Staffline Group PLC (OSU.F) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the Staffline Group plc Full Year Results Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I would like to submit the following poll. And as usual, if you could give that your kind attention, I'm sure the company would be most grateful. And I'd now like to hand you over to CEO, Albert Ellis. Good morning, sir.

Good morning, everybody, and thank you so much for joining us this morning. We feel these presentations are super informative and really well received by you all. So we're going to, without further ado, set off. I've got my excellent CFO, with me here, Daniel Quint. I'm the CEO of the group. And just to get moving on to the FY 2022 results. We always start with this slide because it reinforces our most important competitive advantage. We're the leading national recruiter for blue collar workers. We have a very strong specialist service line there with Datum, Omega and Brightwork. We're also one of the leading trainers in the country across the U.K. and Ireland. You can see we've got many, many temp workers, 36,000. That varies depending on the season. Over 400 sites. We're one of the strongest suppliers of drivers, and we've got multiple thousands of learners in our prisons and our education centers. So a really, really comprehensive service across the U.K. and Ireland. Daniel?

Thank you. Good morning, everyone. Excellent to be able to present to you today and also to present to you a really good set of results. So I'm just going to summarize very quickly the highlights from 2022. We gave a bit of a trail in January, but really good to present the fully audited and final numbers for 2022. So although revenue growth occurred in H2, so we actually had a really good H2 at the end of last year. Gross profit, up 0.5%, but really the stellar deliverable really driven by a tight control of cost base as our underlying operating profit up at 16.5% at GBP 12 million, driven by permanent fees being up 65% year-over-year. And then really crucially in what today -- what was and continues to be a challenging economic macro political environment is net cash of GBP 5 million, really important to be coming into 2023 with a strong balance sheet. We had new contracts last year, BMW and VINCI, which Albert will talk a little about later. And then also in our PeoplePlus division, our first profit of GBP 1.2 million in the second half of last year from our Restart employability contract, which runs through to 2025. There's a really excellent space to be operating in. And then also one of our other key strategic aims, further expansion to the Republic of Ireland. And then other contract wins in the second half of last year at Sainsbury's Argos, our first managed service provider contract outside our core construction sector, which also Albert will speak about later. And finally, an additional winner, PeoplePlus in youth offenders with a GBP 15 million contract with the Ministry of Justice there. So some real excellent highlights for last year. And I also just want to highlight to you in terms of the plans that we had at Staffline we announced just at our half year results at the beginning of August last year, just to illustrate the track record that we have in terms of what we said at the end of H1 would happen in H2 and then what actually happened. So we said that we would deliver successfully the BMW & VINCI contracts, which we did. We onboarded 1,800 workers in that second half. There'll be a full GBP 60 million of revenue per annum from the BMW contract. Restart already mentioned, we delivered that. Our peak in the second half of last year, which we did have some benefit from the World Cup sentiment at the time, successfully delivered excellent feedback from our customers, always delivering for them the people they want, when they want them and where they want them. And then finally, I mentioned that Sainsbury's Argos managed service provider contract, the first contract of its kind in our core sector, so food production, food retail, et cetera, and really excellent to develop our offering in that space. So really good delivery of what we said and what we actually did. Now to move on to the core financials from last year. Revenue was flat, but that was known we were going to do that because we actually exited 1 or 2 low-margin contracts made on a strategic basis. But one additional KPI we put in here is gross sales value. And that illustrates some of the activity we've been doing in our managed service area where we coordinate workers for as, I've already said, our first new contract, Sainsbury's Argos. And the scale of that business now, we upped deliveries just over GBP 1 billion worth of revenue for the group on a gross sales value basis. So important to reflect even though statutorily, some of that revenue doesn't go into our statutory revenue line. We had the new wins from BMW and VINCI, which offset some of the softening which we did see in demand from some of those core clients who benefited from COVID. Some of those online operators, unsurprisingly, slightly softer demand, but offset by our new wins in BMW and VINCI. In terms of gross profit, up by 0.5%, but up over 4% in the recruitment businesses, which did offset some of the reduction in gross profit in PeoplePlus, which we'll speak about a little later. Perm fees, up 65%, and key stat here. At the end of 2020, we said we would add perm fees as an important strategic add-on, not to replace our temporary contract business, but as an add-on, a supplement to our business, and since 2020, Perm Fees are up 177% across the group, where that's Ireland or England and Scotland and Wales. So a really excellent performance there. Tight control of costs. You'll see that our conversion from gross to operating profit improved from 12.4% to 14.4% to increased conversion ratio. And finally, ahead of expectation is that underlying operating profit of GBP 12 million, ahead of the GBP 10.3 million in 2021. So some really good headlines from my perspective. Just a bit of a summary of where the margins, flat margin across the group. Some of that reassessment in terms of mix in PeoplePlus, which we'll speak about a little later in terms of the skills division, but really excellent performance in margin across the recruitment divisions, had benefited from perm fees, exiting from low-margin contracts, and delivering a strong performance across the group. Now let's move on to some other key financials. Very importantly, strong trading cash flow, which has been supported by the interest rate cap that we purchased at the end of '21. I'm going to start to the left here, so the net finance charges. In a year when interest rates increased from 0.25% to 4% at the end of 2022, our interest rates -- or our finance charges only went up from GBP 2.4 million to GBP 2.7 million. And that was really driven by the purchase of the interest rate cap we made at the end of 2021, which caps a majority of our exposure to interest rates at 1% of SONIA, very much in line with Bank of England base rate. And that goes through to the autumn of 2024. So that really protects us in the current environment. That also allows us to deliver improved profit after tax of GBP 3.8 million. And then finally, the net cash at GBP 5 million pre-IFRS 16 pre-leases really delivering us with GBP 76 million of headroom with our facilities, and a leverage covenant just to illustrate the strength of our balance sheet, a leverage covenant of 0.65x EBITDA. But all that is really underpinned, as I'll show on the next slide, with strong trading cash flow. So here is the waterfall of how our net cash moved over the year. You'll see on the surface, it looks like there's a decline of GBP 1.9 million, but that was as a result of just repaying the final elements of any COVID support or the deferred VAT, which we had one remaining installment of, in January of 2022. So in total, that was a GBP 12 million one-off repayment. So underlyingly, what might look like a reduction of net cash by GBP 1.9 million is actually a cash generation and net cash generation of GBP 10.1 million. And that is not only supported by that really strong trading cash flow of GBP 16 million, but also by some fantastic work in our finance departments, our credit control teams, who through a very challenging environment, the Ukraine war, the other economic challenges throughout last year, no bad debt and a stability if not actually a further minor improvement in DSO and debt today. So really, really good performance and allows us to come into 2023 with a really strong cash position. I'm now going to hand over to Albert, who will take us through the divisional review.

