Prime People Plc
Annual Report and Accounts
for the year ended 31 March 2013
2013
PRIME PEOPLE PLC
Annual Report and Financial Statements for the Year Ended 31 March 2013
________________________________________________________________________________________
Contents
Page
1
3
Chairman's statement & operating review
Financial review
4
Board of Directors
5
Report of the Directors
11
Statement of Directors’ responsibilities
12
Corporate governance
16
Remuneration report
19
21
22
23
25
26
27
28
55
56
Independent Auditor’s report
Consolidated statement of comprehensive income
Consolidated statement of changes in equity
Consolidated statement of financial position
Company statement of financial position
Company statement of changes in equity
Group and Company cash flow statement
Notes to the financial statements
Directors and Advisers
Notice of Annual General Meeting
PRIME PEOPLE PLC
Chairman's Statement & Operating Review
Introduction
The Group’s activity is the delivery of permanent
and temporary recruitment services. Historically
the Group’s focus has been to provide these
services to the built environment sector through its
main subsidiary Macdonald & Company. More
recently the Group has broadened its focus to
include provision of recruitment services for
customer insight staff in the market research and
data analysis sector, branded as Prime Insight, to
the energy & environmental sector as Macdonald
& Company and the pharmaceutical research
sector as Prime Pharma.
Results
In 2013 gross revenue increased to £13.04m
reflecting a small improvement in the level of
temporary business (2012: £12.65m).
Net fee income, which is, after profit, the most
important measure of performance for the Group,
decreased by 5.4% to £7.6m (2012: £8.03m), a
consequence of some
increased pressure on
permanent fee margins in the UK and a small
reduction in net fee income from our Asia
businesses.
The ratio of net fee
income derived from
permanent as against temporary placements is
slightly reduced from 91:9 in 2012 to 90:10 in the
year being reported.
The conversion rate of operating profit from net
fee income decreased from 11.6% in 2012 to
10.3% in 2013.
Basic earnings per share decreased slightly to
4.70p (2012: 5.72p).
The Group maintained a strong net cash position
with £2.3m as at 31 March 2013 (2012: £2.8m).
During the year the Group established an office in
Singapore to further consolidate its presence in
Asia. These results reflect costs associated with
the opening of this new office.
1
Toward the end of the year the Group completed
negotiations to surrender the lease of its London
office, receiving a premium on the surrender. This
has enabled a move to other prestigious Mayfair
offices of the same size for equivalent occupancy
costs. The results also reflect the financial effects
of this transaction.
Cash & Dividends
As was the case last year the Company is holding
a substantial cash balance. The Board continues to
assess the most appropriate use of surplus cash
generated by the Company. Historically this has
focused on developing new business
lines
organically and more recently on a program of
share buybacks. Possible acquisitions have been
investigated every year but as yet, none have met
the Company’s stringent criteria, which include
ensuring that scale of transaction should not have
the potential
to destabilise our continuing
businesses and risks associated with acquisition
should be minimal. The Board considers that the
cash needed to complete the Group’s current
growth plans is more than adequate. Accordingly,
subject to trading conditions, the Company expects
to continue to return cash to shareholders via its
annual dividends and by other means when and if
appropriate.
The Board will be recommending a final dividend
of 3.09p (2012: 2.25p) per share which combined
with the interim dividend of 1.0p per share, will
result in a total dividend of 4.09p (2012: 4.09p).
Share Buy Back
through
the Group’s
During the year 55,000 shares at a cost of £26,850
(2012: 248,234 shares at a cost of £167,809) were
purchased
buyback
programme and
the Board will be seeking
shareholder approval for the renewal of the
authority to repurchase up to 10% of the Group’s
issued share capital at the Annual General Meeting
on 25 June 2013.
PRIME PEOPLE PLC
Chairman's Statement & Operating Review (continued)
Strategy & Outlook
Since this time last year we have continued to
advance our overseas strategy by seeking to extend
our reach in Asia by organic growth. As referred to
above, our Singapore office is now established and
commenced business in April 2012. It is staffed by
the Group’s Managing Director together with,
currently, four experienced fee earners, serving
our property, insights and energy practices across
South East Asia. Good progress has been made in
the region with early indications of a pipeline of
Real Estate work developing from Indonesia and
Malaysia.
Our Middle East and Africa businesses show early
signs of improved activity as we enter the new
financial year and there is some evidence of a
degree of confidence returning to our core Real
Estate market.
Despite a small reduction in UK net fee income in
2013 we are cautiously positive about signs of an
upturn in business as we are well positioned to take
advantage of any improvement in demand for our
services. We have reorganised a number of our
teams in preparation for this upturn which we have
started to see through improved performance in our
temporary markets which in turn we expect to have
a favourable impact on our permanent business in
2014.
that
The economic uncertainties
recruitment
businesses experience serve as a reminder that
businesses need to retain a flexible approach. It is
our intention to continue to invest appropriately in
our established revenue lines and offices and when
the opportunity arises to broaden the recruitment
services that the Group offers within all its regions.
The Group continues
to enjoy strong client
relationships and a committed staff ready to exploit
regional opportunities and the upturn as it occurs.
Our people
Finally, I should like to thank our staff for their
hard work and commitment over the last twelve
months.
Robert Macdonald
Executive Chairman
28 May 2013
2
PRIME PEOPLE PLC
Financial Review
Fee Income
Gross fee income for the year from continuing
operations increased by 3.1% to £13.0m (2012:
£12.65m).
Net fee income decreased by 5.4% to £7.6m
(2012: £8.03m).
dividend of 3.09 pence which will, subject to
shareholder approval at
the Annual General
Meeting, be paid on 28 June 2013 to shareholders
who are on the register on 14 June 2013, making a
total dividend paid to shareholders for the year of
4.09 pence per ordinary share.
The Group considers net fee income to be a key
indicator of the performance of the business. This
is defined as the income generated from permanent
placements together with the contribution earned
from contract and temporary staff.
Profit Before Taxation
Profit before taxation decreased by 18.3% to
£0.78m (2012: £0.95m)
Balance Sheet
The Group’s net assets position at 31 March 2013
is slightly up on last year at £14.08m (2012:
£13.89m)
Trade receivables are slightly up on last year at
£1.9m (2012: £1.46m) with an increase in the
credit period taken by customers at 58 days (2012:
47 days).
Administration Costs
Cash Flow and Cash Position
recorded a 1.3% decline
The Group
in
administration costs (after adjusting for a gain on
surrender of its property lease of £0.17m) to £7.0m
(2012: £7.1m) primarily arising from the fall in
headcount which on average for 2013 was 12%
lower at 95 (2012: 108).
Net cash inflow of £0.19m (2012: inflow of
£0.78m) was generated from operating activities
during the year, which after net taxation payments
of £0.19m (2012: net payment of £0.34m),
resulted in a net cash outflow from operating
activities of £0.01m (2012: inflow of £0.44m).
Taxation
The taxation charge is £0.22m on a profit on
ordinary activities before taxation of £0.78m
which gives an overall tax rate of 28.5% (2012:
28.3%). The reasons for the difference from the
standard UK corporation tax rate of 24% are
detailed in note 7 of the accounts.
Earnings Per Share
Basic earnings per share decreased by 17.8% to
4.70p (2012: 5.72p).The diluted earnings per share
decreased by 16.3% to 4.67p (2012: 5.58p).
Dividend
As outlined in the Chairman’s statement &
operating review, the Directors propose a final
The Group operates a centralised treasury function
with a net cash position at 31 March 2013 of
£2.26m, compared to a net cash position of
£2.83m at 31 March 2012.
