SThree (STEM) 27-Jan-2020 / 07:00 GMT/BST Dissemination of a RegulatoryAnnouncement that contains inside information according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group. The issuer is solely responsible for the content of this announcement.

SThree plc

("SThree" or the "Group")

FINAL RESULTS FOR THE YEAR ENDED 30 NOVEMBER 2019

STHREEANNOUNCES RECORD REVENUEANDOPERATING PROFIT

SThree, the onlyglobal pure playspecialist staffing business focused on roles in STEM(Science, Technology, Engineering and Mathematics), is today announcing its final results for the year ended 30 November 2019.

FINANCIAL HIGHLIGHTS

	2019 2018			Variance
	Adjusted (1)	Reported	Adjusted ( 2)	Reported	Movement (3)	Constant Currency Movement (4)
Revenue (£ million)	1,345.0	1,345.0	1,258.2	1,258.2	+7%	+6%
Contract net fees (£ million)	254.6	254.6	232.1	232.1	+10%	+8%
Permanent net fees (£ million)	87.8	87.8	89.0	89.0	-1%	-3%
Net Fees (£ million)	342.4	342.4	321.1	321.1	+7%	+5%
Operating profit (£ million)	60.0	57.7	53.9	47.5	+11%	+9%
Conversion ratio (%)	17.5%	16.9%	16.8%	14.8%	+0.7%pts	+0.6%pts
Profit before taxation (£ million)	59.1	56.8	53.4	47.0	+11%	+9%
Basic earnings per share (pence)	33.2p	31.8p	30.7p	26.6p	+8%	+7%
Proposed final dividend (pence)	10.2p	10.2p	9.8p	9.8p	+4%	+4%
Total dividend (pence)	15.3p	15.3p	14.5p	14.5p	+6%	+6%
Net cash/(debt) (£ million)	10.6	10.6	(4.1)	(4.1)	-	-

(1) 2019 figures exclude the impact of £2.3 million in net exceptional strategic restructuring costs and CEOchange costs.

(2) 2018 figures exclude the impact of £6.4 million in exceptional strategic restructuring costs.

(3) Variance compares adjusted 2019 against adjusted 2018 to provide a like-for-like view. (4) Variance compares adjusted 2019 against adjusted 2018 on a constant currency basis, whereby the prior financial year foreign exchange rates are applied to current financial year results to remove the impac t of exchange rate fluctuations.

(5) Net cash/(debt) represents cash & cash equivalents less borrowings and bank overdrafts.

HIGHLIGHTS

Record revenue and profit for theGroup

Revenue of £1.35bn up by6%*
Adjusted operating profit grewby9%* to £60.0m, a record level for theGroup
Adjusted profit before taxup 11%YoYto £59.1m (2018: £53.4m)
Reported profit before taxup 21%YoYto £56.8m (2018: £47.0m)
Strategic focus driving net fees growth for the full year of 5%*
- Strong growth in USA,Continental Europe andAsia Pacific &Middle East
- Good growth across Technology, Life Sciences, Energy&Engineering
- 86%ofGroup net fees generated from international markets (2018: 83%)
- Strong growth in Contract net fees up 8%*, in line with strategy, nowrepresenting 74%ofGroup net fees (2018: 72%)
- Permanent net fees down 3%*
Further improvements in operational performance
0.6%pts* improvement in conversion ratio to 17.5%, reflecting strong trading performance and cost savings delivered from the restructuring of support functions
- Bolstered management teams
Implemented newstrategic process and defined newstrategic pillars
Strong cash conversion underpins 6%increase in full year dividend to 15.3p (2018: 14.5p)
Year-end net cash position of £10.6m; underlining the cash flowresilience of our Contract emphasis and tighter working capital management.

* In constant currency

Mark Dorman,CEO, commented:

"I am pleased to be reporting today on a record year for the Group, during which we delivered an adjusted operating profit of £60.0m. This performance is a result of the hard work delivered throughout the business over the period.Our focus on STEM and flexible working is delivering good overall growth despite a challenging trading background.

Looking to the year ahead, we will continue to build our scalable platform. We will continue to invest in our people, data and technology as we execute against our focused strategy as outlined at our recent Capital Markets Day. Whilst early in the year, we can see that broader macro-economic and political uncertainties may well persist, and the trading environment remains similar to Q4. We have the right strategy, are in the right sectors and geographies, and our Contract focus will allowus to drive another year of progress towards our ambitions.

We have a unique position at the centre of long-term secular global trends and are focused on the right markets which will stand us in good stead for the future. In addition,we are building a platform businesswith the systems to increase the effectiveness of our execution. The opportunity for us is significant, and we are very well placed to capitalise on it, driving sustainable value for all of our stakeholders ."

SThree will host a live presentation and conference call for analysts at 0930GMTtoday. The conference call participant telephone details are as follows:

Dial in: 0800 358 9473 Call passcode: 90161391#

This event will also be simultaneously audio webcast, at http://bit.ly/STEM\_FY19. Please note that this is a listen only facility. An archive of the presentation will be available via the same link following the event.

SThree will issueQ1 trading update on Monday16 March 2020.

Enquiries:

SThree plc 020 7268 6000

MarkDorman,Chief ExecutiveOfficer AlexSmith,Chief Financial Officer Shaun Zulafqar, Senior CompanySecretarialAssistant

Alma PR 020 3405 0205 Rebecca Sanders-Hewett [email protected] HilaryBuchanan

Notes toeditors

SThree is the only global pure play specialist staffing business focused on roles in STEM(Science, Technology, Engineering and Mathematics). It brings skilled people together to build the future through the provision of specialist Contract and Permanent services to a diverse client base of over 9,000 clients. From its wellestablished position as a major player in the Technologysector, the Group has broadened the base of its operations to include businesses serving the Banking & Finance, Energy, Engineering and Life Sciences sectors.

Since launching its original business, Computer Futures, in 1986, the Group has adopted a multi-brand strategy, establishing new operations to address growth opportunities. SThree brands include Progressive, Computer Futures, HuxleyAssociates and Real Staffing Group. The Group has circa 3,100 employees in sixteen countries.

SThree plc is quoted on theOfficial List of the UKListingAuthorityunder the ticker symbol STEMand also has a USAlevel oneADRfacility, symbol SERTY.

Important notice

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

CHAIRMAN'S STATEMENT

I'm proud that SThree delivered in 2019 a record performance in terms of revenue, profitabilityand market penetration as we focused more tightly on providing our customers with the best STEMtalent, our candidates with the opportunity to fulfil their ambitions and potential, and our employees with engaging and rewarding work. This is all the more impressive given a complexand somewhat unpredictable macro-economic and political backdrop in some of our main markets.

Our purpose remains compelling and unchanged: bringing skilled people together to build the future. It is this purpose that governs our responsibility to all stakeholders. We have spent considerable effort and attention during the year to ensure thatwe are closer to our customers and candidate communities, and this remains a key future priority of the Group, together with enhancing our offering to employees and communicating better with our investors. We are pleased about the role that our business plays in wider society and have re-energised our CSR activities and implemented new initiatives under our ESG strategy. It is also significant that we have set ourselves a bold new target of reducing our absolute carbon emissions by 20% by 2024, helping to address one of the world's key challenges.

The achievements in the year are in no small part the result of our exceptional, committed and entrepreneurial team. As signalled last year, Gary Elden stepped down as CEOin March after nearly30 years in the business, the last sixof them as CEO. Garywas responsible for setting a number of the business foundations we have in place today and which provide an enviable springboard for future growth. We wish him all the best in his new endeavours and thank him for his leadership and direction. Iwould also like to thank Justin Hughes,who stepped down as COOin July, for his significant contribution over the last 25 years.

We were pleased to welcome Mark Dorman as CEO in March, bringing to SThree a wealth of experience in scaling international business service operations, delivering compelling strategies and leading great teams. He has alreadyshown himself to be an ambitious and insightful leader, and I look forward to continuing to work with him. The Board and I are confident that his relentless focus on value creation for all our stakeholders will be indispensable as we scale further. During the year we also made a number of significant appointments to our leadership teams around the world, bolstering our capabilities as we take the business into its next stages of growth.

In November we held our Capital Markets Day in London to update investors on our vision, strategic evolution and blueprint for success. Our huge market opportunityis also clear, and we are proud to have crystallised our strategyand pathwayto sustainable future growth.

On behalf of the Board, I would like to express our thanks for the tireless effort our colleagues put in every day to make SThree a trusted partner to our many customers and candidates. It is their drive and dedication to our purpose that elevates SThree as a global leader and partner of choice. It has been a pleasure for the Board and individual Board members to spend time visiting a number of our offices over the year, seeing the work being delivered across our platform, from our excellent operations and technologyactivities inGlasgowto the local market leadership we enjoyinAmsterdam.

Corporate governance remains a priorityand focus of the business and we have set ourselves FTSE250-appropriate targets and aspirations. We are also focused on initiatives to enhance diversity and inclusion across our organisation and remain committed to ensuring that all of our employees' voices are heard at every level.

Asense of excitement for the future is palpable across SThree. Our recently refined and newly articulated strategy provides us with confidence in our long-term success, supported by strong structural market drivers around STEMand flexible working, a great team and a corporate purpose that seems ever more relevant to meet manyof the world's future challenges and opportunities.

CHIEF EXECUTIVE OFFICER'S STRATEGIC REVIEW

The only global pure play STEM specialist [1]

SThree is at the centre of STEMand this has enabled us to deliver a robust financial performance in what has been one of the most uncertain macro-economic

and political periods since 2008. Over the year we have built on the strong foundations that were in place when I took over.Our continued focus on STEM, and our scale and global footprint in the right markets, combined with our ability to provide a full staffing solution for all our clients' needs means that we have delivered an all-time record profit performance.

Group net fees were up 5%* in the year. The growth was largelydelivered, as expected, through our key territories of Continental Europe and USA; the former was driven by our market-leading businesses in Germany and the Netherlands which together saw growth of 8%*, whilst the latter was up 9%*. We also made improvements in our other target markets, including a stand-out performance from our growing team in Japan, up 43%*. From a sector point of view, we saw robust growth across theGroup,with Technologyup 7%*, Life Sciences up 5%*, and Energy&Engineering up 14%*.

This performance is a result of the hard work delivered both strategicallyand operationally, and we continue to move closer to delivering on our vision of being the number one science, technology, engineering and mathematics ('STEM') recruiter in the best STEMmarkets.

Bringing skilled people together to build the future

It is clear to see our purpose of bringing skilled people together to build the future in action through the work that has been delivered in the period. The wide range of placements that we have made include, for example, a RegulatoryAffairs Consultant, who ensures life-changing medical devices meet the highest possible safetystandards before going to market, a Commissioning Manager whose planning and execution of key renewable energyprojects is helping to make the world a greener place, as well as a significant number of solar technicians who are providing homes and businesses across the US with environmentally-friendly solar energy. We provide a company's most important asset - its people - to the businesses that are at the centre of some of the biggest challenges going on in the world today. We are verypleased to be a true partner to those businesses, helping them build the future.

The scale of the growth and change as a result of the need for STEMskills going forward should not be underestimated.Addressing some of the biggest issues such as climate change and the huge demographic shifts is just the start. Skilled people are needed to solve these global challenges and drive the future. This creates a huge opportunityas manyof those skills,while still in high demand, are also in short supply, irrespective ofwhere we are in terms of economic cycle.

We truly understand the dynamics of our markets, both as they are now and where they are headed. Our knowledge of the STEM markets, the needs of businesses operating within them and the niche, local talentwe have built trusted relationships with is unrivalled. This is supported byour abilityto deliver a full set of resourcing solutions to our clients, whether that be Contract or Permanent, to support with incoming legislation, and to develop supply though the cultivation of candidate communities.

