Gattaca Regulatory News (GATC)

19 Feb 2008 07:00

Matchtech Group PLC19 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 inaccordance with International Accounting Standards and International FinancialReporting Standards (collectively 'IFRS'). Matchtech Group plc has hithertoprepared its financial statements in accordance with UK Generally AcceptedAccounting Principles (UK GAAP). This statement provides information on how the Group's financial performance andposition under IFRS differs from that reported under UK GAAP. The financialinformation presented in this document is unaudited. The transition date to IFRS for the Group is 1 August 2006, being the start ofthe period of comparative information. The Group's first interim results underIFRS will be for the six months ended 31 January 2008 and its first accountingperiod 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 isminimal, as can be seen from the table in Note 2, and does not affect theGroup'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 UnauditedCONTINUING OPERATIONS £'000 £'000Revenue 3 93,438 202,779Cost 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 20Finance cost (390) (831)PROFIT BEFORE TAX 4,129 9,871 Income tax expense (1,169) (2,356)PROFIT FROM CONTINUINGOPERATIONS 2,960 7,515 DISCONTINUED OPERATIONSProfit from discontinued operations 4 67 67PROFIT FOR THE PERIOD 3,027 7,582 EARNINGS PER ORDINARY SHARE 6 months 12 months to 31/01/07 to 31/01/07 Unaudited UnauditedContinuing operations pence PenceBasic 6 13.29 34.79Diluted 6 12.75 33.43 Total operationsBasic 6 13.59 35.10Diluted 6 13.04 33.72 CONDENSED CONSOLIDATED BALANCE SHEET 31/01/2007 31/07/2007 Note Unaudited UnauditedASSETS £'000 £'000Non-current assetsProperty, plant 1,590 1,699and equipmentIntangible assets 113 133Deferred tax assets 879 529 2,582 2,361Current AssetsTrade and other receivables 25,672 31,984Cash and cash equivalents 353 836 26,025 32,820TOTAL ASSETS 28,607 35,181 LIABILITIESCurrent liabilitiesTrade 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 liabilitiesLong 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 PARENTCalled-up equity share capital 225 230Share premium account 2,367 2,829Other reserves 685 610Retained earnings 3,670 7,154TOTAL 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 £'000CASH FLOWS FROMOPERATING ACTIVITIESProfit after taxation 3,027 7,582Adjustments 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 8,112Interest paid (390) (831)Income taxes paid (1,256) (2,205)NET CASH FROM OPERATINGACTIVITES 2,452 5,076 6 months 12 months to 31/01/07 to 31/07/07 Note Unaudited UnauditedCASH FLOWS FROM INVESTING £'000 £'000ACTIVITIES Proceeds from sale of Matchtech Inc 105 105Purchase of plant and equipment (532) (960)Proceeds from sale of plant 0 28Interest received 13 20NET CASH USED IN INVESTINGACTIVITIES (414) (807) CASH FLOWS FROM FINANCINGACTIVITIESProceeds from issue of share capital 361 829Proceeds from long-term borrowings 1,918 699Dividends paid (4,414) (5,428)NET CASH USED IN FINANCINGACTIVITIES (2,135) (3,900) NET INCREASE IN CASH ANDCASH EQUIVALENTS (97) 369CASH AND CASH EQUIVALENTSAT BEGINNING OF PERIOD 290 290CASH AND CASH EQUIVALENTSAT 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 theperiod 3 0 0 0 0 3 Profit for theperiod -3 0 0 0 3,027 3,024 Share basedpaymentreserve movement 0 0 0 123 0 123 Total recognisedincomeand expense forthe period 0 0 0 123 3,027 3,150 Dividends 0 0 0 0 (4,414) (4,414) IAS 12 adjustmentto 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 31January 2007 0 2,592 224 461 3,670 6,947 Balance at 1August 2006 0 2,230 229 338 4,884 7,681 Currencytranslationdifferences 3 0 0 0 0 3 Net incomerecogniseddirectly in equity 3 0 0 0 0 3 Profit for the year -3 0 0 0 7,582 7,579 Share basedpaymentreserve movement 0 0 0 48 0 48 Total recognisedincomeand expense forthe year 0 0 0 48 7,582 7,630 Dividends 0 0 0 0 (5,428) (5,428) IAS 12 adjustmentto 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 July2007 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 contractand permanent recruitment in the Private and Public sector. The Group isorganised 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 requirementsof IFRS 1 "First-time Adoption of International Financial Reporting Standards".It does not include all of the information required for full annual financialstatements, and should be read in conjunction with the consolidated financialstatements for the year ended 31 July 2007 which have been filed with theRegistrar of Companies. The auditor's report on those financial statements wasunqualified and did not contain a statement under section 237 (2) and (3) of theCompanies Act 1985. This restatement document has been prepared in accordance with the accountingpolicies set out below which are based on the recognition and measurementprinciples of IFRS in issue as adopted by the European Union (EU) and areeffective at 31 July 2008 or are expected to be adopted and effective at 31 July2008, our first annual reporting date at which we are required to use IFRSaccounting standards as adopted by the EU. Matchtech Group plc's consolidated financial statements were prepared inaccordance with United Kingdom Accounting Standards (United Kingdom GenerallyAccepted Accounting Practice) until 31 July 2007. The date of transition to IFRSwas 1 August 