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Final Results

23 Jun 2016 07:00

RNS Number : 9954B
Prime People PLC
23 June 2016
 

 

 

 

 

 

 

 

 

 

23 June 2016

 

Prime People Plc

Results for the year ended 31 March 2016

 

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 Insight & Analytics sectors, today announces its audited results for the year ended 31 March 2016.

 

Highlights:

 

Year ended

31 March

2016

Year ended

31 March

2015

Gross fee income

Net fee income

£20.75m

£12.28m

£16.65m

£10.22m

Profit before tax

£2.15m

£1.44m

Profit after tax

£1.70m

£1.13m

Fully diluted earnings per share

13.52p

9.01p

Total dividend for the year

8.84p

8.84p

 

The Group announces that its report and accounts for the year ended 31 March 2016, Notice of 2016 Annual General Meeting and Form of Proxy for the 2016 Annual General Meeting have been posted to shareholders. The Annual General Meeting of the Group's shareholders will be held at 2 Harewood Place, Hanover Square, London, W1S 1BX on Wednesday 20 July 2016 at 11.00am.

The documents are available on the Group's website at www.prime-people.co.uk.

 

Peter Moore, Managing Director of Prime People, said:

 

"I am pleased to report a strong set of results with Net Fee Income up 20.16% and profit up 50.35% for the full year founded on our continued drive to control costs and increase productivity across the Group.

 

There were a number of 'standout' performances within U.K. property. In particular, contract and technical recruitment generated much improved NFI and our recently established residential team has made a strong start. It was also heartening to see international divisions, markedly Hong Kong, exceed expectations in testing local conditions.

 

As previously advised, following a second interim dividend of 3.09p paid in March 2016, the Board does not anticipate recommending a final dividend (2015: 3.09p). This will result in a total dividend payment of 8.84p for the 2016 financial year (2015: 8.84p).

 

Current activity is resilient across the group and, while we expect some slowing in our mature vertical markets in the short term, we are confident the business is well positioned to exploit available opportunities."

 

-Ends-

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

020 7397 8900

Elizabeth Bowman

 

Julian Morse  (Sales/Broking)

 

 

 

Chairman's Statement

 

 

Performance

 

The year ended 31 March 2016 was an encouraging year for our company, as it was for many professional recruitment businesses based in the U.K. Despite the global economy providing some uncertainty to our year end, our clients continued to hire and competition for scarce talent supported demand. As the following report shows, the Group achieved positive revenue growth and improved its operating profit margin.

 

I am pleased to report that we closed the year with Net Fee Income (NFI) of £12.28m. This is a 20.16% increase on last year (2015: £10.22m). Despite NFI in the second half of the year of £6.07m being 2.23% lower than the first half of 2016, it is encouraging to see a second half increase over the comparable period in 2015 of 16.21%.

 

There were a number of 'standout' performances, within U.K. property. In particular, contract and technical recruitment generated improved NFI. It was also heartening to see our international businesses, notably Hong Kong, exceed expectations in testing local conditions.

 

The 50.35% increase in operating profit for the year from £1.43m in 2015 to £2.15m in 2016 reflects the improvement in NFI and the continued drive to control costs and increase productivity across the Group.

 

During the year NFI productivity per head rose to £103.49k (2015: £91k). The increase is due, in part, to new hires contributing to performance sooner than expected.

 

The conversion rate, which compares operating profit to NFI, increased from 13.99% to 17.50% due primarily to greater operational efficiency.

 

The ratio of NFI derived from contract as against permanent placements has slightly increased in the year from 8:92 in 2015 to 9:91. This increase can be attributed to clients seeking flexibility in a full and competitive employment market.

 

Cash Flow

 

The Group continues to maintain a strong net cash position. At the start of the year the Group had cash of £1.01m which had slightly decreased to £0.95m by the end of the year. The decrease is primarily due to growth in the contract business, where NFI has grown by 43.04% to £1.13m (2015: £0.79m).

 

Dividend

 

During the year, an interim dividend of 1.75p per share (2015: 1.75p), a special dividend of 4.00p per share (2015: 4.00p) and a second interim dividend of 3.09p (2015: 0.00p) were paid to shareholders. As previously advised, the Board does not anticipate recommending a final dividend (2015: 3.09p). This will result in a total dividend payment of 8.84p for the 2016 financial year (2015: 8.84p).

 

Share Buy Back

 

During the year no shares were purchased through the Group's buyback programme (2015: 67,210 shares purchased at a cost of £61,512). The Board will be seeking shareholder approval for renewal of the authority to repurchase up to 10% (2015: 10%) of the Group's issued share capital at the Annual General Meeting.

 

New Issue of Ordinary Shares

 

During the year the Company applied for 96,250 (2015: 127,499) 10p newly issued shares to be admitted to trading on AIM in order to satisfy the exercise of options granted under the company's share option scheme. The Admission of 68,250 took place on 21 September 2015, and the Admission of 28,000 took place on 16 February 2016.

 

Board

 

The Board has continued to operate corporate governance standards appropriate to an AIM listed company.

On 27th October 2015 Christopher Heayberd retired from his role as Finance Director after 20 years with the company. The Board is delighted that Mr Heayberd will continue to serve the Company as a Non-executive Director.

 

Mrs Donka Zaneva-Todorinski was promoted and appointed as Finance Director and member of the Board with effect from 27th October 2015 in succession to Mr Heayberd.

 

Although not required to do so, the Directors have resolved that they will retire at least once every three years and seek reappointment by shareholder at the next AGM.

 

The Board has a fine mix of skills, experience, gender and backgrounds. This mix is of considerable benefit to the business.

 

People

 

The average number of staff increased from 112 last year to 124 this year and we anticipate that headcount at the end of 2016 will increase again.

 

The Group has a diverse cultural and ethnic profile within the business and at the end of 2016 had global 52:48 male/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

 

Following three years of buoyant trading in the recruitment sector, we anticipate that market conditions will be softer in the remainder of 2016. Current activity is resilient across the group and, while we expect some slowing in our mature vertical markets, we are confident the business is well positioned to exploit available opportunities and to grow.

 

Surveying the business environment, we are conscious of several macro-economic headwinds, including the UK referendum on EU membership, turbulent emerging markets and other volatility that may affect our clients' hiring plans. However, the Group continues to find opportunities for expansion and has successfully incubated new business lines over the past twelve months while increasing productivity per head and diversifying outside the UK. We will continue to invest in people and the technology that allows us to improve shareholder returns by offering our clients innovative approaches to recruitment and a globally connected service.

 

 

 

 

 

Robert Macdonald

Executive Chairman

 

 

 

 

Strategic Report

 

 

Overview

 

The Group provides permanent and contract recruitment services to selected, niche industry sectors. The built environment continues to be the Group's largest market, served through its main subsidiary, Macdonald & Company. As distinct brands, Prime Insight and Prime Energy serve the data analysis & customer insight and renewable energy & sustainability sectors respectively.

 

Our employees are vital to the continued success of the business and we invest heavily in them. As such, we take time to find and train the best talent that will shares our ambition - to be the best, not simply the biggest. In pursuit of this objective, the Group made several strategic hires in 2016 and conducted successful graduate hiring programme.

 

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 alone 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 Group has two locations in the U.K., the London head office and Manchester. It has fully staffed offices in Hong Kong (established in 2007), in Dubai (established in 2008), Singapore (established in 2012), and a franchise in South Africa (established in 2008).

 

Both Group Revenue and NFI were up in 2016 which in turn delivered an increased operating profit of £2.15m (2015: £1.44m).

 

The U.K. had a good year overall, although in the third quarter our clients' confidence stalled while job seekers' expectations remained bullish. Performance in the U.K. was driven by increased NFI from our Technical and Contract teams as well as a notable performance from our newly established Residential business.

 

Outside the U.K., Hong Kong proved the 'standout' performer and made the largest contribution to group NFI of all our business units.

 

Our Middle East business, based in Dubai, also generated strong fee income, especially in light of negative sentiment linked to the falling price of oil. Nevertheless, the Board continues to watch the region carefully and sets conservative expectations in an uncertain environment.

 

Singapore performed slightly below expectations due to staff changes. However, the office finished the year strongly and we have confidence in the staff structure of the office going forward. Our Prime Insight team in Singapore has grown, with the business area showing signs of maturity and we are expecting improved results from it in 2017.

 

The Board remains steadfast in its pursuit of sustainable NFI growth and cash generation. It will continue to maintain careful control on expenditure in the pursuit of increased profitability. Cultivating strong client relationships, investing in the best technology and employing the best people are pillars of the Group's success. To this end, the Board has delegated accountability for each business area to a newly created Operational Management Board, which reports to the Group Executive Directors. With slow-moving global growth and a world economy increasingly exposed to risk it is more important than ever that we stay 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 ratios, position the Group to prosper.

 

 

 

Regional Performance

 

UK

 

 

2016

£m

2015

£m

 

 

 

Revenue

16.25

12.96

Net fee income (NFI)

7.77

6.53

Operating profit

1.53

0.99

 Operating profit as % of NFI

19.69%9

15.16%

Average number of employees

84

79

 

 

 

The UK results reported in 2016 compare well to the performance of 2015.

 

Revenue increased by 25.39% to £16.25m (2015: 12.96m) with an increase in NFI of 18.99% to £7.77m (2015: £6.53m)

 

Market conditions fluctuated throughout the year which was reflected in an improved NFI performance in the first half of the year compared to 2015, and accounted for the majority of the NFI growth during the year.

 

Our Technical, Architecture and Real Estate Finance teams delivered strong NFI growth during the year. This together with additional investment in a new residential team contributed to the increase in operating profit as a percentage of NFI from 15.16% to 19.69%.

 

NFI from our contract team was 18.60% higher in the second six months which was directly driven by increased sales volume and better margins in the current candidate-driven market.

 

 

Asia

 

 

2016

£m

2015

£m

 

 

 

Revenue

3.63

2.99

Net fee income (NFI)

3.63

2.99

Operating profit

0.46

0.37

Operating profit as % of NFI

12.67%

12.37%

Average number of employees

33

32

 

 

 

NFI grew by 21.40% to £3.63m (2015: £2.99m).The region is covered by our offices in Hong Kong and Singapore and represents 29.56% of Group NFI (2015: 29.26%).

 

The region has benefited from increased productivity through staff rationalisation and maturing business lines. Although the construction business in the region reached a 'plateau', the team now benefits from a better ability to serve markets in mainland China and the region.

