TIDMPRP
RNS Number : 2550E
Prime People PLC
04 November 2020
4 November 2020
Prime People Plc
Results for the year ended 31 March 2020
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 2020.
The Group's Annual Report and Accounts and Notice of General
Meeting will be published shortly and are available to view on the
Company's website at http://prime-people.co.uk/ . The GM will be
held on 23 November 2020 at 11.00 am at 2 Harewood Place, London,
W1S 1BX.
Highlights:
Year ended Year ended
31 March 31 March
2020 2019
----------------------------------- ---------- ----------- -----------
Revenue GBP23.99m GBP24.66m
Net Fee Income ("NFI") GBP15.52m GBP15.78m
Operating Profit before tax
and Goodwill impairment Note 1 GBP1.96m GBP2.47m
Operating Profit before tax,
Goodwill impairment and after GBP1.80m GBP1.96m
non-controlling interest
Fully diluted earnings per
share before Goodwill impairment Note 2 13.28p 13.37p
Dividends for the year Note 3 1.80p 5.20p
----------------------------------- ---------- ----------- -----------
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:
"The Covid-19 pandemic started in the early part of 2020, and
while not having a material impact on performance for the year
ended 31 March 2020, nonetheless, slowed activity in our final
quarter. Overall, the Group delivered an acceptable performance
given that our Asian markets slowed rapidly in early Q4 as the
pandemic took hold in the region ahead of the UK downturn later in
the quarter. I would like to personally thank all our team for
their dedication, everyone has adapted and embraced the rapid
changes to working practices and the business environment Covid-19
has created. The Group continues to maintain a good net cash
position. At the start of the year the Group had cash of GBP2.3m
which had declined slightly to GBP2.1m by the year end."
For further information, please contact:
Prime People 020 7318 1785
Robert Macdonald, Executive Chairman
Peter Moore, Managing Director
Donka Zaneva-Todorinski, Finance Director
Cenkos Securities plc 020 7397 8900
Katy Birkin/Harry Hargreaves
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
The Covid-19 pandemic started in the early part of 2020, and
while not having a material impact on performance for the year
ended 31 March 2020, nonetheless, slowed activity in our final
quarter.
Overall, the Group delivered an acceptable performance given
that our Asian markets slowed rapidly in early Q4 as the pandemic
took hold in the region ahead of the UK downturn later in the
quarter. In the UK, although Net Fee Income ("NFI") performance was
broadly consistent with the prior year, operating costs were higher
due to staff turnover and localised investment in IT infrastructure
and advertising.
Internationally the business has made good progress with a
continuing positive growth performance in Asia including a material
contribution from our majority investment in Command Recruitment
Group (H.K.) Limited, and the Rest of The World breaking even this
year.
We closed the year with headline Revenue of GBP23.9m (2019:
GBP24.6m) and NFI of GBP15.5m (2019 GBP15.7m). NFI comprises the
total fees for permanent candidates and the margin earned in the
placement of contract staff.
Operating Profit, before Goodwill impairment of GBP4.0m, was
GBP2.0m compared to the prior year of GBP2.4m, the decline
attributable to a combination of lower NFI and higher operating
costs.
The Group conversion rate, excluding Goodwill impairment, and
which compares operating profit to NFI, was 12.9% (2019:
15.6%).
The Board have carefully considered the prospects of the Group's
UK operation and market and believe it prudent to recognise an
impairment charge of GBP4.0m against the carrying value of
Goodwill. Further details of the goodwill impairment are disclosed
in note 11.
Cash Flow
The Group continues to maintain a good net cash position. At the
start of the year the Group had cash of GBP2.3m which had declined
slightly to GBP2.1m by the year end.
Dividend
During the year, an interim Dividend of 1.8p per share was paid
(2019: 1.8p). In light of the significant uncertainty created by
Covid- 19, the Board is taking all measures to protect cash while
at the same time ensuring the Group is properly positioned to
service its markets as and when normality begins to return.
Consequently, as previously reported, the Board will not be
recommending a final Dividend this year (2019: 3.4p per share).
This will result in a total Dividend payment of 1.8p for the 2020
financial year against 5.2p for 2019. Subject to market conditions
and cash, the Group remains committed to paying progressive
dividends as soon as appropriate.
Return of Capital
As of 31 March 2019, the Group had net cash of GBP2.3m which had
increased to approximately GBP3.0m as of 30 September 2019. A large
proportion of this net cash was considered by the Board to be
surplus, at that time, to the day-to-day needs of the business. The
Group's cash position had strengthened over the course of the last
year, during which period the Group had continued to focus on its
core markets to deliver organic revenue growth.
The Board therefore considered that the Group had sufficient
funds for the purposes of pursuing its organic growth plans and
concluded that it was appropriate for the Company to return surplus
cash to Shareholders by way of a Capital Reduction.
The return of cash amounted to 16.25p per share and was paid to
shareholders in January 2020.
Share Buy Back
During the year 19,000 shares were purchased through the Group's
buyback programme at a cost of GBP20,950. In the year 231,750
ordinary shares were transferred from Treasury to satisfy demand
arising from the part paid share incentive scheme for key
personnel. At the year end the Group held no shares in
Treasury.
Board
The Board believes it has continued to operate corporate
governance standards appropriate to an AIM quoted company of its
size. Simon Murphy stepped down from the Board in February 2020,
and we extend our thanks to him for his diligent service to the
Group during his tenure as a Director. Although not required to do
so, the Directors have resolved that they will retire at least once
every three years and seek re-appointment by shareholders at the
next AGM.
The Board members have a mix of skills, experience, gender, and
backgrounds that are a considerable support to the business.
People
The average number of staff (excluded Temporary Contractors)
reduced from 138 last year to 137 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 and continue to be impacted by
Covid-19, and although we have experienced reasonable progress in
the UK following the easing of the lockdown imposed on 26(th) March
2020, levels of activity have not recovered fully to pre Covid-19
levels. This is also the case in Asia although the region did not
suffer as severe a contraction in trading as the UK. We are
anticipating a gradual improvement in trading in H2 to 31(st) March
2021. Significant new lockdown measures could see progress
slow.
As an international Group, we may be impacted by geopolitical
uncertainty, and although our Hong Kong business continues to trade
well, it is too early to assess the longer-term impact of the
political landscape following recent Chinese intervention.
Post year end, in July 2020, we secured a GBP2.0m CBILS facility
from our bank, to provide additional working capital to support the
Group in the months ahead. Alongside this, on a weekly basis, we
have implemented highly sensitive systems for the monitoring of
trading and cash flow forecasts.
