REG-Matchtech Group PLC Final Results - Part 3

Released : 14/10/08 06:00

                                                                                                                       .
  
Part 3 : For preceding part double click [nRn2N7516F]  
                          £'000    £'000   
                                           
  Wages and salaries      11,394   9,183   
  Social security costs   1,325    1,082   
  Other pension costs     744      648     
  Total                   13,463   10,913  
  
  
Disclosure of the remuneration of Key Management Personnel, as required by IAS 
24, is covered by the audited part of the Directors Remuneration Report.  
  
7    FINANCE COSTS  
  
 
                          2008    2007   
                          £'000   £'000  
                                         
  Bank interest payable   1,074   831    
  
  
8    DIVIDENDS  
  
 
                                                                 2008     2007    
                                                                 £'000    £'000   
                                                                                  
  Equity dividends paid during the year at 14.3 pence per share  3,310    5,427   
  (2007: 24.1p)                                                                   
                                                                                  
  Equity dividends proposed after the year-end (not recognised                    
  as a liability) at 10.6 pence per share (2007: 9.3p)           2,462    2,148   
                                                                                  
  
  
9    PARENT COMPANY PROFIT  
  
 
                                                           2008    2007   
                                                           £'000   £'000  
                                                                          
  The amount of profit (loss) dealt with in the accounts   11      1,337  
  of the company is                                                       
  
  
The company has taken advantage of the exemption in S230 of the Companies Act 
(1985) not to present the parent company's income statement.  
  
10    TAX ON PROFIT ON ORDINARY ACTIVITIES  
  
 
                                                                    2008    2007   
                                                                    £'000   £'000  
                                                                                   
  Current Tax:         UK corporation tax                           3,932   3,177  
                       Adjustments in respect of previous periods   (77)    1      
                                                                    3,855   3,178  
                                                                                   
                                                                                   
  Deferred tax (note 14)                                            (150)   (16)   
  Tax on profit on ordinary activities                              3,705   3,162  
                                                                                   
  
  
UK corporation tax has been charged at 29.33% (2007 - 30%).   
  
The charge for the year can be reconciled to the profit as per the income 
statement as follows:  
  
 
                                                             2008     2007   
                                                             £'000    £'000  
                                                                             
  Profit before tax                                          12,797   9,871  
                                                                             
  Profit on ordinary activities multiplied by the standard                   
  rate of corporation tax in the UK                                          
  of 29.33% (2007: 30%)                                      3,753    2,961  
                                                                             
  Expenses not deductible for tax purposes                   18       17     
  Exceptional items not deductible for tax purposes          0        183    
  Change in deferred tax rate                                11       0      
  Adjustments to tax charge in respect of previous periods   (77)     1      
  Current tax charge for period                              3,705    3,162  
  
  
Tax charge/(credit) recognised directly in equity  
  
 
                                               2008    2007   
                                               £'000   £'000  
                                                              
  Current tax recognised directly in equity    (91)    (806)  
  Deferred tax recognised directly in equity   387     162    
  Total tax recognised directly in equity      296     (644)  
  
  
Factors that may affect future tax charges  
  
Based on current capital investment plans, and the changes in capital allowance 
rules effective April 2008, the group expects depreciation to exceed capital 
allowances in the future.  
  
A deferred tax asset has been recognised in the balance sheet in respect of the 
cost of employee share options. This will become recoverable when the options 
are exercised.  
  
None of the companies have losses carried forward available for offset against 
future profits and the directors are confident that the group will continue to 
be profitable in coming years.   
  
11    EARNINGS PER SHARE  
  
Earnings per share has been calculated by dividing the consolidated profit after 
taxation attributable to ordinary shareholders by the weighted average number of 
ordinary shares in issue during the period.   
  
Diluted earnings per share has been calculated, on the same basis as above, 
except that the weighted average number of ordinary shares that would be issued 
on the conversion of all the dilutive potential ordinary shares (arising from 
the Group's share option schemes) into ordinary has been added to the 
denominator. There are no changes to the profit (numerator) as a result of the 
dilutive calculation.  
  
