Prime People Plc
Annual Report and Financial Statements
for the year ended 31 March 2015
2015
Contents
Chairman’s Statement
Strategic Report
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
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56
57
PRIME PEOPLE PLC
Chairman's Statement
Performance
In 2015 many UK recruitment businesses that
focus on professional recruitment, experienced
strong revenue growth and as the detailed report
that follows shows, the Group has also had a good
year overall, particularly in the UK.
I am pleased to report that we closed the year with
Net Fee Income (NFI) of £10.22m which is a
22.70% increase on last year (2014: £8.33m). It is
encouraging to see both sequential and bi-annual
improvements in performance. NFI in the second
the year of £5.2m shows a 4.5%
half of
improvement on the first half of 2015 and a 14.4%
increase on the second half of 2014.
There were a number of strong NFI performances,
noticeably from our UK property businesses,
which continue to be the core of the Group.
During the year our Energy business, which
addresses the recruitment needs of the Energy,
Renewables and Environmental Sectors, was given
a separate identity as Prime Energy and provided
an excellent NFI result.
The 38.8% increase in operating profit for the year
from £1.03m in 2014 to £1.43m in 2015 reflects
the improvement in NFI and the continued drive to
control costs across the Group.
NFI productivity per head has remained constant
at £91k in 2014 (2014: £91k).
The conversion rate, which compares operating
profit to NFI, improved from 12.33% to 13.99%
due primarily to improvement in the UK, where
client and candidate confidence continued to
improve.
The ratio of NFI derived from permanent as
slightly
temporary placements has
against
increased in the year from 91:9 in 2014 to 92:8.
Return of capital to shareholders
The decrease is mainly due to the return of £1.8m
cash to shareholders by way of reduction in capital
which amounted to 14.809329p per share paid to
the shareholders on 24 July 2014.
Dividend
The Board will be recommending a final dividend
of 3.09p (2014: 3.09p) per share which combined
with the interim dividend of 1.75p per share and
the special second interim dividend of 4p paid on 2
April to all shareholders on the register on 27
March 2015 end will result in a total dividend of
8.84p for the 2015 financial year (2014: 4.09p).
Share Buy Back
During the year 67,210 shares were purchased at a
cost of £61,512 (2014: 7,000 shares at a cost of
£4,900) through the Group’s buyback programme.
The Board will be seeking shareholder approval
for renewal of the authority to repurchase up to
10% of the Group’s issued share capital at the
Annual General Meeting.
New Issue of Ordinary Shares
During the year the Company applied for 127,499
10p newly issued shares to be admitted to trading
on AIM which were issued to satisfy the exercise
of options granted under the company’s share
option and SAYE schemes. The Admission of
100,000 took place on 13 June 2014, and the
Admission of 27,499 took place on 25 February
2015.
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 shareholder at the next AGM.
At the start of the year the Group had cash less
overdrafts of £2.96m which had decreased to
£1.01m by the end of the year.
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.
1
PRIME PEOPLE PLC
Chairman's Statement (continued)
People
The average number of staff increased from 91 last
year to 112 this year and we anticipate that
headcount at the end of 2016 will increase 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
After recent growth seen in the recruitment sector,
levels of activity are currently steady providing
confidence for a good outcome for 2016. Whilst we
are conscious of
the continued Eurozone
uncertainty, we believe we are well positioned to
capitalise on both current and future growth
opportunities.
We will continue to develop new business lines
organically as opportunities arise and we will
continue to invest in our CRM and management
information systems so that they are appropriate
for the business now and into the future.
The Group continues
to drive performance
improvement from its global network with a focus
on retaining our most experienced and talented
employees.
The Board will continue to invest in areas where
growth can be delivered at acceptable levels of
projected profitability and risk, increasing cash
generation and growing Group revenue.
Robert Macdonald
Executive Chairman
28 May 2015
2
Both Group Revenue and NFI were up in 2015
which in turn delivered an increased operating
profit of £1.43m (2014: £1.03m).
The UK had a better start to the year but recorded
a lower performance in the second half of the year.
The growth in the UK was driven by an increase in
NFI from our Prime Energy, General Practice and
Technical teams.
and
further
Hong Kong and Singapore produced strong
performances,
established our
positions in these markets. It has been rewarding
to see our investment in Singapore produce good
results both in terms of NFI and profitability in the
region.
Our Dubai based Middle East operation produced
a stronger performance than the comparable period
last year. However, the Board continue to have
likely
conservative expectations as
performance from this business in the next twelve
months.
the
to
We remain focused on delivering a consistent level
of NFI, cash generation and profitable growth.
Access to professional talent is a key component
to the Group’s ability to grow and remain
competitive, and in the current unpredictable
European climate, it is even more important for the
business to have the flexibility it needs to modify
or transform services quickly, and remain globally
competitive. We closely monitor individual NFI
performance
in
conjunction with tightly managing costs, aim to
continue
ratios and
improve conversion
to
productivity per head.
productivity which,
and
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. The Group’s service to the energy
& environmental sector has experienced strong
growth both in terms of NFI and profitability and
now operates as Prime Energy.
The involvement of our employees in the business
is imperative to our success now and into the
future. We take time and care to source the very
best talent to grow our business in a sustainable
way, our aim is not to be the biggest but simply to
be the best. The business is organised into a
number of teams based on functional activity with
team leaders responsible for running their teams
within the operating framework of the Group. The
policy of
strong communication with all
employees has continued and employees are
encouraged to present their own suggestions and
views in order to improve the business and the
sectors that we serve.
The Group is committed to the principles of hiring
based purely on individual merit and is committed
to equal opportunities. The Group gives full and
fair consideration to applications for employment
from disabled persons, where the requirements of
the job may be adequately covered by a disabled
person.
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.
3
PRIME PEOPLE PLC
Strategic Report
Regional Performance
UK
Revenue
Net fee income (NFI)
Operating profit
Operating profit as % of NFI
Average number of employees
2015
£m
12.96
6.53
0.99
15.16%
68
2014
£m
11.43
5.32
0.72
13.53%
61
In 2014 we were able to capitalise on an
improving economic backdrop. At the end of last
year we saw the potential and so added fee earner
headcount to put us in the best position as the
market continued to strengthen.
Revenue increased by 13.4% to £12.96m (2014:
11.43m) with an increase in NFI of 22.74% to
£6.53m (2014: £5.32m)
Market conditions improved through the year
which was reflected
improved NFI
performance in the first half of the year which
accounted for the majority of the NFI growth
during the year.
in our
Our business serving the Energy & Renewables
sector delivered strong NFI growth during the year
and is now branded Prime Energy. This together
with additional
the business
investment
contributed to the operating profit uplift as a
percentage of NFI increasing from 13.5% to
15.2%.
in
Freelance
NFI performance was slightly higher in the first
six months mainly due to higher margin contracts,
which came to an end in the second half of the
year.
