passion,
drawing on his extensive experience and building a
strong team around him. Across our Group there is a
renewed sense of energy, unity and excitement which
I felt acutely as I had the opportunity to meet again
in person with a number of our regional teams during
the year across Europe, the US and APAC. I would like
to take this opportunity to thank SThree’s exceptional
teams around the world for their hard work and
dedication which has supported the delivery of our
record financial results.
Following the strong trading performance in the year,
coupled with a healthy balance sheet position, the
Board is proposing a final dividend at 11.0 pence per
share, which taken together with the interim dividend
of 5.0 pence per share, gives the total dividend for
the year of 16.0 pence per share, an increase of 45%
on the prior year. This is in line with the Board’s aim to
offer shareholders long-term ordinary dividend growth
within a targeted cover range of 2.5x to 3.0x.
We were pleased to appoint Elaine O’Donnell as
Audit & Risk Committee Chair and Non-Executive
Director in October. Elaine brings to SThree both
broad and deep business experience and financial
capability, plus highly developed commercial and
people judgement. Her extensive experience of
working with high-growth, FTSE-listed businesses
will serve to strengthen our Board as the Company
continues to execute our growth strategy. In addition,
we were delighted to welcome Imogen Joss to the
Board in November. Imogen has extensive experience
of growing global services businesses and driving
technology-led change, as well as a strong focus
on people, sales and culture. I am also pleased that
Imogen’s appointment will ensure that SThree’s Board
will have in excess of 40% female representation, in
accordance with the FCA’s Board diversity targets. I
would also like to extend my thanks to Anne Fahy, who
stepped down from the Board in April, for her valued
contribution to the Company over many years.
The Board has once again worked hard during the year
to act in the long-term interests of all stakeholders,
balancing complex interests and priorities. The SThree
Board aspires to adopt FTSE 250-level governance
best practice wherever possible and was an early
adopter of the UK Corporate Governance Code.
Our purpose, values and culture demonstrate a
commitment to taking long-term decisions and to
treating all clients, candidates, employees, suppliers
and communities with respect as key stakeholders
and partners in our business. I would like to thank my
Board colleagues for their hard work and engagement
during the year.
Lastly, but importantly, during the year we have
increased our focus on the Group's impact on the
wider world and the communities in which we operate.
We continue to invest in our business and grow our
talent with environmental, social and governance
(ESG) considerations embedded in our strategy,
values and culture. We are committed to building
a sustainable future, developing a more inclusive
workforce and ensuring that we operate our business
to the highest ethical standards.
Whilst we are mindful of the wider macro-economic
uncertainties, the demand for STEM talent and flexible
STEM talent in particular, is structural. Our position
as the number one destination for talent in the best
STEM markets, and our strong contractor order book
underpins our continued confidence for the future.
Our clients know that they can come to us for the
provision of highly skilled experts, drawing on our
global network and expertise. Similarly, candidates
know that, by coming to SThree, their skills will be
fully appreciated and they will have access to a huge
pool of employment opportunities with dynamic
organisations across the world, accelerating their
professional growth. We remain inspired and focused
on our mission - bringing skilled people together to
build the future.
James Bilefield
Chair
27 January 2023
Read my introduction to Governance on page 120
Read more about our financial highlights on page 84
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Strategic Report
Chief Executive Officer’s statement
A record year
of growth
This has been another record year of double-digit
growth and strong profitability, materially ahead of
initial expectations, together with clear operational
achievements.
“ Our focus as a specialist
staffing partner in STEM
and flexible talent means
we are uniquely positioned
to service the structural
demand of a changing
world, work which we
significantly progressed
during the year.”
Basic earnings per share
41.0p
2021: 31.9p
Net cash
£65m2021: £58m
Exceptional year of growth
The effort of our dedicated team meant we placed over
20,000 STEM specialists into highly skilled positions in
2022, helping to deliver vital talent that will tackle many
of the complex issues facing our world. We are proud of
the work we do in delivering our purpose of connecting
skilled people with opportunities to build the future.
With a heritage as specialist STEM staffing pioneers for
almost 40 years, I believe the business has a huge and
exciting opportunity ahead as we execute our vision
to be the number one STEM talent provider in the best
STEM markets.
The Group’s strong performance in the year was
against a market backdrop characterised by a return
to a more normalised trading environment, followed
by an increasingly uncertain and weakening macro-
economic environment towards the end of the period.
Through this, and against very strong post-Covid
comparators, the Group delivered net fee growth of
19% in constant currency (21% on a reported basis) to
£430.6 million and profit before tax growth of 28%,
on a reported basis, to £77.0 million. Overall, the
performance in the year reinforces our confidence in
our strategic vision for the long term and demonstrates
that our mid-term ambitions are within reach.
Strong foundations with a unique and
resilient business model
Our overarching mission is consistent: placing STEM
specialists in markets with high demand and limited
supply. Supply constraints of STEM talent continues to
intensify, offering huge opportunity in a global market
estimated to be worth over £100 billion in revenue and
of which we currently have, on average, a 2% share
across our top five markets which account for 75% of
the addressable share of the global market.
We capitalise on the STEM opportunity with a
conscious focus on Contract placements, which grew
strongly at 23% and now represents 78% of Group
net fee income, up from 75% a year ago. This focus
enables us to service the changing world of work
with a clear and growing preference toward flexible
talent, a structure highly suited to STEM roles and a
key motivator for candidates. Motivations for work are
changing, with candidates aligning their careers to life
priorities, of which flexible work is a top consideration.
Our own recent survey demonstrated that flexible
working options are now expected to be a standard
given of employment.
Within this context, our core and differentiated value
proposition is a deep understanding of our clients’
requirements together with an unparalleled candidate
network, meaning we often know of candidates before
formal searches are needed and this enables us to be
proactive in our approach to clients.
Operating across 46 locations in 14 countries from the
USA, across Europe to Japan, our combination of global
reach and expert local recruitment knowledge across
specialist STEM skills means we can deliver quality at
speed. We are trusted talent partners, helping more
clients to succeed and more candidates to accelerate
their careers.
In addition, demand for the Employed Contractor
Model (ECM) continues to be a strong driver of
growth. ECM is a model whereby contractors are
directly employed by SThree for the duration of the
contract and is an area in which SThree has built a
leading position. ECM now represents 45% of all
Contract work undertaken by the Group, compared
to 43% in 2021.
Permanent placements also play an important role
in our overall offering, providing clients with a full-
service solution depending on their requirements.
Permanent grew 6%, and we continue to focus our
efforts on Permanent in markets where we can achieve
the best returns.
Over time the Group has shown that the specialist
focus on STEM and flexible talent has proven more
resilient and adaptable relative to the generalist
staffing market. The strength of our contractor order
book, which ended 2022 up 19% YoY, provides a
good degree of comfort against a more challenging
and volatile backdrop. The strength of our business
platform, combining global scale with the flexibility
of an agile business able to deploy resources as
appropriate, has provided a robust foundation from
which we advanced our disciplined and focused
strategy during the year.
A responsible business for now and the
future guided by purpose
We believe in empowering a sustainable future
through STEM skills, whether that is placing engineers
to build wind turbines, medical researchers to create
new vaccines or cyber specialists to provide financial
security. This purpose is grounded in our ESG
commitments, which are focused around promoting
green jobs, encouraging diversity in STEM and
contributing to a renewable future.
We set ourselves targets related to ESG which are
aligned to the UN Sustainable Development Goals,
and we are pleased to have progressed against these
during the year, including:
• Having positively impacted 88,741 lives since
December 2019, meaning we are over halfway to
our goal of 150,000 by 2024.
• Making further strides in our ambition to tackle
climate change, with 88% growth in net fees from
our renewables business since 2019, in line with our
ambition to double our share by 2024 from 2019.
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Chief Executive Officer’s statement continued
• Having reduced our carbon emissions by 44% in
2022 as compared to the base year 2019, achieving
our initial target of 20% reduction. In doing so, we
have set ourselves a more challenging target going
forward of a 25% reduction against 2019.
• Progressing our focus on increasing gender
representation in the business, with 32% of all
leadership positions occupied by women.
Building a business for sustainable scale
In taking up the CEO role a year ago, I spent my first
months, along with the senior leadership team across
our regions, reviewing, analysing and assessing the
Group’s operations and strategy. Working together
we agreed our strategic vision and an execution plan
centred on an analytical and fact-based approach. We
have articulated and collaboratively achieved buy-in
to this clear vision across the Group, and in doing so,
evolved our 2024 ambitions to be more relevant to our
aspirations under a new leadership team. The direction
of travel remains the same and we are unanimously
committed to these ambitions. We are relentlessly
focused on building a business of scale with
sustainable margins, driven by our energised team.
As we step into execution mode, we look to advance
our vision across four main strategic pillars:
Our Places - to be a leader in the markets we
choose to serve
The Group’s performance in the year was driven by
broad-based, double-digit growth across our four
major regions, which demonstrates that we are already
operating as a leader in key markets where we know
we can win. We spent time assessing and honing our
market approach to understand deeply the specific
dynamics that enable us to scale, making sure we
are in exactly the right niches and specific skill areas
across the different life cycles of each market.
This approach, crystallised during the year into a
‘market investment model’, meant that we segmented
our focus into large, proven and scalable markets
and small-to-medium high-margin markets. A good
example of our focus and commercial discipline
is our approach in the Netherlands, where we set
appropriate strategic goals aligned to the market
context, delivering 34% growth in net fees during
the year. This continuous analytical assessment also
informed our decision to restructure our operations
in Singapore and Ireland. We continue to actively
optimise and invest in those markets where we can
generate the strongest returns.
Our Platform - create a world class operational
platform through data, technology and
infrastructure
A focus of the year was ensuring we have in place
the structure to deliver best-in-class operational
execution and understand where we can make
improvements to continue to lead the pack. As part
of this, we have made good progress with planned
strategic investments in our systems through which
we are fundamentally re-engineering, simplifying and
automating some of our most manual and complex
processes. The majority of the year’s costs were
recognised in the second half of the year and, as we
progress into the new financial year, phasing and
budget remains in line with plans.
We believe these improvements, along with
implementing and systemising best practice across
the Group, has created, and will continue to create,
an environment where colleagues are happier,
more productive and ultimately have an improved
experience which will ultimately improve the
experience of our candidates. The outputs we aspire to
are better data-driven insights, improved productivity,
empowered regions and enhanced operational
excellence through secure infrastructure, all
contributing to our long-term success and sustainable
margin improvement in 2024 and beyond.
Our People - find, develop and retain
great people
A key objective in the year, and one that I am
passionate about, was improving our employee
value proposition to be a destination employer in our
regions. We are a people business and our colleagues
are our most valuable asset. A focus for me was
engaging with our global teams to bring everyone in
the business toward one strategic focus. Our objective
is to enable and excite people to perform at their best
by creating a high-performance, inclusive culture,
which attracts the best talent, provides the best
training and targets the best markets to support the
meaningful work we do every day.
As part of this we standardised best talent acquisition
practices across the Group, implemented a new sales
compensation scheme in our key markets, launched a
new onboarding programme (Elements) in all regions,
as well as enhanced our training and development
programmes to provide clear pathways for career
progression. An example of this is Identify, our
programme to develop women at SThree to become
future leaders. As a result of these initiatives, I was
very pleased to see our eNPS score improve to the
highest level we’ve ever achieved, and I believe this
is just the beginning.
Everyone plays a part in our journey. As we look
forward, we will continue our policy of highly targeted
headcount investments, in the markets and skill
verticals that provide the best growth opportunities
and where we can drive the strongest returns. I would
like to thank everyone for their dedication and hard
work throughout the year.
Our Position - Leveraging our position at the
centre of STEM to deliver sustainable value to
our candidates and clients
Our position at the heart of STEM is illustrated through
the deep market value of our niche brands, aligned to
our specialist focused areas across target markets. We
are proud of the power of our brands which continue
to have high local recognition.
A major achievement during the year was the launch
of a new overarching corporate brand identity, to tie
our ‘house of brands’ together and leverage the power
of SThree as a whole. This was an important step in
uniting the business together as a STEM specialist
company and represents a clear expression of our
intent to seize the market as a refreshed, energised
and innovative business.
In addition, we made further improvements to how we
engage with our candidates and clients and further
cemented our position as a trusted resourcing and
placement partner. We undertook a number of digital
and in-person candidate forums, career support
programmes, and our ‘Breaking the Glass’ programme
in the US continues to provide a meaningful resource
for supporting professional women in technology. This
work ensures we retain our enviable, market-leading
position as the business the world comes to for flexible
STEM talent.
Technology improvement
programme scale
Our technology improvement programme will
enable us to adopt modern, scalable, and innovative
technologies and processes, driving market leading,
data driven insights, greater operational excellence
and productivity. This programme will enable us to
deliver a world-class digital experience differentiating
SThree and delivering our vision to be the number one
STEM talent provider in the best STEM markets.
The programme underpins the delivery of a value
shift in our sales consultants’ productivity by
enabling them to achieve their best more quickly
and more consistently. The programme will drive
standardisation, simplification and automation
though our back-office technologies and processes
enabling us to operate effectively at greater scale.
The programme supports the continuing shift towards
ECM from the historic independent contracting model
and positions the Group at the forefront of the industry
as it continues to evolve from a traditional, analogue
recruitment model driven primarily by headcount.
In 2022, we successfully piloted a CRM module in
our Houston office. This is enabling us to systematise
existing Group best practice, developed over many
years, across an integrated platform to empower our
people to be their best. We will deliver this through a
sequenced rollout across the Group, starting with our
US and German businesses later in 2023. In 2022, we
incurred programme costs of £4.1 million. In 2023, we
expect to incur programme costs of £15 million-£17
million, of which £6 million-£7 million will be expensed
with the remainder of the £30 million-£35 million
programme costs anticipated to be incurred in 2024,
of which £5 million-£6 million will be expensed. We
also expect to realise the initial financial benefits of
this programme from 2024, and a positive return on
investment by the end of 2025. This will support the
delivery of a sustainable operating profit conversion
ratio of 21% or greater by 2024 and beyond.
Outlook underpinned by long-term
megatrends
Following 17 years at SThree, and having spent my
first year as CEO, it is clear to me that the Group has
a huge opportunity to build on the foundations and
success to date to create a differentiated proposition
within the market. We have the team in place to
execute our vision and our expert knowledge of our
chosen markets. Along with a deep insight into our
clients’ needs and the preferences of our candidate
communities, this means we look ahead with a
significant amount of experience and understanding
of where our best opportunities lie. With our team
energised around a clear strategy, it is time to unleash
the power of SThree.
Following an exceptional 2022 performance, trading
early in the new financial year continues to track in
line with full year expectations, and we continue to
monitor how the markets are evolving in the short term.
Our opportunity is large, underpinned by structural
megatrends, and the requirement for scarce STEM
talent across industries and regions is acute. The work
we have done over the year is aligned to building a
business with long-term sustainable growth potential,
in line with our 2024 ambitions and beyond. We will
continue to monitor how the markets are evolving in the
short term, however our belief in the Group’s medium to
long-term prospects remains as strong as ever.
Timo Lehne
Chief Executive Officer
27 January 2023
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Strategic Report
Our business model
Uniquely positioned to build a sustainable future through
our STEM expertise
Why we exist
Our purpose of ‘Bringing skilled people together to build the future’ is central
to everything we do.
Our key value drivers
Long-term relationships
Group resources
We maintain and
nurture long-term
relationships and
manage and develop
our key resources to
create and preserve
value for our
stakeholders.
Culture
Open, co-operative, collaborative
and performance-focused.
We develop and implement
policies and business practices
that are underpinned by our
operating principles. They are
designed to guide behaviours and
ways of working across SThree.
See page 42 for our people
Financial position
Strong operating cash flows,
supplemented by debt and equity
when appropriate, provide us with
strategic flexibility to pursue value-
enhancing opportunities when
they arise.
See our financial review on page 84
Geographic footprint
We have a strong leading presence
in key STEM markets where
technological change is at full
speed and demand for contract
roles outstrips supply.
See our regional review on page 90
Our people
With a broad range of skills,
experience and values,
together delivering excellent
customer service.
See page 42 for our people
Candidates
They are at the heart of everything
we do. We aim to anticipate and
meet their changing needs to
ensure an ongoing pool of in-
demand STEM talent across our
chosen markets.
For more on our candidates, see page 48
Client base and loyalty
By investing in our people’s
knowledge, thought leadership
and ongoing drive to improve our
customers’ experience we have
become the go-to partner for
global clients looking for niche
STEM skills.
See page 48 for more on our client base
Local communities
Established long-term partnerships
with local authorities, non-
governmental organisations
and other institutions help us to
have a meaningful impact on the
communities we are part of.
See how we help communities
on page 56
What we do
We source and place STEM talent across three major sectors: Life Sciences,
Technology and Engineering.
Talent in demand
We build specialist STEM
candidate communities via
multi-channel campaigns:
career development fairs,
industry events, networking,
thought leadership, digital
marketing and other
targeting techniques.
Agility
The way we serve our
clients flexes locally,
accommodating client
preferences and complex
regulatory landscapes across
all regions.
Recurring revenue generation
We earn fees mainly on a recurring basis. 78%
of Group net fees are Contract fees, earned
on an ongoing basis for the duration of the
contract, with the Group paying contractors
and retaining a portion of the amount charged
as a service fee. 22% are permanent fees,
charged as a percentage of a candidate’s salary
when the candidate is placed with a client.
We connect
STEM specialists
with dynamic
organisations across
the world
We source and
help to nurture
sought-after STEM
talent
We earn fees
and grow free
cash flow
We reinvest
capital wisely
to fund continued
business growth
and fund dividend
Investing for growth
We are a highly cash-generative business.
We invest free cash into growing our
business and asset base and use it to fund
a regular dividend stream.
See page 40 for details on the Group-wide
infrastructure investment programme
We build a sustainable future through STEM
Sustainability
Our commitment to run a responsible and sustainable business remains at the heart
of everything we do.
We work with clients who are at the forefront of tackling climate challenges,
whilst investing in our own renewable energy business and managing our
own carbon footprint towards the net-zero economy. We make
DE&I development part of business as usual and launch
new incentives to support the wellbeing
and health of our people.
See our Responsible business
on pages 52-79
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Our business model continued
Value created for our
stakeholders
Underpinned by the ethos of the United Nations
Sustainable Development Goals
People
Candidates
Clients
For our 3,119 people worldwide,
we provide a great place to work
and invest in ongoing learning
and development, wellbeing and
DE&I programmes, all in support
of creating an inclusive culture,
winning our people’s engagement
and empowering them to meet
their goals.
Our deep understanding of STEM
markets allows us to find the
right roles for our candidates
and help guide them to maintain
purposeful, sustainable and fit-
for-the-future careers.
Our people stay up to date with
changing client demand for STEM
specialists so they can advise
candidates, helping them choose
the right projects and roles.
We find candidates with
relevant skills and experience
to take on roles as software
developers, business intelligence
and data scientists, laboratory
technologists, electrical
engineers, clinicians, researchers,
and more. Their work helps clients
make new discoveries, increase
the accuracy and availability of
technologies and to realise the
long-term potential of technology
to address the world’s challenges.
Shareholders (our
institutional and retail
investors)
The Board has recommended
a 38% YoY increase in the final
dividend for the year to 11.0 pence
per share.
Communities
Environment
We continually utilise our
knowledge and experience
to empower people in local
communities to help them
overcome the barriers to
employment and build pathways
into STEM careers.
We source the talent needed
to build a sustainable future,
partnering with clients to support
the transition to a low-carbon
economy. Our own ambition is
to reduce our absolute scope 1, 2
and 3 emissions by 25% by 2024
compared to 2019.
5.3%
operating profit invested in
L&D in 2022
20,074
candidates placed in 2022
>8,200
clients around the world
£14.7m
total dividends distributed to
shareholders in 2022
5,156
people accessed career
support programmes
44%
reduction in CO2 emissions
since 2019 base year
36,902
hours of learning and
developing accessed by our
people this year
5,000
candidates surveyed in 2022
to gain and share insights on
how the STEM world works
51 eNPS
which places us in the
top 25% of a Professional
Services industry
Our commitment to sourcing
diverse, highly skilled and
flexible talent, and providing
high-quality services are well
recognised by our clients.
52 NPS
(a score of above 50 is
considered as excellent by
industry experts)
41.0p
EPS
2,082
hours volunteered in local
communities
35.4%
TSR
£0.1m
invested in local community
initiatives (via donations and
money raised)
See Strategic progress – Our People
on page 42
See page 30 for more details on the
survey results
See Key performance indicators
on page 80
See our Key performance indicators
on page 80
See page 56 for more details on our
role in building a diverse STEM talent
pipeline in a wider society
See pages 58 to 77 for details on
our long-term commitments to the
environment
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Our business model in action
Connecting sought-after STEM
talent with dynamic organisations
across the world
SThree’s broad knowledge of the market is critical both for candidates,
to realise their full potential and capitalise on opportunities that may
not otherwise present themselves, and for clients, as it enables them to
search across a wide talent pool to identify relevant expertise.
In 2022, we conducted a survey among 5,000
STEM specialists. They included both permanent
and contract workers and ranged from life
scientists and IT practitioners to engineers and
healthcare experts. They were located across all
our key regions. The result is a rich data set that
provides critical insights into how the priorities
and goals of STEM professionals have shifted
in the post-pandemic era, highlighting trends
among STEM talent at all stages of their career.
“ STEM employers who
offer enhanced packages
(including attractive
training and development
pathways) and more
flexible working options,
stand a better chance
of securing and retaining
the right talent. Also,
ensuring that candidates
represent diverse
backgrounds is critical
to the future success
of the employers.”
Source: Our research | How the STEM World Works (sthree.com)
Timo Lehne
SThree CEO
Securing opportunities for
future generations
The STEM skills shortage has a huge impact on organisations
worldwide. If we want to solve the world’s most complex
challenges, STEM specialists are vital.
Bringing skilled people
together to build the future
SThree is helping to bridge the STEM skills gap. We
use our almost 40 years of deep knowledge in the
STEM sectors and global network to understand
the expectations of skilled professionals and match
them with the organisations that need them. It is this
specialist approach that allows us to identify trends
and have access to talent pools that others don’t have.
The demand for green energy, greater connectivity,
and fast-acting medical assistance is driving the
worldwide need for expertise in Science, Technology,
Engineering and Mathematics at a time when many
leading nations are losing that expertise to retirement.
Building sustainable global
relationships
Top talent is attracted to companies that have positive
impacts on society and the environment. At SThree
we have developed a way of working that suits both
companies and candidates. It is important that we are
close to candidates themselves and take care of them.
We prioritise candidates’ needs and look to connect
them to the needs of our clients’ businesses.
We can make a positive impact in the world and that’s
what we want to do as an organisation – we believe
we can achieve that by having a focus on a strong
ESG agenda and really making a difference by being a
company that is truly specialised.
“ STEM is at our heart
and it’s something we
really see ourselves as
an expert in. We are
doing a lot of work to
help and advise young
adults to make choices
to become specialists
in STEM as we truly
believe it is something
we as a society need.”
Timo Lehne
SThree CEO
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Our business model in action continued
Our role in a wider society
In 2022, SThree launched a new partnership with Earthly to support our
carbon offsetting initiatives. We have planted 2,250 trees which have
removed 1,403 tons of carbon through two supporting projects, TIST in
Kenya, and Planting Mangroves in Madagascar.
TIST (The International Small Group & Tree
Planting Program) has over 148,160 members,
23,252,870 living trees and they have removed
9,395,470 verified tons of carbon in total. The
project covers 18 counties in Kenya and takes
an inclusive approach with youth, women and
men all taking part. In the past five years, all
10,007 participating farmers have reported
improved livelihoods and wellbeing. As part of
the programme, all farmers have developed and
learned skills to adapt to lower rainfall, higher
winds and erosion, supporting adaptation to
climate change.
The Planting Mangroves project in Madagascar
started in 2007 and aims to aid forest restoration
which is a critical issue as the country has lost
over 90% of its native forest cover to date.
Mangroves is an excellent forest type for
restoration; it not only stores more carbon than
traditional forests, but it also provides multiple
benefits to coastal communities, such as storm
protection, water filtration and livelihood
generation. The project has already contributed
to planting over 334 million trees in eight
countries and created over 3.3 million workdays
for local communities.
How SThree’s contributions
have helped TIST on the
ground
“ Our small-scale
agricultural projects
have been supported
by cash received from
TIST periodically;
these projects include
goat rearing and cattle
keeping. We have
been able to combat
malnutrition in our
community since we
are able to run our small
agricultural projects.”
TIST
Kenya Program Team
Achieving growth for Priva
with interim IT professionals
In collaboration with Computer Futures, one of our go-to-market
brands, Priva has been able to build a large team of high-quality IT
specialists to achieve their sustainable projects and growth goals.
Sustainable innovation
and growth
Priva is a global market leader in high-tech sustainable
greenhouses and climate control and water
purification systems. From software development to
the development of systems, Priva takes care of the
entire chain itself.
Priva’s ambitious growth plans were stunted due to
labour market shortages, resulting in a lack of talent.
Priva was faced with a challenge: keep vacancies
open which is costly or close them, squeezing
growth ambitions.
Making strides
Computer Futures worked closely with Priva to
find a solution. A team of high-quality, interim IT
professionals was built at speed. At its peak, Priva
employed 51 interim specialists.
“A big advantage of these specialists is that you
quickly have the right knowledge in-house, so that you
can make huge steps as an organisation,” said Walter
Doorduin, VP Organization Development at Priva.
More than technical skills
“ Computer Futures helped
us find preselected
specialists quickly who
they’d been working
with for some time, so,
they knew the quality of
these specialists. They
accurately matched us with
professionals – partly on
knowledge and skills, but
more so on cultural match
and the match with our
core values. That’s why it’s
important that you work,
as much as possible, with a
permanent staffing partner.
Would I recommend CF
to others? Yes, I would!”
Walter Doorduin
VP Organization Development at Priva
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Strategic overview
Our Places
To be a leader in markets we choose to serve
Our Platform
Create a world-class operational platform
through data, technology, and infrastructure
Our People
Find, develop and retain great people
Our Position
Leveraging our position at the centre of STEM
to deliver sustainable value to our candidates
and clients
Key performance indicators we track
• Net fees
• Operating profit conversion ratio
• Representation of women in leadership roles
• Customer net promoter score (NPS)
• Net fees through renewable business
• Basic earnings per share
• Total shareholder return
Progress on 2022 priorities
• Profit before tax
• Carbon reduction
• Grew our market share between 2021 and 2022
•
in four out of our ‘big-5’ markets.
Improved understanding of performance
drivers for consultants and how to better focus
their activities.
• Piloted a leading next-generation CRM.
• Migrated our physical, on-premises data
centres to the cloud, improving performance
and security.
• Enhanced cyber security.
•
Improved our diligence in how we manage
and process candidate data and cleansed our
candidate databases.
• Continue to evolve our state-of-the-art CRM
platform, rolling out to more teams and two
key geographies.
• Begin implementation of an Enterprise Resource
Planning (ERP) system providing significant
business capabilities and efficiencies.
• Established a global ‘market investment’
framework for our Large and Proven and our
Small and High-Margin markets.
•
Improved our regional governance model,
by implementing clear responsibilities and
conducted a refreshed regulatory and
contractual risk assessment for all our
contractor markets.
• Established a working group for better
collaboration on large global accounts to
serve clients better.
Initiatives and immediate priorities for 2023
•
Improve our processes to monitor business
performance and ensure prioritisation of the
development of our people while focusing them
on the right markets.
• Ensure the Group invests in the right skills
verticals in the right markets.
• Continue to apply pricing discipline in
our markets while inflationary pressures
remain uncertain.
•
Improve the quality of our market insights to
understand relative recruiting trends across
sectors and skills.
Our approach to ESG
Integral to our purpose and strategy is a strong emphasis on our ESG commitments.
We bring skilled people together to build a sustainable future for everyone.
• Positively impacting over 150,000 lives by 2024
• Delivering efficiencies so we can transition to
through providing access to decent work and our
community programmes.
• Providing access to the diverse STEM talent our
clients need to change the world.
net zero and build the systems that will provide
our clients with access to the very best talent to
deliver their low-carbon transition plans.
• Employee net promoter score (eNPS)
• Number of lives positively impacted
• Evolved our high-performance culture with roll
• Refreshed the corporate SThree brand with a
out of a framework for leadership behaviours.
Increased SThree-wide working groups, while
supporting our ‘House of Brands’.
• Refreshed our compensation framework and
launched employee share scheme.
• Continued to add content and compliance
training to our Learning Academy.
• Launched first stage of Future Office property
redesign programme to create a hybrid
working environment.
• Continued to monitor employee NPS, seeing
higher than ever engagement levels.
•
Introduced a more robust approach to
succession planning.
new identity.
• Launched thought leadership campaigns during
the year, including a survey on ‘How the STEM
World Works’.
• Grew our candidate database to in excess of
12,500 active contractors at the year end.
• Continued to deliver community outreach
programmes to grow and diversify the STEM
talent pipeline.
• Develop future culture programme.
• Continue to extend our Thought Leadership
•
Investments in capabilities and tools to attract and
retain the best talent in the market.
• Continue implementation of Future Office plans.
•
Introduce new, and iterate current, operating
models across the Group.
• Leadership and Next Gen Leadership investments.
• Leading with Purpose rollout for all
people managers.
•
Introduce talent, further mobility and
retention measures.
editorial programme.
• Continue to drive our brands in the STEM
markets in which we operate, enhancing their
positioning and refreshing digital assets.
• Promote best practice Customer Marketing
across regions, integrating Marketing and Sales
efforts to optimise growth.
• Expand diverse candidate communities and
talent development opportunities.
• Continue to promote and grow take up of
volunteering leave.
• By creating a culture where everyone is welcome
at SThree we empower our people to thrive. In
turn, our colleagues influence diversity across
our client portfolio and the STEM sectors in
which we operate.
• Building diverse STEM talent communities
that enable our clients to meet their business
objectives and make STEM careers more
accessible to everyone.
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Strategic progress
Redefining how we measure
success
We set out a five-year strategy at our Capital
Markets Day in 2019. Our aim then was to uniquely
position SThree as the global leader in STEM talent,
ideally placed to connect STEM specialists with the
opportunities being generated by a world that needs
their skills. We argued that this demand for STEM
would continue to increase as it was driven by several
megatrends that were growing in their impact (see
market megatrends in Market overview section on
page 12). All the evidence since then suggests this
still to be the case. As a result, our strategy has not
significantly changed and the focus this year has been
on implementation.
We have continued to invest in Marketing to build
our brands, strengthen our reputation as STEM
leaders and enable growth. Having scoped the
need, and planned the specification, we selected
technology partners and began investment in building
a platform that will raise productivity and scalability.
We reviewed how we focus on markets and refined
how we categorise opportunity, applying rigorous
discipline so we only allocate resources to markets
that fit challenging profiles for return and growth.
We also continued to improve our employee value
proposition (EVP) with a view to making SThree an
even more appealing place to work so we continue to
attract and retain talent.
Update and evolution
of 2024 ambitions
During the year we announced that we were going
to redefine the way we measure success. We remain
committed to our ambition to sustainably deliver
an operating profit conversion ratio of 21% or more.
However, our free cash conversion metric will no
longer be reported as a key ambition as it no longer
reflects our current business model. From 2023
onwards, we will shift the focus from measuring
market share on a revenue basis to a net fee basis.
This is because our product mix can contribute strong
margins on a smaller revenue. We will continue to aim
to be an employer of choice but, from 2023, we will
measure this through eNPS benchmarking, which will
allow us to make direct comparisons with best-in-class
organisations. We retain our societal goals but, from
next year, we will link these to our path to net zero
carbon emissions. Our new 2024 ambition is to reduce
scope 1, 2 and 3 emissions by 25% compared to 2019.
“ These investments
will transform our
productivity, but they’ll
also improve our EVP.
That will help us compete
better in the search for
talent, improve retention
and further increase our
employee satisfaction.”
Timo Lehne
SThree CEO
Our Places
38
Our People
42
Our Platform
40
Our Position
48
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Strategic progress continued
Our Places
To be a leader in markets
we choose to serve
Initiatives and immediate
priorities for 2023
•
Improve our processes to monitor business
performance and ensure prioritisation of the
development of our people while focusing
them on the right markets.
• Ensure the Group invests in the right skills
verticals in the right markets.
• Continue to apply pricing discipline in our
markets while inflationary pressures
remain uncertain.
•
Improve the quality of our market insights to
understand relative recruiting trends across
sectors and skills.
We continued to focus purposefully in the five major STEM skills markets in which
we have chosen to operate: the USA, Germany, the Netherlands, the UK and Japan.
These are the world’s leading STEM economies.
They deliver our highest revenue and profits, except
for Japan, which is on a growth trajectory for the
Group as we are still scaling in this territory (see At
a glance section on page 4). We remain confident
these five markets offer the most potential for growth
and the most opportunities to significantly increase
the future profits of the Group. Each market is at a
different point in its life cycle so we adopt a tailored
approach for each.
Continued focus on market share
growth in our key territories
All our markets have now recovered from the pandemic
and show an average growth on 2019 levels of 34% (in
constant currency). Our STEM contract order book
grew 55% (in constant currency) since 2019. In 2022,
our operating profit was up 29% on 2019 in reported
currency. This was driven by continuing demand for
talent in our core disciplines, as clients dealt with a
variety of needs as they sought to make their businesses
more resilient, more digital and more agile.
Based on our in-market performance, we took share from
STEM competitors in four out of five of our key territories.
Established a global ‘market
investment’ framework for our Large
and Proven and our Small and High-
Margin markets
We segmented our markets into Large and Proven
and Small and High Margin in order to better target
investment. Within each of these categories, markets
were further segmented by stage of maturity in order
to set appropriate strategic goals from the following
options: Drive Growth, Scale, Drive Margin and
Under Review.
Improved our regional governance
model, by implementing clear
responsibilities and conducted a
refreshed regulatory and contractual risk
assessment for all our contractor markets
Over the course of 2022, we carried out an in-depth
analysis of the regulatory and contractual position,
and risk profile, of each of SThree’s business models,
then analysed them against a standardised set
of categories.
This work has been integrated into the Group’s
strategic plans and also serves as the basis for a
Contracting Improvement Project.
The project introduces a new contracting approval
process, establishing a standard approach across all
regions. It will streamline contracting and reduce time
to contract execution.
It also includes a review of governance around
SThree’s contractual risk appetite. We began roll
out in all jurisdictions following the completion of a
regional pilot.
In each of our countries of operation, we have
processes in place that are optimally structured to
comply with local legislative requirements. This is
achieved by ensuring that we have both the right
roles and the right accountabilities in place, and
that suitable technologies have been considered
to support compliance.
Established a working group for better
collaboration on large global accounts
to serve clients better
We formed the group to evolve the way that we
go to market using more developed segmentation
approaches. Its focus is particularly on large
enterprise clients.
“ There is discipline and focus in our resource allocation.
We’ve worked out where there are opportunities, then
put the right people in the right place to deliver the
best return on investment.”
Andrew Beach
CFO
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Strategic progress continued
Our Platform
Create a world-class operational
platform through data, technology
and infrastructure
Initiatives and immediate
priorities for 2023
• Continue to evolve our state-of-the-art CRM
platform, rolling out to more teams and two
key geographies.
• Begin implementation of an Enterprise
Resource Planning (ERP) system
providing significant business capabilities
and efficiencies.
“ Delivering the future of
STEM staffing through
insight, innovation and
operational excellence.”
Nick Folkes
Chief Technology and Information Officer
Empowering our people through enhanced technology and processes using better
connected, innovative technology and processes to drive operational excellence.
We will increase consultant productivity and enhance our customers’ experience.
We are building an end-to-end integrated solution
which is digital in its orientation. Our new platform has
been designed to support the continuing shift towards
ECM from the historic independent contracting model.
This platform is future-proofed for scalable growth,
particularly in the ECM world, which we expect to be
a key driver of the STEM staffing market.
The technology improvement programme once fully
implemented will:
• Drive sales effectiveness, accelerating the
productivity of our sales consultants.
• Standardise, simplify and automate our back-office
technologies and processes enabling us to operate
effectively at greater scale.
• Digitalise ECM to drive growth in a scalable, lower
cost to serve way.
• Position the Group at the forefront of the industry,
as it continues to evolve from the traditional
recruitment model driven primarily by headcount.
Our technology improvement programme is at the
heart of our drive to deliver a step change in our
business, enabling us to deliver the future of
STEM staffing through insight, innovation, and
operational excellence.
Systemised and sequenced rollout
We successfully piloted our new CRM functionality in
our Houston business in 2022. Our pilot sales teams
found the new CRM system enhanced team and
individual performance and was intuitive to use.
We are refining the system further before a planned
rollout across the Group from 2023, starting with the
USA in 2023, followed by Germany, the Netherlands,
the UK and Japan thereafter, and then the rest of
the business.
Designing for productivity benefits
When planning refinements to our platform, we sought
opportunities to deliver productivity benefits. Our
goal is to build in the functionality that will enable the
organisation to scale whilst improving our operating
profit conversion ratio.
Like any talent-based business, we experience a marked
difference in productivity between our new hires and
our most experienced consultants. One of the main
priorities when designing the platform was therefore
systematising best practice from across the Group, then
programming interventions at appropriate moments
in the sales process. As a result, our sales consultants
should become more productive, more quickly. This
embedding of learning in day-to-day processes should
also lift employee satisfaction, improving retention.
Data driven insights
The platform will also allow data insights to support
decision making and give managers a better
understanding of our candidates and our clients.
Management will be able to better interrogate
performance by sector, location, team and individual.
Such transparency empowers decision making.
Improve non-sales productivity
Back-office processes offer opportunities for automation,
removing time-consuming manual interventions so we
free the organisation to scale. Our goal with back-office
systems is to not only achieve best-in-class status for our
industry: we aim to become world class by any measure,
creating a digital process that is intuitive from candidates'
and other users’ perspectives.
Enhancing cyber security through a
secure infrastructure
During the year we have migrated our physical,
on-premise data centres to the cloud, improving
performance and security. This offers a more flexible
infrastructure that is better able to support all
companies in the Group. It also has a host of other
benefits: it is more cost effective, it offers a better
quality of system, and it improves our disaster recovery
business continuity capabilities.
Our new end-to-end integrated solution utilises
world-leading technology infrastructure providing
real-time monitoring and regular and timely updates.
Ensuring all employees are aware of the importance of
following data protection protocols is also key so all
our people receive mandatory training in data security.
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Strategic progress continued
Our People
Find, develop and retain great people
Initiatives and immediate
priorities for 2023
• Develop future culture programme.
•
Investments in capabilities and tools
to attract and retain the best talent
in the market.
• Continue implementation of
Future Office plans.
•
Introduce new, and iterate current,
operating models across the Group.
• Leadership and Next Gen
Leadership investments.
• Leading with Purpose rollout for
all people managers.
•
Introduce talent, further mobility
and retention measures.
For us to achieve our growth ambition we need to continue attracting talented
people to SThree and help them perform at their best. We are determined to make
SThree the STEM talent employer of choice in the markets in which we choose
to operate.
Attract the best talent
New onboarding programme launch
Our employee value proposition (EVP) is a combination
of compensation, career opportunity, corporate
culture and the working experience and the working
environment. We made good progress enhancing all
these dimensions this year.
Spread best talent acquisition practices to
meet hiring targets
First, we improved the way we assess our talent
requirement, standardising the way that we report and
plan our headcount needs across all our businesses. In
high-growth markets, where sales consultant capacity
would otherwise limit profitable growth, we defined a
hiring plan so we can meet that need, then allocated
resources to increased headcount, as appropriate.
Implement a sales compensation scheme in
our key markets
To assess the competitiveness of our compensation
schemes in each of the markets where we choose
to operate, we completed a sales compensation
review. It focused on ensuring we reward great sales
performance with motivating compensation in all our
key markets, the USA, Germany, the Netherlands, the
UK and Japan. There were also enhancements in base
salaries for new and existing sales colleagues, as well as
revisions to commission schemes across these markets.
All regions completed the launch of the Elements on-
boarding programme early in the year. It introduces
new hires to their development journey, the culture,
systems, tools and training programmes they will
need to pursue in order to perform their roles. We
introduced the programme to our existing teams
before rolling it out to all new joiners globally. In
total, 62,463 Elements courses have been started
with 56,424 completed. Feedback has been highly
positive among our people, and we also won Silver at
the Learning Technology Awards for ‘Best Technology
Based Onboarding Programme’.
Develop talent
Embed our inclusive culture
We continued to evolve our high-performance culture and
began to roll out a framework for leadership behaviours.
Additionally, we are increasingly working together as
SThree plc, while supporting our ‘House of Brands’.
Optimise our talent pathways
The year saw us undertake a comprehensive review
and systematisation of all the practices involved in the
recruitment and retention of talent. This puts us in a
position to embed best practice throughout the Group
as part of our platform enhancement programme.
Welcoming new starters in
the Netherlands
Our Netherlands region launched a New Starter
Lunch programme this year where new joiners
meet existing SThree team members and a director
for lunch to hear about ESG and why it is core to
our business. They then collectively volunteer at a
local project such as a beach clean, canal clean or
eco farm. The feedback has shown that building
networks, and experiencing our values first hand, has
a great positive impact on those joining the business.
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Strategic progress – Our People continued
Strategic progress – Our People continued
Define career pathways
Senior management development
We have defined sales pathways using the Elements
onboarding programme as a baseline. All the 118
different sales career journeys possible at SThree have
been represented with specific learning pathways.
All core function teams also now have 35 individual
pathways built onto the Learning Management System
(LMS). They have been simplified and standardised in
readiness for our enhanced platform.
Global grading
Every employee in each business now has a grade
that reflects their position in each company. This new
scheme was launched across the Group allowing us
to become much more standardised. The benefits
are greater visibility for management, allowing
better informed and more nuanced interventions to
achieve goals such as diversity and inclusion. Grading
also helps us define reward structures and create
communities around roles.
Enhance training and talent development
For people to perform at their best and understand their
role in achieving our growth ambition, it is essential to
have access to comprehensive training. This year, we
introduced several major programmes and upgrades.
Upgrading digital learning
The priority for the LMS during the year was to drive
adoption of digital academies. We began by making
it easier for new joiners and current employees to find
the right learning by organising programmes into five
academies: Recruitment, Skills, Management, Tech, and
Ethics. All are open to any of our people. We have made all
LinkedIn learning available through our SThree Academy.
Every module can also now be accessed remotely
by phone.
The result has been a significant uptick in usage.
In 2022, our people accessed 36,902 hours of
learning and development, with almost 21,184
courses being completed.
Platform enhancements
Although only at pilot stage this year - see Our Platform
section on page 40 - new technology will enhance
the working experience, acting as a key enabler by
accelerating learning, improving individual performance
and removing process frustrations and administrative
burdens that hold our talent back.
Our new leadership framework, Leading with Purpose,
has begun increasing capability across our senior
management community. Its framework is supported
by a new leadership index where leaders will be
measured on their ability to inspire trust, create
vision, execute strategy and coach potential. Through
developing our leaders, we will continue to build a
strong organisational culture, improve our eNPS score
and ultimately positively impact retention.
Find, develop and retain great women
Identify, our talent development programme, finds and
develops women at SThree who have the most potential
to become future leaders. Building on the success of
a previous Identify programme, 24 women from all
parts of the organisation spent nine months pursuing
individualised learning pathways designed to enhance
their skills and capabilities. We worked with social
enterprise, Femme Palette, to deliver external mentoring
for every participant. Femme Palette then used the fees
we gave them to finance scholarships for women beyond
SThree. We also ran learning events with external
speakers which offered guidance and inspiration
for participants in how to build their own bespoke
career paths. Participants ended the programme with
an opportunity to make recommendations to senior
leaders about how we can continue to build a culture
where women can thrive. Over 90% of women on the
programme felt mentoring improved their skills.
Wellbeing capability pilot
Pilot mental wellbeing training was rolled out from
March to June to cover 100 colleagues and people
managers. The colleague programme focused on
building personal resilience; the people manager
programme concentrated on how to identify the
signs of mental ill-health, start conversations and
sign-post available resources. Overwhelmingly
positive feedback from both pilots has informed our
investment and training approach for 2023.
Compliance learning strategy
We introduced four new compliance courses for all
existing staff and embedded them into the Elements
Programme for new joiners. Sponsored by the CEO,
the courses have so far achieved an average of 92%
completion rates.
Target Operating Model design and delivery
To support our focus on our markets and market
opportunities – see Our Places section above – we
have introduced a new Executive Committee (ExCo)
structure which replaces the Senior Leadership Team
(SLT). The new group includes managing directors
for our regions, as well as corporate function leaders.
All ExCo members directly report to the CEO. ExCo
makes it much easier to drive change as domain
responsibility is better defined and leaders regularly
come together, aiding cooperation.
Retain talent
Diversity, equity and inclusion (DE&I) continues to be
a strategic focus as we need to bring diverse talents
and views in order to perform effectively in the diverse
cultures in which we operate.
Employee Resource Groups, campaigns
and talks
In 2022, we grew our Employee Resource Groups (ERGs)
to a total of nine focused, colleague-led communities.
We continued to deliver campaigns and awareness days
for Women’s History Month and Pride as well as more
specific regional awareness days nominated by our
people. These attract great support and engagement.
We also invited seven external speakers to talk on topics
such as Transgender issues, Intersectionality, Allyship
and Black History. As part of raising awareness about
the lived experience and diversity of our workforce, we
published 39 people profiles.
Employee Share Plan
We believe the more colleagues share in the success
of the business, the more motivated they will be to
pursue our mission and deliver positive outcomes
for all of our stakeholders. So we launched our
new Employee Share Plan in November giving
all employees the option of buying and receiving
matching shares.
The DE&I year in numbers
9 events ran in 2022.
3 DE&I bitesize learnings created in
2022 with c.10% of the organisation
completing.
British Diversity Award nomination, European
Diversity Award nomination – for Company of
the Year Award.
Build a safe, flexible working environment
Health and safety (H&S) policy and
compliance activity
•
•
Improved employee involvement and engagement
with H&S; we continued to work hard to ensure
that our employees feel involved, informed
and able to contribute to a healthy and safe
work environment.
Increased H&S training programme in SThree
Academy, including introducing a full H&S
Awareness training module for all our employees
across all regions.
• Ensured that communication and consultation on
H&S-related matters is part of the new employee
induction programme, in addition to one-to-one H&S
and monthly regional communication meetings.
• Continued to promote and train fire wardens,
workplace first aiders and mental health first aiders
to support our hybrid way of working.
•
Implemented processes for reporting of any
accidents or incidents involving employees and
ECM contractors.
• Ensured we have monitored behavioural safety,
safety performance and risk management
arrangements established in our core governance
structure with our monthly KPI dashboard.
“ This year saw the launch of two new ERGs in the
UK&I region – NOW (No Ordinary Women) and HERO
(Heritage, Ethnicity, Race & Origin). This brings the
total number of these special interest groups across
SThree to nine.”
Gemma Branney
Global Director of Purpose and Inclusion
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Strategic progress – Our People continued
Identify women’s talent
programme
200 hours of mentoring provided.
180 hours of learning.
Six
development opportunities, including
speakers and insights.
• Liaised with clients to ensure safety of a candidate
on a client site and obligations are understood
by both the client and candidate towards health
and safety.
• Measured and successfully completed our office
H&S performance review and facility inspections
within the UK&I region; we plan to roll similar
reviews out globally during 2023.
Health, safety and wellbeing remains a top Group
priority and we will continue to engage, encourage
and educate our colleagues on all aspects of health
and safety enabling them to actively participate in
improving the workplace health and safety culture.
Hybrid guideline development
We have adjusted our hybrid working policy so it
applies to all markets in the Group. Flexibility is
increasingly expected by employees and the policy
helps attract, retain and support our talent. It is also an
optimal way of working, keeping everyone performing
at their best.
Adapt our office environments to support hybrid
working
To optimise employee engagement and productivity
we developed and launched our office design
playbook. Already deployed in the creation of our new
Tokyo, Hamburg and Berlin offices, it provides more
collaborative spaces that offer more opportunities
for social interaction, meetings and team gatherings.
These significant changes adapt our property portfolio
to the hybrid working environment, enabling our teams
to perform at their best in the office, and outside,
supported by an integrated Microsoft workspace.
Measure progress and provide opportunities
for feedback
As part of our group listening strategy, in 2022,
we introduced quarterly Pulse Surveys to provide
opportunities for employees to share their feedback
more regularly. The surveys were built around topics
such as leadership, strategy, communication, and
health and wellbeing. We saw steady increases in
particiaption and satisfaction scores across both pulse
surveys. Q2 and Q4 scores put us in the top 25% for
professional services firms in the benchmark provided
by Peakon Workday, our third-party partner.
We also launched Tell Me Anything sessions this
year, where Executive Committee members met
with a group of colleagues to have an open, candid
conversation and listen to ideas and suggestions.
The outcomes of these sessions were then relayed
to relevant teams and leaders to influence decision
making and priorities.
Talent and succession planning framework
A new Talent Management Toolkit has been created
that guides managers through the Talent Management
Lifecycle. A key part of that lifecycle is succession.
Bi-annual ExCo Talent & Succession reviews provide
ExCo with visibility of the potential succession
candidates for all our top 100 leader roles. This
allows them to build the bench-strength of emerging
successors and fast-track key talent. Our ambition is
to have a successor ready to take on all Top-100 roles.
Become the sector’s employer of choice
Investments in our people demonstrate how we are
building a strong, supportive, training-focused culture.
They show we are serious about putting people at the
centre of what we do, helping everyone at SThree to
be more successful and achieve their full potential.
This all enhances our employee value proposition,
making it more attractive to join and stay at SThree.
Global reward analysis by gender
Since April 2017, we have been reporting our UK
gender pay data on an annual basis, and this year, for
the first time, we used a similar approach to consider
gender pay data on a global basis.
Our methodology
All employees who were active on 30 November 2021
have been included in the analysis.
Measures included are median (the middle value of a
list ordered from highest to lowest), mean (adding up
all the numbers and dividing the result by the total data
points), and the proportion of employees who identify
as women and men in each quarter of the Group from
highest to lowest paid.
At a global level we have equal numbers of women and
men. Our analysis shows that the median hourly pay
of women is £0.84 for every £1 that men earn, and the
mean hourly pay is £0.80 for every £1 that men earn.
This difference is primarily a result of women being
underrepresented in more senior and therefore more
highly paid leadership roles, and overrepresented in the
less senior, lower paid roles. The chart below details
the proportion of women and men in each pay quartiles
from highest to lowest.
Currently fewer than four in 10 of the highest paid roles
at SThree and approaching six in 10 of the lowest paid
roles, are held by women.
Taking action to address gender parity and pay
We are committed to increasing representation of
women in leadership roles and continue to invest in
several areas. These include:
• Ongoing focus on our flagship Identify programme,
a talent accelerator for women.
• Reviewing and refreshing our approach to talent
attraction.
• Leveraging recently rolled out global grading to
ensure greater pay parity.
• Upskilling managers on talent identification and
management, career planning, and coaching, to
drive a more inclusive approach to helping people
to thrive.
• Holding our ExCo to account through
remuneration-linked objectives around gender
balance at senior leadership level.
As an organisation, our purpose is to bring skilled
people together to build the future, and we have an
obligation to ensure those people are diverse and that
future is inclusive. We know this starts with us.
SThree reward analysis by gender
Upper Quartile
63%
37%
Upper Middle Quartile
49%
Lower Middle Quartile
Lower Quartile
44%
44%
51%
56%
56%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Men
Women
Gender diversity profile as of 30 November 2022
Non-Executive Directors*
Executive Committee
Directors and managers
Other employees
Total
Men
Women
Total
Number
%
Number
6
6
629
2,478
3,119
4
4
360
1,155
1,523
67%
67%
57%
47%
49%
2
2
269
1,323
1,596
%
33%
33%
43%
53%
51%
* As at 30 November 2022. Excluding Imogen Joss appointed as a Non-Executive Director, with effect from 1 December 2022.
For more information on the composition of our Board of Directors, see pages 122 to 123.
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Strategic progress
Our Position
To be a leader in markets
we choose to serve
Initiatives and immediate
priorities for 2023
• Continue to extend our Thought Leadership
editorial programme.
• Continue to drive our brands in the
STEM markets in which we operate,
enhancing their positioning and
refreshing digital assets.
• Promote best practice Customer Marketing
across regions, integrating Marketing and
Sales efforts to optimise growth.
• Expand diverse candidate communities
and talent development opportunities.
• Continue to promote and grow the
utilisation of volunteering leave.
SThree’s positioning as a global STEM talent provider is firmly established in the
markets in which we operate.
Our goal this year has been to build our senior
marketing team and refine our brand so that we
have the capacity, skills, assets and tools to extend
awareness of this STEM leadership and the value
we offer.
we published a regular series of articles throughout
the year. These included an in-depth white paper of
candidate activity in our markets ('How the STEM
World Works'), and a partnership with ITN Business on
Securing STEM Opportunities for Future Generations.
Define and communicate the
SThree story
An organisation that wants to change has to get all its
people to understand where it is going and why. So
we articulated a narrative for our vision and roadmap
over the coming year, sharing it at a senior manager
conference in October. These managers went back to
their territories to cascade the story to their teams.
Refresh our brand
Early in the year, we refreshed our corporate brand,
while retaining our multi-brand, go-to-market strategy.
We distributed new guidelines to all involved in
producing communications materials across all SThree
Group companies.
Refresh our online presence
We redesigned and launched the SThree Group
website to reflect the new brand identity. It is now
simpler, making it easier for all the different audiences
who visit us online to find the information they
need. Work to upgrade the individual go-to-market
websites is also underway. The aim is to refine
customer journeys and improve user experience and
functionality across our digital marketing platforms.
Gain recognition for
Thought Leadership
The key to positioning ourselves as genuine sector
leaders is to maintain a steady stream of in-depth
articles and thought pieces that demonstrate insight.
With the additional senior resource in place to plan
and commission a substantial editorial schedule,
Regional thought
leadership
In addition to articles and papers aimed at a
global audience, our thought leadership has an
editorial programme for each region, released
under our commercial, go-to-market brands.
Our Progressive brand published a paper in the
UK, in partnership with Engineering Magazine,
on net zero’s impact on talent attraction and
retention. We also commissioned research
studies on STEM-specific recruitment issues
faced in DACH, Japan and the USA, publishing
the findings in the form of white papers.
Volunteering in the
community
We simplified the process for taking
volunteering leave and built partnerships in
our communities to provide colleagues with
easy access to volunteering opportunities.
As a result, we saw a 135% increase in
utilisation this year and a trend for teams
to volunteer together. There was a massive
uptake in volunteering leave to run collections
for Ukrainian aid relief and help settle
Ukrainian refugees.
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Support the ESG agenda with community outreach
Across our global business we have partnered with 143
community organisations via volunteering and official
partnerships. Our particular focus is on using our
expertise to support those at risk of unemployment,
and those underrepresented in the STEM industries.
In 2022, our career support initiatives helped 5,156
people with advice, knowledge, skills and coaching to
help them on their career journey.
Our US STEM equity community programmes
continued to strengthen the diverse candidate pool
our consultants place with clients.
120 people from underrepresented communities with
no STEM experience were given training and support
to help them enter the STEM sector. We partnered
with four STEM training non-profit organisations who
focus on upskilling, reskilling and guiding those out
of work into STEM career paths. In addition, in 2022,
we delivered 22 Break-the-Glass learning events to
women in, or with aspirations to join, the STEM sector.
These provided support to enable them to grow,
network and progress their career. Over 13 clients
joined us in our community outreach efforts. A key
priority is to continue to scale our community outreach
in 2023 with global partners who share our ambition to
make the STEM industries more equitable.
Breaking the Glass (BTG) programme helps to address
gender disparity in STEM.
We partner with STEM organisations, clients, industry bodies and community
groups and individuals to support the progression of women in STEM and
help women reach their potential. By empowering women to access roles and
promotions in STEM we will create a more diverse and successful community
across the globe.
In 2022, our BTG programme encompassed 20
learning and networking events (see examples below)
for aspiring and existing women in STEM. With 33
industry leaders speaking on panels, we provided
women with knowledge, insights and skills on topics
related to STEM, personal development, and career
progression. In total, these events attracted 943
participants, most of whom were women.
Key BTG events:
• Girl Develop IT: BTG partnered with Girl Develop
IT (GDI) to supercharge potential and unbox
careers for women in the Business Intelligence
and Data fields. The participants benefitted from
insights and knowledge gained during ‘Résumé
Reviews’, ‘Interview Preparation’, ‘Meet the Pros’
and ‘Recruiter Q&A’ sessions. As a result, GDI was
able to attract 50 new members, all with ambition
to build a more equitable and confident workforce
of women in STEM.
• The Women in Cable Tech (WICT) Network:
In 2022, we expanded our relationship with the
WICT Network by becoming their ‘Women in
STEM’ partner and teaming up with both the
WICT Rocky Mountain and Carolinas Chapters.
Through this partnership with SThree, the WICT
Network were able to provide support to Girls
Who Code, WICT Network’s Tech It Out, The Nomi
M. Bergman Fellowship, The WICT Network PAR
Initiative, Women’s TechConnect and The Women
in Technology Award.
• Supporting Women in Climate Careers: This
year, BTG also partnered with two ‘Women in
climate careers’ groups: Women in Cleantech
+ Sustainability and New England Women in
Energy & the Environment. Our climate-focused
programme this year reached 86 professionals and
helped address both representation of women in
STEM but also the green skills gap.
Grew our candidate database
There are now in excess of 12,500 active contractors
on our candidate database.
Extend STEM Series events
These events are for existing professionals who have
spent much of their career in traditional sectors, such
as oil and gas, but who want to shift their role and skills
into STEM-led industries, such as clean energy. Career
pathways are set out and trends are analysed with
predictions for future skills needs.
These are open events and many who attend have had
no previous contact with SThree. We benefit from this
broadening of our candidate talent pool. Attendees are
helped to make the transition to STEM industries. Our
clients gain access to an increased, and more diverse,
pipeline of talent.
“ We are here to support,
guide, and advocate
for every candidate in
our Breaking the Glass
programme and Girl
Develop IT network.
I look forward to seeing
what the future holds
with our partnership and
how we will positively
impact lives together.”
Susan Mire
Associate Manager at SThree
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Empowering a
sustainable future
through STEM
Whenever the world faces new
challenges, STEM skills are usually
critical to finding solutions.
As we bring skilled people together with those
that need them, we are contributing to building a
sustainable future for everyone. Indeed, we focus on
delivering sustainable value to all of our stakeholders.
In 2022, we have witnessed world events and crises
that have impacted our communities, including
our own colleagues. Even so, we maintained our
commitment to deliver our environmental and social
targets, and we stepped up our efforts as world
events highlighted the needs of our stakeholders
and the importance of being a responsible and
sustainable business.
People are the core of who we are
We continue to remain focused on building an
inclusive culture and have focused on improving
engagement in 2022. We have set challenging targets
for diversity, equality and inclusion, and we have
delivered new initiatives to support DE&I initiatives.
Alongside our commitment to our own colleagues,
we play an important role in the careers of STEM
professionals. Placing highly sought-after STEM
talent provides an opportunity for us to nurture and
empower communities underrepresented in STEM,
helping them access sustainable career paths whilst
bridging the diversity gap and the STEM talent
shortage. This is the core focus of our community
engagement strategy.
Our role in the low-carbon transition
The energy crisis has highlighted the need for
sustainable energy sources and brought new focus
to long-term energy strategies. It should not distract
us from the climate crisis but rather strengthen
our resolve in transitioning to more sustainable,
clean energy.
At SThree we continue to be led by climate science.
We spent 2022 undergoing the Science Based Target
initiative’s rigorous net zero validation process. This
has strengthened our commitment to transition our
business to a low-carbon operation with transparent
reporting and accountability to our stakeholders.
Our commitment to reducing our own environmental
impact has been recognised by SThree being listed
for the second year in the Financial Times-Statista
European Climate Leaders list.
We play a crucial role in bringing together the STEM
talent needed to deliver the wider decarbonisation
agenda. STEM skills will develop the innovation
and technologies needed to enable businesses to
decarbonise and adapt, and we play a critical role in
nurturing and finding this crucial talent.
We set challenging targets to stretch our ambitions as
we bring skilled people together to build the future the
world needs.
Gemma Branney
Global Director of Purpose and Inclusion
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ESG targets and
progress
In 2020, we set targets related to ESG matters most material to our operating
model. Through a materiality assessment we established the areas that impact our
business and support our wider performance. We undertook analysis to understand
the UN Sustainable Development Goals (SDG) that we can impact and align our
strategy to deliver relevant outcomes to the targets and indicators established
within the SDG framework.
To positively impact 150,000 lives
by 2024
Doubling the share of our global
renewables business by 2024
To reduce our absolute carbon
emissions by 25% by 2024
We aspire to increase gender
representation at leadership levels
to 50/50 by 2024
Progress
Progress
Progress
Progress
88,741 lives positively impacted by SThree since
1 December 2019.
88% growth in our renewables business net fees since
2019 (baseline year).
44% carbon reduction in 2022 from 2019 (baseline
year).
