TIDMSTAF
RNS Number : 5246F
Staffline Group PLC
22 March 2022
22 March 2022
STAFFLINE GROUP PLC
("Staffline", the "Company" or the "Group")
AUDITED RESULTS FOR THE YEARED 31 DECEMBER 2021
Strong performance across FY 2021, exceeding market guidance
Staffline Group plc, the recruitment and training group,
announces its audited results 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 margin % 8.8% 8.0% +0.8%pts
---------- ----------- ----------
Underlying operating profit (2) GBP10.3m GBP4.8m +114.6%
---------- ----------- ----------
Gross profit to underlying operating
profit conversion % 12.4% 6.4% +6.0%pts
---------- ----------- ----------
Profit/(loss) after tax GBP1.6m GBP(48.5)m +GBP50.1m
---------- ----------- ----------
Underlying EBITDA GBP16.9m GBP12.2m +38.5%
---------- ----------- ----------
Net cash/(debt) (3) GBP6.9m GBP(8.8)m +GBP15.7m
---------- ----------- ----------
-- Revenue increased to GBP942.7m (2020: GBP927. 6m)
notwithstanding the exit of certain lower-margin contracts
o Strong organic growth in like for like revenue and gross
profit has more than doubled year-on-year underlying operating
profits(2) , significantly contributing to the increase of GBP15.7m
of cash
-- Strategic actions, and the quality of the organic growth has
driven up margins with gross profit increasing by 11% to GBP82.8m
(2020: GBP74.6m), and gross margin by 0.8%pts to 8.8% (2020:
8.0%)
-- Underlying operating profit(2) is ahead of market
expectations for 2021 increasing 114.6% to GBP10.3m (2020: GBP4.8m)
with underlying EBITDA surpassing GBP16m
-- Stronger than expected trading cash flow has reduced ongoing
finance costs materially to GBP2.4m (2020: GBP4.1m)
-- Profit after tax of GBP1.6m (2020: loss GBP(48.5)m), the first profit after tax since 2017
-- The Group's balance sheet continues to strengthen following
the equity raise of GBP46.4m (net) in June 2021 and refinancing of
the Group's working capital facilities.
-- Net cash (Pre-IFRS 16)(3) as at 31 December 2021 of GBP6.9m (2020: net debt of GBP(8.8)m)
o Repayment of deferred VAT relief of GBP40.7m during 2021 with
final instalment of GBP5.8m paid on 31 January 2022. No pandemic
related relief or loans now outstanding.
Operational Highlights
-- All three divisions have delivered strong growth in gross
profit and underlying operating profit(2) with conversion ratios
improving across the Group
o The successful drive to expand the portfolio of services in
permanent recruitment has exceeded expectations with gross profit
up 68% compared to 2020
o The turnaround of PeoplePlus continues with a 156% increase in
underlying(2) operating profit
-- Significant productivity gains have been achieved as a result
of a new focus on incentivisation
o Recruitment GB: gross profit per fee earner up 14.6% to
GBP71.5k (2020: GBP62.4k)
o Recruitment Ireland: gross profit per fee earner up 2.2% to
GBP111.5k (2020: GBP109.1k)
o PeoplePlus: revenue per employee up 18.3% to GBP62.6k (2020:
GBP52.9k)
-- PeoplePlus's Restart sub-contracts awarded in June 2021 have been successfully mobilised
-- The ongoing implementation of the Group's digital
transformation project continues to underpin operating efficiencies
and positions Staffline as a leading innovator in the sector
-- PeoplePlus launched #GetBritainWorking, a potential solution
to tackle structural elements of the labour shortage
Current Trading and Outlook
-- The Group has an encouraging pipeline of opportunities
emerging across traditionally strong sectors such as automotive and
travel as the UK economy continues its recovery from the Covid-19
pandemic
-- The Group has today announced a major contract win with BMW
and a material extension with Vinci an existing customer,
demonstrating Staffline's scale, reach and its capacity for
increasing market share
-- Whilst macroeconomic uncertainty has increased, the Group's
strong market share in resilient sectors such as food distribution,
logistics and on-line sectors provides good visibility of
revenues
-- Overall, the Board of Directors is confident that Staffline
has the operational and financial foundations in place to deliver
sustainable growth
-- We have made a strong start to 2022 and are confident in
meeting our expectations for the full year
Albert Ellis, Chief Executive Officer, commented:
"I am extremely proud of the commitment of the Group's
leadership and workforce who delivered throughout the ongoing
Covid-19 restrictions, facing labour shortages and global supply
chain issues. I wish to acknowledge their hard work and my
confidence in their ability to continue to deliver, including
generating new areas of growth in the future."
" I am delighted with Staffline's performance across 2021, both
in the significant operational progress we have delivered across
the Group but also in more than doubling our underlying(2)
operating profit in the year. I am satisfied that we now have the
operating platform, balance sheet strength and governance in place
to fully capitalise on our market leading position and drive
sustainable growth."
(1) Presented on a continuing basis.
Alternative performance measures
(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 which excludes lease
liabilities and also excludes refinancing costs
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
Vigo Consulting Financial PR 020 7390 0230
www.vigoconsulting.com staffline@vigoconsulting.com
Jeremy Garcia / Antonia Pollock / Kate
Kilgallen
Forward looking statements
Certain statements in this announcement are forward looking
statements. By their nature, forward looking statements involve a
number of risks, uncertainties or assumptions that could cause
actual results or events to di er materially from those expressed
or implied by the forward-looking statements. These risks,
uncertainties or assumptions could adversely a ect the outcome and
nancial e ects of the plans and events described herein. Forward
looking statements contained in this announcement regarding past
trends or activities should not be taken as representation that
such trends or activities will continue in the future. Readers
should not place undue reliance on forward looking statements,
which apply only as of the date of this announcement.
Important notice
This announcement does not constitute or form part of any o er
or invitation to sell, or any solicitation of any o er to purchase
any shares in the Company, nor shall it, or any part of it, or the
fact of its distribution, form the basis of, or be relied on in
connection with any contract or commitment or investment decisions
relating thereto, nor does it constitute a recommendation regarding
the shares of the Company. Past performance cannot be relied upon
as a guide to future performance.
Market Abuse Regulation
The person who arranged for the release of this announcement on
behalf of Staffline Group plc was Ian Lawson, Non-Executive
Chairman.
About Staffline - Recruitment, Training and Support
Enabling the Future of Work(TM)
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.33,000 staff per day on average from around 420 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 and ten onsite customer locations, supplying c.4,500
staff per day on average, and offering RPO, MSP, temporary and
permanent solutions across the island of Ireland.
PeoplePlus Division
Staffline is the leading adult skills and training provider in
the UK, delivering adult education, prison education and
skills-based employability programmes across the country.
Chairman's Statement
Introduction
2021 was a year in which the Group returned to growth. Staffline
delivered a robust performance across both revenue and underlying
operating profit whilst continuing to build on the significant
strategic progress achieved in the prior year, restoring stability
and resilience.
This included a refinancing, which was completed in June 2021,
raising GBP46.4m of equity alongside the restructuring of the
Group's debt, which has provided Staffline with a strong financial
and operational platform. The proceeds enabled us to reduce Group
indebtedness and to return to delivering profitable, cash
generative growth. The strong response we received for the
fundraising, both from new and existing investors, also provided a
significant endorsement to the effectiveness of Staffline's
business strategy and belief in our ongoing success.
In the year ended 31 December 2021, the Group generated revenues
of GBP942.7m (2020: GBP927.6m), up 1.6%, and an underlying(1)
operating profit of GBP10.3m (2020: GBP4.8m), representing an
increase of 114.6%. This strong performance was as a result of the
ongoing recovery of certain industries from the Covid-19 pandemic
and new business wins, coupled with the Group beginning to realise
the benefits from its cost reduction measures and the exit of
lower-margin business contracts. At 31 December 2021, the Group had
net cash (pre-IFRS 16)(2) of GBP6.9m (2020: net debt GBP8.8m).
Operationally, all three of Staffline's divisions delivered a
robust performance during 2021. In the Group's Recruitment
divisions, whilst operating against a backdrop of the
well-publicised labour shortages, our GB and Ireland businesses
continued to successfully support clients in what has become a
rapidly evolving market. In PeoplePlus, due to the advancement of
digital learning models and the Government's relaxation of social
distancing measures, we were pleased to see significantly greater
numbers trained in our classrooms over the course of the year, both
in-person and online.
By continuing to implement our comprehensive business continuity
and resilience initiatives, we believe the business is well placed
to respond to any additional challenges during 2022 and look to
build on the strong performance seen in 2021.
Environmental, Social and Governance
Staffline recognises the importance of adopting a strong
environmental, social and governance ('ESG') framework, and this
underpins our overarching business objectives and is core to
serving the needs of all of our key stakeholders. Improving
Staffline's ESG credentials is central to the Group's development
strategy, and we have formed a dedicated committee to help shape
policy across these areas going forwards and it has become a key
item on our Board agenda. A comprehensive outline of Staffline's
approach to ESG is included in the Group's 2021 Annual Report.
The Group has a clear purpose in assisting individuals
nationwide with accessing sustainable employment opportunities,
however, we continue to develop all elements of ESG across the
business, with governance and compliance points of particular focus
over the course of the past 18 months. Ensuring the proper
processes are in place to increase accountability at every level of
our operations is central to this, and we were pleased to have
appointed a new head of internal audit to assist our efforts in
this area. We are confident in the robust procedures we have in
place across the business, and intend to build on these further in
2022.
Board and management changes
We welcomed Tom Spain to the Board of Directors, in July 2021,
as Non-Executive Director, representing the Company's largest
shareholder.
Furthermore, in December 2021, Kenny Boyle was appointed
Managing Director of PeoplePlus. An experienced operator in
outsourced public services, Kenny joined PeoplePlus as Chief
Operating Officer in 2018 from Capita.
Richard Thomson, Senior Independent Director, has informed the
Board that he will not be standing for re-election at the Company's
AGM in 2022. Richard was appointed to the Board in September 2019
and has played an integral part in the successful turnaround of the
Group. The Board extends its thanks to Richard for the important
part he has played in the restructuring of the Group.
Summary and Outlook
On behalf of the Board and management of Staffline, I would like
to thank all of our colleagues and customers for their contribution
to our business during 2021, without whom we would not be in the
position we are today. We achieved strong trading during the period
despite the ongoing macroeconomic challenges that were present, and
continued to make significant strides operationally.
Our strengthened balance sheet - coupled with the resilience
measures that have been built into the business over the course of
the last 18 months - have provided us with a strong operational and
financial platform from which to continue to deliver growth,
building upon the trading performance that we achieved in 2021.
I would like to extend my thanks to both existing and new
shareholders for their continuing support as demonstrated in the
successful equity raise of June 2021.
We have made a strong start to 2022 and are confident in meeting
our expectations for the full year. Whilst there are still some
macroeconomic uncertainties and labour challenges, the Board of
Directors is confident in the Group's prospects in the medium-to
long-term as we continue to seek to capitalise on our
market-leading positions and strengthened business model.
Ian Lawson
Chairman
21 March 2022
Alternative performance measures
(1) Underlying results exclude goodwill impairment, amortisation
of intangible assets arising on business combinations,
reorganisation costs and other non-underlying charges
(2) Presented on a pre-IFRS16 basis, which excludes lease
liabilities, and also excludes refinancing costs
Chief Executive Officer's Review
Introduction
2021 was a milestone year for Staffline, during which we
completed the turnaround of the business and transformed the
Group's balance sheet, whilst delivering a strong financial
performance exceeding market expectations in profitability and
cashflow. This was all achieved against an uncertain market
backdrop, and we now believe that the Group has the platform to
deliver sustainable growth going forward.
In the year ended 31 December 2021, the Group generated revenues
of GBP942.7m (2020: GBP927.6m), up 1.6%, with an 11% increase in
gross profit to GBP82.8m (2020: GBP74.6m). Underlying(1) operating
profit increased 114.6% to GBP10.3m (2020: GBP4.8m) with net cash
(pre-IFRS 16)(2) as at 31 December of GBP6.9m (2020: net debt
GBP(8.8)m).
Our strong trading performance was achieved by successfully
growing market share whilst exiting certain lower margin contracts,
adding new customers across our recruitment divisions and securing
new contracts in PeoplePlus, including Restart, which we expect to
benefit future trading periods. Furthermore, we continued to
implement a number of productivity and margin improvement
initiatives, which are now resulting in improved profitability.
Ever-present Covid-19 restrictions were well documented
throughout 2021 and had varying effects across our divisions. As
previously noted, the Group was impacted by the severe lockdown
that was in place in the UK in Q1 2021, and by the Government's
introduction of Plan B Covid-19 measures in Q4 2021, traditionally
our peak trading period. However, we were successful in adapting
our strategy, building on the robust Covid-19 response we
implemented in 2020, to ensure business disruption was kept to a
minimum and the safety and wellbeing of our workforce and our
customers was the top priority.