Chris Heayberd
Finance Director
28 May 2013
3
PRIME PEOPLE PLC
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 College, Cirencester 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 when Peter has been instrumental
in developing Prime People into a global specialist recruitment business spanning real estate, energy &
environmental, insight & analytics and pharmaceuticals.
Chris Heayberd BA ACA - Finance Director
Chris qualified as a Chartered Accountant in 1980 and since that date has 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 rejoined the Board of Prime People in June 2000 and for a period of five
years combined the role of Finance Director with other business interests. In May 2005 he returned full time
to the Board.
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 is Chief Financial Officer of
Battersea Power Station Development Company. 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.
4
PRIME PEOPLE PLC
Report of the Directors for the Year Ended 31 March 2013
The Directors present their annual report on the affairs of the Group, together with the audited financial
statements for the year ended 31 March 2013. Prime People is a public limited Company, incorporated and
domiciled in England, and its shares are quoted on the AIM market.
Principal Activity
The principal activity of the Group during the year was the provision of recruitment services.
Business Review
The Company is required by the Companies Act to include a business review in their report of the
development and performance of the Group’s business for the financial year and of its position at the year end
as well as expected future developments. This information is contained within the Chairman’s Statement and
Operating Review on page 1and 2 and the Financial Review on page 3.
Principal Risks and Uncertainties
The Board reviews on a regular basis the principal risks and uncertainties facing the Group. 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 future success of the Group is dependant 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 recruitment function, a training and
development programme, competitive pay structures and long term remuneration plans, the aim of which is to
retain the key employees.
Competition
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 property recruitment services, from which the Group obtains the major part of its revenue,
remains uncertain and it is difficult to predict how this market will develop in the foreseeable future. Our
temporary business continues to be focused in the Public Sector which in recent years, due to government
funding cut backs has been in decline, but there are positive signs of recovery in this area of our business.
However a decline from current levels of activity in the property market generally could have a material adverse
effect on profitability and cash flows of the business.
Macro economic factors
Recruitment activity is largely driven by economic cycles and the levels of business confidence. The Board
looks to reduce the Group’s cyclical risk by expanding geographically in its chosen markets and so therefore
outcomes could be influenced by the GDP growth of economies in which we operate.
Regulatory position
The recruitment industry is subject to an increasing level of regulation and compliance which varies in its degree
of complexity from country to country. The Group takes its responsibilities seriously and remains committed to
being 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 of changes in legal and compliance requirements.
5
PRIME PEOPLE PLC
Report of the Directors for the Year Ended 31 March 2013
Principal Risks and Uncertainties (continued)
Information Technology
To provide services to clients and candidates the Group is highly dependent on certain technology systems
and the infrastructure on which they operate. These systems are dependent 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. In addition the systems and
infrastructure are regularly reviewed and upgraded to ensure that they provide appropriate functionality and
resilience to support the business as it develops.
Foreign Exchange Risk
The Group’s international operations account for approximately 35 per cent of net fee income and less than 11
per cent of the Group’s assets. 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’s operations 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 minimal, future
interest rate, liquidity and foreign currency risks could arise. 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. Ongoing 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.
Corporate Governance
The Company and the Group are committed to high standards of corporate governance, details of which are
provided in the Corporate Governance Report on pages 12 to 15 and Remuneration Report on pages 16 to 18.
Results
The consolidated profit on ordinary activities after taxation amounted to £560k (2012: £680k).
Dividends
An interim dividend for 2013 of 1.00 pence per ordinary share was paid on 29 November 2012 to those
shareholders on the register at 23 November 2012 (2012: 1.84pence). The Directors recommend the payment
of a final dividend for 2013 of 3.09 pence per ordinary share which, if approved at the Annual General
Meeting, will be paid on 28 June 2013 to those shareholders on the register on 14 June 2013 (2012: 2.25
pence).
6
PRIME PEOPLE PLC
Report of the Directors for the Year Ended 31 March 2013
Directors and Interests
The following were Directors during the year and held office throughout the year:
Robert Macdonald
Peter Moore
Chris Heayberd
John Lewis
Simon Murphy
(Executive Chairman)
(Managing Director)
(Finance Director)
(Non-executive Director)
(Non-executive Director)
Biographical details for all the current Directors are shown on page 4.
Substantial Shareholders
As at 01 May 2013, the Company had been notified in accordance with Chapter 5 of the Disclosure and
Transparency Rules of the following substantial shareholdings:
Peter Moore
Robert Macdonald
John Lewis
Peter Hearn
The Cayzer Trust Company Limited
Number of 10p
ordinary shares
Percent of issued
share capital
%
2,897,500
2,480,000
1,180,500
719,500
439,500
24.36
20.85
9.78
6.04
3.69
The mid market quotation of the Company’s shares at close of business on 31 March 2013 was 50.5p. The
highest and lowest mid market quotations in the period from 1 April 2012 to 31 March 2013 were 75.0p and
46.0p.
Our Employees
The involvement of our employees in the business is key to our success. We endeavour to source and retain
the highest calibre employees from a wide range of backgrounds. The business is organised into a number of
business teams based on sector with each team leader empowered to run their operations within the operating
framework of the Group. The policy of providing employees with information about the Group has been
continued and employees are always encouraged to present their own suggestions and views.
The Group is committed to the principles of hiring based purely on individual merit and is committed to equal
opportunities.
The Group gives full and fair consideration to applications for employment from disabled persons where the
requirements of the job may be adequately covered by a disabled person.
7
PRIME PEOPLE PLC
Report of the Directors for the Year Ended 31 March 2013
Policy and practice on payment of creditors
The Group agrees payment terms with each of its major suppliers and seeks to abide by these terms, subject to
satisfactory performance by the supplier. Trade creditors for the Group at the year end represent 35 days
average purchases (2012: 35 days). The Company makes no trade purchases.
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 main environmental impact comes from the running of our
businesses 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.
Charitable and Political Donations
During the year, the Group supported the charity ELIFAR with a number of employees donating their time to
support initiatives. This year we also allowed employees the opportunity to be involved in activities with a
charity, community or environmental cause and allowed them to take two working days out of the office in order
“to give something back”. In addition the Group made charitable donations of £3,976 (2012: £7,755).
The Group made no political donations during the year (2012: £Nil).
Going Concern
At 31 March 2013 the Group had a net cash position of £2.26m (2012: £2.83m). 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 the appropriate enquiries, the Directors have a reasonable
expectation that the Group has adequate resources to continue operating for the foreseeable future. The Group
continue to adopt the going concern basis in preparing the financial statements.
Directors’ and Officers’ Liability Insurance
The Company maintains liability insurance for the Directors and officers of the Company and its subsidiaries.
Capital Structure
Details of the authorised 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.
8
PRIME PEOPLE PLC
Report of the Directors for the Year Ended 31 March 2013
Ordinary and Special Business for the Annual General Meeting
The notice of the meeting contains Ordinary and Special Resolutions to be proposed at the forthcoming Annual
General Meeting to be held on Tuesday 25 June 2013. The Special Business is detailed below.
Allotment of Shares
The Companies Act 2006 provides that the Directors of the Company may only allot unissued shares if they
have the authority of shareholders or the Articles of Association to do so. Approval of shareholders will
therefore be sought in resolution 8 to grant authority to allot shares up to a maximum aggregate nominal amount
of £402,200. This amounts to 4,022,000 shares or approximately 33.33 per cent of the total share capital in issue
as at 31 May 2013.
