TIDMSTAF
RNS Number : 6247L
Staffline Group PLC
14 September 2021
14 September 2021
STAFFLINE GROUP PLC
('Staffline', the 'Company' or the 'Group')
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2021
Staffline Group PLC, the recruitment and training group,
announces its unaudited results for the six months ended 30 June
2021.
Continuing activities Six months
Six months to 30 June
to 30 June 2020
2021 Unaudited
Unaudited Restated*** Change
Revenue GBP450.7m GBP430.3m +4.7%
------------- -------------- ----------
Gross profit GBP39.0m GBP34.2m +14.0%
------------- -------------- ----------
Underlying operating profit* GBP4.6m GBP0.1m +4,500%
------------- -------------- ----------
+231.6
Underlying EBITDA (pre-IFRS 16)** GBP6.3m GBP1.9m %
------------- -------------- ----------
Finance costs **** GBP1.4m GBP2.1m -33.3%
------------- -------------- ----------
(Loss) before tax GBP(0.8)m GBP(46.8)m +98.3%
------------- -------------- ----------
Net cash/(debt) (pre-IFRS 16) GBP20.9m GBP(36.2)m +GBP57.1m
------------- -------------- ----------
* Operating profit before amortisation of intangible assets
arising on business combinations and, in the six months ended 30
June 2020, goodwill impairments and other non-underlying charges
(see note 3).
** EBITDA after operating lease payments and before, in the six
months ended 30 June 2020, non-underlying charges (see note 3).
***Comparative results for the period ended 30 June 2020 have
been restated to exclude the activities that were discontinued in
2020.
**** Excludes non-underlying refinancing costs relating to 2020
only.
Key financial highlights
-- Gross profit of GBP39.0m up 14% (H1 2020: GBP34.2m)
-- Gross profit margin increased to 8.7% (H1 2020: 7.9%)
-- Underlying operating profit increased to GBP4.6m (H1 2020: GBP0.1m)
-- Gross profit conversion to operating profit increased to 11.8% (H1 2020: 0.3%)
-- Finance costs reduced by 33.3% to GBP1.4m (H1 2020: GBP2.1m)
-- Strengthened balance sheet, with net cash of GBP20.9m (H1 2020: net debt GBP(36.2)m)
-- The net cash/(debt) improvement reflects the net proceeds of
GBP46.4m from the equity raise, further improvements in trading
cash flow and cash collection, including c.GBP15m of timing
differences
-- New receivables facility of GBP90.0m over a period of 4.5 years
Key operational highlights:
-- Group underlying overhead cost base broadly flat versus last
year at GBP34.4m and down 12.9% versus H1 2019 (H1 2020: GBP34.1m;
H1 2019: GBP39.5m)
-- Staff productivity improvements
o Recruitment: Gross profit per fee earner up 21.4% on H1 2020
to GBP37.5k (H1 2020: GBP30.9k)
o Training: Revenue per employee up 30.6% on H1 2020 to GBP30.7k
(H1 2020: GBP23.5k)
-- Strong six months of trading across the Group
o All three divisions delivered operating profit growth for the
six months to 30 June 2021
o Exposure to resilient growth sectors such as food, logistics
and e-commerce underpinned performance
-- Blue-collar market share gains with strong customer retention rates and new business wins
-- PeoplePlus secured three Restart sub-contracts with prime
providers worth up to a maximum of GBP90m revenue over four years
dependent on performance
Current trading and outlook
-- The Group continues to benefit from increased levels of
client activity across the UK and Ireland. However, the Board
remains mindful of the economic uncertainty and risks to the
economy represented by the pandemic and sector-specific labour
shortages
-- T he Group is trading in line with the revised, increased
market expectations (further to the July trading update) for the
full year 2021
-- The Board remains confident in the Group's prospects after a
period of transformation and restructuring to streamline operations
in 2020, followed by the recent refinancing which materially
strengthened the platform for future growth
Albert Ellis, Chief Executive Officer of Staffline,
commented:
"I am delighted to report such a strong performance in the first
six months of the year from Staffline, during which, we've seen a
return to growth in revenue, gross profit, operating margins and
underlying operating profit.
"I am extremely proud of the operational turnaround delivered by
our leadership teams and employees who have transformed the
business, building on the Group's well-established reputation for
unrivalled excellence in service delivery.
"Throughout the Covid-19 pandemic we have continued to focus on
the protection and wellbeing of our staff and customers and will
continue to do so despite the easing of lockdowns in the UK and
Republic of Ireland.
"Looking ahead, whilst we expect to see continued
sector-specific labour shortages, we believe Staffline is well
placed to capitalise on its position as the clear leader in many
markets. In addition, our recent refinancing has transformed the
Company's balance sheet providing a strong platform for growth in
the medium term. The Group is trading in line with the revised,
increased market expectations for the full year 2021."
Retail investor webcast
Management will be hosting a presentation for retail investors
in relation to the Company's interim results on Wednesday, 15
September 2021 at 1:00 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 to meet
Staffline via:
https://www.investormeetcompany.com/staffline-group-plc/register-investor
Investors who have already registered and have added to meet the
Company will be automatically invited.
Forward looking statements
Certain statements in this announcement are forward looking
statements. By their nature, forward looking statements involve a
number of risks, uncertainties or assumptions that could cause
actual results or events to di er materially from those expressed
or implied by the forward-looking statements. These risks,
uncertainties or assumptions could adversely a ect the outcome and
nancial e ects of the plans and events described herein. Forward
looking statements contained in this announcement regarding past
trends or activities should not be taken as representation that
such trends or activities will continue in the future. Readers
should not place undue reliance on forward looking statements,
which apply only as of the date of this announcement.
Important notice
This announcement does not constitute or form part of any o er
or invitation to sell, or any solicitation of any o er to purchase
any shares in the Company, nor shall it, or any part of it, or the
fact of its distribution, form the basis of, or be relied on in
connection with any contract or commitment or investment decisions
relating thereto, nor does it constitute a recommendation regarding
the shares of the Company. Past performance cannot be relied upon
as a guide to future performance.
Enquiries:
Staffline Group plc via Vigo Consulting
www.stafflinegroupplc.co.uk
Albert Ellis, Chief Executive Officer
Daniel Quint, Chief Financial Officer
Liberum (Nominated Adviser and Broker)
www.liberum.com
Richard Lindley / William Hall / Christopher
Whitaker 020 3100 2222
Vigo Consulting (Financial PR) 020 7390 0230
www.vigocon sulting .com staffline@vigoconsulting.com
Jeremy Garcia / Antonia Pollock
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.37,000 staff per day on average to around 450 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 20 industries, 10 branch
locations, 15 onsite customer locations, supplying c.5,000 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
The positive trading momentum generated in H2 2020 continued in
the first half of 2021, with significant improvement in revenue,
gross profit and underlying operating profit delivered during the
period.
Revenue for H1 2021 increased 4.7% to GBP450.7m (H1 2020:
GBP430.3m), with gross profit increasing by 14.0% to GBP39.0m (H1
2020: GBP34.2m) and underlying operating profit increasing
significantly to GBP4.6m (H1 2020: GBP0.1m).
This positive trend not only reflects the transformation and
restructuring implemented during 2020, which resulted in a much
lower cost base, but also the growth in market share across
Staffline's three core divisions, as existing customers extended
their arrangements and new customers were added.
Central to this, was our placing, subscription and open offer,
which raised net proceeds of GBP46.4m alongside a refinancing of
the Group's working capital facilities, transforming the Company's
balance sheet and providing a strong platform for growth in the
medium term.