Alongside this, there are two factors driving the demand for flexible working. There is a generation of people entering the global labour force that have a very different view of the workplace. Millennials and Generation Z, particularly those with STEMskills, see their career through the lens of the various projects that they work on rather than the companies theywork for.At the same time, more and more companies are looking for contingent workers and flexible workforces, whether on large scale capital projects in Engineering or Life Sciences, or whether they're looking to upgrade their technologyand their innovation sphere project byproject. These dynamics continue to drive the need for the right talent in a supplyconstrained environment.

Our ability to find great talent and to curate that talent to make sure that it matches the right opportunity is the reason we are able to benefit from both of these trends. We are expert in engaging with both the client and the candidate all the waythrough a project, standardising our processes across the globe and ensuring the client and candidate come to our teams for their solutions going forward, making it a trulyrepeatable process.Our scale allows us to deliver this offering across the globe, in an increasinglycomplexregulatoryenvironment for our clients.Our scale, expertise and culture make us the partner of choice.

A scalable platform business able to drive further growth

Akeymilestone of the year has been the development and articulation of a refocused strategyfor the business that sets us up well to scale the business effectively and deliver consistentlyinto the future.

The long-term secular trends towards more flexible working manifests itself differentlyin the 70 different jurisdictions in which we place talent. In order to meet this opportunity, SThree has built a set of scalable service offerings, which are recurring in nature and which we deploy globally, allowing for long-term sustainable growth.

One of the important defining characteristics of SThree is our entrepreneurial spirit. It is trulya pleasure to be working with a team that generates an abundance of new opportunities and good ideas. Our future success will be reliant on our ability to channel those ideas and ensure we choose the right opportunities to focus on. As such, we have implemented a 'managing for value' programme process which assesses the economic value that would be created by each idea, and allows us to rank them bythe economic rate of return. This allows us to create real structure to help us execute our strategyacross five areas of focus - our current geographies and markets, investment in sales and marketing, the use of data to enhance our decision making, to help drive our business and innovation, while building on our operational capabilities.

Alongside the use of data to inform our business decisions we are also able to utilise valuable exhaust data from the activityacross our business. We understand what is going on in the STEMmarkets through the work we do, and this knowledge enables us to have the right people in the right place to help our clients. An example of this is the use of data points, internal and external, in order to select the optimum industry/skill base to invest in. This allows us to maximise productivity of our consultants and scale appropriatelywithin an industry/skill base.

We maintain our focus on embracing new technologies and believe that this should be central to everything we do. This will drive efficiency across our scalable, platform business and support the delivery to our customers. We will continue to capitalise on trends to remain relevant to our customers in a new digital era, whether that being newways ofworking or incremental improvements on an ongoing basis.

Building on our operational capabilities will underpin our execution going forward. Our creation of the Centre of Excellence in Glasgow was a foundational step in building first class global operations to create operational scale and leverage. From that foundational step we'll continue to invest as we move forward, enhancing our platform for growth.

Our sixprevious strategic pillars have been refined and we are now focused on executing across four keyelements.Our newstrategic pillars are the guideposts of howthe business will be driven going forward, and reflect howSThree will build upon its unique position in the market:

Leveraging our position at the centre of STEMto deliver sustainable value to our candidates and customers
Create a world class operational platform through data, technologyand infrastructure
To be a leader in the markets we choose to serve
Find, develop, retain great people

The right team to deliver on the opportunity

We have a truly great team with a wide breadth and depth of skills across our organisation, whether found in our experienced, long-tenured team that have been delivering the Group's robust performance over prior years, or in our experts from outside the industry that have joined to build upon the Group's foundations. Both have been working tirelesslyover the year to ensure the business is in its best position to capture the opportunityahead of us.

We were pleased to appoint Matthew Blake as Chief People Officer to develop and lead the Group's people strategy, and Kate Holden as Chief Strategy and DevelopmentOfficer to oversee the strategic planning process and successful deliveryof SThree's Group-wide strategic programmes.

Our people truly are our lifeblood and we are focused on creating the right culture and environment for our people to thrive. A full people strategy is being implemented, focused on driving engagement, shaping culture, developing talent, organisational design, reward and governance, risk and compliance. Truly reflecting the customer and candidate pools we serve is also keyand we are focused on building diversitythroughout the organisation, from top to bottom. To this end,we are building out our Diversityand Inclusion ('D&I') strategywhich will set out our ambition to become leaders of D&I in the staffing industry.Aligned with our broader Group strategic themes, our D&I commitments will centre around initiatives such as building communities, internal and external networking, data monitoring and data-based decision making, policy development, communication, talent management and leadership development. Alongside this, we are building our Learning &Development ('L&D') strategy through the creation of learning academies, and strengthening digitalisation (delivering learning the way our people want to learn). Supporting this is the identification and development of the newL&Dtarget operating model, structure and ways ofworking.

Outlook: at the centre of STEM

"Looking to the year ahead, we will continue to build our scalable platform. We will continue to invest in our people, data and technology as we execute against our focused strategy as outlined at our recent Capital Markets Day. Whilst early in the year, we can see that broader macro-economic and political uncertainties may well persist, and the trading environment remains similar to Q4. We have the right strategy, are in the right sectors and geographies, and our Contract focus

will allowus to drive another year of progress towards our ambitions.

We have a unique position at the centre of secular global trends and are focused on the right markets which will stand us in good stead for the future. In addition, we are building a platform business with the systems that will increase the effectiveness of our execution. The opportunity for us is significant, and we are very well placed to capitalise on it, driving sustainable value for all of our stakeholders."

CHIEF SALES OFFICER'S REVIEW

2019 saw growth for the Group with net fees up 5%*. Our Contract division, which represents 74% of the Group, saw strong growth of 8%* offset by a decline in Permanent down 3%* as anticipated. [2]

Global pure play STEM specialist

SThree is the only global, pure play STEMspecialist recruiter which makes our business unique. This enables us to service our customers, both candidates and clients, and achieve our purpose of bringing skilled people together to build the future.

Our unique scalable business can holisticallybe viewed in five keydistinct sections.

1.Customer

Our customers are split between SME to mid-size organisations and large enterprise organisations. Although it can vary regionally, our core business sits within SMEto mid-size which accounts for circa 82%of our business.

2. Skills We place 100% STEM skills, exclusively, no matter what sector. As ^a result, we are better insulated against the worst vagaries of the broader cycle. Our market intelligence tool uses 32 internal and external data points and enables us to identifywhat skills and markets to invest in.

3.Resource options We provide our customers with ^a full solution split into three distinct options, Freelance contractor, Employed contractor, and Permanent. Our blueprint programme provides a standard service globallywith options to fit regional needs.

4. Product type

Alongside our complete standard offerings, we also provide enhanced contract services to our customers. This provides additional value above and beyond our standard service and supplements the clients' existing workforce and demanding project requirements.

5. Service anddelivery

In order to deliver to our customers in the most effective waywe use a local model and a near shore model. Local deliverymodel uses technical market and sector specialists to build strong customer relationships with primarilySME and mid-market organisations. Near shore deliverymodel utilises our key account managers to provide scaled deliveryto enterprise organisations. We automate the process using technologyand utilisingAI to service the client efficiently.

Performance in 2019 [3]

The strategy to focus growth investment towards Contract in order to align SThree with the key drivers in its key markets continues to bear fruit with the mix of Contract net fees increasing to 74%of total Group net fees, up from 72%in 2018. Total net fees grew by5%* with strong performance in Contract partiallyoffset bya decline in Permanent.

Net fees per division	2019	2018	YoYVariance*
Contract	£254.6m	£232.1m	+8%
Permanent	£87.8m	£89.0m	-3%
Group	£342.4m	£321.1m	+5%

Contract/Permanent Split 2019 2018

Contract	74% 72%
Permanent	26% 28%

Regional

SThree has well established and, in many cases, leading positions in the best STEMstaffing markets across the globe. We are a well-diversified business with 86% of our net fees now generated outside of the UK & Ireland ('UK&I'). We are pleased to report that 2019 was another year where the majority of our regional businesses reported growth ahead of their domestic averages.

Performance in Continental Europe was pleasing with growth of 8%* in net fees. This is despite having strong prior year comparatives with net fees growing 20%* in 2018. Within Continental Europe,DACH grew 10%* and Benelux, France & Spain grew 4%*. Our keyaims in this region are to be the number one in the STEM space in bothGermanyand the Netherlands.

The Netherlands, which is a keybusiness hub for manymultinational companies, grew 8%* against strong prior year comparatives of 25%*. Germany continues to deliver strong growth with net fees up 9%*. The expansion of our Contract service, to include Employed Contractor Model in 2017, provided ourGerman business with further opportunities for growth. We also opened two new offices in Germanylocated in Hanover and Nuremburg, which enables us build towards our aim to be the number one in the STEMspace.

Our business in USAsaw robust growth of 9%* in net fees. This is on the back of strong prior year growth of 8%*. We believe the infrastructure that we have in place, alongside our experienced management team leaves us in a strong position to grow our net fees going into the new year and target an increased market share.

The UK&Iwas challenging in 2019 as the uncertainty surrounding Brexit and wider political environment continues to impact the region. Net fees for the year declined 9%* year on year. The UK is a mature recruitment market and is seeing slower industry growth than other geographies, however, it remains a strategic priorityfor theGroup. Following the restructuring of Permanent division in 2018,we appointed a new Managing Director inQ4 2019 to positivelyimpact performance.

Our Asia Pacific & Middle East ('APAC & ME') business delivered growth of 12%* in the year. This was driven largely by our excellent Japan business which grew 43%*. Japan is a veryimportant market for the Group where we have a small but fast-growing business providing the Group with substantial opportunity for further growth.

Net fees per region	2019	2018	YoYVariance*
Continental Europe	£196.7m	£183.3m	+8%
USA	£76.7m	£66.7m	+9%
UK&I	£48.2m	£53.1m	-9%
Asia Pacific &Middle East	£20.8m	£18.0m	+12%
Group	£342.4m	£321.1m	+5%

Sectors

Our largest sector, Technology, represents 45% of the Group's total net fees and net fees grew by 7%* in the year. All our regions other than UK&I experienced

growth in this sector.

Life Sciences grew net fees by 5%* in the year. USA, our largest region for this sector, grew net fees by 11%*. UK&I delivered robust growth of 4%*, offset by 2%* decline in Continental Europe.

Banking & Finance was a challenging sector for the Group with net fees declining by13%*. We saw a decline in UK&I of 22%* driven by the uncertainty surrounding Brexit.Continental Europe and USAboth declined in the year down 10%* and 21%*, respectively.

We saw strong growth in our Energy & Engineering sector, with net fees up 14%*. This was driven byUSAwhich grew 38%* and Continental Europe which grew 10%*.

Net fees per sector	2019	2018	YoYVariance*
Technology	£152.7m	£142.0m	+7%
Energy&Engineering	£73.9m	£64.0m	+14%
Life Sciences	£67.8m	£66.3m	+5%
Banking &Finance	£38.0m	£42.4m	-13%
Other	£10.0m	£6.4m	+3%
Group	£342.4m	£321.1m	+5%

Focuson Contract

Across multiple geographies there is an increasing shift towards flexible employment, and we believe our focus on STEM provides us a unique opportunity to capitalise on this shift. It is theGroup's strategyto invest and growour Contract offering.

Our average Contract headcount was up 10% year on year for the Group with all regions growing double digitwith the exception of UK&I which grew4%. Our increased weighting towards Contract means we are more resilient to changing market conditions and provides us with stronger and more sustainable profits. Our Freelance contractor model performs well across all our regions and the popularityof our Employed contractor model leaves us well placed to drive further growth.

BUSINESS REVIEW

DACH (Germany, Austria and Switzerland) (32%of Group net fees)

DACH, our largest region, enjoyed a strong 2019 with growth across Contract and Permanent.

