Staffline significantly narrows interim pre-tax losses

Recruitment firm Staffline said on Tuesday that interim pre-tax losses had been narrowed significantly thanks to a solid performance by all of its three divisions and cost-cutting efforts.

However, while the group remained in the red on a pre-tax basis, Staffline did successfully cut pre-tax losses by 98.3% to £800,000 as first-half gross profits grew 14% to £39.0m and underlying operating profits increased from £100,000 at the midway point of 2020 to £4.6m a year later.

Revenue was up 4.7% at £450.7m, with recruitment gross profits per fee earner 21.4% higher year-on-year at £37,500 and training revenues 30.6% stronger at £30,700.

Gross profit margins expanded from 7.9% to 8.7% and gross profit conversion to operating profit increased to 11.8% from 0.3%.

Finance costs were cut 33.3% to £1.4m, while the firm also strengthened its balance sheet to hold a net cash balance of £20.9m - a marked improvement when compared to Staffline's net debt position of £36.2m a year earlier.

Chief executive Albert Ellis said: "Looking ahead, whilst we expect to see continued sector-specific labour shortages, we believe Staffline is well placed to capitalise on its position as the clear leader in many markets. In addition, our recent refinancing has transformed the company's balance sheet providing a strong platform for growth in the medium term. The group is trading in line with the revised, increased market expectations for the full year 2021."

As of 1005 BST, Staffline shares had slumped 9.18% at 84.28p.