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STHR Sthree Plc

300.00
0.00 (0.00%)
09 May 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Sthree Plc LSE:STHR London Ordinary Share GB00B0KM9T71 ORD 1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 300.00 297.50 300.50 0.00 01:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
0 0 N/A 0

SThree: Final results for the year ended 30 November 2017

29/01/2018 7:05am

UK Regulatory


Dow Jones received a payment from EQS/DGAP to publish this press release.

 
 
 SThree (STHR) 
SThree: Final results for the year ended 30 November 2017 
 
29-Jan-2018 / 07:00 GMT/BST 
Dissemination of a Regulatory Announcement that contains inside information according to 
REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group. 
The issuer is solely responsible for the content of this announcement. 
 
29 January 2018 
 
SThree plc 
 
("SThree" or the "Group") 
 
Final results for the year ended 30 November 2017 
 
SThree, the international specialist staffing business, is today announcing its final results for 
the year ended 30 November 2017. 
 
"Encouraging overall result for 2017, with Group business profile continuing to remix to Contract 
and international markets. Entered 2018 in good shape and well-positioned for further growth." 
 
FINANCIAL HIGHLIGHTS 
 
                 2017              2016          Variance (3) 
           Adjusted Reported Adjusted Reported  Actual  Constant 
                (1)               (2) 
 
                                               Movement Currency 
 
                                                        Movement 
                 GBPm       GBPm       GBPm       GBPm    %        % 
Revenue     1,114.5  1,114.5    959.9    959.9   +16%     +9% 
Contract      203.5    203.5    173.3    173.3   +17%     +10% 
gross 
profit 
Permanent      84.2     84.2     85.4     85.4   -1%      -8% 
gross 
profit 
Gross         287.7    287.7    258.7    258.7   +11%     +4% 
profit 
Operating      44.9     38.2     41.3     37.8   +9%      -3% 
profit 
Conversion    15.6%    13.3%    16.0%    14.6%  -0.4%    -1.2% 
ratio                                            pts      pts 
Profit         44.5     37.7     40.8     37.3   +9%      -3% 
before 
taxation 
Basic         25.7p    21.5p    23.2p    21.2p   +11%     -1% 
earnings 
per share 
Proposed       9.3p     9.3p     9.3p     9.3p    -        - 
final 
dividend 
Total         14.0p    14.0p    14.0p    14.0p    -        - 
dividend 
(interim 
and final) 
Net cash        5.6      5.6     10.0     10.0    -        - 
 
(1) 2017 figures were adjusted for the impact of GBP6.7 million of exceptional strategic 
restructuring costs. 
 
(2) 2016 figures were adjusted for the impact of GBP3.5 million of restructuring costs. 
 
(3) All variances compare adjusted 2017 against adjusted 2016 to provide a like-for-like view. 
 
(4) FX impacted positively on our results YoY on a reported basis 
 
OPERATIONAL HIGHLIGHTS 
 
* Encouraging full year performance with strong Q4 and exit rate into 2018 
 
 * Adjusted profit before tax up 9% to GBP44.5m 
 
* GP up 4%* YoY (up 11% on an as reported basis) and up 8%* YoY in Q4 
 
* Growth in GP driven by USA (up 18%*) and Continental Europe (up 9%*), whilst UK&I remains 
challenging (-14%*) 
 
* 81% of GP now generated outside UK&I (FY 2016: 75%) 
 
* Contract GP up 10%* YoY, with growth across all sectors 
 
* Contract now accounts for 71% of Group GP (FY 2016: 67%) 
 
* Permanent GP down 8%* YoY but productivity improved by 3%* YoY 
 
  * Foreign exchange increased reported operating profit by circa GBP5.0m and GP by cGBP18.1m 
 
* Move of London-based support functions to Glasgow underway 
 
* Final dividend maintained 
 
* Variances at constant currency 
 
Gary Elden, CEO, commented: "We have delivered an encouraging overall result for the year, with a 
strong finish in the final quarter. Pleasing performances in the USA and Continental Europe, 
particularly from our market-leading businesses in the Netherlands and Germany, were key to this 
result. With 81% of our business now generated outside the UK and 71% of our GP generated by our 
more resilient Contract business, our business profile has changed significantly over recent 
years. After two years of turbulent political, market and economic conditions, we enter 2018 in 
good shape, with a clear vision to be the number one STEM talent provider in the best STEM 
markets. 
 
"Looking ahead to 2018, the momentum of our Contract business and the strength of our 
performances in the USA and Continental Europe leave us well-positioned for further growth." 
 
SThree will host a live presentation and conference call for analysts at 0900 GMT today. The 
conference call participant telephone details are as follows: 
 
      Dial in: +44 (0) 20 3003 2666 
 
Call passcode:               SThree 
 
This event will also be simultaneously audio webcast, hosted on the SThree website at 
www.sthree.com [1]. Note that this is a listen only facility and an archive of the presentation 
will be available via the same link later. 
 
SThree will be announcing its Q1 Trading Update on Friday 16 March 2018. 
 
Enquiries: 
 
                                        SThree plc 020 7268 6000 
Gary Elden, Chief Executive Officer 
Alex Smith, Chief Financial Officer 
Sarah Anderson, Deputy Company Secretary/ Investor 
Relations 
 
                            Citigate Dewe Rogerson 020 7638 9571 
Kevin Smith / Jos Bieneman 
 
Notes to editors 
 
SThree is a leading international specialist staffing business, providing permanent and contract 
specialist staff to a diverse client base of over 9,000 clients. From its well-established 
position as a major player in the Information & Communications Technology ("ICT") sector the 
Group has broadened the base of its operations to include businesses serving the Banking & 
Finance, Energy, Engineering and Life Sciences sectors. 
 
Since launching its original business, Computer Futures, in 1986, the Group has adopted a 
multi-brand strategy, establishing new operations to address growth opportunities. SThree brands 
include Computer Futures, Huxley Associates, Progressive and The Real Staffing Group. The Group 
has c2,800 employees in sixteen countries. 
 
SThree plc is quoted on the Official List of the UK Listing Authority under the ticker symbol 
STHR and also has a US level one ADR facility, symbol SERTY. 
 
Important notice 
 
Certain statements in this announcement are forward looking statements. By their nature, forward 
looking statements involve a number of risks, uncertainties or assumptions that could cause 
actual results or events to differ materially from those expressed or implied by those 
statements. Forward looking statements regarding past trends or activities should not be taken as 
representation that such trends or activities will continue in the future. Data from the 
announcement is sourced from unaudited internal management information. Accordingly, undue 
reliance should not be placed on forward looking statements. 
 
Chief Executive Officer's Review 
******************************** 
 
We have delivered an encouraging overall result for the year, with a strong finish in the final 
quarter. Pleasing performances in the USA and Continental Europe, particularly from our 
market-leading businesses in the Netherlands and Germany, were key to this result. With 81% of 
our business now generated outside the UK and 71% of our GP generated by our more resilient 
Contract business, our business profile has changed significantly over recent years. After two 
years of turbulent political, market and economic pressure, we enter 2018 in good shape, with a 
clear vision to be the number one STEM talent provider in the best STEM markets. 
 
This year we also made some changes to SThree's leadership model which will help us to work in a 
more effective and agile way in the future. With the creation of the new senior management roles 
of Chief Sales Officer and Chief Operations Officer, we will be in a better position to align our 
sales and operational strategies and ensure we have the right services, infrastructure and people 
to execute our global growth strategy and provide our customers with the best possible 
experience. 
 
Growing Contract, driving Permanent profitability 
 
We invested for future growth, with year end sales headcount up 10% year on year and up 7% 
sequentially vs Q3 2017. We continued to grow Contract headcount (+15%) faster than Permanent 
headcount (+3%), in line with our plan. The shift in favour of Contract is creating a business 
that is much more resilient in times of uncertainty, providing stronger and more sustainable 
profits. While in 2012 our business was evenly split between Contract and Permanent, we now have 
65% of our sales headcount working on Contract recruitment. We have also created separate 
management structures for our Contract and Permanent business in almost all territories to drive 
accountability and focus. 
 
Growing Contract 
 
As I have been able to report every year since taking over as CEO, we enter our next financial 
year with a record Contract book, passing a key milestone of 10,000 Contract runners to reach 
10,197 at the end of the year, up 12% from last year. Contract GP returned to double digit year 
over year (YoY) growth of 10%*, with a strong final quarter up 14%*. Contract growth YoY was 
across all sectors and driven by Continental Europe, which was up 17%* and by USA, up 21%*. 
Continental Europe and USA combined now represent nearly 70% of our Contract runners, up from 65% 
in 2016. 
 
Our traditional Personal Service Company/freelance model ("PSC") continues to perform well and we 
are also generating increased business through our Employed Contractor Model ("ECM"). ECM is 
structured such that the Group employs individuals directly and contracts them to clients. ECM is 
the established contracting model in a number of countries, including the USA. With governments 
across the world examining new ways to raise tax revenues to address budget deficits, our 
business model is expected to shift further towards ECM over time. A key focus for 2018 is the 
expansion and strengthening of supporting processes of ECM within our Contract business to 
increase its market opportunity. 
 
Driving Permanent Profitability 
 
Investment in Permanent continued to be made on a highly selective basis in the year as we 
focused on improving the profitability of this division. Permanent GP was down 8%* YoY, with 
average sales headcount down 10%, reflecting a 3%* improvement in Permanent productivity per head 
over last year. 
 
The USA posted a 12%* GP increase, driven by supportive Energy and Banking markets. This was 
offset by declines in all other regions, with Continental Europe down 7%* and UK&I down 22%*. 
 
Permanent recruitment is more sensitive to overall market sentiment and has been hit harder by 
the political, market and economic uncertainty of recent years. In response, we have actively 
reduced Permanent headcount in certain markets in order to improve overall profitability in our 
Permanent business. Over the years, this has meant restructuring our UK, Benelux & France, USA, 
APAC and Middle East (APAC & ME), Oil & Gas and Banking & Finance businesses. In markets with 
significant Permanent opportunity such as the USA and Germany we continue to maintain a strong 
Permanent offering. 
 
Improving customer experience 
 
Last year we rolled-out a major customer experience programme globally, using Net Promoter Score 
(NPS) to capture our clients and candidates feedback at every stage of the customer journey. 
Feedback has then been used to adapt our systems, processes and behaviours and we have already 
seen significant improvements in our overall NPS results (+3.6% points) as well as in the volume 
of data we capture. 
 
From these findings, we have developed operating principles that place the customer at the heart 
of everything we do - to build trust, to care and then act, to be clear and then to aim high. We 
rolled these principles out across the business in the last quarter of 2017 and will continue to 
reinforce them in 2018. 
 
Investing in new systems, processes and infrastructure 
 
Our processes, systems and infrastructure are crucial to the delivery of our sales strategy and 
to providing the best customer experience. We are currently finalising a structure which will 
provide us with a more holistic, strategic view of our global operational requirements and help 
us to manage demand and resource for optimum delivery. 
 
