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H1 25 results were strong, with 54% underlying EBIT growth, and the business is on track for the FY. We make four key points: 1.) The macro is undeniably tough, but Staffline continues to drive growth through market share gains; 2.) The Culina contract should materially contribute in FY 26, delivering an estimated £100m of revenue with potential for further upside; 3.) Recruitment GB is benefitting from a defensive customer base and Recruitment Ireland is well-positioned in the public sector; and 4.) Balance sheet strength, with £66.5m of financing headroom, enables further investment in the business and creates opportunities for organic growth. Maintain BUY and TP of 60p; a CY 26 P/E of 7.8x is attractive given the growth potential.
Staffline Group plc
H1 25 results were on track for the FY, with 54% growth in underlying EBIT, benefitting from GP growth and a better conversion rate. The financial position changed from £9.6m of net cash in FY 24 to £5.7m of net debt, noting the seasonally weak H1 and a £3.5m improvement yoy. We maintain our EPS estimates, having increased them in May 2025 following the Culina contract announcements, but increase GB and reduce Ireland in the mix. Three key points: 1) The macro is tough, although temporary billings are declining at a slowing rate; 2) At Recruitment GB, the business is demonstrating its defensive customer base and continues to win market share; and 3) At Recruitment Ireland, EBIT fell 42% despite strong perm growth. We maintain our BUY recommendation and TP of 60p; a revised CY 26 P/E of 8.3x is still too cheap given the growth potential.
Staffline’s H1 2025 results show continued strong growth and positive momentum. During a period where larger, UK-listed peers have again reported decreasing net fee income (NFI), Staffline increased its NFI (or gross profit) by 6.1% and underlying EBIT by 54.2% in H1 2025 (on a continuing operations basis). The strong H1 results and the contract win with Culina Group positions Staffline well to meet our unchanged underlying FY25 estimates that show 15.8% underlying EBIT growth. Staffline shares trade on P/E multiples of 13.5x FY25 and 8.8x FY26, which we think still undervalues the Group. Our updated DCF valuation estimate of 57.5p (previously 52.5p) per share implies 21.7% upside from last night’s closing price.
The AGM update indicates that Staffline is on track to deliver results in line, with strength in GB. This follows on from the 12% and 46% increase to FD EPS for FY 25 and FY 26 on 16th May, after the Culina contract win. We leave our earnings and net debt estimates unchanged. We introduce an H1 25 FD EPS estimate of 0.6p; an H1 weighting of 17%, noting normal seasonality and Culina impacts in H2. We make three key points: 1) The macro is tough, and that was before the tariff war had been fully felt; 2) At Recruitment GB, the business is gaining market share through deeper penetration of customers and new wins; 3) At Recruitment Ireland, market conditions are tough, but the business is well positioned in the public sector. We maintain our BUY recommendation and TP of 60p; a revised CY 25 P/E of 10.6x is still too cheap given the growth potential.
Staffline, one of the UK and Ireland’s leading recruitment groups, has released a positive AGM statement confirming strong trading momentum. Temporary worker hours from Recruitment GB in the first four months of FY25 are comfortably ahead (+6.6%) of the prior comparator, driving a 6.2% increase in Group gross profit over the same period. We expect strong gross profit growth to continue through FY25, in part driven by the new contract win announced last week that is expected to mobilise across Q2 and Q3 2025. Staffline shares trade on P/E multiples of 11.5x FY25 and 7.5x FY26, which we think still undervalues the Group. Our valuation estimate of 52.5p per share implies 31% upside from last night’s closing price.
Staffline has announced a new contract win with Culina in logistics. We believe that the contract could be worth £300m, potentially over 3 years. The contract is further evidence of market share gains and should mobilise in Q2 and Q3 25, incurring implementation and mobilisation costs in FY 25. We increase FY 25, FY 26 and FY 27 FD EPS by 12%, 46% and 41%, respectively. We maintain our BUY recommendation and increase our TP from 52p to 60p to reflect increased estimates; a revised CY 25 P/E of 7.2x is still too cheap given the growth potential.
Staffline, one of the UK’s leading recruitment groups, has announced a significant strategic partnership with a leading food and drink supply chain management and logistics provider. The agreement will mobilise c. 3,000 temporary workers and demonstrates Staffline’s ability to quickly deliver at scale as a trusted partner. As a result of this win, we increase FY25 underlying PBT by 12% to £5.9m, FY26 by 47% to £8.3m and FY27 by 45% to £8.7m. This follows on from a material outperformance of its UK-quoted peers in CY24, based on Zeus analysis in our 8 April note. In our view, the current 3.6x FY25 EV/EBIT multiple, based on Zeus forecasts, is exceptionally low and undervalues the Group’s strong market position, track record and forecast fundamentals. Our valuation estimate of 52.5p per share implies 93% upside to last night’s closing price. In addition, a c. 9x FY25 EV/EBIT multiple implied by the possible offer for Empresaria, announced on 7 May, would translate to a 77p per share valuation for Staffline.
FY 24 results were broadly in line, with FD EPS up 55% and net cash of £9.6m. We make four key points: 1) The macro environment is undeniably tough, but Staffline continues to take market share; 2) As things stand, we see no material adverse impact from tariffs; 3) The disposal of PeoplePlus creates a focussed recruitment group and should drive a re-rating; and 4) Balance sheet strength enables further investment in the business and creates opportunities for organic growth. Maintain BUY and TP of 52p; we believe a CY 25 PE of 7.7x is attractive.
Staffline, one of the UK’s leading recruitment groups, has announced FY24 results showing an excellent trading and cashflow performance against a challenging macroeconomic backdrop. Our analysis of UK-quoted peers’ CY24 results suggests a material outperformance by Staffline. With the disposal of PeoplePlus in February 2025, the Group is now a pure-play UK recruitment business with, in our view, attractive organic growth prospects. At a FY25 EV/EBIT multiple of only 3.6x, believe Staffline’s shares are undervalued based on its market position, track record and forecast fundamentals. Our valuation estimate of 52.5p per share implies 72% upside and we believe the ongoing share buyback will provide support to the share price.
FY 24 FD EPS increased 55% to 3.1p, broadly in line with our estimates, which were increased in January. Cash performance was strong and net cash (exc. leases) increased from £3.8m to £9.6m, despite £4.4m of share purchases. We maintain our FD EPS estimates, noting market share gains and strong execution. 5 points: 1) The macro is tough, and that was before the tariff war. 2) There is no material adverse impact from tariffs as things stand. 3) Zero hours is not necessarily negative and Labour may soften its approach for the sake of growth. 4) At Recruitment GB, EBIT is up 29% and the business is gaining market share through deeper penetration of customers and new customers wins. 5) At Recruitment Ireland, EBIT is up 56% and the business is well positioned in the public sector. We maintain our BUY recommendation and TP of 52p; a CY 25 P/E of 9.5x is still too cheap given the growth potential.
Staffline has announced the disposal of PeoplePlus. Given the new £7.5m buy back, we maintain our FD EPS estimates, but reduce FY 25 and FY 26 net cash by 14% and 18%. The disposal creates a focused recruitment business operating in the UK and Republic of Ireland, and should help drive a re-rating. The net cash proceeds are £4.9m, in addition to £2.0m of deferred consideration, and we expect £11.1m of intangible write-offs, no CGT and only modest fees. Staffline gave a positive post close trading update in February, bucking the negative trend among recruiters. We maintain our BUY recommendation and TP of 52p; a revised CY 25 P/E of 7.5x is far too cheap given the growth potential.
Staffline has announced the disposal of its workplace training and employability business, PeoplePlus, for net cash proceeds of up to £6.9m. In our view, PeoplePlus was a non-core asset and this deal simplifies Staffline’s platform, allowing it to focus on the faster-growing and strong performing recruitment businesses across the UK and Ireland. The cash proceeds add to Staffline’s already strong net cash position (£9.7m at 31 December 2024, ex. leases), providing the funds for a new £7.5m share buyback programme announced today. Zeus forecasts had minimal forecast profits from PeoplePlus due to ongoing delays in Government spending decision making on its contract pipeline. We adjust forecasts for the disposal and share buyback, with the net impact being a 2.3% increase to underlying diluted EPS in FY25 and 12.1% increase in FY26. With Staffline shares trading on exceptionally low valuation multiples (3.1x FY25 EV/EBIT), we believe share buybacks are an appropriate use of capital.
The FY 24 post close update indicates EBIT and Net Cash ahead of expectations, despite market concerns to the contrary. We increase our FY 24 FD EPS by 10% and reduce our FY 25 FD EPS by 5%, an impressive outcome given the backdrop. We increase our FY 24 IAS 17 net cash estimate from £1.7m to £9.7m, an increase of £8m, or 36% of the market cap. Looking at the three divisions: 1) At Recruitment GB, the business is gaining market share through deeper penetration of customers and new customers wins; 2) At Recruitment Ireland, the business is relatively stable; and 3) At PeoplePlus, there have been delays but there is still a strong pipeline. We maintain our BUY recommendation and TP of 52p; a revised CY 25 P/E of 6.0x is far too cheap given the growth potential.
Staffline’s FY24 trading update showed a strong performance that beat Zeus’ expectations and demonstrates the resilience of its business model. The Group has made market share gains in its blue-collar sectors and recorded robust growth in permanent recruitment fees, offsetting the expected weakness in PeoplePlus. Underlying EBIT of £11.1m was 10.5% ahead of our estimate and net cash (ex. leases) of £9.7m was significantly ahead of our £2.9m net debt estimate. We have rebased FY25 and FY26 estimates, which were at the top of market consensus, for lower expected PeoplePlus contribution and for higher interest charges, reducing FY25 underlying PBT by 28% to £5.6m. If interest rates fall faster than expected or the £190m PeoplePlus pipeline converts faster, there is scope to outperform estimates. In our view, with its strong balance sheet and defensive sector focuses, Staffline is well positioned to trade through macro uncertainty, gain market share, and capitalise on any economic recovery.
