TIDMPRP

RNS Number : 2012G

Prime People PLC

23 July 2021

23 July 2021

Prime People Plc

Results for the year ended 31 March 2021

Prime People Plc ("Prime People" or the "Group"), the global specialist recruitment business for professional and technical staff working in the Real Estate & Built Environment, Digital & Data Analytics sectors, today announces its audited results for the year ended 31 March 2021.

The Group's Annual Report and Accounts and Notice of Annual General Meeting will be published shortly and are available to view on the Company's website at http://prime-people.co.uk/ . The AGM will be held on 1 September 2021 at 11.00 am at 2 Harewood Place, London, W1S 1BX.

Highlights:

 
                                                                           Year ended  Year ended 
                                                                             31 March    31 March 
                                                                                 2021        2020 
------------------------------------  ---------  ------------------------------------  ---------- 
Revenue                                                                     GBP17.80m   GBP23.99m 
 
 Net Fee Income ("NFI")                                                     GBP10.93m   GBP15.52m 
Operating Profit/(Loss) before 
 tax and Goodwill impairment             Note 1                            GBP(0.12)m    GBP1.96m 
Operating Profit/(Loss) before 
 tax, Goodwill impairment and after                                                      GBP1.80m 
 non-controlling interest                                                 GBP(0.036)m 
Fully diluted earnings per share 
 before Goodwill impairment              Note 2                               (0.30)p      13.28p 
Dividends for the year                   Note 3                                   Nil       1.80p 
------------------------------------  ---------  ------------------------------------  ---------- 
 

Note 1. Operating profit for the year ended 31 March 2020 is before goodwill impairment of GBP4.0m

Note 2. Fully diluted earnings per share for the year ended 31 March 2020 are based on operating profit before goodwill impairment of GBP4.0m

Note 3. In addition to the interim dividend, in the year ended 31 March 2020 a return of capital of 16.25p per share was paid to shareholders

Peter Moore, Managing Director of Prime People, said:

" Our financial year to March 2021 has been most extraordinarily challenging for the majority of businesses and we were no exception. I am very grateful to our teams around the world who have, despite all the hurdles, challenges and separation, worked incredibly hard to provide exceptional service to our customers. I am confident that our significant investment in modern globalised systems and well over twenty years of experience will see us make good progress this year. I want to thank all our stakeholders for their continuing support, loyalty and resilience."

For further information, please contact:

 
 
Prime People              020 7318 1785 
Robert Macdonald 
 
 
  Cenkos Securities plc     020 7397 8900 
Katy Birkin/Nick Wells 
 

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

PRIME PEOPLE PLC

Chairman's Statement

Performance

As previously reported, the Covid-19 pandemic started in the early part of 2020 and, while not having a material effect on outcomes for the year ended 31 March 2020, nonetheless, activity slowed in our final quarter with an increasing impact throughout the 12 months to 31 March 2021.

The scale of the economic slowdown in all the Group's geographical segments saw performance significantly deteriorate compared with the results of the previous year.

We closed the year with headline Revenue of GBP17.8m (2020: GBP24.0m) and Net Fee Income ("NFI") of GBP10.9m (2020 GBP15.5m), a 30% year-on-year decline. NFI comprises the total fees for permanent candidates and the margin earned in the placement of contract staff.

The Group's Operating Loss, was GBP0.12m compared to the prior year profit of GBP2.0m, before a goodwill impairment of GBP4.0m. The decline is attributable to lower NFI although there were materially reduced operating costs as consequence of the income received in respect of the UK Government Coronavirus Job Retention Scheme and support programs in overseas locations.

The Board has carefully considered the prospects of the Group's operations and markets and are confident that no impairment charge is required to be recognised against the overall carrying value of Goodwill. Further details of the Goodwill are disclosed in note 11.

Cash Flow

Cash management was strengthened further during the period and, as previously announced, a Coronavirus Business Interruption Loan (CBILS) of GBP2m was secured, which continues to remain in place at the time of this report. The Group continues to maintain a good net cash position. At the start of the year the Group had cash of GBP2.1m which had increased to GBP4.0m at the end of March 2021, of which GBP2.0m is comprised of the CBILS.

Dividend

The Board will not be recommending a final Dividend this year.

Share Buy Back

During the year 190,000 shares were purchased through the Group's buyback programme at a cost of GBP103k. In the year no ordinary shares were transferred from Treasury to satisfy the exercise of options. At the year end the Group held 190,000 shares in Treasury.

Board

The Board believes it has continued to operate corporate governance standards appropriate to an AIM quoted company of its size. The Directors retire by rotation every three years and seek re-appointment by shareholders at the next AGM. This year, Peter Moore will retire and seek re-election under these arrangements.

The Board members have a mix of skills, experience and backgrounds that are a considerable support to the business.

People

The average number of staff (excluding Temporary Contractors) reduced from 137 last year to 117 this year.

The Group has a diverse cultural and ethnic profile within its businesses and at the year-end had a global 60:40 male to female gender ratio.

The success of the Group is dependent on having competent and committed people and the Board would like to thank all the members of our staff for their hard work, commitment and contribution over the last year.

Current trading and outlook

All our markets have been impacted by Covid-19 and, although we have experienced reasonable progress as the various economies we operate in start to recover, noticeably in the UK. As an international Group, we may be impacted by ongoing restrictions on travel. Several of our geographic segments face geopolitical uncertainty and, whilst trading in our international offices is encouraging, we are closely monitoring the systemic risks posed over the longer term in all our regions of operation.

We believe that with our management focus on the key business drivers, and optimising interaction between our regions, the Group is well positioned to respond swiftly across all businesses to changes impacting our activity. We are confident about our ability to generate worthwhile, long-term returns and will continue to invest for the future.

Robert Macdonald

Executive Chairman

PRIME PEOPLE PLC

Strategic Report

Overview

The Group provides Permanent and Contract recruitment services to selected, niche industry sectors. Our business model is built around our people, all of whom are specialists in their industry verticals.

Our employees are vital to the continued success of the Group and we invest heavily in them. As such, we take time to find and train the best talent that shares our ambition - to be the best, not simply the biggest.

The built environment continues to be the Group's largest market, served through its main subsidiary, Macdonald & Company. In addition, the Group also serves the technology & digital transformation and infrastructure, construction, and design sectors through its Prime Insight and Command brands respectively.

The business is organised into teams of specialist consultants, each managed by a team leader who is responsible for performance within the operating framework approved by the Board. The Group operates a policy of open communication in the belief that its employees are best placed to suggest operational improvements and emergent strategies that will increase earnings.

The Group is committed to managing its talent on merit and provides equal opportunities for all current and future employees. It gives full and fair consideration to applications for employment from disabled persons, where a disabled person may adequately carry out the requirements of any position within the physical constraints of the Company's offices. The Board is concerned to provide a healthy corporate culture and in pursuit of its objectives and strategy seeks regular input through open meetings with its staff.

The Group has two locations in the UK, the London head office and Manchester, and international offices in Hong Kong (established in 2007), Dubai (established in 2008), Singapore (established in 2012), Frankfurt (established in 2019), and a franchise in South Africa (established in 2008). In the past 12 months, the Group has also opened offices in Riyadh, Houston, and Düsseldorf.

The Covid-19 pandemic had a large impact on all parts of our business during the period. As societies across the world locked down, the Group experienced a marked decrease in demand which extended through the year and has significantly affected results. Despite the strong headwinds facing all businesses, the Group's strategy of cultivating strong client relationships, investing in the best technology, and employing the best people helped mitigate the impact of the unprecedented restrictions placed upon global economies.

These are the foundations of the Group's success and, together with an experienced management team, focussed on tight control of cash resources, expenditure and productivity per head, they helped quickly stabilise the Group and have positioned us to recover as markets began to normalise after the first round of lockdowns.

While short-term cost reduction measures were quickly put in place, the Group has continued to invest in our people and every effort was made to retain staff and ensure we were equipped to take advantage of an economic recovery. We were able to make use of government funded support schemes and, while some limited staff reductions were, unfortunately required, the Group was able to retain its most experienced, productive fee earners.

Over several years, the Group has positioned itself to be agile in serving our clients - wherever their demand may be. Consequently, we had made significant investments in our technology and were well positioned to support remote working. Business was able to continue throughout the various lockdown measures with little interruption and we believe that the accelerated adoption of flexible working will present opportunities for the Group.

Despite this, performance was materially impacted by the pandemic with NFI down by 30% overall. As a result of the reduction in NFI the group reports an operating loss of GBP0.12m, however, the fundamentals of the Group are strong and the investment we made in retaining fee earners during the period will position us to take advantage of opportunities in our markets over the long-term.

Due to a predominantly public sector client base, contract recruitment in the UK proved resilient. During the year the Group continued its targeted expansion into the U.S. and mainland European markets.

With growth now returning to economies around the world, the Group remains committed to organic growth and where individual NFI performance against costs justifies, it will hire new fee earners.

Regional Performance

United Kingdom

 
                                       2021     2020 
                                       GBPm     GBPm 
 
 Revenue                              11.67    15.70 
 Net Fee Income (NFI)                  4.89     7.26 
 Adjusted Operating (Loss)/Profit 
  (Note 1)                           (0.02)     0.30 
 Adjusted Operating (Loss)/Profit 
  as % of NFI                        (0.4%)    4.55% 
 Average number of employees             61       71 
 

Revenue reduced by 25.7% to GBP11.67m (2020: GBP15.7m) with NFI reducing by 32.6% to GBP4.89m (2020: GBP7.3m).

Asia Pacific

 
                                  2021     2020 
                                  GBPm     GBPm 
 
 Revenue                          5.11     8.18 
 Net Fee Income (NFI)             5.01     8.12 
 Operating Profit                 0.05     1.67 
 Operating Profit as % of NFI    9.23%   20.68% 
 Average number of employees        50       60 
 

NFI declined by 38.3% to GBP5m (2020: GBP8.1m) . The region is covered by our offices in Hong Kong and Singapore and represents 45.8% of Group NFI (2020: 52.5%).

Command Operating Loss, unadjusted for Minority Interest, was part of the reported Operating Profit in the region.

Rest of the World

 
                                        2021    2020 
                                        GBPm    GBPm 
 
 Revenue                                1.03    0.14 
 Net Fee Income (NFI)                   1.03    0.14 
 Operating (Loss)/Profit              (0.13)    0.00 
 Operating (Loss)/Profit as % of 
  NFI                               (12.73%)   0.00% 
 Average number of employees               3       2 
 

The region now covers our offices in Frankfurt, Düsseldorf, Houston, Dubai and a franchise in South Africa.

Peter Moore

Managing Director

22 July 2021

Financial Review

Revenue

The Group's Revenue was GBP17.8m, which represents a 25.5% decline compared to 2020 (GBP24.0m).

Net Fee Income (NFI)

Overall Group NFI was GBP10.93.m which is a decrease of 29.5% compared to the prior year.

The split of net fee income was 94% from Permanent Sales (2020: 94%) and 6.0% from Contract Sales (2020: 6.0%).

The Group generated 55.3% of its Net Fee Income from outside the UK (2020: 53.2%).

