REG-Matchtech Group PLC Interim Results - Part 2

Released : 17/03/08 07:02

                                                                                                                       .
 
RNS Number:1971Q 
Matchtech Group PLC  
Part  2 : For preceding part double-click [nRNSQ1971Q] 
 
 
 
 
 
 
 
Dividend 
 
 
Reflecting the performance of our business in the first half, the Board has 
declared an interim dividend of 5.0 pence per share, an increase of 14% (2007: 
H1 4.4p). 
 
 
The interim dividend will be paid on 24 June 2008 to those shareholders on the 
register at close of business on 6 June 2008. 
 
 
Risk 
 
The Group considers strategic, financial and operational risks and identifies 
actions to mitigate those risks. Key  risks and their mitigation are disclosed 
in the 2007 Annual Report and no significant new risks have been identified in  
the period. 
 
 
Growth strategy 
 
 
Our unique single site model continues to provide a stable, low cost platform 
for growth. The growth strategy is being implemented by an experienced 
management team and is based around a balanced contract/perm mix in our target 
recruitment markets. We aim to further segment and subdivide our markets and to 
deepen our niche specialisations over time. 
 
 
 
Outlook 
 
 
General business sentiment in our markets has remained positive to date, and the 
sectors that we serve continue to exhibit strong structural growth 
characteristics. Moreover we have a highly diversified and expanding customer 
base, which provides further opportunities for growth and adds protection to our 
business. 
 
 
Candidates and Contractors remain in short supply, with wage inflation 
continuing in each of the sectors in which we operate. This demonstrates that 
the market continues to be candidate driven, allowing Matchtech to utilise its 
superior service delivery capabilities to gain market share. 
 
 
We believe that there are strong opportunities for continued growth, both from 
the significant investment made in our sales headcount at the start of the year 
through our graduate program, which is expected to show through in the second 
half, and from our existing business development pipeline. The Board remains 
confident in its outlook for the year and expects to be able to report sound 
progress in the second half. 
 
 
George Materna 
 
Chairman 
 
 
17 March 2008 
 
 
 
 
 
 
 
MATCHTECH GROUP PLC 
 
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 
 
FOR THE PERIOD ENDED 31ST JANUARY 2008 
 
 
 
 
CONDENSED CONSOLIDATED INCOME STATEMENT 
 
For the period ended 31 January 2008 
                                    Note      6 months     6 months    12 months 
                                           to 31/01/08  to 31/01/07  to 31/07/07 
                                             Unaudited    Unaudited    Unaudited 
CONTINUING OPERATIONS                          £'000        £'000        £'000 
Revenue                               3      116,562       93,438      202,779 
Cost of Sales                               (101,290)     (80,933)    (175,902) 
                                             ---------     --------     -------- 
GROSS PROFIT                          3       15,272       12,505       26,877 
 
Cost of Admission to AIM                           0         (572)        (572) 
Other administrative expenses                 (9,119)      (7,427)     (15,623) 
                                             ---------     --------     -------- 
Total administrative expenses                 (9,119)      (7,999)     (16,195) 
                                             ---------     --------     -------- 
OPERATING PROFIT                      3        6,153        4,506       10,682 
 
Finance income                                    18           13           20 
Finance cost                                    (500)        (390)        (831) 
                                             ---------     --------     -------- 
PROFIT BEFORE TAX                              5,671        4,129        9,871 
 
Income tax expense                    4       (1,729)      (1,169)      (2,356) 
                                             ---------     --------     -------- 
PROFIT FROM CONTINUING OPERATIONS              3,942        2,960        7,515 
 
DISCONTINUED OPERATIONS 
Profit from discontinued 
operations                            5            0           67           67 
                                             ---------     --------     -------- 
PROFIT FOR THE PERIOD                          3,942        3,027        7,582 
                                             =========     ========     ======== 
 
 
 
EARNINGS PER ORDINARY SHARE 
                                    6 months          6 months         12 months 
                                 to 31/01/08       to 31/01/07       to 31/07/07 
                                   Unaudited         Unaudited         Unaudited 
Continuing operations                  pence             pence             Pence 
  - Basic                   7        17.09             13.29             33.44 
  - Diluted                 7        16.53             12.75             32.64 
 
Total operations 
  - Basic                   7        17.09             13.59             33.74 
  - Diluted                 7        16.53             13.04             32.93 
 
 
 
