Statement re: Impact of IFRS

Matchtech Group PLC 19 February 2008 19 February 2008 MATCHTECH GROUP PLC ('Matchtech' or 'the Group') Statement on the Impact of Adoption of International Financial Reporting Standards Introduction From 1 August 2007 Matchtech Group plc is required to report its results in accordance with International Accounting Standards and International Financial Reporting Standards (collectively 'IFRS'). Matchtech Group plc has hitherto prepared its financial statements in accordance with UK Generally Accepted Accounting Principles (UK GAAP). This statement provides information on how the Group's financial performance and position under IFRS differs from that reported under UK GAAP. The financial information presented in this document is unaudited. The transition date to IFRS for the Group is 1 August 2006, being the start of the period of comparative information. The Group's first interim results under IFRS will be for the six months ended 31 January 2008 and its first accounting period under IFRS will be for the financial year ended 31 July 2008. Restated information is shown for: • The consolidated income statement for: - the six month period ending 31 January 2007 - the year ended 31 July 2007 • The consolidated balance sheet as at: - 31 January 2007 - 31 July 2007 • The consolidated cashflow statement for: - the six month period ending 31 January 2007 - the year ended 31 July 2007 • The consolidated statement of changes in equity for: - the six month period ending 31 January 2007 - the year ended 31 July 2007 Impact of the Adoption of IFRS The impact of the adoption of IFRS on the Group's financial net assets is minimal, as can be seen from the table in Note 2, and does not affect the Group's strategy, underlying business performance or its cash flows. CONDENSED CONSOLIDATED INCOME STATEMENT Note 6 months 12 months to 31/01/07 to 31/01/07 Unaudited Unaudited CONTINUING OPERATIONS £'000 £'000 Revenue 3 93,438 202,779 Cost of Sales (80,933) (175,902) GROSS PROFIT 3 12,505 26,877 Administrative Expenses (7,427) (15,623) Cost of Admission to AIM (572) (572) OPERATING PROFIT 3 4,506 10,682 Finance income 13 20 Finance cost (390) (831) PROFIT BEFORE TAX 4,129 9,871 Income tax expense (1,169) (2,356) PROFIT FROM CONTINUING OPERATIONS 2,960 7,515 DISCONTINUED OPERATIONS Profit from discontinued operations 4 67 67 PROFIT FOR THE PERIOD 3,027 7,582 EARNINGS PER ORDINARY SHARE 6 months 12 months to 31/01/07 to 31/01/07 Unaudited Unaudited Continuing operations pence Pence Basic 6 13.29 34.79 Diluted 6 12.75 33.43 Total operations Basic 6 13.59 35.10 Diluted 6 13.04 33.72 CONDENSED CONSOLIDATED BALANCE SHEET 31/01/2007 31/07/2007 Note Unaudited Unaudited ASSETS £'000 £'000 Non-current assets Property, plant 1,590 1,699 and equipment Intangible assets 113 133 Deferred tax assets 879 529 2,582 2,361 Current Assets Trade and other receivables 25,672 31,984 Cash and cash equivalents 353 836 26,025 32,820 TOTAL ASSETS 28,607 35,181 LIABILITIES Current liabilities Trade and other payables (8,881) (12,617) Current tax liability (904) (1,068) Bank loans and overdrafts - short term borrowings (7,292) (6,924) - current portion of long term borrowings (1,666) (1,666) (18,743) (22,275) Non-current liabilities Long term borrowings (2,917) (2,083) TOTAL LIABILITIES (21,660) (24,358) NET ASSETS 6,947 10,823 EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT Called-up equity share capital 225 230 Share premium account 2,367 2,829 Other reserves 685 610 Retained earnings 3,670 7,154 TOTAL EQUITY 6,947 10,823 CONDENSED CONSOLIDATED CASH FLOW STATEMENT 6 months 12 months to 31/01/07 to 31/07/07 Note Unaudited Unaudited £'000 £'000 CASH FLOWS FROM OPERATING ACTIVITIES Profit after taxation 3,027 7,582 Adjustments for: -Depreciation 226 499 -Profit on disposal of discontinued operation 4 (59) (59) -Foreign exchange gain on disposal of discontinued operation (3) (3) -Profit on disposal of property, plant and equipment 0 0 -Interest income (13) (20) -Interest expense 390 831 -Taxation expense recognised in profit and loss 1,172 2,359 -Increase)/decrease in trade and other receivables (1,240) (7,516) -Increase in trade and other payables 473 4,118 -Increase in share based payment provision 125 321 Cash generated from operations 4,098 8,112 Interest paid (390) (831) Income taxes paid (1,256) (2,205) NET CASH FROM OPERATING ACTIVITES 2,452 5,076 6 months 12 months to 31/01/07 to 31/07/07 Note Unaudited