REG - Matchtech Group PLC - Half Yearly Report - Part 1

Released : 08/04/10 06:00

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Matchtech Group PLC
08 April 2010 
 
8 April 2010 
 
Half year financial report for the six months ended 31 January 2010 
 
NFI STABILISED, WELL POSITIONED FOR RECOVERY, INTERIM DIVIDEND MAINTAINED 
 
Matchtech Group plc ("Matchtech" or the "Group"), one of the UK's leading specialist technical recruitment companies, today
announces its unaudited results for the six months ended 31 January 2010. 
 
Although these results reflect the impact of the challenging economic downturn on customers' activity levels compared with
the two prior six month periods, since the second half of FY2008/09 the weekly run rate of permanent recruitment fees has
stabilised and contractors on placement at 31 January 2010 were at a record level of 4,750, up 6% on 31 July 2009. 
 
Highlights for the six months ended 31 January 2010 
 
·      Revenue of £125.4m (down 9% on 2009 H1; down 5% on 2009 H2) 
 
·      Net Fee Income (NFI) of £12.5m (down 25% on 2009 H1; down 9% on 2009 H2) 
 
·      Permanent recruitment fees stable at £2.8m (down 47% on 2009 H1; in line with 2009 H2) 
 
·      Record number of contractors on placement 4,750 at 31 January 2010 (up 6% on 31 January 2009; up 6% on 31 July
2009) 
 
·      Operational cost savings of £2.4m against 2009 H1 
 
·      Operating profit £4.5m (down 30% on 2009 H1; down 15% on 2009 H2) 
 
·      NFI Conversion 36.1% (2009 H1: 38.6%, 2009 H2: 38.7%) 
 
·      Profit before tax £4.4m (down 28% on 2009 H1; down 15% on 2009 H2) 
 
·      Basic EPS 13.58p (down 29% on 2009 H1; down 11% on 2009 H2) 
 
·      Interim dividend maintained at 5.0 pence per share (2009: 5.0 pence) 
 
·      Cash flow from operations £5.9m (up 44% on 2009 H1; up 4% on 2009 H2) 
 
·      Debtor days 43 days (2009 H1: 42 days; 2009 H2: 42 days) 
 
·      Net cash at end of period of £0.8m (31 January 2009: net debt £3.7m; 31 July 2009: net debt £1.2m). 
 
·      Banking facilities extended, £25.0m for 3 years until April 2013 
 
Trading since 31 January 2010 & Outlook 
 
·      Permanent recruitment fees remain stable at the weekly run rate of 2010 H1. 
 
·      Over 5,000 contractors on placement during March 2010, an all time record and up 5% since 31 January 2010. 
 
·      Based upon current market conditions and expected run rates, the outlook for the full year is now slightly ahead of
the Board's previous expectations. 
 
Commenting on the results, George Materna, Chairman of Matchtech said: 
 
"We are pleased with these first half results in what remain challenging economic conditions.  Increased business
development work is resulting in increased exclusivity with customers, although levels of business remain subdued in many
markets. 
 
We took steps during 2009 to reduce the Group's cost base to reflect market conditions.  With around 50% of the Group's NFI
exposed to sectors dependent on the public sector, albeit much of it on long-term contracts, we will continue to monitor
the impact of future changes to public sector expenditure to ensure resources remain appropriately aligned with market
conditions. 
 
At the same time we continue to invest in selected strategic initiatives.  The new "elemense" Recruitment Process
Outsourcing (RPO) brand, launched in July 2009, has shown early signs of success in delivering broader RPO services in the
technical sector. We are now seeking to strengthen our business development activity in non-technical markets. 
 
Our recently launched German operation, which focuses on the engineering market, has made a sound start in line with our
expectations. 
 
We increased the Group's headcount by 3% over the period, including making key senior appointments within Professional
Services, a sector in which there are early signs of increased activity and one in which we are developing our plans for
expansion in FY2010/11.  Looking ahead we anticipate a material increase in the Group's sales force headcount over the
coming months. 
 
The strength and resilience of the business allows the Board to adhere to its strong dividend payout policy and the Board
is pleased to declare a maintained interim dividend of 5.0 pence per share. 
 
Although the economic climate remains subdued, the continued efforts of our staff in maintaining and developing our
business, the relative stability of the marketplace during the period and signs of increased activity in some sectors, all
give the Board increased optimism in its outlook for the current financial year.  The Board now expects the results for the
year to 31 July 2010 to be slightly ahead of its previous expectations and remains confident in the Group's prospects over
the medium term." 
 
