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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Prime People Plc | LSE:PRP | London | Ordinary Share | GB00B4ZG0R74 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 67.00 | 63.00 | 71.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMPRP
RNS Number : 9497C
Prime People PLC
21 June 2019
21 June 2019
Prime People Plc
Results for the year ended 31 March 2019
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, Energy & Environmental and Technology, Digital & Data Analytics sectors, today announces its audited results for the year ended 31 March 2019.
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 Wednesday 24 July 2019 at 11.00am at 2 Harewood Place, London, W1S 1BX, and all shareholders are encouraged to attend.
Highlights:
Hot Features
Premium
Year ended Year ended
31 March 31 March
2019 2018
---------------------------------- ----------- -----------
Revenue GBP24.66m GBP22.92m
Net fee income ("NFI") GBP15.78m GBP13.15m
Operating profit before tax GBP2.47m GBP1.19m
Operating profit before tax and GBP1.96m GBP1.18m
after non-controlling interest
Fully diluted earnings per share 13.372p 8.67p
Dividends for the year 5.20p 5.00p
---------------------------------- ----------- -----------
Peter Moore, Managing Director of Prime People, said:
"I am pleased to announce the Group delivered a strong performance in the year ended 31 March 2019 with increased revenue and profitability. The UK proved resilient with our permanent business reporting solid results while the UK contract division held up well against the backdrop of legislative changes. Internationally the business has made good progress with a strong performance in Asia Pacific. Asia NFI rose, substantially boosted by the contribution, in our first full year following the acquisition, of Command where an extensive line of new business was obtained during the year.
We have maintained a strong cash position and propose a final dividend of 3.40p, which combined with the interim dividend of 1.80p per share, will result in a total dividend of 5.20p for the 2019 financial year (2018: 5.00p).
The Group continues to focus on its core markets to deliver organic revenue growth whilst establishing new markets to drive geographical diversity. The Group is confident about its ability to generate good returns and will continue to invest for the long term."
For further information, please contact:
Prime People 020 7318 1785 Robert Macdonald, Executive Chairman Peter Moore, Managing Director Donka Zaneva-Todorinski, Finance Director Cenkos Securities plc 020 7397 8900 Katy Birkin/Harry Hargreaves
PRIME PEOPLE PLC
Chairman's Statement
Performance
Overall the Group delivered a strong performance in the year ended 31 March 2019. In the UK performance was broadly consistent with the prior year, holding up against the backdrop of political uncertainty and of legislative changes that continued to affect self-employed candidates in our contract division. Internationally the business has made good progress with a strong performance in Asia Pacific including a substantial contribution from our majority investment in Command Recruitment Group (H.K.) Limited, and the Rest of The World making a small positive contribution this year.
We closed the year with headline Revenue of GBP24.66m and Net Fee Income ("NFI") of GBP15.78m. NFI comprises the total fees for permanent candidates and the margin earned in the placement of contract staff. The ratio of NFI derived from contract as against permanent placements was 8:92.
Improved productivity per head of GBP114.40k, helped headline operating profit reach GBP2.47m. After adjusting for the 40% minority interest in Command, the underlying operating profit for the Group was GBP1.95m, helped by a positive effect from the adoption of IFRS15 in respect of administration costs.
The Group conversion rate, which compares operating profit to NFI, was 15.65%, enhanced by the winning of substantial business from an extensive set of linked real estate infrastructure projects in the Middle East. This business is undertaken by Command and is reported under our Asia Regional Performance below. The impact of this demand for the company's services greatly enhanced the Group's profitability in the year being reported. The projects are of a long-term nature and we expect that our involvement will continue throughout the current financial year.
Cash Flow
The Group continues to maintain a strong net cash position. At the start of the year the Group had cash of GBP1.23m which had increased to GBP2.31m by the year end. The increase is principally due to the growth in the Asia Pacific business referred to above and is after taking account of cash outflows of GBP1.34m. Of this GBP0.74m was for the purchase of assets (GBP0.10m was spent on a new Customer Relationship Management system and GBP0.44m on improving office facilities in our Hong Kong and London offices) and GBP0.60m related to the dividend payments to shareholders.
Dividend
During the year, a final dividend of 3.25p per share was paid together with a slightly increased interim dividend up from 1.75p to 1.80p per share. The Board will be recommending a final dividend this year of 3.40p per share. This will result in a total dividend payment of 5.20p for the 2019 financial year against 5.00p the year before. Subject to market conditions and cash, the Group intends to continue to pay dividends on a progressive basis.
Share Buy Back
During the year 34,000 shares were purchased at a cost of GBP26,360 through the Group's buyback programme. In the second half of the year 300,000 ordinary shares were sold from Treasury to satisfy obligations arising from the part paid share incentive scheme for key personnel. At the year end the Group held 195,676 shares in treasury. The Board will be seeking shareholder approval for renewal of the authority to repurchase up to 10% of the Group's issued share capital at the Annual General Meeting.
Board
The Board believes it has continued to operate corporate governance standards appropriate to an AIM quoted company of its size. There have been no changes to the Board during the year. Although not required to do so, the Directors have resolved that they will retire at least once every three years and seek re-appointment by shareholders at the next AGM.
The Board members have a mix of skills, experience, gender and backgrounds that are a considerable support to the business.
People
The average number of staff (excluding temporary contractors) increased from 136 last year to 138 this year.
The Group has a diverse cultural and ethnic profile within its businesses and at the end of 2019 had a global 52:48 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
In the 2019 financial year, we made significant investments in technology, our working environments and talent, reflecting our belief that success in the future will depend on our ability to attract the most able people and equip them with industry leading technology. We are confident that these investments will provide returns through increased productivity and staff retention.
Current trading is consistent with the prior year and we expect the outlook for our sectors and geographies to remain positive in the absence of any negative economic or political events. Over the last quarter our key performance indicators of instructions from clients, interviews arranged and committed business are comparable with the same period last year and all our main markets continue to experience shortages of available talent, driving demand for our services.
We are mindful of both the political inertia in the U.K. and the trade dispute between the United States and China, both of which could affect our largest markets. Consequently, the Group continues to explore new geographies and has expanded its client base into mainland Europe and Saudi Arabia.
We aim to optimise interaction between our brands to fully deliver Group benefits by being positioned to respond swiftly across all businesses to changes impacting our activity, such as regulation and candidate shortages.
The Group continues to focus on its core markets to deliver organic revenue growth, to improve productivity gains and to drive profit growth. Despite the increasing political risks that reduce business confidence in the UK and Europe, we are confident about our abilities to generate good returns and will continue to invest for the long term.
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.
Operating as distinct brands, the sectors served by Prime Insight, Prime Energy and Command are technology & digital transformation; renewable energy & sustainability; and infrastructure, construction and design respectively.
The business is organised into teams of specialist consultants, each managed by a team leader who is responsible for performance within the operating framework approved by the Board. The Group operates a policy of open communication in the belief that its employees are best placed to suggest operational improvements and emergent strategies that will increase earnings.
The Group is committed to managing its talent on merit and provides equal opportunities for all current and future employees. It gives full and fair consideration to applications for employment from disabled persons, where a disabled person may adequately carry out the requirements of any position within the physical constraints of the Company's offices. The Board is concerned to provide a healthy corporate culture and in pursuit of its objectives and strategy seeks regular input through open meetings with its staff.
The Group has two locations in the UK, the London head office and Manchester, with offices in Hong Kong (established in 2007), Dubai (established in 2008), Singapore (established in 2012), Frankfurt (established in January 2019), and a franchise in South Africa (established in 2008).
Overall the UK permanent recruitment businesses performed satisfactorily with our built environment teams delivering consistent results while the contract business saw a reduction in NFI as the changes to the tax landscape for contractors working in the public sector continued to have an effect. Looking forward, when these changes are extended to the private sector, in April 2020, we anticipate the temporary recruitment market may shift further.