		Net fees
	growth* YoY				2019 Mix
	Cont	Perm	Total	Cont	Perm
2019	+14%	+5%	+10%	65%	35%

Keydevelopments inthe year

Opening of two newoffices in 2019
Winner of 'Mittelstand Deutschland Top Employer 2019'
Continued investment in headcount up 13%
Double digit growth in net fees

Overview

2019 was an encouraging year for our DACH region in terms of net fee growth. Total net fees grew strongly and were up 10%* despite having strong prior year comparatives (2018: 21%*). [4]

Our employee proposition launched in 2018 was fullyimplemented for the year and we have continued to retain and growour talent.

2019 saw the opening of two new offices in Germany, located in Nuremburg and Hanover. These are now fullyoperational with a strong leadership team driving the business.

We developed a market intelligence tool allowing us to analyse the external market to ensure we are active in all the attractive and relevant spaces.

Our Employed Contractor Model ('ECM') which we implemented in 2017, saw an 84%increase in volume in 2019.On top of that, we saw a strong growth rate within our top 20 accounts of 37%year on year.

2019 net fees performance

DACH net fees grew 10%* in 2019 with our largest sector Technology growing 13%*. There was strong growth in Banking & Finance, up 19%* and Energy & Engineering up 11%*.

Contract performance was verystrong, up 14%* driven byour two largest sectors Technologyand Energy&Engineering, up 13%* and 16%* respectively. Life Sciences was up 7%* and Banking &Finance up 34%*.

Against some tough comparatives (2018: +19%*), Permanent sawgrowth of 5%*.Our biggest sector Technologygrew13%* on the prior year.Our other sectors saw a slowdown with Life Sciences down 11%*, Energy&Engineering down 11%* and Banking &Finance down 6%*.

2020 outlook

The broader German economy is sensitive to global trade tensions and we witnessed a deterioration in business sentiment through the course of 2019. Despite these concerns, German domestic consumer spending remained solid. SThree's strengths lie in the Mittelstand, and here the backdrop is proving more resilient. The high shortage of specialist labour inGermanyis continuing to be a challenge for employers,which points to supportive trading conditions in 2020.

We exit the year with a strong contractor book, our largest ECMorder book to date and a strong Permanent starter pipeline. In line with the Group strategy, we will continue to invest in DACHContract division along with a focused investment in Permanent in the markets where we see the best opportunityfor growth.

Benelux, France & Spain (26%of Group net fees)

Benelux, France &Spain is the second biggest region after DACHand accounts for 26%ofGroup net fees. 2019 sawgrowth of 4%* in overall net fees, however, our Permanent business has been challenging.

		Net fees
		growth* YoY		2019 Mix
	Cont	Perm	Total	Cont	Perm
2019	+8%	-13%	+4%	85%	15%

Keydevelopments inthe year

Continued investment in our ECMmodel which is the main driver of growth in Contract net fees and grewby31%* in 2019
Newregional office opened in Utrecht, the Netherlands, to improve client and candidate proximity
Appointed Managing Director for Regional Sales to maximise our position as a market leader in the region
Appointed Managing Director for Sales Operations &Business Improvement to create a scalable platform for growth

Overview

Benelux, France & Spain is the second largest region after DACH, representing 26% of the Group net fees. Despite softening macro-economic conditions, the region delivered a robust performance with net fees growth of 4%* in the year. [5]

Growth was mainly driven by our ECM model, which grew by 31%* and now accounts for 23% of Contract net fees. Our clients favour this model as it mitigates legislative risks.

We also continued our investment in building candidate communities of highlyqualified, niche skilled STEMtalent, so that we are in the position to deliver the best candidates to our long serving clients.

Permanent had a challenging year. However, in line with Group strategy, we focused on increasing productivity per consultant in our niche core STEMmarkets and we alreadysawthe impact as productivityincreased by3%.

2019 net fees performance

Overall net fees for the region were robust and we saw growth of 4%* in the year. The Netherlands was the standout performer with growth of 8%*, supported by France which grew3%*. Technology, our largest sector, had a strong performance in the year and grew9%*.

Contract performance for the region was strong with growth of 8%*. We saw double digit growth of 12%* in our biggest sector Technology. Energy &Engineering had a strong year with growth of 17%* and is now our second biggest sector. We saw good growth across the majorityof our key countries with the Netherlands, up 10%* and France up 7%*.Asmall decline was reported in Luxembourg.

Permanentwas down across all our countries (overall down 13%*) except for Spain.Average Permanent headcount declined by17%in the year.

2020 outlook

With soft macro-economic conditions continuing in the region, there are signs that growth may slow down. In line with our Group strategy, we will continue to invest in growing Contract in scarce STEMmarkets,where we see market opportunity, and improving Contract and Permanent productivity.

We are confident that with our well-diversified business in countries and sectors, combined with our highlyexperienced leadership team, we will be able to balance the selective investments for long term growth while managing the softer market conditions.

USA (22%of Group net fees)

During 2019, our USbusiness continued to showrobust growth with net fees up 9%*. The performance of our Contract division was particularlystrong, delivering 17%* growth in net fees.

		Net fees
		growth* YoY		2019 Mix
	Cont	Perm	Total	Cont	Perm
2019	+17%	-11%	+9%	78%	22%

Keydevelopments inthe year

Balanced further towards higher value Contract business (Contract net fees mix: 78%vs 73%in 2018)
Successful pilot of Enhanced Employment Services productwith Engineering sector clients resulting in 143%* higher average weeklynet fees
Further investment in contingentworkforce management expertise and thought leadership
Appointed a newVice President of TalentAcquisition to strengthen platform for headcount growth
Top 125 training magazine winner, third year running

Overview

USAis our third largest region and represents 22%ofGroup net fees.

Against a backdrop of softening performance from USAcompetitors, our USA business delivered accelerated growth in net fees while balancing the business further towards Contract.

Avery strong Contract performance was driven by our ongoing investment in the candidate communities of scalable, supply-constrained STEM markets which continued to drive customer value, resulting in accelerating growth and improving gross margins.

We also continued to benefit from our expertise in the increasingly complex regulatory environment relating to contingent workforce management in USA, as customers tryto navigate these risks.

Our mature ECMproduct now has more than 1,200 contractors employed on assignment across 44 US states. Meanwhile, the successful pilot of our Enhanced Employment Services productwith Engineering sector clients resulted in a significant increase in gross margins.

While Permanent performance declined, our new Permanent management team has refocused the business on scalable, supply-constrained STEMmarkets and built headcount to provide a platform for growth in 2020.

Further headcount growth will be supported by our new Vice President of Talent Acquis ition, who is strengthening our graduate recruiting platform, and by our multi-award winning induction program.

2019 net fees performance

USAdelivered a strong performance in 2019 with net fees growing 9%*. Energy&Engineering was the standout performer from a sector perspective with growth of 38%* against strong prior year comparatives. We continued to build on our customer portfolio, our strong position in renewable energy and broadened our product offering. Life Sciences, our largest sector in the region, grew11%*, and Technologygrew9%*. [6]

Contract performance was very strong in 2019, with growth of 17%*. We saw a double-digit growth in our three biggest sectors. Life Sciences up 19%*, Energy& Engineering up 45%*, and Technologyup 12%*.Average headcount in Contract increased by13%.

Our Permanent business sawa decline of 11%*, as the new management team tightened the focus on niche skill sets hired into our biggest opportunitymarkets to build a platform for growth.

2020 outlook

With a strong exit rate in number of contractors, especiallyin Energy&Engineering, Life Sciences and Technology,we expect continued growth into 2020. We expect Permanent to return to growth in 2020 as a result of the previouslymentioned measures implemented in 2019.

We are confident that we have the right team and structure to deliver a high-quality service to our clients and continue to penetrate the largest recruitment market in the world. Moreover,we have a highly scalable platform for future growth in the USbased on a clear and differentiated customer value proposition, mature product offering and infrastructure to support scale. We remain agile to cater for anyrisks or opportunities that are posed bythe market.

UK&I (14%of Group net fees)

Macro-economic and political uncertaintyimpacted performance during 2019 with net fees down 9%*.UK&I remains a strategic priorityfor theGroup and Contract sawgrowth in headcount of 4%.

		Net fees
		growth* YoY		2019 Mix
	Cont	Perm	Total	Cont	Perm
2019	-7%	-18%	-9%	84%	16%

Keydevelopments inthe year

Tom Wayappointed as Managing Director for UK&I inOctober 2019
Investment in Contract in line withGroup Strategy
Permanent division nowright sized following the 2018 restructure

Overview

2019 was a challenging year for the region impacted bythe continued uncertaintyaround Brexit and larger political environment.

Following the restructuring of our Permanent division in 2018, we appointed a new Managing Director in Q4 2019 to positivelyimpact performance.As a result, we refocused our leadership team to a regional deliverymodel.

While trading conditions were challenging,we sawsuccess in our Life Sciences business which grewin the year, alongside our robust public sector business.

The reform of IR35 in the private sector will be a significant change for clients and contractors. We have been activelypreparing our clients and candidates for the impact of this regulatorychange with a number of initiatives, and with our experience we believe we are well placed to minimise anyimpact.

2019 net fees performance

Challenging market conditions in the UK&I resulted in a net fees decline of 9%*. Although well diversified from a sector perspective, tougher market conditions meant that fees were down in most sectors except for Life Sciences,which was up 4%*. [7]

UK&I Contract net fees were down across most of our sectors with more competitive spaces such as Technologydown 6%*, Energy& Engineering down 8%* and Banking &Finance down 19%*. Life Sciences had a robust performance in the year with net fee growth of 2%*.

Permanent net fees were impacted by a slowdown in Technology and Banking & Finance which were down 30%* and 32%*, respectively. Life Sciences was a standout performer from a sector perspective and grew 9%* with Energy &Engineering up 4%*. Permanent headcount was significantly reduced in 2018 as part of our move to a specialist hub and onshore deliverymodel. This has nowbeen stabilised with headcount remaining at 2018 levels.

2020 outlook

While Brexit continues to remain a material uncertainty for the UK economy, we remain confident that we are set up to maximise the market opportunity, with the existing customer base and sectors.Regional organisation enables us to execute more effectivelyon our strategy.

IR35 intermediaries legislation applicable to private sector from April 2020 is starting to have an adverse impact on the UK business, but also gives us an opportunityto deliver fullycompliant services to our clients and candidates.

With our management team refocused on a regional deliverymodel we believe we are well placed to maximise opportunityin our second largest STEMmarket.

Asia Pacific & Middle East (6%of Group net fees)

The region delivered a double-digit growth of 12%*, driven byexcellent performance in Japan and strong performance in Dubai.

		Net fees
		growth* YoY		2019 Mix
	Cont	Perm	Total	Cont	Perm
2019	+6%	+16%	+12%	43%	57%

Keydevelopments inthe year

Office move in Dubai allowing the business to growover the next four years
Japan continued to growaggressivelyand became our largest countryin the region
Hong Kong experienced some macro-economic challenges, with political instability impacting the hiring patterns of some our key clients mainly in Contract division
We made key leadership appointments in 2019, mainly in Singapore andAustralia; these are critical hires that we expect to have a positive impact on both countries in 2020
Local credit control function in Middle East region hired in the second half of the year, allowing the business to mitigate the key risk of customer late payments

Overview

2019 was a veryencouraging year for the region as we grewour net fees and invested in headcount.

The continued growth in Japan,which sawaverage headcount grow50%,was the highlight of the year.

We were also verypleased with our business in Dubai which sawa strong double-digit growth in net fees.

Australia reported a 9%* growth in Permanent net fees.

2019 was a bit more challenging year for our Singaporean business,which underwent a significant restructuring that set the platform for growth in 2020.

2019 net fees performance

Total net fees for the region grew 12%* year on year. Our two largest sectors showed good growth within Technology, up 29%* and Banking & Finance, up 8%*. Energy&Engineering sawa small decline of 3%*. [8]

Our Permanent division, which accounted for 57% of net fees, saw very good growth of 16%*. This was driven primarily by Japan which was up 42%*. Japan Permanent grew across all sectors, with Technology growing 52%*, Life Sciences up 30%*, and Banking & Finance up 29%*. Dubai saw growth of 7%* in Permanent andAustralia grew9%*. This was offset bya decline in Singapore, down 32%*.

