Staffline (AIM: STAF), the Staffing services, outsourcing, training and Employability organisation, providing people and operational expertise to industry, is pleased to announce today that it has agreed to acquire A4e Limited (“A4e”), a leading provider of welfare to work and skills training services across the UK, on a debt free/cash free basis for a total consideration of £34.5 million (the “Acquisition”).
The Acquisition represents a highly complementary fit with Staffline’s existing Employability division, accelerating the Group’s growth strategy and bringing a number of strategic benefits and revenue synergies.
Staffline has agreed to acquire A4e’s entire issued share capital for £23.5 million and will assume A4e’s net debt of £11 million. The consideration of £34.5 million represents a multiple of 2.5 times the A4e unaudited EBITDA for the year ended 31 March 2015.
The cash consideration is being funded through increased debt facilities provided by the Group’s existing bankers. The Group’s facilities will now comprise a £35.0 million term loan, £20.0 million loan notes and increased existing working capital facilities of £30 million.
A4e is a profitable, cash generativebusiness expected to deliver revenues of approximately £140 million, EBITDA of £13.8 million and profit before tax of £10.2 million for the year ended 31 March 2015. The Directors expect the Acquisition to be significantly earnings enhancing and to increase underlying diluted earnings per share for the period ended 31 December 2015 by approximately 26%.
Following the Acquisition, Staffline will become one of the largest Work Programme providers in the UK in terms of the number of jobseekers supported and contracted regions serviced, with a Work Programme presence in nine CPAs (regions) as a prime contractor and six further regions as a sub-contractor. This is a key long term growth initiative for the Group.
The Group will have the greatest geographical reach of all Work Programme providers covered by over 150 locations nationwide, which will offer employer engagement and partnership opportunities with Staffline’s established OnSite presence throughout the UK.
The combined Group will be able to provide a wide range of services across the sectors of Employability, Skills and Justice, including access to financial advice as well as to health, social and relevant advisory services.
The increased scale and scope of services and the Group’s proven track record of results will position the business strongly for the future and enable Staffline to maximise opportunities in the Employability, Skills and Justice sectors, creating significant shareholder value.
The Group has seen a strong start to the new financial year, with Staffing Services securing a record 28 OnSites in Q1 (taking the number of OnSites to over 260) and the new business pipeline remaining excellent.
Andy Hogarth, Chief Executive, Staffline commented:
“We are delighted to be announcing today the acquisition of A4e. This is an exciting milestone in Staffline’s growth, considerably expanding the size and geographic reach of our Employability offering and will result in the combined business being one of the largest Work Programme providers in the UK.
The significant strengths of both businesses will be united and we are confident that our leading position will be a strong platform from which to develop our strategy, services and innovation.
We look forward to creating a winning team and business, and delivering significant shareholder value.”
Andrew Dutton, Group CEO, A4e commented:
“We are today starting a new chapter in the history of A4e. Staffline is exactly the right fit for us: its ambitions, robust financial position and its people and business values will all support the combined business as we grow together and build on our position as a leading Work Programme provider in the UK.
A4e is now in the perfect ownership to both develop our customers and support our employer relationships and I wish the combined business every success in the future.”