1 February 2021
STAFFLINE GROUP PLC
("Staffline," or the "Group")
Trading and Business Update
Staffline, the recruitment and training group, is pleased to provide the following trading and business update for the year ended 31 December 2020.
The Group made significant progress in 2020, improving its operational, financial and governance processes and board composition, including strengthening the Group's financial position through a successful refinancing in June 2020. The net result has been an improvement in revenues, underlying operating profit1, working capital and cash generation in the second half of 2020.
The Group expects to report underlying operating profit marginally ahead of expectations for the year ended 31 December 2020.
Staffline experienced strong demand for temporary recruitment from the food, driving, logistics and e-commerce sectors in 2020, whilst the manufacturing, retail and automotive industries continued to be more challenging. Despite the national lockdown in November and restrictions in December, the Group still experienced a strong Christmas trading peak, with significant demand from the Group's food retail customers. Furthermore, e-commerce and logistics experienced a very strong trading period as a result of consumers transitioning to online retail.
PeoplePlus successfully completed the disposal of its Apprenticeships business in December 2020 for a nominal consideration, as part of a strategic re-focus on its core employability and adult skills capabilities. PeoplePlus expects to report an underlying operating profit for the second half of 2020 compared to a loss in the first half.
At 31 December 2020, the Group had pre-IFRS 16 net debt2 of c. £9.0m (2019: £59.5m), with average net debt throughout the year of c. £38.1m (2019: c. £85.2m).
The year-end position represents an improvement against expectations resulting from the increased focus on working capital and cash generation during 2020, as well as a number of timing effects, including the benefit of deferred VAT relief from Q2 2020 of £42.9m.
HMRC VAT measures
In March 2020, the Government announced that VAT payments due from businesses between 20 March 2020 and the end of June 2020 could be deferred until the end of the tax year. In September, the Government provided an update allowing businesses which have deferred this VAT to have the option to pay in instalments between March 2021 and March 2022. This payment delay provides the Group with a significant short-term liquidity improvement.
The broader impact of the COVID pandemic, which has caused disruption globally, has created both opportunities and challenges across Staffline. Whilst the current lockdown has not caused the significant spike in food customer demand first seen in March 2020, volumes still remain high and look set to continue until COVID restrictions ease across the UK. PeoplePlus took actions to reduce its cost base in the first half of 2020, together with implementing new digital operating models, however it continues to experience disruption to many of its classroom-based services as a result of the pandemic.
Staffline delivered a robust performance across 2020, underpinned by the new structures and processes implemented during the year. These initiatives have provided stability and ultimately position the Group for growth; however, the board is mindful that the near-term challenges created by the COVID pandemic remain. The employment market experienced a structural shift in 2020, with the pandemic causing a significant rise in UK unemployment, which the board believes presents a number of opportunities for Staffline due to existing customer relationships and the Group's broad market offering.
Notwithstanding the combination of corrective measures taken in 2020, which has resulted in a significant improvement in working capital, the board continues to evaluate its options in relation to strengthening the Group's finances. Whilst the outlook for Staffline in the near-term is not without its challenges, the board remains cautiously optimistic.
1Underlying operating profit before goodwill impairment, amortisation of intangible assets arising on business combinations, reorganisation costs and other non-underlying costs.
2Net debt is stated before unamortised debt issue costs.
For further information, please contact:
Staffline Group plc
Albert Ellis, Chief Executive Officer
Daniel Quint, Chief Financial Officer
via Vigo Communications
Liberum NOMAD and Broker
Richard Lindley / William Hall
020 3100 2222
Vigo Communications Financial PR
Jeremy Garcia / Antonia Pollock
020 7390 0230
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 the UK's leading provider of flexible blue-collar workers, supplying approximately 40,000 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 20 industries, 10 branch locations, 15 onsite customer locations 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.
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.