4
PRIME PEOPLE PLC
Strategic Report
Asia
Revenue
Net fee income (NFI)
Operating profit
Operating profit as % of NFI
Average number of employees
NFI grew by 34% to £2.99m (2014: £2.23m). This
remains the fastest growing region and represents
29% of Group NFI. The region is covered by our
offices
in Hong Kong and Singapore. The
combined office NFI is approximately 34% up on
the previous year.
The region is entirely focused on permanent
revenue and across the region we are seeing
increasing demand for professionally qualified
Rest of the World
Revenue
Net fee income (NFI)
Operating profit
Operating profit as % of NFI
Average number of employees
2015
£m
2.99
2.99
0.37
12.37%
32
2014
£m
2.23
2.23
0.38
17.04%
23
candidates, combined with greater interest from
domestic clients for our service as cross border
capital flows increase.
Average headcount increased by 39%, which is in
line with the company strategy to continue to
recruit new consultants into those markets where
there is potential for NFI and profit growth.
2015
£m
0.70
0.70
0.07
8.9%
7
2014
£m
0.78
0.78
(0.07)
-
7
The Dubai business is now well settled and
operates from a ‘free zone’.
economic conditions impacted by the fall in oil
price and regional political instability.
We have retained our consultant team throughout
the year and despite a very slow start we have
finished the year with a relatively strong last
quarter. We continue to work on adapting
ourselves to our client needs against a backdrop of
NFI in the year reduced by 8.9% but despite this
the business is profitable. The Board remain
positive as to the future of the business but are,
however, conservative as to the prospects in the
region for the next twelve months.
Peter Moore
Managing Director
28 May 2015
5
PRIME PEOPLE PLC
Strategic Report
Financial Review
Revenue
The Group achieved a 15.30% increase in revenue
to £16.65 (2014: £14.44m).
Net Fee Income (NFI)
NFI comprises
fee of
permanent candidates and the margin earned in the
placement of temporary staff.
total placement
the
second
special
dividend of 4p was paid on 2 April 2015 to all
shareholders on the register on 27 March 2015.
This
interim dividend was
approved by the Board on 19 March 2015. A final
dividend of 3.09p (2014: 3.09p) is proposed,
taking the total dividend for the year to 8.84p
(2014: 4.09p). The proposed dividend will be paid
on 26 June 2015 to shareholders on the register on
12 June 2015 subject to approval at the AGM.
Overall the Group delivered a 22.7% increase in
total NFI to £10.22m (2014: £8.33m). NFI from
permanent business increased by 25.2% to £9.44m
(2014: £7.54m). Fees
temporary
business, which represents 7.7% of total NFI
(2014: 9.4%), remained the same as last year at
£0.78m.
from our
NFI from international placements, which is
included in our permanent business, increased by
22.6% to £3.69m (2014: £3.01m).
Administration Costs
Administration costs for the year increased by
20.4% to £8.79m (2014: £7.30m). The increase
primarily related to increased staff costs.
Profit before Taxation
Profit before taxation increased by 37.41% to
£1.44m (2014: £1.05m).
Taxation
The taxation charge is £0.31m on a profit on
ordinary activities before taxation of £1.44m
which gives an effective tax rate of 21.5% (2014:
19.4%). The reasons for the difference from the
standard UK corporation tax rate of 21% are
detailed in note 7 of the accounts.
Earnings Per Share
Basic earnings per share increased by 30.7% to
9.28p (2014:7.10p).The diluted earnings per share,
into account existing share options,
taking
increased by 31.92% to 9.01p (2014: 6.83p).
Dividend
An interim dividend of 1.75p (2014: 1.0p) was
paid on 28 November 2014 to shareholders on the
register at close of business on 21 November 2014.
The interim dividend was approved by the Board
on 5 November 2014. A special second interim
6
Return of capital to shareholders
At the start of the year the Group had cash less
overdrafts of £2.96m. As outlined when we
announced our final results for 2014 it was the
intention of the directors to return cash to
shareholders. A circular was sent to shareholders
on 29 May 2014 explaining the background to and
reasons for the proposed return of capital and
convening a General Meeting on 16 June 2014. At
the meeting shareholders approved the reduction
totalling £1.8m. On 16 July 2014 we announced
that the capital reduction had been confirmed by
the court and on the 24 July cheques amounting to
14.809329p per share were sent to shareholders.
Balance Sheet
Net assets at 31 March 2015 have reduced to
£13.47m which incorporate the £1.8m returned to
shareholders (2014: £14.4m).
Trade receivables were up on last year at £2.10m
(2014:£1.6m) which reflects the increased revenue
for the year. Credit period taken by customers
reduced to 38 days (2014: 41 days).
Treasury Management and Currency Risk
Approximately 78% of the Group’s revenue in
2015 (2014:79%) 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
PRIME PEOPLE PLC
Financial Review
consider that the net cash within the Group is
foreseeable
to meet existing and
sufficient
liabilities as they fall due.
Cash Flow and Cash Position
At the start of the year the Group had cash less
overdrafts of £2.96m. After net taxation payments
of £0.28m (2014: £0.17m), and before repayment
of capital to shareholders of £1.8m, cash generated
from operations was £0.41m (2014: £1.42m).
(2014: £0.17m) on
During the course of the year the Group spent
£0.17m
its CRM and
management information systems. In addition
£0.05m was spent on training associated with the
investment in the CRM.
A final dividend for 2014 of £0.38m was paid in
June 2014 and an interim dividend for 2015 of
£0.21m was paid in November 2014.
At 31 March 2015 the Group had cash less
overdrafts of £1.01m
Measurements of performance in 2015
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 13.99% (2014: 12.33%)
- Productivity (NFI divided by total average
headcount) remained at £91k (2014: £91k)
- Ratio of billing headcount
to
support
headcount increased to 3.4 (2014: 2.9)
- Percentage of NFI paid to staff 62.5% (2014:
61.4%)
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
risks
the business, but cannot eliminate
on
absolutely. According to latest industry surveys
strong growth continues across the recruitment
profession, alongside more performance stability, but
a number of challenges remain of concern for the
recruitment sector and are difficult to predict. The
Board reviews on a regular basis the principal risks
and uncertainties facing the Group. The Board’s
approach is to ascertain the key risks and develop
plans to reduce the potential effects of these risks on
the business. The principal risks identified are as
follows:
Dependence on Key People
The sustainable success of the Group is dependent on
the continued service of senior management and key
people. The loss of the services of the senior
management and other key people could have a
material effect on the business. To address this, the
Group has put in to place an internal recruitment
function and invested in management information
systems, training and development programmes,
competitive
term
structures
remuneration plans, the aim of which is to retain the
key employees.
long
and
pay
Competitors
The Group’s focus is on specialist, niche practices
where clients need expert knowledge and high levels
of service. We concentrate on markets where there is
a shortage of supply of suitable candidates and
opportunities to build strong and fruitful long term
relationships with clients. The Directors believe that
the Group is well positioned in its chosen markets.