We believe that with our renewed 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 abilities to generate worthwhile, long-term returns and
will continue to invest for 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. During the various degrees of lockdown, as Governments
attempted to control the pandemic in their countries, it has become
clear that many people can work productively from home and the long
term impact of remote working on our core markets remain
unclear.
Operating as distinct brands, the sectors served by Prime
Insight, Prime Energy and Command are technology & digital
transformation; renewable energy & sustainability; and
infrastructure, construction, and design 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 January 2019), and a franchise in
South Africa (established in 2008).
Overall, the UK permanent recruitment businesses performed
satisfactorily with our built environment teams delivering
consistent results while the Contract business experienced a
reduction in NFI.
In Asia NFI continued to grow. The Hong Kong office with the
combined businesses of Macdonald and Command contributed the
majority of the region's NFI.
Our small Macdonald business in Dubai continues to face
challenging market conditions and we have made changes to realign
it to the expected medium-term demand. Our Command business
operates across the Middle East particularly in Saudi Arabia and we
are optimistic as to its future performance in this region.
Cultivating strong client relationships, investing in the best
technology, and employing the best people are the foundations of
the Group's success. With global growth seriously impacted by
Covid-19 and a world economy increasingly exposed to political and
macro-economic risk it is important that we remain flexible, are
able to serve our clients wherever demand may be and that we
closely monitor individual NFI performance against costs.
Tight management control of both expenditure and cash resource,
together with a focus on improved productivity per head and NFI
conversion rates, will position the Group to recover as and when
markets stabilise post Covid- 19.
Regional Performance
United Kingdom
2020 2019
GBPm GBPm
Revenue 15.70 16.47
Net Fee Income (NFI) 7.26 7.60
Adjusted Operating Profit (Note 1) 0.30 0.92
Adjusted Operating Profit as % of
NFI 4.55% 12.10%
Average number of employees 71 77
Note 1. Operating Profit is before Goodwill impairment costs of
GBP4.0m.
Revenue reduced by 4.7% to GBP15.7m (2019: GBP16.5m) with NFI
reducing by 4.5% to GBP7.3m (2019: GBP7.6m).
Permanent NFI decreased by 2.3% in the year and represents 87.4%
(2019: 85.1%) of total UK NFI in 2020.
As a result of an internal accounting change to allocate central
costs more proportionately to the regions in which they were
incurred, the UK was subject to an increased charge in the year
amounting to circa GBP0.3m. Increased costs related to planned
investment in our Information Technology, brand marketing and
advertising.
Contract NFI reduced by 17% in the year compared to a reduction
of 7.7% in the previous year and represents 13.0% (2019: 14.6%) of
total UK NFI in 2020 .
Asia Pacific
2020 2019
GBPm GBPm
Revenue 8.18 7.77
Net Fee Income (NFI) 8.12 7.77
Operating Profit 1.67 1.52
Operating Profit as % of NFI 20.68% 19.56%
Average number of employees 60 57
NFI grew by 5.2% to GBP8.1m (2019: GBP7.8m) and includes
contribution from Command of GBP3.6m (2019: GBP3.9m). The region is
covered by our offices in Hong Kong and Singapore and represents
52.5 % of Group NFI (2019: 49.2%).
Command Operating Profit, unadjusted for Minority Interest, was
approximately 85% of the reported Operating Profit in the
region.
The 2018 investment in 60% of the equity of Command strengthened
our presence and performance in the region particularly with its
winning of substantial business from an extensive set of linked
real estate infrastructure projects in the Middle East. The
projects are of a long-term nature and we expect that Command's
involvement will continue throughout the current financial
year.
With the good performance of Command, and the investment in
establishing our Insight and Analytics team in the region, the
business is now well placed to expand its reach and growth.
Rest of the World
2020 2019
GBPm GBPm
Revenue 0.14 0.42
Net Fee Income (NFI) 0.14 0.42
Operating Profit/(loss) 0.00 (0.02)
Operating Profit as % of NFI 0.00% -4.76%
Average number of employees 2 4
The region is covered by a small office in Dubai, and a
franchise agreement in South Africa.
The Dubai business continues to face challenging market
conditions and we have made changes to realign it to the expected
medium-term demand.
Peter Moore
Managing Director
Financial Review
Revenue
The Group's Revenue was GBP23.9m, which represents a small
decline compared to 2019 (GBP24.6m).
Net Fee Income (NFI)
Overall Group NFI was GBP15.5m which is a small decrease of 1.8%
compared to the prior year.
The split of net fee income was 94% from Permanent Sales (2019:
93%) and 6.0% from Contract Sales (2019: 7.0%).
The Group generated 53.2% of its Net Fee Income from outside the
UK (2019: 51.9%).
Administration Costs
Administration costs for the year were GBP13.5m, an increase of
1.5% on 2019.
In light of the uncertainty of future profit generation from the
UK markets, an impairment charge of GBP4.0m has been recognised
against the carrying value Goodwill of Macdonald & Company
Group Ltd in accordance with IAS 36, details of which are set out
in note 11.
Profit before Taxation
Operating Profit before taxation and Goodwill impairment was
GBP2m (2019 GBP2.4m) and reported Operating Loss was GBP2.1m after
Goodwill Impairment.
Taxation
The taxation charge is GBP0.18m on profit before taxation and
goodwill impairment of GBP2m (from Ordinary Activities) which gives
an effective tax rate of 8.9% (2019: 12.1%). The reasons for the
difference from the standard UK corporation tax rate of 19% are
detailed in note 7.
Earnings per Share
Basic earnings per share decreased to a loss per share of
(19.36)p (2019:13.72p) The diluted earnings per share, without
taking into account existing share options, decreased to a loss per
share of (19.36)p (2019: 13.38p).
Balance Sheet
Net Assets at 31 March 2020 were GBP9.5m compared to the prior
year Net Assets of GBP15.0m. The reduced Net Assets at year-end are
after return of capital to Shareholders of GBP2m, Dividend payment
of GBP1m and Goodwill impairment of GBP4.0m.
Trade Receivables net of provisions for doubtful debts at the
year-end were GBP2.97m (2019: GBP3.54m) and reflect the reduced
average credit period taken by clients to 75 days (2019: 131 days).
The decrease in debtor days is explained by stronger collection
from certain Command clients in Saudi Arabia.
Treasury Management and Currency Risk
Approximately 65.4% of the Group's revenue in 2020 (2019:
66.79%) 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 GBP2.3m. After
net taxation payments of GBP0.16m (2019: GBP0.11m) cash generated
from operations was GBP3.4m (2019: GBP2.04m).
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.
