Staffline, the recruitment and training organisation, announces its unaudited interim results for the six months ended 30 June 2019.
Financial highlights:
Statutory | *Underlying | |||||
2019 | 2018 | Change | 2019 | 2018 | Change | |
£’m | £’m | % | £’m | £’m | % | |
Revenue | 534.6 | 481.0 | +11.1 | 534.6 | 481.0 | +11.1 |
Recruitment | 493.2 | 429.6 | +14.8 | 493.2 | 429.6 | +14.8 |
PeoplePlus | 41.4 | 51.4 | (19.5) | 41.4 | 51.4 | (19.5) |
(Loss)/profit before tax | (7.7) | 10.5 | (173.3) | 1.5 | 15.0 | (90.0) |
Recruitment | (6.7) | 6.3 | (206.3) | 2.4 | 7.9 | (69.6) |
PeoplePlus | (1.0) | 4.2 | (123.8) | (0.9) | 7.1 | (112.7) |
% (Loss)/profit margin | (1.4%) | 2.2% | 0.3% | 3.1% | ||
Recruitment | (1.4%) | 1.5% | 0.5% | 1.8% | ||
PeoplePlus | (2.4%) | 8.2% | (2.2%) | 13.8% | ||
Pence | Pence | % | Pence | Pence | % | |
Diluted earnings per share (“EPS”) | (22.4) | 32.8 | (168.3) | 5.6 | 47.2 | (88.1) |
Interim dividend per share | – | 11.3 | – | 11.3 | ||
£’m | £’m | £’m | £’m | £’m | £’m | |
Net debt** | 89.2 | 36.9 | 52.3 increase | 89.2 | 36.9 | 52.3 increase |
* Underlying profit before tax excludes amortisation charges on intangible assets arising on business combinations, acquisition and exceptional reorganisation costs, exceptional National Minimum Wage (“NMW”) remediation and financial penalties, revised audit scope and increased audit fees and the non-cash charge/credit for share-based payment costs (“SBPC”).
** Net debt including unamortised transaction costs.
The table below reconciles the statutory profit before tax with the underlying profit before tax:
£ million | H1 2019 | FY 2018 | H1 2018 |
Statutory (loss)/profit before tax | (7.7) | (9.6) | 10.5 |
Amortisation of intangible assets arising on business combinations | 6.2 | 11.8 | 4.9 |
NMW remediation and financial penalties | – | 15.1 | – |
Reorganisation costs | 2.2 | 10.6 | – |
Others – see note 3 for further detail | 0.8 | 8.1 | (0.4) |
Underlying profit before tax | 1.5 | 36.0 | 15.0 |
Operational highlights:
Recruitment
· Performance benefitted from the acquisitions made in 2018, which are now fully integrated. However, activity levels were lower in the Food, Logistics and Automotive divisions.
· The Driving division profit performance was ahead of last year, although at a lower margin.
· Gross margin was slightly lower than last year, although the Food division was +0.2% higher with price increases being successfully negotiated as a result of service differentiation and technology improvements.
· New business wins included: Oak Furniture Land and M and M Direct with additional sites won at existing clients: Argos, Laleham Health and Beauty and Go Outdoors.
· As previously flagged, there has been a slowdown in new contract momentum in the current financial year, which the Company largely attributes to the impact of the delay in publication of the 2018 full year results.
· Customer and staff engagement metrics are showing significant improvements compared to a year ago, with Net Promoter Score of 35.7 (June 2018: 23.4), Client Happiness 80.0% (June 2018: 74.9%) and Staff Happiness 80.6% (June 2018: 73.7%).
PeoplePlus
· Successful transition from a Work Programme provider to the UK’s leading skills and training business is now complete.
· Prison Education contracts secured are worth a total of £104.6 million over a four-year period, doubling Staffline’s share of the Prison Education market to c. 20%.
· Contracts worth a total of over £35 million over a 27-month period secured in the latest round of the Education and Skills Funding Agency’s European Social Fund competition.
Outlook
· Trading remains challenging and the Board now expects the Group to deliver full year adjusted operating profit (being profits before interest, tax and non-underlying charges) of approximately £20m. Since the publication of the 2018 Full Year results, weak consumer confidence has weighed on our end customers, particularly in food and retail, which has had a direct impact on demand for Staffline’s services.
· The Board expects net debt to be c2x EBITDA at the year-end benefiting from the proceeds of the equity capital raise and trading in the second half of the year.
· While the Group’s near term trading outlook will remain subject to variances in consumer confidence caused by the unprecedented levels of uncertainty associated with Brexit, the Board remains confident in Staffline’s medium and long-term growth prospects.
Chris Pullen, Chief Executive Officer, commented:
“The first six months of 2019 presented a number of unforeseen challenges for Staffline. The delay in the publication of the 2018 final results created uncertainty, which has been compounded by a challenging trading environment. As a consequence of this and the transformation of PeoplePlus, this year’s result will be more heavily weighted than usual towards the final quarter. Brexit has become the source of unprecedented uncertainty for our end customers and is increasingly weighing on consumer confidence. The performance of our end customers in food and retail has a direct impact on the demand for our services. Despite this, we remain convinced that the challenges the Group is currently facing are short-term and that the business is sufficiently differentiated in its service proposition to return to future growth. We have developed an excellent platform as a result of the strategies we have put in place, and look forward to continuing to further enhance the leading positions we have in each of our core markets.”
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