Final Results

RNS Number : 7516F
Matchtech Group PLC
14 October 2008
 



14 October 2008


Matchtech Group plc

Preliminary Results for the year ended 31 July 2008


Matchtech Group plc ('Matchtech' or the 'Group'), one of the UK's leading specialist technical recruitment companies, is pleased to announce its Preliminary Results for the year ended 31 July 2008.


Financial Highlights


  • Revenue £258.8m (2007: £202.8m)* 

up 28%

  • Net fee income (Gross Profit) £33.2m (2007: £26.9m)* 

up 23%

  • Operating profit £13.8m (2007: £11.3m)* 

up 22%

  • Adjusted Profit Before Tax (before non recurring items) £12.8m (2007: £10.5m) *

up 22%

  • Reported Profit Before Tax (after non recurring items) £12.8m (2007: £9.9m)

up 29%

  • Adjusted Basic EPS (before non recurring items) 39.34p (2007: 32.42p) *

up 21%

  • Reported Basic EPS (after non recurring items) 39.34p (2007: 30.16p)

up 30%

  • Total dividend for year of 15.6 pence per share (2007: 13.7 pence). Dividend cover of 2.5 times. 

up 14%

  • Cash flow from operating activities £14.9m (2007: £8.1m)

up 84%

  •   Net debt reduced by £6.7m to £3.1m, with gearing at just 18.1%

 


*2007 results exclude sales and profits from the US business sold on 31 August 2006 as well as the non-recurring costs of the IPO.

The financial statements have been prepared under International Financial Reporting standards; see IFRs below.


Operating Highlights


  • Substantial organic growth across every sector

  • Strong growth throughout the year - Net fee income growth H1 up 22%, H2 up 24%

  • Healthy balance of Contingency, Preferred and Master Vendor business

  • Maintained good net fee income mix - contract 67%, permanent 33%

  • Permanent fees up 28%, permanent placements up 31%

  • Contract net fee income up 21% and number of contractors working at the year end up 11%

  • Sales force headcount increased by 26%


Current Trading and Proposed Share Buybacks


  • Net fee income in the first two months of the current financial year up 13%. Contractors working at the end of September were 4,595, up 5% since end July.

  • Seeking shareholder approval at the forthcoming AGM for buybacks of up to 10% of share capital 



Commenting on the results, George Materna, Chairman of Matchtech said:

 

'Our strong second half performance maintained our momentum and ensured that we built on our track record of sustained organic growth. We have delivered record turnover in the year converting into record profits across every sector of the business.  


'This excellent performance has strengthened our position as the UK's biggest single-site recruitment agency and we have continued to build on our already strong presence in our core industry sectors. 


'The clients and sectors that we serve continue to exhibit strong structural growth characteristics. We are involved in the recruitment process throughout a project's life-cycle from the initial design and conception phase, through the construction and implementation stages and finally to the delivery and maintenance of the asset or infrastructure. Many of these projects, such as the construction of the two new Aircraft Carriers for the Royal Navy which are due in service in 2014 and 2015, and the construction of the Olympic site, due in 2012, operate on long life cycles and are not materially impacted by the current financial turmoil. Moreover we have a highly diversified and expanding customer base, which provides further opportunities for growth and adds an additional element of protection to our business. 


'The technical markets continue to suffer from skills shortages, which, in turn, create demand for qualified candidates despite the macro economic turbulence. By providing high levels of service across the entire UK from our single site location, we are gaining new clients and winning business from our competitors.


'Our clear defensive strategy of pursuing organic growth in our well established areas through working with our highly diversified client base is working and offers scope for further growth.  Whilst there will be competitive and market challenges ahead, we are well positioned, with the flexibility offered by our single site, to respond quickly and effectively to any deterioration in market conditions. 


'Overall trading in the first two months of the current year has been good, with net fee income up 13% on the same period last year and contractor numbers up 5% since the end of July. We are determined and consistent at what we do and believe we can deliver another successful year.' 



For further information please contact:


Matchtech Group plc

01489 898989

George Materna, Chairman

Adrian Gunn, Group Managing Director

Tony Dyer, Group Finance Director

 

 

Hogarth Partnership 

020 7357 9477

John Olsen / James Longfield / Fiona Noblet




Arbuthnot Securities

 

Mark Brown/Katie Shelton/Richard Tulloch

020 7012 2000


IFRS


The financial statements have been prepared in accordance with applicable International Financial Reporting Standards ('IFRS') as adopted by the European Union (EU) and which are effective at 31 July 2008, our first annual reporting date at which we are required to use IFRS accounting standards as adopted by the EU.


Matchtech Group plc's consolidated and company financial statements were prepared in accordance with United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) until 31 July 2007. The date of transition to IFRS was 1 August 2006. The comparative figures in respect of 2007 have been restated to reflect changes in accounting policies as a result of adoption of IFRS. The disclosures required by IFRS 1 concerning the transition from UK GAAP to IFRS are given in the reconciliation schedules, presented and explained in note 2 to the financial statements


Background on Matchtech 


Matchtech specialises in the provision of contract and permanent staff in the Engineering, Built Environment and Support Services sectors across the UK. 


It was established in 1984 and has grown organically to become the UK's 2nd largest technical recruitment specialist and the UK's 17th largest recruitment company (Source: Recruitment International Top 100 Report - 2008). 


Operating from a single site near Southampton, Matchtech provides predominantly professionally-qualified candidates to clients in a broad range of industries including oil and petrochemicals, pharmaceutical, marine, aerospace, automotive, water, electronics, civil engineering, building structures and transport infrastructure


Group Chairman's Statement


This has been another excellent year for Matchtech. Our strong second half performance maintained our momentum and ensured that we built on our track record of sustained organic growth. We have delivered record turnover in the year converting into record profits across every sector of the business.


For comparison purposes 2007 results exclude the sales and profits from the US business sold on 31 August 2006 as well as the non-recurring costs of admission to AIM


Turnover was £258.8 million, up 28% on 2007, with net fee income (gross profit) of £33.2 million up 23%. 


Operating profit and profit before tax were both up 22% to £13.8 million and £12.8 million respectively, with the First Half profit before tax up 21% and the Second Half up 22%. Adjusted basic earnings per share increased to 39.3 pence, up 21%. 


This excellent performance has strengthened our position as the UK's biggest single-site recruitment agency and we have continued to build on our strong presence in our core industry sectors.


The Board has a progressive dividend policy and I am pleased to confirm a proposed final dividend for the year of 10.6 pence per share, which when added to the interim dividend of 5.0 pence per share, makes a total dividend for the year of 15.6 pence per share, a 14% increase on last year. The final dividend, if approved by shareholders at the Annual General Meeting to be held on 21 November 2008 will be payable on 5 December 2008 to shareholders on the register on 7 November 2008. 


Cash generation has again been strong and our net debt has fallen to £3.1m on 31 July 2008 from £9.8m at the 31 July 2007.


The recruitment and retention of our high quality staff, at all levels and in all areas, along with the ability to align their interests with shareholders and to provide the best service and results possible is essential for sustained organic growth. There is a high performance culture across the group created by the enthusiasm, the dedication, the professionalism and the desire to succeed of all our staff. 


This is a people business and our people have shown a commitment to clients, candidates and contractors that gives a significant competitive advantage. On behalf of the Board, I would like to thank the whole of the Matchtech team for their continued commitment and hard work. 


The clients and sectors that we serve continue to exhibit strong structural growth characteristics. We are involved in the recruitment process throughout a project's life-cycle from the initial design and conception phase, through the construction and implementation stages and finally to the delivery and maintenance of the asset or infrastructure. Many of these projects, such as the construction of the two new Aircraft Carriers for the Royal Navy which are due in service in 2014 and 2015, and the construction of the Olympic site, due in 2012, operate on long life cycles and are not materially impacted by the current financial turmoil. Moreover we have a highly diversified and expanding customer base, which provides further opportunities for growth and adds an additional element of protection to our business.


The technical markets continue to suffer from skills shortages, which, in turn, create demand for qualified candidates despite the macro-economic turbulence. By providing high levels of service across the entire UK from our single site location, we are gaining new clients and winning business from our competitors.


Our clear defensive strategy of pursuing organic growth in our well established areas through working with our highly diversified client base is working and offers scope for further growth. Whilst there will be competitive and market challenges ahead, we are well positioned, with the flexibility offered by our single site, to respond quickly and effectively to deterioration in market conditions.


Overall trading in the first two months of the current year has been good, with net fee income up 13% on the same period last year and contractor numbers up 5% since the end of July. We are determined and consistent at what we do and believe we can deliver another successful year.


George Materna FREC FCIPD



Group Managing Director's Report


Matchtech has continued to deliver consistent growth in both the First and Second Half of the year despite a slowing UK economy. This is testament to the structure and strength of the business, the markets in which we operate and the high quality of our staff and management. 


In a period when the growth of the UK economy has slowed, Matchtech has continued to grow in excess of 20%. We are pleased to report that our results have produced pre-tax profits of £12.8m compared to £10.5m (excluding non-recurring items) in 2007, up 22%.


Our business mix was essentially unchanged. We remain a contract led organisation; contract recruitment accounts for 67% of the Company's net fee income and permanent recruitment 33%. Both areas continue to show good growth, with contract recruitment up 22% and permanent up 28%. Most pleasingly, this growth has been consistent in both H1 and H2.