Administration Costs

Administration costs for the year were GBP11.7m, a decrease of 13.4% on 2020 due to staff going on furlough and lower commission costs.

Profit before Taxation

Loss before taxation and Goodwill impairment was GBP0.17m (2020: profit of GBP1.89m) and reported loss was GBP0.17m after Goodwill Impairment (2020: loss of GBP2.13m).

Taxation

The taxation credit is GBP5k on loss before taxation of GBP173k which gives an effective tax rate of 2.8% (2020: 8.2%). The reasons for the difference from the standard UK corporation tax rate of 19% are detailed in note 7.

Earnings per Share

Basic and diluted earnings per share improved to a loss per share of 0.30p (2020: loss per share of 19.36p).

Balance Sheet

Net Assets at 31 March 2021 were GBP8.8m compared to the prior year net assets of GBP9.4m. Trade Receivables net of provisions for doubtful debts at the year-end were GBP2.2m (2020: GBP3.0m) and reflect the reduced average credit period taken by clients to 48 days (2020: 75 days). The decrease in debtor days is explained by stronger collection from certain Command clients in Saudi Arabia.

Treasury Management and Currency Risk

Approximately 65.6% of the Group's revenue in 2021 (2020: 65.4%) was denominated in Sterling. Consequently, the Group has a currency exposure in accounting for overseas operations.

Currently the Group policy is not to hedge against this exposure, but it does seek to minimise the effect by converting into Sterling all cash balances in foreign currency that are not required for local short-term working capital needs.

Cash Flow and Cash Position

At the start of the year the Group had Cash of GBP2.055m. After net taxation payments of GBP0.13m (2020: GBP0.16m) cash generated from operations was GBP1.0m (2020: GBP3.5m).

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Strategic Report, the Directors' Report and the Financial Statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRSs') as adopted by the EU and applicable law.

Under Company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the Company and the Group profit or loss for that period. In preparing these Financial Statements, the Directors are required to:

   --     select suitable accounting policies and then apply them consistently. 
   --     make judgments and accounting estimates that are reasonable and prudent. 

-- state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the Financial Statements.

-- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The Directors are responsible for keeping adequate accounting records that are enough to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

They are further responsible for ensuring that the Strategic Report and the Report of the Directors and other information included in the Annual Report and Financial Statements is prepared in accordance with applicable law in the United Kingdom.

The maintenance and integrity of the Prime People Plc web site is the responsibility of the directors.

Legislation in the United Kingdom governing the preparation and dissemination of the accounts and the other information included in annual reports may differ from legislation in other jurisdictions.

Consolidated Statement of Comprehensive Income

For the year ended 31 March 2021

 
                                  Note            2021        2020 
                                               GBP'000     GBP'000 
 
 Revenue                          2, 3          17,802      23,992 
 Cost of sales                                 (6,870)     (8,471) 
-----------------------------  -------  ---  ---------  ---------- 
 
   Net Fee Income                 2, 3          10,932      15,521 
 Administrative 
  expenses                                    (11,756)    (13,560) 
  Goodwill impairment               11               -     (4,018) 
 Other operating                                   707           - 
  income (Covid 
  related Governmental 
  support) 
-----------------------------  -------  ---  ---------  ---------- 
 
   Operating loss                    4           (117)     (2,057) 
 Net interest 
  payable                                         (56)        (76) 
 
   Loss before taxation                          (173)     (2,133) 
 Income tax credit/(expense)         7               5       (175) 
-----------------------------  -------  ---  ---------  ---------- 
 
   Loss for the 
   year 
 
   Other comprehensive 
   income 
   Items that will                               (168)     (2,308) 
   or may be reclassified 
   to profit or 
   loss: 
 
   Exchange loss 
   on translating 
   foreign operations                            (267)       (105) 
-----------------------------  -------  ---  ---------  ---------- 
 
   Other Comprehensive 
   loss for the 
   year, net of 
   tax                                           (267)       (105) 
 
   Total comprehensive 
   loss for the 
   year                                          (435)     (2,413) 
 
 Loss attributable 
  to: 
 Equity shareholders 
  of the parent                                   (36)     (2,384) 
 Non-controlling 
  interest                                       (132)          76 
 
 Total comprehensive 
  loss attributable 
  to: 
 Equity shareholders 
  of the parent                                  (303)     (2,489) 
 Non-controlling 
  interest                                       (132)          76 
 
 Loss per share                      9 
 Basic loss per 
  share                                        (0.30)p    (19.36)p 
 Diluted loss 
  per share                                    (0.30)p    (19.36)p 
 
 
 
 

The above results relate to continuing operations.

PRIME PEOPLE PLC

Consolidated Statement of Changes in Equity

For the year ended 31 March 2020

 
                   Called      Capital   Treasury     Share    Merger     Share   Translation   Retained          Total   Non-controlling      Total 
                       up   Redemption     shares   premium   reserve    option       reserve   Earnings   attributable          interest     equity 
                    share      reserve              account             reserve                               to equity 
                  capital                                                                                       holders 
                                                                                                                 of the 
                                                                                                                 parent 
                  GBP'000      GBP'000    GBP'000   GBP'000   GBP'000   GBP'000       GBP'000    GBP'000        GBP'000           GBP'000    GBP'000 
---------------  --------  -----------  ---------  --------  --------  --------  ------------  ---------  -------------  ----------------  --------- 
 
 
   At 31 March 
   2019             1,229            9      (161)     5,371       173       337           596      6,857         14,411               588     14,999 
 
 Loss for the 
  year                  -            -          -         -         -         -             -    (2,384)        (2,384)                76    (2,308) 
 
 Other 
  comprehensive 
  loss                  -            -          -         -         -         -         (105)          -          (105)                 -      (105) 
 Total 
  Comprehensive 
  loss for the 
  year                  -            -          -         -         -         -         (105)    (2,384)        (2,489)                76    (2,413) 
 
 IFRS16 
  adjustment 
  for leases            -            -          -         -         -         -             -      (297)          (297)                 -      (297) 
 
 Transactions with owners of the company 
 
 Adjustment in 
  respect of 
  share 
  options               -            -          -         5         -     (150)             -        236             91                 -         91 
 
 Issue of 
  ordinary 
  shares                2            -          -         -         -         -             -          -              2                 -          2 
 
 Capital 
  repayment             -            -          -   (2,000)         -         -             -          -        (2,000)                 -    (2,000) 
 
 Shares 
  purchased 
  for treasury          -            -       (23)         -         -         -             -          -           (23)                 -       (23) 
 
 Shares issued 
  from treasury         -            -         34         -         -         -             -          -             34                 -         34 
 
 Adjustment on 
  share 
  disposal              -            -        150         -         -         -             -      (150)              -                 -          - 
 
 Dividend               -            -          -         -         -         -             -      (948)          (948)                 -      (948) 
---------------  --------  -----------  ---------  --------  --------  --------  ------------  ---------  -------------  ----------------  --------- 
 
 At 31 March 
  2020              1,231            9          -     3,376       173       187           491      3,314          8,781               664      9,445 
---------------  --------  -----------  ---------  --------  --------  --------  ------------  ---------  -------------  ----------------  --------- 
 

PRIME PEOPLE PLC

Consolidated Statement of Changes in Equity

For the year ended 31 March 2021

 
                   Called      Capital   Treasury     Share    Merger     Share   Translation   Retained          Total   Non-controlling     Total 
                       up   Redemption     shares   premium   reserve    option       reserve   Earnings   attributable          interest    equity 
                    share      reserve              account             reserve                               to equity 
                  capital                                                                                       holders 
                                                                                                                 of the 
                                                                                                                 parent 
                  GBP'000      GBP'000    GBP'000   GBP'000   GBP'000   GBP'000       GBP'000    GBP'000        GBP'000           GBP'000   GBP'000 
---------------  --------  -----------  ---------  --------  --------  --------  ------------  ---------  -------------  ----------------  -------- 
 
 At 31 March 
  2020              1,231            9          -     3,376       173       187           491      3,314          8,781               664     9,445 
 
 
 Loss for the 
  year                  -            -          -         -         -         -             -       (36)           (36)             (132)     (168) 
 
 Other 
  comprehensive 
  loss                  -            -          -         -         -         -         (267)          -          (267)                 -     (267) 
 
 Total 
  Comprehensive 
  loss for the 
  year                  -            -          -         -         -         -         (267)       (36)          (303)             (132)     (435) 
 
 Transactions with owners of the company 
 
 Adjustment in 
  respect of 
  minority 
  dividend              -            -          -         -         -         -             -      (152)          (152)                 -     (152) 
 
 Adjustment in 
  respect of 
  share 
  schemes               -            -          -         -         -        76             -          -             76                 -        76 
 
 
 
 Shares 
  purchased 
  for treasury          -            -      (103)         -         -         -             -          -          (103)                 -     (103) 
 
 
 Adjustment in 
  respect of 
  share 
  options               -            -          -         -         -      (24)             -         24              -                 -         - 
 
 
 At 31 March 
  2021              1,231            9      (103)     3,376       173       239           224      3,150          8,299               532     8,831 
---------------  --------  -----------  ---------  --------  --------  --------  ------------  ---------  -------------  ----------------  -------- 
 

PRIME PEOPLE PLC

Consolidated Statement of Financial Position

As at 31 March 2021

 
                                                               2021                        2020 
                                   Note                     GBP'000                     GBP'000 
 
 Assets 
 Non - current assets 
    Goodwill                        11                        6,509                       6,509 
    Property, plant and 
     equipment                      10                        1,284                       1,890 
 
                                                              7,793                       8,399 
 
 Current assets 
    Trade and other receivables     13                        3,061                       3,868 
    Deferred tax asset              17                           40                          40 
    Cash at bank and in 
     hand                           22                        3,980                       2,055 
--------------------------------  -----  --------------------------  -------------------------- 
 
                                                              7,081                       5,963 
--------------------------------  -----  --------------------------  -------------------------- 
 
 Total assets                                                14,874                      14,362 
--------------------------------  -----  --------------------------  -------------------------- 
 
 
 Liabilities 
 Current liabilities 
    Trade and other payables        15                        3,140                       3,205 
    Lease liabilities                                           533                         497 
    Current tax liability                                        95                         166 
    Deferred tax liability          17                           22                          22 
--------------------------------  -----  --------------------------  -------------------------- 
 
                                                              3,790                       3,890 
--------------------------------  -----  --------------------------  -------------------------- 
 
 Non-current liabilities 
    Borrowings                      16                        1,733                           - 
    Lease liabilities                                           520                       1,027 
--------------------------------  -----  --------------------------  -------------------------- 
 
 Total liabilities                                            6,043                       4,917 
--------------------------------  -----  --------------------------  -------------------------- 
 
 Net assets                                                   8,831                       9,445 
--------------------------------  -----  --------------------------  -------------------------- 
 
 
 

PRIME PEOPLE PLC

Consolidated Statement of Financial Position

As at 31 March 2021

 
                                         2021      2020 
                               Note   GBP'000   GBP'000 
 
 Called up share capital        18      1,231     1,231 
 Capital redemption reserve     19          9         9 
 Treasury shares                19      (103)         - 
 Share premium account          19      3,376     3,376 
 Merger reserve                 19        173       173 
 Share option reserve           19        239       187 
 Translation reserve            19        224       491 
 Retained earnings              19      3,150     3,314 
 
