Gattaca Regulatory News (GATC)

25 Apr 2007 07:01

Matchtech Group PLC25 April 2007 Matchtech Group plc 25 April 2007 Interim results for the six months ended 31 January 2007 Matchtech Group plc ("Matchtech" or the "Group"), one of the UK's leadingspecialist technical recruitment companies, is pleased to announce its maideninterim results for the six months ended 31 January 2007, following itsAdmission to AIM in October 2006. Financial Highlights • Turnover up 30% to £93.4m (2006: £72.1m)* • Net fee income up 29% to £12.5m (2006: £9.7m)* • Operating profit up 35% to £5.0m (2006: £3.7m)* • Operating profit margin 5.4% (2006: 5.1%)* • Profit before tax up 34% to £4.7m (2006: £3.5m)* • Reported profit before tax after non-recurring items up 14% to £4.1m (£2006: 3.6m) • Basic earnings per share (pre non-recurring items) up 38% to 15.66p (2006: 11.33p) • Basic reported EPS up 18% to 13.36p (2006: 11.33p) • Maiden interim dividend of 4.4p per share * 2006 and 2007 results exclude the sales and profits from the US business soldon 31 August 2006 as well as the non-recurring costs of the IPO Operating Highlights • Strong organic growth across all sectors (Engineering, Built Environment and Support Services) • Results reflect continuing strong demand for permanent placements • 27% increase in permanent placements and 15% increase in contractor numbers in the period • Major Master Vendor contract secured with Mouchel Parkman • Successful Admission to AIM in October 2006 • Adrian Gunn assumed the role of Group Managing Director on 1 February 2007 Commenting on the results, George Materna, Chairman of Matchtech said: "We are very pleased with these results, our first as an AIM-listed company,which show that Matchtech has continued to make strong progress on all fronts.The markets we serve are demonstrating strong demand for qualified white collarstaff and we are continuing to develop our offering though further investment inthe business. "There is evidence of continuing salary inflation in each of the sectors inwhich we operate and the market remains candidate driven. In the Engineering andBuilt Environment sectors, a shortage of suitably qualified engineers continuesto be a key factor in the marketplace, favouring our superior service deliverycapabilities which derive from our systems and people." "The second half has started well and we believe that we will be able to buildon what has been achieved in the first half, benefiting from our ongoinginvestment in staff, systems and additional office space. We look forward withconfidence to the future." For further information please contact: +----------------------------------------------------------+-------------------+|Matchtech Group plc | 01489 898989|+----------------------------------------------------------+-------------------+|George Materna, Chairman | |+----------------------------------------------------------+-------------------+|Adrian Gunn, Group Managing Director | |+----------------------------------------------------------+-------------------+|Tony Dyer, Group Finance Director | |+----------------------------------------------------------+-------------------+|Hogarth Partnership | 020 7357 9477|+----------------------------------------------------------+-------------------+|John Olsen / James Longfield / Fiona Noblet | |+----------------------------------------------------------+-------------------+ Background on Matchtech Matchtech specialises in the provision of contract and permanent staff in theEngineering, Built Environment and Support Services sectors across the UK. It was established in 1984 and has grown organically to become the UK's 4thlargest technical and engineering recruitment specialist and one of the UK's 20largest recruitment companies (Source: Recruitment International Top 100 Report- August 2006). Operating from a single site near Southampton, Matchtech provides predominantlyprofessionally-qualified candidates to clients in a broad range of industriesincluding oil and petrochemicals, marine, aerospace, automotive, water,electronics, civil engineering, building structures and transportinfrastructure. It structures its business