TIDMGATC
RNS Number : 0315U
Gattaca PLC
31 March 2021
31 March 2021
Gattaca plc
("Gattaca" or "the Group")
Interim Results for the six months ended 31 January 2021
Resilient performance; FY guidance unchanged
Well placed for further recovery underpinned by our core focus
on STEM skills
Gattaca plc ("Gattaca" or the "Group"), the specialist
Engineering and Technology staffing solutions business, today
announces its Interim Results for the six months ended 31 January
2021.
Financial Highlights
2021 H1 2020 H1 (restated)
Continuing Continuing Continuing Continuing Continuing Continuing
reported underlying(2) reported underlying reported underlying
GBPm GBPm GBPm GBPm % %
================ =========== ================ ============= ============= =========== ===========
Revenue 206.5 206.5 297.6 297.6 (30.6) (30.6)
================ =========== ================ ============= ============= =========== ===========
Net Fee Income
(NFI)(1) 21.1 21.1 31.8 31.8 (33.7) (33.7)
================ =========== ================ ============= ============= =========== ===========
EBITDA 2.2 2.0 5.5 5.7 (61.0) (65.5)
================ =========== ================ ============= ============= =========== ===========
Profit before
tax 0.1 0.4 1.4 3.3 (92.2) (86.5)
================ =========== ================ ============= ============= =========== ===========
Profit after
tax 0.1 0.3 0.7 2.4 (90.4) (85.4)
================ =========== ================ ============= ============= =========== ===========
Discontinued
Operations (0.0) (1.4)
================ =========== ================ ============= ============= =========== ===========
Reported
Profit/(Loss)
after Tax 0.0 (0.6)
================ =========== ================ ============= ============= =========== ===========
Basic earnings
per share 0.2 1.1 2.2 7.4 (90.4)% (85.4)%
================ =========== ================ ============= ============= =========== ===========
Diluted
earnings
per share 0.2 1.1 2.1 7.2 (90.1)% (84.9)%
================ =========== ================ ============= ============= =========== ===========
Interim
dividend 0p 0p
================ =========== ================ ============= ============= =========== ===========
Adjusted net GBP22.7m GBP(3.1)m
cash / (debt)
at end of
period(3)
================ =========== ================ ============= ============= =========== ===========
Highlights
-- Group continuing underlying NFI of GBP21.1m, 34% lower on restated
H1 2020, reflecting the market impact of the COVID-19 pandemic
over the entire reporting period (no COVID-19 impact in H1 2020).
International NFI lower by 33%
-- Strong cost management resulted in Group continuing underlying
PBT of GBP0.4m (restated 2020 H1: GBP3.3m)
-- Improving activity levels in our core markets continued through
Q1 and we were pleased to deliver quarter-on-quarter UK NFI growth
of 9% versus Q4. UK NFI in Q2 was 2% higher than Q1 affected by
lower activity over Christmas period
-- Encouraging signs of recovery demonstrated by our key operational
metrics:
-- 6% increase in contractors since 1 January 2021 to date
-- 84% increase in average daily new permanent starters since 1
January 2021 to date
-- Robust balance sheet with Group having adjusted net cash position
of GBP22.7m at 31 January 2021 (31 January 2020: GBP(3.1)m net
debt) reflecting focus on reducing net debt over last three years
-- Revolving Credit Facility repaid early in October 2020; Group is
now covenant free
Improvement Plan
-- Group restructuring completed in October 2020, realising annualised
savings of GBP4m, a ppropriate cost management along with the restructuring
has contributed to the H1 2021 underlying PBT of GBP0.4m
-- As market demand improves we are making targeted headcount investment
in those markets offering the best opportunity for returns, with
consultant hiring underway and will be further accelerated in Q4
2021
-- Global technology platform upgrade nearing completion (April 2021).
The Primary Business Systems ("PBS") replaces legacy systems and
will provide a fully integrated and flexible centralised system
across the Group
Outlook
Whilst the pace of the recovery remains uncertain, we are seeing
more encouraging signs in the market and improving activity rates.
Over the coming year we will continue to invest in our people and
technology, and the Board remains confident on the outlook for the
business.
Full year 2021 underlying PBT expected to be in line with market
expectations.
Commenting on the results, Kevin Freeguard, Chief Executive
Officer said:
"We have been encouraged by the resilience the business has
shown over the first half, and we are pleased with the continued
progress made to reposition the business, through the acceleration
of our Group wide Improvement Plan. Our ability to flex our costs
has been an important element in offsetting the reduction in
NFI.
Gattaca's focus on STEM skills and Contract staffing, combined
with the resilience of our core markets, including Infrastructure
and Defence, together with our strong cash position underpins our
strength and positions us well for growth. We are seeing more
encouraging signs in the market and improving activity rates, and
over the coming year we will continue to invest in our people and
technology, and I remain very confident on the outlook for the
business.
It is now over a year since this pandemic took hold presenting
unparalleled challenges for people in their business and personal
lives, and the way our staff have risen to these gives me immense
pride. I would like to thank them for their continued dedication,
resilience and hard work. "
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014. Upon the
publication of this announcement via a Regulatory Information
Service, this inside information is now considered to be in the
public domain.
The following footnotes apply, unless where otherwise indicated, throughout
these Interim Results:
(1.) NFI is calculated as revenue less contractor payroll costs
(2.) Continuing underlying results exclude the NFI and trading losses
before taxation of discontinued businesses being operations in
China, the contract Telecoms Infrastructure markets in Africa,
Asia and Latin America as well as operations in Dubai, Malaysia
and Qatar (2021 H1: GBP(0.0)m, 2020 H1 restated: GBP(1.5)m), non-underlying
items within administrative expenses in 2021 H1 primarily related
to reversal of restructuring costs provided for at 31 July 2020
(2021 H1: GBP(0.2)m, 2020 H1: GBP0.1m), amortisation of acquired
intangibles (2021 H1: GBP0.2m, 2020 H1: GBP0.3m), and exchange
losses from revaluation of foreign assets and liabilities (2021
H1: GBP(0.3)m, 2020 H1 restated: GBP(1.5)m).
(3.) Included within Net Cash / (Debt) are Capitalised Financing costs
(31 January 2021: GBP0.0m, 31 July 2020: GBP0.2m)
For further information please contact:
Gattaca plc +44 (0) 1489 898989
Kevin Freeguard, Chief Executive Officer
Salar Farzad, Chief Financial Officer
Liberum Capital Limited (Nomad and
Broker) +44 (0) 20 3100 2000
Lauren Kettle
Robert Morton
Euan Brown
Citigate Dewe Rogerson +44 (0) 20 7638 9571
Toby Mountford
Jos Bieneman
Elizabeth Kittle
Operational Performance
UK Engineering (64% of underlying NFI)
2021 H1 2020 H1 Change
Underlying NFI GBP'm GBP'm %
============================================= ========== ======== ==============
Contract 10.8 15.0 (28.4)
Permanent 2.8 5.2 (33.8)
============================================= ========== ======== ==============
Total 13.6 20.2 (33.1)
--------------------------------------------- ---------- -------- --------------
UK Engineering was down 33% on H1 2020, reflecting the ongoing
impact of the Covid-19 pandemic on demand. Our contract bias
provided some resilience to the trading environment.
The Infrastructure business NFI within UK Engineering was also
down 33% year on year. Infrastructure remains our largest business
unit and is underpinned by the longevity of our client
relationships and the long term nature of their projects with
increased UK government spending commitments under the "Build back
better" initiative.
In Energy, the renewable energy market has been an area where
demand has remained strong, as a result the Energy business has
been least affected with NFI down 12% on H1 2021.
Demand has been most impacted within our Aerospace, Auto and
Maritime business units with NFI down 59% on the same period last
year as a result of reductions in end customer demand impacting the
supply chain.
UK Technology (24% of underlying NFI)
2021 H1 2020 H1 Change
Underlying NFI GBP'm GBP'm %
====================================================== ========= ========= =========
Contract 4.2 6.5 (37.4)
Permanent 0.9 1.4 (33.6)
Total 5.1 7.9 (36.7)
====================================================== ========= ========= =========
UK technology was down 37% on H1 2020. In the second quarter the
Technology business returned to growth quarter on quarter and we
anticipate that trend to continue through H2 2021. Technology
skills remain a key growth driver across all our markets, and we
see strong demand for development and cloud skills, further
improving throughout 2021.
As of 1 August 2020 we have reclassified our Engineering
Technology business unit to sit under the leadership and direction
of UK Technology (previously under Engineering), reflecting the
growing importance of the market convergence between traditional
engineering and IT skill sets, and ensuring consistency across the
full technology stack.
International (12% of underlying NFI)
2021 H1 2020 H1) Change
(restated)
Underlying NFI GBPm GBPm %
================ ======== =========== =======
Contract 0.9 1.3 (30.8)
Permanent 1.5 2.4 (34.6)
================ ======== =========== =======
Total 2.4 3.7 (33.2)
================ ======== =========== =======
International operations NFI was down 33% on H1 2020 at GBP2.4m.
Our international operations have been impacted by Covid-19 with
specific country approaches affecting each market and geography, as
NFI has declined we have sought to take mitigating cost
actions.
Group Contractor and Permanent mix
Our sales mix remained relatively stable with Contract Fees
accounting for 75% of continuing underlying NFI in H1 2021
(restated H1 2020: 72%). During the period of H1 there was a
consistent growth in our contractor base ending the period with
approximately 5,300 contractors (February pre Pandemic 7,200).
Permanent Fees accounted for 25% of continuing underlying NFI in
H1 2021 (restated H1 2020: 28%). There was reduced demand for
permanent hires in our contingent business, however our Solutions
business continued to perform well and during the period added
another RPO client.
People
Gattaca's permanent FTE headcount at 31 January 2021 was 477, a
reduction of 204 from 31 January 2020. The ratio of sales to
support staff was 70:30, compared to the ratio of 73:27 at 31
January 2020.
Improvement Plan
-- Group restructure completed in October 2020, realising annualised
savings of GBP4m, a ppropriate cost management along with the
restructuring has contributed to the H1 2021 underlying PBT
of GBP0.4m
-- Following the successful completion of the Group restructuring
in October 2020, it was no longer necessary for us to continue
to use the Government Job Retention Scheme
-- As market demand improves we are making targeted headcount
investment in those markets offering the best opportunity for
returns, with consultant hiring underway and will be further
accelerated in H2 2021
-- Global technology platform upgrade nearing completion. The
Primary Business Systems ("PBS") replaces legacy systems and
will provide a fully integrated and flexible centralised system
across the Group:
-- Our Resourcing Solutions ("RSL") subsidiary went Live in
October 2020 and subsequently Spain and South Africa have also
gone onto the platform
-- Full Go Live in April 2021 for the remainder of the business
Financial Overview
Revenue for the period of GBP206.5m (H1 2020: GBP297.6m) was 31%
down year on year, on a continuing basis.
NFI of GBP21.1m represented a 34% year on year decline on a
continuing basis. Contract NFI margin of 7.9% (2020 H1: 7.9%) was
consistent with the prior year.
