19 March
2024
STAFFLINE GROUP PLC
("Staffline", the
"Company" or the "Group")
AUDITED RESULTS FOR THE YEAR
ENDED 31 DECEMBER 2023
·
Robust performance delivered full year underlying operating
profit slightly ahead of market
expectations1
·
Net
cash (pre-IFRS 16) significantly ahead of original market
expectations1
maintaining ongoing balance sheet strength that underpinned
£5 million share buyback programme in 2023
Staffline Group plc, the recruitment
and training group, announces its audited results for the year
ended 31 December 2023 ('FY 2023').
Financial
Highlights2
|
FY 2023
|
FY 2022
|
Change
|
Continuing activities
|
|
|
|
Revenue
|
£938.2m
|
£928.1m
|
+1.1%
|
Gross sales value3
|
£1,055.7m
|
£1,018.9m
|
+3.6%
|
Gross profit
|
£80.8m
|
£82.0m
|
-1.5%
|
Gross margin %
|
8.6%
|
8.8%
|
-0.2%pts
|
Underlying operating profit4
|
£10.3m
|
£12.0m
|
-14.2%
|
Gross profit to underlying operating profit conversion
%
|
12.7%
|
14.6%
|
-1.9%pts
|
(Loss)/profit after tax (total
activities)
|
£(11.0)m
|
£3.8m
|
-£14.8m
|
Underlying EBITDA
|
£15.2m
|
£17.6m
|
-£2.4m
|
Net cash5
|
£3.8m
|
£5.0m
|
-£1.2m
|
1Company-compiled original
consensus for FY 2023 (pre the trading update on 23 January 2024)
underlying operating profit and net debt (pre-IFRS 16), based on
the mean average of two analyst estimates, stands at £10.15m and
£3.0m, respectively
2Presented on a continuing
basis
Alternative performance
measures
3Gross sales value
represents the value of the consideration received or receivable
for the supply of services, including agency sales, (excluding
fees) which are subject to an IFRS 15 agency adjustment, net of
value added tax, rebates and discounts
4Underlying results exclude
goodwill impairment, amortisation of intangible assets arising on
business combinations, reorganisation costs and other
non-underlying charges
5Presented on a pre-IFRS16
basis which excludes lease liabilities and also excludes
refinancing costs
· Delivered
Underlying operating profit slightly ahead of market
expectations1 against challenging trading conditions in
FY 2023
· Net cash
(pre-IFRS 16) of £3.8m (2022: £5.0m), ahead of original market
expectations by £6.8m; strong trading cashflow supported £5m share
buyback programme during FY 2023
· Revenue up 1.1%
highlighting market share gains predominately in Recruitment GB,
with H2 2023 revenues up by 3.7% for the Group
· Gross profit
0.8% lower in the Recruitment divisions as a result of reduced
demand for permanent hires
· Refinanced
banking facilities with improved terms in Q4 2023, reflecting
progress in the business and ongoing balance sheet
strength
Operational
Highlights
·
Strong financial and operational performance
across the Recruitment divisions:
o Recruitment GB: Expanded market share with several existing
major customers, such as Tesco, GXO Logistics and
Morrisons
o Strong performance from Omega, the Group's engineering
technology recruitment business and solid results from Datum, the
Group's Managed Services provider
o Further reduction in the cost base and ongoing efficiencies
drove increased profit conversion. Restructuring programme incurred
a non-underlying charge of £1.8m, which is expected to deliver
annual savings of c.£3.5m
o Ireland: Substantial new opportunities secured in the
Republic of Ireland with the ESB (Electricity Supply Board) and the
An Garda Síochána (the national police and security service)
commencing in 2024
·
PeoplePlus:
o Delivered a solid performance from ongoing operations,
underpinned by Prison Education and Employability
o Challenging market with continued low unemployment generating
lower volumes. Exit of loss-making (in-person) skills business
generated a charge of £3.1m, contributing to a non-cash goodwill
impairment of £8.9m.
o Significant pipeline of bids outstanding for multi-year
contracts (c.£310m) that would mainly benefit 2025 and future
years
Board
changes
·
Tom Spain was appointed as permanent Chair of the Board on 18
March 2024, having been Interim Chairman since May 2022
·
Amanda Aldridge joined the board as a Non-Executive Director
on 17 April 2023
Current Trading and
Outlook
Staffline's performance throughout 2023
demonstrated the resilience of the business model and its ability
to generate cash, despite the well-known economic challenges in the
market.
Management are encouraged by the uplift in
temp working hours which are c.5% higher for the first 10 weeks of
2024 compared to prior year, and the pipeline of permanent fees in
Ireland, which is at record levels as a result of contract wins,
and we await the outcomes from PeoplePlus' large outstanding bid
pipeline. Accordingly, with our increasing market share and strong
balance sheet we are confident that we can use our market leading
positions to continue to grow the Group organically, positioning us
well for the economic recovery when it comes.
Albert Ellis,
Chief Executive Officer, commented:
"I am
pleased to report that Staffline has delivered a robust trading
performance across 2023, demonstrating the resilience of the
Group's operating model against a challenging macro-economic
backdrop and also the success of our strategy. We continued to grow
our recruitment market share, driven by a healthy pipeline of
contract renewals and awards, alongside further strengthening our
cash position which enabled us to carry out a £5m share buyback
programme, an important part of our capital allocation
policy.
Our results
for 2023 are a testament to not only the resilience of our
business, but also the hard work of our team who have worked
tirelessly to deliver these results. I would personally like to
thank all our talented leadership and dedicated staff for their
unwavering commitment to Staffline's success."
Staffline
Group plc
www.stafflinegroupplc.co.uk
Albert Ellis, Chief Executive
Officer
Daniel Quint, Chief Financial
Officer
|
via Vigo Consulting
|
|
|
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
Staffline is a leading provider
of flexible blue-collar workers, supplying c.28,000 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 twenty industries,
ten branch locations and ten onsite customer locations, supplying
c.4,000 staff per day on average, and offering RPO, MSP, temporary
and permanent solutions across the island of Ireland.
PeoplePlus
Division
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.
Chairman's
Statement
Introduction
I would like to start by thanking our staff
and management teams for their tireless work in 2023. Positive
results are mostly a combination of a lot of hard work and skill,
sometimes they get the assistance of a bit of luck. With a
combination of higher interest rates and a gloomy outlook for the
UK economy our luck was out in 2023. It would have been easy to
adjust the goal posts, but credit to our management teams and
staff, we found a way to deliver robust
performance with full year underlying operating profit slightly
ahead of market expectations.
We hope to continue to build on
this platform by further strengthening relationships with our key
customers in helping them to achieve their staffing and training
needs with a trusted and reliable partner in 2024 and
beyond.
There are three ways we can
continue to grow our brand: be the cheapest, be the most convenient
or be the best. It is an extremely rare thing for any company to do
all three - we will attempt to be the best and try for one more.
The dynamics of capitalism will mean everyone else will be trying
to do a combination of the same. To succeed in a fast-paced world
we will need to continue to adapt, stay relevant and deliver.
Keeping our top talent and developing them further will be
essential if we are to reach this goal.
Capital allocation
Net cash (pre-IFRS 16) was also a
highlight in 2023. The year ended significantly ahead of original
market expectations by £6.8m, our ongoing balance sheet strength
maintained with net cash of £3.8m (2022: £5.0m). The litmus test of
creating shareholder value on a long-term basis will be how well we
use the profits generated by the business.
The elegant name given to such
decisions is 'capital allocation'. In simple terms, the success of
any business is how well management make decisions on retained cash
and its reinvestment, as well as their choices about when and how
to redistribute that cash to shareholders.
In 2023 the stock market gave us
an excellent opportunity to repurchase 10% of the Company's
outstanding shares at what we regard to be very attractive
prices. Yet, this begs the question "What is a buyback?" and
"Why do we think our remaining shareholders should like them so
much?" Well, it's really very simple; a buyback is another form of
capital distribution.
When companies choose to
distribute a dividend, our investors receive an income payment from
the company whether they want it or not. With buybacks, the company
purchases shares from investors who want to sell them (perhaps
because they need the money, or perhaps because they have forgotten
the reason why they bought their shares in the first place). When
cancelling these shares after purchase, their proportional
ownership of the business grows for those who hold on to their
shares, as well as their claim on any future cashflows.
What's notable is that during that
process we were able to buy back those shares at an average
purchase price of 30p. While we won't provide a running
commentary on what we regard the intrinsic value of the Company to
be, we will repurchase shares when they are trading at a
substantial discount to what we believe they are
worth.
We don't know exactly what 2024
will hold for the price of our publicly traded shares. What we can
say though, is that we intend to generate more cash and if some of
that cash is better used in the repurchase of the Company's shares,
we will not be slow in doing so.
Board changes
In April 2023, we appointed Amanda Aldridge as a
Non-Executive Director. Amanda chairs the Group's Audit Committee
and was appointed to the Remuneration and Nominations Committees.
We are very grateful for her significant contribution already
towards the business' present and future achievements.
I am also humbled that my position
of Chair has now been made permanent, and I look forward to
continuing to work with all of the Group's staff, customers and
other stakeholders to drive Staffline's ongoing
prosperity.
Looking
ahead
As we navigate the inevitable challenges of 2024 and
beyond, I am confident in Staffline's resilience and ability to
seize opportunities in a testing macro environment. Ultimately, we
are not just a people business, we are a people-focused business;
striving to match rewarding work opportunities with those who seek
them.
Our passion for helping our extraordinary clients
achieve their objectives through first-class recruitment is
evidenced by both the enduring relationships we have forged with so
many of our partners, and our ability to consistently secure
top-level client wins. We hope to do more of the same in the year
ahead.
Tom Spain
Chairman
18 March 2024
Chief Executive Officer's Review
Introduction
I am pleased to report that Staffline has
delivered a robust trading performance across 2023, demonstrating
the strength of the Group's operating model and the success of our
strategy against a challenging macro-economic backdrop. We
continued to grow our recruitment market share, driven by contract
renewals and awards, alongside further strengthening our balance
sheet, enabling us to carry out a £5m share buyback programme,
which is an important component to our capital allocation
policy.
In 2023, the Group generated Underlying
operating profit of £10.3m, slightly ahead of market expectations,
whilst cashflow performance was well ahead of original market
expectations. Revenue was up 1.1%, set against a highly competitive
recruitment market, and reinforced by market share gains
predominantly in Recruitment GB which reported a 3.7% increase in
revenues throughout the second half. In H2 2023 the Group
outperformed the prior six months despite a weaker sector backdrop,
showcasing the robustness of our strategy and the determination of
our team. Staffline has continued to deliver on its strategy of
market share gains and is expanding its business in the Republic of
Ireland, evidenced by our success over the last 12 months and our
new contract win with An Garda Síochána (the Republic
of Ireland Police Service). The Group's reputation for
outstanding service delivery, with market leading scale and reach,
has underpinned new mandates with both existing and new
customers.
Our results for 2023 are a testament to not
only the resilience of our business, but also the hard work of our
people who have worked tirelessly to deliver these results. I
would personally like to thank all our talented leadership team and
dedicated staff for their unwavering commitment to Staffline's
success.
Strategy
Throughout 2023, Staffline successfully
implemented its key strategic goals. We expanded our recruitment
portfolio and were successful in increasing our operational
footprint across both recruitment verticals with new contract
awards won in Recruitment GB and Recruitment Ireland. We further
leveraged our leadership across the blue-collar recruitment market
through securing sole and majority supply with both new and
existing customers. In addition, we invested in our technology
infrastructure and delivery capacity in our Recruitment Ireland
division, which will position us well to capitalise on the multiple
contracts secured during 2023 and early 2024.
