Prime People Plc
Annual Report and Financial Statements
for the year ended 31 March 2017
2017
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
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56
PRIME PEOPLE PLC
Chairman's Statement
Performance
the UK,
talent. In
The year ended 31 March 2017 was overall an
encouraging one with our clients continuing to
compete for scarce
the
referendum to remain or leave the EU occurring at
the end of our first quarter slowed activity both
sides of 23 June 2016 but, with a good recovery in
the second half we achieved a full year NFI
broadly in line with 2016. NFI comprises the total
placement fees of permanent candidates and the
margin earned in the placement of contract staff.
Our businesses in Asia performed particularly well
with both NFI and profit contribution being well
ahead of the prior year.
I am pleased to report we closed the year with
Revenue of £24.21m (2016: £20.76m) and NFI of
£13.10m. This is a 6.68% increase on last year
(2016: £12.28m). NFI in the second half of the
year of £6.77m was 7.00% higher than the first
half of 2017, and it is encouraging to see a second
half increase over the comparable period in 2016
of 11.55%.
There were a number of good performances within
UK property.
In particular, Contract and
Residential teams generated improved NFI. Our
Asia business, particularly Singapore, continued to
develop strongly.
the uncertainties of
There was a reduction in operating profit for the
year from £2.15m in 2016 to £1.90m in 2017. In
the UK, our core business in property was
particularly affected in quarters one and two by the
considerable negative sentiment for the sector
the EU
surrounding
referendum. Our Prime Energy business, servicing
the renewable market in the UK suffered difficulty
following the change in government subsidy for
the sector. The Group supported the team to
refocus on expanding its reach in new territories.
There were also costs associated with conserving
talent and, whilst total headcount increase was
limited, there was investment in staff to support
future productivity across the Group.
The conversion rate, which compares operating
profit to NFI, decreased from 17.50% to 14.54%
which is in line with the costs mentioned above.
During the year NFI productivity per head rose to
£102.33k (2016: £99.03k).
1
The ratio of NFI derived from contract as against
permanent placements has slightly increased in the
year from 9:91 in 2016 to 10:90, as a result of
increase in the contract team size.
Cash Flow
The Group continues to maintain a strong net cash
position. At the start of the year the Group had
cash of £0.95m which increased to £2.40m by the
end of the year. The increase is primarily due to
growth in the contract business and Asia’s positive
performance. Contract NFI grew by 28.32% to
£1.45m (2016: £1.13m) and Asia NFI increased by
39.94% to £5.08m (2016: £3.63m).
Dividend
During the year, an interim dividend of 1.75p per
share (2016: 1.75p) was paid to shareholders. The
Board will be recommending a final dividend of
3.25p (2016: 0.00p) per share. This will result in a
total dividend payment of 5.00p for the 2017
financial year (2016: 8.84p – which included a
special interim dividend of 4.00p and a second
interim dividend of 3.09p).
Share Buy Back
During the year 129,500 shares were purchased at
a cost of £111,390 through the Group’s buyback
programme (2016: nil shares purchased). The
Board will be seeking shareholder approval for
renewal of the authority to repurchase up to 10%
(2016: 10%) of the Group’s issued share capital at
the Annual General Meeting.
New Issue of Ordinary Shares
During the year the Company did not apply to
issue new shares for admission on AIM (2016:
96,250).
Board
The Board believes it has continued to operate
corporate governance standards appropriate to an
AIM listed company of its size. There have been
no changes to the Board during the year. Although
not required to do so, the Directors have resolved
that they will retire at least once every three years
and seek reappointment by shareholder at the next
AGM.
The Board members have a mix of skills,
experience, gender and backgrounds that are
considerable support to the business.
PRIME PEOPLE PLC
Chairman's Statement (continued)
People
The average number of staff increased from 124
last year to 128 this year and we anticipate that
headcount at the end of the current financial year
will have increased further.
The Group has a diverse cultural and ethnic profile
within the business and at the end of 2017 had a
global 54:46 (2016: 52:48) male: female gender
ratio.
The success of the Group is dependent on having
competent and committed people and the Board
would like to thank all the members of our staff
for their hard work, commitment and contribution
over the last year.
Current trading and outlook
is encouraging and we are
Current activity
confident the business is well positioned to exploit
opportunities as they arise. We have continued to
advance our overseas strategy by extending our
reach in Asia. The Group has strong and well-
established client relationships and committed
talent
to exploit current and new
ready
opportunities.
turbulence
is conscious of macro-economic
The Board
uncertainties, such as the effects for us of the
negotiations over the UK’s departure from EU
membership and possible
in our
overseas markets that may affect our clients’
hiring plans. The Group continues
to seek
opportunities for expansion, reacting swiftly to
market conditions as
individual
revenue lines. The Group will continue to invest in
people and the technology that allows us to grow
shareholders returns by offering our clients
innovative approaches to recruitment and globally
connected service.
they affect
Robert Macdonald
Executive Chairman
2
PRIME PEOPLE PLC
Strategic Report
Overview
The Group provides permanent and contract
recruitment services to selected, niche industry
sectors. The built environment continues to be the
Group’s largest market, served through its main
subsidiary, Macdonald & Company. As distinct
brands, Prime Insight and Prime Energy serve the
data analysis & customer insight and renewable
energy & sustainability sectors respectively.
Our employees are vital to the continued success
of the business and we invest heavily in them. As
such, we take time to find and train the best talent
that shares our ambition - to be the best, not
simply the biggest.
The business is organised into teams of specialist
consultants, each managed by a team leader who is
responsible for performance within the operating
framework approved by the Board. The Group
operates a policy of open communication in the
belief that its employees are well placed to suggest
operational improvements and emergent strategies
that will increase earnings.
The Group is committed to managing its talent on
merit alone and provides equal opportunities for
all current and future employees. It gives full and
fair consideration to applications for employment
from disabled persons, where a disabled person
may adequately carry out the requirements of any
position within the physical constraints of the
Company’s offices.
The Group has two locations in the UK, the
London head office and Manchester, with offices
in Hong Kong (established in 2007), Dubai
(established in 2008), Singapore (established in
2012), and a franchise in South Africa (established
in 2008).
to
in
Group Revenue and NFI improved in 2017.
However, as referred
the Chairman’s
Statement, set against this were the operational
issues faced by some of our UK teams. As
property sector sentiment was disturbed by the
referendum in quarters one and two it was decided
to hold on to staff and this together with expense
associated with repositioning the Prime Energy
team in the UK were major contributors to our
delivering a reduced operating profit of £1.90m
(2016: £2.15m). The recovery in the second half in
property sector performance justified our decision
in the first half of the year to maintain headcount.
The UK permanent recruitment market was
adversely affected by the uncertainty in the UK
property sector caused by the EU referendum.
However, performance in the UK was supported
by
from our Contract and
Residential teams as well as a good performance
from our recently established Real Estate Banking
and Investment team.
increased NFI
From the twelve UK and Overseas teams, under
which the Group operates, Hong Kong and
Singapore, were the leading contributors to Group
NFI, and made substantial contributions to overall
Group profit.
Our Dubai business saw a decline in its revenue,
as a result of general instability in the region.
As indicated above, our Asia businesses continued
to mature and finished the year strongly, with the
Prime Insight team there contributing materially to
the growth of business in the region.
in
careful
to maintain
The Board remains committed in its pursuit of
sustainable NFI growth and cash generation. It
control on
continues
expenditure
the pursuit of profitability.
Cultivating strong client relationships, investing in
the best technology and employing the best people
are the foundations of the Group’s success. With
uncertain global growth and a world economy
increasingly exposed to risk it is important that we
remain flexible, able to serve our clients wherever
demand may be, and that we closely monitor
individual NFI performance against costs. Tight
management
and
expenditure, together with a focus on improved
productivity per head and conversion ratios,
position the Group to prosper.
remuneration
control of
3
PRIME PEOPLE PLC
Strategic Report (Continued)
Regional Performance
UK
Revenue
Net fee income (NFI)
Operating profit
Operating profit as % of NFI
Average number of employees
2017
£m
18.56
7.44
0.82
11.02%
87
2016
£m
16.25
7.77
1.53
19.69%
84
UK revenue increased by 14.22% to £18.56m
(2016: £16.25m) with a decrease in NFI of 4.25%
to £7.44m (2016: £7.77m).
Contract represented 17.36% (2016: 14.52%) of
total UK NFI in 2017 while permanent NFI
declined by 9.84%
the region was flat
NFI for
largely as a
consequence of the lack of performance in quarters
one and two of our property business, affected by
referendum uncertainty. As mentioned in the
Chairman’s Report, there were difficulties for the
Prime Energy team as a result of the change in
government policy which gave rise to material
costs involved in the refocusing of the team.
Additionally, we suffered staff turnover in our
Manchester office causing revenue delay and
profit impact.
Our Contract, Residential and Real Estate Banking
& Investment teams delivered strong NFI growth
during the year and performed in line with profit
expectations.
