TIDMSTAF
RNS Number : 5336U
Staffline Group PLC
02 August 2022
2 August 2022
STAFFLINE GROUP PLC
('Staffline', the 'Company' or the 'Group')
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2022
Solid performance in H1 with trading for the full year in line
with market expectations
Staffline Group PLC, the recruitment and training group,
announces its unaudited results for the six months ended 30 June
2022.
Financial highlights
Continuing activities Six months Six months
to 30 June to 30 June
2022 2021
Unaudited Unaudited Change
Revenue GBP438.0m GBP450.7m -2.8%
------------ ------------ ----------
Gross profit GBP39.9m GBP39.0m +2.3%
------------ ------------ ----------
Gross profit margin 9.1% 8.7% +0.4ppts
------------ ------------ ----------
Underlying operating profit* GBP4.0m GBP4.6m -13.0%
------------ ------------ ----------
Finance costs GBP1.2m GBP1.4m -14.3%
------------ ------------ ----------
Underlying profit before taxation
and amortisation GBP2.8m GBP3.2m -12.5%
------------ ------------ ----------
(Loss) before tax GBP(1.0)m GBP(0.8)m -25.0%
------------ ------------ ----------
Net (debt)/cash** GBP(13.9)m GBP16.2m -GBP30.1m
------------ ------------ ----------
* Underlying operating profit before amortisation of intangible
assets arising on business combinations
** On a Pre-IFRS16 basis, net debt was GBP(9.7)m at 30 June 2022
(2021: net cash GBP20.9m)
-- Revenues marginally down due to lower hours worked in the
food and online distribution sectors
-- Gross profit increased by 2.3% due to increased proportion of
permanent fees (up 113%) as well as reopening of higher margin
sectors such as automotive and aviation
-- Investment in headcount for H2 and beyond (Staffline +8%)
holding back underlying operating profit in H1 2022 (-13%)
-- Strong jobs market has impacted revenues and underlying
operating profit in PeoplePlus' Skills and training division
partially offset by increased activity with the Ministry of
Justice
-- Solid trading cash flows, continued tight working capital
management and lower banking margin costs, helping to deliver lower
finance costs and sustained balance sheet strength
-- Deferred VAT relief of GBP46.4m now fully repaid, no further
outstanding COVID-19 related liabilities
-- Significant headroom of GBP46.7m (2021: GBP87.8) in banking facilities.
Key operational highlights:
-- Record permanent fees of GBP3.2m up 113% on 2021 (2021: GBP1.5m)
-- Proactive investment in fee-earning headcount across H1 2022
provides an expanded base from which to deliver future growth
-- Demand increasing in sectors experiencing delayed recovery
from lockdown, such as automotive and aviation
-- New contract momentum in the period including:
o Restart successfully mobilised, recognition of operating
profit expected to commence in H2 2022
o Successfully implemented supply of flexible workers to BMW in
May 2022, incremental revenues in H2 2022
o 5-year extension of RPO contract with VINCI Construction
-- Continued strong demand for labour amid reported record vacancies.
Current trading and outlook
-- The Group has made a solid start to the year and continues to trade in line with expectations
-- Continued strong demand for white collar recruitment across the UK
-- A strong pipeline of new business opportunities and a robust
balance sheet underpins confidence in the second half of 2022
-- The full year outlook is subject to any adverse changes in
the current macroeconomic headwinds of inflation, the associated
cost of living challenge and global supply chain issues
Albert Ellis, Chief Executive Officer of Staffline,
commented:
"I am pleased with the solid start Staffline has made to 2022,
providing a strong base from which to deliver across the remainder
of the year. This performance, achieved against the backdrop of
macro-economic and geopolitical uncertainty, as well as the adverse
impact of the Omicron COVID-19 wave in January 2022, further
highlights the resilience of our business and the value of our
scale and operational expertise.
"Our executive management team has worked hard to deliver on our
growth strategies, securing new business in challenging labour
markets through contract wins with BMW Group, VINCI Construction
and the Ministry of Justice, which will deliver incremental
revenues in H2 2022.
"In addition, we have actively invested in headcount in order to
capitalise on future growth opportunities and build the capacity
required to further increase our fee income organically. I am
confident this will yield positive results in the second half of
the year, which will also see a boost from the maiden returns from
our Restart contracts.
"Management remains conscious of heightened macro and political
headwinds going forward, and will seek to offset any associated
impacts by protecting the Group's strong balance sheet through
tight control of the cost base and continued focus on working
capital management. We believe the industry-wide challenges that
lie ahead present an unprecedented opportunity for Staffline, as we
pursue a number of new business prospects and continue to grow our
market share at the expense of sub-scale competitors."
Retail investor webcast
Management will be hosting a presentation for retail investors
in relation to the Company's interim results on Tuesday, 2 August
2022 at 2:00 pm BST.
The presentation will be hosted on the Investor Meet Company
("IMC") digital platform and is open to all existing and potential
shareholders. Investors can sign up to IMC for free and add
themselves to meet Staffline via:
https://www.investormeetcompany.com/staffline-group-plc/register-investor
Investors who have already registered and have been added to
meet the Company will be automatically invited.
Enquiries:
Staffline Group plc via Vigo Consulting
www.stafflinegroupplc.co.uk
Albert Ellis, Chief Executive Officer
Daniel Quint, Chief Financial Officer
Liberum (Nominated Adviser and Broker)
www.liberum.com
Richard Lindley / William Hall 020 3100 2222
Vigo Consulting (Financial PR) 020 7390 0230
www.vigocon sulting .com staffline@vigoconsulting.com
Jeremy Garcia / Kate Kilgallen
Market Abuse Regulation
For the purposes of MAR, Article 2 of Commission Implementing
Regulation (EU) 2016/1055 and the UK version of such implementing
regulation, the person responsible for arranging for the release of
this Announcement on behalf of the Company is Daniel Quint, Chief
Financial Officer.
About Staffline
Providing workforce solutions
Staffline is the UK's market leading Recruitment and Training
group. It has three divisions:
Recruitment GB
Staffline is a leading provider of flexible blue collar workers,
supplying c.33,000 staff per day on average to around 400 client
sites, across a wide range of industries including agriculture,
supermarkets, drinks, driving, food processing, logistics and
manufacturing.
Recruitment Ireland
The Recruitment Ireland business is a leading end to end
solutions provider operating across twenty industries, ten branch
locations 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
PeoplePlus is a leading skills and employability business with a
clear purpose to help people transform their lives, get jobs and
keep jobs, and develop their careers. The division works with
employers to develop workforces of the future, and with central,
local and devolved governments to support their economic and social
policy agendas.
Chief Executive Officer's review
Introduction
I am pleased with the Group's performance across H1 2022,
building on the positive momentum generated across the business in
FY 2021. This, alongside the proactive investment in fee-earning
headcount, which Staffline has not instigated for a number of
years, and ongoing new business momentum, provides an expanded base
from which to deliver future growth.
This solid H1 2022 performance was delivered against the
background of a weaker than expected UK macro environment over the
past six months, further highlighting the quality of both our
people and operational expertise.
Revenue of GBP438.0m (2021: GBP450.7m), was slightly lower
compared to the prior year due to lower hours worked in the food
and distribution sectors, headwinds in Skills, and strong
comparators in Q1 2021. However, the robust performance in white
collar and permanent recruitment lifted gross profit by 2.3% to
GBP39.9m (2021: GBP39.0m), and gross margin to 9.1% (2021: 8.7%).
Underlying operating profit of GBP4.0m (2021: GBP4.6m) was held
back by the investment in increasing average fee-earning headcount
by c.8%, deferred recognition of revenue, and therefore operating
profit, in relation to Restart contracts into H2, and one-off costs
incurred during the Omicron wave of COVID-19 in January 2022.