Furthermore, our PeoplePlus business was
restructured in the year, with the strategic focus now being on
Employability (including the Restart programme) and Prison
Education. PeoplePlus has a strong market share across both
sectors, and we expect to see growth in these areas as the benefits
of the restructure start to impact the Group's progress.
Finally, we maintained a tight control over
our cost base, prioritising operational efficiency and cost
management, and further strengthening our balance sheet, which
enabled the Group to execute a £5m share buyback programme (10% of
outstanding shares) in H2 2023. The Board sees share buybacks as a
valuable way of returning excess cash to shareholders and I am
pleased that we were able to deliver on this in 2023.
Recruitment
GB
I am pleased to report a strong fourth
consecutive year of underlying profitable growth within Recruitment
GB, despite a reduction in demand driven by the ongoing cost of
living crisis continuing to dampen consumer confidence. In light of
these weaker macro-economic conditions the division carried out a
restructuring programme to optimise the cost base, incurring a
non-underlying charge of £1.8m. This, alongside tight control of
overheads enabled the division to report Underlying operating
profit of £8.6m.
Revenues within the division were, as
expected, weighted positively to the second-half, comparing
favourably to the rest of the sector, which reported widespread
declines. H2 2023 revenues increased by 3.7% year-on-year, driven
by organic growth, which was supported by our traditional trading
peak in the run up to Christmas. This significant increase offset
weak demand in H1 2023 alongside lower permanent fees throughout
the year. During the year we grew our market share, securing
numerous contract renewals with major top 20 customers such as
M&S, Bakkavor, Tesco, Laithwaites, and AMFRESH. We also
concluded a sole supplier partnership with Morrisons, where we now
supply over 95% of their blue-collar temporary labour
requirements.
Datum, our managed service business, secured
numerous major projects in the year, most notably for Pilgrims and
Argos Sainsburys. Omega, our technical and engineering
recruitment business, delivered year-on-year growth and
outperformed many of its peers. Their performance was
buoyed by expansion into new sectors such as technology. We
also plan to add two additional regional offices in Birmingham and
Leeds, expanding our presence in these regions.
Recruitment
Ireland
Recruitment Ireland, which has a higher
proportion of white-collar recruitment than the rest of Staffline's
operations, reported a decline in perm fees compared to the prior
year. Despite this challenging backdrop, the team secured new
wins with Avondale Foods and Maersk, and following a thorough
public procurement process, secured a strategic partnership with An
Garda Síochána to recruit white-collar roles across various support
disciplines with revenues expected to flow through into the second
half of the year. In addition, Recruitment Ireland invested in a
digital platform to enable volume growth throughout 2024 and
beyond. This was part of a long-term strategy of prioritising
infrastructure preservation, fee-earning capacity and
organisational strength to enable the business to capitalise on
growth opportunities in the future. The short-term impact on
operating profit is visible through much of 2023. However,
permanent recruitment revenue began to recover in H2 2023, and we
anticipate a stronger revenue performance in 2024 as the Northern
Ireland government resumes.
PeoplePlus
PeoplePlus has strong market share across both
the Justice and Employability markets, and we anticipate that we
will continue to grow this position now that the division has
transitioned to a simpler operating model. Tenders totalling
c.£310m across several public service contracts have been bid for
and results are awaited. If successful, results from these bids are
expected to begin to come on stream at the end of H2 2024,
impacting full year Group operating profits from 2025.
The Prison Education Framework contract was
successfully extended to March 2025, with PeoplePlus performing
particularly well under the new 'Payment by Results' terms. As
previously reported, several long-term contracts have come to a
natural end. However, our near-term bid pipeline remains
substantial, and we are optimistic about potential revenue impact
from 2025-26. Further progress across its portfolio of Restart
sub-contracts was made, despite lower than anticipated participant
volumes, with the announcement that an extension is being
implemented to June 2027.
Additional initiatives to broaden our market
reach resulted in the pilot programme 'Mid-Life MOT' for the DWP
aimed at workforce retention, as well as our first contract with
HMP Werrington, the young offender's institution. Investment
has been made in diversifying the range of commercial services
offered - notably in social value consultancy and social
recruitment support - which are proving attractive to a growing
portfolio of private sector employer customers. In recognition of
the success of these new areas, PeoplePlus was voted the Social
Responsibility Organisation of the Year 2023 by Investors in
People.
PeoplePlus undertook a major restructuring
exercise, exiting the in-person skills market and focusing on
digital training. Accordingly, a charge relating to trading losses
and exit costs of £3.1m has been disclosed as 'Discontinued' in
these results. The low levels of unemployment associated with a
reduction in demand for in-person skills training, as well as
political uncertainty, has led to the reappraisal of the carrying
value of goodwill, generating an impairment of £8.9m, which has no
cash impact.
Board
changes
We were delighted to welcome Amanda Aldridge
to the Board as a non-executive director ("NED") in April 2023.
Amanda is an experienced NED and chairs the Group's Audit Committee
and has been appointed to Staffline's Remuneration and Nomination
Committees, replacing Ian Starkey.
I am also pleased to announce that Tom Spain
has been appointed as permanent Chair of the Board. Tom was
appointed Interim Chairman in May 2022 and his contribution has
been invaluable, providing advice and support to the
Board.
Current trading and
outlook
Staffline's performance throughout 2023
demonstrated the resilience of the business model and its strong
cash generating nature, despite the well-known economic challenges
in the market.
Management are encouraged by the uplift in
temp working hours which are c.5% higher for the first 10 weeks of
2024 compared to prior year, and the pipeline of permanent fees in
Ireland, which is at record levels as a result of contract wins,
and we await the outcomes from PeoplePlus' large outstanding bid
pipeline. Accordingly, with our increasing market share and strong
balance sheet we are confident that we can use our market leading
positions to continue to grow the Group organically, positioning us
well for the economic recovery when it comes.
Albert Ellis
Chief Executive Officer
18 March 2024
Financial
Review
Introduction
On an underlying basis the Group
delivered a resilient trading and cashflow performance for 2023,
particularly in the Recruitment GB division, against a challenging
macroeconomic backdrop in the UK. Underlying operating profit of
£10.3m was slightly ahead of market expectations and strong cash
flow was well ahead of original market
expectations.
The Group incurred a
non-underlying charge of £1.8m reflecting a reorganisation,
rationalisation and restructuring programme in the Recruitment GB
division. Additionally, PeoplePlus closed its in-person
classroom-based training business to focus on digital training.
This discontinued activity generated trading losses and exit costs
totalling £3.1m before taxation. This contributed to the
reappraisal of the value of goodwill associated with the PeoplePlus
division, resulting in an impairment charge of £8.9m. These items
contributed to a reported loss for the year of £11.0m (2022: profit
£3.8m).
Gross sales for 2023 increased by
3.6% to £1,055.7m (2022: £1,018.9m) driven by strong growth in the
Recruitment GB division. Total revenue for the year of £938.2m
(2022: £928.1m) was higher than the previous year by 1.1%. Gross
profit across the recruitment businesses decreased slightly to
£64.2m (2022: £64.7m), alongside a reduction in PeoplePlus' gross
profit to £16.6m (2022: £17.3m). This resulted in Group gross
profit reducing to £80.8m compared to £82.0m in the previous year
and gross profit margin reducing to 8.6% from 8.8%. The Group
continued to control overhead costs tightly, resulting in an
increase of under 1% in total overheads, despite considerable
inflationary pressures. This contributed towards underlying
operating profit on continuing activities of £10.3m, (2022:
£12.0m).
The Group has continued to pursue
its policy of organic growth with a focus on cost control and
working capital, conserving cash reserves, and further
strengthening the balance sheet.
The Group ended the year with
pre-IFRS 16 net cash of £3.8m (2022: £5.0m), after returning £5.0m
to shareholders via a share buyback programme. This means that the
Group generated an underlying improvement in net cash of
£3.8m.
Net underlying finance charges
were £3.7m (2022: £2.7m) reflecting the significant increase in
interest rates during 2023. However, the Group's purchase of a
3-year interest rate cap in October 2021, in order to manage its
debt financing costs, meant that the impact of the increase in the
Bank of England base rate from 3.50% to 5.25% during the year was
partly mitigated.
In December 2023, the Group
refinanced its existing receivables facility with improved terms,
reflecting progress in the business and ongoing balance sheet
strength. The Group's balance sheet and its significant financing
headroom have enabled a resilient performance despite the
significant global macroeconomic headwinds and remain a strong
platform to enable the Group to capitalise on market share growth
opportunities.
The Group comprises three
divisions, namely, Recruitment GB, flexible blue-collar
recruitment; Recruitment Ireland, generalist recruitment; and
PeoplePlus, adult skills and training provision.
Underlying1 divisional
performance - continuing operations
|
Recruitment GB
2023
£m
|
Recruitment Ireland
2023
£m
|
PeoplePlus 2023
£m
|
Group costs 2023
£m
|
Total Group
2023
£m
|
Recruitment
GB
2022
Restated
£m
|
Recruitment
Ireland
2022
£m
|
PeoplePlus
2022
Restated
£m
|
Group costs
2022
£m
|
Total Group
2022
Restated
£m
|
Revenue
|
763.0
|
108.3
|
66.9
|
-
|
938.2
|
751.8
|
110.6
|
65.7
|
-
|
928.1
|
Year-on-year revenue
increase/(decline)
|
1.5%
|
(2.1)%
|
1.8%
|
-
|
1.1%
|
0.5%
|
(1.0)%
|
8.5%
|
-
|
0.9%
|
|
|
|
|
|
|
|
|
|
|
|
Gross sales
value3
|
880.5
|
108.3
|
66.9
|
|
1055.7
|
842.6
|
110.6
|
65.7
|
|
1018.9
|
Year-on-year gross sales value
increase
|
4.5%
|
(2.1)%
|
(1.8)%
|
-
|
3.6%
|
5.1%
|
(1.0)%
|
8.5%
|
-
|
4.7%
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
51.9
|
12.3
|
16.6
|
-
|
80.8
|
51.8
|
12.9
|
17.3
|
-
|
82.0
|
Year-on-year gross profit
increase/(decline)
|
0.2%
|
(4.7)%
|
(4.0)%
|
-
|
(1.5)%
|
2.6%
|
14.2%
|
(4.0)%
|
-
|
2.4%
|
Gross profit as a % of
revenue
|
6.8%
|
11.4%
|
24.8%
|
-
|
8.6%
|
6.9%
|
11.7%
|
26.3%
|
-
|
8.8%
|
|
|
|
|
|
|
|
|
|
|
|
Underlying operating profit before
tax
|
8.6
|
1.8
|
3.1
|
(3.2)
|
10.3
|
8.3
|
3.2
|
3.8
|
(3.3)
|
12.0
|
Underlying operating profit as a %
of revenue
|
1.1%
|
1.7%
|
4.6%
|
-
|
1.1%
|
1.1%
|
2.9%
|
5.8%
|
-
|
1.3%
|
Underlying operating profit as a %
of gross profit
|
16.6%
|
14.6%
|
18.7%
|
-
|
12.7%
|
16.0%
|
24.8%
|
22.0%
|
-
|
14.6%
|
|
|
|
|
|
|
|
|
|
|
|
Pre-IFRS 162 net cash
excluding unamortised refinancing costs
|
-
|
-
|
-
|
-
|
3.8
|
-
|
-
|
-
|
-
|
5.0
|
Post-IFRS 16 net cash
excluding unamortised refinancing
costs
|
-
|
-
|
-
|
-
|
(0.2)
|
-
|
-
|
-
|
-
|
0.1
|
Comparatives for 2022 have been
restated to exclude discontinued activities.