4
PRIME PEOPLE PLC
Strategic Report (Continued)
Asia
Revenue
Net fee income (NFI)
Operating profit
Operating profit as % of NFI
Average number of employees
2017
£m
5.08
5.08
1.04
20.47%
33
2016
£m
3.63
3.63
0.46
12.67%
33
NFI grew by 39.94%
(2016:
£3.63m).The region is covered by our offices in
Hong Kong and Singapore and represents 38.78%
of Group NFI (2016: 29.56 %).
to £5.08m
we expanded our Prime Insight team in Singapore
which offers our clients broader service range and
better ability to serve markets in mainland China
and the region.
increased
Both Asia
productivity and maturing business lines. In 2017,
teams benefited
from
2017
£m
0.58
0.58
0.05
8.62%
4
2016
£m
0.88
0.88
0.16
18.18%
7
Rest of the World
Revenue
Net fee income (NFI)
Operating profit
Operating profit as % of NFI
Average number of employees
The region is covered by our offices in Dubai and
South Africa.
Whilst the regions covered made a small profit this
year, with NFI declining and a conversion rate of
8.62%, the outlook for the regions in the new
financial year looks stable and are expected to be
profitable
.
Peter Moore
Managing Director
5
PRIME PEOPLE PLC
Strategic Report (Continued)
Financial Review
Revenue
The Group achieved a 16.62% increase in revenue
to £24.21m (2016: £20.76m).
Net Fee Income (NFI)
Overall the Group delivered a 6.68% increase in
total NFI to £13.10m (2016: £12.28m). NFI from
permanent business
to
£11.81m (2016: £11.15m). Fees from our contract
business, which represents 9.85% of total NFI
(2016: 9.20%), increased to £1.29 million from
£1.13m last year.
increased by 5.92%
NFI from international placements, which is
included in our permanent business, increased by
25.50% to £5.66m (2016: £4.51m). UK NFI of
£7.44m reduced 4.26% (2016: £7.77m) affected by
the referendum.
Administration Costs
Administration costs for the year increased by
10.46% to £11.19m (2016: £10.13m). The increase
primarily related to higher staff costs.
Profit before Taxation
Profit before taxation decreased by 11.62% to
£1.90m (2016: £2.15m).
Taxation
The taxation charge is £0.29m on profit before
taxation of £1.90m (from ordinary activities)
which gives an effective tax rate of 15.26% (2016:
21.40%). The reasons for the difference from the
standard UK corporation tax rate of 20% are
detailed in note 7 of the accounts.
As outlined in the Chairman’s statement, the
Board propose a final dividend of 3.25p per share
which will, subject to shareholder approval at the
Annual General Meeting be paid on 28th July 2017
to shareholders who are on the register on 21st July
2017, making a total dividend paid to shareholders
for the year of 5.00p per ordinary share. (2016:
8.84p – included a special dividend of 4.00p).
Balance Sheet
Net assets at 31 March 2017 have increased to
£15.06m (2016: £13.42m).
Trade receivables at the year end, were down on
last year at £2.44m (2016: £2.71m) which reflects
the decreased credit period taken by clients to 45
days (2016: 55 days).
Treasury Management and Currency Risk
Approximately 76.66% of the Group’s revenue in
2017 (2016: 78.27%) was denominated in Sterling.
Consequently the Group has a degree of currency
exposure in accounting for overseas operations.
Currently, the Group policy is not to hedge against
this exposure but it does seek to minimise the
effect by converting into Sterling all cash balances
in foreign currency that are not required for local
short term working capital needs.
The Group operates a centralised
treasury
function, with no borrowing facilities, and is
confident the net cash within the Group is
foreseeable
to meet current and
sufficient
liabilities as they fall due.
Earnings per Share
Cash Flow and Cash Position
Basic earnings per share decreased by 5.05 % to
13.14p (2016: 13.84p). The diluted earnings per
share, taking into account existing share options,
decreased by 4.07% to 12.97p (2016: 13.52p).
At the start of the year the Group had cash of
£0.95m. After net taxation payments of £0.52m
(2016: £0.41m) cash generated from operations
was £1.46m (2016: £1.96m).
Dividend
An interim dividend of 1.75p (2016: 1.75p) was
paid on 25 November 2016 to shareholders on the
register at close of business on 18 November 2016.
The interim dividend was approved by the Board
on 8 November 2016.
During the year the Group spent £0.05m (2016:
its Customer Relationship
£0.09m)
to
Management systems and paid dividends
shareholders of £0.21m (2016: £1.95m).
on
As at 31 March 2017 the Group cash was £2.40m.
6
PRIME PEOPLE PLC
Strategic Report (Continued)
Financial Review (Continued)
Measurements of performance in 2017
Whilst the Group considers Net Fee Income (NFI)
to be the key indicator of the performance of the
business there are other measures which were
reported to senior management as follows:
- Conversion ratio (operating profit divided by
NFI) decreased to 14.54% (2016: 17.50 %)
- Productivity (NFI divided by total average
to £102.33k (2016:
increased
headcount)
£99.03k)
- Ratio of billing headcount
to
support
headcount slightly reduced to 3.2 (2016: 3.4)
- Percentage of NFI paid to staff increased to
66.26% (2016: 63.69%)
These key performance indicators form the basis
for reviewing the progress of the business.
Principal Risks and Uncertainties
Risk management is an important part of the
management process throughout the group. The
composition of the Board is structured to give
balance and expertise when considering the principal
risks and uncertainties of the Group.
The Group’s strategy is designed to allow the
business to grow without increasing risk beyond an
acceptable limit. The profile of risks fluctuates from
time to time and, whilst the Group cannot eliminate
risk altogether, the actions being taken to manage
and control risks are intended to mitigate the effects
on the business. According to latest industry surveys
persistent
the
recruitment profession and a number of difficult to
predict challenges remain of concern for the sector.
The Board
risks and
uncertainties facing the Group on a regular basis.
The Board’s approach is to ascertain the key risks
and develop plans to reduce the potential effects of
these risks on the business. The principal risks
identified are as follows:
slow growth continues across
the principal
reviews
Dependence on Key People
The sustainable success of the Group is dependent on
the continued service of senior management and key
7
people. The loss of the services of the senior
management and other key people could have a
material effect on the business. To address this, the
Group has put in to place an internal talent
acquisition function and invested in management
information systems,
training and development
programmes, competitive pay structures and long-
term remuneration plans, the aim of which is to
retain the key employees. The Group is fortunate to
have the loyalty of the senior management team
which allows the business to progress, even in
uncertain markets.
Competitors
The Group’s focus is on specialist, niche sectors
where clients need expert knowledge and high levels
of service. We concentrate on markets where there is
a shortage of supply of suitable candidates and
opportunities to build strong and fruitful long-term
relationships with clients. The Directors believe that
the Group is well positioned in its chosen markets.
Whilst the Group seeks to continue to improve its
competitive positions, the actions of current, or
indeed potential, competitors may adversely affect
the Group’s business.
Strength of Property Markets
The market for built environment recruitment
services, from which the Group obtains the major
part of its revenue, is expected to be unpredictable in
the United Kingdom given the uncertainties around
Brexit. The effect of Brexit on the property market
could have a material adverse effect on profitability
and cash flows of the business depending on the
outcome of the negotiations within the Eurozone.
That said, the performance in the revenue line has
level post 23rd June
settled at a profitable
referendum. Our contract business remains focused
in the public sector and recent introduction of
additional IR35 legislation will have an impact on
this business line in the short term and possibly long
term. Our Contract business has strengthened its
position in the private sector in order to reduce the
impact of IR35 legislation on our total contract book.
The Group is using business models that evolve to
operate in more innovative ways.
PRIME PEOPLE PLC
Strategic report (Continued)
Financial Review (Continued)
The Group seeks to maximise its potential by
understanding its position in the market, which will
ultimately help turn further challenges into potential
opportunities.
Macro economic factors
Slow growth in the global economy has effects that
trigger reduced output, and with it, demand and
investment. A return of financial turmoil, impairing
confidence globally in the next twelve months could
hamper job creation in our business areas. The Board
sees opportunities for development and will continue
to invest in areas where growth can be delivered at
acceptable levels of profitability, increasing cash
generation and growing Group revenue. The Group
is geographically diversified, spanning over different
countries which reduces the reliance on the success
of any particular market.
Regulatory position
The increase in regulatory scrutiny and demands on
compliance are having an effect on hiring. The
is aware of continuing challenges as
Group
procurement
remains
evolves,
committed to being fully compliant in each of the
regions in which it operates. In order to reduce the
legal and compliance risks, fee earners and support
staff receive regular training and updates on changes
in legal and compliance requirements.
practice
but
Information Technology
The Group is highly dependent on certain technology
systems and the infrastructure on which they operate
in order to maintain its client and candidate database.
These systems rely on specific suppliers who provide
the technology infrastructure and disaster recovery
solutions. The performance of these suppliers is
continually monitored to ensure that the services are
available and maintained. The Group is aware of the
increasing potential challenges to data integrity and
security from both internal and external sources.
infrastructure are
the systems and
Therefore,
regularly
to ensure
reviewed and upgraded
appropriate provision of functionality and resilience
to support the business as it develops.
revenue
Foreign Exchange Risk
The Group’s international operations account for
and
23.36% of
approximately 26.00% of the Group’s assets
(2016: 19.85%). Consequently, the Group has a
degree of translation exposure in accounting for
overseas operations and expects this to increase in
(2016: 21.71%)
line with the growth of the Group outside the
United Kingdom. Currently, the Group’s policy is
not to hedge against this exposure. However, the
Group seeks
this exposure by
converting into sterling all cash balances received
in foreign currency that are not required for local
short term working capital needs. The Group will
continue to monitor its policies in this area.