across three main sectors:Engineering, Built Environment and Support Services. Matchtech Group plc floated on AIM in October 2006. MATCHTECH GROUP PLC Interim report for the period ended 31 January 2007 Chairman's statement Operating review The Group continued to see strong growth across all three of its sectors,Engineering, Built Environment and Support Services, during the first half. H1 2007 H1 2006 ChangeEngineering sectorNet fee income £6.8m £5.4m 26%Operating profit £3.0m £2.3m 30% Built Environment sectorNet fee income £2.8m £2.1m 33%Operating profit £1.2m £0.9m 33% Support Services sectorNet fee income £2.8m £2.2m 27%Operating profit £0.8m £0.6m 33% These results exclude any contribution from our small US business, which wassold on 31st August 2006, as well as the non-recurring costs of the IPO, andhave been achieved through organic growth alone. We have seen good progress in Engineering, our largest sector, where we saw asignificant increase in permanent fees, reflecting strong client demand forcandidates and continuing salary inflation. In particular demand was strong inOil & Gas and Pharmaceutical, where we achieved some important client wins andcontract extensions. Built Environment saw the strongest growth and we continue to gain market sharein this sector. We have broadened our capabilities to include Architecture,Building Services and Construction Site candidates and were delighted to enterinto a Master Vendor relationship with Mouchel Parkman towards the end of thehalf, significantly expanding our involvement with this client. Our newest sector, Support Services, continues to go from strength to strengthwith a number of strategically important client wins in the period, includingBritish American Tobacco and the Olympic Delivery Authority. We are alsoexpanding our offer in the procurement sector, which is providing opportunitiesfor cross-selling into other parts of the Group. We have seen strong increases in permanent placements in the half, along with anincrease in the average placement fee rates, as demand for candidates continuesto outstrip availability, and we have shown solid growth in contractor numberswhich stood at 3,900 at 31st January 2007. The Group has maintained a healthybalance between contract and permanent placements. H1 2007 H1 2006 ChangePermanent placementsNumber of permanent placements 1,022 805 27%Permanent fees £3.9m £2.9m 34%Average permanent fees per placement £3,855 £3,619 7% ContractorsNumber of working contractors 3,900 3,400 15%Contract net fee income £8.6m £6.9m 25% Contract / Permanent Mix 69% 70% Board Changes On 1 February 2007 we announced that Adrian Gunn, formerly Deputy ManagingDirector and Sales Director, had taken over the position of Group ManagingDirector. Adrian has been fundamental to the Group's success, having joinedMatchtech as a consultant in 1988. He has been a member of the senior managementteam for the past nine years and on the Board since 2004. Adrian took over the day-to-day leadership of Matchtech from Paul Raine, who hastaken up the role of Resources Director, with responsibility for IT, operations,marketing and compliance matters. This represents a smooth transition ofmanagement roles, with the established core executive team of Adrian, Paul andTony Dyer remaining in place. The Board thanks Paul for his past leadership and looks forward to hiscontinuing contribution in the revised role. People Our performance reflects the strength of our management team and the quality ofour staff. Their continued focus during a period of significant change as webecame a listed company, is a great testament to our strong operating culture. Iwould like to thank all our staff on behalf of our new shareholders for theircontribution. As a key feature of the Board's plans for growth, staff numbers were increasedby 23 in the period to 219. Staff attrition remained at 20%, which the Boardbelieves is well below the industry average. Financial Overview The Group achieved a strong set of results across all of its sectors in thefirst half of the year, reflecting strong trading conditions in each of thethree markets we serve. Turnover increased 30% to £93.4m (2006: £72.1m), with a similar increase of 29%in net fee income to £12.5m (2006: £9.7m). Both years' figures are statedexcluding the results from our small US business which was sold on 31 August2006. Underlying operating profit (excluding profits from the US business sold inAugust 2006 as well as non-recurring costs) was £5.0m, an increase of 35% (2006:£3.7m). This reflected an increase in operating margin to 5.4% (2006: 5.1%) aswe continued to achieve greater efficiencies within the business, as a result ofthe Group's single-site model. This was achieved despite continued investment innew staff, systems and office space in the period. Reported profit before tax was up 14% at £4.1m (2006: £3.6m) giving an increasein basic earnings per share of 18% to 13.36p (2006: 11.33p). Underlying profitbefore tax (excluding profits from the US business sold in August 2006 as wellas non-recurring items) was up 34% to £4.7m (2006: £3.5m). Earnings per share The Group continued to show strong growth in earnings per share. Basic earnings per share increased by 18% to 13.36p (2006: 11.33p), with basicearnings per share (pre non-recurring items) increasing by 38% to 15.66p (2006:11.33p). Fully diluted earnings per share increased by 19% to 12.82p (2006:10.77p), with fully diluted earnings per share (pre non-recurring items)increasing by 40% to 15.03p (2006: 10.77p). Cash flow Cash inflows from operating activities in the period were £4.1m (2006: £7.1m)representing cash conversion of 93% (2006: 121% excluding an increase increditors due to directors' loans and a decrease in debtors due to EBT loanrepayments.) Capital expenditure was £0.5m (2006: £0.3m), with the increase being mainly dueto the fitting out of additional office space. Net debt at 31 January 2007 was £11.5m (31 January 2006: £6.0m, 31 July 2006:£9.5m). During the period the Group agreed a loan facility with Barclays Bank;£4.6m was outstanding at 31 January 2007. In addition, the confidential invoicediscounting facility as at 31 January 2007 was £7.1m (2006: £6.6m) Dividend Reflecting the strong performance of the business in the first half, the Boardhas declared an interim dividend of 4.4 pence per share. Despite the fact thatMatchtech has only been a listed company for three months of the reportingperiod, the dividend is being paid in respect of the results for the full sixmonth period. The interim dividend will be paid on 22 June 2007 to thoseshareholders on the register at close of business on 8 June 2007. Growth strategy The Board's strategy remains unchanged from that outlined at the time of ourAdmission to AIM. We intend to maintain our stable low cost platform for growthin our target recruitment markets, each of which benefit from strong macrodrivers, and to continue with our successful business model based around abalanced contract/permanent mix. We aim to increase our market share and convertappropriate contingency business into beneficial retained business. The successof this strategy is demonstrated in the first half by extended relationshipswith British American Tobacco, Exxon, Severn Trent Water, Transport for Londonand Mouchel Parkman. Outlook Trading in the second half to date has remained encouraging. We are continuingto invest in the business, including a significant expansion of our office spaceand further investment in systems. Plans are underway to recruit a further 20graduates in the second half. The Board is confident that Matchtech is in robustshape and expects to be able to report sound progress in the second half. George Materna Chairman 25 April 2007 CONSOLIDATED PROFIT AND LOSS ACCOUNT for the six months ended 31 January 2007 Note 6 months 6 months 12 months to 31/01/07 to 31/01/06 to 31/07/06 Unaudited Unaudited AuditedTURNOVER £'000 £'000 £'000 Continuing operations 93,438 72,124 156,686Discontinued operations 135 733 1,442 -------- --------- --------- 2 93,573 72,857 158,128COST OF SALESContinuing operations (80,933) (62,455) (135,893)Discontinued operations (117) (604) (1,196) -------- --------- --------- (81,050) (63,059) (137,089)GROSS PROFITContinuing operations 12,505 9,669 20,793Discontinued operations 18 129 246 -------- --------- --------- 12,523 9,798 21,039ADMINISTRATIVE EXPENSESContinuing operations (7,475) (5,945) (12,554)Discontinued operations (10) (51) (93)Cost of Admission to AIM (572) 0 0 -------- --------- --------- (8,057) (5,996) (12,647) OPERATING PROFITContinuing operations 4,458 3,724 8,239Discontinued operations 8 78 153 -------- --------- --------- 2 4,466 3,802 8,392 NON-RECURRING ITEMProfit on sale of discontinuedoperations 59 0 0 -------- --------- ---------PROFIT AFTER NON-RECURRING ITEMS 4,525 3,802 8,392Net Interest and other similarcharges (377) (242) (549) -------- --------- ---------PROFIT ON ORDINARY ACTIVITIESBEFORE TAXATION 4,148 3,560 7,843 Tax on profit on ordinaryactivities 3 (1,172) (1,124) (2,098) -------- --------- ---------PROFIT ON ORDINARY ACTIVITIESAFTER TAXATION 2,976 2,436 5,745 -------- --------- --------- EARNINGS PER ORDINARY SHARE pence pence penceBasic 5 13.36 11.33 26.60Diluted 5 12.82 10.77 25.56 CONSOLIDATED SUMMARISED BALANCE SHEET as at 31st January 2007 31/01/2007 31/01/2006 31/07/2006 Unaudited Unaudited Audited £'000 £'000 £'000FIXED ASSETS 1,702 1,453 1,399 CURRENT ASSETSDebtors 25,818 21,595 24,670Cash at bank and in hand 353 626 495 --------- --------- --------- 26,171 22,221 25,165CREDITORSAmounts falling due within one year (18,656) (17,557) (19,313) --------- --------- ---------NET CURRENT ASSETS 7,515 4,664 5,852 CREDITORSAmounts falling after one year (2,917) 0 0 --------- --------- ---------TOTAL ASSETS LESS LIABILITIES 6,300 6,117 7,251 --------- --------- --------- CAPITAL AND RESERVESCalled-up equity share capital 225 215 221Share premium account 2,367 1,659 2,009Other reserves 685 477 567Profit and loss account 3,023 3,766 4,454 --------- --------- ---------SHAREHOLDERS' FUNDS 6,300 6,117 7,251 --------- --------- --------- CONSOLIDATED SUMMARISED CASH FLOW STATEMENT for the period ended 31 January 2007 6 months 6 months 12 months to 31/01/07 to 31/01/06 to 31/07/06 Unaudited Unaudited Audited £'000 £'000 £'000NET CASH INFLOW FROM OPERATINGACTIVITIES 4,098 7,069 7,540 RETURNS ON INVESTMENTS & SERVICINGOF FINANCE (377) (243) (549) TAXATION (1,256) (746) (2,006) CAPITAL EXPENDITURE (528) (286) (455) DISPOSAL OF INVESTMENT 105 0 0 EBT CAPITAL DISTRIBUTION 0 0 (1,070) EQUITY DIVIDENDS PAID (4,414) (2,579) (4,124) FINANCING 2,275 (3,178) 416 --------- --------- ---------INCREASE/(DECREASE) IN CASH (97) 37 (248) --------- --------- --------- CONSOLIDATED SUMMARISED CASH FLOW STATEMENT for the period ended 31 January 2007 RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES 6 months 6 months 12 months Unaudited Unaudited Audited to 31/01/07 to 31/01/06 to 31/07/06 £'000 £'000 £'000Operating profit 4,466 3,802 8,392Depreciation and amortisation 226 190 412(Profit)/loss on disposal of fixedassets 0 (4) (4)(Increase)/decrease in debtors (1,152) 868 (2,207)Increase in creditors 433 2,132 786Increase in FRS20 provision 125 81 161 --------- --------- ---------Net cash inflow from operatingactivities 4,098 7,069 7,540 --------- --------- --------- RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT 6 months 6 months 12 months to 31/01/07 to 31/01/06 to 31/07/06 Unaudited Unaudited Audited £'000 £'000 £'000Increase in cash in the period (97) 37 (248)Net cash (inflow)/outflow from tradedebt finance (1,918) 3,223 (10)Change in net debt (2,015) 3,260 (258) Net debt at start of period (9,508) (9,250) (9,250) --------- --------- ---------Net debt at end of period (11,523) (5,990) (9,508) --------- --------- --------- ANALYSIS OF CHANGES IN NET DEBT At 1 Aug 2006 Cash flows 31 Jan 2007 Audited Unaudited Unaudited £'000 £'000 £'000Net cash: Cash in hand and at bank 290 (97) 193 Debt: Trade debt finance (9,798) 2,665 (7,133) Barclays Loan 0 (4,583) (4,583) ---------- --------- ---------Net debt (9,508) (2,015) (11,523) ---------- --------- --------- RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS for the six months ended 31 January 2007 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS 6 months 6 months 12 months to 31/01/07 to 31/01/06 to 31/07/06 Unaudited Unaudited Audited £'000 £'000 £'000 Profit for the period 2,976 2,436 5,745New share