32% women in leadership positions.
2022 activities
2022 activities
2022 activities
2022 activities
20,074 accessed decent work through SThree
placements.
29% growth in our renewables business net fees YoY
in 2022.
5,156 accessed our career support programme.
3,968 accessed community programmes we delivered.
Delivered green career upskilling events to 86 STEM
professionals in collaboration with four clients.
2,243 accessed career development opportunities
hosted by SThree.
2,082 hours of volunteering supported people in our
local community.
Delivered green career awareness events to 240
school students.
94% carbon emissions increase in 2022 in comparison
to 2021, as a direct result of Covid-19 restrictions
being lifted.
Expanded our scope 3 carbon reporting and delivered
our TCFD report.
24 women participated in our leadership talent
development programme Identify.
Alignment to strategic pillars
Alignment to strategic pillars
Alignment to strategic pillars
Alignment to strategic pillars
Our Position
Our People
Our Places
Our Platform
Our People
Sustainable Development Goals
Sustainable Development Goals
Sustainable Development Goals
Sustainable Development Goals
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Social targets
Building an inclusive
workforce for the future
Enabling people to reach their
full potential is simply part of
who we are; it is an integral part
of our business model.
“ We were so proud to launch
a second Identify programme
where we saw a selection of our
most talented women develop
their skills and make global
connections. These outstanding
women presented solutions to our
ExCo in support of progressing
and retaining women to our
business. It is programmes like
this that help us be leaders of
DE&I in the staffing industry.”
Raveena Dhadwal
DE&I Business Partner
Elevating our people
We are building a culture where everyone is welcome
at SThree, where differences are celebrated, and we
encourage every colleague to reach their full potential.
Our people are critical to our success and core to who we
are. We know the focus needs to be on action, not just
words, and in 2022 we delivered the following actions:
• We can see we are not making strong enough
progress to reach 50/50 representation of women
in leadership. To help address this in 2022, we
built a 10-point plan to deliver outcomes that
will achieve this target. One point was to deliver
a second cohort of our talent development
programme, Identify, to elevate women who are
potential future leaders.
•
Improving employee engagement has been a
key focus. We provided employee engagement
feedback tools to our people managers, our
leaders hosted Tell Me Anything sessions, we
developed department engagement action
plans based on feedback and we had nine active
Employee Resource Groups (ERG). As a result,
our employee engagement score was 51, up
eight points from 2021.
• Empowering colleagues to develop and grow is
essential in building career paths that support
retention. In 2022, our people had access to 21,184
training courses through our SThree Academy
which includes LinkedIn Learning courses.
Our people accessed 36,902 hours of learning
and development.
Building employee experience and continuing to
develop the right culture for everyone will continue
to be a priority. You can read more about how we are
elevating our people on pages 42 to 47.
Elevating our community
We source our candidates from the communities
where we operate. We have a role to play in helping
those communities thrive, both in terms of providing
meaningful, decent work but also in our wider
contribution. Every colleague has 40 hours of paid
volunteering leave every year and each SThree office
has at least one ESG Ambassador who builds local
partnerships and actions to support our community.
In 2022, our colleagues supported over 140
community organisations through fundraising, gifts in
kind, donation and volunteering over 2,000 hours.
Building understanding for the future
In early 2022, we published the outcomes from
our first STEM Youth Survey which was delivered
in partnership with the Social Value Lab and Social
Shifters. Over 1,000 young people aged 18-30 years
old from across the globe shared their insights on their
experiences of STEM and their views of STEM careers.
The outcomes have provided insights into what we
and the STEM markets need to do to attract the next
generation of STEM change-makers to address
the skills shortage and build a diverse pipeline for
the future. You can read more about our research
on our website.
Case study:
Our mission to increase diversity in STEM
This year we relaunched our STEM equity programme
with four partner organisations who support diverse
community members with free, in-demand, tech
training and certification opportunities.
Over 100 entry-level and aspiring tech professionals
joined SThree’s dedicated STEM equity programme
to receive support in résumé reviews, mentor chats,
virtual networking mixers and mock interviews.
At our core, SThree is committed to ensure all people
have access to equitable opportunities for their
futures. We also understand that diversity, equity and
inclusion set the foundation for all people to thrive and
feel a sense of belonging. This is core to our STEM
equity work but also our internal colleagues.
Our African American and military-connected ERGs
have driven activities with our external STEM equity
programme members. Our ERG members volunteered to
do résumé reviews for 50 community members, providing
direct feedback to help them on their career journey.
This collaboration enables underrepresented groups to
connect with someone from a similar background.
Our STEM equity programme was recognised by
receiving the Elevate Award at the American Staffing
Associations Awards 2022.
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Environmental
targets
The energy crisis, severe weather
events across the world and COP27
have continued to put an emphasis
on the need to tackle climate
change. It becomes ever clearer
that the transition to a low-carbon
economy is critical, and that fast
action is required now to achieve
2050 targets.
Building a sustainable
future
For over a decade SThree has been
taking climate action and our resolve
has never been stronger. We are
focused and determined to deliver
our net zero transition plan and
will be setting our Science Based
Target initiative validated targets in
2023. As a STEM talent partner, we
know that we have to demonstrate
best practice and do all we can to
decarbonise our own business.
The skills that will tackle
climate change
Through market insights, increased
client demand and climate-related
scenario analysis we can clearly
see the role STEM skills will play
in the transition to a low-carbon
economy. McKinsey estimates 202
million new jobs may be needed to
achieve net zero by 2050.
Attracting and retaining key talent
into transition-focused roles is
essential to achieve net zero. In
2022, we delivered events with a
focus on green skills to 86 STEM
professionals and 240 high school
students. We partner with clients
and industry associations, such as
Women in Renewable Industries
and Sustainable Energy (WRISE),
to deliver events that support the
attraction and retention of diverse
talent within sustainable STEM roles.
Taking meaningful
climate action
Since 2020, our environmental
impact has been influenced by the
global pandemic and restrictions.
This year we have seen restrictions
on business travel ease, offices
open and other activities return.
As we began reopening offices,
we adopted efficiencies learned
during lockdown.
As a result, we have limited our
global footprint and established a
44% reduction in comparison to
2019 (our most recent business-
as-usual year).
For over a decade at SThree we
have monitored our scope 1 and
2 carbon emissions, and limited
scope 3 reporting aligned to best
practice. We have been actively
implementing measures to reduce
and avoid carbon emissions
since then. Through a scope 3
materiality assessment we have
established additional reporting
requirements and processes
aligned with the Greenhouse
Gas Protocol. We have therefore
expanded our reporting to ensure
we are transparent and full value-
chain emissions are now included.
Case study: Collaborating
to develop green skills
In 2021, we partnered with
Engineering client Bouygues
Construction UK on youth green
skills events. This was the catalyst
for SThree to support Bouygues
when they launched the ‘Girls
Believe Academy’. The academy’s
objective is to attract more
women into the Construction and
Engineering industry by showing
them how vibrant, diverse and
exhilarating the industry is.
In July 2022, colleagues from
SThree joined Bouygues at
secondary schools in Bristol to
host a Girls Believe Academy
event in conjunction with ‘World
Youth Skills Day 2022’. Together
we shared experiences and
programming to 240 students
to help them see the potential
in a green engineering and
construction career.
749placements in renewable
energy in 2022
88%
growth in our renewable
energy sector (baseline
2019)
44%
reduction in our carbon
emissions since 2019
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Task Force on Climate-related Financial
Disclosures statement
SThree has supported the recommendations of the
Task Force on Climate-related Financial Disclosures
(TCFD) since 2020.
We confirm that we are reporting consistent with all
of the TCFD Recommendations and Recommended
Disclosures in the Annual Report and Accounts 2022.
By this we mean the four TCFD recommendations and
the 11 recommended disclosures set out in Figure 4
of Section C of the report entitled ‘Recommendations
of the Task Force on Climate-related Financial
Disclosures’ published in June 2017 by the TCFD. In
addition, we have considered the TCFD additional
guidance (2021 TCFD Annex), specifically the all
sectors guidance in preparing the disclosures. We are
therefore compliant with the requirements of the UK
Listing Rule 9.8.6(8)1.
This section contains the relevant disclosures or
otherwise provides cross-references where
the disclosures are located elsewhere in the report.
In preparing them we have had to make several
assumptions, and while we are satisfied that they
are consistent with the TCFD recommendations, we
will continue to monitor TCFD guidance as it evolves
and will consider opportunities to enhance our
future disclosures.
SThree has long recognised that greenhouse gas
(GHG) emissions from the use of hydrocarbon-
based energy are contributing to the warming of the
climate system. We support the Paris Agreement’s
goal to keep the rise in global average temperature
this century to well below two degrees Celsius
above pre-industrial levels and to pursue efforts
to limit the temperature increase even further to
1.5 degrees Celsius.
Our long-term commitment to reduce our own
environmental impact underwent the Science Based
Target initiative’s (SBTi) rigorous net zero validation
process in 2022. This led to the development and
the Board sign-off of well-considered, data-led
transition plans for each high-emitting business area,
implementation of transparent Scope 3 emission
reporting, and establishment of a carbon removal
investment plan. These outcomes have been validated
by a robust SBTi review process and our new net zero
target will be announced in 2023.
1
In considering the consistency of our disclosures with the TCFD
Recommendations and Recommended Disclosures we have had regard
to, among other things, the documents referred to in LR 9.8.6B and 6C, as
applicable to the financial year 2022.
Governance – ensuring accountability
and responsibility
Board oversight
Describe the Board's oversight of climate-
related risks and opportunities.
The Board engages with stakeholders on matters
of business strategy and performance, material
environment, including climate change-related issues,
social and governance (ESG) factors. Continuing to
integrate ESG impacts into the business and providing
clear, transparent reporting on ESG matters remains a
priority for the Board. The Board’s experience includes
a range of skills and knowledge in relation to risk
management and risk-informed strategic and financial
planning which supports the implementation of the
TCFD recommendations across the Group. Full details
of the Board’s experience can be found on pages
122 to 123. The level of Board oversight is considered
appropriate for the ESG risks identified by the Group.
The Board appointed the Chief Financial Officer as the
Executive Board member who acts as senior sponsor
for all climate-related matters including climate
risk, metrics and targets. The Chief Financial Officer
reports progress to the Board on a regular basis. With
over 14 years’ experience as a listed company CFO
and extensive risk management knowledge the CFO is
best placed to assess and monitor the financial impact
of climate risk.
In addition, the Chief Executive Officer has appointed
an Executive Committee (ExCo) which includes the
senior leaders within the business. The purpose of
the ExCo is to direct the Group strategy including the
achievement of performance targets and mitigation
of risks to the business. The ExCo conducts regular
business reviews related to strategy, risk management
(including climate-related risks) and performance
including progress towards ESG targets. The ExCo
meets every month, and in the event, further reporting
on any particular matter or risk is required, the Chair
will request a paper or verbal update. The ExCo
reports to the Board and escalates both risk and ESG
matters as appropriate. The Board reviews strategy at
least twice a year.
In addition, ESG topics are regularly discussed at the
Group Remuneration Committee and Group Audit &
Risk Committee.
The ESG Committee meets quarterly to direct the
Group ESG strategy, policies and implementation
of key changes across the business. This includes
identifying climate risks and providing oversight of
the assessment and mitigation of these risks. The
review of climate-related risks occurred each quarter
during 2022.
In order to provide the right level of oversight to
both climate risk and climate opportunities the ESG
Committee has formed two sub-groups which include:
• TCFD Steering Committee, formed in 2022, which
includes leaders from across the business with
expertise in risk management, financial planning,
strategy, ESG and reporting. The TCFD Steering
Committee provides recommendations to the ESG
Committee on the assessment and management
of climate risk, processes to ensure climate
risk informs financial and strategic planning,
and the governance of climate risk. During the
reporting period, the TCFD Steering Committee
implemented 26 actions to improve the controls,
governance and strategic response to climate-
related risks and opportunities.
• Global Renewable Energy Network which includes
energy sector leaders from across the business
who come together to learn, share and collaborate
on actions that improve the performance of
our renewable energy business, maximising
the opportunities identified through scenario
analysis and supporting the achievement of
performance targets.
The ESG Committee provides input to the ExCo and
also the Group Risk Committee, escalating strategic
impacts and material changes as required. The ExCo
consolidates and reviews these, reporting any material
changes to the Board as required.
During the reporting period, the Board agenda
included:
• An update on ESG priorities where the Board
influenced and challenged the KPIs and strategic
plans including how to engage and influence
decision making throughout our leadership levels.
• Agreeing our net zero target. The Board
acknowledged that although our operations are
not carbon intense, as a key supplier to clients
there is an expectation to actively limit our
emissions in order to maintain and grow client
opportunities. The Board also discussed the risk of
“green washing” and the need to utilise the robust
SBTi framework to set a target aligned to best
practice and climate science. Group carbon targets
are therefore designed in partnership with SBTi, as
agreed by the Board.
• TCFD progress updates were provided by the CFO
to give assurance to the Board that we would meet
all compliance requirements. This provided an
opportunity for the Board to question actions and
progress, and influence the direction of the TCFD
Steering Committee as required.
In addition, the Board reviews principal risks annually,
of which some contain climate-related risks and ESG
matters as appropriate, with key material changes
being discussed and agreed.
Management oversight
Describe management’s role in assessing
and managing climate-related risks
and opportunities.
To oversee the governance of risk management,
including climate-related risks, the ExCo has formed
a Group Risk Committee. In addition, to support
the management of climate-related matters and
wider ESG ambitions, the ExCo established an
ESG Committee.
ESG Committee
SThree’s ESG Committee has representatives from
the ExCo, including the Chief Executive Officer, Chief
Financial Officer, Chief People Officer and Chief
Legal Officer, as well as individuals from key strategic
markets and departments.
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Climate change management organogram
SThree Board
Oversight of business strategy and performance,
including material environment, social and governance (ESG) factors.
Audit & Risk Committee
Oversight of the effectiveness
of the Group’s Risk
Management systems and
processes. Reviews assurance
over mitigating controls.
Remuneration Committee
Oversight of the Group’s
remuneration policy
and employee incentive
arrangements.
Nomination Committee
Oversight of continuing
development of an adequate
pipeline into the Executive
Team for succession and
bench strength purposes.
CEO
Executive Committee
Undertakes regional reviews to identify risks and opportunities with regional leadership teams.
Responsible for the management of risks and recommending risk appetite to the Board.
Develops Company strategy in line with Board appetite.
ESG Committee
Identify, assess and mitigate climate risk and
opportunities, ensuring integration into strategic
and financial planning.
Group Risk Committee
Responsible for reviewing and assessing strength
of controls related to climate risk and reporting
updates on risk to the ExCo, Audit & Risk
Committee and the Board.
Global Head of
ESG
Implementation
of climate-related
scenario analysis,
and stakeholder
engagement to ensure
delivery of action
plans. Oversees
the development of
climate targets and
data reporting.
TCFD Steering
Committee
Provides
recommendations to
the ESG Committee
on the assessment
and management
of climate risk,
informs financial and
strategic planning,
and the governance of
climate risk.
Global Renewable
Energy Network
Energy sector
leaders who work on
actions that improve
the performance
of our renewable
energy business.
Climate Risk
Owners
Responsible for the
monitoring of climate
risks, developing
and implementing
mitigation,
and escalating
changes within
risk environment
to the Group
Risk Committee.
ESG Ambassadors
100+ ambassadors across the business deliver local climate action,
engage colleagues in climate related issues and provide local insights to the ESG Committee.
Strategy – building the future the
world needs
The impact of climate change
on SThree
Describe the impact of climate-related risks
and opportunities on the organisation’s
business, strategy and financial planning.
The Group’s climate change-related risks and
opportunities are routinely considered in our strategic
and financial planning, including our capital allocation
decisions and in operational management. In 2021,
we implemented a climate-related scenario analysis
framework which we continued to use in 2022, to
better understand the resilience of our business within
three climate change scenarios.
Through climate-related scenario analysis, we have
identified no immediate material risks or negative
exposure of our business to climate change,
which would impact our strategy, performance or
liquidity. Further information on risk assessments
and materiality can be found in the risk section of
this report. We do however understand that climate
change and its associated impacts on society are
causing systemic and exponential disruption.
One of the global megatrends is decarbonisation
which requires extensive innovation and change.
Climate change will have a unique impact on our
clients and the STEM skills they require to redesign
and innovate business models that align with a net-
zero future. Our role in supplying the STEM skills,
which are needed to facilitate this change, is a key
opportunity identified through scenario analysis
which has influenced our strategic priorities. We are
well positioned to respond to the growing demand
for green skills and can quickly respond to expanding
and contracting talent markets as the global economy
reconfigures towards a decarbonising outcome.
In addition, the decarbonisation of our own business
plays an important role in ensuring we meet the
requirements of our clients and can access new
business opportunities. As a result, we have set
ambitious carbon reduction targets and have been
on our journey to net zero since 2018. As we embark
on technology transformation, we have embedded
sustainability criteria into our technology investments.
In addition, as we implement new procurement
processes, select new office facilities and reimagine
ways of working post the Covid-19 pandemic, we are
integrating sustainable and carbon reduction methods.
Further details on financial implications of these risks
and opportunities are assessed using climate scenario
analysis, the results of which are presented within
this report.
In summary here are our strategic pillars and how they shape our journey towards low-carbon economy:
Our Places
In order to build our market position we
develop and nurture a diverse green skills
pipeline to maintain competitive advantage as
a talent partner to the transition towards low
carbon economy.
Our People
Attracting talent to our business and on
behalf of our clients; meeting the growing
sustainability expectations of candidates to
provide access to the best talent.
Low-Carbon Economy
Our Position
Be the talent partner to decarbonisation
through access to quality talent and our ability
to respond quickly to client requirements.
Our Platform
Decarbonise our business and continue to
hold a leadership position in climate action
and build operational efficiencies into
our business.
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Risk and opportunity identification and assessment
Describe the climate-related risks and opportunities the organisation has identified over the short,
medium, and long term.
In setting and monitoring the delivery of SThree’s strategy, the Board and ExCo consider climate-related risks and
opportunities across three time horizons, aligned to the Network for Greening Financial Systems’ (NGFS):
• Short-term: up to five years, which is most aligned to the nature of our business, our own financial plans and
SThree’s existing risk management framework.
• Medium term: 5-15 years, which enables us to look beyond our short-term targets and adjust course
as appropriate.
• Long term: 15+ years.
TCFD categorises climate-related risks and opportunities as follows: policy and legal, market, reputation and
technology. At the Group level we have identified four broad climate-related transition risks which may cut across
our short, medium and long-term time horizons. These transition risks are global in nature, so we do not discuss
specific geographies here. We also recognise potential for opportunity associated with some of those risks, and,
where appropriate, we refer to specific geographies. Through the process of data gathering, collecting internal
insights and analysing market intelligence we identified specific focus areas for climate-related scenario analysis,
based on potential material impact on financial and strategic planning. As a result, we have identified the most
material climate-related risks and opportunities as outlined below. At present we identify no risks which will
significantly impact our long-term strategy or business model.
Climate change-related risks
Type
Potential risk
t
e
k
r
a
M
Fossil Fuel sector exposure
Less than 3% of net fees globally are
derived from oil and gas clients. Under
a low-carbon transition potential net
fees from these clients could be lost
due to divestment and reduction in
client demand. The risk to SThree
would be two-fold on revenue and
operating expenses - a potential
material loss of revenue, in addition
to still maintaining the consultant
expenditure to recruit into this area
of the market when there are limited
opportunities available.
Maintaining market share in rapidly
expanding markets
Through scenario analysis we
have identified opportunities for
significant growth, particularly under
a renewable-led growth future (our
scenario analysis of 1.5oC of warming
with orderly growth). There is a
potential risk that we do not respond
quickly enough to maximise these
opportunities and as a result lose
market share.
Decarbonisation continues to be a key
megatrend in our business (see page
14). Growing headcount will ensure we
can meet the demand for STEM skills
in decarbonisation projects.
Addressing the multiple skills
requirements of clients
As part of the low carbon transition
clients require multiple STEM skills
within their business. The risk is that
SThree could miss opportunities to
deliver across multiple skills within
one client due to our brand structure
and how our delivery teams operate.
For example, requirements for
IT candidates to solve big data
challenges are being required
across all industries, particularly
during the transition to a low carbon
future. Energy clients require both
engineering and tech skills which are
two specialisms separated into two
different SThree brands rather than
one service supplier.
L Low risk M Medium risk H High risk
Horizon/likelihood
Short
Term
Med
Term
Long
Term Implications for resilience
L
L
L
Key risk indicator
% net fees
generated from
oil and gas
sector.
In 2022, the ExCo agreed to an
Energy Sector Position Statement
for the business which outlined the
key energy sector focus areas of the
business. This enables leaders to grow
our energy business informed by
risk and with risk mitigation at front
of thoughts.
In addition, our clean energy network
provides a forum for leaders to
share insights and best practice
on building clean energy business
which contribute towards our target
to double the size of clean energy
business by 2024.
Our bi-annual strategic reviews
gather market insights, business
opportunities and as of 2022 climate-
related risks. Through these reviews
in 2022 we have identified both
expanding and contracting markets
which has informed our strategic and
financial planning.
L
L
M
% net fees
generated from
clean energy
sector
Number of
placements
made within
clean energy
L
M
M During 2022 we refreshed
SThree’s global brand identity and
strengthened the interlink between
our ‘House of Brands’ to ensure we
can support clients’ requirements
across different specialist skill sectors.
We believe that we can continue to
provide service to our clients even
under the event that demand for talent
shifts rapidly, as this is inherent in the
SThree Value Proposition.
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Climate change-related risks
Type
Potential risk
Changing candidate and
client preferences
Environmental concerns are becoming
increasingly front of mind when
candidates consider employers.
There is a risk candidates opt to
work with staffing providers who can
demonstrate strong green credentials
and SThree loses competitive
advantage if we do not align to
candidate expectations.
Key risk indicator
% reduction in
carbon emissions
% energy
procured from
clean sources
% clean fleet
within the
company
n
o
i
t
a
t
u
p
e
R
L
L
L
% net fees
generated from
oil and gas
placements
Operating within high-carbon
industries
High-carbon emitting clients are
increasingly facing divestment and
stranded asset risk as a result of
changing consumer preferences
and government policies. The risk to
SThree is twofold, loss of net fees
from these clients and the reputational
damage of operating within high-
carbon emitting sectors.
Horizon/likelihood
Short
Term
Med
Term
Long
Term Implications for resilience
M
M
M The role we play in bringing skilled
people together to build a sustainable
future is core to our business and
is demonstrated throughout our
market proposition. Our social
impact programmes include youth
programmes where we collaborate
with clients to build the green skills
pipeline. This addresses the skills
shortage whilst highlighting our
commitment. In 2022, 240 school
students attended a green skills
event we organised in collaboration
with clients.
We continue to demonstrate a
leadership position with a strong
roadmap to net zero which is
demonstrated by the publication of
our impact report, CDP B rating and
being ranked in the Financial Times
Climate Leaders listing.
In 2022, we undertook the SBTi net
zero validation of our targets to show
our approach to climate action is
led by climate science and verified
by others. Our roadmap to net zero
is integrated into every element of
our strategy which will impact the
business up until 2050.
The Energy Sector Position Statement
approved by ExCo in 2022 defines
how we operate within high carbon
industries and the monitoring we
have in place to mitigate any potential
risks derived from this work. We
monitor our work within high emitting
industries and report biannually to the
ESG Committee. Any change which
may heighten the impact of risk is
escalated to ExCo.
Key risk indicator
Number of days’
work lost from
severe weather
events
Horizon/likelihood
Short
Term
Med
Term
Long
Term Implications for resilience
L
L
M As part of the Group’s business
continuity planning review, the offices
identified as at risk have plans in place
to ensure operations can continue if
they are impacted by a weather event
which could render the ability to work
from an office and/or work from home
for a period of time. The Covid-19
pandemic and the need to implement
remote working at pace tested the
effectiveness of our business continuity
planning. Where gaps in the plans
have been identified these are being
proactively addressed. Each country
has incident management teams to
manage any severe weather events
ensuring disruption is minimised while
colleague safety is paramount.
Our office footprint is in mature
markets where planning and building
controls are robust which supports
the mitigation of this risk. In addition,
our office selection criteria consider
physical climate risk such as grid
stability and flood risk. This will impact
our long-term decision making on
future new markets and business
growth opportunities.
Climate change-related risks
Type
Potential risk
l
a
c
i
s
y
h
P
Impact of extreme weather on
operational performance
Extreme weather events occasionally
impact the markets in which SThree
operates and can, at times, have
an impact on access to offices and
technology as well as access to
sites for our contractors. The risk is
that this could lead to a reduction in
productivity due to lack of access to
offices or colleagues’ inability to work
due to power outages. In addition, our
contractors may have reduced access
to sites to deliver their contracted hours.
Both of these scenarios could impact
our net fees and operating profit.
The current risk is relatively small, and
we had only one severe weather event in
24 months which had an impact on the
Group performance. This event was the
ice storm in Texas in February 2021 which
caused power outages for extended
periods of time. This resulted in a £97,000
loss of net fees. Across our 46 locations
only seven locations have been identified
as at risk (Scotland and North England
due to ice and snow, Houston and Austin
due to the ice storm risk, Dusseldorf
and New York due to previous flooding
and Dubai due to extensive heat impact
on productivity). Global warming could
cause significantly more extreme weather
events in the longer term, increasing the
number of business locations affected
(Fossil-fuelled future scenario).
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Climate change-related risks
Climate change-related opportunities
Type
Potential risk
Key risk indicator
Horizon/likelihood
Short
Term
Med
Term
Long
Term Implications for resilience
Type
Potential opportunities
Performance
indicator
Short
Term
Med
Term
Long
Term Implications for resilience
Horizon/likelihood
M
M
M We have a structured strategic review
process which is overseen by our ExCo.
This process ensures we are regularly
reviewing markets and changing
demands to ensure we are responding
and investing in the right way.
Over the past 30+ years we have
shown our ability to respond and
pivot our consultants to respond and
maximise to changing market demands.
Most recently, we demonstrated this
through the changing market needs
during Covid-19.
Continuous market reviews ensure
we understand large tenders
coming to market, and can map out
recruitment requirements at each
stage, enabling us to build relationships
with appropriate clients throughout
the value chain. Our global clean
energy network shares best practise
approaches to project mapping and
planning which helps our teams to
maximise opportunities.
Responding to the changing demands
of the market
We are dynamic and flexible in our
approach and can adapt to new market
requirements with agility and pace.
Double the size
of our clean
energy business
by 2024
M
H
M
Double the size
of our clean
energy business
by 2024
t
e
k
r
a
M
Our flexible approach alongside
offering full staffing compliance
expertise and at times additional
‘value-add’ offerings such as trucks,
IT equipment and adjacencies for
wind projects. Our expertise and
proven track record in delivering
compliant staffing solutions provides
competitive advantage.
Growth of clean energy generation
and associated technologies
Materially increased net fees from
large infrastructure projects (e.g.
offshore wind) and local changing
energy generation mix, will lead to
investment into technologies and
available government grants for
clients, which will be invested into
talent requirements to deliver projects.
Additionally, the growth of green
innovation will create new STEM job
opportunities. Reports from IRENA,
estimate that employment in energy
efficiency globally could expand
from under 10 million to 29 million
by 2030, while upgrade of grids and
energy system flexibility would likely
see an employment increase over
the same period from 7.4 million to
12 million employees.
SThree is well positioned to meet the
growing demand for STEM talent.
Increased carbon emissions
As global temperatures rise our reliance
on cooling will increase. It is predicted
that cooling requirements could triple
by 2050 (Fossil fuelled future scenario).
The risks to SThree are:
1. The increased operating costs to
cool office spaces.
2. Access to renewable energy as
demand increases across all markets.
3. The increased offsetting costs to
purchase carbon credits to offset
the increase in carbon emissions.
4. The reputational damage of
increasing our carbon footprint
rather than limiting emissions/
achieving carbon reduction targets.
We have also seen an increase in client
requests for contractor equipment
including vehicles, IT and PPE which
contributes to SThree’s scope 3 carbon
emissions. A growth in this requirement
will see growth in our carbon emissions.
l
a
c
i
s
y
h
P
% reduction in
carbon emissions
L
M
% energy
procured from
clean energy
sources carbon
emissions
M In 2022, we committed to targets within
our net zero transition plan to move
our property portfolio to 100% clean
energy by 2030 which will reduce the
environmental impact of increased
cooling. However, we remain focused
on reducing consumption. Cooling
requirements and sustainability metrics
are embedded into our property strategy
and selection criteria to minimise the
impact of increased cooling.
We continue to invest in carbon offsetting,
however our priority is carbon reduction
and transitioning to a net zero business.
We will continue to work with our partner
Earthly who provides verified offsetting
solutions. We currently offset scope
1, 2 and limited scope 3 emissions (as
disclosed in our SECR report) to ensure
we support innovative offsetting solutions
whilst we transition to net zero. The cost of
offsetting was £28,786 in 2022.
We continue to monitor client requests
and we are building modelling to
predicted potential growth in our
emissions from client requests for
equipment. This will inform how we
work with and influence clients, ensuring
we move to more sustainable options
aligned to our net zero roadmap.
Climate change-related risks
Horizon/likelihood
Type
Potential risk
Key risk indicator
(KRI)
Short
Term
Med
Term
Long
Term Implications for resilience
l
a
g
e
l
d
n
a
y
c
i
l
o
P
Exposure to changing
government policy
Some large energy and infrastructure
projects are influenced by government.
To respond successfully to these
tenders and win contracts, SThree
requires investment in consultants, and
sometimes additional certifications.
The risk, which is outside of SThree’s
control, is that the level of preparation
work for large renewables projects is an
investment we must make as a potential
vendor, however tender outcomes
may change. Often the timeline and
budgets for these projects are delayed
and reduced. These changes are often
in response to changing government
policies and priorities. This could result
in SThree having areas of operational
costs which face delayed or reduced
revenue opportunities.
M
L
L
% net fees
generated from
clean energy
sector
Large infrastructure projects which
are subject to regional and national
government approval, have very long
timeframes, from initial investment
through to final installation and
ongoing operation.
There are opportunities for SThree
throughout this timeframe, which often
last for upwards of five years. SThree
can evaluate over this time the internal
resources required to assist clients,
without committing to long-term costs
which have a larger payback period.
By understanding the timeline for
these projects, utilising external
project data tools and mapping clients’
requirements at each stage throughout
the timeline, we ensure we resource
correctly at each stage of the project.
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Climate change-related opportunities
Horizon/likelihood
Type
Potential opportunities
Performance
indicator
Short
Term
Med
Term
Long
Term Implications for resilience
M
M
Maintain our
CDP Score
SBTi validated
net zero targets
and roadmap
M We continue to be market leaders in
our environmental action with clear
targets and metrics alongside reporting
on our net zero transition plans. In 2022
we have worked to strengthen this
through SBTi net zero validation as well
as continuing to submit via CDP.
Doubling the share of our clean energy
business by 2024, and intentionally
growing our green business highlights
our alignment to a low-carbon future
whilst reducing the reputational risks
of working with clients who have the
largest impact on the environment.
We continue to build our position as a
thought leader in regard to the green
skills gaps which is demonstrated
through us co-hosting programmes
with clients, women in renewable
industries and sustainable energy as
well as other key partners.
Through a strategic, embedded
approach to our role in climate action
we are not only positioning ourselves,
but we are driving outcomes aligned to
sustainable development.
M
H
M
Maintain CDP
Score
SBTi validated
net zero targets
and roadmap
Alignment to low-carbon clients
As the market moves towards a
low-carbon future, companies are
reviewing their own transition plans.
Increasingly they are questioning the
environmental impact and transition
plans of all suppliers. SThree has
been working on carbon footprint
management and carbon offsetting
for over a decade. Our long-term
environmental strategy, targets
and transparent reporting provides
competitive advantage.
We experience an increased demand
to clearly evidence our climate
ambition and carbon reduction plans
as a supply partner which we
can deliver.
n
o
i
t
a
t
u
p
e
R
Given minimal differential economic
incentives, candidates often choose
to work for a more socially conscious
company - this could extend to
SThree itself as a recruiter who aligns
themselves to a low-carbon solution.
Emergence of the ‘green recruiter’
Increasingly, clients are asking for
SThree’s ESG targets and strategy, as
such there is an opportunity to stand
out from our rivals by highlighting
SThree’s green credentials and
commitment to delivering both
environmental and social impact.
In European markets there is an
emergence of small, start-up
sustainable recruitment consultants
who solely work with low-carbon
clients. SThree has the potential to
also compete in this niche market
and obtain competitive advantage
given the climate leadership position,
experience and compliance benefits
already in place.
Climate-related scenario analysis
Describe the potential impact of different scenarios, including a 2°C scenario, on the organisation’s
businesses, strategy and financial planning.
The TCFD recommendations require companies to include a scenario where the world is able to limit global temperature
increases to 2°C above pre-industrial levels, or lower.
Our scenarios, and the underlying data used in modelling, are based on the NGFS climate scenario framework
which are categorised as follows:
1. Renewable-led growth (orderly, 1.5°C)
2. Disruptive change (disruptive 2°C)
3. Fossil-fuelled future (hot house 3°C+)
2021 – 2040 scenarios
s
k
s
i
r
n
o
i
t
i
s
n
a
r
T
2
Disruptive
change
1
Renewable
led growth
3
Fossil fuelled
future
Physical risks
Through climate-related scenario analysis we have assessed both transition and physical impacts of climate change
on our business. Each risk and opportunity, including climate-related macroeconomic drivers, are analysed based
on an estimated impact on net fees, and wider business performance. Using net fees as a measure of impact
enables us a consistent comparison of risks and opportunities and their impact across different scenarios. We have
a five-step approach to our analysis.
Identify regional
material markets
Apply climate
change impact
Assess risks and
opportunities
Identify mitigants
and realisation
strategies
Validate findings
Ensuring alignment with strategic planning and governance
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The identification of climate-related risks and
opportunities influence our strategic planning and
support management decision making. It was also
considered when preparing the Consolidated Financial
Statements, in particular as part of assessment of the
Group’s long-term viability and its flexibility to adapt
operations to climate-related risks and opportunities.
For further details see note 1 to the financial statements.
Our management team has used the opportunities
identified to inform growth targets in the clean energy
sector which will continue to be a key priority up to
and beyond 2024. In addition to informing targets
and growth opportunities, the scenario analysis is
informing wider business strategy, e.g. how we grow
our value proposition as a green recruitment partner
to mitigate reputational risk and realise opportunities
with both clients and candidates as outlined above.
In addition, our management team is actively
monitoring high-emitting sectors and the role we play
as a recruitment partner. During 2022 management
identified the need for more accurate data on the role
we play in high-emitting sectors, e.g. the roles we
place in net zero transition projects within
those sectors.
The management team is integrating the need for this
improved data into our technology transformation
project to ensure we can better monitor the
reputational risks identified whilst maximising
opportunities to place net zero transition roles.
The management team has identified the need to
expand our climate-related scenario analysis to
include transitional risks related to the technology
sector. Clean tech is a potential growth area for
SThree, and technology is currently the biggest sector
for net fee generation. As a result, climate-related
scenario analysis will be expanded in 2023 to support
our strategic and financial planning within the sector.
In addition, the management team has also conducted
a review of our carbon data and agreed plans to
improve our carbon data accuracy. The review was
an action agreed after understanding the reputational
risks we may face, and the implementation of
improvements is a key priority for 2023 which will be
monitored by the ESG Committee.
Responsible business continued
Impacts have been categorised as follows:
Impact on net fees
Very high risk
High risk
Low/medium risk
Normal business
Low/medium
opportunity
High opportunity
Very high opportunity
-£20m to -£10m -£10m to -£5m
-£5m to £0m
–
+£5m
+£10m
+£20m
Impact on net fees
Renewable-led growth
Disruptive change
Fossil-fuelled future
2025
2030
2035
2040
2025
2030
2035
2040
2025
2030
2035
2040
Impact on net fees
Renewable-led growth
Disruptive change
Fossil-fuelled future
2025
2030
2035
2040
2025
2030
2035
2040
2025
2030
2035
2040
Climate
change-related
opportunity
More detail
Geographic
region
Wind
investment
USA
Market
Growth of
clean energy
generation
and
associated
technologies
Japan
UK
Germany
Netherlands
Storage
technology
USA
Europe
Resilient grid
technology
USA
Hydrogen
investment
Europe
Europe
Japan
Climate change-
related risk
More detail
Geographic
region
Physical*
Policy and
legal**
Speed of
decline in
fossil fuel
investment
Europe
*
Impact of extreme weather on operational performance.
** Exposure to changing government policy.
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Risks
Risk management framework
Describe how processes for identifying,
assessing, and managing climate-related risks
are integrated into the organisation’s overall
risk management.
The Group Risk Committee is a recently formed sub-
committee of the ExCo. Its purpose is to support the
development and maintenance of an effective risk
culture within the organisation, in line with the SThree
strategic objectives and risk appetite through the
maintenance of the Group Risk Framework. The Group
Risk Committee is responsible for:
• Evaluating, monitoring and reviewing principal and
emerging risks including climate related risks.
• Ensuring climate risk is integrated into the Group
Risk Framework.
• Maintaining oversight of climate risks where they
occur or impact Group principal risks.
• Reviewing and assessing the strength of controls
in place for climate risk as part of the oversight of
principal risks and overall review of emerging risks
for the Group. This assessment is reported to the
Board on a bi-annual basis.
On a six-monthly basis the Board receives an update
from the Group Risk Committee which includes
climate-related risks. In addition, any material changes
relating to ESG matters, climate risk, and targets are
included within the CFO report (executive sponsor of
climate risk) which is delivered at each Board meeting.
In addition, climate change-related risks, and the
related mitigating actions, are presented to the Audit
& Risk Committee along with Group principal risks.
Read about the Group’s risk management framework
on pages 106 to 107.
Identifying climate-related risks
Describe the organisation’s processes for
identifying and assessing climate-related risks.
Our existing Group risk framework is designed to
identify, assess, score and monitor all risks. In addition,
risk mitigation plans and timelines are determined by
the appetite and tolerance for risks as set by the Board
and directed by ExCo.
Our approach to identifying climate-related risks
includes utilising market research data, external
partner insights and internal business reviews.
Our strategic review process asks senior leaders
from across the business to identify any current or
emerging risks within their markets, with key questions
around climate-related market changes, policy and
thought leadership. These are then discussed at local
management meetings and escalated to the ESG
Committee, who in turn, ensures the right mitigation
and controls are put in place.
In addition, throughout 2022, we continued to utilise
climate-related scenarios, first introduced in 2021, to
identify and assess the climate risks and opportunities
to SThree, with these forming a regular agenda point
within our ESG Committee. Climate-related scenario
analysis has demonstrated that there are no immediate
risks that would impact strategy, performance
and liquidity of SThree. Therefore, climate change
continues to be an emerging risk to the business.
However, in 2022 we reviewed and assessed the role
climate change may play in relation to the Group
principal risks. As a result, in agreement with the Chief
Financial Officer who acts as senior sponsor, we have
integrated relevant emerging climate-related issues
within our principal risks. See further details below.
Managing climate risks
Describe the organisation’s processes for
managing climate-related risks.
To better understand our climate resilience, we assess
the potential magnitude and likelihood of specific risks
and opportunities under the varied parameters and
assumptions of each scenario, quantifying the financial
impact on net fees – the same financial metric used
across SThree’s risk management framework.
Once assessed, climate-related risks are assigned
a risk owner who is responsible for building and
implementing the mitigation controls related to
that risk. Each risk and control are then monitored,
using key risk indicators (KRI) with metrics being
reported on a quarterly basis, with any changes being
escalated, to the ESG Committee.
In 2022, we identified that some of the Group principal
risks are, to an extent, impacted by climate change
and as such we have reviewed each with a climate
risk lens. As a result, where there is an impact or a
link to climate change the principal risk now reflects
elements of the climate-related risks identified through
scenario analysis. These risks are regularly reviewed
by the Group Risk Committee and twice a year by the
Board. Further details of these risks can be found in
our Risks section on pages 108 to 113 and more details
around risk management governance can be found on
pages 106 to 107.
Metrics and Targets – taking action
to limit climate impact
Metrics
Disclose the metrics used by the
organisation to assess climate-related risks
and opportunities in line with its strategy
and risk management process.
Being an environmental conscious business is part
of our culture. For over a decade at SThree, we have
monitored our scope 1 and 2 carbon emissions and
expanded scope 3 reporting aligned to best practice.
We have been actively implementing measures to
reduce and avoid carbon emissions since then.
Throughout 2021 and 2022, we spent time
understanding net zero best practice in order to
set ambitious yet achievable net zero targets that
are informed by climate science and align to the
requirements of the Paris Agreement.
In addition, through climate-related scenario analysis
we have identified both climate risks and opportunities
and metrics to monitor KRI. The KRI used as metrics
to monitor our climate risks and opportunities are
detailed within the risk descriptions outlined in our
TCFD Strategy section on page 63 to 73. The KRI are
reviewed quarterly by the ESG Committee with any
material changes escalated to ExCo for review and
further escalation to the Board if required.
Carbon reduction
In 2021, we conducted a carbon emission materiality
assessment utilising the GHG Protocol. As a result, we
have expanded scope 3 emissions reporting to include
all 15 categories. We will be reporting against these
factors annually to demonstrate progress towards our
net zero targets.
Disclose Scope 1, Scope 2, and, if appropriate,
Scope 3 greenhouse gas (GHG) emissions, and
the related risks.
Streamline Energy and Carbon
Reporting (SECR) 2022
This year we have calculated our environmental
impact across scope 1, 2 and 3 (selected categories)
for our global emissions sources. Our emissions are
presented on both a location and market basis. On
a market basis our emissions are 2,620 tCO2e, an
average impact of 0.83 tCO2e per FTE. This represents
a 73% increase in the intensity of our market-based
emissions since 2021, driven primarily by increases
in business travel. Our location-based emissions are
2,705 tCO2e, an increase of 94% from 2021.
As restrictions on Covid-19 have lifted, business travel
has increased across the business. This is reflected
in a 477% increase in business travel emissions since
2021, driven primarily by an increase in air travel. Due
to the transition to a new travel system, business travel
data continues to develop and we expect accuracy to
continue to improve in future years.
The cumulative impact of reduced Company vehicle
usage, reductions in the use of natural gas and no
refrigerant top-ups being recorded in 2022, has
resulted in scope 1 emissions decreasing by 35%.
Energy efficiency initiatives
In the period covered by the report SThree plc has
undertaken the following emissions and energy
reduction initiatives:
• We have continued to transition our fleet away
from petrol and diesel vehicles to hybrid and
electric. Although this programme began in 2021,
the impact of this change is now being seen in
our scope 1 emissions as Covid-19 restrictions
are lifted.
• Efforts have been made to reduce natural gas
usage in our UK sites. This has led to a 42%
decrease in emissions from natural gas in our
scope 1 footprint.
• We continue to transition our business to
renewable energy and saw renewable energy use
grow to 39% (+1%).
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Responsible business continued
GHG emissions (tCO2e) and associated energy consumption (kWh) for 2022
Targets
Emissions Source (tCO2e)1
Natural gas
Scope 1
Leased transport
Scope 2
Refrigerant
Purchased electricity
(market/location based)
Other fuels
(heat and steam)
Water
Business travel
Scope 3
Paper
Waste
T&D and WTT
Total tonnes of CO2e (market based)
Total tonnes of CO2e (location based)2
Number of employees
Tonnes of CO2e per employee
Total energy consumption used to calculate
emissions (kWh)3
2021
2022
UK and
offshore
Global (excluding
UK and offshore)
UK and
offshore
Global (excluding
UK and offshore)
% change in
total emissions
(vs previous year)
26
13
26
–
335
–
15
11
–
–
235
–
-42%
-29%
-100%
46/74
269/312
38/64
276/335
+3%
–
1
29
1
3
36
182
209
692
0.26
22
5
286
2
18
204
1,142
1,185
2,043
0.56
–
2
1,198
2
2
28
1,296
1,322
756
1.71
15
1
621
1
4
171
1,324
1,383
2,364
0.56
-32%
-50%
+477%
0%
-71%
-17%
+98%
+94%
–
+74%
1,189,920
570,627
531,177
2,707,760
+84%
1 Based on IEA data from the IEA (2021) Emissions factors, www.iea.org/statistics. All rights reserved; as modified by SThree plc.
2 Totals may not match exactly the sum of the figures shown in the table, due to rounding across all emission categories.
3 Total energy consumption includes energy consumed for heating (natural gas, district heating), power (electricity) and transport (company leased vehicles,
expensed mileage claims).
Table 1 - Energy and carbon disclosures for reporting year 1 December 2021–30 November 2022
Methodology
The methodology used to calculate the GHG emissions is in accordance with the requirements of the following
standards:
• World Resources Institute (WRI) Greenhouse Gas (GHG) Protocol (revised version).
• Defra’s Environmental Reporting Guidelines: Including Streamlined Energy and Carbon Reporting requirements
(March 2019).
• Office emissions have been calculated using the IEA 2022, DEFRA 2022 issue of the conversion factor repository.
Following an operational control approach to defining our organisational boundary, our calculated GHG emissions
from business activities fall within the reporting period of December 2021 to November 2022 and using reporting
period of December 2020 to November 2021 for comparison.
Describe the targets used by the organisation to manage climate-related risks and opportunities
and performance against targets.
We have had carbon reduction targets since 2018 and
have seen a 44% reduction in our carbon footprint
since then. This has been a key priority of the Group
to ensure we minimise the risk of changing client and
candidate preferences and maximise the opportunity
of being a ‘green’ recruiter.
In 2022, we established net zero working groups
for each of our high emission sources with the sole
objective of developing carbon reduction plans and
ensuring these are embedded within our operating
plans. These groups include subject matter experts
alongside business leaders who will shape and drive
sustainable transformation across the global business.
As a result of this work, we have been participating
in the SBTi net zero validation process and will be in
a position to announce near-term and long-term net
zero targets alongside our transition plan in 2023.
We do however understand that climate change will
not wait and we must take action now. This was a key
message at COP27 in Egypt this year. As a result, we
have set a carbon reduction target and made steady
progress in 2022, as per the below summary.
Target
Progress
2022 actions
To reduce our scope 1, 2 and limited scope 3 emissions by 25% by 2024 (baseline year 2019).
44% reduction in emissions across scope 1, 2 and 3 since 2019.
In 2022, we did see our carbon emissions increase by 94% YoY which was a direct result of Covid-19
restrictions being lifted. As we saw offices reopen, business meetings and business travel resume, we
have recorded an increase in emissions YoY. However, the reductions we saw in 2021 were not reflective
of business as usual. We remained focused in 2022 on delivering the following operational changes to
transition to net zero:
• Increased the amount of clean energy procured to 39% (2021: 38%).
• We reduced the use of natural gas across our offices by 42%.
• Reduced the emissions of our car fleet by 78%.
• Continued to improve our office selection criteria to prioritise green properties.
• Delivered 14 environmental awareness events to colleagues alongside weekly sustainability
conversations in some locations, to promote sustainable behaviours.
• Facilitated over 1,382 hours of volunteering at environmental projects to raise awareness and educate
our colleagues.
• Completed a single use plastic audit in the USA and began to implement plans to remove single use
plastic from the business.
Through climate-related scenario analysis, we identified more opportunities than risks, in particular the
opportunities that arise from the role STEM skills will play in decarbonisation. Our scenario analysis highlighted
a particular opportunity in the clean energy sector which has resulted in SThree setting a target and strategy to
maximise this opportunity.
Target
Progress
To double the size of our clean energy business by 2024 (baseline year 2019).
88% growth in net fees since 2019.
2022 actions
In 2022, our clean energy business grew by 29% YoY. To support the realisation of our clean energy target we:
• Delivered green careers upskilling events to 86 STEM professionals.
• Collaborated with a client to deliver green skills awareness events to 240 high school students.
• Partnered with Women of Renewable Industries and Sustainable Energy (WRISE) on partnered events.
Our climate targets have been established to mitigate climate risk and maximise climate opportunities. KRI are in
place as measures to monitor climate risks, these KRI are metrics which contribute to our overarching targets. As
an example our KRI to reduce the carbon emissions of car fleet is a sub-target and metric within our overarching
carbon reduction target.
Furthermore, our focus on ESG matters is reflected through our remuneration policy with the weighting of
performance measures adjusted to accommodate related targets. The resultant breakdown includes a 10%
weighting for ESG targets, including climate targets, as outlined in the KPI section of our Annual Report.
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Furthermore, our focus on ESG matters is reflected through our remuneration policy with the weighting of
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Responsible business continued
Governance
targets
Building on our business ethics
Providing ethical, compliant,
staffing solutions is an essential
part of our business.
We develop and implement policies
and business practices that are
underpinned by our operating
principles and Code of Conduct. Our
operating principles represent the
values and behaviours demonstrated
throughout our business practices:
Build trust.
Care then act.
Be clear, then aim high.
Our Code of Conduct sets out clear
expectations of how to conduct
business in an ethical and transparent
way, without compromising integrity
and professionalism. These promote:
• Ethical handling of actual or
apparent conflicts of interest.
• Compliance with applicable
governmental laws, rules and
regulations.
• Complete, accurate, fair and
balanced disclosure in reporting.
• Prompt internal reporting
of violations.
Ethical business practices are
embedded into every aspect of our
operations and are demonstrated
through respectful relationships
with clients, candidates, suppliers,
governments, communities and
our people. Ensuring candidates
are placed within fair and decent
work is a fundamental pillar in the
recruitment process.
We place candidates with clients
that share our commitment to a
work environment free from bribery,
corruption, exploitation, forced labour
or modern slavery.
Our own Global DE&I policy ensures
a working environment in which our
employees are treated with dignity
and respect, free from discrimination
or harassment, and in which all
decisions are based on merit, whilst
our sustainability statement strives
to reduce our negative impact on
the environment. Our commitment
to comply with all applicable laws
includes the transposition into local
laws of the UN universal declaration
of human rights.
Training is an integral part to create
awareness and expected behaviour
amongst our people. Our vendor
management and procurement
process ensures that our vendors
are committed to our supplier
code of conduct encompassing
the same ethos as we as a business
are committed to. We retain the
right to audit our vendors to ensure
compliance with the supplier code
of conduct.
Although not fully inclusive of
everything we do in this area, please
refer to the Summary of notices and
policies available on our corporate
website. You will find there key themes
that demonstrate the policies we
currently implement and monitor.
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Key performance indicators
SThree’s Board and Executive Committee review the
Group performance across a wide range of measures and
indicators that are consistent with our strategic priorities
and investor proposition.
Our key performance indicators (KPIs) provide a
balanced set of metrics that give emphasis to both
financial and non-financial measures, in line with
interests of various groups of our stakeholders.
Changes to KPIs since 2021
In H1 2022, our new management team evaluated the
Group’s business priorities and clarified the metrics on
which SThree’s success should be judged.
Our KPIs now reflect a number of updated medium-
term ambitions, which evolved over the past few
years, including to be an employer of choice via eNPS
benchmarking, to reduce scope 1, 2 and 3 carbon
emissions by 25% compared to 2019 (base year), to
deliver an operating profit conversion ratio of 21% or
more, and to grow our net fees faster than our peer
group across the aggregate of our top five markets
compared to 2019.
As a result of this exercise, we added three new
KPIs: number of lives positively impacted during the
year; reduction in carbon emissions; and growth in
renewable business manifested in the growth of Group
net fees attributable to placements in the renewable
energy sector.
We also moved to report our market share against the
selected peer group on a net fee basis, and therefore
we retired our previous revenue KPI. Our existing net
fees KPI will now also include details of our relative
net fee performance against the selected peer group.
Finally, we removed year-end sales headcount/
turnover and we retired free cash conversion
(previously reported as a key ambition) as it no
longer reflects our current business model. As an
ambitious company planning to grow quickly –
particularly when much of that growth is likely to
come from our Contract business which is working
capital consumptive – we believe this measure is
not appropriate.
Remuneration
To help our Board and Executive Committee align their
focus with the interests of our stakeholders, some of
the KPIs are used for the executive remuneration, as
per the policy approved by shareholders at the 2022
Annual General Meeting.
Our Places
To be a leader in markets we choose to serve
Net fees
This KPI is calculated as
revenue less cost of sales.
It is one of our fundamental
financial measures as it
indicates how our business
is performing over time. Our
medium-term target for 2024
is to grow our net fees faster
than our peer group across
the aggregate of our top five
markets compared to 2019.
Net fees through
renewable business
Basic earnings per share
(EPS)
Total shareholder return
(TSR)
Growth in the Group’s net fees
generated from placements of
candidates in the renewable
energy sector, versus the
base year 2019. A transition
to a low-carbon future will
drive increase in STEM job
opportunities. Our medium-
term target is to double the
size of our global renewable
energy business by 2024
versus the base year 2019.
EPS helps to assess the
Group’s profitability versus
share price. Internally, it is
also used for the vesting
assessment of the Group
Long-Term Incentive Plans.
Our ongoing target is to
achieve earnings growth for
shareholders while balancing
reinvestment to secure future
growth opportunities.
The growth in value of a
shareholding over a three-
year period, assuming that
dividends are reinvested
at the closing price on the
ex-dividend date. This KPI
helps to assess the Group’s
performance in the delivery
and maximisation of long-
term value for shareholders.
Our ongoing target is to
generate good returns on the
investments we make and
create long-term value for
shareholders.
£431m
+19% on 2021
88%
growth on 2019
41.0p
+29% on 2021
35.4%
-50.2% on 2021
2022
2021
£431m
2022
88%
2022
41.0p
2022
35.4%
£356m
2021
46%
2021
31.8p*
2021
85.6%
2020
£309m
2020
20%
2020
13.9p*
2020
-15.8%
2019
£338m
2019 Base year
Result (% growth on base year)
2019
33.2p*
2019
33.2%
* Adjusted
SThree’s renewable business
is up by 29%* versus 2021,
and up 88%* on 2019. It
demonstrates a strong
momentum in demand for
skills that help mitigate climate
change, and the benefits of
our global renewable energy
network to drive renewable
business development on a
global scale.
Basic EPS increased
significantly over the prior year,
driven by record-breaking
profits and a small decrease
in effective tax rate. It is now
above the pre-pandemic level
of 33.2 pence in 2019, thanks
to significant improvement in
trading performance over the
past two years.
During the assessed three-
year period (2019 to 2022),
SThree plc’s share price was
subject to high market volatility
driven mainly by uncertainty
due to the severe pandemic
and wider macro-economic
challenges. The Group’s
business model, its resilience
and focus on favourable
labour market megatrends,
accompanied by the excellent
trading performance, resulted
in share price appreciation
outperforming a majority of
the basket of comparator
companies.
2022 performance
Net fees grew by 19%* YoY
driven by our strategic focus
on STEM and flexible talent.
We had a record number of
contractors, both independent
and employed, placed across
all regions in the year. Our
Permanent business also
made a good progress in the
execution of our wider strategy;
it was up by 6%* YoY with the
USA and the Netherlands as
main contributors. Based on
the market data available at
the end of Q3 2022, we have
outperformed our peer group
(on a net fee basis versus
2019) in four out of our five
markets (the USA, Germany, the
Netherlands and the UK).
* In constant currency.
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Key performance indicators continued
Our Platform
Create a world-class operational platform through data,
technology and infrastructure
Operating profit
conversion ratio
This measure represents
operating profit before
adjusting items stated as
a percentage of net fees.
It measures the Group’s
effectiveness in controlling
costs and managing its
investments for future growth.
Our aim is to operate our
business efficiently and cost
effectively with stable margins
and to deliver an operating
profit conversion ratio in
excess of 21% each year.
Profit before tax (PBT)
Carbon reduction
The KPI represents net fees
less administrative expenses,
less interest before adjusting
items. It is a measure of our
underlying profitability, our
efficiency and how we manage
our cost base. Delivering
a healthy and consistently
profitable growth is essential
as we aim to create value for
all our stakeholders over the
long term.
In 2022 we underwent the
Science Based Target initiative
net zero validation process
and will be announcing
net zero targets in 2023.
However, we have understood
the importance of carbon
reduction for over five years
and continue to set ambitious
targets led by climate science,
whilst we built our net zero
target and transition plan. Our
medium-term ambition is to
reduce our absolute carbon
emissions by 25% between
2019 and 2024. Since 2022,
progress against carbon
reduction is used as a factor in
determining vesting of Long-
Term Incentive Plans granted
to executives.
s
Our Position
Leveraging our position at
the centre of STEM to deliver
sustainable value to our
candidates and clients
Customer net promoter
score (NPS)
Number of lives
positively impacted
NPS is a metric that measures
the candidate's and client's
(customer's) experience when
working with SThree and is the
key indicator of customer loyalty
to the Group. The score is the
percentage of promoters minus
the percentage of detractors.
NPS helps us measure
and improve the customer
experience and draw
meaningful insights into how
our candidates and clients
view their relationships and
engagement with our business.
The metric represents the
number of people whose
lives since 2019 have been
positively impacted through
inclusive recruitment solutions
and community programmes
that SThree delivers. We use
our skills and unique position
to help communities find
decent, sustainable work that
can deliver real social change.
Our medium-term target is to
positively impact 150,000 lives
between 2019 and 2024.
Our People
Find, develop and retain great
people
Employee net promoter
score (eNPS)
The score is the result of the
annual employee survey that
captures regular feedback
from our people about their
experience of working at
SThree. Our success is reliant
on having a motivated and
engaged workforce so our aim
is to never stop listening to,
and acting upon, our people’s
feedback. eNPS helps us
identify areas for ongoing
improvement so that we can
ensure SThree is a great place
to work and we attract and
retain the best people.
Representation of
women in leadership
roles
To ensure consistency
throughout this annual report,
in 2022, the number of women
in leadership positions is
calculated via our newly
implemented global grading
framework. This has enabled
us to define our leadership
cohort more clearly as roles
at global grade 15 and above.
For context, the Executive
Leadership Team roles are
global grade 18 to 21. The
comparators have not been
restated due to lack of data.
This KPI is a measure of gender
balance within the Group. We
have an aspiration to increase
the representation of women
at leadership levels to 50/50
and continue to monitor our
progress towards this.
s
18%
+1% pts on 2021
£77m
+24% on 2021
44%
reduction from base year
32%
(of global grade 15+)
51pts
+8 pts on 2021
52pts
+2 pts on 2021
89k lives
+59% on 2021
18%
2022
£77m
2022
-44%
2022
32%*
2022
51 pts
2022
52 pts
2022
88,741*
17%*
2021
£60m*
2021
-71%
2021
L3: 34%
L4: 14%
2021
43 pt
s
2020
10%*
2020
£30m*
2020
-56%
2020
L3: 34%
L4: 14%
2020
5 pts
18%*
*
2019
£59m*
2019
Base year
2019
L3: 31%
L4: 11%
2019
38 pt
s
2021
2020
2019
50 pts
2021
55,771*
52 pts
2020
15,764*
44 pts
2019
Base year
* Lives
* Adjusted
PBT increased by 24%* as
compared to 2021, mainly
driven by favourable trading
conditions and stable
productivity per head.
This reflects the Group’s
effectiveness at controlling
costs in the business, together
with the degree of investment
being made for future growth.
In 2022 we continued to make
improvements to the energy
efficiency of our business,
increasing our clean energy to
39% (2021: 38%). We also have
embedded energy efficiencies
into our technology
transformation project.
* Global Grade 15+
2022 performance
At the year end, there were
116 roles under the newly
defined leadership cohort, of
which 32% were represented
by women. In line with the
Group’s DE&I initiatives, we
will endeavour to improve
this result by developing our
employees who are women
and nurture an inclusive work
environment. Any comparison
to previous years is obscured;
under the previous KPI
definition women represented
39% and 21% of L3 and L4
sales cohorts respectively.
Our average global eNPS
reached an all-time high
of 51, supported by DE&I
networks and the Identify
leader programme. Key themes
that we need to develop and
invest in include pay and
reward schemes as well as
systems and technology to
reduce workload.
Our global NPS score
improved by two points versus
2021. This year’s score reflects
our continued customer focus,
supported by investment in the
right technology, improving our
processes and propositions,
to meet the evolving needs of
our customers.
Since December 2019 we
have positively impacted
88,741 lives. This year, we
continued to develop local
career support and STEM
equity programmes as well as
volunteering over 2,000 hours
to strengthen communities
in our key markets. Through
our placements in 2022 alone,
we helped nearly 20,074
candidates access decent work
in STEM-related industries.
2022
2021
2019
* Adjusted
2022 performance
The ratio has increased to
18.0% as compared to 17.1%
in the prior year which reflects
the positive momentum
in net fee growth and
operational leverage.
* In constant currency.
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Chief Financial Officer’s statement
The Group delivered
a record performance
in 2022
In line with the Board’s expectations, strong
momentum of 2021 continued into 2022, with
all our core markets and sectors delivering
strong YoY growth in net fees.
Operating profit
£78m(2021: £61m)
Net fees
£431m
up 19% in constant currency
This year's performance demonstrates the strength of our
strategy, which was designed to focus on recruiting STEM
specialists in markets with high demand and limited supply,
and is underpinned with ongoing investments in our people,
talent acquisition and digital infrastructure.
