Sports Direct staff agency Transline on brink of administration

The controversial employment agency which staffs Sports Direct's largest warehouse is on the verge of falling into administration after failing to secure new financial investment.

Sky News has learnt that Transline Group filed a notice of its intention to appoint administrators last week.

The move gives the company just days to raise millions of pounds to keep it afloat, or face the threat of collapse.

Deloitte is thought to have been lined up to handle the administration.

Transline which was founded in 1989, has faced mounting criticism from MPs (BSE: MPSLTD.BO - news) over the employment practices it uses on behalf of corporate clients.

In a statement issued to Sky News on Wednesday, a Transline spokesman said:

"The company has suffered as a result of a continued move to tighter margins in the recruitment industry.

"We are close to securing inward investment that will allow us to drive forward with continued growth and infrastructure development, and have lodged the Notice of Intention to protect the business, our employees and our customers as we complete this process.

"The welfare of our staff and our relationships with our customers are of paramount importance, and we are continuing our service and operations as normal."

It emerged last month that Transline had appointed advisers at KPMG to seek new capital for the business.

The loss of a key contract with Amazon is understood to be among the factors behind the downturn in the company's fortunes.

Transline became one of the most notorious names in corporate Britain after it emerged that it operated a brutal regime at Sports Direct's Shirebrook warehouse characterised by zero tolerance and zero hours contracts.

The sporting goods retailer controlled by Mike Ashley, the billionaire tycoon, has been at the centre of controversy over its treatment of staff as well as its lukewarm commitment to corporate governance.

At Shirebrook, where thousands of people are employed, Transline operated a 'six strikes' policy which left workers fearing for their jobs if, for example, they took toilet breaks deemed to have lasted too long.

Mr Ashley recently sanctioned the appointment of a workers' representative to Sports Direct's board in an attempt to improve the company's image.

News of Transline's possible plunge into administration comes just weeks after the agency's finance director Jennifer Hardy gave evidence for a second time to MPs on the Business, Energy and Industrial Strategy select committee.

Transline's co-founders - Paul Beasley and Jon Taylor - each own 42.5% of the company, while another executive, Mark Elms, holds 5%, according to City sources.

The remaining 10% of the equity in the business is held by another director, Colin Beasley.

Transline recently appointed Keith Pacey, a retail veteran, as its chairman.

The latest accounts filed at Companies House, which relate to Qualitycourse Limited - the name under which Transline is registered - show that it made just £919,000 in operating profit on turnover of nearly £230m.

Gross profit margins fell from 11.2% in 2014 to 10.1% the following year, which the company attributed to "difficult trading conditions caused by increased competition in the sector and increasing wage costs".

Transline recently appointed Keith Pacey, a retail veteran, as its chairman.

The latest accounts filed at Companies House, which relate to Qualitycourse Limited - the name under which Transline is registered - show that it made just £919,000 in operating profit on turnover of nearly £230m.

Gross profit margins fell from 11.2% in 2014 to 10.1% the following year, which the company attributed to "difficult trading conditions caused by increased competition in the sector and increasing wage costs".