Staffline tumbles after cutting FY profit forecast

(Sharecast News) - Staffline shares tumbled on Wednesday as the AIM-listed recruiter downgraded its full-year profit forecast and announced the departure of chief financial officer Mike Watts.
The company said trading in the recruitment division and PeoplePlus was below the board's expectations in the fourth quarter.

In recruitment, it saw lower-than-expected demand from end customers. Customer demand was down around 16% from the previous year, reflecting "high levels" of consumer uncertainty across the UK. While trading in December has improved, it's also expected to miss the board's expectations.

The group said its PeoplePlus business also missed expectations, "due to the impact of the general election purdah on short-term procurement opportunities".

As a result, it now expects to report adjusted operating profit for the year to 31 December of about £10m to £12m. In its interim results in September, Staffline had projected operating profit of approximately £20m.

The group also said that following the accounting review in the first half of the year, it now reckons it overstated 2018 profit by about £4 million. The errors primarily related to costs which were not correctly booked.

In addition, the company announced that chief financial officer Mike Watts was stepping down with immediate effect after tendering his resignation. Daniel Quint, who was most recently CFO at Young & Co's Brewery, has been appointed as interim CFO with immediate effect.

Chief executive Chris Pullen said: "It has been a most challenging year for Staffline. Despite this we have developed two robust market leading businesses which are well set as platforms for future growth. We remain optimistic about future potential of the group with the challenges of 2019 behind us."

At 0910 GMT, the shares were down 29% at 74.97p.