Staffline Group (LSE:STAF) — Full Year Results

0:01 Good morning ladies and gentlemen and welcome to the STAFFLINE GROUP PLC Full Year Results Investor Presentation. Throughout this recorded presentation investors will be in listen only mode. Questions are encouraged, they can be submitted at any time via the Q and A tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. 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.

0:33 Before we begin, I would like to submit the following poll, as usual, if you could give that your kind attention, I'm sure the company would be most grateful. 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 a 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 Brightworth.

1:25 We're also one of the leading trainers in the country across The UK 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, you know, multiple thousands of learners in in our prisons and our education center. So a really, really comprehensive service across The UK and Ireland.

1:53 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. I'm just going to summarise 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 in the end of last year, gross profit up 0.5%, but really the STAFFLER deliverable really driven by a tight control of cost base, was our underlying operating profit up at 16.5% at £12,000,000 driven by permanent fees being up 65% year over year and then really crucially in what was and continues to be a challenging economic macro political environment is net cash of £5,000,000 really important to be coming into 2023 with a strong balance sheet.

2:55 We had new contracts last year, BMW and VINCI, which Albert will talk a little about later, and then also in our People Plus division, first profit of £1,200,000 in the second half of last year from our restart employability contract, which runs through to 2025, is 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 win at People Plus in Youth Defenders with a contract with the Ministry of Justice there. So, 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 that we announced just at our half year results at the beginning of August last year, just to illustrate the track record that we had 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 and VINCI contracts, which we did.

4:06 We onboarded 1,800 workers in that second half. And there'll be a full £60,000,000 of revenue per annum from the BMW contract. Restart, I've already mentioned, we delivered that. Our peak in the second half of last year, which did have some benefit from the World Cup sentiments 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've mentioned that Sainsbury's Garza's managed service provider contract, the first contract of its kind in our core sector, so food production, food retail, etc, 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 there was no way we were going do that because we actually exited one or two low margin contracts made on a strategic basis, but one additional KPI we've 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 delivers just over £1,000,000,000 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.

5:37 We've 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 Vincily. In terms of gross profit, up 0.5% but up over 4% in the recruitment businesses, which did offset some of the reduction in gross profits in People Plus, which we'll speak about a little later. Perm fees up 65% and key stats here at the end of twenty twenty we said we would add perm fees as an important strategic add on, not to replace our temporary contract business, but an add on, a supplement to our business and since 2020 perm fees are up 177% across the group, whether that's Ireland or England and Scotland as well, 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, so an increased conversion ratio and finally, ahead of expectations, that underlying operating profit of £12,000,000 ahead of the 10,300,000 in 2021.

6:49 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 People Plus, which we'll speak about a little later in terms of the skills division, but really excellent performance in margin across the recruitment divisions,

7:10 benefited from perm fees, exiting from low margin contracts and delivering a strong performance across the group. Now to 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 twenty twenty one. 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 twenty twenty two, our finance charges only went up from £2.4 to £2,700,000 and that was really driven by the purchase of the interest rate cap we made at the end of twenty twenty one, which caps 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 twenty twenty four, so that really protects us in the current environment.

8:13 That also allows us to deliver improved profit after tax of £3,800,000 and then finally the net cash at £5,000,000 pre IFRS 16, pre leases, really delivering us with £76,000,000 of headroom with our facilities and a leverage covenant, just to illustrate the strength of our balance sheet, leverage covenant of 0.65 times 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 and you'll see on the surface it looks like there's a decline of £1,900,000 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 instalment of in January 2022.

9:04 So in total, was a £12,000,000 one off repayment. So underlyingly, what might look like a reduction of net cash by £1,900,000 is actually a cash generation, a net cash generation of £10,100,000 and that is not only supported by that really strong trading cash flow of £16,000,000 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, bad debts and a stability of not actually a further minor improvement in DSO and debtor days, so really, really good performance and allows us to come into 2023 with a really strong cash position.

9:51 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 there on the cash flows. You know, recruitment businesses are cash generators, and it's great to see that cash flow flowing into the business and all those liabilities settled going forward. So starting with recruitment GB. Now Daniel's talked about the financials and the margins, so I'm gonna 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 ours is the key driver. However, we still have a great gross profit results.

