SThree PLC

LSE:STEM

Earnings Call Transcript 2020-Q2

[Operator]

Hello, and welcome to the SThree Q2 Trading Update. I'll shortly be handing you over to Mark Dorman and Alex Smith, who will take you through today's presentation, and there'll be an opportunity for Q&A later in the call. But now over to Mark Dorman. Please begin.

[Mark Dorman, CEO & Executive Director]

Thank you, Hugh, and welcome, everyone. Good morning to SThree's half year trading update for the half year from December '19 to May 2020. It would be fair to say that currently we're in the most unusual of times, and so we thought it'd be appropriate to take a slightly different approach to update you, hopefully to give you some more clarity about how we're approaching the current situation, our performance and how we are seeing things develop. And so we'll take today's update in 4 sections. First off, I'll give you some context and I'll share some thoughts about how SThree and the management team are approaching the current environment. And secondly, Alex will walk you through some performance on our numbers for the first half. And then he'll hand back to me, and I'll give you an update on some work we've done engaging with our customers and clients and share some insights we're seeing on some data as how we're seeing trends develop. And then lastly, of course, we'll do our Q&A. So with that, let's get started. So next slide, please. Without sounding like a Dickens novel, it's clearly been a tale of 2 quarters in this half. And in Q1, we had a robust performance where we continued to perform and invest in line with our strategy that we shared, which seems like a lifetime ago in our Capital Markets Day back in November. Q2, of course, we were dramatically impacted by the global health pandemic of novel coronavirus, COVID-19. I think it's important at this stage to give you a sense of how we think about how we're approaching this current global crisis and how we're managing the business through that. And I wanted to give you a view on that through 3 lenses: firstly, a strategic lens; an operational lens; and then lastly, a financial view. But I think we see this primarily as a health crisis. And then, of course, there are government responses that vary throughout the globe in the markets we operate in, in response to that health crisis. And then lastly, of course, there's the economic impact that comes from those 2 impacts. And so we have viewed this crisis and the way we're managing this -- our business through this and we see it happening in 3 phases. Initially, back in February and March, there was our initial emergency response to managing the business. We're now in what we call our ongoing management phase, which we believe will continue for some time; and largely, as we -- as the world focuses on solving the health problems and gets to a therapeutic or ultimately a vaccination solution; and ultimately, will end into a recovery phase into whatever the next normal looks like. Our primary focus through these phases has always been the safe and effective operations of our business. Ensuring the safety and health of our people, our candidates and our clients has been priority #1. Secondly, we've been focusing on securing the long-term strength of the group, making sure that we can operate effectively in this environment for the long term. And also ensuring that we have an economically viable and secure business focused on fulfilling our undimmed strategic ambitions and underpinning our financial strength. And so as we think about this strategically, our purpose of bringing skilled people together to build the future has never felt more relevant. And the trends, the long-term secular trends that we sit at the central, that we updated you all on at our Capital Markets Day, that of the need and continuing growth of requirements for STEM skills as well as the move and changes in workplace of running flexible working have only been accelerated by the current pandemic. Operationally, our first priority, as I said, was the health and safety of our colleagues, contractors and clients. And with a matter of weeks, we were able to get 98% of our group headcount to remote working, making sure our employees and candidates were fully supported with training, development and resources to effectively operate in this new environment. We're operating differently and adapting, and we're making sure that we are focused on learning and evolving to operate better in this environment. And if we think of that ongoing management phase going on for some period of time until health crisis is fixed, we want to make sure that we are operating and adapting to make sure that we can support our clients who are also adjusting to this new environment. And then lastly, financially, whilst the pandemic continues, it's not possible to estimate with any certainty the impact on the group looking forwards. That said, as we stated in our update of 20th March, there's no avoiding that demand in the short-term has been impacted by government's response to this global pandemic, and we focused on making sure that we have financial strength and are bolstering our balance sheet. Proactively, we're managing our cost base in the short term, making sure that in industries that are pulling back we are rightsizing and adjusting our business as appropriate. Nonessential capital expenditure has been postponed as of all discretionary costs. The salaries of our executive directors of the Board and the senior executive team and the fees of the nonexecutive directors have been temporarily reduced by 20% and the executive directors are also forgoing their 2020 bonuses. Our focus on liquidity and making sure we have strong balance sheet, has been primarily in our view so that we can make sure we can navigate through this current environment strongly. Underpinning all of our management decisions is a clear objective to make sure that we are strengthening and retaining the skills, capacity and management capability to fulfill what I said was our undimmed strategic ambitions, and we believe that now is the right time to selectively invest for the years ahead. We believe we can come out of this stronger and deliver on our purpose of bringing skilled people together to build the future. So with that as a little bit of context, I'll now pass on to Alex, who will take us through the numbers. Alex?

