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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Made Tech Group Plc | LSE:MTEC | London | Ordinary Share | GB00BLGYDT21 | ORD GBP0.0005 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -0.725 | -5.53% | 12.375 | 12.00 | 12.75 | 13.00 | 12.25 | 13.00 | 643,982 | 09:51:20 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Cmp Facilities Mgmt Service | 40.25M | -1.6M | -0.0107 | -11.56 | 18.47M |
From Apr 2019 to Apr 2024
TIDMMTEC
RNS Number : 1375V
Matchtech Group PLC
14 April 2016
14 April 2016
Matchtech Group plc
Interim Results for the six month ended 31 January 2016
Matchtech Group plc ("Matchtech" or the "Group"), the specialist Engineering and Technology (IT & Telecoms) recruitment agency, today announces its Interim Results for the six months ended 31 January 2016.
Financial Highlights
Hot Features
Premium
2016 H1 2015 H1 Change
---------------------------- -------------------------- -------------------------- --------------------------
Statutory Underlying(2) Statutory Underlying(2) Statutory Underlying(2)
---------------------------- ---------- -------------- ---------- -------------- ---------- --------------
GBPm GBPm GBPm GBPm % %
---------------------------- ---------- -------------- ---------- -------------- ---------- --------------
Revenue 297.9 297.2 220.2 298.0 +35% 0%
---------------------------- ---------- -------------- ---------- -------------- ---------- --------------
Net Fee Income (NFI)
(1) 36.5 35.9 22.5 36.2 +62% -1%
---------------------------- ---------- -------------- ---------- -------------- ---------- --------------
Contract NFI 26.6 26.5 16.3 27.1 +63% -2%
---------------------------- ---------- -------------- ---------- -------------- ---------- --------------
Permanent recruitment
fees 9.9 9.4 6.2 9.1 +60% +3%
---------------------------- ---------- -------------- ---------- -------------- ---------- --------------
Earnings before interest
& tax (EBIT) 7.0 10.1 5.3 9.9 +32% +2%
---------------------------- ---------- -------------- ---------- -------------- ---------- --------------
Profit before tax
(PBT) 6.9 9.4 5.1 9.1 +35% +3%
---------------------------- ---------- -------------- ---------- -------------- ---------- --------------
% Contract NFI / Permanent
fees 73 / 27 72 / 28
---------------------------- ---------- -------------- ---------- -------------- ---------- --------------
Basic earnings per
share 15.4p 21.9p 15.1p 20.6p +2% +6%
---------------------------- ---------- -------------- ---------- -------------- ---------- --------------
Diluted earnings per
share 14.8p 20.9p 14.1p 19.6p +5% +7%
---------------------------- ---------- -------------- ---------- -------------- ---------- --------------
Interim dividend 6.00p 5.68p +6%
---------------------------- ---------- -------------- ---------- -------------- ---------- --------------
Operating cash conversion 175% 132%
---------------------------- ---------- -------------- ---------- -------------- ---------- --------------
Net debt (31 Jan 16 GBP24.8m GBP33.6m
v 31 Jul 15)
---------------------------- ---------- -------------- ---------- -------------- ---------- --------------
The following footnotes apply, where indicated, throughout these interim results:
(1) NFI is calculated as revenue less contractor payroll costs
(2) Underlying performance is calculated on a pro-forma basis as though Networkers had been owned by the Group for the entire prior period. Underlying results exclude the trading and net proceeds of divested businesses (2016: GBP0.3m loss; 2015: GBP0.4m loss), acquisitions costs (2016: GBPnil; 2015: GBP0.7m), amortisation of acquired intangibles (2016: GBP1.8m; 2015: GBP0.3m) and integration and restructuring costs (2016: GBP0.9m; 2015: GBP0.2m), exchange gains from balance sheet conversion (2016: GBP0.6m; 2015: GBP0.4m) and include implied interest from acquisition funding (2016: GBPnil; 2015: GBP0.5m).The weighted average number of shares in issue for 2015 includes the 5.4 million shares issued on the acquisition of Networkers.
Operational Highlights
* Trading performance in line with management
expectations
* Engineering and Telecoms markets remain positive
offset by some weakness in Technology
* Integration of Networkers on track, due to be largely
completed by 31 July 2016
* On course to achieve synergy targets fully in the
year to 31 July 2017
* Investments in connectivity and business development
implemented
* Managing Directors appointed to run Asia and the
Americas
* New IT market segmentation implemented post period
end with clear niche specialist focus
Commenting on the results, Brian Wilkinson, Chief Executive of the Group said:
"The Group today announces another solid set of results, reflecting the continuing strategic and operational progress we are making.
"The acquisition of the Networkers business in April 2015 has enabled the Group to deliver a 62% increase in NFI for the period. Cost synergies are being realised as planned, with more to come in the second half-year.
"Performance in the first half of FY 2016 is in line with management's expectations, with NFI growth in Engineering of 7% and Telecoms of 11% compared to the second half of last year. IT declined 20% against 2015 H1, improving to a 9% decline against 2015 H2, and management actions are in hand to deliver an improved performance, with a new IT market segmentation implemented post period end giving clear niche specialist focus in attractive markets where we have high levels of capability.
"Demand for skilled engineers remains strong in the UK. Having identified a number of opportunities to roll out our Engineering recruitment services internationally, we have taken the first practical steps to realise sales synergies through our new overseas network, with some encouraging initial results. Investment in headcount is continuing in these areas as we aim to build market share and I remain confident that we will convert these exciting opportunities into significant growth over the next few years."
For further information please contact:
Matchtech Group plc +44 (0) 1489 898989
------------------------------------- ---------------------
Brian Wilkinson, Chief Executive
Officer
Tony Dyer, Chief Financial Officer
------------------------------------- ---------------------
Citigate Dewe Rogerson +44 (0) 20 7638 9571
------------------------------------- ---------------------
Rob Newman / Nick Hayns
------------------------------------- ---------------------
Numis Securities Limited +44 (0) 20 7260 1000
------------------------------------- ---------------------
Michael Meade / Tom Ballard
------------------------------------- ---------------------
Operational Performance
NFI performance for the Group in H1 2016 was up 62% to GBP36.5m (H1 2015: GBP22.5m).
Underlying Group NFI 2016 H1 2016 H1
v 2015 v 2015
2016 H1 2015 H1 H1 H2(1)
GBPm GBPm % %
Contract NFI 26.5 27.0 -2% +2%
Permanent Fees 9.4 9.2 +2% +12%
Total NFI 35.9 36.2 -1% +4%
(1) Calculated on an average weekly run-rate basis
We saw a strong permanent fee performance across Engineering and Technology with fees up 12% on the second half of last year.
