TIDMITQ
RNS Number : 7685H
InterQuest Group PLC
15 March 2018
15 March 2018
InterQuest Group plc
("InterQuest" or "Group")
Final Results
The InterQuest Group is a specialist technology recruitment
business operating in high growth areas in the 'new digital
economy' and today releases audited results for the year ended 31
December 2017.
Financial highlights
-- Group adjusted operating profit before exceptional items
decreased 25% to GBP2.7m (2016: GBP3.6m). (1)
-- PBT before exceptional items decreased 26% to GBP2.0m (2016:
GBP2.7m).
-- Statutory profit after tax of GBP0.5m profit (2016: GBP1.2m
loss).
-- Net fee income (NFI) increased 3% to GBP22.4m (2016:
GBP21.7m). (2)
-- Revenue decreased 5% to GBP136.0m (2016: GBP143.6m).
-- Basic earnings per share increased to a profit of 1.5 pence
(2016: 3.4 pence loss).
-- Diluted earnings per share 1.5 pence (2016: 3.4 pence
loss).
-- Basic adjusted earnings per share 5.1 pence (2016: 7.2
pence). (3)
-- Diluted adjusted earnings per share 5.1 pence (2016: 7.0
pence). (4)
-- Net cash generated from operating activities GBP2.2m (2016:
GBP2.5m).
-- Net debt at year end improved by GBP1m to GBP4.6m (2016:
GBP5.6m). (5)
Improved margins
-- Gross margin improvement to 16.5% (2016: 15.1%).
Operational highlights
-- Headline results aligned with market expectations following a
year of significant change.
-- Permanent placement fees increased by 25% to GBP10.4m (2016:
GBP8.3m).
-- Successful integration of the RDW acquisition.
-- Improving the Group's international net fee income mix to
20.5% (2016:10.3%).
-- Expanding the Group's New York presence.
1 Adjusted for share-based payment charge, amortisation and
exceptional items.
Group operating profit before exceptional items reconciliation
is shown in the Consolidated Statement of Comprehensive Income.
2 NFI = Net Fee Income = Statutory Gross Profit.
3 Adjusted for share-based payment charge, amortisation and
exceptional items.
4 Adjusted for share-based payment charge, amortisation,
impairments and exceptional items.
5 Net Debt = Cash at bank and in hand less Borrowings.
Gary Ashworth, Chairman of InterQuest, said:
"The acquisition of RDW in 2016 had a positive material impact
on the financial performance in 2017. The legacy businesses
continued to be restructured in order to address underperformance
and have the right management and personnel to focus on the niche
markets that are growing in the face of the challenges brought on
by Brexit.
Our recruitment process outsourcing business, InterQuest
Solutions, added a further customer to the practice during the year
and continues to be a focus for designing and delivering high value
resourcing solutions.
Looking forward, the Group intends to continue to invest in our
high performing brands and in our staff whilst focusing on paying
down debt."
Chris Eldridge, CEO of InterQuest said:
"Following a year of change, the 2017 results for the Group were
slightly behind the management team's expectations. The Group has
invested in new service offerings and developed its international
footprint in order to focus on niche, fast growth technologies and
higher margin opportunities.
During the course of the year the Group leadership team has made
significant progress in refining its value proposition and
simplifying its brand structure in order to meet our client's needs
and offer a total talent management solution.
The Group remains focused on capitalising on the opportunity in
assisting our clients wherever they are in the digital maturity
lifecycle.
On behalf of the board I want express our gratitude to all of my
colleagues for their energy and commitment in 2017 and their
ongoing hard work and dedication."
For further information please contact:
InterQuest Group
plc +44 (0)20 7025 0100
Gary Ashworth Chairman
Chris Eldridge Chief Executive Officer
David Bygrave Chief Financial Officer
Allenby Capital
Limited +44 (0)20 3328 5656
John Depasquale
Asha Chotai
Our markets
The Group is focusing on the markets that are being driven by
digital innovation and working with companies that are investing in
technology to drive their future growth.