2022 Group performance highlights:
Continuing operations
Revenue (£ million)
Net fees (£ million)
Operating profit (£ million)
Operating profit conversion ratio
Profit before tax (£ million)
Basic earnings per share (pence)
Proposed final dividend per share (pence)
Total dividend (interim and final) per share (pence)
Net cash (£ million)4
2022
2021
Variance
Reported
Adjusted1
Reported
Reported2
Like-for-like3
1,639.4
1,330.7
1,330.7
430.6
77.6
18.0%
77.0
41.0
11.0
16.0
65.4
355.7
60.8
17.1%
60.0
31.8
8.0
11.0
57.5
355.7
61.0
+23%
+21%
+28%
+22%
+19%
+23%
17.1%
+0.9% pts
+0.6% pts
60.2
31.9
8.0
11.0
57.5
+28%
+29%
+38%
+45%
+14%
+24%
+24%
+38%
+45%
+14%
1 Excludes the impact of £0.2 million in net exceptional income recognised in 2021.
2 Variance compares reported 2022 against adjusted 2021 to provide a like-for-like view. There were no adjusting items in 2022.
3 Variance compares reported 2022 against adjusted 2021 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.
4 Net cash represents cash and cash equivalents less bank borrowings and bank overdrafts and excluding leases.
Income statement
On a reported basis revenue for the year was up
23% to £1.6 billion (2021: £1.3 billion) while net fees
increased by 21% to £430.6 million (2021: £355.7
million). When presented on a constant currency basis,
the net fees increased by 19% YoY; the strengthening
of our two main trading currencies, the US Dollar and
the Euro, against Sterling during the year, increased
the total net fees by £8.1 million.
Net fee growth has been strong throughout the year,
driven by continued high demand from clients for
candidates with STEM skills. Our Contract business
experienced excellent momentum and activity levels
across all regions and all key sectors, with net fee
growth of 23%5.
This was led by EMEA excluding DACH which was
up 27%, DACH, up 22%, USA, up 19% and APAC,
up 27%. From a sector perspective, Technology and
Engineering were both up 27% YoY, with a more
modest growth in Life Sciences, up 13%, due to very
strong prior year comparatives. Our ECM proposition
also continued to deliver encouraging performance
and was up by 28%. Group Contract net fees as a
percentage of Contract revenue6 increased marginally
to 21.7% (2021: 21.5%), and at the end of the year
Contract represented 78% of the Group net fees in the
year (2021: 75%).
The contractor order book7 was up 19% YoY, reflecting
the strong demand for skilled contractors that we have
seen across our markets, and providing good visibility
into 2023.
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Chief Financial Officer’s statement continued
Permanent net fee income was up 6% which was
driven by DACH, our largest Permanent market
delivering net fee growth of 6%. EMEA excluding
DACH also reported growth of 6%, with USA down 8%
following our strategic focus on Contract and strong
prior year comparatives. APAC was up by 45%. This
was reflected in growth in Technology up 10% and
Engineering up 24%. Life Sciences was down 14%
YoY reflecting very strong prior year comparators.
Group Permanent net fees as a percentage of salary
increased marginally to 25.3% (2021: 25.0%).
Operating expenses increased by 20% YoY on a
reported basis, amounting to £353.1 million (2021:
£294.7 million), mainly attributable to higher personnel
costs due to investments in headcount across the
business, higher average salaries and bonuses and
increased share-based payment charges. Other
operating expenses included spend on technology
and improved systems, as well as a loss on disposal
of legacy development costs capitalised in previous
years. In addition, following the Board approval of
the plan to restructure two businesses in Ireland and
Singapore, and to close the Hong Kong business, due
to continued underperformance, the Group incurred
£2.4 million in personnel termination costs (see further
details in the Investment section below or note 7 to the
Consolidated Financial Statements).
The reported operating profit was £77.6 million (2021:
£61.0 million), up 23% YoY in constant currency, driven
by strong performance in Contract net fees. The
net currency movements versus Sterling provided
a moderate net tailwind to the operating profit,
providing a £2.8 million benefit.
The Group operating profit conversion ratio6 increased
to 18.0% (2021: 17.1%), which reflects the positive
momentum in net fee growth and operational leverage
partially offset by the impact of the technology and
people investments and costs associated with the
restructuring activities undertaken in Ireland and
APAC in the second half of the year.
Net finance costs
Net finance costs, which predominantly related to
lease interest, decreased to £0.5 million (2021: £0.8
million) in line with the reduction in lease liabilities.
Income tax
The total tax charge for the year on the Group’s profit
before tax was £22.8 million (2021: £17.9 million),
representing a full year effective tax rate (ETR) on
continuing operations of 29.6%, broadly in line with
the prior year reported ETR on continuing operations
of 29.8%.
The Group’s ETR varies depending on 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 £77.0
million, up 23% YoY in constant currency and up 28%
on a reported basis (2021: reported £60.2 million
and adjusted £60.0 million, both excluding the
discontinued operations).
The reported profit after tax was £54.2 million, up 24%
YoY in constant currency and up 28% on a reported
basis (2021: reported £42.3 million and adjusted £42.1
million, both excluding the discontinued operations).
Foreign exchange exposure
Fluctuations in foreign currency exchange rates
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 net fees by
£2.4 million and £1.1 million respectively per annum,
and operating profit by £0.8 million and £0.4 million
respectively per annum. Our foreign exchange risk
management strategy involves using certain derivative
financial instruments to minimise the transactional
exposure arising from currency fluctuations.
Earnings per share (EPS)
The reported and adjusted EPS was 41.0 pence (2021:
reported 31.9 pence and adjusted 31.8 pence). The
YoY growth reflects the exceptionally strong trading
performance, largely stable Group ETR, and the
weighted average number of shares reducing by 0.1
million YoY.
The reported diluted EPS was 39.9 pence (2021: 30.9
pence excluding discontinued operations). Share
dilution mainly results from various share options
in place and expected future settlement of certain
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,
taking into account 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
cover6 range of 2.5x to 3.0x through the cycle.
The Board has proposed to pay a final dividend at 11.0
pence (2021: 8.0 pence) per share. Taken together with
the interim dividend of 5.0 pence (2021: 3.0 pence)
per share, it gives the total dividend for the year of
16.0 pence (2021: 11.0 pence) per share.
The final dividend, which amounts to approximately
£14.8 million, will be subject to shareholder approval
at the 2023 Annual General Meeting. It will be paid on
9 June 2023 to shareholders on the register on
12 May 2023.
Balance sheet
Total Group net assets increased to £200.4 million
(2021: £158.2 million), driven by the excess of net profit
over the dividend payments, and favourable foreign
currency movements, partially offset by share buy-
backs. Net working capital, including contract assets,
increased by £45.1 million on the prior year, driven
mainly by the accelerated growth in revenue and a
strong contractor order book increasing our working
capital. Our days sales outstanding increased slightly
to 45 days (2021: 44 days) due to the challenging
economic environment experiences in various
countries we operate in.
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 March 2022, SThree's Board approved the Group-
wide infrastructure investment programme which
will help us achieve our 2024 ambitions and deliver
sustainable returns over the longer term. This business
transformation programme aims to modernise our
core systems within sales and supporting functions
delivering enhanced sales effectiveness as well as
scalable and automated end-to-end processes for the
flexible talent models we provide. The programme
started in June this year and will last until the end
of 2024. For the year ended 30 November 2022,
the Group spent £4.1 million primarily on the initial
research-related stages of the programme. These
costs did not meet the capitalisation criteria. The
entire amount was therefore immediately expensed in
the Group income statement.
Investments in subsidiaries
The subsidiary undertakings principally affecting
the profits and net assets of the Group are listed in
note 26 to the Consolidated Financial Statements.
During the year, the Group’s businesses delivered a
very strong financial performance, ahead of market
and management’s expectations. No significant
indicators of impairment were identified when
reviewing recoverable amounts of the Company’s
key trading subsidiaries.
However, the commencement of restructuring
activities undertaken in Ireland and Singapore in Q4
2022, and the Board decision to close the Hong Kong
business, acted as a trigger to the impairment charge
which was recognised in the Company’s separate
books (for the total amount of £0.9 million) in 2022.
All three businesses underperformed in the past few
years, with Hong Kong in particular remaining at
sub-optimal level. The Group’s presence in the APAC
region was already subject to the review in 2017, when
the Board significantly downsized operations in Hong
Kong, reducing it to a satellite office. Most recently, it
became clear that our continued trading in Hong Kong
was no longer a viable investment option.
This impairment charge did not impact the Group
consolidated results.
In the prior year, no impairment loss was recognised
by the Company.
Tracker shares
The Group settled certain vested and unvested tracker
shares during the year for a total consideration of £6.0
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; 623,219 new shares were issued
and 983,637 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.
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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.
We expect all future tracker share settlements to
be between £2.0 million to £10.0 million per annum.
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.8
Liquidity management
In 2022, cash generated from operations was £64.4
million (2021: £54.5 million). It represented the
improved EBITDA6 offset by the continued growth
of the contractor order book increasing our working
capital investment. Income tax paid increased to £18.9
million (2021: £16.7 million), reflecting the improved
underlying trading performance across our markets
and sectors.
Capital expenditure increased to £3.7 million (2021:
£2.6 million), the key drivers being the spend on
leasehold improvements and IT hardware costs
including our network infrastructure.
The Group paid £14.3 million in rent (principal and
interest portion) (2021: £13.1 million). Net interest cost
(excluding interest on lease payments) was £nil (2021:
£0.2 million) in the year. The Group spent £9.9 million
(2021: £5.2 million) for the purchase of its own
shares to satisfy employee share incentive schemes.
Cash inflows of £0.5 million (2021: £0.2 million)
were generated from the Save As You Earn
employee scheme.
Dividend payments were £14.7 million (2021: £6.6
million, being the final dividend paid in June 2021)
and there was a small cash outflow of £0.1 million
(2021: £0.1 million) representing distributions to
tracker shareholders.
SThree remains disciplined in its approach to
allocating capital, with the core objective at all times
being to maximise stakeholder value:
• Balance sheet – our intention is to maintain a
strong balance sheet at all times.
• Organic growth – our top priority is to invest in the
organic growth of the business. We will actively
invest in delivering scalable growth in net fees and
margins – focusing on our people, systems and
processes to improve operational efficiencies as
well as developing new business opportunities.
• Acquisitions – we may seek to accelerate our
growth by acquiring businesses that complement
our strategy as well as offer value-enhancing
financial profiles.
• Dividend – we aim to pay a dividend that is
sustainable through the cycle, and which will be
driven by long-term earnings growth.
• Surplus cash – whilst unlikely in the foreseeable
future, we will consider returning excess capital to
shareholders by way of special dividends and/or
share repurchases in the event of there not being
suitable organic or inorganic opportunities.
“ We’re shifting how we operate to achieve executional
excellence. The changes we’re making will make
us well positioned to capitalise on opportunities
generated by megatrends - and they’ll set us up to
be able to scale.”
Andrew Beach
CFO
Foreign exchange had a positive impact on
operating profit of £4.5 million (2021: negative
impact £2.6 million).
Overall, the underlying cash performance in 2022
was strong, reflecting excellent trading performance
across the Group offset by increased working capital
driven by strong growth in the contract order book.
We started the year with net cash of £57.5 million and
closed the year with net cash of £65.4 million.
Cash flow bridge
£103.0m
(£38.6m)
Capital allocation and accessible funding
£57.5m
(£14.3m)
(£14.4m)
(£3.7m)
(£9.4m)
(£14.7m)
£65.4m
Year-end
2021
net cash
EBITDA
Working capital
Rent
payments, incl.
interest portion
Taxes and FX
Capex
Own shares less
share options
settlements
Dividends
Year-end 2022
net cash
Note
EBITDA includes share-based payments and other non-cash items, see note 27 to the Consolidated Financial Statements.
5 Unless specifically stated, all growth rates in revenue and net fees are
expressed in constant currency.
6 The Group has identified and defined certain alternative performance
measures (APMs). These are the key measures the Directors use to assess
SThree’s underlying operational and financial performance. The APMs are
fully explained and reconciled to IFRS line items in note 27 to the Group
Consolidated Financial Statements.
7 The contractor order book represents value of net fees until contractual end
dates, assuming all contractual hours are worked.
8 Note 20 to the financial statements provides further details about all Group-
wide discretionary share plans, including the tracker share arrangements.
The Group’s capital allocation priorities are financed
mainly by retained earnings, cash generated from
operations, and a £50.0 million Revolving Credit
Facility (RCF), which has been refinanced and is now
committed to at least 2025. Any funds borrowed
under the RCF bear a minimum annual interest rate of
1.2% above the benchmark Sterling Overnight Index
Average (SONIA). 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.
During the year, the Group did not draw down any of
the above credit facilities (2021: £nil).
On 30 November 2022, the Group had total accessible
liquidity of £120.4 million, made up of £65.4 million in
net cash (2021: £57.5 million), the £50.0 million RCF,
and a £5.0 million overdraft of which £0.4 million was
used at the year end.
The Group continues to retain a strong financial
position and has sufficient cash reserves to meet
its obligations as they fall due for a period of at
least 12 months from the date of signing of these
financial statements.
Andrew Beach
Chief Financial Officer
27 January 2023
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DACH
35%
(of Group net fees)
Net fees mix
By country
By division
By sector
2021
2022
2021
2022
2021
2022
Germany
Switzerland
Austria
2022 2021
89% 91%
6%
5%
5%
4%
Independent
contractors
ECM
Permanent
2022 2021
51% 50%
Technology
20% 18%
29% 32%
Life Sciences
Engineering
Other1
2022 2021
67% 65%
16% 18%
14% 13%
3%
4%
1. Other includes the results of Banking & Finance sector, which was previously presented separately,
and Procurement & Supply Chain and Sales & Marketing.
“ We are in the right
markets at the right time
to address and solve
the challenges that
megatrends create.”
Christophe Zwaenepoel
Managing Director DACH
Performance highlights
Revenue (£ million)
Net fees (£ million)
Average total headcount (FTE)
NPS
2022
539
149
874
57
Variance
Reported
Like-for-like2
+19%
+15%
+6%
+1pts
+20%
+17%
n/a
n/a
2021
453
129
823
56
2. Variance compares 2022 against 2021 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.
Key market drivers
DACH is the second largest region of the Group
and represents 35% of the Group’s net fees (2021:
36%). The year was characterised by a very strong
market environment in the first half of the year and a
second half that was overshadowed by geo-political
challenges, the ongoing crisis in Ukraine, supply chain
bottlenecks, sharply rising inflation and the associated
rise in interest rates. Despite these uncertainties, public
sector investment increased due to efforts to stimulate
the economy and address key goals including energy
infrastructure and digitalisation projects. This had a
positive impact on STEM skills demand across most
disciplines. However, job opportunities decreased
in Life Sciences as Covid-19 research ramped down
whilst interest rate increases, inflation and supply chain
blockages put a brake on the Construction sector.
Overall, our clear strategic positioning in this region
helped the business deliver a resilient performance in
the year.
Impact of megatrends/Opportunities
Digitalisation: the drive for energy efficiency
and automation to reduce production costs and
resource consumption lifted demand for STEM skills,
particularly in Technology, with higher demand for
roles within Infrastructure, Cyber Security, Open-
Source Software Development, and Engineering, with
strong demand for Construction roles.
Decarbonisation: sustainability targets, and a
switch from nuclear energy, led to strong growth in
sustainability and renewable energy skills placements.
Demographic changes: new working models and
ageing populations are leading to skill shortages
particularly in STEM.
Reasons for confidence
The war for talent continued as skilled workers retired
faster than they could be replaced while demand for
STEM talent increased. As a result, there were over
300,000 STEM vacancies in Germany. In response,
we became the first German recruitment company
to open a partnership with Bosch.
Our people
SThree was named ‘Top Employer’ in Germany
for the ninth year in a row. We continued to invest
in onboarding and leadership development,
in a partnership with the well-respected St
Gallen University.
2022 performance highlights
The DACH region delivered a strong performance in
the year with net fees up 17% YoY like-for-like. The
Contract business grew 22% and Permanent grew 6%.
Germany, our largest country in the region, delivered
strong net fee growth of 14%. Technology was up 18%
with higher demand for roles within infrastructure,
Cyber Security, Open-Source Software Development
and Leadership and Strategic positions. Engineering
was up 27% due to demand for Construction roles.
Switzerland and Austria also grew strongly up 37%
and 51% YoY respectively, both driven by the
Technology sector.
Outlook
Despite the macro-economic uncertainties, the
prospects for the DACH market are very encouraging.
We believe that the shortage of skilled workers,
especially in STEM professions, will ensure an
increasing demand for the talents we place over the
long term. As the leading STEM provider in the region,
we have an excellent platform to continue to grow,
address market demand and create sustainable value
for candidates and clients. Our strong investment
focus on ECM will also allow us to meet increasing
market demand for flexible workforces and reinforce
our ambition to be leaders in these markets.
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EMEA excluding DACH
36%
(of Group net fees)
Net fees mix
By country
By division
By sector
2021
2022
2021
2022
2021
2022
Netherlands
UK
France
Belgium
Dubai
Others
2022 2021
47% 44%
30% 30%
7%
7%
5%
4%
9%
8%
4%
5%
Independent
contractors
ECM
Permanent
2022 2021
58% 62%
Technology
30% 25%
12% 13%
Life Sciences
Engineering
Other1
2022 2021
50% 50%
12% 13%
24% 24%
14% 13%
1. Other includes the results of Banking & Finance sector, which was previously presented separately,
and Procurement & Supply Chain and Sales & Marketing.
“ Almost every sector is experiencing
digitalisation, global ageing
populations and decarbonisation.
We invest in building candidate
communities with highly sought-
after niche skills to serve the
changing needs of our clients.”
Thomas Way
Managing Director UK, France, Belux
1 USA
United States
(focus on Life Sciences and Engineering)
Performance highlights
Revenue (£ million)
Net fees (£ million)
Average total headcount (FTE)3
NPS
2022
739
157
989
48
Variance
2021
Reported
Like-for-like2
606
127
899
46
+22%
+23%
+10%
+2pts
+22%
+24%
n/a
n/a
2. Variance compares 2022 against 2021 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.
3. Excludes central headcount located in the UK.
Key market drivers
Overall, the market position of EMEA excluding
DACH, the largest region of the Group, is strong. We
saw an increased demand for STEM talent across most
of the markets. This was driven by the ‘great transition’
to sustainability which led to a shift towards power and
renewables in the energy sector in the Netherlands;
whilst Healthcare, Engineering and IT were the most
attractive segments in the UK, with Life Sciences having
the highest proportion of temporary workers.
Impact of megatrends/Opportunities
Digitalisation: strong demand for delivery of digital
transformation projects led to an increase in roles
within IT Leadership and Strategy, Project Managers,
Software Development and Testing.
Decarbonisation: renewable initiatives, that are
already funded, are presenting opportunities in our
energy business.
Research-led healthcare: healthcare tech demand
is constant while the development of medicines and
devices is driving demand for talent in Life Sciences.
Demographic changes: baby boomers taking their
skills into retirement, plus new working models are
both impacting almost every sector. Generational shift
has led to high demand for senior IT roles and a push
on diversity.
Reasons for confidence
Ongoing skills shortages in niche STEM roles will
drive demand for our niche-specialist consultants.
The strength of our long-term relationships with
clients - especially those which lead the market in
technological change - as well as our candidates also
points to continued growth. Our strong Contract offer
means we are well positioned to benefit from the rise in
flexible working. The Most Attractive Staffing Markets
Globally 2022 report found that the best performing
European countries are typically located in the northern
and central regions of the continent, are large, have
favourable legislative environments, and are recovering
from the pandemic relatively well. Our weighting in the
Netherlands, the UK and France fits this success profile
and suggests we are well placed for future growth.
Our people
We have invested heavily in personal development with the
creation of the SThree Academy online platform offering
over 21,000 training courses and a collaboration with
Nyenrode Business University. The French business has
developed an online candidate community for contractors.
2022 performance highlights
The segment saw net fees grow by 24% YoY like-for-like
with growth in both our Contract and Permanent divisions.
The Netherlands, our largest country in the region,
saw very strong net fee growth of 34%, due to solid
performance in Technology, up 36%, which was driven
by demand for Project Managers, ERP Consultants
and Business Intelligence and Data Science roles.
Engineering was up 34% YoY, mainly due to demand
for Process Engineers, Electrical Engineers and Health
and Safety Advisers.
Net fees in the UK were up 23% YoY driven by
Technology up 30% as demand increased for roles within
IT Leadership and Strategy, Software Development and
Testing, Cloud and Data & Business Intelligence.
We also saw net fee growth of 10% in Belgium driven by
Technology, and 32% in Dubai driven by Engineering.
Outlook
Overall, the region has set strong foundations to
continue its growth and momentum in 2023. Whilst
we understand that both geopolitical and economic
uncertainty will remain, STEM talent is critical and is
in short supply. Over the long term we expect demand
for talent to accelerate which underpins our growth
prospects across the region.
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USA
26%
(of Group net fees)
Net fees mix
By division
By sector
2021
2022
2021
2022
Independent
contractors
ECM
Permanent
2022 2021
15% 12%
Technology
64% 63%
21% 25%
Life Sciences
Engineering
Other1
2022 2021
17% 16%
43% 48%
30% 26%
10% 10%
1. Other includes the results of Banking & Finance sector, which was previously presented separately, and
Procurement & Supply Chain and Sales & Marketing.
“ Gone are the days where the
USA focused on manufacturing,
brick and mortar retail, and
other legacy sectors. This
shift is being led nearly
exclusively by those with
STEM talents.”
Sunny Ackerman
President USA
1 USA
United States
(focus on Life Sciences and Engineering)
Performance highlights
Revenue (£ million)
Net fees (£ million)
Average total headcount (FTE)
NPS
2022
338
112
539
56
Variance
Reported
Like-for-like2
+33%
+25%
+14%
+3pts
+20%
+13%
n/a
n/a
2021
254
89
472
53
2. Variance compares 2022 against 2021 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.
Key market drivers
The USA is the world’s largest specialist STEM staffing
market and our third largest region. Research-led
healthcare and digitalisation were both significant
drivers of top-line growth as was decarbonisation
driving demand from our utilities clients who are
adapting their businesses towards clean energy.
Impact of megatrends/Opportunities
Digitalisation: considerable capital and resources
are being focused on digitalisation driven by the
average return on investment increasing by 81% in
2022. Next-phase digitalisation, linked to step change
developments such as 5G, web3 and the metaverse
should drive future growth.
Decarbonisation: most Fortune 500 and beyond
corporations are setting ESG goals in their strategies,
and their corporate charters. Many institutional
investors are also deploying capital based not only
on raw financial metrics but also on ESG progress.
Our utilities clients are focused on adapting their
businesses so clean energy is an area of investment.
Research-led healthcare: the number of Life Sciences
professionals grew by 79% between 2001-2021
compared with an 8% growth for all USA occupations.
This talent base had the second-lowest unemployment
rate of all USA occupations in April 2022 at 0.6%.
With increased supply and demand, the space is only
expected to grow.
Demographic changes: experienced hires are retiring
faster than they can be replaced. This, combined with Gen
Z’s desire for career flexibility, a greater work-life balance
and interesting projects, is driving demand for STEM skills
and contract hire, which is our strategic focus.
Reasons for confidence
The USA has entered a new age. There is a shift away
from manufacturing, bricks and mortar retail and
other legacy sectors towards being predominantly
a producer of automation and intelligent-design
products and solutions.
Government investment and legislation is driving
demand for future-fit products and infrastructure.
Our people
We have continued to invest in our people. Our managers
are now given empathy training so they can better support
colleagues during times of stress or other emotional
challenges. An improved Velocity scheme offers
increased opportunities and rewards, and we have made
enhancements to the US region’s hybrid working model.
There has been industry recognition through a range
of awards for women and leadership. SThree’s US
President Sunny Ackerman is one of the leaders on
the Staffing 100 list, published by Staffing Industry
Analyst, that recognises executives for progress in a
company’s workforce solution’s ecosystem.
2022 performance highlights
The segment saw net fee growth of 13% YoY like-for-like.
There was strong growth in Contract of 19%. Permanent
was down 8% following our strategic shift towards
Contract and very strong prior year comparatives, when
Life Sciences was the standout performer with high
demand from Covid-19-related activity.
Technology was up 18% with a particular focus on
roles within Adobe, Software Developers, Mobile
Applications and Salesforce.
Engineering was up 32%, driven by demand for roles
within Electrical Engineering and Project Management.
Outlook
We will continue to invest strategically in the region
as we align our resources with the best long-term
opportunities. The focus in 2023 will be to capture
market share through continued growth within our
core vertical markets of Technology, Engineering
and Life Sciences. Despite the economic uncertainty
forecasted for 2023 and the potential consequences
to the labour market, the STEM market continues to
show resilience providing an opportunity for the US
region to grow its market share.
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Asia Pacific
3%
(of Group net fees)
Net fees mix
By country
By division
By sector
2021
2022
2021
2022
2021
2022
1 USA
United States
(focus on Life Sciences and Engineering)
Japan
Singapore
2022 2021
69% 70%
31% 30%
Independent
contractors
ECM
Permanent
2022 2021
6%
6%
Technology
11% 11%
83% 83%
Life Sciences
Engineering
Other1
2022 2021
47% 52%
29% 32%
7%
1%
17% 15%
1. Other includes the results of Banking & Finance sector, which was previously presented separately, and
Procurement & Supply Chain and Sales & Marketing.
“ To continue our growth path,
we need to further capitalise
in our global client strategy,
local excellence and our
ability to deliver projects for
companies across the world.”
Jelte Hacquebord
Senior Group Managing Director
Performance highlights
Revenue (£ million)
Net fees (£ million)
Average total headcount (FTE)
NPS
Variance
2022
2021
Reported
Like-for-like2
23
14
156
36
18
10
111
31
+29%
+38%
+41%
+5pts
+28%
+42%
n/a
n/a
2. Variance compares 2022 against 2021 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.
Key market drivers
Our APAC business is principally focused on Japan
which accounts for 69% of APAC net fees. 2022 was
an encouraging year for the region, with net fees
growing significantly for the second year in a row,
following the impact of Covid-19 in 2020.
During the year, management reviewed the regional
performance of Singapore, one of our smaller
markets, when it became clear that our returns
remained sub-optimal in the past few years, and
decided to restructure its operations, reducing
it to a satellite office.
Impact of megatrends/Opportunities
Japan is a pathfinder economy for demographic
changes as it has faced the problem of an ageing
population shrinking the workforce for well over a
decade. Its strong Technology sector continues to
drive demand for IT skills which we meet through our
communities of tech experts in various disciplines,
many of which are in hard-to-fill niches.
Reasons for confidence
Demand for contract recruitment is growing due
to client desire to accelerate business at a quicker
rate than is possible with permanent hires. We meet
that demand with a team of Japanese specialist
consultants, more than 50% of whom are Japanese
nationals, applying the Group’s experience in contract
married to thorough compliance with Japan’s
labour laws.
Our team offers a full understanding of Japanese
business culture and the subtle nuances in
communication so important to success in this market.
That enables our Japanese clients to see the potential
in non-Japanese nationals, and our non-Japanese
multinational clients are thereby able to draw on more
local talent.
Our people
We believe that we invest more heavily in our people
than most Gaishi-kei (foreign owned) recruitment
agencies in Japan. In addition to the Group-wide
learning and development schemes we offer
bilingual support.
2022 performance highlights
Total net fees for the region were up 42% YoY like-for-
like. Our two largest sectors showed strong growth
with Technology up 34% and Life Sciences up 24%.
An excellent performance in Japan saw net fee growth
of 47% which was driven by the Technology sector,
up 32% YoY with increased demand for Software
Engineering roles.
Outlook
In line with our global strategy, we are continuing
to increase our investment into the APAC region,
with a focus on growing our business in Japan
whilst reducing our activities in Singapore. The
STEM opportunity in Japan has a positive outlook
for the next year, and we will be strengthening
our position in Technology, Life Sciences and
Engineering accordingly.
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Section 172 statement
In accordance with the requirements of Section 172
of the Companies Act 2006 (the Act), the Directors
confirm that during the financial year ended 30
November 2022 they have acted in a way that they
consider, in good faith, would most likely promote
the success of the Company for the benefit of its
shareholders as a whole, having regard to the likely
consequences of any decision in the long term and
the broader interests of other stakeholders as required
by the Act.
Supported by a well-established corporate
governance framework, the Board’s decisions take the
long-term interests of key stakeholders into account,
including its employees, clients and candidates,
shareholders and local communities, along with
the impact of our business upon them and the likely
consequences of any planned actions required to
deliver sustainable growth.
The Board maintains close business relationships and
partnerships with these groups, to keep itself informed
of the material issues relevant to stakeholders. In
addition to the regular feedback that it receives from
customers and employees, the Board maintains an
open two-way dialogue with investors to effectively
engage with and communicate our actions to them.
This is integral to the Board’s strategic decision-
making framework focused on those business
priorities which will position SThree to deliver shared
and sustainable value for all stakeholders.
A summary of who our key stakeholders are, how we engage with them and how we respond to their interests is provided on
pages 99 to 102 and separately in the Our Board section of the Governance report on pages 127 to 130.
The examples of the Board’s principal decisions made over the past year, including information on how SThree delivered value for its
stakeholders, are summarised on pages 103 to 104.
How we engage and foster strong relationships with some of our key stakeholders
Our people
Why we engage
Our people’s hard work and commitment to deliver
standout customer experiences are at the heart of
SThree’s ongoing success.
Engaging with our employees and understanding
what is important to them is therefore essential to the
Board’s decision making. It helps to inform Group-
wide people strategies, reward schemes, local training
plans and share best practice in finding, developing
and retaining talent.
How we engage
• Employee surveys (quarterly pulse surveys and
employee net promoter score surveys).
• Monthly employee resource groups providing
input to systemic policy development and
process changes.
• Sales and core functions Diversity, Equity and
Inclusion (DE&I) network.
• Regular dialogue with employee focus groups led
by Denise Collis, the Senior Independent Non-
Executive Director, a dedicated Board advocate for
employee engagement.
• Regular meetings between the CEO, Chief People
Officer and members of the Executive Committee
on people strategy and initiatives to promote
inclusive leadership role models.
• Other ongoing interactions via Group intranet,
leadership and employee-led forums, CEO Town
Halls, webinars and external social media channels.
• Global calendar of events to celebrate as well
as address societal challenges such as how
to increase women and ethnic diversity in
the workplace.
Key interests and concerns in 2022 and
our response
Through the engagement activities undertaken, the
following areas were identified as key areas of focus
for our employees: wellbeing, sustainable work-life
balance and an attractive working environment,
supported by the use of modern hardware and
software as well as training offer and employee reward
and benefit programmes.
In response, we have made several improvements to
Group-wide policies and procedures, remuneration,
training programmes and infrastructure to
support employees.
Transforming the way we work
We kicked off a three-year long sales and operational
transformation programme, to bring more efficiency
in the way we work internally and with our customers,
increase our consultant’s productivity and long-term
resilience in the increasingly competitive recruitment
market. As part of this solution, we have moved our
physical IT infrastructure to a cloud service and are
modernising our core systems to enable high-quality
customer service and business decisions.
Reward
We upgraded reward structures to aid retention
and link them to shareholder value. We continued to
encourage employee share ownership to incentivise
our people in meeting the Group’s targets. In
November 2022 we introduced a new Share Match
plan matching SThree shares purchased by our
employees. Plus, all individuals employed by SThree
Group at the grant date received a one-off grant of
either share units or share options, that immediately
became available to keep, sell or transfer.
Further, in October 2022 all eligible employees
received a one-off payment to provide them with some
relief to the pressure on their personal finances caused
by several major macro-economic events in many of
the markets we operate in.
We also launched a series of appreciation days across
a number of supporting functions, to celebrate our
people’s achievements across the Group.
Learning
We continued to drive adoption of our digital
academies. This year we enhanced them with DE&I
Micro Learning; the Elements induction/onboarding
programme with over 140 tailored learning journeys;
Leading with Purpose – an industry-leading leadership
development programme; and the LinkedIn Learning
Integration tool.
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Our clients and candidates
Why we engage
Regular engagement with all our clients and
candidates (customers) helps us to adapt our business
and strategy by investing in the right vertical niches
and improving and developing a service proposition
that is more relevant to evolving customer needs.
Ultimately, it helps us remain the STEM talent
provider of choice in our markets and a sustainable
value creator.
How we engage
• Key account managers appointed among our
senior recruiting consultants to engage with clients
at a strategic level.
• Customer satisfaction surveys.
• Net promoter score surveys.
• Digital customer interfaces, videos, webinars,
social media channels and other virtual events.
• Thought Leadership articles.
• #STEMSeries virtual events to share industry
experts’ advice and tips on multiple topics relevant
to the current work and market environment,
including best practices in DE&I, talent retention,
digitalisation of the workplace, transitioning
towards STEM skills.
Key interests and concerns in 2022
and our response
Through the engagement activities undertaken, the
following was identified as a key area of focus of our
customers: pressure of digitalisation and generational
shifts challenging retention of talent and forcing
adaption of working models.
In response, we increased the customer-centricity
of our approach where we clustered our client
portfolios according to sector. We also continued to
build candidate communities with highly sought-after
niche skills.
Our investments in our Employed Contractor Model
have also served the changing legislation requirements
and we continued to innovate our systems and
processes to maximise service delivery for our clients
and candidates.
Decarbonisation was another key area of concern for
our clients this year, especially in the energy sector
which is currently going through the ‘great transition’.
It has led our energy brands to shift their activities
towards the power and renewables sector. Within this
transition it was important to adapt our go-to-market
strategy to every stage of the process and follow with
key strategic projects.
One of the aims of the transformation programme
launched in Q3 is to build a modern CRM system to
improve customer engagement and drive measurable
financial and operational efficiencies. The state-of-
the-art CRM system will allow us to have a single
view of customers, which will enable us to centralise,
optimise and streamline our communication
with them.
The above was further supported by the launch of
our new parent brand identity, including a refreshed
corporate website.
Our shareholders
Why we engage
We aim to instil confidence in our investors and win
their long-term support of our business by providing
them with complete, accurate and transparent
information about our strategy including sustainability
commitments and the key drivers behind our
operational and financial performance.
How we engage
• Annual General Meetings.
• Quarterly results presentations and trading
statements.
•
Investor roadshows with one-to-one consultations
and group meetings with large international
institutions, sections of the UK private wealth and
retail investor community.
• Virtual investor briefings and capital markets days.
• Shareholder perception studies received via the
Company’s stockbrokers and financial advisers.
•
Investor community engagement with the
Chair and Non-Executive Directors, to address
environmental, social and governance issues and
our performance.
Key interests and concerns in 2022
and our response
Throughout the year when engaging with our investors
we focused on demonstrating our exceptionally good
financial performance, favourable market dynamics
(increasing demand for STEM and flexible talent),
governance and remuneration, strategy, and capital
allocation, and how this affects SThree’s strategy in
addressing climate change.
We provided reassurance to our investors that the
Group continues to be in a strong position (our
business continued to substantially outperform its
peers in four out of five key markets) and remains a
good investment opportunity.
In July 2022, the Group entered into a new £50
million three-year revolving credit facility agreement
to refinance the existing £50 million facility that was
due to mature in May 2023. The RCF key terms and
conditions remained largely unchanged, and extends
the Group’s credit maturity profile to 2025, with
extension options to 2027, and reinforces our ongoing
strong financial position.
The Board recommended an increased final 2022
dividend of 11.0 pence per share. This final dividend,
together with the interim dividend, amounts to a
total dividend for the year of 16.0 pence per share, an
increase of 45% on the 2021 total dividend.
In November, our CEO and CFO held SThree’s first
in a series of investor briefings. We shared with our
investors insight into the Group’s markets, strategy
and operations, and our path to growth.
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Our local communities and environment
Why we engage
Local communities are the source of the STEM talent
our clients need to solve complex world challenges
and drive economic growth. We provide decent work
opportunities within our local communities and access
to sustainable livelihoods.
We also address the increasing risk of climate change
through providing the STEM talent at the forefront of
climate innovation whilst also actively reducing our
own carbon emissions.
How we engage
Community outreach programmes to grow and
diversify the STEM talent pipeline:
• Career support initiatives including green careers
youth engagement initiatives in collaboration with
our clients.
• STEM equity programmes, in partnerships with
education, non-profit organisations and clients to
empower community members underrepresented
in STEM to access career pathways, helping to
diversify the STEM talent pipeline and provide
access to sustainable income.
• Partnerships with our clients providing the skills
needed to deliver projects that contribute towards
the United Nations Sustainable Development Goals.
Key interests and concerns in 2022
and our response
In our local communities, our engagement focused on
using our expertise through career support initiatives
and STEM equity programmes to positively impact
32,970 lives in 2022.
Our own people contributed nearly 2,082 hours to
support community initiatives throughout 2022.
We reinforced our engagement programme with our
strategic suppliers, encouraging them to complete
sustainability assessments and share best practice
and learning.
We further reduced our own carbon emissions by
44% on the base year 2019. However, as our offices
reopened, business meetings and business travel
resumed as a direct result of Covid-19 restrictions
being lifted, we saw our carbon emissions increase by
94% YoY. The reductions we saw in 2021 were not fully
reflective of business as usual.
Our renewables business grew by 88% in 2022 versus
the base year 2019.
Illustration of key decisions made by the Board in 2022
Launch of the Group-wide sales effectiveness and operational transformation programme.
Providing the tools to unlock sales and supporting functions' productivity.
How the Board had regard to the feedback in its decision making, including stakeholder
groups affected
Background and considerations made
A detailed review of SThree’s existing IT architecture
highlighted process complexity and too many outdated
IT solutions which were deemed to constrain our sales
efficiency and capability. The Board set out to achieve
effective digital transformation for SThree to drive our
business performance in a sustainable manner. Behind
the Board’s decision to modernise SThree computer
systems lies the need to provide our consultants with the
right technological capability to grow their productivity in
competitive markets, accelerate lead generation, and to
increase SThree’s scale of operations more quickly.
The likely consequences of the decision in the
long term
Expected outcome for our people and clients and candidates:
the new technology architecture will enable SThree to
increase the stability of our operational platform, maximise
service delivery, improve user experience and make better
use of our data to improve decision making and collaboration
throughout the organisation. It is also expected to reduce
staff attrition rates which in recent years were impacted
by inefficient processes curbing the performance and
continuous growth of our consultants.
Shareholders: the Board also had the due regard to SThree’s
disciplined approach in allocating capital into carefully
selected organic growth opportunities which, among others,
include investments in our people, systems and processes to
improve operational efficiencies to deliver scalable growth
in net fees and margins. Our new integrated technology
is expected to increase our operational leverage thereby
contributing to faster growth in net fees per head. Ultimately,
it will unlock the path to our Capital Markets Day ambition of
an operating conversion at or above 21%.
Create Employee Value Proposition (EVP) and culture that enable our people to be at their best.
Enhance the employee experience, win their loyalty and help them become more successful, more quickly.
How the Board had regard to the feedback in its decision making, including stakeholder
groups affected
Background and considerations made
The Board recognises enhancing the EVP is key to the ongoing
success of the Group. The Board defined EVP as the Group-
wide commitment to make SThree an attractive place to
work, combined with appealing compensation, great career
opportunities and corporate culture. As part of it, the Board
approved investments in developing a range of differentiated
offerings to attract and retain the best talent, including
enhanced compensation and benefit schemes, onboarding,
career management and learning programmes, better
workplace/lifestyle balance and the right modern tools for our
employees to be successful in delivering their service. We aim
to develop our employees’ trust and ongoing commitment to
SThree’s values and ambitions, helping them better execute
our strategy and, in the longer term, generate more lifetime
value to our business and other stakeholders.
The likely consequences of the decision in the
long term
Besides enhancing our employee benefits, the EVP also
incorporates plans to build on the skills of our leadership
team who, by giving the right strategic direction, will unleash
our people’s potential to deliver SThree’s vision of becoming
the number one STEM talent provider.
Shareholders: longer-term Group financial plans, regional
strategies and long-term ambitions will be linked to an
engaging reward structure. This is expected to drive overall
alignment of our employees in achieving our ambitions to
grow SThree's market share, significantly increasing net fees
and operating profit of SThree Group by 2027.
“ Our aim is to create a working environment today and in the future in which productivity
and a feel-good atmosphere go hand in hand. This is the only way for us as a company to
master future challenges and provide our customers with the best possible advice.”
Timo Lehne
SThree CEO
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To have our net zero target validated by the Science Based Target initiative.
How the Board had regard to the feedback in its decision making, including stakeholder
groups affected
Background and considerations made
In November 2019 we committed to reducing our carbon
footprint by 20% by 2024. However, when the pandemic
hit our ways of working were significantly reshaped. Having
temporarily closed our offices, imposed travel restrictions,
and invested in new technology and training to support
remote work, we managed to reduce our carbon footprint,
exceeding our original target for 2024. Since then, the
Board has committed to set a new net zero target using the
Science-Based Target initiative’s (SBTi) Net Zero Standard.
This led to the development and Board sign-off of well-
considered, data-led transition plans for each high-emitting
business area, implementation of transparent Scope 3
emission reporting, and establishment of a carbon removal
investment plan that will introduce nature-based solutions.
These outcomes have been validated by a robust SBTi review
process and our new net zero target will be announced
in 2023.
The likely consequences of the decision in the
long term
Our new net zero target will be aligned to climate science
and SBTi standards, which have been widely accepted by
market investors as best practice. Our new target will also
provide greater transparency to all our stakeholders, on our
commitment to tackling climate change and the methodology
used to define net zero. We will continue to disclose data to
SBTi, the Carbon Disclosure Project (CDP) and other external
net zero partners, all of which are external organisations who
will give SThree credibility in our actions.
We will utilise external benchmarking and partner
testimonials, to strengthen our value proposition for our
clients who increasingly, as part of their own net zero targets,
put pressure on their supply chains to set similar targets.
We also want to be seen as an attractive employer for our
existing and potential employees, who want to work for
companies which have clear plans and commitments to help
shape the future and fight the environmental damage caused
by climate change.
Expected outcome for shareholders: we understand
the investment communities need to decarbonise their
investment portfolio and, as such, our net zero target
and roadmap will ensure our investors have the data and
efficiencies needed to meet their reporting and targets.
New parent brand identity.
Upgrading our visual identity and reflecting it in a new corporate website.
How the Board had regard to the feedback in its decision making, including stakeholder
groups affected
Background and considerations made
A new marketing strategy was approved by the Board in
2022, which was accompanied by the launch of an updated
parent brand identity and website, and a coherent ‘House of
Brands’ framework in April 2022.
The likely consequences of the decision in the
long term
Clients and candidates: the initiative will strengthen the
SThree corporate identity.
The Board expects that our stakeholder confidence in the
SThree brand will increase. A future-minded brand with a
clear identity is primed for future growth which is reassuring
for both investors and our people.
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Risks
Risk management is a key part of our business, values and culture.
Effective risk management enables us as a business to protect value
and proactively manage threats to the delivery of strategic and
operational objectives, while enhancing the realisation of opportunities.
Our principal risks
1. Macro-economic environment/cyclicality
2. Future growth
3. Commercial relationships and customer risk
4. Contractual liability
5. People, talent acquisition and retention
6. Cyber security
7. Data privacy
8. Regulatory compliance
9. Strategic change management
10. Health and safety
Connecting risk, opportunity,
and strategy
Risk mitigation helps SThree manage specific areas
of the business. However, when brought into our
day-to-day activities, successful risk management
helps us to maximise our competitive advantage and
successfully deliver on our strategy. Whilst the ultimate
responsibility for risk management rests with the
Board, the effective day-to-day management of risk is
delegated to our leaders across the business, seeking
at all times to maintain a prudent balance between
mitigating risks and taking advantage of opportunities.
Ukraine
The war in Ukraine created macro-economic
uncertainty and concerns for our people, candidates
and clients. The Group Crisis Management Team (CMT)
was engaged to review risks for all stakeholders and
the Group, in order to formulate next steps. Measures
taken included a new internal process, with sanctions
screening checks across all suppliers and clients.
Whilst not considered a principal risk in its own right
the ongoing war in Ukraine impacts existing principal
risks and continues to be monitored.
Risk management approach
Our Enterprise Risk Management (ERM) framework
and processes help us to describe, analyse, report and
monitor risks and controls at all levels in the Group.
We believe that the effective management of risk is
based on a ‘top-down’ and ‘bottom-up’ approach,
which includes:
• Our strategy setting process.
• The quality of our people and culture.
• Established internal controls with assurance via
self-verification on the strength of controls.
• Processes for reviewing, escalating and
controlling risks.
•
Independent assurance by internal audit and
external audit.
• Regular oversight by the relevant Committees.
• Reacting quickly to market conditions and the cycle.
Principal and key operational risks are considered and
discussed as part of the strategic planning process.
This year, our principal risk statements were expanded
to include key risk indicators and risk tolerance
measures, as well as assessments of current controls
and risk appetite. These statements are reviewed
twice a year by the Board, following discussion and
challenge at the Executive Committee and as part of
relevant function or regional updates to the Board.
What we review when assessing our principal
and key risks:
• Risk ownership: each risk has a named owner.
In addition, each principal risk is sponsored by
a member of the Executive Committee, who
drives progress.
• Likelihood and impact: globally applied five-by-
five scoring matrix.
• Gross risk: before mitigating controls.
• Net risk: after mitigating controls are applied.
• Risk appetite: defined at principal risk level and
categorised into five levels.
• Risk tolerance: in data format, showing the amount
of deviation from the risk appetite.
Top-down risk
management
Ongoing risk
mitigation and
control review
Bottom-up risk
management
Regional and
functions
business
leadership teams
identify, assess,
and control,
monitor and
escalate
Board
Audit & Risk
Committee
Executive
Committee
Group Risk Committee
Regional
management
Function/
business
leadership
Internal Audit
• Key risk indicators: quantitative measures that
provide early signals of a change in the risk.
• Actions: key controls in place and activities
required for further mitigation if required.
•
Impact on the Group’s strategic pillars and
interdependencies between principal risks.
• Climate change: where the principal risk is
impacted by or could impact climate change.
All principal risks are detailed in a standardised
statement. This ensures effective review,
understanding and monitoring throughout the Group,
together with consistency, both in terminology and
the underlying assessment itself. As part of the top-
down process, an updated assessment was completed
for each principal risk by the relevant risk owner,
working with the Executive Committee risk sponsor
and the risk function. The statements are challenged
and reviewed in detail by the Group Risk Committee,
Executive Committee and by the Board twice a year.
In addition, deep dive reviews are conducted by the
Group Risk Committee throughout the year, with
updates on effectiveness and progress of mitigating
actions and reporting to the Audit & Risk Committee
to provide insight into controls and assurance
as required.
Board
Audit & Risk
Committee
Executive
Committee
Overall responsibility assessing the nature and
extent of the principal risks and the Group’s risk
appetite and to facilitate effective, entrepreneurial
and prudent management of the business.
Changed to Audit & Risk Committee in 2022.
Responsible for reviewing the effectiveness of the
Group’s risk management systems and processes.
Reviews assurance over mitigating controls.
Responsible for the review and assessment of the
principal risks and recommending risk appetite and
tolerance to the Board. Develops Company strategy
in line with Board appetite.
Group Risk
Committee
Responsible for monitoring principal and key risks
and ensuring effectiveness of regional and function
risk management.
Regional
management
Responsible for reviewing and oversight of regional
risk and controls and plans to mitigate risks within
their region. These risks will then feed into strategic
plans to be reviewed every six months as part of the
strategic planning process.
Function/
business
leadership
Responsible for identifying, assessing and mitigating
both key and operational risks within their functions/
business areas. Risks should be discussed as part of
country management meetings.
Internal audit
Provides assurance on key controls in place to
mitigate identified risks and assurance that the risk
management and internal control framework are
operating effectively.
Emerging risks
As part of our ongoing risk management process,
emerging risks are reviewed yearly. An emerging risk is
defined as a risk that materialises over a period of time,
rather than at once, meaning the likely impact of the
risk is difficult to evaluate at the time of assessment of
the risk.
Emerging risks are identified during:
• Twice-yearly principal risk reviews.
• The strategic review process with each region and
function.
• Horizon scanning undertaken by the Group Legal
Function.
• Bi-monthly financial reviews of country
performance and macro-economic trends.
Climate change risk, as reported in the 2021 Annual
Report, continues to be an emerging risk for the
Group. Further assessment on the emerging risk
is shown on page 74 as part of the Task Force on
Climate-related Financial Disclosures (TCFD) report.
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Risks continued
Principal risks
Risks can develop and evolve over time and their potential
impact or likelihood may vary in response to changes in
internal and external circumstances. Risks and mitigation
activities that are outlined below, whilst not exhaustive
nor in any order of priority, are those which could have
a material adverse effect on the implementation of our
strategic priorities, our business, financial performance,
cash flows, liquidity, shareholder value or reputation,
or could affect other key stakeholders, including
employees, clients and candidates.
Changes during 2022
The Group undertook a refreshed approach to its
principal risks and the assessment of these in 2021.
Following reviews by the Board, the Board believes
that the risks presented are the correct assessment
and the right principal risks for the Group. As a result,
the ten principal risks remain the same ones identified
in 2021, with positive movement in net risk, other than
where there has been an external impact.
We support the recommendation of the TCFD. We
consider climate, as well as broader environmental,
social and governance risks as part of the review
process for our principal risks, as well as in our half-
yearly business strategy reviews. Where climate
change may impact or be impacted by a principal risk,
this is detailed within the principal risk description.
Strategic pillars
1. Our Places:
To be a leader in markets we choose to serve
2. Our Platform:
Create a world class operational platform through
data, technology, and infrastructure
3. Our People:
Find, develop and retain great people
4. Our Position:
Leverage our position at the centre of STEM
to deliver sustainable value to our candidates
and clients
1. Macro-economic environment/cyclicality risk
Risk Description
Rapid changes in the macro-economic environment could result in SThree suffering financial exposure and/or loss. SThree
operates in a sector that is highly cyclical and sensitive to the economy and business sentiment. Mixed economic signals can
delay identification of changes in market conditions and business decisions to respond, both on the upside and downside.
The growth in the ECM models globally and fixed central support costs impact on the flexible cost base so may exacerbate
any time lag between financial performance impact and ability to cut costs and therefore impacts the ability to scale when
the economy recovers quicker than anticipated.
Link to climate change and sustainability: SThree may be affected, primarily through its work with the Engineering sector,
to changes in government policy related to climate change, including in the renewable energy space, which may present
positive business opportunities for the Company and fluctuations in the oil price. Geopolitical events, including energy price
shocks and other energy security risks can have an impact on economies, and in turn SThree's markets and profits.
Mitigations
• The annual strategic planning and budgeting process incorporates
reviews of the broader market conditions along with monthly business
performance monitoring and twice-yearly reviews as part of the
strategy cycle to help inform any changes that are required to react to
changes in the economy.
Change from 2021
Increased due to softening of the wider
macro-economic conditions, which is largely
controlled through the Group’s well-diversified
business and ability to respond quickly to
changes in the market conditions.
• The Group is a strategically diversified business, geographically, by
sector and by product, with a focus on STEM markets which are less
sensitive to economic cycles.
• Strategic focus on Contract market which is more resilient in
less certain economic conditions than Permanent and provides
a counter cyclical cash hedge working capital release with each
contract finisher.
Executive Committee sponsor:
Andrew Beach
Chief Financial Officer
Link to Strategic Pillar:
1. Our Places, 4. Our Position
• The Group has a flexible cost base that enables the business to quickly
cut costs to react swiftly to changes in market activity.
Principal risk interdependency:
• The Group has a strong balance sheet with low levels of net debt
through the year and committed debt facilities to support the business.
2 3 5 9
2. Future growth
Risk Description
If we ineffectively execute our strategic initiatives and investments this could lead to a failure to deliver planned growth and
value creation.
The Group has clear growth ambitions, as set out in the 2019 Capital Markets Day and in the investor briefing held in November
2022. To achieve these ambitions, the growth needs to be delivered through effective strategy and execution of strategic plans.
SThree recognises that it is vital for the right strategy to be implemented and for this to be executed effectively.
Link to climate change and sustainability: our strategy to focus on STEM skills and a Contract business is designed to
address the opportunities presented by a number of global megatrends, in business, society and the way that people work.
Mitigations
• Clear strategy, with regular planning and review meetings as
part of strategy setting cycle.
• Oversight of strategic workstreams and technology
investments through the project governance and
Executive Committee.
• Corporate Development function and defined M&A
processes in place to review any appropriate opportunities to
complement organic growth opportunities.
• Geographies and sectors are aligned with our core strategy
and any new business model proposed is reviewed to
understand market opportunity and strategic synergies, prior
to adoption and implementation.
Change from 2021
Decreased, due to growth in key markets, refined
approach to the markets in which we operate and
continued progress of key strategic projects.
Executive Committee sponsor:
Timo Lehne
Chief Executive Officer
Link to Strategic Pillar:
1. Our Places, 2. Our Platform, 3. Our People,
4. Our Position
Principal risk interdependency:
1 3 4 5 6 7 8 9
3. Commercial relationships and customer risk
Risk Description
In circumstances where working capital impairment or bad debt write-off occurs, SThree may suffer financial loss, due to
customers or intermediaries being unable to fulfil their contractual payment obligations. The Group’s growing ECM business
has increased the need for sufficient working capital to ensure payments are made to candidates whilst waiting for clients to
settle invoices. Bad debt can impact future cash flow for operations when uncollectable debt is written off.
Link to climate change and sustainability: SThree works with a number of clients who are helping to solve the most
significant challenges of our time for both the environment and society.
Mitigations
• Overall credit risk profile client-base of
the Company is low.
• Regular reviews and credit risk scoring
model for higher-risk clients managed
by credit risk analysts.
• Regional oversight of debt through
credit risk dashboard and monthly key
performance indicator reviews.
• Effective end-to-end process for
review of payment terms out of
policy with Chief Financial Officer
approval required.
• Continued focus on aged debt.
Change from 2021
Net risk likelihood remains low, but the impact is assessed as increased, due
to the Group’s growing ECM business, which has a more significant impact
on working capital cycles as SThree pays its candidates, whilst waiting for
clients to settle invoices.
In circumstances of the macro-economic environment softening, there is a
risk that clients will seek to increase payment terms and/or there will be an
increase in delinquent days.
Executive Committee sponsor:
Andrew Beach
Chief Financial Officer
Link to Strategic Pillar:
1. Our Places, 2. Our Platform
Principal risk interdependency:
1 2 4
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Risks continued
4. Contractual
Risk Description
If SThree enters into unfavourable contractual terms with customers, it risks suffering significant financial loss. SThree
operates in a highly competitive environment in which clients sometimes seek to assign significant contractual
responsibilities and high financial liabilities to SThree. Where SThree acts as the employer of record (as with its ECM model)
this expectation is generally heightened.
Mitigations
• SThree seeks to ensure that its contractual exposure to claims is
effectively controlled through its contracts.
• Contract approval processes are in place with defined escalation
procedures for the proposal of contractual terms that do not align with
standard negotiation parameters.
• Well-established in-house legal team, aligned to and working closely
with the regional businesses, ensures a close understanding of
business risks and associated contractual requirements.
• Risk Committee oversight of any changes in the external environment
that should be incorporated into approach to contracting.
Change from 2021
Stable. The strategic shift towards enterprise
clients and MSPs, which typically seek to
apply their own contractual terms, presents
negotiation challenges for SThree. We
continue to proactively monitor and track
this risk. We work closely with each business
to identify opportunities to improve the risk
profile of our customer contracts. This is
supported by an approval framework.
Executive Committee sponsor:
• The Company seeks to place the responsibility for supervision
and control of contractors directly with the client, including the
acceptance of liability for any acts, defaults or omissions.
• Global insurance coverage in place to cover exposure
where appropriate.
Kate Danson
Chief Legal Officer
Link to Strategic Pillar:
1. Our Places, 2. Our Platform, 3. Our People
Principal risk interdependency:
2 3 7 8 10
5. People, talent acquisition and retention
Risk Description
SThree’s profitability, long-term enterprise value, and ability to deliver our strategy to find, develop, and retain great people,
will be detrimentally impacted if we cannot attract the talent we need to deliver against our ambitions, are unable to
meet our profit productivity targets or fail to effectively manage retention. The Group is reliant on attracting and retaining
people that can deliver against its growth strategy. Sales consultants take time to reach their productivity peak, and this
therefore needs to be taken into account when considering timelines. It is vital that SThree attracts and retains an engaged,
productive, diverse workforce to ensure the future success of the Company.
Mitigations
• Talent acquisition strategy targeted on recruiting the right
level of talent into the business.
• Improved employee engagement through survey platform.
• Flexible hybrid working policy offered to all employees.
• Award-winning training platform to strengthen development
of consultants throughout their career.
• Continuation of strengthening our wider focus on diversity
and inclusion across gender, nationality, age and race.
• Continued focus on mental health and wellbeing.
Change from 2021
Unchanged. Wider economic conditions remain
challenging but continued development of people and
wellbeing strategies balances out the risk.
Executive Committee sponsor:
Paul Dempsey
Interim Chief People Officer
Link to Strategic Pillar:
1. Our Places, 3. Our People
Principal risk interdependency:
2 9 10
6. Cyber security
Risk Description
If SThree suffers a serious system or third-party disruption, this could cause a loss of data or security breach that disrupts
business-critical activities and its ability to meet its contractual and regulatory obligations.
The threat landscape continues to evolve, heightened by recent world events, with an increase in cyber crime and the
evolution of ransomware attacks. Secure data is at the heart of creating a strong culture and trusted brand for our candidates
and clients; failing to protect our data and manage security across our services will directly impact our reputation and our
ability to sustain and grow our business.
Mitigations
• Global information security framework, designed to ensure that
SThree identifies and meets requirements relating to cyber security.
• Vulnerability scanning to early identify weaknesses across the estate
alongside the information security team actively monitoring for
security incidents and remediating where necessary.
• Mandatory cyber security training for all employees to build
Change from 2021
Decreased, due to improvements in operating
systems and processes, and investments in
Group-wide training to increase employee
awareness of underlying security risk.
Executive Committee sponsor:
awareness and understanding of how individuals can help to protect
the Company.
Nick Folkes
Chief Technology and Information Officer
• Incident management plan with clear escalation in the event of
a serious incident and linked to an outsourced security event
monitoring to assist.
• Crisis management exercise undertaken, focusing on cyber-attack
and ransomware.
Link to Strategic Pillar:
1. Our Places, 2. Our Platform, 4. Our Position
Principal risk interdependency:
• Insurance cover in place that provides access to an expert helpline in
the event of an incident.
2 4 7 9
7. Data privacy
Risk Description
Non-compliance with international data protection regulations and/or contractual obligations in relation to data protection
could expose SThree to loss of revenue, reputational damage and regulatory sanctions. Having solid data foundations is
required for SThree to fulfil our business strategy. Great customer experience starts with accurate, complete and timely data,
and secure data is at the heart of creating a strong culture and trusted brand for our candidates and clients.
Mitigations
• Data privacy landscape continues to be monitored by our cross-
functional privacy team and international Data Protection Champion
network to ensure compliance with GDPR and applicable data
privacy legislation.
Change from 2021
Decreased. Net risk has decreased due to
enhancement of checks and balances and
employee awareness alongside and increased
system controls.
• A global data protection framework is in place to ensure that the
Group can identify and meet regulatory requirements relating to
data protection within each jurisdiction.
• Enhancement of processes to manage and respond to Data Subject
Rights requests, such as Right to be Forgotten.
• Mandatory yearly data privacy training for all current employees and
all new employees as part of the induction process.
• Continued investment in our IT systems and technology controls.
Executive Committee sponsor:
Kate Danson
Chief Legal Officer
Link to Strategic Pillar:
1. Our Places, 2. Our Platform, 4. Our Position
Principal risk interdependency:
4 6 8
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Risks continued
8. Regulatory compliance
10. Health and safety
Risk Description
If an employee suffers injury where SThree has failed to meet its regulatory obligations or duty of care this could lead to an
undermining of trust by our employees, candidates and clients, as well as reputational damage and financial loss. Health and
safety (H&S) management regulations contain a general requirement for organisations to monitor and review preventive and
protective measures to protect the health, safety and well-being of our employees. As a responsible employer we strive to
ensure all our people are safe in their working environment. Our increasing volume and proportion of business in ECM means
we have heightened regulatory obligations towards our candidates, many of whom operate in higher risk environments than
our internal workforce.
Link to climate risk and sustainability: employees are potentially at risk of exposure to increased climatic natural disasters
and to extremes of temperature, where working outdoors, making working conditions higher risk.
Mitigations
• Monthly health and safety administration and communication
meetings to discuss risks and any change in processes.
Change from 2021
Decreased due to global policy and process
improvements.
• Annual review and rollout of global H&S policy.
• Processes and reporting in place for any accidents or incidents
involving internal employees and ECM candidates.
• Regular horizon scanning of H&S regulations by both Group
Legal and H&S Manager to ensure policies and processes are
updated accordingly.