 
                                        8,299     8,781 
 Non-controlling interest                 532       664 
 
 
 Total equity                           8,831     9,445 
----------------------------  -----  --------  -------- 
 
 
 

The financial statements on pages 29 to 71 were approved by the Board of Directors and authorised for issue on 22 July 2021 and are signed on its behalf by:

   R J G Macdonald                                                P H Moore 

PRIME PEOPLE PLC

Company Statement of Financial Position

As at 31 March 2021

 
                                                               2021                        2020 
                                   Note                     GBP'000                     GBP'000 
 
 Assets 
 Non-current assets 
    Investment in subsidiaries      12                        7,189                       7,137 
 
                                                              7,189                       7,137 
--------------------------------  -----  --------------------------  -------------------------- 
 
 Current assets 
    Trade and other receivables     13                        4,054                       3,145 
    Cash and cash equivalents       22                          556                         876 
--------------------------------  -----  --------------------------  -------------------------- 
 
                                                              4,610                       4,021 
--------------------------------  -----  --------------------------  -------------------------- 
 
 Total assets                                                11,799                      11,158 
--------------------------------  -----  --------------------------  -------------------------- 
 
 
 Liabilities 
 Current liabilities 
     Trade and other payables       15                        2,580                       3,912 
      Current tax liability                                       -                           3 
--------------------------------  -----  --------------------------  -------------------------- 
 
                                                              2,580                       3,915 
--------------------------------  -----  --------------------------  -------------------------- 
 
 Non-current liabilities 
    Borrowings                      16                        1,733                           - 
--------------------------------  -----  --------------------------  -------------------------- 
 
                                                              1,733                           - 
--------------------------------  -----  --------------------------  -------------------------- 
 
 Total liabilities                                            4,313                       3,915 
--------------------------------  -----  --------------------------  -------------------------- 
 
 Net assets                                                   7,486                       7,243 
--------------------------------  -----  --------------------------  -------------------------- 
 
 
 Capital and reserves 
  attributable to the 
 Company's equity holders 
 Called up share capital            18                        1,231                       1,231 
 Capital redemption reserve 
  fund                              19                            9                           9 
 Treasury shares                    19                        (103)                           - 
 Share premium account              19                        3,376                       3,376 
 Merger reserve                     19                          173                         173 
 Share option reserve               19                          239                         187 
 Retained earnings                  19                        2,561                       2,267 
--------------------------------  -----  --------------------------  -------------------------- 
 
 Total equity                                                 7,486                       7,243 
--------------------------------  -----  --------------------------  -------------------------- 
 
 
 

PRIME PEOPLE PLC

Company Statement of Financial Position

As at 31 March 2021

The Company's retained earnings includes profit/(loss) for the year of GBP294,034 (2020: (GBP524,296)).

The financial statements of Prime People Plc, Company Number 01729887 were approved by the Board and authorised for issue on 22 July 2021 and are signed on its behalf by:

   R J G Macdonald                                            D J G Macdonald 

PRIME PEOPLE PLC

Company Statement of Changes in Equity

For the year ended 31 March 2021

 
 Company          Called         Capital           Treasury   Share            Merger          Share             Retained   Total 
                   up             Redemp-            shares    premium          reserve         option           earnings 
                   share          tion                         account                          reserve 
                   capital        reserve 
                       GBP'000        GBP'000       GBP'000          GBP'000        GBP'000         GBP'000       GBP'000   GBP'000 
 
 At 31 March 
  2019               1,229                  9         (161)        5,371             173                337         3,576    10,534 
 
 
 Total 
  comprehensive 
  loss for 
  the year          -                       -             -     -                -                        -         (524)     (524) 
 
 Issue of 
  ordinary 
  shares            2                       -             -     -                -                        -             -         2 
 
 Adjustment 
  for share 
  schemes           -                       -             -     5                -                        -           (5)         - 
 
 Capital 
  repayment                  -              -             -          (2,000)              -               -             -   (2,000) 
 
 Shares 
  purchased 
  for treasury               -              -          (23)                -               -              -             -      (23) 
 
 Shares issued 
  from treasury              -              -            34                -               -              -             -        34 
 
 Adjustment 
  on share 
  disposal                   -              -           150                -               -          (150)         (150)     (150) 
 
 
 Dividend                    -              -             -                -               -              -         (630)     (630) 
---------------  -------------  -------------  ------------  ---------------  --------------  -------------  ------------  -------- 
 
 
   At 31 March 
   2020             1,231                   9             -     3,376            173                    187         2,267     7,243 
---------------  -------------  -------------  ------------  ---------------  --------------  -------------  ------------  -------- 
 
 
 Total 
  comprehensive 
  loss for 
  the year          -                       -             -     -                -                        -           294       294 
 
 
 
 
 Shares 
  purchased 
  for treasury               -              -         (103)                -               -              -             -     (103) 
 
 
 Adjustment 
  in respect 
  of share 
  options                    -              -             -                -               -             52             -        52 
 
 
 
 
   At 31 March 
   2021             1,231                   9         (103)     3,376            173                    239         2,561     7,486 
---------------  -------------  -------------  ------------  ---------------  --------------  -------------  ------------  -------- 
 
 
 

PRIME PEOPLE PLC

Group and Company Cash Flow Statement

For the year ended 31 March 2021

 
                                     Group                   Company 
                                   2021        2020       2021         2020 
                      Note      GBP'000     GBP'000    GBP'000      GBP'000 
 
 Cash generated 
  from (used 
  in) underlying 
  operations            21        2,016       3,642         10        (276) 
 Corporation 
  tax paid                        (125)       (160)        (9)          (8) 
 
 
 Net cash 
  from/ (used 
  in) operating 
  activities                      1,891       3,482          1        (284) 
-------------------  -----  -----------  ----------  ---------  ----------- 
 
 Cash flows 
  (used in)/ 
  from investing 
  activities 
 Interest 
  received                            5                      5 
 Net purchase 
  of property, 
  plant and 
  equipment, 
  and software                     (75)       (122)          -            - 
 Dividend 
  received                            -           -        300        3,450 
 
 Net cash 
  (used in)/from 
  investing 
  activities                       (70)       (122)        305        3,450 
 
 
 Cash flows 
  from financing 
  activities 
 Interest                          (13)           -          -            - 
  paid 
 Issue of 
  ordinary 
  share capital                       -           2          -            2 
 Shares issued 
  from treasury                       -           -          -           34 
 Shares purchased 
  for treasury                    (103)        (21)      (103)         (21) 
 Shares issued 
  and moved 
  to treasury                         -           -          -          (2) 
 Return of 
  capital 
  from share 
  premium                             -     (2,000)          -      (2,000) 
 Dividend 
  paid to 
  shareholders                        -       (948)          -        (625) 
 Dividend                         (152)           -          -            - 
  paid to 
  non-controlling 
  interest 
 Repayment                            -           -    (2,523)            - 
  of intercompany 
  debt 
 Repayment                        (822)           -          -            - 
  of Invoice 
  discounting 
  loan 
 Coronavirus 
  Business 
  Interruption 
  Loan                            2,000           -      2,000            - 
 Lease payments                   (519)       (566)          -            - 
-------------------  -----  -----------  ----------  ---------  ----------- 
 
 Net cash 
  from / (used 
  in) financing 
  activities            22          391     (3,533)      (626)      (2,612) 
-------------------  -----  -----------  ----------  ---------  ----------- 
 
 Net (decrease)/ 
  increase 
  in cash 
  and cash 
  equivalents                     2,212       (173)      (320)          554 
-------------------  -----  -----------  ----------  ---------  ----------- 
 
 Cash and 
  cash equivalents 
  at beginning 
  of the year                     2,055       2,309        876          322 
 Effect of 
  foreign 
  exchange 
  rate changes                    (287)        (81)          -            - 
-------------------  -----  -----------  ----------  ---------  ----------- 
 
 Cash and 
  cash equivalents 
  at the end 
  of the year           23        3,980       2,055        556          876 
-------------------  -----  -----------  ----------  ---------  ----------- 
 
 
 

PRIME PEOPLE PLC

Notes to the Financial Statements

For the year ended 31 March 2021

   1     Nature of Operations 

Prime People Plc ('the Company') and its subsidiaries (together 'the Group') is an international recruitment services organisation with offices in the United Kingdom, the Middle East and the Asia Pacific region from which it serves an international client base. The Group offers both Permanent and Contract specialist recruitment consultancy for large and medium sized organisations.

The Company is a public limited company which is quoted as an AIM Company and is incorporated and domiciled in the UK. The address of the registered office and the principal place of business is 2 Harewood Place, London W1S 1BX. The registered number of the Company is 01729887.

   2     Summary of Significant Accounting Policies 

Basis of Preparation

The financial statements of Prime People Plc consolidate the results of the Company and all its subsidiary undertakings. As permitted by Section 408 of the Companies Act 2006, the profit and loss account of the Company has not been included as part of these financial statements. The financial statements have been prepared on a going concern basis.

The consolidated financial statements of the Group and Company have been prepared on going concern basis, and in accordance with International Financial Reporting Standards ("IFRS") in conformity with the requirement of the Companies Act and comply with IFRIC interpretations and Company Law applicable to Companies reporting under IFRS, and in accordance with the Companies Act 2006. During the reporting year, the UK left the European Union and therefore the standards will be adopted by the UK. The consolidated financial statements have been prepared under the historical cost convention modified as necessary to include certain items at fair value, as required by accounting standards.

The Parent Company's Financial Statements have also been prepared in accordance with IFRS and the Companies Act 2006. The consolidated financial statements for the year ended 31 March 2021 (including comparatives) are presented in GBP '000.

The accounting polices applied by the Group in these consolidated financial statements are the same as those applied in its consolidated Financial Statements as at and for the year ended 31 March 2020.

International Accounting Standards (IAS/IFRS) and Interpretations in issue but not yet UK approved

At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published by the IASB but are not yet effective. These have not been adopted early by the Group and the initial assessment indicates that either they will not be relevant or will not have a material impact on the Group. The effective dates below are for reporting periods beginning on or after that point:

International Accounting Standards (IAS/IFRS) and Amendments adopted by the UK but not yet effective in the UK

-- Amendment to IFRS 16 Leases Covid 19-Related Rent Concessions (issued on 28 May 2020), effective 1 June 2020

-- Amendments to IFRS 16 Leases: Covid-19-Related Rent Concessions beyond 30 June 2021 (issued on 31 March 2021), effective 1 April 2021

-- Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current (issued on 23 January 2020) and Classification of Liabilities as Current or Non-current (issued on 15 July 2020), deferral of effective date to 1 January 2023

-- Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies (issued on 12 February 2021), effective 1 January 2023

-- Amendments to: IFRS 3 Business Combinations; IAS 16 Property, Plant and Equipment; IAS 37 Provisions, Contingent Liabilities and Contingent Assets; and Annual Improvements 2018-2020 (all issued 14 May 2020), effective 1 January 2023

-- Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates (issued on 12 February 2021), effective 1 January 2023

-- Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (issued on 7 May 2021), effective 1 January 2023

IAS 1 - Presentation of Financial Statements

Amendments to IAS 1 clarify the criteria used to determine whether liabilities are classified as current or non-current. This will be based on the Group's right at the end of the reporting period to defer settlement of the liability for at least twelve months after the reporting period. 'Settlements' include the transfer of cash, goods, services, or equity instruments unless the obligation to transfer equity instruments arises from a conversion feature classified as an equity instrument separately from the liability component of a compound financial instrument. The amendments are effective for annual reporting periods beginning on or after 1 January 2023.

