20 September 2019 – interim results

The data and technology focused recruitment and consultancy business has announced its interim results for the six months to 30 June reporting that revenues for the period rose by 3% to £44.5m (2018: £44.3m) although adjusted pre-tax profits fell by 76% to £203.000 (2018: £847,000).   The company reported a loss per share on continuing operations after non-recurring items of 0.47p (2018: earnings per share 0.41p) and no dividend has been proposed as usual.  Net debt at the end of the period was £1.2m (31 December 2018:  £1.1m).  Although the results are disappointing, the company commenced its transformation programme in March under its new CEO and the first phase of this has now been completed.  This has resulted in a fall in headcount of 35% and a reduction in operating costs of £2.08m per annum, a higher than expected figure.  The company has suffered from difficult trading during the period in its traditional recruitment business losing a major contract with the Scottish Government and this was only partly offset by recent wins in its consultancy business.  The latter include contracts with Compass Group and the Department of Education.  The full year should see the group achieve a modest profit before exceptional items which would be a good performance in the circumstances.  The move into a multi-line business built around consultancy, learning and development and strategic recruitment in the data world makes sense and as the benefits of this come through so the company’s fortunes will improve.  The shares are a BUY.