For further information please contact: 
 
Matchtech Group plc                                          01489 898989 
 
Adrian Gunn, CEO / Tony Dyer, CFO 
 
Hogarth                                                             020 7357 9477 
 
John Olsen / Ian Payne 
 
Arbuthnot Securities                                           020 7012 2000 
 
James Steel / Andrew Fairclough 
 
Background on Matchtech (AIM: MTEC.L) 
 
Established in 1984, Matchtech specialises in the provision of contract and permanent staff and has grown organically to
become one of the UK's leading technical and professional recruitment specialists. 
 
Operating from a single UK site near Southampton, Matchtech provides predominantly professionally-qualified candidates to a
broad range of clients across the UK in the Engineering, Built Environment and Professional Services sectors. 
 
In August 2009 Matchtech commenced trading in Germany. 
 
Website: www.matchtechgroupplc.com 
 
Cautionary Statement 
 
This interim financial information has been prepared for the shareholders of the Company, as a whole, and its sole purpose
and use is to assist shareholders to exercise their governance rights. The Company and its directors and employees are not
responsible for any other purpose or use or to any other person in relation to this announcement. 
 
The report contains indications of likely future developments and other forward-looking statements that are subject to risk
factors associated with, among other things, the economic and business circumstances occurring from time to time in the
countries, sectors and business segments in which the Group operates. These and other factors could adversely affect the
Group's results, strategy and prospects. Forward-looking statements involve risks, uncertainties and assumptions. They
relate to events and/or depend on circumstances in the future which could cause actual results and outcomes to differ. No
obligation is assumed to update any forward-looking statements, whether as a result of new information, future events or
otherwise. 
 
MATCHTECH GROUP PLC 
 
Interim report for the period ended 31 January 2010 
 
Chairman's statement 
 
Operating review 
 
We are pleased with these first half results in what remain challenging economic conditions, and we are seeing an element
of stability return to the business following a difficult 2009 H2. 
 
There has been a shift in the contract/permanent mix with 77% of the Group's Net Fee Income (NFI) derived from contract
placements (2009 H1: 69%), following the effect in the first half of the fall in demand for permanent placements in 2009
H2. However, average weekly permanent recruitment fees have now been at a stable level for 11 consecutive months from May
2009 to March 2010. 
 
Whilst we have adjusted our headcount as the market changed, we have retained a strong core of consultants, who have the
capacity to grow NFI rapidly as and when demand increases for permanent recruitment services. 
 
The Group's contractor biased model, coupled with a highly diversified client and sector base, is providing a degree of
protection against market volatility. No single customer accounts for more than 10% of Group NFI, with our top 5 customers
representing 26% and our top 50 customers 55% of Group NFI. 
 
The following table reports Contract NFI and Permanent Fees by Sector: 
 
 Sector                 2009 H1  2009 H2  2010 H1  Change on 2009 H1  Change on 2009 H2  
                        £m       £m       £m       %                  %                  
 Engineering                                                                             
 Contract NFI           6.1      5.8      5.7      (7%)               (2%)               
 Permanent Fees         2.5      1.5      1.3      (48%)              (13%)              
                                                                                         
 Built Environment                                                                       
 Contract NFI           3.4      3.0      2.4      (29%)              (20%)              
 Permanent Fees         0.8      0.3      0.3      (63%)              0%                 
                                                                                         
 Professional Services                                                                   
 Contract NFI           1.9      1.8      1.5      (21%)              (17%)              
 Permanent Fees         1.9      1.3      1.2      (37%)              (8%)               
                                                                                         
 Matchtech Group plc                                                                     
 Contract NFI           11.4     10.6     9.6      (16%)              (9%)               
 No of weeks            23.8     25.2     23.8                                           
 Per week               0.48     0.42     0.40     (17%)              (5%)               
                                                                                         
 Permanent Fees         5.2      3.1      2.8      (46%)              (10%)              
 No of weeks            23.8     25.2     23.8                                           
 Per week               0.22     0.12     0.12     (45%)              0%                 
 
 
0.48 
 
0.42 
 
0.40 
 
(17%) 
 
(5%) 
 
Permanent Fees 
 
5.2 
 
3.1 
 
2.8 
 
(46%) 
 
(10%) 
 
No of weeks 
 
23.8 
 
25.2 
 
23.8 
 
Per week 
 
0.22 
 
0.12 
 
0.12 
 
(45%) 
 
0% 
 
Due to the Group's period end, the number of working weeks is less in the first half than the second half of the year.  In
terms of average weekly fees, Contract NFI is down only 5% and Permanent Fees are unchanged from 2009 H2. 
 
