The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as amended by The Market Abuse (Amendment) (EU Exit) Regulations 2019. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

 

 

30 July 2024

 

 

 

 

 

 

STAFFLINE GROUP PLC

('Staffline', the 'Company' or the 'Group')

 

UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2024

 

 

Strong H1 2024 performance across the Group and underlying trading in line with FY 2024 expectations

 

Staffline growing its market leading position underpinned by solid new business pipeline

 

Staffline Group PLC, the recruitment and training group, announces its unaudited interim results for the six months ended 30 June 2024 ("H1 2024").

 

Financial highlights

 

Continuing activities	Six months to 30 June 2024 Unaudited	Six months to 30 June 2023 Unaudited	Change
Revenue	£480.2m	£430.0m	+11.7%
Gross sales value1	£532.4m	£492.3m	+8.1%
Gross profit	£38.2m	£38.1m	+0.3%
Gross margin %	8.0%	8.9%	-0.9 ppts
Underlying operating profit	£2.9m	£3.0m	-3.3%
Gross profit to underlying operating profit conversion %	7.6%	7.9%	-0.3 ppts
Loss before tax	£(12.1)m	£(1.4)m	-£10.7m
Pre-IFRS16 Net debt2	£(9.2)m	£(3.5)m	-£5.7m

Alternative performance measures

1.        Gross sales value represents the fair value of consideration received or receivable for the supply of services, including agency sales, (excluding fees), net of VAT

2.        On a Post-IFRS16 basis, net debt was £(14.5)m at 30 June 2024 (2023: net debt £(8.0)m)

 

Key highlights:

·    Revenue increased 11.7% to £480.2m (H1 2023: £430.0m)

·    Strong trading driven by a 9.2% year-on-year uplift in temporary hours worked in Recruitment GB

·    Permanent recruitment fees in Ireland were up 30%

·    The Group's recruitment businesses are performing well

o  Recruitment GB operating profit up 56%

o  Ireland operating profit up 50%

·    Underlying operating profit at £2.9m (H1 2023: £3.0m) impacted by £1.3m reduction in PeoplePlus underlying operating profit

·    PeoplePlus to be preferred sole supplier to Mitie Care & Custody on HMP Millsike contract, and a two year extension to Restart agreed. However, other pipeline delays caused by political uncertainty, have led to a non-cash impairment charge of £12.9m against goodwill carrying value of PeoplePlus

·    Net debt increased as a result of working capital investment and share buybacks

 

Current trading and outlook

 

•     FY 2024 outlook is supported by momentum in Staffline's market leading blue-collar recruitment division and revenues on new contract wins in the Republic and Northern Ireland

•     The Board expects FY 2024 underlying operating profit to be in line with expectations despite macro-economic and political uncertainty following the change of government

•     Customers' staff attrition has reduced, and the ONS reports that overall vacancies are in decline, however, a tight labour market continues in many sectors and geographic areas.

•     Delays in PeoplePlus' 2025 pipeline have arisen as a result of the UK general election, albeit 2024 remains in line with expectations

•     Interest rates have remained high for longer than expected, and although the Group's strong performance on working capital management continues, there is an impact on net finance charges

•     With a strong balance sheet and continued expected positive underlying trading cashflows, £2.2 million is still set aside for continued share buybacks

•     The Group continues to make good progress across its key strategic priorities, further capitalising on Staffline's market leading position in the blue-collar recruitment market

 

Albert Ellis, Chief Executive Officer of Staffline, commented:

 

"With the widely reported downturn in the recruitment sector, I am delighted to report a highly creditable performance across the first half of 2024.

 

In what has proven to be a persistently challenging macro-economic environment, Staffline's strategy to grow its market share organically, and focus on customer service and delivery has served it well in the first six months of the year. In exiting the Skills market twelve months ago, PeoplePlus has reduced its overheads at a time when political changes in the UK have resulted in the pipeline being pushed back.

 

"My thanks to everybody in the Group who has contributed to this excellent result, and looking forward, I am pleased that we expect underlying trading to be in line with expectations for the full year."

 

Retail investor webcast

Management will be hosting a presentation for investors in relation to the Company's interim results at 8.00am (BST) on Tuesday, 30 July 2024.

 

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

 

Investors who have already registered and have been added to meet the Company will be automatically invited.