Engineering (60% of Group NFI)
Underlying Engineering 2016 H1 2016 H1
NFI v 2015 v 2015
2016 H1 2015 H1 H1 H2(1)
GBPm GBPm % %
Contract NFI 15.3 14.6 +5% +5%
Permanent Fees 6.4 5.7 +12% +13%
Total NFI 21.7 20.3 +7% +7%
(1) Calculated on an average weekly run-rate basis
Engineering's NFI was up 7% to GBP21.7m, (up 7% v H2 2015(1) ).
There was a strong performance from Infrastructure with NFI up 19% against the same period last year. There is continuing high demand in the rail sector mainly in project delivery, in property largely with private sector structure/services work and in water with design/project delivery phases. With many major projects in the pipeline, such as the Thames Tideway Project, HS2, Crossrail (phase 2) and the Wessex to Waterloo line improvements, we have long term visibility in this sector.
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April 14, 2016 02:00 ET (06:00 GMT)
In Energy, whilst the low oil price means activity remains muted globally, our diversification in recent years has ensured that two thirds of our energy business now lies outside of the oil & gas market. There are an increasing number of requirements for candidates throughout Europe in the renewable energy, transmission and nuclear markets. In renewable energy our main focus is within offshore and onshore wind programmes where there are number of upcoming opportunities in Northern Europe. Within the transmission area there are extensive upgrades being carried out to the electrical grid infrastructure throughout Europe, whilst in the nuclear sector there are a number of new reactors being planned in the UK alone.
Investment in the UK Automotive manufacturing industry continues, which is flowing down through the supply chain, where the need to design new automotive technologies, particularly hybrid and alternative fuel transmissions, is increasing. We are also seeing signs of UK automotive companies looking to re-shore certain operations and further expand.
The Aerospace sector is focussed on increasing manufacturing production rates, as no major new aircraft models are in the pipeline. The large aftermarket retrofit and interior suppliers are struggling to keep up with design and production demand, hence increasing our opportunities with SME's.
In Maritime much of the positive growth is coming from our international team, particularly in Canada where the NSPS C$33 billion (cGBP18 billion) naval ship building programme will span the next 30 years and Matchtech is well-positioned as a key supplier of global talent to the two prime shipyards. Elsewhere, super-yacht build and cruise liner refit/repair projects in Europe are creating opportunities in design, build and project management.
Across these sectors there are many opportunities to expand our Engineering Technology division where the convergence of Engineering, IT and Telecom skills sets continues with the "Internet of Things" playing a significant part in driving this evolution. For example, within the automotive sector, the UK government recently announced that it will establish the UK as a global centre of excellence in connected and autonomous vehicles.
There is also high demand from our engineering and technology customer base for procurement professionals, finance, HR and sales candidates sourced through our Barclay Meade operation. The well documented skills shortages within Engineering and Technology has resulted in increased investment in Training by clients. The scope of these clients will widen further with the introduction of the apprenticeship levy. These factors create great opportunities, within the UK and overseas, for our Alderwood business as it further aligns itself to the core specialist sectors of Matchtech and Networkers.
The acquisition of Networkers in April last year gave us the platform to accelerate the expansion of our engineering brand overseas. As we build on our existing international capabilities, we see vast opportunities globally, with our initial focus on renewable energy, infrastructure and maritime in Europe, the Middle East and the Americas.
Technology (40% of Group NFI)
Underlying Technology 2016 H1 2015 H1 2016 H1 2016 H1
NFI v 2015 v 2015
H1 H2
GBPm GBPm % %
Contract NFI 11.2 12.4 -10% -2%
Permanent Fees 3.0 3.5 -14% +8%
Total NFI 14.2 15.9 -11% 0%
(1) Calculated on an average weekly run-rate basis
Technology's NFI was down 11% to GBP14.2m (H1 2015: GBP15.9m), and level with H2 2015(1) . Within Technology, Telecoms was in line with H1 2015 and up 11% vs. H2 2015, whilst IT was down 20% vs. H1 2015 and down 9% vs. H2 2015.
As previously reported, we are focussed on significantly improving performance in our IT division. Although overall demand for IT staff in both permanent and contract remains high, the shortage of candidates in specific areas means that we need to be increasingly specialist in our approach.
We are focussing on six core markets, five of which are across specific technology skillsets, with the objective of becoming the leading specialist recruiter in each of these markets. These are: digital/mobile development, cloud, cyber security, leadership and ERP. At the same time we will build on our success in the Public Sector, expanding our teams in the NHS, through our presence on the non-medical, non-clinical framework as well as developing our central and local government business.
The telecoms market is currently quite buoyant as it increasingly converges with the IT sector. In addition, we are seeing growth in Asia from the continued expansion of 4G. We have also seen a resurgence of fixed line business in North America and Europe where there is renewed investment in cable laying, enabling higher quality and faster streaming as well as quicker connections between locations. As 5G is eventually rolled out we are well placed to support our clients as the technology is deployed to help realise the vision of smart cities, driverless cars and the "Internet of Things".
Integration of Networkers
The integration continues to go well. We have now identified nearly GBP2.3m in annualised synergies since the acquisition which will be fully realised in FY 2017. We expect to identify additional cost synergies as we continue the integration process and we combine the remaining back office functions by the end of this financial year.
People
Total headcount at 31 January 2016 was 714 at similar levels to 31 July 2015 of 712. We continue to invest in appropriate areas and Engineering sales headcount increased by 11%, netted off by reductions from the divested business, group support and management. Of total staff 76% are UK based, 8% in the Americas, 6% in Asia and 10% in the Middle East & Africa, and during the period we appointed Regional Managing Directors to run our Asia and Americas operations.
Financial Overview
Underlying performance is calculated on a pro-forma basis as though Networkers had been owned by the Group for the entire prior period. Underlying results exclude the trading and net proceeds of divested businesses (2016: GBP0.3m loss; 2015: GBP0.4m loss), acquisitions costs (2016: GBPnil; 2015: GBP0.7m), amortisation of acquired intangibles (2016: GBP1.8m; 2015: GBP0.3m) and integration and restructuring costs (2016: GBP0.9m; 2015: GBP0.2m), exchange gains from balance sheet conversion (2016: GBP0.6m; 2015: GBP0.4m) and include implied interest from acquisition funding (2016: GBPnil; 2015: GBP0.5m). The weighted average number of shares in issue for 2015 includes the 5.4 million shares issued on the acquisition of Networkers.
Revenue for the period was up 35% to GBP297.9m (2015 H1: GBP220.2m).