Key performance indicators -
continuing operations
|
Recruitment GB
2023
|
Recruitment Ireland
2023
|
PeoplePlus 2023
|
Total
Group
2023
|
Recruitment GB
2022
|
Recruitment Ireland
2022
|
PeoplePlus 2022
|
Total Group
2022
|
Hours worked by temporary
workers
|
41.4m
|
6.2m
|
-
|
47.6m
|
44.0m
|
6.7m
|
-
|
50.7m
|
Gross profit per fee
earner
|
£76.5k
|
£98.8k
|
-
|
£79.9k
|
£76.5k
|
£102.2k
|
-
|
£80.6k
|
Revenue per employee
|
-
|
-
|
£49.3k
|
-
|
-
|
-
|
£55.7k
|
-
|
Alternative performance
measures
1 Underlying results
exclude goodwill impairment, amortisation of intangible assets
arising on business combinations, reorganisation costs and other
non-underlying charges.
2 Presented on a
pre-IFRS 16 basis, which excludes lease liabilities, and also
excludes refinancing costs.
3 Gross sales value
represents the value of consideration received or receivable for
the supply of services, including agency sales, (excluding fees)
net of VAT.
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. This value is adjusted for reporting revenue in
accordance with IFRS 15. The adjustment relative to reported
revenue for the Group is as follows:
|
2023
£m
|
2022
Restated
£m
|
Gross sales value
|
1,055.7
|
1,018.9
|
Agency sales excluding
fees
|
(117.5)
|
(90.8)
|
Revenue as reported
|
938.2
|
928.1
|
Recruitment
GB
Revenues in the Recruitment GB
division increased by £11.2m to £763.0m. The division experienced
weak demand in the first half of the year, due to the cost of
living crisis, as well as reduced permanent fees throughout the
year, which held back a strong performance in the second half. The
division benefited, particularly in the second half of the year,
from its strategy of driving organic growth, expanding key
strategic partnerships, whilst also renewing contracts with
key customers.
Gross profit of £51.9m (2022:
£51.8m) resulted in gross profit margin reducing slightly to 6.8%
(2022: 6.9%), reflecting the sector-wide reduction in permanent
recruitment activity. Increases in general pay rates combined with
the increase in the National Minimum Wage in April 2023, from £9.50
to £10.42 per hour for over 23s, do not impact absolute gross
profit but do negatively impact gross margin percentage
achieved.
Gross profit generated from
temporary recruitment increased as a proportion of the total to
93.3% (2022: 92.5%), with the remaining 6.7% (2022: 7.5%) of gross
profit generated from permanent recruitment. Permanent recruitment
fees reduced by 10.3% to £3.5m (2022: £3.9m). Hours worked reduced
to 41.4m (2022: 44.0m) reflecting reduced year-on-year supermarket
and online retail volumes.
Contrary to revenue declines in
the first half of the year, revenues in the second half were 3.7%
higher, year-on-year, at £421.8m (2022: £406.6m). This was driven
by organic growth won earlier in the year as well as strong trading
peak in the run up to Christmas, reflecting improved sentiment,
particularly in the retail sector. The division continued to
control overhead costs tightly, increasing its gross profit to
underlying operating profit conversion rate from 16.0% to 16.6%,
which delivered a 3.6% increase in underlying operating profit to
£8.6m (2022: £8.3m). In light of the weak economic backdrop the
division has taken a restructuring charge of £1.8m to rationalise
its cost base, which is expected to deliver annual savings of
c.£3.5m.
Recruitment
Ireland
Revenues in the Recruitment
Ireland division reduced by £2.3m to £108.3m, reflecting the
reduction in temporary worker hours to 6.2m (2022: 6.7m). This,
combined with a 12% decrease in permanent recruitment fees, led to
a reduction in profitability after the exceptionally strong result
in 2022.
Gross profit of £12.3m (2022:
£12.9m) resulted in gross profit margin reducing to 11.4% (2022:
11.7%), reflecting the lower permanent recruitment income. Gross
profit generated from temporary recruitment accounted for 84.1%
(2022: 82.9%) of the total, with the remaining 15.9% (2022: 17.1%)
of gross profit generated from permanent recruitment.
Despite the lower levels of demand
and local political uncertainty the division has continued to
invest in its cost base and as a result has secured a significant
contract win with the Republic of Ireland's Garda, which commences
in 2024. Underlying operating profit for the year was £1.8m (2022:
£3.2m).
PeoplePlus
As previously reported,
PeoplePlus' Skills training division was restructured during the
year, with a shift away from in-person classroom-based training to
focus on digital training. Consequently, the divisional results
reported below and elsewhere in these financial statements exclude
the results of the Skills division, which is treated as a
discontinued activity, generating trading losses and exit costs of
£3.1m before taxation.
PeoplePlus revenues increased by
1.8%, from £65.7m to £66.9m, based on the continuing strength of
its contracts in the Justice and Employability sectors. The
division continues to deliver strong performance in its Restart
sub-contracts but a number of other profitable contracts have come
to a natural end, alongside a quieter commissioning
period.
PeoplePlus achieved a gross margin
of 24.8% in 2023, which compares to 26.3% in 2022, largely due to
the completion of profitable Employability contracts.
Although the division reduced its
overhead base in the second half of the year as contracts expired,
this was unable to totally offset a reduction in underlying profit
conversion, which reduced from 22.0% to 18.7%. Underlying operating
profit for the year was £3.1m (2022: £3.8m).
In PeoplePlus, political
uncertainty, low levels of unemployment and the impact of new
contract revenue streams only flowing from 2025/6, will reduce
short term profitability by around two thirds, in 2024, as
announced in the January trading update. This and the exit from the
Skills business, contributed to the reappraisal of the value of
goodwill associated with the division, resulting in an impairment
charge of £8.9m, which has no cash impact.
Group costs
Group costs, which include
Directors' remuneration costs, have decreased to £3.2m (2022:
£3.3m) reflecting continued tight control over corporate
spend.
Group result
Underlying operating profit, which
was in line with market expectations, was £10.3m (2022: £12.0m), a
reduction of 14.2%. Total non-underlying charges on continuing
activities before tax, which are described below, were £14.0m
(2022: £7.4m), of which £12.2m was non-cash.
The underlying profit before
taxation on continuing operations for 2023 was £6.6m (2022: £9.3m).
The underlying profit after tax on continuing operations for the
year was £4.9m (2022: £9.4m).
The Group's reported loss before
taxation was £(7.9)m in the year (2022: profit £1.9m).
Net finance charges
Net underlying finance charges
incurred in the year amounted to £3.7m (2022: £2.7m), reflecting
part of the increase in overnight SONIA rates during the year from
c.3.50% to c.5.25%. However, the Group limited its exposure to
these interest rate increases through the use of an interest rate
cap, which was purchased in October 2021. This reduces exposure to
interest rate increases above 1% of SONIA on an aggregated
two-thirds of the Receivables Finance Agreement ("RFA"). The
instrument, which has a term of three years from 13 October 2021,
delivered receipts totalling £1.9m (2022: £0.3m).
In 2022, the net finance charge
benefited from a non-cash interest hedging credit adjustment of
£0.4m, which has partially reversed in the current year, resulting
in an interest hedging adjustment charge of £0.1m.
Taxation
The total tax charge for the year
was £(0.5)m (2022: credit £1.9m), which relates to the movement of
deferred tax balances. The Group does not have an estimated current
corporation tax liability for the year. Remaining tax losses of
£14.4m carried forward in all divisions have been recognised as a
deferred tax asset.
The amortisation charge relating
to intangible assets arising on business combinations and the
goodwill impairment charge, which are not deductible under UK
corporation tax, have been added back to taxable profit.
Alternative Performance
Measures
In the reporting of its financial
performance, the Group uses a limited number of alternative
performance measures that are not defined under IFRS, the Generally
Accepted Accounting Principles ("GAAP") under which the Group
reports. The Directors believe that these non-GAAP measures assist
with the understanding of the performance of the business and are
not given undue prominence in these financial statements. These
non-GAAP measures are not a substitute for, or superior to, any
IFRS measures of performance, but they have been included as an
additional means of comparing performance year on year. The
alternative performance measures used are described in Note
3.
Non-underlying items
Non-underlying items of income or
expenditure are items that are either non-recurring or of a
particular size or nature such that they require separate
identification. Non-underlying items are included in total reported
results but are excluded from underlying results. Certain items can
vary significantly from year to year and therefore create
volatility in reported earnings. It should be noted that whilst the
amortisation of intangible assets arising on business combinations
has been added back, the revenue from those acquisitions has not
been eliminated.
Non-underlying charges on
continuing activities before tax amounted to £14.0m in the year
(2022: £7.4m), which is analysed below.
Non-underlying expenses -
continuing operations
|
2023
£m
|
2022
£m
|
Reorganisation, rationalisation
and restructuring costs
|
1.8
|
-
|
Amortisation of intangible assets
arising on business combinations
|
3.3
|
7.4
|
Goodwill impairment
|
8.9
|
-
|
|
14.0
|
7.4
|
Tax credit on above non-underlying
expenses
|
(1.2)
|
(1.8)
|
|
12.8
|
5.6
|
During the year the Recruitment GB
division undertook a reorganisation, rationalisation and
restructuring programme in response to the impact of economic and
inflationary cost pressures on customers' permanent and temporary
worker requirements. The scope of the activities included a
reduction in administration headcount, a streamlining of the
property portfolio and the consolidation of selected third-party
spends.
The charge in the year for
amortisation of intangible assets arising on business combinations
relates to the following acquisitions: Vital Recruitment (charge
£0.7m: asset was fully amortised by February 2023); Passionate
about People (charge £1.7m: asset was fully amortised by October
2023); and Grafton (charge £0.9m: asset was fully amortised by June
2023). The intangible assets on business combinations are all fully
amortised at the end of 2023.
The results of an impairment
review showed that an impairment charge to goodwill of £8.9m was
required in the PeoplePlus cash-generating unit. Further details
are given in Note 10.
Share buyback programme
On 1 August 2023, the Group
announced the launch of a share buyback programme to repurchase
Ordinary Shares in the capital of the Company up to an aggregate
value of £4.0m. The 12,672,174 Ordinary Shares purchased at an
average price of 31.6p, pursuant to the share buyback were
immediately cancelled. On 4 October 2023, the Group announced the
launch of a further share buyback programme to repurchase up to
3,904,598 Ordinary Shares in the capital of the Company. The
3,904,598 Ordinary Shares purchased at an average price of 26.4p,
pursuant to the share buyback were immediately cancelled. As a
result of these programmes, the Company reduced the Ordinary Shares
in issue from 165,767,728 to 149,190,956.
The share buybacks were operated
in accordance with the terms of the Company's general authority to
repurchase Ordinary Shares granted by shareholders at its annual
general meeting, held on 12 June 2023.
Cancellation of share premium
account
At the Company's Annual General
Meeting held on 12 June 2023, the shareholders approved a special
resolution to cancel the entire amount standing to the credit of
the Company's share premium account, subject to the approval of the
High Court of England and Wales. Approval was granted by the Court
on 18 July 2023 and as a result the Company had distributable
reserves of £85.8m with effect from 20 July 2023, being the date
that the Court's decision was registered at Companies
House.
Earnings per share
Statutory basic and diluted loss
per share on continuing activities in 2023 were both (5.3)p (2022:
both 2.3p).
Following the share buyback
programme, under which the shares purchased were cancelled, the
weighted average number of shares (basic) is 157,247,639 (2022:
163,753,217).