Our Contract business grew 6%* in the year. Dubai Contract was up 19%*, which was driven by a strong performance in Banking & Finance, up 87%*. This was supported byour small but growing Contract business in Japan which grew53%*.Australia Contractwas down in the year with net fees declining 7%*.

2020 outlook

We will continue to invest in our Japanese Permanent business with planned investment in our operations and support functions as well as sales headcount. In Asia Pacific the demand for Technology skills is growing very fast. As a gl obal pure play STEMspecialist, we are well positioned against our competitors and occupya position in the market that benefits from innovation and the ever-evolving technologymarket.

With our office move in Dubai completed,we will continue to invest in Middle EastContract across both Energy&Engineering and Banking &Finance sectors.

We will continue to maintain a market leading position in Permanent division, with particular focus on placing candidates at an executive level within Banking & Finance sector.

CHIEF FINANCIAL OFFICER'S REVIEW

The strength of our model has enabled us to deliver another year of strong performance in 2019.

Income statement

Revenue for the year was up 7% to £1.35 billion on a reported basis and up 6% on a constant currency basis (2018: £1.26 billion). On a reported basis, net fees increased by7%, and 5%on a constant currencybasis, to £342.4 million (2018: £321.1 million).

In constant currency, growth in revenue exceeded the growth in net fees as the business continued to remixtowards Contract.

Contract represented 74%of the Group net fees in the year (2018: 72%). This change in mixresulted in a marginal decrease in the overall net fees margin to 25.4% (2018: 25.5%), as Permanent revenue has no cost of sale, whereas the cost of paying a contractor is deducted to derive Contract net fees. The Contract margin increased marginallyto 20.3%(2018: 19.9%).

The reported operating profit was £57.7 million, up 22%. The adjusted operating profit was £60.0 million, up 11% year on year (2018: reported £47.5 million and adjusted £53.9 million). The adjusted operating profit excluded exceptional costs of £2.3 million that were incurred in the current year primarilyin respect of the CEO changes and restructuring of senior leadership (2018: £6.4 million due to relocation of support functions).

Our operating profit conversion ratio has increased by2.1 percentage points to 16.9%on a reported basis and 0.7 percentage points to 17.5%on an adjusted basis (2018: reported 14.8% and adjusted 16.8%). The increase reflects strong trading performance, primarily in our international markets, and operational cost savings delivered from the restructuring of our support functions.

Exceptional costs ('adjusting items')

In discussing the performance of the Group, comparable measures are used. This approach allows users of our financial statements to obtain a better understanding of the Group's operating and financial performance achieved from underlying activities. The following items of material or non-recurring nature were excluded from the directlyreconcilable IFRSmeasures.

Restructuring

Support functionrelocation

In 2019, the Group recognised a net income of £0.1 million in relation to support functions restructuring. It comprised personnel costs of £0.3 million and property costs of £0.3 million, subsequently offset by the government grant income of £0.7 million. The total net costs recognised to date amounted to £12.9 million (2018: £13.1 million). This restructuring has realised cost savings in excess of £5.0 million per annum.

Senior leadershiprestructuring

To continue to drive theGroup growth plans and deliver on our ambition to be the number one in our chosen STEMmarkets, a number of key changes were made to the senior leadership structure (impacting UK&I, Benelux, France & Spain, and Middle East). These changes will drive further alignment between our key markets, leading to a well-governed and efficient regional structure. Changes to the senior leadership structure resulted in the exceptional charge of £1.2 million in the current year.

CEOchange

The costs associated with the departure of the previous Chief Executive Officer ('CEO'), GaryElden, and the appointment of the new CEO, Mark Dorman, led to the recognition of an exceptional charge of £1.2 million in 2019. The total charge comprised contractual payments, recruitment and other professional fees, double running costs and relocation costs.

The Group alternative performance measures, used throughout this Annual Report, are fully explained and reconciled to IFRS line items in the Alternative Performance Measures section of theAnnual Report.

Accounting changes

On 1 December 2018, IFRS9 Financial Instruments ('IFRS9') and IFRS15 Revenue from Contractswith Customers ('IFRS15') became effective for theGroup.

IFRS9 introduced newrequirements for classification, recognition and impairment of financial assets.

Overall, IFRS9 had an immaterial impact on theGroup and no retrospective adjustments were made. Under IFRS 9, theGroup started to present changes in the fair value of all its equity investments in other comprehensive income, as these instruments are held for long-term strategic purposes. There were no changes to the Group's existing impairment methodologyfor trade receivables.

IFRS 15 was adopted on the modified retrospective basis. Under IFRS 15, the recognition of contingent consideration, such as Contract accrued income, is recognised as revenue provided that it is highlyprobable that its significant reversal will not occur when the uncertaintyassociated with the contingent consideration is subsequently resolved. Historically, the Group's policy of estimating Contract accrued income resulted in certain amount of revenue being reversed. On 1 December 2018 the Group revised the waythe Contract accrued income is estimated. This change resulted in a net post-taxadjustment of £2.3 million that reduced the opening balance of retained earnings on the date of initial application of IFRS15.

On 1 December 2019, the Group will adopt IFRS 16, a new lease accounting standard that requires to recognise a lease asset and lease liability for all contracts. The evaluation of the effect of adoption of the standard is substantially complete. On the date of initial application, we expect that the net assets will decrease by £0.8 million (a net result of an increase in total assets of £41.5 million offset byan increase in total liabilities of £42.3 million).

Operating costs

Adjusted operating costs, excluding exceptional costs of £2.3 million (2018: £6.4 million), increased by 6% to £282.3 million (2018: £267.2 million). The increase was mainly driven by additional investment in total headcount (6% increase year on year), 3%* increase in personnel costs (an 8%* increase in salaries partially offset bya reduction in redundancycosts and share-based benefits), and £3.2 million additional spend on ITlicenses. [9]

Payroll costs represented 78% of our cost base.Average total headcount was up by6% at 3,109 (2018: 2,926), with average sales headcount up 7%. The increase in average sales headcount was in response to supportive market conditions across most of our geographies primarily in Continental Europe (Benelux, France & Spain and DACHregions) and USA, (headcount up 8%and 11%respectively). The year-end total headcountwas up 7%at 3,196 (2018: 2,979).

The year-end sales headcount represented 77%of the total Group headcount.

Investments

During the year, we continued to invest in in-house innovation initiatives, expensing a total of £2.2 million (2018: £2.4 million) on our 'build' programme. We have reprioritised our innovation effort towards our most promising initiative,Hirefirst. It was launched in October 2018 and is at the early market testing stage. In the current year,Hirefirst generated its first revenue of £0.3 million.

During the year we wrote off in full two equityinvestments that theGroup held in the external innovation start-ups, i.e. The Sandpit Limited and Ryalto Limited.

The equity rights in The Sandpit Limited, which discontinued its operations earlier this year, were converted into a minority shareholding in The Sandpit Ventures Limited at an immaterial nominal book value.

Ryalto Limited continued to incur operating losses as it failed to gain momentum and build a customer base. Due to a lack of prospective buyers for the business, Ryalto's board of directors passed a resolution to liquidate the business.

In 2019, the Group transitioned to IFRS 9, a new financial instruments standard, accordingly, the write-offs of the equity investments were recognised in other comprehensive income.

Taxation

The tax charge on pre-exceptional statutory profit before tax for the year was £15.9 million (2018: £13.9 million), representing an effective tax rate ('ETR') of 26.9% (2018: 25.9%). The ETRon post exceptional statutoryprofit before taxwas 27.3%(2018: 27.1%).

The ETRis primarilydriven bycountryprofit mixand their respective taxrates.However, a number of other factors overlaythis base position, including:

i. Transfer pricing: The Group recharges support costs, and royalties for assets used throughout the business. As the bulk of the support costs and assets are held in the UK, which benefits from a relatively low tax rate, compared to our main businesses in Continental Europe and USA, our transfer pricing policygives rise to material taxcredits each year.However, this is an inherent risk thatwe (and all multinationals) run, as taxauthorities in all our jurisdictions question the policies. This risk is increasing as corporates must now provide increased information to taxauthorities, following the OECD BEPS' proposals, and governments around the world exchange this information.
ii. Loss-making business: Tax credits on loss making businesses maybe recognised to the extent that we consider future profits are likely. This pushes the Group ETR up. Conversely, any such businesses which become profitable can benefit from historic tax losses without recognising a tax charge. Such profitable businesses will push theGroup ETRdown.
iii. Finance companies:During the year theGroup closed its finance companies in Luxembourg and Ireland which took advantage of regulatoryarbitrage.
iv. Taxation of LTIP's: Corporate tax deductions are not allowable on the accounting charge for LTIP's. Instead, a corporation tax credit is available when employees exercise. To the extent LTIP's pay out less than anticipated on grant, this can result in not all of the cost of LTIP's is deductible for tax. In particular, to the extent the total shareholder return underperforms, the taxdeduction reduces proportionally, but the accounting charge does not.

Earningsper share ('EPS')

On an adjusted basis, basic EPS was up by 2.5 pence, or 8%, at 33.2 pence (2018: adjusted 30.7 pence), due to an increase in the adjusted profit before tax, partially offset by a 1.2 million increase in weighted average number of shares. On a reported basis, EPS increased to 31.8 pence, up 5.2 pence on the prior year (2018: 26.6 pence), attributable mainlyto an improved trading performance and decline in restructuring costs as explained above. The weighted average number of shares used for basic EPS grew to 129.9 million (2018: 128.7 million). Reported diluted EPS was 30.9 pence (2018: 25.7 pence), up 5.2 pence. Share dilution mainlyresults from various share options in place and expected future settlement of certain tracker shares. The dilutive effect on EPS from tracker shares will varyin future periods depending on the profitability of the underlying tracker businesses, the volume of new tracker arrangements created and the settlement of vested arrangements.

Dividends

The Board proposed to increase a final dividend to 10.2 pence per share (2018: 9.8 pence). Taken together with the interim dividend of 5.1 pence per share (2018: 4.7 pence), this brings the total dividend for the year to 15.3 pence per share (2018: 14.5 pence). This represents a 6% increase in dividend per share versus the prior year. The final dividend, which amounts to approximately £13.5 million, will be subject to shareholder approval at the 2020 Annual General Meeting. It will be paid on 5 June 2020 to shareholders on the register on 1 May2020.

The Board monitors the appropriate level of the dividend, taking into account, inter alia, achieved and expected trading of the Group, together with its balance sheet position.As previouslystated, the Board is targeting a dividend cover (1) of between 2.0xand 2.5x, based on underlying EPS, over the short to medium term. [10]

Share options and tracker share arrangements

We recognised a share-based payment charge of £2.7 million during the year (2018: £4.7 million) for the Group's various share-based incentive schemes. The lower charge in 2019 is primarily due to lower than expected non-market vesting conditions, such as strategic targets and regional trading performance. Furthermore, the share-based payment charge in the prior year was affected by the accelerated cost recognised for all 'good leavers' who left the Group as a result of strategic restructuring of our support functions.

We also operate a tracker share model to help retain and motivate our entrepreneurial management within the business. The programme gives our most senior sales colleagues a chance to invest in a business they manage with the support and economies of scale that the Group can offer them. In 2019, 52 employees invested an equivalent of £0.5 million in 23Group businesses.

We settled certain tracker shares during the year for a total consideration of £4.4 million (2018: £3.7 million) which was determined using a formula in theArticles of Association underpinning the tracker share businesses. We settled the consideration in SThree plc shares either byissuing newshares (475,738 newshares were issued on settlement of vested tracker shares in 2019) or treasury shares (in total 974,583 were used in settlement of vested tracker shares in 2019). Consequently, the arrangement is deemed to be an equity-settled share-based payment arrangement under IFRS 2 Share-based payments. There is no charge to the income statement as initially the tracker shareholders subscribed to the tracker shares at their fair value. We expect future tracker share settlements to be between £5.0 million to £10.0 million per annum. These settlements mayeither dilute the earnings of SThree plc's existing ordinary shareholders if funded bynew issue of shares or will result in a cash outflowif funded via treasuryshares.