 
                                                                                     2008    2007   
                                                                                     £'000   £'000  
                                                                                                    
  Profit after tax attributable to ordinary shareholders   Continuing operations     9,092   6,709  
                                                           Discontinued operations   0       67     
  Total                                                                              9,092   6,776  
                                                                                                    
  
  
 
                                                        2008     2007    
                                                        '000s    '000s   
                                                                         
  Weighted average number of ordinary shares in issue   23,111   22,470  
  Effect of dilutive potential ordinary shares          660      556     
  Total                                                 23,771   23,026  
                                                                         
  
  
 
                                                                     pence   Pence  
                                                                                    
  Earnings per ordinary share   - basic    Continuing operations     39.34   29.86  
                                           Discontinued operations   0.00    0.30   
  Total                                                              39.34   30.16  
                                                                                    
                                                                                    
                                - dilutd   Continuing operations     38.25   29.14  
                                           Discontinued operations   0.00    0.29   
  Total                                                              38.25   29.43  
                                                                                    
  
  
Earnings Per Share for the purpose of a performance measure for the LTIPs is 
calculated excluded the non-recurring items of the sales and profits of the US 
business sold on 31st August 2006 as well as the non-recurring costs of the 
flotation as calculated below. (See 'Earnings per share growth' within the 
Directors' Remuneration Report).  
  
 
                                                              2008    2007   
                                                              '000s   '000s  
                                                                             
  Profit on ordinary activities after taxation                9,092   6,776  
  Cost of admission to AIM                                    0       572    
  Profit after tax of discontinued operations                 0       (5)    
  Profit on sale of discontinued operations                   0       (59)   
  Profit on ordinary activities after taxation but before     9,092   7,284  
  non-recurring items                                                        
                                                                             
                                                              pence   pence  
                                                                             
  Earnings per ordinary share   - basic                       39.34   32.42  
                                - diluted                     38.25   31.63  
                                                                             
  
  
12    INTANGIBLE ASSETS  
  
 
                                            Software  
                                            Licences  
                                            £'000     
                                                      
  COST             At 1 August 2006         150       
                   Additions                37        
                   At 1st August 2007       187       
                   Additions                86        
                   At 31st July 2008        273       
                                                      
  AMORTISATION     At 1st August 2006       22        
                   Charge for the year      32        
                   At 1st August 2007       54        
                   Charge for the year      49        
                   At 31st July 2008        103       
                                                      
                                                      
  NET BOOK VALUE   At 31st July 2007        133       
                   At 31st July 2008        170       
  
  
13    PROPERTY, PLANT AND EQUIPMENT  
  
 
  Group                                  Motor      Office      Computer           
                                         Vehicles   Equipment   Equipment   Total  
                                         £'000      £'000       £'000       £'000  
                                                                                   
  COST             At 1 August 2006      1,194      947         514         2,655  
                   Additions             329        364         230         923    
                   Disposals             (116)      0           0           (116)  
                   At 1st August 2007    1,407      1,311       744         3,462  
                   Additions             472        190         131         793    
                   Disposals             (155)      (114)       (11)        (280)  
                   At 31st July 2008     1,724      1,387       864         3,975  
                                                                                   
                                                                                   
  DEPRECIATION     At 1st August 2006    515        557         312         1,384  
                   Charge for the year   216        140         111         467    
                   Release on disposal   (88)       0           0           (88)   
                   At 1st August 2007    643        697         423         1,763  
                   Charge for the year   275        174         145         594    
                   Release on disposal   (105)      (75)        (11)        (191)  
                   At 31st July 2008     813        796         557         2,166  
                                                                                   
  NET BOOK VALUE   At 31st July 2007                                               
                   At 31st July 2008     764        614         321         1,699  
                                         911        591         307         1,809  
  
