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LONDON (Alliance News) - Staffline Group PLC lost more than half of its market value Friday morning after the recruitment and training company said Brexit uncertainty has hurt demand and margins.
Staffline shares were down 53% Friday morning to 391.80 pence each and has fallen 67 % since the start of 2019.
Staffline now expects to deliver adjusted earnings before interest and taxes in the range of GBP23 million to GBP28 million for 2019. The firm has not published its full year report for 2018 yet. For 2017, the company recorded adjusted operating profit of GBP39.1 million.
The company said that ongoing Brexit uncertainty is impacting the UK labour market and has led to a number of customers transferring a significant volume of their temporary workforce into permanent employment. Staffline expects it will continue to impact temporary worker demand throughout the current year.
"A proportion of these 'temp to perm' transfers have occurred in the higher margin driving sector, resulting in an overall margin dilution. In addition, we are seeing further challenges in the higher margin automotive sector and associated supply chain where reductions in demand have been greater than expected", the company said.
Staffline also said there has seen a slowdown in new contract momentum in the current financial year, which the company largely attributes to the impact of the delay in publication of the 2018 full year results.
The company decided to delay release of its 2018 results following concerns regarding invoicing and payroll practices in its Recruitment division.
In April, Staffline said it has made progress on the extended audit of its 2018 statements and was working on "key outstanding matter" of historical compliance with the UK national minimum wage regulations. The company added that it would release its 2018 results once the work was complete.