Note 1 to the financial statements provides further details about all Group-wide discretionaryshare plans, including the tracker share arrangements.

Balance sheet

At 30 November 2019, the Group's net assets increased to £116.8 million (2018: £101.7 million), mainlydue to the excess of net profit over the dividend payments, offset byshare buybacks and decline in fair valuation of equityinvestments during the year.

The most significant item in our statement of financial position is trade receivables (including accrued income) which decreased to £256.2 million (2018: £274.6 million).

The main driver of the decline was an accounting adjustment of £13.0 million to the opening balance of the accrued income following the implementation of the new revenue standard IFRS 15. It was partially offset by a 3%* increase in Contract net fees Q4 year on year.Days Sales Outstanding ('DSOs') remained flat at 44 days (2018: 44 days).

Trade and other payables decreased to £172.4 million in 2019 (2018: £191.7 million), primarily due to £9.9 million in IFRS 15 adjustment, and the remainder is attributable to favourable movements in foreign exchange rates (£5.8 million), a 1% decline in contractors in Q4 year on year, and a decline in Creditor Days to 15

days (2018: 17 days).

Provisions decreased by£1.5 million primarilydue to a utilisation in a restructuring provision for the relocation of central support functions from London toGlasgow.

Investment insubsidiaries (Companyonly)

During the year, the Directors reviewed the recoverable amount of the Company's own portfolio of investments.As a result, an impairment loss of £8.2 million was recognised in respect of the UK operations. In 2019, the trading performance of the UK arm of the Group operations continued to decline due to the ongoing macroeconomic uncertainty surrounding Brexit and its outcomes. Both Permanent and Contract divisions across all sectors experienced reduced margins impacting the profitabilityof the UKregion.

After booking this impairment, the distributable retained earnings were £122.0 million (£2018: £156.5 million).

Strong cash generation

On an adjusted basis, we generated net cash from operations at £54.8 million (2018: £40.6 million on an adjusted basis). It reflects a combination of (i) the improved underlying trading performance, driven by our international markets, (ii) cost savings generated from the restructuring of support functions, and (iii) the benefits of operational efficiencies including cash collection.

Capital expenditure increased moderately to £4.6 million (2018: £4.2 million excluding £1.0 million in exceptional capital expenditure), reflecting higher spend on IT infrastructure and office fittings.

Overall, the cash conversion ratio (2) increased to 83.7% on an adjusted basis and 84.1% on a reported basis (2018: 67.4% on an adjusted basis and 52.3% on a reported basis). The net cash outflowassociated with exceptional items was £1.7 million (2018: £10.5 million). [11]

During the year, SThree plc bought back shares for £2.5 million (2018: £1.5 million) to satisfyemployee share schemes in future periods. Small cash inflows were generated from SaveAs You Earn employee schemes.

Income tax paid decreased to £12.9 million (2018: £14.4 million). The Group paid £0.9 million in net interest cost in the year. Foreign exchange had a moderate positive impact of £0.6 million (2018: £0.3 million).

Dividend payments increased to £18.8 million (2018: £18.0 million) as a result of the increased dividend per share and higher number of shares issued to the market. Distributions to tracker shareholders nearly doubled to £0.2 million (2018: £0.1 million) as a result of the improved trading performance of the tracked businesses.

We started the year with net debt of £4.1 million and closed the financial year with net cash of £10.6 million. The year-on-year improvement primarily reflected an increased cash collection focus and significantlyreduced cash outflows associated with theGroup restructuring.

Treasury management

We finance the Group's operations through equity and bank borrowings. The Group's cash management policy is to minimise interest payments by closely managingGroup cash balances and external borrowings. We intend to continue this strategywhile maintaining a strong balance sheet position.

We maintain a committed Revolving Credit Facility ('RCF') of £50.0 million, along with an uncommitted £20.0 million accordion facility, with HSBC and Citibank, giving the Group an option to increase its total borrowings under the facility to £70.0 million. At the year end, there were no draw downs (2018: £37.4 million) on these facilities.

The RCF is subject to financial covenants requiring the Group to maintain financial ratios over interest cover of at least 4.0, leverage of at least 3.0 and guarantor cover at 85%of EBITDA (3) and gross assets. The Group was in compliance with these covenants throughout the year. We ended 2019 with significant headroom on all our covenants. The funds borrowed under this facilitybear interest at a minimum annual rate of 1.3%above three-month LIBOR, giving an average interest rate of 2.0%during the year (2018: 1.8%). The finance costs for the year amounted to £1.0 million (2018: £0.7 million).

TheGroup also has an uncommitted £5.0 million overdraft facilitywith HSBC.

The Group's UK-based treasury function manages the Group's treasury risks in accordance with policies and procedures set by the Board, and is responsible for day-to-day cash management; the arrangement of external borrowing facilities; the investment of surplus funds; and the management of the Group's interest rate and foreign exchange risks. The treasuryfunction does not engage in speculative transactions or operate as a profit centre.

Foreign exchange

Foreign exchange volatility continues to be a significant factor in the reporting of the overall performance of the business with the main functional currencies of the Group entities being Sterling, the Euro and the USDollar.

In 2019, movements in exchange rates between Sterling and the Euro and the US Dollar provided a moderate net tailwind to the reported performance of the Group with the highest impact coming from the Euro and USDollar.

Year-on-year movements in foreign exchange rates increased our reported 2019 net fees byapproximately£4.3 million and operating profit by£1.2 million.

Exchange rate movements remain a material sensitivity. By way of illustration, each one per cent movement in annual exchange rates of the Euro and US Dollar against Sterling impacted our 2019 net fees by£2.0 million and £0.8 million, respectively, and operating profit by£0.6 million and £0.2 million, respectively.

The Board considers it appropriate in certain cases to use derivative financial instruments as part of its day-to-day cash management to provide the Group with protection against adverse movements in the Euro and US dollar during the settlement period. The Group does not use derivatives to hedge translational foreign exchange exposure in its balance sheet and income statement.

Principal Risks

Principal risks and uncertainties affecting the business activities of the Group will be detailed within the StrategicReport section of the Group's 2019 Annual Report, a copyofwhich will be available on theGroup's website www.sthree.com.

Delivering on our strategy requires all parts of our business to work together. In isolation risk mitigation helps SThree manage specific subjects and areas of the business. However, when brought into our day-to-day activities successful risk management has helped us to maximise our competitive advantage and deliver on our strategic priorities in 2019. Whilst the ultimate responsibilityfor risk management rests with the Board, the effective day-to-daymanagement of risk is in the way we do business and our culture.

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

CONSOLIDATED INCOME STATEMENT

for the year ended 30 November 2019

			2019			2018
	Before exceptional	Exceptional		Before exceptional	Exceptional
	items	items	Total	items	items	Total
Note	£'000	£'000	£'000	£'000	£'000	£'000

Revenue	2	1,345,021	-	1,345,021	1,258,152	-	1,258,152
Cost of sales		(1,002,669)	-	(1,002,669)	(937,026)	-	(937,026)
Net fees	2	342,352	-	342,352	321,126	-	321,126
Administrative expenses	3	(282,326)	(2,273)	(284,599)	(267,211)	(6,397)	(273,608)
					53,915
					124 (439) (147)
Operatingprofit	4	60,026	(2,273)	57,753		(6,397)	47,518
Finance income		55	-	55	75	-	75
Finance costs		(1,009)	-	(1,009)	(743)	-	(743)
Gain on disposal of associate		-	-	-	146	-	146
Profit before taxation		59,072	(2,273)	56,799	53,393	(6,397)	46,996
Taxation	5	(15,908)	428	(15,480)	(13,851)	1,127	(12,724)
Profit for the periodattributable toowners of the Company		43,164	(1,845)	41,319	39,542	(5,270)	34,272

Earnings per share	7	pence	pence	pence	pence	pence	pence
					30.7
					24.9
Basic		33.2	(1.4)	31.8		(4.1)	26.6
Diluted		32.3	(1.4)	30.9	29.7	(4.0)	25.7

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 30 November 2019

	Note	2019 £'000	2018 £'000
Profit for the period		41,319	34,272
Other comprehensive (loss)/income: Items that may be subsequently reclassified to profit or loss: Exchange differences on retranslation of foreign operations		(3,892)	2,572
Items thatwill not be subsequently reclassified to profit or loss: Net loss on equityinstruments at fair value through other comprehensive income	1	(1,996)	-
Other comprehensive (loss)/income for the period (net of tax)		(5,888)	2,572
Total comprehensive income for the periodattributable toowners of the Company		35,431	36,844

The accompanying notes on pages 20-30 form an integral part of this Financial Report.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 30 November 2019

	Note	30 November 2019 £'000	30 November 2018 £'000
ASSETS
Non-current assets
Property, plant and equipment		6,804	6,915
Intangible assets		8,031	9,609
Investments	1	13	1,977
Deferred taxassets		4,167	2,750
		19,015	21,251

Current assets
Trade and other receivables		270,350	285,618
Current taxassets		624	2,751
Cash and cash equivalents	8	15,093	50,844
		286,067	339,213

Total assets		305,082	360,464

EQUITYANDLIABILITIES
Equityattributable toowners of the Company
Share capital		1,326	1,319
Share premium		32,161	30,511
Other reserves		(8,338)	(5,275)
Retained earnings		91,622	75,116
Total equity		116,771	101,671

Non-current liabilities
Provisions for liabilities and charges		1,403	1,569

Current liabilities
Borrowings	9	-	37,428
Bank overdraft	8	4,538	17,521
Provisions for liabilities and charges		8,275	9,614
Trade and other payables		172,357	191,742
Current taxliabilities		1,738	919
		186,908	257,224

Total liabilities		188,311	258,793

Total equityandliabilities		305,082	360,464

The accompanying notes on pages 20-30 form an integral part of this Financial Report.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 30 November 2019

	Note	Share capital £'000	Share premium £'000	Capital redemption reserve £'000	Capital reserve £'000	Treasury reserve £'000	Currency translation reserve £'000	Fair value reserve of equity investments £'000	Retained earnings £'000	Total equity attributable toowners of the Company £'000
Balance at 30 November 2017		1,317	28,806	168	878	(8,535)	(1,067)	-	59,138	80,705
Profit for the year Other comprehensive income for the		-	-	-	-	-	-	- -	34,272	34,272
year		-	-	-	-	-	2,572		-	2,572
Total comprehensive income for the year		-	-	-	-	-	2,572	-	34,272	36,844
Dividends paid to equityholders	6	-	-	-	-	-	-	-	(18,007)	(18,007)
Distributions to tracker shareholders Settlement of vested tracker shares		- 4	- 1,306	- -	- -	- 2,124	- -	- -	(124) (3,306)	(124) 128
Settlement of share-based payments		2	399	-	-	65	-	-	(65)	401
Cancellation of share capital Purchase of own shares by		(4)	-	4	-	-	-	-	(1,468)	(1,468)
Employee Benefit Trust Credit to equityfor equity-settled		-	-	-	-	(1,484)	-	-	-	(1,484)
share-based payments Current and deferred taxon share		-	-	-	-	-	-	-	4,697	4,697
based payment transactions	5	-	-	-	-	-	-	-	(21)	(21)
Totalmovements inequity		2	1,705	4	-	705	2,572	- -	15,978	20,966
Balance at 30 November 2018		1,319	30,511	172	878	(7,830)	1,505		75,116	101,671
Effect of a change in accounting policy Restatedtotal equityat 1 December	1	-	-	-	-	-	-	- -	(2,344)	(2,344)
2018		1,319	30,511	172	878	(7,830)	1,505		72,772	99,327
Profit for the year Other comprehensive loss for the		-	-	-	-	-	-	-	41,319	41,319
year		-	-	-	-	-	(3,892)	(1,996)	-	(5,888)
Total comprehensive income for the year		-	-	-	-	-	(3,892)	(1,996)	41,319	35,431
Dividends paid to equityholders	6	-	-	-	-	-	-	-	(18,778)	(18,778)
Distributions to tracker shareholders		-	-	-	-	-	-	-	(218)	(218)
Settlement of vested tracker shares Settlement of share-based		5	1,325	-	-	3,245	-	-	(4,419)	156
payments Purchase of own shares by		2	325	-	-	2,086	-	-	(2,086)	327

Employee Benefit Trust		-	-	-	-	(2,506)	-	-	-	(2,506)
Credit to equityfor equity-settled share-based payments		-	-	-	-	-	-	-	2,681	2,681
Current and deferred taxon share
based payment transactions	5	-	-	-	-	-	-	-	351	351
Totalmovements inequity		7	1,650	-	-	2,825	(3,892)	(1,996)	18,850	17,444
Balance at 30 November 2019		1,326	32,161	172	878	(5,005)	(2,387)	(1,996)	91,622	116,771

The accompanying notes on pages 20-30 form an integral part of this Financial Report.

