Prime People Plc
Annual Report and Financial Statements
for the year ended 31 March 2014
2014
Contents
Chairman’s Statement
Strategic Report
Financial Review
Report of Directors
Statement of Directors’ responsibilities
Corporate governance
Remuneration report
Independent Auditor’s report
Consolidated statement of comprehensive income
Consolidated statement of changes in equity
Consolidated statement of financial position
Company statement of financial positon
Company statement of changes in equity
Group and Company cash flow statement
Notes to the financial statements
Directors and Advisers
Board of Directors
Page
1
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11
12
16
19
21
22
23
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26
27
28
54
55
PRIME PEOPLE PLC
Chairman's Statement
Performance
2014 was a year in which the recruitment sector
stabilised and there were clear signs of growth in
our main markets.
I am pleased to report that we closed the year with
Net Fee Income (NFI) of £8.3m which is a 9.2%
increase on last year (2013: £7.6m).
It is
encouraging to see both sequential and bi-annual
improvements in performance. NFI in the second
half of the year of £4.5m shows an 18.4%
improvement on both the first half of 2014 and
second half of 2013.
There were a number of strong NFI performances,
noticeably from our UK property businesses,
which continue to be our core market, and our
most recently established business in Singapore,
covering South East Asia, which has performed
consistently well throughout this year.
The increase in operating profit for the year from
£0.76m in 2013 to £1.03m in 2014 reflects the
improvement in NFI and the continued drive to
control costs across the Group.
NFI productivity per head has increased from £80k
in 2013 to £91k this year.
to shareholders by way of a reduction in capital
amounting to 15 pence per share.
We will continue to develop new business lines
organically as opportunities arise and we have and
will continue
in our CRM and
invest
management information systems so that they are
appropriate for the business now and into the
future.
to
In order to effect a reduction of share capital the
reduction must be approved by shareholders by a
special resolution. If shareholders approve the
reduction then as a public company, the Company
must apply to the High Court for confirmation of
the reduction of share capital.
in more detail
A circular containing a notice of the general
meeting will be circulated separately
to all
the
shareholders explaining
background to and reasons for the proposed
reductions in capital and convening the meeting.
As stated above if shareholders approve the
reduction then approval of the Court will need to
be obtained which, if given, will mean that the
process should be completed by the middle of July
and cash will be returned to shareholders towards
the end of that month.
The conversion rate which compares operating
profit to NFI improved from 10.05% to 12.33%
due primarily to improvement in Asia.
Dividend
The Board will be recommending a final dividend
of 3.09p (2013: 3.09p) per share which combined
with the interim dividend of 1.0p per share will
result in a total dividend of 4.09p for the 2014
financial year (2013: 4.09p).
Share Buy Back
through
During the year 7,000 shares were purchased at a
cost of £4,900 (2013: 55,000 shares at a cost of
buyback
£26,850)
seeking
programme. The Board will be
shareholder approval for renewal of the authority
to repurchase up to 10% of the Group’s issued
share capital at the Annual General Meeting.
the Group’s
The ratio of NFI derived from permanent as
against
slightly
temporary placements has
increased in the year from 90:10 in 2013 to 91:9.
Return of capital to shareholders
At the start of the year the Group had net cash of
£2.26m which had increased to £2.96m by the end
of the year, a large proportion of which is
considered by the Board to be surplus to the day to
day needs of the business.
The Board considers the cash needed to complete
current growth plans is more than adequate and
now concludes that it is appropriate to return cash
1
PRIME PEOPLE PLC
Chairman's Statement (continued)
Board
The Board has continued to operate corporate
governance standards appropriate to an AIM listed
company. There have been no changes to the
Board during the year. Although not required to
do so, the Directors have resolved that they will
retire at least once every three years and seek
reappointment by shareholders at the next AGM.
We are fortunate that the Board is composed of an
experienced group of people, who are able to give
balance and expertise to the business.
People
The average number of staff reduced slightly from
95 last year to 91 this year. However, we anticipate
that headcount at the end of 2015 will have
increased again.
The success of the Group is dependent on having
the right people and the Board would like to thank
all of the Group’s staff for their hard work,
commitment and contribution over the last year.
Current trading and outlook
Global
We are cautiously optimistic about the current
year.
are
economic
strengthening and there are signs of growth in a
number of recruitment sectors.
The Group
continues to enjoy strong client relationships which
will allow it to capitalise on opportunities as they
arise.
conditions
Robert Macdonald
Executive Chairman
28 May 2014
2
in NFI throughout the period from our Singapore
operation and improved NFI performance in the
second half of the year from our Hong Kong
office, whilst costs remained at the same level as
last year. Our business in the Rest of the World,
which is primarily directed through our Dubai
office, started the year well but then, due to
unforeseen licensing issues in Dubai, required
restructuring there. The business has now been
relocated
to a Dubai Government sponsored
‘Freezone’.
We remain focused on delivery profitable growth.
We closely monitor individual NFI performance
and productivity which, in conjunction with tightly
managing costs, aim to continue to improve
conversion ratios.
PRIME PEOPLE PLC
Strategic Report
Overview
The Group’s activity is the delivery of permanent
and temporary recruitment services. The Group’s
core market has been to provide these services to
the built environment sector through its main
subsidiary Macdonald & Company. This has been
broadened to include provision of recruitment
services for customer insight staff in the market
research and data analysis sector, branded as
Prime Insight and the energy & environmental
sector as Macdonald & Company.
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
functional activity with team leaders responsible
for running their teams 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
from disabled
persons where the requirements of the job may be
adequately covered by a disabled person.
for employment
We have two offices in the UK, London which is
our head office and Manchester. Internationally
we have offices in Dubai, Hong Kong, Singapore
and South Africa.
Group revenue and NFI were both up in 2014
which allowed us to deliver an increased operating
profit of £1.03m (2013: £0.76m) and increase in
profit before tax of £1.05m (2013: £0.78m).
Profit before tax grew by 474% in Asia but fell in
the UK and the Rest of the World. The UK had a
slow start to the year but recorded a much better
performance in the second half of the year. The
growth in Asia was driven by a consistent increase
3
PRIME PEOPLE PLC
Strategic Report
Regional Performance
UK
Revenue
Net fee income
Operating profit
% of NFI
Average number of employees
Revenue increased by 10.7% to £11.4m (2013:
10.3m) with an increase in net fee income of 8.2%
to £5.3m (2013: £4.9m)
Market conditions improved through the year
which was reflected in our improved net fee
income performance in the second half of the year
which accounted for the majority of the net fee
income growth during the year.
The improved net fee income performance was
primarily achieved by our more experienced
consultants which resulted in higher than usual
commissions.
Asia
Revenue
Net fee income
Operating profit
% of NFI
Average number of employees
2014
£m
11.4
5.3
0.72
13.6%
61
2013
£m
10.3
4.9
0.84
17.1%
64
This together with additional investment in the
business contributed to the reduced operating
profit as a percentage of NFI from 17.1% to
13.6%.
During the year, due to difficult UK market
conditions in the pharmaceutical sector in which
we worked, we took the decision to close our UK
pharmaceutical sector recruitment business. This
comprised of two fee earners, who were then
reallocated within the Group.