[Alex Smith, CFO & Executive Director]

Thank you very much, Mark, and good morning. So group net fees in the half were down 7% year-on-year, with Q2 down 12% against a flat Q1. As Mark said, this has been very much a tale of 2 quarters, with the group's robust performance in Q1 being offset by the impact of the COVID-19 pandemic across all our territories and sectors in the second quarter. In Q1, our quarter to the 29th of Feb, we posted some robust growth in DACH and the Netherlands and the resilient performance in the U.S. Overall net fees were level year-on-year. In Q2, as the pandemic hit, aggregate demand has been significantly less than what would normally be expected, with notable spikes and troughs across different markets and industries in the short term. Despite this, Contracts, which accounts for 76% of group net fees, delivered a more resilient performance across both quarters, as would be expected given the nature of the model. Contract net fees were down 5% across the half, against Perm down 12%. Group average head count in the half was up 2% year-on-year, reflecting a 5% increase in Q1, in line with our strategy of investing in Germany and the U.S., followed by decline in Q2 in response to the crisis. There were marked differences by region in line with our previously stated strategy to focus on specific niches within sectors and markets where we can gain valuable market share. This approach is clearly demonstrated in our H1 period-to-end headcount, which was up 3% in the U.S., up 1% in DACH, down 13% in EMEA excluding DACH and down 19% in APAC. Overall, group headcount was down 5% year-on-year and down 5% sequentially Q2 versus Q1. Balancing the current economic headwinds and the acceleration of the long-term secular trends of STEM in flexible working, we are, as Mark said, proactively managing our cost base in the short term. The combination of the factors that we've seen, however, will result in a short-term decrease in our operating leverage with a resulting impact on our profitability compared to the same period last year. I've also talked before about our Contract business as a supertanker with momentum. Unsurprisingly, given the demand environment, that momentum is slowing. As Mark mentioned, we were pleased with the strong progress we made in respect of cash and liquidity. SThree remains in a strong financial position with total accessible liquidity of GBP 136 million. This is made up of GBP 31 million of net cash; GBP 50 million revolving credit facility, which has now been fully drawn down; GBP 5 million overdraft, not drawn down; and GBP 50 million from the Bank of England Coronavirus Corporate Financing Facility, also not drawn down, which we secured in May. In addition, we have a GBP 20 million accordion facility as well as a substantial working capital position, reflecting net cash due to SThree replacements already taken. Our Contract-focused business model enjoys a countercyclical cash hedge when the business levels off or declines. These dynamics are playing through. But we also took strong management action to mitigate the potential impact of the crisis on our ability to collect amounts due from clients. We reallocated headcount from our management accounts team to the collections team in Glasgow, 11 additional heads, and also enhanced our credit risk processes and systems in an agile fashion. The result was an in-quarter reduction in our days sales outstanding to 42 days from 45 days at the end of Q1. Next slide, please. DACH delivered a solid performance with net fees for H1 down 1% year-on-year, whilst Q2 was down 9% against particularly strong comps were up 16% in Q2 last year. So this was driven by significant growth, the overall performance in Q1, with Germany accounting for 92% of DACH. Technology in H1 within the region was up 1%, with a strong Q1 and Q2 slightly down, down 6% across the region, with strong performances in infrastructure and software development. Life Sciences after a very strong Q1 saw a Q2 decline as the pandemic impacted companies' abilities in region to run clinical trials and drug manufacturing. EMEA, excluding DACH, was down 12% in H1, with Q2 down 17%. These results largely reflect the U.K.'s challenging performance, which was down 14% in H1 and 19% in Q2. The Netherlands, our largest country in the region, delivered a resilient performance in H1 with net fees declining 5%, albeit with a 12% decline in Q2. In the Netherlands, notable performances were delivered in Life Sciences, up 10% with Q2 flat, driven by increased placements across quality assurance and medical devices, and across engineering with our particular focus on manufacturing high-tech and chemicals. Moving to the U.S. Our U.S. business showed its resilience across both quarters, resulting in net fees decreasing by only 1% in the first half. This was driven by Life Sciences, up 10% in the half and up 9% in the second quarter; and Technology up 4%, with Q2 up 5%. The region benefited from increased activity in quality assurance as more new drugs were manufactured and saw good growth in tech skills that support digital transformation such as mobile applications and software development, in line with changing customer needs. APAC net fees declined in the half by 28% as the region was impacted by both the Australian wildfires and the earlier impact of COVID-19. Japan was down 24% in the first half, with Q2 down 36%. And it's worth remembering that this is a Permanent business. And in our tech sector, we saw decline in demand for skills in advertising and digital media, tech consulting and implementation and enterprise technology. Now I'll hand over to Mark, who will take you through how we're positioning ourselves for the future.