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 minor,
future interest rate, liquidity and foreign currency
risks could arise. An additional bout of exchange
rate depreciations in emerging market economies
and a sharp decline in capital inflows could force a
rapid compression of domestic demand. The
depreciation of Sterling might have
tangible
impact on UK business. The Board continues to
focus on cash flow forecasting and to manage
financial and foreign exchange risk in order to
define and understand the Group foreign exchange
exposures and to ensure the quality of information
on each exposure. 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 counterparty will
default on its contractual obligations resulting in
financial loss to the Group. The principal credit
risk arises from the Group’s trade receivables.
Client credit terms and cash collections are
managed carefully and cash balances and cash
flow forecast are reviewed weekly. Monthly credit
evaluation is performed on the financial condition
of accounts receivable based on payment history
and third-party credit references with appropriate
provisions being made.
Donka Zaneva-Todorinski
Finance Director
8
PRIME PEOPLE PLC
Report of the Directors for the Year Ended 31 March 2017
The Directors submit their report and the audited Group financial statements of Prime People Plc for the year
ended 31 March 2017. 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 21 June 2017, 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
Number of 10p
ordinary shares
Percent of issued
share capital
%
719,500
5.90
The mid market quotation of the Company’s shares at close of business on 31 March 2017 was 89.00p. The
highest and lowest mid market quotations in the period from 1 April 2016 to 31 March 2017 were 104.00p
and 84.00p respectively.
Going concern
The Group has two revenue streams permanent and temporary recruiting. The Group has experienced 16.66%
revenue growth in 2017 which has been driven by growth in both the permanent and contract businesses
The Directors have prepared cash flow forecasts for a period of at least 12 months from the date of approval
of the financial statements. After reviewing these forecasts and having made appropriate enquiries, the
Directors have a reasonable expectation that the Group has adequate resources to continue operating for the
foreseeable future. The Group continues to adopt the going concern basis when preparing the financial
statements.
Environmental Policy
The Group recognises its responsibilities for the environment and gives due consideration to the possible
effects of its activities on the environment. As such, our environmental impact comes from the running of our
business generating carbon emissions through the consumption of gas and electricity, transport activities and
commuting, as well as office based waste such as paper and toners. We do not consider that the Group’s
activities have a major effect on the environment. However, it is the Group’s aim to reduce the environmental
impact of its activities and to operate in an environmentally responsible manner. We are, therefore, committed
to the following principles to ensure the business operates in an environmentally sensitive manner:
Encouraging the re-use and re-cycling of products and waste from our offices
Ensuring efficient use of materials and energy
Purchasing environmentally friendly materials where appropriate
Political Donations
The Group made no political donations during the year (2016: Nil).
9
PRIME PEOPLE PLC
Report of the Directors for the Year Ended 31 March 2017
Workplace Pensions
In line with the law on workplace pensions the Group continues to operate a defined contribution plan and
automatically enrols certain UK employees into NEST pension scheme.
In 2017 the Group provided contribution to defined pension schemes on behalf of two of its executive
directors, details of which are set out in the Remuneration Report on page 16.
Capital Structure
Details of the allotted and issued share capital are shown in note 17. The Company has one class of ordinary
shares which carry no right to fixed income and which represents 100% of the total issued nominal value of
all share capital. Each share carries the right to one vote at general meetings of the company.
Details of employee share schemes are set out in note 17.
Annual General Meeting (“AGM”)
The AGM will be held on Monday 24 July 2017 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 129,500 shares (2016: nil 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 them aware of any relevant audit
information and to establish that it has been communicated to the auditors.
Post Balance sheet events
To facilitate further growth and sustainable success, on 11 April 2017 Macdonald and Company Freelance
Limited (UK subsidiary of the Group) entered into 12 months agreement with HSBC Invoice Finance (UK)
Limited for the purchase of its contract debts.
Auditor
Crowe Clark Whitehill LLP has expressed its willingness to continue in office and a resolution to reappoint
the firm as Auditor and authorising the Directors to set their remuneration will be proposed at the forthcoming
Annual General Meeting.
By order of the Board
Donka Zaneva- Todorinski
Finance Director
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; and
prepare the financial statements on a going concern basis unless it is inappropriate to presume that the
Group and Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Company's transactions and disclose, with reasonable accuracy at any time, the financial position of the
Company and its Group and enable them to ensure that the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for
taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information
included on the Company’s website; the work carried out by the auditors does not involve the consideration of
these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred
in the accounts since they were initially presented on the website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.
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, professional
integrity and ethics. The Board gives due regard to the ‘UK Corporate Governance Code’ published by the
Financial Reporting Council and the Quoted Companies Alliance (QCA) Corporate Governance Code for
small and Mid-Size Quoted Companies. As a company with its securities admitted to trading on AIM, the
company is not required to follow the UK Corporate Governance Code, however, it does so as far as is
practicable and appropriate for the nature and size of the Group, as further set out below.
A statement of the Directors’ responsibilities in respect of the financial statements is set out on page 11.
The Board has established two committees being the Audit Committee and the Remuneration Committee each
of which operates with defined terms of reference.
Membership of these committees as at the date of this report, the number of meetings held in 2017 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
Donka Zaneva-Todorinski – Finance Director
Chris Heayberd – Non-Executive Director
John Lewis – Non-Executive Director
6/6
6/6
6/6
6/6
N
N
N
N
N
N
N
N
1/1
1/1 (Chair)
Simon Murphy – Non-Executive Director
6/6
1/1(Chair)
1/1
Below is a brief description of the role of the Board and its Committees, followed by a statement regarding
the Group’s system of internal controls.
The Board and its Operation
The Board of Prime People Plc is the body responsible for corporate governance, establishing policies and
objectives, and reviewing the management of the Group’s resources.
The Board consists of an executive Chairman, Robert Macdonald, two other Executive Directors and three
Non-Executive Directors.
The Non-Executive Directors are John Lewis, Simon Murphy and Chris Heayberd. They receive a fixed fee
for their services and their interests in the shares of the Company are set out in the Remuneration Report on
page 16.
Biographical details for all the Directors are shown on page 56 and 57.
12
PRIME PEOPLE PLC
Corporate Governance
The Board and its Operation (Continued)
The Board meets at least five times each year, or more frequently where business needs require, and the
Directors receive monthly management accounts detailing the performance of the Group. The Board has a
general responsibility for overseeing all day to day matters of the Company with specific responsibility for;
reviewing trading performance; resources (including key appointments); finding, setting and monitoring
strategy; examining acquisition opportunities; and reporting to shareholders. The non-executive Directors
have a responsibility to ensure the strategies proposed by the executive Directors are fully considered and to
bring their judgment to bear in this role.
To enable the Board to function effectively and Directors to discharge their responsibilities, full and timely
access is given to all relevant information. In the case of Board meetings, this consists of a comprehensive set
of papers, including monthly business progress reports and discussion documents regarding specific matters.
Directors are free to, and regularly make further enquiries where they feel it is necessary and they are able to
take independent professional advice as required at the Company's expense. This is in addition to the access
which every Director has to the Company secretary.
The Board considers itself to be a "small board", and therefore has not set up a separate Nomination
Committee. Appointments to the Board of both executive and non-executive Directors are based on approval
by the full Board.
The Board has considered the matter of the independence of its non-executive directors who have served for
more than 5 years or have had previous executive roles. As the Board considers itself to be a "small board"
and having regard to the professional qualifications and standing of its non-executive directors as set out in
Biographical details for all the Directors on pages 56 and 57 it has been resolved to disregard the QCA
Guidelines Appendix A for the time being.
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.
13
PRIME PEOPLE PLC
Corporate Governance (Continued)
Audit Committee (Continued)
The Audit Committee’s principal tasks are to ensure the integrity of the Company’s Financial Reporting
process, review the effectiveness of the Group’s internal controls including risk management, review the
scope of the work of the external auditor and their independence, consider issues raised by the external
auditor, review audit effectiveness and review the half-yearly and annual accounts focusing in particular on
accounting policies and compliance and on areas of management judgement and estimates.
Remuneration Committee
The Remuneration Committee comprise the two non-executive Directors of the Company and is chaired by
John Lewis.
The committee reviews the Group policy on the Executive Directors’ remuneration and terms of employment;
makes recommendations on this; and also approves the provision of policies for the remuneration 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 2016
to the date of approval of the financial statements and believes it has the procedures in place to safeguard the
Group’s assets and to ensure the reliability of information used within the business and for publication.
Key elements of the system of internal control are as follows:
Group Organisation
The Board of Directors meets up to six times a year and more frequently when required focusing mainly on
strategic issues, operational and financial performance. The Directors have in place an organisational structure
with clearly defined levels of responsibility and delegation of authority.
The Operational Management Board meets quarterly. It acts as a conduit between the Board of Directors and
the Group subsidiaries by providing information, advice and guidance to all staff. It has responsibilities for
setting up, monitoring and control of the business operations globally.
Annual Business Plan
The Group has a comprehensive budgeting system with an annual budget approved by the Board.
Monthly Forecasting
The Group prepares monthly fee income forecasts by individual businesses which are compared to budget.
14
PRIME PEOPLE PLC
Corporate Governance
Internal Controls (continued)
Financial Reporting
Detailed monthly reports are produced showing a comparison of results against budget, forecast and the prior
year with performance monitoring and explanations provided for significant variances. Any significant
adverse variances are examined and remedial action taken where necessary.