2006. The comparative figures in respect of 2006 have been restatedto reflect changes in accounting policies as a result of adoption of IFRS. Thedisclosures required by IFRS 1 concerning the transition from UK GAAP to IFRSare given in the reconciliation schedules, presented and explained in note 2. IFRS 1 permits companies adopting IFRS for the first time to take certainexemptions from the full requirements of IFRS in the transition period. Thisrestatement document has been prepared on the basis of taking the followingexemptions: • 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 itssubsidiary undertakings drawn up to the balance sheet date. Subsidiaries areentities over which the group has power to control the financial and operatingpolicies so as to obtain benefits from its activities. The group obtains andexercises control through voting rights. Acquisitions of subsidiaries are dealt with by the purchase method. The purchasemethod involves the recognition at fair value of all identifiable assets andliabilities, including contingent liabilities of the subsidiary, at theacquisition date, regardless of whether or not they were recorded in thefinancial statements of the subsidiary prior to acquisition. On initialrecognition, the assets and liabilities of the subsidiary are included in theconsolidated balance sheet at their fair values, which are also used as thebases for subsequent measurement in accordance with group accounting policies. iv Revenue Revenue is measured by reference to the fair value of consideration received orreceivable by the group for services provided, excluding VAT and tradediscounts. Revenue on temporary placements is recognised upon receipt of aclient approved timesheet or equivalent. Revenue from permanent placements,which is based on a percentage of the candidate's remuneration package, isrecognised when candidates commence employment. v Property, plant and equipment Property, plant and equipment is stated at cost or valuation, net ofdepreciation and any provision for impairment. Depreciation is calculated so as to write off the cost of an asset, less itsestimated residual value, over the useful economic life of that asset asfollows: Motor Vehicles 25.00% Reducing balanceComputer equipment 25.00% Straight lineEquipment 12.50% Straight line Residual value estimates are updated as required, but at least annually, whetheror not the asset is revalued. vi Intangible assets Separately acquired software licences are included at cost and amortised on astraight-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 animpairment 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 thedifference between the disposal proceeds and the carrying amount of the assetand is recognised in the income statement. viii Operating lease agreements Rentals applicable to operating leases where substantially all of the benefitsand risks of ownership remain with the lessor are charged against profits on astraight line basis over the lease term. Lease incentives are spread over theterm of the lease. ix Taxation Deferred income taxes are calculated using the liability method on temporarydifferences. Deferred tax is generally provided on the difference between thecarrying amounts of assets and liabilities and their tax bases. Deferred tax liabilities are provided in full, with no discounting. Deferred taxassets are recognised to the extent that it is probable that the underlingdeductible temporary differences will be able to offset against future taxableincome. Current and deferred tax assets and liabilities are calculated at taxrates 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 oftax expense in the income statement, except where they relate to items that arecharged or credited directly to equity (such as the revaluation of land) inwhich case the related deferred tax is also charged or credited directly toequity. x Pension costs The company operates a defined contribution pension scheme for employees. Theassets of the scheme are held separately from those of the company. The annualcontributions 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 theincome statement with a corresponding credit to "share-based payment reserve".All goods and services received in exchange for the grant of any share-basedremuneration are measured at their fair values. Fair values of employee servicesare indirectly determined by reference to the fair value of the share optionsawarded. Their value is appraised at the grant date and excludes the impact ofnon-market vesting conditions (for example, profitability and sales growthtargets). If vesting periods or other non-market vesting conditions apply, the expense isallocated over the vesting period, based on on the best available estimate ofthe number of share options expected to vest. Estimates are subsequently revisedif there is any indication that the number of share options expected to vestdiffers from previous estimates. Any cumulative adjustment prior to vesting isrecognised in the current period. No adjustment is made to any expenserecognised in prior periods if share options ultimately exercised are differentto that estimated on vesting. Upon exercise of share options, proceeds receivednet of attributable transaction costs are credited to share capital and sharepremium. xii Exceptional items Non-recurring items which are sufficiently