Whilst the Group seeks to continue to improve its
competitive positions, the actions of current or
indeed potential competitors may adversely affect the
Group’s business.
Strength of Property Markets
The market for built environment recruitment
services, from which the Group obtains the major
part of its revenue, reported strong growth but
challenges still remain and are difficult to predict.
Our temporary business remains focused in the
public sector and has strengthened its position in the
private sector. However speculations on the current
levels of activity in the property market generally
7
PRIME PEOPLE PLC
Financial Review
could have a material adverse effect on profitability
and cash flows of the business.
The Group is using business models that evolve to
operate in more innovative ways. The Group seeks to
maximise this potential by understanding its position
in the market, which will ultimately help turn further
challenges into potential opportunities.
Macro economic factors
Our global competitiveness is linked to the continued
development, and flexibility of the nation's labour
market. Any fall, in general levels of confidence
globally, in 2015, could hamper job growth in our
business areas. The Board sees opportunities for
development and will continue to invest in areas
where growth can be delivered at acceptable levels of
profitability, increasing cash generation and growing
expanding
Group
geographically in its chosen markets and so therefore
outcomes could be influenced by the GDP growth of
economies in which we operate.
revenue.
includes
This
Regulatory position
The increase in regulatory scrutiny and demands on
compliance are having an effect on the hiring. The
is aware of continuing challenges as
Group
procurement
remains
evolves,
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.
practice
but
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 rely on specific suppliers who provide
the technology infrastructure and disaster recovery
solutions. The performance of these suppliers is
continually monitored to ensure that the services are
available and maintained. The Group is aware of the
increasing potential challenges to data integrity and
security from both internal and external sources.
Therefore,
infrastructure are
the systems and
to ensure
reviewed and upgraded
regularly
appropriate provision of functionality and resilience
to support the business as it develops
Foreign Exchange Risk
The Group’s international operations account for
approximately 22% of revenue (2014: 21%) and
approximately 15% of the Group’s assets (2014:
7%). 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
this exposure by
Group seeks
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.
to minimise
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.
Client credit terms and cash collections are
managed carefully and cash balances and cash
flow forecast are reviewed weekly. Monthly credit
evaluation is performed on the financial condition
of accounts receivable based on payment history
and third party credit references with appropriate
provisions being made.
Chris Heayberd
Finance Director
28 May 2015
8
PRIME PEOPLE PLC
Report of the Directors for the Year Ended 31 March 2015
The Directors submit their report and the audited Group financial statements of Prime People Plc for the year
ended 31 March 2015. 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 2015, 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
%
719,500
439,500
5.90
3.60
The mid market quotation of the Company’s shares at close of business on 31 March 2015 was 108p. The
highest and lowest mid market quotations in the period from 1 April 2014 to 31 March 2015 were 116.50p
and 84p.
Going concern
The Group has two revenue streams permanent and temporary recruiting. The Group has experienced 15%
revenue growth in 2015 which was mainly driven by growth in the permanent business. The permanent
business, which is largely cash generative, has provided the working capital to support the growth in the
temporary.
The Directors have prepared cash flow forecasts for a period of at least 12 months from the date of approval
of the financial statements. After reviewing these forecasts and having made appropriate enquiries, the
Directors have a reasonable expectation that the Group has adequate resources to continue operating for the
foreseeable future. The Group 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 (2014: Nil).
9
PRIME PEOPLE PLC
Report of the Directors for the Year Ended 31 March 2015
Workplace Pensions
The law on workplace pensions required that the Group automatically enrol certain UK employees into a
pension scheme which the Group implemented 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 Tuesday 14 July 2015 at 11.00am at 2 Harewood Place, London, W1S 1BX. All
shareholders are encouraged to attend. The resolutions to be put forward to the AGM are detailed in the
Notice of AGM, which is being circulated separately to all shareholders.
Authority to purchase own shares
The Directors were given authority at last year’s AGM to purchase through the market up to 10% of the
Company’s issued share capital, subject to certain restrictions on price. A request for renewal of the authority
is included in the resolutions for this year’s AGM.
During the year the company purchased 67,210 shares (2014: 7,000 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 2015
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; the work carried out by the auditors does not involve the consideration of
these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred
in the accounts since they were initially presented on the website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.
11
PRIME PEOPLE PLC
Corporate Governance
Statement by the Directors on 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 2012. 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 2015 and the
attendance record are summarised in the table below:
Directors
Board
Audit
Committee
Remuneration
Committee
Robert Macdonald – Executive Chairman
6/6 (Chair)
Peter Moore – Managing Director
Chris Heayberd – Finance Director
John Lewis – Non-Executive Director
Simon Murphy – Non-Executive Director
6/6
6/6
6/6
4/6
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 56.
12
PRIME PEOPLE PLC
Corporate Governance
The Board and its Operation (continued)
The Board meets at least five 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. During the year the committee met once which was considered sufficient by both committee
members to deal with matters referred to it in the year. By invitation, the meetings are also attended by the
Finance Director.
The Audit Committee’s principal tasks are to ensure the integrity of the Company’s Financial Reporting
process, review the effectiveness of the Group’s internal controls including risk management, review the
scope of the work of the external Auditor and their independence, consider issues raised by the external
Auditor, review audit effectiveness and review the half-yearly and annual accounts focusing in particular on
accounting policies and compliance and on areas of management judgement and estimates.
13
PRIME PEOPLE PLC
Corporate Governance
Remuneration Committee
The members of the Remuneration Committee comprise the two non-executive Directors of the Company and
is chaired by John Lewis.
The committee reviews the Group policy on the Executive Directors’ remuneration and terms of employment,
makes recommendations on this and also approves the provision of policies for the incentivisation of senior
employees, including share schemes.
The principal terms of reference of the committee are set out in the Remuneration Report on pages 16 to 18.
The report also contains full details of Directors' remuneration and a statement of the Company's
remuneration policy. The committee meets when required to consider all aspects of the executive Directors'
remuneration, drawing on outside advice as necessary.
Internal Controls
The Directors are responsible for the Group’s system of internal control and for reviewing its effectiveness
which, by its nature, can only provide reasonable and not absolute assurance against material misstatement or
loss.
When undertaking their review the Directors have considered all material controls including operational,
compliance and risk management, as well as financial.
