Gattaca Regulatory News (GATC)

7 February 2013

Matchtech Group plc

Trading Update

Matchtech Group plc ("Matchtech" or the "Group"), one of the UK's leading specialist recruitment agencies, is pleased to provide the following Trading Update for the six months ending 31 January 2013 and the Board's current outlook for the year to 31 July 2013.

Since our last update on 16 November 2012, the Group has continued to trade in line with the Board's expectations.

Net Fee Income ("NFI")

There was a good first half performance across the whole Group, generating total NFI of £18.5 million, up 8% against the same period last year. NFI performance is analysed as follows:

There has been a slight change in the Group's business mix, with Contract NFI accounting for 71% and Permanent Fees 29% of total NFI in the period (2012 H1: 67%; 33%).

*Included in the figures above and below for Professional Services is Contract NFI generated from the purchase of Xchanging Resource Services ("XRS"), which was acquired on 16 January 2012 for a total cash consideration of £0.4m, consisting of 2012 H1 £0m; 2012 H2 £0.36m; 2013 H1 £0.35m.

**Discontinued Operations: Executive Search and Financial Services. Further information is provided under New Reporting Structure.

Contract NFI

The Group continues to see strong demand for contractors, especially across the engineering and technology sectors, supplying UK clients who have multi-year engineering infrastructure projects in the UK and global demand for their services.

We have maintained the number of contractors on assignment at the same level since 31 July 2012 at 6,700, which is up 5% since 31 January 2012.

Contract NFI in the period of £13.2m was 14% up on the same period last year. Contract NFI performance is analysed as follows:

Permanent Fees

Across the Group as a whole Permanent Fees remained stable compared to the same period last year. Permanent Fee performance is analysed as follows:

Whilst there is strong demand for permanent staff across the Group, subdued candidate confidence in the job market and counter offers from incumbent employers has held back growth.

Net Debt

Net debt may be analysed as follows:

New Reporting Structure

As reported in our Preliminary Results on 4 October 2012, we have introduced a simplified reporting structure for the financial year to 31 July 2013 in order to improve stakeholders' understanding of the Group as it continues to diversify. The business is now managed in two distinct Business Units.

The Engineering segment operates under the Matchtech brand. It includes Matchtech Germany and also elemense, the Managed Services business, which supports Matchtech's large framework agreements.

The Professional Services segment comprises the existing Barclay Meade and Alderwood brands, along with the Information Systems & Technology sector, which was previously within Matchtech. This latter sector is more aligned with the Professional Services businesses where its profile bears a closer fit and opportunities for cross-selling are greater.

The elemense managed services brand has been re-integrated within the Group's Shared Services and we redefined our service offering in Professional Staffing, ceasing to provide Executive Search and Financial Services recruitment.

As a result there have been a number of changes to management, shared service and service delivery teams, resulting in £0.4m of non-recurring costs in the first half of the year.

Headcount at 31 January 2013 was 359 (31 January 2012: 361; 31 July 2012: 370).

The Group continues to selectively invest in market development whilst remaining watchful of overhead expenditure in the present market circumstances.

Outlook

The Group's niche focus, especially within the engineering and technology markets, positions us well for continued growth in contract fees, supplying UK clients who have global demand for their services or are working on large, multi-year engineering infrastructure projects in the UK and overseas markets.

We expect our permanent fees to remain at similar levels to those achieved in the previous year, and with the investment we have made in our professional staffing brand we have the capability and resource to take market share quickly when candidate confidence returns.

Our robust business model, sector diversification and developing international capability all continue to give the Board confidence in the future prospects for the Group.

The Group will release its Interim Results for the six months ended 31 January 2013 on Thursday 11 April 2013, at which point it will provide a further update on trading.

For further information please contact:

Matchtech Group plc 01489 898 989

Adrian Gunn, Chief Executive Officer

Tony Dyer, Chief Financial Officer

MHP Communications 020 3128 8788

John Olsen / Ian Payne / Giles Robinson

Numis 0207 260 1000

Michael Meade / James Serjeant

Background on Matchtech (AIM: MTEC.L)

Matchtech Group has over 28 years' experience providing niche recruitment services to the engineering, technology, professional staffing and the employability & skills markets. The Group is recognised as the UK's leading specialist recruitment agency providing contract, temporary and permanent staff.