Removing the non-underlying
charges, and their respective taxation impacts, results in
underlying basic earnings per share of 3.1p (2022: 5.7p) and
diluted earnings per share of 3.1p on continuing activities (2022:
5.7p).
Earnings before interest, taxation,
depreciation and amortisation, "EBITDA"
The table below reconciles
underlying EBITDA on continuing operations to operating
profit.
Reconciliation of operating loss to
EBITDA
|
2023 £m
|
2022
£m
|
Operating profit
|
(3.7)
|
4.6
|
Non-underlying costs
|
14.0
|
7.4
|
Underlying operating
profit
|
10.3
|
12.0
|
Depreciation and loss on
disposals
|
4.9
|
5.6
|
Underlying EBITDA
|
15.2
|
17.6
|
Lease rental payments
|
(1.8)
|
(1.6)
|
Underlying EBITDA (pre-IFRS
16)
|
13.4
|
16.0
|
Note: Underlying operating profit
is before goodwill impairment, amortisation of intangible assets
arising on business combinations, reorganisation costs and other
non-underlying expenses. EBITDA represents earnings before
interest, taxation, depreciation and amortisation.
Statement of financial position,
cash generation and financing
The Group has continued to deliver
strong trading cash flows with net cash (pre-IFRS 16) at the end of
the year significantly ahead of original market expectations,
maintaining ongoing balance sheet strength.
The movement in net debt is shown
in the table below. Strong trading cash flows were offset by the
outflow from the share buyback programme and additional working
capital investment in receivables growth in the final quarter of
the year.
Movement in net debt
|
2023
£m
|
2022
£m
|
Opening net cash (pre-IFRS
16)
|
5.0
|
6.9
|
Cash generated before change in
working capital and share options
|
10.5
|
17.6
|
Principal repayment of lease
liabilities
|
(1.8)
|
(1.6)
|
Change in trade and other
receivables
|
(9.5)
|
1.5
|
Repayment of advance receipts from
the MoJ
|
-
|
(6.2)
|
Deferred VAT
|
-
|
(5.8)
|
Change in trade, other payables
and provisions
|
10.8
|
(0.9)
|
Taxation and interest
|
(3.6)
|
(2.3)
|
Capital investment (net of
disposals)
|
(2.7)
|
(3.6)
|
Own shares purchased
|
(5.5)
|
-
|
Other
|
0.6
|
(0.6)
|
Closing net cash (pre-IFRS
16)
|
3.8
|
5.0
|
IFRS 16 lease
liabilities
|
(4.0)
|
(4.9)
|
Closing net (debt)/cash (post-IFRS
16)
|
(0.2)
|
0.1
|
Note: Underlying operating profit
is before goodwill impairment, amortisation of intangible assets
arising on business combinations, reorganisation costs and other
non-underlying expenses. EBITDA represents earnings before
interest, taxation, depreciation and amortisation.
The Group's headroom relative to
available committed banking facilities as at 31 December 2023 was
£62.4m (2022: £75.9m) as set out below:
|
2023 £m
|
2022
£m
|
Cash at bank
|
13.3
|
31.0
|
Undrawn receivables finance
agreement
|
49.1
|
49.1
|
Banking facility
headroom
|
62.4
|
75.9
|
Working capital financing
The Group manages its working
capital requirements using a receivables finance facility ("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 balance outstanding
on the RFA at 31 December 2023 was £9.5m (2022: £26.0m).
The balance funded under the
customer financing arrangements at 31 December 2023 was £46.8m
(2022: £51.7m).
Dividends
The Board is not proposing a final
dividend payment for 2023 (2022: £nil).
Going concern
For the period to 31 December
2025, the Group's cash flow forecasts indicate ongoing headroom in
the RFA and also full compliance with the financial covenants
contained therein. The Group has sufficient day-to-day liquidity to
ensure that short-term liabilities can be satisfied as and when
they fall due.
The financial statements have been
prepared on a going concern basis. The Directors have reviewed this
basis and have made full disclosure in Note 3, concluding that
there is a reasonable expectation that the Group and Company have
adequate resources to continue in operational existence for the
foreseeable future.
Daniel
Quint
Chief
Financial Officer
18 March 2024
Consolidated statement of
comprehensive income
For the year ended 31 December
2023
|
Note
|
2023
£m
|
2022
Restated
£m
|
Continuing operations
|
|
|
|
Revenue
|
4
|
938.2
|
928.1
|
Cost of sales
|
5
|
(857.4)
|
(846.1)
|
Gross profit
|
|
80.8
|
82.0
|
Administrative expenses
|
5
|
(84.5)
|
(77.4)
|
Operating (loss)/profit
|
|
(3.7)
|
4.6
|
Underlying operating profit before
non-underlying administrative expenses
|
|
10.3
|
12.0
|
Administrative expenses
(non-underlying)
|
5
|
(14.0)
|
(7.4)
|
Operating (loss)/profit
|
|
(3.7)
|
4.6
|
Finance income
|
6
|
1.9
|
0.7
|
Finance charges -
underlying
|
6
|
(5.6)
|
(3.4)
|
Finance charges -
non-underlying
|
6
|
(0.5)
|
-
|
Net finance charges
|
|
(4.2)
|
(2.7)
|
(Loss)/profit for the year before
taxation
|
|
(7.9)
|
1.9
|
Tax (expense)/credit
|
7
|
(0.5)
|
1.9
|
(Loss)/profit from continuing
activities
|
|
(8.4)
|
3.8
|
Loss from discontinued
operations
|
|
(2.6)
|
-
|
(Loss)/profit for the
year
|
|
(11.0)
|
3.8
|
Items that will not be
reclassified to profit and loss - actuarial gains, net of
tax
|
|
0.2
|
0.4
|
Items that will be reclassified to
profit and loss:
|
|
|
|
- effective portion of (loss)/gain
on hedging instrument measured at fair value
|
|
(0.8)
|
1.5
|
- Foreign exchange translation
(loss)/gain
|
|
(0.4)
|
0.1
|
Total comprehensive
income
|
|
(12.0)
|
5.8
|
|
|
|
|
Earnings per ordinary
share
|
8
|
|
|
Continuing operations: Basic and
diluted
|
|
(5.3)p
|
2.3p
|
Discontinued operations: Basic and
diluted
|
|
(1.7)p
|
-
|
Total earnings per share: Basic
and diluted
|
|
(7.0)p
|
2.3p
|
The accompanying notes form an
integral part of these financial statements.
Consolidated statement of changes
in equity
For the year ended 31 December
2023
|
Share
capital
£m
|
Own
shares
£m
|
Share
premium
£m
|
Capital redemption
reserve
£m
|
Share-
based
payment
reserve
£m
|
Cash flow hedge reserve
£m
|
Foreign exchange translation
reserve
£m
|
Profit
and loss
account
£m
|
Total
equity
£m
|
At 1 January 2022
|
16.6
|
(4.8)
|
111.8
|
-
|
0.3
|
0.2
|
(0.3)
|
(57.9)
|
65.9
|
Share based payments -
equity-settled
|
-
|
-
|
-
|
-
|
0.3
|
-
|
-
|
-
|
0.3
|
Issue of shares to
management
|
-
|
0.7
|
-
|
-
|
-
|
-
|
-
|
(0.6)
|
0.1
|
Own shares purchased
|
-
|
(0.4)
|
-
|
-
|
-
|
-
|
-
|
-
|
(0.4)
|
Transactions with
owners
|
-
|
0.3
|
-
|
-
|
0.3
|
-
|
-
|
(0.6)
|
-
|
Profit for the year
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
3.8
|
3.8
|
Cash flow hedge reserve
|
-
|
-
|
-
|
-
|
-
|
1.5
|
-
|
-
|
1.5
|
Actuarial gain on pension scheme,
net of taxation
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
0.4
|
0.4
|
Foreign exchange translation
adjustments
|
-
|
-
|
-
|
-
|
-
|
-
|
0.1
|
-
|
0.1
|
Total comprehensive income for the
year, net of tax
|
-
|
-
|
-
|
-
|
-
|
1.5
|
0.1
|
4.2
|
5.8
|
At 31 December 2022
|
16.6
|
(4.5)
|
111.8
|
-
|
0.6
|
1.7
|
(0.2)
|
(54.3)
|
71.7
|
Share based payments -
equity-settled
|
-
|
-
|
-
|
-
|
0.6
|
-
|
-
|
-
|
0.6
|
Transfer of share
premium
|
-
|
-
|
(111.8)
|
-
|
-
|
-
|
-
|
111.8
|
-
|
Issue of shares to
management
|
-
|
0.3
|
-
|
-
|
-
|
-
|
-
|
(0.2)
|
0.1
|
Shares purchased and
cancelled
|
(1.7)
|
-
|
-
|
1.7
|
-
|
-
|
-
|
(5.0)
|
(5.0)
|
Own shares purchased
|
-
|
(0.5)
|
-
|
-
|
-
|
-
|
-
|
-
|
(0.5)
|
Transactions with
owners
|
(1.7)
|
(0.2)
|
(111.8)
|
1.7
|
0.6
|
-
|
-
|
106.6
|
(4.8)
|
Loss for the year
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(11.0)
|
(11.0)
|
Cash flow hedge reserve
|
-
|
-
|
-
|
-
|
-
|
(0.8)
|
-
|
-
|
(0.8)
|
Actuarial gain on pension scheme,
net of taxation
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
0.2
|
0.2
|
Foreign exchange translation
adjustments
|
-
|
-
|
-
|
-
|
-
|
-
|
(0.4)
|
-
|
(0.4)
|
Total comprehensive income for the
year, net of tax
|
-
|
-
|
-
|
-
|
-
|
(0.8)
|
(0.4)
|
(10.8)
|
(12.0)
|
At 31 December 2023
|
14.9
|
(4.7)
|
-
|
1.7
|
1.2
|
0.9
|
(0.6)
|
41.5
|
54.9
|
The accompanying notes form an
integral part of these financial statements.
Consolidated statement of financial
position
As at 31 December 2023
|
|
|
Note
|
2023
£m
|
2022
£m
|
Assets
|
|
|
|
Non-current
|
|
|
|
Goodwill
|
10
|
50.7
|
59.6
|
Other intangible assets
|
|
6.7
|
9.4
|
Investments
|
|
-
|
-
|
Property, plant and
equipment
|
11
|
5.5
|
7.6
|
Deferred tax asset
|
|
4.4
|
5.0
|
Retirement benefit net
asset
|
|
0.5
|
0.2
|
Amount due from subsidiary
undertaking
|
|
-
|
-
|
|
|
67.8
|
81.8
|
Current
|
|
|
|
Trade and other
receivables
|
|
129.4
|
119.8
|
Current tax asset
|
|
-
|
0.3
|
Derivative financial
instruments
|
13
|
1.7
|
3.0
|
Cash and cash
equivalents
|
14
|
13.3
|
31.0
|
|
|
144.4
|
154.1
|
Total assets
|
|
212.2
|
235.9
|
Liabilities
|
|
|
|
Current
|
|
|
|
Trade and other
payables
|
|
140.8
|
130.3
|
Borrowings
|
15
|
9.5
|
26.0
|
Current tax liability
|
|
0.2
|
-
|
Provisions
|
|
1.8
|
0.9
|
Lease liabilities
|
12
|
1.4
|
1.5
|
|
|
153.7
|
158.7
|
Non-current
|
|
|
|
Provisions
|
|
0.5
|
0.6
|
Lease liabilities
|
12
|
2.6
|
3.4
|
Deferred tax
liabilities
|
|
0.5
|
1.5
|
|
|
3.6
|
5.5
|
Total liabilities
|
|
157.3
|
164.2
|
Equity
|
|
|
|
Share capital
|
16
|
14.9
|
16.6
|
Own shares
|
|
(4.7)
|
(4.5)
|
Share premium
|
|
-
|
111.8
|
Capital redemption
reserve
|
|
1.7
|
-
|
Share-based payment
reserve
|
|
1.2
|
0.6
|
Cash flow hedge reserve
|
|
0.9
|
1.7
|
Foreign exchange translation
reserve
|
|
(0.6)
|
(0.2)
|
Profit and loss account
|
|
41.5
|
(54.3)
|
Total equity
|
|
54.9
|
71.7
|
Total equity and
liabilities
|
|
212.2
|
235.9
|
The accompanying notes form an
integral part of these financial statements.
