Final Results

Released : 04/10/12 07:00

RNS Number : 8825N
Matchtech Group PLC
04 October 2012
 



 

4 October 2012

Matchtech Group plc

Preliminary Results for the year ended 31 July 2012

 

Matchtech Group plc ("Matchtech" or the "Group"), one of the UK's leading specialist engineering and professional services recruitment companies, today announces its Preliminary Results for the year ended 31 July 2012.

 

Financial Headlines

 

·      Revenue £371.4m up 23% (2011: £301.8m)

·      Net Fee Income* (NFI) £36.1m up 21% (2011: £29.8m)

·      Permanent recruitment fees £11.5m up 22% (2011: £9.4m)

·      Mix between contract NFI and permanent fees continues at 68%:32% (2011: 68%:32%)

·      Profit before tax £8.0m up 25% (2011: £6.4m)

·      Basic earnings per share 24.3 pence up 20% (2011: 20.3 pence)

·      Net cash from operating activities was £6.5m (2011: outflow £7.4m) with operating cash conversion of 106% (2011: -72%)

·      Final dividend maintained at 10.6 pence giving total dividend for the year of 15.6 pence (2011: 15.6 pence) and providing increased cover of 1.6x (2011: 1.3x)

·      Net debt of £14.5m (2011: £16.0m)

 

* NFI is calculated as revenue less contractor payroll costs.

 

Operational Headlines

·      Unprecedented demand for contractors across all engineering sectors with record numbers on assignment

·      Supplying UK clients who have:

Global demand for their services

Multi-year engineering infrastructure projects in the UK

·      Acquisition of the internal recruitment arm of Xchanging plc

·      The Professional Services brands of Barclay Meade & Alderwood are now well established and much improved performance with losses halved to £1.4m

·      New, simpler reporting structure established for FY2012/13. The business will be managed in two distinct segments, Engineering and Professional Services.

 

Commenting on the results, George Materna Chairman of Matchtech said:

 

"The Group delivered 21% growth in NFI in the year ended 31 July 2012. Our diversification strategy is continuing to bear fruit and we are seeing unprecedented demand for contract staff within our engineering markets with a record number of contractors on assignment. 

 

Since our Pre-close Trading Update on 2 August 2012 trading has remained in line with the Board's expectations, with contractor numbers continuing to grow well, up 2% in the two months to 30 September 2012. Permanent recruitment time-to-hire has been elongated and has started the year on a par with last year.

 

The changes we introduced over the past two years to the Group's structure position us well for continued growth, particularly by supplying more contractors to UK clients who have global demand for their services or are working on large, multi-year engineering infrastructure projects in the UK and overseas markets.

 

We look forward with confidence to the year ahead."

 

For further information please contact:

 

Matchtech Group plc                                                   01489 898989

Adrian Gunn, Chief Executive Officer

Tony Dyer, Chief Financial Officer

 

MHP Communications                                                 020 3128 8100

John Olsen / Ian Payne / Giles Robinson

 

Numis Securities Limited                                            020 7260 1000

Michael Meade / James Serjeant


 

 

 

 

 

Background on Matchtech Group

 

Established in 1984, the Group specialises in the provision of contract, temporary and permanent staff and has grown organically to become one of the UK's leading Engineering and Professional Services specialists, providing niche recruitment solutions to a broad range of clients across the UK and Europe. The Group's Head Office is based in Fareham, Hampshire with strategic office locations in London, St Albans, Aberdeen and Stuttgart.

 

 

 

Chairman's Statement

 

Trading Performance

The Board is pleased to report a strong performance by the Group, with both Net Fee Income (NFI) and Profit before tax over 20% up compared with last year. 

 

Total revenues were £371.4m, an increase of 23% on the previous year, NFI of £36.1m was up 21% and Profit before tax of £8.0m was up 25%.

 

We were pleased to have achieved another record year for contractors on assignment, which at 31 July 2012 stood at 6,700, a rise of 12% on the previous year.  Contract recruitment across engineering and technology sectors exceeded our initial expectations.  Permanent recruitment continued to be sensitive to economic conditions and consequently some clients and candidates took longer to commit to new roles, which lengthened the time-to-hire.

The Group's growth stemmed from successfully taking advantage of our established presence in growth niche markets, strong client retention based on consistently first-class service delivery and from the much improved performance by the professional services brands, which were created in the last two years.

 

Dividend

Reflecting the year's good performance, but mindful of prevailing economic conditions, the Board is pleased to recommend to shareholders that the final dividend is maintained at last year's level of 10.6 pence per share, which makes a total dividend for the year of 15.6 pence per share (2011: 15.6 pence) covered 1.6 times by earnings per share (2011: 1.3 times).

 

People

The Group has spent the last two years creating its new brands around the recruitment of experienced staff. With the brands now established and management in place, resourcing in these areas will return to our traditional graduate recruitment programme.

 

We have a strong tradition of developing graduate employees who are mentored by senior colleagues and have clear career paths that will encourage them to develop within the Group.

 

As a people business, we work hard to offer our employees an enjoyable and stimulating workplace, which the Board recognises is important when having to remain flexible to a wider marketplace that demands constant innovation and the ability to respond quickly to secure opportunities.

 

The Board wishes to pay tribute to all our staff and to our contractors for their continued hard work and dedication.

 

We were especially pleased to be placed 25th in the 2012 Sunday Times Best Companies to Work For survey.  This is an award which is entirely based upon the feedback of our staff and reflects the high importance we place upon employee engagement.

 

Board and Corporate Governance

During the year Richard Bradford and Rudi Kindts joined the Board as Non-Executive Directors. We welcome them both and the contribution they are already making.

 

In September I was pleased to announce the appointment of Keith Lewis to the Board with effect from 5 September 2012.  Keith has been with Matchtech for 19 years. He is currently responsible for Matchtech UK, the largest business within the Group.

 

Keith's elevation to the Board reflects the pivotal role that he plays.  He has a long and consistent track record of success in driving forward our engineering business and his executive experience and character will complement what is already a strong Board.  On behalf of my colleagues, I congratulate him on his new role.

 

I would like to pay special thanks to David Rees, a colleague of the highest integrity, who has worked with me for 20 years and contributed a substantial amount to the success of the business over that time.  David stepped down as Group HR Director and left the Group in September.  I wish him the very best for the future.

 

Strategy

The Group's traditional strength in segmenting the market and delivering highly skilled candidates to a largely blue chip engineering and technology client base, gives us continuing competitive advantage. 

 

From this strong platform we have identified many opportunities to continue to grow the business by finding new niches to supply and by further internationalising our sales efforts. Our strategy is to find and analyse opportunities, but only move forward where we can largely de-risk any new business propositions.

 

Diversifying into new sectors under the Professional Services brands of Barclay Meade and Alderwood has provided opportunities for further growth. In just two years both brands have made significant inroads into their markets and have quickly positioned themselves as experts in their fields. Professional Services' NFI was £5.7m, up 33% on the previous full year, representing 16% of the Group's NFI (2011: 14%).

 

Our international growth strategy is partly de-risked by supplying candidates to existing clients for their new international projects. This lowers the risks associated with opening offices in new countries and has the additional benefit of further cementing relationships with our client base by helping meet their needs.

 

Of course, there are still challenges in finding the right candidates, almost all of whom are specialists. To increase our talent pool we have invested considerably in our technology, brands and websites. We plan to strengthen our online presence so that our websites are one of the first places where new candidates register when looking for new roles.

 

 

Outlook

Since our Pre-close Trading Update on 2 August 2012 trading has remained in line with the Board's expectations, with contractor numbers at record levels continuing to grow well, up 2% in the two months to 30 September 2012. Permanent recruitment continues to be sensitive to global market news and has started the year on a par with last year.

 

The Group delivered 21% growth in NFI in the year ended 31 July 2012. Our diversification strategy is continuing to bear fruit and we are seeing unprecedented demand for contract staff within the engineering markets, with a record number of contractors on assignment. 

 

The changes we have introduced over the past two years to the Group's structure position us well for continued growth, particularly by supplying more contractors to UK clients who have global demand for their services or are working on large, multi-year engineering infrastructure projects in the UK and overseas markets.

 

Whilst we remain mindful that any deterioration in the global economy has the potential to impact on our business, we look forward with confidence to the year ahead.

 

George Materna

Chairman

 

 

 

Chief Executive's Review

 

Performance Overview

The Group has continued to benefit from the substantial reorganisation and investment for growth made over the past two years. In particular, our contract recruitment business, which accounts for around two-thirds of Net Fee Income (NFI), performed ahead of our expectations throughout the year, with growth being driven by strong demand for contractors in our traditional niches of engineering and technology and by the understandable attractions of flexible labour during an economic downturn.

 

This year we have enhanced the performance of the business through further investment in our professional services brands, additional sales personnel and faster and more efficient IT systems. Our improvements make us well-placed to handle significantly higher volumes of business.

 

The Group has once again delivered a creditable performance with NFI growth of 21% on the previous year, contributing to a 25% increase in Profit before tax. The mix between contract NFI and permanent fees remained the same as the previous year at 68%:32%.