The digital market place is both broad and dynamic, with areas
of acute staff shortage across the globe. New technologies and
protocols are being developed and adopted at an increasing rate
and, just as quickly, legacy technology is being scrapped with
companies looking to benefit from increased speed, mobility and
flexibility. The way that consumers are accessing information is
driving investment with B2C companies having to address their
technology estate to ensure that they offer the ease of use
demanded from an increasingly aware and app based set of customers.
All of this is happening against a backdrop of increased awareness
in issues such as security, sustainability, inclusion, mobility and
the ethical use of data, which in turn is driving innovation and
change.
The technologies that these applications, platforms and
operating systems rely on are reasonably well established, however,
the ongoing demand for talented people to design and develop
effective and innovative solutions shows little sign of abating,
and, in some niche areas, is the primary risk to growth.
-- 77% of CEOs in UK stated their top area of investment over
the next three years will be recruiting and investing highly in
people (75% global) - KPMG UK CEO Outlook 2017 Report.
-- The average digital salary in the UK is 44% higher than the
national average - Tech nation report 2017.
-- 80% of company leaders believe digitising their enterprise is
a critical part of innovation, however only 43% state they have a
dedicated team for this - PwC Global Digital IQ Survey.
-- UK tech businesses are growing 2X faster than non-digital
businesses - Tech nation report 2017.
The InterQuest business model
InterQuest Group's human capital management business is an
award-winning specialist staffing, executive search and solutions
provider.
Following a simplification of the Group's brand architecture in
2017 the Group goes to market with four operating brands,
InterQuest (technology talent acquisition), ECOM (digital talent
acquisition), Rees Draper Wright (executive search) and InterQuest
Solutions (workforce optimisation) to help organisations acquire
in-demand talent and develop human capital. InterQuest Group's
approach to human capital acquisition, management and optimisation
enables every type of organisation to respond more effectively to
the challenges and opportunities of the future.
Demand for highly skilled and experienced technology
professionals continues to develop alongside new and innovative
applications. The Group has structured itself to directly map our
services to the in demand technology areas of Digital Change,
Security, Analytics, Risk, Telecommunications, ESM, ERP and have
begun to develop capability in Intelligent Automation.
Alongside this the InterQuest Solutions business focuses on
providing a range of innovative recruitment services and solutions
that respond effectively to the changing demands of the recruitment
outsourcing market. Focusing on clients that face significant
transformation with high demand for niche skills, InterQuest
Solutions have built a robust specialist workforce management
proposition that delivers fast, effective results.
Review of the business in 2017
The Group has implemented a number of changes during 2017 to
ensure that the business is capitalising on growth markets.
However, during this restructuring Group profitability has
decreased.
-- Group adjusted operating profit before exceptional items
decreased 25% to GBP2.7m (2016: GBP3.6m).
-- PBT before exceptional items decreased 26% to GBP2.0m (2016:
GBP2.7m).
-- Statutory profit before tax was GBP0.9m (2016: GBP0.5m
loss).
-- Statutory profit after tax of GBP0.5m (2016: GBP1.2m
loss).
-- Net fee income (NFI) increased 3% to GBP22.4m (2016:
GBP21.7m).
-- Permanent NFI increased 25% to GBP10.4m (2016: GBP8.3m).
-- Contract NFI decreased 11% to GBP12.0m (2016: GBP13.5m).
The Group's financial results were impacted during the year by
the bid from Chisbridge Limited. The defence costs of the bid
amounted to GBP0.45m.
The revenues from permanent placements increased in the year by
25% to GBP10.4m. However, the primary cause of the Group's
reduction in revenue during 2017 was a continued decline in
contractor numbers. The revenue resulting from contract recruitment
decreased by 7% during the year with the most significant impact
being felt in ECOM, and certain practices reported in Enterprise
(Telecoms, Enterprise Service Management and IT Sales). The
reduction in revenues led to an 11% decrease in contract Net Fee
Income as margins came under pressure.
The Group's permanent revenue increased by 25%, which was
positively affected by the acquisition of RDW in August 2016 and
therefore trading for the full year in 2017.