Capital Expenditure
Capital expenditure requests are reviewed by the Board. Appropriate due diligence work will be carried out if
a business is to be acquired.
Levels of authority
There are clear levels of authority, delegation and management structure.
Risk Management
The Directors and operating Company management have a clear responsibility for identifying risks facing
each of the businesses and for putting in place procedures to mitigate and monitor risks. Risks are assessed
during the annual budget process, which is monitored by the Board, and the ongoing Group strategy process.
Whistle blowing 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
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 structure that strongly aligns the interests of
management with those of shareholders.
Remuneration Policy
The main aim of the Committee is to attract, retain and motivate high calibre individuals with a compensation
comprising of basic salary, incentives and rewards which are linked to the overall performance of the Group
and which are comparable to pay levels in companies of similar size and in similar business sectors.
Directors’ Service Contracts
The Executive Chairman and Managing Director have service contracts which contain a notice period of one
year which are terminable by either party giving one years notice. The service contracts also contain
restrictive covenants preventing them from competing with the Group for one year following the termination
of employment and preventing both Directors from soliciting key employees, clients and candidates of the
employing Group and Group companies for 12 months following termination of employment. There are no
provisions for liquidated damages on the early termination of any of the Directors’ service contracts, nor
provisions for mitigating damages.
The Finance Director has a service contract which contains a notice period of 3 months which is terminable
by either party giving 3 months notice. The service contract also contains restrictive covenants preventing her
from competing with the Group for 3 months following the termination of employment and preventing her
from soliciting key employees, clients and candidates of the employing Group and Group companies for 3
months following termination of employment. There are no provisions for liquidated damages on the early
termination of any of the Directors’ service contracts, nor provisions for mitigating damages.
Non-Executive Directors’ Remuneration and Terms of Services
All Non-Executive Directors have letters of appointment which entitle either party to give three months
notice. The remuneration of the Non-Executive Directors is determined by the Board. The Non-Executive
Directors do not receive any pension or other benefits, other than out of pocket expenses, from the Group, nor
do they participate in any bonus schemes.
The remuneration agreed by the Committee for the Executive Directors contains some or all of the following
elements: a base salary and benefits, defined pension contributions, an annual bonus reflecting Group and
individual performance and share options.
Base Salary and Benefits
The Committee establishes salaries and benefits by reference to those prevailing in the employment market
generally for Executive Directors of companies of comparable status and market value. Reviews of such base
salary and benefits are conducted annually by the committee.
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, pension contributions, fees as Directors and benefits. Emoluments
shown are in respect of each Director's period in office during the year as a Board member of Prime People
Plc, and include emoluments from the Company and its subsidiary undertakings.
Notes
Salaries
and fees
Benefits
£
£
Gain on
Option
Exercise
£
Pension
2017
Total
£
£
2016
Total
£
Executive Chairman
Robert Macdonald
3
116,171
4,791
Executive Directors
Peter Moore
1 & 3
186,529
7,469
-
-
21,000
141,962
140,011
35,372
229,370
229,015
Donka Zaneva-
Todorinski
Chris Heayberd
Non-Executive Directors
John Lewis
Simon Murphy
Chris Heayberd
94,890
1,719
-
11,475
-
372
-
108,456
-
33,617
26,227
19,768
19,768
25,378
-
-
-
-
-
-
-
-
-
19,768
19,435
19,768
19,435
25,378
14,038
462,504
13,979
11,475
56,744
544,702
481,778
Notes to the emoluments:
1. Peter Moore is the highest paid Director,
2. Benefits include subscriptions, medical and travel allowance,
3. Executive Directors’ Pension Contribution to two executive directors was approved by the Board on 7 March 2017
Pension includes the cash value of the Group contribution to defined contribution pension plans
17
PRIME PEOPLE PLC
Remuneration Report
Directors’ interests in shares
Directors’ beneficial interest in the shares of the Company at 31 March 2017 was as follows:
Ordinary
shares of 10p
each held at
31 March
2017
Percentage of
issued share
capital at
31 March
2017
Ordinary
shares of 10p
each held at
31 March
2016
Percentage of
issued share
capital at
31 March
2016
2,780,000
2,907,721
1,250
1,062,000
330,000
24,000
22.62%
23.66%
0.01%
8.64%
2.70%
0.20%
2,780,000
2,907,721
1,250
1,019,000
330,000
24,000
22.62%
23.66%
0.01%
8.29%
2.70%
0.20%
Robert Macdonald
Peter Moore
Donka Zaneva-Todorinski
John Lewis
Simon Murphy
Chris Heayberd
Share option schemes
As at 31 March 2017 Directors’ options on ordinary shares of 10p each granted under the Prime People
Enterprise Management Incentive Scheme, were as follows:
Director
Year of
grant
Exercise
price
Granted
Number of
options
31 March
2016
Cancelled Exercised Number of
options
31 March
2017
Donka Zaneva-
Todorinski
2013/14
2014/15
10.00p
10.00p
2015/16
58.00p
1,250
30,000
10,000
-
-
-
-
-
-
-
(15,000)
-
1,250
15,000
10,000
Directors’ Insurance
Directors’ and officers’ liability insurance is provided at the cost of the Group for all Directors and Officers.
Annual Resolution
Shareholders will be given the opportunity to approve the Remuneration report at the Annual General
Meeting.
John Lewis
Chairman of the Remuneration Committee
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 2017 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 numbered 1 to 23.
The financial reporting framework that has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the
parent Company financial statements, as applied in accordance with the provisions of the Companies Act
2006.
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's
members those matters we are required to state to them in an Auditor's report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company
and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of Directors and Auditor
As explained more fully in the Statement of Directors' Responsibilities, the Directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the
Auditing Practices Board's Ethical Standards for Auditors.
Scope of the audit of the Financial Statements
A description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s
website at www.frc.org.uk/auditscopeukprivate .
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 2017 and of the Group‘s and parent Company’s profit for the year then ended;
the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union;
the parent Company financial statements have been properly prepared in accordance with IFRSs as
adopted by the European Union as applied in accordance with the provisions of the Companies Act 2006;
and
the financial statements have been prepared in accordance with the requirements of the Companies Act
2006.
19
PRIME PEOPLE PLC
Independent Auditor’s Report (continued)
Opinion on other Matter Prescribed by the Companies Act 2006
In our opinion based on the work undertaken in the course of our audit
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; and
the Directors’ Report and Strategic report have been prepared in accordance with applicable legal
requirements.
Matters on which we are Required to Report by Exception
In light of the knowledge and understanding of the company and its environment obtained in the course of the
audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to if,
in our opinion:
adequate accounting records have not been kept by the parent Company, or returns adequate for our audit
have not been received from branches not visited by us; or
the parent Company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of Directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Stacy Eden
Senior Statutory Auditor
For and on behalf of
Crowe Clark Whitehill LLP
Statutory Auditor
St Bride’s House
10 Salisbury Square
London
EC4Y 8EH
20
PRIME PEOPLE PLC
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2017
Revenue
Cost of sales
Net fee income
Administrative expenses
Operating profit
Profit before taxation
Income tax expense
Profit for the year
Other comprehensive income
Items that will or may be reclassified
to profit or loss:
Exchange profit on translating foreign
operations
Other Comprehensive income
for the year, net of tax
Total comprehensive income for the
year
Attributable to:
Equity shareholders of the parent
Earnings per share
Basic earnings per share
Diluted earnings per share
Note
2, 3
4
7
9
The above results relate to continuing operations
21
2017
£’000
24,213
(11,115)
2016
£’000
20,755
(8,475)
13,098
(11,194)
12,280
(10,131)
1,904
2,149
1,904
2,149
(292)
(459)
1,612
1,690
270
21
270
21
1,882
1,711
1,880
1,711
13.14p
12.97p
13.84p
13.52p
PRIME PEOPLE PLC
Consolidated Statement of Changes in Equity
For the year ended 31 March 2017
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
1,219
9
(21)
5,370
173
212
442
6,070
13,474
-
-
-
10
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
-
-
-
-
-
-
-
-
88
-
-
-
-
1,690
1,690
21
-
21
78
-
166
11
(1,946)
(1,946)
-
-
1,229
9
(21)
5,371
173
300
463
5,892
13,416
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(111)
13
98
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(20)
-
-
-
-
-
1,612
1,612
270
-
270
-
-
-
-
-
108
88
-
-
(98)
(111)
13
-
(215)
(215)
1,229
9
(21)
5,371
173
280
733
7,299
15,073
At 1 April
2015
Profit for the
year
Other
comprehensive
income
Adjustment in
respect of
share schemes
Issues of
ordinary shares
Dividend
At 31 March
2016
Profit for the
year
Other
comprehensive
income
Adjustment in
respect of
share schemes
Shares
purchased for
treasury
Shares issued
from treasury
Adjustment on
share disposal
Dividend
At 31 March
2017
22
PRIME PEOPLE PLC
Consolidated Statement of Financial Position
As at 31 March 2017
Assets
Non – current assets
Goodwill
Property, plant and equipment
Deferred tax asset
Current assets
Trade and other receivables
Cash at bank and in hand
Total assets
Liabilities
Current liabilities
Trade and other payables
Current tax liabilities
Non-current liabilities
Deferred tax liabilities
Total liabilities
Net assets
2017
£’000
9,769
136
43
9,948
5,101
2,409
7,510
2016
£’000
9,769
229
-
9,998
4,939
953
5,892
17,458
15,890
2,310
75
2,385
-
-
2,216
249
2,465
9
9
2,385
2,474
15,073
13,416
Note
11
10
16
13
21
15
16
23
PRIME PEOPLE PLC
Consolidated Statement of Financial Position
As at 31 March 2017
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
Note
17
18
18
18
18
18
18
18
2017
£’000
1,229
9
(21)
5,371
173
280
733
7,299
2016
£’000
1,229
9
(21)
5,371
173
300
463
5,892
Total equity
15,073
13,416
The financial statements on pages 21 to 54 were approved by the Board of Directors and authorised for issue
on 21 June 2017 and are signed on its behalf by:
R J G Macdonald
D Zaneva-Todorinski
24
PRIME PEOPLE PLC
Company Statement of Financial Position
As at 31 March 2017
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
2017
£’000
11,156
-
11,156
6
636
642
2016
£’000
11,176
-
11,176
14
633
647
11,798
11,823
779
779
959
959
11,019
10,864
1,229
9
(21)
5,371
173
280
3,978
1,229
9
(21)
5,371
173
300
3,803
Total equity
11,019
10,864
The Company’s retained earnings includes profit for the year of £487,456 (2016: £890,249).
