REG - Staffline Group PLC - Unaudited Interim Results
02/08/2022 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220802:nRSB5336Ua&default-theme=true
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 MONTHS ENDED 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 to 30 June 2022 Six months to 30 June 2021 Change
Unaudited Unaudited
Revenue £438.0m £450.7m -2.8%
Gross profit £39.9m £39.0m +2.3%
Gross profit margin 9.1% 8.7% +0.4ppts
Underlying operating profit* £4.0m £4.6m -13.0%
Finance costs £1.2m £1.4m -14.3%
Underlying profit before taxation and amortisation £2.8m £3.2m -12.5%
(Loss) before tax £(1.0)m £(0.8)m -25.0%
Net (debt)/cash** £(13.9)m £16.2m -£30.1m
* Underlying operating profit before amortisation of intangible assets arising
on business combinations
** On a Pre-IFRS16 basis, net debt was £(9.7)m at 30 June 2022 (2021: net
cash £20.9m)
· 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 £46.4m now fully repaid, no further
outstanding COVID-19 related liabilities
· Significant headroom of £46.7m (2021: £87.8) in banking facilities.
Key operational highlights:
· Record permanent fees of £3.2m up 113% on 2021 (2021: £1.5m)
· 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
(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 (http://www.stafflinegroupplc.co.uk)
Albert Ellis, Chief Executive Officer
Daniel Quint, Chief Financial Officer
Liberum (Nominated Adviser and Broker) 020 3100 2222
www.liberum.com (http://www.liberum.com)
Richard Lindley / William Hall
Vigo Consulting (Financial PR) 020 7390 0230
www.vigocon (http://www.vigoconsulting.com) sulting staffline@vigoconsulting.com
(http://www.vigoconsulting.com) .com (http://www.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 £438.0m (2021: £450.7m), 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
£39.9m (2021: £39.0m), and gross margin to 9.1% (2021: 8.7%). Underlying
operating profit of £4.0m (2021: £4.6m) 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.£1m 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 £3.2m
(2021: £1.5m), 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
£m £m
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 £345.2m 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 £1.9m (2021: £0.9m) on the back of sustained
strong demand for white collar workers. Investment in headcount of c.£1m 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 £0.3m
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
£m £m
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
£m £m
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 £5m 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 £6.1m, 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 £438.0m (2021: £450.7m) 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 £39.9m (2021: £39.0m)
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 2022 Six months ended 30 June 2021
Recruitment GB Recruitment Ireland PeoplePlus Group costs Recruitment GB Recruitment Ireland Group costs Total
Unaudited Unaudited Unaudited Unaudited Total Unaudited Unaudited PeoplePlus Unaudited Group
Group Unaudited Unaudited
Unaudited
£m £m £m £m £m £m £m £m £m £m
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 June 2022 Six months ended 30 June 2021
Recruitment GB Recruitment Ireland PeoplePlus Recruitment GB Recruitment Ireland Total
Unaudited Unaudited Unaudited Total Unaudited Unaudited PeoplePlus Group
Group Unaudited Unaudited
Unaudited
Hours worked by temporary workers 21.4m 3.4m - 24.8m 26.1m 3.6m - 29.7m
Gross profit per fee earner* £36.6k £56.7k - £39.4k £40.0k £59.9k - £41.7k
Revenue per employee - - £27.9k - - - £30.7k -
*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 £9.8m, (2.8)%, to
£345.2m (2021: £355.0m). 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 £55.8m
(2021: £55.2m), 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 £3.5m (8.6%), to £37.0m (2021: £40.5m),
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 £39.9m
(2021: £39.0m) with Group gross profit margin increasing to 9.1% (2021:
8.7%).
The gross profit for Recruitment GB increased year-on-year, from £24.0m to
£24.6m, 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 £8.72 per hour to £8.91 and in April 2022 to £9.50 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
£1.9m of gross profit, up from £0.9m 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 £5.6m (10.1%) in H1
2021 to £6.3m in H1 2022 (11.3%). Permanent recruitment generated £1.3m of
gross profit compared to £0.6m 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 £1.7m to £2.0m in H1 2022.
