World Careers Network

Internet-based recruitment software concern World Careers Network (WCN) suffered a profits fall last year on significant business lost from the financial sector.

During what chairman Ian Moore described as a ‘particularly gruelling’ year to July, pre-tax profits retreated by £156,000 to £585,000 at WCN, as turnover waned 14% to £4.15m, on the back of clients failing as a result of the financial crisis as well as lower levels of discretionary spend from its customer base.

Profits were also pegged back by investment spend – over recent years, WCN has invested heavily in software product development – although the effects were somewhat cushioned by £546,000 worth of cost reductions achieved.

Though market conditions remain uncertain for WCN, in the second half, sales were £100,000 up on the first as a result of new clients won and the company says it is now increasing headcount so that it can maintain high levels of client satisfaction. Furthermore, WCN finished last year with a healthy £3.4m in cash – roughly half its current market value – enabling the board to maintain dividends at 3.5p despite the decline in profitability.

Nevertheless, the shares, now 90p against 52-week highs and lows of 100p and 88.5p, are not particularly cheap, trading on around 16 times historic earnings of 5.65p (2009: 6.54p).

Given the uncertainties ahead, we feel they are best avoided for the time being.