The Group expects performance to be second half weighted, with
an increase in revenues from business wins secured in H1 2022,
expected returns from PeoplePlus' Restart contracts, and increased
seasonal retail trading volumes in Q4. Accordingly, management
remains confident that FY 2022 results will be in line with
expectations.
Market
The broader macro-economic environment continues to shape the UK
and Ireland labour markets as both Staffline's customers and
consumers adjust to the rising cost of living. Lower levels of
demand from the food and online distribution sectors have been
reflected in a decline of "hours worked" in the blue collar sector.
Conversely, the stronger jobs market seen across the UK has
impacted the Group's skills and training division as candidates opt
to take up employment rather than attend training. These rapidly
evolving market dynamics underline the importance of our agile
operating model and diverse customer offering.
As predicted, we are beginning to see demand returning in
sectors that have experienced a delayed recovery from lockdown,
such as automotive and aviation. Businesses operating within these
sectors are still in a transition phase, facing both an
unprecedented resurgence in demand whilst also grappling with
significant supply chain challenges. Staffline continues to take
advantage of these and other growing opportunities, along with
investing in the Group's Permanent Recruitment and Recruitment
Process Outsourcing ('RPO') operations, both of which are
experiencing strong demand in the current employment climate.
According to the latest Office for National Statistics Labour
Market Data, the unemployment rate dropped to 3.8% in the three
months to May 2022, down 1.1 percentage points on the same period
last year. The latest available data shows the number of job
vacancies at 1.3m, up 50% from the same period last year, and
online job sites are reporting record levels of job
advertising.
Customers have responded to the labour shortages and challenging
resourcing requirements by engaging with the Group's management on
a more strategic basis, recognising the benefit of Staffline's
scale and geographic reach, as well as the comprehensive training
capabilities offered by the Group and the enhanced flexibility of
temporary workforce solutions.
Strategy
Capitalising on the Group's position as a market leader lies at
the heart of Staffline's business strategy. As we move into H2
2022, we will seek to further grow our market share in the white
collar recruitment market, including through the expansion of our
permanent recruitment offering, which ultimately generates higher
margin returns and stronger cash generation, whilst retaining a
core focus on strengthening our existing scale and reach in blue
collar sectors.
The recent investment in fee-earning headcount, which saw
c.GBP1m invested across the UK in H1 2022, is now generating
financial returns for the Group, and enabled Recruitment GB and
Ireland to expand its operational delivery and local branch network
capacity. In addition, PeoplePlus has implemented a number of
initiatives to unlock the potential of providing additional pools
of labour and training to bridge the skills gaps and address the
labour shortage.
Staffline continues to make excellent progress in all its target
areas, with material new business wins in recruitment, permanent
fees up 113% to GBP3.2m (2021: GBP1.5m), investment in additional
headcount across all divisions, and a new Republic of Ireland
office coming on stream in September 2022, to further expand the
Group's geographical footprint in an increasingly attractive
market.
Operational review
Recruitment
The focus on white collar recruitment across the Group has
yielded a doubling of permanent recruitment fees for the period
compared to last year. In particular, the Irish business has seen
strong growth in permanent fees including its first executive level
placements. We also saw a series of improvements in the Group's
fulfilment data in the second quarter, which was especially
encouraging, given the continued labour shortages. Finally, the
Group's RPO business has reported its strongest results since being
acquired, with a strong pipeline of new opportunities.
Recruitment GB
H1 2022 H1 2021 % Var
GBPm GBPm
--------------------- --------------------- -------
Revenue 345.2 355.0 -2.8%
Gross Profit 24.6 24.0 +2.5%
Underlying operating
profit 2.3 3.2 -28.1%
---------------------- --------------------- --------------------- -------
Revenue of GBP345.2m was 2.8% lower in the first half. This was
due in part to lower hours worked on client sites as the
macro-economic environment weakened, as well as the inclusion in
2021 of the remaining revenues relating to a since exited low
margin contract. Gross profit increased by 2.5% with a 111%
increase in permanent fees to GBP1.9m (2021: GBP0.9m) on the back
of sustained strong demand for white collar workers. Investment in
headcount of c.GBP1m in the first half, targeting an 8% increase to
facilitate further growth held back operating profit compared to
the previous year. First half operating profit was also materially
impacted by the Omicron wave of COVID-19, as absences increased,
and the one-off cost of sick pay and absence was GBP0.3m higher
than in the same period in 2021.
Looking forward, Recruitment GB will benefit from a healthy new
business pipeline, including its partnership with BMW to supply
flexible operational workers and specialists for its manufacturing
sites in England, first implemented in May, as well as its RPO
contract extension with VINCI Construction UK. These contracts,
combined with the investment in headcount to expand the branch
network and white collar business, will deliver incremental
revenues into the second half.
Recruitment Ireland
H1 2022 H1 2021 % Var
GBPm GBPm
--------------------- --------------------- -------
Revenue 55.8 55.2 +1.1%
Gross Profit 6.3 5.6 +12.5%
Underlying operating
profit 1.5 1.2 +25.0%
---------------------- --------------------- --------------------- -------
Recruitment Ireland continued its strong recovery with the
momentum in permanent recruitment being brought forward from H2
2021 into H1 2022. This led to an increase in gross profit of
12.5%, and a growth in underlying operating profit of 25.0%
compared with the year prior. Blue collar recruitment was similarly
impacted by lower hours and a decline in demand, keeping revenue at
broadly similar levels to 2021. Nevertheless, the strategic focus
on driving higher margin recruitment activities has delivered an
excellent result for H1 2022, underpinned by strong permanent
recruitment demand reflected in the increase in gross margins to
11.3% (2021: 10.1%). The business is investing in fee-earning
headcount (up 19% compared to 2021) particularly in the more
attractive market of the Republic of Ireland.
PeoplePlus
H1 2022 H1 2021 % Var
GBPm GBPm
--------------------- --------------------- -------
Revenue 37.0 40.5 -8.6%
Gross Profit 9.0 9.4 -4.3%
Underlying operating
profit 1.6 1.9 -15.8%
---------------------- --------------------- --------------------- -------
PeoplePlus' results were set against a particularly strong
performance turnaround in H1 2021 following an operating loss in
2020. Since the easing of COVID-19 related restrictions, the job
market has bounced back with an unprecedented demand for labour.
Whilst this strong employment market is supportive for the
employability division, this has adversely affected revenues in the
Skills and training division, as candidates are placed in jobs
without the requirement for training. We expect to see an
incrementally improved performance from Skills in H2 2022. In
addition, a probation contract ended in H1 2021 of which GBP5m of
revenue at a margin of 10% was included in the prior period.
Excluding this contract, the business has grown revenue and
operating profit in the period.
In line with the Group's cautious approach to revenue and profit
recognition, nil operating profit, on revenues of GBP6.1m, has been
recognised from the Restart contracts during the period. Although
this has diluted operating profit percentage in H1 2022 we expect
to recognise our first operating profit from the Restart contracts
in H2 2022.
Board changes
On 26 May 2022, Ian Lawson informed the Company of his intention
to step down from his position as Non-Executive Chair of the Board
and as a director of the Company with immediate effect. Tom Spain
was appointed Interim Chair and Ian Starkey, Independent
Non-Executive Audit Chair, assumed the role of Senior Independent
Non-Executive Director. The Interim Chair is ensuring the Board
remains focused on reducing costs, delivering organic growth, and
yielding positive returns on shareholder capital over a long-term
horizon.
