TIDMSTAF
RNS Number : 4525Z
Staffline Group PLC
25 January 2022
25 January 2022
STAFFLINE GROUP PLC
("Staffline", the "Company", or the "Group")
Trading Update
&
Notice of Results
- 2021 Underlying Operating Profit doubles year-on-year; c. 11% ahead of market expectations
- Strong FY 2021 performance underpins increased confidence for FY 2022
Staffline, the recruitment and training group, is pleased to
provide the following trading update for the year ended 31 December
2021.
Financial Highlights(1)
FY 2021 FY 2020 Change
Revenue GBP942.7m GBP927.6m +1.6%
---------- ---------- ----------
Gross profit GBP82.8m GBP74.6m +11.0%
---------- ---------- ----------
Gross profit % 8.8% 8.0% +0.8%pts
---------- ---------- ----------
Underlying operating profit (2) GBP10.0m GBP4.8m +108.3%
---------- ---------- ----------
Gross profit to operating profit
conversion % 12.1% 6.4% +5.7%pts
---------- ---------- ----------
Net cash/(debt) (3) GBP6.9m GBP(8.8)m +GBP15.7m
---------- ---------- ----------
(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
(3) Presented on a pre-IFRS16 basis
The Group continued to trade strongly across H2 2021, building
on the positive momentum achieved in H1 2021, and is expected to
generate revenues for FY 2021 of c. GBP942.7m (2020: GBP927.6m),
representing an increase of c. 1.6% notwithstanding management
actions to exit low margin contracts. As a result of these actions
and the turnaround plan, the Group is anticipated to deliver
Underlying Operating Profit for FY 2021 of c. GBP10.0m (2020:
GBP4.8m), a significant increase of c. 108.3%, and c. 11% ahead of
market expectations for 2021.
Staffline's balance sheet was significantly strengthened during
the year with the Group expected to report an increase in
pre-IFRS16 net cash of GBP15.7m to GBP6.9m at 31 December 2021
(2020: net debt of GBP(8.8)m), despite repaying the majority
(GBP40.7m) of its Deferred VAT Relief, with the remaining balance
of GBP5.8m to be repaid on 31 January 2022. This substantial
improvement was achieved through a successful equity raise of
GBP46.4m (net of costs), and includes c. GBP10m of timing benefits,
which are expected to unwind, alongside further improvements in
trading cash flow and cash collections. The Group's financing
headroom, relative to available committed banking facilities at 31
December 2021, was in excess of GBP75m.
Operational Update
All three of the Group's divisions delivered a strong
performance in the year, as Staffline successfully leveraged its
market leading positions in each segment to mitigate operational
headwinds presented by the Covid-19 pandemic and widely publicised
labour shortages.
Recruitment GB
The Group's Recruitment GB division continued to achieve high
levels of worker fulfilment, underpinned by ongoing operating
efficiencies delivered through the rollout of its digital platform
for workers and customers. The exiting from certain lower margin
contracts, equating to c.GBP40m of annual revenue, was mitigated by
strong new business momentum both in securing new contracts and
expanding with existing customers. Furthermore, the division
successfully executed on a number of cross-sell opportunities with
existing blue-collar customers, to deliver permanent recruitment, a
key strategic margin growth driver, alongside reporting record
results in the white-collar sector.
Recruitment Ireland
In Staffline's Recruitment Ireland division, high levels of
consultant productivity, despite the region experiencing severe
Covid-19 restrictions, resulted in a strong performance in H2 2021.
Whilst restrictions impacted performance in 2020 and H1 2021, a
focus on margin growth and gross profit mix in favour of permanent
recruitment, particularly in the white-collar sector, ensured a
strong flow through to operating profit.
PeoplePlus
Following the restructuring of PeoplePlus in 2020, including the
disposal of the non-core and loss-making Apprenticeships division,
a rebuilding of the business's core services and footprint was
undertaken in 2021, which included further alignment of the cost
base with Covid-19 impacted lower revenues in the Skills division.
An additional impact in the Skills division has been the discovery
of incomplete records relating to 2019, which will require the
repayment of c. GBP2m of revenue. Based on its legacy nature, this
has been adjusted through reserves. Of the c. GBP2m, GBP0.8m has
already been repaid in 2021, with the balance due for repayment in
2022.
As announced in June 2021, PeoplePlus secured a number of
Restart sub-contracts, and these have all been successfully
mobilised. Employability services saw the strongest demand within
the division, specifically in supporting individuals seeking to
start their own businesses, principally under the New Enterprise
Allowance scheme. Finally, the transition to further improved
digital delivery models across all of our contracts was completed,
enabling the business to switch from in-person engagement to
virtual delivery across many of its services, resulting in record
revenues from its digital model.
Outlook
The Group has delivered an excellent performance in 2021,
exceeding expectations in both profitability and cashflows, with
upgrades to market expectations during 2021 against a backdrop of
continued macroeconomic headwinds.
This momentum is expected to continue into 2022, supported by a
strong new business pipeline, a lower overhead cost base and the
expected post-Covid recovery of historically strong Staffline
recruitment sectors, such as automotive, manufacturing, aerospace
and travel. The Board remains confident in the growth prospects for
the Group in the medium-to-long-term.
Notice of Results
The Group expects to report its results for the year ended 31
December 2021 on Tuesday, 22 March 2022.
Albert Ellis, Chief Executive Officer of Staffline,
commented:
"To have achieved such a strong profit performance during a year
which presented a number of industry-wide challenges is testament
to the underlying strength of our market leading positions and the
Group's unrivalled reputation for delivery of labour at scale to
major organisations across the UK in critical sectors.
"Having both re-capitalised and refinanced the Group, we now
have the balance sheet strength and operational agility to execute
on more ambitious organic growth plans. The pipeline for 2022 is
encouraging, underpinning the Board's increased confidence in the
current financial year and beyond."
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.
Enquiries:
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 / Christopher
Whitaker 020 3100 2222
Vigo Consulting ( Financial PR) 020 7390 0230
www.vigoconsulting.com staffline@vigoconsulting.com
Jeremy Garcia / Antonia Pollock
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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