CONDENSED CONSOLIDATED BALANCE SHEET 
                                                                                  Note   31/01/08   31/01/07   31/07/07 
                                                                                        Unaudited  Unaudited  Unaudited 
                                                                                            £'000      £'000      £'000 
ASSETS 
Non-current assets  
Property, plant and equipment                                                               2,014      1,590      1,699 
Intangible assets                                                                             186        113        133 
Deferred tax assets                                                                           502        879        529 
                                                                                        ---------   --------   -------- 
                                                                                            2,702      2,582      2,361 
Current Assets 
Trade and other receivables                                                                29,039     25,672     31,984 
Cash and cash equivalents                                                                      91        353        836 
                                                                                        ---------   --------   -------- 
                                                                                           29,130     26,025     32,820 
                                                                                        ---------   --------   -------- 
TOTAL ASSETS                                                                               31,832     28,607     35,181 
                                                                                        =========   ========   ======== 
 
LIABILITIES 
Current liabilities 
Trade and other payables                                                                  (11,677)    (8,881)   (12,617) 
Current tax liability                                                                      (1,773)      (904)    (1,068) 
Bank loans and overdrafts 
    - short term borrowings                                                                (2,556)    (7,292)    (6,924) 
    - current portion of long term borrowings                                              (1,666)    (1,666)    (1,666) 
                                                                                        ---------   --------    -------- 
                                                                                          (17,672)   (18,743)   (22,275) 
Non-current liabilities 
Long term borrowings                                                                       (1,251)    (2,917)    (2,083) 
                                                                                        ---------   --------    -------- 
TOTAL LIABILITIES                                                                         (18,923)   (21,660)   (24,358) 
                                                                                        =========   ========    ======== 
NET ASSETS                                                                                 12,909      6,947     10,823 
                                                                                        =========   ========    ======== 
 
 
 
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 
Called-up equity share capital                                                  231            225            230 
Share premium account                                                         2,892          2,367          2,829 
Other reserves                                                                  859            685            610 
Retained earnings                                                             8,927          3,670          7,154 
                                                                            ---------       --------       -------- 
TOTAL EQUITY                                                                 12,909          6,947         10,823 
                                                                            =========       ========       ======== 
 
 
 
CONDENSED CONSOLIDATED CASH FLOW STATEMENT 
                                                                        Note     6 months     6 months    12 months 
                                                                              to 31/01/08  to 31/01/07  to 31/07/07 
                                                                                Unaudited    Unaudited    Unaudited 
                                                                                  £'000        £'000        £'000 
CASH FLOWS FROM 
OPERATING ACTIVITIES 
Profit after taxation                                                             3,942        3,027        7,582 
Adjustments for: 
    -Depreciation                                                                   306          226          499 
    -Profit on disposal of discontinued                                  5            0          (59)         (59) 
   operation 
 
   -Foreign exchange gain on                                                          0           (3)          (3) 
   disposal of discontinued 
   operation 
 
   -Profit on disposal of property,                                                  (3)           0            0 
   plant and equipment 
 
    -Interest income                                                                (18)         (13)         (20) 
    -Interest expense                                                               500          390          831 
    -Taxation expense recognised in                                               1,729        1,172        2,359 
   profit and loss 
 
    -Increase)/decrease in trade and                                              2,950       (1,240)      (7,516) 
   other receivables 
 
   -Increase in trade and other                                                    (939)         473        4,118 
   payables 
 
   -Share based payment charge                                                      250          125          321 
                                                                                ---------     --------     -------- 
 
Cash generated from operations                                                    8,717        4,098        8,112 
Interest paid                                                                      (500)        (390)        (831) 
Income taxes paid                                                                (1,024)      (1,256)      (2,205) 
                                                                                ---------     --------     -------- 
NET CASH FROM OPERATING ACTIVITES                                                  7,193        2,452        5,076 
 
CASH FLOWS FROM INVESTING ACTIVITIES 
Proceeds from sale of Matchtech Inc                                                    0            105       105 
Purchase of plant and equipment                                                     (708)          (532)     (960) 
Proceeds from sale of plant                                                           37              0        28 
Interest received                                                                     18             13        20 
                                                                                ---------       --------  -------- 
NET CASH USED IN INVESTING ACTIVITIES                                               (653)          (414)     (807) 
 
CASH FLOWS FROM FINANCING ACTIVITIES 
Proceeds from issue of share capital                                                  64            361       829 
Proceeds from long-term borrowings                                                (5,096)         1,918       699 
Dividends paid                                                                    (2,148)        (4,414)   (5,428) 
                                                                                ---------       --------  -------- 
NET CASH USED IN FINANCING ACTIVITIES                                             (7,180)        (2,135)   (3,900) 
 
NET INCREASE IN CASH AND CASH EQUIVALENTS                                           (640)           (97)      369 
                                                                                ---------       --------  -------- 
 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                     659            290       290 
                                                                                ---------       --------  -------- 
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                            19            193       659 
                                                                                =========       ========  ======== 
 
 
 
