Pre-close Trading Update

Released : 04/08/11 07:00

RNS Number : 7060L
Matchtech Group PLC
04 August 2011
 



4 August 2011

 

Matchtech Group plc

 

Pre-close Trading Update

 

Matchtech Group plc (the "Group"), one of the UK's leading specialist recruitment agencies operating in the Engineering, Science, Technology and Professional Services sectors, provides the following Pre-close Trading Update for the year ended 31 July 2011.

 

The Group intends to release its Preliminary Results for the year ended 31 July 2011 on 6 October 2011.

 

Since our last update on 7 April 2011, trading in the final 4 months of FY2011 has continued broadly in line with the Board's expectations.

 

Trading performance improved significantly in H2 over H1.  After reporting profit before tax in FY2011 H1 of £2.3m, profit before tax in FY2011 H2 is expected to return to 2010 half-year levels (H1: £4.4m, H2: £4.2m).

 

 

Net Fee Income (NFI)

 







Change v comparable period

NFI

FY2011

Year

FY2011

H2

FY2011

H1

FY2010

Year


FY2010

FY2010 H2

FY2010 H1


£m

£m

£m

£m


%

%

%










Contract

20.4

10.9

9.5

20.1


+1%

+4%

-1%

Permanent

9.2

5.1

4.1

6.1


+51%

+59%

+41%

Total

29.6

16.0

13.6

26.2


+13%

+17%

+9%










Business Mix









Contract

69%

68%

70%

77%





Permanent

31%

32%

30%

23%














Contractors on assignment *

6,000

6,000

5,200

5,100


+18%

+15%

+2%

 

* at end of period

 

NFI for the year was up 13% on FY2010. 

 

Contract NFI for the year was essentially unchanged compared with FY2010. The impact of the margin reductions on the renewal of the Group's two largest contracts at the end of FY2010 was reflected in contract margin falling from 7.8% in FY2010 to 6.9% in FY2011.  The Board believes the pressure to reduce margins has eased, with contract margin similar in both half-years in FY2011.

 

Contractor numbers have continued to increase and at 31 July 2011 were over 6,000, up 18% on 31 July 2010. Numbers were up by 800 (15%) from 31 January to 31 July 2011, with much of this growth occurring in the last quarter.  Whilst this growth has had limited impact on this year's NFI, it has increased the level of debtors and net debt at 31 July 2011, as explained below.

 

Permanent Fees have grown significantly in FY2011, mainly as a result of the Group's investment in Professional Services, which have continued to grow Quarter on Quarter, although the Group's Permanent Fees in Q4 overall were marginally lower than in Q3.

 

 

NFI by Sector

FY2011

FY2011

H2

FY2011

H1

FY2010

FY2010

 H2

FY2010

H1


£m

£m

£m

£m

£m

£m








  Engineering

10.3

5.5

4.8

9.7

5.0

4.7

  Built Environment

5.2

2.7

2.5

5.2

2.6

2.6

  Information Systems & Technology

6.0

3.2

2.8

4.8

2.7

2.1

  Science and Medical

1.9

1.0

0.9

1.5

0.6

0.9

Matchtech UK

23.4

12.4

11.0

21.2

10.9

10.3








Germany

0.6

0.4

0.2

0.2

0.2

0.0

Professional Services

4.3

2.5

1.8

3.0

1.7

1.3

elemense

1.3

0.7

0.6

1.8

0.9

0.9

Group

29.6

16.0

13.6

26.2

13.7

12.5

 

Matchtech UK

 

Engineering sector performed well throughout FY2011 with NFI in H2 up 15% on H1 and FY2011 up 6% on FY2010. Performance was based around the increasing volume of contract recruitment under our major framework agreements.

 

Built Environment's NFI remained stable, despite challenging market conditions.

 

Information Systems & Technology grew strongly, with NFI in H2 up 14% on H1 and FY2011 up 25% on FY2010.  Our niche focus, along with a candidate skills shortage, is pushing up demand. 

 

Science and Medical, formed in August 2010, had a strong H2, with NFI up 11% on H1 and up 67% on FY2010 H2.  FY2011 was up 27% on FY2010.

 

Germany

 

Trading in Germany continues to gain momentum. We are now starting to make good progress within the Aerospace sector with a number of key contract wins, however developing a presence in the Automotive sector has been slower.

 

Professional Services

 

Our new Professional Services brands, Barclay Meade and Alderwood Education, are becoming established.  Having invested heavily in this sector, NFI in H2 was up 39% on H1 and FY2011 up 43% on FY2010.

 

elemense

 

elemense continues to provide Account Management support for key clients, indirectly generating revenue for the Group.  elemense's NFI reduction this year was essentially due to a change in the trading arrangement with our largest client at the start of FY2011.

 

 

Overheads and Headcount

 

As reported in the Interim Results to 31 January 2011, the Board's investment in additional staff and locations, especially in Professional Services, has resulted in an increase in overheads.  H2's overheads were similar to those in H1.

 

Headcount at 31 July 2011 was 350 (31 January 2011: 341, 31 July 2010: 315). 

 

 

Working Capital, Cashflow, and Net Debt

 

As reported above, the volume of activity has grown significantly in H2 over H1, as evidenced by an increase in Contractors on assignment of 15% from 5,200 at 31 January 2011 to 6,000 at 31 July 2011.  There was an increase of £11m in billings (including VAT) from £21m in January 2011 to £32m in July 2011.

 

Because the Group pays its contractors before it is paid by its customers, the resulting increase in debtors, and hence working capital requirement, has increased net debt by £11.0m at 31 July 2011 to £15.8m (31 January 2011: £4.8m).  The aged debtor profile at 31 July 2011 remains similar to that at 31 January 2011.

 

Cash outflow in H2 includes dividends of £1.2m, tax of £1.0m and capital expenditure of £0.3m.

 

 

Banking Facilities

 

In July the Group agreed an increase in its banking facilities from £25m to £35m, in place until April 2013. 

 

 

Board Appointment

 

As announced separately today, the Group is pleased to announce that on 3 August 2011 Richard Bradford (48) was appointed as a Non-Executive Director of the Group.  Richard has a background in solutions and services businesses.  He was Chief Executive of AIM listed Carlisle Group from 1997 to 2008, up to and including the merger to create Impellam Group (AIM: ipel).  Richard was previously Chief Executive of LPM Group, a private equity backed mid-market group of facilities management investments, and his early career was with Exel Logistics (now DHL).  He is currently Chief Executive of UK based InHealth Group, a leading provider of diagnostics and imaging services. 

 

 

Outlook

 

The Group's investment in sector and geographic diversification is starting to show results, particularly in the Professional Services sector. However, it has taken longer than expected to bring our new sectors on stream and it is difficult therefore to gauge the pace of future development.  Additionally, the Board is mindful of the uncertain economic backdrop.

 

The Board remains committed to its strategy and to maintaining its current dividend policy. With the investment in additional staff made and the Group's diversification into new sectors, the Board remains confident about the Group's prospects over the medium term.

 

 

For further information please contact:

 

Matchtech Group plc                                                  01489 898 989

Adrian Gunn, Chief Executive Officer

Tony Dyer, Chief Financial Officer

 

MHP Communications                                                020 3128 8100

John Olsen / Ian Payne / Giles Robinson

 

Arbuthnot Securities                                                 020 7012 2000

James Steel / Tim Willis   

 


This information is provided by RNS
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