The Board has assessed the effectiveness of the Group’s internal control systems for the period 1 April 2014
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 2015
15
PRIME PEOPLE PLC
Remuneration Report
The role of the Remuneration Committee
The Remuneration Committee met once this year and comprises John Lewis and Simon Murphy. The
Committee is chaired by John Lewis.
The purpose of the Remuneration Committee is to review, on behalf of the Board, the remuneration policy for
the Chairman, Executive Directors and other Senior Executives and to determine the level of remuneration,
incentives and other benefits, compensation payments and terms of employment of the Executive Directors
and other Senior Executives. It seeks to provide a remuneration 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 are 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
£
£
Gain on
exercise of
share options
£
2015
Total
2014
Total
£
£
Executive Chairman
Robert Macdonald
114,122
4,513
118,635
115,766
Executive Directors
Peter Moore (Notes 1 & 2)
176,377
47,535
6,184
230,096
273,537
Chris Heayberd
71,459
4,248
75,707
66,405
Non-Executive Directors
John Lewis
Simon Murphy
19,389
19,389
-
-
19,389
18,925
39,350
58,739
18,925
400,736
56,296
48,534
502,566
493,558
Notes to the emoluments:
1 - Peter Moore is the highest paid Director,
2 - Peter Moore relocated to Singapore in August 2012 and was provided with family accommodation until September
2014, when he returned to the UK
3 - Benefits include accommodation, subscriptions, 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 2015 were as follows:
Ordinary
shares of 10p
each held at
31 March
2015
Percentage of
issued share
capital at
31 March
2015
Ordinary
shares of 10p
each held at
31 March
2014
Percentage of
issued share
capital at
31 March
2014
2,780,000
2,907,721
24,000
1,088,500
330,000
22.80%
23.85%
0.20%
8.93%
2.7%
2,480,000
2,897,500
324,000
1,008,500
230,000
20.55%
24.01%
2.69%
8.36%
1.91%
Robert Macdonald
Peter Moore
Chris Heayberd
John Lewis
Simon Murphy
17
PRIME PEOPLE PLC
Remuneration Report
Share option schemes
As at 31 March 2015 Director’s options on ordinary shares of 10p each granted under the Prime People
Enterprise Management Incentive Scheme, were as follows:
Director
Year of
grant
Exercise
price
Number of
options
31 March 2014
Exercised
Number of
options
31 March 2015
Simon Murphy
2005/6
57.7p
184,234
(100,000)
84,234
The performance criteria on Directors share options granted in 2005/6 were achieved when the Company
acquired Macdonald & Company Group Limited in January 2006.
During 2015 options granted to Peter Moore on ordinary shares of 10p each granted under the Prime People
SAYE scheme totalling 10,221 matured and were exercised on 28 February at the exercise price of 56p.
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 2015
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 2015 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 and to identify any information that is
apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the
course of performing the audit.. If we become aware of any apparent material misstatements or
inconsistencies we consider the implications for our report.
19
PRIME PEOPLE PLC
Independent Auditor’s Report (continued)
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 2015 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.
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 2015
20
PRIME PEOPLE PLC
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2015
Note
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 profit/(loss) on translating
foreign operations
Other Comprehensive income
for the year
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
2015
£’000
16,647
(6,425)
2014
£’000
14,442
(6,115)
10,222
(8,792)
8,327
(7,300)
1,430
1,027
6
-
20
(2)
1,436
1,045
(310)
(203)
1,126
842
130
130
(111)
(111)
1,256
731
1,256
731
9.28p
9.01p
7.10p
6.83p
PRIME PEOPLE PLC
Consolidated Statement of Changes in Equity
For the year ended 31 March 2015
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 2013
1,207
9
(191)
7,109
173
97
423
5,256
14,083
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
Total
comprehensive
income for the
year
Capital
reduction
(Note 17)
Adjustment in
respect of share
schemes
Issues of
ordinary shares
Shares issued
from treasury
Shares
purchased for
treasury
Adjustment on
share disposal
Dividend
At 31 March
2015
-
-
-
-
-
-
-
-
-
-
-
-
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
-
-
-
12
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
42
(62)
142
-
(1,800)
-
48
13
-
-
-
-
-
-
-
-
-
-
-
92
-
-
-
-
130
1,126
1,256
-
-
-
-
-
-
-
(1,800)
38
130
-
-
-
(142)
(588)
60
55
(62)
-
(588)
-
-
-
-
-
1,219
9
(21)
5,370
173
212
442
6,070
13,474
22
PRIME PEOPLE PLC
Consolidated Statement of Financial Position
As at 31 March 2015
Assets
Non – current assets
Goodwill
Property, plant and equipment
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
2015
£’000
9,769
316
2014
£’000
9,769
328
10,085
10,097
4,538
1,009
5,547
3,535
2,963
6,498
15,632
16,595
-
1,958
184
2,142
16
16
1
2,005
151
2,157
15
15
2,158
2,172
13,474
14,423
Note
11
10
13
21
14
15
16
23
PRIME PEOPLE PLC
Consolidated Statement of Financial Position
As at 31 March 2015
Note
2015
£’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
1,219
9
(21)
5,370
173
212
442
6,070
2014
£’000
1,207
9
(143)
7,109
173
120
312
5,636
Total equity
13,474
14,423
The financial statements on pages 21 to 54 were approved by the Board of Directors and authorised for issue
on 28 May 2015 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 2015
Assets
Non-current assets
Investment in subsidiaries
Deferred tax asset
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Liabilities
Current liabilities
Other payables
Total liabilities
Net assets
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
Note
12
16
13
21
15
17
18
18
18
18
18
18
2015
£’000
10,876
1
10,877
499
446
945
2014
£’000
10,876
1
10,877
15
2,672
2,687
11,822
13,564
213
213
159
159
11,609
13,405
1,219
9
(21)
5,370
173
15
4,844
1,207
9
(143)
7,109
173
32
5,018
Total equity
11,609
13,405
The financial statements of Prime People Plc, Company Number 1729887 were approved by the Board and
authorised for issue on 28 May 2015 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 2015
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 2013
1,207
9
(191)
7,109
173
32
5,002
13,341
Total
comprehensive
income for the
year
Shares
purchased for
treasury
Dividend
At 31 March
2014
Total
comprehensive
income for the
year
Issue of
ordinary shares
Capital
reduction
(Note 17)
Adjustment in
respect of share
options
Shares issued
from treasury
Shares
purchased for
treasury
Adjustment on
share disposal
Dividend
At 31 March
2015
1,219
-
-
-
-
-
-
-
48
-
-
-
-
-
-
-
-
-
-
501
501
-
48
(485)
(485)
1,207
9
(143)
7,109
173
32
5,018
13,405
-
12
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9
-
42
-
-
-
(62)
142
-
-
48
(1,800)
-
13
-
-
-
-
-
-
-
-
-
-
-
-
-
-
539
-
-
539
102
(1,800)
(17)
17
-
-
-
-
-
-
-
13
(62)
(142)
(588)
-
(588)
(21)
5,370
173
15
4,844
11,609
26
PRIME PEOPLE PLC
Group and Company Cash Flow Statement
For the year ended 31 March 2015
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
Capital reduction
Issue of ordinary share capital
Shares issued from treasury
Shares purchased for treasury
Dividend paid to shareholders
Net cash used in financing
activities
Net (decrease)/ increase 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
2015
£’000
2014
£’000
Company
2015
£’000
2014
£’000
685
1,586
(436)
(276)
-
(230)
60
(10)
723
(5)
409
1,416
(446)
718
6
(156)
-
18
(180)
-
6
-
550
18
-
450
(150)
(162)
556
468
(1,800)
72
42
(62)
(588)
-
-
(5)
53
(485)
(1,800)
72
42
(62)
(588)
(2,336)
(437)
(2,336)
-
-
-
48
(485)
(437)
(2,077)
817
(2,226)
749
2,962
2,256
2,672
1,923
130
(111)
-
-
1,009
2,962
446
2,672
27
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2015
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 £537,595 (2014: profit £501,331). 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 2015 (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 2015 and
are described below.
