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UK –InterQuest update speaks of head winds and future plans.

22 November 2012

InterQuest Group plc (AIM: ITQ), the specialist technology recruitment group, in a trading update this morning highlighted that some of their markets, particularly financial services, remain sluggish and visibility was poor. However, they expect to achieve low single digit growth in Net Fee Income (NFI) in 2012 compared to the prior year, as several of their niche businesses continue to demonstrate encouraging growth.

The firm feels they have not seen the level of growth that they anticipated, particularly in permanent fees, in the period since late summer which is traditionally their strongest trading period. As a result, the Board expects that the underlying EBITDA for the year will be in the region of £2.2 million (adjusted to remove the impact of charges related to share based payments).  This does not include an exceptional credit to their income statement arising from the settlement of their warranty claim against the vendors of CCL, which is expected to make a positive impact of £1.0 million to the profitability of the Group, and with a positive cash impact this year of approximately £0.85 million after paying costs associated with the claim. EBITA before non-recurring items and IFRS 2 charges was £3.8 million in the last financial year.

As the company noted earlier in the year. They have continued the restructuring of their business to align their strategy towards sectors of the market they believe will provide increased opportunities for future growth. InterQuest have also made deliberate and targeted investments in several areas, including: their first overseas office in Singapore; consolidating their Financial Services businesses onto a single operating platform in a new office in Canary Wharf; investment in new fee earners and migration of all of their candidate-centric recruitment business into a single, separate practice aimed at placing niche candidates into niche roles. The management reported they had made these investments for the medium/long term at the expense of short term 2012 profit and are confident that they are building a platform for increased organic growth in the future.

According to InterQuest, despite current headwinds the Board remains firmly committed to its strategy and to building a strong platform for long term organic growth. They have made significant investments into the business and remain confident that their strategy will see them emerge as a much stronger IT recruitment business, better positioned with their clients and better able to capture opportunities for growth. The group’s balance sheet and cash collection remain strong and year end group net debt is expected to be similar to, or slightly less than 31 December 2011.

The InterQuest Group is a specialist technology recruitment Group providing contract and permanent recruitment services within niche disciplines in the UK and Southeast Asia. The Group comprises specialist divisions covering a range of technology and analytical skill sets including Analytics, Digital, ERP (SAP, Oracle), Enterprise Systems Management (Infrastructure, ITSM, ITAM), Mobile, Quality Assurance & Testing and Telecommunications. The Group operates across multiple industries and claims a significant presence and expertise in Financial Markets (Banking & Insurance), Public Sector, Not-for-Profit and Retail. Gary Ashworth, the Chairman has a 40% shareholding.

This morning in early trading InterQuest shares fell just under 4% to 50p pence, 20.63% below its 52-week high of 63.00, set on 4th May, 2012, and 11.5% below a year ago. This means the firm is valued at £17.21 million.


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