TIDMPRP
RNS Number : 2012G
Prime People PLC
23 July 2021
23 July 2021
Prime People Plc
Results for the year ended 31 March 2021
Prime People Plc ("Prime People" or the "Group"), the global
specialist recruitment business for professional and technical
staff working in the Real Estate & Built Environment, Digital
& Data Analytics sectors, today announces its audited results
for the year ended 31 March 2021.
The Group's Annual Report and Accounts and Notice of Annual
General Meeting will be published shortly and are available to view
on the Company's website at http://prime-people.co.uk/ . The AGM
will be held on 1 September 2021 at 11.00 am at 2 Harewood Place,
London, W1S 1BX.
Highlights:
Year ended Year ended
31 March 31 March
2021 2020
------------------------------------ --------- ------------------------------------ ----------
Revenue GBP17.80m GBP23.99m
Net Fee Income ("NFI") GBP10.93m GBP15.52m
Operating Profit/(Loss) before
tax and Goodwill impairment Note 1 GBP(0.12)m GBP1.96m
Operating Profit/(Loss) before
tax, Goodwill impairment and after GBP1.80m
non-controlling interest GBP(0.036)m
Fully diluted earnings per share
before Goodwill impairment Note 2 (0.30)p 13.28p
Dividends for the year Note 3 Nil 1.80p
------------------------------------ --------- ------------------------------------ ----------
Note 1. Operating profit for the year ended 31 March 2020 is
before goodwill impairment of GBP4.0m
Note 2. Fully diluted earnings per share for the year ended 31
March 2020 are based on operating profit before goodwill impairment
of GBP4.0m
Note 3. In addition to the interim dividend, in the year ended
31 March 2020 a return of capital of 16.25p per share was paid to
shareholders
Peter Moore, Managing Director of Prime People, said:
" Our financial year to March 2021 has been most extraordinarily
challenging for the majority of businesses and we were no
exception. I am very grateful to our teams around the world who
have, despite all the hurdles, challenges and separation, worked
incredibly hard to provide exceptional service to our customers. I
am confident that our significant investment in modern globalised
systems and well over twenty years of experience will see us make
good progress this year. I want to thank all our stakeholders for
their continuing support, loyalty and resilience."
For further information, please contact:
Prime People 020 7318 1785
Robert Macdonald
Cenkos Securities plc 020 7397 8900
Katy Birkin/Nick Wells
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
PRIME PEOPLE PLC
Chairman's Statement
Performance
As previously reported, the Covid-19 pandemic started in the
early part of 2020 and, while not having a material effect on
outcomes for the year ended 31 March 2020, nonetheless, activity
slowed in our final quarter with an increasing impact throughout
the 12 months to 31 March 2021.
The scale of the economic slowdown in all the Group's
geographical segments saw performance significantly deteriorate
compared with the results of the previous year.
We closed the year with headline Revenue of GBP17.8m (2020:
GBP24.0m) and Net Fee Income ("NFI") of GBP10.9m (2020 GBP15.5m), a
30% year-on-year decline. NFI comprises the total fees for
permanent candidates and the margin earned in the placement of
contract staff.
The Group's Operating Loss, was GBP0.12m compared to the prior
year profit of GBP2.0m, before a goodwill impairment of GBP4.0m.
The decline is attributable to lower NFI although there were
materially reduced operating costs as consequence of the income
received in respect of the UK Government Coronavirus Job Retention
Scheme and support programs in overseas locations.
The Board has carefully considered the prospects of the Group's
operations and markets and are confident that no impairment charge
is required to be recognised against the overall carrying value of
Goodwill. Further details of the Goodwill are disclosed in note
11.
Cash Flow
Cash management was strengthened further during the period and,
as previously announced, a Coronavirus Business Interruption Loan
(CBILS) of GBP2m was secured, which continues to remain in place at
the time of this report. The Group continues to maintain a good net
cash position. At the start of the year the Group had cash of
GBP2.1m which had increased to GBP4.0m at the end of March 2021, of
which GBP2.0m is comprised of the CBILS.
Dividend
The Board will not be recommending a final Dividend this
year.
Share Buy Back
During the year 190,000 shares were purchased through the
Group's buyback programme at a cost of GBP103k. In the year no
ordinary shares were transferred from Treasury to satisfy the
exercise of options. At the year end the Group held 190,000 shares
in Treasury.
Board
The Board believes it has continued to operate corporate
governance standards appropriate to an AIM quoted company of its
size. The Directors retire by rotation every three years and seek
re-appointment by shareholders at the next AGM. This year, Peter
Moore will retire and seek re-election under these
arrangements.
The Board members have a mix of skills, experience and
backgrounds that are a considerable support to the business.
People
The average number of staff (excluding Temporary Contractors)
reduced from 137 last year to 117 this year.
The Group has a diverse cultural and ethnic profile within its
businesses and at the year-end had a global 60:40 male to female
gender ratio.
The success of the Group is dependent on having competent and
committed people and the Board would like to thank all the members
of our staff for their hard work, commitment and contribution over
the last year.
Current trading and outlook
All our markets have been impacted by Covid-19 and, although we
have experienced reasonable progress as the various economies we
operate in start to recover, noticeably in the UK. As an
international Group, we may be impacted by ongoing restrictions on
travel. Several of our geographic segments face geopolitical
uncertainty and, whilst trading in our international offices is
encouraging, we are closely monitoring the systemic risks posed
over the longer term in all our regions of operation.
We believe that with our management focus on the key business
drivers, and optimising interaction between our regions, the Group
is well positioned to respond swiftly across all businesses to
changes impacting our activity. We are confident about our ability
to generate worthwhile, long-term returns and will continue to
invest for the future.
Robert Macdonald
Executive Chairman
PRIME PEOPLE PLC
Strategic Report
Overview
The Group provides Permanent and Contract recruitment services
to selected, niche industry sectors. Our business model is built
around our people, all of whom are specialists in their industry
verticals.
Our employees are vital to the continued success of the Group
and we invest heavily in them. As such, we take time to find and
train the best talent that shares our ambition - to be the best,
not simply the biggest.
The built environment continues to be the Group's largest
market, served through its main subsidiary, Macdonald &
Company. In addition, the Group also serves the technology &
digital transformation and infrastructure, construction, and design
sectors through its Prime Insight and Command brands
respectively.
The business is organised into teams of specialist consultants,
each managed by a team leader who is responsible for performance
within the operating framework approved by the Board. The Group
operates a policy of open communication in the belief that its
employees are best placed to suggest operational improvements and
emergent strategies that will increase earnings.
The Group is committed to managing its talent on merit and
provides equal opportunities for all current and future employees.
It gives full and fair consideration to applications for employment
from disabled persons, where a disabled person may adequately carry
out the requirements of any position within the physical
constraints of the Company's offices. The Board is concerned to
provide a healthy corporate culture and in pursuit of its
objectives and strategy seeks regular input through open meetings
with its staff.
The Group has two locations in the UK, the London head office
and Manchester, and international offices in Hong Kong (established
in 2007), Dubai (established in 2008), Singapore (established in
2012), Frankfurt (established in 2019), and a franchise in South
Africa (established in 2008). In the past 12 months, the Group has
also opened offices in Riyadh, Houston, and Düsseldorf.
The Covid-19 pandemic had a large impact on all parts of our
business during the period. As societies across the world locked
down, the Group experienced a marked decrease in demand which
extended through the year and has significantly affected results.
Despite the strong headwinds facing all businesses, the Group's
strategy of cultivating strong client relationships, investing in
the best technology, and employing the best people helped mitigate
the impact of the unprecedented restrictions placed upon global
economies.
These are the foundations of the Group's success and, together
with an experienced management team, focussed on tight control of
cash resources, expenditure and productivity per head, they helped
quickly stabilise the Group and have positioned us to recover as
markets began to normalise after the first round of lockdowns.
While short-term cost reduction measures were quickly put in
place, the Group has continued to invest in our people and every
effort was made to retain staff and ensure we were equipped to take
advantage of an economic recovery. We were able to make use of
government funded support schemes and, while some limited staff
reductions were, unfortunately required, the Group was able to
retain its most experienced, productive fee earners.
Over several years, the Group has positioned itself to be agile
in serving our clients - wherever their demand may be.
Consequently, we had made significant investments in our technology
and were well positioned to support remote working. Business was
able to continue throughout the various lockdown measures with
little interruption and we believe that the accelerated adoption of
flexible working will present opportunities for the Group.
Despite this, performance was materially impacted by the
pandemic with NFI down by 30% overall. As a result of the reduction
in NFI the group reports an operating loss of GBP0.12m, however,
the fundamentals of the Group are strong and the investment we made
in retaining fee earners during the period will position us to take
advantage of opportunities in our markets over the long-term.
Due to a predominantly public sector client base, contract
recruitment in the UK proved resilient. During the year the Group
continued its targeted expansion into the U.S. and mainland
European markets.
With growth now returning to economies around the world, the
Group remains committed to organic growth and where individual NFI
performance against costs justifies, it will hire new fee
earners.
Regional Performance
United Kingdom
2021 2020
GBPm GBPm
Revenue 11.67 15.70
Net Fee Income (NFI) 4.89 7.26
Adjusted Operating (Loss)/Profit
(Note 1) (0.02) 0.30
Adjusted Operating (Loss)/Profit
as % of NFI (0.4%) 4.55%
Average number of employees 61 71
Revenue reduced by 25.7% to GBP11.67m (2020: GBP15.7m) with NFI
reducing by 32.6% to GBP4.89m (2020: GBP7.3m).
Asia Pacific
2021 2020
GBPm GBPm
Revenue 5.11 8.18
Net Fee Income (NFI) 5.01 8.12
Operating Profit 0.05 1.67
Operating Profit as % of NFI 9.23% 20.68%
Average number of employees 50 60
NFI declined by 38.3% to GBP5m (2020: GBP8.1m) . The region is
covered by our offices in Hong Kong and Singapore and represents
45.8% of Group NFI (2020: 52.5%).
Command Operating Loss, unadjusted for Minority Interest, was
part of the reported Operating Profit in the region.