We have again demonstrated our ability to grow organically across all three of our sectors. Long term publicly funded projects, continuing skills shortages of highly technical candidates and a strategy of expanding our geographical reach within the UK aided growth within our Engineering and the Built Environment sectors.


In our Support Service Sector our strategy of expanding the range of skill types placed has taken us into new markets and diversified our client base.


We continued to deliver a healthy mix of contract and permanent business supplying our clients on a Contingency, Preferred  Supplier and Managed Agency basis. 


Our top 50 clients generated 54% (2007: 50%) of our net fee income. Babcock International, VT Group and Mouchel Group are our largest three clients, each generating around 4% of our net fee income. The highlight of the year was the re-signing of a 5 year contract with Babcock International and extending the VT Group Managed Service Provider contract for a further three years. The largest new contract win in the period was the contract with Ricardo, which is our first Master Vendor win in the Automotive sector.


We have delivered net fee income growth from our strategy of up-selling services with existing clients. This, along with a competitive marketplace, has put a slight downward pressure on our percentage margins which reduced to 12.8% from 13.3% in 2007.


Quality candidates remain in short supply but we have demonstrated our ability to source and place the best. This year we have placed 2,868 candidates into permanent positions, 31% up on 2007's 2,192 and we have filled over 6,800 contract/temporary assignments, up 8% on 2007's 6,300. Contractor care continues to be high on our agenda. This is demonstrated by our stance of continuing to pay our contractors and consultancies weekly. Internal service levels agreements are in place to ensure the contractor receives a high level of service from our consultants and our support staff.


I would like to thank all contractors and consultancies that have worked with Matchtech this year. With the quality service they deliver we are able to foster and maintain strong relationships with our clients.


We increased headcount in all three sectors to keep up with growth, especially within Support Services. Total numbers have risen from 245 to 296 staff, up 21% and sales force from 166 to 209 staff, up 26%.


This strong investment in increased headcount and slight change in business mix between contract and permanent recruitment has reduced our NFI conversion marginally to 41.6% (2007:42.0%). However, we aim to see the benefits from our staff investment next year together with increased staff productivity through training and development geared around service delivery.


The Group's remuneration strategy for sales consultants remains strongly biased towards variable over fixed remuneration,  encouraging staff to over perform.


Our leading edge IT technology continued to deliver operational efficiency and our proven single site strategy ensured our cost base remained under control.


We have further strengthened our business continuity strategy by achieving the new BS25999 Business Continuity standard and as such became the first UK recruitment company to obtain this certification.


Once again our experienced management team and high quality staff have produced another set of excellent results demonstrating their ability to perform in a less buoyant environment. I would like to thank all our staff for their hard work.


Their industry knowledge has ensured we are involved at the early stages of new business development opportunities and their ability to coach and mentor new staff is driving each sector's future growth plans.


We have demonstrated our ability to grow in demanding economic times. Our responsive service delivery model has won contingency business from our competitors and our Managed Service offering has developed an enviable reputation within the industry.


Our growth strategy remains unchanged along with our ability to maintain a low flexible cost base.


Our business development pipeline remains healthy and the management team will be working hard to increase the number of Managed Agency accounts as well as increasing the revenue generated by our existing accounts.


Finally we believe there has been little change in the long term growth drivers in the Engineering and Built Environment sectors and are committed to our strategy to diversify our Support Services sector.


We have a seasoned management team and our single site strategy means we are well positioned to respond quickly and effectively in the event of a weakening in market demand. This gives us confidence in uncertain economic times that Matchtech is well placed to continue to deliver solid performance in the future.


Adrian Gunn FREC



Group Finance Director's Review


This year Matchtech has again delivered consistent growth across all our sectors and the conversion to International Financial Reporting Standard's ('IFRS') has had minimal impact on our reported results.


International Reporting Standards ('IFRS') 

The Financial Statements for year ending 31 July 2008 are the first set of annual results prepared under IFRS. The transitional arrangements are detailed in Note 2 to the accounts on page 28.


The principle impact of the conversion relates to IAS12 Income Taxes, where the provision for the full potential future tax deduction in respect of share options resulted in an increase in the deferred tax asset recognised by £0.4m and the requirement to take to equity the excess tax effect of gains and losses on the exercise of share options in the period over and above the previously expensed share options cost under IFRS 2. The impact is a £0.8m increase in 2007 income tax expense and a resultant £0.8m decrease in profits after tax for that period. Consequently the comparative fully diluted EPS of continuing operations is 29.43p which was previously reported as 32.66p under UK GAAP. The two other areas affected are IAS 17 Leases and IAS 19 Employee Benefits; neither materially affects the results.


Group non-recurring items

For comparison purposes we have excluded from the 2007 results the non-recurring items of the sales and profits of the US business sold on 31st August 2006 of £0.07m as well as the nonrecurring costs of the admission to AIM of £0.6m.


Group Income Statement

Matchtech has continued to build on its resilient business model, once again posting record results.


With all sectors showing growth on last year turnover increased 28% to £258.8m (2007: £202.8m).


Net fee income increased 23% to £33.2m (2007:£26.9m) reflecting a slight fall in our gross profit margin to 12.8% (2007: 13.3%).


A strong permanent marketplace in the sectors in which we operate has resulted in faster growth in permanent fees than contract net fee income and a slight shift in mix, with 67% (2007: 69%) of net fee income derived from recurring contract income and 33% (2007: 31%) from permanent placements. We continue, however, to be a contract led business, maintaining a healthy balance between contract and permanent business.


Investment in new staff slightly impacted the net fee income conversion to operating profit which was 41.6% (2007: 42.0%).


Operating profit rose by 22% to £13.8m (2007: £11.3m). Profit before tax also rose by 22% to £12.8m (2007: £10.5m).


Profit after tax of £9.1m was up 25% (2007: £7.3m).


Group Earnings Per Share

Basic Earnings Per Share were up 30.4% to 39.34p (2007: 30.16p) and Diluted Earnings Per Share up by 30.0% to 38.25p (2007: 29.43p).


Excluding the non-recurring items in 2007, underlying Basic and Diluted Earnings Per Share were up 21.3% and 20.9% respectively.


Group Dividends

The Board has proposed a final dividend for the year of 10.6 pence per share, payable on 5 December 2008 to those shareholders registered on 7 November 2008. This makes a total dividend for the year of 15.6 pence per share (2007: 13.7 pence per share), up 14%.


Group Balance Sheet

Group net assets stood at £17.1m (2007: £10.8m). Net debt fell by £6.7m to £3.1m (2007: £9.8m) and debtor days fell by 3.3 days to 40.1 days (2007: 43.4 days). At 31 July 2008 £0.3m (2007: £0.3m) of the debtor book of £38.3m was greater than 90 days overdue, less than 0.8%.


Group Financing and Cashflow

The Group operates a Confidential Invoice Discounting facility with Barclays Bank plc. The facility ceiling currently stands at the lower of £20m or 90 per cent. of qualifying invoiced debtors.


On 27 May 2008, the Group entered into a £7.5m Revolver Credit facility with Barclays Bank plc. The Revolver Credit facility replaced the previously held £5m three year loan with Barclays Bank and on 31 July 2008 Matchtech repaid the entire balance on the £5m loan.


At 31 July 2008 the balance on the Confidential Invoice Discounting Facility was £3.3million and the borrowings from the Revolver Credit facility were zero.


The utilisation of all borrowing facilities as at 31July 2008 was 12%.


The Group continues to be cash generative at an operating level. Operating cash conversion in 2008, as defined by cash generated from operations as a percentage of operating profit, was 108% (2007: 76%).


Group Financial Risk Management 

The Board reviews and agrees policies for managing financial risks. The Group's finance function is responsible for managing investment and funding requirements including banking and cash flow monitoring. It seeks to ensure that adequate liquidity exists at all times in order to meet its cash requirements


The Group's strategy is to finance its operations through a mixture of cash generated from operations and, where necessary, equity finance and borrowings by way of bank loan and confidential sales ledger financing.


The Group's financial instruments comprise borrowings, cash and various items, such as trade receivable and trade payables, that arise from its operations. The main purpose of these financial instruments is to finance the Group's operations. The Group does not trade in financial instruments. The main risks arising from the Group's financial instruments are described below.


• Liquidity and Interest rate risk

The Group had net debt of £3.1m at the year end, comprising £3.4m (debt) less £0.3m (cash).


The Group's exposure to market risk for changes in interest rates related primarily to the Group's bank loan and sales financing facility debt obligations. Bank interest is charged on a floating rate basis.


As a guide, a 1% increase in interest rates, will cost an approximate £0.1m in additional interest.


The interest rate on the current Confidential Invoice Discounting Facility is linked to Barclays Bank base rate and the Revolver Credit Facility is linked to LIBOR. 


Barclays Bank has the right, at any time, to set-off the amount of any liability owed to the bank against any amounts owed by the bank.


• Credit risk

The Group seeks to trade only with recognised, creditworthy third parties. Receivable balances are monitored on an ongoing basis with the result that the Group's exposure to bad debts has not been significant. There are no significant concentrations of credit risk within the Group, with no debtor as at 31 July 2008 accounting for more than 5% (2007: 7%) of total receivable balances..


