26 April 2011 – acquisition

The acquisition of Fourstar Employment & Skills Ltd from Dutch company Fourstar Group Limited, a wholly owned subsidiary of Lern Holding B.V, a company registered in the Netherlands, has been announced.  The cost will be £3m in cash, satisfied from existing cash resources.  In the year ended 31 December 2010 Fourstar Employment & Skills Ltd generated an unaudited net profit of £3.6m including a significant early termination payment from the DWP in relation to the ending of the Flexible New Deal programme.  The acquisition is expected to generate around £90m of revenue over the next five years, which is significant.  It should be earnings neutral in the first full year of ownership and earnings enhancing thereafter.

There has also been welcome news that trading in the core Staffline business has been ahead of budget in the first quarter of the current year.  The company has said that it is too early to draw firm conclusions about the year as a whole and a further update will be given at the AGM on 19 May.  Ahead of that news we continue to rate the shares as a BUY.