A further market-wide theme which characterised 2021 was the
tight labour market and supply chain disruption which continues to
impact our clients. Using our market leading position and digital
technology, we have been able to support our customers through
these challenges and relationships have been strengthened as a
result. For example, we have delivered innovative solutions to
continue to supply drivers despite the widely publicised acute
shortage.
Group restructuring
We launched a comprehensive restructuring and transformation
programme in 2020, which was successfully completed in 2021. This
included strengthening governance and the balance sheet, as well as
right-sizing the Group through a reduction in headcount and
property rationalisation, resulting in significant annualised cost
savings.
Key to transforming the Group's balance sheet was the equity
fundraising and refinancing of the debt facilities, completed in
June 2021. The GBP46.4m net proceeds, were used to reduce
indebtedness, in addition to providing ongoing working capital
requirements as the Board focuses on the Group's organic growth
strategy. We were delighted with the positive response that we
received from both new and existing shareholders for the
fundraising, demonstrating both an endorsement of the strategic
progress we had implemented in the turnaround but also of our
future growth potential.
The refinancing has had a transformational impact, with the
Group achieving a positive net cash position at the outturn of the
year with significant headroom within its debt facilities.
Vision and strategy
Our vision is clear, to be a world class recruitment and
training group, the clear market leader and trusted partner known
for excellent service and integrity, driven forward by digital
innovation.
We have delivered on a number of key objectives within our
strategy since the new management team was appointed in 2020,
transforming the Group's governance and management coupled with
reducing its cost base and a refinancing.
Going forward, our strategic priorities, which we believe will
underpin Staffline's sustainable growth, are as follows:
-- To capitalise on the Group's market leadership:
Staffline's Recruitment divisions have market leading positions
in the supply of temporary workers. Their scale and geographic
coverage provide a competitive advantage and we expect to leverage
this to win more customers and organically grow revenue.
-- To broaden the portfolio of services:
The Group now has broad capabilities and will leverage these to
drive more permanent hiring and white-collar recruitment to
increase the Group's proportion of higher margin, cash generative
recruitment.
-- To unlock the potential in training:
We continue to transition PeoplePlus into a profitable
employability and skills training provider and are beginning to use
its unique database of labour to support Staffline's Recruitment
divisions in a market experiencing acute labour shortages.
-- To grow Republic of Ireland:
The Republic of Ireland has an attractive recruitment market,
and the Group is growing through investment in additional branches
and hiring additional fee-earning headcount.
Operational review
Recruitment GB
The Recruitment GB division performed strongly, growing revenues
by 2.2% in 2021 despite the division's exit from a low margin, top
five customer (by revenue). The team successfully secured a number
of new business wins alongside expanding existing client mandates,
a key feature of our strategy to broaden our operational footprint.
Crucially, Recruitment GB delivered high levels of worker
fulfilment within its core customers despite ongoing nationwide
labour supply issues.
Moreover, the division achieved a 69% year-on-year growth in
underlying(1) operating profit as a result of a sharp focus on
operating efficiencies and a swing in the mix of higher margin
services outside of onsite blue-collar activity. This included the
introduction of a new Direct Hire operation, a cross-sell
initiative to recruit permanent blue-collar employees for existing
customers. Furthermore, Digital transformation projects, including
our chatbot technology, also helped drive greater cost efficiency,
improve applicant engagement and reinforced our position as a
leading innovator within the recruitment industry.
In addition, Brightwork, the division's Scottish brand, renewed
its top three customer accounts on new long-term mandates during
the year. Omega, our technical engineering permanent and contract
recruitment business, and Datum, our RPO business, both
demonstrated significant recovery and year-on-year growth.
Recruitment GB has entered 2022 with a strong pipeline of new
business opportunities both across specialist sectors within which
it has recently increased its footprint, such as construction and
e-commerce, and in traditionally strong sectors for Staffline, such
as automotive and travel.
Recruitment Ireland
A recovery in demand for permanent recruitment and a focus on
white-collar recruitment in Recruitment Ireland underpinned a very
strong performance in 2021 despite Covid-19 measures being some of
the strictest worldwide during the year. A hybrid operating model
for employees was introduced to ensure the business could operate
successfully, notwithstanding the pandemic related
restrictions.
Gross margin grew 7.6% within the division in 2021 as a result
of a strong recovery in permanent fees, which increased 87% versus
2020, with the quantum of permanent fees generated in the second
half of 2021 exceeding those delivered for the full year in 2020.
In addition, temporary recruitment gross margins improved to 8.5%
during the period. Growth from the Republic of Ireland's branch
network was particularly strong, with a 23% increase in revenues
over the year.
The Group's Recruitment Ireland division remains a key strategic
driver for Staffline, particularly given its footprint and
expertise within permanent and white-collar recruitment. The
division has also entered 2022 with a strong pipeline with plans to
open a further two branches in the Republic to support future
growth.
PeoplePlus
PeoplePlus increased profitability in the year following a
significant period of restructuring in 2020, which continued into
2021 and included further alignment of its cost base. The division
successfully adjusted its service in response to ongoing Covid-19
related restrictions, continuing the use of digital delivery models
and achieving stability.
As announced in June 2021, PeoplePlus secured a number of
Restart sub-contracts which have been successfully mobilised. In
addition, in the prison education sector, further roll out of our
"in-cell" learning service was achieved, a key priority for the
Ministry of Justice. 2021 also saw the highest ever starts on
PeoplePlus' New Enterprise Allowance scheme, which helps support
individuals seeking to start their own business. Whilst there was a
decline in demand for training across the hospitality and retail
sectors, the business was able to pivot its focus to growth
sectors, including construction. Our training services provided
support to 15,000 learners.
Finally, we were delighted with the response to PeoplePlus'
newly launched #GetBritainWorking initiative, delivered as part of
our social recruitment framework. This programme works with a
consortium of large national employers to provide prospective
candidates with guaranteed interviews for 1000's of vacancies each
month. The programme is central to our core business values -
providing those distant from the employment market with the right
tools and training to successfully re-enter the workforce.
The labour market and recruitment landscape
Demand for labour is currently at unprecedented levels, with 1.5
million job vacancies. The latest data from the Office for National
Statistics reporting on the quarter ended 31 December 2021 reveals
that the number of payrolled employees has now exceeded
pre-pandemic levels, and as the success of the vaccine rollout
increases business confidence, organisations continue to hire
staff. The demand, combined with the impact of self-isolation
measures created a labour shortage immediately following the easing
of restrictions during the summer of 2021.
Employees, customers and stakeholders
On behalf of the Board, I would like to thank all of our
employees throughout the Group for their hard work and dedication
during a year which once again presented significant challenges as
a result of the Covid-19 pandemic.
The scale of the Staffline Group across a large and growing
number of industry sectors and services naturally gives rise to an
extensive and wide-ranging stakeholder base. These include public
bodies, consumers, business partners, shareholders, our employees
and the communities we serve.
We have been pleased over the past year to have significantly
strengthened our partnerships with key customers and also the
departments of the Government responsible for commissioning work.
We will continue to nurture these commercial relationships.
Summary
The Group delivered an excellent performance in 2021, resulting
in a number of upgrades to market expectations during the period.
This was achieved despite ongoing macroeconomic headwinds, certain
of which, management and the Board of Directors believe are showing
signs of abating. This, coupled with the strong financial and
operational platform that Staffline has developed, engenders a
positive outlook for the Group.
In the year-to-date, we are already building on the positive
momentum achieved in 2021 with a strong new business pipeline
underpinning our growth prospects. Furthermore, having
recapitalised and refinanced the Group, we have the balance sheet
strength and operational agility to execute on more ambitious
organic growth plans in the medium term.
Albert Ellis
Chief Executive Officer
21 March 2022
Alternative performance measures
(1) Underlying results exclude goodwill impairment, amortisation
of intangible assets arising on business combinations,
reorganisation costs and other non-underlying charges
(2) Presented on a pre-IFRS16 basis, which excludes lease
liabilities, and also excludes refinancing costs
Financial Review
Introduction
The Group traded very strongly during 2021, despite the now well
documented operational headwinds, which included ongoing Covid-19
restrictions, labour shortages and global supply chain issues.
Total revenue for the year of GBP942.7m (2020: GBP927.6m) was
higher than the previous year by 1.6%. The exiting from certain
lower margin contracts in the Recruitment GB division, equating to
c. GBP40m of annual revenue, meant that the like-for-like increase
in revenues was c. 6%. Gross profit improved in all three
divisions, delivering an overall increase of 11.0% to GBP82.8m
(2020: GBP74.6m), with overall gross profit margin increasing to
8.8% (2020: 8.0%).
The Group comprises three divisions, namely, Recruitment GB,
flexible blue-collar recruitment; Recruitment Ireland, generalist
recruitment; and PeoplePlus, adult skills and training
provision.
Underlying(1) divisional performance - continuing operations
Recruitment Recruitment Group Total Recruitment Recruitment Group Total
GB Ireland PeoplePlus Costs Group GB Ireland PeoplePlus Costs Group
2021 2021 2021 2021 2021 2020 2020 2020 2020 2020
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------- ----------- ----------- ---------- ------ ----- ----------- ----------- ---------- ------ -------
Revenue 747.9 111.7 83.1 - 942.7 732.1 120.5 75.0 - 927.6
Year-on-year
revenue
increase/(decline) 2.2% (7.3)% 10.8% - 1.6% (12.8)% (18.4)% (0.4)% - (12.7)%
Gross profit 50.7 11.3 20.8 - 82.8 46.2 10.5 17.9 - 74.6
Year-on-year gross
profit
increase/(decline) 9.7% 7.6% 16.2% 11.0% (18.4)% (32.6)% 17.0% (14.7)%
Gross profit as a %
of revenue 6.8% 10.1% 25.0% - 8.8% 6.3% 8.7% 23.9% - 8.0%
Underlying
operating
profit/(loss) 7.1 2.5 4.1 (3.4) 10.3 4.2 1.6 1.6 (2.6) 4.8
Underlying
operating profit
as a % of revenue 0.9% 2.2% 4.9% - 1.1% 0.6% 1.3% 2.1% - 0.5%
Underlying
operating profit
as a % of gross
profit 14.0% 22.1% 19.7% - 12.4% 9.1% 15.2% 8.9% - 6.4%
Pre-IFRS 16 net
cash/( debt)(2)
excluding
refinancing costs - - - - 6.9 - - - - (8.8)
Post-IFRS 16 net
cash/(debt)
excluding
unamortised
refinancing costs - - - - 2.3 - - - - (1 4.3)
------------------- ----------- ----------- ---------- ------ ----- ----------- ----------- ---------- ------ -------
Key performance indicators - continuing operations
Recruitment Recruitment Recruitment Recruitment
GB Ireland PeoplePlus Total Group GB Ireland PeoplePlus Total Group
2021 2021 2021 2021 2020 2020 2020 2020
------------ ----------- ----------- ---------- ----------- ----------- ----------- ---------- -----------
Hours worked
by
temporary
workers 51.1m 7.1m - 58.2m 55.6m 7.5m - 63.1m
Gross profit GBP71.5k GBP111.5k - GBP76.5k GBP62.4k GBP109.1k - GBP67.9k
per fee
earner
Revenue per - - GBP62.6k - - - GBP52.9k -
employee
------------ ----------- ----------- ---------- ----------- ----------- ----------- ---------- -----------
Alternative performance measures
(1) Underlying results exclude goodwill impairment, amortisation
of intangible assets arising on business combinations,
reorganisation costs and other non-underlying charges
(2) Presented on a pre-IFRS16 basis excluding lease liabilities
and also excludes refinancing costs
Recruitment GB
Revenues in the Recruitment GB division increased by GBP15.8m to
GBP747.9m. 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.
Gross profit margin in Recruitment GB increased to 6.8% (2020:
6.3%). This was principally due to the exit from certain lower
margin contracts supplemented by a gradual shift in customer mix
away from lower margin sectors such as food production as lockdown
restrictions eased. The increase in the National Minimum Wage in
April 2021, from GBP8.72 to GBP8.91 per hour for over 23s, does not
impact absolute gross profit but does negatively impact gross
margin percentage achieved, and it is anticipated this dynamic will
continue with increases in April each year.
Gross profit generated from temporary recruitment reduced as a
proportion of the total to 95.7% (2020: 97.0%), with the remaining
4.3% (2020: 3.0%) of gross profit generated from permanent
recruitment. This represented a 57% increase in gross profit
generated from permanent recruitment to GBP2.2m (2020: GBP1.4m).
Hours worked reduced to 51.1m (2020: 55.6m) mainly as a result of
the exiting from a top five low margin contract, as well as the
widely documented labour shortages in the second half of the
year.