Except for the issue of shares held under an existing Enterprise Management Incentive Scheme, details of which
are set out in note 17 of these accounts the Directors have no intention, at present, of issuing any part of that
capital and no issue will be made which will effectively alter control of the Company without the prior approval
of shareholders in general meeting.
In addition, the Companies Act 2006 gives shareholders statutory rights of pre-emption, whereby any shares
issued for cash must be offered to existing shareholders pro-rata to their respective holdings. Assuming the
board is granted the authority to issue new shares by shareholders, authority will be sought in resolution 9 to
allot shares for cash up to a maximum aggregate nominal amount of £60,350 representing 603,500 shares, being
approximately 5 per cent of the issued ordinary share capital of the Company, to persons other than existing
shareholders as if the statutory pre-emption rights did not apply. The authorities granted by the relevant
resolutions will expire on the earlier of 25 September 2014 and the conclusion of the next Annual General
Meeting of the Company.
Market Purchases of Own Shares
Resolution 8 will be proposed as a special resolution at the Annual General Meeting and, if approved, will
give the Company authority to make market purchases of its own shares out of the distributable profits of the
Company. The Directors propose that the Company should be authorised to purchase a maximum of
1,206,650 ordinary shares of 10p each, equivalent to approximately 10 per cent of the current ordinary shares
in issue. On such purchase, such ordinary shares will be cancelled or held in treasury.
The effect of any purchases will be to reduce the number of shares in issue. In recognition that current market
conditions are challenging and that liquidity for dealing in the Company’s shares is constrained, within the
limits of the resolution dealing with the purchase of its own shares at the forthcoming resolution (if duly
passed by shareholders) and with an aggregate consideration not exceeding £250,000 the Company plans,
from time to time, to purchase its shares in the market and to cancel them or held in treasury.
If the Board exercises the authority conferred by Resolution 10 the Company will have the option of holding
repurchased shares in treasury.
The full exercise of all options outstanding at the date of the notice of meeting may require the issue of up to
764,930 ordinary shares. This represents 6.45 per cent of the Company’s issued share capital if the proposed
authority to purchase the Company’s own shares has been obtained and exercised in full (in each case at the
date of notice of the Annual General Meeting).
9
PRIME PEOPLE PLC
Report of the Directors for the Year Ended 31 March 2013
Statement as to Disclosure of Information to Auditor
Each of the persons who are Directors at the time when this report is approved has confirmed that:
(a) so far as each Director is aware, there is no relevant audit information of which the Company’s Auditor
are unaware; and
(b) each Director has taken all steps that ought to have been taken as a Director in order to be aware of any
information needed by the Company’s Auditor in connection with preparing their report and to establish that
the Company’s Auditor are aware of that information.
Auditor
Crowe Clark Whitehill LLP have expressed their willingness to continue in office and a resolution to
re-appoint them as Auditor and authorising the Directors to set their remuneration will be proposed at the
forthcoming Annual General Meeting.
By order of the Board
Chris Heayberd
Finance Director
28 May 2013
10
PRIME PEOPLE PLC
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Directors' Report, 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 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 of the Company and the Group and of the profit or loss of the
Group for that period. In preparing these financial statements, the Directors are required to:
select suitable accounting policies and then apply them consistently;
make judgments and accounting estimates that are reasonable and prudent;
state whether applicable accounting standards have been followed, subject to any material departures
disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Company's transactions and disclose with reasonable accuracy at any time the financial position of the
Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors confirm that:
so far as each Director is aware there is no relevant audit information of which the Company’s Auditor is
unaware; and
the Directors have taken all steps that they ought to have taken as Directors in order to make themselves
aware of any relevant audit information and to establish that the Auditor is aware of that information.
the Directors are responsible for the maintenance and integrity of the corporate and financial information
included on the Company’s website. Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other jurisdictions.
11
PRIME PEOPLE PLC
Corporate Governance
Statement by the Directors on Compliance with the Combined Code
Corporate Governance
The Board of the Company is committed to achieving high standards of corporate governance, integrity and
ethics. The Directors recognise the value and importance of sound corporate governance and support the
principles of the UK Corporate Governance Code published in 2010. Although as an AIM listed Company it
is not formally required to do so, Prime People has sought to comply with the Code so far as is practical and
appropriate for a public Group of its size and nature. The Group also seeks to comply with the
recommendations of the QCA on corporate governance.
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 2013 and the
attendance record are summarised in the table below:
Directors
Robert Macdonald
Peter Moore
Chris Heayberd
John Lewis
Simon Murphy
Number of meetings 2013
Board
Audit
Committee
Remuneration
Committee
Y (Chair)
Y
Y
Y
Y
4
N
N
N
Y
Y(Chair)
2
100%
N
N
N
Y (Chair)
N
2
100%
Overall attendance record for 2013 meetings
100%
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 two non-
executive Directors.
The non-executive Directors are John Lewis and Simon Murphy. Both receive a fixed fee for their services
and their interests in the shares of the Company are as described on pages 7 and 16 to 17.
Biographies of the board members appear on page 4.
The Board meets up to 6 times each year and 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,
12
PRIME PEOPLE PLC
Corporate Governance
The Board and its Operation (continued)
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. Its terms of reference require it to meet not less than twice each year and it provides a forum for
reporting by the Group’s Auditor. 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.
13
PRIME PEOPLE PLC
Corporate Governance
Remuneration Committee
The members of the Remuneration Committee comprises 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 2013
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 at least six times a year 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.
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 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.
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.
14
PRIME PEOPLE PLC
Corporate Governance
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.
15
PRIME PEOPLE PLC
Remuneration Report
The Remuneration Committee meets not less than twice a 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 package that strongly aligns the interests of
Executive Directors with those of shareholders.
Remuneration Policy
The main aim of the Committee is to attract, retain and motivate high calibre individuals with a remuneration
package 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.
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 the Executive Directors 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 him
from competing with the Group for 3 months following the termination of employment and preventing him
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.
Both 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, 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.
16
PRIME PEOPLE PLC
Remuneration Report
Emoluments of Directors
The aggregate emoluments of Directors who served during the period is shown in the table below.
Emoluments include management salaries, 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 includes
emoluments from the Company and its subsidiary undertakings.
Salaries and
fees
Benefits
Year ended
31 March
2013
Total
31 March
2012
Total
£
£
£
£
Executive Chairman
R J G Macdonald
107,960
5,958
113,918
109,884
Executive Directors
P H Moore (Notes 1 & 2)
176,682
75,962
252,644
176,990
C I Heayberd
106,337
3,206
109,543
121,128
Non-Executive Directors
J H J Lewis
S J Murphy
18,342
18,342
-
-
18,342
12,731
18,342
17,731
427,663
85,126
512,790
438,464
Notes to the emoluments:
1 - Peter Moore is the highest paid Director,
2 - Peter Moore relocated to Singapore in August 2012 and is provided with family accommodation,
3 - Benefits include accommodation, medical and travel allowance,
4 - The Group does not operate a defined benefit pension scheme.
Share option schemes
During 2013 no share options were granted to Executive Directors. As at 31 March 2013 Director’s options
on ordinary shares of 10p each granted under the Prime People Enterprise Management Incentive Scheme,
were as follows:
Director
Year of issue Granted Exercise Price
Earliest exercise date
Simon Murphy
2005/6
184,234
57.5p
15 May 2007
17
PRIME PEOPLE PLC
Remuneration Report
Performance Criteria
The performance criteria on Directors share options granted in 2005/6 were achieved when the Company
acquired Macdonald & Company Group Limited in January 2006.
