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Part 2 : For preceding part double-click [nRn1H4314A]
Dividends paid in the year 0 0 (3,626) (3,626)
At 31 July 2009 232 3,045 65 3,342
A dividend will be declared from Matchtech Group UK Limited prior to the payment
of the proposed dividend outlined in note 6.
BALANCE SHEETS as at 31 July 2009
GROUP COMPANY
2009 2008 2009 2008
Note £'000 £'000 £'000 £'000
NON-CURRENT ASSETS
Intangible assets 10 151 170 0 0
Property, plant and equipment 11 1,546 1,809 0 0
Investments 13 0 0 272 250
Deferred tax asset 12 99 292 0 0
Total Non-Current Assets 1,796 2,271 272 250
CURRENT ASSETS
Trade and other receivables 14 32,903 38,565 2,989 2,880
Cash and cash equivalents 307 297 82 211
Total Current Assets 33,210 38,862 3,071 3,091
TOTAL ASSETS 35,006 41,133 3,343 3,341
LIABILITIES
Current Liabilities
Trade and other payables 15 (10,933) (18,930) 0 0
Current tax liability (1,368) (1,788) (1) (5)
Bank loans and overdrafts 20 (1,470) (3,349) 0 0
(13,771) (24,067) (1) (5)
Non-current liabilities
Long term borrowings 0 0 0 0
TOTAL LIABILITIES (13,771) (24,067) (1) (5)
NET ASSETS 21,235 17,066 3,342 3,336
EQUITY
Called-up equity share capital 18 232 232 232 232
Share premium account 3,045 3,045 3,045 3,045
Merger reserve 224 224 0 0
Share based payment reserve 550 794 0 0
Profit and loss account 17,184 12,771 65 59
TOTAL EQUITY 21,235 17,066 3,342 3,336
These financial statements were approved by the directors on the 7th October
2009, and signed on its behalf by:
Tony Dyer
Chief Financial Officer
CONSOLIDATED CASH FLOW STATEMENT for the year ended 31 July 2009
GROUP COMPANY
2009 2008 2009 2008
£'000 £'000 £'000 £'000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit after taxation 7,990 9,092 3,632 3,321
Adjustments for:
Depreciation 626 643 0 0
Loss on disposal of property, plant and equipment 2 27 0 0
Interest income (9) (79) (4) (16)
Interest expense 376 1,074 0 0
Taxation expense recognised in profit and loss 3,288 3,705 2 5
Decrease/ (increase) in trade and other receivables 5,662 (6,385) (109) (678)
(Decrease)/ increase in trade and other payables (7,997) 6,313 0 0
Share based payment (credit)/ charge (156) 540 0 0
Investment income 0 0 (3,626) (3,309)
Cash generated from operations 9,782 14,930 (105) (677)
Interest paid (376) (1,074) 0 0
Income taxes paid (3,554) (3,241) (6) (2)
NET CASH FROM OPERATING ACTIVITIES 5,852 10,615 (111) (679)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of plant and equipment (340) (794) 0 0
Purchase of intangible assets (39) (86) 0 0
Investment in subsidiaries 0 0 (22) 0
Proceeds from sale of plant 33 62 0 0
Interest received 9 79 4 16
Dividend received 0 0 3,626 3,309
NET CASH USED IN INVESTING ACTIVITIES (337) (739) 3,608 3,325
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of share capital 0 218 0 218
Repayments to invoice discounting facility (1,769) (7,257) 0 0
Dividends paid (3,626) (3,309) (3,626) (3,309)
NET CASH USED IN FINANCING (5,395) (10,348) (3,626) (3,091)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 120 (472) (129) (445)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 187 659 211 656
CASH AND CASH EQUIVALENTS AT END OF PERIOD 307 187 82 211
GROUP COMPANY
2009 2008 2009 2008
£'000 £'000 £'000 £'000
ANALYSIS OF CASH AND CASH EQUIVALENTS
Cash 307 297 82 211
Bank overdraft 0 (110) 0 0
307 187 82 211
NOTES forming part of the financial statements
1 THE GROUP AND 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 Company is
incorporated in the United Kingdom. The Group is organised in three sectors,
Engineering, Built Environment and Professional 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 2009.
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.
