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Matchtech Has Increased Optimism In Its Outlook

Matchtech Has Increased Optimism In Its Outlook

Half year financial report for the six months ended 31 January 2010


Matchtech Group plc, one of the UK's leading specialist technical recruitment companies, today announces its unaudited results for the six months ended 31 January 2010.

Although these results reflect the impact of the challenging economic downturn on customers' activity levels compared with the two prior six month periods, since the second half of FY2008/09 the weekly run rate of permanent recruitment fees has stabilised and contractors on placement at 31 January 2010 were at a record level of 4,750, up 6% on 31 July 2009.

Highlights for the six months ended 31 January 2010

Revenue of 125.4m (down 9% on 2009 H1 down 5% on 2009 H2)
Net Fee Income (NFI) of 12.5m (down 25% on 2009 H1 down 9% on 2009 H2)
Permanent recruitment fees stable at 2.8m (down 47% on 2009 H1 in line with 2009 H2)
Record number of contractors on placement 4,750 at 31 January 2010 (up 6% on 31 January 2009 up 6% on 31 July 2009)
Operational cost savings of 2.4m against 2009 H1
Operating profit 4.5m (down 30% on 2009 H1 down 15% on 2009 H2)
NFI Conversion 36.1% (2009 H1: 38.6%, 2009 H2: 38.7%)
Profit before tax 4.4m (down 28% on 2009 H1 down 15% on 2009 H2)
Basic EPS 13.58p (down 29% on 2009 H1 down 11% on 2009 H2)

Interim dividend maintained at 5.0 pence per share (2009: 5.0 pence)

Cash flow from operations 5.9m (up 44% on 2009 H1 up 4% on 2009 H2)
Debtor days 43 days (2009 H1: 42 days 2009 H2: 42 days)
Net cash at end of period of 0.8m (31 January 2009: net debt 3.7m 31 July 2009: net debt 1.2m).
Banking facilities extended, 25.0m for 3 years until April 2013

Trading since 31 January 2010 & Outlook

Permanent recruitment fees remain stable at the weekly run rate of 2010 H1.
Over 5,000 contractors on placement during March 2010, an all time record and up 5% since 31 January 2010.
Based upon current market conditions and expected run rates, the outlook for the full year is now slightly ahead of the Board's previous expectations.

Commenting on the results, George Materna, Chairman of Matchtech said:
"We are pleased with these first half results in what remain challenging economic conditions. Increased business development work is resulting in increased exclusivity with customers, although levels of business remain subdued in many markets.

We took steps during 2009 to reduce the Group's cost base to reflect market conditions. With around 50% of the Group's NFI exposed to sectors dependent on the public sector, albeit much of it on long-term contracts, we will continue to monitor the impact of future changes to public sector expenditure to ensure resources remain appropriately aligned with market conditions.

At the same time we continue to invest in selected strategic initiatives. The new "elemense" Recruitment Process Outsourcing (RPO) brand, launched in July 2009, has shown early signs of success in delivering broader RPO services in the technical sector. We are now seeking to strengthen our business development activity in non-technical markets.

Our recently launched German operation, which focuses on the engineering market, has made a sound start in line with our expectations.

We increased the Group's headcount by 3% over the period, including making key senior appointments within Professional Services, a sector in which there are early signs of increased activity and one in which we are developing our plans for expansion in FY2010/11. Looking ahead we anticipate a material increase in the Group's sales force headcount over the coming months.

The strength and resilience of the business allows the Board to adhere to its strong dividend payout policy and the Board is pleased to declare a maintained interim dividend of 5.0 pence per share.

Although the economic climate remains subdued, the continued efforts of our staff in maintaining and developing our business, the relative stability of the marketplace during the period and signs of increased activity in some sectors, all give the Board increased optimism in its outlook for the current financial year. The Board now expects the results for the year to 31 July 2010 to be slightly ahead of its previous expectations and remains confident in the Group's prospects over the medium term."


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