For further information, please contact:

 

Staffline Group plc www.stafflinegroupplc.co.uk Albert Ellis, Chief Executive Officer Daniel Quint, Chief Financial Officer	via Vigo Consulting
Panmure Liberum Nominated Adviser and Joint Broker www.liberum.com Richard Lindley / Satbir Kler   Zeus Joint Broker www.zeuscapital.co.uk David Foreman (Investment Banking) Nick Searle (Sales)	020 3100 2222       020 3829 5000
Vigo Consulting Investor Relations & Financial PR www.vigoconsulting.com Jeremy Garcia / Verity Snow	020 7390 0230 staffline@vigoconsulting.com

 

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:

Recruitment GB

The Recruitment GB business is a leading provider of flexible blue-collar workers, supplying c.30,000 staff per day on average from around 400 sites, across a wide range of industries including supermarkets, drinks, driving, food processing, logistics and manufacturing.

 

Recruitment Ireland 

The Recruitment Ireland business is a leading end to end solutions provider operating across multiple 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 public and private sectors throughout the island of Ireland.

 

PeoplePlus Division

The PeoplePlus business is a leading provider of employability, adult training, prison education and skills-based programmes across the country to those who are disadvantaged in society. In addition, it delivers Community Service support as well as social value services and expertise to employers.

 

Chief Executive Officer's review

 

Introduction

 

I am delighted to report a solid overall six months of trading, with recruitment growing strongly, underpinned by ongoing market share gains across our recruitment divisions and PeoplePlus in line with revised expectations.

Revenue grew 11.7% to £480.2m (H1 2023: £430.0m), with gross margin of 8.0% (H1 2023: 8.9%). Gross profit was marginally above last year at £38.2m (2023: £38.1m), with the recruitment businesses growing gross profit by £1.6m, due to increasing blue-collar temporary hours and a stronger than expected performance in permanent fees in Ireland, being offset by an equal decline in PeoplePlus' gross profit. Group underlying operating profit of £2.9m (H1 2024: £3.0m) was held back by a reduction of £1.3m in PeoplePlus driven by lower levels of trading in PeoplePlus, albeit trading is on budget and in line with expectations.

The Group's two recruitment businesses increased combined underlying operating profit by 53.8%, driven by organic growth in the largest of our existing blue-collar Recruitment GB customers as a result of an increase of 9.2% in hours worked, as well as the increase in Recruitment Ireland's permanent hiring fees.  

The ongoing strength of our recruitment footprint continues to drive our growth as we secured both new mandates in permanent recruitment, including with G4S, alongside broadening activity with existing temporary recruitment customers, such as Tesco and Morrisons. This highly creditable performance, underpinned by the increase in reported hours within the temporary staffing sector, is in contrast to the widely reported trend in a subdued recruitment market where demand remains below historic levels as a weak macro-economic environment persists.

Furthermore, PeoplePlus extended two of its largest contracts; Restart (employability) to 2028; and the Prison Education Framework, which will now run until Q4 2025. PeoplePlus is also expected to be the preferred supplier of prison education services to Mitie Plc following the announcement of the HMP Millsike bid results.

The Group remains disciplined in its allocation of capital with strong levels of cashflow supporting a share buyback programme of up to £2.5 million announced on 10 June 2024.

Market

 

The broader macro-economic uncertainty continued across H1 2024 in both the UK and Irish labour markets. Staffline, in partnership with its customers, continues to adjust to cost pressures. The unemployment rate has risen slightly to 4.4% but, whilst inflation has now fallen, the labour market remains tight with the estimated number of vacancies at 889,000 for the quarter ended June 2024, still at historically high levels. This was a decrease of 15,000 on the previous quarter.

White-collar recruitment continues to remain relatively subdued, impacted by continued demand and the ongoing skills shortage, with the exception of specialist engineering roles.

With the UK general election now concluded, we expect the pipeline delays and backlog of public sector demand to begin to improve, particularly within Northern Ireland, but also in the medium-term within PeoplePlus.