PRIME PEOPLE PLC
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2020
Note 2020 2019
GBP'000 GBP'000
2,
Revenue 3 23,992 24,660
Cost of sales (8,471) (8,873)
------------------------------------- ----- ---------------- ---------------- ----------
Net Fee Income 2 15,521 15,787
Administrative expenses (13,560) (13,316)
Goodwill impairment 11 (4,018) -
------------------------------------- ----- ---------------- ---------------- ----------
Operating (loss)/profit 4 (2,057) 2,471
Interest payable (76) -
(Loss)/profit before
taxation (2,133) 2,471
Income tax expense 7 (175) (298)
------------------------------------- ----- ---------------- ---------------- ----------
(Loss)/profit for the
year
2,173
Other comprehensive income (2,308)
Items that will or may
be reclassified
to profit or loss:
Exchange (loss)/ profit
on translating foreign
operations (105) 106
------------------------------------- ----- ---------------- ---------------- ----------
Other Comprehensive (loss)/income
for the year, net of
tax (105) 106
Total comprehensive (loss)/income
for the year (2,413) 2,279
(Loss)/profit attributable
to:
Equity shareholders of
the parent (2,384) 1,660
Non-controlling interest 76 513
Total comprehensive (loss)/income
attributable to:
Equity shareholders of
the parent (2,489) 1,766
Non-controlling interest 76 513
(Loss)/earnings per share 9
Basic (loss)/earnings
per share (19.36)p 13.72p
Diluted (loss)/earnings
per share (19.36)p 13.38p
The above results relate to continuing operations.
PRIME PEOPLE PLC
Consolidated Statement of Changes in Equity
For the year ended 31 March 2019
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
2018 1,229 9 (421) 5,371 173 314 490 7,764 14,929 75 15,004
IFRS 15
adjustment
for revenue
recognition - - - - - - - (1,976) (1,976) - (1,976)
Total
comprehensive
income for
the
year - - - - - - - 1,659 1,659 513 2,172
Other
comprehensive
income - - - - - - 106 - 106 - 106
Adjustment in
respect of
share
schemes - - - - - 23 - - 23 - 23
Shares
purchased
for treasury - - (26) - - - - - (26) - (26)
Shares issued
from treasury - - 246 - - - - - 246 - 246
Adjustment on
share
disposal - - 40 - - - - 5 45 - 45
Dividend - - - - - - - (595) (595) - (595)
--------------- -------- ----------- --------- -------- -------- -------- ------------ --------- ------------- ---------------- ---------
At 31 March
2019 1,229 9 (161) 5,371 173 337 596 6,857 14,411 588 14,999
--------------- -------- ----------- --------- -------- -------- -------- ------------ --------- ------------- ---------------- ---------
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
IFRS 16
adjustment
for leases - - - - - - - (297) (297) - (297)
Total
comprehensive
loss for the
year - - - - - - - (2,384) (2,384) 76 (2,308)
Other
comprehensive
loss - - - - - - (105) - (105) - (105)
Adjustment in
respect of
share
schemes - - - 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 Financial Position
As at 31 March 2020
2020 2019
Note GBP'000 GBP'000
Assets
Non - current assets
Goodwill 11 6,509 10,527
Property, plant and equipment 10 1,890 752
Deferred tax asset 16 40
40
8,439 11,319
Current assets
Trade and other receivables 13 3,868 4,646
Cash at bank and in hand 21 2,055 2,309
----------------------------------- ----- -------------- ---- --------------------------
5,923 6,955
----------------------------------- ----- -------------- ---- --------------------------
Total assets 14,362 18,274
----------------------------------- ----- -------------- ---- --------------------------
Liabilities
Current liabilities
Trade and other payables 15 3,205 3,080
Lease liabilities 497 -
Current tax liability 166 173
Deferred tax liability 16 22 -
----------------------------------- ----- -------------- ---- --------------------------
3,890 3,253
----------------------------------- ----- -------------- ---- --------------------------
Non-current liabilities
Deferred tax liability 16 - 22
Lease liability 1,027 -
----------------------------------- ----- -------------- ---- --------------------------
Total liabilities 4,917 3,275
----------------------------------- ----- -------------- ---- --------------------------
Net assets 9,445 14,999
----------------------------------- ----- -------------- ---- --------------------------
PRIME PEOPLE PLC
Consolidated Statement of Financial Position
As at 31 March 2020
2020 2019
Note GBP'000 GBP'000
Capital and reserves attributable to the
Company's equity holders
Called up share capital 17 1,231 1,229
Capital redemption
reserve fund 18 9 9
Treasury shares 18 - (161)
Share premium account 18 3,376 5,371
Merger reserve 18 173 173
Share option reserve 18 187 337
Translation reserve 18 491 596
Retained earnings 18 3,314 6,857
8,781 14,411
Non-controlling interest 664 588
Total equity 9,445 14,999
--------------------------- ----- -------- --------
The financial statements were approved by the Board of Directors
and authorised for issue on 3 November 2020 and are signed on its
behalf by:
R J G Macdonald D Zaneva-Todorinski
PRIME PEOPLE PLC
Company Statement of Financial Position
As at 31 March 2020
2020 2019
Note GBP'000 GBP'000
Assets
Non-current assets
Investment in subsidiaries 12 7,137 11,213
7,137 11,213
-------------------------------- ----- -------- --------
Current assets
Trade and other receivables 13 3,145 124
Cash and cash equivalents 21 876 322
-------------------------------- ----- -------- --------
4,021 446
-------------------------------- ----- -------- --------
Total assets 11,158 11,659
-------------------------------- ----- -------- --------
Liabilities
Current liabilities
Trade and other payables 15 3,912 1,125
Current tax liability 3
-------------------------------- ----- -------- --------
Total liabilities 3,915 1,125
-------------------------------- ----- -------- --------
Net assets 7,243 10,534
-------------------------------- ----- -------- --------
Capital and reserves attributable to the
Company's equity holders
Called up share capital 17 1,231 1,229
Capital redemption reserve
fund 18 9 9
Treasury shares 18 - (161)
Share premium account 18 3,376 5,371
Merger reserve 18 173 173
Share option reserve 18 187 337
Retained earnings 18 2,267 3,576
-------------------------------- ----- -------- --------
Total equity 7,243 10,534
-------------------------------- ----- -------- --------
The Company's retained earnings includes (loss)/profit for the
year of (GBP524,296) (2019: GBP458,173).
