31st Jan 2020 10:33
(Alliance News) - Staffline Group PLC is to book further charges, it said on Friday, meaning 2019 profit is to be "materially" below previous guidance.
Recruiter and training firm Staffline also said there is no danger of its breaching lending covenants but is considering options to reduce debt.
Shares were 10% lower on Friday morning at a price of 66.45 pence each. In May 2019, they were worth 782.13p.
Nottingham-based Staffline in January last year was forced to book GBP15 million of costs after an anonymous email alleged it had failed to pay staff the UK minimum wage.
This led to a delay in results being published as well as an accounting review, and Staffline also completed a crucial fundraise which secured its future. A profit warning in May based on Brexit certainty led to the share price slump.
"Following the accounting review completed in the first half of the year, the board has continued projects to improve Staffline's internal controls. This has included a rigorous internal review process, with a detailed review of the balance sheet," said Staffline on Friday.
"Although the year-end audit process, with our new auditors, Grant Thornton, is on-going, we have already identified it is appropriate to increase certain provisions and make further write-downs."
Staffline did not specify how large these provisions and write-downs would be but said it will lead adjusted operating profit for 2019 to be well below previous guidance. In December, it guided for a figure between GBP10 and GBP12 million, the top end of which would be a third of 2018's figure.
"Staffline maintains a constructive relationship with its lending banks and consequently the board does not anticipate any covenant issues. The company is also actively considering certain strategic options which may significantly reduce net debt during the first half of 2020," said Staffline.
On the trading front, Staffline said 2020 has started well and expectations for the year are unchanged.
Elsewhere, Staffline confirmed Non-Executive Director Ed Barker has now left the firm. His departure was announced in September.
"On behalf of the board, we thank Ed for his contribution and wish him well for the future. The board is well progressed in its search for a replacement and we look forward to announcing an appointment once complete," said Chair Tracy Lewis.
By George Collard; [email protected]
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