Regulatory Story
Go to market news section View chart   Print
RNS
InterQuest Group PLC  -  ITQ   

Final Results

Released 07:00 14-Mar-2017

RNS Number : 3470Z
InterQuest Group PLC
14 March 2017
 

14th March 2017

Embargoed until 7am.

InterQuest Group plc

("InterQuest" or "Group")

 

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 2016.

Financial highlights

·       Group operating profit before exceptional items decreased 35% to £3.2m (2015: £4.9m). [1] 

·       Adjusted PBT* decreased 34% to £3.3m (2015: £5.0m). [2]

·       Statutory loss after tax of £1.2m loss (2015: £3.1m profit).

·       Net fee income (NFI) decreased 9% to £21.7m (2015: £23.8m).

·       Revenue decreased 9% to £143.6m (2015: £158.6m). 

·       Basic earnings per share decreased to a loss of 3.4 pence (2015 earnings: 8.5 pence).

·       Diluted loss per share was 3.3 pence (2015: 8.2 pence)

·       Diluted adjusted earnings per share decreased by 30.7% to 7.0 pence (2015: 10.1 pence).

·       Net cash generated from operating activities £2.5m (2015: £5.8m).

·       Net debt at year end improved by £0.4m to £5.6m (2015: £6.0m).

·       Second interim dividend of 1 penny per share, making it 1.5 pence for the year (2015: 3 pence per share). [3]

Improved margins

·       Gross margin improvement to 15.1% (2015: 15.0%).

Operational highlights

·       Headline results aligned with market expectations following a year of significant change.

·       Successful acquisition and integration of the Rees Draper Wright group ("RDW") adding Executive Search capability in both the UK and US.

·       74% increase in NFI from the Group's recruitment process outsourcing business helped by a further client win.

·       Permanent placement fees increased by 4%.

·       Loss after tax reflecting the non cash impairment of goodwill in relation to ECOM.

·       Group net debt improved significantly since the interim from £9.9m to £5.6m.

 

Gary Ashworth, Chairman of InterQuest, said:

"2016 has been a challenging year of transformation for the InterQuest Group. However we are pleased to announce the Group results in line with market expectations.

Following a change in executive management at the beginning of the year, an operational review of activities was undertaken and the future vision for the company outlined. All of our service offerings are now clearly focused on assisting our clients overcome the challenges of digital transformation and being able to support them at each stage of that process.

Financial performance in 2016 reflects the changing nature of how our clients seek to address their staffing challenges. The leadership team have taken action to address underperformance and ensure that the Group's specialist staffing brands now address markets that are growing.

During the course of the year, we have significantly developed our recruitment process outsourcing business, IQ Solutions, through designing and delivering high value resourcing solutions.

The acquisition of Rees Draper Wright (RDW) in the latter part of the year, has allowed the Group to pursue its strategy to have greater impact at the senior level, offering executive search and interim management solutions. RDW have a rich history of delivering excellence at board and senior levels in both the professional services and private sectors. The acquisition also offers an opportunity to further develop the US platform that RDW have in place and broaden the Group's geographical reach."

 

Looking forward the Group intends to follow a path of organic growth, continuing to invest in our staff and developing the well established brands that we have in place whilst focusing on paying down debt. We are cautiously optimistic about 2017."

 

Chris Eldridge, CEO of InterQuest said:

"The 2016 results for the Group reflect a year of significant change and development.  The Group continues to focus on supporting our clients in identifying the talent they need to drive their businesses forwards through the use of technology.

We have addressed the areas of the Group that have underperformed during the year and developed our service offering both in the UK and in the US following the acquisition of RDW.

The Group enters 2017 with a clear vision and tactical plan to develop our specialist brands and capitalise on our ability to service our clients' recruitment needs at all stages of the digital transformation life cycle.

On behalf of the board I would like to thank all of my colleagues for their ongoing hard work and support throughout 2016."

 

For further information please contact:

 

InterQuest Group plc

020 7025 0100

Gary Ashworth

Non-Executive Chairman

Chris Eldridge

Chief Executive Officer

David Bygrave

Chief Financial Officer

 

Panmure Gordon (UK) Limited

020 7149 6000

Dominic Morley

Karri Vuori

 


 

 

 

 



 

Our markets

The demand for digital and technology skills is driven by businesses seeking to derive value or advantage by exploiting the opportunity that digital commerce offers.