Thank you, Daniel. And just a shout out beyond the cash flows. Recruitment business is cash generators, and it's great to see that cash flow flowing into the business and the -- all those liabilities settled going forward. So starting with Recruitment GB, now Daniel has talked about the financials and the margins. So I'm going to focus on the business. We actually saw lower average hours because, as you know, and I'll come to the statistics later in the presentation, the British economy is constantly criticized for being not as productive as it should be. And ours is the key KPI that gives us that information. And it still hasn't recovered, to be honest, to pre-pandemic levels. So that naturally affects our turnover as hours is the key driver. However, we still have a great gross profit results, and gross profit for a recruitment business is the real measure of improvement. Gross profit is your net fees, the fees that you earn that you put in the business to work for you, paying your bills and giving shareholder returns, and that was up 2.6%. Bearing in mind the first half, we were slightly lower than the previous year as we got to the tail end of COVID and Omicron. But in the second half, the company came roaring back and the activity came roaring back with a seasonal peak and of course, boosted by the World Cup. There still is a tight labor market, but it has eased somewhat. We've seen pockets in the U.K. of the labor market easing, and we're using our resources, our tremendous geographical resources to move labor from one area or one region to another, so we can deliver to our clients on that basis. Picking out the one success that was not announced, and that is the Sainsbury's Argos managed service where we are providing compliance scrutiny and a level of management of the 70 labor suppliers that Argos has in its portfolio. We are managing those labor suppliers, and we indeed are a supplier ourselves. We also picked up the driving for Sainsbury's, which we're delighted about. So in terms of those targets for the second half of the year, we feel we have done really well against them. Sainsbury's has been one, and I'll come to another in a moment. So moving on to Ireland. What we've got here is our -- it's almost perfectly formed, slightly smaller than GB but a perfectly formed business. I mean those stats, 14% up in gross profit, underlying profit up 28%, are really spectacular. And we love our Ireland business, it really is focused on the white collar market now. It's very public sector-orientated in the north of Ireland, the Northern Ireland area. And in the Republic of Ireland, we're growing across the fees, particularly in the private sector. A few points to bring out was that we announced an extension to a critically important contract that we have with the Causeway Coast and Glen's Borough Council. That is a 5-year extension. We also had excellent results from the Republic. The Republic's economy has been better as it's come out of COVID than the U.K. and the Mainland, the GB business, so we benefited from that. And of course, our strategy is to focus on that area. And we've indeed invested in another office in Limerick, and we're opening up new services, which I'll talk about in a minute. Now on to PeoplePlus. You'll see that, look, this is our counter cyclical service. So PeoplePlus is a training business. And let me explain how it works. We're essentially receiving learners who are either not in work, or customers or indeed the department of working pensions are sending us learners or candidates to improve their skills because the government have got a strong focus on upskilling the workforce. But where you have such a tight labor market, those candidates, those jobs seekers, those learners are being offered work. And in a cost of living crisis with inflation as the context, it's challenging for them to give up those opportunities and come and sit in a classroom. So that's the key headwind that we're facing in PeoplePlus. It's not a bad one in the sense that in economic terms, we've got low unemployment, and that's obviously good for the economy. But obviously, it holds back the skills business. And look, we had strong results from employability, where we're putting people into work who have been out of work for up to 6 to 12 months. And in our prison education business, where we're educating in prisons across England, Scotland and Wales, we've had a slower period for new material contracts. We secured the largest hub contract package in the Restart funding that the then chancellor Rishi Sunak put forward 18 months ago. And of course, we've ramped up in that contract and delivered, so that's a positive and a highlight. But basically, it's a tight controller cost scenario, and mitigating revenue declines with making sure that we increase our margins and our bottom line. So looking at the market trends. I love these stats, first of all, because they come out of the Office for National Statistics and they are not a survey, crucially. Surveys can be -- can emphasize or not be a fully representative example. But the Office for National Statistics stats are really, really important. And so we prefer and like these measures. And actually, what the picture is, on the 23rd of March, I think when these came out, which measure up to February, is that we seem to have quite a resilient U.K. labor market. And if I start on the bottom right-hand corner, whilst job vacancies have been declining, and you've seen and heard that in news reports and read it in news articles, we are still above pre-pandemic levels, and that demand of plus 1 million outstanding vacancies is still -- you can see it's still at record highs. So whilst we've got some decline, whilst we haven't got growth and this will mainly affect permanent recruitment, we still have a buoyant job market. And of course, candidate confidence remains there, although I will say that candidates have become slightly more risk-averse. When receiving a new job offer from outside of the company they're working, we're seeing now a trend where any counteroffers are seriously considered as the candidate maybe opts for the counteroffer and stays where they are as opposed to moving to a new job, bit of risk aversion in there. On payroll employees, look, that's above pre-pandemic. So the economy as a whole for employment is growing. It's now at GBP 30 million plus, and that's obviously a good sign. It's the pie, the size of the cake. And then in the middle, the productivity problem which I talked to you about, you can see it plunged during COVID. And it's now still below pre-pandemic levels, unfortunately. We've really got to get that productivity measure up. Demand and inflation are the key headwinds that are holding it back. At this point, I'm just going to hand over to Daniel, who is going to take you through our environment, social and governance framework. Some really good work put into that area. Daniel?

