It was hard to fault Matchtech's (MTEC) first-half results, with all of the main performance indicators for a recruitment business moving in the right direction. Net fee income jumped by a fifth to £22.1m. Demand for temporary contractors in specialist engineering and professional services remained high amid a continued skills shortage, while demand for permanent staff picked up as hiring confidence returned.
The rate at which Matchtech turned that net fee income into cash profits also rose, with a net fee income to cash profit conversion rate of 30 per cent - up from 23 per cent a year earlier. That helped drive pre-tax profit before amortisation up by almost half to £6.0m, which broker Numis said was 7 per cent ahead of its forecast. To reflect the earnings beat, Numis nudged up its full-year pre-tax profit before amortisation forecast by 4 per cent to £11.9m, giving earnings per share of 35.5p. The broker’s EPS forecast for next year was upped by 7 per cent to 38.8p.
Those earnings upgrades come despite guidance from Matchtech that investment in the business will step up in the second half. Chief executive Adrian Gunn says Matchtech is "looking to add scale" as it seeks to position itself for the ongoing recovery in staffing markets by growing its headcount.
| MATCHTECH (MTEC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 618p | MARKET VALUE: | £152m | |
| TOUCH: | 610-625p | 12-MONTH HIGH: | 650p | LOW:330p |
| DIVIDEND YIELD: | 3.0% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 156p | NET DEBT: | 22% | |
| Half-year to 31 Jan | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 197 | 3.96 | 12.7 | 5.15 |
| 2014 | 221 | 5.69 | 18.1 | 5.41 |
| % change | +12 | +44 | +43 | +5 |
Ex-div: 28 May Payment: 20 Jun | ||||
