While Staffline (STAF) achieved double-digit earnings growth in 2017, the top line fell just short of the 'Burst a Billion' objective outlined in 2012. This may explain the share price fall on release of the recruiter's full-year figures. Encouragingly, however, management says the year’s exiting run rate exceeded the five-year target.
The 14 per cent sales growth in the recruitment segment stemmed from strengthening organic growth, in addition to contributions from acquired assets – Oak Recruitment in the Republic of Ireland and Brightwork in Scotland. While recruitment’s gross profit margin fell by half a percentage point to 7.8 per cent, Staffline attributes this partly to the rising minimum wage.
As the government’s work programme started winding down and new referrals ended, the ‘PeoplePlus’ division saw revenue fall 19 per cent to £115m. However, this decline was mitigated to a degree by a £13.6m reduction in overhead costs, which fed through to a 150 basis point increase in the operating margin to 16.5 per cent. The efficiency improvements will please outgoing chief executive Andy Hogarth, who is stepping down after a long tenure at the company, to be replaced by current chief financial officer Chris Pullen.
Analysts at Berenberg forecast adjusted pre-tax profit of £38.6m and EPS of 120.6p for the year to December 2018, up from £36.3m and 113.2p in 2017.
| STAFFLINE (STAF) | ||||
| ORD PRICE: | 976p | MARKET VALUE: | £271m | |
| TOUCH: | 975-976p | 12-MONTH HIGH: | 1,450p | LOW: 960p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 345p* | NET DEBT: | 17% | |
| Year to | Turnover | Pre-tax | Earnings | Dividend |
| 31 Dec | (£m) | profit (£m) | per share (p) | per share (p) |
| 2013 | 416 | 8.6 | 33.3 | 10.0 |
| 2014 | 503 | 10.5 | 28.6 | 13.5 |
| 2015 | 702 | 5.5 | 12.4 | 20.0 |
| 2016 | 882 | 18.9 | 59.1 | 25.8 |
| 2017 | 958 | 24.1 | 71.4 | 26.7 |
| % change | +9 | +28 | +21 | +3 |
| Ex-div: | 31 May | |||
| Payment: | 3 Jul | |||
| *Includes intangible assets of £115m, or 414p a share | ||||
