AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2020
Staffline Group plc, the recruitment and training group, announces its audited Preliminary results for the year ended 31 December 2020.
Refinancing and Current Trading
On 10 June 2021, the Group completed a placing, subscription and open offer, raising gross proceeds of £48.4 million. Additionally, the Group's debt facilities were refinanced. The combined refinancing has transformed Staffline's balance sheet
As previously announced, Q1 2021 trading was ahead of management expectations providing increased confidence in the full year
The employment market experienced a structural change in 2020, with increasing levels of unemployment and demand shifting in favour of essential retail, online and e-commerce sectors, presenting a number of growth opportunities for Staffline
Three-yearcontract extension agreed with Tesco in 2020 and a number of contracts recently secured by PeoplePlus with prime suppliers to deliver the Restart programme
The Group has been right-sized and is now re-focused on its core sectors, which the Board believes Staffline can leverage to continue sustainable growth
2020 Financial Highlights1
Revenue of £927.6m (2019: restated £1,063.0m)
Underlying2 operating profit increased (66%) to £4.8m (2019: restated £2.9m)
Reported operating loss of £(44.3)m (2019: restated £(36.2)m)
Underlying EBITDA (pre-IFRS 16)3 of £9.3m (2019: restated £7.0m)
Reported loss before tax of £(51.6)m (2019: restated £(44.4)m)
Net borrowings4 reduced by £50.7m to £8.8m as at 31 December 2020 (2019: £59.5m) on a pre-IFRS 16 basis
Net borrowings were £14.3m as at 31 December 2020 (2019: £67.9m) on an IFRS 16 basis
The Group benefitted from the HMRC VAT measures that were introduced in March 2020, enabling deferral of its payments for the period March to June 2020, providing a short-term liquidity improvement
The health, safety and wellbeing of our employees, customers and candidates has been our number one priority during the pandemic
The Group responded well to the unprecedented surge in demand for temporary staff in the essential food and other online sectors
Sustained demand throughout 2020 in the logistics and driving segments as a result of the transition to online retail
Conversely, demand from other sectors such as high street retail, automotive and manufacturing was diminished throughout the year
Despite the closure of skills centres in line with the Government's Covid rules, PeoplePlus was able to operate the majority of its services by delivering a mix of services including online and digital learning, but most funding support has been on a cost only basis
The Group experienced a strong Christmas peak with high demand from the Group's food retail customers
Year-endGroup headcount decreased by 18.2% to 2,202 (2019: 2,692) as a result of transformation and restructuring actions implemented during the year to right-size the Group for the future
Disposed of the loss-making Apprenticeships business in PeoplePlus
Comprehensive restructuring programme implemented across 2020 improving reporting and governance across the Group, as well as strengthening the balance sheet, with all three divisions returning to full underlying operating profit in H2
Significantly strengthened the Board, with the appointments of Ian Lawson, Chairman; Albert Ellis, Chief Executive Officer; Daniel Quint, Chief Financial Officer, and Ian Starkey and Catherine Lynch, Non-Executive Directors
Designed and implemented leaner organisational structures, streamlined divisional reporting and focused the Group on its core activities.
Albert Ellis, Chief Executive Officer, commented:
"The Group has successfully come through one of the most challenging periods in its existence. Faced with a global pandemic, our employee well-being and safety was our number one priority, and the Group would not have been able to service such high levels of demand without the support of its permanent and temporary workforce across the UK and Ireland."
"Group net fee income was down 12.7% for the full year but the impact of the transformation and cost reduction actions resulted in a significant improvement in underlying operating profit in the second half compared to the first, enabling the Group to deliver full-year profits ahead of expectations."
"Trading in the first quarter of 2021 was encouraging with operating profit ahead of expectations. Whilst market conditions remain volatile in those sectors which are just opening up following the lockdown, the successful vaccination programme is providing a springboard for a strong recovery in the second half of 2021. This, coupled with the Group's successful equity and debt refinancing in June 2021, that was supported by both new and existing investors, underpins our optimism for the second half of the current financial year and we remain on track to meet current market expectations for the full year."
1 The results shown above relate to continuing operations. The 2019 results are restated to exclude the results of the Apprenticeships business sold in December 2020 and the Poland subsidiaries, which are held for sale.
2Underlying operating profit before goodwill impairment, amortisation of intangible assets arising on business combinations, reorganisation costs and other non-underlying costs.
Earnings before interest, taxation, depreciation and amortisation on a pre-IFRS 16 basis
Net debt excludes transaction costs of £0.3m (2019: nil).
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 diﬀer materially from those expressed or implied by the forward-looking statements. These risks, uncertainties or assumptions could adversely aﬀect the outcome and ﬁnancial eﬀects 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.
This announcement does not constitute or form part of any oﬀer or invitation to sell, or any solicitation of any oﬀer 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.
Market Abuse Regulation
The person who arranged for the release of this announcement on behalf of Staffline Group plc was Ian Lawson, Non-Executive Chairman.
About Staffline - Recruitment, Training and Support
Enabling the Future of Work™
Staffline is the UK's market leading Recruitment and Training group. It has three divisions:
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.