• Foreign currency risk

The Board considers that the Group does not have any material risks arising from the effects of exchange rate fluctuations.


Tony Dyer FMCA


CONSOLIDATED INCOME STATEMENT

for the year ended 31st July 2008




2008

2007

CONTINUING OPERATIONS

  Note

£'000

£'000


 

 

 

Revenue

 

258,830

202,779

Cost of Sales

 

(225,596)

(175,902)

GROSS PROFIT

3

33,234

26,877


 

 

 


 

 

 

Cost of admission to AIM

 

0

(572)

Other administrative expenses

 

(19,442)

(15,623)

Total administrative expenses

 

(19,442)

(16,195)


 

 

 

OPERATING PROFIT

4

13,792

10,682


 

 

 

Finance income

 

79

20

Finance cost

7

(1,074)

(831)

PROFIT BEFORE TAX

 

12,797

9,871


 

 

 

Income tax expense

10

(3,705)

(3,162)

PROFIT FROM CONTINUING OPERATIONS

3

9,092

6,709





Discontinued operations

 

 

 

Profit from discontinued operations

5

0

67

PROFIT FOR THE PERIOD

 

9,092

6,776


 

 

 


 

 

 

EARNINGS PER ORDINARY SHARE

 

 

 


 

 

 


 

2008

2007


  Note

pence

pence


 

 

 

Basic      Continuing operations

11

39.34

29.86

              Discontinued operations

11

0.00

0.30

              Total

 

39.34

30.16


 

 

 

Diluted    Continuing operations

11

38.25

29.14

              Discontinued operations

11

0.00

0.29

              Total

 

38.25

29.43



STATEMENT OF CHANGES IN EQUITY

for the year ended 31st July 2008


A) GROUP

Foreign Currency Translation Reserve

Share Capital

Share premium

Other reserve

Share based payment reserve

Retained Earnings

Total


£'000

£'000

£'000

£'000

£'000

£'000

£'000


 

 

 

 

 

 

 

At 1 August 2006

0

221

2,009

229

338

4,884

7,681


 

 

 

 

 

 

 

Currency translation differences from








foreign operations

3

0

0

0

0

0

3


 

 

 

 

 

 

 

Net income recognised directly








in equity

3

0

0

0

0

0

3

Profit for the year

(3)

0

0

0

0

6,776

6,773

Total recognised income/expense








for the year

0

0

0

0

0

6,776

6,776


 

 

 

 

 

 

 

Dividends in the year

0

0

0

0

0

(5,428)

(5,428)

Deferred tax movement re share options

0

0

0

0

0

644

644

IFRS2 credit

IFRS2 reserves transfer

0

0

0

0

0

0

0

0

321

(273)

0

273

321

0

EBT reserve movement

0

0

0

(5)

0

5

0

New share capital

0

9

820

0

0

0

829


0

9

820

(5)

48

(4,506)

(3,634)


 

 

 

 

 

 

 

At 31st July 2007

0

230

2,829

224

386

7,154

10,823


 

 

 

 

 

 

 


 

 

 

 

 

 

 

At 1 August 2007

0

230

2,829

224

386

7,154

10,823


 

 

 

 

 

 

 

Profit for the year

0

0

0

0

0

9,092

9,092

Total recognised income/expense








for the year

0

0

0

0

0

9,092

9,092


 

 

 

 

 

 

 

Dividends in the year

0

0

0

0

0

(3,310)

(3,310)

Deferred tax movement re share








options

0

0

0

0

0

(296)

(296)

IFRS2 credit

0

0

0

0

539

0

539

IFRS2 reserves transfer

0

0

0

0

(131)

131

0

New share capital

0

2

216

0

0

0

218


0

2

216

0

408

(3,475)

(2,849)


 

 

 

 

 

 

 

At 31st July 2008

0

232

3,045

224

794

12,771

17,066





















Share Capital

Share premium

Retained Earnings

Total

B) COMPANY




£'000

£'000

£'000

£'000









At 1st August 2006




221

2,009

(1,289)

941





 

 

 

 

Profit for the year




0

0

6,765

6,765

Total recognised income/expense








for the year

 

 

 

0

0

6,765

6,765





 

 

 

 

New share capital




9

820

0

829

Dividends paid in the year




0

0

(5,428)

(5,428)

At 31st July 2007




230

2,829

48

3,107





 

 

 

 





 

 

 

 

At 1st August 2007




230

2,829

48

3,107





 

 

 

 

Profit for the year




0

0

3,321

3,321

Total recognised income/expense








for the year

 

 

 

0

0

3,321

3,321





 

 

 

 

New share capital




2

216

0

218

Dividends paid in the year




0

0

(3,310)

(3,310)

At 31st July 2008




232

3,045

59

3,336


A dividend will be declared from Matchtech Group UK Limited prior to the payment of the proposed dividend outlined in note 8.




BALANCE SHEETS 

as at 31st July 2008




GROUP

COMPANY



2008

2007

2008

2007


Note

£'000

£'000

£'000

£'000

NON-CURRENT ASSETS






Intangible assets

12

170

133

0

0

Property, plant and equipment

13

1,809

1,699

0

0

Investments

15

0

0

250

250

Deferred tax asset

14

292

529

0

0

Total Non-Current Assets

 

2,271

2,361

250

250



 

 

 

 

CURRENT ASSETS


 

 

 

 

Trade and other receivables

16

38,565

31,984

2,880

2,203

Cash and cash equivalents

 

297

836

211

656

Total Current Assets

 

38,862

32,820

3,091

2,859



 

 

 

 

TOTAL ASSETS

 

41,133

35,181

3,341

3,109



 

 

 

 

LIABILITIES


 

 

 

 

Current Liabilities

 

 

 

 

 

Trade and other payables

17

(18,930)

(12,617)

0

0

Current tax liability

 

(1,788)

(1,068)

(5)

(2)

Bank loans and overdrafts

- short term borrowings

 

(3,349)

(6,924)

0

0

 

- current portion of long

 

 

 

 

 

 

   term borrowings

 

0

(1,666)

0

0



(24,067)

(22,275)

(5)

(2)

Non-current liabilities


 

 

 

 

Long term borrowings

19

0

(2,083)

0

0

TOTAL LIABILITIES

 

(24,067)

(24,358)

(5)

(2)



 

 

 

 

NET ASSETS

 

17,066

10,823

3,336

3,107



 

 

 

 



 

 

 

 

CAPITAL AND RESERVES


 

 

 

 

Called-up equity share capital 

21

232

230

232

230

Share premium account

 

3,045

2,829

3,045

2,829

Merger reserve

 

224

224

0

0

Share based payment reserve

 

794

386

0

0

Profit and loss account

 

12,771

7,154

59

48

SHAREHOLDERS' FUNDS

 

17,066

10,823

3,336

3,107














These financial statements were approved by the directors on the 14th October 2008, and signed on its behalf by:




Tony Dyer     

Finance Director

CONSOLIDATED CASH FLOW STATEMENT 

for the year ended 31st July 2008



GROUP

COMPANY


2008

2007

2008

2007


£'000

£'000

£'000

£'000

CASH FLOWS FROM OPERATING ACTIVITIES





Profit after taxation

9,092

6,776

3,321

6,765


 

 

 

 

Adjustments for:

 

 

 

 


 

 

 

 

    Depreciation

643

499

0

0

    Profit on disposal of discontinued operation

0

(59)

0

0

    Foreign exchange gain on disposal of discontinued 
    operation

0

(3)

0

0

    Loss on disposal of property, plant and equipment

27

0

0

0

    Interest income

(79)

(20)

(16)

(8)

    Interest expense

1,074

831

0

0

    Taxation expense recognised in profit and loss

3,705

3,162

5

3

    Increase in trade and other receivables

(6,385)

(7,514)

(678)

(996)

    Increase in trade and other payables

6,313

4,119

0

(652)

    Share based payment charge

540

321

0

0

    Investment income

0

0

(3,309)

(5,428)

Cash generated from operations

14,930

8,112

(677)

(316)


 

 

 

 

Interest paid

(1,074)

(831)

0

0

Income taxes paid

(3,241)

(2,205)

(2)

(1)

NET CASH FROM OPERATING ACTIVITIES

10,615

5,076

(679)

(317)


 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

Proceeds from sale of Matchtech Inc

0

105

0

0

Purchase of plant and equipment

(880)

(960)

0

0

Proceeds from sale of plant

62

28

0

0

Interest received

79

20

16

8

Dividend received

0

0

3,309

5,428

NET CASH USED IN INVESTING ACTIVITIES

(739)

(807)

3,325

5,436


 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

Proceeds from issue of share capital

218

829

218

829

(Repayments to)/proceeds from long-term borrowings

(7,257)

699

0

0

Dividends paid

(3,309)

(5,428)

(3,309)

(5,428)

NET CASH USED IN FINANCING

(10,348)

(3,900)

(3,091)

(4,599)


 

 

 

 


 

 

 

 

NET INCREASE IN CASH AND CASH EQUIVALENTS

(472)

369

(445)

520

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

659

290

656

136

CASH AND CASH EQUIVALENTS AT END OF PERIOD

187

659

211

656












GROUP

COMPANY

ANALYSIS OF CASH AND CASH EQUIVALENTS

2008

2007

2008

2007


£'000

£'000

£'000

£'000

Cash and cash equivalents

297

836

211

656

Bank Overdraft

(110)

(177)

0

0

 

187

659

211

656







NOTES 

forming part of the financial statements


1    THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES


i    The business and address of the Group


Matchtech Group plc is a human capital resources business dealing with contract and permanent recruitment in the Private and Public sector. The Group is organised in three sectors, Engineering, Built Environment and Support Services, with niche activities within each sector. The Group's address is: Matchtech Group plc, 1450 Parkway, Whiteley, Fareham PO15 7AF.


ii    Basis of preparation of the financial statements


The financial statements have been prepared in accordance with applicable International Financial Reporting Standards as adopted by the European Union (EU) and which are effective at 31 July 2008, our first annual reporting date at which we are required to use IFRS accounting standards as adopted by the EU.


