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(STAF) Staffline Group Share Chat

Discussion in 'General Share Chat (STAF)' started by Inspiration, Jan 27, 2016.

  1. Groucho

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    30 June 2020

    STAFFLINE GROUP PLC

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


    RESULTS FOR THE YEAR ENDED 31 DECEMBER 2019


    Staffline Group plc, the recruitment and training group, today announces its audited preliminary results for the year ended 31 December 2019.


    Financial Highlights

    · Revenue decreased (3.9)% to £1,076.7m (2018 restated: £1,120.9m)

    · Underlying* operating loss of £(0.8)m (2018 restated: £32.8m profit)

    · Reported operating loss of £(39.9)m (2018 restated: £(14.7)m)

    · Reported loss before tax of £(48.1)m (2018 restated: £(17.8)m)

    · On a pre-IFRS 16 basis net borrowings reduced by £3.5m to £59.5m (2018: £63.0m)

    · On a post-IFRS 16 basis net borrowings were £67.9m


    Operational Highlights

    · The Group's credit facilities have been restructured in June 2020, post period-end

    · Group leadership, finance and main Board strengthened post year-end with the following appointments:

    o Ian Lawson as Executive Chairman in April 2020

    o Daniel Quint, Interim Chief Financial Officer, appointed to the Board in May 2020

    o Albert Ellis as Non-executive Director in March 2020 and as Chair of the Audit Committee in April 2020

    o Richard Thomson as Senior Non-executive Director and Chair of the Remuneration Committee in April 2020

    · Implementation of corporate governance improvements following certain control failures and prior period reporting issues


    Current Trading and Outlook

    · The impact of COVID-19 has been mixed across the Group with surges of demand reported in key food distribution and production supply chains, offset by declines in demand from sectors where the Government's shutdown was most severe such as manufacturing, retail and classroom-based training programmes

    · The Recruitment divisions have experienced significant variance between customer sectors

    o Strong response to the unprecedented surge in food sector demand utilising web-based platforms to connect displaced workers with vital roles required in the food supply chain, where demand continues to be strong

    o Conversely, demand from other sectors such as retail, automotive and manufacturing diminished considerably

    o Since the easing of lockdown, the Group has benefitted from a gradual recovery in demand for labour in non-food sectors including retail and manufacturing in line with our expectations

    · PeoplePlus has continued to operate the majority of its services adhering to isolation measures

    o Most funding support provided has been on a cost only basis

    o Whilst business intake in 2020 has weakened, it is anticipated that the Government will launch new funding for training and retraining schemes, which PeoplePlus is well-positioned to benefit from

    · The Board remains cautiously optimistic that each of the three operating divisions will achieve a positive result in 2020 on an underlying operating profit basis



    Ian Lawson, Executive Chairman of Staffline, commented:

    "2019 was a challenging year for the Group during which time Staffline faced a number of significant issues. Our new management team are now ensuring that the appropriate measures of strong corporate governance and controls are being put in place. Clearly in the current year, we are operating within an unprecedented macroeconomic climate as a result of the COVID-19 pandemic, however, Staffline's people have risen to this challenge and maintained an outstanding level of business continuity, enabling us to successfully support our blue-chip customer base.

    "Our strong operational base and leading positions in many of the markets in which we operate sit firmly at the heart of our strategy to create the most reliable, flexible and integrated workforce in the UK, delivering both opportunities and jobs, training and re-skilling, and in-turn to deliver value to all stakeholders."

    * Note: Underlying results exclude amortisation of intangible assets arising on business combinations, exceptional reorganisation, legal and refinancing costs, exceptional transaction costs, exceptional National Minimum Wage remediation and financial penalties, revised audit scope and increased audit fees, employee dispute settlements, goodwill impairment and the non-cash charge/credit for share-based payment costs.

    Note: The results for the year ended 31 December 2019 have been prepared in accordance with International Financial Reporting Standards and reflect IFRS 16 'Leases', effective for financial periods beginning on or after 1 January 2019. The Group has adopted the modified retrospective approach and therefore there has been no restatement of the comparatives for the 2018 reporting period. The impact on the financial statements is summarised in the Financial Review. There is no overall impact on the Group's cash and cash equivalents.

    Note: EBITDA represents Earnings Before Interest, Taxation, Depreciation and Amortisation.

    Note: Net debt includes transaction costs of £nil (2018:£0.8m).
     
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    Screenshot_20200923-071735_Vox Markets.jpg

    Ian Lawson, Executive Chairman of Staffline, commented:

    "Staffline continued to successfully service its customer base, and our business proved resilient in the first half of 2020 despite COVID-19 significantly impacting a number of the Group's key sectors. Our teams have worked tirelessly to not only support our customers in what has been a very challenging trading environment, but to ensure all of our workforce remains safe."

    "Whilst we anticipate a stronger trading performance in H2 2020, there is a very high level of uncertainty across the market as a result of COVID-19."
     
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  4. Groucho

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    23 September 2020

    STAFFLINE GROUP PLC

    ("Staffline" or the "Company")


    Appointment of Chief Executive Officer


    Staffline, the recruitment and training group, announces the appointment of Albert Ellis, currently Non-executive Director, as Chief Executive Officer with effect from 1 October 2020.


    Albert was appointed to the Board of Staffline in March 2020 and has extensive executive level experience in the recruitment and human capital sectors. Most recently, Albert served as Group Chief Executive Officer at Harvey Nash Group, the AIM quoted technology recruitment and IT outsourcing group, for 14 years before it was sold in 2018. Prior to his time at Harvey Nash, Albert spent five years at Hays Plc, the FTSE 250 professional recruitment business, where he held various roles as a Senior Finance Executive.

    Albert is a qualified Chartered Accountant, a Trustee of Asia House and a key contributor to Cambridge University's Jesus College Conference work on the future of employment and the jobs market.

    Albert will step down from his current position as Chair of Staffline's Audit Committee, and the Company will announce a new appointment in due course.

    Following a suitable period of operational handover and transition, Ian Lawson, currently Executive Chairman, will move to Non-executive Chairman of the Board on 31 December 2020.


    Ian Lawson, Executive Chairman of Staffline, commented:

    "For an individual of Albert's calibre to take up the role of Chief Executive is testament to the underlying fundamentals of our business. Albert brings almost unrivalled expertise in our core staffing and training outsourcing markets, we believe the Company will significantly benefit from his leadership qualities and his focus on best practice and corporate governance.

    "Whilst the current market backdrop continues to present a number of challenges, we are delighted that Albert will be taking up this role as Staffline moves into the next phase of its evolution."


    Albert Ellis, Chief Executive of Staffline, commented:

    "Having joined the board earlier in the year, I believe that Staffline has excellent long-term prospects underpinned by its scale in its core key worker staffing markets and leading market positions in training and employability outsourcing. I look forward to working even more closely with the wider management team as we drive the business forward with a view to returning to growth and realising value for our key stakeholders."
     
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  5. Groucho

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    5 October 2020


    STAFFLINE GROUP PLC

    ("Staffline" or the "Group")



    New Business and VAT Deferral Update


    Staffline, the Recruitment and Training group, provides the following update on new business and VAT deferral.


    PeoplePlus update

    PeoplePlus, the Group's adult skills and training division, is pleased to announce it has been selected as a provider for the Department for Work and Pensions' ("DWP") Commercial Agreement for the Provision of Employment and Health Related Services ("CAEHRS") framework.

    CAEHRS replaces the DWP's existing Umbrella Agreement which expires in 2021. It will become the default framework for contracting employability and health related programmes. CAEHRS will run for five years (2020-2025) and the framework will cover a potential aggregate contract value of £7.5 billion.

    This UK-wide commercial agreement is organised into a national Lot and seven regional Lots split across two tiers. Tier 1 covers the commissioning of services with a value of over £11 million in England and £6 million in Scotland and Wales. Tier 2 covers the commissioning of services with a value of between £2 million and £11 million in England and £2 million to £6 million in Scotland and Wales.

