Ashley Services : Appendix 4D and Half Year 2022 Accounts

For personal use only

Appendix 4D:

Half-year Information

2 January 2022

1. DETAILS OF REPORTING PERIODS:

The current reporting period is the 26 weeks from 5 July 2021 to 2 January 2022. The previous corresponding reporting period was the 26 weeks from 6 July 2020 to 3 January 2021, except for the Consolidated Statement of Financial Position, where comparatives are balances as at 4 July 2021.

2. RESULTS FOR ANNOUNCEMENT TO THE MARKET:

	$000
Revenues from ordinary activities	up 18.2% to 219,816
Profit after tax for the half-year	Up by 43.2% or 1,771 to 5,866
Profit after tax for the half-year attributable to shareholders	Up by 52.3% or 1,991 to 5,801

Please refer attached Directors' Report and Interim Financial Statements for the half-year ended 2 January 2022 and the attached press release.

The remainder of the information requiring disclosure to comply with listing rule 4.2A is contained in the attached Directors' Report and Interim Financial Statements for the half-year ended 2 January 2022, the attached press release, and the additional information below.

Dividends:

	Amount per security	Franked amount per
Dividends (distributions)		security
Interim dividend for the half-year ended 2 January 2022	3.0 cents	3.0 cents

Interim Dividend timetable:
	Ex-dividend date	Wednesday 2 March 2022
	Record date	Thursday 3 March 2022
	Payment date	Thursday 17 March 2022

Additional information:

Additional information

Net Tangible Assets per ordinary share:

$0.1231 (4 July 2021

$0.1051)

Note:

1. Right-of-use assets have been considered as intangible assets and as such are excluded assets for the purposes of the Net Tangible Assets calculation.

Audit qualification or review:

Audit qualification or review

The financial statements were subject to a review by the auditors and the review report is attached as part of the Interim Financial Statements.

Ron Hollands

Company Secretary

Sydney, 25 February 2022

ASHLEY SERVICES GROUP

Interim Financial Statements for the half-year ended 2 January 2022

1

For personal use only

Ashley Services Group Limited

ABN: 92 094 747 510

Interim Financial Statements

For the half-year ended 2 January 2022

ASHLEY SERVICES GROUP

Interim Financial Statements for the half-year ended 2 January 2022

2

For personal use only

Ashley Services Group Interim Financial Statements for the half-year ended 2 January 2022

DIRECTORS' REPORT ------------------------------------------------------------------------------------------------------------------------	4
AUDITOR'S INDEPENDENCE DECLARATION-------------------------------------------------------------------------------------------	8
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ----------------------------	9
CONSOLIDATED STATEMENT OF FINANCIAL POSITION --------------------------------------------------------------------------	10
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ---------------------------------------------------------------------------	11
CONSOLIDATED STATEMENT OF CASH FLOWS -------------------------------------------------------------------------------------	12
DIRECTORS' DECLARATION---------------------------------------------------------------------------------------------------------------	23
INDEPENDENT AUDITOR'S REVIEW REPORT ----------------------------------------------------------------------------------------	24

ASHLEY SERVICES GROUP

Interim Financial Statements for the half-year ended 2 January 2022

3

For personal use only

Directors' Report

The Directors present their report together with the financial statements of the consolidated entity, being Ashley Services Group Limited and its controlled entities ("Group") for the half-year ended 2 January 2022.

DIRECTOR DETAILS

The names of the Directors in office at any time during, or since the end of the financial year are as follows:

Names	Appointed / Resigned
Mr Ross Shrimpton	Appointed 12 October 2000, re-appointed Managing Director 23 January
	2017
Mr Ian Pratt	Appointed 1 October 2015
Mr Chris McFadden	Appointed 6 April 2017

The above named Directors held office since the start of the financial half-year to the date of this report.

REVIEW OF OPERATIONS AND FINANCIAL RESULTS

Earnings and result

Earnings

Net profit after tax ("NPAT") for the financial half-year ended 2 January 2022, was a total group profit of $5.9 million (1H 2021: profit $4.1 million).

Key elements within the result include:

Revenues

Revenue at $219.8 million was well up by $33.8 million (18.2%) on the comparative period, with revenue growth seen across most areas of the business.

Labour Hire revenues for the first half were up by $32.2 million (17.7%).

