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Net fee income (NFI) was up by +13% from 26.2 million Pounds in financial year (FY) 2010 to 29.6 million Pounds in FY2011 at Matchtech Group Plc (MTEC:LSE), the specialist technical recruitment company.
A pre-close trading update for the year ended 31 July 2011 reveals that net fee income generated from contract placements was up by +1% from 20.1 million Pounds in FY2010 to 20.4 million Pounds in FY2011.
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.
Contractor numbers have continued to increase and at 31 July 2011 were over 6,000, up by +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.
Net fee income generated from permanent placements was up by +51% from 6.1 million Pounds in 2010 to 9.2 million Pounds in 2011.
The growth in permanent fees in FY2011 was mainly due to 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.
In the UK the engineering sector performed well throughout FY2011 with NFI in H2 up by +15% on H1 and FY2011 up by +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 by +14% on H1 and FY2011 up by +25% on FY2010.
Science and Medical, formed in August 2010, had a strong H2, with NFI up by +11% on H1 and up by +67% on FY2010 H2. FY2011 was up by +27% on FY2010.
Trading in Germany continues to gain momentum. The group is 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.
The new professional services brands, Barclay Meade and Alderwood Education, are becoming established. The group has invested heavily in this sector and NFI in H2 was up by +39% on H1 whilst FY2011 was up by +43% on FY2010.
Elemense continues to provide account management support for clients, indirectly generating revenue for the group. Elemense's NFI reduction this year was essentially due to a change in the trading arrangement with the group's largest client at the start of FY2011.
Matchtech says in a statement "the group's investment in sector and geographic diversification is starting to show results, particularly in the professional services sector. However, it has taken longer than expected to bring our new sectors on stream and it is difficult therefore to gauge the pace of future development. Additionally, the board is mindful of the uncertain economic backdrop."
The board remains committed to its strategy and to maintaining its current dividend policy. With the investment in additional staff made and the group's diversification into new sectors, the board remains confident about the group's prospects over the medium term."
In early trading Matchtech's shares were up by +0.93% to 220.54 Pence.