Network Group sees profits increase

 NETWORK Group Holdings, the Midlands-based recruitment and business outsourcing group, has announced an increase in pre-tax interim profits despite a £1.2m decline in revenue during the first half.

In the six months to May 31, revenue reached £25.1m, while profit before tax – based on the profit before other items, was £0.6m, an increase of £1.6m.

In a statement, the group said it had experienced improved market conditions in the majority of its businesses during the first half of the year, continuing on from the end of the last financial year.  

Cost reductions implemented during 2009 have been maintained during the period, it added.

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“Together these have resulted in a much improved operating profit performance for the period when compared to the same period last year,” said the statement.

Recruitment revenue for the six months stood at £22,087,000 compared to £23,437,000 for the corresponding period last year.  The operating profit for the period was £382,000 compared to an operating loss of £710,000 for the corresponding period last year.
 
Chief executive Tim Watts said the principal reason for the fall in revenue was that increased revenue from the businesses operating in the healthcare sector had been more than offset by a combination of reduced activity in the businesses in the construction sector and a fall in revenue from the businesses in the IT sector.  

“The additional revenue from acquisitions made during 2009 has been offset by the loss of revenue from businesses disposed of by the group in November and December 2009.  

“However, despite reduced revenue from the businesses in the IT sector, the gross profit generated was maintained with the acquisition of a further IT business during the period,” he said.

Mr Watts said there had also been a significant increase in the profitability of the recruitment division compared to the corresponding period last year.  

In particular, businesses in the sales and marketing and healthcare sectors produced significantly improved results.  

An operating loss was recorded by the group’s education business, which has now been sold following the balance sheet date.  Despite reduced revenues from the businesses in the construction sector, the losses from these businesses were reduced compared to the corresponding period last year.
 
Profitability has also improved as a result of three loss-making businesses being disposed of.

Mr Watts said the group remained focussed on the growth of both its specialist recruitment business and also its business process outsourcing operation.  

“The group is actively seeking acquisitions that will enhance shareholder value.  Our equity sharing principles remain a key motivator in the way the group operates and we believe this will give the group an advantage in attracting suitable businesses,” he added.