Market
The labour market continues to adjust to the broader macro
environment which has been shaped by the pandemic. Sectors
providing essential services such as food distribution have seen
unprecedented demand particularly during lockdown. Home delivery
and logistics networks have benefitted from the shift to on-line
and meal delivery services have experienced significant growth.
This has created increased demand for HGV drivers at a time when
the supply of labour has contracted.
The reopening of the economy has increased demand for labour in
many sectors and has driven up the number of people in work.
According to the latest Office for National Statistics Labour
Market Data, the unemployment rate dropped to 4.7% in the three
months to June, down 0.2 percentage points on the previous quarter.
Data for July showed the number of job vacancies passed one million
for the first time on record and online job sites are reporting
record levels of job advertising. The end of the jobs furlough
scheme in September should further help ease the supply
constraints.
Consequently, employers have responded to their recruitment and
resourcing challenges by engaging with the Group's management on a
more strategic basis recognising the benefit of Staffline's scale,
flexibility, geographic coverage and training capabilities.
Strategy
Given the changes we have seen in the labour market, we are
confident of our sustainable growth strategy which rests on four
key drivers:
-- Capitalise on market leadership - position and scale in contingent workforce management
-- Broaden the portfolio - driving growth in permanent and white-collar recruitment
-- Unlock the potential in training - return PeoplePlus to sustainable profit growth
-- Republic of Ireland - grow market share in a highly attractive market
Pleasingly, the Group has made good headway across all of these
areas, and as the broader economy further unlocks, we would
anticipate this progress to accelerate.
Operational review
As our clients respond to the overall impact of the pandemic,
they continue to manage their staff as their employment
requirements continue to shift. Given Staffline's market position,
particularly in many key sectors across the UK and Irish economies,
our ability to both support and evolve our customer offering sits
at the heart of our business.
Recruitment GB
The division performed well throughout H1 2021, driven by the
well documented demand in the food, logistics and e-commerce
sectors, in addition to new business wins providing additional
margin improvement, replacing unattractive legacy contracts. As
expected, worker productivity was exceptionally high during the
lockdown in line with the strong demand.
Against this backdrop, well documented labour shortages have
created headwinds in the Group's market leading "HGV drivers"
recruitment division. The division is working closely with some of
the largest employers in the market to mitigate the effects of the
shortage, and we are confident the market will rebalance in the
longer term through improved pay and increased investment in
training.
Significant progress has been made in the Group's white-collar
brands, with engineering recruiter, Omega and Scottish based
Brightworks both reporting solid year on year gross profit and
operating profit increases as client activity improved,
particularly in permanent recruitment. The Group's recruitment
process outsourcing business, Datum, has also recovered sharply as
demand from its core construction sector increased.
Recruitment Ireland
Staffline Ireland reported an excellent return to profit growth
in the period, supported mainly by a strong performance in Q2 2021,
driven by a bounce back in permanent hiring and also benefitting
from a much lower cost base despite lower levels of revenue. Good
trading in its core, market leading Northern Ireland business was
supported by a solid result from the Republic of Ireland despite
the severity of the lockdown. Increased permanent recruitment and
management actions to improve temporary margins resulted in gross
margins of 10.1% compared to 9.0% in the comparative 2020 period.
Tight control of the cost base was reflected in a gross profit to
operating profit conversion rate of 21.4% in H1 2021 (H1 2020:
19.6%).
PeoplePlus
PeoplePlus has been transformed over the last 12 months and is
now fully focused on employability and skills as the UK labour
market continues to respond to the lasting impact on skills
availability as a result of the pandemic. The business reported a
strong bounce back to profit from a loss in the prior year
particularly in employability, despite the social distancing
restrictions imposed on skills centres. In June 2021, the business
announced it had secured three contracts with prime Restart
suppliers representing a c. GBP90m revenue opportunity over four
years subject to performance, commencing in the second half of this
year.
Board appointment
On 28 July 2021, the Board welcomed Tom Spain on his appointment
as a Non-Executive Director of the Company. Mr Spain is the Board
representative of Henry Spain Investment Services Limited,
currently the largest shareholder in the Company.
Outlook
Trading for the first half exceeded the Board's expectations and
momentum is expected to continue into the second half. The Group is
trading in line with the revised, increased market expectations
(further to the July trading update) for the full year 2021. In
addition, our recent refinancing has transformed the Company's
balance sheet providing a strong platform for growth in the medium
term.
The Board remains mindful of the economic uncertainty and risks
to the economy represented by the pandemic and sector-specific
labour shortages. However, we believe Staffline is well placed to
capitalise on its position as the clear leader in many markets.
Albert Ellis
Chief Executive Officer
13 September 2021
Financial Review
Introduction
Trading in the first half of 2021 showed continuing momentum
from last year, supported by the gradual lifting of some of the
lockdown restrictions. In June 2021, an equity raise and the
refinancing of the Group's debt facilities were successfully
completed to ensure that the business has a stronger balance sheet
to position it for future growth.
Trading performance
Total revenue for H1 2021 increased by 4.7% to GBP450.7m (H1
2020 restated: GBP430.3m).
The Group comprises three divisions: Recruitment GB, flexible
blue-collar recruitment; Recruitment Ireland, generalist
recruitment; and PeoplePlus, an adult skills and training
provider.
Six months ended 30 June Six months ended 30 June
2021 2020
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 Restated Restated Restated Restated Restated
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ------------ ------------ ----------- ---------- ----------- ------------ ------------ ------------ ---------- ----------
Revenue 355.0 55.2 40.5 - 450.7 332.8 61.9 35.6 - 430.3
Period-on-period
% change 6.7% (10.8)% 13.8% - 4.7% (18.1)% (18.0)% (1.9)% - (17.0)%
Gross profit 24.0 5.6 9.4 - 39.0 21.6 5.6 7.0 - 34.2
Period-on-period
% change 11.1% - 34.3% - 14.0% (23.7)% (30.9)% (28.6)% - (26.0)%
Gross profit
% 6.8% 10.1% 23.2% - 8.7% 6.5% 9.0% 19.7% - 7.9%
Underlying
operating profit
/(loss) 3.2 1.2 1.9 (1.7) 4.6 1.3 1.1 (1.1) (1.2) 0.1
Underlying
operating profit
as a % of
revenue 0.9% 2.2% 4.7% - 1.0% 0.4% 1.8% (3.1%) - -
Underlying
operating profit
as a % of gross
profit 13.3% 21.4% 20.2% - 11.8% 6.0% 19.6% (15.7)% - 0.3%
Pre-IFRS16
net cash/(debt) - - - - 20.9 - - - - (36.2)
Post-IFRS16
net - - - - 16.2 - - - - (43.1)
Hours worked
by temporary
workers 26.1m 3.6m - - 29.7m 27.4m 3.9m - - 31.3m
------------------ ------------ ------------ ----------- ---------- ----------- ------------ ------------ ------------ ---------- ----------
Revenues in the Recruitment GB division increased by GBP22.2m
(6.7%) to GBP355.0m. The increase is as a result of new contract
wins, notwithstanding the strategic exit from a low margin, large
customer, as well as organic growth from existing customers
following the easing of some lockdown restrictions.
Revenues in the Recruitment Ireland division decreased by
GBP(6.7)m (10.8%) to GBP55.2m, reflecting a broader exposure to
white collar and permanent recruitment, which were harder hit than
the temporary recruitment market by lockdown restrictions.