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
28 May 2013
18
PRIME PEOPLE PLC
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 2013 which
comprise Group and Parent Company Statements of Financial Position, the Group Statements of
Comprehensive Income, the Group and Company Cash Flow Statements, the Group and Parent Company
Statement 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 Auditor’s.
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 Directors’ Report, Chairman’s
statement & operating review, Financial review, Corporate governance and Remuneration report to identify
material inconsistencies with the audited financial statements. 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 2013 and of the Group‘s profit for the year then ended;
the Group financial statements 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.
19
PRIME PEOPLE PLC
Independent Auditor’s Report (continued)
Opinion on other Matter Prescribed by the Companies Act 2006
In our opinion the information given in 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
report to you 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.
Matthew Stallabrass
Senior Statutory Auditor
For and on behalf of
Crowe Clark Whitehill LLP
Statutory Auditor
St Bride’s House
10 Salisbury Square
London
EC4Y 8EH
28 May 2013
20
PRIME PEOPLE PLC
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2013
Note
2, 3
2, 3
4
7
9
Revenue
Cost of sales
Net fee income
Administrative expenses
Operating profit
Finance income
Finance expense
Profit before taxation
Income tax expense
Profit for the year
Other comprehensive loss
Foreign currency exchange differences
Total comprehensive income for the
year
Attributable to:
Equity shareholders of the parent
Earnings per share
Basic earnings per share
Diluted earnings per share
The above results relate to continuing operations
21
Year ended
31 March
2013
£’000
31 March
2012
£’000
13,038
(5,443)
12,652
(4,626)
7,595
(6,832)
8,026
(7,096)
763
20
-
783
(223)
930
21
(3)
948
(268)
560
680
19
(9)
579
671
579
671
4.70p
4.67p
5.72p
5.58p
PRIME PEOPLE PLC
Consolidated Statement of Changes in Equity
For the year ended 31 March 2013
Called
up
share
capital
£’000
Capital
Redemp-
tion
reserve
£’000
Treasury
shares
Share
premium
account
Merger
reserve
Share
option
reserve
£’000
£’000
£’000
£’000
Foreign
currency
trans-
lation
£’000
Retained
earnings
Total
£’000
£’000
At 1 April 2011
1,194
9
(39)
7,095
173
108
413
4,840
13,793
Total
comprehensive
income for the
year
Issue of ordinary
shares
Adjustment in
respect of share
schemes
Shares
purchased for
treasury
Dividend
At 31 March
2012
Total
comprehensive
income for the
year
Adjustment in
respect of share
schemes
Shares
purchased for
treasury
Dividend
At 31 March
2013
-
13
-
-
-
-
-
-
-
-
-
-
-
(130)
-
-
14
-
-
-
-
-
-
-
-
-
-
(9)
-
680
671
-
27
(27)
-
-
-
-
-
47
20
-
(130)
(487)
(487)
1,207
9
(169)
7,109
173
81
404
5,080
13,894
-
-
-
-
-
-
-
-
-
-
(22)
-
-
-
-
-
-
-
-
-
-
19
560
579
16
-
-
-
-
-
3
19
-
(22)
(387)
(387)
1,207
9
(191)
7,109
173
97
423
5,256
14,083
22
PRIME PEOPLE PLC
Consolidated Statement of Financial Position
As at 31 March 2013
Assets
Non – current assets
Goodwill
Property, plant and equipment
Deferred tax asset
Current assets
Trade and other receivables
Cash at bank and in hand
Total assets
Liabilities
Current liabilities
Financial liabilities
Trade and other payables
Current tax liabilities
Total liabilities
Net assets
2013
£’000
9,769
264
28
10,061
3,452
2,282
5,734
2012
£’000
9,769
195
2
9,966
2,920
2,831
5,751
15,795
15,717
26
1,526
160
1,712
1,712
7
1,711
105
1,823
1,823
14,083
13,894
Note
11
10
13
14
21
15
16
23
PRIME PEOPLE PLC
Consolidated Statement of Financial Position
As at 31 March 2013
Note
2013
£’000
Capital and reserves attributable to the
Company’s equity holders
Called up share capital
Capital redemption reserve fund
Treasury shares
Share premium account
Merger reserve
Share option reserve
Currency translation reserve
Retained earnings
17
18
18
18
18
18
18
18
1,207
9
(191)
7,109
173
97
423
5,256
2012
£’000
1,207
9
(169)
7,109
173
81
404
5,080
Total equity
14,083
13,894
The financial statements on pages 21 to 54 were approved by the Board of Directors and authorised for issue
on 28 May 2013 and are signed on its behalf by:
R J G Macdonald
C I Heayberd
24
PRIME PEOPLE PLC
Company Statement of Financial Position
As at 31 March 2013
Assets
Non-current assets
Investment in subsidiaries
Property, plant and equipment
Deferred tax asset
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Liabilities
Current liabilities
Financial liabilities – borrowings
Other payables
Total liabilities
Net assets
Note
12
10
13
14
21
16
2013
£’000
10,876
-
1
10,877
596
1,949
2,545
2012
£’000
10,876
-
1
10,877
352
2,076
2,428
13,422
13,305
26
55
81
81
7
58
65
65
13,341
13,240
Capital and reserves attributable to the Company’s equity holders
Called up share capital
Capital redemption reserve fund
Treasury shares
Share premium account
Merger reserve
Share option reserve
Retained earnings
17
18
18
18
18
18
18
1,207
9
(191)
7,109
173
32
5,002
1,207
9
(169)
7,109
173
32
4,879
Total equity
13,341
13,240
The financial statements of Prime People Plc, Company Number 1729887 were approved by the Board and
authorised for issue on 28 May 2013 and are signed on its behalf by:
R J G Macdonald
C I Heayberd
25
PRIME PEOPLE PLC
Company Statement of Changes in Equity
For the year ended 31 March 2013
Company
Called
up
share
capital
£’000
Capital
Redemp-
tion
reserve
£’000
Treasury
shares
Share
premium
account
Merger
reserve
Share
option
reserve
Retained
earnings
Total
£’000
£’000
£’000
£’000
£’000
£’000
At 1 April 2011
1,194
9
(39)
7,095
173
47
4,812 13,291
Total
comprehensive
income for the
year
Issue of
ordinary shares
Shares
purchased for
treasury
Adjustment in
respect of share
scheme
Dividend
At 31 March
2012
Total
comprehensive
income for the
year
Shares
purchased for
treasury
Dividend
At 31 March
2013
-
13
-
-
-
-
-
-
-
-
(130)
-
-
-
-
14
-
-
-
-
-
-
-
-
-
(15)
537
522
-
-
-
-
-
27
-
(130)
17
17
(487)
(487)
1,207
9
(169)
7,109
173
32
4,879
13,240
-
-
-
-
-
-
-
(22)
-
-
-
-
-
-
-
-
-
-
510
510
-
(22)
(387)
(387)
1,207
9
(191)
7,109
173
32
5,002
13,341
26
PRIME PEOPLE PLC
Group and Company Cash Flow Statement
For the year ended 31 March 2013
Cash generated from
underlying operations
Income tax paid
Income tax received
Net cash (used by)/from
operating activities
Cash flows from investing
activities
Interest received
Net purchase of property,
plant and equipment
Dividend received
Net cash (used in)/from
investing activities
Cash flows from financing
activities
Capital element of hire
purchase obligations
Issue of ordinary share capital
Treasury shares
Dividend paid to shareholders
Interest paid
Net cash used in financing
activities
Net decrease in cash and
cash equivalents
Cash and cash equivalents at
beginning of the year
Exchange gain/(loss) on cash
and cash equivalents
Cash and cash equivalents at
the end of the year
Note
20
Group
Year ended
Company
Year ended
31 March
2013
£’000
31 March
2012
£’000
31 March
2013
£’000
31 March
2012
£’000
186
775
(223)
(195)
-
(340)
3
(6)
-
(203)
(51)
-
(9)
438
(229)
(254)
20
(189)
-
21
(60)
-
19
-
473
21
-
500
(169)
(39)
492
521
-
-
(22)
(387)
-
(25)
27
(130)
(487)
(3)
-
-
(22)
(387)
-
-
27
(130)
(487)
-
(409)
(618)
(409)
(590)
(587)
(219)
(146)
(323)
2,824
3,052
2,069
2,392
19
(9)
-
-
2,256
2,824
1,923
2,069
27
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2013
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 £509,038 (2012: profit £537,458). 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 as adopted by the European Union and also comply with IFRIC
interpretations and the Companies Act 2006 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 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 2012
except as described below.