 

Contractor numbers continue to increase. At 31 July 2012 there were 6,700 contractors, an increase of 12% on the previous year and up 3% on 31 January 2012.  Contract margins stabilised at 6.6% for the full year 2012.

 

The increased number of contractors reflected continuing strong demand for contract staff in our main sectors, driven mostly by existing clients working on global, multi-year programmes.  Growth also stemmed from supplying contractors to major UK infrastructure projects in the marine, rail and water sectors.

 

Greatly assisted by the brands in professional services, permanent fees rose by 22% compared with the previous year, with average placement fees essentially stable throughout each quarter of 2012.However, we have seen clients extending the typical time-to-hire. 

 

Business Plan

The Group's success has been built on a core strategy of attracting the best candidates.  We believe that by finding strong candidates and making their interests central to our success, we will ensure that our clients are supplied with the right people, at the right time, for the right roles. By understanding the requirements of our clients and by knowing our candidates thoroughly, we deliver by being able to scan, screen, shortlist and present our candidates more effectively and quicker than our competitors.

 

We have now completed the first year of our 5 year business plan and have made encouraging progress against our 7 Key Aims, set out below, which are absolutely integral to the business and which provide the framework for delivering growth. 

 

1.         Expanding our sector diversification and geographical reach by building on our early successes and looking at opportunities to grow into new sectors and additional strategic locations within the UK.

2.         Increasing the NFI we generate per employee by focusing on developing existing client relationships and winning new business outside the engineering sector.

3.         Building our conversion ratio of NFI to profit from operations as our investments mature, continuing the Group's ability to generate high levels of return from NFI.

4.         Enhancing internal systems performance and controls to deliver an even faster, more efficient and robust service to our clients and candidates.

5.         Improving our staff retention levels by continuing to look at staff engagement and providing career opportunities. This is a key factor in determining how fast the Group can grow.

6.         Maximising cross-selling opportunities across the Group by utilising the increasingly varied client base being created with our expanding brands.

7.         Extending our international reach by developing a structured rollout of international opportunities.

 

Strategic Developments

In January 2012, the Group acquired certain assets of Xchanging Resources Services Limited (XRS), the contingency recruitment arm of Xchanging plc.  The assets have quickly been integrated into the Group giving us greater access to the client base. This will increase our scope to expand into new Technology markets and helps us forge even closer links with one of our largest clients.

 

In June 2012, Matchtech met an important Group goal by signing its first framework agreement with a strategic partner in China.  This contract is for design engineers for the rapidly expanding Chinese aerospace industry.

  

 

Management and Staff

I wish to thank staff and management for another year in which they have applied hard work, resourcefulness and creativity to produce a strong financial performance. It is a privilege to lead a business that is full of intelligent and talented individuals whom I believe serve our clients and candidates so well.

 

Our financial success is built on both the service ethos we cultivate and guard closely and from our culture which allies entrepreneurial flair to strong relationship management.

 

All of the Group's staff work towards one common set of values: Teamwork, Integrity, Enthusiasm, Innovation, and Fun.  We are also united behind our 7 Key Aims, which provide an excellent framework for delivering further growth.

 

As a people business we also understand the importance of personal development. This is why we have continued to invest in developing our staff, including supporting them with considerably improved IT systems and shared services functions.

 

I would like to add my congratulations to those of the Chairman to Keith Lewis on his promotion to the Board. 

 

Divisional Performance

Matchtech UK operates in four key sectors: Engineering, Built Environment, Information Systems & Technology and Science & Medical.  This was a record year for Matchtech UK with unprecedented demand for contract staff in its markets, and a record number of contractors on assignment. Matchtech UK contractor numbers grew from 5,250 at the start of the year to 5,850 at the year end.

 

Engineering, the largest sector in Matchtech UK representing 44% of NFI, performed well again in 2012.  NFI increased by 19% on the previous year, with strong demand across all areas, particularly in the Civil Aerospace, Automotive and Marine sectors. 

 

Built Environment grew contractor numbers by 8% to 1,400, and produced NFI growth of 9%, which came primarily from Water and Rail infrastructure projects.

 

Information Systems & Technology saw NFI grow by 26% on the previous full year.  Growth was aided by the convergence of technology in Electronic Systems and Business Applications, which play to our strengths in niche service delivery.

 

Science & Medical grew steadily with NFI up 11% on 2011.

 

elemense, our Managed Services business, provides account management support for key clients, which indirectly generates revenue for the Group.

 

elemense plays an important role in client retention by ensuring key contracts are constantly monitored and Service Level Agreements are delivered.  The client handling skills are essential in fostering strong client relationships and have provided many new business leads in permanent recruitment across the Group.

 

Matchtech Germany, a business which we first opened in 2009, targets the Aerospace, Automotive and Energy sectors. Trading in Germany continues to gain momentum with NFI up 50% to £0.9, achieving some excellent business development wins, despite growth being restricted by the shortage of available candidates. The Loss before tax increased to £0.4m (2011: £0.1m).

 

A key challenge, therefore, is to attract more qualified engineers for the German market, which is where our focus lies in the year ahead. As part of this effort we re-launched our German website to have the 'look and feel' of an engineering consultancy, which is a much better fit with the German labour leasing business model. 

 

The Professional Services brands, Barclay Meade and Alderwood continue to make progress.

 

Barclay Meade focuses on Finance & Accountancy, Marketing, Procurement & Supply Chain, HR and Sales.  Alderwood focuses on the Skills and Employability markets.  Setting up these two new professional services brands and establishing them firmly in their marketplace has been an important step in diversifying the business. 

 

Barclay Meade continues to develop well and has established good brand recognition in the permanent SME market, working with approximately 300, mainly medium sized, client companies.  We intend to scale up the business by recruiting more graduate consultants, who will be guided and mentored by more experienced colleagues, which will enable Barclay Meade to continue to grow market share, while improving its operating margins.

 

For its size and relative youth of the brand, Alderwood has exceeded expectations in the Welfare to Work market, working for 8 of the 12 main providers. It has also made good headway in the Work-Based Learning market, providing assessors for National Vocational Qualifications (NVQs). Looking forward, we expect to increase placements in both markets.

 

 

New reporting structure

In order to improve stakeholders' understanding of the Group as it continues to diversify we will be introducing a simplified reporting structure for the financial year to 31 July 2013. The business will be managed in two distinct segments, Engineering and Professional Services.

 

The Engineering segment will operate under the Matchtech brand and will be led by Keith Lewis. It will include Matchtech Germany and also elemense, the Managed Services business, which supports Matchtech's large framework agreements.

 

The Professional Services segment will comprise of the existing Barclay Meade and Alderwood brands, along with the Information Systems and Technology sector, which was previously within Matchtech. This latter sector is more aligned with the Professional Services businesses where its profile bears a closer fit and opportunities for cross-selling will be greater.   

 

An indicative representation of the financial performance of this new structure can be found in Note 2 of the Financial Statements.

 

The clarity that this new structure provides will allow us to maximise opportunities across the Group and I look forward to giving shareholders an initial update on progress with the interim results in April 2013.

 

Adrian Gunn 

Chief Executive Officer

 

  

 

 

 

 

Chief Financial Officer's Report

 

Revenue and Net Fee Income (NFI)

The Group generated revenue of £371.4m, a rise of 23% on the previous year (2011: £301.8m), with NFI for the year of £36.1m, up 21% (2011: £29.8m).

 

Contractor numbers on assignment continued to grow, finishing the year on 6,700, up 12% on the starting position of 6,000.  This growth in numbers contributed to an increase of 21% in contract NFI to £24.6m (2011: £20.4m).

 

Permanent Recruitment Fees of £11.5m were up 22% (2011: £9.4m).  However, the average weekly fees billed each quarter essentially remained flat throughout the year.  Information on the performance of Group businesses is provided in the Chief Executive Officer's Review.

 

Overheads and NFI Conversion

Overheads in the year increased by 20%, resulting in a slight increase in the NFI conversion rate to 24% (2011: 23%). We are in a position to start improving the NFI conversion rate going forwards.

 

Profit and Earnings per Share

Profit from operations was £8.7m, up 28% (2011: £6.8m).  The increase of £1.9m from 2011 was mainly due to successfully taking advantage of our established presence in growth niche markets, strong client retention based on consistently first-class service delivery, and from the encouraging improved performance by the Professional Services brands, which we have created in the last two years.

 

The structure of the business and our July year end mean that there is a strong second half weighting to our profits, with the half year splits similar to last year, H1 39%;H2 61% (2011: H1 34%;H2 66%).

 

The Group generated profit before tax of £8.0m, up 25% (2011: £6.4m) and profit after tax of £5.7m (2011: £4.7m).

 

The effective tax rate has increased to 28.5% (2011: 25.9%) due to higher non tax deductible professional fees and increased losses incurred by Matchtech Germany. 

 

Basic earnings per share rose by 20% to 24.34 pence (2011: 20.26 pence) and diluted earnings per share of 23.49 pence by 19% (2011: 19.74 pence).

 

Dividends

The Board proposes an unchanged final dividend for the year of 10.6 pence per share which, if approved by shareholders at the Annual General Meeting, to be held on Friday 16 November 2012, will be payable on 7 December 2012 to those shareholders registered on 9 November 2012. 