We have announced some significant changes this year, including the strategic restructuring and 
relocation of our London-based support functions to a new office in Glasgow, which will provide a 
more sustainable support structure as we continue to grow our business. We expect to 
substantially complete the reorganisation and relocation during 2018, creating a centre of 
excellence with a clear objective to reduce costs, while improving operational capability. 
 
We have continued to transition our systems to a cloud-based marketing services structure and 
have invested in new automation technology which gives us new and distinct ways to build a single 
customer view and to communicate in a more personalised way. 
 
We are also part way through a roll-out of a new customer/contractor portal and a new contract 
management system. Both systems have been developed in response to contractor and customer 
feedback. 
 
Generating new revenue streams 
 
Innovation and entrepreneurship are a key focus for the Group as we aspire to build a more 
diverse portfolio of products and services. 
 
We have created an internal system of Innovation which gives us greater ability to identify 
 promising new ideas and to test them quickly. We have invested c.GBP3.2 million in the year in a 
 number of external innovation start-ups (GBP1.2 million) and have created our own innovation 
 incubator (GBP2.0 million). We expect to increase the amount spent on our innovation incubator to 
 c.GBP3 million in 2018. 
 
Key developments in 2017 included: 
 
- Talent Deck, a new smart job board, focused on cultural fit and automated matching was launched 
in the UK and has already attracted blue-chip technology brands. We expect to continue the 
roll-out of Talent Deck and to win additional marquee clients in 2018. 
 
- We prepared the ground for two other internally-developed initiatives to launch in 2018. 
Showcaser allows a user to create and manage asynchronous video interviewsand is currently being 
trialled with one of our brands. Hirestream combines a digital market platform with key 
human-centred touch points. A pilot is planned in mid-2018. 
 
In addition to unlocking internal ideas, we have also engaged with a number of start-ups in the 
recruitment space, to identify whether we should make strategic investments or find other ways to 
 unlock the potential in these ideas. We made additional small investments totalling c.GBP1 million 
in a number of HR technology start-ups: 
 
- We supported the deployment of Right Staff by Ryalto Limited, a work scheduling app for 
healthcare professionals in which we have invested, with a successful trial among shift workers 
in the UK's National Health Service. This is currently being scaled up for a further roll-out. 
 
- We signed a development agreement and invested in RoboRecruiter, a messaging bot specifically 
designed for recruitment which engages with candidates without any human intervention. 
 
- We invested in a HR vertical of The Sandpit Limited (HRecTech), an incubator with a successful 
track record in marketing technology, which is now incubating HR technology businesses in the UK 
and USA. 
 
We will continue to look at potential additional investments where we see a good strategic fit. 
 
Identifying and developing great talent 
 
SThree's success depends on having highly skilled and motivated employees. We aim to find great 
people and enable them to build meaningful careers inside the organisation. 
 
We provide on-the-job learning programmes as well as online and classroom-based courses to 
support our employee's careers at all stages. Our career management platform is leading edge and 
helps our employees to develop their careers within the group. 
 
This year saw the launch of our revised organisational purpose 'Bringing skilled people together 
to build the future' and with it, support for our managers and leaders to bring to life the true 
meaning of our work with our candidates and clients. 
 
In 2017, we introduced our quarterly Employee Net Promoter Score (eNPS), replacing our annual 
engagement survey, as a more dynamic way to capture regular feedback from our people. Over 70% of 
our employees responded with feedback about their experience of working at SThree, as well as how 
they view the services we offer our customers. eNPS will help us make the right changes based on 
employee feedback and track what is working. Ultimately, it puts our people at the centre of 
decisions that help to create a brilliant place to work. 
 
As part of our ongoing commitment to creating an inclusive and diverse workforce, we have 
introduced a new Female Leadership Development Programme: IdentiFy. Thirty high potential, future 
female leaders from across the Group have been selected to participate in a 12-month development 
programme. The programme is designed to support them to recognise and develop their leadership 
strengths through facilitated learning, stretch assignments and executive sponsorship. Through 
IdentiFy we hope to improve the gender balance at a senior level. 
 
Operating Review 
 
Group GP up 4%*, with a strong finish to the year with GP up 8%* in Q4. 
 
The growth in GP was driven by Contract up 10%*, with growth across all sectors and strong 
regional performances in Continental Europe up 17%* and USA up 21%*. Permanent GP was down 8%*, 
with average sales headcount down 10%. 
 
Breakdown of GP            FY 2017 FY 2016 
 
                                 %       % 
Contract/Permanent Split 
Contract                       71%     67% 
Permanent                      29%     33% 
                              100%    100% 
Geographical Split 
UK&I                           19%     25% 
Continental Europe             52%     49% 
USA                            22%     20% 
Asia Pacific & Middle East      7%      6% 
                              100%    100% 
Sector Split 
ICT                            43%     45% 
Banking & Finance              15%     16% 
Energy                          9%      8% 
Engineering                     9%      9% 
Life Sciences                  22%     21% 
Other                           2%      1% 
                              100%    100% 
 
                  GP                          Average Sales 
                                                Headcount 
             Growth YoY*      FY 2017 Mix       Growth YoY 
         Cont   Perm   Total  Cont   Perm   Cont   Perm  Total 
 
GROUP FY +10%  -8%    +4%     71%   29%    +5%    -10%   -1% 
      17 
 
Regional Overview 
 
Regionally, our GP growth was driven by a strong performance in the USA, up 18%*, and robust 
growth in Continental Europe up 9%*, led by the Netherlands up 20%* YoY. The USA overtook the 
UK&I (19% of Group GP) to become our second largest region (22% of Group GP) during the year 
behind Continental Europe (52% of Group GP). Although the UK&I remains an important part of our 
business, uncertainty created by the EU Referendum and the relative maturity of the recruitment 
market have led us to focus on growth opportunities in other regions and to be cautious with our 
investment in the UK&I business. As part of our regional market penetration plans, we expanded 
our global footprint by opening four new offices in Continental Europe. However, as we reviewed 
regional business performance, it became clear that our return on investment in certain other 
regions was sub-optimal and we took action to restructure our Hong Kong office. 
 
We have continued to roll out ECM through the year, introducing new offerings in Germany, and 
improvements in our operating model globally. With governments turning to new means to address 
their budget deficits, including the IR35 Intermediaries Legislation in the UK and the 
Deregulering Beoordeling Arbeidsrelaties (DBA law) in the Netherlands, there is an increasing 
risk to the traditional Personal Service Company contractor model. However, we are in a position 
to provide service to clients that is highly compliant with the new legislation and we have a 
growing footprint in the ECM market which offers a suitable alternative to our candidates and 
clients. A key focus for 2018 is further growth in ECM and the further diversification of our 
Contract services. 
 
Continental Europe 
 
                      GP                        Average Sales 
                                                  Headcount 
                 Growth YoY*    FY 2017 Mix      Growth YoY 
               Cont Perm Total  Cont   Perm  Cont   Perm  Total 
 
CONTINENTAL FY +17% -7%  +9%    71%   29%    +21%  -5%    +10% 
EUROPE      17 
 
Performance in 2017 
 
Continental Europe is our largest region representing 52% of Group GP. It is split into two 
regions: Germany, Austria & Switzerland (DACH) which is 28% of Group GP, and Belgium, 
Netherlands, Luxembourg, France and Spain (Benelux, France & Spain), which is 24% of Group GP. 
Average headcount was up 10% in the year and period end headcount was up 18% as we continued to 
invest for future growth in this market. 
 
Overall, we delivered strong growth in GP, up 9%*, supported by strong labour markets, a shortage 
of STEM candidates, low unemployment and rising incomes. SThree is the market leader in STEM 
professional recruitment in the Netherlands and once again our Dutch business delivered an 
excellent performance, with GP up 20%*. 
 
Our performance across Continental Europe improved through the year with GP in the final quarter 
up +16%* YoY. 
 
Strong growth was achieved in Contract across the region with GP up 17%*. Contract in Continental 
Europe provides a significant growth opportunity and average headcount was up 21% YoY. The region 
had an excellent performance in the final quarter with Contract GP up 24%*. The Netherlands 
Contract business grew GP by 27%* YoY, France by 16%* YoY and Germany by 12%* YoY. We ended 2017 
with our Contract runners up 21%, our GP Day Rates ("GPDR") up 1%* and our sales headcount up 26% 
YoY, providing a strong pipeline for growth in 2018. 
 
Permanent declined by 7%*, with average sales headcount down 5% in the year. Average salaries 
were up 1%* and fees were up 2%*. GP yields declined 2%*, however, improvements were noted in 
Benelux & France where our Permanent businesses had been restructured in prior years. Period end 
headcount was up 5% YoY as we invested selectively in opportunities in Germany where SThree is 
the largest Permanent, professional services recruitment business. 
 
We delivered GP growth across every sector in Continental Europe, with double digit growth in 
Contract across the board. Contract ICT, our largest sector, grew 18%* YoY, Life Sciences 12%*, 
Engineering 19%* and Banking & Finance 20%*. 
 
We opened new offices in Toulouse, Lyon, Vienna and Barcelona in the year in order to better 
service our client base. 
 
Expectations for 2018 
 
Continental Europe exited 2017 with a strong pipeline for growth in 2018, focused and capable 
management and a highly engaged team with the lowest churn in the Group. 
 
In line with our Group strategy, we will continue to invest in Contract throughout 2018 where we 
see market opportunity. Labour laws create momentum for demand in the Contract business and our 
increased offering of ECM services is expected to help drive further growth. Our ECM offering in 
Germany has completed a pilot phase successfully with full roll out anticipated in 2018. 
 
This year, we will focus on improving Permanent productivity, with selective headcount 
investments, especially in Germany. 
 
We expect to open new satellite offices in Lille and Eindhoven in 2018. 
 
UK&I 
 
                 GP                            Average Sales 
                                                 Headcount 
            Growth YoY*       FY 2017 Mix       Growth YoY 
        Cont   Perm   Total   Cont   Perm   Cont   Perm   Total 
 
UK&I FY -11%  -22%   -14%    79%    21%    -10%   -17%   -12% 
     17 
 
Performance in 2017 
 
The UK&I business, which is 19% of Group GP, experienced a challenging year in 2017, in an 
environment dominated by further uncertainty. The ongoing 'Brexit' negotiations and the UK's snap 
general election affected market confidence leading to a decline in both our divisions. Average 
headcount was down 12% YoY with a decline across both Contract and Permanent. Period end 
headcount was down 3% YoY. 
 
Contract GP in UK&I was down 11%* YoY. The Contract division is more resilient in tough market 
conditions, but these were exacerbated by pricing pressures and IR35 Intermediaries Regulation in 
the Public Sector in the year. We have successfully navigated these new regulations, 
demonstrating our ability to provide a high quality and compliant service. Average headcount was 
down 10% YoY, however, period end headcount was down 1%. Contract runners closed at 2,616, down 
2% with our GPDR down 1%*. However, the Contract business showed signs of improvement with 
runners and GPDR both growing sequentially in H2. 
 