Matchtech Group plc's consolidated and company financial statements were prepared in accordance with United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) until 31 July 2007. The date of transition to IFRS was 1 August 2006. The comparative figures in respect of 2007 have been restated to reflect changes in accounting policies as a result of adoption of IFRS. The disclosures required by IFRS 1 concerning the transition from UK GAAP to IFRS are given in the reconciliation schedules, presented and explained in note 2. 


These financial statements have been prepared under the historical cost convention. The accounting policies have been applied consistently throughout both the Group and the Company for the purposes of preparation of these financial statements. A summary of the principal accounting policies of the group are set out below.


IFRS 1 permits companies adopting IFRS for the first time to take certain exemptions from the full requirements of IFRS in the transition period. These financial statements have been prepared on the basis of taking the following exemptions:


  • business combinations prior to 1 August 2006, the Group's date of transition to IFRS, have not been restated to comply with IFRS 3 'Business Combinations'.


  • cumulative translation differences on foreign operations are deemed to be nil at 1 August 2006. Any gains and losses recognised in the consolidated income statement on subsequent disposal of foreign operations will exclude translation differences arising prior to the transition date.


  • the transitional arrangements of IFRS 2 Share Based Payments have been applied. In accordance with transitional arrangements, IFRS has been applied to all grants of equity instruments after 7 November 2002 that were unvested at 1 August 2006.



iii    Basis of consolidation


The group financial statements consolidate those of the company and all of its subsidiary undertakings drawn up to the balance sheet date. Subsidiaries are entities over which the group has power to control the financial and operating policies so as to obtain benefits from its activities. The group obtains and exercises control through voting rights.


Acquisitions of subsidiaries are dealt with by the purchase method. The purchase method involves the recognition at fair value of all identifiable assets and liabilities, including contingent liabilities of the subsidiary, at the acquisition date, regardless of whether or not they were recorded in the financial statements of the subsidiary prior to acquisition. On initial recognition, the assets and liabilities of the subsidiary are included in the consolidated balance sheet at their fair values, which are also used as the bases for subsequent measurement in accordance with group accounting policies.


Intra-group transactions are eliminated on consolidation


iv    Revenue


Revenue is measured by reference to the fair value of consideration received or receivable by the group for services provided, excluding VAT and trade discounts. Revenue on temporary placements is recognised upon receipt of a client approved timesheet or equivalent. Revenue from permanent placements, which is based on a percentage of the candidate's remuneration package, is recognised when candidates commence employment at which point it is probable that the economic benefits associated with the transaction will be transferred.


v    Property, plant and equipment


Property, plant and equipment is stated at cost, net of depreciation and any provision for impairment.


Depreciation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset as follows:


Motor Vehicles

25.00%

Reducing balance

Computer equipment

25.00%

Straight line

Equipment

12.50%

Straight line


Residual value estimates are updated as required, but at least annually, whether or not the asset is revalued.


vi    Intangible assets


Separately acquired software licences are included at cost and amortised on a straight-line basis over the useful economic life of that asset at 20%-33%. Provision is made against the carrying value of intangible assets where an impairment in value is deemed to have occurred. Amortisation is recognised in the income statement under administrative expenses.


vii    Disposal of assets


The gain or loss arising on the disposal of an asset is determined as the difference between the disposal proceeds and the carrying amount of the asset and is recognised in the income statement.


viii    Operating lease agreements


Rentals applicable to operating leases are charged against profits on a straight line basis over the lease term. Lease incentives are spread over the term of the lease.


ix    Taxation


Current tax is the tax currently payable based on taxable profit for the year.


Deferred income taxes are calculated using the liability method on temporary differences. Deferred tax is generally provided on the difference between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit.


Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is probable that the underlying deductible temporary differences will be able to offset against future taxable income. Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date.


Deferred tax on temporary differences associated with shares in subsidiaries is not provided if these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future.


Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statement, except where they relate to items that are charged or credited directly to equity (such as share based payments) in which case the related deferred tax is also charged or credited directly to equity.


x    Pension costs


The company operates a defined contribution pension scheme for employees. The assets of the scheme are held separately from those of the company. The annual contributions payable are charged to the income statement as they accrue.


xi    Share based payment


The transitional arrangements of IFRS 2 have been applied to all grants of equity instruments after 7 November 2002 that were unvested at 1 August 2006. All share-based remuneration is ultimately recognised as an expense in the income statement with a corresponding credit to 'share-based payment reserve'. All goods and services received in exchange for the grant of any share-based remuneration are measured at their fair values. Fair values of employee services are indirectly determined by reference to the fair value of the share options awarded. Their value is appraised at the grant date and excludes the impact of non-market vesting conditions (for example, profitability and sales growth targets).


If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options ultimately exercised are different to that estimated on vesting. Upon exercise of share options, proceeds received net of attributable transaction costs are credited to share capital and share premium.


The Group operates a share incentive plan (SIP) which is HMRC approved, and enables employees to purchase company shares out of pre-tax salary. For each share purchased the company grants an additional share at no cost to the employee. The expense in relation to these 'free' shares is recorded as employee remuneration and measured at fair value of the shares issued as at the date of the grant. 


xii    Exceptional items


Non-recurring items which are sufficiently material are presented separately within their relevant consolidated income statement category. This helps to provide a better understanding of the group's financial performance.


xiii    Business combinations completed prior to date of transition to IFRS


The group has elected not to apply IFRS 3 Business Combinations retrospectively to business combinations prior to 1 August 2006.


Accordingly the classification of the combination (merger) remains unchanged from that used under UK GAAP. Assets and liabilities are recognised at date of transition if they would be recognised under IFRS, and are measured using their UK GAAP carrying amount immediately post-acquisition as deemed cost under IFRS, unless IFRS requires fair value measurement. Deferred tax is adjusted for the impact of any consequential adjustments after taking advantage of the transitional provisions.


xiv    Discontinued operations


A discontinued operation is a cash-generating unit, or a group of cash -generating units, that either has been disposed of, or is classified as held for sale, and:


  • represents a separate line of business or geographic area of operations

  • is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations or

  • is a subsidiary acquired exclusively with a view to resale.


The disclosures for discontinued operations in the prior period relate to all operations that have been discontinued by the balance sheets date for the latest period presented.


xv    Financial assets


All financial assets are recognised when the group becomes a party to the contractual provisions of the instrument. Financial assets are recognised at fair value plus transaction costs.


In the company financial statements, investment in the subsidiary company is measured at cost.


Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Trade receivables are classified as loans and receivables. Loans and receivables are measured subsequent to initial recognition at amortised cost using effective interest method, less provision for impairment. Any change in their value through impairment or reversal of impairment is recognised in the income statement.


Provision against trade receivables is made when there is objective evidence that the group will not be able to collect all amounts due to it in accordance with the original terms of those receivables. The amount of the write-down is determined as the difference between the asset's carrying amount and the present value of estimated future cash flows.


A financial asset is derecognised only where the contractual rights to cash flows from the asset expire or the financial asset is transferred and that transfer qualifies for derecognition. A financial asset is transferred if the contractual rights to receive the cash flows of the asset have been transferred or the group retains the contractual rights to receive the cash flows of the asset but assumes a contractual obligation to pay the cash flows to one or more recipients. A financial asset that is transferred qualifies for derecognition if the group transfers substantially all the risks and rewards of ownership of the asset, or if the group neither retains nor transfers substantially all the risks and rewards of ownership but does transfer control of that asset.


Trade receivables subject to the invoice discounting facility are recognised in the balance sheet until they are settled by the customer.


xvi    Financial liabilities


Financial liabilities are obligations to pay cash or other financial assets and are recognised when the group becomes a party to the contractual provisions of the instrument and comprise trade and other payables and bank loans. Financial liabilities are recorded initially at fair value, net of direct issue costs and are subsequently measured at amortised cost using the effective interest rate method.


A financial liability is derecognised only when the obligation is extinguished, that is, when the obligation is discharged or cancelled or expires.


xvii    Cash and cash equivalents


Cash and cash equivalents comprise cash on hand, on demand deposits and bank overdrafts.


xviii    Dividends


Dividend distributions payable to equity shareholders are included in 'other short term financial liabilities' when the dividends are approved in general meeting prior to the balance sheet date.


xix    Equity


Equity comprises the following:


  • 'Share capital' represents the nominal value of equity shares.

  • 'Share premium' represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue.

  • 'Share based payment reserve' represents equity-settled share-based employee remuneration until such share options are exercised.

