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Staffline problems worse than feared

17/06/2019 · Staffline Group PLC (STAF) 

Shares UK

Recruitment graphic - Staffline (AIM:STAF) shares suspended

After casually brushing past £20m of exceptional costs in a trading statement in January (enough to push the recruiter into a loss making position), Staffline finally hit a wall. Shares were suspended soon after the trading statement and have struggled since re-opening following miserable trading statements and the continual delay of group results. Now management has announced that the problems are even worse than feared. 

Stafflline's (STAF) needs to raise £30m of cash, equivalent to 64% of its current market capitalisation to deal with the cash costs of its historic liabilities which are now higher than management previously anticipated.  

The shares resumed trading in March after management admitted that the costs would dent the company's financial position in January, resulting in a suspension of the shares. The series of calamities follows a trading update for the financial year to December 2018 which proudly ran through the progress made by the recruiter’s two main divisions – PeoplePlus and Recruitment – which have ensured trading in the period is “in line with market expectations”. It is not until line 16 of 19 that management admitted that the group incurred at least £20m of exceptional costs in 2018 – more than the entire net profit made last year.

It’s the first time investors have been made aware of this exceptional charge which relates to a strategic overhaul…

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