Alleged fraud set to dent Contract Connections owner
SPECIALIST IT recruitment group InterQuest has announced a major client termination at its recently acquired subsidiary Contract Connections Ltd.
InterQuest said it that due to apparent “impropriety and alleged fraud” within a major client of CCL, which is based in London and Birmingham, the client had terminated its contract with CCL.
In a statement today, InterQuest said: “The client has withheld, pending an ongoing investigation, £0.6m owed to CCL which has arisen during the normal course of business. In the opinion of the board and its legal advisors, the termination represents a breach of the contract between CCL and the client. The board therefore believes that there will be a path to seeking restitution and potentially damages in due course.”
However, the board said in light of the circumstances it believed it appropriate to impair both the receivable (£0.6m) and the related goodwill arising on the business, which together are worth£2.6m.
“As such, while the group as a whole continues to trade well and the board continues to explore expansion opportunities, the group’s results for the year ending December 31, 2011 will be adversely impacted,” it added.
The termination is not expected to dent the group’s long term position as it will only reduce the number of contractors currently on assignment by around 40 out of a total of more than 1,200 across the group.
Outside of CCL, InterQuest said it expected to trade in-line with the board’s expectations, delivering revenue growth and increasing levels of profitability.
The company said it would update investors when appropriate. InterQuest will announce its half year results on September 13.
InterQuest, which acquired CCL in June in a deal worth £4.6m, provides contract and permanent recruitment services within various niche sectors in the UK and Europe. The group comprises 17 separately branded divisions covering a broad range of skill sets and industries including Public Sector, SAP, Oracle, CRM Testing, Banking, Insurance, Retailing, Pharmaceuticals, Media, Analytics, Infrastructure and Communications.