  • 'Merger reserve' represents the equity balance arising on the merger of Matchtech Engineering and Matchmaker Personnel.

  • 'Foreign currency reserve' represents the foreign exchange difference arising on retranslation of the assets of Matchtech Inc.

  • 'Profit and loss reserve' represents retained profits.


xx    Foreign currencies


Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at the rates of exchange ruling at the balance sheet date. Non-monetary items that are measured at historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.


Any exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were initially recorded are recognised in the profit or loss in the period in which they arise.  


The assets and liabilities in the financial statements of foreign subsidiaries are translated at the rate of exchange ruling at the balance sheet date. Income and expenses are translated at the actual rate. The exchange differences arising from the retranslation of the opening net investment in subsidiaries are taken directly to the 'Foreign currency reserve' in equity. On disposal of a foreign operation the cumulative translation differences are transferred to the income statement as part of the gain or loss on disposal.


As permitted by IFRS 1, the balance on the cumulative translation adjustment on retranslation of subsidiaries' net assets has been set to zero at the date of transition to IFRS.


xxi    Employee Benefit Trust


The assets and liabilities of the Employee Benefit Trust (EBT) have been included in the group accounts. Any assets held by the EBT cease to be recognised on the group balance sheet when the assets vest unconditionally in identified beneficiaries.


The costs of purchasing own shares held by the EBT are shown as a deduction against equity. The proceeds from the sale of own shares held increase equity. Neither the purchase nor sale of own shares leads to a gain or loss being recognised in the group income statement.


xxii     Financial risk management


Details of the Group's financial risk management policies and objectives as they relate to financial instruments, comprising discussion of the risks the Group faces, including liquidity risk, and its responses to them, are included within the Group Finance Director's Review under the heading Group Financial Risk Management.


xxiii    Significant accounting estimates and judgments


Estimates, assumptions concerning the future and judgments are made in the preparation of the financial statements. They affect the application of the Group's accounting policies, reported amounts of assets, liabilities, income and expenses, and disclosures made. They are assessed on an on-going basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances.


Critical judgements


The judgments made which, in the opinion of the Directors, are critical in drawing up the financial statements are as follows:


Invoice discounting facility:


The terms of this arrangement are judged to be such that the risk and rewards of ownership of the trade receivables do not pass to the finance provider. As such the receivables are not derecognised on draw-down of funds against this facility.


Key sources of estimation uncertainty


The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date are discussed below. These are included for completeness, although it is the Directors' view that none of these have significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.


Estimated useful lives of property, plant and equipment


The cost of equipment is depreciated on a straight line basis and the cost of motor vehicles is depreciated on a reducing balance basis over their useful lives. Management estimates the useful lives of property, plant and equipment to be within 2 to 4 years. These are common life expectances applied in the industry in which the Group operates. Changes in the expected level of usage and technological development could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.


Impairment loss of trade and other receivables


The Group's policy for doubtful receivables is based on the on-going evaluation of the collectability and aging analysis of the trade and other receivables and on management's judgments. Considerable judgment is required in assessing the ultimate realisation of these receivables, including the current creditworthiness and the past collection history of each debtor. If the financial conditions of the Group's debtors were to deteriorate, resulting in an impairment of their ability to make payments, additional impairment loss of trade and other receivables may be required. The carrying amounts of these assets are shown in note 16.


Share based payments


The key assumptions used in estimating the fair values of options granted to employees under IFRS 2 are detailed under Note 21.


xxiv    Employee benefits


The financial liability arising in relation to outstanding holiday pay is recognised on the balance sheet with the expense being charged as a payroll cost.



2    TRANSITIONAL ARRANGEMENTS



These are the Group's first annual consolidated financial statements prepared in accordance with IFRS. 


An explanation of how the transition from UK GAAP to IFRS has affected the Group's financial position, financial performance and cash flows is set out below. There were no changes to the Company's financial statements resulting from the transition therefore no transition statement has been presented for the Company.


Reconciliation of equity at 1 August 2006



UK GAAP


IAS 12 

IAS 17 

IAS 19

IFRS

 

 

 

Income Taxes

Leases

Employee Benefits

as restated

 

£'000

 

£'000

£'000

£'000

£'000

EQUITY 

 


 

 

 

 

Called-up equity share capital

221

 

0

0

0

221

Share premium account

2,009

 

0

0

0

2,009

Other reserves

567

 

0

0

0

567

Retained earnings

4,454

 

566

(64)

(72)

4,884

 TOTAL EQUITY 

7,251

 

566

(64)

(72)

7,681



Reconciliation of consolidated balance sheet and equity at 31 July 2007



UK GAAP

IAS 1

IAS 12 

IAS 17 

IAS 19

IFRS


 

Presentation of financial statements

Income Taxes

Leases

Employee Benefits

as restated


£'000

£'000

£'000

£'000

£'000

£'000

NON-CURRENT ASSETS

 

 

 

 

 

 

Intangible assets

133

0

0

0

0

133

Property, plant and equipment

1,699

0

0

0

0

1,699

Deferred tax assets

0

124

405

0

0

529


 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

Trade and other receivables

32,108

(124)

0

0

0

31,984

Cash and cash equivalents

836

0

0

0

0

836


 

0

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

Trade and other payables

(12,474)

0

0

(67)

(76)

(12,617)

Tax liability

(1,068)

0

0

0

0

(1,068)

Bank loans and overdrafts

(8,590)

0

0

0

0

(8,590)


 

 

 

 

 

 

NON-CURRENT LIABILITIES

 

 

 

 

 

 

Bank loan

(2,083)

0

0

0

0

(2,083)


 

 

 

 

 

 

NET ASSETS

10,561

0

405

(67)

(76)

10,823


 

 

 

 

 

 

EQUITY







Called-up equity share capital

230

0

0

0

0

230

Share premium account

2,829

0

0

0

0

2,829

Other reserves

610

0

0

0

0

610

Retained earnings

6,892

0

405

(67)

(76)

7,154

TOTAL EQUITY

10,561

0

405

(67)

(76)

10,823


Reconciliation of consolidated income statement for year ended 31 July 2007



UK GAAP

IAS 1

IAS 12 (1)

IAS 17 

IAS 19 

IAS 21

IFRS


 

Presentation of financial statements

Income Taxes

Leases

Employee Benefits

Foreign Exchange Rates

as restated


£'000

£'000

£'000

£'000

£'000

£'000

£'000









Revenue

202,914

(135)

0

0

0

0

202,779

Cost of sales

(176,019)

117

0

0

0

0

(175,902)

Gross profit

26,895

(18)

0

0

0

0

26,877


 

 


 

 

 

 

Administration Costs

(15,627)

10

0

(2)

(4)

0

(15,623)

Cost of admission to AIM

(572)

0

0

0

0

0

(572)

Profit on sale of discontinued operation

59

(59)


0

0

0

0

0

Finance Income

19

0

0

0

0

0

19

Finance Cost

(830)

0

0

0

0

0

(830)

Profit before tax

9,944

(67)

0

(2)

(4)

0

9,871


 

 


 

 

 

 

Taxation

(2,359)

3

(806)

0

0

0

(3,162)

Profit for the period

7,585

(64)

(806)

(2)

(4)

0

6,709


 

 


 

 

 

 

Profit from discontinued operations

0

64


0

0

0

3

67

Profit for the period from total operations

7,585

0


(806)

(2)

(4)

3

6,776











Notes to the reconciliations


IAS 1 Presentation of financial statements


Under UK GAAP, the deferred tax asset was classified as a current asset. Under IFRS the deferred tax asset is classified as a non-current asset.


Under UK GAAP, the income statement provided full disclosure of each line item relating to discontinued operations. Under IFRS, only the profit from the discontinued operation is disclosed on the income statement.


IAS 12 Income Taxes


Under FRS 19, deferred tax was recognised only on timing differences; in contrast IAS 12 'Income Taxes' requires the recognition of deferred tax on all temporary differences which specifically impacts the recognition of deferred tax in relation to share based payments.


Under FRS 19, the deferred tax asset on the cost of options recognised was restricted to the amount calculated by applying the prevailing corporation tax rate to the total cost in the year calculated under FRS20. Under IFRS the deferred tax asset recognised is the cost of options outstanding based on the fair value at the period end date multiplied by the prevailing rate of corporation tax. The deferred tax asset has been adjusted in line with IFRS requirements.


The tax effect of gains and losses on exercise of share options in the period is recognised through the income statement only to the extent that a corresponding charge has been recorded as remuneration expense under the requirements of IFRS2, Share Based Payments. The excess of the tax effect over the cumulative IFRS2 charge is recognised directly in equity.


(1) This adjustment was not reflected in the transition statements presented in the interim financial statements for the period to 31 January 2008. The impact of this adjustment is an increase of £806,000 to the tax charge and a corresponding decrease in profit for the year ended 31 July 2007.



IAS 17 Leases


Under UK GAAP, the rent-free period lease incentive was spread over the period from the start of the lease to the first break clause. Under IFRS, the incentive is spread over the non-cancellable contracted period of the lease term. 


IAS 19 Employee benefits


Under UK GAAP, the company chose not to accrue for outstanding staff holiday pay at the balance sheet date. IFRS requires that the accrual be calculated at each balance sheet date.