capital issued 4 0 6Premium on share capital issued 358 44 395FRS20 reserve movement 125 81 161Shares held by EBT 0 0 5EBT capital distribution 0 0 (1,070)Dividends (4,414) (2,579) (4,124)Foreign currency translation 0 0 (2) ---------- --------- --------Net increase/(decrease) to funds (951) (18) 1,116 Opening shareholders' funds 7,251 6,135 6,135 ---------- --------- --------Closing shareholders' equity funds 6,300 6,117 7,251 ---------- --------- -------- NOTES forming part of the financial statements 1 BASIS OF PREPARATION OF INTERIM FINANCIAL INFORMATION The interim financial information does not constitute statutory accounts for thepurpose of Section 240 of the Companies Act 1985. The financial statements forthe year ended 31 July 2006 have been delivered to the Registrar of Companiesand include an auditor report which was unqualified and did not contain astatement under section 237 (2) and (3) of the Companies Act 1985 The interim financial information has been prepared using the same accountingpolicies and estimation techniques as set out in the group accounts for the yearended 31 July 2006. 2 SEGMENTAL & GEOGRAPHIC INFORMATION The turnover and profit before tax are attributable to the one principalactivity of the company. (i) Segmental 6 months 6 months 12 months to 31/01/07 to 31/01/06 to 31/07/06 Unaudited Unaudited Audited £'000 £'000 £'000 A segmental analysis of turnover is given below: Engineering 59,990 47,108 101,989 Built Environment 18,629 14,632 31,617 Support Services 14,819 10,384 23,080 Discontinued Operations 135 733 1,442 --------- --------- --------- Total 93,573 72,857 158,128 --------- --------- --------- A segmental analysis of net fee income is given below: Engineering 6,844 5,378 11,679Built Environment 2,824 2,103 4,544Support Services 2,837 2,188 4,570Discontinued Operations 18 129 246 --------- --------- ---------Total 12,523 9,798 21,039 --------- --------- --------- A segmental analysis of operating profit is given below: Engineering 2,992 2,263 5,332Built Environment 1,230 909 1,679Support Services 808 552 1,228Discontinued Operations 8 78 153IPO Costs (572) 0 0 --------- --------- ---------Total 4,466 3,802 8,392 --------- --------- --------- (i) Geographic 6 months 6 months 12 months to 31/01/07 to 31/01/06 to 31/07/06 Unaudited Unaudited Audited £'000 £'000 £'000 A geographic analysis of turnover is given below: United Kingdom 93,438 72,124 156,686 Overseas 135 733 1,442 --------- --------- --------- Total 93,573 72,857 158,128 --------- --------- --------- A geographic analysis of net fee income is given below: United Kingdom 12,505 9,669 20,793 Overseas 18 129 246 --------- --------- --------- Total 12,523 9,798 21,039 --------- --------- --------- A geographic analysis of operating profit is given below: United Kingdom 4,458 3,724 8,239 Overseas 8 78 153 --------- --------- --------- Total 4,466 3,802 8,392 --------- --------- --------- 3 TAX ON PROFIT ON ORDINARY ACTIVITIES Analysis of charge in the year 6 months 6 months 12 months to 31/01/07 to 31/01/06 to 31/07/06 Unaudited Unaudited Audited £'000 £'000 £'000Current Tax: UK corporation tax 1,207 1,108 2,058 Foreign Tax 3 40 89 --------- --------- --------- 1,210 1,148 2,147 Deferred tax on timingdifferences (38) (24) (49) --------- --------- ---------Tax on profit onordinary activities 1,172 1,124 2,098 --------- --------- --------- The current tax charge is lower than the standard rate of corporation tax. Thedifferences are detailed below: Profit on ordinary activities before taxation 4,148 3,560 7,843 Corporation Tax at current rate 30% 1,244 1,068 2,353 Disallowable flotation costs 172 0 0Profit on Sale of US business (18) 0 0Disallowable expenses 117 97 194Capital Allowances (60) (57) (109)Cost of share options granted in the period (251) 0 (340)Other 3 0 (40) --------- --------- ---------Current UK Tax Charge 1,207 1,108 2,058 --------- --------- --------- 4 DIVIDENDS Dividends on shares classed as equity: 6 months 6 months 12 months to 31/01/07 to 31/01/06 to 31/07/06 Unaudited Unaudited Audited £'000 £'000 £'000Paid during the periodEquity dividends on ordinary shares 4,414 2,579 4,124 --------- --------- --------- 5 EARNINGS PER SHARE Earnings per share has been calculated by dividing the consolidated profit aftertaxation attributable to ordinary shareholders by the weighted average number ofordinary shares in issue during the period. Diluted earnings per share has been calculated, on the same basis as above,except that the weighted average number of ordinary shares that would be issuedon the conversion of all the dilutive potential ordinary shares (arising fromthe Group's share option schemes) into ordinary shares has been added to thedenominator. There are no changes to the profit (numerator) as a result of thedilutive calculation. The earnings per share information has been calculated as follows: 6 months 6 months 12 months to 31/01/07 to 31/01/06 to 31/07/06 (restated) (restated) Unaudited Unaudited Audited Profits £'000 £'000 £'000 Profit on ordinaryactivities after taxationattributable to ordinaryshareholders 2,976 2,436 5,745Non-recurring items 513 0 0 ---------- --------- ---------Profit on ordinaryactivities after taxation(pre non-recurring) 3,489 2,436 5,745 ---------- --------- --------- Number of Shares 000's 000's 000's Weighted average number ofordinary shares in issue 22,277 21,499 21,600Effect of dilutivepotential ordinary sharesunder option 939 1,125 883 ---------- --------- --------- 23,216 22,624 22,483 ---------- --------- --------- Earnings per Share pence pence pence Earnings per ordinary share - Basic 13.36 11.33 26.60 - Diluted 12.82 10.77 25.56 Earnings per ordinary share(pre non-recurring) - Basic 15.66 11.33 26.60 - Diluted 15.03 10.77 25.56 AUDITORS REPORT We have been instructed by the company to review the financial information forthe six months ended 31 January 2007 which comprise the summary profit and lossaccount, balance sheet, cash flow statement and the related notes on pages 2 to8. We have read the other information contained in the interim report whichcomprises only the Chairman's Statement and considered whether it contains anyapparent misstatements or material inconsistencies with the financialinformation. Our responsibilities do not extend to any other information. This report is made solely to the company's members as a body in accordance withguidance contained in APB Bulletin 1999/4 "Review of Interim FinancialInformation". Our review work has been undertaken so that we might state to thecompany's members those matters we are required to state them in a review reportand for no other purpose. To the fullest extent permitted by law, we do notaccept or assume responsibility to anyone other than the company and thecompany's members as a body, for our review work, for this report, or for theconclusion we have formed. Directors' Responsibilities The interim report including the financial information contained therein is theresponsibility of, and has been approved by, the directors. The Listing Rules ofthe Financial Services Authority require that the accounting policies andpresentation applied to the interim figures should be consistent with thoseapplied in preparing the preceding annual accounts except where any changes, andthe reasons for them, are disclosed. Review Work Performed We conducted our review in accordance with guidance contained in Bulletin 1999/4"Review of Interim Financial Information" issued by the Auditing Practices Boardfor use in the United Kingdom. A review consists primarily of making enquiriesof management and applying analytical procedures to the financial informationand underlying financial data and based thereon, assessing whether theaccounting policies and presentation have been consistently applied unlessotherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance with UnitedKingdom auditing standards and therefore provides a lower level of assurancethan an audit. Accordingly we do not express an audit opinion on the financialinformation. Review Conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 January 2007. GRANT THORNTON UK LLPChartered Accountants & Registered AuditorsManor CourtBarnes Wallis RoadFarehamPO15 5GT12 April 2007 This information is provided by RNS The company news service from the London Stock Exchange