The Group does not believe that the amendments to IAS 1 will have a significant impact on the classification of its liabilities.

Consolidation

Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

Business combinations are accounted for using the acquisition method of accounting. The cost of an acquisition is measured at the aggregate of the fair value of the assets given, equity instruments issued, and liabilities incurred or assumed at the date of exchange. Acquisition related costs are recognised in profit or loss as incurred. Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition date fair value . The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill.

Inter-company transactions and balances on transactions between Group companies are eliminated in preparing the consolidated financial statements.

Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Going Concern

The directors have taken consideration of the impact of Covid-19 on the business and the withdrawal of the United Kingdom from the European Union.

The Group's activities are funded by a combination of its operating cashflows, a GBP2m CBILS loan and an invoice finance facility in the UK of GBP2m. The Board has reviewed the Group's profit and cash flow forecasts, and applied sensitivities to the underlying assumptions including impact of Covid-19 outbreak and the potential consequences for the Group. These projections indicate that the Group expects to meet its obligations as they fall due with the use of existing facilities and to continue to meet its covenant requirements for a period of not less than 12 months from the date of issue of the Annual Report and Accounts. The Directors note that the Group is trading adequately and has sufficient working capital and other finance available to continue trading for a period of not less than 12 months from the date of issue of the Annual Report and Accounts. As such, the Directors consider it appropriate to continue to prepare the financial statements on a Going Concern basis.

Revenue recognition

   a)   Revenue 

Revenue, which excludes value added tax ("VAT"), constitutes the value of services undertaken by the Group from its principal activities, which are recruitment consultancy and other ancillary services. These consist of:

-- Revenue from Contract placements, which represents amounts billed for the services of contract staff, including the salary of these staff. This is recognised over the duration of the placement contract as the service is provided; and

-- Revenue from Permanent placements, which is based on a percentage of the candidate's remuneration package and is derived from retained assignments (income is recognised after an offer is accepted and candidate commences employment). Revenue is recognised once value has been received by the customer and when the above performance obligation has been satisfied. A provision is made for certain circumstances where a client may be entitled to a refund based on variable consideration if a candidate that has been placed leaves the role within 3 months; and

-- Revenue from franchise, is recognised on an accruals basis in line with the period to which it relates

   b)   Cost of Sales 

Cost of sales consists of the salary cost of contract staff and costs incurred on behalf of clients, principally advertising costs.

   c)   Net Fee Income 

Net Fee Income represents Revenue less Cost of Sales and consists of the total placement fees of Permanent candidates and the margin earned on the placement of Contract candidates.

   d)   Foreign Currency Translation 
   (i)         Functional and Presentation Currency 

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial statements are presented in Sterling, which is the Company's functional and presentation currency.

   (ii)    Transactions and Balances 

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated statement of comprehensive income.

(iii) Group Companies

On consolidation the results and financial position of all the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

-- assets and liabilities for each year end presented are translated at the closing rate of that year end;

-- income and expenses for each statement of comprehensive income are translated at average exchange rates; and

   --    all resulting exchange differences are recognised in other comprehensive income. 
   e)   Government grants 

Grants are accounted for under the accruals model. Grants of a revenue nature are recognised in the statement of comprehensive income in the same period as the related expenditure and are shown within other operating income.

   f)    Intangible Assets 
   (i)         Goodwill 

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in 'intangible' assets.

Separately recognised goodwill is reviewed annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash generating unit and a suitable discount rate in order to calculate present value.

Intangible assets that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful life. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with any changes being accounted for on a prospective basis.

   g)   Property, Plant and Equipment 

All property, plant and equipment are stated at historical cost less accumulated depreciation less provisions for impairment. Depreciation is provided on all property, plant and equipment using the straight-line method at rates calculated to write off the cost less estimated residual values over their estimated useful lives, as follows:

   --    Furniture, fittings and computer equipment 25% - 33% 

The gain or loss arising on disposal or retirement of an asset is determined by comparing the sales proceeds with the carrying amount of the asset and is recognised within profit and loss.

   h)   Impairment of Assets 

Assets that have an indefinite useful economic life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).

   i)    Taxation 

The tax expense represents the sum of the current tax expense and deferred tax expense.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the statement of financial position reporting date.

Deferred income tax is provided in full, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax is determined using tax rates and laws that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised, or the deferred income tax liability is settled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

   j)    Leases 

The Group recognises within the balance sheet a right-of-use asset and a corresponding lease liability for all applicable leases except for short term leases (lease term of 12 months or less) and leases of low value assets (less than GBP5,000). For those leases the Group has opted to recognise a leases expense on a straight line basis.

New right-of-use assets are measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:

   --    lease payments made at or before commencement of the lease. 
   --    initial direct costs incurred; and 

-- the amount of any provision recognised where the group is contractually required to dismantle, remove or restore the leased asset (typically leasehold dilapidations).

-- using hindsight in determining the lease term where the lease agreement contains options to extend or terminate the contract

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case applying a single discount rate to leases with reasonably similar characteristics. The Group does not have any leases with variable lease payments.

Subsequent to initial measurement, lease liabilities increase as a result of interest charged at a constant rate of return on the balance outstanding and are reduced for lease payments made. Right of use assets are depreciated on a straight line basis over the remaining term of the lease.

When the Group revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee extension or termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted using a revised discount rate. An equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being depreciated over the revised remaining lease term.

   k)   Pension Costs 

The Group operates a defined contribution pension scheme. The Group adopts both the minimum legally required employer contribution rate of 3% of qualifying earnings, and the maximum earning threshold for automatic enrolment for 2020-21, as set by the Pension Regulator.

The assets of the scheme are held separately from those of the Group in independently administered workplace pension - NEST. The pension costs charged to the income statement represent the contributions payable by the Group to NEST during the year.

The Pension liabilities at the Balance Sheet date represent employer and employee pension contributions, that are payable to the pension provider by the 22nd day of each month.

   l)    Segmental Reporting 

IFRS 8 requires operating segments to be identified based on internal reports that are regularly reviewed by the Board of Directors to allocate resources to the segment and to assess their performance.

m) Financial instruments

Financial assets and liabilities are recognised in the Group's balance sheet when the Group becomes a party to the contractual provision of the instrument.

   n)   Financial assets 

The Group's financial assets comprise cash and various other receivable balances that arise from its operations.

This includes the Group's trade and other receivables. They are initially recorded at fair value and subsequently measured at amortised cost. For trade receivables amortised cost includes an allowance for expected credit losses. This is assessed applying a provision percentage of expected loss to each of these which is assessed by reference to past default experience. Trade receivables are only written off once the potential of collection is considered to be nil and any local requirements such as withholding sales taxes are met.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets except for trade receivables, where the carrying amount is reduced using an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in the profit or loss account.

Cash and cash equivalents include cash in hand and bank deposits that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. Bank overdrafts are classified with current liabilities in the statement of financial position.

   o)   Financial liabilities and equity 

The Group's operating activities in the UK are part funded by Invoice Financing facilities. Movements in the Invoice Discounting balance are shown within financing activities in the Group's Cash flow Statement. Interest charges on invoice discounting are included in finance costs and service charges are included in administrative costs in the Group's Income Statement.

Financial liabilities and equity instruments are initially measured at fair value and are classified according to the substance of the contractual arrangements entered. Financial liabilities are subsequently measured at

amortised cost. The Group's financial liabilities comprise trade payables, bank overdrafts and other payable balances that arise from its operations. They are classified as 'financial liabilities measured at amortised cost'.

   p)   Share-Based Compensation 

The Group operates equity-settled, share-based compensation plans. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). At the balance sheet date, the number of outstanding options is adjusted to reflect those options that have been granted during the year or have lapsed in the year.

   q)   Dividend Distribution 

A final dividend distribution to the Company's shareholders is recognised as a liability in the Group's financial statements in the period in which the dividends are approved by the Company's shareholders. Interim dividend distributions are recognised in the period in which they are approved and paid.

   r)   Critical Accounting Estimates and Judgements 

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates and judgements. It also requires management to exercise judgement in the process of applying the Company's accounting policies.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described below:

Critical judgements in applying the Group's policies

Revenue Recognition

Revenue from permanent placements is recognised when a candidate commences employment as management considers that to be when the performance obligation is satisfied.

Key sources of estimation uncertainty

Goodwill Impairment

The Group tests goodwill for impairment at least annually. The recoverable amount is determined based on value-in-use calculations. This method requires the estimation of future cash flows and the assessment of a suitable discount rate in order to calculate their present value. Details of the impairment review are disclosed in note 11.

Trade Receivables

There is uncertainty regarding customers who may not be able to pay as their debts fall due. In reviewing the appropriateness of the provisions in respect of recoverability of trade receivables, consideration has been given to the ageing of the debt and the potential likelihood of default, considering current economic conditions. Details of the total amount of receivables past due and the movement in allowance for doubtful debts are disclosed in note 13.

Included within receivables are amounts due of GBP328k against which a provision of GBP263k has been made. These amounts are due from one entity which has a history of taking extended credit terms, management has considered this when deciding upon the appropriate level of provision. In the event that the debt is not repaid a further provision of GBP65k will be required, in the event that it is paid the provision of GBP263k will be released.

   3     Segment Reporting 
   a)     Revenue and Net Fee Income, by Geographical Region 

Information provided to the Board is focused on regions and as a result, reportable segments are on a regional basis.