The financial statements of Prime People Plc, Company Number
01729887 were approved by the Board and authorised for issue on 3
November 2020 and are signed on its behalf by:
R J G Macdonald D Zaneva-Todorinski
PRIME PEOPLE PLC
Company Statement of Changes in Equity
For the year ended 31 March 2020
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 1 April
2018 1,229 9 (421) 5,371 173 314 3,748 10,423
Total
comprehensive
income for
the year - - - - - - 458 458
Shares
purchased
for treasury - - (26) - - - - (26)
Shares issued
from treasury - - 246 - - - - 246
Adjustment
on share
disposal - - 40 - - - (35) 5
Investment
in
subsidiaries - - - - - 23 - 23
Dividend - - - - - - (595) (595)
--------------- ------------- -------------- ------------ --------------- -------------- ------------- ------------ --------
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
--------------- ------------- -------------- ------------ --------------- -------------- ------------- ------------ --------
PRIME PEOPLE PLC
Group and Company Cash Flow Statement
For the year ended 31 March 2020
Group Company
2020 2019 2020 2019
Note GBP'000 GBP'000 GBP'000 GBP'000
Cash generated from
(used
in) underlying
operations 20 3,642 2,146 (276) 241
Income tax paid (160) (111) (8) (9)
Net cash from/ (used
in)
operating activities 3,482 2,035 (284) 232
----------------------- ----- -------------------- -------------------- -------------------- --------------------
Cash flows (used in)/
from investing
activities
Net purchase of
property,
plant and equipment,
and
software (122) (727) - -
Dividend received - - 3,450 450
Net cash (used
in)/from
investing activities (122) (727) 3,450 450
Cash flows from
financing
activities
Issue of ordinary
share
capital 2 - 2 -
Shares issued from
treasury - 260 34 246
Shares purchased for
treasury (21) - (21) (26)
Shares issued and - - (2) -
moved
to treasury
Return of capital from
share premium (2,000) - (2,000) -
Dividend paid to
shareholders (948) (595) (625) (595)
Lease payments (566) - - -
----------------------- ----- -------------------- -------------------- -------------------- --------------------
Net cash used in
financing
activities (3,533) (335) (2,612) (375)
----------------------- ----- -------------------- -------------------- -------------------- --------------------
Net (decrease)/
increase
in cash and cash
equivalents (173) 973 554 307
----------------------- ----- -------------------- -------------------- -------------------- --------------------
Cash and cash
equivalents
at beginning of the
year 2,309 1,234 322 15
Effect of foreign
exchange
rate changes (81) 102 - -
----------------------- ----- -------------------- -------------------- -------------------- --------------------
Cash and cash
equivalents
at the end of the
year 21 2,055 2,309 876 322
----------------------- ----- -------------------- -------------------- -------------------- --------------------
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
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") as endorsed by
the European Union and comply with IFRIC interpretations and
Company Law applicable to Companies reporting under IFRS, and in
accordance with the Companies Act 2006. The consolidated financial
statements have been prepared under the historical cost convention
modified as necessary to include any 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 2020 (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 2019, except for lease recognition and uncertainty over
income tax treatments which are covered in more detail in Notes
2(i) and 19 and are described below.
Adjustments recognised on adoption of IFRS 16
The Group has adopted IFRS 16 for the first time in these
financial statements. This note explains the impact of the adoption
of IFRS 16 Leases on the Group's financial statements. The Group
has adopted the modified retrospective approach which does not
require the restatement of comparative information. 2019 figures
have therefore not been restated and IFRS 16 has an impact from 1
April 2019.
The reclassifications and the adjustments arising from the new
leasing rules are therefore recognised in the opening balance sheet
on 1 April 2019.
The weighted average incremental borrowing rate used is
3.77%.
From 1 April 2019 the Group no longer records a rental expense
within its operating costs but instead records a depreciation
charge in respect of the right-of-use assets within operating
costs, and an interest charge on the lease liabilities within its
finance costs.
On adoption of IFRS 16, the Group recognises within the balance
sheet a right-of-use asset and a corresponding lease liability for
all applicable leases. Within the income statement, operating lease
rentals payable has been replaced by depreciation and interest
expense. This has resulted in an increase in operating profit and
finance costs.
Measurement of right-of-use assets
In applying IFRS 16 for the first time right of use assets are
initially measured on a retrospective basis as if the new rules had
always been applied. Other 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
accounting for operating leases with remaining lease terms of
less than 12 months as at 1 April 2019 as short- term leases
Adjustments recognised in the balance sheet as at 1 April
2019
The change in Accounting Policy affected the following balance
sheet items on 1 April 2019
right-of-use assets - increase by GBP1.47m
lease liabilities - increase by GBP1.76m
net impact on retained earnings on 1 April 2019 was a decrease
of GBP0.30m
The Group has applied the simplified transition approach where
it does not restate any comparative information. Instead the
cumulative effect of applying the standard is recognised as an
adjustment to the opening balance of retained earnings at the date
of initial adoption.
The Group has elected not to recognise the right-of-use assets
and lease liabilities for short-term leases that have a term of 12
months or less or leases that are of low value (GBP5,000). Lease
payments associated with these leases are expensed on a
straight-line basis over the lease term.
The table below summarises the IFRS 16 impact on transition for
lease liabilities and the corresponding right-of-use assets along
with the movement from 1 April 2019 to 31 March 2020:
Lease liability GBP'000
Operating lease commitment disclosed as at 31 March
2019 1,817
Less short-term and low value lease (27)
Exchange difference 104
----------------------------------------------------- --------
Operating lease commitment at 31 March 2019 falls
under IFRS 16 1,894
Discounted using borrowing incremental rate at
initial application (134)
Lease liabilities recognised at 1 April 2019 1,760
Lease liabilities movement from 1 April 2019 to
31 March 2020
At 1 April 2019 1,760
New lease in period 212
Lease payments (566)
Interest charge 71
Exchange difference 48
----------------------------------------------------- --------
Total lease liabilities at 31 March 2020 1,525
Current lease liabilities 497
Non-current lease liabilities 1,027
Right-of-use assets
31 March 2020 1 April 2019
GBP'000 GBP'000
Properties 1,284 1,463
Total right-of-use-assets 1,284 1,463
---------------------------- -------------- -------------
International Accounting Standards (IAS/IFRS) and
Interpretations in issue but not yet EU 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 EU but not yet effective
IAS 1 Presentation of Financial Statements and IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors (Issued on 31
October 2018, effective 1 January 2020)
IFRS 3 Business Combinations (Issued on 22 October 2018,
effective 1 January 2020)
Revised Conceptual Framework for Financial Reporting (Issued 29
March 2018, effective 1 January 2020)
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, plus costs directly attributable to the acquisition.
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 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. 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
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 when the service has been provided;
and
Revenue from Permanent placements, which is based on a
percentage of the candidate's remuneration package and is derived
from both retained assignments (where income is recognised on
completion of defined stages of work) and non-retained assignments.
Revenue is recognised once value has been received by the customer
and when the performance obligations have been satisfied. Revenue
from non-retained, permanent-placement assignments is now
recognised when a candidate commences employment.