[Mark Dorman, CEO & Executive Director]

Thank you, Alex. And so as we think about positioning ourselves for the future, I think it's important to restate what Alex highlighted that we have a strong financial position and have the liquidity to see us through whatever is to come. Our robust performance in Q1 was followed up by a resilient performance in Q2 against the backdrop of a global pandemic. What we're seeing is the acceleration of secular trends that we talked about in our CMD are on flexible working and the need for STEM skills. And so we're using this time to put our best foot forward and making sure that we're readjusting the business, downsizing in some markets if necessary, but critically to invest and focus on those key markets for the business so we will be in a strong position to drive our growth when the global economy starts to come out of the impact of the pandemic. We've talked about the right markets and right geographies and using data and data-led approaches to invest in specific niches within sectors and markets that are likely to be key in the future and where we have an opportunity right now to gain valuable market share. We believe that we can come out of this stronger, well invested, having strengthened current relationships by being able to support our clients and candidates through this time with the appropriate solution. Don't forget we have the scale and skill to provide whatever solution our clients need in these complex niches globally with new relationships, virtual solutions and sharing best practice and knowledge. So in the next section, I just wanted to -- next slide, please, update you on what we are seeing in the marketplace. Over the last 12 weeks or so, we've spoken to over 300 of our customers individually. We've aggregated several external data sources around demand in the various markets we serve as well as collated internal data on demand in our various offices around the world to get a picture of what trends are emerging in the short and medium term and what follows, and as this slide indicates, is initial view or pulse of the current market conditions over the last 12 weeks or so, and how we see things developing and what priorities our customers are viewing. So next slide, please. So here is a snapshot of some of the people trends that we're seeing in terms of what are the biggest people challenges our clients are seeing. I think it's clear to see that in the immediate term, April, May, there was a big reprioritization of activity, reprioritizing IT and change projects to drive the transition to remote working, and you can see those top trends there really are about customers adjusting to new ways of working, in flexible working, in the current environment. This also has meant that there was a pause of noncritical projects as the focus of all businesses shifted to business continuity planning and execution of managing their employee base remotely. In the medium term, what we're seeing is the acceleration of the urgency for business transformation, fast-tracking of previously planned projects and programs around digitization and highlighting the criticality of certain roles and projects, both internally and externally, as customers and clients globally focus on emerging trends of making more robust IT infrastructure, the digitization of processes and the reconfiguration of customer and supply chains as these things react to the current environment. There's no simple answer for any particular market. And these items tend to be very niche dependent and sector dependent, almost customer by customer. It's business as usual for some, so critical infrastructure, such as power generation and transmission or Internet connection and media companies. In sector-specific challenges, there are significant changes. For instance, implementing social distance in manufacturing lines or dramatic changes to global supply chains as they've been severed as borders are closed. In the early stages of the crisis, recruitment activity dropped quickly between 30% and 50% in terms of placements made, applications and interviews process with depressed activity volumes as we entered May. However, there is demand as companies reassess those projects and move towards focusing on the future as business reorganize to prepare themselves to compete in whatever the next normal is.Next slide, please. As I've said, there's no one simple answer, and these impacts we're seeing are very customer-specific across those broad trends, but we are seeing things developing across many sectors. No surprise around investing in more robust IT infrastructure, a focus on digitizing processes and a reconfiguration of customer channels. What has been interesting to see is the unprecedented volatility and the shift of skill type in the period, from the initial focus on business continuity planning to focus on pausing and reassessing company priorities and then a move to fast-tracking specific projects to enable that digitization, customer focus and engagement with customer channels and reimagining supply chains to build in resilience. Next slide, please. If we take one sector specifically, and here's an example of Life Sciences, a focal point of COVID-19, one might think that it would be all growth in Life Sciences, which is not true. There's been a strain in digital health services as the increased demand for experts in health care technology have increased. There's been an impact of deprioritized medical procedures as COVID-19 becomes the main treatment priority. And so if