Insider: small-cap firm gets backing as Afentra boss buys

A recruitment firm has seen a number of boardroom purchases, while there’s backing for Afentra from ex-Tullow Oil boss Paul McDade.

Staffline shares worth £267,000 have been bought by four of its directors as the blue-collar recruitment firm continues to show momentum following a major restructuring.

The Nottingham-based company, whose recent contract awards have been with BMW Group, Vinci and the Ministry of Justice, last week posted in-line half-year results and highlighted its confidence in growing market share “at the expense of sub-scale competitors."

But with the City focused on the uncertain economic outlook, shares ended results-day at 39.65p compared with 44p the previous session and more than 90p last September. 

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Tom Spain, who is interim chairman, subsequently bought shares worth £138,000 at a price less than 40p before a £20,000 investment by chief executive Albert Ellis at 40p. Recruitment Ireland boss Tina McKenzie and chief financial officer Daniel Quint also made purchases.

Their buying boosted confidence in the AIM-listed stock, which closed the week at 46.2p. The shares trade on 7.5 times 2023 earnings, which house broker Liberum views as attractive “given the recovery potential and positive momentum”. Its target price is 100p.

Staffline Group (LSE:STAF) recently posted its first post-tax annual profit since 2017, signalling the company’s recovery since 2019’s discovery of accounting and payroll issues.

A major restructuring that included an exit from low-margin contracts culminated in May 2021 with a refinancing and £44 million fundraising priced at 50p a share.

The company supplies about 33,000 staff per day on average to around 400 client sites, with its Ireland business providing some 4,500 workers a day.

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The half-year results showed a 2.8% dip in revenues to £438 million, reflecting lower levels of demand from the food and online distribution sectors and strong comparators the year before. Its PeoplePlus skills and training division was impacted by the stronger jobs market as candidates opted to take up employment instead.

Positives for the company included the reopening of higher margin sectors such as automotive and aviation, while a greater focus on white collar recruitment enabled permanent fees to more than double to £3.2 million.

Underlying operating profit of £4 million was 13% lower after £1 million was invested in its fee-earning headcount with a view to capitalising on future growth opportunities.

Staffline expects its 2022 results to be second half weighted, driven by an increase in revenues from recent business wins and benefit of PeoplePlus's government Restart contracts. With a seasonal increase in retail trading volumes still to come, the company stuck by full-year expectations but warned that this was subject to any change in economic headwinds.

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It pointed out that customers were responding to labour shortages and challenging resourcing requirements by engaging with the company on a more strategic basis.

Ellis, who spent 21 years at Harvey Nash prior to his appointment in October 2020, said: “We believe the industry-wide challenges that lie ahead present an unprecedented opportunity for Staffline, as we pursue a number of new business prospects and continue to grow our market share at the expense of sub-scale competitors."

Buying at Afentra

Former Tullow Oil boss Paul McDade has bought £200,000 of Afentra (LSE:AET) shares following the resumption of trading in the Africa-focused company that he now runs.

Afentra, which stands for African Energy Transition, is focused on acquiring assets in West Africa with solid low-cost production, proven reserves and significant upside.

Its shares were suspended in October after the company disclosed its interest in assets owned by Angola’s national oil company Sonangol.

Agreement was reached in April on a deal covering 20% and 40% of two producing blocks worth up to $130 million (£107.2 million), before a separate move in July involved the purchase of additional interests from a Croatian company for $12 million (£9.9 million).

Admission documents for the Sonangol acquisition were published on Wednesday, allowing shares to resume trading at 15p. They jumped to 25p during their first session, which is close to where McDade made his investment in a move taking his stake to 1.4%.

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Buyers also included customers of interactive investor, with our daily trading statistics showing Afentra as the second most-bought stock on the platform on Wednesday morning and the 10th most bought on Thursday. Shares closed the week at 27p.

A meeting of shareholders to approve the Sonangol deal will take place on 30 August, ahead of the expected completion of both acquisitions in the fourth quarter. 

The company aims to emulate the precedents set in the Gulf of Mexico and North Sea by supporting Africa’s responsible transition of mature assets to new operators.

McDade, who spent 19 years as either chief operating officer or chief executive of Tullow Oil, said: “We are emerging from suspension with two complementary transactions that provide a strong growth platform underpinned by robust cash flow and significant upside value.”