International Accounting Standards (IAS/IFRS) and Interpretations in issue but not yet approved
At the date of authorisation of these financial statements, certain new standards, amendments and
interpretations to existing standards have been published by the IASB but are not yet effective. These have not
been adopted early by the Group and the initial assessment indicates that either they will not be relevant or
will not have a material impact on the Group:
Standards
•
•
•
IFRS 14 Regulatory Deferral Accounts ( Issued January 2014, effective date 1 January 2016)
IFRS 15 Revenue from Contracts with Customers ( Issued May 2014, effective date 1 January 2017)
IFTS 9 Financial Instruments ( Issued July 2014, effective date 1 January 2018)
Amendments (Effective date for all amendments listed is 1 January 2016)
•
•
IFRS 11 Amendments: Accounting for Acquisitions of Interest in Joint Operations ( Issued May
2014)
IAS 16 and IAS 38 Amendments: Clarification of Acceptable Methods of Depreciation and
Amortisation ( Issued May 2014)
28
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2015
International Accounting Standards (IAS/IFRS) and Interpretations in issue but not yet approved
(continued)
IAS 27 Amendment – Equity Method in Separate Financial Statements ( Issued August 2014)
•
• Annual Improvements to IFRSs 2012 – 2014 Cycle ( Issued September 2014)
• Amendments to IAS 1: Disclosure Initiative (Issued December 2014)
2 Summary of Significant Accounting Policies (continued)
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 2015
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 consists 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 2015
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 2015
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
On 1 July 2014, the Group automatically enrolled certain UK employees on NEST workplace pension, as
required by law. The Group assesses the employees based on age and qualifying earning into three categories:
Eligible jobholders, non-eligible jobholders and entitled workers. The contributions relate to staff who are
eligible jobholders and have not ‘opted out’ of the scheme; and non- eligible jobholders and entitles workers
who have ‘opted in’.
The qualifying earnings include, but are not exhaustive of: salary, commission, bonuses, and statutory
payments. The Group adopted the minimum legally required employer contribution rate of 1% of qualifying
earnings and up to the maximum earning threshold for automatic enrolment for 2014-15, as set by the Pension
Regulator.
32
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2015
2 Summary of Significant Accounting Policies (continued)
j) Pension Costs (continued)
Every year, the Department for Work and Pensions (DWP) reviews the earnings thresholds for automatic
enrolment. Where there’s a change, we will update this page with the new thresholds after DWP has
announced them.
The changes take effect from the start of the next tax year following the changes on 6 April.
The pension costs charged to profit or loss represent the contributions payable by the Group during the year.
Pension liabilities at the Balance Sheet date represent employer and employee pension contributions, that are
payable to the pension provider by the 22nd date of each month.
k) Segmental Reporting
IFRS8 requires operating segments to be identified on the basis of internal reports that are regularly reviewed
by the 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 income is recognised by applying the effective interest rate, except for short-term
receivables when the recognition of interest would be immaterial.
Financial assets are assessed for impairment at each balance sheet date, and are impaired where there is
objective evidence that, as a result of one or more events that occurred after the initial recognition of the
financial asset, the estimated future cash flows of the investment have been impacted.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets
with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance
account. When a trade receivable is considered uncollectible, it is written off against the allowance account.
Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes
in the carrying amount of the allowance account are recognised in the profit or loss account. If in a subsequent
period the amount of the impairment loss decreases and the decreases can be related objectively to an event
occurring after the impairment was recognised, the previously recognised impairment loss is reversed through
profit and loss to the extent that the carrying amount of the financial asset at the date the impairment is
reversed does not exceed what the amortised cost would have been had the impairment not been recognised.
Cash and cash equivalents includes cash in hand and bank deposits that are readily convertible to a known
amount of cash and are subject to an insignificant risk of changes in value. Bank overdrafts are classified with
current liabilities in the statement of financial position.
33
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2015
2 Summary of Significant Accounting Policies (continued)
n) Financial liabilities and equity
Financial liabilities and equity instruments are initially measured at fair value and are classified according to
the substance of the contractual arrangements entered into. Financial liabilities are subsequently measured at
amortised cost. The Group’s financial liabilities comprise trade payables, borrowings, bank overdrafts and
other payable balances that arise from its operations. They are classified as ‘financial liabilities measured at
amortised cost’.
o) Share-Based Compensation
The Group operates equity-settled share-based compensation plans.
The fair value of the employee services received in exchange for the grant of the options is recognised as an
expense. The total amount to be expensed over the vesting period is determined by reference to the fair value
of the options granted, excluding the impact of any non-market vesting conditions (for example, profitability
and sales growth targets). At the balance sheet date the number of outstanding options is adjusted to reflect
those options that have been granted during the year or have lapsed in the year.
p) Dividend Distribution
A final dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s
financial statements in the period in which the dividends are approved by the Company’s shareholders.
Interim dividend distributions are recognised in the period in which they are approved and paid.
q) Critical Accounting Estimates and Judgements
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
estimates and judgements. It also requires management to exercise judgement in the process of applying the
Company’s accounting policies.
Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying
accounting policies that have the most significant effect on the amount recognised in the financial statements
are described below:
Revenue Recognition
Revenue from permanent placements is recognised when a candidate formally accepts an offer of
employment, a start date has been agreed, but employment has not commenced. A ‘fall-through’ provision is
made by management, based on historical experience, for the proportion of those placements where the offer
of employment is not taken up. Management have reviewed the past assumptions made with respect to the
‘fall-through’ provisions and consider that they remain reasonable. The fall through provision is estimated at
16.5 % of those offers where employment has yet to commence (2014: 21.9%). 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.
