FINANCIALS: Staffline claims Brexit is affecting temp to perm transfers

Recruitment and training group Staffline claims Brexit uncertainty is affecting demand for temporary workers.

A trading update, issued this morning, said more firms are moving temp staff into permanent roles.

With regard to the impact of this on the business, the group said a proportion of “temp to perm” transfers have occurred in the driving sector, resulting in overall margin dilution. It is also seeing further challenges in the automotive sector and associated supply chain where reductions in demand have been greater than anticipated.

The group added that there has also been a slowdown in agreeing new contracts for the current financial year, which it largely attributes to a delay in publication of its 2018 full-year results due to an investigation into historical compliance with National Minimum Wage Regulations 2015.

However, the group adds that it expects its approach to worker engagement, and digitally enabled candidate attraction, will result in increasing differentiation, and support future growth for its recruitment division.

With regard to its PeoplePlus division, the group says its transition from a Work Programme provider to a skills and training company is almost complete, and it maintains a positive outlook for the division in 2020 under this new operating model.

However, as for 2019, the group expects the division’s performance be affected by continued delays in apprenticeship new starts – partially due to the slow take up of the Apprenticeship Levy scheme nationally, but also as a reflection of current economic uncertainty. The group reports sectors such as retail are delaying apprenticeships, while store restructure programmes are completed. However, the group’s management remains confident that this market is attractive and other elements of PeoplePlus, which are expected to contribute around 85% of PeoplePlus revenue in 2020, continue to develop well.

As the group’s April performance is a key initial indicator to fortunes for the full year, Staffline’s board now expects to deliver adjusted earnings before interest, taxes, depreciation, and amortisation (EBITA) ranging from £23m to £28m for the financial year ending 31 December 2019.

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