Thank you, Albert. Thanks for those comments on those previous slides. And we just thought it was really important to highlight to investors and listeners what we're doing in the ESG space. And there are 4 key drivers behind our engagement with our people, our workers, and of course, the environment and society around us. And it should be quite obvious, actually, to make a positive difference to society, supporting and developing our people, reducing our environmental impact and doing business in a responsible way. And our focus is to make a positive difference to people's lives and deliver social value. But how are we doing that. And actually, we see that really as a competitive advantage. And you can see these stats in front of you here. Throughout the year, we get to work 93,000 people. We did that through in 2022. You're seeing the bottom there. We support approximately 10,000 carers. We have contracts to support carers throughout the United Kingdom with direct payments. And you see on the left, we supported over 1 million people over the last 4 years and made a difference to their lives, whether that's with training skills, employability or moving them into work. We helped over 5,500 unemployed people get a job since July 2021. And many of you will know that we are present in educating offenders, ex-offenders. Over 10,000 learners in 72 prisons started 26,000 courses. Of course, these are profitable contracts with government departments, Ministry of Justice, fund work and pensions, et cetera, et cetera, as well as, of course, in our recruitment businesses, giving people opportunities for work and career development. And this, of course, is such a crucial area of value for our company, but not just to society, to our shareholders, our employees, all our stakeholders that we treat extremely importantly, and we're very proud of and that we can show what we're adding value to wider society.