CONSOLIDATED STATEMENT OF CASH FLOWS

for the year ended 30 November 2019

	Note	2019 £'000	2018 £'000
Cashflows fromoperatingactivities
Profit before taxation after exceptional items		56,799	46,996
Adjustments for:
Depreciation and amortisation charge		6,040	6,145
Accelerated amortisation and impairment of intangible assets		-	709
Finance income		(55)	(75)
Finance cost		1,009	743
(Gain)/loss on disposal of property, plant and equipment		(3)	8
Loss on disposal of subsidiaries		-	70
Gain on disposal of associate		-	(146)
FXrevaluation gain on investments
		-	(26)
Non-cash charge for share-based payments		2,681	4,697
Operatingcashflows before changes inworkingcapital andprovisions		66,471	59,121
Increase in receivables		(8,020)	(55,372)
(Decrease)/increase in payables		(3,712)	30,116
Decrease in provisions		(1,589)	(3,796)
Cash generated from operations		53,150	30,069
Finance income		23	35
Income taxpaid - net		(12,958)	(14,391)
Net cash generated from operating activities		40,215	15,713
Cash generated from operating activities before exceptional items		41,904	26,208
Cash outflowfrom exceptional items		(1,689)	(10,495)
Net cash generated from operating activities		40,215	15,713
Cashflows frominvestingactivities
Purchase of property, plant and equipment		(3,102)	(3,161)
Purchase of intangible assets		(1,455)	(2,043)

Net cash used in investing activities		(4,557)	(5,204)
Cashflows fromfinancingactivities
(Repayments of)/proceeds from borrowings	9	(37,428)	25,428
Interest paid		(894)	(540)
Employee subscription for tracker shares		536	644
Proceeds from exercise of share options		327	401
Cancellation of share capital		-	(1,468)
Purchase of own shares		(2,506)	(1,484)
Dividends paid to equityholders	6	(18,778)	(18,007)
Dividends paid to tracker shareholders		(218)	(116)
Net cash (used in)/generated from financing activities		(58,961)	4,858

Net (decrease)/increase incashandcashequivalents		(23,303)	15,367
Cash and cash equivalents at beginning of the year Exchange gains relating to cash and cash equivalent		33,323 535	17,621 335

Net cashandcashequivalents at endof the year	8	10,555	33,323

The accompanying notes on pages 20-30 form an integral part of this Financial Report. NOTES TO THE FINANCIAL INFORMATION

for the year ended 30 November 2019

1. ACCOUNTING POLICIES

Basisof preparation

The financial information in this preliminary announcement has been extracted from the Group audited financial statements for the year ended 30 November 2019 and does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The Group financial statements and this preliminary announcementwere approved bythe Board ofDirectors on 24 January2020.

The auditors have reported on the Group's financial statements for the years ended 30 November 2019 and 30 November 2018 under s495 of the Companies Act

The auditors' reports are unqualified and do not contain a statement under section 498(2) or (3) of the Companies Act 2006. The Group's statutory financial statements for the year ended 30 November 2018 were filed with the Registrar of Companies and those for the year ended 30 November 2019 will be filed following the Company's Annual General Meeting.

In 2019, selected UK subsidiaries were exempt from the requirements of the UK Companies Act 2006 ('theAct') relating to the audit of individual accounts by virtue of s479Aof theAct. The Companyprovides a guarantee concerning the outstanding liabilities of these subsidiaries under section 479Cof theAct.

The Group's financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRSs') and IFRS Interpretations Committee ('IFRS IC') as adopted and endorsed by the European Union and have been prepared under the historical cost convention, as modified by financial assets held at fair value through profit or loss or held at fair value through other comprehensive income.

The same accounting policies, presentation and computation methods are followed in this preliminary announcement as in the preparation of the Group financial statements. The Group's principal accounting policies, as set out below, have been consistently applied in the preparation of these financial statements of all the periods presented, exceptwhere otherwise indicated.

New and amended accounting standards

The Group adopted IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers with effect from 1 December 2018. Information on the implementation of newaccounting standards is included in theGroup's financial statements - see note 1 Newand amended accounting standards.

IFRS 9 Financial Instruments

IFRS 9 replaces the provisions of IAS 39 that relate to the recognition, classification and measurement of financial assets and financial liabilities, derecognition of financial instruments, impairment of financial assets and hedge accounting. The adoption of IFRS9 resulted in changes in accounting policies; however, there were no adjustments to the amounts recognised in the financial statements at 1 December 2018, due to the immaterial impact of IFRS9.

On the date of initial application of IFRS 9, the Directors assessed which business models were applicable to the financial assets held bythe Group, and classified its financial instruments into the appropriate IFRS 9 categories: financial assets held at fair value through profit or loss ('FVTPL'), financial assets held at fair value through other comprehensive income ('FVOCI'), and financial assets held at amortised cost (the latter comprise primarily 'Trade and other receivables'). The main effects resulting from this reclassification were as follows:

	FVTPL	FVOCI (Available-for-sale 2018)	Trade andother receivables
Financial assets - 1 December 2018	£'000	£'000	£'000
Closing balance 30 November 2018 - IAS39*	-	1,977	285,618
Reclassifydebt investments from available-for-sale to FVTPL	435	(435)	-
Reclassifyequityinvestments from available-for-sale to FVOCI*	-	-	-
Adjustments arising from the adoption of IFRS15	-	-	(13,017)
Openingbalance 1 December 2018 - IFRS9	435	1,542	272,601

* The closing balances as at 30 November 2018 showavailable-for-sale financial assets under FVOCI.

IFRS 15 Revenue from Contractswith Customers

Under IFRS 15, revenue from contracts with customers is recognised as or when the Group satisfies a performance obligation bytransferring a promised service to a customer.Aservice is transferred when the customer obtains control of that service.

The adoption of IFRS 15 resulted in changes in accounting policies and adjustments to the amounts recognised in the financial statements on 1 December 2018. In line with the transition provisions in IFRS 15, the Group adopted the refined revenue recognition rules on the modified retrospective basis without restatement of comparatives. Under the modified transition method, on 1 December 2018, a net (post tax) adjustment of £2.3 million was made to the opening balance of retained earnings, to recognise a newpolicyof estimating accrued income.

The following adjustments were made to the amounts recognised in the statement of financial position at the date of initial application:

	IAS18 carryingamount 30 November 2018		Remeasure-ments IFRS15 carryingamount 1 December 2018
	£'000	£'000	£'000
Trade and other receivables (Accrued income only)	78,741	(13,017)	65,724
Trade and other payables (Accruals)	(107,105)	9,859	(97,246)
Current taxassets	2,751	814	3,565
Post-tax adjustment at the date of initial applicationof IFRS15		(2,344)

The impact on theGroup's retained earnings at 1 December 2018 is as follows:

	2018
	£'000
Retainedearnings prior toadjustment	75,116
Restatement of accrued income	(13,017)
Restatement of accrued cost of sales	9,859
Taxadjustment to retained earnings from adoption of IFRS15	814
Openingretainedearnings 1 December post adoptionof IFRS15	72,772

Contract revenue ('accrued income') 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 reporting end date. Accrued income is recognised as revenue for contractors where no timesheet has been received, but the individual is 'live' on the Group's systems, or where a client has not yet approved a submitted timesheet.

Previously, such accruals were systematically removed after a three-month cut-off date if no timesheet was received or no customer approval was obtained. That policyof estimating accrued income/cost historicallyresulted in a portion of revenue/cost being reversed (this is referred to as 'shrinkage').

Under IFRS 15, an amount of estimated Contract accrual can only be recognised if it is highly probable that a significant reversal in the amount of recognised revenue will not occur in subsequent periods.

In line with this new requirement, to prevent the over-recognition of revenue, from 1 December 2018 the Group has applied the historical shrinkage rate to the amount of accrued income/cost determined for unsubmitted or unapproved timesheets. As a consequence, on 1 December 2018 the accrued income and cost would have been £13.0 million and £9.9 million lower respectively. This resulted in a net adjustment to the opening balance of retained earnings of £3.1 million pretax.

The Group's business activities, together with the factors likely to affect its future development, performance, its financial position, cash flows, liquidity position and borrowing facilities are described in the strategic section of the Annual Report. In addition, notes to the Group financial statements include details of the Group's treasury activities, funding arrangements and objectives, policies and procedures for managing various risks including liquidity, capital management and credit risks.

The Directors have considered the Group's forecasts, including taking account of reasonably possible changes in trading performance, and the Group's available banking facilities. Based on this review and after making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, the Directors continue to adopt a going concern basis in preparing these financial statements and this preliminaryannouncement.

2. SEGMENTAL ANALYSIS

TheGroup's operating segments are established on the basis of those components of theGroup that are regularlyreviewed bythe Group's chief operating decision maker, in deciding howto allocate resources and in assessing performance. TheGroup's business is considered primarilyfrom a geographical perspective.

The Directors have determined the chief operating decision maker to be the Executive Committee made up of the Chief Executive Officer, the Chief Financial Officer, the ChiefOperatingOfficer, the Chief PeopleOfficer and the Chief Sales Officer,with other senior management attending via invitation.

The Group segments the business into four reportable regions: United Kingdom & Ireland ('UK&I'), USA,Asia Pacific & Middle East ('APAC & ME') and Continental Europe. The latter comprises DACH(Germany, Switzerland andAustria) and 'Benelux, France &Spain' ('BFS'); both sub-regions were aggregated into one reportable segment based on the possession of similar economic characteristics. DACH and BFS generate a similar average net fees margin and long-term growth rates, and are similar in each of the following areas:

the nature of the services (i.e. recruitment/candidate placement)
the methods used in which theyprovide services to clients (i. 'Freelance contractors', ii. Employed contractors, and iii. 'Permanent' candidates)
the class of candidates (candidates,who we place with our clients, represent skill sets in Science, Technology, Engineering and Mathematics disciplines)

The Group's management reporting and controlling systems use accounting policies that are the same as those described in note 1 to theGroup financial statements in the summaryof significant accounting policies.

Revenue and net feesby reportable segment

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

Intersegment revenue is recorded at values which approximate third partyselling prices and is not significant.

	Revenue		Net fees
	2019	2018	2019	2018
	£'000	£'000	£'000	£'000
Continental Europe	796,438	716,058	196,665	183,367
UK&I	249,708	268,031	48,191	53,144
USA	237,702	215,099	76,706	66,654
APAC&ME	61,173	58,964	20,790	17,961
	1,345,021	1,258,152	342,352	321,126

Continental Europe primarilyincludes Austria, Belgium, France,Germany, Luxembourg, the Netherlands, Spain and Switzerland.

