SThree at a glance

Strategic Report
Governance
Financial Statements

Unlocking our purpose bybringing skilled
people together
to build the future
A resilient performance against a record prior year and challenging
global macro-economic backdrop.

We have led our industry for nearly 40 years, specialising in STEM before anyone else – we are proud pioneers.
We accelerate careers, enrich lives and enable people to make a difference to the world around them – that goesfor our own colleagues as well as our candidates.

Net fees

eNPS

Basic earnings
per share

42.4p

43

Our People
Pages 28-31

Operating profit

Net cash

NPS

FY22: £78m

FY22: £65m

FY22: 52£83m

Engaging,
developing
and empowering
our people.

FY22: 51

FY22: 41.0p

£76m

48

Delivering highquality customer
service supported
by investmentin the righttechnology.

Taking action on climate

8%

reduction in CO2*
(FY22: 44% reduction*)
Science-based GHG reduction targets
approved for scopes 1, 2 & 3, aligned
to a 1.5°C scenario.

Doubled the share of
renewable business*

Our Places

Our Platform

Our People

Our Position

Lives positively
impacted

To be a leader in markets wechoose to serve

Create a world-classoperational platform
through data, technology
and infrastructure

Find, develop and retain
great people

Leverage our position in STEM
to deliver sustainable value toour candidates and clients(FY22: 32,970)

We focus our decision making
on disciplined investments into
target regions and STEM skill
verticals. Our global house ofwell-respected brands provides
us with deep STEM expertiseand broad networks of clientsand candidates.

We accelerate digitaltransformation to drive greater
operational excellence,
productivity and customer
experience. Using innovativetechnology and insightful data,
we enable knowledge-fuelled
consultants to perform attheir best.

We create a high-performance,
inclusive culture. We invest
in talent acquisition strategy,
best training and development
initiatives, and offer competitive
reward and incentives to attract
the best talent in the best
markets.

Define what we want each of
our brands to be famous forand drive our reputation as theundeniable first choice for clientsand candidates within STEM.

Our FY24 goal
To grow Group market sharefaster than our peer group3 (on anet fee basis compared to FY19).

Our FY24 goal
In the short term, progression of
our conversion ratio4 is expected
to be affected by current macroeconomic headwinds.

Our FY24 goal
Achieve and maintain an upper
quartile eNPS in the professional
services sector/industry.

Our FY24 goal
To positively impact 150,000 lives
since FY19.

25,725

Through delivering
recruitment solutions
and community
programmes
in FY23.

(FY22: 88% growth*)
Through delivering STEM skills
required in the transition to a
low-carbon economy.
* Since FY19

Chief Financial Officer’s statement
Pages 34-37

1.	Read more about how we apply our purpose
in day-to-day activities and what progress weare making towards achieving SThree’s ESG
commitments in the case studies that feature
throughout this Annual Report. You can identify
these by looking for this QR code icon.

02

SThree plc

Our vision is to be the#1 STEM talent provider
in the best STEM markets.

We deliver our purpose through four strategic pillars

Group operational highlights in FY23

FY22: £431m

Our purpose is groundedin our ESG commitments,
which are focused on
encouraging diversity
in STEM (Sciences,
Technology, Engineeringand Mathematics),
reducing our own
environmental impact
and contributing to a net
zero future by facilitating
green careers1.

Highlights

Group financial highlights in FY232£419m

Our purpose is focusedon making the mostof favourable market
megatrends and investingin our platform for future
operational excellence,
to allow us to provide a
quality service and deliver
sustainable value to ourstakeholders.

Our Position
Pages 32-33

In the mid to long term, we aim
to build a business that canachieve its conversion ratio at
21% or higher.

Our commitment to being a responsible
business (including TCFD) Pages 52-75

2.	The Group also uses alternative performancemeasures (APMs) to help explain its businessperformance. Further information on APMs,
including a reconciliation to the financial
statements (where appropriate), can be foundon pages 193 to 195.

3.

Peer group reflects top two to four listed peersin each region.

4.

See ‘Alternative performance measures’ notefor details on applied methodology, pages 193
to 195.

Further reading
Strategy overview, pages 18 to 19

Annual Report and Accounts 2023

03

Our market environment

Strategic Report
Governance
Financial Statements

Global labour market landscape5
The past few years have completely
altered the shape of the labour
market. From the large volume of job
losses in 2020 to sharp rebounds inmost economies leading to elevatedwage growth, shortages of workers,
high numbers of job openings andshifted working habits.
Through 2023, in the face ofongoing macro-economic andgeopolitical uncertainties which
accelerated a series of cascading andinterconnected global crises in food,
fuel and energy, major economies
such as the US narrowly avoided arecession and mild contractions ineconomic activity were recordedin the UK and some EU economies.
Nevertheless, labour demandremained robust, mostly driven
by the technological advances,
widening digitalisation and the ‘green
transition’. Also, throughout the year
a series of critical reviews led by
the United Nations took place toassess international agreements onsustainable development, climatechange, gender equity, financing,natural disasters and universal
health coverage. It helped to build
political momentum, articulate
new commitments and inclusive
coalitions to accelerate progress ofgreen investments and businesses’
decarbonisation. These developments
contributed to the growth in demandfor highly skilled talent and underpin
our confidence in the resilience ofour business model and strategy withstrong focus on STEM jobs and skills.

We differentiate between fiveglobal megatrends which gained
traction and draw in soughtafter specialists in life sciences,
technology and engineering.
Decarbonisation

Research-led healthcare

Generational shifts

New working models

Digitalisation is transforming business models
around the world, helping companies to makehuge leaps forward, enabling them to become
more sustainable and resilient. Businesses
are adopting leaner ways of working, with
software-driven production, allowing morecapacity for innovation and cost efficiencies.

A large scale global action towards a green
energy transition is ongoing and is expectedto accelerate over the next decade, partiallythanks to the development and widespread
adoption and deployment of innovativetechnologies and engineering skills.

The pandemic has led to profound changes
and developments that have significantly
accelerated the pace at which the life sciences
sector is evolving.

The world is facing fast-ageing populations,lower birth rates and smaller households. By
2030, 1.4 billion7, or one in six people, in theworld will be aged 60 years or over and this is
expected to reach more than two billion people
by 2050.

The pandemic has changed the way the world
thinks about wellbeing, mobility, infrastructure
and therefore work practices.

Global direct investment in digital transformation
is expected to reach $3.4 trillion by 2026 andthis rate of investment is accelerating.
Changing customer demands, increased
technological complexity and innovative digitaltechnologies, including Artificial Intelligence(AI) and machine learning, are driving an
explosion in demand for specialist technology
skills. It is forecast that 69 million new digitaljobs will be needed by 2027.

Global investment
in digitaltransformation,by 2026

Source: Statista

Global annual
venture capital
investment inquantum computing
in 2021$1bn

Source: HSBC Global
Research, Nine key themes
to guide your outlook*

SThree plc

These roles are typical for STEM markets, within
which we operate, and provide enormous
opportunity for SThree.

Digitalisation$3.4tr04

Today, the global STEM talent market is valued
at circa £112 billion in annual revenue6, of
which the key driver is the net job-creation inroles related to technology, digitalisation andsustainability. Roles within AI and Machine
Learning Specialists are top of the list,
followed by Sustainability Specialists, BusinessIntelligence Analysts, Information Security
Analysts, Renewable Energy Engineers, andSolar Energy Installation and System Engineers.

In constant currency.

According to the International Energy Agency,
by 2030 14 million new jobs will be created in
global energy supply, and a further 16 million
in clean energy end-uses, such as more
efficient appliances, electric and fuel cellvehicles, building retrofits and energy-efficientconstruction. In the next five years, this job
growth will be driven through both public andprivate investments, driving an exponential
growth in demand for engineering and ‘green’
tech talent.

Ensuring that solutions and knowledge,
including AI and reliable data, are developedin good time to address future healthcare
priorities is the foundation of this megatrend.
Research and development, technology,
regulation, remote care and efficientmanufacturing will be essential for the life
sciences sector to reach its full potential in the
coming years.
Companies at the forefront of these exciting
areas will create ongoing demand for highly
skilled specialists within quality assurance,clinical operations, regulatory affairs and othermedical specialists.

New digital jobs
required globallyby 2027

Global investmentin the energy
transition in 2022

New ‘green’ energy
jobs required
globally by 2030

Growth in global
pharma R&D spend,
2019–2026

Source: WEF Future of
Jobs Report 2023

Source: HSBC Global
Research, Nine key themes
to guide your outlook

Source: IEA Net Zero –clean energy jobs by 2030

Source: Statista

69m

Growth in SThreetechnology-related
net fees since FY19

+36%*

>$1tr

Growth in
SThree net feesin renewables
since FY19

+142%*+14m+24%

Share of health andhealthcare firms
expect to be using
AI by 2025

Growth in SThree
Life Sciencesrelated net fees
since FY19

+10%*

The proportion of people of working age
globally is therefore shrinking, while the relative
number of those retiring is expanding, driving
acute labour shortages across every sector.

Driven by recent technological advances, many
people are no longer constrained by traditional
9-5 working models. Furthermore, a shift towards
remote working has seen businesses adapting
existing infrastructure or making ‘smart’ urban
developments, which in turn call for significant
investment and highly skilled STEM professionals.

Changing demographics, including labour
shortages post-pandemic, are one of thedriving forces behind the research anddevelopment and encourage the adoption of
automation technologies to boost productivity.
This leads to a rise in demand for a highly
skilled workforce, as well as increased rates ofpay, especially in STEM fields.

Greater work flexibility gives candidates theconfidence to go from contract to contract,developing their career within their given
sphere of expertise. This contributes to ongoinggrowth in the number of freelancers andindependent contractors, which according to
62% of global executives polled by Ceridian will
substantially replace full-time employees within
the next four years.

Global shortageof skilled workers
by 2030, withthe largest gap intechnology andengineering

Share of global
candidates stating
flexible working asa factor that willaffect their career

Share of executives
believe freelancers
likely to replace fulltime employees innext four years

Source: SThree research‘How the STEM world
evolves’ 2023

Source: SIA/Ceridian
2021 survey

85m

Source: German
Economic Institute89%

Source: HSBC Global
Research, Nine key themes
to guide your outlook

US growth of
STEM occupations
between 2017–2029

8.8%

Source: Id Tech
Ageing and health (who.int)

Growth in SThree
STEM contractor
order book since
FY19

+51%*

5.

Based on https://www3.weforum.org/docs/WEF_Future_of_Jobs_2023.pdf

6.

Based on our top five markets which together represent 74% of global STEM market by revenue.
Source: SThree analysis, SIA data.

7.

Source: Ageing and health (who.int/news-room/fact-sheets/detail/ageing-and-health).

63%

62%

Growth in SThreecontract net fees
since FY19

+36%*

Annual Report and Accounts 2023

05

Chair’s statement

Strategic Report
Governance
Financial Statements

Unlocking our unique potential bydelivering inline with ourstrategy2023 has been another challenging year for
many people around the globe. Heightenedlevels of geopolitical and macro-economic
instability have impacted individuals,
businesses, and governments creating
an increasingly complex commercial
environment. Meanwhile, issues that wereprevalent last year, including high inflationand interest rates, the rising cost of living
and a global energy crisis have continued
to have an impact on our lives.
Our teams, customers and key markets of operation have all
been impacted differently by these issues, yet I am proud that
SThree has still delivered a resilient performance this year,
thanks to our strategic focus on sourcing and placing the best
STEM talent. Our robust performance in Contract, supported
by our unique Employed Contractor Model (ECM), underpins
our confidence in the megatrend that is the demand for flexible
workers in STEM. In the year we placed 15,292 skilled people
and maintained a strong order book throughout. I would like tothank our clients and candidates for the trust they have placed in
the Group this year. I would also like to thank every member of
the SThree team for their efforts to support our customers. It is
thanks to their skill and dedication that SThree finds itself in thisposition of strength today, with many exciting opportunities tobe pursued in the near future.
Since Timo’s appointment as Chief Executive Officer in April
2022 his energy and vision has spread across the business, withthe whole team coming together to execute an exciting growthstrategy. Our Technology Improvement Programme underpinsa large part of this strategy and I am delighted to report thatit continues to roll out at pace, providing a market-leading
platform for future growth and productivity that has been
designed to provide us with the best opportunity to continue
to seize market share in our target markets.

06

SThree plc

Following the resilient trading performance in the year, coupledwith a healthy balance sheet position, the Board is proposing
a final dividend at 11.6 pence per share, which taken together
with the interim dividend of 5.0 pence per share, gives the total
dividend for the year of 16.6 pence per share, an increase of
4% over the prior year. This is in line with the Board’s policy tooffer shareholders long-term ordinary dividend growth within atargeted cover range of 2.5x to 3.0x and forms part of our wider
capital allocation policy.
Maximising shareholder value through a disciplined approach
to investment to deliver growth in net fees and margin, whilst
maintaining a strong balance sheet and sustainable throughthe-cycle dividend, remains a priority for the Board. Following
a periodic review, the Group’s capital allocation policy has
been refreshed to reflect investments in business improvement
alongside organic and inorganic growth as a key aspect ofour strategy.
Across the Group, we are clear on our ambitions and delivering
our strategy. With the addition of Margot van Soest (Managing
Director, Netherlands & Spain), Sarah Mason (Chief People
Officer) and Matt McManus (Managing Director, US) to the
Executive Committee, coupled with the appointment of Imogen
Joss as Non-Executive Director early in the financial year, wehave an enhanced, experienced executive leadership teamand Board in place to drive the Group forward. I would like tothank both the executive team and Board for all their hard work
this year, alongside those inside and working together with ourbusiness who have helped us achieve a resilient set of results.
I am especially proud of our promotion to the FTSE 250, after
too many years of absence. This is a clear reflection of the
progress we have made, and is another key milestone in
SThree’s ongoing journey.
We remain committed to reducing our impact on the planet,
providing great opportunities for our people and ensuring wehave the governance processes in place to protect each andevery SThree stakeholder. We are proud to support the transition
to a green economy by connecting engineering talent to thegreen energy projects where they are most needed, and weare dedicated to making SThree an employer of choice forstaff. I am delighted that, for the first time, through targetedownership opportunities, over 50% of our employees arenow shareholders in the business, something we see as
the ultimate vote of confidence in our direction of travel,
providing strong alignment with our wider shareholder base.
Looking ahead, while we remain conscious of the wider
economic environment, I am confident that the Group willcontinue to deliver against our strategy. We have continued
to invest across the business, enhancing and innovating how
we operate so that as customer confidence strengthens andthe market returns to growth, we are in the best position
possible to seize the opportunity. With a market-leading
technology suite underpinning our future operations and atalented and experienced team in place, we are confident in
the Group’s long-term prospect.
James Bilefield
Chair

29 January 2024

SThree finds itself in the positionof strength today, with many
exciting opportunities to be
pursued in the near future.”James Bilefield
Chair

Annual Report and Accounts 2023

07

Chief Executive Officer’s statement

Strategic Report
Governance
Financial Statements

Unlocking our unique potential throughthe powerof talent
I am proud of the work we have achieved
over the past year. The Group has
performed well against a challenging
economic backdrop, demonstrating
the resilience of our business modeland strength of our strategy, with themegatrend of demand for flexible STEM
workers persisting across our core markets.
Through this, we have invested in ourpeople, infrastructure product offering andmade excellent progress in the positioningof SThree for sustainable long-term growth.
The strength of the Group derives from our clear purpose:bringing skilled people together to build the future. We firmly
believe that the future is flexible STEM talent. Underpinned bylong-term megatrends, the two growth drivers of STEM andflexible talent have proven resilient through cycles, providing
a unique business model that delivers quality of earnings andgood visibility.
Whilst this core purpose remains consistent, we must also
evolve. As a business consciously aligned to megatrends, weare acutely aware of how these structural forces, such as digitaltransformation, changing patterns of work, and the opportunities
presented by artificial intelligence are affecting every industry.
We have established a position as a leading specialist talent
partner, built over decades through unrivalled STEM networks,
long-term client relationships and deep expertise, all of which
work together to create significant competitive differentiation.
From this, we are progressing to the next stage of our growthjourney as a digital-first organisation, with an integrated end-toend platform that will redefine our potential and support us inunleashing our vision.

08

SThree plc

Our unique model and strategic focus
on STEM and flexible talent provide
us with a strong platform both now
and over the long term.”
Timo Lehne
Chief Executive Officer

At the same time, we continue to be guided by our disciplined
and focused approach to our investment decisions, supported bya robust business model. For FY23, the Group delivered net feesof £419 million, 4% down on the record prior year performance.
With ongoing exceptional levels of productivity combined withtight cost control, whilst also benefitting from spend recognition
timing on the Technology Improvement Programme (TIP)(without impacting delivery) we delivered operating profit of£76 million. This was delivered alongside a material increasein net cash balance to £83 million and a contractor order bookof £184 million. This provides us with the financial strength andflexibility to pursue our market opportunity and to deliver value
to shareholders.
Our approach: a platform of STEM resourcing solutions
supporting our customers’ business ambitions
The Group provides solutions to customers predominately
through the placement of specialist STEM Contract skills,
representing 82% of total net fees, as this model is particularly
well aligned to employee and employer preferences in STEM
roles. Within this, we have also established a specific expertisein delivering ECM, whereby contractors are directly employed
by SThree and which is increasingly a source of growth for thebusiness, now comprising nearly 50% of the contractor orderbook. We also provide our clients with high-value Permanentskills in select, strategic markets. The Group’s STEM proficiency
across all three employment models, whether it be Contractors,
ECM or Permanent roles, allows us to offer the best solution tomeet our customers’ bespoke requirements.
We wrap this in a customer-centric service delivery approach,working collaboratively with our clients to source the scarceskills on which they depend, building enduring relationships
with our contractors who view SThree as a partner in theircareer development. We are a people business, and we aresuper-charging our teams through the implementation of a
sophisticated and integrated IT infrastructure. This is bringing
our organisation closer together to drive scale, efficiencies andproductivity, particularly in our growing ECM business which iscomplex and compliance heavy. We believe this will be a gamechanger in the industry.

The market: our model performing in a challenging
environment
Global macro-economic factors through the year, such as highinflation, market uncertainty and high interest rates weighing
on investment decisions, have created a challenging labour
market. Many organisations took stock of their previous
expansive hiring initiatives to reassess their footprint in lightof a weakening outlook.
The priority for organisations shifted to business-criticalrequirements, which for many is represented by STEM Contract
skills. Whether it be engineers, cyber security specialists ormedical scientists, organisations across sectors are dependent
to function effectively. We saw these market dynamics play out
during the year with robust extensions as clients sought to retain
critical STEM skills helping to somewhat offset weaker newplacement activity across the market.
Progressing our ESG commitments
As we navigate through periods of transient market conditions,
we do not lose sight of our ESG commitments. We know thata successful business is a responsible one, seeking to deliver a
positive outcome for all stakeholders. As such, we are pleased
to have not only made continued progress against the clear ESG
targets we have set ourselves, but to have also strengthened
our environmental ambitions during the year with a new sciencebased target (SBTi-verified) of net zero before FY50. This
complements the work we do every day promoting jobs that willbuild a sustainable future, and we are delighted to have achieved
our target of doubling the share of our global renewables
business ahead of the target date of FY24.
We continue to strive for social mobility and equity in STEM byencouraging diversity in our talent pipeline. We do this throughour Elevate Careers programme and our partnership with
Women Who Code where we have funded scholarships for
3,700 women. In FY23, we welcomed 47 women to our internaltalent programme, Identify. We can see how the programme isimproving retention and progression of our female employees,
but we recognise we need to do more to make progress towards
our ambition to have 50/50 women in leadership roles and thiswill continue to be a priority in FY24.

Annual Report and Accounts 2023

09

Chief Executive Officer’s statement continued

Strategic Report
Governance
Financial Statements

We have a talented team and arebuilding a market-leading technology
suite, to help us drive future growth
for the Group.”
Timo Lehne
Chief Executive Officer

Strategic execution

Our places – knowing where to play, play where we
can win

Our analytical and data-driven approach informs the regionaland vertical mix we choose to operate in. Over the year weforensically analysed and validated our footprint, reconfirming
our confidence in our active market coverage of 11 countries
strategically focused in the biggest STEM markets. With anaverage share of under 3%, we believe there is substantial scope
to scale, both organically and, given the highly fragmented andniche landscape, through select acquisitions that align with theBoard’s strict criteria, and in doing so, realise the increasing
benefits of economies of scale.
This analysis also brought greater clarity and insight into thestrategic direction for our regions – understanding where
our core opportunities lie to drive margin and higher value,
versus those regions ripe for steady growth or fast scaling
opportunities. Within this context we continue to refine to how
we go to market. Within the US, we reinforced our presence bymoving away from a brand-led management structure, to having
strong fully integrated regional teams serving all of our brands,
and across the organisation we introduced new tools anddashboards to bring greater performance insight.

Our platform – digital first

We have bold ambitions to be a digital-first innovator in a
traditionally analogue industry, and we see huge scope todrive higher margin growth by leveraging the power of modern
technology. The systematic roll out of our TIP continues toprogress on track and on budget, with our first deployment
successfully completed in the US. Whilst we continue to workon data quality testing, it is evident that the end-to-end platform
is working. We have already onboarded over 2,000 contractors,
using it to submit timesheets, while to date we have issued over
15,000 invoices reflecting around $70 million of revenue.

We are seeing the early benefits from our first deployment,
including the systemising of best practice and process
efficiencies, helping to improve both employee and client
experiences. Our disputed invoice volume has fallen
considerably as a result of improved data collection, and ourContractor payment process, which previously required a highproportion of manual intervention due to its complexity, hasbeen streamlined significantly, freeing teams up to be moreproductive. As we have said before, the wider benefits aroundefficiencies and scaling will become evident with time as the TIP
progresses, and the platform develops richer functionality.
We look ahead to our next regional deployment in Germany,
commencing in the first half of FY24. We have a great teamin place and are confident in our approach as proven by
deployment in the US.

Our people – best employer, best people

The engine of our business is our brilliant people, and as such,
we are focused on making our business a destination employer,
attracting and retaining the best talent, in order to support ourcollective push as one team to achieve our growth ambition.
The key metric we monitor to assess our standing is our
employee net promoter score, and we were pleased to havecomfortably retained our position this year in the top quartileof professional services companies. We continue to see highengagement across our employee surveys, there is growing
uptake across the organisation of our DE&I learnings initiative
launched in the previous year, and the soft launch of our newly
redefined values in H2 to our sales leadership team is helping
shape our culture as we grow.
With relation to the TIP, whilst a great deal of focus is on IT
migration and data management, key to our programme is ourtraining and change management initiatives working to ensure
our teams understand our new capabilities and have the skills to
adopt new ways of working. We have also started some bigger
programmatic work, taking the global best practices and looking
to standardise excellence.

Building on this, we will look to embed our new values acrossthe Group. Other priorities are centred on ensuring we have theright incentives and infrastructure to allow our people to thrive,
including the continued optimisation of our office footprint
in line with current working model expectations, new talentmanagement programmes to retain key talent and drive shortertime-to-productivity, and ongoing efforts to ensure an inclusive
working environment that promotes best practice and ambition.

Our position – a winning brand with competitive anddifferentiated value propositions

We are committed to providing best-in-class STEM staffing
services to our clients and candidates by leveraging our global
network of specialised brands. Our approach ensures that every
client receives tailored solutions, unparalleled expertise, and apathway to reach their goals amid an ever-changing landscapewhilst helping candidates realise their career ambitions. During
the year, we reinforced our go-to-market brand position in
specific vertical skills, elevated our thought-leadership throughnew research ‘How the STEM world evolves’, and establisheda Group Commercial function under a new Chief Commercial
Officer position to coordinate our commercial strategy.
OutlookAs we look forward, Contract extensions remain strong andprovide an ongoing source of resilience, although as we await
an easing of the macro-economic backdrop, new businessactivity continues to be subdued for longer than expected.
Our conversion ratio, whilst anticipated to temper from theexceptional FY23 levels as our staged investment programme
progresses, is expected to remain sector leading. We have been
consciously positioning the business for the future and whilst
we continue to operate in a challenging market environment,
this does not change our focus. We have a resilient business,a talented team, great client and candidate partnerships, andwe are building a market-leading technology suite. With ourinvestments and innovations, we are confident that when themarket returns to growth, we will be in a position of strength tosource the best STEM talent the world needs.

Basic earnings per share

42.4p
FY22: 41.0p

Total divided per share

16.6p
FY22: 16.0p

Timo Lehne
Chief Executive Officer

29 January 2024

10

SThree plc

Annual Report and Accounts 2023

11

Our business model

Strategic Report
Governance
Financial Statements

Unlocking our unique potential by

A global network

giving customers
access to a global
network

Europe offices (Head office: London)

1 USA
United States(focus on Life Sciences and Engineering)

EuropeAmsterdam
Antwerp
Barcelona
BerlinBirmingham
Bristol
Brussels
Düsseldorf
EindhovenFrankfurt
Glasgow
Hamburg
Hannover
Leeds
LondonMadridManchester

MünchenNürnberg
Paris
Rotterdam
Stuttgart
Utrecht
ViennaZurichUSA offices

ME & Asia offices

AustinBostonChicagoHoustonNew York
San Diego

Dubai
Tokyo

USA

SThree is a multi-brand organisation, giving our customers
access to a global network of dedicated STEM specialists.
SThree employs circa 2,700 people across 33 offices in 118
countries, with key operations located in Europe, the USA,
the Middle East and Japan.

Where we operate
Financial reporting segments
Since FY23, the Group’s reportable segments are as follows:

Reportablesegment name

8.

12Countries included

DACH

Austria, Germany, Switzerland Netherlands
including Spain

Netherlands, Spain

Rest of Europe

Belgium, France, the UK

USA

USA

Middle East & Asia

Dubai, JapanNet fees perreporting segment

Recruitment consultants
per reporting segment

As a proportion of FY23 total
Group net fees

Based on FY23 average

FY23

ME & Asia

FY23

DACH

36%

DACH

37%

Netherlands incl. Spain

19%

Netherlands incl. Spain

18%

Rest of Europe

17%

Rest of Europe

20%

USA

23%

USA

17%

Middle East & Asia

5%

Middle East & Asia

8%

Excluding Ireland, Luxembourg and Singapore, which
as of 30 November 2023 were no longer a going concern.