Outlook
The Group has made a solid start to 2022 and continues to trade
in line with expectations for the current financial year. Staffline
is well placed to capitalise on its strong market position, with
market share gains, a continuous strengthening of the balance
sheet, and a sizable pipeline of new business opportunities
underpinning future organic growth.
Provided macro-environment conditions remain in line with
predictions, the Group's traditionally stronger second half is
expected to benefit from incremental new business, continued
organic growth in rebounding sectors, such as automotive and
aviation, initial recognition of operating profit from Restart,
productivity improvements owing to new investment in headcount, and
a strong market for white collar recruitment.
Accordingly, the Board expects the Group's full year results to
be in line with expectations.
Albert Ellis
Chief Executive Officer
1 August 2022
Financial Review
Introduction
The Group's turnaround and successful refinancing during 2021,
delivering a strengthened balance sheet and significant reduction
in net debt, underpinned the solid trading across H1 2022. Our
renewed balance sheet strength has provided an ideal platform to
leverage contract wins achieved in H1 2022, as well as new organic
opportunities that are starting to present themselves, especially
in this challenging labour market.
The Group further protected its financial position by purchasing
a three-year interest rate cap product in October 2021 limiting the
Group's exposure to increases in interest rates up to SONIA of
1.00% on two-thirds of the aggregate of its bank borrowing and
customer financing arrangements. This has been beneficial during
the first half of the year and establishes protection in light of
the expected base rate increases going into the second half of the
year.
Trading performance
Total revenue for H1 2022 decreased by (2.8)% to GBP438.0m
(2021: GBP450.7m) as a result of a reduction in food and
distribution sector volumes. This was caused by both the higher
volumes during the COVID-19 lockdown in H1 2021, as well as the
exit from a significant low-margin customer in March 2021.
Notwithstanding the revenue declines, the margin-related
initiatives across the Group, higher margin customers and increased
permanent recruitment activity, have led to an increase in gross
profit to GBP39.9m (2021: GBP39.0m) as well as gross profit margin
to 9.1% (2021: 8.7%).
The Group comprises three divisions: Recruitment GB, flexible
blue collar recruitment; Recruitment Ireland, generalist
recruitment; and PeoplePlus, adult skills, training and
employability provision.
Underlying divisional performance
Six months ended 30 June Six months ended 30 June
2022 2021
Recruitment Recruitment Group Total Recruitment Recruitment Group Total
GB Ireland PeoplePlus costs Group GB Ireland PeoplePlus costs Group
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ------------ ------------ ----------- ---------- ----------- ------------ ------------ ------------ ---------- ----------
Revenue 345.2 55.8 37.0 - 438.0 355.0 55.2 40.5 - 450.7
Period-on-period
% change (2.8)% 1.1% (8.6)% - (2.8)% 6.7% (10.8)% 13.8% - 4.7%
Gross profit 24.6 6.3 9.0 - 39.9 24.0 5.6 9.4 - 39.0
Period-on-period
% change 2.5% 12.5% (4.3)% - 2.3% 11.1% - 34.3% - 14.0%
Gross profit
% 7.1% 11.3% 24.3% - 9.1% 6.8% 10.1% 23.2% - 8.7%
Underlying
operating
profit /(loss) 2.3 1.5 1.6 (1.4) 4.0 3.2 1.2 1.9 (1.7) 4.6
Underlying
operating profit
as a % of
revenue 0.7% 2.7% 4.3% - 0.9% 0.9% 2.2% 4.7% - 1.0%
Underlying
operating profit
as a % of gross
profit 9.3% 23.8% 17.8% - 10.0% 13.3% 21.4% 20.2% - 11.8%
Post-IFRS16
net (debt)/cash - - - - (13.9) - - - - 16.2
Pre-IFRS16 net
(debt)/cash - - - - (9.7) - - - - 20.9
------------------ ------------ ------------ ----------- ---------- ----------- ------------ ------------ ------------ ---------- ----------
Key performance indicators
Six months ended 30 Six months ended 30 June
June 2022 2021
Recruitment Recruitment Total Recruitment Recruitment Total
GB Ireland PeoplePlus Group GB Ireland PeoplePlus Group
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
Hours
worked by
temporary
workers 21.4m 3.4m - 24.8m 26.1m 3.6m - 29.7m
Gross GBP36.6k GBP56.7k - GBP39.4k GBP40.0k GBP59.9k - GBP41.7k
profit
per
fee
earner*
Revenue - - GBP27.9k - - - GBP30.7k -
per
employee
----------- ------------ ------------ ----------- ----------- ------------ ------------ ------------ ----------
*The definition of 'fee-earner' has been refined and therefore
the prior year comparative has been adjusted
Revenues in the Recruitment GB division decreased by GBP9.8m,
(2.8)%, to GBP345.2m (2021: GBP355.0m). The decrease is as a result
of reducing year-over-year supermarket and online retail volumes.
These have been caused by the twin impact of the cost-of-living
challenges, combined with the strong prior year COVID-19 lockdown
comparative. The strategic exit from a significant high volume, low
margin contract during 2021 further reduced revenues.
Revenues in the Recruitment Ireland division were broadly flat
at GBP55.8m (2021: GBP55.2m), reflecting the more balanced customer
portfolio between blue and white collar, as well as permanent
recruitment. In Northern Ireland, the exposure to the public
sector, more than offset the decline in food supply chain volumes.
The strategic initiative to increase activity in the Republic of
Ireland has also underpinned revenues in the division.
PeoplePlus revenues decreased by GBP3.5m (8.6%), to GBP37.0m
(2021: GBP40.5m), primarily as a result of the decline in revenues
from the Skills division, which has been impacted by the high level
of job vacancies across the economy, driving people straight into
jobs, thereby reducing the demand for skills training. This was
partially offset by the commencement of the Restart contracts,
which have been implemented successfully.
The sales mix between the operating divisions was broadly
unchanged compared with H1 2021, with the recruitment businesses
accounting for 92% of revenue (2021: 91%).
Despite reduced revenues, total gross profit increased by 2.3%
to GBP39.9m (2021: GBP39.0m) with Group gross profit margin
increasing to 9.1% (2021: 8.7%).
The gross profit for Recruitment GB increased year-on-year, from
GBP24.0m to GBP24.6m, with the gross profit margin increasing from
6.8% in H1 2021 to 7.1% in H1 2022, despite the average increase in
pay rates of c.10%. This was partially driven by the increase in
the National Living Wage in April 2021, from GBP8.72 per hour to
GBP8.91 and in April 2022 to GBP9.50 per hour for over 23 year
olds. This does not impact absolute gross profit but does
negatively impact the gross profit margin achieved. Permanent
recruitment generated GBP1.9m of gross profit, up from GBP0.9m in
H1 2021, generating a healthy incremental 0.2ppts of gross profit
increase. The gross profit margin was further strengthened by the
exit from a significant low margin contract. Additionally, the
sales mix change from supermarket and food supply chain sectors to
the re-opening sectors of automotive and aviation, further
supported the gross profit margin increase.
The gross profit for Recruitment Ireland increased from GBP5.6m
(10.1%) in H1 2021 to GBP6.3m in H1 2022 (11.3%). Permanent
recruitment generated GBP1.3m of gross profit compared to GBP0.6m
in H1 2021, making a significant contribution to the increase in
gross profit margin. Temporary recruitment activity in the branch
network across Northern Ireland and the Republic of Ireland has
increased the contribution to gross profit from GBP1.7m to GBP2.0m
in H1 2022.
The gross profit for PeoplePlus decreased from GBP9.4m in H1
2021 to GBP9.0m in H1 2022, whereas gross profit margin increased
from 23.2% in H1 2021 to 24.3% in H1 2022. The decline in gross
profit in Skills has been partially offset by the strong
performances in the Justice division, especially in Way Out TV
services, as well as the continued strong performance in
Employability Services.
