TIDMSTAF
RNS Number : 8182H
Staffline Group PLC
01 August 2023
1 August 2023
STAFFLINE GROUP PLC
('Staffline', the 'Company' or the 'Group')
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2023
Resilient H1 performance with full year trading in line with
market expectations*
Board committed to Share buyback programme of up to GBP4
million
Staffline Group PLC, the recruitment and training group,
announces its unaudited interim results for the six months ended 30
June 2023 ("H1 2023").
Financial highlights
Continuing activities Six months Six months
to 30 June to 30 June
2023 2022
Unaudited Unaudited Change
Revenue GBP434.1m GBP438.0m -0.9%
------------ ------------ ---------
Gross sales value(1) GBP496.4m GBP474.9m +4.5%
------------ ------------ ---------
Gross profit GBP38.0m GBP39.9m -4.8%
------------ ------------ ---------
Gross margin % 8.8% 9.1% -0.3ppts
------------ ------------ ---------
Underlying operating profit(2) GBP2.4m GBP4.0m -40.0%
------------ ------------ ---------
Gross profit to underlying operating
profit conversion % 6.3% 10.0% -3.7ppts
------------ ------------ ---------
(Loss) before tax GBP(4.3)m GBP(1.0)m -330.0%
------------ ------------ ---------
Pre-IFRS16 Net debt(3) GBP(3.5)m GBP(9.7)m +GBP6.2m
------------ ------------ ---------
Alternative performance measures
1. Gross sales value represents the fair value of consideration
received or receivable for the supply of services, including agency
sales, (excluding fees), net of VAT
2. Underlying operating profit before Skills onerous contract
(GBP1.0m) and exit costs provisions (GBP1.3m) and amortisation of
intangible assets arising on business combinations (GBP2.6m)
3. On a Post-IFRS16 basis, net debt was GBP(8.0)m at 30 June
2023 (2022: net debt GBP(13.9)m)
Key highlights:
-- Revenues broadly flat in a challenging market
-- All three divisions remained profitable on an underlying basis
-- Organic growth and renewals across a number of existing customers
o Contract renewal with M&S, a three-year contract extension
with Tesco and sole supply secured with AM Fresh Group, one of the
UK's largest suppliers of fresh produce
o Two-year extension of PeoplePlus' contract with the Ministry
of Justice to provide Prison Education Services
-- Restructuring of PeoplePlus' Skills training activities,
closing of in-person training and focus on digital delivery
* Underlying operating profit in line with expectations
-- Solid results from the Republic of Ireland
-- Positive cash generation with net debt (pre-IFRS16) reduced year on year by GBP6.2m
-- Increased interest costs limited by interest rate cap
-- GBP4m share buyback programme to be implemented
Current trading and outlook
-- Management expects a significant improvement in H2 2023, in
line with the traditional second-half weighting of the Group's
Recruitment division
-- FY 2023 performance will be underpinned by contributions from
several new opportunities, the anticipated upswing in seasonal
retail trading volumes, and benefits of cost reductions across the
Group
-- Staffline's strategy is to continue leveraging its scale and
balance sheet strength to increase market share during this period
of macroeconomic uncertainty - optimising the business' operational
gearing to benefit in a recovery
-- Accordingly, the Board expects the Group's FY 2023 results to be in line with expectations*
Albert Ellis, Chief Executive Officer of Staffline,
commented:
"The business has delivered a resilient first half performance
amidst a challenging market environment for the recruitment
industry. Our management team has demonstrated exceptional
leadership by securing new business wins, implementing significant
structural and cost changes across all businesses, and
strengthening customer relationships with a focus on service
delivery. These actions have underpinned the Board's confidence in
full year trading being in line with expectations*, alongside
implementing a GBP4m share buyback programme.
We anticipate better trading conditions in the second half of
the year with improved consumer confidence stimulating growth.
Whilst the outlook for permanent recruitment is more subdued, a
number of new temporary staffing contract opportunities are
currently in the pipeline, in addition to the seasonal boost
expected in the final half of the year including the Women's
Football and Men's Rugby World Cups.
There is no question, the broader economic environment in the UK
and Ireland will continue to dominate headlines. However, with the
increasing return to work of many classified as economically
inactive in the most recent ONS labour market report, we are
cautiously optimistic that the tight labour market is starting to
ease and this will support the economy going forward."
Retail investor webcast
Management will be hosting a presentation for retail investors
in relation to the Company's interim results at 8.30am (BST) on
Tuesday, 1 August 2023.
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.
* Underlying operating profit in line with expectations
For further information, please contact:
Staffline Group plc via Vigo Consulting
www.stafflinegroupplc.co.uk
Albert Ellis, Chief Executive Officer
Daniel Quint, Chief Financial Officer
Liberum (Nominated Adviser and Broker)
www.liberum.com
Richard Lindley / Satbir Kler 020 3100 2222
Zeus (Joint Broker)
www.zeuscapital.co.uk
David Foreman (Investment Banking)
Nick Searle (Sales) 020 3829 5000
Vigo Consulting (Financial PR) 020 7390 0230
www.vigoconsulting.com Staffline@vigoconsulting.com
Jeremy Garcia / Kate Kilgallen
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.31,000 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
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.
Chief Executive Officer's review
Introduction
The business delivered a resilient overall performance in the
context of the highly challenging macro-environment.
Revenue remained broadly flat at GBP434.1 million (H1 2022:
GBP438.0 million), with gross margin slightly down at 8.8% (H1
2022: 9.1%) due to changes in mix. Underlying operating profit
declined by 40% as expected, on the back of a slowdown within the
retail sector, reduced hours worked in our top customers and weaker
demand for permanent recruitment, particularly in the first
quarter. However, all three divisions remained profitable on an
underlying basis over the period, generating better than expected
positive cashflows, with tight control of costs and debtor
days.
Our temporary staffing pipeline has been a key underpin in the
first half, with organic expansion in existing customers expected
in both the UK and Ireland in H2 2023. This growth will come mainly
from Recruitment GB's existing logistics partner, GXO logistics,
alongside M&S, Tesco, and Morrisons. Furthermore, PeoplePlus
has secured a two-year extension to its contract with the Ministry
of Justice, to deliver prison education programmes.
Tight control of costs, including the restructuring of the
Skills business within PeoplePlus, continues and the streamlining
of operations across the Group is a key priority to improve overall
performance.
The Group continues to enjoy substantial financing headroom
created through strong cash flow including the benefits from its
interest rate cap. It is this stability and confidence that has
encouraged the Board to set aside up to GBP4 million for a share
buyback programme.
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 and interest rate
increases caused by high inflation. In the first half, 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 resilient jobs market seen across the UK has
impacted the Group's skills and training businesses as candidates
opt to take up employment rather than attend training. We remain
optimistic about the white-collar engineering and manufacturing
sectors as they continue to show resilience. Omega, the Group's
professional engineering recruiter, report steady job flows in the
first half of the year which are expected to continue in the second
half. In particular, the aerospace manufacturing sector and its
associated supply chain is experiencing high levels of demand as
airlines seek to replenish their fleets following the pandemic.
