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View All NewsUK – Matchtech releases trading update, acquires Networkers International, and bids farewell to CEO
Specialist engineering and professional services recruitment firm Matchtech Group (MTEC: LSE) today released a pre-close trading update for the six months ending 31 January 2015, advising that net fee income (NFI) for the first half of financial year 2015 was up 2% compared with last year.
H1 2015 | H1 2014 | Change | |
Engineering NFI | £14.1 million | £13.3 million | +6% |
Professional Services NFI | £8.4 million | £8.8 million | -5% |
Group NFI | £22.5 million | £22.1 million | +2% |
Contract NFI for the period, which increased by 2% to £16.2 million, year-on-year, accounted for 72% of Group NFI, unchanged from last year.
Engineering has seen continued strong demand for contractors, particularly within both the Infrastructure and the Power & Nuclear markets, whose NFI is £600,000 and £300,000 higher, respectively, than the same period last year. The increase was somewhat offset by a £200,000 reduction in NFI within Maritime following the closure of shipbuilding at the Portsmouth Naval Base, as well as a £500,000 reduction in NFI in Oil & Gas.
Permanent fees rose by 2% to £6.3 million, year-on-year. Demand for permanent staff within the Engineering segment continued to improve, with NFI up 22% on last year, including 60% growth in Infrastructure, 40% in General Engineering, and 25% in Maritime.
The 10% decline in the Professional Services segment was due to an underperformance in Professional Staffing, with NFI down 13% compared with the same period last year with penetration into the Group’s non-core markets proving challenging. Technology NFI was broadly similar to the same period last year.
In addition to the trading update, Matchtech today announced that they have reached an agreement to acquire listed UK recruitment firm Networkers International (NWKI: AIM) for a total consideration of £57.9 million.
Shareholders in Networkers International, will be entitled to receive £0.34 in cash and 0.06 new Matchtech shares in exchange for each share in Networkers International.
The Matchtech Board believes the acquisition will accelerate its vision to become the market leading specialist recruiter in engineering and technology, in the UK and internationally, as it can assist to:
- Sharpen focus on key niche markets in the white collar recruitment space, adding Networkers’ Telecoms and Technology expertise to Matchtech’s existing strength in Engineering and Technology, and enabling the combined Group to capitalise on the convergence of the skill sets demanded by these markets;
- Continue improvements in gross profitability as Networkers’ higher price points and percentage gross margins are added to Matchtech’s improving performance in this area;
- Allow Matchtech to internationalise its existing service offering by leveraging Networkers’ existing global infrastructure, thereby lowering the cost, time and risk of Matchtech’s planned geographic expansion and allowing Matchtech to better address the skill shortage issues reported by its clients worldwide; and
- Improve opportunities for candidates by enhancing Matchtech’s international capability; for example, UK qualified engineers are increasingly seeking to gain experience globally.
Networkers International’s largest market is Europe, responsible for just over 80% of revenue but the company’s global network also spans Africa, Asia, Middle East & the Americas providing Matchtech with opportunities in a number of new and-high growth staffing markets. In its last reported results (for the six months ending June 2014), Networkers International reported a 2% revenue increase to £81.1 million but gross profit fell by 6.1% to £13.8 million and operating profit decreased by 16.7% to £2.8 million.
The Matchtech Board has separately announced this morning that Adrian Gunn, the current Chief Executive Officer of Matchtech believes that this is the appropriate time to bring forward his retirement from the business (which he originally planned for 2016), and is stepping down with immediate effect.
As a result, Brian Wilkinson will move from being Executive Chairman to being Chief Executive Officer; and Ric Piper, currently Senior Independent Non-Executive Director of Matchtech, will assume the role of Interim Non-Executive Chairman until a permanent replacement is identified.
Commenting on the Acquisition, Brian Wilkinson, said: “We’re delighted to have reached agreement with the Networkers board of directors and are very excited with the prospects of the enlarged group. We continue to see major opportunities in our core markets of white collar engineering and technology recruitment.”
“Both digitisation and converging technology is creating further opportunities in these areas and the addition of telecoms recruitment to our portfolio creates an even stronger specialist Group. In addition, Networkers’ long-standing, substantial and profitable overseas operations will enable us to accelerate the introduction of our Engineering services to our international customers with a considerably reduced cost, risk and time profile.”
Spencer Manuel, Chief Executive Officer of Networkers, added: “Networkers has enjoyed loyal support from its shareholders as an independent company since it was admitted to AIM in 2006. The acquisition provides Networkers Shareholders with an opportunity to realise part of their investment at a premium for cash today and the Board believes the compelling characteristics of the combined business will be positive for its shareholders, customers and employees.”
Following the announcements, the company’s share price fell by 4.7% to £5.03, a decrease of 6.8% compared with last year. Based on its current share price, the company has a market value of £127.7 million.