Continuing underlying EBITDA for the period at GBP2.0m (restated
H1 2020: GBP5.7m) was 66% lower than H1 2020 on a continuing
reported basis. This reflects the decline in NFI from both UK and
International operations, as a result of the impact of Covid-19,
with a 27% decline in the administrative cost base partly
mitigating the impact of the decline in NFI.
On a continuing underlying basis the effective tax rate was 21%
(restated H1 2020: 27.4%). The Group's continuing underlying
effective tax rate reported at 31 July 2020 was 27.7%.
Basic underlying earnings per share from continuing operations
were 1.1p (restated H1 2020: 7.4p) and adjusted underlying diluted
earnings per share from continuing operations were 1.1p (restated
H1 2020: 7.2p).
Administrative costs
Underlying administrative costs of GBP20.3m (restated H1 2020:
GBP27.7m) reduced by 27% on prior year, as we proactively managed
the cost base and group headcount in response to the reduction in
NFI. In October 2020 we completed a restructure which realised
GBP4m of annualised savings and increased operational
effectiveness. During the period we received payments from the UK
Government Job Retention Scheme totalling GBP0.5m, having ended our
participation in the scheme following the successful completion of
the Group restructuring in October 2020. A detailed breakdown of
the reduction in administrative costs is shown below:
GBPm
============================================== ======
H1 2020 continuing underlying administrative
costs 27.7
============================================== ======
UK staff restructuring (2.0)
Staff furlough benefit (0.5)
International operating cost savings (1.3)
Sales commission and incentive (1.9)
Consultancy fees (0.4)
Travel, subsistence and entertaining (0.5)
Property and admin costs (0.3)
Depreciation and software amortisation (0.5)
============================================== ======
H1 2021 continuing underlying administrative
costs 20.3
============================================== ======
Non-underlying costs and discontinued operations
The continuing non-underlying (credit) / costs in H1 2021 of
GBP(0.2)m (restated H1 2020: GBP0.1m), were credits related to the
group restructuring completed in October 2020 as a result of lower
than anticipated staff exit costs.
In our 2020 full year accounts, China was classified within
discontinued operations. Profit / (loss) before tax in H1 2021 for
all discontinued operations was GBP(0.0) million (restated H1 2020:
GBP(1.5)m).
Financing costs
Net financing costs of GBP0.7m (H1 2020 GBP2.3m) were GBP1.6m
lower primarily due to a GBP1.1m decrease in foreign exchange
impacts on translation of foreign currency balances within local
entities (treated as non-underlying) compared to prior year. Bank
interest payable was GBP0.5m lower due to the lower average net
debt balance through the period compared to H1 2020 and the benefit
of reduced borrowing costs following the repayment of the revolving
Credit Facility in October 2020.
Debtors, cash flow, net debt and financing
Net cash at 31 January 2021 was GBP15.8m (31 July 2020:
GBP19.6m; 31 January 2020: net debt GBP(12.7)m). Adjusted Net cash
(net cash excluding IFRS 16 lease liabilities) was GBP22.7m (31
July 2020: GBP27.3m; 31 January 2020: net debt GBP(3.1)m) at the
period end. Our cash balances included GBP10.2m of deferred VAT
payments to HMRC, this will be repaid in 11 equal instalments
commencing March 2021.
Our Days Sales Outstanding ('DSO'), stands at 43 days, compared
to 41 days at 31 July 2020 and 39 days at 31 Jan 2020. Our DSO
calculation includes GBP12.2m of trade receivables transferred to
HSBC but on whose behalf we perform collection services. The
increase from July 2020 was as a result of our mix of clients.
Capital expenditure in the period of GBP0.9m (2020 H1: GBP1.2m)
was primarily investment in software related to our Primary
Business Systems initiative where we are replacing our in-house
built legacy systems with fully integrated industry leading third
party systems which will enhance the data flow and performance
management across the entire group. Following the substantial
investment program, and given that the PBS program is almost at
completion, we expect the capital expenditure to moderate to more
normal levels in H2 and 2022.
On 27 October 2020, the Group repaid its GBP15m Revolving Credit
Facility (RCF) in full and cancelled the facility, as a result the
Group no longer has any covenant obligations. The only source of
borrowing within the Group is now a GBP75m Invoice Financing
Facility split between a recourse and a non-recourse basis, the
non-recourse element of which is not recognised as Group debt under
IFRS.
Dividend
The Board is mindful of the importance of dividends to
shareholders. We will review the dividend in our full year results
depending on the pace of the recovery. We are committed as a Board
to restoring the dividend at the earliest opportunity.
Risks
The Board considers strategic, financial and operational risks
and identifies actions to mitigate those risks. Key risks and their
mitigations were disclosed on pages 48 to 53 of the Annual Report
for the year ended 31 July 2020.
We continue to manage a number of potential risks and
uncertainties including contingent liabilities as noted in the
interim accounts - many of which are common to other similar
businesses - which could have a material impact on our longer-term
performance.
Outlook
Whilst the pace of the recovery remains uncertain, we are seeing
more encouraging signs in the market and improving activity rates.
Over the coming year we will continue to invest in our people and
technology, and the Board remains confident on the outlook for the
business.
Full year 2021 underlying PBT expected to be in line with market
expectations.
Condensed Consolidated Income Statement
For the period ended 31 January 2021
6 months Restated 12 months
to 31/01/21 6 months to 31/07/20
(1)
to 31/01/20
unaudited unaudited
Total Total Total
Note GBP'000 GBP'000 GBP'000
============================================= ===== ============= ============= =============
Continuing Operations
Revenue 2 206,534 297,551 538,651
Cost of sales (185,418) (265,718) (484,375)
--------------------------------------------- ----- ------------- ------------- -------------
Gross profit 2 21,116 31,833 54,276
Administrative expenses (2) (20,340) (28,149) (50,914)
--------------------------------------------- ----- ------------- ------------- -------------
Profit from continuing operations 2 776 3,684 3,362
Finance income 32 51 91
Finance cost (702) (2,377) (2,016)
--------------------------------------------- ----- ------------- ------------- -------------
Profit before taxation 106 1,358 1,437
Taxation 5 (38) (649) (866)
--------------------------------------------- ----- ------------- ------------- -------------
Profit after taxation from continuing
operations 68 709 571
--------------------------------------------- ----- ------------- ------------- -------------
Discontinued operations
Loss for the period from discontinued
operations (attributable to equity holders
of the Company) (30) (1,358) (2,352)
--------------------------------------------- ----- ------------- ------------- -------------
Profit/(loss) for the period 38 (649) (1,781)
--------------------------------------------- ----- ------------- ------------- -------------
(1) 6 months to January 2020 figures have been restated for the
presentation of discontinued operations following the announcement
of withdrawal from China on 9 March 2020.
(2) Administrative expenses from continuing operations includes
net impairment losses on trade receivables and accrued income of
GBP492,000 (6 months to 31 January 2020: GBP630,000 and 12months to
31 July 2020 GBP2,716,000).
Profit/(loss) for the period for 31 January 2021, 31 January
2020 and the year for 31 July 2020 are wholly attributable to
equity holders of the Parent.
31/01/21 31/01/20 31/07/20
Earnings per ordinary share Note pence pence pence
============================= ===== ========= ========= =========
Basic earnings per share 6 0.1 (2.0) (5.5)
Diluted earnings per share 6 0.1 (1.9) (5.5)
============================= ===== ========= ========= =========
Reconciliation to adjusted profit measures
Underlying profit is the Group's key adjusted profit measure;
profit from continuing operations is adjusted to exclude
non-underlying income and expenditure as defined in the Group's
accounting policy, amortisation and impairment of goodwill and
acquired intangibles, impairment of leased right-of-use assets and
net foreign exchange gains or losses.
6 months Restated 12 months
to 31/01/21 6 months to 31/07/20
(1)
to 31/01/20
unaudited unaudited
Total Total Total
GBP'000 GBP'000 GBP'000
================================================ ============= ============= =============
Profit from continuing operations 776 3,684 3,362
Add
Depreciation of property, plant and equipment,
depreciation of leased right-of-use assets
and amortisation of software and software
licences 1,191 1,540 3,245
Non-underlying items included within
administrative expenses (197) 148 1,248
Amortisation and impairment of goodwill
and acquired intangibles and impairment
of leased right-of-use assets 193 313 1,382
================================================= ============= ============= =============
Underlying EBITDA 1,963 5,685 9,237
================================================= ============= ============= =============
Less
Depreciation and impairment of property,
plant and equipment, leased right-of-use
assets and amortisation of software and
software licenses (1,191) (1,540) (3,245)
Net finance costs excluding foreign exchange
gains and losses (330) (863) (1,404)
================================================= ============= ============= =============
Underlying profit before taxation 442 3,282 4,588
================================================= ============= ============= =============
Underlying taxation (93) (899) (1,271)
================================================= ============= ============= =============
Underlying profit after taxation from
continuing operations 349 2,383 3,317
================================================= ============= ============= =============
(1) 6 months to January 2020 figures have been restated for the
presentation of discontinued operations following the announcement
of withdrawal from China on 9 March 2020.
Condensed Consolidated Statement of Comprehensive Income
For the period ended 31 January 2021
6 months 6 months 12 months
to 31/01/21 to 31/01/20 to 31/07/20
unaudited unaudited
Total Total Total
GBP'000 GBP'000 GBP'000
=================================================== =============== ================ ===============
Profit/(loss) for the period 38 (649) (1,781)
Other comprehensive income/(loss)
Items that may be reclassified subsequently
to profit or loss
Exchange differences on translation of foreign
operations 12 (294) (1,091)
=================================================== =============== ================ ===============
Other comprehensive income/(loss) for the
period 12 (294) (1,091)
=================================================== =============== ================ ===============
Total comprehensive profit/(loss) for the
period attributable to equity holders of the
parent 50 (943) (2,872)
=================================================== =============== ================ ===============
6 months Restated 12 months
to 31/01/21 6 months to 31/07/20
(1)
to 31/01/20
unaudited unaudited
GBP'000 GBP'000 GBP'000
=================================================== =============== ================ ===============
Attributable to:
Continuing operations 282 844 (172)
Discontinued operations (232) (1,787) (2,700)
=================================================== =============== ================ ===============
50 (943) (2,872)
=================================================== =============== ================ ===============
(1) 6 months to January 2020 figures have been restated for the
presentation of discontinued operations following the announcement
of withdrawal from China on 9 March 2020.