Recruitment Ireland
Revenues in the Recruitment Ireland division reduced by GBP8.8m
to GBP111.7m, mainly due to the strict lockdown measures in Ireland
in Q1 2021 in contrast to a very strong pre-Covid Q1 2020. Whilst
restrictions impacted performance, 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 gross
profit in H2 2021. The gross profit margin for Recruitment Ireland
increased to 10.1% (2020: 8.7%) driven by a change in mix toward
permanent recruitment business, which consistently achieves a gross
margin of 100%. Gross profit generated from temporary recruitment
accounted for 86.7% (2020: 92.4%) of the total, with the remaining
13.3% (2020: 7.6%) of gross profit generated from permanent
recruitment. Hours worked decreased to 7.1m (2020: 7.5m).
PeoplePlus
With the gradual reopening of various learner centres and
improved revenues in the employability division, PeoplePlus
revenues increased to GBP83.1m (2020: GBP75.0m). A rebuilding of
the division's footprint was undertaken in 2021, which included
further alignment of the cost base. An additional impact in the
Skills division was the discovery of incomplete records relating to
2019, as highlighted in the Company's trading update in January
2022, which require the repayment of GBP2.3m of revenue. Based on
its legacy nature, this has been adjusted through reserves (see
note 3). Of the GBP2.3m, GBP0.8m has already been repaid in 2021,
with the balance paid in February 2022.
Revenue per employee was GBP62.6k during 2021 (2020: GBP52.9k),
an 18.3% increase, driven by the significant cost base efficiency
reductions. PeoplePlus achieved a gross margin of 25.0% in 2021,
which compares to 23.9% in 2020, largely due to improved
productivity following further restructuring during the year.
Group costs
Group costs, which include Directors' remuneration costs, have
increased due to the inclusion of bonus awards for the Executive
Directors. No bonuses were paid for 2020.
Group result
Underlying(1) operating profit was GBP10.3m (2020: GBP4.8m), a
significant increase of 114.6%, and ahead of market expectations
for the year. Total non-underlying charges on continuing activities
before tax, which are described below, were GBP8.0m (2020:
GBP52.3m), which was all non-cash. Finance charges before
refinancing costs were GBP2.4m (2020: GBP4.1m). Costs of GBP1.5m in
respect of the debt refinancing in June 2021 are included within
other receivables on the balance sheet and are being amortised over
the term of the facility.
The underlying (1) profit before taxation on continuing
operations for 2021 was GBP7.9m (2020: GBP0.7m). Underlying profit
before taxation as a percentage of revenue was 0.8% (2020: 0.1%).
The reported underlying profit after tax on continuing operations
for 2021 was GBP8.7m (2020: GBP3.4m).
The Group's reported loss before taxation was GBP(0.1)m in 2021
(2020: GBP(51.6)m).
Alternative performance measures
In the reporting of its financial performance, the Group uses a
limited number of alternative performance measures that are not
defined under IFRS, the Generally Accepted Accounting Principles
("GAAP") under which the Group reports. The Directors believe that
these non-GAAP measures, which have been consistently applied over
time, assist with the understanding of the performance of the
business and are not given undue prominence in these financial
statements. These non-GAAP measures are not a substitute for, or
superior to, any IFRS measures of performance but they have been
included as an additional means of comparing performance
year-on-year.
Non-underlying items
Non-underlying items of income or expenditure are items that are
either non-recurring or of a particular size or nature such that
they require separate identification. Non-underlying items are
included in total reported results but are excluded from underlying
results. Certain items can vary significantly from year to year and
therefore create volatility in reported earnings. It should be
noted that whilst the amortisation of intangible assets arising on
business combinations has been added back, the revenue from those
acquisitions has not been eliminated.
Non-underlying charges on continuing activities before tax
amounted to GBP8.0m in 2021 (2020: GBP52.3m), relating solely to
amortisation of intangible assets arising on business combinations.
For 2020, the costs included exceptional reorganisation,
rationalisation and restructuring costs of GBP4.0m relating
principally to a rationalisation programme across all the divisions
in order to reduce the number of properties occupied and reducing
administration headcount, transaction costs of GBP0.5m related to
the Group exploring strategic options, refinancing costs totalling
GBP3.2m, a GBP9.2m charge for the amortisation of intangible assets
arising on business combinations, a GBP35.3m goodwill impairment
charge, and a share-based payment charge of GBP0.1m.
The charge in the year for amortisation of intangible assets
arising on business combinations relates to the following
acquisitions: Vital Recruitment (charge GBP3.2m: asset will be
fully amortised by February 2023), Passionate about People (charge
GBP2.3m: asset will be fully amortised by October 2023), Grafton
(GBP1.3m: asset will be fully amortised by June 2023), Brightwork
(charge GBP0.7m: asset will be fully amortised by April 2022),
others (charge GBP0.5m: asset will be fully amortised during
2022).
2021 2020
Non-underlying charges - Continuing operations GBPm GBPm
-------------------------------------------------------- ----- -----
Reorganisation, rationalisation and restructuring
costs - 4.0
Transaction costs - business acquisitions and strategic
options - 0.5
Amortisation of intangible assets arising on business
combinations 8.0 9.2
Goodwill impairment - 35.3
Share-based payment charges (equity and cash-settled) - 0.1
-------------------------------------------------------- ----- -----
Total non-underlying charges before tax for continuing
operations 8.0 49.1
-------------------------------------------------------- ----- -----
Discontinued activities
On 1 December 2020, the Group sold its loss-making
Apprenticeships training business for a nominal sum. The sale
agreement required PeoplePlus to provide working capital support to
the purchaser in the form of reimbursement of relevant salary costs
incurred between December 2020 and March 2021, which is being
repaid over twelve months from May 2021.
In 2020, the Apprenticeships business recorded an underlying
operating loss of GBP(2.2)m for the year, before reorganisation and
exit costs of GBP(2.5)m. During 2021, further exit costs of GBP0.3m
were incurred.
The Group completed its disposal of its subsidiaries in Poland
to the incumbent management team in December 2021. The results of
the Polish activities were deemed to be discontinued during 2020
and the loss for that year was GBP(0.3)m. Costs incurred during
2021, principally for legal fees, amounted to GBP0.1m.
Government support
In 2020, the Group took advantage of the forbearance scheme for
the deferral of VAT due between March and June 2020. The total
deferral agreed with HMRC under the UK scheme amounted to GBP42.4m
after offset of a Corporation Tax refund due in relation to the
financial year 2018. Repayment of the balance commenced in June
2021 and the final instalment of GBP5.8m was paid in January
2022.
Whilst the effects of the pandemic were less severe in 2021, it
was still necessary to place a small number of workers and staff on
furlough for short periods. The support received totalled GBP1.6m
in the year.
Finance costs
Finance costs, excluding refinancing costs, incurred in the
year, amounted to GBP2.4m (2020: GBP4.1m). The Group has sought to
limit its exposure to future interest rate increases through the
use of derivative financial instruments. During the year, the Group
has entered into an amortising interest rate cap instrument, which
reduces exposure to interest rate increases above 1% of SONIA on an
aggregated two-thirds of the Receivables Finance Agreement and the
customer finance arrangements. The instrument, which has a term of
three years from 13 October 2021, is based on quarterly notional
amounts varying between GBP39.5m and GBP62.5m, with an average of
GBP51.9m.
Taxation
The total tax credit for the year was GBP1.7m (2020: GBP3.1m),
which comprises a Corporation Tax credit relating to prior years
and the movement of deferred tax balances. The Group has no current
Corporation Tax liability in respect of either 2021 or prior years
and is anticipating a refund of GBP0.4m relating to tax losses
carried back to a prior period. Remaining tax losses of GBP16.7m
carried forward in all divisions have been recognised as a deferred
tax asset.
The amortisation charge relating to intangible assets arising on
business combinations is not deductible under UK corporation tax
and is therefore added back to taxable profits. A deferred tax
liability is recognised in respect of other intangible assets. This
liability is reduced each year in line with the amortisation
charge, giving rise to a deferred tax credit each year.
Earnings per share
Statutory basic and diluted loss per share on continuing
activities in 2021 were both 1.3p (2020: both (71.5)p loss).
For the year, the weighted average number of shares (basic) is
122,178,126 (2020: 67,790,086).
Removing the non-underlying charges, and their respective
taxation impacts, results in underlying basic and diluted earnings
per share of 7.1p on continuing activities (2020: both 5.0p).
Statement of financial position, cash generation and
financing
The Group's total equity increased by GBP48.3m (2020: decrease
GBP(53.6)m) over the year. This is as a result of the placing,
subscription and open offer, which raised net proceeds of GBP46.4m,
plus the net movements on reserves of GBP1.9m, as disclosed in the
Consolidated Statement of Changes in Equity.
The movement in net debt is shown in the table below. The main
movement in working capital comprised the repayment of deferred VAT
of GBP40.7m. Strong trade receivables collection resulted in
GBP5.6m of net inflows, which was offset by GBP17.8m due to the
absorption of receivables previously financed under a non-recourse
facility.
Movement in net debt (excluding unamortised
refinancing costs)
2021 2020
GBPm GBPm
------------------------------------------------ ------ ------
Opening net debt (pre-IFRS 16) (8.8) (59.5)
Cash generated before change in working capital
and share options 16.5 3.4
Principal repayment of lease liabilities (1.7) (3.4)
Change in trade and other receivables (12.2) 27.6
Deferred VAT (net of corporation tax offset) (36.6) 42.4
Change in trade, other payables and provisions 3.5 (7.8)
Taxation and interest paid 3.9 (9.0)
Capital investment (net of disposals) (4.5) (2.4)
Cash flows relating to acquisitions - (0.3)
Net proceeds from equity issue 46.4 -
Payments from restricted funds for NMW 0.9 11.8
Settlement of NMW liabilities from restricted
funds (0.9) (11.8)
Other 0.4 0.2
Closing net cash/(debt) (pre-IFRS 16) 6.9 (8.8)
IFRS 16 lease liabilities (4.6) (5.5)
------------------------------------------------ ------ ------
Closing net cash/(debt) (post-IFRS 16) 2.3 (14.3)
------------------------------------------------ ------ ------
The table below reconciles underlying EBITDA (e arnings before
interest, taxation, depreciation and amortisation) , on continuing
operations to operating profit/(loss).
2021 2020
Reconciliation of operating loss to EBITDA GBPm GBPm
------------------------------------------- ----- ------
Operating profit/(loss) 2.3 (44.3)
Non-underlying costs 8.0 49.1
------------------------------------------- ----- ------
Underlying operating profit 10.3 4.8
------------------------------------------- ----- ------
Depreciation and loss on disposals 6.6 7.4
------------------------------------------- ----- ------
Underlying EBITDA 16.9 12.2
------------------------------------------- ----- ------
Lease rental payments (1.7) (2.9)
------------------------------------------- ----- ------
Underlying EBITDA (pre-IFRS 16) 15.2 9.3
------------------------------------------- ----- ------
Note: Underlying operating profit is before goodwill impairment,
amortisation of intangible assets arising on business combinations,
reorganisation costs and other non-underlying costs. EBITDA
represents Earnings Before Interest, Taxation, Depreciation and
Amortisation.
The Group's headroom relative to available committed banking
facilities as at 31 December 2021 was GBP78.4m (2020: GBP79.4m) as
set out below:
2021 2020
GBPm GBPm
----------------------------------------------- ----- -----
Cash at bank 29.8 24.5
Undrawn receivables finance facility agreement 48.6 54.9
Banking facility headroom 78.4 79.4
----------------------------------------------- ----- -----
Net (debt)/cash (pre-IFRS16)
Net cash (pre-IFRS16) of GBP6.9m, up GBP15.7m despite repaying
GBP40.7m of GBP46.5m deferred VAT. Substantial improvement of
GBP46.4m of net funds generated through the equity raise, improved
trading cash ow and cash collections, including c.GBP10m of timing
differences.
Equity fundraise and debt refinancing
At the time of the refinancing of the Group's facilities on 26
June 2020, the Group's liquidity forecast for the period ending 31
December 2021, which was prepared in support of that refinancing,
indicated that the Group would not have sufficient funds to repay
deferred VAT, believed at the time to be due for repayment in full
on or before 31 March 2021.
In September 2020, the UK Government announced that an
instalment payment scheme would be introduced, and details of the
final scheme were published on 23 February 2021. The revised
repayment profile had the effect of delaying the potential
liquidity shortfall from March 2021 to later in the year.
In order to address the liquidity shortfall, the Directors
engaged professional advisors in late 2020 to assess the Group's
options for refinancing its debt facilities and to engage with
potential lenders. On 20 May 2021, following a detailed appraisal
by the Directors, the Company and certain subsidiary undertakings,
entered into a new Receivables Financing Agreement ("RFA") to
replace the existing Group funding arrangements. The RFA contained
certain requirements to be met before completion, the most
significant of which was that the Company raise new equity capital
of at least GBP40.0m. This condition was satisfied and the RFA
became effective on 10 June 2021.