Thank you, Daniel. And just to conclude on that section, these numbers are people, they're job seekers. They are people and if you -- if every survey right across the world of people, when asked what they want most out of life, the #1 reply anywhere in the world is usually a good job. So delighted to have that section presented by Daniel, who is actually chairing that activity in the business, and so important it is too. I'm going to move on to strategy now. And I'm going to -- we haven't changed our strategy. We're tweaking it, but it hasn't changed. And we're very proud of some of the progress we've made. So the most important pillar or foundation of our strategy is the capitalizing on our market-leading position. And you've seen some brilliant names, some really, really blue-chip customers that we've secured. And we have this competitive advantage, which is we are perceived now as the quality supplier of people in the sector. Particularly in blue collar and in engineering, Staffline, Omega, Datum, Brightworks is all seen as the quality supplier, compliant, concern about governance, concerned about the candidates, concerned about their people, making sure that people get into good work. This transparency, this governance, this compliance culture has led customers to give us work in the last 12 months even from unexpected quarters just purely because of our reputation and our processes. So this is our most important strategic aim, and it is to grow the business organically using our most powerful competitive advantage. Next slide, please, Daniel. Well, these are just some of the names which you've seen before. One of the names, a tremendous company called Samworth Brothers, famous for many things, one of which is the baking of Ginster pies, along with a lot of other food to go. They have suffered a little bit with rail strikes because food to go is at railway stations, airports around the country, and indeed in pharmacies and supermarkets. And they suffered from some of the industrial turmoil that's going on. But indeed, they have -- we have delivered thousands of workers at Samworth and we've seen increases across the year in that sector. We mentioned Sainsbury's Argos, where we have -- managing 70 sites -- 70 suppliers over 45 sites, and of course, Restart, where Daniel has so articulately put forward our proposition of getting people back into work. And we've recognized our first profit in the year. So those are just examples, very good examples, powerful examples of organic growth. On to permanent recruitment. Now we've talked about permanent recruitment, but here are some fantastic stats. Over 2 years, 178% up. Permanent fees are high margin and they are cash generative. So with a business like Staffline, where we have a large payroll, over 30,000, 35,000 temps paid every week, when you have permanent recruitment, it partly funds that working capital requirement. So we've done this by increasing our fee earners by broadening in our contracts to focus not only on temp but on perm. Daniel actually indeed talked about that in the beginning that we've introduced an additional service which is not replacing temp, it's additional to temp. So very valuable for the [ cat ]. And of course, we focused on those niche sectors that are really -- we've seen a lot of resilience in their demand, technical engineering, automotive supply chain and most recently in the last 12 months, unsurprisingly, defense. So we've leveraged our perm delivery into existing major accounts. Now getting the most out of PeoplePlus. Daniel has taken you through some of the headlines there. But in terms of operations, this business is a complex business. It's not our largest business, but it's one of our really important businesses. And what we've done is implement deep change in the culture. It's had a patchy record. If you look back over 5 -- in the past 5 years ago, and operations and reward structures were not aligned with shareholders' interest and with the company at large. We've restructured all that and implemented some real change. We are focusing on our 2 core markets of employability, which is getting people into work and of course, education, both in prisons and in centers, classrooms around the country. But most importantly, we're investing in embracing digital, and we're seeing growth in that partner in digital services. And this is a higher-margin service that's cash generative. It reaches a broader market and gets to the scale and gets to the volume question in this business without massively increasing our costs. But of course, we keep them under review. And our real strategic aim is to unlock the new contract pipeline, of which we got GBP 29 million worth of revenue we're awaiting decisions right now. And then as I said about Ireland, it's our -- almost -- in some respects, in terms of key performance operators, it is our diamond in the business. It has tremendous conversion rates, well in excess of 20%. This is possibly a little high, and we've run the business hot in that sense. And we need to invest. We need to invest for the future. We've expanded our branch presence. We've taken on fee earners, over 10% based on the prior year. And we're investing in medical. We've just hired a tremendous head to head up our medical and health care sector, a consultant from the medical -- with the medical background from the sector, and she is heading up our service there. And we're expecting that business to be a source of growth in the future. Indeed, in the first quarter of this year, we've already generated fees, which is unusual and unexpected. Look, we want to continue our focus in the Republic. Our competitors there are flatlining a little bit, and we feel there's a lot to be had in terms of organic growth. But we will consider small bolt-on acquisitions, ones that are from trading cash flow where they're sensibly structured and they're not material in terms of cash outflows, they're indeed funded by our trading, our annual trading cash flow, and we would certainly not consider taking on debt or anything of that nature to fund them. So we would call them accelerator start-ups. So that is a consideration that we have on the table, but we have no immediate announcements to make in that regard. So finally, in a nutshell, capitalizing on the blue chip market leadership we have boosting that perm fee offering, unlocking and getting to grips with PeoplePlus and growth in PeoplePlus, and then finally, boosting our presence in the higher margin and less competitive market of the Republic of Ireland. Thank you. Now we're just going to finish on the investment and the outlook for the business. Always the most eagerly read and anticipated part of the regulatory news service in our presentations. Trying to put a little bit of flesh on the bone here, so that means it's meaningful for you. First of all, and this has not been explicitly said, but I just want to make sure that in the bottom -- on the bottom line, you see that first, we're not changing our estimate. We're not actually -- we're very comfortable with the revised expectations which were put out to the market in January. So we're in line at the moment. There's no new news on that, which in this tough market is a positive. Our competitive strengths are increasingly recognized by our blue chip and our enviable customer base, and despite the wider recruitment market downgrading their numbers, both in quarter 4 last year and in the years to come. So I think Staffline has shown that its resilience and its exposure to the Christmas peak, the World Cup has carried through into 2023. And this has been a positive for us. And we currently have a healthy pipeline, a tremendous pipeline of new opportunities in all of our divisions. As always, with uncertainty, tight cost control and focus on cash and you've got Daniel's track record here to bank on, we're -- cash is king. You've heard the saying, turnover is vanity. Property is good, but cash is king. That is our mantra and is at least a sizable proportion of every evaluation of every opportunity that we make. So the macroeconomic challenges are obvious. I don't need to go through those with you. We've mentioned below ours, and we've mentioned the training headwinds. But we're positioning Staffline for a number of years of growth now to take advantage of these challenging market conditions. It's always great to have a position where you've got some cash in the bank and you've got a strong operating model with experienced management to be able to take advantage of volatility. So on that basis, on the last slide, in line with revised expectations for January, we will pause there to take some of your questions and we'll try and answer them the best we...