 

When added to the interim dividend of 5 pence per share this makes an unchanged total dividend for the year of 15.6 pence per share, giving dividend cover of 1.6 times (2011: 1.3 times).

 

Dividends Paid

 

 

Paid on

Dividend

 (pence per share)

2012

£'000

2011

£'000

3 December 2010

10.6

-

2,477

21 June 2011

5.0

-

1,169

2 December 2011

10.6

2,480

-

19 June 2012

5.0

1,172

-



3,652

3,646

 

Group Consolidated Statement of Financial Position

At the 31 July 2012 the Group had net assets of £27.6m (2011: £25.1m) and had 23.4m fully paid ordinary shares in issue (2011: 23.4m).

 

Capital Expenditure and Tangible and Intangible Assets

Capital expenditure in the year was £1.4m (2011: £0.5m), of which £0.4m was for the acquisition of XRS in January 2012

 

Tangible assets at 31 July 2012 of £1.8m (2011: £1.5m) consist of the Group's motor fleet, office equipment, leasehold improvements and computer equipment. 

 

Intangible items at 31 July 2012 of £0.5m (2011: £0.1m) consist of £0.3m being the amortised acquisition cost of XRS, which will be amortised over a two year period, and external software licences of £0.2m which are amortised over the expected life of the licence.

 

Working Capital, Cashflow and Net Debt

Current debtor days at the year-end were improved to 50 (31 July 2011: 53).

Net cash from operating activities was £6.5m (2011: outflow of £7.4m) with an operating cash conversion of 106% (2011: -72%).

Net debt at 31 July 2012 was £14.5m (31 January 2012: £11.5m, 31 July 2011: £16.0m).

 

Banking Facilities

The Group operates a working capital Confidential Invoice Discounting facility with Barclays Bank plc.

 

In June 2012 the Group agreed an increase in its facilities with Barclays from £35m to £50m, on improved terms, committed until June 2015.  

 

The facility ceiling currently stands at the lower of £50m or 90% of qualifying invoiced debtors and interest on borrowing is at Barclays Bank Base Rate plus 2.00%.   At 31 July 2012 the balance on the Confidential Invoice Discounting Facility was £15.1m.

 

Critical Accounting Policies

The Statement of Significant Accounting Policies is set out in Note 1 to the Financial Statements.

The Group's Revenue Recognition policy may be summarised as:

·      Contract revenue, and hence contract net fee income, is only recognised upon receipt of a client signed timesheet

·      Permanent fees are only recognised following confirmation by the client that the candidate has started work

·      Other fees are recognised on confirmation from the client committing to the agreement

The Group makes estimates and assumptions regarding the future. Estimates and judgments are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions.

The Board considers that the estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are the measurement of tangible assets (where the Group estimates useful lives for the purposes of depreciation).

 

Group financial risk management

The Board reviews and agrees policies for managing financial risks. The Group's Finance function is responsible for managing investment and funding requirements including banking and cash flow monitoring. It seeks to ensure that adequate liquidity exists at all times in order to meet its cash requirements.

The Group's strategy is to finance its operations through a mixture of cash generated from operations and, where necessary, equity finance and borrowings by way of bank facilities and working capital finance.

 The Group's financial instruments comprise borrowings, cash and various items, such as trade receivables and trade payables that arise from its operations. The main purpose of these financial instruments is to finance the Group's operations. The Group does not trade in financial instruments. The main risks arising from the Group's financial instruments are described below.

 

Liquidity and Interest Rate Risk

The Group had net debt of £14.5m at the year end, comprising £15.1m debt less £0.6m cash. The Group's exposure to market risk for changes in interest rates relates primarily to the Group's bank loan and sales financing facility debt obligations. Bank interest is charged on a floating rate basis.

 

Credit Risk

The Group trades only with recognised, creditworthy third parties. Receivable balances are monitored on an on-going basis with the result that the Group's exposure to bad debts is not significant. There are no significant concentrations of credit risk within the Group, with no single debtor accounting for more than 13% (2011: 14%) of total receivables balances at 31 July 2012.

 

Foreign Currency Risk

The Board considers that the Group does not have any material risks arising from the effects of exchange rate fluctuations.

 

Tony Dyer

Chief Financial Officer

4 October 2012

 

 

 

 

CONSOLIDATED INCOME STATEMENT

for the year ended 31 July 2012

 









2012

2011








 Note

£'000

£'000











Revenue







371,366

301,806

Cost of Sales







(335,248)

(272,048)

GROSS PROFIT





2

36,118

29,758











Administrative expenses






(27,444)

(22,939)











PROFIT FROM OPERATIONS





3

8,674

6,819





















Finance income






2

30

Finance cost






5

(711)

(461)

PROFIT BEFORE TAX






7,965

6,388





















Income tax expense





8

(2,268)

(1,654)

PROFIT FOR THE YEAR ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT


5,697

4,734

 

 

 

 

 

 

EARNINGS PER ORDINARY SHARE

 









2012

2011








 Note

pence

pence











Basic






9

24.34

20.26











Diluted






9

23.49

19.74

 

 

 

 

 

STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 July 2012

 









2012

2011









£'000

£'000











PROFIT FOR THE YEAR






5,697

4,734











OTHER COMPREHENSIVE INCOME







Exchange differences on translating foreign operations



74

(28)

OTHER COMPREHENSIVE INCOME FOR THE YEAR



74

(28)











TOTAL COMPREHENSIVE INCOME FOR THE YEAR ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT


5,771

4,706


STATEMENT OF CHANGES IN EQUITY

for the year ended 31 July 2012

 

A) GROUP

 







Share










Based

Translation






Share

Share

Merger

payment

of foreign

Retained





capital

premium

reserve

reserve

operations

earnings

Total




£'000

£'000

£'000

£'000

£'000

£'000

£'000











At 1 August 2010

233

3,098

224

466

18

19,633

23,672









Dividends paid in the year

-

-

-

-

-

(3,646)

(3,646)

Deferred tax movement re share options

-

-

-

-

-

5

5

IFRS2 charge


-

-

-

288

-

-

288

IFRS2 reserves transfer

-

-

-

25

-

(25)

-

Shares issued

1

28

-

-

-

-

29

Transactions with owners

1

28

-

313

-

(3,666)

(3,324)











Profit for the year

-

-

-

-

-

4,734

4,734

Other comprehensive income

-

-

-

-

(28)

-

(28)

Total comprehensive income

-

-

-

-

(28)

4,734

4,706










At 31 July 2011

234

3,126

224

779

(10)

20,701

25,054





















At 1 August 2011

234

3,126

224

779

(10)

20,701

25,054











Dividends paid in the year

-

-

-

-

-

(3,652)

(3,652)

Deferred tax movement re share options

-

-

-

-

-

(3)

(3)

IFRS2 charge


-

-

-

476

-

-

476

IFRS2 reserves transfer

-

-

-

(370)

-

370

-

Shares issued


-

2

-

-

-

-

2

Transactions with owners

-

2

-

106

-

(3,285)

(3,177)











Profit for the year

-

-

-

-

-

5,697

5,697

Other comprehensive income

-

-

-

-

74

-

74

Total comprehensive income

-

-

-

-

74

5,697

5,771











At 31 July 2012

234

3,128

224

885

64

23,113

27,648

 



 

B) COMPANY

 
















  


 Share 










based








Share

Share

payment

Retained 







 capital 

 premium 

reserve 

 earnings 

 Total 






 £'000 

 £'000 

 £'000 

 £'000 

 £'000 











At 1 August 2010

 233

3,098

466

5

3,802









Dividends paid in the year



-

-

-

(3,646)

(3,646)

IFRS 2 charge




-

-

288

-

288

IFRS 2 reserves transfer



-

-

25

(25)

-

Shares issued




1

28

-

-

29

Transactions with owners



 1

28

313

(3,671)

(3,329)











Profit and total comprehensive income for the year

-

-

-

4,532

4,532











At 31 July 2011


 234

3,126

779

866

5,005





















At 1 August 2011



 234

3,126

779

866

5,005









Dividends paid in the year



-

-

-

(3,652)

(3,652)

IFRS 2 charge




-

-

476

-

476

IFRS 2 reserves transfer



-

-

(370)

370

-

Shares issued




-

2

-

-

2

Transactions with owners



 -

2

106

(3,282)

(3,174)











Profit and total comprehensive income for the year

-

-

-

3,350

3,350











At 31 July 2012




 234

3,128

885

934

5,181

 

 

 

 

 

 

STATEMENTS OF FINANCIAL POSITION

for the year ended 31 July 2012

 








GROUP

COMPANY








2012

2011

2012

2011







 Note

£'000

£'000

£'000

£'000












NON-CURRENT ASSETS







Intangible assets




11

498

106

-

-

Property, plant and equipment



12

1,832

1,530

-

-

Investments





14

-

-

1,458

983

Deferred tax asset




13

220

188

-

-

Total Non-Current Assets 



2,550

1,824

1,458

983












CURRENT ASSETS









Trade and other receivables


15

62,749

56,452

3,576

3,878

Cash and cash equivalents



626

475

147

144

Total Current Assets





63,375

56,927

3,723

4,022












TOTAL ASSETS





65,925

58,751

5,181

5,005












NON-CURRENT LIABILITIES








Provisions




17

(278)