2014
£m
2.2
2.2
0.4
18.2%
23
2013
£m
1.7
1.7
(0.1)
-
22
Net fee income grew by 29% to £2.2m (2013:
£1.7.m). This is the fastest growing region and
now represents 27% of Group net fee income. The
region is covered by our offices in Hong Kong and
Singapore. This year Net Fee Income for Hong
Kong is approximately 6% down on the previous
However, our Singapore office has
year.
performed well, exceeding its budgeted forecasts
and ended significantly above last year, its first
year of trading.
The region is entirely focussed on permanent
revenue. Average staff members were broadly the
same in 2014 compared to 2013.
4
PRIME PEOPLE PLC
Strategic Report
Rest of the World
Revenue
Net fee income
Operating profit
% of NFI
Average number of employees
2014
£m
0.8
0.8
(0.08)
-
7
2013
£m
1.0
1.0
0.02
2.0
9
The Dubai business had a number of distractions
over the last year, not least of which was the
process of organising a move to a ‘free zone’ to
simplify trading licence renewal in the future. This
was a challenging process as it necessitated a
complete change in the corporate structure of the
business, which has now been
completed. Whilst the business has made a small
loss this year, the outlook for the region, as we
step in to the new financial year, looks favourable
and the expectation is that business will return to
profit in the 2014/15 year.
Peter Moore
Managing Director
28 May 2014
5
PRIME PEOPLE PLC
Financial Review
Revenue
The Group achieved a 10.6% increase in revenue
to £14.42m (2013: £13.04m).
Net Fee Income (NFI)
NFI comprises
fee of
permanent candidates and the margin earned in the
placement of temporary staff.
total placement
the
Overall the Group delivered a 9.2% increase in
total NFI to £8.3m (2013: £7.6m). NFI from
permanent business increased by 10.4% to £7.54m
temporary
(2013: £6.83m).
business, which represents 9.4% of total NFI
(2013: 10%), increased by 2.6% to £0.78m (2013:
£0.76m).
NFI from international placements
increased by 11.9% to £3.01m(2013: £2.69m).
Fees from our
Administration Costs
Administration costs for the year increased by
4.3% to £7.3m (2013: £7.0m after adjusting for a
gain on surrender of a property lease of £0.17m).
The
increased
commission costs paid to employees.
increase primarily
related
to
Profit before Taxation
Profit before taxation increased by 34.6% to
£1.05m (2013: £0.78m)
Taxation
The taxation charge is £0.20m on a profit on
ordinary activities before taxation of £1.05m
which gives an effective tax rate of 19.4% (2013:
28.5%). The reasons for the difference from the
standard UK corporation tax rate of 23% are
detailed in note 7 of the accounts.
Earnings Per Share
Basic earnings per share increased by 51.1% to
7.10p (2013: 4.70p).The diluted earnings per
share, taking into account existing share options,
increased by 46.3% to 6.83p (2013: 4.67p).
Dividend
An interim dividend of 1.0p (2013: 1.0p) was paid
on 29 November 2013 to shareholders on the
register at close of business on 22 November 2013.
The interim dividend was approved by the Board
6
is proposed,
on 7 November 2013. A final dividend of 3.09p
(2013: 3.09p)
total
dividend for the year to 4.09p (2013: 4.09p). The
proposed dividend will be paid on 27 June 2014 to
shareholders on the register on 13 June 2014
subject to approval at the AGM.
taking
the
Balance Sheet
Net assets at 31 March 2014 were slightly up on
last year at £14.4m (2013: £14.08m)
Trade receivables were slightly down on last year
at £1.6m (2013: £1.9m) which reflects the reduced
credit period taken by customers at 41 days (2013:
58 days).
Treasury Management and Currency Risk
Approximately 80% of the Group’s revenue in
2014 was denominated in Sterling. Consequently
the Group has a degree of currency exposure in
accounting for overseas operations.
Currently the Groups 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 local short term working capital monetary
needs.
The Group operates a centralised treasury function
and has chosen not to renew its borrowing
facilities with Barclays Bank Plc as the Board
consider that the net cash within the Group is
sufficient
foreseeable
to meet existing and
liabilities as they fall due.
Cash Flow and Cash Position
At the start of the year the Group had net cash of
£2.26m. After net taxation payments of £0.17m
(2013: £0.19m) cash generated from operations
was £1.4m (2013: outflow of £0.01m).
During the course of the year the Group spent
£0.18m on its CRM and management information
systems.
A final dividend for 2013 of £0.46m was paid in
June 2013 and an interim dividend for 2014 of
£0.12m was paid in November 2013.
At 31 March 2014 the Group had net cash of
£2.96m.
PRIME PEOPLE PLC
Financial Review
Measurements of performance in 2014
Whilst the Group considers Net Fee Income (NFI)
to be the key indicator of the performance of the
business there are other measures which were
reported on to senior management as follows:
- Conversion ratio (operating profit divided by
NFI) increased to 12.33% (2013: 10.05%)
- Productivity (NFI divided by total average
headcount) increased to £91k (2013: £80k)
- Ratio of billing headcount
to
support
headcount reduced to 2.9 (2013: 3)
These key performance indicators form a basis for
reviewing the progress of the business.
Principal Risks and Uncertainties
Risk management is an important part of the
management process throughout the group. The
composition of the Board is structured to give
balance and expertise when considering the principal
risks and uncertainties of the Group.
The Group’s strategy is designed to allow the
business to grow without increasing risk beyond an
acceptable limit. The profile of risks fluctuates from
time to time and the actions being taken to manage
and control risks are intended to mitigate the effects
on
risks
the business, but cannot eliminate
absolutely. 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:
to
to continue
its competitive
seeks
positions, the actions of current or indeed potential
competitors may adversely affect
the Group’s
business.
improve
Strength of Property Markets
The market for built environment 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. Our
temporary business continues to be focused in the
Public Sector which
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.
in recent years, due
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.
Dependence on Key People
The future success of the Group is dependent on the
continued service of senior management and key
people. The loss of the services of the senior
management and other key people could have a
material effect on the business. To address this, the
Group has put in to place an internal recruitment
function, a training and development programme,
competitive
term
structures
remuneration plans, the aim of which is to retain the
key employees.
long
and
pay
Competitors
The Directors believe that the Group is well
positioned in its chosen markets. Whilst the Group
7
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
technology
provide
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
and
infrastructure
upgraded to ensure that they provide appropriate
functionality and
the
resilience
business as it develops.
to support
reviewed
regularly
the
are
PRIME PEOPLE PLC
Financial Review
Foreign Exchange Risk
The Group’s international operations account for
approximately 21 per cent of revenue (2013: 20
per cent) and slightly less than 7 per cent of the
Group’s assets (2013: 6 per cent). 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
third party credit
on payment history and
references with appropriate provisions being
made.
Chris Heayberd
Finance Director
28 May 2014
8
PRIME PEOPLE PLC
Report of the Directors for the Year Ended 31 March 2014
The Directors submit their report and the audited Group financial statements of Prime People Plc for the year
ended 31 March 2014. Prime People Plc is a public listed company, incorporated and domiciled in England
and its shares are quoted on the AIM Market.