Albert, Daniel, that's great. Thank you very much indeed for your presentation this morning. [Operator Instructions] But just while the team take a few moments to review those questions that were submitted already, I would like to remind you that a recording of this presentation along with a copy of the slides and the published Q&A can be accessed via our investor dashboard. Albert, Daniel, as you can see there in the Q&A tab, we've received a number of questions throughout your presentation this morning. And thank you to all of those on the call for taking the time to submit their questions. But guys, if I may just hand back to you to respond to those where it's appropriate to do so, and then I'll pick up from you at the end.

Thank you very much. So I will take the first question. Thank you for that. It's the first question. The revenue came in slightly lower than guide at first period end. How much related to PeoplePlus revenue recognition and what other factors were there? Actually, it was very small, just refinement of revenue, mainly to recognize our new managed service offering with the expansion out of the core construction sector into our food sector. So we recategorized that from -- and refined revenue. No impact on profit at all, but that was the main factor that drove that slight refinement of the revenue post the guidance earlier. Second question, Albert, maybe I think you'll take that.

So from a -- and Michael asked, from a competition point of view, who are you winning your major new clients from? Well, we don't like to mention our peers and competitors. But we are winning a number of these contracts and it's from a range of competitors, not just a single competitor. But what's happened is I can talk about the landscape, which is actually of interest, which is that the landscape, the competitive landscape has changed. In times of economic uncertainty, companies, particularly procurement, have the upper hand. They are fighting inflation. They are worried about their supply chains. They've got all kinds of concerns, starting with solvency. Think about the HGV driver situation that was quite critical 18 months ago. It was headlining all the major news item. We are the largest provider of heavy goods driving vehicle -- vehicle drivers. And so these points, procurement and HR, they're in the attendancy at the moment. They want to ensure that their supply chains are secure, they're transparent and they are actually delivering. So in that sense, it doesn't really matter who the competitors are, and there's more than one, but we're actually winning on the basis of our competitive advantage. Being a public company is a huge advantage, by the way, because you're getting your results out in real time. As opposed to 1 year to 18 months in arrears, you get -- you're totally transparent and you have a set of governance governing the business that's unequaled in terms of transparency and it's best in class. So I'd like to talk about the competitive landscape because that is what I see the advantage. And we're seeing that coming through, I would say, even possibly a little bit better than we expected. And it's all being driven by customers who are concerned about their supply chains. And therefore, it's applied to quality, in summary.

Yes. And just -- I completely agree with what Albert just said there. As CFO and responsible and custodian of the company's money and risk profile, you can see how I would approach my supply chain, our supply chain as CFO, and I'm sure there is a board out there approaching their own supply chains and looking at Staffline with the good, high level of quality of governance and trust that they give to us in their customer. Next question, how much debt is left to pay off if you have any? So you'll see that we reported GBP 5 million pre-IFRS 16 and net cash at the year-end. We run a working capital facility that helps us fund our business. I would say there is no structural debt to pay off. You will recall -- you might recall, some of you, that this business had nearly, if not sometimes, over GBP 100 million worth of debt 2 or 3 years ago. The work that we've done both operationally and then from a structural finance perspective, moving away from revolving credit facilities to a receivable facility which only supports us just in working capital and making sure that we can fund our business from day to day and week to week, but we have no structural debt to repay, and that net cash of GBP 5 million really illustrates that, and we hope to obviously continue in that vein. Next question, I'll read it and maybe Albert may answer it. How much opportunity -- it's from David, how much opportunity do you see in expanding sales into large clients like Sainsbury's, et cetera? How long does the sales process take with some of the larger accounts to get a foothold?