International Accounting Standards (IAS/IFRS) and Interpretations in Issue but not yet adopted
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 indicate that they will not be relevant or will
have a material impact to the Group:
Disclosures – Offsetting Financial Assets and Financial Liabilities – Amendments to IFRS 7 (effective 1
IAS 1 Presentations of items of Other Comprehensive Income (effective 1 July 2012)
IFRS 9 Financial Instruments (effective 1 January 2015)
IFRS 10 Consolidated Financial statements (effective 1 January 2013**)
IFRS 11 Joint Arrangements (effective 1 January 2013**)
IFRS 12 Disclosure of Interests in Other Entities (effective 1 January 2013**)
IFRS 13 Fair Value Measurement (effective 1 January 2013)
IAS 19 Employee Benefits (Revised June 2012) (effective 1 January 2013)
IAS 27 (Revised), Separate Financial Statements (effective 1 January 2013**)
IAS 28 (Revised), Investments in Associates and Joint Ventures (effective 1 January 2013**)
January 2013)
Offsetting Financial Assets and Financial Liabilities – Amendments to IAS 32 (effective 1 January 2014)
Mandatory Effective Date and Transition Disclosures – Amendments to IFRS 9 and IFRS 7 (effective 1
January 2015)
Government Loans – Amendments to IFRS 1 (effective 1 January 2013)
IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine (effective 1 January 2013)
28
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2013
2 Summary of Significant Accounting Policies (continued)
International Accounting Standards (IAS/IFRS) and Interpretations in Issue but not yet adopted
(continued)
Annual Improvements 2009-2011 Cycle (effective 1 January 2013)
Transition Guidance – Amendments to IFRS 10, IFRS 11 and IFRS 12 (effective 1 January 2013)
Investment Entities – Amendments to IFRS 10, IFRS 12 and IAS 27 (effective 1 January 2014)
**Note: EU mandatory effective date is 1 January 2014, not 2013. Also Deferred Tax: Recovery of
Underlying assets – Amendments to IAS 12 Income Taxes (IASB effective date 1 January 2012) has a
mandatory EU effective date of periods commencing on or after 1 January 2013.
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, balances and unrealised gains on transactions between Group companies are
eliminated in preparing the consolidated financial statements. Unrealised losses are also eliminated in the
same way as unrealised gains but only to the extent that there is no evidence of impairment.
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.
29
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2013
2 Summary of Significant Accounting Policies (continued)
Revenue recognition
(a) Gross Fee Income
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 temporary placements, which represents amounts billed for the services of temporary
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 based on past historical experience; and
Revenue from amounts billed to clients for expenses incurred on their behalf (principally
advertisements) is recognised when the expense is incurred.
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 consist of the salary cost of temporary 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 temporary 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 pounds sterling (£), which is the Company’s functional and presentation
currency and rounded to the nearest thousand pounds.
(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 income statement.
30
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2013
2 Summary of Significant Accounting Policies (continued)
(d) Foreign Currency Translation (continued)
(iii) Group Companies
The results and financial position of all the Group entities (none of which has the currency of a hyper-
inflationary economy) that have a functional currency different from the presentation currency are translated
into the presentation currency as follows:
assets and liabilities for each balance sheet presented are translated at the closing rate at the date of
that balance sheet;
income and expenses for each income statement are translated at average exchange rates; and
all resulting exchange differences are recognised as a separate component of equity. On consolidation,
exchange differences arising from the translation of the net investment in foreign operations, are taken
to shareholders’ equity.
(e) 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 20% – 33%
Motor vehicles 20% – 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.
(f) Intangible Assets
(i) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net
identifiable assets of the acquired subsidiary/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 tested 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 using the straight-line
method over their estimated useful economic lives (33% per annum).
31
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2013
2 Summary of Significant Accounting Policies (continued)
(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 income statement 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
Where assets are financed by leasing arrangements that give rights approximating to ownership (finance
leases), the assets are treated as if they had been purchased outright. The amount capitalised is the lower of
fair value or the present value of the minimum lease payments payable during the lease term, The
corresponding lease commitments are shown as obligations to the lessor. The property, plant or equipment
acquired under finance leases is depreciated over the shorter of the asset’s useful life and the lease term.
Lease payments are apportioned between finance charges and reduction in lease obligations so as to achieve a
constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to
income.
All other 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 does not operate a pension scheme for employees.
32
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2013
2 Summary of Significant Accounting Policies (continued)
(k) Segmental Reporting
IFRS8 requires operating segments to be identified on the basis of internal reports that are regularly reviewed
by the Managing Director to allocate resources to the segment and to assess their performance.
(l) Financial Assets and Liabilities
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. Non derivative financial instruments comprise trade and other
receivables, cash and cash equivalents, loans and borrowing and trade and other payables.
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 measured at amortised cost
using the effective interest 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.
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short term highly
liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are
shown within borrowings in current liabilities on the balance sheet.
Trade payables are recognised initially at fair value. Other financial liabilities including borrowings are
recognised at fair value net of transaction costs incurred.
(m) 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.
(n) 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.
(o) 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:
33
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2013
2 Summary of Significant Accounting Policies (continued)
(o) Critical Accounting Estimates and Judgements (continued)
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
20.5% of those offers where employment has yet to commence (2012: 20.6%). 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 14.
34
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2013
3 Segment Reporting
a) Revenue and Net Fee Income, by Geographical Region
UK
Asia
Rest of World
Revenue
Year ended
Net fee income
Year ended
31 March
2013
£’000
31 March
2012
£’000
31 March
2013
£’000
31March
2012
£’000
10,345
1,746
947
9,965
1,801
886
4,902
1,746
947
13,038
12,652
7,595
5,339
1,801
886
8,026
All revenues disclosed by the Group are derived from external customers 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
Permanent
-UK
-Asia
-Rest of World
Temporary (UK)
Total
Revenue
Year ended
Net fee income
Year ended
31 March
2013
£’000
31 March
2012
£’000
31 March
2013
£’000
31March
2012
£’000
4,146
1,746
947
6,199
4,763
1,801
886
5,202
13,038
12,652
4,140
1,746
947
762
7,595
4,609
1,801
886
730
8,026
35
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2013
3 Segment Reporting (continued)
c) Profit before Taxation by Geographical Region
UK
Asia
Rest of World
Operating Profit
Net finance income
Profit before taxation
Year ended
31 March
2013
£’000
31 March
2012
£’000
841
(102)
24
763
20
783
691
324
(85)
930
18
948
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.