    PeoplePlus has been successful in securing a place on the national Lot and has been selected as a Tier 1 provider in all six regions across England and Scotland, and as a Tier 2 provider in Wales.


    Recruitment GB update

    Staffline is also pleased to announce a three-year contract extension of an existing agreement to provide contingent labour to Tesco, a significant customer of the Group in terms of scale. This agreement continues to build on an 11-year working relationship in which Staffline has provided innovative, value added solutions to Tesco's Distribution network.


    VAT deferral

    The Group notes the Chancellor's recent statement giving businesses who have deferred VAT due from 20 March 2020 to 30 June 2020, the option to pay in smaller payments over a longer period.

    As a result, instead of paying the full VAT amount due by the end of March 2021, Staffline can make smaller payments up to the end of March 2022, interest free. This payment period will now ensure that the Group has additional time in which to consider and implement mitigating actions with regards to liquidity as set out in its 2020 interim results.


    Ian Lawson, Executive Chairman of Staffline, commented:

    "We are delighted to be extending our working partnership with Tesco, a long-term and valued customer, in addition to our PeoplePlus' services being represented so widely across the CAEHRS framework.

    "We also welcome the Chancellor's recent amendments to existing VAT deferral measures, which further support the Group's wider actions to further alleviate liquidity pressures in the medium term."
     
  6. Groucho

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    23 October 2020

    STAFFLINE GROUP PLC

    ("Staffline" or the "Group")



    Capital Markets Presentation


    Staffline, the Recruitment and Training group, will be hosting a Capital Markets presentation via webcast on Thursday, 5 November 2020 at 10.00 a.m. GMT. A link to pre-register for the presentation and to the view the stream on the day can be found in the Investor Relations section of the Group's website: www.stafflinegroupplc.co.uk/investor-relations.

    The presentation will be hosted by Staffline's new management team and the Group's divisional managing directors, who will highlight Staffline's strategic intent and the opportunities that exist for the Group.

    https://webcasting.brrmedia.co.uk/broadcast/5f7ee84cc4d0076f2b93d750
     
  7. Groucho

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    5 November 2020

    STAFFLINE GROUP PLC

    ("Staffline" or the "Group")


    Capital Markets Presentation


    Staffline, the Recruitment and Training group, will be hosting a Capital Markets presentation via webcast today at 10.00 a.m. GMT. A link to pre-register for the presentation and to the view the live stream can be found in the Investor Relations section of the Group's website: www.stafflinegroupplc.co.uk/investor-relations.

    The presentation will be hosted by Staffline's new management team and the Group's divisional managing directors, who will highlight Staffline's strategic intent and the opportunities that exist for the Group. The agenda for the event is as follows:

    (i) Introduction

    Ian Lawson (Executive Chairman)


    (ii) Finance - mitigating actions and target operating model

    Daniel Quint (Interim Chief Financial Officer)


    (iii) Recruitment Ireland - market share and growth opportunities

    Tina McKenzie (Managing Director, Recruitment Ireland)


    (iv) Recruitment GB - why our customers choose Staffline

    Frank Atkinson (Managing Director, Recruitment GB)


    (v) PeoplePlus - making a difference to the employability sector

    Simon Rouse (Managing Director, PeoplePlus)


    (vi) Group strategy

    Albert Ellis (Chief Executive Officer)


    No new material information will be provided.
     
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    20 November 2020

    STAFFLINE GROUP PLC

    ("Staffline" or the "Group")


    PeoplePlus Update


    Staffline, the recruitment and training group, announces that its PeoplePlus division has agreed terms to sell its Apprenticeships business to Babington Business College Ltd ("Babington"), a leading professional training course, apprenticeships and traineeships provider (the "Transaction") for a nominal fee.

    It is anticipated that the Transaction will complete in early December, enabling an orderly transition for both clients and learners. Under the agreement, Babington will acquire contracts and assets from PeoplePlus associated with the delivery of Apprenticeships across England and Scotland.

    This Transaction forms part of PeoplePlus' strategic re-focus on its core employability and adult skills capabilities as it seeks to leverage the division's leading position within these markets to capitalise on the significant increases in funding for central and devolved government contracts that have recently been announced.


    Albert Ellis, Chief Executive Officer of Staffline, commented:

    "We are pleased to have reached an agreement with Babington, which will ensure our Apprenticeship clients and learners continue with another high-quality training provider. PeoplePlus has unique capabilities, experience and scale in the employability and adult skills sectors and this transaction will enable the division to fully focus on the UK wide unemployment challenge that now exists."
     
  10. Groucho

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    10 December 2020

    STAFFLINE GROUP PLC

    ("Staffline" or the "Group")



    Board Update


    Staffline, the recruitment and training group, announces the following update regarding the Group's board of directors, including the appointments of Ian Starkey and Catherine Lynch as non-executive directors with effect from 1 January 2021.


    Ian has significant audit expertise, specifically in financial management, control and reporting, having spent 19 years at KPMG UK and Switzerland as a global lead audit partner and latterly as a member of the UK Board, up until 2018. At KPMG, Ian worked with blue-chip corporate clients including BAE Systems, Diageo, Roche, Unilever and Vodafone. Ian is currently a non-executive member of the board at DAC Beachcroft LLP, a non-executive director of Bespoke Capital Acquisition Corp and a member of the Audit and Risk committee of Historic Royal Palaces. Ian is a qualified chartered accountant and will chair the Group's Audit Committee and be a member of Staffline's Remuneration and Nominations Committees.


    Catherine is a highly experienced HR director, with over 20 years' experience, and is currently Chief People Officer UK & Ireland at Flutter Entertainment plc, the FTSE 100-listed global sports betting, gaming and entertainment company. Prior to this, Catherine spent over three years as Chief People Officer at Virgin Media, with additional experience including leading the HR functions of Ardonagh Group and BGL Group. Catherine's career has also included leadership roles at Barclaycard, Santander, Sainsbury's and Tesco. Catherine is currently a member of the Advisory Board of Dial Global, a community focused on inclusion. Catherine will chair the Group's Remuneration committee and be a member of Staffline's Audit and Nominations Committees.


    In addition, Daniel Quint, currently Interim Chief Financial Officer of Staffline, will become permanent from 1 February 2021. Richard Thomson will remain in his role as Senior Independent Director, and as previously announced, Ian Lawson, currently Executive Chairman, will move to a non-executive capacity from 1 January 2021.


    This concludes an extensive period of board restructuring for the Group which also includes the appointment of Albert Ellis as Chief Executive Officer in October 2020. Albert was appointed to the Board of Staffline in March 2020 and has extensive executive level experience in the recruitment and human capital sectors.


    Ian Lawson, Executive Chairman of Staffline, commented:

    "We have made significant progress in improving Staffline's corporate governance, which has been an ongoing strategic priority for the Group, and I am delighted to welcome Ian and Catherine to the board. We look forward to benefitting from both of these individuals' highly relevant skillsets, with Ian bringing a wealth of audit and financial management expertise and Catherine, significant people experience.

    "In addition, I am delighted to formally confirm Daniel as our permanent Group CFO. Daniel has been central in both coordinating and leading a number of important financial workstreams since joining the Group in December 2019 and alongside Albert Ellis, our recently appointed CEO, I firmly believe we have the right people in place to lead our business, from our board of directors through to senior management."

    6380C70E-F7F4-4472-B8E5-DAC91978C64D.jpeg
     
  11. Groucho

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    1 February 2021

    STAFFLINE GROUP PLC

    ("Staffline," or the "Group")


    Trading and Business Update


    Staffline, the recruitment and training group, is pleased to provide the following trading and business update for the year ended 31 December 2020.


    Trading update

    The Group made significant progress in 2020, improving its operational, financial and governance processes and board composition, including strengthening the Group's financial position through a successful refinancing in June 2020. The net result has been an improvement in revenues, underlying operating profit1, working capital and cash generation in the second half of 2020.