 

 

 

 Rest of the World

 

 

2016

£m

2015

£m

 

 

 

Revenue

0.88

0.70

Net fee income (NFI)

0.88

0.70

Operating profit

0.16

0.07

Operating profit as % of NFI

18.18%

10.00%

Average number of employees

7

7

 

 

 

The region is covered by our offices in Dubai and South Africa.

 

In Dubai our consultant team was stable throughout the year and, despite a backdrop of economic conditions affected by the fall in oil price and regional political instability, we had a relatively strong year. With the bulk of the business focussed on the Middle East, the region delivered 26.17% growth in NFI and a conversion rate of 18.18%.

 

The Board are positive as to the future of the business but remain conservative as to the prospects in the region for the next twelve months.

 

 

 

 

 

 

Peter Moore

Managing Director

 

 

 

Financial Review

 

 

Revenue

 

The Group achieved a 24.68% increase in revenue to £20.76m (2015: £16.65m).

 

Net Fee Income (NFI)

 

NFI comprises the total placement fees of permanent candidates and the margin earned in the placement of contract staff.

 

Overall the Group delivered a 20.16% increase in total NFI to £12.28m (2015: £10.22m). NFI from permanent business increased by 18.11% to £11.15m (2015: £9.44m). Fees from our contract business, which represents 9.20% of total NFI (2015: 7.73%), increased to £1.13 million from £0.79m last year.

 

NFI from international placements, which is included in our permanent business, increased by 22.22% to £4.51m (2015: £3.69m).

 

Administration Costs

 

Administration costs for the year increased by 15.25% to £10.13m (2015: £8.79m). The increase primarily related to higher staff costs, in line with fee income growth.

 

Profit before Taxation

 

Profit before taxation increased by 450.35% to £2.15m (2015: £1.43m).

 

Taxation

 

The taxation charge is £0.46m on profit before taxation of £2.15m (from ordinary activities) which gives an effective tax rate of 21.40% (2015: 21.53%). The reasons for the difference from the standard UK corporation tax rate of 20% are detailed in note 7 of the accounts.

 

Earnings per Share

 

Basic earnings per share increased by 49.14% to 13.84p (2015: 9.28p). The diluted earnings per share, taking into account existing share options, increased by 50.06% to 13.52p (2015: 9.01p).

 

Dividend

 

An interim dividend of 1.75p (2015: 1.75p) was paid on 27 November 2015 to shareholders on the register at close of business on 20 November 2015. A special dividend of 4p (2015: 4.00p) was also paid on 27 November 2015 to all shareholders on the register on 20 November 2015. Both the interim and special second interim dividends were approved by the Board on 27 October 2015.

 

A second interim dividend of 3.09p (2015: 0.00p) was paid on 25 March 2016 to all shareholders on the register on 18 March 2016. The second interim dividend was approved by the Board on 3 March 2016. No final dividend is proposed for the current year.

 

Balance Sheet

 

Net assets at 31 March 2016 have slightly reduced to £13.42m (2015: £13.47m).

 

Trade receivables at the year end, were up on last year at £2.71m (2015: £2.13m) which reflects the increased revenue for the year. The credit period taken by clients increased to 55 days (2015: 38 days).

 

Treasury Management and Currency Risk

 

Approximately 78.27% of the Group's revenue in 2016 (2015: 77.82%) 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.

 

The Group operates a centralised treasury function, with no borrowing facilities, and is confident the net cash within the Group is sufficient to meet current and foreseeable liabilities as they fall due.

 

Cash Flow and Cash Position

 

At the start of the year the Group had cash of £1.01m. After net taxation payments of £0.41m (2015: £0.28m) cash generated from operations was £1.96m (2015:£1.27m).

 

During the year the Group spent £0.97m (2015: £0.17m) on its CRM systems and paid dividends to shareholders of £1.95m (2015: £0.59m).A final dividend for 2015 of £0.38m was paid in June 2015 and an interim dividend for 2016 of £0.70m as well as a second interim dividend of £0.38m was paid in November 2015 and March 2016 respectively. At 31 March 2016 the Group had cash of £0.95m.

 

Measurements of performance in 2016

 

Whilst the Group considers Net Fee Income (NFI) to be the key indicator of the performance of the business there are other measures which were reported to senior management as follows:

 

- Conversion ratio (operating profit divided by NFI) increased to 17.50% (2015: 13.99%)

- Productivity (NFI divided by total average headcount) increased to £99.03k (2015: £91.25k)

- Ratio of billing headcount to support headcount remained at 3.4 (2015: 3.4)

- Percentage of NFI paid to staff 63.69% (2015: 62.47%)

 

These key performance indicators form the basis for reviewing the progress of the business.

 

Principal Risks and Uncertainties

 

Risk management is an important part of the management process throughout the group. The composition of the Board is structured to give balance and expertise when considering the principal risks and uncertainties of the Group.

 

The Group's strategy is designed to allow the business to grow without increasing risk beyond an acceptable limit. The profile of risks fluctuates from time to time and, whilst the Group cannot eliminate risk altogether, the actions being taken to manage and control risks are intended to mitigate the effects on the business. According to latest industry surveys persistent slow growth continues across the recruitment profession and a number of difficult to predict challenges remain of concern for the sector. The Board reviews the principal risks and uncertainties facing the Group on a regular basis. The Board's approach is to ascertain the key risks and develop plans to reduce the potential effects of these risks on the business. The principal risks identified are as follows:

 

Dependence on Key People

The sustainable success of the Group is dependent on the continued service of senior management and key people. The loss of the services of the senior management and other key people could have a material effect on the business. To address this, the Group has put in to place an internal talent acquisition function and invested in management information systems, training and development programmes, competitive pay structures and long term remuneration plans, the aim of which is to retain the key employees. The Group is fortunate to have the loyalty of the senior management team which allows the business to progress, even in uncertain markets.

 

For succession planning, and to facilitate corporate management an Operational Management Board has been established which has the responsibilities for setting and delivering the performance of the Group and proposing where the business should be focused operationally.

 

CompetitorsThe Group's focus is on specialist, niche sectors where clients need expert knowledge and high levels of service. We concentrate on markets where there is a shortage of supply of suitable candidates and opportunities to build strong and fruitful long-term relationships with clients. The Directors believe that the Group is well positioned in its chosen markets. Whilst the Group seeks to continue to improve its competitive positions, the actions of current, or indeed potential, competitors may adversely affect the Group's business.

 

Strength of Property Markets

The market for built environment recruitment services, from which the Group obtains the major part of its revenue is expected to be unpredictable. Our contract business remains focused in the public sector and has strengthened its position in the private sector. However speculations in the property market could have material adverse effect on profitability and cash flows of the business. The Group is using business models that evolve to operate in more innovative ways.The Group seeks to maximise this potential by understanding its position in the market, which will ultimately help turn further challenges into potential opportunities.

Macro economic factors

Persistent slow growth in the global economy has effects that trigger reduced output, and with it, demand and investment. A return of financial turmoil, impairing confidence globally in the next twelve months could hamper job creation in our business areas. The Board sees opportunities for development and will continue to invest in areas where growth can be delivered at acceptable levels of profitability, increasing cash generation and growing Group revenue. The Group is geographically diversified, spanning over different countries which reduces the reliance on the success of any particular market.

 

Regulatory position

The increase in regulatory scrutiny and demands on compliance are having an effect on hiring. The Group is aware of continuing challenges as procurement practice evolves, but remains committed to being fully compliant in each of the regions in which it operates. In order to reduce the legal and compliance risks, fee earners and support staff receive regular training and updates on changes in legal and compliance requirements.

 

Information Technology

The Group is highly dependent on certain technology systems and the infrastructure on which they operate in order to maintain its client and candidate database. These systems rely on specific suppliers who provide the technology infrastructure and disaster recovery solutions. The performance of these suppliers is continually monitored to ensure that the services are available and maintained. The Group is aware of the increasing potential challenges to data integrity and security from both internal and external sources. Therefore, the systems and infrastructure are regularly reviewed and upgraded to ensure appropriate provision of functionality and resilience to support the business as it develops. The Group has appointed a senior operational manager to take specific responsibility for the evaluation of its Information Technology systems to ensure that appropriate and reasonable steps are taken, particularly in respect of cyber-related threats.

 

Foreign Exchange Risk

The Group's international operations account for 21.71% of revenue (2015: 22.16%) and approximately 19.85% of the Group's assets (2015: 15.06%). Consequently the Group has a degree of translation exposure in accounting for overseas operations and expects this to increase in line with the growth of the Group outside the United Kingdom. Currently, the Group's policy is not to hedge against this exposure. However, the Group seeks to minimise this exposure by converting into sterling all cash balances received in foreign currency that are not required for local short term working capital needs. The Group will continue to monitor its policies in this area.

 

Treasury Policies, Liquidity and Financial Risk

Surplus funds are held to support short term working capital requirements. These funds are invested through the use of short term and period deposits, with a policy of maximising fixed interest returns, whilst providing the flexibility required to fund on-going operations and to invest cash safely and profitably. It is not a Group policy to invest in financial derivatives.

 

Although the financial risks to which the Group is exposed are currently considered to be minor, future interest rate, liquidity and foreign currency risks could arise. An additional bout of exchange rate depreciations in emerging market economies and a sharp decline in capital inflows could force a rapid compression of domestic demand. The Board will continually review its existing policies and make changes as required to limit the financial risks of the business.

 

Credit Risk Management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The principal credit risk arises from the Group's trade receivables. Client credit terms and cash collections are managed carefully and cash balances and cash flow forecast are reviewed weekly. Monthly credit evaluation is performed on the financial condition of accounts receivable based on payment history and third party credit references with appropriate provisions being made.

 

Donka Zaneva-Todorinski

Finance Director

 

 

 

 

Report of the Directors for the Year Ended 31 March 2016

 

The Directors submit their report and the audited Group financial statements of Prime People Plc for the year ended 31 March 2016. Prime People Plc is a public listed company, incorporated and domiciled in England and its shares are quoted on the AIM Market.

 

Substantial Shareholders

 

At 22 June 2016, other than the Director's interests shown in the Directors' remuneration report on page 16 the Company had been notified of the following interests disclosed under the Disclosure and Transparency Rules:

 

 

Number of 10p ordinary shares

Percent of issued share capital

 

 

%

 

 

 

Peter Hearn

719,500

5.90

 

 

 

 

The mid market quotation of the Company's shares at close of business on 31 March 2016 was 96.5p. The highest and lowest mid market quotations in the period from 1 April 2015 to 31 March 2016 were 134p and 92.5p.

 

Going concern

 

The Group has two revenue streams permanent and temporary recruiting. The Group has experienced 24.68% revenue growth in 2016 which has been driven by growth in both the permanent and contract businesses. The permanent business, which is largely cash generative, has provided the working capital to support the growth in the contract side.