Substantial Shareholders
At 28 May 2014, other than the Director’s interests shown in the Directors’ remuneration report on page 16
the Company had been notified of the following interests disclosed under the Disclosure and Transparency
Rules:
Peter Hearn
The Cayzer Trust Company Limited
Number of 10p
ordinary shares
Percent of issued
share capital
%
784,500
439,500
6.50
3.64
The mid market quotation of the Company’s shares at close of business on 31 March 2014 was 88p. The
highest and lowest mid market quotations in the period from 1 April 2013 to 31 March 2014 were 88p and
51p.
Going concern
The Group has two revenue streams permanent and temporary recruiting. The Group has experienced 10%
revenue growth in 2014 evenly split between the two streams of business. The permanent business, which is
largely cash generative, has provided the working capital to support the growth in the temporary business as
well as increase the net cash position of the Group from £2.26m to £2.96m at the end of the year.
The Directors have prepared cash flow forecasts for a period of at least 12 months from the date of approval
of the financial statements. These forecasts take account of the proposed return of capital which is referred to
in the Chairman’s Statement on page 1 and which, subject to shareholders’ approval will be paid to
shareholders in July 2014. After reviewing these forecasts and having made appropriate enquiries, the
Directors have a reasonable expectation that the Group has adequate resources to continue operating for the
foreseeable future. The Group continue to adopt the going concern basis in preparing the financial statements.
Environmental Policy
The Group recognises its responsibilities for the environment and gives due consideration to the possible
effects of its activities on the environment. As such as our environmental impact comes from the running of
our business generating carbon emissions through the consumption of gas and electricity, transport activities
and commuting, as well as office based waste such as paper and toners. We do not consider that the Group’s
activities have a major effect on the environment. However, it is the Group’s aim to reduce the environmental
impact of its activities and to operate in an environmentally responsible manner. We are, therefore,
committed to the following principles to ensure the business operates in an environmentally sensitive manner:
•
•
•
Encouraging the re-use and re-cycling of products and waste from our offices
Ensuring efficient use of materials and energy
Purchasing environmentally friendly materials where appropriate
Political Donations
The Group made no political donations during the year (2013: Nil).
9
PRIME PEOPLE PLC
Report of the Directors for the Year Ended 31 March 2014
Workplace Pensions
The law on workplace pensions requires that the Group automatically enrol certain UK employees into a
pension scheme which the Group will be implementing on 1 July 2014.
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.
Annual General Meeting (“AGM”)
The AGM will be held on Monday 16 June 2014 at 9.00am at 2 Harewood Place, London, W1S 1BX. All
shareholders are encouraged to attend. The resolutions to be put forward to the AGM are detailed in the
Notice of AGM, which is being circulated separately to all shareholders.
Authority to purchase own shares
The Directors were given authority at last year’s AGM to purchase through the market up to 10% of the
Company’s issued share capital, subject to certain restrictions on price. A request for renewal of the authority
is included in the resolutions for this year’s AGM.
During the year the company purchased 7,000 shares (2013: 55,000 shares).
Statement as to disclosure of information to auditors
The Directors who were in office on the date of approval of these financial statements have confirmed that, as
far as they are aware, there is no relevant audit information of which the auditors are unaware. The Directors
have confirmed that they have taken appropriate steps to make themselves aware of any relevant audit
information and to establish that it has been communicated to the auditors.
Auditor
Crowe Clark Whitehill LLP 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 2014
10
PRIME PEOPLE PLC
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Strategic Report, the Directors' Report, the Directors'
Remuneration Report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the
Directors have elected to prepare the financial statements in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European Union (EU) and applicable law.
Under Company law the Directors must not approve the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs and profit or loss of the Company and Group for that period. In
preparing these financial statements, the Directors are required to:
•
select suitable accounting policies and then apply them consistently;
• make judgments and accounting estimates that are reasonable and prudent;
•
state whether applicable accounting standards have been followed, subject to any material departures
disclosed and explained in the financial statements;
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Group and Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Company's transactions and disclose with reasonable accuracy at any time the financial position of the
Company and its Group and enable them to ensure that the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for
taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information
included on the Company’s website. 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 2014 and the
attendance record are summarised in the table below:
Directors
Board
Audit
Committee
Remuneration
Committee
Robert Macdonald – Executive Chairman
5/5 (Chair)
Peter Moore – Managing Director
Chris Heayberd – Finance Director
John Lewis – Non-Executive Director
Simon Murphy – Non-Executive Director
5/5
5/5
5/5
4/5
N
N
N
N
N
N
1/1
1/1 (Chair)
1/1(Chair)
1/1
Below is a brief description of the role of the Board and its Committees, followed by a statement regarding
the Group’s system of internal controls.
The Board and its Operation
The Board of Prime People Plc is the body responsible for corporate governance, establishing policies and
objectives, and reviewing the management of the Group’s resources.
The Board consists of an executive Chairman, Robert Macdonald, two other Executive Directors and two
Non-Executive Directors all of whom held office throughout the year.
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 set out in the Remuneration Report on page 17.
Biographical details for all the Directors are shown on page 55.
12
PRIME PEOPLE PLC
Corporate Governance
The Board and its Operation (continued)
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,
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.
During the year the committee met once which was considered sufficient by both committee members to deal
with matters referred to it in the year.
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 meet up to six times a year and more frequently when required focusing mainly on
strategic issues, operational and financial performance. The Directors have in place an organisational structure
with clearly defined levels of responsibility and delegation of authority.
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.
Levels of authority
There are clear levels of authority, delegation and management structure.
14
PRIME PEOPLE PLC
Corporate Governance
Internal Controls (continued)
Risk Management
The Directors and operating Company management have a clear responsibility for identifying risks facing
each of the businesses and for putting in place procedures to mitigate and monitor risks. Risks are assessed
during the annual budget process, which is monitored by the Board, and the ongoing Group strategy process.
Whistleblowing Policy
The Company is committed to maintaining the highest ethical standards and the personal and professional
integrity of its employees, suppliers, contractors and consultants. It encourages all individuals to raise any
concerns that they may have about the conduct of others in the business or the way in which the business is
run. The aim of the policy is to ensure that as far as is possible, our employees are able to tell us about any
wrong doing at work which they believe has occurred or is likely to occur.
Dialogue with shareholders
Many of those who continue to hold shares in the Company are, or have been employed within the business.
The original owners of Macdonald & Company Group still hold considerable share interests and retain a
strong interest in the company’s success and reputation.
Robert Macdonald
Chairman
28 May 2014
15
PRIME PEOPLE PLC
Remuneration Report
The role of the Remuneration Committee
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
management 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.
Directors’ Service Contracts
The Executive Chairman and Managing Director have service contracts which contain a notice period of one
year which are terminable by either party giving one years notice. The service contracts also contain
restrictive covenants preventing 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.
Non-Executive Directors’ Remuneration and Terms of Services
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 year 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
2014
Total
£
£
£
2013
Total
£
Executive Chairman
Robert Macdonald
111,390
4,376
115,766
113,918
Executive Directors
Peter Moore (Notes 1 & 2)
171,840
101,697
273,537
252,644
Chris Heayberd
62,485
3,920
66,405
109,543
Non-Executive Directors
John Lewis
Simon Murphy
18,925
18,925
-
-
18,925
18,342
18,925
18,342
383,565
109,993
493,558
512,790
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.