In Asia NFI rose substantially, aided by the contribution in our first full year following the acquisition of Command in October 2017. Hong Kong with the combined businesses of Macdonald and Command contributed the majority of the region's NFI. Macdonald recorded reduced NFI, largely as a consequence of staff turnover in the early part of the year, an issue which has now been addressed.
Our Macdonald business in Dubai continues to face challenging market conditions and we have made changes to realign it to the expected medium-term demand. Our Command business operates across the Middle East and we are optimistic as to the future performance of the business in this region.
The Board remains committed in its pursuit of sustainable NFI growth and cash generation. Whilst costs have increased in aggregate in the year, with the contribution from Command the conversion rate has also increased. We continue to focus on improving the profitability of the business and realising cost reductions where possible.
Cultivating strong client relationships, investing in the best technology and employing the best people are the foundations of the Group's success. With uncertain global growth and a world economy increasingly exposed to political and macro-economic risk it is important that we remain flexible, able to serve our clients wherever demand may be, and that we closely monitor individual NFI performance against costs. Tight management control of remuneration and expenditure, together with a focus on improved productivity per head and conversion rates, position the Group to prosper.
Regional Performance
United Kingdom
2019 2018
GBPm GBPm
Revenue 16.47 17.52
Net fee income (NFI) 7.60 7.75
Operating profit 0.92 0.91
Operating profit as % of NFI 12.10% 11.74%
Average number of employees 77 80
Revenue reduced by 5.99% to GBP16.47m (2018: GBP17.52m) with NFI reducing by 1.93% to GBP7.60m (2018: GBP7.75m).
Permanent NFI decreased by 0.83% in the year and represents 85.11% (2018: 86.20%) of total UK NFI in 2019.
The UK Permanent teams serving the real estate banking and investment sector provided the strongest NFI growth for the region in the year. This was counterbalanced by performance of teams serving other sectors. In September 2018, we relocated fee earners to an office in Frankfurt, to take advantage of opportunities that the German staffing market offers in the long term.
Contract NFI reduced by 7.65% in the year compared to a reduction of 17.05% in the previous year and represents 14.55% (2018: 13.80%) of total UK NFI in 2019. Contract NFI is not affected by IFRS 15 and the reduction against the comparative period was a consequence of lower public sector client requirements resulting from ITEPA Act 2003 legislative changes.
Our diversified business sectors delivered opportunities to diminish the effect of some challenging markets and our extended spread of operations helped to make the most of market conditions.
Asia Pacific
2019 2018
GBPm GBPm
Revenue 7.77 5.06
Net fee income (NFI) 7.77 5.06
Operating profit 1.52 0.49
Operating profit as % of NFI 19.56% 9.68%
Average number of employees 57 47
NFI grew by 53.55% to GBP7.77m (2018: GBP5.06m) and includes contribution from Command of GBP3.97m (2018: GBP0.84m). The region is covered by our offices in Hong Kong and Singapore and represents 49.24% of Group NFI (2018: 38.48%).
Command operating profit, unadjusted for minorities, was approximately 93% of the reported operating profit in the region.
The 2018 investment in 60% of the equity of Command strengthened our presence and performance in the region particularly with its winning of substantial business from an extensive set of linked real estate infrastructure projects in the Middle East, which represent 22.26% of reported Asia Pacific revenue. The projects are of a long-term nature and we expect that Command's involvement will continue throughout the current financial year.
With the good performance of Command, and the investment in establishing our Insight and Analytics team in the region last year, the business is now well placed to expand its reach and growth.
Rest of the World
2019 2018
GBPm GBPm
Revenue 0.42 0.34
Net fee income (NFI) 0.42 0.34
Operating profit 0.02 -0.20
Operating profit as % of NFI 4.76% -58.82%
Average number of employees 4 5
The region is covered by our offices in Dubai, Australia and South Africa. The modest, but improved performance reflects restructuring of the Dubai business and cost reductions which delivered improvements in profitability and the team is well positioned for a more positive 2020.
Peter Moore
Managing Director
Financial Review
Revenue
As referred in our H1 2019 Interim Report, the Financial Statements for 2019 reflect the Group's adoption of IFRS 15, which has required a change in the accounting policy for revenue recognition. We are now reporting revenue based on invoices delivered as opposed to the previous treatment based on the value of contracts formed. Further detail on the impact of the IFRS 15 is set out in Note 2 of the financial statements.
The Group delivered a 7.59% increase in reported revenue to GBP24.66m (2018: GBP22.92m).
The change in accounting policy did not have any impact on the reporting of NFI of our contract business or that reported by Command.
Further detail on the impact of the IFRS 15 is set out in Note 2 of the financial statements
Net Fee Income (NFI)
Overall Group NFI increased by 20.00% to GBP15.78m (2018: GBP13.15m). The split of net fee income was 93% from permanent sales (2018: 91.87%) and 7.00% from contract (2018: 8.13%). The contract margin percentage was 11.09%, up from 10.92% in the prior year as we extended our contract business in higher margin sectors, as well as strengthening our focus on maintaining sustainable direct client relationships.
The Group generated 51.90% of its net fee income from outside the UK (2018: 41.07%). There were particularly strong results from Command with NFI of GBP3.97m (2018: GBP0.84m).
Administration Costs
Administration costs for the year increased by 11.38% to GBP13.31m (2018: GBP11.95m) reflecting the inclusion of Command operating costs, further investment in a new Customer Relationship Management system, improved information technology platforms, increased spend on staff training and higher property costs associated with our Hong Kong office which we relocated in May 2018. The increased administrative costs, we believe, will generate greater value in the long term. In the year commission, which is a constituent of administration costs, reduced by approximately GBP0.20m as a result of the change to the Group accounting policy on revenue recognition when adopting IFRS 15.
Profit before Taxation
Reported profit before taxation increased to GBP2.47m from GBP1.19m last year. After adjusting for the 40% minority interest in Command, profit before tax increased to GBP1.95m (2018: GBP1.19m).
The table below presents year on year comparisons adjusted to remove the 40% of Command not owned by the Group.
2019 2018
GBP'000 GBP'000
-------- --------
Revenue * 23,071 22,580
-------- --------
NFI * 14,198 12,811
-------- --------
Adjusted Profit Before Tax
* 1,907 1,192
-------- --------
Conversion ratio * c/f table
below 13.43% 9.31%
-------- --------
* 2019 net of 40% not owned, as indicated above
Taxation
The taxation charge is GBP0.29m on profit before taxation of GBP2.47m (from ordinary activities) which gives an effective tax rate of 11.74% (2018: 14.29%). The reasons for the difference from the standard UK corporation tax rate of 19% are detailed in note 7 of the accounts.
Earnings per Share
Basic earnings per share increased by 58.24% to 13.72p (2018: 8.67p). The diluted earnings per share, taking into account existing share options, increased by 56.86% to 13.38p (2018: 8.53p).
Balance Sheet
Net assets at 31 March 2019 remained the same as last year at GBP14.99m (2018: GBP15.00m).
Trade receivables net of provision for doubtful debts at the year end, were up on last year at GBP3.53m (2017: GBP2.86m) which reflects the increased average credit period taken by clients to 131 days (2018: 69 days). The increase in debtor days is explained by extended 120-day payment terms with certain Command clients in Saudi Arabia.
Treasury Management and Currency Risk
Approximately 66.79% of the Group's revenue in 2019 (2018: 76.44%) was denominated in Sterling. Consequently, the Group has a degree of 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 GBP1.23m. After net taxation payments of GBP0.11m (2018: GBP0.26m) cash generated from operations was GBP2.04m (2018: GBP1.06m).