NFI was up 62% to GBP36.5m (2015 H1: GBP22.5m). Contract NFI was up 63% to GBP26.6m (2015 H1: GBP16.3m). Contract margins increased to 9.2% (2015 H1: 7.6%). Permanent recruitment fees were up 60% to GBP9.9m (2015 H1: GBP6.2m).
Profit from operations was GBP7.0m (2015 H1: GBP5.3m).
Underlying profit from operations was GBP10.1m (2015 H1: GBP9.9m).
NFI conversion was 20% (2015 H1: 24%), with underlying NFI conversion 28% (2015 H1:27%).
Interest costs remain relatively low at GBP0.1m (2015 H1: GBP0.2m). H1 2015 included a profit on the revaluation of foreign assets of GBP0.6m.
Profit before tax was up 35% to GBP6.9m (2015 H1: GBP5.1m) with underlying profit before tax up 3% to GBP9.4m (2015 H1: GBP9.1m).
The effective rate of tax for the period was 31.5% (2015 H1: 25.6%); the increase is mainly due to irrecoverable withholding tax in the acquired Networkers business and differentials in UK and overseas tax rates, partly offset by the reduction of the UK standard rate of corporation tax to 20.0% (2015: 20.7%).
Basic earnings per share were up 2% to 15.4p (2015 H1: 15.1p) with underlying basic earnings per share up 6% to 21.9p (2015 H1: 20.6p).
Diluted earnings per share were up 5% to 14.8p (2015 H1: 14.1p) with underlying diluted earnings per share up 7% to 20.9p (2015 H1: 19.6p).
Debtors, Cashflow and Net Debt
Debtor days at the end of the period were 48 (31 January 2015 - excluding Networkers: 46; 31 July 2015: 50), with no material unimpaired debtors over 90 days overdue (31 January 2014: GBPnil; 31 July 2014: GBPnil).
Capital expenditure for the period was GBP0.2m (2015 H1: GBP0.4m).
As at 31 January 2016 the Group had a committed Confidential Invoice Discounting ("CID") facility with HSBC Bank until July 2018. The facility allows the Group to borrow up to 90% of its qualifying UK invoiced debtors capped at GBP80.0m, with a single debtor cap of 20% of total debtor book. Interest is charged on borrowings at HSBC Bank Base Rate plus 1.1%.
Additionally, as part of the Group's financing of the acquisition of Networkers, the Group has a GBP15m balance on a term loan facility with HSBC until April 2018.
Cash inflows from operations of GBP16.0m (2015 H1: GBP7.0m) represented cash conversion of 175% (2015 H1: 132%). After dividend payments of GBP5.0m, the Group reduced net debt in the period by GBP8.8m to GBP24.8m (31 July 2015: GBP33.6m).
Dividend
The Board has today declared a 6% increase in the interim dividend to 6.00 pence per share (2015: 5.68 pence) to be paid on 17 June 2016 to shareholders on the register at 27 May 2016.
Risks
The Board considers strategic, financial and operational risks and identifies actions to mitigate those risks. Key risks and their mitigation were disclosed on pages 18 and 19 of the Annual Report for the year ended 31 July 2015.
Notwithstanding that no new key risks have been identified in the period, we continue to manage a number of potential risks and uncertainties - many of which are common to other similar businesses - which could have a material impact on our longer term performance.
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April 14, 2016 02:00 ET (06:00 GMT)
In particular the Board is focussed on the integration of Networkers International and the additional risks associated with the acquisition, given its size and international operations which it brings to a historically UK based business.
Outlook
Demand for skilled engineers remains strong in the UK. The acquisition of Networkers has created an even stronger specialist Group focussed on Engineering and Technology recruitment. It has added long-standing, substantial and profitable overseas operations to the Group which enables us to accelerate the introduction of our Engineering services to our international customers, in-line with our strategy. Investment in headcount is continuing in these areas as we aim to build market share and turn these into substantial overseas operations. Our integration plans are on track and due to be largely completed by 31 July 2016.
We continue to see growth in both Engineering and Telecoms. We are working on delivering an improved performance in our IT division, with new IT market segmentation implemented post period end with clear niche specialist focus.
Whilst the Board is mindful of the increased caution in economic forecasts in recent months, based on opportunities won, trading in the two months since the half year and continued close cost management the Board anticipates the Group's operational results for the year to 31 July 2016 will be in line with management's expectations.
Brian Wilkinson
Chief Executive Officer
14 April 2016
Cautionary Statement
This announcement has been prepared for the shareholders of the Company, as a whole and its sole purpose and use is to assist shareholders to exercise their governance rights. The Company and its directors and employees are not responsible for any other purpose or use or to any other person in relation to this announcement and their responsibility to shareholders shall be limited to that which is imposed by statute.
This announcement contains indications of likely future developments and other forward-looking statements that are subject to risk factors associated with, among other things, the economic and business circumstances occurring from time to time in the countries, sectors and business segments in which the Group operates. These and other factors could adversely affect the Group's results, strategy and prospects. Forward-looking statements involve risks, uncertainties and assumptions. They relate to events and/or depend on circumstances in the future which could cause actual results and outcomes to differ from those currently expected. No obligation is assumed to update any forward-looking statements, whether as a result of new information, future events or otherwise.
CONDENSED CONSOLIDATED INCOME STATEMENT
for the period ended 31 January 2016
Note 6 months 6 months 12 months
to 31/01/16 to 31/01/15 to 31/07/15
unaudited unaudited audited
GBP'000 GBP'000 GBP'000
Revenue 2 297,907 220,202 502,293
Cost of Sales (261,450) (197,748) (447,474)
-------------------------------------------- ----- ------------- ------------- -------------
GROSS PROFIT 2 36,457 22,454 54,819
Administrative expenses (29,504) (17,165) (42,459)
-------------------------------------------- ----- ------------- ------------- -------------
PROFIT FROM OPERATIONS 6,953 5,289 12,360
Profit from operations before amortisation
of acquired intangibles and non-recurring
items 2 9,669 6,496 16,750
Amortisation of acquired intangibles 2 (1,828) (277) (1,680)
Non-recurring items included within
administrative expenses 2 (888) (930) (2,710)
-------------------------------------------- ----- ------------- ------------- -------------
Profit on disposal of subsidiary 58 - -
Finance income 571 393 12
Finance costs (649) (632) (1,086)
-------------------------------------------- ----- ------------- ------------- -------------
PROFIT BEFORE TAX 6,933 5,050 11,286
Taxation 3 (2,182) (1,292) (2,959)
-------------------------------------------- ----- ------------- ------------- -------------
PROFIT FOR THE PERIOD 4,751 3,758 8,327
-------------------------------------------- ----- ------------- ------------- -------------
Attributable to:
Equity holders of the parent 4,751 3,758 8,311
Non-controlling interests - - 16
-------------------------------------------- ----- ------------- ------------- -------------
4,751 3,758 8,327
-------------------------------------------- ----- ------------- ------------- -------------
All of the activities of the Group are classed as continuing.