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
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) Intangible Assets
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.
As permitted by the exception in IFRS1 'First time adoption of
International Reporting Standards', the Group has elected not to
apply IFRS3 'Business combinations' to goodwill arising on
acquisition that occurred before the date of transition to
IFRS.
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.
f) 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.
g) 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).
h) 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 substantially enacted by the balance
sheet 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.
i) Leases
IFRS 16 was adopted on 1 April 2019 without the restatement of
comparative figures. For an explanation of the transitional
requirements that were applied as at 1 April 2019, see note 2
above. The following policies apply subsequent to the date of
initial application, 1 April 2019.
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.
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.
j) 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 2019-20, 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.
k) 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.
l) 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.
m) 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.
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.
n) Financial liabilities and equity
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'.
o) 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.
p) 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.
q) 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:
Revenue Recognition
Revenue from permanent placements is recognised when a candidate
commences employment.
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.
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
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
UK 15,677 16,472 7,262 7,599
Asia 8,176 7,770 8,120 7,770
Rest 139 418 139 418
of
World
------- -------- --------------- ----------------------------------------------------------------------------------------- -------------- --------------
23,992 24,660 15,521 15,787
--------------- ----------------------------------------------------------------------------------------- -------------- --------------
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 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
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Permanent
- UK 6,344 6,501 6,344 6,493
- Asia 8,110 7,770 8,110 7,770
- Rest of World 139 418 139 418
Contract
- UK 9,333 9,971 918 1,106
- Asia 66 - 10 -
------------------ --------- ------------- -------------- -----------
Total 23,992 24,660 15,521 15,787
------------------ --------- ------------- -------------- -----------
c) Profit before Taxation by Geographical Region
2020 2019
GBP'000 GBP'000
UK - operations 299 928
UK - impairment of investment asset (4,018) -
Asia 1,672 1,523
Rest of World (10) 20
Operating (loss)/profit (2,057) 2,471
Net finance income (76) -
------------------------------------- ------------------ -------------------
(Loss)/profit before taxation (2,133) 2,471
------------------------------------- ------------------ -------------------
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 GBP0.80m (2019:
GBP0.83m) for the UK, and charges of GBP0.80m (2019: GBP0.77m) for
Asia and nil for the rest of the world (2019: GBP0.06m).
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
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
UK 9,418 12,502 386 2,036
Asia 4,867 5,375 4,522 1,159
Rest of World 77 397 9 80
---------------- --------- --------- ---------------- ---------------
Total 14,362 18,274 4,917 3,275
---------------- --------- --------- ---------------- ---------------
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 Profit on ordinary activities before taxation
2020 2019
GBP'000 GBP'000
Profit for the year is arrived at after charging:
Depreciation - owned assets and leased assets 737 220
Operating lease rentals - land and buildings - 586
Loss/(profit) on disposal of fixed assets 374 (1)
Exchange rate loss 29 3
The analysis of auditor's remuneration is as
follows:
Audit of Company 31 23
Audit of subsidiaries 53 36
--------------------------------------------------- ------------------ ---------------
Total audit fees 84 59
--------------------------------------------------- ------------------ ---------------
5 Directors' emoluments
2020 2019
GBP'000 GBP'000
Emoluments for qualifying services 538 562
538 562
-------------------------------------- -------- ------------
Highest paid Director:
Emoluments for qualifying services 210 231
Details of Directors' emoluments and interests, which form part
of these financial statements, are provided in the Director's
Remuneration report in the Annual Report.
6 Employees
Group 2020 2019
Number Number
The average monthly number of employees of the
Group during the year, including Directors, was
as follows:
Consultants 107 106
Management and administration 30 32
Temporary staff 30 37
--------------------------------------------------- ------- ---------
167 175
--------------------------------------------------- ------- ---------
Company 2020 2019
Number Number
The average monthly number of employees of the
Company during the year, including Directors,
was as follows:
Management 6 5
-------------------------------------------------- ------- -------
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 2020 2019
GBP'000 GBP'000
Wages and salaries 8,795 8,360
Social security costs 741 709
Pension contributions 65 84
Share option charge 49 57
9,650 9,210
----------------------- ------------------ ----------------
Remuneration of key management 2020 2019
GBP'000 GBP'000
Short-term employee benefits 1,568 1,139
Social security costs 151 115
Share-based payments 38 33
Pension contributions 11 49
1,768 1,336
-------------------------------- -------- --------
Key management includes executive Directors and senior
divisional managers.
7 Taxation on Profits on Ordinary Activities
2020 2019
GBP'000 GBP'000
Analysis of tax charge in the year
Current tax
UK Corporation tax 118 173
Foreign tax 97 129
Foreign tax over-provision in prior years (40) -
Total current tax 175 302
Deferred tax
Deferred tax on fair value share option charge - (4)
Total charge on profit for the year 175 298
------------------------------------------------------ ---------- ---------
UK corporation tax is calculated at 19% (2019: 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:
2020 2019
GBP'000 GBP'000
(Loss) / profit before taxation (2,133) 2,471
------------------------------------------------------ ---------- ---------
Tax at UK corporation tax rate of 19% (2019:
19%) on profit on ordinary activities (405) 470
Effects of:
Expenses not deductible for tax purposes 18 8
Capital allowances for the period less than
depreciation (22) (26)
Depreciation on non-qualifying assets 116 -
Increase in general debt provision 26 -
Tax losses not utilised/(utilised) - 2
Tax rate differences (250) (125)
Exchange rate differences (23) -
Temporary differences recognised (3) (34)
Permanent timing differences 727 (2)
Share option charge/exercised (9) 5
Total current tax 175 298
Deferred Tax - -
Tax charge for the year 175 298
------------------------------------------------------ ---------- ---------
8 Dividends
2020 2019
GBP'000 GBP'000
Final dividend for 2019: 3.40p per share (2018:
3.25p per share) 411 383
Interim dividend for 2020: 1.80p per share (2019:
1.80p per share) 220 212
Command Recruitment Group (HK) Limited dividend 317 -
to non-controlling shareholders
--------------------------------------------------- -------- ------------
948 595
--------------------------------------------------- -------- ------------
A final dividend of 3.40p (2018: 3.25p) was paid on 2 August
2019 to shareholders on the register on 19 July 2019.
An interim dividend of 1.80p (2019: 1.80p) was paid on 6
December 2019 to shareholders on the register at the close of
business on 22 November 2019. The interim dividend was approved by
the Board on 11 November 2019.
A final dividend of GBP1m was approved by the directors of the
partly owned (60%) subsidiary Command Recruitment (H.K) Group
Limited in December 2019. 75% of the declared dividend was paid on
31 December 2019, with the remainder payable by 31 December
2020.