During the year the Group spent GBP0.10m (2018: GBP0.23m) on its Customer Relationship Management systems; paid GBP0.30m for the relocation and office refit in Hong Kong; GBP0.22m for the purchase of treasury shares; and paid dividends to shareholders of GBP0.60m (2018: GBP0.61m). As at 31 March 2019 the Group's cash position was GBP2.31m.
Operational highlights in 2019
2019 2018 % change
Conversion ratio (Operating profit
divided by NFI)
100 % for Command 15.65% 9.07% 72.55%
----------- ---------- ---------
Staff Productivity
(NFI divided by average headcount
excluding contract staff) GBP114.40k GBP96.26k 18.84%
----------- ---------- ---------
Fee earner to Support Headcount
ratio 3.4 3.2 6.25%
----------- ---------- ---------
Percentage of NFI paid to Staff 68.43% 71.47% (4.25%)
----------- ---------- ---------
Free Cashflow post tax GBP2.03m GBP1.06m 91.50%
----------- ---------- ---------
PRIME PEOPLE PLC
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 of the company and the group and of the profit or loss of the group 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; the work carried out by the auditors does not involve the consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred in the accounts since they were initially presented on the website.
Legislation in the United Kingdom governing the preparation and dissemination of the accounts and the other information included in annual reports may differ from legislation in other jurisdictions.
PRIME PEOPLE PLC
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2019
Note 2019 2018
GBP'000 GBP'000
Revenue 2, 3 24,660 22,916
Cost of sales (8,873) (9,769)
------------------------------------------------------------ ----- --------- ---------
Net fee income 2 15,787 13,147
Administrative expenses (13,316) (11,954)
------------------------------------------------------------ ----- --------- ---------
Operating profit 4 2,471 1,193
Profit before taxation 2,471 1,193
Income tax expense 7 (298) (166)
------------------------------------------------------------ ----- --------- ---------
Profit for the year
2,173
Other comprehensive income 1,027
Items that will or may be reclassified
to profit or loss:
Exchange profit/(loss) on translating foreign operations 106 (243)
------------------------------------------------------------ ----- --------- ---------
Other Comprehensive income
for the year, net of tax 106 (243)
Total comprehensive income for the year 2,279 784
Profit attributable to:
Equity shareholders of the parent 1,660 1,022
Non-controlling interest 513 5
Total comprehensive income attributable to:
Equity shareholders of the parent 1,766 779
Non-controlling interest 513 5
Earnings per share 9
Basic earnings per share 13.72p 8.67p
Diluted earnings per share 13.38p 8.53p
The above results relate to continuing operations.
PRIME PEOPLE PLC
Consolidated Statement of Changes in Equity
For the year ended 31 March 2018
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 2017 1,229 9 (21) 5,371 173 280 733 7,299 15,073 - 15,073 Total comprehensive income for the year - - - - - - - 1,022 1,022 5 1,027 Other comprehensive income - - - - - - (243) - (243) - (243) Adjustment in respect of share schemes - - - - - 34 - 60 94 - 94 Shares purchased for treasury - - (408) - - - - - (408) - (408) Shares issued from treasury - - 3 - - - - - 3 - 3 Acquisition of subsidiary with Non-Controlling Interest - - - - - - - - - 70 70 Adjustment on share disposal - - 5 - - - - (5) - - - Dividend - - - - - - - (612) (612) - (612) ----------------- -------- ----------- --------- -------- -------- -------- ------------ --------- ------------- ---------------- --------- At 31 March 2018 1,229 9 (421) 5,371 173 314 490 7,764 14,929 75 15,004 ----------------- -------- ----------- --------- -------- -------- -------- ------------ --------- ------------- ---------------- ---------
PRIME PEOPLE PLC
Consolidated Statement of Changes in Equity
For the year ended 31 March 2019
- Called Capital Treasury Share Merger Share Translation Retained Total Non-controlling Total
up Redemption shares premium reserve option reserve Earnings attributable interest equity
share reserve account reserve to equity
capital holders
of the
parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- ----------- --------- -------- -------- -------- ------------ --------- ------------- ---------------- ---------
At 31 March
2018 1,229 9 (421) 5,371 173 314 490 7,764 14,929 75 15,004
IFRS 15
adjustment
for revenue
recognition - - - - - - - (1,976) (1,976) - (1,976)
Total
comprehensive
income for
the
year - - - - - - - 1,659 1,659 513 2,172
Other
comprehensive
income - - - - - - 106 - 106 - 106
Adjustment in
respect of
share
schemes - - - - - 23 - 23 - 23
Shares
purchased
for treasury - - (26) - - - - - (26) - (26)
Shares issued
from treasury - - 246 - - - - - 246 - 246
Adjustment on
share
disposal - - 40 - - - - 5 45 - 45
Dividend - - - - - - - (595) (595) - (595)
--------------- -------- ----------- --------- -------- -------- -------- ------------ --------- ------------- ---------------- ---------
At 31 March
2019 1,229 9 (161) 5,371 173 337 596 6,857 14,411 588 14,999
--------------- -------- ----------- --------- -------- -------- -------- ------------ --------- ------------- ---------------- ---------
PRIME PEOPLE PLC
Consolidated Statement of Financial Position
As at 31 March 2019
2019 2018
Note GBP'000 GBP'000
Assets
Non - current assets
Goodwill 11 10,527 10,527
Property, plant and equipment 10 752 242
Deferred tax asset 16 40 45
11,319 10,814
Current assets
Trade and other receivables 13 4,646 5,616
Current tax asset - 41
Cash at bank and in hand 21 2,309 1,234
----------------------------------- ----- -------------------------- ----- --------------------------
6,955 6,891
----------------------------------- ----- -------------------------- ----- --------------------------
Total assets 18,274 17,705
----------------------------------- ----- -------------------------- ----- --------------------------
Liabilities
Current liabilities
Trade and other payables 15 3,080 2,679
Current tax liability 173 -
----------------------------------- ----- -------------------------- ----- --------------------------
3,253 2,679
----------------------------------- ----- -------------------------- ----- --------------------------
Non-current liabilities
Deferred tax liability 16 22 22
Total liabilities 3,275 2,701
----------------------------------- ----- -------------------------- ----- --------------------------
Net assets 14,999 15,004
----------------------------------- ----- -------------------------- ----- --------------------------
PRIME PEOPLE PLC
Consolidated Statement of Financial Position
As at 31 March 2019
2019 2018
Note GBP'000 GBP'000
Capital and reserves attributable to the
Company's equity holders
Called up share capital 17 1,229 1,229
Capital redemption reserve fund 18 9 9
Treasury shares 18 (161) (421)
Share premium account 18 5,371 5,371
Merger reserve 18 173 173
Share option reserve 18 337 314
Translation reserve 18 596 490
Retained earnings 18 6,857 7,764
14,411 14,929
Non-controlling interest 588 75
Total equity 14,999 15,004
---------------------------------- ----- -------------- --------
The financial statements were approved by the Board of Directors and authorised for issue on 20(th) June 2019 and are signed on its behalf by:
R J G Macdonald D Zaneva-Todorinski
PRIME PEOPLE PLC
Company Statement of Financial Position
As at 31 March 2019
2019 2018
Note GBP'000 GBP'000
Assets
Non-current assets
Investment in subsidiaries 12 11,213 11,190
11,213 11,190
--------------------------------- ----- -------------------------- --------------------------
Current assets
Trade and other receivables 13 124 9
Cash and cash equivalents 21 322 15
--------------------------------- ----- -------------------------- --------------------------
446 24
--------------------------------- ----- -------------------------- --------------------------
Total assets 11,659 11,214
--------------------------------- ----- -------------------------- --------------------------
Liabilities
Current liabilities
Other payables 15 1,125 791
--------------------------------- ----- -------------------------- --------------------------
Total liabilities 1,125 791
--------------------------------- ----- -------------------------- --------------------------
Net assets 10,534 10,423
--------------------------------- ----- -------------------------- --------------------------
Capital and reserves attributable to the
Company's equity holders
Called up share capital 17 1,229 1,229
Capital redemption reserve fund 18 9 9
Treasury shares 18 (161) (421)
Share premium account 18 5,371 5,371
Merger reserve 18 173 173
Share option reserve 18 337 314
Retained earnings 18 3,576 3,748
--------------------------------- ----- -------------------------- --------------------------
Total equity 10,534 10,423
--------------------------------- ----- -------------------------- --------------------------
The Company's retained earnings includes profit for the year of GBP458,173 (2018: GBP386,536).