The key terms of the facility, which is provided jointly by RBS
Invoice Finance Limited, ABN AMRO Asset Based Finance N.V., UK
Branch and Leumi ABL Limited, are set out below:
I. Maximum receivables financing facility of GBP90.0m over a
four-and-a-half-year term, with a one-year extension option;
II. An Accordion option of up to an additional GBP15.0m, subject to lender approval;
III. Security on all of the assets and undertakings of the
Company and certain subsidiary undertakings;
IV. Interest accruing at 2.75% over SONIA, with a margin ratchet
downward to 2.0%, dependent upon the Group's leverage reducing to
3.00x;
V. A non-utilisation fee of 35% of the margin;
VI. Maximum net debt (averaged over a rolling three months) to
EBITDA leverage covenant commencing at 5.95x followed by a gradual
reduction to 4.0x by October 2023; and
VII. Minimum interest cover covenant of 2.25x the last 12 months EBITDA to finance charges.
An arrangement fee of GBP0.9m was paid to the lenders in respect
of the RFA.
The new facility enabled the cancellation of the Group's
existing facilities, which comprised: a Revolving Credit Facility
of GBP20.0m, a Receivables Finance Facility of GBP68.2m and a
non-recourse Receivables Purchase Facility of GBP25.0m.
The Group announced a proposed Placing, Subscription and Open
Offer (the "Fundraise") on 21 May 2021 following conditional
agreement of the debt refinancing the previous day. The Fundraise
comprised the following elements:
-- A total of 87,249,500 new ordinary shares of 10 pence each
placed at a price of 50 pence per share (the "Issue Price") to
certain existing shareholders, new institutional investors and
certain Directors and employees of the Group;
-- A total of 750,500 new ordinary shares of 10 pence each to
certain Directors and employees of the Group at the Issue Price,
and;
-- An open offer to existing shareholders of 10 shares for every
78 ordinary shares held, for a total of 8,837,242 new ordinary
shares of 10 pence each at the Issue Price.
The total gross proceeds of the Fundraise, which was approved by
the shareholders in a General Meeting on 9 June 2021, were
GBP48.4m. The total costs of the Fundraise and debt refinancing
were GBP4.0m. The net proceeds have been used to reduce total
indebtedness and to provide working capital for growth.
The Group is also funded through a number of separate,
non-recourse, customer financing arrangements whereby specific
customers' invoices are settled in advance of their normal
settlement date. The balance funded under these arrangements as at
31 December 2021 was GBP42.3m (2020: GBP43.0m).
Dividends
The Board is not proposing a final dividend payment for
2021.
Going concern
For the period to 31 December 2023, the Group's cash flow
forecasts indicate ongoing headroom in the Receivables Finance
Agreement and also full compliance with the financial covenants
contained therein. The Group has sufficient day to day liquidity to
ensure that short-term liabilities can be satisfied as and when
they fall due.
The financial statements have been prepared on a going concern
basis. The Directors have reviewed this basis and have made full
disclosure in note 3, concluding that there is a reasonable
expectation that the Group and Company have adequate resources to
continue in operational existence for the foreseeable future.
Daniel Quint
Chief Financial Officer
21 March 2022
Alternative performance measures
(1) Underlying results exclude goodwill impairment, amortisation
of intangible assets arising on business combinations,
reorganisation costs and other non-underlying charges
(2) Presented on a pre-IFRS16, which excludes lease liabilities,
and also excludes refinancing costs
Consolidated statement of comprehensive income
For the year ended 31 December 2021
2021 2020
Note GBPm GBPm
--------------------------------------------------- ---- ------- -------
Continuing operations
--------------------------------------------------- ---- ------- -------
Revenue 4 942.7 927.6
Cost of sales 5 (859.9) (853.0)
--------------------------------------------------- ---- ------- -------
Gross profit 82.8 74.6
--------------------------------------------------- ---- ------- -------
Administrative expenses 5 (80.5) (118.9)
--------------------------------------------------- ---- ------- -------
Operating profit/(loss) 2.3 (44.3)
--------------------------------------------------- ---- ------- -------
Underlying operating profit before non-underlying
administrative expenses 10.3 4.8
Administrative expenses (non-underlying) 5 (8.0) (49.1)
--------------------------------------------------- ---- ------- -------
Operating profit/(loss) 2.3 (44.3)
--------------------------------------------------- ---- ------- -------
Finance costs - underlying (2.4) (4.1)
Finance costs - refinancing costs (non-underlying) - (3.2)
--------------------------------------------------- ---- ------- -------
Finance costs (2.4) (7.3)
--------------------------------------------------- ---- ------- -------
Loss for the year before taxation (0.1) (51.6)
--------------------------------------------------- ---- ------- -------
Tax credit 6 1.7 3.1
--------------------------------------------------- ---- ------- -------
Profit/(loss) from continuing activities 1.6 (48.5)
--------------------------------------------------- ---- ------- -------
Loss from discontinued operations (0.4) (4.2)
--------------------------------------------------- ---- ------- -------
Profit/(loss) for the year 1.2 (52.7)
--------------------------------------------------- ---- ------- -------
Items that will not be reclassified to profit
and loss - actuarial gains/(losses), net
of tax 0.7 (0.8)
Items that may be reclassified to profit
and loss - cumulative translation loss (0.3) (0.1)
--------------------------------------------------- ---- ------- -------
Total comprehensive profit/(loss) for the
year 1.6 (53.6)
--------------------------------------------------- ---- ------- -------
Profit/(loss) per ordinary share 7
Continuing operations: Basic and diluted 1.3p (71.5)p
Discontinued operations: Basic and diluted (0.3)p (6.2)p
--------------------------------------------------- ---- ------- -------
Total loss per share: Basic and diluted 1.0p (77.7)p
--------------------------------------------------- ---- ------- -------
The accompanying notes form an integral part of these financial
statements.
Consolidated statement of changes in equity
For the year ended 31 December 2021
Share-
Own based Profit
Share shares Share payment Hedging and loss Total
capital JSOP premium reserve reserve account equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------------- -------- ------- -------- -------- -------- --------- -------
At 1 January 2020 - as reported 6.9 (4.8) 75.1 0.5 - (1.9) 75.8
----------------------------------- -------- ------- -------- -------- -------- --------- -------
Prior year adjustment (note
3) - - - - - (2.3) (2.3)
----------------------------------- -------- ------- -------- -------- -------- --------- -------
At 1 January 2020 - restated 6.9 (4.8) 75.1 0.5 - (4.2) 73.5
----------------------------------- -------- ------- -------- -------- -------- --------- -------
Save As You Earn ("SAYE") share
scheme - equity-settled - - - 0.1 - (0.1) -
----------------------------------- -------- ------- -------- -------- -------- --------- -------
Transactions with owners - - - 0.1 - (0.1) -
----------------------------------- -------- ------- -------- -------- -------- --------- -------
Loss for the year - - - - - (52.7) (52.7)
Actuarial loss on pension scheme,
net of taxation - - - - - (0.8) (0.8)
Cumulative translation adjustments - - - - - (0.1) (0.1)
Total comprehensive loss for
the year, net of tax - - - - - (53.6) (53.6)
----------------------------------- -------- ------- -------- -------- -------- --------- -------
At 31 December 2020 - as reported 6.9 (4.8) 75.1 0.6 - (55.6) 22.2
----------------------------------- -------- ------- -------- -------- -------- --------- -------
Prior year adjustment (note
3) - - - - - (2.3) (2.3)
----------------------------------- -------- ------- -------- -------- -------- --------- -------
At 31 December 2020 - restated 6.9 (4.8) 75.1 0.6 - (57.9) 19.9
----------------------------------- -------- ------- -------- -------- -------- --------- -------
Cancellation of JSOP shares - - - (0.4) - 0.4 -
Save As You Earn ("SAYE") share
scheme - equity-settled - - - 0.1 - - 0.1
Proceeds from share issue 9.7 - 36.7 - - - 46.4
----------------------------------- -------- ------- -------- -------- -------- --------- -------
Transactions with owners 9.7 - 36.7 (0.3) - 0.4 46.5
----------------------------------- -------- ------- -------- -------- -------- --------- -------
Profit for the year - - - - - 1.2 1.2
Cash flow hedge reserve - - - - 0.2 - 0.2
Actuarial gain on pension scheme,
net of taxation - - - - - 0.7 0.7
Cumulative translation adjustments - - - - - (0.3) (0.3)
-----------------------------------
Total comprehensive loss for
the year, net of tax - - - - 0.2 1.6 1.8
----------------------------------- -------- ------- -------- -------- -------- --------- -------
At 31 December 2021 16.6 (4.8) 111.8 0.3 0.2 (55.9) 68.2
----------------------------------- -------- ------- -------- -------- -------- --------- -------
The accompanying notes form an integral part of these financial
statements.
Consolidated statement of financial position
As at 31 December 2021
Consolidated Company
------------------------------ ---- ----------------- -------------------------
2020 2019
2021 Restated Restated 2021 2020
Note GBPm GBPm GBPm GBPm GBPm
------------------------------ ---- ------ --------- --------- ------ ------
Assets
Non-current
Goodwill 8 59.6 59.6 94.9 - -
Other intangible assets 16.5 24.3 34.0 - -
Investments - - - 67.8 67.8
Property, plant and equipment 9 8.0 9.6 14.6 - -
Deferred tax asset 4.6 4.4 1.4 0.8 -
------------------------------ ---- ------ --------- --------- ------ ------
88.7 97.9 144.9 68.6 67.8
------------------------------ ---- ------ --------- --------- ------ ------
Current
Trade and other receivables 116.2 104.8 132.4 3.0 7.7
Current tax asset 0.6 1.7 5.3 - 0.2
Derivative financial
instruments 11 0.5 - - 0.5 -
Cash and cash equivalents 12 29.8 24.5 25.0 - -
Restricted cash 12 - 0.9 12.7 - -
------------------------------ ---- ------ --------- --------- ------ ------
147.1 131.9 175.4 3.5 7.9
------------------------------ ---- ------ --------- --------- ------ ------
Debtors: amounts falling
due after more than one
year - - - 30.8 -
------------------------------ ---- ------ --------- --------- ------ ------
Total assets 235.8 229.8 320.3 102.9 75.7
------------------------------ ---- ------ --------- --------- ------ ------
Liabilities
Current
Trade and other payables 134.3 155.6 128.7 3.4 3.8
Borrowings 13 22.9 13.0 6.4 - -
Other liabilities - - 0.7 - -
Provisions 1.4 3.8 16.0 - -
Lease liabilities 10 1.3 1.6 2.6 - -
159.9 174.0 154.4 3.4 3.8
------------------------------ ---- ------ --------- --------- ------ ------
Non-current
Borrowings 13 - 20.0 78.1 - 20.0
Other liabilities 0.3 7.3 1.4 - 0.4
Provisions 1.4 1.2 2.4 - -
Lease liabilities 10 3.3 3.9 5.8 - -
Deferred tax liabilities 2.7 3.5 4.7 - -
------------------------------ ---- ------ --------- --------- ------ ------
7.7 35.9 92.4 - 20.4
------------------------------ ---- ------ --------- --------- ------ ------
Total liabilities 167.6 209.9 246.8 3.4 24.2
------------------------------ ---- ------ --------- --------- ------ ------
Equity
Share capital 14 16.6 6.9 6.9 16.6 6.9
Own shares (4.8) (4.8) (4.8) (4.8) (4.8)
Share premium 111.8 75.1 75.1 111.8 75.1
Share-based payment reserve 0.3 0.6 0.5 - -
Cash flow hedge reserve 0.2 - - 0.2 -
Profit and loss account (55.9) (57.9) (4.2) (24.3) (25.7)
------------------------------ ---- ------ --------- --------- ------ ------
Total equity 68.2 19.9 73.5 99.5 51.5
------------------------------ ---- ------ --------- --------- ------ ------
Total equity and liabilities 235.8 229.8 320.3 102.9 75.7
------------------------------ ---- ------ --------- --------- ------ ------
The accompanying notes form an integral part of these financial
statements.