After a significant restructuring of the Permanent business in 2016, we expected GP to be down in 
the year, but it fell further than anticipated as a result of the continuing political 
uncertainty through the year and was down 22%* YoY. Average sales headcount was down 17% with 
period end sales headcount down 9%. Whilst Permanent GP yields were down 6%* YoY, we have been 
actively working to increase our focus on higher salary placements and our average fees and 
average salaries were both up 4%* YoY. 
 
ICT, which includes Public Sector and represents 58% of GP, declined 18%* YoY, with Contract down 
17%* and Permanent down 22%*. Banking & Finance, our second largest market in the region, 
reported a decline of 22%* YoY. The Banking & Finance sector, which is 14% of UK&I, remains 
subject to further uncertainty arising from the UK's negotiations with the EU. However, we saw 
improvements in our Engineering GP which grew 8%*, with growth achieved in all four quarters of 
the year. Performance in Engineering was driven by Contract up 12%*, in part as the sector 
benefited from increased demand resulting from the depreciation of sterling. Life Sciences also 
showed promise with growth from Q2 onwards and FY growth of 3%* YoY. 
 
The UK&I business is focussed on maintaining profitability and measures were taken through the 
year to streamline the business. We rationalised the management structure and increased the 
relative number of candidate resourcing roles in our Glasgow Resource Centre, which benefits from 
a lower cost base. 
 
Expectations for 2018 
 
In the UK, we enter 2018 against a background of continued uncertainty. Increasing inflation and 
supressed GDP growth rates for the UK being in the forefront of our minds, we expect to hold UK&I 
headcount broadly flat this year and to focus on maximising the profitability of the business. 
 
We expect to retain a flexible approach to resource allocation to maximise the opportunities 
available in certain sectors and to adapt to all legislative changes in the region as required, 
including a proposed expansion of changes to the IR35 Intermediaries Legislation to the private 
sector in 2019. 
 
USA 
 
                GP                            Average Sales 
                                                Headcount 
            Growth YoY*       FY 2017 Mix       Growth YoY 
       Cont   Perm    Total  Cont   Perm    Cont   Perm   Total 
 
USA FY +21%  +12%    +18%    69%   31%     -8%    -9%     -8% 
    17 
 
Performance in 2017 
 
The USA is now our second largest region, representing 22% of Group GP. USA was our fastest 
growing region in 2017, with GP up 18%*. Our strong performance in 2017 was across both Contract 
up 21%* and Permanent up 12%*. This reflected a significant improvement in GP yields, primarily 
driven by a recovery in the Energy and Banking markets from the weaker conditions experienced in 
2016. Average headcount declined by 8% YoY with both Contract and Permanent headcount reducing 
following a restructuring in 2016 and a pause on recruitment as potential impacts of the US 
presidential election result were assessed. However, we made significant investment in headcount 
in the second half of the year. Period end headcount was up 15% YoY with both Contract and 
Permanent growing sequentially in Q3 and Q4. 
 
Contract GP was up 21%* YoY with growth across all quarters. Average headcount declined by 8% and 
as a result yields were up 31%*. An improved performance in Contract GP was evident across all 
sectors with our largest sector, Life Sciences, which represents 45% of the division, up 18%* 
YoY. Energy GP was up 68%* as we expanded our services to key clients. Contract runners were up 
14% YoY with GPDR down 3%*, however, GPDR grew sequentially in Q3 and Q4. Average headcount was 
down 8% YoY, however, period end headcount was up 11% YoY providing a solid platform for growth 
in 2018. 
 
Our Permanent division in the region performed well in the year, with GP up +12%* and excellent 
yields, up +23%* YoY. Permanent growth was across all sectors, with strong growth in Banking & 
Finance, up 9%*. Permanent Life Sciences was up 3%* YoY. Average Permanent fees and average 
salaries declined YoY, down 7%* and 6%*, respectively, driven by Banking & Finance and Energy. 
However, Life Sciences, our largest sector in the division, delivered an increase in both average 
fees and average salaries. Average headcount was down 9% YoY, however with increased business 
confidence in the region, headcount build resumed in the second half of the year. Period end 
sales headcount was up 23% YoY. 
 
Life Sciences which represents 46% of USA GP, grew 13%* YoY with growth across both Contract and 
Permanent. Banking & Finance, the second largest sector in the region, grew 2%* YoY with strong 
performance in Permanent, up 9%* YoY, offset by a decline in Contract, down 6%* YoY. The Energy 
market in the region showed an encouraging recovery in the year, up 71%* YoY with growth across 
both Contract and Permanent. 
 
Expectations for 2018 
 
With a good exit rate on Contract runners, up 14%, especially in Energy, and excellent permanent 
yields, we expect to continue our strong growth into 2018. We will continue to invest in 
headcount in high yielding markets as opportunities are identified. We opened a new office in 
Washington D.C. in December 2017 to service the needs of our clients in this region. 
 
In the USA, we are confident that we have the right team and structure to deliver a high quality 
service to our clients and continue to penetrate the largest recruitment market in the world. 
 
APAC & ME 
 
                 GP                            Average Sales 
                                                 Headcount 
            Growth YoY*       FY 2017 Mix       Growth YoY 
        Cont   Perm   Total   Cont   Perm   Cont   Perm   Total 
 
APAC FY +24%   -22%    -4%    51%    49%    -6%    -17%   -14% 
& ME 17 
 
Performance in 2017 
 
APAC and Middle East (APAC & ME) is our smallest region representing 7% of Group GP. The business 
is split into two regions: Australia, Japan, Hong Kong and Singapore (APAC) which represent 5% of 
Group GP and Dubai (Middle East) which represents 2% of Group GP. The region has struggled since 
the drop in the oil price in mid-2014. The upstream Energy business, which historically had been 
the backbone of the operation, has not recovered due to the relatively high break-even price of 
oil extraction in the region. This has been compounded by weak Banking & Finance markets in 2016 
and a slow-down in the rate of growth in China, which has impacted much of APAC. In 2017, the 
region reported an overall GP decline of 4%* YoY. Despite a significant improvement in Contract 
GP, the Permanent business deteriorated through the year. Australia, our largest country in the 
region representing 34% of GP, declined 2%*. In response to the continuing decline in the 
performance of the region, we announced that the Hong Kong office would be downsized, reducing it 
to a satellite office. Average headcount for the region was down 11% YoY and period end headcount 
was down 1% YoY. 
 
Contract GP grew by 24%* YoY, with average headcount down 6% YoY. Energy and Banking & Finance 
Contract GP were up 22%* and 41%* YoY, respectively. The recovery in Contract was generated from 
a strong pipeline at the start of the year across the region. The period end Contract runner book 
at year end (up 3%) was supported by an increased focus on Contract in the Middle East. GPDR 
declined 11%* YoY and was down across the region. Australia, which represents 53% of regional 
Contract GP, saw good growth of 20%* YoY, driven by ICT and Banking & Finance. However, we note a 
slowdown in our performance in the ICT market as we exit this year. Dubai, which is our second 
largest Contract business in the region, saw a significant improvement, with Contract GP ahead by 
49%* YoY. The growth in Dubai was largely due to the Energy market, where we focus on large 
international service companies. Banking in Dubai also showed modest growth in the year. 
 
2017 was a challenging year for Permanent with GP declining 22%* YoY. Average headcount for 
Permanent was down 17% YoY with yields down 5%*. We increased our focus in the year on the 
penetration of markets with higher fees and stronger structural growth opportunities, notably 
Japan, the second largest recruitment market in the world. Our Japanese Permanent business 
increased GP by 30%* YoY and now represents 32% of Permanent GP for the region. Average Permanent 
fees for Japan were up 2%* YoY with average salaries also growing. 
 
Banking & Finance, our largest sector for the region, remained relatively flat YoY. Energy saw 
strong growth, up 10%* YoY, driven by Dubai Contract. Permanent GP was down across all sectors. 
 
Expectations for 2018 
 
Our Chief Operating Officer ("COO"), Justin Hughes, led APAC & ME from Hong Kong until September 
2017 when he returned to London to take on the role of COO full time. Japan and Middle East 
Contract are being managed for growth, while the rest of the region is being managed to maximise 
profitability. 
 
Sector Overview 
 
On a sector basis, Group GP benefited from a continued recovery in Energy, up 25%*, and solid 
growth in Life Sciences up 7%*. After a significant restructuring in 2016, Banking & Finance GP 
was down 2%* with average headcount down 11% YoY. ICT and Engineering grew, with GP up 1%* and 
5%*, respectively. ICT suffered from a weak UK&I performance. 
 
ICT 
 
                GP                            Average Sales 
                                                Headcount 
            Growth YoY*       FY 2017 Mix       Growth YoY 
       Cont   Perm    Total  Cont   Perm    Cont   Perm   Total 
 
ICT FY +4%   -6%     +1%     75%   25%     +4%    -10%    -1% 
    17 
 
ICT, which accounted for 43% of Group GP in 2017, continues to be our largest and most 
established sector. GP in this sector showed YoY growth for the fifteenth consecutive quarter, 
and provides opportunities across all regions. We saw modest growth in GP in the year of 1%*, but 
against a strong comparative in 2016, when GP was up 12%* YoY. The rate of growth slowed in this 
sector due to a deterioration in the performance of the UK&I. Although average headcount in this 
sector was down 1% YoY, period end headcount was up 8%. The mix of headcount shifted further in 
favour of Contract and Continental Europe. 
 
Contract, which was 75% of ICT, was up 4%* YoY. Runners in the sector were up 6% YoY, with GPDR 
growth of 2%* YoY. Permanent was down 6%* YoY, but saw a growth in average permanent fees, up 
+2%* YoY and yields increased 4%*. 
 
Continental Europe, which constitutes 63% of our ICT business, was up 12%* YoY, against a strong 
prior year growth of 17%*. Contract GP in this region had an exceptional performance, up 18%* 
YoY. Permanent, however, remained flat across the region. DACH, which is our largest Permanent 
ICT business, saw growth of 7%* YoY and will remain a key area of investment in 2018. 
 
UK&I, our second largest ICT region remained challenging. ICT in the UK&I includes Public Sector, 
which was 33% of ICT GP in the region. Public Sector employment reforms and a general slowdown in 
activity in the UK had an adverse impact which resulted in Contract being down 17%* YoY and 
Permanent being down 22%* YoY. 
 
Our USA business grew 12%* YoY. Although in 2017 USA is a small proportion of our total ICT 
business, we are confident that our knowledge and expertise in this sector will enable us to 
maximise the market opportunity in this region, the largest ICT market in the world, over time. 
 
