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Staffline (STAF: LSE), a Nottingham-based recruiter and licenced Gangmaster specializing in food processing, manufacturing, e-retail, driving and logistics, has announced an increase in turnover, gross and net profit on continuing operations for the six months ended 30 June 2013.
Revenue was £187.2million compared to £163.9 million (+14.2%) for the six month period ended 30 June 2012. According to the company, growth in sales during the first six months of 2013 has been relatively modest compared to earlier years mainly due to lower levels of acquisitive growth. Gross profit increased from £15.9 million to £19.184 million (+26.0%) and net profit was up from £2.1 million to £2.5 million. As “an expression of our confidence of the Group’s prospects”, the Directors propose to increase the interim dividend by 22.6% from 3.1p to 3.8p.
During the 6 month period to 30 June 2013, three customers in the recruitment services segment contributed £71.5m (40% of total revenues). Recruitment services as a whole accounted for 95% of the turnover, with work on the government’s welfare to work and training programmes providing the remaining turnover. Net debt fell significantly during the period, from £8.4 million at June 30 2012 and £4.6 million at 31 December 2012 to £2.7 million at 30 June 2013.
According to the Chairman and Chief Executive’s report, the first half of 2013 was a challenging environment Nevertheless, the company increased the net number of ‘Onsite’ offices by four ending the period with a total of 183 locations. In addition, they have opened a number of new divisions as well as expanding into Ireland.
Following the acquisition of the franchised staffing network, Select Appointments, at the end of 2012, the company has spent the first six months of 2013 improving systems and the operating environment for their franchisees. They have reduced the initial set up cost of a franchise business by a third to £24,750 and are actively looking to recruit new franchisees.
The company claims to have “started the second half well, buoyed by the recent hot weather which has seen a significant increase in demand for contractors from many of our clients, reflected in the strong retail figures for July. We have also seen strong levels of demand in our driving businesses highlighting the systemic shortage of available HGV drivers in the UK. ..We believe significant opportunities now exist within the driving recruitment sector and will continue to support this growing division”.
The company has been encouraged by the action taken by HM Treasury with legislation effective from April 2014 which will prevent workers from being pay rolled offshore and therefore avoiding the cost of Employers National Insurance. Whilst the company lost a small number of clients to competitors operating these schemes they also won new and returning business from customers who are realising the potential liabilities they face if they allow their supplier to use certain of these schemes unscrupulously. The company believes that much greater emphasis in the media about any exploitative tax avoidance schemes is resulting in clients becoming more adverse to the potential reputational risk to their businesses if they are seen to profit from them.
Staffline also announced it has undertaken a new five year strategic growth plan aimed at broadening their market reach and increasing the scale of all of our divisions.
Commenting on the results and prospects for the remainder of 2013, Andy Hogarth, Chief Executive, said: “Staffline continues to trade ahead of the broader recruitment sector with demand for our Onsite model and broader outsourcing services underpinning growth. We are still seeing a strong pipeline of new business enquiries from both new and existing customers and believe increasing regulatory and budgetary pressures will continue to drive strong levels of demand for our services. Current trading remains robust and the confidence we place in our future trading performance supports our commitment to a progressive dividend policy."
Operating from over 200 locations in the UK, Staffline supplies up to 30,000 blue collar workers each day according to the firm. Brands include Select Appointments, providing white collar staff and Staffline Express , both High Street branch operations, OnSite based on clients’ premises, Elpis Training a national training and consultancy organisation, OSP a specialist volume recruitment call centre and EOS, a Welfare to Work provider.
According to Staffing Industry Analysts’ research, Staffline is counted among the twenty largest staffing companies in the UK and its Chief Executive is one of the most influential executives in the European staffing industry.
In early trading today Staffline’s share price increased by 3.88% to £5.35, 3.25% below its 52-week high of £5.53 set on the 13 August 2013. This means the company is valued at £130 million.