The Group is seeing significant operating model change and investment across a wide variety of sectors from banking and financial services through to medical and logistics and therefore is looking to benefit from this increase in activity in the digital needs of these sectors. The retail sector along with banking and telecommunications have been early investors in digital to great effect with numerous case studies being implemented now in other industries and geographies.

Technical skills underpin growth across the economy and are vital to ensuring global competitiveness and productivity. Harnessing the potential of the digital opportunity is often constrained by a lack of relevant skills within the labour force. In the digital economy the competition for talent has intensified. As demand for both emergent and traditional technical skills has continued to outstrip supply, employers across all sectors are experiencing skill and knowledge gaps within their workforce. These talent shortages are threatening to hinder the achievement of the productivity gains expected through the use of digital technologies and the emergence of new digital revenue streams.

·      The £626bn UK digital economy is forecast to account for 33% of real Gross Domestic Product (GDP) by 2018.[4]

·      Jobs in the digital economy are increasing 2.8x faster than the rest of the economy.[5]

·      The UK's digital economy is growing around 32% faster than the rest of the economy.[6]

·      59% of C-Level executives say their organisations don't have the in-house capabilities to respond to digital transformation.[7]

·      Average salaries for technical roles are 36% higher than the national average.[8]

·      88% of C-Level Executives cite skill shortages as a negative impact on growth.[9]

 

The InterQuest business model

The InterQuest Group is a specialist digital and technology recruitment business with offices in the UK and US. The Group focuses on permanent and contract recruitment across a broad range of sectors, specifically in the high growth functions of digital design, cyber security, digital networks, analytics, change management and other high value niche markets. The Group's service offering includes a growing recruitment process outsourcing business and recently, following the acquisition of RDW, the ability to provide executive search and interim management solutions.

With the demand for digital and technical talent continuing to outstrip supply we will continue to focus on the provision of cutting edge skills as we help companies across the world overcome the knowledge gaps in their workforces.

The Group's vision is:


"To be the leading global digital transformation recruitment partner - a business that helps companies overcome the complexities and challenges of digitisation to exploit the potential of the digital opportunity."

 

InterQuest is a well-established provider of specialist recruitment services, clearly positioned to assist companies identify and secure the talent they need to develop or retain competitive advantage.

Review of the business in 2016

The Group has implemented a number of changes during 2016 to ensure that the business is capitalising on growth markets.  However, during this restructuring Group profitability has decreased.

·      Group operating profit before exceptional items decreased 35% to £3.2m (2015: £4.9m). 

·      Adjusted PBT decreased 34% to £3.3m (2015: £5.0m).

·      Statutory loss before tax was £0.5m (2015: £4.1m profit)

·      Statutory loss after tax of £1.2m loss (2015: £3.1m profit).

·      Net fee income (NFI) decreased 9% to £21.7m (2015: £23.8m).

·      Permanent NFI increased 4% to £8.3m (2015: £7.9m).  Excluding RDW permanent NFI decreased 6% to £7.4m (2015: £7.9m)

·      Contract NFI decreased 15% to £13.5m (2015: £15.9m)

 

The primary cause of the Group's reduction in revenue during 2016 was a reduction in contractor numbers. The revenue resulting from contract recruitment decreased by 15% during the year with the most significant impact being felt in Public Sector, ECOM and IQ Financial Markets (reported within Enterprise).

The Group's permanent revenue increased by 4%, which was positively affected by the acquisition of RDW in August 2016. 

During the year the leadership team took action in addressing the cost base and reviewing the markets that the Group focuses on to ensure that we are addressing the sectors, technology skills and geographies that present significant opportunities for growth.

 

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 £7.04m.

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 has been impaired by £3,152k which has been treated as an exceptional item in the period.  The carrying value of the goodwill at 31 December 2016 is £1,711k.

During 2016 ECOM's business model was significantly challenged as the demand from agency clients decreased. This change in buying behaviour reflects the evolution of the agency market with a number of large end user clients deciding to build up a strong in house capability instead of relying on agencies to deliver their digital assets.

As a result ECOM's London business saw a 41% decrease in NFI. Action was taken to address this through changing the leadership team and refocusing the business towards end user clients while retaining the agencies that had an on-going demand. This has resulted in a pick up in contractor numbers towards the end of the year and offers a stable base from which to grow in 2017. The ECOM business in Manchester (focused both on the city's digital growth and the broader demands of northern Europe) increased NFI by 33%.  This has been achieved through expanding the team and focusing on niche permanent roles in high demand skill sets.