IAS 21 The Effects of Changes in Foreign Exchange Rates


On the disposal of Matchtech Inc the cumulative translation differences are transferred to the income statement as part of the gain or loss on disposal. Under UK GAAP the difference was shown as a movement in reserves.


Cash Flow statement


Application of IFRS has resulted in reclassification of certain items in the cash flow statement as follows:


Profit after taxation has been adjusted as per the reconciliation above. (Operating profit was used in the Annual Report for 2007 in the reconciliation to net cash inflow from operating activities).


Movements in trade and other receivables and trade and other payables have been adjusted to account for the IFRS adjustments to the provisions on the balance sheet as shown in the reconciliations of consolidated balance sheets and income statements above. These relate to the reclassification of the deferred tax asset between trade and other receivables and non current assets and the adjustments to the rent free period and staff holiday reserves.


3    SEGMENTAL INFORMATION


The revenue, gross profit and profit before tax are attributable to the one principal activity of the group.




2008

2007


£'000

£'000

A segmental analysis of revenue is given below:

 

 

Engineering

147,977

129,299

Built Environment

69,186

40,046

Support Services

41,667

33,434

Continuing operations

258,830

202,779

Discontinued Operations

0

135

Total

258,830

202,914


 

 


 

 


2008

2007


£'000

£'000

A segmental analysis of gross profit is given below:

 

 

Engineering

16,786

14,833

Built Environment

9,039

6,000

Support Services

7,409

6,044

Continuing operations

33,234

26,877

Discontinued Operations

0

18

Total

33,234

26,895


 

 


 

 


2008

2007


£'000

£'000

A segmental analysis of operating profit is given below:

 

 

Engineering

7,562

5,896

Built Environment

3,977

2,384

Support Services

2,253

2,402

Continuing operations

13,792

10,682

Discontinued Operations

0

8

Total

13,792

10,690





The Group operates from a single site with assets being centrally held. For this reason a segmental analysis of assets and liabilities has not been presented.


The Directors consider that the group does not generate material profits from overseas operations and have therefore not presented geographic information. 


4    OPERATING PROFIT




2008

2007


£'000

£'000

Operating profit is stated after charging:



Depreciation

643

499

Loss on disposal of property, plant and equipment

31

0

Auditors' remuneration

- fees payable for the audit of the annual accounts

39

30

 

- tax services

4

11


- other services pursuant to legislation

14

119




Operating lease costs:

- Plant and machinery

12

8

 

- Land and buildings

536

424

Net (profit)/loss on foreign currency translation

(6)

4






    DISCONTINUED OPERATIONS


On 31st August 2006 Matchtech Group UK Ltd sold the shares of Matchtech Inc for consideration of £105,000, giving a profit on disposal of £59,000. The profit from Matchtech Inc has been included under discontinued operations in the consolidated income statement. The income statement of Matchtech Inc is set out below.



2008

2007


£'000

£'000




Revenue

0

135

Cost of Sales

0

(117)

GROSS PROFIT

0

18


 

 

Administrative Expenses

0

(10)

OPERATING PROFIT

0

8


 

 

Finance income

0

0

Finance cost

0

0

PROFIT BEFORE TAX

0

8


 

 

Profit on disposal of discontinued operation

0

59

Income tax expense

0

(3)

Foreign exchange gain

0

3

PROFIT FROM DISCONTINUED OPERATIONS

0

67





6    PARTICULARS OF EMPLOYEES


The average number of staff employed by the group during the financial year amounted to:


2008

2007


No.

No.




Selling

215

148

Administration

60

66

Directors

7

7

Total

282

221


The aggregate payroll costs of the above were:


2008

2007


£'000

£'000




Wages and salaries

11,394

9,183

Social security costs

1,325

1,082

Other pension costs

744

648

Total

13,463

10,913


Disclosure of the remuneration of Key Management Personnel, as required by IAS 24, is covered by the audited part of the Directors Remuneration Report.


7    FINANCE COSTS



2008

2007


£'000

£'000




Bank interest payable

1,074

831



8    DIVIDENDS



2008

2007


£'000

£'000




Equity dividends paid during the year at 14.3 pence per share (2007: 24.1p)

3,310

5,427


 

 

Equity dividends proposed after the year-end (not recognised as a liability) at 10.6 pence per share (2007: 9.3p)


2,462


2,148





9    PARENT COMPANY PROFIT



2008

2007


£'000

£'000




The amount of profit (loss) dealt with in the accounts of the company is

11

1,337


The company has taken advantage of the exemption in S230 of the Companies Act (1985) not to present the parent company's income statement.


10    TAX ON PROFIT ON ORDINARY ACTIVITIES



2008

2007


£'000

£'000




Current Tax:

UK corporation tax

3,932

3,177

 

Adjustments in respect of previous periods

(77)

1


3,855

3,178







Deferred tax (note 14)

(150)

(16)

Tax on profit on ordinary activities

3,705

3,162





UK corporation tax has been charged at 29.33% (2007 - 30%). 


The charge for the year can be reconciled to the profit as per the income statement as follows:



2008

2007


£'000

£'000




Profit before tax

12,797

9,871


 

 

Profit on ordinary activities multiplied by the standard rate of corporation tax in the UK



of 29.33% (2007: 30%)

3,753

2,961


 

 

Expenses not deductible for tax purposes

18

17

Exceptional items not deductible for tax purposes

0

183

Change in deferred tax rate

11

0

Adjustments to tax charge in respect of previous periods

(77)

1

Current tax charge for period

3,705

3,162



Tax charge/(credit) recognised directly in equity


2008

2007


£'000

£'000




Current tax recognised directly in equity

(91)

(806)

Deferred tax recognised directly in equity

387

162

Total tax recognised directly in equity

296

(644)



Factors that may affect future tax charges


Based on current capital investment plans, and the changes in capital allowance rules effective April 2008, the group expects depreciation to exceed capital allowances in the future.


A deferred tax asset has been recognised in the balance sheet in respect of the cost of employee share options. This will become recoverable when the options are exercised.


None of the companies have losses carried forward available for offset against future profits and the directors are confident that the group will continue to be profitable in coming years. 



11    EARNINGS PER SHARE


Earnings per share has been calculated by dividing the consolidated profit after taxation attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the period. 


Diluted earnings per share has been calculated, on the same basis as above, except that the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares (arising from the Group's share option schemes) into ordinary has been added to the denominator. There are no changes to the profit (numerator) as a result of the dilutive calculation.




2008

2007


£'000

£'000




Profit after tax attributable to ordinary shareholders

Continuing operations

9,092

6,709

 

Discontinued operations

0

67

Total

9,092

6,776







2008

2007


'000s

'000s




Weighted average number of ordinary shares in issue

23,111

22,470

Effect of dilutive potential ordinary shares

660

556

Total

23,771

23,026






pence

Pence




Earnings per ordinary share

- basic

Continuing operations

39.34

29.86

 

 

Discontinued operations

0.00

0.30

Total

39.34

30.16







 

- dilutd

Continuing operations

38.25

29.14

 

 

Discontinued operations

0.00

0.29

Total

38.25

29.43






Earnings Per Share for the purpose of a performance measure for the LTIPs is calculated excluded the non-recurring items of the sales and profits of the US business sold on 31st August 2006 as well as the non-recurring costs of the flotation as calculated below. (See 'Earnings per share growth' within the Directors' Remuneration Report).



2008

2007


'000s

'000s




Profit on ordinary activities after taxation

9,092

6,776

Cost of admission to AIM

0

572

Profit after tax of discontinued operations

0

(5)

Profit on sale of discontinued operations

0

(59)

Profit on ordinary activities after taxation but before non-recurring items

9,092

7,284





pence

pence




Earnings per ordinary share

- basic

39.34

32.42

 

- diluted

38.25

31.63





12    INTANGIBLE ASSETS




Software



Licences



£'000




COST

At 1 August 2006

 

150

 

Additions

 

37

 

At 1st August 2007

 

187

 

Additions

 

86

 

At 31st July 2008

 

273


 


 

AMORTISATION

At 1st August 2006

 

22

 

Charge for the year

 

32

 

At 1st August 2007

 

54

 

Charge for the year

 

49

 

At 31st July 2008

 

103


 


 


 


 

NET BOOK VALUE

At 31st July 2007

 

133

 

At 31st July 2008

 

170



13    PROPERTY, PLANT AND EQUIPMENT


Group


Motor

Office

Computer




Vehicles

Equipment

Equipment

Total



£'000

£'000

£'000

£'000







COST

At 1 August 2006

1,194

947

514

2,655


Additions

329

364

230

923


Disposals

(116)

0

0

(116)


At 1st August 2007

1,407

1,311

744

3,462


Additions

472

190

131

793


Disposals

(155)

(114)

(11)

(280)


At 31st July 2008

1,724

1,387

864

3,975



 

 

 

 



 

 

 

 

DEPRECIATION

At 1st August 2006

515

557

312

1,384


Charge for the year

216

140

111

467


Release on disposal

(88)

0

0

(88)


At 1st August 2007

643

697

423

1,763


Charge for the year

275

174

145

594


Release on disposal

(105)

(75)

(11)

(191)


At 31st July 2008

813

796

557

2,166



 

 

 

 

NET BOOK VALUE

At 31st July 2007

 

 

 

 

 

At 31st July 2008

764

614

321

1,699

 

 

911

591

307

1,809


There were no capital commitments as at 31st July 2008 (2007: £nil)


14    DEFERRED TAX



GROUP

COMPANY


2008

2007

2008

2007

The deferred tax asset is represented by:

£'000

£'000

£'000

£'000






Temporary difference on share based payments





At start of year

529

675

0

0

Recognised in income

150

16

0

0

Recognised in equity

(387)

(162)

0

0

At end of year

292

529

0

0



15    INVESTMENTS



GROUP

COMPANY


2008

2007

2008

2007


£'000

£'000

£'000

£'000






Shares in group companies

0

0

250

250

Total

0

0

250

250



Subsidiary Undertakings


Company

Country of Incorporation

Share Class

% held 

Main Activities

Matchtech Group UK Ltd

United Kingdom

Ordinary

99.998%

Provision of recruitment consultancy

Matchtech Engineering Ltd

United Kingdom

Ordinary

100%

Non trading

Matchmaker Personnel Ltd

United Kingdom

Ordinary 

100%

Non trading


On 31st August 2006 Matchtech Group UK Ltd sold the shares of Matchtech Inc for consideration of £105,000. The results of Matchtech Inc have been included under discontinued operations in the consolidated income statement.