PeoplePlus revenues increased by GBP4.9m (13.8%) to GBP40.5m,
primarily as a result of an excellent performance from its
'employability' division and higher levels of activity in 2021
compared to the initial lockdown in 2020.
The sales mix between the operating divisions was unchanged
compared with H1 2020, with the recruitment businesses accounting
for 91% of revenue (2020: restated 92%).
Overall, gross profit increased by 14.0% to GBP39.0m (H1 2020:
GBP34.2m) with Group gross profit margin (to which all three
divisions contributed) increasing to 8.7% (H1 2020: 7.9%).
The gross margin for Recruitment GB increased year-on-year, from
6.5% in H1 2020 to 6.8% in H1 2021, despite the increase in the
National Living Wage in April 2020, from GBP8.21 to GBP8.72 per
hour for over 25s. This does not impact absolute gross profit but
does negatively impact the gross margin percentage achieved. This
dynamic will continue with the increase in April 2021 to GBP8.91
per hour for over 25s. As the lockdown restrictions have eased, the
contract mix has changed reducing the proportion of activity with
the supermarkets, which are traditionally lower margin
contracts.
The gross margin for Recruitment Ireland increased from 9.0% in
H1 2020 to 10.1% in H1 2020, close to the pre-pandemic level, which
was achieved by very tight margin management.
The gross margin for PeoplePlus increased from 19.7% in H1 2020
to 23.2% in H1 2021 due to the return to normal contractual pricing
following a period in which some Government contracts were
supported by cost plus recovery.
Reflecting the solid performance by all three divisions in the
period as well as the continued overhead cost disciplines initiated
in 2020, underlying operating profit was GBP4.6m (H1 2020 restated:
GBP0.1m). Total non-underlying charges before tax were GBP(4.0)m
(H1 2020 restated: GBP(44.8)m) as described below. Finance charges
were GBP(1.4)m (H1 2020 restated, underlying: GBP(2.1)m). These
movements generated a reported loss before taxation of GBP(0.8)m in
H1 2021 (H1 2020 restated: GBP(46.8)m).
The reported loss after tax on continuing activities for H1 2021
was GBP(0.6)m (H1 2020 restated: GBP(45.9)m).
Non-underlying administrative charges
Non-underlying charges before tax have decreased to GBP4.0m in
H1 2021 (H1 2020 restated: GBP44.8m), as shown below.
Non-underlying charges Six-months Six-months
ended 30 ended 30
June June
Unaudited Unaudited
2021 2020
GBPm GBPm
-------------------------------------------------------- ---------- ----------
Reorganisation, rationalisation & restructuring costs - 1.9
Transaction costs - business acquisitions and strategic
options - 0.6
Finance costs - Refinancing arrangement fees and exit
fees - 2.1
Amortisation of intangible assets arising on business
combinations 4.0 4.8
Goodwill impairment - 35.3
Share-based payment charges - 0.1
-------------------------------------------------------- ---------- ----------
Total non-underlying charges before tax 4.0 44.8
-------------------------------------------------------- ---------- ----------
Taxation
There is GBPnil tax charge for the period (H1 2020: GBP0.9m) due
to the use of brought forward tax losses offset against chargeable
profits.
Statement of financial position, cash generation and
financing
The Group's total equity increased by GBP46.5m over the six
months from 31 December 2020, following the equity fundraise in
June 2021.
The movement in net debt is shown in the table below. The
movement in working capital includes an increase in trade and other
receivables and accrued income of GBP11.9m. As part of the new
receivables financing agreement ("RFA"), GBP17.8m of previously
non-recourse financed receivables were brought onto the balance
sheet and included in the RFA. This increase was offset by further
improvement in trade receivables collection.
Movement in net debt H1 2021 H1 2020
Unaudited Unaudited
GBPm GBPm
-------------------------------------------------------- ---------- ----------
Opening net debt (pre IFRS16) (8.8) (59.5)
Cash generated before change in working capital
and share options (note 11) 7.2 0.1
Movements in working capital (24.2) 30.4
Net taxation and interest received/(paid) 4.5 (4.9)
Capital investment (net of disposals) (1.9) (1.1)
Net proceeds from the issue of share capital (note
10) 46.4 -
Payments from restricted funds for NMW 0.9 9.2
Settlement of NMW liabilities from restricted
funds (0.5) (9.2)
Principal repayments of lease liabilities (0.8) (1.7)
Debt transaction costs (1.9) -
Employee equity settled share options - 0.1
Impact of foreign exchange loss on operating activities - 0.4
-------------------------------------------------------- ---------- ----------
Closing net cash/(debt) (pre-IFRS16) 20.9 (36.2)
IFRS16 lease liabilities (4.7) (6.9)
-------------------------------------------------------- ---------- ----------
Closing net cash/(debt) (post-IFRS16) 16.2 (43.1)
-------------------------------------------------------- ---------- ----------
The Group ended H1 2021 with pre-IFRS16 net cash of GBP20.9m,
compared to net debt of GBP(36.2)m at H1 2020. Post-IFRS16 net cash
was GBP16.2m at H1 2021 compared to net debt of GBP(43.1)m at H1
2020. This turnaround is principally due to the net proceeds of the
equity raise of GBP46.4m in June 2021, c.GBP15m of timing benefits
which are expected to unwind and further improvements in trading
cash flow and cash collection efficiency, which have generated an
additional c.GBP10m. The equity and debt refinancing have
transformed the Company's balance sheet and repositioned the Group
for the medium term.
The table below reconciles underlying EBITDA (e arnings before
interest, taxation, depreciation and amortisation) , to operating
loss.
Reconciliation of operating loss to EBITDA H1 2020
H1 2021 Unaudited
Unaudited Restated
GBPm GBPm
------------------------------------------- ---------- ----------
Operating profit/(loss) 0.6 (42.6)
Non-underlying charges 4.0 42.7
------------------------------------------- ---------- ----------
Underlying operating profit 4.6 0.1
------------------------------------------- ---------- ----------
Depreciation 2.6 3.5
------------------------------------------- ---------- ----------
Underlying EBITDA 7.2 3.6
------------------------------------------- ---------- ----------
Lease rental payments (0.9) (1.7)
------------------------------------------- ---------- ----------
Underlying EBITDA (pre-IFRS16) 6.3 1.9
------------------------------------------- ---------- ----------
Note: Operating profit before amortisation of intangible assets
arising on business combinations and, in the six months ended 30
June 2020, goodwill impairments and other non-underlying
charges.
The Group's headroom relative to available committed banking
facilities as at 30 June 2021 was GBP87.8m (30 June 2020: GBP38.4m)
as set out below:
H1 2021 H1 2020
Unaudited Unaudited
GBPm GBPm
-------------------------------------------------- ---------- ----------
Cash at bank 29.2 32.3
Available receivables finance facility unutilised 58.6 6.1
-------------------------------------------------- ---------- ----------
Banking facility headroom 87.8 38.4
-------------------------------------------------- ---------- ----------
Refinancing: New Credit Facilities June 2021
On 10 June 2021, the Group entered into a new Receivables
Financing Agreement ("RFA") to replace the existing Group funding
arrangements. The RFA contained certain requirements to be met
before completion, the most significant of which was that the
Company raise new equity capital of at least GBP40.0m. This
condition was satisfied and the RFA became effective on 10 June
2021.
