Gattaca Regulatory News (GATC)

28 January 2016

Matchtech Group plc

("Matchtech" or, "the Group")

Trading Update for 6 months ended 31 January 2016

Matchtech Group plc (LSE-AIM: MTEC), the UK's leading specialist Engineering and Technology recruitment business, today provides the following pre-close Trading Update for the six months to 31 January 2016.

Overview

The Board currently anticipates profit for the full year to be in-line with its expectations.

We are pleased to report that in the six months to 31 January 2016 the Group's operational performance was in-line with our expectations, with encouraging progress on the integration of the Networkers businesses acquired in April 2015 and the strategic development of the Group's international management capability.

Operational Performance

1 Excludes NFI from the Networkers Search business divested in January 2016 (2015 H1: £nil; 2016 H1: £0.7m)

2 Excludes NFI from the discontinued Professional Staffing London operation (2015 H1: £1.1m; 2016 H1: £nil)3 Like for Like - had Networkers been owned for the entire prior period, comparisons on average weekly NFI run rate

Performance

NFI performance for the Group in H1 2016 was up 59% to £35.7m (H1 2015: £22.5m).

On a Like for Like (LfL) basis NFI was down 1% to £35.7m (H1 2015: £36.2m) with the weekly run rate up 4% on H2 2015.

Engineering's LfL NFI was up 7% to £21.7m, (up 7% v H2 2015), with particularly strong 17% growth in Permanent Fees and Contract NFI growing by 4%. Within Engineering, there was a strong performance from Infrastructure with NFI up 19%.

Technology's LfL NFI was down 12% to £14.0m (H1 2015: £15.9m), and down 2% on H2 2015. Within Technology, Telecoms was in line with H1 2015 and up 8% vs. H2 2015, whilst IT was down 20% vs. H1 2015 and down 9% vs. H2 2015. We are focused on delivering an improved performance in our IT division and are committed to enhancing our overall offering in this sector.

The Group's sales force headcount increased to 515 at 31 January 2016, up 5% since 31 July 2015 on a LfL basis.

Integration of Networkers

The integration continues to go well, and we have now identified nearly £2m in annualised synergies since the acquisition which will be fully realised in FY 2017. We expect to identify additional cost synergies as we continue the integration process and we combine the remaining back office functions by the end of this financial year.

As previously reported we have chosen to re-invest some of these cost synergies to improve the business and accelerate future growth. In particular we are improving systems connectivity in Asia & North America. We have also appointed regional senior management in both regions in order to accelerate growth in these important markets for the Group. Finally, we have taken the opportunity to strengthen the Group management structure and in particular to invest further in our business development capability. Sales synergies are coming through and the new business pipeline across the Group is encouraging.

With the integration expected to be substantially completed by the end of the financial year, Spencer Manuel and Jon Plassard, the CEO and CFO of Networkers respectively, will be leaving the Group with effect from that time. In developing Networkers, they have built a successful and strong business with a culture similar to Matchtech Group. The Board wishes to thank them both for their support through the integration process and their success in helping to deliver a stronger, more international platform for the growth of Matchtech.

Interim Results

The Group expects to announce its interim results for the 6 months to 31 January 2016 on Thursday 14 April 2016.

Brian Wilkinson, Chief Executive Officer, said:

"I am pleased to report a period of encouraging operational performance and strategic progress for the Group.

"The acquisition of the Networkers business in April 2015 has enabled the Group to deliver a 59% increase in NFI for the period. We continue to realise synergies, with further cost savings being identified in addition to those previously announced, and with initial joint sales proposals going well.

"Performance in the first half of FY 2016 is in line with management's expectations, with growth in Engineering and Telecoms compared to the second half of last year.

"Demand in the UK for skilled engineers remains robust and looking ahead we have identified a number of opportunities to roll out our Engineering recruitment services across our overseas locations. Investment in headcount is taking place in these areas and I remain confident that we will convert these exciting opportunities into significant growth over the next few years."

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About Matchtech

Matchtech Group plc (LSE-AIM: MTEC), is the UK's leading specialist Engineering and Technology (IT & Telecoms) recruitment agency, providing contract, temporary and permanent staff. Established in 1984 and AIM-listed in 2006, the Group is one of the fastest growing staffing organisations listed in the UK, with a well-balanced business model; approximately 73% contract and 27% permanent.

In April 2015, Matchtech Group plc announced the completion of the acquisition of Networkers International, a global recruitment company specialising in the delivery of recruitment services focussing on Telecoms and Technology.

Recruiting in 100 countries across the world from 18 offices in 12 countries, the Group has over 500 sales staff, 9,000 contractors on assignment and places 4,000 candidates into permanent positions each year.

The combined group is well-placed to take advantage of the convergence between Engineering, IT and Telecoms skill sets and creates a specialist recruiter, of scale, in the UK and internationally.