Recent labour shortages despite migrant boom in Australia has compelled companies to review their hiring strategies, putting a spotlight on skilled workers and meeting them halfway. In July 2023, as full-time employment decreased by over 24,000, part-time employment saw gains of 9,600. To find the right employees, labour hiring services like Ashley Services (ASX: ASH) have come into the spotlight. Seeing a profitable venture, the Company acquired two new hiring companies in FY23 and witnessed subsequent revenue boosts.
In FY23, the Company’s revenue was up $99.4 million on FY22 to $549.2 million. This includes $14.5 million and $25.2 million respectively from acquisitions of West Australian labour hire business Linc Personnel and seasonal work employer Owen Pacific Workforce. Excluding acquisitions, revenue was $509.5 million, up $59.7 million or 13%. Moreover, its operating Cash Flow, marking a $22.8 million inflow, was up $16.1 million.
The Group invested $8.7 million in acquiring Linc and Owen, $2.8 million in indigenous associated entities and $3.2 million in property, plant and equipment, primarily to fund vehicle and equipment purchases to support the growing traffic management business in Victoria.
Managing Director, Ross Shrimpton, said, “The financial year ended 2023 saw the Ashley Services Group continue its strong growth in revenues, driven partly by the Linc and OPW acquisitions, but largely through increased hours worked with existing customers and new business wins.”
Ashley Services is a labour hire business, established decades ago in 1968. It provides labour hire, training and recruitment solutions to help with workforce management. Having seen many such inflationary waves, it’s not surprising that the Company managed to keep with the times. Its FY23 EBITDA of $20.1 million, was up $1.4 million or 7.5%, but its statutory after-tax profit of $11.4 million represented a minor 0.4% increase.
Shrimpton added, “Profits were adversely impacted by seasonality, transitional costs incurred strengthening the management team to allow the previous owners to move into retirement and increasing costs to serve clients preparing for the introduction of a new deed governing the Seasonal Worker Programme. November to February is the peak period for volumes in this business. Going forward, the business is well placed to deliver expected annual EBITDA of $3 million per year.”
While EBITDA from its Labour Hire division decreased by 1%, its Training division did well, with earnings rising by 146.7% from $1.5 million to $3.7 million. This paints what appears to be an accurate picture of the state of affairs, with labour shortages compelling staff to upskill and companies to boost their training programs.
Labour Hire earnings reached $533.2 million, displaying a notable surge of $95 million. The surge was particularly visible in the construction and traffic management sectors within Victoria. Training revenues of $16.0 million were up $4.5 million, with the comparative period negatively impacted by COVID restrictions, but also with growth achieved across both the Ashley and The Instruction Company training businesses.
Operating cash flow was strong in H2 FY23, with an inflow of $15.3 million, bringing the full year operating cash flow to $22.8 million, up from FY22’s $6.7 million.
Ashley also invested in three new indigenous labour hire providers, as it aspires towards greater coverage and services expansion. As the industry gets more competitive, it undoubtedly helps to have your bases covered.
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