The key terms of the new facility, which is provided jointly by
RBS Invoice Finance Limited, ABN AMRO Asset Based Finance N.V., UK
Branch and Leumi ABL Limited, are set out below:
I. Maximum receivables financing facility of GBP90.0m over a
four-and-a-half-year term, with a one-year extension option;
II. An Accordion option of up to an additional GBP15.0m, subject to lender approval;
III. Security on all of the assets and undertakings of the
Company and certain subsidiary undertakings;
IV. Interest accruing at 2.75% over SONIA, with a margin ratchet
downward to 2.00%, dependent upon the Group's leverage multiple
reducing to 3.00x;
V. A non-utilisation fee of 0.35% of the margin;
VI. Maximum net debt (averaged over a rolling three months) to
EBITDA leverage covenant commencing at 5.95x followed by a gradual
reduction to 4.0x by October 2023; and
VII. Minimum interest cover covenant of 2.25x the last twelve
months EBITDA to finance charges.
The new facility enabled the cancellation of the existing
facilities, comprising a Revolving Credit Facility ("RCF") of
GBP20.0m and a Receivables Financing Facility ("RFF") of GBP68.2m,
and also the non-recourse Receivables Purchase Facility of
GBP25.0m.
The Group also has available a number of separate, non-recourse,
Customer Financing arrangements whereby specific customer invoices
are settled in advance of their normal settlement date. At 30 June
2021, the value of invoices funded under these arrangements was
GBP39.1m (H1 2020: GBP23.1m).
Dividend policy
No dividends will be declared by the Company for the 2021
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 2021 which materially impact the Group's
reported performance or financial position.
Daniel Quint
Chief Financial Officer
13 September 2021
Consolidated statement of comprehensive income
For the six months ended 30 June 2021
Six-month
Six-month period
period ended 30
ended 30 June 2020 Year ended
June 2021 Unaudited 31 December
Total Unaudited Restated 2020 Audited
Note GBP'm GBP'm GBP'm
----------------- ----------- --------------
Continuing operations
-------------------------------------------- ----- ----------------- ----------- --------------
Revenue 2 450.7 430.3 927.6
Cost of sales (411.7) (396.1) (853.0)
-------------------------------------------- ----- ----------------- ----------- --------------
Gross profit 39.0 34.2 74.6
-------------------------------------------- ----- ----------------- ----------- --------------
Administrative expenses (38.4) (76.8) (118.9)
-------------------------------------------- ----- ----------------- ----------- --------------
Operating profit/(loss) 0.6 (42.6) (44.3)
-------------------------------------------- ----- ----------------- ----------- --------------
Underlying operating profit before
non-underlying administrative expenses 4.6 0.1 4.8
Administrative expenses (non-underlying) 3 (4.0) (42.7) (49.1)
-------------------------------------------- ----- ----------------- ----------- --------------
Operating profit/(loss) 2 0.6 (42.6) (44.3)
-------------------------------------------- ----- ----------------- ----------- --------------
Finance costs (1.4) (4.2) (7.3)
-------------------------------------------- ----- ----------------- ----------- --------------
Loss for the period before taxation (0.8) (46.8) (51.6)
Tax credit 0.2 0.9 3.1
Loss from continuing operations (0.6) (45.9) (48.5)
Loss from discontinued operations - (0.9) (4.2)
--------------------------------------------------- ----------------- ----------- --------------
Loss for the period (0.6) (46.8) (52.7)
Items that will not be reclassified to
the statement of comprehensive income
- actuarial gains and losses, net of
deferred tax 0.7 (0.6) (0.8)
Items that may be reclassified to the
statement of comprehensive income - cumulative
translation adjustment - 0.4 (0.1)
--------------------------------------------------- ----------------- ----------- --------------
Total comprehensive income/(loss)
for the period 0.1 (47.0) (53.6)
-------------------------------------------- ----- ----------------- ----------- --------------
Earnings per ordinary share 4
Continuing operations:
Basic (0.0p) (67.7p) (71.5p)
-------------------------------------------- ----- ----------------- ----------- --------------
Diluted (0.0p) (67.7p) (71.5p)
-------------------------------------------- ----- ----------------- ----------- --------------
Comparative results for the period ended 30 June 2020 have been
restated for the effect of the activities that were discontinued in
2020.
The accompanying notes form an integral part of these financial
statements.
Consolidated statement of changes in equity
For the six months ended 30 June 2021
Unaudited Share-based Profit
Share Own shares Share payment and loss Total
capital JSOP premium reserve account equity
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
-------------------------- --------- ----------- --------- ------------ ---------- --------
At 1 January 2021 6.9 (4.8) 75.1 0.6 (55.6) 22.2
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 (55.5) 68.7
-------------------------- --------- ----------- --------- ------------ ---------- --------
Consolidated statement of changes in equity
For the six months ended 30 June 2020
Share-based Profit
Share Own shares Share payment and loss Total
Unaudited capital JSOP premium reserve account equity
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
--------------------------- --------- ----------- --------- ------------ ---------- --------
At 1 January 2020 6.9 (4.8) 75.1 0.5 (1.9) 75.8
Save As you Earn ("SAYE")
share scheme - equity
settled - - - 0.1 - 0.1
--------------------------- --------- ----------- --------- ------------ ---------- --------
Transactions with owners - - - 0.1 - 0.1
--------------------------- --------- ----------- --------- ------------ ---------- --------
Loss for the period - - - - (46.8) (46.8)
Actuarial losses - - - - (0.6) (0.6)
Cumulative translation
adjustments - - - - 0.4 0.4
--------------------------- --------- ----------- --------- ------------ ---------- --------
Total comprehensive loss
for the period, net of
tax - - - - (47.0) (47.0)
--------------------------- --------- ----------- --------- ------------ ---------- --------
At 30 June 2020 6.9 (4.8) 75.1 0.6 (48.9) 28.9
--------------------------- --------- ----------- --------- ------------ ---------- --------
The accompanying notes form an integral part of these financial
statements.
Consolidated statement of changes in equity
For the year ended 31 December 2020
Audited Share-
Own based Profit
Share shares Share payment and loss Total
capital JSOP premium reserve account equity
GBPm GBPm GBPm GBPm GBPm GBPm
At 1 January 2019 2.8 (4.8) 41.2 0.3 43.0 82.5
-------------------------------- --------- -------- --------- --------- ---------- --------
Issue of share capital 4.1 - 36.9 - - 41.0
Costs of issue of share
capital - - (3.0) - - (3.0)
Save As You Earn ("SAYE")
share scheme - equity-settled - - - 0.2 (0.2) -
-------------------------------- --------- -------- --------- --------- ---------- --------
Transactions with owners 4.1 - 33.9 0.2 (0.2) 38.0
-------------------------------- --------- -------- --------- --------- ---------- --------
Loss for the year - - - - (44.0) (44.0)
Actuarial loss, net
of taxation - - - - (0.7) (0.7)
-------------------------------- --------- -------- --------- --------- ---------- --------
Total comprehensive
loss for the year, net
of tax - - - - (44.7) (44.7)
-------------------------------- --------- -------- --------- --------- ---------- --------
At 31 December 2019 6.9 (4.8) 75.1 0.5 (1.9) 75.8
-------------------------------- --------- -------- --------- --------- ---------- --------
Save As You Earn ("SAYE")
share scheme - equity-settled - - - 0.1 (0.1) -
-------------------------------- --------- -------- --------- --------- ---------- --------
Transactions with owners - - - 0.1 (0.1) -
-------------------------------- --------- -------- --------- --------- ---------- --------
Loss for the year - - - - (52.7) (52.7)
Actuarial loss, net
of taxation - - - - (0.8) (0.8)
Cumulative translation
adjustments - - - - (0.1) (0.1)
-------------------------------- --------- -------- --------- --------- ---------- --------
Total comprehensive
loss for the year, net
of tax - - - - (53.6) (53.6)
-------------------------------- --------- -------- --------- --------- ---------- --------
At 31 December 2020 6.9 (4.8) 75.1 0.6 (55.6) 22.2
-------------------------------- --------- -------- --------- --------- ---------- --------
The accompanying notes form an integral part of these financial
statements.