Strategy

The Group has delivered excellent progress in its strategy of increasing its share of the blue-collar recruitment market, growing its business in the Republic of Ireland, and remains focused on delivering across its strategic, operational, and financial objectives which include:

 

·    Capitalising on market leadership in blue-collar to expand organically and drive market share gains

·    Cross selling and expanding the recruitment portfolio; managed services and permanent recruitment

·    Investing in the Republic of Ireland

·    Continuing to transform PeoplePlus into a stable annuity business with diverse revenues

 

The Group continues to operate from a position of financial stability and strength, providing a solid foundation for continued investment and providing cash returns to shareholders.

 

Operational review

 

Recruitment

 

The Group's market leading blue-collar recruitment activities traded well, increasing both revenues and profits despite broader macro challenges which have impacted many of our white-collar peers. Our sizeable scale, geographic reach and market leadership across the UK has attracted new business opportunities.

 

Recruitment GB

	H1 2024	H1 2023	% Var
	£m	£m
Revenue	393.0	341.2	+15.2%
Gross Profit	24.7	23.5	+5.1%
Underlying operating profit	2.8	1.8	+55.6%

 

The performance of Recruitment GB has improved significantly in H1 2024 vs 2023, with temporary worker hours worked up 9.2% year-on-year. Importantly, this strong performance has been driven by an increase in market share across our top 20 largest blue-collar customers, mainly in food distribution and logistics. Our continued focus on efficiency savings across the business is reflected in overall overheads remaining broadly flat year-on-year despite ongoing inflationary pressures.

 

The division continues to grow organically, with market share increasing c.17% across our top 20 customers. We have maintained our strong market presence across the UK food retail sector; securing further spend by Tesco and Sainsburys (delivered via 3rd party logistics partner relationships with DHL and GXO); and we now exclusively provide all agency workers at Morrisons.

Outlook for our permanent recruitment activity remains in line with expectations, despite a challenging marketplace, mainly due to the division's focus on its technical engineering speciality, a sector which remains buoyant. The volume permanent hiring service, such as the managed service with G4S, continues to perform well and expand in line with expectations.

In anticipation of a return to growth in white-collar recruitment, headcount investment has been made in our Gloucestershire Omega Head Office as well as our Leeds operation, and in H1 2024 we have also successfully opened our third operation in Birmingham. Datum remains affected by a slow-down in the construction sector but is expected see an improvement in its performance during H2 2024.

 

Recruitment Ireland

	H1 2024	H1 2023	% Var
	£m	£m
Revenue	53.8	54.5	-1.3%
Gross Profit	6.5	6.1	+6.6%
Underlying operating profit	1.2	0.8	+50.0%

 

In Recruitment Ireland, gross profit increased by 6.6% mainly as a result of the strong 30% year-on-year increase in permanent recruitment with underlying operating profit increasing by 50%. Revenues were marginally lower than prior year but a change in the mix and a successful strategy to focus on higher margin services is paying off. In addition, investment made in the fee-earning capacity, office and technology infrastructure of the business in recent years have increased the capacity of the business to generate additional revenues without much additional overhead.

 

This highly creditable performance was set against the backdrop of the wider economic headwinds, weak results reported from peers in the sector, as well as the ongoing power sharing impasse at Stormont.  With power sharing now resolved, we believe this will improve demand in Northern Ireland in the core public services sector.  The mobilisation of the new contract wins continue to gather pace with revenues expected to be generated in Q4 2024, positively impacting FY 2024 performance.

 

PeoplePlus

	H1 2024	H1 2023	% Var
	£m	£m
Revenue	33.4	34.3	-2.6%
Gross Profit	7.0	8.5	-17.6%
Underlying operating profit	0.5	1.8	-72.2%

 

The financial performance of PeoplePlus is in line with expectations, which were reset at the beginning of 2024.

 

The UK general election understandably created significant uncertainty in PeoplePlus's public sector markets, with the bid pipeline adversely affected.  Delays, both in new commissioning but also decisions in relation to outstanding bids, have been reported. However, an extension to PeoplePlus' Restart (employability) contract was secured to 2028.

 

PeoplePlus secured a c.£49 million agreement (subject to contract) to provide education and industry services at the newly built HMP Millsike over a 10 year period, in support of our partner, Mitie Care & Custody. Following our successful entry in 2023 into the Young Offenders' sector at Werrington Young Offenders Institute, the preferred supplier status to Mitie at HMP Millsike signifies our first entry into the Private Sector prisons estate which represents a c.£500m market opportunity over the next 10 years.  This, combined with the new government's focus on the prisons services sector, highlights this prospective significant growth area for the business.

