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InterQuest revenues down 9% in H1 2016

InterQuest Group plc has announced its unaudited interim results for the six months ended 30th June 2016.

 

The Group’s revenue is down 9% to £73.8m (2015: £81.2m). Net Fee Income ("NFI") is down 10% to £11.0m (2015: £12.1m).

 

The company’s adjusted PBT is down 44% to £1.4m (2015: £2.5m). It has reported a net loss (after goodwill impairment of £3.2m) of £2.4m (2015: £1.6m profit).

 

Its diluted adjusted earnings per share are down 46% to 3.0 pence (2015: 5.5 pence) and its basic loss per share of 6.7 pence (2015: 4.7 pence earnings).

 

InterQuest’s net cash used in operating activities was £2.9m (2015: net cash generated £2.8m). Net debt, consisting of our working capital facility which we use to finance fluctuations in contractor levels, and cash increased during the period to £9.9m (2015: £6.9m).

 

The Group reported interim dividend of 0.5 pence per share to be paid on 16th November 2016 (2015: 1.0 pence).

 

Professional contract recruitment margins were up 90 bps to 17.6% (2015: 16.7%) and contract recruitment margins on all deals (excluding payroll) increased 90 bps to 13.2% (2015: 12.3%).

 

The average permanent fee per placement has increased by 4% to £6.8k (£2015: £6.5k) through developing a focus on senior roles and supporting our clients at the management and leadership level.

 

The Group has grown the net fee income earned across the divisions through its Solutions clients by 42% to £1.6m (2015: £1.1m) through expanding on the previous services offered to our managed service clients and adding a further client taking the total to six.

 

The Group states that it continues to focus on supporting our clients to overcome the staffing challenges presented by the digital economy and has made significant progress in developing innovative solutions for our clients.

 

Chris Eldridge, chief executive officer, commented, "A root and branch reform has been necessary at our ECOM digital recruitment subsidiary which was acquired three years ago, requiring a non-cash impairment charge of £3.2m resulting in a total loss of £2.4m for the Group although before exceptional items the Group reported Adjusted PBT of £1.4m. We have now put the ECOM business on a firmer footing and I am confident it will make a significant contribution to the Group in the future. We are also encouraged by the progress we have made in our Solutions business and can take satisfaction from the fact that our contract recruitment margins and average permanent placement fees have increased which is evidence of the new initiatives we have been putting in place during the period.

 

Gary Ashworth, chairman, said, "The Group's results for the first half of 2016 are below our expectations at the start of the year, particularly in the ECOM brand and the Public Sector division, and were impacted by uncertainty in the UK market leading up to the EU referendum. Following a period of change, the new management team is in place and focused on progressing the Group strategy of expanding our reach in the digital economy and the further development of the Group's Solutions business. We have refocused or removed non profitable elements of the business which we believe will help profits in the medium / long term.

“The recent acquisition of Rees Draper Wright on 3 August 2016 will also extend our geographic reach further into the strong markets of the US and Europe. On behalf of the Board I would like to thank all of my colleagues across the Group for their hard work and commitment through these times of change."

 

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