SThree plc

Annual Report and Accounts 2023

13

Our business model continued

Strategic Report
Governance
Financial Statements

Our key value drivers

What we do

We have long-standing relationships and strong internal
resources which we use to do business and create andpreserve value for our stakeholders and for wider society.

As the global STEM specialist talent partner we connect sought-after specialists in life
sciences, technology, engineering and mathematics with dynamic organisations acrossthe world.

Our relationships

Group resources

Our people

SThree’s culture

with a broad range of skills, experience and values,
are crucial to deliver our purpose and strategy.

Candidates

who depend on us to connect them with the rightopportunities and dynamic organisations in need ofhighly specialist STEM talent.

Clients

for whom we adapt our business and strategy byinvesting in the right vertical niches, improving anddeveloping our service proposition so it continues tobe relevant to evolving client needs. And for whom
we have become the go-to partner to find niche
STEM skills.

Local communities

where we established long-standing partnerships withlocal authorities, non-governmental organisations
and other institutions. Together we contribute todevelopment of a more diverse and innovative
STEM talent pipeline.

is open, cooperative and performance focused. It
is underpinned by policies and business practices
and a well-established corporate governanceframework, all of which are designed to guide our
behaviours and ways of working across SThree.
Our culture demonstrates a commitment totreating all employees, candidates, clients and local
communities with respect as critical partners in ourbusiness.

How we do it
1
Talent in demand

We build specialist STEM candidate
communities via multi-channel
campaigns: career development fairs,
industry events, networking, thought
leadership, digital marketing and othertargeting techniques.

2
Agility

The way we serve our clients flexes
locally, accommodating client
preferences and complex regulatory
landscapes across all regions.

3
Recurring revenue generation

We earn fees mainly on a recurring basis. 82% ofGroup net fees are Contract fees, earned on an
ongoing basis for the duration of the contract, with
the Group paying contractors and retaining a portionof the amount charged to the client as a service fee.
18% are Permanent fees, charged as a percentage ofa candidate’s starting salary when the candidate isplaced with a client.

Financial position

we fund our business through a strong operating
cash flow, supplemented by debt and equity whenneeded. An appropriate mix between the threeprovides us with strategic flexibility to pursue valueenhancing opportunities when they arise.

Geographic footprint

with a strong leading presence in key STEM markets
where technological change is at full speed anddemand for contract roles outstrips supply.

2

1

We connect
STEM specialists
with dynamic
organisations acrossthe world

3

We source and help tonurture sought-after
STEM talent

We earn fees
and grow free
cash flow

Investors

with whom we engage to share our strategic
priorities and performance.

4
We reinvest
capital wisely to fundcontinued businessgrowth and funddividend

Investing for growth

We are a highly cash generative
business. We invest free cash into
growing our business and asset baseand use it to fund a regular dividend
stream. In time, we will consider
the appropriateness of inorganic
opportunities.

5

We build a sustainable future through STEM
Sustainability
Our commitment to run a responsible and sustainable business remains at theheart of everything we do. We work with clients who are at the forefrontof tackling climate challenges, whilst investing in our own renewableenergy business and managing our own carbon footprint towards
the net zero economy. We make DE&I development part ofbusiness as usual and launch new incentives
to support the wellbeing and healthof our people.

14

SThree plc

Annual Report and Accounts 2023

15

Our business model continued

Strategic Report
Governance
Financial Statements

What value we create for stakeholders

Our key competitive advantages

Our natural ability to bring people together sets us apart. By nurturing closer relationships
with our employees, candidates and clients, we earn loyalty and inspire collaboration.
By combining it with responsible resource management, and close relationships with local
communities, we create value for all our stakeholders.

We are where the world comes for scarce STEM talent. This is where we operate.
By successfully focusing on STEM and developing a deep knowledge of our candidate
specialisms and our clients’ needs, we are able to bring clients and candidate talent
together. The ability to achieve a perfect fit is highly valued by both parties. That enables
us to maintain our pricing, invest in enhancing our service, continue to take market sharein a growing market and generate sustainable returns.

Examples of our value creation in FY23

Focus on STEM

Driving sustainable value

Cash generative business

Significant market potential

Clear capital allocation
policyStrong financial position

SThree operates in the world’s largest
STEM markets: the USA, Germany, theNetherlands, the UK and Japan. Despite
our strong market positions we have arelatively small market share (circa 2%of the potential STEM market in the top
five markets). This offers us a significant
opportunity for growth.

Our investment policy reflects a
disciplined strategy of value creation.
Funds are allocated across the businessaccording to strategic value-enhancing
priorities, sustainability-related mattersand principal risks.

Recurring revenue dynamics of ourContract business drive sustainable
free cash flows. Plus, we maintain a£50 million Revolving Credit Facility(RCF).

c.2%£30–35m£83m

Global house of STEM
specialist recruitment
brandsWell-considered ESG
strategy

Regular dividend

Each of our brands brings expertisein specific sought-after skills withinscience, technology, engineering andmathematics. We understand them andknow how to achieve the goals of STEM
professionals and the organisations thatneed them across many sectors – for both
permanent and contract work.

Long-term commitments to theenvironment and society aim to deliver
positive outcomes for all our stakeholders
and contribute towards the UN
Sustainable Development Goals (SDGs).

We offer shareholders long-term dividend
growth in line with our dividend coverpolicy, which is currently within the rangeof 2.5x to 3.0x of our annual earnings.

1,833

114,466

16.6p

Our people

Shareholders

Environment

7.1%

11.6p

8%

41,264£27.4mFor our 2,654 people worldwide, we
provide a great place to work and invest
in ongoing learning and development,
wellbeing and DE&I programmes, all insupport of creating an inclusive culture,
winning our employees’ engagement andempowering them to meet their goals.

We aim to pay a dividend that issustainable through the cycle, and which
will be driven by long-term earnings
growth. In FY23, the Board recommended
a final dividend for the year of 11.6 pence
per share.

of operating profit invested in learning andprofessional development programmes

employee training hours

recommended final dividend per share

Local communities

15,292431>7,2003,094

clients we worked with around the world in FY23

We use our deep knowledge and global
network to understand the needs andcareer aspirations of the best STEM
professionals and match them with theorganisations that need them, in both
permanent and contract roles. Their work
helps our clients make new discoveries,
increase the accuracy and availability oftechnologies and to realise the long-term
potential of technology to address theworld’s challenges.
SThree plc

reduction in CO2 emissions since FY19 baseyear

total dividends distributed to shareholders
in FY23

Candidates and clients

candidates placed in FY23

16

(our institutional and retail investors)

people accessed career support programmes

hours volunteered in local communities

We use our knowledge and experience
to support local communities andinitiatives to help eliminate barriers to
employment and create more pathways
into STEM careers.

We source the talent needed to build asustainable future, partnering with clientsto support the transition to a low-carbon
economy. Our ambition is to be a net
zero company by FY50, with a near-termtarget of reducing scope 1 and 2 GHG
emissions by 77%, and scope 3 GHG
emissions by 50%, by FY30 versus thebase year FY19.

Full details of our transition to net zerocan be found on page 71

Our share of STEM market in our top fivecountries

Recruitment consultants

See Strategic progress: Our Places, Our
Platform for more information on page 24

Current investment plan to increase our
productivity

Number of lives positively impacted since FY19

See Our commitment to being a responsible
business for more information on page 52

Net cash

Total dividend per share

See Chief Financial Officer’s statement
for more information on page 34

Annual Report and Accounts 2023

17

Strategy overview

Strategic Report
Governance
Financial Statements

Unlocking our strategy
Our Places

Our Platform

Our People

Our Position

To be a leader in markets we choose
to serve

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

Find, develop and retain great people

Leverage our position in STEM to deliver
sustainable value to our candidates
and clients

Key performance indicators we track for these pillars

Key performance indicators we track for these pillars

Key performance indicators we track for these pillars

Key performance indicators we track for these pillars•

Net fees.

•

Operating profit conversion ratio.

•

Representation of women in leadership roles.

•

Customer net promoter score (NPS).

•Net fees through renewable business.

•

Profit before tax.

•

Employee net promoter score (eNPS).

•

Number of lives positively impacted.

•

Basic earnings per share.

•

Carbon reduction.

•

Total shareholder return.

Progress on FY23 priorities

Progress on FY23 priorities

Progress on FY23 priorities

Progress on FY23 priorities•

Built a performance dashboard so managers canunderstand the status and client focus of their team.

••

Redefinition and internal launch of our new values.

•

Tracked key STEM skill verticals and matched headcountinvestment in core growth markets.

••

Continued to deliver commercial pricing discipline andgrew average bill rates.

•

Began adaptation of the office estate to hybrid working.

Reinforced positioning of our go-to-market brands as
specialists in specific vertical skills.

•

Used an agile approach to enhance consultant productivity
through the new tools.

Conducted employee engagement surveys with 81%
participation.

Promotion of new research, ‘How the STEM world
evolves’, to support thought-leadership positioning.

•

Began the roll out of our new Customer RelationshipManagement (CRM) system and Enterprise Resource
Planning system as part of a unified technology platform.

•

Continued to develop our talent pool through a ‘Leadingwith Purpose’ programme, rolled out to our leadershipcohorts, for improved succession management, andintroduced a new cohort of future women leaders into
Identify programme.

•

Finalised the formal planning for the establishment of a
dedicated Customer Marketing function, to support ourincreasing client and candidate-focus, for implementation
in FY24.

•

Creation of new role of Chief Commercial Officer torepresent the customer on ExCo.

•

Launched Elevate Careers programmes for diversifying
STEM talent pipeline.

••

Creation of new role of Chief Operating Officer torepresent operations on Executive Committee (ExCo).

•

Compensation framework review.

•

Enhanced our operating model with a clearer matrix
structure for core function support to our markets.

Initiatives and immediate priorities for FY24

Initiatives and immediate priorities for FY24

Initiatives and immediate priorities for FY24

Initiatives and immediate priorities for FY24•

Improve the use of data-driven insights to focus our effortson the highest-demand STEM skill verticals, and scaleteams supporting those sectors.

•

Continue the CRM roll out to other major markets with afocus on the change management approach to adopt new
ways of working.

•Embed new values across the Group and evolve our
Employee Value Proposition (EVP).

•

Further refine specialist positioning of our House of Brands
portfolio.

•

Enhance customer-orientated behaviours through bestpractice training and a more globalised sector approach.

••

Build a programme to enhance our People model, focusing
on retaining key talent and driving a shorter time-toproductivity.

•

Drive more customer-centricity into the organisationand embed our Sales Excellence programme across theorganisation.

•

Implement a more efficient set of processes for placing
candidates into international locations.

Continue refinements to processes to improve theemployee experience, share best practice and shorten thepathway to productivity for new hires.

•

Embed the Leadership with Purpose behaviours andextend our leadership development programme.

••

Continue DE&I initiatives.

Expand the remit of our commercial function to improve
marketing effectiveness, pricing approach and client
development approaches.

•

For internal recruitment purposes, launch a data-driven
competency testing framework.

•

Implement/launch a newly created Customer
Marketing function.

•

Continue to optimise our office footprint in line withcurrent working model expectations.

•

Extend L&D offering to equip our people with theenhanced platform skills.

Our approach to ESG*

Our approach to ESG*

Our approach to ESG*

Our approach to ESG*••

Deliver efficiencies so we can transition to net zero.

•

•

•

Build the systems that will provide our clients with accessto the very best talent to deliver their low-carbon
transition plans.

Create a culture where everyone is welcome at SThree so
we empower our people to thrive.

•

Improve diversity across our client portfolio and the STEM
sectors in which we operate.

Build diverse STEM talent communities that enable ourclients to meet their business objectives and make STEM
careers more accessible to everyone.

•

Run or partner on events that build diverse STEM talent
career pathways.

•

18*	Integral to our purpose and strategy is a strong emphasis on our ESG commitments.
We bring skilled people together to build a sustainable future for everyone.

Positively impacting over 150,000 lives by FY24 throughproviding access to decent work and our community
programmes.
Help the world move to net zero by finding clients therenewables talent they need to make the transition.

SThree plc

Annual Report and Accounts 2023

19

Key performance indicators

Strategic Report
Governance
Financial Statements

SThree’s Board and
ExCo review the Group
performance across awide range of measuresand indicators that areconsistent with our strategic
priorities and investor
proposition.
Our key performance indicators (KPIs)
provide a balanced set of metrics thatgive emphasis to both financial and nonfinancial measures, in line with interestsof various groups of our stakeholders.
Remuneration
To help our Board and Executive
Committee align their focus with theinterests of our stakeholders, all of
the KPIs are reflected in the executive
remuneration targets, as per the policy
approved by shareholders at the 2023
Annual General Meeting.

Our Places

Our Platform

Be a leader in markets we choose to serve

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

Net fees

Net fees through global
clean energy business

Basic earnings per share(EPS)

Total shareholder return(TSR)

Operating profit
conversion ratio

Profit before tax (PBT)

Carbon reduction

This KPI is calculated asrevenue less cost of sales, andrepresents the mark-up we
charge to our clients on top
of candidate salaries. It is oneof our fundamental financial
measures as it indicates how
our business is performing
over time. Our FY27 mediumterm target is to grow our net
fees faster than our peer groupacross the aggregate of our
top five markets comparedto FY19.

This KPI represents growth in
the Group’s net fees generated
from placements of candidates
in the renewable energy sector
since FY19. A transition to a
low-carbon future will drive
an increase in STEM job
opportunities. Our target is to
double the size of our global
clean energy business by FY24
versus the base year FY19.

EPS helps to assess theGroup’s profitability per share.
Internally, it is also used forthe vesting assessment of theGroup Long-Term Incentive
Plans. Our ongoing target is toachieve earnings growth forshareholders while balancing
reinvestment to secure future
growth opportunities.

The growth in value of ashareholding over a threeyear period, assuming that
dividends are reinvested
at the closing price on the
ex-dividend date. This KPI
helps to assess the Group’s
performance in the delivery
and maximisation of longterm value for shareholders.
Our ongoing target is togenerate good returns on theinvestments we make andcreate long-term value forshareholders.

This measure represents
operating profit stated asa percentage of net fees.
It measures the Group’s
effectiveness in controlling
costs and managing its
investments for future growth.
Our aim is to operate ourbusiness efficiently and costeffectively with stable margins
and to deliver a mid-termsustainable operating profit
conversion ratio in excessof 21%.

The KPI represents net fees
less administrative expenses,
less interest before adjusting
items. It is a measure of ourunderlying profitability, ourefficiency and how we manage
our cost base. Deliveringa healthy and consistently
profitable growth is important
as we aim to create value forall our stakeholders over thelong term.

In FY23, we announced ourambitious commitment to
reduce scope 1 and 2 carbon
emissions by 77%, and scope
3 carbon emissions by 50%
by FY30, from a FY19 base.
Our medium-term ambition
is to reduce scope 1, 2 and3 carbon emissions by 25%
between FY19 and FY24.
Progress against carbon
reduction is also used as afactor in determining vestingof Long-Term Incentive Plans
granted to executives.

42.4p

51.7%

18%

£78m

8%

£419m 142%
-4% on FY22

growth on FY19

FY23

£419m

FY23

FY22

£431m

FY22

FY21
FY20

£356m

FY21

£309m

FY20

142%
88%
46%
20%

+4% on FY22

+16.3% pts on FY22

FY23

42.4p

FY23

FY22

41.0p

FY22

FY21
FY20

31.8p**
13.9p**

51.7%
35.4%

FY21
FY20

flat in % pts on FY22

85.6%

reduction from baseyear FY19

FY23

18%

FY23

£78m

FY22

18%

FY22

£77m

FY21

-15.8%-2%* on FY22

FY20

17%**
10%**

FY23

-8% YoY

FY22 -44% YoY

FY21£60m**FY21

FY20£30m**

FY20-71% YoY-56% YoY

Result (% growth on base year 2019)

FY23 performance
Net fees declined 4%* YoY; thiswas a resilient performance
underpinned by our strategic
focus on STEM and flexible
talent. Contract remained
stable, up 1%* YoY, while
Permanent was down 22%*
amidst challenging market
conditions.
Based on the market data
available to us as at theend of Q3 FY23, we haveoutperformed our peer group(on a net fee basis versus FY19)
in four out of five top markets(Germany, the Netherlands, theUK and Japan).
R*

In constant currency.

** Adjusted.

20

SThree plc

FY23 performance
SThree’s commitment todouble the size of clean energy
business has already beenachieved. In FY23, net feesfrom renewable businessgrew by 142%* on FY19.
STEM talent continued to
be in high demand among
businesses with strong plans
to mitigate climate change.
Our internal Global Renewable
Energy Network continued
to promote best practices
and guidance on how to drive
future growth within the
renewable energy sector on a
global scale.

Basic EPS increased by 4%
over the prior year; this was
attributable to the lower
operating profit offset by
net interest earned on cash
balances, lower Group ETR
and a decrease of 0.1 million in
the weighted average numberof shares.

During the assessed three-year
period (FY20 to FY23), SThree
plc’s share price remained
strong, outperforming
the basket of comparator
companies. Despite volatile
geopolitical and macroeconomic conditions
persisting in the postpandemic period, the Groupbenefitted from favourable
STEM-related megatrends
and a resilient business model,delivering a good trading
performance.

The ratio has remained
stable YoY, reflecting theongoing exceptional levelsof productivity, that despite
the challenging macro
environment dropped just
2% in the year, combinedwith tight cost control, whilst
also benefitting from spend
recognition timing on theTechnology Improvement
Programme (TIP) (without
impacting delivery). When
excluding the TIP expense of£3.8 million incurred in FY23,
the ratio would be 19.2%.

R

R

R

R
*

PBT increased by 1% on areported basis (down 2% inconstant currency basis) as
compared to FY22, due tolower trading performance,
investments made intechnology, but with stronger
YoY productivity per head
and favourable currency
movements.

In FY23, we continued to make
improvements to the energy
efficiency of our business. We
invested nearly £3.0 million tofund energy-efficient facilities
and equipment in our new
office in Glasgow, UK, andtransitioning some of ourtechnology to the cloud-based
arrangements.

R
In constant currency.

** Adjusted.

Annual Report and Accounts 2023

21

Key performance indicators continued

Strategic Report
Governance
Financial Statements

Our People

Our Position

Find, develop and retain great people

Leverage our position in STEM to deliver
sustainable value to our candidates and clients

Representation of womenin leadership roles

Employee net promoter score(eNPS)

Customer net promoter score(NPS)

Number of lives positively
impacted

This KPI is a measure of gender balance
within the Group and an indicator of
our strategic growth plans leading toa diverse leadership team. In FY23,
we reviewed the definition of womenin leadership to align with the FTSE
Women in Leadership requirements.
This KPI is therefore calculated bytaking the number of women in ExCoand ExCo -1 (excluding administrativeroles) as a percentage of the total of ourworkforce who are ExCo and ExCo -1(excluding administrative roles).

The score is the result of the annual
employee survey that captures regularfeedback from our people about theirexperience of working at SThree.
Our success is reliant on having a
motivated and engaged workforce,so our aim is to never stop listening
to, and acting upon, our people’s
feedback. eNPS helps us identify areas
for ongoing improvement so that we
can ensure SThree is a great place towork, and we attract and retain thebest people.

NPS is a metric that measures thecandidate’s and client’s (both referred
to as customer) experience whenworking with SThree and is the key
indicator of customer loyalty to theGroup. The score is the percentage ofpromoters minus the percentage ofdetractors.

The metric represents the number ofpeople whose lives since 2019 havebeen positively impacted throughinclusive recruitment solutions andcommunity programmes that SThreedelivers. We use our skills and uniqueposition to help communities finddecent, sustainable work that candeliver real social change. Our shortterm target is to positively impact
150,000 lives between FY19 and FY24.

NPS helps us measure and improvethe customer experience and draw
meaningful insights into how ourcandidates and clients view theirrelationships and engagement withour business.

Our short-term target is to achieve 40%
of women in leadership, with a longerterm ambition to achieve 50/50.
*

The comparators for years prior to FY23 areusing a definition which resulted in a larger
population being included and restating has
not been possible due to a lack of data.

39%

of women in leadership
FY23

39%

FY22

32%

FY21

L3: 34%

FY20

L3: 34% L4: 14%*-4 pts on FY22

43 ptsFY23-8 pts on FY22
FY23
FY22

L4: 14%*48 ptsFY21

43 pts51 pts

R

FY23

FY22

52 ptsFY22FY21

50 ptsFY21

FY20

52 pts114,466**
88,741**
55,771**

FY20 15,764**

FY23 performance

FY20 5 pts

Our average global eNPS declined to
43 points. This is still a strong result
which allows SThree to remain within
the top quartile of professional services.
78% of all staff who completed thesurvey believe that SThree builds agreat performance culture throughrecognition, clear performance
objectives and constructive feedback,and supports its people in setting andpursuing challenging career goals.
Key themes that we need to develop
and invest in include hybrid working
environment and organisational
structure, providing our people withmore autonomy and flexibility.
R+29% on FY22

43 pts

FY23 performance
At the end of FY23, women
represented 39% of all roles within
the leadership cohort. In FY23, we
identified that 53% of our core function
leadership are women compared
to 24% of our sales leadership. We
therefore held two focus groups
with women in sales management tobetter understand their experiencein addition to conducting a full
assessment of the employee life cycleof women in sales. This has informed
an action plan for FY24.

48 pts114k lives

We delivered a
resilient performanceagainst record prioryear and challenging
macro-economic
environment.”

Our global NPS score remained
strong at 48 points given growing
complexity in the world of work andhigher customer expectations. Thisscore reflects our commitment tobuilding deeper partnerships with ourcustomers, innovating our systems (wesuccessfully launched the first trancheof the TIP in our US business), andoptimising our processes to ensure
superior service delivery for all ourclients and candidates.

Since December 2019 we havepositively impacted 114,466 lives.
This year, we remained focusedon addressing the STEM skills gap
for our clients through diversifying
the talent pipeline and contributing
to social mobility and equity in the
STEM industries we partner with.
Our new Elevate Careers programme
provided development, coaching andmentoring support to 2,754 existing
and aspiring STEM professionals in
FY23. Through our placements in FY23
alone, we helped 15,292 candidates
access decent work in STEM-relatedindustries.

R

R

Andrew Beach
Chief Financial Officer** Number of lives.

22

SThree plc

Annual Report and Accounts 2023

23

Strategic Report

Strategic progress
Our Places

Strategic progress
Our Platform

Unlocking our unique potential throughUnlocking our unique potential with

data-driven
decision making

major platform
improvements

We continue to focus on the biggest
STEM markets where we are strongest
and where we can offer the most value forour clients.

Deciding where we operate is a dynamic process and we will
move swiftly to open in a new territory, or expand our market
presence, when we see opportunities for growth. Even intimes of economic uncertainty, we continue to invest in the
major markets for STEM talent.

Our presence in five of our regions alone gives us accessto approximately 73% of the total global STEM market.
We continue to outperform our competitors in most skill
verticals across our markets. Each of our regional operations
enjoys strong autonomy, enabling them to tailor services tothe specific needs of their region, but we also standardise
processes across the Group to leverage our proven sales andclient development practices.

At the beginning of the year, we unveiled a new structure
to simplify our reporting on regional performance and alignour leadership to our geographical operational clusters. Our
regional segments are DACH, Netherlands including Spain,
USA, Rest of Europe and Middle East & Asia.

Our geographical footprint
In line with our strategy of choosing to operate where we
see the biggest opportunity to win, we continued to apply adiligent approach to making investments in technology andour people across our core markets.
We are happy with our global footprint and can serve themost important global STEM markets from our current office
footprint and client coverage.
Where we feel we need to expand our presence, we will doso in a considered way, evaluating different expansion options
for serving other markets, including from our existing pointsof strength.

Utilise opportunities of enhanced platform
Improvements in our technology platform are giving us
greater quality market insights, allowing us to enhance theservice we offer our clients. We have introduced new training
to help our people add value for clients.
Plans for FY24
FY23 was all about ensuring we have the right structures,operating models, skills verticals, specialisms and global
company network to support our ‘Leader in STEM talent’positioning. Next year, with the frameworks in place, our aims
will be to:•apply data driven insights to focus market discipline,
pricing and skills vertical investments; and•enhance customer-orientated behaviour through bestpractice training.

Wherever they are in theworld, we want our clientsand candidates to recognisethat when they work with an
SThree brand, they can rely ona high level of excellence.”

Governance
Financial Statements

We began the implementation of ourTechnology Improvement Programme(TIP) this year following a successful
pilot in FY22. It will enable sustainable,scalable growth and capability that
future-proofs the business.
We presented full details of our TIP in an investor briefing
in January. Roll out began this year following a pilot in our
Houston offices in FY22.
The opportunity
We are good at what we do and have a strong business, but
we identified two specific performance improvements that
greater digitisation could bring. First, like all talent businesses,
even though we provide new hires with thorough training
and support, there is usually a period of up to 18 months
before their productivity starts to reach the levels of moreexperienced colleagues. The latest digital technology enables
us to prompt best practice at every stage of the sales process,presenting consultants with reminders of the action most
likely to achieve an optimal outcome. Also, managers can see
real-time visibility of their team members’ activity allowing
them to make supportive interventions earlier, before theoutcome of a sale is decided.
The other opportunity offered by greater digitisation is
simplifying complex, administrative processes such as thoserequired for compliance. The industry’s fastest growing
employment segment is the Employed Contractor Model(ECM) where we employ the candidate on behalf of the client.
It has grown as a share of our business and now constitutes
37% of our net fees. Providing ECM requires considerable
administrative support in order to comply with regulations indifferent territories. Digitisation can reduce the costs and time
involved and improve accuracy.