 

The Directors have prepared cash flow forecasts for a period of at least 12 months from the date of approval of the financial statements. After reviewing these forecasts and having made appropriate enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue operating for the foreseeable future. The Group continues to adopt the going concern basis when preparing the financial statements.

 

Environmental Policy

 

The Group recognises its responsibilities for the environment and gives due consideration to the possible effects of its activities on the environment. As such, our environmental impact comes from the running of our business generating carbon emissions through the consumption of gas and electricity, transport activities and commuting, as well as office based waste such as paper and toners. We do not consider that the Group's activities have a major effect on the environment. However, it is the Group's aim to reduce the environmental impact of its activities and to operate in an environmentally responsible manner. We are, therefore, committed to the following principles to ensure the business operates in an environmentally sensitive manner:

 

· Encouraging the re-use and re-cycling of products and waste from our offices

· Ensuring efficient use of materials and energy

· Purchasing environmentally friendly materials where appropriate

 

Political Donations

 

The Group made no political donations during the year (2015: Nil).

 

 

 

Workplace Pensions

 

In line with the law on workplace pensions the Group continues to operate a defined contribution plan and automatically enrols certain UK employees into NEST pension scheme.

 

In 2016 the Group provided contribution to defined pension schemes on behalf of two of its executive directors, details of which are set out in the Remuneration Report on page 17.

 

Capital Structure

 

Details of the allotted and issued share capital are shown in note 17. The Company has one class of ordinary shares which carry 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.

 

Details of employee share schemes are set out in note 17.

 

Annual General Meeting ("AGM")

 

The AGM will be held on Wednesday 20 July 2016 at 11.00am at 2 Harewood Place, London, W1S 1BX. All shareholders are encouraged to attend. The resolutions to be put forward to the AGM are detailed in the Notice of AGM, which is being circulated separately to all shareholders.

 

Authority to purchase own shares

 

The Directors were given authority at last year's AGM to purchase through the market, up to 10% of the Company's issued share capital, subject to certain restrictions on price. A request for renewal of the authority is included in the resolutions for this year's AGM.

 

During the year the company purchased nil shares (2015: 67,210 shares).

 

Statement as to disclosure of information to auditors

 

The Directors, who were in office on the date of approval of these financial statements have confirmed that, as far as they are aware, there is no relevant audit information of which the auditors are unaware. The Directors have confirmed that they have taken appropriate steps to make themselves aware of any relevant audit information and to establish that it has been communicated to the auditors.

 

Auditor

 

Crowe Clark Whitehill LLP has expressed its willingness to continue in office and a resolution to re‑appoint the firm as Auditor and authorising the Directors to set their remuneration will be proposed at the forthcoming Annual General Meeting.

 

By order of the Board

 

 

 

 

Donka Zaneva- Todorinski

Finance Director

 

 

 

Statement of Directors' Responsibilities

 

The Directors are responsible for preparing the Strategic Report, the Directors' Report, the Directors' Remuneration 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 European Union (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 state of affairs and profit or loss of the Company and 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; and

· prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Group and Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose, with reasonable accuracy at any time, the financial position of the Company and its Group 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 the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website; 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 financial statements may differ from legislation in other jurisdictions.

 

 

 

 

Corporate Governance

 

Statement by the Directors on Corporate Governance

The Board of the Company is committed to achieving high standards of corporate governance, professional integrity and ethics. The Board gives due regard to the 'UK Corporate Governance Code' published by the Financial Reporting Council and the Quoted Alliance (QCA) Corporate Governance Code for small and Mid-Size Quoted Companies. As a company with its securities admitted to trading on AIM, the company is not required to follow the UK Corporate Governance Code, however, it does so as far as is practicable and appropriate for the nature and size of the Group, as further set out below.

 

A statement of the Directors' responsibilities in respect of the financial statements is set out on page 11.

 

The Board has established two committees being the Audit Committee and the Remuneration Committee each of which operates with defined terms of reference.

 

Membership of these committees as at the date of this report, the number of meetings held in 2016 and the attendance record are summarised in the table below:

Directors

Board

Audit Committee

Remuneration Committee

 

 

 

 

Robert Macdonald - Executive Chairman

6/6 (Chair)

N

N

 

 

 

 

Peter Moore - Managing Director

6/6

N

N

 

 

 

 

Donka Zaneva-Todorinski - Finance Director

4/6

N

N

 

Chris Heayberd - Non-Executive Director

 

6/6

 

N

 

N

 

 

 

 

John Lewis - Non-Executive Director

6/6

1/1

1/1 (Chair)

 

 

 

 

Simon Murphy - Non-Executive Director

5/6

1/1(Chair)

1/1

 

 

 

 

Below is a brief description of the role of the Board and its Committees, followed by a statement regarding the Group's system of internal controls.

 

The Board and its Operation

 

The Board of Prime People Plc is the body responsible for corporate governance, establishing policies and objectives, and reviewing the management of the Group's resources.

 

The Board consists of an executive Chairman, Robert Macdonald, two other Executive Directors and three Non-Executive Directors.

 

Chris Heayberd retired from his role as Finance Director on 27 October 2015 and continued to serve the Company as a Non-Executive Director. Mrs Donka Zaneva-Todorinski was appointed as Finance Director and member of the Board with effect of 27 October 2015 in succession to Mr Heayberd.

 

The Non-Executive Directors are John Lewis, Simon Murphy and Chris Heayberd. They receive a fixed fee for their services and their interests in the shares of the Company are set out in the Remuneration Report on page 16.

 

Biographical details for all the Directors are shown on page 57 and 58

 

The Board meets at least five times each year, or more frequently where business needs require, and the Directors receive monthly management accounts detailing the performance of the Group. The Board has a general responsibility for overseeing all day to day matters of the Company with specific responsibility for; reviewing trading performance; resources (including key appointments); finding, setting and monitoring strategy; examining acquisition opportunities; and reporting to shareholders. The non-executive Directors have a responsibility to ensure the strategies proposed by the executive Directors are fully considered and to bring their judgment to bear in this role.

 

To enable the Board to function effectively and Directors to discharge their responsibilities, full and timely access is given to all relevant information. In the case of Board meetings, this consists of a comprehensive set of papers, including monthly business progress reports and discussion documents regarding specific matters.

 

Directors are free to, and regularly make further enquiries where they feel it is necessary and they are able to take independent professional advice as required at the Company's expense. This is in addition to the access which every Director has to the Company secretary.

 

The Board considers itself to be a "small board", and therefore has not set up a separate Nomination Committee. Appointments to the Board of both executive and non-executive Directors are based on approval by the full Board.

 

Any Director appointed during the year is required, under the provisions of the Company's Articles of Association, to retire and seek reappointment by shareholders at the next Annual General Meeting. The Articles also require that one-third of the Directors retire by rotation each year and seek reappointment at the Annual General Meeting.

 

The Directors have resolved that they will retire at least once every three years even though not required by the Company's Articles.

 

The executive Directors abstain from any discussion or voting at full board meetings on Remuneration Committee recommendations where the recommendations have a direct bearing on their own remuneration package.

 

Remuneration of non-executive Directors is determined by the Board. Non-executive Directors abstain from discussions concerning their own remuneration.

 

The Company publishes a full annual report and financial statements which are available on the Prime People website, to shareholders on request and to other parties who have an interest in the Group's performance.

 

All shareholders have the opportunity to put questions at the Company's Annual General Meeting.

 

Audit Committee

 

The Audit Committee comprises the two non-executive Directors of the Company and is chaired by Simon Murphy. During the year the committee met once which was considered sufficient by both committee members to deal with matters referred to it in the year. By invitation, the meetings are also attended by the Finance Director.

 

The Audit Committee's principal tasks are to ensure the integrity of the Company's Financial Reporting process, review the effectiveness of the Group's internal controls including risk management, review the scope of the work of the external Auditor and their independence, consider issues raised by the external Auditor, review audit effectiveness and review the half-yearly and annual accounts focusing in particular on accounting policies and compliance and on areas of management judgement and estimates.

Remuneration Committee

 

The Remuneration Committee comprise the two non-executive Directors of the Company and is chaired by John Lewis.

The committee reviews the Group policy on the Executive Directors' remuneration and terms of employment; makes recommendations on this; and also approves the provision of policies for the incentivisation of senior employees, including share schemes.

The principal terms of reference of the committee are set out in the Remuneration Report on pages 16 to 18. The report also contains full details of Directors' remuneration and a statement of the Company's remuneration policy. The committee meets when required to consider all aspects of the executive Directors' remuneration, drawing on outside advice as necessary.

 

Internal Controls

 

The Directors are responsible for the Group's system of internal control and for reviewing its effectiveness which, by its nature, can only provide reasonable and not absolute assurance against material misstatement or loss.

When undertaking their review the Directors have considered all material controls including operational, compliance and risk management, as well as financial.

The Board has assessed the effectiveness of the Group's internal control systems for the period 1 April 2015 to the date of approval of the financial statements and believes it has the procedures in place to safeguard the Group's assets and to ensure the reliability of information used within the business and for publication.

 

Key elements of the system of internal control are as follows:

 

Group Organisation

The Board of Directors meets up to six times a year and more frequently when required focusing mainly on strategic issues, operational and financial performance. The Directors have in place an organisational structure with clearly defined levels of responsibility and delegation of authority.

 

The Operational Management Board meets quarterly. It acts as a conduit between the Board of Directors and the Group subsidiaries by providing information, advice and guidance to all staff. It has responsibilities for setting up, monitoring and control of the business operations globally.

Annual Business Plan

The Group has a comprehensive budgeting system with an annual budget approved by the Board.

Monthly Forecasting

The Group prepares monthly fee income forecasts by individual businesses which are compared to budget.

 

Financial Reporting

Detailed monthly reports are produced showing a comparison of results against budget, forecast and the prior year with performance monitoring and explanations provided for significant variances. Any significant adverse variances are examined and remedial action taken where necessary.

 

Capital Expenditure

Capital expenditure requests are reviewed by the Board. Appropriate due diligence work will be carried out if a business is to be acquired.

Levels of authority

There are clear levels of authority, delegation and management structure.

 

Risk Management

 

The Directors and operating Company management have a clear responsibility for identifying risks facing each of the businesses and for putting in place procedures to mitigate and monitor risks. Risks are assessed during the annual budget process, which is monitored by the Board, and the ongoing Group strategy process.