Condensed Consolidated Statement of Changes in Equity
For the period ended 31 January 2021
Share-based Treasury Retained
Share Share Merger payment Translation shares earnings
capital premium reserve reserve reserve reserve (1) Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
========================= ======== ======== ======== ============== ============ =========== =========== ==========
At 1 August 2019 as per
originally presented 323 8,706 28,750 753 944 (140) 2,571 41,907
========================= ======== ======== ======== ============== ============ =========== =========== ==========
Adjustment on initial
application of IFRS 16,
net of tax - - - - - - 770 770
========================= ======== ======== ======== ============== ============ =========== =========== ==========
Restated total equity
at 1 August 2019 323 8,706 28,750 753 944 (140) 3,341 42,677
========================= ======== ======== ======== ============== ============ =========== =========== ==========
Loss for the period - - - - - - (649) (649)
Other comprehensive loss - - - - (294) - - (294)
========================= ======== ======== ======== ============== ============ =========== =========== ==========
Total comprehensive loss - - - - (294) - (649) (943)
========================= ======== ======== ======== ============== ============ =========== =========== ==========
Deferred tax movement
in respect of share
options - - - - - - 1 1
Share-based payments
charge - - - 58 - - - 58
Share-based payments
reserve transfer - - - (81) - - 81 -
Issue of treasury shares
to employees - - - - - 32 32
========================= ======== ======== ======== ============== ============ =========== =========== ==========
Transactions with owners - - - (23) - 32 82 91
========================= ======== ======== ======== ============== ============ =========== =========== ==========
Balance at 31 January
2020 323 8,706 28,750 730 650 (108) 2,774 41,825
========================= ======== ======== ======== ============== ============ =========== =========== ==========
At 1 August 2019 as per
originally presented 323 8,706 28,750 753 944 (140) 2,571 41,907
========================= ======== ======== ======== ============== ============ =========== =========== ==========
Adjustment on initial
application of IFRS 16,
net of tax - - - - - - 770 770
========================= ======== ======== ======== ============== ============ =========== =========== ==========
Restated total equity
at 1 August 2019 323 8,706 28,750 753 944 (140) 3,341 42,677
========================= ======== ======== ======== ============== ============ =========== =========== ==========
Loss for the period - - - - - - (1,781) (1,781)
Other comprehensive loss - - - - (1,091) - - (1,091)
========================= ======== ======== ======== ============== ============ =========== =========== ==========
Total comprehensive loss - - - - (1,091) - (1,781) (2,872)
========================= ======== ======== ======== ============== ============ =========== =========== ==========
Deferred tax movement
in respect of share
options - - - - - - (16) (16)
Reversal of share-based
payments charge - - - (60) - - - (60)
Share-based payments
reserve transfer - - - (167) - - 167 -
Issue of treasury shares
to employees - - - - - 43 - 43
========================= ======== ======== ======== ============== ============ =========== =========== ==========
Transactions with owners - - - (227) - 43 151 (33)
========================= ======== ======== ======== ============== ============ =========== =========== ==========
-
========================= ======== ======== ======== ============== ============ =========== =========== ==========
Balance at 31 July 2020 323 8,706 28,750 526 (147) (97) 1,711 39,772
========================= ======== ======== ======== ============== ============ =========== =========== ==========
At 1 August 2020 323 8,706 28,750 526 (147) (97) 1,711 39,772
========================= ======== ======== ======== ============== ============ =========== =========== ==========
Profit for the period - - - - - - 38 38
Other comprehensive
income - - - - 12 - - 12
========================= ======== ======== ======== ============== ============ =========== =========== ==========
Total comprehensive
income - - - - 12 - 38 50
========================= ======== ======== ======== ============== ============ =========== =========== ==========
Deferred tax movement - - - - - - - -
in respect of share
options
Share-based payments
charge - - - 28 - - - 28
Share-based payments
reserve transfer - - - (71) - - 71 -
Issue of treasury shares
to employees - - - - - 17 - 17
========================= ======== ======== ======== ============== ============ =========== =========== ==========
Transactions with owners - - - (43) - 17 71 45
========================= ======== ======== ======== ============== ============ =========== =========== ==========
Balance at 31 January
2021 323 8,706 28,750 483 (135) (80) 1,820 39,867
========================= ======== ======== ======== ============== ============ =========== =========== ==========
(1) Retained earnings as at 31 January 2020 have been restated
to reflect the deferred tax impact on transition to IFRS 16 on 1
August 2019.
Condensed Consolidated Statement of Financial Position
As at 31 January 2021
Restated
(1)
31/01/21 31/01/20 31/07/20
unaudited unaudited
Note GBP'000 GBP'000 GBP'000
================================ ===== ========== ========== =========
Non-current assets
Goodwill and intangible assets 7 13,512 12,446 12,877
Property, plant and equipment 1,332 2,924 1,492
Right-of-use assets 10 6,683 8,776 7,338
Investments 19 - 19
Total non-current assets 21,546 24,146 21,726
================================ ===== ========== ========== =========
Current assets
Trade and other receivables 8 45,539 59,017 48,888
Cash and cash equivalents 13 27,082 19,350 34,796
================================ ===== ========== ========== =========
Total current assets 72,621 78,367 83,684
================================ ===== ========== ========== =========
Total assets 94,167 102,513 105,410
================================ ===== ========== ========== =========
Non-current liabilities
Deferred tax liabilities (134) (146) (277)
Provisions (1,522) (1,723) (2,558)
Lease liabilities 10 (5,056) (2,066) (5,746)
Bank loans and borrowings 9 - (9,696) (7,304)
================================ ===== ========== ========== =========
Total non-current liabilities (6,712) (13,631) (15,885)
================================ ===== ========== ========== =========
Current liabilities
Trade and other payables (40,136) (25,040) (46,129)
Provisions (751) - (236)
Current tax liabilities (454) (1,692) (1,247)
Lease liabilities 10 (1,909) (7,596) (1,990)
Bank loans and borrowings 9 (4,338) (12,729) (151)
================================ ===== ========== ========== =========
Total current liabilities (47,588) (47,057) (49,753)
================================ ===== ========== ========== =========
Total liabilities (54,300) (60,688) (65,638)
================================ ===== ========== ========== =========
Net assets 39,867 41,825 39,772
================================ ===== ========== ========== =========
Equity
Share capital 11 323 323 323
Share premium 8,706 8,706 8,706
Merger reserve 28,750 28,750 28,750
Share-based payment reserve 483 730 526
Translation reserve (135) 650 (147)
Treasury shares reserve (80) (108) (97)
Retained earnings 1,820 2,774 1,711
================================ ===== ========== ========== =========
Total equity 39,867 41,825 39,772
================================ ===== ========== ========== =========
The accompanying notes are an integral part of these interim
Financial Statements.
(1) Retained earnings and deferred tax liabilities as at 31
January 2020 have been restated to reflect the deferred tax impact
on transition to IFRS 16 on 1 August 2019.
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the period ended 31 January 2021
6 months 6 months 12 months
to 31/01/21 to 31/01/20 to 31/07/20
unaudited unaudited
Total Total Total
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Profit/(loss) after taxation 38 (649) (1,781)
Adjustments for:
Depreciation of property, plant and equipment
and amortisation of goodwill and intangible
assets 431 932 1,831
Depreciation of leased right-of-use assets 953 924 2,041
Non-cash adjustment from adoption of IFRS - 651 -
16
Profits from sale of subsidiary, associate,
or investment - (304) (304)
Loss on disposal of property, plant and
equipment 27 - 52
Impairment of goodwill and acquired intangibles
and right-of-use assets - - 766
Interest income (32) (51) (91)
Interest costs 594 2,384 1,936
Taxation expense recognised in Income Statement 34 473 598
Decrease in trade and other receivables 2,958 37,677 47,537
(Decrease)/increase in trade and other
payables (6,009) (15,636) 5,453
(Decrease)/increase in provisions (547) (191) 1,085
Share-based payment charge 86 58 77
==================================================== ============= ============= =============
Cash (used in)/generated from operations (1,467) 26,268 59,200
Interest paid (83) (752) (1,052)
Interest on lease liabilities (82) (120) (214)
Interest received 32 51 91
Income taxes paid (1,048) (167) (387)
==================================================== ============= ============= =============
Cash (used in)/generated from operating
activities (2,648) 25,280 57,638
==================================================== ============= ============= =============
Cash flows from investing activities
Purchase of plant and equipment - (87) (191)
Purchase of intangible assets (937) (1,173) (2,348)
Purchase of investments - - (19)
Proceeds from sale of subsidiary, associate,
or investment - 304 304
==================================================== ============= ============= =============
Cash used in investing activities (937) (956) (2,254)
==================================================== ============= ============= =============
Cash flows from financing activities
Lease liability principal repayment (1,046) (793) (1,987)
Sales/(purchase) of treasury shares 17 32 (67)
Working capital facility including non-recourse
facility withdrawn/ (repaid) 4,572 (16,390) (28,968)
Finance costs paid - (222) (223)
Repayment of term loan (7,500) (5,000) (7,500)
==================================================== ============= ============= =============
Cash used in financing activities (3,957) (22,373) (38,745)
==================================================== ============= ============= =============
Effects of exchange rates on cash and cash
equivalents (172) (1,774) (1,016)
(Decrease)/increase in cash and cash equivalents (7,714) 177 15,623
Cash and cash equivalents at beginning of
period 34,796 19,173 19,173
==================================================== ============= ============= =============
Cash and cash equivalents at end of period
(1) 27,082 19,350 34,796
==================================================== ============= ============= =============
Net decrease in cash and cash equivalents for discontinued
operations was GBP59,000 (6 months to 31 January 2020 restated:
decrease of GBP1,188,000, year to 31 July 2020: decrease of
GBP1,164,000).
(1) Included in Cash and cash equivalents is GBP1,558,000 of
restricted cash (6 months to 31 January 2020: GBP894,000, year to
31 July 2020: GBP2,034,000) which meets the definition of cash and
cash equivalents but is not available for use by the Group. These
balances arise from the Group's non-recourse working capital
arrangements, which were entered into in 2020 as explained in Note
9.
NOTES
Forming part of the financial statements
1. The Group and Company Significant Accounting Policies
The accounting policies applied in these condensed interim
Financial Statements are consistent with those used in the
preparation of the Group's consolidated Financial Statements for
the year ended 31July 2020, as described in those annual Financial
Statements, with the exception of policies, amendments and
interpretations effective as of 1 August 2020 and other changes
detailed below.
1.1 The Business of the Group
Gattaca plc ('the Company') and its subsidiaries (together 'the
Group') is a human capital resources business providing contract
and permanent recruitment services in the private and public
Sectors. The Company is a public limited company, which is listed
on the Alternative Investment Market (AIM) and is incorporated and
domiciled in England, United Kingdom. The Company's address is:
1450 Parkway, Solent Business Park Whiteley, Fareham, Hampshire,
PO15 7AF. The registration number is 04426322.
1.2 Basis of preparation of the interim Financial Statements
These condensed consolidated interim Financial Statements are
for the six months ended 31 January 2021. They have been prepared
in accordance with IAS 34 "Interim Financial Reporting". They do
not include all of the information required for full annual
Financial Statements, and should be read in conjunction with the
consolidated Financial Statements for the year ended 31 July 2020
which have been filed with the Registrar of Companies. The
auditor's report on those Financial Statements was unqualified and
did not contain a statement under section 498 of the Companies Act
2006.
These condensed consolidated interim Financial Statements (the
interim Financial Statements) have been prepared in accordance with
the accounting policies set out below which are based on the
recognition and measurement principles of IFRS in issue as adopted
by the European Union (EU) and are effective at 1 August 2020 or
are expected to be adopted and effective at 1 August 2020.
