Opinion
In our opinion: SThree plc's group financial statements and company financial statements (the "financial statements") give a true and fair view of . the state of the group's and of the company's affairs as at 30 November 2023 and of the group's profit and the group's cash flows for the year then ended; . the group financial statements have been properly prepared in accordance with UK-adopted international accounting standards as applied in accordance with the provisions of the Companies Act 2006; the company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted . Accounting Practice (United Kingdom Accounting Standards, including FRS 101 "Reduced Disclosure Framework", and applicable law); and the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. . We have audited the financial statements, included within the Annual Report and Accounts 2023 (the "Annual Report"), which comprise: the Consolidated and Company Statements of Financial Position as at 30 November 2023; the Consolidated Income Statement and Consolidated Statement of Comprehensive Income, the Consolidated Statement of Cash Flows, and the Consolidated and Company Statement of Changes in Equity for the year then ended; and the notes to the financial statements, which include a description of the significant accounting policies. Our opinion is consistent with our reporting to the Audit and Risk Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC's Ethical Standard were not provided. Other than those disclosed in note 3 to the financial statements, we have provided no non-audit services to the company or its controlled undertakings in the period under audit.
Independent auditors’ report
to the members of SThree plc continued
Our audit approach
Overview
Audit scope

Key audit matters

Materiality

The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
Key audit matters
Key audit matters are those matters that, in the auditors' professional judgement, were of most significance in the audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit. Provision for impairment of trade accounts receivable and contract assets is a new key audit matter this year. Otherwise, the key audit matters below are consistent with last year.

Key audit matter
Impairment of investments in subsidiaries (parent) The Company holds investments in a number of UK and overseas subsidiaries with a total carrying amount of £223.63 million at 30 November 2023 (2022: £215.22 million). An assessment for impairment indicators is performed by management annually. Impairment triggers were identified due to under performance of trading in Luxembourg and Canada, and an impairment charge of £0.1 million recognised to fully impair the investment balances in respect of these operations. No other impairment indicators were identified. We focused on this area due to the material quantum of investments held by the Company, and the level of judgement required in determining whether impairment indicators exist which would then require an impairment test to be performed. Refer to 'Investments' (note 11 of the financial statements) and 'Chief Financial Officer's statement'.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole, taking into account the structure of the group and the company, the accounting processes and controls, and the industry in which they operate. The Group's components vary significantly in size and we identified four financially significant components that, in our view, required an audit of their complete financial information due to their relative size or risk characteristics. In addition, we performed an audit over the full financial information of the company and testing over specific material balances across a further five components. Together these full and specific scope component audits gave appropriate coverage of all material balances at a group level. We also audited consolidation adjustments to get sufficient coverage over final balances. The remaining components were subject to analytical review. Although the Group has an international presence, all audit procedures have been performed by the group engagement team in the UK as this reflects the centralised shared service structure of the finance function across the group.
The impact of climate risk on our audit
As part of our audit we made enquiries of management to understand the process management adopted to assess the extent of potential climate risk on the Group's financial statements and support the disclosures made within the Annual Report. We challenged the completeness of management's climate risk assessment by:
We also considered the consistency of the disclosures in relation to climate change (including the disclosures in the Task Force on Climate-related Financial Disclosures (TCFD) section) within the Annual Report with the financial statements and our knowledge obtained from the audit. Our procedures did not identify any material impact in the context of our audit of the financial statements as a whole, or our key audit matters for the year ended 30 November 2023.
How our audit addressed the key audit matter
We obtained management's assessment of impairment trigger indicators for all subsidiaries in the Group, including a summary of year on year performance and business outlook We considered the view of management and the performance of the group as a whole by reference to prior year and budgets (including individual subsidiaries) and concluded that management's trigger assessment was reasonable with no indication of impairment triggers other than in Canada and Luxembourg. We reviewed the market capitalisation of the group against the carrying value of investments. We consider the disclosure in the financial statements to be appropriate.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole. Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The range of materiality allocated across components was £0.7 million to £3.24 million. Certain components were audited to a local statutory audit materiality that was also less than our overall group materiality. We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance materiality was 75% (2022: 75%) of overall materiality, amounting to £2.91 million (2022: £2.89 million) for the group financial statements and £1.14 million (2022: £1.42 million) for the company financial statements. In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment and aggregation risk and the effectiveness of controls - and concluded that an amount in the middle of our normal range was appropriate. We agreed with the Audit and Risk Committee that we would report to them misstatements identified during our audit above £0.38 million (group audit) (2022: £0.38 million) and £0.15 million (company audit) (2022: £0.19 million) as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors' assessment of the group's and the company's ability to continue to adopt the going concern basis of accounting included:
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the group's and the company's ability to continue as a going concern. In relation to the directors' reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the directors' statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors' report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on these responsibilities. With respect to the Strategic report and Directors' Report, we also considered whether the disclosures required by the UK Companies Act 2006 have been included. Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as described below.
Strategic report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Directors' Report for the year ended 30 November 2023 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements. In light of the knowledge and understanding of the group and company and their environment obtained in the course of the audit, we did not identify any material misstatements in the Strategic report and Directors' Report.
Directors’ Remuneration
In our opinion, the part of the Directors' remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.
Corporate governance statement
The Listing Rules require us to review the directors' statements in relation to going concern, longer-term viability and that part of the corporate governance statement relating to the company's compliance with the provisions of the UK Corporate Governance Code specified for our review. Our additional responsibilities with respect to the corporate governance statement as other information are described in the Reporting on other information section of this report. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement, included within the Governance Report is materially consistent with the financial statements and our knowledge obtained during the audit, and we have nothing material to add or draw attention to in relation to:
Our review of the directors' statement regarding the longer-term viability of the group and company was substantially less in scope than an audit and only consisted of making inquiries and considering the directors' process supporting their statement; checking that the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the statement is consistent with the financial statements and our knowledge and understanding of the group and company and their environment obtained in the course of the audit. In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is materially consistent with the financial statements and our knowledge obtained during the audit:
We have nothing to report in respect of our responsibility to report when the directors' statement relating to the company's compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review by the auditors.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors' responsibilities in respect of financial statements, the directors are responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the group's and the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below. Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws and regulations related to the Companies Act 2006, Listing Rules, UK and overseas tax legislation and UK adopted IFRS, and we considered the extent to which non-compliance might have a material effect on the financial statements. We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to achieve desired financial results. Audit procedures performed by the engagement team included:
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non- compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected. A further description of our responsibilities for the audit of the financial statements is located on the FRC's website at: www.frc.org. uk/auditorsresponsibilities. This description forms part of our auditors' report.
Use of this report
This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting Under the Companies Act 2006 we are required to report to you if, in our opinion:
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit and Risk Committee, we were appointed by the members in 1999 to audit the financial statements for the year ended 30 November 1999 and subsequent financial periods. The period of total uninterrupted engagement is 25 years, covering the years ended 30 November 1999 to 30 November 2023.
Other matter
In due course, as required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial statements will form part of the ESEF-prepared annual financial report filed on the National Storage Mechanism of the Financial Conduct Authority in accordance with the ESEF Regulatory Technical Standard ('ESEF RTS'). This auditors' report provides no assurance over whether the annual financial report will be prepared using the single electronic format specified in the ESEF RTS. Kenneth Wilson (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors Glasgow 29 January 2024
The accompanying notes form an integral part of this Consolidated Income Statement.
Consolidated Statement of Comprehensive Income
for the year ended 30 November 2023