Included within operating profit are inter segment revenues/(charges) totalling £0.33m (2012 £0.465m) for the
UK, £(0.19m) (2012 £(0.3m)) for Asia and £(0.14m) (2012 £(0.165m)) for the rest of the world.
d) Segment Assets and Liabilities by Geographical Region
UK
Asia
Rest of World
Total
Total non-current assets
Total liabilities
31 March
2013
£’000
31March
2012
£’000
31 March
2013
£’000
31March
2012
£’000
10,018
9,952
34
9
12
2
979
577
156
881
601
341
10,061
9,966
1,712
1,823
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.
36
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2013
4 Profit for the Year
Year ended
31 March
2013
£’000
31 March
2012
£’000
Profit for the year is arrived at after charging:
Audit of company
Audit of subsidiaries
Total audit
Tax compliance services (i.e. related to assistance with corporate tax returns)
Total fees
Depreciation
- owned assets
- leased assets
Operating lease rentals
- land and buildings
- other operating leases
Loss/(profit) on disposal of fixed assets
Exchange rate (gain)/loss
12
29
41
2
43
94
-
427
7
26
(11)
(Profit) relating to a premium received on surrender of a lease net of associated
costs
(169)
5 Directors’ Remuneration
12
31
43
7
50
115
5
392
8
1
2
-
Short term employee benefits (aggregate Directors remuneration)
Share based payment charge
Highest paid Director:
Emoluments
Year ended
31 March
2013
£’000
31 March
2012
£’000
513
-
436
2
513
438
253
177
The Directors are the key management personnel of the Group. There were no post-employment benefits
provided to key management during the year and no key management exercised any share based payments.
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.
37
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2013
6 Employee Information
Group
The average monthly number of employees of the Group during the year,
including Directors, was as follows:
Consultants
Management and administration
Temporary staff
Company
Year ended
31 March
2013
Number
31 March
2012
Number
66
22
7
95
73
25
10
108
Year ended
31 March
2013
Number
31 March
2012
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 temporary staff placed with clients consists
of:
Group
Wages and salaries
Social security costs
Pension contributions
Share option charge
Year ended
31 March
2013
£’000
31 March
2012
£’000
4,668
370
-
19
4,564
386
14
22
5,057
4,986
38
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2013
7 Taxation on Profits on Ordinary Activities
Analysis of charge in the year
Current tax
UK Corporation tax
UK tax over provided in previous years
Total current tax
Deferred tax
Origination and reversal of temporary differences
Year Ended
31 March
2013
£’000
31 March
2012
£’000
247
2
231
13
249
244
(26)
24
Total income tax expense in the income statement
223
268
The tax assessed for the year is equal to that obtained by applying the standard rate of corporation tax in
the UK. Taxation for other jurisdictions is calculated at the rates prevailing in the respective
jurisdictions.
Reconciliation of the effective tax rate
Profit before taxation
Year Ended
31 March
2013
31 March
2012
783
948
UK corporation tax at the standard rate of 24% (2012: 26%) on profit on
ordinary activities
Effects of:
Expenses not deductible for tax purposes
Capital allowances for the period less than depreciation
Tax losses not utilised/(utilised)
Tax rate differences
Temporary differences recognised
Overprovision provision in prior years
188
20
7
59
(14)
(13)
2
246
25
(7)
7
(40)
-
13
Tax charge for the year
249
244
39
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2013
8 Dividends
Final dividend for 2012: 2.25 pence per share (2011: 2.25 pence per share)
Interim dividend for 2013: 1.00 pence per share (2012: 1.84 pence per share)
Year ended
31 March
2013
£’000
31 March
2012
£’000
267
120
267
220
387
487
The Directors propose to pay a final dividend in respect of the year ended 31 March 2013 of 3.09 pence per
share (2012: 2.25 pence per share) which, subject to shareholder approval, will be paid on 28 June 2013 to
shareholders who are on the register on 14 June 2013.
9 Earnings Per Share
Earnings per share is 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.
Year ended
31 March
2013
£’000
31 March
2012
£’000
Retained profit for basic and diluted earnings per share
560
680
Weighted average number of shares used for basic earnings per share
Dilutive effect of share options
11,896,544
83,393
11,890,089
297,234
Number Number
Diluted weighted average number of shares used for diluted earnings per
share
11,979,936
12,187,323
Basic earnings per share
Diluted earnings per share
40
Pence
Pence
4.70p
4.67p
5.72p
5.58p
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2013
10 Property, Plant and Equipment
Group
Cost
At 1 April 2011
Additions
Disposals
Exchange difference
At 1 April 2012
Additions
Disposals
Exchange difference
At 31 March 2013
Depreciation
At 1 April 2011
Provision for the year
Disposals
Exchange rate loss
At 1 April 2012
Provision for the year
Disposals
Exchange rate gain
At 31 March 2013
Net book value
At 31 March 2013
At 31 March 2012
At 31 March 2011
Total
£’000
1,264
82
(136)
1
1,211
190
(637)
5
769
1,006
120
(111)
1
1,016
94
(610)
5
505
264
195
258
Fixtures,
fittings and
equipment
£’000
Motor
vehicles
£’000
51
-
(30)
-
21
-
-
1
22
23
6
(8)
-
21
-
-
1
22
-
-
28
1,213
82
(106)
1
1,190
190
(637)
4
747
983
114
(103)
1
995
94
(610)
4
483
264
195
230
41
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2013
10 Property, Plant and Equipment (continued)
Fixtures, fittings and equipment
Company
Cost
At 1 April 2011 and 1 April 2012
Disposals
At 31 March 2013
Depreciation
At 1 April 2011 and 1 April 2012
Disposals
At 31 March 2013
Net book value
At 31 March 2013
At 31 March 2012
At 31 March 2011
11 Goodwill
Cost
At 1 April 2011, 1 April 2012 and 31 March 2013
£’000
19
(17)
2
19
(17)
2
-
-
1
Goodwill
£’000
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 value in use is determined through the analysis of the discounted cash flow forecasts based on financial
forecasts approved by management which takes account of both past performance and expected future market
developments.
If the value in use is estimated to be less than the carrying amount then the carrying amount of the asset would
be reduced to its recoverable amount.
42
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2013
11 Goodwill (continued)
The key assumptions in calculating the value in use is that the Group will meet its budgeted growth in net fee
income of 8% in the year to 31 March 2014. 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.
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 £0.36m. If the net fee
income growth rate fell below 4.3% from year 2 or a discount factor greater than 9.6% were applied then an
impairment loss would need to be recognised.
12
Investments
Company
Cost
At 1 April 2011
Disposal in year
At 1 April 2012 and 31 March 2013
Amounts provided
At 1 April 2011
Disposal in year
At 1 April 2012 and 31 March 2013
At 31 March 2013
At 31 March 2012
At 31 March 2011
43
Shares in
subsidiary
undertakings
£’000
11,139
(263)
10,876
263
(263)
-
10,876
10,876
11,139
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2013
12
Investments (Continued)
The following are subsidiary undertakings at the end of the year and have all been included in the
consolidated financial statements:
Country of
incorporation
Principal
activity
England and Wales
Holding Company
England and Wales
Recruitment
England and Wales
Recruitment
Macdonald & Company
Group Limited
Macdonald & Company
Property Limited
Macdonald and Company
Freelance Limited
Macdonald & Company
(Overseas) Limited
England and Wales
Macdonald & Company Ltd
Hong Kong
Ru Yi Consulting Limited
Hong Kong
Macdonald and Company
Pte Limited
Singapore
Macdonald & Company Pty Ltd
Australia
Macdonald & Company
Recruitment Proprietary Ltd
South Africa
The Prime Organisation Ltd
England and Wales
Dormant
Recruitment
Dormant
Recruitment
Dormant
Dormant
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.