Rest of the World
2021 2020
GBPm GBPm
Revenue 1.03 0.14
Net Fee Income (NFI) 1.03 0.14
Operating (Loss)/Profit (0.13) 0.00
Operating (Loss)/Profit as % of
NFI (12.73%) 0.00%
Average number of employees 3 2
The region now covers our offices in Frankfurt, Düsseldorf,
Houston, Dubai and a franchise in South Africa.
Peter Moore
Managing Director
22 July 2021
Financial Review
Revenue
The Group's Revenue was GBP17.8m, which represents a 25.5%
decline compared to 2020 (GBP24.0m).
Net Fee Income (NFI)
Overall Group NFI was GBP10.93.m which is a decrease of 29.5%
compared to the prior year.
The split of net fee income was 94% from Permanent Sales (2020:
94%) and 6.0% from Contract Sales (2020: 6.0%).
The Group generated 55.3% of its Net Fee Income from outside the
UK (2020: 53.2%).
Administration Costs
Administration costs for the year were GBP11.7m, a decrease of
13.4% on 2020 due to staff going on furlough and lower commission
costs.
Profit before Taxation
Loss before taxation and Goodwill impairment was GBP0.17m (2020:
profit of GBP1.89m) and reported loss was GBP0.17m after Goodwill
Impairment (2020: loss of GBP2.13m).
Taxation
The taxation credit is GBP5k on loss before taxation of GBP173k
which gives an effective tax rate of 2.8% (2020: 8.2%). The reasons
for the difference from the standard UK corporation tax rate of 19%
are detailed in note 7.
Earnings per Share
Basic and diluted earnings per share improved to a loss per
share of 0.30p (2020: loss per share of 19.36p).
Balance Sheet
Net Assets at 31 March 2021 were GBP8.8m compared to the prior
year net assets of GBP9.4m. Trade Receivables net of provisions for
doubtful debts at the year-end were GBP2.2m (2020: GBP3.0m) and
reflect the reduced average credit period taken by clients to 48
days (2020: 75 days). The decrease in debtor days is explained by
stronger collection from certain Command clients in Saudi
Arabia.
Treasury Management and Currency Risk
Approximately 65.6% of the Group's revenue in 2021 (2020: 65.4%)
was denominated in Sterling. Consequently, the Group has a currency
exposure in accounting for overseas operations.
Currently the Group policy is not to hedge against this
exposure, but it does seek to minimise the effect by converting
into Sterling all cash balances in foreign currency that are not
required for local short-term working capital needs.
Cash Flow and Cash Position
At the start of the year the Group had Cash of GBP2.055m. After
net taxation payments of GBP0.13m (2020: GBP0.16m) cash generated
from operations was GBP1.0m (2020: GBP3.5m).
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Strategic
Report, the Directors' Report and the Financial Statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have elected to prepare the financial statements in accordance with
International Financial Reporting Standards (IFRSs') as adopted by
the EU and applicable law.
Under Company law the Directors must not approve the Financial
Statements unless they are satisfied that they give a true and fair
view of the Company and the Group profit or loss for that period.
In preparing these Financial Statements, the Directors are required
to:
-- select suitable accounting policies and then apply them consistently.
-- make judgments and accounting estimates that are reasonable and prudent.
-- state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the Financial Statements.
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are enough to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the Financial Statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
They are further responsible for ensuring that the Strategic
Report and the Report of the Directors and other information
included in the Annual Report and Financial Statements is prepared
in accordance with applicable law in the United Kingdom.
The maintenance and integrity of the Prime People Plc web site
is the responsibility of the directors.
Legislation in the United Kingdom governing the preparation and
dissemination of the accounts and the other information included in
annual reports may differ from legislation in other
jurisdictions.
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2021
Note 2021 2020
GBP'000 GBP'000
Revenue 2, 3 17,802 23,992
Cost of sales (6,870) (8,471)
----------------------------- ------- --- --------- ----------
Net Fee Income 2, 3 10,932 15,521
Administrative
expenses (11,756) (13,560)
Goodwill impairment 11 - (4,018)
Other operating 707 -
income (Covid
related Governmental
support)
----------------------------- ------- --- --------- ----------
Operating loss 4 (117) (2,057)
Net interest
payable (56) (76)
Loss before taxation (173) (2,133)
Income tax credit/(expense) 7 5 (175)
----------------------------- ------- --- --------- ----------
Loss for the
year
Other comprehensive
income
Items that will (168) (2,308)
or may be reclassified
to profit or
loss:
Exchange loss
on translating
foreign operations (267) (105)
----------------------------- ------- --- --------- ----------
Other Comprehensive
loss for the
year, net of
tax (267) (105)
Total comprehensive
loss for the
year (435) (2,413)
Loss attributable
to:
Equity shareholders
of the parent (36) (2,384)
Non-controlling
interest (132) 76
Total comprehensive
loss attributable
to:
Equity shareholders
of the parent (303) (2,489)
Non-controlling
interest (132) 76
Loss per share 9
Basic loss per
share (0.30)p (19.36)p
Diluted loss
per share (0.30)p (19.36)p
The above results relate to continuing operations.
PRIME PEOPLE PLC
Consolidated Statement of Changes in Equity
For the year ended 31 March 2020
Called Capital Treasury Share Merger Share Translation Retained Total Non-controlling Total
up Redemption shares premium reserve option reserve Earnings attributable interest equity
share reserve account reserve to equity
capital holders
of the
parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- ----------- --------- -------- -------- -------- ------------ --------- ------------- ---------------- ---------
At 31 March
2019 1,229 9 (161) 5,371 173 337 596 6,857 14,411 588 14,999
Loss for the
year - - - - - - - (2,384) (2,384) 76 (2,308)
Other
comprehensive
loss - - - - - - (105) - (105) - (105)
Total
Comprehensive
loss for the
year - - - - - - (105) (2,384) (2,489) 76 (2,413)
IFRS16
adjustment
for leases - - - - - - - (297) (297) - (297)
Transactions with owners of the company
Adjustment in
respect of
share
options - - - 5 - (150) - 236 91 - 91
Issue of
ordinary
shares 2 - - - - - - - 2 - 2
Capital
repayment - - - (2,000) - - - - (2,000) - (2,000)
Shares
purchased
for treasury - - (23) - - - - - (23) - (23)
Shares issued
from treasury - - 34 - - - - - 34 - 34
Adjustment on
share
disposal - - 150 - - - - (150) - - -
Dividend - - - - - - - (948) (948) - (948)
--------------- -------- ----------- --------- -------- -------- -------- ------------ --------- ------------- ---------------- ---------
At 31 March
2020 1,231 9 - 3,376 173 187 491 3,314 8,781 664 9,445
--------------- -------- ----------- --------- -------- -------- -------- ------------ --------- ------------- ---------------- ---------
PRIME PEOPLE PLC
Consolidated Statement of Changes in Equity
For the year ended 31 March 2021
Called Capital Treasury Share Merger Share Translation Retained Total Non-controlling Total
up Redemption shares premium reserve option reserve Earnings attributable interest equity
share reserve account reserve to equity
capital holders
of the
parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- ----------- --------- -------- -------- -------- ------------ --------- ------------- ---------------- --------
At 31 March
2020 1,231 9 - 3,376 173 187 491 3,314 8,781 664 9,445
Loss for the
year - - - - - - - (36) (36) (132) (168)
Other
comprehensive
loss - - - - - - (267) - (267) - (267)
Total
Comprehensive
loss for the
year - - - - - - (267) (36) (303) (132) (435)
Transactions with owners of the company
Adjustment in
respect of
minority
dividend - - - - - - - (152) (152) - (152)
Adjustment in
respect of
share
schemes - - - - - 76 - - 76 - 76
Shares
purchased
for treasury - - (103) - - - - - (103) - (103)
Adjustment in
respect of
share
options - - - - - (24) - 24 - - -
At 31 March
2021 1,231 9 (103) 3,376 173 239 224 3,150 8,299 532 8,831
--------------- -------- ----------- --------- -------- -------- -------- ------------ --------- ------------- ---------------- --------
PRIME PEOPLE PLC
Consolidated Statement of Financial Position
As at 31 March 2021
2021 2020
Note GBP'000 GBP'000
Assets
Non - current assets
Goodwill 11 6,509 6,509
Property, plant and
equipment 10 1,284 1,890
7,793 8,399
Current assets
Trade and other receivables 13 3,061 3,868
Deferred tax asset 17 40 40
Cash at bank and in
hand 22 3,980 2,055
-------------------------------- ----- -------------------------- --------------------------
7,081 5,963
-------------------------------- ----- -------------------------- --------------------------
Total assets 14,874 14,362
-------------------------------- ----- -------------------------- --------------------------
Liabilities
Current liabilities
Trade and other payables 15 3,140 3,205
Lease liabilities 533 497
Current tax liability 95 166
Deferred tax liability 17 22 22
-------------------------------- ----- -------------------------- --------------------------
3,790 3,890
-------------------------------- ----- -------------------------- --------------------------
Non-current liabilities
Borrowings 16 1,733 -
Lease liabilities 520 1,027
-------------------------------- ----- -------------------------- --------------------------
Total liabilities 6,043 4,917
-------------------------------- ----- -------------------------- --------------------------
Net assets 8,831 9,445
-------------------------------- ----- -------------------------- --------------------------
PRIME PEOPLE PLC
Consolidated Statement of Financial Position
As at 31 March 2021
2021 2020
Note GBP'000 GBP'000
Called up share capital 18 1,231 1,231
Capital redemption reserve 19 9 9
Treasury shares 19 (103) -
Share premium account 19 3,376 3,376
Merger reserve 19 173 173
Share option reserve 19 239 187
Translation reserve 19 224 491
Retained earnings 19 3,150 3,314
8,299 8,781
Non-controlling interest 532 664
Total equity 8,831 9,445
---------------------------- ----- -------- --------
The financial statements on pages 29 to 71 were approved by the
Board of Directors and authorised for issue on 22 July 2021 and are
signed on its behalf by:
R J G Macdonald P H Moore
PRIME PEOPLE PLC
Company Statement of Financial Position
As at 31 March 2021
2021 2020
Note GBP'000 GBP'000
Assets
Non-current assets
Investment in subsidiaries 12 7,189 7,137
7,189 7,137
-------------------------------- ----- -------------------------- --------------------------
Current assets
Trade and other receivables 13 4,054 3,145
Cash and cash equivalents 22 556 876
-------------------------------- ----- -------------------------- --------------------------
4,610 4,021
-------------------------------- ----- -------------------------- --------------------------
Total assets 11,799 11,158
-------------------------------- ----- -------------------------- --------------------------
Liabilities
Current liabilities
Trade and other payables 15 2,580 3,912
Current tax liability - 3
-------------------------------- ----- -------------------------- --------------------------
2,580 3,915
-------------------------------- ----- -------------------------- --------------------------
Non-current liabilities
Borrowings 16 1,733 -
-------------------------------- ----- -------------------------- --------------------------
1,733 -
-------------------------------- ----- -------------------------- --------------------------
Total liabilities 4,313 3,915
-------------------------------- ----- -------------------------- --------------------------
Net assets 7,486 7,243
-------------------------------- ----- -------------------------- --------------------------
Capital and reserves
attributable to the
Company's equity holders
Called up share capital 18 1,231 1,231
Capital redemption reserve
fund 19 9 9
Treasury shares 19 (103) -
Share premium account 19 3,376 3,376
Merger reserve 19 173 173
Share option reserve 19 239 187
Retained earnings 19 2,561 2,267
-------------------------------- ----- -------------------------- --------------------------
Total equity 7,486 7,243
-------------------------------- ----- -------------------------- --------------------------
PRIME PEOPLE PLC
Company Statement of Financial Position
As at 31 March 2021
The Company's retained earnings includes profit/(loss) for the
year of GBP294,034 (2020: (GBP524,296)).
