Marlborough International profits rise 2.7% to €2.85m

Marlborough International, the rapidly expanding Irish recruitment group, has announced a 2.7 per cent rise in pre-tax profit to €2.85 million (£2.24 million) in the first half of 1999, and an expansion into the Scottish market.

The latest acquisitions are two Scottish recruitment companies, Margaret Hodge Staff Consultants, and Scot Jobs, for up to £3.58 million sterling (€5.58 million).

The latest results are in line with expectations according to managing director, Mr David McKenna. Substantial profit growth is anticipated in the second half and the final outcome should meet brokers' forecasts, he said.

The group had to contend with once-off operating costs arising from development costs. This is reflected in the jump in operating costs from €6.58 million to €10.32 million. Asked about the underlying trend of operating expenses, he said, these rose by 5 per cent to 10 per cent, excluding the non-recurring costs. These costs led to a reduction in the operating profits from €3.6 million to €3.3 million in the six months ended August 31st, 1999. The extra costs, the interim statement said, reflected the group's strong focus on consolidating its market position through the opening of a number of new offices, including two new greenfield operations in Belfast and Melbourne, Australia. Costs were also involved in the rebranding of a number of existing specialist divisions within the Marlborough Group and Professional Placement Group "to facilitate further growth and expansion across different divisions".

The group relocated from two offices in Tara Street and College Close to larger premises in Grafton Street. Refurbishing costs amounted to €1.16 million.

What matters, Mr McKenna said, was the 34 per cent increase in gross fee income to €29.99 million. "We signalled at the beginning of the year that we were confident that we would meet our targets in spite of considerable once off development costs, and we have done just that. Furthermore, the growth in gross fee income during the period indicates quite clearly that the company's own positioning in the market place is working well, and we have managed to achieve that growth at a time of considerable rebranding and the relocation of our main operations in Dublin." The basic earnings per share fell from 6.04 cents to 5.67 cents. Net debt rose from €8.59 million to €9.21 million. The gearing is at a modest 34 per cent.

The consideration of the latest acquisitions will be funded by the issue of £3.35 million in loan notes and £225,500 in cash, with £81,000 of the cash deferred for four months. Margaret Hodge, founded in 1977, has offices in Edinburgh and Livingston. In 1990 it formed an alliance with Edinburgh-based Scot Jobs. In 1994, the group opened an office in Glasgow and acquired Joyce Young Recruitment. It employs 55 people and had more than 1,000 contract staff.

Margaret Hodge generated a profit before tax of £420,811 on sales of £5.3 million and on net assets of £593,166 in the year to June 30th, 1999. Scot Jobs generated a profit of £159,920 on sales of £3.8 million and on net assets of £192,598.

Mr McKenna reiterated that the group was continuing to look for the "big one" which could cost £25 million. This, he added, was likely to be in Britain or the US.