Good morning! Fairly quiet for results & trading statements today, but here's a review of what has caught my eye.
Staffline (LON:STAF)
These shares had done very well, along with most other recruitment & staffing agencies, on the back of a recovering economy. Staffline also does interesting work on the Government welfare to work scheme, where they are paid by results if they manage to re-train the long-term unemployed and place them in proper jobs.
On the downside, rightly or wrongly STAF has been implicated in several recent exposes of questionable practices by employment agencies, which introduces potential risk, and has certainly hit the share price quite hard since the >600p highs late last year. Also, there is now (rightly) increasing political pressure to raise Minimum Wage, and stop exploitation of unskilled workers (e.g. zero hours contracts) who are currently being paid wages which are too low to give a reasonable standard of living, certainly in the South East anyway where housing is so expensive.
Doing some Googling also throws up examples of other problems - such as workers at a Hovis factory striking because of the company's use of cheap temps from Staffline. So this could be an increasingly difficult area to operate in, as in a recovering economy workers might be more inclined to dig in their heels, rather than be exploited for Minimum Wage?
Staffline's results for the year ended 31 Dec 2013 are released today, and I'm impressed with their prompt reporting schedule - which is indicative of strong financial controls, being able to publish preliminary results just 29 days after the year end. The figures look good - adjusted operating profit up 15.6% to £12.8m, adjusted EPS up 21.6% to 46.1p, total dividends up 23.5% to 10p, and they moved into net cash of £4.9m (2012: net debt of £4.6m).
Therefore at 492p the shares look good value, on a PER of 10.7 and a dividend yield of 2.0%. The result for 2013 seems to be well above analyst expectations, so I would imagine these shares are likely to have a strong day today. Also, the company's financial track record in recent years has been impressive, and the welfare to work side of the business is a gradually increasing stream of income, as the up-front…