The financial statements of Prime People Plc, Company Number
01729887 were approved by the Board and authorised for issue on 22
July 2021 and are signed on its behalf by:
R J G Macdonald D J G Macdonald
PRIME PEOPLE PLC
Company Statement of Changes in Equity
For the year ended 31 March 2021
Company Called Capital Treasury Share Merger Share Retained Total
up Redemp- shares premium reserve option earnings
share tion account reserve
capital reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31 March
2019 1,229 9 (161) 5,371 173 337 3,576 10,534
Total
comprehensive
loss for
the year - - - - - - (524) (524)
Issue of
ordinary
shares 2 - - - - - - 2
Adjustment
for share
schemes - - - 5 - - (5) -
Capital
repayment - - - (2,000) - - - (2,000)
Shares
purchased
for treasury - - (23) - - - - (23)
Shares issued
from treasury - - 34 - - - - 34
Adjustment
on share
disposal - - 150 - - (150) (150) (150)
Dividend - - - - - - (630) (630)
--------------- ------------- ------------- ------------ --------------- -------------- ------------- ------------ --------
At 31 March
2020 1,231 9 - 3,376 173 187 2,267 7,243
--------------- ------------- ------------- ------------ --------------- -------------- ------------- ------------ --------
Total
comprehensive
loss for
the year - - - - - - 294 294
Shares
purchased
for treasury - - (103) - - - - (103)
Adjustment
in respect
of share
options - - - - - 52 - 52
At 31 March
2021 1,231 9 (103) 3,376 173 239 2,561 7,486
--------------- ------------- ------------- ------------ --------------- -------------- ------------- ------------ --------
PRIME PEOPLE PLC
Group and Company Cash Flow Statement
For the year ended 31 March 2021
Group Company
2021 2020 2021 2020
Note GBP'000 GBP'000 GBP'000 GBP'000
Cash generated
from (used
in) underlying
operations 21 2,016 3,642 10 (276)
Corporation
tax paid (125) (160) (9) (8)
Net cash
from/ (used
in) operating
activities 1,891 3,482 1 (284)
------------------- ----- ----------- ---------- --------- -----------
Cash flows
(used in)/
from investing
activities
Interest
received 5 5
Net purchase
of property,
plant and
equipment,
and software (75) (122) - -
Dividend
received - - 300 3,450
Net cash
(used in)/from
investing
activities (70) (122) 305 3,450
Cash flows
from financing
activities
Interest (13) - - -
paid
Issue of
ordinary
share capital - 2 - 2
Shares issued
from treasury - - - 34
Shares purchased
for treasury (103) (21) (103) (21)
Shares issued
and moved
to treasury - - - (2)
Return of
capital
from share
premium - (2,000) - (2,000)
Dividend
paid to
shareholders - (948) - (625)
Dividend (152) - - -
paid to
non-controlling
interest
Repayment - - (2,523) -
of intercompany
debt
Repayment (822) - - -
of Invoice
discounting
loan
Coronavirus
Business
Interruption
Loan 2,000 - 2,000 -
Lease payments (519) (566) - -
------------------- ----- ----------- ---------- --------- -----------
Net cash
from / (used
in) financing
activities 22 391 (3,533) (626) (2,612)
------------------- ----- ----------- ---------- --------- -----------
Net (decrease)/
increase
in cash
and cash
equivalents 2,212 (173) (320) 554
------------------- ----- ----------- ---------- --------- -----------
Cash and
cash equivalents
at beginning
of the year 2,055 2,309 876 322
Effect of
foreign
exchange
rate changes (287) (81) - -
------------------- ----- ----------- ---------- --------- -----------
Cash and
cash equivalents
at the end
of the year 23 3,980 2,055 556 876
------------------- ----- ----------- ---------- --------- -----------
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2021
1 Nature of Operations
Prime People Plc ('the Company') and its subsidiaries (together
'the Group') is an international recruitment services organisation
with offices in the United Kingdom, the Middle East and the Asia
Pacific region from which it serves an international client base.
The Group offers both Permanent and Contract specialist recruitment
consultancy for large and medium sized organisations.
The Company is a public limited company which is quoted as an
AIM Company and is incorporated and domiciled in the UK. The
address of the registered office and the principal place of
business is 2 Harewood Place, London W1S 1BX. The registered number
of the Company is 01729887.
2 Summary of Significant Accounting Policies
Basis of Preparation
The financial statements of Prime People Plc consolidate the
results of the Company and all its subsidiary undertakings. As
permitted by Section 408 of the Companies Act 2006, the profit and
loss account of the Company has not been included as part of these
financial statements. The financial statements have been prepared
on a going concern basis.
The consolidated financial statements of the Group and Company
have been prepared on going concern basis, and in accordance with
International Financial Reporting Standards ("IFRS") in conformity
with the requirement of the Companies Act and comply with IFRIC
interpretations and Company Law applicable to Companies reporting
under IFRS, and in accordance with the Companies Act 2006. During
the reporting year, the UK left the European Union and therefore
the standards will be adopted by the UK. The consolidated financial
statements have been prepared under the historical cost convention
modified as necessary to include certain items at fair value, as
required by accounting standards.
The Parent Company's Financial Statements have also been
prepared in accordance with IFRS and the Companies Act 2006. The
consolidated financial statements for the year ended 31 March 2021
(including comparatives) are presented in GBP '000.
The accounting polices applied by the Group in these
consolidated financial statements are the same as those applied in
its consolidated Financial Statements as at and for the year ended
31 March 2020.
International Accounting Standards (IAS/IFRS) and
Interpretations in issue but not yet UK approved
At the date of authorisation of these financial statements,
certain new standards, amendments and interpretations to existing
standards have been published by the IASB but are not yet
effective. These have not been adopted early by the Group and the
initial assessment indicates that either they will not be relevant
or will not have a material impact on the Group. The effective
dates below are for reporting periods beginning on or after that
point:
International Accounting Standards (IAS/IFRS) and Amendments
adopted by the UK but not yet effective in the UK
-- Amendment to IFRS 16 Leases Covid 19-Related Rent Concessions
(issued on 28 May 2020), effective 1 June 2020
-- Amendments to IFRS 16 Leases: Covid-19-Related Rent
Concessions beyond 30 June 2021 (issued on 31 March 2021),
effective 1 April 2021
-- Amendments to IAS 1 Presentation of Financial Statements:
Classification of Liabilities as Current or Non-current (issued on
23 January 2020) and Classification of Liabilities as Current or
Non-current (issued on 15 July 2020), deferral of effective date to
1 January 2023
-- Amendments to IAS 1 Presentation of Financial Statements and
IFRS Practice Statement 2: Disclosure of Accounting policies
(issued on 12 February 2021), effective 1 January 2023
-- Amendments to: IFRS 3 Business Combinations; IAS 16 Property,
Plant and Equipment; IAS 37 Provisions, Contingent Liabilities and
Contingent Assets; and Annual Improvements 2018-2020 (all issued 14
May 2020), effective 1 January 2023
-- Amendments to IAS 8 Accounting policies, Changes in
Accounting Estimates and Errors: Definition of Accounting Estimates
(issued on 12 February 2021), effective 1 January 2023
-- Amendments to IAS 12 Income Taxes: Deferred Tax related to
Assets and Liabilities arising from a Single Transaction (issued on
7 May 2021), effective 1 January 2023
IAS 1 - Presentation of Financial Statements
Amendments to IAS 1 clarify the criteria used to determine
whether liabilities are classified as current or non-current. This
will be based on the Group's right at the end of the reporting
period to defer settlement of the liability for at least twelve
months after the reporting period. 'Settlements' include the
transfer of cash, goods, services, or equity instruments unless the
obligation to transfer equity instruments arises from a conversion
feature classified as an equity instrument separately from the
liability component of a compound financial instrument. The
amendments are effective for annual reporting periods beginning on
or after 1 January 2023.
The Group does not believe that the amendments to IAS 1 will
have a significant impact on the classification of its
liabilities.
Consolidation
Subsidiaries are all entities over which the Group has the power
to govern the financial and operating policies, generally
accompanying a shareholding of more than one half of the voting
rights. Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated from
the date that control ceases.
Business combinations are accounted for using the acquisition
method of accounting. The cost of an acquisition is measured at the
aggregate of the fair value of the assets given, equity instruments
issued, and liabilities incurred or assumed at the date of
exchange. Acquisition related costs are recognised in profit or
loss as incurred. Where applicable, the consideration for the
acquisition includes any asset or liability resulting from a
contingent consideration arrangement, measured at its acquisition
date fair value . The excess of the cost of acquisition over the
fair value of the Group's share of the identifiable net assets
acquired is recorded as goodwill.