APAC&MEmainlyincludes Australia,Dubai,Hong Kong, Japan, Malaysia and Singapore.

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:

	Revenue		Net fees
	2019	2018	2019	2018
	£'000	£'000	£'000	£'000
Germany	342,345	310,399	101,480	93,701
Netherlands	261,429	237,904	52,396	48,563
USA	237,702	215,099	76,706	66,654
UK	236,323	256,056	43,817	48,814
Other	267,222	238,694	67,953	63,394
	1,345,021	1,258,152	342,352	321,126

	Non-current assets
	30 November	30 November
	2019	2018
	£'000	£'000
UK	11,160	14,354
Germany	949	1,060
USA	600	1,136
Netherlands	596	803
Other	1,543	1,148
	14,848	18,501

The following segmental analysis by brands, recruitment classification and sectors (being the profession of candidates placed) have been included as additional disclosure to the requirements of IFRS8.

	Revenue		Net fees
	2019	2018	2019	2018
	£'000	£'000	£'000	£'000
Brands
Progressive	446,422	401,959	104,279	92,063
Computer Futures	400,184	362,958	103,533	96,672
Real StaffingGroup	255,951	239,116	76,473	72,263
HuxleyAssociates	242,464	254,119	58,067	60,128
	1,345,021	1,258,152	342,352	321,126

Other brands includingGlobal Enterprise Partners, JPGray, Madison Black,Newington International andOrgtel are rolled into the above brands.

Recruitment classification
Contract	1,255,558	1,169,141	254,547	232,115
Permanent	89,463	89,011	87,805	89,011
	1,345,021	1,258,152	342,352	321,126

Sectors
Technology	641,977	580,732	152,717	141,970
Life Sciences	207,738	195,102	67,841	66,250
Energy	181,521	169,018	39,150	33,452
Banking &Finance	151,917	180,122	37,923	42,454
Engineering	131,189	111,608	34,764	30,618
Other	30,679	21,570	9,957	6,382
	1,345,021	1,258,152	342,352	321,126

Other includes Procurement &SupplyChain and Sales &Marketing.

3. ADMINISTRATIVE EXPENSES - EXCEPTIONAL ITEMS

CEOchange costs

On 14 December 2018, the Group communicated to the market that the Chief Executive Officer, Gary Elden, would step down from his role. After a rigorous recruitment process, the new Chief Executive Officer ('CEO'), MarkDorman, joined the Group on 18 March 2019. This CEOchange resulted in the exceptional charge of £1.2 million in 2019, mainlycomprising contractual payments to the departing CEOand recruitment fees.

Restructuringcosts - Senior leadershiprestructuring

To continue to drive the Group growth plans, and deliver on our ambition to be the number one in our chosen STEMmarkets, a number of key changes were made to the senior leadership structure (impacting UK&I, Benelux, Spain, MENAand France) in the current year. These changes are expected to position the Group for a stronger growth by building upon the enhanced alignment being put in place between these important markets and moving to a more efficient regional structure. These changes resulted in the exceptional charge of £1.2 million in the current year.

Restructuringcosts - Support functionrelocation

The expected benefits are being realised from the successful restructure and relocation of the majority of our London-based support functions to our Centre of Excellence inGlasgow. This restructuring has realised cost savings in excess of £5.0 million per annum.

The restructuring resulted in the recognition of net exceptional income of £0.1 million in the current year. Personnel costs of £0.3 million and property costs £0.3 million, offset bythe government grant income of £0.7 million.

We do not expect to incur any further exceptional costs in respect of the move to Glasgow whilst the additional government grant is anticipated to be received and recognised as exceptional income in the period through to the end of 2021.

Due to the material size and non-recurring nature of this strategic restructuring project, the associated costs have been separatelydisclosed as exceptional items in the Consolidated Income Statement in line with their treatment in 2018.Disclosure of items as exceptional, highlights them and provides a clearer, comparable view of underlying earnings.

Items classified as exceptional were as follows.

	2019	2018
Exceptional items - chargedtooperatingprofit	£'000	£'000
CEOchange
Contractual payments for CEOdeparture	716	-
Recruitment and other professional fees	342	-
Double running costs	83	-
Relocation costs	60	-
Total - CEOchange	1,201	-
Restructuringcosts
Senior leadershiprestructuring	1,200	-
Support functions relocation
Staff costs and redundancy	318	4,075
Propertycosts	261	898
Other	14	1,842
Grant income	(721)	(418)
Total - Restructuringcosts	1,072	6,397
Total net exceptional costs	2,273	6,397

4. OPERATING PROFIT

Operating profit is stated after charging/(crediting):

	2019	2018
	£'000	£'000
Depreciation	3,058	2,852
Amortisation	2,982	3,049
Accelerated depreciation	-	244
Accelerated amortisation and impairment of intangible assets	-	709
Foreign exchange gains	(523)	(644)
Staff costs	214,264	206,713
Movement in bad debt provision and debts directlywritten off	2,380	1,279
(Gain)/loss on disposal of property, plant and equipment	(3)	8
Loss on disposal of intangible assets	51	62
Net exceptional restructuring costs	2,273	6,397
Net gain on disposal of subsidiaries and associate	-	(76)
Operating lease charges
- Motor vehicles	1,851	1,771
- Land and buildings	12,736	12,647

5. TAXATION

a. Analysis of tax charge for the year

	2019				2018
	Before exceptional items £'000	Exceptional items £'000	Total £'000	Before exceptional items £'000	Exceptional items £'000	Total £'000
Current taxation Corporation taxcharged/(credited) on profits for the year	15,917	(428)	15,489	12,862	(1,127)	11,735
Adjustments in respect of prior periods	1,110	-	1,110	(541)	-	(541)
Total current taxcharge/(credit)	17,027	(428)	16,599	12,321	(1,127)	11,194
Deferredtaxation Origination and reversal of temporary differences	(678)	-	(678)	2,308	-	2,308
Adjustments in respect of prior periods	(441)	-	(441)	(778)	-	(778)
Total deferred tax(credit)/charge	(1,119)	-	(1,119)	1,530	-	1,530
Total income tax charge/ (credit) inthe income statement	15,908	(428)	15,480	13,851	(1,127)	12,724

b. Reconciliationof the effective tax rate

TheGroup's taxcharge for the year exceeds (2018: exceeds) the UKstatutoryrate and can be reconciled as follows:

	Before		2019	Before		2018
	exceptional items £'000	Exceptional items £'000	Total £'000	exceptional items £'000	Exceptional items £'000	Total £'000
Profit before taxation	59,072	(2,273)	56,799	53,393	(6,397)	46,996
Profit before taxation multiplied bythe standard rate of corporation taxin the UKat 19.00%(2018:
19.00%)	11,223	(432)	10,791	10,144	(1,215)	8,929
Effects of:
Disallowable items	756	4	760	988	88	1,076
Differing taxrates on overseas earnings	4,369	-	4,369	3,029	-	3,029

Differing taxrates on overseas earnings	4,369	-	4,369	3,029	-	3,029
Adjustments in respect of prior periods	669	-	669	(1,319)	-	(1,319)
Adjustment due to taxrate changes	(246)	-	(246)	816	-	816
Taxlosses for which deferred taxassetwas derecognised	(863)	-	(863)	193	-	193
Tax charge/(credit) for the year	15,908	(428)	15,480	13,851	(1,127)	12,724
Effective tax rate	26.9%	18.8%	27.3%	25.9%	17.6%	27.1%

c. Current anddeferredtax movementrecogniseddirectlyinequity

	2019	2018
	£'000	£'000
Equity-settledshare-basedpayments
Current tax	-	(2)
Deferred tax	351	(19)
Tax adjustment ontransitiontoIFRS15	814	-
	1,165	(21)

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 taxshould be recognised in equity.At 30 November 2019, a deferred taxasset of £1.9 million (2018: £0.9 million) has been recognised in respect of these options.

Prior to the adoption of IFRS 15, income of £3.2 million was recognised and taxed. On transition to IFRS 15 this income was reversed via the opening balance of retained earnings, and hence a taxdeduction was due on this reversal. This taxdeduction resulted in a taxcredit of £0.8 million.

6. DIVIDENDS

	2019	2018
	£'000	£'000
Amounts recognisedas distributions toequityholders inthe year
(i) Interim dividend of 4.7p (2018: 4.7p) per share	6,056	6,041
(ii) Final dividend of 9.8p (2018: 9.3p) per share	12,722	11,966
	18,778	18,007

Amounts proposedas distributions toequityholders
(iii) Interim dividend of 5.1p (2018: 4.7p) per share	6,661	6,077
(iv) Final dividend of 10.2p (2018: 9.8p) per share	13,507	12,819

i. 2018 interim dividend of 4.7 pence (2017: 4.7 pence) per share was paid on 7 December 2018 to shareholders on record at 2 November 2018.

ii. 2018 final dividend of 9.8 pence (2017: 9.3 pence) per share was paid on 7 June 2019 to shareholders on record at 26April 2019.

iii. 2019 interim dividend of 5.1 pence (2018: 4.7 pence) per share was paid on 6 December 2019 to shareholders on record at 1 November 2019.

iv. The Board has proposed a 2019 final dividend of 10.2 pence (2018: 9.8 pence) per share, to be paid on 5 June 2020 to shareholders on record at 1 May 2020. This proposed final dividend is subject to approval by shareholders at the Company's nextAnnual General Meeting on 20 April 2020, and therefore, has not been included as a liabilityin these financial statements.

7. EARNINGS PER SHARE

The calculation of the basic and diluted earnings per share ('EPS') is set out below:

Basic EPS is calculated by dividing the earnings attributable to owners of the Company by the weighted average number of shares in issue during the year excluding shares held as treasuryshares and those held in the EBTwhich are treated as cancelled.

For diluted EPS, the weighted average number of shares in issue is adjusted to assume conversion of dilutive potential shares. Potential dilution resulting from tracker shares takes into account profitabilityof the underlying tracker businesses and SThree plc's earnings per share. Therefore, the dilutive effect on EPSwill vary in future periods depending on anychanges in these factors.

	2019	2018
	£'000	£'000
Earnings
Profit for the year after taxand before exceptional items	43,164	39,542
Exceptional items net of tax	(1,845)	(5,270)
Profit for the year attributable to owners of the Company	41,319	34,272

	million	million
Number of shares
Weighted average number of shares used for basic EPS	129.9	128.7
Dilutive effect of share plans	3.7	4.4
Diluted weighted average number of shares used for diluted EPS	133.6	133.1

		2019	2018
		pence	pence
Basic
	Basic EPSbefore exceptional items	33.2	30.7

Impact of exceptional items	(1.4)	(4.1)
Basic EPSafter exceptional items	31.8	26.6
Diluted
Diluted EPSbefore exceptional items	32.3	29.7
Impact of exceptional items	(1.4)	(4.0)
Diluted EPSafter exceptional items	30.9	25.7

8. CASH AND CASH EQUIVALENTS

	2019	2018
	£'000	£'000
Cash at bank	15,093	50,844
Bank overdraft	(4,538)	(17,521)
Net cashandcashequivalents per the consolidatedstatement of cashflow	10,555	33,323

Cash and cash equivalents comprise cash and short-term bank deposits with an original maturity of three months or less, net of outstanding bank overdrafts. The carrying amount of these assets is approximatelyequal to their fair values. Substantiallyall of these assets are categorised within level 1 of the fair value hierarchy.

TheGroup has three cash pooling arrangements in place atHSBCUS(USD),NatWest (GBP) and Citibank (EUR).

9. BORROWINGS

The Group has access to a committed Revolving Credit Facility ('RCF') of £50.0 million along with an uncommitted £20.0 million accordion facility in place with HSBC and Citibank, giving the Group an option to increase its total borrowings under the facility to £70.0 million. The funds borrowed under the facilitybear interest at a minimum annual rate of 1.3% (2018: 1.3%) above the appropriate Sterling LIBOR. The average interest rate paid on the RCF during the year was 2.0% (2018: 1.8%). TheGroup also has an uncommitted £5.0 million overdraft facilitywith HSBC.