Consolidated statement of cash flows
For the year ended 31 December 2021
2021 2020
Note GBPm GBPm
--------------------------------------------------- ---- ------ ------
Cash flows from operating activities 15 (28.7) 65.8
--------------------------------------------------- ---- ------ ------
Taxation received/(paid) 6 5.8 (0.5)
Net cash inflow from operating activities (22.9) 65.3
--------------------------------------------------- ---- ------ ------
Cash flows from investing activities -
trading
Purchases of property, plant and equipment 9 (2.4) (1.3)
Sale of property, plant and equipment - 0.2
Purchase of intangible assets - software (2.1) (1.3)
Cash flows from investing activities -
acquisitions
Acquisition of businesses - deferred consideration
for prior year acquisitions - (0.3)
--------------------------------------------------- ---- ------ ------
Total cash flows arising from investing
activities (4.5) (2.7)
--------------------------------------------------- ---- ------ ------
Total cash flows arising from operating
and investing activities (27.4) 62.6
--------------------------------------------------- ---- ------ ------
Cash flows from financing activities
New loans (net of refinancing fees) - 43.0
Net movement in Receivables Finance Agreement 9.9 (29.7)
Loan repayments (20.0) (58.1)
Principal repayment of lease liabilities (1.7) (3.4)
Interest paid (1.9) (8.5)
Payment from restricted fund 0.9 11.8
Settlement of NMW liabilities from restricted
fund (0.9) (11.8)
Gross proceeds from the issue of share
capital 48.4 -
Costs relating to the issue of share capital (2.0) -
--------------------------------------------------- ---- ------ ------
Net cash flows from financing activities 32.7 (56.7)
--------------------------------------------------- ---- ------ ------
Net change in cash and cash equivalents 5.3 5.9
--------------------------------------------------- ---- ------ ------
Cash and cash equivalents at beginning
of year 24.5 18.6
Cash and cash equivalents at end of year 12 29.8 24.5
--------------------------------------------------- ---- ------ ------
The accompanying notes form an integral part of these financial
statements.
Notes to the financial information
For the year ended 31 December 2021
1 Nature of operations
The principal activities of Staffline Group plc and its
subsidiaries ("the Group") include the provision of recruitment and
outsourced human resource services to industry and the provision of
skills and employment training and support.
2 General information and statement of compliance
Staffline Group plc, a Public Limited Company limited by shares
listed on AIM ("the Company"), is incorporated and domiciled in
England, United Kingdom. The Company acts as the holding company of
the Group. The Company's registration number is 05268636.
The financial information set out in this document does not
constitute the Group's statutory accounts for the years ended 31
December 2021 or 2020 but is derived from those accounts. Statutory
accounts for 2020 have been delivered to the registrar of
companies. The auditors have reported on those accounts; their
reports were (i) unqualified, (ii) contained an Emphasis of Matter
highlighting a materiality uncertainly related to going concern and
(iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006. Statutory accounts for 2020 will be
delivered to the registrar of companies in due course. The auditors
have reported on those accounts; their reports were (i)
unqualified, and (ii) did not contain a statement under section 498
(2) or (3) of the Companies Act 2006.
The financial statements for the year ended 31 December 2021
(including the comparatives for the year ended 31 December 2020)
were approved and authorised for issue by the Board of Directors on
21 March 2022. This results announcement for the year ended 31
December 2021 was also approved by the Board on 21 March 2022.
3 Accounting policies
Basis of preparation
The Consolidated financial statements are prepared for the year
ended 31 December 2021. The Consolidated financial statements of
the Group have been prepared on a going concern basis using the
significant accounting policies and measurement bases summarised
below, and in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006. The
financial statements are prepared under the historical cost
convention except for equity-settled share options and derivative
financial instruments which are measured at fair value.
There are no new accounting pronouncements which have become
effective in the year.
Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Chief Executive Officer's Review. The financial
position of the Group, its cash flows, liquidity position and
borrowing facilities are described in the Financial Review.
As described in the Chief Executive Officer's Review, despite
the challenging trading conditions experienced across all divisions
in the Group during 2021, the Group reported an underlying
operating profit for the year on continuing activities. In the
recruitment divisions, the impact of Covid-19 was mixed following
the gradual return to work for most sectors, which was accompanied
by unexpected high levels of labour shortages, especially in
logistics-based sectors. The Group's PeoplePlus division continued
to be impacted by the disruption to its training programmes, with a
gradual return to some face-to-face training, which accelerated in
the second half of the year. the Directors continued to enable the
majority of the Group's permanent staff to work from home and
provided additional support with Covid-secure working practices
implemented at customers' premises.
Trading volumes in the first half of the year were impacted by
the pandemic, with a relatively modest recovery in the second half.
The Directors maintained tight cost control throughout with
overheads at reduced levels, additionally benefitting from previous
restructuring programmes. These initiatives resulted in improved
performance in the second half of the year as lockdown restrictions
eased, resulting in underlying profit and positive cash
generation.
The Directors had previously highlighted that the Group's
financial forecasts indicated a liquidity issue in early 2021 when
VAT of GBP46.5m, deferred from the period between March to June
2020, may have had to be repaid. On 24 September 2020 the UK
Government announced that an instalment payment scheme would be
introduced, and details of the final scheme were published on 23
February 2021. The revised repayment profile of equal instalments
over eight months commencing June 2021 had the effect of delaying
the potential liquidity shortfall from March 2021 to later in the
year.
In order to address the anticipated liquidity shortfall the
Directors engaged professional advisors in late 2020 to assess the
Group's options for refinancing its debt facilities and to engage
with potential lenders. On 20 May 2021, following a detailed
appraisal by the Directors, the Company and certain subsidiary
undertakings, entered into a new GBP90m Receivables Financing
Agreement ("RFA") to replace the existing Group funding
arrangements. The RFA contained certain requirements to be met
before completion, the most significant of which was that the
Company raise new equity capital of at least GBP40.0m. This
condition was satisfied and the RFA became effective on 10 June
2021.
The new facility enabled the cancellation of the existing
facilities, comprising the RCF of GBP20.0m and the RFF of GBP68.2m
and also the non-recourse Receivables Purchase Facility of
GBP25.0m. The Group will continue to have access to its existing
customer financing arrangements in respect of specific customers,
under which invoices are settled in advance of normal credit
terms.
The Group announced a proposed Placing, Subscription and Open
Offer (the "Fundraise") on 21 May 2021 following conditional
agreement of the debt refinancing. The Fundraise comprised the
following elements:
-- A total of 87,249,500 new ordinary shares of 10 pence each
placed at a price of 50 pence per share (the "Issue Price") to
certain existing shareholders, new institutional investors and
certain Directors and employees of the Group;
-- A total of 750,500 new ordinary shares of 10 pence each to
certain Directors and employees of the Group at the issue price,
and;
-- An open offer to existing shareholders of 10 shares for every
78 ordinary shares held, for a total of 8,837,242 new ordinary
shares of 10 pence each at the issue price.
The total proceeds of the Fundraise, which was approved by the
shareholders in a General Meeting on 9 June 2021, was GBP48.4m. The
total cost of the Fundraise and debt refinancing was GBP4.0m. The
net proceeds were used to reduce total indebtedness and to provide
working capital for growth.
The Directors have prepared updated forecasts and cash flow
projections to 31 December 2023, which is considered to be a
reasonable period over which a reasonable view can be formed. These
forecasts, have been used to assess going concern and have been
stress-tested by applying basic sensitivity analysis, involving a
reduction to revenues across all three divisions, over the period
to 31 December 2023.
In forming their opinion, the Directors have performed a robust
assessment of the principal risks and uncertainties facing the
Group. Consequently, the Directors believe that the Group is well
placed to manage its business risks successfully.
At 31 December 2021, the Group had net cash of GBP6.9m (2020:
net debt of GBP(8.8)m), on a pre-IFRS 16 basis, and following the
debt refinancing has committed facilities until 1 December 2025.
For the period to 31 December 2023, the Group's cash flow forecasts
indicate ongoing headroom in the Receivables Finance Agreement and
also full compliance with the financial covenants contained
therein. The Group has sufficient day to day liquidity to ensure
that short-term liabilities can be satisfied as and when they fall
due. Further details of the financial position of the Group, its
cash flows, liquidity position and borrowing facilities are
described in the Financial Review.
As a result, the Directors have formed a judgement, at the time
of approving the financial statements, that there is a reasonable
expectation that the Group has adequate resources to continue in
operational existence and meet its liabilities as they fall due
over the assessment period. The Directors have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Group's ability to continue as a going concern for a period of at
least eighteen months from when the financial statements are
authorised for issue. For this reason, the Directors continue to
adopt the going concern basis in preparing the financial
statements.
Prior year restatement
Prior year restatements
Revenue overclaimed
During the year a customer undertook a review of amounts claimed
by PeoplePlus over the duration of the customer contract, which
began in 2019. The review revealed that a number of records that
are required to substantiate revenue claims were incomplete and as
such revenue was recognised in error. The records related to 2019
and will require the repayment of GBP2.3m of revenue. Based on its
legacy nature, this has been adjusted through reserves. Of the
GBP2.3m, GBP0.8m has already been repaid in 2021, with the balance
paid in February 2022. The required adjustment is set out in the
table below; Other payables understated by GBP2.3m.
Restatement of Consolidated statement of financial position
As at 31 December 2019 and at 31 December 2020
2019 Revenue 2019 2020 Revenue
Reported overclaimed Restated Reported overclaimed 2020 Restated
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- --------- ------------ --------- --------- ------------ -------------
Assets
Non-current
Goodwill 94.9 - 94.9 59.6 - 59.6
Other intangible
assets 34.0 - 34.0 24.3 - 24.3
Property, plant
and equipment 14.6 - 14.6 9.6 - 9.6
Deferred tax asset 1.4 - 1.4 4.4 - 4.4
------------------------- --------- ------------ --------- --------- ------------ -------------
144.9 - 144.9 97.9 - 97.9
------------------------- --------- ------------ --------- --------- ------------ -------------
Current 175.4 - 175.4 131.9 - 131.9
------------------------- --------- ------------ --------- --------- ------------ -------------
Total assets 320.3 - 320.3 229.8 - 229.8
------------------------- --------- ------------ --------- --------- ------------ -------------
Liabilities
Current
Trade and other
payables 126.4 2.3 128.7 153.3 2.3 155.6
Borrowings 6.4 - 6.4 13.0 - 13.0
Other liabilities 0.7 - 0.7 - - -
Provisions 16.0 - 16.0 3.8 - 3.8
Lease liabilities 2.6 - 2.6 1.6 - 1.6
------------------------- --------- ------------ --------- --------- ------------ -------------
152.1 2.3 154.4 171.7 2.3 174.0
------------------------- --------- ------------ --------- --------- ------------ -------------
Non-current
Borrowings 78.1 - 78.1 20.0 - 20.0
Other liabilities 1.4 - 1.4 7.3 - 7.3
Provisions 2.4 - 2.4 1.2 - 1.2
Lease liabilities 5.8 - 5.8 3.9 - 3.9
Deferred tax liabilities 4.7 - 4.7 3.5 - 3.5
------------------------- --------- ------------ --------- --------- ------------ -------------
92.4 - 92.4 35.9 - 35.9
------------------------- --------- ------------ --------- --------- ------------ -------------
Total liabilities 244.5 2.3 246.8 207.6 2.3 209.9
------------------------- --------- ------------ --------- --------- ------------ -------------
Equity
Share capital 6.9 - 6.9 6.9 - 6.9
Own shares (4.8) - (4.8) (4.8) - (4.8)
Share premium 75.1 - 75.1 75.1 - 75.1
Share-based payment
reserve 0.5 - 0.5 0.6 - 0.6
Profit and loss
account (1.9) (2.3) (4.2) (55.6) (2.3) (57.9)
------------------------- --------- ------------ --------- --------- ------------ -------------
Total equity 75.8 (2.3) 73.5 22.2 (2.3) 19.9
------------------------- --------- ------------ --------- --------- ------------ -------------
Total equity and
liabilities 320.3 - 320.3 229.8 - 229.8
------------------------- --------- ------------ --------- --------- ------------ -------------
Consolidation of subsidiaries
The Group financial statements consolidate those of the parent
Company and all of its subsidiaries as at 31 December 2021 in
accordance with IFRS 10. Subsidiaries are all entities to which the
Group is exposed to or has rights to variable returns and the
ability to affect those returns through control over the
subsidiary. The results of subsidiaries whose accounts are prepared
in a currency other than sterling; are translated at the average
rates of exchange during the period and their year-end balances at
the year-end rate of exchange. Translation adjustments are taken to
the profit and loss reserves.
Material intra-group balances and transactions, and any
unrealised gains or losses arising from intra-group transactions,
are eliminated in preparing these financial statements.
Underlying profit - non-GAAP measures of performance
In the reporting of its financial performance, the Group uses
certain measures that are not defined under IFRS, the Generally
Accepted Accounting Principles ("GAAP") under which the Group
reports. The Directors believe that these non-GAAP measures assist
with the understanding of the performance of the business. These
non-GAAP measures are not a substitute, or superior to, any IFRS
measures of performance but they have been included as the
Directors consider them to be an important means of comparing
performance year-on-year and they include key measures used within
the business for assessing performance.
Non-underlying items of income and expenditure
These non-underlying charges are regarded as recurring or
non-recurring items of income or expenditure of a particular size
and/or nature relating to the operations of the business that in
the Directors' opinion require separate identification. These items
are included in "total" reported results but are excluded from
"underlying" results. These items can vary significantly from year
to year and therefore create volatility in reported earnings which
does not reflect the Group's underlying performance.
Underlying EBITDA
Underlying operating profit before the deduction of underlying
depreciation and amortisation charges. This is considered a useful
measure because it approximates the underlying cash flow by
eliminating depreciation and amortisation charges.