 Sector                           2009 H1  2009 H2  2010 H1  Change on 2009 H1  Change on 2009 H2  
                                  £m       £m       £m       %                  %                  
 Engineering (including Germany)                                                                   
 Net Fee Income                   8.6      7.3      7.1      (17%)              (3%)               
 Operating Profit                 3.7      3.2      2.9      (22%)              (9%)               
                                                                                                   
 Built Environment                                                                                 
 Net Fee Income                   4.2      3.3      2.7      (36%)              (18%)              
 Operating Profit                 1.7      1.3      1.0      (41%)              (23%)              
                                                                                                   
 Professional Services                                                                             
 Net Fee Income                   3.8      3.1      2.7      (29%)              (13%)              
 Operating Profit                 1.0      0.8      0.6      (40%)              (25%)              
                                                                                                   
 Matchtech Group plc                                                                               
 Net Fee Income                   16.6     13.7     12.5     (25%)              (9%)               
 Operating Profit                 6.4      5.3      4.5      (30%)              (15%)              
 
 
Matchtech Group plc 
 
Net Fee Income 
 
16.6 
 
13.7 
 
12.5 
 
(25%) 
 
(9%) 
 
Operating Profit 
 
6.4 
 
5.3 
 
4.5 
 
(30%) 
 
(15%) 
 
Engineering 
 
Engineering, the Group's largest sector, was the most resilient in the first half with only a slight fall in NFI compared
with 2009 H2. Operating profit fell primarily due to the set up costs of the German operation, which is included in
Engineering in the table above. 
 
The business mix, in Engineering, has shifted towards contract which now accounts for 81% (2009 H1: 71%) of the sector's
NFI. Contractors on weekly assignment have increased in this period to record levels, but gross margins have reduced.
Margin reduction, pay rate deflation and a shift in mix between white and blue collar contractors impacted on the average
timesheet value which is down 17% on 2009 H1 and down 8% on 2009 H2. 
 
As expected, the number of permanent placements has dropped substantially compared to 2009 H1, but we have not seen a
further decline in 2009 H2 and weekly permanent placements have remained stable throughout the period.  Our permanent
recruitment consultants are currently operating at around 50% of capacity, providing us with the capability and resource to
capture market share as and when the economy recovers. 
 
The Group's recently launched German operation, which focuses on the engineering market, commenced trading from Stuttgart
in August 2009 and has made a sound start in line with our expectations.  Information on Germany's financial performance is
given in note 2, Segmental Information, to the financial statements. 
 
Built Environment 
 
Built Environment's NFI was down 18% and operating profit down 23% compared with 2009 H2. This sector has been most
affected by the current downturn, particularly in permanent recruitment. Contract revenue now accounts for 89% (2009 H1:
81%) of NFI. Contractors on assignment have remained fairly stable during this period but, like Engineering, gross margins
have reduced. Tender activity in this sector has been high as clients look to reduce costs and streamline their vendor
base; our success rate has been encouraging and the highlight was our Master Vendor win with WSP.  The benefit of these
wins should materialise in additional contract NFI in the second half, but recovery of permanent fees in this sector will
be slow and we are not anticipating volumes to increase in H2. 
 
Professional Services 
 
NFI in Professional Services was down 13% and operating profit down 25 % compared with 2009 H2. Unlike the other two
sectors, it has a more even split between contract and permanent NFI. The number of contractors on assignment and the
number of permanent placements have both reduced during the period. Staff headcount levels in this sector have remained
stable compared to 2009 H2 and we are starting to invest in additional staff as this sector is seeing early signs of
recovery. 
 
Elemense 
 
The new "elemense" Recruitment Process Outsourcing (RPO) brand, launched in July 2009, has shown early signs of success in
delivering broader RPO services in the technical sector. We are now seeking to strengthen our business development activity
in non-technical markets. 
 
This did not give rise to an additional segment as all the activities were carried out within the segments outlined above
and were classified as such in internal reporting. 
 
                                2009 H1  2009 H2  2010 H1  Change on 2009 H1  Change on 2009 H2  
 Permanent placements                                                                            
 Number of placements           1,400    800      800      (43%)              0%                 
 Permanent fees                 £5.2m    £3.1m    £2.8m    (46%)              (10%)              
 Average fee per placement      £3,708   £3,954   £3,618   (2%)               (8%)               
                                                                                                 
 Contractors                                                                                     
 Number of working contractors  4,500    4,500    4,750    6%                 6%                 
 
 
Contractors 
 
Number of working contractors 
 
4,500 
 
4,500 
 
4,750 
 
6% 
 
6% 
 
Financial Overview 
 
Revenue was £125.4m (down 9% on 2009 H1: £138.0m; down 5% on 2009 H2: £131.6m), with NFI of £12.5m (down 25% on 2009 H1:
£16.6m; down 9% on 2009 H2: £13.7m).  The average weekly timesheet NFI was £86, down 17% on 2009 H1: £104 and down 8% on
2009 H2: £93. 
 