• Communication with clients to ensure safety of a candidate on a
client site and obligations are understood by both the client and
candidate towards health and safety.
• The review of health and safety obligations are a key part of the
contract review process, to ensure any required processes are
followed and are proportionate to the product being offered to
the client.
• Dashboard to capture leading and lagging indicators to highlight any
incident risks and introduce continual improvement processes.
• Insurance policies where required covering the Company and ECM
contractors in the event of an accident.
Executive Committee sponsor:
Kate Danson
Chief Legal Officer
Link to Strategic Pillar:
2. Our Platform, 3. Our People, 4. Our Position
Principal risk interdependency:
4 5 8
Risk Description
A failure by the organisation to meet its regulatory obligations in respect of its business models could undermine our
reputation, might result in legal exposure and regulatory sanctions and could negatively impact our ability to operate. The
staffing and recruitment industry sits against the backdrop of an increasingly stringent and complex regulatory environment.
These regulatory changes bring commercial opportunities for SThree, as companies seek staffing models which remove both
the burden of administration and the risk of regulatory non-compliance through engaging with companies such as SThree.
However, they also present risk to SThree in circumstances where we fail to manage those opportunities appropriately.
Failure to comply leaves SThree open to a range of risks, including fines, penalties, litigation, personal Director liability and
loss of licence to operate. Additionally, the reputational impact and loss of stakeholder confidence could undermine SThree’s
business in its entirety.
Mitigations
• Regular horizon scanning by Legal function with reporting to regional
management boards and Executive Committee.
• Regional Legal team involvement in the establishment of new
products/services and entering new jurisdictions to ensure there is full
understanding of regulatory compliance required and the processes to
support the compliance.
• Local internal processes designed to ensure regulatory compliance
for each placement.
• Oversight of regulatory compliance risks and controls at Group
Risk Committee.
• Regional regulatory compliance training rolled out by
legal department.
• Detailed regulatory risk assessments completed and regularly
reviewed for all business models in each country that the Company
has an entity incorporated within, to ensure full understanding and
relevant appropriate controls are in place.
Change from 2021
Stable. We continue to proactively track and
monitor this risk and embed processes to
address it.
Executive Committee sponsor:
Kate Danson
Chief Legal Officer
Link to Strategic Pillar:
1. Our Places, 2. Our Platform
Principal risk interdependency:
2 4 7 10
9. Strategic change management
Risk Description
If the Company does not effectively manage and implement strategic change, this could result in poorly implemented
projects, wasted resource and/or adverse financial impact and ability to execute strategy, impacting future growth of the
Group. Effective strategic change management is inherently tied into the achievement of our strategy; change management
is required for the effective implementation of parts of the strategy that require us to operate differently. Lack of oversight or
the rejection by staff of change, would prevent SThree moving to the next level of revenue growth and profitability.
Mitigations
• Prioritisation of investment decisions, approval of business cases
and oversight of the investment portfolio, with strong linkage into
the annual budget cycle.
Change from 2021
Decreased due to enhanced governance rolled
out during the year and increased resource and
capability in this area.
• Project management embedded and a formal governance
structure in place for strategic projects, including independent
assurance for key technology-related programmes.
• Full Board visibility of the portfolio status, including timelines,
project spend and issues escalation.
• A formal digital demand process to coordinate requests that place
demands on our technology change resources. The forum ensures
correct resource allocation against Company priorities.
• Monthly programme steering committees review programme
status, risks and document decisions.
• Recruitment and secondment of skilled expertise to business
transformation programme.
Executive Committee sponsor:
Nick Folkes
Chief Technology and Information Officer
Link to Strategic Pillar:
1. Our Places, 2. Our Platform, 3. Our People,
4. Our Position
Principal risk interdependency:
2 5 6
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Compliance information
Going concern statement
The Directors have reviewed the Group’s cash flow forecasts, including the
assumptions contained in the budget, and considered associated principal
risks which may impact the Group’s performance in the 12 months from
the date of approval of this year’s financial statements and in the period
immediately thereafter.
The base case forecasts were sensitised to reflect
a severe but plausible downside scenario on Group
performance. The key assumptions subject to the
sensitivity analysis were a decline in net fees, with
a flat cost base, resulting in reduced margins and
operating profit.
In the severe but plausible downside scenario, the
Group has sufficient liquidity headroom through
the whole period covered. This stress test also did
not incorporate potential mitigating actions at the
Board’s disposal to improve the position identified
by the analysis, e.g. deferrals of capital expenditure,
cash preservation initiatives, suspension of dividends
payment and/or share buyback programme, and a
number of further reductions in operating expenditure
across the Group primarily related to workforce
cost reductions.
Following this assessment, the Directors have formed
a judgement, at the time of approving the SThree
Group Annual Report and Accounts 2022, that
there are no material uncertainties that cast doubt
on the Group’s going concern status and that it is a
reasonable expectation that the Group has adequate
resources to continue in operational existence for at
least the next 12 months from the date of approval
of this Annual Report. For this reason, the Group
continues to adopt the going concern basis in
preparing the Consolidated Financial Statements for
the year ended 30 November 2022.
At 30 November 2022, the Group had no debt except
for IFRS 16 lease liabilities of £33.7 million and a small
bank overdraft of £0.4 million. Credit facilities relevant
to the review period comprise a committed £50.0
million RCF (a recently refinanced facility expiring in
May 2025, with extension options to 2027) and an
uncommitted £30.0 million accordion facility, both
jointly provided by HSBC and Citibank. These facilities
remained undrawn on 30 November 2022. A further
uncommitted £5.0 million bank overdraft facility is
also held with HSBC of which £0.4 million was used at
the year end. (Refer to note 17 for further details on the
new credit facility which replaced the existing RCF as
mentioned here.)
In addition, the Group has £65.4 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.
The RCF is subject to covenants that are measured
biannually in May and November, on a trailing
12-month basis, being (i) net debt to EBITDA of a
maximum of 3.0x and (ii) interest cover of a minimum
of 4.0x. The ratio of net debt to EBITDA at 30
November 2022 was nil, as no debt was drawn at the
year end, and interest cover was 125 times, and hence
the going concern assessment was primarily focused
on available liquidity during the assessment period.
The Directors considered the current and possible
future impact from the macro-economic environment
on new placement activity and in turn on the Group’s
net fees performance. The Directors also considered
expected cash outflows attributable to investments
in people, talent acquisition and infrastructure in
response to identified market opportunities and
emerging risks.
Viability statement
In accordance with provision 31 of the UK Corporate Governance Code 2018, the
Directors have assessed the prospects of the Group over the five-year period, based on
management’s reasonable expectations of the financial position and performance of the
Group, internal budgets, planning timeframes, medium-term targets and the potential
impact of the principal risks as documented on pages 106 to 113 of the Annual Report.
Assessment of prospects
The Group’s strategy is to deliver a sustainable and
profitable growth by focusing on four strategic
pillars and building on the favourable megatrends
that influence all markets and sectors we operate in.
The Group has a clear framework for investments in
selective strategic initiatives and operational decisions
made to continue strengthening the Group’s market
position into the future. Our performance against our
strategic objectives is discussed in more detail on
pages 34-35.
The review period covers five years from 2023 to
2027, which comprise the next financial year plan used
in the going concern assessment and projections for
the subsequent four financial years. The Directors
believe that the five years to November 2027 is an
appropriate period over which a reasonable evaluation
of the potential impact of future risk events on the
Group can be made. In coming to this view, the
Directors have considered sustainability and resilience
of the Group’s business model over the long term
(including strategic factors detailed in our investor
proposition on page 18, as well as longer-term market
trends in areas such as digitalisation and climate
change). Furthermore, the viability period aligns to:
• The impairment review process, where
investments in subsidiaries are tested based on
five-year forecasts.
• The period over which the capital investment
decisions are appraised.
• The period over which the Group’s major strategic
priorities and plans have historically been
considered (in line with the long-term ambitions
announced at the Capital Markets Day in 2019).
Given our principal risks, the Directors believe that
the ability to assess the Group’s longer-term viability
beyond this period becomes increasingly reduced.
The Directors have reviewed the Group’s current
financial position, progress against the Group’s
strategic targets and plans for the next five years,
alongside an evaluation of the long-term opportunities
and risks in the market in which the Group operates.
The financial projections were based on the following
key assumptions:
• Key macro-economic data that could impact
recruitment activity and demand for our services
and consequently our revenues and net fees.
• Expected headcount retention rates and our ability
to dynamically change hiring decisions and other
operational spend in the light of trading conditions.
• Expected productivity of the sales teams (relating
to placements per sales consultant).
• Changes in the Group’s working capital levels.
• Movements in foreign currency rates, tax rates and
interest rates.
•
Impact of climate change risk and opportunities.
• Dividend per share.
The viability assessment focused mainly on the
expected future solvency of the Group in the face
of the macro-economic environment cyclicality in
which the Group operates, being a key principal risk.
However, also considered were the potential impact
of other key principal risks, especially those related to
customer risk and cyber security.
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Compliance information continued
Subsequently, the key assumptions in the Group’s five-year 2023-2027 plan were stress-tested against severe but
plausible downside scenarios linked to certain principal risks, as summarised in the table below.
SThree non-financial and sustainability information statement
Assumptions, level of severity considered
Link to risks
Scenario 1
Decline in demand for recruitment services – zero
growth in net fees
Reduction in demand impacting both Contract
and Permanent businesses, flat YoY cost base, no
reduction in headcount.
Scenario 2
Deteriorating/severe macro-economic conditions
(cost inflation and margin compression) – decline
in net fees
Key areas considered: reduction in contractor book
compounded by the lower volume of Permanent
opportunities. Flat headcount and higher labour
costs, reducing operating profit conversion ratio.
Negative impact on the Group’s sales volume
resulting in reduced net fees and profits.
No mitigating levers activated, except for variable
staff costs.
Scenario 3
Climate change negatively affecting delivery of
our services
Key areas considered: increase in costs and decline
in the Group's income due to higher physical risk
leading to closure of our offices. The closure of
SThree’s offices would affect our operational
ability to place candidates in roles and service the
existing contracts.
• Macro-economic environment/cyclicality risk
• Future growth
• Commercial relationships and customer risk
• Macro-economic environment/cyclicality risk
• Future growth
• Commercial relationships and customer risk
• Strategic change management
• Emerging risks – climate change
Based on the results of these scenarios individually and in combination for Scenarios 1 and 2, the Directors
are satisfied that the Group would be able to respond to such circumstances through various means which
could include a reduction and deferral of capital expenditure and further rationalisation and/or restructuring of
operations, to ensure that the Group continues to meet its ongoing obligations. In addition, the Directors have
considered the fact that the Group operates in stable markets and has the robust financial position of the Group,
including the ability to sell assets, raise capital and suspend or reduce the payment of dividends.
Viability statement
Following this assessment, the Board can confirm that it has a reasonable expectation that the Group will continue
in operation and meet its liabilities, as they fall due, over a viability horizon of five years for the period ending 30
November 2027. In making this statement, it is recognised that not all future events or conditions can be predicted,
and future assessments are subject to a level of uncertainty that increases with time.
The Group has complied with the requirements of sections 414CA and 414CB of the Companies Act 2006 by integrating
the required non-financial and sustainability information disclosures throughout the Strategic and Governance reports.
The following table outlines key areas of disclosure together with references where the key content can be found.
Relevant policies and standards1
Information related to policies, due diligence
process, and the outcome (a-e)
Requirement – A. Environmental matters
• TCFD (governance and risk management)
• Our road to net zero carbon emissions
• Sustainability policies
Requirement – B. Employees
• Our operating principles
• Global DE&I policy
• Health and safety policy
• Whistleblowing policy
• Data protection policy
• Bullying and sexual harassment policy
Requirement – C. Social matters
• Climate-related financial disclosures, pages 60-77
• Emerging risks – climate change, page 107
• 2022 Impact Report (online)
• The role of the Board and its key decisions, pages 127-130
• Governance targets – Building on our business ethics,
pages 78-79 (plus Summary of notices and policies
available online)
• Strategic progress, Our People, pages 42-47
• Employee engagement (how the Board engaged with
SThree employees), pages 131-135
• Gender Pay Gap Report 2021-2022 (online)
• Our community programmes aimed at building and
educating future generations of diverse STEM talent
• Social targets – Building an inclusive workforce for the
future, pages 56-57
• Volunteering guidelines
• Corporate giving and fundraising policy
• Tax strategy for 2022 (online)
Requirement – D. Respect for human rights
• Our Code of Conduct
• Procurement process
• The Company’s Modern Slavery and Human Trafficking
Statement (online)
Requirement – E. Anti-corruption and anti-bribery matters
• Anti-bribery and corruption policy
• Gifts, hospitality and charitable contributions policy
Description of principal risks relating to matters A-E above
• 2022 Impact Report (online)
• Governance targets – Building on our business ethics, pages
78-79 (plus Summary of notices and policies available online)
• Governance targets - Building on our business ethics,
pages 78-79
• Governance targets – Building on our business ethics,
pages 78-79 (plus Summary of notices and policies
available online)
• Risk management approach, pages 106-107
• Emerging risks – climate change, page 107
• TCFD report, climate related risks and opportunities,
pages 64-70
Relevant information
Business model description
• Our business model, pages 26-29
Description of non-financial KPIs
• Key performance indicators, pages 80-83
• Our non-financial KPIs include:
– Under strategic pillar Our Platform: Carbon reduction
– Under strategic pillar Our People: Representation of women in leadership roles, Employee net promoter score (eNPS)
– Under strategic pillar Our Position: Customer net promoter score (NPS), Number of lives positively impacted
1. Please note some of the policies are available on request from Company Secretary.
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Governance
120 Chair’s governance statement
122 Board of Directors
124 Board at a glance
126 Board roles and responsibilities
127 Our Board
131 Employee engagement
136 Nomination Committee
140 Audit & Risk Committee
148 Directors’ remuneration report
174 Directors’ report
178 Statement of Directors’ responsibilities
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Chair’s governance statement
Our purpose and culture demonstrate a commitment to driving performance for
the Group’s long-term success and to treating all clients, candidates, employees,
suppliers and communities with respect as key stakeholders and partners in
our business.
Key governance and oversight
activities during the year:
• The appointment of Timo Lehne as
Chief Executive Officer
Compliance with the UK
Corporate Governance
Code 2018
• The continued refreshing of the Board, announcing
the appointment of two new Non-Executive
Directors and enhancing our gender diversity
The Board applied all the main principles and
provisions of the Code throughout the year
ended 30 November 2022.
• Continued focus on strategic prioritisation,
commencing a multi-year Business
Transformation Programme
• Receiving updates from management of key
markets, including DACH, the Netherlands, the US,
the UK and Japan
• Approving the update of the Capital Markets Day
ambitions for 2024
• Continued monitoring of our talent acquisition
strategy and DE&I metrics and activities
• Direct engagement through investor calls and
meetings and feedback following investor meetings.
Engagement with significant shareholders in the
lead up to the AGM and following voting
• Reviewing audit tendering considerations
• Reviewing Brand Strategy
• Approving our ‘Market Clustering’ approach
to our markets
• Considering regulatory and contractual risk across
our core business models and markets
• Considering an update on the Group’s property
portfolio in light of new ways of working post Covid
• The adoption of a new Corporate
Governance Framework
• Progressing the actions from the externally
facilitated Board effectiveness review and
conducting an internal Board effectiveness review
• Reviewing and approving the Group’s Impact
Report, including the commitment to set a net zero
target using the robust Science Based
Target initiatives
Read my introduction to strategy on page 20
I am pleased to introduce SThree plc’s Corporate Governance Report for the
financial year ended 30 November 2022.
Dear Shareholder
This report sets out our governance framework and
outlines key activities undertaken during the year.
The SThree Board aspires to adopt FTSE 250-level
governance best practice wherever possible and
our statement of compliance with the UK Corporate
Governance Code published by the Financial
Reporting Council (FRC) in July 2018 (the Code) can
be found on page 120.
It is my responsibility as Chair to ensure that the Group
has sound corporate governance and that the Board
continues to be effective. This is managed by ensuring
that the Group and the Board are acting in the best
interests of our various stakeholders and making
sure that the Board discharges its responsibilities
appropriately. This includes creating the right Board
dynamic and ensuring that all important matters, in
particular strategic decisions, receive adequate time
and attention at Board meetings.
There have been a number of changes to the Board
since my last Governance Report. Timo Lehne,
who was appointed interim CEO in December
2021 following the departure of Mark Dorman, was
appointed CEO on a permanent basis in April 2022.
His appointment followed an extensive search
process, reviewing both internal and external
candidates. Also in April, Anne Fahy stood down
as a Non-Executive Director and Chair of the Audit
Committee, having served as a Director since 2015.
I would like to thank Anne for her valued contribution
to SThree during a period of significant growth
and expansion.
During the year, we were delighted to announce the
appointment of two new Non-Executive Directors: Elaine
O’Donnell, who joined the Board on 1 October 2022, and
Imogen Joss, who joined on 1 December 2022. They are
both accomplished, highly experienced individuals who
bring a wealth of experience to the Board.
SThree has always been driven by core business
principles, led by a desire to add value as a recruitment
partner and play a positive role in society. Our purpose
and culture demonstrate a commitment to driving
performance for the Group’s long-term success and to
treating all clients, candidates, employees, suppliers
and communities with respect as key stakeholders and
partners in our business. Our approach to stakeholder
engagement during the year is set out in this report.
I was particularly pleased that we continued to
encourage employee share ownership with the launch
of a global share plan during the year. Under this
plan, all eligible employees were able to receive the
equivalent of £100 of free shares and join a monthly
share purchase scheme. Some 36% of our eligible
employees have signed up to the monthly share
purchase plan, under which the Company will match
shares purchased each month up to a maximum of
£50. It is good to see so many employees now have an
equity stake in our business.
I have also been pleased that the Board has been able
to meet in person this year, with all Board meetings
held face to face. In September, the Board travelled
to our Berlin office. This provided an excellent
opportunity to spend time with our German senior
management, those based in the Berlin office and for
the Board to engage with one of our most important
stakeholder groups: our candidates.
As Chair I have also had the pleasure of visiting our
Amsterdam, New York, Houston and Dubai offices this
year, spending time with both local management in
those locations and our broader employee population.
Additionally, in mid-October, a global leadership
conference was held. Both myself and Elaine
O’Donnell had the pleasure of attending this event
and spending time connecting with around 75 of our
most senior leaders, as we reflected on the Company’s
strategy, vision and ambitions.
The Board continues to shape and develop our culture
with a renewed focus on diversity and inclusion and
we have maintained oversight of the Group’s initiatives
in this important area. Further information on diversity
and gender pay can be found in the Strategic
progress section.
Finally, I would like to take this opportunity to thank all
of our stakeholders for their support during this year.
I, along with the Board, am available to respond to any
questions on this report or any of our activities both
now and at the 2023 Annual General Meeting.
James Bilefield
Chair
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P-121
Governance
Board of Directors
Committee membership
Audit & Risk Committee
Nomination Committee
Remuneration Committee
Chair
James Bilefield
Non-Executive Chair
Timo Lehne
CEO; Executive Director
Andrew Beach
CFO; Executive Director
Denise Collis
Senior Independent
Non-Executive Director and
Employee Engagement NED
Elaine O’Donnell
Independent Non-Executive
Director
Barrie Brien
Independent Non-Executive
Director
Imogen Joss
Independent Non-Executive
Director
Kate Danson
Chief Legal Officer and
Company Secretary
Appointed: October 2017
Appointed: January 2022
Appointed: July 2021
Appointed: July 2016
Appointed: October 2022
Appointed: September 2017
Appointed: December 2022
Appointed: May 2021
Experience
James Bilefield was appointed
to the SThree Board as Senior
Independent Director and
Chair Designate in October
2017, becoming Chair in
April 2018. He is Chair of
the Nomination Committee
and a member of the
Remuneration Committee.
James is a Trustee of the
Science Museum Group,
the world’s leading group of
science museums, a Senior
Advisor to McKinsey &
Company, and a Trustee of
Teach First.
He managed the digital
transformation of media
group Condé Nast across
27 countries, scaled Skype’s
global operations as part of its
founding management team
and held senior management
roles at Yahoo! during its
major growth phase. Formerly
CEO of global advertising
technology company, OpenX,
he also co-founded the UK
local information business,
UpMyStreet, following
an investment banking
career at JP Morgan Chase.
James was previously a
Non-Executive Director of
MoneySupermarket.com,
stepping down in May 2022,
and Stagecoach Group plc.,
stepping down in June 2022
following its acquisition and
subsequent delisting from the
London Stock Exchange.
Experience
Timo Lehne was appointed
CEO in April 2022 having
joined the Board as interim
CEO and an Executive Director
on 1 January 2022. Prior to this
Timo was a Senior Managing
Director with full responsibility
for the day-to-day running of
SThree’s largest region, DACH,
which comprises Germany,
Austria and Switzerland.
Timo studied International
Economics in the Netherlands
before joining our Progressive
Recruitment business in
Germany as a sales consultant
in 2006. He was appointed
Senior Business Manager
in Düsseldorf for SThree in
2009, quickly turning it into
our fastest growing business
and growing the city’s share
of net fees within the DACH
region from 4% in 2009 to 27%
in 2012. He was promoted to
Senior Sales Director in 2013,
taking joint responsibility
for the running of the overall
DACH business and in 2017
became Managing Director
for the region, where he was
responsible for the overall
DACH business of SThree
accounting for over 33% of
the Group’s revenue and more
than 1,000 employees across
10 locations.
Experience
Andrew Beach was appointed
to the SThree Board in July
2021, joining from Hyve
Group plc, a global exhibitions
business. As CFO he holds full
responsibility for the financial
strategy and financial activities
across the SThree Group. He
is an accomplished CFO with
more than 14 years’ experience
in listed companies. He has
global experience of business
transformation, funding
and M&A in fast-paced and
high-growth companies and
has extensive experience of
working alongside boards and
senior leadership on company
strategy and direction.
As CFO of Hyve, Andrew was
instrumental in leading the
company through a period of
significant transformation and
rapid international growth,
which resulted in its promotion
to the FTSE 250. Previously,
he held a number of roles
at Ebiquity plc, joining as
Group Financial Controller
in 2007 and quickly being
appointed as CFO in 2008.
In 2014 he was promoted
to Chief Financial and
Operating Officer. Andrew
trained and qualified as a
Chartered Accountant with
PwC, working with them from
1998 until 2007.
Experience
Denise Collis was appointed to
the SThree Board, Nomination
Committee and Remuneration
Committee in July 2016. Denise
was appointed as Chair of the
Remuneration Committee in
September 2016, became a
member of the Audit & Risk
Committee in April 2018. In
October 2018 Denise was
appointed Senior Independent
Director and, with effect from
1 December 2018, was appointed
as Employee Engagement NED.
Denise is also a Non-Executive
Director and Chair of the
Remuneration Committee at
Smiths News plc, the specialist
distribution company, a Non-
Executive Director of Emis
Group plc, a major provider of
healthcare software, information
technology and related services,
where she is Chair of the
Remuneration Committee and
a member of the Audit and
Nomination Committees, and
Chair of the Remuneration
& People Committee and a
member of the Nominations
Committee at the British Heart
Foundation. Prior to this, she
was Group HR Director for 3i
Group plc, and most recently
Chief People Officer for Bupa.
She has extensive international
Human Resources and executive
committee experience, and
has also held senior roles at EY,
Standard Chartered plc and
HSBC. Denise is a Fellow of the
Chartered Institute of Personnel
and Development.
Experience
Elaine O’Donnell was
appointed to the SThree
Board, the Remuneration and
Nomination Committees and
as Chair of the Audit & Risk
Committee in October 2022.
Elaine is the Senior
Independent Non-Executive
Director and Chair of the Audit
& Risk Committee of On The
Beach Group plc and is a Non-
Executive Director and Chair
of the Audit & Risk Committee
of The Gym Group plc.
Elaine qualified as a Chartered
Accountant at PwC and then
spent the majority of her
executive career specialising
in corporate finance,
latterly serving as a partner
in Transaction Advisory
Services at EY. Throughout
her career, she has worked
extensively with global
businesses across a range of
market capitalisations and
industry sectors.
Elaine was previously Chair of
Games Workshop Group plc
and a Non-Executive Director
of Studio Retail Group plc.
Experience
Barrie Brien was appointed
to the SThree Board, Audit
& Risk, Nomination and
Remuneration Committees in
September 2017.
Experience
Imogen Joss was appointed
to the SThree Board, the Audit
& Risk, Remuneration and
Nomination Committees in
December 2022.
He is Group Chief Executive
Officer of STRAT7, a data
analytics and strategy
consultancy, and was the
former Chief Executive Officer
of Creston plc, a media and
marketing communications
group, stepping down in 2017
following its sale and de-
listing. Barrie was extensively
involved in the growth of
Creston plc from 2004 with
its buy-and-build strategy and
had also been Chief Operating
and Financial Officer.
In addition to extensive
public company experience,
including M&A fundraisings
and Investor Relations, Barrie
has spent 30 years in global
media, digital, and marketing
communication companies,
advising a portfolio of
boards and clients across
multiple industries on their
growth strategies.
Imogen is Non-Executive
Director and Senior
Independent Director of
Fintel plc and Chair of its
Remuneration Committee.
Imogen is also Chair
of Grant Thornton UK
LLP, the accounting and
consulting firm, and a
Non-Executive Director of
IPSX UK Ltd and Envetec
Sustainable Technologies.
Imogen spent her executive
career working in senior
general management, sales
and marketing roles for a
range of information services
and other companies,
including the London Stock
Exchange Group plc and S&P
Global Inc.
Imogen was previously a
Non-Executive Director and
Chair of the Remuneration
Committee of Euromoney
Institutional Investor plc,
stepping down in November
2022 on completion of the
acquisition of Euromoney and
its delisting from the London
Stock Exchange.
Experience
Kate Danson joined SThree in
2021. She is responsible for
leading the provision of legal
services, as well as holding
responsibility for enterprise
risk and insurance across the
SThree Group and is the PLC
Company Secretary. Prior
to joining, she was General
Counsel, Group at Johnson
Matthey plc, responsible for
leading the provision of legal
services across the global
group functions. She had
previously worked in a variety
of senior global roles within
Johnson Matthey.
Kate brings a wealth of
knowledge and experience in
complex global legal, ethics
and compliance, business and
risk management issues. She is
a qualified solicitor and started
her career in private practice
at the international law firm
Ince & Co.
Kate completed a degree at
Kings College London before
studying at the College of Law
between 2002 and 2004.
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P-123
Governance
Board at a glance
A strong Board
positioned for growth
Board and Committee structure
Skills matrix
SThree plc Board of Directors
Chaired by James Bilefield
Audit & Risk
Committee
Chaired by
Elaine O’Donnell
Remuneration
Committee
Chaired by
Denise Collis
Nomination
Committee
Chaired by
James Bilefield
Disclosure
Committee
Chaired by the
Chief Legal Officer
and Company
Secretary
Executive Committee
Established under the authority of the Chief Executive Officer
Chaired by Timo Lehne
Group Risk
Committee
Chaired by the
Chief Legal Officer
and Company
Secretary
ESG
Committee
Chaired by the
Chief Executive
Officer
Finance and
Administration
Committee
Chaired by the
Chief Financial
Officer
Board
Committee
Other
Committee
Board diversity*
Board tenure
Board composition
Male
Female
57%
43%
0 – 3 years
3 – 6 years
6 – 9 years
57%
29%
14%
Chair
Independent Non-Executive
Executive
14%
57%
29%
* This depicts the composition of the Board as at the date of the Annual Report and includes Imogen Joss, who joined the Board on 1 December 2022.
James
Bilefield
Elaine
O’Donnell
Denise
Collis
Barrie
Brien
Imogen
Joss
Timo
Lehne
Andrew
Beach
Strategy and
Transformation
Finance
Risk Management
People and
Culture
Marketing
Tech & Cyber
Security
Data
ESG/Responsible
Business
Commercial
Sector
Technology,
Publishing,
Financial
Services
Travel,
ecommerce,
retail
Healthcare,
Financial
Services
Media and
Marketing
Services
International
UK, US,
Europe
UK, Europe
UK, Europe,
North America
and Australasia
UK, Americas,
Europe,
Middle
East, Asia,
Australasia
Business
Information,
Professional
Services
UK, Europe,
Middle
East, North
America,
APAC
Staffing
UK, US,
Europe, Asia
Events
Services,
Marketing
Services,
Accountancy
UK, US,
Europe,
Middle East,
Asia
Nom Com
Chair/Rem
Com
Audit & Risk
Chair/Nom
Com/Rem
Com
Audit & Risk /
Nom Com/
Rem Com
Chair
Audit & Risk/
Nom Com/
Rem Com
Audit & Risk/
Nom Com/
Rem Com
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P-125
Governance
Board roles and responsibilities
Chair
Chief Executive
Chief Financial Officer
The CFO is responsible for the management
of the Finance function. He leads the
Group’s finance activities, finance risks
and controls, Group funding arrangements
and the Investor Relations function. As a
Director, the CFO’s responsibilities extend
beyond the Finance function to include
the whole of the Group’s operations and
activities, supporting the CEO in the
delivery of the corporate strategy.
Our Chief Executive has day-to-day
management responsibility for running
the Group’s operations, for implementing
the Group’s strategy as approved by the
Board, for applying Group policies and
for promoting the Company’s culture and
standards, including those on governance.
He has the broad authority from the Board
to run the Company and he is accountable
for, and reports to the Board on, how it is
performing. Our Chief Executive also has
a key role in the process for the setting
and review of strategy. In addition, he
ensures that the Executive Directors’ views
on business issues and views from the
workforce on relevant issues are shared
with the Board in a balanced way.
There is a clear division between the Chair’s
responsibilities for running the Board and
the Chief Executive’s role for the running of
the business. This division of responsibilities
is established in a written statement.
The Chair is responsible for ensuring
an effective Board. A culture of mutual
respect, openness, debate and constructive
challenge is vital to this. The Chair
encourages open communication and
constructive working relations between
the Executive and Non-Executive Directors.
He also seeks to ensure that the Executive
Directors are responsive to constructive
challenge on their proposals by the Non-
Executive Directors.
The Chair ensures that SThree maintains
effective communications with our
shareholders, communicating the views
of shareholders to the Board so that all
Directors develop an understanding of the
views of the major investors in the Group. In
addition, he also ensures the Board listens to
the views of the workforce, customers and
other stakeholders, especially in the context
of principal decisions.
With the assistance of the Company
Secretary, the Chair sets the Board’s
agenda, ensuring adequate time is available
to discuss all agenda items. To facilitate
constructive Board discussion, the Chair
ensures there is a timely flow of high-quality,
accurate, clear information.
Senior Independent Director
Non-Executive Directors
Company Secretary
The Company Secretary reports to our Chair
on Board governance matters and together
they keep the efficacy of the Company’s
and the Board’s governance processes
under review. The Company Secretary is
responsible for advising and keeping the
Board up to date on all legislative, regulatory
and governance matters and developments.
The Company Secretary’s responsibilities
also include ensuring good information
flows within the Board and its committees
and between senior management and
Non-Executive Directors. The Company
Secretary facilitates Board inductions and
assists with professional development as
required. The Company Secretary’s advice,
services and support are available to
each Director.
The Senior Independent Director’s role is
to provide a sounding board for the Chair,
to act, if necessary, as a focal point and
intermediary for the other Non-Executive
Directors and to ensure that any key issues
that are not being addressed by the Chair
or the executive management are taken up.
The Senior Independent Director and the
Chair maintain a regular dialogue regarding
current issues. The Board recognises that,
should any significant issues arise which
threaten the stability of SThree or its Board,
the Senior Independent Director may be
required to work with the Chair or others or
to intervene to resolve them.
The Senior Independent Director is available
to shareholders should they have concerns
which have not been resolved from
contact through the normal channels of the
Chair, Chief Executive or other executive
directors or if the normal channels may
be inappropriate. The Senior Independent
Director is also available to attend meetings
with major shareholders to listen to their
views in order to help develop a balanced
understanding of their issues and concerns.
The Senior Independent Director is
responsible for leading the annual appraisal
of the Chair’s performance and plays an
important role by ensuring there is an
orderly process for succession to the role of
Chair of SThree.
The role of our Non-Executive Directors is
to scrutinise management’s performance in
meeting agreed goals and objectives and to
monitor how that performance is reported.
They must also be satisfied with the integrity
of the Group’s financial information on the
effectiveness of financial controls and risk
management systems.
As members of the Board, the Non-Executive
Directors bring independent judgement
and a range of experience to the Board and
therefore have a key role in constructively
challenging in all areas. This is vital to the
independence and objectivity of the Board’s
deliberations and decision making and is
particularly important in helping develop
proposals on strategy. The Chief Executive
and the other Executive Directors welcome,
and are responsive to, constructive challenge
by the Non-Executive Directors on their
proposals. The Non-Executive Directors’ role
is to support the decisions that have been
taken and to support the executive team
in their delivery. Non-Executive Directors
also play an important part in supporting
the Chair and the Executive Directors in
embracing and representing the Company’s
culture, values and standards within the
Board and throughout SThree.
The Non-Executive Directors are responsible
for determining appropriate levels of
remuneration for the Executive Directors and
have a prime role in appointing and, where
necessary, removing Executive Directors,
and in succession planning.
Our Board
Board and Committee composition
and attendance
The Board has established various Committees, each
with clearly defined Terms of Reference, procedures
and powers. The Terms of Reference for the Audit &
Risk, Remuneration and Nomination Committees are
reviewed regularly and are aligned closely with the UK
Corporate Governance Code. They are available at
sthree.com.
In addition to the scheduled Board meetings held
during the year, the Board met for a dedicated
strategy session. The number of scheduled Board
meetings held, and attendance at each, is set
out in the table below. All Directors attended the
Annual General Meeting. Attendance at each of the
Committee meetings can be found in the Audit & Risk,
Remuneration and Nomination Committee reports.
Should Directors be unable to attend meetings due
to unavoidable commitments, full Board packs are
distributed and separate dialogue held with the Chair
on all matters of relevance. Further details of each
Committee are contained in the Remuneration, Audit
& Risk and Nomination Committee sections of this
Annual Report.
Director
James Bilefield
Timo Lehne
Andrew Beach
Denise Collis
Elaine O’Donnell
Barrie Brien
Anne Fahy
Mark Dorman
Scheduled Board
meetings attended
8/8
8/8
8/8
8/8
2/2
8/8
2/2
0/0
Notes: Imogen Joss joined the Board after the year end. Mark Dorman stepped
down as a Director on 31 December 2021, there were no scheduled Board
meetings during the period prior to his departure.
Composition of the Board
The Board comprises a balance of Executive and Non-
Executive Directors who bring a wide range of skills,
experience and knowledge to its deliberations. The
Non-Executive Directors fulfil a vital role in corporate
accountability and have a particular responsibility
to ensure that the strategies proposed by the
Executive Directors are fully discussed and critically
examined, not only in the best long-term interests of
shareholders, but to also take account of the interests
of customers, employees and other stakeholders.
The Non-Executive Directors are all experienced
and influential individuals and through their mix
of skills and business experience, they contribute
significantly to the effective functioning of the Board
and its Committees. This ensures that matters are fully
debated and that no one individual or small group
dominates the decision-making process.
Directors have a wide range of experience of various
industry sectors relevant to the Group’s business
and each member brings independent judgement
to bear in the interests of the Company on issues
of strategy, performance, resources and standards
of conduct. The Board is of sufficient size to match
business needs and members have an appropriate
and varied range of skills, vital to the success of the
Group. The composition and performance of the Board
and each Committee is evaluated at least annually
to ensure the appropriate balance of skills, expected
time commitment, knowledge and experience, and
the Directors can therefore ensure that the balance
reflects the changing needs of the Group’s business
and is refreshed if necessary. Board members feel a
strong cultural affinity with the Group, engaging fully
as a committed team and in a wide variety of activities
with our employees around the globe, whether it
be an office visit, or presentation by management.
The Nomination Committee report gives further
information on activity in this regard, including
changes in Board composition, succession planning
and diversity and inclusion activity.
Excluding the Chair, the other Non-Executive
Directors have been determined by the Board
throughout the year as being independent in character
and judgement with no relationships or circumstances
which are likely to affect, or could appear to affect,
each Director’s judgement.
The Board has a Non-Executive Chair, who is not
classed as independent because of his position but
who met the independence criteria set out in the Code
on appointment. At least half the Board is comprised
of Non-Executive Directors determined by the Board
to be independent, as required by the Code.
The role of the Board
Our Board’s role is to provide leadership of the
Company and direction for management. It is
collectively responsible and accountable to our
shareholders for the long term sustainable success
of the Group, for generating value for shareholders,
contributing to wider society and for ensuring the
Group is appropriately managed and operates
responsibly, with effective controls, as it pursues
its objectives.
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Governance
Our Board continued
The Board reviews the performance of management
and the operating and financial performance of
the Group as a whole. In particular, the Board is
responsible for establishing the Company’s purpose
and values and setting strategy, determining risk
appetite, ensuring appropriate risk management
and internal controls are in place, ensuring good
governance, decision making and promoting the
desired culture. The Board also ensures that plans
are in place for orderly succession for appointments
to the Board and to senior management, so as
to maintain an appropriate balance of skills and
experience within the Company and on the Board.
In order to carry out its work, the Board, which
usually meets formally eight times a year, agrees an
annual agenda plan to ensure all necessary matters
are covered and to allow sufficient time for debate
and challenge. In particular, the Board has sought
to ensure there is sufficient time to discuss strategy
so that the Non-Executive Directors have a good
opportunity to challenge and help develop strategy
proposals. The Board also takes time to review past
decisions where necessary.
At Board meetings, the Board receives and considers
papers and presentations from management on
relevant topics. Effective review and decision
making are supported by providing the Board with
high-quality, accurate, clear and timely information
including input from experts and independent advisers
where necessary. The Board seeks to work in the best
interest of SThree plc and its stakeholders.
Certain powers are delegated to the Remuneration
Committee, Audit & Risk Committee and
Nomination Committee, with details of the roles and
responsibilities of these Committees being set out
under the relevant sections.
Division of responsibilities
In order to facilitate more efficient working practices
there are agreed Terms of Reference for the Board’s
main Committees and for the Group’s management
committees, including an Executive Committee, a
Disclosure Committee, a Group Risk Committee, an
ESG Committee, and a Finance and Administration
Committee, all of which provide a clear framework of
delegated authorities.
The Board is responsible to shareholders for the proper
management of the Group and has identified key
financial and operational areas that require regular
reporting and which enable the performance of senior
management to be reviewed and monitored. These are
set out in a schedule of matters reserved for the Board,
which is reviewed on a regular basis.
The schedule outlines all matters requiring specific
consent of the Board, which include the approval of
Group strategy, operating plans, annual budget, the
Annual Report, the Interim Report, trading updates,
major divestments and capital expenditure, meaningful
acquisitions and disposals, the recommendation of
dividends and the approval of treasury, tax and risk
management policies.
The schedule therefore facilitates structured
delegation, subject to certain financial limits and
provides a practical framework for executive
management and reporting, which seeks to achieve
the objectives of maintaining effective financial and
operational controls, whilst allowing appropriate
flexibility to manage the business. The current
schedule of matters reserved for the Board, which has
been incorporated into a new Corporate Governance
Framework, is available on the Company’s website at
sthree.com.
Information and support
Board and Committee meeting papers are circulated
well in advance of the relevant meeting and where
a Director is unable to attend he/she is provided
with a copy of the papers and has the opportunity to
comment on the matters under discussion.
The Company Secretary helps to ensure information
flows between the Board and Committees, as well as
senior individuals across the Group and Non-Executive
Directors, and appropriately advises the Board on
governance matters.
Directors have access to the advice and services of the
Company Secretary, who is responsible to the Board
for ensuring that its procedures are complied with
and to assist in arranging any additional information
as required. The appointment and removal of the
Company Secretary is a matter reserved for the Board
as a whole.
Directors are entitled to obtain independent
professional advice at the Company’s expense, on
the performance of their duties as Directors. All
Committees are serviced by the Company Secretary’s
team and are appropriately resourced.
Section 172 duties, including link to
purpose, values and culture
Directors must act in the way they consider, in good
faith, would be most likely to promote the success
of the Company for the benefit of its members as a
whole, and in doing so have regard (amongst other
matters) to the:
•
likely consequences of any decision in the
long term;
•
interests of employees;
• need to foster business relationships with
suppliers, customers and others;
•
impact of operations on the community and
the environment;
• desirability of maintaining a reputation for high
standards of business conduct; and
• need to act fairly as between members.
As a purpose-driven organisation, this also drives our
approach to values and culture to help deliver on our
strategy. Board and Committee meeting attendees
are reminded of these duties at the start of each
meeting, including considering the long-term impact
of decisions, whilst aiming to uphold the highest
standards of governance.
In between trading updates, there is continued
dialogue with the investor community by meeting key
investor representatives, holding investor roadshows
and participating in conferences. Investor sentiment
is regularly relayed to the Board, whilst meetings
between management and debt providers, principally
the Company’s banks, also take place periodically.
The Chair, Senior Independent Director and other
Non-Executive Directors are available to discuss
governance, strategy or other issues, or should there
be matters of concern that have not been, or cannot
be, addressed through the Executive Directors. During
the year, both the Chair and Senior Independent
Director were available to shareholders, with the Chair
and Company Secretary holding separate investor
meetings, the results of which were fed back to
the Board.
Views of analysts, brokers and institutional investors
are sought on a non-attributed basis via periodic
sentiment surveys and these, as well as regular analyst
and broker publications, are circulated to all Directors
to ensure that they develop a full understanding of the
views of shareholders.
Any issues or concerns are raised and discussed at the
Board, and Directors routinely receive regular reports
on share price, trading activity and sector updates.
The issues, factors and stakeholders that the Board
considers relevant to complying with Section 172 are
set out in the Section 172 statement.
The Board views the AGM as an opportunity to
communicate with private and institutional investors
alike and welcomes active participation.
Engagement with shareholders and
constructive use of our AGM
As a listed plc, engagement with shareholders is given
a high priority as part of a comprehensive Investor
Relations programme. The Company produces
Annual and Interim Reports for shareholders and the
Company’s website contains up-to-date information
on the Group’s activities, investor presentations and
published financial results.
Shareholders can also subscribe for email alerts of
important announcements made. There are regular
meetings with institutional shareholders and analysts
following key trading updates and throughout the
year on an ad hoc basis, whilst ensuring that price-
sensitive information is released consistently and at
the same time to all, in accordance with best practice
market rules.
There is also dialogue on specific issues, which this
year included audit tendering, the application of the
remuneration policy and general governance matters.
The Company proposes a separate resolution on
each substantially separate issue and the proxy
appointment forms for each resolution provide
shareholders with the option to direct their proxy to
vote either for or against any resolution or to withhold
their vote.
The Company’s registrars ensure that all valid proxy
appointments received for the AGM are properly
recorded and counted and a schedule of proxy votes
cast is made available to shareholders attending the
meeting. There is also full disclosure of the voting
outcome via the London Stock Exchange and on
the Company’s website as soon as practicable after
the AGM.
All Board members attended the AGM and the Chairs
of the Audit & Risk, Nomination and Remuneration
Committees are available to answer questions. The
Notice of AGM is posted at least 20 working days
prior to the date of the meeting and the Company’s
website contains copies of all Notices issued.
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P-129
Our Board continued
Update on 2022 AGM voting results
All resolutions put to the AGM held on 20 April 2022
were passed with the requisite majority of votes.
However, we acknowledge the votes received against
the 2021 Directors’ remuneration report and the
resolution to re-elect PwC as auditors. The Chair and
Chair of the Remuneration Committee undertook an
extensive consultation with investors prior to the AGM
to understand concerns. In respect of the Directors’
remuneration report, votes against were caused by
the departing CFO receiving a higher contractual
payment, due to a misalignment between the date
of the announcement of the Company serving 12
months’ notice (25 January 2021) and the date of
notice in the Settlement Agreement (16 April 2021).
The explanation for this ‘Notice of Notice’ scenario
was detailed in last years’ annual report. Subsequent
to the AGM, our Remuneration Committee Chair
has again engaged with significant shareholders to
confirm steps that have been put in place to prevent
recurrence of a similar situation. This includes a new
step-by-step process for all future senior executive
leavers, covering Committee oversight, management
supervision, internal Legal and HR interaction and
touchpoints with external advisers. In respect of votes
against the resolution to re-elect PwC, this was caused
by their tenure. Our Executive Directors have engaged
with significant shareholders to explain why the
Board continues to believe it is appropriate for PwC
to remain in office for the time being. As described
more fully in our Audit & Risk Committee Report, we
will begin an audit tender process during the 2023
financial year with a view to having new auditors in
place for our 2024 interim results. The Company will
continue to monitor the objectivity, independence and
performance of PwC and, if there are any concerns,
the audit tendering process will be accelerated.
Engagement with employees and
stakeholder influence in decision
making
The Board is committed to engaging with employees
to better understand the Company’s culture,
challenges and issues. Across the year, the Board has
met collectively with employee groups from a number
of our key markets, including Japan, Germany and
the US. These meetings are designed to coordinate
with Board reviews for the relevant region, to enable a
holistic understanding of the experience of our people
in the workplace, in addition to the strategic and
operational perspective of regional management.
Denise Collis was appointed in December 2018
as the designated NED responsible for employee
engagement, to gather views from employees and
ensure that these are brought into the boardroom. In
carrying out this role, Denise has met with a diverse
range of employees, at all levels of seniority, whilst
also engaging with Group and local HR teams. See the
separate Employee engagement section for details
on Denise’s engagement with employees across the
SThree Group during the course of 2022.
To ensure the continuing success of the Group in
setting strategy, making decisions and addressing
principal risks, key stakeholders are considered as part
of the business model and value chain.
The Board’s annual programme, reviewed each year,
is designed to ensure the voice of each stakeholder
group is heard, either directly, (e.g. by inviting
customers to meet Board Directors) or indirectly, (e.g.
through independent surveys or management reports).
The Board oversees and challenges the executive on
stakeholder engagement and its influence on strategy
by including appropriate direct or independent
assessments, (e.g. investor or client/customer survey
feedback), it also ensures appropriate stakeholder
management processes are in place, (e.g. by
facilitating escalation procedures and complaints/
grievance mechanisms, (such as whistleblowing)
which are also appropriately reviewed or audited,
as needed.
Employee engagement
As in recent years, we have
established a programme of
employee engagement focus
groups where people from
across SThree’s network,
at different levels in the
organisation, have come
together to share their views
about the business.
Denise Collis
Senior Independent
Non-Executive Director
Four meetings were held over the year, two by
videoconference in March and June, and two
in person, in Berlin in September and London in
October. Participants, attending remotely through
video conferencing came from America, UK, France,
Netherlands, Dubai, Belgium and Germany.
Whilst the meeting in Berlin was with a range of
employees across different grades and a range of
specialisms, it was decided this year to have three
groups that focused on a specific demographic.
Improving retention is a key business imperative and
I was keen to meet with those at the early stages of
their career to try and develop a better understanding
of what had attracted them to SThree, what the
experience had been like and what action we could
take to encourage our talented people to build a
longer-term career with us. One cohort focused on
those in their first 12 months and another on those
between 12 and 24 months. The business is going
through a major transformation programme so I also
met with a group of individuals from our core functions
who are playing a key role in the programme’s
implementation. Adopting such a focused approach
proved very insightful and provided rich output that is
reflected in the following pages.
I have continued to be encouraged by the directness
and positivity of those attending engagement
focus groups. My strong impression is that we have
established an atmosphere of trust where participants
can frankly share opinions in an open and generally
constructive way. Nothing is off-limits and my only ask
is that people speak with good intent.
The level of engagement is further reflected in those
who take the initiative to contact me following a
meeting to share additional thoughts on the topics
discussed. Indeed, over my time as the Employee
Engagement NED I have been able to build a
relationship with many who have contributed and have
been heartened that they have wanted to continue
a dialogue.
There is a strong correlation between the opinions
raised and the findings of the deep-dive, annual
employee survey. In 2022, we have been able to
monitor this correlation even more accurately as
the Group has conducted quarterly pulse surveys of
employee engagement prior to the full annual survey
in October.
All Non-Executive Directors and the Chair have an
open invitation to attend the focus group sessions to
gain insights into how our people think which will add
to those they already gain from their own touchpoints
with the business.
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Governance
Employee engagement continued
In addition to these sessions, I have continued to
work with Identify, the diversity talent initiative for
fast-tracking the development of women from across
SThree with leadership potential. I was delighted to
speak at the closing ceremony for this year’s new
cohort, which was attended by a committed group of
business leaders including the Chair and CEO.
I have also explored other touchpoints, reaching
out to groups and individuals for their input, in
addition to meeting with a group of managers at our
Birmingham office.
This year we have again dedicated two Board sessions,
in July and November, to discussing my findings,
considering recommendations and determining next
steps. At the same session, we have reviewed either
the Pulse or Annual Survey results, which has allowed
for deeper analysis and more targeted actions. I
am in no doubt that the Board takes these sessions
very seriously. The commitment is evident, and we
collectively hold ourselves accountable for responding
quickly and positively.
It is vital that employees feel their views are not just
being heard but are being acted upon.
The best confirmation that this is indeed happening
is for them to see evidence of change, in a way that
impacts them directly. The table on pages 134 to 135
sets out the key areas of focus and actions either
taken in 2022 or planned for 2023. I am heartened
that we are making significant progress. Employee
engagement is now woven into the fabric of the
business and our annual cadence.
Over the coming year, I will be holding further focus
group sessions, and will seek to align these with
those aspects of the people agenda that are key to
delivery of the business strategy. Our approach to
employee engagement is integral to our business
philosophy. We are a People business. The gathering
of views and insights across the business is essential
and it’s important that everyone, at any level of the
organisation, has an opportunity to speak out, grow in
their leadership and make a difference.
I would like to thank the Board for their continued
unstinting support. My role can only be effective if
the most senior leadership of the business are serious
about employee engagement. I believe this Board is,
and I look forward to reporting on further progress
next year.
“ This was my first time attending
a focus group and I honestly
didn’t know what to expect from
the Employee Engagement Focus
Group, run by Denise, a Non-
Exec. But it genuinely did not
disappoint. Denise herself was
welcoming and has a positive
approach as a listener. It was
a valuable learning experience
to be able to see, hear and
share experiences with other
participants and I left confident
knowing the Board Members
are listening and positively
care about their people and
continually wishing to improve
their organisation.”
Harjinder, UK&I
“ The chance to share
experiences, thoughts and
to discuss with colleagues
of all regions really adds
value to me personally and
- I hope - to all of us across
the SThree globe. To create
a platform like the focus
groups is very purposeful
for our development as an
organisation in common. I feel
that feedback is appreciated
and sharing different
perspectives is a key to
improve ourselves.”
Christina, DACH
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Governance
Employee engagement continued
2021/2022 Feedback
Action taken during 2022 or planned for 2023
2021/2022 Feedback
Action taken during 2022 or planned for 2023
Further develop internal
communications, with
particular emphasis on
audience segmentation, to
ensure appropriate and timely
connections across different
parts of the organisation.
Provide greater clarity around
the employee proposition.
Continue to invest in L&D,
particularly onboarding, manager
effectiveness and leadership
development.
Further work on career paths,
progression and market-
competitive rewards for both
sales and core functions.
Provide greater openness around
planned improvements to IT
and operational infrastructure.
A key priority for the internal communications team has been
reinforcement of key messages from the new CEO and ExCo. Top 100
calls, where the senior managers come together, are now conducted
on a regular basis. We created and launched a strategic narrative at a
global leadership event in October which was attended by most of our
top 100 senior leaders. This was followed with a planned cascade, via
a programme of local engagement events, for all employees, rolled out
towards the end of 2022 and into 2023.
We developed a new People Promise. It provides a clear commitment
about the experience we want to create for everyone who works at
SThree. This was launched, and embedding commenced, during 2022.
We also enhanced our employer value proposition (EVP), adjusting it to
reflect different cultural nuances across our regions. This new EVP was
created and launched in line with the brand refresh. A new careers site
was launched, reinforcing the enhanced proposition. Looking forward
to 2023, we will be developing new interventions reflecting the differing
needs of those in sales and the core functions.
Our onboarding learning programme, Elements, which was shortlisted
for Best Digital Induction and Best Use of Blended Learning awards at
the Learning Technologies Awards, continues to grow with the course
being accessed over 270,000 times since launch. A new Leading with
Purpose programme was launched in H2 2022, combining a two-day
programme with leadership assessments and coaching. It commenced
with ExCo participation and then cascaded down to the Top 100. There
will be quarterly follow up sessions in 2023.
Following the completion of the Global Grading project, all roles across
the organisation are now aligned to the new framework. Our focus
has turned to action planning to address inconsistencies and drive
equity of career opportunity as well as the achievement of market
competitive pay for all. Early initiatives included further investment in
sales consultant base salaries in the USA, Germany, the Netherlands and
the UK. We improved reward communications to colleagues in several
markets, including a total reward statement in the USA, and uprated
employee benefits communications in the UK. A share incentive plan
for everyone at SThree was launched to promote a culture of collective
ownership. Further activity, including a focus on career paths and
opportunities for core functions, is being developed for 2023.
The strategic investment in systems, that began in 2022, is delivering to
plan. We established a communications stream to keep people briefed.
A key priority in 2023 will be to ensure that we engage with teams
as they are directly impacted. We will complement this with broader
communication that will allow people to understand the big picture as
well as how and when changes will arrive locally.
Continue to enhance support
for mental health fallout post
Covid-19 and address any signs of
burnout due to the weight of the
organisational change agenda.
Investment in our Health and Wellbeing support programmes continued.
Mental wellbeing was the focus for 2022 and we rolled out pilot training
programmes for our colleagues and people managers. The outputs
shaped our ongoing strategy and resulted in significant budget being
approved for continued investment in training in the coming year. Key
highlights include:
Continue to focus on Diversity &
Inclusion, with visible declarations
of intent.
• Mind Strength, an online modular programme for all colleagues
(complemented with virtual drop-in clinics), aimed at building
personal resilience.
• At Ease with Mental Wellbeing, an online and workshop-based
programme (with personalised follow-up) for people managers,
designed to help them spot warning signs, start conversations and
direct them to resources.
• Volunteers came forward to actively support both programmes
with over 40 participating in the colleague programme and over 50
completing the people manager programme.
We ran workshops with active participants to capture feedback.
Recommendations will be included in the development of the future
Mental Wellbeing strategy for 2023 and beyond.
The investment in diversity of 2021 continued into 2022. There was a
strong focus on allyship and empowering our regions to develop local
initiatives, along with delivery of a number of global and local events
marking US Black History Month, International Women’s History Month
and Pride. The number of Employee Resource Groups across the
business now totals nine.
Despite the engagement and activity, elevating women to senior
leadership roles, especially sales, has proved challenging. A second
cohort of Identify, our women’s leadership talent accelerator, ran
from January to July. It supported 24 women across our business by
matching them to external mentors, offering them internal workshops
and training, and building a women’s network across the business.
Gaining greater traction will be a key priority during 2023, along with
focus on areas such as differing abilities and socio-economic mobility.
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Governance
Governance
Nomination Committee
“ SThree’s purpose is to bring skilled
people together to build the future.
That future-focus and long-term
thinking also applies to how our
Nomination Committee keeps our
Board’s composition under review
and ensures we have robust
succession plans in place.”
James Bilefield
Nomination Committee Chair
Committee meetings held
3
James Bilefield (Chair)
Barrie Brien
Denise Collis
Elaine O’Donnell
Anne Fahy
3/3
3/3
3/3
1/1
0/0
Anne Fahy resigned prior to any scheduled Committee meetings
being held.
Imogen Joss joined the Committee subsequent to year end.
The Committee complies with the requirement to have a majority of
independent Non-Executive Directors (NEDs).
Full biographies are available on pages 122-123.
Dear Shareholder
I am pleased to present to you the Nomination
Committee report. The report provides underlying
detail on the Committee and its activities during
the year, in compliance with the UK Corporate
Governance Code (the Code).
SThree’s purpose is to bring skilled people together
to build the future. That future-focus and long-
term thinking also applies to how our Nomination
Committee keeps our Board’s composition under
review and ensures we have robust succession plans
in place, to safeguard the delivery of our strategy and
ensure the long-term success of the Company.
Since my last report we have seen a number of
changes to the composition of the Board. At the
start of the year we announced that Mark Dorman
would be stepping down from the Board and as CEO
of the Group on 31 December 2021. Timo Lehne
was appointed interim CEO of the Group and the
Committee commenced a search for a permanent
CEO. Having completed an extensive search process,
reviewing both internal and external candidates,
the Committee recommended Timo for the role
as permanent CEO, with his appointment being
confirmed on 28 April 2022.
The Board understands and fully supports the
recommendations of the Parker Review. However,
following the very recent appointments, we plan to
allow a period of bedding in and Board stability for
our two new Non-Executive Directors and for the
Board overall. We believe that this is also sensible
forward planning in terms of board succession and
rotation. Therefore we intend to look for an additional
Non-Executive Director, preferably from a non-
white minority ethic background, at some point in
2024 in order to meet the Parker Review target by
December 2024.
Summary of Terms of Reference
The Committee’s Terms of Reference are, broadly, to
regularly review the structure, size and composition
(including the skills, knowledge, experience and
diversity) of the Board, make recommendations with
regard to any changes and to review and prepare
relevant job descriptions for new appointees, as
well as ensuring the continuing development of, and
adequate pipeline into, the Executive Committee for
succession and bench strength purposes.
Summary of core Committee activities
carried out during the year:
• Oversaw the Board and senior management
succession plans.
• Oversaw the composition and effectiveness
of the Board and Committees, with diversity
a key criteria.
• Oversaw the search for a new Chief
Executive Officer.
• Oversaw the search for, and recommended the
appointment of, two new independent Non-
Executive Directors, including the Chair of the
Audit & Risk Committee.
Selection and appointment of a
new Chief Executive Officer
Following the announcement of the departure
of Mark Dorman as Chief Executive Officer,
Timo Lehne was, on the recommendation of
the Nomination Committee, appointed as
an Executive Director and interim CEO. An
extensive and thorough search process then
commenced. Russell Reynolds Associates, a
leading executive search firm, was engaged
to facilitate the process, which involved a
diverse longlist of potential candidates, drawn
from a range of backgrounds and including
both internal and external candidates. Russell
Reynolds Associates has no other connection
with the Company or its individual Directors
aside from the provision of recruitment services.
Following interviews with and full evaluation
of selected candidates, the Nomination
Committee endorsed the appointment of
Timo Lehne as the permanent Chief Executive
Officer. Having previously been SThree’s
most experienced Managing Director from
our largest region, Timo had demonstrated
strategic thinking, drive, commerciality and
people-leadership skills both in that role and
as Interim CEO and was well placed to lead
the Group. Timo then received a tailored
induction programme, which given his in-
depth knowledge of the Group and the market,
concentrated on the legal framework governing
the duties of a director of a listed company, and
continuing obligations.
Succession planning and diversity
As discussed above, Mark Dorman stepped down as
CEO in December 2021. The Committee oversaw an
internal and external search for a new CEO, leading to
the appointment of Timo Lehne, first as interim CEO
and subsequently as permanent CEO. Following the
resignation of Anne Fahy as a Non-Executive Director
in April this year the Committee accelerated its search
for new Directors, leading to the appointment of Elaine
O’Donnell and Imogen Joss.
Denise Collis continues to act as the designated
NED responsible for employee engagement and to
understand and represent the views of employees at
Board level. Denise has attended a number of focus
groups with a wide range of employees during the year,
together with other Board members. These focus groups
have discussed subjects such as executive remuneration,
diversity and inclusion, and health and wellbeing.
The Committee also periodically reviews Board
composition to ensure that the Code provisions
regarding diversity, over-boarding, Chair tenure and
Remuneration Committee Chair experience are all
complied with. In November 2022 the Committee
considered Board membership and the need to
continually refresh the composition of the Board on a
gradual basis, taking into account the length of service
of current Board members.
Last year we reported that the Committee had agreed
plans to achieve a Board, by 2024, with a minimum of
40% female representation and at least one individual
from a non-white minority ethnic background. I am
delighted to report that we now have in excess of 40%
female representation on the Board, in accordance
with the FCA’s Board diversity targets. Denise Collis
who is our Senior Independent Director, is considered
to hold a senior Board position.
It remains the Committee’s intention to add one
additional Non-Executive Director, preferably from
a non-white minority ethnic background, before
December 2024. The Committee acknowledges the
importance of diversity in its broadest sense in the
boardroom. In filling this position, consideration will be
given to the combination of demographics, experience,
skills, race, age, gender, education and professional
background and other personal objectives needed
to support good decision making. The Committee
is mindful of the need to devote time to thoroughly
embedding each new Non-Executive Director and to
creating a cohesive Board. The timing of onboarding
of a new Non-Executive Director will therefore be
carefully assessed.
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Nomination Committee continued
All Directors are subject to annual re-election,
although NEDs are typically expected to serve
for an initial term of three years, which, in normal
circumstances and subject to satisfactory
performance/re-election at each AGM, is
automatically extended annually. NEDs will normally
serve no longer than nine years, subject to review
as part of the AGM re-election process and their
agreement. The Company’s Articles of Association
also contain provisions regarding the removal,
appointment, and election/re-election of Directors.