The accompanying notes form an integral part of this Consolidated Statement of Comprehensive Income. SThree plc (the Company) has elected to take the exemption under Section 408 of the Companies Act 2006 not to present an income statement and statement of comprehensive income for the parent Company. Financial Statements
The accompanying notes form an integral part of these Statements of Financial Position. The Company's loss after tax for the year was £9.3 million (FY22: profit after tax of £91.3 million). The financial statements on pages 147 to 152 were approved by the Board of Directors on 29 January 2024 and signed on its behalf by: Andrew Beach Chief Financial Officer Company registered number: 03805979
Financial Statements
30 November 2022 77,026 18,902 122 (266) 499 1,176 (141) 667 4,999 102,984 (59,288) 17,174 3,510 64,380 141 (18,922) 45,599 (3,407) (265) (3,672) (667) (13,721) 510 (9,900) (14,650) (109) (38,537) 3,390 57,502 4,494 65,386
1  Basis of preparation and consolidation
General information
SThree plc is a public limited company listed on the London Stock Exchange, incorporated in the United Kingdom and domiciled in the United Kingdom, and registered in England and Wales. Its registered office is 1st Floor, 75 King William Street, London, EC4N 7BE. The business model, activities, locations of SThree plc (the Company) and its subsidiaries (together the Group) are set out further in the Strategic Report of this Annual Report.
Basis of preparation
The Consolidated Financial Statements have been prepared in accordance with UK-adopted International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) and in conformity with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards, including interpretations issued by the IFRS Interpretations Committee. The Group's key accounting policies are set out across the following notes to the accounts and were applied consistently throughout the year and preceding year. The notes to the financial statements have been prepared on a continuing basis unless otherwise stated. The Consolidated Financial Statements have been prepared under the historical cost basis of accounting, as modified by financial assets held at fair value through profit or loss or held at fair value through other comprehensive income. The Consolidated Financial Statements are presented in Sterling, the functional currency of SThree plc. The Company-only Financial Statements have been prepared under the historical cost convention, in accordance with Financial Reporting Standard 101 (FRS 101) Reduced Disclosure Framework as issued by the Financial Reporting Council. As permitted by Section 408 of the Companies Act 2006, the Company's income statement and statement of comprehensive income have not been presented. The Company, as permitted by FRS 101, has taken advantage of the disclosure exemptions available under that standard in relation to share-based payments, financial instruments, certain disclosures regarding the Company's capital, capital management, presentation of comparative information in respect of certain assets, presentation of a cash flow statement, certain related party transactions and the effect of future accounting standards not yet adopted. Where required, equivalent disclosures are provided in the Consolidated Financial Statements of SThree plc. The significant accounting policies and significant judgments and key estimates, including those applied in the individual going concern assessment relevant to the Company, are the same as those set out in this note 1 to the SThree Group consolidated financial statements.
Going concern
The Consolidated and Company-only Financial Statements have been prepared on a going concern basis. The Directors have reviewed the Group's cash flow forecasts, considered the assumptions contained in the budget, and considered associated principal risks which may impact the Group's performance in the 12 months from the date of approval of this year's financial statements and in the period immediately thereafter. At 30 November 2023, the Group had no debt except for lease liabilities of £29.0 million. Credit facilities relevant to the review period comprise a committed £50.0 million Revolving Credit Facility (RCF) (with the expiry date of June 2026, with an extension option to 2027) and an uncommitted £30.0 million accordion facility, both jointly provided by HSBC and Citibank. A further uncommitted £5.0 million bank overdraft facility is also held with HSBC. All these facilities remained undrawn on 30 November 2023. In addition, the Group has £83.2 million of cash and cash equivalents available to fund its short-term needs, as well as a substantial working capital position, reflecting net cash due to SThree for placements already undertaken. The assessment of going concern is further described in the Strategic Report as part of the Compliance information under the heading ‘Going concern’ on page 83 which is incorporated by reference into these financial statements. Based on this evaluation, the Directors have formed a judgement that the Group has adequate resources to continue in operational existence for at least the next 12 months from the date of approval of the Group's Consolidated Financial Statements, and considered it appropriate to prepare them on the going concern basis.
Climate change consideration
Climate change is a significant issue for the world and the transition to a low-carbon economy will create both risks and opportunities for the Group. The management team has considered the impact of climate change in preparing the Consolidated Financial Statements, particularly in the context of the risks identified in the TCFD report on pages 58 to 75. These considerations, which are integral to the Group's strategy, are not viewed to be key areas of judgements or sources of estimation uncertainty in the current financial year.
1  Basis of preparation and consolidation continued
The management team considered the impact from climate change on the following areas:
Whilst there is currently no material medium-term impact expected from climate change, the management team is aware of the ever-changing risks and will continue to regularly monitor these risks against judgements and estimates made in preparation of the Group's financial statements.
Accounting policies
The accounting policies used in the preparation of the Consolidated Financial Statements are consistent with those applied in the previous financial year, except for the adoption of new and amended standards effective as of 1 December 2022 as set out below. New and amended standards effective in 2023 and adopted by the Group The following amendments to the accounting standards, issued by the IASB and endorsed by the UK and EU, have been adopted by the Group and became applicable as of 1 December 2022. The Group did not have to change its accounting policies or make retrospective adjustments as a result of adopting these amended standards.
New and amended standards that are applicable to the Group but not yet effective As at the date of authorisation of this Annual Report, the following amendments to existing standards were in issue but not yet effective. Subject to the endorsement by the UKEB, these changes are effective for the SThree's financial year beginning 1 December
The Group's significant accounting policies relating to specific financial statement items are set out under the relevant notes. Accounting policies that affect the financial statements as a whole and a description of the accounting estimates and judgements are
set out below.
Basis of consolidation
The Consolidated Financial Statements of the Group include the financial statements of the Company and all its subsidiaries. Subsidiaries are fully consolidated from the date on which the Group obtains control. The Group has control when it has rights to variable returns from its involvement in the entity and has the ability to affect those returns through its power over the entity. The subsidiaries are deconsolidated from the date on which that control ceases. When the Group disposes of a subsidiary, the gain or loss on disposal represents: (i) the aggregate of the fair value of the consideration received or receivable; (ii) the carrying amount of the subsidiary's net assets (including goodwill) at the date of disposal; and (iii) any directly attributable disposal costs. Amounts previously recognised in other comprehensive income in relation to the subsidiary are removed from equity and recognised in the Consolidated Income Statement as part of the gain or loss on disposal. Uniform accounting policies are adopted across the Group. All intra-group balances and transactions, including unrealised profits and losses arising from intra-group transactions, are eliminated on consolidation.
Foreign currencies and translation
Functional and presentation currency Items included in the financial statements of each Group subsidiary are measured using the currency of the primary economic environment in which that subsidiary operates (its functional currency).
Transactions and balances
Foreign currency transactions are translated using exchange rates at the date of the transactions. Any exchange gain or loss from settlement of these transactions or translation at the period end are recognised in the income statement.
Consolidation
On consolidation, the subsidiaries' assets and liabilities denominated in foreign currencies are translated into Sterling at the rates ruling at the reporting date. The results of foreign subsidiaries are translated into Sterling at average rates of exchange for the period and the exchange differences arising on translation are recognised in Other Comprehensive Income. Any exchange differences which have arisen from an entity's investment in a foreign subsidiary, including long-term loans, are recognised as a separate component of equity and are included in the Group's currency translation reserve (CTR). When a foreign operation is sold, such exchange differences are reclassified from CTR to the Consolidated Income Statement to form part of the gain or loss on disposal.
Critical accounting judgements and estimates
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates and judgements. It also requires management to exercise judgement in the process of applying the Company's accounting policies. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Critical accounting judgements Details of critical accounting judgements which could have a significant impact upon the financial statements are set out in the related notes as follows: (i) Tracker shares arrangements (refer to note 11 Investments). (ii) Indicators of impairment of investments in subsidiaries (Company only) (refer to note 11 Investments). Critical accounting estimates The assumptions and estimates at the end of the current reporting period that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year are set out in the related note as follows: (i) Revenue recognition (refer to note 2 Operating segments).
1  Basis of preparation and consolidation continued
Other areas of judgement and accounting estimates The consolidated financial statements include other area of judgement and accounting estimates. While this area does not meet the definition under IAS 1 of significant accounting estimates or critical accounting judgements, the recognition and measurement of certain material assets and liabilities are based on assumptions and/or are subject to longer-term uncertainties. The other area of judgement and accounting estimates is: (i) Provisions in respect of recoverability of trade receivables and contract assets, otherwise referred to as 'allowance for expected credit losses'. As described in note 12 Trade and other receivables, provisions for impairment of trade receivables and contract assets have been made. In reviewing the appropriateness of these provisions, consideration has been given to the ageing of the debt and the potential likelihood of default, taking into account current and future economic conditions.
2 Operating segments
Accounting policy
Revenue
Revenue from contracts with customers is recognised when or as the Group satisfies a performance obligation by transferring service to a client. For Permanent placements, the Group principally satisfies its performance obligations at a point in time; for Contract placements, the Group satisfies its performance obligations over time. Revenue is shown net of value added tax and other sales-related taxes, credit notes, rebates and discounts and after elimination of sales within the Group. Contract revenue for the supply of professional services, which is mainly based on the number of hours worked by a contractor, is recognised when the service has been provided. Revenue from Permanent placements is typically based on a fixed percentage of the candidate's remuneration package and is recognised when the candidate commences employment. Revenue earned but not invoiced at year end is accrued and included in 'Contract assets' (it represents a variable part of revenue). The management team applies a constraint in the form of the historical shrinkage rate to Contract assets, aimed at preventing the over-recognition of revenue. Revenue from retained assignments is recognised on completion of certain pre-agreed stages of the service. Fees received for the service are non-refundable. A bad debt provision is established for non-fulfilment of Permanent placement and Contract revenue obligations, which is netted off against the gross trade receivables on the face of the statement of financial position.
Cost of sales
Cost of sales consists of the contractors' (including employed contractors) cost of supplying services and any costs directly attributable to them.
Net fees
Net fees represent revenue less cost of sales and consist of the total placement fees of Permanent candidates and the margin earned on the placement of contractors.
Critical accounting estimates
Revenue recognition (Contract assets) Contract revenue is recognised when the supply of professional services has been rendered. This includes an assessment of professional services received by the client for services provided by contractors between the date of the last received timesheet and the year end. Revenue is accrued (known as Contract assets) for contracts which are valid in the period, but where no timesheet has been received or approved, and therefore billing and payments to contractors have not taken place. The value of unsubmitted/ unapproved timesheets for each individual contractor is system generated and the number of hours worked by each contractor is adjusted for expected holidays and the historical shrinkage rate. The key estimation uncertainty arises from determining the historical shrinkage rate which is used to constrain the variable part of revenue, i.e. Contract assets, at the reporting date. The historical shrinkage rate represents a full-year (12-month rolling) average pattern in which revenue recognised for expected timesheets is reduced versus the actual timesheets received and approved each month.
In FY23, the average shrinkage rate was approximately 12.8% across the Group (FY22: 14.6%).
A 10% increase in this key assumption could have an impact of approximately £0.3 million on the amount of Contract net fees (£1.3 million on revenue less £1.0 million on costs of sales) in the Consolidated Income Statement in the next financial year. The Group's operating segments are established on the basis of those components of the Group that are regularly reviewed by the Group's chief operating decision making body, in deciding how to allocate resources and in assessing performance. The Group's business is considered primarily from a geographical perspective. The Directors have determined the chief operating decision-making body to be the Executive Committee made up of the Chief Executive Officer, the Chief Financial Officer, the Chief Operating Officer, the Chief Commercial Officer and the Chief People Officer, with other senior management attending via invitation. In the current financial year, the Group has changed its reporting structure and going forward it will segment the business into the following reportable regions: DACH, Netherlands including Spain (Spain is managed from the Netherlands), Rest of Europe, USA and Middle East & Asia. The comparative numbers have been restated in accordance with the new reporting structure. The reporting structure in the previous financial year was: EMEA excluding DACH, DACH, USA and Asia Pacific. The Group will continue to present separately the net fees of its five key markets: Germany, the Netherlands, the USA, the UK and Japan. In addition, what it previously referred to as sectors, has now been renamed as 'skills mix'. Finally, Contract and Permanent are from now on referred to as 'service mix'. DACH region comprises Austria, Germany and Switzerland. Rest of Europe comprises the UK, Belgium and France, and Middle East & Asia includes Japan and UAE. Countries aggregated into DACH and separately into Rest of Europe have similar economic risks and prospects, i.e. they are expected to generate similar average gross margins over the long term, and are similar in each of the following areas:
The Group's management reporting and controlling systems use accounting policies that are the same as those described in these financial statements and the accompanying notes.
Revenue and net fees by reportable segment
The Group assesses the performance of its operating segments through a measure of segment profit or loss which is referred to as ‘net fees’ in the management reporting and controlling systems. Net fees is the measure of segment profit comprising revenue less cost of sales.