Consolidated statement of cash
flows
For the year ended 31 December
2023
|
Note
|
2023
£m
|
2022
£m
|
Cash flows from operating
activities
|
17
|
12.4
|
5.5
|
Taxation received
|
|
0.1
|
0.4
|
Net cash inflow from operating
activities
|
|
12.5
|
5.9
|
Cash flows from investing
activities - trading
|
|
|
|
Purchases of property, plant and
equipment
|
11
|
(0.4)
|
(1.0)
|
Purchase of intangible assets -
software
|
|
(2.3)
|
(2.3)
|
Total cash flows arising from
investing activities
|
|
(2.7)
|
(3.3)
|
Total cash flows arising from
operating and investing activities
|
|
9.8
|
2.6
|
Cash flows from financing
activities
|
|
|
|
Net movements on Receivables
Finance Agreement
|
15
|
(16.5)
|
3.1
|
Principal repayment of lease
liabilities
|
12
|
(1.8)
|
(1.6)
|
Net interest paid
|
|
(3.7)
|
(2.5)
|
Own shares purchased
|
|
(5.5)
|
(0.4)
|
Net cash flows from financing
activities
|
|
(27.5)
|
(1.4)
|
Net change in cash and cash
equivalents
|
|
(17.7)
|
1.2
|
Cash and cash equivalents at
beginning of year
|
|
31.0
|
29.8
|
Cash and cash equivalents at end
of year
|
14
|
13.3
|
31.0
|
The accompanying notes form an
integral part of these financial statements.
Notes to the financial
information
For the year ended 31 December
2023
1 Nature of operations
The principal activities of
Staffline Group plc and its subsidiaries ("the Group") include the
provision of recruitment and outsourced human resource services to
industry and the provision of skills and employment training and
support.
2 General information and statement
of compliance
Staffline Group plc, a Public
Limited Company limited by shares listed on AIM ("the Company"), is
incorporated and domiciled in England, United Kingdom. The Company
acts as the holding company of the Group. The Company's
registration number is 05268636.
The financial information set out
in this document does not constitute the Group's statutory accounts
for the years ended 31 December 2023 or 2022 but is derived from
those accounts. Statutory accounts for 2022 have been delivered to
the registrar of companies. The auditors have reported on those
accounts; their reports were (a) unqualified, and (ii) did not
contain a statement under section 498 (2) or (3) of the Companies
Act 2006. Statutory accounts for 2023 will be delivered to the
registrar of companies in due course. The auditors have reported on
those accounts; their reports were (i) unqualified, and (ii) did
not contain a statement under section 498 (2) or (3) of the
Companies Act 2006.
The financial statements for the
year ended 31 December 2023 (including the comparatives for the
year ended 31 December 2022) were approved and authorised for issue
by the Board of Directors on 18 March 2023. This results
announcement for the year ended 31 December 2023 was also approved
by the Board on 18 March 2024.
3 Accounting policies
Basis of preparation
The Consolidated financial
statements are prepared for the year ended 31 December 2022. The
Consolidated financial statements of the Group have been prepared
on a going concern basis using the significant accounting policies
and measurement bases summarised below, and in accordance UK
adopted International Accounting Standards. The financial
statements are prepared under the historical cost convention except
for equity-settled share options, derivative financial instruments
and the retirement benefit net asset, which are measured at fair
value.
There are no new accounting
pronouncements which have become effective in the year.
Going concern
The Group's business activities,
together with the factors likely to affect its future development,
performance and position are set out in the Chief Executive
Officer's Review. The financial position of the Group, its cash
flows, liquidity position and borrowing facilities are described in
the Financial Review.
As described in the Chief Executive
Officer's Review, despite the challenging trading conditions
experienced across all divisions in the Group during the year, the
Group reported an underlying operating profit for the year on
continuing activities. The recruitment divisions reported resilient
results and are expecting further growth following significant
contract extensions with existing customers and new contract wins.
The Group's PeoplePlus division continued to be significantly
impacted by the disruption to its Skills training programmes, which
resulted in the closure of in-person training during the year.
Volume reduction in the sector is expected to continue in the
short-term.
The Directors maintained tight cost
control throughout, with overheads at reduced levels, additionally
benefiting from previous restructuring programmes. These
initiatives resulted in improved performance in the second half of
the year generating increased underlying profit and positive cash
generation.
The Directors have prepared updated
forecasts and cash flow projections to 31 December 2025, which is
considered to be a reasonable period over which a reasonable view
can be formed. These forecasts have been used to assess going
concern and have been stress-tested by applying basic sensitivity
analysis, involving a reduction to revenues across all three
divisions, over the forecast period.
In forming their opinion, the
Directors have performed a robust assessment of the principal risks
and uncertainties facing the Group. Consequently, the Directors
believe that the Group is well placed to manage its business risks
successfully.
At 31 December 2023, the Group had
net cash of £3.8m (2022: net cash of £5.0m), on a pre-IFRS 16
basis, and has committed debt facilities until 1 December 2027. For
the period to 31 December 2025, the Group's cash flow forecasts
indicate ongoing headroom in the Receivables Finance Agreement and
also full compliance with the financial covenants contained
therein. The Group has sufficient day to day liquidity to ensure
that short-term liabilities can be satisfied as and when they fall
due. Further details of the financial position of the Group, its
cash flows, liquidity position and borrowing facilities are
described in the Financial Review.
As a result, 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 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.
Consolidation of
subsidiaries
The Group financial statements
consolidate those of the parent Company and all of its subsidiaries
as at 31 December 2022 in accordance with IFRS 10. Subsidiaries are
all entities to which the Group is exposed to or has rights to
variable returns and the ability to affect those returns through
control over the subsidiary. The results of subsidiaries whose
accounts are prepared in a currency other than sterling; are
translated at the average rates of exchange during the period and
their year-end balances at the year-end rate of exchange.
Translation adjustments are taken to the profit and loss
reserves.
Material intra-group balances and
transactions, and any unrealised gains or losses arising from
intra-group transactions, are eliminated in preparing these
financial statements.
Underlying profit - non-GAAP
measures of performance
In the reporting of its financial
performance, the Group uses certain measures that are not defined
under IFRS, the Generally Accepted Accounting Principles ("GAAP")
under which the Group reports. The Directors believe that these
non-GAAP measures assist with the understanding of the performance
of the business. These non-GAAP measures are not a substitute, or
superior to, any IFRS measures of performance but they have been
included as the Directors consider them to be an important means of
comparing performance year-on-year and they include key measures
used within the business for assessing performance.
Gross sales value
Gross sales value represents the
value of the consideration received or receivable for the supply of
services, including agency sales, (excluding fees), which are
subject to an IFRS 15 agency adjustment, net of value added tax,
rebates and discounts and after eliminating sales within the
Group.
Non-underlying items of income and
expenditure
These non-underlying charges are
regarded as recurring or non-recurring items of income or
expenditure of a particular size and/or nature relating to the
operations of the business that in the Directors' opinion require
separate identification. These items are included in "total"
reported results but are excluded from "underlying" results. These
items can vary significantly from year to year and therefore create
volatility in reported earnings which does not reflect the Group's
underlying performance.
Underlying EBITDA
Underlying operating profit before
the deduction of underlying depreciation and amortisation charges.
This is considered a useful measure because it approximates the
underlying cash flow by eliminating depreciation and amortisation
charges.
Net debt
Net debt is the amount of bank
debt less available cash balances excluding escrow funds. This is a
key measure as it is one on which the terms of the banking
facilities are based and shows the level of external debt utilised
by the Group to fund operations. Net debt is also presented on a
pre-IFRS 16 basis which excludes lease liabilities.
The Directors acknowledge that the
adjustments made to arrive at underlying profit may not be
comparable to those made by other companies and it should be
noted that whilst the amortisation of acquisition-related
intangible assets has been added back, the revenue from those
acquisitions has not been eliminated.
These alternative performance
measures are utilised by the Board to monitor performance and
financial position. They show a comparable level of performance
excluding one-off items, with which underlying performance and
ability to service debt can be judged.
Business combinations
The Group applies the acquisition
method in accounting for business combinations. The consideration
transferred by the Group to obtain control of a subsidiary is
calculated as the sum of the acquisition-date fair value of assets
transferred, liabilities incurred and the equity interests of the
Group, which includes the fair value of any asset or liability
arising from a contingent consideration arrangement. Acquisition
costs are expensed as incurred.
Goodwill is stated after separate
recognition of identifiable intangible assets. It is calculated as
the sum of a) fair value of consideration transferred, b) the
recognised amount of any non-controlling interest in the acquiree
and c) acquisition-date fair value of any existing equity interest
in the acquiree, over the acquisition-date fair values of
identifiable net assets. If the fair values of identifiable net
assets exceed the sum calculated above, the excess amount (i.e.
gain on a bargain purchase) is recognised in the statement of
comprehensive income immediately.
Segment reporting
The Group has three material
operating segments: the provision of recruitment and outsourced
human resource services to industry, in Great Britain (Recruitment
GB) an also in Ireland (Recruitment Ireland), plus the provision of
skills and employment training and support, together "PeoplePlus".
Each of these operating segments is managed separately as each
requires different technologies, marketing approaches and other
resources. For management purposes, the Group uses the same
measurement policies as those used in its financial
statements.
4 Segment reporting
Management currently identifies
three operating segments: Recruitment GB, Recruitment Ireland and
PeoplePlus. The Group's reporting 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 operating segments, they are operated and
reviewed as single units by the Board of Directors. Each legal
entity within an operating segment has the same management team,
head office and have similar economic characteristics. The Group's
strategy, historically and going forward, has been to integrate new
acquisitions into the main trading entities within each operating
segment.
