REG-Matchtech Group PLC Statement re: Impact of IFRS

Released : 19/02/08 07:00

                                                                                                                       .
RNS Number:2558O 
Matchtech Group PLC 
19 February 2008 
 
 
19 February 2008 
 
 
 
                MATCHTECH GROUP PLC ("Matchtech" or "the Group") 
 
                    Statement on the Impact of Adoption of  
                  International Financial Reporting Standards 
 
 
 
Introduction 
 
From 1 August 2007 Matchtech Group plc is required to report its results in 
accordance with International Accounting Standards and International Financial 
Reporting Standards (collectively 'IFRS'). Matchtech Group plc has hitherto 
prepared its financial statements in accordance with UK Generally Accepted 
Accounting Principles (UK GAAP). 
 
 
This statement provides information on how the Group's financial performance and 
position under IFRS differs from that reported under UK GAAP. The financial 
information presented in this document is unaudited. 
 
 
The transition date to IFRS for the Group is 1 August 2006, being the start of 
the period of comparative information. The Group's first interim results under 
IFRS will be for the six months ended 31 January 2008 and its first accounting 
period under IFRS will be for the financial year ended 31 July 2008. 
 
 
Restated information is shown for: 
 
 
   - The consolidated income statement for: 
 
     -   the six month period ending 31 January 2007 
     -   the year ended 31 July 2007 
 
 
   - The consolidated balance sheet as at: 
 
     -   31 January 2007 
     -   31 July 2007 
 
 
   - The consolidated cashflow statement for: 
 
     -   the six month period ending 31 January 2007 
     -   the year ended 31 July 2007 
 
 
   - The consolidated statement of changes in equity for: 
 
     -   the six month period ending 31 January 2007 
     -   the year ended 31 July 2007 
 
 
Impact of the Adoption of IFRS 
 
The impact of the adoption of IFRS on the Group's financial net assets is 
minimal, as can be seen from the table in Note 2, and does not affect the 
Group's strategy, underlying business performance or its cash flows. 
 
 
 
 
CONDENSED CONSOLIDATED INCOME STATEMENT 
 
                                        Note         6 months        12 months 
                                                  to 31/01/07      to 31/01/07 
                                                    Unaudited        Unaudited 
CONTINUING OPERATIONS                                   £'000            £'000 
Revenue                                   3           93,438          202,779 
Cost of Sales                                        (80,933)        (175,902) 
GROSS PROFIT                              3           12,505           26,877 
 
Administrative Expenses                               (7,427)         (15,623) 
Cost of Admission to AIM                                (572)            (572) 
OPERATING PROFIT                          3            4,506           10,682 
 
Finance income                                            13               20 
Finance cost                                            (390)            (831) 
PROFIT BEFORE TAX                                      4,129            9,871 
 
Income tax expense                                    (1,169)          (2,356) 
PROFIT FROM CONTINUING 
OPERATIONS                                             2,960            7,515 
 
DISCONTINUED OPERATIONS 
Profit from discontinued operations       4               67               67 
PROFIT FOR THE PERIOD                                  3,027            7,582 
 
 
 
EARNINGS PER ORDINARY SHARE 
                                                    6 months         12 months 
                                                 to 31/01/07       to 31/01/07 
                                                   Unaudited         Unaudited 
Continuing operations                                  pence             Pence 
Basic                                     6            13.29             34.79 
Diluted                                   6            12.75             33.43 
 
Total operations 
Basic                                     6            13.59             35.10 
Diluted                                   6            13.04             33.72 
 
 
 
CONDENSED CONSOLIDATED BALANCE SHEET 
                                                  31/01/2007        31/07/2007 
                                        Note        Unaudited        Unaudited 
ASSETS                                                  £'000            £'000 
Non-current assets 
Property, plant                                         1,590            1,699 
and equipment 
Intangible assets                                         113              133 
Deferred tax assets                                       879              529 
                                                        2,582            2,361 
Current Assets 
Trade and other receivables                            25,672           31,984 
Cash and cash equivalents                                 353              836 
                                                       26,025           32,820 
TOTAL ASSETS                                           28,607           35,181 
 