34
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2015
2 Summary of Significant Accounting Policies (continued)
q) Critical Accounting Estimates and Judgements (continued)
Trade Receivables
There is uncertainty regarding customers who may not be able to pay as their debts fall due. In reviewing the
appropriateness of the provisions in respect of recoverability of trade receivables, consideration has been
given to the ageing of the debt and the potential likelihood of default, taking into account current economic
conditions. Details of the total amount of receivables past due and the movement in allowance for doubtful
debts are disclosed in note 13.
3 Segment Reporting
a) Revenue and Net Fee Income, by Geographical Region
UK
Asia
Rest of World
Revenue
Net fee income
2015
£’000
2014
£’000
2015
£’000
2014
£’000
12,957
11,432
6,532
5,317
2,992
2,230
2,992
2,230
698
780
698
780
16,647
14,442
10,222
8,327
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
2015
£’000
2014
£’000
Net fee income
2014
£’000
2015
£’000
5,760
2,992
698
4,548
2,230
780
5,747
2,992
698
4,533
2,230
780
7,197
6,884
785
784
16,647
14,442
10,222
8,327
35
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2015
3 Segment Reporting (continued)
c) Profit before Taxation by Geographical Region
UK
Asia
Rest of World
Operating Profit
Net finance income
2015
£’000
993
370
67
1,430
6
2014
£’000
719
381
(73)
1,027
18
Profit before taxation
1,436
1,045
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 £0.64m (2014 £0.37m) for the UK, and charges of £0.53m (2014 £0.24m) for Asia and £0.11m (2014
£0.13m) for the rest of the world.
d) Segment Assets and Liabilities by Geographical Region
UK
Asia
Rest of World
Total
Total non-current assets
2014
£’000
2015
£’000
Total liabilities
2015
£’000
2014
£’000
10,023
10,062
1,309
1,380
50
12
7
28
687
162
656
136
10,085
10,097
2,158
2,172
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 2015
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
Loss/(profit) on disposal of fixed assets
Exchange rate loss
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
2015
£’000
2014
£’000
170
471
-
1
1
12
31
43
2
45
116
353
2
(2)
25
12
30
42
2
44
2015
£’000
2014
£’000
503
494
503
494
230
274
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 2015
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:
2015
Number
2014
Number
84
25
3
112
63
22
6
91
2015
Number
2014
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
Pension contributions
Share option charge
Remuneration of key management
Short term employee benefits (excluding social security costs)
Share based payments
Key management includes executive Directors and senior divisional managers.
38
2015
£’000
5,744
500
12
130
2014
£’000
4,677
388
-
46
6,386
5,111
2015
£’000
765
24
2014
£’000
816
11
789
827
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2015
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
2015
£’000
2014
£’000
278
(21)
52
123
(23)
60
309
160
1
43
310
203
UK corporation tax is calculated at 21% (2014: 23%) 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
2015
£’000
2014
£’000
1,436
1,045
Tax at UK corporation tax rate of 21% (2014: 23%) 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 in prior years
302
16
2
19
(20)
11
(21)
Total current tax
309
247
7
(20)
(45)
(21)
15
(23)
160
Deferred Tax
Origination and reversal of temporary differences
1
43
Tax charge for the year
310
203
39
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2015
8 Dividends
Final dividend for 2014: 3.09p per share (2013: 3.09p per share)
Interim dividend for 2015: 1.75p per share (2014: 1.00p per share)
2015
£’000
2014
£’000
376
212
366
119
588
485
The final dividend in relation to 2014 was recommended on 28 May 2014 but was not recognised as a liability
in the year ended 31 March 2014.
An interim dividend of 1.75p (2014: 1.0p) was paid on 28 November 2014 to shareholders on the register at
the close of business on 21 November 2014. The interim dividend was approved by the Board on 7 November
2014.
A special second interim dividend of 4p was paid subsequent to the end of the year to shareholders on the
register at the close of business on 27 March 2015. The special second interim dividend was approved by the
Board on 17 March 2015 and was paid on 2 April 2015. As interim dividends are recognised only when paid
the special second interim dividend has not been included in these financial statements.
A final dividend of 3.09p (2014: 3.09p) is proposed, taking the total dividend for the year to 8.84p (2014:
4.09p). The proposed dividend will be paid on 26 June 2015 to shareholders on the register on 12 June 2015
subject to approval at the AGM.
40
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2015
9 Earnings per share
Earnings per share are calculated by dividing the profit attributable to ordinary shareholders by the weighted
average number of ordinary shares in issue during the year.
Fully diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares by
existing share options assuming dilution through conversion of all existing options.
Earnings and weighted average number of shares from continuing operations used in the calculations are
shown below.
Profit for the year and earnings used in basic and diluted earnings per share
2015
£’000
2014
£’000
1,126
842
Number Number
Weighted average number of shares used for basic earnings per share
Dilutive effect of share options
12,131,633
362,117
11,863,698
462,126
Diluted weighted average number of shares used for diluted earnings per
share
12,493,750
12,325,824
Basic earnings per share
Diluted earnings per share
Pence
9.28p
9.01p
Pence
7.10p
6.83p
41
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2015
10 Property, Plant and Equipment
Group
Cost
At 1 April 2013
Additions
Disposals
Exchange difference
At 1 April 2014
Additions
Disposals
Exchange difference
At 31 March 2015
Depreciation
At 1 April 2013
Provision for the year
Disposals
Exchange rate loss
At 1 April 2014
Provision for the year
Disposals
Exchange rate gain
At 31 March 2015
Net book value
At 31 March 2015
At 31 March 2014
At 31 March 2013
Total
£’000
769
186
(48)
(11)
896
168
(20)
13
1,057
505
116
(44)
(9)
568
170
(7)
10
741
316
328
264
Fixtures,
fittings and
equipment
£’000
Motor
vehicles
£’000
22
20
(22)
-
20
-
(20)
-
-
22
6
(22)
-
6
1
(7)
-
-
-
14
-
747
166
(26)
(11)
876
168
-
13
1,057
483
110
(22)
(9)
562
169
-
10
741
316
314
264
42
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2015
11 Goodwill
Cost
At 1 April 2013, 1 April 2014 and 31 March 2015
£’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 17% in the year to 31 March 2016. After the end of the period covered by the budget a 5% growth
rate is applied. This growth rate represents the average rate of growth in the markets in which the Group
operates. A discount rate of 9% has been applied which represents the weighted average costs of capital for
the Group. In the last two years, operating profit achieved exceeded budgeted operated profit by
approximately 25%.
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 £8.4m. If Operating profit
remains constant with no growth into the future or if a discount factor greater than 16% were applied then an
impairment loss would need to be recognised.