These financial statements have been prepared in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006 and in accordance with
international financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European
Union.
1.3 Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Strategic Report of the 2020 annual report for
Gattaca plc. Any significant changes are highlighted in the
operational performance and financial overview of the interim
results for the 6 months ending 31 January 2021.
There continues to be significant uncertainty regarding the
ongoing potential future impact of the COVID-19 outbreak on our
clients and resultant trading activity. We continue to monitor any
changes and have regular management and monthly Board meetings to
assess the situation. We have a wide spread of customers across
multiple sectors but recognise that COVID-19 continues to impact
many of our customers and contractors across many industries.
The majority of our staff have now been working remotely for
over twelve months and there has not been any significant impact to
our ability to operate effectively. The initial reduction in
contractor numbers in April 2020, whilst impacting profitability,
has resulted in reduced working capital requirements and has
created further liquidity. The Group has also undertaken other
actions, including an increase to the payment terms of certain
contractors and these actions have created a permanent working
capital benefit, and will reduce our working capital requirements
during growth. We have seen early signs of minor extensions in
debtor days as a result of the pandemic impact on trading at our
clients and we continue to be alert for any sudden changes. There
is sufficient headroom on our working capital facilities to absorb
a level of extensions but we would also manage supply to the
customer if payment within an appropriate period was not being
made. A significant deterioration in payment terms would
significantly impact the Group's liquidity. Our future cost base
has also been significantly reduced following the larger scale UK
redundancy programme completed in October 2020. Having repaid and
cancelled the Revolving Credit Facility on 27 October 2020, the
Group is now covenant free.
The Directors have prepared detailed cash flow forecasts to July
2023, covering a period of 28 months from the date of approval of
these financial statements. This base case is drawn up with
appropriate regard for the current macroeconomic environment and
the particular circumstances in which the Group operates. This
conservative base case assumes a recovery of the UK business to 80%
of pre-COVID-19 contract and permanent NFI by July 2021, with a
further 86% recovery by July 2022 and 100% recovery by July 2023
years. Trading has been in line with this forecast since the year
end.
The output of the base case forecasting process has been used to
perform sensitivity analysis on the Group's cash flow to model the
potential effects should principal risks actually occur either
individually or in unison. The sensitivity analysis modelled
scenarios in which the Group incurred a sustained loss of business
arising from a prolonged global downturn as a result of the
COVID-19 pandemic, with a slower recovery scenario considered. The
Group has modelled the impact of a severe but plausible scenario
including the delay in recovery to 80% of pre-COVID NFI from July
2021 to February 2022, and subsequent slow recovery to 95% of
pre-COVID NFI by July 2023, as well as the impact of a subsequent 5
day deterioration in the recovery of customer receivables.
After making appropriate enquiries and considering the
uncertainties described above, the Directors have a reasonable
expectation at the time of approving these interim financial
statements that the Group and the Company has adequate resources to
continue in operational existence for the foreseeable future.
Following careful consideration the Directors do not consider there
to be a material uncertainty with regards to going concern and
consider it is appropriate to adopt the going concern basis in
preparing the financial statements.
1.4 New standards and interpretations
The following are new standards or improvements to existing
standards that are mandatory for the first time in the Group's
accounting period beginning on 1 August 2020 and no new standards
have been early adopted. The Group's January 2021 interim Financial
Statements have adopted these amendments to IFRS:
-- Amendment to IFRS 16, ' Leases' - Covid-19 related rent concessions
(effective 1 June 2020).
-- Amendment to IFRS 9, IAS39 and IFRS 7 - interest rate benchmark
reform (effective 1 January 2020)
New standards in issue, not yet adopted
The Group has not yet adopted certain new standards, amendments
and interpretations to existing standards, which have been
published but which are only effective for the Group accounting
periods beginning on or after 1 August 2020. These new
pronouncements are listed as follows:
-- Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest
Rate Benchmark Reform - Phase 2 (effective 1 January 2021)
The Directors are currently evaluating the impact of the
adoption of all other standards, amendments and interpretations but
do not expect them to have a material impact on the Group's
operations or results.
Forthcoming requirements
The following amendments are required for application for the
Group's periods beginning after 1 August 2020 or later:
Standard Effective date (annual period
beginning on or after)
================== ===================================== ==============================
IAS 1 amendments Classification of liabilities 1 January 2022
as current or non-current
IAS 16 amendments Property, plant and equipment 1 January 2022
proceeds before intended use
IAS 37 amendments Onerous contracts-cost of fulfilling 1 January 2022
a contract
IAS 3 amendments Reference to the conceptual 1 January 2022
framework
1.5 Basis of consolidation
Subsidiaries are all entities over which the Group has control.
The Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over
the entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are deconsolidated
from the date on which that control ceases.
The Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of
a subsidiary is the fair value of the assets transferred, the
liabilities incurred to the former owners of the acquiree, and the
equity interests issued by the Group. The consideration transferred
includes the fair value of any asset or liability resulting from a
contingent consideration arrangements. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair value at the
acquisition date. The Group recognises any non-controlling interest
in the acquiree on an acquisition-by-acquisition basis, either at
fair value or at the non-controlling interest's proportionate share
of the recognised amounts of the acquiree's identifiable net
assets.
Acquisition-related costs are expensed as incurred.
Intercompany transactions, balances and unrealised gains on
transactions between Group companies are eliminated. Unrealised
losses are also eliminated. Where necessary, amounts reported by
subsidiaries have been adjusted to conform to the Group's
accounting policies.
1.6 Revenue
Revenue is measured by reference to the fair value of
consideration received or receivable by the Group for services
provided, excluding VAT and trade discounts.
Temporary placements
Revenue from temporary, or contract, placements is recognised at
the point in time when the candidate provides services, upon
receipt of a client-approved timesheet or equivalent proof of time
worked. Timing differences between the receipt of a client-approved
timesheet and the raising of an invoice are recognised as accrued
income. The Group has assessed its use of third party providers to
supply candidates for temporary placements under the agent or
principal criteria and has determined that it is the principal on
the grounds that it retains primary responsibility for provision of
the services.
A number of contractual rebate arrangements are in place in
respect of volume and value of sales; these are accounted for as
variable consideration reducing revenue and estimated in line with
IFRS 15.
Any consideration payable at the start of contracts to customers
is recognised as a prepayment and released to profit or loss over
the terms of the contract it relates to, as a reduction to
revenue.
Permanent placements
Revenue from permanent placements, which is based on a
percentage of the candidate's remuneration package, is recognised
when candidates commence employment which is the point at which the
performance obligation of the contract is considered met. Some
permanent placements are subject to a 'claw-back' period whereby if
a candidate leaves within a set period of starting employment, the
customer is entitled to a rebate subject to the Group's terms and
conditions. Provisions as a reduction to revenue are recognised for
such arrangements if material. In addition, a number of contractual
rebate arrangements are in place in respect of volume and value of
sales; these are accounted for as variable consideration reducing
revenue and estimated in line with IFRS 15.
Other
Other revenue streams are generated from provision of
engineering services and other fees. Revenue from the provision of
engineering services is recognised either over a period of time
when the performance obligations are satisfied over the course of
project milestones or at a point in time upon receipt of
client-approved timesheets. Other fees mainly relate to relate to
account management fees for providing recruitment services. Revenue
from other fees is recognised on confirmation from the client
committing to the agreement and either at a point in time or over
time in accordance with terms of each individual agreement as
performance obligations are met
1.7 Government grants
Government grants are assistance by government in the form of
transfers of resources to an entity in return for past or future
compliance with certain conditions relating to operating
activities.
Government grants are recognised when there is a reasonable
assurance that the Group will comply with the conditions attached
to it and that the grant will be received. They are recognised in
the consolidated Income Statement on a systematic basis over the
periods in which the related costs that they compensate are
recognised as expenses.
Grants are either presented as grant income or deducted in
reporting the related expense they compensate in the Income
Statement.
1.8 Non-underlying items
Non-underlying items are income or expenditure that are
considered unusual and separate to underlying trading results
because of their size, nature or incidence and are presented within
the consolidated Income Statement but highlighted through separate
disclosure. The Group's Directors consider that these items should
be separately identified within the income statement to enable a
proper understanding of the Group's business performance.
Items which are included within this category include but are
not limited to:
-- costs of acquisitions;
-- integration costs following acquisitions; and
-- material restructuring costs including related professional
fees and staff costs.
In addition, the Group also excludes from underlying results
amortisation and impairment of goodwill and acquired intangibles,
impairment of leased right-of-use assets and net foreign exchange
gains or losses.
Specific adjusting items are included as non-underlying based on
the following rationale:
Does not
reflect in-year
Distorting operational
due to irregular Distorting performance
nature year due to fluctuating of continuing
Item on year nature (size) business
========================================= ================== ==================== =================
Costs of acquisitions ü ü ü
Integration costs following acquisitions ü ü
Material restructuring costs ü ü
Amortisation and impairment of goodwill ü ü ü
and acquired intangibles
Impairment of leased right-of-use ü ü ü
assets
Net foreign exchange gains and losses ü ü
Tax impact of the above ü ü ü
========================================= ================== ==================== =================
1.9 Property, plant and equipment
Property, plant and equipment is stated at cost, net of
depreciation and any provision for impairment.
Depreciation is calculated so as to write off the cost of an
asset, less its estimated residual value, over the useful economic
life of that asset in terms of annual depreciation as follows:
Motor vehicles 25.0% Reducing balance
Fixtures, fittings and 12.5% to 33.3% Straight line
equipment
Leasehold improvements Over the period of the Straight line
lease term
The assets' residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period.
An asset's carrying amount is written down immediately to its
recoverable amount if the asset's carrying amount is greater than
its estimated recoverable amount.
When revalued assets are sold, the amounts included in other
reserves in respect of those assets are transferred to retained
earnings.
1.10 Goodwill
Goodwill arises on the acquisition of subsidiaries and
represents the excess of the fair value of the consideration given
for a business over the Company's interest in the fair value of the
net identifiable assets, liabilities and contingent liabilities of
the acquiree. Goodwill is stated at cost less accumulated
impairment.
Goodwill impairment reviews are undertaken annually, or more
frequently if events or changes in circumstances indicate a
potential impairment. Goodwill is allocated to cash-generating
units, being the lowest level at which goodwill is monitored. The
carrying value of the assets of the cash-generating unit, including
goodwill, intangible and tangible assets and working capital
balances, is compared to its recoverable amount, which is the
higher of value in use and fair value less costs to sell. Any
excess in carrying value over recoverable amount is recognised
immediately as an impairment expense and is not subsequently
reversed. Gains and losses on the disposal of an entity include the
carrying amount of goodwill relating to the entity sold.
1.11 Intangible assets
Customer relationships
Customer relationships comprise principally of existing customer
relationships which may give rise to future orders (customer
relationships), and existing order books. They are recognised at
fair value at the acquisition date, and subsequently measured at
cost less accumulated amortisation and impairment. Customer
relationships are determined to have a useful life of ten years and
are amortised on a straight-line basis.
