Prime People Plc
Annual Report and Financial Statements
for the year ended 31 March 2020
2020
Contents
Chairman’s Statement
Strategic Report
Report of the Directors
Statement of Directors’ responsibilities
Corporate governance
Audit Committee Report
Remuneration report
Independent Auditor’s report
Consolidated statement of comprehesive income
Consolidated statement of changes in equity for the year ended 31 March 2019
Consolidated statement of changes in equity for the year ended 31 March 2020
Consolidated statement of financial position
Company statement of financial position
Company statement of changes in equity
Group and company cash flow statement
Notes to the financial statements
Directors and Advisers
Board of Directors
Page
1
3
11
14
15
19
20
23
29
30
31
32
34
35
36
37
70
71
PRIME PEOPLE PLC
Chairman's Statement
Performance
Dividend
During the year, an interim Dividend of 1.8p per
share was paid (2019: 1.8p). In light of the
significant uncertainty created by Covid- 19, the
Board is taking all measures to protect cash while
at the same time ensuring the Group is properly
positioned to service its markets as and when
normality begins to return. Consequently, as
previously reported,
the Board will not be
recommending a final Dividend this year (2019:
3.4p per share). This will result in a total Dividend
payment of 1.8p for the 2020 financial year against
5.2p for 2019. Subject to market conditions and
cash, the Group remains committed to paying
progressive dividends as soon as appropriate.
Return of Capital
As of 31 March 2019, the Group had net cash of
£2.3m which had increased to approximately £3.0m
as of 30 September 2019. A large proportion of this
net cash was considered by the Board to be surplus,
at that time, to the day-to-day needs of the business.
The Group's cash position had strengthened over
the course of the last year, during which period the
Group had continued to focus on its core markets to
deliver organic revenue growth.
The Board therefore considered that the Group had
sufficient funds for the purposes of pursuing its
organic growth plans and concluded that it was
appropriate for the Company to return surplus cash
to Shareholders by way of a Capital Reduction.
The return of cash amounted to 16.25p per share
and was paid to shareholders in January 2020.
Share Buy Back
During the year 19,000 shares were purchased
through the Group’s buyback programme at a cost
of £20,950. In the year 231,750 ordinary shares
were transferred from Treasury to satisfy demand
arising from the part paid share incentive scheme
for key personnel. At the year end the Group held
no shares in Treasury.
The Covid-19 pandemic started in the early part of
2020, and while not having a material impact on
performance for the year ended 31 March 2020,
nonetheless, slowed activity in our final quarter.
Overall,
the Group delivered an acceptable
performance given that our Asian markets slowed
rapidly in early Q4 as the pandemic took hold in the
region ahead of the UK downturn later in the
quarter. In the UK, although Net Fee Income
(“NFI”) performance was broadly consistent with
the prior year, operating costs were higher due to
staff turnover and localised investment in IT
infrastructure and advertising.
Internationally
the business has made good
progress with a continuing positive growth
performance
including a material
contribution from our majority investment in
Command Recruitment Group (H.K.) Limited, and
the Rest of The World breaking even this year.
in Asia
We closed the year with headline Revenue of
£23.9m (2019: £24.6m) and NFI of £15.5m (2019
total fees for
£15.7m). NFI comprises
permanent candidates and the margin earned in the
placement of contract staff.
the
Operating Profit, before Goodwill impairment of
£4.0m, was £2.0m compared to the prior year of
£2.4m, the decline attributable to a combination of
lower NFI and higher operating costs.
The Group conversion rate, excluding Goodwill
impairment, and which compares operating profit to
NFI, was 12.9% (2019: 15.6%).
The Board have carefully considered the prospects
of the Group’s UK operation and market and
believe it prudent to recognise an impairment
charge of £4.0m against the carrying value of
Goodwill. Further details of
the Goodwill
impairment are disclosed in note 11.
Cash Flow
The Group continues to maintain a good net cash
position. At the start of the year the Group had cash
of £2.3m which had declined slightly to £2.1m by
the year end.
1
Post year end, in July 2020, we secured a £2.0m
CBILS facility from our bank, to provide additional
working capital to support the Group in the months
ahead. Alongside this, on a weekly basis, we have
implemented highly sensitive systems for the
monitoring of trading and cash flow forecasts.
We believe that with our renewed management
focus on the key business drivers, and optimising
interaction between our regions, the Group is well
positioned to respond swiftly across all businesses
to changes impacting our activity. We are confident
about our abilities to generate worthwhile, long-
term returns and will continue to invest for future.
Robert Macdonald
Executive Chairman
PRIME PEOPLE PLC
Chairman's Statement (continued)
Board
The Board believes it has continued to operate
corporate governance standards appropriate to an
AIM quoted company of its size. Simon Murphy
stepped down from the Board in February 2020, and
we extend our thanks to him for his diligent service
to the Group during his tenure as a Director.
Although not required to do so, the Directors have
resolved that they will retire at least once every
re-appointment by
seek
three years
shareholders at the next AGM.
and
The Board members have a mix of skills,
experience, gender, and backgrounds that are a
considerable support to the business.
People
The average number of staff (excluded Temporary
Contractors) reduced from 138 last year to 137 this
year.
The Group has a diverse cultural and ethnic profile
within its businesses and at the year-end had a
global 60:40 male to 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
in
All our markets have been and continue to be
impacted by Covid-19, and although we have
experienced reasonable progress
the UK
following the easing of the lockdown imposed on
26th March 2020, levels of activity have not
recovered fully to pre Covid-19 levels. This is also
the case in Asia although the region did not suffer
as severe a contraction in trading as the UK. We are
anticipating a gradual improvement in trading in H2
to 31st March 2021. Significant new lockdown
measures could see progress slow.
As an international Group, we may be impacted by
geopolitical uncertainty, and although our Hong
Kong business continues to trade well, it is too early
to assess the longer-term impact of the political
landscape following recent Chinese intervention.
2
PRIME PEOPLE PLC
Strategic Report
Overview
The Group provides Permanent and Contract
recruitment services to selected, niche industry
sectors. Our business model is built around our
people, all of whom are specialists in their industry
verticals.
Our employees are vital to the continued success of
the Group 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 built environment continues to be the Group’s
largest market, served through its main subsidiary,
Macdonald & Company. During
the various
degrees of lockdown, as Governments attempted to
control the pandemic in their countries, it has
become clear
that many people can work
productively from home and the long term impact
of remote working on our core markets remain
unclear.
Operating as distinct brands, the sectors served by
Prime Insight, Prime Energy and Command are
technology & digital transformation; renewable
energy &
infrastructure,
construction, and design respectively.
sustainability; and
The business is organised into teams of specialist
consultants, each managed by a team leader who is
responsible for performance within the operating
framework approved by the Board. The Group
operates a policy of open communication in the
belief that its employees are best placed to suggest
operational improvements and emergent strategies
that will increase earnings.
The Group is committed to managing its talent on
merit 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 Board is concerned to
provide a healthy corporate culture and in pursuit of
3
its objectives and strategy seeks regular input
through open meetings with its staff.
The Group has two locations in the UK, the London
head office and Manchester, and international
offices in Hong Kong (established in 2007), Dubai
(established in 2008), Singapore (established in
2012), Frankfurt (established in January 2019), and
a franchise in South Africa (established in 2008).
Overall, the UK permanent recruitment businesses
performed satisfactorily with our built environment
the
teams delivering consistent results while
Contract business experienced a reduction in NFI.
In Asia NFI continued to grow. The Hong Kong
office with the combined businesses of Macdonald
and Command contributed the majority of the
region’s NFI.
Our small Macdonald business in Dubai continues
to face challenging market conditions and we have
made changes to realign it to the expected medium-
term demand. Our Command business operates
across the Middle East particularly in Saudi Arabia
and we are optimistic as to its future performance in
this region.
Cultivating strong client relationships, investing in
the best technology, and employing the best people
are the foundations of the Group’s success. With
global growth seriously impacted by Covid-19 and
a world economy increasingly exposed to political
and macro-economic risk it is important that we
remain flexible, are able to serve our clients
wherever demand may be and that we closely
monitor individual NFI performance against costs.
Tight management control of both expenditure and
cash resource, together with a focus on improved
productivity per head and NFI conversion rates,
will position the Group to recover as and when
markets stabilise post Covid- 19.
2020
£m
2019
£m
15.70
7.26
0.30
4.55%
16.47
7.60
0.92
12.10%
71
77
to an
regions in which they were incurred, the UK was
subject
the year
increased charge
amounting to circa £0.3m. Increased costs related to
planned investment in our Information Technology,
brand marketing and advertising.
in
Contract NFI reduced by 17% in the year compared
to a reduction of 7.7% in the previous year and
represents 13.0% (2019: 14.6%) of total UK NFI in
2020.
PRIME PEOPLE PLC
Strategic Report (Continued)
Regional Performance
United Kingdom
Revenue
Net Fee Income (NFI)
Adjusted Operating Profit (Note 1)
Adjusted Operating Profit as % of NFI
Average number of employees
Note 1. Operating Profit is before Goodwill
impairment costs of £4.0m.
Revenue reduced by 4.7% to £15.7m (2019:
£16.5m) with NFI reducing by 4.5% to £7.3m
(2019: £7.6m).
Permanent NFI decreased by 2.3% in the year and
represents 87.4% (2019: 85.1%) of total UK NFI in
2020.
As a result of an internal accounting change to
allocate central costs more proportionately to the
4
PRIME PEOPLE PLC
Strategic Report (Continued)
Asia Pacific
Revenue
Net Fee Income (NFI)
Operating Profit
Operating Profit as % of NFI
Average number of employees
2020
£m
8.18
8.12
1.67
20.68%
60
2019
£m
7.77
7.77
1.52
19.56%
57
NFI grew by 5.2% to £8.1m (2019: £7.8m) and
includes contribution from Command of £3.6m
(2019: £3.9m). The region is covered by our offices
in Hong Kong and Singapore and represents 52.5 %
of Group NFI (2019: 49.2%).
winning of substantial business from an extensive
set of linked real estate infrastructure projects in the
Middle East. The projects are of a long-term nature
and we expect that Command’s involvement will
continue throughout the current financial year.
With the good performance of Command, and the
investment in establishing our Insight and Analytics
team in the region, the business is now well placed
to expand its reach and growth.
2020
£m
0.14
0.14
0.00
0.00%
2
2019
£m
0.42
0.42
(0.02)
-4.76%
4
Command Operating Profit, unadjusted
for
Minority Interest, was approximately 85% of the
reported Operating Profit in the region.
The 2018 investment in 60% of the equity of
Command
and
performance in the region particularly with its
strengthened our presence
Rest of the World
Revenue
Net Fee Income (NFI)
Operating Profit/(loss)
Operating Profit as % of NFI
Average number of employees
The region is covered by a small office in Dubai,
and a franchise agreement in South Africa.
The Dubai business continues to face challenging
market conditions and we have made changes to
realign it to the expected medium-term demand.
Peter Moore
Managing Director
5
PRIME PEOPLE PLC
Strategic Report (Continued)
Financial Review
Revenue
The Group’s Revenue was £23.9m, which represents a small decline compared to 2019 (£24.6m).
Net Fee Income (NFI)
Overall Group NFI was £15.5m which is a small decrease of 1.8% compared to the prior year.
The split of net fee income was 94% from Permanent Sales (2019: 93%) and 6.0% from Contract Sales (2019:
7.0%).
The Group generated 53.2% of its Net Fee Income from outside the UK (2019: 51.9%).
Administration Costs
Administration costs for the year were £13.5m, an increase of 1.5% on 2019.
In light of the uncertainty of future profit generation from the UK markets, an impairment charge of £4.0m has
been recognised against the carrying value Goodwill of Macdonald & Company Group Ltd in accordance with
IAS 36, details of which are set out in note 11.
Profit before Taxation
Operating Profit before taxation and Goodwill impairment was £2m (2019 £2.4m) and reported Operating Loss
was £2.1m after Goodwill Impairment.