  
There were no capital commitments as at 31st July 2008 (2007: £nil)  
  
14    DEFERRED TAX  
  
 
                                                 GROUP           COMPANY        
                                                 2008    2007    2008    2007   
  The deferred tax asset is represented by:      £'000   £'000   £'000   £'000  
                                                                                
  Temporary difference on share based payments                                  
  At start of year                               529     675     0       0      
  Recognised in income                           150     16      0       0      
  Recognised in equity                           (387)   (162)   0       0      
  At end of year                                 292     529     0       0      
  
  
15    INVESTMENTS  
  
 
                              GROUP           COMPANY        
                              2008    2007    2008    2007   
                              £'000   £'000   £'000   £'000  
                                                             
  Shares in group companies   0       0       250     250    
  Total                       0       0       250     250    
  
  
Subsidiary Undertakings  
  
 
  Company                     Country of Incorporation   Share Class   % held    Main Activities                       
  Matchtech Group UK Ltd      United Kingdom             Ordinary      99.998%   Provision of recruitment consultancy  
  Matchtech Engineering Ltd   United Kingdom             Ordinary      100%      Non trading                           
  Matchmaker Personnel Ltd    United Kingdom             Ordinary      100%      Non trading                           
  
  
On 31st August 2006 Matchtech Group UK Ltd sold the shares of Matchtech Inc for 
consideration of £105,000. The results of Matchtech Inc have been included under 
discontinued operations in the consolidated income statement.  
  
16    TRADE AND OTHER RECEIVABLES  
  
 
                                    GROUP             COMPANY        
                                    2008     2007     2008    2007   
                                    £'000    £'000    £'000   £'000  
                                                                     
  Trade debtors                     38,298   31,672   0       0      
  Amounts owed by group companies   0        0        2,880   2,203  
  Other debtors                     49       55       0       0      
  Prepayments                       218      257      0       0      
  Total                             38,565   31,984   2,880   2,203  
  
  
The amount owed to group undertakings in the company balance sheet is considered 
to approximate to fair value.  
  
The number of days sales outstanding at the end of the period was 54 days (2007: 
57 days). The allowance for doubtful debts has been determined by reference to 
previous experience and management assessment of debts.  
  
The Directors consider that the carrying amount of trade and other receivables 
approximates the fair value.  
  
Included in the Group's trade receivable balance are debtors with a carrying 
amount of £6,293,000 (2006: £7,799,000) which are past due at the reporting date 
for which the Group has not provided as the Directors do not believe there has 
been a significant change in credit quality and consider the amounts to be 
recoverable in full. The Group does not hold any collateral over these balances. 
The Directors consider all trade receivables not past due to be fully 
recoverable.  
  
The Group uses a third party credit scoring system to assess the credit 
worthiness of potential new customers before accepting them. Credit limits are 
defined by customer based on this information. All customer accounts are subject 
to review on a regular basis by senior management and actions are taken to 
address debt ageing issues.  
  
The Directors believe that there is no requirement for further provision over 
and above the allowance for doubtful debts.   
  
 
  Ageing of past due but not impaired trade receivables                  
                                                          GROUP          
                                                          2008    2007   
                                                          £'000   £'000  
  0-30 days                                               5558    6,448  
  30-60 days                                              619     1,042  
  60-90 days                                              29      151    
  90+ days                                                87      158    
                                                          6,293   7,799  
                                                                         
                                                                         
  Movement in the allowance for doubtful debts                           
                                                          GROUP          
                                                          2008    2007   
                                                          £'000   £'000  
  Balance at the beginning of the period                  183     116    
  Impairment losses recognised                            16      67     
                                                          199     183    
                                                                         
                                                                         
  Ageing of impaired trade receivables                                   
                                                          GROUP          
                                                          2008    2007   
                                                          £'000   £'000  
  0-30 days                                               0       0      
  30-60 days                                              0       0      
  60-90 days                                              0       11     
  90+ days                                                199     172    
                                                          199     183    
  