NFI conversion for the period was 36.1% (2009 H1: 38.6%; 2009 H2: 38.7%). 
 
Operating profit was £4.5m (down 30% on 2009 H1: £6.4m; down 15% on 2009 H2: £5.3m). 
 
There were operational cost savings of £2.4m compared with 2009 H1, including a write back of unvested LTIP charges of
£0.3m (2009 H1: £Nil, 2009 H2: £0.6m).  In January 2010 there was a grant of new LTIP share options to Directors and staff.
 There was no material IFRS2 charge in 2010 H1 but there will be a charge in 2010 H2. 
 
The operating margin reduced to 3.6% (2009 H1: 4.6%; 2009 H2 4.0%) due to a combination of operational gearing, pay rates
and margins being put under increasing pressure. 
 
Benefiting from lower interest costs of £0.1m (2009 H1: £0.3m; 2009 H2 £0.1m), profit before tax was £4.4m (down 28% on
2009 H1: £6.1m; down 15% on 2009 H2: £5.2m). 
 
Effective Rate of Tax 
 
The effective rate of tax for the period was 28.2% (2009 H1: 27.1%). 
 
Earnings per share 
 
Basic earnings per share were 13.58p (down 29% on 2009 H1: 19.03p; down 11% on 2009 H2: 15.34p). 
 
Fully diluted earnings per share were 13.31p (down 26% on 2009 H1: 18.10p; down 18% on 2009 H2: 16.25p). 
 
Cash flow and Net cash / (debt) 
 
Cash inflows from operations in the period were £5.9m (2009 H1: £4.1m; 2009 H2: £5.7m) representing cash conversion of 130%
(2009 H1: 65%; 2009 H2: 107%). 
 
Capital expenditure for the period was £0.0m (2009 H1: £0.3m; 2009 H2 £0.0m) and in 2010 H2 is expected to be around
£0.4m. 
 
The Group ended the period with net cash of £0.8m (31 January 2009: net debt £3.7m; 31 July 2009: net debt £1.2m). 
 
Debtor days at the end of the period stood at 43 (2009 H1: 42; 2009 H2: 42 days) with debtors over 90 days overdue of £0.1m
(2009 H1: £0.4m; 2009 H2: £0.1m) and no unimpaired debtors over 90 days overdue (2009 H1: £nil; 2009 H2: £nil). 
 
Banking 
 
Since the period end, the Group has extended its Confidential Invoice Discounting ("CID") facility with Barclays Bank.  The
new £25m facility, which replaces the old £20m CID facility and the £7.5m Revolving Credit Facility, will be in place for
three years until April 2013 at Barclays Bank Base Rate plus 2.25%, previously Barclays Bank Base Rate plus 1.9%. 
 
Dividend 
 
The Board is pleased to declare a maintained interim dividend of 5.0 pence per share, reflecting the continued strength and
resilience of the Group. 
 
The interim dividend will be paid on 23 June 2010 to those shareholders on the register at close of business on 4 June
2010. 
 
People 
 
The Group's key asset is the strength and stability of our management team and the quality of our staff. 
 
Since reducing headcount in the second half of 2009, we have started to make strategic appointments, especially within
Professional Services, to aid the Board's plans for strong growth coming out of the recession. 
 
Total staff numbers at the end of the period were 270 (January 2009: 286; July 2009: 263). 
 
We continue to balance control of our cost base with the need to recruit and retain quality staff as part of our plans to
be able to react quickly to any improvement in demand. Looking ahead we anticipate a material increase in the Group's sales
force headcount over the coming months. 
 
I would like to thank all our staff on behalf of our shareholders for their strong and consistent contribution. 
 
Risk 
 
As previously disclosed, change in the economic environment is one of the principal key risks for the Group and the Board
remains vigilant to this. 
 
Around 50% of the Group's NFI comes directly and indirectly from across many parts of the Public Sector, much on long term
contracts. The Board is mindful of the impact on the Group of potential changes to public expenditure after the forthcoming
General Election. 
 
The Group considers strategic, financial and operational risks and identifies actions to mitigate those risks.  Key risks
and their mitigation are disclosed in the 2009 Annual Report and no other significant new risks have been identified in the
period. 
 
Trading since 31 January 2010 & outlook 
 
Permanent recruitment fees remain stable at the weekly run rate of 2010 H1. Contractor numbers at 31 March 2010, in excess
of 5,000, are at all time record levels and up 5% since 31 January 2010. 
 
Although the economic climate remains subdued, the continued efforts of our staff in maintaining and developing our
business, the relative stability of the marketplace during the period and signs of increased activity in some sectors, all
give the Board increased optimism in its outlook for the current financial year. The Board now expects the results for the
year to 31 July 2010 to be slightly ahead of its previous expectations and remains confident in the Group's prospects over
the medium term. 
 