 

Board changes

Tom Spain was appointed as permanent Chair of the Board in March 2024, after having been Interim Chairman since May 2022, and his contribution has been invaluable, providing advice and support to the Board.

 

Outlook

Staffline's recruitment businesses delivered an excellent performance across H1 2024 and is expected to trade strongly in the second half of 2024.  Therefore, underlying operating profit for FY 2024 is anticipated to be in line with expectations.

 

As a result of recent political uncertainty, delays in PeoplePlus' pipeline will likely result in the proportion of operating profit in FY 2025 being more favourable to recruitment as a result of market share gains delivered by Staffline's recruitment activities. 

 

 

Albert Ellis

Chief Executive Officer

29 July 2024

 

Financial Review

Introduction

 

The Group has delivered resilient results driven by significantly increasing temporary worker hours in the period, notwithstanding ongoing challenges in the domestic consumer market. Permanent recruitment has remained surprisingly robust in contrast to market peers. The Group's balance sheet remains strong with pre-IFRS16 net debt of £(9.2)m (2023: £(3.5)m) after spend on share buybacks  and funding for the Employee Benefit Trust, totaling £9.1m since 30 June 2023. Significant headroom of £50.2m (2023: £58.7m) exists in the Group's refinanced banking facilities alongside material headroom in financial covenants.

The Group continues to benefit from its decision to purchase a three-year interest rate cap product in October 2021, which has limited the Group's exposure to increases in interest rates. This has been hugely beneficial during the period, with receipts of £0.9m, partly offsetting increased borrowing costs.

Trading performance

 

Total revenue for H1 2024 increased by 11.7% to £480.2m (2023: £430.0m) resulting from increased worker hours, predominately in the food retail and distribution sectors. Gross profit has increased to £38.2m (2023: £38.1m) alongside a decrease in gross margin to 8.0% from 8.9% in 2023. The reduction in gross margin % is as a result of a combination of pay inflation from National Minimum Wage increases, the increase in temporary worker hours in sectors where the margin is comparatively low and the reduction in higher margin employability training activity.

 

Underlying divisional performance

 

The Group comprises three divisions: Recruitment GB, flexible blue-collar recruitment; Recruitment Ireland, generalist recruitment; and PeoplePlus, adult skills, training and employability provision.

 

 

	Six months ended 30 June 2024					Six months ended 30 June 2023
	Recruitment GB Unaudited	Recruitment Ireland Unaudited	PeoplePlus Unaudited	Group costs Unaudited	Total Group Unaudited	Recruitment GB Unaudited	Recruitment Ireland Unaudited	PeoplePlus Restated Unaudited	Group costs Unaudited	Total Group Restated Unaudited
	£'m	£'m	£'m	£'m	£'m	£'m	£'m	£'m	£'m	£'m
Revenue	393.0	53.8	33.4	-	480.2	341.2	54.5	34.3	-	430.0
Period-on-period % change	15.2%	(1.3)%	(2.6)%	-	11.7%	(1.2)%	(2.3)%	9.2%	-	(0.6)%
Gross sales value1	445.2	53.8	33.4	-	532.4	403.5	54.5	34.3	-	492.3
Period-on-period % change	10.3%	(1.3)%	(2.6)%	-	8.1%	5.6%	(2.3)%	9.2%	-	3.9%
Gross profit	24.7	6.5	7.0	-	38.2	23.5	6.1	8.5	-	38.1
Period-on-period % change	5.1%	6.6%	(17.6)%	-	0.3%	(4.5)%	(3.2)%	(1.5)%	-	(3.6)%
Gross margin %	6.3%	12.1%	21.0%	-	8.0%	6.9%	11.2%	24.8%	-	8.9%
Underlying operating profit /(loss)	2.8	1.2	0.5	(1.6)	2.9	1.8	0.8	1.8	(1.4)	3.0
Underlying operating profit as a % of revenue	0.7%	2.2%	1.5%	-	0.6%	0.5%	1.5%	5.2%	-	0.7%
Underlying operating profit as a % of gross profit	11.3%	18.5%	7.1%	-	7.6%	7.7%	13.1%	21.2%	-	7.9%
Post-IFRS16 net (debt)/cash	-	-	-	-	(14.5)	-	-	-	-	(8.0)
Pre-IFRS16 net (debt)/cash	-	-	-	-	(9.2)	-	-	-	-	(3.5)

 

¹ Gross sales value represents the fair value of consideration received or receivable for the supply of services, including agency sales, (excluding fees) net of VAT.

