Staffline stumbles despite positive trading update

Recruitment group Staffline has confirmed full year trading reached earning growth targets thanks to good performances from both divisions.

The AIM-listed company, which was predicted by broker FinnCap to have grown earnings per share 54% in calendar 2015, said the Staffing division secured a record number of contract wins for its Onsite service.

Staffing was also helped by two bolt-on acquisitions completed in the second half of the year, Diamond Recruitment and Milestone.

This combination of record new business performance and acquisition spending has led to a short-term increase to working capital requirements, which has driven net debt to a £64m peak at the year end, but management are confident this will fall "quickly… over coming periods".

Not much detail was given on the PeoplePlus employability, skills and probation services division apart from the fact that it continued "to build on its reputation for quality and performance" and that the integration of April's £34.5m acquisition A4e was on track.

Finncap added that the peak in net debt "suggests that the group has had a very strong finish to the year".

Shares in Staffline slumped 7.4% to 1,300p by 0830 GMT on Wednesday, having accelerated from the 800p level since the A4e purchase.