The GO2 People Limited (ASX: GO2) offers vertically integrated recruitment services like staffing solutions to a range of businesses. The operations of the company are driven by strong core values and an ethical approach to business principles.
The company today, on 1st May 2019, released its quarterly cash flow and provided a business update for the three months ended 31st March 2019. The company is on track to achieve revenue growth with an aim to triple its business operations in three years from the public listing.
The revenue of the group for the nine months to March 2019 has increased by 19% on the same corresponding period last year, which provided a robust foundation for the company to achieve its FY19 target. Expansion into NSW and Victoria continues to help grow revenue, while existing recruitment clients have stabilised revenue in the foundation states of WA and Queensland.
The GO2 Skills and Training Pty Ltd, which was recently acquired by the group, contributed $257k of revenue from existing GO2 Recruitment clients for the quarter, exhibiting some of the synergistic benefits expected on the acquisition. The Training Division will further seek to grow its client base off the back of this model and access more cross-selling opportunities through recruitment of clients.
The group has presented two consecutive quarters with positive operational cash flow, driven by the improvements in collections, reduction in the debtor days outstanding (a key KPI for the group), and the collection of large debtor balances outstanding as at 31 December 2018, arising due to the Christmas period.
As per the strategic plan of the company, GO2 has invested in two Indigenous-owned businesses based in Western Australia, which complements the current business of the company and are highly synergistic. GO2 expects that both the businesses will contribute positively to the group’s profitability in FY20, especially after the initial integration of these businesses, which is progressing well currently.
After the March quarter, the group announced a third acquisition and a capital raise associated with it. The company soon will acquire RTO Industry Pathways Pty Ltd. From the perspective of the overall strategic plan of the company, IPW is a profitable business, delivering innovative training to the mining and health care sectors.
GO2 has appointed Gobarralong Capital Pty Ltd as a Lead Manager in the share placement to raise a minimum of $2.7 million, up to a maximum of $4.0 million, to complete the transaction in two tranches, with the second tranche placement requiring the approval of the shareholders. The placement will also provide additional working capital to fund growth initiatives and to pay for the associated transaction costs.
The company reported a net cash inflow from operating activities of A$852,000 during the period. However, there was an outflow of A$136,000 and A$1,423,000 from investing and financing activities, respectively. The cash and cash equivalents at the end of the quarter stood at A$781,000.
The company requested the continuation of the suspension of trading of its securities by the ASX. It will require additional time to finalise the capital raising to support the potential acquisition recently announced. The suspension will likely cease when the company receives firm commitments for the capital raising and releasing an announcement on the completion of the capital raising.
On the price-performance front, the stock of The GO2 People Limited last traded on 05 April 2019 at $0.090. The stock has generated returns of 5.88%, -10.0% and 13.92% over the past six months, three months and one-month period, respectively (as on 05 April 2019). Its 52-week high price stands at $0.130.