The H1 24 results were broadly in line, with underlying FD EPS of 0.4p (vs Liberum: 0.3p). We make three key points on the business: 1) Staffline is taking market share in a tough macro environment; 2) investment and strategic progress in the business should leave it well-positioned when the macro environment improves; and 3) Staffline should be a winner from legislative change, e.g. tightening of legislation on umbrella companies and a ban on "exploitative" zero-hours contracts. In terms of valuation, the Impellam exit implies a share price of 59-161p at Staffline. A CY 25 P/E of 11.7x is attractive, given the growth potential.
The H1 24 results were broadly in line, with underlying FD EPS of 0.4p (vs Liberum: 0.3p). The underlying cash performance was sound but the financial position changed from £3.8m net cash at the FY to net debt of £9.2m at H1 24. We maintain our FY 24 FD EPS but reduce our FY 25 FD EPS by 17% mainly due to weakness at PeoplePlus. We reduce our FY 24 net cash (excl. leases) estimate from £9.0m to £1.7m, mainly due to share purchases. Looking at the 3 divisions: 1) At Recruitment GB, the 9.2% increase in worker hours suggests market share gains. 2) At Recruitment Ireland, 30% perm growth in H1, with growth in HR consultancy. 3) At PeoplePlus, the adverse Purdah impact on FY 25 is likely to be worse than expected. We maintain our BUY recommendation and TP of 52p; a CY 25 P/E of 12.5x is attractive given the growth potential.
Staffline’s interim results show another resilient performance despite ongoing macro headwinds in the wider recruitment industry. Underlying operating profit is broadly flat year on year, with strong Recruitment GB and Ireland performances being offset by lower profit from PeoplePlus, as anticipated. With momentum in Recruitment GB and Ireland, we have increased FY24 underlying EBIT forecasts by 11%, albeit higher interest charges on working capital financing offset this at the underlying PBT level. The strong operating performance in the recruitment businesses supports our view that Staffline is undervalued versus its UK peers and is better positioned than most of this group.
The AGM update indicates that Staffline is on track to deliver results in line with management expectations for the full year. We leave our earnings estimates unchanged, but note the strong momentum in the first four months of the year. We introduce an H1 24 FD EPS estimate of 0.3p; an H1 weighting of 10%. The YTD cash performance has been strong but we estimate H1 net debt (excl. leases) of £6m due to contract wins and seasonality. We maintain our FY 24 net cash (excl. leases) estimate of £9.0m, which leaves scope for more buybacks. At Recruitment GB, 9% growth in hours indicates market share gains. At Recruitment Ireland Perm fees increased 25%. At PeoplePlus, the pipeline is strong, particularly with the MoJ. We maintain our BUY recommendation and TP of 52p; a CY 24 P/E of 9.9x is attractive given the recovery potential and share gains.
Staffline has released a brief AGM statement confirming that the positive trading momentum from the final quarter of FY23 has continued into the first four months of FY24.
Staffline’s FY23 results, covered in our 19 March research, showed a robust trading performance in light of tough macro conditions. Now that most of the quoted UK recruitment peers have reported full year or interim results covering the 2023 calendar year, we are able to benchmark Staffline’s performance. The Group outperformed the average of its listed peers on CY23 revenue growth, NFI growth, underlying EBIT growth, and GP to EBIT conversion. The outperformance is greater when Staffline’s combined Recruitment GB and Recruitment Ireland divisions (less all Group central costs) are compared to the UK operating segments of the peers. We think this outperformance and the merits of Staffline’s defensive positioning (from Temp mix and sector specialisms) are not reflected in the current valuation of 4.5x FY24 EV/EBIT. Our DCF valuation estimate of 52.5p per share indicates 106% upside to last night’s closing price.
The FY 23 results were in line with our estimates. We make four key points about the business: 1) The UK job market remains subdued according to the macro data; 2) Encouragingly, market hours worked were flat in the last three months of the year across the UK, but up by 5% at Staffline, suggesting market share gains; 3) Investment and strategic progress in the business should leave it well-positioned when the macro environment improves; 4) Strong cash generation and the forecasted balance sheet leave scope for more buybacks. In terms of valuation, the Impellam exit implies a share price of 57p-155p at Staffline. A CY 24 P/E of 8.5x is attractive, given growth potential.
Albert Ellis, CEO of Staffline, explains why GB Recruitment is gaining share and what the return of Stormont means for Northern Ireland. Management suggests it will continue buying what is cheap and what they know best - their own shares.
FD EPS fell by 45% from 5.7p to 3.1p, but was in line with our expectations; £8.9m non-cash goodwill impairment at PeoplePlus. The underlying cash performance was strong with net cash of £3.8m at FY 23 on an IAS 17 spot basis vs our estimate of £3.8m, and there is a prospect of more buybacks. We maintain our FD EPS estimates, noting a strong start to the year, and no assumption of market recovery. We make 5 points: 1) The UK job market remains subdued. 2) Tightening of legislation on ‘umbrella companies’ would act as a tailwind for Staffline. 3) At Recruitment GB, EBIT increased 4% due to a 5% increase in hours in Q4, despite the tough macro and weaker perm fees. 4) Recruitment Ireland’s profitability is being restrained as expected by investment and tough macro in Northern Ireland, but there are some encouraging wins as Stormont reconvenes and the Republic is expected to grow in 2024. 5) At PeoplePlus, we expect a reduction in profits in FY 24 but a strong pipe-line points to recovery thereafter. We maintain our BUY recommendation and TP of 52p; a CY 24 P/E of 8.9x is attractive given the growth potential.
Staffline’s FY23 results present a resilient trading performance throughout tough market conditions. FY23 Adj. EBIT of £10.3m is 2.0% ahead of the £10.1m we forecast and, impressively, is broadly in line with our original £10.4m estimate set over a year ago in January 2023, testament to the Group’s resilient model and strong cost control.
The FY 23 post close update indicates a strong H2 23 performance with FY 23 EBIT broadly in line our estimate. We increase FY 23 FD EPS by 3% given the strong performance but cut FY 24 FD EPS by 30% largely due to the weak outlook for PeoplePlus. FY 23 IAS 17 net cash of £3.8m was much better than our net debt estimate of £2.5m and the facilities were refinanced. At Recruitment GB, EBIT was broadly unchanged, despite the tough macro and weak perm fees. Recruitment Ireland’s profitability is being restrained as expected by investment and tough macro in Northern Ireland. At PeoplePlus, we expect a reduction in profits in FY 24 but a recovery thereafter. We maintain our BUY recommendation but cut our TP from 60p to 52p. We expect a negative share price reaction today but a revised CY 24 P/E of 8.0x is attractive given the growth potential.
Staffline’s FY23 trading update shows a strong underlying performance against challenging trading conditions.
Following on from Staffline’s interim results last week, we talk to Albert Ellis, CEO, about trading and prospects. Albert discusses the highlights of the interims, current trading, and recent contract wins. Importantly, he explains why the higher profits expected in H2 should be deliverable.
Staffline’s H1 results show a good performance in challenging market conditions and the Group is on track to meet current market expectations for FY23, subject to its usual H2 weighting. Therefore, Zeus underlying EBIT forecasts are unchanged, but we factor in the newly announced £4m share buyback programme which boosts EPS estimates. We reiterate our investment case that Staffline has a uniquely diversified platform across recruitment services, longstanding blue-chip clients, a robust balance sheet, and a growing track record of meeting expectations. Given these factors, we think Staffline’s 46% FY1 P/E discount to its peer average (13.4x) is unwarranted and we remain comfortable with our valuation estimate of 62.2p per share.
The trading result in H1 23 was broadly in line, with underlying EBIT of £2.4m (vs Liberum: £2.5m) but worse at the FD EPS level due to higher interest costs. The underlying cash performance was strong with net debt of £3.5m at H1 23 on an IAS 17 spot basis vs our estimate of £6.1m. The company has launched a £4m buyback programme. We maintain our EBIT estimates but make changes to reflect higher interest costs and the buyback which results in a 3% cut to FY 23 FD EPS but a 7% upgrade to FY 24 FD EPS. We maintain our FY 23 net debt (exc. leases) estimate of £2.5m, as the stronger than expected net debt at H1 23 helps offset the £4m outflow on the buyback. Recruitment GB is restrained by the tough macro back drop, but the GXO Logistics contract expansion helps to underpin the outlook. We maintain our BUY recommendation and TP of 60p; a CY 24 P/E of 5.8x is attractive given the growth potential.
Staffline has confirmed it remains on track to hit our FY23 estimates following a strong FY22 performance. Signs of stronger organic growth are coming through in both the UK and Ireland driven mainly by contract extensions in Recruitment GB and People Plus. We make no changes to our forecasts at this juncture and remain comfortable with our valuation per share of 62.2p illustrating compelling upside from current levels. We continue to believe that Staffline is well positioned to navigate current levels of economic uncertainty whilst capitalising on growth opportunities as the cycle turns.
In this video, Staffline CEO, Albert Ellis, talks through the highlights of the FY22 results as well as outlining trends in current trade, particularly the potential mix shift between perm and temps and the likely financial impact. Albert also discusses how Staffline is investing for growth in FY23 and highlights the key milestones to look out for.
The FY 22 results were strong and slightly ahead of our estimates. We make four key points: 1) The UK job market appears to be softening, as expected; 2) At Recruitment, we expect higher-margin perm to weaken in FY 23; 3) Investment and strategic progress in the business will leave it well-positioned when the macro environment improves; and 4) The Impellam exit valuation implies a share price of 44p-142p at Staffline. We maintain our BUY recommendation and TP of 60p; a CY 23 P/E of 11.9x is attractive, given the growth potential.
The FY 22 results indicate a strong H2 22 performance with FY 22 EBIT 3% ahead, and FD EPS 20% ahead due to a deferred tax credit. The underlying cash performance was strong with net cash of £5.0m at FY 22 on an IAS 17 spot basis, in line with our estimate. Having cut FY 23 FD EPS by 47% in January due to a weaker outlook, we leave estimates unchanged. We assume a small net debt position in FY 23 given the possible investment of working capital in growth. We make three key points: 1) The UK job market appears to be softening, as expected; 2) At Recruitment, we expect weaker perm in FY 23; 3) The exit valuation for Impellam suggests a share price of 45p to 142p. We maintain our BUY recommendation and TP of 60p; a CY 23 P/E of 11.4x is attractive given the growth potential.