EARNINGS PER ORDINARY SHARE
pence pence pence
Basic 5 15.4 15.1 31.0
Diluted 5 14.8 14.1 29.6
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the period ended 31 January 2016 6 months 6 months 12 months
to 31/01/16 to 31/01/15 to 31/07/15
unaudited unaudited audited
GBP'000 GBP'000 GBP'000
PROFIT FOR THE PERIOD 4,751 3,758 8,327
OTHER COMPREHENSIVE INCOME
Exchange differences on translating foreign
operations (44) 65 (109)
--------------------------------------------- ------------- ------------- -------------
OTHER COMPREHENSIVE INCOME FOR THE PERIOD (44) 65 (109)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD
ATTRIBUTABLE TO EQUITY HOLDERS OF THE
PARENT 4,707 3,823 8,218
--------------------------------------------- ------------- ------------- -------------
Attributable to:
EQUITY HOLDERS OF THE PARENT 4,707 3,823 8,202
NON-CONTROLLING INTERESTS - - 16
--------------------------------------------- ------------- ------------- -------------
4,707 3,823 8,218
--------------------------------------------- ------------- ------------- -------------
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 January 2016
Note 31/01/2016 31/01/2015 31/07/2015
unaudited unaudited audited
ASSETS GBP'000 GBP'000 GBP'000
Non-Current Assets
Intangible assets 6 50,183 3,379 52,230
Property, plant and equipment 1,290 1,395 1,535
Deferred tax assets 1,253 339 1,237
--------------------------------------- ----- ------------ ----------- -----------
52,726 5,113 55,002
Current Assets
Trade and other receivables 7 89,804 64,594 98,897
Cash and cash equivalents 9,071 781 3,997
--------------------------------------- ----- ------------ ----------- -----------
98,875 65,375 102,894
TOTAL ASSETS 151,601 70,488 157,896
--------------------------------------- ----- ------------ ----------- -----------
LIABILITIES
Non-Current Liabilities
Deferred tax liability (4,626) - (4,967)
Provisions (278) (278) (278)
Bank loans and overdrafts (13,608) - (28,608)
--------------------------------------- ----- ------------ ----------- -----------
(18,512) (278) (33,853)
Current Liabilities
Trade and other payables (34,106) (22,555) (37,562)
Current tax liability (1,845) (1,437) (911)
Bank loans and overdrafts (20,226) (2,648) (9,033)
--------------------------------------- ----- ------------ ----------- -----------
(56,177) (26,640) (47,506)
TOTAL LIABILITIES (74,689) (26,918) (81,359)
NET ASSETS 76,912 43,570 76,537
--------------------------------------- ----- ------------ ----------- -----------
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS
OF THE PARENT
Called-up equity share capital 8 309 250 309
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April 14, 2016 02:00 ET (06:00 GMT)
Share premium account 8,696 7,388 8,694 Merger reserve 28,750 224 28,750 Share based payment reserve 2,822 2,270 2,140 Translation of foreign operations (64) 154 (20) Retained earnings 36,399 33,284 36,648 TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF PARENT 76,912 43,570 76,521 --------------------------------------- ----- ------------ ----------- ----------- Non-controlling interests - - 16 --------------------------------------- ----- ------------ ----------- ----------- TOTAL EQUITY 76,912 43,570 76,537 --------------------------------------- ----- ------------ ----------- -----------
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
for the period ended 31 January 2016
6 months 6 months 12 months
to 31/01/16 to 31/01/15 to 31/07/15
unaudited unaudited audited
GBP'000 GBP'000 GBP'000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit after taxation 4,751 3,758 8,327
Adjustments for:
Depreciation and amortisation 2,389 646 2,696
Profit on disposal of subsidiary (58) - -
Profit on disposal of property, plant
and equipment (6) - (13)
Interest income (2) - -
Interest expense 80 239 1,074
Taxation expense recognised in profit
and loss 2,182 1,292 2,959
Decrease in trade and other receivables 9,093 7,654 12,524
Decrease in trade and other payables (3,294) (7,481) (11,157)
Share based payment charge 894 858 1,623
-------------------------------------------------- ------------- ------------- -------------
Cash generated from operations 16,029 6,966 18,033
Interest paid (644) (243) (848)
Income taxes paid (1,658) (1,446) (3,965)
-------------------------------------------------- ------------- ------------- -------------
NET CASH FROM OPERATING ACTIVITES 13,727 5,277 13,220
-------------------------------------------------- ------------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of plant and equipment (186) (386) (524)
Purchase of intangibles (53) (14) (387)
Acquisitions net of cash received (390) - (37,587)
Proceeds from sale of plant and equipment 19 - 58
Proceeds from sale of subsidiary 420 - -
Interest received 2 - -
NET CASH USED IN INVESTING ACTIVITIES (188) (400) (38,440)
-------------------------------------------------- ------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of share capital 2 - 6
(Repayment)/drawdown of term loan (15,000) - 28,608
Dividends paid (5,031) (3,641) (5,382)
-------------------------------------------------- ------------- ------------- -------------
NET CASH USED IN FINANCING ACTIVITIES (20,029) (3,641) 23,232
-------------------------------------------------- ------------- ------------- -------------
Effects of exchange rates on cash and cash
equivalents 575 6 (143)
NET (DECREASE)/INCREASE IN CASH AND CASH
EQUIVALENTS (5,915) 1,242 (2,131)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD (5,240) (3,109) (3,109)
-------------------------------------------------- ------------- ------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD (11,155) (1,867) (5,240)
-------------------------------------------------- ------------- ------------- -------------
CASH AND CASH EQUIVALENTS
Cash 9,071 781 3,997
Bank overdrafts (15) (64) (14)
Working capital facility used (20,211) (2,584) (9,223)
CASH AND CASH EQUIVALENTS IN CASH
FLOW STATEMENT (11,155) (1,867) (5,240)
-------------------------------------------------- ------------- ------------- -------------
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the period ended 31 January 2016
Share
based Translation Non-controlling
Share Share Merger payment of foreign Retained interests
Capital premium reserve reserve operations earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at
1 August 2014 250 7,388 224 1,621 89 33,091 - 42,663
----------------- --------- --------- --------- ---------- ------------ ---------- ----------------- ---------
Profit for
the period - - - - - 3,758 - 3,758
Other
comprehensive
income - - - - 65 - - 65
----------------- --------- --------- --------- ---------- ------------ ---------- ----------------- ---------
Total
comprehensive
income - - - - 65 3,758 - 3,823
Dividends paid
in the period - - - - - (3,641) - (3,641)
Deferred tax
movement re
share options - - - - - (133) - (133)
IFRS 2 charge - - - 858 - - - 858
IFRS 2 reserves
transfer - - - (209) - 209 - -
Shares issued - - - - - - - -
----------------- --------- --------- --------- ---------- ------------ ---------- ----------------- ---------
Transactions
with owners - - - 649 - (3,565) - (2,916)
----------------- --------- --------- --------- ---------- ------------ ---------- ----------------- ---------
Balance at
31 January
2015 250 7,388 224 2,270 154 33,284 - 43,570