Directors’ interests in shares
Directors’ beneficial interest in the shares of the Company at 31 March 2014 were as follows:
Ordinary
shares of 10p
each held at
31 March
2014
Percentage of
issued share
capital at
31 March
2014
Ordinary
shares of 10p
each held at
31 March
2013
Percentage of
issued share
capital at
31 March
2013
2,480,000
2,897,500
324,000
1,008,500
230,000
20.55%
24.01%
2.69%
8.36%
1.91%
2,480,000
2,897,500
324,000
1,180,500
230,000
20.55%
24.01%
2.69%
9.78%
1.91%
Robert Macdonald
Peter Moore
Chris Heayberd
John Lewis
Simon Murphy
17
PRIME PEOPLE PLC
Remuneration Report
Share option schemes
During 2014 no share options were granted to Executive Directors. As at 31 March 2014 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
The performance criteria on Directors share options granted in 2005/6 were achieved when the Company
acquired Macdonald & Company Group Limited in January 2006.
Directors’ Insurance
Directors’ and officers’ liability insurance is provided at the cost of the Group for all Directors’ and Officers’.
Annual Resolution
Shareholders will be given the opportunity to approve the Remuneration report at the Annual General
Meeting.
John Lewis
Chairman of the Remuneration Committee
28 May 2014
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 2014 which
comprise Group and Parent Company Statements of Financial Position, the Group Statement of
Comprehensive Income, the Group and Company Cash Flow Statements, the Group and Parent Company
Statements of Changes in Equity and the related notes.
The financial reporting framework that has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the
parent Company financial statements, as applied in accordance with the provisions of the Companies Act
2006.
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's
members those matters we are required to state to them in an Auditor's report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company
and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of Directors and Auditor
As explained more fully in the Statement of Directors' Responsibilities, the Directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the
Auditing Practices Board's Ethical Standards for 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 Strategic Report and the Directors’
Report, Chairman’s Statement, Financial Review, Corporate Governance and Remuneration Report to identify
material inconsistencies with the audited financial statements. 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 2014 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 Strategic Report and the Directors' Report for the financial year for
which the financial statements are prepared is consistent with the financial statements.
Matters on which we are Required to Report by Exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to
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 2014
20
PRIME PEOPLE PLC
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2014
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 income
Exchange (loss)/profit on translating
foreign operations
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
2014
£’000
14,442
(6,115)
2013
£’000
13,038
(5,443)
8,327
(7,300)
7,595
(6,832)
1,027
20
(2)
1,045
(203)
763
20
-
783
(223)
842
560
(111)
19
731
579
731
579
7.10p
6.83p
4.70p
4.67p
PRIME PEOPLE PLC
Consolidated Statement of Changes in Equity
For the year ended 31 March 2014
Called
up
share
capital
£’000
Capital
Redemp-
tion
reserve
£’000
Treasury
shares
Share
premium
account
Merger
reserve
Share
option
reserve
Trans-
lation
reserve
Retained
earnings
Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
At 1 April 2012
1,207
9
(169)
7,109
173
81
404
5,080
13,894
Total
comprehensive
income for the
year
Adjustment in
respect of share
schemes
Shares issued
from treasury
Shares
purchased for
treasury
Dividend
At 31 March
2013
Total
comprehensive
income for the
year
Adjustment in
respect of share
schemes
Shares issued
from treasury
Shares
purchased for
treasury
Dividend
At 31 March
2014
-
-
-
-
-
-
-
-
-
-
-
-
4
(26)
-
-
-
-
-
-
-
-
-
-
-
-
19
560
579
16
-
-
-
-
-
-
-
3
-
19
4
-
(26)
(387)
(387)
1,207
9
(191)
7,109
173
97
423
5,256
14,083
-
-
-
-
-
-
-
-
-
-
-
-
53
(5)
-
-
-
-
-
-
-
-
-
-
-
-
(111)
842
731
23
-
-
-
-
-
-
-
23
-
-
46
53
(5)
(485)
(485)
1,207
9
(143)
7,109
173
120
312
5,636
14,423
22
PRIME PEOPLE PLC
Consolidated Statement of Financial Position
As at 31 March 2014
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
Non-current liabilities
Deferred tax liabilities
Total liabilities
Net assets
2014
£’000
9,769
328
-
2013
£’000
9,769
264
28
10,097
10,061
3,535
2,963
6,498
3,452
2,282
5,734
16,595
15,795
1
2,005
151
2,157
15
15
26
1,526
160
1,712
-
-
2,172
1,712
14,423
14,083
Note
11
10
16
13
21
14
15
16
23
PRIME PEOPLE PLC
Consolidated Statement of Financial Position
As at 31 March 2014
Note
2014
£’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
Translation reserve
Retained earnings
17
18
18
18
18
18
18
18
1,207
9
(143)
7,109
173
120
312
5,636
2013
£’000
1,207
9
(191)
7,109
173
97
423
5,256
Total equity
14,423
14,083
The financial statements on pages 21 to 53 were approved by the Board of Directors and authorised for issue
on 28 May 2014 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 2014
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
16
13
21
15
2014
£’000
10,876
-
1
10,877
15
2,672
2,687
2013
£’000
10,876
-
1
10,877
596
1,949
2,545
13,564
13,422
-
159
159
159
26
55
81
81
13,405
13,341
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
(143)
7,109
173
32
5,018
1,207
9
(191)
7,109
173
32
5,002
Total equity
13,405
13,341
The financial statements of Prime People Plc, Company Number 1729887 were approved by the Board and
authorised for issue on 28 May 2014 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 2014
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 2012
1,207
9
(169)
7,109
173
32
4,879 13,240
Total
comprehensive
income for the
year
Shares
purchased for
treasury
Dividend
At 31 March
2013
Total
comprehensive
income for the
year
Shares
purchased for
treasury
Dividend
At 31 March
2014
-
-
-
-
-
-
-
(22)
-
-
-
-
-
-
-
-
-
-
510
510
-
(22)
(387)
(387)
1,207
9
(191)
7,109
173
32
5,002
13,341
-
-
-
-
-
-
48
-
-
-
-
-
-
-
-
-
501
501
-
48
(485)
(485)
1,207
9
(143)
7,109
173
32
5,018
13,405
26
PRIME PEOPLE PLC
Group and Company Cash Flow Statement
For the year ended 31 March 2014
Cash generated from (used
in) underlying operations
Income tax paid
Income tax received
Net cash from/(used by)
operating activities
Cash flows from investing
activities
Net interest received
Net purchase of property,
plant and equipment
Dividend received
Net cash (used in)/from
investing activities
Cash flows from financing
activities
Shares issued from treasury
Shares purchased for treasury
Dividend paid to shareholders
Net cash used in financing
activities
Net increase/(decrease) in
cash and cash equivalents
Cash and cash equivalents at
beginning of the year
Effect of foreign exchange
rate changes
Cash and cash equivalents at
the end of the year
Note
20
Group
2014
£’000
2013
£’000
Company
2014
£’000
2013
£’000
1,586
186
723
(223)
(230)
60
(195)
-
(5)
(6)
-
1,416
(9)
718
(229)
18
(180)
-
20
(189)
-
18
-
450
19
-
473
(162)
(169)
468
492
(5)
53
(485)
4
(26)
(387)
-
48
(485)
-
(22)
(387)
(437)
(409)
(437)
(409)
817
(587)
749
(146)
2,256
2,824
1,923
2,069
(111)
19
-
-
2,962
2,256
2,672
1,923
27
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2014
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 £501,331 (2013: profit £509,038). The financial
statements have been prepared on a going concern basis.
