TIDMSTAF
RNS Number : 6151N
Staffline Group PLC
24 January 2023
24 January 2023
STAFFLINE GROUP PLC
("Staffline", the "Company", or the "Group")
Trading Update
&
Notice of Results
- Full Year Results marginally ahead of market expectations
- Net cash position at the year-end highlights ongoing balance sheet strength
Staffline, the recruitment and training group, provides the
following trading update for the year ended 31 December 2022 ('FY
2022'), as well as the outlook for 2023 ('FY 2023').
Financial Highlights (1)
FY 2022 FY 2021 Change
Revenue GBP946.8m GBP942.7m +0.4%
---------- ---------- ---------
Gross profit GBP83.2m GBP82.8m +0.5%
---------- ---------- ---------
Gross profit % 8.8% 8.8% -
---------- ---------- ---------
Underlying operating profit (2) GBP11.6m GBP10.3m +12.6%
---------- ---------- ---------
Gross profit to operating profit
conversion % 13.9% 12.4% +1.5pts
---------- ---------- ---------
Net cash (pre IFRS 16) GBP5.0m GBP6.9m -GBP1.9m
---------- ---------- ---------
Net cash (post IFRS 16) GBP0.1m GBP2.3m -GBP2.2m
---------- ---------- ---------
(1) Presented on a continuing basis. The figures are unaudited
and provisional.
(2) Underlying results exclude goodwill impairment, amortisation
of intangible assets arising on business combinations,
reorganisation costs and other non-underlying charges
-- Revenue increase of 0.4% driven by new client wins, including
BMW, during the year and also a full year contribution from
Restart, offset by softening demand from customers who had
benefited from COVID
-- Gross profit from Recruitment businesses up 4.7% offsetting reduction in PeoplePlus
-- Tight cost control contributed to the 1.5ppts improvement in
gross profit to operating profit conversion
-- Strengthened balance sheet with strong trading cashflow,
despite repayment of c.GBP12m of COVID related government support
and advance payments
-- Net cash ahead of expectations
Staffline is pleased to report that trading across FY 2022
remained solid, particularly in the second half, with underlying
operating profit marginally ahead, and cash flows substantially
ahead of market expectations.
This positive performance has been supported by further
operational progress across the Group, as highlighted by two
significant recruitment customer wins, the first profit recognised
from the Restart contract, and robust trading during the peak
pre-Christmas period boosted by the FIFA World Cup.
The Group has pursued a policy of organic growth with a focus on
cost control and working capital, conserving its cash reserves, and
further strengthening its balance sheet. The post-IFRS16 net cash
of GBP0.1m at 31 December 2022 (2021: GBP2.3m) is stated after
repayments of the final GBP5.8m tranche of HMRC Deferred VAT Relief
and GBP6.2m of COVID related advance payments to the Ministry of
Justice. The substantial progress was achieved through strong
trading cash generation in line with the operating profit
performance, combined with tight control of working capital. At 31
December 2022, the Group continued to have significant financing
headroom relative to available committed banking facilities of
c.GBP75m. The Group is benefitting from a three-year interest rate
cap taken out in Q4 2021.
Operational Update
The challenging macro-economic climate worsened as the year
progressed, with higher wage inflation fuelled by tight labour
markets and increasing interest rates, which were above market
expectations at the start of the year. Nevertheless, all three of
the Group's divisions reported operating profits.
Recruitment GB
The Group's Recruitment GB division successfully implemented a
major customer win, BMW Group, whilst also generating strong
organic growth in two existing customers. In addition, the division
began recruiting for the travel sector as it recovered from the
pandemic, although security clearance and constrained customer
capacity to onboard new employees delayed any additional
contribution to the FY 2022 results. Investment in headcount and
technology improved customer fulfilment, despite widespread labour
shortages, and expansion of the Group's branch network has helped
to create a solid platform for future growth. Record results
reported by Datum RPO, the Group's managed services business,
underscored the trend for customers to consolidate their
recruitment supply chains using an independent expert. Omega, the
Group's technical and engineering recruiter, also posted strong
increases in its permanent recruitment fees, which across the
division were up c.80% on FY 2021, representing a c.179% increase
over the last two years. The division continued to control overhead
costs tightly, increasing its gross profit to operating profit
conversion rate from 14.0% to 16.0%.
Recruitment Ireland
The Recruitment Ireland business is more dependent on the
permanent recruitment market and less dependent upon temporary
placements than our Recruitment GB business. A 45% increase in
permanent recruitment fees drove Staffline's Ireland recruitment
business to deliver the division's strongest results since 2019, as
well as a record trading performance in the Republic of Ireland. A
pivot to white-collar recruitment in the Republic of Ireland, the
opening of a new office in Limerick, and the retention of key
public sector contracts in Northern Ireland, all contributed to
growth across 2022. The strength of permanent recruitment, and for
the first time, executive search, helped increase gross margins.