----------------- --------- --------- --------- ---------- ------------ ---------- ----------------- ---------
Balance at
1 August 2014 250 7,388 224 1,621 89 33,091 - 42,663
Profit for
the year - - - - - 8,311 16 8,327
Other
comprehensive
income - - - - (109) - - (109)
----------------- --------- --------- --------- ---------- ------------ ---------- ----------------- ---------
Total
comprehensive
income - - - - (109) 8,311 16 8,218
Dividends paid
in the period - - - - - (5,382) - (5,382)
Deferred tax
movement re
share options - - - - - 174 - 174
IFRS 2 charge - - - 1,623 - - - 1,623
IFRS 2 reserves
transfer - - - (1,104) - 1,104 - -
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Re-acquisition of non-controlling interests - - - - - (650) - (650) Shares issued 59 1,306 28,526 - - - - 29,891 ----------------- --------- --------- --------- ---------- ------------ ---------- ----------------- --------- Transactions with owners 59 1,306 28,526 519 - (4,754) 16 25,656 ----------------- --------- --------- --------- ---------- ------------ ---------- ----------------- --------- Balance at 31 July 2015 309 8,694 28,750 2,140 (20) 36,648 16 76,537 Balance at 1 August 2015 309 8,694 28,750 2,140 (20) 36,648 16 76,537 ----------------- --------- --------- --------- ---------- ------------ ---------- ----------------- --------- Profit for the period - - - - - 4,751 - 4,751 Other comprehensive income - - - - (44) - - (44) ----------------- --------- --------- --------- ---------- ------------ ---------- ----------------- --------- Total comprehensive income - - - - (44) 4,751 - 4,707 Dividends paid in the period - - - - - (5,031) - (5,031) Deferred tax movement re share options - - - - - (57) (57) Acquisition of non-controlling interest - - - - - (124) (16) (140) IFRS 2 charge - - - 894 - - - 894 IFRS 2 reserves transfer - - - (212) - 212 - - Shares issued - 2 - - - - - 2 ----------------- --------- --------- --------- ---------- ------------ ---------- ----------------- --------- Transactions with owners - 2 - 682 - (5,000) (16) (4,332) ----------------- --------- --------- --------- ---------- ------------ ---------- ----------------- --------- Balance at 31 January 2016 309 8,696 28,750 2,822 (64) 36,399 - 76,912 ----------------- --------- --------- --------- ---------- ------------ ---------- ----------------- ---------
Notes forming part of the financial statements
1 The Group and Company 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 sectors. 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
These interim condensed consolidated financial statements are for the six months ended 31 January 2016. They have been prepared in accordance with IAS 34 "Interim Financial Reporting". They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements for the year ended 31 July 2015. The comparative figures for the financial year ended 31 July 2015 are not the company's statutory accounts for that financial year. Those accounts have been reported on by the company's auditor and delivered to the registrar of companies. The report of the auditor was (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.
These condensed consolidated interim financial statements ('the interim financial statements') have been prepared in accordance with the accounting policies set out below which are based on the recognition and measurement principles of IFRS in issue as adopted by the European Union (EU) and are effective at 31 July 2016 or are expected to be adopted and effective at 31 July 2016.
These financial statements have been prepared under the historical cost convention. The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these condensed interim financial statements. A summary of the principal accounting policies of the group are set out below.
iii 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 historical 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
These following standards and amendments to existing standards are applicable for the period ending 31 January 2016:
Effective date
(Annual periods beginning
Standard on or after)
-------- ------------------------------- --------------------------
Defined Benefit Plans: Employee
IAS 19 Contributions 1 February 2015
-------- ------------------------------- --------------------------
The adoption of the above standard has had no material impact on the financial statements.
New Standards in Issue, Not Yet Effective
The following relevant standards, amendments to existing standards and Interpretations, which are new and yet to become mandatory, have not been applied in the Group financial statements.
Effective date (Annual periods
Standard beginning on or after)
----------------- ----------------------------------- ------------------------------
IFRS 11 Joint Arrangements 1 January 2016
IFRS 14 Regulatory Deferral Accounts 1 January 2016
Equity Method in Separate Financial
IAS 27 Statements 1 January 2016
IFRS 9 Fair Values 1 January 2018
IFRS 15 Revenue 1 January 2018
IFRS 16 Leases 1 January 2019
IFRS improvements Various Various
----------------- ----------------------------------- ------------------------------
Based on the Group's current business model and accounting policies, the Directors do not expect material impacts on the figures in the Group's financial statements when the interpretations become effective.
The Group does not intend to apply any of these pronouncements early.
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 controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns through its involvement with an entity and it has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.
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 Group 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
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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. Fees for the provision of engineering services are recognised on completion of work performed in accordance with customer contracts. Other fees are recognised on confirmation from the client committing to the agreement.
vii Non-recurring Items
Non-recurring items are items that are unusual because of their size, nature or incidence and are presented within the consolidated income statement but highlighted through separate disclosure. The Group's Directors consider that these items should be separately identified within the income statement to enable a true and fair understanding of the Group's results.
Items which are included within this category include:
costs of acquisitions;
integration costs of acquisitions;
significant restructuring costs;
other particularly significant or unusual items.
viii 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 in terms of annual depreciation as follows:
Motor vehicles 25.0% Reducing balance
Fixtures, Fittings and Office
equipment 12.5% to 33.0% Straight line
Over the period of the
Leasehold Improvements lease term
----------------------------- ---------------------- ----------------
Residual value estimates are updated as required, but at least annually, whether or not the asset is revalued.
ix Intangible Assets
Goodwill
Goodwill arises on the acquisition of subsidiaries and represents the excess of the fair value of the consideration given for a business over the Company's interest in the fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree. Goodwill is stated at cost less accumulated impairment.