2 Operating segments continued
Split of revenue from contracts with customers The Group derives revenue from the transfer of services over time and at a point in time in the following geographical regions:
Major customers In FY23 and FY22, no single customer generated more than 10% of the Group's revenue.
Other information
The Group's revenue from external customers, its net fees and information about its segment assets (non-current assets excluding deferred tax assets) by key location are detailed below:
Non-current assets do not include Deferred Tax Assets as they are not reviewed by the CODM. The following segmental analysis by brands, recruitment classification and sectors (being the profession of candidates placed) has been included as additional disclosure to the requirements of IFRS 8 Operating Segments.
Other brands, including Global Enterprise Partners, JP Gray, Madison Black, Newington International and Orgtel are rolled into the above brands.

3 Administrative expenses

3  Administrative expenses continued
(b)  Auditors' remuneration During the year, the Group (including its subsidiaries) obtained the following services from the Company's auditors and its associates.

4  Directors and employees
Accounting policy
Employee benefits
Wages, salaries, bonuses, social security contributions, paid annual leave or sick leave and any other employee benefits are accrued in the period in which the associated services are rendered by employees to the Group. The Group operates defined contribution pension schemes. The assets of the schemes are held separately from those of the Group in independently administered funds. The pension costs charged to the income statement represent the contributions payable by the Group to the funds during each period.
Share-based payments
The Group operates a number of equity-settled share-based arrangements, under which it receives services from employees in return for equity instruments of the Group. The cost of equity-settled transactions with employees is measured by reference to the fair value at the date when equity instruments are granted and is recognised as an expense over the vesting period, which ends on the date on which the employees become fully entitled to the award. Fair value is determined by using an appropriate valuation model. No expense is recognised for awards that do not ultimately vest. For the awards with non-vesting conditions (awards that do not have an explicit or implicit service requirement), the full cost of the award is recognised on the grant date, i.e. they are treated as fully vested irrespective of whether or not the market condition is satisfied. At the end of the reporting period, the cumulative expense is calculated, representing the extent to which the vesting period has expired and the best estimate of the achievement of non-market conditions and the number of equity instruments that will ultimately vest. The movement in cumulative expense since the previous year end is recognised in the income statement, with a corresponding credit recognised in equity. Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation and any cost not yet recognised in the income statement for the award is expensed immediately. Any compensation paid, up to the fair value of the award, at the cancellation or settlement date, is deducted from equity, with any excess over fair value being treated as an expense in the income statement. Aggregate remuneration of employees, including Directors, in continuing operations was:
The staff costs capitalised during the year on internally developed assets (note 10) and not included in the above amounts were £2.7 million (FY22: £0.3 million). The average monthly number of employees (including Executive Directors) during the year was:
USA 367 131 498 USA 444 130 620 574 1,107 The breakdown of group headcount for the prior year has been restated to reflect the new segmental reporting structure (see details in note 2 Operating segments). The average number of employees is derived by dividing the sum of the number of employees employed under contracts of service in each month (whether throughout the month or not) by the number of months in the financial year, irrespective of whether they are full-time or part-time. There were also 3,441 (FY22: 3,613) contractors engaged during the year under the Employed Contractor Model (ECM). They are not included in the numbers above as they are not considered to be full-time employees of the Group. The labour costs of employed contractors is treated as the direct costs attributable to the delivery of SThree's recruitment services to its clients. The entire ECM cost, which in the current year amounted to £349.6 million (FY22: £335.9 million), is therefore captured within cost of sales. Details of the Directors' remuneration for the year, including the highest paid Director, which form part of these financial statements, are provided in the Directors' remuneration report (section 1.1). Directors' compensation for loss of office was £0.4 million (FY22: £0.1 million). of Europe 1,066 of Europe
5 Finance income and finance costs
Accounting policy
Finance income is recognised as the interest accrues to the net carrying amount of the financial asset. Finance cost is recognised in the income statement in the period in which it is incurred.

6 Income tax expense
Accounting policy
The tax expense comprises both current and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before income tax as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax
Deferred tax is provided in full, using the liability method, on temporary differences at the reporting date arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is calculated using tax rates that are expected to apply when the related deferred tax asset is realised, or the deferred tax liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the reporting date. Deferred tax assets are recognised only to the extent that it is probable that sufficient future taxable profits will be available to allow all or part of the deferred tax asset to be utilised. Where an entity has been loss-making, deferred tax assets are only recognised if there is convincing evidence supporting its future utilisation.

(b) Reconciliation of the effective tax rate
The Group's tax charge for the year exceeds (FY22: exceeds) the UK statutory rate and can be reconciled as follows:
The Group expects to receive additional tax deductions in respect of share options currently unexercised. Under IFRS, the Group is required to provide for deferred tax on all unexercised share options. Where the amount of the tax deduction (or estimated future tax deduction) exceeds the amount of the related cumulative remuneration expense, this indicates that the tax deduction relates not only to remuneration expense but also to an equity item. In this situation, the excess of the current or deferred tax should be recognised in equity. At 30 November 2023, a deferred tax asset of £1.4 million (FY22: £1.1 million) was recognised in respect of these options (note 18). On 20 June 2023, Finance (No.2) Act 2023 was substantively enacted in the UK; the Act introduced a multinational top-up tax and domestic top-up tax as part of the UK's adoption of the OECD's Pillar Two Global Anti-Base Erosion rules. This will apply for accounting periods beginning on or after 31 December 2023. The Group has applied the exception under the Amendments to IAS 12 Income Taxes to not disclose information about deferred tax assets and liabilities related to the OECD Pillar Two Income Taxes.
7 Earnings per share
Accounting policy
Basic earnings per share (EPS) is calculated by dividing the profit for the year attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the period excluding shares held as treasury shares (note 19(a)) and those held in the Employee Benefit Trust (EBT), which for accounting purposes are treated in the same manner as shares held in the treasury reserve. Diluted EPS is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive ordinary shares arising from exercising employee stock options and tracker shares. For accounting policy regarding EBT, refer to note 19 Equity.

8 Dividends
Accounting policy
Interim dividends are recognised in the financial statements at the earlier of the time they are paid or shareholders' approval. Final dividends declared to the Company's shareholders are recognised as a liability in the Company's and Group's financial statements in the period in which they are approved by the Company's shareholders. The Company recognises dividends from subsidiaries at the time that they are declared.
2. The FY22 interim dividend of 5.0 pence (FY2t: 3.0 pence) per share was paid on 2 December 2022 to those shareholders on the register of SThree plc on 4 November 2022. 3. The FY22 final dividend of 11.0 pence (FY2t: 8.0 pence) per share was paid on 9 June 2023 to shareholders on record on 12 May 2023. 4. The FY23 interim dividend of 5.0 pence (FY22: 6.0 pence) per share was paid on 8 December 2023 to shareholders on record at 10 November 2023. The £6.4 million in funds, required for settlement of the interim dividend, were first transferred to the share administrator before 30 November 2023. 6. The Board has proposed the FY23 final dividend of 11.6 pence (FY22: 11.0 pence) per share, to be paid on 7 June 2024 to shareholders on record at 10 May 2024. This propos dividend is subject to approval by shareholders at the Company's next Annual General Meeting on 25 April 2024, and therefore has not been included as a liability in these f statements.
9  Property, plant and equipment
Accounting policy
Property, plant and equipment is recorded at cost less accumulated depreciation and any impairment losses. Subsequent expenditure is added to the carrying value of the asset when it is probable that future economic benefits, in excess of the originally assessed performance of the existing asset, will flow to the Group and the costs can be measured reliably. All other subsequent expenditure is expensed in the period in which it is incurred. Depreciation is provided on a straight-line basis and charged to the income statement over the expected useful working lives of the assets, after they have been brought into use, at the following rates:
Gains and losses on disposals are included in the income statement by comparing proceeds with carrying amount. Residual values and useful lives are reviewed and adjusted if appropriate at the end of the reporting period. Any changes are accounted for prospectively. Property, plant and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of the asset's fair value less cost to sell and its value in use. For accounting policy regarding right-of-use assets, refer to note 15 Leases.
9  Property, plant and equipment continued
The movements of property, plant and equipment by class of assets are as follows:
A depreciation charge of £15.9 million (FY22: £18.7 million) was recognised in administrative expenses. During the year, certain assets such as server hardware, which became obsolete due to data centre exit, and other office equipment were found to be no longer operational. These assets with a total net book value of £0.2 million (FY22: £0.1 million) were disposed of, incurring a loss on disposal of less than £0.2 million (FY22: a loss on disposal of £0.1 million). For the carrying amount of right-of-use assets per class of underlying asset refer to note 15. During the year, the Group early- terminated certain lease contracts (including the write-off of the corresponding lease liabilities) resulting in no gain or loss on lease modification (FY22: net gain on lease modification of £0.3 million). The Company has no property, plant and equipment.
10  Intangible assets
Accounting policy
Goodwill
Goodwill arising on consolidation represents the excess of purchase consideration over the fair value of the Group's share of the identifiable net assets of the acquired subsidiary at the date of acquisition. Goodwill on the acquisition of subsidiaries has an indefinite useful life and is included in intangible assets. If the goodwill balance is material, it is tested annually for impairment and carried at cost less accumulated impairment losses. Any impairment is recognised immediately in the income statement and is not subsequently reversed. On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
Acquired and developed software and systems
Computer software acquired or developed by the Group is stated at cost less accumulated amortisation. Costs incurred on software and system development projects are only capitalised if capitalisation criteria under IAS 38 Intangible Assets (IAS 38) and IFRS Interpretation Committee (IFRIC) interpretation of Software-as-a-Service (SaaS) are met. These are amortised as follows: Acquired computer software expected useful life of three to seven years Software and system development costs expected useful lives not exceeding five years Software maintenance costs are expensed in the period in which they are incurred. Other costs linked to development projects that do not meet the IAS 38 criteria are expensed in the period incurred.
Assets under construction
Purchased assets or internally generated intangible assets that are still under development are classified as 'assets under construction'. These assets are reclassified within intangibles over the phased completion dates and are amortised from the date they are reclassified.
Trademarks
Acquired trademarks are stated at cost and are amortised over the estimated useful life (up to 12 years) on a straight-line basis. Impairment of intangible assets Assets that are not subject to amortisation are tested for impairment annually. Any impairment loss or gain is recognised in the income statement. Impairment loss is the excess of an asset's carrying amount over its recoverable amount. The recoverable amount represents the higher of an asset's fair value less costs to sell and its value in use. Value in use is measured based on the expected future discounted cash flows attributable to the asset. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).
10 Intangible assets continued