The consolidated financial statements of Prime People Plc have been prepared in accordance with
International Financial Reporting Standards (“IFRS”) as endorsed by the European Union and also comply
with IFRIC interpretations and Company Law applicable to Companies reporting under IFRS. The
consolidated financial statements have been prepared under the historical cost convention modified as
necessary so as to include any items at fair value, as required by accounting standards.
The consolidated financial statements for the year ended 31 March 2014 (including comparatives) are
presented in GBP ‘000.
The accounting polices applied by the Group in these consolidated financial statements are the same as those
applied by the Group in its consolidated financial statements as at and for the year ended 31 March 2013 and
are 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 indicates that either they will not be relevant or
will not have a material impact on the Group:
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**)
IAS 27 (Revised), Separate Financial Statements (effective 1 January 2013**)
IAS 28 (Revised), Investments in Associates and Joint Ventures (effective 1 January 2013**)
•
•
•
•
•
• Novation of Derivatives and Continuation of Hedge Accounting - Amendments to IAS 39 (effective 1
January 2014
28
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2014
2 Summary of Significant Accounting Policies (continued)
International Accounting Standards (IAS/IFRS) and Interpretations in Issue but not yet adopted
(continued)
• 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)
• Recoverable Amount Disclosures for Non-Financial Assets (Amendments to IAS 36) (effective 1 January
2014).
**Note: EU mandatory effective date is 1 January 2014, not 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 and balances on transactions between Group companies are eliminated in
preparing the consolidated financial statements.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the
policies adopted by the Group.
Going Concern
The Directors have prepared cash flow forecasts for a period of at least 12 months from the date of approval
of the financial statements and have a reasonable expectation that the Company and the Group have adequate
resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the
going concern basis of accounting in preparing the financial statements.
29
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2014
2 Summary of Significant Accounting Policies (continued)
Revenue recognition
a) Revenue
Revenue, which excludes value added tax (“VAT”), constitutes the value of services undertaken by the Group
from its principal activities, which are recruitment consultancy and other ancillary services. These consist of:
- Revenue from 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; and
-
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective
interest rate applicable.
b) Cost of Sales
Cost of sales 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 Sterling, which is the Company’s functional and presentation currency.
(ii) Transactions and Balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the consolidated statement of comprehensive income.
30
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2014
2 Summary of Significant Accounting Policies (continued)
d) Foreign Currency Translation (continued)
(iii) Group Companies
On consolidation the results and financial position of all the Group entities that have a functional currency
different from the presentation currency are translated into the presentation currency as follows:
• assets and liabilities for each year end presented are translated at the closing rate of that year end;
•
income and expenses for each statement of comprehensive income are translated at average exchange
rates; and
• all resulting exchange differences are recognised in other comprehensive income.
e)
Intangible Assets
(i) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net
identifiable assets of the acquired subsidiary/associate at the date of acquisition. Goodwill on acquisitions of
subsidiaries is included in ‘intangible assets’.
As permitted by the exception in IFRS1 ‘First time adoption of International Reporting Standards’, the Group
has elected not to apply IFRS3 ‘Business combinations’ to goodwill arising on acquisition that occurred
before the date of transition to IFRS.
Separately recognised goodwill is reviewed annually for impairment and carried at cost less accumulated
impairment losses. Impairment losses on goodwill are not reversed. Determining whether goodwill is
impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been
allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise
from the cash generating unit and a suitable discount rate in order to calculate present value.
(ii) Computer Software
Computer software acquired by the Group is stated at cost. These costs are amortised to write the cost off in
equal annual instalments over three years.
f) Property, Plant and Equipment
All property, plant and equipment are stated at historical cost less accumulated depreciation less provisions
for impairment. Depreciation is provided on all property, plant and equipment using the straight-line method
at rates calculated to write off the cost less estimated residual values over their estimated useful lives, as
follows:
• Leasehold improvements over the expected period of the lease.
• Furniture, fittings and computer equipment 25% – 33%
• Motor vehicles 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.
31
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2014
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 statement of comprehensive income because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are never taxable or deductible. The Group’s
liability for current tax is calculated using tax rates that have been enacted or substantially enacted by the
balance sheet date.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements.
Deferred income tax is determined using tax rates and laws that have been enacted or substantially enacted by
the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the
deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be
available against which the temporary differences can be utilised.
i) Leased Assets and Obligations
All of the Group’s leases are operating leases and the annual rentals are charged to profit and loss on a straight
line basis over the lease term.
The benefit of rent free periods received for entering into a lease is spread evenly over the lease term.
j) Pension Costs
The Group does not operate a pension scheme for employees.
32
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2014
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 instruments
Financial assets and liabilities are recognised in the Group’s balance sheet when the Group becomes a party to
the contractual provision of the instrument.
m) Financial assets
The Group’s financial assets comprise cash and various other receivable balances that arise from its
operations. Trade receivables, loans and other receivables that have fixed or determinable payments that are
not quoted in an active market are classified as loans and receivables. Loans and receivables are initially
measured at fair value and subsequently at amortised cost using the effective interest rate method, less any
impairment. Interest incomes is recognised by applying the effective interest rate, except for short-term
receivables when the recognition of interest would be immaterial.
Financial assets are assessed for impairment at each balance sheet date, and are impaired where there is
objective evidence that, as a result of one or more events that occurred after the initial recognition of the
financial asset, the estimated future cash flows of the investment have been impacted.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets
with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance
account. When a trade receivable is considered uncollectible, it is written off against the allowance account.
Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes
in the carrying amount of the allowance account are recognised in the profit or loss account. If in a
subsequent period the amount of the impairment loss decreases and the decreases can be related objectively to
an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed
through profit and loss to the extent that the carrying amount of the financial asset at the date the impairment
is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.
Cash and cash equivalents includes cash in hand and bank deposits that are readily convertible to a known
amount of cash and are subject to an insignificant risk of changes in value. Bank overdrafts are classified with
current liabilities in the statement of financial position.
n) Financial liabilities and equity
Financial liabilities and equity instruments are initially measured at fair value and are classified according to
the substance of the contractual arrangements entered into. Financial liabilities are subsequently measured at
amortised cost. The Group’s financial liabilities comprise trade payables, borrowings, bank overdrafts and
other payable balances that arise from its operations. They are classified as ‘financial liabilities measured at
amortised cost’.
33
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2014
2 Summary of Significant Accounting Policies (continued)
o) Share-Based Compensation
The Group operates equity-settled share-based compensation plans.
