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InterQuest Group

  • BY: Andrew Hore |
  • POSTED: 12/08/2011 |

IT staff recruiter InterQuest Group says that a company it bought two months ago has lost a major contract.

The share price has fallen by one-fifth to 49.5p, which values InterQuest at £15.9m.

The client believes there has been fraud in its business and it has withheld a payment to CCL of £600,000. This will be provided for as a bad debt although it could eventually be paid after an investigation.

InterQuest paid an initial £3.7m in cash and £296,000 in shares – at 63.5p each - for Contract Connections Ltd (CCL), which is focused on the legal sector. A further £600,000 could be paid depending on performance but that seems unlikely. InterQuest says that it is writing of the £2m of goodwill relating to the acquisition.

CCL made a profit of £750,000 on revenues of £10m in the year to May 2011. Around one-quarter of CCL’s contractors were working for this client. 

House broker FinnCap has cut its underlying 2011 profit forecast from £4.3m to £3.7m to reflect a £400,000 fall in CCL’s contribution and £200,000 for additional expansion costs.

InterQuest argues that the contract termination will not be material to the future prospects of the group but FinnCap has downgraded its 2012 profit forecast from £5.3m to £4.9m.

InterQuest will report its interim figures on 13 September.

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