 

Public Sector

IQPS, the Group's Public Sector brand, has a number of long-standing relationships across the sector and benefits from both one off recruitment mandates and large scale programs of work. During 2016 IQPS did not benefit from a significant high volume opportunity as it had in 2015 and as a result NFI decreased by 28% year on year.

The business went through a structural review at the half year and as a result is clearly focused on both gaining market share and delivering compliant niche skills to its clients. The business has identified several new products that are now being taken to market and the initial signs are promising especially developing our recruitment relationships and offering consulting solutions with a view to increasing market share and margins.

IQPS has taken an active role in assessing the implications of IR35 in the Public Sector. At this time, the impact of implementing the updated legislation is hard to predict, however, the management team are taking action mitigate any negative effects.

 

 

Enterprise

IQ Financial Markets suffered a material reduction in contractor numbers during 2016 which negatively impacted its full year results. Trading conditions in financial markets remain challenging. The management team are focusing on the pockets of high growth driven by regulatory change and broadening their focus outside of retail and investment banks.

The effect of this was mitigated by IQ Solutions, (the Group's RPO and Managed Service business) where NFI increased by 74%. This was driven by increased demand from IQ Solutions five existing customers and the winning of a further new customer engagement in 2016. IQ Solutions has seen demand grow domestically in the UK and for the first time has been engaged in the US. One of the reasons for seeking additional funding through the augmented confidential invoice discounting facility is to anticipate the cash absorptive nature of this business.

 

Niche

The Group's NFI from niche brands decreased by 3% in 2016. The niche brands include IQ Analytics, IQ InfoSec, IQ Technology and IQ Telecom (now IQ Networks). Progress in the niche brands has been slower than management's expectations. This is in part down to the time taken to get new sales consultants productive as well as a historic over reliance on long standing clients. Having identified these issues the respective management teams have clearly outlined an updated methodology and are focused on improving net fee income per head.

 

RDW

The Group acquired RDW in August 2016 and following a period of integration with the broader Group have added significant value (£0.9m of NFI in five months to 31 December 2016) and have worked closely with the other Group brands to drive cross client development in the UK and US, where a number of immediate wins have resulted. RDW focus their attention at senior management and board positions both in the consulting and private sector. The salary levels that are achieved and the resulting fees significantly exceed the average placement value of the broader Group. 

 

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.

 

Our Primary services

InterQuest Group offers the following services:

·      Contract recruitment.

·      Permanent recruitment.

·      Executive Search & Interim.

·      Managed Solutions (MSP and RPO).

 

This suite of recruitment services works well both independently and a when utilised as a combined service offering.

When looking at the blend of services the mix between permanent and contract services has changed to 62:38 in favour of contract (2015: 67:33 in favour of contract).

All four services address the needs of the digital economy and base the foundation of their offering on the relationships they build with clients and candidates alike.

 

Candidate attraction

Attracting candidates through advanced use of social media and creative content enables the consultants within the Group to identify candidates that are not accessible through traditional channels and adds significant value to our clients. During 2016 the Group has continued to develop this strategy and as a result has grown its social media audience to in excess of 85,000 (2015: 55,000).

The Group continues to invest in our digital presence with the on-going objective to identify technology leaders and niche technologists who do not use traditional routes to find employment. Through developing a reputation as a thought leader, producing market commentary, white papers, surveys and insight the Group's brands develop close and trusting relationships with hard to find candidates.

The Group's Marketing team won the Best Marketing Team award at the Recruiter Awards 2016 with their highly innovative approach to candidate identification and development being singled out as industry leading.

 

Focus points for 2017

During 2016 the Group prepared a strategic plan to improve the Group's financial performance, outlining the six focus areas for the coming year:

International expansion

The Group plans to expand its international reach through building upon the US platform that RDW has developed over the past three years. The RDW office in New York opened in 2014 and will enable further development of the ECOM and IQ Analytics brands locally. The salary and fee rates in the US are materially higher than those in the UK; the Group will both recruit locally and seek to give the opportunity for internal transfers to our staff.

Senior and executive reach

The Group will invest in the RDW executive search business. The acquisition has already resulted in several cross selling opportunities and we will look to build upon their outstanding reputation at the senior leadership level within consulting firms, digital advisories and the private sector.