Underlying operating profit was GBP4.0m (2021: GBP4.6m), with
gross profit to underlying operating profit conversion at 10.0%
compared to 11.8% in H1 2021. The reduction in conversion is
largely driven by investment in headcount to enable future growth,
for example the mobilisation of the BMW contract, Recruitment GB
branch expansion and the implementation of the Restart contracts in
PeoplePlus.
Non-underlying charges
Total non-underlying charges before tax were GBP3.8m (2021:
GBP4.0m), which relates to amortisation of the intangible assets
arising on business combinations.
Finance costs and interest rate hedge
Finance costs were GBP1.2m (2021: GBP1.4m), which includes
GBP0.2m of non-cash charges for amortisation of debt re-financing
costs and hedging instrument. The underlying GBP0.4m improvement in
cash finance cost was generated by tight management of working
capital and the benefit of the lower interest costs of the new
banking agreement.
The decision to purchase an interest rate cap product in October
2021 means that the Group's exposure to an increase in interest
rates is limited to SONIA up to 1.00% on two thirds of the
aggregate of its bank borrowings and customer finance
arrangements.
These movements generated a reported loss before taxation of
GBP(1.0)m in H1 2022 (2021: GBP(0.8)m).
Taxation
There is a GBP0.3m tax credit (2021: GBP0.2m) for the period due
to the movement on deferred tax balances.
The reported loss after tax on continuing activities for H1 2022
was GBP(0.7)m (2021: GBP(0.6)m).
Statement of financial position, cash generation and
financing
The movement in net debt is shown in the table below. The
movement in working capital includes a decrease in other taxation
and social security of GBP10.0m of which GBP5.8m relates to the
final repayment of the deferred COVID-19 related VAT. In addition,
deferred income balances have decreased by GBP6.1m for the
repayment of advance receipts in relation to Government contracts.
The net debt position has also benefitted from c.GBP5m of timing
differences.
Movement in net debt H1 2022 H1 2021
Unaudited Unaudited
GBPm GBPm
--------------------------------------------------- ---------- ----------
Opening net cash/(debt) 2.3 (14.3)
Cash generated before change in working capital
(note 12) 7.1 7.2
Movements in working capital (20.9) (24.6)
Net taxation and interest received/(paid) (0.4) 4.5
Capital investment (net of disposals) (1.8) (1.9)
Net proceeds from the issue of share capital (note
10) - 46.4
Payments from restricted funds for NMW - 0.9
Settlement of NMW liabilities from restricted
funds - (0.5)
Lease payments, additions, disposals & interest (0.4) 0.4
Debt transaction costs - (1.9)
Employee equity and cash settled share options 0.2 -
--------------------------------------------------- ---------- ----------
Closing net (debt)/cash (13.9) 16.2
--------------------------------------------------- ---------- ----------
The Group ended H1 2022 with net debt of GBP(13.9)m, compared to
net cash of GBP16.2m at H1 2021. Pre-IFRS16 net debt was GBP(9.7)m
at H1 2022 compared to net cash of GBP20.9m at H1 2021. This change
is principally due to the repayment of VAT that was deferred under
the UK Government scheme to defer VAT payments due between March
and June 2020. The total repaid in the period 1 July 2021 to 30
June 2020 was GBP40.6m. After adjusting for this repayment of
deferred VAT, the underlying increase in net cash is GBP10.5m.
The table below reconciles underlying EBITDA (e arnings before
interest, taxation, depreciation and amortisation) , to operating
loss.
Reconciliation of operating loss to EBITDA H1 2022 H1 2021
Unaudited Unaudited
GBPm GBPm
------------------------------------------- ---------- ----------
Operating profit 0.2 0.6
Non-underlying charges 3.8 4.0
------------------------------------------- ---------- ----------
Underlying operating profit 4.0 4.6
Depreciation 3.1 2.6
------------------------------------------- ---------- ----------
Underlying EBITDA 7.1 7.2
------------------------------------------- ---------- ----------
Lease rental payments (0.8) (0.9)
------------------------------------------- ---------- ----------
Underlying EBITDA (pre-IFRS16) 6.3 6.3
------------------------------------------- ---------- ----------
Note: Underlying operating profit is stated before amortisation
of intangible assets arising on business combinations.
The Group's headroom relative to available committed banking
facilities as at 30 June 2022 was GBP46.7m (30 June 2021: GBP87.8m)
as set out below:
H1 2022 H1 2021
Unaudited Unaudited
GBPm GBPm
--------------------------------------------------- ---------- ----------
Cash at bank 12.6 29.2
Available receivables finance agreement unutilised 34.1 58.6
--------------------------------------------------- ---------- ----------
Banking facility headroom 46.7 87.8
--------------------------------------------------- ---------- ----------
Refinancing: New Credit Facilities June 2021
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 facilities, which are provided jointly by
RBS Invoice Finance Limited, ABN AMRO Asset Based Finance N.V., UK
Branch and Leumi UK Group 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 2.00%, dependent upon the Group's leverage multiple
reducing to 3.00x;
V. A non-utilisation fee of 0.35% 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 twelve
months EBITDA to finance charges.
The new facility enabled the cancellation of the previous
facilities, comprising a Revolving Credit Facility ("RCF") of
GBP20.0m and a Receivables Financing Facility ("RFF") of GBP68.2m,
and also the non-recourse Receivables Purchase Facility of
GBP25.0m.
The Group also has available a number of separate, non-recourse,
Customer Financing arrangements whereby specific customer invoices
are settled in advance of their normal settlement date. At 30 June
2022, the value of invoices funded under these arrangements was
GBP39.1m (2021: GBP39.1m).
Dividend policy
No dividends will be declared by the Company for the 2022
financial year.
Going concern
T he 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.
International Financial Reporting Standards
There have been no new accounting standards or interpretations
in the first half of 2022 which materially impact the Group's
reported performance or financial position.
Daniel Quint
Chief Financial Officer
1 August 2022
Consolidated statement of comprehensive income
For the six months ended 30 June 2022
Six-month Six-month
period period Year ended
ended 30 ended 30 31 December
June 2022 June 2021 2021
Unaudited Unaudited Audited
Note GBP'm GBP'm GBP'm
----------- ----------- -------------
Continuing operations
--------------------------------------------------- ------ ----------- ----------- -------------
Revenue 2 438.0 450.7 942.7
Cost of sales (398.1) (411.7) (859.9)
--------------------------------------------------- ------ ----------- ----------- -------------
Gross profit 39.9 39.0 82.8
--------------------------------------------------- ------ ----------- ----------- -------------
Administrative expenses (39.7) (38.4) (80.5)
--------------------------------------------------- ------ ----------- ----------- -------------
Operating profit 0.2 0.6 2.3
--------------------------------------------------- ------ ----------- ----------- -------------
Underlying operating profit before
non-underlying administrative expenses 4.0 4.6 10.3
Administrative expenses (non-underlying) 3 (3.8) (4.0) (8.0)
--------------------------------------------------- ------ ----------- ----------- -------------
Operating profit 2 0.2 0.6 2.3
--------------------------------------------------- ------ ----------- ----------- -------------
Finance costs (1.2) (1.4) (2.4)
--------------------------------------------------- ------ ----------- ----------- -------------
Loss for the period before taxation (1.0) (0.8) (0.1)
Tax credit 0.3 0.2 1.7
(Loss)/profit from continuing
operations (0.7) (0.6) 1.6
Loss from discontinued operations - - (0.4)
----------------------------------------------------------- ----------- ----------- -------------
(Loss)/profit for the period (0.7) (0.6) 1.2
Items that will not be reclassified to
the statement of comprehensive income
- actuarial gains and losses, net of
deferred tax 1.3 0.7 0.7
Items that may be reclassified to the
statement of comprehensive income:
* cumulative translation adjustment - - (0.3)
* movement on cash flow hedge, net of deferred tax 1.0 - 0.2
----------------------------------------------------------- ----------- ----------- -------------
Total comprehensive income for
the period 1.6 0.1 1.8
--------------------------------------------------- ------ ----------- ----------- -------------
Earnings per ordinary share 4
Continuing operations: Basic and
diluted (0.4)p (0.8)p 1.3p
Discontinued operations: Basic
and diluted - - (0.3)p
--------------------------------------------------- ------ ----------- ----------- -------------
Total earnings per share: Basic
and diluted (0.4)p (0.8)p 1.0p
--------------------------------------------------- ------ ----------- ----------- -------------
The accompanying notes form an integral part of these financial
statements.