you look globally, those companies, and parts of the health care system that were not focused on reacting to the global pandemic, were paused certainly through the back half of March to currently as things begin to open up, which has had a material impact on those businesses. Supply chain QA production roles are in demand as supply chain shift and rapid scaling is required, as Alex has already stated, around vaccines and therapeutics and treatments are developed at a rapid pace. And closing of borders has placed an emphasis on local knowledge and new networks to fill roles and capabilities that hitherto were seen around global supply chains. Increasing scarcity for talent has and will remain a challenge moving forward. And if you look at some of the responses that you can see there, no change is only 1/3 in terms of the staffing plans for Life Sciences, which means 2/3 will look to see a change in the future. Next slide, please. And those common themes that are talked about around IT infrastructure, digitization of processes and reconfiguration of customer channels have impacted all sectors globally. Even sectors that historically have tended to be laggards on digitization are now seeing this as an absolute priority in the current environment. Working remotely, engaging with the customers in different ways using technology, understanding the data around supply chains and demand management is critical across all sectors. And as we see new trends emerge, we can see that there's different priorities for our customers along 3 broad trends that we will be focusing on, and we'll talk to you about it in the coming weeks and months. Next slide, please. These 3 broad priorities for our customers fall into these sectors: management of a more flexible and resilient workforce of the future, one that has more engagement on supporting remote or at least flexible and remote working for the foreseeable future; a focus on how to engage with employees wherever they happen to be; resilience and business continuity, supporting and onboarding people and ensuring cultural integration with teams that may be flexible and mixed in terms of permanent, temporary and contingent working on projects across the globe. The next trend we see is building supply chains with a focus on resilient and sustainability, the move from just-in-time to just-in-case. Understanding supply chains, making them resilient around the globe, immunizing them against impact. And also making sure that we have supply chains and production that is appropriate in the world of social distancing and new ways of working. And then lastly, digital transformation acceleration across all sectors. Reimagining customer journeys, a focus on data and data science, and this would be true in companies that are searching for growth or searching for survival. And an acceleration of automation to get data insights and engaging with customers in different ways. So what does this mean for SThree? Next slide. Help is needed to navigate the environment. And in the early days of the pandemic, as it was impacting Europe and North America, flexible working and ways of managing flexible working, we were asked by many of our customers to help them understand different service needs for managing their workforce. We need to think about end-to-end processes, not just in recruitment and places but -- and placement, but also around candidate onboarding, workforce planning and understanding resources and needs of specialist skills and candidates. All of these things are critical for that resilient flexible workforce of the future that will help solve our immediate problems and the challenges that companies face in the future. Next slide. As we listen to our customers and get them to tell us what they think the future looks like, here are 4 areas that they focused on. We've talked about STEM and STEM talent and the need for STEM talent and the supply challenges. These talent gaps have been heightened and a light has been shone on those gaps as a result of the pandemic. Access to skills are key and the right skills at the right time and to adjust program-by-program, project-by-project is really important. Not all times are temporary, and particularly, the work -- the focus on flexible working and engaging in offices in different ways, working from home in different ways and flexible working across both environments will be key. And that flexibility will be important in terms of training and development, not just the workforce of the future but the management and systems that support them. Next slide. And so as we shared with you all at our Capital Markets Day, SThree is unique. We're the only global pure-play STEM talent specialist, and we sit in the center of 2 long-term secular trends. What we've seen through the current 12 weeks, as the pandemic has raced around the world, is an acceleration of the trends that we shared with you around the need for STEM talent and the changing demands on flexible working and working environment. We believe that there is a unique opportunity for SThree, and this volatility is a time for us to capture the moment and be part of the solution and central to the Fourth Industrial Revolution. As I said right at the start, our purpose has never felt so relevant, bringing skilled people together to build the future seems like a good place for us to start. And we -- this is being confirmed by the current environment and the data that we're seeing from the marketplace. Next slide. So with that, we'll open up for some questions.