development costs were capitalised in the statement of financial position. In addition, the Group incurred £3.8 million in costs spent on research-related and administrative costs which were expensed immediately to the income statement. At the reporting date, all the costs capitalised in the statement of financial position were classified as assets under construction due to the ongoing testing procedures. Management expects that these assets are likely to be brought into use in Q2 FY24 at the earliest. Accordingly, the asset amortisation is expected to start in the second half of the next financial year. In the prior year, management expensed £1.7 million (including £0.5 million in accelerated amortisation) worth of the legacy development costs and assets no longer in use to the income statement. An amortisation charge for FY23 was immaterial, less than of £0.1 million (FY22: £0.2 million), and was included in administrative expenses. Disclosures required under IAS 36 Impairment of Assets for goodwill impairment have not been included on the basis that the goodwill value is not considered material. The Company has no intangible assets.
11  Investments
Accounting policy
Equity investments The Group classifies its financial assets in the following measurement categories: ● those measured subsequently at fair value, either through other comprehensive income (FVOCI) or through profit or loss;
Classification depends on the Group's business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will be recorded in either profit or loss or OCI. For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at FVOCI. Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payments of principal and interest.
Subsidiaries
Investments in shares in subsidiary companies are stated at cost less impairment loss to the extent that the carrying value exceeds the recoverable amount; the investment is impaired to its recoverable amount with the impairment charged to the Company's income statement. An investment is deemed to be impaired when it has been determined that its carrying value will not be recovered either through actual cash flows or operating profit generation or selling it. If circumstances arise that indicate that investments might be impaired, the recoverable amount of the investment is estimated. The recoverable amount is the higher of the fair value less costs to sell or its value in use. To the extent that the carrying value exceeds the recoverable amount, the investment is impaired to its recoverable amount. Where share-based payments are granted to the employees of subsidiary undertakings by the Company, they are treated as a capital contribution to the subsidiary and the Company's investment in the subsidiary is increased accordingly. The investments in shares in the undertakings outside of the Group, in particular where the Group does not have significant influence or control, are classified as financial assets held at fair value through other comprehensive income. At initial recognition, such shareholdings are measured at cost and on subsequent measurement dates they are fair valued on the basis of current prices generated for similar transactions or using an enterprise value to sales multiple valuation method.
Tracker share arrangements
Over the past years, until 2020, the Group invited selected senior individuals to invest in the businesses they manage, sharing in both the risk and reward. These individuals were offered equity ('tracker shares') in those businesses in return for making an investment. The amount of equity offered varied in different circumstances but was never over 25% of the overall equity of the business in question. The equity stake tracks the performance of the underlying business and the individuals receive dividends (if declared) by the 'tracked' business. If an individual remains a holder of the tracker shares for a pre-agreed period, typically three to five years depending on the vesting period applied to the tracker shares, they may then offer their vested tracker shares for sale to the Group, but there is no obligation on the Group to settle the arrangement. SThree will undertake a formal due diligence process to establish whether there is a sound business case for settling a tracker share and make an arm's length judgement. Should the Group decide to settle the tracker shares, it will do so at a price which is determined using a formula stipulated in the tracker share Articles of Association (Articles). SThree plc may settle in cash or in its shares, as it chooses. The Group policy is to settle in SThree plc shares. Consequently, the arrangements are deemed to be an equity-settled share-based payment scheme under IFRS 2 Share- based Payments (IFRS 2). Individuals paid the fair value for the tracker shares at the time of the initial subscription, as determined by an independent third- party valuer in accordance with IFRS 2 and taking into account the particular rights attached to the shares as described in the relevant businesses' Articles. The initial valuation always took into consideration factors such as the size and trading record of the underlying business, expected dividends, future projections, as well as the external market, sector and country characteristics. The external valuer was supplied with detailed financial information, including net fees and EBITDA of the relevant businesses. Using this information, an independent calculation of the initial Equity Value (EV) was prepared. This EV was then discounted to arrive at a valuation to take into account the relevant characteristics of the shareholding in the tracked business, for example the absence of voting rights.
11 Investments continued
The methodology for calculating the EV was applied consistently, although the data used varied depending on the size and history of the business. In FY21, the Directors decided to close the tracker share scheme for any new entrants/investments. If an individual leaves the Group before the pre-agreed period, they are entitled to receive the lower of the initial subscription amount they contributed or the tracker share fair value on the date of departure as set out under the Articles. To reflect this, a provision in relation to tracker shares is recognised to reflect the consideration for tracker shares received from individuals (note 17 Provisions). Up until FY14 certain individuals received loans from the Group to pay part of the initial subscription for their tracker shares, on which interest is charged at or above the HMRC beneficial loan rate. These loans are repayable by the individuals either at the time of settlement of their tracker shares, or via tracker share dividend, or when they leave the Group. These loans are included within other receivables (note 12 Trade and other receivables). During the vesting period, no share-based payment charge is recognised in the income statement on the basis that the initial subscription by the individual at the grant date equated to the fair value at that date. Dividends declared by the tracked businesses, which were factored into the grant date fair value determination of the tracker shares, are recorded in equity as ‘distributions to tracker shareholders’. When the Company issues new shares to settle the tracker share arrangements, the nominal value of the shares is credited to share capital and the difference between the fair value of the tracker shares and the nominal value is credited to share premium. If the Company uses treasury shares to settle the arrangements, the difference between the fair value of the tracker shares and the weighted average value of the treasury shares is accounted for in the retained earnings.
Critical accounting judgements
Tracker shares arrangements The tracker shares arrangements give the Group the choice to settle tracker shares in either cash or SThree plc shares. There are significant accounting differences between an equity-settled and cash-settled scheme. Judgement is therefore required as to whether this is a cash or equity-settled share-based payment scheme. Based on the Directors' judgement, the tracker share arrangements are accounted for as an equity-settled share-based payment scheme under IFRS 2 as the Group's policy is to settle its obligations under the arrangements in SThree plc shares. The Company settles tracker shares through either treasury shares or the issue of new shares in SThree plc. The Companies Act 2006 does not specify whether the issue of treasury shares to settle share-based payments should be accounted for in share premium or elsewhere. The Company has taken legal advice which confirms this is judgemental and therefore the approach taken by the Company is to include differences between the fair value of the tracker shares settled and the weighted average cost of treasury shares in retained earnings. Tracker shares can be repurchased from holders with either cash or SThree plc shares at the Company's discretion. Historically, the Company's policy and intention has been to settle tracker shares using SThree plc shares. Therefore, the judgement of the Directors is that this scheme is treated as equity-settled.
Indicators of impairment of investments in subsidiaries (Company only)
At each reporting date, the Company assesses whether there are indications of impairment of its investments in subsidiaries. The Company uses both external and internal sources of information to make this assessment, including significant adverse changes in the market or economic environment in which subsidiaries operate, the carrying amount of their net assets versus market value, or internal management that indicate that the financial performance of subsidiaries will be worse than budgeted. Only when an indication of impairment is identified, the Company performs a detail impairment review including calculations of recoverable amounts of the investments.
Group
The Group holds a minority shareholding (less than 1% of the total share capital issued) in RoboRecruiter, a company which invests in automated recruitment solutions. The investment is a financial asset classified as measured at fair value through other comprehensive income. Due to limited information about the current performance and prospects of this company, the investment was written off in full in the prior year.
This resulted in an increase in the Company's investment of £4.5 million (FY22: £6.0 million) in relevant subsidiary businesses. IFRS 2 requires that any options or awards granted to employees of subsidiary undertakings, without reimbursement by the subsidiary, increase the carrying value of the investment held in the subsidiaries. In FY23, the Company recognised a net increase in investments in its subsidiaries of £3.9 million (FY22: £4.1 million) relating to share options and awards including those under the Long-Term Incentive Plan, Save-As-You-Earn and Employee Share Purchase Plan schemes.
Assessment of investment impairment indications