The latest UK labour market statistics from the ONS depict mixed
trends over the period. The unemployment rate has risen to 4.0% due
to the stagnant economy, and the cost-of-living crisis has led to
formerly economically inactive workers re-entering the workforce.
Overall, job vacancies declined by 85,000 in the quarter ending
June 2023, leaving around 1,034,000 vacancies. Despite the reduced
demand, there is still resilience in the job market, which,
combined with an easing in the skills shortage in blue-collar,
supports a more favourable environment for fulfilment.
Customers have responded to the current market conditions by
reviewing their supply chains and engaging with the Group,
recognising the benefit of Staffline's scale and reach and Datum's
managed service product. Companies are now driven to find cost
savings, with the result that our pipeline of potential managed
services is stronger than it has been in a long time.
Strategy
The Group remains focused on delivering across its strategic,
operational, and financial objectives:-
-- Capitalising on market leadership in the blue-collar market
to grow organically and gain market share
-- Cross selling and expanding the recruitment portfolio;
managed services and permanent recruitment
-- Transformation of PeoplePlus through focusing on
Employability (Restart) and Prison Education
-- Investing in the Republic of Ireland
The Group's balance sheet has been further strengthened,
providing a solid foundation for continued investment and
initiating cash returns to shareholders.
Operational review
Recruitment
The core of the Group's recruitment activities remains our
sizable temporary blue-collar footprint across the UK and Ireland,
which is yielding both new business opportunities and organic
growth in existing customers. It is clear that the Group's scale,
reach, delivery excellence and strengthening financial position
continue to attract new and existing customers. Our strategy is to
grow and achieve permanent market share gains.
Recruitment GB
H1 2023 H1 2022 % Var
GBP'm GBP'm
---------------------- --------------------- --------------------- -------
Revenue 341.2 345.2 -1.2%
Gross Profit 23.5 24.6 -4.5%
Underlying operating
profit 1.8 2.3 -21.7%
---------------------- --------------------- --------------------- -------
A combination of macro-economic headwinds and lower levels of
consumer spending impacted volumes of permanent recruitment,
particularly in the first quarter, as well as also affecting client
demand for temporary labour. This led to reduced hours across the
blue-collar market, alongside lower staff numbers in the automotive
sector.
Nevertheless, Recruitment GB continued to gain market share with
their major customers securing multiple renewals in the period,
most notably the expansion announced today with GXO Logistics, the
three-year contract extension with Tesco, as well as with a number
of other major logistics customers, the majority of which will come
on stream towards in H2 2023.
Mixed results from specialist recruitment saw Omega report good
results as the engineering and defence sectors faced acute skills
shortages, but Datum saw lower levels of activity from its
construction clients and the Driving business remains well below
historical levels.
Recruitment Ireland
H1 2023 H1 2022 % Var
GBP'm GBP'm
---------------------- --------------------- --------------------- -------
Revenue 54.5 55.8 -2.3%
Gross Profit 6.1 6.3 -3.2%
Underlying operating
profit 0.8 1.5 -46.7%
---------------------- --------------------- --------------------- -------
Our Irish operations have been affected by both the wider
economic headwinds as well as the ongoing power sharing impasse at
Stormont. These factors have contributed to the weakening permanent
recruitment market, particularly in relation to public sector
clients in Northern Ireland. The prior year comparatives benefitted
from exceptionally strong demand for permanent recruitment. The
division produced solid results from customer on-site locations and
ongoing growth across the Republic of Ireland, which partly
mitigated against the shortfall in permanent recruitment.
Despite the above challenges, gross profit margin percentage
overall only declined by 0.1ppts to 11.2% in H1 2023, with
temporary recruitment margin up to 9.4% (H1 2022: 9.2%), reflecting
the changes in mix in favour of the Republic of Ireland.
PeoplePlus
H1 2023 H1 2022 % Var
GBP'm GBP'm
---------------------- --------------------- --------------------- -------
Revenue 38.4 37.0 +3.8%
Gross Profit 8.4 9.0 -6.7%
Underlying operating
profit 1.2 1.6 -25.0%
---------------------- --------------------- --------------------- -------
Operating profit is down 25% due to the change in mix, with a
greater proportion of higher margin employability and
self-employment activity in the prior year comparatives.
Additionally, H1 2023 includes the losses resulting from ongoing
market headwinds in relation to the demand for in-person Adult
Education support (Skills). In response, PeoplePlus is in the
process of closing its classroom-based operations in England, to
focus on digital education delivery and growing B2B support
services, whilst working to deliver broader overhead reductions to
improve efficiencies and margins.
PeoplePlus has remained profitable, supported by the ongoing
delivery of the Restart programme, which continues to perform in
line with expectations. Elsewhere, our sizable new contract to
provide education services within the Werrington Young Offender
Institution is progressing well, in addition to our broader Prison
Education contracts where we have entered the first year of a
successful two-year extension. Preparation is well underway ahead
of the subsequent recommissioning of these services.
Board changes
On 17 April 2023, Amanda Aldridge joined the Company as a
Non-Executive Director ("NED"). Amanda is an experienced NED and
worked at KPMG LLP for 33 years until 2017, including 20 years as a
partner. Amanda chairs the Group's Audit Committee and has been
appointed to Staffline's Remuneration and Nomination Committees,
replacing Ian Starkey.
Outlook
Staffline remains well placed to capitalise on its market
leadership, bolstered by additional market share gains during the
first half and a pipeline of solid opportunities expected to come
on stream in H2 2023, particularly in Recruitment GB and
Ireland.
Whilst Staffline's Northern Irish business has been impacted by
the decline in demand for public sector permanent recruitment, new
staffing opportunities in H2 2023 look promising. On the UK
mainland, increasing demand for temporary staff for the
pre-Christmas peak trading period, and a number of global sporting
events in H2, underpin our expectations of increased profits in the
remainder of the year. In addition, the Group's ongoing cost
reduction programme, specifically the closure of in-person Skills
training in PeoplePlus, will benefit the second half.
Confidence in the Group's balance sheet and future cash flows
underpins the Board's decision to set aside up to GBP4 million for
a share buyback programme.
Accordingly, the Board expects the Group's FY 2023 results to be
in line with expectations*.
Albert Ellis
Chief Executive Officer
1 August 2023
* Underlying operating profit in line with expectations
Financial Review
Introduction
The Group delivered resilient results in the context of the
challenging macro-economic environment, as evidenced in reduced
temporary worker hours as a result of declining consumer spend. In
addition, permanent recruitment has also softened in H1 2023.
Notwithstanding these pressures, the Group's balance sheet
strengthened with pre-IFRS16 net debt reducing by GBP6.2m to
GBP(3.5)m. Significant headroom of GBP58.7m (2022: GBP46.7m) exists
in the Group's banking facility alongside material headroom in
financial covenants.
The Group continues to protect its financial position, having
purchased a three-year interest rate cap product in October 2021
limiting the Group's exposure to increases in interest rates. This
has been hugely beneficial during the last twelve months, when the
Bank of England base rate increased from 1.25% to 5.00%.