10:47 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 in the than the previous year as we got got got to the tail end of COVID and Omicron. But in the second half, the the 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 UK of the labor market easing, and we're using our resources, our tremendous geographical resources, to move labor from one area, one region to another, so we can deliver to our clients on that basis.

11:41 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're 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've done really well against them. Sainsbury's been one and I'll come to another in a moment. So moving on to Ireland. What we've got here is our, you know, 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.

12:32 And we 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 piece, particularly in the private sector.

12:48 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 Glensborough Council. That was a five 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 UK and The Mainland, the GB business, and so we've benefited from that. And, of course, you know our strategy is to focus on that area, and we've 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 People Plus, and you'll see that, look, this is our countercyclical service. So, People Plus 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 you know the governments have got a strong focus on upskilling the workforce. But where you have such a tight labor market, those candidates, those job seekers, those learners are being offered work.

13:55 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 People Plus. It's not a bad one in the sense that in economic terms, we've got low unemployment, and that's that's obviously good for the economy. But, obviously, it holds back the skills business. And, look, we had strong results from employability

14:21 where we're putting people into work who have been out of work for up to six to twelve months. And in our prison education business where we're in prisons across England, Scotland, and Wales, we've had a slower period for new material contracts. We we secured, the largest subcontract package in the restart funding that, the the then chancellor, Rishi Sunak put forward eighteen 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 control of 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 of national statistics and they're a survey crucially.

15:10 Surveys can emphasize or not be a fully representative sample. 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 March 23, I think when these came out, which measure up to February, is that we seem to have quite a resilient UK labor market. And if I start on the bottom right hand corner, whilst job vacancies have been declining, and you've seen or heard that in news reports and read it in in in in news articles, we are still above pre pandemic levels, and that demand of plus 1,000,000 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, 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 counter offers are seriously considered as the candidate maybe opts for the counter offer and stays where they are as opposed to moving to a new job. A 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 30,000,000 plus, and that's obviously a good sign. It's the

16:40 pie. It's 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's going to take you through our environment, social and governance framework. Some really good work has put into that area. Daniel? Thank you, Albert. Thanks for those comments on those previous slides. We just felt it's really important to highlight to investors listeners what we're doing in the ESG space, and there are four key drivers behind our engagement with our people, our workers, and of course the environment and society around us. 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. Our focus is to make a positive difference to people's lives and deliver social value, but how are we doing that?

17:52 And actually, see that really as 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 in 2022. You'll see in the bottom there, we support approximately 10,000 carers. We have contracts to support carers throughout The United Kingdom with direct payments and you'll see on the left, we supported over a million people over the last four years and made a difference to their lives, whether that's with training, skills, employability or moving them into work. We helped over five and a half thousand 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, are profitable contracts with government departments, Ministry of Justice, Department of Work and Pensions, etc, etc, as well as, of course, in our recruitment businesses giving people opportunities for work and career development.

19:00 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 that we're adding value to wider society. Thank you, Daniel. And just to, you know, conclude on that section, you know, 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 number one reply anywhere in the world is usually a good job.

19:43 Delighted to have that section presented by Daniel, who's 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 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 or foundation of our strategy is capitalizing on our market leading position. And you've seen some brilliant names, some really, really blue chip customers that we've

20:14 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, DATAM, Brightworks is all seen as the quality supplier, compliant, concerned 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 twelve 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 most powerful competitive advantage.

21:05 Next slide, please, Daniel. Well, these 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 the the the the baking of Ginster pies along with a lot of other food to go. They've suffered a little bit with rail strikes because food to go is is is at railway stations, airports around the country, and indeed in in in pharmacies and supermarkets. And they suffered from some of the industrial turmoil turmoil that's going on. But indeed, they have we have delivered, thousands of workers at Sandwick, and we've seen increases across the year in that sector. We've mentioned Sainsbury's Argos where we have managing 70 sites, 70 supplies over 45 sites, and of course, restart where Daniel has so articulately put forward our proposition on 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.

