World Careers Network: I Am Locked Into A 35% Loss Following A Stupid Company Rebranding And Likely End Of A Major Contract

01 May 2018
By Maynard Paton

Update on World Careers Network (WOR).

Event: Interim results for the six months to 31 January 2018 published 30 April 2018

Summary: Yet again the recruitment software developer delivered results that warned of greater costs and lower client fees. However, this statement was also accompanied by details of a company rebranding — which seems a complete joke project to me. Instead, management really should be addressing why the firm looks to have lost its largest customer. I have sat on a 35% loss here for three years now, and have been taught a tough lesson about illiquidity. Sadly I continue to hold.

Price: 235p
Shares in issue: 7,610,304
Market capitalisation: £17.9m
Click here to read all my WOR posts


My thoughts:

* He did say there would be a “material adverse impact

This time last year, WOR admitted its 2018 earnings would experience a “material adverse impact” due to a mix of slow sales to new clients and greater operating costs.

As such, these results were never going to be spectacular.

In the event, revenue dropped 1% while operating profit dived 42%. The sole positive from this H1 performance was that it was not as bad as H2 2017, when operating profit collapsed to £102k.

That said, the prospect of another woeful H2 seems high. WOR’s executive chairman, Charles Hipps, confessed:

“Low new sales in the first half of the year, and known reductions in subscription revenues from the existing client base, mean that we expect profits for the second half of the year to be lower than the first half and for this to be reflected in a lower profit for the full year than we achieved in 2017.”

Perhaps if WOR held its seminars away from converted bunkers…

Source: @WCN_eRec

…then new sales would not be so elusive.

* Substantial HMRC contract looks to have been lost

When I studied November’s annual figures, I wrote:

“I note the term “known reductions in revenue from the existing client base”.

I bet that concerns HMRC, which is WOR’s largest customer and represents about 12% of group revenue.

My investigation back in 2015 revealed that HMRC’s standard monthly payment to WOR had dropped by a massive 66%.

The HMRC contract is up for renewal in early 2018 and I dare say WOR has again pitched a lower fee to keep the business. “

Well, it seems WOR has lost its HMRC contract — at least judging by HMRC’s monthly spreadsheets.

The spreadsheets for January, February and March made no mention of WOR. HMRC produced approximately 14% of WOR’s 2017 revenue and would be a significant client loss.

* Stupid name change could disguise a more pressing problem

I had to snigger at this remark from the aforementioned Mr Hipps:

“As we continue to grow the business, we want our brand to best reflect why we exist, what we believe in, and where we are heading. In order to achieve this we intend to change our logo, our visual identity and the branding of our products and services and, alongside this, the name of the company.”

Continue to grow the business!? Excuse me Mr Hipps, but operating profit currently runs 80% below the level reported for 2014.

The company name will be changed to Oleeo plc.

No, I am not sure how exactly Oleeo reflects why the company exists, what it believes in and where it is heading either.

I also doubt this rebranding exercise will disguise what could be a more fundamental problem — that the products just aren’t good enough — and why perhaps HMRC has jumped ship.

I can only trust Mr Hipps spent a few minutes on Domainhole rather than employ costly consultants for this joke project.


With earnings continuing at a very depressed level and no sign of any imminent improvement, gauging WOR’s valuation remains tricky.

The only real yardstick is the £11.0m net cash position, which adjusting for likely upfront customer payments is probably about £9.5m. With a market cap of £17.9m, the underlying business could arguably be valued at £8.4m.

However, that £8.4m figure does not appear to be an obvious bargain given the £491k trailing operating profit.

The straw to clutch, of course, is that WOR’s investment in marketing and so on eventually pays off, revenue then advances, and profitability in time rebounds to the previous heights of £2m-plus. (I acknowledge this projection could be wishful thinking.)

I have held this share for three years now and have been stuck with a 35% loss for almost all of that time.

While I am a patient investor, the (likely) loss of the HMRC contract alongside the stupid name change has left me somewhat uncomfortable with the business.

Indeed, I am beginning to sense the group’s extra costs are to help its products catch up with the competition, rather than to extend their prominence.

Normally I would be selling out here, but WOR has taught me a tough lesson about illiquidity — the free float has only a c£1m market value and I just can’t sell without crashing the share price.

As such, I have to resign myself to keeping WOR on and hoping I do not face another three years of holding ‘dead money’.

Maynard Paton

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Disclosure: Maynard owns shares in World Careers Network.

4 thoughts on “World Careers Network: I Am Locked Into A 35% Loss Following A Stupid Company Rebranding And Likely End Of A Major Contract

  1. Maynard Paton Post author

    World Careers Network (WOR)

    HMRC payments update:

    I continue to monitor the monthly expenditure updates from HMRC, what was WOR’s largest customer (but may be no longer).

    HMRC’s data now covers March 2018:

    No reference to WOR again this month. Three consecutive months without payment has never happened before — and feels ominous.

    Here is that HMRC contract again.

    The contract ran until 31 January 2018.


  2. Daniel Wilsher

    Dear Maynard

    Just a style point. You’r blog is a really nicely measured and elegant thing,
    The tone speaks of calmness and care in your investing. Recent posts use more intemperate words – bullshit, complete joke. You sold one holding and would sell the other. Not sure what to make of the language shift. It’s not typical.

    We all have an interest in psychology and investing. Language gives us clues as to our state of mind.

    Best wishes


    1. Maynard Paton Post author

      Hello Dan

      Thanks for the comment. I guess I have become too frustrated with developments at certain companies, and do not wish to ‘beat around the bush’ with my view. Sorry if the language has offended.


      (EDIT 06 May: PS I thought about this overnight, and decided to change the wording within the Record post)

  3. Hope that helps

    Hello Maynard – Recruitment activities for Civil Service now fall under Cabinet Office, not HMRC. This may help inform your view.


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