12
Investments
Company
Cost
At 1 April 2013, 1 April 2014 and 31 March 2015
Shares in
subsidiary
undertakings
£’000
10,876
43
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2015
12
Investments (continued)
The following are subsidiary undertakings at the end of the year and have all been included in the
consolidated financial statements:
Country of
incorporation
Principal
activity
England and Wales
Holding Company
England and Wales
Recruitment
England and Wales
Recruitment
Macdonald & Company
Group Limited
Macdonald & Company
Property Limited
Macdonald and Company
Freelance Limited
Macdonald & Company
(Overseas) Limited
England and Wales
Macdonald & Company Ltd
Hong Kong
Ru Yi Consulting Limited
Hong Kong
Macdonald and Company
Pte Limited
Singapore
Macdonald & Company Pty Ltd
Australia
Macdonald & Company
Recruitment Proprietary Ltd
South Africa
The Prime Organisation Ltd
England and Wales
Dormant
Recruitment
Dormant
Recruitment
Dormant
Dormant
Dormant
For all undertakings listed above, the country of operation is the same as its country of incorporation.
The Group holds 100% of all classes of issued share capital. The percentage of the issued share capital held is
equivalent to the percentage of voting rights for all companies.
44
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2015
13 Trade and other Receivables
Current
Trade receivables
Allowance for doubtful debts
Other receivables
Prepayments and accrued income
Group
2015
£’000
2,126
(102)
578
1,936
2014
£’000
1,613
(38)
52
1,908
4,538
3,535
Company
2015
£’000
2014
£’000
-
-
4
495
499
-
-
5
10
15
At 31 March 2015, the average credit period taken on sales of recruitment services was 38 days (2014: 41
days) from the date of invoicing. An allowance of £102,000 (2014: £38,000) 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
2015
£’000
Provisions
2015
£’000
Gross trade
receivables
2014
£’000
Provisions
2014
£’000
Not past due
Past due 0-30 days
Past due 30-90 days
Past due more than 90 days
1,635
322
100
69
2,126
24
-
9
69
102
1,255
276
82
-
1,613
7
21
10
-
38
45
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2015
13 Trade and other Receivables (continued)
Movement in allowance for doubtful debts:
1 April 2014
Impairment losses recognised
Amounts written off as uncollectable
Impairment losses reversed
31 March 2015
14 Financial Instruments
2015
£’000
38
100
(11)
(25)
102
2014
£’000
85
38
(72)
(13)
38
Group
Company
Note
2015
£’000
2014
£’000
2015
£’000
2014
£’000
Financial assets
Trade and other receivables
Cash and cash equivalents
13
4,538
1,009
3,535
2,963
499
446
15
2,672
Cash is held either on current account or on short term deposits at floating rates of interest determined by the
relevant bank's prevailing base rate.
5,547
6,498
945
2,687
Group
Company
Note
2015
£’000
2014
£’000
2015
£’000
2014
£’000
Financial liabilities
Current
Bank overdraft
Trade and other payables
15
-
478
478
1
13
14
-
13
13
1
13
13
The Group has not renewed its borrowing facilities with Barclays Bank Plc as the Board consider that the net
cash within the Group is sufficient to meet existing and foreseeable liabilities as they fall due.
There is no material difference between the book values of the Group's financial assets and liabilities and their
fair values.
The Group and the Company do not hold any derivative financial instruments.
46
PRIME PEOPLE PLC
Notes to the financial statements
For the year ended 31 March 2015
15 Trade and other Payables
Group
Company
Current
Trade payables
Other payables
Amount owed to subsidiary
undertakings
Taxation and social security
Accruals and deferred income
2015
£’000
239
239
-
567
913
2014
£’000
2015
£’000
2014
£’000
303
256
-
490
956
12
1
145
8
47
213
12
1
99
20
27
159
1,958
2,005
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 2013
Credit to income
At 31 March 2014
Charge to income
At 31 March 2015
Company (Asset)
At 1 April 2013, 1 April 2014 and 31 March 2015
47
Tax
losses
£’000
Accelerated
depreciation
£’000
(26)
26
-
-
-
(2)
17
15
1
16
Accelerated
depreciation
£’000
1
Total
£’000
(28)
43
15
1
16
Total
£’000
1
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2015
17 Share Capital
2015
2014
Number
£’000
Number
£’000
AUTHORISED CALLED UP AND FULLY PAID
Ordinary shares of 10p each
At 1 April 2014
Shares issued
12,066,500
127,449
1,207
12
12,066,500
-
1,207
-
At 31 March 2015
12,193,949
1,219
12,066,500
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 16 June 2014, the Company has the
following authorities during the period up to the next AGM.
-
-
-
-
to issue new/additional ordinary shares to existing shareholders through a rights issue up to a maximum
nominal amount of £406,465, representing one third of the then issued share capital of the Company;
to issue new/additional ordinary shares to new shareholders up to a maximum nominal amount of
£406,465 representing one third of the issued shares capital of the Company
to allot equity securities for cash, without the application of pre-emption rights, up to a maximum nominal
amount of £60,970 representing 5% of the then issued share capital of the Company; and
to purchase through the market up to 10% of the Company’s issued share capital, subject to certain
restrictions on price.
Shareholders will be asked to renew these authorities at the AGM in 2015 on 14 July 2015.
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.
48
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2015
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 2015 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
2014
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
51,000
10,000
100,000
34,000
2011/12
68.00 2014-2019*
18,000
2013/14
Nil
Nil
2016-2021
2019-2021
124,250
116,250
Granted
Exercised
Forfeited
Number of
Options
31 March
2015
84,234
48,000
-
100,000
11,000
-
-
-
-
-
-
-
-
(100,000)
(3,000)
0
-
(23,000)
-
-
(10,000)
-
-
(10,000)
(5,000)
3,000
-
-
-
-
(20,000)
(20,000)
(5,000)
(5,000)
104,250
96,250
187,500
350,500
2014/15
10.00
10.00
2016-2021
2019-2021
192,500
355,500
Total 2015
637,734
548,000
(136,000)
(65,000)
984,734
Weighted average exercise price
2015 (pence)
27.86p
10.00p
54.84p
11.62p
15.27p
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
*These options have fully vested
There were 984,734 options outstanding at 31 March 2015 (2014: 637,734) which had a weighted average
price per share of 15.27p (2014: 27.86p). The options vest over a period of two to five years conditional upon
the option holders continued employment with the Company.
49
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2015
17 Share Capital (continued)
The conditions applying to those options which are fully vested have been achieved. The number of
outstanding options that will vest is dependent on the achievement of a number of key performance measures
of the group, measured at a regional and consolidated level for the financial years 2014 and 2015. 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.