The financial statements of Prime People Plc, Company Number 01729887 were approved by the Board and authorised for issue on 20(th) June 2019 and are signed on its behalf by:
R J G Macdonald D Zaneva-Todorinski
PRIME PEOPLE PLC
Company Statement of Changes in Equity
For the year ended 31 March 2019
Company Called Capital Treasury Share Merger Share Retained Total
up Redemp- shares premium reserve option earnings
share tion account reserve
capital reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 April
2017 1,229 9 (21) 5,371 173 280 3,978 11,019
Total comprehensive
income for
the year - - - - - - 387 387
Shares purchased
for treasury - - (408) - - - - (408)
Shares issued
from treasury - - 3 - - - - 3
Adjustment
on share
disposal - - 5 - - - (5) -
Investment
in subsidiaries - - - - - 34 - 34
Dividend - - - - - - (612) (612)
--------------------- --------- --------- -------------- --------- --------- --------- ---------- ---------
At 31 March
2018 1,229 9 (421) 5,371 173 314 3,748 10,423
--------------------- --------- --------- -------------- --------- --------- --------- ---------- ---------
Total comprehensive
income for
the year - - - - - - 458 458
Shares purchased
for treasury - - (26) - - - - (26)
Shares issued
from treasury - - 246 - - - 246
Adjustment
on share
disposal - - 40 - - - (35) 5
Investment
in subsidiaries - - - - - 23 - 23
Dividend - - - - - - (595) (595)
--------------------- --------- --------- -------------- --------- --------- --------- ---------- ---------
At 31 March
2019 1,229 9 (161) 5,371 173 337 3,576 10,534
--------------------- --------- --------- -------------- --------- --------- --------- ---------- ---------
PRIME PEOPLE PLC
Group and Company Cash Flow Statement
For the year ended 31 March 2019
Group Company
2019 2018 2019 2018
Note GBP'000 GBP'000 GBP'000 GBP'000
Cash generated from (used
in) underlying operations 20 2,146 1,320 241 (43)
Income tax paid (111) (256) (9) (11)
Net cash from/(used by)
operating activities 2,035 1,064 232 (54)
------------------------------- ----- -------- ---------- -------- ---------------
Cash flows from/(used
in) investing activities
Net purchase of property,
plant and equipment (727) (209) - -
Purchase of subsidiary, - (771) - -
net of cash acquired
Dividend received - - 450 450
------------------------------- ----- -------- ---------- -------- ---------------
Net cash from / (used
in) investing activities (727) (980) 450 450
Cash flows from financing
activities
Issue of ordinary share - - - -
capital
Shares issued from treasury 260 - 246 3
Shares purchased for treasury - (408) (26) (408)
Dividend paid to shareholders (595) (612) (595) (612)
------------------------------- ----- -------- ---------- -------- ---------------
Net cash used in financing
activities (335) (1,020) (375) (1,017)
------------------------------- ----- -------- ---------- -------- ---------------
Net (decrease)/ increase
in cash and cash equivalents 973 (936) 307 (621)
------------------------------- ----- -------- ---------- -------- ---------------
Cash and cash equivalents
at beginning of the year 1,234 2,409 15 636
Effect of foreign exchange
rate changes 102 (239) - -
------------------------------- ----- -------- ---------- -------- ---------------
Cash and cash equivalents
at the end of the year 21 2,309 1,234 322 15
------------------------------- ----- -------- ---------- -------- ---------------
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2019
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 Prime People Plc have been prepared in accordance with International Financial Reporting Standards ("IFRS") as endorsed by the European Union and comply with IFRIC interpretations and Company Law applicable to Companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention modified as necessary to include any items at fair value, as required by accounting standards.
The consolidated financial statements for the year ended 31 March 2019 (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 2018, except for revenue recognition which is covered in more detail in Note 2(a) and are described below.
a) The Group adopted IFRS 15 standard- Revenue from Contracts with Customers from 1st April 2018.
Under the standard, revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange of transferring goods or services to a customer.
The Group has applied IFRS 15 using the cumulative effect method - i.e. by recognising the cumulative effect of initially applying IFRS 15 as an adjustment to the opening balance of equity at 1 April 2018. Therefore, the comparative information has not been restated and continues to be reported under IAS 18 and IAS 11. The following table summarise the impacts of adopting IFRS 15 on the Group's consolidated report for the year ending 31 March 2019.
Reported as Adjustments Balance without
at Under IFRS adopting IFRS 15
31 March 2019 15 GBP'000
GBP'000 GBP'000
Revenue 24,660 (322) 24,338
--------------- ------------ ------------------
Accrued Income - 1,654 1,654
--------------- ------------ ------------------
Retained Earnings 6,857 1,654 8,511
--------------- ------------ ------------------
Retained profit for basic
and diluted earnings per
share 1,659 (322) 1,337
--------------- ------------ ------------------
Basic earnings per share 13.72p (2.73p) 11.05p
--------------- ------------ ------------------
Diluted earnings per share 13.38p (1.60p) 10.78p
--------------- ------------ ------------------
The resulting changes in the timing of revenue and cost recognition aligns the financial results more closely with the timing of the delivery of services to our clients. The standard introduces a direct link between the value provided to a client and the timing of revenue recognition, as revenue is recognised when a candidate starts an assignment.
Permanent revenue is recognised from permanent placements based on a percentage of candidate's remuneration package. The impact of the transition to IFRS 15 resulted in revenue recognised at the point that the candidate starts the job, as opposed to the previous policy which recognised permanent revenue at the date an offer is made. A provision is made against cancellation of placements shortly after commencement of employment. The transition to IFRS 15 on permanent revenue has been accounted for under the cumulative effect method.
Contract revenue, which represents amounts billed for the services of temporary staff, including the salary costs of these staff, is recognised when the service has been provided. This basis of revenue recognition is consistent with IFRS 15 with no effect on revenue earned on temporary placements.
International Accounting Standards (IAS/IFRS) and Interpretations in issue but not yet EU approved
At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published by the IASB but are not yet effective. These have not been adopted early by the Group and the initial assessment indicates that either they will not be relevant or will not have a material impact on the Group. The effective dates below are for reporting periods beginning on or after that point:
International Accounting Standards (IAS/IFRS) and Amendments adopted by the EU but not yet effective
-- IFRIC 23 Uncertainty over Income Tax Treatments (Issued on 7 June 2017, effective 1 January 2019)
-- IFRS 16 Leases (issued on 13 January 2016, effective 1 January 2019)
IFRS 16 - Leases
On adoption of IFRS 16 the Group will recognise within the balance sheet a right of use asset and a corresponding lease liability for all applicable leases. Within the income statement, operating lease rentals payable will be replaced by depreciation and interest expense. This will result in an increase in operating profit and an increase in finance costs.
If IFRS 16 had been applied in the current accounting period, assets and liabilities would have increased by approximately GBP2.2m with an immaterial impact on the reported results.
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 as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. 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 prepared cash flow forecasts for a period of at least 12 months from the date of approval of the financial statements and have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the financial statements.