    The Group expects to report underlying operating profit marginally ahead of expectations for the year ended 31 December 2020.

    Staffline experienced strong demand for temporary recruitment from the food, driving, logistics and e-commerce sectors in 2020, whilst the manufacturing, retail and automotive industries continued to be more challenging. Despite the national lockdown in November and restrictions in December, the Group still experienced a strong Christmas trading peak, with significant demand from the Group's food retail customers. Furthermore, e-commerce and logistics experienced a very strong trading period as a result of consumers transitioning to online retail.

    PeoplePlus successfully completed the disposal of its Apprenticeships business in December 2020 for a nominal consideration, as part of a strategic re-focus on its core employability and adult skills capabilities. PeoplePlus expects to report an underlying operating profit for the second half of 2020 compared to a loss in the first half.


    Net debt

    At 31 December 2020, the Group had pre-IFRS 16 net debt2 of c. £9.0m (2019: £59.5m), with average net debt throughout the year of c. £38.1m (2019: c. £85.2m).

    The year-end position represents an improvement against expectations resulting from the increased focus on working capital and cash generation during 2020, as well as a number of timing effects, including the benefit of deferred VAT relief from Q2 2020 of £42.9m.


    HMRC VAT measures

    In March 2020, the Government announced that VAT payments due from businesses between 20 March 2020 and the end of June 2020 could be deferred until the end of the tax year. In September, the Government provided an update allowing businesses which have deferred this VAT to have the option to pay in instalments between March 2021 and March 2022. This payment delay provides the Group with a significant short-term liquidity improvement.


    COVID-19 update

    The broader impact of the COVID pandemic, which has caused disruption globally, has created both opportunities and challenges across Staffline. Whilst the current lockdown has not caused the significant spike in food customer demand first seen in March 2020, volumes still remain high and look set to continue until COVID restrictions ease across the UK. PeoplePlus took actions to reduce its cost base in the first half of 2020, together with implementing new digital operating models, however it continues to experience disruption to many of its classroom-based services as a result of the pandemic.


    Summary

    Staffline delivered a robust performance across 2020, underpinned by the new structures and processes implemented during the year. These initiatives have provided stability and ultimately position the Group for growth; however, the board is mindful that the near-term challenges created by the COVID pandemic remain. The employment market experienced a structural shift in 2020, with the pandemic causing a significant rise in UK unemployment, which the board believes presents a number of opportunities for Staffline due to existing customer relationships and the Group's broad market offering.

    Notwithstanding the combination of corrective measures taken in 2020, which has resulted in a significant improvement in working capital, the board continues to evaluate its options in relation to strengthening the Group's finances. Whilst the outlook for Staffline in the near-term is not without its challenges, the board remains cautiously optimistic.

    1Underlying operating profit before goodwill impairment, amortisation of intangible assets arising on business combinations, reorganisation costs and other non-underlying costs.

    2Net debt is stated before unamortised debt issue costs.
     
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    21 May 2021

    Staffline Group plc

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

    Proposed Placing and Subscription to raise £44 million,

    Proposed Open Offer to raise up to £4.4 million

    and

    Proposed Debt Refinancing

    Staffline (AIM: STAF), the recruitment and training group, announces its intention to raise £44 million by way of a placing (the "Placing") of 87,249,500 new ordinary shares of 10 pence each in the capital of the Company (the "Placing Shares") and a direct subscription (the "Subscription") of 750,500 new ordinary shares of 10 pence each in the capital of the Company (the "Subscription Shares"), both at a price of 50 pence per share (the "Issue Price").

    Certain Directors and employees of the Group are subscribing for Placing Shares and certain other Directors and employees of the Group are subscribing for Subscription Shares. As set out below, the aggregate investment by Directors and employees of the Group by way of the Placing and Subscription will amount to c.£0.5 million.

    In addition, in order to provide all Qualifying Shareholders with an opportunity to participate in the fundraise, the Company also announces its intention to launch an Open Offer of up to 8,837,242 new ordinary shares of 10 pence each in the capital of the Company (the "Open Offer Shares") at the Issue Price to raise up to a further £4.4 million.

    The Placing, Subscription and, if fully subscribed, the Open Offer (together, the "Fundraise") will raise, in aggregate, gross proceeds of £48.4 million through the issue of up to 96,837,242 new ordinary shares of 10 pence each in the capital of the Company (the "New Ordinary Shares").

    The Placing is being conducted via an accelerated bookbuild process (the "Bookbuild"), which will be launched immediately following this announcement (the "Announcement") and is subject to the terms and conditions set out in the appendix to this Announcement (which forms part of this Announcement) (the "Appendix"). Liberum Capital Limited ("Liberum") is acting as Nominated Adviser, Broker and Sole Bookrunner in relation to the Placing. Canaccord Genuity is acting as financial adviser to the Company.

    The Company is also carrying out a refinancing of its debt facilities (the "Debt Refinancing"), further details of which are set out below. The Fundraise and Debt Refinancing (together, the "Transaction") are inter-conditional. In the event that the proceeds of the Placing and Subscription are not received in full by the Company, the Debt Refinancing will not complete.

    Key Highlights

    · Proposed Placing and Subscription of £44 million (before expenses) with institutional and other investors (including certain Directors and employees of the Group) and proposed Open Offer of up to approximately £4.4 million (before expenses) with Qualifying Shareholders, in each case at the Issue Price;

    · The Company intends to use the net proceeds of the proposed Placing and Subscription to reduce Group indebtedness and to provide working capital for growth;

    · All proceeds of the Open Offer will be used to further reduce indebtedness;

    · Debt Refinancing conditional on the Placing and Subscription;

    · The Transaction will provide a platform for profitable, cash generative growth;

    · Completion of the Fundraise is subject, inter alia, to shareholder approval to enable the issue of the New Ordinary Shares, which will be sought at a General Meeting of the Company.

    Background

    The Group implemented a comprehensive restructuring and deep transformation programme in 2020. Significant progress has been made in improving and strengthening the Group's operational, financial and governance processes and Board composition. The Board is overseeing the implementation of a new organic growth strategy with a focus on gross profit (net fee income), operating profit and cash generation. The Group has tightened bid disciplines and is exiting contracts with low profitability and poor cash generation. A restructuring to right-size the Group led to annualised cost savings of c.£15 million, delivering a 19% reduction in 2020 compared to 2019, principally through headcount reduction and rationalising the Group's property estate. Within Recruitment Ireland, costs were reduced by 23% (c.£2.5 million). Rigorous management of working capital has generated c.£10 million of cash due to an increased focus on debt collection and overdue debtors, combined with a squeeze on capital spending. The non-core Apprenticeships business, which was also loss-making, was sold in December 2020 for a nominal consideration, as part of the Board's strategy to simplify its training division into two core services, employability and adult skills.

    2020 was a challenging year due to Covid-19 and the Group faced mixed market demands across its divisions as the lockdown, commencing in March, affected customers in different ways. The Covid-19 pandemic created both opportunities and challenges across the Group and overall the businesses proved resilient. During the first lockdown, Staffline experienced strong demand for temporary recruitment from the food, driving, logistics and e-commerce sectors and, whilst subsequent lockdowns did not cause the significant spike in food customer demand seen in March 2020, volumes still remained high. Overall Group trading improved in the second half of 2020, with an increase in revenues and all three divisions returned to underlying operating profit, on a continuing basis, exceeding revised expectations.

    The momentum in the second half of 2020 continued into 2021 and the Group made a strong start to the year, with revenue and underlying operating profit ahead of expectations for the first quarter despite the lockdowns implemented for the duration of the period across the UK and Ireland. The Group has continued to benefit from sustained demand from essential food and logistics services, as well as e-commerce. The Group is now also seeing increased activity from clients in some of those sectors most adversely impacted by Covid-19, such as manufacturing, high street retail and convenience foods. There is an increasingly positive market backdrop, with independent data showing that recruitment activity rebounded sharply in March 2021. In addition to the stronger recruitment pipeline, it is anticipated that the Group's training division will benefit from the increase in Government spending on re-skilling and transitioning the workforce back into full time employment. The Group plans to build on its market leading position in Northern Ireland over the next three years, entering the white-collar recruitment market whilst maintaining a strong focus on growth and operating profit.

