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Matchtech Group plc

Matchtech Group plc 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 &pound2.3m, profit before tax in FY2011 H2 is expected to return to 2010 half-year levels (H1: &pound4.4m, H2: &pound4.2m).

Net Fee Income (NFI)

Change v comparable period

NFI

FY2011

Year

FY2011

H2

FY2011

H1

FY2010

Year

FY2010

FY2010 H2

FY2010 H1

&poundm

&poundm

&poundm

&poundm

%

%

%

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.

 ontractor 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

&poundm

&poundm

&poundm

&poundm

&poundm

&poundm

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.

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