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UK — Kellan Group makes a loss

30 September 2009

Kellan Group plc (KLN:LSE), the temporary and permanent recruitment agency group announces its half year interim results for the six months ended 30 June 2009.

Revenues were down from 25.4 million Pounds during the first six months of 2008 to 15.2 million Pounds in the same period of 2009. Net fee income was down by 49% to 6.6 million Pounds.

Adjusted EBITA amounted to a loss of 1.6 million Pounds compared to a profit of 2 million Pounds in 2008. Loss per share was 3.7 Pence compared to a 1.5 Pence profit per share in 2008.

Kellan Group's CEO, Ross Eades said, "the six months to 30 June 2009 have been a period of considerable change and challenge for the Kellan Group. It is not surprising that a Group like ours, which has historically been heavily dependent on the permanent recruitment market for the bulk of its net fee income, has suffered due to the reduction in demand for these services arising from the economic downturn."

"This has also been the case with many of our competitors. Following my appointment as CEO in late April it was necessary to both continue and accelerate the existing cost reduction initiatives as well as streamline the management structure in order to stem the tide of NFI decline and further lower the cost base. That said, I have been pleased with the way in which the divisional management have continually reacted to the challenge of cutting their cloth to match current market demands."

"Although our longer term strategic aims remain the same, the focus for the Group in the short-term is clearly returning the business to profitability and it is paramount that we are exerting all our efforts towards weathering the economic storm whilst ensuring we are well positioned for the upturn."

"I am pleased to be able to report that the management team has continued to develop and implement the corrective actions and our operating cost base (excluding exceptional items, depreciation, amortisation and share based payment charges) which is 8.1 million Pounds in the current six month period (June 2008: 10.8 million Pounds) is anticipated to be below 6.5 million Pounds for the second half of 2009."

"Whilst we are cutting back to the core within many of our business units we all understand the importance of ensuring that we don't cut too deeply in to the fabric of each business. As a services business the majority of the cost cutting exercises have been focused on reducing headcount and scaling back positions which are no longer required."

"This has mainly been non-revenue generating positions which don't 'ring the till'. Although it has been far from pleasant to have to disassemble and unpick areas of our Group I have been extremely pleased with the understanding, resilience and positive nature shown by our staff."

"Although recently we have experienced a slight rise in job vacancy traffic we remain cautious about the overall economic outlook. We will continue to structure and invest for the future during the second half of this year, as well
as continue to look for potential value enhancing acquisitions. We will work hard to ensure that the short term economic environment does not deter our longer term ability to build a successful, durable company that will be a
significant force in recruitment in the coming years."

Kellan Group's business divisions include: Quantica Search and Selection; Quantica Technology; Berkeley Scott; RK Accountancy; RK Supply Chain; and RK Search and Robinson Keane.

In early trading Kellan Group's shares were unchanged at 6.25 Pence.



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