Gattaca Regulatory News (GATC)

6 August 2015

Matchtech Group plc

("Matchtech" or, "the Group")

Trading Update for 12 months ended 31 July 2015

Matchtech Group plc (LSE-AIM: MTEC), the UK's leading specialist Engineering, IT and Telecoms recruitment agency, today provides the following pre-close trading update for the 12 months ended 31 July 2015.

The Group expects profits to be in-line with current market expectations, including a maiden four months of contribution from Networkers International ("Networkers"), which was acquired on 2 April 2015.

Performance Summary

Group performance

The Combined Group NFI was ahead 22% in both contract and permanent. This included 4 months contribution from Networkers, the acquisition of which completed on 2 April 2015.

Performance - Matchtech

Matchtech's NFI in H2 2015 was up 1% compared with the same period last year (Contract NFI and Permanent Fees both up 2%). The Engineering segment, up 6% in the year, saw particularly strong growth in Permanent Fees, up 27%, and 2% growth in Contract NFI. Professional Services was down 7% in the year, 2% down in Contract NFI and 14% down in Permanent Fees, with the second half impacted by the previously reported closure of our Barclay Meade London operation which had not, as a whole, gained enough traction to be viable over the medium term.

Investment in headcount at the end of last year and in the first half of this year did not translate into an expected increase in client demand. Accordingly, Matchtech's Sales headcount was reduced during the second half by 33 (26 in Engineering and 7 in Professional Service) plus 28 from the closure of Barclay Meade in London.

Combined with continued focus on the management of other overheads, profitability is expected to be in-line with expectations.

Performance - Networkers

The acquisition of Networkers valued the entire issued and to be issued share capital of Networkers on a fully diluted basis at approximately £57.9 million. Further Information about Networkers and the acquisition was provided in the Group's announcement on 28 January 2015.

Since its acquisition, in the four months ending 31 July 2015, Networkers has traded in-line with expectations, with NFI flat (Contract up 3%, Permanent down 7%) over the same period in the previous year.

Net Debt

1Includes effects of exchange rates

Net debt at 31 July 2015 was £35.5 million, up by £33.6 million from 31 January 2015. Of the increase, £32.1 million is due to the cash consideration paid on the acquisition of Networkers as well as the assumption of £8.4 million of Networkers' debt.

Integration of Networkers

The integration process has started well and the Board is increasingly confident of achieving its targets for overhead savings by the end of FY 2016. This is expected to entail exceptional integration costs of around £1.0m in FY 2015, and a similar amount anticipated in FY 2016.

In addition, the Board has accelerated its plan to integrate certain sales teams. In particular, with effect from 1 August 2015, the IT businesses of Matchtech and Networkers will have a common leadership and Networkers' engineering business will join Matchtech's equivalent business.

Preliminary Results

The Group expects to announce its full year results for the 12 months to 31 July 2015 on Thursday 29 October 2015.

Brian Wilkinson, Chief Executive Officer, said:

"As I reported at the time of the Interim Results in April, trading had been steady and this continued throughout the second half. We have taken the necessary measures to meet our profit targets, whilst investing to prepare the Group to exploit the major opportunities in our core markets, opportunities which have been significantly enhanced by the acquisition of Networkers.

"We remain committed to our strategy of being a specialist recruitment group. Networkers has introduced telecoms to the Group's offering and added long-standing, substantial and profitable overseas operations, which will enable us to accelerate the introduction of our Engineering services to our international customer base, in the medium term.

"At the start of the new financial year, we will merge the Matchtech and Networkers' IT businesses, and integrate the engineering businesses, both to increase performance in the UK and internationally.

"Looking ahead, the Board's plan is for Group NFI to return to growth in the second half of the 2016 financial year, with further growth over the medium term.

"I remain confident that we will convert the exciting opportunities available to the Group into growth."

- ENDS -

For further information please contact:

About Matchtech

Matchtech Group plc (LSE-AIM: MTEC), is the UK's leading specialist Engineering, IT and 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 70% contract and 30% 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 over 100 countries across the world from 18 offices in 12 countries, the Group has over 580 sales staff, with over 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, Technology and Telecoms skill sets and creates a specialist recruiter, of scale, in the UK and internationally.