  
17    TRADE AND OTHER PAYABLES  
  
 
                                 GROUP             COMPANY        
                                 2008     2007     2008    2007   
                                 £'000    £'000    £'000   £'000  
                                                                  
  Trade creditors                149      54       0       0      
  Taxation and Social Security   5,049    5,376    0       0      
  Other creditors                10,667   4,140    0       0      
  Accruals and deferred income   3,065    3,047    0       0      
  Total                          18,930   12,617   0       0      
                                                                  
                                                                  
  
  
The working capital facility is secured by way of an all assets debenture, dated 
5 August 2002, which contains fixed and floating charges over the assets of 
Matchtech Group UK Limited. The facility held with Barclays Bank allows the 
company to borrow up to 90% of its invoiced debtors up to a maximum of £20 
million. Interest is charged on borrowings at a rate of 1.0% over Barclays Bank 
base rate.  
  
18    FINANCIAL ASSETS AND LIABILITIES BALANCE SHEET CLASSIFICATION  
  
The carrying amount of Matchtech's financial assets and liabilities as 
recognised at the balance sheet date of the reporting periods under review may 
also be categorised as follows:   
  
Financial assets are included in the balance sheet within the following 
headings:  
  
 
                                GROUP             COMPANY        
                                2008     2007     2008    2007   
                                £'000    £'000    £'000   £'000  
                                                                 
  Trade and other receivables                                    
  - Loan and receivables        38,347   31,727   2,880   2,203  
  Cash and cash equivalents                                      
  - Loan and receivables        297      836      211     656    
  Total                         38,644   32,563   3,091   2,859  
  
  
Each financial liability is considered to be held at fair value.  
  
Financial liabilities are included in the balance sheet within the following 
headings:  
  
 
                                                       GROUP             COMPANY        
                                                       2008     2007     2008    2007   
                                                       £'000    £'000    £'000   £'000  
  Current liabilities                                                                   
  Borrowings                                                                            
  - Financial liabilities recorded at amortised cost   3,349    8,590    0       0      
  Trade and other payables                                                              
  - Financial liabilities recorded at amortised cost   10,816   4,194    0       0      
                                                                                        
  Non current liabilities                                                               
  Borrowings                                                                            
  - Financial liabilities recorded at amortised cost   0        2,083    0       0      
  Total                                                14,165   14,867   0       0      
                                                                                        
  
  
19    LONG TERM BORROWINGS  
  
 
              GROUP           COMPANY        
              2008    2007    2008    2007   
              £'000   £'000   £'000   £'000  
                                             
  Bank loan   0       2,083   0       0      
  
  
The bank loan was cleared on 31st July 2008  
  
20    COMMITMENTS UNDER OPERATING LEASES  
  
 
  At 31st July 2008 the group had commitments to pay the           GROUP           COMPANY        
  following                                                                                       
  amounts under non-cancellable operating leases as set out        2008    2007    2008    2007   
  below.                                                                                          
                                                                   £'000   £'000   £'000   £'000  
                                                                                                  
  Land/buildings       Leases falling due:   within 1 to 5 years   583     783     0       0      
                                             after 5 years         2,494   2,779   0       0      
                                                                                                  
                                                                                                  
  Other                Leases falling due:   within 1 year         1       6       0       0      
                                             within 1 to 5 years   9       12      0       0      
  
  
The lease on 1400 Parkway, which expires in March 2017 has a break clause 
exercisable in June 2011. The annual commitment has therefore been classified in 
the expiration within 1 to 5 year category. There are no applicable renewal 
clauses in the current lease agreements.   
  