The Board did not and will not recommend any final dividend for
the year to 31 March 2020.
9 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.
2020 2019
GBP'000 GBP'000
(Loss) / profit for the year and earnings used
in basic and diluted earnings per share (2,384) 1,660
Number Number
Weighted average number of shares used for basic
earnings per share 12,307,273 12,094,523
Dilutive effect of share options - 307,031
---------------------------------------------------- -------------- -------------
Diluted weighted average number of shares used
for diluted earnings per share 12,307,273 12,401,554
---------------------------------------------------- -------------- -------------
Pence Pence
(19.36)
Basic (loss)/earnings per share p 13.72p
(19.36)
Diluted (loss)/earnings per share p 13.38p
The following table shows earnings per share as they would be
without the effect of goodwill impairment.
GBP'000 GBP'000
Profit for the year and earnings used in basic
and diluted earnings per share prior to goodwill
impairment 1,635 1,660
Number Number
Weighted average number of shares used for basic
earnings per share 12,307,273 12,094,523
Dilutive effect of share options - 307,031
Diluted weighted average number of shares used
for diluted earnings per share 12,307,273 12,401,554
Pence Pence
Basic earnings per share prior to goodwill impairment 13.28p 13.72p
Diluted earnings per share prior to goodwill
impairment 13.28p 13.38p
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 2018 1,368 - 1,368
Additions 727 - 727
Disposals (133) - (133)
Exchange difference 18 - 18
------------------------ --------------- ------------- -----------------------
At 1 April 2019 1,980 2,932 4,912
Additions 122 212 334
Disposals (28) - (28)
Exchange difference 37 62 99
------------------------ --------------- ------------- -----------------------
At 31 March 2020 2,111 3,206 5,317
------------------------ --------------- ------------- -----------------------
Depreciation
At 1 April 2018 1,126 - 1,126
Provision for the year 220 - 220
Disposals (133) - (133)
Exchange difference 15 - 15
------------------------ --------------- ------------- -----------------------
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 31 March 2020 1,505 1,922 3,427
Net book value
At 31 March 2020 606 1,284 1,890
------------------------ --------------- ------------- -----------------------
At 31 March 2019 752 - 752
------------------------ --------------- ------------- -----------------------
At 31 March 2018 242 - 242
------------------------ --------------- ------------- -----------------------
11 Goodwill
GBP'000
Cost
At 1 April 2019 10,527
Goodwill impairment (4,018)
------------------------------- ---------------------------------
At 31 March 2020 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
or more frequently if there is an indication that goodwill might be
impaired. 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 with prior years, the impact of Covid- 19 has
influenced the basis of forecasting that has been applied. The
recoverable amount is determined on a value-in-use basis utilising
the value of cash flow projections over five years with terminal
value which equates to an earnings multiple of six times year 5
earnings of the UK CGU. This has changed from prior years' model,
where a multiple of 10 was applied.
As the business has been impacted by Covid-19, the forecast
results for the first year are significantly reduced from previous
years. As the 2021 forecast is not reflective of the expected
business performance going forward post pandemic, management used
the second year as a base with the expectation that the business
will return to reduced but nevertheless normal NFI levels. The
second year UK segment profit forecast shows a recovery with
operating profit improvement, although it is still below levels
achieved in the past.
% Rate
Assumptions used
Growth rate (NFI) 4- 6%
-------
Cost increases 5-8%
-------
Discount rate 6.49%
-------
A key assumption in the forecasts applied is that the impact of
the pandemic will recede to an extent and allow the business to
improve performance, although still at significantly reduced
levels. As 2022 has been used as the base year for the modelling,
growth rates have only been applied in 2023, 2024 and 2025, of 6%,
4% and 4% respectively. These rates are more than the 2% that has
been applied in previous years, but also reflect the fact that the
business is starting from a significantly reduced position, with
capacity for growth.
The model has applied a terminal value of 6 times year 5
earnings. A pre-tax discount rate of 6.49% (2019: 6.60%) has been
applied, representing the weighted average cost of capital for the
Group. The reduced discount rate reflects the fact that the Group
have taken on CBILS debt bearing interest at 3.99%.
As a result of the impairment reviews carried out at 31 March
2020, an impairment charge of GBP4m (2019: Nil) has been recognised
for the UK business segment, reducing the carrying amount of
goodwill in respect of that business to GBP5.75m.
Potential sensitivity scenarios have been considered. With a
1.0% increase in the discount rate the level of impairment
recognised will reduce at the rate of approximately GBP0.27m.
Different modelled scenarios indicate that the impairment could be
both less or more than the GBP4m recognised.
Management are confident the assessment is reasonable as the NFI
activity in the first six months post 31 March 2020 is in line with
the forecast applied.
Goodwill recognised on the business combination in 2018 with
Command recruitment Group (HK) limited was GBP758k. The assessment
of Command Recruitment Group (H.K) Limited is based on projected
results in Hong Kong and Dubai. The approach is the same as that
used for Macdonald & Company Group. In assessing value in use,
the estimated future cash flows are calculated by preparing cash
flow forecasts derived from the most recent financial forecasts for
five years. T his analysis does not indicate any impairment.
Several potential sensitivity scenarios have been considered and
these would only indicate impairment in the carrying value of
goodwill if the discount rate were to be increased to 26% and if
the forecast operating profit is underachieved by 52%. Management
believes that both scenarios are unlikely as Command continues to
profitable and perform in line with management expectations. As a
result, the Group has continued to make significant investments in
the business to accelerate its growth in line with the Group's
strategy to build a strong presence in Hong Kong and maximise the
long-term growth opportunities available in the market.
12 Investments
Company shares in subsidiary undertakings 2020 2019
GBP'000 GBP'000
Cost
At 1 April 19 11,213 11,190
Impairment of investment asset (3,926) -
(Decrease)/ increase in shares from
subsidiary from share option reserve (150) 23
-------------------------------------------- -------- --------
At 31 March 20 7,137 11,213
-------------------------------------------- -------- --------
The investment value is linked to the Goodwill and accordingly
the impairment in the carrying value of the UK CGU, is an
indication that there is an impairment in the underlying
investment. The model and assumptions applied to assessing the
Goodwill impairment have been applied to the carrying value of the
investment and an 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.