Emerging specialisms

With technology developing at such a fast pace today's emergent specialism could be tomorrow's commodity. With this in mind the Group will continue to focus on the roles that are most critical to digital transformation. We will evolve in line with the market, ensuring that the Group is focused on the technical skills and leadership our clients need the most, enabling us to add the most value and achieve margins above the market average.

Recruitment solutions

The Group will further develop IQ Solutions seeking to provide outsourced solutions assisting businesses with a high dependency on niche digital and technology skills. These solutions provide our clients with an efficient and compliant method of procuring specialist skills and drive digital transformation.

Cross selling

InterQuest has a large number of existing clients that we are yet to develop in to relationships where they procure recruitment services from us across multiple stages of the digital transformation cycle. Cross selling the Group's services will positively affect how our clients resource their programmes of work whilst enabling a significant increase in the Group's share of our clients recruitment spend.

Learning and development

To be a specialist, our staff must continually work towards becoming expert recruiters in their markets. The Group is committed to continuing the progress that was made in 2016 and providing continuous learning, providing training to ensure that our management and consulting staff can differentiate themselves through their expertise and add tangible value to their 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

2016
£'000

31 December
2015
£'000

Financial KPIs:



Revenue

143,610

158,613

Net fee income

21,747

23,813

Gross profit percentage

15.1%

15.0%

Group operating profit before exceptional items

3,249

4,914

Group statutory (loss)/profit

(1,244)

3,085

Net cash inflow from operating activities

2,506

5,804

Net debt

 

5,577

5,999

Non-financial KPIs:



Recruitment staff (average number during the year)

249

224

Administration staff (average number during the year)

55

52

 

The primary cause of the Group's reduction in revenue during 2016 was a reduction in contractor numbers. The revenue resulting from contract recruitment decreased by 15% during the year with the most significant impact being felt in Public Sector, ECOM and IQ Financial Markets (reported within Enterprise).  This resulted in an almost proportional reduction in Net Fee Income as the Gross Profit percentage increased from 15% to 15.1% overall.  The Group statutory loss for the year includes the impairment of goodwill at ECOM of £3.2m.

At the end of 2015 and early 2016 the Group had expanded its sales workforce to meet the perceived demand in the market whilst aiming to maintain its administration headcount as static as possible.  However, as the revenues in contract recruitment declined the Group took steps to reduce its cost base and the reduction in Net Fee Income resulted in a decrease in operating profit before exceptional items and also had a corresponding impact on net cash inflow. 

Net debt was reduced through a careful management of credit terms with customers during the course of 2016.



 

Net finance costs were £0.31m (2015: £0.44m) reflecting the lower levels of debt required during the year by the Group.

Tax on profits was £0.6m before exceptional items (2015: £1.1m); a detailed analysis is included at note 6.

 

Exceptional items

 

The following table summarises exceptional items in the 2016 financial statements:



2016
£'000

2015
£'000





Acquisition costs


(28)

(21)

Restructuring costs


-

(118)

Tax on restructuring costs


-

24

Redundancy and loss of office costs


(284)

(219)

Tax on loss of office costs


57

44

Impairment


(3,152)

-



 

 



(3,407)

(290)



 

 

In 2016 the Group incurred exceptional costs as follows:

i)             £284k in relation to redundancies and loss of office costs during the year.

ii)            £28k in respect to the acquisition of controlling shares in RDW-RD Limited.

iii)           £3,152k in respect to the impairment of goodwill in ECOM.

See note 3 for further details.

Earnings per share and dividend

Basic loss per share was 3.4 pence (2015 earnings: 8.5 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 profit per share was 7.2 pence representing a decrease of 31.4% from 10.5 pence in 2015. See note 5 for details of the calculation.

Due to the reduction in profitability and the need for liquidity in order to fund further growth in the Group the Board are declaring a reduced dividend of 1 penny per share and this will be paid on 16 June 2017 to shareholders on the register on 19 May 2017. The ex-dividend date is 18 May 2017.  This brings the total dividend for the year to 1.5 pence per share (2015: 3 pence per share)

Balance sheet, cash flow and financing

The Group's net assets decreased by £1.3m to £22.1m at 31 December 2016 (2015: £23.4m).

 

Continued delivery of operating profit before exceptional items and tight control of working capital delivered £2.5m of operating cash flow (2015: £5.8m). The Group paid £0.31m (2015: £0.44m) of net interest during the year. Net capital expenditure was £0.25m (2015: £0.14m) and dividends of £0.9m (2015: £1.09m) were paid.