Banking & Finance 
 
                   GP                          Average Sales 
                                                 Headcount 
              Growth YoY*     FY 2017 Mix       Growth YoY 
           Cont Perm   Total   Cont  Perm   Cont   Perm   Total 
 
BANKING FY +6%  -10%  -2%     55%    45%   -7%    -15%   -11% 
&       17 
FINANCE 
 
Banking & Finance represented 15% of Group GP in 2017, making it the third largest sector for the 
Group. We faced mixed trading conditions in this sector across our geographies, with GP declining 
by 2%* YoY. Average headcount in this sector in the year declined by 11% following a 
restructuring implemented in 2016 in response to difficult conditions in the global Banking 
market. Period end headcount was down 5%. 
 
Contract, which was 55% of Banking & Finance, is more resilient and has had considerable success, 
up 6%*, despite a 7% drop in headcount. Contract GP yields were up 13%*. Runners at the end of 
the year were up 8%, with GPDR up 4%* YoY. Permanent GP declined, as expected, following a 
significant reduction in headcount in 2016. GP was down 10%*, with headcount down 15%. Permanent 
yields therefore improved 6%*. Average Permanent fees were down by 1%* YoY. 
 
Continental Europe, which was our largest region in this sector was up 7%* YoY. The growth was 
heavily supported by Contract, which was up 20%*, with DACH, Benelux & France all showing good 
growth. Contract Runners for the region were up 25% YoY, which leaves us with a strong pipeline 
for 2018. Permanent GP in the region, declined by 9%* YoY and there was a moderate decline in 
Permanent average fee down 1%* YoY. 
 
The UK&I business performance was hampered by uncertainty around the EU referendum leading to 
cautious hiring decisions. The reduced market confidence was reflected in GP being down 22%*, 
with Contract GP down 10%* YoY and Permanent GP down 45%*. 
 
The USA, which was our second largest Banking & Finance market, saw growth of 2%* YoY, driven 
mainly from Permanent which was up 9%* YoY. Contract in this region declined 6%* YoY, but was 
showing signs of improvement as we exited the year. 
 
While the Banking sector has remained subdued over the last few years, we will continue to 
monitor performance in this sector and invest as opportunities arise. We see a strong opportunity 
for Contract in Continental Europe and Permanent in the USA. 
 
Global Energy 
 
                  GP                          Average Sales 
                                                Headcount 
              Growth YoY*     FY 2017 Mix       Growth YoY 
          Cont  Perm   Total  Cont   Perm   Cont   Perm  Total 
 
GLOBAL FY +26% +15%   +25%    93%   7%     +4%    -19%   +2% 
ENERGY 17 
 
Energy now represents 9% of Group GP. Overall conditions in the Oil & Gas market have stabilised 
this year and this supported strong growth in GP, up 25%* YoY (2016: down 29%* YoY). Although, we 
have seen growth in this sector in 2017, we remain significantly below our peak performance in 
2014. Our average headcount in the sector was up 2%* YoY and with measured investment in Contract 
through the year in key markets, our period end headcount was up 17% YoY. 
 
Contract which is 93% of our Energy GP, was up 26%* YoY, with growth across all our geographies, 
excluding UK&I. Average Contract headcount was up 4% YoY, with period end headcount up 19%. 
Contract yields in the sector were up 21%* YoY, while GPDR remained flat* YoY. Contract Runners 
at the end of the year were up 35%, providing a strong platform for 2018. Permanent, although a 
small part of Energy GP, was up 15%* YoY, with yields up 43%* and average Permanent fees down 
16%* YoY. 
 
Continental Europe, which is 41% of Energy GP, was up 11%* YoY, with growth in both the Contract 
and Permanent divisions, up 11%* and 8%* respectively. The growth in Contract was across all 
countries in the region, whereas Permanent growth was concentrated on the Netherlands. 
 
USA, which accounts for 41% of Energy GP, picked up significant upstream and power business 
though the year. This lead to GP being up 71%* YoY, with Contract, which is the larger part of 
Energy USA, up 68%* and Permanent up 117%* YoY. 
 
UK&I, which is 6% of Energy GP, declined 22%* YoY. APAC & ME grew 10%* YoY. 
 
We have noted significant YoY improvements in both Continental Europe and USA this year in both 
Contract and Permanent. We will continue to remain agile, but cautious, with our future 
investments in the Energy sector. 
 
Life Sciences 
 
                 GP                            Average Sales 
                                                 Headcount 
            Growth YoY*       FY 2017 Mix       Growth YoY 
        Cont   Perm   Total   Cont   Perm   Cont   Perm   Total 
 
LIFE FY +15%  -4%    +7%     64%    36%    +9%    -3%    +3% 
SCIE 17 
NCES 
 
We pride ourselves on being one of the largest global professional recruiters in the Life 
Sciences market, with growth opportunities across all our geographies and both our divisions. 
Life Sciences is now 22% of Group GP and was up 7%* YoY, with average headcount up 3%. 
 
Contract, which represents 64% of Life Sciences GP, was up 15%* YoY, with growth across all 
geographies. Contract Runners were up 16% YoY, but GPDR declined 5%*. Average headcount was up 9% 
YoY with our two largest regions, Continental Europe and Americas growing 13% and 8%, 
respectively. Permanent GP, was down 4%* YoY, with Permanent average fee up 4%* YoY and Permanent 
yields down 1%* YoY. Permanent average headcount declined 3% YoY, however, period end headcount 
grew 16%. 
 
USA, our largest Life Sciences business, which accounts for 48% of GP, grew strongly, up 13%* 
YoY. The growth was driven by a strong Contract performance, up 18%* YoY, while Permanent grew 
3%* YoY. We continue to invest in Life Sciences in the USA, which is a key growth market for the 
Group, Period end headcount was up 24% YoY. 
 
Continental Europe accounts for 38% of Life Sciences GP. GP was up 4%* YoY, against tough 
comparatives of 13%* in 2016. Contract GP in the region was up 12%* YoY, with excellent growth in 
Benelux & France, up 59%* YoY. Permanent GP, was down 8%* YoY, against a tough prior year 
comparative of an increase of 23%* YoY. 
 
UK&I, which was 11% of our Life Sciences GP, recorded moderate growth of 3%*. The growth was 
driven by Contract, which grew +8%* YoY, while Permanent declined by 7%* YoY. 
 
Engineering 
 
                      GP                        Average Sales 
                                                  Headcount 
                 Growth YoY*    FY 2017 Mix      Growth YoY 
               Cont Perm Total  Cont   Perm  Cont   Perm  Total 
 
ENGINEERING FY +17% -18% +5%    72%   28%    +21%  -11%   +7% 
            17 
 
Engineering, which was 9% of our Group GP, is primarily focused on Continental Europe and UK&I. 
USA Permanent, a fairly new addition to our Engineering portfolio, has had some initial success, 
with GP quadrupling YoY. Our average headcount in this sector was up 7% YoY, with most of the 
headcount increase in Contract. Period end sales headcount was up 26% YoY. We expect further 
opportunities in this sector as we enter 2018. 
 
Contract, which represents 72% of Engineering GP, was up 17%* YoY with growth in both UK&I and 
Continental Europe. Contract Runners are up 17% YoY with GPDR being flat*. In comparison, 
Permanent GP was weaker, down 18%* YoY, with only USA seeing significant growth. Permanent 
average fees and yields in the sector declined 2%* and 8%*, respectively. 
 
Continental Europe, which represents 71% of Engineering GP, was up 2%* YoY with Contract up 19%*, 
offset by a decline in Permanent down 25%* YoY. Contract Runners at year end were up 25%, 
providing a strong pipeline for growth as we enter 2018. 
 
Engineering in the UK&I was up 8%* YoY, with Contract up 12%* and Permanent down 5%* YoY. 
 
OUTLOOK 
 
Looking ahead to 2018, the momentum of our Contract business and the strength of our performances 
in the USA and Continental Europe leave us well-positioned for further growth. 
 
We have been encouraged by our performance in 2017, particularly in the last quarter, which has 
provided us with a strong platform to deliver further growth in the coming year. We will continue 
to focus our headcount investment to maximise our returns and to pay close attention to 
productivity in Permanent and in the UK&I. The benefit of the restructuring and relocation of our 
support service function in the UK is expected to be fully realised during 2019. 
 
Our focus on customers, services and our people, underpinned by investment in technology and 
innovation, gives us confidence that we are set up for success as we continue on our journey to 
become the number one STEM talent provider in our markets. 
 
*In constant currency 
 
CHIEF FINANCIAL OFFICER'S REVIEW 
******************************** 
 
In 2017, we delivered a robust financial performance ahead of market expectations. Our improved 
operational performance was further supported by currency appreciation against the pound, which 
enhanced growth in our Revenue, Gross Profit and Profit Before Tax. 
 
Income statement 
 
  Revenue for the year was up 9% on a constant currency basis to GBP1.1 billion (2016: GBP959.9 
million) and up 16% on a reported basis. On a constant currency basis, Gross Profit ('GP') 
  increased by 4%, and on a reported basis by 11% to GBP287.7 million (2016: GBP258.7 million) 
supported by foreign exchange tailwinds of c.GBP18.1 million. Growth in revenue exceeded the growth 
in GP as the business continued to remix towards Contract. Contract represented 71% of the Group 
GP in the year (2016: 67%). This change in mix resulted in a decrease in the overall GP margin to 
25.8% (2016: 26.9%) as Permanent revenue has no cost of sale, whereas the cost of paying the 
contractor is deducted to derive Contract GP. The Contract margin remained robust at 19.8% (2016: 
19.9%). 
 
 Reported profit before tax was broadly flat at GBP37.7 million. Restructuring costs have been 
incurred in the current and prior year. We have reported certain KPIs on an "Adjusted" basis to 
 provide a more like-for-like view of performance. Adjusted profit before tax was up 9% at GBP44.5 
  million (2016: GBP40.8 million) supported by foreign exchange tailwinds of c.GBP5.0 million. On a 
constant currency basis, our adjusted profit before tax was down 3%. This is reflected in a 
decline in our operating profit conversion ratio of 0.4 percentage points to 15.6% (2016: 16.0%). 
Our operating performance in the period has been strong with increased sales team yields driving 
our GP growth, but our cost base has increased as we invest in innovation, to secure the future 
of our business, and incurred other non-exceptional restructuring costs in the year. 
 
Restructuring costs ('Adjusting items') 
 
On 1 November 2017, as part of a strategic reassessment of our UK operations, we announced that 
we were commencing a consultation with employees on the proposed relocation of support functions 
away from our London headquarters to a new facility located in Glasgow, along with a 
restructuring of the marketing department. The purpose of this strategic restructuring is to 
  realise cost savings of approximately GBP4 million - GBP5 million per annum. 
 
The restructuring is expected to result in certain material one-off costs totalling approximately 
   GBP14 million to GBP16 million, of which an estimated GBP15 million is operating expenses and 
  approximately GBP0.5 million is property fit out costs (to be capitalised), less approximately GBP2 
million of grants receivable from Scottish Enterprise. The costs are mainly related to people, 
property and professional advisor fees. 
 