The financial statements of Prime People Plc, Company Number 1729887 were approved by the Board and
authorised for issue on 21 June 2017 and are signed on its behalf by:
R J G Macdonald
D Zaneva-Todorinski
25
PRIME PEOPLE PLC
Company Statement of Changes in Equity
For the year ended 31 March 2017
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 2015
1,219
9
(21)
5,370
173
15
4,844
11,609
Total
comprehensive
income for the
year
Issue of
ordinary shares
Adjustment in
respect of share
options
Investment in
subsidiaries
Dividend
At 31 March
2016
Total
comprehensive
income for the
year
Shares issued
from treasury
Shares
purchased for
treasury
Adjustment on
share disposal
Investment in
subsidiaries
Dividend
At 31 March
2017
-
10
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
-
-
-
-
-
-
-
-
-
-
890
890
-
11
(15)
15
-
300
-
-
300
(1,946)
(1,946)
1,229
9
(21)
5,371
173
300
3,803
10,864
-
-
-
-
-
-
-
-
-
-
-
-
-
13
(111)
98
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
488
488
-
-
13
(111)
(98)
-
(20)
-
-
(215)
(20)
(215)
1,229
9
(21)
5,371
173
280
3,978
11,019
26
PRIME PEOPLE PLC
Group and Company Cash Flow Statement
For the year ended 31 March 2017
Cash generated from (used
in) underlying operations
Income tax paid
Net cash from/(used by)
operating activities
Cash flows from investing
activities
Net purchase of property,
plant and equipment
Dividend received
Net cash (used in)/from
investing activities
Cash flows from financing
activities
Issue of ordinary share capital
Shares issued from treasury
Shares purchased for treasury
Dividend paid to shareholders
Net cash used in financing
activities
Net increase/ (decrease) in
cash and cash equivalents
Cash and cash equivalents at
beginning of the year
Effect of foreign exchange
rate changes
Cash and cash equivalents at
the end of the year
Note
20
Group
2017
£’000
2016
£’000
Company
2017
£’000
1,981
2,369
(521)
(411)
(126)
(10)
2016
£’000
1,278
(6)
1,460
1,958
(136)
1,272
(53)
-
(97)
-
-
450
-
850
(53)
(97)
450
850
2
115
(111)
(215)
11
-
-
(1,946)
2
13
(111)
(215)
11
-
-
(1,946)
(209)
(1,935)
(311)
(1,935)
1,198
953
(74)
1,009
258
18
3
633
-
(187)
446
-
21
2,409
953
636
633
27
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2017
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 within the financial statements of the parent is £487,456 (2016: £890,249). 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 2017 (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 2017 and
are described below.
International Accounting Standards (IAS/IFRS) and Interpretations in issue but not yet EU approved
At the date of authorisation of these financial statements, certain new standards, amendments and
interpretations to existing standards have been published by the IASB but are not yet effective. These have not
been adopted early by the Group and the initial assessment indicates that either they will not be relevant or
will not have a material impact on the Group:
Standards
IFRS 14 Regulatory Deferral Accounts (Issued January 2014, effective date 1 January 2016)
IFRS 16 Leases (Issued January 2016, effective date 1 January 2019)
Amendments (Effective date for all amendments is deferred indefinitely)
Amendments to IFRS 10 and IAS 28: Sales or Contribution of Assets between an Investor and its
Associate or Joint Venture (Issued on 11 September 2014)
28
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2017
2
Summary of Significant Accounting Policies (continued)
International Accounting Standards (IAS/IFRS) and Interpretations in issue but not yet EU approved
(continued)
Amendments (Effective date for all amendments listed is 1 January 2017)
Amendments to IAS 12: Recognition of Deferred Tax Assets for Unrealised Losses (Issued January 2016)
Amendments to IAS 7: Disclosure Initiative (Issued January 2016)
Amendments (Effective date for all amendments listed is 1 January 2018)
Clarifications to IFRS 15 Revenue from Contracts with Customers (issued on 12 April 2016)
Clarifications to IFRS 15 Revenue from Contracts with Customers (Issued April 2016, effective date 1
January 2018)
Amendments to IFRS 2: Classification and Measurement of Share-based Payment Transactions (issued on
20 June 2016)
Amendments to IFRS 4: Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (issued
on 12 September 2016)
IFRIC Interpretation 22 Foreign Currency Transactions and Advance Consideration (issued on 8
December 2016)
Amendments to IAS 40: Transfers of Investmenty Property (issued on 8 December 2016)
International Accounting Standards (IAS/IFRS) and Amendments (and EU adopted) but not yet
effective
IFRS 9 Financial Instruments (Issued on 24 July 2014, effective date 1 January 2018)
IFRS 15 Revenue from Contracts with Customers (issued on 28 May 2014) including amendments to IFRS
15: Effective date of IFRS 15 (issued on 11 September 2015), effective date for both is 1 January 2018
The directors do not expect the adoption of the Standards and Interpretations listed above will have a material
impact on the financial statements of the Group in future periods, except for disclosure of IFRS 15 that may
have an impact on revenue recognition and related disclosures. Beyond the information above it is not
practicable to provide a reasonable estimate of the impact of IFRS 15 until a detailed review has been
completed.
Consolidation
Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies,
generally accompanying a shareholding of more than one half of the voting rights. Subsidiaries are fully
consolidated from the date on which control is transferred to the Group. They are de-consolidated from the
date that control ceases.
29
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2017
Consolidation (Continued)
Business combinations are accounted for using the acquisition method of accounting. The cost of an
acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred
or assumed at the date of exchange, plus costs directly attributable to the acquisition. The excess of the cost of
acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as
goodwill.
Inter-Company transactions and balances on transactions between Group companies are eliminated in
preparing the consolidated financial statements.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the
policies adopted by the Group.
Going Concern
The Directors have prepared cash flow forecasts for a period of at least 12 months from the date of approval
of the financial statements and have a reasonable expectation that the Company and the Group have adequate
resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the
going concern basis of accounting in preparing the financial statements.
Revenue recognition
a) Revenue
Revenue, which excludes value added tax (“VAT”), constitutes the value of services undertaken by the Group
from its principal activities, which are recruitment consultancy and other ancillary services. These consist of:
- Revenue from contract placements, which represents amounts billed for the services of contract staff,
including the salary of these staff. This is recognised when the service has been provided;
- Revenue from permanent placements, which is based on a percentage of the candidate’s remuneration
package and is derived from both retained assignments (income recognised on completion of defined
stages of work) and non-retained assignments (income recognised at the date an offer is accepted by a
candidate, a start date has been agreed but employment has not yet commenced). The latter includes
revenue anticipated but not invoiced at the balance sheet date, which is correspondingly accrued on the
balance sheet within prepayments and accrued income. A provision is made against accrued income based
on past historical experience for possible cancellations of placements prior to, or shortly after, the
commencement of employment; and
-
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective
interest rate applicable.
b) Cost of Sales
Cost of sales consists of the salary cost of contract staff and costs incurred on behalf of clients, principally
advertising costs.
c) Net Fee Income
Net fee income represents revenue less cost of sales and consists of the total placement fees of permanent
candidates, the margin earned on the placement of contract candidates and the margin on advertising income.
30
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2017
d) Foreign Currency Translation
(i) Functional and Presentation Currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of
the primary economic environment in which the entity operates (‘the functional currency’). The consolidated
financial statements are presented in Sterling, which is the Company’s functional and presentation currency.
(ii) Transactions and Balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the consolidated statement of comprehensive income.
(iii) Group Companies
On consolidation the results and financial position of all the Group entities that have a functional currency
different from the presentation currency are translated into the presentation currency as follows:
assets and liabilities for each year end presented are translated at the closing rate of that year end;
income and expenses for each statement of comprehensive income are translated at average exchange
rates; and
all resulting exchange differences are recognised in other comprehensive income.
e)
Intangible Assets
(i) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net
identifiable assets of the acquired subsidiary/associate at the date of acquisition. Goodwill on acquisitions of
subsidiaries is included in ‘intangible assets’.
