Staffline Group (STAF) H2 2023 earnings summary

Executive summary

• FY 2023 revenue rose 1.1% to £938.2m despite sector declines; underlying operating profit was £10.3m, 1.5% ahead of expectations, and cash generation exceeded expectations.

• Strategic progress included new Recruitment contracts, a focused PeoplePlus business with a substantial bid pipeline, refinancing on more favourable terms and a 10% share buyback.

Financial highlights

• Revenue increased to £938.2m from £928.1m; gross profit was £80.8m versus £82.0m, and underlying operating profit was £10.3m versus £12.0m.

• Gross sales value rose to £1,055.7m from £1,018.9m; gross margin eased to 8.6% from 8.8%.

• Loss after tax was £11.0m, including an £8.9m PeoplePlus goodwill impairment, £3.4m of discontinued costs mainly from the in-person Skills business, and £1.8m Recruitment GB restructuring costs.

Outlook and guidance

• Q1 2024 started well and was in line with management expectations; GB Recruitment working hours were ~5% higher in the first 10 weeks than the prior year.

• Ireland’s permanent-fee pipeline was at record levels and its largest since 2019; outcomes were pending on PeoplePlus tenders worth £310m, with a Restart extension also proposed.

• Annualised benefits from cost reductions are expected to flow into 2024; management cited an improved conversion ratio.