 

Whistleblowing Policy

 

The Company is committed to maintaining the highest ethical standards and the personal and professional integrity of its employees, suppliers, contractors and consultants. It encourages all individuals to raise any concerns that they may have about the conduct of others in the business or the way in which the business is run. The aim of the policy is to ensure that, as far as is possible, our employees are able to tell us about any wrong doing at work which they believe has occurred or is likely to occur.

 

Dialogue with shareholders

 

Many of those who continue to hold shares in the Company are, or have been, employed within the business. The original owners of Macdonald & Company Group still hold considerable share interests and retain a strong interest in the company's success and reputation.

 

 

 

 

 

Robert Macdonald

Chairman

 

 

 

Remuneration Report

 

The role of the Remuneration Committee

 

The Remuneration Committee met once this year and comprises John Lewis and Simon Murphy. The Committee is chaired by John Lewis.

The purpose of the Remuneration Committee is to review, on behalf of the Board, the remuneration policy for the Chairman, Executive Directors and other Senior Executives and to determine the level of remuneration, incentives and other benefits, compensation payments and terms of employment of the Executive Directors and other Senior Executives. It seeks to provide a remuneration structure that strongly aligns the interests of management with those of shareholders.

 

Remuneration Policy

 

The main aim of the Committee is to attract, retain and motivate high calibre individuals with a compensation comprising of basic salary, incentives and rewards which are linked to the overall performance of the Group and which are comparable to pay levels in companies of similar size and in similar business sectors.

 

Directors' Service Contracts

 

The Executive Chairman and Managing Director have service contracts which contain a notice period of one year which are terminable by either party giving one years notice. The service contracts also contain restrictive covenants preventing them from competing with the Group for one year following the termination of employment and preventing both Directors from soliciting key employees, clients and candidates of the employing Group and Group companies for 12 months following termination of employment. There are no provisions for liquidated damages on the early termination of any of the Directors' service contracts, nor provisions for mitigating damages.

 

The Finance Director has a service contract which contains a notice period of 3 months which is terminable by either party giving 3 months notice. The service contract also contains restrictive covenants preventing her from competing with the Group for 3 months following the termination of employment and preventing her from soliciting key employees, clients and candidates of the employing Group and Group companies for 3 months following termination of employment. There are no provisions for liquidated damages on the early termination of any of the Directors' service contracts, nor provisions for mitigating damages.

 

Non-Executive Directors' Remuneration and Terms of Services

 

All Non-Executive Directors have letters of appointment which entitle either party to give three months notice. The remuneration of the Non-Executive Directors is determined by the Board. The Non-Executive Directors do not receive any pension or other benefits, other than out of pocket expenses, from the Group, nor do they participate in any bonus schemes.

The remuneration agreed by the Committee for the Executive Directors contains some or all of the following elements: a base salary and benefits, defined pension contributions, an annual bonus reflecting Group and individual performance and share options.

 

Base Salary and Benefits

The Committee establishes salaries and benefits by reference to those prevailing in the employment market generally for Executive Directors of companies of comparable status and market value. Reviews of such base salary and benefits are conducted annually by the committee.

 

Emoluments of Directors

 

The aggregate emoluments of Directors who served during the year are shown in the table below. Emoluments include management salaries, pension contributions, fees as Directors and benefits. Emoluments shown are in respect of each Director's period in office during the year as a Board member of Prime People Plc, and include emoluments from the Company and its subsidiary undertakings.

 

 

Notes

 

Salaries and fees

 

£

Benefits

 

 

£

Pension

 

 

£

2016

Total

 

£

2015

Total

 

£

Executive Chairman

 

 

 

 

 

 

 

 

 

 

 

 

 

Robert Macdonald

3

114,391

4,620

21,000

140,011

118,635

 

 

 

 

 

 

 

Executive Directors

 

 

 

 

 

 

 

 

 

 

 

 

 

Peter Moore

1 & 3

183,671

10,344

35,000

229,015

230,096

 

 

 

 

 

 

 

Chris Heayberd

4

23,217

3,010

-

26,227

75,707

 

 

 

 

 

 

 

Donka Zaneva-Todorinski

5

33,333

284

-

33,617

-

 

 

 

 

 

 

 

Non-Executive Directors

 

 

 

 

 

 

 

 

 

 

 

John Lewis

 

19,435

-

-

19,435

19,389

 

 

 

 

 

 

 

Simon Murphy

 

19,435

-

-

19,435

58,739

 

 

 

 

 

 

 

Chris Heayberd

4

14,038

-

-

14,038

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

407,520

18,258

56,000

481,778

502,566

 

Notes to the emoluments:

1. Peter Moore is the highest paid Director,

2. Benefits include subscriptions, medical and travel allowance,

3. Executive Directors' Pension Contribution to two executive directors was approved by the Board on 27 May 2015,

4. Chris Heayberd retired as Finance Director and moved to a Non-Executive role on 27 October 2015. The fees noted above cover the period to 1 November 2015 to 31 March 2016,

5. Donka Zaneva-Todorinski was appointed Finance Director and member of the Board on 27 October 2015. The fees shown in 2016 reflect the amount paid to her from the date of appointment to 31 March 2016.

 

Directors' interests in shares

 

Directors' beneficial interest in the shares of the Company at 31 March 2016 was as follows:

 

 

 

 

 

Ordinary

shares of 10p

each held at

31 March

2016

Percentage of issued share capital at

31 March

2016

Ordinary shares of 10p each held at

31 March 2015

Percentage of

issued share

capital at

31 March

2015

 

 

 

 

 

Robert Macdonald

2,780,000

22.62%

2,780,000

22.80%

Peter Moore

2,907,721

23.66%

2,907,721

23.85%

Donka Zaneva-Todorinski

1,250

0.01%

-

0.00%

John Lewis

1,019,000

8.29%

1,088,500

8.93%

Simon Murphy

330,000

2.70%

330,000

2.70%

Chris Heayberd

24,000

0.20%

24,000

0.20%

 

Share option schemes

 

As at 31 March 2016 Directors' options on ordinary shares of 10p each granted under the Prime People Enterprise Management Incentive Scheme, were as follows:

 

Director

Year of grant

Exercise price

Number of options

31 March 2015

Granted

Cancelled

Exercised

Number of

options

31 March 2016

 

Simon Murphy

 

2005/6

 

57.7p

 

84,234

 

-

(84,234)

 

-

 

-

Donka Zaneva-Todorinski

 

2013/14

 

0.00p

 

2,500

 

-

 

-

 

(1,250)

 

1,250

 

2014/15

10.00p

30,000

-

-

-

30,000

 

2015/16

58.00p

-

10,000

-

-

10,000

 

Directors' Insurance

 

Directors' and officers' liability insurance is provided at the cost of the Group for all Directors and Officers.

 

Annual Resolution

 

Shareholders will be given the opportunity to approve the Remuneration report at the Annual General Meeting.

 

 

John Lewis

Chairman of the Remuneration Committee

 

 

 

Independent Auditor's Report

 

Independent Auditor's Report to the Members of Prime People Plc

We have audited the financial statements of Prime People Plc for the year ended 31 March 2016 which comprise Group and Parent Company Statements of Financial Position, the Group Statement of Comprehensive Income, the Group and Company Cash Flow Statements, the Group and Parent Company Statements of Changes in Equity and the related notes.

The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

 

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of Directors and Auditor

As explained more fully in the Statement of Directors' Responsibilities, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the Financial Statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements.

In addition, we read all the financial and non-financial information in the Strategic Report and the Directors' Report, Chairman's Statement, Financial Review, Corporate Governance and Remuneration Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

 

Opinion on Financial Statements

In our opinion:

· the financial statements give a true and fair view of the state of the Group's and of the parent Company's affairs as at 31 March 2016 and of the Group's and parent Company's profit for the year then ended;

· have been properly prepared in accordance with IFRSs as adopted by the European Union;

· the parent Company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union as applied in accordance with the provisions of the Companies Act 2006; and

· the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other Matter Prescribed by the Companies Act 2006

In our opinion the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are Required to Report by Exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to if, in our opinion:

· adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not been received from branches not visited by us; or

· the parent Company financial statements are not in agreement with the accounting records and returns; or

· certain disclosures of Directors' remuneration specified by law are not made; or

· we have not received all the information and explanations we require for our audit.

 

 

 

Stacy Eden

Senior Statutory Auditor

For and on behalf of

Crowe Clark Whitehill LLP

Statutory Auditor

St Bride's House

10 Salisbury Square

London

EC4Y 8EH

 

 

 

 

Consolidated Statement of Comprehensive Income

For the year ended 31 March 2016

 

 

 

Note

2016

2015

 

 

 

£'000

£'000

 

 

 

 

 

Revenue

2, 3

 

 20,755

16,647

Cost of sales

 

 

 

(8,475)

(6,425)

 

Net fee income

 

 

 

 

 

12,280

 

10,222

Administrative expenses

 

 

 

(10,131)

(8,792)

 

Operating profit

 

 

4

 

 

 

 

2,149

 

1,430

 

Finance income

 

 

-

6

 

 

 

 

 

 

Profit before taxation

 

 

 

 

2,149

 

 

1,436

Income tax expense

7

 

 

(459)

(310)

 

Profit for the year

 

Other comprehensive income

Items that will or may be reclassified

to profit or loss:

 

Exchange profit/(loss) on translating foreign operations

 

 

 

 

 

1,690

 

 

 

21

 

1,126

 

 

 

 

130

 

Other Comprehensive income

for the year, net of tax

 

 

 

 

 

21

 

 

130

 

Total comprehensive income for the year

 

 

 

 

1,711

 

 

1,256

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

Equity shareholders of the parent

 

 

1,711

1,256

 

 

 

 

 

 

 

 

 

 

 

Earnings per share

9

 

 

 

Basic earnings per share

 

 

13.84p

9.28p

Diluted earnings per share

 

 

13.52p

9.01p

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The above results relate to continuing operations

 

 

 

 

Consolidated Statement of Changes in Equity

For the year ended 31 March 2016

 

 

 

Called up

share capital

Capital

Redemp-

tion

reserve

Treasury

shares

Share

premium

account

Merger

reserve

Share

option

reserve

Trans-

lation

reserve

Retained

Earnings

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

 

 

 

At 1 April 2014

 1,207

9

 (143)

  7,109

173

 120

312

  5,636

  14,423

 

 

 

 

 

 

 

 

 

 

Profit for the year

 

 -

 

-

 

-

-

 

-

 

 -

 

-

  1,126

  1,126

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

-

  -

  -

  -

  -

  -

 130

 -

  130

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital reduction

 

 -

 

-

  -

(1,800)

 

-

 

-

 

-

 

 -

 

 (1,800)

 

 

 

 

 

 

 

 

 

 

Adjustment in respect of share schemes

 