Commitment
For Board vacancies, the Nomination Committee
approves a detailed job specification, which sets out
the indicative time commitment expected. Potential
Director candidates are required to disclose any
significant outside commitments prior to appointment
and must undertake that they have sufficient time to
meet these, in addition to Company business.
Upon joining, each Director receives a formal
appointment letter which identifies their
responsibilities and expected minimum time
commitment, which is typically two to three days a
month. These letters are available for inspection at the
Company’s registered office, or by contacting
cosec@sthree.com.
Development
At scheduled Board and Committee meetings,
Directors receive detailed reports from management
on the performance of the Group or specific areas of
focus and responsibility. NEDs may visit the Group’s
sales offices or other locations in order to join staff
members and other stakeholders from different
geographic areas to discuss current initiatives.
Directors are aware of their responsibilities and are
briefed on relevant regulatory, legal, governance or
accounting matters periodically, as required. Directors
also attend external seminars on areas of relevance
to their role in order to facilitate their professional
development, whilst NEDs also use external insights
from their own development networks to support the
management team. These measures help to ensure
that the Board continues to develop its knowledge
of the Group’s business and get to know senior
management, as well as promoting awareness of
responsibilities. Executive Directors are encouraged
to accept external appointments in order to broaden
their experience, although currently no such positions
are held.
Induction arrangements are tailored for new
appointments to ensure that these are appropriate to
each role, dependent on previous experience. Details
of Elaine O’Donnell’s induction are set out below.
Directors and other Senior Executives are invited
to attend analyst briefings and our Investor Briefing
Series of presentations, and major shareholders are
invited to meet any relevant new NEDs.
As part of the annual Board evaluation process, the
Chair assesses any training and development needs in
respect of individual Directors.
James Bilefield
Chair
27 January 2023
Induction of Elaine O’Donnell
Upon appointment to the Board, each Director
engages in a comprehensive induction programme
which is tailored to their individual needs.
Elaine’s programme included:
•
Initial meetings with fellow Directors for
discussion of key matters;
• Specific handover of Audit & Risk
Committee Chair responsibilities meeting
with Barrie Brien;
• Meetings with CFO, Director of Finance
Operations, Head of Internal Audit, and
Lead External Auditor in respect of Audit
Committee matters;
• Meetings with Executive Committee
members with responsibilities for key
regions and countries;
• Meetings with the Chief Legal Officer and
Company Secretary covering an overview
of legal framework applicable to directors
of UK-listed companies, and an overview of
Risks and processes around identification
and reporting;
• Meetings with the Head of Risk and Head of
Business Integrity in respect of risk, ethics
and compliance matters;
• Attending senior leadership conference.
In addition, key strategic, financial and
governance documents were provided to Elaine
in an electronic reading room.
Board evaluation
Each year, the Board reviews performance and
effectiveness, including that of its committees
and individual Directors, to identify areas for
improvement and ensure it is well placed to provide
constructive challenge.
Last year, the review was externally facilitated by
Manchester Square Partners. We have made good
progress against the outcomes of that review, as
shown below. The 2022 review was undertaken
by the Chair and Company Secretary, and in
relation to the Chair’s performance, the Senior
Independent Director.
The key focus areas identified are set out below:
The review was a formal and rigorous evaluation
of the performance and effectiveness of the Board
and its principal committees, with Committee
Chairs overseeing the review of their respective
committees. The evaluation process involved each
Director considering a tailored questionnaire which
included specific consideration of Board structure,
meetings, key responsibilities of the Board and/or
committee, its relationship with management, its
priorities and changes which the Directors believed
would improve effectiveness. The review concluded
that the Board operated effectively and that the
Board Committees discharged effectively their
duties under their respective terms of reference.
Action 2020 / 2021
2021 / 2022 progress and insight
Maintaining an effective balance of the Board’s time
between short-and long-term topics.
Forward planner regularly reviewed by Chair and Company
Secretary and presented to each Board meeting.
Ensuring effective support for the Interim CEO and the
subsequent permanent CEO appointee.
Regular scheduled catch-ups between Chair and Timo Lehne
following appointment. External PLC mentor in place.
Focusing on the implementation of the Nomination
Committee’s NED succession plan.
Announced the appointment of two experienced NEDs during
the year.
Evolving risk management oversight.
Evolving Board meeting cadence and attendance.
Expansion of the scope of the Audit Committee to include
both audit and risk.
List of standing attendees rationalised, whilst ensuring that the
Board continues to have good interaction with different levels
of management.
Action arising from 2021 / 2022 review
Ongoing monitoring of the Company’s Business Transformation Programme to ensure its success.
Successful induction of the newly appointed Non-Executive Directors and continued focus on the NED succession plan.
Post-implementation reviews of past decisions.
Consideration to be given to the mechanisms used to monitor culture throughout the Group.
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Governance
Audit & Risk Committee
“ During the latter part of 2022, as part
of the introduction and adoption of
SThree’s new Corporate Governance
Framework, the Committee expanded
its scope from Audit to both Audit
and Risk, renaming as the Audit & Risk
Committee. New terms of reference
were adopted which are more specific
in terms of the Committee’s overall
role in relation to oversight of both
financial and non-financial risk.”
Elaine O’Donnell
Audit & Risk Committee Chair
Committee meetings held
4
Elaine O’Donnell (Chair)
Barrie Brien
Denise Collis
Anne Fahy
Imogen Joss joined the Committee subsequent to year end.
Full biographies are available on pages 122-123
1/1
4/4
4/4
1/1
Dear Shareholder
As Chair of the Audit & Risk Committee, I am pleased
to present, on behalf of the Board, its Audit & Risk
Committee report, prepared in accordance with the
UK Corporate Governance Code (the Code). This
Report explains the Committee’s responsibilities and
how it has delivered on these.
The Audit & Risk Committee assists the Board in
carrying out its oversight responsibilities regarding
the Company’s financial and corporate reporting, risk
management and internal controls and in overseeing
the relationship with the external auditor. This
report sets out how the Committee has discharged
its responsibilities during the year and, in relation
to the financial statements, the significant issues it
considered and how they were addressed.
Before doing so I would like to thank Barrie Brien for
acting as Interim Chair of the Committee in April 2022
following the resignation of Anne Fahy, a position he
held until my appointment in October 2022. As well as
chairing the Committee through the period, Barrie has
subsequently overseen the performance evaluation of
the Committee.
During the latter part of 2022, as part of the
introduction and adoption of SThree’s new Corporate
Governance Framework, the Committee expanded its
scope from audit to both audit and risk, renaming as
the Audit & Risk Committee. New Terms of Reference
were adopted which are more specific in terms of the
Committee’s overall role in relation to oversight of
both financial and non-financial risk.
During the course of the year, and following on from
earlier work carried out in response to the Department
of Business Energy and Industrial Strategy’s work on
restoring trust in audit and corporate governance, the
Committee received and considered updates on the
Company’s control environment, and development
of an audit assurance policy. It also considered
improvements to third-party due diligence processes
and the Company’s processes to ensure compliance
with the evolving sanctions regimes relating to Russia.
The Company continued to improve and evolve
its Enterprise Risk Management Framework by
developing and embedding the necessary capabilities
within the organisation to support informed risk taking
by the business. Management, together with the
Board, further reviewed the Company’s risk appetite
and tolerance and conducted a post-implementation
review of a significant internal programme.
By overseeing these activities, the Committee is able
to support the Board to enable it to further embed the
Code provisions on risk, control and viability, whilst
strengthening the internal control environment by
ensuring the independence, effectiveness and quality
of both internal and external audit processes, as well
as of the Committee itself.
Internal Audit (IA) continues to play an important role
in the Group’s governance, providing regular updates
to the Committee, with tracking of remedial action in
the case of any control failures. At the start of each
year, an annual IA plan is presented for the Committee
to agree, after appropriate review and challenge.
Significant focus is placed on key accounting
judgements and estimates, which underpin the
financial statements, namely:
• Revenue recognition and the assessment of the
impact of shrinkage rate on Group net fees.
•
Impairment of investments in subsidiaries.
All of these were fully considered by the Committee in
light of the latest FRC guidance.
Having reviewed the content of the Annual Report,
the Committee considers that, taken as a whole, it is
fair, balanced and understandable and provides the
information necessary for shareholders to assess the
Company’s and the Group’s performance, business
model and strategy.
Committee composition and
experience
The Committee consists of Elaine O’Donnell (Chair),
Barrie Brien and Denise Collis. Anne Fahy stood down
from the Committee on 19 April 2022. Imogen Joss
joined the Committee on 1 December 2022. James
Bilefield continues to attend meetings by invitation,
as does the Chief Executive Officer, Chief Financial
Officer, Chief Legal Officer & Company Secretary, the
external auditors, Director of Group Risk, Insurance
and Health & Safety, Head of Internal Audit and
certain Finance function heads.
Elaine O’Donnell is a Chartered Accountant and has
held senior roles, including as a Partner in Transaction
Advisory Services at EY. Barrie Brien brings extensive
financial experience, having held the role of Chief
Operating and Financial Officer at Creston PLC
between 2004 and 2014.
Denise Collis is degree educated and has held senior
management positions, which include financial
responsibility. Imogen Joss has relevant sector
experience given her position as Chair of Grant
Thornton UK LLP, an accounting and consulting firm.
The Committee, taken as a whole, is considered to
have appropriate sector knowledge in addition to their
broad board experience.
The Committee’s principal
responsibilities
• To monitor the integrity of the Consolidated
Financial Statements of the Group and any
announcements relating to financial performance.
• To review significant financial reporting issues
and judgements.
• As requested by the Board, to advise whether,
taken as a whole, the Annual Report is fair,
balanced and understandable and provides
the information necessary for stakeholders to
assess the Group’s performance, business model
and strategy.
• To review the Group’s internal financial controls,
internal control and risk management systems
and reporting, including supporting the Board in
overseeing risk management activity, advising on
risk appetite and assessing material breaches of
risk controls.
• To monitor and review the effectiveness of the
Group’s IA function.
• To agree the external auditors’ engagement terms,
scope, fees and non-audit services, to monitor and
review the external auditors’ effectiveness and
associated independence and recommend
re-appointment to the Board and shareholders.
• To review arrangements by which the Group’s
employees may raise concerns about possible
improprieties in financial reporting or other such
matters and ensuring appropriate follow-up.
• To monitor and review the activities and
priorities of the Group’s Risk function and
the Risk Committee.
• To assess procedures for detecting fraud and
preventing bribery.
• Where requested by the Board, to advise on
proposed strategic transactions, including
conducting due diligence appraisals and focusing
on risk aspects.
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Audit & Risk Committee continued
Summary of core Committee activities
carried out during the year:
Risk management, internal controls,
key focus areas and viability
• Approved annual Committee programme/cycle
of work.
• Reviewed and recommended to the Board the full-
and half-year financial results for publication.
• Approved the external audit plan and reviewed
the audit results.
• Approved the IA plan and reviewed all
reports/findings.
• Reviewed the effectiveness of the IA function.
• Reviewed the performance, independence and
effectiveness of the external auditors.
• Reviewed any non-audit services provided by the
external auditors.
• Reviewed the risk management and controls
framework and effectiveness.
• Considered the Code requirements concerning
fair, balanced and understandable reporting.
• Reviewed the Company’s going concern and long-
term viability statements, including the impact of
climate change on the business.
• Reviewed work in developing an Audit and
Assurance Policy.
• Considered improvements in third-party due
diligence and compliance with sanctions regimes
towards Russia.
• Conducted an annual review of progress against
the business integrity areas forming part of
SThree’s compliance programme.
• Recommended the Audit & Risk Committee report
for approval by the Board.
• Held discussions with the external auditors and
Head of IA without management present.
The Committee also considered, amongst other
matters, technical accounting matters and their
appropriate disclosure, going concern/viability
and scenario modelling, as well as fraud and
whistleblowing, whilst also supporting the Board in
its discussions on systems implementation and other
key risk areas. The Committee aspires to best practice
governance and reporting.
The Committee supports the Board in its overall
responsibility for risk management activities and
implementing policies to ensure that all risks are
evaluated, measured and kept under review by
way of appropriate KPIs, as part of the Group’s
ERM framework.
Presentations from senior management across the
business are provided to the Board to further develop
information, understanding and debate on risks.
This activity includes monitoring of the effectiveness
of the Group’s risk management and internal
control systems in order to safeguard shareholders’
investments and the Group’s assets and, at least
annually, carrying out a robust assessment of risks and
the effectiveness of associated controls on behalf of
the Board. No significant failings or weaknesses were
identified by the Committee from this review.
Significant progress was made towards reaching a
fully integrated system of SThree internal controls,
risk management and policies. Areas were identified
that could be strengthened to drive a future-proof,
appropriately resourced and fully compliant system
of internal control and corporate governance policies.
Management established a process for regular self-
assessment style attestation by risk relating to internal
controls over financial reporting and their owners.
The Committee works closely with the Chief Financial
Officer, Chief Legal Officer & Company Secretary,
Head of Risk, IA team and external auditors to ensure
that any potential material misstatement risks are
identified and targeted in terms of the overall audit
strategy and that audit resources and the efforts of the
engagement team are correctly allocated. This helps
to ensure the effective planning and performance of
the external and IA teams, focused on risk, and has
resulted in a continued improvement in processes and
controls over recent years.
External auditors
Performance and tendering
Responsibilities in relation to
external auditors
During the year, the Committee carried out each
of the following:
• Recommended the re-appointment of PwC as
external auditors, for subsequent ratification of
their remuneration and terms of engagement
by shareholders.
• Reviewed and monitored the external auditors’
independence and objectivity and the
effectiveness of the audit process, taking into
consideration relevant UK professional and
regulatory requirements.
• Reviewed the policy on the engagement of the
external auditors and supply of non-audit services.
This policy sets out a ‘whitelist’ of permitted
non-audit services, lists examples of prohibited
services, sets out typical audit-related services,
their award and approval, explains the cap on non-
audit services which can be billed, and sets out
reporting and independence provisions.
Appointment, objectivity and
independence
Following the conclusion of the last formal audit
tender in early 2017, both the Committee and the
external auditors have safeguards in place to ensure
that objectivity and independence are maintained.
The Committee also considers independence taking
into consideration relevant UK professional and
regulatory requirements. Non-audit services relate
to the half-year agreed upon procedures and PwC
Viewpoint (regulatory updates) subscription, whilst
net fees generated to the Group through recruitment
services provided to PwC as a client are not material.
The external auditors are required to rotate audit
partners responsible for the Group audit every five
years and the current lead audit partner, Kenneth
Wilson, was appointed in 2019, following appropriate
transition. This also reflected the focus of the audit
team’s activities moving to Glasgow.
During the year, the Committee reviewed performance
and fees and met with the external auditors, PwC,
regularly, without management present. Prior to their
most recent re-appointment, following a robust tender
process, PwC originally replaced BDO as auditors
in 1999 and became auditors of the public company
in 2005.
In light of feedback from a small number of large
shareholders regarding the tenure of PwC as external
auditors, at its meeting in November 2021, the
Committee carefully considered whether it would
be appropriate to conduct a tender process for the
appointment of new external auditors.
Under current rules SThree is subject to EU PIE Audit
regulations, but not the UK CMA Order, and are not
required to change auditors until after the audit of
the 2026 financial year report and accounts, with
new auditors needing to be in place for the 2027
financial year.
In response to the significant votes against the
re-election of PwC as auditors at the 2022 Annual
General Meeting, where 78% of the votes cast were
in favour of the re-election of PwC, at its meeting in
July the Board gave careful thought as to the timing of
an audit tender. Following careful consideration and
discussions with certain significant shareholders, the
Board concluded that it was, for the time being and
subject to satisfactory performance, appropriate for
PwC to remain in office, a decision supported by the
Audit & Risk Committee.
The rationale for this included the period of
significant change during the finance and non-finance
transformation across the Group, the current market
for retendering, the existing non-audit work carried
out by other audit firms and resources needed to carry
out a successful tender.
We will begin an audit tender process during the 2023
financial year with a view to having new auditors in
place for our 2024 interim results. The Company will
continue to monitor the objectivity, independence and
performance of PwC and if there are any concerns the
audit tendering process will be accelerated.
In reaching that decision the Board noted that PwC
were still considered to be fully independent, with
the audit moving from PwC’s London team to a
completely new auditing team based in Glasgow
following the opening of SThree’s Centre of Excellence
in Glasgow in 2018, and a new audit partner in the
2019 financial year.
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Audit & Risk Committee continued
Framework used by the Committee to
assess effectiveness of the external
audit process
The Committee has adopted a broad framework to
review the effectiveness of the Group’s external audit
process and audit quality which includes: assessment
of the audit partner and team with particular focus
on the lead audit engagement partner; planning
and scope of the audit, including a dedicated audit
planning afternoon, with identification of particular
areas of audit risk; the planned approach and
execution of the audit; management of an effective
audit process; communications by the auditors with
the Committee; how the auditors support the work of
the Committee; how the audit contributes insights and
adds value; a review of independence and objectivity
of the audit firm; and the quality of the formal audit
report to shareholders.
Feedback is provided to both the external auditors
and management by the Committee and its attendees,
based on the above, with any actions reviewed by
the Committee.
The effectiveness of management in the external audit
process is assessed principally in relation to the timely
identification and resolution of areas of accounting
judgement, the quality and timeliness of papers,
analysing those judgements, management’s approach
to the support of independent audit and the booking
of any audit adjustments arising, as well as the timely
provision of documents for review by the auditors and
the Committee.
Policy on non-audit work
The Committee sets clear guidelines on non-audit
work, which is only permitted where it does not impair
independence or objectivity and where the Committee
believes that it is in the Group’s best interests to
make use of built-up knowledge or experience.
Such work has included services required due to
legislation and assurance work or other specialist
services. The Committee continuously monitors the
quality and volume of this work, fees incurred, as well
as independent safeguards established, in order to
consider whether to use other firms and continues
to use such firms to provide general tax advice or for
other projects.
The policy aligns with regulations to prohibit a number
of non-audit services, whilst also meeting APB Ethical
Standards and FRC guidance, to clearly set out:
• which types of non-audit work are allowed/
prohibited;
•
the types of work for which external auditors
can be engaged without Audit & Risk Committee
referral, provided such services fall below £25,000
and are not specifically prohibited; and
•
for which types of work Committee Chair referral
is needed, i.e. which are above £25,000.
Fees paid to external auditors for
non-audit work
Audit fees for the year were £925,000 (2021:
£782,000). The YoY increase in audit fees reflects the
10% inflation rate applied to the cost of audit services
and two additional subsidiaries falling under the audit
scope due to growth in trading.
The Committee reviews all non-audit work against
policy to ensure it is appropriate and the fees are
justified. Non-audit fees reduced compared to the
prior year, being £13,000 in 2022 (2021: £15,700). Last
year non-audit fees included a non-recurring fee for
the review of Switzerland’s gender equal-pay analysis.
Areas of key significance in the
preparation of the financial statements
The Committee considered each of the following
items of key significance in the preparation of the
Consolidated Financial Statements in 2022 and
based on discussions with management found the
accounting treatment and presentation thereof
complete and accurate. These items were also
discussed with the external auditors during the
planning stage and on completion of the audit.
The key considerations were:
• Revenue recognition including the constraint of
variable consideration - significant estimation is
required in determining a portion of the Group
revenue recognised in exchange for provided
service for which no timesheets have been
received on or before the reporting date. The key
estimation uncertainty arises from determining the
historical shrinkage rate which is used to constrain
the variable part of revenue.
The Committee evaluated the key assumptions
applied in the calculation methodology and the use
of the shrinkage rate by comparing them with prior
years and considering business developments,
in particular continued growth of our contract
business, in 2022; and satisfied itself that the
assumptions and the changes to those assumptions
were appropriate.
• The impairment trigger assessment of SThree
plc’s investments – the Group has operations in
a number of countries across the globe. These
operations are subsidiaries of the parent company,
SThree plc. As set out in the accounting policies,
every year management performs an assessment
whether there are any indicators of impairment of
SThree plc’s investments in its subsidiaries. The
Committee considered key areas of judgement
applied by management in this assessment and
compared them with the Group’s budget, medium-
term forecasts, and the current macro-economic
environment in which subsidiaries operate.
The Committee agreed with the management’s
conclusion that there were no material impairment
triggers and no detailed impairment review was
therefore required in 2022.
• Adopting the going concern basis of preparation
of the financial statements - the Committee
reviewed and challenged the assumptions
underlying the forecast models underpinning the
going concern and viability statements including
the appropriateness and relevance of the severe
but plausible stress tests to ensure adequate
liquidity and covenant compliance throughout the
relevant periods. The Committee also reviewed
the management’s work in conducting a robust
assessment of the risks facing the Group, their
potential impact, how they were being managed,
together with a discussion as to the appropriate
period for the assessment. The Committee deemed
appropriate that the Group continues to apply
the going concern basis for the preparation of the
financial statements and recommended to the
Board to approve the viability statement.
The above key accounting judgements and estimates
are also set out in the note Basis of preparation and
consolidation on pages 198 to 201.
On a quarterly basis the Committee also considered
and addressed key judgements applied by
management in accounting for certain other
transactions which occurred during the year. In the
year under review this included:
• Onerous leases contracts - following the review of
office utilisation in our main locations management
determined to early terminate lease contracts
associated with five offices in Europe. The
Committee reviewed the appropriateness of this
decision and evaluated if the accounting treatment
was in line with IFRS 16 Leases standard.
• Restructuring of SThree’s subsidiaries - significant
activities undertaken by the Group to restructure
businesses in Ireland, Singapore and to close the
Hong Kong business resulted in a recognition of
a £2.4 million restructuring provision, covering
mainly personnel termination costs. The
Committee evaluated, and satisfied itself, that
management correctly applied the recognition
criteria for the provision under the accounting
standard IAS 37 Provisions, Contingent Liabilities
and Contingent Assets.
• Discontinued operations - the Committee also
considered whether the closure of the Hong
Kong business required additional disclosures
as discontinued operations in the financial
statements. The Committee agreed with the
management’s interpretation of the accounting
standard IFRS 5 Non-current Assets Held for Sale
and Discontinued Operations and conclusion
that as the Hong Kong business was not a major
line of the Group’s operations, the definition of
discontinued operations was not met, and separate
presentation of discontinued operations was
therefore not necessary.
• Capitalisation of internally generated assets -
following the commencement of the Group-wide
transformation programme management assessed
all categories of costs to be incurred to develop
intangible assets as part of the programme and
whether they should be capitalised or expensed.
The Committee discussed with management
key judgements applied to cost treatment and
satisfied itself that the key requirements of the
accounting standard IAS 38 Intangible Assets, and
further IFRS guidance issued on accounting for
cloud computing arrangements, were applied and
interpreted correctly.
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Governance
Audit & Risk Committee continued
• Exceptional items - the Committee evaluated
whether management correctly applied the
accounting policy for presentation of exceptional
items. In particular, it reviewed whether costs
associated with business restructuring and the
transformation programme should be presented as
exceptional items due to their non-recurring nature
and material quantum. After further consultation
with the external auditors and having considered
market constituents’ practice to limit the use of
exceptional items, the Committee agreed with the
management’s conclusion that none of the current
transactions should be presented as exceptional.
Internal Audit (IA)
IA plays an integral role in the Group’s governance and
risk management processes and provides independent
assurance to the Committee on compliance with
its policies and procedures. The function carries
out a wide variety of audits including operational
as well as ad hoc and project-based reviews and
fraud investigation.
The Committee oversees and monitors the work of IA,
which carries out risk-based reviews of key controls
and processes throughout the Group on a rolling
cycle, including resources, scope and alignment with
principal risks and effectiveness of the function.
The Head of IA has direct access to the Committee
and meets regularly with both the Committee and its
Chair without management present to consider the IA
work programme, which is approved in advance by
the Committee.
For 2022, whilst the programme was again focused on
addressing both financial and overall risk management
objectives across the Group, with reviews carried out,
findings reported to the Committee, recommendations
tracked and their closure monitored.
No significant weaknesses were identified from
the risk management or internal control reviews
undertaken by IA during the reporting period and
throughout the financial year. The IA team, working
with the Group’s risk and compliance function,
has continued to enhance the risk management
framework and work with managers across the globe
to further develop and embed the risk framework and
methodology at a local level, whilst also ensuring that
the IA plan is closely aligned to risk.
Senior management are invited to present to the
Committee, from time to time, to report back on
progress against agreed IA actions and other risks in
their area of responsibility.
The Committee ensures that the Group’s IA function
remains at an appropriate size and skill mix for the
business, and firmly believes that this function remains
effective and continues to add significant value. The
IA activity conforms with the International Standards
for the Professional Practice of Internal Auditing as
supported by the results of both an external evaluation
of the IA function which was conducted during 2019
that concluded the IA function was highly effective,
and yearly internal assessments of the quality
assurance and improvement programme. At the end
of the year, the Committee approved the adoption of a
new grading system for IA reports.
The new methodology includes an additional
parameter to reference the expected speed of action,
allowing for better prioritisation of reports.
Group Risk Committee
The Group Risk Committee was created in 2018, with
agreed Terms of Reference, and a regular reporting
slot at each Audit & Risk Committee meeting.
The Terms of Reference were updated in 2022. Under
the new Governance Framework, Management
incorporates discussions on risk in Country and
Regional meetings and the half-yearly strategic
reviews conducted for each country, so as to ensure
that risks are fully incorporated into business activities
and decisions and strategic planning. The output of
these discussions is reported back to the Group Risk
Committee. The Group Risk Committee meetings
consider a range of risks identified, their materiality
and the progress of mitigating actions/projects in
terms of their successful implementation and their
likely effectiveness in reducing risk in line with Group
appetite, on a regular basis, and reports in to both the
Executive Committee and the Audit & Risk Committee
on these. Notable activities this year include oversight
of the development of risk tolerance statements for
each of the principal risks, and the building out of
key risk indicators (KRIs) against which the Company
will monitor the principal risks, to ensure appropriate
action can be taken where these KRIs highlight a
change in risk profile.
Fraud and cyber risks
Speak Up hotline
The Group has in place a dedicated independent
Speak Up (whistleblowing) hotline, which is well
publicised across the Group, including via the intranet,
with any notification initially reported to the Chief
Legal Officer & Company Secretary and the Head
of Business Integrity, before being reviewed by the
Committee. Under this arrangement, employees are
able to report any matters of concern, where this does
not conflict with local laws or customs (see ‘Company
information and corporate advisers’ section for
details). This policy aligns with best practice.
Committee evaluation
Following an external evaluation in 2021 the
Committee conducted an internal evaluation process
this year which included feedback from management
attendees. The Committee concluded that it continues
to operate effectively.
Elaine O’Donnell
Audit & Risk Committee Chair
27 January 2023
The Committee reviews the procedures for the
prevention and detection of fraud in the Group and
has also closely monitored improvements to cyber
security protection in the light of increasing risks in
this area, having particular regard to data breaches
that the Group may face and the processes and
controls in place to tackle any security threats. A
cyber-breach crisis management exercise was carried
out with a specialist third party in September 2022,
attended by the Executive Committee and Head of
Risk, with the results and recommendations reviewed
by the Committee.
Suspected cases of fraud must be reported to
senior management and are investigated by IA,
with the outcome of any investigation reported to
the Committee.
Anti-bribery and corruption, and
business ethics
The Group maintains a zero-tolerance approach
against corruption. An assessment was carried out
and presented to the Committee in July 2021 and a
new anti-bribery and corruption policy and a gifts,
hospitality and charitable contributions policy were
introduced, following review and approval by the
Committee in November 2021. A gifts and hospitality
register is maintained to ensure transparency.
The Group also has a Code of Conduct which sets out
the standards of behaviour by which all employees are
bound. This is based on the Group’s commitment to
acting professionally, fairly and with integrity.
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Governance
Governance
Directors’ remuneration
report
The Committee has sought to make
appropriate remuneration decisions
in a year that delivered excellent
business performance, building upon
our growth in 2021. Looking forward,
the Committee has set appropriate
incentive plans to focus management
on continued strong performance,
further enhancing shareholder value.
Committee meetings held
4
Denise Collis (Chair)
James Bilefield
Barrie Brien
Elaine O’Donnell*
Anne Fahy*
*Attended all meetings whilst a Director.
Imogen Joss joined the Committee subsequent to year end.
4/4
4/4
4/4
1/1
1/1
Dear Shareholder
On behalf of the Board, I am pleased to present this
Directors’ remuneration report for the period ended
30 November 2022. At the 2022 AGM shareholders
approved the continued operation of the current
remuneration policy, which has now reached the
end of its three-year term. The support received
reinforces our view that our reward policy has
reflected our business strategy, with remuneration
payments that are strongly linked to performance.
The Annual report on remuneration describes how this
policy was implemented in 2022 and how we intend
to operate in 2023. Given the support for our current
policy, and following on from consultation with our
major shareholders, we are proposing only minor
updates to the new policy, which are set out in more
detail below. The updated policy will be subject to a
binding shareholder vote at the 2023 AGM.
Overall, fixed elements of the remuneration packages
are set so that they reflect the calibre and experience
of our people and the complexity of their roles. The
annual bonus measures are based on specific areas
that require immediate focus, whereas our Long-
Term Incentive Plan (LTIP), looks to drive sustainable
improvements at a more macro level over the longer
term. Culturally, the setting of both financial and
broader non-financial measures serves to focus
scheme participants on a holistic view of business
success and hence serves to drive performance on a
broad, sustainable basis.
An important highlight of 2022 was the wellbeing
support we were able to offer colleagues around
the globe. We continued our practice from 2021 of
offering everyone a ‘wellbeing day’, and in addition
made a one-off financial payment to those colleagues
who we believed would be most impacted by the
cost-of-living increases being experienced around
the world. More broadly, we have been focused on
ensuring that our reward systems are aligned with
attracting and retaining talent, and have made a
number of adjustments where appropriate.
Appointment of new Chief Executive
Officer (CEO)
Following a comprehensive search process, we were
pleased to appoint Timo Lehne as our permanent CEO
on 28 April 2022. As noted in last year’s Directors’
remuneration report, Timo was appointed Interim
CEO in January 2022 having previously been the
Senior Managing Director of our largest region, DACH
(Germany, Austria and Switzerland). Timo brings a
wealth of relevant experience in STEM recruitment,
a deep understanding of our business, and focused,
dynamic leadership, all vital qualities as the Group
continues to execute its growth strategy.
Timo was appointed on a base salary of £483,900,
which was the same level as the previous CEO, and
his variable reward was aligned with the remuneration
policy. Full remuneration details are set out in detail in
this report.
Remuneration payable for performance
in 2022
The Group delivered a strong performance, both
overall and in comparison with sector peers,
particularly in its key markets.
This strong performance is reflected in the outcome
of the annual bonus plan, against a backdrop of
stretch targets having been set. Half of the bonus is
determined by adjusted operating profit achievement
and the outcome was above the maximum of the
target range resulting in a 100% pay-out of this part
of the award. Similarly, the performance against
the targets for net fees, and revenue exceeded
the maximum target, resulting in full pay-out of
these elements.
Our performance in the areas of customer and
employee net promoter scores was between threshold
and maximum resulting in a partial pay-out. We did not
reach the threshold of our free cash flow conversion
ratio target or DE&I gender representation target
resulting in no pay-out for these elements of the plan.
Overall this results in 75.5% of the maximum bonus
being payable, not including the personal objectives
assessment, which represents up to a further 7.5% for
each Executive Director.
The 2020 LTIP award, based on our performance
over the three financial years to the end of 2022, was
subject to a mix of Earnings Per Share (EPS), Total
Shareholder Return (TSR) and a strategic performance
measure. Despite these targets being set prior to
the impacts of Covid-19, achievement against the
stretching EPS target was positive, although our
performance against the strategic target remained
negatively impacted by the pandemic. TSR, measured
against our sector peers, was strong over the period.
For the 50% of the award based on the EPS
performance condition, this required adjusted EPS
for 2022 to be between 38.6 pence and 46.9 pence.
Actual adjusted EPS performance for 2022 was 41.0
pence, resulting in 46.7% vesting of the EPS part of
the award.
For the 30% of the award based on our TSR
performance, our TSR was required to be between
median and upper quartile performance against a peer
group. Actual TSR was at the 72nd percentile resulting
in 91.6% pay-out of this part of the award.
The final 20% of the award was subject to the long-
term strategic measure of operating profit conversion
ratio. We did not reach the threshold for the operating
profit conversion ratio target, and therefore, there was
no vesting of this element of the award.
The overall performance vesting of the 2020-22 LTIP
was therefore 50.8% of maximum. The Committee
has reviewed the share price at which this LTIP grant
was made in 2020 (375 pence per share), and the
current price, and are satisfied that participants
have not benefitted from any Covid-19-related share
price windfall.
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Directors’ remuneration report continued
The Committee has considered whether the
formula-driven pay-outs under the incentive plans
and resultant total remuneration for Directors is
appropriate, looking at the broader context within
which the performance has been delivered. The
Committee is comfortable that there has been a robust
link between remuneration and performance, and the
policy has operated as intended. We have not adjusted
the performance measures for any of the plans and
there has not been a need to use discretion to adjust
the level of remuneration payable. The outcomes
also reflect broader reward outcomes across other
incentive plans within the Group.
Full details of the LTIP measures, performance against
them and resultant payments are set out in the Annual
report on remuneration.
Policy for 2023 to 2025
Our current policy has lasted the full three years
and supported the business strategy well, providing
a strong link between pay and performance. It
has proved appropriately robust and flexible and
has accommodated our restrained approach to
remuneration through the Covid-19 pandemic, as well
as the changes to our leadership during this period.
We believe that current remuneration levels, incentive
opportunities and structure are appropriately
positioned to support our growth ambitions and no
material changes are required. We have, however,
brought the policy up to date, for instance in relation
to the wording on pension provision and made it
explicit that any notice period must start on the date
of an announcement of an executive’s departure,
recognising our recent experience in this area.
In summary, the changes we are proposing to the
policy, are as follows:
Pension: the policy now makes it clear that the pension
contribution for all Executive Directors must be
aligned to the rate (as a percentage of salary) applying
to the majority of the UK workforce (currently 5%
of salary). Both of our recently appointed Executive
Directors receive this pension rate.
Leaver provisions: within the terms of the existing
policy, we have tightened the wording around leaver
provisions to make it explicit that ‘notice’ starts on the
date of an announcement of a departing executive.
Policy implementation for 2023
The Committee increased the salary of both the CEO
and CFO by 3.5%, which is below the budgeted 5%
increase for UK employees more broadly.
We have adjusted the overall mix of financial and
non-financial measures for the annual bonus scheme
from 80%-20% to 70%-30%. This reflects the focus on
important customer and employee measures, which
represent 15% in total, with a further 15% allocated to
the achievement of stretch personal objectives. Within
the financial measures we have removed revenue
because net fees is the most important income metric
for our business. We have also replaced our Group
cashflow measure as it is counter to our working
capital cycle of growing contractors, with Days Sales
Outstanding, which is a more appropriate measure
and is more familiar to employees and can therefore
be rolled out and communicated more effectively.
The LTIP will continue to be based on performance
over three years and subject to a two-year holding
period post-vesting. For 2023, we intend that the grant
level will be unchanged at 150% of base salary, in line
with the Remuneration Policy.
The weighting of LTIP performance measures
will remain unchanged at 50% EPS, 20% TSR,
20% strategic and 10% ESG. The ESG target will
be simplified for this cycle, focusing solely on a
quantitative SBTi reduction in carbon outputs.
The Committee has set stretching targets, recognising
the need to build forward momentum towards our
long-term ambitions.
The Committee retains discretion to ensure that
annual bonus payments and vested awards under the
LTIP can be adjusted if the formula-driven outturn
does not reflect the broader overall performance of
the business.
Full details of the annual bonus measures and the
measures and targets for the 2023-2025 LTIP awards
are set out in the Annual report on remuneration.
Chair and NED fees
Fees for the Chair and NEDs were last increased
on 1 December 2021, taking account of market
benchmarks, and the increased responsibilities and
resultant time commitment required to fulfil the roles.
The fees and approach were further reviewed this
year and an increase in line with that awarded to the
Executive Directors of 3.5% has been made.
Shareholder and employee engagement,
and specific focus on Executive
remuneration in broader context
During 2022 we engaged our major shareholders and
other key stakeholders in relation to the high vote against
the remuneration report at the 2022 AGM, and the new
policy that we will be bringing to our 2023 AGM.
In relation to the high vote against the remuneration
report resolution, the Chair and Chair of the
Remuneration Committee undertook an extensive
consultation with investors prior to the AGM to
understand concerns. This was caused by the
departing CFO receiving a higher contractual
payment, due to the date of the announcement of
the Company serving 12 months’ notice (25 January
2021) not being aligned to the date of notice in the
Settlement Agreement (16 April 2021).
The explanation for this ‘Notice of Notice’ scenario
was detailed in my annual statement last year.
Subsequent to the AGM I further engaged with
significant shareholders to confirm steps that have
been put in place to stop the risk of a ‘Notice of
Notice’ situation arising again. This includes a new
step-by-step process for all future senior executive
leavers, including the Executive Directors, covering
Committee oversight, management supervision,
internal Legal and HR interaction and touchpoints
with external advisers. We have also made the
remuneration policy explicit that a notice period starts
on the date of announcement of an executive director
stepping down.
In relation to the engagement on the new
remuneration policy, and recognising the very modest
changes we were proposing, the feedback was
supportive and there were no specific points for the
Committee to consider nor changes required to the
proposals. We appreciate the level of engagement and
support offered.
We have built upon the rolling programme of
engagement with employees around reward, utilising
a combination of in-person and virtual meetings. I
have personally engaged with many employees across
a number of our offices around the world, as part of
my role as designated NED responsible for employee
engagement, during which reward has emerged as
an area of discussion. In addition, I recently held a
very interactive and productive session with a diverse
group, drawn from across the business, to answer
questions about our corporate governance and
remuneration processes and how our reward policy
cascades throughout the Company, accompanied by
the Director of Reward.
At the July Committee meeting we continued to
focus on the ‘fair pay’ agenda discussing progress
on specific initiatives from last year, which included
meaningful investment in entry-level base salaries
in our sales function and progressing with the
implementation of an all-employee share plan. I was
pleased to see the employee share plan launch in
November 2022 giving all colleagues around the
globe the opportunity to participate and benefit from
matching shares.
We intend to maintain the momentum in this area and
will continue to discuss the ‘fair pay’ agenda in 2023.
Conclusion
The Committee appreciates the support received from
shareholders to date on its executive remuneration
and governance approach and looks forward to this
continued support at the AGM in April 2023.
Denise Collis
Chair of the Remuneration Committee
27 January 2023
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Remuneration at a glance
Remuneration policy
How have we performed?
Bonus-maximum potential 120% of base salary
Group adjusted operating profit £m
Group net fees £m
Free cash flow conversion ratio %
Group revenue £bn
Employee NPS
DE&I gender representation %
Customer NPS
Total pay-out (% of maximum)
Threshold
59.0
363.9
60%
1.37
43.2
34%
50
Max
65.4
383.0
64%
1.45
52.8
38%
54
Actual Achievement %
69.0
402.7
40%
1.54
51.0
32%
52
100.0%
100.0%
0.0%
100.0%
81.3%
0.0%
50.0%
75.5%
Personal objectives are individually determined and worth up to a further 7.5%. Details are set out below.
2020-2022 LTIP award – grant 150% of base salary
EPS (adjusted) (for 50% of the award)
Threshold
38.6p
Max
46.9p
Actual Achievement %
41.0p
TSR (for 30% of the award)
50th percentile
75th percentile 72nd percentile
OP conversion between 18.5% and 22.0% (for 20% of the award)
18.5%
22.0%
18.0%
46.7%
91.6%
0.0%
50.8%
Total vesting (% of maximum)
Summary of total reward
2022
2021
Reward component
Base pay £’000
Total remuneration £’000
Base pay £’000
Total remuneration £’000
CEO1
CFO2
£416.7
£942.8
£484.0
£1,380.7
£352.9
£735.7
£139.3
£293.1
1. 2022 CEO figure relates to Timo Lehne who was appointed Interim CEO on 1 January 2022. 2021 figures relate to Mark Dorman, former CEO.
2. 2021 and 2022 CFO figures relate to Andrew Beach, who joined the Board on 15 July 2021.
How we will apply the remuneration policy in 2023
Key reward component
Base salary and core benefits
Annual bonus
70% Group financial targets
15% Shared objectives
15% Personal objectives
LTIP award
50% EPS
20% TSR
20% strategic targets (operating profit conversion ratio %)
10% ESG (carbon emission reduction)
Shareholding requirements
Key features
CEO salary £483,900 increased by 3.5% to £500,837. CFO
salary £352,873, increased by 3.5% to £365,224.
Pension contribution: 5% of salary for CEO and CFO in line with
the wider UK workforce.
Maximum of 120% of salary, with one third of any bonus award
paid in shares and held for two years.
Maximum award of shares worth 150% of annual salary,
performance tested, vesting after three years with a further two-
year holding period.
Requirement to build up and hold shares equivalent to 200% of
salary whilst employed. Post-service requirement to hold the
lower of 200% of salary or actual shareholding for two years after
cessation of employment.
This section of the Directors’ remuneration report sets out the Group’s full remuneration policy for Directors.
Shareholders’ approval for the policy will be sought at the AGM on 19 April 2023 and the policy will then apply for a
period of three years from this date.
The remuneration policy is designed to support the strategic business objectives of the Group so as to attract,
motivate and retain high-calibre Directors and senior managers, in order to deliver sustainable long-term increases
in shareholder value.
Remuneration payments and payments for loss of office to Directors can only be made if they are consistent
with the approved Remuneration Policy or if an amendment to the Policy, authorising the Company to make the
payment, has been approved by shareholders.
Decision-making process for determination, review and implementation of policy
The Committee reviews the Policy and its operation taking into account the UK Corporate Governance Code,
institutional investor and proxy agency views and market practice and regulatory developments. The Committee
also takes into account views from management and advisers who provide the Committee with updates on
corporate governance developments, market practice and technical assistance. In addition, the Committee also
carefully considers the remuneration arrangements, policies and practices of the workforce and the cascade of
remuneration throughout the business to ensure that Executive Director pay is considered in the round.
Where changes are being made to the remuneration policy or significant changes are proposed in the way we
operate our policy, major shareholders will be consulted, and their views taken into account.
To manage any potential conflicts of interest, no individual is involved in discussions regarding their own
remuneration arrangements and the Committee designs the Policy such that remuneration is fully aligned to, and
supports, the strategy.
Implementation of the Policy is considered annually for the year ahead in light of the strategy and market outlook
and incentive targets are appropriately stretching.
Factors considered in reviewing and operating the policy
The table below describes how the factors of Provision 40 listed in the UK Corporate Governance Code are
addressed in the Remuneration Policy and its application.
Clarity
Simplicity
Risk
The policy and its implementation is straightforward, in line with market norms and clearly disclosed in the
Directors’ remuneration report. The Remuneration Committee Chair consults with shareholders to explain
any changes that are being made to the remuneration policy or where there is a significant change in
operation of policy.
The policy is simple and clear and in line with market practice. The performance conditions chosen are aligned
to the business strategy and the operation of our policy shows a strong and clear link to performance.
The design of our remuneration policy ensures that excessive risk taking will not be rewarded by the balance
of incentive plans in favour of long-term performance and equity, significant shareholding requirements,
discretion to override formula-driven incentive payments, and malus and clawback provisions.
To avoid conflict of interest no individual is present when their remuneration is being reviewed.
Predictability
The incentive plans are subject to maximum caps, and the scenario charts illustrate the potential rewards
receivable, taking into consideration performance and share price growth, for the Executive Directors.
Proportionality
Overall, there is an appropriate balance between fixed and performance-based pay (weighted in favour
of the latter) and short and long-term incentives (also weighted in favour of the latter). Performance
targets are stretching, delivering incrementally higher performance pay at higher performance levels. This
delivers a market competitive remuneration package which is strongly linked to both short and long-term
performance.
Alignment to
culture
The Remuneration Committee designs and operates the policy to support and drive behaviours in line with
the Company culture. The Committee actively considers the pay reward structures across the Group in this
process to ensure that a consistent approach to reward is adopted that is in line with our values.
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Remuneration policy continued
The changes to the Policy are:
• An update to the pension policy to remove legacy provisions and to reflect the position that Executive
Directors’ pensions are now aligned to the rate applying to the majority of UK employees (currently 5%
base salary).
• Leaver provisions: within the terms of the existing policy, we have tightened the wording around leaver
provisions to make it explicit that “notice” starts on the date of an announcement of a departing executive.
The new Remuneration Policy is set out in the table below, followed by supporting notes which, together, form
the Policy.
Element
Purpose and link to strategy Operation
Maximum
Performance metrics
Executive Directors
Base salary
Sufficient to attract,
retain and motivate
high-calibre individuals.
Reviewed annually with
any increases normally
taking effect from
1 December.
Benefits
Market competitive
benefits package.
Pension
To provide a competitive
pension provision.
Including benefits
allowance, private
medical insurance,
permanent health
insurance, life assurance
and housing allowance
(if relocated).
Other benefits may
be introduced to
ensure benefits overall
are competitive and
appropriate for the
circumstances.
Individuals may
either participate in
a pension plan into
which the Group
contributes or receive
a salary supplement in
lieu of pension.
Not applicable
Not applicable
Increases will normally
be equivalent to the
average salary increase
for employees, other
than in exceptional
circumstances.
Cost of insured benefits
will vary in line with
premiums. Other
benefits will be at a level
considered appropriate
in the circumstances.
Not applicable
Executive Directors
are entitled to a Group
contribution to a
pension scheme or
cash in lieu, of 5% of
salary, aligned with the
current UK workforce
contribution.
Element
Purpose and link to strategy Operation
Maximum
Performance metrics
Annual bonus
Incentivises high levels
of personal and team
performance, focused
on the key business
strategies and financial/
operational measures
which will promote the
long-term success of
the business.
Long-Term
Incentive Plan
(LTIP)
Incentivises and
rewards Executives
for the delivery of
longer-term strategic
objectives and to reward
substantial relative and
absolute increases in
shareholder value.
Maximum bonus
opportunity is 120% of
annual salary.
The maximum award
is 150% of salary p.a. in
normal circumstances
but may be 175% of
salary in exceptional
circumstances.
Achievement of agreed
strategic and financial/
operational annual business
targets, weighted in line with
business priorities. A majority
of the performance conditions
will be based on financial
metrics. Sliding scales
are used for each metric
wherever practicable with up
to 20% payable for achieving
threshold performance.
Normally 50% of the
maximum bonus is payable
for target performance for
any financial metric.
Within the maximum limit,
the Committee may adjust
bonus outcomes, based on
the application of the bonus
formula set at the start of the
relevant year, if for instance it
considers the quantum to be
inconsistent with the Group’s
overall performance during
the year.
Targets are reviewed annually
ahead of each grant to
ensure they are aligned to
the business strategy and
performance outlook.
A majority of the performance
conditions are based on
Group financial performance
and shareholder value-based
outcomes. No more than
25% of an award may vest
for the threshold level of
performance.
Within the maximum limit,
the Committee may adjust
vesting outcomes, if it
considers the quantum to be
inconsistent with the Group’s
overall performance during
the performance period or for
other factors, at its discretion.
Deferral into shares for
one third of any bonus
earned, which must be
held for two years.
Dividends or dividend
equivalent payments
accrue on deferred
shares, payable normally
in shares.
Bonus may be subject to
clawback or malus being
applied, if appropriate,
in the event of financial
misstatement, error,
misconduct, reputational
damage or corporate
failure, which has led to
an over-payment.
LTIP awards may be
granted each year in the
form of a conditional
award of shares or a nil-
cost option. LTIP awards
normally vest after
three years. Dividend
equivalent payments
accrue on vested
LTIP awards, payable
normally in shares.
Vested LTIP awards
must be held for a
further two years before
the shares may be sold
(other than to pay tax).
LTIP awards may be
subject to clawback or
malus being applied,
if appropriate, in the
event of financial
misstatement, error,
misconduct, reputational
damage or corporate
failure, which has led to
an over-payment.
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Element
Purpose and link to strategy Operation
Maximum
Performance metrics
Provisions under previous remuneration policies
All-employee
share plans
Support and encourage
share ownership by
employees at all levels.
Share ownership
requirements
Alignment of Executive
Directors’ interests with
those of investors.
Not applicable
In line with statutory
limits or lower limits
specified by the Group
from time to time.
Not applicable
Not applicable
Individuals may
participate in share
plans offered on an
‘all-employee’ basis
on the same terms
as other colleagues.
HMRC approved SAYE
and SIP participation
is available to all UK
employees, including
Executive Directors, on
similar terms.
A global SIP is
available to all
employees, including
Executive Directors,
on similar terms. For
UK participants this
is an HMRC tax-
advantaged SIP.
Other plans may be
introduced from time
to time to ensure the
all-employee share
plans offering remains
appropriate.
Executive Directors are
expected to build and
maintain a shareholding
equivalent in value to
no less than 200% of
base salary. Until this
threshold is achieved
Executive Directors
are normally required
to retain no less than
50% of the net of tax
value from vested LTIP,
deferred bonus or other
share awards (after the
expiry of any relevant
holding period).
After ceasing
employment Executive
Directors must
normally retain a level
of shareholding for
two years equivalent
to the lower of 200%
of salary or the level of
shareholding on ceasing
employment with the
Group. Self-purchased
shares are excluded
from this requirement.
For the avoidance of doubt, the Committee has authority to honour any payments due under the terms of the
previous policy or which have been disclosed to shareholders in previous remuneration reports. As part of this
policy, awards or other arrangements which were made in compliance with the policy in force at the relevant time,
may be settled in accordance with their terms.
Operation of incentive plans
The Committee’s policy is to review performance measures for the incentive schemes annually, so that they
continually align with strategic objectives. The Committee considers that linking annual bonus and the vesting
of LTIP awards to a combination of different measures, capturing share price, financial results and non-financial
performance, will ensure that incentive plans provide a reward for rounded performance, while maintaining the
alignment of Executive and shareholder interests. Targets for the incentive schemes are reviewed annually and
consideration is given as to whether these remain appropriate or need to be recalibrated. The specific performance
targets are set with the aim of setting stretching targets which incentivise and reward improved performance.
In designing incentive structures and approving incentive payments, the Committee pays due consideration to risk
management and environmental, social and governance (ESG) issues.
The Committee may exercise discretion in assessing achievement against each stated target where it considers
that it would be fair and reasonable to do so. The Committee may also exercise broader discretion in relation to the
terms of all incentive plans, for instance (but not limited to) adjustments required for corporate restructuring and
change of control.
Illustration of potential 2023 Executive Directors’ remuneration
The charts below show the remuneration potentially payable to Executive Directors under different
performance scenarios.
£3,000k
£2,500k
£2,000k
£1,500k
£1,000k
£500k
£-
£2,267k
£1,891k
40%
32%
28%
£1,215k
31%
25%
44%
£539k
100%
£398k
100%
Fixed Pay
Annual Bonus
LTIP
LTIP with 50% share price growth
£1,385k
£892k
31%
24%
45%
£1,659k
39%
32%
29%
Below threshold
Target
Maximum
Below threshold
Target
Maximum
Chief Executive Officer
Chief Financial Officer
Assumptions for the charts above:
Fixed pay comprises base salary as at 1 December 2022, pension contribution of 5% salary and the value of benefits
received in 2022. The on-target level of bonus is 50% of the maximum opportunity. The on-target level of the LTIP
is taken to be 50% of the value of a single year’s award.
The maximum level of bonus and LTIP is the maximum bonus and full vesting of the LTIP award. No share price
appreciation has been assumed for deferred bonus awards and the value of all-employee share plans has been
excluded. The ‘maximum’ column includes an additional 50% value of the LTIP to illustrate 50% share price growth.
The CEO’s benefits have been converted from EUR to GBP.
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Role of the Committee in overseeing broader employee pay and differences in
remuneration policy for Executive Directors compared to other employees
The Committee actively considers the pay structures across the wider Group when setting policy for Executive
Directors to ensure that a consistent approach to reward is adopted that is in line with our values. There is a
particular focus in relation to any base salary review.
Overall, compared to most employees, the remuneration policy for Executive Directors is weighted more to
long-term share-based incentives and stringent deferral and shareholding requirements. This is to ensure that the
relatively higher pay levels are justifiable internally and externally to shareholders as a clear link between the long-
term value created for shareholders and the remuneration received by Executives.
Consideration of employment conditions elsewhere in the Group
When setting the Executive Directors’ remuneration policy, the Committee takes into account the pay and
conditions of employees more generally and, at least once a year, is given full details of the remuneration policy
across the Group, with any changes highlighted. As mentioned earlier, the Committee Chair also has responsibility
to engage on employee pay.
During the year Denise Collis, Remuneration Committee Chair, met with employees from across the organisation
to explain how executive pay aligns to that of the workforce. Virtual meetings were held with regional
management, employees and HR representatives, as well as a number of in-office meetings. At the July meeting
the Remuneration Committee continued to focus on the ‘fair pay’ agenda discussing progress on specific
initiatives from last year, which included meaningful investment in entry-level base salaries in our Sales function
and progressing with the implementation of an all-employee share plan. The employee share plan launched in
November 2022 giving all colleagues around the globe the opportunity to participate and benefit from matching
shares. The Committee intends to maintain the momentum in this area and review further progress at the
July 2023 meeting.
Consideration of shareholders’ views in determining the remuneration policy
The Committee actively consults with shareholders on executive remuneration policy changes. Feedback is taken
on board and any proposals are adjusted, as appropriate, given the objective of ensuring that shareholders are
supportive of the policy and its implementation. In addition, the Group follows shareholder sentiment on executive
pay and takes it into account in considering the application of policy in the years between the development of a
new policy. The last exercise was undertaken in 2022, as described in the Chair’s statement.
Remuneration policy for recruitment and promotion
The remuneration package for a new Executive Director would take into account the skills and experience of
the individual, the market rate for a candidate of that experience and the individual’s remuneration package in
their previous role if considered appropriate. The Committee will not pay more than necessary to facilitate the
recruitment of an individual.
Base salary levels will be set in line with the policy taking account of their skills and experience and market data at
comparable companies. Benefits and pension will be in line with the policy. Additionally, there is flexibility to make
payments to cover relocation and other related expenses.
Annual bonus opportunity will be in line with the policy and there is flexibility to set different performance
conditions measurable over a part-year for Executives in the first year of appointment.
LTIP award levels will be in line with the policy.
For internal promotions, outstanding incentive payments may continue and vest on their original terms. For
external recruits there may be a need to buy out unvested incentive awards at a previous employer. The Committee
confirms that any such buy-out arrangements would only be used if necessary, would take a similar form to that
surrendered (e.g. cash or shares and timeframe), would take account of performance conditions, vesting periods
and quantum, and would be no greater than that which the individual has forfeited on appointment.
Policy on Directors’ service contracts and payments for loss of office
The Executive Directors have rolling service contracts subject to a maximum of 12-months’ notice by the Group or
Executive. For the avoidance of doubt, an individual’s notice period will start on the date of the announcement of
their departure. At the Group’s discretion, on termination a payment may be made in lieu of notice equivalent to
12 months’ salary, which may be paid in monthly instalments and offset against future earnings. For new hires the
policy is to provide a 12-month notice period.
Service contracts are available for inspection by appointment at 75 King William Street, London EC4N 7BE.
Depending on the circumstances the Committee may consider payments in respect of statutory entitlements,
outplacement support and legal fees. Mitigation would be applied to reduce any payments associated with loss
of office.
‘Good leavers’ (e.g. redundancy or retirement) as determined by the Committee may generally retain any earned
bonus (pro-rata if active employment ceases part way through the year and normally paid at the usual time) or
share-based awards, with LTIP awards scaled back on a pro-rata basis for the portion of the vesting period elapsed
on cessation of active employment, subject to still achieving any relevant performance criteria.
Awards would vest at the normal time and any deferral or holding periods would continue to apply for the
normal duration. Only in exceptional circumstances would awards vest or shares be released early, such as
serious ill-health.
‘Bad leavers’, such as a resignation, will lose any entitlement to participate in the current bonus scheme and any
LTIP awards will normally lapse on cessation of employment.
Deferred bonus shares are beneficially owned, but must be held for a minimum of two years.
External appointments
Executive Directors are encouraged to undertake one external appointment, where they are able to combine this
with their existing role. This helps to broaden experience and capability, which can benefit the Group. Currently,
no external appointments are held by any Executive Directors.
Terms of appointment and remuneration policy for Non-Executive Directors (NEDs)
NEDs are appointed for an initial three-year term, subject to satisfactory performance and re-election at each
AGM, with an expectation that they would serve for at least six years, to provide a mix of independence, balance
and continuity of experience. In practice NEDs may be requested to serve up to nine years, subject to rigorous
review. The dates of appointment and current terms of the NEDs who served during the year are set out in the
below table.
Non-Executive Director
Date of appointment
Expiry date of current term
James Bilefield
Denise Collis
Anne Fahy
Barrie Brien
Elaine O’Donnell
Imogen Joss
October 2017
July 2016
October 2015
September 2017
October 2022
December 2022
30 September 2023
30 June 2025
N/A
10 September 2023
1 October 2025
1 December 2025
Notes: Anne Fahy stepped down as a Non-Executive Director on 19 April 2022. Elaine O’Donnell replaced Anne Fahy as a Non-Executive Director and Chair of the Audit
and Risk Committee on 1 October 2022.
The appointment may be terminated by either the Group or the NED giving three months’ notice. Upon termination
or resignation, NEDs are not entitled to compensation and, except for the three months’ notice, no fee is payable in
respect of any unexpired portion of the three-year term of appointment.
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Annual report on remuneration
Service contracts are available for inspection by appointment at 75 King William Street, London EC4N 7BE.
Section 1 – Total reward for 2022
The policy for the remuneration of NEDs is summarised below:
Element
Purpose and link to strategy
Operation
Maximum
Performance metrics
Fees
Attracts, retains and
motivates high-calibre NEDs
to provide experience,
capability and governance in
the interest of shareholders.
There is no maximum
individual fee limit. The
overall fee comprises a
basic fee plus payment for
additional responsibilities
such as chairing Committees
and for interim additional
duties. NEDs do not
participate in the Group’s
incentive schemes.
Non-Executive Directors
are not eligible for any
performance-related
remuneration.
Obligation to perform
satisfactorily and attend
and contribute to meetings,
assessed via Board
effectiveness reviews.
Fees are determined by the
Board as a whole and set by
reference to those fees paid
in similar companies, related
to allocated responsibilities
and subject to the aggregate
Directors’ fee limits
contained in the Group’s
Articles of Association.
Fees may be payable in
cash or in shares. Out of
pocket expenses including
travel may be reimbursed
by the Group in accordance
with the Group’s expenses
policy (and may settle any
tax incurred in relation to
these). NEDs are not entitled
to compensation and no fee
is payable in respect of the
unexpired portion of the term
of appointment.
Sourcing shares for share plans and minority interests
Shares used to settle vested share awards may include new issue shares, treasury, Employee Benefit Trust (EBT)
shares or market-purchased shares. The use of new issue or treasury shares is constrained by dilution limits which
are reviewed by the Board annually. In order to comply with investor guidelines, the Board has agreed that certain
LTIP awards will be satisfied using market-purchased shares via the EBT, if appropriate.
1.1 Directors’ remuneration for 2022
1.2 Annual bonus for 2022
1.3 LTIP awards vested by reference to performance over the three years to 2022
1.4 LTIP awards granted during the year
1.1 Directors’ remuneration for 2022 (audited)
Director
Timo Lehne4
Andrew Beach
Mark Dorman5
Anne Fahy6
Elaine O’Donnell7
Denise Collis
James Bilefield
Barrie Brien8
Salary and
fees
(£’000)
Benefits1
(£’000)
Pension
(£’000)
Total fixed
pay
(£’000)
416.7
352.9
42.7
25.7
10.8
80.0
170.0
59.4
13.2
16.7
1.7
–
–
–
–
–
20.8
17.6
2.1
–
–
–
–
–
450.7
387.2
46.5
25.7
10.8
80.0
170.0
59.4
Annual
bonus
(£’000)
411.3
348.5
40.6
Long-Term
Incentive
Plan2
(£’000)
Total
variable pay
(£’000)
80.8
–
277.1
492.1
348.5
317.7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
(£’000)
942.8
735.7
364.2
25.7
10.8
80.0
170.0
59.4
Aggregate emoluments
1,158.2
31.6
40.5
1,230.3
800.4
357.9
1,158.3
2,388.6
2021
Director
Mark Dorman
Alex Smith9
Andrew Beach10
Anne Fahy
Denise Collis
James Bilefield
Barrie Brien
Salary and
fees
(£’000)
484.0
223.2
139.3
58.0
70.5
150.0
48.0
Benefits1
(£’000)
Pension
(£’000)
Total fixed
pay
(£’000)
19.6
17.8
6.0
–
–
–
–
24.2
31.9
5.7
–
–
–
–
527.8
272.9
150.9
58.0
70.5
150.0
48.0
Annual
bonus
(£’000)
484.0
223.2
142.2
–
–
–
–
Long-Term
Incentive
Plan3
(£’000)
368.9
334.5
–
–
–
–
–
Total variable
pay
(£’000)
Total
(£’000)
852.9
1,380.7
557.7
142.2
–
–
–
–
830.6
293.1
58.0
70.5
150.0
48.0
Aggregate emoluments
1,173.0
43.4
61.7
1,278.1
849.3
703.4
1,410.6
2,688.8
1. Benefits comprise car allowance, medical cover and life/income protection insurance.
2. 2022 LTIP awards relate to those granted in early 2020 and due to vest in February 2023 for Timo Lehne and Mark Dorman, based on performance assessed over
2022 to 2023, also including the value of any related dividends accrued during the vesting period on vested awards. The value has been calculated using a share price
of 372p, being the average closing share price over Q4 of the financial year.