Taxation
The taxation charge is £0.18m on profit before taxation and Goodwill impairment of £2m (from Ordinary
Activities) which gives an effective tax rate of 8.9% (2019: 12.1%). The reasons for the difference from the
standard UK corporation tax rate of 19% are detailed in note 7.
Earnings per Share
Basic earnings per share decreased to a loss per share of (19.36)p (2019:13.72p) The diluted earnings per share,
without taking into account existing share options, decreased to a loss per share of (19.36)p (2019: 13.38p).
Balance Sheet
Net Assets at 31 March 2020 were £9.5m compared to the prior year Net Assets of £15.0m. The reduced Net
Assets at year-end are after return of capital to Shareholders of £2m, Dividend payment of £1m and Goodwill
impairment of £4.0m.
Trade Receivables net of provisions for doubtful debts at the year-end were £2.97m (2019: £3.54m) and reflect
the reduced average credit period taken by clients to 75 days (2019: 131 days). The decrease in debtor days is
explained by stronger collection from certain Command clients in Saudi Arabia.
Treasury Management and Currency Risk
Approximately 65.4% of the Group’s revenue in 2020 (2019: 66.79%) was denominated in Sterling.
Consequently, the Group has a 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.
Cash Flow and Cash Position
At the start of the year the Group had Cash of £2.3m. After net taxation payments of £0.16m (2019: £0.11m)
cash generated from operations was £3.4m (2019: £2.04m).
6
PRIME PEOPLE PLC
Strategic Report (Continued)
Financial Review
Principal Risks and Uncertainties
The Board has responsibility for establishing the Group’s approach to risk and the effective risk management. The
Group’s strategy is designed to allow the business to grow without increasing risk beyond an acceptable limit. The
risk fluctuates from time to time and will be assessed in line with delivering the business strategy of the Group, to
safeguard shareholders’ interests and improve the quality of decision making. The Board reviews the principal
risks and uncertainties facing the Group on a regular basis. The Board’s approach is to ascertain the key risks and
develop plans to reduce the potential effects of these risks on the business. The principal risks identified are as
follows:
Dependence on Key People
The sustainable success of the Group is dependent on recruiting and retaining senior management and key staff.
The loss of the services of the senior management and other key people could impact trading and profitability.
To address this, the Group has put into 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 key employees. The Board’s management equity incentives
present key management with equity ownership, tying them to the business for the long term.
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 monitor the legal and regulatory environment in all Group markets. By investing in the Group
brands and markets, the executive management reacts to changes in legislation, as well as making it easier to attract
candidates because of the brand reputation and knowledge. 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.
Macro-economic factors
Persistent slow growth in the global economy has effects that trigger reduced output, and with it, demand and
investment. There is strong correlation between the business performance and that of the economies in which the
Group operates. The impact on the UK economy from leaving the EU remains unclear and this uncertainty may
continue to negatively impact on investment in staff. 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 single market. The global Covid- 19 pandemic has highlighted
the significant challenges to trading created by outbreaks of this nature. Prolonged impact on our business cannot
be ruled out as a result of Covid- 19 and future pandemics.
The Group complies with local guidance and client requirements in place in response to Covid- 19. Where possible
alternative recruitment practices such as video interviewing are being employed to maintain recruitment activity.
Regulatory position
The increase in regulatory scrutiny and demands on compliance are influencing hiring. The Group is aware of
continuing challenges as procurement practice evolves but remains committed to being fully compliant in each of
the regions in which it operates. To reduce the legal and compliance risks, fee earners and support staff receive
timely and regular training and updates on changes in legal and compliance requirements.
7
PRIME PEOPLE PLC
Strategic Report (Continued)
Financial Review
Cyber Security and data protection
The risk of sensitive information being accessed without authorisation has grown in the wider business
environment. Any successful breach can lead to the loss of commercially sensitive data, candidate and clients’
data, damage our brand reputation and lead to business disruption. With increasing regulation on data protection
there is an ongoing risk of failing to comply with regulations leading to reputational damage.
We have invested resources on cyber security with close oversight and training to ensure we meet a minimum
standard of security. As we invest further in technology, we will also invest in ensuring our cyber security
measures and policies reflect the changes in the Group.
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. Therefore, the systems and infrastructure are
regularly reviewed and upgraded to ensure appropriate provision of functionality and resilience to support the
business as it develops.
Foreign Exchange Risk
The Group’s international operations account for 34.6% of revenue (2019: 33.2%) and approximately 34.4% of
the Group’s assets (2019: 31.6%). Consequently, the Group has a degree of translation exposure in accounting
for overseas operations and expects this to increase in line with the growth of the Group outside the United
Kingdom. The Group’s policy is not to hedge against this exposure, as there is a degree of natural hedge from
the Group geographical diversification. However, the Group seeks to minimise this exposure by converting into
sterling all cash balances received in foreign currency that are not required for local short-term working capital
needs. The Group will continue to monitor its policies in this area to be able to react if rates move adversely.
Treasury Policies, Liquidity and Financial Risk
Surplus funds are held to support short term working capital requirements. These funds are invested using 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.
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 the counterparty will default on its contractual obligations resulting in financial
loss to the Group. The principal credit risks arise 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.
8
PRIME PEOPLE PLC
Strategic Report (Continued)
Section 172 Statement
Section 172(a)(a) to (f) of the Companies Act 2006 (“s.172s”) requires a Director of a company to act in the
way which he/she considers, in good faith, would be most likely to promote the success of the company for
the benefit of its members and, in so doing, to have regard (amongst other matters) to the following factors:
•
•
•
•
•
•
the interest of the Company’s employees.
the likely long-term consequences of any decision being made.
the need to maintain the Company’s relationships with suppliers, customers and others.
the desire to maintain reputation for high professional standards and business conduct.
the need to act fairly between members of the Company, and
the impact of the Company’s operations on the environment and the community
The Board of Directors consider that they act in a way to promote the success of the Company and Group for
the benefit of its members, having regard to the matters set out above. The Company key stakeholders are its
Shareholders, internal staff, candidates, clients, and suppliers. The Board’s aims to make decisions that are for
the long-term strategic benefit of the Group and its stakeholders.
The Board seek to ensure that its actions and decision-making processes consider key stakeholders and that
there is sufficient time, information and understanding to consider their interests efficiently and effectively,
when making long term decisions. Stakeholder engagement is achieved through direct interaction by Board
Directors, receiving reports from management who engage with stakeholders.
The Directors recognise that stakeholder groups may not remain static and can be affected by changes in
strategy, legislation, or business requirements. Therefore, these are regularly reviewed to ensure they remain
appropriate.
Detail on how the Board has had regard to the matters set out in s.172 during the year is set out below.
Long-term decision making
The Directors review strategic objectives continually and with Executive Management continued to have their
main focus on delivery of organic growth:
• by further embedding of Prime culture, value drivers and principles, which help create an environment
in which each employee achieves his or her goals, realises individual potential and achieves career
development
• by the roll out of Microsoft Office Teams and a single Global online telephone platform 8x8 across all
Group companies, to enable direct and immediate engagement with all employees around the world
• by realignment of the Group Customer Relationship Management system into multiple brands and core
sectors allowing the sharing of common experiences and to leverage synergies and existing capabilities
to achieve more efficient working for our staff and an improved service to other stakeholders
• by the Board, through the Executive Management, creating an environment, in each office location,
where colleagues are happy to work and which supports their wellbeing for the long term
• by continuing to deal equitably with those businesses who supply services and goods to the Group and
particularly seeking to pay them on terms agreed.
9
PRIME PEOPLE PLC
Strategic Report (Continued)
Section 172 Statement (continued)
Investment & Organic Growth
The Board is aware of shareholders sentiment regarding investments and weighs up the need of higher return
to investors against the desire to make investment decisions for organic growth. During the year, the Board
made the decision to further support, grow, and develop the Group presence in Germany, along with establishing
a fully incorporated entity in Shenzhen in China.
The Group approved a budget that enables the Group to effectively manage productivity by investing in:
• Front and back office technologies (e.g. Bullhorn, Cube- 19, and Sage Cloud solutions)
• Providing greater central support for training, marketing, and technology
Business Conduct Standards
The Directors recognise the importance of corporate governance, and a description of how the Board complies
with the QCA Corporate Governance Code (the “Code”) can be found on pages 15 and 16 of this Annual Report.
The Board believes that modern slavery and human trafficking are significant global issues, presenting a
challenge for business worldwide and has committed to continually review its practices in this regard. The
Directors are committed to ensuring that the Company and the Group subsidiaries act ethically and with integrity
in their business dealings.
The Board expects all of its colleagues to observe the high standards contained within the Group’s policies in
relation to bribery and corruption, data protection, equality, diversity and inclusion, Cyber security, fraud and
whistleblowing, each of which is reinforced though appropriate training.
Donka Zaneva-Todorinski
Finance Director
10
PRIME PEOPLE PLC
Report of the Directors for the Year Ended 31 March 2020
The Directors submit their report and the audited Group financial statements of Prime People Plc for the year
ended 31 March 2020. Prime People Plc is a public listed company, incorporated and domiciled in England and
its shares are quoted on the AIM Market.
Directors
The Directors who served during the year were:
Robert Macdonald
Peter Moore
Donka Zaneva-Todorinski
Chris Heayberd
Sir John Lewis OBE
Simon Murphy (resigned 3 February 2020)
As permitted by legislation, the Group has chosen to set out the information regarding likely financial risk
management objectives and policies and future developments in the business of the company, which would
otherwise be required to be contained in the director's report, within the Strategic Report.
Substantial Shareholders
As at 3 November 2020, other than the Director’s interests shown in the Directors’ remuneration report on page
21 the Company were not required to notify any interests under the Disclosure Guidance and Transparency
Rules.
The mid-market quotation of the Company’s ordinary shares at close of business on 31 March 2020 was 48.5p.
The highest and lowest mid-market quotations in the period from 1 April 2019 to 31 March 2020 were 143.5p
and 46.5p, respectively.
Going concern
The Group has two revenue streams, Permanent and Contract recruiting and provides these services across
several established international markets.
Covid-19 has created an unprecedented short to medium term challenge for all of the Group’s markets, and as
a result, the Group secured a £2m CBILS loan, repayable over 6 years commencing in July 2021, to support the
Group, until revenue visibility and stability resumes. Strict cost control measures have been implemented across
all divisions and will continue for the foreseeable future.
The Group continues to also have access to an Invoice Discounting facility of up to £2m in the UK, which
provides working capital underpinned by the Contract receivables’ ledger. The facility is renewed annually in
April.
Trading and cash flow forecasts for a period of at least 12 months from the date of approval of the financial
statements have been prepared for each of the Group’s autonomous trading segments and are reviewed and
challenged biweekly by a sub - committee of the Board. The sub - committee review the monthly cash collection
forecast, debtor collection assumptions for the upcoming three months, disbursement control and change in cash
balances 12 months forward. The Commercial Director reviews weekly the status of all major clients’
outstanding balances. The Directors have accepted government approved liability deferral schemes and
provided greater job security for its employees by entering Government Job Retentions Schemes, both in the
UK and overseas. The cash forecasts prepared by management show that all deferred liabilities are paid in full
by September 2021.
11
PRIME PEOPLE PLC
Report of the Directors for the Year Ended 31 March 2020
Going concern (continued)
The forecast models revenues and cash collections and cost outflows across the Group for the period October
2020 to October 2021. Management have modelled a number of scenarios assessing the impact of a reduction
in cash collections, as well as assessing the actions that could be taken to reduce the impact of these such as
negotiating new payment plans with creditors or looking to equity funding.
The scenarios modelled resulting in these significantly reduced cash collections are thought to be unlikely, and
the effects could be countered with the corrective actions mentioned above.
As at 31 March 2020 the Group had Cash balances of £2.1m and Net Current Assets of £2.0m.
After reviewing these forecasts, including careful consideration of downside risk trading scenarios, and having
made appropriate enquiries, the Directors have a reasonable expectation that the Group has adequate resources
to continue operating for a period of at least 12 months. Consequently, the Board 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; and
• Purchasing environmentally friendly materials where appropriate.