-

-

-

Total Non-Current Liabilities




(278)

-

-

-










CURRENT LIABILITIES









Trade and other payables




16

(21,825)

(16,577)

-

-

Current tax liability





(1,074)

(690)

-

-

Bank loans and overdrafts




22

(15,100)

(16,430)

-

-

Total Current Liabilities





(37,999)

(33,697)

-

-










TOTAL LIABILITIES





(38,277)

(33,697)

-

-












NET ASSETS





27,648

25,054

5,181

5,005























EQUITY










Called-up equity share capital



20

234

234

234

234

Share premium account





3,128

3,126

3,128

3,126

Merger reserve




224

224

-

-

Share-based payment reserve


885

779

885

779

Translation of foreign operations


64

(10)

-

-

Retained earnings





23,113

20,701

934

866

TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT



27,648

25,054

5,181

5,005

 

 

 

These financial statements were approved by the Board of Directors on 4 October 2012, and signed on their behalf by:

 

 

 

Tony Dyer

Chief Financial Officer

 

 

 

 

CONSOLIDATED CASH FLOW STATEMENT

for the year ended 31 July 2012







GROUP

COMPANY







2012

2011

2012

2011







£'000

£'000

£'000

£'000











CASH FLOWS FROM OPERATING ACTIVITIES






Profit after taxation




5,697

        4,734

3,250

4,532











Adjustments for:










Depreciation and amortisation


702

           516

-

              - 


Loss on disposal of property, plant and equipment

1

              8

-

              - 


Interest income



(2)

  (30)

(1)

  (1)


Interest expense



711

           461

-

              - 


Taxation expense recognised in the income statement

2,268

        1,654

-

              - 


(Increase) / decrease in trade and other receivables


(6,223)

  (15,442)

402

  (886)


Increase in trade and other payables


5,248

        2,875

-

              - 


Increase in provisions

278

-

-

-


Share-based payment charge


476

           288

-

              - 


Investment income



-

              - 

(3,645)

  (4,815)

Cash generated from operations



9,156

  (4,936)

6

  (1,170)











Interest paid





(703)

  (461)

-

              - 

Income taxes paid




(1,916)

  (2,040)

-

              - 

NET CASH FROM OPERATING ACTIVITIES


6,537

  (7,437)

6

  (1,170)











CASH FLOWS FROM INVESTING ACTIVITIES






Purchase of plant and equipment



(868)

  (484)

-

              - 

Purchase of intangible assets




(575)

  (45)

-

              - 

Proceeds from sale of plant




45

107

-

-

Interest received





2

             30

2

              - 

Dividend received





-

              - 

3,645

        4,815

NET CASH USED IN INVESTING ACTIVITIES


(1,396)

  (392)

3,647

        4,815











CASH FLOWS FROM FINANCING ACTIVITIES






Proceeds from issue of share capital



4

             29

2

             29

Payment of transactions costs relating to loans and borrowings


(150)

-

-

-

Dividends paid





(3,652)

  (3,646)

(3,652)

  (3,646)

NET CASH USED IN FINANCING


(3,798)

  (3,617)

(3,650)

  (3,617)











EFFECTS OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS

(4)

              2

-

              - 











NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS

1,339

(11,444)

3

28

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

(15,955)

  (4,511)

144

           116

CASH AND CASH EQUIVALENTS AT END OF YEAR


(14,616)

  (15,955)

147

           144








CASH AND CASH EQUIVALENTS








Cash






626

475

147

144

Bank overdrafts





(169)

  (172)

-

              - 

Working capital facility utilised




(15,073)

  (16,258)

-

              - 

Cash and cash equivalents in the statement of cash flows

(14,616)

  (15,955)

147

           144

 

 

 

 

 

 

NOTES

forming part of the financial statements

 

1.      SIGNIFICANT ACCOUNTING POLICIES

i.           The business and address of the Group

Matchtech Group plc is a human capital resources business dealing with contract and permanent recruitment in the Private and Public Sector. The Company is incorporated in the United Kingdom. The Group's address is: Matchtech Group plc, 1450 Parkway, Whiteley, Fareham PO15 7AF.

ii.          Basis of preparation of the financial statements

The financial statements have been prepared in accordance with applicable International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and which are effective at 31 July 2012.

These financial statements have been prepared under the historical cost convention. The accounting policies have been applied consistently throughout both the Group and the Company for the purposes of preparation of these financial statements. A summary of the principal accounting policies of the Group are set out below.

iii.         Going concern

The Directors have reviewed forecasts and budgets for the coming year, which have been drawn up with appropriate regard for the current macroeconomic environment and the particular circumstances in which the Group operates. These were prepared with reference to historic and current industry knowledge, taking future strategy of the Group into account. As a result, at the time of approving the financial statements, the Directors consider that the Company and the Group have sufficient resources to continue in operational existence for the foreseeable future, and accordingly, that it is appropriate to adopt the going concern basis in the preparation of the financial statements. As with all business forecasts, the directors cannot guarantee that the going concern basis will remain appropriate given the inherent uncertainty about future events.

iv.         New standards and interpretations

New standards and amendments to existing standards applicable for the period ending 31 July 2012 are:

-        IAS 24 'Related Party Disclosures'

 

The adoption of the above standards has had no impact on the financial statements.


New standards in issue, not yet effective

The following relevant Standards and Interpretations, which are new and yet to become mandatory, have not been applied in the Group financial statements:

 

Standard

Effective date (Annual periods beginning on or after)

IAS 1 Presentation of Items of Other Comprehensive Income

 

1 July 2012

 

v.          Basis of consolidation

The Group financial statements consolidate those of the Company and all of its subsidiary undertakings drawn up to the statement of financial position 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 statement of financial position at their fair values, which are also used as the bases for subsequent measurement in accordance with Group accounting policies.

Transactions between Group companies are eliminated on consolidation.

vi.         Revenue

Revenue is measured by reference to the fair value of consideration received or receivable by the Group for services provided, excluding VAT and trade discounts. Revenue on temporary placements is recognised upon receipt of a client approved timesheet or equivalent. Revenue from permanent placements, which is based on a percentage of the candidate's remuneration package, is recognised when candidates commence employment at which point it is probable that the economic benefits associated with the transaction will be transferred. Other fees are recognised on confirmation from the client committing to the agreement.

vii.        Property, plant and equipment

Property, plant and equipment is stated at cost, net of depreciation and any provision for impairment.

Depreciation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset.  Depreciation is charged per annum as follows:

Motor vehicles                          25.0%                                                    Reducing balance
Computer equipment             25.0%                                                    Straight line
Office equipment                     12.5%                                                    Straight line
Leasehold improvements     Over the period of the lease term


Residual value estimates are updated as required, but at least annually, whether or not the asset is revalued.

viii.       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%-50% per annum.

 

Other intangible assets are included at cost and amortised on a straight-line basis over the useful economic life of that asset.

 

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.

ix.        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.

x.         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.

xi.        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 statement of financial position date.

Deferred tax on temporary differences associated with shares in subsidiaries is not provided if these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future.

Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statement, except where they relate to items that are charged or credited directly to equity (such as share-based payments) in which case the related deferred tax is also charged or credited directly to equity.

xii.       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.

xiii.      Share-based payment

The transitional arrangements of IFRS 1 have been applied to all grants of equity instruments after 7 November 2002 that were unvested at 1 August 2006. All share-based remuneration is ultimately recognised as an expense in the income statement with a corresponding credit to "share-based payment reserve", a component of equity. All goods and services received in exchange for the grant of any share-based remuneration are measured at their fair values. Fair values of employee services are indirectly determined by reference to the fair value of the share options awarded. Their value is appraised at the grant date and excludes the impact of non-market vesting conditions (for example, profitability and sales growth targets).

If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options ultimately exercised are different to that estimated on vesting. Upon exercise of share options, proceeds received net of attributable transaction costs are credited to share capital and share premium.

 

The Company is the granting and settling entity in the group share-based payment arrangement where share options are granted to employees of its subsidiary companies.  The Company recognises the share-based payment expense as an increase in the investment in subsidiary undertakings.

The Group operates a Share Incentive Plan (SIP) which is HMRC approved, and enables employees to purchase Company shares out of pre-tax salary. For each share purchased the Company grants an additional share at no cost to the employee. The expense in relation to these 'free' shares is recorded as employee remuneration and measured at fair value of the shares issued as at the date of grant.

xiv.      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.

xv.       Financial assets

All financial assets are recognised when the Group becomes a party to the contractual provisions of the instrument. Financial assets are recognised at fair value plus transaction costs.

In the Company financial statements, investment in the subsidiary company is measured at cost, and provision made where an impairment value is deemed to have occurred.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Trade receivables are classified as loans and receivables. Loans and receivables are measured subsequent to initial recognition at amortised cost using the effective interest method, less provision for impairment. Any change in their value through impairment or reversal of impairment is recognised in the income statement.

Provision against trade receivables is made when there is objective evidence that the Group will not be able to collect all amounts due to it in accordance with the original terms of those receivables. The amount of the write-down is determined as the difference between the asset's carrying amount and the present value of estimated future cash flows.