 

Key performance indicators

	Six months ended 30 June 2024				Six months ended 30 June 2023
	Recruitment GB Unaudited	Recruitment Ireland Unaudited	PeoplePlus Unaudited	Total Group Unaudited	Recruitment GB Unaudited	Recruitment Ireland Unaudited	PeoplePlus Unaudited	Total Group Unaudited
Hours worked by temporary workers	20.6m	2.9m	-	23.5m	18.8m	3.2m	-	22.0m
Gross profit per fee earner	£38.5k	£49.2k	-	£40.4k	£36.3k	£47.0k	-	£38.0k
Revenue per employee	-	-	£25.4k	-	-	-	£26.4k	-

 

For management reporting purposes, the Recruitment GB division presents its 'gross sales', which includes sales under agency arrangements. The reporting of gross sales gives an indication of the full level of activity undertaken by the division. The value is adjusted for revenue reporting in accordance with IFRS15. The adjustment relative to reported revenue for the Group is as follows:

	H1 2024 Unaudited £'m	H1 2023 Restated Unaudited £'m
Gross sales value	532.4	492.3
Agency sales	(52.2)	(62.3)
Revenue as reported	480.2	430.0

 

Revenues in the Recruitment GB division increased by £51.8m, (15.2%), to £393.0m (2023: £341.2m). The increase is predominately as a result of organic growth with existing customers in the latter part of 2023 and in H1 2024, particularly in the food retail and distribution sectors. This new business has been won based on quality service and performance by the business and in spite of the ongoing cost-of-living challenges.

 

The gross profit for Recruitment GB increased 5.1% year-on-year, from £23.5m in 2023 to £24.7m, with the gross margin % decreasing from 6.9% in H1 2023 to 6.3% this year. This was significantly impacted by a 9.8% increase in the National Living Wage from April 2024, from £10.42 to £11.44, which follows on from a 9.7% increase the year before. This contributed to an average increase in our temporary worker pay rates of c.7.1%. This does not impact absolute gross profit as the increase is passed through to customers, but does adversely impact the gross margin % achieved. Gross profit margin % was supported by the higher margin activity of permanent recruitment, which generated £2.0m of gross profit, an 11.1% increase from £1.8m in H1 2023.

 

Revenues in the Recruitment Ireland division were broadly flat at £53.8m (2023: £54.5m), reflecting a reduction in onsite temporary recruitment activity. The gross profit for Recruitment Ireland increased by 6.6% from £6.1m in H1 2023 to £6.5m in H1 2024, whilst the gross profit margin % increased from 11.2% to 12.1% . This gross margin % improvement was driven by permanent recruitment increasing by 30.0% with £1.3m of gross profit in H1 2024 compared to £1.0m in H1 2023, reflecting cautious optimism following the return of local Government. Revenues and gross profits were increased in the branch networks in both Northern Ireland and the Republic of Ireland.

 

After adjustment to exclude the discontinued in-person Skills business, PeoplePlus revenues decreased by £0.9m, to £33.4m (2023: £34.3m). The gross profit for the division decreased from £8.5m (24.8%) in H1 2023 to £7.0m in H1 2024 (21.0%). In a decisive response to these increasingly challenging market conditions, the business was restructured in H2 2023 to align business operations to market opportunities, exiting the in-person skills market and the process of reducing overhead costs is ongoing.

Given the ongoing uncertainty in the UK adult training, education and employability market along with the unknown departmental funding plans following the general election, there are delays to the pipeline. Therefore, the Group has incurred a non-underlying, non-cash goodwill impairment charge of £12.9m, which is a material non-cash item that, based on its size and nature, is considered to be non-underlying. The remaining PeoplePlus goodwill balance at 30 June 2024 is £10.7m.

The prison education services business continues to perform well and will benefit in 2025 from the recently announced win of the provision of education services into HMP Millsike. This c.£49m contract over 10 years opens up new markets for the division in the private prisons sector.

