Staffline Group (STAF: LSE), the UK-based staffing and employability organisation, reported revenue today for the full year ended 31 December 2023 of £938.2 million, an increase of 1.1% compared with the previous year.

In January 2024, the group posted its trading update for FY 2023. Staffline said it achieved its 1.1% growth against a 'highly competitive' recruitment market.

The group said it delivered a full year of underlying operating profits slightly ahead of market expectations against challenging trading conditions.

Albert Ellis, Chief Executive Officer, said, "I am pleased to report that Staffline has delivered a robust trading performance across 2023, demonstrating the resilience of the group's operating model against a challenging macro-economic backdrop and also the success of our strategy. We continued to grow our recruitment market share, driven by a healthy pipeline of contract renewals and awards, alongside further strengthening our cash position which enabled us to carry out a £5 million share buyback programme, an important part of our capital allocation policy."

The group incurred a non-underlying charge of £1.8 million reflecting a reorganisation, rationalisation and restructuring programme in the Recruitment GB division.

Additionally, PeoplePlus closed its in-person classroom-based training business to focus on digital training. This discontinued activity generated trading losses and exit costs totalling £3.1 million before taxation. This contributed to the reappraisal of the value of goodwill associated with the PeoplePlus division, resulting in an impairment charge of £8.9 million. These items contributed to a reported loss for the year of £11.0 million (2022: profit £3.8 million).

Gross profit across the recruitment businesses decreased slightly to £64.2 million (2022: £64.7 million), alongside a reduction in PeoplePlus' gross profit to £16.6 million (2022: £17.3 million). This resulted in the group's gross profit falling to £80.8 million compared to £82.0 million in the previous year, and the gross profit margin decreased to 8.6% from 8.8%.

Staffline continued to control costs tightly, resulting in an increase of under 1% in total overheads despite considerable inflationary pressures. This contributed towards underlying operating profit on continuing activities of £10.3 million (2022: £12.0 million).

Revenue by division

Revenue in the Recruitment GB division increased by £11.2 million to £763.0 million. The division experienced weak demand in the first half of the year due to the cost of living crisis and reduced permanent fees throughout the year, which held back a strong performance in the second half. The division benefited, particularly in the year's second half, from its strategy of driving organic growth, expanding key strategic partnerships, and renewing contracts with key customers.

During the year, the Recruitment GB division undertook a reorganisation, rationalisation and restructuring programme in response to the impact of economic and inflationary cost pressures on customers' permanent and temporary worker requirements. The scope of the activities included a reduction in administration headcount, a streamlining of the property portfolio and the consolidation of selected third-party spends.

Revenue in the Recruitment Ireland division fell by £2.3 million to £108.3 million, reflecting the reduction in temporary worker hours to 6.2 million (2022: 6.7 million). This, combined with a 12% decrease in permanent recruitment fees, reduced profitability after the exceptionally strong result in 2022.

PeoplePlus' Skills training division was restructured during the year, with a shift away from in-person classroom-based training to focus on digital. Consequently, the divisional results reported below and elsewhere in these financial statements exclude the results of the Skills division, which is treated as a discontinued activity, generating trading losses and exit costs of £3.1 million before taxation.

PeoplePlus revenues increased by 1.8%, from £65.7 million to £66.9 million, based on the continuing strength of its contracts in the justice and employability sectors. Staffline said the division continues to deliver strong performance in its restart sub-contracts, but several profitable contracts have come to a natural end alongside a quieter commissioning period.

Ellis said, "Our results for 2023 are a testament to not only the resilience of our business, but also the hard work of our team who have worked tirelessly to deliver these results. I would personally like to thank all our talented leadership and dedicated staff for their unwavering commitment to Staffline's success."

Staffline said its performance throughout 2023 demonstrated the resilience of the business model and its strong cash-generating nature, despite the economic challenges in the market".

"Management are encouraged by the uplift in temp working hours which are circa 5% higher for the first 10 weeks of 2024 compared to prior year, and the pipeline of permanent fees in Ireland, which is at record levels as a result of contract wins, and we await the outcomes from PeoplePlus' large outstanding bid pipeline," the company stated. "Accordingly, with our increasing market share and strong balance sheet we are confident that we can use our market leading positions to continue to grow the group organically, positioning us well for the economic recovery when it comes."

Staffline Group shares last traded at £26.60, down 1.50% on the day and 26.04% above the 52-week low of £21.10 set on 24 January 2024. The company has a market cap of £40.28 million.