A financial asset is derecognised only where the contractual rights to cash flows from the asset expire or the financial asset is transferred and that transfer qualifies for derecognition. A financial asset is transferred if the contractual rights to receive the cash flows of the asset have been transferred or the Group retains the contractual rights to receive the cash flows of the asset but assumes a contractual obligation to pay the cash flows to one or more recipients. A financial asset that is transferred qualifies for derecognition if the Group transfers substantially all the risks and rewards of ownership of the asset, or if the Group neither retains nor transfers substantially all the risks and rewards of ownership but does transfer control of that asset.

Trade receivables subject to the invoice discounting facility are recognised in the statement of financial position until they are settled by the customer. The Group is responsible for collection of trade receivables and undertakes the risk and rewards until they are settled by the customer.

xvi.      Financial liabilities

Financial liabilities are obligations to pay cash or other financial assets and are recognised when the Group becomes a party to the contractual provisions of the instrument and comprise trade and other payables and bank loans. Financial liabilities are recorded initially at fair value, net of direct issue costs and are subsequently measured at amortised cost using the effective interest rate method.

A financial liability is derecognised only when the obligation is extinguished, that is, when the obligation is discharged or cancelled or expires.



 

xvii.     Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and on demand deposits.

xviii.    Dividends

Dividend distributions payable to equity shareholders are included in "other short term financial liabilities" when the dividends are approved in general meeting prior to the statement of financial position date.

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 statement of financial position 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 income statement in the period in which they arise.

The assets and liabilities in the financial statements of foreign subsidiaries are translated at the rate of exchange ruling at the statement of financial position date. Income and expenses are translated at the actual rate. The exchange differences arising from the retranslation of the opening net investment in subsidiaries are taken directly to "Translation of foreign operations" in equity. On disposal of a foreign operation the cumulative translation differences are transferred to the income statement as part of the gain or loss on disposal.

As permitted by IFRS 1, the balance on the cumulative translation adjustment on retranslation of subsidiaries' net assets has been set to zero at the date of transition to IFRS.

xx.       Equity

Equity comprises the following:

-        "Share capital" represents the nominal value of equity shares.

-        "Share premium" represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue.

-        "Share-based payment reserve" represents equity-settled share-based employee remuneration until such share options are exercised.

-        "Merger reserve" represents the equity balance arising on the merger of Matchtech Engineering and Matchmaker Personnel.

-        "Translation of foreign operations" represents the foreign currency differences arising on translating foreign operations into the presentational currency of the Group.

-        "Retained earnings" represents retained profits.

xxi.      Significant accounting estimates and judgements

Estimates, assumptions concerning the future and judgments are made in the preparation of the financial statements. They affect the application of the Group's accounting policies, reported amounts of assets, liabilities, income and expenses, and disclosures made. They are assessed on an on-going basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances.


Critical judgements

The judgements made which, in the opinion of the Directors, are critical in drawing up the financial statements are as follows:

Invoice discounting facility

The terms of this arrangement are judged to be such that the risk and rewards of ownership of the trade receivables do not pass to the finance provider. As such the receivables are not derecognised on draw-down of funds against this facility. This facility is recognised as a liability for the amount drawn.

Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the statement of financial position date are discussed below. These are included for completeness, although it is the Directors' view that none of these have significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

Estimated useful lives of property, plant and equipment

The cost of equipment is depreciated on a straight line basis and the cost of motor vehicles is depreciated on a reducing balance basis over their useful lives. Management estimates the useful lives of property, plant and equipment to be within 2 to 8 years. These are common life expectancies applied in the industry in which the Group operates. Changes in the expected level of usage and technological development could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.

Impairment loss of trade and other receivables

The Group's policy for doubtful receivables is based on the on-going evaluation of the collectability and aging analysis of the trade and other receivables and on management's judgements. Considerable judgement is required in assessing the ultimate realisation of these receivables, including the current creditworthiness and the past collection history of each debtor. If the financial conditions of the Group's receivables were to deteriorate, resulting in an impairment of their ability to make payments, additional impairment loss of trade and other receivables may be required. The carrying amounts of these assets are shown in note 15.

Share-based payments

The key assumptions used in estimating the fair values of options granted to employees under IFRS 2 are detailed under Note 20.

Employee benefits

The financial liability in relation to outstanding holiday pay is recognised in the income statement and held as a provision.

 

 

 

 

2.      SEGMENTAL INFORMATION

 

The chief operating decision maker, as defined in IFRS 8, has been identified as the Board of Directors of Matchtech Group plc. The information reported below is consistent with the reports regularly provided to the Board of Directors.

 

Reportable segments

 

Year ended 31 July 2012

 


Matchtech UK






Engineering

Built Environment

Information Systems & Technology

Science & Medical

Matchtech UK Total

Germany

Professional Services

 

 

elemense

Matchtech Group Total


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Revenue

164,845

77,941

81,208

9,089

333,083

3,018

23,309

11,956

371,366

Gross profit

12,129

5,768

7,586

2,129

27,612

879

5,744

1,883

36,118

Profit/(loss) from operations

5,697

2,156

2,535

275

10,663

(410)

(1,361)

(218)

8,674

Finance cost, net

(303)

(142)

(150)

(17)

(612)

(33)

(43)

(21)

(709)

Profit/(loss) before tax

5,394

2,014

2,385

258

10,051

(443)

(1,404)

(239)

7,965











Depreciation and amortisation

129

92

231

52

504

2

137

59

702











Segment net assets

27,572

13,027

13,573

1,519

55,671

505

3,896

1,998

62,070

Unallocated net liabilities









(34,422)

Total net assets









27,648











 

Year ended 31 July 2011

 


Matchtech UK






Engineering

Built Environment

Information Systems & Technology

Science & Medical

Matchtech UK Total

Germany

Professional Services

 

 

elemense

Matchtech Group Total


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Revenue

138,865

65,429

57,191

6,982

268,467

1,740

19,430

12,169

301,806

Gross profit

10,183

5,254

6,037

1,897

23,371

625

4,281

1,481

29,758

Profit/(loss) from operations

5,391

2,271

2,367

168

10,197

(32)

(2,764)

(582)

6,819

Finance cost, net

(166)

(80)

(70)

(11)

(327)

(28)

(45)

(31)

(431)

Profit/(loss) before tax

5,225

2,191

2,297

157

9,870

(60)

(2,809)

(613)

6,388











Depreciation and amortisation

113

87

97

49

346

8

111

51

516











Segment net assets

28,342

11,366

10,559

1,509

51,776

654

1,534

1,769

55,733

Unallocated net liabilities









(30,769)

Total net assets









25,054











 

 

Professional Services includes Barclay Meade Limited and Alderwood Education Limited.

A segmental analysis of total assets has not been included as this information is not available to the Board; trade receivables represent the majority of net assets and are included as segment net assets above. Other net assets are centrally held and are not allocated across the reportable segments. Unallocated net liabilities include non-current assets, other receivables, cash and cash equivalents and current liabilities.

 

Geographical information

 

All amounts in £'000


United Kingdom

Germany

Total




2012

2011

2012

2011

2012

2011




£'000

£'000

£'000

£'000

£'000

£'000

Revenue



368,348

300,066

3,018

1,740

371,366

301,806

Gross profit



35,239

29,133

879

625

36,118

29,758

Profit/(loss)from operations



9,084

6,851

(410)

(32)

8,674

6,819

Finance cost, net



(676)

(403)

(33)

(28)

(709)

(431)

Profit before tax



8,408

6,448

(443)

(60)

7,965

6,388










Depreciation and amortisation



700

508

2

8

702

516










Non-current assets



2,540

1,815

10

9

2,550

1,824

Net current assets / (liabilities)



25,849

23,654

(751)

(424)

25,098

23,230

Total net assets /  (liabilities)



28,389

25,469

(741)

(415)

27,648

25,054










 

Revenue and non-current assets are allocated to the geographic market based on the domicile of the respective subsidiary. Included within UK revenues is cross-border revenues of £4,298,000 (2011: £3,066,000).

 

Largest customers

 

During the year revenues of £45,519,000 (2011: £35,598,000) were generated from sales to the Group's largest client and its business process outsourcer. The majority of this revenue is included in the Engineering segment.

 

No other single client contributed more than 10% of the Group's revenues.

 

Indicative representation of changes to the reporting structure

 

From 1 August 2012 the reporting structure of the Group was changed to two main reporting segments, Engineering and Professional Services. Engineering will consist of Matchtech UK, excluding Information Systems & Technology, and elemense. Professional Services will include Information Systems & Technology. 

 

The following disclosure is an indicative representation of the reported results as if the new structure had been implemented throughout the year 31 July 2012 and does not constitute segmental reporting as defined by IFRS 8.

