REG-SThree SThree: Update on Trading and COVID-19 and Annual General Meeting Guidance

SThreeAnnouncement

06/04/2020 07:05

============

   SThree (STEM)
   SThree: Update on Trading and COVID-19 and Annual General Meeting Guidance

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

   ══════════════════════════════════════════════════════════════════════════

    

                                        

                                   SThree plc

                                        

                         Update on Trading and COVID-19

                                      and

                        Annual General Meeting Guidance

                                        

   Given the  rapidly-changing trading  background  arising from  the  global
   COVID-19 pandemic,  SThree  ("SThree" or  the  "Group") is  providing  the
   following update.

   Business and Trading Update

   As a Group, we have three  overriding priorities: ensuring the health  and
   safety of  all of  our colleagues,  contractors, candidates  and  clients;
   maintaining our strong financial position and ensuring that we come out of
   this period  ready to  build on  our unique  position as  the only  global
   pure-play STEM specialist.

   The COVID-19 pandemic is first and  foremost a global health crisis,  with
   governments across the  world taking unprecedented  action to prevent  the
   further spread of the virus.  The responses taken differ significantly  by
   region and  the  impact  also  varies markedly  by  sector.  Clearly,  our
   business is not immune  to the economic impact  of the current  situation.
   Whilst the pandemic  continues, it is  not possible to  estimate with  any
   certainty the  extent of  the impact  on the  Group. The  Board  therefore
   considers it is no longer possible to provide guidance on future earnings.
   The Board will continue to update shareholders as the situation evolves.

   We are proactively managing our cost base in the short term. For the  time
   being we  have ceased  all hiring  and are  managing our  headcount as  is
   appropriate to the varied local conditions  we face. We have a  particular
   focus  on  working  capital  management  and  all  non-essential   capital
   expenditure has been postponed, as have all discretionary costs.  Salaries
   of the executive directors of the Board and senior executive team, and the
   fees of the non-executive directors, have been temporarily reduced by 20%,
   with the executive directors also foregoing FY20 bonuses. Underpinning all
   our management decisions  is the clear  objective to balance  the need  to
   secure the short-term  financial strength of  the Group, whilst  retaining
   the skills,  capacity and  management capability  to fulfil  our  undimmed
   strategic ambitions.

   Maintaining the full operational capability of the group is in keen focus.
   On 28 February, we set up a dedicated COVID-19 crisis team made up of  key
   senior managers from across the  business, which is monitoring  operations
   and reacting as appropriate. The committee convenes daily to make sure all
   possible actions  to  help  mitigate  the impact  are  taken  quickly  and
   effectively, whilst ensuring that the Group  will be in a strong  position
   to continue  executing on  its growth  strategy once  conditions begin  to
   normalise.

   We have adjusted our  operations to protect the  health and safety of  our
   colleagues, contractors, candidates  and clients  and within  a matter  of
   weeks have moved  over 98% of  our Group headcount  to remote working.  We
   recognise that many of  the communities we operate  in are facing  serious
   challenges and therefore, in line with the Group's purpose-driven culture,
   have made the decision to extend the paid volunteering leave we offer  for
   those supporting the areas of our community most impacted by COVID-19.  We
   are encouraging  all  our  staff  to  make use  of  this  time  to  safely
   volunteer.

   Financial position

   SThree is in a strong  financial position with total accessible  liquidity
   of £57.4m as at 31 March 2020. This  is made up of £2.4m net cash, a  £50m
   revolving credit facility ("RCF"),  which has now  been fully drawn  down,
   and a £5.0m  overdraft. In addition, SThree  has a £20m  accordion, and  a
   substantial working  capital  position  (£98m as  at  30  November  2019),
   reflecting net  cash  due to  SThree  for placements  already  undertaken.
   Covenants on the RCF are limited to a net debt to EBITDA ratio of 3:1  and
   a minimum of 4:1  on EBITDA to interest.  The Board acknowledges that  the
   conservation of funds is critical at this time of intensified  uncertainty
   and  has  therefore  taken  steps  to  further  strengthen  its  financial
   position. 

   SThree  welcomes  the  Government  support  being  shown  for   businesses
   globally, including the deferring  of various tax  payments. The Group  is
   also at an advanced stage in seeking access to the Bank of England's Covid
   Corporate Financing  Facility  (CCFF).  In addition,  SThree  is  actively
   exploring other opportunities to access support across all its regions  of
   operation.

