Group Update and Restoration of Trading

12 March 2019

STAFFLINE GROUP PLC

("Staffline" or "the Group")

Group Update and Restoration of Trading

On the evening of 29 January 2019, allegations were raised by a third party to the Group's auditors in respect of invoicing and payroll practices within the Group's Recruitment division. A review was instigated which included the appointment of independent legal advisers to conduct an investigation, as well as instructing the Group's auditors to extend their scope of work.

The independent legal investigation has delivered its key findings which has assisted the Board in assessing and defining the impact on the Group's profitability and existing forecasts.

The Board remains confident that its policies in relation to these matters are appropriate. However, one allegation concerned the Group's historical compliance with National Minimum Wage Regulations 2015. The Group has been engaging with HMRC in order to quantify underpayments made in the past to workers, over a number of years prior to 2018. Potential underpayments identified by the Group relate to a limited number of food production facilities and the payment for preparation time, which is generally the time spent donning workwear. A provision of £4.4m had been made for estimated additional costs in the Group's accounts for the year ended 31 December 2018. This provision was included as part of the £20m of exceptional costs announced in the Company's trading update on 8 January 2019. However, as a result of legal advice, the Board has revised its estimate and deems it prudent to increase that charge by £3.5m taking total exceptionals in the period to £23.5m. The additional provision referred to above is exceptional and is the only change against market expectations identified by the Board.

Once the audit process is complete, Staffline will release its preliminary results for the year ended 31 December 2018. At that point, the Board expects to report, subject to audit completion, an underlying trading performance for the year ended 31 December 2018 in line with expectations and maintains its expectations for the current financial year. As previously announced, the Group expects to report net debt of c.£63m (unaudited) as at 31 December 2018. Furthermore, the Group can confirm that, of the items behind the working capital increase at 31 December 2018, there has since been an improvement of approximately £10m.

Having now clarified the expected financial impact on the Group, the Board has requested that suspension be lifted and trading in the Company's shares will resume with effect from 7.30am on 12 March 2019.

John Crabtree, Non-executive Chairman of Staffline, commented:

"On behalf of the Board, I am pleased that we are able to take this positive step forward, providing clarity and reassurance to our staff, customers and shareholders.

We have taken this opportunity to review thoroughly the implementation of our policies as we strive to set the highest standards.

We look forward to publishing Staffline's results for the year ended 31 December 2018 in due course and continuing to focus on delivering across our key growth objectives."

 Note for Editors

About Staffline - Recruitment, Training and Support

Enabling the Future of Work™

Staffline is the UK's market leading Recruitment and Training group. It has two divisions:

Recruitment Division

The UK's leading provider of flexible blue-collar workers, supplying over 60,000 staff per day to c. 1,500 private sector clients, across a wide range of industries including agriculture, drinks, driving, food processing, logistics and manufacturing.  It operates from over 400 locations in UK, Eire and Poland.

Its world leading Customer Experience platform provides optimised customer-based staffing management solutions whilst providing market-leading levels of job satisfaction for workers.

 PeoplePlus Division

The leading adult skills and training provider in the UK, delivering apprenticeships, adult education, prison education and skills-based employability programmes across the country.

Education and Training - market leading provider of training courses for private sector Apprenticeships (both Levy and non-Levy) and Government funded Adult Skills programmes.

Employability - top quartile performer, supporting Government programmes providing back-to-work education and support services to the unemployed.

Justice and Community - education and training services for prisoners and ex-offenders, as well as individual support services for carers and people with disabilities, both at home and in the work place.