Spring Pleased With Its Numbers
Spring Pleased With Its Numbers
Spring Group PLC has provided an update on trading for the year ended 31 December 2008 ahead of the announcement of preliminary results on 26 February 2009.
In a period of challenging trading conditions particularly in the last quarter, despite certain restructuring costs and investments made in new offices, people and clients, the Group will again put in a performance in 2008 broadly in line with market expectations. Revenue and net fee income are expected to increase by around 20% and EBITDA by approximately 14% year on year with net cash at the year end expected to be circa 40 million (1H08 26 million).
2008 saw the continued execution of our strategy to build a global staffing and solutions business. During the year we opened 7 offices across Germany, Italy, France, Australia and Singapore, bringing the total number of overseas offices to 22. Income from overseas operations is expected to represent approximately 25% of net fee income in 2008, up from 1% in 2006.
Overseas growth will continue to be an important cornerstone of our strategy and will be predominantly based around customer demand from our global clients in our Recruitment Process Outsourcing (RPO) business or national changes in legislation, which give us a competitive advantage with our business model.
In the UK, we have continued to invest in growing the Group organically. During the first half of 2008 we completed the planned expansion of our general staffing business and we now have a national network of offices, allowing us to fully support our bids for national contracts.
As with many of our peers, the recent global economic environment has created a softening of some of our markets, particularly within our permanent business and financial services clients, whilst presenting opportunities in others. We have seen increased demand from many of our customers to adopt an outsourcing model and have had notable successes in both retaining and extending contracts with many existing RPO customers. In addition we have won a number of new clients on an international basis, which will help underpin our performance through 2009 and beyond. The largest of these new wins was AVIVA, which in 2009 is likely to be our largest RPO customer. The associated set up costs of these new contracts have been expensed in 2008.
Given the increasing economic uncertainty in the second half of 2008, we took steps to reduce our cost base with minimum impact on our sales infrastructure. In addition, where possible, we continued to automate our support functions to maximize our efficiency. These steps incurred a one off cost of around 1 million in 2008, but will provide significant ongoing financial savings in overheads in 2009. These measures combined with efficient working capital management have resulted in further improvement to our cash position in 2008, which is reflected in a net cash balance of circa 40 million at the year end (31 December 2007: 35 million).
Peter Searle, Chief Executive Officer, commented:
"We are pleased with the Group's performance during what was an increasingly challenging trading environment. The Group has continued to grow the business and expand geographically whilst winning new clients across the globe. The developments within our RPO business combined with our focus on contract and our strong balance sheet position us well to tackle these challenging markets and we continue to look for opportunities to expand our market share."