    The Group's pre-IFRS 16 average net debt in the first quarter of 2021 reduced by £14.5 million to £54.9 million (including deferred VAT) as a result of the initiatives implemented to generate additional cashflow. The Group has benefited from a £46.5 million Covid-19 VAT deferral. This VAT creditor will be repaid in eight equal instalments of circa £5.8 million from June 2021 to January 2022. The first instalment will be reduced by a circa £4.1 million corporation tax refund.


    Notwithstanding some uncertainty in relation to the pace of lockdown easing and recovery of certain sectors such as travel, the Board is confident in the outlook and believes that the Group is well positioned as a market leading recruitment and training business with a strong reputation for quality delivery. Its strategy is to capitalise on the Group's leadership position in blue collar recruitment whilst expanding higher margin permanent recruitment services and to cross sell employability and training into its blue-chip client base.

    However, the Group has required additional funding, which has been provided by Covid-19 related VAT deferral relief from the period from March to June 2020. This is now repayable and the Group is therefore carrying out the Fundraise and Debt Refinancing to meet this funding requirement. With the proposed strengthened capital structure in place, the Board believes that the Group would be in a strong position to take advantage of the increasing opportunities arising from improving business confidence and the wider Covid-19 economic recovery.

    Current Trading and Outlook

    The Company announced a trading update on 26 April 2021, in which the Board confirmed that the momentum achieved in the second half of 2020 had continued into 2021, and thatStafflinehad made a strong start to the year with all three divisions achieving an underlying operating profit for the first quarter of 2021. As a result of this strong performance, the Company confirmed that both revenue and underlying operating profit were expected to be ahead of expectations with all three businesses ahead of budget.

    The Board is pleased with the progress achieved thus far in 2021 and is beginning to see the benefits of the continued easing of Covid-19 restrictions coupled with the UK's successful vaccination roll-out programme, leading to improving market conditions.

    The Group continues to see a stronger recruitment pipeline developing, and it is anticipated that PeoplePlus will benefit from the incremental increase in Government spending on re-skilling and transitioning the national workforce back into employment, following the end of the Furlough scheme.

    The Company is currently negotiating certain contracts with prime Restart suppliers in relation to the Department for Work and Pensions Restart programme. Whilst there can be no guarantees that any such contracts will be concluded, any resulting contracts will not impact the current financial year, but would positively impact revenue for the PeoplePlus division across 2022 and 2023.

    Whilst there continues to be ongoing uncertainty relating to the pandemic, given the strength of Staffline's trading in the first quarter of 2021 and the clear momentum apparent across the Group's core markets, the Board remains confident in the overall outlook for the business.

    Unaudited financials for the year ended 31 December 2020

    Set out below are the summary unaudited financials for the year ended 31 December 2020. The full results for that year are expected to be published in June 2021.
    Screenshot_20210521-071421_Vox Markets.jpg

    Reasons for the Transaction and Use of Proceeds

    The Placing and Subscription are expected to raise £44 million in gross proceeds (approximately £40 million net of costs of the Fundraise and Debt Refinancing). The Board intends to use the funds raised to reduce the indebtedness of the Group and to provide working capital for growth. All proceeds of the Open Offer will be used to further reduce indebtedness of the Group.

    The Board believes that the Group is now well positioned, and that the Transaction will provide the platform for profitable, cash generative growth. The Group's leverage will ultimately reduce following the repayment of the deferred VAT creditor and as it delivers growth and generates further cash.

    Proposed Debt Refinancing

    The Debt Refinancing and Fundraise are being carried out in order to meet a forecast funding shortfall for the Group and to put in place what the Board believes to be more appropriate debt facilities with reduced ongoing Group borrowing costs. The Debt Refinancing and Fundraise are inter-conditional. In the event that the proceeds of the Placing and Subscription are not received in full by the Company, the Debt Refinancing will not complete.

    The New Facilities agreement has been signed with three lenders (RBS Invoice Finance Limited, ABN AMRO Asset Based Finance N.V., UK Branch and Leumi ABL Limited), subject to the Group satisfying certain typical conditions precedent, in relation to committed full resource receivables finance facilities of £90 million, in aggregate. In addition, the New Facilities provide an accordion option of up to a further £15 million for the Group if required to fund further growth, subject to lender approval. The New Facilities will be secured on all of the assets and undertakings of the Company and certain other members of the Group, providing liquidity which flexes with the Group's working capital requirements. Further, the Group will continue to have access to its existing and ongoing supplier financing arrangements in respect of specific customers, under which invoices are settled in advance of normal credit terms. At 31 March 2021, £38.7 million of invoices had been settled under these arrangements.

    The New Facilities have a four and a half year term, with a one year extension option. The Group will pay interest at 2.75% over SONIA, with a margin ratchet downwards dependent on the Group's leverage. The margin reduces from 2.75% at greater than 5x net debt to EBITDA, to 2.0% at less than or equal to 3x.

    A termination fee is payable if the Company voluntarily cancels the New Facilities (or any part of them). If termination/cancellation occurs in the first 12 months, the fee would be 2% of the cancelled amount; the fee reduces to 1% in the second year and thereafter no fee is payable.

    The New Facilities will repay the Existing Facilities comprising a revolving credit facility of £20 million and an invoice finance facility of £68.2 million and will replace the current 'off balance sheet' non-recourse receivables purchase facility of £25 million. In conjunction with the Fundraise, the Debt Refinancing will provide significant headroom for the Group going forward against its forecast borrowing requirements. As mentioned above, the existing supplier financing facilities will remain.

    As at 31 March 2021 there was £20 million drawn down under the revolving credit facility, £19.3 million drawn down under the receivables finance facility and £18.4 million drawn down under the non-recourse receivables facility.

    Under the terms of the New Facilities, the Group will be subject to a maximum net debt (averaged over a rolling 3 months) to EBITDA leverage covenant (initially tested on a monthly basis with a mechanism to move to quarterly testing after 31 December 2022 subject to EBITDA performance) commencing at 5.95x, followed by a gradual reduction to 4.0x by October 2023. The Group will also be subject to a minimum interest cover covenant of 2.25x the last twelve months EBITDA to finance charges.

    Importance of the Fundraise

    The Transaction is conditional on, amongst other things, the Bookbuild closing and the Resolutions being passed by Shareholders at the General Meeting.

    If the Bookbuild does not close and/or Shareholders do not approve the Resolutions:

    (i) the Placing, Subscription and the Open Offer cannot be implemented; and

    (ii) the New Facilities would not be available to the Group.

    In such circumstances, the Group would not have sufficient liquidity under its Existing Facilities to meet its forecast funding requirements. In such circumstances the Board would seek to refinance its Existing Facilities but, based on current information available, the Board believes that it is unlikely to be able to do so without an equity raise or some other form of corporate action which it cannot be certain it would achieve.

    Accordingly, it is very important that Shareholders vote in favour of the Resolutions so that the Transaction can proceed (assuming that all other conditions are satisfied).

    Details of the Placing, Subscription and Open Offer

    Placing

    The Placing will be conducted by way of the Bookbuild which will be launched immediately following this Announcement in accordance with the terms and conditions set out in the Appendix. Liberum is acting as Sole Bookrunner in connection with the Placing.

    Pursuant to the terms of the Placing Agreement, Liberum, as agent for Staffline, has conditionally agreed to use reasonable endeavours to place the Placing Shares at the Issue Price with institutional and other investors, representing gross proceeds of £44 million if the Placing Shares and Subscription Shares are fully subscribed. The Placing Shares are not subject to clawback and are not part of the Open Offer. The final number of Placing Shares will be agreed by Liberum and Staffline at the close of the Bookbuild, and the result of the Placing will be announced as soon as practicable thereafter. The timing for the close of the Bookbuild and allocation of the Placing Shares shall be at the discretion of Liberum. The Placing is not underwritten.