Very good question, David. Good insight there. Actually, large major accounts, the enviable blue chip customers that we do have, they've got long leads -- lead times. They employ outside consultants to sometimes run the process. They also have really well resourced teams in-house to run that process. And they want a competitive process, let's be honest. One of our largest clients, TESCO, is renowned for its competitive procurement process. So it's a grueling process, and I would say it's at least a year. Sometimes things move a bit quicker depending on the state of the economy and the state of our customers and the state of our peers and suppliers. So things can move a bit quicker. We've seen that, and that's not unusual, but in times of macro uncertainty, and then that can be compressed to say, 6 to 9 months. I would say never less than 6. So we have a good visibility of the pipeline. We have at least 6 to 9 months. And we know what opportunities are coming down. The track -- the large blue chip customers are very structured, very organized. Their tenders -- their request for information is sent to us in good time. So you're talking about a well organized market that -- where you customers are sophisticated, with full transparency and insight. And in many ways, that's a great position to be in because we can compete fairly, so that's the process. So the short answer is it takes about 6 to 9 months to get to the final stages of a process. And then you have an implementation and an onboarding period, which can be 3 to 6 months depending on the size and scale. From Steven, are there any plans to go into new markets? So I did mention, this is a small start in medical and health care, but I think every bit of research that you read predicts that the aging populations of the world at the moment naturally dictate that health care and social care will be important and increasingly important. So we're entering this market confidently but prudently in terms of investment. And the most important thing is that we've secured a tremendous leader ahead of specialists from the sector, a consultant from the medical sector who's going to lead the client-facing activities, whilst we have unbelievably good delivery and track record of delivery within. And this is, I might add, our Northern Ireland and Southern Ireland business. And we will look in the future to expand that even further if we can. We've got plenty to go for in Northern Island at this point in time and in the Republic. So that's the one service that I would put on the map. Of course, we're doing lots of other things. We've implemented the perm service across the board. We've also got -- we're also doing a bit of executive search around the Belfast and Northern Ireland business community area where we have tremendous relationships. And all of this is about building strong relationships with senior leaders across the business community and building our brand again, the worthy brand that it is in terms of what -- of our delivery and our track record of delivery. So those are the plans for new markets. I would say that the Republic is our most important sort of strategic initiative because it's a market where we only have very little market share. The larger market players are in a state of flux. There's been some M&A. There's been some consolidation and this change, and we are the one constant there, the one growing. So we know that in the Republic, our excellent business that's based in and headquartered in Belfast will be able to leverage those opportunities. From Leo, if employees continue to become more cautious over the next year, to what extent would you expect lower total employment to be offset by a move from perm to temporary recruitment? I've seen this many times. Daniel and I have 30 years. I'm sure you're surprised because it doesn't show. But we have 30 years of recruitment experience. And I know what it means when recessions come. We've been through 3. It always is a swing. It's a yin and yang between perm and temp, and the permanent recruitment service is driven by confidence and optimism, and temporary recruitment is driven by companies wanting a flexible workforce. So it's a yin and yang, and that's one of the great strengths of Staffline is we actually have not only an enviable blue-chip client base, but we've got the yin and yang now of temp and perm recruitment. But we will see slightly lower perm figures, although I must say, in the first quarter of this year, I've been slightly surprised, particularly in Ireland, and this might be a feature of the Irish economy, but also the Northern Ireland economy, that it has been relatively buoyant out there. We've not seen some of the weakening that's been widely reported by the sector across the mainland here in Great Britain. So there's that nuance to it. So we're surprised but we'll see how that unfolds. But essentially, the rule of thumb is that in a time of uncertainty, companies, large companies will tend to hire temps.

Next question from Tom. So when do you think we would see an improvement in the stock, as it's been stuck in the 30s mark? I think, well, primarily, my role, our role is to make sure that we're delivering results. That's what's most important at the moment. If you look at the recruitment sector over the last 12 to 18 months, we're not out of sync with the decline in share prices that has occurred over the last 12 months. Especially as expectations of a recession came, recruitment companies being a lead bellwether in terms of what will be happening in the market in the world economy. And one would hope that the same is true on the other side in terms of when the green shoots start to grow. As I think a couple of weeks ago, we started to see obviously the event of the last 10 days, SVB and Credit Suisse have just introduced some additional factors to people's considerations at the moment, which is understandable. But as those things settle down, which I'm sure they will, and if the economy gradually solidifies and cements itself, then I think we will see those green shoots. And you would expect, I think, generally, recruitment businesses to develop from there. And the key thing for me is that as we've commented on a couple of times in this presentation, our competitive advantage, we're a listed business. And very importantly, in terms of the governance we've built into the business over the last few years, competing against what is mostly a peer group of private companies, I think that really does give us a competitive advantage and I would expect to see some developments onwards from there. I don't know, Albert, if you have any more to ...

