(Reuters) - Recruitment company Staffline Group Plc (STAF.L) reported a loss for the first half on Tuesday and said Brexit had become a source of unprecedented uncertainty for its customers, increasingly weighing on consumer confidence.
Staffline, which booked a charge in June for potential fines for underpaying workers, said trading remains challenging, and it now expects to deliver full-year adjusted operating profit of about 20 million pounds, roughly half of its underlying operating profit for 2018.
Staffline’s shares traded 15.6% lower at 135 pence on Tuesday.The British recruiter in June reported a 2018 loss after it booked a charge for potential fines for underpaying workers and said it would raise capital to cut debt, wiping a quarter off its market value.
Staffline is also facing regulatory challenges with UK’s tax authority HMRC, while an independent adviser is looking into whether historically the recruiter had complied with minimum wage regulations.
Brexit uncertainty has led to a number of customers transferring a significant volume of their temporary workforce into permanent employment to mitigate the risk of a skills shortage, the company said, adding the trend would continue through the year.
Staffline reported a loss before tax of 7.7 million pounds for the six months ended June 30, from a pretax profit of 10.5 million pounds a year earlier. It reported a loss for both its recruitment and adult skills and training businesses.
Liberum analysts said the results were worse than expected, putting their rating on the stock under review.
Staffline helps recruit more than 15,000 staff daily for about 1,500 clients across industries including agriculture, drinks, driving, food processing, logistics and manufacturing.
Reporting by Noor Zainab Hussain in Bengaluru, Editing by Sherry Jacob-Phillips