LIABILITIES 
Current liabilities 
Trade and other payables                               (8,881)         (12,617) 
Current tax liability                                    (904)          (1,068) 
Bank loans and        
overdrafts       - short term 
                   borrowings                          (7,292)          (6,924) 
                 - current portion 
                   of long term 
                   borrowings                          (1,666)          (1,666) 
                                                      (18,743)         (22,275) 
Non-current liabilities 
Long term borrowings                                   (2,917)          (2,083) 
TOTAL LIABILITIES                                     (21,660)         (24,358) 
NET ASSETS                                              6,947           10,823 
 
 
 
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 
Called-up equity share capital                            225              230 
Share premium account                                   2,367            2,829 
Other reserves                                            685              610 
Retained earnings                                       3,670            7,154 
TOTAL EQUITY                                            6,947           10,823 
 
 
 
CONDENSED CONSOLIDATED CASH FLOW STATEMENT 
                                                     6 months        12 months 
                                                  to 31/01/07      to 31/07/07 
                                        Note        Unaudited        Unaudited 
                                                        £'000            £'000 
CASH FLOWS FROM 
OPERATING ACTIVITIES 
Profit after taxation                                   3,027            7,582 
Adjustments for: 
 -Depreciation                                            226              499 
 -Profit on disposal of discontinued 
  operation                                 4             (59)             (59) 
 -Foreign exchange gain on 
  disposal of discontinued 
  operation                                                (3)              (3) 
 -Profit on disposal of property, 
  plant and equipment                                       0                0 
 -Interest income                                         (13)             (20) 
 -Interest expense                                        390              831 
 -Taxation expense recognised in                        
 profit and loss                                        1,172            2,359 
 -Increase)/decrease in trade and 
  other receivables                                    (1,240)          (7,516) 
 -Increase in trade and other 
  payables                                                473            4,118 
 -Increase in share based 
  payment provision                                       125              321 
 
Cash generated from operations                          4,098            8,112 
Interest paid                                            (390)            (831) 
Income taxes paid                                      (1,256)          (2,205) 
NET CASH FROM OPERATING 
ACTIVITES                                               2,452            5,076 
 
                                                     6 months        12 months 
                                                  to 31/01/07      to 31/07/07 
                                        Note        Unaudited        Unaudited 
CASH FLOWS FROM INVESTING                               £'000            £'000 
ACTIVITIES 
 
Proceeds from sale of Matchtech Inc                       105              105 
Purchase of plant and equipment                          (532)            (960) 
Proceeds from sale of plant                                 0               28 
Interest received                                          13               20 
NET CASH USED IN INVESTING 
ACTIVITIES                                               (414)            (807) 
 
CASH FLOWS FROM FINANCING 
ACTIVITIES 
Proceeds from issue of share capital                      361              829 
Proceeds from long-term borrowings                      1,918              699 
Dividends paid                                         (4,414)          (5,428) 
NET CASH USED IN FINANCING 
ACTIVITIES                                             (2,135)          (3,900) 
 
NET INCREASE IN CASH AND 
CASH EQUIVALENTS                                          (97)             369 
CASH AND CASH EQUIVALENTS 
AT BEGINNING OF PERIOD                                    290              290 
CASH AND CASH EQUIVALENTS 
AT END OF PERIOD                                          193              659 
 
 
 
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 
 
                        Foreign      Share    Other    Share  Retained   Total 
                       currency  Capital &  reserve    based  Earnings 
                    translation      Share           payment 
                        reserve    Premium           reserve 
 
                        £'000      £'000    £'000    £'000     £'000     £'000 
 
Balance at 1 August  
2006                        0      2,230      229      338     4,884     7,681 
 
Profit for the 
period                      3          0        0        0         0         3 
 
Profit for the 
period                     -3          0        0        0     3,027     3,024 
 
Share based 
payment 
reserve movement            0          0        0      123         0       123 
 
Total recognised 
income 
and expense for 
the period                  0          0        0      123     3,027     3,150 
 
 
Dividends                   0          0        0        0    (4,414)   (4,414) 
 
IAS 12 adjustment 
to deferred tax asset       0          0        0        0       168       168 
 
EBT reserve movement        0          0       -5        0         5         0 
 
New share capital           0        362        0        0         0       362 
 
                            0        362       -5        0    (4,241)   (3,884) 
Balance at 31 
January 2007                0      2,592      224      461     3,670     6,947 
 
Balance at 1 
August 2006                 0      2,230      229      338     4,884     7,681 
 