Inter-company transactions and balances on transactions between
Group companies are eliminated in preparing the consolidated
financial statements.
Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the
Group.
Going Concern
The directors have taken consideration of the impact of Covid-19
on the business and the withdrawal of the United Kingdom from the
European Union.
The Group's activities are funded by a combination of its
operating cashflows, a GBP2m CBILS loan and an invoice finance
facility in the UK of GBP2m. The Board has reviewed the Group's
profit and cash flow forecasts, and applied sensitivities to the
underlying assumptions including impact of Covid-19 outbreak and
the potential consequences for the Group. These projections
indicate that the Group expects to meet its obligations as they
fall due with the use of existing facilities and to continue to
meet its covenant requirements for a period of not less than 12
months from the date of issue of the Annual Report and Accounts.
The Directors note that the Group is trading adequately and has
sufficient working capital and other finance available to continue
trading for a period of not less than 12 months from the date of
issue of the Annual Report and Accounts. As such, the Directors
consider it appropriate to continue to prepare the financial
statements on a Going Concern basis.
Revenue recognition
a) Revenue
Revenue, which excludes value added tax ("VAT"), constitutes the
value of services undertaken by the Group from its principal
activities, which are recruitment consultancy and other ancillary
services. These consist of:
-- Revenue from Contract placements, which represents amounts
billed for the services of contract staff, including the salary of
these staff. This is recognised over the duration of the placement
contract as the service is provided; and
-- Revenue from Permanent placements, which is based on a
percentage of the candidate's remuneration package and is derived
from retained assignments (income is recognised after an offer is
accepted and candidate commences employment). Revenue is recognised
once value has been received by the customer and when the above
performance obligation has been satisfied. A provision is made for
certain circumstances where a client may be entitled to a refund
based on variable consideration if a candidate that has been placed
leaves the role within 3 months; and
-- Revenue from franchise, is recognised on an accruals basis in
line with the period to which it relates
b) Cost of Sales
Cost of sales consists of the salary cost of contract staff and
costs incurred on behalf of clients, principally advertising
costs.
c) Net Fee Income
Net Fee Income represents Revenue less Cost of Sales and
consists of the total placement fees of Permanent candidates and
the margin earned on the placement of Contract candidates.
d) Foreign Currency Translation
(i) Functional and Presentation Currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates ('the functional
currency'). The consolidated financial statements are presented in
Sterling, which is the Company's functional and presentation
currency.
(ii) Transactions and Balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the
consolidated statement of comprehensive income.
(iii) Group Companies
On consolidation the results and financial position of all the
Group entities that have a functional currency different from the
presentation currency are translated into the presentation currency
as follows:
-- assets and liabilities for each year end presented are
translated at the closing rate of that year end;
-- income and expenses for each statement of comprehensive
income are translated at average exchange rates; and
-- all resulting exchange differences are recognised in other comprehensive income.
e) Government grants
Grants are accounted for under the accruals model. Grants of a
revenue nature are recognised in the statement of comprehensive
income in the same period as the related expenditure and are shown
within other operating income.
f) Intangible Assets
(i) Goodwill
Goodwill represents the excess of the cost of an acquisition
over the fair value of the Group's share of the net identifiable
assets of the acquired subsidiary at the date of acquisition.
Goodwill on acquisitions of subsidiaries is included in
'intangible' assets.
Separately recognised goodwill is reviewed annually for
impairment and carried at cost less accumulated impairment losses.
Impairment losses on goodwill are not reversed. Determining whether
goodwill is impaired requires an estimation of the value in use of
the cash-generating units to which goodwill has been allocated. The
value in use calculation requires the entity to estimate the future
cash flows expected to arise from the cash generating unit and a
suitable discount rate in order to calculate present value.
Intangible assets that are acquired separately are carried at
cost less accumulated amortisation and accumulated impairment
losses. Amortisation is recognised on a straight-line basis over
their estimated useful life. The estimated useful life and
amortisation method are reviewed at the end of each reporting
period, with any changes being accounted for on a prospective
basis.
g) Property, Plant and Equipment
All property, plant and equipment are stated at historical cost
less accumulated depreciation less provisions for impairment.
Depreciation is provided on all property, plant and equipment using
the straight-line method at rates calculated to write off the cost
less estimated residual values over their estimated useful lives,
as follows:
-- Furniture, fittings and computer equipment 25% - 33%
The gain or loss arising on disposal or retirement of an asset
is determined by comparing the sales proceeds with the carrying
amount of the asset and is recognised within profit and loss.
h) Impairment of Assets
Assets that have an indefinite useful economic life are not
subject to amortisation and are tested annually for impairment.
Assets that are subject to amortisation are reviewed for impairment
whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset's carrying amount
exceeds its recoverable amount. The recoverable amount is the
higher of an asset's fair value less costs to sell and value in
use. For the purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable
cash flows (cash-generating units).
i) Taxation
The tax expense represents the sum of the current tax expense
and deferred tax expense.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from profit as reported in the
statement of comprehensive income because it excludes items of
income or expense that are taxable or deductible in other years and
it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the statement of
financial position reporting date.
Deferred income tax is provided in full, on temporary
differences arising between the tax bases of assets and liabilities
and their carrying amounts in the consolidated financial
statements. Deferred income tax is determined using tax rates and
laws that have been enacted or substantially enacted by the balance
sheet date and are expected to apply when the related deferred
income tax asset is realised, or the deferred income tax liability
is settled.
Deferred income tax assets are recognised to the extent that it
is probable that future taxable profit will be available against
which the temporary differences can be utilised.
j) Leases
The Group recognises within the balance sheet a right-of-use
asset and a corresponding lease liability for all applicable leases
except for short term leases (lease term of 12 months or less) and
leases of low value assets (less than GBP5,000). For those leases
the Group has opted to recognise a leases expense on a straight
line basis.
New right-of-use assets are measured at the amount of the lease
liability, reduced for any lease incentives received, and increased
for:
-- lease payments made at or before commencement of the lease.
-- initial direct costs incurred; and
-- the amount of any provision recognised where the group is
contractually required to dismantle, remove or restore the leased
asset (typically leasehold dilapidations).
-- using hindsight in determining the lease term where the lease
agreement contains options to extend or terminate the contract
Lease liabilities are measured at the present value of the
contractual payments due to the lessor over the lease term, with
the discount rate determined by reference to the rate inherent in
the lease unless (as is typically the case) this is not readily
determinable, in which case applying a single discount rate to
leases with reasonably similar characteristics. The Group does not
have any leases with variable lease payments.
Subsequent to initial measurement, lease liabilities increase as
a result of interest charged at a constant rate of return on the
balance outstanding and are reduced for lease payments made. Right
of use assets are depreciated on a straight line basis over the
remaining term of the lease.
When the Group revises its estimate of the term of any lease
(because, for example, it re-assesses the probability of a lessee
extension or termination option being exercised), it adjusts the
carrying amount of the lease liability to reflect the payments to
make over the revised term, which are discounted using a revised
discount rate. An equivalent adjustment is made to the carrying
value of the right-of-use asset, with the revised carrying amount
being depreciated over the revised remaining lease term.
k) Pension Costs
The Group operates a defined contribution pension scheme. The
Group adopts both the minimum legally required employer
contribution rate of 3% of qualifying earnings, and the maximum
earning threshold for automatic enrolment for 2020-21, as set by
the Pension Regulator.
The assets of the scheme are held separately from those of the
Group in independently administered workplace pension - NEST. The
pension costs charged to the income statement represent the
contributions payable by the Group to NEST during the year.
The Pension liabilities at the Balance Sheet date represent
employer and employee pension contributions, that are payable to
the pension provider by the 22nd day of each month.
l) Segmental Reporting
IFRS 8 requires operating segments to be identified based on
internal reports that are regularly reviewed by the Board of
Directors to allocate resources to the segment and to assess their
performance.
m) Financial instruments
Financial assets and liabilities are recognised in the Group's
balance sheet when the Group becomes a party to the contractual
provision of the instrument.
n) Financial assets
The Group's financial assets comprise cash and various other
receivable balances that arise from its operations.
This includes the Group's trade and other receivables. They are
initially recorded at fair value and subsequently measured at
amortised cost. For trade receivables amortised cost includes an
allowance for expected credit losses. This is assessed applying a
provision percentage of expected loss to each of these which is
assessed by reference to past default experience. Trade receivables
are only written off once the potential of collection is considered
to be nil and any local requirements such as withholding sales
taxes are met.
The carrying amount of the financial asset is reduced by the
impairment loss directly for all financial assets except for trade
receivables, where the carrying amount is reduced using an
allowance account. When a trade receivable is considered
uncollectible, it is written off against the allowance account.
Subsequent recoveries of amounts previously written off are
credited against the allowance account. Changes in the carrying
amount of the allowance account are recognised in the profit or
loss account.
Cash and cash equivalents include cash in hand and bank deposits
that are readily convertible to a known amount of cash and are
subject to an insignificant risk of changes in value. Bank
overdrafts are classified with current liabilities in the statement
of financial position.
o) Financial liabilities and equity
The Group's operating activities in the UK are part funded by
Invoice Financing facilities. Movements in the Invoice Discounting
balance are shown within financing activities in the Group's Cash
flow Statement. Interest charges on invoice discounting are
included in finance costs and service charges are included in
administrative costs in the Group's Income Statement.
Financial liabilities and equity instruments are initially
measured at fair value and are classified according to the
substance of the contractual arrangements entered. Financial
liabilities are subsequently measured at
amortised cost. The Group's financial liabilities comprise trade
payables, bank overdrafts and other payable balances that arise
from its operations. They are classified as 'financial liabilities
measured at amortised cost'.
p) Share-Based Compensation
The Group operates equity-settled, share-based compensation
plans. The fair value of the employee services received in exchange
for the grant of the options is recognised as an expense. The total
amount to be expensed over the vesting period is determined by
reference to the fair value of the options granted, excluding the
impact of any non-market vesting conditions (for example,
profitability and sales growth targets). At the balance sheet date,
the number of outstanding options is adjusted to reflect those
options that have been granted during the year or have lapsed in
the year.
q) Dividend Distribution
A final dividend distribution to the Company's shareholders is
recognised as a liability in the Group's financial statements in
the period in which the dividends are approved by the Company's
shareholders. Interim dividend distributions are recognised in the
period in which they are approved and paid.
r) Critical Accounting Estimates and Judgements
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates and
judgements. It also requires management to exercise judgement in
the process of applying the Company's accounting policies.