Training revenues for the first half were also well up by $1.6 million (38.7%).

Earnings before interest taxes depreciation and amortisation ("EBITDA")

EBITDA for the financial half-year was a profit of $9.3 million, up $2.6 million or 39.5% on the prior corresponding period (1H 2021: profit of $6.7 million).

• Labour Hire EBITDA of $10.6 million, was up $3.3 million or 44.2% on the prior corresponding period (1H 2021: $7.3 million), with Action Workforce leading the way. The half did continue to be negatively affected by continuing COVID related restrictions and lockdowns, which mostly impacted the labour hire brands exposed to the construction sector.
• Training EBITDA of $1.0 million was down $0.4 million on the prior corresponding period (1H 2021: $1.4 million), due in part to the positive contribution made to profit in the prior corresponding period by JobKeeper, with no such government benefits present in the latest half.
• Corporate overheads, at $2.2 million, were up $0.2m on the prior corresponding period (1H 2021: $2.0 million), with increases largely related to the growth of the overall business.

ASHLEY SERVICES GROUP

Interim Financial Statements for the half-year ended 2 January 2022

4

For personal use only

Directors' Report

Statement of financial position

Net assets at $30.4 million were up slightly on the financial year ended 4 July 2021 position of $28.0 million, in line with a final FY21 final dividend of $3.5 million within the period and also the 1H FY22 net profit after tax of $5.9 million.

Noteworthy balance sheet movements since the financial year ended 4 July 2021 include:

• Cash down by $1.8m - used in part (along with Borrowings) to fund the gap between cash flow and requirements of a high working capital build peak period (Nov-Dec);
• Trade Receivables up $12.0m - reflecting working capital requirement of peak (Nov-Dec) as opposed to quieter year end period (May-Jun), plus a few significant late payments received just after H1 cut off;
• Trade Payables up $6.7m - $5.3m increase due to a 3 month Superannuation payable as against one month at financial year end where we pay earlier as part of our annual tax planning process, with general seasonality (peak) playing a part also; and
• Borrowings up $4.1m - used to fund the gap between cash flow and funding requirements in a high working capital build peak period (Nov-Dec).

In general, it is worth noting that whilst the half year end closes at the end of peak revenue build (Nov-Dec), which draws on working capital as mentioned, the financial year end, closing at the end of June, is in general a lower revenue period, hence the considerable working capital requirement differential between the half and the full year position.

Operating Cash Flow

The operating cash flow for the half-year period was an inflow of $0.5 million (1H 2021: outflow of $7.0 million), reflecting a more traditional marginally positive H1 cash flow, where we have a significant working capital requirement in peak period (Nov-Dec) as high levels of workers are paid with collection of the associated invoices occurring in early H2 (Jan-Feb). To illustrate further, Nov-Dec average weekly revenue is 10% higher than the YTD Oct average. (1H 2021 significant outflow anomaly was due in part to year on year timing movements at end of calendar 2020, as well as strong Nov-Dec 2020 revenue growth, particularly in Action Workforce).

The first half also saw the $3.5 million payment of the 2021 final dividend, $0.5 million in minority shareholder dividends and $1.2 million for the final deferred purchase payments for both the CCL Group and The Instruction Company.

FUTURE PROSPECTS AND MATERIAL BUSINESS RISKS:

Our view in regard to both our future prospects and our material business risks has not altered since our ASX update released to the market on 2 December 2021 and which we have essentially replicated here in this report:

We anticipate favourable conditions in the labour hire market in the current financial year if the risk of lockdowns continues to diminish. This is, however, difficult to predict given the emergence of new COVID-19 variants and possible public health responses to them. In any event, the hard-earned wins achieved, by Action Workforce in particular, during lockdown, where our certainty of supply differentiated us from the majority of our competitors, place us in a favourable position to retain a larger and more highly penetrated customer base into the future. In our approach to the market, we will also look to leverage the credibility generated through our impressive ability to deliver to our customers in challenging times.

Additionally, our continued investment in our candidate- and client-facing technology, including a candidate app, screening and on-boarding tools and client reporting portals, continues to enhance our competitive advantage. This, along with an increased investment in our marketing capability and online (including social media) exposure, will strengthen the position of our labour hire division.

ASHLEY SERVICES GROUP

Interim Financial Statements for the half-year ended 2 January 2022

5