21    SHARE CAPITAL  
  
Authorised share capital  
  
 
                                             2008    2007   
                                             £'000   £'000  
                                                            
  40,000,000 Ordinary shares of £0.01 each   400     400    
  
  
Allotted, called up and fully paid:  
  
 
                                             2008    2007   
                                             £'000   £'000  
                                                            
  23,225,000 Ordinary shares of £0.01 each   232     230    
  
  
The number of shares in issue in the company increased as follows:  
  
 
  Date            Ordinary shares   Share premium received   Consideration  
                  issued            pence per share          Received       
                                                                            
  At 01/08/2006   22,071,610                                                
  27/10/2006      348,254           69                       243,778        
  27/11/2006      31,955            366                      117,115        
  27/11/2006      31,955            0                        320            
  22/12/2006      767               0                        8              
  30/01/2007      736               0                        7              
  26/02/2007      658               0                        7              
  30/03/2007      668               0                        7              
  27/04/2007      573               0                        6              
  25/05/2007      485               0                        5              
  01/06/2007      539,140           86                       466,705        
  11/06/2007      947               88                       839            
  25/06/2007      1,447             0                        14             
  At 31/7/2007    23,029,195                                 828,811        
  27/08/2007      436               0                        4              
  28/09/2007      447               0                        4              
  31/10/2007      454               0                        5              
  05/11/2007      70,872            89                       63,781         
  23/01/2008      17,131            0                        171            
  08/04/2008      9,174             133                      12,293         
  12/05/2008      5,692             145                      8,310          
  05/06/2008      75,336            145                      109,991        
  28/07/2008      16,619            145                      24,264         
  Total           23,225,356                                 1,047,634      
  
  
Share Options  
  
The following options arrangements exist over the Company's shares.  
  
 
                                     2008    2007    Date of      Exercise   Exercise period                  
                                     '000s   '000s   grant        price                                       
                                                                  pence                                       
                                                                                                              
  Key Share Options                  24      48      18/06/2004   70         18/06/2005   to      18/06/2014  
  Key Share Options                  0       34      08/11/2004   89         08/11/2005   to      08/11/2014  
  Key Share Options                  142     218     01/12/2005   146        01/06/2007   to      01/12/2015  
  Target/Loyalty Share Options       3       3       05/03/2003   70         14/07/2005   to      05/03/2013  
  Target/Loyalty Share Options       2       2       18/06/2004   70         18/06/2005   to      18/06/2014  
  Target/Loyalty Share Options       2       6       08/11/2004   89         14/07/2006   to      08/11/2014  
  Target/Loyalty Share Options       26      72      01/12/2005   146        01/12/2006   to      01/12/2015  
  Long Term Incentive Plan Options   260     269     26/10/2006   1          27/10/2009   to      27/10/2016  
  Long Term Incentive Plan Options   7       8       26/01/2007   1          26/01/2010   to      25/01/2017  
  Long Term Incentive Plan Options   292     0       15/11/2007   1          15/11/2010   to      14/11/2017  
  Total                              758     660                                                              
  
  
In the year the company operated an EMI Share Option Scheme. No EMI share 
options were granted during the year. All options exercised during the year were 
EMI share options.  
  
The Group also operates a Long Term Incentive Plan (LTIP). LTIP awards are 
nil-cost options granted to senior staff subject to a three year holding period 
and the achievement of performance targets. LTIP options have a life of 10 
years. The number and weighted average exercise price of share options granted, 
forfeited and exercised in the year were as follows.  
  
 
                              2008                                                                      2007                                                                     
                              Number   Weighted average exercise price   Weighted average share price   Number   Weighted average exercise price   Weighted average share price  
                              '000s    (pence)                           (pence)                        '000s    (pence)                           (pence)                       
                                                                                                                                                                                 
  Outstanding at 1st August   660      75.6                                                             1,294    95.5                                                            
                                                                                                                                                                                 
  Granted                     302      1.0                                                              295      1.0                                                             
  Forfeited                   33       29.9                                                             41       69.5                                                            
  Exercised                   171      122.8                             361.0                          888      80.1                              411.0                         
                                                                                                                                                                                 
  Outstanding at 31st July    758      75.6                              75.6                           660      75.6                              75.6                          
                                                                                                                                                                                 
  Exercisable at 31st July    200      134.2                             134.2                          93       78.2                              78.2                          
                                                                                                                                                                                 
  
  
The number and weighted average exercise price of future share options vesting 
in the future are shown below.  
  
