Staffline Group PLC (LON:STAF) has won a place on a new scheme from the Department for Work and Pensions and has extended its contract to provide on-demand workers to Tesco.
PeoplePlus, the AIM-listed group’s skills and training division, has been selected as a provider for the new Commercial Agreement for the Provision of Employment and Health Related Services (CAEHRS) framework that was launched in the summer.
READ: Staffline brings in new CEO as it swings to loss in first half
From 2021 until at least 2025, CAEHRS, which replaces the current 'Umbrella Agreement', will be the default medium for contracting employability and health related programmes and will be available for use across government as well as by other public sector contracting authorities.
The total framework covers a potential aggregate contract value of £7.5bn, with PeoplePlus securing a place on the national ‘Lot’ and as a tier-1 supplier for all six regions across England and Scotland, covering the commissioning of services with a value of over £11mln in England and £6mln in Scotland.
PeoplePlus will be a tier-2 supplier in Wales, covering services with a value of between £2mln and £6mln.
House broker Liberum noted that Staffline was not on the previous umbrella agreement, and has presented its position to government and asked for more generous working capital terms as historically the contract has required working capital investment.
"It is hard to know how much work Staffine will win," Liberum's analysts said. "The total contract size is larger. But there have been some new entrants to the market and it is hard to know Staffline’s future share... One of the challenges on the previous contract was margin and we expect Staffline to take a disciplined approach to this."
Staffline also said it will provide contingent labour to “significant customer” Tesco under a three-year contract extension to an 11-year working relationship with the grocer’s distribution network.
The company also said that because of the Chancellor’s recent winter policy adjustments, it will be able to pay VAT due by the end of March 2021 in a series of smaller payments up to the end of March 2022, interest free.
“This payment period will now ensure that the group has additional time in which to consider and implement mitigating actions with regards to liquidity.”
Shares in the company were up 6% to 25p by mid-morning on Monday, down 71% since the start of the year.
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