Political Donations
The Group made no political donations during the year (2019: nil).
Workplace Pensions
In line with the law on workplace pensions the Group continues to operate a defined contribution plan and
automatically enrols certain UK employees into NEST pension scheme.
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.
12
PRIME PEOPLE PLC
Report of the Directors for the Year Ended 31 March 2020
Dividend
During the year a final Dividend of 3.40p per share was paid (2019: 3.25p) on 2 August 2019 to shareholders
on the register on 19 July 2019. An interim Dividend of 1.80p (2019: 1.80p) was paid on 6 December 2019 to
Shareholders on the register at close of business on 22 November 2019. The interim Dividend was approved by
the Board on 11 November 2019.
Annual General Meeting (“AGM”)
The AGM was held on Tuesday 22 September 2020 at 11.00am at 2 Harewood Place, London, W1S 1BX. All
resolutions put to Shareholders (as detailed in Note 17) were duly passed on a show of hands.
General Meeting
A General Meeting of the Company will be held at 2 Harewood Place, Hanover Square, London, W1S 1BX on
23 November 2020 at 11.00am.
Authority to purchase own shares
The Directors renewed their authority at the AGM held on 22 September 2020 to purchase through the market,
up to 15% of the Company’s issued share capital, subject to certain restrictions on price.
During the year the Company purchased 19,000 shares (2019: 34,000 shares). The purchased shares were held
in Treasury and were utilised in the year to meet obligations arising from share incentive arrangements with
employees of the Company.
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.
Auditor
Crowe U.K. LLP has expressed its willingness to continue in office and a resolution to re-appoint the firm as
Auditor and authorising the Directors to set their remuneration will be proposed at the forthcoming General
Meeting.
By order of the Board
Peter Moore
Managing Director
13
PRIME PEOPLE PLC
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Strategic Report, the Directors' Report and the Financial
Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the
Directors have elected to prepare the financial statements in accordance with International Financial Reporting
Standards (IFRSs’) as adopted by the EU and applicable law.
Under Company law the Directors must not approve the Financial Statements unless they are satisfied that they
give a true and fair view of the Company and the Group profit or loss for that period. In preparing these Financial
Statements, the Directors are required to:
•
select suitable accounting policies and then apply them consistently.
• make judgments and accounting estimates that are reasonable and prudent.
•
•
state whether applicable accounting standards have been followed, subject to any material departures
disclosed and explained in the Financial Statements.
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
company will continue in business.
The Directors are responsible for keeping adequate accounting records that are enough to show and explain the
Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company
and enable them to ensure that the Financial Statements comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
They are further responsible for ensuring that the Strategic Report and the Report of the Directors and other
information included in the Annual Report and Financial Statements is prepared in accordance with applicable
law in the United Kingdom.
The maintenance and integrity of the Prime People Plc web site is the responsibility of the directors.
Legislation in the United Kingdom governing the preparation and dissemination of the accounts and the other
information included in annual reports may differ from legislation in other jurisdictions.
14
PRIME PEOPLE PLC
Corporate Governance
Statement by the Directors on Corporate Governance
The Board consider it important that appropriately high standards of corporate governance are maintained. They
have therefore put in place governance structures and provide information which would be expected for a
company quoted on the AIM Market of the London Stock Exchange. The Group has adopted the QCA
Governance Code (the “Code”), so this report follows all required disclosures.
A statement of the Directors’ responsibilities in respect of the financial statements is set out on page 14.
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 2020 and the
attendance record are summarised in the table below:
Directors
Board
Audit
Committee
Remuneration
Committee
Robert Macdonald – Executive Chairman
8/8 (Chair)
Peter Moore – Chief Executive Officer
Donka Zaneva-Todorinski – Finance Director
Chris Heayberd – Non-Executive Director
Sir John Lewis – Non-Executive Director
Simon Murphy – Non-Executive Director (resigned 3
February 2020)
8/8
8/8
8/8
8/8
5/7
N
N
N
1/1
1/1
N
N
N
N
1/1 (Chair)
1/1(Chair)
1/1
Below is a brief description of the role of the Board and its Committees, followed by a statement regarding the
Group’s system of internal controls.
The Board and its Operation
The Board of Prime People Plc is the body responsible for corporate governance, establishing policies and
objectives, and reviewing the management of the Group’s resources.
The Board consists of an Executive Chairman, Robert Macdonald, two other Executive Directors and two Non-
Executive Directors.
The Non-Executive Directors are John Lewis, Simon Murphy (resigned in February 2020) 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 20.
Biographical details for all the Directors are shown on page 71.
The Board meets at least six 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 Group with specific responsibility for; reviewing
trading performance; resources (including key appointments); setting and monitoring strategy; examining
acquisition opportunities; and reporting to shareholders.
15
PRIME PEOPLE PLC
Corporate Governance
The Board and its Operation (continued)
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 can 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.
Given the size of the Board, there is no separate Nomination Committee and appointments to the Board of both
Executive and Non-Executive Directors are considered and approved by the full Board.
The Board has considered the matter of the independence of its Non-Executive Directors all of whom 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, standing and skill levels derived from their other
directorships of its Non-Executive Directors, as set out in Biographical details for all the Directors on page 71,
it considers their level of independence to be adequate. Furthermore, no board performance evaluation is
undertaken for the same reasons.
The Senior Independent Director, Sir John Lewis OBE, is the main point of contact for Shareholders if there
are any concerns that cannot be addressed through the Chairman or Executive Directors.
The Senior Independent Director provides advice and support to the Executive Directors, by holding monthly
meetings with the Chairman.
The Company Secretary is responsible for ensuring that Board procedures are followed, that the Company
complies with company law and the AIM Rules and that the Board receives the information it needs to fulfil its
duties effectively. All Directors have access to the Company Secretary and their appointment (or termination
of appointment) is a matter for decision by the full Board.
Any Director appointed during the year is required, under the provisions of the Company's Articles of
Association, to retire and seek reappointment by shareholders at the next Annual General Meeting. The Articles
also require that one-third of the Directors retire by rotation each year and seek reappointment at the Annual
General Meeting.
The Directors have resolved that they will retire at least once every three years even though not required by the
Company's Articles.
The Executive Directors abstain from any discussion or voting at full board meetings on Remuneration
Committee recommendations where the recommendations have a direct bearing on their own remuneration
package.
Remuneration of Non-Executive Directors is determined by the Board. Non-executive Directors abstain from
discussions concerning their own remuneration.
The Company publishes a full Annual Report and financial statements which are available on the Prime People
website, to Shareholders on request and to other parties who have an interest in the Group's performance.
All shareholders can put questions to the Board at the Company's Annual General Meeting.
16
PRIME PEOPLE PLC
Corporate Governance
Remuneration Committee
The Remuneration Committee comprises the two Non-Executive Directors of the Company and is chaired by
Sir John Lewis OBE.
The committee reviews the Group policy on the Executive Directors’ remuneration and terms of employment;
makes recommendations on this; and 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 page 20. 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 2019 to
the date of approval of the financial statements and believes it has the procedures in place to safeguard the
Group’s assets and to ensure the reliability of information used within the business and for publication.
Key elements of the system of internal control are as follows:
Group Organisation
The Board of Directors meets up to six times a year and more frequently when required focusing mainly on
strategic issues, operational and financial performance. The Directors have in place an organisational structure
with clearly defined levels of responsibility and delegation of authority.
The Operational Management Board meets quarterly. It acts as a conduit between the Board of Directors and
the Group subsidiaries by providing information, advice and guidance to all staff. It has responsibilities for
setting up, monitoring and control of the business operations globally.
Annual Business Plan
The Group has a comprehensive budgeting system with an annual budget approved by the Board.
Monthly Forecasting
The Group prepares monthly fee income forecasts by individual businesses which are compared to budget.
Financial Reporting
Detailed monthly reports are produced showing a comparison of results against budget, forecast and the prior
year with performance monitoring and explanations provided for significant variances. Any significant adverse
variances are examined, and remedial action taken where necessary.
Capital Expenditure
Capital expenditure requests are reviewed by the Board. Appropriate due diligence work will be carried out if
a business is to be acquired.
17
PRIME PEOPLE PLC
Corporate Governance
Internal Controls (continued)
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
wrongdoing 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.
The Board consider that the Annual Report and Accounts, in its entirety is fair, balanced and understandable
and provides the information necessary for shareholders to assess the company’s position and performance,
business model and strategy.
Robert Macdonald
Chairman
18
PRIME PEOPLE PLC
Audit Committee Report
Audit Committee
The Audit Committee comprises the two Non-Executive Directors of the Company and is chaired by Chris
Heayberd who replaced Simon Murphy in March 2020. During the year the committee met once which was
considered sufficient by both committee members to deal with matters referred to it in the year. By invitation,
the meetings are also attended by the Finance Director.
The Audit Committee’s principal tasks are to ensure the integrity of the Company’s financial reporting process,
review the effectiveness of the Group’s internal controls including risk management, review the effectiveness
and 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 Report focusing in particular on
accounting policies and compliance and on areas of management judgement and estimates.
During 2020, the Committee’s primary activity involved meeting with the external auditors, considering
material issues and areas of judgement, and reviewing and approving the interim and Annual Report. The
Audit Committee:
• met with the external Auditors to review and approve the annual audit plan and receive their findings
and report on the annual audit;
considered significant matters and areas of judgement with the potential to have a material impact on
the financial statements;
considered the integrity of the published financial information and whether the Annual Report and
Accounts taken are fair and balanced and provide the information necessary to assess the Group’s
performance, business model and strategy; and
reviewed and approved the Interim and Annual Report and Financial Statements
•
•
•
External Audit
The Committee has primary responsibility for the relationship between the Group and its external auditor.
The independence of the auditor is kept under review and is reported on as part of the Audit Findings Report
presented to the Committee by the Auditor.
To safeguard the objectivity and independence of the external auditor, the Committee monitors the external
auditor’s proposed scope of work and the value of fees paid, to ensure that independence is not compromised.
The Committee concluded that Crowe UK LLP are delivering the necessary audit scrutiny and that the
taxation services provided did not pose a threat to their objectivity and independence.
The Committee recommended to the Board that Crowe UK LLP be re-appointed as the Group’s statutory
Auditor for the next financial year.
Whistle blowing and anti-corruption Policy
There were no “whistleblowing” (public interest) disclosures during the year.
This report was approved by the Audit Committee and the Board on 3 November 2020 and was signed on its
behalf by:
Chris Heayberd
Chairman of the Audit Committee
19
PRIME PEOPLE PLC
Remuneration Report
The role of the Remuneration Committee
The Remuneration Committee met once this year and comprises Sir John Lewis and Simon Murphy until his
resignation. Mr Chris Heayberd has replaced Simon Murphy. The Committee is chaired by Sir John Lewis
OBE.
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 year’s 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.
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.