3. 2021 LTIP awards relate to those granted in early 2019 and vested in early 2022, based on performance assessed over 2019 to 2021, also including the value of any related
dividends accrued during the vesting period on vested awards. The benefit included in the table last year was calculated based on the average of the share price over the
closing three months of the FY21 financial year, at 571 pence. The actual share price on the date of vesting in March 2022 for Mark Dorman was 404p. For Alex Smith the
actual share price on date of vesting in February 2022 was 475 pence. This updated share price has been used for the LTIP values and the totals in the table above.
4. Timo Lehne was appointed Interim CEO on 1 January 2022; base pay, benefits, pension and bonus are shown from this date. The total value of the 2020-2022 LTIP
vesting is included in the table.
5. Mark Dorman stepped down as CEO and from the Board on 31 December 2021. Remuneration is shown for the period to this date for salary, benefits, pension and
bonus. The full value of the 2020-2022 LTIP award vesting has been included in the table.
6. Anne Fahy stepped down as a Non-Executive Director on 19 April 2022.
7. Elaine O’Donnell replaced Anne Fahy as a Non-Executive Director and Chair of the Audit & Risk Committee on 1 October 2022.
8. Barrie Brien was appointed to the Board in 2017 and acted as interim Chair of the Audit Committee from April to October 2022.
9. Alex Smith stepped down from the Board on 15 July 2021 and his base pay, benefits, pension and bonus are shown to this date. He remained actively employed
providing support and ensuring a smooth handover to his successor until 29 October 2021. The total value of the 2019-2021 LTIP vesting is included in the table. There
was a pension overpayment of £799.82 to Alex Smith in 2020, which has been recouped.
10. Andrew Beach joined the Group on 5 July 2021 and was appointed to the Board on 15 July 2021. His remuneration as stated in the table is from the date of his
appointment to the Board.
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Weighting
Threshold (20%
payable)
Target (50%
payable)
Maximum
(100% payable)
Actual
performance Achievement %
Timo Lehne
(continued)
Global footprint, and products and
services review
Director
Personal objective
Assessment of performance by Committee
Overall achievement (out
of maximum 100%)
Annual report on remuneration continued
1.2 Annual bonus for 2022
Group adjusted operating profit £m
Group net fees £m
Free cash flow conversion ratio %
Group revenue £bn
Employee NPS
DE&I gender target %
Customer NPS
Sub-total (% of maximum)
Personal objectives
Total (% of maximum)
50%
15%
10%
5%
3.75%
3.75%
5%
7.5%
100%
59.0
363.9
60%
1.37
43.2
34%
50.0
62.1
383.0
64%
1.45
48.0
36%
52.0
65.4
402.2
68%
1.52
52.8
38%
54.0
69.0
402.7
40%
1.54
51.0
31%
52.0
100.0%
100.0%
0.0%
100.0%
81.3%
0.0%
50.0%
75.5%
Individually determined, details are set out below
Performance of the CEO, former CEO and CFO against their personal objectives for 2022 is detailed below:
Director
Personal objective
Assessment of performance by Committee
Overall achievement (out
of maximum 100%)
Mark Dorman
Hand over to, and generally support, the
new CEO including acting as a sounding
board to, and providing such assistance
and information to, the new CEO
as required.
Satisfactory handover and support was
provided to the interim CEO up until 31
March 2022.
50%
Timo Lehne
Building ONE SThree ExCo Team
Regional TOM successfully implemented.
95%
Implement phase one of the Target
Operating Model (TOM) with a clear
global structure and modus operandi.
Agree and align around the SThree
Strategy and Change journey.
SThree 2027 Strategy
Agree and align SThree 2024 Capital
Markets Day ambitions with a longer-
term strategy out to 2027, enabled by a
simplified narrative and approach.
Implement a rolling strategy review cycle
for the regions and functions.
Ensure a successful mobilisation of the IT
transformation programmes.
Creation of a reshaped global Executive
Committee, underpinned by team
activity, individual development plans and
succession processes.
2024 Capital Markets Day ambitions
reiterated and Strategy 2027 signed off.
Selected market exits underway to drive
focus on growth areas.
Global strategy launch event held for
80 senior executives, to outline the
Company’s 2027 vision combined with a
corporate narrative around transformation
and growth plans. Event followed by a
major communication and engagement
exercise across the business.
Two Strategy reviews and five Regional
Finance reviews conducted during
the year.
Transformation mobilised, with
achievement of first phase KPIs on time
and within budget.
Conduct detailed legal risk assessments
of the Independent Contractor and
Employed Contractor Models in our core
countries against regulatory requirements
and the contractual position. Feed outputs
into a market clustering analysis.
Develop a robust framework outlining
our products and services by country,
looking through both a commercial and
compliance lens.
Growing sales capacity
Complete a sales benchmarking analysis
of the top four markets. Implement and
embed agreed changes.
People Dashboard – develop and
introduce a dashboard of key People KPIs.
Talent Acquisition (TA) – accelerate
headcount acquisition plans in the US,
Netherlands and Germany to meet
agreed targets.
Andrew Beach
Drive finance team engagement
through development of an energised
global finance community
Improve the development and usage
of financial performance metrics to
enhance commercial decision making
Drive the finance part of the
transformation project in pursuit of
2024 and 2027 ambitions
Develop Investor Relations, ensuring
clarity of message to shareholders
Employed Contractor Model and
Independent Contractor markets
assessed. Areas of risk identified and
corrective action taken.
Framework developed and reviewed, and
approved by the Board.
Benchmarking completed for the top
four markets, and investment made in
base pay structures to support increased
attraction and retention.
Launched career framework with
accompanying pay structure across the
top four markets. Positive impact on
employee turnover (-8.4% vs Prior Year).
Initial draft of overall People
dashboard created.
Enhanced reporting on TA metrics and
inclusion in CEO report.
TA budget gap closed during the year
with focus on onboarding activities
achieving 97% of global hiring plan across
the full year.
Finance Target Operating Model well
underway. Leadership restructure
complete, and model agreed by senior
finance leaders. Significant effort on
engagement, with eNPS increase from -3
to 49 with 95% participation rate.
New management accounts pack
designed and launched, accompanied
by a global suite of KPIs to monitor
performance in a more dynamic and
proactive way, using consistent data.
Business case for ERP signed off by plc
Board. Team selected and mobilised,
system chosen, and SI partner engaged.
Authority matrix significantly simplified
and updated.
Development and external transmission of
the SThree story. Significant improvement
delivered in analyst relationships,
consensus management, and investor
engagement and messaging.
90%
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The table below sets out the annual bonus outcome for the Executive Directors. In line with the arrangements
disclosed in last year’s report Mark Dorman will receive a pro-rated bonus for the year. In determining the final
outcome, the Committee did not exercise any discretion. One third of the bonus payable will be paid in shares,
which must be held for a period of two years.
1.4 LTIP awards granted during 2022
Type
Date of grant
Number of
shares
Face value of
award1
% of award
receivable at
threshold
Financial element
Shared strategic element
Personal element
Timo Lehne
Conditional
23-Feb-22
133,630
£600,000
Payment
under financial
element
(£)
%
achievement
87.5%
87.5%
87.5%
348,244
35,829
296,413
%
achievement
44.4%
44.4%
44.4%
Payment
under shared
strategic
element
(£)
27,595
2,839
23,488
Payment
under personal
element
(£)
35,446
1,919
Total bonus
payable
(£)
411,2861
40,5882
28,583
348,484
%
achievement
95%
50%
90%
Timo Lehne
Mark Dorman
Andrew Beach
1. The bonus noted for Timo Lehne is pro-rata for his period as CEO on the Board from 1 January 2022.
2. The bonus noted for Mark Dorman is pro-rata for his period as CEO on the Board to 31 December 2021.
1.3 2020-2022 LTIP award vested by reference to performance over the three years to 2022
(audited)
Earnings Per Share (EPS) for 50% of the award:
EPS Pay-out range
Pay-out range
(threshold to
maximum)
Actual
performance
Vesting level
Vesting %
of total LTIP
award
Between 38.6p and 46.0p per share
25% – 100%
41.0p
46.70%
23.35%
Total Shareholder Return (TSR) for 30% of the award:
TSR – Rank of the Company compared to the peer group pay-out range
TSR performance between the median (50th percentile and upper
quartile (75th percentile)
Strategic objectives for 20% of the award
Pay-out range
(threshold to
maximum)
25% – 100%
Actual
performance
72nd
percentile
Vesting %
of total LTIP
award
Vesting level
91.60%
27.48%
Measure
Target
Operating profit conversion ratio
Financial operating profit conversion ratio of
between 18.5% and 22% in 2022
Actual
performance
Vesting level
Vesting %
of total LTIP
award
18.0%
0.00%
0.00%
Number of shares granted vs vested vs lapsed based on assessment versus targets for 2020-2022
LTIP award granted in 2020
Executive Director
Number
of shares
granted
Number
of shares
vested
Number
of shares
lapsed
Value of
vested
shares based
on grant
price1
(£)
Value of
vested shares
attributable
to share
price growth2
(£)
Dividend
equivalent
additional
shares
Dividend
equivalent
additional
shares
(£)
Total
£’0002
Timo Lehne, CEO
40,482
20,577
19,905
1,131
77,164
Mark Dorman, former CEO3
138,930
70,618
68,312
3,881
264,818
n/a
n/a
4,207
81,371
14,439
279,257
1. Based on share price of 375 pence.
2. Based on Q4 average share price for 2022 of 372 pence.
3. Mark Dorman’s award was reduced from 193,562 on a pro-rata basis to 31 March 2022.
25%
25%
25%
Performance period
1 December 2021 to
30 November 2024
1 December 2021 to
30 November 2024
1 December 2021 to
30 November 2024
Conditional
26-Jul-222
18,945
£74,739
Andrew Beach Conditional
23-Feb-22
117,886
£529,310
1. Based on share price at date of grant of 449 pence for February grant and 395 pence for July grant.
2. Upon his appointment as permanent CEO, Timo Lehne’s salary increased from £400,000 to £483,900, this additional award represents 150% of the salary increase,
pro-rated for the proportion of the financial year left to run after appointment as permanent Chief Executive Officer.
The performance conditions applying to this award are set out on page 155.
Section 2 – How we will apply our remuneration policy in 2023
2.1 Base salary
2.2 Benefits and pension
2.3 2023 annual bonus including financial, shared and personal measures
2.4 2023 Long-Term Incentive Plan awards
2.5 Non-Executive Directors (NEDs)
2.6 Payments to past Directors
2.1 Base salary
The table below illustrates the most recent base salary review (effective for 2023). The average budgeted salary
increase for employees is 5.0%.
Executive Director
Timo Lehne, CEO
Andrew Beach, CFO
2.2 Benefits and pension
Base salary
2022
(£’000)
483.9
352.8
Increase
(from 1 December 2022)
3.5%
3.5%
Base salary
2023
(£’000)
500.8
365.2
There are no changes to benefits. The CEO and CFO receive a pension contribution of 5% of salary in line with the
rate applying to the majority of the UK workforce.
2.3 2023 annual bonus including financial, shared and personal measures
The maximum annual bonus remains capped at 120% of base salary. One third of bonus is deferred in shares for
two years. The bonus metrics and weightings for the 2023 annual bonus scheme are summarised in the table
below. As the target ranges for each metric are considered to be commercially sensitive, they will be disclosed
retrospectively in next year’s Directors’ remuneration report.
We have replaced our Group cashflow measure as it is counter to our working capital cycle of growing contractors,
with Days Sales Outstanding, which is a more appropriate measure and is more familiar to employees and can
therefore be rolled out and communicated more effectively.
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Metric
Weighting
Measure
Sub-weighting
Link to strategy/notes
2.4 Long-Term Incentive Plan (LTIP) awards
70%
Adjusted operating profit 50%
Group financial targets
These are considered
by the Committee to be
the three most relevant
financial KPIs for bonus
purposes.
Shared objectives
15.0%
Group net fees
15%
Days Sales Outstanding
(DSO)
5%
5%
Employee engagement:
Peakon-based relative
outcome (against
external comparators)
requiring upper
quartile to upper decile
performance
Customer engagement
5%
Operating profit is the key underlying measure
of profitability used within the business.
Revenue less cost of sales. A broad indicator
of trading.
The number of days it takes us to receive
payment following issuance of an invoice and
supports effective working capital management.
To build further on our Employee Engagement
score from 2022 baseline and to maintain our
excellent top quartile relative performance.
To build further on the recent improvements in
Customer Engagement scores.
DE&I: Improved
representation of women
5%
Building towards our ambition of 50%
representation of women in leadership roles.
Personal objectives
15.0%
Personal objectives
15%
Delivery versus agreed objectives to produce
value or efficiency gains.
Total
100%
100%
LTIP awards to be granted in early 2023 will be granted over shares worth 150% of salary. Awards will vest on the
third anniversary of grant, with a further two-year holding period on vested shares. Performance conditions will be
based on EPS, TSR, a strategic metric, and an ESG metric, each applied independently, and there will be a straight-
line sliding scale between threshold and maximum.
These measures are considered to provide an effective link to the business KPIs and provide a strong long-term
alignment of interest between executives and shareholders. The introduction of the ESG measure focused on long-
term Scope 1, 2 and 3 carbon emissions is linked to the science-based targets within our Board ESG strategy.
For comparison, LTIP targets are summarised in the following table, for awards made in 2021 and 2022:
LTIP Weighting
EPS
Strategic
ESG
2021-2023
2022-2024
2023-2025
2021-2023
50%
50%
50%
TSR
30%
20%
20%
Between 24.9 pence
(25% vesting) and 38.9
pence (100% vesting).
Between median (25%
vesting) and UQ (100%
vesting).
2022-2024
Between 51.9 pence
(25% vesting) and 63.0
pence (100% vesting).
Between median (25%
vesting) and UQ (100%
vesting).
20%
20%
20%
Adjusted operating
profit conversion ratio
between 18.5% (25%
vesting) and 22.0%
(100% vesting).
Adjusted operating
profit conversion ratio
between 19.0% (25%
vesting) and 23.0%
(100% vesting).
2023-2025
Between 55.8 pence
(25% vesting) and 69.0
pence (100% vesting).
Between median (25%
vesting) and UQ (100%
vesting).
Adjusted operating
profit conversion ratio
between 20.0% (25%
vesting) and 23.5%
(100% vesting).
10% (3.3% for each measure)
10% (5% for each measure)
1. Positively impacting lives between
135,000 (25% vesting) and 165,000
(100% vesting).
2. Increasing our renewables business
between 8.5% (25% vesting) and 9.5%
(100% vesting).
3. Carbon reduction (absolute reduction
of between threshold 20% (25%
vesting) and 25% (100% vesting) from
2019 baseline).
One single measure of carbon reduction
across scope 1, 2 and 3 emissions.
Incremental progress against 2030
milestones
1) Scope 1 and 2 reduction: between
threshold 35% (25% vesting) and 45%
(100% vesting).
2) Scope 3 reduction: between
threshold 20% (25% vesting) and 25%
(100% vesting).
Weighted equally as 5% of overall total.
Notes: For the 2023-25 LTIP grant the TSR peer group comprises of the following 15 companies - Robert Half International, Randstad, Adecco Group, Asgn, Manpower
Group, Korn Ferry, Hays, Page Group, Kforce, Amadeus Fire, Groupe Crit, Kelly Services ‘A’, Robert Walters, Brunel Intl., and Impellam Group. Previously the group
also included Staffline Group, Empersaria Group and Gattaca, however, they all had a 12-month average market cap below £100 million and are no longer considered a
relevant peer for TSR comparison purposes.
2.5 Non-Executive Directors (NEDs)
The Committee and Board reviewed the fee levels during the year taking into consideration market benchmarks,
the responsibilities and time commitment required for the Chair and NEDs to fulfil their role.
This year it was agreed to increase the Chair and NED base fee in line with any increase to the Executive Director’s
base salary. As such the Chair and NED base fees were increased by 3.5% effective 1 December 2022.
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The fees for the Chair and NEDs are as follows:
Role
Chair
NED base fee (x 3 in 2022 and x 4 in 2023)1
Committee Chair (Audit and Remuneration)
SID
Employee engagement NED
Total (Articles of Association limit is £500k per annum)
1. Imogen Joss joined as a Non-Executive Director on 1 December 2022.
2.6 Payments to past Directors (audited)
Mark Dorman, former CEO
2022 annual
fee
(£’000)
2023 annual
fee
(£’000)
170
55
10
10
5
370
176
57
10
10
5
439
Section 3 – Directors’ interests in shares and broader context for Directors’ pay
3.1 Outstanding share awards held by Directors under LTIP, and SAYE
3.2 Statement of Directors’ shareholdings
3.3 Total Shareholder Return (TSR) performance of SThree over the last ten-year period
3.4 Historical levels of CEO remuneration and incentive plan pay-outs
3.5 Year-on-year percentage change in CEO remuneration compared to employees
3.6 Comparison of CEO remuneration to workforce remuneration by quartiles
3.7 Relative importance of spend on all employees’ pay compared to dividend payments
3.1 Outstanding share awards held by Directors under LTIP, and SAYE
Awards outstanding (including those granted in the year), comprising LTIP, and SAYE (audited)
Executive Directors’ awards outstanding under the LTIP are set out in the table below. Awards are currently
structured as conditional awards of shares, with no exercise price.
Mark stepped down from the Board on 31 December 2021, and remained actively employed to 31 March 2022,
during which time he assisted in a handover and smooth transition. He was then placed on garden leave for the
remainder of his notice period. The following arrangements apply to Mark’s remuneration from the date he stepped
down from the Board until the end of his employment period.
• He continued to receive his salary, pension allowance, and other contractual benefits until 12 December 2022,
subject to him not taking up alternative employment (excluding a single NED role). To 30 November 2022
this amounted to £443,690 in relation to base salary, £22,185 in relation to pension and £17,841 in relation
to benefits.
Executive Director
Mark Dorman
Andrew Beach
• He was eligible to receive a bonus for the financial year ended 30 November 2022 based on his period of
Timo Lehne
active employment. His bonus from stepping down from the Board to the end of active employment equates to
£112,939 for 2022, further details on performance are set out in this report. One-third of his bonus for 2022 will
be paid in shares and held for two years.
• He retained his FY2020-2022 LTIP award reduced pro rata for his period of active employment. As set out in
this report the award will vest in February 2023 at 50.8% of maximum which equates to 70,618 shares worth
£277,138 including dividend equivalents. A two-year post-vesting holding period applies to these shares.
Alex Smith, former CFO
Alex stepped down from the Board on 15 July 2021; the following arrangements applied to Alex’s remuneration until
16 April 2022.
• He continued to receive his salary, pension allowance, and other contractual benefits subject to him not taking
up alternative employment (excluding a single NED role). For 2022, this amounted to £135,290 in relation to
base salary, £19,356 in relation to pension and £12,919 in relation to benefits.
• He retained his FY2020-2022 LTIP award, reduced pro rata to his termination date. As set out in this report
the award will vest in February 2023 at 50.8% of maximum which equates to 53,327 shares worth £209,279
including dividend equivalents. A two-year post-vesting holding period applies to these shares.
• An estimate of the value of Alex’s FY2019-2021 LTIP award vesting was included in last year’s report; based on
the actual share price on vesting the value of the award was £334,531.
Type of
award
Dates of LTIP
grant/award
LTIP
LTIP
LTIP
LTIP
05/02/2020
16/03/2021
19/07/2021
23/02/2022
SAYE
09/03/2022
LTIP
LTIP
LTIP
LTIP
05/02/2020
16/03/2021
23/02/2022
26/07/2022
Market price
at grant/award
(pence)
Shares originally
awarded
Face value
(£)
Vesting date
Remaining
unexercised at
30/11/2022 (incl.
rolled-up dividend
shares)
375
362
458
449
380
375
362
449
395
193,562
725,857.50
05/02/2023
138,930
200,563
726,038.06
16/03/2024
57,377
262,786.66
19/07/2024
117,886
529,308.14
23/02/2025
4,740
40,482
68,508
18,012.00
01/05/2025
151,807.50
05/02/2023
247,998.96
16/03/2024
133,630
599,998.70
23/02/2025
18,945
74,832.75
26/07/2025
69,839
57,377
117,886
4,740
40,482
68,508
133,630
18,945
3.2 Statement of Directors’ shareholdings (audited)
Under the remuneration policy Executive Directors must build and maintain a level of shares equivalent to at
least 200% of base salary. Directors’ interests in the ordinary share capital of the Company as at the year end, are
shown in the table below, including the interests of connected persons and any changes since the start of the year.
There have been no changes since the year end and no Director had any other interest in the share capital of the
Company or its subsidiaries, or exercised any option during the year, other than as disclosed.
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Annual report on remuneration continued
Ordinary
shares
held at
1 December
2021
Ordinary
shares
acquired
Ordinary
shares
disposed
–
121,706
4,150
45,537
10,005
10,000
4,000
–
–
5,000
17,714
5,000
–
–
–
–
–
1,594
–
–
–
–
–
–
–
–
–
Executive Director
Timo Lehne
Mark Dorman
Andrew Beach
James Bilefield
Anne Fahy
Elaine O’Donnell
Imogen Joss
Denise Collis
Barrie Brien
27,719
15,000
4,000
–
–
5,000
1,594
Ordinary
shares held at
30 November
2022
Indirect
interest w/
perf con (i.e.
LTIP/other
awards)
Indirect
interest w/o
perf con
(i.e. SAYE,
deferred
bonus, SIP)
121,706
261,565
–
49,687
208,769
20,653
175,263
11,520
Shareholding
requirement
(% of salary)
Shareholding
(% of 2022
salary)
200%
200%
200%
102%
59%
40%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
The value has been calculated using a share price of 405.5 pence, being the share price on the last day of the financial year.
Share interests shown for FY20-22, FY21-23, FY22-24 LTIP, Share Incentive Plan (SIP) and Save As You Earn (SAYE).
There have been no changes to the share interests of Directors between the end of FY22 and 27 January 2023,
when this report was signed off.
3.3 Total Shareholder Return (TSR) performance of SThree over the last ten-year period
The following graph shows the TSR of the Company, compared to the FTSE 350 Support Services and FTSE Small
Cap indices. These are considered the most illustrative comparators for investors as the Company is or has been a
constituent in the past of these indices.
Total Shareholder Return
300.00
250.00
200.00
150.00
100.00
50.00
0.00
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
SThree
FTSE Small Cap
FTSE 350 Support Services
3.4 Historical levels of CEO remuneration and incentive plan pay-outs
The table below shows historical levels of CEO total remuneration over a ten-year period, as well as annual bonus
and LTIP vesting percentages over the same period.
Year
2022
2022
2021
2020
2019
2019
2018
2017
2016
2015
2014
2013
CEO
Timo Lehne1
Mark Dorman2
Mark Dorman
Mark Dorman
Mark Dorman (appointed 18 March 2019)
Gary Elden (stepped down 18 March 2019)
Gary Elden
Gary Elden
Gary Elden
Gary Elden
Gary Elden
Gary Elden
CEO total
remuneration
(£’000)
Annual
bonus (% of
maximum)
LTIP awards
vesting (% of
maximum)
942.8
364.2
1,533.1
500.2
629.1
832.1
1,064.0
1,228.9
1,058.5
1,284.9
852.2
752.8
82.7%
79.3%
83.3%
00.0%
55.7%
53.2%
73.4%
76.2%
56.4%
92.8%
54.6%
44.3%
50.8%
50.8%
34.4%
0%3
0%4
63.5%
18.8%
41.0%
50.0%
50.0%
18.5%
25.5%
1. Timo Lehne was appointed as interim CEO on 1 January 2022 and permanent CEO from 28 April 2022.
2. Mark Dorman stepped down from the CEO role on 31 December 2021.
3. Mark Dorman was not eligible to receive the 2018-2020 LTIP award for which the performance period ended in 2020; the LTIP vested at 19.3% of maximum
for participants.
4. Mark Dorman was not eligible to receive the 2017-2019 LTIP award for which the performance period ended in 2019; the LTIP vested at 71.8% of maximum
for participants.
3.5 Year-on-year percentage change in Directors’ remuneration compared to employees
The table below shows the percentage increase for each element of remuneration between FY22 and FY19 for
Directors who served during each year, compared with all Group employees.
FY22 vs FY21
FY21 vs FY20
FY20 vs FY19
Salary/fees
Benefits
Annual
bonus Salary/fees
Benefits
Annual
bonus Salary/fees
Benefits
Annual
bonus
n/a
n/a
n/a
13.3%
n/a
n/a
13.5%
23.8%
n/a
n/a
n/a
–
–
–
–
–
n/a
n/a
n/a
–
–
–
–
–
–
7.1%
n/a
7.1%
7.2%
–
7.1%
7.1%
–
4.1%
n/a
–
–
–
–
–
–
–
–
–
100%
(4.9%)
(2.5%)
(100.0%)
n/a
–
–
–
–
–
–
(6.7%)
(6.7%)
–
(6.7%)
(6.7%)
–
–
–
–
–
–
–
–
–
–
–
–
Timo Lehne
Mark Dorman
Andrew Beach
James Bilefield
Anne Fahy
Elaine O’Donnell
Denise Collis
Barrie Brien
Average for all employees
13.8%
20.4%
(15.5%)
8.8%
(5.0%)
77.3%
(1.5%)
(5.7%)
(3.0%)
Notes:
n/a: comparisons for the following executives cannot be provided as they joined or left part way through the year.
2022 vs 2021: Timo Lehne was appointed CEO in January 2022. Mark Dorman stepped down from the Board on 31 December 2021. Andrew Beach joined the Board on
15 July 2021. Alex Smith stepped down from the Board on 15 July 2021. Anne Fahy stepped down as Non-Executive Director on 19 April 2022. Elaine O’Donnell replaced
Anne Fahy as Non-Executive Director and Chair of the Audit & Risk Committee on 1 October 2022.
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3.6 Comparison of CEO remuneration to workforce remuneration by quartiles
The Committee has decided to use Option B in the relevant regulations to calculate the Chief Executive Officer
pay ratio, using 2022 gender pay gap information to identify the three UK employees as the best equivalents of
P25, P50 and P75, calculated based on full-time equivalent base pay data as at 5 April 2022. This methodology
was selected as the Committee believes this provides a more accurate and consistent calculation based on the
information available at this time.
The following table sets out the CEO pay ratio at the median, 25th and 75th percentile.
Financial year
2022
2021
2020
2019
2018
Method
Option B
Option B
Option B
Option B
Option B
The three employees used for the 2022 ratio are shown below:
Q 25 pay
Q 50 pay
Q 75 pay
25th percentile
pay ratio
40:1
59:1
22:1
34:1
39:1
Median
22:1
35:1
19:1
26:1
24:1
Employees’
salary
(£)
23,000
37,544
62,244
Employees’
total remuneration
(£)
23,281
42,104
68,558
75th percentile
pay ratio
14:1
23:1
10:1
16:1
20:1
% change
2022 to 2021
-10.9%
-2.9%
2.2%
Ratios have decreased year on year due to a number of factors; CEO pay has decreased largely driven by a
reduction in bonus paid and the long term incentive vesting being lower year on year. The decrease at the 25th and
median employee is due to the roles being more junior compared to prior year.
The Committee is satisfied the median pay ratio is consistent with the pay, reward and progression policies for
the Company’s employees. Workforce pay and reward policies across the Group are actively considered by the
Committee when determining the Executive Director Remuneration Policy and its implementation each year to
ensure that our approach to reward across the Group is aligned with our values.
Section 4 – Governance
4.1 The Committee and its advisers
4.2 Statements of voting at most recent AGMs
4.3 Approval
4.1 The Committee and its advisers
The Committee’s Terms of Reference (available at sthree.com) are reviewed periodically to align as closely as
possible with the UK Corporate Governance Code (the Code) and CGI best practice guidelines. During the year,
the Committee comprised only independent NEDs, being Denise Collis (Chair), James Bilefield, Barrie Brien,
Anne Fahy and Elaine O’Donnell. The Committee therefore meets Code requirements to comprise at least three
independent NEDs.
The Chief Executive Officer, Chief Financial Officer and the most senior HR representative attend meetings by
invitation, excluding matters related to their own remuneration. The Committee met four times during the year for
routine business, in addition to unscheduled meetings for specific items and no member of the Committee has any
personal financial interest (other than as a shareholder) in the matters decided.
The Committee appointed Korn Ferry as its independent remuneration adviser in 2016, following a
comprehensive review.
Fees paid to Korn Ferry for advice in relation to remuneration matters during the year were £68,594.89 (2021:
£63,559), both excluding VAT. A representative from Korn Ferry attends each Remuneration Committee meeting
and provides input into the papers. Korn Ferry are members of the Remuneration Consultants Group (RCG) and
comply with the RCG Code of Conduct. Korn Ferry has no other relationship with the Company and the Committee
is satisfied that their advice was and is objective and independent.
4.2 Statements of voting at most recent AGMs
At the AGMs held in April 2020 and April 2022, the following votes were cast in relation to the binding vote on the
remuneration policy and the advisory vote on the Annual report on remuneration.
Resolution
For
%
Against
%
Withheld
Directors’ remuneration policy (2020 AGM)*
94,753,657
95.46
4,505,467
4.54
50,380
Directors’ remuneration report (2022 AGM)*
55,874,397
54.42 46,806,243
45.58
1,986,904
3.7 Relative importance of spend on all employees’ pay compared to dividend payments
* Votes withheld are not counted in the % shown above.
The table below sets out the change to the total employee remuneration costs compared with the change in
dividends for 2022 compared to 2021. All figures are taken from the relevant sections of the Annual Report.
Item
Dividends
Remuneration paid to employees (including Directors)
2022
2021
£14.65m
£10.6m
£266.01m
£225.9m
Change
38.2%
17.8%
At the 2022 AGM, the Directors’ remuneration report resolution received 45.6% votes against. This vote against
was as a result of ‘notice of notice’ scenario in respect of the departing CFO. The explanation was detailed in the
Chair’s statement and remuneration report last year. Shareholders were consulted prior to the AGM on this issue.
Following the AGM our Remuneration Committee Chair engaged with significant shareholders to confirm steps
that have been put in place to stop the risk of a ‘Notice of Notice’ situation arising again. We have also made the
policy explicit that a notice period starts on the date of announcement of a Director stepping down.
4.3 Approval
This report was approved by the Board of Directors on the date shown below and signed on its behalf by:
Denise Collis
Chair of the Remuneration Committee
27 January 2023
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Governance
Directors’ report
The Directors present their Annual Report on the
activities of the Company and the Group, together
with the audited Consolidated Financial Statements
for the year ended 30 November 2022.
The Board confirms that these, taken as a whole,
are fair, balanced and understandable and that the
narrative sections of the report are consistent with the
financial statements and accurately reflect the Group’s
strategy, performance and financial position. Where
reference is made to other sections of the Annual
Report, these sections are incorporated into this report
by reference. An overview of the principal risks and
uncertainties faced by the Group is also provided in
the Strategic Report on pages 10 to 117, along with the
Company’s section 172 statement.
These sections, together with the Governance (pages
118-179), Nomination Committee (pages 136-139),
Audit & Risk Committee (pages 140-147) and Directors’
remuneration report (pages 148-173), provide an
overview of the Group, including on environmental
and employee matters, and give an indication of future
developments in the Group’s business, providing a
balanced assessment of the Group’s position and
prospects in accordance with the latest reporting
requirements. The Group’s subsidiary undertakings,
including branches outside the UK, are disclosed
in note 26 to the financial statements, found on
pages 241-244.
The forward-looking statements reflect knowledge
and information available at the date of preparation of
this Annual Report and nothing in this Annual Report
should be construed as a profit forecast.
The Directors confirm that they have carried out a
robust assessment of the principal risks facing the
Company and the Group, including those that would
threaten the business model, future performance,
solvency and liquidity, and explained how they are
being managed or mitigated (see analysis of key risks,
mitigation and impact on strategy within the Strategic
Report). Information on the Company, including
legal form, domicile and registered office address is
included in note 1 to the financial statements,
on page 198.
Business operations and performance
Business model
The Strategic Report provides information relating to
the Group’s activities, its business model, governance,
strategy, future developments and the principal risks
and uncertainties faced by the business, including
analysis using both financial and non-financial KPIs
where necessary.
Results and dividends
Results and other key financial information for the year
ended 30 November 2022 are set out in the Financial
Statements, beginning on page 192.
The Group paid an interim dividend of 5.0 pence
per share in December 2022 (2021: 3.0 pence). The
Directors have also recommended a final dividend of
11 pence per share to be paid in June 2023 (2021: 8.0
pence) to shareholders on the register at the close of
business on 12 May 2023.
Financial instruments
Information and policy in respect of financial
instruments and financial risk management is set out
in note 24 to the financial statements, together with
information on price, credit and liquidity risks, on
pages 234-241.
Research and development
The only expenditure incurred in the area of research
and development relates to software and system
development, which is shown in the notes to the
financial statements.
Events occurring after the reporting period
There have been no significant events affecting the
Group since the end of the reporting period until the
approval of this report.
Essential contractors and implications
following a change of control or takeover
Directors’ indemnities, and Directors’ and
Officers’ insurance
The Group has business relationships with a number of
clients and contractors but is not reliant on any single
one. There are no significant agreements which the
Company is party to that take effect, alter or terminate
upon a change of control of the Company following
a takeover offer, with the exception of the Citibank
and HSBC Revolving Credit Facility agreements. The
Company does not have agreements with any Director
or employee that would provide compensation for loss
of office or employment resulting from a takeover,
except that in the event of a takeover, provisions of the
Group’s share plans and tracker share arrangements
may cause options, awards or tracker shares to vest.
Directors and their interests
The Directors of the Company, including their
biographies, are shown within the Board of Directors
section of this Annual Report, on pages 122-123, with
further details of Board Committee membership being
set out in the Our Board section, on pages 127-130.
All Directors served throughout the financial
year, except Timo Lehne, who was appointed as
an Executive Director on 1 January 2022, Elaine
O’Donnell, who was appointed as an independent
Non-Executive Director on 1 October 2022, Mark
Dorman who stepped down as a Director on 31
December 2021, and Anne Fahy, who stepped down
from the Board on 19 April 2022. Imogen Joss joined
the Board as an independent Non-Executive Director
after the financial year on 1 December 2022.
In accordance with the UK Corporate Governance
Code, all serving Directors will retire at the 2023
Annual General Meeting and submit themselves for
election/re-election. Rules on the appointment and
replacement of Directors are governed primarily by
the Company’s Articles, the UK Corporate Governance
Code and the Companies Act 2006.
Other than employment contracts, none of the
Directors had a material interest in any contract with
the Company or its subsidiary undertakings. Key
terms of the Directors’ service contracts and interests
in shares and options are disclosed in the Directors’
remuneration report on pages 148-173.
The Directors have the benefit of the indemnity
provisions contained in the Company’s Articles, and
the Company has maintained throughout the year
Directors’ and Officers’ liability insurance for the
benefit of the Company, the Directors, and its officers.
The Company has entered into qualifying third-party
indemnity arrangements for the benefit of all its
Directors in a form and scope which comply with the
requirements of the Companies Act 2006 and which
were in force throughout the year and remain in force.
Conflicts of interest
The Board also confirms that there are appropriate
procedures in place to ensure that its powers to
authorise the Directors’ conflicts of interest are
operated effectively. The Board maintains a register
of all potential conflicts, which include external
appointments, close family members and companies of
which a Director maintains a significant shareholding.
Shareholders and share capital
Share capital and share rights
SThree plc has a premium listing on the London
Stock Exchange, and trades under the STEM ticker.
As at 30 November 2022, the issued share capital
of the Company was 134,498,389 ordinary shares
of 1p each, which includes 35,767 shares held in
treasury. Details of the share capital of the Company,
together with movements during the year are shown
in the notes to the financial statements. The rights
and obligations attached to the Company’s ordinary
shares are contained in the Articles. Shares acquired
by employees under a Company share scheme rank
equally with all other shares in issue.
Ordinary shares allow holders to receive dividends and
to vote at general meetings of the Company. They also
have the right to a return of capital on a winding-up.
There are no restrictions on the size of holding or the
transfer of shares, which are both governed by the
general provisions of the Company’s Articles and
relevant legislation. Under the Articles, the Directors
have the power to suspend voting rights and the right
to receive dividends in respect of ordinary shares, as
well as to refuse to register a transfer in circumstances
where the holder of those shares fails to comply with
a notice issued under Section 793 of the Companies
Act 2006. The Directors also have the power to refuse
to register any transfer of certificated shares that does
not satisfy the conditions set out in the Articles.
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Governance
Directors’ report continued
The Company is not aware of any agreements
between shareholders that might result in the
restriction of transfer of voting rights in relation to the
shares held by such shareholders.
Authority to issue or make purchases of own
shares including as treasury shares and dilution
The Company is, until the date of the forthcoming
AGM, generally and unconditionally authorised to issue
and buy back a proportion of its own ordinary shares.
The Company’s policy is to comply with investor
guidelines on dilution limits for its share plans by using
a mixture of market-purchased and new-issue shares.
Some 2,519,652 shares were purchased in the market
during the year at a cost of £9.9 million. Purchases
may be made for cancellation, to be held as treasury
shares, or for the Employee Benefit Trust (EBT). The
Company’s EBT has waived its right to dividends on
shares held in the Trust account. The Directors will
seek to renew the authority to purchase up to 10% of
the Company’s issued share capital at the next AGM.
Substantial shareholdings
As at the date of this report, the Group has been
notified, under the Financial Conduct Authority’s
(FCA) Disclosure and Transparency Rules (DTR 5), of
the significant interests in the ordinary share capital of
the Company, shown below.
Number of
shares
Percentage
shareholding
Date of
notification
13,265,368
9.98% 01 July 2020
Name of holder
J O Hambro
Capital
Management
JP Morgan
7,698,775
Kempen
6,673,700
5.76% 08 February
2022
5.0% 08 March
2021
Blackrock
6,463,097
5.82% 17 May 2022
Fidelity
6,480,078
4.85% 21
The information provided above was correct at the
date of notification. However, since notification of
any change is not required until the next notifiable
threshold is crossed, these holdings are likely to have
changed. Between 30 November 2022 and the date of
this report, the Company has not been notified of any
changes. No Director held over 3% of the Company’s
share capital.
In addition, the Companies Act 2006, s992 (13c)
requires disclosure of persons with significant direct
or indirect holdings of securities as at the year end.
At the year-end we were aware of the following
significant shareholdings.
Name of holder
Kempen Capital
Management
Number of
shares
Percentage
shareholding
Nature of
holding
13,222,750
9.83% Indirect
Blackrock
7,972,902
5.93% Indirect
Littlejohn & Co
7,469,846
5.56% Indirect
6,935,501
5.16% Indirect
6,821,018
5.07% Indirect
JP Morgan Asset
Management
J O Hambro
Capital
Management
Allianz Global
Investors
Polar Capital
4,484,332
3.34% Indirect
GLG Partners
4,425,279
3.29% Indirect
Schroder
Investments
4,085,407
3.04% Indirect
Annual General Meeting (AGM)
The AGM of the Company will be held on 19 April
2023, at 75 King William Street, London, EC4N 7BE. A
separate Notice details all business to be transacted.
Governance, policies and stakeholders
Information to be disclosed under LR 9.8.4R
Related party transactions
Equal opportunities
Details of any related party transactions undertaken
during the year are shown in the notes to the
financial statements.
Corporate and social responsibility, including
diversity, human rights and environmental
matters
The Board pays due regard to environmental,
health and safety, and employment responsibilities
and devotes appropriate resources to monitoring
compliance with, and improving, standards. The Chief
Executive Officer has responsibility for these areas
at Board level, ensuring that the Group’s policies are
upheld and providing the necessary resources.
Further information on the Group’s diversity, human
rights and anti-bribery and corruption policies,
plus detail on environmental matters, including
carbon emissions data, is contained in the ‘Strategic
progress’ and ‘Responsible business’ sections of
this Annual Report, whilst information on employee
share plans and share ownership is contained in the
Directors’ remuneration report and the notes to the
financial statements.
Information about our stakeholders, including
employees, suppliers and customers, and how the
Board has engaged and considered their views
in regard to principal decisions can be found in
the Corporate Governance Report and within the
Stakeholder engagement section on pages 98-104.
Health and safety
The Group is committed to providing for the health,
safety and welfare of all current and potential
employees. Every effort is made to ensure that all
health and safety legislation, regulations or similar
codes of practice, are complied with.
The Group is also committed to providing equal
opportunities and employees are encouraged to train
and develop their careers. Group policy is to offer
the opportunity to benefit from fair employment,
without regard to gender, sexual orientation, marital
status, race, religion or belief, age or disability, and full
and fair consideration is given to the employment of
disabled persons for all suitable jobs.
In the event of any employee becoming disabled,
every effort is made to ensure that employment
continues within the existing or a similar role, and it is
the Group’s policy to support disabled employees in all
aspects of their training, development and promotion
where it benefits both the employee and the Group.
Greenhouse gas emissions
The Board is conscious of the role that the business
plays in building a greener future and its impact on
the environment and is committed to our ambitious
environmental goals. Details of the business’s carbon
emissions can be found in the Responsible business
section on pages 52-79.
Political donations
No donations for political purposes of any kind were
made during the year.
Modern Slavery Act 2015: slavery and human
trafficking statement
The Board of Directors has approved and published
on its website its Modern Slavery Statement. This
statement is made pursuant to Section 54(1) of the
Modern Slavery Act 2015 and constitutes our slavery
and human trafficking statement for 2022. The
Company’s Modern Slavery Act statement can be
found on our website, sthree.com.
6,605,708
4.91% Indirect
Section 172 and stakeholder engagement
December
2021
Details of the disclosures to be made under Listing
Rule 9.8.4R are listed below.
Allianz
6,356,808
4.79% 19
December
2019
9.8.4R (4): Details of any long-term incentive schemes
can be found in the Directors’ remuneration report, on
pages 148-173.
Aside from the above, the other required disclosures
are not applicable.
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Directors’ report continued
Championing human rights
Our Equal Opportunities Policy sets out clear
expectations of how to conduct business in an ethical
and transparent way, without compromising integrity
and professionalism, and respecting the rights and
dignity of all people.
Our focus is on ethical recruitment and working
conditions at our sites, security, and community health
and livelihoods.
Given that we also expect our business partners
to respect these workplace values, our Code of
Conduct promotes:
• ethical handling of actual or apparent conflicts
of interest;
• compliance with applicable governmental laws,
rules and regulations;
Statement of Directors’ responsibilities
in respect of financial statements
The Directors are responsible for preparing the Annual
Report and the financial statements in accordance
with applicable law and regulation.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the
Directors have prepared the Group and the Company
financial statements in accordance with UK-adopted
international accounting standards.
Under company law, Directors must not approve the
financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of
the Group and Company and of the profit or loss of
the Group for that period. In preparing the financial
statements, the Directors are required to:
• complete, accurate, fair and balanced disclosure in
• select suitable accounting policies and then apply
reporting; and
• prompt internal reporting of violations.
Furthermore, ensuring candidates are placed within
a fair and ethical workplace is a fundamental pillar in
the recruitment process. We have a responsibility to
all candidates we place to ensure that they are not
subjected to bribery, corruption, exploitation, forced
labour or modern slavery at the companies they join.
Implementation of this is ensured through extensive
training and the continuous education of our people.
Employees, contractors or other third parties are
required to immediately report any instances of unethical
behaviour or suspicion of malpractice to a line manager
or a member of the Group HR Team. Any breaches in
human rights are reported to our Chief People Officer
and where required to relevant authorities.
Independent auditors
A resolution will be put to the forthcoming AGM
proposing that PricewaterhouseCoopers LLP be
re-appointed as auditors for the ensuing year, having
indicated their willingness to continue in office. A
formal audit tender was last completed in early 2017.
Audit fees and non-audit services are disclosed in the
Audit & Risk Committee report, on pages 140-147.
them consistently;
• state whether applicable UK-adopted international
accounting standards have been followed, subject
to any material departures disclosed and explained
in the financial statements;
• make judgements and accounting estimates that
are reasonable and prudent; and
• prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the Group and Company will continue
in business.
The Directors are responsible for safeguarding
the assets of the Group and Company and hence
for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are also responsible for keeping
adequate accounting records that are sufficient
to show and explain the Group’s and Company’s
transactions and disclose with reasonable accuracy
at any time the financial position of the Group and
Company and enable them to ensure that the financial
statements and the Directors’ remuneration report
comply with the Companies Act 2006.
The Directors are responsible for the maintenance
and integrity of the Company’s website. Legislation
in the United Kingdom governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
Directors’ confirmations
The Directors consider that the Annual Report
and Accounts, taken as a whole, is fair, balanced
and understandable and provides the information
necessary for shareholders to assess the Group’s and
Company’s position and performance, business model
and strategy.
Each of the Directors, whose names and functions are
listed in the ‘Our Board’ section of this Annual Report
confirm that, to the best of their knowledge:
•
•
the Group and Company financial statements,
which have been prepared in accordance with
UK-adopted international accounting standards,
give a true and fair view of the assets, liabilities and
financial position of the Group and Company, and
of the profit of the Group; and
the Directors’ report, together with the Strategic
Report, Chair and other Officers’ sections of
this Annual Report, includes a fair review of the
development and performance of the business and
the position of the Group and Company, together
with a description of the principal risks and
uncertainties that it faces.
In the case of each Director in office at the date the
Directors’ report is approved:
• so far as the Director is aware, there is no relevant
audit information of which the Group’s and
Company’s auditors are unaware; and
•
they have taken all the steps that they ought
to have taken as a Director in order to make
themselves aware of any relevant audit information
and to establish that the Group’s and Company’s
auditors are aware of that information.
Kate Danson
Company Secretary
For and on behalf of SThree plc
27 January 2023
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Governance
Financial Statements
Financial
Statements
182
Independent auditors’ report
192 Consolidated Income Statement
193 Consolidated Statement of
Comprehensive Income
194 Statements of Financial Position
195 Consolidated Statement of Changes in Equity
196 Company Statement of Changes in Equity
197 Statements of Cash Flows
198 Notes to the financial statements
248 Five-year financial summary
Other information
249 Results announcement timetable
250 Shareholder information
251 Company information and corporate advisers
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Financial Statements
Independent auditors’ report
to the members of SThree plc
Report on the audit of the financial statements
Opinion
In our opinion, SThree plc’s group financial statements and company financial statements (the “financial
statements”):
• give a true and fair view of the state of the group’s and of the company’s affairs as at 30 November 2022 and of
the group’s profit and the group’s and company’s cash flows for the year then ended;
• have been properly prepared in accordance with UK-adopted international accounting standards as applied in
accordance with the provisions of the Companies Act 2006; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report and Accounts 2022 (the “Annual
Report”), which comprise: the Consolidated and Company Statements of Financial Position as at 30 November
2022; the Consolidated Income Statement and Consolidated Statement of Comprehensive Income, the
Consolidated and Company Statements of Cash Flows, and the Consolidated and Company Statements of
Changes in Equity for the year then ended; and the notes to the financial statements, which include a description of
the significant accounting policies.
Our opinion is consistent with our reporting to the Audit and Risk Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable
law. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the
financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to our audit
of the financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public
interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical
Standard were not provided.
Other than those disclosed in note 3 to the financial statements, we have provided no non-audit services to the
company or its controlled undertakings in the period under audit.
Our audit approach
Overview
Audit scope
• The whole group was audited by one UK audit team, as the SThree centralised support function teams
responsible for processing the transactions of the whole group are based in London and Glasgow. Our audit
was therefore conducted solely from the UK.
• We conducted full scope audits on four components and the audit of specified balances for six components.
The remaining components were subject to analytical reviews.
• The four components where we performed full scope audits account for 76% of group revenue and 72% of
group profit before income tax.
• We also performed a full scope audit of the parent company.
Key audit matters
• Accrued income cut off (group)
•
Impairment of investments in subsidiaries (Company)
Materiality
• Overall group materiality: £3.85 million (2021: £2.99 million) based on 5% of profit before income tax
(2021: profit before income tax and exceptional items).
• Overall company materiality: £1.90 million (2021: £1.21 million) based on 1% of net assets.
• Performance materiality: £2.89 million (2021: £2.25 million) (group) and £1.42 million
(2021: £0.91 million) (company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
financial statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the
audit of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect
on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement
team. These matters, and any comments we make on the results of our procedures thereon, were addressed in
the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
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Financial Statements
Independent auditors’ report
to the members of SThree plc continued
The key audit matters below are consistent with last year.
Key audit matter
How our audit addressed the key audit matter
Accrued income cut off (group)
For Contract revenue, including accrued income, we:
The group’s accounting process means that there is a
material amount of accrued rather than billed contractor
revenue at each period end within contract assets
(‘accrued income’).
At year end the accrued income, disclosed as contract
assets, was £91.68 million (2021: £82.08 million). This
estimate is a system-generated amount calculated by
using standard contractor rates and estimated hours
for placed contractors and reduced by a manually
calculated historic ‘shrinkage’ calculation. Contract
revenue represented 94% (2021: 93%) of the group’s
revenue during the year.
We focused on this area due to the material quantum
of accrued income, the estimation uncertainty and the
potential for variances arising from applying the historic
‘shrinkage’ percentage to the full potential value of
unsubmitted timesheets.
Refer to Trade and other receivables (note 13 of the
financial statements), Operating Segments (note 2 of
the financial statements) and ‘Audit Committee report’.
Tested the business process controls supporting the
accuracy of rates and hours input into the system;
Tested a sample of accrued revenue and performed
a recalculation of the accrual based on timesheets
submitted and contract rates;
We performed detailed testing over the 12 month
rolling average historical shrinkage rate calculation
and performed detailed testing over the inputs into
the calculation. In addition, we have recalculated the
2022 shrinkage adjustment posted by management and
performed sensitivities and look back procedures; and
We verified that accrued income was not older than
3 months in age in accordance with group policy and
examined the ageing profile of the balance, concluding
that management were following their accounting
policies in this area. We have not identified any
evidence of fraud or error in the recognition of revenue.
Based on our audit work, we found estimates related
to accrued income to be acceptable. We also consider
the disclosures made in the financial statements to
be appropriate.
Key audit matter
How our audit addressed the key audit matter
We obtained management’s assessment of impairment
trigger indicators, as set out in IAS 36, for subsidiaries
along with details of year to date results and compared
them to the prior year which demonstrated significant
growth across the Company’s subsidiaries; and
We considered the view of management and the
performance of the group as a whole (including
individual subsidiaries) and concluded that
management’s trigger assessment is fair and there are
no indicators of further impairment, except for those
three entities where a decision has been taken by the
board to either restructure or close the operations of
the entities (Ireland, Singapore and Hong Kong).
We also consider the disclosures made in the financial
statements to be appropriate.
Impairment of investments in subsidiaries
(Company)
The Company holds investments in a number of
UK and overseas subsidiaries with a total carrying
amount of £215.22 million at 30 November 2022 (2021:
£206.05 million). In previous years the UK business has
experienced challenging economic conditions. In the
period 2016 to 2020 impairment of £156.01 million has
been recognised.
In the current year the UK market has experienced a
higher than anticipated growth rate. The actual growth
achieved was 19% year on year compared to 8% growth
in the previous year. However, the Company recognised
an impairment charge of £0.94 million relating to
operations in 3 locations as a result of a restructuring
exercise. The entire net carrying value of investments
in respect of these 3 locations were written off to
nil. Management performed an assessment of the
impairment trigger indicators as set out in IAS 36 as at
year end date and concluded other than an impairment
provision for 3 locations, there were no indicators
present hence an assessment of impairment was not
required for any other subsidiaries.
We focused on this area due to the material quantum
of the carrying value of the investments in subsidiaries.
Judgement is required to determine whether
impairment indicators exist which would require an
impairment test to be performed.
Refer to Critical accounting judgement (note 12 of the
financial statements).
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Financial Statements
Independent auditors’ report
to the members of SThree plc continued
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the
financial statements as a whole, taking into account the structure of the group and the company, the accounting
processes and controls, and the industry in which they operate.
The group’s components vary significantly in size and we identified four financially significant components that, in
our view, required an audit of their complete financial information due to their relative size or risk characteristics. In
addition, we performed testing over specific material balances across a further six components. Together these full
and specific scope component audits gave appropriate coverage of all material balances at a group level. We also
audited consolidation adjustments to get sufficient coverage over final balances. The remaining components were
subject to analytical reviews.
Although certain components are based overseas, the audit procedures have been performed by the group
engagement team in the UK as this reflects the centralised shared service structure for finance across the group.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the
nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures
and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements
as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall
materiality
How we
determined it
Rationale for
benchmark
applied
Financial statements - group
Financial statements - company
£3.85 million (2021: £2.99 million).
£1.90 million (2021: £1.21 million).
5% of profit before income tax (2021: profit
before income tax and exceptional items)
1% of net assets
We believe that profit before tax provides
us with a consistent year-on-year basis for
determining materiality and is a generally
accepted auditing benchmark. In the prior
year, profit before tax and exceptional items
was adopted to eliminate the disproportionate
impact of the exceptional items on the
normalised results. There are no exceptional
items in the current year.
We believe that net assets is the primary
measure used by shareholders in
assessing the position of the non-trading
holding company, and is an accepted
auditing benchmark.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group
materiality. The range of materiality allocated across components was £1.30 million and £3.40 million. Certain
components were audited to a local statutory audit materiality that was also less than our overall group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance
materiality in determining the scope of our audit and the nature and extent of our testing of account balances,
classes of transactions and disclosures, for example in determining sample sizes. Our performance materiality
was 75% (2021: 75%) of overall materiality, amounting to £2.89 million (2021: £2.25 million) for the group financial
statements and £1.42 million (2021: £0.91 million) for the company financial statements.
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk
assessment and aggregation risk and the effectiveness of controls - and concluded that an amount in the middle of
our normal range was appropriate.
We agreed with the Audit and Risk Committee that we would report to them misstatements identified during our
audit above £0.38 million (group audit) (2021: £0.29 million) and £0.19 million (company audit) (2021: £0.12 million)
as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the group’s and the company’s ability to continue to adopt the going
concern basis of accounting included:
• Reviewing management’s going concern assessment (which includes a Base Case, a Downside Scenario and a
Severe but Plausible Scenario) for reasonableness and consistency with our audit work;
• Obtaining an understanding and challenging the forecasted cash flows for the twelve month period from the
date of authorisation of these financial statements and agreeing these to supporting documentation;
• Testing of management’s cashflow forecast model which includes challenging the key assumptions within the
model as well as the mathematical accuracy and its integrity;
• Assessing historic growth and management forecasting accuracy;
• Reviewing available banking facilities, including consideration of covenant requirements; and
• Reviewing management’s going concern disclosures.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the group’s and the company’s ability
to continue as a going concern for a period of at least twelve months from when the financial statements are
authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the
group’s and the company’s ability to continue as a going concern.
In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation to the directors’ statement in the financial statements about
whether the directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report.
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Financial Statements
Independent auditors’ report
to the members of SThree plc continued
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements
and our auditors’ report thereon. The directors are responsible for the other information, which includes reporting
based on the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. Our opinion on the
financial statements does not cover the other information and, accordingly, we do not express an audit opinion or,
except to the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent
material inconsistency or material misstatement, we are required to perform procedures to conclude whether there
is a material misstatement of the financial statements or a material misstatement of the other information. If, based
on the work we have performed, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report based on these responsibilities.
With respect to the Strategic report and Directors’ Report, we also considered whether the disclosures required by
the UK Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain
opinions and matters as described below.
Strategic report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic
report and Directors’ Report for the year ended 30 November 2022 is consistent with the financial statements and
has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the group and company and their environment obtained in the
course of the audit, we did not identify any material misstatements in the Strategic report and Directors’ Report.
Directors’ Remuneration
In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in
accordance with the Companies Act 2006.
Corporate governance statement
The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability
and that part of the corporate governance statement relating to the company’s compliance with the provisions of
the UK Corporate Governance Code specified for our review. Our additional responsibilities with respect to the
corporate governance statement as other information are described in the Reporting on other information section
of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
corporate governance statement, included within the Governance Report is materially consistent with the financial
statements and our knowledge obtained during the audit, and we have nothing material to add or draw attention to
in relation to:
• The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
• The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify
emerging risks and an explanation of how these are being managed or mitigated;
• The directors’ statement in the financial statements about whether they considered it appropriate to adopt the
going concern basis of accounting in preparing them, and their identification of any material uncertainties to
the group’s and company’s ability to continue to do so over a period of at least twelve months from the date of
approval of the financial statements;
• The directors’ explanation as to their assessment of the group’s and company’s prospects, the period this
assessment covers and why the period is appropriate; and
• The directors’ statement as to whether they have a reasonable expectation that the company will be able to
continue in operation and meet its liabilities as they fall due over the period of its assessment, including any
related disclosures drawing attention to any necessary qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term viability of the group and company was
substantially less in scope than an audit and only consisted of making inquiries and considering the directors’
process supporting their statement; checking that the statement is in alignment with the relevant provisions of
the UK Corporate Governance Code; and considering whether the statement is consistent with the financial
statements and our knowledge and understanding of the group and company and their environment obtained in
the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following
elements of the corporate governance statement is materially consistent with the financial statements and our
knowledge obtained during the audit:
• The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and
understandable, and provides the information necessary for the members to assess the group’s and company’s
position, performance, business model and strategy;
• The section of the Annual Report that describes the review of effectiveness of risk management and internal
control systems; and
• The section of the Annual Report describing the work of the Audit and Risk Committee.
We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the
company’s compliance with the Code does not properly disclose a departure from a relevant provision of the Code
specified under the Listing Rules for review by the auditors.
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Financial Statements
Independent auditors’ report
to the members of SThree plc continued
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ responsibilities in respect of financial statements, the
directors are responsible for the preparation of the financial statements in accordance with the applicable
framework and for being satisfied that they give a true and fair view. The directors are also responsible for such
internal control as they determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the group or the company or to
cease operations, or have no realistic alternative but to do so.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of
instances of non-compliance with laws and regulations that are not closely related to events and transactions
reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher
than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using
data auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than
testing complete populations. We will often seek to target particular items for testing based on their size or risk
characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the population
from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website
at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Auditors’ responsibilities for the audit of the financial statements
Use of this report
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud
or error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in
line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the group and industry, we identified that the principal risks of non-compliance
with laws and regulations related to employment laws and indirect taxes impacting the different territories in which
the group operates, and we considered the extent to which non-compliance might have a material effect on the
financial statements. We also considered those laws and regulations that have a direct impact on the financial
statements such as the Companies Act 2006 and Listing Rules. We evaluated management’s incentives and
opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls),
and determined that the principal risks were related to posting inappropriate journal entries to achieve desired
financial results and management bias in accounting estimates. Audit procedures performed by the engagement
team included:
• enquiries with management, internal audit, the Audit and Risk committee and the group’s internal legal
counsel, including consideration of known or suspected instances of fraud and non-compliance with laws
and regulations and performed testing where a provision has been made in respect of these by examining
supporting calculations;
• understanding and evaluating the design and implementation of management’s controls designed to prevent
and detect irregularities;
• challenging assumptions and judgements made by management in their significant accounting estimates, in
particular in relation to accrued income cut-off, assessment of impairment for investments in subsidiaries; and
•
identifying and testing journal entries, in particular any journal entries posted with unusual account
combinations and postings by unusual users.
This report, including the opinions, has been prepared for and only for the company’s members as a body in
accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving
these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the company, or returns adequate for our audit have not
been received from branches not visited by us; or
• certain disclosures of directors’ remuneration specified by law are not made; or
•
the company financial statements and the part of the Directors’ remuneration report to be audited are not in
agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit and Risk Committee, we were appointed by the members in 1999 to
audit the financial statements for the year ended 30 November 1999 and subsequent financial periods. The period
of total uninterrupted engagement is 24 years, covering the years ended 30 November 1999 to 30 November 2022.
Other matter
In due course, as required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R,
these financial statements will form part of the ESEF-prepared annual financial report filed on the National Storage
Mechanism of the Financial Conduct Authority in accordance with the ESEF Regulatory Technical Standard (‘ESEF
RTS’). This auditors’ report provides no assurance over whether the annual financial report will be prepared using
the single electronic format specified in the ESEF RTS.
