Matchtech to exit London professional staffing market
9 April 2015
Engineering and professional services recruitment agency Matchtech Group is backing out of the professional staffing market in London via its Barclay Meade division due to the “crowded marketplace”.
Thu, 9 Apr 2015
Engineering and professional services recruitment agency Matchtech Group is backing out of the professional staffing market in London via its Barclay Meade division due to the “crowded marketplace”.
Discussing the company’s unaudited financial results for the six months ended 31 January 2015 with Recruiter this morning [9 April], group chief executive Brian Wilkinson said the performance of the professional services side of the business, as compared to engineering, was weaker.
That was particularly so in London. He said the group’s Barclay Meade brand, the second biggest division within its professional services side of the business, was doing particularly well in the South Coast area but the London side of the business had been “a real struggle”.
The business was opened in London five years ago in an attempt to break into professional staffing in the City and the West End.
“That’s been a real struggle and we really worked hard to gain traction but it’s a very crowded marketplace, dominated by big international brands. Frankly, on the back of trading in the last couple of years, we’ve decided that it’s sensible to withdraw from that market, reallocate consultants who are productive in that business into our engineering and technology business, and move on.”
Over the reporting period, the group “rebalanced” headcount, increasing the number of staff in the engineering business by about 35 and decreasing the number in professional services by 28.
Other aspects of the professional services business were affected by lower client demand, falling oil prices and uncertainty around apprenticeship funding.
Overall, the professional service businesses delivered net fee income (NFI) that was £300k lower at £8.5m (H1 2014: £8.8m), with contract NFI up 2% to £5m (2014 H1: £4.9m) and permanent fees down 10% to £3.5m (2014 H1: £3.9m).
The engineering division, the group’s core business, returned a “very positive performance”.
NFI in this division increased 5% to £14m (2014 H1: £13.3m) with contract NFI up 3% to £11.3m (2014 H1: £11m) and permanent fees up 17% to £2.7m (2014 H1: £2.3m).
Wilkinson said infrastructure recruitment was particularly strong, driven by continued investment in highways, rail and water. This was bolstered by the group’s own investment in headcount to boost perm placements.
He added the group had managed to capitalise on the growth of the Canadian Navy – providing UK engineers to Canada and supplying the two major contractors with directors. It is hoped this will provide an opportunity to penetrate the supply chain and further break into the Canadian market.
Assisting that expansion into the North American market was the acquisition of telecoms and technology sector recruiter Networkers International, which has an office in Toronto.
That acquisition was completed on 2 April and provides Matchtech with an opportunity to “internationalise” its business via Networkers’ business, while also providing Networkers’ telco sales people access to Matchtech clients.
The back offices of the two businesses are to be combined, providing cost savings.
The group incurred acquisition adviser costs of £700k. The £57.9m cost of the Networkers business is being covered by a 50:50 split between stock and cash. The group incurred some of that cost ahead of the deal, with more to come in the second half of this year.
Overall, group revenue for the period was similar to H1 2014 at £220.2m (2014 H1: £220.9m). NFI was up 2% to £22.5m (2014 H1: £22.1m).
The results exclude acquisition costs, amortisation of acquired intangibles and non-recurring restructuring costs.
Matchtech also announced this morning it had signed “significant additional contracts” with new and existing clients.
The contracts are:
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Discussing the company’s unaudited financial results for the six months ended 31 January 2015 with Recruiter this morning [9 April], group chief executive Brian Wilkinson said the performance of the professional services side of the business, as compared to engineering, was weaker.
That was particularly so in London. He said the group’s Barclay Meade brand, the second biggest division within its professional services side of the business, was doing particularly well in the South Coast area but the London side of the business had been “a real struggle”.
The business was opened in London five years ago in an attempt to break into professional staffing in the City and the West End.
“That’s been a real struggle and we really worked hard to gain traction but it’s a very crowded marketplace, dominated by big international brands. Frankly, on the back of trading in the last couple of years, we’ve decided that it’s sensible to withdraw from that market, reallocate consultants who are productive in that business into our engineering and technology business, and move on.”
Over the reporting period, the group “rebalanced” headcount, increasing the number of staff in the engineering business by about 35 and decreasing the number in professional services by 28.
Other aspects of the professional services business were affected by lower client demand, falling oil prices and uncertainty around apprenticeship funding.
Overall, the professional service businesses delivered net fee income (NFI) that was £300k lower at £8.5m (H1 2014: £8.8m), with contract NFI up 2% to £5m (2014 H1: £4.9m) and permanent fees down 10% to £3.5m (2014 H1: £3.9m).
The engineering division, the group’s core business, returned a “very positive performance”.
NFI in this division increased 5% to £14m (2014 H1: £13.3m) with contract NFI up 3% to £11.3m (2014 H1: £11m) and permanent fees up 17% to £2.7m (2014 H1: £2.3m).
Wilkinson said infrastructure recruitment was particularly strong, driven by continued investment in highways, rail and water. This was bolstered by the group’s own investment in headcount to boost perm placements.
He added the group had managed to capitalise on the growth of the Canadian Navy – providing UK engineers to Canada and supplying the two major contractors with directors. It is hoped this will provide an opportunity to penetrate the supply chain and further break into the Canadian market.
Assisting that expansion into the North American market was the acquisition of telecoms and technology sector recruiter Networkers International, which has an office in Toronto.
That acquisition was completed on 2 April and provides Matchtech with an opportunity to “internationalise” its business via Networkers’ business, while also providing Networkers’ telco sales people access to Matchtech clients.
The back offices of the two businesses are to be combined, providing cost savings.
The group incurred acquisition adviser costs of £700k. The £57.9m cost of the Networkers business is being covered by a 50:50 split between stock and cash. The group incurred some of that cost ahead of the deal, with more to come in the second half of this year.
Overall, group revenue for the period was similar to H1 2014 at £220.2m (2014 H1: £220.9m). NFI was up 2% to £22.5m (2014 H1: £22.1m).
The results exclude acquisition costs, amortisation of acquired intangibles and non-recurring restructuring costs.
Matchtech also announced this morning it had signed “significant additional contracts” with new and existing clients.
The contracts are:
- A three-year extension to an existing contract with global defence, aerospace and security company BAE Systems. The contract, which runs until the end of 2018 with the option of an additional one-year extension, is to provide contingent labour with engineering and technology backgrounds.
- A new three-year contract with Zodiac Aerospace to recruit aerospace engineering candidates on both a contract and permanent basis.
- A new three-year contract with HCL Technologies, a global IT services company. The Matchtech group will act as one of four companies engaged as part of a contract framework to provide candidates across all IT skill sets on both a UK and European basis.
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