Matchtech Group PLC Trading Update for 12 months ended 31 July 2015 (2753V)

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                     [phone] 
   Brian Wilkinson, Chief Executive 
                Officer 
  Tony Dyer, Chief Financial Officer 
 Newgate - Financial PR                 [phone] 
 Rob Newman / Andrew Jones 
 Numis Securities Limited               [phone] 
 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

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