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
Information about significant areas of estimation uncertainty
and critical judgements in applying accounting policies that have
the most significant effect on the amount recognised in the
financial statements are described below:
Critical judgements in applying the Group's policies
Revenue Recognition
Revenue from permanent placements is recognised when a candidate
commences employment as management considers that to be when the
performance obligation is satisfied.
Key sources of estimation uncertainty
Goodwill Impairment
The Group tests goodwill for impairment at least annually. The
recoverable amount is determined based on value-in-use
calculations. This method requires the estimation of future cash
flows and the assessment of a suitable discount rate in order to
calculate their present value. Details of the impairment review are
disclosed in note 11.
Trade Receivables
There is uncertainty regarding customers who may not be able to
pay as their debts fall due. In reviewing the appropriateness of
the provisions in respect of recoverability of trade receivables,
consideration has been given to the ageing of the debt and the
potential likelihood of default, considering current economic
conditions. Details of the total amount of receivables past due and
the movement in allowance for doubtful debts are disclosed in note
13.
Included within receivables are amounts due of GBP328k against
which a provision of GBP263k has been made. These amounts are due
from one entity which has a history of taking extended credit
terms, management has considered this when deciding upon the
appropriate level of provision. In the event that the debt is not
repaid a further provision of GBP65k will be required, in the event
that it is paid the provision of GBP263k will be released.
3 Segment Reporting
a) Revenue and Net Fee Income, by Geographical Region
Information provided to the Board is focused on regions and as a
result, reportable segments are on a regional basis.
Revenue Net fee income
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
UK 11,668 15,677 4,894 7,262
Asia 5,105 8,176 5,009 8,120
Rest of World 1,029 139 1,029 139
---------------- -------------------------- --------- ----------- --------------
17,802 23,992 10,932 15,521
-------------------------- --------- ----------- --------------
All revenues disclosed by the Group are derived from external
clients and are for the provision of recruitment services. The
accounting policies of the reportable segments are the same as the
Group's accounting policies described in note 2. Segment profit
before taxation shown below represents the profit earned by each
segment after allocations of central administration costs.
b) Revenue and Net Fee Income, by Classification
Revenue Net fee income
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
Permanent
- UK 4,257 6,344 4,257 6,344
- Asia 4,995 8,110 4,995 8,110
- Rest of World 1,029 139 1,029 139
Contract
- UK 7,411 9,333 637 918
- Asia 110 66 14 10
------------------ --------- --------- --------- ---------
Total 17,802 23,992 10,932 15,521
------------------ --------- --------- --------- ---------
c) Profit before Taxation by Geographical Region
2021 2020
GBP'000 GBP'000
UK - operations (33) 299
UK - impairment of investment asset - (4,018)
Asia 47 1,672
Rest of World (131) (10)
Operating loss (117) (2,057)
Net finance income (56) (76)
------------------------------------- -------- ----------
Loss before taxation (173) (2,133)
------------------------------------- -------- ----------
Operating profit is the measure of profitability regularly
reviewed by the Board, which collectively acts as the Chief
Operating Decision Maker. Consequently, no segmental analysis of
interest or tax expenses is provided.
Segment operating profit is the profit earned by each operating
unit and includes inter-segment revenues totalling GBP1.29m (2020:
GBP0.80m) for the UK, and charges of GBP1.11m (2020: GBP0.80m) for
Asia and GBP0.18m for the rest of the world (2020: GBPnil).
Intersegmental revenue and charges relate to transfer of
services from one subsidiary of the Group to another. They are
based on arm's length calculations and in proportion to segmental
headcount as percentage of the total Group headcount.
d) Segment Assets and Liabilities by Geographical Region
Total assets Total liabilities
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
UK 9,288 9,418 3,768 386
Asia 5,363 4,867 1,910 4,522
Rest of World 223 77 365 9
---------------- ------------- --------- -------------- --------
Total 14,874 14,362 6,043 4,917
---------------- ------------- --------- -------------- --------
The analysis above is of the carrying amount of reportable
segment assets and liabilities. Segment assets and liabilities
include items directly attributable to a segment and include income
tax assets and liabilities.
4 Loss on ordinary activities before taxation
2021 2020
GBP'000 GBP'000
Operating loss for the year is arrived at after
charging:
Depreciation - owned assets and leased assets 701 737
Loss/(profit) on disposal of fixed assets - 374
Exchange rate loss 49 29
The analysis of auditor's remuneration is as
follows:
Audit of Company 31 31
Audit of subsidiaries 53 53
------------------------------------------------- ------------------- -------------
Total audit fees 84 84
------------------------------------------------- ------------------- -------------
5 Directors' emoluments
2021 2020
GBP'000 GBP'000
Emoluments for qualifying services 521 538
Loss of office 80 -
601 538
-------------------------------------- -------- ------------
Highest paid Director:
Emoluments for qualifying services 208 210
Details of Directors' emoluments and interests, which form part
of these financial statements, are provided in the Director's
Remuneration report on pages 20 to 22.
6 Employees
Group 2021 2020
Number Number
The average monthly number of employees of
the Group during the year, including Directors,
was as follows:
Consultants 87 107
Management and administration 30 30
Temporary staff 23 30
--------------------------------------------------- ------- ---------
140 167
--------------------------------------------------- ------- ---------
Company 2021 2020
Number Number
The average monthly number of employees of
the Company during the year, including Directors,
was as follows:
Management 6 6
----------------------------------------------------- ------------- -------------
Staff costs for all employees, including Directors, but
excluding contract staff placed with clients are as follows and
have been included in Administration expenses in the Consolidated
statement of comprehensive income:
Group 2021 2020
GBP'000 GBP'000
Wages and salaries 6,973 8,795
Social security costs 608 741
Pension contributions 43 65
Share option charge 76 49
7,700 9,650
----------------------- -------- --------
Remuneration of key management 2021 2020
GBP'000 GBP'000
Short-term employee benefits 1,283 1,568
Social security costs 119 151
Share-based payments 76 38
Pension contributions 9 11
1,487 1,768
-------------------------------- -------- --------
Key management includes executive Directors and senior
divisional managers.
7 Taxation on Profits on Ordinary Activities
2021 2020
GBP'000 GBP'000
a) Analysis of tax charge in the year
Current tax
UK Corporation tax 50 118
Over provision in prior year (41) -
Foreign tax (14) 97
Foreign tax over-provision in prior years - (40)
Total current tax (5) 175
Deferred tax
Deferred tax on fair value share option charge - -
Total (credit)/charge on (loss)/profit for the
year (5) 175
------------------------------------------------------ ---------- ---------
UK corporation tax is calculated at 19% (2020: 19%) of the estimated
assessable profits for the year. Taxation for other jurisdictions
is calculated at the rates prevailing in the respective jurisdictions.
b) The charge for the year can be reconciled to the profit per
the consolidated statement of comprehensive income as follows:
2021 2020
GBP'000 GBP'000
(Loss) / profit before taxation (173) (2,133)
------------------------------------------------------ ---------- ---------
Tax at UK corporation tax rate of 19% (2020:
19%) on profit on ordinary activities (33) (405)
Effects of:
Expenses not deductible for tax purposes 4 18
Decelerated / (accelerated) capital allowances 19 (22)
Depreciation on non-qualifying assets - 116
Increase in general debt provision - 26
Difference on Right of use asset 22 -
Tax rate differences - (250)
Exchange rate differences - (23)
Tax losses carried forward 24 -
Temporary differences recognised - (3)
Permanent timing differences - 727
Share option charge/exercised 14 (9)
Total current tax 50 175
Over provision in prior year (55) -
Tax (credit)/charge for the year (5) 175
------------------------------------------------------ ---------- ---------
8 Dividends
2021 2020
GBP'000 GBP'000
Final dividend for 2020: 0.00p per share (2019:
3.40p per share) - 411
Interim dividend for 2021: 0.00p per share (2020:
1.80p per share) - 220
Command Recruitment Group (HK) Limited dividend
to non-controlling shareholders - 317
--------------------------------------------------- --------- --------
- 948
------------------------------------------------------------- --------
The Board did not and will not recommend any final dividend for
the year to 31 March 2021.
9 (Loss)/earnings per share
Earnings per share are calculated by dividing the profit
attributable to ordinary shareholders by the weighted average
number of ordinary shares in issue during the year.
Fully diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares by existing share
options assuming dilution through conversion of all potentially
dilutive existing options.
Earnings and weighted average number of shares from continuing
operations used in the calculations are shown below.
2021 2020
GBP'000 GBP'000
Loss for the year and earnings used in basic
and diluted earnings per share (36) (2,384)
Number Number
Weighted average number of shares used for
basic (loss) per share 12,266,005 12,307,273
Dilutive effect of share options - -
---------------------------------------------- -------------- -------------
Diluted weighted average number of shares
used for diluted (loss) per share 12,266,005 12,307,273
---------------------------------------------- -------------- -------------
Pence Pence
Basic (loss) per share (0.30) p (19.36) p
Diluted (loss) per share (0.30) p (19.36) p
The following table shows earnings per share as they would be
without the effect of goodwill impairment.
