20 May 2020
Access to CCFF granted and further COVID-19 Update
SThree plc ("SThree" or the "Group"), the leading global pure-play specialist staffing business focused on roles in Science, Technology, Engineering and Mathematics ('STEM'), today issues an update on its financial position and operations.
Strong financial position with access to significant liquidity
The Group is pleased to announce it has received confirmation that it is eligible to access up to £300 million of funding under the Bank of England's Covid Corporate Financing Facility (CCFF) to further strengthen its financial position. Of this, the Board has agreed, in consultation with its existing RCF lenders, that the CCFF facility will be capped at £50 million.
This facility is designed to support liquidity among larger firms that make a material contribution to the UK economy and can demonstrate they were in sound financial health prior to the economic impact of the COVID-19 pandemic.
As detailed in our business and trading update of 6th April, SThree continues to benefit from a strong financial position. As at 18 May 2020 the Group has total accessible liquidity of £129.4 million. This is made up of £24.4 million net cash, a £50 million revolving credit facility ("RCF"), which has now been fully drawn down, a £5.0 million overdraft and £50 million from the CCFF (both not yet drawn down). In addition, SThree has a £20 million accordion facility as well as a substantial working capital position reflecting net cash due to SThree for placements already undertaken.
Demand in the short term, impacted by global government responses to the pandemic
We are in the midst of a health crisis and whilst governments across the world are taking their next steps in response to the pandemic, uncertainty persists. The resultant economic environment has meant the majority of companies have been focused on their own immediate challenges. Those challenges are often specific to their sector, many even within particular niches, and sometimes distinct to each company. This has led to aggregate demand for staffing being significantly less than what would normally be expected, with notable spikes and troughs across different markets and industries in the short term.
Acceleration of long term secular trends
The secular trends on which our business is focussed, flexible working and STEM, are becoming more evident and we believe these will accelerate significantly over the period ahead as noted by several global CEOs in the field.
The enforced implementation of flexible working that we are now seeing is likely to cause a seismic shift in working practices and cultures, with many businesses adopting new ways of operating for the long term. Alongside this, in a recent SThree study1, employers have cited that remote working will help to widen their talent pools where there are significant talent gaps.
We believe a crisis of this nature will ultimately also drive further acceleration of many key STEM trends over the long term. For example, whilst many non-essential health procedures have been paused in the short term, in the future we see greater investment in health care resulting from the crisis, particularly digital and data-led health safeguarding, which will require key skills in Life Sciences. In Engineering, there is likely to be an increased focus on the resilience of infrastructure and protection of supply chains. The adoption of Technology, AI and data science to problem solve will become ever more pervasive in business as those that did not previously prioritise the "digital revolution" rethink its potential impact on their businesses.
Our continued response
There has been no time more relevant for our purpose: to bring skilled people together to build the future. Our scale and deep understanding of STEM niches allows us to continue to effectively service our clients in complex and fast moving environments. We remain focused on ensuring our business is well placed to benefit from the acceleration of the secular trends.
Investing in the right markets in the right geographies
At our Capital Markets Day in November 2019, we talked about the right markets in the right geographies and this is key to our ability to drive the business forward in the period ahead. We began the period focused on continuing to selectively invest in our business, reflecting our commitment to building the future, and we continue to believe that this is the right strategy for the future of our Group.
As such, we are using our data led approach to invest in specific niches within sectors and markets that are likely to be key in the future and where we have an opportunity to gain valuable market share, creating new relationships as well as enhancing our existing ones. In those industries that are pulling back, we are supporting our clients effectively whilst rightsizing as appropriate.
Using our scale and agility to deliver what clients need
As the world adapts to the changes created by COVID-19, we will be operating in an environment that is very different to what we have known previously. As such, at SThree, we are focused on learning and evolving to operate better in this environment, utilising our agility and expertise to navigate a successful path and grow our market position for the long term.
We have the ability to adapt and flex our workforces to continue to provide what our clients need and help them to navigate this complex environment. We are investing in virtual interview and placement solutions and sharing knowledge of best practice across our global teams. As well as reinforcing our relationships with our clients, this will bolster our market position now and into the future.
Supporting our teams and candidates
Our first priority has been to ensure the safety and wellbeing of our teams. We are also working hard to make sure colleagues, contractors, candidates and clients are supported effectively in this time, and that takes many different guises. Our teams have adapted well to home working and continue to service clients effectively. We would like to take this opportunity to thank them for their hard work and contribution.
For our colleagues we have created an internal 'Coronavirus Knowledge hub' with a dedicated space and materials for learning and development, including guidance on managing remote teams and guidance on remote working for our consultants. Alongside this we have accelerated investment in our digital learning platform to provide learning on demand for all.
For candidates we have created dedicated resources on our digital platforms to ensure that they are supported, with information, articles and guidelines on remote working, how to contact us and other tips for getting through COVID-19. Illustrating the success of these programmes, our Net Promoter Score (NPS) from our candidates improved by seven points and is now tracking at its highest level over the last 12 months and the results from candidate interviews were up 13 points.
Notice of trading update
In our H1 trading update and interim results announcement we will share further detail on current trading and how adaptations are being made throughout the business in this current environment.
1. SThree's customer insights research, May 2020
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Notes to editors
SThree is the leading global pure-play STEM 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, 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 Financial Conduct Authority under the ticker symbol STEM and also has a US level one ADR facility, symbol SERTY.
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.
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