2015
2014
Share price (pence)
Fair value of options granted during the year
Expected volatility (%)
Risk-free interest rate (%)
Expected life of options (years)
85.00
61.50
76.45 63.42
35.0
4.0
2 & 5
14.0
4.0
2 & 5
Expected volatility was determined by reference to historical volatility of the Company’s share price.
The share based payment expense recognised within the income statement during the period was £0.13m
(2014: £0.05m).
SAYE Share Scheme
The Company operated a Save As You Earn (SAYE) scheme for the benefit of the employees within the
Company which was 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.
On 18 October 2014 the options granted on 18 August 2011 matured. All option holders were given six
months from the maturity date to exercise their options. At 31 March 2015 all options had been exercised.
Details are as follows:
Year of grant Exercise price Pence
Exercise
period
Number of
options
31 March
2014
Exercised
Number of
Options
31 March
2015
2011
56.00
2014
72,383
(72,383)
Total 2014
72,383
(72,383)
-
-
Weighted average exercise price 2015 (pence)
56.0p
56.0p
56.0p
Weighted average exercise price 2014 (pence)
56.0p
56.0p
56.0p
50
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2015
17 Share Capital (continued)
Share Premium
The reduction of capital of £1.8m relates to cancellation of part of the amount that stood to the credit of the
Company’s Share Premium Account. This resulted in return of cash to shareholders who were on the
Company’s register of members at 16 July 2014, pro rata to their respective holdings of Ordinary Shares. The
return of cash amounted to 14.809329p per Ordinary share and was paid to shareholders on 24 July 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 2015, the total number of ordinary shares held in Treasury and their values were as follows:
2015
2014
Number
£’000
Number
£’000
As at 01 April 2014
Shares purchased for treasury
Shares issued from treasury
Equity reclassification on disposal of
treasury shares
35,000
67,210
(80,934)
143
62
(42)
206,000
7,000
(178,000)
-
(142)
-
As at 31 April 2015
21,276
21
35,000
Nominal value
Market value
2
23
191
5
(53)
-
143
4
29
The maximum number of shares held in treasury during the year was 54,050 shares representing 0.4% of the
called-up ordinary share capital of the Company (2014: 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. During the year, the balance on the share premium account was reduced by £1.81 million
relating to return of cash to shareholders.
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.
51
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2015
18 Reserves (continued)
Translation Reserve
The foreign currency translation reserve comprises all presentation foreign exchange differences arising from
translation of the financial statements of foreign operations into the presentation currency of the Group
accounts.
Retained Earnings
The balance held on this reserve is the accumulated retained profits of the Group.
19 Operating Lease Commitments
As at 31 March 2015 the Group was committed to making the following total payments in respect of non-
cancellable operating leases:
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
2015
£’000
Other
2015
£’000
Land and
buildings
2014
£’000
Other
2014
£’000
30
217
-
1,861
2,108
-
-
-
-
-
23
-
223
2,115
2,361
-
-
-
-
-
The Group leases various offices under non-cancellable operating lease agreements. The leases have varying
terms as disclosed above.
52
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2015
20 Reconciliation of Profit Before Tax to Net Cash Inflow from Operating Activities
Group
2015
£’000
2014
£’000
Company
2015
£’000
2014
£’000
Profit before taxation
Adjust for:
Depreciation
Share based payment expense
Loss/(profit) on sale of plant & equipment
Net finance income
1,436
1,045
170
130
-
(6)
116
46
(2)
(18)
(6)
-
-
-
(6)
Operating cash flow before changes in working
capital
(Increase)/decrease in receivables
(Decrease)/increase in payables
1,730
1,187
(12)
(1,003)
(42)
(83)
482
(489)
65
58
-
-
-
(18)
40
581
102
Cash generated from/(used by) underlying
operations
685
1,586
(436)
723
21 Analysis of Cash less overdrafts
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
Total cash
2014
£’000
2,963
(1)
£’000
(1,954)
1
2015
£’000
1,009
-
2,962
1,953
1,009
At 1 April
2014
£’000
2,672
2,672
Cash flow
£’000
(2,226)
(2,226)
At 31 March
2015
£’000
446
446
53
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2015
22 Financial Risk Management
The Board of Directors has overall responsibility for the risk management policies that are applied by the
business to identify and control the risks faced by the Group.
The Group has exposure from its use of financial instruments to foreign currency risk, credit risk and liquidity
risk.
Foreign Currency
The Group publishes its consolidated financial statements in Sterling. The functional currencies of the
Group’s main operating subsidiaries are Sterling, the Singapore Dollar, the Hong Kong Dollar and the UAE
Dirham.
The Group’s international operations account for approximately 22% (2014: 21%) of revenue and
approximately 15% (2014: 7%) of the Group’s assets and consequently the Group has a degree of translation
exposure in accounting for overseas operations.
Currently the Group’s policy is not to hedge against this exposure but it does seek to minimise this exposure
by converting into sterling all cash balances in foreign currency that are not required for capital monetary
needs. The settlement of intercompany balances held with foreign operations is neither planned nor likely to
occur in the foreseeable future. Therefore, exchange differences arising from the translation of the net
investments are recognised in Other Comprehensive income.
Credit Risk
The Group’s principal financial assets are bank balances, trade and other receivables. The Group’s credit risk
is primarily in respect of trade receivables. Credit risk refers to the risk that a client will default on its
contractual obligations resulting in financial loss to the Group. The Group does not have any significant credit
risk exposure to any individual client. At the year end no customer represented more than 6% (2014: 7%) of
the total balance of trade receivables.
In reviewing the appropriateness of the provisions in respect of recoverability of trade receivables,
consideration has been given to the ageing of the debt and the potential likelihood of default, taking into
account current economic conditions.
It is the Directors’ opinion that no further provision for doubtful debts is required.
Liquidity Risk
The Group manages it liquidity risk by maintaining adequate cash and or credit facilities to meet forecast cash
requirements of the Group. Management monitors its forecasted cash flow requirements at a Group level
based on monthly returns made by the Group’s operating units.
The Group has no financial liabilities other than short term trade payables and accruals as disclosed in note
16, all due within one year of the year end.
The Group has net funds of £1.01m (2014: £2.96m) which the Board consider are more than adequate to meet
future working capital requirements and to take advantage of business opportunities.
54
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2015
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 £240k (2014: £220k). The balance owed to the subsidiary undertakings at the
year end is £145k (2014: £99k).
The Company also provides corporate guarantees on the subsidiary bank accounts. At 31 March 2015
amounts overdrawn by subsidiary bank accounts were nil (2014: £1k).
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
£339,048 (2014: £290,881). As part of the return of capital to shareholders, the Directors received £1,027,775.
55
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.
56
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 Deputy Chief Executive
and 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.
57
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