George Materna 
 
Chairman 
 
8 April 2010 
 
INDEPENDENT REVIEW REPORT TO MATCHTECH GROUP PLC 
 
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report
for the six months ended 31 January 2010 which comprises the condensed consolidated income statement, the condensed
consolidated statement of comprehensive income, the condensed consolidated balance sheet, the condensed consolidated cash
flow statement, the condensed consolidated statement of changes in equity and notes 1 to 7. We have read the other
information contained in the interim report which comprises only the Chairman's Statement and considered whether it
contains any apparent misstatements or material inconsistencies with the financial information in the condensed set of
financial statements. 
 
This report is made solely to the company in accordance with guidance contained in ISRE (UK and Ireland) 2410, "Review of
Interim Financial Information performed by the Independent Auditor of the Entity". Our review work has been undertaken so
that we might state to the company those matters we are required to state to them in a review report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
company, for our review work, for this report, or for the conclusion we have formed. 
 
Directors' Responsibilities 
 
The half-yearly financial report is the responsibility of, and has been approved by, the directors. 
 
As disclosed in Note 1, the annual financial statements of the group are prepared in accordance with IFRS as adopted by the
European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared
in accordance with International Accounting Standard 34, 'Interim Financial Reporting,' as adopted by the European Union. 
 
Our Responsibility 
 
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half
yearly financial report based on our review. 
 
Scope of Review 
 
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board
for use in the United Kingdom.  A review of interim financial information consists of making enquiries, primarily of
persons responsible for financial and accounting matters, and applying analytical and other review procedures.  A review is
substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland)
and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be
identified in an audit.  Accordingly, we do not express an audit opinion. 
 
Review Conclusion 
 
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial
statements in the half-yearly financial report for the six months ended 31 January 2010 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by the European Union. 
 
GRANT THORNTON UK LLP 
 
Chartered Accountants & Registered Auditors 
 
No, 1 Dorset Street 
 
Southampton 
 
SO15 2DP 
 
8 April 2010 
 
CONDENSED CONSOLIDATED INCOME STATEMENT 
 
for the period ended 31 January 2010 
 
                          Note    6 months       6 months       12 months    
                                  to 31/01/10    to 31/01/09    to 31/07/09  
                                  unaudited      unaudited                   
                                  £'000          £'000          £'000        
 CONTINUING OPERATIONS                                                       
 Revenue                  2       125,448        138,015        269,581      
 Cost of Sales                    (112,955)      (121,435)      (239,314)    
 GROSS PROFIT             2       12,493         16,580         30,267       
                                                                             
 Administrative expenses          (7,969)        (10,242)       (18,622)     
 OPERATING PROFIT         2       4,524          6,338          11,645       
                                                                             
 Finance income                   5              4              9            
 Finance cost                     (123)          (277)          (376)        
 PROFIT BEFORE TAX                4,406          6,065          11,278       
                                                                             
 Income tax expense       3       (1,244)        (1,645)        (3,288)      
 PROFIT FOR THE PERIOD            3,162          4,420          7,990        
 
 
Income tax expense 
 
3 
 
(1,244) 
 
(1,645) 
 
(3,288) 
 
PROFIT FOR THE PERIOD 
 
3,162 
 
4,420 
 
7,990 
 
All of the activities of the group are classed as continuing. 
 
EARNINGS PER ORDINARY SHARE 
 
               pence    pence    pence  
                                        
 Basic    5    13.58    19.03    34.37  
 Diluted  5    13.31    18.10    34.35  
 
 
13.31 
 
18.10 
 
34.35 
 
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 
 
for the period ended 31 January 2010 
 
                                                         6 months       6 months       12 months    
                                                         to 31/01/10    to 31/01/09    to 31/07/09  
                                                         unaudited      unaudited                   
                                                         £'000          £'000          £'000        
                                                                                                    
 PROFIT FOR THE PERIOD                                   3,162          4,420          7,990        
                                                                                                    
 OTHER COMPREHENSIVE INCOME                                                                         
 Exchange differences on translating foreign operations  5              -              -            
 OTHER COMPREHENSIVE INCOME FOR THE PERIOD               5              -              -            
                                                                                                    