Nicholas Folkes

Chief Operating Officer (COO)
Nicholas Folkes leads the Technology Improvement Programme.
Before joining us in 2021 as Chief Technology Officer, Nicholas
had successfully run digital transformation initiatives at major
companies including G4S, Tesco and MSCI. His appointment
as COO this year allows him to represent technology at
C-suite level and demonstrates its centrality to all ouroperations planning.

Jelte Hacquebord
Chief Commercial Officer

24

SThree plc

Annual Report and Accounts 2023

25

Strategic Report

Strategic progress
Our Platform continued

Governance
Financial Statements

We’re taking the art ofrecruitment and turning
it into a science.”

Carbon reduction on
FY19

8%

Matt McManus
Managing Director US

FY22: 44%

Together, the multiple productivity improvements that result
from digital systematisation offer the potential to scale at
speed, without a correlating increase in headcount. So thereis the real prospect of a step change in our operating profit
conversion ratio and profit before tax. At the same time,
we can improve the experience and service we deliver toboth candidates and clients, giving us a strong competitive
advantage.

So far this year we have rolled out the enhanced CRM acrossthe US whilst continuing to invite feedback and identify
further potential improvement at each stage. Next year, as we
continue the implementation across our global network, there
will be further configuration enhancement in response to theexperiences of our people using it day to day. From FY25, we
anticipate our platform will be fully deployed and we will be
unlocking further potential for our business.

An improved platform also offers many benefits for
employees. Our people’s experience at work will become
more rewarding as they adopt more effective practices
more quickly. They will have access to data-driven insights,
and more-timely, focused, management guidance to direct
their sales tactics. People will be freed of much routine
administration that was holding them back from being
more productive. Put these improvements together and thepositive impact on day-to-day work should be significant. Job
satisfaction amongst new-hires and experienced hands alike
is likely to benefit, enhancing retention rates.

Reducing our CO2 impact and helping clients reduce
theirsOur main contribution to reducing global warming emissions isproviding the renewable energy engineering specialists neededby companies wanting to decarbonise their operations. Our
clean energy business increased by 28% this year which resulted
in us achieving our target to double the size of our clean energy
business by FY24 (from a FY19 baseline year). Nevertheless, wetake our own emissions seriously and seek to aim to become a
net zero operation by FY50 – see ‘Our commitment to being a
responsible business (including TCFD)’ section for more details.

Development and implementation
SThree has a distinct way of working that has proved
successful in the talent marketplace. We captured thesebehaviours and processes in a blueprint, ready for digitisation,then consulted extensively within the business, explaining therationale of the platform enhancement and discovering frommanagers what they needed the platform to do. As a result,we identified over 300 steps or ‘enablers’ in the blueprintthat have the potential to enhance real-time interactions withclients, candidates and colleagues. As our next step, we will
select the enablers with the biggest expected impact andreturn on investment, to digitalise within sales processes.

Our platform is broader than our technology system – itembraces all our operations. So we continue to look at ourown carbon emissions on our journey to becoming a net zerobusiness whilst also focusing on how we can better support
our clients with their transition plans.
We have predominantly moved to the cloud through thedigital enhancement of our platform, reducing the carbon
footprint of running our own servers. Microsoft, our major
platform supplier partner, has similarly ambitious net zerotargets to ours which will help us decarbonise our scope 3
emissions.
One of the trends we have seen this year is clients seeking
support with achieving their scope 3 emissions reduction
targets. We have responded by starting to upskill our
consultants on how to talk to clients about these topics. We
will continue to look at how we can best reduce our energy
consumption in order to meet client expectations faster.

Case study

For more information on our approach todeliver a recruitment service that adapts toour clients’ evolving needs, please see ourcase study on Real Staffing on our website:sthree.com/annual-report-2023

Although each individual enabler is not revolutionary, bringing
them together to serve as a best practice copilot for allcolleagues, seamlessly integrating with their work, is a stepchange. The data generated and analytical tools will also give
us greater insight into the customers and markets we serve.

26

SThree plc

Annual Report and Accounts 2023

27

Strategic Report

Strategic progress
Our People

Governance
Financial Statements

Unlocking our unique potential bymaking SThree agreat place to work
SThree is a talent business. Attracting andkeeping the best talent is critical to our
becoming recognised as the leader in STEM
talent and achieving our growth ambitions.

Gender pay analysis
Since April 2017, we have been reporting our UK gender pay dataon an annual basis. This is the second year reporting our gender
pay gap on a global basis.

Before taking action, we listen. Across the year, we ran three
Employee Engagement surveys which achieved an average
participation rate of 79%. They showed us what our people
felt SThree’s strengths are and where we most needed to
improve: see table below. The global actions we subsequently
took were guided by the insights these surveys revealed.

All active employees on 30 November 2022 have been includedin the analysis. Employees from Ireland, Singapore and Hong
Kong have been excluded following the closure of these markets.

eNPS score and benchmarking
We want to make SThree the employer of choice and so ouremployee net promoter score is a key metric in measuring
progress. External factors, such as economic and politicaluncertainty, can cause scores to drop across all companies
and sectors, so the measure we study most closely is ourranking against comparable professional services companies.
There are thousands of other professional services companies
in the Peakon employee voice tool index we use. Our aim is toretain our position in the top quartile, which we comfortably
did this year.
Diversity, Equity & Inclusion (DE&I) progress
Only by continuing to make progress in building a diverse,
equitable and inclusive organisation will we harness the fullrange of skills and experience required to meet the needs ofour candidates and clients. Our DE&I initiatives continued
apace this year with the aim of creating an inclusive, highperforming culture, with a focus on representation of womenin leadership.

Our methodology

Metrics we have used to measure our global gender pay gap
are: median (the middle value of a list ordered from highest to
lowest), mean (adding up all the numbers and dividing the result
by the total data points), and the proportion of employees who
identify as women and men in each quarter of the Group fromhighest to lowest paid.
This reduction in the median bonus pay gap has been driven by
a combination of more women in more senior roles, therefore
higher bonuses, and the cost-of-living payment we awarded at
the end of FY22. Nearly 60% of employees receiving this award
were women.
The remaining gap is driven by having more men than women insenior roles (despite improvements), increasing the value of theirbonuses, and by having a higher number of women in junior roles
which decreases the value of their bonuses.

Theme

Feedback and action taken
being able to see a path to advancecareer within SThree

We continue to build on our strengths through recognition, setting clear
performance objectives, and providing feedback enabling career advancement
and progression.

Hybrid working

flexibility and autonomy

As office leases end, we redesign spaces to drive collaboration and autonomy,
and to support flexible working practices. Through various communication
channels we help everyone understand local policies on hybrid working to ensure
the transition to hybrid working environment is safe, efficient and fast. Having
autonomy to deliver agreed results is important to our people and is an ongoing
focus for us.

Purposebeing able to link Group purpose
to organisational strategies andincrease teams’ relevance

Our Group Marketing team has worked hard to collate stories and case studies
from across our business, to showcase our purpose and how we bring it to life.
We have also been updating our values, which will enable our purpose and shape
our future culture.

eNPS score FY23

This year we saw a significant reduction of the SThree global
gender pay gap. The median gap moved from 16.4% to 7.3% andthe mean from 21.2% to 12.6%. This means women earn £0.93 forevery £1 that men earn when comparing median hourly pay, and£0.87 for every £1 that men earn when comparing mean hourly
pay.
This reduction in the global gender pay gap has been driven bya higher number of women holding more-mid-to-senior andsenior roles. In the upper quarter, the representation of women
increased from 37.4% to 44.4% as shown in the graph below.
At a global level, women represent 52% of our workforce, anincrease from 51% last year.
The remaining gap is primarily a result of having more men than
women in more senior and therefore more highly paid leadershiproles, and more women than men in the less senior, lower paidroles (see the below graph).
We also saw a reduction of the SThree global bonus pay gap.
The median bonus gap moved from 61.0% to 52.9%. The mean
bonus gap has remained the same as last year. This means thatwomen earn £0.47 for every £1 that men earn when comparing
median bonus pay and £0.54 for every £1 that men earn whencomparing mean bonus pay.

SThree Group gender pay gap
70.0%
62.6%

60.0%

56.0% 56.4%

56.4%

50.0%
44.0% 43.6%

Performance
cultureFindings

43.6%

55.6%

54.9%
49.3% 48.6%

45.1%

50.7% 51.4%
44.4%

40.0%

37.4%

30.0%
20.0%

43pts

10.0%
0.0%
Men
Women
Lower Quarter

Men
Women
Lower Middle Quarter
FY21

Men
Women
Upper Middle Quarter

Men
Women
Upper Quarter

FY22

Axis X shows the mix of women and men at the four different levels of pay, with ‘lower quarter’ being the lowest paid and ‘upper quarter’ being the highest paid.
Axis Y shows the proportion of women and men at the four different levels of pay, showing movements in distributions between FY21 and FY22.

28

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29

Strategic Report

Strategic progress
Our People continued

Identify women’s talent programme

274
618
10

hours of mentoring provided

hours of learning completed by Identify
participants
development opportunities

The global proportion of men and women receiving bonuses
increased this year, moving from 79.7% to 90.8%. The cost-ofliving payment we awarded at the end of FY22 increased the
proportion of employees receiving at least one bonus award
within the financial year.
Leading with Purpose roll out
We launched our new Leadership with Purpose principles
which set out the four essential roles a leader must master.
All our most senior people managers have now completed
a training programme in these principles and should beapplying them in their day-to-day management. This will drive
our business forward and provide a consistent experience forour people. We will continue to embed the behaviours acrossthe organisation to support the right culture in FY24 when
we will provide a dedicated programme for the next level ofmanagement.
Next year will also see the launch of our Sales Excellence
programme. The initial focus will be on training new staff
during their onboarding process as part of the Speed toCompetence programme, but the longer-term plan is to
involve all members of the sales team so that best practice isspread across the Group.
Identify – our women leadership programme
Now in its iteration year, a fresh cohort of 47 women joined ourIdentify programme which seeks to find and develop our future
leaders, giving them all the support they need to fulfil theirpotential. Participants come from across our global businesswith representation from every market in which we operate.

30

SThree plc

Governance
Financial Statements

All the women have access to an external mentor through oursocial enterprise partners, Femme Palette, and benefit froma speaker series and plenty of networking opportunities. Our
Women in STEM networks in the UK, the Netherlands and the
US provide additional support for women.
Values and evolving our EVP
The focus in the second half of the year was on a review ofour values with a soft launch of newly refined value definitions
to the sales leadership in October. Alongside leadershipdevelopment and a newly defined vision, our values will
be key in shaping our culture as we grow. They set out the
behaviours and way of business that define SThree’s culture
and its distinctive appeal for both candidates and clients, aswell as being essential to making SThree a great place towork. Our values drive all our decision making and determine
our culture. They guide everything we do: leadershipbehaviour, communications, workspace design, our employee
career pathways and more. It is therefore important they areclear so that everyone at SThree understands them and theimportance of being true to our values in everything we do.
Our new internal values are:
• We are all in• We do the right thing• We build partnerships• We think big

Refinement of compensation framework forsales roles
Rewards for our sales staff are an important component of
our Employee Value Proposition (EVP), which for internal
purposes we refer to as our People Promise. So we continue
to take measures to ensure compensation and incentives
are competitive. A review of reward schemes to ensure they
are driving the right performance and behaviours is still inprocess. It will be followed by a comprehensive review of ourbenefits offering across all regions.
In addition to continuing to invest in base salaries on atargeted basis, we improved reward communications,
testing the introduction of total reward statements in
the Netherlands. To give managers clarity and achieve
consistency, we further embedded the global grading
framework by providing a detailed toolkit for HR business
partners and managers to direct their people’s compensation.
Our all-employee share incentive plan continues to be
successful with nearly four in ten employees participatingeach month.

Men
Gender diversity profile as of 30 November 2023

Women

Total

NumberBoard of Directors including Non-Executive Directors

7

4

Executive Committee

11

8

Executive Committee less 1

75

46

61%

Other employees

2,561

1,266

49%

1,295

51%

Total

2,654

1,324

50%

1,330

50%

%

Number

%

57%

3

43%

73%

3

27%

29

39%

For more information on the composition of our Board of Directors, see pages 86 to 87.

Talent management
To further build the appeal of our People Promise weintroduced a new talent management process for all staff
across all core sales and non-sales functions. It will ensure
we have the right career offering for all roles.
Retention and succession planning
Next year we plan to introduce a productivity and retention
programme to identify and address key factors that impact
our productivity and retention. Early features include new
approaches to talent acquisition and evolving our People
Promise. In FY24, we also plan to identify and codify the
success criteria for the top 30 most vital roles within thebusiness so we can invest in succession planning and thetalent management of those individuals.
Future Office programme and hybrid working
Our Employee Survey revealed strong demand for hybrid working
across the Group and a desire for access to hybrid working
options to be clearer and more equitable between offices.
We have opted for a flexible, regional-first approach to working
practices that empowers local leaders to reflect the needs ofthe culture and region. We will keep this approach under review
due to ongoing changing expectations and standards aroundworking practices. We will continue to benchmark and assess
our hybrid practices against local norms, along with internal
data on engagement and productivity, and respond accordingly.
Our future office programme provides for hybrid working: as
office leases end, we are redesigning spaces so they support
collaboration between teams.
Preparing people for platform enhancements
Our TIP is offering multiple opportunities to spread best practiceand to work in new ways that take advantage of data. Where
appropriate, there will be automation of manual processes. We
are working alongside the platform team to understand the newcapabilities and are developing initiatives to support behaviouralchange and ensure people have the skills to adopt new ways ofworking.

New Chief People Officer appointment
Sarah Mason was appointed to the new role of Chief
People Officer in April having previously worked for theGroup between 1998 and 2008, in sales and then senior
HR roles.

Case study

For more information on how we support ourpeople development, please see our casestudy on Lawrence Doe on our website:sthree.com/annual-report-2023

Annual Report and Accounts 2023

31

Strategic Report

Strategic progress
Our Position

Governance
Financial Statements

Unlocking our unique potential bymaking the most of
our powerful brands
SThree’s specialist brands are known
amongst candidates and clients fortalent provision in the key STEM skills
verticals while the SThree Group provides
standardisation across our businesses,
spreading efficiencies and best practice,and coordinating major accountdevelopment.
We have been most successful when we have had company
brands known for a particular specialism. So this year we havebeen taking steps to sharpen the specialist positioning of all
our brands.
Both candidates and clients value expertise in their specialism– be it Technology, Life Sciences, Renewable Energy or
Engineering. For candidates, it offers a real partnership, anorganisation who can guide them throughout their career. For
clients, it promises a talent provider who understands their
particular needs and can supply hard-to-find talent with theskill set they require.
The overarching SThree Group brand presents significant
additional benefits that complement the specialist recruitment
brands, providing the resources, scale and global reach toserve major clients who need talent in a variety of STEM
disciplines, often across different regions. Although we flex
to a country’s culture and respect local nuances, we also
take best practice and apply it everywhere so all customers
experience a marketing-leading service.

New structure and appointments
To raise customer awareness of the benefits of our houseof brands proposition we have been finalising plans for theestablishment of a dedicated Customer Marketing function
for implementation in FY24. This function will support ourincreasing client and candidate-focus. It will coordinate sales
and marketing teams, encouraging the sharing of insights anddeveloping a complete service for major account clients bybringing our global range of STEM expertise and candidate
relationships to play. The appointment of Jelte Hacquebord as
Chief Commercial Officer to drive this initiative, and represent
the customer at ExCo level, is evidence of our determination
to fully realise the potential of these major global clients.
Thought leadership
The main thrust of our marketing effort continues to beestablishing true thought leader status in the STEM talent
sector. Last year, the ‘How STEM World Works’ research
we commissioned attracted extensive coverage and thisyear we followed it with a new study, ‘How the STEM World
Evolves’. It was similarly well received, with 314 instances of
media coverage across press titles including Business Insider,
Associated Press and Asia One, and other numerous trade,
STEM-centric and regional publications.

Case study

For more information on how we support
our clients in talent sourcing, please see ourcase study on Computer Futures, ‘Helping
Optimal maintain their market position
through new hires’ on our website:sthree.com/annual-report-2023

Encouraging people into STEM
We rationalised several programmes designed to widen
and diversify the STEM talent pipeline for our clients under
the new banner of ‘Elevate Careers’. This outreach plays
a crucial role in positioning SThree as the leader in STEM
talent recruitment. It also meets a client need. Our clients are
increasingly coming to us for advice on how to deal with thechallenge of attracting diverse talent. Unlike other industries,
which often attract diverse candidates but face equity
challenges around promotion and development,
STEM industries have an attraction problem they need toovercome first.
Elevate Careers is a range of activities that bring communities
together to help people access and advance along clear STEM
career pathways. We co-create events with partners and bringour expertise to other events, as well as funding scholarships
for women to access development opportunities.
Volunteering
We continued to encourage all our people to takevolunteering leave and participate in local initiatives. Not
only is volunteering consistent with our values and vision to
make a positive impact and support lives, it is also something
our people are keen to do and is an important part of our
Employee Value Proposition.

Our multi-brand strategy –our ‘House of brands’ – reallydifferentiates us. All of our listedcompetitors are single brand.”Jelte Hacquebord
Chief Commercial Officer

32

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33

Chief Financial Officer’s statement

Strategic Report
Governance
Financial Statements

Unlocking our unique potential throughfocused investments
across markets andskill verticals
We delivered a resilient performance
underpinned by our strategic focus on
Contract in STEM markets, while thewider macro-economic environment
remained challenging.
Income statement

On a reported basis revenue for the year was up 1%9 andamounted to £1.7 billion (FY22: £1.6 billion) while net fees
declined by 3% to £418.8 million (FY22: £430.6 million).
The strengthening of our two main trading currencies, theUS Dollar and the Euro, against Sterling during the year,
increased the total net fees by £5.6 million. Therefore,
when presented on a constant currency basis, the net
fees decreased by 4% YoY.
Net fee growth in our Contract business was driven byrobust contract extensions from clients with demand forcandidates with STEM skills across most of regions, with
net fees growth of 1%. This was led by the Netherlands
region, which was up 7%, Rest of Europe, up 3%, andMiddle East & Asia, up 29%, while DACH and USA were
down by 1% and 4% respectively. This performance
was driven by strong growth in Engineering, which was
up 18% YoY, and Technology, up 1%, with Life Sciences
down 14% reflecting global sector conditions. Our
ECM proposition also continued to deliver encouraging
performance and was up by 3% YoY. Group Contract net
fees as a percentage of Contract revenue10 remained
consistent YoY at 21.7% (FY22: 21.7%), and at the end of
the year Contract represented 82% of the Group net feesin the year (FY22: 78%).
The contractor order book11 closed at £183.5 million,
down 3% YoY against a record prior year comparative,
and accounts for approximately four months’ worth of net
fees, providing us with sector-leading visibility into FY24.

Our focus as a specialist staffing
partner in STEM and flexible talentmeans we are uniquely positioned
to service the structural demandof a changing world.”
Andrew Beach
Chief Financial Officer

Permanent net fees were down 22% reflecting
challenging market conditions across all regions, andour planned transition from Permanent to Contract inseveral markets, particularly in the USA and UK. Ourlargest Permanent market, DACH, reported a decline of
8%. Netherlands region was down 1%, and Japan was up
5%. Permanent average fee increased by 6% YoY in theyear, with average permanent fee margin (net fees as apercentage of salary) now at 27.1% (FY22: 25.3%).
Operating expenses decreased by 3% YoY on a reported
basis, amounting to £342.4 million (FY22: £353.1 million).
This decline resulted from lower personnel costs as
average headcount declined by 2% compared to FY22.
The reported operating profit was £76.4 million (FY22:£77.6 million), down 5% YoY in constant currency while
the Group operating profit conversion ratio10 increased
to 18.2% (FY22: 18.0%). Operating profit conversion ratio
reflects the ongoing exceptional levels of productivity,that despite the challenging macro environment
dropped just 2% in the year, combined with tight cost
control whilst also benefitting from spend recognition
timing on the Technology Improvement Programme(TIP) (without impacting delivery). Excluding the TIP, forwhich £3.8 million was expensed in FY23, an operating
profit conversion ratio of 19.2% was achieved. The net
currency movements versus Sterling were favourable
to the operating profit, providing a £2.3 million benefit.
Fluctuations in foreign currency exchange rates
are expected to remain a material sensitivity to theGroup’s reported results. By way of illustration, each 1%
movement in annual exchange rates of the Euro and US
Dollar against Sterling impacts the Group’s operating
profit by £0.9 million and £0.3 million respectively perannum.

10. The Group has identified and defined certain alternative performancemeasures (APMs). These are the key measures the Directors use to assess
the SThree’s underlying operational and financial performance. The APMs
are fully explained and reconciled to IFRS line items in note 26 to theGroup Consolidated Financial Statements.
9.

34

SThree plc

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

Net finance income
The Group received net finance income of £1.6 million
as compared to net finance costs of £0.5 million in theprevious year. This was driven by significantly higher
interest rates applied to the Group’s bank deposits.
Income tax
The total tax charge for the year on the Group’s profit
before tax was £21.9 million (FY22: £22.8 million),
representing a full-year effective tax rate (ETR) of 28.1%(FY22: 29.6%). The Group’s ETR also varies depending on
the mix of taxable profits by territory, non-deductibilityof the accounting charge for LTIPs and other one-off tax
items. The FY23 ETR is lower than in the prior year due
to a change in the profit mix and FY22 being impacted
by unrecognised losses arising from the restructure ofSingapore and Ireland, and the closure of Hong Kong.
Overall, the reported profit before tax was £77.9 million,
down 2% YoY in constant currency and up 1% on areported basis (FY22: £77.0 million).
The reported profit after tax was £56.1 million, flat YoY in
constant currency and up 3% on a reported basis (FY22:£54.2 million).

Earnings per share (EPS)The EPS was 42.4 pence (FY22: 41.0 pence). The YoY
movement is attributable to the lower operating profit
offset by net interest earned on cash balances, lower
Group ETR and a decrease of 0.1 million in the weighted
average number of shares.
The diluted EPS was 41.5 pence (FY22: 39.9 pence).
Share dilution mainly results from various share options
in place and expected future settlement of vested tracker
shares. The dilutive effect on EPS from tracker shares willvary in future periods, depending on the profitability of
the underlying tracker businesses and the settlement ofvested arrangements.

Operating profit£76m
FY22: £78m
Net fees£419m
FY22: £431m

11. The contractor order book represents value of net fees until contractualend dates, assuming all contractual hours are worked.

Annual Report and Accounts 2023

35

Chief Financial Officer’s statement continued

Strategic Report
Governance
Financial Statements

Liquidity management

FY23 Group performance highlights:
Variance
Continuing operations

FY23

FY22

Reported

Like-for-like

Revenue (£ million)

1,663.2

1,639.4+1%

flat

Net fees (£ million)

418.8

430.6

-3%

-4%

Operating profit (£ million)

76.4

77.6

-2%

-5%

Operating profit conversion ratio

12

18.2%

18.0%

+0.2% pts

-0.1% pts

Profit before tax (£ million)

77.9

77.0

+1%

-2%

Basic earnings per share (pence)

42.4

41.0

+4%

+1%

Proposed final dividend per share (pence)

11.6

11.0

+5%

+5%

Total dividend (interim and final) per share (pence)

16.6

16.0

+4%

+4%

Net cash (£ million)

83.2

65.4

+27%

+27%

13

12. Variance compares reported results on a constant currency basis, whereby the prior year foreign exchange rates are applied to current and prior financial year results to remove
the impact of exchange rate fluctuations.
13. Net cash represents cash and cash equivalents less bank borrowings and bank overdrafts and excluding leases.

Dividends and distributable reserves

The Board monitors the appropriate level of dividend,considering achieved and expected trading of the Group,
together with its balance sheet position. The Board aims tooffer shareholders long-term ordinary dividend growth within atargeted dividend cover10 range of 2.5x to 3.0x through the cycle.
The Board has proposed to pay a final dividend at 11.6 pence(FY22: 11.0 pence) per share, which together with the interim
dividend of 5.0 pence (FY22: 5.0 pence) per share, will give thetotal dividend of 16.6 pence (FY22: 16.0 pence) per share for
FY23.
The final dividend, which amounts to approximately £15.3
million, will be subject to shareholder approval at the 2024
Annual General Meeting. It will be paid on 7 June 2024 toshareholders on the register on 10 May 2024.

Balance sheet

Total Group net assets increased to £222.9 million (FY22:£200.4 million), driven by the excess of net profit over thedividend payments, £6.2 million increase in intangible assets
attributable to development costs capitalised under the TIP
and favourable foreign currency movements, partially offset bycost of shares purchased by the Employee Benefit Trust (EBT).
Net working capital, including contract assets, decreased by£2.1 million on the prior year, driven mainly by the slowdown intrading, including reduced contractor order book. Our days sales
outstanding remained largely unchanged at 45.7 days (FY22:45.2 days); a slight YoY increase was mainly due to a change of‘>60 days’ debt profile which went from 7% to 8% of the book.
To reflect the more challenging macro-economic backdrop, we
have increased the provision for impairment of trade receivablesby £4.9 million.
Our business model remains highly cash generative, and wehave no undue concentration of repayment obligations in
respect of trade payables or borrowings.

Investments in subsidiaries
The subsidiary undertakings principally affecting the profitsand net assets of the Group are listed in note 25 to theConsolidated Financial Statements. The recoverable amounts of
the Company’s key trading subsidiaries remained strong in thecurrent year. However, due to a continued underperformance intrading in Luxembourg and Canada, a small impairment chargeof £0.1 million was recorded in the Company’s separate books
for FY23. This impairment charge did not impact the Group
consolidated results.
An impairment loss of £0.9 million recognised by the Company
in the prior year was in relation to three businesses, which were
either restructured or closed down.
Tracker shares
The Group settled certain vested and unvested tracker shares
during the year for a total consideration of £4.5 million which was
determined using a formula set out in the Articles of Association
underpinning the tracker share businesses. The consideration was
settled in SThree plc shares; 320,457 new shares were issued and928,483 of shares held by the EBT were utilised. The arrangement
is deemed to be an equity-settled share-based payment
arrangement under IFRS 2 Share-based payments. There
was no charge to the income statement as initially the tracker
shareholders subscribed to the tracker shares at their fair value.
All current tracker share businesses remaining in existence willcontinue to be reviewed for settlement based on the pre-agreed
criteria each year, until the full closure of the scheme in the next
few years. As at the year end, the valuation of the outstanding
shareholdings was approximately £7.9 million. These settlements
may either dilute the earnings of SThree plc’s existing ordinary
shareholders if funded by a new issue of shares or result in a cash
outflow if funded via treasury shares or shares held in the EBT14.