    The Appendix (which forms part of this Announcement) contains the detailed terms and conditions of the Placing.

    The Placing is conditional, inter alia, on the following:

    (i) the Resolutions to issue the New Ordinary Shares being passed at the General Meeting;

    (ii) the closing of the Bookbuild;

    (iii) the Placing Agreement and New Facilities agreements not being terminated prior to Admission and becoming unconditional in all respects save as they relate to Admission and, in the case of the New Facilities agreements the completion of customary searches and receipt of not less than £40 million of net proceeds of the Fundraise by the Group; and

    (iv) Admission of the Placing Shares and Subscription Shares having become effective on or before 8.00 a.m. on 10 June 2021 (or such later date and/or time as the Company and Liberum may agree not being later than 4.30 p.m. on 17 June 2021).

    If any of the conditions are not satisfied or waived by Liberum, the New Ordinary Shares will not be issued and all monies received from participants in the Fundraise will be returned to them (at the investors' risk and without interest) as soon as possible.

    Open Offer

    In order to provide Qualifying Shareholders who do not take part in the Placing with an opportunity to participate in the proposed issue of New Ordinary Shares, the Company is providing all Qualifying Shareholders with the opportunity to subscribe for Open Offer Shares, to raise up to a further £4.4 million (before expenses), on the basis of:

    10 Open Offer Shares for every 78 Ordinary Shares

    held by a Qualifying Shareholder on the Record Date

    Subject to the fulfilment of the conditions set out below, Qualifying Shareholders may subscribe for Open Offer Shares in proportion to their holding of Existing Ordinary Shares held on the Record Date. Qualifying Shareholders subscribing for their full entitlement under the Open Offer may also request under the Excess Application Facility additional Open Offer Shares as an Excess Entitlement, up to the total number of Open Offer Shares available to Qualifying Shareholders under the Open Offer. The Open Offer is not underwritten.

    The Open Offer is conditional, inter alia, on the following:

    (i) the closing of the Bookbuild;



    (ii) the Resolutions to issue the New Ordinary Shares being passed at the General Meeting;

    (iii) the Placing Agreement not being terminated prior to Admission and having become unconditional in all respects; and

    (iv) Admission of the Open Offer Shares becoming effective on or before 8.00 a.m. on 10 June 2021 (or such later date and/or time as the Company and Liberum may agree being no later than 4.30 p.m. on 17 June 2021).

    The allotment and issue of the Open Offer Shares is conditional on Admission of the Placing Shares and Subscription Shares, but the Placing and Subscription is not conditional on Admission of the Open Offer Shares. If the Placing does not complete, then the Open Offer will also not complete. However, if the Open Offer does not complete, then this will not prevent the Placing and Subscription from completing.

    A Circular which will provide further details, and include the terms and conditions, of the Open Offer is expected to be sent to Shareholders and be available on the Company's website https://www.stafflinegroupplc.co.uk/investor-relations/ on or around 24 May 2021. The Circular will also include further details of the Placing, Subscription, and the Debt Refinancing and include a notice convening the General Meeting.

    Not all Shareholders will be Qualifying Shareholders. Shareholders who are located in, or are citizens of, or have a registered office in certain overseas jurisdictions will not qualify to participate in the Open Offer. The attention of Shareholders who do not have a registered address in the UK is drawn to paragraph 5 of Part 4 of the Circular.

    Staffline Group PLC - Proposed Placing, Open Offer & Debt Refinancing #STAF @StafflineGroup https://www.voxmarkets.co.uk/rns/announcement/70929652-b7fe-4808-a890-0d860c552511 #voxmarkets
     
    Last edited: May 21, 2021
  15. Groucho

    Groucho Member

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    9 June 2021

    Staffline Group plc

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

    Result of Open Offer


    Staffline, the recruitment and training group, is pleased to announce that further to the announcement of the Open Offer on 21 May 2021, it has conditionally raised total gross proceeds of £4.4 million via the Open Offer.

    Staffline is pleased to announce that it has received valid acceptances under the Open Offer and the Excess Application Facility significantly in excess of the 8,837,242 Open Offer Shares available. Qualifying Shareholders who have validly applied for Open Offer Shares will receive their full Basic Entitlement, applications for New Ordinary Shares under the Excess Application Facility will be scaled back as outlined in the Circular.

    Application has been made to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on AIM. On the assumption that, amongst other things, the Resolutions are passed by Shareholders at the General Meeting, it is expected that Admission will become effective and that dealings in the New Ordinary Shares will commence at 8.00 a.m. on 10 June 2021 (being the business day following the General Meeting). The New Ordinary Shares will rank pari passu with the existing Ordinary Shares.

    New Ordinary Shares in uncertificated form are expected to be credited to Shareholders who hold their Ordinary Shares in CREST accounts on 10 June2021. Definitive share certificates for New Ordinary Shares are expected to be despatched to Shareholders who hold their Ordinary Shares in certificated form within 10 business days of Admission.

    Related Party Transaction

    Henry Spain Investment Services Limited is considered to be a related party of the Company (the "Substantial Shareholder") for the purposes of the AIM Rules by virtue of its status as a substantial shareholder of the Company.

    The Substantial Shareholder has agreed to subscribe for 10,081,616 New Ordinary Shares as part of the Placing and Open Offer.

    The Directors, having consulted with the Company's Nominated Adviser, Liberum, consider that the terms of the participation in the Placing and Open Offer by the Substantial Shareholder is fair and reasonable insofar as the shareholders of the Company are concerned.

    Capitalised terms not otherwise defined in the text of this announcement have the meanings given in the Company's announcement of 21 May 2021.
     
  16. Groucho

    Groucho Member

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    22 June 2021

    STAFFLINE GROUP PLC

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


    AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2020


    Staffline Group plc, the recruitment and training group, announces its audited Preliminary results for the year ended 31 December 2020.


    Refinancing and Current Trading

    · On 10 June 2021, the Group completed a placing, subscription and open offer, raising gross proceeds of £48.4 million. Additionally, the Group's debt facilities were refinanced. The combined refinancing has transformed Staffline's balance sheet

    · As previously announced, Q1 2021 trading was ahead of management expectations providing increased confidence in the full year

    · The employment market experienced a structural change in 2020, with increasing levels of unemployment and demand shifting in favour of essential retail, online and e-commerce sectors, presenting a number of growth opportunities for Staffline

    · Three-year contract extension agreed with Tesco in 2020 and a number of contracts recently secured by PeoplePlus with prime suppliers to deliver the Restart programme

    · The Group has been right-sized and is now re-focused on its core sectors, which the Board believes Staffline can leverage to continue sustainable growth


    2020 Financial Highlights1

    · Revenue of £927.6m (2019: restated £1,063.0m)

    · Underlying2 operating profit increased (66%) to £4.8m (2019: restated £2.9m)

    · Reported operating loss of £(44.3)m (2019: restated £(36.2)m)

    · Underlying EBITDA (pre-IFRS 16)3 of £9.3m (2019: restated £7.0m)

    · Reported loss before tax of £(51.6)m (2019: restated £(44.4)m)

    · Net borrowings4 reduced by £50.7m to £8.8m as at 31 December 2020 (2019: £59.5m) on a pre-IFRS 16 basis

    · Net borrowings were £14.3m as at 31 December 2020 (2019: £67.9m) on an IFRS 16 basis

    · The Group benefitted from the HMRC VAT measures that were introduced in March 2020, enabling deferral of its payments for the period March to June 2020, providing a short-term liquidity improvement


    Operational Highlights

    · The health, safety and wellbeing of our employees, customers and candidates has been our number one priority during the pandemic

    · The Group responded well to the unprecedented surge in demand for temporary staff in the essential food and other online sectors