The Recruitment Ireland business is a leading end to end solutions provider operating across twenty industries, ten branch locations, fifteen 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.
Staffline is the leading adult skills and training provider in the UK, delivering adult education, prison education and skills-based employability programmes across the country.
Our focus for 2020 was to restructure the business and ultimately restore resilience and stability to the Group. The many initiatives implemented during the year included strengthening the balance sheet through a refinancing in June 2020, and a focus on cash, alongside improving the Group's operational, financial and governance processes, in order to create a sustainable business for the future.
In the year ended 31 December 2020, the Group generated revenues of £927.6m and an underlying profit before tax of £0.7m.
Strengthening our balance sheet and improving cash generation were high priorities during the year. At the year-end, the Group had pre-IFRS 16 net debt of £8.8m, with average pre-IFRS 16 net debt throughout the year of £38.1m. The Group's net debt position benefited by £46.5m as a result of the Government's VAT deferral scheme.
The global Covid-19 pandemic, which dominated much of 2020, impacted our overall performance to various degrees during the year. This resulted in some areas of the business benefitting markedly, such as temporary recruitment for the food sector, which experienced a significant uptick in demand in Q2 2020. I was extremely proud of the reaction and contribution of both our people and the business to the nationwide #FeedTheNation campaign. This initiative allowed the Group to utilise its significant food retail experience ensuring our customers were sufficiently staffed and stocked during the first national lockdown. In addition, our driving business benefitted from the e-commerce surge, as consumers transitioned to online shopping during the closure of non-essential retail.
By contrast, other sectors within the recruitment businesses, such as manufacturing, high street retail and automotive, were adversely affected during the year with the temporary nationwide shutdown of some of these industries. In addition, PeoplePlus experienced a loss of classroom delivery in the year, however, well- developed business continuity and resilience plans, together with digital operating models, meant that the business could continue to operate the majority of its services.
Where appropriate, we successfully transitioned to working remotely in March 2020 and did so whilst achieving minimal business disruption. The Group also utilised the Government's furlough scheme with certain of its permanent and temporary employees, and has benefitted from the deferral of VAT, as noted above.
The employment market underwent some structural changes in 2020 with unemployment rising significantly. This presents potential opportunities for Staffline, both in recruitment, as enterprises look to appoint temporary workers as opposed to permanent staff, and for PeoplePlus, as skills and training becomes higher priority in a bid to get more individuals back into employment.
Staffline entered 2021 with a business that has much stronger foundations from which to deliver a return to growth. This is already evident in our performance in Q1 2021, which was ahead of management expectations, as we benefit from the structural changes in our business that were implemented last year.
The Group's Board of Directors was transformed during 2020 and our corporate governance processes strengthened significantly. I firmly believe we now have a strong team in place, both at board and senior management level, to lead our business through the next stage of its development.
I was delighted Albert Ellis took up the role of Group Chief Executive in October 2020 having joined Staffline in March 2020 as a Non-Executive Director. Albert has considerable experience within the recruitment sector, and we are already benefitting from his leadership. In addition, Daniel Quint, who joined Staffline as interim CFO in December 2019, became permanent from 1 February 2021. Daniel has been involved in a number of important workstreams since joining the Group and I am very pleased he has taken up the role on a permanent basis.
Furthermore, we appointed two additional non-executive directors who joined the Board on 1 January 2021. Ian Starkey, who has significant audit and financial management experience is now Chair of our Audit Committee, and Catherine Lynch, who is a highly experienced HR director, is now Chair of our Remuneration Committee.
Annual General Meeting
Notice of the 2021 Annual General Meeting of Staffline Group PLC ("AGM") will be published at the same time as the 2020 Annual report. The AGM will be held at the offices of Liberum Capital Limited at Ropemaker Place, Level 12, 25 Ropemaker Street, London, EC2Y 9LY on 28 July 2021 at 9:00 a.m. However, in light of the Covid-19 pandemic and HM Government's measures to restrict travel and public gatherings in force, shareholders (other than the two necessary or to be present in person or by proxy to form a quorum) are not allowed to attend the meeting in person. The Q&A that would have taken place at the AGM will instead be made available on the investors page of the Staffline Group PLC's website.
Summary and Outlook
The health, safety and wellbeing of all of our employees, suppliers and customers remained our top priority throughout 2020 and into 2021. Our people are central to our success, and on behalf of the Board I would like to thank every one of our employees for their exceptional dedication and contribution, during what has been a particularly challenging time for every individual.
Despite the operational and broader macroeconomic challenges across 2020, Staffline delivered a robust performance in the year. Trading across the first three months of 2021 was strong and underpins our confidence in meeting expectations for the full year. Having now strengthened our financial position through the recent fundraising and debt refinancing, we truly believe we have a platform from which to deliver meaningful growth as we are already seeing a stronger pipeline developing across all of our divisions.
The passion and commitment throughout Staffline is very evident. We have a collective understanding of the significant opportunity that exists for our business, and myself and the Board believe we can capitalise on these strengths to deliver value for our stakeholders.
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