World Careers Network H1 results show drop in revenue
A decrease in turnover of 16% to £3.50 million (£4.18 million in the first half of 2014), was accompanied by a small increase in overheads of 1% to £3.22 million (£3.18 million in the first half of 2014). As a result profits before tax decreased to £0.3 million (£1.02 million in the first half of 2014).
The decline in sales has combined with continued investment in key areas of the business to impact significantly on profits in the first half of the company's current year.
World Careers Network says the fall in sales is due in part to reductions and delays in the sales of online tests with the remainder due to a significant decline in the value of a major contract that has been somewhat offset by new wins and growth in other areas albeit at a slower rate and lower level than anticipated.
Core overheads have increased by around £400,000 as the company invested in the resources required to generate overseas sales, enhance its product development and delivery and manage the business.
However, these increased costs were offset by a reduction in rechargeable costs (mainly in online tests bought-in from third parties) and as a result total costs in the half year remained at a similar level to the first half of 2013/14.
The company added, "The decrease in profits is thus largely attributable to a reduction in value on the renewal of a major contract (without the anticipated compensating growth elsewhere), the ongoing investment in resources to develop the business and, to a lesser extent, the margin we earn from reselling third party tests.
"We expect to see some recovery in sales and profitability in the second half of the year, as major new contracts come fully online and delays in the sales of online tests, albeit at a lower level, are made good.
"However we do expect profits to continue at significantly lower levels than last year as we make further substantial investments in the business particularly in the areas of sales, marketing, product development, delivery and customer success, all of which are aimed at generating future long term growth."