Trading performance
Total revenue for H1 2023 decreased by (0.9)% to GBP434.1m
(2022: GBP438.0m) resulting from reduced food and distribution
sector volumes, offset by the new revenues from the BMW contract
that commenced toward the end of H1 2022. Gross profit has
decreased to GBP38.0m (2022: GBP39.9m) alongside a marginal
decrease in gross margin to 8.8% from 9.1% in 2022. The reduction
in gross margin % is driven by both the softening in permanent
recruitment, as well as the reduction in higher margin
employability training activity in H1 2022.
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
2023 2022
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
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
------------------ ------------ ------------ ----------- ---------- ----------- ------------ ------------ ------------ ---------- ----------
Revenue 341.2 54.5 38.4 - 434.1 345.2 55.8 37.0 - 438.0
Period-on-period
% change (1.2)% (2.3)% 3.8% - (0.9)% (2.8)% 1.1% (8.6)% - (2.8)%
Gross sales
value(1) 403.5 54.5 38.4 - 496.4 382.1 55.8 37.0 - 474.9
Period-on-period
% change 5.6% (2.3)% 3.8% - 4.5% 0.8% 1.1% (8.6)% - -
Gross profit 23.5 6.1 8.4 - 38.0 24.6 6.3 9.0 - 39.9
Period-on-period
% change (4.5)% (3.2)% (6.7)% - (4.8)% 2.5% 12.5% (4.3)% - 2.3%
Gross margin
% 6.9% 11.2% 21.9% - 8.8% 7.1% 11.3% 24.3% - 9.1%
Underlying
operating
profit /(loss) 1.8 0.8 1.2 (1.4) 2.4 2.3 1.5 1.6 (1.4) 4.0
Underlying
operating profit
as a % of
revenue 0.5% 1.5% 3.1% - 0.6% 0.7% 2.7% 4.3% - 0.9%
Underlying
operating profit
as a % of gross
profit 7.7% 13.1% 14.3% - 6.3% 9.3% 23.8% 17.8% - 10.0%
Post-IFRS16
net (debt)/cash - - - - (8.0) - - - - (13.9)
Pre-IFRS16 net
(debt)/cash - - - - (3.5) - - - - (9.7)
------------------ ------------ ------------ ----------- ---------- ----------- ------------ ------------ ------------ ---------- ----------
(1) Gross sales value represents the fair value of consideration
received or receivable for the supply of services, including agency
sales, (excluding fees) net of VAT.
Key performance indicators
Six months ended 30 Six months ended 30 June
June 2023 2022
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 18.8m 3.2m - 22.0m 21.4m 3.4m - 24.8m
Gross GBP36.3k GBP47.0k - GBP38.0k GBP36.6k GBP50.0k - GBP38.7k
profit
per
fee
earner
Revenue - - GBP26.4k - - - GBP27.9k -
per
employee
----------- ------------ ------------ ----------- ----------- ------------ ------------ ------------ ----------
For management reporting purposes, the Recruitment GB division
presents its 'gross sales', which includes sales under agency
arrangements. The reporting of gross sales gives an indication of
the full level of activity undertaken by the division. The value is
adjusted for revenue reporting in accordance with IFRS15. The
adjustment relative to reported revenue for the Group is as
follows:
H1 2023 H1 2022
Unaudited Unaudited
GBP'm GBP'm
-------------------- ---------- ----------
Gross sales value 496.4 474.9
Agency sales (62.3) (36.9)
-------------------- ---------- ----------
Revenue as reported 434.1 438.0
-------------------- ---------- ----------
Revenues in the Recruitment GB division decreased by GBP4.0m,
(1.2%), to GBP341.2m (2022: GBP345.2m). The decrease is as a result
of reducing year-on-year supermarket and online retail volumes,
partially offset by the new revenues from the BMW contract that
commenced during H1 2022. The decline in retail volumes is as a
direct result of the ongoing cost-of-living challenges.
The gross profit for Recruitment GB decreased year-on-year, from
GBP24.6m in 2022 to GBP23.5m, with the gross margin % decreasing
from 7.1% in H1 2022 to 6.9% this year. This was significantly
impacted by a 9.7% increase in the National Living Wage from April
2023, from GBP9.50 to GBP10.42, which was the largest increase in
the last five years. This contributed to an average increase in our
temporary worker pay rates of c.8.5%. This does not impact absolute
gross profit as it is passed through to customers, but does
negatively impact the gross margin % achieved. Gross profit margin
% was further diluted by the softening in the higher margin
activity of permanent recruitment, which generated GBP1.8m of gross
profit, down slightly from GBP1.9m in H1 2022.
Revenues in the Recruitment Ireland division were broadly flat
at GBP54.5m (2022: GBP55.8m), reflecting resilience in onsite
temporary recruitment activity, offset by a 23% reduction in
permanent recruitment. The gross profit for Recruitment Ireland
decreased slightly from GBP6.3m (11.3%) in H1 2022 to GBP6.1m in H1
2023 (11.2%). Permanent recruitment generated GBP1.0m of gross
profit compared to GBP1.3m in H1 2022, reflecting cautious
sentiment. Revenues and gross profits were also reduced in the
branch networks in both Northern Ireland and the Republic of
Ireland, as well as with our Northern Irish public sector
clients.
PeoplePlus revenues increased by GBP1.4m (3.8%), to GBP38.4m
(2022: GBP37.0m), primarily as a result of increased revenues from
the Restart contracts and the prison education contract transition
from COVID-driven cost plus basis to payment by results. These
gains are partially offset by declining revenue from Skills
education, which has led to our decision to exit from that
business. The continued tight labour market along with inflationary
cost pressures made the financial model of the Skills business
sub-optimal. The losses of GBP(0.6)m generated in the Skills
business in H1 contributed to the gross profit for PeoplePlus
decreasing from GBP9.0m in H1 2022 to GBP8.5m in H1 2023, whilst
gross margin reduced from 24.3% in H1 2022 to 21.9% in H1 2023.
Group underlying operating profit was GBP2.4m (2022: GBP4.0m),
with gross profit to underlying operating profit conversion
reducing to 6.3% compared to 10.0% in H1 2022. Excluding the
GBP(0.6)m of losses in the Skills business, which will be treated
as a discontinued operation in the Group's full-year financial
statements, the underlying operating profit would have been GBP3.0m
(see note 3). Similar to 2022, the Group expects underlying
operating profit to be H2 weighted due to the main peak trading
period in the lead up to Christmas and the New Year. The Board
expects full-year results to be in line with expectations*.
Non-underlying charges
Total non-underlying charges of GBP4.9m for the period include
new onerous contract and exit cost provisions of GBP2.3m following
the decision to exit the in-person Skills training business and
GBP2.6m (2022: GBP3.8m) for amortisation of the intangible assets
arising on business combinations.
Finance costs and interest rate hedge
Net finance costs were GBP1.8m (2022: GBP1.2m), which includes
GBP0.3m (2022: GBP0.2m) of non-cash charges for amortisation of
debt re-financing costs and the hedging instrument. The increased
cost arises from the significant increase in SONIA rates during the
last 18 months, which has been significantly mitigated by income
from the interest rate cap product purchased in October 2021. 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 costs resulted in a reported loss before taxation of
GBP(4.3)m in H1 2023 (2022: GBP(1.0)m).