Segment information for the
reporting year is as follows:
|
Recruitment
GB
2023
£m
|
Recruitment Ireland
2023
£m
|
PeoplePlus
2023
£m
|
Group
Costs
2023
£m
|
Total
Group
2023
£m
|
Recruitment
GB
2022
Restated
£m
|
Recruitment
Ireland
2022
£m
|
PeoplePlus
2022
Restated
£m
|
Group
Costs
2022
£m
|
Total
Group
2022
Restated
£m
|
Sales revenue from external
customers
|
763.0
|
108.3
|
66.9
|
-
|
938.2
|
751.8
|
110.6
|
65.7
|
-
|
928.1
|
Cost of sales
|
(711.1)
|
(96.0)
|
(50.3)
|
-
|
(857.4)
|
(700.0)
|
(97.7)
|
(48.4)
|
-
|
(846.1)
|
Segment gross profit
|
51.9
|
12.3
|
16.6
|
-
|
80.8
|
51.8
|
12.9
|
17.3
|
-
|
82.0
|
Administrative expenses
|
(40.8)
|
(9.9)
|
(11.7)
|
(3.2)
|
(65.6)
|
(40.3)
|
(9.3)
|
(11.5)
|
(3.3)
|
(64.4)
|
Depreciation, software & lease
amortisation
|
(2.5)
|
(0.6)
|
(1.8)
|
-
|
(4.9)
|
(3.2)
|
(0.4)
|
(2.0)
|
-
|
(5.6)
|
Segment underlying operating
profit*
|
8.6
|
1.8
|
3.1
|
(3.2)
|
10.3
|
8.3
|
3.2
|
3.8
|
(3.3)
|
12.0
|
Reorganisation costs
|
(1.8)
|
-
|
-
|
-
|
(1.8)
|
-
|
-
|
-
|
-
|
-
|
Goodwill impairment
|
-
|
-
|
(8.9)
|
-
|
(8.9)
|
-
|
-
|
-
|
-
|
-
|
Amortisation of intangibles
arising on business combinations
|
(3.2)
|
(0.1)
|
-
|
-
|
(3.3)
|
(5.9)
|
(1.3)
|
(0.2)
|
-
|
(7.4)
|
Segment (loss)/profit from
operations
|
3.6
|
1.7
|
(5.8)
|
(3.2)
|
(3.7)
|
2.4
|
1.9
|
3.6
|
(3.3)
|
4.6
|
Finance (costs)/income
|
(5.5)
|
(0.1)
|
-
|
1.9
|
(3.7)
|
(3.1)
|
(0.1)
|
-
|
0.5
|
(2.7)
|
Refinancing costs
|
-
|
-
|
-
|
(0.5)
|
(0.5)
|
-
|
-
|
-
|
-
|
-
|
Segment (loss)/profit before
taxation
|
(1.9)
|
1.6
|
(5.8)
|
(1.8)
|
(7.9)
|
(0.7)
|
1.8
|
3.6
|
(2.8)
|
1.9
|
Tax (expense)/credit
|
0.9
|
(0.2)
|
(1.4)
|
0.2
|
(0.5)
|
1.8
|
-
|
(0.2)
|
0.3
|
1.9
|
Segment profit/(loss) from
continuing operations
|
(1.0)
|
1.4
|
(7.2)
|
(1.6)
|
(8.4)
|
1.1
|
1.8
|
3.4
|
(2.5)
|
3.8
|
*
Segment underlying operating profit before
goodwill impairment, amortisation of intangible assets arising on
business combinations, reorganisation costs and other
non-underlying costs.
|
Recruitment
GB
2023
£m
|
Recruitment Ireland
2023
£m
|
PeoplePlus
2023
£m
|
Staffline Group
2023
£m
|
Total
Group
2023
£m
|
Recruitment
GB
2022
£m
|
Recruitment
Ireland
2022
£m
|
PeoplePlus
2022
£m
|
Staffline Group
2022
£m
|
Total Group
Restated
2022
£m
|
Total non-current
assets
|
24.7
|
12.3
|
26.4
|
-
|
63.4
|
28.4
|
12.2
|
36.2
|
-
|
76.8
|
Total current assets
|
112.6
|
15.7
|
13.8
|
2.3
|
144.4
|
117.6
|
19.9
|
13.3
|
3.3
|
154.1
|
Total assets
(consolidated)
|
137.3
|
28.0
|
40.2
|
2.3
|
207.8
|
146.0
|
32.1
|
49.5
|
3.3
|
230.9
|
Total liabilities
(consolidated)
|
131.8
|
9.6
|
15.3
|
0.1
|
156.8
|
135.1
|
11.0
|
17.5
|
0.6
|
164.2
|
Cash capital expenditure in
software
|
1.9
|
0.6
|
1.1
|
-
|
3.6
|
2.0
|
0.5
|
0.8
|
-
|
3.3
|
The analysis above excludes deferred tax assets and
liabilities as required by IFRS 8 Operating
segments.
Revenues can be analysed by country
as follows (97.0% of revenues arising within the UK in 2023, 96.7%
in 2022):
|
Recruitment
GB
2023
£m
|
Recruitment Ireland
2023
£m
|
PeoplePlus
2023
£m
|
Total
Group
2023
£m
|
Recruitment
GB
2022
Restated
£m
|
Recruitment
Ireland
2022
£m
|
PeoplePlus
2022
Restated
£m
|
Total Group
2022
£m
|
UK
|
763.0
|
79.7
|
66.9
|
909.6
|
751.8
|
80.0
|
65.7
|
897.5
|
Republic of Ireland
|
-
|
28.6
|
-
|
28.6
|
-
|
30.6
|
-
|
30.6
|
|
763.0
|
110.6
|
66.9
|
938.2
|
751.8
|
110.6
|
65.7
|
928.1
|
No customer contributed more than
10% of the Group's revenue during either 2023 or 2022.
5 Expenses by nature
Expenses by nature are as
follows:
Underlying expenses
|
2023
£m
|
2022
Restated
£m
|
Employee benefits expenses - cost
of sales
|
845.4
|
834.3
|
Other cost of sales
|
12.0
|
11.8
|
Employee benefits expenses -
administrative expenses
|
46.4
|
46.3
|
Depreciation and software
amortisation
|
4.9
|
5.6
|
Operating lease
expenses
|
0.7
|
1.2
|
Other administrative
expenses
|
18.5
|
16.9
|
|
927.9
|
916.1
|
Disclosed as:
|
|
|
Cost of sales
|
857.4
|
846.1
|
Administrative expenses -
excluding non-underlying expenses
|
70.5
|
70.0
|
|
927.9
|
916.1
|
Auditors' remuneration
|
2023
£'000
|
2022
£'000
|
Fees payable to the Company's
auditor for the audit of the Company's annual accounts
|
17
|
17
|
Fees payable to the Company's
auditor and its associates for other services:
|
|
|
- Audit of the accounts of
subsidiaries
|
748
|
682
|
- Audit of the pension
scheme
|
17
|
18
|
- Audit-related assurance
services
|
18
|
15
|
- Audit fee expenses
|
13
|
13
|
Total
|
813
|
745
|
Non-underlying expenses -
continuing operations
|
|
2023
£m
|
2022
£m
|
Reorganisation costs
|
|
1.8
|
-
|
Goodwill impairment
|
|
8.9
|
-
|
Amortisation of intangible assets
arising on business combinations (licences, customer
contracts)
|
|
3.3
|
7.4
|
Tax credit on above non-underlying
expenses
|
|
(1.2)
|
(1.8)
|
Post taxation effect on above
non-underlying expenses
|
|
12.8
|
5.6
|
During the year the Recruitment GB
division undertook a reorganisation, rationalisation and
restructuring programme in response to the impact
of economic and inflationary cost pressures on customer permanent
and temporary worker requirements. The scope of the activities
included a reduction in administration headcount, a streamlining of
the property portfolio and the consolidation of selected third
party spends.
The results of an impairment review
indicated that an impairment charge of £8.9m was required against
the goodwill held in respect of the PeoplePlus cash generating
unit.
The charge for amortisation of
intangible assets arising on business combinations relates
principally to the acquisitions of the Endeavour Group, Passionate
About People, Grafton Recruitment and Brightwork.
6 Finance income and
charges
Finance income
|
2023
£m
|
2022
£m
|
Receipts from derivative
|
1.9
|
0.3
|
Derivative
ineffectiveness
|
-
|
0.4
|
Total
|
1.9
|
0.7
|
Finance charges
Underlying finance charges
|
2023
£m
|
2022
£m
|
Interest payable on bank and other
funding
|
5.0
|
2.9
|
Interest on lease
liabilities
|
0.1
|
0.1
|
Derivative
ineffectiveness
|
0.1
|
-
|
Amortisation of refinancing
costs
|
0.3
|
0.3
|
Amortisation of derivative
cost
|
0.1
|
0.1
|
Total
|
5.6
|
3.4
|
Non-Underlying finance charges
|
2023
£m
|
2022
£m
|
Arrangement fees and refinancing
costs
|
0.5
|
-
|
Net finance charges
|
4.2
|
2.7
|
7 Tax expense
The tax expense on the loss for the
year consists of:
Continuing activities
|
2023
£m
|
2022
£m
|
Corporation tax
|
|
|
UK corporation tax at 23.5% (2022:
19.00%)
|
-
|
0.1
|
Adjustments in respect of prior
years
|
-
|
-
|
UK current tax
charge/(credit)
|
-
|
0.1
|
Deferred tax
|
|
|
Timing differences arising in the
year
|
0.9
|
(0.6)
|
Adjustments in respect of prior
years
|
(0.4)
|
(1.4)
|
UK deferred tax
expense/(credit)
|
0.5
|
(2.0)
|
Total UK tax expense/(credit) for
the year
|
0.5
|
(1.9)
|
The tax expense/(credit) for the
year, as recognised in the statement of comprehensive income, is
higher than the standard rate of corporation tax in the UK of 23.5%
(2022: lower than the 19.00% standard rate). The differences are
explained below:
|
2023
£m
Total
|
2022
£m
Total
|
(Loss)/profit for the year before
taxation
|
(7.9)
|
1.9
|
Tax rate
|
23.5%
|
19%
|
Tax on (loss)/profit for the year
at the standard rate
|
(1.9)
|
0.4
|
Effect of:
|
|
|
Remeasurement of deferred tax for
changes in tax rates
|
-
|
(0.4)
|
Expenses not allowable
|
2.3
|
-
|
Income not taxable
|
(0.3)
|
-
|
Adjustments in respect of prior
years
|
0.4
|
(1.0)
|
Tax losses available
|
-
|
(0.7)
|
Deferred tax not
recognised
|
-
|
0.2
|
Actual tax
expense/(credit)
|
0.5
|
(1.9)
|
On underlying profit
|
1.7
|
(0.1)
|
On non-underlying loss
|
(1.2)
|
(1.8)
|
Actual tax
expense/(credit)
|
0.5
|
(1.9)
|
The total
tax expense for the year of £0.5m (2022: credit £1.9m) arises
principally from the movement of deferred tax balances. The Group
does not have an estimated current corporation tax liability for
the current year (2022: £0.1m). Corporation tax losses of £14.4m
carried forward in all divisions and the Company have been
recognised as a deferred tax asset. Previously, a deferred tax
liability was recognised in respect of intangible assets arising on
acquired businesses. This asset has been fully amortised in 2023
and the associated deferred tax liability has been
extinguished.
The deferred tax assets and
liabilities at 31 December 2023 and at 31 December 2022 have been
calculated based on 25%, reflecting the expected timing of reversal
of the related timing differences.
No material tax charges arise on
overseas profits or losses and accordingly no disclosures relating
to overseas tax are included within the financial
statements.
8 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 year, after deducting the "own shares" held in the
Group's Employee Benefit Trust of 3,3163,391 shares (2022:
2,014,511 shares). The calculation of the diluted earnings per
share is based on the basic earnings per share as adjusted to
further take into account the potential issue of Ordinary Shares
resulting from share options granted to certain Directors and
senior staff under long-term incentive schemes and share options
granted to employees under the SAYE scheme.