Unaudited CASH FLOWS FROM INVESTING £'000 £'000 ACTIVITIES Proceeds from sale of Matchtech Inc 105 105 Purchase of plant and equipment (532) (960) Proceeds from sale of plant 0 28 Interest received 13 20 NET CASH USED IN INVESTING ACTIVITIES (414) (807) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of share capital 361 829 Proceeds from long-term borrowings 1,918 699 Dividends paid (4,414) (5,428) NET CASH USED IN FINANCING ACTIVITIES (2,135) (3,900) NET INCREASE IN CASH AND CASH EQUIVALENTS (97) 369 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 290 290 CASH AND CASH EQUIVALENTS AT END OF PERIOD 193 659 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Foreign Share Other Share Retained Total currency Capital & reserve based Earnings translation Share payment reserve Premium reserve £'000 £'000 £'000 £'000 £'000 £'000 Balance at 1 August 2006 0 2,230 229 338 4,884 7,681 Profit for the period 3 0 0 0 0 3 Profit for the period -3 0 0 0 3,027 3,024 Share based payment reserve movement 0 0 0 123 0 123 Total recognised income and expense for the period 0 0 0 123 3,027 3,150 Dividends 0 0 0 0 (4,414) (4,414) IAS 12 adjustment to deferred tax asset 0 0 0 0 168 168 EBT reserve movement 0 0 -5 0 5 0 New share capital 0 362 0 0 0 362 0 362 -5 0 (4,241) (3,884) Balance at 31 January 2007 0 2,592 224 461 3,670 6,947 Balance at 1 August 2006 0 2,230 229 338 4,884 7,681 Currency translation differences 3 0 0 0 0 3 Net income recognised directly in equity 3 0 0 0 0 3 Profit for the year -3 0 0 0 7,582 7,579 Share based payment reserve movement 0 0 0 48 0 48 Total recognised income and expense for the year 0 0 0 48 7,582 7,630 Dividends 0 0 0 0 (5,428) (5,428) IAS 12 adjustment to deferred tax asset 0 0 0 0 111 111 EBT reserve movement 0 0 -5 0 5 0 New share capital 0 829 0 0 0 829 0 829 -5 0 (5,312) (4,488) Balance at 31 July 2007 0 3,059 224 386 7,154 10,823 Notes Forming part of the financial statements 1. THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES i The business of the Group Matchtech Group plc is a human capital resources business dealing with contract and permanent recruitment in the Private and Public sector. The Group is organised in three sectors, Engineering, Built Environment and Support Services, with niche activities within each sector. ii Basis of preparation of restatement document This restatement document has been prepared in accordance with the requirements of IFRS 1 'First-time Adoption of International Financial Reporting Standards'. It does not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements for the year ended 31 July 2007 which have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain a statement under section 237 (2) and (3) of the Companies Act 1985. This restatement document has been prepared in accordance with the accounting policies set out below which are based on the recognition and measurement principles of IFRS in issue as adopted by the European Union (EU) and are effective at 31 July 2008 or are expected to be adopted and effective at 31 July 2008, our first annual reporting date at which we are required to use IFRS accounting standards as adopted by the EU. Matchtech Group plc's consolidated financial statements were prepared in accordance with United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) until 31 July 2007. The date of transition to IFRS was 1 August 2006. The comparative figures in respect of 2006 have been restated to reflect changes in accounting policies as a result of adoption of IFRS. The disclosures required by IFRS 1 concerning the transition from UK GAAP to IFRS are given in the reconciliation schedules, presented and explained in note 2. IFRS 1 permits companies adopting IFRS for the first time to take certain exemptions from the full requirements of IFRS in the transition period. This restatement document has been prepared on the basis of taking the following exemptions: • business combinations prior to 1 August 2006, the Group's date of transition to IFRS, have not been restated to comply with IFRS 3 'Business Combinations'. • cumulative translation differences on foreign operations are deemed to be nil at 1 August 2006. Any gains and losses recognised in the consolidated income statement on subsequent disposal of foreign operations will exclude translation differences arising prior to the transition date. • the Group has not applied IFRS 2, share based payments to share options awards granted prior to 