 
                                 Revenue                        Net fee income 
                                        2021       2020         2021            2020 
                                     GBP'000    GBP'000      GBP'000         GBP'000 
 
 UK                                   11,668     15,677        4,894           7,262 
 Asia                                  5,105      8,176        5,009           8,120 
 Rest of World                         1,029        139        1,029             139 
----------------  --------------------------  ---------  -----------  -------------- 
 
                                      17,802     23,992       10,932          15,521 
                  --------------------------  ---------  -----------  -------------- 
 
 
 

All revenues disclosed by the Group are derived from external clients and are for the provision of recruitment services. The accounting policies of the reportable segments are the same as the Group's accounting policies described in note 2. Segment profit before taxation shown below represents the profit earned by each segment after allocations of central administration costs.

   b)     Revenue and Net Fee Income, by Classification 
 
                           Revenue           Net fee income 
                         2021       2020       2021       2020 
                      GBP'000    GBP'000    GBP'000    GBP'000 
 
 Permanent 
 - UK                   4,257      6,344      4,257      6,344 
  - Asia                4,995      8,110      4,995      8,110 
  - Rest of World       1,029        139      1,029        139 
 Contract 
 - UK                   7,411      9,333        637        918 
  - Asia                  110         66         14         10 
------------------  ---------  ---------  ---------  --------- 
 
   Total               17,802     23,992     10,932     15,521 
------------------  ---------  ---------  ---------  --------- 
 
 
 
   c)     Profit before Taxation by Geographical Region 
 
                                           2021        2020 
                                        GBP'000     GBP'000 
 
 UK - operations                           (33)         299 
 UK - impairment of investment asset          -     (4,018) 
 
 Asia                                        47       1,672 
 
 Rest of World                            (131)        (10) 
 
 
 Operating loss                           (117)     (2,057) 
 
   Net finance income                      (56)        (76) 
-------------------------------------  --------  ---------- 
 
 
   Loss before taxation                   (173)     (2,133) 
-------------------------------------  --------  ---------- 
 
 

Operating profit is the measure of profitability regularly reviewed by the Board, which collectively acts as the Chief Operating Decision Maker. Consequently, no segmental analysis of interest or tax expenses is provided.

Segment operating profit is the profit earned by each operating unit and includes inter-segment revenues totalling GBP1.29m (2020: GBP0.80m) for the UK, and charges of GBP1.11m (2020: GBP0.80m) for Asia and GBP0.18m for the rest of the world (2020: GBPnil).

Intersegmental revenue and charges relate to transfer of services from one subsidiary of the Group to another. They are based on arm's length calculations and in proportion to segmental headcount as percentage of the total Group headcount.

   d)     Segment Assets and Liabilities by Geographical Region 
 
                        Total assets            Total liabilities 
                           2021       2020            2021      2020 
                        GBP'000    GBP'000         GBP'000   GBP'000 
 
 UK                       9,288      9,418           3,768       386 
 Asia                     5,363      4,867           1,910     4,522 
 Rest of World              223         77             365         9 
----------------  -------------  ---------  --------------  -------- 
 
   Total                 14,874     14,362           6,043     4,917 
----------------  -------------  ---------  --------------  -------- 
 
 
 

The analysis above is of the carrying amount of reportable segment assets and liabilities. Segment assets and liabilities include items directly attributable to a segment and include income tax assets and liabilities.

4 Loss on ordinary activities before taxation

 
                                                                  2021           2020 
                                                               GBP'000        GBP'000 
 
 Operating loss for the year is arrived at after 
  charging: 
 Depreciation - owned assets and leased assets                     701            737 
 Loss/(profit) on disposal of fixed assets                           -            374 
 Exchange rate loss                                                 49             29 
 
 
 
 The analysis of auditor's remuneration is as 
  follows: 
 Audit of Company                                                   31             31 
 Audit of subsidiaries                                              53             53 
-------------------------------------------------  -------------------  ------------- 
 Total audit fees                                                   84             84 
-------------------------------------------------  -------------------  ------------- 
 
   5   Directors' emoluments 
 
                                            2021          2020 
                                         GBP'000       GBP'000 
 
   Emoluments for qualifying services        521           538 
 Loss of office                               80             - 
 
                                             601           538 
--------------------------------------  --------  ------------ 
 
 
 Highest paid Director: 
 Emoluments for qualifying services          208           210 
 
 
 

Details of Directors' emoluments and interests, which form part of these financial statements, are provided in the Director's Remuneration report on pages 20 to 22.

   6     Employees 
 
 Group                                                  2021       2020 
                                                      Number     Number 
 
   The average monthly number of employees of 
   the Group during the year, including Directors, 
   was as follows: 
 
 Consultants                                              87        107 
 Management and administration                            30         30 
 Temporary staff                                          23         30 
---------------------------------------------------  -------  --------- 
 
                                                         140        167 
---------------------------------------------------  -------  --------- 
 
 
 
 Company                                                        2021           2020 
                                                              Number         Number 
 
   The average monthly number of employees of 
   the Company during the year, including Directors, 
   was as follows: 
 
   Management                                                      6              6 
-----------------------------------------------------  -------------  ------------- 
 
 

Staff costs for all employees, including Directors, but excluding contract staff placed with clients are as follows and have been included in Administration expenses in the Consolidated statement of comprehensive income:

 
 Group                       2021      2020 
                          GBP'000   GBP'000 
 
 Wages and salaries         6,973     8,795 
 Social security costs        608       741 
 Pension contributions         43        65 
 Share option charge           76        49 
 
 
                            7,700     9,650 
-----------------------  --------  -------- 
 
 
 Remuneration of key management       2021      2020 
                                   GBP'000   GBP'000 
 
 Short-term employee benefits        1,283     1,568 
 Social security costs                 119       151 
 Share-based payments                   76        38 
 Pension contributions                   9        11 
 
 
                                     1,487     1,768 
--------------------------------  --------  -------- 
 

Key management includes executive Directors and senior divisional managers.

   7      Taxation on Profits on Ordinary Activities 
 
                                                              2021       2020 
                                                           GBP'000    GBP'000 
 a) Analysis of tax charge in the year 
 Current tax 
 UK Corporation tax                                             50        118 
 Over provision in prior year                                 (41)          - 
 Foreign tax                                                  (14)         97 
 Foreign tax over-provision in prior years                       -       (40) 
 
 
 Total current tax                                             (5)        175 
 Deferred tax 
 Deferred tax on fair value share option charge                  -          - 
 
 Total (credit)/charge on (loss)/profit for the 
  year                                                         (5)        175 
------------------------------------------------------  ----------  --------- 
 
 
 UK corporation tax is calculated at 19% (2020: 19%) of the estimated 
  assessable profits for the year. Taxation for other jurisdictions 
  is calculated at the rates prevailing in the respective jurisdictions. 
 
  b) The charge for the year can be reconciled to the profit per 
  the consolidated statement of comprehensive income as follows: 
                                                              2021       2020 
                                                           GBP'000    GBP'000 
 
 (Loss) / profit before taxation                             (173)    (2,133) 
------------------------------------------------------  ----------  --------- 
 
 
 Tax at UK corporation tax rate of 19% (2020: 
  19%) on profit on ordinary activities                       (33)      (405) 
 Effects of: 
 Expenses not deductible for tax purposes                        4         18 
 Decelerated / (accelerated) capital allowances                 19       (22) 
 Depreciation on non-qualifying assets                           -        116 
 Increase in general debt provision                              -         26 
 Difference on Right of use asset                               22          - 
 Tax rate differences                                            -      (250) 
 Exchange rate differences                                       -       (23) 
 Tax losses carried forward                                     24          - 
 Temporary differences recognised                                -        (3) 
 Permanent timing differences                                    -        727 
 Share option charge/exercised                                  14        (9) 
 
 Total current tax                                              50        175 
 
   Over provision in prior year                               (55)          - 
 
 Tax (credit)/charge for the year                              (5)        175 
------------------------------------------------------  ----------  --------- 
 
 
   8      Dividends 
 
                                                          2021      2020 
                                                       GBP'000   GBP'000 
 
 Final dividend for 2020: 0.00p per share (2019: 
  3.40p per share)                                           -       411 
 Interim dividend for 2021: 0.00p per share (2020: 
  1.80p per share)                                           -       220 
 Command Recruitment Group (HK) Limited dividend 
  to non-controlling shareholders                            -       317 
---------------------------------------------------  ---------  -------- 
 
                                                             -       948 
 -------------------------------------------------------------  -------- 
 

The Board did not and will not recommend any final dividend for the year to 31 March 2021.

   9      (Loss)/earnings per share 

Earnings per share are calculated by dividing the profit attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year.

Fully diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares by existing share options assuming dilution through conversion of all potentially dilutive existing options.

Earnings and weighted average number of shares from continuing operations used in the calculations are shown below.

 
                                                          2021           2020 
                                                       GBP'000        GBP'000 
 
 Loss for the year and earnings used in basic 
  and diluted earnings per share                          (36)        (2,384) 
 
 
 
                                                        Number         Number 
 
   Weighted average number of shares used for 
   basic (loss) per share                           12,266,005     12,307,273 
 Dilutive effect of share options                            -              - 
----------------------------------------------  --------------  ------------- 
 
     Diluted weighted average number of shares 
             used for diluted (loss) per share      12,266,005     12,307,273 
----------------------------------------------  --------------  ------------- 
 
 
                                                         Pence          Pence 
 
 Basic (loss) per share                               (0.30) p      (19.36) p 
 Diluted (loss) per share                             (0.30) p      (19.36) p 
 
 

The following table shows earnings per share as they would be without the effect of goodwill impairment.

 
 
                                                         GBP'000      GBP'000 
 
 (Loss)/profit for the year and earnings used 
  in basic and diluted (loss)/earnings per share 
  prior to goodwill impairment                              (36)        1,635 
 
 
                                                          Number       Number 
 
 Weighted average number of shares used for 
  basic (loss)/earnings per share                     12,226,005   12,307,273 
 Dilutive effect of share options                              -            - 
 
 
          Diluted weighted average number of shares 
         used for diluted (loss)/earnings per share   12,226,005   12,307,273 
 
 
                                                           Pence        Pence 
 
 Basic (loss)/earnings per share prior to goodwill 
  impairment                                            (0.30) p       13.28p 
 Diluted (loss)/earnings per share prior to 
  goodwill impairment                                   (0.30) p       13.28p 
 
 
   10   Property, Plant and Equipment 
 
                                Fixtures,   Right-of-use     Total 
                                fittings,       assets - 
                            and equipment       Land and 
                                               buildings 
 Group                            GBP'000        GBP'000   GBP'000 
 
 Cost 
 At 1 April 2019                    1,980          2,932     4,912 
 Additions                            122            212       334 
 Disposals                           (28)              -      (28) 
 Exchange difference                   37             62        99 
------------------------  ---------------  -------------  -------- 
 
 At 1 April 2020                    2,111          3,206     5,317 
 Additions                             75            107       182 
 Disposals                              -           (93)      (93) 
 Exchange difference                 (64)          (104)     (168) 
------------------------  ---------------  -------------  -------- 
 
 At 31 March 2021                   2,122          3,116     5,238 
------------------------  ---------------  -------------  -------- 
 
 
 Depreciation 
 At 1 April 2019                    1,228          1,469     2,697 
 Provision for the year               283            440       723 
 Disposals                           (28)              -      (28) 
 Exchange difference                   22             13        35 
------------------------  ---------------  -------------  -------- 
 
 At 1 April 2020                    1,505          1,922     3,427 
 Provision for the year               258            443       701 
 Disposals                              -           (93)      (93) 
 Exchange difference                 (34)           (47)      (81) 
------------------------  ---------------  -------------  -------- 
 
 At 31 March 2021                   1,729          2,225     3,954 
 
 
 
   Net book value 
 At 31 March 2021                     393            891     1,284 
------------------------  ---------------  -------------  -------- 
 
 
   At 31 March 2020                   606          1,284     1,890 
------------------------  ---------------  -------------  -------- 
 
 At 31 March 2019                     752              -       752 
------------------------  ---------------  -------------  -------- 
 
 

11 Goodwill

 
                        GBP'000 
 
   Cost 
 At 1 April 2020          6,509 
 Goodwill impairment          - 
---------------------  -------- 
 
 At 31 March 2021         6,509 
---------------------  -------- 
 
 
 

The total carrying value of goodwill is GBP6.51m, which relates to the acquisition of the Macdonald & Company Group in January 2006 and Command Recruitment Group (H.K.) Limited in October 2017. Goodwill is reviewed and tested for impairment on an annual basis. Goodwill has been tested for impairment by comparing the carrying amount of the group of cash generating units (CGUs) the goodwill has been allocated to, with the recoverable amount of those CGUs. The recoverable amounts of the CGUs are their value in use.