Taxation
There is a GBP1.1m tax credit (2022: GBP0.3m) for the period due
principally to the movement on deferred tax balances.
The reported loss after tax on continuing activities for H1 2023
was GBP(3.2)m (2022: GBP(0.7)m).
* Underlying operating profit in line with expectations
Statement of financial position, cash generation and
financing
The Group ended H1 2023 with pre-IFRS16 net debt of GBP(3.5)m,
(2022: GBP(9.7)m). Post-IFRS16 net debt was GBP(8.0)m at H1 2023
(2022: GBP(13.9)m). The movement in net debt is shown in the table
below. The change in working capital includes the Q1 VAT payment,
representing VAT collections in the Group's peak seasonal Q4 2022
trading period. This was partly offset by continued tight working
capital management. The net debt position has also benefitted from
the completion of previous capital projects leading to a reduction
in capital expenditure during H1 2023.
Movement in net debt H1 2023 H1 2022
Unaudited Unaudited
GBP'm GBP'm
------------------------------------------------- ---------- ----------
Opening net cash (pre-IFRS16) 5.0 6.9
Cash generated before changes in working capital
(note 13) 2.7 7.1
Movements in working capital (7.7) (20.9)
Net taxation and interest paid (1.4) (0.4)
Capital investment (net of disposals) (1.0) (1.8)
Own shares purchased (0.5) -
Principal repayment of lease liabilities (0.9) (0.8)
Employee equity settled share options 0.3 0.2
------------------------------------------------- ---------- ----------
Closing net (debt) (pre-IFRS16) (3.5) (9.7)
------------------------------------------------- ---------- ----------
IFRS16 lease liabilities (4.5) (4.2)
------------------------------------------------- ---------- ----------
Closing net (debt) (post-IFRS16) (8.0) (13.9)
------------------------------------------------- ---------- ----------
The table below reconciles underlying EBITDA (e arnings before
interest, taxation, depreciation and amortisation) , to operating
loss.
Reconciliation of operating loss to EBITDA H1 2023 H1 2022
Unaudited Unaudited
GBP'm GBP'm
------------------------------------------- ---------- ----------
Operating (loss)/profit (2.5) 0.2
Non-underlying charges 4.9 3.8
------------------------------------------- ---------- ----------
Underlying operating profit 2.4 4.0
Depreciation 2.6 3.1
------------------------------------------- ---------- ----------
Underlying EBITDA 5.0 7.1
Lease rental payments (0.9) (0.8)
------------------------------------------- ---------- ----------
Underlying EBITDA (pre-IFRS16) 4.1 6.3
------------------------------------------- ---------- ----------
Note: Underlying operating profit is stated before provisions
arising from the closure of the Skills training business and
amortisation of intangible assets arising on business
combinations.
The Group's banking facility headroom under its available
committed banking facilities is set out below:
H1 2023 H1 2022
Unaudited Unaudited
GBP'm GBP'm
--------------------------------------------------- ---------- ----------
Cash at bank 12.2 12.6
Available receivables finance agreement unutilised 46.5 34.1
--------------------------------------------------- ---------- ----------
Banking facility headroom 58.7 46.7
--------------------------------------------------- ---------- ----------
Banking facilities
The Group uses a Receivables Financing Agreement ("RFA") to fund
its day-to-day working capital requirements.
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 2.00%, 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 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
2023, the value of invoices funded under these arrangements was
GBP41.3m (2022: GBP39.1m).
Share repurchase programme ("Share Buyback")
The Board believes the current climate presents a good
opportunity to make share purchases. The Company has delivered two
years of underlying operating profits of at least GBP10.0m and net
debt (pre-IFRS16) has reduced to GBP(3.5)m at 30 June 2023 (2022:
GBP(9.7)m) through retained earnings and improvements in working
capital. Consequently, the Group has substantial headroom of
GBP58.7m (2022: GBP46.7m) under its available debt facilities.
Accordingly, the Company today announces the launch of a share
buyback, to repurchase ordinary shares in the capital of the
Company (the "Ordinary Shares") up to an aggregate value of GBP4.0
million. T he Ordinary Shares purchased pursuant to the Share
Buyback will be cancelled.
Dividend policy
No interim dividend for 2023 is proposed (2022: GBPnil).
Going concern
T he Directors have formed a judgement, at the time of approving
the unaudited condensed interim Group 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 unaudited condensed interim Group financial statements are
authorised for issue. For this reason, the Directors continue to
adopt the going concern basis in preparing the financial
statements.
Post balance sheet event
At the Company's Annual General Meeting held on 12 June 2023,
the shareholders approved a special resolution to cancel the entire
amount standing to the credit of the Company's share premium
account, subject to the approval of the High Court of England and
Wales. Approval was granted by the Court on 18 July 2023 and as a
result the Company has distributable reserves of GBP85.8m with
effect from 20 July 2023, being the date that the Court's decision
was registered at Companies House.
International Financial Reporting Standards
There have been no new accounting standards or interpretations
in the first half of 2023 which materially impact the Group's
reported performance or financial position.
Daniel Quint
Chief Financial Officer
1 August 2023
Consolidated statement of comprehensive income
For the six months ended 30 June 2023
Six-month Six-month
period period Year ended
ended 30 ended 30 31 December
June 2023 June 2022 2022
Unaudited Unaudited Audited
Note GBP'm GBP'm GBP'm
----------- ----------- -------------
Continuing operations
--------------------------------------------------- ------ ----------- ----------- -------------
Revenue 2 434.1 438.0 940.5
Cost of sales (396.1) (398.1) (857.3)
--------------------------------------------------- ------ ----------- ----------- -------------
Gross profit 38.0 39.9 83.2
--------------------------------------------------- ------ ----------- ----------- -------------
Administrative expenses (40.5) (39.7) (78.6)
--------------------------------------------------- ------ ----------- ----------- -------------
Operating (loss)/profit (2.5) 0.2 4.6
--------------------------------------------------- ------ ----------- ----------- -------------
Underlying operating profit before
non-underlying administrative expenses 2.4 4.0 12.0
Administrative expenses (non-underlying) 3 (4.9) (3.8) (7.4)
--------------------------------------------------- ------ ----------- ----------- -------------
Operating (loss)/profit 2 (2.5) 0.2 4.6
--------------------------------------------------- ------ ----------- ----------- -------------
Finance income 0.7 - 0.7
Finance charges (2.5) (1.2) (3.4)
--------------------------------------------------- ------ ----------- ----------- -------------
(Loss)/profit for the period before
taxation (4.3) (1.0) 1.9
Tax credit 1.1 0.3 1.9
(Loss)/profit for the period (3.2) (0.7) 3.8
Items that will not be reclassified to
the statement of comprehensive income
- actuarial gains and losses, net of
deferred tax 0.1 1.3 0.4
Items that may be reclassified to the
statement of comprehensive income:
* cumulative translation adjustment - - 0.1
* movement on cash flow hedge, net of deferred tax 0.3 1.0 1.5
----------------------------------------------------------- ----------- ----------- -------------
Total comprehensive income for
the period (2.8) 1.6 5.8
--------------------------------------------------- ------ ----------- ----------- -------------
Earnings per ordinary share 4
Continuing operations: Basic and
diluted (2.0)p (0.4)p 2.3p
--------------------------------------------------- ------ ----------- ----------- -------------
The accompanying notes form an integral part of these unaudited
condensed interim Group financial statements .