material are presented separatelywithin their relevant consolidated income statement category. This helps toprovide 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 retrospectivelyto business combinations prior to 1 August 2006. Accordingly the classification of the combination (merger) remains unchangedfrom that used under UK GAAP. Assets and liabilities are recognised at date oftransition if they would be recognised under IFRS, and are measured using theirUK GAAP carrying amount immediately post-acquisition as deemed cost under IFRS,unless IFRS requires fair value measurement. Deferred tax is adjusted for theimpact of any consequential adjustments after taking advantage of thetransitional 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 heldfor 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 alloperations that have been discontinued by the balance sheets date for the latestperiod presented. xv Financial assets Financial assets are divided into the following categories: loans andreceivables. Financial assets are assigned to the different categories bymanagement on initial recognition, depending on the purpose for which they wereacquired. The designation of financial assets is re-evaluated at every reportingdate at which a choice of classification or accounting treatment is available. All financial assets are recognised when the group becomes a party to thecontractual provisions of the instrument. Financial assets are recognised atfair value plus transaction costs. Loans and receivables are non-derivative financial assets with fixed ordeterminable payments that are not quoted in an active market. Trade receivablesare classified as receivables. Loans and receivables are measured subsequent toinitial recognition at amortised cost using effective interest method, lessprovision for impairment. Any change in their value through impairment orreversal of impairment is recognised in the income statement. Provision against trade receivables is made when there is objective evidencethat the group will not be able to collect all amounts due to it in accordancewith the original terms of those receivables. The amount of the write-down isdetermined as the difference between the asset's carrying amount and the presentvalue of estimated future cash flows. A financial asset is derecognised only where the contractual rights to cashflows from the asset expire or the financial asset is transferred and thattransfer qualifies for derecognition. A financial asset is transferred if thecontractual rights to receive the cash flows of the asset have been transferredor the group retains the contractual rights to receive the cash flows of theasset but assumes a contractual obligation to pay the cash flows to one or morerecipients. A financial asset that is transferred qualifies for derecognition ifthe group transfers substantially all the risks and rewards of ownership of theasset, or if the group neither retains nor transfers substantially all the risksand rewards of ownership but does transfer control of that asset. xvi Financial liabilities Financial liabilities are obligations to pay cash or other financial assets andare recognised when the group becomes a party to the contractual provisions ofthe instrument. Financial liabilities are recorded initially at fair value, netof 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 bankoverdrafts. xviii Dividends Dividend distributions payable to equity shareholders are included in "othershort term financial liabilities" when the dividends are approved in generalmeeting 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 atthe date of the transaction. Monetary assets and liabilities in foreigncurrencies are translated at the rates of exchange ruling at the balance sheetdate. Non-monetary items that are measured at historical cost in a foreigncurrency 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 aretranslated using the exchange rates at the date when the fair value wasdetermined. Any exchange differences arising on the settlement of monetary items or ontranslating monetary items at rates different from those at which they wereinitially recorded are recognised in the profit or loss in the period in whichthey arise. Exchange differences on non-monetary items are recognised in equityto the extent that they relate to a gain or loss on that non-monetary item takento equity, otherwise such gains and losses are recognised in the incomestatement. The assets and liabilities in the financial statements of foreign subsidiariesare translated at the rate of exchange ruling at the balance sheet date. Incomeand expenses are translated at the actual rate. The exchange differences arisingfrom the retranslation of the opening net investment in subsidiaries are takendirectly to the "Foreign currency reserve" in equity. On disposal of a foreignoperation the cumulative translation differences (including, if applicable,gains and losses on related hedges) are transferred to the income statement aspart of the gain or loss on disposal. As permitted by IFRS 1, the balance on the cumulative translation adjustment onretranslation of subsidiaries' net assets has been set to zero at the date oftransition to IFRS. xxi Employee benefit trust The assets and liabilities of the Employee Benefit Trust (EBT) have beenincluded in the group accounts. Any assets held by the EBT cease to berecognised on the group balance sheet when the assets vest unconditionally inidentified beneficiaries. The costs of purchasing own shares held by the EBT are shown as a deductionagainst 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 beingrecognised in the group income statement. 