The assessment for Macdonald & Company Group is based on UK projected operating profit. Whilst the assessment model has remained consistent in prior years, the impact of Covid- 19 has influenced the forecasting methodology that has been applied. The recoverable amount is determined on a value-in-use basis utilising the value of cash flow projections over four years with a terminal value based on a growth rate in perpetuity. This has changed from prior years' model, where an earnings multiple of six times year 5 earnings of the UK CGU was used with a forecast period of 5 years.

Goodwill recognised on the business combination in 2018 with Command recruitment Group (HK) limited was GBP758k. The assessment of Command CGU is based on projected results in Hong Kong. The approach is the same as that used above for Macdonald & Company Group. The recoverable amount is determined on a value-in-use basis utilising the value of cash flow projections over four years with a terminal value based on a growth rate in perpetuity. This has changed from prior years' model, where an earnings multiple of eight times year 5 earnings of the Command CGU was used with a forecast period of 5 years.

As the business has been impacted by Covid-19, the forecast results for the first year are significantly reduced from previous years in both the UK and Command CGUs. Between 2020-21 and 2021-22, management has applied a 13% NFI growth rate for the UK CGU and 49% for Command which reflects a return to more normal levels of activity as the impact of the pandemic recedes. Thereafter, in subsequent years, management expect the initial growth rate to stabilise and have projected NFI growth to return to its long term trend of 5% per annum through to 2025.

In the same respect, as NFI increases, management expects operating profit to return to pre-pandemic levels. Historic conversion rates of NFI to operating profit have been in the range of 11-16% and forecast operating profit for 2021-22 is 11% of NFI for the UK and 5% for the Command CGUs respectively. The conversion rate is projected to increase to 15% for the UK CGU over the period as senior management work with local management to realise ongoing efficiencies whereas it will remain the same for the Command CGU.

The value-in-use for the terminal value in the model has been determined based on a growth rate of 2.00% in perpetuity. This is deemed reasonable and represents the average rate of growth in the markets in which the Group operates. A pre-tax discount rate of 11.67% (2020: 6.49%) has been applied, representing the weighted average cost of capital for the Group. The rate has increased as it is more closely aligned to other listed recruitment companies.

The profit growth rate used for the UK & Command CGUs in the first year are -1941% and -137% respectively, which reflects a return to more normal levels of activity as the impact of the pandemic recedes. The first year growth rates are, therefore, augmented as we started with a loss of GBP0.03m and GBP0.33m in 2021 in UK and Command respectively. Thereafter, in subsequent years, management expect the initial growth rate to stabilise with projected profit growth rates.

The key assumptions used in the estimation of the recoverable amount are set out below. The values assigned to the key assumptions represent management's assessment of future trends in the industry the Group operates in and have been based on historical data from internal sources.

 
                         Macdonald & Company Group   Command recruitment 
   Assumptions                                        Group (HK) 
 Terminal growth rate                           2%                    2% 
                        --------------------------  -------------------- 
 Profit growth rate                                       -137%, 5%, 5%, 
  (Year 1 - 4)                -1941%, 34%, 11%, 6%                    5% 
                        --------------------------  -------------------- 
 Growth rate (NFI) 
  (Year 1 - 4)                     13%, 5%, 5%, 5%       49%, 5%, 5%, 5% 
                        --------------------------  -------------------- 
 Discount rate                              11.67%                11.67% 
                        --------------------------  -------------------- 
 

As a result of the impairment reviews carried out at 31 March 2021, no impairment charge (2020: GBP4m) has been recognised for the UK CGU, since the 'recoverable amount' (being the greater of the net realisable value and the value in use) exceeds the carrying amount. A number of sensitivity scenarios have been considered. If the discount rate increased to 12.67% and the projected profit decreased by 15% then this would still leave headroom of GBP0.5m. Management are confident the assessment is reasonable as the NFI generated in the first three months post 31 March 2021 by the UK CGI is in line with the forecast applied.

The impairment reviews carried out at 31 March 21 for the Command CGU indicated a small impairment of GBP0.02m which is not deemed material to recognise. Several sensitivity scenarios have been considered. If the discount rate increased to 12.67% and the projected profit decreased by 1% then this would indicate an impairment of GBP0.1m. However, management is confident that performance will return to historic levels over the forecast period.

   12    Investments 
 
 Company shares in subsidiary undertakings        2021      2020 
                                               GBP'000   GBP'000 
 Cost 
 At 1 April 2020                                 7,137    11,213 
 Impairment of investment asset                      -   (3,926) 
 Increase / (decrease) in shares from 
  subsidiary from share option reserve              52     (150) 
--------------------------------------------  --------  -------- 
 At 31 March 21                                  7,189     7,137 
--------------------------------------------  --------  -------- 
 

The investment value is linked to the Goodwill. The model and assumptions applied to assessing the Goodwill impairment have been applied to the carrying value of the investment and based on that no impairment has been recognised in the period.

Non-Controlling Interest

The following table summarises the information relating to Command Recruitment Group (HK) Limited, that is a subsidiary with material non-controlling interest ("NCI"), before any intra-group eliminations.

 
                                                              2021                 2020 
                                                           GBP'000              GBP'000 
 NCI percentage                                                40%                  40% 
 
 Non-current assets                                            175                  288 
 Current assets                                              1,749                1,892 
 Current liabilities                                         (753)                (440) 
 Non-current liabilities                                      (64)                (145) 
----------------------------------------------  ------------------  ------------------- 
 Net assets                                                  1,107                1,596 
----------------------------------------------  ------------------  ------------------- 
 Net assets attributable to NCI                                443                  638 
----------------------------------------------  ------------------  ------------------- 
 Revenue                                                     1,700                3,596 
 Operating profit                                            (322)                1,412 
 Profit after interest and tax                               (330)                1,407 
 Other comprehensive (loss)/ income                          (158)                 (35) 
----------------------------------------------  ------------------  ------------------- 
 Total comprehensive income                                  (448)                1,372 
----------------------------------------------  ------------------  ------------------- 
 Profit after interest and tax allocated 
  to NCI                                                     (132)                  563 
 Other comprehensive (loss)/ income allocated 
  to NCI                                                      (63)                 (14) 
----------------------------------------------  ------------------  ------------------- 
 Cash flows from operating activities                        (300)                4,831 
 Cash flows from financing activities                            -                (318) 
----------------------------------------------  ------------------  ------------------- 
 Net (decrease)/increase in cash and cash 
  equivalents                                                (300)                4,513 
----------------------------------------------  ------------------  ------------------- 
 

The following are subsidiary undertakings at the end of the year and have all been included in the consolidated financial statements:

 
                            Country of       Principal activity   Registered address 
                             incorporation 
 Macdonald & Company        England and      Holding Company      2 Harewood Place, 
  Group Limited              Wales                                 Hanover Square, London, 
                                                                   W1S 1BX 
 Macdonald & Company        England and      Recruitment          2 Harewood Place, 
  Property Limited           Wales                                 Hanover Square, London, 
                                                                   W1S 1BX 
 Macdonald and Company      England and      Recruitment          2 Harewood Place, 
  Freelance Limited          Wales                                 Hanover Square, London, 
                                                                   W1S 1BX 
 Macdonald & Company        England and      Dormant              2 Harewood Place, 
  (Overseas) Limited         Wales                                 Hanover Square, London, 
                                                                   W1S 1BX 
 Macdonald & Company        Hong Kong        Recruitment          29th Floor 
  Ltd                                                              3 Lockhart Road 
                                                                   Wan Chai, Hong Kong 
 Ru Yi Consulting           Hong Kong        Dormant              29th Floor 
  Limited                                                          3 Lockhart Road 
                                                                   Wan Chai, Hong Kong 
 Macdonald & Company        P.R. China       Recruitment          1503M, 15/F, Tower 
  (Shenzhen) Limited                                               2, Kerry Plaza, No.1 
                                                                   Zhong Xin Si Road, 
                                                                   Futian District, Shenzhen 
                                                                   518048, P.R. China 
 Macdonald and Company      Singapore        Recruitment          63 Market Street #05-02, 
  Pte Limited                                                      Bank of Singapore 
                                                                   Centre, Singapore 
                                                                   048942 
 Macdonald & Company        Australia        Dormant              Storey Blackwood & 
  Pty Ltd                                                          Co, Level 4, 222 Clarence 
                                                                   Street, Sydney NSW 
                                                                   2000 Australia 
 Macdonald & Company        South Africa     Dormant              1 Emfuleni, 79 Crassula 
  Recruitment Proprietary                                          Crescent, Woodmead, 
  Ltd                                                              Johannesburg, 2052 
                                                                   South Africa 
 The Prime Organisation     England and      Dormant              2 Harewood Place, 
  Ltd                        Wales                                 Hanover Square, London, 
                                                                   W1S 1BX 
 Command Recruitment        Hong Kong        Recruitment          29th Floor 
  Group (H.K.) Limited                                             3 Lockhart Road 
                                                                   Wan Chai, Hong Kong 
 Prime People Inc.          U.S.A.           Recruitment          1209 Orange Street, 
                                                                   Wilmington, New Castle 
                                                                   County, Delaware 19801 
 Macdonald Consulting       Germany          Dormant              District Court, Frankfurt 
  GmbH                                                             am Main, HRB 121950 
 

For all undertakings listed above, the country of operation is the same as its country of incorporation.

The Group holds 100% of all classes of issued share capital except in the case of Command Recruitment Group (H.K.) Limited, where it owns 60%, The percentage of the issued share capital held is equivalent to the percentage of voting rights for all companies.

   13    Trade and other receivables 
 
                                          Group              Company 
                                       2021      2020      2021      2020 
 
                                    GBP'000   GBP'000   GBP'000   GBP'000 
 Current 
 Trade receivables                    2,582     3,312         -         - 
 Allowance for doubtful debts         (380)     (340)         -         - 
 Other receivables                      453       284       159       133 
 Amounts owed by subsidiary 
  company                                 -         -     3,868     3,000 
 Prepayments and accrued income         406       612        27        12 
---------------------------------  --------  --------  --------  -------- 
 
                                      3,061     3,868     4,054     3,145 
 --------------------------------  --------  --------  --------  -------- 
 
 

At 31 March 2021 the average credit period taken on sales of recruitment services was 48 days (2020: 75 days) from the date of invoicing. An allowance of GBP380,000 (2020: GBP340,000) has been made for estimated irrecoverable amounts. Due to the short-term nature of trade and other receivables, the Directors consider that the carrying value approximates to their fair value.