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 when the service has been provided; and
- Revenue from permanent placements, which is based on a percentage of the candidate's remuneration package and is derived from both retained assignments (where income is recognised on completion of defined stages of work) and non-retained assignments. The Group has changed its revenue-recognition policy from April 2018 in accordance with IFRS 15, Revenue from Contracts with Customers. This requires revenue to be recognised once value has been received by the customer and when the performance obligations have been satisfied. Revenue from non-retained, permanent-placement assignments is now recognised when a candidate commences employment, whereas previously recognition was at the date an offer was accepted by a candidate and where a start date had been determined. There has been no effect on either contract placements or retained, permanent-placement assignments.
The change resulted in a deferral of revenue from the previous period to the current one and a reduction in the retained earnings of the Group from the previous period of GBP2.0m.
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) 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.
As permitted by the exception in IFRS1 'First time adoption of International Reporting Standards', the Group has elected not to apply IFRS3 'Business combinations' to goodwill arising on acquisition that occurred before the date of transition to IFRS.
Separately recognised goodwill is reviewed annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash generating unit and a suitable discount rate in order to calculate present value.
f) Property, Plant and Equipment
All property, plant and equipment are stated at historical cost less accumulated depreciation less provisions for impairment. Depreciation is provided on all property, plant and equipment using the straight-line method at rates calculated to write off the cost less estimated residual values over their estimated useful lives, as follows:
-- Furniture, fittings and computer equipment 25% - 33%
The gain or loss arising on disposal or retirement of an asset is determined by comparing the sales proceeds with the carrying amount of the asset and is recognised within profit and loss.
g) Impairment of Assets
Assets that have an indefinite useful economic life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).
h) Taxation
The tax expense represents the sum of the current tax expense and deferred tax expense.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantially enacted by the balance sheet date.
Deferred income tax is provided in full, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax is determined using tax rates and laws that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised, or the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
i) Leased Assets and Obligations
All the Group's leases are operating leases and the annual rentals are charged to profit and loss on a straight-line basis over the lease term.
The benefit of rent-free periods received for entering a lease is spread evenly over the lease term.
j) Pension Costs
The Group operates a defined contribution pension scheme. The Group adopts both the minimum legally required employer contribution rate of 2% of qualifying earnings, and the maximum earning threshold for automatic enrolment for 2018-19, as set by the Pension Regulator.
The assets of the scheme are held separately from those of the Group in independently administered workplace pension - NEST. The pension costs charged to the income statement represent the contributions payable by the Group to NEST during the year.
The Pension liabilities at the Balance Sheet date represent employer and employee pension contributions, that are payable to the pension provider by the 22nd day of each month.
k) Segmental Reporting
IFRS8 requires operating segments to be identified based on internal reports that are regularly reviewed by the Board of Directors to allocate resources to the segment and to assess their performance.
l) Financial instruments
Financial assets and liabilities are recognised in the Group's balance sheet when the Group becomes a party to the contractual provision of the instrument.
m) Financial assets
The Group's financial assets comprise cash and various other receivable balances that arise from its operations. All of the Group's financial assets are held within a business model whose objective is to collect contractual cash flows which are solely payments of principals and interest and therefore classified as subsequently measured at amortised cost.
With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under IFRS 15.
The Group assesses on a forward-looking basis the expected credit losses ("ECL"), defined as the difference between the contractual cash flows and the cash flows that are expected to be received. For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs and recognises a loss allowance based on lifetime ECLs at each reporting date. For all other financial assets, the Group recognises lifetime ECL when there has been a significant increase in credit risk since initial recognition. If the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month ECL.
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.
n) Financial liabilities and equity
Financial liabilities and equity instruments are initially measured at fair value and are classified according to the substance of the contractual arrangements entered. Financial liabilities are subsequently measured at
amortised cost. The Group's financial liabilities comprise trade payables, bank overdrafts and other payable balances that arise from its operations. They are classified as 'financial liabilities measured at amortised cost'.
o) Share-Based Compensation
The Group operates equity-settled, share-based compensation plans.
The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). At the balance sheet date, the number of outstanding options is adjusted to reflect those options that have been granted during the year or have lapsed in the year.
p) Dividend Distribution
A final dividend distribution to the Company's shareholders is recognised as a liability in the Group's financial statements in the period in which the dividends are approved by the Company's shareholders. Interim dividend distributions are recognised in the period in which they are approved and paid.
q) Critical Accounting Estimates and Judgements
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates and judgements. It also requires management to exercise judgement in the process of applying the Company's accounting policies.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described below:
Revenue Recognition
Revenue from permanent placements is recognised when a candidate commences employment.
Goodwill Impairment
The Group's determination of whether goodwill is impaired requires an estimation of the value in use of the cash generating units to which goodwill is allocated. This requires estimation of future cash flows and the selection of a suitable discount rate details of which are disclosed in note 11.
Trade Receivables
There is uncertainty regarding customers who may not be able to pay as their debts fall due. In reviewing the appropriateness of the provisions in respect of recoverability of trade receivables, consideration has been given to the ageing of the debt and the potential likelihood of default, considering current economic conditions. Details of the total amount of receivables past due and the movement in allowance for doubtful debts are disclosed in note 13.
3 Segment Reporting a) Revenue and Net Fee Income, by Geographical Region
Information provided to the Board is focused on regions and as a result, reportable segments are on a regional basis.
Revenue Net fee income
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
UK 16,472 17,515 7,599 7,746
Asia 7,770 5,060 7,770 5,060
Rest of World 418 341 418 341
---------------- ------------- --------- --------- ---------
24,660 22,916 15,787 13,147
------------- --------- --------- ---------
All revenues disclosed by the Group are derived from external clients and are for the provision of recruitment services. The accounting policies of the reportable segments are the same as the Group's accounting policies described in note 2. Segment profit before taxation represents the profit earned by each segment after allocations of central administration costs.
b) Revenue and Net Fee Income, by Classification
Revenue Net fee income
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Permanent
-UK 6,501 6,551 6,493 6,548
-Asia 7,770 5,060 7,770 5,060
-Rest of World 418 341 418 341
Contract (UK) 9,971 10,964 1,106 1,198
----------------- --------- --------- --------- ---------
Total 24,660 22,916 15,787 13,147
----------------- --------- --------- --------- ---------
c) Profit before Taxation by Geographical Region
2019 2018
GBP'000 GBP'000
UK 928 906
Asia 1,523 489
Rest of World 20 (202)
-------------------------- -------- --------
Operating Profit 2,471 1,193
Net finance income - -
-------------------------- -------- --------
Profit before taxation 2,471 1,193
-------------------------- -------- --------
Operating profit is the measure of profitability regularly reviewed by the Board, which collectively acts as the Chief Operating Decision Maker. Consequently, no segmental analysis of interest or tax expenses is provided.
Segment operating profit is the profit earned by each operating unit and includes inter segment revenues totalling GBP0.83m (2018: GBP0.72m) for the UK, and charges of GBP0.77m (2018: GBP0.63m) for Asia and GBP0.06m (2018: GBP0.09m) for the rest of the world.
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
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
UK 12,502 12,896 2,036 1,382
Asia 5,375 3,562 1,159 950
Rest of World 397 1,247 80 369
---------------- --------- --------- --------- ---------
Total 18,274 17,705 3,275 2,701
---------------- --------- --------- --------- ---------
The analysis above is of the carrying amount of reportable segment assets and liabilities. Segment assets and liabilities include items directly attributable to a segment and include income tax assets and liabilities.
4 Profit on ordinary activities before taxation
2019 2018
GBP'000 GBP'000
Profit for the year is arrived at after charging:
Depreciation - owned assets 220 123
Operating lease rentals - land and buildings 586 740
(Profit)/loss on disposal of fixed assets (1) -
Exchange rate loss 3 (5)
The analysis of auditor's remuneration is as follows:
Audit of Company 23 25
Audit of subsidiaries 36 35
------------------------------------------------------- -------- --------
Total audit fees 59 60
------------------------------------------------------- -------- --------
5 Directors' emoluments
2019 2018
GBP'000 GBP'000
Emoluments for qualifying services 562 508
562 508
-------------------------------------- -------- ---------
Highest paid Director:
Emoluments for qualifying services 231 201
Details of Directors' emoluments and interests, which form part of these financial statements, are provided in the Director's Remuneration report in the Company's 2019 Annual Report & Accounts.
