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Staffline swings to loss in H1 amid 'challenging' conditions
17th Sep 2019 08:54
(Sharecast News) - Recruiter Staffline said on Tuesday that it swung to a profit in the first half as it warned on full-year profits amid "challenging" trading conditions, with Brexit uncertainty weighing on consumer confidence.
In the six months to the end of June, the company swung to a pre-tax loss of £7.7m from a profit of £10.5m in the first half of 2018 even as revenue rose 11.1% to £534.6m. As previously flagged, Staffline pointed to a slowdown in new contract momentum, which it largely attributed to the impact of the delay in publication of the 2018 annual results.
Staffline shares were suspended earlier this year after its auditor, PWC, delayed the full-year results to investigate allegations that the company had underpaid workers.
The group said it would not be paying a dividend, having suffered a number of trading headwinds in the first half of 2019 and recognised "significant" one-off exceptional costs last year.
Staffline said trading remains "challenging" and it now expects to deliver full-year adjusted operating profit of around £20m. It said weak consumer confidence has weighed on its end customers, particularly in food and retail, and this has had a direct impact on demand for its services.
Chief executive officer Chris Pullen said: "The first six months of 2019 presented a number of unforeseen challenges for Staffline. The delay in the publication of the 2018 final results created uncertainty, which has been compounded by a challenging trading environment. As a consequence of this and the transformation of PeoplePlus, this year's result will be more heavily weighted than usual towards the final quarter.
"Brexit has become the source of unprecedented uncertainty for our end customers and is increasingly weighing on consumer confidence. The performance of our end customers in food and retail has a direct impact on the demand for our services. Despite this, we remain convinced that the challenges the group is currently facing are short-term and that the business is sufficiently differentiated in its service proposition to return to future growth."
In the six months to the end of June, the company swung to a pre-tax loss of £7.7m from a profit of £10.5m in the first half of 2018 even as revenue rose 11.1% to £534.6m. As previously flagged, Staffline pointed to a slowdown in new contract momentum, which it largely attributed to the impact of the delay in publication of the 2018 annual results.
Staffline shares were suspended earlier this year after its auditor, PWC, delayed the full-year results to investigate allegations that the company had underpaid workers.
The group said it would not be paying a dividend, having suffered a number of trading headwinds in the first half of 2019 and recognised "significant" one-off exceptional costs last year.
Staffline said trading remains "challenging" and it now expects to deliver full-year adjusted operating profit of around £20m. It said weak consumer confidence has weighed on its end customers, particularly in food and retail, and this has had a direct impact on demand for its services.
Chief executive officer Chris Pullen said: "The first six months of 2019 presented a number of unforeseen challenges for Staffline. The delay in the publication of the 2018 final results created uncertainty, which has been compounded by a challenging trading environment. As a consequence of this and the transformation of PeoplePlus, this year's result will be more heavily weighted than usual towards the final quarter.
"Brexit has become the source of unprecedented uncertainty for our end customers and is increasingly weighing on consumer confidence. The performance of our end customers in food and retail has a direct impact on the demand for our services. Despite this, we remain convinced that the challenges the group is currently facing are short-term and that the business is sufficiently differentiated in its service proposition to return to future growth."