A provision for impairment of trade receivables has been made. In reviewing the appropriateness of the provision, consideration has been given to the ageing of the debt and the potential likelihood of default, taking into account current economic conditions.

The ageing of group trade receivables at the reporting date was:

 
                    Gross trade   Provisions   Expected    Gross trade   Provisions     Expected 
                    receivables                    Loss    receivables                 Loss rate 
                                                   rate 
                           2021         2021       2021           2020         2020         2020 
                        GBP'000      GBP'000          %        GBP'000      GBP'000            % 
 
 
 Not past due 
  0 -30 days              1,475           71       4.8%          1,548           50         3.2% 
 Past due 30-90 
  days                      631           18       2.9%            792           80        10.1% 
 Past due more 
  than 90 days              476          291      61.1%            972          210        21.6% 
----------------  -------------  -----------  ---------  -------------  -----------  ----------- 
 
                          2,582          380                     3,312          340 
 
 
 
 

The expected loss rates for trade receivables are based on the payment profile and the shared credit risk characteristics arising in the different industries in which the Group operates. The Company has incorporated forward-looking information based on the clients' industries and financial position, including the assessment of any perceived impact of Covid-19.

Movement in allowance for doubtful debts:

 
                                             2021      2020 
                                          GBP'000   GBP'000 
 
 1 April 2020                                 340       621 
 Impairment losses recognised                 164       340 
 Amounts written off as uncollectable        (63)      (38) 
 Amounts paid by the client                  (22)     (452) 
 Impairment losses reversed                  (39)     (131) 
---------------------------------------  --------  -------- 
 
   31 March 2021                              380       340 
 
 
 
   14    Financial Instruments 
 
                                               Group                 Company 
                                            2021      2020            2021      2020 
                                  Note   GBP'000   GBP'000         GBP'000   GBP'000 
 
 Financial assets at amortised 
  cost 
 Trade and other receivables       13      2,655     3,256             159       133 
 Amounts owed by subsidiary 
  company                          13          -         -           3,868     3,000 
 Cash and cash equivalents                 3,980     2,055             556       876 
-------------------------------  -----  --------  --------  --------------  -------- 
 
                                           6,646     5,311           4,583     4,009 
-------------------------------  -----  --------  --------  --------------  -------- 
 
 

Cash is held either on current account or on short-term deposits at floating rates of interest determined by the relevant bank's prevailing base rate.

 
                                                                   Group                         Company 
                                                     2021           2020           2021             2020 
                                      Note        GBP'000        GBP'000        GBP'000          GBP'000 
 
 Financial liabilities at 
  amortised cost 
 Trade and other payables                15           742          1,619          2,247            3,873 
 Accruals                              15           1,335            901             65               35 
 Coronavirus Business Interruption 
  Loan                                              2,000              -          2,000                - 
 
                                                    4,077          2,520          4,312            3,908 
 

There is no material difference between the book values of the Group's financial assets and liabilities and their fair values.

The Group and the Company do not hold any derivative financial instruments.

   15    Trade and other Payables 
 
                                                                 Group            Company 
                                              2021                2020     2021      2020 
                                           GBP'000             GBP'000  GBP'000   GBP'000 
Current 
Trade payables                                 203                 371       30         1 
Other payables                                 539               1,248        -         - 
Amount owed to subsidiary 
 undertakings                                    -                   -    2,217     3,872 
Taxation and social security                   796                 685        1         4 
Coronavirus Business 
 Interruption Loan                             267                   -      267         - 
Accruals                                     1,335                 901       65        35 
                                                                                 -------- 
 
                                             3,140               3,205    2,580     3,912 
 
 

Due to the short-term nature of the trade and other payables, the Directors consider that the carrying value approximates to their fair value. Trade payables are generally on 30-60-day terms. No payables are past their due date.

   16    Borrowings due after more than one year 
 
                                                            Group                     Company 
                                            2021             2020          2021          2020 
                                         GBP'000          GBP'000       GBP'000       GBP'000 
 
Borrowings due after more than 
 one year 
Coronavirus Business Interruption 
 Loan                                      1,733                -         1,733             - 
 
                                           1,733                -         1,733             - 
 

The loan is repaid in 60 equal instalments from August 2021 to July 2026.

   17    Deferred Tax 
 
Group (Liability)       Other temporary           Total 
                            differences 
                                GBP'000         GBP'000 
 
At 1 April 2019                      22              22 
Credit to income                      -               - 
 
At 31 March 2020                     22              22 
Debit to income                       -               - 
 
 
At 31 March 2021                     22              22 
 
 
Group (Asset)             Share Options           Total 
                                GBP'000         GBP'000 
 
At 1 April 2019                      40              45 
Debit to income                       -             (5) 
 
At 31 March 2020                     40              40 
Debit to income                       -               - 
 
 
  At 31 March 2021                   40              40 
 
 
 
   18    Share Capital 
 
                                                2021                    2020 
                                            Number   GBP'000      Number        GBP'000 
 
ALLOTTED CALLED UP 
Ordinary shares of 10p each 
As at 1 April                            12,307,273    1,231  12,290,199          1,229 
Shares (purchased for treasury)/issued 
 during the year                          (190,000)    (103)      17,074              2 
At 31 March                              12,117,273    1,128  12,307,273          1,231 
 
 

Share capital includes unpaid shares of nil (2020: nil).

The Company has one class of ordinary shares which carries no right to fixed income and which represents 100% of the total issued nominal value of all share capital.

Each share carries the right to one vote at general meetings of the Company. No person has any special rights of control over the company's share capital and all its issued shares are fully paid.

Pursuant to shareholder resolutions at the AGM of the Company on 22 September 2020, the Company has the following authorities during the period up to the next AGM:

-- to issue new/additional ordinary shares to existing shareholders through a rights issue up to a maximum nominal amount of GBP410,242 representing one- third of the Company's issued share capital;

-- to issue new/additional ordinary shares to new shareholders up to a maximum nominal amount of GBP410,242 representing one third of the issued shares capital of the Company;

-- to allot equity securities for cash, without the application of pre-emption rights, up to a maximum nominal amount of GBP184,609 representing 15% of the Company's issued share capital of the Company;

-- to purchase through the market up to 15% of the Company's issued share capital, subject to certain restrictions on price; and

-- to make off-market purchases of its ordinary shares for the purposes of or pursuant to an employee 'share scheme with the maximum aggregate number of ordinary shares authorised to be purchased is 4,102,424 representing approximately one-third of the Company's issued ordinary share capital.

Capital Risk Management

The Group manages its capital to ensure that it will be able to continue as a going concern while maximising returns to shareholders through the optimisation of debt and equity balances. The capital structure of the Group consists of cash and cash equivalents and equity attributable to equity holders of the parent comprising issued capital reserves and earnings.

The Group manages the capital structure and adjusts it in the light of changes to economic conditions and risks. In order to manage capital, the Group has continued to consider and adjust the level of dividends paid to shareholders and made purchases of its own shares which are held as Treasury Shares.

Employee Share Schemes

The Company operates two share options schemes with one of them, the Save as You Earn scheme, being dormant.

Enterprise Management Incentive Share Option Scheme

At 31 March 2021 the following options had been granted and remained outstanding in respect of the Company's ordinary shares:

 
      Year  Exercise   Exercise       Number of       Granted  Exercised  Cancelled     Number of 
  of grant     Price    Period          options                                        Options 31 
               Pence                   31 March                                        March 2021 
                                           2020 
   2011/12     68.00  2014-2019           3,000             -          -          -         3,000 
   2013/14     10.00  2016-2021           9,000             -          -          -         9,000 
               10.00   2019-2021          6,000             -          -          -         6,000 
   2014/15     10.00  2016-2021          10,000             -          -          -        10,000 
               10.00   2019-2021         25,000             -          -          -        25,000 
   2015/16     10.00  2020-2022          30,000             -          -          -        30,000 
               58.00   2017-2022         15,000             -          -          -        15,000 
               58.00   2020-2022         50,000             -          -   (10,000)        40,000 
   2016/17     50.00  2022-2027          10,000             -          -          -        10,000 
               90.00   2019-2024         15,000             -          -          -        15,000 
               90.00   2022-2027         20,000             -          -          -        20,000 
2018/19        10.00  2020-2028          80,000             -          -   (30,000)        50,000 
2019/20        50.00  2022-2029          15,000             -          -          -        15,000 
               50.00   2024-2029         50,000             -          -          -        50,000 
               42.50   2022-2029         30,000             -          -          -        30,000 
2020/21        50.00  2022-2029               -        20,000          -          -        20,000 
               10.00   2023-2033              -       725,000          -          -       725,000 
Total 2021                              368,000       745,000          -   (40,000)     1,073,000 
 
  Weighted average exercise 
  price 2021                             35.73p        11.07p          -     22.00p        19.68p 
 
  Total 2020                            604,750        95,000  (231,750)  (100,000)       368,000 
Weighted average exercise 
 price 2020                              26.96p        47.63p     17.25p     36.80p        35.73p 
 
 

There were 1,073,000 options outstanding at 31 March 2021 (2020: 368,000) which had a weighted average price per share of 19.68p (2020: 35.73p) and a weighted average contractual life of 2.4 years. The options vest over a period of two to four years conditional upon the option holders continued employment with the Company.

The conditions applying to those options which are fully vested have been achieved. The number of outstanding options that will vest is dependent on the achievement of several key performance measures of the group, measured at a regional and consolidated level for the financial years 2020 and 2021. The fair value of the employee services received in exchange for the grant of the share options is charged to the profit and loss account over the vesting period of the share option, based on the number of options which are expected to become exercisable.

 
                                            2021           2020 
Option pricing model used               Black-Scholes  Black-Scholes 
Weighted average share price at grant   57.50 & 61.00  91.00 & 81.50 
 date (in pence) 
Exercise price (in pence)               50.00 & 10.00  50.00 & 42.50 
Fair value of options granted during 
 the year                               25.53 & 51.29      46.44 
Expected volatility (%)                    67 & 40          20 
Risk-free interest rate (%)                   1              4 
Vesting period of options (years)          2 & 2.7         2 & 5 
 

Expected volatility was determined by reference to historical volatility of the Company's share price.

The share-based payment expense recognised within the income statement during the period was GBP75,974 (2020: expense GBP48,836).

   19    Reserves 

Capital Redemption Reserve Fund

The capital redemption reserve relates to the cancellation of the Company's own shares.

Treasury Shares

At 31 March 2021, the total number of ordinary shares of 10p held in Treasury and their values were as follows:

 
                                     2021                2020 
                                 Number  GBP'000     Number   GBP'000 
 
As at 1 April                         -        -    195,676       161 
Shares purchased for 
 treasury                       190,000      103     36,074        23 
Shares issued from treasury           -        -  (231,750)      (34) 
Loss on treasury shares 
 disposal                             -        -          -     (150) 
 
  As at 31 March                190,000      103          -         - 
 
  Nominal value                                -                    - 
Market value                                   -                    - 
 
 

The maximum number of shares held in treasury during the year was 190,000 shares representing 1.6% of the called-up ordinary share capital of the Company (2020: 195,676 representing 1.6% of the called-up ordinary share capital of the Company).