6 Employees
Group 2019 2018
Number Number
The average monthly number of employees of the Group during the year, including Directors,
was as follows:
Consultants 106 104
Management and administration 32 32
Temporary staff 37 43
---------------------------------------------------------------------------------------------- ------- -------
175 179
---------------------------------------------------------------------------------------------- ------- -------
Company 2019 2018
Number Number
The average monthly number of employees of the Company during the year, including Directors,
was as follows:
Management 5 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 2019 2018
GBP'000 GBP'000
Wages and salaries 8,360 8,612
Social security costs 709 704
Pension contributions 84 (14)
Share option charge 57 94
9,210 9,396
----------------------- -------- --------
Remuneration of key management 2019 2018
GBP'000 GBP'000
Short-term employee benefits 1,139 1,129
Social security costs 115 118
Share-based payments 33 25
Pension contributions 49 2
1,336 1,274
-------------------------------- -------- --------
Key management includes executive Directors and senior divisional managers.
7 Taxation on Profits on Ordinary Activities
2019 2018
GBP'000 GBP'000
a) Analysis of tax charge in the year
Current tax
UK Corporation tax 173 134
Foreign tax 129,107 12
Foreign tax over-provision in prior years - -
Total current tax 302 146
Deferred tax
Origination and reversal of temporary differences - 22
Deferred tax on fair value share option charge (4) (2)
Total charge on profit for the year 298 166
------------------------------------------------------------------------------------ --------- -----------
UK corporation tax is calculated at 19% (2018: 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:
2019 2018
GBP'000 GBP'000
Profit before taxation 2,471 1,193
------------------------------------------------------------------------------------ --------- -----------
Tax at UK corporation tax rate of 19% (2018: 19%) on profit on ordinary activities 470 227
Effects of:
Expenses not deductible for tax purposes 8 28
Depreciation for the period less than capital allowances (26) (20)
Tax losses not utilised/(utilised) 2 6
Tax rate differences (125) (11)
Temporary differences recognised (34) (20)
Permanent timing differences (2) -
Share option charge/exercised 5 -
Overprovision in prior years - (64)
Group relief - -
Total current tax 298 146
Deferred Tax
Origination and reversal of temporary differences - 20
Tax charge for the year 298 166
------------------------------------------------------------------------------------ --------- -----------
8 Dividends
2019 2018
GBP'000 GBP'000
Final dividend for 2018: 3.25p per share (2017: 3.25p per share) 383 398
Interim dividend for 2019: 1.80p per share (2018: 1.75p per share) 212 214
-------------------------------------------------------------------- -------- --------
595 612
-------------------------------------------------------------------- -------- --------
A final dividend of 3.25p (2017: 3.25p) was paid on 27 July 2018 to shareholders on the register on 20 July 2018.
An interim dividend of 1.80p (2018: 1.75p) was paid on 7 December 2018 to shareholders on the register at the close of business on 30 November 2018. The interim dividend was approved by the Board on 15 November 2018.
A final dividend of 3.40p per share will, subject to shareholder approval at the Annual General Meeting, be paid on 2 August 2019 to shareholders who are on the register on 19 July 2018, making a total dividend paid to shareholders for the year of 5.20p per ordinary share. (2018: 5.00p)
9 Earnings per share
Earnings per share are calculated by dividing the profit attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year.
Fully diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares by existing share options assuming dilution through conversion of all potentially dilutive existing options.
Earnings and weighted average number of shares from continuing operations used in the calculations are shown below.
2019 2018
GBP'000 GBP'000
Profit for the year and earnings used in basic and diluted earnings per share 1,660 1,022
Number Number
Weighted average number of shares used for basic earnings per share 12,094,523 11,784,523
Dilutive effect of share options 307,031 184,146
------------------------------------------------------------------------------- ------------- -------------
Diluted weighted average number of shares used for diluted earnings per share 12,401,554 11,968,669
------------------------------------------------------------------------------- ------------- -------------
Pence Pence
Basic earnings per share 13.72p 8.67p
Diluted earnings per share 13.38p 8.53p
10 Property, Plant and Equipment
Fixtures, fittings and equipment Total
Group GBP'000 GBP'000
Cost
At 1 April 2017 1,075 1,075
Additions 209 209
Acquisition 115 115
Disposals - -
Exchange difference (31) (31)
------------------------ --------------------------------- --------
At 1 April 2018 1,368 1,368
Additions 727 727
Acquisition - -
Disposals (133) (133)
Exchange difference 18 18
------------------------ --------------------------------- --------
At 31 March 2019 1,980 1,980
------------------------ --------------------------------- --------
Depreciation
At 1 April 2017 939 939
Provision for the year 123 123
Acquisition 91 91
Disposals - -
Exchange difference (27) (27)
------------------------ --------------------------------- --------
At 1 April 2018 1,126 1,126
Provision for the year 220 220
Acquisition - -
Disposals (133) (133)
Exchange difference 15 15
------------------------ --------------------------------- --------
At 31 March 2019 1,228 1,228
Net book value
At 31 March 2019 752 752
------------------------ --------------------------------- --------
At 31 March 2018 242 242
------------------------ --------------------------------- --------
At 31 March 2017 136 136
------------------------ --------------------------------- --------
11 Goodwill
GBP'000
Cost
At 1 April 2018 10,527
At 31 March 2019 10,527
------------------ --------
The total carrying value of goodwill is GBP10.53m, which relates to the acquisition of the Macdonald & Company Group in January 2006 and Command Recruitment Group (H.K.) Limited in October 2017. It has been tested for impairment with the recoverable amount being determined from value-in-use calculations.
The assessment for Macdonald & Company Group is based on UK projected results. The recoverable amount is determined on a value-in-use basis utilising the value of cash flow projections over five years with terminal value added for the UK business segment. The first year of the projections is based on detailed budgets prepared and approved by management. Subsequent years are based on extrapolations.
The key assumption in calculating the value in use was that the Group would meet its budgeted growth in UK net fee income of 14.42% in the year to 31 March 2020. For the year after the end of the period covered by the budget a growth rate of 2.00% is applied. This is followed by an assumed growth rate of 2.00%, which is deemed reasonable and represents the average rate of growth in the markets in which the Group operates. A discount rate of 6.60% has been applied, representing the weighted average cost of capital for the Group.
Based upon this analysis the asset has not been impaired, since the 'recoverable amount' (being the greater of the net realisable value and the value in use) exceeds the carrying amount by GBP1.62m. A few potential sensitivity scenarios have been considered and these would indicate impairment in the carrying value of goodwill if the discount rate were to be increased to 8.63% or if there were no future growth. Management believes the assessment is reasonable based on average UK operating profit achieved for the past three years above GBP1.43m.
The assessment of Command Recruitment Group (H.K) Limited is based on projected results in Hong Kong and Dubai. The approach is the same as that used for Macdonald & Company Group. In assessing value in use, the estimated future cash flows are calculated by preparing cash flow forecasts derived from the most recent financial budget and projections for five years, followed by an assumed growth rate of 0%which does not exceed the long-term average growth rate of the relevant markets. This analysis does not indicate any material impairment. Several potential sensitivity scenarios have been considered and these would only indicate material impairment in the carrying value of goodwill if the discount rate were to be increased to 27% and if the budgeted operating profit is underachieved by 50%. Management believes that both scenarios are unlikely as Command continues to perform in line with management expectations. As a result, the Group has continued to make significant investments in the business to accelerate its growth in line with the Group's strategy to build a strong presence in Hong Kong and maximise the long-term growth opportunities available in the market.