 

-

 

 

-

 

 

-

 

 

-

 

 

 -

92

 

-

  38

  130

 

 

 

 

 

 

 

 

 

 

Issues of ordinary shares

  12

  -

  -

  48

  -

  -

  -

  -

60

 

 

 

 

 

 

 

 

 

 

Shares issued from treasury

 -

  -

42

13

  -

  -

  -

  -

55

 

 

 

 

 

 

 

 

 

 

Shares purchased for treasury

   -

  -

 (62)

  -

  -

  -

   -

  -

 

 

(62)

 

 

 

 

 

 

 

 

 

Adjustmen on share disposal

 

-

 

-

 

142

 

-

 

-

 

-

 

-

(142)

 

-

 

 

 

 

 

 

 

 

 

 

Dividend

 

-

-

-

-

-

-

-

(588)

(588)

 

At 31 March 2015

 

 

 

 1,219

 

 

9

 

 

(21)

 

 

5,370

 

 

173

 

 

212

 

 442

 

 

6,070

 

13,474

 

 

 

 

 

 

 

 

 

 

Profit for the year

 

-

 

-

-

-

 

-

 

-

 

-

 

1,690

 

1,690

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

-

 

-

-

 

-

 

-

 

 

-

 

  21

 

  -

 

 

21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustment in respect of share schemes

 

 

-

 

 

-

 

 

-

 

 

-

 

  -

 

  88

 

 

-

 

 

78

 

 

166

 

 

 

 

 

 

 

 

 

 

Issues of ordinary shares

 

10

 

-

 

-

 

1

 

-

 

-

 

-

 

-

 

11

 

 

 

 

 

 

 

 

 

 

Dividend

 

-

-

-

-

-

-

-

(1,946)

(1,946)

 

 

 

 

 

 

 

 

 

 

At 31 March 2016

 

 

1,229

9

 

(21)

 

5,371

 

173

 

300

 

463

 

5,892

 

13,416

 

 

 

 

 

 

 

 

 

 

           

 

 

 

 

Consolidated Statement of Financial Position

As at 31 March 2016

 

 

 

 

2016

 

2015

 

Note

£'000

 

£'000

 

 

 

 

 

Assets

 

 

 

 

Non - current assets

 

 

 

 

Goodwill

11

9,769

 

9,769

Property, plant and equipment

 

10

229

 

316

 

 

 

 

 

 

 

9,998

 

10,085

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

Trade and other receivables

13

4,939

 

4,538

Cash at bank and in hand

21

953

 

1,009

 

 

 

 

 

 

 

 

5,892

 

5,547

 

 

 

 

 

Total assets

 

 

15,890

 

15,632

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

Current liabilities

 

 

 

 

Trade and other payables

15

2,216

 

1,958

Current tax liabilities

 

 

249

 

184

 

 

 

 

 

 

 

 

2,465

 

2,142

 

 

 

 

 

Non-current liabilities

 

 

 

 

Deferred tax liabilities

 

16

9

 

16

 

 

 

 

 

 

 

9

 

 

16

 

 

 

 

 

Total liabilities

 

 

2,474

 

2,158

 

 

 

 

 

Net assets

 

13,416

 

13,474

 

 

 

 

 

 

 

 

 

 

Consolidated Statement of Financial Position

As at 31 March 2016

 

 

 

2016

2015

 

 

Note

£'000

 

£'000

 

 

 

 

 

 

Capital and reserves attributable to the

Company's equity holders

Called up share capital

 

17

1,229

 

1,219

Capital redemption reserve fund

 

18

9

 

9

Treasury shares

 

18

(21)

 

(21)

Share premium account

 

18

5,371

 

5,370

Merger reserve

 

18

173

 

173

Share option reserve

 

18

300

 

212

Translation reserve

 

18

463

 

442

Retained earnings

 

18

5,892

 

6,070

 

 

 

 

 

 

 

 

 

 

 

 

Total equity

 

 

13,416

 

13,474

 

 

 

 

 

 

 

 

 

The financial statements on pages 21 to 55 were approved by the Board of Directors and authorised for issue on 22 June 2016 and are signed on its behalf by:

 

 

 

 

R J G Macdonald D Zaneva-Todorinski

 

 

 

Company Statement of Financial Position

As at 31 March 2016

 

 

 

 

2016

 

2015

 

Note

£'000

 

£'000

 

 

 

 

 

Assets

 

 

 

 

Non-current assets

 

 

 

 

Investment in subsidiaries

12

11,176

 

10,876

Deferred tax asset

 

16

-

 

1

 

 

 

 

 

 

 

 

11,176

 

10,877

 

 

 

 

 

Current assets

 

 

 

 

Trade and other receivables

13

14

 

499

Cash and cash equivalents

 

21

633

 

446

 

 

 

 

 

 

 

 

647

 

945

 

 

 

 

 

Total assets

 

 

11,823

 

11,822

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

Current liabilities

 

 

 

 

Other payables

 

15

959

 

213

 

 

 

 

 

Total liabilities

 

 

959

 

213

 

 

 

 

 

Net assets

 

 

10,864

 

11,609

 

 

 

 

 

 

 

 

 

 

Capital and reserves attributable to the

Company's equity holders

Called up share capital

17

1,229

 

1,219

Capital redemption reserve fund

18

9

 

9

Treasury shares

18

(21)

 

(21)

Share premium account

18

5,371

 

5,370

Merger reserve

18

173

 

173

Share option reserve

18

300

 

15

Retained earnings

 

18

3,803

 

4,844

 

 

 

 

 

Total equity

 

 

10,864

 

11,609

 

 

 

 

 

 

 

The financial statements of Prime People Plc, Company Number 1729887 were approved by the Board and authorised for issue on 22 June 2016 and are signed on its behalf by:

 

 

 

 

R J G Macdonald D Zaneva-Todorinski

 

 

 

Company Statement of Changes in Equity

For the year ended 31 March 2016

 

Company

Called up

share

capital

Capital

Redemp-

tion

reserve

Treasury

shares

Share

premium

account

Merger reserve

Share

option

reserve

Retained

earnings

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

 

At 1 April 2014

1,207

9

(143)

7,109

173

32

5,018

13,405

 

 

 

 

 

 

 

 

 

Total comprehensive income for the year

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

539

 

 

 

539

 

 

 

 

 

 

 

 

 

Issue of ordinary shares

 

12

 

-

 

42

 

48

 

-

 

-

 

-

 

102

 

 

 

 

 

 

 

 

 

Capital reduction

 

-

-

 

-

 

(1,800)

 

-

 

-

 

-

(1,800)

 

 

 

 

 

 

 

 

 

Adjustment in respect of share options

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(17)

 

 

17

 

 

-

 

 

 

 

 

 

 

 

 

Shares issued from treasury

 

-

 

-

 

-

 

13

 

-

 

-

 

-

 

13

 

 

 

 

 

 

 

 

 

Shares purchased for treasury

 

 

-

 

-

 

 

(62)

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(62)

 

 

 

 

 

 

 

 

 

Adjustment on share disposal

 

-

 

-

 

142

 

-

 

-

 

-

(142)

 

-

 

 

 

 

 

 

 

 

 

Dividend

 

-

-

-

-

-

-

(588)

(588)

At 31 March 2015

 

1,219

9

(21)

5,370

173

15

4,844

11,609

 

 

 

 

 

 

 

 

 

Total comprehensive income for the year

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

  890

 

 

  890

 

 

 

 

 

 

 

 

 

Issue of ordinary shares

 

10

 

-

 

-

 

1

 

-

 

-

 

-

 

11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustment in respect of share options

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(15)

 

 

15

 

 

-

Investment in Subsidiaries

 

 

 

 

 

 

300

 

 

300

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend

 

-

-

-

-

-

-

(1,946)

(1,946)

 

 

 

 

 

 

 

 

 

At 31 March 2016

 

1,229

 

9

 

(21)

 

5,371

 

173

 

300

 

3,803

 

10,864

 

 

 

 

 

 

 

 

 

 

 

 

 

Group and Company Cash Flow Statement

For the year ended 31 March 2016

 

 

Group

Company

 

2016

2015

2016

2015

 

Note

£'000

£'000

£'000

£'000

 

 

 

 

 

 

Cash generated from (used in) underlying operations

 

20

 

2,369

 

685

 

1,278

 

(436)

 

Income tax paid

 

(411)

(276)

(6)

(10)

 

 

 

 

 

 

 

 

 

 

 

 

Net cash from/(used by) operating activities

 

 

 

1,958

 

409

 

1,272

 

(446)

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Net interest received

 

-

6

-

6

Net purchase of property, plant and equipment

 

 

(97)

 

(156)

 

-

 

-

Dividend received

 

-

-

850

550

 

 

 

 

 

 

 

 

 

 

 

 

Net cash (used in)/from investing activities

 

 

 

(97)

 

 

(150)

 

 

850

 

556

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Capital reduction

 

-

(1,800)

-

(1,800)

Issue of ordinary share capital

 

11

72

11

72

Shares issued from treasury

 

-

42

-

42

Shares purchased for treasury

 

-

(62)

-

(62)

Dividend paid to shareholders

 

(1,946)

(588)

(1,946)

(588)

 

Net cash used in financing activities

 

 

(1,935)

 

(2,336)

 

(1,935)

 

(2,336)

 

Net (decrease)/ increase in cash and cash equivalents

 

 

 

(74)

 

 

(2,077)

 

187

 

(2,226)

Cash and cash equivalents at beginning of the year

 

 

1,009

 

2,962

 

446

 

2,672

 

Effect of foreign exchange rate changes

 

 

 

18

 

 

130

 

 

-

 

-

 

 

 

 

 

 

 

Cash and cash equivalents at the end of the year

 

 

21

 

953

 

1,009

 

633

 

446

 

 

 

 

 

 

 

 

 

Notes to the Financial Statements

For the year ended 31 March 2016

 

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 1729887.

 

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 amount of profit after tax and before dividends dealt with in the financial statements of the parent is £890,249 (2015: profit £537,595). 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 also 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 so as to include any items at fair value, as required by accounting standards.

 

The consolidated financial statements for the year ended 31 March 2016 (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 by the Group in its consolidated financial statements as at and for the year ended 31 March 2016 and are described below.