[Operator]

[Operator Instructions] Our first question is over to the line of Steve Woolf at Numis Securities.

[Steven John Woolf, Analyst]

Just 2 from me. One, do you have sort of a sense of where you are in the Contract runoff process, say, versus the average contract life or whether you think you're 1/3, 2/3 through that? And then secondly, just a bit more color on Germany, which has been exceptionally strong. I just wonder whether -- what you were seeing there, the backdrop to clients, the messaging there, particularly has done very well out of, obviously, COVID relative to other countries.

[Mark Dorman, CEO & Executive Director]

Steve, thanks for that. Why don't I start with an overview of Germany and then Alex can give you a view on the Contract. Look, I think a couple of things on Germany. One, I think we're particularly pleased with the team's performance there and our focus just being in the right niches and the right sectors at the right time. And if you remember, we're exposed primarily to Mittelstand, and we've had particularly robust performance in both Permanent and Contract there as companies are looking for the right skills to see them through here. But I think you're right that the overarching environment in Germany is better than other places, largely as a function of them public health policies have dealt with the pandemic more effectively than many other countries. So therefore, the day-to-day operational impact is not as severe as in other countries. But yes, we're pleased. Team is performing well within the right spots. We're supporting our customers in a really good way in Germany. Alex, do you want to have a crack at the Contract runoff question?

[Alex Smith, CFO & Executive Director]

Yes, sure. Steve, perhaps the best way of thinking about Contract is to think about the Contract order book which we talked about at the Capital Markets Day and again at the full year. So the Contract order book at the 31st of May, i.e. looking forwards at the value to the kind of contractual end date, so not assuming any extensions, was GBP 92 million, and that was down 14% year-on-year. And within there, what's interesting is that the average length of the contracts remains level year-on-year at 18 weeks. So I suppose that's kind of a snapshot looking forward. In terms of kind of Contract runoff, and perhaps using that supertanker analogy again, the supertanker -- we're not operating in a normal sea and with normal engines. So as we look forward, the end of the calendar quarter, 30th of June, would be a normally -- quite a high point in terms of scheduled finishes. And so the forward momentum of our engines on new deals will have a challenge, I suspect, as we come to the end of June. But we're seeing some good sequential improvement too as the teams are getting used to a different way of working. So between May and April, we did see a good sort of sequential improvement in some of that new deal activity. But I'd say, Q3 will have -- the order book is down 14%. We've got a significant finisher period at the end of June, but getting more effective in this new normal, I guess, in terms of deal production.

[Operator]

Our next question is from the line of Sanjay Vidyarthi of Liberum.