Net debt decreased from £6.0m at the start of the year to £5.6m at the end of 2016 (2015: decreased from £8.3m at the start of the year to £6.0m at the end of the year). The Group continues to finance its activities through the utilisation of a confidential trade receivables finance facility. The Group has given notice on its current facility after negotiating with HSBC with a facility limit of £24m which will come into effect in March 2017.  The facility has a three month rolling notice period following the expiry of an initial term ending in March 2018.  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 2016

 


Before
exceptional items


Exceptional items

2016

 

Before
exceptional items


Exceptional items

2015

 



£'000

£'000

£'000

£'000

£'000

£'000









Group revenue


143,610

-

143,610

158,613

-

158,613









Cost of sales


(121,863)

-

(121,863)

(134,800)

-

(134,800)



 

 

 

 

 

 

Gross profit


21,747

-

21,747

23,813

-

23,813









Amortisation


(345)

-

(345)

(345)

-

(345)

Impairments


-

(3,152)

(3,152)

-

-

-

Other administrative expenses


(18,154)

(284)

(18,438)

(18,554)

(337)

(18,891)



 

 

 

 

 

 

Total administrative expenses


(18,499)

(3,436)

(21,935)

(18,899)

(337)

(19,236)



 

 

 

 

 

 









Continued operations


2,928

(3,436)

(508)

4,914

4,577

Acquisitions


321

-

321

-

-

-



 

 

 

 

 

Group operating profit/(loss)


3,249

(3,436)

(187)

4,914

(337)

4,577









Acquisition costs


-

(28)

(28)

-

(21)

(21)

Finance costs


(312)

-

(312)

(444)

-

(444)



 

 

 

 

 

 

Profit/(loss) before taxation


2,937

(3,464)

(527)

4,470

(358)

4,112









Share based payment charge


(212)

-

(212)

-

-

-

Income tax (expense)/credit


(562)

57

(505)

(1,095)

68

(1,027)



 

 

 

 

 

 

Profit/(loss) for the year


2,163

(3,407)

(1,244)

3,375

(290)

3,085



 

 

 

 

 

 

 



 

Statement of comprehensive income

For the year ended 31 December 2016

 


Before
exceptional items


Exceptional items

2016

Before
exceptional items


Exceptional items

2015



£'000

£'000

£'000

£'000

£'000

£'000









Profit/(loss) and total

comprehensive income

attributable to:



 

 

 

 

 

 




- Owners of the parent


2,110

(3,407)

(1,297)

3,310

(290)

3,020

- Non controlling interests


53

-

53

65

-

65



 

 

 

 

 

 

Total comprehensive income /(expense) for the year


2,163

(3,407)

(1,244)

3,375

(290)

3,085



 

 

 

 

 

 

 

Profit per share from both total and continuing operations:

 


Notes





2016
Pence

2015
Pence









Basic (loss)/earnings per share

5





(3.4)

8.5







 

 

Diluted (loss)/earnings per share

5





(3.3)

8.2







 

 

 

 

Except for the acquisition of RDW all results for the Group are derived from continuing operations in both the current and prior year.

 



 

Consolidated balance sheet

As at 31 December 2016

 


2016
£'000

2015
£'000

Assets




Non-current assets




Property, plant and equipment


480

611

Goodwill


16,596

18,867

Intangible assets


947

1,000



 

 

Total non-current assets


18,023

20,478



 

 

Current assets




Trade and other receivables


25,978

27,417

Cash at bank and in hand


1,541

1,181



 

 

Total current assets


27,519

28,598



 

 

Total assets


45,542

49,076



 

 

Liabilities




Current liabilities




Trade and other payables


(14,828)

(16,698)

Borrowings


(7,094)

(7,180)

Current tax payable


(1,218)

(1,571)



 

 

Total current liabilities


(23,140)

(25,449)



 

 

Non-current liabilities




Deferred income tax liability


(296)

(212)



 

 

Total non-current liabilities


(296)

(212)



 

 

Total liabilities


(23,436)

(25,661)



 

 

Net assets


22,106

23,415



 

 

Equity




Share capital


374

359

Share premium account


11,338

10,632

Capital redemption reserve


12

12

Retained earnings


8,549

10,829

Share-based payment reserve


2,411

2,199

Share buyback reserve


(666)

(666)



 