Consolidated statement of changes in equity
For the six months ended 30 June 2023
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 2023 16.6 (4.5) 111.8 0.6 1.7 (54.5) 71.7
-------------------------- --------- ----------- --------- ------------ ------------ ---------- --------
Issue of shares to
management - 0.3 - - - (0.3) -
Long term incentive
scheme - - - 0.2 - - 0.2
Save As You Earn (SAYE)
share scheme - - - 0.1 - - 0.1
Own shares purchased - (0.5) - - - - (0.5)
Transactions with
owners - (0.2) - 0.3 - (0.3) (0.2)
-------------------------- --------- ----------- --------- ------------ ------------ ---------- --------
Loss for the period - - - - - (3.2) (3.2)
Cash flow hedge reserve,
net of taxation - - - - 0.3 - 0.3
Actuarial gain, net
of taxation - - - - - 0.1 0.1
-------------------------- --------- ----------- --------- ------------ ------------ ---------- --------
Total comprehensive
income for the period,
net of tax - - - - 0.3 (3.1) (2.8)
-------------------------- --------- ----------- --------- ------------ ------------ ---------- --------
At 30 June 2023 16.6 (4.7) 111.8 0.9 2.0 (57.9) 68.7
-------------------------- --------- ----------- --------- ------------ ------------ ---------- --------
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
-------------------------- --------- ----------- --------- ------------ ------------ ---------- --------
Issue of shares to
management - 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
-------------------------- --------- ----------- --------- ------------ ------------ ---------- --------
The accompanying notes form an integral part of these unaudited
condensed interim Group financial statements.
Consolidated statement of changes in equity
For the year ended 31 December 2022
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 2022 16.6 (4.8) 111.8 0.3 0.2 (58.2) 65.9
------------------------------ --------- -------- --------- --------- --------- ---------- --------
Save As You Earn ("SAYE")
share scheme - cash-settled - - - 0.3 - - 0.3
Issues of shares to
management - 0.7 - - - (0.6) 0.1
Own shares purchased - (0.4) - - - - (0.4)
------------------------------ --------- -------- --------- --------- --------- ---------- --------
Transactions with owners - 0.3 - 0.3 - (0.6) -
------------------------------ --------- -------- --------- --------- --------- ---------- --------
Profit for the year - - - - - 3.8 3.8
Cash flow hedge reserve - - - - 1.5 - 1.5
Actuarial gain on pension
scheme, net of taxation - - - - - 0.4 0.4
Cumulative translation
adjustments - - - - - 0.1 0.1
------------------------------ --------- -------- --------- --------- --------- ---------- --------
Total comprehensive
income for the year,
net of tax - - - - 1.5 4.3 5.8
------------------------------ --------- -------- --------- --------- --------- ---------- --------
At 31 December 2022 16.6 (4.5) 111.8 0.6 1.7 (54.5) 71.7
------------------------------ --------- -------- --------- --------- --------- ---------- --------
The accompanying notes form an integral part of these unaudited
condensed interim Group financial statements.
Consolidated statement of financial position
As at 30 June 2023
30 June 31 December
2023 30 June 2022 2022
Unaudited Unaudited Audited
Note GBP'm GBP'm GBP'm
---------------------------------- ----- ----------- ------------- ------------
Assets
Non-current assets
Goodwill 5 59.6 59.6 59.6
Other intangible assets 6.6 12.3 9.4
Property, plant and equipment 6.7 7.8 7.6
Retirement benefit net asset 0.3 1.4 0.2
Deferred tax asset 5.4 3.6 5.0
---------------------------------- ----- ----------- ------------- ------------
78.6 84.7 81.8
---------------------------------- ----- ----------- ------------- ------------
Current assets
Trade and other receivables 6 122.7 116.8 119.8
Current tax asset 0.3 - 0.3
Derivative financial instruments 7 3.1 1.8 3.0
Cash and cash equivalents 8 12.2 12.6 31.0
---------------------------------- ----- ----------- ------------- ------------
138.3 131.2 154.1
---------------------------------- ----- ----------- ------------- ------------
Total assets 216.9 215.9 235.9
---------------------------------- ----- ----------- ------------- ------------
Liabilities
Current
Trade and other payables 9 123.5 114.7 130.3
Borrowings 10 15.7 22.3 26.0
Provisions 11 3.1 1.0 0.9
Lease liabilities 10 1.5 1.3 1.5
---------------------------------- ----- ----------- ------------- ------------
143.8 139.3 158.7
---------------------------------- ----- ----------- ------------- ------------
Non-current
Provisions 11 0.5 1.6 0.6
Lease liabilities 10 3.0 2.9 3.4
Deferred tax liabilities 0.9 2.0 1.5
---------------------------------- ----- ----------- ------------- ------------
4.4 6.5 5.5
---------------------------------- ----- ----------- ------------- ------------
Total liabilities 148.2 145.8 164.2
---------------------------------- ----- ----------- ------------- ------------
Equity
Share capital 12 16.6 16.6 16.6
Own shares (4.7) (4.1) (4.5)
Share premium 111.8 111.8 111.8
Share-based payment reserve 0.9 0.5 0.6
Cash flow hedge reserve 2.0 1.2 1.7
Profit and loss account (57.9) (55.9) (54.5)
---------------------------------- ----- ----------- ------------- ------------
Total equity 68.7 70.1 71.7
---------------------------------- ----- ----------- ------------- ------------
Total equity and liabilities 216.9 215.9 235.9
---------------------------------- ----- ----------- ------------- ------------
The accompanying notes form an integral part of these unaudited
condensed interim Group financial statements.
Consolidated statement of cash flows
For the six months ended 30 June 2023
Six months Six months
ended 30 ended 30 Year ended
June June 31 December
2023 2022 2022
Unaudited Unaudited Audited
Note GBP'm GBP'm GBP'm
Cash flows from operating activities 13 (4.7) (13.6) 5.5
------------------------------------------ ----- ----------- ----------- -------------
Taxation received 0.1 0.6 0.4
------------------------------------------ ----- ----------- ----------- -------------
Net cash outflow from operating
activities (4.6) (13.0) 5.9
------------------------------------------ ----- ----------- ----------- -------------
Cash flows from investing activities
- trading
Purchase of intangible assets -
software (0.8) (1.2) (2.3)
Purchases of property, plant and
equipment (0.2) (0.6) (1.0)
------------------------------------------ ----- ----------- ----------- -------------
Total cash flows arising from investing
activities (1.0) (1.8) (3.3)
------------------------------------------ ----- ----------- ----------- -------------
Total cash flows arising from operating
and investing activities (5.6) (14.8) (2.6)
------------------------------------------ ----- ----------- ----------- -------------
Cash flows from financing activities
Net movements on Receivables Finance
Agreement (10.3) (0.6) 3.1
Finance lease principal repayments (0.9) (0.8) (1.6)
Net interest paid (1.5) (1.0) (2.5)
Own shares purchased (0.5) - (0.4)
Net cash flows from financing activities (13.2) (2.4) (1.4)
------------------------------------------ ----- ----------- ----------- -------------
Net change in cash and cash equivalents (18.8) (17.2) 1.2
------------------------------------------ ----- ----------- ----------- -------------
Cash and cash equivalents at beginning
of period 31.0 29.8 29.8
------------------------------------------ ----- ----------- ----------- -------------
Cash and cash equivalents at end
of period 8 12.2 12.6 31.0
------------------------------------------ ----- ----------- ----------- -------------
The accompanying notes form an integral part of these unaudited
condensed interim Group financial statements .
