Staffline : Full year results

For Immediate Release

25 January 2017

STAFFLINE GROUP PLC

('Staffline' or 'the Group')

AUDITED FULL YEAR RESULTS FOR THE TWELVE MONTHS ENDED 31 DECEMBER 2016

Staffline, the Staffing and Employability organisation, today announces its audited Full Year Results for the twelve months ended 31 December 2016.

Financial highlights:

 Revenues up 26% to £882.4m (2015: £702.2m)

• Group gross profit up 24% to £124.9m (2015: £100.9m)

• Underlying profit before tax* up 30% to £36.7m (2015: £28.3m)

• Reported profit before tax up by 244% to £18.9m (2015: £5.5m)

• Underlying diluted Earnings Per Share* up 23% to 114.0 pence (2015: 92.4 pence)

• Reported diluted Earnings Per Share up 378% to 58.8 pence (2015: 12.3 pence)

• Net debt** significantly reduced from £63.1m at the end of FY 2015 to £36.7m at the end of FY 2016, equal to 0.8 x 2016 underlying EBITDA of £44.9m

• Final dividend of 15.3 pence; total dividend for the year of 25.8 pence, an increase of 29% (2015: 20.0 pence)

• Underlying excludes amortisation of intangible assets arising on business combinations, acquisition and exceptional reorganisation costs and the non-cash charge/credit for share based payment costs

  ** Net debt including unamortised transaction costs

  Operational highlights:

  • Record year within Staffing division:

    • OnSites grew by 52 locations; total locations now 357 (2015: 305) - making Staffline the clear market leader

    • Further success with one more white-collar OnSites established

    • Newer divisions, Driving Plus, Ireland and Agriculture, each had an excellent year

    • Continuing strong pipeline of further opportunities

  • PeoplePlus (previously Employability) achieved significant improvements as fully integrated business:

    • Contract performance now in top quartile

    • 22 other contracts won or extended within Employability division

    • Only provider to secure inclusion on framework for all of the Government's new welfare to work contracts

  • Positive outlook for 2017 and on track to achieve ambitious five-year £1 billion revenue target

Commenting on the results and prospects for 2017, Andy Hogarth, Chief Executive, said:

"These strong results are testament to the hard work and determination of all those involved in our business. In what has been a competitive environment, we are delighted to report such strong organic growth and, with the decision to leave the EU having had no negative impact on trading to date, Staffline has continued to perform well. Our reputation for reliability has not only led to new contract wins but also existing customers extending their work with us, meaning Staffline is now increasing its market share more than ever.

We look forward to 2017 with great confidence and remain on track to achieve our ambitious five year target to grow revenues to over £1 billion in 2017."

A presentation for analysts will be held at 9.30am on Wednesday 25 January 2017 at the offices of Buchanan, 107 Cheapside, London, EC2V 6DN. A presentation for private and retail investors will be held at 12.00pm on Wednesday 25 January 2017 at the offices of Buchanan, 107 Cheapside, London, EC2V 6DN. Admittance is strictly limited to those who register their wish to attend in advance with Buchanan.

For further information, please contact:
Staffline Group plc
Andy Hogarth, Chief Executive	07931 175775
Diane Martyn, Group Managing Director Chris Pullen, Group Chief Financial Officer	07771 944578 07786 265344
www.staffline.co.uk
Liberum Capital Limited
NOMAD & Joint Broker
Steve Pearce / Steven Tredget / Richard Bootlewww.liberum.com	020 3100 2222
Berenberg Joint Broker Chris Bowman / Marie Stolbergwww.berenberg.com	020 3465 2722
Buchanan
Sophie McNulty/Richard Oldworth/Jamie Hooper/Jane Glover	020 7466 5000

www.buchanan.uk.com

About Staffline

Staffline is a leading outsourcing organisation providing services, mainly in the UK, to both Government and commercial customers. The Staffing division supplies up to 51,000 workers per day to more than 1,500 clients. Using the skills we have developed and learned within Staffing we have developed a second division, PeoplePlus, and have become a leading provider to both Central and Local Government, offering a wide range of services to help and support in the Employability (Welfare to Work), Communities and Skills arenas.

Staffing Services

Specialising in providing complete labour solutions in agriculture, food processing, manufacturing, e- retail, driving and the logistics sectors, the recruitment business operates from over 350 locations in the UK, Eire and Poland.