Yes. I mean just Daniel said everything that needs to be said in this regard. We can't control the markets, obviously. And -- but believe me, with a substantial amount of our private wealth invested in the company, we're perfectly aligned, and we feel the pain just acutely as anybody else. We'd love that price to be -- have a different digit in front of it, not a 3 but a 4 or a 5. But in essence, it's a market, it's a free market. And I'm very philosophical. I've been in recruitment for 3 decades and I've seen prices as very low in recessions, and I've seen them boom in growth periods. And I just see a low price of a good business the same way Warren Buffett does, which is it's a buying opportunity. And so I don't think it's all bad. And sometimes you don't get those opportunities often. You only have to look back at COVID and look at the indexes around the world, the FTSE, for example, which has just hit record highs. People who bought those stocks at the depths of COVID have seen increases. So the cycle goes and moves and prices follow, and it's a free market.

Question from Stephen, what challenges ahead do you see with the ESG market? I mean I see opportunities, as we've illustrated today, not only driven by our PeoplePlus business, but very importantly by our recruitment businesses who put people into work and enable themselves, they enable them to deliver their careers. We focus on as much of the S and the G, the social and the governance, and we've spoken today about the compliance, the trust and regulation that we, at Staffline, believe is one of our competitive edges, our USPs against our peer group in our particular part of the recruitment sector as well as the training and skills and employability sector. I see those as opportunities. And like many other businesses from an environmental perspective, we do our -- because it is our responsibility, and we do our best to ensure that we limit any impact from an environmental perspective. But we have buildings unlike any -- we also, like very many other businesses, we have oil and gas platforms or various other areas of challenge like that. So of course, we do our very best on the environmental sector, but we see our opportunities not only on the environmental platforms, but in social and governance and value that we can add to our -- to society, our workers, our employees and of course, as importantly, our investors. Next question is, do Staffline see the expected GBP 75 million county grant at BMW as an opportunity to grow on the BMW contract?

Well, that's -- someone had to comment on that. That was a big press release for us because we did see the automotive market struggling with supply chain challenges. We saw it from the inside, every Mini that's sold in this -- that's produced in this country has an element of Staffline tip labor involved in the production of that Mini. Every Rolls-Royce that is produced in Sussex has a Staffline labor component to it. And so we do see the business from the inside and the challenges they have with global supply chains, with the war in Ukraine disrupting those supply chains, and with credit, to be honest, affecting leasing arrangements and forward order books. And so it was with joy, I would say, that the management team read this announcement by the government that they had committed to supporting BMW and were 100% behind that. And we're grateful for that because it will mean that, that production facility, particularly, I think, on the electric side, will have some -- plenty of years left in it and will be a constant source of employment and growth in that area, so really well received.

Next question, will directors continue buying at these low prices to support confidence? I believe, Albert, myself purchased shares in January/February time, and I'm sure we'll make decisions in line with what's good for us and also our expectations of the company performance going forward, dare it to say.

Yes. The -- I mean look, we can't comment on timing of directors' purchases that they would be -- that wouldn't be right and you wouldn't expect us to do so. But you've seen our track record in the last 18 months. We're still individuals with families and costs just like you have in inflation. We're not an unlimited source of liquidity in the market, but we have been buying and buying regularly. But we are limited by closed periods and price-sensitive information and that and the rules. So we do have -- there are limits to -- and of course, our own personal resources. But you can see that most recently, we've made purchases, and substantial for individuals. So I think you can draw your own conclusions from that.

Good. Thank you. Another question from David. I think there's only 2 or 3, just to manage people's expectations out there. You delivered a very tight control of working capital in FY '22, with DSOs particularly low. Do you envisage being able to sustain those levels? Or will the new contract wins see the level of DSOs rise? I think I do foresee being able to sustain those levels. I think there are opportunities where, as we've said, some of our peers may be finding it quite challenging. And of course, we have got the interest rate cap in place for another 18 months, and we're just in swap rates actually as a result of the recent challenges of the last 10 days reduced as well in terms of interest rates. So we -- where we see opportunities to add value for the business, to add even strategic volume additions to this business where there might -- we might be able to utilize our balance sheet to ensure that we are able to deliver value for our customers, there'll be a mix of appraisal of opportunities between balance sheet use, margin. And all those things go into the strategic opportunities for our investors, all those things go into the mix. So I do envisage us underlyingly being able to maintain that DSO position with the fabulous work of my finance teams and the credit control teams, and we will look at every opportunity that comes before us in a balance sheet and a P&L perspective and make the decision sensibly as to where we can add value for investors over the medium and long term. Last question, I'll speak it. And then Albert, no doubt, may initially respond. Apologies, Albert and Daniel -- this is from [ Zafar ]. Apologies, Albert and Daniel, about the age-old question, shareholder returns, can you please share any plans or expectations?