Consolidated statement of changes in equity
For the six months ended 30 June 2022
Unaudited
Share-based Cash flow Profit
Share Share payment hedge and loss Total
capital Own shares premium reserve reserve account equity
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
-------------------------- --------- ----------- --------- ------------ ------------ ---------- --------
At 1 January 2022 16.6 (4.8) 111.8 0.3 0.2 (55.9) 68.2
-------------------------- --------- ----------- --------- ------------ ------------ ---------- --------
Share award from own
shares - 0.7 - - - (0.6) 0.1
Long term incentive
scheme - - - 0.1 - - 0.1
Save As You Earn (SAYE)
share scheme - - - 0.1 - - 0.1
Transactions with
owners - 0.7 - 0.2 - (0.6) 0.3
-------------------------- --------- ----------- --------- ------------ ------------ ---------- --------
Loss for the period - - - - - (0.7) (0.7)
Cash flow hedge reserve,
net of taxation - - - - 1.0 - 1.0
Actuarial gain, net
of taxation - - - - - 1.3 1.3
-------------------------- --------- ----------- --------- ------------ ------------ ---------- --------
Total comprehensive
income for the period,
net of tax - - - - 1.0 0.6 1.6
-------------------------- --------- ----------- --------- ------------ ------------ ---------- --------
At 30 June 2022 16.6 (4.1) 111.8 0.5 1.2 (55.9) 70.1
-------------------------- --------- ----------- --------- ------------ ------------ ---------- --------
Consolidated statement of changes in equity
For the six months ended 30 June 2021
Unaudited Share-based Profit
Share Share payment and loss Total
capital Own shares premium reserve account equity
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
-------------------------- --------- ----------- --------- ------------ ---------- --------
At 31 December 2020
(reported) 6.9 (4.8) 75.1 0.6 (55.6) 22.2
Prior year adjustment - - - - (2.3) (2.3)
-------------------------- --------- ----------- --------- ------------ ---------- --------
At 1 January 2021
(restated) 6.9 (4.8) 75.1 0.6 (57.9) 19.9
-------------------------- --------- ----------- --------- ------------ ---------- --------
Issue of share capital 9.7 - 38.7 - - 48.4
Costs of issue of share
capital - - (2.0) - - (2.0)
Transactions with owners 9.7 - 36.7 - - 46.4
-------------------------- --------- ----------- --------- ------------ ---------- --------
Loss for the period - - - - (0.6) (0.6)
Actuarial gain, net
of taxation - - - - 0.7 0.7
-------------------------- --------- ----------- --------- ------------ ---------- --------
Total comprehensive
income for the period,
net of tax - - - - 0.1 0.1
-------------------------- --------- ----------- --------- ------------ ---------- --------
At 30 June 2021 16.6 (4.8) 111.8 0.6 (57.8) 66.4
-------------------------- --------- ----------- --------- ------------ ---------- --------
The accompanying notes form an integral part of these financial
statements.
Consolidated statement of changes in equity
For the year ended 31 December 2021
Audited Share- Cash
based flow Profit
Share Own Share payment hedge and loss Total
capital shares premium reserve reserve account equity
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
At 1 January 2021 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 - cash-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
income 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 30 June 2022
30 June 30 June 2021 31 December
2022 Unaudited 2021
Unaudited Restated Audited
Note GBP'm GBP'm GBP'm
---------------------------------- ----- ----------- ------------- ------------
Assets
Non-current assets
Goodwill 5 59.6 59.6 59.6
Other intangible assets 12.3 20.4 16.5
Property, plant and equipment 7.8 8.6 8.0
Retirement benefit net asset 1.4 - -
Deferred tax asset 3.6 3.7 4.6
---------------------------------- ----- ----------- ------------- ------------
84.7 92.3 88.7
---------------------------------- ----- ----------- ------------- ------------
Current assets
Trade and other receivables 6 116.8 117.7 116.2
Current tax asset - 0.4 0.6
Derivative financial instruments 7 1.8 - 0.5
Cash and cash equivalents 8 12.6 29.2 29.8
---------------------------------- ----- ----------- ------------- ------------
131.2 147.3 147.1
---------------------------------- ----- ----------- ------------- ------------
Total assets 215.9 239.6 235.8
---------------------------------- ----- ----------- ------------- ------------
Liabilities
Current
Trade and other payables 9 114.7 153.6 134.3
Borrowings 10 22.3 8.3 22.9
Provisions 1.0 1.5 1.4
Lease liabilities 10 1.3 1.6 1.3
---------------------------------- ----- ----------- ------------- ------------
139.3 165.0 159.9
---------------------------------- ----- ----------- ------------- ------------
Non-current
Other liabilities - 0.3 0.3
Provisions 1.6 2.0 1.4
Lease liabilities 10 2.9 3.1 3.3
Deferred tax liabilities 2.0 2.8 2.7
---------------------------------- ----- ----------- ------------- ------------
6.5 8.2 7.7
---------------------------------- ----- ----------- ------------- ------------
Total liabilities 145.8 173.2 167.6
---------------------------------- ----- ----------- ------------- ------------
Equity
Share capital 11 16.6 16.6 16.6
Own shares (4.1) (4.8) (4.8)
Share premium 111.8 111.8 111.8
Share-based payment reserve 0.5 0.6 0.3
Cash flow hedge reserve 1.2 - 0.2
Profit and loss account (55.9) (57.8) (55.9)
---------------------------------- ----- ----------- ------------- ------------
Total equity 70.1 66.4 68.2
---------------------------------- ----- ----------- ------------- ------------
Total equity and liabilities 215.9 239.6 235.8
---------------------------------- ----- ----------- ------------- ------------
The accompanying notes form an integral part of these financial
statements.