In FY23, cash generated from operations was £93.3 million(FY22: £64.4 million). The increase was primarily driven by arelease in working capital as the rate of new placement activity
slowed down, partially offset by robust Contract extensions.
Income tax paid increased to £19.5 million (FY22: £18.9 million).
Capital expenditure increased to £8.2 million (FY22: £3.7
million), due to the Group-wide TIP and related IT hardware
costs. The capital expenditure also included costs of leasehold
improvements and fitting out certain parts of our office portfolio.
The Group paid £14.9 million in rent (principal and interest
portion) (FY22: £14.3 million). The Group spent £10.0 million(FY22: £9.9 million) for the purchase of its own shares to satisfy
employee share incentive schemes. Cash inflows of £0.3 million(FY22: £0.5 million) were generated from Save-As-You-Earnemployee scheme.
Dividend payments were £27.4 million (FY22: £14.7 million,
being the final dividend paid in June 2022) and there was a small
cash outflow of £0.1 million (FY22: £0.1 million) representing
distributions to tracker shareholders.
Foreign exchange had a significant positive impact of £2.1 million(FY22: positive impact £4.5 million).
Overall, the underlying cash performance in FY23 was strong,reflecting primarily improved working capital partially offset by
the acquisition cost of own shares purchased by the Employee
Benefit Trust. We started the year with net cash of £65.4 million
and closed the year with net cash of £83.2 million.

3. Acquisitions: strict inorganic growth discipline, witha focus on complementary and value enhancing
acquisitions.
4. Capital return to shareholders: after all organic andinorganic opportunities within an appropriate time
horizon have been assessed, further cash returns toshareholders may be considered.
The Group’s capital allocation priorities are financed mainly byretained earnings, cash generated from operations, and a £50.0
million RCF. This has remained undrawn during the year, but any
funds borrowed under the RCF would bear a minimum annualinterest rate of 1.2% above the benchmark Sterling OvernightIndex Average. The Group also maintains a £30.0 million
accordion facility as well as a substantial working capital positionreflecting net cash due to SThree for placements alreadyundertaken.
At the end of the current financial year, the Group did not draw
down any of the above credit facilities (FY22: £nil).
On 30 November 2023, the Group had total accessible liquidityof £138.2 million, made up of £83.2 million in net cash (FY22:£65.4 million), the £50.0 million RCF and a £5.0 million overdraft
facility (undrawn at the year end).
Andrew Beach
Chief Financial Officer

29 January 2024

Capital allocation and accessible funding
SThree remains disciplined in its approach to allocating
capital, with the core objective at all times being to maximise
shareholder value. The Group’s capital allocation policy isreviewed periodically by the Board and was refreshed at the startof FY24:•

Balance sheet – our intention is to maintain a strong balance
sheet at all times to provide operational flexibility throughout
the business cycle.

•

Dividend – we aim to pay a sustainable dividend, with acommitment to a through the cycle dividend cover range of
2.5x to 3.0x of EPS.

•

Deployment of capital prioritised in the order of:1.

Organic growth: investing in our people and ensuring
sufficient working capital on hand to fund growth in
the contractor order book while developing new
business opportunities.

2. Business improvement: digitalising our business, putting
in place the technology and tools that are key to driving
both scale and higher margins.

14. Note 19 to the financial statements provides further details about all
Group-wide discretionary share plans, including the tracker sharearrangements.

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Financial Statements

DACH
Group net fees

36%

Net fees mix
By country

By service

FY22

FY23

FY23

FY22

Germany

88%

89%

Switzerland

7%

6%

Austria5%5%Impact of megatrends
We have seen the five megatrends continue to drive STEM
demand, with only a slight downturn in our Life Sciencebusiness, reflecting the global market challenge in thisskills vertical.

By skills

FY22

FY23

FY23

FY22

I ndependent
contractors

51%

51%

ECM

21%

20%

Permanent

28%

29%

FY22

FY23

FY23

FY22

Technology

68%

67%

Life Sciences

13%

16%

Engineering

17%

14%

Other 15

2%

3%

Our successful application for apermanent ECM licence will allow
us to further invest in ECM anduse ECM as a growth engine forour business in Germany.”
Christophe Zwaenepoel
Managing Director DACH

There is still a war for talent in the DACH territories as employers
struggle with a shortage of STEM talent. Retirement of the baby
boomer generation and insufficient replacements from younger
cohorts is intensifying STEM skill shortages. That, combinedwith still high inflation rates, is likely to lower GDP growth in
DACH countries.
FY23 performance highlights
DACH region saw net fees decline by 3% YoY, with Contract
down 1% and Permanent down 8%. This was primarily driven
by our greater exposure to small- to medium-sized enterpriseclients, which are more inclined to reduce investment in theface of greater macro-economic challenges than our enterpriseclients. Germany, our largest country in the region (88% of netfees), saw Contract down 1% with overall net fees down 4%,
driven by Engineering up 13%, offset by Technology and Life
Sciences, down 4% and 16% respectively. Switzerland saw net
fees grow 2% YoY driven by Engineering and Technology, with
Austria net fees flat YoY.
Variance
Performance highlights

FY23

FY22

Reported

Like-for-like16

Revenue (£ million)

525

539

-3%

-6%

Net fees (£ million)

149

149

–

-3%

Average total
headcount (FTE)

877

874

–

n/a

Case study

Our people
Like most firms, we continually review our Employee Value
Proposition to ensure we attract and retain talent. It includes our
hybrid working policy, developing the office into an appealing
place where people can connect, collaborate and receive
coaching. We aim to encourage more staff into the officeenvironment by enhancing our spaces as leases come up
for renewal.
The Technology Improvement Programme (TIP), due to roll out in
Germany at the beginning of FY24, will enable us to increase theproductivity of our employees by giving them state-of-the-art
tools to be more effective in their day-to-day work.
We invested in the development of our leadership through the
Leading with Purpose programme. We will also be reviewing
training delivery at all staff levels as it has become rather too
online centred in response to the Covid-19 pandemic. Our
aim is to introduce a more balanced mix of online andclassroom training.
Reasons for confidence
We remain well positioned in flexible working with our strong
ECM offering, whilst our Permanent business has increasingly
moved up the salary/seniority range. Together, that enables us tobe a full solution provider to our customers and grow the value ofeach of our clients.
In FY23, we continued to invest in growing our strategic
accounts relationships and public sector business. The fact that
we succeeded in our application for a permanent ECM licence
will allow us to further invest in ECM and truly use ECM as a
growth engine for our business in Germany.
In the short term, we will continue to operate under volatile
market conditions. However, we remain confident that we canachieve our ambition of doubling our business by FY28, by beinga partner of choice to our customers, employer of choice for ourpeople and creating a high performance culture in which we all
operate to the highest standards, proud to pursue our purpose.

For more information on how we grow
ECM service proposition in DACH, pleasesee our case study on ‘Providing ECM asa service combined with the local STEM
knowledge’ on our website:sthree.com/annual-report-2023

15. Other includes the results of Banking & Finance sector, which was previously
presented separately, and Procurement & Supply Chain and Sales & Marketing.
16. Variance compares FY23 against FY22 on a constant currency basis, whereby theprior year foreign exchange rates are applied to current and prior financial year
results to remove the impact of exchange rate fluctuations.

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USA
Group net fees23%

Net fees mix
By service

By skills

FY22

FY23

FY23

FY22

I ndependent
contractors

13%

15%

ECM

75%

64%

Permanent

12%

21%

FY22

FY23

FY23

FY22

Technology

16%

17%

Life Sciences

38%

43%

Engineering

41%

30%

Other 175%

10%Transformation, collaboration,
putting clients at the heartof what we do – this is what
underpins our strategy ofknowing where to play andwhere we can win. It’s how weare enabling growth and taking
advantage in the largest STEM
market in the world.”
Matt McManus
Managing Director US

Impact of megatrends
Significant investment into clean energy projects has beenannounced in the USA since federal clean energy incentives
were signed into law. 83 new or expanded clean energy
manufacturing facilities are creating demand for nearly 30,000
new jobs while the total number of renewable energy jobs in the
USA is up 50% on 2019. Pharmaceutical companies have also
been ramping up their AI operations in recent months with multibillion dollar investments.
Looking at demographic change, the US has a relatively
favourable profile compared to most large economies, but this is
set to change with the share of the population over the age of 65
more than doubling by the end of this century. The shift will drive
healthcare demand, exacerbating current staff shortages. By
the 2030s, the country could be faced with a shortage of nearly
200,000 nurses and 124,000 physicians.
FY23 performance highlights
Despite the overall US recruitment market declining YoY, we
saw a 10% growth in our top ten clients while the next ten grewby 26%. STEM is demonstrating its resilience against general
economic headwinds. New job activity has been substantially
impacted by a market-wide drop in hiring demand, underpinned
by inflationary and interest rate pressures.
Overall, we saw a net fee decline of 14% YoY due to very strong
prior year comparatives in Life Sciences. Engineering saw
strong growth and we outperformed the market, but we didsee market-driven declines in Life Sciences as job vacancies
declined significantly due to the macro-economic environment.
Contract, supported by improved finisher rates, showedstronger resilience than Permanent, with a decline of 4% and
51% respectively. Engineering was up 16%, driven by demand
for roles within Electrical Engineering, Project Management andConstruction. Life Sciences was down 24% YoY, in line with themarket conditions within this sector.
Variance
Performance highlights

FY23

FY22

Reported

Like-for-like18

Revenue (£ million)

328

338

-3%

-3%

Net fees (£ million)

96

112

-14%

-14%

Average total
headcount (FTE)

473

539

-12%

n/a

Our people
This year we have introduced a new operating model with thegoal of simplifying and standardising ways of working, increasing
cross selling and collaboration between industries. We also
upgraded our hybrid working policy to provide our people withmore opportunities for coaching, collaboration and community
participation.
Reasons for confidence
Worth over $50 billion, the USA has the largest STEM staffing
market in the world. It exhibited resilience in FY23 after two
consecutive years of high double-digit growth. It is projected to
grow 5% in FY24.
We see immense opportunity in the US market, as we still only
capture a relatively small share of wallet of our key clients.
The US is the first region to benefit from TIP, equipping ourconsultants with best-in-class tools and processes ahead of therest of the Group. This builds a solid foundation for scaling ourbusiness profitably and winning market share.
The Engineering skills vertical offers particular potential. SThreeis the ninth largest engineering staffing agency in the world andis the eleventh largest in the USA*.
Our focus in FY24 will be to capture market share throughgrowth within our core vertical markets of Technology (Software
Development and Salesforce), Engineering and Life Sciences(Clinical Research and Quality Assurance).

Awards / Rankings
1

SSG ranked #82 –Largest Staffing Firms in the US*

2 Real ranked #5(up from #6 last year) –Largest Life Sciences Staffing firmin the US**3 2023 Oncon Icon Award –L&D Team

4 Computer Futures –Industry Partner of the Year***

5 Nine people win

WISA (Women in Sales Awards)* Source: SIA data.
** SIA.
*** WICT Network.

17. Other includes the results of Banking & Finance sector, which was previously
presented separately, and Procurement & Supply Chain and Sales & Marketing.
18. Variance compares FY23 against FY22 on a constant currency basis, whereby theprior year foreign exchange rates are applied to current and prior financial year
results to remove the impact of exchange rate fluctuations.

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Netherlands including Spain
Group net fees

19%

Net fees mix
By country

By service

FY22

FY23

FY23

FY22

Netherlands

94%

96%

Spain

6%

4%

By skills

FY22

FY23

FY23

FY22

I ndependent
contractors

55%

55%

ECM

38%

37%

Permanent

7%

8%

FY22

FY23

FY23

FY22

Technology

50%

50%

Life Sciences

5%

6%

Engineering

36%

35%

Other 199%9%The Netherlands is a leading
digital frontrunner in Europe anddigitisation remains a top priority
for many clients.”
Margot van Soest
Managing Director Netherlands & Spain

Impact of megatrends
The region is responding to client demand for digitisation
by investing in AI and cloud infrastructure. It is also seeing
significant spend on decarbonisation. Although hydrogen isstill in its infancy, we anticipate client demand in this sector toincrease in coming years; therefore, we have been building ourcapability to secure a significant part of this market opportunity.
There is a shifting attitude to work. Remote and hybrid working
expanded dramatically during the pandemic but the legal
framework regulating them lagged behind and employers are
realising they may need to fill the gap with their own policies.
SThree, with its state-of-the-art systems for managing contract
employment, is well placed to provide this support.
FY23 performance highlights
Like-for-like, this region saw net fees grow by 6% YoY, withstrong growth in Contract, up 7%, partially offset by Permanent
which was down 2%. The Netherlands, which represents 94%
of the region, saw a net fees growth of 3%, with Engineering up
8% and Technology up 3% YoY driven by demand for skills withinEnterprise Resource Planning (ERP), data and digitalisation
projects. Spain had an impressive year, with net fee growth of
82% driven primarily by Technology.

Our people
Our focus this year has been on retention programmes. We
built on our partnership with Nyenrode University to provide
leadership training for our business managers and tested
improved reward communications with the introduction of
total reward statements.
Reasons for confidence
Two megatrends continue to drive up demand in the
Netherlands STEM labour market: the increasing requirement
for specialist STEM skills linked to future technologies within
Technology and Engineering skill verticals, particularly in relation
to renewable energy, and the reduction in the talent pool thatis resulting from the demographical changes, in particular a
growing proportion of an ageing workforce retiring fasterthan ever.
In Spain we see a demand for contingent labour continuing togrow, particularly within the Retail, Banking and Financial, andEnergy sectors.

Variance
FY23

FY22

Reported

Like-for-like20

Revenue (£ million)

368

324

+14%

+11%

Net fees (£ million)

82

76

+8%

+6%

Average total
headcount (FTE)

422

389

+8%

n/a

Case study

or more information on how we support ourclients within the renewables sector, pleasesee our case study on ‘Sourcing talent foroffshore wind farm projects’ on our website:sthree.com/annual-report-2023

19. Other includes the results of Banking & Finance sector, which was previously
presented separately, and Procurement & Supply Chain and Sales & Marketing.
20. Variance compares FY23 against FY22 on a constant currency basis, whereby theprior year foreign exchange rates are applied to current and prior financial year
results to remove the impact of exchange rate fluctuations.

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Financial Statements

Rest of Europe
Group net fees17%

Net fees mix
By country

Middle East & Asia

By service

FY22

FY23

FY23

FY22

UK

64%

64%

France15%

14%Belgium

18%

15%

Luxembourg

1%

2%

Ireland2%

5%

Impact of megatrends
Our Rest of Europe region is made up of businesses in the UK,
Belgium and France. In these markets, as globally, there is a shift
from Permanent hires to Contract, in large part due to projectspecific hiring. With strong extensions and increased contract
lengths, we saw a 3% increase YoY in Contract net fees.
AI is a hot topic amongst customers. Our report, How the STEMWorld Evolves, revealed the rise of AI and automation caused
concerns among STEM professionals, with 34% worried about
consequent job losses. However, the impact of these twotechnologies on recruitment is yet to be seen and the prevailingview is that they will become another skill verticals, creating
more job opportunities in STEM with a positive impact on thenumber of STEM specialists that companies employ.
The UK market is experiencing a green jobs boom as businesses
seek to decarbonise and reach challenging net zero targets.
Demand for talent in the clean energy sector is expected to grow
YoY; reskilling and upskilling STEM specialists will be essential tobridge the skills gap in this area.
FY23 performance highlights
Net fees saw a decline of 4% YoY. Contract, which represents
95% of net fees for the region, grew 3%, with Permanent
declining 59%, driven by both market conditions and thetransition towards Contract.
The UK, the largest country market in the region (64% of netfees), saw net fees decline by 3% YoY, driven by Engineering,up 10%, as demand increased for roles within Project andConstruction Management, Electrical and MechanicalEngineering, offset by decline in both Technology, down 5%,
and Life Sciences, down 27%. Belgium saw net fees up 13% andFrance was down 3%. Average headcount for the region was
down 9% YoY, with year-end headcount down 24%.

Group net fees

By skills

FY22

FY23

FY23

FY22

I ndependent
contractors

66%

62%

ECM

29%

26%

Permanent

5%

12%

5%
FY22

FY23

FY23

FY22

FY22

SThree plc

FY23

FY23

FY22

FY23

FY22

56%

55%

Japan

45%

44%

Life Sciences

17%

20%

Dubai

50%

36%

Engineering

14%

12%

Singapore

5%

20%

Other2113%

13%

Reported

Like-for-like

22

Revenue (£ million)

400

394

+1%

–

Net fees (£ million)

71

73

-3%

-4%

Average total
headcount (FTE)23

499

547

-9%

n/a

Our people
We built our Employee Value Proposition through several
initiatives this year. All our most senior people managers
completed the Leading with Purpose programme which gavethem training in the four essential roles of leadership. This will
enhance their, and their teams’ performance, as they builda supportive culture. New compensation frameworks wereadopted for all levels as we invested in base salaries on atargeted basis and reviewed reward schemes to ensure they are
driving the right performance behaviours.
Reasons for confidence
Despite geopolitical and economic uncertainties, we
remain confident about the region’s growth prospects. The
implementation of the TIP alongside our focus on STEM will bestrong differentiators, and we remain confident this will enable
the business to capture more market share across this region.
By implementing dynamic and responsive strategies, the regionis actively adapting to meet the evolving needs of its customers.
Besides flexible working offering, it involves a deep understandingof STEM market, knowing the right skills that are vital forclients’ long-term success, and wider shifts in the recruitment
environment. The region’s overarching goal is to maintainfocus and clarity, meticulously track leads and pipelines, andstrategically invest in its people to help them succeed.

Impact of megatrends
Life Sciences and Research-led Healthcare were the key
drivers behind demand for STEM talent in the region. Clients
continued to appoint talent with skills to keep up with increasing
technological complexity. Digitalisation was also a significant
demand driver as clients sought to harness the potential it offers
for business transformation.
FY23 performance highlights
The region saw net fees increase by 3% YoY. Excluding the
restructured businesses in Singapore and Hong Kong, net fees
were up 20% YoY. Japan, which represents 45% of the region,
was up 6% YoY, driven by Engineering and Life Sciences. Japan’sContract net fees were up 32% and Permanent up 5%. Strong
performance was also reported in UAE with net fees up 41%
driven by Engineering.
Variance

Revenue (£ million)

FY23

FY22

Reported

Like-for-like22

43

44

-3%

+1%

Net fees (£ million)

21

21

–

+3%

Average total
headcount (FTE)

185

208

-11%

n/a

To keep up with increasing technologicalcomplexity as life sciences and healthcaremake rapid advances, our customers
are constantly looking to appoint talentfrom our Digitisation and Research-led
Healthcare segments.”
Hashim Kapadia
Regional Sales Director SThree ME&A

44

By service

Technology

Variance
Performance highlights

Net fees mix
By country

By skills

FY22

FY23

FY23

FY22

I ndependent
contractors

31%

23%

ECM

5%

7%

Permanent

64%

70%

FY22

FY23

FY23

FY22

Technology

27%

30%

Life Sciences

14%

19%

Engineering

27%

13%

Other

32%

38%

21

Our people
More than 60% of our regional leadership team have beenwith SThree since joining through our graduate programme.
Such strong retention of some of our best talent demonstrates
we have a compelling Employee Value Proposition andare a preferred employer in the sector. This was confirmed
independently this year when we were recognised as a Great
Place to Work-Certified™ company by the Great Place to Work®
organisation, a global authority on workplace culture.
One of the attractions for graduates is the opportunities we offer
for both mentors and mentees. Beyond their core job role, all
our people have the opportunity to participate in community
initiatives that promote DE&I and ESG goals.
Reasons for confidence
Our specialism in major STEM disciplines, combined with ourglobal reach, gives us a significant edge over competitors in
the region. Our office footprint and consultants immersed in
the prevailing culture, provide the region with insights intoclients’ key challenges. We are well placed to build candidate
relationships and source talent.
In line with our global strategy, we will continue to increase ourinvestment into the Middle East & Asia region, with a focus on
growing our business in Japan and Dubai.

21. Other includes the results of Banking & Finance sector, which was previously
presented separately, and Procurement & Supply Chain and Sales & Marketing.
22. Variance compares FY23 against FY22 on a constant currency basis, whereby theprior year foreign exchange rates are applied to current and prior financial
year results to remove the impact of exchange rate fluctuations.
23. Excludes central headcount located in the UK.

Annual Report and Accounts 2023

45

Stakeholder engagement

Strategic Report
Governance
Financial Statements

Section 172 statement
In accordance with the requirements of Section 172 of theCompanies Act 2006 (the Act), the Directors confirm that during
the financial year ended 30 November 2023 they have acted in a
way that they consider, in good faith, would most likely promote
the success of the Company for the benefit of its shareholders
as a whole, having regard to the likely consequences of any
decision in the long term and the broader interests of otherstakeholders as required by the Act.
Supported by a well-established corporate governanceframework, the Board’s decisions take the long-term interestsof key stakeholders into account, including its employees,
clients and candidates, shareholders and local communities,
along with the impact of our business upon them and thelikely consequences of any planned actions required to deliver
sustainable growth.

The Board maintains close business relationships andpartnerships with these groups, to keep itself informed of thematerial issues relevant to stakeholders. In addition to the regularfeedback that it receives from customers and employees, theBoard maintains an open two-way dialogue with investors
to effectively engage with and communicate our actions tothem. This is integral to the Board’s strategic decision-making
framework focused on those business priorities which will
position SThree to deliver shared and sustainable value for all
stakeholders.
The information set out below, together with the information
on pages 94 to 99 of our Governance Report, explains how
the Board considers and engages with key stakeholder groups
identified as critical to our future success: our people, ourclients and candidates (which we referred to as customers), ourshareholders and our local communities.

The examples of the Board’s principal decisions made over the past year, and how wecreated value for our stakeholders, are provided on pages 50 to 51

Our clients and candidates
Why we engage

Regular engagement with all our clients and candidates(customers) helps us to adapt our business and strategy
by investing in the right vertical niches and improving anddeveloping a service proposition that is more relevant to evolving
customer needs. Ultimately, it helps us remain the STEM talent
provider of choice in our markets and a sustainable value creator.

How we engage•

Key Client Directors appointed among our senior recruiting
consultants to engage with clients at a strategic level.

•

Customer satisfaction surveys.

•

Net promoter score surveys.

•

Digital customer interfaces, videos, webinars, social media
channels and other virtual events.

•

Thought Leadership articles.

•

Elevate Careers – a community programme delivered incollaboration with clients, candidates and industry bodies
to help diversify the STEM talent pipeline. The programme
provides an opportunity to collaborate on hosting events andactions that empower people from diverse backgrounds toaccess career paths into STEM roles.

Our people
Why we engage

Our people’s hard work and commitment to deliver standout
customer experiences are at the heart of SThree’s ongoing
success.
Engaging with our employees and understanding what is
important to them, what challenges and risks they face, aretherefore essential to the Board’s decision making. It helps toinform Group-wide people strategies, develop better policy
interventions, reward schemes, local training plans and share
best practice in finding, developing and retaining talent.

How we engage•

Regular employee surveys.

•

Employee resource groups provide moments of belonging,awareness and allyship whilst influencing policy and people
experience.

•

Our internal community of ambassadors deliver internal
events, volunteering and moments of connection that aligncolleagues to our purpose.

•

Employee focus groups led by Denise Collis, the Senior
Independent Non-Executive Director, a dedicated Board
advocate for employee engagement.

•

Meetings between the CEO, Chief People Officer andmembers of the ExCo on people strategy and initiatives.

•

Other ongoing interactions via Group intranet, leadershipand employee-led forums, CEO Town Halls, webinars, social
media channels and global newsletters on client- and salesrelated matters.

Key interests and concerns in FY23
and our response

As part of Our People pillar we continued to keep investing timeand resources into our people.
In light of the ongoing Group-wide Technology Improvement
Programme (TIP), we were very selective about what initiatives
to focus on, ensuring we spread them over the year and acrossthe Group so that people can still have the opportunity to get
involved but without any impact on their day job or work-lifebalance. We have made several improvements to Group-widecommunication processes, training programmes, remunerationand infrastructure to support employees.

•#STEMSeries virtual events to share industry experts’ advice
and tips on multiple topics relevant to the current work andmarket environment.

Key interests and concerns in FY23
and our response

Through the engagement activities undertaken, we identified
that acceleration of digital transformation and increased
stakeholder pressure to reduce business carbon footprint are
our clients’ key areas of focus. This contributed to the ongoing
demand for STEM professionals with expertise in data analytics,
AI, developing cutting-edge technologies and green systems
architecture, creating new digital products and processoptimisation. This in turn resulted in a significant rise in average
rates for most sought-after IT contractors.
In parallel, our candidates requested to work on innovative
projects and with the latest tech to help maintain their value inthe labour market. Flexible and remote working also continued
to be an ask of our candidates, putting additional pressure on ourclients to meet these needs to attract the best talent.
In response, we continued to innovate our systems andprocesses to maximise service delivery for all our clientsand candidates.
After an intense period of testing, we rolled out the first cohortsof the new integrated platform in the US, to drive greater
operational excellence, productivity and customer experience.
For clients who experience regional talent shortages we utilised
our global talent hotspots and regional specialisms to identify
suitable candidates.
We formed a global core team to work on a new Global Client
Strategy focused on creating a consistent and standardised
approach of growing our key strategic accounts and the way wepartner with them. We aim to enhance our market reputation forthe best client experience.

