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Staffline Shares Rise on Update

Staffline Shares Rise on Update

Staffline has issued a trading update for its financial year ended 31 December 2008, ahead of its preliminary results for the period which it expects to announce on Tuesday, 3 March 2009.

The Board anticipates that Group sales for the full year will be broadly maintained at last year's level and that profit before tax for the full year will be in line with market expectations.

We have continued to make significant progress, predominantly via our OnSite model, where we successfully opened a net 8 new locations during the second half of the financial year, giving a total of 112 at the period end. The full year performance, however, reflects a combination of reduced demand from existing customers, as a result of deteriorating economic conditions, and the client site closures and the impact of a client receivership referred to at the time of our interim results on 2 September 2008. This has been offset, in part, by our cost reduction programme and the continued success of the OnSite model with clients.

We continue to be highly focused on cost control and cash collection. The Group has a strong financial position, with its term loan not maturing until 2013, and has continued to be cash generative during the year, which is expected to give rise to a 0.2m reduction in net debt at the year end to 6.1m (2007: 6.3m).

Our core area of food processing, which represents over 60% of Group sales, has remained relatively resilient. However, sales volumes have been reduced most notably from existing customers in the automotive, manufacturing and distribution sectors. Despite this subdued demand from existing customers, the full benefit of the new OnSites opened during the year, most of which opened in the second half of 2008, will be felt in 2009 and we continue to be encouraged by the levels of interest in our products and services from new clients.

We, therefore, remain confident in the Group's ability to grow its share of the market due to the efficiencies and cost savings that we are able to offer to clients through our OnSite model, which offers outsourcing benefits over and above those of a traditional recruiter.

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