InterQuest plunged into a full-year loss after taking a £2.9m impairment charge on the acquisition of Contract Connections, a rival company that provides staff to the legal sector. The company paid an initial £4m in cash and shares last June for that business, but less than two months later it reported that a major client of Contract Connections had terminated a contract on the grounds of "apparent impropriety and alleged fraud". InterQuest is now claiming £4m from the vendors.
Unfortunately, this issue distracts attention from what were otherwise respectable results. Unlike some of the competition, InterQuest has combated a sharp decline in public sector recruitment by increasing revenues from the private sector, notably financial services. In total, net fee income rose by 14 per cent to £16.6m and adjusted operating profits were 4 per cent higher at £3.8m.
The Contract Connections debacle has not put InterQuest off expanding, though. In 2011 the number of revenue earners in the company rose from 147 to 169 and is now 185. The company has also opened its first overseas office in Singapore, and Hong Kong could be next. But such expansion also comes at a cost, so FinnCap new forecasts are for adjusted profits this year of £3.7m and EPS of 8.2p.
INTERQUEST (ITQ) | ||||
|---|---|---|---|---|
| ORD PRICE: | 54.5p | MARKET VALUE: | £17.6m | |
| TOUCH: | 53-56p | 12-MONTH HIGH: | 71p | LOW: 50p |
| DIVIDEND YIELD: | 4.6% | PE RATIO: | na | |
| NET ASSET VALUE: | 60p* | NET DEBT: | 28% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 87 | 3.14 | 11.0 | nil |
| 2008 | 106 | 3.73 | 9.0 | 1.0 |
| 2009 | 97 | 1.79 | 4.4 | 2.0 |
| 2010 | 112 | 2.22 | 6.1 | 2.5 |
| 2011 | 121 | -0.20 | -3.4 | 2.5 |
| % change | +8 | – | – | – |
Ex-div: 12 Mar Payment: 12 Apr Aim: Support services. *Includes intangible assets of £16.2m, or 50p a share | ||||