The fair value of the employee services received in exchange for the grant of the options is recognised as an
expense. The total amount to be expensed over the vesting period is determined by reference to the fair value
of the options granted, excluding the impact of any non-market vesting conditions (for example, profitability
and sales growth targets). At the balance sheet date the number of outstanding options is adjusted to reflect
those options that have been granted during the year or have lapsed in the year.
p) Dividend Distribution
A final dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s
financial statements in the period in which the dividends are approved by the Company’s shareholders.
Interim dividend distributions are recognised in the period in which they are approved and paid.
q) Critical Accounting Estimates and Judgements
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
estimates and judgements. It also requires management to exercise judgement in the process of applying the
Company’s accounting policies.
Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying
accounting policies that have the most significant effect on the amount recognised in the financial statements
are described below:
Revenue Recognition
Revenue from permanent placements is recognised when a candidate formally accepts an offer of
employment, a start date has been agreed, but employment has not commenced. A ‘fall-through’ provision is
made by management, based on historical experience, for the proportion of those placements where the offer
of employment is not taken up. Management have reviewed the past assumptions made with respect to the
‘fall-through’ provisions and consider that they remain reasonable. The fall through provision is estimated at
20.5% of those offers where employment has yet to commence (2013: 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 13.
34
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2014
3 Segment Reporting
a) Revenue and Net Fee Income, by Geographical Region
UK
Asia
Rest of World
Revenue
Net fee income
2014
£’000
2013
£’000
2014
£’000
2013
£’000
11,432
10,345
5,317
4,902
2,230
1,746
2,230
1,746
780
947
780
947
14,442
13,038
8,327
7,595
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
2014
£’000
2013
£’000
Net fee income
2013
£’000
2014
£’000
4,548
2,230
780
6,884
4,146
1,746
947
4,533
2,230
780
4,140
1,746
947
6,199
784
762
14,442
13,038
8,327
7,595
35
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2014
3 Segment Reporting (continued)
c) Profit before Taxation by Geographical Region
UK
Asia
Rest of World
Operating Profit
Net finance income
Profit before taxation
2014
£’000
719
381
(73)
1,027
18
1,045
2013
£’000
841
(102)
24
763
20
783
Operating profit is the measure of profitability regularly reviewed by the Board, which collectively acts as the
Chief Operating Decision Maker. Consequently no segmental analysis of interest or tax expenses are
provided.
Segment operating profit is the profit earned by each operating unit and includes inter segment revenues
totalling £0.37m (2013 £0.43m) for the UK, and charges of £(0.24m) (2013 £(0.3m)) for Asia and £(0.13m)
(2013 £(0.14m)) for the rest of the world.
d) Segment Assets and Liabilities by Geographical Region
UK
Asia
Rest of World
Total
Total non-current assets
2013
£’000
2014
£’000
Total liabilities
2014
£’000
2013
£’000
10,062
10,018
1,380
7
28
34
9
656
136
979
577
156
10,097
10,061
2,172
1,712
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 2014
4 Profit on ordinary activities before taxation
Profit for the year is arrived at after charging:
Depreciation
Operating lease rentals
- owned assets
- land and buildings
- other operating leases
(Profit)/loss on disposal of fixed assets
Exchange rate loss/(gain)
(Profit) relating to a premium received on surrender of a lease net of associated
costs
The analysis of auditors remuneration is as follows:
Audit of company
Audit of subsidiaries
Total audit fees
Tax compliance services (i.e. related to assistance with corporate tax returns)
Total fees
5 Directors’ emoluments
Emoluments for qualifying services
Highest paid Director:
Emoluments for qualifying services
Year ended
2014
£’000
2013
£’000
116
353
2
(2)
25
94
427
7
26
(11)
-
(169)
12
30
42
2
44
12
29
41
2
43
2014
£’000
2013
£’000
494
494
513
513
274
253
The Directors did not exercise any share options during the year (2013: Nil).
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 2014
6 Employees
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
The average monthly number of employees of the Company during the
year, including Directors, was as follows:
2014
Number
2013
Number
63
22
6
91
66
22
7
95
2014
Number
2013
Number
Management
5
5
Staff costs for all employees, including Directors, but excluding temporary staff placed with clients are as
follows and have been included in Administration expenses in the consolidated statement of comprehensive
income:
Group
Wages and salaries
Social security costs
Share option charge
Remuneration of key management
Short term employee benefits (excluding social security costs)
Share based payments
2014
£’000
4,677
388
46
2013
£’000
4,668
370
19
5,111
5,057
2014
£’000
816
11
2013
£’000
852
8
827
860
Key management includes executive Directors above and senior divisional managers.
38
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2014
7 Taxation on Profits on Ordinary Activities
a) Analysis of tax charge in the year
Current tax
UK Corporation tax
UK tax over provided in previous years
Foreign tax
Total current tax
Deferred tax
Origination and reversal of temporary differences
Total charge on profit for the year
2014
£’000
2013
£’000
123
(23)
60
239
2
8
160
249
43
(26)
203
223
UK corporation tax is calculated at 23% (2013: 24%) of the estimated assessable profits for the year.
Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
b) The charge for the year can be reconciled to the profit per the consolidated statement of
comprehensive income as follows:
Profit before taxation
Tax at UK corporation tax rate of 23% (2013: 24%) 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
2014
£’000
2013
£’000
1,045
783
247
7
(20)
(45)
(21)
15
(23)
188
20
7
59
(14)
(13)
2
Tax charge for the year
160
249
39
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2014
8 Dividends
Final dividend for 2013: 3.09p per share (2012: 2.25p per share)
Interim dividend for 2014: 1.00p per share (2013: 1.00p per share)
2014
£’000
2013
£’000
366
119
267
120
485
387
An interim dividend of 1.0p (2013: 1.0p) was paid on 29 November 2013 to shareholders on the register at the
close of business on 22 November 2013. The interim dividend was approved by the Board on 7 November
2013.
The final dividend in relation to 2013 was recommended on 28 May 2013 but was not recognised as a liability
in the year ended 31 March 2013.
A final dividend of 3.09p (2013: 3.09p) is proposed, taking the total dividend for the year to 4.09p (2013:
4.09p). The proposed dividend will be paid on 27 June 2014 to shareholders on the register on 13 June 2014
subject to approval at the AGM.
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.