    · Sustained demand throughout 2020 in the logistics and driving segments as a result of the transition to online retail

    · Conversely, demand from other sectors such as high street retail, automotive and manufacturing was diminished throughout the year

    · Despite the closure of skills centres in line with the Government's Covid rules, PeoplePlus was able to operate the majority of its services by delivering a mix of services including online and digital learning, but most funding support has been on a cost only basis

    · The Group experienced a strong Christmas peak with high demand from the Group's food retail customers

    · Year-end Group headcount decreased by 18.2% to 2,202 (2019: 2,692) as a result of transformation and restructuring actions implemented during the year to right-size the Group for the future

    · Disposed of the loss-making Apprenticeships business in PeoplePlus


    Governance

    · Comprehensive restructuring programme implemented across 2020 improving reporting and governance across the Group, as well as strengthening the balance sheet, with all three divisions returning to full underlying operating profit in H2

    · Significantly strengthened the Board, with the appointments of Ian Lawson, Chairman; Albert Ellis, Chief Executive Officer; Daniel Quint, Chief Financial Officer, and Ian Starkey and Catherine Lynch, Non-Executive Directors

    · Designed and implemented leaner organisational structures, streamlined divisional reporting and focused the Group on its core activities.



    Albert Ellis, Chief Executive Officer, commented:

    "The Group has successfully come through one of the most challenging periods in its existence. Faced with a global pandemic, our employee well-being and safety was our number one priority, and the Group would not have been able to service such high levels of demand without the support of its permanent and temporary workforce across the UK and Ireland."

    "Group net fee income was down 12.7% for the full year but the impact of the transformation and cost reduction actions resulted in a significant improvement in underlying operating profit in the second half compared to the first, enabling the Group to deliver full-year profits ahead of expectations."

    "Trading in the first quarter of 2021 was encouraging with operating profit ahead of expectations. Whilst market conditions remain volatile in those sectors which are just opening up following the lockdown, the successful vaccination programme is providing a springboard for a strong recovery in the second half of 2021. This, coupled with the Group's successful equity and debt refinancing in June 2021, that was supported by both new and existing investors, underpins our optimism for the second half of the current financial year and we remain on track to meet current market expectations for the full year."

    1The results shown above relate to continuing operations. The 2019 results are restated to exclude the results of the Apprenticeships business sold in December 2020 and the Poland subsidiaries, which are held for sale.

    2Underlying operating profit before goodwill impairment, amortisation of intangible assets arising on business combinations, reorganisation costs and other non-underlying costs.

    3 Earnings before interest, taxation, depreciation and amortisation on a pre-IFRS 16 basis

    4 Net debt excludes transaction costs of £0.3m (2019: nil).



    Chairman's Statement

    Introduction

    Our focus for 2020 was to restructure the business and ultimately restore resilience and stability to the Group. The many initiatives implemented during the year included strengthening the balance sheet through a refinancing in June 2020, and a focus on cash, alongside improving the Group's operational, financial and governance processes, in order to create a sustainable business for the future.

    In the year ended 31 December 2020, the Group generated revenues of £927.6m and an underlying profit before tax of £0.7m.

    Strengthening our balance sheet and improving cash generation were high priorities during the year. At the year-end, the Group had pre-IFRS 16 net debt of £8.8m, with average pre-IFRS 16 net debt throughout the year of £38.1m. The Group's net debt position benefited by £46.5m as a result of the Government's VAT deferral scheme.

    The global Covid-19 pandemic, which dominated much of 2020, impacted our overall performance to various degrees during the year. This resulted in some areas of the business benefitting markedly, such as temporary recruitment for the food sector, which experienced a significant uptick in demand in Q2 2020. I was extremely proud of the reaction and contribution of both our people and the business to the nationwide #FeedTheNation campaign. This initiative allowed the Group to utilise its significant food retail experience ensuring our customers were sufficiently staffed and stocked during the first national lockdown. In addition, our driving business benefitted from the e-commerce surge, as consumers transitioned to online shopping during the closure of non-essential retail.

    By contrast, other sectors within the recruitment businesses, such as manufacturing, high street retail and automotive, were adversely affected during the year with the temporary nationwide shutdown of some of these industries. In addition, PeoplePlus experienced a loss of classroom delivery in the year, however, well-developed business continuity and resilience plans, together with digital operating models, meant that the business could continue to operate the majority of its services.

    Where appropriate, we successfully transitioned to working remotely in March 2020 and did so whilst achieving minimal business disruption. The Group also utilised the Government's furlough scheme with certain of its permanent and temporary employees, and has benefitted from the deferral of VAT, as noted above.

    The employment market underwent some structural changes in 2020 with unemployment rising significantly. This presents potential opportunities for Staffline, both in recruitment, as enterprises look to appoint temporary workers as opposed to permanent staff, and for PeoplePlus, as skills and training becomes higher priority in a bid to get more individuals back into employment.

    Staffline entered 2021 with a business that has much stronger foundations from which to deliver a return to growth. This is already evident in our performance in Q1 2021, which was ahead of management expectations, as we benefit from the structural changes in our business that were implemented last year.


    Board composition

    The Group's Board of Directors was transformed during 2020 and our corporate governance processes strengthened significantly. I firmly believe we now have a strong team in place, both at board and senior management level, to lead our business through the next stage of its development.

    I was delighted Albert Ellis took up the role of Group Chief Executive in October 2020 having joined Staffline in March 2020 as a Non-Executive Director. Albert has considerable experience within the recruitment sector, and we are already benefitting from his leadership. In addition, Daniel Quint, who joined Staffline as interim CFO in December 2019, became permanent from 1 February 2021. Daniel has been involved in a number of important workstreams since joining the Group and I am very pleased he has taken up the role on a permanent basis.

    Furthermore, we appointed two additional non-executive directors who joined the Board on 1 January 2021. Ian Starkey, who has significant audit and financial management experience is now Chair of our Audit Committee, and Catherine Lynch, who is a highly experienced HR director, is now Chair of our Remuneration Committee.


    Annual General Meeting

    Notice of the 2021 Annual General Meeting of Staffline Group PLC ("AGM") will be published at the same time as the 2020 Annual report. The AGM will be held at the offices of Liberum Capital Limited at Ropemaker Place, Level 12, 25 Ropemaker Street, London, EC2Y 9LY on 28 July 2021 at 9:00 a.m. However, in light of the Covid‑19 pandemic and HM Government's measures to restrict travel and public gatherings in force, shareholders (other than the two necessary or to be present in person or by proxy to form a quorum) are not allowed to attend the meeting in person. The Q&A that would have taken place at the AGM will instead be made available on the investors page of the Staffline Group PLC's website.


    Summary and Outlook

    The health, safety and wellbeing of all of our employees, suppliers and customers remained our top priority throughout 2020 and into 2021. Our people are central to our success, and on behalf of the Board I would like to thank every one of our employees for their exceptional dedication and contribution, during what has been a particularly challenging time for every individual.

    Despite the operational and broader macroeconomic challenges across 2020, Staffline delivered a robust performance in the year. Trading across the first three months of 2021 was strong and underpins our confidence in meeting expectations for the full year. Having now strengthened our financial position through the recent fundraising and debt refinancing, we truly believe we have a platform from which to deliver meaningful growth as we are already seeing a stronger pipeline developing across all of our divisions.

    The passion and commitment throughout Staffline is very evident. We have a collective understanding of the significant opportunity that exists for our business, and myself and the Board believe we can capitalise on these strengths to deliver value for our stakeholders.


    Ian Lawson

    Chairman



    Chief Executive Officer's Review


    Introduction

    I joined the Board in March 2020 as Non-Executive Director, at a time when the Group was facing significant internal and external challenges. Having seen the Staffline Group's strengths and potential opportunities, I was pleased to accept the position of Chief Executive Officer in October 2020.

