The Tuffnells horror show has taken a new twist, with the news it faces a bill of up to £1.5m for failing to comply with National Minimum Wage legislation.
It came a day after it was revealed the firm had been fined £1.5m plus costs by the HSE after one of its drivers was crushed to death in a rollaway incident.
In a statement today (14 September) Tuffnells parent company Connect Group said: “The group has been in discussion with HMRC regarding an historic underpayment in relation to a misapplication of National Minimum Wage legislation in Tuffnells.
“Although dialogue continues, it is expected that a provision amounting to between £1.0m and £1.5m will be made in the FY2018 accounts in respect of any potential liabilities, of which approximately two thirds will impact operating costs in the year.”
While it added that its Smith News business, which distributes newspapers and magazines, had proved resilient, Tuffnells is still struggling.
It said: “Conditions in the parcel freight market have continued to be challenging, with actions to improve service and efficiency having had limited time to influence financial performance in the period.
"As a consequence, Tuffnells' second half performance is expected to be worse than H1 2018.”
In June Connect Group removed its CFO with immediate effect and said its CEO, Mark Cashmore, after a grim trading update that laid bare that Tuffnells, its until recently star performer, was in trouble.
Jos Opdeweegh was appointed as Cashmore’s successor on 1 September and its leading a review of the group business.
Cashmore has now stepped down from his role but will remain with the business for a short time as part of a handover process with Opdeweegh.
In June it also said it would be closing its failed Pass my Parcel network.
This has moved at pace, the group confirmed today, and added: “Deliveries and collections representing over 95% of volumes ceased during August 2018 and distribution services for the remaining clients will end by January 2019; the contractual arrangements for the provision of IT services to one client are expected to continue throughout FY2019.
“The swifter than anticipated exit from onerous contracts has led to additional operating losses in the period but is expected to have a positive impact on the level of provision required for closure costs in FY2019.”
Connect Group expects its full year trading performance, which will be revealed on 6 November, to be below expectations.