22:08 Onto permanent recruitment. Now we've talked about permanent recruitment, but here are some fantastic stats. Over two years, a 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, that working capital requirement. So we've done this by increasing our fee earners, by broadening in our contracts to 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. It's not replacing temp. It's additional to temp. So very valuable for the and of course, we focused on those niche sectors that are really we've seen a lot of resilience in the in the demand, technical engineering, automotive supply chain, and most recently in the last twelve months, unsurprisingly, defense. So we've leveraged our perm delivery into existing major accounts.

23:10 Now getting the most out of people plus Daniel's taking you through some of the headlines there. But in terms of operations, this business is a complex business. It's it's it's 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 five in the past five years ago, and operations and reward structures were not aligned with shareholders' interests and with the company at large. We've restructured all that and implemented some real change. We are focusing on our two core markets of employability, which is getting people into work, and of course education, both in prisons and in centers, classrooms around the country.

23:56 But most importantly, we're investing and embracing in digital, and we're seeing growth in our partner and digital services. And this is a higher margin service. It'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 under review, and our real strategic aim is to unlock the new contract pipeline of which we've got $2,029,000,000 pounds worth of revenue. We're awaiting decisions right now. And then as I said about Ireland, it's our almost, you know, in some respects, in terms of key performance operators, it is our diamond in the in in in the business. It has tremendous conversion rates well in excess of 20%.

24:44 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 healthcare sector, a consultant with a medical background from the sector, and she is heading up our service there. We're expecting that business to be a source of growth

25:16 in the future. Indeed, in the first quarter of this year, we've already generated fees, which is, you know, unusual and unexpected. Look. We 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 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 annual trading cash flow,

25:48 and we would certainly not consider taking on debt or anything of that nature to fund them. So we would call them accelerated startups. So that is a consideration that we have on the table, but we no immediate announcements to make in that regard. So finally, in a nutshell, capitalizing on blue chip market leadership we have, you know, boosting that perm fee offering, unlocking and getting to grips with People Plus and growing People Plus, and then finally boosting our presence in the higher margin and less competitive market of The Republic Of Ireland.

26:25 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 of the regulatory news service and our presentations, trying to put a little bit of flesh on the bone here so that it's meaningful for you. First of all, and this has not been explicitly said, but I just want to make sure that

26:50 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, despite the wider recruitment market downgrading their numbers both in quarter four last year and

27:20 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 it through into 2023, and this has been a positive for us. We currently have a healthy pipeline, a tremendous pipeline of new opportunities in all of our divisions.

27:40 As always, with uncertainty, tight cost control and focus on cash, and you've got Daniel's track record here to bank on. Cash is king. You've heard the saying turnover is vanity, profit 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 the lower hours and we've mentioned the training headwinds, but we're positioning STAFFLINE for

28:16 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, the last slide, we're 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

28:46 Albert, Daniel, that's great and thank you very much indeed for your presentation this morning. Ladies and gentlemen, please do continue to submit your questions just by using the Q and A tab that's situated on the top right hand corner of your screen. 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 and A can be accessed via your investor dashboard.

29:11 Albert, Daniel, as you can see there in the Q and 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. 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 guided post period end. How much related to People Plus revenue recognition and what other factors were there? Well, actually it was a very small refinement of revenue, mainly to recognise our new managed service offering with the expansion out of the core construction sector into our food sector, so we re categorised that and refined the revenue.

29:59 No impact on profit at all, 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. Michael asks, 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, you know, we are winning a number of of these contracts, and it's from a range of competitors, not just a single competitor. But, you know, what's happened is I can talk about the landscape, which is actually of interest, which is that the competitive landscape has changed in times of economic uncertainty.

30:46 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. You know, think about the HGV driver situation that was quite critical eighteen months ago, was headlining all the major news items. We're the largest provider of heavy goods driving vehicle vehicle drivers. And so these these points, procurements and HR, they're in the ascendancy 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 a year to eighteen months in arrears. You get you're totally transparent, and and and you have a set of governance governing the the business that's unequaled in terms of in terms of its transparency and and and its and its best in class. So I like to talk about the competitive landscape because that is what I see the advantage.