Trade names and trademarks
Trade names and trademarks have either arisen on the
consolidation of acquired businesses or have been separately
purchased and are recognised at fair value at the acquisition date.
They are subsequently measured at cost less accumulated
amortisation and impairment. Trade names and trademarks are
determined to have a useful life of ten years and are amortised on
a straight-line basis.
Software and software licences
Acquired computer software licences are capitalised on the basis
of the costs incurred to acquire and bring into use the specific
software. These costs are amortised using the straight-line method
to allocate the cost of the software licences over their useful
lives of between two and five years. Subsequent licence renewals
are expensed to profit or loss as incurred. Software licences are
stated at cost less accumulated amortisation and impairment.
Internally generated intangible assets
Development costs that are directly attributable to the design
and testing of identifiable and unique software products are
capitalised as part of internally generated software and include
employee costs and professional fees attributable to the
development of the asset. Other expenditure that does not meet
these criteria is recognised as an expense to profit or loss as
incurred. Software development costs recognised as assets are
amortised on a straight-line basis over their estimated useful
lives of between two and ten years.
Expenditure on internally generated brands and other intangible
assets is expensed to profit or loss as incurred.
Other
Other intangible assets acquired by the Group have a finite
useful life between five and ten years and are measured at cost
less accumulated amortisation and accumulated losses.
Amortisation of intangible assets and impairment losses are
recognised in profit or loss within administrative expenses.
Intangible assets are tested for impairment either as part of a
goodwill-carrying cash-generated unit, or when events arise that
indicate an impairment may be triggered. Provision is made against
the carrying value of an intangible asset where an impairment is
deemed to have occurred. Impairment losses on intangible assets are
recognised in the income statement under administrative
expenses.
1.12 Disposal of assets
The gain or loss arising on the disposal of an asset is
determined as the difference between the disposal proceeds and the
carrying amount of the asset and is recognised in the income
statement at the time of disposal.
1.13 Leases
The Group has applied IFRS 16 using the modified retrospective
approach and therefore the comparative information has not been
restated and continues to be reported under IAS17 and IFRIC 14.
The Group leases office property, motor vehicles and equipment.
Rental contracts range from monthly to eight years.
At inception of a contract, the Group assesses whether a
contract is, or contains, a lease. A contract is, or contains, a
lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for
consideration. Contracts may contain both lease and non-lease
components, and consideration is allocated in the contract to the
lease and non-lease components based on their relative stand-alone
prices.
Assets and liabilities arising from a lease are initially
measured on a present value basis at the lease commencement date.
Lease liabilities include the net present value of the fixed
payments less any lease incentives receivable, variable lease
payments that are based on an index or a rate, amounts expected to
be payable by the group under residual value guarantees, the
exercise price of any purchase option if the Group is reasonably
certain to exercise that option, and payments of penalties for
terminating the lease if that option is expected to be taken.
Lease payments to be made under reasonably certain extension
options are also included in the measurement of the liability.
Lease payments are discounted at either the interest rate
implicit in the lease or when this interest rate cannot be readily
determined, the Group's incremental borrowing rate associated with
a similar asset. When calculating lease liabilities, the Group uses
its incremental borrowing rate, being the rate it would have to pay
to borrow the funds necessary to obtain an asset of similar value
in a similar economic climate with similar terms, security and
conditions. This is estimated using publicly available data
adjusted for changes specific to the lease in financing conditions,
lease term, country and currency.
The Group does not have leases with variable lease payments
based on an index or rate.
Extension or termination options are included in a number of the
Group's leases. In determining the lease term, the Group considers
all facts and circumstances that create an economic incentive to
exercise, or not to exercise, an option. Extension options are only
included in the lease term if the lease is reasonably certain to be
extended. The lease term is reassessed if an option is actually
exercised or the Group becomes obliged to exercise (or not to
exercise) it. The assessment of reasonable certainty is only
revised if a significant event or a significant change in
circumstances occurs that is within the control of the Group.
Lease payments are allocated between principal and finance cost.
The finance cost is charged to profit or loss over the lease period
so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period.
Right-of-use assets are measured at cost comprising the
following:
-- the amount of the initial measurement of lease liability,
-- any lease payments made at or before the commencement date
less any lease incentives received,
-- any initial direct costs, and
-- restoration costs.
Right-of-use assets are depreciated on a straight-line basis
over the term of the lease with depreciation expense recognised in
the income statement.
Lease modifications are a change in scope of a lease that was
not part of the original lease. Any change that is triggered by a
clause already part of the original lease contract is a
re-assessment and not a modification. Changes to lease cash flows
as part of a re-assessment result in a re-measurement of the lease
liability using an updated discount rate and a corresponding
adjustment to the carrying value of the right-of-use asset.
Advantage has been taken of the practical expedients for
exemptions provided for leases with less than 12 months to run, for
leases of low value, to account for leases with similar
characteristics as a portfolio with a single discount rate and to
present existing onerous lease provisions against the carrying
value of right-of-use assets. Payments associated with short-term
leases and leases of low value are recognised on a straight-line
basis as an expense in profit or loss.
1.14 Taxation
The tax expense for the year comprises current and deferred tax.
Tax is recognised in the Income Statement, except to the extent
that it relates to items recognised in other comprehensive income
or directly in equity. In this case, the tax is also recognised in
other comprehensive income or directly in equity, respectively.
The current tax charge is calculated on the basis of the tax
laws enacted or substantively enacted at the statement of financial
position date in the countries where the Company and its
subsidiaries operate and generate taxable income. Management
periodically evaluates positions taken in tax returns with respect
to situations in which applicable tax regulation is subject to
interpretation. It establishes provisions, where appropriate, on
the basis of amounts expected to be paid to the tax
authorities.
Deferred income taxes are calculated using the liability method
on temporary differences. Deferred tax is generally provided on the
difference between the carrying amounts of assets and liabilities
and their tax bases. However, deferred tax is not provided on the
initial recognition of goodwill, nor on the initial recognition of
an asset or liability unless the related transaction is a business
combination or affects tax or accounting profit.
Deferred tax liabilities are provided in full, with no
discounting. Deferred tax assets are recognised to the extent that
it is probable that the underlying deductible temporary differences
will be able to be offset against future taxable income. Current
and deferred tax assets and liabilities are calculated at tax rates
that are expected to apply to their respective period of
realisation, provided they are enacted or substantively enacted at
the Statement of Financial Position date.
Deferred tax on temporary differences associated with shares in
subsidiaries is not provided for if these temporary differences can
be controlled by the Group and it is probable that reversal will
not occur in the foreseeable future.
Deferred tax assets and liabilities are offset only where there
is a legally enforceable right to the offset and there is an
intention to settle balances on a net basis.
Changes in deferred tax assets or liabilities are recognised as
a component of tax expense in the Income Statement, except where
they relate to items that are charged or credited directly to
equity (such as share-based payments) in which case the related
deferred tax is also charged or credited directly to equity.
1.15 Pension costs
The Group operates a number of country-specific defined
contribution plans for its employees. A defined contribution plan
is a pension plan under which the Group pays fixed contributions
into a separate entity. Once the contributions have been paid the
Group has no further payment obligations. The contributions are
recognised as an expense when they are due. Amounts not paid are
shown in other creditors in the Statement of Financial Position.
The assets of the plan are held separately from the Group in
independently administered funds.
1.16 Share-based payments
All share-based remuneration is ultimately recognised as an
expense in the Income Statement with a corresponding credit to the
share-based payment reserve. All goods and services received in
exchange for the grant of any share-based remuneration are measured
at their fair values. Fair values of employee services are
indirectly determined by reference to the fair value of the share
options awarded. Their value is appraised at the grant date and
excludes the impact of non-market vesting conditions (for example,
profitability and sales growth targets).
If vesting periods or other non-market vesting conditions apply,
the expense is allocated over the vesting period, based on the best
available estimate of the number of share options expected to vest.
Estimates are subsequently revised if there is any indication that
the number of share options expected to vest differs from previous
estimates. Any cumulative adjustment prior to vesting is recognised
in the current period. No adjustment is made to any expense
recognised in prior periods if share options ultimately exercised
are different to that estimated on vesting. Upon exercise of share
options, proceeds received net of attributable transaction costs
are credited to share capital and share premium.
The Company is the granting and settling entity in the Group
share-based payment arrangement where share options are granted to
employees of its subsidiary companies. The Company recognises the
share-based payment expense as an increase in the investment in
subsidiary undertakings.
The Group operates two long-term incentive share option plans.
The Zero Priced Share Option Bonus covers all share options issued
with an exercise price of GBP0.01; the Long-Term Incentive Plan
Options have an exercise price above GBP0.01. Grants under both
categories have been made as part of a CSOP scheme, depending on
the terms of specific grants.
The Group also operates a Share Incentive Plan ('SIP'), the
Gattaca plc Share Incentive Plan ('The Plan'), which is approved by
HMRC. The Plan is held by Gattaca plc UK Employee Benefit Trust
('the EBT'), the purpose of which is to enable employees to
purchase Company shares out of pre-tax salary. For each share
purchased the Group grants an additional share at no cost to the
employee. The expense in relation to these 'free' shares is
recorded as employee remuneration and measured at fair value of the
shares issued as at the date of grant. The assets and liabilities
of the EBT are included in the Gattaca Plc Consolidated Statement
of Financial Position.
1.17 Financial instruments
Financial assets
IFRS 9 contains a classification and measurement approach for
financial assets that reflects the business model in which assets
are managed and their cash flow characteristics. Under IFRS 9, all
financial assets are measured at either amortised cost, fair value
through profit and loss ('FVTPL') or fair value through other
comprehensive income ('FVOCI').
Financial assets: debt instruments
The Group classifies its debt instruments in the following
measurement categories depending on the Group's business model for
managing the asset and the cash flow characteristics of the
asset:
(i) those to be measured subsequently at fair value through
other comprehensive income (OCI): Assets that are held for
collection of contractual cash flows and for selling the financial
assets, where the assets' cash flows represent solely payments of
principal and interest, are measured at FVOCI. Movements in the
carrying amount are taken through OCI, except for the recognition
of impairment gains or losses, interest revenue and foreign
exchange gains and losses which are recognised in profit or loss.
When the financial asset is derecognised, the cumulative gain or
loss previously recognised in OCI is reclassified from equity to
profit or loss and recognised in other gains/ (losses). Interest
income from these financial assets is included in finance income
using the effective interest rate method. Foreign exchange gains
and losses are presented in other gains/ (losses) and impairment
expenses are presented as separate line item in the Income
Statement.
(ii) those to be measured subsequently at FVTPL: Assets that do
not meet the criteria for amortised cost or FVOCI are measured at
FVTPL. A gain or loss on a debt investment that is subsequently
measured at FVTPL is recognised in profit or loss and presented net
within other gains/ (losses) in the year in which it arises.
(iii) those to be measured subsequently at amortised cost:
Assets that are held for collection of contractual cash flows where
those cash flows represent solely payments of principal and
interest are measured at amortised cost. Interest income from these
financial assets is included in finance income using the effective
interest rate method. Any gain or loss arising on derecognition is
recognised directly in profit or loss and presented in other gains/
(losses), together with foreign exchange gains and losses.