[Sanjay Kumar Vidyarthi, Research Analyst]

The question was on the U.S., which I think has had a particularly good performance over the period. And you mentioned investing in the right verticals has been a part of that. Just wanted to understand, presumably in the U.S., a lot of that has been in place prior to COVID. But how proactive can you be right now in terms of other markets of making that shift into the right verticals? How easy is that process right now to make those changes? And what kind of lead times are we talking about in terms of actually getting some traction to kind of make sure you're best positioned?

[Mark Dorman, CEO & Executive Director]

Sanjay, thanks for that. Look, I think that the U.S. team has been pretty flexible. The time to adjust is very sector-specific and how much knowledge we have in specific niches and how similar they are. I think if I take Life Sciences, for example, the team there did a pretty good job of adjusting quickly to the changing environment. As I talked about in Life Sciences, there's many sectors there that's actually have been in significant decline. So if you look at Q1 U.S. GDP decline, a big portion of that was actually somewhat counterintuitively health care. And so the team did a really good job of adjusting from areas that were in decline to areas that were more focused on therapeutics and response to COVID. So that would be an example of where we have experience in a sector and we're able to adjust quickly. Others, as you say, we're already in train. So we were already looking to downsize that exposure to upstream E&P oil and gas to more renewables and to power generation and transmission. That already been in train in the U.S. and that's been accelerated as a result of that. And then also, we've seen a pickup in IT where there's been a real focus there in response to the crisis. So I think it's our ability to be agile, understand the market and the niches and adapt to how they change is going to be important. And that's why, as I've stated before, our focus on really making sure we understand the niche, we get data and make data-led decisions and invest in that, so we can see where the trends are and focus on that in the future, build up that scale and capability is important.

[Operator]

Our next question is over to the line of Alex deGroote at Radnor Capital.

[Alexander Christian deGroote, Consultant]

Two quick questions from me, please. Question one, could we have a little bit more color on the Q-on-Q trends you've seen in the U.S. specifically, which looks like good momentum following what perhaps had been a Q1 which was fractionally below expectations. A little bit more detail on that and what that tells us about how you're getting on in the U.S.? I guess this echoes back to the previous question. And question 2 from me would be on liquidity. The paragraph around liquidity, net cash at period end of GBP 31 million. Could you talk a little bit to the moving parts behind that very strong cash performance, please?

[Mark Dorman, CEO & Executive Director]

Thanks, Alex. So look, I think we talked a bit about the U.S. and we're certainly pleased with the performance and the momentum that we're seeing there. Alex can maybe give you some more color specifically on the numbers. And then, Alex, you want to do the liquidity?

[Alex Smith, CFO & Executive Director]

Yes, sure. So shall I give the color on the numbers for the U.S., yes?

[Mark Dorman, CEO & Executive Director]

Yes.

[Alex Smith, CFO & Executive Director]

So the -- a quick look. The standouts, as we said in our narrative, was -- so IT or Tech in the U.S., sorry, was up 3% in Q1, up 5% in Q2 year-on-year, so very positive. Engineering was also positive. So we're up 20% in Q2 year-on-year. And Life Sciences, we were up 11% in Q2, 14% in Q1. So overall, within the U.S., a pleasing forward movement. The areas where we saw weakness was banking and finance, which was down 20% in the second quarter; and Energy, which was the E&P part of that, the upstream energy, down 11% in the second quarter. But overall, as we said, a pleasing performance in the U.S., flat in Q1, down in Q2, down 1% in the half. In terms of the kind of the cash and a bit more color around that. As I said in my comments, we've had a big focus on collections. And we redeployed heads to the collections team to focus on collecting the current, and then our experienced collectors moved on to focusing on overdue as well as improving our processes and systems around credit risk. And I think what we're particularly pleased with is that we've managed to reduce our DSOs with billings also declining, which is, if you think about it, a particularly strong kind of effort there. In terms of the kind of the shape of the cash, that's -- a big element is working capital unwind. So it's probably about 16 -- GBP 15 million, GBP 16 million of the H1 cash movement would be that. But significant -- but there's still significant working capital -- net working capital on the balance sheet to go if the business continues to decline. So kind of a strong focus on that. We did have some half year cash benefits in terms of government assistance. So in terms of deferral of certain VAT payments, social costs in the U.S., so it's about GBP 5.5 million of, if you like, government cash assistance in those numbers, which you could back out to get a more normalized view. Yes. No, we're very pleased with the cash performance. It's been a big focus, and we're pleased with how it's come through.