44
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2013
13 Deferred Tax Asset
Group
At 1 April 2011
Charge to income
At 31 March 2012
Credit to income
At 31 March 2013
Company
At 1 April 2011, 1 April 2012 and 31 March 2013
14 Trade and other Receivables
Current
Trade receivables
Allowance for doubtful debts
Amounts owed by subsidiary undertakings
Other receivables
Prepayments and accrued income
Tax
losses
£’000
Accelerated
depreciation
£’000
-
-
-
26
26
26
(24)
2
-
2 28
Accelerated
depreciation
£’000
1
Total
£’000
26
(24)
2
26
28
Total
£’000
1
Group
2013
£’000
2012
£’000
Company
2013
£’000
2012
£’000
1,882
(85)
1,459
(146)
73
1,582
140
1,467
3,452
2,920
-
-
584
1
11
596
-
-
343
2
7
352
Trade receivables are recognised initially at fair value. A provision for impairment of trade receivables is
established when there is evidence that the Group will not be able to collect all amounts due according to the
original terms of the receivables. An allowance of £85k (2012: £146k) has been made for estimated irrecoverable
amounts.
Other receivables are considered to be short term, and no amounts are past due date. Within the Parent
company, loans to subsidiary undertakings are non- interest bearing. The directors have confirmed that the
amounts have no set term or repayment date.
45
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2013
14 Trade and other Receivables (continued)
The ageing of trade receivables at the reporting date was:
Gross trade
receivables
2013
£’000
Provisions
2013
£’000
Gross trade
receivables
2012
£’000
Not past due
Past due 0-30 days
Past due 30-90 days
Past due More than 90 days
1,056
578
117
131
1,882
12
-
19
54
85
Movement in allowance for doubtful debts:
1 April 2012
Impairment losses recognised
Amounts written off as uncollectable
Impairment losses reversed
31 March 2013
15 Financial Instruments
Financial assets
Trade and other receivables
Cash and cash equivalents
Note
14
924
384
102
49
1,459
2013
£’000
146
85
(23)
(123)
85
2013
£’000
3,452
2,282
Provisions
2012
£’000
3
68
55
20
146
2012
£’000
196
93
(60)
(83)
146
2012
£’000
2,920
2,831
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.
5,734
5,751
46
PRIME PEOPLE PLC
Notes to the financial statements
For the year ended 31 March 2013
15 Financial Instruments (continued)
Financial liabilities
Current
Bank overdraft
2013
£’000
2012
£’000
26
26
7
7
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 does not hold any derivative financial instruments.
16 Trade and other Payables
Current
Trade payables
Other payables
Taxation and social security
Accruals and deferred income
Group
Company
2013
£’000
193
245
374
714
2012
£’000
289
265
355
802
1,526
1,711
2013
£’000
-
-
17
38
55
2012
£’000
6
-
8
44
58
Due to the short-term nature of the trade and other payables, the Directors consider that the carrying value
approximates to their fair value.
47
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2013
17 Share Capital
31 March 2013
31 March 2012
Number
£’000
Number
£’000
ALLOTTED, CALLED UP AND FULLY PAID
New ordinary shares of 10p each
At beginning of period
Shares issued
12,066,500
-
1,207
-
11,941,500
125,000
12,066,500
1,207
12,066,500
1,194
13
1,207
The Company has one class of ordinary shares which carries no right to fixed income.
Capital Management Disclosure
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 Group considers capital to
be comprised of all the components of equity. There are no externally imposed capital requirements on the
Group.
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 15, has taken the decision not to renew its
borrowing facilities with Barclays Bank.
48
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2013
17 Share Capital (continued)
Employee Share Schemes
The Company operates two share options schemes and a HM Revenue & Customs SAYE approved scheme.
Enterprise Management Incentive Share Option Scheme
At 31 March 2013 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
2012
2005/6
2008/9
2009/10
57.50
2007-2015*
20.77 2011-2016*
31.50 2012-2017
31.50 2014-2019
42.00 2013-2018
184,234
127,000
15,000
200,000
72,000
2011/12
68.00 2014-2019
143,000
Total 2013
741,234
Weighted average exercise price
2013 (pence)
44.19p
Granted
Exercised
Cancelled
Number of
Options
31 March
2013
-
-
-
-
-
-
-
(17,000)
-
-
-
-
-
-
-
-
(14,000)
184,234
110,000
15,000
200,000
58,000
(38,000)
105,000
(17,000)
(52,000)
672,334
20.77p
61.0p
43.48p
Total 2012
908,468
143,000
(280,234)
(30,000)
741,234
Weighted average exercise price
2012 (pence)
33.48p
68.00p
22.61p
34.92p
44.19p
*These options have fully vested
There were 672,334 options outstanding at 31 March 2013 (2012: 741,234) which had a weighted average
price per share of 43.48p (2012: 44.19p). The options vest over a period of two to four years conditional upon
the option holders continued employment with the Company.
49
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2013
17 Share Capital (continued)
The conditions which give the option holders the right to exercise their options under the EMI have been
achieved. There were no options granted in the year:
Share price (pence)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of options (years)
2013
-
-
-
-
2012
68.00
41.00
4.0
2
Expected volatility was determined by reference to historical volatility of the Company’s share price.
SAYE Share Scheme
The Company operates a save as you earn (SAYE) scheme for the benefit of the employees within the
Company which is administered by Barclays Bank Trust Company Limited.
On 18 August 2011 all eligible employees within the Group were invited to buy shares in Prime People Plc.
Details are as follows:
Year of grant
Exercise
price
Pence
Exercise
period
Number of
options 31
March
2012
2011
56.00
2014
119,246
Total 2013
119,246
Weighted average exercise price 2013
(pence)
56.0p
Lapsed
Granted
Leavers
Number of
Options
31 March
2013
-
-
-
-
-
-
(26,549)
92,697
(26,549)
92,697
56.0p
56.0p
Weighted average exercise price 2012
(pence)
86.0p
86.0p
56.0p
56.0p
56.0p
50
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2013
17 Share Capital (continued)
There were 92,697 options outstanding at 31 March 2013 which had a weighted average price per share of
56.0p. The performance conditions which gives the option holder the right to exercise their options under the
EMI have been achieved. There were no options granted under the SAYE scheme during this year:
Share price (pence)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of options (years)
2013
-
-
-
-
2012
56.00
20.00
4.0
3
Expected volatility was determined by reference to historical volatility of the Company’s share price.
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 2013, 206,000 shares were held in treasury with a nominal value of £20,600 (2012: 173,000
shares with a nominal value £17,300).
The maximum number of shares held in treasury during the year was 206,000 shares representing 1.70% of
the called-up ordinary share capital of the Company (2012: 173,000 representing 1.43% of the called-up
ordinary share capital of the Company).
Share Premium Account
The balance on the share premium account represents the amounts received in excess of the nominal value of
the ordinary shares.
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.
Currency Translation Reserve
The translation reserve comprises all foreign exchange differences arising from translation of the financial
statements of foreign operations.
Retained Earnings
The balance held on this reserve is the accumulated retained profits of the Group.
51
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2013
19 Operating Lease Commitments
As at 31 March 2013 the Group was committed to making the following total payments in respect of non-
cancellable operating leases:
Group
Non-cancellable operating leases which expire:
Within one year
Within one to two years
Within two to five years
After five years
Land and
buildings
2013
£’000
Other
2013
£’000
Land and
buildings
2012
£’000
Other
2012
£’000
10
153
372
2,332
2,867
2
-
-
-
2
10
-
626
213
849
-
-
9
-
9
The Group leases various offices under non-cancellable operating lease agreements. The leases have varying
terms as disclosed above. The Group also leases various plant and equipment under operating lease
agreements with varying terms.
