Networkers deal drives H2 NFI up 42%
​Matchtech is the UK's leading specialist engineering and professional services recruitment agency, providing contract, temporary and permanent staff. Since the £66.3m acquisition of Networkers International on 2nd April 2015, the Group now derives 28% of Net Fee Income (NFI) overseas. The early signs for the combined businesses are positive. In today's pre-close trading update for the y/e 31st July 2015, total NFI for the enlarged entity jumped +42% in H2 to £32.5m and +22% to £55.0m for FY15. Moreover, apart from 'revving' up the top line, we estimate that once Networkers is fully integrated, at least £2m pa of annualised cost synergies could be generated by FY17. However, the real beauty of the deal lies in leveraging Networkers' overseas infrastructure to support MTEC's existing clients in foreign jurisdictions along with cross-selling into adjacent verticals (eg Telecoms). Although difficult to quantify exactly, we believe this sharper organisational structure could deliver sales synergies of >£4m p.a. in due course - none of which has been factored within our existing forecasts. Looking forward, in light of the reduced like-for-like NFI rates and a weaker € vs £, we have nudged down our FY16 NFI forecast by 6% to £78.4m (from £83.1m), with adjusted PBTA and diluted EPS coming in at £21.5m and 49.3p respectively. Indeed, with regards to valuation, our price target remains unchanged at 680p / share, or £1 above current levels.
Gattaca is an engineering and technology recruitment solutions company. Co. operates in the STEM markets (science, technology, engineering and maths), all sectors with skills shortages. Co. has three reporting segments, Engineering, Technology and International. Co.'s brands are Matchtech, an engineering recruitment specialist; Networkers, a technology recruitment specialist; Cappo, Provanis, Barclay Meade, a professional services brand, recruiting finance, procurement, sales and HR professionals., and Alderwood, which is involved in placing trainers and assessors with training providers throughout the U.K. and the Middle East.
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