Consolidated statement of financial position
As at 30 June 2021
31 December
30 June 2021 30 June 2020 2020
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 20.4 28.9 24.3
Property, plant and equipment 8.6 12.6 9.6
Deferred tax asset 3.7 1.9 4.4
-------------------------------- ----- ------------- ------------- ------------
92.3 103.0 97.9
-------------------------------- ----- ------------- ------------- ------------
Current assets
Trade and other receivables
(due after more than one year
GBPnil, 2020: GBP0.6m) 6 118.1 123.3 105.1
Current tax asset - 6.0 1.7
Cash and cash equivalents 7 29.2 32.3 24.5
Restricted cash 7 - 3.5 0.9
-------------------------------- ----- ------------- ------------- ------------
147.3 165.1 132.2
-------------------------------- ----- ------------- ------------- ------------
Total assets 239.6 268.1 230.1
-------------------------------- ----- ------------- ------------- ------------
Liabilities
Current
Trade and other payables 8 151.3 150.7 153.3
Borrowings 9 8.3 38.5 13.3
Other liabilities - 1.3 -
Provisions 1.5 5.1 3.8
Lease liabilities 9 1.6 2.3 1.6
-------------------------------- ----- ------------- ------------- ------------
162.7 197.9 172.0
-------------------------------- ----- ------------- ------------- ------------
Non-current
Borrowings 9 - 30.0 20.0
Other liabilities 0.3 0.4 7.3
Provisions 2.0 2.1 1.2
Lease liabilities 9 3.1 4.6 3.9
Deferred tax liabilities 2.8 4.2 3.5
-------------------------------- ----- ------------- ------------- ------------
8.2 41.3 35.9
-------------------------------- ----- ------------- ------------- ------------
Total liabilities 170.9 239.2 207.9
-------------------------------- ----- ------------- ------------- ------------
Equity
Share capital 10 16.6 6.9 6.9
Own shares (4.8) (4.8) (4.8)
Share premium 111.8 75.1 75.1
Share-based payment reserve 0.6 0.6 0.6
Profit and loss account (55.5) (48.9) (55.6)
-------------------------------- ----- ------------- ------------- ------------
Total equity 68.7 28.9 22.2
-------------------------------- ----- ------------- ------------- ------------
Total equity and liabilities 239.6 268.1 230.1
-------------------------------- ----- ------------- ------------- ------------
The accompanying notes form an integral part of these financial
statements.
Consolidated statement of cash flows
For the six months ended 30 June 2021
Six months
Six months ended 30 Year
ended 30 June ended 31
June 2020 December
2021 Unaudited 2020
Unaudited Restated Audited
Note GBP'm GBP'm GBP'm
Cash flows from operating activities 11 (17.4) 31.0 65.8
-------------------------------------------- ----- ----------- ----------- ----------
Taxation received/(paid) 5.9 (0.7) (0.5)
-------------------------------------------- ----- ----------- ----------- ----------
Net cash (outflow)/inflow from operating
activities (11.5) 30.3 65.3
-------------------------------------------- ----- ----------- ----------- ----------
Cash flows from investing activities
- trading
Purchase of intangible assets - software - (0.5) (1.3)
Sale of property, plant and equipment - - 0.2
Purchases of property, plant and equipment (1.9) (0.6) (1.3)
Cash flows from investing activities
- acquisitions
Acquisition of businesses - deferred
consideration for prior year acquisitions - - (0.3)
-------------------------------------------- ----- ----------- ----------- ----------
Total cash flows arising from investing
activities (1.9) (1.1) (2.7)
-------------------------------------------- ----- ----------- ----------- ----------
Total cash flows arising from operating
and investing activities (13.4) 29.2 62.6
-------------------------------------------- ----- ----------- ----------- ----------
Cash flows from financing activities:
New loans - 38.5 43.0
Reduction in Receivables Finance Facility (4.6) - (29.7)
Debt transaction costs (1.9) - -
Loan repayments 9 (20.0) (48.1) (58.1)
Finance lease principal repayments (0.8) (1.7) (3.4)
Interest paid (1.4) (4.2) (8.5)
Payment from restricted fund 0.9 9.2 11.8
Settlement of NMW liabilities from
restricted funds (0.5) (9.2) (11.8)
Net proceeds from the issue of share
capital 10 46.4 - -
-------------------------------------------- ----- ----------- ----------- ----------
Net cash flows from/(used in) financing
activities 18.1 (15.5) (56.7)
-------------------------------------------- ----- ----------- ----------- ----------
Net change in cash and cash equivalents 4.7 13.7 5.9
-------------------------------------------- ----- ----------- ----------- ----------
Cash and cash equivalents at beginning
of period 24.5 18.6 18.6
-------------------------------------------- ----- ----------- ----------- ----------
Cash and cash equivalents at end of
period 7 29.2 32.3 24.5
-------------------------------------------- ----- ----------- ----------- ----------
The accompanying notes form an integral part of these financial
statements.
Notes to the summary financial statements
For the six months ended 30 June 2021
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 2021 (including the comparatives
for the six-month period ended 30 June 2020 and the year ended 31
December 2020) were approved and authorised for issue by the Board
of Directors on 13 September 2021.
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 2020 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 2020 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 2020, 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 2021.
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 2020 audited year-end
Annual Report, and in accordance with International Financial
Reporting Standards (IFRS) as adopted by the EU and with the
Companies Act 2006, as applicable to companies reporting under
IFRS. The financial statements are prepared under the historical
cost convention except for contingent consideration and cash
settled share options which are measured at fair value. The
consolidated financial statements are presented in sterling, which
is also the functional currency of the parent company.
Going concern
T he Directors have formed a judgement, at the time of approving
the financial statements, that there is a reasonable expectation
that the Group has adequate resources to continue in operational
existence and meet its liabilities as they fall due over the
assessment period. The Directors have not identified any material
uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Group's ability
to continue as a going concern for a period of at least 18 months
from when the financial statements are authorised for issue. For
this reason, the Directors continue to adopt the going concern
basis in preparing the financial statements.
