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The sell-off continues at Brisbane-headquartered staffing and recruitment company PeopleIN (ASX: PPE), striking a deal to divest First Choice Care and Edmen to Healthcare Australia (HCA) for $20.25 million.
The news - revealed to the market after trading closed yesterday - follows the recent completion of a $23.5 million divestment of PeopleIN's 79.3 per cent stake in Techforce Personnel, yielding a return of more than 100 per cent on its investment made four years ago.
PeopleIN reports the combined sale value for health and aged care staffing business First Choice Care and youth and disability staffing business Edmen represent 6.2 times their FY25 earnings.
Proceeds from the latest divestments of will be used to target accretive acquisitions in other areas of focus, namely engineering, trades and labour, defence and federal government, Pacific Australia Labour Mobility (PALM) scheme growth and international staffing platforms.
PeopleIN describes HCA as the ideal buyer, having the scale and market position to enable further growth and provide future opportunities for our people.
The company anticipates the divestments to settle by the end of this calendar year and projects net debt ratio of zero on completion.
This compares to a net debt ratio of 1.6x at the end of June, down from 2.1x the year prior, which chair Glen Richards attributed to continued cost reductions totalling more than $25 million over three years, improved pricing discipline and strong cash conversion.
After the group reported a 6.5 per cent decline in revenue to $1.1 billion for FY25, and a 10 per cent drop in EBITDA to $33.3 million, in the annual report Richards described "another year shaped by challenging economic conditions that tested the staffing industry".
"While our financial results reflect these pressures, PeopleIN again outperformed peers and preserved a strong base for future growth," he said.
"The board continued to oversee prudent capital management, risk controls and drive strategy to deliver shareholder value.
"We remained Australia’s largest sponsor of Pacific Australia Labour Mobility (PALM) scheme workers, supporting more than 4,700 participants."
He highlighted a significant medium-term opportunity in Queensland as the state enters a major infrastructure cycle with demand for more than 50,000 additional workers expected through to FY29.
"As the largest staffing company in Queensland, with 42 per cent of Group revenue generated in the state, PeopleIN is well positioned to be a workforce engine for this growth," he said.
"Defence also presents a strong pipeline. With increased investment by the Australian and US Governments, we are positioned to support Defence Force resourcing, including Pacific Islander recruitment and Defence-industry construction and manufacturing contractors in Northern Australia, Adelaide and Perth.
"We’re also now positioned to start considering acquisitions given our strong capital management discipline over the past two years."
Investors have reacted positively to the announcement in early trading today with PPE shares up 5.95 per cent at $0.89.
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