Kenneth Wilson (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Glasgow
27 January 2023
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Consolidated Income Statement
for the year ended 30 November 2022
Consolidated Statement of Comprehensive Income
for the year ended 30 November 2022
£'000
Continuing operations
Revenue
Cost of sales
Net fees
Administrative (expenses)/income
Impairment losses on financial assets
Operating profit
Finance income
Finance costs
Profit before income tax
Income tax expense
Profit for the year from continuing operations
Discontinued operations
Loss after tax for the year from discontinued operations
Profit for the year attributable to owners of the Company
Earnings per share attributable to shareholders
pence
Total Group
Basic
Diluted
Continuing operations
Basic
Diluted
2022
2021
Note
Total
Before
exceptional
items
Exceptional
items
Total
£'000
Profit for the year
Other comprehensive income/(loss):
Items that may be subsequently reclassified to profit or loss:
Note
2022
2021
54,202
41,982
Exchange differences on retranslation of foreign continuing operations
7,096
(2,694)
Items that will not be subsequently reclassified to profit or loss:
Net loss on equity instruments at FVOCI
Other comprehensive income/(loss) for the year (net of tax)
Total comprehensive income for the year attributable to owners of the Company
Total comprehensive income/(loss) for the year attributable to owners of the Company
arises from:
Continuing operations
Discontinued operations
12
(1)
–
7,095
(2,694)
61,297
39,288
61,297
39,557
7
–
(269)
61,297
39,288
The accompanying notes form an integral part of this Consolidated Statement of Comprehensive Income.
SThree plc (the Company) has elected to take the exemption under Section 408 of the Companies Act 2006 not to
present an income statement and statement of comprehensive income for the parent Company.
2
2
3
3
5
5
6
7
8
8
8
8
1,639,446
1,330,726
– 1,330,726
(1,208,830)
(975,013)
430,616
355,713
–
–
(975,013)
355,713
(349,301)
(292,325)
184
(292,141)
(3,763)
(2,579)
–
(2,579)
77,552
60,809
184
60,993
141
34
(667)
(869)
–
–
34
(869)
77,026
59,974
184
60,158
(22,824)
(17,872)
(35)
(17,907)
54,202
42,102
149
42,251
–
(269)
54,202
41,833
–
149
(269)
41,982
41.0
39.9
41.0
39.9
31.6
30.6
31.8
30.8
0.1
0.1
0.1
0.1
31.7
30.7
31.9
30.9
The accompanying notes form an integral part of this Consolidated Income Statement.
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Financial Statements
Statements of Financial Position
as at 30 November 2022
Consolidated Statement of Changes in Equity
for the year ended 30 November 2022
Consolidated
Company
30 November
2022
30 November
2021
30 November
2022
30 November
2021
Note
£’000
Note
Share
capital
Share
premium
Capital
redemption
reserve
Capital
reserve
Treasury
reserve
Currency
translation
reserve
Fair value
reserve
of equity
investments
Total equity
attributable
to owners of
the Company
Retained
earnings
Balance at 1 December 2020
1,330 33,026
172
878 (1,496)
340
(12) 94,279
128,517
£'000
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Investments
Deferred tax assets
Total non-current assets
Current assets
Trade and other receivables
Current tax assets
Cash and cash equivalents
Total current assets
Total assets
EQUITY AND LIABILITIES
Equity attributable to owners of the Company
Share capital
Share premium
Other reserves
Retained earnings
Total equity
Current liabilities
Bank overdraft
Trade and other payables
Lease liabilities
Provisions
Current tax liabilities
Total current liabilities
Non-current liabilities
Lease liabilities
Provisions
Total non-current liabilities
Total liabilities
Total equity and liabilities
10
11
12
19
846
–
4,616
40,711
35,249
38,073
2,459
–
–
–
–
1
215,218
206,047
4,491
225
346
45,024
215,443
206,393
13
363,884
298,024
–
–
14
65,809
57,526
15,446
12,394
121
429,693
355,550
27,961
580
5,857
4,646
11,083
470,404
400,574
243,404
217,476
20
1,345
1,337
1,345
1,337
38,239
35,466
38,239
35,466
(802)
(4,683)
(5,531)
161,610
126,033
155,553
(2,317)
77,119
200,392
158,153
189,606
111,605
14
15
16
18
16
18
423
24
–
–
216,842
196,080
53,772
105,694
11,102
7,871
7,391
13,081
6,258
2,987
–
26
–
–
177
–
243,629
218,430
53,798
105,871
22,600
3,783
26,383
21,987
2,004
23,991
–
–
–
–
–
–
270,012
242,421
53,798
105,871
470,404
400,574
243,404
217,476
The accompanying notes form an integral part of these Statements of Financial Position.
The Company’s profit after tax for the year was £91.3 million (2021: loss after tax of £4.0 million).
The Financial Statements on pages 192 to 197 were approved by the Board of Directors on 27 January 2023 and
signed on its behalf by:
Andrew Beach
Chief Financial Officer
Company registered number: 03805979
Profit for the year
Other comprehensive loss for
the year
Total comprehensive income for
the year
Dividends paid to equity holders
9
Distributions to tracker
shareholders
Settlement of vested tracker
shares
Settlement of share-based
payments
20(a)
20(a)
Purchase of shares by Employee
Benefit Trust, including share gift 20(a)
Credit to equity for equity-
settled share-based payments
20(b)
Current and deferred tax
on share-based payment
transactions
6
Total movements in equity
Balance at 30 November 2021
and at 1 December 2021
Profit for the year
Other comprehensive income for
the year
Total comprehensive income for
the year
Dividends paid to equity holders
9
Distributions to tracker
shareholders
Settlement of vested tracker
shares
Settlement of share-based
payments
20(a)
20(a)
Purchase of shares by Employee
Benefit Trust
20(a)
Credit to equity for equity-
settled share-based payments
20(b)
Current and deferred tax
on share-based payment
transactions
Total movements in equity
6
–
–
–
–
–
2
5
–
–
–
7
–
–
–
–
–
964
1,476
–
–
–
2,440
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 2,494
–
967
– (5,332)
–
–
–
–
–
–
(2,694)
(2,694)
–
–
–
–
–
–
–
(1,871)
(2,694)
–
–
–
–
–
–
–
–
–
–
–
41,982
41,982
–
(2,694)
41,982
39,288
(6,616)
(6,616)
(87)
(87)
(3,635)
(175)
(2,057)
391
–
(5,332)
1,520
1,520
647
647
31,754
29,636
1,337 35,466
172
878 (3,367)
(2,354)
(12) 126,033
158,153
–
–
–
–
–
6
2
–
–
–
8
–
–
–
–
–
2,265
508
–
–
–
2,773
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 3,835
–
2,851
– (9,900)
–
–
–
–
–
–
54,202
54,202
7,096
(1)
–
7,095
7,096
(1) 54,202
61,297
–
–
–
–
–
–
–
– (14,650)
(14,650)
–
–
–
–
–
–
(116)
(116)
(5,629)
(2,851)
477
510
–
(9,900)
4,999
4,999
(378)
(378)
– (3,214)
7,096
(1)
35,577
42,239
Balance at 30 November 2022
1,345 38,239
172
878 (6,581)
4,742
(13)
161,610
200,392
The accompanying notes form an integral part of this Consolidated Statement of Changes in Equity.
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Financial Statements
Company Statement of Changes in Equity
for the year ended 30 November 2022
Statements of Cash Flows
for the year ended 30 November 2022
£’000
Note
Share
capital
Share
premium
Capital
redemption
reserve
Capital
reserve
Treasury
reserve
Retained
earnings
Total equity
attributable to
owners of the
Company
Balance at 1 December 2020
1,330
33,026
172
878
(1,496)
87,163
121,073
Total comprehensive loss for the year
Dividends paid to equity holders
Settlement of vested tracker shares
Settlement of share-based payments
Purchase of shares by Employee
Benefit Trust, including share gift
Credit to equity for equity-settled
share-based payments
9
20(a)
20(a)
20(a)
Deferred tax on share-based payment
transactions
19
Total movements in equity
Balance at 30 November 2021 and at
1 December 2021
Total comprehensive income
for the year
Dividends paid to equity holders
Settlement of vested tracker shares
Settlement of share-based payments
Purchase of shares by Employee
Benefit Trust
Credit to equity for equity-settled
share-based payments
9
20(a)
20(a)
20(a)
Current and deferred tax on share-
based payment transactions
19
Total movements in equity
–
–
2
5
–
–
–
7
–
–
964
1,476
–
–
–
2,440
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(4,043)
(4,043)
(6,616)
(6,616)
2,494
980
4,440
967
(2,057)
391
(5,332)
–
(5,332)
–
–
1,520
1,520
172
172
(1,871)
(10,044)
(9,468)
1,337
35,466
172
878
(3,367)
77,119
111,605
–
–
6
2
–
–
–
8
–
–
2,265
508
–
–
–
2,773
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
91,257
91,257
(14,650)
(14,650)
3,835
(224)
5,882
2,851
(2,851)
510
(9,900)
–
(9,900)
–
–
(97)
(97)
(3,214)
78,434
78,001
Balance at 30 November 2022
1,345
38,239
172
878
(6,581)
155,553
189,606
The accompanying notes form an integral part of this Company Statement of Changes in Equity.
4,999
4,999
Interest received
£'000
Cash flows from operating activities
Profit/(loss) from continuing operations before tax after
exceptional items
Loss before tax from discontinued operations
Profit/(loss) before tax
Adjustments for:
Consolidated
Company
30 November
2022
30 November
2021
30 November
2022
30 November
2021
Note
77,026
60,158
89,057
(4,245)
–
(269)
–
–
77,026
59,889
89,057
(4,245)
Depreciation and amortisation charge
10,11,16
18,902
17,717
Loss on disposal of property, plant and equipment other than
right-of-use assets
Gain on lease modification
Impairment of intangible assets
Loss on disposal of intangible assets
Finance income
Finance costs
Impairment of investments
Loss on liquidation of a subsidiary
10
10
11
11
5
5
12
7
122
(266)
499
1,176
(141)
667
–
–
199
–
608
74
(34)
869
–
236
Non-cash charge for equity-settled share-based payments
20(b)
4,999
1,520
–
–
–
–
–
(4)
3,105
940
–
709
–
–
–
–
–
(14)
1,571
–
–
159
Operating cash flows before changes in working capital and
provisions
102,984
81,078
93,807
(2,529)
(Increase)/decrease in receivables
Increase/(decrease) in payables
Increase/(decrease) in provisions
Cash generated from operations
Income tax (paid)/received – net
Net cash generated from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Net cash used in investing activities
Cash flows from financing activities
Interest paid
Lease principal payments
Proceeds from exercise of share options
Purchase of shares by Employee Benefit Trust
Dividends paid to equity holders
Distributions to tracker shareholders
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Exchange gains/(losses) relating to cash and cash equivalents
Net cash and cash equivalents at end of the year
14
5
10
11
16,17
16,17
20(a)
9
(59,288)
(63,559)
(14,895)
17,174
3,510
41,074
(4,065)
(51,969)
10
64,380
54,528
26,953
141
(18,922)
45,599
(3,407)
(265)
34
(16,771)
37,791
(1,923)
(726)
(3,672)
(2,649)
4
(4,337)
22,620
–
–
–
8,212
3,610
177
9,470
14
7,397
16,881
–
–
–
(667)
(869)
(3,105)
(1,571)
(13,721)
(12,460)
510
(9,900)
(14,650)
(109)
209
(5,150)
(6,616)
(87)
–
510
(9,900)
(14,650)
–
–
209
(5,150)
(6,616)
–
(38,537)
(24,973)
(27,145)
(13,128)
3,390
57,502
4,494
65,386
10,169
49,895
(2,562)
57,502
(4,525)
4,646
–
121
3,753
893
–
4,646
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The accompanying notes form an integral part of these Statements of Cash Flows.
Financial Statements
Notes to the financial statements
for the year ended 30 November 2022
1 Basis of preparation and consolidation
General information
SThree plc is a public limited company listed on the London Stock Exchange, incorporated in the United Kingdom
and domiciled in the United Kingdom, and registered in England and Wales. Its registered office is 1st Floor,
75 King William Street, London, EC4N 7BE.
The business model, activities, locations of SThree plc (the Company) and its subsidiaries (together the Group) are
set out further in the Strategic Report of this Annual Report.
Basis of preparation
The Consolidated and Company-only Financial Statements have been prepared in accordance with UK-adopted
International Accounting Standards and in conformity with the requirements of the Companies Act 2006
as applicable to companies reporting under those standards, including interpretations issued by the IFRS
Interpretations Committee.
On 31 December 2020, International Financial Reporting Standards as adopted by the European Union (EU) at that
date were brought into UK law and became UK-adopted International Accounting Standards, with future changes
being subject to endorsement by the UK Endorsement Board. The Group transitioned to UK-adopted International
Accounting Standards in its Consolidated Financial Statements on 1 December 2021. However, there was no impact
on recognition, measurement or disclosures, as well as no changes in the accounting policies from the transition.
The Group’s key accounting policies are set out across the following notes to the accounts and were applied
consistently throughout the year and preceding year.
The Consolidated and Company-only Financial Statements have been prepared under the historical cost basis of
accounting, as modified by financial assets held at fair value through profit or loss or held at fair value through other
comprehensive income. The Company has elected to take the exemption under Section 408 of the Companies Act
2006 not to present an income statement and statement of comprehensive income for the parent Company. The
profit after tax for the parent Company for the year was £91.3 million (2021: loss after tax of £4.0 million).
The Consolidated Financial Statements are presented in Sterling, the functional currency of SThree plc.
Going concern
The Consolidated and Company-only 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
considered associated principal risks which may impact the Group’s performance in the 12 months from the date of
approval of this year’s financial statements and in the period immediately thereafter.
At 30 November 2022, the Group had no debt except for IFRS 16 lease liabilities of £33.7 million and a small bank
overdraft. Credit facilities relevant to the review period comprise a committed £50.0 million RCF (a recently
refinanced facility expiring in May 2025, with extension options to 2027) and an uncommitted £30.0 million
accordion facility, both jointly provided by HSBC and Citibank. These facilities remained undrawn on 30 November
2022. A further uncommitted £5.0 million bank overdraft facility is also held with HSBC of which £0.4 million was
used at the year end. (Refer to note 17 Other financial liabilities for further details on the new credit facility which
replaced the existing RCF as mentioned here.)
In addition, the Group has £65.4 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.
The assessment of going concern is further described in the Strategic Report as part of the Compliance information
under the heading ‘Going concern’ on page 114 which is incorporated by reference into these financial statements.
Based on this evaluation, the Directors have formed a judgement that the Group has adequate resources to
continue in operational existence for at least the next 12 months from the date of approval of the Group’s
Consolidated Financial Statements, 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
the Consolidated Financial Statements, particularly in the context of the risks identified in the TCFD report on
pages 60 to 77. These considerations, which are integral to the Group’s strategy, are not considered 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 2022-2040. 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 has plans to invest 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. The Group’s expected credit losses
allowance uses credit ratings which inherently include the market’s assessment of the climate change impact
on credit risk of our clients. 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 for members of the
Executive Committee are linked and measured against ESG metrics from 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 only 10% of each grant, the impact
is considered immaterial.
• 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.
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 2021 as set out below.
New and amended standards effective in 2022 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 2021. The Group did not have to change its
accounting policies or make retrospective adjustments as a result of adopting these amended standards.
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Financial Statements
Notes to the financial statements continued
for the year ended 30 November 2022
1 Basis of preparation and consolidation continued
• Amendments to IFRS 7, IFRS 9, IFRS 16 and IAS 39 Interest Rate Benchmark Reform – phase 2.
The replacement of Interbank Offered Rates (IBORs) with Alternative Reference Rates (ARRs) began from
December 2021. Where floating interest-bearing receivables and payables exist (currently based on IBORs) the
Group applied suitable replacement benchmark rates and accounts for the instruments in accordance with the
amendments to IFRS 9 Financial Instruments published in 2019 (Phase 1) and 2020 (Phase 2). The adoption of these
amendments and the transition to ARRs had an immaterial financial impact. The implications on the trading results
of our segments of IBOR reform were also assessed and the expected impact was found to be immaterial.
New and amended standards that are applicable to the Group but not yet effective
As at the date of authorisation of this Annual Report, the following amendments to existing standards were in issue
but not yet effective. Where already endorsed by the UK, these changes will be adopted on the effective dates
noted. Where not yet endorsed by the UK, the adoption date is less certain. These amendments are not expected to
have a material impact on the Group in the current or future periods.
• Reference to the Conceptual Framework (amendments to IFRS 3).
• Property, plant and equipment – proceeds before intended use (amendments to IAS 16).
• Onerous contracts – cost of fulfilling a contract (amendments to IAS 37).
• Annual improvements to IFRS 2018-2020 (amendments to the following standards: IFRS 1, IFRS 9, IFRS 16 and
IAS 41).
The Group has not early adopted any standard, interpretation or amendment that has been issued but is not
yet effective.
The Group’s significant accounting policies relating to specific financial statement items are set out under the
relevant notes. Accounting policies that affect the financial statements as a whole and a description of the
accounting estimates and judgements are set out below.
Basis of consolidation
The Consolidated Financial Statements of the Group include the financial statements of the Company and all its
subsidiaries. Subsidiaries are fully consolidated from the date on which the Group obtains control. The Group has control
when it has rights to variable returns from its involvement in the entity and has the ability to affect those returns through
its power over the entity. The subsidiaries are deconsolidated from the date on which that control ceases.
When the Group disposes of a subsidiary, the gain or loss on disposal represents: (i) the aggregate of the fair
value of the consideration received or receivable; (ii) the carrying amount of the subsidiary’s net assets (including
goodwill) at the date of disposal; and (iii) any directly attributable disposal costs. Amounts previously recognised
in other comprehensive income in relation to the subsidiary are removed from equity and recognised in the
Consolidated Income Statement as part of the gain or loss on disposal.
Uniform accounting policies are adopted across the Group. All intra-group balances and transactions, including
unrealised profits and losses arising from intra-group transactions, are eliminated on consolidation.
Foreign currencies and translation
Functional and presentation currency
Items included in the financial statements of each Group subsidiary are measured using the currency of the primary
economic environment in which that subsidiary operates (its functional currency).
Transactions and balances
Foreign currency transactions are translated using exchange rates at the date of the transactions. Any exchange
gain or loss from settlement of these transactions or translation at the period end are recognised in the
income statement.
Consolidation
On consolidation, the subsidiaries’ assets and liabilities denominated in foreign currencies are translated into
Sterling at the rates ruling at the reporting date. The results of foreign subsidiaries are translated into Sterling
at average rates of exchange for the period and the exchange differences arising on translation are recognised
in Other Comprehensive Income. Any exchange differences which have arisen from an entity’s investment in a
foreign subsidiary, including long-term loans, are recognised as a separate component of equity and are included
in the Group’s currency translation reserve (CTR). When a foreign operation is sold, such exchange differences are
reclassified from CTR to the Consolidated Income Statement to form part of the gain or loss on disposal.
Critical accounting judgements and estimates
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates
and judgements. It also requires management to exercise judgement in the process of applying the Company’s
accounting policies. Estimates and judgements are continually evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Critical accounting judgements
Details of critical accounting judgements which could have a significant impact upon the financial statements are
set out in the related notes as follows:
(i) Tracker shares arrangements (refer to note 12 Investments);
(ii) Exceptional items (refer to note 3 Administrative expenses).
(iii) Indicators of impairment of investments in subsidiaries (Company only) (refer to note 12 Investments).
Critical accounting estimates
The assumptions and estimates at the end of the current reporting period that have a significant risk of resulting in
a material adjustment to the carrying amounts of assets and liabilities within the next financial year are set out in
the related note as follows:
(i) Revenue recognition (refer to note 2 Operating segments).
2 Operating segments
Accounting policy
Revenue
Revenue from contracts with customers is recognised when or as the Group satisfies a performance obligation
by transferring service to a client. For Permanent placements, the Group principally satisfies its performance
obligations at a point in time; for Contract placements, the Group satisfies its performance obligations over time.
Revenue is shown net of value added tax and other sales-related taxes, credit notes, rebates and discounts and
after elimination of sales within the Group.
Contract revenue for the supply of professional services, which is mainly based on the number of hours worked by
a contractor, is recognised when the service has been provided. Revenue from Permanent placements is typically
based on a fixed percentage of the candidate’s remuneration package and is recognised when the candidate
commences employment. Revenue earned but not invoiced at year end is accrued and included in ‘Accrued
income’ (it represents the variable consideration of revenue). The management team applies a constraint in the form
of the historical shrinkage rate to Contract accrued income, aimed at preventing the over-recognition of revenue.
Revenue from retained assignments is recognised on completion of certain pre-agreed stages of the service.
Fees received for the service are non-refundable.
A bad debt provision is established for non-fulfilment of Permanent placement and Contract revenue obligations,
which is netted off against the gross trade receivables on the face of the statement of financial position.
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Financial Statements
Notes to the financial statements continued
for the year ended 30 November 2022
2 Operating segments continued
Cost of sales
Cost of sales consists of the contractors’ (including employed contractors) cost of supplying services and any
costs directly attributable to them.
Net fees
Net fees represent revenue less cost of sales and consist of the total placement fees of Permanent candidates
and the margin earned on the placement of contractors.
Critical accounting estimates
Revenue recognition (Contract assets)
Contract revenue is recognised when the supply of professional services has been rendered. This includes an
assessment of professional services received by the client for services provided by contractors between the
date of the last received timesheet and the year end.
Revenue is accrued (known as accrued income) for contracts which are valid in the period, but where no timesheet
has been received or approved, and therefore billing and payments to contractors have not taken place. The value
of unsubmitted/unapproved timesheets for each individual contractor is system generated and the number of
hours worked by each contractor is adjusted for expected holidays and the historical shrinkage rate.
The key estimation uncertainty arises from determining the historical shrinkage rate which is used to constrain
the variable part of revenue, i.e. accrued income, at the reporting date. The historical shrinkage rate represents a
full-year (12-month rolling) average pattern in which income accrued for expected timesheets is reduced versus
the actual timesheets received and approved each month.
In 2022, the average shrinkage rate was approximately 14.6% across the Group (2021: 13.6%).
A 10% increase in this key assumption could have an impact of approximately £0.3 million on the amount
of Contract net fees (£1.5 million on revenue less £1.2 million on costs of sales) in the Consolidated Income
Statement in the next financial year.
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 maker to be the Executive Committee made up of the
Chief Executive Officer, the Chief Financial Officer, the Chief Technology and Information Officer, the Chief People
Officer, Chief Legal Officer and Senior Managing Directors.
The Group segments the business into the following reportable regions: DACH, EMEA excluding DACH, USA and
APAC, as well as presents an analysis of net fees by its five key markets: Germany, the Netherlands, the USA, the
UK and Japan. The DACH region comprises Germany, Switzerland and Austria. The ‘EMEA excluding DACH’ region
comprises primarily Belgium, France, the Netherlands, Spain, the UK, Ireland, and Dubai. All these sub-regions were
aggregated into two separate reportable segments based on the possession of similar economic characteristics.
Countries aggregated into DACH and separately into ‘EMEA excluding DACH’ generate a similar average net fees
margin and long-term growth rates, and are similar in each of the following areas:
•
•
•
the nature of the services (recruitment/candidate placement);
the methods used in which they provide services to clients (independent contractors, employed contractors,
and permanent candidates); and
the class of candidates (candidates, who we place with our clients, represent skillsets in Science, Technology,
Engineering and Mathematics disciplines).
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 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.
Intersegment revenue is recorded at values which approximate third party selling prices and is not significant.
£’000
EMEA excluding DACH
DACH
USA
APAC
Revenue
Net fees
2022
2021
2022
2021
739,409
606,248
156,540
127,197
539,014
452,456
148,922
129,420
338,221
254,338
111,545
89,260
22,802
17,684
13,609
9,836
1,639,446
1,330,726
430,616
355,713
APAC includes Japan and Singapore. In 2022, the segment also included the results generated by the Hong Kong
business, which was closed as at 30 November 2022 (see note 7 for further details).
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:
£’000
Timing of revenue recognition
Over time
At a point in time
£’000
Timing of revenue recognition
Over time
At a point in time
Major customers
2022
EMEA
excluding
DACH
DACH
USA
APAC
Total
718,447
495,268
315,134
11,474
1,540,323
20,962
43,746
23,087
11,328
99,123
739,409
539,014
338,221
22,802
1,639,446
2021
EMEA
excluding
DACH
DACH
USA
APAC
Total
587,220
410,510
231,812
9,558
1,239,100
19,029
41,944
22,526
8,127
91,626
606,249
452,454
254,338
17,685
1,330,726
In 2022 and 2021, no single customer generated more than 10% of the Group’s revenue.
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Financial Statements
Notes to the financial statements continued
for the year ended 30 November 2022
2 Operating segments continued
Other information
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:
£’000
Germany
USA
Netherlands
UK
Japan
RoW1
£’000
Germany
UK
Japan
USA
Netherlands
RoW1
Revenue
Net fees
2022
2021
2022
2021
468,352
405,308
131,880
117,827
338,221
254,338
111,545
89,260
314,156
250,645
72,931
262,999
202,368
46,689
10,793
8,189
244,925
209,878
9,410
58,161
55,612
37,798
6,868
48,348
1,639,446
1,330,726
430,616
355,713
Non-current assets
30 November
2022
30 November
2021
16,313
5,374
4,144
3,962
2,149
4,153
12,079
11,027
4,211
5,304
2,400
5,512
36,095
40,533
£’000
Brands
Computer Futures
Progressive
Real Staffing Group
Huxley Associates
564,844
448,325
143,932
117,384
475,142
376,844
124,877
99,502
365,708
294,309
104,901
90,394
233,752
211,248
56,906
48,433
1,639,446
1,330,726
430,616
355,713
£’000
Recruitment classification
Contract
Permanent
£’000
Sectors
Technology
Engineering
Life Sciences
Other1
Revenue
Net fees
2022
2021
2022
2021
1,540,323
1,239,100
334,215
266,163
99,123
91,626
96,401
89,550
1,639,446
1,330,726
430,616
355,713
Revenue
Net fees
2022
2021
2022
2021
838,649
674,072
203,184
166,538
341,850
267,407
92,083
319,734
271,460
139,213
117,787
95,172
40,177
70,563
85,439
33,173
1,639,446
1,330,726
430,616
355,713
1. Other includes the results of Banking & Finance sector, which was previously presented separately, and Procurement & Supply Chain and Sales & Marketing.
3 Administrative expenses
(a) Operating profit from continuing operations is stated after charging/(crediting):
£’000
Staff costs (note 4)
Depreciation (note 10)
Amortisation (note 11)
Service lease charges
– Buildings
– Cars
Foreign exchange losses
Other operating income (see note 3(b))
2022
2021
266,010
225,920
18,682
220
122
(266)
499
1,176
15,764
1,953
199
–
608
74
3,763
2,579
2,426
1,391
1,164
–
2,156
1,402
397
(470)
1. RoW (Rest of World) includes all countries other than listed.
Loss on disposal of property, plant and equipment other than right-of-use assets (note 10)
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.
Gain on lease modification (note 10)
Impairment of intangible assets (note 11)
Revenue
Net fees
Loss on disposal of intangible assets (note 11)
2022
2021
2022
2021
Impairment losses on financial assets1
Other brands, including Global Enterprise Partners, JP Gray, Madison Black, Newington International and Orgtel
are rolled into the above brands.
1. The YoY increase in impairment losses is mainly attributable to exposures written off as part of a transformation data cleanse exercise. During the year, in
preparation for the start of the programme, management reviewed legacy exposures, which had been in dispute for more than 180 days, and concluded they were
no longer recoverable and therefore were provided in full.
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Financial Statements
Notes to the financial statements continued
for the year ended 30 November 2022
3 Administrative expenses continued
(c) Auditors’ remuneration
(b) Profit for the prior year included the following items that were unusual because of their nature,
size or incidence:
During the year, the Group (including its subsidiaries) obtained the following services from the Company’s auditors
and its associates.
Accounting policy
Exceptional items
Exceptional items, as disclosed on the face of the income statement, are items which due to their size and non-
recurring nature are classified separately in order to draw them to the attention of the reader of the financial
statements and to provide an alternative performance measure (APM) of the underlying profits of the Group.
Government grant income
Government grants represent assistance by government in the form of transfers of resources to SThree in return
for compliance with grant conditions.
A government grant is recognised only when there is reasonable assurance that the Group will comply with any
conditions attached to the grant and that the grant will be received. The grant is recognised against the related
costs for the period in which they are intended to compensate.
Critical accounting judgements
Exceptional items
Exceptional items are those items that the Group considers to be non-recurring and material in nature that
should be brought to the reader’s attention in understanding the Group’s financial performance.
The term ‘exceptional items’ is not separately defined within IFRS. Judgement is therefore required in assessing
which items of income or expense qualify as exceptional and that disclosure of this APM is useful for readers of
the Annual Report.
£’000
1. Net exceptional income
2. Impact of Covid-19:
Government assistance income
Total
Net exceptional income
2022
–
–
–
2021
184
286
470
In the prior year, the Group recognised a net exceptional income of £0.2 million in relation to a legacy restructuring
programme partially funded by a grant receivable from Scottish Enterprise. The Group was entitled to the grant
until the end of 2021.
Impact of Covid-19
The Covid-19 health crisis had implications on certain items of income in the Consolidated Financial Statements,
affecting the profit before tax for the current and prior year. These items were not treated as exceptional.
Government assistance income
In the prior year, the Group took advantage of job retention schemes launched by the national governments of
France and Singapore, whereby it was reimbursed for a portion of salaries of furloughed personnel. A benefit of
£0.3 million was recognised and presented as a deduction in reporting the related staff expense. No such benefits
were received in the current year.
£’000
Fees payable to the Company’s auditors for the audit of the Company’s annual financial statements:
– recurring and non-recurring audit fees
Fees payable to the Company’s auditors and their associates for other services to the Group:
– audit of the Company’s subsidiaries pursuant to legislation
– audit-related assurance services
– all other non-audit services including Viewpoint subscription and, relevant to 2021 only,
Switzerland gender equal pay analysis
Fees charged to operating profit
4 Directors and employees
Accounting policy
Employee benefits
2022
2021
523
489
402
12
1
938
293
11
5
798
Wages, salaries, bonuses, social security contributions, paid annual leave or sick leave and any other employee
benefits are accrued in the period in which the associated services are rendered by employees to the Group.
The Group operates defined contribution pension schemes. The assets of the schemes are held separately from
those of the Group in independently administered funds. The pension costs charged to the income statement
represent the contributions payable by the Group to the funds during each period.
Share-based payments
The Group operates a number of equity-settled share-based arrangements, under which it receives services
from employees in return for equity instruments of the Group. The cost of equity-settled transactions with
employees is measured by reference to the fair value at the date when equity instruments are granted and is
recognised as an expense over the vesting period, which ends on the date on which the employees become fully
entitled to the award. Fair value is determined by using an appropriate valuation model.
No expense is recognised for awards that do not ultimately vest. For the awards with non-vesting conditions
(awards that do not have an explicit or implicit service requirement), the full cost of the award is recognised on
the grant date, i.e. they are treated as fully vested irrespective of whether or not the market condition is satisfied.
At the end of the reporting period, the cumulative expense is calculated, representing the extent to which the
vesting period has expired and the best estimate of the achievement of non-market conditions and the number
of equity instruments that will ultimately vest. The movement in cumulative expense since the previous year end
is recognised in the income statement, with a corresponding credit recognised in equity.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation and any
cost not yet recognised in the income statement for the award is expensed immediately. Any compensation
paid, up to the fair value of the award, at the cancellation or settlement date, is deducted from equity, with any
excess over fair value being treated as an expense in the income statement.
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Financial Statements
Notes to the financial statements continued
for the year ended 30 November 2022
4 Directors and employees continued
Aggregate remuneration of employees, including Directors, in continuing operations was:
£’000
Wages and salaries (including bonuses)
Social security costs
Other pension costs
Temporary staff costs
Share-based payments (see note 20(b))
Group
Company
2022
2021
229,460
195,414
26,822
25,492
3,161
1,513
5,054
2,115
1,392
1,507
266,010
225,920
2022
2,457
153
13
–
525
3,148
2021
3,186
798
12
–
160
4,156
The staff costs capitalised during the year on internally developed assets (note 11) and not included in the above
amounts were £0.3 million (2021: £0.6 million).
The average monthly number of employees (including Executive Directors), in continuing operations, during the
year was:
Sales
Non-sales
Sales
Non-sales
EMEA
excluding
DACH
867
711
1,578
EMEA
excluding
DACH
807
742
1,549
DACH
827
138
965
DACH
777
116
893
2022
USA
444
130
574
2021
USA
372
112
484
APAC
144
22
166
APAC
97
19
116
Group
total
2,282
1,001
3,283
Company
total
–
7
7
Group
total
Company
total
2,053
989
3,042
–
8
8
The average number of employees is derived by dividing the sum of the number of employees employed under
contracts of service in each month (whether throughout the month or not) by the number of months in the financial
year, irrespective of whether they are full-time or part-time.
There were also 3,613 (2021: 3,338) contractors engaged during the year under the Employed Contractor Model.
They are not included in the numbers above as they are not considered to be full-time employees of the Group.
Details of the Directors’ remuneration for the year, including the highest paid Director, which form part of these
financial statements, are provided in the audited information section of the Directors’ remuneration report
(section 1.1).
Directors’ compensation for loss of office was £0.1 million (2021: £1.1 million).
5 Finance income and costs
Accounting policy
Finance income is recognised as the interest accrues to the net carrying amount of the financial asset. Finance
cost is recognised in the income statement in the period in which it is incurred.
£’000
Finance income
Bank interest receivable
Other interest
Finance costs
Interest on lease liability
Bank loans and overdrafts
Net finance costs
2022
2021
139
2
141
(530)
(137)
(667)
(526)
28
6
34
(607)
(262)
(869)
(835)
6 Income tax expense
Accounting policy
The tax expense comprises both current and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before income
tax as reported in the income statement because it excludes items of income or expense that are taxable
or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the
reporting date.
Deferred tax
Deferred tax is provided in full, using the liability method, on temporary differences at the reporting date arising
between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred
tax is calculated using tax rates that are expected to apply when the related deferred tax asset is realised or the
deferred tax liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted
by the reporting date.
Deferred tax assets are recognised only to the extent that it is probable that sufficient future taxable profits will
be available to allow all or part of the deferred tax asset to be utilised. Where an entity has been loss-making,
deferred tax assets are only recognised if there is convincing evidence supporting its future utilisation.
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Financial Statements
Notes to the financial statements continued
for the year ended 30 November 2022
6 Income tax expense continued
(a) Analysis of tax charge for the year
£’000
Current income tax
Corporation tax charged on profits for the year
Adjustments in respect of prior periods
Total current tax charge
Deferred income tax
Origination and reversal of temporary differences
Adjustments in respect of prior periods (note 19)
Total deferred tax credit
2022
Total
2021
Before
exceptional
items
Exceptional
items
23,409
(133)
23,276
(395)
(57)
(452)
18,142
1,989
20,131
(276)
(1,983)
(2,259)
17,872
Total
18,177
1,989
20,166
(276)
(1,983)
(2,259)
35
–
35
–
–
–
35
17,907
Total income tax charge in the Consolidated Income Statement
22,824
The total income tax charge relates entirely to continuing operations.
(b) Reconciliation of the effective tax rate
The Group’s tax charge for the year exceeds (2021: exceeds) the UK statutory rate and can be reconciled as follows:
£’000
2022
Total
2021
Before
exceptional
items
Exceptional
items
Profit before income tax from continuing operations
77,026
59,974
Loss before income tax from discontinued operations
Profit before income tax for the Group
–
(269)
77,026
59,705
184
–
184
Total
60,158
(269)
59,889
Profit before income tax multiplied by the standard rate of
corporation tax in the UK at 19.0% (2021: 19.0%)
14,635
11,344
35
11,379
Effects of:
Disallowable items
Differing tax rates on overseas earnings
Adjustments in respect of prior periods
Adjustments due to tax rate changes
Tax losses for which deferred tax asset was not recognised or
derecognised
Total tax charge for the year
At the effective tax rate
Effective tax rate attributable to continuing operations
1,905
5,590
(190)
(294)
1,178
22,824
29.6%
29.6%
1,650
3,897
6
(149)
1,124
17,872
29.9%
29.8%
–
–
–
–
–
35
19.0%
–
1,650
3,897
6
(149)
1,124
17,907
29.9%
29.8%
(c) Current and deferred tax movement recognised directly in equity
£’000
Equity-settled share-based payments:
Current tax credit
Deferred tax (charge)/credit
2022
2021
196
(574)
(378)
4
643
647
The Group expects to receive additional tax deductions in respect of share options currently unexercised. The
Group provides 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 2022, a deferred tax asset of
£1.1 million (2021: £1.5 million) was recognised in respect of these options (note 19).
7 Business disposals
Hong Kong
In September 2022, the Board approved the plan for the closure of our Hong Kong business due to continued
underperformance in trading in the past years and lack of realisable potential for growth.
Already in 2017 when reviewing the Group’s presence in the APAC region, the Board significantly downsized
operations in Hong Kong, reducing it to a satellite office. Most recently, it became clear that our continued trading
in Hong Kong remained sub-optimal and was no longer a viable investment option.
At the end of November 2022, all current agreements with contractors were in the process of being terminated
or being transferred to an external agency. Overall, the closure of Hong Kong resulted in additional costs of
£0.2 million incurred by the Group, mainly in relation to personnel termination benefits.
This disposal did not meet the definition of discontinued operations given in IFRS 5 ‘Non-Current Assets Held for
Sale and Discontinued Operations’ and, therefore, no disclosures in relation to discontinued operations were made.
Australia
In the financial year ended 30 November 2020, the Group liquidated the Australian subsidiary (‘SThree Australia’),
the operations of which represented a separate major line of business for SThree. Since then, SThree Australia
was treated as discontinued operations and its results were reported separately from the continuing operations of
the Group.
In the prior year, the post-tax loss of £0.3 million from discontinued operations was reported on the face of
the Consolidated Income Statement, which comprised the following items of income and expense after intra-
group eliminations.
£’000
Cost of sales
Administrative expenses
Operating loss
Loss before and after income tax from discontinued operations
Reclassification of foreign currency translation reserve
Total comprehensive loss on liquidation of the subsidiary
Net cash flows used by discontinued operations were as follows in the prior year:
Operating activities
2022
–
–
–
–
–
–
–
2021
(20)
(13)
(33)
(33)
(236)
(269)
(848)
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Financial Statements
Notes to the financial statements continued
for the year ended 30 November 2022
8 Earnings per share
Accounting policy
9 Dividends
Accounting policy
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 period excluding shares
held as treasury shares (note 20(a)) 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.
Interim dividends are recognised in the financial statements at the earlier of the time they are paid or shareholders’
approval. Final dividends declared to the Company’s shareholders are recognised as a liability in the Company’s
and Group’s financial statements in the period in which they are approved by the Company’s shareholders.
The Company recognises dividends from subsidiaries at the time that they are declared.
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.
£’000
For accounting policy regarding EBT, refer to note 20 Equity.
The following tables reflect the income and share data used in the basic and diluted EPS calculations.
Amounts recognised and paid as distributions to owners of the Company in the year
Interim dividend for the year ended 30 November 2021 of 3.0 pence (2020: nil pence) per share1
Final dividend for the year ended 30 November 2021 of 8.0 pence (2020: 5.0 pence) per share2
£’000
Earnings
Continuing operations before exceptional items
Exceptional items
Discontinued operations
Profit for the year attributable to owners of the Company
million
Number of shares
Weighted average number of shares used for basic EPS
Dilutive effect of share plans
Diluted weighted average number of shares used for diluted EPS
pence
Basic EPS
Continuing operations before exceptional items
Exceptional items
Discontinued operations
Diluted EPS
Continuing operations before exceptional items
Exceptional items
Discontinued operations
2022
2021
54,202
42,102
–
–
149
(269)
54,202
41,982
2022
2021
132.2
3.7
135.9
132.3
4.4
136.7
2022
2021
41.0
–
–
41.0
39.9
–
–
39.9
31.8
0.1
(0.2)
31.7
30.8
0.1
(0.2)
30.7
2022
2021
3,965
10,685
14,650
–
6,616
6,616
2022
2021
6,632
14,547
21,179
3,982
10,690
14,672
£’000
Amounts arising in respect of the year
Interim dividend for the year ended 30 November 2022 of 5.0 pence (2021: 3.0 pence) per share3
Proposed final dividend for the year ended 30 November 2022 of 11.0 pence (2021: 8.0 pence) per share4
1. The 2021 interim dividend of 3.0 pence (2020: nil pence) per share was paid on 3 December 2021 to those shareholders on the register of SThree plc on 5 November 2021.
2. The 2021 final dividend of 8.0 pence (2020: 5.0 pence) per share was paid on 10 June 2022 to shareholders on record on 6 May 2022.
3. The 2022 interim dividend of 5.0 pence (2021: 3.0 pence) per share was paid on 2 December 2022 to shareholders on record at 4 November 2022.
4. The Board has proposed the 2022 final dividend of 11.0 pence (2021: 8.0 pence) per share, to be paid on 9 June 2023 to shareholders on record at 12 May 2023.
This proposed final dividend is subject to approval by shareholders at the Company’s next Annual General Meeting on 19 April 2023, and therefore has not been
included as a liability in these financial statements.
10 Property, plant and equipment
Accounting policy
Property, plant and equipment is recorded at cost less accumulated depreciation and any impairment losses.
Subsequent expenditure is added to the carrying value of the asset when it is probable that future economic
benefits, in excess of the originally assessed performance of the existing asset, will flow to the Group and the costs
can be measured reliably. All other subsequent expenditure is expensed in the period in which it is incurred.
Depreciation is provided on a straight-line basis and charged to the income statement over the expected useful
working lives of the assets, after they have been brought into use, at the following rates:
Right-of-use assets
Computer equipment
Leasehold improvements
Fixtures and fittings
lower of the asset’s useful life and the lease term
three years
lower of the lease term and five years
five years
Gains and losses on disposals are included in the income statement by comparing proceeds with carrying amount.
Residual values and useful lives are reviewed and adjusted if appropriate at the end of the reporting period. Any
changes are accounted for prospectively.
Property, plant and equipment is reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the
carrying amount of the asset exceeds its recoverable amount, which is the higher of the asset’s fair value less cost
to sell and its value in use.
For accounting policy regarding right-of-use assets, refer to note 16 Leases.
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Financial Statements
Notes to the financial statements continued
for the year ended 30 November 2022
10 Property, plant and equipment continued
The movements of property, plant and equipment by class of assets are as follows:
£’000
Cost
At 1 December 2020
Additions
Disposals
Forex revaluation
At 30 November 2021
Additions
Disposals
Forex revaluation
At 30 November 2022
Accumulated depreciation
At 1 December 2020
Depreciation charge for the year
Disposals
Forex revaluation
At 30 November 2021
Depreciation charge for the year
Disposals
Forex revaluation
At 30 November 2022
Net book value
At 30 November 2022
At 30 November 2021
Right-of-use
assets
Computer
equipment
Leasehold
improvements
Fixtures and
fittings
Total
16,326
10,509
5,557
45,186
14,026
(7,728)
(300)
51,184
14,432
(12,278)
729
1,358
(804)
(254)
16,626
1,311
(709)
312
54,067
17,540
12,308
12,008
(5,249)
(230)
18,837
15,075
(10,250)
611
11,893
2,256
(695)
(154)
13,300
2,288
(648)
255
268
(439)
(184)
10,154
1,196
(1,768)
340
9,922
7,985
1,095
(412)
(137)
8,531
936
77,578
15,949
(9,758)
(865)
297
(787)
(127)
4,940
82,904
900
(718)
107
17,839
(15,473)
1,488
5,229
86,758
4,574
36,760
405
(724)
(92)
4,163
383
15,764
(7,080)
(613)
44,831
18,682
24,273
15,195
8,059
3,982
51,509
29,794
32,347
2,345
3,326
1,863
1,623
1,247
35,249
777
38,073
A depreciation charge of £18.7 million (2021: £15.8 million) was recognised in administrative expenses.
During the year, certain assets related to no longer operational office equipment, with a net book value of
£0.1 million (2021: £0.2 million), were disposed of, incurring a loss on disposal of £0.1 million (2021: a loss on
disposal of £0.2 million).
For the carrying amount of right-of-use assets per class of underlying asset refer to note 16. During the year, the
Group early-terminated certain lease contracts resulting in the net gain on lease modification (including the write-
off of the corresponding lease liabilities) of £0.3 million (2021: £0.8 million).
The Company has no property, plant and equipment.
(1,733)
(692)
(13,323)
325
128
1,319
Trademarks
11 Intangible assets
Accounting policy
Goodwill
Goodwill arising on consolidation represents the excess of purchase consideration over the fair value of the
Group’s share of the identifiable net assets of the acquired subsidiary at the date of acquisition. Goodwill on the
acquisition of subsidiaries has an indefinite useful life and is included in intangible assets. If the goodwill balance
is material, it is tested annually for impairment and carried at cost less accumulated impairment losses. Any
impairment is recognised immediately in the income statement and is not subsequently reversed. On disposal of
a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
Acquired and developed software and systems
Computer software acquired or developed by the Group is stated at cost less accumulated amortisation. Costs
incurred on software and system development projects are only capitalised if capitalisation criteria under IAS
38 Intangible Assets (IAS 38) and IFRS Interpretation Committee (IFRIC) interpretation of Software-as-a-Service
(SaaS) are met. These are amortised as follows:
• Acquired computer software: expected useful life of three to seven years
• Software and system development costs: expected useful lives not exceeding five years
Software maintenance costs are expensed in the period in which they are incurred. Other costs linked to
development projects that do not meet the IAS 38 criteria are expensed in the period incurred.
Assets under construction
Purchased assets or internally generated intangible assets that are still under development are classified as
‘assets under construction’. These assets are reclassified within intangibles over the phased completion dates
and are amortised from the date they are reclassified.
Acquired trademarks are stated at cost and are amortised over the estimated useful life (up to 12 years) on a
straight-line basis.
Impairment of intangible assets
Assets that are not subject to amortisation are tested for impairment annually. Any impairment loss or gain is
recognised in the income statement.
Impairment loss is the excess of an asset’s carrying amount over its recoverable amount. The recoverable
amount represents the higher of an asset’s fair value less costs to sell and its value in use. Value in use is
measured based on the expected future discounted cash flows attributable to the asset. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash
flows (cash-generating units).
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P-215
Financial Statements
Notes to the financial statements continued
for the year ended 30 November 2022
11 Intangible assets continued
The movements in intangible assets by asset class during the year were as follows:
Internally generated
£’000
Cost
Goodwill
Computer
software
Assets under
construction
At 1 December 2020
206,313
9,076
Additions
Disposals
Reclassification
Forex revaluation
–
–
–
4
4
–
–
(3)
At 30 November 2021
206,317
9,077
Additions
Disposals
Transfer
Forex revaluation
At 30 November 2022
–
–
–
–
8
(2)
–
1
206,317
9,084
Accumulated amortisation and impairment
At 1 December 2020
205,480
9,072
Amortisation charge for the year
Accelerated amortisation and impairment charge
Disposals
Reclassification
–
–
–
(1)
2
–
–
–
At 30 November 2021
205,479
9,074
Amortisation charge for the year
Accelerated amortisation and impairment charge
Disposals
Forex revaluation
At 30 November 2022
Net book value
At 30 November 2022
At 30 November 2021
–
–
–
–
4
–
(2)
–
205,479
9,076
838
838
8
3
172
722
(74)
(137)
12
695
257
(765)
(202)
15
–
–
–
–
–
–
–
–
–
–
–
–
–
695
Software
and system
development
costs
41,322
–
(2,062)
84
(1)
Trademarks
Total
71
256,954
–
–
–
–
726
(2,136)
(53)
12
39,343
71
255,503
–
(433)
202
–
–
–
–
–
265
(1,200)
–
16
39,112
71
254,584
37,922
71
252,545
1,951
608
(2,062)
1
–
–
–
–
1,953
608
(2,062)
–
38,420
71
253,044
216
499
(22)
(1)
–
–
–
–
220
499
(24)
(1)
39,112
71
253,738
–
923
–
–
846
2,459
In 2022, the Board approved the Group-wide IT Transformation Programme, the aim of which is to create a world-
class operational platform through data, technology and infrastructure. The Programme started in June and most of
the expenditure (£4.1 million) was made on research-related activities and expensed immediately.
Also in 2022, management reviewed the entire book of legacy development costs and assets under construction
capitalised in previous years. The decision was taken to expense £1.7 million (including £0.5 million in accelerated
amortisation) worth of the legacy intangible assets immediately to the income statement.
An amortisation charge of £0.2 million (2021: £2.0 million) was included in administrative expenses.
Disclosures required under IAS 36 Impairment of Assets for goodwill impairment have not been included on the
basis that the goodwill value is not considered material.
The Company has no intangible assets.
12 Investments
Accounting policy
Equity investments
The Group classifies its financial assets in the following measurement categories:
•
•
those measured subsequently at fair value (either through OCI or through profit or loss); and
those measured at amortised cost.
Classification depends on the Group’s business model for managing the financial assets and the contractual
terms of the cash flows. For assets measured at fair value, gains and losses will be recorded in either profit or
loss or OCI. For investments in equity instruments that are not held for trading, this will depend on whether the
Group has made an irrevocable election at the time of initial recognition to account for the equity investment at
FVOCI. Financial assets with embedded derivatives are considered in their entirety when determining whether
their cash flows are solely payments of principal and interest.
Subsidiaries
Investments in shares in subsidiary companies are stated at cost less impairment loss to the extent that the
carrying value exceeds the recoverable amount; the investment is impaired to its recoverable amount with the
impairment charged to the Company’s income statement. An investment is deemed to be impaired when it has
been determined that its carrying value will not be recovered either through actual cash flows or operating profit
generation or selling it. If circumstances arise that indicate that investments might be impaired, the recoverable
amount of the investment is estimated. The recoverable amount is the higher of the entity’s fair value less costs
to sell or its value in use. To the extent that the carrying value exceeds the recoverable amount, the investment is
impaired to its recoverable amount.
Where share-based payments are granted to the employees of subsidiary undertakings by the Company,
they are treated as a capital contribution to the subsidiary and the Company’s investment in the subsidiary is
increased accordingly.
The investments in shares in the undertakings outside of the Group, in particular where the Group does not have
significant influence or control, are classified as financial assets held at fair value through other comprehensive
income. At initial recognition, such shareholdings are measured at cost and on subsequent measurement dates
they are fair valued on the basis of current prices generated for similar transactions or using an enterprise value
to sales multiple valuation method.
Tracker share arrangements
Over the past years, until 2020, the Group invited selected senior individuals to invest in the businesses they
manage, sharing in both the risk and reward. These individuals were offered equity (‘tracker shares’) in those
businesses in return for making an investment. The amount of equity offered varied in different circumstances
but was never over 25% of the overall equity of the business in question. The equity stake tracks the performance
of the underlying business and the individuals receive dividends (if declared) by the ‘tracked’ business.
If an individual remains a holder of the tracker shares for a pre-agreed period, typically three to five years
depending on the vesting period applied to the tracker shares, they may then offer their vested tracker shares
for sale to the Group, but there is no obligation on the Group to settle the arrangement. SThree will undertake a
formal due diligence process to establish whether there is a sound business case for settling a tracker share and
make an arm’s length judgement. Should the Group decide to settle the tracker shares, it will do so at a price
which is determined using a formula stipulated in the tracker share Articles of Association (Articles). SThree plc
may settle in cash or in its shares, as it chooses. The Group policy is to settle in SThree plc shares. Consequently,
the arrangements are deemed to be an equity-settled share-based payment scheme under IFRS 2 Share-based
Payments (IFRS 2).
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Annual Report and Accounts 2022
P-217
Financial Statements
Notes to the financial statements continued
for the year ended 30 November 2022
12 Investments continued
Individuals paid the fair value for the tracker shares at the time of the initial subscription, as determined by an
independent third-party valuer in accordance with IFRS 2 and taking into account the particular rights attached
to the shares as described in the relevant businesses’ Articles. The initial valuation always took into consideration
factors such as the size and trading record of the underlying business, expected dividends, future projections,
as well as the external market, sector and country characteristics. The external valuer was supplied with detailed
financial information, including net fees and EBITDA of the relevant businesses. Using this information, an
independent calculation of the initial Equity Value (EV) was prepared. This EV was then discounted to arrive
at a valuation to take into account the relevant characteristics of the shareholding in the tracked business, for
example the absence of voting rights.
The methodology for calculating the EV was applied consistently, although the data used varied depending on
the size and history of the business.
Tracker shares can be repurchased from holders with either cash or SThree plc shares at the Company’s discretion.
Historically, the Company’s policy and intention has been to settle tracker shares using SThree plc shares.
Therefore, the judgement of the Directors is that this scheme is treated as equity-settled.
Indicators of impairment of investments in subsidiaries (Company only)
At each reporting date, the Company assesses whether there are any indications of impairment of its investments in
subsidiaries. The Company uses both external and internal sources of information to make this assessment, including
those in relation to significant adverse changes in the market or economic environment in which subsidiaries operate,
information about the carrying amount of subsidiaries’ net assets versus market value, or internal management reports
that indicate that the financial performance of subsidiaries will be worse than budgeted.
Only when an indication of impairment is identified, the Company performs a detail impairment review including
calculations of recoverable amounts of the investments.
In 2021 the Directors decided to close the tracker share scheme for any new entrants/investments.
Group
If an individual leaves the Group before the pre-agreed period, they are entitled to receive the lower of the initial
subscription amount they contributed or the tracker share fair value on the date of departure as set out under
the Articles. To reflect this, a provision in relation to tracker shares is recognised to reflect the consideration for
tracker shares received from individuals (note 18 Provisions).
Up until 2014 certain individuals received loans from the Group to pay part of the initial subscription for
their tracker shares, on which interest is charged at or above the HMRC beneficial loan rate. These loans are
repayable by the individuals either at the time of settlement of their tracker shares, or via tracker share dividend,
or when they leave the Group. These loans are included within other receivables (note 13 Trade and other
receivables).
During the vesting period, no share-based payment charge is recognised in the income statement on the basis
that the initial subscription by the individual at the grant date equated to the fair value at that date. Dividends
declared by the tracked businesses, which were factored into the grant date fair value determination of the
tracker shares, are recorded in equity as ‘distributions to tracker shareholders’.
When the Company issues new shares to settle the tracker share arrangements, the nominal value of the shares
is credited to share capital and the difference between the fair value of the tracker shares and the nominal value
is credited to share premium. If the Company uses treasury shares to settle the arrangements, the difference
between the fair value of the tracker shares and the weighted average value of the treasury shares is accounted
for in the retained earnings.
Critical accounting judgements
Tracker shares arrangements
The tracker shares arrangements give the Group the choice to settle tracker shares in either cash or SThree
plc shares. There are significant accounting differences between an equity-settled and cash-settled scheme.
Judgement is therefore required as to whether this is a cash or equity-settled share-based payment scheme.
Based on the Directors’ judgement, the tracker share arrangements are accounted for as an equity-settled
share-based payment scheme under IFRS 2 as the Group’s policy is to settle its obligations under the
arrangements in SThree plc shares. The Company settles tracker shares through either treasury shares or the
issue of new shares in SThree plc. The Companies Act 2006 does not specify whether the issue of treasury
shares to settle share-based payments should be accounted for in share premium or elsewhere. The Company
has taken legal advice which confirms this is judgemental and therefore the approach taken by the Company
is to include differences between the fair value of the tracker shares settled and the weighted average cost of
treasury shares in retained earnings.
The Group holds a minority shareholding (less than 1% of the total share capital issued) in RoboRecruiter, a
company which invests in automated recruitment solutions. The investment is a financial asset classified as
measured at fair value through other comprehensive income. Due to limited information about the current
performance and prospects of this company, management made a decision to fully write off the investment of
c.£1k. In previous years, the investment was considered a level 1 valuation under the fair value hierarchy.
Company
Cost
At 1 December 2020
Additions
– Settlement of vested tracker shares
– Settlement of unvested tracker shares
– Capital contribution relating to share-based payments
At 30 November 2021
Additions
– Settlement of vested tracker shares
– Settlement of unvested tracker shares
– Capital contribution relating to share-based payments
At 30 November 2022
Provision for impairment
At 1 December 2020 and 30 November 2021
Provision made during the year
At 30 November 2022
Net carrying value
At 30 November 2022
At 30 November 2021
£’000
356,213
4,610
217
1,077
362,117
3,862
2,122
4,127
372,228
156,070
940
157,010
215,218
206,047
During the year, the Company settled a number of vested and unvested tracker shares by awarding SThree plc
shares (note 20(b)). This resulted in an increase in the Company’s investment of £6.0 million (2021: £4.8 million) in
relevant subsidiary businesses.
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Annual Report and Accounts 2022
P-219
Financial Statements
Notes to the financial statements continued
for the year ended 30 November 2022
12 Investments continued
IFRS 2 requires that any options or awards granted to employees of subsidiary undertakings, without reimbursement
by the subsidiary, increase the carrying value of the investment held in the subsidiaries. In 2022, the Company
recognised a net increase in investments in its subsidiaries of £4.1 million (2021: £1.1 million) relating to share
options and awards including those under the Long-Term Incentive Plan and Save-As-You-Earn schemes.
Assessment of investment indications
During the year, the Company performed an assessment of impairment indications within its portfolio of investments
in subsidiaries. Overall, SThree businesses delivered a very strong financial performance, ahead of market and
management expectations, in 2022. The Group’s Contract net fees increased by 19% and Permanent net fees
increased by 6%, both on a like-for-like basis. With ongoing strong demand for candidates with STEM skills, our
contractor order book grew by 19% YoY across the Group. No significant indicators of impairment were noted.
However, following the Board’s decision to significantly restructure our businesses in Ireland and Singapore, and to close
the Hong Kong business, an impairment charge of £0.9 million was recognised in the Company’s income statement in
2022. The net book values of these investments were written off in full. Further details can be found in note 7 and in the
Chief Financial Officer’s statement on page 87.
For comparison, no impairment charge was recognised in the prior year.
A full list of the Company’s subsidiaries that existed as at 30 November 2022 is provided in note 26.
13 Trade and other receivables
Accounting policy
Trade receivables including Contract assets are amounts due from customers for services performed in the
ordinary course of business. They are initially recognised at fair value and subsequently measured at amortised
cost using the effective interest rate method. The normal credit terms are between 14-30 days upon service
provision, with 30 days becoming a more prevalent payment term.
The Group applies the IFRS 9 simplified approach for trade and other receivables and follows an expected credit
losses (ECLs) approach for measuring the allowance of its trade receivables. The Group recognises a loss allowance
based on lifetime ECLs at each reporting date. For invoices reviewed on a portfolio basis (i.e. not individually
reviewed), the loss allowance for ECLs is provided at differing percentages determined based on historical collection
experience, adjusted for forward-looking market factors specific to the debtors and the economic environment.
Certain exposures within trade receivables are individually assessed for which the Directors make judgement on a
client-by-client basis as to their ability to collect outstanding receivables. When reviewing significant outstanding
invoices, the Directors consider qualitative factors that are available without undue cost or effort, such as a decrease
in the debtor’s creditworthiness, changes in external or internal credit ratings, macro-economic conditions, actual or
expected deterioration in business performance of any particular debtor, and other known issues.
Derecognition of trade and other receivables
Trade and other receivables are derecognised when the rights to receive cash flows from these assets have
expired or have been transferred. On derecognition, any difference between the carrying amount of an asset
and the consideration received is recognised in the profit or loss.
For critical accounting estimates regarding contract assets, refer to note 2 Operating segments.
£'000
Trade receivables
Less allowance for ECLs and revenue reversals
Trade receivables – net
Contract assets
Prepayments
Other receivables
Other taxes and social security – debtor
Group
Company
30 November
2022
30 November
2021
30 November
2022
30 November
2021
254,413
206,293
(3,704)
(4,308)
250,709
201,985
91,680
15,528
5,967
–
82,083
6,768
7,188
–
–
–
–
6,488
8
–
8,950
363,884
298,024
15,446
–
–
–
–
45
17
518
580
Trade receivables are non-interest-bearing current financial assets.
Contract assets represent the Contract revenue earned but not invoiced at the year end. It is based on the value of
the unbilled timesheets from the contractors for the services provided up to the year end. The corresponding costs
are shown within trade payables (where the contractor has submitted an invoice) and within accruals (in respect of
unsubmitted and unapproved timesheets) (note 15).
Other receivables include £0.1 million (2021: £0.2 million) for loans given to certain employees in previous years
towards their subscription for tracker shares (note 24(d)). Tracker share loans are unsecured and charged interest at
a rate of 2% (2021: 2%). No such new tracker share loans were given to employees during the current year.
The Group establishes an allowance for doubtful accounts that represents an estimate of ECLs in respect of trade
and other receivables. Movements in the impairment provision for trade receivables are shown in the table below.