 Exceptional costs of GBP6.7 million have been recognised and separately disclosed in the Income 
 Statement in 2017, including GBP1.1 million of restructuring costs incurred or accrued, mainly for 
 professional fees, and GBP5.6 million as a provision for redundancy costs. The additional 
exceptional cost to set up a centre of excellence in Glasgow in 2018 is expected to be between GBP8 
  million and GBP9 million, with a grant of up to approximately GBP2 million potentially receivable 
over several years. 
 
In the prior year, we carried out a restructuring of certain sales businesses and central support 
functions in response to the adverse market conditions in certain sectors and regions. These 
 actions resulted in one-off redundancy costs of GBP3.5 million. 
 
Due to their nature and magnitude, the restructuring costs in the 2017 and 2016 financial years 
have been separately highlighted to help readers understand the Group's underlying results for 
the year ('Adjusted'). The Group's adjusted profit KPIs for the year are presented in various 
sections of this Annual Report. The strategic nature and material cost of the restructuring of 
support functions announced in 2017 is of sufficient magnitude to warrant separate disclosure as 
an exceptional item on the face of the Consolidated Income Statement, in line with our accounting 
policy. 
 
A reconciliation of 'Adjusting items' is provided below: 
 
GBP'million                                          2017 2016 
Reported profit before tax after exceptional items 37.7 37.3 
Exceptional strategic restructuring costs           6.7    - 
Reported profit before tax and exceptional items   44.5 37.3 
Non-exceptional restructuring costs(1)                -  3.5 
Adjusted profit before tax                         44.5 40.8 
 
(1) 2016 figures were adjusted for the restructuring of certain sales businesses and central 
support functions. 
 
Operating costs 
 
  Adjusted operating costs, excluding one-off restructuring costs of GBP6.7 million (2016: GBP3.5 
  million), increased by 12% to GBP242.8 million (2016: GBP217.4 million). The increase was mainly 
 driven by an adverse foreign exchange impact of c.GBP13 million, focused expenditure on innovation 
  (c.GBP2 million), management delayering (c.GBP1.2 million) and a restructure of our Hong Kong 
 business (c.GBP0.4 million). 
 
Payroll costs represent 79% of our cost base. Average total headcount was flat at 2,668, with 
total sales headcount down 1%. The drop in average sales headcount is attributable to a 
restructuring of our Permanent business, in which headcount was significantly reduced in the 
second half of 2016 in response to market conditions. Selective headcount build continued 
throughout 2017. Improvements in consultant productivity and the strength of market activity 
provided management with the confidence to invest in headcount in the USA and Continental Europe 
in the second half of the year. Year-end headcount was up 11% at 2,866. 
 
Year-end sales headcount represented 79% of the total Group headcount. 
 
The full benefits of the restructure of our UK Support function on personnel and property costs 
are expected to be realised from the financial year 2019 onwards. 
 
Investments 
 
 During the year, we invested in a number of innovation start-ups (GBP1.2 million), created our own 
 innovation incubator (c.GBP2 million) and invested in new technology to serve the needs of our 
customers (GBP3.4 million, of which GBP1.9 million in the year was spent on developing a new contract 
management system and a contractor timesheet application). 
 
Our most significant investment in innovation start-ups was a 30% non-controlling interest in the 
share capital of HRecTech Sandpit Limited ('HRecTech') for a total consideration of GBP0.8 million. 
The Sandpit Limited is a privately owned group that specialises in developing early stage 
start-up companies within defined markets. 
 
We continued to support Ryalto in which we have an 18% investment, purchasing convertible bonds 
 for a total consideration of $0.5 million (GBP0.4 million) in October 2017. 
 
The bulk of our investment in our own innovation incubator was focused on Talent Deck, a 
recruitment platform focused on cultural fit and automated matching that is now in the initial 
stages of its roll-out. We expect to increase the amount spent on the creation of innovative 
 products to c.GBP3 million in the current financial year. 
 
We expect to reduce our investment in non-innovation technology spend in the current financial 
year as we relocate our IT function. 
 
Impairment of investment in subsidiaries (Company only) 
 
During the year, we reviewed the recoverable amount of the Company's own portfolio of 
investments, including SThree UK Holdings, which in turn owns SThree Partnership LLP, and 
 determined that an impairment loss of GBP88 million needs to be recognised due to the significant 
downturn in the trading performance and prospects of the UK business. This was the result of 
several factors, including: the unfavourable impact of the ongoing political uncertainties 
following the EU referendum on trading in the Permanent division and Banking sector; changes in 
working practices in the Public Sector, namely IR35 and framework agreements, and reduced margins 
impacting the profitability of the UK region. After booking this impairment, the distributable 
   retained earnings were GBP179.9 million (GBP2016: GBP267.3 million). 
 
Taxation 
 
 The tax charge on pre-exceptional statutory profit before tax for the year was GBP11.4 million 
(2016: GBP10.1 million), representing an effective tax rate ('ETR') of 25.6% (2016: 27.0%). The ETR 
on post-exceptional statutory profit before tax was 26.7% (2016: 27.0%). 
 
The ETR primarily reflects our geographical mix of profits and a cautious approach to recognising 
assets on tax losses. The ETR will also be influenced by any changes to tax rates and 
legislation, which may result in certain expenses not allowable for tax, non-taxable income or 
enhanced tax deductions such as research and development tax credits. 
 
US Tax Reform legislation passed on 20 December 2017 sees the reduction in the federal corporate 
tax rate from 35% to 21%. This will have an overall positive impact on our business with an 
 estimated annual tax saving of GBP1 million at current levels of profitability. This is a 
non-adjusting post balance sheet event. The full benefit of this will largely be offset in the 
first year by the reduction in the deferred tax asset. 
 
Other regulatory changes which may impact the group in future years include: 
 
(i) The extent to which the OECD member countries continue to implement changes to domestic 
legislation as a result of recommendations from the Base Erosion and Profit Shifting project. 
 
(ii) The October 2017 announcement of the European Union Competition Commissioner's State Aid 
investigation into the UK's Controlled Foreign Company legislation. 
 
We will continue to monitor and assess the impact of any changes as they are implemented. 
 
Earnings per share ('EPS') 
 
On an adjusted basis, EPS was up by 2.5 pence at 25.7 pence (2016: adjusted 23.2 pence), due to 
an increase in the adjusted profit before tax and a drop in the effective tax rate. On a reported 
basis, EPS remained broadly flat at 21.5 pence, up 0.3 pence on the prior year (2016: 21.2 
pence), attributable mainly to an increase in restructuring costs as explained above. The 
weighted average number of shares used for basic EPS remained stable at 128.6 million (2016: 
128.3 million). Reported diluted EPS was 20.8 pence (2016: 20.6 pence), up 0.2 pence. 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, the volume of new 
tracker arrangements created and the settlement of vested arrangements. 
 
Dividends 
 
In line with the Group's strategy to operate a policy of financing the activities and development 
of the Group from retained earnings and to maintain a strong balance sheet position, the Board 
has proposed a maintained final dividend of 9.3 pence per share (2016: 9.3 pence). Taken together 
with the interim dividend of 4.7 pence per share (2016: 4.7 pence), this brings the total 
dividend for the year to 14.0 pence per share (2016: 14.0 pence). This represents a dividend 
yield of 4% based on the average share price for the year (2016: 5%). The final dividend, which 
 amounts to c.GBP12.1 million, will be subject to shareholder approval at the 2018 Annual General 
Meeting. It will be paid on 8 June 2018 to shareholders on the register on 27 April 2018. 
 
Share options and tracker share arrangements 
 
  We recognised a share-based payment charge of GBP3.3 million during the year (2016: GBP2.9 million) 
for the Group's various share-based incentive schemes. The greater charge in 2017 is primarily 
due to an increase in the number of participants in the 2017 Long Term Incentive Plan ('LTIP'), 
and an improvement in regional performance metrics for legacy LTIPs. 
 
We also operate a tracker share model to help retain and motivate our entrepreneurial management 
within the business. The programme gives our most senior front office sales colleagues a chance 
to invest in a business they manage, with the support and economies of scale that the Group can 
 offer them. In 2017, 38 employees invested an equivalent of GBP0.4 million in 15 Group businesses. 
 
 We settled certain vested tracker shares during the year for a total consideration of GBP3.2 
 million (2016: GBP4.6 million) which was determined using a formula in the Articles of Association 
underpinning the tracker share businesses. We settled the consideration in SThree plc shares 
either by issuing new shares (393,910 new shares were issued on settlement of vested tracker 
shares in 2017) or treasury shares (in total 647,507 were used in settlement of vested tracker 
shares in 2017). Consequently, the arrangement is deemed to be an equity-settled share-based 
payment arrangement under IFRS 2 'Share-based payments'. There is no charge to the income 
statement as initially the tracker shareholders subscribed to the tracker shares at their fair 
  value. We expect future tracker share settlements to be between GBP5 million to GBP15 million per 
annum. These settlements will either dilute the earnings of SThree plc's existing ordinary 
shareholders if funded by new issue of shares or will result in a cash outflow if funded via 
treasury shares. 
 
Note 1 to the financial statements provides further details about all Group-wide discretionary 
share plans, including the tracker share arrangements. 
 
Balance sheet 
 
  At 30 November 2017, the Group's net assets increased to GBP80.7 million (2016: GBP75.7 million), 
mainly due to the excess of net profit over the dividend payments and share buy backs during the 
year supported by a strengthening of the Euro vs Sterling. 
 
The most significant item in our statement of financial position is trade receivables (including 
   accrued income) which increased to GBP217.7 million (2016: GBP182.6 million), with GBP2.3 million of 
the increase due to a favourable change in foreign exchange rate. Other drivers of an increase in 
receivables are a three day increase in Days Sales Outstanding to 40.6 days (2016: 37.5 days) and 
 a 14% increase in Contract GP in Q4 year-on-year. Trade and other payables increased from GBP138.9 
  million to GBP159.6 million, with GBP2.2 million due to movements in foreign exchange rates and the 
remainder primarily due to an increase in Contract GP. Creditor days were 18 days (2016: 19 
  days). Provisions increased by GBP8.7 million primarily due to a GBP6.7 million increase in 
restructuring provisions, including a provision for the relocation of central support functions 
 from London to Glasgow (GBP5.6 million). 
 
Cash Flow 
 
  On an adjusted basis, we generated lower cash from operations of GBP41.1 million (2016: GBP46.9 
million on an adjusted basis) due to continued growth of the contract runner book increasing our 
working capital and an increase in Days Sales Outstanding. This resulted in a lower cash 
conversion ratio of 78.6% (2016: 96%) on an adjusted basis or 90.2% (2016: 95.0%) on a reported 
basis. 
 