As permitted by the exception in IFRS1 ‘First time adoption of International Reporting Standards’, the Group
has elected not to apply IFRS3 ‘Business combinations’ to goodwill arising on acquisition that occurred
before the date of transition to IFRS.
Separately recognised goodwill is reviewed annually for impairment and carried at cost less accumulated
impairment losses. Impairment losses on goodwill are not reversed. Determining whether goodwill is
impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been
allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise
from the cash generating unit and a suitable discount rate in order to calculate present value.
(ii) Computer Software
Computer software acquired by the Group is stated at cost. These costs are amortised to write the cost off in
equal annual instalments over three years.
31
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2017
f) Property, Plant and Equipment
All property, plant and equipment are stated at historical cost less accumulated depreciation less provisions
for impairment. Depreciation is provided on all property, plant and equipment using the straight-line method
at rates calculated to write off the cost less estimated residual values over their estimated useful lives, as
follows:
Leasehold improvements over the expected period of the lease.
Furniture, fittings and computer equipment 25% – 33%
The gain or loss arising on disposal or retirement of an asset is determined by comparing the sales proceeds
with the carrying amount of the asset and is recognised as income.
g)
Impairment of Assets
Assets that have an indefinite useful economic life are not subject to amortisation and are tested annually for
impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised
for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount
is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows
(cash-generating units).
h) Taxation
The tax expense represents the sum of the current tax expense and deferred tax expense.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported
in the statement of comprehensive income because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are never taxable or deductible. The Group’s
liability for current tax is calculated using tax rates that have been enacted or substantially enacted by the
balance sheet date.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements.
Deferred income tax is determined using tax rates and laws that have been enacted or substantially enacted by
the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the
deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be
available against which the temporary differences can be utilised.
i) Leased Assets and Obligations
All of the Group’s leases are operating leases and the annual rentals are charged to profit and loss on a straight
line basis over the lease term.
The benefit of rent free periods received for entering into a lease is spread evenly over the lease term.
32
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2017
j) Pension Costs
The Group operates defined contribution pension scheme. The Group adopts the minimum legally required
employer contribution rate of 1% of qualifying earnings and up to the maximum earning threshold for
automatic enrolment for 2016-17, as set by the Pension Regulator.
The assets of the scheme are held separately from those of the Group in independently administered
workplace pension -NEST. The pension costs charged to the income statement represent the contributions
payable by the Group to Nest during the year.
The Pension liabilities at the Balance Sheet date represent employer and employee pension contributions, that
are payable to the pension provider by the 22nd date of each month.
k) Segmental Reporting
IFRS8 requires operating segments to be identified on the basis of internal reports that are regularly reviewed
by the Board of Directors to allocate resources to the segment and to assess their performance.
l) Financial instruments
Financial assets and liabilities are recognised in the Group’s balance sheet when the Group becomes a party to
the contractual provision of the instrument.
m) Financial assets
The Group’s financial assets comprise cash and various other receivable balances that arise from its
operations. Trade receivables, loans and other receivables that have fixed or determinable payments that are
not quoted in an active market are classified as loans and receivables. Loans and receivables are initially
measured at fair value and subsequently at amortised cost using the effective interest rate method, less any
impairment. Interest income is recognised by applying the effective interest rate, except for short-term
receivables when the recognition of interest would be immaterial.
Financial assets are assessed for impairment at each balance sheet date, and are impaired where there is
objective evidence that, as a result of one or more events that occurred after the initial recognition of the
financial asset, the estimated future cash flows of the investment have been impacted.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets
with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance
account. When a trade receivable is considered uncollectible, it is written off against the allowance account.
Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes
in the carrying amount of the allowance account are recognised in the profit or loss account. If in a subsequent
period the amount of the impairment loss decreases and the decreases can be related objectively to an event
occurring after the impairment was recognised, the previously recognised impairment loss is reversed through
profit and loss to the extent that the carrying amount of the financial asset at the date the impairment is
reversed does not exceed what the amortised cost would have been had the impairment not been recognised.
Cash and cash equivalents includes cash in hand and bank deposits that are readily convertible to a known
amount of cash and are subject to an insignificant risk of changes in value. Bank overdrafts are classified with
current liabilities in the statement of financial position.
33
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2017
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
18.90% of those offers where employment has yet to commence (2016: 20.02%). 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 2017
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
2017
£’000
2016
£’000
Net fee income
2017
£’000
2016
£’000
18,558
16,249
7,443
5,075
3,626
5,075
580
880
580
7,774
3,626
880
24,213
20,755
13,098
12,280
All revenues disclosed by the Group are derived from external clients and are for the provision of recruitment
services. The accounting policies of the reportable segments are the same as the Group’s accounting policies
described in note 2. Segment profit before taxation represents the profit earned by each segment after
allocations of central administration costs.
b) Revenue and Net Fee Income, by Classification
Permanent
-UK
-Asia
-Rest of World
Contract (UK)
Total
Revenue
Net fee income
2017
£’000
2016
£’000
2017
£’000
2016
£’000
6,004
5,075
580
6,653
3,626
880
5,991
5,075
580
6,645
3,626
880
12,554
9,596
1,452
1,129
24,213
20,755
13,098
12,280
35
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2017
3
Segment Reporting (continued)
c) Profit before Taxation by Geographical Region
UK
Asia
Rest of World
Operating Profit
2017
£’000
823
1,035
46
1,904
2016
£’000
1,527
460
162
2,149
Profit before taxation
1,904
2,149
Operating profit is the measure of profitability regularly reviewed by the Board, which collectively acts as the
Chief Operating Decision Maker. Consequently, no segmental analysis of interest or tax expenses is provided.
Segment operating profit is the profit earned by each operating unit and includes inter segment revenues
totalling £0.76m (2016 £0.71m) for the UK, and charges of £0.68m (2016 £0.60m) for Asia and £0.08m (2016
£0.11m) for the rest of the world.
d) Segment Assets and Liabilities by Geographical Region
UK
Asia
Rest of World
Total
Total non-current assets
2016
£’000
2017
£’000
Total liabilities
2017
£’000
2016
£’000
9,934
9,962
1,286
1,441
19
3
27
9
1,019
73
910
121
9,956
9,998
2,378
2,472
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 2017
4 Profit on ordinary activities before taxation
Profit for the year is arrived at after charging:
- owned assets
- land and buildings
Depreciation
Operating lease rentals
Loss 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
Advisory Services (related to FRS102 transition)
Total fees
5 Directors’ emoluments
Emoluments for qualifying services
Highest paid Director:
Emoluments for qualifying services
2017
£’000
2016
£’000
158
521
1
26
21
24
45
-
45
188
487
-
33
21
23
44
4
48
2017
£’000
2016
£’000
544
482
544
482
229
229
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 2017
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:
2017
Number
2016
Number
95
25
8
91
26
7
128
124
2017
Number
2016
Number
Management
5
5
Staff costs for all employees, including Directors, but excluding contract staff placed with clients are as
follows and have been included in Administration expenses in the consolidated statement of comprehensive
income:
Group
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
2017
£’000
7,860
655
75
89
2016
£’000
6,984
598
73
166
8,679
7,821
2017
£’000
1,195
24
2016
£’000
1,090
35
1,219
1,125
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2017
7 Taxation on Profits on Ordinary Activities
a) Analysis of tax charge in the year
Current tax
UK Corporation tax
Foreign tax
Foreign tax over provision in prior years
Total current tax
Deferred tax
Origination and reversal of temporary differences
Deferred tax on fair value share option charge
2017
£’000
2016
£’000
209
107
28
344
(9)
(43)
375
87
(4)
458
1
-
Total charge on profit for the year
292
459
UK corporation tax is calculated at 20% (2016: 20%) of the estimated assessable profits for the year.
Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
b) The charge for the year can be reconciled to the profit per the consolidated statement of
comprehensive income as follows:
Profit before taxation
Tax at UK corporation tax rate of 20% (2016: 20%) 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
Tax exemption
Total current tax
Deferred Tax
Origination and reversal of temporary differences
Tax charge for the year
39
2017
£’000
1,904
2016
£’000
2,149
381
22
14
(2)
(35)
9
(28)
(17)
344
(52)
292
430
8
11
21
(19)
19
(4)
-
466
(7)
459
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2017
8 Dividends
Special second interim dividend for 2017: 0.00p per share (2016: 3.09p per share)
Final dividend for 2016: 0.00p per share (2015: 3.09p per share)
Interim dividend for 2017: 1.75p per share (2016: 1.75p per share)
Special dividend for 2017: 0.00p per share (2016: 4.00p per share)
Second Interim dividend for 2017: 0.00p per share (2016: 3.09p per share)
2017
£’000
2016
£’000
-
-
215
-
-
215
488
376
212
490
380
1,946
An interim dividend of 1.75p (2016: 1.75p) was paid on 25 November 2016 to shareholders on the register at
the close of business on 18 November 2016. The interim dividend was approved by the Board on 8 November
2016.
A final dividend of 3.25p per share which will, subject to shareholder approval at the Annual General Meeting
be paid on 28th July 2017 to shareholders who are on the register on 21st July 2017, making a total dividend
paid to shareholders for the year of 5.00p per ordinary share. (2016: 8.84p).