 

Total issued share capital and reserves attributable to the owners of the parent


22,018

23,365

Non-controlling interests


88

50



 

 

Total equity


22,106

23,415



 

 

 

 

 

 

 

 

 

 

 

Consolidated statement of changes in equity

For the year ended 31 December 2016

 

 

Share capital

Share premium account

Capital redemption reserve

Retained earnings

Share-based payment reserve

Share
buy back reserve

Non-controlling interest

Total equity

 


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 










Balance at 1 January 2015

344

10,468

12

10,322

2,006

(666)

288

22,774


 

 

 

 

 

 

 

 

Comprehensive income









Profit for the year

-

-

-

3,020

-

-

65

3,085


 

 

 

 

 

 

 

 

Total comprehensive income for the year

 

-

 

-

 

-

 

3,020

-

-

65

3,085










Transactions with owners









Movement in share-based

      payment reserve

-

-

-

-

193

-

-

193

Issue of share capital

15

164

-

-

-

-

-

179

Current tax credit on share based payments

 

-

 

-

 

-

 

(191)

-

-

-

(191)

Deferred tax credit

-

-

-

39

-

-

-

39

Dividends relating to 2015

-

-

-

(1,089)

-

-

-

(1,089)

Elimination of reserves on acquisition of IQ Telecoms NCI

 

-

 

-

 

-

 

-

-

-

(307)

(307)

Elimination of reserves on                         

               -

-








acquisition of Korus Group NCI                                

                      -

                      -

                      -

-

-

4

4

Adjustment to IQ Telecom NCI

              

               -

                     

                      -                                       

                   

                   -      

                      (1,013)

                    -                                 

-

-

(1,013)

Adjustment to Korus Group NCI

               -

                      -

                      -

                (259)

-

-

-

(259)


 

 

 

 

 

 

 

 

Total contributions by and

distributions to owners

 

 

15

 

 

164

 

 

-

 

 

(2,513)

193

-

(303)

(2,444)


 

 

 

 

 

 

 

 

Balance at 31 December 2015

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 relating to 2016

-

-

-

(895)

-

-

-

(895)










RDW step acquisition MI acquired

-

-

-

15

-

-

(15)

-


 

 

 

 

 

 

 

 

Total contributions by and distributions to owners

 

15

 

706

 

-

 

(983)

212

-

(15)

(65)


 

 

 

 

 

 

 

 

Balance at 31 December 2016

374

11,338

12

8,549

2,411

(666)

88

22,106

 


 

 

 

 

 

 

 

 



 

Consolidated cash flow statement

For the year ended 31 December 2016


2016
£'000

2015
£'000





Cash flows from operating activities




(Loss)/profit after taxation


(1,245)

3,085

Adjustments for:




Depreciation


411

441

Impairment of intangible assets


3,152

-

Disposal of assets


-

(10)

Share-based payment charge


212

193

Finance costs


312

444

Amortisation


345

345

Income tax expense


505

1,027

Decrease/(increase) in trade and other receivables


1,439

(1,052)

(Decrease)/increase in trade and other payables


(1,870)

2,019



 

 

Cash generated from operations


3,261

6,492

Income taxes paid


(755)

(688)



 

 

Net cash from operating activities


2,506

5,804



 

 

Cash flows from investing activities




Purchase of property, plant and equipment


(279)

(138)

Acquisition of subsidiaries, net of cash acquired and goodwill adjustments


(1,503)

(1,560)

Loan notes repaid


-

(443)



 

 

Net cash used in investing activities


(1,782)

(2,141)



 

 

Cash flows from financing activities




Proceeds from issue of share capital


721

179

Proceeds from sale of shares in subsidiary


-

25

Net decrease in discounting facility


(86)

(2,432)

Interest paid


(312)

(444)

Dividends paid


(923)

(1,089)



 

 

Net cash used in financing activities


(600)

(3,761)



 

 

Net increase/(decrease) in cash, cash equivalents and overdrafts


124

(98)





Effects of currency translation on cash and cash equivalents


235

-





Cash, cash equivalents and overdrafts at beginning of year


1,181

1,279







 

 

Cash and cash equivalents at end of year


1,541

1,181



 

 

 



 

Notes to the consolidated financial statements for the year ended 31 December 2016

 

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 2016 or 2015 but is derived from those accounts. Statutory accounts for 2015 have been delivered to the Registrar of Companies, and those for 2016 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 2017.