Impairment losses are presented as a separate line item in the
Income Statement.
The Group reclassifies debt investments when and only when its
business model for managing those assets changes.
Financial assets: equity instruments
The Group subsequently measures all equity investments at fair
value. Where the Group's management has elected to present fair
value gains and losses on equity investments in OCI, there is no
subsequent reclassification of fair value gains and losses to
profit or loss following the derecognition of the investment.
Dividends from such investments continue to be recognised in profit
or loss as other income when the Group's right to receive payments
is established.
Impairment losses (and reversal of impairment losses) on equity
investments measured at FVOCI are not reported separately from
other changes in fair value.
Impairment of financial assets
IFRS 9 require the application of the 'Expected Credit Loss'
model ('ECL'). This applies to all financial assets measured at
amortised cost or FVOCI, except equity investments.
The Group assesses on a forward looking basis the expected
credit losses associated with its debt instruments carried at
amortised cost and FVOCI.
The Group has reviewed each category of its financial assets to
assess the level of credit risk and ECL provision to apply:
-- Trade receivables: the Group has chosen to take advantage of the
practical expedient in IFRS 9 when assessing default rates over
its portfolio of trade receivables, to estimate the ECL based on
historical default rates specific to groups of customers by industry
and geography that carry similar credit risks. Separate ECL's have
been modelled for UK customers in different industries, and customers
in the Americas, Europe, Asia and Africa.
-- Accrued income is in respect of temporary placements where a client-approved
timesheet has been received or permanent placements where a candidate
has commenced employment, but no invoice has been raised. Default
rates have been determined by reference to historical data.
-- Cash and cash equivalents are held with established financial institutions.
The Group has determined that based on the external credit ratings
of counterparties, this financial asset has a very low credit risk
and that the estimated expected credit loss provision is not material.
At each reporting date, the expected credit loss provision will
be reviewed to reflect changes in credit risk and historical
default rates and other economic factors. Changes in the ECL
provision are recognised in profit or loss.
Financial liabilities
Financial liabilities are obligations to pay cash or other
financial assets and are recognised when the Group becomes a party
to the contractual provisions of the instrument and comprise trade
and other payables and bank loans. Financial liabilities are
recorded initially at fair value, net of direct issue costs and are
subsequently measured at amortised cost using the effective
interest rate method.
A financial liability is derecognised only when the obligation
is extinguished, that is, when the obligation is discharged,
cancelled or expires.
Non-recourse receivables factoring is not recognised as a
financial liability as there is no contractual obligation to
deliver cash; subsequently, the receivables are de-recognised and
any difference between the receivable value and amount received
through non-recourse factoring is recognised as a finance cost.
1.18 Cash and cash equivalents
In the Consolidated Cash Flow Statement, cash and cash
equivalents include cash in hand, deposits held at call with banks,
other short-term highly liquid investments with original maturities
of three months or less and bank overdrafts. In the Statement of
Financial Position and Cash Flow Statement, bank overdrafts are
netted against cash and cash equivalents where the offsetting
criteria are met.
Cash in transit inbound from, or outbound to, a third party is
recognised when the transaction is no longer reversible by the
party making the payment. This is determined to be in respect of
all electronic payments and receipt transactions that commence
before or on the reporting date and complete within one business
day after the reporting date.
Restricted cash and cash equivalent balances are those which
meet the definition of cash and cash equivalents but are not
available for wider use by the Group. These balances arise from the
Group's non-recourse working capital arrangements.
1.19 Provisions
Provisions are recognised where the Group has a present legal or
constructive obligation as a result of past events; it is probable
that an outflow of resources will be required to settle the
obligation; and the amount has been reliably estimated. Provisions
are not recognised for future operating losses.
1.20 Dividends
Dividend distributions payable to equity shareholders are
included in 'other short term financial liabilities' when the
dividends are approved in general meeting prior to the financial
position date.
1.21 Foreign currencies
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 each entity operates ('the functional
currency'). The consolidated Financial Statements are presented in
'currency' (GBP), which is the Group's presentation currency.
Transactions in foreign currencies are translated at the
exchange rate ruling at the date of the transaction. Monetary
assets and liabilities in foreign currencies are translated at the
rates of exchange ruling at the Statement of Financial Position
date. Non-monetary items that are measured at historical cost in a
foreign currency are translated at the exchange rate at the date of
the transaction. Non-monetary items that are measured at fair value
in a foreign currency are translated using the exchange rates at
the date when the fair value was determined. Income and expenses
are translated at the actual rate.
Any exchange differences arising on the settlement of monetary
items or on translating monetary items at rates different from
those at which they were initially recorded are recognised in the
Income Statement in the year in which they arise.
The assets and liabilities in the Financial Statements of
foreign subsidiaries are translated at the rate of exchange ruling
at the Statement of Financial Position date.
The individual Financial Statements of each Group company are
presented in its functional currency. On consolidation, the assets
and liabilities of overseas subsidiaries, including any related
goodwill, are translated to Sterling at the rate of exchange at the
balance sheet date. The results and cash flows of overseas
subsidiaries are translated to Sterling using the average rates of
exchange during the period. Exchange adjustments arising from the
re-translations of the opening net investment and the results for
the period to the period end rate are accounted for in the
translation reserve in the statement of Comprehensive Income. On
divestment, these exchange differences are reclassified from the
translation reserve to the Income Statement.
1.22 Equity
Equity comprises the following:
-- 'Share capital' represents the nominal value of equity shares;
-- 'Share premium' represents the excess over nominal value of
the fair value of consideration received for equity shares,
net of expenses of the share issue;
-- 'Merger reserve' represents the equity balance arising on the
merger of Matchtech Engineering and Matchmaker Personnel and
to record the excess fair value above the nominal value of
the share consideration on the acquisition of Networkers International
plc;
-- 'Share-based payment reserve' represents equity-settled share-based
employee remuneration until such share options are exercised
or lapse;
-- 'Translation reserve' represents the foreign currency differences
arising on translating foreign operations into the presentational
currency of the Group;
-- 'Treasury shares reserve' represents Company shares purchased
directly by the Group to satisfy obligations under the employee
share plan;
-- 'Retained earnings' represents retained profits.
1.23 Critical accounting judgements and key sources of
estimation uncertainty
Critical accounting judgements
The Directors are of the opinion there are no critical
accounting judgements.
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources
of estimation uncertainty at the Statement of Financial Position
date that carry a risk of causing a material adjustment within the
next 12 months are discussed below:
ECL provisions in respect of trade receivables
The Group's policy for default risk over receivables is based on
the on-going evaluation of the credit risk of its trade
receivables. Estimation is used in assessing the ultimate
realisation of these receivables, including reviewing the potential
likelihood of default, the past collection history of each
customer, any insurance coverage in place and the current economic
conditions. As a result, expected credit loss provisions for
impairment of trade receivables have been recognised, as discussed
in Note 8. The impact of COVID-19 has been incorporated into these
estimates.
Valuation of goodwill and intangible assets
Goodwill and intangible assets (including acquired intangibles)
are tested for impairment on an annual basis or otherwise when
changes in events or situations indicate that the carrying value
may not be recoverable. This requires an estimate to be made of the
recoverable amount of the cash-generating unit to which the assets
are allocated, including forecasting future cash flows of each
cash-generating unit and forming assumptions over the discount rate
and long-term growth rate applied. The impact of COVID-19 has been
reflected in the forecast future cash flows.
2 Segmental information
An operating segment, as defined by IFRS 8 'Operating segments',
is a component of the Group that engages in business activities
from which it may earn revenues and incur expenses. The Group is
managed through its three reporting segments, UK Engineering, UK
Technology and International, which form the operating segments on
which the information below is prepared. The Group determines and
presents operating segments based on the information that is
provided internally to the chief operating decision maker, which
has been identified as the Board of Directors of Gattaca plc.
6 months to 31 January
2021 unaudited
All amounts in UK UK International Continuing Non-underlying Discontinued Group
GBP'000 Engineering Technology underlying items operations Total
operations
================ ============ =========== ============== ============ =============== ============= =========
Revenue 120,676 78,589 7,269 206,534 - (53) 206,481
Gross profit 13,555 5,109 2,452 21,116 - (60) 21,056
Operating
contribution 6,981 1,910 782 9,673 - (11) 9,662
Depreciation,
impairment
and
amortisation (625) (383) (183) (1,191) (193) - (1,384)
Central
overheads (4,882) (1,381) (1,447) (7,710) 197 (132) (7,645)
================ ============ =========== ============== ============ =============== ============= =========
Profit/ (loss)
from
operations 1,474 146 (848) 772 4 (143) 633
Finance
(cost)/income,
net (330) (340) 108 (562)
================ ============ =========== ============== ============ =============== ============= =========
Profit/ (loss)
before tax 442 (336) (35) 71
================ ============ =========== ============== ============ =============== ============= =========
The continuing non-underlying costs in H1 2021 of GBP197,000 were credits
related to the group restructuring completed in October 2020 as a result
of lower than anticipated staff exit costs.
6 months to 31 January 2020
unaudited/restated
(1)
z
All amounts in UK UK International Continuing Non-underlying Discontinued Group
GBP'000 Engineering Technology underlying items operations Total
operations
================ ============ =========== ============== ============ =============== ============= =========
Revenue 193,703 94,375 9,473 297,551 - 352 297,903
Gross profit 20,256 7,904 3,673 31,833 - 403 32,236
Operating
contribution 10,306 3,265 1,013 14,584 - (160) 14,424
Depreciation,
impairment
and
amortisation (1,194) (298) (48) (1,540) (313) (3) (1,856)
Central
overheads (5,775) (2,024) (1,100) (8,899) (148) (1,364) (10,411)
================ ============ =========== ============== ============ =============== ============= =========
Profit/ (loss)
from
operations 3,337 943 (135) 4,145 (461) (1,527) 2,157
Finance cost,
net (863) (1,463) (7) (2,333)
================ ============ =========== ============== ============ =============== ============= =========
Profit/ (loss)
before tax 3,282 (1,924) (1,534) (176)
================ ============ =========== ============== ============ =============== ============= =========
Year to 31 July 2020 restated
(1)
All amounts in UK UK International Continuing Non-underlying Discontinued Group
GBP'000 Engineering Technology underlying items operations Total
operations
================ ============ =========== ============== ============ =============== ============= =========
Revenue 347,173 173,648 17,830 538,651 - 339 538,990
Gross profit 34,177 13,602 6,497 54,276 - 391 54,667
Operating
contribution 20,913 7,061 1,300 29,274 - (740) 28,534
Depreciation,
impairment
and
amortisation (2,509) (628) (108) (3,245) (1,382) (11) (4,638)
Central
overheads (13,065) (4,773) (2,199) (20,037) (1,248) (1,949) (23,234)
================ ============ =========== ============== ============ =============== ============= =========
Profit/ (loss)
from
operations 5,339 1,660 (1,007) 5,992 (2,630) (2,700) 662
Finance
(cost)/income,
net (1,404) (521) 80 (1,845)
================ ============ =========== ============== ============ =============== ============= =========
Profit/ (loss)
before tax 4,588 (3,151) (2,620) (1,183)
================ ============ =========== ============== ============ =============== ============= =========
A segmental analysis of total assets has not been included as
this information is not available to the Board; the majority of
assets are centrally held and are not allocated across the
reportable segments
Geographical information
Total Group Revenue Non-current Assets
All amounts in GBP'000 6 months 6 months 12 months 6 months 6 months 12 months
to 31/01/21 to 31/01/20 to 31/07/20 to 31/01/21 to 31/01/20 to 31/07/20
========================== ============= ============= ============= ============= ============= =============
UK 197,038 285,066 515,869 20,764 23,407 21,051
Rest of Europe 1,621 1,810 3,469 1 3 1
Middle East and Africa 729 1,009 1,786 344 94 286
Americas 7,093 9,671 17,534 437 633 388
Asia Pacific - 347 332 - 9 -
========================== ============= ============= ============= ============= ============= =============
Total 206,481 297,903 538,990 21,546 24,146 21,726
========================== ============= ============= ============= ============= ============= =============
Revenue and non-current assets are allocated to the geographic
market based on the domicile of the respective subsidiary.