Currency 
translation 
differences                 3          0        0        0         0         3 
 
Net income 
recognised 
directly in equity          3          0        0        0         0         3 
 
Profit for the year        -3          0        0        0     7,582     7,579 
 
Share based 
payment 
reserve movement            0          0        0       48         0        48 
 
Total recognised 
income 
and expense for 
the year                    0          0        0       48     7,582     7,630 
 
 
Dividends                   0          0        0        0    (5,428)   (5,428) 
 
IAS 12 adjustment 
to deferred tax asset       0          0        0        0       111       111 
 
EBT reserve movement        0          0       -5        0         5         0 
 
New share capital           0        829        0        0         0       829 
 
                            0        829       -5        0    (5,312)   (4,488) 
 
Balance at 31 July 
2007                        0      3,059      224      386     7,154    10,823 
 
 
Notes 
 
Forming part of the financial statements 
 
1. THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES 
 
i The business 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. 
 
ii Basis of preparation of restatement document 
 
This restatement document has been prepared in accordance with the requirements 
of IFRS 1 "First-time Adoption of International Financial Reporting Standards". 
It does not include all of the information required for full annual financial 
statements, and should be read in conjunction with the consolidated financial 
statements for the year ended 31 July 2007 which have been filed with the 
Registrar of Companies. The auditor's report on those financial statements was 
unqualified and did not contain a statement under section 237 (2) and (3) of the 
Companies Act 1985. 
 
This restatement document has been prepared in accordance with the accounting 
policies set out below which are based on the recognition and measurement 
principles of IFRS in issue as adopted by the European Union (EU) and are 
effective at 31 July 2008 or are expected to be adopted and 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 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 2006 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. 
 
IFRS 1 permits companies adopting IFRS for the first time to take certain 
exemptions from the full requirements of IFRS in the transition period. This 
restatement document has 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 Group has not applied IFRS 2, share based payments to share options awards 
  granted prior to 7 November 2002, nor to those granted subsequent to that date 
  but which had vested by 1 August 2006, the date of transition. 
 
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. 
 
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. 
 
v Property, plant and equipment 
 
Property, plant and equipment is stated at cost or valuation, 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 non current assets where an 
impairment in value is deemed to have occurred. 
 
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 where substantially all of the benefits 
and risks of ownership remain with the lessor 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 
 
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. 
 
Deferred tax liabilities are provided in full, with no discounting. Deferred tax 
assets are recognised to the extent that it is probable that the underling 
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. 
 
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 the revaluation of land) 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 
 
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 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. 
 
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 co-ordinated 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 
 
Financial assets are divided into the following categories: loans and 
receivables. Financial assets are assigned to the different categories by 
management on initial recognition, depending on the purpose for which they were 
acquired. The designation of financial assets is re-evaluated at every reporting 
date at which a choice of classification or accounting treatment is available. 
 
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. 
 
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 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. 
 
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. Financial liabilities are recorded initially at fair value, net 
of direct issue costs. 
 
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. 
 
- "Other reserve" represents the equity balance arising on the merger of 
  Matchtech Engineering and Matchmaker Personnel. 
 
- "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. Exchange differences on non-monetary items are recognised in equity 
to the extent that they relate to a gain or loss on that non-monetary item taken 
to equity, otherwise such gains and losses are recognised in the income 
statement. 
 
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 (including, if applicable, 
gains and losses on related hedges) 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. 
 
2   TRANSITION RECONCILIATIONS 
 
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. 
 
Reconciliation of equity at 1 August 2006 
 
                        UK GAAP    IAS 12    IAS 17    IAS 19           IFRS 
                                   Income    Leases  Employee    as restated 
                                    Taxes            Benefits 
                          £'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 January 2007 
 
                UK GAAP         IAS 1   IAS 12   IAS 17    IAS 19         IFRS 
                         Presentation   Income   Leases  Employee  as restated 
                         of financial    Taxes           Benefits 
                           statements 
                  £'000         £'000    £'000    £'000     £'000        £'000 
NON-CURRENT 
ASSETS 
Intangible assets   113             0        0        0         0          113 
Property, plant 
and equipment     1,590             0        0        0         0        1,590 
Deferred tax 
assets                0           879        0        0         0          879 
 
CURRENT ASSETS 
Trade and other 
receivables      25,819          (879)     732        0         0       25,672 
Cash and cash 
equivalents         353             0        0        0         0          353 
 