 
                  2008                                                                                  2007                                                                                 
                  Weighted average remaining contract life   Number   Weighted average exercise price   Weighted average remaining contract life   Number   Weighted average exercise price  
  Exercise Date   (months)                                   '000s    (pence)                           (months)                                   '000s    (pence)                          
                                                                                                                                                                                             
  27/10/2009      15                                         260      1.0                               27                                         269      1.0                              
  30/01/2010      18                                         7        1.0                               27                                         8        1.0                              
  06/11/2010      27                                         292      1.0                               0                                          0        0.0                              
  Total                                                      559                                                                                   277                                       
                                                                                                                                                                                             
  
  
The fair values of the LTIPS were calculated using a Monte Carlo simulation 
method along with the assumption as detailed in the table below. In the year the 
Group operated a Share Incentive Plan (SIP). The SIP is an HMRC approved plan 
available to all employees enabling them to purchase shares out of pre-tax 
salary. For each share purchased the company grants an additional share at no 
cost. The fair values of the SIPS were calculated as the market value on the 
date of the grant.  
  
 
  Date of grant          Share Price on the date of grant   Exercise Price   Volatility   Vesting Period   Dividend Yield   Risk Free Rate of interest   Fair Value  
                         (£)                                (£)              (%)          (yrs)            (%)              (%)                          (£)         
  27/10/2006      LTIP   3.45                               0.01             30.4%        3.00             10%              4.6%                         1.96        
  30/01/2007      LTIP   3.79                               0.01             30.7%        3.00             10%              5.0%                         2.20        
  27/11/2006      SIP    3.67                               0.01             N/A          3.00             N/A              N/A                          3.67        
  22/12/2006      SIP    3.67                               0.01             N/A          3.00             N/A              N/A                          3.67        
  30/01/2007      SIP    3.79                               0.01             N/A          3.00             N/A              N/A                          3.79        
  26/02/2007      SIP    4.02                               0.01             N/A          3.00             N/A              N/A                          4.02        
  30/03/2007      SIP    4.00                               0.01             N/A          3.00             N/A              N/A                          4.00        
  27/04/2007      SIP    4.40                               0.01             N/A          3.00             N/A              N/A                          4.40        
  25/05/2007      SIP    4.75                               0.01             N/A          3.00             N/A              N/A                          4.75        
  25/06/2007      SIP    4.83                               0.01             N/A          3.00             N/A              N/A                          4.83        
  27/07/2007      SIP    4.73                               0.01             N/A          3.00             N/A              N/A                          4.73        
  15/11/2007      LTIP   4.24                               0.01             30.1%        3.00             10%              4.6%                         2.68        
  30/08/2007      SIP    4.61                               0.01             N/A          3.00             N/A              N/A                          4.61        
  28/09/2007      SIP    4.60                               0.01             N/A          3.00             N/A              N/A                          4.60        
  26/10/2007      SIP    4.69                               0.01             N/A          3.00             N/A              N/A                          4.69        
  30/11/2007      SIP    4.12                               0.01             N/A          3.00             N/A              N/A                          4.12        
  02/01/2008      SIP    3.73                               0.01             N/A          3.00             N/A              N/A                          3.73        
  25/01/2008      SIP    3.58                               0.01             N/A          3.00             N/A              N/A                          3.58        
  29/02/2008      SIP    3.19                               0.01             N/A          3.00             N/A              N/A                          3.19        
  28/03/2008      SIP    3.02                               0.01             N/A          3.00             N/A              N/A                          3.02         
  
  
More to follow, for following part double-click [nRn4N7516F]