£'000
Provision for impairment of trade receivables
At the beginning of the year
Charge for the year
Bad debts written off
Reversed as amounts recovered
Exchange differences
At the end of the year
30 November
2022
30 November
2021
4,308
3,697
4,013
3,456
(4,323)
(1,903)
(67)
89
(1,111)
(147)
3,704
4,308
Other classes within trade and other receivables do not contain impaired assets. The management team considers
that the carrying value of trade and other receivables is approximately equal to their fair values and they are
deemed to be current assets.
For further information refer to note 24.
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P-221
Financial Statements
Notes to the financial statements continued
for the year ended 30 November 2022
14 Cash and cash equivalents
Accounting policy
16 Leases
Accounting policy
Cash and cash equivalents include cash-in-hand, deposits held with banks, and other short-term highly liquid
investments with original maturities of three months or less. Bank overdrafts are classified as short-term
borrowings unless they form part of a cash pooling arrangement where there is an intention to settle on a net
basis, in which case they are reported net of related cash balances.
Leases, from a lessee perspective, are recognised as a right-of-use asset and a corresponding lease liability at
the date when the leased asset is available for use by the Group. Assets and liabilities arising from a lease are
initially measured on a net present value basis and are recognised as part of ‘Property, plant and equipment’,
‘Non-current lease liabilities’ and ‘Current lease liabilities’ in the statement of financial position.
£'000
Cash at bank
Bank overdraft
Net cash and cash equivalents
Group
Company
30 November
2022
30 November
2021
30 November
2022
30 November
2021
65,809
57,526
(423)
(24)
65,386
57,502
121
–
121
4,646
–
4,646
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 carrying amount of these assets approximate their fair values.
Substantially all of these assets are categorised within level 1 of the fair value hierarchy.
The Group has four cash pooling arrangements in place at HSBC US (USD), HSBC UK (GBP), NatWest (GBP) and
Citibank (EUR).
15 Trade and other payables
Accounting policy
Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost
using the effective interest rate method.
£'000
Trade payables
Accruals
Other taxes and social security
Other payables
Group
Company
30 November
2022
30 November
2021
30 November
2022
30 November
2021
38,093
46,710
141,178
121,239
22,323
15,248
21,787
6,344
–
1,611
170
1,210
–
1,859
307
968
Amounts due to subsidiaries (note 23)
–
–
50,781
102,560
216,842
196,080
53,772
105,694
The carrying amounts of trade and other payables are considered to be the same as their fair values, due to their
short-term nature.
Trade and other payables are predominantly interest-free, are unsecured and are usually paid within 15 days
of recognition.
Accruals include amounts payable to contractors in respect of unsubmitted and unapproved timesheets (note 13).
Amounts due to subsidiaries are subject to annual interest at a rate of 15 basis points below the Group’s external
borrowing costs under its Revolving Credit Facility.
Lease liabilities include the net present value of the following lease payments:
a) fixed payments less any lease incentives receivable;
b) variable lease payments that are based on an index or a rate;
c) amounts expected to be payable by the lessee under residual value guarantees, if any;
d) the exercise price of a purchase option if the Group is reasonably certain it will exercise that option; and
e) payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.
The lease payments are discounted using the interest rate implicit in the lease (if that rate can be determined),
or the incremental borrowing rate (IBR), being the rate the Group would have to pay to borrow the funds
necessary to obtain an asset of similar value in a similar economic environment with similar terms and
conditions. In determining the IBR to be used, the Group applies judgement to establish the suitable reference
rate and credit spread.
Each lease payment is allocated between the liability and finance costs, within finance costs in the
income statement.
Lease payments are presented as follows in the Group statement of cash flows:
• payments for the interest element of recognised lease liabilities are included in ‘interest paid’ within cash
flows from financing activities; and
• payments for the principal element of recognised lease liabilities are presented within cash flows from
financing activities.
Right-of-use assets are measured at cost comprising the following:
a) the amount of the initial measurement of lease liability;
b) any lease payments made at or before the commencement date less any lease incentive received;
c) any initial direct costs; and
d) any restoration costs.
The right-of-use assets are depreciated over the shorter of the assets’ useful life and the lease term on a
straight-line basis.
The Group does not apply the recognition exemption to short-term leases or leases of low-value assets, as
permitted by the standard.
In determining the lease terms, the management team consider all facts and circumstances that create an
economic incentive to exercise an extension option, or not exercise a termination option. Extension options
(or periods after a termination option) are only included in the lease term if the lease is reasonably certain to
be extended (or not terminated). The assessment is reviewed if a significant event or change in circumstances
occurs which affects this assessment and that is within the control of the lessee.
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Annual Report and Accounts 2022
P-223
Financial Statements
Notes to the financial statements continued
for the year ended 30 November 2022
16 Leases continued
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
Buildings
Cars
IT equipment
Total right-of-use assets (refer to note 10)
Current lease liabilities
Non-current lease liabilities
Total lease liabilities (refer to note 24)
30 November
2022
30 November
2021
27,862
30,667
1,932
–
1,631
49
29,794
32,347
11,102
22,600
13,081
21,987
33,702
35,068
The Consolidated Income Statement includes the following amounts relating to depreciation of right-of-use assets:
£'000
Buildings
Cars
IT equipment
Total depreciation charge of right-of-use assets
30 November
2022
30 November
2021
13,849
10,882
1,152
74
1,052
74
15,075
12,008
In the current year, interest expense on leases amounted to £0.5 million (2021: £0.6 million) and was recognised
within finance costs in the Consolidated Income Statement (refer to note 5 Finance income and costs).
The total cash outflow for leases in 2022 was £14.3 million (2021: £13.1 million) and comprised the principal and
interest element of recognised lease liabilities.
17 Other financial liabilities
Accounting policy
Financial liabilities
All non-derivative financial liabilities are classified as ‘financial liabilities measured at amortised cost’. All
financial liabilities are recognised initially at fair value and net of transaction costs. They are subsequently
measured at amortised cost using the effective interest rate method. Financial liabilities are classified as current
liabilities unless the Group has an unconditional right to defer settlement for at least 12 months after the end of
the reporting period.
The Group’s financial liabilities include trade and other payables and other financial liabilities, including bank
overdraft and lease liabilities.
The Group maintains a committed Revolving Credit Facility (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 has also an uncommitted £5.0 million overdraft facility with HSBC of which
£0.4 million was used at the year end.
On 21 July 2022, the Management negotiated a new credit facility which runs until June 2025 (with options to
extend it until 2027), with key terms and conditions remaining largely similar to the previous facility. Since this is a
new credit facility, it was treated as an extinguishment of the original facility, and all associated costs and legal fees
incurred were recognised immediately in the income statement.
The new facility is subject to financial covenants and any funds borrowed under the new facility will bear a
minimum annual interest rate of 1.2% above the benchmark Sterling Overnight Index Average (SONIA). As
the Group and the Company did not draw down under these facilities, the net finance costs of £0.5 million
(2021: £0.8 million) were mainly related to lease interest.
The RCF is subject to certain covenants requiring the Group to maintain financial ratios over interest cover,
leverage and guarantor cover (note 24(c)). The Group has complied with these covenants throughout the year.
The Group’s exposure to interest rates, liquidity, foreign currency and capital management risks is disclosed in
note 24.
Reconciliation of financial liabilities to cash flows arising from financing activities:
£'000
Balance at 1 December 2020
Cash flows:
Interest paid on borrowings, excluding lease liabilities
Payments of principal and interest element of lease liabilities
Total cash flows
Lease increases
Lease termination
Other movements1
Balance at 30 November 2021
Cash flows:
Interest paid on borrowings, excluding lease liabilities
Payments of principal and interest element of lease liabilities
Total cash flows
Lease increases
Lease termination
Other movements1
Balance at 30 November 2022
1. Other movements in 2022 and 2021 primarily comprise unwind of the discount on lease liabilities.
18 Provisions
Accounting policy
35,504
(262)
(13,067)
(13,329)
14,026
(1,740)
607
35,068
(137)
(14,251)
(14,388)
14,773
(2,294)
543
33,702
A provision is recognised in the statement of financial position when the Group has a present legal or
constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be
required to settle the obligation. Provisions are recognised at the present value of the expenditures expected to
be required to settle the obligation. No provision is recognised for future operating losses.
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Annual Report and Accounts 2022
P-225
Financial Statements
Notes to the financial statements continued
for the year ended 30 November 2022
18 Provisions continued
(a) Movements in each class of provision during the financial year are set out below:
£'000
Dilapidations
Restructuring
and
termination
payments
Tracker share
liability
At 1 December 2020
Additions
(Released)/charged to the income
statement
Utilised during the year
Forex revaluation
At 30 November 2021
Additions
(Released)/charged to the income
statement
Utilised during the year
Forex revaluation
2,705
318
(153)
(131)
(84)
2,655
294
(36)
(127)
33
5,121
–
961
(4,574)
–
1,508
2,998
(58)
(1,407)
–
3,357
–
(241)
(557)
–
2,559
–
(134)
(525)
–
Legal
1,321
–
426
(193)
(14)
1,540
1,565
Onerous
contracts
–
–
–
–
–
–
–
(238)
984
(74)
117
–
–
Total
12,504
318
993
(5,455)
(98)
8,262
4,857
518
(2,133)
150
At 30 November 2022
2,819
3,041
1,900
2,910
984
11,654
£'000
Expected timing of provision utilisation
Current
Non-current
30 November
2022
30 November
2021
7,871
3,783
11,654
6,258
2,004
8,262
Provisions are not discounted as the Directors believe that the effect of the time value of money is immaterial. The
provisions are measured at cost, which approximates to the present value of the expenditure required to settle
the obligation.
(b) Information about individual provisions and significant estimates
Dilapidations
The Group is obliged to pay for dilapidations at the end of its tenancy of various properties. Provision was made
based on independent professional estimates of the likely costs on vacating properties based on the current
conditions of the properties. The provision is captured within the carrying value of the right-of-use assets and
depreciated to profit or loss over the lease term.
Restructuring and termination payments
At 30 November 2022, the provision comprised primarily future termination payments related to staff in the Ireland
and Singapore businesses, which are being restructured, and the Hong Kong business, which was closed at the
year end, as well as a number of other employees who will exit the business in early 2023. Termination payments
are provided for staff exiting SThree in the normal course of business and in the case of a restructuring.
The liability in relation to dilapidation, restructuring and termination payments provisions is expected to crystallise
as follows:
£'000
Within one year
One to five years
After five years
Tracker share liability
30 November
2022
30 November
2021
4,037
1,555
268
5,860
2,159
1,383
621
4,163
The provision relates to an obligation to repay amounts received or receivable in relation to subscriptions for
tracker shares awarded to senior individuals under the terms of the tracker share arrangements (note 12). The timing
of economic outflow is subject to the factors governing each tracker share and is considered to be within one year.
During the year, £0.5 million (2021: £0.6 million) of the provision was utilised, principally in relation to settled tracker shares.
There were no new subscriptions in the current year as the tracker share scheme was closed for new entrants/investments.
Legal
The provision relates to various ongoing legal and other disputes including employee litigation, compliance with
employment laws and regulations, and open enquiries with tax and pension authorities. The provision relates to
separate claims in a number of different geographic regions and represents our most probable estimate of the likely
outcome of each of the disputes. The timing of economic outflow is subject to the factors governing each case.
Onerous contracts
The provision relates to partially underutilised leased offices in certain locations. The onerous contract provision
was created for corresponding service charges (not capitalised within the initial recognition amount of right-of-use
assets) which would be incurred for the remainder of the underlying lease terms.
19 Deferred tax
Group
£’000
At 1 December 2020
Credit/(charge) to income statement for the year
Prior year credit/(charge) to income statement for
the year
Adjustment due to tax rate changes
Credit directly to equity
Forex revaluation
At 30 November 2021
Credit/(charge) to income statement for the year
Prior year credit to income statement for the year
Adjustment due to tax rate changes
Charge directly to equity
Forex revaluation
At 30 November 2022
Accelerated
tax
depreciation
Share-based
payments
76
115
5
29
–
–
225
83
13
44
–
(4)
361
770
46
(60)
119
643
1
1,519
80
–
84
(574)
32
1,141
Tax losses
Provisions
898
(688)
(262)
654
Total
1,482
127
(210)
2,248
1,983
–
–
–
–
–
–
–
–
–
–
1
–
106
2,747
(62)
44
166
–
219
149
643
107
4,491
101
57
294
(574)
247
3,114
4,616
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Annual Report and Accounts 2022
P-227
Financial Statements
Notes to the financial statements continued
for the year ended 30 November 2022
19 Deferred tax continued
Nevertheless, the Group settled the £1.4 million requested by HMRC and this amount is recorded as an asset held
within current tax.
Deferred tax assets and liabilities are offset where the Group has a legally enforceable right to do so and when the
deferred income taxes relate to the same fiscal authority. The following is an analysis of the deferred tax balances
for financial reporting purposes:
Company
The Company’s deferred tax asset relates in full to the equity-settled share-based payments.
£'000
Deferred tax assets:
Recovered within one year
Recovered after one year
Deferred tax liabilities
Settled within one year
Settled after one year
Net deferred tax assets
30 November
2022
30 November
2021
2,016
2,638
1,939
2,612
(8)
(30)
(12)
(48)
4,616
4,491
Deferred tax assets that are expected to be recovered within one year are £2.0 million (2021: £1.9 million) and
deferred tax liabilities that are expected to be settled within one year are £0.01 million (2021: £0.01 million).
Deferred tax assets are recognised for carry-forward tax losses to the extent that the realisation of the related
tax benefit through future taxable profits from the respective jurisdictions is probable. In assessing whether to
recognise deferred tax assets, the Group considered both current and the forecast trading performance in these
territories and the expectations regarding the levels of profitability that can be achieved.
At the reporting date, the Group had unused tax losses of £30.3 million (2021: £34.1 million) available for offset
against future profits. No deferred tax asset was recognised in respect of the £30.3 million (2021: £34.1 million)
losses. The reduction in losses arises from expiration, recognition, exchange differences and utilisation.
Included in unrecognised tax losses are losses of £0.8 million (2021: £0.8 million) which are subject to expiry. Of
this amount, £nil expires over the course of the next five years; and the remaining balance of £0.8 million will expire
by 2042. A regional summary of our unrecognised operating tax losses is shown below.
£'000
Operating tax losses not recognised
Europe
Asia Pacific
Rest of World
30 November
2022
30 November
2021
15,532
13,977
809
14,074
8,901
11,161
30,318
34,136
Recognised operating losses were £nil (2021: £nil) during the year.
The Group has the following uncertain tax positions:
• On transfer pricing risks, the provision increased during the year by £0.1 million to £2.3 million
(2021: £2.2 million).
• With regards to the European Commission’s decision as of April 2019, that certain parts of the UK’s controlled
foreign company legislation gave rise to state aid, the management team concluded that the provision for this
uncertain tax position should remain in place at £1.4 million (2021: £1.4 million). On 8 June 2022, the General
Court of the European Union dismissed the applications for annulment from both the UK Government and
one of the British broadcast television network companies. Both parties have now appealed this decision. The
outcome of these appeals will be closely monitored by the management team to determine any implications on
the Group’s tax position.
£'000
At 1 December 2020
Charge to income statement for the year
Credit directly to equity
At 30 November 2021
Credit to income statement for the year
Charge directly to equity
At 30 November 2022
20 Equity
Accounting policy
Share capital
1,029
(855)
172
346
41
(162)
225
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
The Group’s holdings in its own equity instruments are classified as ‘treasury reserve’. The consideration paid,
including any directly attributable incremental costs, is deducted from the equity attributable to the owners of
the Company until the shares are cancelled or reissued. No gain or loss is recognised in the income statement on
the purchase, sale, issue or cancellation of own equity shares.
Employee Benefit Trust (EBT)
The EBT is funded entirely by the Company. The assets and liabilities of the EBT are recognised in the Group’s
Consolidated Financial Statements.
The shares in the EBT are held to satisfy awards and grants under certain employee share schemes. For
accounting purposes, shares held in the EBT are treated in the same manner as treasury shares and are,
therefore, included in the Consolidated Financial Statements as treasury reserve. Consideration, if any, received
for the sale of such shares is also recognised in equity, with any difference between the proceeds from sale and
the original cost being taken to retained earnings. No gain or loss is recognised in the income statement on the
purchase, sale, issue or cancellation of equity shares held by the EBT.
In the separate financial statements of the Company, the EBT is treated as an agent acting on behalf of the
Company. Funding provided by the Company to the EBT is accounted for as the issue of treasury shares.
For accounting policy regarding tracker share awards in subsidiary companies, refer to note 12 Investments.
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Annual Report and Accounts 2022
P-229
Financial Statements
Notes to the financial statements continued
for the year ended 30 November 2022
20 Equity continued
Group and Company
(a) Share capital
Issued and fully paid
At 1 December 2020
Issue of new shares
Purchase of shares by EBT, including gift of shares
Utilisation of shares held by EBT
At 30 November 2021
Issue of new shares
Purchase of shares by EBT
Utilisation of shares held by EBT
At 30 November 2022
Number of
ordinary shares
132,896,622
734,155
–
–
Share
capital
£'000
1,330
7
–
–
Capital
redemption
reserve
£'000
Treasury
reserve
£'000
172
(1,496)
–
–
–
–
(5,332)
3,461
133,630,777
1,337
172
(3,367)
831,845
–
–
8
–
–
–
–
–
–
(9,900)
6,686
134,462,622
1,345
172
(6,581)
The nominal value per ordinary share is £0.01 (2021: £0.01).
The Company does not have a limited amount of authorised share capital.
During the year 831,845 (2021: 734,155) new ordinary shares were issued, resulting in a share premium of
£2.8 million (2021: £2.4 million). Of the shares issued, 623,219 (2021: 200,372) were issued to tracker shareholders
on settlement of vested and unvested tracker shares and 208,626 (2021: 81,169) pursuant to the exercise of share
awards under the Save As You Earn (SAYE) scheme. In the previous year, 452,614 new shares were issued on
settlement of Long-Term Incentive Plans (LTIP).
Treasury reserve
Treasury shares represent SThree plc shares repurchased and available for specific and limited purposes.
No shares were utilised from the treasury reserve during the current and previous year.
At the year end, 35,767 (2021: 35,767) shares were held in treasury reserve.
EBT
During the year, the EBT purchased 2,519,652 (2021: 1,220,854) of SThree plc shares. The average price paid
per share was 393 pence (2021: 422 pence). The total acquisition cost of the purchased shares was £9.9 million
(2021: £5.3 million), for which the treasury reserve was reduced. During the year, the EBT utilised 1,671,868
(2021: 985,932) shares on settlement of vested tracker shares and LTIP awards. At the year end, the EBT held
1,771,146 (2021: 923,362) shares.
(b) Share-based payments
Tracker share awards in subsidiary companies
As described in note 12, until 2019 the Group made tracker share awards in respect of certain subsidiary businesses
to senior individuals who participate in the development of those businesses.
During the year, the Group settled certain vested and unvested tracker shares for a total consideration of
£6.0 million (2021: £4.8 million) by issue of new shares or using treasury shares purchased from the market. This
resulted in an increase in share capital and share premium for new issue, and reduction in capital reserves for
utilised treasury reserve, with a corresponding reduction in the Group’s retained earnings and provision for tracker
share liability.
LTIP, SAYE and other share schemes
The Group has a number of share schemes to incentivise its Directors and employees. All schemes are treated
as equity-settled (except Share Incentive Plans (SIP)) as the Group has no legal or constructive obligation to
repurchase or settle the options in cash. The schemes are detailed below.
30 November 2022
30 November 2021
Charge
(£'000)
Number
of share
options
Charge
(£'000)
Number of
share options
Vesting
period
Expiry
date
Valuation
method
Performance
metrics
Scheme
LTIP
4,221 3,562,691
1,284
3,918,656 3 years
Immediate
after vesting
Monte Carlo and
Binomial model
period
Incremental EPS
growth/TSR ranking
against comparator
group
6 months
after 3-year
vesting period
Binomial
None
SAYE
148
538,070
236
666,223 3 years
Deferred
bonus in
shares
Free shares
SIP
Total
LTIP
430
n/a
–
n/a
1 year
n/a
n/a
Group financial
targets, shared
objectives, personal
objectives
200
55
n/a
n/a
–
38
n/a
n/a
none
1 year
n/a
n/a
n/a
n/a
None
None
5,054
4,100,761
1,558 4,584,879
Further details on the conditions of the LTIP are provided in the Directors’ remuneration report on pages 152 and
164.
At 1 December 2020
Granted
Exercised
Forfeited
At 30 November 2021
Granted
Exercised
Forfeited
At 30 November 2022
Number of
options
4,458,174
1,414,288
(592,964)
(1,360,842)
3,918,656
1,633,560
(586,063)
(1,403,462)
3,562,691
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Annual Report and Accounts 2022
P-231
Financial Statements
Notes to the financial statements continued
for the year ended 30 November 2022
20 Equity continued
Out of the 3,562,691 options outstanding (2021: 3,918,656), 20,853 options were exercisable (2021: 68,387).
Options exercised during the year under the LTIP were satisfied by new issue or shares held in the EBT. The related
weighted average share price at the time of exercise was £3.98 (2021: £4.43). The related transaction costs were
negligible. The share options had a weighted average exercise price of £nil (2021: £nil).
The share options granted in 2022, and separately in 2021, under the Group LTIP scheme were valued as follows:
Weighted average fair value (£)
Key assumptions used:
Share price at grant date (£)
Expected volatility1
Annual risk-free interest rate
Expected life (years)
2022
4.08
4.08
36.8%
1.27%
3
2021
3.57
3.75
37.1%
0.13%
3
1. Expected volatility is determined by using the historic daily volatility of SThree plc’s shares as measured over a period commensurate with the expected
performance period of the share options, i.e. three years.
Other schemes
The SAYE, Free shares and SIP arrangements are not deemed material for further disclosure. Further details behind
the executive scheme, deferred bonus in shares, are provided in the Directors’ remuneration report on page 155.
21 Contingencies
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.
22 Commitments
Capital commitments
At the year end, the Group had capital commitments for property, plant and equipment amounting to £16.6 million
(2021: £7.6 million). Capital commitments include total future minimum lease payments under leases not yet
commenced to which the Group was committed at the year end of £0.5 million (2021: £5.3 million).
Other commitments
23 Related party transactions
Group
Balances and transactions with subsidiaries were eliminated on consolidation and are not disclosed in this note.
Transactions between the Group and its Directors and members of the Executive Committee (ExCo), who are
deemed to be key management personnel, are disclosed below.
Remuneration of key management personnel (KMP)
The Group’s KMP comprises members of the ExCo, other members of the Board of Directors and key managers
who have authority and responsibility for planning, directing and controlling the activities of the Group, directly or
indirectly. Further details of Directors’ remuneration are included in the Directors’ remuneration report on pages
148 to 173.
The total number of KMP for the year was 14 (2021: 15). Total remuneration for members of KMP, including seven
members who left the business in 2022, is detailed below:
£'000
Short-term employee benefits
Share-based payments
Post-employment benefits
Termination benefits
Company
2022
6,452
1,491
204
87
2021
3,556
427
266
460
8,234
4,709
The Company has related party relationships with its subsidiaries, with members of its Board and key managers.
The Directors’ remuneration which they receive from the Company is disclosed in the Directors’ remuneration
report. The Company did not have any transactions with the Directors during the financial year other than those
disclosed in the Directors’ remuneration report and below. Details of transactions between the Company and other
related parties are disclosed below.
£'000
Transactions with the related parties during the year
Dividend income received from subsidiaries
Investments in subsidiaries (note 12)
Settlement of tracker shares with KMP
Loans and advances (repaid to)/received from subsidiaries
Loans repaid by Directors
Loans repaid by other KMP
Interest income received from subsidiaries
2022
2021
101,400
–
(10,111)
(5,904)
(1,143)
(482)
(51,779)
5,264
–
–
4
10
169
2
(3,103)
(1,571)
At the year end, the Group had also committed to future lease service costs of £5.4 million (2021: £6.0 million).
Interest paid by subsidiaries
Guarantees
Settlement of tracker shares with KMP
At the year end, the Group/SThree plc had bank guarantees in issue for commitments which amounted to
£3.2 million (2021: £4.3 million).
Company
In 2022, selected UK subsidiaries (see note 26) were exempt from the requirements of the UK Companies Act
2006 (the Act) relating to the audit of individual accounts by virtue of s479A of the Act. The Company provides a
guarantee concerning the outstanding liabilities of these subsidiaries under Section 479C of the Act.
During the year, 102,991 shares were issued to the Chief Executive Officer (CEO) as part of the annual tracker shares
settlement. Of the 12 tracker share businesses in which the CEO held interests, nine were recommended for a full or
partial buyout, each having been assessed against the normally applied criteria. The overall buyout offer value for the
CEO was £0.5 million of which £0.4 million was accepted and settled in SThree plc’s shares.
Two other members of KMP were also offered a full or partial buyout offer in 2022. Their total buyout offer
was £1.0 million of which £0.8 million was accepted and settled in SThree plc’s shares. No purchase or sales
transactions were entered into between the Company and its subsidiaries.
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Annual Report and Accounts 2022
P-233
Financial Statements
Notes to the financial statements continued
for the year ended 30 November 2022
23 Related party transactions continued
£'000
Year-end balances arising from transactions with related parties
Investments in subsidiaries
Amounts due to subsidiaries
24 Financial instruments and financial risk management
Financial instruments
30 November
2022
30 November
2021
215,218
206,047
(50,781)
(102,560)
The Group holds and uses financial instruments to finance its operations and to manage its interest rate and
liquidity risks. The Group primarily finances its operations using share capital, revenue and borrowings.
The accounting classification of each category of financial instruments and their carrying amounts are set out below.
£'000
At 30 November 2022
Financial assets
Trade receivables and contract assets
Other receivables1
Cash and cash equivalents
Financial liabilities
Bank overdraft
Trade payables and accruals
Other payables2
Lease liabilities
£'000
At 30 November 2021
Financial assets
Investments
Trade receivables and contract assets
Other receivables1
Cash and cash equivalents
Financial liabilities
Bank overdraft
Trade payables and accruals
Other payables2
Lease liabilities
Measured at
amortised
cost
Note
Elected to be
measured at
FV through
OCI
Total
carrying
amount
13
13
14
14
15
15
342,389
2,779
65,809
(423)
(179,271)
(9,853)
16,17
(33,702)
–
–
–
–
–
–
–
Measured at
amortised cost
Note
Elected to be
measured at
FV through
OCI
12
13
13
14
14
15
15
–
284,068
2,961
57,526
(24)
(167,949)
(5,342)
16,17
35,068
1
–
–
–
–
–
–
–
342,389
2,779
65,809
(423)
(179,271)
(9,853)
(33,702)
Total
carrying
amount
1
284,068
2,961
57,526
(24)
(167,949)
(5,342)
35,068
Financial risk factors
The Group reports in Sterling and pays dividends out of Sterling profits. The role of the Group’s corporate treasury
function is to manage and monitor external and internal funding requirements and financial risks in support of
corporate objectives. Treasury activities are governed by policies and procedures approved by the Board. A
treasury management committee, chaired by the Chief Financial Officer, meets on a monthly basis to review
treasury activities and its members receive management information relating to treasury activities. The Group’s
internal auditors periodically review the treasury internal control environment and compliance with policies
and procedures.
Each year, the Board reviews the Group’s currency hedging strategy to ensure it is appropriate. The Group does not
hold or issue derivative financial instruments for speculative purposes and its treasury policies specifically prohibit
such activity. All transactions in financial instruments are undertaken to manage the risks arising from underlying
business activities, not for speculation.
The Group corporate treasury function enters into a limited number of derivative transactions, principally currency
swaps and forward currency contracts, with the purpose of managing the currency risks arising from operations
and financing of subsidiaries.
At the year end, the Group had net foreign exchange swaps of:
Currency
United Arab Emirates Dirham (AED)
Canadian Dollar (CAD)
Swiss Franc (CHF)
Euro (EUR)
Hong Kong Dollar (HKD)
Japanese Yen (JPY)
Singapore Dollar (SGD)
US Dollar (USD)
2022
LCCY'000
2,218
(486)
(759)
2022
£'000
501
(300)
(666)
2021
LCCY'000
7,314
(199)
2021
£'000
1,497
(117)
(4,650)
(3,806)
(15,106)
(13,041)
5,559
590
2,974
7,664
2,535
739
(606,417)
(3,645)
(221,633)
(1,472)
(8,142)
(4,961)
(5,412)
(2,982)
(30,569)
(25,355)
(17,936)
(13,483)
(46,877)
(17,089)
The contracts were mainly taken out close to the year-end date for a period of 30 to 32 days (2021: 31 to 37 days),
and they had an immaterial net positive fair value (2021: £0.1 million) at the year end.
The Group is exposed to a number of different financial risks including capital management, foreign currency rates,
liquidity, credit and interest rates risks, which were not materially changed from the previous year. The Group’s
objective and strategy in responding to these risks are set out below and did not change materially from the
previous year.
(a) Capital risk management
The Group’s objectives when managing capital are to safeguard the Group and its subsidiaries’ ability to continue
as going concerns to provide returns for shareholders and benefits for other stakeholders and to maintain an
optimal capital structure to minimise the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to
shareholders, delay or reduce the settlement of vested tracker shares, sell assets to reduce debt, return capital
to shareholders or issue new shares, subject to applicable rules. The Group’s policy is to settle the vested tracker
shares in the Company’s shares. During the year, certain vested and unvested tracker shares were settled by issue
of new shares or using treasury shares purchased from the market (note 20(a)).
1. Other receivables comprise mainly rental deposits and staff loans and exclude non-financial assets.
2. Other payables comprise mainly cash in transit and other trade creditors and exclude non-financial liabilities.
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P-235
Financial Statements
Notes to the financial statements continued
for the year ended 30 November 2022
24 Financial instruments and financial risk management continued
The capital structure of the Group consists of equity attributable to owners of the parent of £200.4 million
(2021: £158.2 million), comprising share capital, share premium, other reserves and retained earnings as disclosed
in the Consolidated Statement of Changes in Equity and net cash of £65.4 million (2021: £57.5 million), comprising
cash and cash equivalents less bank overdraft (note 14).
Except for compliance with certain bank covenants (note 24(c)), the Group is not subject to any externally imposed
capital requirements.
(b) Foreign currency exchange risk management
The Group uses Sterling as its presentation currency. It undertakes transactions in a number of foreign currencies.
Consequently, exposures to exchange rate fluctuations do arise. Such exchange rate movements affect the
Group’s transactional revenues, cost of sales, the translation of earnings and the net assets/liabilities of its
overseas operations.
The Group is also exposed to foreign currency risks from the value of net investments outside the United Kingdom.
The intercompany loans which are treated as net investments in foreign operations are not planned to be settled in
the foreseeable future as they are deemed to be a part of the investment. Therefore, exchange differences arising
from the translation of the net investment loans are taken into equity.
The Group’s businesses generally raise invoices and incur expenses in their local currencies. Local currency cash
generated is remitted via intercompany transfers to the United Kingdom. The Group generally converts foreign
currency balances into Sterling to manage its cash flows.
Foreign currency sensitivity analysis
The Group is mainly exposed to the Euro and the US Dollar. If the Euro or the US Dollar strengthened against
Sterling by a movement of 10%, the anticipated impact on the Group’s results in terms of translational exposure
would be an increase in profit before income tax of £6.9 million and £3.4 million (2021: £7.0 million and £3.1 million)
respectively, with a similar decrease if the Euro or the US Dollar weakened against Sterling by 10%.
(c) Liquidity risk management
The Group’s treasury function centrally coordinates relationships with banks, manages borrowing requirements,
foreign exchange needs and cash management. The Group has access to a committed RCF of £50.0 million along
with an uncommitted £30.0 million accordion facility in place with HSBC and Citibank, giving the Group an option
to increase its total borrowings under the facility to £80.0 million. At the year end, £nil (2021: £nil) was drawn down
on these facilities. The Group also has an uncommitted £5.0 million overdraft facility with HSBC of which £0.4
million was used at the year end.
The RCF is subject to certain covenants requiring the Group to maintain financial ratios over interest cover, leverage
and guarantor cover. The Group complied with these covenants throughout the year.
(i) Interest cover: interest cover shall not be less than the ratio of 4:1 at any time;
(ii) Leverage: the ratio of total net debt on the last day of a period to the adjusted EBITDA in respect of that period
shall not exceed the ratio of 3:1; and
(iii) Guarantor cover: the aggregate adjusted EBITDA and gross assets of all the guarantor subsidiaries must at all
times represent at least 80% of the adjusted EBITDA and gross assets of the Group as a whole.
The table below shows the maturity profile of the financial liabilities which are held at amortised cost based on the
contractual amounts payable on the date of repayment:
£'000
At 30 November 2022
Within one year
More than one year
At 30 November 2021
Within one year
More than one year
(d) Credit risk management
(i) Risk management
Lease liabilities
Trade and other payables,
including bank overdrafts
Group
Group
Company
11,023
189,547
53,602
23,254
–
–
34,277
189,547
53,602
13,081
173,315
105,387
21,987
–
–
35,068
173,315
105,387
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss
to the Group.
In the normal course of business, the Group participates in cash pooling arrangements with its counterparty
bank. The maximum exposure to a single banking group for deposits and funds held on account at the year end
was £40.6 million (2021: £43.5 million). The Group will not accept any counterparty bank for its deposits unless it
has been awarded a minimum recognised credit rating of A3/Prime-2 (Moody’s). Some local banks in emerging
markets may have lower ratings but the funds at risk will be small. The Group will permit exposures with individual
counterparty banks and exposure types up to pre-defined limits as part of the Group treasury policy. Exposure to
all transaction limits is monitored daily.
The Group mitigates its credit risk from trade receivables by using a credit rating agency to assess new clients and
payment history to consider further credit extensions to existing clients. In addition, the spread of the client base
(over 8,200 clients) helps to mitigate the risk of individual client failure having a material impact on the Group.
The Group does not typically renegotiate the terms of trade receivables; hence the outstanding balance is included
in the analysis based on the original payment terms. There were no significant renegotiated balances outstanding
at the year end.
The Group’s credit risk from loans given to certain tracker shareholders (note 13) is immaterial. In 2022, five loans
were repaid in full, and only three remain outstanding (2021: eight outstanding tracker share loans) for the total
amount of £0.1 million. Exposure to loans from individuals is regularly monitored and the individuals are asked
to settle all or a portion of their outstanding balances when their tracker shares are settled, when they receive
dividends or if they leave the business.
Climate-related matters
In the current year, the management team continued to monitor and mitigate any potential deterioration in clients’
credit risk, in particular for a small proportion of the Group’s clients which are exposed to physical and transition
risks associated with climate change. No material financial impact or deterioration in our clients’ ability to settle
their debt obligations was identified.
In the near future, in line with the Group’s climate change strategy, the management team has plans to establish
credit rating/scoring matrix which will help us to assess how our clients address ESG matters within their
organisations, and whether their policies meet our standards and risk appetite.
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P-237
Financial Statements
Notes to the financial statements continued
for the year ended 30 November 2022
24 Financial instruments and financial risk management continued
(ii) Credit rating
The Group uses the following categories of internal credit risk rating for financial assets which are subject to
ECLs under the three-stage general approach. These categories reflect the respective credit risk and how the loss
provision is determined for each of those categories.
Category of internal credit rating
Definition of category
Basis of recognition of ECLs
Performing
Clients have a low risk of default and a strong capacity
to meet contractual cash flows
12-month ECLs
Underperforming/non-performing Clients negotiating for new credit terms, default in
Lifetime ECLs
repayment and other relevant indicators that showed
customers’ deteriorating financial condition
Non-performing
Interest and/or principal payment are 90 days past due
Lifetime ECLs
Write-off
Clients with no reasonable expectation of recovery
Asset is written off
(iii) Impairment of financial assets
The Group applies the simplified approach by using the provision matrix to measure the lifetime ECLs for trade
receivables and contract assets.
At 30 November 2022, cash and cash equivalents, other receivables and refundable deposits are rated with a
‘performing’ internal credit rating. The credit risks on bank balances, other receivables and deposits are low as
these balances are placed with reputable financial institutions or companies with good collection track records
with the Group.
To measure the ECLs, the Group considers historical payment patterns and credit characteristics of each client
and adjusts for forward-looking information such as future prospects of the clients’ core operating industries, the
political and economic environment in which the Group’s clients operate, and other information and factors on the
clients’ financial condition.
Notwithstanding the above, the Group evaluates the ECLs on clients in financial difficulties and who have defaulted
on payments separately. These receivables are not secured by any collateral or credit enhancements.
Trade and other receivables are written off when there is no reasonable expectation of recovery, such as a
debtor failing to engage in a repayment plan with the Group. Where receivables have been written off, the Group
continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made,
these are recognised in profit or loss.
The Group’s credit risk exposure in relation to trade receivables and contract assets as at 30 November 2022 and
30 November 2021 is set out in the provision matrix as follows:
£'000
30 November 2022
Expected loss rates
Gross trade receivables
Contract assets
Other assets
Loss allowances
£'000
30 November 2021
Expected loss rates
Gross trade receivables
Contract assets
Other assets
Loss allowances
1-30
days
past due
31-60
days
past due
61-120
days
past due
More than
120 days
past due
Current
Total
0.03%
0.45%
196,628
29,960
47.40%
6,761
254,413
1.08%
11,741
–
–
127
1.62%
9,323
–
–
151
–
–
135
–
–
3,204
1-30
days
past due
31-60
days
past due
61-120
days
past due
More than
120 days
past due
91,680
2,779
3,704
Total
91,680
2,779
87
Current
0.193%
1.31%
162,728
24,080
0.89%
7,428
82,083
2,961
478
–
–
315
–
–
66
4.09%
47.42%
5,235
6,822
206,293
–
–
–
–
214
3,235
82,083
2,961
4,308
(e) Interest rate risk management
The Group is exposed to interest rate risk from the possibility that changes in interest rates will affect future cash
flows or the fair values of its financial instruments, principally financial liabilities. The Group finances its operations
through a mixture of retained profit and the RCF.
The Group does not hedge the exposure to variations in interest rates.
Taking into consideration all variable rate borrowings and bank balances at 30 November 2022, if the interest rate
payable or receivable moved by 100 basis points in either direction, the effect to the Group would be minimal. 100
basis points was used on the assumption that applicable interest rates are not likely to move by more than this basis
given the pattern of interest rate movements in recent years.
(f) Interest rate profile of financial assets and liabilities
At the reporting date, the Group and the Company did not have any significant financial liabilities exposed to
interest rate risk. The only financial assets which accrued interest were cash and cash equivalents (note 14) with
maturity of less than a year and were subject to floating interest income.
Interest Rate Benchmark Reform
LIBOR was discontinued as a benchmark rate from 31 December 2021 and replaced with Alternative Reference
Rates (ARRs). The adoption of these amendments and the transition to ARRs had an immaterial financial impact on
SThree’s ability to manage interest rate risk. The implications on the trading results of our segments of IBOR reform
have also been assessed and the expected impact is immaterial.
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Annual Report and Accounts 2022
P-239
Financial Statements
Notes to the financial statements continued
for the year ended 30 November 2022
24 Financial instruments and financial risk management continued
(g) Currency profile of net cash and cash equivalents (including bank overdrafts)
£’000
At 30 November 2022
Functional currency of Group operations
Sterling
Euro
US Dollar
Other
£’000
At 30 November 2021
Functional currency of Group operations
Sterling
Euro
US Dollar
Other
Net cash and cash equivalents
Sterling
Euro
US Dollar
Other
currencies
Total
17,610
14,396
9,437
70
–
11
14,712
–
–
17,691
29,108
–
167
1,608
11,212
195
190
–
41,638
14,972
167
6,990
8,609
7,375
65,386
Sterling
Euro
US Dollar
Other
currencies
Total
5,541
21
–
6
17,727
7,713
–
6
5,568
25,446
17,254
–
24
643
17,921
–
–
–
8,567
8,567
40,522
7,734
24
9,222
57,502
Other foreign currencies held by the Group include Canadian Dollar, Hong Kong Dollar, Australian Dollar, Japanese
Yen, Malaysian Ringgit, Qatari Riyal, Singapore Dollar, Saudi Arabia Riyal, Swiss Franc and United Arab Emirates
Dirham. The Company does not have a material exposure to other currencies.
(h) Fair value
For all financial instruments, the carrying amount is either the fair value, or approximates the fair value.
Fair value is the amount at which a financial instrument could be exchanged in an arm’s length transaction between
informed and willing parties, other than a forced or liquidation sale, and excludes accrued interest.
Where relevant, market values were used to determine fair values. Where market values were not available, fair
value was calculated by discounting expected cash flows at prevailing interest rates and by applying year-end
exchange rates.
The Group holds a minority shareholding in RoboRecruiter (see note 12) which fair value was written off to other
comprehensive income in the current year. Previously, the investment valuation was categorised within level 1 of
the fair value hierarchy. The Group’s all other financial assets or financial liabilities, which are not measured at fair
value, have the carrying amounts which are a reasonable approximation of their fair values.
Summary of fair value methods and assumptions
Receivables and payables
Due to the short-term nature of the current receivables and payables, their
carrying amount is considered to be the same as their fair value.
Cash and cash equivalents,
including short-term deposits
Approximates the carrying amount because of the short maturity of these
instruments.
Investments
Borrowings
Market valuation at the end of the reporting year.
The carrying amount of the Group’s borrowings, primarily the RCF,
approximates their fair value. The fair value of the RCF is estimated using
discounted cash flow analysis based on the Group’s current incremental
borrowing rates for similar types and maturities of borrowing and is
consequently categorised in level 2 of the fair value hierarchy.
25 Subsequent events
There were no subsequent events following 30 November 2022.
26 List of subsidiaries
The full list of SThree plc’s subsidiaries at 30 November 2022 and 30 November 2021, and the Group percentage of
ordinary share capital and voting rights is as follows:
Name of undertaking
Country of
incorporation
%
Principal
activities
Registered office
SThree Australia Pty
100 Australia
Liquidated
C/O DLA Piper Australia, 80 Collins
Street, Melbourne VIC 3000, PO Box
4301, Australia
Registered
number
126 409 103
SThree Austria GmbH
100 Austria
Recruitment Wiedner Gurtel 13, Turm 24,
FN 447727 y
10 OG. 1100 Vienna, Austria
SThree Temp Experts Austria
GmbH
100 Austria
Recruitment Wiedner Gurtel 13,
FN 520633
Turm 24, 10 OG. 1100 Vienna, Austria
Computer Futures Solutions NV
100 Belgium
Recruitment Kreupelenstraat 9, 5de en 6de
BE 0461.883.118
verdieping, B-1000 Brussels, Belgium
Huxley Associates Belgium NV
100 Belgium
Recruitment Kreupelenstraat 9, 5de en 6de
BE 0886.778.156
verdieping, B-1000 Brussels, Belgium
SThree Services NV
100 Belgium
Recruitment Kreupelenstraat 9, 5de en 6de
BE 0889.572.251
verdieping, B-1000 Brussels, Belgium
SThree Belgium NV
100 Belgium
Recruitment Kreupelenstraat 9, 5de en 6de
BE 0892.363.574
verdieping, B-1000 Brussels, Belgium
SThree Canada Limited
100 Canada
Recruitment Sun Life Plaza West Tower, 144-4
810508-1
SThree SAS
100 France
Recruitment
Avenue SW, Suite 1600, Calgary AB
T2P 3N4, Canada
170 Boulevard de la Villette, 75019,
Paris, France
502 095 094
SThree Holdings GmbH
100 Germany
Holding
company
Querstrasse 7, 60322, Frankfurt am
Main, Germany
HRB 96507
SThree GmbH
100 Germany
Recruitment Querstrasse 7, 60322, Frankfurt am
HRB 78875
Main, Germany
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Annual Report and Accounts 2022
P-241
Financial Statements
Notes to the financial statements continued
for the year ended 30 November 2022
26 List of subsidiaries continued
Name of undertaking
Country of
incorporation
%
Principal
activities
Registered office
Registered
number
Name of undertaking
Country of
incorporation
%
Principal
activities
Registered office
SThree Temp Experts GmbH
100 Germany
Recruitment Querstrasse 7, 60322, Frankfurt am
HRB 103758
SThree UK Operations Limited*
100 UK
Main, Germany
Holding
company
1st Floor, 75 King William Street,
London, EC4N 7BE, United Kingdom
Registered
number
08628611
SThree Services GmbH
100 Germany
Recruitment Querstrasse 7, 60322, Frankfurt am
HRB 122851
SThree Euro UK Limited
100 UK
SThree K.K.
100 Japan
Recruitment Kabukiza Tower, 12-15, Ginza
0100-01-147559
4-chome, Chuo-ku, Tokyo, Japan
Progressive Global Energy Limited
100 UK
Recruitment
SThree S.à r.l.
100 Luxembourg Recruitment 33 Boulevard Prince Henri,
B160680
Progressive Global Energy Sdn.
Bhd.
49 Malaysia
Recruitment
Luxembourg, L-1724, Luxembourg
10th Floor, Menara Hap Seng, No
1&3 Jalan P Ramlee, 50250 Kuala
Lumpur, Malaysia
201301004004
Progressive Global Energy
Kurdistan Limited
100 UK
Dormant
1st Floor, 75 King William Street,
London, EC4N 7BE, United Kingdom
08286247
Elevize Limited
100 UK
Support
services
1st Floor, 75 King William Street,
London, EC4N 7BE, United Kingdom
03561279
100 Netherlands Recruitment Gustav Mahlerlaan 38, Gebouw Som
1, 1082MC, Amsterdam, Netherlands
24295090
HireFirst Limited
100 UK
Recruitment
Technology
1st Floor, 75 King William Street,
London, EC4N 7BE, United Kingdom
11050648
SThree Pte. Ltd.
100 Singapore
Recruitment WeWork, 30 Raffles Place, 17th
200720126E
SThree Ventures Limited
100 UK
Floor, #12 – 01, 048622, Singapore
SThree Limited
100 Hong Kong
Recruitment
SThree India Private Limited
100 India
Under
liquidation
Main, Germany
10th Floor, YF Life Tower,
33 Lockhart Road, Wan Chai,
Hong Kong
511 The Corporate Centre, Nirmal
Lifestyle Mall, LBS Road, Mulund
(West), Mumbai, Maharashtra-MH.
400080, India
1113048
200224
SThree Staffing Ireland Limited
100 Ireland
Recruitment 3rd Floor, 80 Harcourt Street, Dublin
283856
2, Ireland
SThree Holdings BV
Huxley BV
100 Netherlands Recruitment Keizersgracht 281, 5e verdieping,
1016ED, Amsterdam., Netherlands
54742730
SThree Interim Services BV
100 Netherlands Recruitment Gustav Mahlerlaan 38, Gebouw Som
1, 1082MC, Amsterdam, Netherlands
58612122
SThree Business Services Ibérica,
S.L.
100 Spain
Recruitment WeWork, Glories, Carrer Tànger 86,
08018 Barcelona, Spain
B87900593
SThree Switzerland GmbH
100 Switzerland Recruitment 3rd Floor, Claridenstrasse 34, 8002
Zürich, Switzerland
CH-
020.4.044.653-4
Cavendish Directors Limited*
100 UK
Dormant
1st Floor, 75 King William Street,
London, EC4N 7BE, United Kingdom
04326888
SThree UK Holdings Limited*
100 UK
Holding
company
1st Floor, 75 King William Street,
London, EC4N 7BE, United Kingdom
03804468
SThree Overseas Holdings
Limited*
100 UK
Holding
company
1st Floor, 75 King William Street,
London, EC4N 7BE, United Kingdom
03247281
SThree UK Management Limited*
100 UK
Holding
company
1st Floor, 75 King William Street,
London, EC4N 7BE, United Kingdom
07509542
SThree Overseas Management
Limited*
100 UK
Holding
company
1st Floor, 75 King William Street,
London, EC4N 7BE, United Kingdom
07846499
SThree IP Limited*
100 UK
Support
services
Support
services
1st Floor, 75 King William Street,
London, EC4N 7BE, United Kingdom
04632138
1st Floor, 75 King William Street,
London, EC4N 7BE, United Kingdom
03682824
SThree Management Services
Limited*
100 UK
Management
services
1st Floor, 75 King William Street,
London, EC4N 7BE, United Kingdom
04255086
SThree Partnership LLP
100 UK
Recruitment
Huxley Associates Global Limited
100 UK
Recruitment
1st Floor, 75 King William Street,
London, EC4N 7BE, United Kingdom
OC387148
1st Floor, 75 King William Street,
London, EC4N 7BE, United Kingdom
05908145
1st Floor, 75 King William Street,
London, EC4N 7BE, United Kingdom
04883344
Talent Deck Limited
100 UK
Dormant
Showcaser Limited
100 UK
Dormant
SThree Dollar UK Limited
100 UK
Specialist Staffing Holdings Inc
100 USA
1st Floor, 75 King William Street,
London, EC4N 7BE, United Kingdom
10841039
1st Floor, 75 King William Street,
London, EC4N 7BE, United Kingdom
10873444
1st Floor, 75 King William Street,
London, EC4N 7BE, United Kingdom
11047674
1st Floor, 75 King William Street,
London, EC4N 7BE, United Kingdom
11740244
Corporation Service Company,
251 Little Falls Drive, Wilmington DE
19808, United States
5692896
Holding
company
Support
services
Holding
company
Specialist Staffing Solutions Inc
100 USA
Recruitment Corporation Service Company,
4367091
251 Little Falls Drive, Wilmington DE
19808, United States
Specialist Staffing Services Inc
100 USA
Recruitment Corporation Service Company,
5134909
Newington International Inc
100 USA
Recruitment
*
Directly held subsidiaries. All other subsidiaries are indirectly held.
251 Little Falls Drive, Wilmington DE
19808, United States
1209 Orange Street, City of
Wilmington, County of New Castle
DE 19801, United States
5222208
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Annual Report and Accounts 2022
P-243
Financial Statements
Notes to the financial statements continued
for the year ended 30 November 2022
26 List of subsidiaries continued
Statutory Guarantees and audit exemptions
The following Group entities are exempt from audit by virtue of Section 479A of the Companies Act 2006. SThree
plc has provided statutory guarantees to all these entities in accordance with the Companies Act:
SThree Euro UK Limited
Huxley Associates Global Limited
SThree IP Limited
Progressive Global Energy Limited
Talent Deck Limited
Showcaser Limited
SThree Dollar UK Limited
Progressive Global Energy Kurdistan Limited
SThree Ventures Limited
SThree UK Operations Limited
HireFirst Limited
SThree Management Services Limited
Elevize Limited
27 Alternative performance measures (APMs): definitions and reconciliations
Adjusted APMs
In discussing the performance of the Group, comparable measures are used which are calculated by deducting
from the directly reconcilable IFRS measures the impact of the Group’s restructuring income recognised in the
prior year, which is considered as an item impacting comparability, due to its nature. The restructuring income
comprised government grant income arising from a strategic relocation of SThree’s central support functions away
from the London headquarters to the Centre of Excellence located in Glasgow in 2018.
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 IFRS is as follows:
Reconciliation of adjusted financial indicators for continuing operations
£'000, unless otherwise stated
Revenue
Net fees
2022
Administrative
expenses
including
impairment
loss
Operating
profit
Profit
before tax
Profit after
tax
Basic EPS
(pence)
Tax
As reported*
1,639,446
430,616
(353,064)
77,552
77,026
(22,824)
54,202
41.0p
*
In 2022, there were no adjusting items.
£'000, unless otherwise stated
Revenue
Net fees
2021
Administrative
expenses
including
impairment
loss
Operating
profit
Profit
before tax
Tax
Profit
after tax
Basic EPS
(pence)
As reported
1,330,726
355,713
(294,720)
60,993
60,158
(17,907)
42,251
Exceptional items
–
–
(184)
(184)
(184)
35
(149)
Adjusted
1,330,726
355,713
(294,904)
60,809
59,974
(17,872)
42,102
31.9p
(0.1)p
31.8p
APMs in constant currency
As we are operating in 14 countries and with many different currencies, we are affected by foreign exchange
movements, and we report our financial results to reflect this. However, we manage the business against targets
which are set to be comparable between years and within them, for otherwise foreign currency movements would
undermine our ability to drive the business forward and control it. Within this Annual Report, we have highlighted
comparable results on a constant currency basis as well as the audited 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 IFRS are as follows:
£'000, unless otherwise stated
Revenue
Net fees
2022
Operating
profit
conversion
ratio**
Operating
profit
Profit
before tax
Basic EPS
(pence)
As reported*
Currency impact
1,639,446
430,616
77,552
18.0%
77,026
(22,830)
(8,046)
(2,804)
(0.3%)
(2,774)
As reported in constant currency
1,616,616
422,570
74,748
17.7%
74,252
41.0p
(1.5)p
39.5p
*
In 2022, there were no adjusting items.
£'000, unless otherwise stated
Revenue
Net fees
2021
Operating
profit
Adjusted
Currency impact
1,330,726
355,713
60,809
35,686
11,325
3,648
Adjusted in constant currency
1,366,412
367,038
64,457
** Operating profit conversion ratio represents operating profit over net fees.
Other APMs
Net cash excluding lease liabilities
Operating
profit
conversion
ratio**
17.1%
0.5%
17.6%
Profit
before tax
Basic EPS
(pence)
59,974
3,669
63,643
31.8p
2.0p
33.8p
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
Cash and cash equivalents
Bank overdraft
Net cash
EBITDA
2022
2021
65,809
57,526
(423)
(24)
65,386
57,502
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.
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Financial Statements
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.
SThree plc TSR return index value: three-month average to 30 Nov 2019 (2021: 30 Nov 2018) (pence)
SThree plc TSR return index value: three-month average to 30 Nov 2022 (2021: 30 Nov 2021) (pence)
Total shareholder return
2022
2021
262.41
355.43
35.4%
284.75
528.47
85.6%
Notes to the financial statements continued
for the year ended 30 November 2022
27 Alternative performance measures (APMs): definitions and reconciliations
continued
The Group also discloses adjusted EBITDA which is intended to provide useful information to analyse the Group’s
operating performance excluding the impact of operating non-cash items as defined above and net exceptional
items. Where relevant, the Group also uses adjusted EBITDA to measure the level of financial leverage of the Group
by comparing adjusted EBITDA to net debt.
A reconciliation of reported operating profit for the year, the most directly comparable IFRS measure, to EBITDA
and adjusted EBITDA is set out below.
£'000
Reported operating profit for the year from continuing operations
Reported operating loss for the year from discontinued operations
Depreciation of PPE
Depreciation and impairment of intangible assets
Loss on disposal of PPE and intangible assets
Gain on lease modification
Employee share options charge
EBITDA
Exceptional items
Adjusted EBITDA
Dividend cover
2022
2021
77,552
60,993
–
(33)
18,682
719
1,298
(266)
4,999
102,984
15,764
2,561
273
–
1,520
81,078
–
(184)
102,984
80,894
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
Profit for the year attributable to owners of the Company
Dividend proposed to be paid to shareholders (note 9)
Dividend cover
Contract margin for continuing operations
2022
2021
A
B
54,202
21,179
(A ÷ B)
2.6
41,982
14,672
2.9
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
Contract net fees
Contract revenue
Contract margin
2022
2021
A
B
334,215
266,163
1,540,323
1,239,100
(A ÷ B)
21.7%
21.5%
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Financial Statements
Financial Statements
Five-year financial summary
Financial metrics1
Revenue (£'m)
Net fees (£'m)
Operating profit (£'m)2
Operating profit conversion ratio2
Basic EPS (pence)2
Other Group ratios
Total assets (£'m)
Total equity (£'m)
Net cash/(debt) (£'m)
Cash from operations (£'m)
Free cash conversion ratio2
Total dividend per share (pence)
Group operational statistics
Average total headcount3
Average sales headcount3
Active contractors at year end
30 November
2022
30 November
2021
30 November
2020
30 November
2019
30 November
2018
1,639.4
1,330.7
1,202.6
1,324.7
1,235.8
430.6
77.6
18.0%
41.0
470.4
200.4
65.4
64.4
40.2%
16.0
2,890
2,114
12,533
355.7
60.8
17.1%
31.8
400.6
158.2
57.5
54.5
308.6
31.3
10.1%
13.9
334.5
128.5
49.9
76.9
40.4%
177.8%
11.0
5.0
2,588
1,911
11,809
2,894
2,219
9,523
338.0
60.0
17.8%
33.2
305.1
116.8
10.6
54.8
68.3%
15.3
3,109
2,423
11,110
316.5
53.8
17.0%
30.7
360.5
101.7
(4.1)
40.6
47.7%
14.5
2,926
2,254
11,203
1. Financial metrics are presented for continuing operations only.
2. The results for the years 2018 to 2021 are presented on an adjusted basis, i.e. excluding the impact of exceptional items.
3. Based on full-time equivalents.
Other information
Results announcement timetable
SThree plc confirms the following forthcoming dates in the Group financial calendar:
2023
21 March 2023
FY23 Q1 Trading Update
19 April 2023
20 June 2023
25 July 2023
Annual General Meeting*
FY23 Half Year Trading Update
FY23 Half Year Results
19 September 2023
FY23 Q3 Trading Update
14 December 2023
FY23 Trading Update
2024
30 January 2024
FY23 Final Results
*
The Group does not normally provide a trading update at the time of its Annual General Meeting.
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Other information
Shareholder information
Shareholders with enquiries relating to their shareholding should contact Link Group.
Alternatively, you may access your account via sthreeshares.com, but will need to have your investor code available
when you first log in, which can be found on your dividend voucher, share certificate or form of proxy. The online
facility also allows shareholders to view their holding details, how to register a change of name or what to do if
a share certificate is lost, as well as download forms in respect of changes of address, dividend mandates and
share transfers.
Shareholders who would prefer to view documentation electronically can elect to receive automatic notification
by e-mail each time the Company distributes documents, instead of receiving a paper version of such documents.
You can choose your preferred communication method by using the shareholder portal at sthreeshares.com,
alternatively you can register your request via the registrar by calling +44 (0)371 664 0300. Calls are charged at
the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the
applicable international rate. Lines are open between 09:00–17:30, Monday to Friday excluding public holidays
in England and Wales. There is no fee for using this service and you will automatically receive confirmation that a
request has been registered. Should you wish to change your mind or request a paper version of any document in
the future, you may do so by contacting the registrar.
Potential targeting of shareholders
Companies have become aware that their shareholders have received unsolicited phone calls or correspondence
concerning investment matters. These are typically from overseas-based brokers who target UK shareholders
offering to sell them what often turn out to be worthless or high-risk shares in US or UK investments. They can be
very persistent and extremely persuasive. It is not just the novice investor that has been duped in this way; many of
the victims had been successfully investing for several years.
Shareholders are advised to be very wary of any unsolicited advice, offers to buy shares at a discount or offers of
free company reports. If you receive any unsolicited investment advice:
Reject unexpected offers
Scammers usually cold call, but contact can also come by email, post, word of mouth or at a seminar. If you have
been offered an investment out of the blue, chances are it is a high-risk investment or a scam.
Check the Financial Conduct Authority (‘FCA’) Warning List
Use the FCA Warning List to check the risks of a potential investment – you can also search to see if the firm is
known to be operating without FCA authorisation.
Get impartial advice
Get impartial advice before investing – do not use an adviser from the firm that contacted you.
You can report a firm or scam to the FCA on 0800 111 6768 or through fca.org.uk/scamsmart
If you have lost money in a scam, contact Action Fraud on 0300 123 2040 or actionfraud.police.uk
Share price information
Information on the Company’s share price can be found via: sthree.com.
ShareGift
ShareGift (reg charity no. 1052686) operates a charity share donation scheme for shareholders with small parcels of
shares whose value may make it uneconomic to sell. Details of the scheme are available from www.sharegift.org or
by calling 0207 930 3737.
Company information and corporate advisers
Executive Directors
Registrars (ordinary shares)
Timo Lehne
Chief Executive Officer
Andrew Beach
Chief Financial Officer
Whistleblowing hotline
Tel: (UK) 0800 915 1571
Website: safecall.co.uk/report
Financial advisers and stockbrokers
Liberum
25 Ropemaker Street
London
EC2Y 9LY
Panmure Gordon
40 Gracechurch Street
London
EC3V 0BT
Financial PR
Alma PR
71-73 Carter Lane
London
EC4V 5EQ
Auditors
PricewaterhouseCoopers LLP
141 Bothwell Street
Glasgow
G2 7EQ
Link Group
Central Square
29 Wellington Street
Leeds
LS1 4DL
Tel: (UK) +44 (0)371 664 0300*
Email: shareholderenquiries@linkgroup.co.uk
Shareholder Portal: sthreeshares.com
* Calls are charged at the standard geographic rate and will vary by provider.
Calls outside the United Kingdom will be charged at the applicable
international rate. Lines are open between 09:00–17:30, Monday to Friday
excluding public holidays in England and Wales.
Group Company Secretary and
registered office
Kate Danson
Group Company Secretary
1st Floor, 75 King William Street
London
EC4N 7BE
Email: cosec@sthree.com
Company number
03805979
Contact details
Tel: 0207 268 6000
Fax: 0207 268 6001
Email: enquiries@sthree.com
Web: sthree.com
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SThree plc
75 King William St
London
EC4N 7BE
sthree.com