 

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 except that derivative financial instruments and financial instruments held for trading or available for sale are stated at their fair value. Non-current assets held for sale are stated at the lower of carrying amount and fair value less costs to sell. 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 2016 which will be made available to shareholders in May 2017.

 

1.         Revenue and segmental reporting

There were no material revenues earned or 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.

 

 

Notes to the consolidated financial statements for the year ended

31 December 2016 (continued)

 

1.             Revenue and segmental reporting (continued)

2016


 

Niche

 

 

 

ECOM

 

 

 

Enterprise

Public  Sector

 

 

 

RDW

(acquisition)

Other

Total

 



£'000

  £'000



£'000

£'000



£'000

£'000

£'000

 










Revenue


46,369

17,006

52,311

23,338

                     869

3,717

        143,610

Gross profit


8,855

4,353

4,470

2,076

866

1,261

           21,747










EBITA


2,834

 

549

 

1,667

1,013

 

321

 (3,026)

            3,358

Reconciling items to amounts reported in the statement of comprehensive income:

- exceptional items






(284)

- impairments






(3,152)

- amortisation of intangible assets






(345)







 

Statutory operating loss






(423)

Acquisition costs






(28)

Share-based payment charge






(212)

Finance costs






(312)

Effects of currency translation






235







 

Loss before tax






(740)







 

 

 

 

 

 

2015


 

Niche

 

 

ECOM

 

 

Enterprise

Public

  Sector

 

 

Business Change

Other

Total

 



£'000

  £'000



£'000

£'000



£'000

£'000

£'000

 










Revenue


43,613

17,609

49,601

31,360

12,961

3,469

         158,613

Gross profit


9,132

4,037

3,633

3,215

2,884

912

            23,813










EBITA


3,760

 

874

 

1,646

1,700

 

707

               (3,235)

               5,452

Reconciling items to amounts reported in the statement of comprehensive income:

- share-based payment charge






(193)

- exceptional items






(337)

- amortisation of intangible assets






(345)







 

Statutory operating profit






4,577

Acquisition costs






(21)

Finance costs






(444)







 

Profit before tax






4,112







 

 



 

Notes to the consolidated financial statements for the year ended

31 December 2016 (continued)

 

1.             Revenue and segmental reporting (continued)


 

 

Revenue

Gross profit


2016
£'000

2015
£'000

2016
£'000

2015
£'000






Permanent

8,263

7,939

8,263

7,939

Contract

135,346

150,674

13,483

15,874


 

 

 

 


143,610

158,613

21,746

23,813


 

 

 

 

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 (2015: no client represented more than 10%).

Reconciliation of adjusted profit before tax


2016
£'000

2015
£'000





            EBITA per management accounts


3,358

5,452

            Acquisition costs


(28)

(21)

            Finance costs


(312)

(444)

            Effects of currency translation


235

-



 

 

Adjusted profit before tax


3,253

4,987



 

 

 

 

2.         Exceptional items

The below represent exceptional items in the 2016 financial statements:



2016
£'000

2015
£'000





            Acquisition costs


(28)

(21)

            Restructuring costs


-

(118)

            Tax on restructuring costs


-

24

            Redundancy and loss of office costs


(284)

(219)

            Tax on loss of office costs


57

44

            Impairment


(3,152)

-



 

 



(3,407)

(290)



 

 

 

In 2016 the Group incurred exceptional costs in three areas:

i)             £28k in respect of the acquisition of the Rees Draper Wright group of companies in two tranches;

ii)            £3,152k in respect of the impairment of goodwill in ECOM; and

iii)           £284k in relation of redundancies during the year.



 

Notes to the consolidated financial statements for the year ended

31 December 2016 (continued)

 

3.         Income tax expense


Before exceptional items
£'000

 

Exceptional items
£'000

2016
£'000

2015
£'000

Current tax





Corporation tax on chargeable profits for the year

560

(57)

503

907

Adjustments in respect of prior periods

(90)

-

(90)

(50)


 

 

 

 

Total current tax

470

(57)

413

857


 

 

 

 

Deferred tax





Origination and reversal of temporary difference

115

-

115

(37)

Adjustment in respect of prior periods

(23)

-

(23)

207


 

 

 

 

Total income tax expense

562

(57)

505

1,027


 

 

 

 

 




2016

2015

Income tax expense recognised outside of the income statement

£'000

£'000





Current tax charge on share-based payments

  62

191

Deferred tax credit on share-based payments

(12)

