Investors in welfare-to-work (W2W) scheme provider Staffline (STAF) may have been nervous about prospects for the government programme prior to the election, yet the group's management were untroubled. "The fundamentals would continue whether it was Labour or Tories in power," says chief executive Andy Hogarth. Nevertheless, the election of a Tory majority sent the share price rocketing.
In April the recruiter bolstered its operations through the £35.4m acquisition of A4e, making the group one of the largest providers of W2W services to the Department of Work and Pensions. However, acquisition costs relating to A4e and previous bolt-ons totalled almost £26m during the first half of this year. Nonetheless, it was a positive performance overall, with gross profits up nearly three quarters to £42m. Management are in the process of integrating the recently acquired Avanta and A4e businesses with the remainder of the employability and skills division, which generated gross profit growth of almost a fifth in the first half.
The group's staffing services business put in the best growth during the period. Staffline expanded its onsite model at its most rapid rate yet, opening 32 new locations. Mr Hogarth says this was driven by a tightening labour market, which increased client numbers as smaller companies struggled to find candidates.
Broker FinnCap expects adjusted EPS of 91.7p this year, up from 59.7p in 2014.
STAFFLINE (STAF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,358p | MARKET VALUE: | £376m | |
| TOUCH: | 1,354-1,367p | 12-MONTH HIGH: | 1,470p | LOW: 710p |
| DIVIDEND YIELD: | 1.2% | PE RATIO: | NA | |
| NET ASSET VALUE: | 236p* | NET DEBT: | 76% | |
| Half-year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 208 | 1.9 | 31.6 | 5.0 |
| 2015 | 297 | 0.9 | -2.2 | 7.5 |
| % change | +43 | -56 | - | +50 |
Ex-div:15 Oct Payment:13 Nov *includes intangible assets of £104m, or 374p a share | ||||
