29 January 2020 – trading update

The specialist staffing group has provided a trading update for the year ended 31 December 2019 ahead of announcing full year results on 18 March.  Results are set to be in line with market expectations.  Net fee income was up 3% from the prior year and 2% in constant currency.  Adjusted profit before tax should be in line with market expectations at £9.3m (2018: £11.4m).  Adjusted profit before tax is stated before exceptional costs incurred during the year relating to matters such as the restructuring of the UK Engineering business and costs associated with the change of CEO in June 2019.  The reduction in adjusted profit before tax reflects the impact of the material declines in the UK Engineering business along with the impact of Brexit in the UK and the slowdown of the German automotive sector.  Adjusted net debt as at 31 December 2019 was £19.1m.  We feel that there is scope for recovery, although there is a high level of risk.  The shares are a SPECULATIVE BUY.