Retained profit for basic and diluted earnings per share
2014
£’000
2013
£’000
842
560
Number Number
Weighted average number of shares used for basic earnings per share
Dilutive effect of share options
11,863,698
462,126
11,896,543
83,393
Diluted weighted average number of shares used for diluted earnings per
share
12,325,824
11,979,936
Basic earnings per share
Diluted earnings per share
40
Pence
Pence
7.10p
6.83p
4.70p
4.67p
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2014
10 Property, Plant and Equipment
Group
Cost
At 1 April 2012
Additions
Disposals
Exchange difference
At 1 April 2013
Additions
Disposals
Exchange difference
At 31 March 2014
Depreciation
At 1 April 2012
Provision for the year
Disposals
Exchange rate loss
At 1 April 2013
Provision for the year
Disposals
Exchange rate gain
At 31 March 2014
Net book value
At 31 March 2014
At 31 March 2013
At 31 March 2012
Total
£’000
1,211
190
(637)
5
769
186
(48)
(11)
896
1,016
94
(610)
5
505
116
(44)
(9)
568
328
264
195
Fixtures,
fittings and
equipment
£’000
Motor
vehicles
£’000
21
-
-
1
22
20
(22)
-
20
21
-
-
1
22
6
(22)
-
6
14
-
-
1,190
190
(637)
4
747
166
(26)
(11)
876
995
94
(610)
4
483
110
(22)
(9)
562
314
264
195
41
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2014
10 Property, Plant and Equipment (continued)
Company
Cost
At 1 April 2012, 1 April 2013 and 31 March 2014
Depreciation
At 1 April 2012, 1 April 2013 and 31 March 2014
Net book value
At 1st April 2012, 1 April 2013 and 31 March 2014
11 Goodwill
Cost
At 1 April 2012, 1 April 2013 and 31 March 2014
Fixtures, fittings and equipment
£’000
-
-
-
£’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 recoverable amount is determined on a value in use basis utilising the value of cash flow projections. The
first year of the projections is based on detailed budgets prepared and approved by management. Subsequent
years are based on extrapolations.
The key assumptions in calculating the value in use is that the Group will meet its budgeted growth in net fee
income of 13% in the year to 31 March 2015. 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 £4.6m. If Operating profit
remains constant with no growth into the future or if a discount factor greater than 15.7% were applied then
an impairment loss would need to be recognised.
42
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2014
12
Investments
Company
Cost
At 1 April 2012, 1 April 2013 and 31 March 2014
Shares in
subsidiary
undertakings
£’000
10,876
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.
43
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2014
13 Trade and other Receivables
Current
Trade receivables
Allowance for doubtful debts
Amounts owed by subsidiary undertakings
Other receivables
Prepayments and accrued income
Group
2014
£’000
1,613
(38)
-
52
1,908
2013
£’000
1,882
(85)
-
73
1,582
3,535
3,452
Company
2014
£’000
2013
£’000
-
-
-
5
10
15
-
-
584
1
11
596
At 31 March 2014, the average credit period taken on sales of recruitment services was 41 days (2013: 58
days) from the date of invoicing. An allowance of £38,000 (2013: £85,000) has been made for estimated
irrecoverable amounts. Due to the short-term nature of trade and other receivables, the Directors consider that
the carrying value approximates to their fair value.
Prepayments and accrued income principally comprise amounts to be billed for permanent placements with a
start date within three months from the start of the new financial year.
The Group does not provide against receivables solely on the basis of the age of the debt, as experience has
demonstrated that this is not a reliable indicator of recoverability. The Group provides fully against all
receivables where it has positive evidence that the amount is not recoverable.
The ageing of trade receivables at the reporting date was:
Gross trade
receivables
2014
£’000
Provisions
2014
£’000
Gross trade
receivables
2013
£’000
Provisions
2013
£’000
Not past due
Past due 0-30 days
Past due 30-90 days
Past due More than 90 days
7
21
10
-
38
1,056
578
117
131
1,882
12
-
19
54
85
1,255
276
82
-
1,613
44
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2014
13 Trade and other Receivables (continued)
Movement in allowance for doubtful debts:
1 April 2013
Impairment losses recognised
Amounts written off as uncollectable
Impairment losses reversed
31 March 2014
14 Financial Instruments
Financial assets
Trade and other receivables
Cash and cash equivalents
2014
£’000
85
38
(72)
(13)
38
2014
£’000
3,535
2,963
2013
£’000
146
85
(23)
(123)
85
2013
£’000
3,452
2,282
6,498
5,734
Note
13
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.
Financial liabilities
Current
Bank overdraft
2014
£’000
2013
£’000
1
1
26
26
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.
45
PRIME PEOPLE PLC
Notes to the financial statements
For the year ended 31 March 2014
15 Trade and other Payables
Current
Trade payables
Other payables
Amount owed to subsidiary
undertakings
Taxation and social security
Accruals and deferred income
Group
Company
2014
£’000
2013
£’000
2014
£’000
2013
£’000
303
256
-
490
956
193
245
-
374
714
12
1
99
20
27
-
-
-
17
38
2,005
1,526
159
55
Due to the short-term nature of the trade and other payables, the Directors consider that the carrying value
approximates to their fair value. Trade payables are generally on 30–60 day terms. No payables are past their
due date.
16 Deferred Tax Liability
Group
At 1 April 2012
Credit to income
At 31 March 2013
Charge to income
Tax
losses
£’000
-
(26)
(26)
26
Accelerated
depreciation
£’000
(2)
-
(2)
17
Total
£’000
(2)
(26)
(28)
43
At 31 March 2014
-
15
15
Company
At 1 April 2012, 1 April 2013 and 31 March 2014
Accelerated
depreciation
£’000
1
Total
£’000
1
46
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2014
17 Share Capital
2014
2013
Number
£’000
Number
£’000
ALLOTTED, CALLED UP AND FULLY PAID
Ordinary shares of 10p each
At 1 April 2012 and 1 April 2013
12,066,500
1,207
12,066,500
At 31 March 2014
12,066,500
1,207
12,066,500
1,207
1,207
The Company has one class of ordinary shares which carries no right to fixed income and which represents
100% of the total issued nominal value of all share capital.
Each share carries the right to one vote at general meetings of the company. No person has any special rights
of control over the company’s share capital and all its issued shares are fully paid.
Pursuant to shareholder resolutions at the AGM of the Company on 25 June 2013, the Company has the
following authorities during the period up to the next AGM.
-
-
-
-
to issue new/additional ordinary shares to existing shareholders through a rights issue up to a maximum
nominal amount of £402,200, representing one third of the then issued share capital of the Company;
to issue new/additional ordinary shares to new shareholders up to a maximum nominal amount of
£402,200 representing one third of the issued shares capital of the Company
to allot equity securities for cash, without the application of pre-emption rights, up to a maximum nominal
amount of £60,350 representing 5% of the then issued share capital of the Company; and
to purchase through the market up to 10% of the Company’s issued share capital, subject to certain
restrictions on price.
Shareholders will be asked to renew these authorities at the AGM in 2014.
Capital Risk Management
The Group manages its capital to ensure that it will be able to continue as a going concern while maximising
returns to shareholders through the optimisation of debt and equity balances. The capital structure of the
Group consists of cash and cash equivalents and equity attributable to equity holders of the parent comprising
issued capital reserves and earnings.
The Group manages the capital structure and makes adjustments to it in the light of changes to economic
conditions and risks. In order to manage capital the Group has continued to consider and adjust the level of
dividends paid to shareholders and also made purchases of its own shares which are held as Treasury Shares.
As part of its strategy of seeking to optimise the Group’s debt and equity balance the Group also considers the
appropriate level of external borrowing and, as disclosed in Note 14, has taken the decision not to renew its
borrowing facilities with Barclays Bank.
