Staffline shares tumble after latest profit alert

Staffline has seen shares plummet after its second profit warning in four months as it swung to a first half loss following a slowdown in new contracts.

Shares in the firm tumbled as much as 25% after it said it now expects annual underlying earnings of around £20 million.

It comes after a profit alert in May saw the company trim annual earning expectations to between £23 million and £28 million.

Staffline slumped to a pre-tax loss of £7.7 million for the six months to June 30 against profits of £10.5 million a year earlier.

It bemoaned “unforeseen challenges” in the first half, as well as uncertainty caused by Brexit.

The firm said the pay scandal and delay to its 2018 full-year results had caused a slowdown in new contract work, with the affair having “impacted the perceptions” of the group.

It booked a £15.1 million charge in June for historical non-compliance with the national minimum wage between 2013 and 2018.

According to Staffline, the discrepancy mostly relates to payment for preparation time, which is generally used by workers to change into workwear.

The shortfall relates to a small number of food production facilities, where Staffline said it was complying with its clients’ procedures for clocking in and out.

The company also tapped investors in July with a share placing to raise about £37 million to help cut its debt pile.

Chris Pullen, chief executive of Staffline, 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.”

He added: “Brexit has become the source of unprecedented uncertainty for our end customers and is increasingly weighing on consumer confidence.”

It said the food and retail sectors were feeling the pinch from Brexit woes in particular, which was having a “direct impact” on demand for its services.

Staffline provides flexible blue-collar workers, supplying over 60,000 staff a day to around 1,600 private sector clients.

It has more than 460 sites across the UK, Ireland and Poland.