 

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:

 

Standards

· IFRS 14 Regulatory Deferral Accounts (Issued January 2014, effective date 1 January 2016)

· IFRS 15 Revenue from Contracts with Customers (Issued May 2014, effective date 1 January 2018)

· IFRS 9 Financial Instruments (Issued July 2014, effective date 1 January 2018)

· IFRS 16 Leases (Issued January 2016, effective date 1 January 2019)

 

Amendments (Effective date for all amendments listed is 1 January 2016)

· Amendments to IFRS 10, IFRS 12 and IAS 28: Investment Entities - Applying the Consolidation Exception (Issued December 2014)

 

Amendments (Effective date for all amendments listed is 1 January 2017)

· Amendments to IAS 12: Recognition of Deferred Tax Assets for Unrealised Losses (Issued January 2016)

· Amendments to IAS 7: Disclosure Initiative (Issued January 2016)

 

· Clarifications to IFRS 15 Revenue from Contracts with Customers (Issued April 2016, effective date 1 January 2018)

 

International Accounting Standards (IAS/IFRS) and Amendments (and EU adopted) but not yet effective

· Amendments to IAS 1: Disclosure Initiative (Issued December 2014)

· Amendment to IAS 27: Equity Method in Separate Financial Statements (Issued August 2014)

· Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortisation (Issued May 2014)

· Amendments to IFRS 11: Accounting for Acquisitions of Interests in Joint Operations (Issued May 2014)

· Amendments to IAS 16 and IAS 41: Bearer Plants (Issued June 2014)

 

The directors do not expect the adoption of the Standards and Interpretations listed above will have a material impact on the financial statements of the Group in future periods, except for disclosure of IFRS 15 that may have an impact on revenue recognition and related disclosures. Beyond the information above it is not practicable to provide a reasonable estimate of the impact of IFRS 15 until a detailed review has been completed.

 

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;

 

- Revenue from permanent placements, which is based on a percentage of the candidate's remuneration package and is derived from both retained assignments (income recognised on completion of defined stages of work) and non-retained assignments (income recognised at the date an offer is accepted by a candidate, a start date has been agreed but employment has not yet commenced). The latter includes revenue anticipated but not invoiced at the balance sheet date, which is correspondingly accrued on the balance sheet within prepayments and accrued income. A provision is made against accrued income based on past historical experience for possible cancellations of placements prior to, or shortly after, the commencement of employment; and

 

- Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.

 

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, the margin earned on the placement of contract candidates and the margin on advertising income.

 

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/associate 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.

 

(ii) Computer Software

 

Computer software acquired by the Group is stated at cost. These costs are amortised to write the cost off in equal annual instalments over three years.

 

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:

 

· Leasehold improvements over the expected period of the lease.

· 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 as income.

 

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, using the liability method, 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 of 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 into a lease is spread evenly over the lease term.

 

j) Pension Costs

 

The Group operates defined contribution pension scheme. The Group adopts the minimum legally required employer contribution rate of 1% of qualifying earnings and up to the maximum earning threshold for automatic enrolment for 2015-16, 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 date of each month.

 

k) Segmental Reporting

 

IFRS8 requires operating segments to be identified on the basis of 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. Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are initially measured at fair value and subsequently at amortised cost using the effective interest rate method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

 

Financial assets are assessed for impairment at each balance sheet date, and are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.

 

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of 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. If in a subsequent period the amount of the impairment loss decreases and the decreases can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit and loss to the extent that the carrying amount of the financial asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

 

Cash and cash equivalents includes 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 into. Financial liabilities are subsequently measured at

amortised cost. The Group's financial liabilities comprise trade payables, borrowings, 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.

 

In particular, 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 formally accepts an offer of employment, a start date has been agreed, but employment has not commenced. A 'fall-through' provision is made by management, based on historical experience, for the proportion of those placements where the offer of employment is not taken up. Management have reviewed the past assumptions made with respect to the 'fall-through' provisions and consider that they remain reasonable. The fall through provision is estimated at 20.02% of those offers where employment has yet to commence (2015: 16.5%). The Directors consider that a change in the range of possible outcomes, or sensitivity, would not have a material impact on the business.

 

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, taking into account 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

 

 

 

Revenue

Net fee income

 

 

2016

2015

2016

2015

 

 

£'000

£'000

£'000

£'000

 

 

 

 

 

UK

 

 

16,249

12,957

7,774

6,532

Asia

 

 

3,626

2,992

3,626

2,992

Rest of World

 

880

698

880

698

 

 

 

 

20,755

 

16,647

 

12,280

 

10,222

 

 

 

 

 

 

 

        

 

 

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

 

2016

2015

2016

2015

 

£'000

£'000

£'000

£'000

 

 

 

 

 

Permanent

 

 

 

 

-UK

-Asia

-Rest of World

 

6,653

3,626

880

 

5,760

2,992

698

6,645

3,626

880

5,747

2,992

698

Contract (UK)

9,596

7,197

1,129

785

 

Total

 

20,755

 

16,647

 

12,280

 

10,222

 

 

 

 

 

 

 

c) Profit before Taxation by Geographical Region

 

 

2016

 

2015

 

£'000

 

£'000

 

 

 

 

UK

1,527

 

993

 

 

 

 

Asia

460

 

370

 

 

 

 

Rest of World

162

 

67

 

 

 

 

Operating Profit

2,149

 

1,430

 

Net finance income

 

-

 

 

6

 

 

 

 

 

Profit before taxation

 

2,149

 

 

1,436

 

 

 

 

 

 

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 are provided.

Segment operating profit is the profit earned by each operating unit and includes inter segment revenues totalling £0.71m (2015 £0.64m) for the UK, and charges of £0.60m (2015 £0.53m) for Asia and £0.11m (2015 £0.11m) for the rest of the world.

 

d) Segment Assets and Liabilities by Geographical Region

 

 

 

Total non-current assets

Total liabilities

 

 

2016

2015

2016

2015

 

 

£'000

£'000

£'000

£'000

 

 

 

 

 

 

UK

 

 

9,962

10,023

1,441

1,309

Asia

 

 

27

50

910

687

Rest of World

 

 

9

12

121

162

 

Total

 

 

9,998

 

10,085

 

2,472

 

2,158

 

 

 

 

 

 

 

The analysis above is of the carrying amount of reportable segment assets, liabilities and non-current assets. Segment assets and liabilities include items directly attributable to a segment and include income tax assets and liabilities. Non-current asset include property, plant and equipment and computer software.

 

 

4 Profit on ordinary activities before taxation

 

 

2016

2015

 

£'000

£'000

 

 

 

Profit for the year is arrived at after charging:

 

 

 

Depreciation - owned assets

188

170

Operating lease rentals - land and buildings

487

471

- other operating leases

-

-

Loss/(profit) on disposal of fixed assets

-

1

Exchange rate loss

33

1

The analysis of auditors remuneration is as follows:

 

 

Audit of company

Audit of subsidiaries

21

23

12

31

Total audit fees

44

43

Tax compliance services (i.e. related to assistance with corporate tax returns)

Advisory Services (related to FRS102 transition)

-

4

2

-

 

 

 

 

Total fees

 

48

 

45

 

 

5 Directors' emoluments

 

 

2016

2015

 

£'000

£'000

 

Emoluments for qualifying services

 

482

 

503

 

 

 

 

482

503

 

 

 

 

 

 

 

Highest paid Director:

 

 

Emoluments for qualifying services

229

230

 

 

 

 

 

 

 

 

Details of Directors' emoluments and interests, which form part of these financial statements, are provided in the Director's Remuneration report on pages 16 to 18.

 

6 Employees

 

Group

2016

2015

 

Number

Number

The average monthly number of employees of the Group during the year, including Directors, was as follows:

 

 

 

 

 

Consultants

91

84

Management and administration

26

25

Temporary staff

 

7

3

 

 

 

 

 

124

112

 

 

 

 

 

 

Company

2016

2015

 

Number

Number

The average monthly number of employees of the Company during the year, including Directors, was as follows:

 

 

 

Management

5

 

5

 

 

 

 

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

 

Group

2016

2015

 

£'000

£'000

 

 

 

Wages and salaries

6,984

5,744

Social security costs

598

500

Pension contributions

73

12

Share option charge

166

130

 

 

 

 

 

 

 

7,821

6,386

 

Remuneration of key management

2016

2015

 

£'000

£'000

 

 

 

Short term employee benefits (excluding social security costs)

1,090

765

Share based payments

35

24

 

 

 

 

 

 

 

1,125

789

 

Key management includes executive Directors and senior divisional managers. 

 

7 Taxation on Profits on Ordinary Activities

 

 

2016

2015

 

£'000

£'000

 

a) Analysis of tax charge in the year

 

 

 

Current tax

 

 

UK Corporation tax

375

278

UK tax under/(over) provided in previous years

Foreign tax

-

87

(21)

52

Foreign tax over provision in prior years

(4)

-

 

 

 

 

 

 

Total current tax

458

309

 

Deferred tax

 

 

Origination and reversal of temporary differences

1

1

 

 

 

 

 

 

Total charge on profit for the year

 

459

310

 

 

 

 

 

 

UK corporation tax is calculated at 20% (2015: 21%) 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:

 

 

2016

£'000

2015

£'000

 

 

 

Profit before taxation

2,149

1,436

 

 

 

 

 

 

 

Tax at UK corporation tax rate of 20% (2015: 21%) on profit on ordinary activities

 

430

 

302

Effects of:

 

 

Expenses not deductible for tax purposes

8

16

Capital allowances for the period less than depreciation

11

2

Tax losses not utilised/utilised

21

19

Tax rate differences

(19)

(20)

Temporary differences recognised

19

11

Overprovision in prior years

(4)

(21)

 

 

 

Total current tax

466

309

 

Deferred Tax

 

 

Origination and reversal of temporary differences

(7)

1

 

 

 

 

Tax charge for the year

 

 

459

310

 

 

 

 

 

 

 

 

8 Dividends

 

2016

2015

 

£'000

£'000

 

 

 

 

Special second interim dividend for 2015: 4.00p per share

Final dividend for 2015: 3.09p per share (2014: 3.09p per share)

 

488

376

-

376

Interim dividend for 2016: 1.75p per share (2015: 1.75p per share)

Special dividend for 2016: 4.00p per share

Second Interim dividend for 2016: 3.09p per share

212

490

380

212

-

-

 

 

 

 

1,946

588

 

A special second interim dividend of 4p was paid subsequent to shareholders on the register at the close of business on 27 March 2015. The special second interim dividend was approved by the Board on 17 March 2015 and was paid on 2 April 2015.

 

A final dividend of 3.09p for 2015 was proposed, the dividend was paid on 26 June 2015 to shareholders on the register on 12 June 2015.

 

An interim dividend of 1.75p (2015: 1.75p) was paid on 27 November 2015 to shareholders on the register at the close of business on 20 November 2015. The interim dividend was approved by the Board on 7 November 2015.

 

A special dividend of 4.00p was paid on 27 November 2015 to shareholders on the register on 20 November 2015.