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 
 
                 Foreign    Share     Share    Other     Share  Retained   Total 
                Currency  Capital   Premium  reserve     based  Earnings   £'000 
             translation 
                 reserve  £'000     £'000    £'000     payment   £'000 
                 £'000                                 reserve 
                                                       £'000 
Balance at 
1                    0      221     2,009      229       338     4,884     7,681 
August 2006     --------  -------  --------  -------  --------  --------    ------ 
Currency 
translation          3        0         0        0         0         0         3 
differences 
                --------  -------  --------  -------  --------  --------    ------ 
Net income 
recognised           3        0         0        0         0         0         3 
directly in 
equity          --------  -------  --------  -------  --------  --------    ------ 
Profit for 
the                 (3)       0         0        0         0     3,027     3,024 
period          ========  =======  ========  =======  ========  ========    ====== 
Total 
recognised 
income               0        0         0        0         0     3,027     3,027 
and expense 
for the         ========  =======  ========  =======  ========  ========    ====== 
period 
 
Dividends            0        0         0        0         0    (4,414)   (4,414) 
IAS 12 
adjustment           0        0         0        0         0       168       168 
to 
deferred 
tax asset 
EBT reserve 
movement             0        0         0       (5)        0         5         0 
Share based 
payment              0        0         0        0       123         0       123 
reserve 
movement 
New share 
capital              0        4       358        0         0         0       362 
                --------  -------  --------  -------  --------  --------    ------ 
                     0        4       358       (5)      123    (4,241)   (3,761) 
                --------  -------  --------  -------  --------  --------    ------ 
Balance at 
31                   0      225     2,367      224       461     3,670     6,947 
January         ========  =======  ========  =======  ========  ========    ====== 
2007 
 
Balance at 
1                    0      221     2,009      229       338     4,884     7,681 
August 2006     --------  -------  --------  -------  --------  --------    ------ 
Currency 
translation          3        0         0        0         0         0         3 
differences 
                --------  -------  --------  -------  --------  --------    ------ 
Net income 
recognised           3        0         0        0         0         0         3 
directly in 
equity          --------  -------  --------  -------  --------  --------    ------ 
Profit for 
the                 (3)       0         0        0         0     7,582     7,579 
year            ========  =======  ========  =======  ========  ========    ====== 
Total 
recognised 
income               0        0         0        0         0     7,582     7,582 
and expense 
for the         ========  =======  ========  =======  ========  ========    ====== 
year 
 
Dividends            0        0         0        0         0    (5,428)   (5,428) 
IAS 12 
adjustment           0        0         0        0         0       111       111 
to 
deferred 
tax asset 
EBT reserve 
movement             0        0         0       (5)        0         5         0 
Share based 
payment              0        0         0        0        48         0        48 
reserve 
movement 
New share 
capital              0        9       820        0         0         0       829 
                --------  -------  --------  -------  --------  --------    ------ 
                     0        9       820       (5)        0    (5,312)   (4,440) 
                --------  -------  --------  -------  --------  --------    ------ 
Balance at 
31                   0      230     2,829      224       386     7,154    10,823 
July 2007       ========  =======  ========  =======  ========  ========    ====== 
 
Balance at 
1                    0      230     2,829      224       386     7,154    10,823 
August 2007     --------  -------  --------  -------  --------  --------    ------ 
Profit for 
the                  0        0         0        0         0     3,942     3,942 
period          ========  =======  ========  =======  ========  ========    ====== 
Total 
recognised 
income               0        0         0        0         0     3,942     3,942 
and expense 
for the         ========  =======  ========  =======  ========  ========    ====== 
year 
 
Dividends            0        0         0        0         0    (2,149)   (2,149) 
Share based 
payment              0        0         0        0       249       (20)      229 
reserve 
movement 
New share 
capital              0        1        63        0         0         0        64 
                --------  -------  --------  -------  --------  --------    ------ 
                     0        1        63        0       249    (2,169)   (1,856) 
                --------  -------  --------  -------  --------  --------    ------ 
Balance 31 
January              0      231     2,892      224       635     8,927    12,909 
2008            ========  =======  ========  =======  ========  ========    ====== 
 
 
 
 
 
 
 
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 interim financial information 
 
 
These interim condensed consolidated financial statements are for the six months 
ended 31 January 2008. They have been prepared in accordance with IAS 34 
"Interim Financial Reporting" and the requirements of IFRS 1 "First-time 
Adoption of International Financial Reporting Standards" relevant to interim 
reports, because they are part of the period covered by the Group's first IFRS 
financial statements for the year ended 31 July 2008. They do 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. 
 
 
These condensed consolidated interim financial statements (the interim financial 
statements) have 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. 
 
 
These financial statements have been prepared under the historical cost 
convention. The accounting policies have been applied consistently throughout 
the Group for the purposes of preparation of these condensed interim 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 
interim 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 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 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 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. 
 
 
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 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 
 
 
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 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. 
 
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. 
 