Consolidated statement of cash flows
For the six months ended 30 June 2022
Six months Six months Year
ended 30 ended 30 ended 31
June June December
2022 2021 2021
Unaudited Unaudited Audited
Note GBP'm GBP'm GBP'm
Cash flows from operating activities 12 (13.6) (17.4) (28.7)
-------------------------------------------- ----- ----------- ----------- ----------
Taxation received 0.6 5.9 5.8
-------------------------------------------- ----- ----------- ----------- ----------
Net cash outflow from operating activities (13.0) (11.5) (22.9)
-------------------------------------------- ----- ----------- ----------- ----------
Cash flows from investing activities
- trading
Purchase of intangible assets - software (1.2) (0.8) (2.1)
Purchases of property, plant and equipment (0.6) (1.1) (2.4)
-------------------------------------------- ----- ----------- ----------- ----------
Total cash flows arising from investing
activities (1.8) (1.9) (4.5)
-------------------------------------------- ----- ----------- ----------- ----------
Total cash flows arising from operating
and investing activities (14.8) (13.4) (27.4)
-------------------------------------------- ----- ----------- ----------- ----------
Cash flows from financing activities
Net movements on Receivables Finance
Agreement (0.6) (4.6) 9.9
Debt transaction costs - (1.9) -
Loan repayments - (20.0) (20.0)
Finance lease principal repayments (0.8) (0.8) (1.7)
Interest paid (1.0) (1.4) (1.9)
Payment from restricted fund - 0.9 0.9
Settlement of NMW liabilities from
restricted funds - (0.5) (0.9)
Net proceeds from the issue of share
capital 11 - 48.4 48.4
Costs relating to the issue of share
capital 11 - (2.0) (2.0)
-------------------------------------------- ----- ----------- ----------- ----------
Net cash flows from financing activities (2.4) 18.1 32.7
-------------------------------------------- ----- ----------- ----------- ----------
Net change in cash and cash equivalents (17.2) 4.7 5.3
-------------------------------------------- ----- ----------- ----------- ----------
Cash and cash equivalents at beginning
of period 29.8 24.5 24.5
-------------------------------------------- ----- ----------- ----------- ----------
Cash and cash equivalents at end
of period 8 12.6 29.2 29.8
-------------------------------------------- ----- ----------- ----------- ----------
The accompanying notes form an integral part of these financial
statements.
Notes to the summary financial statements
For the six months ended 30 June 2022
1 Interim accounts and accounting policies
Staffline Group plc, a Public Limited Company, is incorporated
and domiciled in the United Kingdom.
The unaudited condensed interim Group financial statements for
the six-month period ended 30 June 2022 (including the comparatives
for the six-month period ended 30 June 2021 and the year ended 31
December 2021) were approved and authorised for issue by the Board
of Directors on 1 August 2022.
It should be noted that accounting estimates and assumptions are
used in the preparation of the interim financial information.
Although these estimates are based on management's best knowledge
and judgement of current events, actual results may ultimately
differ from those estimates. The unaudited interim Group financial
statements have been prepared using the accounting policies as
described in the December 2021 audited year-end Annual Report and
have been consistently applied.
The interim Group financial information contained within this
report does not constitute statutory accounts as defined in the
Companies Act 2006, section 434. The full accounts for the year
ended 31 December 2021 received an unqualified report from the
auditors and did not contain a statement under Section 498(2) or
(3) of the Companies Act 2006. A copy of the statutory accounts for
that year has been delivered to the Registrar of Companies.
Basis of preparation
The unaudited interim Group financial statements, which should
be read in conjunction with the audited Annual Report for the year
ended 31 December 2021, have been prepared in accordance with AIM
Rules for Companies - Part One, Section 18 "Half-yearly
reports".
The interim Group financial statements consolidate those of the
parent company and all its subsidiaries as at 30 June 2022.
Subsidiaries are all entities to which the Group is exposed, or has
rights, to variable returns and has the ability to affect those
returns through power over the subsidiary.
The unaudited Group financial statements have been prepared on a
going concern basis using the significant accounting policies and
measurement bases summarised in the December 2021 audited year-end
Annual Report, and in accordance with International Financial
Reporting Standards (IFRS) as adopted by the EU and with the
Companies Act 2006, as applicable to companies reporting under
IFRS. The financial statements are prepared under the historical
cost convention except for contingent consideration and cash
settled share options which are measured at fair value. The
consolidated financial statements are presented in sterling, which
is also the functional currency of the parent company.
Going concern
T he 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 18 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.
2 Segmental reporting
Management currently identifies three reportable 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 training and probationary services. The Group's reportable
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
reportable segments, they are operated and reviewed as single units
by the Board of Directors. Each legal entity within a reportable
segment has the same management team, head office and have similar
economic characteristics. Historically and going forward, practice
has been to integrate new acquisitions into the main trading
entities within each reportable segment.
Segment information for the reporting half-year is as
follows:
Six months ended 30 June
2022 Six months ended 30 June 2021
-----------------
Segment
continuing Recruitment Recruitment Group Total Recruitment Recruitment Group Total
operations GB Ireland PeoplePlus costs Group GB Ireland PeoplePlus costs Group
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
----------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
Revenue from
external
customers 345.2 55.8 37.0 - 438.0 355.0 55.2 40.5 - 450.7
Cost of sales (320.6) (49.5) (28.0) - (398.1) (331.0) (49.6) (31.1) - (411.7)
----------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
Segment gross
profit 24.6 6.3 9.0 - 39.9 24.0 5.6 9.4 - 39.0
----------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
Administrative
expenses
(underlying) (20.4) (4.6) (6.4) (1.4) (32.8) (19.5) (4.2) (6.4) (1.7) (31.8)
Depreciation
and software
amortisation
(underlying) (1.9) (0.2) (1.0) - (3.1) (1.3) (0.2) (1.1) - (2.6)
----------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
Segment
underlying
operating
profit/(loss)* 2.3 1.5 1.6 (1.4) 4.0 3.2 1.2 1.9 (1.7) 4.6
----------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
Amortisation
of intangible
assets arising
on business
combinations (3.7) - (0.1) - (3.8) (3.9) - (0.1) - (4.0)
----------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
Segment
operating
profit/(loss) (1.4) 1.5 1.5 (1.4) 0.2 (0.7) 1.2 1.8 (1.7) 0.6
Finance costs (1.1) (0.1) - - (1.2) (0.8) (0.2) - (0.4) (1.4)
----------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
(Loss)/profit
for the period
before taxation (2.5) 1.4 1.5 (1.4) (1.0) (1.5) 1.0 1.8 (2.1) (0.8)
----------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
Tax
credit/(charge) 0.7 (0.3) (0.4) 0.3 0.3 0.4 (0.2) - - 0.2
----------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
Net
(loss)/profit
for the period (1.8) 1.1 1.1) (1.1) (0.7) (1.1) 0.8 1.8 (2.1) (0.6)
----------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
* Segment underlying operating profit before amortisation of
intangible assets arising on business combinations
2 Segmental reporting (continued)
Six months ended 30 June
2022 Six months ended 30 June 2021
-------------
Segment
continuing Recruitment Recruitment Group Total Recruitment Recruitment Group Total
operations GB Ireland PeoplePlus costs Group GB Ireland PeoplePlus costs Group
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
Total
non-current
assets 32.2 12.0 39.7 0.8 84.7 42.4 11.3 38.6 - 92.3
------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
Total
current
assets 96.1 21.8 11.5 1.8 131.2 104.6 22.4 20.3 - 147.3
------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
Total assets 128.3 33.8 51.2 2.6 215.9 147.0 33.7 58.9 - 239.6
------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
Total
liabilities 114.4 12.5 18.6 0.3 145.8 132.1 16.7 24.4 - 173.2
------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
Capital
expenditure
inc
software 1.0 0.2 0.6 - 1.8 1.3 - 0.6 - 1.9
------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
Segment information for the year ended 31 December 2021 is as
follows:
Segment continuing operations Recruitment Recruitment
GB Ireland PeoplePlus Group Costs Total Group
2021 2021 2021 2021 2021
GBPm GBPm GBPm GBPm GBPm
---------------------------------- ----------- ----------- ---------- ------------- -----------
Sales revenue from external
customers 747.9 111.7 83.1 - 942.7
Cost of sales (697.2) (100.4) (62.3) - (859.9)
---------------------------------- ----------- ----------- ---------- ------------- -----------
Segment gross profit 50.7 11.3 20.8 - 82.8
---------------------------------- ----------- ----------- ---------- ------------- -----------
Administrative expenses (40.4) (8.4) (14.0) (3.4) (66.2)
Depreciation, software & lease
amortisation (3.2) (0.4) (2.7) - (6.3)
---------------------------------- ----------- ----------- ---------- ------------- -----------
Segment underlying operating
profit/(loss)* 7.1 2.5 4.1 (3.4) 10.3
---------------------------------- ----------- ----------- ---------- ------------- -----------
Amortisation of intangibles
arising on business combinations (6.4) (1.4) (0.2) - (8.0)
Segment loss from operations 0.7 1.1 3.9 (3.4) 2.3
---------------------------------- ----------- ----------- ---------- ------------- -----------
Finance costs (2.0) (0.3) - (0.1) (2.4)
---------------------------------- ----------- ----------- ---------- ------------- -----------
Segment loss before taxation (1.3) 0.8 3.9 (3.5) (0.1)
---------------------------------- ----------- ----------- ---------- ------------- -----------
Tax credit 0.3 (0.1) - 1.5 1.7
---------------------------------- ----------- ----------- ---------- ------------- -----------
Segment loss from continuing
operations (1.0) 0.7 3.9 (2.0) 1.6
---------------------------------- ----------- ----------- ---------- ------------- -----------
Total non-current assets 36.0 11.6 36.5 - 84.1
---------------------------------- ----------- ----------- ---------- ------------- -----------
Total current assets 106.6 20.1 19.9 0.5 147.7
---------------------------------- ----------- ----------- ---------- ------------- -----------
Total assets (consolidated) 142.6 31.7 56.4 0.5 231.2
---------------------------------- ----------- ----------- ---------- ------------- -----------
Total liabilities (consolidated) 128.0 13.2 26.3 0.1 167.6
---------------------------------- ----------- ----------- ---------- ------------- -----------
Capital expenditure inc software 2.8 - 1.7 - 4.5
---------------------------------- ----------- ----------- ---------- ------------- -----------
* Segment underlying operating profit before amortisation of
intangible assets arising on business combinations
No customer contributed more than 10% of the Group's revenue in
either of the six months ended 2022 or 2021.