The Company performed an assessment of impairment indications for its portfolio of investments in subsidiaries. Overall, owing to the Group's strategic focus on Contract and STEM, most of SThree businesses delivered a resilient trading performance in FY23, despite the persisting uncertainties in the wider macro-economic environment. Only two small investments, in Luxembourg and Canada, had to be written off in full due to limited growth potential. This resulted in the recognition of £0.1 million in impairment charge. With all developments and lead indicators of the Group's performance monitored closely, the Group remains confident about its strong market position. All regions continue to operate and execute on the Group's strategy and on this basis, management concludes that the majority of the investments' carrying value will continue to be recovered through profit and cash generation. In the prior year, following the Board's decision to significantly restructure our businesses in Ireland and Singapore, and to close the Hong Kong business, an impairment charge of £0.9 million was recognised in the Company's income statement in FY22. The net book values of these investments were written off in full. A full list of the Company's subsidiaries that existed as at 30 November 2023 is provided in note 25.
12 Trade and other receivables
Accounting policy
Trade receivables including contract assets are amounts due from customers for services performed in the ordinary course of business. They are initially recognised at fair value and subsequently measured at amortised cost using the effective interest rate method. The normal credit terms are between 14-30 days upon service provision, with 30 days becoming a more prevalent payment term. The Group applies the IFRS 9 simplified approach for trade and other receivables and follows an expected credit losses (ECLs) approach for measuring the allowance of its trade receivables. ECL provision has been considered for Contract assets but it is viewed as immaterial. The Group recognises a loss allowance based on lifetime ECLs at each reporting date. For invoices reviewed on a portfolio basis (i.e. not individually reviewed), the loss allowance for ECLs is provided at differing percentages determined based on historical collection experience, adjusted for forward-looking market factors specific to the debtors and the economic environment. Certain exposures within trade receivables are individually assessed for which the Directors make judgement on a client-by-client basis as to their ability to collect outstanding receivables. When reviewing significant outstanding invoices, the Directors consider qualitative factors that are available without undue cost or effort, such as a decrease in the debtor's creditworthiness, changes in external or internal credit ratings, macro-economic conditions, actual or expected deterioration in business performance of any particular debtor, and other known issues.
Derecognition of trade and other receivables
Trade and other receivables are derecognised when the rights to receive cash flows from these assets have expired or have been transferred. On derecognition, any difference between the carrying amount of an asset and the consideration received is recognised in the profit or loss. For critical accounting estimates regarding contract assets, refer to note 2 Operating segments.
Trade receivables are non-interest-bearing current financial assets. Contract assets represent the contract revenue earned but not invoiced at the year end. It is based on the value of the unbilled timesheets from the contractors for the services provided up to the year end. The corresponding costs are shown within trade payables (where the contractor has submitted an invoice) and within accruals (in respect of unsubmitted and unapproved timesheets) (note 14). In FY23, other receivables include £0.1 million (FY22: £0.1 million) for loans given to certain former employees towards their subscription for tracker shares (note 23(b)(iv)). Tracker share loans are unsecured and charged interest at a rate of 2% (FY22: 2%). No such new tracker share loans were given to employees during the current year or previous year. The Group establishes an allowance for doubtful accounts that represents an estimate of ECLs in respect of trade and other receivables. Movements in the impairment provision for trade receivables are shown in the table below.
The ECLs increased significantly YoY, primarily due to the ongoing macro-economic challenges, which are forecast to persist in the short term. The Group's exposure to a credit risk has deteriorated across various countries in which it operates. In FY23, a certain number of SThree's clients underwent insolvency proceedings or fell into administration due to experienced financial difficulties. The management team considers that the carrying value of the Group's and Company's trade and other receivables is approximately equal to their fair values and they are deemed to be current assets. The Company's financial assets are classified as held at amortised cost and there is no significant exposure to market risks (interest rate and foreign exchange risks). For further information on the Group's financial assets refer to note 23.
13 Cash and cash equivalents
Accounting policy
Cash and cash equivalents include cash-in-hand, deposits held with banks, and other short-term highly liquid investments with original maturities of three months or less. Bank overdrafts are classified as short-term borrowings unless they form part of a cash pooling arrangement where there is an intention to settle on a net basis, in which case they are reported net of related cash balances.
Cash and cash equivalents comprise cash and short-term bank deposits with an original maturity of three months or less, net of outstanding bank overdrafts. The carrying amount of these assets approximate their fair values. Substantially all of these assets are categorised within level 1 of the fair value hierarchy. The Group has four cash pooling arrangements in place at HSBC US (USD), HSBC UK (GBP), NatWest (GBP) and Citibank (EUR).
14 Trade and other payables
Accounting policy Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method.
The carrying amounts of the Group's and Company's trade and other payables are considered to be the same as their fair values, due to their short-term nature. The Company's financial liabilities are classified as held at amortised cost and there is no significant exposure to market risks (interest rate and foreign exchange risks). For further information on the Group's financial liabilities refer to note 23. Trade and other payables are predominantly interest-free, are unsecured and are usually paid within 15 days of recognition. Accruals include amounts payable to contractors in respect of unsubmitted and unapproved timesheets (note 12). Amounts due to subsidiaries are subject to annual interest at a rate of 15 basis points below the Group's external borrowing costs under its RCF.
15 Leases
Accounting policy
Leases, from a lessee perspective, are recognised as a right-of-use asset and a corresponding lease liability at the date when the leased asset is available for use by the Group. Assets and liabilities arising from a lease are initially measured on a net present value basis and are recognised as part of 'Property, plant and equipment', 'Non-current lease liabilities' and 'Current lease liabilities' in the statement of financial position. Lease liabilities include the net present value of the following lease payments: a) fixed payments less any lease incentives receivable; b) variable lease payments that are based on an index or a rate; c) amounts expected to be payable by the lessee under residual value guarantees, if any; d) the exercise price of a purchase option if the Group is reasonably certain it will exercise that option; and e) payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option. The lease payments are discounted using the interest rate implicit in the lease (if that rate can be determined), or the incremental borrowing rate (IBR), being the rate the Group would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions. In determining the IBR to be used, the Group applies judgement to establish the suitable reference rate and credit spread. Each lease payment is allocated between the liability and finance costs, within finance costs in the income statement. Lease payments are presented as follows in the Group statement of cash flows:
Right-of-use assets are measured at cost comprising the following: (a)  the amount of the initial measurement of lease liability; (b)  any lease payments made at or before the commencement date less any lease incentive received; (c)  any initial direct costs; and (d)  any restoration costs. The right-of-use assets are depreciated over the shorter of the assets' useful life and the lease term on a straight-line basis. The Group does not apply the recognition exemption to short-term leases or leases of low-value assets, as permitted by the standard. In determining the lease terms, the management team considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after a termination option) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). The assessment is reviewed if a significant event or change in circumstances occurs which affects this assessment and that is within the control of the lessee. The leases which are recognised in the Consolidated Statement of Financial Position are principally in respect of buildings and cars. The Group's right-of-use assets and lease liabilities are presented below:
The Consolidated Income Statement includes the following amounts relating to depreciation of right-of-use assets:
In the current year, interest expense on leases amounted to £0.6 million (FY22: £0.5 million) and was recognised within finance costs in the Consolidated Income Statement (refer to note 5 Finance income and costs). The total cash outflow for leases in FY23 was £14.9 million (FY22: £14.3 million) and comprised the principal and interest element of recognised lease liabilities.
16 Other financial liabilities
Accounting policy
Financial liabilities
All non-derivative financial liabilities are classified as 'financial liabilities measured at amortised cost'. All financial liabilities are recognised initially at fair value and net of transaction costs. They are subsequently measured at amortised cost using the effective interest rate method. Financial liabilities are classified as current liabilities unless the Group has an unconditional right to defer settlement for at least 12 months after the end of the reporting period. The Group's financial liabilities include trade and other payables and other financial liabilities, including bank overdraft and lease liabilities. The Group maintains a committed RCF of £50.0 million along with an uncommitted £30.0 million accordion facility, both jointly provided by HSBC and Citibank, giving the Group an option to increase its total borrowings under the facility to £80.0 million. During the current and previous year, the Group did not draw down under these facilities. The Group also has an uncommitted £5.0 million overdraft facility with HSBC, of which £nil was drawn at the year end (FY22: £0.4 million). The RCF is subject to financial covenants and any funds borrowed under the facility bear a minimum annual interest rate of 1.2% above the benchmark Sterling Overnight Index Average (SONIA). As the Group and the Company did not draw down under these facilities, the finance costs of £0.7 million (FY22: £0.5 million) were mainly related to lease interest. The covenants, which the RCF is subject to, require the Group to maintain financial ratios over interest cover, leverage and guarantor cover (note 23(b)(iii). The Group has complied with these covenants throughout the year. The Group's exposure to interest rates, liquidity, foreign currency and capital management risks is disclosed in note 23. Reconciliation of financial liabilities to cash flows arising from financing activities:

