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UK – Work Group revenues down but gross profit up

15 March 2012

Work Group Plc (WORK:LSE), the employer marketing, communications and talent management services provider, reported on Thursday that revenues in 2011 went down to £21.7 million from £22.8 million in 2010. But gross profit increased by +5% and amounted to £13.1 million from £12.5 million in the previous year.

In the preliminary results for the year ended 31 December 2011, the firm also revealed that it made no profit after tax as in 2010 the Group experienced a loss of £0.3 million.  

However, Chairman Simon Howard was positive and commented that the Group was moving in the right direction, stating that 2011 was “a year of progress.”

The UK contributed most of the revenue although performance there was down from £21.1 million in 2010 to £19.3 million in 2011. The USA, however, saw sales almost double to £1.1 million while in Europe revenues declined to £0.3 million from £0.4 million. In 2011 The Rest of the World increased sales to over £1 million from £0.6 million in 2010.

Armstrong Craven, the search & intelligence provider, saw income increase in the year as the business mix improved and there was a strong profit contribution. But revenue was up only marginally from £4.03 million in 2010 to £4.35 million in 2011 while net fee income also rose to £4.4 million from £4 million.

But the Work Communications segment which specialises in managing organisations’ reputation saw revenues drop to £17.3 million in 2011 from £18.8 million in 2010 as costs were rationalised and an office closed.

Overall the trends in each of the businesses showed an improving position throughout the year, although the firm continued to be impacted by high levels of uncertainty within its clients as different sectors adjusted to changing market conditions.

Mr Craven said that the firm had built ”a stable client base meaning that we are not over-reliant on any individual client or any single sector.  In 2011, we doubled the number of clients from whom we earned more than £500,000 net fee income (NFI) while we retained the diverse nature of our client base: Finance & Banking remained our largest single sector (2011: 25%; 2010: 30%) followed by Business & Professional services (2011: 17%; 2010: 17%). The Public Sector has never been significant for us and accounted for less than 2% of income in 2011.” Internationally, the firm also reported good client wins resulting in a +60% increase in income and first profit contributions.

Commenting on future developments, Mr Howard added “The Group today is substantially different from that which came to the AIM market in 2006.  Since then the business environment has changed beyond recognition, and today Work Group is better placed with better skills to exploit the reality of changing economic conditions.”

Work Group provides services in talent acquisition and talent management to help employers attract and retain key staff. It aims to reduce employers’ reliance on third-party recruiters, such as head-hunters and recruitment firms, by helping them establish and maintain a direct relationship with prospective employees. The Group also assists employers in reducing their staff attrition costs through better employee engagement and improved internal communications.

After the firm announced its results this morning, the company’s share price went down by -1.96% to £12.50, down -19.35% from a year ago but +25% above the 52-week low of £10 set on 01 March 2012. This values the company at £3.56 million. 

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