The leadership team took further action to challenge and
restructure the cost base which resulted in one off redundancy and
loss of office costs of GBP0.4m.
ECOM
On 26 November 2013, the Group acquired 100% of the share
capital of ECOM Recruitment Limited ("ECOM"), the UK's leading
digital technology recruitment business for a total consideration
of up to GBP7.04m.
At 30 June 2016 the Board conducted a review of the carrying
value of the intangibles and goodwill associated with the business
of ECOM and as a result of that review the goodwill was impaired by
GBP3,152k in the 2016 financial year. The carrying value of the
goodwill at 31 December 2017 is GBP1,711k. There has been no change
to the carrying value of goodwill in 2017.
The change in activity has resulted in a decline in contractor
levels and a 9% decline in revenues but an increase in Net Fee
Income of 3% in 2017.
Public Sector
The Group's Public Sector practice was not affected in any
significant way by the uncertainty over the changes in IR35
regulations implemented by the UK government in April 2017. The
number of contractors reduced during the year but the margins
achieved improved in 2017 which, added to an increase in permanent
placements, led to a reduction in revenue but an increase in Net
Fee Income of 23%.
The business continues to grow its customer base and is
delivering new products into the public sector market, including
supplying niche consulting solutions.
Enterprise
The enterprise markets facing the financial services industry
continued to suffer a material reduction in contractor numbers
during 2017 which negatively impacted its full year results and a
reduction in Net Fee Income of 5%. The effect of this was partly
mitigated by the Solutions practice, (the Group's RPO and Managed
Service business) where Net Fee Income increased by 5%. This was
driven by increased demand from Solutions' six existing customers
and the winning of a further new customer engagement in 2017.
Niche
The Group's NFI from niche practices decreased by 15% in 2017.
The niche practices include Analytics, Information Security,
Technology and Networks. The over reliance on long standing clients
with attritional margins and the slower than anticipated
development of new opportunities led to the decrease. A change in
senior leadership has occurred during the year and they are focused
on increasing productivity in the various practices.
RDW
The Group acquired RDW in August 2016 and the acquisition has
materially contributed to the Group's financial outcome in 2017.
RDW focus their attention at senior management and board positions
both in the consulting and the wider private sector. The salary
levels that are achieved and the resulting fees significantly
exceed the average placement value of the broader Group.
Net Fee Income in RDW grew to GBP3.1m from GBP0.9m in 2016. RDW
has benefitted from offering executive search services to existing
InterQuest customers but has also grown its own customer base,
particularly in the US market.
The digital transformation cycle
One of the Group's primary differentiators is achieved through
focusing on specialist skills. We differentiate ourselves from the
competition by recruiting effectively across each of the core
stages of digital transformation, providing a cohesive solution
across all stages of the process:
-- Creative design & development - served by ECOM among
other IQ brands
-- IT & infrastructure - served by niche brands such as IQ
Tech and Enterprise
-- Connectivity & mobility - Served by niche IQ brands such
as IQ Networks
-- Information & cyber security - served by niche IQ brands
such as IQ InfoSec
-- Analytics - served by niche IQ brands such as IQ
Analytics
-- Change & transformation - served by niche brand IQ
Change
-- InterQuest is therefore able to support our clients'
recruitment demands as they progress with their digital strategy
ensuring a continuity of service that is highly valued.
-- Being able to offer support across all the stages of the
digital transformation cycle enables the Group to benefit from
cross selling opportunities and creates the opportunity to present
fully managed recruitment process, outsourcing and managed service
programmes.
-- The ability to offer a one off solution to a specific
client's mandate, as well as being able to provide a market
leading, large scale RPO or managed services programme domestically
and in the US, marks InterQuest Group apart from its
competitors.
Operational Overview
Internationalisation
The Group expanded its office in NY investing in the existing
RDW team and establishing both an Analytics and ECOM practice. The
teams work in similar markets to their UK counterparts focusing
primarily on the NY state geography. Demand for digital and
consulting skills in NY is currently strong, being driven by a mix
of start- ups and digitally mature companies who are seeking
experienced talent to gain a competitive advantage. As a result of
high demand and low supply both the salaries candidates can command
and the margin at which the Group works are significantly higher
than the UK equivalent, making it an attractive geography for
further investment.