Staffline has reported FY22 results with underlying EBIT of £12.0m up 16.5% year-on-year, beating our £11.6m forecast. Despite broadly flat revenue vs. FY21, the focus on its recruitment margins, tight cost control, and interest rate hedging has led to improved profits. As flagged on 24 January, the Group significantly outperformed our cash expectations, with net cash of £5.0m being £20.0m ahead of our estimates prior to the trading update. After resetting FY23 and FY24 forecasts in January, we make no further changes to estimates today. We continue to believe the Group is in a strong position to navigate any near-term macro volatility and by using its strengthened balance sheet, capitalise on growth opportunities and increase its market share to increase gearing into a recovery.
The FY 22 trading update indicates a strong H2 22 performance with FY 22 EBIT slightly ahead of our estimate. We broadly maintain our FY 22 earnings estimates as profits were H2 weighted as expected, but we cut FY 23 FD EPS by 47% due to a weaker outlook. The cash performance was impressive with net cash of £5m at FY 22 on an IAS 17 spot basis vs our estimate of net debt of £15m largely due to a stronger than expected working capital performance. At Recruitment GB, H2 was strong, helped by strength on new contracts and organic growth but we expect weaker perm. At Recruitment Ireland, profit conversion increased from 22.1% in FY 21 to 24.8% in FY 22 due to strong perm, but there is a need for investment and perm is likely to soften. At PeoplePlus, Restart was profitable in FY 22, but volumes are not as they were initially anticipated. We maintain our BUY recommendation but cut our TP from 100p to 60p due to the weakening outlook; a CY 23 P/E of 10.6x is attractive given the growth potential.
Staffline has released a trading update for the year to December showing a solid second half, exceeding our expectations for profitability and cash flow. FY22 underlying EBIT was £11.6m (Zeus: £11.4m) and net cash (ex. leases) was £5.0m (Zeus: net debt of £15.0m). Market conditions in FY23 are expected to be more challenging, with some softening of recruitment demand – as such, we trim our forecasts, reducing FY23 and FY24 underlying EBIT by 25.5% and 23.2%, respectively. That being said, with exposure to defensive sectors, a diversified business model, net cash and headroom in its banking facilities, we think Staffline is in a good position to navigate any near-term macro volatility and capitalise on growth opportunities. The shares provide material upside potential versus our revised valuation estimate of 62.2p per share.
H1 22 gross profit rose 2.3% but EBIT fell 13% due to increased investment in fee earners. H1 22 spot net debt (inc. leases) was £13.9m and lending provides ample headroom. Despite the weaker H1, we see good reasons to maintain our headline estimates. We maintain our FY 22 IAS 17 spot net debt estimate of £15m despite the investment in working capital for growth. The UK jobs market remains robust although there are signs that it is moderating. At Recruitment GB, H1 was depressed by investment and one-off costs from Omicron but we are optimistic about H2. The shares are trading on a CY 23 P/E of 6.7x, which is attractive given the recovery potential and positive momentum.
Staffline’s H1 results for the six months to 30 June show a solid performance despite a challenging macro backdrop. With lower activity levels in certain industries (food, online distribution) versus last year, total revenue is marginally down (-2.8%) at £438.0m. However, a 113% increase in Permanent recruitment fees, strong performance from Recruitment Ireland (25% EBIT growth), and improving mix means that Group gross profit is up 2.3% to £39.9m. FY22 results are expected to be in-line with expectations, albeit H2-weighted (implied H2 EBIT of £7.4m vs. £5.7m in H2 2021), so we hold headline forecasts. Given Staffline’s strategic progress, financial position, growth prospects, and the strength of the labour market, we remain comfortable with our 95.7p per share valuation estimate.
H1 22 gross profit increased 2.3% but EBIT fell 13% due to increased investment in fee earners. H1 22 spot net debt (including leases) was £13.9m and lending provides ample head-room. Despite the weaker H1, we believe that there are good grounds to maintain our headline estimates. We maintain our FY 22 IAS 17 spot net debt estimate of £15m despite the investment of working capital in growth. The UK job market remains robust although billings and inflation are expected to moderate. At Recruitment GB, H1 was depressed by investment and one-off costs from Omicron but optimistic about H2. The shares are trading on a CY 23 P/E of 7.5x, which is attractive given the recovery potential and positive momentum.
Staffline has released a trading statement ahead of its AGM confirming YTD trading is in line with expectations. Whilst current macroeconomic trends create some lack of visibility over the labour market in the near term, Staffline’s strong market position in defensive industries alongside momentum in new initiatives, including Perm, means we remain confident in its ability to hit our medium-term targets. The benefits of recent new contracts are yet to be recognised and Staffline is well placed to capitalise on an eventual unwinding of labour market tightness through its PeoplePlus business and blue-collar strategic focus.
AGM statement guides to a solid start to 2022 and we maintain our FY 22 FD EPS estimate of 4.7p. We also maintain our FY 22 IAS 17 spot net debt estimate of £15m despite the investment of working capital in growth. Ian Lawson is stepping down from the board after a successful turn-around. The UK job market remains robust and we expect perm is strong, but the supply constraint in the temp market experienced in Q4 21 continued into H1 22. At Recruitment GB, the BMW and Vinci contracts have started well. At Recruitment Ireland, management continues to seek market share gains. At PeoplePlus, rising unemployment should benefit employability and skills. The shares are trading on a CY 23 P/E of 8.6x, which is attractive given the recovery potential and positive momentum.
Staffline Group, Wickes, Gemfields, Stagecoach, SMID Market Highlights
STAF WIX SGC
Staffline Group, Next, Wickes, Gemfields, Stagecoach, Market Highlights
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FY 21 EBIT of £10.3m was slightly ahead of expectations, with no exceptionals apart from amortisation. After upgrades in January, we leave our EPS estimates unchanged. It is early in the year, but there are grounds for optimism. All divisions enter 2022 with good momentum. Inflation gives scope for rate card increases. The UK job market is strong and work winning has been strong across the group, with £120m worth of new business won over the last five quarters. Reducing sickness should increase hours worked. Restart has begun well and the rise in digital activity has increased efficiency. The shares are trading on a CY 23 P/E of 10.9x, which is attractive given the recovery potential and positive momentum.
Joiners: No Joiners Today. Leavers: No Leavers Today. What’s cooking in the IPO kitchen? According to Proactive Investors, SpectrumX Holdings Ltd, which is tapping the healthcare and commercial potential of hypochlorous acid, is considering a London listing. It is understood the group has submitted its prospectus to the London Stock Exchange ahead of a float in late spring, targeting a valuation of around £50m. Sources suggest that a £10m pre-IPO round is largely complete, with the group looking to bring in circa £5m at the time of the company’s stock market debut. Asimilar Group plc, currently listed on AIM, intends to the join Aquis Stock Exchange Growth Market. The Group invests in the technology and software sectors and aims to focus primarily on opportunities in the Big Data, Machine Learning, Telematics and Internet of Things areas. Whilst the Directors are principally focused on making investments in private businesses, they do not rule out investments in listed businesses if this presents, in their judgment, the best opportunity for Shareholders. Expected 4 April 2022. Probiotix Health plc intends to join the Aquis Stock Exchange Growth Market. ProBiotix develops probiotics (live microbes that, when ingested, can alter the composition of the microbiome, and improve human health) to tackle cardiovascular disease and other lifestyle conditions which are affecting growing numbers of people across the world. Mkt Cap and Capital to be raised TBC. Expected 31 March Aquis Exchange (AQX.L) the exchange services group, announced its intention to apply for admission of the Group to trading on the Apex Segment of the Aquis Stock Exchange Growth Market. Aquis' shares will continue to trade on the AIM market of the London Stock Exchange plc to satisfy certain regulatory requirements. The Group is targeting admission to the AQSE Growth Market on 29 March 2022. Anglesey Mining, a UK mining company currently listed on the Main Market (Premium) intends to move to AIM. Anglesey’s principal asset is a 100% interest in the Parys Mountain copper-zinc-lead-gold-silver project on the island of Anglesey in North Wales. Anglesey is currently exploring and developing the property, which has a high potential for the discovery of additional mineral resources through the development of a new, modern mine in an environmentally sustainable manner. Anticipated Mkt Cap TBC, current capitalisation c£8m. Expected 8 April 2022. Summerway Capital plc, (AIM:SWC) to be renamed Celadon Pharmaceuticals plc following completion of the acquisition of Vertigrow Technology Ltd, is to relist on AIM. Vertigrow is a UK based pharmaceutical Company specialising in the researching, growing and supply of medicinal cannabis, for a total consideration of £80m. Summerway is an investing company focused on investment and acquisition opportunities across the healthcare and pharmaceutical sectors, particularly within new and emerging therapeutic areas. Capital to be raised on admission £8.5m. Anticipated Mkt Cap approximately £101.8m. Due 28 March 2022. Cordiant Global Agricultural Income plc intends to float on the Main Market (Premium). The Company's investment objective will be to seek to provide an attractive yield, with potential capital growth, by providing secured medium-term finance to the global agricultural sector. The Company will seek to promote more sustainable crop production and help address a capital solutions gap which exists in the agricultural sector in select regions. The Company will provide finance for crop inputs and for capital investment in new technologies and infrastructure which help increase crop yields and have a sustainable benefit. Mkt Cap and Capital to be raised TBC. Shellraise plc, to join AQSE Growth Market. The Company will focus on identifying investment opportunities in companies operating in the viticulture sector which require funding to increase output. Mkt Cap and Capital to be raised TBC. Expected 1st April 2022. Carbon Air, a nano-technology company which leverages the adsorption properties of activated carbon and other advanced materials to improve suspension systems, enhance acoustics or reduce noise, to join AIM. The Company's proprietary technology has allowed it to develop a unique portfolio of solutions for a variety of sizeable end markets, including vehicle suspension systems, acoustic insulation for domestic appliances and micro-speakers for smartphones. Mkt Cap and Capital to be raised TBC. Due Late March. Recycling Tech Group to join AIM, a UK-based engineering, research and manufacturing company that has developed a modular and mass producible machine, the RT7000, which processes hard to recycle plastic waste into a synthetic oil