17 Provisions
Accounting policy
A provision is recognised in the statement of financial position when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are recognised at the present value of the expenditures expected to be required to settle the obligation. No provision is recognised for future operating losses.
Provisions are not discounted as the Directors believe that the effect of the time value of money is immaterial. The provisions are measured at cost, which approximates to the present value of the expenditure required to settle the obligation.
(b)  Information about individual provisions and significant estimates
Dilapidations The Group is obliged to pay for dilapidations at the end of its tenancy of various properties. Provision was made based on independent professional estimates of the likely costs on vacating properties based on the current conditions of the properties. The provision is captured within the carrying value of the right-of-use assets and depreciated to profit or loss over the lease term. Restructuring and termination payments At 30 November 2023, the provision comprised primarily future termination payments related to staff in the following businesses: France, Belgium, the USA, the Netherlands and Spain, as well as a number of other employees who will exit the business in early FY24. Termination payments are provided for staff exiting SThree in the normal course of business and in the case of a restructuring.
17 Provisions continued
The liability in relation to dilapidation, restructuring and termination payments provisions is expected to crystallise as follows:

Tracker share liability
The provision relates to an obligation to repay amounts received or receivable in relation to subscriptions for tracker shares awarded to senior individuals under the terms of the tracker share arrangements (note 11). The timing of economic outflow is subject to the factors governing each tracker share and is considered to be within one year. During the year, £0.5 million (FY22: £0.5 million) of the provision was utilised, principally in relation to settled tracker shares. There were no new subscriptions in the current year as the tracker share scheme was closed for new entrants/investments.
Legal
The provision relates to various ongoing legal and other disputes including employee litigation, compliance with employment laws and regulations, and open enquiries with tax and pension authorities. The provision relates to separate claims in a number of different geographic regions and represents our most probable estimate of the likely outcome of each of the disputes. The timing of economic outflow is subject to the factors governing each case.
Onerous contracts
The provision relates to partially underutilised leased offices in certain locations. The onerous contract provision was created for corresponding service charges (not capitalised within the initial recognition amount of right-of-use assets) which would be incurred for the remainder of the underlying lease terms.
18 Deferred tax

Deferred tax assets and liabilities are offset where the Group has a legally enforceable right to do so and when the deferred income taxes relate to the same fiscal authority. The following is an analysis of the deferred tax balances for financial reporting purposes:
Deferred tax assets that are expected to be recovered within one year are £2.6 million (FY22: £2.0 million) and deferred tax liabilities that are expected to be settled within one year are £0.01 million (FY22: £0.01 million). Deferred tax assets are recognised for carry-forward tax losses to the extent that the realisation of the related tax benefit through future taxable profits from the respective jurisdictions is probable. In assessing whether to recognise deferred tax assets, the Group considered both current and the forecast trading performance in these territories and the expectations regarding the levels of profitability that can be achieved. At the reporting date, the Group had unused tax losses of £27.3 million (FY22: £30.3 million) available for offset against future profits. No deferred tax asset was recognised in respect of the £27.3 million (FY22: £30.3 million) losses. The reduction in losses arises from expiration, recognition, exchange differences and utilisation. Included in unrecognised tax losses are losses of £0.8 million (FY22: £0.8 million) which are subject to expiry. Of this amount, £nil expires over the course of the next five years; and the remaining balance of £0.8 million will expire by FY43. A regional summary of our unrecognised operating tax losses is shown below.

Recognised operating losses were £nil (FY22: £nil) during the year.
The Group has the following uncertain tax positions: On transfer pricing risks, the provision increased during the year by £0.2 million to £2.5 million (FY22: £2.3 million). With regards to the European decision as of April 2019, that certain parts of the UK’s controlled foreign company legislation gave rise to state aid, the management team concluded that the provision for this uncertain tax position should remain in place at £1.4 million (FY22: £1.4 million). On 8 June 2022, the General Court of the European Union dismissed the applications for annulment from both the UK Government and one of the British broadcast television network companies. Both parties have now appealed this decision. The outcome of these appeals will be closely monitored by the management team to determine any implications on the Group's tax position. Nevertheless, the Group settled the £1.4 million requested by the HMRC and this amount is recorded as an asset held within current tax.
18 Deferred tax continued
Company The Company's deferred tax assets relate in full to the equity-settled share-based payments.

19 Equity
Accounting policy
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. The Group's holdings in its own equity instruments are classified as 'treasury reserve'. The consideration paid, including any directly attributable incremental costs, is deducted from the equity attributable to the owners of the Company until the shares are cancelled or reissued. No gain or loss is recognised in the income statement on the purchase, sale, issue or cancellation of own equity shares.
Employee Benefit Trust (EBT)
The EBT is funded entirely by the Company. The assets and liabilities of the EBT are recognised in the Group's Consolidated Financial Statements. The shares in the EBT are held to satisfy awards and grants under certain employee share schemes. For accounting purposes, shares held in the EBT are treated in the same manner as treasury shares and are, therefore, included in the Consolidated Financial Statements as treasury reserve. Consideration, if any, received for the sale of such shares is also recognised in equity, with any difference between the proceeds from sale and the original cost being taken to retained earnings. No gain or loss is recognised in the income statement on the purchase, sale, issue or cancellation of equity shares held by the EBT. In the separate financial statements of the Company, the EBT is treated as an agent acting on behalf of the Company. Funding provided by the Company to the EBT is accounted for as the issue of treasury shares. For accounting policy regarding tracker share awards in subsidiary companies, refer to note 11 Investments.
Group and Company
(a)  Share capital
The nominal value per ordinary share is £0.01 (FY22: £0.01). The Company does not have a limited amount of authorised share capital. During the year 409,818 (FY22: 831,845) new ordinary shares were issued, resulting in a share premium of £1.5 million (FY22: £2.8 million). Of the shares issued, 320,457 (FY22: 623,219) were issued to tracker shareholders on settlement of vested and unvested tracker shares and 89,361 (FY22: 208,626) pursuant to the exercise of share awards under the Save-As-You-Earn (SAYE) scheme. Treasury reserve Treasury shares represent SThree plc shares repurchased and available for specific and limited purposes. No shares were utilised from the treasury reserve during the current and previous year. At the year end, 35,767 (FY22: 35,767) shares were held in treasury reserve.
EBT
During the year, the EBT purchased 2,198,735 (FY22: 2,519,652) of SThree plc shares. The average price paid per share was 455 pence (FY22: 393 pence). The total acquisition cost of the purchased shares was £10.0 million (FY22: £9.9 million), for which the treasury reserve was reduced. During the year, the EBT utilised 2,046,423 (FY22: 1,671,868) shares on settlement of vested and unvested tracker shares, LTIP awards and free shares. At the year end, the EBT held 1,923,458 (FY22: 1,771,146) shares.
(b) Share-based payments
Tracker share awards in subsidiary companies As described in note 11, until FY19 the Group made tracker share awards in respect of certain subsidiary businesses to senior individuals who participate in the development of those businesses. During the year, the Group settled certain vested and unvested tracker shares for a total consideration of £4.5 million (FY22: £6.0 million) by issue of new shares or using treasury shares purchased from the market. This resulted in an increase in share capital and share premium for new issue, and reduction in capital reserves for utilised treasury reserve, with a corresponding reduction in the Group's retained earnings and provision for tracker share liability.
19 Equity continued
LTIP, SAYE, Employee Share Purchase Plan and other share schemes The Group has a number of share schemes to incentivise its Directors and employees. All schemes are treated as equity-settled (except a legacy Share Incentive Plan (SIP)) as the Group has no legal or constructive obligation to repurchase or settle the options in cash. The schemes are detailed below.
contractual life of three years at any point in time.
LTIP

Further details on the conditions of the LTIP are provided in the Directors' remuneration report on page 115. Out of the 3,501,313 LTIP options outstanding (FY22: 3,562,691), 12,643 LTIP options were exercisable (FY22: 20,853). Options exercised during the year under the LTIP were satisfied by new issue or shares held in the EBT. The related weighted average share price at the time of exercise was £3.91 (FY22: £3.98). The related transaction costs were negligible. The share options had a weighted average exercise price of £nil (FY22: £nil). The share options granted in FY23, and separately in FY22, under the Group LTIP scheme were valued as follows:
7. Expected volatility is determined by using the historic daily volatility of SThree plc's shares as measured over a period commensurate with the expected performance peri share options, i.e. three years.
Employee Share Purchase Plan (ShareMatch)
The ShareMatch plan was approved by the Remuneration Committee on 13 September 2021 and was launched on 21 November 2022. The ShareMatch was implemented in order to promote share ownership amongst all employees across the entire Group, linking employee benefit to the performance of the Company, and to aid retention of staff. Under the ShareMatch plan, employees are invited to make monthly contributions to buy SThree plc shares at the current market value. If an employee agrees to buy shares, the Company will match the number of shares bought with an award of shares (the so called matching shares), on a one-for-one basis up to the maximum value of £50.00 per month. For the purpose of valuing matching shares and to arrive at the corresponding share-based payment charge, management uses the market price at which matching shares were purchased at the time of their allocation to an employee's account. The matching shares are considered to be forfeited if the employee resigns or sells the purchased shares before the vesting date. In the current year, the Company awarded/granted 116,886 (FY22: none, as the scheme started in February 2023) matching shares to eligible employees. No shares under the ShareMatch plan vested during the current year.
Other schemes
The SAYE, Growth Incentive Plan, Free Shares and SIP arrangements are not deemed material for further disclosure. Further details behind the executive short-term incentive scheme, Deferred Shares, are provided in the Directors' remuneration report on page 117.
20 Contingencies
Legal
The Group is involved in various disputes and claims which arise from time to time in the course of its business. These are reviewed on a regular basis and, where possible, an estimate is made of the potential financial impact on the Group. The Group has contingent liabilities in respect of these claims. In appropriate cases a provision is recognised based on advice, best estimates and management judgement. The Directors currently believe the likelihood of any material liabilities to be low, and that such liabilities, if any, will not have a material adverse effect on its financial position.
21 Commitments
Capital commitments At the year end, the Group had capital commitments for property, plant and equipment and intangible assets amounting to £11.9 million (FY22: £16.6 million). Capital commitments include total future minimum lease payments under leases not yet commenced to which the Group was committed at the year end of £0.1 million (FY22: £0.5 million).
21 Commitments continued
Other commitments At the year end, the Group had also committed to future lease service costs of £3.9 million (FY22: £5.4 million).
Guarantees
At the year end, the Group/SThree plc had bank guarantees in issue for commitments which amounted to £3.4 million (FY22: £3.2 million).
Company
In FY23, selected UK subsidiaries (see note 25) were exempt from the requirements of the UK Companies Act 2006 (the Act) relating to the audit of individual accounts by virtue of Section 479A of the Act. The Company provides a guarantee concerning the outstanding liabilities of these subsidiaries under Section 479C of the Act.
22 Related party transactions
Group
Balances and transactions with subsidiaries were eliminated on consolidation and are not disclosed in this note. Transactions between the Group and its Directors and members of the Executive Committee, who are deemed to be key management personnel, are disclosed below.
Remuneration of key management personnel (KMP)
The Group's KMP comprises members of the Executive Committee, other members of the Board of Directors and key managers who have authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly. Further details of Directors' remuneration are included in the Directors' remuneration report on pages 117 to 119. The total number of KMP for the year was 15 (FY22: 14). Total remuneration for members of KMP, including three (FY22: seven) members who left the business during the current financial year, is detailed below:

Company
The Company has related party relationships with its subsidiaries, with members of its Board and key managers. The Directors' remuneration which they receive from the Company is disclosed in the Directors' remuneration report. The Company did not have any transactions with the Directors during the financial year other than those disclosed in the Directors' remuneration report and below. Details of transactions between the Company and other related parties are disclosed below.