Merger Reserve

The merger reserve represents the fair value of the consideration given in excess of the nominal value of ordinary shares issued to acquire subsidiaries.

Share Option Reserve

The reserve represents the cumulative amounts charged to profit in respect of employee share option arrangements where the scheme has not yet been settled by means of an award of shares to an individual.

Share Premium Account

The balance on the share premium account represents the amounts received in excess of the nominal value of the ordinary shares.

Translation Reserve

The foreign currency translation reserve comprises all presentation foreign exchange differences arising from translation of the financial statements of foreign operations into the presentation currency of the Group accounts.

Retained Earnings

The balance held on this reserve is the accumulated retained profits of the Group/Company.

   20    Leases 

The Group adopted IFRS 16 Leases for the first time in the prior-year financial statements.

The Group's leases are property leases. These include leases for the offices from which the businesses across the Group operate and these have terms of typically 1 to 10 years. The movements in the carrying value of right-of-use assets is provided below.

 
Right-of-use asset - Property            2021      2020 
                                      GBP'000   GBP'000 
Cost 
At 1 April 2020                         3,206     2,994 
Exchange differences                    (104)         - 
Additions                                 107       212 
Disposals                                (93)         - 
At 31 March 2021                        3,116     3,206 
 
Accumulated depreciation 
At 1 April 2020                         1,922     1,482 
Exchange differences                     (47)         - 
Depreciation                              443       440 
Disposals                                (93)         - 
At 31 March 2021                        2,225     1,922 
 
 
Net Book Value as at 31 March 2021        891     1,284 
 
 

Additional disclosures as required under IFRS 16 Leases are provided in the table below:

 
                                          2021      2020 
                                       GBP'000   GBP'000 
Depreciation of right-of-use assets        443       440 
Interest on lease obligations               48        71 
Cash outflow for leases                    562       566 
Additions to right-of-use-assets           107       212 
Disposals of right-of-use assets          (93)         - 
 
   21    Reconciliation of Profit before Tax to Net Cash Inflow from Operating Activities 
 
                                                     Group                Company 
                                                     2021      2020      2021      2020 
                                                  GBP'000   GBP'000   GBP'000   GBP'000 
 
Loss before taxation                                (173)   (2,133)       (5)   (3,965) 
 
  Adjust for: 
Depreciation of property, plant and 
 equipment and software amortisation                  258       737         -         - 
Depreciation of right-of-use assets                   443         -         -         - 
Impairment of goodwill                                  -     4,018         -     3,926 
Share-based payment expense                            76        49         -         - 
Loss on sale of tangible asset                          -         1         -         - 
Interest receivable                                   (5)         -         -         - 
Interest payable                                       61        76         -         - 
 
 
  Operating cash flow before changes 
  in working capital                                  660     2,748       (5)      (39) 
 
Decrease/(increase) in receivables                    866       778      (41)   (3,021) 
(Decrease)/increase in payables                     (332)       116        56     2,784 
 
Cash generated from / (used by) underlying 
 operations                                         1,194     3,642        10     (276) 
 
   22    Reconciliation of movements of liabilities to cash flows arising from financing activities 
 
Group                         At 1 April  New loan  Net Repayments  At 31 March 
                                    2020                                   2021 
                                 GBP'000   GBP'000         GBP'000      GBP'000 
 
Borrowings                             -     2,000               -        2,000 
Invoice finance                      806         -           (822)         (16) 
Lease liabilities                  1,524         -           (471)        1,053 
 
Total financing liabilities        2,330     2,000         (1,293)        3,037 
 
 
 
 
 
Company                       At 1 April  New loan  Net Repayments  At 31 March 
                                    2020                                   2021 
                                 GBP'000   GBP'000         GBP'000      GBP'000 
 
Borrowings                             -     2,000               -        2,000 
 
Total financing liabilities            -     2,000               -        2,000 
 
 
 
 
   23    Analysis of Cash less overdrafts 
 
Group                         At 1  Cash flow  Exchange  At 31 March 
                             April                              2021 
                              2020 
                           GBP'000    GBP'000   GBP'000      GBP'000 
 
Cash at bank and in hand     2,055      2,212     (287)        3,980 
 
Total cash                   2,055      2,212     (287)        3,980 
 
 
 
 
 
Company                    At 1 April  Cash flow  At 31 March 
                                 2020                    2021 
                              GBP'000    GBP'000      GBP'000 
 
Cash at bank and in hand          876      (320)          556 
 
Total cash                        876      (320)          556 
 
 
 
 
   24    Financial Risk Management 

The Board of Directors has overall responsibility for the risk management policies that are applied by the business to identify and control the risks faced by the Group. The Group has exposure from its use of financial instruments to foreign currency risk, credit risk and liquidity risk.

Foreign Currency

The Group publishes its consolidated financial statements in Sterling. The functional currencies of the Group's main operating subsidiaries are Sterling, the Singapore Dollar, the Hong Kong Dollar and the UAE Dirham.

The Group's international operations account for approximately 34.46% (2020: 34.66% of revenue and approximately 29.12% (2020: 24.27%) of the Group's assets and consequently the Group has a degree of translation exposure in accounting for overseas operations.

The Group exposure to foreign currency risk is as follows:

 
As at 31 March 
 2021                 Euro      AUD      USD      HK$       S$      AED      CNY      SAR 
                   GBP'000  GBP'000  GBP'000  GBP'000  GBP'000  GBP'000  GBP'000  GBP'000 
Cash at bank           410       26      634      313      877        6      378      104 
Trade and other 
 receivables            46        -       28      952      293       28        -        - 
Trade and other 
 payables            (165)        -    (146)    (735)    (236)     (32)        -        - 
Net exposure           291       26      516      530      934        2      378      104 
 
 
 
  As at 31 March 
  2020                 Euro      AUD      USD      HK$       S$      AED      CNY      SAR 
                    GBP'000  GBP'000  GBP'000  GBP'000  GBP'000  GBP'000  GBP'000  GBP'000 
Cash at bank             66        7        1      259      211      410        -        - 
Trade and other 
 receivables              -        -        -    1,350      299      336        -        - 
Trade and other 
 payables                 -        -        -  (1,101)    (117)    (115)        -        - 
Net exposure             66        7        1      508      393      631        -        - 
 

Sensitivity analysis - currency risk

A 10% weakening or strengthening of Sterling against the above currencies at 31 March 2021 would have increased/(decreased) equity and profit or loss by the amounts shown below. This analysis is applied currency by currency in isolation, i.e. ignoring the impact of currency correlation, and assumes that all other variables, interest rates, remain constant. The amounts generated from the sensitivity analysis are forward-looking estimates of market risk assuming certain adverse market conditions occur. Actual results in the future may differ materially from those projected, due to developments in the global financial markets which may cause fluctuations in interest and exchange rates to vary from the hypothetical amounts disclosed in the table below, which therefore should not be considered a projection of likely future events and losses.

Foreign Currency

 
                       Weakening             Strengthening 
                      2021 equity  2021 PBT    2021 equity  2021 PBT 
                          GBP'000   GBP'000        GBP'000   GBP'000 
Euro                         (26)      (26)             25        25 
US dollar                    (47)      (47)             37        37 
Hong Kong dollar             (48)      (48)              5         5 
Singapore dollar             (85)      (85)             50        50 
UAE dirham                      -         -              -         - 
Australian dollar             (2)       (2)              1         1 
Chinese yuan 
 renminbi                    (34)      (34)              4         4 
Saudi riyal                   (9)       (9)              2         2 
 

Currently the Group's policy is not to hedge against this exposure, but it does seek to minimise this exposure by converting into sterling all cash balances in foreign currency that are not required for capital monetary needs. The settlement of intercompany balances held with foreign operations is neither planned nor likely to occur in the foreseeable future. Therefore, exchange differences arising from the translation of the net investments are recognised in Other Comprehensive income.

Credit Risk

The Group's principal financial assets are bank balances, trade and other receivables. The Group's credit risk is primarily in respect of trade receivables. Credit risk refers to the risk that a client will default on its contractual obligations resulting in financial loss to the Group. The Group's largest credit risk exposure to a single client is in the UK and represents 10.05% of the Group trade receivables balance. Although there is no indication that the debt is uncollectable, the Directors are of the opinion that adequate provision is in place to cover any potential default by this client. A public investment funds in Saudi Arabia accounted for 4.13% of Group trade receivables respectively. Apart from this exposure, at the year-end no other customer represented

more than 4.01% (2020:   5.73% ) of the total balance of trade receivables. 

In reviewing the appropriateness of the provisions in respect of recoverability of trade receivables, consideration has been given to the ageing of the debt and the potential likelihood of default, considering current economic conditions.

It is the Directors' opinion that no further provision for doubtful debts is required.

Liquidity Risk

The Group manages its liquidity risk by maintaining adequate cash and or credit facilities to meet forecast cash requirements of the Group. Management monitors its forecasted cash flow requirements at a Group level based on monthly returns made by the Group's operating units.

The Group has short-term trade and other payables and accruals as disclosed in note 15, all due within one year of the year end. In addition it has lease liabilities and a loan under the Coronavirus Business Interruption Loan Scheme as set out below.

The Group has net funds of GBP3.98m (2020: GBP2.06m), which the Board considers are more than adequate to meet future working capital requirements and to take advantage of business opportunities.

As at 31 March 2021, the Group's financial liabilities have contractual maturities as follows:

 
                                           Between   Between 
                      Less than   6 - 12   1 and 2   2 and 5   Over 5 
                       6 months   months     years     years    years 
At 31 March 21          GBP'000  GBP'000   GBP'000   GBP'000  GBP'000 
 
Trade payables and 
 other payables           2,676      197         -         -        - 
Lease liabilities           281      281       437        99        - 
CBILS                        81      239       466     1,298      135 
Total contractual 
 cash flows               3,038      717       903     1,397      135 
 
 
 
 
 
                                            Between   Between 
                       Less than   6 - 12   1 and 2   2 and 5   Over 5 
                        6 months   months     years     years    years 
At 31 March 20           GBP'000  GBP'000   GBP'000   GBP'000  GBP'000 
 
Trade payables and 
 other payables            1,619        -         -         -        - 
Taxation and social 
 security                    440      245         -         -        - 
Accruals                     901        -         -         -        - 
Lease liabilities            254      243       500       508       20 
Total contractual 
 cash flows                3,214      488       500       508       20 
 
 
   25    Related Party Transactions 

The Company provides corporate guarantees on the subsidiary bank accounts. At 31 March 2021 amounts overdrawn by subsidiary bank accounts were GBPnil (2020: GBPnil).

The Group owes a director GBP40,330 (2020: GBPnil). There is no interest charged on this loan and no fixed date for repayment.

The Directors receive remuneration from the Group, which is disclosed in the Directors' Remuneration Report. As shareholders, the Directors also eligible to receive dividends from the Company. In the year these amounted to GBPnil (2020: GBP318,213).

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END

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(END) Dow Jones Newswires

July 23, 2021 02:00 ET (06:00 GMT)

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