(1) Since 1 August 2020, Eng Tech has been reclassed from UK
Engineering segment to UK Technology segment. Therefore the July 20
and January 20 segmental disclosures have been restated to reflect
this change. In addition, China has been restated from
International to Discontinued in January 2020.
3 Revenue From Contracts With Customers
Revenue from contracts with customers is disaggregated by major
service line and operating segment, as well as timing of revenue
recognition as follows:
Major service lines - continuing underlying operations
UK Engineering UK Technology International Total
6 months to 31/01/21 GBP'000 GBP'000 GBP'000 GBP'000
====================== =============== ============== ============== ========
Temporary placements 116,736 77,542 5,721 199,999
Permanent placements 2,809 948 1,544 5,301
Other 1,131 99 4 1,234
Total 120,676 78,589 7,269 206,534
====================== =============== ============== ============== ========
UK Engineering UK Technology International Total
Restated 6 months to 31/01/20 GBP'000 GBP'000 GBP'000 GBP'000
(1)
=============================== =============== ============== ============== ========
Temporary placements 188,438 92,945 7,113 288,496
Permanent placements 5,246 1,428 2,360 9,034
Other 19 2 - 21
Total 193,703 94,375 9,473 297,551
=============================== =============== ============== ============== ========
UK Engineering UK Technology International Total
Restated 12 months to 31/07/20 GBP'000 GBP'000 GBP'000 GBP'000
(1)
================================ =============== ============== ============== ========
Temporary placements 339,004 171,150 13,678 523,832
Permanent placements 7,886 2,502 4,152 14,540
Other 283 (4) - 279
Total 347,173 173,648 17,830 538,651
================================ =============== ============== ============== ========
Timing of revenue recognition - continuing operations
UK Engineering UK Technology International Total
6 months to 31/01/21 GBP'000 GBP'000 GBP'000 GBP'000
====================== =============== ============== ============== ========
Point in time 119,563 78,589 7,269 205,421
Over time 1,113 - - 1,113
Total 120,676 78,589 7,269 206,534
====================== =============== ============== ============== ========
UK Engineering UK Technology International Total
Restated 6 months to 31/01/20 GBP'000 GBP'000 GBP'000 GBP'000
(1)
=============================== =============== ============== ============== ========
Point in time 193,703 94,375 9,473 297,551
Over time - - - -
Total 193,703 94,375 9,473 297,551
=============================== =============== ============== ============== ========
UK Engineering UK Technology International Total
Restated 12 months to 31/07/20 GBP'000 GBP'000 GBP'000 GBP'000
(1)
================================ =============== ============== ============== ========
Point in time 346,890 173,648 17,830 538,368
Over time 283 - - 283
Total 347,173 173,648 17,830 538,651
================================ =============== ============== ============== ========
No single customer contributed more than 10% of the Group's
revenues (2020: none). Revenue is recognised for each performance
obligation over time based on the proportion of cost incurred to
total forecast costs.
The Group has determined that its contract assets from contracts
with customers are trade receivables and accrued income, and its
contract liabilities are deferred income, which are set out
below:
6 months 6 months 12 months
to 31/01/21 to 31/01/20 to 31/07/20
unaudited unaudited
Total Total Total
GBP'000 GBP'000 GBP'000
============================ ============= ============= =============
Trade receivables (Note 8) 29,488 41,537 27,703
Accrued income (Note 8) 12,518 13,589 15,900
Deferred income (803) 82 (1,090)
============================ ============= ============= =============
Accrued income relates to the Group's right to consideration for
temporary and permanent placements made but not billed by the year
end. These transfer to trade receivables once billing occurs. All
accrued income at a given reporting date is billed within the
following financial year and is classified in current assets.
Deferred income at a given reporting date is recognised as revenue
in the following financial year once performance obligations are
satisfied and is classified in current liabilities.
((1)) Since 1 August 2020, Eng Tech has been reclassed from UK
Engineering segment to UK Technology segment. Therefore the July 20
and January 20 segmental disclosures have been restated to reflect
this change. In addition, China has been restated from
International to Discontinued in January 2020.
4 Government Grants
Grant income recognised from government grants recognised in
Cost of Sales and Administrative Expenses are as follows:
6 months 6 months 12 months
to 31/01/21 to 31/01/20 to 31/07/20
Continuing operations GBP'000 GBP'000 GBP'000
=================================================== ============= ============= =============
UK Government Coronavirus Job Retention
Scheme grant income recognised in Cost
of Sales for temporary workers 43 - 2,335
UK Government Coronavirus Job Retention
Scheme grant income recognised in Administrative
Expenses for employees 458 - 1,471
=================================================== ============= ============= =============
Total 501 - 3,806
=================================================== ============= ============= =============
As a response to the COVID-19 global pandemic, the Group made
use of the UK Government's Coronavirus Job Retention Scheme (6
months to 31 January 2021: claim period is from August 2020 to
November 2020, 12 months to 31 July 2020: claim period is from
April 2020 to July 2020). Under this scheme, Her Majesty's Revenue
& Customs (HMRC) provides UK companies with a non-refundable
grant equivalent to a portion of wages, National Insurance
contributions and pension contributions for employees and temporary
workers who are retained in employment but placed on furlough. From
1 August 2021 National Insurance contributions and pension
contributions are no longer eligible for claims. When considering
temporary workers, the contractors employed by Gattaca's clients
that Gattaca provides payroll services to and whose costs are
recognised as Cost of Sales by Gattaca, are also considered
eligible.
As the scheme is conditional upon the Group retaining its
employees in employment, or the temporary contract workers being
retained by their employers, whilst they are furloughed during the
COVID-19 pandemic, it is designed to compensate companies for staff
or temporary worker costs incurred. As all claims submitted for the
period have either been received or are expected to be receivable,
the Group considers the scheme meets the definition of a government
grant as set out in IAS 20 and has accounted for it as such. For
grants received or receivable for Gattaca's employees on furlough,
the Group has presented the grant income as a deduction to staff
costs presented in Administrative Expenses in the Income Statement;
for grants received or receivable for temporary contract workers of
Gattaca's clients on furlough, the Group has presented the grant
income as a deduction to Cost of Sales.
5 Taxation
6 months Restated 12 months
to 31/01/21 6 months to 31/07/20
(1)
to 31/01/20
unaudited unaudited
Total Total Total
Analysis of charge in the period for continuing GBP'000 GBP'000 GBP'000
operations
================================================= ============= ============= =============
Profit before tax for continuing operations 106 1,358 1,437
================================================= ============= ============= =============
Profit before tax multiplied by the standard
rate of corporate tax in the UK of
9% (31 January 2020: 18.3%, 31 July 2020:
19%) 20 249 273
Expenses not deductible for tax purposes
and goodwill impairment loss 3 242 21
Income not taxable - (56) -
Effect of share-based payments (4) 4 70
Irrecoverable withholding tax 1 31 42
Overseas losses not recognised as deferred
tax assets 19 113 610
Difference between UK and overseas tax
rates 1 30 (143)
Adjustment to tax charge in respect of
previous periods (2) 36 (7)
================================================= ============= ============= =============
Total taxation charge for the period
for continuing operations 38 649 866
================================================= ============= ============= =============
Total taxation credit for the period for
discontinued operations (5) (176) (268)
================================================= ============= ============= =============
6 Earnings Per Share
Earnings per share (EPS) has been calculated by dividing the
consolidated profit or loss after taxation attributable to ordinary
shareholders by the weighted average number of ordinary shares in
issue during the period.
Diluted earnings per share has been calculated on the same basis
as above, except that the weighted average number of ordinary
shares that would be issued on the conversion of all the dilutive
potential ordinary shares (arising from the Group's share option
schemes) into ordinary shares has been added to the denominator.
Share options are treated as dilutive when, at the reporting date,
they would be issuable had the performance year ended at that
date.
The Group has dilutive potential ordinary shares, being the LTIP
and Zero-priced share options. The number of shares that could have
been acquired at fair value (determined as the average annual
market share price of the Company's shares) is calculated based on
the monetary value of the subscription rights attached to the
outstanding share options.
The effect of potential ordinary shares are reflected in diluted
EPS only when they are dilutive. Potential ordinary shares are
considered dilutive when their inclusion in the calculation would
decrease EPS, or increase the loss per share from continuing
operations in accordance with IAS 33. This is regardless of whether
the potential ordinary shares are dilutive for EPS from total
operations. The effect of potential ordinary shares are considered
to be dilutive for year ended 31 July 2020, 6 months to 31 January
2020 and 6 months to 31 January 2021 and therefore have been
included in the calculation below. The diluted loss per share is
lower than basic loss per share because of the effect of losses
from discontinued operations.
There are no changes to the profit numerator as a result of the
dilution calculation.