20
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
Pension
2020
Total
£
£
£
£
2019
Total
£
126,807
6,314
-
133,121
149,973
Executive Chairman
Robert Macdonald
Executive Directors
Peter Moore
1, 2 & 3
203,607
5,056
1,316
209,979
231,028
Donka Zaneva-
Todorinski
Non-Executive Directors
Sir John Lewis OBE
Simon Murphy
Chris Heayberd
3 & 2
120,000
1,645
1,316
122,961
88,080
4
26,458
22,048
23,812
-
-
-
-
-
-
26,458
25,835
22,048
25,835
23,812
41,452
522,733
13,015
2,632
538,379
562,204
Notes to the emoluments:
1. Peter Moore is the highest paid Director.
2. Benefits include subscriptions, medical and travel allowance.
3. Pension includes the cash value of the Group contribution to defined contribution pension plans.
4. Simon Murphy resigned from the Board on 3rd February 2020.
21
PRIME PEOPLE PLC
Remuneration Report
Directors’ interests in shares
Directors’ beneficial interest in the shares of the Company at 31 March 2020 was as follows:
Ordinary
shares of 10p
each held at
31 March 2020
Percentage of issued
share capital at
31 March
2020
Ordinary shares of
10p each held at
31 March 2019
Percentage of issued
share capital at
31 March
2019
Robert Macdonald
Peter Moore
Donka Zaneva-
Todorinski
Sir John Lewis
Simon Murphy
Chris Heayberd
Share option schemes
2,794,000
2,907,721
17,500
1,094,750
100,000
24,000
22.70%
23.63%
0.14%
8.90%
0.81%
0.20%
2,794,000
2,907,721
1,250
1,074,750
330,000
24,000
22.73%
23.66%
0.01%
8.74%
2.70%
0.20%
As at 31 March 2020 Directors’ options on ordinary shares of 10p each granted under the Prime People
Enterprise Management Incentive Scheme, were as follows:
Director
Year of
grant
Exercise
price
Number of
options
31 March
2019
Exercised Number of options
31 March 2020
Donka Zaneva-
Todorinski
Directors’ Insurance
2013/14
2014/15
2015/16
10.00p
10.00p
58.00p
1,250
15,000
10,000
(1,250)
(15,000)
-
-
-
10,000
Directors and Officers liability insurance is provided at the cost of the Group for all Directors.
Annual Resolution
Shareholders will be given the opportunity to approve the Remuneration Report at the next General Meeting.
Sir John Lewis OBE
Chairman of the Remuneration Committee
22
PRIME PEOPLE PLC
Independent Auditor’s Report
Independent Auditor’s Report to the Members of Prime People Plc
Opinion
We have audited the financial statements of Prime People Plc (the “Parent Company”) and its subsidiaries (the
“Group”) for the year ended 31 March 2020, which comprise:
•
•
•
•
•
the Group statement of comprehensive income for the year ended 31 March 2020;
the Group and parent company statements of financial position as at 31 March 2020;
the Group and parent company statements of cash flows for the year then ended;
the Group and parent company statements of changes in equity for the year then ended; and
the notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the financial statements is
applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and,
and, as regards the parent company, as applied in accordance with the provisions of the Companies Act 2006.
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 2020 and of the Group’s loss for the period 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.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities
for the audit of the financial statements section of our report. We are independent of the Group in accordance
with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the
FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which ISAs (UK) require us to report
to you when:
• The directors’ use of the going concern basis of accounting in the preparation of the financial statements is
not appropriate; or
• The directors have not disclosed in the financial statements any identified material uncertainties that may
cast significant doubt about the Group’s or the parent company’s ability to continue to adopt the going
concern basis of accounting for a period of at least twelve months from the date when the financial
statements are authorised for issue.
23
PRIME PEOPLE PLC
Independent Auditor’s Report (continued)
Overview of our audit approach
Materiality
In planning and performing our audit we applied the concept of materiality. An item is considered material if it
could reasonably be expected to change the economic decisions of a user of the financial statements. We used
the concept of materiality to both focus our testing and to evaluate the impact of misstatements identified.
Based on our professional judgement, we determined overall materiality for the Group financial statements as
a whole to be £150,000 for the year ending 31 March 2020 (2019: £125,000), based on 8% percent of Group
profit before tax adjusted to remove the impact of goodwill impairment recognised in the period..
We use a different level of materiality (‘performance materiality’) to determine the extent of our testing for the
audit of the financial statements. Performance materiality is set based on the audit materiality as adjusted for
the judgements made as to the entity risk and our evaluation of the specific risk of each audit area having regard
to the internal control environment.
Where considered appropriate performance materiality may be reduced to a lower level, such as, for related
party transactions and directors’ remuneration.
We agreed with the Audit Committee to report to it all identified errors in excess of £4,500 (2019: £5,000).
Errors below that threshold would also be reported to it if, in our opinion as auditor, disclosure was required on
qualitative grounds.
Overview of the scope of our audit
The Group’s operations are mainly based in the UK, Hong Kong and Singapore. We performed a full scope
audit on all trading components of the Group. The finance function is based in the UK at one central operating
location. Due to the impact of the Covid-19 pandemic, the team were unable to physically visit this location and
so the full scope audit has been performed remotely.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified. These matters included those which had the
greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of
the engagement team. These matters were addressed in the context of our audit of the financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
24
PRIME PEOPLE PLC
Independent Auditor’s Report (continued)
This is not a complete list of all risks identified by our audit.
Key audit matter
How the scope of our audit addressed the key audit
matter
Impairment of goodwill and
investment
There is a risk that the carrying value
of goodwill may be higher than the
recoverable amount. Management has
performed a full impairment review
for goodwill and have recorded an
impairment of £4m in respect of the
UK Cash Generating Unit (CGU).
The Group held goodwill of £10.5m
at the end of 2019, and following the
impairment the carrying value is
£6.5m.
Linked to this goodwill is the value of
investment carried in the Plc entity
balance sheet. As the investment
relates to the same cashflows as the
a
goodwill
corresponding
the
value of the investment.
has
impairment
been
in
there
When a review for impairment is
conducted, the recoverable amount is
determined based on value in use
(VIU) calculations which rely on the
directors’ assumptions and estimates
of future trading performance.
The key assumptions applied by the
directors in the impairment reviews
are country-specific discount rates,
future growth and the terminal value
applied to the VIU calculations.
We evaluated and challenged the directors’ future cash
flow forecasts and the process by which they were drawn
up and tested the underlying value in use calculations.
We compared management’s forecast with the latest
Board approved budget and found them to be reasonable.
We challenged:
- The key assumptions for short- and long-term growth
rates in the forecasts by comparing them with
historical results, as well as economic and industry
forecasts for the UK recruitment market; and
- The discount rate used in the calculations by
assessing the cost of capital for the Group and
comparable organisations.
- The terminal value multiple applied to the year five
forecast cash flows by comparing the rates used to
publicly available information for similar entities in
the employment services market.
the key
We performed sensitivity analysis on
assumptions within the cash flow forecasts as well as
ensuring that the assumptions were within the expected
range of likely values as determined by Crowe at the
outset of our work.
This included sensitising the discount rate applied to the
future cash flows, the short and longer-term growth rates,
and the terminal value.
We ascertained the extent to which a change in these
assumptions, either individually or in aggregate, would
result in a material change to the value of impairment
recognised, and considered the likelihood of such events
occurring. We also ensured that sufficient and appropriate
disclosure regarding such events was included in the
Group’s financial statements.
25
PRIME PEOPLE PLC
Independent Auditor’s Report (continued)
Revenue recognition
The group generates revenue from the
provision of recruitment consultancy
services, which consists of revenue
from contractors and permanent
placements.
Our audit procedures included comparing management’s
accounting policy with the accounting standard and its
disclosure requirements. We reviewed the terms included
in the Group’s Terms of Business to ensure these were
aligned with the accounting policy and the standard.
Revenue recognition (continued)
In respect of revenue recognition, the
accounting policy is described on page
41.
to
The risk of material misstatement in
relation
recognition
revenue
concerns the recognition around the
year end, particularly in relation to
contractor placements.
Revenue is recognised for contractor
placements when the service has been
is a significant
provided. There
judgement involved at the period end
as to the amount of accrued cost for
these contractors that the group are
liable to and therefore the amount of
corresponding revenue that should be
recognised.
In view of the judgements involved
and the significance of this matter to
the determination of group revenue,
we consider this to be an area giving
rise to significant risk of material
financial
in
misstatement
statements.
the
We performed following procedures on all trading
components:
- We assessed the design and implementation of key
controls around all streams of revenue recognised.
- We selected a sample of revenue transactions for
detailed transaction testing to verify that the revenue
recognition criteria had been met and to verify that
the transaction had actually occurred and was
recorded at the correct value. We performed
analytical procedures including comparing revenue
both to the prior year on a monthly basis, and in the
year from month
together with a
to month,
comparison of current year performance to budgeted
figures. Where we identified unusual or unexpected
variances or anomalies we investigated these further
seeking,
from
management.
explanations
evaluating,
and
- We tested the accrued income associated with work
performed by contractors and temporary workers
before the year end, by comparing the amounts to
timesheets submitted after year end.
- We performed period-end cut off testing focusing on
material items to check all revenue recognition
criteria had been met and revenue had been
recognised in the correct period.
- We considered whether the revenue and cost
recognition policies comply with Accounting
Standards, with specific reference to IFRS 15.
26
PRIME PEOPLE PLC
Independent Auditor’s Report (continued)
Our audit procedures in relation to these matters were designed in the context of our audit opinion as a whole.
They were not designed to enable us to express an opinion on these matters individually and we express no such
opinion.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion
on the financial statements does not cover the other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the other information. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
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 group and the parent company and their 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
report to you if, in our opinion:
•
•
adequate accounting records have not been kept by the parent company, or returns adequate for our
audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns;
or
•
certain disclosures of directors' remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of the directors for the financial statements
As explained more fully in the directors’ responsibilities statement set out on page 14, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and parent
company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the directors either intend to liquidate the group or the
parent company or to cease operations, or have no realistic alternative but to do so.
27
PRIME PEOPLE PLC
Independent Auditor’s Report (continued)
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
Use of our report
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.
Stacy Eden (Senior Statutory Auditor)
for and on behalf of
Crowe U.K. LLP
Statutory Auditor
London
3 November 2020
28
PRIME PEOPLE PLC
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2020
Note
2, 3
2
11
4
7
Revenue
Cost of sales
Net Fee Income
Administrative expenses
Goodwill impairment
Operating (loss)/profit
Interest payable
(Loss)/profit before taxation
Income tax expense
(Loss)/profit for the year
Other comprehensive income
Items that will or may be
reclassified
to profit or loss:
Exchange (loss)/ profit on
translating foreign operations
Other Comprehensive
(loss)/income
for the year, net of tax
Total comprehensive
(loss)/income for the year
(Loss)/profit attributable to:
Equity shareholders of the parent
Non-controlling interest
Total comprehensive
(loss)/income attributable to:
Equity shareholders of the parent
Non-controlling interest
(Loss)/earnings per share
Basic (loss)/earnings per share
Diluted (loss)/earnings per share
9
The above results relate to continuing operations.