Additionally, tight control of the cost base resulted in the gross
profit to operating profit conversion rate improving to 24.8%, up
from 22.1% in the prior year.
PeoplePlus
PeoplePlus reported a solid performance in FY 2022 but was held
back by lower revenues in Skills training. Strong demand for labour
resulted in potential candidates bypassing additional training
programmes and moving straight into employment. Conversely, these
labour market conditions aided our Employability programmes which
performed particularly well, and we were pleased to see PeoplePlus
successfully deliver profit from the Restart sub-contracts during
the year, with the division reporting its first operating profit
from those contracts in the second half of 2022. Certain funding
claims made by PeoplePlus for services delivered in 2020 and
earlier years are now the subject of a dispute. While we are
vigorously defending our position and the final outcome is
uncertain, we have decided to provide GBP2.5m which, based on the
legacy nature of the item, has been recorded through reserves.
Outlook
The Group has delivered a strong performance across FY 2022,
exceeding expectations in terms of both profitability and cashflow,
all the while remaining resilient despite facing a number of
macroeconomic headwinds. PeoplePlus was adversely impacted by the
skills and training markets, offset by a solid performance across
the Group's recruitment activities, reflecting a relatively buoyant
market through most of 2022 for permanent recruitment and new
business.
Looking ahead, we expect the macroeconomic headwinds to persist.
Low unemployment will continue to constrain volumes in PeoplePlus'
Skills and Restart businesses. While we expect to grow market share
in the competitive temporary labour market, the Recruitment
divisions will not be immune to the broader short term market
challenges, where data is showing that demand for permanent
recruitment is weakening.
In the context of current expectations for the UK economy, the
Board has adopted a cautious approach to FY 2023. However, the
strengthened balance sheet, experienced management team and healthy
pipeline, mean the Group is well placed to capitalise on the
considerable market opportunities which lie ahead.
Albert Ellis, Chief Executive Officer of Staffline,
commented:
"We are pleased to report a solid trading performance across the
Group in FY 2022, which is a testament to the outstanding
dedication and commitment from all our employees and partners.
These results not only reinforce Staffline's position as a market
leader in terms of organic growth, but underscore the clear
benefits of its highly cash generative business model.
As the UK cost of living crisis deepens and the much-publicised
global macro headwinds continue to swirl, there is no question that
our core markets have become more challenging. Whilst we are
mindful of the challenges ahead, we firmly believe Staffline,
supported by our sizable market footprint, sector diversity, and
unrivalled track record in service delivery and innovation, remains
well placed to capitalise on considerable market opportunities and
further grow our market share."
Notice of Results
The Group expects to report its results for FY 2022 on Tuesday,
21 March 2023.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 as amended by The
Market Abuse (Amendment) (EU Exit) Regulations 2019. Upon the
publication of this announcement via the Regulatory Information
Service, this inside information is now considered to be in the
public domain.
For further information, please contact:
Staffline Group plc via Vigo Consulting
www.stafflinegroupplc.co.uk
Albert Ellis, Chief Executive Officer
Daniel Quint, Chief Financial Officer
Liberum (Nominated Adviser and Broker)
www.liberum.com
Richard Lindley / William Hall 020 3100 2222
Zeus (Joint Broker)
www.zeuscapital.co.uk
David Foreman (Investment Banking)
Nick Searle (Sales) 020 3829 5000
Vigo Consulting (Financial PR) 020 7390 0230
www.vigoconsulting.com Staffline@vigoconsulting.com
Jeremy Garcia / Kate Kilgallen
Market Abuse Regulation:
For the purposes of MAR, Article 2 of Commission Implementing
Regulation (EU) 2016/1055 and the UK version of such implementing
regulation, the person responsible for arranging for the release of
this Announcement on behalf of the Company is Daniel Quint, Chief
Financial Officer.
About Staffline
Providing workforce solutions
Staffline is the UK's market leading Recruitment and Training
group. It has three divisions:
Recruitment GB
Staffline is a leading provider of flexible blue-collar workers,
supplying c.37,000 staff per day on average to around 450 client
sites, across a wide range of industries including agriculture,
supermarkets, drinks, driving, food processing, logistics and
manufacturing.
Recruitment Ireland
The Recruitment Ireland business is a leading end to end
solutions provider operating across twenty industries, ten branch
locations, fifteen onsite customer locations, supplying c.5,000
staff per day on average, and offering RPO, MSP, temporary and
permanent solutions across the island of Ireland.
PeoplePlus Division
PeoplePlus is leading skills and employability business with a
clear purpose to help people transform their lives, get jobs and
keep jobs, and develop their careers. The division works with
employers to develop workforces of the future, and with central,
local and devolved governments to support their economic and social
policy agendas.
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END
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