32:02 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 are concerned about their supply chains, and therefore, it's a flight to quality in summary. Yeah, and just to add to that, I completely agree with what Albert just said there as, you know, 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 are boards out there approaching their own supply chains and looking at a staff line with the good high level of quality of governance and trust that give to us in their custom. Next question, how much debt is left to pay off, if you have any? So you'll see that we reported £5,000,000 pre IFRS 16 net cash at the year end.

32:50 We run a working capital facility that helps us fund our business. I would say there is no structural debt to pay off. You might recall, some of you, that this business had nearly, if not sometimes over, 100,000,000 worth of debt two or three years ago. The work that we've done both operationally and then from a structural finance perspective, 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 £5,000,000 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 is this from David? How much opportunity do you see in expanding sales into large clients like Sainsbury's, etc? How long does the sales process take with some of the larger accounts to get a foothold?

33:46 Very good question, David. Good insight there. Actually, large major accounts, the enviable blue chip customers that we do have, they've got long lead times. They employ outside consultants to sometimes run 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, renowned for its competitive procurement processes. So it's a gruelling 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, and we've seen that. And that's not unusual, but in in terms of macro uncertainty, and then that can be compressed to, say, six to nine months, I would say never less than six. So we have a good visibility of the pipeline. We have at least six to nine months, and we know what opportunities are coming down.

34:52 The track, the large blue chip customers are very structured, very organized. Their tenders, their their request for information is sent out in good time. So you're talking about a well organized market that where customers are sophisticated with full transparency and insights. And in in many ways, that's a great position to be in because we we can compete fairly. So that's the process. So the short answer is it takes about six to nine months to get to the final stages of a process, and then you have an implementation and an onboarding period, which can be three to six months depending on the size and scale. From Steven, are there any plans to go into new markets? So I did mention, you know, this is a small start in medical and healthcare, but I think every bit of research that you read predicts that the aging populations of the world at the moment naturally dictate that healthcare and social care will be important and increasingly important.

35:54 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, a head of specialist 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, but we've got plenty to go for in Northern Ireland at this point in time and in The Republic. So that's the that's the one service that I would put on the map. Of course, we're doing lots of other things. We've we've implemented the perm service across the board. We've also got we've also doing a bit of executive search around the Belfast and Northern Ireland business community area where we have tremendous relationships.

36:48 And all of this is about building stronger relationships with senior leaders across the business community and building our brand again, know, worthy brand that it is in terms 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 and A, there's been some consolidation, there's change, and we're 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.

37:38 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 thirty years. I'm sure you're surprised because it doesn't show. But we have thirty years of recruitment experience, and I know what it means. When recessions come, we've been through three. It always is a swing. It's a yin and yang between perm and temp and, you know, the permanent recruitment service is driven by confidence and optimism, and temporary recruitment is driven by companies wanting a flexible workforce. So, you know, 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, it's been relatively buoyant out there. We've not seen some of the weakening that that's been widely reported by the sector across the mainland here in in in Great Britain. So there's that nuance to it. So we we we're surprised, but we'll see how that unfolds.

39:01 But essentially, the rule of thumb is that in a time of uncertainty, companies, large companies, will tend to high 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 twelve to eighteen months, we're not out of sync with decline in share prices that has occurred over the last twelve 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 wider 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 events of the last ten 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, recruitment businesses to develop from there and the key thing for me is that, as

40:32 we've commented on a couple of times in this presentation, our competitive advantage We're in 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. Don't know, Albert, if you have anything more to add? Yeah, mean, just Daniel said, everything that needs to be said in this regard, we can't control markets, obviously. Believe me, with substantial amount of our private wealth invested in the company, we're perfectly aligned, and we feel the pain as acutely as anybody else.

41:20 We'd love that pry price to be you know, have a different digit in front of it, not a three, but a four or a five. But in essence, it's a market. It's a free market. And, you know, I'm very philosophical. I've been in recruitment for three decades, and I've seen prices, you know, as very low in recessions, and I've seen them boom in in 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, you know, I don't think it's all bad, and and, you know, sometimes you don't get those opportunities often. You only have to look back at COVID and look at the indices around the world, the FTSE, for example, which is just at 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.