Goodwill is allocated to cash-generating units and is not amortised, but is tested at least annually for impairment. For the purpose of impairment testing, goodwill acquired in a business acquisition is allocated to each of the cash generating units (CGUs), or groups of CGUs that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and fair value less costs to sell. Any impairment is recognised immediately as an expense and is not subsequently reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Expenditure on internally generated goodwill, brands and intangibles is expensed in the Income Statement when incurred.
Intangible Assets
Software Licences
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring into use the specific software. These costs are amortised using the straight line method to allocate the cost of the software licences over their useful lives of between 2 and 5 years. Software licences are stated at cost less accumulated amortisation.
Customer relationships
Acquired customer relationships comprise principally of existing customer relationships which may give rise to future orders (customer relationships), and existing order books (backlog orders). Acquired customer relationships are recognised at fair value at the acquisition date and have a finite useful life. Amortisation of customer relationships is amortised in line with the expected cashflows. Acquired customer relationships are stated at cost less accumulated amortisation and impairment. Backlog orders are recognised at fair value at the acquisition date and amortised in line with the expected cash flows. Backlog orders are stated at cost less accumulated amortisation and impairment. Customer relationships are amortised over their useful economic life of between 2 and 10 years.
Trade names and trademarks
Trade names and trademarks have arisen on the consolidation of acquired businesses and are recognised at fair value at the acquisition date. Where trade names and trademarks are considered to have a finite useful life, amortisation is calculated using the straight line method to allocate the cost of trade names and trademarks over their estimated useful lives. Where trade names and trademarks are considered to have an indefinite useful life, they are not subject to amortisation; they are tested annually for impairment and when there are indications that the carrying value may not be recoverable, detailed within the impairment of non-financial assets section below. Trade names and trademarks are stated at cost less accumulated amortisation and impairment. Trade names and trademarks are amortised over their useful economic life of between 2 and 11 years.
Other
Other intangible assets acquired by the Group that have a finite life useful life are measured at cost less accumulated amortisation and accumulated losses. Other intangibles are amortised over their useful economic life of between 2 and 5 years.
Amortisation of intangible assets is recognised in the income statement under administrative expenses. Provision is made against the carrying value of intangible assets where an impairment in value is deemed to have occurred. Impairment losses are recognised in the Income Statement under administrative expenses.
x 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.
xi 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.
xii 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 be 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.
xiii Pension Costs
The Company operates defined contribution pension schemes for employees. The assets of these schemes are held separately from those of the Company. The annual contributions payable are charged to the Income Statement as they accrue.
xiv Share-based Payments
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". 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.
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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.
xv 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 as at the 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.
xvi 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 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.
xvii 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.
xviii Financial instruments
Financial instruments often consist of a combination of debt and equity and the Group has to decide how to attribute values to each. They are treated as equity only to the extent that they meet the following two conditions:
(i) they include no contractual obligations upon the Group to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the Group; and
(ii) where the instrument will or may be settled in the Group's own equity instruments, it is either a non-derivative that includes no obligation to deliver a variable number of the Group's own equity instruments or is a derivative that will be settled by the Group exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of issue are classified as a financial liability, and where such an instrument takes the legal form of the Company's own shares, the amounts presented in these financial statements for called up share capital and share premium account exclude amounts in relation to those shares.
Finance payments associated with financial liabilities are dealt with as part of finance costs. Finance payments associated with financial instruments that are classified in equity are dividends and are recorded directly in equity
The Group uses financial instruments, in particular forward currency contracts to manage the financial risks associated with the Group's underlying business activities. The forward exchange contracts are used to hedge foreign currency exposures arising on forecast receipts and payments in foreign currencies. These forward contracts are revalued to the rates of exchange at the Statement of Financial Position date and any aggregate unrealised gains and losses arising on revaluation are included in other debtors or creditors. At maturity, or when the contract ceases to be a hedge, gains and losses are taken to the Income Statement. The Group does not undertake any trading activity in financial instruments.
Fair value hierarchy
The Group analyses financial instruments carried at a fair value by valuation method. The different levels have been defined as follows:
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
- Level 2: inputs other than quoted prices included within Level 1 that are observable for assets or liabilities, either directly (i.e. as prices) or indirectly (i.e. directly from prices); and
- Level 3: inputs for assets or liabilities that are not based on observable market data (unobservable inputs).
xix Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand, on demand deposits, bank overdrafts and working capital facilities.
xx Dividends
Dividend distributions payable to equity shareholders are included in "other short term financial liabilities" when the dividends are approved in the annual general meeting prior to the balance sheet date.
xxi 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 profit or loss 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.
xxii 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 and to record the excess fair value above the nominal value of the consideration on the acquisition of Networkers International plc
"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.
xxiii Significant Accounting Estimates and Judgments
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Estimates and 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 Judgments
The judgments 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 3 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 ageing analysis of the trade and other receivables and on management's judgments. Considerable judgment 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 7.
Intangibles
The Group determines whether goodwill and other intangible assets (including acquired intangibles) are impaired on an annual basis or otherwise when changes in events or situations indicate that the carrying value may not be recoverable. This is requires an estimation of the recoverable amount of the cash generating unit to which the assets are allocated. Consideration is given to the future cash flows of each cash generating unit and the discount rate applied to calculate the present value of those cash flows.
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 for the current period is consistent with the reports regularly provided to the Board of Directors.
Reportable segments
For the year to 31 July 2015 the Group was reported in 3 main segments: Engineering, Professional Services and Networkers. Following the integration of Networkers business, from 1 August 2015 the reporting structure of the Group was changed to 2 main reporting segments, Engineering and Technology.
The new Engineering reporting segment includes the Engineering business previously reported together with Engineering business included within Networkers, together with the Professional Services brands of Barclay Meade and Alderwood. The Technology segment includes the Connectus brand previously reported within Professional Services and the remaining Networkers business. A reconciliation between the new and previous segmental reporting is included below.