29
2020
£’000
23,992
(8,471)
2019
£’000
24,660
(8,873)
15,521
15,787
(13,560)
(4,018)
(2,057)
(76)
(13,316)
-
2,471
-
(2,133)
2,471
(175)
(298)
(2,308)
2,173
(105)
106
(105)
106
(2,413)
2,279
(2,384)
76
(2,489)
76
1,660
513
1,766
513
(19.36)p
(19.36)p
13.72p
13.38p
PRIME PEOPLE PLC
Consolidated Statement of Changes in Equity
For the year ended 31 March 2019
Called up
share
capital
Capital
Redemption
reserve
Treasury
shares
Share
premium
account
Merger
reserve
Share
option
reserve
Translation
reserve
Retained
Earnings
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Total
attributable to
equity holders
of the parent
£’000
Non-
controlling
interest
Total
equity
£’000
£’000
At 31 March 2018
1,229
9
(421)
5,371
173
314
490
7,764
14,929
75
15,004
IFRS 15 adjustment for
revenue recognition
Total comprehensive
income 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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(26)
246
40
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
23
-
-
-
-
-
-
106
-
-
-
-
-
(1,976)
(1,976)
-
(1,976)
1,659
1,659
513
2,172
-
-
-
-
5
106
23
(26)
246
45
(595)
(595)
-
-
-
-
-
-
106
23
(26)
246
45
(595)
At 31 March 2019
1,229
9
(161)
5,371
173
337
596
6,857
14,411
588
14,999
30
PRIME PEOPLE PLC
Consolidated Statement of Changes in Equity
For the year ended 31 March 2020
Called up
share
capital
Capital
Redemption
reserve
Treasury
shares
Share
premium
account
Merger
reserve
Share
option
reserve
Translation
reserve
Retained
Earnings
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Total
attributable to
equity holders
of the parent
£’000
Non-
controlling
interest
Total
equity
£’000
£’000
At 31 March 2019
1,229
9
(161)
5,371
173
337
596
6,857
14,411
588
14,999
IFRS 16 adjustment for
leases
Total comprehensive
loss for the year
Other comprehensive
loss
Adjustment in respect of
share schemes
Issue of ordinary shares
Capital repayment
Shares purchased for
treasury
Shares issued from
treasury
Adjustment on share
disposal
Dividend
-
-
-
-
2
-
-
-
-
-
At 31 March 2020
1,231
-
-
-
-
-
-
-
-
-
-
9
-
-
-
-
-
-
(23)
34
150
-
-
-
-
-
5
-
(2,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(150)
-
-
-
-
-
-
-
-
(105)
-
-
-
-
-
-
-
(297)
(297)
-
(297)
(2,384)
(2,384)
76
(2,308)
-
236
-
-
-
-
(150)
(948)
(105)
91
2
(2,000)
(23)
34
-
(948)
-
-
-
-
-
-
-
-
(105)
91
2
(2,000)
(23)
34
-
(948)
3,376
173
187
491
3,314
8,781
664
9,445
31
PRIME PEOPLE PLC
Consolidated Statement of Financial Position
As at 31 March 2020
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
Lease liabilities
Current tax liability
Deferred tax liability
Non-current liabilities
Deferred tax liability
Lease liability
Total liabilities
Net assets
2020
£’000
6,509
1,890
40
8,439
3,868
2,055
5,923
2019
£’000
10,527
752
40
11,319
4,646
2,309
6,955
14,362
18,274
3,205
497
166
22
3,890
-
1,027
4,917
9,445
3,080
-
173
-
3,253
22
-
3,275
14,999
Note
11
10
16
13
21
15
16
16
32
PRIME PEOPLE PLC
Consolidated Statement of Financial Position
As at 31 March 2020
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
Non-controlling interest
Total equity
2020
£’000
1,231
9
-
3,376
173
187
491
3,314
8,781
664
9,445
2019
£’000
1,229
9
(161)
5,371
173
337
596
6,857
14,411
588
14,999
The financial statements on pages 29 to 70 were approved by the Board of Directors and authorised for issue
on 3 November 2020 and are signed on its behalf by:
R J G Macdonald
D Zaneva-Todorinski
33
PRIME PEOPLE PLC
Company Statement of Financial Position
As at 31 March 2020
Assets
Non-current assets
Investment in subsidiaries
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Liabilities
Current liabilities
Trade and other payables
Current tax liability
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
Total equity
Note
12
13
21
15
17
18
18
18
18
18
18
2020
£’000
7,137
7,137
3,145
876
4,021
2019
£’000
11,213
11,213
124
322
446
11,158
11,659
3,912
3
3,915
7,243
1,231
9
-
3,376
173
187
2,267
7,243
1,125
1,125
10,534
1,229
9
(161)
5,371
173
337
3,576
10,534
The Company’s retained earnings includes (loss)/profit for the year of (£524,296) (2019: £458,173).
The financial statements of Prime People Plc, Company Number 01729887 were approved by the Board and
authorised for issue on 3 November 2020 and are signed on its behalf by:
R J G Macdonald
D Zaneva-Todorinski
34
PRIME PEOPLE PLC
Company Statement of Changes in Equity
For the year ended 31 March 2020
Company
Called up
share
capital
Capital
Redemp-
tion
reserve
Treasury
shares
Share
premium
account
Merger
reserve
Share
option
reserve
Retained
earnings
Total
At 1 April 2018
1,229
9
(421)
5,371
173
314
£’000
£’000
£’000
£’000
£’000
£’000
Total
comprehensive
income for the
year
Shares purchased
for treasury
Shares issued
from treasury
Adjustment on
share disposal
Investment in
subsidiaries
Dividend
At 31 March
2019
Total
comprehensive
loss for the year
Issue of ordinary
shares
Adjustment for
share schemes
Capital repayment
Shares purchased
for treasury
Shares issued
from treasury
Adjustment on
share disposal
Dividend
-
-
-
-
-
-
1,229
-
2
-
-
-
-
-
-
At 31 March
2020
1,231
-
-
-
-
-
-
9
-
-
-
-
-
-
-
-
9
-
(26)
246
40
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
23
-
£’000
3,748
£’000
10,423
458
458
-
-
(35)
-
(26)
246
5
23
(595)
(595)
(161)
5,371
173
337
3,576
10,534
-
-
5
-
-
-
(2,000)
-
-
-
-
-
-
-
-
-
-
-
-
(524)
(524)
-
(5)
-
-
-
2
-
(2,000)
(23)
34
-
(150)
(150)
(150)
-
-
-
(630)
(630)
3,376
173
187
2,267
7,243
-
-
-
-
(23)
34
150
-
-
35
PRIME PEOPLE PLC
Group and Company Cash Flow Statement
For the year ended 31 March 2020
Group
2020
£’000
2019
£’000
Company
2020
£’000
2019
£’000
Note
Cash generated from (used in)
underlying operations
20
3,642
2,146
(276)
Income tax paid
(160)
(111)
(8)
241
(9)
Net cash from/ (used in) operating
activities
Cash flows (used in)/ from investing
activities
Net purchase of property, plant and
equipment, and software
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
Shares issued and moved to treasury
Return of capital from share premium
Dividend paid to shareholders
Lease payments
3,482
2,035
(284)
232
(122)
-
(727)
-
-
3,450
(122)
(727)
3,450
2
-
(21)
-
(2,000)
(948)
(566)
-
260
-
-
-
(595)
-
2
34
(21)
(2)
(2,000)
(625)
-
-
450
450
-
246
(26)
-
-
(595)
-
Net cash used in financing activities
(3,533)
(335)
(2,612)
(375)
Net (decrease)/ increase in cash and
cash equivalents
Cash and cash equivalents at
beginning of the year
Effect of foreign exchange rate
changes
(173)
973
2,309
1,234
(81)
102
554
322
-
307
15
-
Cash and cash equivalents at the
end of the year
21
2,055
2,309
876
322
36
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
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 01729887.
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 financial statements have been prepared on a going
concern basis.
The consolidated financial statements of the Group and Company have been prepared on going concern basis,
and in accordance with International Financial Reporting Standards (“IFRS”) as endorsed by the European
Union and comply with IFRIC interpretations and Company Law applicable to Companies reporting under
IFRS, and in accordance with the Companies Act 2006. The consolidated financial statements have been
prepared under the historical cost convention modified as necessary to include any items at fair value, as
required by accounting standards.
The Parent Company’s Financial Statements have also been prepared in accordance with IFRS and the
Companies Act 2006.
The consolidated financial statements for the year ended 31 March 2020 (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 in its consolidated Financial Statements as at and for the year ended 31 March 2019, except for lease
recognition and uncertainty over income tax treatments which are covered in more detail in Notes 2(i) and 19
and are described below.
Adjustments recognised on adoption of IFRS 16
The Group has adopted IFRS 16 for the first time in these financial statements. This note explains the impact
of the adoption of IFRS 16 Leases on the Group’s financial statements. The Group has adopted the modified
retrospective approach which does not require the restatement of comparative information. 2019 figures have
therefore not been restated and IFRS 16 has an impact from 1 April 2019.
The reclassifications and the adjustments arising from the new leasing rules are therefore recognised in the
opening balance sheet on 1 April 2019.
The weighted average incremental borrowing rate used is 3.77%.
From 1 April 2019 the Group no longer records a rental expense within its operating costs but instead records
a depreciation charge in respect of the right-of-use assets within operating costs, and an interest charge on the
lease liabilities within its finance costs.
37
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
Summary of Significant Accounting Policies (continued)
Adjustments recognised on adoption of IFRS 16 (continued)
On adoption of IFRS 16, the Group recognises within the balance sheet a right-of-use asset and a corresponding
lease liability for all applicable leases. Within the income statement, operating lease rentals payable has been
replaced by depreciation and interest expense. This has resulted in an increase in operating profit and finance
costs.
Measurement of right-of-use assets
In applying IFRS 16 for the first time right of use assets are initially measured on a retrospective basis as if the
new rules had always been applied. Other right of use assets are measured at the amount of the lease liability,
reduced for any lease incentives received, and increased for:
•
•
•
lease payments made at or before commencement of the lease.
initial direct costs incurred; and
the amount of any provision recognised where the group is contractually required to dismantle, remove
or restore the leased asset (typically leasehold dilapidations).
• using hindsight in determining the lease term where the lease agreement contains options to extend or
•
terminate the contract
accounting for operating leases with remaining lease terms of less than 12 months as at 1 April 2019 as
short- term leases
Adjustments recognised in the balance sheet as at 1 April 2019
The change in Accounting Policy affected the following balance sheet items on 1 April 2019
right-of-use assets – increase by £1.47m
lease liabilities - increase by £1.76m
•
•
• net impact on retained earnings on 1 April 2019 was a decrease of £0.30m
The Group has applied the simplified transition approach where it does not restate any comparative information.
Instead the cumulative effect of applying the standard is recognised as an adjustment to the opening balance of
retained earnings at the date of initial adoption.
The Group has elected not to recognise the right-of-use assets and lease liabilities for short-term leases that have
a term of 12 months or less or leases that are of low value (£5,000). Lease payments associated with these leases
are expensed on a straight-line basis over the lease term.
The table below summarises the IFRS 16 impact on transition for lease liabilities and the corresponding right-
of-use assets along with the movement from 1 April 2019 to 31 March 2020:
38
£’000
1,817
(27)
104
1,894
(134)
1,760
1,760
212
(566)
71
48
1,525
497
1,027
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
Summary of Significant Accounting Policies (continued)
Adjustments recognised on adoption of IFRS 16 (continued)
Lease liability
Operating lease commitment disclosed as at 31 March 2019
Less short-term and low value lease
Exchange difference
Operating lease commitment at 31 March 2019 falls under IFRS 16
Discounted using borrowing incremental rate at initial application
Lease liabilities recognised at 1 April 2019
Lease liabilities movement from 1 April 2019 to 31 March 2020
At 1 April 2019
New lease in period
Lease payments
Interest charge
Exchange difference
Total lease liabilities at 31 March 2020
Current lease liabilities
Non-current lease liabilities
Right-of-use assets
Properties
Total right-of-use-assets
31 March 2020
1 April 2019
£’000
1,284
1,284
£’000
1,463
1,463
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. The effective dates below are for reporting periods beginning on or after that
point:
International Accounting Standards (IAS/IFRS) and Amendments adopted by the EU but not yet
effective
•
IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors (Issued on 31 October 2018, effective 1 January 2020)
IFRS 3 Business Combinations (Issued on 22 October 2018, effective 1 January 2020)
•
• Revised Conceptual Framework for Financial Reporting (Issued 29 March 2018, effective 1 January
2020)
39
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
Summary of Significant Accounting Policies (continued)
IAS 1 – Presentation of Financial Statements
Amendments to IAS 1 clarify the criteria used to determine whether liabilities are classified as current or non-
current. This will be based on the Group’s right at the end of the reporting period to defer settlement of the
liability for at least twelve months after the reporting period. ‘Settlements’ include the transfer of cash, goods,
services, or equity instruments unless the obligation to transfer equity instruments arises from a conversion
feature classified as an equity instrument separately from the liability component of a compound financial
instrument. The amendments are effective for annual reporting periods beginning on or after 1 January 2023.
The Group does not believe that the amendments to IAS 1 will have a significant impact on the classification
of its liabilities.
Consolidation
Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies,
generally accompanying a shareholding of more than one half of the voting rights. Subsidiaries are fully
consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date
that control ceases.
Business combinations are accounted for using the acquisition method of accounting. The cost of an acquisition
is measured at the aggregate of 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. Acquisition
related costs are recognised in profit or loss as incurred. Where applicable, the consideration for the acquisition
includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition
date fair value. 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 taken consideration of the impact of Covid- 19 on the business and the withdrawal of the
United Kingdom from the European Union.