Details of the earnings and
weighted average number of shares used in the calculations are set
out below:
|
Basic
2023
|
Basic
2022
|
Diluted
2023
|
Diluted
2022
|
(Loss)/profit from continuing
operations (£m)
|
(8.4)
|
3.8
|
(8.4)
|
3.8
|
Weighted average number of
shares
|
157,247,639
|
163,753,217
|
157,788,528
|
165,163,334
|
Earnings per share from continuing
operations (p)
|
(5.3)p
|
2.3p
|
(5.3)p
|
2.3p
|
Underlying earnings (post tax)
from continuing operations (£m)
|
4.9
|
9.4
|
4.9
|
9.4
|
Underlying earnings per share
(p)*
|
3.1p
|
5.7p
|
3.1p
|
5.7p
|
|
|
|
|
|
Loss from discontinued operations
(£m)
|
(2.6)
|
-
|
(2.6)
|
-
|
Weighted average number of
shares
|
157,247,639
|
-
|
157,788,528
|
-
|
Loss per share from discontinued
operations (p)
|
(1.7)p
|
-
|
(1.7)p
|
-
|
(Loss)/profit for the year
(£m)
|
(11.0)
|
3.8
|
(11.0)
|
3.8
|
Weighted average number of
shares
|
157,247,639
|
163,753,217
|
157,788,528
|
165,163,334
|
Total (loss)/earnings per share
(p)
|
(7.0)p
|
2.3p
|
(7.0)p
|
2.3p
|
*
Underlying earnings before goodwill impairment, amortisation of
intangible assets arising on business combinations, reorganisation
costs and other non-underlying costs.
During the year the Company
purchased and immediately cancelled 16,576,772 shares under its
share buyback programme.
The total number of dilutive share
options held in LTIP and SAYE schemes is 540,889
(2022: 1,410,117).).
Dividends
The Board is not proposing a final
dividend payment for 2023 (2022: £nil).
9 Discontinued
activities
On 1 August 2023, the Group
announced the restructuring of the PeoplePlus division's Skills
training activities with the closure of in-person training to focus
on digital delivery in other parts of the division. The Skills
training business has subsequently been wound down with the exit
from leased teaching space and redundancy of affected staff. The
results of the Skills business, which is treated as discontinued in
the year, were as follows:
|
2023
£m
|
2022
£m
|
Revenue
|
4.5
|
12.2
|
Cost of sales
|
(5.3)
|
(11.2)
|
Gross (loss)/profit
|
(0.8)
|
1.0
|
Administrative expenses
|
(0.7)
|
(1.0)
|
Underlying operating
loss
|
(1.5)
|
-
|
Non-underlying costs -
redundancies and property exit
|
(1.6)
|
-
|
Operating loss
|
(3.1)
|
-
|
Tax credit
|
0.7
|
-
|
Loss for the period
|
(2.4)
|
-
|
The cashflows of the business were
as follows:
|
2023
£m
|
2022
£m
|
Net cash outflow from operating
activities
|
(3.1)
|
-
|
During December 2023 the Group's
closed its operations in Portugal, the results of which have been
treated as discontinued and are set out below.
|
2023
£m
|
2022
£m
|
Revenue
|
0.1
|
0.2
|
Cost of sales
|
-
|
-
|
Gross profit
|
0.1
|
0.2
|
Administrative expenses
|
(0.2)
|
(0.2)
|
Underlying operating
loss
|
(0.1)
|
-
|
Non-underlying costs -
redundancies and property exit
|
(0.2)
|
-
|
Operating loss
|
(0.3)
|
-
|
Tax credit
|
0.1
|
-
|
Loss for the period
|
(0.2)
|
-
|
The cashflows of the business were
as follows:
|
2023
£m
|
2022
£m
|
Net cash outflow from operating
activities
|
(0.3)
|
-
|
10 Goodwill
Gross carrying amount by operating segment
Gross carrying amount
|
Recruitment GB
£m
|
Recruitment Ireland
£m
|
PeoplePlus
£m
|
Total
£m
|
At 1 January 2023 and 31 December
2023
|
54.5
|
5.7
|
57.0
|
117.2
|
Impairment adjustment
|
|
|
|
|
At 1 January 2023
|
33.1
|
-
|
24.5
|
57.6
|
Charged in the year
|
-
|
-
|
8.9
|
8.9
|
At 31 December 2023
|
33.1
|
-
|
33.4
|
66.5
|
Net book amount at 31 December
2023
|
21.4
|
5.7
|
23.6
|
50.7
|
Net book amount at 31 December
2022
|
21.4
|
5.7
|
32.5
|
59.6
|
Impairment - Goodwill
Management considers there to be
three cash-generating units ("CGUs"), being Recruitment GB,
Recruitment Ireland and PeoplePlus, in line with the operating
segments defined in note 4. These three cash-generating units have
been tested for impairment.
An impairment review was conducted
as at 31 December 2023. The recoverable amount of goodwill was
determined based on a value-in-use calculation, using forecasts for
2024-26, followed by an extrapolation of expected cash flows over
the next two years with a long-term growth rate of 2% (2022: 2%)
for each cash generating unit. The forecasts are prepared by the
individual operating segments of the Group, which are considered to
be the same as the determined CGUs. The cash flow forecasts are
based on current levels of trading for each CGU, with income and
cost increases generally in line with inflation at 2% (2022: 2%)
and no significant contract wins or losses.
Pre-tax discount rates of 17.0% for
Recruitment GB, 13.8 % for Recruitment Ireland and 14.1% for
PeoplePlus (2022: 17.3% for Recruitment GB, 16.5% for Recruitment
Ireland and 14.2% for PeoplePlus) were used based on the weighted
average costs of capital for each operating segment. The
recoverable amounts of the CGUs, having considered the higher of
value-in-use and fair value less costs to sell, were £67.3m for
Recruitment GB, £33.9m for Recruitment Ireland and £25.2m for
PeoplePlus, (2022: £58.8m for Recruitment GB, £24.1m for
Recruitment Ireland and £42.2m for PeoplePlus) all being
value-in-use. The discount rates used are based on appropriate,
current long-term market rate indicators to give a long-term
forward view, whilst also acknowledging
historical information.
The results of the impairment
review showed headroom in the Recruitment GB and Recruitment
Ireland cash-generating units but that an impairment adjustment of
£8.9m is required for the PeoplePlus CGU, which is monitored for
impairment at the same level as investment. The same calculations
indicated that an impairment adjustment of £17.0m (2022: £8.2m) is
required to the Company's carrying value of its investment in
PeoplePlus, but that no other impairment adjustments were
indicated.
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 CGUs. Whilst there are individual legal
entities within the three operating segments, they are operated and
reviewed as single units by the Board of Directors. Each operating
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 operating
segment.
The key estimates in determining
the value of each CGU are:
1. The discount rate. The
impairment calculations use a pre-tax discount rate of 17.0% for
Recruitment GB, 13.8% for Recruitment Ireland and 14.1% for
PeoplePlus and a terminal growth value of 2%. These rates are based
on the latest weighted average costs of capital for each operating
segment. These rates have decreased this year primarily due to a
movement in the risk-free rate. The calculations highlighted
headroom of £42.7m (2022: £29.5m) for Recruitment GB, headroom of
£22.8m (2022: £13.0m) for Recruitment Ireland and an impairment of
£8.9m (2022: headroom £6.3m) for PeoplePlus. A 1% increase in the
discount rates reduces the headroom to £38.4m (2022: £25.8m) for
Recruitment GB, reduces headroom to £20.0m (2022: £11.3m) for
Recruitment Ireland and increases the impairment to £10.9m (2022:
reduces headroom to £3.0m) for PeoplePlus.
2.
The achievability of the forecasted future cash
flows. There is an inherent uncertainty regarding the
achievability of forecasts, as there are macroeconomic factors
outside of the Group's control. A sustained underperformance of 10%
reduces the headroom to £37.0m (2022: £23.7m) for Recruitment GB,
reduces headroom to £18.5 (2022: £10.6m) for Recruitment Ireland
and increases the impairment to £11.5m (2022: reduces headroom to
£2.1m) for PeoplePlus.
11 Property, plant and
equipment
Gross carrying amount
|
Land and
buildings
£m
|
Computer equipment
£m
|
Fixtures and fittings
£m
|
Motor
vehicles
£m
|
Total
£m
|
At 1 January 2022
|
14.7
|
12.3
|
1.2
|
0.5
|
28.7
|
Additions
|
2.3
|
0.6
|
0.3
|
-
|
3.2
|
Disposals
|
(1.7)
|
(1.5)
|
(0.1)
|
(0.1)
|
(3.4)
|
Transfer
|
0.4
|
(0.4)
|
-
|
-
|
-
|
At 31 December 2022
|
15.7
|
11.0
|
1.4
|
0.4
|
28.5
|
Additions
|
0.9
|
0.2
|
0.1
|
0.1
|
1.3
|
Disposals
|
(0.2)
|
(1.1)
|
-
|
(0.1)
|
(3.4)
|
Transfer
|
0.4
|
(0.4)
|
-
|
-
|
-
|
At 31 December 2023
|
16.4
|
10.1
|
1.5
|
0.4
|
28.4
|
Depreciation
|
|
|
|
|
|
At 1 January 2022
|
9.6
|
9.7
|
1.1
|
0.3
|
20.7
|
Charged in the year -
operating
|
1.7
|
1.5
|
0.2
|
0.2
|
3.6
|
Charged in the year -
impairment
|
(0.6)
|
-
|
-
|
-
|
(0.6)
|
Disposals
|
(1.3)
|
(1.4)
|
-
|
(0.1)
|
(2.8)
|
Transfer
|
0.2
|
(0.2)
|
-
|
-
|
-
|
At 31 December 2022
|
9.6
|
9.6
|
1.3
|
0.4
|
20.9
|
Charged in the year -
operating
|
1.9
|
1.1
|
0.2
|
-
|
3.2
|
Disposals
|
(0.2)
|
(0.9)
|
-
|
(0.1)
|
(1.2)
|
At 31 December 2023
|
11.3
|
9.8
|
1.5
|
0.3
|
22.9
|
Net book value
|
|
|
|
|
|
At 31 December 2023
|
5.1
|
0.3
|
-
|
0.1
|
5.5
|
At 31 December 2022
|
6.1
|
1.4
|
0.1
|
-
|
7.6
|
Land and buildings and computer
equipment includes the following right-of-use assets:
At 31 December 2023
|
Carrying amount
|
Depreciation expense
|
Impairment
|
Office buildings
|
3.9
|
(1.7)
|
-
|
At 31 December 2022
|
Carrying amount
|
Depreciation expense
|
Impairment
|
Office buildings
|
4.7
|
(1.5)
|
(0.6)
|
12 Leases
Lease liabilities are presented in
the statement of financial position as follows:
|
2023
£m
|
2022
£m
|
Current
|
1.4
|
1.5
|
Non-current
|
2.6
|
3.4
|
|
4.0
|
4.9
|
The Group has leases for its
operational and administrative offices. With the exception of
short-term leases and leases of low-value underlying assets, each
lease is reflected on the balance sheet as a right-of-use asset and
a lease liability. The Group classifies its right-of-use assets in
a consistent manner to its property, plant and equipment (see note
11).
Unless there is a contractual right
for the Group to sublet the asset to another party, the
right-of-use asset can typically only be used by the Group. Leases
are either non-cancellable or may only be cancelled by incurring a
substantive termination fee. Some leases contain an option to
extend the lease for a further term. The Group is prohibited from
selling or pledging the underlying leased assets as security. For
leases over office buildings the Group must keep those properties
in a good state of repair and return the properties in their
original condition at the end of the lease. Further, the Group must
insure items of property, plant and equipment and incur maintenance
costs on such items in accordance with the lease
contracts.