6 months to 31 January 2016
unaudited
Amortisation
All amounts Divested Non-recurring of acquired Group
in GBP'000 Engineering Technology Underlying businesses items intangibles Total
--------------- ------------ ----------- ------------ ------------ --------------- -------------- ----------
Revenue 190,030 107,105 297,135 772 - - 297,907
Gross profit 21,630 14,218 35,848 609 - - 36,457
Operating
contribution 11,067 7,267 18,334 (46) - - 18,288
Central
overheads (4,980) (3,294) (8,274) (345) (888) (1,828) (11,335)
----------------- ------------ ----------- ------------ ------------ --------------- -------------- ----------
Profit/(loss)
from
operations 6,087 3,973 10,060 (391) (888) (1,828) 6,953
Profit on
disposal
of subsidiary 58
Finance cost,
net (78)
----------------- ------------ ----------- ------------ ------------ --------------- -------------- ----------
Profit before
tax 6,933
Depreciation
and
amortisation 324 237 1,828 2,389
Segment net
assets 55,508 31,586 87,094
Unallocated net
liabilities (10,182)
---------------- ------------ ----------- ------------ ------------ --------------- -------------- ----------
Total net assets 76,912
----------------- ------------ ----------- ------------ ------------ --------------- -------------- ----------
6 months to 31 January
2015
unaudited
Amortisation
All amounts Divested Non-recurring of acquired Group
in GBP'000 Engineering Technology Underlying businesses items intangibles Total
------------- ----- -------------- ----------- ------------ ------------ --------------- -------------- ---------
Revenue 180,049 36,769 216,818 3,384 - - 220,202
Gross profit 17,911 3,461 21,372 1,082 - - 22,454
Operating contribution 9,861 1,758 11,619 (72) - - 11,547
Central overheads (3,780) (950) (4,730) (321) (930) (277) (6,258)
------------------------ -------------- ----------- ------------ ------------ --------------- -------------- ---------
Profit/(loss) from
operations 6,081 808 6,889 (393) (930) (277) 5,289
Finance cost,
net (239)
------------------------ -------------- ----------- ------------ ------------ --------------- -------------- ---------
Profit before
tax 5,050
Depreciation
and
amortisation 247 122 277 646
Segment net
assets 50,560 10,220 60,780
Unallocated
net liabilities (17,210)
----------------- ----- -------------- ----------- ------------ ------------ --------------- -------------- ---------
Total net
assets 43,570
------------------------ -------------- ----------- ------------ ------------ --------------- -------------- ---------
Year to 31 July 2015
unaudited
Non-recurring Amortisation
All amounts Divested items of acquired Group Total
in GBP'000 Engineering Technology Underlying businesses intangibles
------------ ----- -------------- ------------- -------------- -------------- --------------- ---------------- --------------
Revenue 366,628 129,054 495,682 6,611 - - 502,293
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Gross profit 37,853 14,605 54,458 2,361 - - 54,819 Operating contribution 21,135 6,925 28,060 224 - - 28,284 Central overheads (8,030) (2,683) (10,713) (821) (2,710) (1,680) (15,924) ------------------- ------------------ ------------- -------------- -------------- --------------- ---------------- -------------- Profit/(loss) from operations 13,105 4,242 17,347 (597) (2,710) (1.680) 12,360 Finance cost, net (1,074) ------------------- -------------- ------------- -------------- -------------- --------------- ---------------- -------------- Profit before tax 11,286 ------------------- -------------- ------------- -------------- -------------- --------------- ---------------- -------------- Depreciation and amortisation 749 267 1,680 2,696 Segment net assets 69,595 24,277 93,872 Unallocated net liabilities (17,335) ------------------- -------------- ------------- -------------- -------------- --------------- ---------------- -------------- Total net assets 76,537 ------------------- -------------- ------------- -------------- -------------- --------------- ---------------- --------------
A segmental analysis of total assets has not been included as this information is not available to the Board; the majority of assets are centrally held and are not allocated across the reportable segments. Only trade receivables and acquired intangibles are reported by segment and as such they are included as segment net assets above. Unallocated net liabilities include non-current assets, other receivables, cash and cash equivalents and current liabilities.
Reconciliation of segmental reporting from 2015 Audited Financial Statements
For the year to 31 July 2015 the segmental reporting was presented in three segments: Professional Services, Networkers and Engineering, the analysis below provides a breakdown into the new segments reported above.
Professional Services Networkers
All amounts Divested Divested
in GBP'000 Engineering Technology businesses Total Engineering Technology businesses Total
------------- ----------- ---------- ----------- ------- ----------- ---------- ----------- ------
Revenue 47,503 79,515 5,764 132,782 6,631 49,539 847 57,017
Gross profit 7,557 7,572 1,548 16,677 1,608 7,033 813 9,454
Profit from
operations 2,062 2,498 (347) 4,213 497 1,744 (250) 1,991
------------- ----------- ---------- ----------- ------- ----------- ---------- ----------- ------
The total of the Engineering segment reported for the year ended 31 July 2015 is reported within the revised Engineering segment above.
Geographical information
Revenue Non-current assets
------------------------------- ----------------------------
6 months 6 months 12 months
to to to
All amounts in GBP'000 31/01/16 31/01/15 31/07/15 31/01/16 31/01/15 31/07/15
----------------------- --------- --------- --------- -------- -------- --------
UK 267,596 219,316 488,611 52,447 5,112 54,582
Rest of Europe 780 886 1,575 - 1 -
Middle East and Africa 12,861 - 4,298 215 - 199
Americas 10,155 - 6,103 49 - 57
Asia Pacific 6,515 - 1,706 15 - 164
----------------------- --------- --------- --------- -------- -------- --------
297,907 220,202 502,293 52,726 5,113 55,002
----------------------- --------- --------- --------- -------- -------- --------
Revenue and non-current assets are allocated to the geographic market based on the domicile of the respective subsidiary.
3 INCOME TAX EXPENSE
Analysis of charge in the period:
6 months 6 months 12 months
to 31/01/16 to 31/01/15 to 31/07/15
unaudited unaudited audited
GBP'000 GBP'000 GBP'000
Total income tax expense 2,182 1,292 2,959
-------------- -------------- --------------
The total tax charge is higher (31 January 2015: higher; 31 July 2015:
higher) than the standard rate of corporation tax. The differences are
detailed below:
Profit before tax 6,933 5,050 11,286
Corporation tax at average rate
for the period 20.0%
(31/01/15: 20.7%, 31/07/15: 20.7%) 1,387 1,045 2,336
Expenses not deductible for tax
purposes 266 216 386
Irrecoverable withholding tax 443 - 340
Difference between UK and overseas
tax rates 176 - 86
Overseas losses not provided for - 31 46
Adjustments to tax charge in respect
of previous periods (90) - (235)
------ ------ -------
Total tax charge 2,182 1,292 2,959
------ ------ -------
4 DIVIDENDS
Dividends on shares classed as equity: 6 months 6 months 12 months
to 31/01/16 to 31/01/15 to 31/07/15
unaudited unaudited audited
GBP'000 GBP'000 GBP'000
Paid during the period
Equity dividends on ordinary shares 5,031 3,641 5,382
------------- ------------- -------------
5 EARNINGS PER SHARE
Earnings per share has been calculated by dividing the consolidated profit after taxation attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the period.