We have rolled out a ‘Leading with Purpose’ training and‘Strategic Narrative’ (a six-chapter story), to help our global
workforce gain clarity on SThree’s strategy and values, andthus gain their commitment towards the accomplishment of theGroup’s 2027 ambitions.
Our Group-wide TIP, an essential enabler to increase efficiency
and resilience in the way we work internally and with ourcustomers, made significant progress this year. We successfully
delivered the first cohorts of the programme in our key location,
US, which contributed to step-changes to processes that ouremployees follow in their day-to-day jobs.
Within L&D, we developed and rolled out the professional study
policy and worked with the professional bodies to achieve
accreditation for finance team members. We also developedchange management plans and a related training offer to drive
successful adoption of outputs built and delivered under the TIP.

The employee engagement section on pages 96 to 99 in the Governance Reportprovides more detail on Group-wide actions taken in response to employee feedback

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Financial Statements

Our shareholders
Why we engage

We aim to instil confidence in our investors and win their longterm support of our business by providing them with complete,accurate and transparent information about our strategy
including sustainability commitments and the key drivers behind
our operational and financial performance.

How we engage•

Annual General Meetings.

•

Quarterly results presentations and trading statements.

•

Investor roadshows with one-to-one consultations and groupmeetings with large international institutions, sections of the
UK private wealth and retail investor community.

•

Virtual investor briefings and capital markets days.

•

Shareholder perception studies received via the Company’s
stockbrokers and financial advisers.

•

Investor community engagement with the Chair and NonExecutive Directors, to address environmental, social andgovernance issues and our performance.

Key interests and concerns in FY23
and our response

This year when engaging with our investors we focusedon demonstrating our robust financial performance whiletransforming our ways of working, resilience of our businessmodel further supported by favourable megatrends driving
ongoing demand for STEM skills, governance and remuneration,
strategy, capital allocation, and progress on our strategic
priorities including our transition plan towards net zero.
In June 2023, we received an extension of our main £50 million
credit facility, that was due to mature in May 2023. The Group’s
new credit maturity profile which now extends to FY26, with one
remaining extension option to FY27, has reinforced our ongoingstrong financial position.
The Board recommended a final FY23 dividend of 11.6 pence
per share. This final dividend, together with the interim dividendof 5.0 pence per share, amounts to a total dividend for theyear of 16.6 pence per share, an increase of 4% over the FY22
total dividend.
In January 2023, our CEO and CFO held SThree’s Technology
Briefing with the investor community. Our investors were
given an update on the Group-wide TIP, highlighting how thisdifferentiated solution unique to SThree will bring operational
efficiency and enable SThree’s long-term growth.

48

SThree plc

Our local communities
and environment
Why we engage

Local communities are the source of the
STEM talent our clients need to solve
complex world challenges and drive
economic growth. We provide decent
work opportunities within our local
communities and access to sustainable
livelihoods.
We also address the increasing risk ofclimate change through providing the
STEM talent at the forefront of climate
innovation whilst also actively reducing
our own carbon emissions.

How we engage

Community outreach programmes togrow and diversify the STEM talentpipeline:•

Career support initiatives where
we utilise our intellectual capital inrecruitment to provide employability
support to people facing barriers to
employment.

•

Elevate Careers in partnerships
with education, non-profit
organisations, candidates and clients
to empower community members
underrepresented in STEM to accesscareer pathways, helping to diversify
the STEM talent pipeline and provide
access to sustainable income.

•Partnerships with our clientsproviding the skills needed to deliver
projects that contribute towards theUnited Nations SDGs.

Key interests and concerns
in FY23 and our response

In FY23, we evolved our work in building
diverse STEM talent communities andlaunched Elevate Careers, designed tomake STEM industries more diverse
and inclusive.
Elevate Careers replaced all our previous
regional community programmes andshares one global vision and purpose.
Thanks to a standardised approach andshare of resources, it enables us to work
more efficiently, making it easier to scale
and translate across the business tomaximise our impact.

Annual Report and Accounts 2023

49

Stakeholder engagement continued

Strategic Report
Governance
Financial Statements

Illustration of key decisions made by the Board in FY23
The table below shows some of the key decisions of the Board in FY23. The Directors confirm that the deliberations of
the Board incorporated appropriate consideration of the matters detailed in Section 172 of the Companies Act 2006. As
stewards of the Company, the Board recognises that having regard to the needs and expectations of stakeholders is crucial,
as it ensures that SThree is well positioned to deliver long-term sustainable growth for the benefit of all its stakeholders.

Launch of the Leading with Purpose
Launch of the Strategic Narrative (a ‘Six-Chapter’ narrative)
Enhance the employee experience and knowledge of SThree strategy (service proposition) to help them become more successful,
more quickly in their day-to-day jobs.
Background and considerations made by the Board in its
decision making

The likely consequences of the decision in the long term andstakeholder groups affected

The Board approved the development and launch of astrategic narrative – ‘A Six-Chapter story’ which articulates
SThree’s strategy internally, including our destination, current
reality, unique opportunity, and the journey we need to taketo reach our goals. The Board recognises that Group-widecommunication of SThree’s purpose, vision and strategic
ambitions is key to our ongoing success. In later months of
FY22, multiple interviews took place with the ExCo and focus
groups with representation from across the business to reflect
on who we are and where we want to get; it culminated at
the leadership event in Barcelona in October FY22 when thestrategic ‘Six-Chapter’ narrative was unveiled.

Besides enhancing our employees’ understanding of the Groupvision, the strategic narrative builds on skills of our leadershipteam who, by giving the right strategic direction, helps tounleash our people’s potential to deliver SThree’s vision of
becoming the number one STEM talent provider. The launchof the Strategic Narrative was accompanied by the creationof a new SharePoint site giving access to many resources andinformation about SThree’s four strategic pillars.
This initiative is expected to help our employees to better
execute our strategy and, in the longer term, generate more
lifetime value to our business and other stakeholders.

In FY23, a team of SThree’s senior leaders issued the narrativeacross all business units, describing key initiatives and strategic
drivers and how they shape the purpose of each and every
function within the SThree Group.

Build a reputation in the market for best customer experience.
Background and considerations made by the Board in its
decision making

The likely consequences of the decision in the long term andstakeholder groups affected

The Board understands that SThree’s clients value consistency
and dependability in their partnerships. Our current processes
and standards of growing key strategic accounts were viewed
as good but not ideal, with large potential for improvement
at both global and regional level. The Board approved theinitiative to develop a global client strategy, a much needed
coordinated approach to target, grow and partner with SThree’s
strategic customers.

Our new client strategy will define the distinctive value andexperiences that SThree provides to its targeted clients; it willcomprise well-defined processes, tactics and tools to support
the selection and development of our long-term partnerships
with key clients. A standardised approach across all regions
will facilitate more global cooperation on key accounts and willbring alignment with the new CRM system developed as part of
the TIP. In the long term, the global client strategy is expected
to increase SThree’s credibility, reputation, competitiveness andlead to significant repeat high-value business from our clients;
ultimately increasing our market share within STEM sectors.

SThree plc

Strengthening our environmental ambitions with a new science-based target of net zero.
Background and considerations made by the Board in its
decision making

The likely consequences of the decision in the long term andstakeholder groups affected

After a number of Board discussions with the Executive
Team that began in December 2022, the Board approved
the strategic update announced externally on 12 April 2023.
We have updated the market about our Science Based
Targets initiative (SBTi)-verified target of reaching net zero
GHG emissions across the value chain by FY50, and how we
expect to achieve our near-term pathway to deliver on thisambitious commitment. We target a 77% reduction in scope 1
and 2 carbon emissions and a 50% reduction in scope 3 GHG
emissions by FY30 from a FY19 baseline.

SThree’s Board remains committed to tackling SThree’s
environmental impact, aligned to stakeholder expectations. The
Board also considered that SThree’s roadmap towards net zerowould encompass the Group’s targeted action on behaviouralchange, operational adaptions and influencing its end-to-end
value chain. This will also coincide with our growing investmentin the clean energy business and strengthening supply-chain
management through our TIP.

See net zero transition plan on page 71

We want to be an attractive employer for our existing andpotential employees, who want to work for companies whichhave clear plans and commitments to help shape the future andtackle climate change.
Expected outcome for shareholders: we understand theinvestment communities need to decarbonise their investment
portfolio and, as such, our net zero target and roadmap will
ensure our investors have the data and efficiencies needed tomeet their reporting and targets.

Executive appointments
Changes to SThree’s organisational structure and leadership.

Launch of the Global Client Strategy

50Committed to net zero target by 2050

Background and considerations made by the Board in its
decision making

The likely consequences of the decision in the long term andstakeholder groups affected

In April 2023, following close consultations with the People
Leadership Team, the Board approved the appointment of Sarah
Mason as a new Executive Committee member and Chief
People Officer. Sarah brings with her highly relevant experience,
having spent time within sales and staffing organisations,
including SThree for ten years, between 1998 and 2008.

The above leadership changes are expected to put us in thebest possible position to capitalise on the opportunities in frontof us.

In addition, in August 2023 we announced the appointment ofJelte Hacquebord as Chief Commercial Officer (CCO), who has
been pivotal to the success of one of our biggest sales regions
and brings an enormous amount of experience in building
excellent client relationships and overall sales businesses.
In his role, Jelte will be responsible for all revenue channels,
sales function and marketing across all regions, while steering
the direction of business growth and overseeing the market
investment strategy.
Effective from 1 September 2023, Nicholas Folkes, previously
Chief Technology & Information Officer, became Chief
Operating Officer (COO) to ensure consistent leadershipand strategy delivery in technology, transformation andbusiness operations.

The appointment of Sarah Mason, who takes a practical,
outcome focused, collaborative approach to change, will further
support the Board’s efforts to create high-performing, inclusive,
learning culture within SThree. We want our people to be able
to see how we aim at developing their potential, accelerating
their careers and helping them to perform at their best.
With the appointment of Jelte Hacquebord as CCO we aim tobring all key commercial activities (sales, marketing, blueprint
and other sales projects) under one global function, to improve
our focus on driving and accelerating growth through a clear,consistent and measurable customer strategy, as well as an
optimal go-to-market and customer delivery approach.
The appointment of Nicholas Folkes as COO will maximise ouropportunities to become more efficient and effective in how we
operate, as we navigate our transformation journey.

Annual Report and Accounts 2023

51

Our commitment to being a responsible business (including TCFD)

Strategic Report
Governance
Financial Statements

Ourcommitment
to being a
responsible
business

ESG targets
and progress
Since FY20 we have monitored our ESG performance against key targets that align tothe areas most material to our business, reflecting our business model and stakeholder
priorities. Our ESG targets contribute to the success of our business, aligned with ourstrategic pillars.
In addition, we undertook analysis to understand the UN SDGs that we can impact, andaligned our strategy to deliver relevant outcomes to the targets and indicators establishedwithin the SDG framework.
Reduce scope 1 & 2 emissions
by 77% and absolute scope 3
emissions by 50% by FY30

We aspire to increase
representation of women in
leadership to 50/50

To positively impact
150,000 lives by FY24

Doubling the share of our global
renewables business by FY24

Progress

114,466 lives positively
impacted by SThree since
1 December 2019.

142% growth in our clean
energy business net fees
since FY19 (baseline year).

31% increase in scope
39% women in leadership
1 and 2 and 12% reduction in positions*.
scope 3 in FY23 from FY19
(baseline year).

FY23 activities

15,292 accessed decent
work through SThreeplacements.

28% growth in our clean
energy business net fees
YoY in FY23.

26% increase in absoluteemissions in FY23 incomparison to FY22 due toa return to pre-pandemic
operations.

47 women participatedin our leadership talentdevelopment programme
Identify.

Our Places

Our Platform

Our People

431 accessed our career
support programme.
2,754 existing and aspiring
STEM professionals
accessed Elevate Careers
programme with coaching
and mentoring support
provided by SThree.
3,094 hours of volunteering
supported people in our
local community.
Alignment tostrategic pillars

Our Position
Our People

Sustainable
Development
Goals

Case study

For more information on our Responsible
Business practice, please see a case study on
our partnership with Earthly on our website:sthree.com/annual-report-2023

52

SThree plc*

In FY23, we reviewed our definition of women in leadership and aligned it to the FTSE Women on Boards Leadership index/recommendation which defines leadership as
Executive Committee and Executive Committee minus one (excluding administrative roles). As of FY23, SThree adopts this definition, and our data is reflective of this within
this Annual Report.

Annual Report and Accounts 2023

53

Our commitment to being a responsible business (including TCFD) continued

Strategic Report
Governance
Financial Statements

Building an
inclusive
future foreveryone

Elevating our people

In FY23, we continued to build a high performing, inclusive
culture. People remain a fundamental part of our core strategy,
enabling our performance and heightening the impact wehave on all of our stakeholders. In FY23, we continued to makeprogress in the following areas:••

Our purpose of bringing skilled
people together to build thefuture is focused on empowering
people to reach their full potential
whilst using their skills to drive
innovation and progress acrossthe world. Our social impact
goes beyond our colleagues
and candidates, deliveringoutcomes for all stakeholders andcontributing to the UN Sustainable
Development Goals.”Gemma Branney
Global Director of Purpose and Inclusion

54

SThree plc

We understand that company culture is ever evolving andwe continue to prioritise the development of our own culture
across the global business. Over 150 colleagues delivered
internal networks and activities to enhance our culture.
This includes activities surrounding International Women’sDay, Black History Month, World Environment Day, as wellas touch points throughout the year. In addition, in the US
and UK we launched a new data capture process to enable
colleagues to share their race and ethnicity data with thebusiness, improving our insights surrounding diversity,
informing future priorities for the business. In FY24 wewill continue to embed DE&I data collection across ourglobal business to ensure we can align to the Parker
Review requirements.
Colleague engagement continues to be a KPI for thebusiness, a metric which provides important insights inrelation to development, retention and productivity. In FY23,
we conducted regular town halls to inform our people,
delivered eight focus groups with our ExCo members, four
focus groups with Non-Executive Directors, delivered culture
co-creation workshops with 15% of our people and delivered
our Engage survey achieving an eNPS of 43 (FY22: 51 points).
Active listening has been a key part of our People Strategy in
FY23, ensuring colleagues’ voices contribute to the evolutionof our culture.

•

Our SThree Academy continues to be a significant resource
for colleague development alongside in-person training
and regular performance reviews which include personal
development planning. In FY23, our colleagues accessed
41,264 hours of learning.

•

Our ambition is to achieve 50/50 representation of womenin leadership. In FY23, we launched the third cohort of ourtalent accelerator programme with 47 women participating.
The programme increases engagement, retention andlikelihood of promotion of women.

“ I’ve found my journey with the Identify programme
to be immensely enriching. This initiative has not only
granted me access to a diverse array of specialised
training and webinars hosted by inspiring external
speakers but also facilitated connections withremarkable women from around the globe who sharesimilar values and goals. I truly enjoyed the external
mentorship, where I delved into topics that were
important to me on a professional level.”
Esther Wilz
Commercial Manager, SThree Berlin

Elevating careers

In FY23, we brought together the numerous community
programmes we deliver into one high impact upskilling
programme aimed at diversifying the STEM talent pipeline,
Elevate Careers. Working in partnership with 39 partners,
including community organisations, industry bodies and clients,
we delivered activities to elevate the STEM careers of 2,754
people from diverse communities. Our programmes included
CV reviews, job search advice, skills development sessions andindustry panel events.
“	As a neurodivergent person, I always appreciate
people sharing how they advocate for themselves.
It’s something that can be challenging to navigate.”
Elevate Careers UK Workshop participant
June 2023“	This is the most helpful, transparent webinar for careertransition I’ve heard.”
Elevate Careers USA Workshop participant
October 2023

In FY23, we developed a global partnership with Women Who
Code, a charity whose mission is to empower diverse women to
excel in tech careers. SThree contributed £86,000 to fund 3,700
scholarships for women on their programme and ran workshops
for 1,239 women within the Women Who Code community.
Together we are supporting more women from diverse
backgrounds into tech careers, SThree’s largest STEM market.

Elevating our community

Contributing to our local communities is a long-standing part ofour corporate identity which is demonstrated by the 40 hours of
paid volunteering leave every colleague can utilise each year. In
FY23, 85 ESG Ambassadors arranged activities to support theirlocal community. This included raising £119,025, contributing
over 980 items as gifts in kind and volunteering 3,094 hours. Fulldetails of the organisations we support and the impact we have
had can be found on pages 10 to 18 in our ESG Impact Report.
“ Our colleagues have a strong ethos of doing good.
Their passion and energy to give back to their local
communities through fundraising, donating items,
skills sharing and using their 40 hours of paid volunteer
leave transforms communities and creates a better
future for everyone.”
Francesca Greaves
Global Purpose and Inclusion Manager

Case study

For more information on how we support
local communities, please see a case study
on our partnership with Aleto Foundationon our website:sthree.com/annual-report-2023

Annual Report and Accounts 2023

55

Our commitment to being a responsible business (including TCFD) continued

Strategic Report
Governance
Financial Statements

STEM skills
fuelling a
low-carbon
futureThrough our materiality assessment
it is clear that climate change
is a critical topic to all of our
stakeholders. As a STEM staffing
specialist, we are committed tobeing led by climate science andour net zero targets reflect this.
We are committed to not only
reducing our impact but to providing
the STEM talent the world needs
to decarbonise.”

970

placements in clean energy

28%

YoY growth in our clean energy business8%

reduction in carbon emissions since FY19

The green skills that will build the future

Through climate-related scenario analysis we have identified thegrowing opportunity related to the role STEM skills will play inthe low-carbon transition. This is materialising as we have seen
our clean energy business grow by 142% since FY19, when we
set a target to double the size of our clean energy business tomaximise the opportunity identified.
McKinsey estimates 202 million new jobs may be needed todeliver net zero by FY50 and the LinkedIn Green Skills Report
2023 estimates the need for green skills is double the pace ofgreen talent entering the job market. Decarbonisation is one of
the most material megatrends impacting SThree.
For further details, see page 4

We continue to strengthen our position as a talent partner to
net zero, growing our sustainability credentials and throughpartnering with clients to address their green skills gap. In FY23,
we placed 970 candidates into clean energy roles.
In FY23, we continued to deliver green skills development
opportunities as part of our Elevate Careers programmes.
Throughout this year, 308 women attended workshops
delivered in partnership with Women in Renewable Industries
and Sustainable Energies (WRISE) and New England Women in
Energy and Environment.

Taking meaningful climate action

For over a decade SThree has shown a commitment to climate
action. In FY23, we strengthened our commitment throughsetting SBTi-verified targets.
For further details, see page 71

We demonstrate transparent reporting on our carbon emissions,progress towards our targets and our net zero roadmap which isdetailed within the following TCFD disclosures.

Andrew Beach
CFO and Executive Sponsor of climate risk

56

SThree plc

Annual Report and Accounts 2023

57

Our commitment to being a responsible business (including TCFD) continued

Strategic Report
Governance
Financial Statements

TCFD report
Task Force on Climate-related Financial Disclosures statement
SThree has supported the recommendations of the Task Forceon Climate-related Financial Disclosures (TCFD) since FY20.
We confirm that we are reporting consistent with all the TCFD
Recommendations and Recommended Disclosures in the Annual
Report and Accounts 2023.
By this we mean the four TCFD recommendations and the 11
recommended disclosures set out in Figure 4 of Section C of thereport entitled ‘Recommendations of the Task Force on Climaterelated Financial Disclosures’ published in June 2017 by the
TCFD. We have also considered the TCFD additional guidance(2021 TCFD Annex), specifically the ‘All Sectors Guidance’ inpreparing the disclosures. We are therefore compliant with therequirements of the UK Listing Rule 9.8.6(8)24.
This section contains the relevant disclosures or otherwise
provides cross-references where the disclosures are locatedelsewhere in the report. In preparing them we have had to makeseveral assumptions, and while we are satisfied that they are
consistent with the TCFD recommendations, we will continue
to monitor TCFD guidance as it evolves and will consider
opportunities to enhance our future disclosures.

Governance pillar

The Board appointed the Chief Financial Officer (CFO) as the
Executive Board member who acts as senior sponsor for all
climate-related matters including climate risk, metrics andtargets. The CFO reports progress to the Board on a regularbasis. With over 15 years’ experience as a listed company
CFO, extensive risk management knowledge, an active
member of the Group ESG Committee and Chair of the
TCFD Steering Committee, the CFO is best placed to ensure
the business assesses and monitors the impact of climate
risks and opportunities, informing business strategy andgrowth ambitions.
In addition, the Chief Executive Officer has appointed
an Executive Committee (ExCo) which includes the seniorleaders within the business. The purpose of the ExCo is to
direct the Group strategy including the achievement of
performance targets and mitigation of risks. The ExCo
conducts regular business reviews related to strategy,
risk management (including climate-related risks) andperformance including progress towards ESG targets.

The ExCo reports to the Board and escalates both risk and ESG
matters as appropriate. The Board reviews strategy at least twicea year.
In addition, the ESG Committee, which includes members of
the ExCo, with Non-Executive Directors’ attending on a rotationbasis, meets quarterly to discuss and report ESG specific topics.
These topics are then discussed at the Group Risk Committee,
ExCo, Group Remuneration Committee and the Board.

SThree plc

SThree’s ESG Committee has representatives from the ExCo,
including the Chief Executive Officer, Chief Financial Officer,
Chief People Officer and Chief Legal Officer, as well as
individuals from key strategic markets and departments.
The ESG Committee meets quarterly to direct the Group ESG
strategy, policies and implementation of key changes across thebusiness. This includes identifying climate risks and providing
oversight of the assessment and mitigation of these risks.
The review of climate-related risks occurred each quarter
during FY23.

During the reporting period, the Board agenda included:

In order to provide the right level of oversight to both climate risk
and opportunities, the ESG Committee has formed two subgroups which include:•

an update on ESG priorities and progress towards agreed
KPIs. The Board questioned business engagement andsupport, offering sponsorship of key ESG topics as required;••risk review, including discussing climate risk statements, risk
appetite, tolerance and Key Risk Indicators (KRIs);•

TCFD progress updates were provided by the CFO to giveassurance to the Board that we would meet all compliancerequirements. This provided an opportunity for the Board toquestion actions and progress, and influence the direction of
the TCFD Steering Committee as required;•discussed and agreed new science-based net zero targets
aligned to SBTi; andTCFD Steering Committee, formed in FY22, which
includes leaders from across the business with expertisein risk management, financial planning, strategy, ESG
and reporting. The TCFD Steering Committee provides
recommendations to the ESG Committee on the assessmentand management of climate risk, processes to ensure
climate risk informs financial and strategic planning, andthe governance of climate risk. During the current year,
the TCFD Steering Committee implemented 12 actions
to improve controls and processes of collating information
on how the climate-related risks and opportunities
impact SThree.

•

the Board discussed the role of the ESG Committee andin order to increase the Board’s oversight of ESG-related
topics, including climate risks and opportunities, the Board
agreed that a Non-Executive Director seat will be held on thecommittee in FY24.

•

Global Renewable Energy Network (GREN) includes energy
sector leaders from across the business who come together
to learn, share and collaborate on actions that improve theperformance of our renewable energy business, maximising
the opportunities identified through scenario analysis andsupporting the achievement of performance targets. During
the reporting year, GREN continued to develop its reachacross SThree’s regions, promoting uniformed processes andbest practices in support of future growth of our renewableenergy business. GREN’s key initiatives completed in FY23
include global implementation of the new blueprint to guidea coordinated approach to grow our strategic clients; rollout of a job intensity dashboard and monthly newslettersproviding our leadership with critical insights.

24. In considering the consistency of our disclosures with the TCFD Recommendations and Recommended Disclosures we have had regard to, among other things, the documents
referred to in LR 9.8.6B and 6C, as applicable to the financial year 2023.

58

To oversee the governance of risk management, including
climate-related risks, the ExCo has formed a Group Risk
Committee. In addition, to support the management of climaterelated matters and wider ESG ambitions, the ExCo establishedan ESG Committee.

ESG Committee

Board oversight
TCFD recommendation: Describe the Board’s oversight of climate-related risks and opportunities.
The Board engages with stakeholders on matters of businessstrategy, performance and environment, social and governance(ESG), including climate change. Continuing to integrate ESG
impacts into the business and providing clear, transparent
reporting on ESG matters remains a priority for the Board. The
Board’s experience includes a range of skills and knowledge
in relation to risk management and risk-informed strategic andfinancial planning which supports the implementation of the
TCFD recommendations across the Group. Full details of theBoard’s experience can be found on pages 86 to 87. The levelof Board oversight is considered appropriate for the ESG risks
identified by the Group.

Management oversight
TCFD recommendation: Describe management’s rolein assessing and managing climate-related risks andopportunities.

Annual Report and Accounts 2023

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Our commitment to being a responsible business (including TCFD) continued

Strategic Report
Governance
Financial Statements

Climate change governance framework

Risks pillar
Identifying and managing climate-related risks
TCFD recommendation: Describe the organisation’s
processes for identifying, assessing and managing
climate-related risks.

SThree Board

Oversight of business strategy and performance, including material ESG factors.

Audit & Risk Committee

Oversight of the effectiveness of theGroup’s Risk Management systems
and processes. Reviews assurance
over mitigating controls.

Remuneration Committee

Nomination Committee

Oversight of the Group’s
remuneration policy and employee
incentive arrangements.

Oversight of continuing developmentof an adequate pipeline into the
Executive Team for succession andbench strength purposes.

CEO

Executive Committee

Undertakes regional reviews to identify risks and opportunities with regional leadership teams.
Responsible for the management of risks and recommending risk appetite to the Board.
Develops Company strategy in line with Board appetite.

ESG Committee

Identifies, assesses and mitigates climate risks andopportunities, ensuring integration into strategic andfinancial planning.