Consolidation of London offices
During the second half of 2017 the Group relocated its four
London based offices in to one new headquarters near Cannon Street.
This move creates one unified head office for the Group with
several practices working in one location for the first time. The
opportunity for cross selling will be significantly enhanced as
well as creating a client suite for the Group to host events and
exhibitions.
Simplification of brand architecture
The Group operating structure was reviewed during the year with
the result being a simplification of the Group's 16 brands in to 4.
The revised brand architecture sees the Group going to market
under:
-- InterQuest
-- ECOM
-- Rees Draper Wright
-- InterQuest Solutions
The Group operations board has been changed accordingly, leading
to a more streamlined management team.
Contractor numbers
The Group's contractor numbers were negatively affected by a
reduction in ECOM and certain Enterprise accounts. The drop off in
ECOM was as a result of increased use of online portals and a
growing number of in-house recruitment teams being established in
agencies. The focus has changed within the team with an increased
number of consultants working with end customers. Within the
Enterprise business, several of the Groups contractors were working
with large client organisations via competitor managed service
programmes at low margins. As these agreements have come up for
review and renewal the Group have chosen not to work with several
clients on unfavourable terms resulting in a temporary reduction in
overall demand.
InterQuest Solutions
The Group's workforce optimisation brand continues to manage
several of the Group's larger customer recruitment needs. Over the
course of 2017 a number of new products were developed and launched
to meet the increasingly sophisticated demands of companies' total
talent management requirements. This has led to the creation of a
new programme management office improving the level of service and
support that the Group can offer its current and prospective
clients.
Key performance indicators
The directors use a range of performance indicators to measure
the delivery of the Group's strategic objectives. The most
important of these are considered key performance indicators
("KPI's") and their targets are determined annually. The KPI's are
set out below:
31 December 31 December
2017 2016
GBP'000 GBP'000
Financial KPIs:
Revenue 135,972 143,610
Net fee income 22,437 21,747
Gross profit percentage 16.5% 15.1%
Group operating profit before exceptional
items 2,194 3,037
Group statutory profit/(loss) 502 (1,244)
Net cash inflow from operating activities 2,200 2,506
Net debt 4,550 5,533
Non-financial KPIs:
Recruitment staff (average number
during the year) 237 249
Administration staff (average number
during the year) 60 55
Key performance indicators (continued)
The primary cause of the Group's reduction in revenue during
2017 was a reduction in contractor numbers in ECOM and certain
practices within Enterprise. The revenue resulting from contract
recruitment decreased by 7% during the year but increased by 25%
regarding permanent fee placements. This resulted in an overall
reduction in revenues of 5% but an increase in Net Fee Income of 3%
and a Gross Profit percentage increase from 15.1% to 16.5%
overall.
Net debt was reduced through a careful management of credit
terms with customers during the course of 2017. Net finance costs
were GBP0.24m (2016: GBP0.31m) reflecting the lower levels of debt
required during the year by the Group and improved terms from the
new banking arrangments.
Tax on profits was GBP0.48m before exceptional items (2016:
GBP0.56m); a detailed analysis is included at note 3.
Net finance costs were GBP0.24m (2016: GBP0.31m) reflecting the
lower levels of debt required during the year by the Group.