   In order to further  protect the balance sheet,  the Board has also  taken
   the difficult decision  not to  propose the  2019 final  dividend of  10.2
   pence per  share, detailed  in  the Final  Results  and Notice  of  AGM. A
   resolution was  due  to be  proposed  at the  forthcoming  Annual  General
   Meeting ("AGM")  on  20  April  2020, but  this  resolution  will  now  be
   withdrawn.  This  will  conserve  a  further  £13.5  million.  The   Board
   recognises the importance of dividends  to our shareholders and will  keep
   future dividend payments under review.

   Updated AGM Guidance

   As required by its articles of association, the Group currently intends to
   proceed with its Annual General Meeting  ("AGM") as planned at 11.30am  on
   Monday 20 April, at 75 King  William Street London EC4N 7BE. Currently,  a
   quorum of  two  shareholders  is  required to  attend  in  person,  to  be
   satisfied by  the Chair  and another  Director or  the Company  Secretary,
   although should the Government relax  this requirement, or other  measures
   be necessary, alternative arrangements will be considered.

   The health  of  the  Company's  shareholders  and  its  colleagues  is  of
   paramount  importance.  Due  to  the  COVID-19  crisis,  shareholders  are
   required to follow  the latest  Government guidance in  respect of  public
   gatherings and therefore  are instructed that  they should not attend  the
   AGM in person but instead submit their  votes by proxy, with all votes  to
   be routinely dealt with by way of a poll. Further details can be found  in
   the       notification        on        the        Group's        website:
    1 https://www.sthree.com/en/investors. As set out  in the Notice of  AGM,
   shareholders can also ask questions in advance of the meeting by  emailing
   cosec@sthree.com, with responses to  be set out  with the notification  of
   AGM result, if appropriate.

   As in prior  years, arrangements will  also be made  for the Chair  and/or
   other Directors, to meet with shareholders to discuss governance or  other
   relevant topics, later in the year, once the current situation stabilises.

   Mark Dorman, CEO of SThree, said:

    

   "The coming months will not be easy  and in the short term we are  focused
   on safeguarding the health of our stakeholders and taking decisive  action
   to protect the strength of our Group both now and in the future.

    

   "However severe the current disruption proves  to be, the demand for  STEM
   skills and the trend  to flexible working will  accelerate as a result  of
   the changes  we  are  seeing  in  social  behaviour,  travel  and  working
   patterns. We are focused  on capturing growth in  the medium to long  term
   brought about by these increasingly important secular trends.

    

   "As a strong business with the right strategy, a diversified footprint and
   a sound platform for growth in place, we are confident we can weather this
   crisis  and  will  emerge  well  positioned  to  continue  on  our  growth
   trajectory."

    

                                    - Ends -

    

     

    Enquiries:

                                                            

    
    SThree plc                           020 7268 6000
    Mark Dorman, Chief Executive Officer  
    Alex Smith, Chief Financial Officer   
    Steve Hornbuckle, Company Secretary
                                          
    
                                         020 3405 0205
    Alma PR
                                          
    Rebecca Sanders-Hewett

    Susie Hudson                         SThree@almapr.co.uk

    

    

   This announcement contains inside information for the purposes of Article
   7 of the Market Abuse Regulation (EU) 596/2014.

    

   Notes to editors

    

   SThree is  a  leading  international STEM  specialist  staffing  business,
   providing permanent and contract specialist staff to a diverse client base
   of over 9,000 clients.

    

   The Group's operations  cover the Technology,  Banking & Finance,  Energy,
   Engineering and Life  Sciences sectors. With  a multi-brand strategy,  the
   Group establishes new operations  to address growth opportunities.  SThree
   brands include Computer  Futures, Huxley Associates,  Progressive and  The
   Real Staffing  Group.  The  Group  has  a network  of  47  offices  in  16
   countries, of which  41 are  in our international(2)  markets, with  circa
   3,100 employees.

    

   SThree plc is  quoted on  the Official List  of the  UK Listing  Authority
   under the ticker symbol  STEM and also  has a US  level one ADR  facility,
   symbol SERTY.

    

   Important notice

    

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

   ══════════════════════════════════════════════════════════════════════════

   ISIN:          GB00B0KM9T71
   Category Code: MSCH
   TIDM:          STEM
   LEI Code:      2138003NEBX5VRP3EX50
   Sequence No.:  56651
   EQS News ID:   1015699


    
   End of Announcement EQS News Service

   ══════════════════════════════════════════════════════════════════════════

    2 fncls.ssp?fn=show_t_gif&application_id=1015699&application_name=news&site_id=refinitiv2

References

   Visible links
   1. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=496d853db63e665b719bf45a828eef1a&application_id=1015699&site_id=refinitiv2&application_name=news


============