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
2021 Six months ended 30 June 2020
----------------
Segment
continuing Total
operations Recruitment Recruitment Group Total Recruitment Recruitment PeoplePlus Group Group
GB Ireland PeoplePlus costs Group GB Ireland Unaudited costs Unaudited
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Restated** Unaudited Restated**
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
---------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- ------------
Revenue from
external
customers 355.0 55.2 40.5 - 450.7 332.8 61.9 35.6 - 430.3
Cost of sales (331.0) (49.6) (31.1) - (411.7) (311.2) (56.3) (28.6) - (396.1)
---------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- ------------
Segment gross
profit 24.0 5.6 9.4 - 39.0 21.6 5.6 7.0 - 34.2
---------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- ------------
Administrative
expenses
(underlying) (19.5) (4.2) (6.4) (1.7) (31.8) (18.7) (4.1) (6.6) (1.2) (30.6)
Depreciation
and software
amortisation
(underlying) (1.3) (0.2) (1.1) - (2.6) (1.6) (0.4) (1.5) - (3.5)
---------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- ------------
Segment
underlying
operating
profit/(loss)* 3.2 1.2 1.9 (1.7) 4.6 1.3 1.1 (1.1) (1.2) 0.1
---------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- ------------
Share-based
payment
charge - - - - - - - (0.1) - (0.1)
Amortisation
of intangible
assets arising
on business
combinations (3.9) - (0.1) - (4.0) (4.7) - (0.1) - (4.8)
Reorganisation
costs - - - - - (0.3) (0.1) (1.2) (0.3) (1.9)
Strategic
options - - - - - - - - (0.6) (0.6)
Goodwill
impairment - - - - - (18.8) - (16.5) - (35.3)
---------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- ------------
Segment
operating
profit/(loss) (0.7) 1.2 1.8 (1.7) 0.6 (22.5) 1.0 (19.0) (2.1) (42.6)
Refinancing
costs
-
non-underlying - - - - - - - - (2.1) (2.1)
Finance costs (0.8) (0.2) - (0.4) (1.4) (0.6) - - (1.5) (2.1)
---------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- ------------
(Loss)/profit
for the period
before
taxation (1.5) 1.0 1.8 (2.1) (0.8) (23.1) 1.0 (19.0) (5.7) (46.8)
---------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- ------------
Tax credit 0.4 (0.2) - - 0.2 0.7 - 0.2 - 0.9
---------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- ------------
Net
(loss)/profit
for the period (1.1) 0.8 1.8 (2.1) (0.6) (22.4) 1.0 (18.8) (5.7) (45.9)
---------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- ------------
* Segment underlying operating profit before amortisation of
intangible assets arising on business combinations, reorganisation
costs, other non-underlying costs and the non-cash charge/credit
for share-based payment costs
** P rior year results have been restated to exclude
Apprenticeships from People Plus
Six months ended 30 June 2021 Six months ended 30 June 2020
-------------
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 42.4 11.3 38.6 - 92.3 47.2 15.8 40.0 - 103.0
------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
Total
current
assets 104.6 22.4 20.3 - 147.3 123.6 21.3 20.2 - 165.1
------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
Total assets 147.0 33.7 58.9 - 239.6 170.8 37.1 60.2 - 268.1
------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
Total
liabilities 133.0 16.7 21.2 - 170.9 161.4 23.0 24.2 30.6 239.2
------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
Capital
expenditure
inc
software 1.3 - 0.6 - 1.9 0.6 - 0.5 - 1.1
------------- ------------ ------------ ----------- ---------- ----------- ------------ ------------ ----------- ---------- -----------
Segment information for the year ended 31 December 2020 is as
follows:
Segment continuing operations Recruitment Recruitment
GB Ireland PeoplePlus Group Costs Total Group
2020 2020 2020 2020 2020
GBPm GBPm GBPm GBPm GBPm
---------------------------------- ----------- ----------- ---------- ------------- -----------
Sales revenue from external
customers 732.1 120.5 75.0 - 927.6
Cost of sales (685.9) (110.0) (57.1) - (853.0)
---------------------------------- ----------- ----------- ---------- ------------- -----------
Segment gross profit 46.2 10.5 17.9 - 74.6
---------------------------------- ----------- ----------- ---------- ------------- -----------
Administrative expenses (38.2) (8.2) (13.4) (2.6) (62.4)
Depreciation, software & lease
amortisation (3.8) (0.7) (2.9) - (7.4)
---------------------------------- ----------- ----------- ---------- ------------- -----------
Segment underlying operating
profit/(loss)* 4.2 1.6 1.6 (2.6) 4.8
---------------------------------- ----------- ----------- ---------- ------------- -----------
Reorganisation costs (2.0) (0.7) - (1.3) (4.0)
Transaction costs - - - (0.5) (0.5)
Amortisation of intangibles
arising on business combinations (7.6) (1.4) (0.2) - (9.2)
Goodwill impairment (18.8) - (16.5) - (35.3)
Share-based payment charge - - (0.1) - (0.1)
---------------------------------- ----------- ----------- ---------- ------------- -----------
Segment loss from operations (24.2) (0.5) (15.2) (4.4) (44.3)
---------------------------------- ----------- ----------- ---------- ------------- -----------
Finance costs (2.5) (0.2) (0.1) (4.5) (7.3)
---------------------------------- ----------- ----------- ---------- ------------- -----------
Segment loss before taxation (26.7) (0.7) (15.3) (8.9) (51.6)
---------------------------------- ----------- ----------- ---------- ------------- -----------
Tax credit 0.6 0.2 0.7 1.6 3.1
---------------------------------- ----------- ----------- ---------- ------------- -----------
Segment loss from continuing
operations (26.1) (0.5) (14.6) (7.3) (48.5)
---------------------------------- ----------- ----------- ---------- ------------- -----------
Total non-current assets 45.9 11.5 40.5 - 97.9
---------------------------------- ----------- ----------- ---------- ------------- -----------
Total current assets 97.9 15.6 18.4 - 131.9
---------------------------------- ----------- ----------- ---------- ------------- -----------
Total assets (consolidated) 143.8 27.1 58.9 - 229.8
---------------------------------- ----------- ----------- ---------- ------------- -----------
Total liabilities (consolidated) 142.3 22.4 21.9 20.6 207.2
---------------------------------- ----------- ----------- ---------- ------------- -----------
Capital expenditure inc software 1.2 0.1 1.3 - 2.6
---------------------------------- ----------- ----------- ---------- ------------- -----------
No customer contributed more than 10% of the Group's revenue in
either of the six months ended 2021 or 2020.
2 Non-underlying expenses
Six months Six months Year ended
ended 30 ended 30 31 December
June 2021 June 2020 2020
Unaudited Unaudited Audited
Administrative expenses GBP'm GBP'm GBP'm
---------------------------------------------- ------------ ----------- -------------
Reorganisation costs - 1.9 4.0
Transaction costs - business acquisitions
and strategic options - 0.6 0.5
Goodwill impairment (see note 5) - 35.3 35.3
Amortisation of intangible assets arising
on business combinations (licences and
customer contracts) 4.0 4.8 9.2
Share-based payment charges - 0.1 0.1
----------------------------------------------- ------------ ----------- -------------
4.0 42.7 49.1
Refinancing costs (included in Finance
costs) - 2.1 3.2
----------------------------------------------- ------------ ----------- -------------
4.0 44.8 52.3
---------------------------------------------- ------------ ----------- -------------
Tax credit on above non-underlying costs (0.8) (0.3) (0.4)
Post taxation effect on above non-underlying
costs 3.2 44.5 51.9
----------------------------------------------- ------------ ----------- -------------
Reorganisation costs related to restructuring of the Recruitment
GB division and represents staff redundancy and property closure
costs.
Transaction costs related to advice in connection with the
Group's strategic options.
Costs incurred for refinancing the Group's bank credit
facilities, comprise arrangement fees and legal and advisory
fees.
Goodwill impairment arose from the revision of the carrying
values of the Recruitment GB and PeoplePlus divisions using
forecasts updated for the effect of the COVID-19 pandemic. Further
details are provided in note 5.