 

A second interim dividend of 3.09p paid on 25 March 2016 to shareholders on the register on 18 March 2016.

 

 

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 existing options.

 

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

 

 

2016

2015

 

£'000

£'000

 

 

 

Profit for the year and earnings used in basic and diluted earnings per share

1,690 

 

1,126

 

 

 

 

 

 

 

 

 

 

Number

Number

 

Weighted average number of shares used for basic earnings per share

 

12,211,950

 

12,131,633

Dilutive effect of share options

 

290,730

362,117

 

 

 

Diluted weighted average number of shares used for diluted earnings per share

 

12,502,680

 

12,493,750

 

 

 

 

 

 

 

Pence

Pence

 

 

 

Basic earnings per share

13.84p

9.28p

Diluted earnings per share

13.52p

9.01p

 

 

 

 

 

 

 

10 Property, Plant and Equipment

 

 

Fixtures, fittings and equipment

 

 

Motor vehicles

 

 

Total

Group

£'000

 

£'000

 

£'000

 

 

 

 

 

 

Cost

 

 

 

 

 

At 1 April 2014

876

 

20

 

896

Additions

168

 

-

 

168

Disposals

-

 

(20)

 

(20)

Exchange difference

13

 

-

 

13

 

 

 

 

 

 

At 1 April 2015

1,057

 

-

 

1,057

Additions

97

 

-

 

97

Disposals

(44)

 

-

 

(44)

Exchange difference

8

 

-

 

8

 

 

 

 

 

 

At 31 March 2016

 

1,118

 

-

 

1,118

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

 

 

 

At 1 April 2014

562

 

6

 

568

Provision for the year

169

 

1

 

170

Disposals

-

 

(7)

 

(7)

Exchange rate loss

10

 

-

 

10

 

 

 

 

 

 

At 1 April 2015

741

 

-

 

741

Provision for the year

188

 

-

 

188

Disposals

(44)

 

-

 

(44)

Exchange rate gain

4

 

-

 

4

 

 

 

 

 

 

At 31 March 2016

889

 

-

 

889

 

 

 

 

 

 

 

 

 

 

 

 

 

Net book value

 

 

 

 

 

At 31 March 2016

229

 

 

-

 

229

 

 

 

 

 

 

 

At 31 March 2015

 

 

316

 

 

-

 

 

 

316

 

 

 

 

 

 

 

At 31 March 2014

 

314

 

14

 

328

 

 

 

 

 

 

 

11 Goodwill

 

 

£'000

 

Cost

 

At 1 April 2014, 1 April 2015 and 31 March 2016

9,769

 

 

 

   

 

The total carrying value of goodwill is £9.77m, which relates to the acquisition of the Macdonald & Company Group of companies in January 2006, has been tested for impairment with the recoverable amount being determined from value in use calculations.

 

The recoverable amount is determined on a value in use basis utilising the value of cash flow projections. The first year of the projections is based on detailed budgets prepared and approved by management. Subsequent years are based on extrapolations.

 

The key assumptions in calculating the value in use is that the Group will meet its budgeted growth in net fee income of 11.89% in the year to 31 March 2017. After the end of the period covered by the budget a 5% growth rate is applied. This growth rate represents the average rate of growth in the markets in which the Group operates. A discount rate of 9% has been applied which represents the weighted average costs of capital for the Group. In the last two years, operating profit achieved exceeded budgeted operated profit by approximately 20.38%.

 

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) is in excess of its carrying amount by £15.28m. A number of potential sensitivities have been considered and these would indicate impairment in the carrying value of goodwill if the discount rate were to be increased to 25.2% or if the operating profit reduced to £1.1m with no future growth or if the growth rate were to be decreased to 15.5%.

 

12 Investments

 

Company

 

 

 

Shares in

subsidiary

undertakings

 

 

£'000

Cost

 

 

 

At 1 April 2014, 1 April 2015 and 31 March 2015

 

10,876

Increase in investment in subsidiaries from share option reserve charge

 

 

 

300

As at 31 March 2016

 

11,176

--

The share option reserve relates to employee share option arrangements provided to employees of the Group subsidiary companies.

 

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

 

Country of Principal incorporation activity

 Macdonals & Company

Group Limited England and Wales Holding Company

Macdonald & Company

Property Limited England and Wales Recruitment

 

Macdonald and Company

Freelance Limited England and Wales Recruitment

 

Macdonald & Company

(Overseas) Limited England and Wales Dormant

 

Macdonald & Company Ltd Hong Kong Recruitment

 

Ru Yi Consulting Limited Hong Kong Dormant

 

Macdonald and Company

Pte Limited Singapore Recruitment

 

Macdonald & Company Pty Ltd Australia Dormant

 

Macdonald & Company

Recruitment Proprietary Ltd South Africa Dormant

 

The Prime Organisation Ltd England and Wales Dormant

 

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. 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

 

2016

2015

 

2016

2015

 

 

£'000

 

£'000

 

£'000

 

£'000

Current

 

 

 

 

 

 

 

 

Trade receivables

 

2,706

 

2,126

 

-

 

-

Allowance for doubtful debts

 

 (40)

 

(102)

 

-

 

-

Other receivables

 

69

 

578

 

-

 

4

Prepayments and accrued income

 

 

2,204

 

1,936

 

14

 

495

 

 

 

 

 

 

 

 

 

 

 

4,939

 

4,538

 

14

 

499

 

 

 

 

 

 

 

 

 

          

 

At 31 March 2016, the average credit period taken on sales of recruitment services was 55 days (2015: 38 days) from the date of invoicing. An allowance of £40,000 (2015: £102,000) 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.

The Group does not provide against receivables solely on the basis of the age of the debt, as experience has demonstrated that this is not a reliable indicator of recoverability. The Group provides fully against all receivables where it has positive evidence that the amount is not recoverable.

 

The ageing of trade receivables at the reporting date was:

 

 

Gross trade receivables

 

Provisions

 

Gross trade receivables

 

Provisions

 

2016

 

2016

 

2015

 

2015

 

£'000

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Not past due

1,607

 

33

 

1,635

 

24

Past due 0-30 days

630

 

-

 

322

 

 -

Past due 30-90 days

Past due more than 90 days

469

-

 

7

-

 

100

69

 

9

69

 

 2,706

 

 40

 

2,126

 

102

 

 

 

 

 

 

 

 

 

 

Movement in allowance for doubtful debts:

 

 

 

2016

 

2015

 

 

£'000

 

£'000

 

 

 

 

 

1 April 2015

 

102

 

38

Impairment losses recognised

 

40

 

100

Amounts written off as uncollectable

Amounts paid by the client

 

(97)

(5)

 

(11)

-

Impairment losses reversed

 

-

 

(25)

 

31 March 2016

 

 

40

 

 

102

 

 

 

 

 

 

 

 

 

 

 

 

14 Financial Instruments

 

 

 

Group

 

 

Company

 

 

2016

 

2015

 

2016

 

2015

 

Note

£'000

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

Financial assets

 

 

 

 

 

 

 

 

Trade and other receivables

13

4,087

 

4,538

 

5

 

499

Cash and cash equivalents

 

 

953

 

1,009

 

633

 

446

 

 

 

 

 

 

 

 

 

 

 

5,040

 

5,547

 

638

 

945

 

 

 

 

 

 

 

 

 

 

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

 

 

2016

 

2015

 

2016

 

2015

 

Note

£'000

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

Financial liabilities

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

Trade and other payables

 

15

452

 

478

 

2

 

13

 

 

 

 

 

 

 

 

 

 

 

452

 

478

 

2

 

13

 

The Group has not renewed its borrowing facilities with Barclays Bank Plc as the Board consider that the net cash within the Group is sufficient to meet existing and foreseeable liabilities as they fall due.

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

 

 

 

2016

 

2015

 

2016

 

2015

 

 

£'000

 

£'000

 

£'000

 

£'000

Current

 

 

 

 

 

 

 

 

Trade payables

 

267

 

239

 

1

 

12

Other payables

 

185

 

239

 

-

 

1

Amount owed to subsidiary undertakings

 

-

 

-

 

 

923

 

145

Taxation and social security

 

664

 

567

 

9

 

8

Accruals and deferred income

 

 

1,100

 

913

 

26

 

47

 

 

 

 

 

 

 

 

 

 

 

2,216

 

1,958

 

959

 

213

 

 

 

 

 

 

 

 

 

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 Liability

 

Group

 

 

Accelerated depreciation

Total

 

 

 

 

£'000

 

£'000

 

 

 

 

 

 

 

At 1 April 2014

 

 

 

15

 

15

Charge to income

 

 

 

 

 

1

 

1

 

 

 

 

 

 

 

At 31 March 2015

 

 

 

16

 

16

Credit to income

 

 

 

 

(7)

 

(7)

 

 

 

 

 

 

 

At 31 March 2016

 

 

 

 

9

 

9

 

 

 

 

 

 

 

 

 

 

Company (Asset)

Accelerated depreciation

Total

 

 

£'000

 

£'000

 

 

 

 

 

At 1 April 2013, 1 April 2014 and 31 March 2015

 

1

 

1

 

 

 

 

 

Charge to income

 

(1)

 

(1)

 

 

At March 2016

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

17 Share Capital

 

 

2016

 

2015

 

Number

 

£'000

 

Number

 

£'000

 

 

 

 

 

 

 

 

ALLOTTED CALLED UP

 

 

 

 

 

 

Ordinary shares of 10p each

 

 

 

 

 

 

 

Fully paid as at 1 April 2015

 12,193,949

 

1,219

 

 12,066,500

 

1,207

Fully paid shares issued

Unpaid shares issued

3,000

93,250

 

1

9

 

127,449

-

 

12

-

 

At 31 March 2016

 

 

12,290,199

 

 

1,229

 

 

 12,193,949

 

1,219

 

 

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 14 July 2015, 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 £406,465, 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 £406,465 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 £60,970 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 2016 on 20 July 2016.

 

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 makes adjustments to 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 also made purchases of its own shares which are held as Treasury Shares. As part of its strategy of seeking to optimise the Group's debt and equity balance the Group also considers the appropriate level of external borrowing and, as disclosed in Note 14, has taken the decision not to renew its borrowing facilities with Barclays Bank.

 

Employee Share Schemes

 

The Company operates two share options schemes.