2 TRANSITION RECONCILIATIONS An explanation of how the transition from UK GAAP to IFRS has affected theGroup's financial position, financial performance and cash flows is set outbelow. 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 £'000EQUITYCalled-up equity sharecapital 221 0 0 0 221Share premium account 2,009 0 0 0 2,009Other reserves 567 0 0 0 567Retained earnings 4,454 566 (64) (72) 4,884TOTAL 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 £'000NON-CURRENTASSETSIntangible assets 113 0 0 0 0 113Property, plantand equipment 1,590 0 0 0 0 1,590Deferred taxassets 0 879 0 0 0 879 CURRENT ASSETSTrade and otherreceivables 25,819 (879) 732 0 0 25,672Cash and cashequivalents 353 0 0 0 0 353 CURRENTLIABILITIESTrade and otherpayables (8,793) 0 0 (57) (31) (8,881)Tax liability (904) 0 0 0 0 (904)Bank loans andoverdrafts (8,958) 0 0 0 0 (8,958) NON-CURRENTLIABILITIESBank loan (2,917) 0 0 0 0 (2,917) NET ASSETS 6,303 0 732 (57) (31) 6,947 EQUITYCalled-up equity sharecapital 225 0 0 0 0 225Share premiumaccount 2,367 0 0 0 0 2,367Other reserves 685 0 0 0 0 685Retained earnings 3,026 0 732 (57) (31) 3,670TOTAL 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 £'000NON-CURRENTASSETSIntangible assets 133 0 0 0 0 133 Property,plant andequipment 1,699 0 0 0 0 1,699Deferred taxassets 0 529 0 0 0 529 CURRENT ASSETSTrade andotherreceivables 32,108 (529) 405 0 0 31,984Cash and cashequivalents 836 0 0 0 0 836 CURRENTLIABILITIESTrade andotherpayables (12,474) 0 0 (67) (76) (12,617)Tax liability (1,068) 0 0 0 0 (1,068)Bank loans andoverdrafts (8,590) 0 0 0 0 (8,590) NON-CURRENT 0LIABILITIESBank loan (2,083) 0 0 0 0 (2,083) NET ASSETS 10,561 0 405 (67) (76) 10,823 EQUITYCalled-upequity sharecapital 230 0 0 0 0 230Share premiumaccount 2,829 0 0 0 0 2,829Other reserves 610 0 0 0 0 610Retained earnings 6,892 0 405 (67) (76) 7,154TOTAL 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 £'000Revenue 93,573 (135) 0 0 0 93,438Cost of sales (81,050) 117 0 0 0 (80,933)Gross profit 12,523 (18) 0 0 0 12,505 AdministrationCosts (7,485) 10 7 41 0 (7,427)Cost ofadmission to (572) 0 0 0 0 (572)AIMProfit on saleof discontinuedoperation 59 (59) 0 0 0 0Finance Income 13 0 0 0 0 13Finance Cost (390) 0 0 0 0 (390)Profit beforetax 4,148 (67) 7 41 0 4,129Taxation (1,172) 3 0 0 (1,169)Profit for theperiod 2,976 (64) 7 41 0 2,960Profit fromdiscontinuedoperations 0 64 0 0 3 67Profit for theperiodfrom totaloperations 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 £'000Revenue 202,914 (135) 0 0 0 202,779Cost of sales (176,019) 117 0 0 0 (175,902)Gross profit 26,895 (18) 0 0 0 26,877 AdministrationCosts (15,627) 10 (2) (4) 0 (15,623)Cost ofadmission toAIM (572) 0 0 0 0 (572)Profit on saleof discontinuedoperation 59 (59) 0 0 0 0Finance Income 19 0 0 0 0 19Finance Cost (830) 0 0 0 0 (830)Profit beforetax 9,944 (67) (2) (4) 0 9,871Taxation (2,359) 3 0 0 0 (2,356)Profit for theperiod 7,585 (64) (2) (4) 0 7,515Profit fromdiscontinuedoperations 0 64 0 0 3 67Profit for theperiodfrom totaloperations 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. UnderIFRS the deferred tax asset is classified as a non-current asset. Under UK GAAP, the income statement provided full disclosure of each line itemrelating to discontinued operations. Under IFRS, only the profit from thediscontinued operation is disclosed on the income statement. IAS 12 Income Taxes Under FRS 19, deferred tax was recognised only on timing differences; incontrast IAS 12 "Income Taxes" requires the recognition of deferred tax on alltemporary differences Under FRS 19, the deferred tax asset on the cost of options recognised wasrestricted to the amount calculated by applying the prevailing corporation taxrate to the total cost in the year calculated under FRS20. Under IFRS thedeferred tax asset recognised is the cost of options outstanding based on thefair value at the period end date multiplied by the prevailing rate ofcorporation tax. The deferred tax asset has been adjusted in line with IFRSrequirements. IAS 17 Leases Under UK GAAP, the rent-free period lease incentive was spread over the periodfrom the start of the lease to the first break clause. Under IFRS, the leaseincentive is spread over the full lease term. IAS 19 Employee benefits Under UK GAAP, the company chose not to accrue for outstanding staff holiday payat the balance sheet date. IFRS requires that the accrual be calculated at eachbalance sheet date. IAS 21 The Effects of Changes in Foreign Exchange Rates On the disposal of Matchtech Inc the cumulative translation differences aretransferred 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 thecash 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 thereconciliation to net cash inflow from operating activities) Movements in trade and other receivables and trade and other payables have beenadjusted to account for the IFRS adjustments to the provisions on the balancesheet as stated in the reconciliations above. This information is provided by RNS The company news service from the London Stock Exchange