Exceptional items
The following table summarises the exceptional items in the 2017
financial statements:-
2017 2016
GBP'000 GBP'000
Acquisition costs - (28)
Costs incurred in the defence
of the bid by Chisbridge Limited (446) -
Restructuring costs (175) -
Onerous lease provision (208) -
Redundancy and loss of office
costs (376) (284)
Tax impact on exceptional items 235 57
Impairment - (3,152)
(970) (3,407)
Earnings per share and dividend
Basic earnings per share was 1.5 pence (2016 loss: 3.4 pence per
share). When exceptional items, the IFRS 2 share-based payment
charge, amortisation of intangibles, impairment and the tax in
respect of these items are removed, the basic adjusted earnings per
share was 5.1 pence representing a decrease of 30% from 7.2 pence
in 2016. See note 5 for details of the calculation. Due to the
reduction in operating profits and the need for liquidity in order
to fund further growth in the Group, the Board are not declaring a
dividend. The total dividend for the year was nil pence per share
(2016: 1.5 pence per share)
Balance sheet, cash flow and financing
The Group's net assets increased by GBP0.2m to GBP22.3m at 31
December 2017 (2016: GBP22.1m). Continued delivery of operating
profit before exceptional items and tight control of working
capital delivered GBP2.2m of operating cash flow (2016: GBP2.5m).
The Group paid GBP0.24m (2016: GBP0.31m) of net interest during the
year. Net capital expenditure was GBP0.60m (2016: GBP0.28m) and
dividends of GBP0.4m (2016: GBP0.9m) were paid.
Net debt decreased from GBP5.6m at the start of the year to
GBP4.6m at the end of 2017 (2016: decreased from GBP6.0m at the
start of the year to GBP5.6m at the end of the year). The Group
continues to finance its activities through the utilisation of a
trade receivables finance facility. The facility of GBP24m has a
three month rolling notice period. The Group cannot utilise
invoices if they remain unpaid 120 days from the end of the month
in which they were issued.
Consolidated income statement
For the year ended 31 December 2017
Notes Before Exceptional 2017 Before Exceptional 2016
Exceptional items Exceptional items
Items Items
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Group
revenue 135,972 - 135,972 143,610 - 143,610
Cost of
sales (113,535) - (113,535) (121,863) - (121,863)
Gross
profit 22,437 - 22,437 21,747 - 21,747
Amortisation (403) - (403) (345) - (345)
Impairments - - - - (3,152) (3,152)
Share
based
payments (119) - (119) (212) - (212)
Other
administrative
expenses (19,721) (1,205) (20,926) (18,153) (284) (18,437)
------------ ------------ ---------- ------------- ------------ ------------
Total
administrative
expenses (20,243) (1,205) (21,448) (18,710) (3,436) (22,146)
------------ ------------ ---------- ------------- ------------ ------------
Group
operating
profit/(loss) 2,194 (1,205) 989 3,037 (3,436) (399)
Acquisition
costs - - - - (28) (28)
Finance
costs (241) - (241) (312) - (312)
------------ ------------ ---------- ------------- ------------ ------------
Profit/(loss)
before
taxation 1,953 (1,205) 748 2,725 (3,464) (739)
Income
tax (expense)/credit (481) 235 (246) (562) 57 (505)
Profit/(loss)
for the
year 1,472 (970) 502 2,163 (3,407) (1,244)
============ ============ ========== ============= ============ ============
Statement of comprehensive income
For the year ended 31 December 2017
Before Before
Exceptional Exceptional Exceptional Exceptional
Items Items 2017 Items Items 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Profit/(loss)
and total
comprehensive
income
attributable
to:
Owners of
the parent 1,533 (970) 563 2,110 (3,407) (1,297)
Non-controlling
interests (61) - (61) 53 - 53
---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ----------------------
Total
comprehensive
income /
(expense)
for the year 1,472 (970) 502 2,163 (3,407) (1,244)
====================== ====================== ====================== ====================== ====================== ======================
Profit per share from both total and continuing operations:
2017 2016
Notes Pence Pence
Basic earnings/(loss)
per share 5 1.5 (3.4)
Diluted earnings/(loss)
per share 5 1.5 (3.4)
Consolidated balance sheet
As at 31 December 2017
2017 2016
GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 745 480
Goodwill 16,548 16,548
Intangible assets 544 947
Total non-current assets 17,837 17,975
Current assets
Trade and other receivables 23,261 25,978
Investments 62 48
Cash at bank and in hand 2,260 1,541
Total current assets 25,583 27,567
Total assets 43,420 45,542