Diluted earnings per share has been calculated, on the same basis as above, except that the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares (arising from the Group's share option schemes) into ordinary shares has been added to the denominator. There are no changes to the profit (numerator) as a result of the dilutive calculation.
The earnings per share information has been calculated as follows:
6 months 6 months 12 months
to 31/01/16 to 31/01/15 to 31/07/15
unaudited unaudited
GBP'000 GBP'000 GBP'000
Profit for the period 4,751 3,758 8,327
Number of Shares 000's 000's 000's
Weighted average number of ordinary
shares in issue 30,815 24,967 26,841
Effect of dilutive potential ordinary
shares under option 1,339 1,611 1,263
------------- ------------- -------------
32,154 26,578 28,104
------------- ------------- -------------
Earnings per Share
pence pence pence
Earnings per ordinary share from continuing
operations:
- Basic 15.4 15.1 31.0
- Diluted 14.8 14.1 29.6
Underlying earnings per share
Underlying earnings per share is disclosed below to show the trading
performance of the Group on a pro-forma basis as Networkers had been
owned by the Group for the entire prior period. Underlying results
also exclude non-recurring items, amortisation of intangibles and
divested businesses.
GBP'000 GBP'000 GBP'000
(MORE TO FOLLOW) Dow Jones Newswires
April 14, 2016 02:00 ET (06:00 GMT)
Profit for the period 4,751 3,758 8,327
Proforma Networkers profits - 3,332 4,060
Loss on divested businesses 391 393 597
Amortisation of acquired intangibles 1,828 277 1,680
Non-recurring items 888 930 2,710
Disposal of subsidiary (58) - -
Net foreign currency exchange differences (571) (393) (12)
Interest charged on loan funding Networkers
acquisition - (525) (700)
Less: Tax effect on above items (496) (1,488) (2,756)
------------- ------------- -------------
Underlying earnings 6,733 6,284 13,906
------------- ------------- -------------
Number of Shares 000's 000's 000's
Weighted average number of ordinary
shares in issue 30,815 24,967 26,841
Share placing to part fund Networkers
acquisition - 5,439 3,626
Effect of dilutive potential ordinary
shares under option 1,339 1,611 1,263
------------- ------------- -------------
32,154 32,017 31,730
------------- ------------- -------------
Earnings per Share pence pence pence
Underlying EPS
-Basic 21.9 20.6 45.6
-Diluted 20.9 19.6 43.8
------------- ------------- -------------
6 INTANGIBLE ASSETS
Acquired Software
Goodwill intangibles licences Total
GBP'000 GBP'000 GBP'000 GBP'000
COST At 1 August 2014 1,643 2,642 951 5,236
Additions - - - -
--------------------
At 31 January
2015 1,643 2,642 951 5,236
-------------------- ------------- ---------- --------
At 1 August 2014 1,643 2,642 951 5,236
Additions - - 777 777
Acquisitions 24,808 24,853 41 49,702
-------------------- ------------- ---------- --------
At 1 August 2015 26,451 27,495 1,769 55,715
-------------------- ------------- ---------- --------
Additions - 250 53 303
Disposals (380) - - (380)
-------------------- ------------- ---------- --------
At 31 January
2016 26,071 27,745 1,822 55,638
-------------------- ------------- ---------- --------
AMORTISATION At 1 August 2014 - 979 553 1,532
Charge for the
period - 277 48 325
-------------------- ------------- ---------- --------
At 31 January
2015 - 1,256 601 1,857
-------------------- ------------- ---------- --------
At 1 August 2014 - 979 553 1,532
Charge for the
year - 1,680 273 1,953
--------------------
At 1 August 2015 - 2,659 826 3,485
Charge for the
period - 1,828 142 1,970
-------------------- ------------- ---------- --------
At 31 January
2016 - 4,487 968 5,455
-------------------- ------------- ---------- --------
At 31 January
NET BOOK VALUE 2015 1,643 1,386 350 3,379
At 31 July 2015 26,451 24,836 943 52,230
-------------------- ------------- ---------- --------
At 31 January
2016 26,071 23,258 854 50,183
-------------------- ------------- ---------- --------
The balances at 31 January 2015 and 31 January 2016 are unaudited, the remaining balances are audited.
7 TRADE AND OTHER RECEIVABLES
31/01/2016 31/01/2015 31/07/2015
unaudited unaudited audited
GBP'000 GBP'000 GBP'000
Trade receivables 87,094 60,780 93,872
Other receivables 389 2,951 3,438
Prepayments 2,321 863 1,587
89,804 64,594 98,897
------------ ------------ ------------
Included in the Group's trade receivable balance are debtors with a carrying amount of GBP9,728,000 (31 January 2015: GBP5,985,000, 31 July 2015: GBP10,056,000) which are past due at the reporting date for which the Group has not provided as the Directors do not believe there has been a significant change in credit quality and consider the amounts to be recoverable in full. The Group does not hold any collateral over these balances.
The Directors consider all trade receivables not past due to be fully recoverable.
Ageing of overdue but not impaired trade receivables:
31/01/2016 31/01/2015 31/07/2015
Number of days overdue unaudited unaudited audited
GBP'000 GBP'000 GBP'000
0-30 days 7,463 4,252 7,585
30-60 days 1,706 1,375 1,663
60-90 days 559 356 458
90+ days - 2 350
9,728 5,985 10,056
------------ ------------ ------------
8 SHARE CAPITAL
Authorised share capital 31/01/2016 31/01/2015 31/07/2015
unaudited unaudited audited
GBP'000 GBP'000 GBP'000
40,000,000 Ordinary shares of GBP0.01 each 400 400 400
------------ ------------ ------------
Allotted, called up and fully paid 31/01/2016 31/01/2015 31/07/2015
unaudited unaudited audited
GBP'000 GBP'000 GBP'000
Ordinary shares of GBP0.01 each 309 250 309
------------ ------------ ------------
The movement in the number of shares in issue is shown below:
'000
In issue at 1 August 2014 24,965
Exercise of share options 2
In issue at 31 January 2015 24,967
-------
In issue at 1 August 2014 24,965
Exercise of share options 399
Issue of restricted shares 119
Share placing 5,439
-------
In issue at 31 July 2015 30,922
-------
In issue at 1 August 2015 30,922
Exercise of share options 26
In issue at 31 January 2016 30,948
-------
Statement of Directors' Responsibilities
The Board of Directors confirm that this condensed consolidated half year financial information has been prepared in accordance with IAS 34, as adopted by the European Union.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SFUFWDFMSEIL
(END) Dow Jones Newswires
April 14, 2016 02:00 ET (06:00 GMT)
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