that can be sold back to the petrochemicals industry as a chemical feedstock to make new plastics. Mkt Cap and Capital to be raised TBC. Due early April 2022. Our daily digest of news from UK listed Small and Mid caps Banquet Buffet Alien Metals 0.85p £35.3m (UFO.L) Alien Metals has completed the acquisition of a 100% interest in the Munni Munni Platinum Group Metals and Gold Project in the West Pilbara, Western Australia. Acquisition of a project containing Palladium and Platinum Group Elements (PGE) plus significant quantities of other strategic metals including Rhodium, Nickel and Copper. Potential to extend the historic resource and identify new mineralised systems in both untested additional PGE bearing reefs and the larger base metal system associated with the regional geology. Consolidation of the highly prospective Munni Munni and Elizabeth Hill project areas for the first time in over 30 years. City of London Group 57.5p £61.4m (CIN.L) City of London Group plc announces that Michael Goldstein, Chief Executive Officer, has notified the Board of his intention to step down effective from today, 22 March 2022. Mr Goldstein has been Chief Executive Officer of the Company since 2017, during which time, he has overseen the implementation of a new strategy for the Group, including the development of Recognise Bank from a fledgling idea through to a fully authorised bank serving small and medium enterprises. Michael has also successfully streamlined the Group to focus on delivering the new Bank. Chairman Philip Jenks said: "On behalf of the Board and everyone at the Group, I would like to thank Michael for his leadership and passion over the last few years, navigating the challenges that every start-up bank faces, to the point that Recognise Bank is now one of only a handful of banks to become fully-authorised since the start of the COVID pandemic. He has worked tirelessly to help shape the Group's strategy and engage with shareholders and potential investors, resulting in approximately £54m of investment into Recognise Bank since 2017." City Pub Group 91.5p £95.8m (CPC.L) The owner and operator of 46 premium pubs across Southern England and Wales and a further 4 development sites, announces the disposal of six public houses in two separate transactions for a total cash consideration of approximately £17.1m. The Group has agreed terms and exchanged contracts for the disposal of 5 of the 6 Disposal Pubs on the South Coast of England, which include three pubs in Brighton (Walrus, Brighton Beach Club, and Lion and Lobster), The Inn on the Beach on Hayling Island and The Travellers Friend in Woodford Green, Essex. All are freehold pubs, with the exception of Brighton Beach Club which is leasehold. These 5 pubs, which had a net book value of approximately £17.1m as at April 2022 and recorded unaudited aggregate site EBITDA of £0.7m for the year ended 26 December 2021, are being acquired by Portobello Starboard Limited for cash consideration of £16.2m. This transaction is expected to complete on or around 11 April 2022, subject to successful lease assignment of the Brighton Beach Club. Separately, the Company has sold The London Road Brewhouse, a freehold pub in Southampton for £0.9m. This sale completed on 18 March 2022. The proceeds from the Disposal Pubs will be used to invest and expand the Group in other geographies across the UK. Clean Invest Africa 0.09p £1.23m (AQSE:CIA) CIA welcomes Mr Ramin Salsali as a strategic investor and a strategic adviser to the Company. Mr Salsali entered the real estate development business with the main focus of preservation of historical buildings. In 2011 Mr Salsali established a museum for contemporary art in Dubai, Salsali Private Museum (SPM), focusing on Middle Eastern art. His Highness Sheikh Mohammed Bin Rashid Al Maktoum, UAE Vice President, Prime Minister and Ruler of Dubai has recognised and honoured Ramin Salsali as Patron of the Arts for the consecutive years, 2010, 2011, 2012 and 2013, for his sustained support of the art community in Dubai. Mr Ramin Salsali has recently invested £302,276 in the Company at a subscription price of 0.5p per share as an initial investment into the business. Mr Salsali owns approximately 4.6% of the issued ordinary shares in the Company, having subscribed to the placing shares, announced in December 2021 and February and March 2022. Knights Group 190p £157.8m (KGH.L) Trading update for the full year ending 30 April 2022 from the legal and professional services business. “The Group typically has a strong second half, particularly in the fourth quarter, so had anticipated substantial growth following a good first half in which the Group grew organically by 9%. However, a continuation of the impact of Omicron and recent macro conditions have slowed growth to a greater extent than anticipated. The persistent effects of Omicron across the country have meant, in particular, greater illness rates amongst our people, resulting in the business not benefitting from a faster return to office working and the consequent advantages of our team-based culture. We have also seen a softening in business confidence, possibly due to concerns around the strength of the economy, such that there has been a slowdown in corporate work. This confluence of events has meant that, whilst we have recently seen increasing activity rates, these are lower than management's expectations. The Group is now expected to deliver revenue of c.£126m and underlying PBT of c.£18m for the year ending 30 April 2022. The Group has not seen any significant losses of clients or fee earners. Given the current uncertainty regarding both the economic conditions and the speed of transitioning people more fully back into offices, it is now prudent to anticipate organic growth of c.5% for the year ending 30 April 2023, with margins rebuilding to historic levels over time. Cash conversion remains robust, with industry leading lock-up and debtor days reflecting the strong discipline of day-to-day cash collection across the Group.” MTI Wireless Edge 68p £60.2m (MWE.L) The technology group focused on comprehensive communication and radio frequency solutions across multiple sectors, announces that it has disposed of its Russian operations. Following the MTI board's decision to exit the Company's business unit in Russia, as stated earlier this month in the annual report for the year ended 31 December 2021, the Company has sold its holding in its operation in Russia for a de minims amount. The purchaser is the general manager of the Russian operations. The MTI board does not expect this sale to have any significant profit/loss impact on MTI. PCI PAL 61p £39.9m (PCIP.L) The global cloud provider of secure payment solutions for business communications has received approval from the U.S. Patent Office for the grant of its patent US20210194939 which covers PCI Pal Agent Assist deployment methods used in the United States. PCI Pal was the first in its market to build and launch a true-cloud, globally available, secure payment platform. Our innovative approach has allowed us to apply for patents to cover the key processes of our cloud services, and this is the first of a number of pending patents worldwide to achieve grant approval status. The patent protects PCI Pal's core innovation that enables its Agent Assist product to interact with phone calls in a non-invasive, light-touch manner. This approach has been key to PCI Pal's success in being chosen as a preferred solution provider to more than two-thirds of the CCaaS1 Gartner Magic Quadrant and is a major competitive differentiator. Reneuron Group 31p £17.7m (RENE.L) The UK-based leader in Stem Cell and Exosomes Technologies, announces that Dr Tim Corn and Mark Evans have resigned as Non-Executive Directors of the Company and that Martin Walton has been appointed as a Non-Executive Director, all with immediate effect. Following these changes, the ReNeuron Board now comprises of five directors as follows: Iain Ross (Executive Chairman); Catherine Isted (CFO and Executive Director) and three independent Non-Executive Directors: Dr Michael Owen, Barbara Staehelin and Martin Walton. Iain Ross, Chairman of ReNeuron, commented: "On behalf of the Board and Management I would like to thank Tim Corn for his service to the Company over the last nine years and to recognise his contribution as a director and former Chairman of ReNeuron. Also, I want to thank Mark Evans for the invaluable support he has provided over the last two years as a director and representative of Obotritia, a significant shareholder in ReNeuron. "I would like to welcome Martin Walton to the ReNeuron Board as we look to re-focus the business. Martin, a former investment banker, has completed more than 25 transactions in the last 12 years as a principal or advisor which has included start-up and spin-out investments, pre-IPO and IPO funding; M&A and over $1bn in investment and co-investment capital. He is the co-founder of LSE-listed Arix Bioscience plc (LSE: ARIX) and his current roles include serving as CEO of Excalibur Medicines Ltd and a Board Member of the Liverpool Life Sciences Accelerator Partnership. He brings a wealth of relevant experience in the life sciences sector." Staffline 65p £107.7m (STAF.L) FY21 results from the recruitment and training group. Revenue increased to £942.7m (2020: £927.6m) notwithstanding the exit of certain lower-margin contracts. Strong organic growth in like for like revenue and gross profit has more than doubled year-on-year underlying operating profits, significantly contributing to the increase of £15.7m of cash. Strategic actions, and the quality of the organic growth has driven up margins with gross profit increasing by 11% to £82.8m (2020: £74.6m), and gross margin by 0.8%pts to 8.8% (2020: 8%). Underlying operating profit is ahead of market expectations for 2021 increasing 114.6% to £10.3m (2020: £4.8m) with underlying EBITDA surpassing £16m. The Group has an encouraging pipeline of opportunities emerging across traditionally strong sectors such as automotive and travel as the UK economy continues its recovery from the Covid-19 pandemic. The Group has today announced a major contract win with BMW and a material extension with Vinci an existing customer, demonstrating Staffline's scale, reach and its capacity for increasing market share. Wynnstay Group 590p £118.8m (WYN.L) AGM statement from the agricultural and specialist merchanting group. "I am pleased to report that trading in the first four months of the new financial year has been in line with management expectations across core activities, while fertiliser operations at Glasson have continued to experience one-off gains from the exceptional current trading environment that has been sustained into the current financial year. Market volatility across most commodities has persisted, with material price increases since the start of the calendar year. The recent outbreak of war in Ukraine has exacerbated this, and raised concerns over the supply of fertiliser and wheat, in particular. Energy and transport costs also remain a challenge. Wynnstay has managed these difficult circumstances well, and once again the Group's broad spread of activities is proving a major strength. Farmgate prices have remained strong, enabling customers to absorb elements of this inflation, although higher prices are expected to curtail some demand." On 18 March, the business completed the acquisition of Humphrey Feeds Ltd and its associated pullets business for an initial consideration of £9.5m. As previously reported, the acquisition is expected to be immediately earnings enhancing, and furthers the Group's feed activity in the growing free range egg sector, expands its manufacturing capacity, and opens up expansion opportunities in the South of England.