Liabilities
Current liabilities
Trade and other payables (13,288) (14,828)
Borrowings (6,810) (7,094)
Current tax payable (881) (1,218)
Total current liabilities (20,979) (23,140)
Non-current liabilities
Deferred income tax liability (97) (296)
Total non-current liabilities (97) (296)
Total liabilities (21,076) (23,436)
Net assets 22,344 22,106
Equity
Share capital 385 374
Share premium account 11,338 11,338
Capital redemption reserve 12 12
Retained earnings 11,252 8,549
Share-based payment reserve 14 2,411
Share buyback reserve (666) (666)
Total issued share capital and
reserves attributable to the owners
of the
parent 22,335 22,018
Non-controlling interests 9 88
Total equity 22,344 22,106
Consolidated statement of changes in equity
For the year ended 31 December 2017
Share Share Capital Retained Share-based Share Non-controlling Total
capital premium redemption earnings payment buyback interest equity
account reserve reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
January 2016 359 10,632 12 10,829 2,199 (666) 50 23,415
-------- -------- --------------- --------- ------------ -------- ---------------- --------
Comprehensive
income
Loss for the
year - - - (1,297) - - 53 (1,244)
Total comprehensive
income
for the year - - - (1,297) - - 53 (1,244)
Transactions
with owners
Movement in
share-based
payment reserve - - - - 212 - - 212
Issue of share
capital 15 706 - - - - - 721
Deferred tax
credit - - - (103) - - - (103)
Dividends - - - (895) - - - (895)
Minority interest
acquired - - - 15 - - (15) -
-------- -------- --------------- --------- ------------ -------- ---------------- --------
Total contributions
by and 15 706 - (983) 212 - (15) (65)
distributions
to owners
Balance at 31
December 2016 374 11,338 12 8,549 2,411 (666) 88 22,106
Balance at 1
January 2017 374 11,338 12 8,549 2,411 (666) 88 22,106
Comprehensive
income
Profit for the
year - - - 563 - - (61) 502
Total comprehensive
income
for the year - - - 563 - - (61) 502
Transactions
with owners
Charged to
share-based
payment reserve
in year 119 119
Movement in
share-based
payment reserve - - - 2,516 (2,516) - - -
Issue of share
capital 11 - - - - - - 11
Dividends - - - (376) - - (18) (394)
Total contributions
by and
distributions
to owners 11 - - 2,140 (2,397) - (79) (264)
-------- -------- --------------- --------- ------------ -------- ---------------- --------
Balance at 31
December 2017 385 11,338 12 11,252 14 (666) 9 22,344
======== ======== =============== ========= ============ ======== ================ ========
Consolidated cash flow statement
For the year ended 31 December 2017
2017 2016
GBP'000 GBP'000
Cash flows from operating activities
Profit/(loss) after taxation 502 (1,244)
Adjustments for:
Depreciation 330 411
Impairment of intangible assets - 3,152
Share-based payment charge 119 212
Finance costs 241 312
Amortisation 403 345
Income tax expense 445 413
Decrease in trade and other receivables 1,984 1,438
Decrease in trade and other payables (1,540) (1,870)
Cash generated from operations 2,484 3,169
Income taxes paid (284) (663)
Net cash from operating activities 2,200 2,506
Cash flows from investing activities
Purchase of property, plant and
equipment (596) (279)
Acquisition of subsidiaries, net
of cash acquired - (1,503)
Net cash used in investing activities (596) (1,782)
Cash flows from financing activities
Proceeds from issue of share capital 11 721
Net decrease in discounting facility (284) (85)
Interest paid (241) (312)
Dividends paid (376) (923)
Net cash used in financing activities (890) (599)
Net increase in cash, cash equivalents
and overdrafts 714 125
Effects of currency translation
on cash and cash equivalents 5 235
Cash, cash equivalents and overdrafts
at beginning of year 1,541 1,181
Cash and cash equivalents at end
of year 2,260 1,541
Notes to the consolidated financial statements for the year
ended 31 December 2017
Basis of preparation of the preliminary announcement
The financial information in this statement does not constitute
the Company's statutory accounts for the years ended 31 December
2017 or 2016 but is derived from those accounts. Statutory accounts
for 2016 have been delivered to the Registrar of Companies, and
those for 2017 will be delivered in due course. The auditor has
reported on those accounts; their reports were (i) unqualified,
(ii) did not include a reference to any matters to which the
auditors drew attention by way of emphasis without qualifying their
report and (iii) did not contain a statement under section 498(2)
or (3) of the Companies Act 2006.