CURRENT 
LIABILITIES 
Trade and other 
payables         (8,793)            0        0      (57)      (31)      (8,881) 
Tax liability      (904)            0        0        0         0         (904) 
Bank loans and 
overdrafts       (8,958)            0        0        0         0       (8,958) 
 
NON-CURRENT 
LIABILITIES 
Bank loan        (2,917)            0        0        0         0       (2,917) 
 
NET ASSETS        6,303             0      732      (57)      (31)       6,947 
 
 
 
EQUITY 
Called-up equity share 
capital                    225      0        0        0        0         225 
Share premium 
account                  2,367      0        0        0        0       2,367 
Other reserves             685      0        0        0        0         685 
Retained earnings        3,026      0      732      (57)     (31)      3,670 
TOTAL EQUITY             6,303      0      732      (57)     (31)      6,947 
 
 
Reconciliation of consolidated balance sheet and equity at 31 July 2007 
 
                UK GAAP         IAS 1   IAS 12   IAS 17    IAS 19         IFRS 
                         Presentation   Income   Leases  Employee  as restated 
                         of financial    Taxes           Benefits 
                           statements 
                  £'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           529        0        0         0          529 
 
CURRENT ASSETS 
Trade and 
other 
receivables      32,108          (529)     405        0         0       31,984 
Cash and cash 
equivalents         836             0        0        0         0          836 
 
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                                  0 
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 the period ended  
31 January 2007 
 
                UK GAAP         IAS 1   IAS 17    IAS 19    IAS 21         IFRS 
                         Presentation   Leases  Employee   Foreign  as restated 
                         of financial           Benefits  Exchange 
                           statements                        Rates 
                  £'000         £'000    £'000     £'000     £'000        £'000 
Revenue          93,573          (135)       0         0         0       93,438 
Cost of sales   (81,050)          117        0         0         0      (80,933) 
Gross profit     12,523           (18)       0         0         0       12,505 
 
Administration 
Costs            (7,485)           10        7        41         0       (7,427) 
Cost of 
admission to       (572)            0        0         0         0         (572) 
AIM 
Profit on sale 
of discontinued 
operation            59           (59)       0         0         0            0 
Finance Income       13             0        0         0         0           13 
Finance Cost       (390)            0        0         0         0         (390) 
Profit before 
tax               4,148           (67)       7        41         0        4,129 
Taxation         (1,172)            3                  0         0       (1,169) 
Profit for the 
period            2,976           (64)       7        41         0        2,960 
Profit from 
discontinued 
operations            0            64        0         0         3           67 
Profit for the 
period 
from total 
operations        2,976             0        7        41         3        3,027 
 
 
Reconciliation of consolidated income statement for year ended 31 July 2007 
 
                 UK GAAP           IAS 1   IAS 17    IAS 19          IAS 21         IFRS 
                         Presentation of   Leases  Employee         Foreign  as restated 
                               financial           Benefits        Exchange  
                              statements                              Rates 
                   £'000           £'000    £'000     £'000           £'000        £'000 
Revenue          202,914            (135)       0         0               0      202,779 
Cost of sales   (176,019)            117        0         0               0     (175,902) 
Gross profit      26,895             (18)       0         0               0       26,877 
 
Administration 
Costs            (15,627)             10       (2)       (4)              0      (15,623) 
Cost of 
admission to 
AIM                 (572)              0        0         0               0         (572) 
Profit on sale 
of discontinued 
operation             59             (59)       0         0               0            0 
Finance Income        19               0        0         0               0           19 
Finance Cost        (830)              0        0         0               0         (830) 
Profit before 
tax                9,944             (67)      (2)       (4)              0        9,871 
Taxation          (2,359)              3        0         0               0       (2,356) 
Profit for the 
period             7,585             (64)      (2)       (4)              0        7,515 
Profit from 
discontinued 
operations             0              64        0         0               3           67 
Profit for the 
period 
from total 
operations         7,585               0       (2)       (4)              3        7,582 
 
 
 
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 
 
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. 
 
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 lease 
incentive is spread over the full 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 Interim and Annual Reports 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 stated in the reconciliations above. 
 
 
 
 
 
 
 
                      This information is provided by RNS 
            The company news service from the London Stock Exchange 
 
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