Global Directorof Purpose andInclusion

Implementation ofclimate-related scenario
analysis, and stakeholder
engagement to ensure
delivery of actionplans. Oversees thedevelopment of climate
targets anddata reporting.

Global Renewable
Energy Network

Energy sector leaders
who work on actions
that grow our renewableenergy business.

Group Risk Committee

Responsible for reviewing and assessing strength ofcontrols related to climate risks and reporting updates onrisks to the Executive Committee, Audit & Risk Committee
and the Board.

TCFD Steering
Committee

Providesrecommendations to
the ESG Committee
on the assessment andmanagement of climate
risk, informs financial andstrategic planning.

Climate Risk
OwnersResponsible for themonitoring of climate
risks, developing andimplementing mitigation,and escalating changes
within risk environment
to the Group
Risk Committee.

Our existing Group Risk Framework is designed to identify,
assess, score and monitor all risks. In addition, risk mitigationplans and timelines are determined by the appetite and tolerance
for risks as set by the Board and directed by ExCo.
A responsibility for identifying, assessing, and where appropriate
mitigating climate-related risks and opportunities is delegatedto the ESG Committee. The Committee’s approach toidentifying climate-related risks includes utilising market
research data, external partner insights and internal business
reviews. Our strategic review process asks senior leadersfrom across the business to identify any current or emerging
risks within their markets, with key questions around climaterelated market changes and policy. These are then discussed
at local management meetings and escalated to the ESG
Committee, who in turn, ensures the right mitigation measuresand controls are in place. In addition to our strategic review
process in FY23, we also renewed our materiality assessment,
conducting interviews, stakeholder surveys and desk research
to further identify risks and opportunities. Additional risks andopportunities were then reported to the ESG Committee,
informing risk management and mitigation priorities.
We utilise climate-related scenarios to assess the potential
magnitude and likelihood of specific climate-related risks andopportunities under the varied parameters and assumptions ofeach scenario, quantifying the financial impact on net fees, thesame financial metric used across the Group’s Risk Framework.
Once assessed, climate-related risks are assigned a risk owner
who is responsible for building and implementing the mitigation
controls related to that risk. The overarching mitigation control
involves tracking progress against targets using measurement
indicators, horizon scanning to identify changes that could
trigger additional transition risks and implementing procedures
and solutions to overcome them. This is reported on a quarterly
basis to the ESG Committee.
To date climate-related scenario analysis has demonstrated
that there are no immediate risks and therefore, climate change
continues to be an emerging risk to the business. However,some of the Group principal risks are, to an extent, impacted byclimate change, and therefore since FY22, where applicable,
our principal risks reflect elements of the climate-related risks
identified through scenario analysis. These risks are regularly
reviewed by the Group Risk Committee and twice a year by
the Board. Further details of these risks can be found in our
Risks section on pages 76 to 82 and more details around risk
management governance can be found on page 76.

Integration with Group’s Risk Framework
TCFD recommendation: Describe how processes for
identifying, assessing, and managing climate-relatedrisks are integrated into the organisation’s overallrisk management.
Climate change is an emerging risk to SThree and has thepotential, to varying degrees, to impact our business in the
short, medium and long term. We face potential physicalenvironmental risks from the effects of climate change, including
extreme weather events, alongside potential regulatory andtransition market risks associated with the shift to a low-carbon
economy. However, these also present opportunities.
The process for assessing and identifying climate-related risks
is the same as for all Group’s principal risks and is describedon pages 76 to 77. The risks are reviewed and assessed on an
ongoing basis, and formally at least twice a year, by the Group
Risk Committee. For each of our principal and emerging risks,
the Group Risk Framework details the controls we have in place,
who is responsible for managing both the overall risk and theindividual controls mitigating it. We monitor risks throughout theyear to identify changes in the risk profile.
In summary, the Group Risk Committee is responsible for:•evaluating, monitoring and reviewing principal and emerging
risks including climate-related risks;•

ensuring climate risk is integrated into the Group Risk
Framework;•

maintaining oversight of climate risks where they impact
Group principal risks; and•reviewing and assessing the strength of controls in place forclimate risk. This assessment is reported to the Board on abi-annual basis.

Any material changes relating to ESG matters, climate risk andtargets are also included within the Chief Financial Officer’s
statement (executive sponsor of climate risk) which is deliveredat each Board meeting.
Read about the Group’s Risk Framework on pages 76 to 77

ESG Ambassadors

100+ ambassadors across the business deliver local climate action,
engage colleagues in climate-related issues and provide local insights to the ESG Committee.

60

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Annual Report and Accounts 2023

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Our commitment to being a responsible business (including TCFD) continued

Strategic Report
Governance
Financial Statements

Strategy pillar

Risk and opportunity identification and assessment

The impact of climate change on SThree
TCFD recommendation: Describe the impact of climate-related risks and opportunities on the organisation’s
business, strategy and financial planning.

TCFD recommendation: Describe the climate-related risks and opportunities the organisation has identified overthe short, medium, and long term.

We have the right strategy (see diagram 1), which is informedby climate risks and opportunities and includes our climatetransition plan to net zero.
Through climate-related scenario analysis we have identified
no immediate climate risks to our business, its strategy,
performance or liquidity. However, we understand theimportance of climate change on our stakeholders and therefore
the Group’s exposure to climate-related risks and opportunities
is regularly considered in our strategic and financial planning, ourcapital allocation decisions and in operational management. It
was also considered when preparing the Consolidated Financial
Statements, in particular as part of assessment of the Group’s
long-term viability and its flexibility to adapt operations toclimate-related risks and opportunities. For further details seenote 1 to the financial statements.
We also understand that climate change and its associatedimpacts are causing systemic and exponential disruption to
wider society. One of the global megatrends is decarbonisation
which requires extensive innovation and change. Climate change
will have a unique impact on our clients and the STEM skills theyrequire to redesign and innovate business models that align witha net zero future.

Our role in supplying the STEM skills, which are needed tofacilitate this change, is a key opportunity identified throughscenario analysis which has influenced our strategic priorities.
We are well positioned to respond to the growing demand forgreen skills and can quickly respond to growing demand forhighly skilled talent as the global economy reconfigures towards
decarbonisation.
In addition, the decarbonisation of our own business plays
an important role in ensuring we meet the requirements ofour clients and can access new business opportunities. As aresult, we have set carbon reduction targets and have been on
our journey to net zero since FY18. We have also embedded
sustainability criteria into our technology investments and, as
we implement new procurement processes, select new officefacilities and reimagine ways of working post the Covid-19
pandemic, we are integrating sustainable methods. This year wehave invested £3.0 million in these initiatives, primarily to fundenergy-efficient facilities and equipment in our new office inGlasgow, UK, and transitioning some of our technology to thecloud-based arrangements.

Guided by our climate-related scenario analysis, and risk
management articulated on pages 61 to 63, the climate-relatedrisks and opportunities that could have a potential impact on
SThree Group are detailed below, along with mitigating actions.
To assess the materiality of climate-related risks andopportunities, we used the following timeframes:•

short term: up to five years to 2028;•

medium term: five to 15 years from 2028 to 2038; and•long term: beyond 15 years from 2038 to 2050.

Our likelihood assessment is an estimated probability ofpotential impacts:•

low: very unlikely to unlikely;•

moderate: likely to occur; and•high: likely to very likely to occur.

These risks and opportunities are global in nature and there are
only modest variations in their relative significance for each of
our business segments. Where appropriate, we refer to specificgeographies. Based on potential financial or strategic impact, atpresent we identify no risks which will significantly impact ourlong-term strategy or business model, though management willcontinue to monitor our regional businesses’ performance andtheir response to climate events.
Refer to the subsequent section, Metrics & Targets on pages
72 to 74, for further information on measurement indicators,
including our performance against them.

Table 1. Our key climate-related risks and opportunities
Measurement
indicators

Risk/opportunity

Potential impact and SThree’s response

1. Transition Risk
Diagram 1. Here is how our strategic pillars shape our journey towards low-carbon economy

Market% net fees
generated from oil
and gas sector

Fossil fuel sector exposure

Our Places

In order to build our market position, we develop andnurture a diverse green skills pipeline to maintaincompetitive advantage as a talent partner to the transition
towards a low-carbon economy. In addition, within ourmarkets we select geographies with low physical climate
risks to minimise disruption to our people and contractors.

Our People

Attracting talent to our business and on behalf of ourclients; meeting the growing sustainability expectations ofcandidates to provide access to the best talent.

Less than 4% of net fees globally are derived from oil and gas
clients. Under a low-carbon transition, potential net fees fromthese clients could be lost due to divestment and reduction inclient demand. The risk to SThree would be two-fold on revenue
and operating expenses – a potential material loss of revenue, in
addition to still maintaining the consultant expenditure to recruit
into this area of the market when there are limited opportunities
available.
Business segments potentially affected:

Our Platform

Building operational efficiency to decarbonise
our value chain.

Our Position

Strengthening our position as a sustainable staffing
partner, meeting client, candidate, colleague and investor
expectations to grow our business.

Timeframe (term):
MediumLong

Moderate

High

Likelihood:
Low

Analysis by the International Energy Agency
shows that the majority of energy employment
is already driven by investment in clean energy
sectors. With a strong renewable energy
proposition, we believe we have already pivoted
our activities towards finding talent in these skill
sets and therefore see limited risk in the declineof hydrocarbon-based energy investment.
In FY24, we will continue to build our renewableenergy proposition through developing casestudies and proof points to demonstrate ourexpertise and commitment.

The US and the Netherlands

Short

In FY22, the ExCo agreed to an Energy Sector
Position Statement for the business which
outlined the key energy sector focus areas of
the business. This enables leaders to grow ourenergy business informed by risk.

Over the coming years we will also continue
to build the sustainability literacy levels of ourclient relationship teams to ensure they can fully
understand clients’ sustainability requirements
and can also explain SThree’s net zerocommitments.

Further information on risk and materiality assessment can be found in the Risk management section on page 76

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Our commitment to being a responsible business (including TCFD) continued

Strategic Report
Governance
Financial Statements

Our key climate-related risks and opportunities continued
Measurement
indicators

Risk/opportunity

Potential impact and SThree’s response

Measurement
indicators

Risk/opportunity

4. Transition Risk

2. Transition Risk
Market
Maintaining market share in rapidly expanding markets
Decarbonisation continues to be a key megatrend in our business(see page 4). Through scenario analysis we have identified
opportunities for significant growth which could materialiseat pace, particularly under a renewable-led growth future (ourscenario analysis of 1.5˚C). There is a potential risk that we do notrespond quickly enough to maximise these opportunities and as aresult lose market share.

% net fees
generated fromclean energy
sectorFor details on potential impact and SThree’s
response, see Transition risk 1 (Market/Fossil fuelsector exposure) on page 63.

Reputation% reduction incarbon emissions

Changing candidate and client preferences
Environmental concerns are becoming increasingly front of mind
when candidates consider employers. There is a risk candidates
opt to work with staffing providers who can demonstrate strong
green credentials and SThree loses competitive advantage if we do
not align to candidate expectations.

% energy procured
from clean sources% clean fleet
within the
Company

Growing headcount will ensure we can meet the demand for
STEM skills in decarbonisation projects.
Business segments potentially affected:
Business segments potentially affected:

Group-wide

Timeframe (term):
MediumLong
Timeframe (term):

Likelihood:
Low

Moderate

Short

High

MediumLong

Low

MarketAddressing the multiple skills requirements of clients
As part of the low-carbon transition, clients require multiple STEM
skills within their business. The risk is that SThree could missopportunities to deliver across multiple skills within one client due
to our brand structure and how our delivery teams operate.
For example, demand for IT candidates to solve big data
challenges continues to rise rapidly across all industries,
particularly during the transition to a low-carbon future. Energy
clients require both engineering and tech skills which are two
specialisms separated into two different SThree brands rather than
one service supplier.
Business segments potentially affected:
Group-wide

MediumLong

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SThree plc

In addition, we began the introduction of our new
CRM system which will improve our data acrossboth clients and candidates. We also mobilised
a new client strategy following the appointmentof our new Chief Commercial Officer. Ourstrengthened approach to clients alongside
the new system will ensure opportunities are
identified and maximised, enabling our ability toservice clients across multiple skills and roles.
These projects will be ongoing throughout FY24
and FY25.

ModerateHigh

5. Transition Risk
Reputation
Operating within high-carbon industries
High-carbon emitting clients are increasingly facing divestment
and stranded asset risk as a result of changing consumer
preferences and government policies. The risk to SThree is
two-fold, loss of net fees from these clients and the reputational
damage of operating within high-carbon emitting sectors.

% net fees
generated fromoil and gas
placements

The Energy Sector Position Statement approved
by ExCo in FY22 defines how we operate within
high-carbon industries and the monitoring wehave in place to mitigate any potential risks
derived from this work. We monitor our workwithin high-emitting industries and reportbiannually to the ESG Committee. Any change
which may heighten the impact of risk isescalated to ExCo.

Business segments potentially affected:
Group-wide

Timeframe (term):
MediumLong

Moderate

High

Likelihood:
Low

Likelihood:
Low

Following a brand refresh we have improved
the interlink between our house of brands andcontinue to evolve our marketing to strengthen
our position as a holistic STEM talent pipeline. In
FY23, we continued to strengthen our position
through launching a tool to capture case studies
which enables our sales teams to highlight ourcredentials across sectors and skills.

Short

Timeframe (term):
Short

Number ofplacements madewithin clean
energyModerate

In FY23, we launched Elevate Careers which is asocial impact programme designed to diversify
the STEM talent pipeline. Through collaboratingwith clients, industry bodies, education andcharitable organisations we deliver programmes
to attract more talent into STEM roles, including
green skills. Through this work we grow ourcandidate pipeline but also highlight ourcommitment to talent development. In FY24,
we will be continuing to grow our collaboration
network surrounding green skills.

In FY24, mobilising regional carbon reduction
actions will be a key priority with annual
milestones and targets being implemented until
we achieve net zero.

Likelihood:

3. Transition Risk

The role we play in bringing skilled people
together to build a sustainable future is core to
our business and is demonstrated throughout ourmarket proposition.

We demonstrate a leadership position in
relation to our climate action which has been
demonstrated since setting our first carbon
reduction target in FY18. In FY23, we announced
SBTi-verified short-term and long-term net zerotargets. In addition, we maintained our CDP B
score, published our ESG Impact Report andcontinued to be listed in the FTSE4Good and in
the Financial Times Climate Leaders listing.

Group-wide

Short

Potential impact and SThree’s responseHigh

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Our commitment to being a responsible business (including TCFD) continued

Strategic Report
Governance
Financial Statements

Our key climate-related risks and opportunities continued
Measurement
indicators

Risk/opportunity

Potential impact and SThree’s response

Policy and legal
Exposure to changing government
Some large energy and infrastructure projects are influenced
by government. To respond successfully to these tenders andwin contracts, SThree requires investment in consultants, andsometimes additional certifications.

% net fees
generated fromclean energy
sector

The risk, which is outside of SThree’s control, is that the level of
preparation work for large renewables projects is an investment
we must make as a potential vendor, however tender outcomesmay change. Often the timeline and budgets for these projects
are delayed and reduced. These changes are often in response tochanging government policies and priorities. This could result in
SThree having areas of operational costs which face delayed or
reduced revenue opportunities.

Timeframe (term):Long

Moderate

High

Increased carbon emissions

There are opportunities for SThree throughout
this timeframe, which often last for upwards offive years. SThree can evaluate over this timethe internal resources required to assist clients,
without committing to long-term costs whichhave a larger payback period.

The risks to SThree are:Through the GREN we will continue to build
resources and tools opportunities. This willcontinue to be a key priority in FY24 and beyond
to support the identification and realisation of
new as we see engineering and green skills
demand grow.

Group-wide

MediumLarge infrastructure projects which are subject toregional and national government approval, havevery long timeframes, from initial investment
through to final installation and ongoing
operation.

By understanding the timeline for these projects,
utilising external project data tools and mapping
clients’ requirements at each stage throughout
the timeline, we ensure we resource correctly ateach stage of the project.

Business segments potentially affected:

Likelihood:
Low

Potential impact and SThree’s response

8. Physical Risk

6. Transition Risk

Short

Measurement
indicators

Risk/opportunity

As global temperatures rise, our reliance on cooling will increase. It
is predicted that cooling requirements could triple by 2050 (Fossil
fuelled future scenario).

% reduction incarbon emissions% energy procured
from clean energy
sources

In FY23, we announced SBTi-verified net zerotargets which includes transitioning to 100%
clean energy by FY30. In addition, our officeselection criteria prioritise low-carbon offices
which includes offices with self-generatingenergy opportunities.
We continue to invest in carbon offsetting;however, our priority is decarbonisation. We
will continue to work with our partner Earthly
who provides verified offsetting solutions. We
currently offset scope 1, 2 and limited scope
3 emissions to ensure we support innovative
offsetting solutions whilst we transition to net
zero. The cost of offsetting was £47,684 in FY23.
More details on offsetting can be found on
page 71.

1. The increased operating costs to cool office spaces.
2.	Access to renewable energy as demand increases acrossall markets.
3.	The increased carbon offsetting costs to purchase carbon
credits whilst we transition to net zero.
4.	The reputational damage of increasing our carbon footprint
rather than limiting emissions/achieving carbon reduction
targets.
Business segments potentially affected:
Group-wide

Timeframe (term):
Short

MediumLong

Moderate

High

Likelihood:Low

9. Transition Opportunity

7. Physical Risk
Impact of extreme weather on operational
performance
Extreme weather events occasionally impact the markets inwhich SThree operates and can, at times, have an impact onaccess to offices and technology as well as access to sites forour contractors. The risk is that this could lead to a reduction in
productivity due to lack of access to offices or colleagues’ inability
to work due to power outages. In addition, our contractors may
have reduced access to sites to deliver their contracted hours.
The current risk is relatively small, and during the reporting period
we experienced no financial losses due to severe weather events.
Across our 33 locations only six locations have been identified as
at risk. Global warming could cause significantly more extreme
weather events in the longer term, increasing the number ofbusiness locations affected (Fossil fuelled future scenario).
Business segments potentially affected:
USA, Rest of Europe (the UK), DACH (Germany), and ME&A

Number of days’
work lost fromsevere weather
eventsAs part of the Group’s business continuity
planning, the offices identified as at risk haveplans in place to ensure operations can continue
if they are impacted by the weather. The
Covid-19 pandemic and the need to implement
remote working at pace tested the effectivenessof our business continuity planning. Where gaps
in the plans have been identified these are being
proactively addressed. Each country has incident
management teams to manage any severe
weather events ensuring disruption is minimised
while colleague safety is paramount.
Our office footprint is in mature markets whereplanning and building controls are robust which
supports the mitigation of this risk. In addition,
our office selection criteria consider physicalclimate risk. This will impact our long-term
decision making on future new markets andbusiness growth opportunities.

MarketResponding to the changing demands of the market
We are dynamic and flexible in our approach and can adapt to newmarket requirements with agility and pace.
Our flexible approach alongside offering full staffing complianceexpertise and at times additional ‘value-add’ offerings such astrucks, IT equipment and adjacencies for wind projects. Our
expertise and proven track record in delivering compliant staffing
solutions provide competitive advantage to clients and potential
clients who are sourcing STEM talent to deliver their low-carbon
transition plan.

Business segments potentially affected:% net fees
generated fromclean energy
sectorWe have a strategic review process which isoverseen by our ExCo. This process regularly
reviews our markets and new opportunities toensure we are investing in the right way.
We have a proven track record in pivoting ourconsultants to respond to changing market
opportunities. Most recently, we demonstrated
this through the changing market needs during
Covid-19.
Continuous market reviews ensure weunderstand large tenders coming to market, andcan map out recruitment requirements at eachstage, enabling us to build relationships withappropriate clients throughout the value chain.
Our Global Renewable Energy Network shares
best practice approaches to project mapping
and planning which helps our teams to maximise
opportunities.

Group-wide
Timeframe (term):
Short

MediumLong

Moderate

High

Likelihood:
Low

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SThree plc

Timeframe (term):
Short

MediumLong

Moderate

High

Likelihood:
Low

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Our commitment to being a responsible business (including TCFD) continued

Strategic Report
Governance
Financial Statements

Our key climate-related risks and opportunities continued
Measurement
indicators

Risk/opportunity

Potential impact and SThree’s response

Measurement
indicators

Risk/opportunity

Potential impact and SThree’s response

12. Transition Opportunity

10. Transition Opportunity
MarketGrowth of clean energy generation and associatedtechnologies% net fees
generated fromclean energy
sectorFor details on potential impact and SThree’s
response, see Transition opportunity 9 (Market/
Responding to the changing demands of themarket) on page 67.

Materially increased net fees from large infrastructure projects(e.g. offshore wind) and local changing energy generation mix, willlead to investment into technologies and available government
grants for clients, which will be invested into talent requirements todeliver projects.

Reputation

Maintain CDP
Score

Emergence of the ‘green recruiter’
Increasingly, clients are asking for SThree’s ESG targets andstrategy, as such there is an opportunity to stand out from ourcompetitors by highlighting SThree’s green credentials andcommitment to delivering both environmental and social impact.

% reduction incarbon emissions

For details on potential impact and SThree’s
response, see Transition opportunity 11(Reputation/Alignment to low-carbon clients) on
page 68.

In European markets there is an emergence of small, sustainable
recruitment agencies who solely work with low-carbon clients.
SThree has the potential to also compete in this niche market
and obtain competitive advantage given the climate leadership
position, experience and compliance benefits already in place.

Additionally, the growth of green innovation will create new STEM
job opportunities. LinkedIn research highlights growing demand
for green skills. In 2023 green skills demand increased by 12%
alone. Predictions from IRENA and other industry bodies highlight
unprecedented growth in green skills in the coming seven years.
SThree is well positioned to meet the growing demand for STEM
talent which will support our growth ambitions.

Business segments potentially affected:

Business segments potentially affected:

Group’s European markets

Group-wide
Timeframe (term):

Timeframe (term):
Short

Medium

Short

Long

Long

Moderate

High

Likelihood:

Likelihood:
Low

MediumModerate

Low

High

11. Transition Opportunity
Reputation

Maintain our CDP
Score

Alignment to low-carbon clientsAs the market moves towards a low-carbon future, companies
are reviewing their own transition plans. Increasingly they arequestioning the environmental impact of all suppliers. SThreehas been working on carbon footprint management and carbon
offsetting for over a decade. Our long-term environmental
strategy, targets and transparent reporting provides a competitive
advantage.
We experience an increased demand to clearly evidence ourclimate ambition and carbon reduction plans as a supply partner.
Given minimal differential economic incentives, candidates oftenchoose to work for a more socially conscious company – this could
extend to SThree itself as a recruiter who aligns themselves to a
low-carbon solution, providing opportunities to grow net fees.

% reduction incarbon emissions

We continue to be market leaders in ourenvironmental action with clear targets andmetrics. In the reporting period we announce
SBTi-verified targets and maintained our
CDP score.
Doubling the share of our clean energy businessby FY24, and intentionally growing our green
business highlights our alignment to a lowcarbon future whilst reducing the reputationalrisks of working with high emitting clients.
We continue to build our position as a thought
leader in regard to the green skills gaps
which is demonstrated through us co-hosting
programmes with clients, women in renewableindustries and sustainable energy as well as otherkey partners.
Through a strategic, embedded approach to ourrole in climate action we are not only positioning
ourselves, but we are driving outcomes aligned
to sustainable development.

Business segments potentially affected:
Group-wide

Timeframe (term):
Short

MediumLong

Moderate

High

Likelihood:
Low

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Our commitment to being a responsible business (including TCFD) continued

Strategic Report
Governance
Financial Statements

Climate-related scenario analysis

Our transition to net zero

TCFD recommendation: Describe the potential impact of different scenarios, including a 2°C scenario, on theorganisation’s businesses, strategy and financial planning.
SThree has been utilising climate-related scenario analysis since
FY20. We assessed the financial implications of climate changerelated risks and opportunities under three scenarios alignedwith the NGFS climate scenario framework. The first scenario(‘Green revolution’) is prepared considering orderly transition led
by growth in renewables where an average global temperature
increases by 1.5°C or less; this scenario is most aligned with our
net zero commitment. The second scenario (‘Disruptive change’)considered disruptive climate change with an average global
temperature reaching 2°C. The third one (‘Fossil fuelled’) is a
scenario where global temperatures increase by more than 3°C.

We utilise these three scenarios to ensure all potential risks
and opportunities are identified, and that we are testing ourresilience under each scenario as political landscapes shift andthe likelihood of each scenario materialising shifts. Our net zerocommitment is aligned to a renewables-led scenario (global
warming limited to 1.5°C) which aligns to the Paris Agreement,
our commitment to doing the right thing and also to maximise
the opportunities we have identified within this scenario. Eachrisk and opportunity are analysed based on an estimatedimpact on net fees, aligned to our risk management framework.
Using net fees as a measure of impact allows for a consistentcomparison of risks and opportunities and their impact acrossdifferent scenarios.

SThree uses the NGFS climate scenario framework to stress test key climate-related risks and opportunities. The key outcomesfrom the climate-related scenario analysis inform SThree’s targets and growth opportunities, and wider business strategy, e.g.
how we grow our value proposition as a green recruitment partner to mitigate reputational risk and realise opportunities withboth clients and candidates as outlined above.

Green revolution(orderly 1.5°C)

Disruptive change(disorderly 2°C)

Fossil fuelled(hot house 3°C+)

This orderly scenario assumes that climate
policies are immediately implemented, with anincreasing carbon price levelled that ensures
the world does not exceed 1.5°C warming.

This disorderly scenario assumes thatsignificant climate policy is not implemented
until 2030. In order to reach the 2°C mitigation
goal, the transition from this point happens at a
far quicker pace than in the orderly transition.

This scenario incorporates the policies andmeasures that governments around the world
have already put in place and assumes that nofurther policy action will be taken. The scenario
assumes only cautious implementation ofcurrent commitments and plans. Emissions
grow until 2080 leading to 3°C+ of global
warming and increased physical risks.