Notes to the summary financial statements
For the six months ended 30 June 2023
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 2023 (including the comparatives
for the six-month period ended 30 June 2022 and the year ended 31
December 2022) were approved and authorised for issue by the Board
of Directors on 31 July 2023.
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 condensed interim Group
financial statements have been prepared using the accounting
policies as described in the December 2022 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 2022 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 2022, have been prepared in accordance with AIM
Rules for Companies - Part One, Section 18 "Half-yearly
reports".
The unaudited condensed interim Group financial statements
consolidate those of the parent company and all its subsidiaries as
at 30 June 2023. 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 condensed interim Group financial statements have
been prepared on a going concern basis using the significant
accounting policies and measurement bases summarised in the
December 2022 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 unaudited condensed interim Group 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
unaudited condensed interim Group financial statements are
authorised for issue. For this reason, the Directors continue to
adopt the going concern basis in preparing the unaudited condensed
interim Group financial statements .
Notes to the summary financial statements (continued)
For the six months ended 30 June 2023
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 employability 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
2023 Six months ended 30 June 2022
-----------------
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 341.2 54.5 38.4 - 434.1 345.2 55.8 37.0 - 438.0
Cost of sales (317.7) (48.4) (30.0) - (396.1) (320.6) (49.5) (28.0) - (398.1)
----------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
Segment gross
profit 23.5 6.1 8.4 - 38.0 24.6 6.3 9.0 - 39.9
----------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
Administrative
expenses
(underlying) (20.4) (5.0) (6.2) (1.4) (33.0) (20.4) (4.6) (6.4) (1.4) (32.8)
Depreciation
and software
amortisation
(underlying) (1.3) (0.3) (1.0) - (2.6) (1.9) (0.2) (1.0) - (3.1)
----------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
Segment
underlying
operating
profit/(loss)* 1.8 0.8 1.2 (1.4) 2.4 2.3 1.5 1.6 (1.4) 4.0
Amortisation
of intangible
assets arising
on business
combinations (2.5) - (0.1) - (2.6) (3.7) - (0.1) - (3.8)
Skills closure
provisions - - (2.3) - (2.3) - - - - -
----------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
Segment
operating
profit/(loss) (0.6) 0.8 (1.3) (1.4) (2.5) (1.4) 1.5 1.5 (1.4) 0.2
Finance
(costs)/income (2.4) (0.1) - 0.7 (1.8) (1.1) (0.1) - - (1.2)
----------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
(Loss)/profit
for the period
before taxation (3.0) 0.7 (1.3) (0.7) (4.3) (2.5) 1.4 1.5 (1.4) (1.0)
----------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
Tax
credit/(charge) 0.8 (0.2) 0.3 0.2 1.1 0.7 (0.3) (0.4) 0.3 0.3
----------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
Net
(loss)/profit
for the period (2.2) 0.5 (1.0) (0.5) (3.2) (1.8) 1.1 1.1) (1.1) (0.7)
----------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
* Segment underlying operating profit before amortisation of
intangible assets arising on business combinations
Notes to the summary financial statements (continued)
For the six months ended 30 June 2023
2 Segmental reporting (continued)
Six months ended 30 June
2023 Six months ended 30 June 2022
-------------
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 27.8 12.9 37.5 0.4 78.6 32.2 12.0 39.7 0.8 84.7
------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
Total
current
assets 107.2 18.2 9.2 3.7 138.3 96.1 21.8 11.5 1.8 131.2
------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
Total assets 135.0 31.1 46.7 4.1 216.9 128.3 33.8 51.2 2.6 215.9
------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
Total
liabilities 117.9 10.5 19.3 0.5 148.2 114.4 12.5 18.6 0.3 145.8
------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
Capital
expenditure
inc
software 0.6 0.2 0.2 - 1.0 1.0 0.2 0.6 - 1.8
------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
Segment information for the year ended 31 December 2022 is as
follows:
Segment continuing operations Recruitment Recruitment
GB Ireland PeoplePlus Group Costs Total Group
2022 2022 2022 2022 2022
GBP'm GBP'm GBP'm GBP'm GBP'm
-------------------------------------------- ----------- ----------- ---------- ------------- -----------
Sales revenue from external customers 752.0 110.6 77.9 - 940.5
Cost of sales (700.0) (97.7) (59.6) - (857.3)
-------------------------------------------- ----------- ----------- ---------- ------------- -----------
Segment gross profit 52.0 12.9 18.3 - 83.2
-------------------------------------------- ----------- ----------- ---------- ------------- -----------
Administrative expenses (40.5) (9.3) (12.5) (3.3) (65.6)
Depreciation, software & lease
amortisation (3.2) (0.4) (2.0) - (5.6)
-------------------------------------------- ----------- ----------- ---------- ------------- -----------
Segment underlying operating profit/(loss)* 8.3 3.2 3.8 (3.3) 12.0
Amortisation of intangibles arising
on business combinations (5.9) (1.3) (0.2) - (7.4)
-------------------------------------------- ----------- ----------- ---------- ------------- -----------
Segment profit from operations 2.4 1.9 3.6 (3.3) 4.6
Net finance costs (3.1) (0.1) - 0.5 (2.7)
-------------------------------------------- ----------- ----------- ---------- ------------- -----------
Segment loss before taxation (0.7) 1.8 3.6 (2.8) 1.9
Tax credit 1.8 - (0.2) 0.3 1.9
-------------------------------------------- ----------- ----------- ---------- ------------- -----------
Segment loss from continuing operations 1.1 1.8 3.4 (2.5) 3.8
-------------------------------------------- ----------- ----------- ---------- ------------- -----------
Total non-current assets 28.4 12.2 36.2 - 76.8
Total current assets 117.6 19.9 13.3 3.3 154.1
-------------------------------------------- ----------- ----------- ---------- ------------- -----------
Total assets (consolidated) 146.0 32.1 49.5 3.3 230.9
-------------------------------------------- ----------- ----------- ---------- ------------- -----------
Total liabilities (consolidated) 135.1 11.0 17.5 0.6 164.2
-------------------------------------------- ----------- ----------- ---------- ------------- -----------
Capital expenditure inc software 2.0 0.5 0.8 - 3.3
-------------------------------------------- ----------- ----------- ---------- ------------- -----------
* 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 2023 or 2022.