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 in the Joint Share Ownership Plan or
"JSOP" - "own shares" (1,140,000 shares at 30 June 2021, at 30 June
2020 and at 31 December 2020). 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 certain
Directors and share options granted to employees in 2017, 2018 and
2019 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
six- month six- month six-month
Basic six- period Basic period period Diluted
month period ended Year ended ended ended Year ended
ended 30 30 June 31 December 30 June 30 June 31 December
June 2021 2020 2020 2021 2020 2020
Unaudited Unaudited
Unaudited Restated Audited Unaudited Restated Audited
----------------------------- -------------- ------------ ------------- ------------ ------------ -------------
Loss from continuing
operations (GBPm) (0.8) (45.9) (48.5) (0.8) (45.9) (48.5)
Weighted daily average
number of shares 78,926,391 67,790,086 67,790,086 78,926,391 67,790,086 67,790,086
Loss per share from
continuing operations
(p) (0.0)p (67.7)p (71.5)p (0.0)p (67.7)p (71.5)p
----------------------------- -------------- ------------ ------------- ------------ ------------ -------------
Underlying earnings/(loss)
from continuing operations
(GBPm)* 2.4 (2.0) 3.4 2.4 (2.0) 3.4
----------------------------- -------------- ------------ ------------- ------------ ------------ -------------
Underlying earnings/(loss)
per share (p)* 3.0p (3.0)p 5.0p 3.0p (3.0)p 5.0p
----------------------------- -------------- ------------ ------------- ------------ ------------ -------------
*Underlying earnings after adjusting for amortisation of
intangible assets arising on business combinations, business
acquisition costs, exceptional reorganisation costs, the non-cash
charge/credit for share-based payment costs.
Dividends
No interim dividend for 2021 is proposed (2020: GBPnil).
5 Goodwill
The breakdown of Goodwill carrying value by division is listed
below:
30 June 30 June 31 December
2021 2020 2020
Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
--------------------- ----------- ----------- ------------
Recruitment GB 21.4 21.4 21.4
Recruitment Ireland 5.7 5.7 5.7
PeoplePlus 32.5 32.5 32.5
--------------------- ----------- ----------- ------------
Total 59.6 59.6 59.6
--------------------- ----------- ----------- ------------
Impairment - Goodwill
Management consider there to be three cash-generating units
("CGU"), being Recruitment GB, Recruitment Ireland and PeoplePlus,
in line with the reportable segments defined in note 2. These three
cash-generating units have been tested for impairment.
The recoverable amount of goodwill was determined based on a
value-in-use calculation, using forecasts for 2021-23, followed by
an extrapolation of expected cash flows over the next two years
with a 0% growth rate for each cash-generating unit. Pre-tax
discount rates of 13.0% for Recruitment GB, 12.0% for Recruitment
Ireland and 10.8% for PeoplePlus (2020: 11.7% for Recruitment GB,
10.9% for Recruitment Ireland and 11.7% for PeoplePlus) were used
based on the weighted average costs of capital for each operating
segment.
The recoverable amounts of the CGU's, having considered the
higher of value-in-use and fair value less costs to sell, were
GBP78.3m for Recruitment GB, GBP21.3m for Recruitment Ireland and
GBP53.0m for PeoplePlus, all being value-in-use.
The results of the impairment review performed showed headroom
in all cash-generating units and accordingly no impairment needed.
The review also indicated that no provision is required to write
down the carrying value of other intangible assets and tangible
fixed assets (year ended 31 December 2020: GBPnil).
In making the assessment of the recoverability of assets within
each CGU a number of judgements and assumptions were required.
The critical judgement relates to the determination of the
CGU's. Whilst there are individual legal entities within the three
segments, they are operated and reviewed as single units by the
Board of Directors. Each reportable segment has its own management
team and head office. The Group's strategy, historically and going
forward, has been to integrate new acquisitions into the main
trading entities within each reportable segment.
The key estimates in determining the value of each CGU are:
1. The discount rate. In the calculations we have utilised a
pre-tax discount rate of 13.0% (2020: 11.7%) for Recruitment GB,
12.0% (2020: 10.9%) for Recruitment Ireland and 10.8% (2020: 11.7%)
for PeoplePlus and a terminal growth value of 0%. The calculations
highlighted no impairment was needed. A 1% increase in the discount
rates still results in no impairment.
2. The achievability of the forecasted future cash flows. There
is an inherent uncertainty regarding the achievability of
forecasts, as there are macro-economic factors outside of the
Group's control. A sustained underperformance of 10% reduces
headroom to GBP28.9m, GBP8.6m and GBP11.3m for Recruitment GB,
Recruitment Ireland and PeoplePlus respectively. A sustained
underperformance of 43% would be required before any impairment was
necessary to the goodwill.
5 Trade and other receivables
30 June
30 June 2020 31 December
2021 Unaudited 2020
Unaudited Restated Audited
GBP'm GBP'm GBP'm
------------------------------------- ----------- ----------- ------------
Trade and other receivables 105.7 113.2 89.4
Accrued income 12.4 9.5 15.7
118.1 122.7 105.1
Amounts falling due after more than
one year
Other receivable - 0.6 -
------------------------------------- ----------- ----------- ------------
118.1 123.3 105.1
------------------------------------- ----------- ----------- ------------
6 Cash and cash equivalents
30 June 30 June 31 December
2021 2020 2020
Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
--------------------------- ----------- ----------- ------------
Cash and cash equivalents 29.2 32.3 24.5
--------------------------- ----------- ----------- ------------
Restricted cash - 3.5 0.9
--------------------------- ----------- ----------- ------------
Cash and cash equivalents consist of cash on hand and balances
with banks only. At 30 June 2021, GBP29.2m (30 June 2020: GBP32.3m,
31 December 2020: GBP24.5m) of cash on hand and balances with banks
were held by subsidiary undertakings but these balances are
available for use by the Group.
Restricted cash relates to amounts held in escrow to satisfy the
NMW remediation and financial penalties relating to historic HMRC
National Minimum Wage breaches.
Long term credit ratings for the four banks used by the Group
are currently as follows:
Fitch Standard Moody's
& Poors
--------------------------- ------ --------- --------
Lloyds Banking Group plc A+ BBB+ A3
--------------------------- ------ --------- --------
Bank of Ireland Group plc BBB BBB- Baa2
--------------------------- ------ --------- --------
HSBC Holdings plc A+ A- A2
--------------------------- ------ --------- --------
Royal Bank of Scotland plc A+ A A1*/A2
--------------------------- ------ --------- --------
The group's banking facility headroom versus available bank
facilities is as follows:
30 June 30 June 31 December
2021 2020 2020
Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
---------------------------------------- ----------- ----------- ------------
Cash and cash equivalents 29.2 32.3 24.5
Available receivables finance facility
balance 58.6 6.1 54.9
---------------------------------------- ----------- ----------- ------------
Banking Facility Headroom 87.8 38.4 79.4
---------------------------------------- ----------- ----------- ------------
7 Trade and other payables
30 June
30 June 2020 31 December
2021 Unaudited 2020
Unaudited Restated Audited
GBP'm GBP'm GBP'm
------------------------------------ ------------ ----------- ------------
Trade and other payables 8.8 8.6 18.7
Accruals and deferred income 60.1 64.4 54.0
Other taxation and social security 82.4 77.7 80.6
151.3 150.7 153.3
------------------------------------ ------------ ----------- ------------
The Group took advantage of the UK Government scheme for the
deferral of VAT payments between March and June 2020. The total
deferral under the scheme amounted to GBP42.4m after offset of a
Corporation Tax refund due from 2018. Repayment of the balance is
due to be paid over instalments commencing from June 2021. As at 30
June 2021 GBP40.7m (31 December 2020: GBP42.9m) is outstanding.
