SThree (STEM) Trading Update summary

Trading performance and market context

• Net fees declined 7% year-on-year on a constant currency basis, but remain 18% above pre-COVID levels.

• Contract business declined 4% year-on-year, with strong contract extensions partially offsetting weaker new business.

• Permanent net fees down 18%, reflecting tough market conditions and strategic focus on contract business.

• Sequential improvement seen in Q2 as comparators softened.

• Contract now represents 84% of net fees, up from 81% last year.

Financial performance and outlook

• Contractor order book at £182 million, down 2% year-on-year, providing about four months or 75% visibility of full-year consensus net fees.

• Net cash position improved to £90 million from £72 million a year earlier, benefiting from anti-cyclical working capital.

• FY 2024 performance expected to be in line with market expectations, with consensus PBT at £71.0 million.

• Group headcount slightly reduced, down 2% since FY 2023, to remain agile amid market changes.

Skill mix and regional trends

• Engineering net fees reached record levels, driven by Energy and Renewables, which grew 15% and now represent 11% of group net fees.

• Technology declined 9% year-on-year, while Life Sciences fell 16% but remained in line with pre-COVID levels.

• Middle East & Asia saw strong growth, especially in Japan (+27% YoY); Netherlands grew contracts 1–3% year-on-year.

• Spain achieved 73% growth, mainly in technology and engineering; Rest of Europe net fees down 10%, or 7% excluding restructured markets.

• USA and Germany experienced declines, mainly due to lower demand in Life Sciences and Technology.