16    TRADE AND OTHER RECEIVABLES



GROUP

COMPANY


2008

2007

2008

2007


£'000

£'000

£'000

£'000






Trade debtors

38,298

31,672

0

0

Amounts owed by group companies

0

0

2,880

2,203

Other debtors

49

55

0

0

Prepayments

218

257

0

0

Total

38,565

31,984

2,880

2,203



The amount owed to group undertakings in the company balance sheet is considered to approximate to fair value.


The number of days sales outstanding at the end of the period was 54 days (2007: 57 days). The allowance for doubtful debts has been determined by reference to previous experience and management assessment of debts.


The Directors consider that the carrying amount of trade and other receivables approximates the fair value.


Included in the Group's trade receivable balance are debtors with a carrying amount of £6,293,000 (2006: £7,799,000) which are past due at the reporting date for which the Group has not provided as the Directors do not believe there has been a significant change in credit quality and consider the amounts to be recoverable in full. The Group does not hold any collateral over these balances. The Directors consider all trade receivables not past due to be fully recoverable.


The Group uses a third party credit scoring system to assess the credit worthiness of potential new customers before accepting them. Credit limits are defined by customer based on this information. All customer accounts are subject to review on a regular basis by senior management and actions are taken to address debt ageing issues.


The Directors believe that there is no requirement for further provision over and above the allowance for doubtful debts. 



Ageing of past due but not impaired trade receivables



GROUP


2008

2007


£'000

£'000

0-30 days

5558

6,448

30-60 days

619

1,042

60-90 days

29

151

90+ days

87

158


6,293

7,799







Movement in the allowance for doubtful debts




GROUP


2008

2007


£'000

£'000

Balance at the beginning of the period

183

116

Impairment losses recognised

16

67


199

183







Ageing of impaired trade receivables




GROUP


2008

2007


£'000

£'000

0-30 days

0

0

30-60 days

0

0

60-90 days

0

11

90+ days

199

172


199

183



17    TRADE AND OTHER PAYABLES



GROUP

COMPANY


2008

2007

2008

2007


£'000

£'000

£'000

£'000






Trade creditors

149

54

0

0

Taxation and Social Security

5,049

5,376

0

0

Other creditors

10,667

4,140

0

0

Accruals and deferred income

3,065

3,047

0

0

Total

18,930

12,617

0

0












The working capital facility is secured by way of an all assets debenture, dated 5 August 2002, which contains fixed and floating charges over the assets of Matchtech Group UK Limited. The facility held with Barclays Bank allows the company to borrow up to 90% of its invoiced debtors up to a maximum of £20 million. Interest is charged on borrowings at a rate of 1.0% over Barclays Bank base rate.



18    FINANCIAL ASSETS AND LIABILITIES BALANCE SHEET CLASSIFICATION


The carrying amount of Matchtech's financial assets and liabilities as recognised at the balance sheet date of the reporting periods under review may also be categorised as follows: 


Financial assets are included in the balance sheet within the following headings:



GROUP

COMPANY


2008

2007

2008

2007


£'000

£'000

£'000

£'000






Trade and other receivables





- Loan and receivables

38,347

31,727

2,880

2,203

Cash and cash equivalents

 

 

 

 

- Loan and receivables

297

836

211

656

Total

38,644

32,563

3,091

2,859



Each financial liability is considered to be held at fair value.


Financial liabilities are included in the balance sheet within the following headings:



GROUP

COMPANY


2008

2007

2008

2007


£'000

£'000

£'000

£'000

Current liabilities





Borrowings





- Financial liabilities recorded at amortised cost

3,349

8,590

0

0

Trade and other payables

 

 

 

 

- Financial liabilities recorded at amortised cost

10,816

4,194

0

0


 

 

 

 

Non current liabilities

 

 

 

 

Borrowings

 

 

 

 

- Financial liabilities recorded at amortised cost

0

2,083

0

0

Total

14,165

14,867

0

0







19    LONG TERM BORROWINGS



GROUP

COMPANY


2008

2007

2008

2007


£'000

£'000

£'000

£'000






Bank loan

0

2,083

0

0


The bank loan was cleared on 31st July 2008


20    COMMITMENTS UNDER OPERATING LEASES


At 31st July 2008 the group had commitments to pay the following 

GROUP

COMPANY

amounts under non-cancellable operating leases as set out below.

2008

2007

2008

2007


£'000

£'000

£'000

£'000








Land/buildings

Leases falling due: 

within 1 to 5 years

583

783

0

0

 

 

after 5 years

2,494

2,779

0

0




 

 

 

 




 

 

 

 

Other

Leases falling due: 

within 1 year

1

6

0

0

 

 

within 1 to 5 years

9

12

0

0


The lease on 1400 Parkway, which expires in March 2017 has a break clause exercisable in June 2011. The annual commitment has therefore been classified in the expiration within 1 to 5 year category. There are no applicable renewal clauses in the current lease agreements. 


21    SHARE CAPITAL


Authorised share capital


2008

2007


£'000

£'000




40,000,000 Ordinary shares of £0.01 each

400

400


Allotted, called up and fully paid:


2008

2007


£'000

£'000




23,225,000 Ordinary shares of £0.01 each

232

230


The number of shares in issue in the company increased as follows:


Date

Ordinary shares 

Share premium received

Consideration 


issued

pence per share

Received





At 01/08/2006

  22,071,610 

 

 

27/10/2006

  348,254 

69

243,778

27/11/2006

  31,955 

366

117,115

27/11/2006

  31,955 

0

320

22/12/2006

  767 

0

8

30/01/2007

  736 

0

7

26/02/2007

  658 

0

7

30/03/2007

  668 

0

7

27/04/2007

  573 

0

6

25/05/2007

  485 

0

5

01/06/2007

  539,140 

86

466,705

11/06/2007

  947 

88

839

25/06/2007

  1,447 

0

14

At 31/7/2007

  23,029,195 

 

828,811

27/08/2007

  436 

0

4

28/09/2007

  447 

0

4

31/10/2007

  454 

0

5

05/11/2007

  70,872 

89

63,781

23/01/2008

  17,131 

0

171

08/04/2008

  9,174 

133

12,293

12/05/2008

  5,692 

145

8,310

05/06/2008

  75,336 

145

109,991

28/07/2008

  16,619 

145

24,264

Total

  23,225,356 

 

1,047,634

Share Options

The following options arrangements exist over the Company's shares.



2008

2007

Date of 

Exercise

Exercise period


'000s

'000s

grant

price








pence












Key Share Options

24

48

18/06/2004

70

18/06/2005

to

18/06/2014

Key Share Options

0

34

08/11/2004

89

08/11/2005

to

08/11/2014

Key Share Options

142

218

01/12/2005

146

01/06/2007

to

01/12/2015

Target/Loyalty Share Options

3

3

05/03/2003

70

14/07/2005

to

05/03/2013

Target/Loyalty Share Options

2

2

18/06/2004

70

18/06/2005

to

18/06/2014

Target/Loyalty Share Options

2

6

08/11/2004

89

14/07/2006

to

08/11/2014

Target/Loyalty Share Options

26

72

01/12/2005

146

01/12/2006

to

01/12/2015

Long Term Incentive Plan Options

260

269

26/10/2006

1

27/10/2009

to

27/10/2016

Long Term Incentive Plan Options

7

8

26/01/2007

1

26/01/2010

to

25/01/2017

Long Term Incentive Plan Options

292

0

15/11/2007

1

15/11/2010

to

14/11/2017

Total

758

660

 

 

 

 

 


In the year the company operated an EMI Share Option Scheme. No EMI share options were granted during the year. All options exercised during the year were EMI share options.


The Group also operates a Long Term Incentive Plan (LTIP). LTIP awards are nil-cost options granted to senior staff subject to a three year holding period and the achievement of performance targets. LTIP options have a life of 10 years. The number and weighted average exercise price of share options granted, forfeited and exercised in the year were as follows.