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
2017
£’000
1,612
2016
£’000
1,690
Number
Number
Weighted average number of shares used for basic earnings per share
Dilutive effect of share options
12,271,923
195,634
12,211,950
290,730
Diluted weighted average number of shares used for diluted earnings per share
12,467,557
12,502,680
Basic earnings per share
Diluted earnings per share
40
Pence
Pence
13.14p
12.97p
13.84p
13.52p
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2017
10 Property, Plant and Equipment
Fixtures, fittings and equipment
Total
Group
Cost
At 1 April 2015
Additions
Disposals
Exchange difference
At 1 April 2016
Additions
FinDisposals
Exchange difference
At 31 March 2017
Depreciation
At 1 April 2015
Provision for the year
Disposals
Exchange rate loss
At 1 April 2016
Provision for the year
Disposals
Exchange rate gain
At 31 March 2017
Net book value
At 31 March 2017
At 31 March 2016
At 31 March 2015
£’000
£’000
1,057
97
(44)
8
1,118
53
(124)
28
1,057
97
(44)
8
1,118
53
(124)
28
1,075
1,075
741
188
(44)
4
889
158
(123)
15
741
188
(44)
4
889
158
(123)
15
939
939
136
229
316
136
229
316
41
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2017
11 Goodwill
Cost
At 1 April 2015, 1 April 2016 and 31 March 2017
£’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 assessment is based on UK projected results. The recoverable amount is determined on a value in use
basis utilising the value of cash flow projections over five years with terminal value added for the UK
business segment. The first year of the projections is based on detailed budgets prepared and approved by
management. Subsequent years are based on extrapolations.
The key assumptions in calculating the value in use is that the Group will meet its budgeted growth in UK net
fee income of 25.88% in the year to 31 March 2018. After the end of the period covered by the budget a
2.50% 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 6.60% has been applied which represents the weighted average costs of
capital for the Group.
Based upon this analysis the asset has not been impaired since the ‘recoverable amount’ (being the greater of
the net realisable value and the value in use) is in excess of its carrying amount by £3.79m. A number of
potential sensitivity scenarios have been considered and these would indicate impairment in the carrying value
of goodwill if the discount rate were to be increased to 11.59% or if the operating profit reduced to £1.07m
with no future growth. Management believes the assessment is reasonable based on average UK operating
profit achieved for the past 3 years above £1.1m.
12 Investments
Company
Cost
At 1 April 2015 and 1 April 2016
Decrease in investment in subsidiaries from share
option reserve charge
As at 31 March 2017
Shares in
subsidiary
undertakings
£’000
11,176
(20)
11,156
The share option reserve relates to employee share option arrangements provided to employees of the Group
subsidiary companies.
42
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2017
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
Registered
Address
England and Wales
Holding Company
2 Harewood Place
Hanover Square London
W1S 1BX
England and Wales
Recruitment
2 Harewood Place
Hanover Square London
W1S 1BX
England and Wales
Recruitment
2 Harewood Place
Hanover Square London
W1S 1BX
England and Wales
Dormant
2 Harewood Place
Hong Kong
Recruitment
Macdonald & Company
Group Limited
Macdonald &
Company Property
Limited
Macdonald and
Company Freelance
Limited
Macdonald and
Company (Overseas)
Limited
Macdonald &
Company Ltd
Hanover Square London
W1S 1BX
Room 601,6/F., Tower
1, Admiralty Centre, 18
Harcourt Road,
Hong Kong
Room 601,6/F., Tower
1, Admiralty Centre, 18
Harcourt Road,
Hong Kong
63 Market Street #05-
02, Bank of Singapore
Centre, Singapore
048942
Storey Blackwood & Co
Level 4,222 Clarence
Street, Sydney NSW
2000 Australia
1 Emfuleni, 79 Crassula
Crescent, Woodmead,
Johannesburg, 2052
South Africa
Ru Yi Consulting
Limited
Hong Kong
Dormant
Macdonald and
Company Pte Limited
Singapore
Recruitment
Macdonald &
Company Pty Ltd
Australia
Dormant
South Africa
Dormant
Macdonald &
Company Recruitment
Proprietary Ltd
The Prime
Organisation Ltd
England and Wales
Dormant
2 Harewood Place
Hanover Square London
W1S 1BX
For all undertakings listed above, the country of operation is the same as its country of incorporation.
The Group holds 100% of all classes of issued share capital. The percentage of the issued share capital held is
equivalent to the percentage of voting rights for all companies.
43
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2017
13 Trade and other Receivables
Current
Trade receivables
Allowance for doubtful debts
Other receivables
Prepayments and accrued income
Group
2017
£’000
2016
£’000
2,435
(24)
72
2,618
2,706
(40)
69
2,204
5,101
4,939
Company
2017
£’000
2016
£’000
-
-
3
3
6
-
-
-
14
14
At 31 March 2017, the average credit period taken on sales of recruitment services was 45 days (2016: 55
days) from the date of invoicing. An allowance of £24,000 (2016: £40,000) 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:
Not past due
Past due 0-30 days
Past due 30-90 days
Past due more than 90 days
Gross trade
receivables
2017
£’000
Provisions
2017
£’000
Gross trade
receivables
2016
£’000
Provisions
2016
£’000
1,598
657
166
14
2,435
15
2
-
7
24
1,607
630
469
-
2,706
33
-
7
-
40
44
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2017
13 Trade and other Receivables (continued)
Movement in allowance for doubtful debts:
1 April 2016
Impairment losses recognised
Amounts written off as uncollectable
Amounts paid by the client
Impairment losses reversed
31 March 2017
14 Financial Instruments
Loans and receivables
Trade and other receivables
Cash and cash equivalents
Note
13
2017
£’000
2016
£’000
40
24
(31)
(6)
(3)
24
102
40
(97)
(5)
-
40
Group
Company
2017
£’000
4,092
2,409
2016
£’000
4,087
953
6,501
5,040
2017
£’000
2016
£’000
2
636
638
5
633
638
Cash is held either on current account or on short term deposits at floating rates of interest determined by the
relevant bank's prevailing base rate.
Financial liabilities and fair value
through profit and loss
Trade and other payables
Note
15
Group
Company
2017
£’000
2016
£’000
2017
£’000
2016
£’000
438
438
452
452
1
1
2
2
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.
45
PRIME PEOPLE PLC
Notes to the financial statements
For the year ended 31 March 2017
15 Trade and other Payables
Current
Trade payables
Other payables
Amount owed to subsidiary
undertakings
Taxation and social security
Accruals and deferred income
Group
Company
2017
£’000
108
330
-
667
1,205
2016
£’000
267
185
-
664
1,100
2,310
2,216
2017
£’000
2016
£’000
-
1
739
14
25
779
1
-
923
9
26
959
Due to the short-term nature of the trade and other payables, the Directors consider that the carrying value
approximates to their fair value. Trade payables are generally on 30–60 day terms. No payables are past their
due date.
16 Deferred Tax
Group (Liability)
At 1 April 2015
Credit to income
At 31 March 2016
Credit to income
At 31 March 2017
Group (Asset)
At 1 April 2016
Credit to income
At March 2017
Share
Options
£’000
Total
£’000
16
(7)
9
(9)
-
Share
Options
£’000
-
43
43
16
(7)
9
(9)
-
Total
£’000
-
43
43
46
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2017
17 Share Capital
ALLOTTED CALLED UP
Ordinary shares of 10p each
2017
2016
Number
£’000
Number
£’000
As at 1 April
12,290,199
1,229
12,193,949
Shares issued during the year
-
-
96,250
At 31 March
12,290,199
1,229
12,290,199
1,219
10
1,229
Share capital includes unpaid shares of 33,000 (2016: 93,250)
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 20 July 2016, 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 £409,632 representing one third of the then issued share capital of the Company;
to issue new/additional ordinary shares to new shareholders up to a maximum nominal amount of
£409,632 representing one third of the issued shares capital of the Company
to allot equity securities for cash, without the application of pre-emption rights, up to a maximum nominal
amount of £61,451 representing 5% of the then issued share capital of the Company; and
to purchase through the market up to 10% of the Company’s issued share capital, subject to certain
restrictions on price.
Shareholders will be asked to renew these authorities at the AGM in 2017 on 24 July 2017.
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
overdraft facilities with Barclays Bank.
47
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2017
17 Share Capital (continued)
Employee Share Schemes
The Company operates two share options schemes.
Enterprise Management Incentive Share Option Scheme
At 31 March 2017 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
2008/9
2009/10
20.77 2011-2016*
31.50 2014-2019*
42.00 2013-2018
2011/12
68.00 2014-2019
2013/14
Nil
Nil
2016-2021
2019-2021
2014/15
10.00
10.00
2016-2021
2019-2021
2015/16
2016/17
10.00
10.00
58.00
58.00
2017-2022
2020-2022
2017-2022
2020-2022
50.00
50.00
90.00
90.00
2019-2024
2022-2027
2019-2024
2022-2027
Number of
options
31 March
2016
48000
100,000
8,000
3,000
19,000
81,250
184,500
340,500
20,000
30,000
52,000
103,000
Granted
Exercised
-
-
-
-
-
-
-
-
-
-
-
-
Forfeited Number of
Options
31 March
2017
-
-
3,000
(48,000)
(100,000)
-
-
(5,000)
-
-
3,000
(7,000)
-
(120,500)
-
-
-
-
-
-
-
-
-
-
(13,000)
(16,000)
(61,000)
-
-
(7,000)
(13,000)
-
-
-
-
12,000
68,250
48,000
279,500
20,000
30,000
45,000
90,000
25,000
55,000
25,000
40,000
-
-
-
-
25,000
55,000
25,000
40,000
Total 2017
989,250
145,000
(132,500)
(258,000)
743,750
Weighted average exercise price
2017 (pence)
19.64p
67.93p
11.21p
0.24p
30.37p
Total 2016
984,734
205,000
(96,250)
(104,234)
989,250
Weighted average exercise price
2016 (pence)
15.27p
46.29p
1.31p
0.48p
19.64p
48
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2017
*These options have fully vested
There were 743,750 options outstanding at 31 March 2017 (2016: 989,250) which had a weighted average
price per share of 30.37p (2016: 19.64p). The options vest over a period of two to five years conditional upon
the option holders continued employment with the Company.