 

2012






Engineering

Professional Services

Group Total




 

 

 

£'000

£'000

£'000

Revenue






266,849

104,517

371,366

Gross profit






22,788

13,330

36,118

Profit from operations






7,500

1,174

8,674

Finance cost, net






(516)

(193)

(709)

Profit before tax






6,984

981

7,965










Depreciation and amortisation






334

368

702










Non-current assets






44,601

17,469

62,070

Net current assets








(34,422)

Total net assets








27,648










 

 

3.      PROFIT FROM OPERATIONS

 

Profit from operations is stated after charging / (crediting):








2012

2011








£'000

£'000










Depreciation







519

466

Amortisation







183

50

Loss / (profit) on disposal of property, plant and equipment




1

8

Auditors' remuneration

- Fees payable for the audit of the Parent Company financial statements

10

10


- Fees payable for the audit of the Subsidiary company  financial statements


60

40


- Non-audit services:

taxation

18

13



other services pursuant to legislation

4

-

Previous auditors' remuneration

- Fees payable for the audit of the Parent Company financial statements

-

9

Operating lease costs:

- Plant and machinery





178

105


- Land and buildings





802

700

Share-based payment charge






476

288

Net loss  /  (profit) on foreign currency translation





164

(32)

Acquisition costs





35

-

Legal and professional fees relating to the Value Creation Plan



233

-

 

 

4.      PARTICULARS OF EMPLOYEES

 

The average number of staff employed by the Group during the financial year amounted to:

 








2012

2011








No.

No.










Selling







275

248

Administration







77

73

Directors







8

6

Total







360

327










 

The aggregate payroll costs of the above were:

 








2012

2011








£'000

£'000










Wages and salaries






16,439

13,782

Social security costs







1,848

1,598

Pension costs







1,073

899

Total







19,360

16,279










 

Disclosure of the remuneration of key management personnel, as required by IAS 24, is detailed below. Disclosure of the remuneration of the statutory Directors is further detailed in the Directors' Remuneration Report contained in the Annual Report and Accounts 2012.

 








2012

2011








£'000

£'000










Short term employee benefits






1,318

1,056

Post employment benefits







181

115

Share-based payments







13

26

Total







1,512

1,197

 

 

5.      FINANCE COSTS

 








2012

2011








£'000

£'000










Bank interest payable







711

461

 

 

6.      DIVIDENDS

 








2012

2011








£'000

£'000










Equity dividends paid during the year at 15.6 pence per share (2011: 15.6p)



3,652

3,646










Equity dividends proposed after the year-end (not recognised as a liability) at 10.6 pence per share (2011: 10.6p)



2,485

2,479










 

A dividend will be declared from Matchtech Group UK Limited prior to the payment of the proposed dividend above.

 

 

7.      PARENT COMPANY PROFIT

 








2012

2011








£'000

£'000










The amount of profit dealt with in the accounts of the Company:



3,350

4,532










 

The Company has taken advantage of the exemption in S408 of the Companies Act 2006 not to present the Parent Company's income statement.

 

 

 

 

 

 

8.      INCOME TAX EXPENSE

 








2012

2011








£'000

£'000










Current Tax:

UK corporation tax




2,311

1,699


Prior year (over) / under provision




(8)

19








2,303

1,718










Deferred tax (note 13)







(35)

(64)

Income tax expense







2,268

1,654










 

UK corporation tax has been charged at 25.3% (2011: 27.3%).

 

The charge for the year can be reconciled to the profit as per the income statement as follows:

 








2012

2011








£'000

£'000










Profit before tax







7,965

6,388










Profit before tax multiplied by the standard rate of corporation tax in the UK of 25.3% (2011: 27.3%)

2,015

1,744










Expenses not deductible / (not chargeable) for tax purposes




204

(73)

Enhanced R&D tax relief







(42)

(49)

Adjustments to tax charge in respect of previous periods




(8)

19

Overseas losses not provided for






99

13

Total tax charge for period






2,268

1,654










 

Tax credit recognised directly in equity:

 








2012

2011








£'000

£'000










Deferred tax recognised directly in equity




(3)

5

Total tax recognised directly in equity




(3)

5










 

Future Tax Rate Changes

 

The 2012 Budget on 21 March 2012 announced that the UK Corporation tax rate will reduce to 22% by 2014.  A reduction  in the rate from 26% to 25% (effective from 1 April 2012) was substantively enacted by 5 July 2011, and further reductions to 24% (effective from 1 April 2013) and 23% (effective from 1 April 2014) were substantively enacted on 26 March 2012 and 17 July 2012 respectively.

 

This will reduce the Group's future current tax charge and further reduce the deferred tax asset.

 

               

 

 

 

9.      EARNINGS PER SHARE

 

Earnings per share has been calculated by dividing the consolidated profit after taxation attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the period.

 

Diluted earnings per share has been calculated on the same basis as above, except that the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares (arising from the Group's share option schemes) into ordinary shares has been added to the denominator. There are no changes to the profit (numerator) as a result of the dilutive calculation. The number of dilutive shares has increased due to the issue of new share options in the current year.

 

The earnings per share information has been calculated as follows:

 








2012

2011








£'000

£'000










Profit after tax attributable to ordinary shareholders




5,697

4,734










 








2012

2011








'000s

'000s










Weighted average number of ordinary shares in issue




23,408

23,370

Effect of dilutive potential ordinary shares




845

612

Total




24,253

23,982










 








2012

2011








pence

pence










Earnings per ordinary share

- basic





24.34

20.26












- diluted





23.49

19.74










 

 

10.    ACQUISITION

 

The Group completed the purchase of certain business assets of Xchanging Resourcing Services Limited ("XRS"), the contingency recruitment arm of Xchanging plc, on 16 January 2012 for a total cash consideration of £400,000.

 

As part of the deal the Group secured an exclusive two year contract to January 2014 to supply contractors to Xchanging's business in the UK and the novation of existing XRS client contracts.

 

The acquisition had the following effect on the Group's assets and liabilities:

 


£'000

Intangible assets

400

Net identifiable assets and liabilities

400

Consideration paid

400

Goodwill

-

 

Intangible assets have been recognised at fair value.

 

The Group incurred acquisition-related costs of £35,000 related to external legal fees and due diligence costs.  These costs have been recognised in administrative expenses in the Group's consolidated income statement.

 

In the period between the acquisition and the year end the Group benefited from £4,600,000 of revenue from XRS, Gross Profit of £391,000 and profit after amortisation of intangibles of £48,000.  If the acquisition had occurred on 1 August 2011, management estimates that the Group would have benefited from revenue of £8,600,000, gross profit of £720,000 and profit after amortisation of intangibles of £90,000.

 

 

 

 

 

 

11.    INTANGIBLE ASSETS

 

Group

 







Software Licences

Other

Total







£'000

£'000

£'000










COST

At 1 August 2010



335

-

335



Additions




45

-

45



At 1 August 2011



380

-

380



Additions




175

-

175



Acquisitions through business combinations

-

400

400



At 31 July 2012



555

400

955










AMORTISATION

At 1 August 2010



224

-

224



Charge for the year



50

-

50



At 1 August 2011



274

-

274



Charge for the year



67

116

183



At 31 July 2012



341

116

457










NET BOOK VALUE


At 31 July 2011



106

-

106



At 31 July 2012



214

284

498










 

 

12.    PROPERTY, PLANT AND EQUIPMENT

 

Group

 





Motor Vehicles

Office Equipment

Leasehold Improvem-ents

Computer Equipment

Total





£'000

£'000

£'000

£'000

£'000










COST

At 1 August 2010

2,013

1,493

103

776

4,385



Additions


204

58

140

82

484


Disposals


(571)

-

-

-

(571)



At 1 August 2011

1,646

1,551

243

858

4,298



Additions


228

13

406

221

868


Disposals


(183)

-

-

-

(183)


At 31 July 2012

1,691

1,564

649

1,079

4,983










DEPRECIATION

At 1 August 2010

1,191

1,028

1

538

2,758



Charge for the year

221

103

22

120

466


Released on disposal

(456)

-

-

-

(456)



At 1 August 2011

956

1,131

23

658

2,768



Charge for the year

196

113

94

116

519


Released on disposal

(136)

-

-

-

(136)


At 31 July 2012

1,016

1,244

117

774

3,151











At 31 July 2011

690

420

220

200

1,530


At 31 July 2012

675

320

532

305

1,832










 

Included within leasehold improvement additions for the year is £228,000 relating to dilapidations provision (see Note 17).

 

There were no capital commitments as at 31 July 2012 or 31 July 2011.

 

 

 

 

 

13.    DEFERRED TAX

 

Deferred tax is recognised on share-based payments, accelerated capital allowances and other temporary timing differences.  Movements in the deferred tax asset are shown below:

 








Group








2012

2011








£'000

£'000










At 1 August







188

119

Recognised in income







35

64

Recognised in equity







(3)

5

At 31 July







220

188










 

The rate of UK corporation tax applied to deferred tax calculations is 24% (2011: 25%).

 

 

14.    INVESTMENTS

 








Company








2012

2011








£'000

£'000










Investment in Group companies at 1 August as originally stated



983

695

Movement in investment in Group companies

475

288

Investment in Group companies at 31 July





1,458

983










 

Subsidiary Undertakings

 

Company

Country of Incorporation

Share Class

% held

Main Activities






Matchtech Group (Holdings) Ltd

United Kingdom

Ordinary

100%

Non trading

Matchtech Group Management Company Ltd

United Kingdom

Ordinary

38%

Non trading

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

Barclay Meade Ltd

United Kingdom

Ordinary

100%

Provision of recruitment consultancy

Alderwood Education Ltd

United Kingdom

Ordinary

100%

Provision of recruitment consultancy

elemense Ltd

United Kingdom

Ordinary

100%

Provision of recruitment consultancy

Matchtech GmbH

Germany

Ordinary

100%

Provision of recruitment consultancy

Matchtech BV

Netherlands

Ordinary

100%

Non trading

Matchtech Engineering Inc.