7 November 2002, nor to those granted subsequent to that date but which had vested by 1 August 2006, the date of transition. iii Basis of consolidation The group financial statements consolidate those of the company and all of its subsidiary undertakings drawn up to the balance sheet date. Subsidiaries are entities over which the group has power to control the financial and operating policies so as to obtain benefits from its activities. The group obtains and exercises control through voting rights. Acquisitions of subsidiaries are dealt with by the purchase method. The purchase method involves the recognition at fair value of all identifiable assets and liabilities, including contingent liabilities of the subsidiary, at the acquisition date, regardless of whether or not they were recorded in the financial statements of the subsidiary prior to acquisition. On initial recognition, the assets and liabilities of the subsidiary are included in the consolidated balance sheet at their fair values, which are also used as the bases for subsequent measurement in accordance with group accounting policies. iv Revenue Revenue is measured by reference to the fair value of consideration received or receivable by the group for services provided, excluding VAT and trade discounts. Revenue on temporary placements is recognised upon receipt of a client approved timesheet or equivalent. Revenue from permanent placements, which is based on a percentage of the candidate's remuneration package, is recognised when candidates commence employment. v Property, plant and equipment Property, plant and equipment is stated at cost or valuation, net of depreciation and any provision for impairment. Depreciation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset as follows: Motor Vehicles 25.00% Reducing balance Computer equipment 25.00% Straight line Equipment 12.50% Straight line Residual value estimates are updated as required, but at least annually, whether or not the asset is revalued. vi Intangible assets Separately acquired software licences are included at cost and amortised on a straight-line basis over the useful economic life of that asset at 20%-33%. Provision is made against the carrying value of non current assets where an impairment in value is deemed to have occurred. vii Disposal of assets The gain or loss arising on the disposal of an asset is determined as the difference between the disposal proceeds and the carrying amount of the asset and is recognised in the income statement. viii Operating lease agreements Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged against profits on a straight line basis over the lease term. Lease incentives are spread over the term of the lease. ix Taxation 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. Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is probable that the underling deductible temporary differences will be able to offset against future taxable income. Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date. Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statement, except where they relate to items that are charged or credited directly to equity (such as the revaluation of land) in which case the related deferred tax is also charged or credited directly to equity. x Pension costs The company operates a defined contribution pension scheme for employees. The assets of the scheme are held separately from those of the company. The annual contributions payable are charged to the income statement as they accrue. xi Share based payment All share-based remuneration is ultimately recognised as an expense in the income statement with a corresponding credit to 'share-based payment reserve'. All goods and services received in exchange for the grant of any share-based remuneration are measured at their fair values. Fair values of employee services are indirectly determined by reference to the fair value of the share options awarded. Their value is appraised at the grant date and excludes the impact of non-market vesting conditions (for example, profitability and sales growth targets). If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period, based on on the best available estimate of the number of share options expected to vest. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options ultimately exercised are different to that estimated on vesting. Upon exercise of share options, proceeds received net of attributable transaction costs are credited to share capital and share premium. xii Exceptional items Non-recurring items which are sufficiently material are presented separately within their relevant consolidated income statement category. This helps to provide a better understanding of the group's financial performance. xiii Business combinations completed prior to date of transition to IFRS The group has elected not to apply IFRS 3 Business Combinations retrospectively to business combinations prior to 1 August 2006. Accordingly the classification of the combination (merger) remains unchanged from that used under UK GAAP. Assets and liabilities are recognised at date of transition if they would be recognised under IFRS, and are measured using their UK GAAP carrying amount immediately post-acquisition as deemed cost under IFRS, unless IFRS requires fair value measurement. Deferred tax is adjusted for the impact of any consequential adjustments after taking advantage of the transitional provisions. xiv Discontinued operations A discontinued operation is a cash-generating unit, or a group of cash -generating units, that either has been disposed of, or is classified as held for sale, and: - represents a separate line of business or geographic area of operations - is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations or - is a subsidiary acquired exclusively with a view to resale. The disclosures for discontinued operations in the prior period relate to all operations that have been discontinued by the balance sheets date for the latest period presented. xv Financial assets Financial assets are divided into the following categories: loans and receivables. Financial assets are assigned to the different categories by management on initial recognition, depending on the purpose for which they were acquired. The designation of financial assets is re-evaluated at every reporting date at which a choice of classification or accounting treatment is available. All financial assets are recognised when the group becomes a party to the contractual provisions of the instrument. Financial assets are recognised at fair value plus transaction costs. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Trade receivables are classified as receivables. Loans and receivables are measured subsequent to initial recognition at amortised cost using effective interest method, less provision for impairment. Any change in their value through impairment or reversal of impairment is recognised in the income statement. Provision against trade receivables is made when there is objective evidence that the group will not be able to collect all amounts due to it in accordance with the original terms of those receivables. The amount of the write-down is determined as the difference between the asset's carrying amount and the present value of estimated future cash flows. A financial asset is derecognised only where the contractual rights to cash flows from the asset expire or the financial asset is transferred and that transfer qualifies for derecognition. A financial asset is transferred if the contractual rights to receive the cash flows of the asset have been transferred or the group retains the contractual rights to receive the cash flows of the asset but assumes a contractual obligation to pay the cash flows to one or more recipients. A financial asset that is transferred qualifies for derecognition if the group transfers substantially all the risks and rewards of ownership of the asset, or if the group neither retains nor transfers substantially all the risks and rewards of ownership but does transfer control of that asset. xvi Financial liabilities Financial liabilities are obligations to pay cash or other financial assets and are recognised when the group becomes a party to the contractual provisions of the instrument. Financial liabilities are recorded initially at fair value, net of direct issue costs. A financial liability is derecognised only when the obligation is extinguished, that is, when the obligation is discharged or cancelled or expires. xvii Cash and cash equivalents Cash and cash equivalents comprise cash on hand, on demand deposits and bank overdrafts. xviii Dividends Dividend distributions payable to equity shareholders are included in 'other short term financial liabilities' when the dividends are approved in general meeting prior to the balance sheet date. xix Equity Equity comprises the following: - 'Share capital' represents the