This preliminary announcement was approved by the Board of
Directors on 13 March 2018.
InterQuest Group Plc (the "Company") is incorporated in the UK.
The information within this document has been prepared based on the
Company's consolidated financial statements which are prepared in
accordance with International Financial Reporting Standards as
adopted by the EU (adopted IFRS) and consistent with the accounting
policies as set out in the previous consolidated financial
statements.
The Group's financial statements have been prepared on the
historical cost basis. The preparation of financial statements
requires the application of estimates and judgements that affect
the reported amounts of assets and liabilities, revenues and costs
and related disclosures at the balance sheet date. The accounting
policies have been consistently applied across Group companies to
all periods presented.
The Group and Company financial statements have been prepared on
the going concern basis, as the directors are satisfied that the
Group and Company have adequate resources to continue to operate
for at least a period of 12 months from the date of approval of the
financial statements. An explanation of the directors' assessment
of using the going concern basis is given in the Directors' report
in the Annual Report and Accounts 2017 which will be made available
to shareholders in 15 March 2018.
1. Revenue and segmental reporting
There were GBP2,217k of revenues earned from outside of the UK,
mainly in the US but no material non-current assets held outside
the UK. For management reporting purposes the Group is organised
into the following six divisions:
1. Niche - comprising specialist recruitment practices focused
on Analytics, Business Intelligence, Cyber Security, Internet of
Things, Telecommunications, Risk and Compliance which provide
access to talent in some of the most critical areas of demand in
the modern economy;
2. ECOM Recruitment Limited - our division operating in the
digital market space which the Group acquired in November 2013;
3. Enterprise - comprising our Recruitment Process Outsourcing
services together with legacy client relationships with significant
customers in the financial services and retail sectors;
4. Public Sector - focused on the public sector and not for profit markets;
5. RDW - an executive search recruiter acquired in August 2016
with offices in the UK and the USA.
6. Other - including central costs and the centralised sales function
All business units provide contract and permanent recruitment
services and have similar economic characteristics and are
considered to meet the aggregation criteria of IFRS.
Information regarding segment assets is not provided to the
Group's chief operating decision maker. This is because the Group
considers net fee income (gross profit) and profitability for the
purpose of making decisions about allocation of resources.
2017
Division Niche ECOM Enterprise Public RDW Other Total
Sector
Brand InterQuest ECOM InterQuest/ InterQuest RDW Total
Solutions
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 39,988 15,449 53,997 22,471 3,237 830 135,972
Gross Profit 7,565 4,481 4,227 2,548 2,939 677 22,437
Adjusted EBITA 2,280 491 2,293 1,531 1,084 (4,968) 2,711
Exceptional items (1,205)
Share based payment
charge (119)
Amortisation of
intangible assets (403)
Effects of currency
translation 5
--------
Statutory operating
profit 989
Finance costs (241)
Profit before tax 748
========
2016
Division Niche ECOM Enterprise Public RDW Other Total
Sector (acquisition)
Brand InterQuest ECOM InterQuest/ InterQuest RDW Total
Solutions
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 46,369 17,006 52,311 23,338 869 3,717 143,610
Gross Profit 8,855 4,353 4,470 2,067 866 1,136 21,747
Adjusted EBITA 2,834 549 1,667 1,103 321 (3,115) 3,359
Exceptional
items (284)
Share based
payment charge (212)
Impairments (3,152)
Amortisation
of intangible
assets (345)
Effects of
currency translation 235
--------
Statutory operating
loss (399)
Acquisition
costs (28)
Finance costs (312)
Loss before
tax (739)
========
Revenue Gross profit
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
Permanent 10,409 8,263 10,409 8,263
Contract 125,563 135,347 12,028 13,484
135,972 143,610 22,437 21,747
The Group does not report items below EBITA by segment in its
internal management reporting.