USA

Ordinary

100%

Provision of recruitment consultancy






 

All holdings are indirect except Matchtech Group (Holdings) Limited and Matchtech GmbH.

 

During the year a re-organisation of the Group structure took place as part of the implementation of the Value Creation Plan whereby Matchtech Group (Holdings) Limited was included within the Group as a direct subsidiary of the Company.  The share capital of Matchtech Group (Holdings) Limited is divided into A and B ordinary shares.  The A shares represent 90% of the ordinary share capital and each share is entitled to 10 votes per share and are owned by Matchtech Group plc, the B shares represent 10% of the ordinary share capital and each share is entitled to 1 vote per share, the B shares are owned by Matchtech Group Management Company Limited, a company which is owned by Matchtech Group plc and senior management of the Group. The subsidiary companies owned by the Company, except Matchtech GmbH were transferred to Matchtech Group (Holdings) Limited as part of this reorganisation.

 

Matchtech Group Management Company Limited has been consolidated under the Special Purpose Entity rules within International Accounting Standards. Although senior management of the Group hold a number of shares in Matchtech Group Management Company Limited, this entity is considered to be a Special Purpose Entity and as such these shares are considered own shares held.  No separate reserve is show as the amounts held are immaterial.

 

 

 

 

 

 

15.    TRADE AND OTHER RECEIVABLES

 







Group

Company







2012

2011

2012

2011







£'000

£'000

£'000

£'000











Trade receivables






62,070

55,733

-

-

Amounts owed by Group companies





-

-

3,576

3,878

Other receivables






70

57

-

-

Prepayments






609

662

-

-

Total






62,749

56,452

3,576

3,878











 

The amount due from Group undertakings in the Company statement of financial position is considered to approximate to fair value.

 

Days sales outstanding at the year end based upon the preceding three months' revenue were 49.6 days (2011: 52.9 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 to the fair value.

 

Included in the Group's trade receivable balance are debtors with a carrying amount of £7,357,000 (2011: £7,561,000) 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 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 aging issues.

 

The Directors believe that there is no requirement for further provision over and above the allowance for doubtful debts.

 

Aging of past due but not impaired trade receivables:

 







Group








2012

2011








£'000

£'000










0-30 days







6,019

5,977

30-60 days







998

925

60-90 days







287

345

90+ days







53

314

Total







7,357

7,561










 

Movement in the allowance for doubtful debts:

 







Group








2012

2011








£'000

£'000










Balance at the beginning of the year






201

348

Impairment losses recognised/(reversed)





59

(147)

Balance at the end of the year






260

201










 

 

 

 

 

Aging of impaired trade receivables:

 







Group








2012

2011








£'000

£'000










Not past due at reporting date






-

-

0-30 days







-

-

30-60 days







22

15

60-90 days







22

19

90+ days







216

167

Total







260

201










 

 

16.    TRADE AND OTHER PAYABLES

 







Group








2012

2011








£'000

£'000










Trade payables







149

339

Taxation and social security






5,863

5,606

Contractor wages creditor







13,308

9,109

Accruals and deferred income






2,189

1,318

Other payables






316

205

Total







21,825

16,577










 

 

 

17.    PROVISIONS

 







Group








2012

2011








£'000

£'000










Balance at start of year







-

-

Transfer from Other Payables






50

-

Provisions made during the year






228

-

Balance at end of year






278

-

Non-current






278

-

Current







-

-








278

-










 

The above provision relates to a dilapidation provision based on the requirement to return leased buildings to their original condition at the end of the lease term. The provision relates to 5 offices held under lease arrangements that expire between August 2016 and June 2017.

 

 

 

 

18.    FINANCIAL ASSETS AND LIABILITIES STATEMENT OF FINANCIAL POSITION CLASSIFICATION

 

The carrying amount of the Group's financial assets and liabilities as recognised on 31 July of the reporting periods under review may also be categorised as follows:

 

Financial assets are included in the statement of financial position within the following headings:

 






Group

Company






2012

2011

2012

2011






£'000

£'000

£'000

£'000










Trade and other receivables








- Loan and receivables




62,140

55,790

3,476

3,878










Cash and cash equivalents








- Loan and receivables





626

475

147

144

Total





62,766

56,265

3,623

4,022










 

Financial liabilities are included in the statement of financial position within the following headings:

 







Group








2012

2011








£'000

£'000

Current liabilities

















Borrowings








- Financial liabilities recorded at amortised cost





15,100

16,430










Trade and other payables








- Financial liabilities recorded at amortised cost





15,961

10,971

Total







31,061

27,401










 

The amounts at which the assets and liabilities above are recorded are considered to approximate to fair value.

 

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 the Group. The facility held with Barclays Bank allows the Company to borrow up to 90% of its invoiced debtors up to a maximum of £50 million. Interest is charged on borrowings at a rate of 2% over Barclays Bank base rate.

 

 

19.    COMMITMENTS UNDER OPERATING LEASES

 

At 31 July 2012 the Group had commitments to pay the following amounts under non-cancellable operating leases as set out below:

 







Group








2012

2011








£'000

£'000










Land/buildings

Payments falling due:

within 1 year


793

820




within 1 to 5 years


2,818

2,976




after 5 years


117

320










Other

Payments falling due:

within 1 year


150

45




within 1 to 5 years


57

174










 

 

 

20.    SHARE CAPITAL

 

Authorised share capital

 








Company

 









2012

2011

 









£'000

£'000

 











 

40,000,000 Ordinary shares of £0.01 each






400

400












 

 

Allotted, called up and fully paid:

 








Company








2012

2011








£'000

£'000










23,445,000 (2011: 23,387,000) Ordinary shares of £0.01 each




234

234










 

 

 

The number of shares in issue in the Company increased as follows:

 

Date

Ordinary

 shares issued

Share premium received

pence per share

Consideration received 

£





At 1 August 2010

23,339,676



04/08/2010

18,349

145

26,790

04/08/2010

440

-

4

01/09/2010

208

-

2

04/10/2010

2,460

-

25

03/11/2010

2,055

-

21

01/12/2010

1,839

-

18

20/01/2011

1,959

-

20

11/01/2011

991

145

1,447

02/03/2011

4,928

-

49

09/03/2011

2,076

-

21

30/03/2011

1,765

69

1,236

30/03/2011

143

88

127

05/04/2011

3,045

30

05/05/2011

1,843

-

18

01/06/2011

3,077

-

31

01/07/2011

2,203

-

22

At 31 July 2011

23,387,057


29,861





10/08/2011

1,952

-

20

04/09/2011

3,103

-

31

03/10/2011

2,903

-

29

03/11/2011

2,021

-

20

05/12/2011

2,009

-

20

10/01/2012

2,110

-

21

03/02/2012

2,090

-

21

08/03/2012

3,817

-

38

16/04/2012

9,509

-

95

10/05/2012

2,281

145

3,330

10/05/2012

1,156

-

12

10/05/2012

1,563

-

16

17/05/2012

14,287

-

143

13/06/2012

6,244

-

62

10/07/2012

625

-

6

10/07/2012

139

145

203

10/07/2012

1,619

-

16

19/07/2012

250

-

3

At 31 July 2012

23,444,735


4,086

 

 

 

 

 

Share Options

 

The following options arrangements exist over the Company's shares:

 




2012

2011

Date of grant

Exercise price

Exercise period




'000s

'000s


pence

From

To










Key Share Options

24

24

18/06/2004

70

18/06/2005

18/06/2014

Key Share Options

86

87

01/12/2005

146

01/06/2007

01/12/2015

Target/Loyalty Share Options

2

2

05/03/2003

70

14/07/2005

05/03/2013

Target/Loyalty Share Options

2

2

18/06/2004

70

18/06/2005

18/06/2014

Target/Loyalty Share Options

1

1

08/11/2004

89

14/07/2006

08/11/2014

Target/Loyalty Share Options

18

18

01/12/2005

146

01/12/2006

01/12/2015

Deferred Share Bonus

24

35

18/01/2010

1

18/01/2012

18/01/2020

Deferred Share Bonus

33

35

18/01/2010

1

18/01/2013

18/01/2020

Zero Priced Share Option Bonus

16

30

18/01/2010

1

18/01/2012

18/01/2020

Zero Priced Share Option Bonus

24

30

18/01/2010

1

18/01/2013

18/01/2020

Long Term Incentive Plan Options

-

81

04/02/2011

1

03/02/2014

02/02/2021

Zero Priced Share Option Bonus

61

173

04/02/2011

1

25/01/2013

02/02/2021

Zero Priced Share Option Bonus

229

173

04/02/2011

1

03/02/2014

02/02/2021

Long Term Incentive Plan Options

71

-

31/01/2012

1

30/01/2015

31/01/2022

Zero Priced Share Option Bonus

43

-

31/01/2012

1

30/01/2014

31/01/2022

Zero Priced Share Option Bonus

297

-

31/01/2012

1

30/01/2015

31/01/2022

Total

931

691














 

During the year the Group operated a Long Term Incentive Plan (LTIP) and a Deferred Share Bonus Plan for Executive Directors and a Zero Priced Share Option Bonus for key staff.  The LTIP options were granted on 31 January 2012 and are subject to an EPS performance target with a TSR (Total Shareholder Return) underpin.  The deferred share bonus option entitlements were granted on 31 January 2012, however, all the entitlements lapsed in the year due to performance falling below the minimum threshold.  The Zero Priced Share Options were granted on 31 January to members of staff subject to two and three year holding periods.