Well, this is a question that has come up, and I'm delighted to say that based on Daniel's work on the balance sheet, we're in a much better position now than we've been for many years, many years. The group is in a very, very strong financial position. And so we were right as a Board to be cautious and constrain capital expenditure, and not -- pushed dividends and share buybacks into the future as we navigated the last 12 to 18 months. I think we were right. I mean who would have foreseen inflation in double digits, a war in Europe, a banking crisis. So I think you've got to give the group credit for maintaining this margin of safety, which is absolutely important. When you look at return on equity, you must think as well about your return of your equity. And so I think Daniel and I are committed to make sure and protect that equity. And that equity is only protected not only by growth and by earnings, but by a balance sheet and a net asset position that represents value. So that's our prime focus is a margin of safety. However, having said that, looking forward, we've now got, from a cash point of view, the best outlook that we've had for some time. And so we're in a much better position. But we haven't said anything. And if we haven't said anything, we can't say anything now. So that's under discussion, and that's a point that you made that's very well made that is obviously a live topic for this Board.

And final question, I think, unless anyone placed anything while I'm talking here, clients like Samworth, [ Argos ], from Jerry, are you winning them from competitors? Or are these new procurements to drive either growth or cost rationalization in their business? And I think I'll just take this and I think I'll hand over to Albert, who then will complete with a final summary. So not specific reference to Samworth, but we are winning volumes from competitors in other -- with other customers. So -- and that is driven by procurement teams assessing their supply chain. And I will come back to it, and you would expect me to say as the CFO, to look at their supply chain for quality suppliers, the suppliers they can trust, the suppliers that have balance sheet of some strength now. And very important in our sector, suppliers that will deliver high fulfillment levels but in a strongly compliant and regulated environment. And those are the unique selling positions and points that we emphasize and that we want to deliver for our customers and any new customers and any additional volumes with our current customers that we can do, and we see that as a really, really important competitive advantage at the moment. And I think I'm going to hand back to Albert now, who will finish on the investment summary if we could just have that. So yes, Albert, over to you.

Well, just before I end, I conclude, I just want to say that customers like Samworth Brothers and Sainsbury's in particular really do care about their labor supply chain. We've been stunned by the care, particularly in the Sainsbury's business, but also traditionally and historically in Samworth's, of the care that they have for their labor, of the well-being, of the thoughtfulness and mindfulness of those management teams. It's stunning. And it's not -- these sorts of stories do not make the headlines. It's only negative stories, but these companies really do care. We see it from the inside. They strain every sinew to make sure that they are compliant and that they are doing good business by their labor supply. So we love working with clients like that because that is our aim as well. Just one point is these businesses have been customers of ours for many years. Our best opportunities come from customers where we've been a supplier. We've got a track record. And as Daniel said, the most important KPI is delivering fulfillment. Can we deliver operator -- warehouse operators and drivers 24 hours a day, 7 days a week on demand. It's challenging. It's a hard business, but can we do that, and that's how they measure us. So finally, just to conclude, Staffline is a market leader in tough times. There's a flight to quality. Our scale and our unequaled geographic coverage will -- and our perception as a quality supplier will send us -- we will be on the podium for any new business opportunities that come along. We have enviable relationships with the best customers, the most resilient names and brands in the market. We've got our turnover complete. We've got an experienced management team fully aligned with shareholders, motivated with reward structures that are equity-based and long term, with performance goals intricately threaded through those schemes. We are resilient. I mean you've seen the points that Daniel has made around cash, the healthy balance sheet. We've got defensive sectors. This year, we'll be particularly looking at those food and food logistics sectors in terms of our resilience. We believe that this -- whatever levels of consumer demand in the economy, those 2 will survive. And also, you've got defense, which is another strand of our niche sector in Omega technical engineering and defense sectors. We see that as actually not only resilient but growing this year. So we have upside. And that's the most important thing if you have a Staffline share is that when the recovery comes, it's only natural that all of this good work will pay off.

Thank you very much to everyone for listening and for tuning in, and wishing you all a good day.