Group underlying operating profit was £2.9m (2023: £3.0m), with gross profit to underlying operating profit conversion reducing to 7.6% compared to 7.9% in H1 2023. Together, the recruitment businesses delivered underlying operating profit of £4.0m (H1 2023: £2.6m), representing growth of 53.8%.  This was offset by the decrease in PeoplePlus' underlying operating profit from £1.8m to £0.5m.  Similar to 2023, the Group expects underlying operating profit to be H2 weighted due to the main peak trading period in the lead up to Christmas and the New Year.  

 

Discontinued activity

 

The results of the in-person Skills training business within PeoplePlus, which was discontinued during H2 2023, were included in the reported result for H1 2023. The comparative results in this Interim statement have been restated to exclude the results of the Skills business. Further details are provided in note 3.

 

Finance costs and interest rate hedge

 

Net finance costs were £2.1m (2023: £1.8m), which includes £0.2m (2023: £0.2m) of non-cash charges for amortisation of debt re-financing costs and the hedging instrument. The higher cost arises from the increased usage of working capital and customer financing facilities due to the growth in temporary worker hours supplied to some of our retail and logistics customers, as well as the increase in the Bank of England base rate between H1 2023 and H1 2024.   

 

The Group's reported loss before taxation, after the non-cash goodwill impairment charge of £(12.9)m, is £(12.1)m in H1 2024 compared to a loss of £(1.4)m in 2023.

 

Taxation

 

There is a £0.2m tax charge (2023: credit £0.6m) for the period due principally to the movement on deferred tax balances.

 

The reported loss after tax on continuing activities for H1 2024 is £(12.3)m (2023: loss £(0.8)m).

 

Statement of financial position, cash generation and financing

 

The Group ended H1 2024 with pre-IFRS16 net debt of £(9.2)m (2023: £(3.5)m). Post-IFRS16 net debt was £(14.5)m at H1 2024 (2023: £(8.0)m). The movement in net debt is shown in the table below. The change in working capital includes the Q1 VAT payment, representing VAT collections in the Group's peak seasonal Q4 2023 trading period. Good trading cash generation in the period driven by the organic growth in Recruitment GB temporary hours worked, has been offset by the required working capital usage. Additionally, the Group purchased a higher number of shares than prior year, taking advantage of the relatively low share price at the time.

Movement in net debt	H1 2024 Unaudited £'m	H1 2023 Unaudited £'m
Opening net cash (pre-IFRS16)	3.8	5.0
Cash generated before changes in working capital (note 13)	5.2	2.7
Movements in working capital	(12.1)	(7.7)
Net taxation and interest paid	(1.9)	(1.4)
Capital investment (net of disposals)	(1.4)	(1.0)
Own shares purchased	(1.9)	(0.5)
Principal repayment of lease liabilities	(1.2)	(0.9)
Employee equity settled share options	0.3	0.3
Closing net (debt) (pre-IFRS16)	(9.2)	(3.5)
IFRS16 lease liabilities	(5.3)	(4.5)
Closing net (debt) (post-IFRS16)	(14.5)	(8.0)

 

The table below reconciles underlying EBITDA (earnings before interest, taxation, depreciation and amortisation), to operating loss.

Reconciliation of operating loss to EBITDA	H1 2024 Unaudited £'m	H1 2023 Restated Unaudited £'m
Operating profit	(10.0)	0.4
Non-underlying charges	12.9	2.6
Underlying operating profit	2.9	3.0
Depreciation and amortisation	2.3	2.6
Underlying EBITDA	5.2	5.6
Lease rental payments	(0.8)	(0.9)
Underlying EBITDA (pre-IFRS16)	4.4	4.7

 

Note: Underlying operating profit is stated before goodwill impairment, provisions arising from the closure of the Skills training business and amortisation of intangible assets arising on business combinations.

 

The Group's banking facility headroom under its available committed banking facilities is set out below:

 

	H1 2024 Unaudited £'m	H1 2023 Unaudited £'m
Cash at bank	4.6	12.2
Available receivables finance agreement unutilised	45.6	46.5
Banking facility headroom	50.2	58.7

 

Banking facilities

 

The Group manages its working capital requirements using a receivables finance agreement ("RFA"), and a number of separate, non-recourse, customer financing arrangements whereby specific customers' invoices are settled in advance of their normal settlement date via a funding intermediary.

