Matchtech Group Annual Report 2015

Matchtech and Networkers are a natural fit, two businesses with similar cultures and values operating in complementary markets each with a healthy balance between contract and permanent net fee income.

The acquisition of Networkers International plc, completed in April 2015, brings the Group not only a well-regarded presence in the Telecoms market, but also a new competence in multi-site, multi-jusridiction management.

The combination of Networkers' international candidate database with Matchtech's largely UK contractor resource will allow the enlarged Group to address the global skills shortage issues reported by our fast-developing UK client-base, enabling us to better service more of their recruitment needs.

By enhancing our global capability, we are increasingly attractive to UK-qualified engineers, who are highly valued throughout the world and are increasingly seeking to gain experience on the largest and most prestigious international projects.

Overall, the acquisition creates a significantly more geographically balanced business with scale in fast growing international markets and the increased client base opens up many cross-selling opportunities across the Group.

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Highlights

Steady results across the business1

Group Revenue

£502.3m

2014: £451.6m
Net Fee Income2

£54.8m

2014: £45m
Adjusted EBITA3

£16.8m

2014: £13.6m
Adjusted profit before tax3

£15.7m

2014: £12.6m
Adjusted basic earnings per share3

45.3p

2014: 39.2p
Dividend per share

22.0p

2014: 20.0p

1 2015 Results include 4 months trading of Networkers International plc
2 Net fee income is calculated as revenue less contractor payroll costs
3 Adjusted results excluding acquisition costs of £1.7m, non-recurring costs of £1.0m and amortisation of acquired intangibles of £1.7m (2014:£0.7m)

Board Statements

Combined Group Overview

9,000

Number of Contractors

4,000

Permanent placements

Map

600


Sales Staff

100

Countries we recruit in

Top 3 UK IT/Telecoms
Recruiter Specialist

UK's No.1
Engineering
recruitment
specialist

Sharpen our focus

We know from our external market research that our clients and candidates want to work with a specialist recruiter and the key to achieving this is to ensure our consultants have a narrow and deep focus in their core area of specialism.

In contract recruitment this year we have further defined every consultant's product offering, into niche skillsets and locations that match our clients' current and future requirements.

This enables our consultants to maintain sharp focus, build long-term relationships and become 'thought leaders' in their market.

Whilst our average contract margin has only marginally increased due to the large proportion of agreed framework contracts, we have seen an increase in the margin generated from new contingent business.

Move up the value chain

During the year Matchtech appointed a head of permanent business and extended the roll out of our talent pool model.

The aim is to sharpen the consultant's focus onto identifying and sourcing highly sought after, niche candidates and matching them to ideal vacancies.

Moving the focus from a vacancy-led strategy to a candidate- led strategy in a skills shortage marketplace is helping us to move up the value chain and achieve higher margins.

This gives the consultants greater focus in their niche. As well as enhancing the candidate and client experience, it has the added benefits of reducing the cost of candidate attraction and ensures we follow a candidate throughout their career.

This is self evident in the Networkers' business where they already operate this model and have higher margins than Matchtech. This year the average salary of permanent placements and the average fee charged have increased.

Think Global

The acquisition of Networkers has accelerated the Group's strategy and ambition to globalise the business. What would have taken many years to create organically, we now have in a network of 10 profitable international offices.

We see many opportunities from which we will be able to export Matchtech services, benefiting from the experience of Networkers local management and the ability to be closer to international clients.

This has also opened up the chance for staff who have ambition to move overseas to continue to build their careers within the Group, employees previously we may have lost to other organisations.

We have identified the markets we can capitalise on. We have created over 20 specific vacancies and are already in the process of relocating a number of experienced employees, the first being a senior manager to head up the Americas business.

We are encouraging staff to think global when considering the opportunities the Group now has.

Measuring Our Performance1

Revenue £m

  • 301.8
     
  • 271.4
     
  • 408.9
     
  • 451.6
     
  • 502.3
     
  • 11
  • 12
  • 13
  • 14
  • 15

Net Fee Income (NFI) £m2

  • 29.8
     
  • 36.1
     
  • 38.4
     
  • 45.0
     
  • 54.8
     
  • 11
  • 12
  • 13
  • 14
  • 15

NFI conversion %

  • 23
     
  • 24
     
  • 28
     
  • 30
     
  • 31
     
  • 11
  • 12
  • 13
  • 14
  • 15

Adjusted EBITA3 £m

  • 6.8
     
  • 8.7
     
  • 10.7
     
  • 13.6
     
  • 16.8
     
  • 11
  • 12
  • 13
  • 14
  • 15

Adjusted Profit Before Tax3 £m

  • 6.4
     
  • 8.0
     
  • 10.1
     
  • 12.6
     
  • 15.7
     
  • 11
  • 12
  • 13
  • 14
  • 15

Adjusted Diluted EPS3 £m

  • 19.7
     
  • 23.5
     
  • 31.6
     
  • 37.1
     
  • 43.3
     
  • 11
  • 12
  • 13
  • 14
  • 15

Operating Cash Conversion %

  • -72
     
  • 106
     
  • 110
     
  • 115
     
  • 124
     
  • 11
  • 12
  • 13
  • 14
  • 15

Net Debt £m4

  • -16.0
     
  • -14.5
     
  • -10.5
     
  • -3.1
     
  • -33.6
     
  • 11
  • 12
  • 13
  • 14
  • 15

Dividend Per Share (pence)

  • 15.6
     
  • 15.6
     
  • 18.0
     
  • 20.0
     
  • 22.0
     
  • 11
  • 12
  • 13
  • 14
  • 15

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