The directors have reviewed forecasts and budgets for the coming year, which
have been drawn up with appropriate regard for the current macroeconomic
environment and the particular circumstances in which the Group operates. These
were prepared with reference to historic and current industry knowledge, taking
future strategy of the Group into account. As a result, at the time of
approving the financial statements, the directors consider that the Company and
the Group have sufficient resources to continue in operational existence for the
foreseeable future, and accordingly, that it is appropriate to adopt the going
concern basis in the preparation of the financial statements. As with all
business forecasts, the Directors' statement cannot guarantee that the going
concern basis will remain appropriate given the inherent uncertainty about
future events.
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.
Transactions between group companies 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 1 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
grant.
xii 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.
xiii 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, and a provision is made where an impairment value is deemed to
have occurred.
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.
xiv 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.
xv Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, on demand deposits and bank
overdrafts.
xvi 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.
xvii 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.
- "Profit and loss reserve" represents retained profits.
xviii
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.
xix Employee Benefit Trust
The Employee Benefit Trust was wound up during the year.
xx Significant accounting estimates and judgements
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. This facility is recognised as a liability for the amount drawn.
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 receivables 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 14.
Share based payments
The key assumptions used in estimating the fair values of options granted to
employees under IFRS 2 are detailed under Note 18.
xxi Employee benefits
The financial liability in relation to outstanding holiday pay is recognised in
the income statement and held as a provision.
2 SEGMENTAL INFORMATION
The revenue, gross profit and profit before tax are attributable to the one
principal activity of the group. The group's primary segment is industry segment
and its secondary is geographical.
A segmental analysis of revenue is given below:
2009 2008
£'000 £'000
Engineering 153,170 147,977
Built Environment 68,706 69,186
Professional Services 47,705 41,667
Total 269,581 258,830
A segmental analysis of gross profit is given below:
2009 2008
£'000 £'000
Engineering 15,864 16,786
Built Environment 7,441 9,039
Professional Services 6,962 7,409
Total 30,267 33,234
A segmental analysis of operating profit is given below:
2009 2008
£'000 £'000
Engineering 6,853 7,562
Built Environment 3,013 3,977
Professional Services 1,779 2,253
Total 11,645 13,792
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.
3 OPERATING PROFIT
2009 2008
£'000 £'000
Operating profit is stated after charging:
Depreciation 568 594
Amortisation 58 49
Loss on disposal of property, plant and equipment 2 31
Auditors' remuneration: - fees payable for the audit of the financial statements 40 39
- taxation 5 4
- other services pursuant to legislation 18 14
Operating lease costs: - Plant and machinery 11 12
- Land and buildings 510 536
Net loss/ (profit) on foreign currency translation 5 (6)
4 PARTICULARS OF EMPLOYEES
The average number of staff employed by the group during the financial year
amounted to:
2009 2008
No. No.
Selling 229 215
Administration 60 60
Directors 7 7
Total 296 282
The aggregate payroll costs of the above were:
2009 2008
£'000 £'000
Wages and salaries 11,217 11,394
Social security costs 1,207 1,325
Other pension costs 899 744
Total 13,323 13,463
Disclosure of the remuneration of Key Management Personnel, as required by IAS
24, is covered by the audited part of the Directors' Remuneration Report, since
only the statutory Directors are considered to be key management personnel.
5 FINANCE COSTS
2009 2008
£'000 £'000
Bank interest payable 376 1,074
6 DIVIDENDS
2009 2008
£'000 £'000
Equity dividends paid during the year at 15.6 pence per share (2008: 3,626 3,310
14.3p)
Equity dividends proposed after the year-end (not recognised as a 2,467 2,462
liability) at 10.6 pence per share (2008: 10.6p)
Between 1 December 2003 and 30 June 2009, the Company paid dividends amounting
to £20.2m. Although the company had sufficient distributable reserves to make
each dividend payment, the relevant interim accounts reflecting these profits
were not prepared and filed at the appropriate time with the Registrar of
Companies as required by the Companies Acts 1985 and 2006. Consequently payment
of £15.7m of those dividends, including the £3.626m paid in the year to 31 July
2009, did not comply with the technical requirements of the Companies Acts 1985
and 2006. Since 31 July 2009, as a matter of good governance and to reflect the
adequacy of distributable reserves, interim accounts have been filed with the
Registrar of Companies, and the Company will put a resolution to the
shareholders at the forthcoming AGM for their approval to take the necessary
steps to remedy the situation. Further information will be provided in the
notice of the AGM. These accounts have been drawn up on the basis that the
infringement referred to above is regularised by the actions to be proposed to
shareholders at the forthcoming AGM. The proposals do not affect the results of
the Group for the year to 31 July 2009, its net assets at 31 July 2009, nor its
ability to pay future dividends.