nominal value of equity shares. - 'Share premium' represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue. - 'Share based payment reserve' represents equity-settled share-based employee remuneration until such share options are exercised. - 'Other reserve' represents the equity balance arising on the merger of Matchtech Engineering and Matchmaker Personnel. - 'Profit and loss reserve' represents retained profits. xx Foreign currencies Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at the rates of exchange ruling at the balance sheet date. Non-monetary items that are measured at historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Any exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were initially recorded are recognised in the profit or loss in the period in which they arise. Exchange differences on non-monetary items are recognised in equity to the extent that they relate to a gain or loss on that non-monetary item taken to equity, otherwise such gains and losses are recognised in the income statement. The assets and liabilities in the financial statements of foreign subsidiaries are translated at the rate of exchange ruling at the balance sheet date. Income and expenses are translated at the actual rate. The exchange differences arising from the retranslation of the opening net investment in subsidiaries are taken directly to the 'Foreign currency reserve' in equity. On disposal of a foreign operation the cumulative translation differences (including, if applicable, gains and losses on related hedges) are transferred to the income statement as part of the gain or loss on disposal. As permitted by IFRS 1, the balance on the cumulative translation adjustment on retranslation of subsidiaries' net assets has been set to zero at the date of transition to IFRS. xxi Employee benefit trust The assets and liabilities of the Employee Benefit Trust (EBT) have been included in the group accounts. Any assets held by the EBT cease to be recognised on the group balance sheet when the assets vest unconditionally in identified beneficiaries. The costs of purchasing own shares held by the EBT are shown as a deduction against equity. The proceeds from the sale of own shares held increase equity. Neither the purchase nor sale of own shares leads to a gain or loss being recognised in the group income statement. 2 TRANSITION RECONCILIATIONS An explanation of how the transition from UK GAAP to IFRS has affected the Group's financial position, financial performance and cash flows is set out below. Reconciliation of equity at 1 August 2006 UK GAAP IAS 12 IAS 17 IAS 19 IFRS Income Leases Employee as restated Taxes Benefits £'000 £'000 £'000 £'000 £'000 EQUITY Called-up equity share capital 221 0 0 0 221 Share premium account 2,009 0 0 0 2,009 Other reserves 567 0 0 0 567 Retained earnings 4,454 566 (64) (72) 4,884 TOTAL EQUITY 7,251 566 (64) (72) 7,681 Reconciliation of consolidated balance sheet and equity at 31 January 2007 UK GAAP IAS 1 IAS 12 IAS 17 IAS 19 IFRS Presentation Income Leases Employee as restated of financial Taxes Benefits statements £'000 £'000 £'000 £'000 £'000 £'000 NON-CURRENT ASSETS Intangible assets 113 0 0 0 0 113 Property, plant and equipment 1,590 0 0 0 0 1,590 Deferred tax assets 0 879 0 0 0 879 CURRENT ASSETS Trade and other receivables 25,819 (879) 732 0 0 25,672 Cash and cash equivalents 353 0 0 0 0 353 CURRENT LIABILITIES Trade and other payables (8,793) 0 0 (57) (31) (8,881) Tax liability (904) 0 0 0 0 (904) Bank loans and overdrafts (8,958) 0 0 0 0 (8,958) NON-CURRENT LIABILITIES Bank loan (2,917) 0 0 0 0 (2,917) NET ASSETS 6,303 0 732 (57) (31) 6,947 EQUITY Called-up equity share capital 225 0 0 0 0 225 Share premium account 2,367 0 0 0 0 2,367 Other reserves 685 0 0 0 0 685 Retained earnings 3,026 0 732 (57) (31) 3,670 TOTAL EQUITY 6,303 0 732 (57) (31) 6,947 Reconciliation of consolidated balance sheet and equity at 31 July 2007 UK GAAP IAS 1 IAS 12 IAS 17 IAS 19 IFRS Presentation Income Leases Employee as restated of financial Taxes Benefits statements £'000 £'000 £'000 £'000 £'000 £'000 NON-CURRENT ASSETS Intangible assets 133 0 0 0 0 133 Property, plant and equipment 1,699 0 0 0 0 1,699 Deferred tax assets 0 529 0 0 0 529 CURRENT ASSETS Trade and other receivables 32,108 (529) 405 0 0 31,984 Cash and cash equivalents 836 0 0 0 0 836 CURRENT LIABILITIES Trade and other payables (12,474) 0 0 (67) (76) (12,617) Tax liability (1,068) 0 0 0 0 (1,068) Bank loans and