The conditions applying to those options which are fully vested have been achieved. The number of
outstanding options that will vest is dependent on the achievement of a number of key performance measures
of the group, measured at a regional and consolidated level for the financial years 2016 and 2017. 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.
Option pricing model used
Weighted average share price at grant date (in pence)
Exercise price (in pence)
Fair value of options granted during the year
Expected volatility (%)
Risk-free interest rate (%)
Expected life of options (years)
2017
Black-Scholes
94.00, 96.30 & 91.55
50 & 90
41.12
20.0 & 24.0
4.25
2 & 5
2016
Black-Scholes
116.00
10 & 58
104.81
30.0
4.0
2 & 5
Expected volatility was determined by reference to historical volatility of the Company’s share price.
The share based payment credit recognised within the income statement during the period was £88,632 (2016:
expense £170,000).
49
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2017
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 2017, the total number of ordinary shares held in Treasury and their values were as follows:
2017
2016
Number
£’000
Number
£’000
As at 1 April
Shares purchased for treasury
Shares issued from treasury
Equity reclassification on disposal of
treasury shares
As at 31 March
Nominal value
Market value
21,276
129,500
(132,500)
-
18,276
21,276
-
-
-
21,276
21
111
(13)
(98)
21
2
16
21
-
-
-
21
2
21
The maximum number of shares held in treasury during the year was 18,276 shares representing 0.15% of the
called-up ordinary share capital of the Company (2016: 21,276 representing 0.2% of the called-up ordinary
share capital of the Company).
Merger Reserve
The merger reserve represents the fair value of the consideration given in excess of the nominal value of the
ordinary shares issued to acquire subsidiaries.
Share Option Reserve
The reserve represents the cumulative amounts charged to profit in respect of employee share option
arrangements where the scheme has not yet been settled by means of an award of shares to an individual.
Share Premium Account
The balance on the share premium account represents the amounts received in excess of the nominal value of
the ordinary shares.
50
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2017
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 2017 the Group was committed to making the following total payments in respect of non-
cancellable operating leases:
Amounts payable
Within one year
Within one to two years
Within two to five years
After five years
Land
and
buildings
2017
£’000
Land
and
buildings
2016
£’000
545
294
696
169
448
408
660
602
1,704
2,118
The Group leases various offices under non-cancellable operating lease agreements. The leases have varying
terms as disclosed above.
51
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2017
20 Reconciliation of Profit before Tax to Net Cash Inflow from Operating Activities
Profit before taxation
Adjust for:
Depreciation
Share based payment expense
(Profit)/Loss on sale of tangible asset
Group
2017
£’000
2016
£’000
Company
2017
£’000
2016
£’000
1,904
2,149
48
50
158
(13)
1
188
166
-
-
-
-
-
-
-
Operating cash flow before changes in working capital
2,050
2,503
48
50
(Increase)/decrease in receivables
Increase/(decrease) in payables
(163)
94
(401) 9
267
(183)
484
744
Cash generated from / (used by) underlying operations
1,981
2,369
(126)
1,278
21 Analysis of Cash less overdrafts
Group
Cash at bank and in hand
Total cash
Company
Cash at bank and in hand
Total cash
At 1 April
2016
£’000
953
953
Cash flow
£’000
1,456
At 31 March
2017
£’000
2,409
1,456
2,409
At 1 April
2016
£’000
Cash flow
£’000
At 31 March
2017
£’000
633
633
3
3
636
636
52
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2017
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 23.37% (2016: 21.72%) of revenue and
approximately 19.70% (2016: 19.85%) 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 9.07% (2016:
6.82%) 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 £2.40m (2016: £0.95m) which the Board consider are more than adequate to meet
future working capital requirements and to take advantage of business opportunities.
53
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2017
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 £200k (2016: £205k). The balance owed to the subsidiary undertakings at the
year end is £739k (2016: £923k).
The Company also provides corporate guarantees on the subsidiary bank accounts. At 31 March 2017
amounts overdrawn by subsidiary bank accounts were £nil (2016: £222,350).
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
£120,312 (2016: £605,384).
54
PRIME PEOPLE PLC
Directors and Advisers
Directors
Robert Macdonald
Peter Moore
Donka Zaneva-Todorinski
Chris Heayberd
John Lewis OBE
Simon Murphy
(Executive Chairman)
(Managing Director)
(Finance Director)
(Non-Executive Director)
(Non-Executive Director)
(Non-Executive Director)
Secretary and Registered Office
Donka Zaneva-Todorinkski, 2 Harewood Place, London, W1S 1BX.
Registered Number
1729887
Stockbrokers & Nominated Advisers
Cenkos Securities Plc, 6.7.8 Tokenhouse Yard, London, EC2R 7AS
Auditor
Crowe Clark Whitehill LLP, St Bride’s House, 10 Salisbury Square, London, EC4Y 8EH
Principal Bankers
Barclays Bank Plc, Corporate Banking, 1 Churchill Place, London E14 5HP
Registrars
Neville Registrars Limited, Neville House, Laurel Lane, Halesowen, West Midlands, B63 3DA.
55
PRIME PEOPLE PLC
Board of Directors
Directors' Biographies
Robert Macdonald - Executive Chairman
Robert has held senior positions within the recruitment industry since 1973 when he founded Reuter Simkin
Limited, a recruitment business in both the legal and property sectors. Reuter Simkin had both Kleinwort
Benson Development Capital and Charterhouse Development Capital as investors. After the sale of Reuter
Simkin in 1989, he acquired shares in and was Chairman of two other recruitment companies one of which
acquired the legal business of Reuter Simkin in the West of England from PSD in 1992 and traded as
Macdonald & Company. In 1994, he established Macdonald & Company as a specialist property recruitment
consultancy in London. Lead by Robert and Peter Moore, Macdonald & Company Group Ltd completed the
reverse takeover of Prime People Plc in January 2006.
Peter Moore MRICS - Managing Director
Peter graduated from the Royal Agricultural University and then worked with Strutt & Parker from 1992 to
1995, qualifying as a Charted Surveyor in 1994. He joined Macdonald & Company in 1995 and was
appointed Managing Director in 1996. Under Peter’s management Macdonald & Company became the largest
and most respected real estate focused recruitment provider in the market and the RICS’s preferred
recruitment partner. Lead by Robert Macdonald and Peter Moore, Macdonald & Company Group Ltd
completed the reverse takeover of Prime People Plc in January 2006. Since then Peter has been instrumental
in developing Prime People into a global specialist recruitment business spanning real estate, energy &
environmental and insight & analytics.
Donka Zaneva-Todorinski ACCA – Finance Director
Donka qualified with a Business Administration and Finance Degree from St Paul’s College in 2007. She has
been a member of the Association of Chartered Certified Accountants since December 2013. Donka began her
professional career in 2003 and since has held accounting positions in the recruitment, media and publishing
industries. She joined Macdonald & Company in 2011 as a Management Accountant. In 2013 Donka was
promoted to be Financial Controller and was then appointed to the Board of Prime People as Finance Director
in October 2015. She is a member of the Finance & Management Faculty of ICAEW.
John Lewis OBE LLB (Hons) - Non-executive Director
John is a solicitor (Non-practising) and a consultant to Eversheds LLP (solicitors). Previously he served as a
partner in Lewis Lewis & Co which became part of Eversheds after a series of mergers. John is currently
Chairman of Photo-Me International Plc and several private companies. He has served as Chairman of
Cliveden Plc and Principal Hotels Plc and as deputy Chairman of John D Wood & Co Plc, retiring in each
case when the Company was sold.
Simon Murphy BSc ACA - Non-executive Director
Simon qualified as a Chartered Accountant with Coopers & Lybrand. He was previously a Managing Director
in the global investment banking division of HSBC. He was Chief Executive of Prime People from May 2005
until the acquisition of Macdonald & Company Group Ltd. He is Chief Financial Officer of Battersea Power
Station Development Company and a Director of a number of private companies including OPD Group
Limited an investment company with holdings in a number of recruitment businesses.
56
PRIME PEOPLE PLC
Board of Directors
Chris Heayberd BA ACA – Non-executive Directors
Chris qualified as a Chartered Accountant in 1980 and after that date held a number of financial positions in a
broad range of industries. Since 1989 his main focus has been the business services sector. This included 4
years as Finance Director of PSD Group plc, during which time the company was admitted to trading on the
London Stock Exchange. Chris joined the Board of Prime People in June 1995 and for a period of five years
combined the role of Finance Director with other business interests. In May 2005 he took up a full time role as
Finance Director of Prime People retiring from this post in 2015 but remaining on the Board in a non-
executive capacity.
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