The market reacted positively to Staffline's (STAF) full-year results, as strategic initiatives taken in the second half of 2015 fed through into a one-third rise in gross profit. Shareholders were also the beneficiaries of a marked increase in the dividend rate, although the main takeaway from these figures is that the company's focus will be on capital discipline through the current year.
The recruiter, which provides services across several niche sectors, including food production, logistics and driving, was intent on driving down its borrowings through 2015. But due to ancillary acquisition costs, most notably those linked to employability specialist A4e, Staffline fell short of its debt reduction target. However, these acquisitions have augmented the group's strengthening organic cash flows, so management now anticipates net debt as a proportion of cash profit will halve from its year-end level to below 0.75 times by the end of 2016.
The operating environment for the wider recruitment sector has deteriorated slightly in recent months, but the investment case for Staffine remains solid due to its provision of government-backed welfare-to-work services. The acquisition of A4e, subsequently rebranded Peopleplus, provides Staffline with another relatively predictable revenue stream, thereby reinforcing the stock's perceived defensive qualities.
Berenberg anticipates adjusted EPS of 118p for the 2016 financial year, up from 92.8p in FY2015.
| STAFFLINE (STAF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,374p | MARKET VALUE: | £381m | |
| TOUCH: | 1,332-1,384p | 12-MONTH HIGH: | 1,640p | LOW: 718p |
| DIVIDEND YIELD: | 1.5% | PE RATIO: | 111 | |
| NET ASSET VALUE: | 264p* | NET DEBT: | 87% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 288 | 7.5 | 25.9 | 7.1 |
| 2012 | 367 | 8.5 | 29.7 | 8.1 |
| 2013 | 416 | 8.6 | 33.3 | 10.0 |
| 2014 (restated) | 503 | 10.5 | 28.6 | 13.5 |
| 2015 | 702 | 5.5 | 12.4 | 20.0 |
| % change | +40 | -48 | -57 | +48 |
Ex-div: 2 Jun Payment: 5 Jul *Includes intangible assets of £126m, or 455p a share | ||||