 

Enterprise Management Incentive Share Option Scheme

 

At 31 March 2016 the following options had been granted and remained outstanding in respect of the Company's ordinary shares:

 

Year of grant

Exercise Price

Pence

Exercise

Period

Number of options

31 March

2015

Granted

Exercised

Forfeited

Number of Options

31 March 2016

 2005/6

57.50

2007-2015*

84,234

-

-

(84,234) -

 

-

2008/9

20.77

2011-2016*

48,000

-

-

-

 

48,000

 

31.50

2014-2019*

100,000

-

-

-

 

100,000

2009/10

42.00

2013-2018

11,000

-

(3,000)

 

 

8,000

 

 

2011/12

68.00

2014-2019

3,000

-

-

-

 

3,000

2013/14

Nil

Nil

 

2016-2021

2019-2021

104,250

96,250

-

-

 (83,250)

 (10,000)

(2,000)

(5,000)

 

19,000 81,250

2014/15

10.00

10.00

2016-2021

2019-2021

187,500

350,500

-

-

-

-

(3,000)

(10,000)

 

184,500

340,500

 

2014/15

 

10.00

10.00

58.00

58.00

 

2017-2022

2020-2022

2017-2022

2020-2022

 

 

 

20,000

30,000

52,000

103,000

 

-

-

-

-

 

-

-

-

-

 

 

20,000

30,000

52,000

103,000

 

Total 2016

 

 

984,734

 

205,000

 

 

(96,250)

 

(104,234)

 

989,250

 

 

Weighted average exercise price 2016 (pence)

 

15.27p

 

46.29p

 

 

 

1.31p

 

 

0.48p

 

 

 

19.64p

 

Total 2015

 

 

637,734

 

548,000

 

(136,000)

 

(65,000)

 

 

984,734

 

-

Weighted average exercise price 2015 (pence)

 

 

27.86p

 

 

10.00p

 

 

54.84p

 

11.62p

 

 

 

15.27p

 

\* These options have fully vested

 

There were 989,250 options outstanding at 31 March 2016 (2015: 984,734) which had a weighted average price per share of 19.64p (2015: 15.27p). 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 a number of key performance measures of the group, measured at a regional and consolidated level for the financial years 2015 and 2016. 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.

 

 

2016

2015

Option pricing model used

Black-Scholes

Black-Scholes

Weighted average share price at grant date (in pence)

116.00

85.00

Exercise price (in pence)

10 & 58

10

Fair value of options granted during the year

104.81

76.45

Expected volatility (%)

30.0

14.0

Risk-free interest rate (%)

4.0

4.0

Expected life of options (years)

2 & 5

2 & 5

 

Expected volatility was determined by reference to historical volatility of the Company's share price.The share based payment expense recognised within the income statement during the period was £0.17m (2015: £0.13m).

 

 

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 2016, the total number of ordinary shares held in Treasury and their values were as follows:

 

 

2016

2015

 

Number

£'000

Number

£'000

 

 

 

 

 

As at 1 April 2015

21,276

21

35,000

143

Shares purchased for treasury

-

-

67,210

62

Shares issued from treasury

-

-

(80,934)

(42)

Equity reclassification on disposal of treasury shares

 

-

 

-

 

-

 

(142)

As at 31 March 2016

 

21,276

 

21

 

21,276

 

21

 

Nominal value

 

 

2

 

2

Market value

 

21

 

23

 

The maximum number of shares held in treasury during the year was 21,276 shares representing 0.2% of the called-up ordinary share capital of the Company (2015: 54,050 representing 0.4% 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 2016 the Group was committed to making the following total payments in respect of non-cancellable operating leases:

 

 

 

 

 

 

 

 

 

 

 

Land and buildings

2016

 

 

 

Land and

buildings

2015

 

 

 

 

 

£'000

 

£'000

 

 

 

 

 

 

 

 

Non-cancellable operating leases which expire:

 

 

 

 

 

 

 

Within one year

 

 

 

448

 

474

Within one to two years

 

 

408

 

432

Within two to five years

 

 

 

660

 

374

After five years

 

 

 

 

 

602

 

829

 

 

 

 

 

 

 

 

 

 

 

 

2,118

 

2,109

 

 

 

 

 

 

 

 

 

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

 

2016

£'000

2015

£'000

2016

£'000

2015

£'000

 

 

 

 

 

Profit before taxation

2,149

1,436

50

(6)

 

Adjust for:

 

 

 

 

Depreciation

188

170

-

-

Share based payment expense

166

130

-

-

Net finance income

-

(6)

-

(6)

 

Operating cash flow before changes in working capital

 

2,503

 

1,730

 

50

 

(12)

 

 

 

 

 

(Increase)/decrease in receivables

(401)

(1,003)

484

(489)

Increase/(decrease) in payables

 

267

(42)

744

65

 

 

 

 

 

Cash generated from / (used by) underlying operations

2,369

685

1,278

(436)

 

 

 

21 Analysis of Cash less overdrafts

 

Group

At 1 April 2015

 

 

Cash flow

 

 

 

At 31 March 2016

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

Cash at bank and in hand

 

1,009

 

(56)

 

953

 

 

 

 

 

 

Total cash

1,009

 

(56)

 

953

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

At 1 April 2015

 

 

Cash flow

 

 

 

At 31 March 2016

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

Cash at bank and in hand

446

 

187

 

633

 

 

 

 

 

 

Total cash

446

 

187

 

633

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 21.72% (2015: 22.16%) of revenue and approximately 19.85% (2015: 15.06%) of the Group's assets and consequently the Group has a degree of translation exposure in accounting for overseas operations.

 

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 not have any significant credit risk exposure to any individual client. At the year end no customer represented more than 6.82% (2015: 6%) 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, taking into account 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 16, all due within one year of the year end.

 

The Group has net funds of £0.95m (2015: £1.01m) 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 £205k (2015: £240k). The balance owed to the subsidiary undertakings at the year end is £923k (2015: £145k).

 

The Company also provides corporate guarantees on the subsidiary bank accounts. At 31 March 2016 amounts overdrawn by subsidiary bank accounts were £222,350 (2015: nil).

 

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 £605,384 (2015: £339,048).

 

 

 

Directors and Advisers

 

 

Directors

 

Robert Macdonald (Executive Chairman)

Peter Moore (Managing Director)

Donka Zaneva-Todorinski (Finance Director)

Chris Heayberd (Non-Executive Director)

John Lewis OBE (Non-Executive Director)

Simon Murphy (Non-Executive Director)

 

 

Secretary and Registered Office

 

Donka Zaneva-Todorinkski, 2 Harewood Place, London, W1S 1BX.

 

 

Registered Number

 

1729887

 

 

Stockbrokers & Nominated Advisers

 

Cenkos Securities Plc, 6.7.8 Tokenhouse Yard, London, EC2R 7AS

 

 

Solicitors

 

Eversheds, One Wood Street, London, EC2V 7WS.

 

 

Auditor

 

Crowe Clark Whitehill LLP, St Bride's House, 10 Salisbury Square, London, EC4Y 8EH

 

 

Principal Bankers

 

Barclays Bank Plc, Corporate Banking, 1 Churchill Place, London E14 5HP

 

 

Registrars

 

Neville Registrars Limited, Neville House, Laurel Lane, Halesowen, West Midlands, B63 3DA.

 

 

 

 

 

 

Board of Directors

 

 

Directors' Biographies

 

Robert Macdonald - Executive Chairman

 

Robert has held senior positions within the recruitment industry since 1973 when he founded Reuter Simkin Limited, a recruitment business in both the legal and property sectors. Reuter Simkin had both Kleinwort Benson Development Capital and Charterhouse Development Capital as investors. After the sale of Reuter Simkin in 1989, he acquired shares in and was Chairman of two other recruitment companies one of which acquired the legal business of Reuter Simkin in the West of England from PSD in 1992 and traded as Macdonald & Company. In 1994, he established Macdonald & Company as a specialist property recruitment consultancy in London. Lead by Robert and Peter Moore, Macdonald & Company Group Ltd completed the reverse takeover of Prime People Plc in January 2006.

 

Peter Moore MRICS - Managing Director

 

Peter graduated from the Royal Agricultural University and then worked with Strutt & Parker from 1992 to 1995, qualifying as a Charted Surveyor in 1994. He joined Macdonald & Company in 1995 and was appointed Managing Director in 1996. Under Peter's management Macdonald & Company became the largest and most respected real estate focused recruitment provider in the market and the RICS's preferred recruitment partner. Lead by Robert Macdonald and Peter Moore, Macdonald & Company Group Ltd completed the reverse takeover of Prime People Plc in January 2006. Since then Peter has been instrumental in developing Prime People into a global specialist recruitment business spanning real estate, energy & environmental and insight & analytics.

 

Donka Zaneva-Todorinski ACCA - Finance Director

 

Donka qualified with a Business Administration and Finance Degree from St Paul's College in 2007. She has been a member of the Association of Chartered Certified Accountants since December 2013. Donka began her professional career in 2003 and since has held accounting positions in the recruitment, media and publishing industries. She joined Macdonald & Company in 2011 as a Management Accountant. In 2013 Donka was promoted to be Financial Controller and was then appointed to the Board of Prime People as Finance Director in October 2015. She is a member of the Finance & Management Faculty of ICAEW.

 

Chris Heayberd BA ACA - Non-executive Directors

 

Chris qualified as a Chartered Accountant in 1980 and after that date held a number of financial positions in a broad range of industries. Since 1989 his main focus has been the business services sector. This included 4 years as Finance Director of PSD Group plc, during which time the company was admitted to trading on the London Stock Exchange. Chris joined the Board of Prime People in June 1995 and for a period of five years combined the role of Finance Director with other business interests. In May 2005 he took up a full time role as Finance Director of Prime People retiring from this post in 2015 but remaining on the Board in a non-executive capacity.

 

John Lewis OBE LLB (Hons) - Non-executive Director

John is a solicitor (Non Practising) and a consultant to Eversheds LLP (solicitors). Previously he served as a partner in Lewis Lewis & Co which became part of Eversheds after a series of mergers. John is currently Chairman of Photo-Me International Plc and several private companies. He has served as Chairman of Cliveden Plc and Principal Hotels Plc and as deputy Chairman of John D Wood & Co Plc, retiring in each case when the Company was sold.

 

Simon Murphy BSc ACA - Non-executive Director

 

Simon qualified as a Chartered Accountant with Coopers & Lybrand. He was previously a Managing Director in the global investment banking division of HSBC. He was Chief Executive of Prime People from May 2005 until the acquisition of Macdonald & Company Group Ltd. He is Chief Financial Officer of Battersea Power Station Development Company and a Director of a number of private companies including OPD Group Limited an investment company with holdings in a number of recruitment businesses.

This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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21st Jun 20197:00 amRNSFinal Results
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5th Mar 20194:06 pmRNSTransaction in Own Shares and PDMR Shareholding

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