The economy is strong, driven by new
industries providing green solutions andtechnologies such as AI, robotics and battery
technology. The development of circular
economy business models disrupts legacy
industries, removing incumbents. Global
opportunities expand in all markets as
consumer technologies are democratised.
Under this scenario, the energy sector
mix shifts rapidly, as the world transitions
away from fossil fuels and towards lowcarbon power, heat and mobility solutions.
Consumer concern over the environmental
sustainability of products and services ishigh, and candidates actively disassociatewith companies not following the renewable
revolution.

Engineering and finance sectors benefit fromthe rapid development of a carbon dioxide
removal industry – funding for which comesin the form of increased energy prices forbusinesses and consumers.
Under this scenario, the energy sector mix
does not change noticeably until after 2030,
at which point actions taken are relatively
late and limited by available technologies, toenable a sharp reduction in emissions. The
pace of change claims many victims within
high-carbon industries who are left withsignificant levels of stranded assets.

New technology solutions are not developed
quickly or cost-effectively enough to disrupt
legacy industries. Energy prices are kept
suppressed by the lack of any meaningfulcarbon price and the lack of progress in carbon
removal technologies.

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SThree plc

Full details of our net zero targets can be found on page 72

Over 87% of our carbon emissions derive from scope 3, with our supply chain being the most significant element of our carbon
footprint. Due to the size of SThree and our relatively modest spend with multi-national tech and insurance companies decarbonising
our supply chain is a challenging priority which will take time. As a result, we have developed a transition roadmap which reflects
both near-term and long-term actions across our most material carbon emissions.

2024

2030

2050

Utilising our new property
criteria to open SThree’s first
net zero operating officein Glasgow.

Agreements in place with alllandlords to procure 100%
clean energy and utilise
self-generating technologies
where possible.

30% car fleet hybrid or electric.

100% car fleet clean fuelled.

By FY50, the megatrends
accelerating the demand for
STEM talent will be reflected in
how we operate. The speed ofchange, our STEM placements
facilitate, will build a future
where:

Scope 1 & 2 targets
100% clean energy

100% clean car fleet

At least seven offices will be
reviewed utilising our clean
property selection criteria.

All offices will be reviewed
utilising our clean energy
criteria.

Low-carbon travel

Introduce and embed a travel
platform that helps influence
behaviour change.

Reduce emissions from travelby 50% through low-carbon
travel options and remotecollaboration technology.

Colleague commuting and working from home

Commence an audit of green
commuter benefits to identify
new opportunities.

Office portfolio to reflectclean commuting with active
travel facilities and transport
connections. All offices will be
reviewed using our clean officeselection criteria.

Decarbonise our supply chain

Engage top 20 high emitting
suppliers in carbon reduction
targets.

Achieve 50% reduction in
supply chain emissions throughinfluencing strategic suppliers
and reducing consumption.

Clean office portfolio

Scope 3 targets

Significant disruption on sectors with offices,manufacturing sites located in regions andareas of high physical risk.

The financial impact assessments for the above presented scenarios are based on the same method of calculations as those used for principal risks evaluated under the SThreeGroup-wide risk framework.

Within all three scenarios we identified no climate changerelated risks that would have a material impact on SThree, ourperformance and strategy. This is consistent with the assertion
that risks associated with climate change are not expected tohave a material impact on the longer-term viability of the Group.

SThree has had climate science aligned targets since FY18 and this year we announced SBTi-verified near-term and long-term net
zero targets. We are committed to transitioning to a net zero business, aligned to a 1.5°C future in order to mitigate the risks andmaximise the opportunities outlined in this report.

However, some growth opportunities may arise from therole STEM skills play in decarbonisation (see details on thismegatrend on page 4) and our proposition as a green supplier(see further details on pages 18 to 19 related to our strategicpillars). It has resulted in SThree setting a target and strategy
to maximise this side of our business. In addition, the scenario
analysis continues to inform wider business strategy, e.g. how
we grow our value proposition as a green recruitment partner
to mitigate reputational risk and realise opportunities with bothclients and candidates as outlined above.

Commence the implementationof supply chain data
management within digitaltransformation.

• the energy sector will betransformed, utilising lowcarbon technology to power
our offices;• the travel sector will bedecarbonised and clean
vehicles will dominate how wetravel;• metaverse technology will
influence how people work,
come together and collaborate,
impacting offices, commuting
and travel; and• the world is changing andSThree is providing the STEM
talent that will create a net zeroworld for our business.

The transition to net zero will take time. Our commitment is to take action today, implementing carbon reduction activities andoffsetting our carbon emission. We have developed a multi-year partnership with Earthly, a non-profit focused on empowering
companies to invest in nature. Through our partnership we offset carbon by investing in nature-based solutions that combat climatechange whilst delivering social outcomes. Our approach to offsetting is focused on scope 1, 2 and limited scope 3 emissions. It is a
short-term mitigation strategy whilst we reduce our carbon emissions and move to net zero. More information on Earthly and the
project we fund can be found on page 8 of the ESG Impact Report 2023.

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Our commitment to being a responsible business (including TCFD) continued

Strategic Report
Governance
Financial Statements

Metrics & Targets pillar
Metrics

Metrics

TCFD recommendation: Disclose the metrics and targets used by the organisation to assess climate-related risks
and opportunities in line with its strategy and risk management process.
In order to manage risks and opportunities the Group’s ESG
Committee have set metrics and targets which are reviewed
quarterly with any material changes escalated to ExCo forreview and further escalation to the Board.
As indicated in the table 2 below, certain metrics and targets aredisclosed at other most appropriate locations of the Strategic
Report.
Our overall climate commitment is to be net zero acrossabsolute scope 1, 2 and 3 emissions by FY50. As recommended
by the SBTi, we have set both near-term and long-term targets
which were verified by SBTi and align to a 1.5°C future. Our
targets are:

Long-term targets

SThree commits to reaching net zero GHG emissions across thevalue chain by FY50. Aligned to the SBTi net zero standard, thiscommitment is a long-term target to reduce absolute scope 1, 2,
and 3 GHG emissions by 90% by FY50 from a FY19 base year.

Climate-related opportunities
Description

Key initiatives and progress FY23

Net fees generated throughrenewable business

28% (FY22: 29%) YoY growth.

Reduce absolute scope 1 and 2 GHG emissions by 77% by
FY30 from a FY19 base year.

•

SThree commits to increasing annual sourcing to 100% ofelectricity from renewables by FY30 from 28% in FY19.

•

Reduce absolute scope 3 GHG emissions by 50% by FY30
from a FY19 base year.

In addition to climate reduction targets, in FY19 we set a target to double the size of our clean energy business by FY24 in responseto the opportunities identified through climate-related scenario analysis. In FY23, our clean energy business grew by 28% resulting in
SThree achieving this target.

142% (FY22: 88%) growth from FY19 baseline.

Double the size of our clean
energy business by FY24 (fromFY19 baseline).

Expanded the reach of our Global Renewable Energy Network toensure wider collaboration and sharing of best practice.

 or more information see
FStrategy overview, Our Placeson page 18

Introduced new client management tools as well as communication
channels to share relevant news and opportunities.

Near-term targets•

Targets

Evolved our tools to accelerate our response to client tenders anddue diligence queries.
	For more information see KPI section on page 20

Remuneration
Description

Key initiatives and progress FY23

Directors’ remuneration report
metrics – 10% weighting of LTIP
award performance measures(carbon emission reduction)

In FY23, we made progress towards our scope 3 target andunderstand more focus is required to achieve our scope 1 and 2 nearterm target.

ESG targets, including climate
targets, as outlined in the KPI
section of this Annual Report.

Table 2. TCFD recommended disclosures – metrics and associated targets
Metrics

Targets

Streamline Energy and Carbon Reporting(SECR) FY23

Climate-related risks (Transition risks)

72

Description

Key initiatives and progress FY23

% reduction in scope 1 andscope 2 carbon emissions

In FY23, our scope 1 and 2 emissions increased by 368% YoY, and
31% since our baseline year which was due to an increase in car
fleet emissions and in certain premises related emissions. This is
two-fold; business returning to pre-pandemic operating models
and an improvement in carbon data. We have however experienced
our premises emissions overall decrease by 61% since FY19.

Reduce absolute scope 1 and
2 GHG emissions by 77% by
FY30 from a FY19 base year.

% reduction in scope 3 carbon
emissions

In FY23, scope 3 emissions increased by 13% YoY but decreasedby 12% since our baseline year. We have remained committed toreducing emissions from our supply chain which equates to 69% of
our carbon emissions. Our supply chain emissions have decreased
by 5% since FY19.

Reduce absolute scope 3 GHG
emissions by 50% by FY30
from a FY19 base year.

% energy procured from clean
energy sources

The total energy consumption used to calculate emissions (kWh)reduced by 2% YoY and 79% since our baseline year.

SThree commits to increasing
annual sourcing to 100% ofelectricity from renewables by
FY30 from 28% in FY19.

CDP score

We continued to evolve our approach to climate risk managementin FY23, ensuring climate risks and opportunities inform strategy
as outlined in this report. In the prior year, our CDP score was B. At
the time of approval of this Annual Report, management was still
awaiting the release of FY23 score.

To maintain a B score in FY24.

SThree plc

Carbon reduction
SThree is committed to providing transparent carbon reportingto our stakeholders and to help facilitate this in FY23 we adopted
a new carbon data management platform. This provides us withstronger oversight and the ability to report more widely acrossscope 1, 2 and 3 emissions. We have therefore expanded thescope of our data and restated FY22 and FY19 (the baseline year
for our targets) to ensure our methodology is consistent.
In FY23, our scope 1 and 2 emissions equated to 3,072 tCO2e(market based) and scope 3 equated to 20,662 tCO2e, anaverage impact of 8.94 tCO2e per FTE. This represents a YoY
increase in carbon emissions of 26% and an intensity increaseof 48%. A contributing factor to the increase in emissions is theavailability of improved data accuracy and reporting, which
accelerated in FY23 with access to a new reporting system andbetter supplier data. The enhanced data collection provides amore precise view of our emissions profile, which has influenced
our scope 1 and 2 emissions. Another factor has been theongoing adjustments to work behaviours and practices in a post
covid environment. Through improved data and insights, wehave an even better understanding of the actions we must taketo achieve our net zero targets and this will be a priority in FY24
and beyond.

Energy efficiency initiatives

Although we have seen YoY increases, we have made progresssince our baseline year which is our closest to ‘business-as-usual’year pre-pandemic. The energy efficiency initiatives which havetaken place include:•

Our carbon emissions from premises (natural gas, purchased
electricity, waste and water) reduced by 61% since FY19
(baseline year). This followed the introduction of sustainableproperty criteria for new offices.

•

Although business travel has increased YoY due to anincrease of in-person meetings post pandemic, we have notincreased emissions to pre-pandemic levels and maintained
a carbon reduction of 10% since FY19, which is the result of
our sustainable travel policy.

Annual Report and Accounts 2023

73

Our commitment to being a responsible business (including TCFD) continued

Strategic Report
Governance
Financial Statements

Metrics & Targets pillar continued
Table 3. GHG emissions (tCO2e) and associated energy consumption (kWh) for FY23
(Energy and carbon disclosures for financial year, 1 December 2022–30 November 2023)
FY19
baseline Year

Emissions source (tCO2e)25

Scope 1

Scope 2

UK andoffshore

FY23

Global(excluding
UK andoffshore)

Global(excluding
UK andoffshore)

UK andoffshore% changein totalemissions% changein totalemissions(FY23 vs FY22)(FY23 vs FY19)

Natural gas

346

2

15

–

22

86

620%

-69%

Leased transport

42

990

11

87

–

2,455

2,405%

138%

Refrigerant

–

–

–

–

41

–

100%

100%

Purchased electricity(market/location based)

157

802

109/61

414/31994/53

320/215

-21%

-57%

Other fuels(heat and steam, EV)

–

9

1

21

–

54

145%

500%

Purchased goods
and services–

17,339–14,048704

15,74617%-5%

Capital goods

–

213

26

13

3

183

377%

-13%

T&D and WTT (fuel andenergy-related activities)

14

–

27

138

7

273

70%

1,900%

Upstream transportationand distribution

56

89

–

211

10

163

-18%

19%

Water (purchased goods
and services)

13

98

–

1

1

2

200%

-97%

Paper (purchased goods
and services)

–

4

2

–

4

4

400%

100%

Waste generated inoperations

15

33

1

5

1

3

-33%

-92%

Business travel

261

1,223

256

848

398

940

21%

-10%

Employee commuting
incl. working from home

–

3,637

417

1,570

382

1,166

-22%

-57%

Upstream leased assets(market/location based)

2

188

–

319/253

–

661

107%

248%

Downstream
leased assets

–

184

–

345

–

11

-97%

-94%

Total tonnes of CO2e(market based)

906

24,811865

18,0201,666

22,06826%-8%

Total tonnes of CO2e(location based)26

906

24,811817

17,8591,626

21,96327%-8%

Number of employees

860

2,504

756

2,364

655

1,998

–

–

Tonnes of CO2e per employee

1.05

9.91

1.14

7.62

2.54

11.05

48%

17%

11,789,326

170%

32%

Scope 3

Total energy consumption used to
calculate emissions (kWh)74

UK andoffshore

Global(excluding
UK andoffshore)

FY22

SThree plc

8,910,915

4,373,483

Methodology

Delivering training to strengthen ethical practices

In FY23, we introduced a new carbon data management
platform to continue to improve our disclosures. Prior to
calculating scope 3 emissions, a materiality assessment was
conducted to assess relevance using the GHG protocol. As aresult, categories 9-12 and 14-15 were considered to have nocontribution to the businesses’ scope 3 emissions and havetherefore been omitted from the SECR table published above.

These trainings include:

The method used to calculate GHG emissions is the GHG
Protocol Corporate Accounting and Reporting Standard(revised edition), together with the latest emission factors fromrecognised public sources including, but not limited to, BEIS, theUS Energy Information Administration, the US Environmental
Protection Agency and the Intergovernmental panel on
Climate Change.

As a result of changing platforms, we have recalculated historiccarbon data, aligned with emission factors now being used
and improved data awareness, which has resulted in somechanges in relation to previously reported emissions. In addition,
increased emissions across leased transportation in FY23
is the consequence of improved data collection from our car
fleet suppliers.
Following an operational control approach to defining ourorganisational boundary, our calculated GHG emissions frombusiness activities fall into the reporting period of 1 December
2022 to 30 November 2023, and using the reporting period
1 December 2021 to 30 November 2022 for comparison.

Governance targets

Integrating ESG impacts into the strategic and financial planningof the business continues to be a priority of the Board, including
providing transparent reporting on ESG matters. The Chief
Executive Officer has appointed the ExCo to direct Groupstrategy. To oversee the governance of risk management the
ExCo appointed a Group Risk Committee and to oversee thegovernance of ESG matters a Group ESG Committee. Bothcommittees include members of ExCo alongside subject matter
experts and other senior leaders from across the global business.
For full details on the Group governance structure see page 93
in this Annual Report.
To reflect shifting trends and stakeholder priorities, SThree
conducts an ongoing materiality assessment to ensure we
identify where we impact people, planet and society, and inturn how they impact our business. In FY23, we delivered 15
interviews, analysed engage survey data and conducted external
research across our stakeholder groups and markets to ensure
we continue to identify the most material ESG matters to ourbusiness.

In order to ensure ethical practices are embedded into ouroperations we are building a culture of ‘doing the right thing’
which is being integrated into every element of our employee life
cycle, from how we recruit people, to their onboarding, personal
development and performance management. In FY23, we
continued to deliver mandatory training for all colleagues in our
SThree Academy.
•Anti-bribery and corruption;•

Data Protection;•

Cyber Security;•

Health and Safety; and•Modern Slavery.

In addition, our award-winning onboarding programme,
Elements, includes training on conduct, operating principles,
performance management, as well as specific training related
to roles. Within our SThree Academy we also provide training
on fraud, our Speak Up policy, DE&I, wellbeing and our wider
policies which every colleague has access to.

Launching Speak Up

In FY23, we refreshed our Speak Up policy and delivered acampaign to explain what the policy was and how colleagues,
suppliers, contractors and clients can use the policy to raise
concerns. The policy and process are designed to create asafe space for concerns and complaints to be addressed in atrusting and transparent manner. Through communications,endorsements from ExCo members and testimonials fromcolleagues who have spoken up in their career, we are building aculture of trust, honesty and safety across our value chain.
Ethical staffing solutions is the foundation of our operating
model and can be demonstrated throughout our Annual Report.
Summary of our policies, implementation and monitoring details
can be viewed online by scanning the following QR code.

Legal notices and policies | SThree

See the summary of notices and policies on
SThree corporate website.
sthree-ar23-notices-and-policies.pdf

The FY23 materiality assessment reaffirmed the criticalmaterial matters with no new issues materialising. The mostcritical matters arising continue to be: climate change anddecarbonisation; DE&I, employee engagement and productivity;
diversity of our candidates; data and cyber security; HSE.
These alongside all other material topics are detailed in our
ESG Impact Report 2023.

Annual Report and Accounts 2023

75

Risk management

Strategic Report
Governance
Financial Statements

Risk management is a key part of our business, values andculture. Effective risk management enables us as a business toprotect value and proactively manage threats to the deliveryof strategic and operational objectives, while enhancing therealisation of opportunities.

What we review when assessing our principal andkey risks:•

Risk ownership: each risk has a named owner. In addition,
each principal risk is sponsored by a member of the ExCo,
who drives progress.

Our principal risks•

Likelihood and impact: globally applied five-by-fivescoring matrix.

•

Gross risk: before mitigating controls.

•

Net risk: after mitigating controls are applied.

•

Risk appetite: defined at principal risk level and categorised
into five levels.

•

Risk tolerance: in data format, showing the amount ofdeviation from the risk appetite.

•

Key risk indicators: quantitative measures that provide earlysignals of a change in the risk.

•

Actions: key controls in place and activities required forfurther mitigation if required.

•Impact on the Group’s strategic pillars andinterdependencies between principal risks.

•

Any relevant emerging risks where the principal risk is
impacted by or could impact the emerging risk.

1.

Macro-economic environment/cyclicality

2. Future growth
3. Commercial relationships and customer risk
4. Contractual liability
5. People, talent acquisition and retention
6. Cyber security
7. Data privacy
8. Regulatory compliance
9. Strategic change management
10. Health and safety

Connecting risk, opportunity and strategy

Risk mitigation helps SThree manage specific areas of
the business. However, when brought into our day-to-day
activities, successful risk management helps us to maximise ourcompetitive advantage and successfully deliver on our strategy.
Whilst the ultimate responsibility for risk management rests
with the Board, the effective day-to-day management of risk isdelegated to our leaders across the business, seeking at all times
to maintain a prudent balance between mitigating risks andtaking advantage of opportunities.

Risk management approach

Our Enterprise Risk Management (ERM) framework andprocesses help us to describe, analyse, report and monitor
risks and controls at all levels in the Group. We believe that theeffective management of risk is based on a ‘top-down’ and‘bottom-up’ approach, which includes:

All principal risks are detailed in a standardised statement.
This ensures effective review, understanding and monitoring
throughout the Group, together with consistency, both interminology and the underlying assessment itself. As part of
the top-down process, an updated assessment was completed
for each principal risk by the relevant risk owner, working with
the Executive Committee risk sponsor and the risk function.
The statements are challenged and reviewed in detail by theGroup Risk Committee, ExCo and by the Board twice a year. In
addition, deep dive reviews are conducted by the Group Risk
Committee throughout the year, the output of which is reviewed
by the Audit & Risk Committee.

Top-down risk
management
Ongoing risk
mitigation andcontrol review

Audit & Risk
Committee

Bottom-up risk
management
Regional andfunctions businessleadership teams
identify, assess, andcontrol, monitor
and escalate

Executive
Committee

Group Risk Committee

Regional
management

Function/businessleadership

Emerging risks

As part of our ongoing risk management process, emerging risks
are reviewed yearly. An emerging risk is defined as a risk thatmaterialises over a period of time, rather than at once, meaning
the likely impact of the risk is difficult to evaluate at the time ofassessment of the risk.
Emerging risks are identified during:•

our strategy setting process;•twice yearly principal risk reviews;•

the quality of our people and culture;•

the strategic review process with each region and function;•

established internal controls with assurance via selfverification on the strength of controls;•horizon scanning undertaken by the Group Legal Function;•bi-monthly financial reviews of country performance andmacro-economic trends.

•

processes for reviewing, escalating and controlling risks;•

independent assurance by internal audit and external audit;•

regular oversight by the relevant Committees; and•reacting quickly to market conditions and the cycle.

Principal and key operational risks are considered anddiscussed as part of the strategic planning process. Our principal
risk statements include key risk indicators and risk tolerance
measures, as well as assessments of key controls andrisk appetite.

Board

Overall responsibility assessing the nature and extent
of the principal risks and the Group’s risk appetite andto facilitate effective, entrepreneurial and prudent
management of the business.

Audit & Risk
Committee

Responsible for reviewing the effectiveness of theGroup’s risk management systems and processes.
Reviews assurance over mitigating controls.

Executive
Committee

Responsible for the review and assessment of theprincipal risks and recommending risk appetite andtolerance to the Board. Develops Company strategy inline with Board appetite.

Group Risk
Committee

Responsible for monitoring principal and key risks andensuring effectiveness of regional and function risk
management.

Regional
management

Responsible for reviewing and oversight of regionalrisk and controls and plans to mitigate risks within theirregion. These risks will then feed into strategic plans to
be reviewed every six months as part of the strategicplanning process.

Function/businessleadershipResponsible for identifying, assessing and mitigating
both key and operational risks within their functions/business areas. Risks should be discussed as part ofcountry management meetings.

Internal
audit

Provides assurance on key controls in place to mitigate
identified risks and assurance that the risk management
and internal control framework are operating
effectively.

Board

Climate change risk continues to be an emerging risk for theGroup. Further assessment on the emerging risk is shown on
page 61 as part of the TCFD report.
During FY23, Artificial Intelligence (AI) was added as an
emerging risk. The risk will be monitored as part of the strategy
reviews and through a newly formed working group. Where an
emerging risk may impact or be impacted by a principal risk, thisis detailed within the principal risk description.

Changes during FY23

Following review by the Board, the Board believes that the riskspresented are the correct assessment and the right principal
risks for the Group. As a result, the ten principal risks remain thesame ones identified in FY22, with positive movement in net
risk across many principal risks, other than the People principal
risk which, following the appointment of the new Chief People
Officer, has undergone a full review and reassessment of
the risk.

Strategic pillars
Our Places

To be a leader in markets we choose to serve.

Our Platform Create a world-class operational platform
through data, technology, and infrastructure.
Our People

Find, develop and retain great people.

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

Principal risks

76

Risks can develop and evolve over time and their potential
impact or likelihood may vary in response to changes in internaland external circumstances. Risks and mitigation activities thatare outlined below, whilst not exhaustive nor in any order ofpriority, are those which could have a material adverse effecton the implementation of our strategic priorities, our business,financial performance, cash flows, liquidity, shareholder value
or reputation, or could affect other key stakeholders, including
employees, clients and candidates.
SThree plc

Annual Report and Accounts 2023

77

Risk management continued

Strategic Report
Governance
Financial Statements

1. Macro-economic environment/cyclicality risk

3. Commercial relationships and customer risk

Risk description

Risk description

Rapid changes in the macro-economic environment could result in SThree suffering financial exposure and/or loss. SThree operates ina sector that is highly cyclical and sensitive to the economy and business sentiment. Mixed economic signals can delay identificationof changes in market conditions and business decisions to respond, both on the upside and downside. The growth in the ECM models
globally and fixed central support costs impact on the flexible cost base so may exacerbate any time lag between financial performance
impact and ability to cut costs and therefore impacts the ability to scale when economy recovers quicker than anticipated.

In circumstances where working capital impairment or bad debt write-off occur, SThree may suffer financial loss, due to customers orintermediaries being unable to fulfil their contractual payment obligations. The Group’s growing ECM business has increased the needfor sufficient working capital to ensure payments are made to candidates whilst waiting for clients to settle invoices. Bad debt can
impact future cash flow for operations when uncollectable debt is written off.

Link to climate change and sustainability: SThree may be affected, primarily through its work with the Energy sector, to changes
in Government policy related to climate change, including in the renewable energy space, which may present positive business
opportunities for the Company and fluctuations in the oil price. Geopolitical events, including energy price shocks and other energy
security risks can have an impact on economies, and in turn SThree markets and profits.

Mitigations

Change from FY22

• The annual strategic planning and budgeting process incorporate
reviews of the broader market conditions along with monthly businessperformance monitoring and twice-yearly reviews as part of thestrategy cycle to help inform any changes that are required to react tochanges in the economy.

No change in net risk due to effective controls throughthe Group’s well diversified business and ability torespond quickly to changes in the market conditions.

• The Group is a strategically diversified business, geographically, by
sector and by product, with a focus on STEM markets which are lesssensitive to economic cycles.

Andrew Beach – Chief Financial Officer• Strategic focus on Contract market which is more resilient in lesscertain economic conditions than Permanent and provides a counter
cyclical cash hedge working capital release with each contract finisher.

Our Places, Our Position

Executive Committee sponsor:
Link to Strategic Pillar:
Principal risk interdependency:• The Group has a flexible cost base that enables the business to quickly
cut costs to react swiftly to changes in market activity.

3

2

5

9

Link to AI: technology advances have the potential to provide quicker trend and payment behaviour analysis, leading to earlier debt
collection and thereby reducing uncollectable debt.

Mitigations

Change from FY22

• Overall credit risk profile client baseof the Company is a low.

No change to net risk due to controls remaining effective. The macro-economic
environment continues to be challenging, resulting in an increased bad debt provision,
however, enhanced controls remain effective through continuous monitoring, with a focus
on high-risk clients and key enterprise clients which typically have longer payment terms.
During the year, a detailed review and stress testing exercise was undertaken on the risk
appetite for this risk to ensure there is the optimal balance between supporting our growthambitions and managing the risk. The conclusion of this review was that risk appetite had
been correctly assessed but will be re-examined if the macro-economic environment
becomes more challenging or greater commercial opportunities arise.