Notes to the summary financial statements (continued)
For the six months ended 30 June 2023
3 Non-underlying expenses
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2022 2022
2023 Unaudited Unaudited Audited
Administrative expenses GBP'm GBP'm GBP'm
---------------------------------------- ----------------- -------------- -------------
Amortisation of intangible assets
arising on business combinations
(licences and customer contracts) 2.6 3.8 7.4
Skills business closure provision 2.3 - -
Tax credit on non-underlying costs (1.1) (1.0) (1.8)
----------------------------------------- ----------------- -------------- -------------
Post taxation effect on non-underlying
costs 3.8 2.8 5.6
----------------------------------------- ----------------- -------------- -------------
Closure of the Skills business within PeoplePlus
During the period a substantial contract operated by the Skills
business within the PeoplePlus division concluded and was not
renewed. Further contracts are due to conclude during the second
half of 2023. The Board has decided that in view of the recent
unsatisfactory performance and the impending completion of a number
of contracts, that the Skills business should be closed. The
business has obligations to provide classroom learning up to August
2023 and consequently is classed as a continuing operation for this
reporting period.
The results of the Skills business for the period ended 30 June
2023 are set out below.
Proforma Statement of Comprehensive Income - Skills business
Six months Six months Year ended
ended ended 30 31 December
30 June June 2022 2022
2023 Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
-------------------------- ----------------- ----------- -------------
Revenue 4.1 5.6 12.2
Cost of sales (4.2) (5.2) (11.2)
--------------------------- ----------------- ----------- -------------
Gross (loss)/profit (0.1) 0.4 1.0
Administrative expenses* (0.5) (0.5) (1.0)
Operating loss (0.6) (0.1) -
--------------------------- ----------------- ----------- -------------
*Administrative expenses comprise an allocation of central
overheads, relating principally to administrative staff, of the
PeoplePlus Division, which has been consistently applied to each
period, to represent the element of costs utilised by the Skills
business.
Notes to the summary financial statements (continued)
For the six months ended 30 June 2023
3 Non-underlying expenses (continued)
Closure costs from, staff redundancies, property exits and other
commitments, will be incurred after completion of contractual
obligations in August 2023. Furthermore, the contracts remaining to
be completed after 30 June 2023 are considered onerous. The
decision to close the business had been formally noted by the Board
in May 2023 and provisions for closure and the onerous contracts
have been recognised at 30 June 2023, as set out below.
Six months
ended
30 June
2023 Unaudited
Skills business closure provisions GBP'm
------------------------------------ -----------------
Onerous contracts 1.0
Closure costs 1.3
------------------------------------- -----------------
Total 2.3
------------------------------------- -----------------
Additional information is provided below to show the Group's
performance for the period, with comparatives, that exclude the
Skills business as if it had been discontinued with effect from 30
June 2023.
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2022 2022
2023 Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
--------------------------------------- ----------------- -------------- -------------
Revenue 430.0 432.4 928.3
Cost of sales (391.9) (392.9) (846.1)
---------------------------------------- ----------------- -------------- -------------
Gross profit 38.1 39.5 82.2
Administrative expenses (37.7) (39.2) (77.6)
Underlying operating profit* 0.4 0.3 4.6
Add: Amortisation of intangible
assets 2.6 3.8 7.4
---------------------------------------- ----------------- -------------- -------------
Underlying operating profit
before non-underlying administrative
expenses 3.0 4.1 12.0
---------------------------------------- ----------------- -------------- -------------
*Underlying operating profit before Skills onerous contract
(GBP1.0m) and exit costs provisions (GBP1.3m) and amortisation of
intangible assets arising on business combinations (GBP2.6m)
Notes to the summary financial statements (continued)
For the six months ended 30 June 2023
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" (3,316,391 shares at 30 June 2023, 2,014,511 shares at
31 December 2022 and 964,511 shares at 30 June 2022). 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 under the SAYE scheme.
Details of the earnings and weighted average number of shares
used in the calculations are set out below:
Basic Diluted Diluted
Basic six months Basic six months six months Diluted
six months ended Year ended ended ended Year ended
ended 30 30 June 31 December 30 June 30 June 31 December
June 2023 2022 2022 2023 2022 2022
Unaudited Unaudited Audited Unaudited Unaudited Audited
------------------------ ------------ ------------ ------------- ------------ ------------- -------------
(Loss)/profit from
continuing operations
(GBP'm) (3.2) (0.7) 3.8 (3.2) (0.7) 3.8
Weighted daily average
number of shares 162,451,337 164,716,595 163,753,217 163,961,869 168,682,279 165,163,334
(Loss)/profit per
share from continuing
operations (p) (2.0)p (0.4)p 2.3p (2.0)p (0.4)p 2.3p
------------------------ ------------ ------------ ------------- ------------ ------------- -------------
Underlying earnings
from continuing
operations (GBP'm)* 0.5 2.1 9.4 0.5 2.1 9.4
------------------------ ------------ ------------ ------------- ------------ ------------- -------------
Underlying earnings
per share (p)* 0.3p 1.3p 5.7p 0.3p 1.2p 5.7p
------------------------ ------------ ------------ ------------- ------------ ------------- -------------
*Underlying earnings after adjusting for Skills onerous contract
and exit costs provisions and amortisation of intangible assets
arising on business combinations.
Dividends
No interim dividend for 2023 is proposed (2022: GBPnil).
Notes to the summary financial statements (continued)
For the six months ended 30 June 2023
5 Goodwill
The breakdown of Goodwill carrying value by division is listed
below:
30 June 30 June 31 December
2023 2022 2022
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
--------------------- ----------- ----------- ------------
59.6 59.6 59.6
--------------------- ----------- ----------- ------------
6 Trade and other receivables
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
----------------------------- ----------- ----------- ------------
Trade and other receivables 97.0 102.7 109.2
Accrued income 25.7 14.1 10.6
----------------------------- ----------- ----------- ------------
122.7 116.8 119.8
----------------------------- ----------- ----------- ------------
7 Derivative financial instruments
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
---------------------------------- ----------- ----------- ------------
Fair value hedge - interest rate
cap 3.1 1.8 3.0
---------------------------------- ----------- ----------- ------------
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 expires on 13 October 2024, 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.