20 Reconciliation of Profit Before Tax to Net Cash Inflow from Operating Activities
Group
Year ended
Company
Year ended
Profit before taxation
Adjust for:
Depreciation
Share option reserve movement
Loss/(profit) on sale of plant & equipment
Net finance income
31 March
2013
£’000
31 March
2012
£’000
31 March
2013
£’000
783
94
19
26
(20)
948
120
20
2
(18)
44
-
-
-
(19)
Operating cash flow before changes in working
capital
(Increase)/decrease in receivables
(Decrease)/increase in payables
902
1,072
25
(532)
(184)
37
(334)
(246)
(2)
31 March
2012
£’000
57
1
2
-
(21)
39
(232)
(10)
Cash generated from/(used by) underlying
operations
186
775
(223)
(203)
52
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2013
21 Analysis of Net Cash
Group
At 1 April
Cash flow
At 31 March
Cash at bank and in hand
Bank overdraft
Company
Cash at bank and in hand
Bank overdraft
2012
£’000
2,831
(7)
£’000
(549)
(19)
2013
£’000
2,282
(26)
2,824
(568)
2,256
At 1 April
2012
£’000
2,076
(7)
Cash flow
£’000
(127)
(19)
At 31 March
2013
£’000
1,949
(26)
Total cash
2,069
(146)
1,923
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’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates
which will impact on future commercial transactions and recognised assets and liabilities in foreign
operations. The principal foreign exchange risk is to the UAE Dirham, Hong Kong Dollar and Singapore
Dollar.
53
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2013
22 Financial Risk Management (continued)
Foreign Currency (continued)
The Group’s international operations account for approximately 20 per cent (2012: 21 per cent) of gross fee
income and slightly less than 11% per cent (2012: 15 per cent) 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 short term working
capital monetary needs.
Credit Risk
The Group’s principal financial assets are bank balances and trade 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 12% of the total
balance of trade receivables.
However, in the current economic climate, there is increased 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.
It is the Directors’ opinion that no further provision for doubtful debts is required.
Liquidity Risk
Effective liquidity risk management requires maintaining sufficient 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.
Apart from one overdrawn bank account 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 £2.26m 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 £250k (2012: £281k). The balance owed by the subsidiary undertakings at the
year end is £584k (2012: £343k).
The Company also provides corporate guarantees on the subsidiary bank accounts. At 31 March 2013
amounts overdrawn by subsidiary bank accounts totalled £26k (2012: £nil). No provision for the fair value of
the financial liability guarantee provided for the subsidiary Company bank overdraft is considered necessary.
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
£231,140 (2012: £288,068).
54
PRIME PEOPLE PLC
Directors and Advisers
Directors
(Managing Director)
Robert Macdonald (Executive Chairman)
Peter Moore
Chris Heayberd (Finance Director)
John Lewis OBE (Non-Executive Director)
Simon Murphy (Non-Executive Director)
Secretary and Registered Office
Chris Heayberd, 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.
55
PRIME PEOPLE PLC
Notice of Annual General Meeting
Notice is hereby given that the twenty-ninth Annual General Meeting of Prime People Plc (the “Company”) will be held
at 2 Harewood Place, Hanover Square, London, W1S 1BX on Tuesday 25 June 2013 at 11.00am for the following
purposes:
Ordinary Business:
1. To receive the Company's financial statements for the year ended 31 March 2013 together with the reports of the
Directors and Auditor thereon.
2. To approve the Remuneration Report.
3. To approve the payment of a final dividend of 3.09 pence on 28 June 2013 to shareholders who are on the register on 14
June 2013.
4. To reappoint Mr C.I. Heayberd as a Director, who retires by rotation pursuant to the articles of association, and being
eligible, offers himself up for reappointment.
5. To reappoint Mr J.H.J Lewis as a Director, who retires by rotation pursuant to the articles of association, and being
eligible, offers himself up for reappointment.
6. To reappoint Crowe Clark Whitehill LLP as Auditor for the ensuing year.
7. To authorise the Directors to determine the remuneration of the Auditor.
Special Business:
8. To consider and, if thought fit, to pass the following resolution as an ordinary resolution:
That, in substitution for any existing powers, the Directors be and are hereby generally and unconditionally authorised in
accordance with Section 551 of the Companies Act 2006 ('the Act') to exercise all powers of the Company to allot
ordinary shares up to an aggregate nominal amount of £402,200 provided that this authority shall expire at the conclusion
of the Annual General Meeting to be held in 2014 or 15 months after the passing of this resolution (whichever is the
earlier) save that the Company may before such expiry make an offer or agreement which would or might require
ordinary shares to be allotted after such expiry and the Directors may allot ordinary shares in pursuance of such an offer
or agreement as if the authority conferred hereby had not expired.
9. To consider, and, if thought fit, to pass the following resolution as a special resolution:
That, in substitution for all existing powers, under Section 570 of the Act, but without prejudice to the exercise of such
power prior to the date hereof, the Directors be and are hereby empowered to allot equity securities (as defined in Section
560(1) and 560(2) of the Act) for cash pursuant to the authority conferred in accordance with Section 551 of the Act
pursuant to Resolution 7 above as if Section 561of the Act did not apply to such allotment provided that this power shall
be limited:
a)
b)
to the allotment of equity securities in connection with a rights issue, open offer or otherwise in favour of the
holders of equity securities in proportion to their respective holdings of such securities but subject to such
exclusions or other arrangements as the Directors may deem necessary or expedient to deal with legal or practical
problems in respect of overseas holders, fractional entitlements or otherwise; or
to the allotment (otherwise than pursuant to sub-paragraph (a) above) of equity securities up to an aggregate
nominal amount of £60,350.
10. To consider, and, if thought fit, to pass the following resolution as a special resolution:
That the Company be and is hereby generally and unconditionally authorised for the purposes of section 701 of the Act
to make one or more market purchases (as defined in section 693 of the Act)) on the AIM Market of the London Stock
Exchange Plc of ordinary shares of 10p each in the capital of the Company provided that:
a) The maximum aggregate number of new ordinary shares authorised to be purchased is 1,206,650 (representing
approximately 10 per cent of the Company’s current issued ordinary share capital).
b) The minimum price which may be paid for such shares is £0.10 per share.
c) The maximum price which may be paid for an ordinary share shall not be more than 5 per cent above the average
of the middle market quotations for a new ordinary share as derived from the London Stock Exchange Plc for the
five business days immediately preceding the date on which the new ordinary share is purchased.
d) Unless previously renewed, varied or revoked, the authority hereby conferred shall expire at the earlier of the
Company’s next Annual General Meeting or 18 months from the date of passing this resolution.
e) The Company may make a contract or contracts to purchase new ordinary shares under the authority conferred
prior to the expiry of such authority which will or may be executed wholly or partly after the expiry of such
authority and may make a purchase of new ordinary shares in pursuance of any such contract or contracts.
Registered Office By order of the Board
2 Harewood Place
Hanover Square, London, W1S 1BX
C I Heayberd
Secretary
28 May 2013
56
Prime People Plc
2 Harewood Place Hanover Square
London W1S 1BX
T: +44 (0) 20 7318 1785
F: +44 (0) 870 442 1737
E: connect@prime-people.com
W: prime-people.co.uk