• Regular reviews and credit risk scoringmodel for higher-risk clients managed
by credit risk analysts.
• Regional oversight of debt throughcredit risk dashboard and monthly key
performance indicator reviews.
• Effective end-to-end process forreview of payment terms out of policy
with Chief Financial Officer approvalrequired.
• Continued focus on aged debt.

Executive Committee sponsor:
Andrew Beach – Chief Financial Officer

Link to Strategic Pillar:• The Group has a strong balance sheet with low levels of net debt
through the year and committed debt facilities to support the business.

Our Places, Our Platform

2. Future growth1

Principal risk interdependency:

Risk description
If the Group ineffectively executes its strategic initiatives and investments, this could lead to a failure to deliver planned growth andvalue creation.
The Group has clear growth ambitions. To achieve these ambitions, the growth needs to be delivered through effective strategy andexecution of strategic plans. SThree recognises that it is vital for the right strategy to be implemented and for this to be executed
effectively.
Link to climate change and sustainability: our strategy to focus on STEM skills and a Contract business is designed to address theopportunities presented by a number of global megatrends, in business, society and the way that people work.

2

4

4. Contractual liability risk
Risk description
If SThree enters into unfavourable contractual terms with customers, it risks suffering significant financial loss. SThree operates in ahighly competitive environment in which clients sometimes seek to assign significant contractual responsibilities and high financial
liabilities to SThree. Where SThree acts as the employer of record (as with its ECM model), this expectation is generally heightened.
Link to AI: opportunity for advanced technology to improve efficiency of the contract review process.

Link to AI: AI presents both risks and opportunities to SThree. For example, it could have an impact on the demand for employment andSThree’s services, with AI replacing certain skillsets. It could also significantly increase the demand for some of the high-quality skills
SThree places across all sectors and present opportunities for use in certain SThree business processes.

Mitigations

Change from FY22

• SThree seeks to ensure that its contractual exposure toclaims is effectively controlled through its contracts.

Mitigations

Change from FY22

• Clear strategy, with regular planning and review meetings aspart of strategy setting cycle.

No change in net risk, strategy remains well articulated with key
strategic projects not yet at a sufficiently advanced stage for the
impact to net risk to be seen.

• Contract approval processes are in place with defined
escalation procedures for the proposal of contractual terms
that do not align with standard negotiation parameters.

Decreased. Following full risk assessment of each business model
operated globally, the parameters for acceptable contractual liability
were updated to reflect the assessed risk and exposure. Monitoringof updated contractual liability through key risk indicators will ensurerisk versus reward remains balanced. A new contractual liability
framework is designed to set appropriate contractual exposure forboth clients and SThree whilst also providing clarity and a positive
contracting experience for both client and consultants.

• Oversight of strategic workstreams and technology
investments through the project governance and ExCo.
• Defined M&A processes in place to review any appropriate
opportunities to complement organic growth opportunities.
• Geographies and sectors are aligned with our core strategy andany new business model proposed is reviewed to understandmarket opportunity and strategic synergies, prior to adoption
and implementation.
• Enterprise client strategy to continue growth of key accounts
focusing on delivery of services globally.

78

Link to climate change and sustainability: SThree works with a number of clients who are helping to solve the most significant
challenges of our time for both the environment and society.

SThree plc

Executive Committee sponsor:
Jelte Hacquebord – Chief Commercial Officer

Link to Strategic Pillar:
Our Places, Our Platform, Our People, Our Position

Principal risk interdependency:
1

3

4

5

6

7

8

9

• Well established in-house legal team, aligned to andworking closely with the regional businesses, ensuresa close understanding of business risks and associatedcontractual requirements.
• Risk Committee oversight of any changes in the external
environment that should be incorporated into approachto contracting.
• The Company seeks to place the responsibility for supervisionand control of contractors directly with the client, including
the acceptance of liability for any acts, defaults or omissions.
• Global insurance coverage in place to cover exposure
where appropriate.

Executive Committee sponsor:
Kate Danson – Chief Legal Officer

Link to Strategic Pillar:
Our Places, Our Platform, Our People

Principal risk interdependency:
2

3

7

8

10
Annual Report and Accounts 2023

79

Risk management continued

Strategic Report
Governance
Financial Statements

5. People, talent acquisition and retention

7. Data privacy

Risk description

Risk description

SThree’s profitability, long-term enterprise value, and ultimately our ability to deliver our strategy will be detrimentally impacted if wecannot attract and retain the right talent and drive the right levels of productivity to deliver against our growth ambitions.

Non-compliance with international data protection regulations and/or contractual obligations in relation to data protection could
expose SThree to loss of revenue, reputational damage and regulatory sanctions. Having solid data foundations is required for SThree
to fulfil our business strategy. Great customer experience starts with accurate, complete and timely data, and secure data is at the heartof creating a strong culture and trusted brand for our candidates and clients.

The Group are reliant on attracting and retaining people that can deliver against its growth strategy. Sales consultants take time to reach
their productivity peak, and this therefore needs to be taken into account when considering timelines. It is vital that SThree attracts andretains an engaged, productive, diverse workforce to ensure the future success of the Company.
Link to AI: a fear of job losses due to the use of AI could cause issues with engagement and retention along with the potential missed
opportunity to use the technology in a way which encourages and enables people to achieve their potential.

Mitigations

Change from FY22

• Improved employee engagement
through survey platform.

Increased. Following appointment of new Chief People Officer a full review of attraction
and retention risk was undertaken and the risk reassessed.

• Flexible hybrid working policy offered
to all employees.

The external environment, such as cost-of-living crisis and macro-economic environment
creating tougher markets for consultants has negatively impacted the risk.

• Award-winning training platform
to strengthen development ofconsultants throughout their career.

It is acknowledged that the reason for attrition and low employee engagement iscomplicated and multi-faceted, requiring a strategic programme focusing on optimisinga broad range of areas throughout the recruitment and talent management process.

• Continuation of strengthening ourwider focus on diversity and inclusion
across gender, nationality, age
and race.
• Continued focus on mental healthand wellbeing.

Executive Committee sponsor:

Link to AI: use of AI technology by sales consultants could result in personal data being added into an uncontrolled environment andshared with third parties without clear and embedded policy and procedures on AI use within the Group.

Mitigations

Change from FY22

• Data privacy landscape continues to be monitored by our crossfunctional privacy team and international Data Protection Champion
network to ensure compliance with GDPR and applicable data
privacy legislation.

No change. Process improvements and staff awareness
continue.

• A global data protection framework is in place to ensure that theGroup can identify and meet regulatory requirements relating todata protection within each jurisdiction.

Kate Danson – Chief Legal Officer• Embedded processes to manage and respond to Data Subject
Rights requests, such as Right to be Forgotten.

Our Places, Our Platform, Our Position

Link to Strategic Pillar:• Mandatory yearly data privacy training for all current employees andall new employees as part of the induction process.

Sarah Mason – Chief People Officer

Link to Strategic Pillar: Our Places, Our People
Principal risk interdependency: 2

910

Executive Committee sponsor:

Principal risk interdependency:
64• Continued investment in our IT systems and technology controls.

8

8. Regulatory compliance
Risk description

6. Cyber security
Risk description
If SThree suffers a serious system or third-party disruption, this could cause loss of data or security breach that disrupts business-criticalactivities and its ability to meet its contractual and regulatory obligations.
The threat landscape continues to evolve, heightened by world events, with an increase in cybercrime and the evolution of ransomware
attacks. Secure data is at the heart of creating a strong culture and trusted brand for our candidates and clients; failing to protect ourdata and manage security across our services will directly impact our reputation and our ability to sustain and grow our business.
Link to climate change and sustainability: expansion of services provided under the ECM business model could potentially increasecarbon emissions and therefore requires investment into greener solutions to ensure both SThree and our clients make a positive
impact.

Link to AI: AI could improve identifying and tracking compliance processes in the system and highlight patterns of behaviour wherecontrols may not be effective or escalate a point of non-compliance quicker than manual process to ensure prompt action. Potential
to provide greater flexibility in adapting to changing regulatory compliance requirements. AI-powered tools can potentially be trained
quickly on new regulations and then quickly incorporate updates and changes as they occur.

Link to AI: being utilised to develop and evolve threats and attack methods to circumvent security controls, or human responses.
However, AI can also be used, in its various forms, to support security, through machine learning and other techniques to help identify
malicious activities and respond to active threats.

Mitigations

Change from FY22

• Regular horizon scanning by Legal function with reporting toregional management boards and Executive Committee.

Decreased. Likelihood of risk materialising has reduced as a resultof in-depth risk assessment of business model’s risk and controls,alongside an ongoing programme of work on controls enhancement
and staff training.

Mitigations

Change from FY22

• Global information security framework, designed to ensure that
SThree identifies and meets requirements relating to cyber security.

Decreased. Whilst cyber risk continues to be seen as asignificant risk globally the improvements in operating
systems and ongoing staff awareness around the increasing
sophistication and number of attempted phishing attacks
has further decreased the net risk to SThree.

• Vulnerability scanning to early identify weaknesses across the estatealongside information security team actively monitoring for security
incidents and remediating where necessary.
• Mandatory cyber security training for all employees to build
awareness and understanding of how individuals can help to protect
the Company.

Executive Committee sponsor:• Incident management plan with clear escalation in the event of aserious incident and linked to outsourced security event monitoring
to assist.

Link to Strategic Pillar:• Ongoing improvements to authentication requirements.

Principal risk interdependency:• Insurance cover in place that provides access to expert helpline in theevent of an incident.

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A failure by the organisation to meet its regulatory obligations in respect of its business models could undermine our reputation, might
result in legal exposure and regulatory sanctions and could negatively impact our ability to operate. The staffing and recruitment
industry sits against the backdrop of an increasingly stringent and complex regulatory environment. These regulatory changes bringcommercial opportunities for SThree, as companies seek staffing models which remove both the burden of administration and therisk of regulatory non-compliance through engaging with companies such as SThree. However, they also present risk to SThree incircumstances where we fail to manage those opportunities appropriately. Failure to comply leaves SThree open to a range of risks,
including fines, penalties, litigation, personal Director liability and loss of licence to operate. Additionally, the reputational impact andloss of stakeholder confidence could undermine SThree’s business in its entirety.

SThree plc

Nicholas Folkes – Chief Operating Officer

Our Places, Our Platform, Our Position

2

4

7

• Regional Legal team involvement in the establishment of new
products/services and entering new jurisdictions to ensure
there is full understanding of regulatory compliance required
and the processes to support the compliance.
• Local internal processes designed to ensure regulatorycompliance for each placement.
• Oversight of regulatory compliance risks and controls at
Group Risk Committee.

Executive Committee sponsor:
Kate Danson – Chief Legal Officer

Link to Strategic Pillar:
Our Places, Our Platform• Regional regulatory compliance training rolled out by legal
department.

Principal risk interdependency:• Detailed regulatory risk assessments regularly reviewed forall business models in each country the Company has anentity incorporated within, to ensure full understanding andrelevant appropriate controls are in place.

2

4

7

10

9
Annual Report and Accounts 2023

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Compliance information

Risk management continued

Strategic Report
Governance
Financial Statements

Going concern statement

9. Strategic change management
Risk description
If the Company does not effectively manage and implement strategic change, this could result in poorly implemented projects, wasted
resource and/or adverse financial impact and ability to execute strategy impacting future growth of the Group. Effective strategic change
management is inherently tied into the achievement of our strategy; change management is required for the effective implementation ofparts of the strategy that require us to operate differently. Attempting too many projects, incorrectly mobilising projects, lack of oversightcausing the rejection by staff of change, would prevent SThree moving to the next level of revenue growth and profitability.

Mitigations

Change from FY22

• Prioritisation of investment decisions, approval of business cases andoversight of the investment portfolio, with strong linkage into the annual
budget cycle.

No change. The volume of transformational change has
increased as part of key strategic project roll outs acrossthe regions but mitigation strategies have increased tobalance this out.

• Formal governance structure in place for strategic projects, including
independent assurance for key technology-related programmes.
• Full Board visibility of the portfolio status, including timelines, project
spend and issues escalation.

Executive Committee sponsor:
Nicholas Folkes – Chief Operating Officer• A formal digital demand process to coordinate requests that placedemands on our technology change resources. The forum ensurescorrect resource allocation against the Company priorities.

Link to Strategic Pillar:• Monthly programme steering committees review programme status,
risks and document decisions.

Principal risk interdependency:

Our Places, Our Platform, Our People, Our Position• Recruitment and secondment of skilled expertise to business
transformation programme.

2

5

6

10. Health and safety
Risk description
If an employee suffers injury where SThree has failed to meet its regulatory obligations or duty of care, this could lead to an underminingof trust by our employees, candidates and clients, as well as reputational damage and financial loss. Health and safety (H&S)
management regulations contain a general requirement for organisations to monitor and review preventive and protective measures
to protect the health, safety and wellbeing of our employees. As a responsible employer we strive to ensure all our people are safe intheir working environment. Our increasing volume and proportion of business in ECM means we have heightened regulatory obligations
towards our candidates, many of whom operate in higher risk environments than our internal workforce.
Link to climate risk and sustainability: employees are potentially at risk of exposure to increased climatic natural disasters and to
extremes of temperature, where working outdoors, making working conditions higher risk.
Link to AI: AI could improve identifying trends across accident and incident reporting globally to ensure quicker responses to reduce
likelihood of reoccurrence.

Mitigations

Change from FY22

• Monthly H&S administration and communication meetings to discuss risks and anychange in processes.

Decreased in likelihood due to a better
understanding of current processes andcontrols in place for ECM business H&S
and continued improvement in controls
for office-based employees.

• Annual review and roll out of global H&S policy.
• Processes and reporting in place for any accidents or incidents involving internal
employees and ECM candidates.
• Regular horizon scanning of H&S regulations by both Group Legal and H&S Manager toensure policies and processes are updated accordingly.
• Communication with clients to ensure safety of a candidate on a client site andobligations are understood by both the client and candidate towards H&S.
• The review of H&S obligations are a key part of the contract review process, to ensure
any required processes are followed and are proportionate to the product being offeredto the client.
• Dashboard to capture leading and lagging indicators to highlight any incident risks andintroduce continual improvement processes.

Executive Committee sponsor:
Kate Danson – Chief Legal Officer

Link to Strategic Pillar:
Our Platform, Our People, Our Position

Principal risk interdependency:
45

8The Directors have reviewed the Group’s cash flow forecasts,
including the assumptions contained in the budget, andconsidered associated principal risks which may impact theGroup’s performance in the 12 months from the date of
approval of this year’s financial statements and in the period
immediately thereafter.
At 30 November 2023, the Group had no debt except for IFRS
16 lease liabilities of £29.0 million. Credit facilities relevant to
the review period comprise a committed £50.0 million RCF(with the expiry date of June 2026 and an extension option to2027) and an uncommitted £30.0 million accordion facility, bothjointly provided by HSBC and Citibank. These facilities remained
undrawn on 30 November 2023. A further uncommitted £5.0
million bank overdraft facility is also held with HSBC.
In addition, the Group has £83.2 million of net cash and cash
equivalents available to fund its short-term needs, as well as a
substantial working capital position, reflecting net cash due toSThree for placements already undertaken.
The RCF is subject to covenants that are measured biannuallyin May and November, on a trailing 12-month basis, being (i)net debt to EBITDA of a maximum of 3.0x and (ii) interest coverof a minimum of 4.0x. The ratio of net debt to EBITDA at 30
November 2023 was nil, as no debt was drawn at the year end,and hence the going concern assessment was primarily focusedon liquidity available during the assessment period.
Despite the ongoing volatile markets, the Group’s net fee
performance remained resilient in FY23, supported by ourstrategic focus on STEM and Contract/flexible working
offerings. In addition, the Group’s targeted investment in talentand digital infrastructure is progressing as planned, driving
both scale and higher margins over the mid to long term, anddelivering our differentiated and higher value proposition within
the market. In the assessment of the Group’s prospects inthe short term, the Directors also considered expected cash
outflows attributable to investments in people, talent acquisition
and infrastructure in response to identified market opportunities
or emerging risks.
The base case forecasts were sensitised to reflect a severe but
plausible downside scenario on Group performance. The key
assumptions subject to the sensitivity analysis were a decline in
net fees (10% decline in FY24 and 5% decline in FY25), with costbase flexed only for variable costs, such as commissions andbonuses, with no other cost mitigating actions assumed, with theoverall result of reduced margins and operating profit.
In the severe but plausible downside scenario, the Group is
expected to have sufficient liquidity headroom through thewhole period covered. This stress test also did not incorporate
potential mitigating actions at the Board’s disposal to improve
the position identified by the analysis, such as deferrals of capital
expenditure, suspension of dividends payment and/or sharebuyback programme, cash preservation initiatives, and a numberof further reductions in operating expenditure across the Group
primarily related to workforce cost reductions.

Following this assessment, the Directors have formed ajudgement, at the time of approving the SThree Group
Annual Report and Accounts 2023, that there are no material
uncertainties that cast doubt on the Group’s going concern
status and that it is a reasonable expectation that the Group
has adequate resources to continue in operational existence
for at least the next 12 months from the date of approval of thisAnnual Report. For this reason, the Group continues to adopt
the going concern basis in preparing the Consolidated Financial
Statements for the year ended 30 November 2023.

Viability statement

In accordance with provision 31 of the UK Corporate
Governance Code 2018, the Directors have assessed theprospects of the Group over the five-year period, based on
management’s reasonable expectations of the financial positionand performance of the Group, internal budgets, planningtimeframes, medium-term targets and the potential impactof the principal risks as documented on pages 78 to 82 of theAnnual Report.

Assessment of prospects

The Group’s strategy is to deliver a sustainable and profitable
growth by focusing on four strategic pillars and building on thefavourable megatrends that influence all markets and sectors
we operate in. The Group has a clear framework for investments
in selective strategic initiatives and operational decisions madeto continue strengthening the Group’s market position into
the future. Our performance against our strategic objectives isdiscussed in more detail on pages 18 to 19.
The review period covers five years from FY24 to FY28, which
comprise the next financial year plan used in the going concern
assessment and projections for the subsequent four financial
years. The Directors believe that the five years to November
FY28 is an appropriate period over which a reasonableevaluation of the potential impact of future risk events on theGroup can be made. In coming to this view, the Directors haveconsidered sustainability and resilience of the Group’s businessmodel over the long term (including strategic factors detailed in
our key competitive advantages on page 17, as well as longerterm market trends in areas such as digitalisation and climatechange). Furthermore, the viability period aligns to:•the impairment review process, where investments in
subsidiaries are tested based on five-year forecasts;•

the period over which the capital investment decisions areappraised; and•the period over which the Group’s major strategic priorities
and plans have historically been considered (in line with thelong-term ambitions announced at the Capital Markets Day
in 2019).

Given our principal risks, the Directors believe that the ability
to assess the Group’s longer-term viability beyond this period
becomes increasingly reduced.

• Group-wide mandatory H&S training.
• Insurance policies where required covering the Company and ECM contractors in theevent of an accident.

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SThree plc

Annual Report and Accounts 2023

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Compliance information continued

Strategic Report
Governance

The Directors have reviewed the Group’s current financial
position, progress against the Group’s strategic targets andplans for the next five years, alongside an evaluation of the longterm opportunities and risks in the market in which the Group
operates. The financial projections were based on the following
key assumptions:•

Changes in the Group’s working capital levels.

•

Movements in foreign currency rates, tax rates and interest
rates.

•

Impact of climate change risk and opportunities.

•

Dividend per share.

•

Key macro-economic data that could impact recruitment
activity and demand for our services and consequently ourrevenues and net fees.

•

Expected headcount retention rates and our ability todynamically change hiring decisions and other operational
spend in the light of trading conditions.

The viability assessment focused mainly on the expected futuresolvency of the Group in the face of the macro-economic
environment cyclicality in which the Group operates, being a
key principal risk. However, also considered were the potential
impact of other key principal risks, especially those related tocustomer risk and strategic change management.

•

Expected increase in productivity of sales teams (placements
per consultant) following a full roll out of outputs delivered
under the Technology Improvement Programme.

Scenario 1

Subsequently, the key assumptions in the Group’s five-year
FY24–FY28 plan were stress-tested against severe but plausible
downside scenarios linked to certain principal risks as well as an
emerging risk of climate change, as summarised in the table below.

Assumptions, level of severity considered

Link to risks

Decline in demand for recruitment services (a 4% decline in net fees)

Macro-economic
environment/cyclicality risk

Reduction in demand impacting both Contract and Permanent businesses,with cost base flexed only for variable costs, such as commissions andbonuses, with no other cost mitigating actions assumed. Headcount growthof 3% remained as per the base case.

Scenario 2

Deteriorating/severe macro-economic conditions (cost inflation andmargin compression, with a 10% decline in net fees in FY24, a 5% decline
in net fees in FY25, followed by return to growth in subsequent years)
Key areas considered: reduction in contractor order book compounded by
the lower volume of Permanent opportunities. Flat headcount and higher
labour costs, reducing operating profit conversion ratio. Negative impact
on the Group’s sales volume resulting in reduced net fees and profits. No
mitigating levers activated, except for variable staff costs.

Scenario 3

Climate change negatively affecting delivery of our services
Key areas considered: negative impact to the Group net fees due to theclosure of two locations with high physical risk. With no cost mitigating
actions taken, the closure of SThree’s offices would affect our operational
ability to place candidates in roles and service the existing contracts.

Based on the results of these scenarios individually and as acluster of events for Scenarios 1 and 2, the Directors are satisfied
that the Group would be able to respond to such circumstances
through various means which could include a reduction anddeferral of capital expenditure and further rationalisation and/or
restructuring of operations, to ensure that the Group continues
to meet its ongoing obligations. In addition, the Directors haveconsidered the fact that the Group operates in stable markets
and has the robust financial position of the Group, including
the ability to sell assets, raise capital and suspend or reduce thepayment of dividends.

84

SThree plc

Viability statement

The Group has complied with the requirements of Sections 414CA and 414CB of the Companies Act 2006 by integrating therequired non-financial and sustainability information disclosures throughout the Strategic and Governance Reports. The table below
is intended to provide our stakeholders with references where the key content on our development, performance, position and theimpact of our activities with regards to specified non-financial matters can be found.
Relevant policies, standards and sectionof the Annual Report25

Annual Report page reference

A. Environmental
matters• TCFD (governance and risk
management)• Our road to net zero carbon emissions• Sustainability policies• Climate-related financial disclosures, pages 58-75• Emerging risks – climate change, page 61 and 77• ESG Impact Report 2023 (online)• The role of the Board and its key decisions, pages 92-95

B.
Employees• Our operating principles• Global DE&I policy• Health and safety policy• Whistleblowing policy• Data protection policy• Bullying and sexual harassment policy• Governance targets, page 75 (plus Summary of notices andpolicies available online)• Strategic overview, Our People, pages 28-31• Employee engagement (how the Board engaged with SThree
employees), pages 96-99• Gender Pay Gap Report 2022–2023 (online)

C.
Social matters• Our community programmes aimed
at building and educating future
generations of diverse STEM talent• Volunteering guidelines• Corporate giving and fundraising policy• Tax strategy for 2023 (online)• Social targets, pages 54-55• ESG Impact Report 2023 (online)• Governance targets, page 75 (plus Summary of notices andpolicies available online)

D.
Respect forhuman rights• Our Code of Conduct• Procurement process• The Company’s Modern Slavery and
Human Trafficking Statement (online)• Governance targets, page 75

E.
Anti-corruption andanti-bribery matters• Anti-bribery and corruption policy• Gifts, hospitality and charitable
contributions policy• Governance targets, page 75 (plus Summary of notices andpolicies available online)

Description ofprincipal risks
relating to matters
A-E above• Risk management approach, pages 76-77• Emerging risks – climate change, page 77• TCFD report, climate-related risks and opportunities, pages 58-75

Non-financial matter

Future growthCommercial relationships andcustomer risk
Macro-economic
environment/cyclicality risk
Future growthCommercial relationships andcustomer risk
Strategic change management
Emerging risk – climatechangeFollowing this assessment, the Board can confirm that it has areasonable expectation that the Group will continue in operationand meet its liabilities, as they fall due, over a viability horizon offive years for the period ending 30 November 2028. In making
this statement, it is recognised that not all future events orconditions can be predicted, and future assessments are subject
to a level of uncertainty that increases with time.

Financial Statements

SThree non-financial and sustainability information statement

Relevant information
Business model
description• Our business model, pages 12-17

Description of nonfinancial KPIs

• Key performance indicators, pages 20-23• Our non-financial KPIs include:– Under strategic pillar Our Platform: Carbon reduction– Under strategic pillar Our People: Representation of women in leadership roles, Employee net promoter
score (eNPS)– Under strategic pillar Our Position: Customer net promoter score (NPS), Number of lives positively impacted

25. Please note that some of the policies are available on request from Company Secretary.

Climate-related financial disclosures

In accordance with Sections 414CB of the UK Companies Act 2006, the required climate-related financial information disclosures
can be found integrated throughout the Strategic Report, primarily in the TCFD report on pages 58 to 74.
A summary of key areas of disclosure is set out below:
Reporting requirement

Further information(a) Group’s governance for assessing and managing climate-related risks and opportunities

Page 58-60(b) How climate-related risks and opportunities are identified, assessed and managed

Page 61, 77(c) How processes for identifying, assessing, and managing climate-related risks are integrated into the overall Grouprisk management framework

Page 61(d) Description of climate-related risks and opportunities, and time periods over which they are assessed

Page 63-69(e) Impact of the climate-related risks and opportunities on the Group’s business model and strategy

Page 62, 77(f) Analysis of the resilience of the Group’s business model and strategy (climate-related scenarios)

Page 70(g) Targets used by the Group to manage climate-related risks and to realise climate-related opportunities

Page 71-73(h) Key performance indicators (including basis of calculating) used to assess progress against targets identified under (g)Page 72-73

Annual Report and Accounts 2023

85