[Alexander Christian deGroote, Consultant]

Great. Just one quick follow-up, guys. The CCFF application that you made. Should we see that as a backstop? I mean can you tell us a little bit more about the duration of that facility, the costs, on what grounds would actually utilize it? Any color on the CCFF...

[Alex Smith, CFO & Executive Director]

Yes. So we put out an announcement in May that we've secured that. We see it very much as kind of backstop financing. So the cost is low. There were obviously certain costs in terms of actually setting it up, but it's there in the background to give all stakeholders absolute confidence that we've got the accessible liquidity behind us to ride out any reasonable scenario.

[Operator]

We move to the line of Kean Marden at Jefferies. Okay. For some reason, we are not able to unmute Kean Marden's line at the moment. I'm trying to unmute Adrian Kearsey's as well. Okay. Sorry, we've got Adrian's line.

[Adrian Mark Kearsey, Support Services Analyst]

Well done on a fairly resilient performance in Q2. I just wanted to ask not so much about trading but more about training and staff welfare. Would you be able to sort of give some details on what kind of training you're actually providing at the moment in order to enhance productivity and enable people to adjust to the current remote working? And also I'd be sort of fairly interested to see what are you doing about staff welfare and staff well-being.

[Mark Dorman, CEO & Executive Director]

Yes. Thanks, Adrian. So as you can imagine, I think the last time we spoke to you on our trading update was March 16. And between March 16 and, I think, about 10 days after that, we moved from a business that has spent 34 of years working from the office to 98% of our team globally working remotely. And so that's a pretty significant shift in terms of how we managed that team. And over that period, we've spent a significant amount of time and effort on developing new learning and development programs, building and engaging on new platforms where we can use video interactive tools to help both train and manage our people and engage with them. And so it's been a really great team effort. One of the things about working remotely on videos, I'm sure we're all finding out is, number one, it's a bit more intense as you live life through the screen, but also whilst we're all working remotely, we've never felt, I don't think as a team, more connected because we can actually access each other more. We're now at a phase where we've got some of the team working remotely, some of the team beginning to go back into offices in an appropriate way, socially distant, enabling more flexibility for our teams. And again, that's a different type of management capability and training and development that we've invested and spent a bit of time on doing that on our various platforms. As it comes to well-being and support, we have a program called Thrive, which is all about well-being, and we've got various modules to help people about how to actually work remotely, how to organize, put some structure around the day, as well as thinking about mental well-being, financial well-being and also just dealing with the stress of working from home. So we've got a whole set of programs around supporting our people there. We've also actually -- because we're all about our candidates and our candidate communities, we also have our candidate knowledge hubs that we have in the various countries where we actually offer out to many of the candidates similar kinds of support programs and tools and capabilities so that our independent contractors could also get access to that because that's helping them in this time as well. So we've spent a lot of time. And as I said, our view on managing through this, so you think of those 3 phases right now, we're in this ongoing management of this crisis, we're likely to be in this for some period of time of a high level of volatility, many of us working remotely and offices going back in, perhaps offices being closed again as we respond to the various waves of the crisis and public health policies in response to that. And so we've got to make sure that we build the capability to be able to manage our teams and support our candidates and clients, regardless of the environment. And so we're working hard on making sure we can do that.

[Operator]

[Operator Instructions] And Kean, over to you.

[Kean Marden, Head of Business Services Equity Research]

Hello, can you hear me this time?

[Mark Dorman, CEO & Executive Director]

Yes, we can hear you.

[Alex Smith, CFO & Executive Director]

Yes, loud and clear.

