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UK – Work Group expects lower 2012 profits

18 September 2012

The UK staffing specialist Work Group (WORK:LSE) expects profit for the 2012 financial year to be below market expectations, the firm reported on Tuesday. 

The latest financial results today show that revenue in the first six months of the year dropped by -9% to £9.4 million from £10.3 million a year ago. Gross profit was also down -4% to £6.2 million, but the gross margin increased to 65.7% from 62.2%.

In the company’s communications and recruitment process outsourcing business, Work Communications, gross profit was flat at £4.2 million. Armstrong Craven, a flexible search and intelligence provider, saw gross profit slide by -11% to £2.0 million.

Overseas offices showed growth, with gross profit in the US increasing by +141% to £0.4 million and in Hong Kong by +28% to £0.2 million.

In the first half of the year, the staffing company made an operating loss of £20,000, seeing an improvement from the loss made a year ago which stood at £75,000.

Overall, the company was not profitable, making a loss after tax of £57,000 against a loss of £108,000 seen last year.

The company said that it had made progress in the six months to June, seeing improvements in its international businesses as well as its UK communications office. Looking ahead, the firm expects the economy to strain activity levels.  

“Prospects for the wider economy and the recruitment market remain uncertain which makes forecasting a challenge and we are finding that the conversion of our pipeline is taking longer and is more uncertain than has been the case previously,” said Chairman Simon Howard.

“Whilst the Board expects the Group to be profitable this year, it anticipates that the Group results will be below market expectations.”

Economic uncertainty, loss of clients and key employees as well as financial risks are the principal threats the company is facing in the next six months, Work Group said. 

Work Group operates through two principal businesses, Armstrong Craven and Work Communications, operating in the UK, US and Asia. 

In early trading this morning, the company’s share price was down -21.4% to 8.26 pence setting a new 52-week low, down -54.1% from a year ago. The firm has a market value of £2.93 million. 

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