Net debt
Net debt is the amount of bank debt less available cash balances
excluding escrow funds. This is a key measure as it is one on which
the terms of the banking facilities are based and shows the level
of external debt utilised by the Group to fund operations. Net debt
is also presented on a pre-IFRS 16 basis which excludes lease
liabilities.
The Directors acknowledge that the adjustments made to arrive at
underlying profit may not be comparable to those made by other
companies and it should be noted that whilst the amortisation of
acquisition-related intangible assets has been added back, the
revenue from those acquisitions has not been eliminated.
These alternative performance measures are utilised by the Board
to monitor performance and financial position. They show a
comparable level of performance excluding one-off items, with which
underlying performance and ability to service debt can be
judged.
Business combinations
The Group applies the acquisition method in accounting for
business combinations. The consideration transferred by the Group
to obtain control of a subsidiary is calculated as the sum of the
acquisition-date fair value of assets transferred, liabilities
incurred and the equity interests of the Group, which includes the
fair value of any asset or liability arising from a contingent
consideration arrangement. Acquisition costs are expensed as
incurred.
Goodwill is stated after separate recognition of identifiable
intangible assets. It is calculated as the sum of a) fair value of
consideration transferred, b) the recognised amount of any
non-controlling interest in the acquiree and c) acquisition-date
fair value of any existing equity interest in the acquiree, over
the acquisition-date fair values of identifiable net assets. If the
fair values of identifiable net assets exceed the sum calculated
above, the excess amount (i.e. gain on a bargain purchase) is
recognised in the statement of comprehensive income
immediately.
Segment reporting
The Group has three material operating segments: the provision
of recruitment and outsourced human resource services to industry,
in Great Britain (Recruitment GB) an also in Ireland (Recruitment
Ireland), plus the provision of skills training and probationary
services, together "PeoplePlus". Each of these operating segments
is managed separately as each requires different technologies,
marketing approaches and other resources. For management purposes,
the Group uses the same measurement policies as those used in its
financial statements.
4 Segment reporting
Management currently identifies three operating segments:
Recruitment GB, the provision of workforce recruitment and
management to industry, Recruitment Ireland, the provision of
generalist recruitment services and PeoplePlus, the provision of
skills and employment training and support. The Group's reporting
segments are determined based on the Group's internal reporting to
the Chief Operating Decision Maker (CODM). The CODM has been
determined to be the Group Chief Executive, with support from the
Board.
Whilst there are individual legal entities within the three
operating segments, they are operated and reviewed as single units
by the Board of Directors. Each legal entity within an operating
segment has the same management team, head office and have similar
economic characteristics. The Group's strategy, historically and
going forward, has been to integrate new acquisitions into the main
trading entities within each operating segment.
Segment information for the reporting year is as follows:
Recruitment Recruitment Group Total Recruitment Recruitment Group Total
GB Ireland PeoplePlus Costs Group GB Ireland PeoplePlus Costs Group
2021 2021 2021 2021 2021 2020 2020 2020 2020 2020
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- ----------- ----------- ---------- ------ ------- ----------- ----------- ---------- ------ -------
Segment
continuing
operations:
Sales revenue
from external
customers 747.9 111.7 83.1 - 942.7 732.1 120.5 75.0 - 927.6
Cost of sales (697.2) (100.4) (62.3) - (859.9) (685.9) (110.0) (57.1) - (853.0)
--------------- ----------- ----------- ---------- ------ ------- ----------- ----------- ---------- ------ -------
Segment gross
profit 50.7 11.3 20.8 - 82.8 46.2 10.5 17.9 - 74.6
--------------- ----------- ----------- ---------- -------
Administrative
expenses (40.4) (8.4) (14.0) (3.4) (66.2) (38.2) (8.2) (13.4) (2.6) (62.4)
Depreciation,
software &
lease
amortisation (3.2) (0.4) (2.7) - (6.3) (3.8) (0.7) (2.9) - (7.4)
--------------- ----------- ----------- ---------- ------ ------- ----------- ----------- ---------- ------ -------
Segment
underlying
operating
profit/(loss)* 7.1 2.5 4.1 (3.4) 10.3 4.2 1.6 1.6 (2.6) 4.8
--------------- ----------- ----------- ---------- ------ ------- ----------- ----------- ---------- ------ -------
Reorganisation
costs - - - - - (2.0) (0.7) - (1.3) (4.0)
Transaction
costs - - - - - - - - (0.5) (0.5)
Amortisation
of intangibles
arising on
business
combinations (6.4) (1.4) (0.2) - (8.0) (7.6) (1.4) (0.2) - (9.2)
Goodwill
impairment - - - - - (18.8) - (16.5) - (35.3)
Share-based
payment
charge - - - - - - - (0.1) - (0.1)
--------------- ----------- ----------- ---------- ------ ------- ----------- ----------- ---------- ------ -------
Segment
profit/(loss)
from
operations 0.7 1.1 3.9 (3.4) 2.3 (24.2) (0.5) (15.2) (4.4) (44.3)
--------------- ----------- ----------- ---------- ------ ------- ----------- ----------- ---------- ------ -------
Finance costs (2.0) (0.3) - (0.1) (2.4) (2.5) (0.2) (0.1) (4.5) (7.3)
--------------- ----------- ----------- ---------- ------ ------- ----------- ----------- ---------- ------ -------
Segment loss
before
taxation (1.3) 0.8 3.9 (3.5) (0.1) (26.7) (0.7) (15.3) (8.9) (51.6)
--------------- ----------- ----------- ---------- ------ ------- ----------- ----------- ---------- ------ -------
Tax credit 0.1 0.1 - 1.5 1.7 0.6 0.2 0.7 1.6 3.1
--------------- ----------- ----------- ---------- ------ ------- ----------- ----------- ---------- ------ -------
Segment
(loss)/profit
from
continuing
operations (1.2) 0.9 3.9 (2.0) 1.6 (26.1) (0.5) (14.6) (7.3) (48.5)
--------------- ----------- ----------- ---------- ------ ------- ----------- ----------- ---------- ------ -------
* Segment underlying operating profit before goodwill
impairment, amortisation of intangible assets arising on business
combinations, reorganisation costs and other non-underlying
costs.
Recruitment Recruitment Total
Recruitment Recruitment Staffline Total GB Ireland PeoplePlus Staffline Group
GB Ireland PeoplePlus Group Group 2020 2020 2020 Group 2020
2021 2021 2021 2021 2021 Restated Restated restated 2020 Restated
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- ----------- ----------- ---------- ---------- ----- ----------- ----------- ---------- ---------- --------
Total
non-current
assets 36.0 11.6 36.5 - 84.1 44.5 11.9 37.1 - 93.5
Total current
assets 106.6 20.1 19.9 0.5 147.1 97.9 15.6 18.4 - 131.9
--------------- ----------- ----------- ---------- ---------- ----- ----------- ----------- ---------- ---------- --------
Total assets
(consolidated) 142.6 31.7 56.4 0.5 231.2 142.4 27.5 55.5 - 225.4
--------------- ----------- ----------- ---------- ---------- ----- ----------- ----------- ---------- ---------- --------
Total
liabilities
(consolidated) 128.0 13.2 26.3 0.1 167.6 142.3 22.4 24.2 20.6 209.5
--------------- ----------- ----------- ---------- ---------- ----- ----------- ----------- ---------- ---------- --------
Cash capital
expenditure
inc
software 2.8 - 1.7 - 4.5 1.2 0.1 1.3 - 2.6
--------------- ----------- ----------- ---------- ---------- ----- ----------- ----------- ---------- ---------- --------
Prior year results have been restated to exclude deferred tax
assets as required by IFRS 8 Operating segments.
Revenues can be analysed by country as follows (97% of revenues
arising within the UK in 2021, 97% in 2020):
Recruitment Recruitment Total Recruitment Recruitment Total
GB Ireland PeoplePlus Group GB Ireland PeoplePlus Group
2021 2021 2021 2021 2020 2020 2020 2020
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------------- ----------- ----------- ---------- ------ ----------- ----------- ---------- ------
UK 747.9 83.9 83.1 914.9 732.1 91.4 75.0 898.5
Republic of Ireland - 27.8 - 27.8 - 29.1 - 29.1
747.9 111.7 83.1 942.7 732.1 120.5 75.0 927.6
-------------------- ----------- ----------- ---------- ------ ----------- ----------- ---------- ------
No customer contributed more than 10% of the Group's revenue
during either 2021 or 2020.
5 Expenses by nature
Expenses by nature are as follows:
Underlying expenses
2021 2020
GBPm GBPm
----------------------------------------------------- ----- -----
Employee benefits expenses - cost of sales 834.1 827.9
Other cost of sales 25.7 25.1
Employee benefits expenses - administrative expenses 46.1 40.5
Depreciation and software amortisation 6.3 7.4
Operating lease expenses 1.5 1.5
Other administrative expenses 18.7 20.4
----------------------------------------------------- ----- -----
932.4 922.8
----------------------------------------------------- ----- -----
Disclosed as:
Cost of sales 859.9 853.0
Administrative expenses 72.5 69.8
----------------------------------------------------- ----- -----
932.4 922.8
----------------------------------------------------- ----- -----
Auditors' remuneration
2021 2020
GBP'000 GBP'000
--------------------------------------------------------- -------- --------
Fees payable to the company's auditor for the audit
of the company's annual accounts 15 15
Fees payable to the company's auditor and its associates
for other services:
- Audit of the accounts of subsidiaries 620 680
- Audit of the pension scheme 16 18
- Audit related assurance services 15 154
--------------------------------------------------------- -------- --------
Total 666 867
--------------------------------------------------------- -------- --------
Non-underlying expenses - continuing operations
2021 2020
Note GBPm GBPm
------------------------------------------------------ ---- ----- -----
Reorganisation, rationalisation and restructuring
costs 1 - 4.0
Transaction costs - business acquisitions and
strategic options 2 - 0.5
Amortisation of intangible assets arising on business
combinations (licences, customer contracts) 3 8.0 9.2
Goodwill impairment 4 - 35.3
Share-based payment charges - other senior executives - 0.1
------------------------------------------------------ ---- ----- -----
8.0 49.1
------------------------------------------------------ ---- ----- -----
Tax credit on above non-underlying expenses (0.9) (0.4)
------------------------------------------------------ ---- ----- -----
Post taxation effect on above non-underlying expenses 7.1 48.7
------------------------------------------------------ ---- ----- -----
Notes:
1. In 2020 the Group continued its reorganisation,
rationalisation and restructuring programme across all the
divisions in order to reduce the number of properties occupied and
reducing administration headcount.
2. Costs were incurred in 2020 in relation to advice on the Group's strategic options.
3. The charge for amortisation of intangible assets arising on
business combinations relates principally to the acquisitions of
the Endeavour Group, Passionate About People, Grafton Recruitment,
Milestone and Brightwork.
4. The results of the impairment review undertaken for reporting
the 2020 results showed that impairment charges to goodwill were
required in the Recruitment GB and PeoplePlus cash-generating units
of GBP18.8m and GBP16.5m respectively.
6 Tax expense
The tax credit on the loss for the year consists of:
2021 2020
Continuing activities GBPm GBPm
-------------------------------------------- ----- -----
Corporation tax
UK corporation tax at 19.00% (2020: 19.00%) - 0.8
Adjustments in respect of prior years (0.5) -
-------------------------------------------- ----- -----
UK current tax (credit)/charge (0.5) 0.8
-------------------------------------------- ----- -----
Deferred tax
Timing differences arising in the year (0.6) (3.3)
Adjustments in respect of prior years (0.6) (0.6)
-------------------------------------------- ----- -----
UK deferred tax credit (1.2) (3.9)
-------------------------------------------- ----- -----
Total UK tax credit for the year (1.7) (3.1)
-------------------------------------------- ----- -----
The tax credit for the year, as recognised in the statement of
comprehensive income, is lower than the standard rate of
corporation tax in the UK of 19.00% (2020: lower than the 19.00%
standard rate). The differences are explained below:
2021 2020
GBPm GBPm
Total Total
----------------------------------------- ------ ------
Loss for the year before taxation (0.1) (51.6)
Tax rate 19% 19%
------------------------------------------- ------ ------
Tax on loss for the year at the standard
rate - (9.8)
------------------------------------------- ------ ------
Effect of:
Goodwill impairment - 6.7
Change in deferred tax rate to 25% (0.7) 0.5
Expenses not allowable - 0.9
Income not taxable (0.1) -
Adjustments in respect of prior years (1.1) (0.6)
Tax losses available (0.8) (0.8)
Deferred tax not recognised 1.0 -
Actual tax credit (1.7) (3.1)
------------------------------------------- ------ ------
On underlying profit (0.8) (2.7)
On non-underlying loss (0.9) (0.4)
------------------------------------------- ------ ------
Actual tax credit (1.7) (3.1)
------------------------------------------- ------ ------
The total tax credit for the year of GBP1.7m (2020: GBP3.1m),
comprises a Corporation Tax credit relating prior years and the
movement of deferred tax balances. The Group has no current
Corporation Tax liability in respect of either the current or prior
years and is anticipating a refund relating to tax losses carried
back to a prior period. Corporation tax losses of GBP16.7m carried
forward in all divisions have been recognised as a deferred tax
asset. Additional tax losses, amounting to GBP6.6m (2020: GBP7.3m)
whose short-term recoverability is less certain have not been
recognised as a deferred tax asset. An amount of overpaid
corporation tax of GBP4.1m was offset against the balance of VAT
that was deferred between March and June 2020. Further corporation
tax amounts receivable of GBP1.7m were received during the
year.