 

All share options have a life of 10 years and are equity settled on exercise.

 

The movement in share options is shown below:

 




2012

2011




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 1 August

691

26.0

-

445

46.4

-










Granted

545

1.0

-

550

1.0

-

Forfeited / lapsed

(287)

1.0

-

(283)

1.0

-

Exercised

(18)

11.4

219.0

(21)

139.3

216.0










Outstanding at 31 July

931

19.3


691

26.0











Exercisable at 31 July

173

91.1


134

129.8











 

The number of share options granted includes the deferred share bonus options.

 

 

 

The numbers and weighted average exercise prices of share options vesting in the future are shown below.

 




2012

2011

Exercise date



Weighted average remaining contract life

Number

Weighted average exercise price

Weighted average remaining contract life

Number

Weighted average exercise price




(months)

'000s

(pence)

(months)

'000s

(pence)










18/01/2013

6

57

1.0

18

65

1.0

25/01/2013

6

61

1.0

18

173

1.0

30/01/2014

18

43

1.0

-

-

-

03/02/2014

19

229

1.0

31

254

1.0

31/01/2015

30

368

1.0

-

-

-

Total


758



492


 

In addition to the share option schemes the Group operated a Share Incentive Plan (SIP), which 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 share options and the SIPS are included in the table below. The values of the LTIPS granted in the year were calculated using a Monte Carlo simulation method along with the assumptions as detailed below. The values of the zero price options granted in the year were calculated using a Black Scholes method along with the assumptions as detailed below. The fair values of the SIPS and Deferred Bonus Shares were based upon market values on the date of the grant adjusted for the assumptions as detailed below.

 

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)

(%)

(%)

(£)










10/08/2011

SIP

2.20

0.01

N/A

3.00

N/A

N/A

2.20

04/09/2011

SIP

2.18

0.01

N/A

3.00

N/A

N/A

2.18

03/10/2011

SIP

2.20

0.01

N/A

3.00

N/A

N/A

2.20

03/11/2011

SIP

2.18

0.01

N/A

3.00

N/A

N/A

2.18

05/12/2011

SIP

2.18

0.01

N/A

3.00

N/A

N/A

2.18

10/01/2012

SIP

2.13

0.01

N/A

3.00

N/A

N/A

2.13

31/01/2012

LTIP

2.12

0.01

20.4%

3.00

7.4%

0.47%

1.34

31/01/2012

Deferred bonus

2.12

0.01

N/A

2.00

7.4%

N/A

1.76

31/01/2012

Deferred bonus

2.12

0.01

N/A

3.00

7.4%

N/A

1.76

31/01/2012

Zero price share option bonus

2.12

0.01

20.4%

2.00

7.4%

N/A

1.84

31/01/2012

Zero price share option bonus

2.12

0.01

20.4%

3.00

7.4%

N/A

1.70

03/02/2012

SIP

2.15

0.01

N/A

3.00

N/A

N/A

2.15

08/03/2012

SIP

2.04

0.01

N/A

3.00

N/A

N/A

2.04

16/04/2012

SIP

2.00

0.01

N/A

3.00

N/A

N/A

2.00

10/05/2012

SIP

2.13

0.01

N/A

3.00

N/A

N/A

2.13

13/06/2012

SIP

2.06

0.01

N/A

3.00

N/A

N/A

2.06

10/07/2012

SIP

2.13

0.01

N/A

3.00

N/A

N/A

2.13

 

The volatility of the Company's share price on each date of grant was calculated as the average of annualised standard deviations of daily continuously compounded returns on the Company's stock, calculated over 5 years back from the date of grant, where applicable.  The risk-free rate is the yield to maturity on the date of grant of a UK Gilt Strip, with term to maturity equal to the life of the option.  LTIP awards are subject to a TSR test. This "market" based condition is taken into account in the date of grant fair value calculation.

 

During the year a Value Creation Plan (VCP) was implemented with participants receiving an entitlement to nil cost options dependent on the Company's share price at annual measurement dates.  The VCP has a 5 year performance period with the first measurement date of 18 November 2012.  The nil cost options will be exercisable, 50% in November 2016 and 50% in November 2017. The IFRS 2 charge was calculated using the Black-Scholes methodology using a risk free rate of return of 1.27% and share price volatility of 18.74%.

 

21.    TRANSACTIONS WITH DIRECTORS AND RELATED PARTIES

 

During the year the Group made sales of £4,000 (2011: £20,000) to Ctruk Group Limited and £88,000 (2011: £14,000) to Cwind Limited, both related parties by virtue of the common directorship of Andy White. As at the year end Ctruk Group Limited had a balance outstanding of £2,000 (2011: £nil) and CWind Limited had a balance outstanding of £32,000 (2011: £nil). All transactions were undertaken at an arms length price.

 

There were no other related party transactions with entities outside of the Group.

 

During the year Matchtech Group UK Ltd charged Matchtech Group plc £394,000 (2011: £284,000) for provision of management services.

 

Further details of transactions with directors are included in the Directors' Remuneration Report in the annual report.

 

 

22.    FINANCIAL INSTRUMENTS

 

The financial risk management policies and objectives including those related to financial instruments and the qualitative risk exposure details, comprising credit and other applicable risks, are included within the Chief Financial Officer's report under the heading Group financial risk management.

 

Maturity of financial liabilities

 

The Group financial liabilities analysis at 31 July 2012 was as follows:

 







Group








2012

2011








£'000

£'000










In less than one year or on demand:







Bank overdrafts





169

172

Working capital facility





15,073

16,258

Finance costs capitalised





(142)

-

Bank loans and overdrafts





15,100

16,430

Trade and other payables





15,961

10,971

Total





31,061

27,401










 

Borrowing facilities

 

The Group makes use of a working capital facility, details of which can be found in note 18. The undrawn facility available at 31 July 2012, in respect of which all conditions precedent had been met, was as follows:

 







Group








2012

2011








£'000

£'000










Expiring in one year or less





-

18,742

Expiring in one to five years





34,927

-










 

The working capital facility was reviewed by the facility providers in June 2012.  The facility cap was increased from £35m to £50m and covenants were updated to reflect revised forecasts.  The facility is committed until June 2015.

 

The Directors have calculated that the effect on profit of a 1% movement in interest rates would be £258,000.

 

The Directors believe that the carrying value of borrowings approximates to their fair value.

 

 

 

 

 

Net foreign currency monetary assets

 







Group








2012

2011








£'000

£'000










Euros





923

939










 

In the Directors' opinion, the exposure to foreign currency risk is not material to the Group due to the size of the operations and therefore a sensitivity analysis in this area has not been included.

 

 

23.    CAPITAL MANAGEMENT POLICIES AND PROCEDURES

 

Matchtech Group plc's capital management objectives are:

 

-       to ensure the Group's ability to continue as a going concern; and to provide an adequate return to shareholders.

-       by pricing products and services commensurately with the level of risk.

 

The Group monitors capital on the basis of the carrying amount of equity as presented on the face of the statement of financial position.

 

The Group sets the amount of capital in proportion to its overall financing structure, i.e. equity and financial liabilities. The Group manages the capital structure and makes adjustments in the light of changes in economic conditions and risk characteristics of the underlying assets. Capital for the reporting period under review is summarised as follows:

 







Group








2012

2011








£'000

£'000










Total equity





27,648

25,054

Cash and cash equivalents





(626)

(475)

Capital





27,022

24,579










Total equity





27,648

25,054

Borrowings





15,100

16,430

Overall financing





42,748

41,484










Capital to overall financing ratio





63%

59%










 

 

24.  SUBSEQUENT EVENTS

 

On 5 September 2012, Keith Lewis was appointed as a Director of Matchtech Group plc.

 

 

 

 

 

The financial information set out above does not constitute the company's statutory accounts for the years ended 31 July 2012 or 2011 but is derived from those accounts.  Statutory accounts for 2011 have been delivered to the registrar of companies, and those for 2012 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

 

The financial information presented on this web site does not comprise the statutory accounts of Matchtech Group plc for the financial years ended 31 July 2012 and 31 July 2011 but represents extracts from them. These extracts do not provide as full an understanding of the financial performance and position, or financial and investing activities, of the company as the complete Annual Report.

 

The statutory accounts for those years have been reported on by the company's auditor and delivered to the registrar of companies. The reports of the auditor were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. The Annual Report, including the auditor's report, can be obtained free of charge on request to the company at Matchtech Group plc, 1450 Parkway, Solent Business Park, Whiteley, Fareham, Hampshire, PO15 7AF, or, alternatively, can be downloaded at www.matchtechgroupplc.com.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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