2020 2019
GBP'000 GBP'000
NCI percentage 40% 40%
Non-current assets 288 110
Current assets 1,892 2,237
Non-current liabilities (145) -
------------------------------------------------- -------- --------
Net assets 2,035 2,347
------------------------------------------------- -------- --------
Net assets attributable to NCI 814 939
------------------------------------------------- -------- --------
Revenue 3,596 3,972
Operating profit 1,412 907
Other comprehensive (loss)/ income (35) 20
------------------------------------------------- -------- --------
Total comprehensive income 1,372 1,414
------------------------------------------------- -------- --------
Operating profit allocated to NCI 565 566
Other comprehensive (loss)/ income allocated
to NCI (14) 8
------------------------------------------------- -------- --------
Cash flows from operating activities 4,831 2,585
Cash flows from financing activities (dividends (318) -
to NCI: nil)
------------------------------------------------- -------- --------
Net increase /(decrease) in cash and cash
equivalents 4,513 2,585
------------------------------------------------- -------- --------
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, Hanover
Group Limited Wales Square, London, W1S
1BX
Macdonald & Company England and Recruitment 2 Harewood Place, Hanover
Property Limited Wales Square, London, W1S
1BX
Macdonald and Company England and Recruitment 2 Harewood Place, Hanover
Freelance Limited Wales Square, London, W1S
1BX
Macdonald & Company England and Dormant 2 Harewood Place, Hanover
(Overseas) Limited Wales 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, Hanover
Ltd Wales Square, London, W1S
1BX
Command Recruitment Hong Kong Recruitment 29th Floor
Group (H.K.) Limited 3 Lockhart Road
Wan Chai, Hong Kong
Blackbox Compliance Singapore Recruitment 63 Market Street #05-02,
Pte. Limited Bank of Singapore Centre,
Singapore 048942
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%, and Blackbox Compliance Pte. Limited where it
owns 40%. 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
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Current
Trade receivables 3,312 4,156 - -
Allowance for doubtful debts (340) (621) - -
Other receivables 284 243 133 119
Amounts owed by subsidiary - - 3,000 -
company
Prepayments and accrued income 612 868 12 5
------------------------------------ ------------------- ---------------- -------- --------
3,868 4,646 3,145 124
----------------------------------- ------------------- ---------------- -------- --------
At 31 March 2020, the average credit period taken on sales of
recruitment services was 75 days (2019: 131 days) from the date of
invoicing. An allowance of GBP340,000 (2019: GBP621,000) 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 trade receivables at the reporting date was:
Gross Provisions Expected Gross trade Provisions Expected
trade Loss receivables Loss rate
receivables rate
2020 2020 2020 2019 2019 2020
GBP'000 GBP'000 % GBP'000 GBP'000 %
Not past due 0
-30days 1,548 50 3.2% 1,654 68 4.1%
Past due 30-90
days 792 80 10.2% 1,435 157 10.9%
Past due more than
90 days 972 210 21.6% 1,067 396 37.1%
-------------------- ------------- ----------- ---------- ------------- ----------- -------------
3,312 340 4,156 621
The expected loss rates for trade receivables and contract
assets 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. Based on the Group's assessment, no expected credit loss
allowance has been recognised in the financial year ended 31 March
2020.
Movement in allowance for doubtful debts:
2020 2019
GBP'000 GBP'000
1 April 2019 621 178
Impairment losses recognised 340 621
Amounts written off as uncollectable (38) (117)
Amounts paid by the client (452) (61)
Impairment losses reversed (131) -
-------------------------------------- -------- ---------
31 March 2020 340 621
14 Financial Instruments
Group Company
2020 2019 2020 2019
Note GBP'000 GBP'000 GBP'000 GBP'000
Financial assets at amortised
cost
Trade and other receivables 13 3,256 3,778 133 119
Amounts owed by subsidiary
company 13 - - 3,000 -
Cash and cash equivalents 2,055 2,309 876 322
------------------------------- ----- -------- -------- -------- --------
5,311 6,087 4,009 441
------------------------------- ----- -------- -------- -------- --------
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
2020 2019 2020 2019
Note GBP'000 GBP'000 GBP'000 GBP'000
Financial liabilities at
amortised cost
Trade and other payables 15 1,619 1,123 3,873 1,097
Accruals 15 901 1,227 35 27
2,520 2,350 3,908 1,124
-------------------------- ----- ------------- ------------- ------------- -------------------
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
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Current
Trade payables 371 316 1 3
Other payables 1,248 807 - 1
Amount owed to subsidiary
undertakings - - 3,872 1,093
Taxation and social security 685 730 4 6
Accruals 901 1,227 35 27
3,205 3,080 3,912 1,130
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 Deferred Tax
Group (Liability) Other temporary Total
differences
GBP'000 GBP'000
At 1 April 2018 - -
Credit to income 22 22
At 31 March 2019 22 22
Debit to income - -
At 31 March 2020 22 22
Group (Asset) Share Options Total
GBP'000 GBP'000
At 1 April 2018 45 45
Debit to income (5) -
At 31 March 2019 40 45
Debit to income - (5)
At 31 March 2020 40 40
17 Share Capital
2020 2019
Number GBP'000 Number GBP'000
ALLOTTED CALLED UP
Ordinary shares of 10p each
As at 1 April 12,290,199 1,229 12,290,199 1,229
Shares issued during the
year 17,074 2 - -
At 31 March 12,307,273 1,231 12,290,199 1,229
Share capital includes unpaid shares of nil (2019: 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 2020 the following options had been granted and
remained outstanding in respect of the Company's ordinary
shares:
Year Exercise Exercise Number of Granted Exercised Forfeited Number of
of grant Price Period options Options
Pence 31 March 31 March
2019 2020
2011/12 68.00 2014-2019 3,000 - - - 3,000
2013/14 10.00 2016-2021 12,000 - (3,000) - 9,000
10.00 2019-2021 40,250 - (19,250) (15,000) 6,000
2014/15 10.00 2016-2021 20,000 - (10,000) - 10,000
10.00 2019-2021 229,500 - (174,500) (30,000) 25,000
2015/16 10.00 2020-2022 30,000 - - - 30,000
58.00 2017-2022 25,000 - (10,000) - 15,000
58.00 2020-2022 60,000 - - (10,000) 50,000
2016/17 50.00 2019-2024 15,000 - (15,000) - -
50.00 2022-2027 45,000 - - (35,000) 10,000
90.00 2019-2024 20,000 - - (5,000) 15,000
90.00 2022-2027 25,000 - - (5,000) 20,000
2018/19 10.00 2020-2028 80,000 - - - 80,000
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
Total 2020 604,750 95,000 (231,750) (100,000) 368,000
Weighted average exercise
price 2020 (pence) 26.96p 47.63 17.25p 36.8p 35.73p
Total 2019 662,750 90,000 (30,000) (118,000) 604,750
Weighted average exercise
price 2019 (pence) 28.37p 10.00p 10.00p 10.00p 27.84p
There were 368,000 options outstanding at 31 March 2020 (2019:
604,750) which had a weighted average price per share of 35.73p
(2019: 27.84p) and a weighted average contractual life of 4.3
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 2019 and 2020. 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.
