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Kellan Update

Kellan Update

Tony Reeves, co-chairman of Kellan Group Plc, provided the following update on trading for the Group, for the period from 1 January 2009 to 30 April 2009.

"As we highlighted in our 2008 year end results statement the economic downturn continues to present a challenging environment for UK recruitment businesses, particularly those with a predominant mix of permanent recruitment income such as Kellan.

"The first quarter of 2009 saw revenues and net fee income reduce by 10% and 14% respectively over the final quarter of 2008 and by 34% and 42% respectively over the comparative quarter in the prior year.

"Like our peers we have seen the longer term visibility of our income streams reduced and trading conditions remain challenging. Our net fee income remains in decline and we have initiated further cost cutting, including to our property and IT infrastructure. We have also further reduced our employee headcount which forms the most significant part of our cost base. Staff numbers at the end of April 2009 were 245 compared to 364 last year. Despite these additional cost reductions that we have implemented since year end, we currently anticipate that the outlook for the full six month trading period will return an operating loss.

"We have appointed an excellent new CEO Ross Eades, who joined in April from InterQuest Group plc. Ross has led significant successes in his career as CEO of staffing organisations and has led companies through challenging times. He also has a track record and expertise in acquisitions and the ability to lead the Group into new areas and strengthen our position in sectors such as IT where his experience is first class.

"The head office for Kellan has been relocated to London to allow us to be closer to both our core and potential client base. Over the long term we also see benefits in having access to a greater talent pool as the Group expands.
"Our strategy of organic and acquisitive growth remains unchanged. We are reducing and realigning our cost base in accordance with our revenues whilst still remaining focused on ensuring that we retain an appropriate balance of revenues and costs for the long term future of the Group. If required, the Board may seek an equity issuance in order to both retain the key talent it believes it now has within the business and to ensure we are sufficiently capitalised to take advantage of opportunities when market conditions improve"

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