The RFA leverages the Group's trade receivables with sufficient headroom and flexibility to manage the variability and size of weekly cash outflows. On 14 December 2023, the Group and its lenders agreed to an amendment to the RFA with improved terms, reflecting progress in the business and ongoing balance sheet strength. The key terms of the facility are set out below:

 

i)         maximum receivables financing facility of £60.0m (previously £90.0m) over a four-year term, with a one-year extension option;

ii)        an Accordion option of up to an additional £20.0m (previously £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 a maximum of 2.25% (previously 2.75%) over SONIA, with a margin ratchet downward to 1.5% (previously 2.0%), dependent upon the Group's leverage reducing to less than 1.00x;

v)       a non-utilisation fee of 0.35% (previously 0.7% during 2023);

vi)      maximum net debt (averaged over a rolling three months) to EBITDA leverage covenant of 4.0x; and

vii)     minimum interest cover covenant of 2.25x the last 12 months EBITDA to finance charges.

The estimated balance funded under the customer finance arrangements at 30 June 2024 was £58.2m (2023: £44.8m).

 

Purchases of own shares

The Company has delivered three years of annual underlying operating profits of at least £10.0m and annual operating cash generation remains strong. During the last 12 months the Board has taken the opportunity to make share purchases under share buyback programmes and for the Employee Benefit Trust. The Group continues to have substantial headroom of £50.2m (2023: £58.7m) under its available banking facilities.

 

On 10 June 2024 the Company announced the launch of a further share buyback programme to repurchase ordinary shares in the capital of the Company (the "Ordinary Shares") up to an aggregate value of £2.5 million. As at 30 June 2024 the Company had acquired 850,790 shares for a consideration of £0.3m. The Ordinary Shares purchased pursuant to the Share Buyback will be cancelled.

 

Dividend policy

No interim dividend for 2024 is proposed (2023: £nil).

 

Going concern

 

The Directors have formed a judgement, at the time of approving the unaudited condensed interim Group 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 unaudited condensed interim Group 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 2024 which materially impact the Group's reported performance or financial position.

 

 

Daniel Quint

Chief Financial Officer

29 July 2024

 

Consolidated statement of comprehensive income

For the six months ended 30 June 2024

		Six-month period ended 30 June 2024 Unaudited	Six-month period ended 30 June 2023 Restated  Unaudited	Year ended  31 December 2023 Audited
	Note	£'m	£'m	£'m
Continuing operations
Revenue	2	480.2	430.0	938.2
Cost of sales		(442.0)	(391.9)	(857.4)
Gross profit		38.2	38.1	80.8
Administrative expenses		(48.2)	(37.7)	(84.5)
Operating (loss)profit		(10.0)	0.4	(3.7)
Underlying operating profit before non-underlying administrative expenses		2.9	3.0	10.3
Administrative expenses (non-underlying)	3	(12.9)	(2.6)	(14.0)
Operating profit/(loss)	2	(10.0)	0.4	(3.7)
Finance income		0.9	0.7	1.9
Finance charges - underlying		(3.0)	(2.5)	(5.6)
Finance charges - non-underlying		-	-	(0.5)
Loss for the period before taxation		(12.1)	(1.4)	(7.9)
Tax (expense)/credit		(0.2)	0.6	(0.5)
Loss for continuing activities		(12.3)	(0.8)	(8.4)
Loss from discontinued activities		-	(2.4)	(2.6)
Loss for the period		(12.3)	(3.2)	(11.0)
Items that will not be reclassified to the statement of comprehensive income - actuarial gains and losses, net of deferred tax		-	0.1	0.2
Items that may be reclassified to the statement of comprehensive income:
cumulative translation adjustment		0.1	-	(0.4)
movement on cash flow hedge, net of deferred tax		(0.4)	0.3	(0.8)
Total comprehensive loss for the period		(12.6)	(2.8)	(12.0)
Earnings per ordinary share	4
Continuing operations: Basic and diluted		(8.6)p	(2.0)p	(7.0)p

 

 

The accompanying notes form an integral part of these unaudited condensed interim Group financial statements.