3 Non-underlying expenses
Six months Six months Year ended
ended 30 ended 30 31 December
June 2022 June 2021 2021
Unaudited Unaudited Audited
Administrative expenses GBP'm GBP'm GBP'm
------------------------------------------- ------------- ----------- -------------
Amortisation of intangible assets arising
on business combinations (licences and
customer contracts) 3.8 4.0 8.0
Tax credit on non-underlying costs (1.0) (0.8) (0.9)
-------------------------------------------- ------------- ----------- -------------
Post taxation effect on non-underlying
costs 2.8 3.2 7.1
-------------------------------------------- ------------- ----------- -------------
4 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 period, after
deducting any shares held by the Employee Benefit Trust ("EBT") -
"own shares" (964,511 shares at 30 June 2022, 1,140,000 shares at
30 June 2021 and at 31 December 2021). The calculation of the
diluted earnings per share is based on the basic earnings per share
as adjusted to further take into account the expected issue of
ordinary shares resulting from any share options granted to
Executive Directors and certain senior employees, and share options
granted to employees in 2021 under the SAYE scheme.
Details of the earnings and weighted average number of shares
used in the calculations are set out below:
Basic Basic Diluted Diluted
six months six months Basic six months six months Diluted
ended ended Year ended ended ended Year ended
30 June 30 June 31 December 30 June 30 June 31 December
2022 2021 2021 2022 2021 2021
Unaudited Unaudited Audited Unaudited Unaudited Audited
------------------------ ------------ ------------ ------------- ------------ ------------- -------------
(Loss)/profit from
continuing operations
(GBPm) (0.7) (0.6) 1.6 (0.7) (0.6) 1.6
Weighted daily average
number of shares 164,716,595 78,926,391 122,178,126 168,682,279 78,926,391 122,682,511
(Loss)/profit per
share from continuing
operations (p) (0.4)p (0.8)p 1.3p (0.4)p (0.8)p 1.3p
------------------------ ------------ ------------ ------------- ------------ ------------- -------------
Underlying earnings
from continuing
operations (GBPm)* 2.1 2.6 8.7 2.1 2.6 8.7
------------------------ ------------ ------------ ------------- ------------ ------------- -------------
Underlying earnings
per share (p)* 1.3p 3.3p 7.1p 1.2p 3.3p 7.1p
------------------------ ------------ ------------ ------------- ------------ ------------- -------------
*Underlying earnings after adjusting for amortisation of
intangible assets arising on business combinations.
Dividends
No interim dividend for 2022 is proposed (2021: GBPnil).
5 Goodwill
The breakdown of Goodwill carrying value by division is listed
below:
30 June 30 June 31 December
2022 2021 2021
Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
--------------------- ----------- ----------- ------------
Recruitment GB 21.4 21.4 21.4
Recruitment Ireland 5.7 5.7 5.7
PeoplePlus 32.5 32.5 32.5
--------------------- ----------- ----------- ------------
Total 59.6 59.6 59.6
--------------------- ----------- ----------- ------------
6 Trade and other receivables
30 June 30 June 31 December
2022 2021 2021
Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
----------------------------- ----------- ----------- ------------
Trade and other receivables 102.7 105.3 103.5
Accrued income 14.1 12.4 12.7
----------------------------- ----------- ----------- ------------
116.8 117.7 116.2
----------------------------- ----------- ----------- ------------
7 Derivative financial instruments
30 June 30 June 31 December
2022 2021 2021
Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
---------------------------------- ----------- ----------- ------------
Fair value hedge - interest rate
cap 1.8 - 0.5
---------------------------------- ----------- ----------- ------------
In October 2021 the Group 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.
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 marked, but the fair value is based on quoted
market prices, broker/dealer quotations, or alternative pricing
sources with reasonable levels of price transparency.
8 Cash and cash equivalents
30 June 30 June 31 December
2022 2021 2021
Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
--------------------------- ----------- ----------- ------------
Cash and cash equivalents 12.6 29.2 29.8
--------------------------- ----------- ----------- ------------
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 but these balances are available for use
by the Group.
Long term credit ratings for the banks used by the Group are
currently as follows:
Fitch Standard Moody's
& Poors
------------------------------ ------ --------- --------
National Westminster Bank plc A+ A A1*/A2
------------------------------ ------ --------- --------
Bank of Ireland Group plc BBB BBB- A3
------------------------------ ------ --------- --------
Royal Bank of Scotland plc A+ A A1*/A2
------------------------------ ------ --------- --------
The Group's banking facility headroom is as follows:
30 June 30 June 31 December
2022 2021 2021
Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
----------------------------------------- ----------- ----------- ------------
Cash and cash equivalents 12.6 29.2 29.8
Available receivables finance agreement
balance 34.1 58.6 48.6
----------------------------------------- ----------- ----------- ------------
Banking facility headroom 46.7 87.8 78.4
----------------------------------------- ----------- ----------- ------------
9 Trade and other payables
30 June
30 June 2021 31 December
2022 Unaudited 2021
Unaudited Restated Audited
GBP'm GBP'm GBP'm
------------------------------------ ------------ ----------- ------------
Trade and other payables 30.0 8.8 20.4
Accruals and deferred income 40.9 62.4 60.1
Other taxation and social security 43.8 82.4 53.8
114.7 153.6 134.3
------------------------------------ ------------ ----------- ------------
The Group took advantage of the UK Government scheme for the
deferral of VAT payments between March and June 2020. The total
deferral under the scheme amounted to GBP42.4m after offset of a
Corporation Tax refund due from 2018. Repayment of the balance was
paid in instalments commencing from June 2021 and the final
instalment of GBP5.8m was paid in January 2022.