[Kean Marden, Head of Business Services Equity Research]

Excellent. I'm going to try to find those questions again. So Alex, you mentioned that normally June is an important month for sort of churn in the contract. But can you just give us a bit of background on -- in a normal year, what proportion of the book would you expect to come to that point where either the contract ceases or it rolls over, first of all? Then secondly, you mentioned job interviews. I think we're running down 30% to 50%. What time frame did that comment relate to? And can you just give us some context about how that differs by division? And then thirdly, do you think that industry data collection will deteriorate in the second half as clients, particularly SMEs, struggle more as they come off government-assisted programs?

[Mark Dorman, CEO & Executive Director]

Thank you, Kean. Glad we could get you off mute. Don't take it personal. Good to hear from you. So no, look, I think 3 good questions. Why don't I start with the job interviews. I think that time frame is really around the last 12 weeks or so. And so if you think from really the middle of Feb -- middle of March really through the balance of the quarter for us, that's the specific time period. I would say, however, inside that, there's a huge level of volatility on a week-by-week basis, on a sector-by-sector basis. And so that's why you've got a pretty wide spread between 30% and 50%. And I think if you think about the shape of it, you've got a couple of things going on. You've got volatility as people are going into lockdown and maybe adjusting to lockdown. You've also then got this notion of -- and I talked about it about in my presentation, the volatility in the different types of skills that are required. So immediately, I'm looking at business continuity planning, I'm pausing all projects. And then as I reprioritize, I might start new projects. So there's a lot of volatility just in that number in terms of interviews. But broadly speaking, it's in the last quarter time frame on job interviews. Alex, do you want to have a crack at the other 2?

[Alex Smith, CFO & Executive Director]

Yes. Yes, no problem. So in terms of kind of the -- if I look back over the last few years, June finisher rates would normally be 11%, 12% of our book, something like that. So that's what we'd normally see in terms -- and that would obviously be the scheduled finishes with us extending where we can. But the net result would be about 11%, 12%. That's historic. The -- looking forward, kind of crystal ball gazing into the kind of second half around debtors, I think it's worth saying a few things. We are getting more sophisticated with our kind of analysis of our credit risk, as I mentioned. And what's pleasing is that as we analyze our outstanding debtors through the Dun & Bradstreet risk engine, 85% of our debtors are low risk, 5% are medium, 5% are high and 5%, if you like, are unidentified on the D&B database, which could be around to kind of mask the data issue or it could be that D&B don't have fantastic coverage all around the world. So we're working to kind of reduce that unidentified piece. But I think the takeaway is actually our book is pretty low risk, and we're pleased with that shape overall. In terms of we're SME orientated, that's obviously good from a diversification point of view. But -- and the kind of a new stat we've got is around client concentration. So our top 20 clients account for 15% of our better book. So yes, there is a long tail. But as I say, we've got 85%, by value, are low risk. So I think, look, we look forward into the second half with confidence around our team, our system and our processes. We're on it daily, should we say, more than daily. I'm on it daily, I see the daily -- obviously, the daily cash of the group and the daily collections. We have daily targets. And over the last couple of months, we've been within 1% or 2% of our target. And we keep -- it looks -- it's still looking good, but we're very alert and we appreciate things may change. So that's why we're on it.

[Kean Marden, Head of Business Services Equity Research]

That's very useful. And congratulations, I'm seeing Glasgow as well, it's been a great performance over the last 3 to 6 months.

[Alex Smith, CFO & Executive Director]

Great. Thank you.

[Mark Dorman, CEO & Executive Director]

Thank you.

[Operator]

[Operator Instructions] Okay. So there are no further questions. May I please pass it back to you for any closing comments at this stage?

[Mark Dorman, CEO & Executive Director]

Terrific. Thank you. Well, thank you all. And thank you for the questions and the time today. Hopefully, this format was useful in giving a little more color around the trading update. And we look forward to seeing you all again when we do our full analyst presentation on the 20th of July. But with that, thank you all.

[Alex Smith, CFO & Executive Director]

Thank you.

[Operator]

This now concludes today's call. So thank you all very much for attending, and you can now disconnect.