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EBIT of £10.3m was slightly ahead of the £10.0m pre-announced in January, with no exceptionals apart from amortisation. After upgrades in January, we now leave EPS estimates unchanged. FY 21 spot net cash (excluding leases) of £7m, in line with guidance. Bank lending provides ample head-room. We maintain our FY 22 IAS 17 spot net debt estimate of £15m despite the investment of working capital in growth. The UK job market is strong despite softening slightly in the last quarter. At Recruitment GB, GP per fee earner was up 15% and there is positive contract news. At Recruitment Ireland strong perm has driven H2 EBIT and the business is investing in market share gains. At PeoplePlus, Restart has started well and an increase in digital activity has increased efficiency. The shares are trading on a CY 23 P/E of 10.4x, which is attractive given the recovery potential and positive momentum.
Staffline has released FY21 results that show a doubling of operating profit versus FY20 and are 5.2% ahead of our forecasts at an underlying PBT level. The Group has delivered strong growth across all divisions, improving conversion ratios across the business. Also announced today was a new agreement with BMW Group to provide staffing solutions and an extension of a major contract in its recruitment process outsourcing business – both of which highlight Staffline’s ability to attract and retain high quality customers, providing good revenue visibility. Our refreshed valuation analysis provides an average estimate of 96.8p per share. We have increased confidence that Staffline has the foundations in place for sustainable growth and the generation of shareholder value.
Joiners: No Joiners Today. Leavers: Rutherford Health has left the AQSE and Prime People has left AIM. What’s cooking in the IPO kitchen? ACP Energy plc, a company formed for the purpose of undertaking an acquisition or acquisitions of a majority interest in a company, business or asset, seeking to join the Main Market (Standard) The Company intends to focus on opportunities in the natural resources sector, raising gross proceeds of £830k. Due 28 Jan. Artemis Resources ltd, an ASX listed mining exploration and development company intends to join AIM. The Company owns projects based in the Pilbara region of Western Australia, the Greater Carlow Gold-Copper-Cobalt Project in the West Pilbara and the Paterson Central exploration project in the East Pilbara. The Company also owns the Radio Hill processing plant that is currently on care and maintenance. This plant is strategically located only 35km from the Greater Carlow Project. Mkt Cap TBC, Capital to be raised approximately £5m. Due 7th Feb. Hercules Site Services a technology enabled labour supply company for the UK infrastructure sector, intends to float on AIM. Hercules is seeking to raise approximately £5.5m to rapidly deliver on the significant demand it is experiencing for its diverse range of services across the UK infrastructure sector, including to scale up its operations to supply labour to the northern section of the HS2 rail project from London to Birmingham. In addition, up to £4.5m will be raised for the existing shareholder from the sale of part of its interest in the Company. Hercules has a sustained track record of revenue growth from £9.7m in FY 2015 to £30.7m in FY 2019 and has experienced a strong rebound following Covid-19 growing to £14.0m in H1 FY 2021. Expected early Q1 2022. Spinnaker Acquisitions plc, intends to join the Main Market (Standard). The Company have conditionally agreed to acquire the entire issued share capital of HomeServe Labs Ltd, a wholly owned subsidiary of FTSE250 quoted public company HomeServe Plc, by way of a reverse takeover conditional, inter alia on relisting and successful completion of fundraising activities to be undertaken by way of a placing and direct subscriptions by new and existing investor. If the Proposed Transaction proceeds to completion, it is proposed to change the name of the Company to Ondo InsurTech Plc and the name of Labs, which will become a subsidiary of the Company, to LeakBot Ltd. Should the Proposed Transaction not proceed, then the Company would need to apply for the suspension of its listing of ordinary shares to be lifted and for trading to be restored. £5m capital to be raised. Due early 2022. Unbound Group PLC, (currently called Electra Private Equity PLC) to join AIM. Unbound Group, will be the parent company for a range of brands focused on the 55 plus demographic. Initially focused on Hotter Shoes, Unbound's curated, multi-brand retail platform will offer additional products and services that will enhance the enjoyment and wellbeing of its targeted customer community. This online platform will be based on the foundations of Hotter Shoes as a trusted brand, cloud-based digital infrastructure, and strong customer personalisation through data insight. No capital being raised on Admission. Anticipated Mkt Cap c.£30m. Due 31st Jan. Clean Power Hydrogen, the UK-based green hydrogen technology and manufacturing company that has developed the IP-protected Membrane-Free Electrolyser is seeking to join AIM. The Group designs and manufactures hydrogen production units and is focused on the commercial production of green hydrogen in a simple, safe, and sustainable manner. The Group intends to raise approximately £50m. Timing TBC. SuperSeed Capital Limited, to join the AQSE Growth Market. The Company will invest in technology-led innovation primarily through unquoted funds managed by SuperSeed Ventures, the Company’s Investment Manager, with the objective of maximising the investors’ long term total returns – principally through capital appreciation. Mkt Cap and Capital to be raised TBC. Carbon Air, a nano-technology company which leverages the adsorption properties of activated carbon and other advanced materials to improve suspension systems, enhance acoustics or reduce noise, to join AIM. The Company's proprietary technology has allowed it to develop a unique portfolio of solutions for a variety of sizeable end markets, including vehicle suspension systems, acoustic insulation for domestic appliances and micro-speakers for smartphones. Mkt Cap and Capital to be raised TBC. Due Late Jan. i(x) Net Zero, the investing company which focusses on Energy Transition and Sustainability in the Built Environment, announces its intention to join AIM and raise money to provide development and expansion capital to certain of its investee companies, for future investments in companies that fall primarily within its areas of interest in Energy Transition and Sustainability in the Built Environment and to provide working capital for the Group. Capital to be raised £20m. Expected admission late Jan. Spiritus Mundi due to join the Main Market (Standard), a special purpose acquisition vehicle which will seek acquisition targets in Europe and Asia in the clinical diagnostics sector. The Company has already raised approximately £1.2m in a pre-IPO fundraising round. Due late Jan 2022. Recycling Tech Group to join AIM, a UK-based engineering, research and manufacturing company that has developed a modular and mass producible machine, the RT7000, which processes hard to recycle plastic waste into a synthetic oil that can be sold back to the petrochemicals industry as a chemical feedstock to make new plastics. Targeting a £40m raise. Due early Q1 2022. Nu-Oil and Gas to acquire Guardian Maritime Ltd and Guardian Barriers IP Ltd and become Guardian Global Security plc and join the Main Market (Standard). Guardian is a technology group that supplies products to prevent unauthorised entry into areas that are deemed to have value, with maritime security being the main focus initially. Due late Jan 2022. Superdielectrics to join AIM, a Company which is focused on developing technology to build supercapacitors with high energy density, low cost, and environmentally benign electrical energy storage devices that will help create a clean and sustainable global energy and transportation system. Admission is expected to take place in Late Jan 2022. Mkt Cap and Capital to be raised TBC. Our daily digest of news from UK listed Small and Mid caps Banquet Buffet Barkby Group 16.5p £22.6m (BARK.L) Subsidiary, Cambridge Sleep Sciences (CSS), the science-based sleep technology business behind SleepHub®, has developed more than 10 new sales partnerships as part of its continued growth strategy. The partnerships, all with leading international businesses, includes retailers Harrods, Smartech (in Selfridges), Currys and Very; sales agents and distributors TKG, Go10, NewGen and Sleep Analysis Australia; and health, wellbeing and fitness brands Lifeworks, Whitecalm and PureGym. CSS's new partnerships will enable them to capitalise on the growing global sleep tech devices market which is forecast to grow at a CAGR of nearly 11% and exceed $30bn by 2028.These partnerships follow the recent shortlisting of CSS as a finalist in the innovation category of the Medilink Midlands Business Awards for their SleepHub® Home product. CSS also recently announced the development of a portable product - SleepHub® Anywhere, due to be launched this year in Spring. CSS is progressing a number of further major partnerships and looks forward to announcing these shortly. Caspian Sunrise 3.85p £81.3m (CASP.L) Caspian has reported initial production from Deep Well A8 on the Airshagyl structure at the Group's flagship BNG Contract Area. Production from the first of three intervals planned for testing has been at the rate of approximately 120 bopd for several days. Work continues to establish the full potential of this well. Aggregate production for the year ended 31 December 2021 was 533,857 barrels at the average rate of 1,462 bopd (2020: 545,667 barrels at the rate of 1,495 bopd). Production for sale in January 2022 is expected to be approximately 65,000 barrels. DSW Capital 122p £26.2m (DSW.L) DSW Capital, a profitable, fast growing, mid-market, challenger professional services network, announced that, in line with the Group's stated growth strategy, it has expanded its service lines with the addition of two leading asset-based lending specialists, providing due diligence and risk management services for ABL clients. Hazel Lomas and Martin Ellison have over 60 years' experience between them, during which time they have worked with most of the major names in the ABL industry. The new business, titled DSW ABL Risk Management, is based at DSW's Daresbury office. The focus of the business is to provide asset-based lenders with specialist due diligence and risk management services across multi-asset classes to support their lending decisions and ongoing support and advice to advisers, investors and their portfolio companies. Egdon Resources 1.65p £8.55m (EDR.L) Egdon Resources plc advised its intention to submit an appeal against the refusal of planning permission by Lincolnshire County Council (LCC) on 1 November 2021, for a side-track drilling operation, associated testing and long-term oil production at the Biscathorpe site, held under licence PEDL253. Egdon is operator and holds a 35.8% interest in the licence. The decision has been made after reviewing LCC's Decision Notice, which was received on 6 December 2021, taking advice from Egdon’s planning and legal advisors and agreement with Egdon’s joint venture partners. The appeal documentation is currently in preparation and is expected to be submitted during Q1 2022. EKF Diagnostics 68.9p £319.65m (EKF.L) The point-of-care, central lab devices and chemistry reagents business, confirms that continued strong trading will result in its performance for the financial year ended 31 December 2021, including adjusted EBITDA, being ahead of already upgraded