12 Investments
Company shares in subsidiary undertakings 2019 2018
GBP'000 GBP'000
Cost
At 1 April 18 11,190 11,156
Increase/ (decrease) in shares from subsidiary from share option reserve 23 34
At 31 March 19 11,213 11,190
--------------------------------------------------------------------------- -------- --------
Non-Controlling Interest
The following table summarises the information relating to Command, that is a subsidiary with material non-controlling interest ("NCI"), before any intra-group eliminations.
2019 2018
GBP'000 GBP'000
NCI percentage 40% 40%
Non-current assets 110 17
Current assets 2,237 855
Non-current liabilities - -
------------------------------------------------- -------- --------
Net assets 2,347 872
--------------------------------------------------- -------- --------
Net assets attributable to NCI 939 349
--------------------------------------------------- -------- --------
Revenue 3,972 840
Operating profit 907 3
Other comprehensive income/(loss) 20 -
------------------------------------------------- -------- --------
Total comprehensive income 1,414 843
--------------------------------------------------- -------- --------
Operating profit allocated to NCI 566 1
Other comprehensive income allocated to 8 -
NCI
------------------------------------------------- -------- --------
Cash flows from operating activities 2,585 222
Cash flows from investment activities - -
Cash flows from financing activities (dividends - -
to NCI: nil)
------------------------------------------------- -------- --------
Net increase (decrease) in cash and cash
equivalents 2,585 222
--------------------------------------------------- -------- --------
The Group acquired 60% holding of Command on 11 October 2017, and it became a subsidiary from that date. Accordingly, the comparative information for 2018 for Command is only for period 11 October 2017 to 31 March 2018.
The following are subsidiary undertakings at the end of the year and have all been included in the consolidated financial statements:
Country of incorporation Principal activity Registered address
Macdonald & Company England and Wales Holding Company 2 Harewood Place,
Group Limited Hanover Square,
London, W1S 1BX
Macdonald & Company England and Wales Recruitment 2 Harewood Place,
Property Limited Hanover Square,
London, W1S 1BX
Macdonald and Company England and Wales Recruitment 2 Harewood Place,
Freelance Limited Hanover Square,
London, W1S 1BX
Macdonald & Company England and Wales Dormant 2 Harewood Place,
(Overseas) Limited 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 and Company Singapore Recruitment 63 Market Street
Pte Limited #05-02, Bank of
Singapore Centre,
Singapore 048942
Macdonald & Company Australia Recruitment Storey Blackwood
Pty Ltd & Co, Level 4,
222 Clarence Street,
Sydney NSW 2000
Australia
Macdonald & Company South Africa Dormant 1 Emfuleni, 79
Recruitment Proprietary Crassula Crescent,
Ltd Woodmead, Johannesburg,
2052 South Africa
The Prime Organisation England and Wales Dormant 2 Harewood Place,
Ltd Hanover Square,
London, W1S 1BX
Command Recruitment Hong Kong Recruitment 29th Floor
Group (H.K.) Limited 3 Lockhart Road
Wan Chai, Hong
Kong
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
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Current
Trade receivables 4,156 3,050 - -
Allowance for doubtful debts (621) (178) - -
Other receivables 243 111 119 4
Prepayments and accrued income 868 2,633 5 5
--------------------------------- ------------ -------- -------- --------
4,646 5,616 124 9
-------------------------------- ------------ -------- -------- --------
At 31 March 2019, the average credit period taken on sales of recruitment services was 131 days (2018: 69 days) from the date of invoicing. An allowance of GBP621,000 (2018: GBP178,000) 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.
Prepayments and accrued income principally comprise amounts to be billed for permanent placements with a start date within three months from the start of the new financial year.
A Provision for impairment of trade receivables has been made. In reviewing the appropriateness of the provision, consideration has been given to the ageing of the debt and the potential likelihood of default, taking into account current economic conditions.
The ageing of trade receivables at the reporting date was:
Gross trade receivables Provisions Gross trade receivables Provisions
2019 2019 2018 2018
GBP'000 GBP'000 GBP'000 GBP'000
Not past due 0 -30days 1,654 68 1,861 41
Past due 30-90 days 1,435 157 956 83
Past due more than 90 days 1,067 396 233 54
---------------------------- ------------------------ ----------- ------------------------ -----------
4,156 621 3,050 178
---------------------------- ------------------------ ----------- ------------------------ -----------
Movement in allowance for doubtful debts:
2019 2018
GBP'000 GBP'000
1 April 2018 178 24
Impairment losses recognised 621 178
Amounts written off as uncollectable (117) (10)
Amounts paid by the client (61) (14)
Impairment losses reversed - -
-------------------------------------- -------- --------
31 March 2019 621 178
14 Financial Instruments
Group Company
2019 2018 2019 2018
Note GBP'000 GBP'000 GBP'000 GBP'000
Loans and receivables
Trade and other receivables 13 4,261 4,638 124 5
Cash and cash equivalents 2,309 1,234 322 15
----------------------------- ----- -------- -------- -------- --------
6,570 5,872 446 20
----------------------------- ----- -------- -------- -------- --------
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
2019 2018 2019 2018
Note GBP'000 GBP'000 GBP'000 GBP'000
Financial liabilities and fair value through profit and loss
Trade and other payables 15 1,123 614 1,092 1
1,123 614 1,092 1
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
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Current
Trade payables 316 307 3 -
Other payables 807 307 1 1
Amount owed to subsidiary undertakings - - 1,093 748
Taxation and social security 730 845 6 13
Accruals 1,227 1,220 27 29
3,080 2,679 1,130 791
Due to the short-term nature of the trade and other payables, the Directors consider that the carrying value approximates to their fair value. Trade payables are generally on 30-60-day terms. No payables are past their due date.
16 Deferred Tax
Group (Liability) Other temporary differences Total
GBP'000 GBP'000
At 1 April 2017 - -
Credit to income 22 22
-------
At 31 March 2018 22 22
Debit to income - -
At 31 March 2019 22 22
-------
Group (Asset) Share Options Total
GBP'000 GBP'000
At 1 April 2017 43 43
Credit to income 2 2
At 31 March 2018 45 45
Debit to income (5) -
At 31 March 2019 40 45
17 Share Capital
2019 2018
Number GBP'000 Number GBP'000
ALLOTTED CALLED UP
Ordinary shares of 10p each
As at 1 April 2018 and 31 March 2019 12,290,199 1,229 12,290,199 1,229
Share capital includes unpaid shares of nil (2018: 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 19 July 2018, 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 GBP409,632, representing one third of the then issued share capital of the Company;
- to issue new/additional ordinary shares to new shareholders up to a maximum nominal amount of GBP409,632 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 GBP61,451 representing 5% of the then issued share capital of the Company; and
- to purchase through the market up to 10% of the Company's issued share capital, subject to certain restrictions on price.
Shareholders will be asked to renew these authorities at the AGM in 2019 on 24 July 2019.