The gross profit for PeoplePlus decreased from £9.4m in H1 2021 to £9.0m 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 £4.0m (2021: £4.6m), 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 £3.8m (2021: £4.0m), which
relates to amortisation of the intangible assets arising on business
combinations.
Finance costs and interest rate hedge
Finance costs were £1.2m (2021: £1.4m), which includes £0.2m of non-cash
charges for amortisation of debt re-financing costs and hedging instrument.
The underlying £0.4m 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 £(1.0)m in H1
2022 (2021: £(0.8)m).
Taxation
There is a £0.3m tax credit (2021: £0.2m) for the period due to the movement
on deferred tax balances.
The reported loss after tax on continuing activities for H1 2022 was £(0.7)m
(2021: £(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 £10.0m
of which £5.8m relates to the final repayment of the deferred COVID-19
related VAT. In addition, deferred income balances have decreased by £6.1m
for the repayment of advance receipts in relation to Government contracts. The
net debt position has also benefitted from c.£5m of timing differences.
Movement in net debt H1 2022 H1 2021
Unaudited Unaudited
£m £m
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 £(13.9)m, compared to net cash of
£16.2m at H1 2021. Pre-IFRS16 net debt was £(9.7)m at H1 2022 compared to
net cash of £20.9m 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 £40.6m. After adjusting for this repayment of
deferred VAT, the underlying increase in net cash is £10.5m.
The table below reconciles underlying EBITDA (earnings before interest,
taxation, depreciation and amortisation), to operating loss.
Reconciliation of operating loss to EBITDA H1 2022 H1 2021
Unaudited Unaudited
£m £m
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 £46.7m (30 June 2021: £87.8m) as set out below:
H1 2022 H1 2021
Unaudited Unaudited
£m £m
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 £40.0m. 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 £90.0m over a
four-and-a-half-year term, with a one-year extension option;
II. An Accordion option of up to an additional £15.0m, 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 £20.0m and a Receivables
Financing Facility ("RFF") of £68.2m, and also the non-recourse Receivables
Purchase Facility of £25.0m.
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 £39.1m (2021: £39.1m).
Dividend policy
No dividends will be declared by the Company for the 2022 financial year.
Going concern
The Directors have formed a judgement, at the time of approving the financial
statements, that there is a reasonable expectation that the Group has adequate
resources to continue in operational existence and meet its liabilities as
they fall due over the assessment period. The Directors have not identified
any material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Group's ability to continue
as a going concern for a period of at least eighteen months from when the
financial statements are authorised for issue. For this reason, the Directors
continue to adopt the going concern basis in preparing the financial
statements.