market expectations. Trading in EKF's core business in the final quarter continued to be robust and ongoing demand for sample collection kits and testing remained strong through to the end of the year. The Group announces that core business revenues grew over 13% compared with the previous financial year. The Group's cash, net of borrowings, at 31 December 2021 was £19.6m (31 December 2020: £21.4m), reflecting further strong operational cash generation offset by substantial investment in the business, some working capital expansion to support anticipated growth, and the payment of the 1.1p per ordinary share cash dividend in December 2021 in line with the Company's progressive dividend policy. During the year, and as part of the Group's strategy, significant investment was made to expand fermentation capabilities and contract manufacturing to drive further organic growth. Further investment in enzyme fermentation is scheduled for FY22 in this key strategic growth area. Growth and investment in the core business is complemented by a strategy to exploit expanded capabilities to meet the demand for contract manufacturing services. Advanced Diagnostic Laboratory LLC, the CLIA-certified lab testing business acquired in October 2021 is integrating well and has begun diversifying into non-COVID testing, as evidenced by the recent partnership relating to the provision of a non-invasive prenatal testing service. Ergomed 1172.5p £576.1m (ERGO.L) The company focused on providing specialised services to the pharmaceutical industry, announces a trading update for the year ended 31 December 2021. Adjusted EBITDA ahead of market expectations. Total revenue growth of 37.3% over 2020 to £118.6m (up 44.3% in constant currency). Robust order book growth, up 24.2% to £240m, providing excellent visibility into 2022 and beyond. Further strong US growth with revenues up 59.5% (up 71.0% in constant currency), with strengthened US strategic presence driven by prior year acquisitions. Strong cash generation, cash increased £12.2m to £31.2m and debt free. Learning Technologies Group 165.65p £1,304m (LTG.L) Learning Technologies Group plc, a market leader in digital learning and talent management, announced a trading update for the year ended 31 December 2021. The Board expects Group revenues to be not less than £254m (2020: £132.3m). Strong organic revenue growth on a constant currency basis is expected to be not less than 7%, driven by a robust performance in the Content & Services division returning to 2019 levels, alongside the continued growth within the Software & Platforms division which has a high proportion of multi-year SaaS contracts. Adjusted EBIT is expected to be not less than £53.7m (2020: £40.3m). This has been driven by organic growth, continued focus on operational excellence and the contribution of the acquisitions completed in the first half of 2021, Reflektive, PDT Global and Bridge. These have been fully integrated and made an important contribution to the Group's results. The acquisition of GP Strategies completed on October 15 2021 and has seen a swifter than anticipated improvement in operational performance. This underpins the Board's confidence that the transformation programme will deliver as expected in 2022 and beyond. Life Sciences REIT 103p £360.5m (LABS.L) The real estate investment trust focused on UK life science properties, announced three senior appointments at the Company's Investment Adviser, Ironstone Asset Management Ltd. Ian Harris joins as Director of Asset Management. Ian is a qualified chartered surveyor with over 30 years' experience in the UK real estate market. His career includes senior roles at CBRE Global Investors, Imry Holdings and Frame Investments Ltd. Most recently he co-founded Westmount Real Estate Ltd, a boutique investment advisory and asset management business acting for a wide range of domestic and international investors. Matthew Barker has been appointed to the role of Senior Asset Manager. Matthew is an experienced asset manager and chartered surveyor with over 10 years of experience in the UK real estate market, including the role of asset manager at the listed REIT Picton Property Income Ltd. He joins from Mayfair Capital where he held the same role. In addition, David Lewis is now Director of Operations and Finance consolidating the two roles and replacing Andrew Pinto, who has now left Ironstone. David has over 30 years' commercial and financial experience, most recently as Head of Fund Finance at Round Hill Capital, a real estate private equity firm. Sareum Holdings* 4.10p £139.5m (SAR.L) Sareum Holdings plc, the specialist small molecule drug development company, announces that the Company will be participating in Edison Group's Global Healthcare "Open House" Virtual Conference, taking place on 25-27 January 2022. At the event, Sareum's Chief Executive Officer, Dr Tim Mitchell, will take part in a virtual interview to discuss the Company's progress and strategy in 2022 with its lead TYK2/JAK1 inhibitor assets SDC-1801 and SDC-1802, as well as opportunities under consideration by licensee Sierra Oncology to advance Chk1 inhibitor SRA737. Dr Mitchell's interview will form part of the pharmaceuticals and drug discovery session, scheduled to take place between 08:00 and 16:00 GMT on Tuesday 25 January. Sareum's content will be available on demand on www.edisongroup.com from 8:00am GMT on Tuesday 25 January. No material new information will be made available. Staffline 62.9p £104.3m (STAF.L) The recruitment and training group, provided a trading update for the year ended 31 December 2021. The Group continued to trade strongly across H2 2021, building on the positive momentum achieved in H1 2021, and is expected to generate revenues for FY 2021 of c.£942.7m (2020: £927.6m), representing an increase of c.1.6% notwithstanding management actions to exit low margin contracts. As a result of these actions and the turnaround plan, the Group is anticipated to deliver Underlying Operating Profit for FY 2021 of c.£10m (2020: £4.8m), a significant increase of c. 108.3%, and c. 11% ahead of market expectations for 2021. Staffline's balance sheet was significantly strengthened during the year with the Group expected to report an increase in pre-IFRS16 net cash of £15.7m to £6.9m at 31 December 2021 (2020: net debt of £(8.8)m), despite repaying the majority (£40.7m) of its Deferred VAT Relief, with the remaining balance of £5.8m to be repaid on 31 January 2022. This substantial improvement was achieved through a successful equity raise of £46.4m (net of costs), and includes c. £10m of timing benefits, which are expected to unwind, alongside further improvements in trading cash flow and cash collections. The Group's financing headroom, relative to available committed banking facilities at 31 December 2021, was in excess of £75m.
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On the back of an upbeat statement, we increase 2021 FD EPS by 11% with strength across the board. There was strength across the board evidencing the improving stability and visibility of the business. We increase our FD EPS by 6% and 10% for FY 22 and 23. We improve our FY 21 IAS 17 estimate from net debt of £26m to net cash of £7m. Bank lending provides more than £75m of head-room. At Recruitment GB, gross profit increased, helped by strong perm and focus on growth sectors such as food distribution and logistics. At Recruitment Ireland strong perm has driven H2 EBIT and the business is investing in market share gains. At PeoplePlus, Restart has mobilised and is on track whilst increased digital delivery has increased efficiency. Our TP of 100p represents a revised FY 23 P/E of 17.1x, which is attractive given the recovery potential and positive momentum.
Today Staffline has released a positive FY21 trading update with underlying operating profit expected to double versus the prior year and net cash of £6.9m at the period end (vs. net debt of £8.8m in FY20). We see Staffline as a unique platform that has improving quality of earnings and a transformed balance sheet. The business has strong defensive qualities but with attractive growth opportunities in structural growth markets. We believe the shares are undervalued and see an intrinsic value per share of 99p based on the current profile of the business, which does not include future potential M&A that could enhance this valuation. We see good reasons to suggest strong trading momentum will continue through 2022 and beyond.
Staffline, Kier Group, Kin + Carta, Galliford Try, Redrow, Mining LOWdown, Market Highlights
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Staffline, Kier Group, Kin + Carta, Galliford Try, Redrow, Mining LOWdown, SMID Market Highlights
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The interims provided further evidence of the turn-around. Headcount has been reduced, and gross margin and conversion rates are improving. A shortage of candidates has provided a short-term challenge, and holidays may also increase in H2. Some macro uncertainty also endures. However, the economy is recovering, and vacancy rates are at record highs. ‘Hours worked’ are increasing and will feed through to Staffline, while skills shortages are positive for PeoplePlus, and the end of the furlough scheme should boost candidate numbers. The candidate shortage has helped Staffline engage clients, while its scale and reach have allowed it to win share. The shares are trading on a CY 23E P/E of 14.6x.
Gross profit increased 14% and H1 EBIT of £4.6m was largely pre-announced in July. We maintain our FY 21 and FY 22 earnings estimates. Visibility is unusually low, but its scale and reach mean that Staffline is winning share with the major accounts. We assume a 47% weighting of PBT to H2, with higher holidays in H2. But the effects of COVID policies and pent-up demand are likely to be transient, and the end of furlough will hopefully alleviate candidate shortages. The H1 21 spot net position (excluding leases) improved from £8.8m debt at the FY to £21m cash, in line with guidance. We maintain our FY 21 IAS 17 spot net debt estimate of £26m as the VAT creditor unwinds. Our TP of 100p represents an FY 23 P/E of 18x, which is attractive given the recovery potential and positive momentum.
The AGM indicates trading ahead of expectations in H1, with strength across the board. We increase our FD EPS estimate by 32% and 7% for FY 21 and FY 22. The financial position strengthened from FY 20 spot net debt (excluding leases) of £8.8m to H1 21 net cash of £20.9m vs. guided net debt of c. £8m. We reduce our FY 21 IAS 17 spot net debt estimate from £36m to £26m, helped by a reduction in DSOs. The ‘Pingdemic’ has resulted in increased demand, but has led to supply challenges too. Fewer holidays in H1 21 may mean more in H2, with a negative impact on productivity, but we expect increased demand. We increase our TP from 90p to 100p, which represents an FY 23 P/E of 19x, due to the better cash and earnings.
Best Idea of the Week, Staffline, What Stood out in Healthcare this Week, Media Weekly, SMID Market Highlights
Podcast: Best Idea of the Week, Staffline, What Stood out in Healthcare this Week, Media Weekly, Market Highlights
The least compelling thing about the FY 20 results was the results themselves, as they had been trailed. The three key points were 1) a reiteration that the year had started well, 2) growing evidence of tight labour markets, and 3) tentative signs of a good start on Restart. Tight labour markets and tighter regulation of agency workers should be positive for Recruitment. Skills shortages should be a driver for PeoplePlus. Improving market conditions and the strategy to increase perm in the mix and conversion rates should drive EPS. A target price of 90p represents a CY 23E P/E of 18x.