overdrafts (8,590) 0 0 0 0 (8,590) NON-CURRENT 0 LIABILITIES Bank loan (2,083) 0 0 0 0 (2,083) NET ASSETS 10,561 0 405 (67) (76) 10,823 EQUITY Called-up equity share capital 230 0 0 0 0 230 Share premium account 2,829 0 0 0 0 2,829 Other reserves 610 0 0 0 0 610 Retained earnings 6,892 0 405 (67) (76) 7,154 TOTAL EQUITY 10,561 0 405 (67) (76) 10,823 Reconciliation of consolidated income statement for the period ended 31 January 2007 UK GAAP IAS 1 IAS 17 IAS 19 IAS 21 IFRS Presentation Leases Employee Foreign as restated of financial Benefits Exchange statements Rates £'000 £'000 £'000 £'000 £'000 £'000 Revenue 93,573 (135) 0 0 0 93,438 Cost of sales (81,050) 117 0 0 0 (80,933) Gross profit 12,523 (18) 0 0 0 12,505 Administration Costs (7,485) 10 7 41 0 (7,427) Cost of admission to (572) 0 0 0 0 (572) AIM Profit on sale of discontinued operation 59 (59) 0 0 0 0 Finance Income 13 0 0 0 0 13 Finance Cost (390) 0 0 0 0 (390) Profit before tax 4,148 (67) 7 41 0 4,129 Taxation (1,172) 3 0 0 (1,169) Profit for the period 2,976 (64) 7 41 0 2,960 Profit from discontinued operations 0 64 0 0 3 67 Profit for the period from total operations 2,976 0 7 41 3 3,027 Reconciliation of consolidated income statement for year ended 31 July 2007 UK GAAP IAS 1 IAS 17 IAS 19 IAS 21 IFRS Presentation of Leases Employee Foreign as restated financial Benefits Exchange statements Rates £'000 £'000 £'000 £'000 £'000 £'000 Revenue 202,914 (135) 0 0 0 202,779 Cost of sales (176,019) 117 0 0 0 (175,902) Gross profit 26,895 (18) 0 0 0 26,877 Administration Costs (15,627) 10 (2) (4) 0 (15,623) Cost of admission to AIM (572) 0 0 0 0 (572) Profit on sale of discontinued operation 59 (59) 0 0 0 0 Finance Income 19 0 0 0 0 19 Finance Cost (830) 0 0 0 0 (830) Profit before tax 9,944 (67) (2) (4) 0 9,871 Taxation (2,359) 3 0 0 0 (2,356) Profit for the period 7,585 (64) (2) (4) 0 7,515 Profit from discontinued operations 0 64 0 0 3 67 Profit for the period from total operations 7,585 0 (2) (4) 3 7,582 Notes to the reconciliations IAS 1 Presentation of financial statements Under UK GAAP, the deferred tax asset was classified as a current asset. Under IFRS the deferred tax asset is classified as a non-current asset. Under UK GAAP, the income statement provided full disclosure of each line item relating to discontinued operations. Under IFRS, only the profit from the discontinued operation is disclosed on the income statement. IAS 12 Income Taxes Under FRS 19, deferred tax was recognised only on timing differences; in contrast IAS 12 'Income Taxes' requires the recognition of deferred tax on all temporary differences Under FRS 19, the deferred tax asset on the cost of options recognised was restricted to the amount calculated by applying the prevailing corporation tax rate to the total cost in the year calculated under FRS20. Under IFRS the deferred tax asset recognised is the cost of options outstanding based on the fair value at the period end date multiplied by the prevailing rate of corporation tax. The deferred tax asset has been adjusted in line with IFRS requirements. IAS 17 Leases Under UK GAAP, the rent-free period lease incentive was spread over the period from the start of the lease to the first break clause. Under IFRS, the lease incentive is spread over the full lease term. IAS 19 Employee benefits Under UK GAAP, the company chose not to accrue for outstanding staff holiday pay at the balance sheet date. IFRS requires that the accrual be calculated at each balance sheet date. IAS 21 The Effects of Changes in Foreign Exchange Rates On the disposal of Matchtech Inc the cumulative translation differences are transferred to the income statement as part of the gain or loss on disposal. Under UK GAAP the difference was shown as a movement in reserves. Cash Flow statement Application of IFRS has resulted in reclassification of certain items in the cash flow statement as follows: Profit after taxation has been adjusted as per the reconciliation above. (Operating profit was used in the Interim and Annual Reports for 2007 in the reconciliation to net cash inflow from operating activities) Movements in trade and other receivables and trade and other payables have been adjusted to account for the IFRS adjustments to the provisions on the balance sheet as stated in the reconciliations above. This information is provided by RNS The company news service from the London Stock Exchange

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