The Times - UK (2020-07-21)

the times | Tuesday July 21 2020 2GM 43

Business

A recruiter that has been closely
involved in finding people for roles in
developing coronavirus vaccines and in
assuring the quality of hospital ventila-
tors said yesterday that a sharp decline
in other work had caused a sharp drop
in profit.
Sthree, a London-listed company
that operates in 16 countries, said that
its first-half, pre-tax profit for the six
months to the end of May had fallen to
£12.6 million, from £24 million a year
earlier. It blamed the Covid-19 pan-
demic, as well as investment in growth
areas such as Germany and the United
States, where it has gained market
share.
Net fee income fell by 7 per cent to
£151.2 million as overall demand for
new employees fell as a result of the
coronavirus turmoil. In Britain net fees
fell by 14 per cent in the first half and by
19 per cent in the second quarter alone.
Banking and finance was among the

“crypto” asset, typically digital cur-

rencies, under the influence of the

authority, which would mean that they

would have to meet minimum stan-

dards of fairness, clarity and accuracy.

Cryptocurrencies have no physical

form, existing only as a string of

computer code, and are seen by some as

the future of financial exchange. They

have been the subject of speculation,

wildly fluctuating prices and at times

fraudulent promotion.

Andrew Bailey, the FCA’s former

chief executive, has suggested previ-

ously that the regulator needs more

powers to tackle investment mis-

selling, but he also has pointed out that

the organisation’s resources are finite.

Before his appointment as governor of

the Bank of England, Mr Bailey was

supportive of the FCA having broader

powers to oversee products outside its

remit, an issue sometimes referred to as

the “regulatory perimeter”. However,

he also warned that the regulator could

not “man-mark” firms since it already

oversaw about 60,000 organisations.

The government said that the two

consultations would be closed on

October 25.

The promotion of certain crypto-

currency assets and minibonds could

be regulated for the first time.

John Glen, the City minister,

launched two consultations yesterday

designed to increase oversight of

financial promotions by the Financial

Conduct Authority. The government

said that the existing approach to

promotions from companies not

“authorised” by the FCA was failing to

do enough to protect investors.

If an unauthorised firm wants to

promote a particular financial product,

such as a “minibond” promising

generous returns, they need to get the

promotion approved by a firm that is

overseen by the City regulator. How-

ever, this approach has failed to prevent

scandals such as the collapse of London

Capital & Finance, which sold £236 mil-

lion of unregulated minibonds to about

12,000 investors.

The proposals would mean that

authorised firms would have to obtain

specific permission from the FCA for

financial promotions. The government

also proposed bringing certain types of

on the government to cover some of the

property costs for the hardest-hit

tenants. forced to stop trading and un-

able to meet their rental debts.

Phil Clark, global head of real assets

equity at Kames Capital, the invest-

ment group, said: “The majority of

responsible tenants and investors are

working together to find reasonable

solutions, but there is no avoiding the

fact that some businesses simply won’t

be able to pay and some pension funds

will receive less income as a result.”

Rental shortfall

leaves investors

£1.5bn in arrears

Louisa Clarence-Smith

Property investors have suffered a

£1.5 billion shortfall in rental income

that was due for the second quarter of

the year.

Almost a fifth of rent that was due at

the March quarter payday had not been

collected 90 days later, according to

Remit Consulting.

The research, which is based on the

analysis of 125,000 leases, highlights

the pressure on property investors,

including pensions and savings funds,

as analysts predict that the shortfall for

the present quarter will be even wider.

William Hill, JD Sports, Primark, Boots

and Stonegate Pubs are among the

companies that did not pay rent on the

June quarter rent day.

“The data for the beginning of the

current quarter shows that collection

rates are on an almost identical trajec-

tory,” Steph Yates, senior consultant at

Remit Consulting, said. “With average

collection on the June due date over

11 per cent lower than three months

earlier, investments in the UK property

could see an even bigger shortfall this

quarter.”

The retail sector, which was forced to

shut outlets during the lockdown,

accounted for £780 million of the

£1.5 billion of unpaid rent. Only 7 per

cent of residential rent has not been

collected, compared with 12 per cent of

office rent, 32 per cent of retail rent and

16 per cent of industrial property rent.

The British Property Federation, a

lobby group, said that the mass non-

payment of rent had been fuelled by the

government’s six-month moratorium

on evictions and the ban on landlords

using statutory demands to secure rent.

Melanie Leech, its chief executive,

said: “The pensions and savings funds

invested in commercial property clear-

ly cannot continue to sustain rental

losses on this scale. Those who can pay

should pay.” The lobby group has called

Street, the city’s main shopping
area, in further evidence of how
high streets are changing amid a
slump in the retail industry.
Alongside the upmarket hotel in
Edinburgh would be retail space, a
spa in the basement and new
restaurants located in the B-listed
buildings. The proposals would help
to create hundreds of new jobs.
Legal & General has its roots in
insurance but provides a range of
financial services products. Its
investment management business is
one of the largest in Europe and has
backed similar projects in Cardiff,
Salford, Newcastle and Sunderland.
The original units, at 109 to 112
Princes Street, date from the 19th

century and have been used as a

hotel, as well as housing the

Scottish Liberal Club and the

Scottish Conservative Club. The site

was taken over by Debenhams in

the 1970s. The store operator went

into administration in April this

year and has since announced

dozens of closures in Britain. In

recent weeks, it has reopened all 15

of its remaining stores in Scotland,

including its main Edinburgh

outlet, as the country emerged from

lockdown.

Legal & General, which owns the

buildings, believes that the existing

retail premises are “under-utilised”.

The cash will be invested through

the Legal & General UK Property

Fund, with pre-planning

consultation documents to be

lodged before the end of this month.

The development timescales will

depend on when planning

permission can be agreed.

Legal & General believes that the

Princes Street site is underused

Government’s first step to

regulate minibond selling

James Hurley Enterprise Editor

JANE BARLOW/PA

Virus puts Sthree in ‘crisis management’

areas affected most seriously, falling by

47 per cent. The life sciences sector was

more resilient, with its net fees flat.

Sthree said that it had supplied nearly

300 contractors to the NHS.

The British division was outper-

formed by countries where there was

strong growth in life sciences recruit-

ment, including Switzerland, where net

fees rose by 46 per cent, and Germany,

where fees fell by 2 per cent. In the

American division, fees increased by

1 per cent as that business recorded

growth in life sciences and technology

recruitment.

The recruitment industry has been

badly damaged by the pandemic. Page

Group, Hays and Robert Walters all

reported sharp falls in net fees this

month.

Sthree said yesterday that it was in

“crisis management phase” and that

demand would continue to be uncer-

tain as businesses dealt with the impact

of government responses and adapted

to the new environment. It halted all

hiring activities in April and cut its

dividend and management pay to help

to preserve cash.

Mark Dorman, 50, chief executive,

said that the company had “the right

strategy, positioned between the accel-

erating secular trends of STEM

[science, technology, engineering and

maths] and flexible working. As we con-

tinue to make targeted investments in

the group, we are positioning ourselves

to best capitalise on this growing

opportunity in the future.”

Sthree did not comment on its

present trading and its financial gui-

dance remains withdrawn.

Shares in Sthree fell by 10½p, or

3.9 per cent, to 261p last night.

Louisa Clarence-Smith

300

Number of contractors supplied to the

NHS by Sthree

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