  Capital expenditure reduced to GBP5.8 million (2016: GBP7.2 million), of which 33% was related to 
investments in innovative technology to improve our customer experience. We expect capital 
expenditure will further decline in 2018. Investments in associates and available for sale assets 
  of GBP1.2 million (2016: GBP0.7 million) were made in the year. 
 
 During the year, SThree plc bought back shares amounting to GBP7.8 million (2016: GBP6.8 million) to 
satisfy employee share schemes in future periods. Small cash inflows were generated from share 
based payment schemes. 
 
  Income tax payments increased to GBP10.9 million (2016: GBP8.5 million). The figures shown for 2016 
reflected a lower than usual outflow due to advanced tax payments made in 2015. Small cash 
outflows were made for interest payments. 
 
  Dividend payments were GBP18.0 million (2016: GBP18.0 million) and there was a small cash outflow 
representing distributions to tracker shareholders. 
 
We started the year with the net cash of GBP10.0 million and closed the financial year with a lower 
 but solid net cash balance of GBP5.6 million. The year-on-year decrease primarily reflected 
increased cash absorbed in working capital. 
 
Treasury management 
 
We finance the Group's operations through equity and bank borrowings. The Group's cash management 
policy is to minimise interest payments by closely managing Group cash balances and external 
borrowings. We intend to continue this strategy while maintaining a strong balance sheet 
position. In general, we do not keep excess cash in any of the countries in which we operate. We 
have central cash pooling facilities in place for Euros and US Dollars. 
 
 We maintain a committed Revolving Credit Facility ('RCF') of GBP50 million, along with an 
uncommitted GBP20 million accordion facility, with Citibank and HSBC, giving the Group an option to 
 increase its total borrowings to GBP70 million for general corporate purposes. We also have a 
  separate GBP5 million overdraft facility with RBS. At the year end the Group had drawn down GBP12 
 million (2016: GBPnil) on these facilities. 
 
The RCF is subject to financial covenants whereby we need to maintain a ratio of net debt to 
adjusted EBITDA of 2.0 times or lower, and maintain interest cover of at least 1.2. In 2017, we 
 ended the year with significant headroom on our covenants, with a net cash balance of GBP5.6 
million and interest cover (including dividends) of 3:1. The funds borrowed under this facility 
bear interest at an annual rate of 1.3% above 3 month LIBOR giving an average interest rate of 
1.5% during the year (2016: 1.8%). The finance costs for the year amounted to GBP0.4 million (2016: 
 GBP0.5 million). The RCF expires in May 2019 and we will renew the facility in the first half of 
2018. 
 
The Group's UK-based treasury function manages the Group's treasury risks in accordance with 
policies and procedures set by the Board, and is responsible for day-to-day cash management; the 
arrangement of external borrowing facilities; the investment of surplus funds; and the management 
of the Group's interest rate and foreign exchange risks. The treasury function does not engage in 
speculative transactions or operate as a profit centre. 
 
Foreign exchange 
 
Foreign exchange volatility continues to be a significant factor in the reporting of the overall 
performance of the business with the main functional currencies of the Group entities being 
Sterling, the Euro and the US Dollar. For 2017, movements in exchange rates between Sterling and 
the Euro and the US Dollar provided a strong tailwind to the reported performance of the Group 
with the highest impact coming from Eurozone countries. Over the course of the year, the exchange 
  rate movements increased our reported 2017 GP and operating profit by c.GBP18.1 million and GBP5.0 
million, respectively. Our financial performance KPIs remain materially sensitive to exchange 
rate movements. By way of illustration, each one percent movement in annual exchange rates of the 
  Euro and the US Dollar against Sterling impacted our 2017 GP by GBP1.5 million and GBP0.6 million, 
  respectively, and operating profit by GBP0.5 million and GBP0.2 million, respectively. 
 
The Board considers it appropriate in certain cases to use derivative financial instruments as 
part of its day-to-day cash management to provide the Group with protection against adverse 
movements in the Euro and the US dollar during the settlement period. The Group does not use 
derivatives to hedge translational foreign exchange exposure in its balance sheet and income 
statement. 
 
Principal Risks and Uncertainties 
 
Principal risks and uncertainties affecting the business activities of the Group are detailed 
within the strategic section of the Annual Report. 
 
In terms of macroeconomic environment risks, our strategy is to continue to grow the size of our 
international business and newer sectors, in both financial terms and geographical coverage. This 
will help reduce our exposure or reliance on any one specific economy, although a downturn in a 
particular market could adversely affect the Group's key risk factors. 
 
In the view of the Board, there is no material change expected to the Group's key risk factors in 
the foreseeable future. 
 
* Variances in constant currency 
 
SThree plc 
Consolidated income statement 
For the year ended 30 November 2017 
                                                2017        2016 
                              Before Exceptional    Total 
                             excepti       items 
                                onal 
                               items 
                       Note    GBP'000       GBP'000    GBP'000  GBP'000 
 
Continuing 
operations 
 
Revenue                   2 1,114,5            - 1,114,5  959,86 
                                  30                   30      1 
Cost of sales               (826,85            - (826,85  (701,1 
                                  8)                   8)    80) 
 
Gross profit              2  287,672           -  287,672 258,68 
                                                               1 
 
Administrative            3 (242,75      (6,741) (249,49  (220,9 
expenses                          2)                   3)    13) 
 
Operating                 4   44,920     (6,741)   38,179 37,768 
profit 
 
Finance income                   124           -      124     79 
Finance costs                  (439)           -    (439)  (549) 
Share of                       (147)           -    (147)      - 
results of 
associate 
 
Profit before                 44,458     (6,741)   37,717 37,298 
taxation 
 
Taxation                  5 (11,392        1,303 (10,089  (10,05 
                                   )                    )     6) 
 
Profit for the year           33,066     (5,438)   27,628 27,242 
attributable 
to owners of the 
Company 
 
Earnings per share        7    pence       pence    pence  pence 
 
Basic                           25.7       (4.2)     21.5   21.2 
Diluted                         24.9       (4.1)     20.8   20.6 
 
SThree plc 
Consolidated statement of comprehensive income 
For the year ended 30 November 2017 
                                                   2017     2016 
                                                  GBP'000    GBP'000 
 
Profit for the year                              27,628   27,242 
 
Other comprehensive (loss)/income: 
Items that may be subsequently reclassified 
to profit or loss: 
Exchange differences on retranslation of        (1,083)   10,774 
foreign operations 
 
Total other comprehensive (loss)/income for     (1,083)   10,774 
the year (net of tax) 
 
Total comprehensive income for the year          26,545   38,016 
attributable to owners of the Company 
 
SThree plc 
Consolidated statement of financial position 
As at 30 November 2017 
                                         30 November 30 November 
                                                2017        2016 
                                Note           GBP'000       GBP'000 
 
              Assets 
  Non-current assets 
 Property, plant and                           6,746       7,100 
           equipment 
   Intangible assets                          11,386      11,597 
       Investment in                             655           - 
           associate 
   Other investments                           1,110         727 
 Deferred tax assets                           4,199       2,501 
                                              24,096      21,925 
 
      Current assets 
     Trade and other                         226,558     189,169 
         receivables 
  Current tax assets                           1,534       4,650 
       Cash and cash               8          21,338      15,707 
         equivalents 
                                             249,430     209,526 
 
        Total assets                         273,526     231,451 
 
          Equity and 
         Liabilities 
        Equity attributable to owners of the Company 
       Share capital                           1,317       1,312 
       Share premium                          28,806      27,406 
      Other reserves                         (8,556)     (5,381) 
   Retained earnings                          59,138      52,333 
 
        Total equity                          80,705      75,670 
 
         Non-current 
         liabilities 
      Provisions for                           2,172         907 
     liabilities and 
             charges 
 
 Current liabilities 
          Borrowings               9          12,000           - 
      Bank overdraft               8           3,717       5,685 
      Provisions for                          12,352       4,953 
     liabilities and 
             charges 
     Trade and other                         159,556     138,859 
            payables 
         Current tax                           3,024       5,377 
         liabilities 
                                             190,649     154,874 
   Total liabilities                         192,821     155,781 
 
    Total equity and                         273,526     231,451 
         liabilities 
 
SThree plc 
Consolidated statement of 
changes in equity 
For the year ended 30 
November 2017 
                     Share   Share    Capital Capital Treasury    Currency Retained Total 
                   capital premium redemption reserve  reserve translation earnings equit 
                                      reserve                      reserve              y 
                                                                                    attri 
                                                                                    butab 
                                                                                    le to 
                                                                                    owner 
                                                                                     s of 
                                                                                      the 
                                                                                    Compa 
                                                                                       ny 
 
              Note   GBP'000   GBP'000      GBP'000   GBP'000    GBP'000       GBP'000    GBP'000 GBP'000 
 
Balance at 30        1,295  23,140        168     878  (1,318)    (10,758)   46,001 59,40 
November 2015                                                                           6 
Profit for               -       -          -       -        -           -   27,242 27,24 
the year                                                                                2 
Other                    -       -          -       -        -      10,774        - 10,77 
comprehensive                                                                           4 
loss for the 
year 
Total                    -       -          -       -        -      10,774   27,242 38,01 
comprehensive                                                                           6 
income for 
the year 
Dividends        6       -       -          -       -        -           - (17,972) (17,9 
paid to                                                                               72) 
equity 
holders 
Distributions            -       -          -       -        -           -    (149) (149) 
to tracker 
shareholders 
Settlement of           14   3,706          -       -        -           -  (3,929) (209) 
vested 
tracker 
shares 
Settlement of            3     560          -       -    1,720           - (1,671)    612 
share-based 
payments 
Purchase of              -       -          -       -  (6,845)           -        - (6,84 
own shares                                                                             5) 
Credit to                -       -          -       -        -           -    2,823 2,823 
equity for 
equity-settle 
d share-based 
payments 
Current and      5       -       -          -       -        -           -     (12)  (12) 
deferred tax 
on 
share-based 
payment 
transactions 
Total                   17   4,266          -       -  (5,125)      10,774    6,332 16,26 
movements in                                                                            4 
equity 
 
Balance at 30        1,312  27,406        168     878  (6,443)          16   52,333 75,67 
November 2016                                                                           0 
Profit for               -       -          -       -        -           -   27,628 27,62 
the year                                                                                8 
Other                    -       -          -       -        -     (1,083)        - (1,08 
comprehensive                                                                          3) 
loss for the 
year 
Total                    -       -          -       -        -     (1,083)   27,628 26,54 
comprehensive                                                                           5 
(loss)/income 
for the year 
Dividends        6       -       -          -       -        -           - (17,994) (17,9 
paid to                                                                               94) 
equity 
holders 
Distributions            -       -          -       -        -           -    (115) (115) 
to tracker 
shareholders 
Settlement of            4   1,185          -       -    2,746           -  (3,060)   875 
vested 
tracker 
shares 
Settlement of            1     215          -       -    2,959           -  (2,972)   203 
share-based 
payments 
Purchase of              -       -          -       -  (4,618)           -        - (4,61 
own shares                                                                             8) 
Purchase of              -       -          -       -  (3,179)           -        - (3,17 
own shares by                                                                          9) 
Employee 
Benefit Trust 
Credit to                -       -          -       -        -           -    3,256 3,256 
equity for 
equity-settle 
d share-based 
payments 
Current and      5       -       -          -       -        -           -       62    62 
deferred tax 
on 
share-based 
payment 
transactions 
Total                    5   1,400          -       -  (2,092)     (1,083)    6,805 5,035 
movements in 
equity 
 
