InterQuest Group's reception in Cannon Green, clover pattern on the wall in light oak

InterQuest Group PLC - Trading update

Pubished 7th August 2012

Trading Update

Set against a difficult market backdrop, particularly in the banking and finance sectors, the business as a whole has performed robustly growing both net fee income and gross margins over our first half performance last year. In particular the performance of the non banking and finance sectors particularly Analytics, Digital, ERP and ESM (Enterprise Systems Management) has been encouraging and the group continues to benefit from having a healthy balance of both permanent and contractor based revenue streams which mitigate volatility. However, particularly tough trading conditions in the banking and finance sector have impacted performance. For the six months ended 30 June 2012:

  • our net fee income is approximately 6% higher than the first half of 2011 (£7,812,000);
  • we have seen net fee income growth of 17% in non banking sectors compared to the first half of 2011;
  • our gross margin % has improved from 13.2% in the first half of 2011 to 14.9% in the first half of 2012;
  • EBITDA in the first half is expected to be in the region of £1.15m (2011: £1.86m)
  • we have seen 20% growth in permanent recruitment fees versus the first half of 2011; and
  • we have seen improvement in contract recruitment margins from 10.5% in the first half of 2011 to 11.5% in the first half of 2012.

As noted in the announcement of our 2011 results on 6 March 2012, during the first half of 2012 we have continued the restructuring of our business to align our strategy towards sectors of the market we believe will provide us with increased opportunities for future growth.

Specifically, we have made deliberate and targeted investments in several areas:

  • We opened our first overseas office in Singapore in Q4, 2011 which now has 13 fee earners;
  • In February we moved all our Financial Services businesses onto a single operating platform under one business leader in a new office in Canary Wharf;
  • In March we established a new international business from scratch based in our London office;
  • In March, we migrated all of our candidate-centric recruitment business into a single, separate practice aimed at placing niche candidates into niche roles rather than just filling vacancies;
  • Gary Goldsmith joined us as Chief Operating Officer on 17 February; and
  • We have increased the number of fee earners in the Group from 169 in December 2011 to 198 currently.

We have made these investments for the medium/long term at the expense of short term 2012 profit and are confident that we are building a platform for increased organic growth in the future. The combined impact on profitability of the investments and restructuring is expected to be in the region of £1.6 million for the year to 31 December 2012.

We also continue to pursue our warranty claim against the vendors of CCL with vigour.


Trading conditions have deteriorated since the start of the year, both in the UK and Far East, particularly in the second quarter and particularly in the banking and finance sectors from which we derive 27% of our net fee income. Consequently, we now expect that it will take a little longer than originally anticipated for all our new investments to reach profitability.

However, as a direct result of our expertise and concentrated effort in specialist markets, we have seen improvements in revenue growth and margin in key sectors such as ERP, ESM (Enterprise Systems Management), Analytics, Digital and Retail . Our balance sheet remains healthy and we have significant headroom within our banking facilities. The Company therefore retains the ability to buy back its own shares in the market should the Board consider this in the long term interest of shareholders and is committed to maintaining its dividend.

Despite current headwinds the Board remains firmly committed to its strategy and to building a strong platform for long term organic growth. We have made significant investment into the business and remain confident that our strategy will see us emerge as a much stronger IT recruitment business that is better positioned with our clients and better able to capture opportunities for growth.

For further information please contact:

InterQuest Group plcThreadneedle CommunicationsfinnCap
020 7025 0100020 7653 9850020 7600 1658
Gary Ashworth, Executive ChairmanCaroline Evans-JonesMarc Young
Michael Joyce, Finance DirectorFiona ConroyCharlotte Stranner

About InterQuest The InterQuest Group is a specialist IT recruitment Group providing contract and permanent recruitment services within niche disciplines in the UK and Europe. The Group comprises specialist divisions covering a broad range of skill sets and industries including Public Sector, SAP, Oracle, CRM Testing, Banking, Insurance, Retailing, Pharmaceuticals, Media, Analytics, Infrastructure and Communications.