GBP'000 GBP'000
(Loss)/profit for the year and earnings used
in basic and diluted (loss)/earnings per share
prior to goodwill impairment (36) 1,635
Number Number
Weighted average number of shares used for
basic (loss)/earnings per share 12,226,005 12,307,273
Dilutive effect of share options - -
Diluted weighted average number of shares
used for diluted (loss)/earnings per share 12,226,005 12,307,273
Pence Pence
Basic (loss)/earnings per share prior to goodwill
impairment (0.30) p 13.28p
Diluted (loss)/earnings per share prior to
goodwill impairment (0.30) p 13.28p
10 Property, Plant and Equipment
Fixtures, Right-of-use Total
fittings, assets -
and equipment Land and
buildings
Group GBP'000 GBP'000 GBP'000
Cost
At 1 April 2019 1,980 2,932 4,912
Additions 122 212 334
Disposals (28) - (28)
Exchange difference 37 62 99
------------------------ --------------- ------------- --------
At 1 April 2020 2,111 3,206 5,317
Additions 75 107 182
Disposals - (93) (93)
Exchange difference (64) (104) (168)
------------------------ --------------- ------------- --------
At 31 March 2021 2,122 3,116 5,238
------------------------ --------------- ------------- --------
Depreciation
At 1 April 2019 1,228 1,469 2,697
Provision for the year 283 440 723
Disposals (28) - (28)
Exchange difference 22 13 35
------------------------ --------------- ------------- --------
At 1 April 2020 1,505 1,922 3,427
Provision for the year 258 443 701
Disposals - (93) (93)
Exchange difference (34) (47) (81)
------------------------ --------------- ------------- --------
At 31 March 2021 1,729 2,225 3,954
Net book value
At 31 March 2021 393 891 1,284
------------------------ --------------- ------------- --------
At 31 March 2020 606 1,284 1,890
------------------------ --------------- ------------- --------
At 31 March 2019 752 - 752
------------------------ --------------- ------------- --------
11 Goodwill
GBP'000
Cost
At 1 April 2020 6,509
Goodwill impairment -
--------------------- --------
At 31 March 2021 6,509
--------------------- --------
The total carrying value of goodwill is GBP6.51m, which relates
to the acquisition of the Macdonald & Company Group in January
2006 and Command Recruitment Group (H.K.) Limited in October 2017.
Goodwill is reviewed and tested for impairment on an annual basis.
Goodwill has been tested for impairment by comparing the carrying
amount of the group of cash generating units (CGUs) the goodwill
has been allocated to, with the recoverable amount of those CGUs.
The recoverable amounts of the CGUs are their value in use.
The assessment for Macdonald & Company Group is based on UK
projected operating profit. Whilst the assessment model has
remained consistent in prior years, the impact of Covid- 19 has
influenced the forecasting methodology that has been applied. The
recoverable amount is determined on a value-in-use basis utilising
the value of cash flow projections over four years with a terminal
value based on a growth rate in perpetuity. This has changed from
prior years' model, where an earnings multiple of six times year 5
earnings of the UK CGU was used with a forecast period of 5
years.
Goodwill recognised on the business combination in 2018 with
Command recruitment Group (HK) limited was GBP758k. The assessment
of Command CGU is based on projected results in Hong Kong. The
approach is the same as that used above for Macdonald & Company
Group. The recoverable amount is determined on a value-in-use basis
utilising the value of cash flow projections over four years with a
terminal value based on a growth rate in perpetuity. This has
changed from prior years' model, where an earnings multiple of
eight times year 5 earnings of the Command CGU was used with a
forecast period of 5 years.
As the business has been impacted by Covid-19, the forecast
results for the first year are significantly reduced from previous
years in both the UK and Command CGUs. Between 2020-21 and 2021-22,
management has applied a 13% NFI growth rate for the UK CGU and 49%
for Command which reflects a return to more normal levels of
activity as the impact of the pandemic recedes. Thereafter, in
subsequent years, management expect the initial growth rate to
stabilise and have projected NFI growth to return to its long term
trend of 5% per annum through to 2025.
In the same respect, as NFI increases, management expects
operating profit to return to pre-pandemic levels. Historic
conversion rates of NFI to operating profit have been in the range
of 11-16% and forecast operating profit for 2021-22 is 11% of NFI
for the UK and 5% for the Command CGUs respectively. The conversion
rate is projected to increase to 15% for the UK CGU over the period
as senior management work with local management to realise ongoing
efficiencies whereas it will remain the same for the Command
CGU.
The value-in-use for the terminal value in the model has been
determined based on a growth rate of 2.00% in perpetuity. This is
deemed reasonable and represents the average rate of growth in the
markets in which the Group operates. A pre-tax discount rate of
11.67% (2020: 6.49%) has been applied, representing the weighted
average cost of capital for the Group. The rate has increased as it
is more closely aligned to other listed recruitment companies.
The profit growth rate used for the UK & Command CGUs in the
first year are -1941% and -137% respectively, which reflects a
return to more normal levels of activity as the impact of the
pandemic recedes. The first year growth rates are, therefore,
augmented as we started with a loss of GBP0.03m and GBP0.33m in
2021 in UK and Command respectively. Thereafter, in subsequent
years, management expect the initial growth rate to stabilise with
projected profit growth rates.
The key assumptions used in the estimation of the recoverable
amount are set out below. The values assigned to the key
assumptions represent management's assessment of future trends in
the industry the Group operates in and have been based on
historical data from internal sources.
Macdonald & Company Group Command recruitment
Assumptions Group (HK)
Terminal growth rate 2% 2%
-------------------------- --------------------
Profit growth rate -137%, 5%, 5%,
(Year 1 - 4) -1941%, 34%, 11%, 6% 5%
-------------------------- --------------------
Growth rate (NFI)
(Year 1 - 4) 13%, 5%, 5%, 5% 49%, 5%, 5%, 5%
-------------------------- --------------------
Discount rate 11.67% 11.67%
-------------------------- --------------------
As a result of the impairment reviews carried out at 31 March
2021, no impairment charge (2020: GBP4m) has been recognised for
the UK CGU, since the 'recoverable amount' (being the greater of
the net realisable value and the value in use) exceeds the carrying
amount. A number of sensitivity scenarios have been considered. If
the discount rate increased to 12.67% and the projected profit
decreased by 15% then this would still leave headroom of GBP0.5m.
Management are confident the assessment is reasonable as the NFI
generated in the first three months post 31 March 2021 by the UK
CGI is in line with the forecast applied.
The impairment reviews carried out at 31 March 21 for the
Command CGU indicated a small impairment of GBP0.02m which is not
deemed material to recognise. Several sensitivity scenarios have
been considered. If the discount rate increased to 12.67% and the
projected profit decreased by 1% then this would indicate an
impairment of GBP0.1m. However, management is confident that
performance will return to historic levels over the forecast
period.
12 Investments
Company shares in subsidiary undertakings 2021 2020
GBP'000 GBP'000
Cost
At 1 April 2020 7,137 11,213
Impairment of investment asset - (3,926)
Increase / (decrease) in shares from
subsidiary from share option reserve 52 (150)
-------------------------------------------- -------- --------
At 31 March 21 7,189 7,137
-------------------------------------------- -------- --------
The investment value is linked to the Goodwill. The model and
assumptions applied to assessing the Goodwill impairment have been
applied to the carrying value of the investment and based on that
no impairment has been recognised in the period.
Non-Controlling Interest
The following table summarises the information relating to
Command Recruitment Group (HK) Limited, that is a subsidiary with
material non-controlling interest ("NCI"), before any intra-group
eliminations.
2021 2020
GBP'000 GBP'000
NCI percentage 40% 40%
Non-current assets 175 288
Current assets 1,749 1,892
Current liabilities (753) (440)
Non-current liabilities (64) (145)
---------------------------------------------- ------------------ -------------------
Net assets 1,107 1,596
---------------------------------------------- ------------------ -------------------
Net assets attributable to NCI 443 638
---------------------------------------------- ------------------ -------------------
Revenue 1,700 3,596
Operating profit (322) 1,412
Profit after interest and tax (330) 1,407
Other comprehensive (loss)/ income (158) (35)
---------------------------------------------- ------------------ -------------------
Total comprehensive income (448) 1,372
---------------------------------------------- ------------------ -------------------
Profit after interest and tax allocated
to NCI (132) 563
Other comprehensive (loss)/ income allocated
to NCI (63) (14)
---------------------------------------------- ------------------ -------------------
Cash flows from operating activities (300) 4,831
Cash flows from financing activities - (318)
---------------------------------------------- ------------------ -------------------
Net (decrease)/increase in cash and cash
equivalents (300) 4,513
---------------------------------------------- ------------------ -------------------
The following are subsidiary undertakings at the end of the year
and have all been included in the consolidated financial
statements:
Country of Principal activity Registered address
incorporation
Macdonald & Company England and Holding Company 2 Harewood Place,
Group Limited Wales Hanover Square, London,
W1S 1BX
Macdonald & Company England and Recruitment 2 Harewood Place,
Property Limited Wales Hanover Square, London,
W1S 1BX
Macdonald and Company England and Recruitment 2 Harewood Place,
Freelance Limited Wales Hanover Square, London,
W1S 1BX
Macdonald & Company England and Dormant 2 Harewood Place,
(Overseas) Limited Wales Hanover Square, London,
W1S 1BX
Macdonald & Company Hong Kong Recruitment 29th Floor
Ltd 3 Lockhart Road
Wan Chai, Hong Kong
Ru Yi Consulting Hong Kong Dormant 29th Floor
Limited 3 Lockhart Road
Wan Chai, Hong Kong
Macdonald & Company P.R. China Recruitment 1503M, 15/F, Tower
(Shenzhen) Limited 2, Kerry Plaza, No.1
Zhong Xin Si Road,
Futian District, Shenzhen
518048, P.R. China
Macdonald and Company Singapore Recruitment 63 Market Street #05-02,
Pte Limited Bank of Singapore
Centre, Singapore
048942
Macdonald & Company Australia Dormant Storey Blackwood &
Pty Ltd Co, Level 4, 222 Clarence
Street, Sydney NSW
2000 Australia
Macdonald & Company South Africa Dormant 1 Emfuleni, 79 Crassula
Recruitment Proprietary Crescent, Woodmead,
Ltd Johannesburg, 2052
South Africa
The Prime Organisation England and Dormant 2 Harewood Place,
Ltd Wales Hanover Square, London,
W1S 1BX
Command Recruitment Hong Kong Recruitment 29th Floor
Group (H.K.) Limited 3 Lockhart Road
Wan Chai, Hong Kong
Prime People Inc. U.S.A. Recruitment 1209 Orange Street,
Wilmington, New Castle
County, Delaware 19801
Macdonald Consulting Germany Dormant District Court, Frankfurt
GmbH am Main, HRB 121950
For all undertakings listed above, the country of operation is
the same as its country of incorporation.
