IT recruiter MSB has warned of instability in its core business areas in an interim statement published today.

Chairman and chief executive John Bateman was upbeat as he announced that operating profit had increased from £1.2m in the year ending 31 July 2000 to £1.7m for the year ending 31 July 2001.

But he warned: 'It is important to acknowledge that the volatile market conditions remain a challenge and our historical core market remains unpredictable.'

Bateman said the economic conditions had particularly affected clients in the finance, telecoms and technology sectors.

Operating margins increased before exceptional items by 2.1% and net borrowings fell from £8.7m to £7.4m.