Commodity snapSHOT – Iron Ore: targeting China’s speculators, Staffline, Grafton, National Express, Harworth, Wickes, SMID Market Highlights
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Commodity snapSHOT – Iron Ore: targeting China’s speculators, Staffline, Grafton, National Express, Harworth, Wickes, Market Highlights
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FY 20 EBIT was in line with the guidance in the April trading statement. We maintain our FY 21 and FY 22 earnings estimates, which we recently updated to reflect the raise and no tax charge. FY 20 spot net debt (excluding leases) reduced from £36.2m in H1 20 to £8.8m, helped by management effort. We maintain our FY 21 IAS 17 spot net debt estimate of £36m as the VAT creditor unwinds. At Recruitment GB, EBIT only decreased 9% despite the disruption from the pandemic, and skills shortages are emerging across the economy. At Recruitment Ireland, there continues to be extensive opportunities across the island. At PeoplePlus, the Restart contract has started well and could be worth £90m over four years. We maintain a TP of 90p, which represents an FY 23 P/E of 18x.
Staffline’s raise has generated £44m of net proceeds. The debt re-fi simplifies the bank lending and provides ample head-room. The circular points to FY results in line. Staffline has also reported a strong start to the year, with potential upside from Restart. FY 21 FD EPS increased by 57% and FY 22 reduced by 8% to reflect the mechanics of the re-fi and no tax. We expect the conversion rate to continue increasing. The B/S looks sound with expected FY 22 covenant net debt / EBITDA of 3.0x. We have a TP of 90p, which represents an FY 23 P/E of 18x.
The unscheduled statement guides to FY 20 underlying EBIT before exceptionals of £4.8m ahead of our estimate of £3.5m. Trading in Q1 2021 was strong and ahead of management expectations. For FY 21, we increase our EBIT estimate from £6.0m to £8.0m. £14m of EBIT should be possible in FY 23. We leave our IAS 17 FY 20 net debt estimates of £9m unchanged but reduce our FY 22 estimate from £64m to £60m. Overall we estimate a funding gap of c.£40m which we expect to be addressed through equity. Removal of the RCF results in lighter covenants. We increase our TP from 60p to 90p to reflect the continued recovery and strong outlook.
FY 20 Recruitment sales were higher than expected as Lockdown 2 was not so severe. On a continuing basis we increase our FY 20 EBIT estimate from £2.7m to £3.5m. For FY 21, we increase our sales estimate given the higher base and increase our EBIT estimate by 20%. We reduce our FY 20 net debt estimate from £40m to £9m, or 1.1x covenant EBITDA, noting the VAT creditor. The improving trading performance and better cash flow increase the options for refinancing. Management’s target margins suggest £11m to £12m of EBIT is reasonable in FY 23, but it could be higher if revenue growth increases. The “Plan for Jobs” proposition was strengthened by the spending review in November and plays to Staffline’s strengths. We increase our TP from 40p to 60p to reflect the evidence of recovery.
Albert Ellis set out a clear vision to capitalise on the leading market positioning in blue collar recruitment and unlock the synergies between the businesses by breaking down silos. New facilities, reduced debt and targeted margin improvements buy time, but we expect an equity raise in H1. Target margins imply 8% higher EPS, but clearly that could be higher if revenue growth comes through. In Ireland there is scope to grow in new markets and expand in the Republic. At Recruitment GB Staffline can leverage its leadership position and its branch network. PeoplePlus is well positioned to benefit from high UK unemployment and the £1bn unemployed programme. We introduce our TP and Recommendation at 40p and BUY.
PeoplePlus has been selected for the CAEHRS framework worth £7.5bn over 5 years. PeoplePlus has won a significant position. Staffline will take a disciplined approach to margin but any additional work would be incremental. We do not know what the impact on working capital will be. There is also a 3 year extension of Staffline’s contract with Tesco, one of Staffline’s largest customers. The Chancellor’s further deferral of VAT reduces short term funding pressures. Recommendation and TP under review, although a CMD could be a catalyst to revisit.
H1 20 earnings in line, with a lower sequential loss despite COVID. New CEO, Albert Ellis. We leave our EPS unchanged noting the uncertainty around COVID. H1 20 spot net debt was £5m better than expectations, helped by management effort. We reduce our FY20 IAS 17 spot net debt estimate from £45m to £40m due to better working capital management, and there is an expected £46m VAT creditor. There is still too much debt but there is sufficient head room and agreed financing to July 22. Recommendation and TP under review, although a CMD could be a catalyst to revisit.
FY19 results were in line with revised guidance given earlier in June, with £42.3m of non-underlying charges and £7.5m of prior year adjustments. Performance so far this year has been mixed across the group.
Ian Lawson has been announced as Executive Chairman and will take over with immediate effect. The executive board has also been significantly changed.
At Recruitment, there is a significant variance between customer segments, with food currently strong. Staffline is well placed to benefit from its strong candidate database.
ValuEngine Industry Report for Staffing
Unscheduled trading statement and we reduce our FY 2019 FDF EPS by 84% due to provisions and write-downs. Having cut FY 2020 EBIT by 30% to £20m in December, we now leave future estimates unchanged.
Unscheduled trading statement and we reduce our FY 2019 FDF EPS by 84% due to provisions and write-downs. Having cut FY 2020 EBIT by 30% to £20m in December, we now leave future estimates unchanged. Current trading is in line with management’s expectations. We increase FY 2019 net debt from £55m to £59m, or 6.0x EBITDA. Management indicates a constructive relationship with its lenders, which is hard to evidence. But there are plenty of strategic options available to improve the balance sheet position, including the sale of the Irish business. If Staffline were to sell the Irish business at the start of FY20, our revised FY20 FD EPS estimate would reduce 29% and reduce revised net debt/EBITDA from 2.6x to 2.2x. Target price reduced from 125p to 100p to reflect the downgrade and worse financial position.
Trading has been weaker than expected in the key Q4 trading period. We therefore reduce FY19 EBIT by 39% from £18m to £11m and FD EPS by 50% from 24.8p to 12.5p. For FY20, we also cut EBIT by 30% to £20m and EPS by 34% to 19.6p.
Staffline had a horrible H1, and it shows in the numbers. H1 FD EPS was down 88% and net debt was up from £63m at the year-end to £89m.
Interim results worse than expectations with an 88% reduction in FD EPS yoy. We reduce our FY 2019 FD EPS estimate from 37.9p to 24.8p.
Staffline Group, Distributors Update, Hays, Harworth, Urban Exposure, SMID Market Highlights
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We expect an H1 FD EPS weighting of 27%, vs 43% in FY18. The significant H2 weighting leaves a lot of work to do in a difficult trading environment.
FY results broadly in line with expectations and 18% revenue growth driven by acquisitions. As expected, there were £45.6m P&L exceptionals, £15m of which related to NMW.
Underlying results are in line with expectations and planned to be published on the 27th June, preventing re-suspension. The HMRC provision has been increased by £7.2m from £7.9m to £15.1m.
We are reducing 2019 and 2020 FD EPS by 46% and 17%. We increase FY net debt from £52m to £85m (net debt /EBITDA of 3.0x) for FY 2019.
Independent legal advisers have investigated the concerns raised on the eve of the results. There have been no issues identified on invoice practices.
Trading statement guides to trading in line with expectations, but we reduce EPS by 2% due to higher interest. 2019 EBIT left unchanged despite acquisitions given investment in first year.
H1 results were slightly lower than expected due to phasing. FY 18 and FY 19 FD EPS increased by 1% and 4%, respectively, helped by acquisitions.
H1 18 results a little lower than expected due to higher H2 weighting but no trading exceptionals. FY 2018 FD EPS increased by 1% due to tax and despite the JSOP but expect £5m trading exceptional charge.
Staffline Group plc (STAF.L, 1057p/£295m) Half year trading update
Staffline (LON:STAF) is a leading outsourcing organisation, operating mainly in the UK and Eire, through two divisions – Staffline Recruitment and PeoplePlus. The shares have been one of the top growth plays in the staffing services sector in the last 15 years, but are currently trading at a discounted valuation.
AGM statement guides to in line and we leave estimates unchanged, with potential for upgrades later on. We continue to expect net debt of £20.4m in FY 2018.
FY 2017 results in-line. No change to headline FD EPS for FY 2018 and 2019 at this early stage.
FY 2017 results in-line with expectations. No change to headline FD EPS for FY 2018 and 2019 at this early stage.
Staffline plc (STAF.L, 986p/£275m) Trading update for year to 31.12.17 (03.01.18)
We expect a re-assuring trading statement next month. We increase our FY net debt estimate from £11m to £18m as working capital improvements have been less than expected.
Trading is in line and we expect a re-assuring trading statement in January. Steady On-Site growth and increasing revenue per On-Site. Staffing activity reaches all time high.
Interim revenues lower than expected, but 3% EPS growth YoY, which is in line. Cash generation in line in H1 and we continue to expect net debt of £1m at the FY. We leave FY estimates unchanged, with higher revenues expected in Staffing in H2 as OnSites contribute for the full period.
Interim revenues lower than expected, but 3% EPS growth YoY, which is in line. Cash generation in line in H1 and we continue to expect net debt of £1m at the FY. FY estimates unchanged, with higher revenues expected in Staffing in H2 as OnSites contribute for the full period. Staffing ahead of expectations with 9% OnSite growth and stable gross margins.
Pre-close guides to in line trading, but we increase revenues at Staffing to reflect Brightwork and OnSite growth. We leave our EBIT assumptions at Staffing and Employability unchanged, with no change to EPS. We continue to estimate FY net debt of £1m.
Trading is in line with market expectations. We leave our assumptions at Staffing and Employability unchanged.