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 2019 the following options had been granted and remained outstanding in respect of the Company's ordinary shares:
Year Exercise Exercise Number of Granted Exercised Forfeited Number of
of grant Price Period options Options
Pence 31 March 31 March
2018 2019
2011/12 68.00 2014-2019 3,000 - - - 3,000
2013/14 Nil 2016-2021 12,000 - - - 12,000
Nil 2019-2021 65,250 - (5,000) (20,000) 40,250
2014/15 10.00 2016-2021 35,000 - (5,000) (10,000) 20,000
10.00 2019-2021 267,500 - - (38,000) 229,500
2015/16 10.00 2017-2022 20,000 - (20,000) - -
10.00 2020-2022 30,000 - - - 30,000
58.00 2017-2022 40,000 - - (15,000) 25,000
58.00 2020-2022 85,000 - - (25,000) 60,000
2016/17 50.00 2019-2024 15,000 - - - 15,000
50.00 2022-2027 45,000 - - - 45,000
90.00 2019-2024 20,000 - - - 20,000
90.00 2022-2027 25,000 - - 25,000
2018/19 10.00 2020-2028 - 90,000 - (10,000) 80,000
Total 2019 662,750 90,000 (30,000) (118,000) 604,750
Weighted average exercise
price 2019 (pence) 28.37p - 10.00p 10.00p 27.84p
Total 2018 743,750 - (10,000) (71,000) 662,750
Weighted average exercise
price 2018 (pence) 30.37p - 34.00p 48.54p 28.37p
There were 604,750 options outstanding at 31 March 2019 (2018: 662,750) which had a weighted average price per share of 28.37p (2018: 30.37p) and a weighted average contractual life of 5.4 years. The options vest over a period of two to five 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 2018 and 2019. 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.
2019 2018
Option pricing model used Black-Scholes Black-Scholes
Weighted average share price at grant date (in pence) 76.00 & 74.00 -
Exercise price (in pence) 10.00 -
Fair value of options granted during the year 68.98 -
Expected volatility (%) 20.00 -
Risk-free interest rate (%) 4.00 -
Expected life of options (years) 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 GBP57,306 (2018: expense GBP94,315).
18 Reserves
Capital Redemption Reserve Fund
The capital redemption reserve relates to the cancellation of the Company's own shares.
Treasury Shares
At 31 March 2019, the total number of ordinary shares of 10p held in Treasury and their values were as follows:
2019 2018
Number GBP'000 Number GBP'000
As at 1 April 505,676 421 18,276 21
Shares purchased for treasury 34,000 26 497,400 408
Shares issued from treasury (344,000) (246) (10,000) (3)
Equity reclassification
on disposal of treasury
shares - - - (5)
Loss on treasury shares
disposal (40)
As at 31 March 195,676 161 505,676 421
Nominal value 20 51
Market value 156 397
The maximum number of shares held in treasury during the year was 509,676 shares representing 4.1% of the called-up ordinary share capital of the Company (2018: 505,676 representing 4.1% of the called-up ordinary share capital of the Company).
Merger Reserve
The merger reserve represents the fair value of the consideration given in excess of the nominal value of the 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.
19 Operating Lease Commitments
As at 31 March 2019 the Group was committed to making the following total payments in respect of non-cancellable operating leases:
Land Land and
and buildings buildings
2019 2018
GBP'000 GBP'000
Amounts payable:
Within one year 532 571
Within one to two years 469 471
Within two to five years 816 1,200
After five years - -
1,817 2,242
The Group leases various offices under non-cancellable operating lease agreements. The leases have varying terms as disclosed above.
20 Reconciliation of Profit before Tax to Net Cash Inflow from Operating Activities
Group Company
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Profit before taxation 2,471 1,193 10 (54)
Adjust for:
Depreciation 220 123 - -
Share-based payment expense 38 94 - -
(Profit)/Loss on sale of tangible asset 1 - - -
Operating cash flow before changes in working capital 2,730 1,410 10 (54)
IFRS 15 adjustment on reserves b/f (1,976)
(Increase)/decrease in receivables 976 (434) (115) (4)
Increase/(decrease) in payables 416 344 346 15
Cash generated from / (used by) underlying operations 2,146 1,320 241 (43)
21 Analysis of Cash less overdrafts
Group At 1 April 2018 Cash flow At 31 March 2019
GBP'000 GBP'000 GBP'000
Cash at bank and in hand 1,234 1,075 2,309
Total cash 1,234 1,075 2,309
Company At 1 April 2018 Cash flow At 31 March 2019
GBP'000 GBP'000 GBP'000
Cash at bank and in hand 15 307 322
Total cash 15 307 322
22 Financial Risk Management
The Board of Directors has overall responsibility for the risk management policies that are applied by the business to identify and control the risks faced by the Group. The Group has exposure from its use of financial instruments to foreign currency risk, credit risk and liquidity risk.
Foreign Currency
The Group publishes its consolidated financial statements in Sterling. The functional currencies of the Group's main operating subsidiaries are Sterling, the Singapore Dollar, the Hong Kong Dollar and the UAE Dirham.
The Group's international operations account for approximately 31.53% (2018: 23.37%) of revenue and approximately 29.64% (2018: 23.88%) 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
2019 Euro USD HK$ S$ AED
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank 78 32 645 95 805
Trade and other receivables - - 648 140 1,389
Trade and other payables - - (27) (4) -
Net exposure 78 32 1,266 231 2,194
As at 31 March
2018 Euro USD HK$ S$ AED
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank 92 215 278 228 203
Trade and other receivables - - 690 167 436
Trade and other payables - - (12) (4) (4)
Net exposure 92 215 956 391 635
Sensitivity analysis - currency risk
A 10% weakening of Sterling against the above currencies at 31 March 2019 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.
2019 equity 2019 PBT 2018 equity 2018 PBT
GBP'000 GBP'000 GBP'000 GBP'000
Euro (7) (7) (8) (8)
US Dollar (3) (3) (20) (20)
Hong Kong Dollar (115) (115) (87) (87)
Singapore Dollar (21) (21) (36) (36)
UAE Dirham (199) (199) (58) (58)
A 10% strengthening of Sterling against the above currencies at 31 March 2019 would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.
Currently the Group's policy is not to hedge against this exposure, but it does seek to minimise this exposure by converting into sterling all cash balances in foreign currency that are not required for capital monetary needs. The settlement of intercompany balances held with foreign operations is neither planned nor likely to occur in the foreseeable future. Therefore, exchange differences arising from the translation of the net investments are recognised in Other Comprehensive income.
Credit Risk
The Group's principal financial assets are bank balances, trade and other receivables. The Group's credit risk is primarily in respect of trade receivables. Credit risk refers to the risk that a client will default on its contractual obligations resulting in financial loss to the Group. The Group does have significant credit risk exposure to one single client in Saudi Arabia which represents 32.45% of the Group trade receivables balance. Although there is no indication that the debts are uncollectable, the Directors are of the opinion that adequate provision is in place to cover any potential default by this client. Apart from this exposure, at the year-end no other customer represented more than 4.86%% (2018: 6.95%) of the total balance of trade receivables.
In reviewing the appropriateness of the provisions in respect of recoverability of trade receivables, consideration has been given to the ageing of the debt and the potential likelihood of default, considering current economic conditions.
It is the Directors' opinion that no further provision for doubtful debts is required.
Liquidity Risk
The Group manages it liquidity risk by maintaining adequate cash and or credit facilities to meet forecast cash requirements of the Group. Management monitors its forecasted cash flow requirements at a Group level based on monthly returns made by the Group's operating units.
The Group has no financial liabilities other than short-term trade payables and accruals as disclosed in note 15, all due within one year of the year end.
The Group has net funds of GBP2.31m (2018: GBP1.23m) which the Board consider are more than adequate to meet future working capital requirements and to take advantage of business opportunities.
23 Related Party Transactions
Prime People Plc provides various management services to its subsidiary undertakings. These services take the form of centralised finance and operations support. The total amount charged by the Company to its subsidiaries during the year is GBP215k (2018: GBP215k). The balance owed to the subsidiary undertakings at the year-end is GBP1.09m (2018: GBP0.75m).
The Company also provides corporate guarantees on the subsidiary bank accounts. At 31 March 2019 amounts overdrawn by subsidiary bank accounts were GBPnil (2018: GBPnil).
The Directors receive remuneration from the Group, which is disclosed in the Directors' Remuneration Report. As shareholders, the Directors also received dividends in the year from the Company amounting to GBP359,697 (2018: GBP355,249).
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
FR EASKEALNNEFF
(END) Dow Jones Newswires
June 21, 2019 02:00 ET (06:00 GMT)
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