The Staffing brands include:

• Staffline OnSite, based on clients' premises and providing both blue and white collar, out-sourced, temporary workforces

• Select Appointments, a high street branch-based operation providing white collar office staff, operated entirely on a franchised basis by independent business owners

• Staffline Express, a high street branch based operation

• Driving Plus, providing HGV drivers to the driving industry

• Staffline Agriculture, providing workers to the UK farming and horticulture sectors

PeoplePlus (previously Employability)

Trading under the PeoplePlus brand, Government contracts include:

• Work Programme, prime contractor in nine regions and sub-contractor in three regions in England

• Steps to Success, prime contractor in Northern Ireland

• Youth Guarantee (MyGo Centre), supporting youth employment in the Ipswich area

• Building Employment through Education, working in Schools in Northern Ireland

  Training services:

• Skillspoint, a procurement consultancy specialising in helping employers benefit from government-funded, work-based training

• Prime contractor to the Skills Funding Agency delivering Apprenticeships and Classroom Based Learning across the UK.

  Community services:

• Ministry of Justice, Transforming Rehabilitation in Warwickshire and West Mercia, helping to transform rehabilitation and probation services

• OLASS, delivery of training to prisoners in nine prisons in the East of England

• Independent Living Services, supporting 3,000 disabled people lead independent lives

• Visitor Centers for the Northern Ireland Prison Service

• Careers Hubs in Stoke and Staffordshire

Market Abuse Regulation

As with previous financial announcements, the information communicated in this announcement includes inside information. Staffline Group plc has included this statement in this announcement in order to comply with the Market Abuse Regulation, which came into effect on 3 July 2016.

Combi n ed Ch ai r man 's an d C hief Executives Statement

Trading in 2016 continued to be very strong, in particular with our Staffing division achieving further significant organic growth and another record in total OnSites. Our PeoplePlus division meanwhile has made good progress as a fully integrated business now rebranded following the acquisition of A4e in April 2015.

2016 was the fourth year into our five year plan to 'Burst the Billion', aiming to grow Group revenues to over £1 billion by 2017, and the financial performance this year means that we remain on track to achieve this. Total sales in 2016 grew 26% to £882.4m (2015: £702.2m), with about half of this growth being organic, derived from winning new business from both new and existing customers. Underlying profit before tax, amortisation of intangible assets arising on business combinations, acquisition and exceptional re-organisation costs in PeoplePlus and the non-cash credit/charge for share based payment costs ("SBPC") increased by 30% to £36.7m (2015: £28.3m). Reported profit before tax increased by 244% to £18.9m (2015: £5.5m).

Our Staffing business has continued to go from strength to strength, achieving considerable organic growth and ending the year with a record 357 OnSites (December 2015: 305). This performance was underpinned by our investment in a number of start-up opportunities in the past few years as well as in our existing divisions to expand our operational reach and bring in new talent, extending our highly scalable platform.

Our PeoplePlus division, which underwent a significant expansion following the acquisition of A4e in April 2015, is the largest provider to the Department for Work and Pensions of Work Programme contracts in the UK. Whilst 2016 was a relatively quiet year for new contracts being tendered, we continued to focus on operational and management changes. PeoplePlus has now started to outperform most of our competitors on the Work Programme and seven of our nine prime contracts have achieved top quartile performance during the period. Our efforts in this regard were recognised recently when PeoplePlus was confirmed as having qualified for the bidding process in every region for the new welfare to work programme, the only provider to achieve such qualification. Whilst the positive economic backdrop has continued to negatively impact referral levels across our Work Programme contracts (since there are very nearly 1m less unemployed people than when the current contracts started), we have continued to reduce overheads related to these contracts through 2016 to ensure they maintain their expected profitability.

It is now six months since the citizens of the UK voted to leave the EU. In that period we have not seen a reduction in demand for our services or the availability of contractors. Whilst it is too early to tell what the long-term impact of Brexit may be, as the market-leading provider of blue collar temporary workers, our scale and capability has enabled us to manage a period of gradual tightening of the labour market and gives us confidence that we will continue to do so. Staffline benefits from a reliable workforce of over 292,000 contractors on our database. Furthermore, any tightening in the labour market is also likely to help the Employability side of our business as this may make our Work Programme candidates easier to place.

Overall, we are pleased to report that both Group sales and profitability have increased in line with the Board's and the market's expectations.