(39)



 

 

Total tax recognised outside of income statement


50

152



 

 


Before exceptional items
£'000

 

Exceptional items
£'000

2016
£'000

2015
£'000











Profit/(loss) before taxation

2,725

(3,464)

(739)

4,112


 

 

 

 

Profit/(loss) before taxation multiplied by standard rate of corporation tax in the UK of 20%

(2015: 20.25%)

587

(693)

(105)

833

Effects of:





Depreciation of assets not qualifying for tax relief

34

-

34

24

Net effect of tax losses in the year

-

-

-

1

Expenses not deductible for tax purposes

61

6

67

39

Temporary difference with respect to share-based

payment charge

6

-

6

(4)

Under / (over) provisions in prior years

(113)

-

(113)

157

Impairment of goodwill

-

630

630


Effect of change in tax rates

-

-

-

(23)

Other tax adjustment

(14)

-

(14)

-


 

 

 

 

Total income tax expense

562

(57)

505

1,027







 

 

 

 

 

Finance Act 2014 reduced the main rate of UK corporation tax to 21.0% effective from 1 April 2014 and 20.0% effective from 1 April 2015 and 2016. These changes have been substantively enacted at the balance sheet date and are therefore reflected in these financial statements.

Notes to the consolidated financial statements for the year ended

31 December 2016 (continued)

 

4.             Cash and cash equivalents




2016
£'000

2015
£'000






Cash and cash equivalents



1,541

1,181




 

 

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.

 



2016
£'000

2015
£'000





(Loss)/profit for the year attributable to the owners of the Company


           (1,282)

3,020



 

 

 

Adjustments to basic earnings




Intangible assets amortisation


345

345

Deferred tax credit on intangible asset amortisation


(69)

(69)

Share-based payment charge


212

193

Tax credit on share-based payment charge


(42)

(39)

Restructuring items


-

118

Tax on restructuring items


-

(24)

Impairment of goodwill


3,152

-

Deferred tax credit on impairment of goodwill


(630)

-

Fees related to acquisition of ECOM Recruitment Limited


-

21

Fees related to acquisition of RDW-RD Limited


28

-

Redundancy and loss of office costs


284

219

Tax on loss of office costs


(57)

(44)



 

 

Adjusted earnings attributable to the owners of the Company


              1,941

3,740



 

 

 

 

 

 

 

 

Notes to the consolidated financial statements for the year ended

31 December 2016 (continued)

5.         Earnings / (loss) per share (continued)

 



           2016

2015

Weighted average number of ordinary shares for the purposes of

basic earnings per share


36,401,381

35,635,968

 





 

Weighted average number of share options in issue


980,155

1,359,421

 







 

 

Weighted average number of ordinary shares for the purposes of

diluted earnings per share


37,381,536

      36,995,389



 

 

 

 

 


2016

Pence

2015

Pence

Profit / (loss) per share




Basic earnings per share


(3.4)

8.5



 

 

Diluted earnings per share


(3.3)

8.2



 

 

Adjusted earnings per share




Basic earnings per share


7.2

10.5



 

 

Diluted earnings per share


7.0

10.1



 

 

 

 



[1] *Adjusted for share-based payment charge, amortisation and exceptional items. A reconciliation of EBITA before exceptional items and IFRS 2 charges to IFRS operating profit is provided in note 1 to the Financial Statements.

Group operating profit before exceptional items = a reconciliation is shown in the Consolidated Income Statement

[2] PBT = Profit before tax

[3] The dividend will be paid on 16 June 2017 to shareholders on the register on 19 May 2017. The ex-dividend date is 18 May 2017.  This brings the total dividend for the year to 1.5 pence per share (2015: 3 pence per share)

[4] Report by Accenture, 2016

[5] Tech Nation Report, 2016

[6] Tech Nation Report, 2016

[7] Report by Ernst & Young, 2016Tech Nation Report, 2016

[8] Tech Nation Report, 2016

[9] NGA HR UK, 2016


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
FR SFWSILFWSEID
Close


London Stock Exchange plc is not responsible for and does not check content on this Website. Website users are responsible for checking content. Any news item (including any prospectus) which is addressed solely to the persons and countries specified therein should not be relied upon other than by such persons and/or outside the specified countries. Terms and conditions, including restrictions on use and distribution apply.

 


Final Results - RNS