The table below describes the
nature of the Group's leasing activities by type of right-of-use
asset recognised on the balance sheet:
Right-of-use asset
|
No of right-of-use assets
leased
|
Range of remaining term
(years)
|
Average remaining lease
term
|
No of leases with extension
options
|
Office building
|
55
|
0.1-11.2
|
2.3
|
-
|
The lease liabilities are secured by
the related underlying assets. Future minimum lease payments at 31
December 2023 were as follows:
|
Minimum lease payments
due
|
Within one year
|
1-2 years
|
2-3 years
|
3-4 years
|
After 5 years
|
Total
|
31 December 2023
|
|
|
|
|
|
|
Lease payments
|
1.5
|
0.9
|
0.6
|
0.5
|
0.7
|
4.2
|
Finance charges
|
(0.1)
|
(0.1)
|
-
|
-
|
-
|
(0.2)
|
Net present value
|
1.4
|
0.8
|
0.6
|
0.5
|
0.7
|
4.0
|
31 December 2022
|
|
|
|
|
|
|
Lease payments
|
1.6
|
1.2
|
0.8
|
0.6
|
1.0
|
5.2
|
Finance charges
|
(0.1)
|
(0.1)
|
(0.1)
|
-
|
-
|
(0.3)
|
Net present value
|
1.5
|
1.1
|
0.7
|
0.6
|
1.0
|
4.9
|
Lease payments not recognised as a
liability
The Group has elected not to
recognise a lease liability for short-term leases (leases with an
expected term of 12 months or less) or for leases of low-value
assets. Payments made under such leases are expensed on a
straight-line basis. In addition, certain variable lease payments
are not permitted to be recognised as lease liabilities and are
expensed as incurred.
The expense relating to payments not
included in the measurement of the lease liability is as
follows:
|
2023
£m
|
2022
£m
|
Short-term leases
|
0.3
|
0.5
|
Leases of low-value
assets
|
0.4
|
0.6
|
|
0.7
|
1.1
|
The Group had not committed to any
leases that had not yet commenced.
Total cash outflow for leases for
the year ended 31 December 2023 was £1.8m (2022: £2.8m).
13 Derivative financial
instruments
|
2023
£m
|
2022
£m
|
Cash flow hedge - interest rate
cap
|
1.7
|
3.0
|
During 2021 the Group entered into
an amortising interest rate cap instrument, which reduces exposure
to interest rate increases above 1% of SONIA on an aggregated
two-thirds of the Receivables Finance Agreement and the customer
finance arrangements. The instrument, which has a term of three
years from 13 October 2021, is based on quarterly notional amounts
varying between £39.5m and £62.5m, with an average of
£51.9m.
The Group has designated the
interest rate cap contract as a hedged instrument in a cash flow
hedge relationship. All derivative financial instruments used for
hedge accounting are recognised initially at fair value and
reported subsequently at fair value in the statement of financial
position. To the extent that the hedge is effective, changes in the
fair value of derivatives designated as hedging instruments in cash
flow hedges are recognised in other comprehensive income and
included within the cash flow hedge reserve in equity. Any
ineffectiveness in the hedge relationship is recognised immediately
in profit or loss.
The fair value of the derivative is
based on market data to calculate the present value of all
estimated flows associated with it at the balance sheet date. The
interest rate cap is classed as a level 2 financial instrument in
accordance with IFRS 13 classification hierarchy. Level 2 financial
instruments are not traded in an active market, but the fair value
is based on quoted market prices, broker/dealer quotations, or
alternative pricing sources with reasonable levels of price
transparency.
The movements on the fair value of
the derivative financial asset and on the cash flow hedge reserve
are as follows:
|
|
Cash flow hedge reserve
£m
|
Derivative financial
asset
£m
|
At 31 December 2021
|
|
0.2
|
0.5
|
Movement through comprehensive
income - hedge ineffectiveness
|
|
-
|
0.4
|
Movement through cash flow hedge
reserve
|
|
2.1
|
2.1
|
Deferred taxation
|
|
(0.6)
|
-
|
At 31 December 2022
|
|
1.7
|
3.0
|
Movement through comprehensive
income - hedge ineffectiveness
|
|
-
|
(0.1)
|
Movement through cash flow hedge
reserve
|
|
(1.2)
|
(1.2)
|
Deferred taxation
|
|
0.4
|
-
|
At 31 December 2023
|
|
0.9
|
1.7
|
14 Cash
|
2023
£m
|
2022
£m
|
Cash and cash
equivalents
|
13.3
|
31.0
|
Cash and cash equivalents consist of
cash on hand and balances with banks only. The majority of cash on
hand and balances with banks are held by subsidiary undertakings;
however, the balances are available for use by the
Group.
Long-term credit ratings for the
Group's banks are currently as follows:
|
Fitch
|
Standard
& Poor's
|
Moody's
|
Royal Bank of Scotland
plc
|
A
|
BBB+
|
A3
|
National Westminster Bank
plc
|
A
|
BBB+
|
A3
|
The Group's headroom versus
available committed bank facilities is as follows:
|
2023
£m
|
2022
£m
|
Cash at bank (as above)
|
13.3
|
31.0
|
Undrawn receivables finance
agreement
|
49.1
|
44.9
|
Banking facility
headroom
|
62.4
|
75.9
|
15 Borrowings
Borrowings are repayable as
follows:
|
2023
£m
|
2022
£m
|
In one year or less or on
demand*
|
10.9
|
27.5
|
In more than one year but not more
than two years*
|
0.9
|
1.1
|
In more than two years but not
more than five years*
|
1.4
|
1.3
|
In more than five years
|
0.3
|
1.0
|
Total borrowings
|
13.5
|
30.9
|
* Ageing of balances
above is shown excluding unamortised refinancing costs.
|
2023
£m
|
2022
£m
|
Split:
|
|
|
Current liabilities:
|
|
|
Receivables finance
agreement
|
9.5
|
26.0
|
Lease liabilities
|
1.4
|
1.5
|
|
10.9
|
27.5
|
Non-current
liabilities:
|
|
|
Lease liabilities
|
2.6
|
3.4
|
Total borrowings
|
13.5
|
30.9
|
Less: Cash (note 14)
|
(13.3)
|
(31.0)
|
Net cash
|
(0.2)
|
(0.1)
|
On 14 December 2023, the Group and
its lenders agreed to a modification of the existing Receivables
Finance Agreement ("RFA").
The key terms of the facility,
which is provided jointly by RBS Invoice Finance Limited, ABN AMRO
Asset Based Finance N.V., UK Branch, are set out below:
a)
Maximum receivables financing facility of £60.0m (previously £90m)
over a four-year term, with a one-year extension option;
ii) An
Accordion option of up to an additional £20m (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.
EBITDA is defined as earnings
before interest, taxation, depreciation and
amortisation.
The Group uses Customer Financing
arrangements whereby specific customer invoices are settled on a
weekly basis, in advance of their normal settlement date. The value
of invoices funded under the Customer Financing arrangements was
£46.8m at 31 December 2023 (2022: £51.7m). Costs incurred in
relation to these arrangements are charged to profit and loss as
finance charges when incurred. The amounts settled under each
customer's agreement are limited to the amounts invoiced to that
customer each week. The total finance charges incurred during the
year amounted to £3.0m (2022: £1.5m).
For the period to 31 December 2025,
the Group's cash flow forecasts indicate ongoing headroom in the
RFA and full compliance with the financial covenants described
above. The likelihood of a breach of the financial covenants is
considered to be remote.
16 Share
capital
|
2023
£m
|
2022
£m
|
Allotted and issued
|
|
|
149,190,956 (2022: 165,767,728)
ordinary 10p shares
|
14.9
|
16.6
|
|
2023
Number
|
2022
Number
|
Shares issued and fully paid at
the beginning of the year
|
165,767,728
|
165,767,728
|
Shares cancelled during the
year
|
(16,576,772)
|
-
|
Shares issued and fully paid at
the end of the year
|
149,190,956
|
165,767,728
|
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
3,316,391 shares held at 31 December 2023 (2022: 2,014,511 shares)
by the Employee Benefit Trust where the right to dividends has been
waived.
On 1 August 2023, the Group
announced the launch of a share buyback programme to repurchase
Ordinary Shares in the capital of the Company up to an aggregate
value of £4.0m. The 12,672,174 Ordinary Shares purchased pursuant
to the share buyback were immediately cancelled.
On 4 October 2023, the Group
announced the launch of a further share buyback programme to
repurchase up to 3,904,598 Ordinary Shares in the capital of the
Company. The 3,904,598 Ordinary Shares purchased pursuant to the
share buyback at a cost of £1.0m, were immediately
cancelled.
The share buybacks were operated in
accordance with the terms of the Company's general authority to
repurchase Ordinary Shares granted by shareholders at its Annual
General Meeting held on 12 June 2023.
17 Cash flows from operating
activities - consolidated
Reconciliation of loss before
taxation to net cash inflow/(outflow) from operating
activities
|
2023
£m
|
2022
£m
|
(Loss)/Profit before taxation
from:
|
|
|
Continuing operations
|
(7.9)
|
1.9
|
Discontinued operations
|
(3.1)
|
-
|
|
(11.0)
|
1.9
|
Adjustments for:
|
|
|
Finance income
|
(1.9)
|
(0.7)
|
Finance charges
|
6.1
|
3.4
|
Depreciation and amortisation -
underlying
|
5.0
|
5.5
|
Amortisation -
non-underlying
|
3.2
|
7.4
|
Goodwill impairment
|
8.9
|
-
|
Loss on disposal of property,
plant and equipment
|
0.2
|
0.1
|
Cash generated before changes in
working capital and share options
|
10.5
|
17.6
|
Change in trade and other
receivables
|
(9.5)
|
(3.8)
|
Change in trade, other payables
and provisions
|
10.8
|
(8.6)
|
Cash generated from
operations
|
11.8
|
5.2
|
Share based payments
expense
|
0.6
|
0.3
|
Net cash inflow from operating
activities
|
12.4
|
5.5
|
Movement in net debt
|
2023
£m
|
2022
£m
|
Net cash at 1 January
|
0.1
|
2.3
|
Net drawdowns from Receivables
Finance Agreement
|
16.5
|
(3.1)
|
Lease payments, additions,
disposals and interest
|
0.9
|
(0.3)
|
Change in cash and cash
equivalents
|
(17.7)
|
1.2
|
Net (debt)/cash at 31
December
|
(0.2)
|
0.1
|
Represented by:
|
|
|
Cash and cash equivalents (note
14)
|
13.3
|
31.0
|
Current borrowings (note
15)
|
(9.5)
|
(26.0)
|
Lease liabilities (note
12)
|
(4.0)
|
(4.9)
|
Net (debt)/cash at 31
December
|
(0.2)
|
0.1
|
The movements in net debt, excluding
refinancing costs, can be further summarised as follows:
|
|
Lease
Liabilities
£m
|
Receivables Finance
Agreement
£m
|
Movements from financing
activities
£m
|
Cash
£m
|
Total
£m
|
Net debt as at 1 January
2022
|
|
(4.6)
|
(22.9)
|
(27.5)
|
29.8
|
2.3
|
Cash flows during the
year
|
|
1.6
|
(3.1)
|
(1.5)
|
1.2
|
(0.3)
|
Non-cash movements in
leases
|
|
(1.9)
|
-
|
(1.9)
|
-
|
(1.9)
|
Net cash/(debt) at 31 December
2022
|
|
(4.9)
|
(26.0)
|
(30.9)
|
31.0
|
0.1
|
Cash flows during the
year
|
|
1.8
|
16.5
|
(18.3)
|
17.7
|
0.6
|
Non-cash movements in
leases
|
|
(0.9)
|
-
|
(0.9)
|
-
|
(0.9)
|
Net (debt)/cash at 31 December
2023
|
|
(4.0)
|
(9.5)
|
(13.5)
|
13.3
|
(0.2)
|
18 Changes in accounting
policies
There were no new accounting
pronouncements requiring adoption in the year.
19 Post balance sheet
events
There were no events between the
balance sheet date of 31 December 2023 and the approval of these
accounts on 18 March 2024, that are required to be brought to the
attention of shareholders.