The Group holds 100% of all classes of issued share capital
except in the case of Command Recruitment Group (H.K.) Limited,
where it owns 60%, The percentage of the issued share capital held
is equivalent to the percentage of voting rights for all
companies.
13 Trade and other receivables
Group Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
Current
Trade receivables 2,582 3,312 - -
Allowance for doubtful debts (380) (340) - -
Other receivables 453 284 159 133
Amounts owed by subsidiary
company - - 3,868 3,000
Prepayments and accrued income 406 612 27 12
--------------------------------- -------- -------- -------- --------
3,061 3,868 4,054 3,145
-------------------------------- -------- -------- -------- --------
At 31 March 2021 the average credit period taken on sales of
recruitment services was 48 days (2020: 75 days) from the date of
invoicing. An allowance of GBP380,000 (2020: GBP340,000) has been
made for estimated irrecoverable amounts. Due to the short-term
nature of trade and other receivables, the Directors consider that
the carrying value approximates to their fair value.
A provision for impairment of trade receivables has been made.
In reviewing the appropriateness of the provision, consideration
has been given to the ageing of the debt and the potential
likelihood of default, taking into account current economic
conditions.
The ageing of group trade receivables at the reporting date
was:
Gross trade Provisions Expected Gross trade Provisions Expected
receivables Loss receivables Loss rate
rate
2021 2021 2021 2020 2020 2020
GBP'000 GBP'000 % GBP'000 GBP'000 %
Not past due
0 -30 days 1,475 71 4.8% 1,548 50 3.2%
Past due 30-90
days 631 18 2.9% 792 80 10.1%
Past due more
than 90 days 476 291 61.1% 972 210 21.6%
---------------- ------------- ----------- --------- ------------- ----------- -----------
2,582 380 3,312 340
The expected loss rates for trade receivables are based on the
payment profile and the shared credit risk characteristics arising
in the different industries in which the Group operates. The
Company has incorporated forward-looking information based on the
clients' industries and financial position, including the
assessment of any perceived impact of Covid-19.
Movement in allowance for doubtful debts:
2021 2020
GBP'000 GBP'000
1 April 2020 340 621
Impairment losses recognised 164 340
Amounts written off as uncollectable (63) (38)
Amounts paid by the client (22) (452)
Impairment losses reversed (39) (131)
--------------------------------------- -------- --------
31 March 2021 380 340
14 Financial Instruments
Group Company
2021 2020 2021 2020
Note GBP'000 GBP'000 GBP'000 GBP'000
Financial assets at amortised
cost
Trade and other receivables 13 2,655 3,256 159 133
Amounts owed by subsidiary
company 13 - - 3,868 3,000
Cash and cash equivalents 3,980 2,055 556 876
------------------------------- ----- -------- -------- -------------- --------
6,646 5,311 4,583 4,009
------------------------------- ----- -------- -------- -------------- --------
Cash is held either on current account or on short-term deposits
at floating rates of interest determined by the relevant bank's
prevailing base rate.
Group Company
2021 2020 2021 2020
Note GBP'000 GBP'000 GBP'000 GBP'000
Financial liabilities at
amortised cost
Trade and other payables 15 742 1,619 2,247 3,873
Accruals 15 1,335 901 65 35
Coronavirus Business Interruption
Loan 2,000 - 2,000 -
4,077 2,520 4,312 3,908
There is no material difference between the book values of the
Group's financial assets and liabilities and their fair values.
The Group and the Company do not hold any derivative financial
instruments.
15 Trade and other Payables
Group Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
Current
Trade payables 203 371 30 1
Other payables 539 1,248 - -
Amount owed to subsidiary
undertakings - - 2,217 3,872
Taxation and social security 796 685 1 4
Coronavirus Business
Interruption Loan 267 - 267 -
Accruals 1,335 901 65 35
--------
3,140 3,205 2,580 3,912
Due to the short-term nature of the trade and other payables,
the Directors consider that the carrying value approximates to
their fair value. Trade payables are generally on 30-60-day terms.
No payables are past their due date.
16 Borrowings due after more than one year
Group Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
Borrowings due after more than
one year
Coronavirus Business Interruption
Loan 1,733 - 1,733 -
1,733 - 1,733 -
The loan is repaid in 60 equal instalments from August 2021 to
July 2026.
17 Deferred Tax
Group (Liability) Other temporary Total
differences
GBP'000 GBP'000
At 1 April 2019 22 22
Credit to income - -
At 31 March 2020 22 22
Debit to income - -
At 31 March 2021 22 22
Group (Asset) Share Options Total
GBP'000 GBP'000
At 1 April 2019 40 45
Debit to income - (5)
At 31 March 2020 40 40
Debit to income - -
At 31 March 2021 40 40
18 Share Capital
2021 2020
Number GBP'000 Number GBP'000
ALLOTTED CALLED UP
Ordinary shares of 10p each
As at 1 April 12,307,273 1,231 12,290,199 1,229
Shares (purchased for treasury)/issued
during the year (190,000) (103) 17,074 2
At 31 March 12,117,273 1,128 12,307,273 1,231
Share capital includes unpaid shares of nil (2020: nil).
The Company has one class of ordinary shares which carries no
right to fixed income and which represents 100% of the total issued
nominal value of all share capital.
Each share carries the right to one vote at general meetings of
the Company. No person has any special rights of control over the
company's share capital and all its issued shares are fully
paid.
Pursuant to shareholder resolutions at the AGM of the Company on
22 September 2020, the Company has the following authorities during
the period up to the next AGM:
-- to issue new/additional ordinary shares to existing
shareholders through a rights issue up to a maximum nominal amount
of GBP410,242 representing one- third of the Company's issued share
capital;
-- to issue new/additional ordinary shares to new shareholders
up to a maximum nominal amount of GBP410,242 representing one third
of the issued shares capital of the Company;
-- to allot equity securities for cash, without the application
of pre-emption rights, up to a maximum nominal amount of GBP184,609
representing 15% of the Company's issued share capital of the
Company;
-- to purchase through the market up to 15% of the Company's
issued share capital, subject to certain restrictions on price;
and
-- to make off-market purchases of its ordinary shares for the
purposes of or pursuant to an employee 'share scheme with the
maximum aggregate number of ordinary shares authorised to be
purchased is 4,102,424 representing approximately one-third of the
Company's issued ordinary share capital.
Capital Risk Management
The Group manages its capital to ensure that it will be able to
continue as a going concern while maximising returns to
shareholders through the optimisation of debt and equity balances.
The capital structure of the Group consists of cash and cash
equivalents and equity attributable to equity holders of the parent
comprising issued capital reserves and earnings.
The Group manages the capital structure and adjusts it in the
light of changes to economic conditions and risks. In order to
manage capital, the Group has continued to consider and adjust the
level of dividends paid to shareholders and made purchases of its
own shares which are held as Treasury Shares.
Employee Share Schemes
The Company operates two share options schemes with one of them,
the Save as You Earn scheme, being dormant.
Enterprise Management Incentive Share Option Scheme
At 31 March 2021 the following options had been granted and
remained outstanding in respect of the Company's ordinary
shares:
Year Exercise Exercise Number of Granted Exercised Cancelled Number of
of grant Price Period options Options 31
Pence 31 March March 2021
2020
2011/12 68.00 2014-2019 3,000 - - - 3,000
2013/14 10.00 2016-2021 9,000 - - - 9,000
10.00 2019-2021 6,000 - - - 6,000
2014/15 10.00 2016-2021 10,000 - - - 10,000
10.00 2019-2021 25,000 - - - 25,000
2015/16 10.00 2020-2022 30,000 - - - 30,000
58.00 2017-2022 15,000 - - - 15,000
58.00 2020-2022 50,000 - - (10,000) 40,000
2016/17 50.00 2022-2027 10,000 - - - 10,000
90.00 2019-2024 15,000 - - - 15,000
90.00 2022-2027 20,000 - - - 20,000
2018/19 10.00 2020-2028 80,000 - - (30,000) 50,000
2019/20 50.00 2022-2029 15,000 - - - 15,000
50.00 2024-2029 50,000 - - - 50,000
42.50 2022-2029 30,000 - - - 30,000
2020/21 50.00 2022-2029 - 20,000 - - 20,000
10.00 2023-2033 - 725,000 - - 725,000
Total 2021 368,000 745,000 - (40,000) 1,073,000
Weighted average exercise
price 2021 35.73p 11.07p - 22.00p 19.68p
Total 2020 604,750 95,000 (231,750) (100,000) 368,000
Weighted average exercise
price 2020 26.96p 47.63p 17.25p 36.80p 35.73p
There were 1,073,000 options outstanding at 31 March 2021 (2020:
368,000) which had a weighted average price per share of 19.68p
(2020: 35.73p) and a weighted average contractual life of 2.4
years. The options vest over a period of two to four years
conditional upon the option holders continued employment with the
Company.
The conditions applying to those options which are fully vested
have been achieved. The number of outstanding options that will
vest is dependent on the achievement of several key performance
measures of the group, measured at a regional and consolidated
level for the financial years 2020 and 2021. The fair value of the
employee services received in exchange for the grant of the share
options is charged to the profit and loss account over the vesting
period of the share option, based on the number of options which
are expected to become exercisable.
2021 2020
Option pricing model used Black-Scholes Black-Scholes
Weighted average share price at grant 57.50 & 61.00 91.00 & 81.50
date (in pence)
Exercise price (in pence) 50.00 & 10.00 50.00 & 42.50
Fair value of options granted during
the year 25.53 & 51.29 46.44
Expected volatility (%) 67 & 40 20
Risk-free interest rate (%) 1 4
Vesting period of options (years) 2 & 2.7 2 & 5
Expected volatility was determined by reference to historical
volatility of the Company's share price.
The share-based payment expense recognised within the income
statement during the period was GBP75,974 (2020: expense
GBP48,836).
19 Reserves
Capital Redemption Reserve Fund
The capital redemption reserve relates to the cancellation of
the Company's own shares.