Keywords Studios (KWS): First engineering acquisition (BUY) | Shanta Gold (SHG): Completion of €2.1 million underground equipment financing (BUY) | Staffline (STAF): Excellent progress continues (BUY) | Blancco Technology Group (BLTG): Plugging the hole (SELL)
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I3 Energy –Schedule 1. Independent oil and gas company with assets and operations in the UK. Offer TBC, 26 May admission. | Opera Investments –Reverse Takeover of Kibo Mining’s subsidiary Kibo Gold. Raising £1.5m. Expected mkt Cap £6.5m. 23 May. | Verditek— Schedule 1 update. On Admission, the Company's subsidiaries will be involved in advanced solar photovoltaic, filtration and absorption technologies specialising in providing environmental services. Issue price 10p. Admission in late May. | AEW UK Long Lease REIT—Intention to Float. Up to £150m raise. Admission early June. UK specialist and alternative property | Alfa Financial Software –Intention to float. Mission-critical software platform purpose-built for asset finance enterprises. Vendor sale of 25% plus. FYDec16 rev £73.3m (CAGR of 24% from 2012). Adjusted EBIT £32.8m. | Kuwait Energy— $150m raise plus vendor offer. Admission due June. 2p reserves 810.0 mmboe | ADES International— Provider of offshore and onshore oil and gas drilling and production services in the Middle East and Africa, seeking raise up to $170m plus vendor sale under a Standard Listing of the Main Market. Admission due May 2017. | Tufton Oceanic Assets– Extended to 9 May on specialist funds segment of Main Market to enable further due diligence. |PRS REIT—Private rental sector REIT raising up to £250m. Admission due 31 May
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I3 Energy –Schedule 1. Independent oil and gas company with assets and operations in the UK. Offer TBC, 26 May admission. | Opera Investments –Reverse Takeover of Kibo Mining’s subsidiary Kibo Gold. Raising £1.5m. Expected mkt Cap £6.5m. 23 May. | Eve Sleep— Schedule 1 from the e-commerce focused, direct to consumer European sleep brand. Raising £35m at £1.01. Expected mkt cap £140m. Expected 18 May 2017 | Velocity Composites—Schedule 1. Manufactures advanced carbon fibre and ancillary material kits (predominantly carbon fibre) for use in the production of aircraft. 18 May 2017 admission expected. Raising £14.4m at 85p. Expected mkt cap £30.4m | Verditek— Schedule 1 update. On Admission, the Company's subsidiaries will be involved in advanced solar photovoltaic, filtration and absorption technologies specialising in providing environmental services. Issue price 10p. Admission in late May.| AEW UK Long Lease REIT—Intention to Float. Up to £150m raise. Admission early June. UK specialist and alternative property | Alfa Financial Software –Intention to float. Mission-critical software platform purpose-built for asset finance enterprises. Vendor sale of 25% plus. FYDec16 rev £73.3m (CAGR of 24% from 2012). Adjusted EBIT £32.8m. | Kuwait Energy— $150m raise plus vendor offer. Admission due June. 2p reserves 810.0 mmboe | Spinnaker Opportunities—Seeking RTO. Targeting a single, material acquisition in the energy or industrial sector. Due 17 May. | ADES International— Provider of offshore and onshore oil and gas drilling and production services in the Middle East and Africa, seeking raise up to $170m plus vendor sale under a Standard Listing of the Main Market. Admission due May 2017. | Tufton Oceanic Assets– Extended to 9 May on specialist funds segment of Main Market to enable further due diligence. | PRS REIT—Private rental sector REIT raising up to £250m. Admission due 31 May
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The share price is factoring in significant risk on Staffline's ability to replace its Government contracts and weather any storm that Brexit produces. However, Staffline is the only company to have won a place in all seven regions of the new Work and Health Programme framework, flexible labour (such as that provided by Staffline) is an essential part of the UK economy and the group has a proven ability to continue to grow against changing market conditions. We expect contract wins to be announced throughout 2017 and reiterate our Buy recommendation.
FY 16 results 3% ahead with 23% FD EPS growth and weakness in Employability as expected, though higher exceptionals. No change to headline EPS at this stage, yet cost savings coming through and upside building. Net debt decreased as expected to 0.8x EBITDA due to better collections and we continue to assume net cash in FY 17.
FY results 3% ahead with 23% FD EPS growth, with weakness in Employability as expected but higher exceptionals. No change to headline EPS for FY 17 and FY 18 so early but cost savings coming through and upside building. Net debt decreased as expected to 0.8x EBITDA due to better collections, and we continue to assume net cash in FY 17.
Trading is in line with market expectations. We expect 32% revenue growth at Staffing and we expect Employability to do well on the Employability frameworks.
Staffline (STAFF): Good progress supports forecasts (BUY) | eg solutions* (EGS): Director update (CORP)
Staffline Group plc EG Solutions
We maintain our EBIT estimates, but reduce 2016 and 2017 FD EPS by 2% and 1% for interest. We increase our FY net debt estimate from £34m to £44m, but expect net cash in FY 2017. OnSite wins at Staffing result in higher revenues and stable margins.
We believe that some of the Brexit risks are overstated. The impact of changing migration rules are mixed. Despite political uncertainty, we expect some clarity on the Work Program in the Autumn Statement.
Strong interim results as expected. At Staffing, revenue increased 44.4% with 36 OnSites added during H1. We now forecast 375 OnSites for the FY but lower gross margins. At Employability growth has been subdued but operational performance is strong.
Strong interim results as expected, with 49% EPS growth. Strong and better cash generation in H1 and now expect net cash in FY 2017. Prudent post Brexit EPS estimates maintained but Staffing sales higher and margins lower.
Pre-close guides to excellent progress in H1, which represents 41% FD EPS. Expect strong cash generation H1. 2016 and 2017 EPS cut 3% and 8% last week for Brexit.
In an encouraging H1 trading update, Staffline has confirmed trading remains strong and in line with expectations. There has been continued strong demand from new and existing customers in recruitment, and the group continues to source record numbers of workers to meet this demand. There has been no change in demand following the EU referendum, and the improvement in the Work Programmes is now clearly showing through. We continue to believe the fundamental demand for Staffline's recruitment services will remain strong, supported by the cost savings that a flexible labour model offers clients and its differentiated model. However, we believe the risk to underlying GDP has increased with Brexit and this tempers the level of progress that we assume the group can make in the short term. We have reduced our FY 2016 EPS and price target by 5%. We now forecast 22% EPS growth in FY 2016 followed by 5% in FY 2017 and FY 2018. The significant decline in the share price has more than accounted for the increased macro risk, in our view, and we reiterate our Buy recommendation.
Staffline: On track with continued excellent progress (BUY)
Strength at the lower margin Staffing business. Employability referrals are falling but much improved performance at A4E. Now expect the new Work Program to be bigger than the old, and scope for share gains.
Staffline produced another strong FY, with 55% EPS growth. There were £4m of unanticipated exceptionals and net debt increased. Higher rated Staffing has increased in the mix. We increase FY 2016 EPS by 9% and expect an unlevered B/S in FY 2018. There is potential for a macro slow-down. But estimates seem conservative and 65% of Staffing sales are food related. P/E of 8.8x Burst a Bn target. TP increased from £14 to mix and possible accretion.
FY results increase 55% and 5% ahead, but unexpected exceptionals. FD EPS estimates increased by 9% for FY 16 and 10% for FY 17. Working capital increases net debt as expected and should reverse. 13.7% EBIT growth at Staffing following a year of record Onsite wins. Positive outlook at Staffing, with strength in Food and Driving and scope to grow share. Weak volumes but operational performance at PeoplePlus. Delay to Health Work Programme tender process should be positive. Growth outside of the Work Programme. Hold to BUY, TP 1400p (from 1500p)
The Oily Rag*: Analyst interview (CORP) | Staffline: 55% EPS growth and upgrades (BUY)
FY15 was a busy year for Staffline. Activity included a clutch of acquisitions, 70 OnSite site gains (net, but including acquisitions) and a number of smaller employability contract wins. PBT jumped +34% to £28.3m (in-line with PG forecasts), though balance sheet leverage disappointed (net debt £63m Dec-15 vs £17m Dec-14, PG original estimate £42m). Given the recent OnSite wins management has indicated that trading is ahead of expectations and we are raising our FY16 PBT estimate from £34.2m to £37.2m (9% upgrade). However, investor sentiment is likely to be constrained by the DWP re-tendering risk and gross margin contraction in recruitment. Therefore, whilst we see room for the shares to move higher on these results, we are modestly reducing our target from 1600p to 1450p.
Pre-close guides to in-line earnings, which represents 51% FD EPS growth yoy. Net debt increased due to growth and acquisitions. There is potential for a FY 2016 EPS upgrade. Record OnSite wins at Staffing results in higher revenues and stable margins. At PeoplePlus, lower revenues but A4E restructuring ‘remains on track’. Milestone and Diamond will be accretive in FY 2016. The Work Program is generally effective, which reduces the risk to 2017 onwards. Mixed macro data with positive hiring outlook but reduced staff availability. Upside pressure built into the share price. HOLD.
Staffline has expanded its position within the transport and driving sector with the acquisition of Milestone (no financial details were provided). The business appears to fit well with Stafflines existing driving business. Although no financial details were provided, management have indicated that it will be c3%-5% earnings enhancing next year.
Interim results in line. At Staffing EBIT increased 15% with 32 OnSites added during H1, indicating our forecast of 40 additions for FY 15 may be conservative. At Employability there has been diversification from Work Programme which now represents 67% of revenue. Potential for further synergies and upgrades. Net debt better than expected and management forecast net cash in 2017. ‘Burst the Billion’ 2017 PBT target of £50m implies a P/E of 9.2x. TP increased from 1400p to 1500p. BUY.
Interim results in line. Upbeat outlook and potential for upgrades. Staffing is gaining momentum, with encouraging additions of OnSites. At Employability, management is diversifying away from the Work Programme and there is scope for more synergies. Net debt is better than estimates due to lower debtor days. Expect no material impact from the National Living Wage. £50m PBT target suggests P/E of 9.2x. BUY, £14.00 target price.
FD EPS increased 3% for 2016 and 7% for 2017, but left unchanged for 2015 due to the investment in growth. H1 PBT and FD EPS increased 5% to £10.1m and 33.5p. Estimates exclude A4E synergies, which could provide a further 20% upside in 2016. Staffing estimates are increased due to a strong start to OnSites, with scope for further upgrades. Employability estimates left unchanged, which should be conservative given the potential for £7m of A4E synergies. A4E is performing in line, but it is early days. Political risks reduced following the Conservative win. A CY 16 P/E of 12.3x is attractive. BUY, TP from 1274p to 1400p
Staffline: Very strong start to the year (BUY) | Hardide*: Strong 1H results (CORP) | Tristel*: Trading update (CORP) | Vectura: Positive QVA149/NVA237 results (BUY) | Gem Diamonds: Jan to April results and IMS (BUY)
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