    Clearly, Staffline's 2020 performance was impacted by the global Covid-19 pandemic, driven by the associated government restrictions, and the social and business trends that subsequently emerged. Our first priority throughout, has been the safety and wellbeing of our workforce. Those able to, were seamlessly transitioned to a home working environment, and those who remained active across our customers' premises were provided with support, as Covid-secure procedures were implemented. Staffline's response to the pandemic across the Group has been outstanding and this has only been made possible by the tremendous collective effort of all our people, for which I am extremely grateful. My thoughts also go out to those who have suffered through Covid-19, either directly or by the loss of friends or family.

    In terms of trading, H1 2020 was significantly impacted by the pandemic with a sharp decline in demand across our three divisions - Recruitment GB, Recruitment Ireland and PeoplePlus. However, certain initiatives implemented in the first half to improve the Group's operational, financial, governance and board profile, resulted in an improvement in revenues, underlying operating profit, working capital and net debt in the second half of 2020.

    Overall, the Group delivered a creditable performance in 2020, generating revenues of £927.6m and underlying operating profit1 of £4.8m, which, as announced in January 2021, was ahead of management's expectations. In addition, as at 31 December 2020, the Group had pre-IFRS 16 net debt2 of £8.8m (2019: £59.5m), with average pre-IFRS 16 net debt throughout the year of c. £38.1m (2019: c. £85.2m), which was a significant improvement against expectations. This was driven by the £46.5m benefit from the Government's VAT deferral scheme and management actions to reduce outstanding debtor days, generating c. £10.0m of cash.

    In temporary recruitment, as previously highlighted, the Group experienced an increase in levels of demand in March 2020 during the first national lockdown across the food, driving, logistics and e-commerce sectors, with this surge in demand normalising later in the year. Certain other sectors such as manufacturing, high street retail and the automotive industries were more challenging with demand across the travel, leisure and aerospace industries continuing to be supressed. Retail and hospitality were volatile throughout the year, with easing of restrictions in the summer benefitting these industries, followed by regional lockdowns in the second half of the year causing further disruption. In addition, the Group's permanent recruitment business declined sharply in H1 2020 but saw some recovery in the latter part of the year.

    Despite the national lockdown in November and restrictions in December, the Group still experienced a strong Christmas trading peak, with significant demand from the Group's food retail customers. Furthermore, e-commerce and logistics experienced a very strong trading period as a result of the accelerated nationwide behavioural shift to online retail.

    The PeoplePlus division was also adversely impacted by the pandemic, with training programmes disrupted or delayed and the majority of services transitioned to predominantly digital delivery with funding support largely on a cost only basis. As part of a broader restructuring of the Group, PeoplePlus successfully completed the disposal of its Apprenticeships business in December 2020, enabling the division to re-focus on its core employability and adult skills capabilities. I am pleased to report that PeoplePlus continued to recover during the year and reported an underlying operating profit in H2 2020 compared to a loss in the first half.

    As the pandemic spread, we took decisions to implement new and safer ways of working. This ensured that we were able to continue to deliver our services, navigating the new macroeconomic landscape whilst adjusting the working environment - in many cases in consultation with our customers - to ensure our employees, both permanent and temporary, remained safe at work.

    We have entered 2021 in a much stronger position than a year earlier as a result of the significant changes we have implemented across our business. Despite the ongoing Covid-19 pandemic, and as announced in our trading update in April 2021, trading in the first quarter of 2021 was relatively strong, and coupled with our recent refinancing, we enter the second half of 2021 with a sense of cautious optimism.


    Restructuring

    As highlighted in the Chairman's statement, the Group implemented a comprehensive restructuring programme during 2020. A key priority of this was to improve the quality of our reporting and governance across the Group. This, alongside a strengthening of our Board, is coming to fruition, as we seek to future-proof Staffline for sustainable long-term growth. Alongside these changes, the Group refinanced its bank facilities in June 2020, ensuring the business had sufficient working capital to support our day-to-day activities. The combined debt and equity refinancing in June 2021 completed the exercise to strengthen the balance sheet.

    Elsewhere, we have changed our organisational structure, streamlining divisional reporting and ensuring that we are focused on our core activities. In addition, we have sought to right-size our business, which has included rationalising both our people costs and property estate, the disposal of a non-core business, alongside seeking supply chain synergies by aligning our new group structure with our market leading IT capabilities and solutions. These changes delivered c.£15.0m of annualised cost savings.

    One of the most exciting strategic transformations has been our shift in focus to core complementary services packaged together in a portfolio, with professional recruitment and permanent placements a key driver of margin improvement and cash generation.

    As a management team, we believe that Staffline is now in a much more resilient position and our renewed focus on our core capabilities will, in time, improve customer retention and ultimately lead to greater levels of cross-selling opportunities across the Group.


    Responsible business

    Staffline is a purpose-led organisation with a long successful track record across both recruitment and training activities. With sustainable employment one of the most desired objectives across society, Staffline provides the solutions to not only connect skilled people to companies, but also to help individuals develop their skills and careers. Our purpose is to bring together skilled people to build better organisations for the future.

    We impact individuals' lives in a number of ways, including providing temporary employment to c. 40,000 blue collar workers a day, enabling them to work flexibly, and easily change their career focus. We had particular success through our #FeedTheNation campaign in March 2020, providing employment in the food production and logistics sectors for over 25,000 displaced workers. We work to help people transform their lives, get jobs and keep jobs, and develop their careers.

    A number of the services that Staffline provides are specifically to assist those in society's most difficult situations. We provide c. 20,000 prisoner learners with not only the skills to find work, but also life skills such as parenting advice. In addition, our WayOutTV solution is watched by a further 50,000 prisoner learners across the UK. We are also one of the largest providers of independent living in the UK, helping vulnerable individuals' stay in their homes for longer.

    We have also created a social recruitment model which connects employers with individuals who might otherwise struggle to find work, with corporates such as Amazon and Tesco utilising this model. In addition, we work closely with individuals who want to exit long-term employment and set up their own business giving them the advice and skills necessary to do so.

    Our goal is to truly embed Environmental, Social and Governance ("ESG") targets across our business and we have been building out our strategy in this regard. By focusing on these three key areas we believe we can have the most impact across our key stakeholders and are currently introducing new targets to increase accountability across the business. We are committed to helping to build a sustainable future for society, and the unprecedented events of this year have strengthened our resolve. With the anticipated rise in unemployment anticipated in the coming months as a result of the pandemic, we believe Staffline's purpose will become more important than ever before.


    Operational review


    Recruitment GB

    The Recruitment GB division was set up well to handle the challenges presented by the Covid-19 pandemic. Over 60% of the division supports the food and food logistics sector, and growth in demand in this sector increased by 10% versus 2019. As a result of the accelerated investment in the division's digital technology and intelligent automation, such as the Recruiter Chatbot, "Flin", integrated with the Group's candidate database management system, Staffline was well-placed to ensure that it could deliver fulfilment levels against challenging timescales. We were also able to leverage the benefits of the wider Group as we jointly developed the #FeedTheNation programme.

    As lockdowns eased during the year, Recruitment GB's Recruitment Procurement Outsourcing ("RPO") division, Datum, supported house builders and construction clients. Additionally, Recruitment GB's professional permanent recruitment businesses, Omega, in England and Wales and Brightwork, in Scotland, helped to source engineering and technical specialists. The business successfully supported its essential food, retail and logistics customers as the country shifted ever more to online delivery models.

    Following a strategic review, the business gave notice to exit low margin contracts, the most significant of which was 2 Sisters Food Group. New business and organic growth was secured in exciting sectors such as digital and online food delivery businesses, with Ocado and Hello Fresh being just two examples. A number of Recruitment GB's core customers also agreed extended contract terms in 2021 as a result of the successful support during a very challenging 2020.