2020 2019
Option pricing model used Black-Scholes Black-Scholes
Weighted average share price at grant 91.00 & 81.50 76.00 & 74.00
date (in pence)
Exercise price (in pence) 50.00 & 42.50 10.00
Fair value of options granted during
the year 46.44 68.98
Expected volatility (%) 20 20
Risk-free interest rate (%) 4 4
Expected life of options (years) 2 & 5 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 GBP48,836 (2019: expense
GBP57,306).
18 Reserves
Capital Redemption Reserve Fund
The capital redemption reserve relates to the cancellation of
the Company's own shares.
Treasury Shares
At 31 March 2020, the total number of ordinary shares of 10p
held in Treasury and their values were as follows:
2020 2019
Number GBP'000 Number GBP'000
As at 1 April 195,676 161 505,676 421
Shares purchased for treasury 36,074 23 34,000 26
Shares issued from treasury (231,750) (34) (344,000) (246)
Loss on treasury shares
disposal (150) (40)
As at 31 March - - 195,676 161
Nominal value - 20
Market value - 156
The maximum number of shares held in treasury during the year
was 195,676 shares representing 1.6% of the called-up ordinary
share capital of the Company (2019: 505,676 representing 4.1% 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. On
3 January 2020 a special resolution was passed to return GBP2m of
this reserve to the shareholders.
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.
19 Leases
The Group has adopted IFRS 16 Leases for the first time in the
financial statements. The Group has opted to apply the transition
approach which does not require the restatement of comparative
information. Further details are provided in note 1.
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
GBP'000
Cost
At 1 April 2019 2,994
Additions 212
At 31 March 2020 3,206
Accumulated depreciation
At 1 April 2019 1,482
Depreciation 440
At 31 March 2020 1,922
Net Book Value as at 31 March
2020 1,284
Additional disclosures as required under IFRS 16 Leases are
provided in the table below:
2020
GBP'000
Depreciation of right-of-use assets 440
Interest on lease obligations 71
Cash outflow for leases 566
Additions to right-of-use-assets 212
20 Reconciliation of Profit before Tax to Net Cash Inflow from Operating Activities
Group Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
(Loss)/ Profit before taxation (2,133) 2,471 (3,965) 10
Adjust for:
Depreciation of property, plant and
equipment and software amortisation 737 220 - -
Impairment of goodwill 4,018 - 3,926 -
Share-based payment expense 49 38 - -
Loss on sale of tangible asset 1 1 - -
Finance costs 76 - - -
Operating cash flow before changes
in working capital 2,748 2,730 (39) 10
IFRS 15 adjustment on reserves b/f - (1,976) - -
(Increase)/decrease in receivables 778 976 (3,021) (115)
Increase/(decrease) in payables 116 416 2,784 346
Cash generated from / (used by) underlying
operations 3,642 2,146 (276) 241
Changes in financial liabilities arise solely from financing
cashflows and leases.
21 Analysis of Cash less overdrafts
Group At 1 April Cash flow At 31 March
2019 2020
GBP'000 GBP'000 GBP'000
Cash at bank and in hand 2,309 (254) 2,055
Total cash 2,309 (254) 2,055
Company At 1 April Cash flow At 31 March
2019 2020
GBP'000 GBP'000 GBP'000
Cash at bank and in hand 322 554 876
Total cash 322 554 876
22 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
34.66% (2019: 31.53% of revenue and approximately 24.27% (2019:
29.64%) 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
2020 Euro AUD USD HK$ S$ AED
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
As at 31 March
2019 Euro AUD USD HK$ S$ AED
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank 78 - 32 645 95 805
Trade and other receivables - - - 648 140 1,389
Trade and other payables - - - (27) (4) -
Net exposure 78 - 32 1,266 231 2,194
Sensitivity analysis - currency risk
A 10% weakening of Sterling against the above currencies at 31
March 2020 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.
2020 equity 2020 PTB 2019 equity 2019 PBT
GBP'000 GBP'000 GBP'000 GBP'000
Euro (6) (6) (7) (7)
US Dollar - - (3) (3)
Hong Kong Dollar (46) (46) (115) (115)
Singapore Dollar (36) (36) (21) (21)
UAE Dirham (57) (57) (199) (199)
Australian Dollar (1) (1) - -
A 10% strengthening of Sterling against the above currencies at
31 March 2020 would have had the equal but opposite effect on the
above currencies to the amounts shown above, on the basis that all
other variables remain constant.
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 6.43% 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. Public investment funds in Hong Kong and
Saudi Arabia accounted for 12.57% and 8.48% of Group trade
receivables respectively. Apart from this exposure, at the year-end
no other
customer represented more than 5.73% (2019: 4.86% ) 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 it 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 no financial liabilities other than short-term
trade payables and accruals as disclosed in note 15, all due within
one year of the year end.
The Group has net funds of GBP2.06m (2019: GBP2.31m) which the
Board consider are more than adequate to meet future working
capital requirements and to take advantage of business
opportunities.
As at 31 March 2020, the Group's financial liabilities have
contractual maturities as follows:
Between Between
Less than 6 - 12 1 and 2 2 and 5
6 months months years years Over 5 years
At 31 March 20 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Trade payables 371 - - - -
Other payables 1,248 - - - -
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
Between Between
Less than 6 - 12 1 and 2 2 and 5
6 months months years years Over 5 years
At 31 March 19 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Trade payables 316 - - - -
Other payables 807 - - - -
Taxation and social
security 730 - - - -
Accruals 1,227 - - - -
Total contractual
cash flows 3,080 - - - -
The amounts disclosed in the table are the contractual
undiscounted cash flows.
23 Related Party Transactions
Prime People Plc provides various management services to its
subsidiary undertakings. These services take the form of
centralised finance and operations support. The total amount
charged by the Company to its subsidiaries during the year is
GBP215k (2019: GBP215k). The balance owed to the subsidiary
undertakings at the year-end is GBP3.87m (2019: GBP1.09m).
The Company also provides corporate guarantees on the subsidiary
bank accounts. At 31 March 2020 amounts overdrawn by subsidiary
bank accounts were GBPnil (2019: GBPnil).
The Directors receive remuneration from the Group, which is
disclosed in the Directors' Remuneration Report. As shareholders,
the Directors also received dividends in the year from the Company
amounting to GBP318,213 (2019: GBP359,697).
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END
FR EAFFLEEDEFFA
(END) Dow Jones Newswires
November 04, 2020 06:12 ET (11:12 GMT)
Prime People (LSE:PRP)
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から 12 2023 まで 12 2024