Settlement of tracker shares with KMP
During the year, 35,676 (FY22: 102,991) shares were issued to the Chief Executive Officer (CEO) as part of the annual tracker shares settlement. Of the 12 tracker share businesses in which the CEO held interests, five were recommended for a full or partial buyout, each having been assessed against the normally applied criteria. The overall buyout offer value for the CEO was £0.1 million (FY22: £0.5 million) of which £0.1 million (FY22: £0.4 million) was accepted and settled in SThree plc's shares. Three (FY22: two) other members of KMP were also offered a full or partial buyout in FY23. Their total buyout offer was £0.7 million (FY22: £1.0 million) of which £0.6 million (FY22: £0.8 million) was accepted and settled in SThree plc's shares. No purchase or sales transactions were entered into between the Company and its subsidiaries.

23  Financial instruments and financial risk management
(a)  Financial instruments The Group holds and uses financial instruments to finance its operations and to manage its interest rate and liquidity risks. The Group primarily finances its operations using share capital, revenue and borrowings. The accounting classification of each category of financial instruments and their carrying amounts are set out below.
exclude non-financial liabilities. The prior year balances of other receivables and other payables were restated to correct two presentation errors. Firstly, in FY22, a bala million, which should have formed part of other receivables and separately of other payables, was shown net. After detailed review, management considered that presentation o a gross basis is more appropriate. Secondly, $0.6 million mainly in tax and social security-related items were incorrectly presented as part of other payables classified as amortised cost. Therefore, the prior year balances of other receivables, £2.8 million, and other payables, £9.9 million, were restated to £5.4 million and £11.9 million res Other than note 23, there is no impact on any other primary financial statement or note.
(b)  Financial risk factors
The Group reports in Sterling and pays dividends out of Sterling profits. The role of the Group's corporate treasury function is to manage and monitor external and internal funding requirements and financial risks in support of corporate objectives. Treasury activities are governed by policies and procedures approved by the Board. A treasury management committee, chaired by the Chief Financial Officer, meets on a monthly basis to review treasury activities and its members receive management information relating to treasury activities. The Group's internal auditors periodically review the treasury internal control environment and compliance with policies and procedures. Each year, the Board reviews the Group's currency hedging strategy to ensure it is appropriate. The Group does not hold or issue derivative financial instruments for speculative purposes and its treasury policies specifically prohibit such activity. All transactions in financial instruments are undertaken to manage the risks arising from underlying business activities, not for speculation. The Group corporate treasury function enters into a limited number of derivative transactions, principally currency swaps and forward currency contracts, with the purpose of managing the currency risks arising from operations and financing of subsidiaries.
The contracts were mainly taken out close to the year-end date for a period of 29 days (FY22: 30 to 32 days), and they had an immaterial fair value both at the current and prior year end. The Group is exposed to a number of different financial risks including capital management, foreign currency rates, liquidity, credit and interest rates risks, which were not materially changed from the previous year. The Group's objective and strategy in responding to these risks are set out below and did not change materially from the previous year.
(i) Capital risk management
The Group's objectives when managing capital are to safeguard the Group and its subsidiaries' ability to continue as going concerns to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to minimise the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, delay or reduce the settlement of vested tracker shares, sell assets to reduce debt, return capital to shareholders or issue new shares, subject to applicable rules. The Group's policy is to settle the vested tracker shares in the Company's shares. During the year, certain vested and unvested tracker shares were settled by issue of new shares or using treasury shares purchased from the market (note 19(a)). The capital structure of the Group consists of equity attributable to owners of the parent of £222.9 million (FY22: £200.4 million), comprising share capital, share premium, other reserves and retained earnings as disclosed in the Consolidated Statement of Changes in Equity and net cash of £83.2 million (FY22: £65.4 million), comprising cash and cash equivalents less bank overdraft (note 13). Except for compliance with certain bank covenants (note 23(b)(iii), the Group is not subject to any externally imposed capital requirements.
(ii) Foreign currency exchange risk management
The Group uses Sterling as its presentation currency. It undertakes transactions in a number of foreign currencies. Consequently, exposures to exchange rate fluctuations do arise. Such exchange rate movements affect the Group's transactional revenues, cost of sales, the translation of earnings and the net assets/liabilities of its overseas operations. The Group is also exposed to foreign currency risks from the value of net investments outside the United Kingdom. The intercompany loans which are treated as net investments in foreign operations are not planned to be settled in the foreseeable future as they are deemed to be a part of the investment. Therefore, exchange differences arising from the translation of the net investment loans are taken into equity. The Group's businesses generally raise invoices and incur expenses in their local currencies. Local currency cash generated is remitted via intercompany transfers to the United Kingdom. The Group generally converts foreign currency balances into Sterling to manage its cash flows.
Foreign currency sensitivity analysis
The Group is mainly exposed to the Euro and the US Dollar. If the Euro or the US Dollar strengthened against Sterling by a movement of 10%, the anticipated impact on the Group's results in terms of translational exposure would be an increase in profit before income tax of £8.7 million and £2.6 million (FY22: £6.9 million and £3.4 million) respectively, with a similar decrease if the Euro or the US Dollar weakened against Sterling by 10%.
(iii) Liquidity risk management
The Group's treasury function centrally coordinates relationships with banks, manages borrowing requirements, foreign exchange needs and cash management. The Group has access to a committed RCF of £50.0 million along with an uncommitted £30.0 million accordion facility in place with HSBC and Citibank, giving the Group an option to increase its total borrowings under the facility to £80.0 million. All these facilities remained undrawn on 30 November 2023 and 30 November 2022. The Group also has an uncommitted £5.0 million overdraft facility with HSBC of which £nil (FY22: £0.4 million) was used at the year end. The RCF is subject to certain covenants requiring the Group to maintain financial ratios over interest cover, leverage and guarantor cover. The Group complied with these covenants throughout the year. (1) Interest cover: the ratio of EBITDA to net finance charges shall not be less than the ratio of 4:1 at any time;
least 80% of the adjusted EBITDA and gross assets of the Group as a whole.
23  Financial instruments and financial risk management continued
The table below shows the maturity profile of the financial liabilities which are held at amortised cost based on the contractual (undiscounted) amounts payable on the date of repayment:

(iv)  Credit risk management
Risk management Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. In the normal course of business, the Group participates in cash pooling arrangements with its counterparty bank. The maximum exposure to a single banking group for deposits and funds held on account at the year end was £58.4 million (FY22: £40.6 million). The Group will not accept any counterparty bank for its deposits unless it has been awarded a minimum recognised credit rating of A3/Prime-2 (Moody's). Some local banks in emerging markets may have lower ratings but the funds at risk will be small. The Group will permit exposures with individual counterparty banks and exposure types up to pre-defined limits as part of the Group treasury policy. Exposure to all transaction limits is monitored daily. The Group mitigates its credit risk from trade receivables by using a credit rating agency to assess new clients and payment history to consider further credit extensions to existing clients. In addition, the spread of the client base (over 7,200 clients) helps to mitigate the risk of individual client failure having a material impact on the Group. The Group does not typically renegotiate the terms of trade receivables; hence the outstanding balance is included in the analysis based on the original payment terms. There were no significant renegotiated balances outstanding at the year end. The Group's credit risk from loans given to certain tracker shareholders (note 12) is immaterial. In FY23, one loan was repaid in full, and two remain outstanding (FY22: three outstanding tracker share loans) for the total amount of £0.1 million. Exposure to loans from individuals is regularly monitored and the individuals are asked to settle all or a portion of their outstanding balances when their tracker shares are settled, when they receive dividends or if they leave the business.
Climate-related matters
In the current year, the management team continued to monitor and mitigate any potential deterioration in clients' credit risk, in particular for a small proportion of the Group’s clients which are exposed to physical and transition risks associated with climate change. No material financial impact or deterioration in our clients' ability to settle their debt obligations was identified. In line with the Group's climate change strategy, our ambition is to deliver an appropriate level of oversight of ESG-related matters across our global client-base. This will help us to assess how our clients address ESG matters within their organisations, and whether their policies meet our standards and risk appetite.
Credit rating
The Group uses the following categories of internal credit risk rating for financial assets which are subject to ECLs under the three-stage general approach. These categories reflect the respective credit risk and how the loss provision is determined for each of those categories.