Notes to the summary financial statements (continued)
For the six months ended 30 June 2023
8 Cash and cash equivalents
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
--------------------------- ----------- ----------- ------------
Cash and cash equivalents 12.2 12.6 31.0
--------------------------- ----------- ----------- ------------
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*
------------------------------ ------ --------- --------
Royal Bank of Scotland plc A+ A+ A1*
------------------------------ ------ --------- --------
The Group's banking facility headroom is as follows:
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
----------------------------------------- ----------- ----------- ------------
Cash and cash equivalents 12.2 12.6 31.0
Available receivables finance agreement
balance 46.5 34.1 44.9
----------------------------------------- ----------- ----------- ------------
Banking facility headroom 58.7 46.7 75.9
----------------------------------------- ----------- ----------- ------------
9 Trade and other payables
30 June
30 June 2022 31 December
2023 Unaudited 2022
Unaudited Restated Audited
GBP'm GBP'm GBP'm
------------------------------------ ------------ ----------- ------------
Trade and other payables 25.3 30.0 30.5
Accruals and deferred income 53.8 40.9 52.6
Other taxation and social security 44.4 43.8 47.2
123.5 114.7 130.3
------------------------------------ ------------ ----------- ------------
Notes to the summary financial statements (continued)
For the six months ended 30 June 2023
10 Borrowings
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
--------------------------------------- ----------- ----------- ------------
Current liabilities:
Receivables finance agreement (15.7) (22.3) (26.0)
Lease liabilities (1.5) (1.3) (1.5)
(17.2) (23.6) (27.5)
--------------------------------------- ----------- ----------- ------------
Non-current liabilities:
Lease liabilities (3.0) (2.9) (3.4)
--------------------------------------- ----------- ----------- ------------
(3.0) (2.9) (3.4)
--------------------------------------- ----------- ----------- ------------
Total borrowings (20.2) (26.5) (30.9)
--------------------------------------- ----------- ----------- ------------
Less: Cash and cash equivalents
(note 8) 12.2 12.6 31.0
--------------------------------------- ----------- ----------- ------------
Net cash/(debt) as disclosed in
consolidated statement of cash flows
(note 13) (8.0) (13.9) 0.1
--------------------------------------- ----------- ----------- ------------
Credit facilities
The Group uses a Receivables Financing Agreement ("RFA") to fund
its day-to-day working capital requirements.
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 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
2023, the value of invoices funded under these arrangements was
GBP41.3m (2022: GBP39.1m).
Notes to the summary financial statements (continued)
For the six months ended 30 June 2023
11 Provisions
Group Skills 2023 2022
Staff Property business Employee Group Group
costs costs closure claim Total Total
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
------------------------------------------------ ----- -------- -------- -------- ----- -----
At 1 January 2023 0.3 1.0 - 0.2 1.5 2.8
------------------------------------------------ ----- -------- -------- -------- ----- -----
Amounts charged to the income statement - 0.1 2.3 0.1 2.5 0.5
Amounts utilised - (0.1) - (0.3) (0.4) (0.2)
Unused amounts reversed to the income statement - - - - - (0.5)
------------------------------------------------ ----- -------- -------- -------- ----- -----
At 30 June 2023 0.3 1.0 2.3 - 3.6 2.6
------------------------------------------------ ----- -------- -------- -------- ----- -----
Due within one year (current) 0.3 0.5 2.3 - 3.1 1.3
Due after more than one year (non-current) - 0.5 - 0.5 1.3
------------------------------------------------ ----- -------- -------- -------- ----- -----
At 30 June 2023 0.3 1.0 2.3 - 3.6 2.6
================================================ ===== ======== ======== ======== ===== =====
The Group makes provision for staff and property costs relating
to reorganisation programmes. The staff costs relate to
redundancies and the property costs relate to lease
dilapidations.
Provision is made for "wear and tear" dilapidation costs at the
Group's leased properties. Where possible, dilapidations provisions
are determined based on an independent valuation of the estimated
total cost payable on expiry of the respective leases. The timing
and value of the costs are uncertain due to potential changes to
exit dates and the final liability which may be subject to
negotiation with the landlord.
As described in note 3, provision has been made for the exit
from the Skills training business within the PeoplePlus division.
Closure costs arise from, staff redundancies, property exits and
other commitments, which will be incurred after completion of
contractual obligations in August 2023. An onerous contracts
provision has been recognised for the cost of completing contracts
after 30 June 2023.
The Company has no provisions (2022: GBPnil).
12 Share capital
31 December
30 June 30 June 2022 2022
2023 Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
------------------------------------ ---------------- ------------- ------------
Allotted and issued
165,767,728 ordinary 10p shares 16.6 16.6 16.6
------------------------------------ ---------------- ------------- ------------
30 June 31 December
2023 30 June 2022 2022
'000 '000 '000
------------------------------------ ---------------- ------------- ------------
Shares issued and fully paid
At beginning and end of the 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 3,316,391 shares held at 30 June
2023 (2022: 964,511 shares) by the Employee Benefit Trust where the
right to dividends has been waived.
Notes to the summary financial statements (continued)
For the six months ended 30 June 2023
13 Cash flows from operating activities
Reconciliation of loss before taxation to net cash inflow from
operating activities
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
------------------------------------------------ ----------- ----------- -------------
(Loss)/profit before taxation from continuing
operations (4.3) (1.0) 1.9
Adjustments for:
Finance income (0.7) - (0.7)
Finance costs 2.5 1.2 3.4
Depreciation and amortisation - underlying 2.6 3.1 5.5
Depreciation and amortisation - non-underlying 2.6 3.8 7.4
Loss on disposal of property, plant and
equipment - - 0.1
Cash generated before changes in working
capital and share options 2.7 7.1 17.6
------------------------------------------------ ----------- ----------- -------------
Change in trade and other receivables (3.2) (0.8) (3.8)
Change in trade, other payables and provisions (4.5) (20.1) (8.6)
Cash (utilised in)/generated from operations (5.0) (13.8) 5.2
------------------------------------------------ ----------- ----------- -------------
Employee equity and cash settled share
options 0.3 0.2 0.3
------------------------------------------------ ----------- ----------- -------------
Net cash (outflow)/inflow from operating
activities (4.7) (13.6) 5.5
------------------------------------------------ ----------- ----------- -------------
Movement in net debt
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
-------------------------------------------- ----------- ----------- -------------
Net cash at beginning of the period 0.1 2.3 2.3
Lease payments, additions, disposals
and interest 0.4 0.4 (0.3)
Net repayments to/(drawn from) Receivables
Finance Agreement 10.3 0.6 (3.1)
Change in cash and cash equivalents (18.8) (17.2) 1.2
-------------------------------------------- ----------- ----------- -------------
Net (debt)/cash at end of period (8.0) (13.9) 0.1
-------------------------------------------- ----------- ----------- -------------
Represented by:
Cash and cash equivalents (note 8) 12.2 12.6 31.0
Current borrowings (note 10) (15.7) (22.3) (26.0)
Lease liabilities (note 10) (4.5) (4.2) (4.9)
Net (debt)/cash at end of period (8.0) (13.9) 0.1
-------------------------------------------- ----------- ----------- -------------
Notes to the summary financial statements (continued)
For the six months ended 30 June 2023
14 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 2023, 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 2022 payable in Ordinary Shares.
Accordingly, the Employee Benefit Trust ("EBT") transferred to
Albert Ellis and Daniel Quint 72,884 and 35,837 Ordinary Shares
respectively.
The directors holding office at 30 June 2023 have the following
beneficial interests in the Company's share capital:
Number
----------------- ----------
Albert Ellis 645,291
Daniel Quint 484,914
Tom Spain 1,300,000
Catherine Lynch 10,000
2,440,205
----------------- ----------
Albert Ellis and Daniel Quint have interests in 2,389,141 and
1,890,057 respectively for options for ordinary shares, awarded
under the Company's 2021 long term incentive plan in July 2021, May
2022, and February 2023 and SAYE scheme 2022. The other directors
have no current interests in share options or the SAYE scheme.
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END
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