42:11 Good. Question from Stephen. What challenges ahead do you see with the ESG market? I see opportunities, we've as illustrated today, not only driven by our People Plus business, but very importantly by our recruitment businesses, who put people into work and 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 to them about the compliance, trust, the 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, do our of course, it is our responsibility and we do our best to ensure that we limit any impact from an environmental perspective, but we have buildings, any also like very many other businesses, 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 society, our workers, our employees and of course, as importantly, our investors.

43:33 Next question is do STAFFLINE see the expected 75,000,000 CAUDI grant at BMW as an opportunity to grow on the BMW contract? Well, 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 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 in Sussex has a STAFFLINE labor component to it. And so we do see the businesses from the inside and the challenges they had with global supply chains, with the war in Ukraine disrupting those supply chains, and with credit, to be honest, affecting leasing arrangements and afford order books. And so it was it was, you know, with with with joy, I would say, that the management team read this announcement by the government that they had they they had committed to supporting BMW, we're a 100% behind that.

44:42 And we're grateful for that because it will mean and it will mean that that that production facility, particularly, I think, on the electric side, will have some, you know, 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 and myself purchased shares in JanuaryFebruary time and I'm sure we'll make decisions in line with what's good for us and also our expectations company performance going forward. Yeah, mean, look, we can't comment on timing of directors' purchases.

45:28 That wouldn't be right and you wouldn't expect us to do so. But you've seen our track record in the last eighteen months. You know, 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 close periods and price sensitive information and the rules, so do have the limits to it, and of course our own personal resources. But you can see that most recently, we've made purchases and and, you know, substantial for individuals, so I think you can you can draw your own conclusions from that.

46:13 Good. Thank you. Another question from David. I think there's only two or three just to manage people's expectations out there. You delivered a very tight control of working capital in FY22 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 eighteen months and we've just seen swap rates actually as a result of the recent challenges over the last ten days reduce as well in terms of interest rates. We see opportunities to add value for the business, to add even strategic volume additions to this business, where we might be able to utilise our balance sheet to ensure that we are able to deliver value for our customers.

47:13 There'll be a mix of appraisal of opportunities between balance sheet use, margin, all those things go into the mix, strategic opportunities for our investors, all those things go into the mix, so I do envisage just underlying 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 and L perspective and make the decision sensibly as to where we can add value for investors over 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?

48:03 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, you know, we were right as a board to be cautious and constrain capital expenditure, not push dividends and share buybacks into the future as we navigated the last twelve to eighteen 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 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, you know, that's our prime focus, is a margin of safety.

49:20 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, you know, 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, you know, that's that's under that's under discussion, and that's a that's a point that you make that's very well made that that is obviously a live topic for the sport. And final question, I think, unless anyone posts anything while I'm talking here, clients like Samworth, are you from Gerry? Are you winning them from competitors, or are these new procurements to drive either growth or cost rationalization in their business? I think I'll just take this and I'll hand over to Albert, who then will complete with a final summary. So with not specific reference to Sandworth, but we are winning volumes from competitors with other customers, 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 this as CFO to look at their supply chain for quality suppliers, for suppliers they can trust, for suppliers that have balance sheet of some strength now and very important in our sector, suppliers that will deliver high fulfilment levels but in a strongly compliant and regulated environment and those are the unique selling positions and points that we emphasise

50:50 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. Albert, over to you. Just before 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.

51:47 It's stunning. You know, 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 in a supplier, we've got a track record, and as Daniel said, the most important KPI is delivery fulfillment. Can we deliver warehouse operatives and drivers twenty four hours a day, seven 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.

52:40 So finally, just to conclude, you know, STAFFLINE's a market leader. In tough times, there's a flight to quality. Our scale and our unequal geographic coverage will and our and our perception as a quality supplier will stand 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 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 thread through those those schemes. We are resilient. I mean, you've seen the points that Daniel's made around cash, the healthy balance sheet.

53:31 We've got defensive sectors. This year, we'll be particularly looking at those food and food logistics, food logistics sectors. In terms of our resilience, we believe that this, you know, whatever levels of consumer demand in the economy, those two 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.