Impairment of financial assets
The Group applies the simplified approach by using the provision matrix to measure the lifetime ECLs for trade receivables and contract assets. At 30 November 2023, cash and cash equivalents, other receivables and refundable deposits are rated with a 'performing' internal credit rating. The credit risks on bank balances, other receivables and deposits are low as these balances are placed with reputable financial institutions or companies with good collection track records with the Group. To measure the ECLs, the Group considers historical payment patterns and credit characteristics of each client and adjusts for forward-looking information such as future prospects of the clients' core operating industries, the political and economic environment in which the Group's clients operate, and other information and factors on the clients' financial condition. Notwithstanding the above, the Group evaluates the ECLs on clients in financial difficulties and who have defaulted on payments separately. These receivables are not secured by any collateral or credit enhancements. Trade and other receivables are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the Group. Where receivables have been written off, the Group continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognised in profit or loss. The Group's credit risk exposure in relation to trade receivables and contract assets as at 30 November 2023 and 30 November 2022 is set out in the provision matrix as follows:

(v) Interest rate risk management
The Group is exposed to interest rate risk from the possibility that changes in interest rates will affect future cash flows or the fair values of its financial instruments, principally financial liabilities. The Group finances its operations through a mixture of retained profit and the RCF.
The Group does not hedge the exposure to variations in interest rates.
Taking into consideration all variable rate borrowings and bank balances at 30 November 2023, if the interest rate payable or receivable moved by 100 basis points in either direction, the effect to the Group would be minimal. 100 basis points was used on the assumption that applicable interest rates are not likely to move by more than this basis given the pattern of interest rate movements in recent years.
(vi) Interest rate profile of financial assets and liabilities
At the reporting date, the Group and the Company did not have any significant financial liabilities exposed to interest rate risk. The only financial assets which accrued interest were cash and cash equivalents (note 13) with maturity of less than a year and were subject to floating interest income.
23 Financial instruments and financial risk management continued

Other foreign currencies held by the Group include Canadian Dollar, Hong Kong Dollar, Australian Dollar, Japanese Yen, Malaysian Ringgit, Qatari Riyal, Singapore Dollar, Saudi Arabia Riyal, Swiss Franc and United Arab Emirates Dirham. The Company does not have a material exposure to other currencies.
(viii) Fair value
For all financial instruments, the carrying amount is either the fair value, or approximates the fair value. Fair value is the amount at which a financial instrument could be exchanged in an arm's length transaction between informed and willing parties, other than a forced or liquidation sale, and excludes accrued interest. Where relevant, market values were used to determine fair values. Where market values were not available, fair value was calculated by discounting expected cash flows at prevailing interest rates and by applying year-end exchange rates. The Group holds a minority shareholding in RoboRecruiter (see note 11) which fair value was written off to other comprehensive income in the prior year. The investment valuation was categorised within level 1 of the fair value hierarchy. All other Group’s financial assets or financial liabilities, which are not measured at fair value, have the carrying amounts which are a reasonable approximation of their fair values.

24  Subsequent events
There were no subsequent events following 30 November 2023.
25  List of subsidiaries
The full list of SThree plc's subsidiaries at 30 November 2023 and 30 November 2022, and the Group percentage of ordinary share capital and voting rights is as follows:
• The operations in this entity were discontinued. It will remain dormant until the liquidation process is completed. ** Directly held subsidiaries. All other subsidiaries are indirectly held Statutory guarantees and audit exemptions: The following Group entities are exempt from audit by virtue of Section 479A of the Companies Act 2006. SThree plc has provided statutory guarantees to all these entities in accordance with the Companies Act:

26 Alternative performance measures (APMs): definitions and reconciliations
In discussing the performance of the Group, comparable measures are used.
The Group discloses comparable performance measures to enable users to focus on the underlying performance of the business on a basis which is common to both periods for which these measures are presented. The reconciliation of comparable measures to the directly related measures calculated in accordance with IFRS is as follows.
APMs in constant currency
As the Group operates in 11 countries, and with many different currencies, it is affected by foreign exchange movements, and the reported financial results reflect this. However, the Group business is managed against targets which are set to be comparable between years and within them, for otherwise foreign currency movements would undermine the management ability to drive the business forward and control it. Within this Annual Report, comparable results have been highlighted on a constant currency basis as well as the results on a reported basis which reflect the actual foreign currency effects experienced. The Group evaluates its operating and financial performance on a constant currency basis (i.e. without giving effect to the impact of variation of foreign currency exchange rates from year to year). Constant currency APMs are calculated by applying the prior year foreign exchange rates to the current and prior financial year results to remove the impact of exchange rate. Measures on a constant currency basis enable users to focus on the performance of the business on a basis which is not affected by changes in foreign currency exchange rates applicable to the Group's operating activities from period to period. The calculations of the APMs on a constant currency basis and the reconciliation to the most directly related measures calculated in accordance with IFRS are as follows:
To calculate the YoY variances in constant currency, management compared the FY23 results in constant currency versus the FY22 reported results.
26  Alternative performance measures (APMs): definitions and reconciliations continued
Other APMs
Net cash excluding lease liabilities Net cash is an APM used by the Directors to evaluate the Group's capital structure and leverage. Net cash is defined as cash and cash equivalents less current and non-current borrowings excluding lease liabilities, as illustrated below:

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

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

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

Total shareholder return (TSR)
The Group uses TSR as an APM to measure the growth in value of a shareholding over a specified period, assuming that dividends are reinvested to purchase additional shares at the closing price applicable on the ex-dividend date. The TSR is calculated by the external independent data-stream party.
10. The results for the financial years 2019 to 2021 are presented on an adjusted basis, i.e. excluding the impact of exceptional items. 11. Based on full-time equivalents.
Results announcement timetable
SThree plc confirms the following forthcoming dates in the Group financial calendar:

Shareholder information
Shareholders with enquiries relating to their shareholding should contact Computershare Investor Services. Alternatively, you may access your account via www.investorcentre.co.uk, but will need to have your Shareholder Reference Number (SRN) available when you first log in. This can be found on your Welcome letter or other correspondence received from Computershare relating to your shareholding. The online facility also allows shareholders to view their holding details, update their address and dividend mandate instructions. Shareholders who would prefer to view documentation electronically can also elect to receive automatic notification by email each time the Company distributes documents, instead of receiving a paper version of such documents. You can again choose your preferred communication method by using the shareholder portal at www.investorcentre.co.uk. Alternatively, you can register your request via the registrar by calling +44 (0)370 707 1412. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Lines are open between 08.30–17.30, Monday to Friday excluding public holidays in England and Wales. Should you wish to change your mind or request a paper version of any document in the future, you may do so by contacting the registrar.
Potential targeting of shareholders
Companies have become aware that their shareholders have received unsolicited phone calls or correspondence concerning investment matters. These are typically from overseas-based brokers who target UK shareholders offering to sell them what often turn out to be worthless or high-risk shares in US or UK investments. They can be very persistent and extremely persuasive. It is not just the novice investor that has been duped in this way; many of the victims had been successfully investing for several years. Shareholders are advised to be very wary of any unsolicited advice, offers to buy shares at a discount or offers of free company reports. If you receive any unsolicited investment advice:
Reject unexpected offers
Scammers usually cold call, but contact can also come by email, post, word of mouth or at a seminar. If you have been offered an investment out of the blue, chances are it is a high-risk investment or a scam. Check the Financial Conduct Authority (FCA) Warning List Use the FCA Warning List to check the risks of a potential investment – you can also search to see if the firm is known to be operating without FCA authorisation. Get impartial advice Get impartial advice before investing – do not use an adviser from the firm that contacted you. You can report a firm or scam to the FCA on 0800 111 6768 or through www.fca.org.uk/scamsmart. If you have lost money in a scam, contact Action Fraud on 0300 123 2040 or www.actionfraud.police.uk.
Share price information
Information on the Company's share price can be found via: www.sthree.com.
ShareGift
ShareGift (reg charity no. 1052686) operates a charity share donation scheme for shareholders with small parcels of shares whose value may make it uneconomic to sell. Details of the scheme are available from www.sharegift.org or by calling 0207 930 3737.
Company information and corporate advisers
Executive Directors Timo Lehne Chief Executive Officer Andrew Beach Chief Financial Officer Whistleblowing hotline Tel: (UK) 0800 915 1571 Website: www.safecall.co.uk/report Financial advisers and stockbrokers Berenberg 60 Threadneedle Street London EC2R 8HP Investec Bank plc 30 Gresham Street London EC2V 7QP Financial PR Alma Strategic Communications 71-73 Carter Lane London EC4V 5EQ Auditors PricewaterhouseCoopers LLP 141 Bothwell Street Glasgow G2 7EQ Registrars (ordinary shares) Computershare The Pavilions Bridgwater Road Bristol BS13 8AE Tel: (UK) +44 (0)370 707 1412* Shareholder Portal: www.investorcentre.co.uk Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Lines are open between 08.30–17.30, Monday to Friday excluding public holidays in England and Wales. Group Company Secretary and registered office Kate Danson Group Company Secretary 1st Floor, 75 King William Street London EC4N 7BE Email: cosec@sthree.com Company number 03805979 Contact details Email: enquiries@sthree.com Web: www.sthree.com Printed by a carbon neutral company to the EMAS standard and Environmental Management System certified to ISO 14001. This product is made using recycled materials limiting the impact on our precious forest resources, helping reduce the need to harvest more trees. This publication has been manufactured using 100% offshore wind electricity sourced from UK wind. 100% of the inks used are vegetable oil based, 95% of press chemicals are recycled for further use and, on average 99% of any waste associated with this production will be recycled and the remaining 1% used to generate energy. The paper is Carbon Balanced with World Land Trust, an international conservation charity, who offset carbon emissions through the purchase and preservation of high conservation value land. Through protecting standing forests, under threat of clearance, carbon is locked-in, that would otherwise be released.