By Pushkala Aripaka
(Reuters) – Britain’s Staffline <STAF.L> swung to a 2018 loss after booking a 15 million pound charge for potential fines for underpaying workers and said on Thursday it would raise capital to cut debt, wiping a quarter off its market value.
This comes a month after Staffline said UK tax authority HMRC and an independent advisor were looking into whether Staffline had historically complied with minimum wage regulations.
Staffline said it booked the charge, which included provisions for “remediation costs” and financial penalties, after completing its own probe launched in January into anonymous allegations related to its invoices, payroll and wage practices. The investigation and review of its financial statements delayed release of its annual results.
“Where issues have been identified, they have been rectified with the benefit of expert independent advice,” Staffline, which also said Chairman John Crabtree was stepping down, added in a statement without giving further details.
The 15.1 million pound charge led to a pretax loss of 9.6 million pounds for 2018.
The company’s shares, which have plummeted 90% so far this year, came under further pressure after Staffline said it planned a 41 million pound capital raising to cut debt and said it does not expect to propose any dividend for 2019 or 2020 after it scrapped a final dividend for 2018. It also said Chairman John Crabtree was stepping down.
In May, it said the HRMC probe had triggered a slowdown in new contracts, and warned that temporary labour demand would be slack throughout this year. Staffline on Thursday said it is now trading in line.
Staffline operates in Britain, Ireland and Poland and helps recruit more than 60,000 staff daily for about 1,500 private sector clients across industries including agriculture, drinks, driving, food processing, logistics and manufacturing.
Underlying pretax profit of 36 million pounds for 2018 was in line with analyst expectations.
(Reporting by Pushkala Aripaka in Bengaluru; Editing by Bernard Orr/ Rashmi Aich and Emelia Sithole-Matarise)