At the year end, theGroup had drawn down £nil (2018: £37.4 million) on these facilities.

The RCF is subject to certain covenants requiring the Group to maintain financial ratios over interest cover, leverage and guarantor cover. The Group has been in compliance with these covenants throughout the year.RCFfacilityis available under these terms and conditions untilApril 2023.

Analysis of movements in borrowings is set out below.

	£'000
At 1 December 2017	12,000
Net drawings during the year	25,967
(1) Changes to carrying amount due to RCFrefinancing	(539)
At 30 November 2018	37,428
Net repayments during the period	(37,313)
Changes to unamortised transaction costs	(115)
At 30 November 2019	-

In 2018, £0.5 million represented the unamortised amount of transaction costs including those incurred on renegotiating the facility.

The carrying amount of the Group's borrowing, comprising the RCF, approximates its fair value. The fair value of the RCF is estimated using discounted cash flow analysis based on the Group's current incremental borrowing rates for similar types and maturities of borrowing and is consequently categorised in level 2 of the fair value hierarchy.

10. ALTERNATIVE PERFORMANCE MEASURES

In discussing the performance of the Group, 'comparable' measures are used, which are calculated bydeducting from the directly reconcilable IFRS measures the impact of theGroup's restructuring costs and CEOchange costs,which are considered as items impacting comparability, due to their nature.

Reconciliationof adjustedfinancial indicators

2019
			Administrative	Operating	Profit		Profit after
	Revenue	Net fees	expenses	profit	before tax	Tax	tax	Basic EPS
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	pence
As reported	1,345,021	342,352	(284,599)	57,753	56,799	(15,480)	41,319	31.8
Exceptional costs	-	-	2,273	2,273	2,273	(428)	1,845	1.4
Adjusted	1,345,021	342,352	(282,326)	60,026	59,072	(15,908)	43,164	33.2

	Revenue	Net fees	Administrative expenses	Operating profit	Profit before tax	Tax	Profit after tax	Basic EPS
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	pence
As reported	1,258,152	321,126	(273,608)	47,518	46,996	(12,724)	34,272	26.6
Exceptional costs	-	-	6,397	6,397	6,397	(1,127)	5,270	4.1
Adjusted	1,258,152	321,126	(267,211)	53,915	53,393	(13,851)	39,542	30.7

APMs inconstant currency

As we are operating in 16 countries and with manydifferent currencies,we are affected byforeign exchange movements, and we report our financial results to reflect

this. However, we manage the business against targets which are set to be comparable between years and within them, for otherwise foreign currencymovements would undermine our ability to drive the business forward and control it. Within this annual report, we highlighted comparable results on a constant currency basis as well as the audited results ('on a reportable basis') which reflect the actual foreign currencyeffects 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 currencyAPMs are calculated byapplying the budgeted foreign exchange rates to current and prior financial year results to remove the impact of exchange rate. (Two main budgeted foreign exchange rates wereGBP:EUR of 1.25 and GBP:USD of 1.40). Measures on a constant currencybasis enable users to focus on the performance of the business on a basis which is not affected bychanges in foreign currencyexchange rates applicable to theGroup's operating activities from year to year.

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

	2019
	Revenue £'000	Net fees £'000	Operatingprofit £'000	Operatingprofit conversionratio*	Profit before tax £'000	Basic EPS pence
Adjusted	1,345,021	342,352	60,026	17.5%	59,072	33.2
Currencyimpact	(100,118)	(26,449)	(8,585)	(1.2%)	(8,584)	(4.8)
Adjustedinconstant currency	1,244,903	315,903	51,441	16.3%	50,488	28.4

		2018
	Revenue £'000	Net fees £'000	Operatingprofit £'000	Operatingprofit conversionratio*	Profit before tax £'000	Basic EPS pence
Adjusted	1,258,152	321,126	53,915	16.8%	53,393	30.7
Currencyimpact	(80,000)	(21,075)	(6,863)	(1.1%)	(7,008)	(4.0)
Adjustedinconstant currency	1,178,152	300,051	47,052	15.7%	46,385	26.7

*Operating profit conversion ratio represents operating profit over net fees

Other APMs

Net debt

Net debt is an APMused by the Directors to evaluate the Group's capital structure and leverage. Net debt is defined as current and non-current borrowings, plus bank overdraft less cash and cash equivalents, as illustrated below:

	2019 £'000	2018 £'000
Borrowings	-	(37,428)
Bank overdraft	(4,538)	(17,521)
Cash and cash equivalents	15,093	50,844
Net cash/(debt)	10,555	(4,105)

AdjustedEBITDA

Adjusted EBITDAis calculated by adding back to the reported operating profit operating non-cash items such as the depreciation and impairment of property, plant and equipment, the amortisation and impairment of intangible assets, the employee share option and exceptional costs. See the table below illustrating how adjusted cash conversion ratio is calculated.Adjusted EBITDAis intended to provide useful information to analyse the Group's operating performance excluding the

impact of operating non cash items as defined above. The Group also uses adjusted EBITDAto measure the level of financial leverage of the Group by comparing

Adjusted EBITDAto net debt.

Dividendcover

The Group uses dividend cover as anAPMto 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 Company's profit for the year attributable to owners of the Companyover the total dividend paid to ordinaryshareholders.

		2019	2018
Profit for the year attributable to owners of the Company (£'000)	A	41,319	34,272
Dividend paid to shareholders (£'000)	B	20,168	18,778
Dividendcover	(A÷B)	2.0	1.8

Contract margin

The Group uses Contract margin as anAPMto evaluate Contract business qualityand the service offered to customers. Contract margin is defined as Contract net fees as a percentage ofContract revenue.

		2019	2018
Contract net fees (£'000)	A	254,547	232,115
Contract revenue (£'000)	B	1,255,558	1,169,141
Contract margin	(A÷B)	20.3%	19.9%

Consultant yield

The Group uses consultant yield as an APMto assess the productivity of the sales teams. Consultant yield is defined as Group net fees divided byGroup average sales headcount over a factor of 12.

Total net fees (£'000)	A	342,352	321,126
Average sales headcount	B	2,423	2,254
Consultant yield(£'000)	(A÷B) ÷12	11.8	11.9

Total shareholder return('TSR')

The Group uses TSR as an APMto 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 TSRare calculated bythe external independent data-stream party.

	2019	2018
SThree plc TSRreturn indexvalue
(three-month average to 30 Nov2016 (2018: 30 Nov2015) (pence)	197.00	266.85
SThree plc TSRreturn indexvalue
(three-month average to 30 Nov2019 (2018: 30 Nov2018) (pence)	262.41	284.75
Total shareholder return	33.2%	6.7%

Cashconversionratio

TheGroup uses cash conversion ratio as anAPMto measure a business abilityto convert profit into cash. It represents cash generated from operations for the year after deducting capex, stated as a percentage of operating profit.

The following table illustrates howadjusted cash conversion ratio is calculated.

			2019
		Operatingnon	Changes inworking	Cashgenerated		Cashconversion
	Operatingprofit	cashitems*	capital	fromoperations	Capex	ratio
	A			B	C	(B+C) ÷A
	£'000	£'000	£'000	£'000	£'000
As reported	57,753	8,718	(13,321)	53,150	(4,557)	84.1%
Exceptional costs	2,273	(518)	(79)	1,676	-	n/a
Adjusted	60,026	8,200	(13,400)	54,826	(4,557)	83.7%

*Operating non-cash items represent primarily depreciation, amortisation and impairment of intangible assets and the employee share option and performance share costs in line 'Noncash charge for share-based payments' of theConsolidated Statement of Cash Flows.

2018
		Operatingnon	Changes inworking	Cashgenerated		Cashconversion
	Operatingprofit	cashitems*	capital	fromoperations	Capex	ratio
	A			B	C	(B+C) ÷A
	£'000	£'000	£'000	£'000	£'000
As reported	47,518	11,603	(29,052)	30,069	(5,204)	52.3%
Exceptional costs	6,397	(503)	4,644	10,538	1,000	n/a
Adjusted	53,915	11,100	(24,408)	40,607	(4,204)	67.4%

* Operating non-cash items represent primarily depreciation, amortisation and impairment of intangible assets and the employee share option and performance share costs in line 'Noncash charge for share-based payments' of the consolidated cash flow statement.

11. ANNUAL REPORT AND ANNUAL GENERAL MEETING

The 2019 Annual Report and Notice of 2020 Annual General Meeting will be posted to shareholders shortly. Copies will be available on the Company's website www.sthree.com or from the CompanySecretary, 1st Floor, 75 King William Street, London, EC4N7BE. TheAnnual General Meeting of SThree plc is to be held on 20April 2020.

[1] * In constant currency

*In constant currency

[3] * In constant currency

*In constant currency

*In constant currency *In constant currency

*In constant currency. For more details on APM, refer to Alternative Performance Measures in note 10

*In constant currency

(1) For details on dividend cover, its definition and howit was calculated, refer to Alternative Performance Measures in note 10

*In constant currency

(2) For details on cash conversion, its definition and howit was calculated, refer to Alternative Performance Measures in note 10 (3) For details on EBITDA, its definition and howit was calculated , refer to Alternative Performance Measures in note 10

ISIN: GB00B0KM9T71 Category Code:FR TIDM: STEM LEICode: 2138003NEBX5VRP3EX50 Sequence No.: 42682 EQS News ID: 961069

End ofAnnouncementEQS News Service

AI assistant

SThree PLC — Earnings Release 2019

4842_rns_2020-01-27_a7ff0ed9-2308-4803-97da-07ab164d90df.pdf

SThree plc

("SThree" or the "Group")

FINAL RESULTS FOR THE YEAR ENDED 30 NOVEMBER 2019

STHREEANNOUNCES RECORD REVENUEANDOPERATING PROFIT

FINANCIAL HIGHLIGHTS

HIGHLIGHTS

Mark Dorman,CEO, commented:

Notes toeditors

Important notice

CHAIRMAN'S STATEMENT

CHIEF EXECUTIVE OFFICER'S STRATEGIC REVIEW

The only global pure play STEM specialist [1]

Bringing skilled people together to build the future

A scalable platform business able to drive further growth

The right team to deliver on the opportunity

Outlook: at the centre of STEM

will allowus to drive another year of progress towards our ambitions.

CHIEF SALES OFFICER'S REVIEW

Global pure play STEM specialist

1.Customer

4. Product type

5. Service anddelivery

Performance in 2019 [3]

Contract/Permanent Split 2019 2018

Regional

growth in this sector.

Focuson Contract

BUSINESS REVIEW

DACH (Germany, Austria and Switzerland) (32%of Group net fees)

Keydevelopments inthe year

Overview

2019 net fees performance

2020 outlook

Benelux, France & Spain (26%of Group net fees)

Keydevelopments inthe year

Overview

2019 net fees performance

2020 outlook

USA (22%of Group net fees)

Keydevelopments inthe year

Overview

2019 net fees performance

2020 outlook

UK&I (14%of Group net fees)

Keydevelopments inthe year

Overview

2019 net fees performance

2020 outlook

Asia Pacific & Middle East (6%of Group net fees)

Keydevelopments inthe year

Overview

2019 net fees performance

2020 outlook

CHIEF FINANCIAL OFFICER'S REVIEW

Income statement

Exceptional costs ('adjusting items')

Restructuring

Support functionrelocation

Senior leadershiprestructuring

CEOchange

Accounting changes

Operating costs

Investments

Taxation

Earningsper share ('EPS')

Dividends

Share options and tracker share arrangements

Balance sheet

days (2018: 17 days).

Investment insubsidiaries (Companyonly)

Strong cash generation

Treasury management

Foreign exchange

Principal Risks

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 30 November 2019

SThree PLC Earnings Release 2019