7 PARENT COMPANY PROFIT
2009 2008
£'000 £'000
The amount of profit dealt with in the accounts of the company is 3,632 3,321
The company has taken advantage of the exemption in S408 of the Companies Act
2006 not to present the parent company's income statement.
8 INCOME TAX
2009 2008
£'000 £'000
Current Tax: UK corporation tax 3,128 3,932
Prior year under/ (over) provision 6 (77)
3,134 3,855
Deferred tax (note 12) 154 (150)
Income tax expense 3,288 3,705
UK corporation tax has been charged at 28% (2008 - 29.33%). The standard rate of
UK Corporation Tax was changed from 30% to 28% on 1 April 2008 therefore in the
prior year the hybrid rate of 29.33% was applied.
The charge for the year can be reconciled to the profit as per the income
statement as follows:
2009 2008
£'000 £'000
Profit before tax 11,278 12,797
Profit on ordinary activities multiplied by the standard rate of 3,158 3,753
corporation tax in the UK of 28% (2008: 29.33%)
Expenses not deductible for tax purposes 23 18
Deferred tax asset not provided for due to fall in share price 155 0
Enhanced R&D tax relief (54) 0
Change in deferred tax rate 0 11
Adjustments to tax charge in respect of previous periods 6 (77)
Total tax charge for period 3,288 3,705
Tax charge/(Credit) recognised directly in equity:
2009 2008
£'000 £'000
Current tax recognised directly in equity 0 (91)
Deferred tax recognised directly in equity (39) 387
Total tax recognised directly in equity (39) 296
9 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. The number of dilutive shares has fallen significantly due
to; the share price falling below the exercise price of the EMI options granted
in 2005; the lapse of the November 2006 and January 2007 LTIP options due to
performance conditions not being met; and as at the date of this report the
November 2007 and November 2008 LTIP options performing below the required TSR
target.
The earnings per share information has been calculated as follows:
2009 2008
£'000 £'000
Profit after tax attributable to ordinary shareholders 7,990 9,092
2009 2008
'000s '000s
Weighted average number of ordinary shares in issue 23,244 23,111
Effect of dilutive potential ordinary shares 14 660
Total 23,258 23,771
2009 2008
pence pence
Earnings per ordinary share - basic 34.37 39.34
- diluted 34.35 38.25
10 INTANGIBLE ASSETS
Group
Software
Licences
£'000
COST At 1 August 2007 187
Additions 86
At 1 August 2008 273
Additions 39
At 31 July 2009 312
AMORTISATION At 1 August 2007 54
Charge for the year 49
At 1 August 2008 103
Charge for the year 58
At 31 July 2009 161
NET BOOK VALUE At 31 July 2008 170
At 31 July 2009 151
11 PROPERTY, PLANT AND EQUIPMENT
Group
Motor Office Computer
Vehicles Equipment Equipment Total
£'000 £'000 £'000 £'000
COST At 1 August 2007 1,407 1,311 744 3,462
Additions 472 190 131 793
Disposals (155) (114) (11) (280)
At 1 August 2008 1,724 1,387 864 3,975
Additions 271 26 43 340
Disposals (140) (11) (272) (423)
At 31 July 2009 1,855 1,402 635 3,892
DEPRECIATION At 1 August 2007 643 697 423 1,763
Charge for the year 275 174 145 594
Released on disposal (105) (75) (11) (191)
At 1 August 2008 813 796 557 2,166
Charge for the year 285 151 132 568
Released on disposal (105) (11) (272) (388)
At 31 July 2009 993 936 417 2,346
NET BOOK VALUE At 31 July 2008 911 591 307 1,809
At 31 July 2009 862 466 218 1,546
More to follow, for following part double-click [nRn3H4314A]