Treasury Shares
At 31 March 2021, the total number of ordinary shares of 10p
held in Treasury and their values were as follows:
2021 2020
Number GBP'000 Number GBP'000
As at 1 April - - 195,676 161
Shares purchased for
treasury 190,000 103 36,074 23
Shares issued from treasury - - (231,750) (34)
Loss on treasury shares
disposal - - - (150)
As at 31 March 190,000 103 - -
Nominal value - -
Market value - -
The maximum number of shares held in treasury during the year
was 190,000 shares representing 1.6% of the called-up ordinary
share capital of the Company (2020: 195,676 representing 1.6% of
the called-up ordinary share capital of the Company).
Merger Reserve
The merger reserve represents the fair value of the
consideration given in excess of the nominal value of ordinary
shares issued to acquire subsidiaries.
Share Option Reserve
The reserve represents the cumulative amounts charged to profit
in respect of employee share option arrangements where the scheme
has not yet been settled by means of an award of shares to an
individual.
Share Premium Account
The balance on the share premium account represents the amounts
received in excess of the nominal value of the ordinary shares.
Translation Reserve
The foreign currency translation reserve comprises all
presentation foreign exchange differences arising from translation
of the financial statements of foreign operations into the
presentation currency of the Group accounts.
Retained Earnings
The balance held on this reserve is the accumulated retained
profits of the Group/Company.
20 Leases
The Group adopted IFRS 16 Leases for the first time in the
prior-year financial statements.
The Group's leases are property leases. These include leases for
the offices from which the businesses across the Group operate and
these have terms of typically 1 to 10 years. The movements in the
carrying value of right-of-use assets is provided below.
Right-of-use asset - Property 2021 2020
GBP'000 GBP'000
Cost
At 1 April 2020 3,206 2,994
Exchange differences (104) -
Additions 107 212
Disposals (93) -
At 31 March 2021 3,116 3,206
Accumulated depreciation
At 1 April 2020 1,922 1,482
Exchange differences (47) -
Depreciation 443 440
Disposals (93) -
At 31 March 2021 2,225 1,922
Net Book Value as at 31 March 2021 891 1,284
Additional disclosures as required under IFRS 16 Leases are
provided in the table below:
2021 2020
GBP'000 GBP'000
Depreciation of right-of-use assets 443 440
Interest on lease obligations 48 71
Cash outflow for leases 562 566
Additions to right-of-use-assets 107 212
Disposals of right-of-use assets (93) -
21 Reconciliation of Profit before Tax to Net Cash Inflow from Operating Activities
Group Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
Loss before taxation (173) (2,133) (5) (3,965)
Adjust for:
Depreciation of property, plant and
equipment and software amortisation 258 737 - -
Depreciation of right-of-use assets 443 - - -
Impairment of goodwill - 4,018 - 3,926
Share-based payment expense 76 49 - -
Loss on sale of tangible asset - 1 - -
Interest receivable (5) - - -
Interest payable 61 76 - -
Operating cash flow before changes
in working capital 660 2,748 (5) (39)
Decrease/(increase) in receivables 866 778 (41) (3,021)
(Decrease)/increase in payables (332) 116 56 2,784
Cash generated from / (used by) underlying
operations 1,194 3,642 10 (276)
22 Reconciliation of movements of liabilities to cash flows arising from financing activities
Group At 1 April New loan Net Repayments At 31 March
2020 2021
GBP'000 GBP'000 GBP'000 GBP'000
Borrowings - 2,000 - 2,000
Invoice finance 806 - (822) (16)
Lease liabilities 1,524 - (471) 1,053
Total financing liabilities 2,330 2,000 (1,293) 3,037
Company At 1 April New loan Net Repayments At 31 March
2020 2021
GBP'000 GBP'000 GBP'000 GBP'000
Borrowings - 2,000 - 2,000
Total financing liabilities - 2,000 - 2,000
23 Analysis of Cash less overdrafts
Group At 1 Cash flow Exchange At 31 March
April 2021
2020
GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank and in hand 2,055 2,212 (287) 3,980
Total cash 2,055 2,212 (287) 3,980
Company At 1 April Cash flow At 31 March
2020 2021
GBP'000 GBP'000 GBP'000
Cash at bank and in hand 876 (320) 556
Total cash 876 (320) 556
24 Financial Risk Management
The Board of Directors has overall responsibility for the risk
management policies that are applied by the business to identify
and control the risks faced by the Group. The Group has exposure
from its use of financial instruments to foreign currency risk,
credit risk and liquidity risk.
Foreign Currency
The Group publishes its consolidated financial statements in
Sterling. The functional currencies of the Group's main operating
subsidiaries are Sterling, the Singapore Dollar, the Hong Kong
Dollar and the UAE Dirham.
The Group's international operations account for approximately
34.46% (2020: 34.66% of revenue and approximately 29.12% (2020:
24.27%) of the Group's assets and consequently the Group has a
degree of translation exposure in accounting for overseas
operations.
The Group exposure to foreign currency risk is as follows:
As at 31 March
2021 Euro AUD USD HK$ S$ AED CNY SAR
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank 410 26 634 313 877 6 378 104
Trade and other
receivables 46 - 28 952 293 28 - -
Trade and other
payables (165) - (146) (735) (236) (32) - -
Net exposure 291 26 516 530 934 2 378 104
As at 31 March
2020 Euro AUD USD HK$ S$ AED CNY SAR
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank 66 7 1 259 211 410 - -
Trade and other
receivables - - - 1,350 299 336 - -
Trade and other
payables - - - (1,101) (117) (115) - -
Net exposure 66 7 1 508 393 631 - -
Sensitivity analysis - currency risk
A 10% weakening or strengthening of Sterling against the above
currencies at 31 March 2021 would have increased/(decreased) equity
and profit or loss by the amounts shown below. This analysis is
applied currency by currency in isolation, i.e. ignoring the impact
of currency correlation, and assumes that all other variables,
interest rates, remain constant. The amounts generated from the
sensitivity analysis are forward-looking estimates of market risk
assuming certain adverse market conditions occur. Actual results in
the future may differ materially from those projected, due to
developments in the global financial markets which may cause
fluctuations in interest and exchange rates to vary from the
hypothetical amounts disclosed in the table below, which therefore
should not be considered a projection of likely future events and
losses.
Foreign Currency
Weakening Strengthening
2021 equity 2021 PBT 2021 equity 2021 PBT
GBP'000 GBP'000 GBP'000 GBP'000
Euro (26) (26) 25 25
US dollar (47) (47) 37 37
Hong Kong dollar (48) (48) 5 5
Singapore dollar (85) (85) 50 50
UAE dirham - - - -
Australian dollar (2) (2) 1 1
Chinese yuan
renminbi (34) (34) 4 4
Saudi riyal (9) (9) 2 2
Currently the Group's policy is not to hedge against this
exposure, but it does seek to minimise this exposure by converting
into sterling all cash balances in foreign currency that are not
required for capital monetary needs. The settlement of intercompany
balances held with foreign operations is neither planned nor likely
to occur in the foreseeable future. Therefore, exchange differences
arising from the translation of the net investments are recognised
in Other Comprehensive income.
Credit Risk
The Group's principal financial assets are bank balances, trade
and other receivables. The Group's credit risk is primarily in
respect of trade receivables. Credit risk refers to the risk that a
client will default on its contractual obligations resulting in
financial loss to the Group. The Group's largest credit risk
exposure to a single client is in the UK and represents 10.05% of
the Group trade receivables balance. Although there is no
indication that the debt is uncollectable, the Directors are of the
opinion that adequate provision is in place to cover any potential
default by this client. A public investment funds in Saudi Arabia
accounted for 4.13% of Group trade receivables respectively. Apart
from this exposure, at the year-end no other customer
represented
more than 4.01% (2020: 5.73% ) of the total balance of trade receivables.
In reviewing the appropriateness of the provisions in respect of
recoverability of trade receivables, consideration has been given
to the ageing of the debt and the potential likelihood of default,
considering current economic conditions.
It is the Directors' opinion that no further provision for
doubtful debts is required.
Liquidity Risk
The Group manages its liquidity risk by maintaining adequate
cash and or credit facilities to meet forecast cash requirements of
the Group. Management monitors its forecasted cash flow
requirements at a Group level based on monthly returns made by the
Group's operating units.
The Group has short-term trade and other payables and accruals
as disclosed in note 15, all due within one year of the year end.
In addition it has lease liabilities and a loan under the
Coronavirus Business Interruption Loan Scheme as set out below.
The Group has net funds of GBP3.98m (2020: GBP2.06m), which the
Board considers are more than adequate to meet future working
capital requirements and to take advantage of business
opportunities.
As at 31 March 2021, the Group's financial liabilities have
contractual maturities as follows:
Between Between
Less than 6 - 12 1 and 2 2 and 5 Over 5
6 months months years years years
At 31 March 21 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Trade payables and
other payables 2,676 197 - - -
Lease liabilities 281 281 437 99 -
CBILS 81 239 466 1,298 135
Total contractual
cash flows 3,038 717 903 1,397 135
Between Between
Less than 6 - 12 1 and 2 2 and 5 Over 5
6 months months years years years
At 31 March 20 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Trade payables and
other payables 1,619 - - - -
Taxation and social
security 440 245 - - -
Accruals 901 - - - -
Lease liabilities 254 243 500 508 20
Total contractual
cash flows 3,214 488 500 508 20
25 Related Party Transactions
The Company provides corporate guarantees on the subsidiary bank
accounts. At 31 March 2021 amounts overdrawn by subsidiary bank
accounts were GBPnil (2020: GBPnil).
The Group owes a director GBP40,330 (2020: GBPnil). There is no
interest charged on this loan and no fixed date for repayment.
The Directors receive remuneration from the Group, which is
disclosed in the Directors' Remuneration Report. As shareholders,
the Directors also eligible to receive dividends from the Company.
In the year these amounted to GBPnil (2020: GBP318,213).
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END
FR EAKXAADDFEFA
(END) Dow Jones Newswires
July 23, 2021 02:00 ET (06:00 GMT)
Grafico Azioni Prime People (LSE:PRP)
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