The impairment of goodwill is not deductible under UK
corporation tax and is therefore added back to taxable profits. A
deferred tax liability is recognised in respect of intangible
assets arising on acquired businesses. This liability is reduced
each year in line with the amortisation charge, giving rise to a
deferred tax credit each year. No deferred tax is recognised on
JSOP charges.
An increase in the UK corporation tax rate from 19% to 25%
(effective 1 April 2023) was substantially enacted on 24 May 2021.
This will
increase the company's future tax charges accordingly. The
deferred tax asset has therefore been calculated at a rate of
25%.
No material tax charges arise on overseas profits or losses and
accordingly no disclosures relating to overseas tax are included
within the financial statements.
7 Earnings per share and dividends
The calculation of basic earnings per share is based on the
earnings attributable to ordinary shareholders divided by the
weighted average number of shares in issue during the year, after
deducting any shares held in the Group's Employee Benefit Trust -
"own shares" (2020: 1,140,400 shares). The calculation of the
diluted earnings per share is based on the basic earnings per share
as adjusted to further take into account the potential issue of
Ordinary Shares resulting from share options granted to certain
Directors and share options granted to employees under the SAYE and
long-term incentive schemes.
Details of the earnings and weighted average number of shares
used in the calculations are set out below:
Diluted
Basic Basic Diluted Restated
2021 2020 2021 2020
----------------------------------------------- ----------- ---------- ----------- ----------
Profit/(loss) from continuing operations
(GBPm) 1.6 (48.5) 1.6 (48.5)
Weighted average number of shares 122,178,126 67,790,086 122,682,511 67,790,086
Earnings/(loss) per share from continuing
operations (p) 1.3p (71.5)p 1.3p (71.5)p
----------------------------------------------- ----------- ---------- ----------- ----------
Underlying earnings (post-tax) from continuing
operations (GBPm)* 8.7 3.4 8.7 3.4
Underlying earnings per share (p)* 7.1p 5.0p 7.1p 5.0p
----------------------------------------------- ----------- ---------- ----------- ----------
Loss from discontinued operations (GBPm) (0.4) (4.2) (0.4) (4.2)
Weighted average number of shares 122,178,126 67,790,086 122,682,511 67,790,086
Loss per share from discontinued operations
(p) (0.3)p (6.2)p (0.3)p (6.2)p
----------------------------------------------- ----------- ---------- ----------- ----------
Underlying loss from discontinued operations
(GBPm)* - (1.9) - (1.9)
Underlying loss per share (p)* - (2.8)p - (2.8)p
----------------------------------------------- ----------- ---------- ----------- ----------
Profit/(loss) for the year (GBPm) 1.2 (52.7) 1.2 (52.7)
Weighted average number of shares 122,178,126 67,790,086 122,682,511 67,790,086
Loss per share (p) 1.0p (77.7)p 1.0p (77.7)p
---------------------------------- ----------- ---------- ----------- ----------
* Underlying earnings before goodwill impairment, amortisation
of intangible assets arising on business combinations,
reorganisation costs and other non-underlying costs.
The weighted average number of shares was increased by
54,388,040 shares to take account of the effect of the Placing,
Subscription and Open Offer in June 2021 whereby 96,837,242 new
Ordinary Shares were issued. The total number of dilutive share
options held in LTIP and SAYE schemes is 504,384 (2020: Nil).
Dividends
The Board is not proposing a final dividend payment for
2021.
8 Goodwill
Gross carrying amount by operating segment
Recruitment Recruitment
GB Ireland PeoplePlus Total
Gross carrying amount GBPm GBPm GBPm GBPm
------------------------------------ ----------- ----------- ---------- -----
At 1 January 2021 and 31 December
2021 54.5 5.7 57.0 117.2
------------------------------------ ----------- ----------- ---------- -----
Impairment adjustment
At 1 January 2021 and 31 December
2021 33.1 - 24.5 57.6
------------------------------------ ----------- ----------- ---------- -----
Net book amount at 31 December 2021 21.4 5.7 32.5 59.6
------------------------------------ ----------- ----------- ---------- -----
Net book amount at 31 December 2020 21.4 5.7 32.5 59.6
------------------------------------ ----------- ----------- ---------- -----
Impairment - Goodwill
Management considers there to be three cash-generating units
("CGU"), being Recruitment GB, Recruitment Ireland and PeoplePlus,
in line with the operating segments defined in note 4. These three
cash-generating units have been tested for impairment.
An impairment review was conducted as at 31 December 2021, the
recoverable amount of goodwill was determined based on a
value-in-use calculation, using forecasts for 2022-24, followed by
an extrapolation of expected cash flows over the next two years
with a long-term growth rate of 0% for each cash-generating unit.
The forecasts are prepared by the individual operating segments of
the Group, which are considered to be the same as the determined
CGU's. The cash flow forecasts are based on current levels of
trading for each CGU, with income and cost increases generally in
line with inflation at c.2% and no significant contract wins or
losses.
Pre-tax discount rates of 14.4% for Recruitment GB, 12.0% for
Recruitment Ireland and 11.7% for PeoplePlus (2020: 13.0% for
Recruitment GB, 12.0% for Recruitment Ireland and 10.8% for
PeoplePlus) were used based on the weighted average costs of
capital for each operating segment. The recoverable amounts of the
CGU's, having considered the higher of value-in-use and fair value
less costs to sell, were GBP59.1m for Recruitment GB, GBP22.7m for
Recruitment Ireland and GBP68.6m for PeoplePlus, all being
value-in-use. The discount rates used are based on appropriate,
current long-term market rate indicators to give a long-term
forward view, whilst also acknowledging historical information.
The results of the impairment review showed headroom in all
cash-generating units and accordingly no impairment was noted. The
same calculations indicated that no impairment was required to the
Company's carrying value of its investments.
In making the assessment of the recoverability of assets within
each CGU a number of judgements and assumptions were required.
The critical judgement relates to the determination of the
CGU's. Whilst there are individual legal entities within the three
operating segments, they are operated and reviewed as single units
by the Board of Directors. Each operating segment has its own
management team and head office. The Group's strategy, historically
and going forward, has been to integrate new acquisitions into the
main trading entities within each operating segment.
The key estimates in determining the value of each CGU are:
1. The discount rate. In the calculations we have utilised a
pre-tax discount rate of 14.4% for Recruitment GB, 12.0% for
Recruitment Ireland and 11.7% for PeoplePlus and a terminal growth
value of 0%. These rates are based on the latest weighted average
costs of capital for each operating segment. These rates have
increased this year primarily due to a movement in the risk-free
rate. The calculations highlighted headroom of GBP21.3m for
Recruitment GB, headroom of GBP11.2m for Recruitment Ireland and
headroom of GBP36.2m for PeoplePlus. A 1% increase in the discount
rates reduces the headroom to GBP17.3m for Recruitment GB, reduces
headroom to GBP9.4m for Recruitment Ireland and reduces headroom to
GBP29.6m for PeoplePlus.
2. The achievability of the forecasted future cash flows. There
is an inherent uncertainty regarding the achievability of
forecasts, as there are macro-economic factors outside of the
Group's control. A sustained underperformance of 10% reduces the
headroom to GBP15.4m for Recruitment GB, reduces headroom to
GBP8.9m for Recruitment Ireland and reduces headroom to GBP28.3m
for PeoplePlus. A sustained underperformance of 37% would be
required before any impairment was necessary to the goodwill.
As at 31 December 2021 the Company had no goodwill (2020:
GBPnil).
9 Property, plant and equipment
Land and Computer Fixtures Motor
buildings equipment and fittings vehicles Total
Gross carrying amount GBPm GBPm GBPm GBPm GBPm
--------------------------------- ---------- ---------- ------------- --------- -----
At 1 January 2020 15.6 13.0 2.3 0.2 31.1
Additions 0.3 1.2 0.1 - 1.6
Disposals (1.2) (2.9) (1.1) - (5.2)
--------------------------------- ---------- ---------- ------------- --------- -----
At 31 December 2020 14.7 11.3 1.3 0.2 27.5
--------------------------------- ---------- ---------- ------------- --------- -----
Additions 1.4 1.8 0.3 0.3 3.8
Disposals (1.4) (0.8) (0.4) - (2.6)
--------------------------------- ---------- ---------- ------------- --------- -----
At 31 December 2021 14.7 12.3 1.2 0.5 28.7
--------------------------------- ---------- ---------- ------------- --------- -----
Depreciation
At 1 January 2020 6.0 8.1 2.2 0.2 16.5
Charged in the year - operating 2.8 2.7 0.1 - 5.6
Disposals (0.9) (2.2) (1.1) - (4.2)
--------------------------------- ---------- ---------- ------------- --------- -----
At 31 December 2020 7.9 8.6 1.2 0.2 17.9
--------------------------------- ---------- ---------- ------------- --------- -----
Charged in the year - operating 1.7 1.8 0.2 0.1 3.8
Charged in the year - impairment 0.7 - - - 0.7
Disposals (0.7) (0.7) (0.3) - (1.7)
--------------------------------- ---------- ---------- ------------- --------- -----
At 31 December 2021 9.6 9.7 1.1 0.3 20.7
--------------------------------- ---------- ---------- ------------- --------- -----
Net book value
--------------------------------- ---------- ---------- ------------- --------- -----
At 31 December 2021 5.1 2.6 0.1 0.2 8.0
--------------------------------- ---------- ---------- ------------- --------- -----
At 31 December 2020 6.8 2.7 0.1 - 9.6
--------------------------------- ---------- ---------- ------------- --------- -----
Additional information on the right-of-use assets by class of
assets at 31 December 2021 is as follows:
At 31 December 2021
Depreciation Impairment
Carrying amount expense GBPm
GBPm GBPm
----------------- --------------- ------------ ----------
Office buildings 3.6 (1.6) (0.7)
IT equipment 0.2 - -
----------------- --------------- ------------ ----------
3.8 (1.6) (0.7)
----------------- --------------- ------------ ----------
At 31 December 2020
Depreciation Impairment
Carrying amount expense GBPm
GBPm GBPm
----------------- --------------- ------------ ----------
Office buildings 5.0 (2.6) -
IT equipment 0.2 (0.1) -
----------------- --------------- ------------ ----------
5.2 (2.7) -
----------------- --------------- ------------ ----------
As at 31 December 2021 the Company had no property, plant and
equipment assets (2020: GBPnil).
10 Leases
Lease liabilities are presented in the statement of financial
position as follows:
2021 2020
GBPm GBPm
------------ ----- -----
Current 1.3 1.6
Non-current 3.3 3.9
4.6 5.5
------------ ----- -----
The Group has leases for its operational and administrative
offices, and some IT equipment. With the exception of short-term
leases and leases of low-value underlying assets, each lease is
reflected on the balance sheet as a right-of-use asset and a lease
liability. The Group classifies its right-of-use assets in a
consistent manner to its property, plant and equipment (see Note
9).
Unless there is a contractual right for the Group to sublet the
asset to another party, the right-of-use asset can typically only
be used by the Group. Leases are either non-cancellable or may only
be cancelled by incurring a substantive termination fee. Some
leases contain an option to extend the lease for a further term.
The Group is prohibited from selling or pledging the underlying
leased assets as security. For leases over office buildings the
Group must keep those properties in a good state of repair and
return the properties in their original condition at the end of the
lease. Further, the Group must insure items of property, plant and
equipment and incur maintenance costs on such items in accordance
with the lease contracts.