2008

2007


Number

Weighted average exercise price

Weighted average share price

Number

Weighted average exercise price

Weighted average share price


'000s

(pence)

(pence)

'000s

(pence)

(pence)








Outstanding at 1st August

660

75.6

 

1,294

95.5

 



 


 

 


Granted

302

1.0

 

295

1.0

 

Forfeited

33

29.9

 

41

69.5

 

Exercised

171

122.8

361.0

888

80.1

411.0



 

 

 

 

 

Outstanding at 31st July

758

75.6

75.6

660

75.6

75.6


 

 

 

 

 

 

Exercisable at 31st July

200

134.2

134.2

93

78.2

78.2









The number and weighted average exercise price of future share options vesting in the future are shown below.



2008

2007


Weighted average remaining contract life

Number

Weighted average exercise price

Weighted average remaining contract life

Number

Weighted average exercise price

Exercise Date

(months)

'000s

(pence)

(months)

'000s

(pence)








27/10/2009

15

260

1.0

27

269

1.0

30/01/2010

18

7

1.0

27

8

1.0

06/11/2010

27

292

1.0

0

0

0.0

Total

559

277

 









The fair values of the LTIPS were calculated using a Monte Carlo simulation method along with the assumption as detailed in the table below. In the year the Group operated a Share Incentive Plan (SIP). The SIP is an HMRC approved plan available to all employees enabling them to purchase shares out of pre-tax salary. For each share purchased the company grants an additional share at no cost. The fair values of the SIPS were calculated as the market value on the date of the grant.


Date of grant


Share Price on the date of grant

Exercise Price

Volatility

Vesting Period

Dividend Yield

Risk Free Rate of interest

Fair Value



(£)

(£)

(%)

(yrs)

(%)

(%)

(£)

27/10/2006

LTIP

3.45

0.01

30.4%

3.00

10%

4.6%

1.96

30/01/2007

LTIP

3.79

0.01

30.7%

3.00

10%

5.0%

2.20

27/11/2006

SIP

3.67

0.01

N/A

3.00

N/A

N/A

3.67

22/12/2006

SIP

3.67

0.01

N/A

3.00

N/A

N/A

3.67

30/01/2007

SIP

3.79

0.01

N/A

3.00

N/A

N/A

3.79

26/02/2007

SIP

4.02

0.01

N/A

3.00

N/A

N/A

4.02

30/03/2007

SIP

4.00

0.01

N/A

3.00

N/A

N/A

4.00

27/04/2007

SIP

4.40

0.01

N/A

3.00

N/A

N/A

4.40

25/05/2007

SIP

4.75

0.01

N/A

3.00

N/A

N/A

4.75

25/06/2007

SIP

4.83

0.01

N/A

3.00

N/A

N/A

4.83

27/07/2007

SIP

4.73

0.01

N/A

3.00

N/A

N/A

4.73

15/11/2007

LTIP

4.24

0.01

30.1%

3.00

10%

4.6%

2.68

30/08/2007

SIP

4.61

0.01

N/A

3.00

N/A

N/A

4.61

28/09/2007

SIP

4.60

0.01

N/A

3.00

N/A

N/A

4.60

26/10/2007

SIP

4.69

0.01

N/A

3.00

N/A

N/A

4.69

30/11/2007

SIP

4.12

0.01

N/A

3.00

N/A

N/A

4.12

02/01/2008

SIP

3.73

0.01

N/A

3.00

N/A

N/A

3.73

25/01/2008

SIP

3.58

0.01

N/A

3.00

N/A

N/A

3.58

29/02/2008

SIP

3.19

0.01

N/A

3.00

N/A

N/A

3.19

28/03/2008

SIP

3.02

0.01

N/A

3.00

N/A

N/A

3.02

25/04/2008

SIP

2.88

0.01

N/A

3.00

N/A

N/A

2.88

30/05/2008

SIP

2.97

0.01

N/A

3.00

N/A

N/A

2.97

27/06/2008

SIP

2.90

0.01

N/A

3.00

N/A

N/A

2.90

25/07/2008

SIP

2.68

0.01

N/A

3.00

N/A

N/A

2.68



- The volatility of the Company's share price on each date of grant was calculated as the average of annualized standard deviations of daily continuously compounded returns on the Company's stock, calculated over 5 years back from the date of grant, where applicable.

- The risk free rate is the yield to maturity on the date of grant of a UK Gilt Strip, with term to maturity equal to the life of the option.

- The IFRS2 charge for the year ended 31st July 2008 is £538,916 (2007: £320,948)



22    TRANSACTIONS WITH DIRECTORS AND RELATED PARTIES


The company was under the direction of G D P Materna, A P Gunn, A S Dyer, P J Raine and A F White throughout the period. As disclosed in the Directors' Report, the directors are each personally interested in 33.9%, 1.7%, 1.1%, 7.9% and 4.7% respectively, of the company's issued share capital.


There were no material related party transactions with the directors during the period.  


With the exception of dividends paid from Matchtech Group UK Limited to Matchtech Group PLC of £2,148,431 on 27th November 2007 and £1,160,666 on 19th June 2008 there are no other related party transactions in the company accounts.


23    FINANCIAL INSTRUMENTS


The financial risk management policies and objectives including those related to financial instruments and the qualitative risk exposure details, comprising credit and other applicable risks, are included within the Finance Director's report under the heading Group financial risk management.


Maturity of financial liabilities


The group financial liabilities analysis at 31July 2008 was as follows:



GROUP

COMPANY


2008

2007

2008

2007


£'000

£'000

£'000

£'000






In less than one year or on demand:

109

176

0

0

Bank overdrafts

-

1,667

0

0

Bank loans

-

-

0

0

Revolving credit facility

3,240

6,747

0

0

Working capital facility

3,349

8,590

0

0






In more than one year but less than two years:

 

 

 

 

Bank and other borrowings

0

1,666

0

0











In more than two years but less than five years:

 

 

 

 

Bank and other borrowings

0

417

0

0







Borrowing facilities


(i) The bank loan was fully repaid in 2008 and replaced by a revolving credit facility whereby the Group may borrow up to £7.5 million subject to satisfaction of the requirements of the facility. The interest rate of the loan is set at 1.1% above the LIBOR lending rate. The maturity date is set by interest period at the commencement of the loan. Each advance is repaid on that date but the revolving facility allows any amount repaid to be available for redrawing.


(ii) The undrawn facility available at 31 July 2008 of the Working Capital facility in respect of which all conditions precedent had been met was as follows:



Group


2008

2007


£'000

£'000




Expiring in one year or less

16,760

13,253


The working capital facility is secured on the total assets of the group as explained in note 17.


The working capital facility was reviewed by the facility providers in September 2008 and renewed for a further twelve months.


The Directors have calculated that the approximate effect of a 1% movement in interest rates would be £100,000.


The Directors believe that the carrying value of borrowings approximates to their fair value.


Net foreign currency monetary assets



Group


2008

2007


£'000

£'000




Euros

19

138



In the Directors' opinion, the exposure to Foreign Currency risk and Interest Rate risk is not material to the Group and has therefore not included sensitivity analyses in these areas.



24    STANDARDS AND INTERPRETATIONS IN ISSUE, NOT YET EFFECTIVE


The following new Standards and Interpretations, which are yet to become mandatory, have not been applied in the Group financial statements.


Standard


Effective date



(Annual periods 



beginning on or after)




IFRIC 13

Customer Loyalty Programmes

1 July 2008

 


 

IFRIC 12

Service Concession Arrangements

1 January 2008

 


 

IAS 23

Borrowing Costs (revised 2007)

1 January 2009

 


 

IFRS 8

Operating Segments

1 January 2009

 


 

IAS 27

Consolidated and Separate Financial Statements (revised 2008)

1 July 2009

 


 

IAS 1

Presentation of Financial Statements (revised 2007)

1 January 2009

 


 

IAS 32

Financial Instruments: Presentation

1 January 2009

 


 

IFRS 2

Share-based Payment - Vesting Conditions and Cancellations

1 January 2009

 


 

IFRS 3

Business Combinations (revised 2008)

1 July 2009

 


 

IFRS 1 & IAS 27

Consolidated and Separate Financial Statements - Costs of

1 January 2009

 

Investment ina Subsidiary, Jointly Controlled Entity or Associate

 

 



 IAS 39

Amendment - Financial Instruments: Recognition and

1 July 2009

 

Measurement - Eligible Hedged Items

 

 



IFRIC 16

Hedges of a Net Investment in a Foreign Operation

1 October 2008





Based on the Group's current business model and accounting policies, management does not expect material impacts on the figures in the Group's financial statements when the interpretations become effective. Management does anticipate a significant impact on disclosures in the financial statements arising from IAS 1 (revised 2007).


The Group does not intend to apply any of these pronouncements early.

  

25    CAPITAL MANAGEMENT POLICIES AND PROCEDURES


Matchtech Group PLC's capital management objectives are:


- to ensure the Group's ability to continue as a going concern; and to provide an adequate return to shareholders.


- by pricing products and services commensurately with the level of risk.


The Group monitors capital on the basis of the carrying amount of equity.



26    EQUITY


For the purpose of preparation of the consolidated financial statements of the Group, the share capital represents the nominal value of the issued share capital of Matchtech Group PLC. Share premium represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue.


The share based payment reserve represents equity-settled share-based payments until such share options are exercised.


Foreign currency translation reserve represents the differences arising from translation of investments in overseas subsidiaries.



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