 TOTAL COMPREHENSIVE INCOME FOR THE PERIOD               3,167          4,420          7,990        
 
 
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 
 
3,167 
 
4,420 
 
7,990 
 
CONDENSED CONSOLIDATED BALANCE SHEET 
 
as at 31st January 2010 
 
                                                      Note    31/01/2010    31/01/2009    31/07/2009  
                                                              unaudited     unaudited                 
 ASSETS                                                       £'000         £'000         £'000       
 Non-current assets                                                                                   
 Property, plant and equipment                                1,361         1,825         1,546       
 Intangible assets                                            129           165           151         
 Deferred tax assets                                          57            294           99          
                                                              1,547         2,284         1,796       
 Current Assets                                                                                       
 Trade and other receivables                          7       31,772        34,086        32,903      
 Cash and cash equivalents                                    793           305           307         
                                                              32,565        34,391        33,210      
 TOTAL ASSETS                                                 34,112        36,675        35,006      
                                                                                                      
 LIABILITIES                                                                                          
 Current liabilities                                                                                  
 Trade and other payables                                     (11,203)      (11,844)      (10,933)    
 Current tax liability                                        (1,269)       (1,775)       (1,368)     
 Bank loans and overdrafts                                    -             (4,015)       (1,470)     
                                                              (12,472)      (17,634)      (13,771)    
                                                                                                      
 TOTAL LIABILITIES                                            (12,472)      (17,634)      (13,771)    
 NET ASSETS                                                   21,640        19,041        21,235      
                                                                                                      
 EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT                                                  
 Called-up equity share capital                       6       232           232           232         
 Share premium account                                        3,045         3,045         3,045       
 Other reserves                                               484           1,026         774         
 Retained earnings                                            17,879        14,738        17,184      
                                                                                                      
 TOTAL EQUITY                                                 21,640        19,041        21,235      
 
 
3,045 
 
3,045 
 
Other reserves 
 
484 
 
1,026 
 
774 
 
Retained earnings 
 
17,879 
 
14,738 
 
17,184 
 
TOTAL EQUITY 
 
21,640 
 
19,041 
 
21,235 
 
CONDENSED CONSOLIDATED CASH FLOW STATEMENT 
 
for the period ended 31 January 2010 
 
                                                             6 months       6 months       12 months    
                                                             to 31/01/10    to 31/01/09    to 31/07/09  
                                                             unaudited      unaudited                   
                                                             £'000          £'000          £'000        
 CASH FLOWS FROM OPERATING ACTIVITIES                                                                   
 Profit after taxation                                       3,162          4,420          7,990        
 Adjustments for:                                                                                       
 Depreciation and amortisation                               243            320            626          
 (Profit)/Loss on disposal of property, plant and equipment  (4)            -              2            
 Interest income                                             (5)            (4)            (9)          
 Interest expense                                            123            277            376          
 Taxation expense recognised in profit and loss              1,244          1,645          3,288        
 (Increase)/decrease in trade and other receivables          1,131          4,480          5,662        
 Increase/(decrease) in trade and other payables             270            (7,087)        (7,997)      
 Unrealised foreign exchange losses/(gains), net             6              -              -            
 Share based payment charge/ (credit)                        (295)          72             (156)        
 Cash generated from operations                              5,875          4,123          9,782        
 Interest paid                                               (123)          (277)          (376)        
 Income taxes paid                                           (1,300)        (1,716)        (3,554)      
 NET CASH FROM OPERATING ACTIVITES                           4,452          2,130          5,852        
                                                                                                        
 CASH FLOWS FROM INVESTING ACTIVITIES                                                                   
 Purchase of plant and equipment                             (33)           (336)          (340)        
 Purchase of intangibles                                     (9)            -              (39)         
 Proceeds from sale of plant and equipment                   10             6              33           
 Interest received                                           5              4              9            
 NET CASH USED IN INVESTING ACTIVITIES                       (27)           (326)          (337)        
                                                                                                        
 CASH FLOWS FROM FINANCING ACTIVITIES                                                                   
 Proceeds from/(repayments to) borrowings                    (1,470)        729            (1,769)      
 Dividends paid                                              (2,468)        (2,463)        (3,626)      
 NET CASH USED IN FINANCING ACTIVITIES                       (3,938)        (1,734)        (5,395)      
                                                                                                        
 Effects of exchange rates on cash and cash equivalents      (1)            -              -            
                                                                                                        
 NET INCREASE IN CASH AND CASH EQUIVALENTS                   486            70             120          
 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD            307            187            187          
 CASH AND CASH EQUIVALENTS AT END OF PERIOD                  793            257            307          
 
 
(2,463) 
 
(3,626) 
 
NET CASH USED IN FINANCING ACTIVITIES 
 
(3,938) 
 
(1,734) 
 
(5,395) 
 
Effects of exchange rates on cash and cash equivalents 
 
(1) 
 