Balance at 30        1,317  28,806        168     878  (8,535)     (1,067)   59,138 80,70 
November 2017                                                                           5 
 
SThree plc 
Consolidated statement 
of cash flow 
For the year ended 30 November 2017 
                                                  2017     2016 
                                        Note     GBP'000    GBP'000 
 
Cash flows from 
operating activities 
Profit before taxation                          37,717   37,298 
after exceptional items 
Adjustments for: 
Depreciation and                                 5,744    5,716 
amortisation charge 
Accelerated                                        309        - 
amortisation and 
impairment of 
intangible assets 
Finance income                                   (124)     (79) 
Finance cost                                       439      549 
Loss on disposal of                        4       110      194 
property, plant and 
equipment 
Share of results of                                147        - 
associate 
Loss on disposal of                                144        - 
subsidiaries 
Non-cash charge for                              3,256    2,823 
share-based payments 
Operating cash flows before changes in 
working capital and provisions 
                                      47,742    46,501 
Increase in receivables                       (35,712)  (9,404) 
Increase in payables                            19,291    5,731 
Increase/(decrease) in                           8,758    (632) 
provisions 
 
Cash generated from                             40,079   42,196 
operations 
Finance income                                     124       79 
Income tax paid - net                         (10,921)  (8,477) 
 
Net cash generated from operating               29,282   33,798 
activities 
 
Cash generated from operating activities        30,273   34,658 
before exceptional items 
Cash outflow from recognised exceptional         (991)    (860) 
items 
Net cash generated from operating               29,282   33,798 
activities 
 
Cash flows from 
investing activities 
Purchase of property,                          (2,374)  (3,220) 
plant and equipment 
Purchase of intangible                         (3,392)  (3,973) 
assets 
Investments designated                           (383)    (727) 
as available-for-sale 
Investment in an                                 (802)        - 
associate 
 
Net cash used in investing activities          (6,951)  (7,920) 
 
Cash flows from 
financing activities 
Proceeds from                              9    12,000        - 
borrowings 
Finance cost                                     (431)    (549) 
Employee subscription                               98      192 
for tracker shares 
Proceeds from exercise                             215      612 
of share options 
Purchase of own shares                         (7,797)  (6,845) 
Dividends paid to                          6  (17,994) (17,972) 
equity holders 
Distributions to                                 (115)    (130) 
tracker shareholders 
 
Net cash used in                              (14,024) (24,692) 
financing activities 
 
Net increase in cash and cash equivalents        8,307    1,186 
Cash and cash equivalents at beginning of       10,022    6,159 
the year 
Effect of exchange rate                          (708)    2,677 
changes 
 
Net cash and cash                          8    17,621   10,022 
equivalents at end of 
the year 
 
SThree plc 
 
Notes to the financial statements 
 
For the year ended 30 November 2017 
 
1. Basis of preparation 
 
The financial information in this preliminary announcement has been extracted from the Group 
audited financial statements for the year ended 30 November 2017 and does not constitute 
statutory accounts within the meaning of section 434 of the Companies Act 2006. The Group 
financial statements and this preliminary announcement were approved by the Board of Directors on 
29 January 2018. 
 
The auditors have reported on the Group's financial statements for the years ended 30 November 
2017 and 30 November 2016 under s495 of the Companies Act 2006. The auditors' reports are 
unqualified and do not contain a statement under section 498(2) or (3) of the Companies Act 2006. 
The Group's statutory financial statements for the year ended 30 November 2016 have been filed 
with the Registrar of Companies and those for the year ended 30 November 2017 will be filed 
following the Company's Annual General Meeting. 
 
The Group's financial statements have been prepared in accordance with International Financial 
Reporting Standards ('IFRSs') and IFRS Interpretations Committee ('IFRS IC') as adopted and 
endorsed by the European Union and have been prepared under the historical cost convention with 
the exception of certain financial instruments classified as available for sale. 
 
The same accounting policies, presentation and computation methods are followed in this 
preliminary announcement as in the preparation of the Group financial statements. The accounting 
policies have been applied consistently by the Group. 
 
Going concern 
 
The Group's business activities, together with the factors likely to affect its future 
development, performance, its financial position, cash flows, liquidity position and borrowing 
facilities are described in the strategic section of the Annual Report. In addition, notes to the 
Group financial statements include details of the Group's treasury activities, funding 
arrangements and objectives, policies and procedures for managing various risks including 
liquidity, capital management and credit risks. 
 
The Directors have considered the Group's forecasts, including taking account of reasonably 
possible changes in trading performance, and the Group's available banking facilities. Based on 
this review and after making enquiries, the Directors have a reasonable expectation that the 
Group has adequate resources to continue in operational existence for the foreseeable future. For 
this reason, the Directors continue to adopt a going concern basis in preparing these financial 
statements and this preliminary announcement. 
 
2. Segmental analysis 
 
IFRS 8 'Segmental Reporting' requires operating segments to be identified on the basis of 
internal results about components of the Group that are regularly reviewed by the entity's chief 
operating decision maker to make strategic decisions and assess segment performance. 
 
Management has determined the chief operating decision maker to be the Group Management Board 
('GMB') made up of the Chief Executive Officer, the Chief Financial Officer, the Chief Operating 
Officer, the Chief People Officer and the Chief Sales Officer, with other senior management 
attending via invitation. Operating segments have been identified based on reports reviewed by 
the GMB, which consider the business primarily from a geographical perspective. The Group 
segments the business into four regions: the United Kingdom & Ireland ('UK&I'), Continental 
Europe, the USA and Asia Pacific & Middle East ('APAC & ME'). 
 
The Group's management reporting and controlling systems use accounting policies that are the 
same as those described in note 1 to the Group financial statements in the summary of significant 
accounting policies. 
 
Revenue and Gross Profit by reportable segment 
 
The Group measures the performance of its operating segments through a measure of segment profit 
or loss which is referred to as "Gross Profit" in the management reporting and controlling 
systems. Gross profit 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. 
 
                                REVENUE         GROSS PROFIT 
                              2017      2016      2017     2016 
                             GBP'000     GBP'000     GBP'000    GBP'000 
 
UK&I                       269,777   290,285    55,687   64,032 
Continental                576,018   448,606   150,636  127,543 
Europe 
USA                        212,737   171,313    64,369   50,682 
APAC & ME                   55,998    49,657    16,980   16,424 
 
                           1,114,5   959,861   287,672  258,681 
                                30 
 
Continental Europe primarily includes Austria, Belgium, France, Germany, Luxembourg, Netherlands, 
Spain and Switzerland. 
 
APAC & ME mainly includes Australia, Dubai, Hong Kong, Japan, Malaysia and Singapore. 
 
Other information 
 
The Group's revenue from external customers, its gross profit and information about its segment 
assets (non-current assets excluding deferred tax assets) by key location are detailed below: 
 
                           REVENUE            GROSS PROFIT 
                          2017      2016        2017        2016 
                         GBP'000     GBP'000       GBP'000       GBP'000 
 
UK                     259,028   275,839      51,922      58,828 
Germany                256,825   206,130      78,021      67,739 
USA                    212,737   171,313      64,369      50,682 
Netherlands            180,602   131,174      38,039      29,201 
Other                  205,338   175,405      55,321      52,231 
 
                     1,114,530   959,861     287,672     258,681 
 
                                           NON-CURRENT ASSETS 
                                         30 November 30 November 
                                                2017        2016 
                                               GBP'000       GBP'000 
 
UK                                            15,702      15,044 
USA                                            1,608       2,481 
Germany                                        1,132         589 
Netherlands                                      431         165 
Other                                          1,024       1,145 
 
                                              19,897      19,424 
 
The following segmental analysis by brands, recruitment classification and sectors (being the 
profession of candidates placed) have been included as additional disclosure to the requirements 
of IFRS 8. 
 
                              REVENUE        GROSS PROFIT 
                              2017      2016      2017      2016 
                             GBP'000     GBP'000     GBP'000     GBP'000 
 
Brands 
Progressive                344,537   275,729    77,105    65,859 
Computer Futures           311,134   265,751    83,700    75,231 
Real Staffing Group        230,330   225,123    70,684    67,915 
Huxley Associates          228,529   193,258    56,183    49,676 
 
                         1,114,530   959,861   287,672   258,681 
 
Other brands including Global Enterprise Partners, Hyden, JP Gray, Madison Black, Newington 
International and Orgtel are rolled into the above brands. 
 
Recruitment 
classification 
Contract                                   1,030,359 874 203 173 
                                                     ,44 ,50 ,26 
                                                       0   1   0 
Permanent                                     84,171 85, 84, 85, 
                                                     421 171 421 
                                           1,114,530 959 287 258 
                                                     ,86 ,67 ,68 
                                                       1   2   1 
 
Sectors 
Information & Communication Technology       502,299 447 124 115 
                                                     ,56 ,74 ,84 
                                                       0   6   4 
Banking &                                    181,007 168 43, 41, 
Finance                                              ,26 502 735 
                                                       3 
Life Sciences                                176,870 147 62, 54, 
                                                     ,05 351 262 
                                                       6 
Energy                                       142,822 107 26, 19, 
                                                     ,88 494 595 
                                                       9 
Engineering                                   97,469 79, 25, 23, 
                                                     016 851 253 
Other                                         14,063 10, 4,7 3,9 
                                                     077  28  92 
 
                                           1,114,530 959 287 258 
                                                     ,86 ,67 ,68 
                                                       1   2   1 
 
Other includes Procurement & Supply Chain and Sales & Marketing. 
 
3. Administrative expenses - Exceptional items 
 
On 1 November 2017, the Group communicated to the market that it was commencing a consultation 
with employees on the proposed relocation of central support functions away from its London 
headquarters to a new facility located within Glasgow and a restructuring of the marketing 
department. The purpose of this strategic restructuring is to realise annualised cost savings of 
 approximately GBP4.0 million per annum. 
 
The restructuring is expected to result in certain material one-off costs totalling approximately 
   GBP14 million to GBP16 million, of which an estimated GBP15 million is operating expenses and 
  approximately GBP0.5 million is property fit out costs (to be capitalised), less approximately GBP2 
million of grant receivable from Scottish Enterprise. The costs are mainly related to people, 
property and professional advisor fees. 
 
