SThree

SThree Dividend Analysis and Summary

• Proposed final dividend: 9.2p per share (unchanged YoY)
• Total FY25 dividend: 14.3p per share (unchanged YoY)
• Ex-dividend date: 14/05/2026 (derived from record date)
• Record date: 15/05/2026
• Payment date: 12/06/2026
• Cash cost of final dividend: c.£11.9m
• Dividend cover (company APM): ~1.0x for FY25; stated through-cycle target 2.5x–3.0x
• EPS vs DPS: FY25 EPS 13.7p vs FY25 DPS 14.3p (payout above earnings)
• Status: Final dividend subject to AGM approval (29/04/2026)

• Coverage: FY25 dividend is effectively uncovered on both EPS and profit-based measures (c.1.0x), below the Board’s through-cycle cover target (2.5x–3.0x). This weak coverage reduces resilience if trading softens further.
• Earnings trajectory: FY25 PBT fell 62% YoY to £25.5m; the Board guides to FY26 PBT c.£10m, which implies further pressure on earnings-based cover if the dividend is maintained.
• Cash and balance sheet support: Net cash of £68.0m, undrawn £50m RCF, and strong FY25 operating cash flow (benefiting from working-capital inflow and lower capex post-TIP) provide near-term funding capacity for the dividend despite low profits.
• Operating backdrop: Contractor order book (~five months’ net fees) offers some visibility; TIP-driven efficiencies and US growth are positives, but Europe remains weak and margins compressed (operating profit conversion 8.1% vs 17.9% in FY24).
• Growth trajectory: Dividend is held flat rather than growing, reflecting cautious capital return amid a subdued cycle. With FY26 profit guidance lower, upward dividend progression appears unlikely near term without a demand recovery and margin rebuild.