TIDMMTEC
RNS Number : 2753V
Matchtech Group PLC
06 August 2015
6 August 2015
Matchtech Group plc
("Matchtech" or, "the Group")
Trading Update for 12 months ended 31 July 2015
Matchtech Group plc (LSE-AIM: MTEC), the UK's leading specialist
Engineering, IT and Telecoms recruitment agency, today provides the
following pre-close trading update for the 12 months ended 31 July
2015.
The Group expects profits to be in-line with current market
expectations, including a maiden four months of contribution from
Networkers International ("Networkers"), which was acquired on 2
April 2015.
Performance Summary
Change vs. comparable
period
Combined Group FY 2014 H1 2015 H2 2015 FY 2015 H1 2015 H2 2015 FY 2015
GBPm GBPm GBPm GBPm
Contract NFI 32.8 16.3 23.8 40.1 +3% +41% +22%
Permanent NFI 12.2 6.2 8.7 14.9 +0% +45% +22%
----------------------- -------- ---------- -------- --------- -------- -------- -------------
Total NFI 45.0 22.5 32.5 55.0 +2% +42% +22%
----------------------- -------- ---------- -------- --------- -------- -------- -------------
Change vs. comparable
period
Matchtech FY 2014 H1 2015 H2 2015 FY 2015 H1 2015 H2 2015 FY 2015
Contract GBPm GBPm GBPm GBPm
Engineering 22.6 11.3 11.8 23.1 +3% +2% +2%
Professional Services 10.2 5.0 5.0 10.0 +2% -6% -2%
----------------------- -------- ---------- -------- --------- -------- -------- -------------
Total Contract
NFI 32.8 16.3 16.8 33.1 +3% -1% +1%
Permanent
Engineering 4.5 2.7 3.0 5.7 +17% +36% +27%
Professional Services 7.7 3.5 3.1 6.6 -10% -18% -14%
----------------------- -------- ---------- -------- --------- -------- -------- -------------
Total Permanent
NFI 12.2 6.2 6.1 12.3 0% +2% +1%
Total NFI 45.0 22.5 22.9 45.4 +2% +0% +1%
----------------------- -------- ---------- -------- --------- -------- -------- -------------
Change vs. comparable
period
Networkers (4 months) 4 mths 4 mths 4 mths H2 2015 FY 2015
2014* 2015 FY 2015
GBPm GBPm GBPm
Contract NFI 6.8 7.0 7.0 +3% +3%
Permanent NFI 2.7 2.5 2.5 -7% -7%
----------------------- -------- ---------- -------- --------- -------- -------- -------------
Total NFI 9.5 9.5 9.5 +0% +0%
----------------------- -------- ---------- -------- --------- -------- -------- -------------
*Prior to ownership by the Group not included in Combined Group
total above
Business Mix (Combined
Group)
FY 2014 H1 2015 H2 2015 FY 2015
Contract 73% 72% 73% 73%
Permanent 27% 28% 27% 27%
Contractors on FY 2014 H1 2015 H2 2015
assignment (**)
No. No. No.
Matchtech 7,000 7,000 6,900
Networkers 2,300
----------------------- -------- ---------- --------
Total Contractors 7,000 7,000 9,200
----------------------- -------- ---------- --------
** At Period End
Staff Numbers ** FY 2014 H1 2015 H2 2015
Engineering 178 186 160
Professional Services 131 117 82
----------------------- -------- ---------- --------
Matchtech Sales 309 303 242
Matchtech Support 105 106 102
----------------------- -------- ---------- --------
Matchtech Total 414 410 344
----------------------- -------- ---------- --------
Networkers 274
Networkers Support 99
----------------------- -------- ---------- --------
Networkers Total 373
----------------------- -------- ---------- --------
Combined Group
Sales 309 303 516
Combined Group
Support 105 106 201
----------------------- -------- ---------- --------
Combined Group
Total 414 410 717
----------------------- -------- ---------- --------
Group performance
The Combined Group NFI was ahead 22% in both contract and
permanent. This included 4 months contribution from Networkers, the
acquisition of which completed on 2 April 2015.
Performance - Matchtech
Matchtech's NFI in H2 2015 was up 1% compared with the same
period last year (Contract NFI and Permanent Fees both up 2%). The
Engineering segment, up 6% in the year, saw particularly strong
growth in Permanent Fees, up 27%, and 2% growth in Contract NFI.
Professional Services was down 7% in the year, 2% down in Contract
NFI and 14% down in Permanent Fees, with the second half impacted
by the previously reported closure of our Barclay Meade London
operation which had not, as a whole, gained enough traction to be
viable over the medium term.