 In 2017, restructuring costs of GBP6.7 million have been charged to the Consolidated Income 
 Statement, including GBP1.1 million of restructuring costs incurred or accrued, mainly for 
 professional advisor fees, and GBP5.6 million as a provision for redundancy costs. A restructuring 
provision can only include the direct expenditure arising from the announced strategic 
restructuring, which are costs that are both necessarily entailed by the restructuring and not 
associated with the ongoing activities of the entity. Restructuring items related to the 
transition, design and set up of the new support function or for which there is no constructive 
obligation at year end have not been included within the 2017 restructuring provision and will be 
recognised each year up to 2020. 
 
Due to the material size and non-recurring nature of this strategic restructuring project, the 
associated costs have been separately disclosed as exceptional items in the Consolidated Income 
Statement. Disclosure of items as exceptional, highlights them and provides a clearer, comparable 
view of underlying earnings. 
 
Items classified as exceptional were as follows: 
 
                                                      2017  2016 
                                                     GBP'000 GBP'000 
 
Exceptional items - 
charged to operating 
profit 
Personnel costs -                                    5,709     - 
redundancy 
Professional advisor fees                            1,017     - 
Other                                                   15     - 
Total exceptional costs                              6,741     - 
 
4. Operating profit 
 
Operating profit is stated after charging/(crediting): 
 
                                                      2017  2016 
                                                     GBP'000 GBP'000 
 
Depreciation                                         2,516 2,276 
Amortisation                                         3,228 3,440 
Accelerated amortisation and                           309     - 
impairment of intangible 
assets 
Foreign exchange gains                               (345) (849) 
Staff costs                                          187,4 168,9 
                                                        19    71 
Movement in bad debt provision and debts               496   573 
directly written off 
Loss on disposal of property, plant and                110   194 
equipment 
Loss on disposal of                                     66    44 
intangible assets 
Exceptional restructuring                            6,741     - 
costs 
Loss on disposal of                                    144     - 
subsidiaries(2) 
Operating lease charges 
- Motor                                              1,790 1,449 
vehicles 
- Land and                                           12,00 11,27 
buildings                                                5     9 
 
(1) The accumulated foreign exchange net loss reclassified from Currency Translation Reserve to 
the Consolidated Income Statement on liquidation of subsidiary companies. 
 
5. Taxation 
 
(a) Analysis of tax charge for the year 
 
                                                      2017  2016 
                                Before   Exceptional Total 
                                except         items 
                                 ional 
                                 items 
                                 GBP'000         GBP'000 GBP'000 GBP'000 
 
Current taxation 
 
Corporation tax charged on      13,520         (946) 12,57 9,349 
profits for the year                                     4 
Adjustments in respect of        (758)             - (758) 1,281 
prior periods 
 
Total current tax               12,762         (946) 11,81 10,63 
charge/(credit)                                          6     0 
 
Deferred taxation 
Origination and                  (743)  (357)      (1,100) (768) 
reversal of temporary 
differences 
Adjustments in                   (627)      -        (627)   194 
respect of prior 
periods 
 
Total deferred tax              (1,370  (357)      (1,727) (574) 
credit                               ) 
 
Total income tax                11,392 (1,303       10,089 10,05 
charge/(credit) in                          )                  6 
the income statement 
 
(b) Reconciliation of the effective tax rate 
 
The Group's tax charge for the year exceeds (2016: exceeds) the UK statutory rate and can be 
reconciled as follows: 
 
                                                      2017  2016 
                                 Before Exceptional  Total 
                            exceptional       items 
                                  items 
                                  GBP'000       GBP'000  GBP'000 GBP'000 
 
Profit before taxation           44,458     (6,741) 37,717 37,29 
                                                               8 
 
Profit before taxation 
multiplied by the 
standard rate of 
corporation tax in the 
UK at 19.33% (2016: 
20%) 
              8,594 (1,303 7,291  7,460 
                         ) 
 
Effects of: 
Disallowable items                  847           -    847   442 
Differing tax rates on            2,725           -  2,725 1,588 
overseas earnings 
Adjustments in respect          (1,385)           - (1,385 1,475 
of prior periods                                         ) 
Adjustment due to tax                33           -     33  (41) 
rate changes 
Tax losses for which                578           -    578 (868) 
deferred tax asset was 
derecognised/(recognise 
d) 
 
Tax expense for the              11,392     (1,303) 10,089 10,05 
year                                                           6 
 
Effective tax rate                25.6%       19.3%  26.7% 27.0% 
 
(c) Current and deferred tax movement recognised directly in equity 
 
                                                     30       30 
                                               November November 
                                                   2017     2016 
                                                  GBP'000    GBP'000 
 
Equity-settled share-based payments 
Current tax                                           -     (26) 
Deferred tax                                       (62)       38 
 
                                                   (62)       12 
 
The Group expects to receive additional tax deductions in respect of share options currently 
unexercised. Under IFRS the Group is required to provide for deferred tax on all unexercised 
share options. Where the amount of the tax deduction (or estimated future tax deduction) exceeds 
the amount of the related cumulative remuneration expense, this indicates that the tax deduction 
relates not only to remuneration expense but also to an equity item. In this situation, the 
excess of the current or deferred tax should be recognised in equity. At 30 November 2017 a 
  deferred tax asset of GBP1.0 million (2016: GBP0.6 million) has been recognised in respect of these 
options. 
 
6. Dividends 
 
                                                   2017    2016 
                                                  GBP'000   GBP'000 
 
Amounts recognised as distributions to equity 
holders in the year 
Interim dividend of 4.7p (2016:                   6,052   6,049 
4.7p) per share (i) 
Final dividend of 9.3p (2016:                    11,942  11,923 
9.3p) per share (ii) 
 
                                                 17,994  17,972 
 
Amounts proposed as distributions to equity 
holders 
Interim dividend of 4.7p (2016:                   6,038   6,052 
4.7p) per share (iii) 
Final dividend of 9.3p (2016:                    12,086  12,002 
9.3p) per share (iv) 
 
(i) 2016 interim dividend of 4.7 pence (2015: 4.7 pence) per share was paid on 9 December 2016 to 
shareholders on record at 4 November 2016. 
 
(ii) 2016 final dividend of 9.3 pence (2015: 9.3 pence) per share, was paid on 9 June 2017 to 
shareholders on record at 5 May 2017. 
 
(iii) 2017 interim dividend of 4.7 pence (2015: 4.7 pence) per share was paid on 8 December 2017 
to shareholders on record at 3 November 2017. 
 
(iv) The Board has proposed a 2017 final dividend of 9.3 pence (2016: 9.3 pence) per share, to be 
paid on 8 June 2018 to shareholders on record at 27 April 2018. This proposed final dividend is 
subject to approval by shareholders at the Company's next Annual General Meeting on 26 April 
2018, and therefore, has not been included as a liability in these financial statements. 
 
7. Earnings per share 
 
The calculation of the basic and diluted earnings per share ('EPS') is set out below: 
 
Basic EPS is calculated by dividing the earnings attributable to owners of the Company by the 
weighted average number of shares in issue during the year excluding shares held as treasury 
shares and those held in the EBT which are treated as cancelled. 
 
For diluted EPS, the weighted average number of shares in issue is adjusted to assume conversion 
of dilutive potential shares. Potential dilution resulting from tracker shares takes into account 
profitability of the underlying tracker businesses and SThree plc's earnings per share. 
Therefore, the dilutive effect on EPS will vary in future periods depending on any changes in 
these factors. 
 
                                                    30       30 
                                              November November 
                                                  2017     2016 
                                                 GBP'000    GBP'000 
 
Earnings 
Profit for the year after tax before            33,066   27,242 
exceptional items 
Exceptional items net of tax                   (5,438)        - 
Profit for the year attributable to             27,628   27,242 
owners of the Company 
 
                                               million  million 
 
Number of shares 
Weighted average number of shares used           128.6    128.3 
for basic EPS 
Dilutive effect of share plans                     4.0      3.8 
 
Diluted weighted average number of               132.6    132.1 
shares used for diluted EPS 
 
                                                    30       30 
                                              November November 
                                                  2017     2016 
                                                 pence    pence 
 
Basic 
Basic EPS before exceptional items                25.7     21.2 
Impact of exceptional items                      (4.2)        - 
Basic EPS after exceptional items                 21.5     21.2 
 
Diluted 
Diluted EPS before exceptional items              24.9     20.6 
Impact of exceptional items                      (4.1)        - 
Diluted EPS after exceptional items               20.8     20.6 
 
8. Cash and cash equivalents 
 
                                                       30     30 
                                                   Novemb Novemb 
                                                       er     er 
                                                     2017   2016 
                                                    GBP'000  GBP'000 
 
Cash at bank                                       21,338 15,707 
Bank overdraft                                     (3,717 (5,685 
                                                        )      ) 
 
Net cash and cash equivalents per the              17,621 10,022 
consolidated statement of cash flow 
 
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 is 
approximately equal to their fair values. 
 
The Group has cash pooling arrangements with legally enforceable rights to set-off cash and 
overdraft balances. Where there is an intention to settle on a net basis, cash and overdraft 
balances relating to the cash pooling arrangements are reported on a net basis in the statement 
of financial position. Other bank overdrafts are shown separately as above and in the statement 
of financial position. 
 
9. Borrowings 
 
  The Group has a committed RCF of GBP50 million along with an uncommitted GBP20 million accordion 
feature in place with HSBC and Citibank, giving the Group an option to increase its total 
 borrowings under the facility up to GBP70 million. The RCF expires in May 2019. The funds borrowed 
under the facility bear interest at an annual rate of 1.3% (2016: 1.3%) above 3 month LIBOR. The 
average interest rate paid on the RCF during the year was 1.5% (2016: 1.8%). The Group also has 
 an uncommitted GBP5 million overdraft facility with RBS. 
 
  At the year end the Group had drawn down GBP12 million (2016: GBPnil) on these facilities. 
 
The RCF is subject to certain covenants requiring the Group to maintain financial ratios over 
interest cover, leverage and guarantor cover. The Group has been in compliance with these 
covenants throughout the year. 
 
10. Annual Report and Annual General Meeting 
 
The 2017 Annual Report and Notice of 2017 Annual General Meeting will be posted to shareholders 
shortly. Copies will be available on the Company's website www.sthree.com or from the Company 
Secretary, 8th Floor, City Place House, 55 Basinghall Street, London, EC2V 5DX. The Annual 
General Meeting of SThree plc is to be held on 26 April 2018. 
 
ISIN:          GB00B0KM9T71 
Category Code: ACS 
TIDM:          STHR 
LEI Code:      2138003NEBX5VRP3EX50 
Sequence No.:  5145 
 
End of Announcement EQS News Service 
 
648919 29-Jan-2018 
 
 
1: http://public-cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=04ccb9928f205f22063cbe5da1a3724c&application_id=648919&site_id=vwd_london&application_name=news 
 

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January 29, 2018 02:05 ET (07:05 GMT)

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