    Recruitment Ireland

    After a positive Q1 2020, during which Recruitment Ireland delivered underlying operating profit of £0.7m on revenue of £33m, management acted quickly to counteract the effects of the Covid-19 outbreak on its core markets. Decisive action was taken in respect of overheads, enabling this division to remain profitable for the remaining nine months of the year, despite a fall in demand and the severe and extended lockdown implemented in the Republic of Ireland. Pleasingly, Recruitment Ireland maintained margins of 8.7% for the year, despite significant industry-wide challenges in certain sectors such as non-food manufacturing and a fall in permanent recruitment throughout the summer.

    The division maintained its position as market leader in Northern Ireland, with over 21% market share, and is now the second largest recruitment agency on the island of Ireland. Recruitment Ireland had new business success during 2020, including adding customers Finnebrogue, the artisan food producer, and Liberty IT, the technology business. In addition, the business supplied Tesco with contingent retail staff, secured additional business with the Northern Ireland Civil Service and was awarded a place on the Nightingale Framework to support the Covid-19 response.

    PeoplePlus

    PeoplePlus adapted quickly to the impact of the Covid-19 pandemic, deploying its business continuity plans successfully with all services maintained. Customers and learners were supported by market leading digital services that had been developed prior to the pandemic and were further enhanced during this period. In a monitoring visit of PeoplePlus' educational services in England in late 2020, Ofsted noted the support this approach had provided to learners. The impact of lost classroom capacity in both adult education and prison services was, however, significant, partly recovering in the summer of 2020, before reducing again as further local and national lockdowns occurred.


    The fixed cost nature of the business model resulted in a loss in the first half of the year. With much reduced capacity and declining revenues, the leadership team implemented a transformation of the business which included focusing on core services and reducing the overhead base significantly, whilst changing the delivery model to a mix of online digital as well as traditional in-person learning.

    This transformation coincided with the emergence of rising unemployment as a defining factor in the economy and led to a strategic refocus of the PeoplePlus division. PeoplePlus disposed of the majority of its Apprenticeship business in December 2020 to support this strategic pivot. The Chancellor's "Plan for Jobs" created a significant pipeline of new public sector funding in these core markets, including investments in traineeships, a long-term unemployed programme, "Restart", and further adult education budget.

    The Group announced on 2 June 2021 that PeoplePlus has secured three significant contracts with two of the UK's leading outsourcing providers within the Restart programme.

    Looking ahead, PeoplePlus, with its leading market positions and reputation for high performance, is well positioned across a number of opportunities. Therefore, bid disciplines will remain an important part of PeoplePlus' sustainable growth strategy.


    The recruitment landscape and our offering

    Given Staffline's significant market position in blue collar recruitment and the strong reputation we have with our blue-chip client base for delivery and fulfilment, I firmly believe we are ideally placed to benefit from the full recovery of the UK and Ireland economies.

    The UK is still considered to be the world's third largest recruitment market, accounting for c. 10% of the global $498 billion in global staffing revenues, with the UK contributing c. $51.9 billion and the Republic of Ireland, $2.5 billion3 pre-pandemic. Despite the ongoing uncertainty and economic impact of Covid-19, the UK recruitment market has proven overall to be highly resilient in the last twelve months. The recruitment market has also historically proven to return to early growth quite rapidly post a crisis or recession versus other sectors, and our focus has been to ensure that we are optimally placed to capitalise on this potential increase in the second half of 2021 following the vaccine rollout in the UK.

    Prior to the pandemic, we operated within a tight labour market across wide and diverse sectors. These historic dynamics have now shifted into essential sectors, such as food and distribution, online retail and e-commerce. As a result, we have seen a significant increase in online activity and accelerated demand for logistics, warehouse and driving. This shift in demand, ultimately driven by the pandemic, appears to have permanently changed consumer behaviour, illustrated by the expansion of the networks and footprints of Hello Fresh and Ocado, which are just two of the Group's customers. The pandemic has also negatively impacted travel, aerospace, hospitality (particularly in city centres and "on-the-go food"), high street retail and automotive and manufacturing.

    Whilst the global uncertainty relating to the pandemic continues, we are pleased to see the global roll-out of vaccination programmes worldwide. However, whilst we have adapted at pace to new levels of demand, so long as the impacts on the macroeconomic environment persist, we expect to see some continued volatility in our markets. There has also been a seismic shift in working practices as a result of Covid-19 and we believe many businesses will be adopting these for the long term.


    Given our market position, we are confident that we are well-placed to capitalise on the new world of work, and so are investing in key areas that we believe will drive future growth. We remain committed to investing in digital technology to improve our customer and candidate experience, providing assurance and transparency, and with the use of our market leading data, also providing insights and identifying labour trends, which will further embed our valued customer relationships.


    Strategy

    As already noted, I took up the role of CEO in October 2020, and alongside the executive management team, we have focused on creating a sustainable business, with our strategy underpinned by the following key priorities, as outlined in our capital markets presentation in November 2020, which are:

    1) Operational excellence - focusing on simplicity, leadership, strong processes, organisational design and implementing performance measurement through KPIs

    2) Governance - developing a dynamic and skilled Board, aligning Group polices, strengthening the finance and internal audit function and ensuring a robust governance framework

    3) Cost base - right-sizing the business, including identifying synergies in shared services, property utilisation and supply chain and scale economies, to underpin our competitive position in the market

    4) Digital and technology - bringing together the IT estate under one leadership team, the appointment of a Group CIO and driving forward intelligent automation and a strong digital platform, whilst strengthening the Group's business continuity infrastructure

    5) Clients and branding - aligning the Group's brands and brand values and upgrading existing client relationships by investing in relationships and building key strategic partnerships. Driving organic sales as a key priority, whilst leveraging the significant opportunities to increase cross-selling across the Group

    6) Talent - ensuring market leading attraction, retention and compensation policies are in place, introducing performance and productivity measurements combined with competitive incentive and reward schemes, both short and long term


    Stakeholders

    Due to our position and the breadth of our business coverage in terms of sectors, we have a wide range of stakeholders from governments, consumers, through to our employees, business partners, shareholders, the community and environment. These relationships are all critical to us as we deliver against our Purpose, Vision and Values - to build and develop the most reliable integrated workforce in the country and be the leading creator of opportunities, jobs and new ideas in the employability, skills and justice sectors. We work hard to engage with all our stakeholders and to create a balance of long-term value for each through our strategy. An overview of how the Board has fulfilled its duty, as set out in Section 172 of the Companies Act 2006, to promote our long-term success, while considering the interests of our stakeholders and our impact on the community and environment, is explained on pages 28 to 32 of the Group's Annual Report.


    Outlook

    Our initial view, which was taken in spring 2020, was that the pandemic would create sustained and significant volatility in staffing demand, creating new growth sectors whilst impacting others. This has proven to be correct, and we anticipate some uncertainty ahead in several of our markets. Despite this, the Group delivered a robust performance in 2020 and has undergone some fundamental changes which have positioned it for future growth as we benefit from the resurgence in our core markets. Our new strategy so far has proven successful, and we will continue to drive the Group forward in the coming period towards our long-term ambitions.

    Results for the year so far have been strong and all three divisions are expected to achieve market expectations for the full year, with a key assumption being that economic growth returns in the second half of the year following the easing of lockdown, and the successful rollout of the vaccination programme. In addition, our recent equity fundraise of £48.4 million of gross proceeds, and debt refinancing, provides us with a renewed platform to capitalise on the opportunities that exist for our businesses.

    Over the coming year, we will continue to invest in our people, data, technology, and our go-to market strategy, leveraging the power of our platform to reduce the cost of customer and candidate acquisition. Our current objective remains to continue winning market share, working towards our ultimate goal of becoming the number one talent provider across our chosen markets.

    Once again, I would like to thank both our temporary and permanent employees for their significant contribution, in what was a challenging year for the Group.


    Albert Ellis

    Chief Executive Officer

    21 June 2021

    Staffline Group PLC - 2020 Audited Results #STAF @StafflineGroup https://www.voxmarkets.co.uk/rns/announcement/82e4ba4b-0990-4126-9b92-aed33e93a9e0 #voxmarkets
     
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