Investment in headcount at the end of last year and in the first
half of this year did not translate into an expected increase in
client demand. Accordingly, Matchtech's Sales headcount was reduced
during the second half by 33 (26 in Engineering and 7 in
Professional Service) plus 28 from the closure of Barclay Meade in
London.
Combined with continued focus on the management of other
overheads, profitability is expected to be in-line with
expectations.
Performance - Networkers
The acquisition of Networkers valued the entire issued and to be
issued share capital of Networkers on a fully diluted basis at
approximately GBP57.9 million. Further Information about Networkers
and the acquisition was provided in the Group's announcement on 28
January 2015.
Since its acquisition, in the four months ending 31 July 2015,
Networkers has traded in-line with expectations, with NFI flat
(Contract up 3%, Permanent down 7%) over the same period in the
previous year.
Net Debt
H1 2015 H2 2015 FY 2015
GBPm GBPm GBPm
At start of period (3.1) (1.9) (3.1)
Dividends paid (3.6) (1.7) (5.3)
Net cash from activities(1) 4.8 9.6 14.4
Acquisition (including
costs) (32.1) (32.1)
Integration costs (1.0) (1.0)
Networkers Trading Debt
at Acquisition (8.4) (8.4)
------------------------------ -------- -------- --------
At end of period (1.9) (35.5) (35.5)
------------------------------ -------- -------- --------
(1) Includes effects of exchange rates
Net debt at 31 July 2015 was GBP35.5 million, up by GBP33.6
million from 31 January 2015. Of the increase, GBP32.1 million is
due to the cash consideration paid on the acquisition of Networkers
as well as the assumption of GBP8.4 million of Networkers'
debt.
Integration of Networkers
The integration process has started well and the Board is
increasingly confident of achieving its targets for overhead
savings by the end of FY 2016. This is expected to entail
exceptional integration costs of around GBP1.0m in FY 2015, and a
similar amount anticipated in FY 2016.
In addition, the Board has accelerated its plan to integrate
certain sales teams. In particular, with effect from 1 August 2015,
the IT businesses of Matchtech and Networkers will have a common
leadership and Networkers' engineering business will join
Matchtech's equivalent business.
Preliminary Results
The Group expects to announce its full year results for the 12
months to 31 July 2015 on Thursday 29 October 2015.
Brian Wilkinson, Chief Executive Officer, said:
"As I reported at the time of the Interim Results in April,
trading had been steady and this continued throughout the second
half. We have taken the necessary measures to meet our profit
targets, whilst investing to prepare the Group to exploit the major
opportunities in our core markets, opportunities which have been
significantly enhanced by the acquisition of Networkers.
"We remain committed to our strategy of being a specialist
recruitment group. Networkers has introduced telecoms to the
Group's offering and added long-standing, substantial and
profitable overseas operations, which will enable us to accelerate
the introduction of our Engineering services to our international
customer base, in the medium term.
"At the start of the new financial year, we will merge the
Matchtech and Networkers' IT businesses, and integrate the
engineering businesses, both to increase performance in the UK and
internationally.
"Looking ahead, the Board's plan is for Group NFI to return to
growth in the second half of the 2016 financial year, with further
growth over the medium term.
"I remain confident that we will convert the exciting
opportunities available to the Group into growth."
- ENDS -
For further information please contact:
Matchtech Group plc +44 (0) 1489 898989
Brian Wilkinson, Chief Executive
Officer
Tony Dyer, Chief Financial Officer
Newgate - Financial PR +44 (0) 20 7680 6550
Rob Newman / Andrew Jones
Numis Securities Limited +44 (0) 20 7260 1000
Michael Meade / James Serjeant
About Matchtech
Matchtech Group plc (LSE-AIM: MTEC), is the UK's leading
specialist Engineering, IT and Telecoms recruitment agency,
providing contract, temporary and permanent staff. Established in
1984 and AIM-listed in 2006, the Group is one of the fastest
growing staffing organisations listed in the UK, with a
well-balanced business model; approximately 70% contract and 30%
permanent.
In April 2015, Matchtech Group plc announced the completion of
the acquisition of Networkers International, a global recruitment
company specialising in the delivery of recruitment services
focussing on Telecoms and Technology.
Recruiting in over 100 countries across the world from 18
offices in 12 countries, the Group has over 580 sales staff, with
over 9,000 contractors on assignment and places 4,000 candidates
into permanent positions each year.
The combined group is well-placed to take advantage of the
convergence between Engineering, Technology and Telecoms skill sets
and creates a specialist recruiter, of scale, in the UK and
internationally.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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