The table below describes the nature of the Group's leasing
activities by type of right-of-use asset recognised on the balance
sheet:
Range Average No of leases
No of right-of-use of remaining remaining with extension
Right-of-use asset assets leased term (years) lease term options
------------------- ------------------ ------------- ----------- ---------------
0.2 -
Office building 53 13.2 3.2 -
IT equipment - - - -
------------------- ------------------ ------------- ----------- ---------------
The lease liabilities are secured by the related underlying
assets. Future minimum lease payments at 31 December 2021 were as
follows:
Minimum lease payments due
------------------ -----------------------------------------------------------
Within After
one year 1-2 years 2-3 years 3-4 years 5 years Total
------------------ --------- --------- --------- --------- -------- -----
31 December 2021
Lease payments 1.4 1.2 0.8 0.5 0.9 4.8
Finance charges (0.1) (0.1) - - - (0.2)
------------------ --------- --------- --------- --------- -------- -----
Net present value 1.3 1.1 0.8 0.5 0.9 4.6
------------------ --------- --------- --------- --------- -------- -----
31 December 2020
Lease payments 1.7 1.1 0.8 0.6 1.7 5.9
Finance charges (0.1) (0.1) (0.1) - (0.1) (0.4)
------------------ --------- --------- --------- --------- -------- -----
Net present value 1.6 1.0 0.7 0.6 1.6 5.5
------------------ --------- --------- --------- --------- -------- -----
Lease payments not recognised as a liability
The Group has elected not to recognise a lease liability for
short term leases (leases with an expected term of 12 months or
less) or for leases of low value assets. Payments made under such
leases are expensed on a straight-line basis. In addition, certain
variable lease payments are not permitted to be recognised as lease
liabilities and are expensed as incurred.
The expense relating to payments not included in the measurement
of the lease liability is as follows:
2021 2020
GBPm GBPm
--------------------------- ----- -----
Short-term leases 0.8 0.6
Leases of low value assets 0.7 0.8
1.5 1.4
--------------------------- ----- -----
The Group had not committed to any leases that had not yet
commenced.
Total cash outflow for leases for the year ended 31 December
2021 was GBP3.2m (2020: GBP4.8m).
11 Derivative financial instruments
2021 2021 2020 2020
Group Company Group Company
GBPm GBPm GBPm GBPm
--------------------------------- ------ -------- ------ --------
Fair value hedge - interest rate
cap 0.5 0.5 - -
--------------------------------- ------ -------- ------ --------
During the year, the Group has adopted a policy of ensuring that
up to two thirds of its interest rate exposure is at a fixed rate.
In seeking to apply this policy the Group has entered into an
amortising interest rate cap instrument, which reduces the exposure
to interest rate increases above 1% of SONIA on an aggregated
two-thirds of the Receivables Finance Agreement and the customer
finance arrangements. The instrument, which has a term of 3 years
from 13 October 2021, is based on quarterly notional amounts
varying between GBP39.5m and GBP62.5m, with an average of
GBP51.9m.
The fair values of derivatives are based on market data to
calculate the present value of all estimated flows associated with
the derivatives at the balance sheet date. The interest rate cap is
classed as a Level 2 financial instrument in accordance with IFRS
13 classification hierarchy. Level 2 financial instruments are not
traded in an active market, but the fair value is based on quoted
market prices, broker/dealer quotations, or alternative pricing
sources with reasonable levels of price transparency.
12 Cash
2021 2020
Group Group
GBPm GBPm
-------------------------- ------ ------
Cash and cash equivalents 29.8 24.5
Restricted cash - 0.9
-------------------------- ------ ------
Cash and cash equivalents consist of cash on hand and balances
with banks only. All cash on hand and balances with banks are held
by subsidiary undertakings; however, the balances are available for
use by the Group.
Restricted cash related to amounts held in escrow to satisfy the
NMW remediation and financial penalties relating to historic HMRC
National Minimum Wage breaches. This balance is excluded from net
debt.
Long-term credit ratings for the Group's banks are currently as
follows:
Standard
Fitch & Poor's Moody's
----------------------------- ----- --------- ---------
Royal Bank of Scotland plc A+ A A1(*) /A1
National Westminster Bank plc A+ A A1(*) /A1
Bank of Ireland Group plc BBB BBB- Baa1
----------------------------- ----- --------- ---------
The Group's headroom versus available committed bank facilities
is as follows:
2021 2020
GBPm GBPm
------------------------------ ----- -----
Cash at bank (as above) 29.8 24.5
Receivables Finance Agreement 48.6 54.9
Banking facility headroom 78.4 79.4
------------------------------ ----- -----
13 Borrowings
Borrowings are repayable as follows:
2021 2020
Group Group
GBPm GBPm
----------------------------------------------------- ------ ------
In one year or less or on demand* 24.2 14.9
In more than one year but not more than two years* 1.1 21.0
In more than two years but not more than five years* 1.3 1.3
In more than five years* 0.9 1.6
Unamortised refinancing costs - (0.3)
----------------------------------------------------- ------ ------
Total borrowings 27.5 38.5
----------------------------------------------------- ------ ------
* Ageing of balances above is shown excluding unamortised refinancing fees
2021 2020
Group Group
GBPm GBPm
--------------------------------------------------- ------ ------
Split:
Current liabilities:
Receivables Finance Agreement 22.9 13.3
Unamortised refinancing costs - (0.3)
Lease liabilities 1.3 1.6
--------------------------------------------------- ------ ------
24.2 14.6
--------------------------------------------------- ------ ------
Non-current liabilities:
Revolving credit facility - 20.0
Lease liabilities 3.3 3.9
3.3 23.9
--------------------------------------------------- ------ ------
Total borrowings 27.5 38.5
--------------------------------------------------- ------ ------
Total borrowings excluding unamortised refinancing
costs 27.5 38.8
Less: Cash (note 12) (29.8) (24.5)
--------------------------------------------------- ------ ------
Net (cash)/debt (2.3) 14.3
--------------------------------------------------- ------ ------
On 10 June 2021, the Group entered into a new Receivables
Financing Agreement ("RFA") to replace the existing Group funding
arrangements. The RFA contained certain requirements to be met
before completion, the most significant of which was that the
Company raise new equity capital of at least GBP40.0m. This
condition was satisfied and the RFA became effective on 10 June
2021.
The key terms of the new facility, which is provided jointly by
RBS Invoice Finance Limited, ABN AMRO Asset Based Finance N.V., UK
Branch and Leumi ABL Limited, are set out below:
I. Maximum receivables financing facility of GBP90.0m over a
four-and-a-half-year term, with a one-year extension option;
II. An Accordion option of up to an additional GBP15.0m, subject
to lender approval;
III. Security on all of the assets and undertakings of the
Company and certain subsidiary undertakings;
IV. Interest accruing at 2.75% over SONIA, with a margin ratchet
downward to 2.0%, dependent upon the Group's leverage reducing to
3.00x;
V. A non-utilisation fee of 35% of the margin
VI. Maximum net debt (averaged over a rolling three months) to
EBITDA leverage covenant commencing at 5.95x followed by a gradual
reduction to 4.0x by October 2023
VIII. Minimum interest cover covenant of 2.25x the last twelve
months EBITDA to finance charges
EBITDA is defined as earnings before interest, taxation,
depreciation and amortisation.
The new facility enabled the cancellation of the existing
facilities, comprising a Revolving Credit Facility of GBP20.0m, a
Receivables Finance Facility of GBP68.2m and also the non-recourse
Receivables Purchase Facility of GBP25.0m. The Group retained its,
non-recourse, Customer Financing arrangements whereby specific
customers' invoices are settled in advance of their normal
settlement date. The value of invoices funded under these
arrangements as at 31 December 2021 was GBP42.3m (2020: GBP43.0m).
Costs incurred in relation to these arrangements are charged to
profit and loss as finance charges when incurred.
For the period to 31 December 2023, the Group's cash flow
forecasts indicate ongoing headroom in the Receivables Finance
Agreement and also full compliance with the financial covenants
described above.
14 Share capital
2021 2020
GBPm GBPm
--------------------------------------------------- ----- -----
Allotted and issued
165,767,728 (2020: 68,930,486) ordinary 10p shares 16.6 6.9
--------------------------------------------------- ----- -----
2021 2020
Number Number
----------------------------------------------- ----------- ----------
Shares issued and fully paid at the beginning
of the year 68,930,486 68,930,486
Shares issued during the year 96,837,242 -
----------------------------------------------- ----------- ----------
Shares issued and fully paid at the end of the
year 165,767,728 68,930,486
----------------------------------------------- ----------- ----------
All ordinary shares have the same rights and there are no
restrictions on the distribution of dividends or repayment of
capital with the exception of the 1,140,400 shares held at 31
December 2021 (2020: 1,140,400) by the Employee Benefit Trust where
the right to dividends has been waived.
The Group announced a proposed Placing, Subscription and Open
Offer (the "Fundraise") on 21 May 2021 following conditional
agreement of the debt refinancing the previous day. The Fundraise
comprised the following elements:
-- A total of 87,249,500 new ordinary shares of 10 pence each
placed at a price of 50 pence per share (the "Issue Price") to
certain existing shareholders and new institutional investors;
-- A total of 750,500 new ordinary shares of 10 pence each to
certain Directors and employees of the Group at the issue price,
and;
-- An open offer to existing shareholders for 10 shares for
every 78 ordinary shares held, for a total of 8,837,242 new
ordinary shares of 10 pence each at the issue price.
The total proceeds of the Fundraise, which was approved by the
shareholders in a General Meeting on 9 June 2021, was GBP48.4m and
the new ordinary shares were admitted by the London Stock Exchange
for trading on AIM on the following day.
15 Cash flows from operating activities - consolidated
Reconciliation of loss before taxation to net cash inflow from
operating activities
2021 2020
GBPm GBPm
-------------------------------------------------------- ------ ------
Loss before taxation from:
Continuing operations (0.1) (51.6)
Discontinued operations (0.4) (5.0)
-------------------------------------------------------- ------ ------
(0.5) (56.6)
Adjustments for:
Finance costs 2.4 7.3
Depreciation and amortisation - underlying 6.3 7.4
Amortisation - non-underlying 8.0 9.2
Loss on disposal of property, plant and equipment 0.3 0.8
Impairment of goodwill - 35.3
Cash generated before changes in working capital
and share options 16.5 3.4
Change in trade and other receivables (12.2) 27.6
Change in trade, other payables and provisions (33.1) 34.6
Impact of foreign exchange loss on operating activities - 0.1
-------------------------------------------------------- ------ ------
Cash generated from operations (28.8) 65.7
-------------------------------------------------------- ------ ------
Employee equity-settled share options 0.1 0.1
Net cash inflow from operating activities (28.7) 65.8
-------------------------------------------------------- ------ ------
Movement in net debt
2021 2020
GBPm GBPm
----------------------------------------------------------- ------ ------
Net debt at 1 January 2020 (excluding refinancing
fees) (14.3) (67.9)
----------------------------------------------------------- ------ ------
Loan repayments 20.0 58.1
Net drawdowns from Receivables Finance Agreement (9.6) (13.3)
Lease payments, additions, disposals and interest 0.9 2.9
Change in cash and cash equivalents 5.3 5.9
----------------------------------------------------------- ------ ------
Net cash/(debt) at 31 December 2020 (excluding refinancing
fees) 2.3 (14.3)
----------------------------------------------------------- ------ ------
Represented by:
Cash and cash equivalents (note 12) 29.8 24.5
Current borrowings (note 13) (22.9) (13.0)
Lease liabilities (note 10) (4.6) (5.5)
Non-current borrowings (note 13) - (20.0)
----------------------------------------------------------- ------ ------
Net cash/(debt) including refinancing fees 2.3 (14.0)
----------------------------------------------------------- ------ ------
Refinancing fees (unamortised balance) - (0.3)
----------------------------------------------------------- ------ ------
Net cash/(debt) at 31 December 2021 (excluding refinancing
fees) 2.3 (14.3)
----------------------------------------------------------- ------ ------
The movements in net debt, excluding refinancing fees, can be
further summarised as follows:
Revolving Receivables Movements
Lease credit Finance from financing
Overdrafts liabilities facility Agreement activities Cash Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------ ---------- ------------ --------- ----------- --------------- ----- ------
Net debt as at 1
January 2020 (6.4) (8.4) (78.1) - (92.9) 25.0 (67.9)
Cash flows during
the year 6.4 3.1 58.1 (13.3) 54.3 (0.5) 53.8
Non-cash movements
in leases - (0.2) - - (0.2) - (0.2)
Net debt at 31 December
2020 - (5.5) (20.0) (13.3) (38.8) 24.5 (14.3)
------------------------ ---------- ------------ --------- ----------- --------------- ----- ------
Cash flows during
the year - 1.8 20.0 (9.6) 12.2 5.3 17.5
Non-cash movements
in leases - (0.9) - - (0.9) - (0.9)
------------------------ ---------- ------------ --------- ----------- --------------- ----- ------
Net debt at 31 December
2021 - (4.6) - (22.9) (27.5) 29.8 2.3
------------------------ ---------- ------------ --------- ----------- --------------- ----- ------
16 Changes in accounting policies
There were no new accounting pronouncements requiring adoption
in the year. During the year the Group adopted a new accounting
policy relating to the treatment of hedged financial
instruments.
17 Post balance sheet events
There were no events between the balance sheet date of 31
December 2021 and the approval of these accounts on 21 March 2021,
that are required to be brought to the attention of
shareholders.
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END
FR EAADFAALAEAA
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March 22, 2022 03:00 ET (07:00 GMT)
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