47
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2014
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 2014 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
2013
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
110,000
15,000
200,000
58,000
2011/12
68.00 2014-2019
105,000
Granted
Exercised
Cancelled
Number of
Options
31 March
2014
184,234
51,000
10,000
100,000
34,000
-
(54,000)
-
(100,000)
(24,000)
-
(5,000)
(5,000)
-
-
-
-
-
-
-
-
-
-
-
(87,000)
18,000
(13,000)
(11,000)
124,250
116,250
2013/14
Nil
Nil
2016-2021
2019-2021
137,250
127,250
Total 2014
672,234
264,500
(178,000)
(121,000)
637,734
Weighted average exercise price
2014 (pence)
43.48p
Nil
29.66p
51.05p
27.86p
Total 2013
741,234
Nil
(17,000)
(52,000)
672,234
Weighted average exercise price
2013 (pence)
44.19p
Nil
20.77p
61.0p
43.48p
*These options have fully vested
There were 637,734 options outstanding at 31 March 2014 (2013: 672,234) which had a weighted average
price per share of 27.86p (2013: 43.48p). The options vest over a period of two to five years conditional upon
the option holders continued employment with the Company.
48
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2014
17 Share Capital (continued)
The conditions which give the option holders the right to exercise their options under the EMI have been
achieved. The fair value of the employee services received in exchange for the grant of the share options is
charged to the profit and loss account over the vesting period of the share option, based on the number of
options which are expected to become exercisable.
Share price (pence)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of options (years)
2014
2013
61.5
35.0
4.0
2 & 5
-
-
-
-
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
2013
Leavers
Number of
Options
31 March
2014
2011
56.00
2014
92,697
(20,314)
72,383
Total 2014
92,697
(20,314)
72,383
Weighted average exercise price 2014 (pence)
Weighted average exercise price 2013 (pence)
56.0p
56.0p
56.0p
56.0p
56.0p
56.0p
There were 72,383 options outstanding at 31 March 2014 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:
49
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2014
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 2014, the total number of ordinary shares held in Treasury and their values were as follows:
Number of shares
Nominal value
Carrying value
Market value
2014
2013
35,000
£’000
206,000
£’000
4
143
29
21
191
104
The maximum number of shares held in treasury during the year was 206,000 shares representing 1.7% of the
called-up ordinary share capital of the Company (2013: 206,000 representing 1.70% 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.
Translation Reserve
The foreign currency translation reserve comprises all presentation foreign exchange differences arising from
translation of the financial statements of foreign operations into the presentation currency of the Group
accounts.
Retained Earnings
The balance held on this reserve is the accumulated retained profits of the Group.
50
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2014
19 Operating Lease Commitments
As at 31 March 2014 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
2014
£’000
Other
2014
£’000
Land and
buildings
2013
£’000
Other
2013
£’000
23
-
223
2,115
2,361
-
-
-
-
-
10
153
372
2,332
2,867
2
-
-
-
2
The Group leases various offices under non-cancellable operating lease agreements. The leases have varying
terms as disclosed above. The Group has a small amount of serviced office space, on annual agreements,
excluded from the above.
20 Reconciliation of Profit Before Tax to Net Cash Inflow from Operating Activities
Profit before taxation
Adjust for:
Depreciation
Share option reserve movement
(Profit)/loss on sale of plant & equipment
Net finance income
Operating cash flow before changes in working
capital
(Increase)/decrease in receivables
Increase/(decrease) in payables
Group
2014
£’000
1,045
2013
£’000
783
116
46
(2)
(18)
94
19
26
(20)
1,187
902
(83)
482
(532)
(184)
Company
2014
£’000
2013
£’000
58
-
-
-
(18)
40
581
102
44
-
-
-
(19)
25
(246)
(2)
Cash generated from/(used by) underlying
operations
1,586
186
723
(223)
51
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2014
21 Analysis of Net Cash
Group
At 1 April
Cash flow
At 31 March
Cash at bank and in hand
Bank overdraft
Total cash
Company
Cash at bank and in hand
Bank overdraft
Total cash
2013
£’000
2,282
(26)
£’000
681
25
2014
£’000
2,963
(1)
2,256
706
2,962
At 1 April
2013
£’000
1,949
(26)
1,923
Cash flow
£’000
723
26
749
At 31 March
2014
£’000
2,672
-
2,672
22 Financial Risk Management
The Board of Directors has overall responsibility for the risk management policies that are applied by the
business to identify and control the risks faced by the Group.
The Group has exposure from its use of financial instruments to foreign currency risk, credit risk and liquidity
risk.
Foreign Currency
The Group publishes its consolidated financial statements in Sterling. The functional currencies of the
Group’s main operating subsidiaries are Sterling, the Singapore Dollar, the Hong Kong Dollar and the UAE
Dirham.
52
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2014
22 Financial Risk Management (continued)
Foreign Currency (continued)
The Group’s international operations account for approximately 21 per cent (2013: 20 per cent) of revenue
and slightly less than 7 per cent (2013: 11 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 capital monetary
needs. The settlement of intercompany balances held with foreign operations is neither planned nor likely to
occur in the foreseeable future. Therefore, exchange differences arising from the translation of the net
investments are recognised in Other Comprehensive income.
Credit Risk
The Group’s principal financial assets are bank balances, trade and other receivables. The Group’s credit risk
is primarily in respect of trade receivables. Credit risk refers to the risk that a client will default on its
contractual obligations resulting in financial loss to the Group. The Group does not have any significant credit
risk exposure to any individual client. At the year end no customer represented more than 7% (2013: 12%) of
the total balance of trade receivables.
In reviewing the appropriateness of the provisions in respect of recoverability of trade receivables,
consideration has been given to the ageing of the debt and the potential likelihood of default, taking into
account current economic conditions.
It is the Directors’ opinion that no further provision for doubtful debts is required.
Liquidity Risk
The Group manages it liquidity risk by maintaining adequate cash and or credit facilities to meet forecast cash
requirements of the Group. Management monitors its forecasted cash flow requirements at a Group level
based on monthly returns made by the Group’s operating units.
Apart from one overdrawn bank account the Group has no financial liabilities other than short term trade
payables and accruals as disclosed in note 15, all due within one year of the year end.
The Group has net funds of £2.96m (2013: £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 £220k (2013: £250k). The balance owed to the subsidiary undertakings at the
year end is £(99)k (2013: £584k).
The Company also provides corporate guarantees on the subsidiary bank accounts. At 31 March 2014
amounts overdrawn by subsidiary bank accounts totalled £1k (2013: £26k).
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
£290,881 (2013: £231,140).
53
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.
54
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 University and then worked with Strutt & Parker from 1992 to
1995, qualifying as a Charted Surveyor in 1994. He joined Macdonald & Company in 1995 and was
appointed Managing Director in 1996. Under Peter’s management Macdonald & Company became the largest
and most respected real estate focused recruitment provider in the market and the RICS’s preferred
recruitment partner. Lead by Robert Macdonald and Peter Moore, Macdonald & Company Group Ltd
completed the reverse takeover of Prime People Plc in January 2006. Since then Peter has been instrumental
in developing Prime People into a global specialist recruitment business spanning real estate, energy &
environmental, 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 currently Chief Financial Officer
of Battersea Power Station Development Company and director of a number of private companies including
OPD Group Limited an investment company with holdings in a number of recruitment businesses. 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.
55
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