8 Borrowings
30 June 30 June 31 December
2021 2020 2020
Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
--------------------------------------- ----------- ----------- ------------
Current liabilities:
Receivables finance facility (8.3) (38.5) (13.3)
Lease liabilities (1.6) (2.3) (1.6)
(9.9) (40.8) (14.9)
--------------------------------------- ----------- ----------- ------------
Non-current liabilities:
Revolving credit facility - (30.0) (20.0)
Lease liabilities (3.1) (4.6) (3.9)
--------------------------------------- ----------- ----------- ------------
(3.1) (34.6) (23.9)
--------------------------------------- ----------- ----------- ------------
Total borrowings (13.0) (75.4) (38.8)
--------------------------------------- ----------- ----------- ------------
Less: Cash and cash equivalents
(note 7) 29.2 32.3 24.5
--------------------------------------- ----------- ----------- ------------
Net cash/(debt) as disclosed in
consolidated statement of cash flows
(note 11) 16.2 (43.1) (14.3)
--------------------------------------- ----------- ----------- ------------
Refinancing on 10 June 2021
On 10 June 2021, the Group entered into a new Receivables
Financing Agreement ("RFA") to replace the existing Group funding
arrangements. The RFA contained certain requirements to be met
before completion, the most significant of which was that the
Company raise new equity capital of at least GBP40.0m. This
condition was satisfied and the RFA became effective on 10 June
2021.
The key terms of the new facility, which is provided jointly by
RBS Invoice Finance Limited, ABN AMRO Asset Based Finance N.V., UK
Branch and Leumi ABL 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 new facility enabled the cancellation of the existing
facilities, comprising the RCF of GBP20.0m and the RFF of GBP68.2m
and also the non-recourse Receivables Purchase Facility of
GBP25.0m. The Group is also funded through customer financing
agreements with some of its key customers.
9 Share capital
30 June 31 December
30 June 2020 Unaudited 2020
2021 Unaudited GBP'm Audited
GBP'm GBP'm
--------------------------------- ---------------- ---------------- -------------
Allotted and issued
165,767,728 (June and December
2020: 68,930,486) ordinary 10p
shares 16.6 6.9 6.9
--------------------------------- ---------------- ---------------- -------------
Six months Six months Year ended
ended 30 ended 30 31 December
June 2021 June 2020 2020
'000 '000 '000
--------------------------------- ---------------- ---------------- -------------
Shares issued and fully paid at
the beginning of the period 68,930 68,930 68,930
Shares issued during the period 96,838 - -
--------------------------------- ---------------- ---------------- -------------
Shares issued and fully paid at
end of period 165,768 68,930 68,930
--------------------------------- ---------------- ---------------- -------------
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 1,140,400 shares held at 30 June
2021 (2020: 1,140,400 shares) by the Employee Benefit Trust where
the right to dividends has been waived.
On 21 May 2021 the Group announced a proposed Placing,
Subscription and Open Offer (the "Fundraise"), following
conditional agreement of a new debt refinancing the previous day.
The Fundraise comprised the following elements:
-- A total of 87,249,500 new ordinary shares of 10 pence each
placed at a price of 50 pence per share (the "Issue Price") to
certain existing shareholders and new institutional investors;
-- A total of 750,500 new ordinary shares of 10 pence each to
certain Directors and employees of the Group at the issue price;
and
-- An open offer to existing shareholders for 10 shares for
every 78 ordinary shares held, for a total of 8,837,242 new
ordinary shares of 10 pence each at the issue price.
The total funds raised amounted to GBP48,418,621, from which
issue costs of GBP1,998,950 were paid.
10 Cash flows from operating activities
Reconciliation of loss before taxation to net cash inflow from
operating activities
Six-month
Six-month period ended
period ended 30 June Year ended
30 June 2020 31 December
2021 Unaudited 2020
Unaudited Restated Audited
GBP'm GBP'm GBP'm
------------------------------------------------ -------------- -------------- -------------
Loss before taxation
* Continuing operations (0.8) (46.8) (51.6)
* Discontinued operations - (0.9) (5.0)
------------------------------------------------ -------------- -------------- -------------
(0.8) (47.7) (56.6)
Adjustments for:
Finance costs 1.4 4.2 7.3
Depreciation and amortisation - underlying 2.6 3.5 7.4
Depreciation and amortisation - non-underlying 4.0 4.8 9.2
Loss on disposal of property, plant
and equipment - discontinued operations - - 0.8
Impairment of goodwill - 35.3 35.3
------------------------------------------------ -------------- -------------- -------------
Cash generated before changes in working
capital and share options 7.2 0.1 3.4
------------------------------------------------ -------------- -------------- -------------
Change in trade and other receivables (15.5) 9.1 27.6
Change in trade, other payables and
provisions (9.1) 21.3 34.6
Impact of foreign exchange loss on operating
activities - 0.4 0.1
------------------------------------------------ -------------- -------------- -------------
Cash (utilised)/generated from operations (17.4) 30.9 65.7
------------------------------------------------ -------------- -------------- -------------
Employee equity settled share options - 0.1 0.1
------------------------------------------------ -------------- -------------- -------------
Net cash (outflow)/inflow from operating
activities (17.4) 31.0 65.8
------------------------------------------------ -------------- -------------- -------------
Movement in net debt
Six-month Six-month
period ended period ended Year ended
30 June 30 June 31 December
2021 2020 2020
Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
--------------------------------------------------- -------------- -------------- -------------
Net debt at beginning of the period (14.3) (67.9) (67.9)
Lease payments, additions, disposals
and interest 0.8 1.5 2.9
Loan repayments 20.0 48.1 58.1
New loans, including RFF/RCF drawdowns/repayments 5.0 (38.5) (13.3)
Change in cash and cash equivalents 4.7 13.7 5.9
--------------------------------------------------- -------------- -------------- -------------
Net cash/(debt) at end of period 16.2 (43.1) (14.3)
--------------------------------------------------- -------------- -------------- -------------
Represented by:
Cash and cash equivalents (note 7) 29.2 32.3 24.5
Current borrowings (note 9) (8.3) (38.5) (13.3)
Lease liabilities (note 9) (4.7) (6.9) (5.5)
Non-current borrowings (note 9) - (30.0) (20.0)
--------------------------------------------------- -------------- -------------- -------------
Net cash/(debt) at end of period 16.2 (43.1) (14.3)
--------------------------------------------------- -------------- -------------- -------------
11 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.
The directors holding office at 30 June 2021 have the following
beneficial interests in the Company's share capital:
Number
----------------- --------
Ian Lawson 231,577
Albert Ellis 320,000
Daniel Quint 225,320
Catherine Lynch 10,000
Ian Starkey 50,000
Richard Thomson 42,579
879,476
----------------- --------
Under the terms of the Company's 2021 long term incentive plan
(the "2021 LTIP"), the Board has approved the award of 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"), as set out below.
Director / PDMR Position Options granted
------------------ -------------------------- ----------------
Albert Ellis Chief Executive Officer 573,770
Daniel Quint Chief Financial Officer 450,820
Martina McKenzie MD - Recruitment Ireland 180,328
Simon Rouse MD - PeoplePlus 180,328
Frank Atkinson MD - Recruitment GB 180,328
------------------ -------------------------- ----------------
The vesting of the Options is subject to the satisfaction of the
Company achieving certain financial performance criteria for the
financial year ending 31 December 2023. 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 is above a minimum target. The
Options will vest from 30 June 2024 (the "Vesting Period") and will
be exercisable until 30 June 2031.
Following the grant of the Options, the total number of Ordinary
Shares outstanding under the 2021 LTIP is 1,678,279, representing
1.0% of the Company's issued share capital.
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END
IR BLGDCIXBDGBX
(END) Dow Jones Newswires
September 14, 2021 02:00 ET (06:00 GMT)
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