The Group’s activities are funded by a combination of its operating cashflows, a £2m CBILS loan and Invoice
Finance facility in the UK of £2m. The Board has reviewed the Group’s profit and cash flow forecasts, and
applied sensitivities to the underlying assumptions including impact of Covid-19 outbreak and the potential
consequences for the Group. These projections indicate that the Group expects to meet its obligations as they
fall due with the use of existing facilities and to continue to meet its covenant requirements. The Directors note
that the Group is trading adequately and has sufficient working capital and other finance available to continue
trading for a period of not less than 12 months from the date of issue of the Annual Report and Accounts. As
such, the Directors consider it appropriate to continue to prepare the financial statements on a Going Concern
basis.
40
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
Summary of Significant Accounting Policies (continued)
Revenue recognition
a) Revenue
Revenue, which excludes value added tax (“VAT”), constitutes the value of services undertaken by the Group
from its principal activities, which are recruitment consultancy and other ancillary services. These consist of:
- Revenue from 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; and
- Revenue from Permanent placements, which is based on a percentage of the candidate’s remuneration
package and is derived from both retained assignments (where income is recognised on completion of
defined stages of work) and non-retained assignments. Revenue is recognised once value has been received
by the customer and when the performance obligations have been satisfied. Revenue from non-retained,
permanent-placement assignments is now recognised when a candidate commences employment.
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 and the margin earned on the placement of Contract candidates.
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.
41
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
Summary of Significant Accounting Policies (continued)
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 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.
Intangible assets that are acquired separately are carried at cost less accumulated amortisation and accumulated
impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful life. The
estimated useful life and amortisation method are reviewed at the end of each reporting period, with any changes
being accounted for on a prospective basis.
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:
• 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 within profit and loss.
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).
42
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
Summary of Significant Accounting Policies (continued)
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, 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) Leases
IFRS 16 was adopted on 1 April 2019 without the restatement of comparative figures. For an explanation of the
transitional requirements that were applied as at 1 April 2019, see note 2 above. The following policies apply
subsequent to the date of initial application, 1 April 2019.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease
term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the
case) this is not readily determinable, in which case applying a single discount rate to leases with reasonably
similar characteristics. The Group does not have any leases with variable lease payments.
When the group revises its estimate of the term of any lease (because, for example, it re-assesses the probability
of a lessee extension or termination option being exercised), it adjusts the carrying amount of the lease liability
to reflect the payments to make over the revised term, which are discounted using a revised discount rate. An
equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount
being depreciated over the revised remaining lease term.
j) Pension Costs
The Group operates a defined contribution pension scheme. The Group adopts both the minimum legally
required employer contribution rate of 3% of qualifying earnings, and the maximum earning threshold for
automatic enrolment for 2019-20, 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 day of each month.
43
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
Summary of Significant Accounting Policies (continued)
k) Segmental Reporting
IFRS 8 requires operating segments to be identified based on 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.
This includes the Group’s trade and other receivables. They are initially recorded at fair value and subsequently
measured at amortised cost. For trade receivables amortised cost includes an allowance for expected credit
losses. This is assessed applying a provision percentage of expected loss to each of these which is assessed by
reference to past default experience. Trade receivables are only written off once the potential of collection is
considered to be nil and any local requirements such as withholding sales taxes are met.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets
except for trade receivables, where the carrying amount is reduced using 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.
Cash and cash equivalents include 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.
The Group’s operating activities in the UK are part funded by Invoice Financing facilities. Movements in the
Invoice Discounting balance are shown within financing activities in the Group’s Cash flow Statement. Interest
charges on invoice discounting are included in finance costs and service charges are included in administrative
costs in the Group’s Income Statement.
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. Financial liabilities are subsequently measured at
amortised cost. The Group’s financial liabilities comprise trade payables, bank overdrafts and other payable
balances that arise from its operations. They are classified as ‘financial liabilities measured at amortised cost’.
44
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
Summary of Significant Accounting Policies (continued)
o) Share-Based Compensation
The Group operates equity-settled, share-based compensation plans.
The fair value of the employee services received in exchange for the grant of the options is recognised as an
expense. The total amount to be expensed over the vesting period is determined by reference to the fair value
of the options granted, excluding the impact of any non-market vesting conditions (for example, profitability
and sales growth targets). At the balance sheet date, the number of outstanding options is adjusted to reflect
those options that have been granted during the year or have lapsed in the year.
p) Dividend Distribution
A final dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial
statements in the period in which the dividends are approved by the Company’s shareholders. Interim dividend
distributions are recognised in the period in which they are approved and paid.
q) Critical Accounting Estimates and Judgements
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
estimates and judgements. It also requires management to exercise judgement in the process of applying the
Company’s accounting policies.
Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
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 commences employment.
Goodwill Impairment
The Group tests goodwill for impairment at least annually. The recoverable amount is determined based on
value-in-use calculations. This method requires the estimation of future cash flows and the assessment of a
suitable discount rate in order to calculate their present value. Details of the impairment review are disclosed in
note 11.
Trade Receivables
There is uncertainty regarding customers who may not be able to pay as their debts fall due. In reviewing the
appropriateness of the provisions in respect of recoverability of trade receivables, consideration has been given
to the ageing of the debt and the potential likelihood of default, considering 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.
45
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
3
Segment Reporting
a) Revenue and Net Fee Income, by Geographical Region
Information provided to the Board is focused on regions and as a result, reportable segments are on a regional
basis.
UK
Asia
Revenue
2020
£’000
2019
£’000
Net fee income
2020
£’000
2019
£’000
15,677
16,472
7,262
7,599
8,176
7,770
8,120
7,770
Rest of World
139
418
139
418
23,992
24,660
15,521
15,787
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
- Asia
Total
Revenue
2020
£’000
2019
£’000
Net fee income
2020
£’000
2019
£’000
6,344
8,110
139
6,501
7,770
418
6,344
8,110
139
6,493
7,770
418
9,333
66
9,971
-
918
10
1,106
-
23,992
24,660
15,521
15,787
46
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
3
Segment Reporting (continued)
c) Profit before Taxation by Geographical Region
UK - operations
UK – impairment of investment asset
Asia
Rest of World
Operating (loss)/profit
Net finance income
2020
£’000
299
(4,018)
1,672
(10)
2019
£’000
928
-
1,523
20
(2,057)
2,471
(76)
-
(Loss)/profit before taxation
(2,133)
2,471
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 £0.80m (2019: £0.83m) for the UK, and charges of £0.80m (2019: £0.77m) for Asia and nil for the rest
of the world (2019: £0.06m).
Intersegmental revenue and charges relate to transfer of services from one subsidiary of the Group to another.
They are based on arm’s length calculations and in proportion to segmental headcount as percentage of the total
Group headcount.
d) Segment Assets and Liabilities by Geographical Region
UK
Asia
Rest of World
Total
Total assets
2020
£’000
2019
£’000
Total liabilities
2020
£’000
2019
£’000
9,418
12,502
386
2,036
4,867
5,375
4,522
1,159
77
397
9
80
14,362
18,274
4,917
3,275
The analysis above is of the carrying amount of reportable segment assets and liabilities. Segment assets and
liabilities include items directly attributable to a segment and include income tax assets and liabilities.
47
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
4 Profit on ordinary activities before taxation
Profit for the year is arrived at after charging:
Depreciation
Operating lease rentals
Loss/(profit) on disposal of fixed assets
Exchange rate loss
- owned assets and leased assets
- land and buildings
The analysis of auditor’s remuneration is as follows:
Audit of Company
Audit of subsidiaries
Total audit fees
5 Directors’ emoluments
Emoluments for qualifying services
Highest paid Director:
Emoluments for qualifying services
2020
£’000
2019
£’000
737
-
374
29
31
53
84
220
586
(1)
3
23
36
59
2020
£’000
2019
£’000
538
562
538
562
210
231
Details of Directors’ emoluments and interests, which form part of these financial statements, are provided in the
Director’s Remuneration report on pages 20 to 22.
48
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
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
2020
Number
2019
Number
107
30
30
106
32
37
167
175
2020
Number
2019
Number
The average monthly number of employees of the Company during the year,
including Directors, was as follows:
Management
6
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
Social security costs
Share-based payments
Pension contributions
Key management includes executive Directors and senior divisional managers.
49
2020
£’000
8,795
741
65
49
2019
£’000
8,360
709
84
57
9,650
9,210
2020
£’000
1,568
151
38
11
2019
£’000
1,139
115
33
49
1,768
1,336
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
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
Deferred tax on fair value share option charge
Total charge on profit for the year
2020
£’000
2019
£’000
118
97
(40)
175
-
175
173
129
-
302
(4)
298
UK corporation tax is calculated at 19% (2019: 19%) 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:
(Loss) / profit before taxation
Tax at UK corporation tax rate of 19% (2019: 19%) on profit on ordinary
activities
Effects of:
Expenses not deductible for tax purposes
Capital allowances for the period less than depreciation
Depreciation on non-qualifying assets
Increase in general debt provision
Tax losses not utilised/(utilised)
Tax rate differences
Exchange rate differences
Temporary differences recognised
Permanent timing differences
Share option charge/exercised
Total current tax
Deferred Tax
Tax charge for the year
50
2020
£’000
(2,133)
2019
£’000
2,471
(405)
470
18
(22)
116
26
-
(250)
(23)
(3)
727
(9)
175
-
175
8
(26)
-
-
2
(125)
-
(34)
(2)
5
298
-
298
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
8 Dividends
Final dividend for 2019: 3.40p per share (2018: 3.25p per share)
Interim dividend for 2020: 1.80p per share (2019: 1.80p per share)
Command Recruitment Group (HK) Limited dividend to non-controlling
shareholders
2020
£’000
2019
£’000
411
220
317
383
212
-
948
595
A final dividend of 3.40p (2018: 3.25p) was paid on 2 August 2019 to shareholders on the register on 19 July
2019.
An interim dividend of 1.80p (2019: 1.80p) was paid on 6 December 2019 to shareholders on the register at the
close of business on 22 November 2019. The interim dividend was approved by the Board on 11 November
2019.
A final dividend of £1m was approved by the directors of the partly owned (60%) subsidiary Command
Recruitment (H.K) Group Limited in December 2019. 75% of the declared dividend was paid on 31 December
2019, with the remainder payable by 31 December 2020.
The Board did not and will not recommend any final dividend for the year to 31 March 2020.
51
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
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 potentially dilutive existing options.
Earnings and weighted average number of shares from continuing operations used in the calculations are shown
below.
(Loss) / profit for the year and earnings used in basic and diluted earnings
per share
2020
£’000
(2,384)
2019
£’000
1,660
Number
Number
Weighted average number of shares used for basic earnings per share
Dilutive effect of share options
12,307,273
-
12,094,523
307,031
Diluted weighted average number of shares used for diluted earnings per
share
12,307,273
12,401,554
Basic (loss)/earnings per share
Diluted (loss)/earnings per share
Pence
(19.36) p
(19.36) p
Pence
13.72p
13.38p
The following table shows earnings per share as they would be without the effect of goodwill impairment.