10 Borrowings
30 June 30 June 31 December
2022 2021 2021
Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
--------------------------------------- ----------- ----------- ------------
Current liabilities:
Receivables finance agreement (22.3) (8.3) (22.9)
Lease liabilities (1.3) (1.6) (1.3)
(23.6) (9.9) (24.2)
--------------------------------------- ----------- ----------- ------------
Non-current liabilities:
Lease liabilities (2.9) (3.1) (3.3)
--------------------------------------- ----------- ----------- ------------
(2.9) (3.1) (3.3)
--------------------------------------- ----------- ----------- ------------
Total borrowings (26.5) (13.0) (27.5)
--------------------------------------- ----------- ----------- ------------
Less: Cash and cash equivalents
(note 8) 12.6 29.2 29.8
--------------------------------------- ----------- ----------- ------------
Net cash/(debt) as disclosed in
consolidated statement of cash flows
(note 12) (13.9) 16.2 2.3
--------------------------------------- ----------- ----------- ------------
Refinancing on 10 June 2021
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 facility, which is provided jointly by RBS
Invoice Finance Limited, ABN AMRO Asset Based Finance N.V., UK
Branch and Leumi UK Group 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 0.35% 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 twelve months EBITDA to finance charges.
The 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 is also funded through customer financing agreements
with some of its key customers.
11 Share capital
31 December
30 June 30 June 2021 2021
2022 Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
--------------------------------- ---------------- ------------- -------------
Allotted and issued
165,767,728 ordinary 10p shares 16.6 16.6 16.6
--------------------------------- ---------------- ------------- -------------
Six months Six months Year ended
ended 30 ended 30 31 December
June 2022 June 2021 2021
'000 '000 '000
--------------------------------- ---------------- ------------- -------------
Shares issued and fully paid at
the beginning of the period 165,768 68,930 68,930
Shares issued during the period - 96,838 96,838
Shares issued and fully paid at
end of period 165,768 165,768 165,768
--------------------------------- ---------------- ------------- -------------
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 964,511 shares held at 30 June
2022 (2021: 1,140,400 shares) by the Employee Benefit Trust where
the right to dividends has been waived.
On 21 May 2021 the Group announced a proposed Placing,
Subscription and Open Offer (the "Fundraise"), following
conditional agreement of a new 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 funds raised amounted to GBP48,418,621, from which
issue costs of GBP1,998,950 were paid.
12 Cash flows from operating activities
Reconciliation of loss before taxation to net cash inflow from
operating activities
Six-month Six-month
period ended period ended Year ended
30 June 30 June 31 December
2022 2021 2021
Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
------------------------------------------------ -------------- -------------- -------------
Loss before taxation
* Continuing operations (1.0) (0.8) (0.1)
* Discontinued operations - - (0.4)
------------------------------------------------ -------------- -------------- -------------
(1.0) (0.8) (0.5)
Adjustments for:
Finance costs 1.2 1.4 2.4
Depreciation and amortisation - underlying 3.1 2.6 6.3
Depreciation and amortisation - non-underlying 3.8 4.0 8.0
Loss on disposal of property, plant
and equipment - - 0.3
Cash generated before changes in working
capital and share options 7.1 7.2 16.5
------------------------------------------------ -------------- -------------- -------------
Change in trade and other receivables (0.8) (15.5) (12.2)
Change in trade, other payables and
provisions (20.1) (9.1) (33.1)
Impact of foreign exchange loss on operating - - -
activities
------------------------------------------------ -------------- -------------- -------------
Cash utilised in operations (13.8) (17.4) (28.8)
------------------------------------------------ -------------- -------------- -------------
Employee equity and cash settled share
options 0.2 - 0.1
------------------------------------------------ -------------- -------------- -------------
Net cash outflow from operating activities (13.6) (17.4) (28.7)
------------------------------------------------ -------------- -------------- -------------
Movement in net debt
Six months Six months Year ended
ended 30 ended 30 31 December
June 2022 June 2021 2021
Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
-------------------------------------------- ----------- ----------- -------------
Net debt at beginning of the period 2.3 (14.3) (14.3)
Lease payments, additions, disposals
and interest 0.4 0.8 0.9
Loan repayments - 20.0 20.0
Net repayments to/(drawn from) Receivables
Finance Agreement 0.6 5.0 (9.6)
Change in cash and cash equivalents (17.2) 4.7 5.3
-------------------------------------------- ----------- ----------- -------------
Net (debt)/cash at end of period (13.9) 16.2 2.3
-------------------------------------------- ----------- ----------- -------------
Represented by:
Cash and cash equivalents (note 8) 12.6 29.2 29.8
Current borrowings (note 10) (22.3) (8.3) (22.9)
Lease liabilities (note 10) (4.2) (4.7) (4.6)
Net (debt)/cash at end of period (13.9) 16.2 2.3
-------------------------------------------- ----------- ----------- -------------
13 Related party transactions
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note. There were no material transactions with
Directors of the Company during the period, except for those
relating to remuneration.
On 31 March 2022, Albert Ellis, Chief Executive Officer, and
Daniel Quint, Chief Financial Officer, were awarded ordinary shares
of 10p each in the Company ("Ordinary Shares") in relation to the
proportion of their respective annual bonuses for the financial
year ended 31 December 2021 payable in Ordinary Shares.
Accordingly, the Employee Benefit Trust ("EBT") transferred to
Albert Ellis and Daniel Quint 102,407 and 73,757 Ordinary Shares
respectively.
The directors holding office at 30 June 2022 have the following
beneficial interests in the Company's share capital:
Number
----------------- ----------
Albert Ellis 422,407
Daniel Quint 299,077
Tom Spain 1,300,000
Catherine Lynch 10,000
Ian Starkey 50,000
2,081,484
----------------- ----------
On 5 July 2021 the Board, Under the terms of the Company's 2021
long term incentive plan, approved and granted nil cost options
(the "Options") over 1,678,279 ordinary shares of ten pence each in
the Company ("Ordinary Shares") to certain employees, including
persons discharging managerial responsibilities ("PDMRs"). The
Options will vest from 30 June 2024 (the "Vesting Period") and will
be exercisable until 30 June 2031. Options over 180,328 have
subsequently lapsed.
On 13 May 2022 the Board, Under the terms of the Company's 2022
long term incentive plan, approved and granted nil cost options
(the "Options") over 2,899,725 ordinary shares of ten pence each in
the Company ("Ordinary Shares") to certain employees, including
persons discharging managerial responsibilities ("PDMRs"). The
Options will vest from 13 May 2025 (the "Vesting Period") and will
be exercisable until 13 May 2032.
The total Options awarded to PDMR's are set out in the table
below:
Director / PDMR Position Options granted
------------------ ------------------------- ----------------
Albert Ellis Chief Executive Officer 1,285,576
Daniel Quint Chief Financial Officer 1,010,096
Martina McKenzie MD Recruitment Ireland 404,038
Frank Atkinson MD Recruitment GB 404,038
Kenny Boyle MD PeoplePlus 183,532
------------------ ------------------------- ----------------
13 Related party transactions (continued)
The vesting of the Options is subject to the satisfaction of the
Company achieving certain financial performance criteria for the
financial years ending 31 December 2023 and 2024 respectively. 50%
of the Options awarded are subject to achieving earnings per share
hurdles and 50% are subject to achieving EBITDA hurdles. In
addition, no Options will vest unless the average closing price of
the Ordinary Shares for the last 30 business days of 2023 and 2024
respectively, is above a minimum target.
Following the grant of the awards described above, the total
number of Options outstanding is 4,397,676, representing 2.65% of
the Company's issued share capital.
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END
IR FFLLBLVLBBBZ
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