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 period ended 30 June 2022 Six-month period ended 30 June 2021 Unaudited Year ended
Unaudited 31 December 2021
Audited
Note £'m £'m £'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 - 1.3 0.7 0.7
actuarial gains and losses, net of deferred tax
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 capital Own shares Share premium Share-based payment reserve Profit and loss account Total equity
Cash flow hedge reserve
£'m £'m £'m £'m £'m £'m £'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 capital Own shares Share premium Share-based payment reserve Profit and loss account Total equity
£'m £'m £'m £'m £'m £'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 Own Share Share- Cash flow hedge reserve Profit Total
capital shares premium based £'m and loss equity
£'m £'m £'m payment account £'m
reserve £'m
£'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 2022 30 June 2021 Unaudited 31 December 2021
Unaudited Restated Audited
Note £'m £'m £'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 ended 30 June Six months ended 30 June Year
2022 2021 ended 31 December
Unaudited Unaudited 2021
Audited
Note £'m £'m £'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
The Directors have formed a judgement, at the time of approving the financial
statements, that there is a reasonable expectation that the Group has adequate
resources to continue in operational existence and meet its liabilities as
they fall due over the assessment period. The Directors have not identified
any material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Group's ability to continue
as a going concern for a period of at least 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 operations Recruitment GB Recruitment Ireland PeoplePlus Group costs Recruitment GB Recruitment Ireland PeoplePlus Group costs
Unaudited Unaudited Unaudited Unaudited Total Unaudited Unaudited Unaudited Unaudited Total
£'m £'m £'m £'m Group £'m £'m £'m £'m Group
Unaudited Unaudited
£'m £'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 (20.4) (4.6) (6.4) (1.4) (32.8) (19.5) (4.2) (6.4) (1.7) (31.8)
(underlying)
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 operations Recruitment GB Recruitment Ireland PeoplePlus Group costs Recruitment GB Recruitment Ireland PeoplePlus Group costs
Unaudited Unaudited Unaudited Unaudited Total Unaudited Unaudited Unaudited Unaudited Total
£'m £'m £'m £'m Group £'m £'m £'m £'m Group
Unaudited Unaudited
£'m £'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 GB Recruitment Ireland PeoplePlus Total Group
2021 2021 2021 Group Costs 2021
£m £m £m 2021 £m
£m
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
Administrative expenses Six months ended 30 June 2021 Unaudited Year ended 31 December 2021
Six months ended 30 June 2022 Unaudited £'m Audited
£'m £'m
Amortisation of intangible assets arising on business combinations (licences 3.8 4.0 8.0
and customer contracts)
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 six months ended 30 June 2022 Basic six months ended 30 June 2021 Basic Diluted six months ended 30 June 2022 Diluted six months ended 30 June 2021 Diluted
Year ended 31 December 2021 Year ended 31 December 2021
Unaudited Unaudited Audited Unaudited Unaudited Audited
(Loss)/profit from continuing operations (£m) (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 (£m)* 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: £nil).
5 Goodwill
The breakdown of Goodwill carrying value by division is listed
below:
30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
£'m £'m £'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 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
£'m £'m £'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 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
£'m £'m £'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
£39.5m and £62.5m, with an average of £51.9m.
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 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
£'m £'m £'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 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
£'m £'m £'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 2021 31 December 2021
30 June 2022 Unaudited Audited
Unaudited Restated £'m
£'m £'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 £42.4m 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 £5.8m was paid in January 2022.
10 Borrowings
30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
£'m £'m £'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 £40.0m. 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 £90.0m over a
four-and-a-half-year term, with a one-year extension option;
ii) An Accordion option of up to an additional £15.0m, 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 £20.0m and the RFF of £68.2m and also the non-recourse
Receivables Purchase Facility of £25.0m.
The Group is also funded through customer financing agreements with some of
its key customers.
11 Share capital
30 June 2022 Unaudited 30 June 2021 31 December 2021
£'m Unaudited Audited
£'m £'m
Allotted and issued
165,767,728 ordinary 10p shares 16.6 16.6 16.6
Six months ended 30 June 2022 Six months ended 30 June 2021 Year ended 31 December 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 £48,418,621, from which issue costs of
£1,998,950 were paid.
12 Cash flows from operating activities
Reconciliation of loss before taxation to net cash inflow from operating
activities
Six-month period ended 30 June 2022 Six-month period ended 30 June 2021 Year ended
Unaudited Unaudited 31 December 2021
£'m £'m Audited
£'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 ended 30 June 2022 Six months ended 30 June 2021 Year ended
Unaudited Unaudited 31 December 2021
£'m £'m Audited
£'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.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR FFLLBLVLBBBZRecent news on Staffline
See all newsREG - Staffline Group PLC Schroders PLC - Holding(s) in Company
AnnouncementREG - Staffline Group PLC - Launch of Tranche 2 of the Share Buyback
AnnouncementREG - Staffline Group PLC - Result of 2025 Annual General Meeting
AnnouncementREG - Staffline Group PLC - AGM Trading Update
AnnouncementREG - Staffline Group PLC - Director/PDMR Shareholding
Announcement