- 
 
- 
 
NET INCREASE IN CASH AND CASH EQUIVALENTS 
 
486 
 
70 
 
120 
 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 
 
307 
 
187 
 
187 
 
CASH AND CASH EQUIVALENTS AT END OF PERIOD 
 
793 
 
257 
 
307 
 
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 
 
for the period ended 31 January 2010 
 
                                                                                Share                       
 Translation                                                           based                       
 of foreign                                 Share    Share    Other    payment  Retained           
 operations                                 capital  premium  reserve  reserve  earnings  Total    
                                            £'000    £'000    £'000    £'000    £'000     £'000    £'000    
                                                                                                            
 Balance at 1 August 2008                   -        232      3,045    224      794       12,771   17,066   
 Total comprehensive income for the period  -        -        -        -        -         4,420    4,420    
 Dividends                                  -        -        -        -        -         (2,463)  (2,463)  
 Deferred tax movement re share options     -        -        -        -        -         (54)     (54)     
 IFRS 2 credit                              -        -        -        -        72        -        72       
 IFRS 2 reserves transfer                   -        -        -        -        (64)      64       -        
 Balance at 31 January 2009                 -        232      3,045    224      802       14,738   19,041   
                                                                                                            
 Balance at 1 August 2008                   -        232      3,045    224      794       12,771   17,066   
 Total comprehensive income for the year    -        -        -        -        -         7,990    7,990    
 Dividends                                  -        -        -        -        -         (3,626)  (3,626)  
 Deferred tax movement re share options     -        -        -        -        -         (39)     (39)     
 IFRS 2 credit                              -        -        -        -        (156)     -        (156)    
 IFRS 2 reserves transfer                   -        -        -        -        (88)      88       -        
 Balance at 31 July 2009                    -        232      3,045    224      550       17,184   21,235   
                                                                                                            
 Balance at 1 August 2009                   -        232      3,045    224      550       17,184   21,235   
 Total comprehensive income for the year    5        -        -        -        -         3,162    3,167    
 Dividends                                  -        -        -        -        -         (2,468)  (2,468)  
 Deferred tax movement re share options     -        -        -        -        -         1        1        
 IFRS 2 credit                              -        -        -        -        (295)     -        (295)    
 Balance at 31 January 2010                 5        232      3,045    224      255       17,879   21,640   
 
 
232 
 
3,045 
 
224 
 
550 
 
17,184 
 
21,235 
 
Balance at 1 August 2009 
 
- 
 
232 
 
3,045 
 
224 
 
550 
 
17,184 
 
21,235 
 
Total comprehensive income for the year 
 
5 
 
- 
 
- 
 
- 
 
- 
 
3,162 
 
3,167 
 
Dividends 
 
- 
 
- 
 
- 
 
- 
 
- 
 
(2,468) 
 
(2,468) 
 
Deferred tax movement re share options 
 
- 
 
- 
 
- 
 
- 
 
- 
 
1 
 
1 
 
IFRS 2 credit 
 
- 
 
- 
 
- 
 
- 
 
(295) 
 
- 
 
(295) 
 
Balance at 31 January 2010 
 
5 
 
232 
 
3,045 
 
224 
 
255 
 
17,879 
 
21,640 
 
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 Professional 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 2010. They have been
prepared in accordance with IAS 34 "Interim Financial Reporting". 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 2009 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 498 (2) and (3) of the Companies Act 2006. 
 
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 2010 or are expected to be adopted and
effective at 31 July 2010. 
 
New standards and amendments to existing standards applicable for the period ending 31 January 2010 are: 
 
-           IFRS 8 'Operating Segments': This new standard had an impact on the nature and extent of the notes in the
Group's financial statements regarding segmental reporting.  Internal management information is reviewed by the Board,
which is deemed to satisfy the definition of the 'Chief Operating Decision Maker' as defined by the standard. 
 
-           IAS 1 'Presentation of Financial Statements - Revised': This amendment had an impact on the presentation of the
primary statements in the Group's financial statements, specifically the introduction of the statement of comprehensive
income. 
 
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. 
 
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 leases are charged against profits on a straight line basis over the lease term. Lease
incentives are spread over the term of the lease. 
 
ix       Taxation 
 
Current tax is the tax currently payable based on taxable profit for the year. 
 
Deferred income taxes are calculated using the liability method on temporary differences. Deferred tax is generally
provided on the difference between the carrying amounts of assets and liabilities and their tax bases. However, deferred
tax is not provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability unless
the related transaction is a business combination or affects tax or accounting profit. 
 
Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that
it is probable that the underlying deductible temporary differences will be able to offset against future taxable income.
Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective
period of realisation, provided they are enacted or substantively enacted at the balance sheet date. 
 
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      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. 
 
xv      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. 
 
xvi      Cash and cash equivalents 
 
Cash and cash equivalents comprise cash on hand, on demand deposits and bank overdrafts. 
 
xvii     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. 
 
xviii    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. 
 
-           "Retained earnings" represents retained profits. 
 
xix     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. 
 
