Goodwill impairment charge sinks Interquest´s bottom line

Interquest group, recorded a loss for the period ending 30 June 2016, as the specialist recruitmenter booked a charge for its ECOM subsidiary and as a result of the uncertainty in the run-up to the referendum vote.

Chairman Gary Ashworth said: "The Group's results for the first half of 2016 are below our expectations at the start of the year, and were impacted by uncertainty in the UK market leading up to the EU referendum.”

The group’s revenue fell 9% to £73.8m and adjusted profit before tax fell 44% to £1.4m.

The group recorded a net loss of £2.4m compared to £1.6m profit in the previous period after booking goodwill impairment costs of £3.2m linked to its ECOM digital recruitement subsidiary, which it purchased three years before.

Chief Executive Chris Eldridge is however confident the company will make a recovery from this. "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” said Eldridge.

Net cash used in operating activities was £2.9m while net debt increased to £9.9m compared to £6.9m in 2015.

On the other hand, their contract margins looked positive with both professional and contract recruitment margins going up 90 basis points to 17.6% and 13.2%, respectively.

The firm also managed to increase its average permanent fee per placement by 4% to £6,800 by focusing on senior roles and supporting clients at the management and leadership level.

Despite that, net Fee Income (NFI) fell 10% to £11m.

However, the group said it has grown the NFI earned across divisions through its Solutions clients by 42% to £1.6m after expanding on the previous services offered to its managed service clients and adding a further client.

Looking ahead, Ashworth said the firm has refocused or removed non profitable elements of the business to help stimulate profits in the medium to long term.

He also said that the firm’s recent acquisition of Rees Draper Wright on 3 August 2016 would extend its geographic reach into strong markets in the US and Europe.

The group reported a basic loss per share of 6.7p compared to 4.7p in the previous period.

Interim dividend is to be paid at 0.5p per share down from 1p.

By the close of trading the shares had lost 21.38% to 45.50p.