Listed QS Baqus has issued a profit warning as its public sector contracts dry up in the wake of the election
Clive Sayer, its chief executive, said the group expected to make a £750,000 loss in the year ended 30 June, compared with a previous forecast of a £500,000 loss. Turnover is expected to be £7.4m rather than £7.8m.
It is the first time Baqus, which was founded when three consultancies merged and floated in December 2007, has made a loss.
Sayer said that contracts had dried up since the change of government last month. “The election has made it worse because there’s been a moratorium on a lot of things. There has been a distinct slowing down of activity.”
He pointed to a slowing of NHS contracts in particular, which had hit the consultancy’s involvement in several hospitals and GPs’ surgeries.
“Quite a lot of the NHS projects are disappearing or going slow. We have got projects sitting there on the books but clients are soft-pedalling them,” he said.
Sayer added that the company made about 60% of its turnover in the public sector, scooping the largest proportion of state contracts from the NHS. It also has contracts in education, social housing and infrastructure.
Sayer said the group was pricing work more aggressively to secure contracts, and that profit margins had fallen, although he declined to say by how much. Margins stood at about 9% this time last year.
Patrick Lineen, Baqus’ finance director, said: “Some firms are putting in suicidal bids. We are going in low but not putting in loss-making bids.”
Despite the profit warning, Sayer predicted that the company would recover its position in the near future. “We expect to break even in the next financial year, starting in July,” he said.
Baqus in numbers
£250,000 net cash on 24 March
£500,000 overdraft facility
£7m expected turnover in 2011
2p share price (12p when listed)
£700,000 cost reductions in last 12 months