There are no external customers who individually represent more
than 10% of the entity's external revenues during the year (2016:
no client represented more than 10%).
2. Exceptional items
The below represent exceptional items in the 2017 financial
statements:
2017 2016
GBP'000 GBP'000
Acquisition costs - (28)
Costs incurred in the defence
of the bid by Chisbridge Limited (446) -
Restructuring costs (175) -
Onerous lease provision (208) -
Redundancy and loss of office
costs (376) (284)
Tax impact of exceptional items 235 57
Impairment - (3,152)
(970) (3,407)
3. Income tax expense
Before
exceptional Exceptional
items items 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
Current tax
Corporation tax on chargeable
profits for the year 569 (235) 334 503
Adjustments in respect of
prior periods 111 - 111 (90)
Total current tax 680 (235) 445 413
Deferred tax
Origination and reversal
of temporary difference (239) - (239) 115
Adjustment in respect of
prior periods 40 - 40 (23)
Total income tax expense 481 (235) 246 505
2017 2016
Income tax expense recognised GBP'000 GBP'000
outside of the income statement
Current tax charge on share-based
payments - 62
Deferred tax credit on share-based
payments - (12)
Total tax recognised outside
of income statement - 50
2017 2016
GBP'000 GBP'000
Profit/(loss) before taxation 502 (739)
======== ========
Profit/(loss) before taxation multiplied
by standard rate of corporation
tax in the UK of 19.25% (2016:
20%) 141 (105)
Effects of:
Depreciation of assets not qualifying
for tax relief 23 34
Net effect of tax losses in the (13) -
year
Expenses not deductible for tax
purposes 26 67
Temporary difference with respect
to share-based (63) 6
payment charge
Under / (over) provisions in prior
years 151 (113)
Impairment of goodwill (112) 630
Effect of change in tax rates 96 -
Other tax adjustment (3) (14)
Total income tax expense 246 505
======== ========
4. Cash and cash equivalents
2017 2017
GBP'000 GBP'000
Cash and cash equivalents 2,260 1,541
The carrying value of cash and cash equivalents is considered to
be a reasonable approximation of fair value.
5. Earnings per share
The calculation of the basic earnings per share is based on the
earnings attributable to ordinary shareholders divided by the
weighted average number of shares in issue during the year.
The calculation of diluted earnings per share is based on the
basic earnings per share, adjusted to allow for the issue of shares
and the post-tax effect of dividends and/or interest, on the
assumed conversion of all dilutive options and other dilutive
potential ordinary shares.
Reconciliations of the earnings and weighted average number of
shares used in the calculations are set out below.
2017 2016
GBP'000 GBP'000
Profit/(loss) for the year attributable
to the owners of the Company 563 (1,297)
Adjustments to basic earnings
Intangible assets amortisation 403 345
Deferred tax credit on intangible
asset amortisation (81) (69)
Share-based payment charge 119 212
Tax credit on share-based payment
charge (23) (42)
Impairment of goodwill - 3,152
Deferred tax credit on impairment
of goodwill - (630)
Fees related to acquisition of
RDW - 28
Exceptional items 1,205 282
Tax impact of exceptional items (235) (57)
Adjusted earnings attributable
to the owners of the Company 1,951 1,924
2017 2016
Weighted average number of ordinary
shares for the purposes of
basic earnings per share 38,052,399 36,401,381
Weighted average number of share
options in issue 593,432 980,155
Weighted average number of ordinary
shares for the purposes of
diluted earnings per share 38,645,831 37,381,536
2017 2016
Pence Pence
Earnings / (loss) per share
Basic earnings per share 1.5 (3.4)
Diluted earnings per share 1.5 (3.4)
Adjusted earnings per share
Basic earnings per share 5.1 7.2
Diluted earnings per share 5.1 7.0
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SFIFULFASEFD
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March 15, 2018 03:00 ET (07:00 GMT)
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