11th Dec 2015 09:26
LONDON (Alliance News) - Work Group PLC Friday announced it has exchanged contracts to sell its UK business and two foreign subsidiaries, allowing the company to turn itself into an investment company.
Work Group has been trying to sell the business for the last six months after its UK business became "sub-scale".
"This process has been underway for nearly six months and consequently, in the United Kingdom in particular, we have found it difficult to win new business pitches which has placed further pressure on group finances," said the company Friday.
However, it has now agreed to sell its units to Capita for GBP2.0 million in cash - with shareholders set to vote on the disposal on December 29.
If approved, Executive Director Rose Colledge will step down and resign from the company, which will become an investment company focused on the "support and business services sectors," it said.
In a separate statement Friday, Work Group reported its results for 2014 that saw its loss widen after revenue tumbled by almost a third.
The company, which operates in the recruitment space, reported a pretax loss of GBP3.5 million in the year ended December 31, 2014, widening from the GBP1.4 million loss a year earleir as revenue tumbled to GBP7.6 million from GBP10.4 million.
One of the reasons for revenue falling was the company's sale of Armstrong Craven in 2013, leading the company to restructure the business in 2014.
Work Group said a number of "significant" pitches and projects that had be won in the first half of the financial year did not materialise in the second half, also hampering revenue.
In addition, graduate interviewing operations at the company's resourcing division, which it described as "normally reliable revenue", declined considerably, as clients witnessed a significant fall in graduate applications, resulting in a 40% decline in revenue from that division.
However, overseas operations in Hong Kong and New York made progress, producing an 8% and 40% year-on-year rise in net income fees during the period.
"Overhead cuts were implemented in the second half of the year, including board remuneration; however the speed of change in the UK business made it impossible to align costs and revenues. The company continues to carry excess property liabilities and other corporate costs which have proved difficult to cut," said Work Group.
The company's headcount fell by 23% in the year, bringing its total workforce down to only 82 from 106 at the end of 2013.
Work Group said it plans to release its half year results for the current financial year before the end of next Wednesday - allowing the suspension of the company's shares trading on AIM being lifted.
By Joshua Warner; [email protected]; @JoshAlliance
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