FINANCIALS: Staffline expects revenues and GP to increase

Recruitment and training group Staffline expects its H1 2021 revenues to reach £450.7m, an increase of 4.7% from the same period last year.

Staffline also anticipates a 14% increase in gross profit in what the company is calling “a significant improvement year-on-year” in its six-month trading update published today (28 July 2021).

At the company’s Annual General Meeting this morning, Ian Lawson, Staffline’s non-executive chairman, said trading had been “strong across the first six months of the year… and is ahead of expectations with all three of Staffline’s core divisions delivering a solid performance in the first half. This, coupled with the benefits of the group’s cost reduction measures implemented in 2020, in addition to securing new higher margin business, continues to underpin underlying profit growth”.

Also, the group was expected to report a net cash position of £20.9m at 30 June 2021 – a sharp contrast to the company’s net debt of £36.2m at the same time last year. Lawson attributed the improvement to the net proceeds of last month’s (June 2021) equity raise of £44.4m, VAT payment relief of £40.7m still to be repaid, about £15m of timing benefits which Lawson said “are expected to unwind” and further improvements in trading cash flow and cash collection efficiency, which have generated an additional £10m, approximately. 

“The equity and debt refinancing have transformed the company’s balance sheet and repositioned the group for the medium term,” Lawson said.

For the individual Staffline divisions:

  • Recruitment GB enjoyed additional margin gains arising from new business wins in online food distribution and the effect of exiting legacy lower margin contracts. “This was achieved despite challenges in the specialist driving division due to the widely reported acute labour shortages,” Lawson said.
  • Recruitment Ireland delivered a “strong” six months, buoyed by “good” trading in its core Northern Ireland business along alongside tight cost control and continued growth in the Republic of Ireland.
  • PeoplePlus reported an “excellent” performance from its ‘core’ employability division. The division generated an underlying operating profit for the first half of 2021, compared to a loss during the same period of 2020.

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