- "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   TRANSITIONAL ARRANGEMENTS 
 
These are the Group's first condensed consolidated interim financial statements 
for part of the period covered by the 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. 
 
 
Reconciliation of equity at 1 August 2006 
 
                               UK GAAP     IAS 12    IAS 17     IAS 19      IFRS 
                               £'000       Income    Leases   Employee        as 
                                            Taxes   £'000     Benefits  restated 
                                          £'000                £'000     £'000 
EQUITY 
Called-up equity share           221          0         0          0       221 
capital 
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 
                   £'000    Presentation    Income    Leases  Employee        as 
                            of financial     Taxes   £'000    Benefits  restated 
                              statements   £'000               £'000     £'000 
                                 £'000 
NON-CURRENT 
ASSETS 
Intangible           113             0         0         0         0       113 
assets 
Property, plant 
and                1,590             0         0         0         0     1,590 
equipment 
Deferred tax           0           879         0         0         0       879 
assets 
 
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 
                  £'000    Presentation    Income    Leases  Employee         as 
                           of financial     Taxes   £'000    Benefits   restated 
                             statements   £'000               £'000      £'000 
                                £'000 
NON-CURRENT 
ASSETS 
Intangible          133             0         0         0         0        133 
assets 
Property, 
plant and         1,699             0         0         0         0      1,699 
equipment 
Deferred tax          0           529         0         0         0        529 
assets 
 
CURRENT ASSETS 
Trade and 
other            32,108          (529)      405         0         0     31,984 
receivables 
Cash and cash 
equivalents         836             0         0         0         0        836 
 
CURRENT 
LIABILITIES 
Trade and 
other           (12,474)            0         0       (67)      (76)   (12,617) 
payables 
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        230             0         0         0         0        230 
capital 
Share premium     2,829             0         0         0         0      2,829 
account 
Other reserves      610             0         0         0         0        610 
Retained          6,892             0       405       (67)      (76)     7,154 
earnings        ---------     ---------  --------  --------  --------   -------- 
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 
                 £'000    Presentation    Leases   Employee    Foreign  as restated 
                          of financial   £'000     Benefits   Exchange      £'000 
                            statements              £'000        Rates 
                               £'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 
AIM               (572)            0         0          0          0         (572) 
Profit on sale 
of                  59           (59)        0          0          0            0 
discontinued 
operation 
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         0            64         0          0          3           67 
operations 
                ========     =========  ========  =========  =========    ========= 
Profit for the 
period           2,976             0         7         41          3        3,027 
from total 
operations      ========     =========  ========  =========  =========    ========= 
 
 
 
Reconciliation of consolidated income statement for year ended 31 July 2007 
 
                  UK GAAP           IAS 1    IAS 17     IAS 19          IAS 21       IFRS 
                  £'000   Presentation of    Leases   Employee         Foreign         as 
                                financial             Benefits  Exchange Rates 
                               statements 
                                  £'000     £'000      £'000           £'000     restated 
                                                                                  £'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          0              64         0          0               3         67 
operations 
                 --------       ---------  --------  ---------       ---------  --------- 
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 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. 
 
 
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 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 and profit before tax are attributable to the one principal activity 
of the company. 
 
 
(i) Segmental 
 
A segmental analysis of revenue is given      6 months     6 months    12 months 
below: 
                                           to 31/01/08  to 31/01/07  to 31/07/07 
                                             Unaudited    Unaudited    Unaudited 
                                               £'000        £'000        £'000 
 
Engineering                                   67,276       59,990      129,299 
Built Environment                             31,463       18,629       40,046 
Support Services                              17,823       14,819       33,434 
                                              --------     --------     -------- 
Continuing operations                        116,562       93,438      202,779 
 
Discontinued Operations                            0          135          135 
                                              --------     --------     -------- 
                                  Total      116,562       93,573      202,914 
                                              ========     ========     ======== 
 
A segmental analysis of gross profit is 
given below: 
 
Engineering                                    7,803        6,394       14,833 
Built Environment                              4,226        3,274        6,000 
Support Services                               3,243        2,837        6,044 
                                              --------     --------     -------- 
Continuing operations                         15,272       12,505       26,877 
 
Discontinued Operations                            0           18           18 
                                              --------     --------     -------- 
                                  Total       15,272       12,523       26,895 
                                              ========     ========     ======== 
 
A segmental analysis of operating profit 
is given below: 
 
Engineering                                    3,468        2,563        5,896 
Built Environment                              1,820        1,118        2,384 
Support Services                                 865          825        2,402 
                                              --------     --------     -------- 
Continuing operations                          6,153        4,506       10,682 
 
Discontinued Operations                            0            8            8 
                                              --------     --------     -------- 
                                  Total        6,153        4,514       10,690 
                                              ========     ========     ======== 
 
More to follow, for following part double-click [nRN2Q1971Q]