2        SEGMENTAL INFORMATION 
 
The revenue and profit before tax are attributable to the one principal activity of the company. 
 
(i)         Segmental 
 
   to 31/01/10    to 31/01/09    to 31/07/09  
   unaudited      unaudited                   
   £'000          £'000          £'000        
 
 
£'000 
 
£'000 
 
A segmental analysis of revenue is given below: 
 
   Engineering            76,216     78,151     153,170  
   Built Environment      28,596     35,916     68,706   
   Professional Services  20,496     23,948     47,705   
   Germany                140        -          -        
   Total                  125,448    138,015    269,581  
 
 
- 
 
Total 
 
125,448 
 
138,015 
 
269,581 
 
A segmental analysis of gross profit is given below: 
 
   Engineering            6,991     8,588     15,864  
   Built Environment      2,720     4,170     7,441   
   Professional Services  2,730     3,822     6,962   
   Germany                52        -         -       
   Total                  12,493    16,580    30,267  
 
 
- 
 
Total 
 
12,493 
 
16,580 
 
30,267 
 
A segmental analysis of operating profit is given below: 
 
   Engineering            3,104    3,674    6,853   
   Built Environment      1,012    1,694    3,013   
   Professional Services  609      970      1,779   
   Germany                (202)    -        -       
   Total                  4,523    6,338    11,645  
 
 
- 
 
Total 
 
4,523 
 
6,338 
 
11,645 
 
Reconciliation to profit before tax: 
 
   Segmental profit per above  4,523    6,338    11,645  
   Finance income              5        4        9       
   Finance cost                (123)    (277)    (376)   
   Profit before tax           4,405    6,065    11,278  
 
 
Profit before tax 
 
4,405 
 
6,065 
 
11,278 
 
During the period the Company provided recruitment process outsourcing under the elemense brand. This did not give rise to
an additional segment as all the activities were carried out within the segments outlined above and were classified as such
in internal reporting. 
 
A new segment, Germany, is being reported in the current period in line with the requirements of IFRS 8. This segment
represents activity undertaken by the German subsidiary, which was set up during the period and is reported as a separate
segment in internal reporting. 
 
(ii)        Seasonality 
 
As the first half of the financial year includes Christmas, the Board assess the number of effective trading weeks to be
23.8 weeks compared to 25.2 weeks in the second half of the year.  This traditionally produces stronger results in the
latter period, but as a result of deteriorating economic conditions in 2009 this seasonality was not evident. The Board
expect a return to normal seasonality over time. 
 
3        INCOME TAX EXPENSE 
 
Analysis of charge in the period 
 
                             to 31/01/10    to 31/01/09    to 31/07/09  
                             unaudited      unaudited                   
                             £'000          £'000          £'000        
                                                                        
   Total income tax expense  1,244          1,645          3,288        
 
 
1,244 
 
1,645 
 
3,288 
 
The total tax charge is lower than the standard rate of corporation tax.  The differences are detailed below: 
 
   Profit before tax                                                   4,406    6,065    11,278  
                                                                                                 
   Corporation Tax at current rate 28% (31/01/09: 28%, 31/07/09: 28%)  1,234    1,698    3,158   
                                                                                                 
   Expenses not deductable for tax purposes                            80       1        23      
   Income not chargeable for tax purposes                              (83)     -        -       
   Depreciation in excess of capital allowances                        9        -        -       
   Deferred tax asset not provided for due to fall in share price      43       -        155     
   Enhanced R&D tax relief                                             (26)     -        (54)    
   Overseas losses carried forward                                     8        -        -       
   Adjustments to tax charge in respect of previous periods            (20)     (54)     6       
   Total UK tax charge                                                 1,244    1,645    3,288   
 
 
- 
 
Adjustments to tax charge in respect of previous periods 
 
(20) 
 
(54) 
 
6 
 
Total UK tax charge 
 
1,244 
 
1,645 
 
3,288 
 
4        DIVIDENDS 
 
   Dividends on shares classed as equity:  6 months       6 months       12 months    
                                           to 31/01/10    to 31/01/09    to 31/07/09  
                                           unaudited      unaudited                   
                                           £'000          £'000          £'000        
   Paid during the period                                                             
   Equity dividends on ordinary shares     2,468          2,463          3,626        
 
 
Equity dividends on ordinary shares 
 
2,468 
 
2,463 
 
3,626 
 
5        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 shares has been added to the denominator.  There are no changes to the profit
(numerator) as a result of the dilutive calculation. 
 
The earnings per share information has been calculated as follows: 
 
                                                              6 months                6 months            12 months    
                                                              to 31/01/10             to 31/01/09         to 31/07/09  
                                                              unaudited               
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