Profit for the year and earnings used in basic and diluted earnings per share
prior to goodwill impairment
Weighted average number of shares used for basic earnings per share
Dilutive effect of share options
£’000
1,635
£’000
1,660
Number
Number
12,307,273
-
12,094,523
307,031
Diluted weighted average number of shares used for diluted earnings per
share
12,307,273
12,401,554
Basic earnings per share prior to goodwill impairment
Diluted earnings per share prior to goodwill impairment
52
Pence
13.28p
13.28p
Pence
13.72p
13.38p
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
10 Property, Plant and Equipment
Group
Cost
At 1 April 2018
Additions
Disposals
Exchange difference
At 1 April 2019
Additions
Disposals
Exchange difference
At 31 March 2020
Depreciation
At 1 April 2018
Provision for the year
Disposals
Exchange difference
At 1 April 2019
Provision for the year
Disposals
Exchange difference
Fixtures,
fittings, and
equipment
Right-of-use
assets - Land
and buildings
Total
£’000
£’000
£’000
1,368
727
(133)
18
1,980
122
(28)
37
-
-
-
-
2,932
212
-
62
1,368
727
(133)
18
4,912
334
(28)
99
2,111
3,206
5,317
1,126
220
(133)
15
1,228
283
(28)
22
-
-
-
-
1,469
440
-
13
1,126
220
(133)
15
2,697
723
(28)
35
At 31 March 2020
1,505
1,922
3,427
Net book value
At 31 March 2020
At 31 March 2019
At 31 March 2018
606
1,284
1,890
752
242
-
-
752
242
53
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
11 Goodwill
Cost
At 1 April 2019
Goodwill impairment
At 31 March 2020
£’000
10,527
(4,018)
6,509
The total carrying value of goodwill is £6.51m, which relates to the acquisition of the Macdonald & Company
Group in January 2006 and Command Recruitment Group (H.K.) Limited in October 2017. Goodwill is
reviewed and tested for impairment on an annual basis or more frequently if there is an indication that goodwill
might be impaired. Goodwill has been tested for impairment by comparing the carrying amount of the group of
cash generating units (CGUs) the goodwill has been allocated to, with the recoverable amount of those CGUs.
The recoverable amounts of the CGUs are their value in use.
The assessment for Macdonald & Company Group is based on UK projected operating profit. Whilst the
assessment model has remained consistent with prior years, the impact of Covid- 19 has influenced the basis of
forecasting that has been applied. The recoverable amount is determined on a value-in-use basis utilising the
value of cash flow projections over five years with terminal value which equates to an earnings multiple of six
times year 5 earnings of the UK CGU. This has changed from prior years’ model, where a multiple of 10 was
applied.
As the business has been impacted by Covid-19, the forecast results for the first year are significantly reduced
from previous years. As the 2021 forecast is not reflective of the expected business performance going forward
post pandemic, management used the second year as a base with the expectation that the business will return to
reduced but nevertheless normal NFI levels. The second year UK segment profit forecast shows a recovery with
operating profit improvement, although it is still below levels achieved in the past.
Assumptions
Growth rate (NFI)
Cost increases
Discount rate
% Rate used
4- 6%
5-8%
6.49%
A key assumption in the forecasts applied is that the impact of the pandemic will recede to an extent and allow
the business to improve performance, although still at significantly reduced levels. As 2022 has been used as
the base year for the modelling, growth rates have only been applied in 2023, 2024 and 2025, of 6%, 4% and
4% respectively. These rates are more than the 2% that has been applied in previous years, but also reflect the
fact that the business is starting from a significantly reduced position, with capacity for growth.
The model has applied a terminal value of 6 times year 5 earnings. A pre-tax discount rate of 6.49% (2019:
6.60%) has been applied, representing the weighted average cost of capital for the Group. The reduced discount
rate reflects the fact that the Group have taken on CBILS debt bearing interest at 3.99%.
As a result of the impairment reviews carried out at 31 March 2020, an impairment charge of £4m (2019: Nil)
has been recognised for the UK business segment, reducing the carrying amount of goodwill in respect of that
business to £5.75m.
54
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
11 Goodwill (continued)
Potential sensitivity scenarios have been considered. With a 1.0% increase in the discount rate the level of
impairment recognised will reduce at the rate of approximately £0.27m. Different modelled scenarios indicate
that the impairment could be both less or more than the £4m recognised.
Management are confident the assessment is reasonable as the NFI activity in the first six months post 31 March
2020 is in line with the forecast applied.
Goodwill recognised on the business combination in 2018 with Command recruitment Group (HK) limited was
£758k. The assessment of Command Recruitment Group (H.K) Limited is based on projected results in Hong
Kong and Dubai. The approach is the same as that used for Macdonald & Company Group. In assessing value
in use, the estimated future cash flows are calculated by preparing cash flow forecasts derived from the most
recent financial forecasts for five years. This analysis does not indicate any impairment. Several potential
sensitivity scenarios have been considered and these would only indicate impairment in the carrying value of
goodwill if the discount rate were to be increased to 26% and if the forecast operating profit is underachieved
by 52%. Management believes that both scenarios are unlikely as Command continues to profitable and perform
in line with management expectations. As a result, the Group has continued to make significant investments in
the business to accelerate its growth in line with the Group’s strategy to build a strong presence in Hong Kong
and maximise the long-term growth opportunities available in the market.
12
Investments
Company shares in subsidiary undertakings
Cost
At 1 April 19
Impairment of investment asset
(Decrease)/ increase in shares from subsidiary from share
option reserve
At 31 March 20
2020
£’000
2019
£’000
11,213
11,190
(3,926)
(150)
-
23
7,137
11,213
The investment value is linked to the Goodwill and accordingly the impairment in the carrying value of the UK
CGU, is an indication that there is an impairment in the underlying investment. The model and assumptions
applied to assessing the Goodwill impairment have been applied to the carrying value of the investment and an
impairment has been recognised in the period.
55
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
12
Investments (Continued)
Non-Controlling Interest
The following table summarises the information relating to Command Recruitment Group (HK) Limited, that
is a subsidiary with material non-controlling interest (“NCI”), before any intra-group eliminations.
NCI percentage
Non-current assets
Current assets
Non-current liabilities
Net assets
Net assets attributable to NCI
Revenue
Operating profit
Other comprehensive (loss)/ income
Total comprehensive income
Operating profit allocated to NCI
Other comprehensive (loss)/ income allocated to NCI
Cash flows from operating activities
Cash flows from financing activities (dividends to NCI: nil)
Net increase /(decrease) in cash and cash equivalents
2020
£’000
40%
288
1,892
(145)
2,035
814
3,596
1,412
(35)
1,372
565
(14)
4,831
(318)
4,513
2019
£’000
40%
110
2,237
-
2,347
939
3,972
907
20
1,414
566
8
2,585
-
2,585
56
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
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
England and Wales
Holding Company
Principal activity
Registered address
Macdonald & Company
Group Limited
Macdonald & Company
Property Limited
Macdonald and Company
Freelance Limited
Macdonald & Company
(Overseas) Limited
Macdonald & Company Ltd
England and Wales
Recruitment
England and Wales
Recruitment
England and Wales
Dormant
Hong Kong
Recruitment
Ru Yi Consulting Limited
Hong Kong
Dormant
Macdonald & Company
(Shenzhen) limited
P.R. China
Recruitment
Macdonald and Company
Pte Limited
Macdonald & Company Pty
Ltd
Macdonald & Company
Recruitment Proprietary Ltd
Singapore
Recruitment
Australia
Dormant
South Africa
Dormant
The Prime Organisation Ltd
England and Wales
Dormant
Command Recruitment
Group (H.K.) Limited
Blackbox Compliance Pte.
Limited
Hong Kong
Recruitment
Singapore
Recruitment
2 Harewood Place, Hanover
Square, London, W1S 1BX
2 Harewood Place, Hanover
Square, London, W1S 1BX
2 Harewood Place, Hanover
Square, London, W1S 1BX
2 Harewood Place, Hanover
Square, London, W1S 1BX
29th Floor
3 Lockhart Road
Wan Chai, Hong Kong
29th Floor
3 Lockhart Road
Wan Chai, Hong Kong
1503M, 15/F, Tower 2, Kerry
Plaza, No.1 Zhong Xin Si Road,
Futian District, Shenzhen 518048,
P.R. China
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
2 Harewood Place, Hanover
Square, London, W1S 1BX
29th Floor
3 Lockhart Road
Wan Chai, Hong Kong
63 Market Street #05-02, Bank of
Singapore Centre, Singapore
048942
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 except in the case of Command Recruitment Group
(H.K.) Limited, where it owns 60%, and Blackbox Compliance Pte. Limited where it owns 40%. The percentage
of the issued share capital held is equivalent to the percentage of voting rights for all companies.
57
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
13 Trade and other receivables
Current
Trade receivables
Allowance for doubtful debts
Other receivables
Amounts owed by subsidiary company
Prepayments and accrued income
Group
2020
£’000
2019
£’000
3,312
(340)
284
-
612
4,156
(621)
243
-
868
Company
2020
£’000
-
-
133
3,000
12
3,868
4,646
3,145
2019
£’000
-
-
119
-
5
124
At 31 March 2020, the average credit period taken on sales of recruitment services was 75 days (2019: 131
days) from the date of invoicing. An allowance of £340,000 (2019: £621,000) 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.
A provision for impairment of trade receivables has been made. In reviewing the appropriateness of the
provision, consideration has been given to the ageing of the debt and the potential likelihood of default, taking
into account current economic conditions.
The ageing of trade receivables at the reporting date was:
Gross
trade
receiv
ables
2020
£’000
Provisions Expected
Loss rate
Gross trade
receivables
Provisions
Expected
Loss rate
2020
£’000
2020
%
2019
£’000
2019
£’000
2020
%
Not past due 0 -30days
Past due 30-90 days
Past due more than 90
days
1,548
792
972
3,312
50
80
210
340
3.2%
10.2%
21.6%
1,654
1,435
1,067
68
157
396
4.1%
10.9%
37.1%
4,156
621
The expected loss rates for trade receivables and contract assets are based on the payment profile and the shared
credit risk characteristics arising in the different industries in which the Group operates. The Company has
incorporated forward-looking information based on the clients’ industries and financial position, including the
assessment of any perceived impact of Covid- 19. Based on the Group’s assessment, no expected credit loss
allowance has been recognised in the financial year ended 31 March 2020.
58
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
13 Trade and other Receivables (continued)
Movement in allowance for doubtful debts:
1 April 2019
Impairment losses recognised
Amounts written off as uncollectable
Amounts paid by the client
Impairment losses reversed
2020
£’000
621
340
(38)
(452)
(131)
2019
£’000
178
621
(117)
(61)
-
31 March 2020
340
621
14 Financial Instruments
Financial assets at amortised cost
Trade and other receivables
Amounts owed by subsidiary company
Cash and cash equivalents
Group
Company
Note
13
13
2020
£’000
3,256
-
2,055
2019
£’000
3,778
-
2,309
2020
£’000
133
3,000
876
2019
£’000
119
-
322
5,311
6,087
4,009
441
Cash is held either on current account or on short-term deposits at floating rates of interest determined by the
relevant bank's prevailing base rate.
Group
Company
Note
2020
£’000
2019
£’000
2020
£’000
2019
£’000
Financial liabilities at amortised cost
Trade and other payables
Accruals
15
15
1,619
901
1,123
1,227
3,873
35
1,097
27
2,520
2,350
3,908
1,124
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.
59
PRIME PEOPLE PLC
Notes to the financial statements
For the year ended 31 March 2020
15 Trade and other Payables
Current
Trade payables
Other payables
Amount owed to subsidiary
undertakings
Taxation and social security
Accruals
Group
Company
2020
£’000
371
1,248
-
685
901
2019
£’000
316
807
-
730
1,227
2020
£’000
1
-
3,872
4
35
2019
£’000
3
1
1,093
6
27
3,205
3,080
3,912
1,130
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 2018
Credit to income
At 31 March 2019
Debit to income
At 31 March 2020
Group (Asset)
At 1 April 2018
Debit to income
At 31 March 2019
Debit to income
At 31 March 2020
Other
temporary
differences
£’000
Total
£’000
-
22
22
-
22
Share Options
£’000
45
(5)
40
-
40
-
22
22
-
22
Total
£’000
45
-
45
(5)
40
60
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
17 Share Capital
2020
2019
Number
£’000
Number
ALLOTTED CALLED UP
Ordinary shares of 10p each
As at 1 April
Shares issued during the year
12,290,199
17,074
1,229
2
12,290,199
-
At 31 March
12,307,273
1,231
12,290,199
£’000
1,229
-
1,229
Share capital includes unpaid shares of nil (2019: nil).
