Sailing masterclass amid stormy seas
The company has posted better than expected FY20 results, with net cash closing July at a robust £27.3m (pre IFRS16 lease liabilities & including the benefit of £13.8m non-recourse off balance sheet financing) compared to -£24.8m LY (ED Est £20m). Driven by £10.3m of deferred VAT payments (payable Apr’22), improved contractor terms (£8.5m - permanent), a working capital unwind (£16.3m) & lower debtor days (41 vs 45 LY).This leaves the business ‘covenant free’ & ideally placed to increase profits as the recovery gains traction. With a high proportion of incremental NFI falling straight to the bottom line, due to continued tight cost control (£4m annualised savings), more efficient processes (Improvement Plan) and positive operating leverage.
FY20 NFI & adjusted PBT both declined -21.4% and -60.7% respectively to £54.3m (£69.1m LY) and £4.6m (£11.6m). Reflecting uncertainties created by the General Election, Brexit, proposed new IRS35 rules and latterly the pandemic (including a prudent £2.3m bad debt provision). Partly offset by a 13% contraction in overheads, thanks to restructuring (£1.7m), lower headcount (665 vs 739), furlough assistance (£1.5m) and a temporary group-wide 20% salary cut (£1.1m).
We have held our FY21 numbers - corresponding to trough adjusted EBIT and EPS estimates of £1.25m and 1.1p. With most of the heavy lifting already completed, and assuming things go to plan, we raise our valuation from 130p to 140p/share.
Adecco Group provides human resource services, including temporary staffing, permanent placement, outsourcing, consulting and outplacement. Co. has more than 5,500 branches in over 60 countries and territories. Co.'s Office and Industrial businesses offer a range of general staffing services, including temporary staffing, permanent placement, assessment, training and integrated human resources applications. In addition, Co. operates professional business lines, which include Adecco Finance & Legal, Adecco Engineering & Technical, Adecco Information Technology, Adecco Medical & Science, Adecco Sales, Marketing & Events and Adecco Human Capital Solutions.
Gattaca is an engineering and technology recruitment solutions company. Co. operates in the STEM markets (science, technology, engineering and maths), all sectors with skills shortages. Co. has three reporting segments, Engineering, Technology and International. Co.'s brands are Matchtech, an engineering recruitment specialist; Networkers, a technology recruitment specialist; Cappo, Provanis, Barclay Meade, a professional services brand, recruiting finance, procurement, sales and HR professionals., and Alderwood, which is involved in placing trainers and assessors with training providers throughout the U.K. and the Middle East.
Randstad is a global staffing and recruitment company, providing various solutions in the human resources (HR) services space. Co.'s services include regular temporary staffing and permanent placement of candidates. In addition, Co. provides several other HR solutions, such as Recruitment Process Outsourcing (RPO), Managed Services Programs (MSP), payroll services, and outplacement. Co. provides four distinct service concepts: Staffing, Inhouse Services, Professionals and HR Solutions.
Staffline Group is a holding company. Through its subsidiaries, Co. is engaged in the provision of recruitment and outsourced human resource services to industry and services in the welfare to work arena. Co. has two operating segments: Staffing Services and PeoplePlus. The Staffing Services segment provides labour solutions in agriculture, food processing, manufacturing, e-retail, driving and the logistics sectors in the U.K., Eire and Poland. The PeoplePlus segment is a provider to both Central and Local Government, providing a range of services to help and support in the Employability (Welfare to Work), Communities and Skills arenas.
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