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 22 September 2020, 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 £410,242 representing one- third of the Company’s issued share capital;
to issue new/additional ordinary shares to new shareholders up to a maximum nominal amount of £410,242
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 £184,609 representing 15% of the Company’s issued share capital of the Company;
to purchase through the market up to 15% of the Company’s issued share capital, subject to certain
restrictions on price; and
to make off-market purchases of its ordinary shares for the purposes of or pursuant to an employee ‘share
scheme with the maximum aggregate number of ordinary shares authorised to be purchased is 4,102,424
representing approximately one-third of the Company’s issued ordinary share capital.
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 adjusts 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 made purchases of its own shares which are held as Treasury Shares.
61
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
17 Share Capital (continued)
Employee Share Schemes
The Company operates two share options schemes with one of them, the Save as You Earn scheme, being
dormant.
Enterprise Management Incentive Share Option Scheme
At 31 March 2020 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
2011/12
68.00
2014-2019
2013/14
10.00
10.00
2016-2021
2019-2021
2014/15
10.00
10.00
2016-2021
2019-2021
2015/16
2016/17
10.00
58.00
58.00
50.00
50.00
90.00
90.00
2020-2022
2017-2022
2020-2022
2019-2024
2022-2027
2019-2024
2022-2027
2018/19
10.00
2020-2028
2019/20
50.00
50.00
42.50
2022-2029
2024-2029
2022-2029
Number of
options
31 March
2019
3,000
12,000
40,250
20,000
229,500
30,000
25,000
60,000
15,000
45,000
20,000
25,000
80,000
Granted
Exercised
Forfeited Number of
Options
31 March
2020
3,000
-
-
(15,000)
-
(30,000)
-
-
(10,000)
-
(35,000)
(5,000)
(5,000)
-
-
-
-
9,000
6,000
10,000
25,000
30,000
15,000
50,000
-
10,000
15,000
20,000
80,000
15,000
50,000
30,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,000)
(19,250)
(10,000)
(174,500)
-
(10,000)
-
(15,000)
-
-
-
-
-
-
-
-
-
-
15,000
50,000
30,000
Total 2020
604,750
95,000
(231,750)
(100,000)
368,000
Weighted average exercise price
2020 (pence)
26.96p
47.63
17.25p
36.8p
35.73p
Total 2019
662,750
90,000
(30,000)
(118,000)
604,750
Weighted average exercise price
2019 (pence)
28.37p
10.00p
10.00p
10.00p
27.84p
62
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
17 Share Capital (continued)
There were 368,000 options outstanding at 31 March 2020 (2019: 604,750) which had a weighted average price
per share of 35.73p (2019: 27.84p) and a weighted average contractual life of 4.3 years. The options vest over
a period of two to four 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 several key performance measures of the group,
measured at a regional and consolidated level for the financial years 2019 and 2020. 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)
2020
Black-Scholes
91.00 & 81.50
50.00 & 42.50
46.44
20
4
2 & 5
2019
Black-Scholes
76.00 & 74.00
10.00
68.98
20
4
2 & 5
Expected volatility was determined by reference to historical volatility of the Company’s share price.
The share-based payment expense recognised within the income statement during the period was £48,836
(2019: expense £57,306).
63
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
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 2020, the total number of ordinary shares of 10p held in Treasury and their values were as follows:
As at 1 April
Shares purchased for treasury
Shares issued from treasury
Loss on treasury shares disposal
As at 31 March
Nominal value
Market value
2020
Number
195,676
36,074
(231,750)
-
£’000
Number
£’000
2019
161
23
(34)
(150)
505,676
34,000
(344,000)
195,676
-
-
-
421
26
(246)
(40)
161
20
156
The maximum number of shares held in treasury during the year was 195,676 shares representing 1.6% of the
called-up ordinary share capital of the Company (2019: 505,676 representing 4.1% 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 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. On 3 January 2020 a special resolution was passed to return £2m of this reserve to the
shareholders.
64
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
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 Leases
The Group has adopted IFRS 16 Leases for the first time in the financial statements. The Group has opted to
apply the transition approach which does not require the restatement of comparative information. Further details
are provided in note 1.
The Group’s leases are property leases. These include leases for the offices from which the businesses across
the Group operate and these have terms of typically 1 to 10 years. The movements in the carrying value of right-
of-use assets is provided below.
Right-of-use
asset - Property
£’000
2,994
212
3,206
1,482
440
1,922
1,284
2020
£’000
440
71
566
212
Cost
At 1 April 2019
Additions
At 31 March 2020
Accumulated depreciation
At 1 April 2019
Depreciation
At 31 March 2020
Net Book Value as at 31 March 2020
Additional disclosures as required under IFRS 16 Leases are provided in the table below:
Depreciation of right-of-use assets
Interest on lease obligations
Cash outflow for leases
Additions to right-of-use-assets
65
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
20 Reconciliation of Profit before Tax to Net Cash Inflow from Operating Activities
Group
2020
£’000
Company
2019
£’000
2020
£’000
2019
£’000
(Loss)/ Profit before taxation
(2,133)
2,471
(3,965)
10
Adjust for:
Depreciation of property, plant and equipment and
software amortisation
Impairment of goodwill
Share-based payment expense
Loss on sale of tangible asset
Finance costs
737
4,018
49
1
76
220
-
38
1
-
-
3,926
-
-
-
-
-
-
-
-
Operating cash flow before changes in working
capital
2,748
2,730
(39)
10
IFRS 15 adjustment on reserves b/f
(Increase)/decrease in receivables
Increase/(decrease) in payables
-
778
116
-
(1,976)
976
416
(3,021)
2,784
-
(115)
346
Cash generated from / (used by) underlying
operations
3,642
2,146
(276)
241
Changes in financial liabilities arise solely from financing cashflows and leases.
21 Analysis of Cash less overdrafts
Group
At 1 April
Cash flow
Cash at bank and in hand
Total cash
Company
Cash at bank and in hand
Total cash
2019
£’000
2,309
At 31
March 2020
£’000
£’000
(254)
2,055
2,309
(254)
2,055
At 1 April
2019
£’000
322
322
Cash flow
£’000
554
554
At 31 March
2020
£’000
876
876
66
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
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 34.66% (2019: 31.53% of revenue and
approximately 24.27% (2019: 29.64%) of the Group’s assets and consequently the Group has a degree of
translation exposure in accounting for overseas operations.
The Group exposure to foreign currency risk is as follows:
As at 31 March 2020
Cash at bank
Trade and other receivables
Trade and other payables
Net exposure
As at 31 March 2019
Cash at bank
Trade and other receivables
Trade and other payables
Net exposure
Euro
£'000
66
-
-
66
Euro
£'000
78
-
-
78
AUD
£'000
7
-
-
7
AUD
£'000
-
-
-
-
USD
£'000
1
-
-
1
USD
£'000
32
-
-
32
HK$
£'000
259
1,350
(1,101)
508
HK$
£'000
645
648
(27)
1,266
S$
£'000
211
299
(117)
393
S$
£'000
95
140
(4)
231
AED
£'000
410
336
(115)
631
AED
£'000
805
1,389
-
2,194
Sensitivity analysis – currency risk
A 10% weakening of Sterling against the above currencies at 31 March 2020 would have increased/(decreased)
equity and profit or loss by the amounts shown below. This analysis is applied currency by currency in isolation,
i.e. ignoring the impact of currency correlation, and assumes that all other variables, interest rates, remain
constant. The amounts generated from the sensitivity analysis are forward-looking estimates of market risk
assuming certain adverse market conditions occur. Actual results in the future may differ materially from those
projected, due to developments in the global financial markets which may cause fluctuations in interest and
exchange rates to vary from the hypothetical amounts disclosed in the table below, which therefore should not
be considered a projection of likely future events and losses.
67
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
Financial Risk Management (continued)
Foreign Currency (continued)
Euro
US Dollar
Hong Kong Dollar
Singapore Dollar
UAE Dirham
Australian Dollar
2020
equity
£'000
(6)
-
(46)
(36)
(57)
(1)
2020 PTB
£'000
(6)
-
(46)
(36)
(57)
(1)
2019
equity
£'000
(7)
(3)
(115)
(21)
(199)
-
2019 PBT
£'000
(7)
(3)
(115)
(21)
(199)
-
A 10% strengthening of Sterling against the above currencies at 31 March 2020 would have had the equal but
opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain
constant.
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’s largest credit risk exposure to a single client is
in the UK and represents 6.43% of the Group trade receivables balance. Although there is no indication that the
debt is uncollectable, the Directors are of the opinion that adequate provision is in place to cover any potential
default by this client. Public investment funds in Hong Kong and Saudi Arabia accounted for 12.57% and 8.48%
of Group trade receivables respectively. Apart from this exposure, at the year-end no other customer represented
more than 5.73% (2019: 4.86%) 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, considering 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 15,
all due within one year of the year end.
The Group has net funds of £2.06m (2019: £2.31m) which the Board consider are more than adequate to meet
future working capital requirements and to take advantage of business opportunities.
68
PRIME PEOPLE PLC
Notes to the Financial Statements
For the year ended 31 March 2020
Financial Risk Management (continued)
As at 31 March 2020, the Group’s financial liabilities have contractual maturities as follows:
At 31 March 20
Trade payables
Other payables
Taxation and social security
Accruals
Lease liabilities
Total contractual
cash flows
Less than
6 months
£'000
6 – 12
months
£'000
Between 1
and 2 years
£'000
Between 2
and 5 years Over 5 years
£'000
£'000
371
1,248
440
901
254
-
-
245
-
243
3,214
488
-
-
-
-
500
500
-
-
-
-
508
508
-
-
-
-
20
20
At 31 March 19
Trade payables
Other payables
Taxation and social security
Accruals
Total contractual
cash flows
Less than
6 months
£'000
6 – 12
months
£'000
Between 1
and 2 years
£'000
Between 2
and 5 years Over 5 years
£'000
£'000
316
807
730
1,227
3,080
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The amounts disclosed in the table are the contractual undiscounted cash flows.
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 £215k (2019: £215k). The balance owed to the subsidiary undertakings at the year-end is
£3.87m (2019: £1.09m).
The Company also provides corporate guarantees on the subsidiary bank accounts. At 31 March 2020 amounts
overdrawn by subsidiary bank accounts were £nil (2019: £nil).
The Directors receive remuneration from the Group, which is disclosed in the Directors’ Remuneration Report.
As shareholders, the Directors also received dividends in the year from the Company amounting to £318,213
(2019: £359,697).
69
PRIME PEOPLE PLC
Directors and Advisers
Directors
Robert Macdonald
Peter Moore
Donka Zaneva-Todorinski
Chris Heayberd
Sir John Lewis OBE
(Executive Chairman)
(Managing Director)
(Finance Director)
(Non-Executive Director)
(Non-Executive Director)
Secretary and Registered Office
Donka Zaneva-Todorinski, 2 Harewood Place, London, W1S 1BX.
Registered Number
01729887
Nominated Adviser & Broker
Cenkos Securities Plc, 6.7.8 Tokenhouse Yard, London, EC2R 7AS
Solicitors
Charles Russell Speechlys LLP, 5 Fleet Place, London EC4M 7RD
Auditor
Crowe U.K. LLP, 55 Ludgate Hill, London EC4M 7JW
Principal Bankers
HSBC Bank PLC, Oxford Circus, 196 Oxford Street, Fitzrovia, London W1D 1NT
Registrars
Neville Registrars Limited, Neville House, Steelpark Road, Halesowen, West Midlands, B62 8HD
70
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 FCCA – 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 and was awarded
fellowship status in January 2019. 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 Group Finance Director in October 2015. She is a member of the Finance &
Management Faculty of ICAEW.
Chris Heayberd BA ACA – Non-executive Directors
Chris qualified as a Chartered Accountant in 1980 and after that date held a few financial positions in a broad
range of industries. Since 1989 his 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 remained on the Board in a non-executive capacity.
Sir John Lewis OBE LLB (Hons) - Non-executive Director
John is a solicitor (Non-practising) previously served as a partner in Lewis Lewis & Co which became part of
Eversheds (to which he was a Consultant until 2019) 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.
71
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