The earnings per share information has been calculated as
follows:
6 months 6 months 12 months
to 31/01/21 to 31/01/20 to 31/07/20
unaudited unaudited
Total earnings GBP'000 GBP'000 GBP'000
======================================= ===================== ============= ============= =============
Total profit/(loss) attributable
to ordinary share holders 38 (649) (1,781)
============================================================== ============= ============= =============
Number of shares 000's 000's 000's
======================================= ===================== ============= ============= =============
Basic weighted average number
of ordinary shares in issue 32,290 32,285 32,285
Dilutive potential ordinary
shares 45 1,039 68
============================================================== ============= ============= =============
Diluted weighted average number
of shares 32,335 33,324 32,353
============================================================== ============= ============= =============
Total earnings per share pence pence pence
======================================= ===================== ============= ============= =============
Earnings per ordinary share * Basic 0.1 (2.0) (5.5)
=======================================
* Diluted 0.1 (1.9) (5.5)
============================================================= ============= ============= =============
6 months Restated 12 months
to 31/01/21 6 months to 31/07/20
(1)
to 31/01/20
Earnings for continuing operations GBP'000 GBP'000 GBP'000
======================================= ===================== ============= ============= =============
Total profit for period 68 709 571
============================================================== ============= ============= =============
6 months Restated 12 months
to 31/01/21 6 months to 31/07/20
(1)
to 31/01/20
Total earnings per share for pence pence pence
continuing operations
======================================= ===================== ============= ============= =============
Earnings per ordinary share
from continuing operations * Basic 0.2 2.2 1.8
=======================================
* Diluted 0.2 2.1 1.8
============================================================= ============= ============= =============
6 months Restated 12 months
to 31/01/21 6 months to 31/07/20
(1)
to 31/01/20
Earnings for discontinuing GBP'000 GBP'000 GBP'000
operations
======================================= ===================== ============= ============= =============
Total loss for the period (30) (1,358) (2,352)
============================================================== ============= ============= =============
6 months Restated 12 months
to 31/01/21 6 months to 31/07/20
(1)
to 31/01/20
Total earnings per share for pence pence pence
discontinuing operations
======================================= ===================== ============= ============= =============
Earnings per ordinary share
from discontinuing operations * Basic (0.1) (4.2) (7.3)
=======================================
* Diluted (0.1) (4.1) (7.3)
============================================================= ============= ============= =============
6 months Restated 12 months
to 31/01/21 6 months to 31/07/20
(1)
to 31/01/20
Earnings from continuing underlying GBP'000 GBP'000 GBP'000
operations
======================================= ===================== ============= ============= =============
Total profit for the period 349 2,383 3,317
============================================================== ============= ============= =============
6 months Restated 12 months
to 31/01/21 6 months to 31/07/20
(1)
to 31/01/20
Total earnings per share for pence pence pence
continuing underlying operations
======================================= ===================== ============= ============= =============
Earnings per ordinary share
for continuing underlying operations * Basic 1.1 7.4 10.3
* Diluted 1.1 7.2 10.3
============================================================= ============= ============= =============
(1) 6 months to January 2020 figures have been rested for the
presentation of discontinued operations following the announcement
of withdrawal from China on 9 March 2020.
7 Intangibles
Software
Customer Trade and software
Goodwill Relationships Names Other licenses Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
================= ================= ========= =============== ======== ======== ============== ========
At 1 August
Cost 2019 28,739 22,245 5,346 3,809 6,225 66,364
Additions - - - - 1,173 1,173
=================================== ========= =============== ======== ======== ============== ========
At 31 January
2020 28,739 22,245 5,346 3,809 7,398 67,537
=================================== ========= =============== ======== ======== ============== ========
At 1 August
2019 28,739 22,245 5,346 3,809 6,225 66,364
Additions - - - - 2,348 2,348
=================================== ========= =============== ======== ======== ============== ========
At 31 July
2020 28,739 22,245 5,346 3,809 8,573 68,712
=================================== ========= =============== ======== ======== ============== ========
Additions - - - - 937 937
=================================== ========= =============== ======== ======== ============== ========
At 31 January
2021 28,739 22,245 5,346 3,809 9,510 69,649
=================================== ========= =============== ======== ======== ============== ========
Amortisation At 1 August
and impairment 2019 24,382 19,924 4,951 3,289 2,067 54,613
Amortisation
for the period - 162 27 124 165 478
=================================== ========= =============== ======== ======== ============== ========
At 31 January
2020 24,382 20,086 4,978 3,413 2,232 55,091
=================================== ========= =============== ======== ======== ============== ========
At 1 August
2019 24,382 19,924 4,951 3,289 2,067 54,613
Amortisation
for the period - 325 53 238 272 888
Impairment - 281 53 - - 334
=================================== ========= =============== ======== ======== ============== ========
At 31 July
2020 24,382 20,530 5,057 3,527 2,339 55,835
=================================== ========= =============== ======== ======== ============== ========
Amortisation
for the period - 119 19 55 109 302
=================================== ========= =============== ======== ======== ============== ========
At 31 January
2021 24,382 20,649 5,076 3,582 2,448 56,137
=================================== ========= =============== ======== ======== ============== ========
Net book At 31 January
value 2020 4,357 2,159 368 396 5,166 12,446
At 31 July
2020 4,357 1,715 289 282 6,234 12,877
=================================== ========= =============== ======== ======== ============== ========
At 31 January
2021 4,357 1,596 270 227 7,062 13,512
=================================== ========= =============== ======== ======== ============== ========
Additions to software and licences during 2020 and 2021 are for
the development of the Group's primary business system assets.
8 Trade and Other Receivables
6 months 6 months 12 months
31/01/21 31/01/20 31/07/20
unaudited unaudited
GBP'000 GBP'000 GBP'000
======================================= ========== ========== ==========
Trade receivables from contracts with
customers, net of loss allowance 29,488 41,537 27,703
Corporation tax receivables 64 295 26
Other receivables 1,857 2,154 3,554
Prepayments 1,612 1,442 1,705
Accrued income 12,518 13,589 15,900
======================================= ========== ========== ==========
Total 45,539 59,017 48,888
======================================= ========== ========== ==========
Accrued income relates to the Group's right to consideration for
temporary and permanent placement made but not billed at the year
end. These transfer to trade receivables once billing occurs.
The Directors consider that the carrying amount of trade and
other receivables approximates to the fair value.
Impairment of trade receivables from contracts with
customers
6 months 6 months 12 months
31/01/21 31/01/20 31/07/20
unaudited unaudited
GBP'000 GBP'000 GBP'000
=========================================== ========== ========== ==========
Trade receivables from contracts with
customers, gross amounts 33,693 43,602 31,690
Loss allowance (4,205) (2,065) (3,987)
=========================================== ========== ========== ==========
Trade receivables from contracts with
customers, net of loss allowance 29,488 41,537 27,703
=========================================== ========== ========== ==========
Trade receivables are amounts due from customers for services
performed in the ordinary course of business. They are generally
settled within 30-60 days and are therefore all classified as
current.
The Group uses a third party credit scoring system to assess the
creditworthiness of potential new customers before accepting them.
Credit limits are defined by customer based on this information.
All customer accounts are subject to review on a regular basis by
senior management and actions are taken to address debt aging
issues.
Trade receivables are subject to the expected credit loss model.
The Group applies the IFRS 9 simplified approach to measuring
expected credit losses which uses a lifetime expected loss
allowance for all trade receivables.
To measure the expected credit losses, trade receivables have
been grouped based on shared credit risk characteristics by
geographical region or customer industry.
The expected loss rates are based on the payment profiles of
sales over a period of 36 months before the relevant period end and
the corresponding historical credit losses experienced within this
period. The historic loss rates are adjusted to reflect any
relevant current and forward-looking information expected to affect
the ability of customers to settle the receivables.
The loss allowance for trade receivables was determined as
follows:
31 January 2021 unaudited Current More than More than More than Total
30 days 60 days 90 days
past due past due due
============================== ======== ========== ========== ========== =======
Weighted expected loss
rate (%) 8.3% 6.1% 6.2% 57.6%
Gross carrying amount -
trade receivables (GBP'000) 19,424 9,554 1,384 3,331 33,693
Loss allowance (GBP'000) 1,621 581 86 1,917 4,205
============================== ======== ========== ========== ========== =======
31 January 2020 unaudited Current More than More than More than Total
30 days 60 days 90 days
past due past due due
============================== ======== ========== ========== ========== =======
Weighted expected loss
rate (%) 2.0% 1.0% 1.3% 45.7%
Gross carrying amount -
trade receivables (GBP'000) 23,893 12,755 3,897 3,057 43,602
Loss allowance (GBP'000) 487 129 52 1,397 2,065
============================== ======== ========== ========== ========== =======
31 July 2020 Current More than More than More than Total
30 days 60 days 90 days
past due past due due
============================== ======== ========== ========== ========== =======
Weighted expected loss
rate (%) 6.9% 8.8% 10.2% 91.1%
Gross carrying amount -
trade receivables (GBP'000) 19,079 8,941 1,788 1,882 31,690
Loss allowance (GBP'000) 1,307 783 183 1,714 3,987
============================== ======== ========== ========== ========== =======
The loss allowance for trade receivables at the period end
reconciles to the opening loss allowance as per below:
6 months 6 months 12 months
31/01/21 31/01/20 31/07/20
unaudited unaudited
GBP'000 GBP'000 GBP'000
============================================= ========== ========== ==========
Opening loss allowance for the period 3,987 2,189 2,189
Increase in loss allowance recognised
in profit and loss during the period 439 132 2,281
Receivable written off during the period
as uncollectable (221) (256) (483)
============================================= ========== ========== ==========
Closing loss allowance for the period 4,205 2,065 3,987
============================================= ========== ========== ==========
9 Loans and Borrowings
6 months 6 months 12 months
31/01/21 31/01/20 31/07/20
unaudited unaudited
GBP'000 GBP'000 GBP'000
========================================== ========== ============ ============
Working capital facility 4,338 12,729 151
Finance costs capitalised - - -
========================================== ========== ============ ============
Bank loans and borrowings due in less
than one year 4,338 12,729 151
========================================== ========== ============ ============
Term loan - 10,000 7,500
Finance costs capitalised - (304) (196)
========================================== ========== ============ ============
Bank loans and borrowings due in more
than one year - 9,696 7,304
========================================== ========== ============ ============
Total bank loans and borrowings 4,338 22,425 7,455
========================================== ========== ============ ============
In January 2020, the Group transferred a portion of its recourse
working capital facility to a non-recourse working capital
facility. Under the terms of the non-recourse facility, the trade
receivables assigned to the facility are owned by HSBC and so have
been de-recognised from the Group's Statement of Financial
Position; in addition, the non-recourse working capital facility
does not meet the definition of loans and borrowings under IFRS.
The Group continues to collect cash from trade receivables assigned
to the non-recourse facility on behalf of HSBC which is then
transferred to them periodically each month. Any cash collected
from trade receivables under the non-recourse facility at the end
of reporting period that had not been transferred to HSBC, is
presented as restricted cash included within the Group's cash
balance. At 31 July 2020, the Group had agreed banking facilities
with HSBC totalling GBP75m Invoice Financing working capital
facility (recourse and non-recourse).
The Group's working capital facilities are secured by way of an
all assets debenture, which contains fixed and floating charges
over the assets of the Group. This facility allows certain
companies within the Group to borrow up to 90% of invoiced or
uninvoiced trade receivables up to a maximum of GBP75m. Interest is
charged on the recourse borrowings at a rate of 1.85% (year to 31
July 2020: 1.75%) over HSBC Bank base rate.
The Group's GBP7.5m Revolving Credit Facility is secured by way
of a fixed and floating charge over assets of the Group. In October
2020, the Group repaid the GBP7.5m Revolving Credit Facility in
full and no longer is required to comply with certain financial
covenants over the Revolving Credit Facility.
10 Lease
The balance sheet shows the following amounts related to leases
where the Group is a lessee.
Right-of-use assets
Buildings Vehicles Other Total
GBP'000 GBP'000 GBP'000 GBP'000
=============== ================================== ============ =========== ========== ==========
Cost At 1 August 2019 9,335 336 17 9,688
Additions - 12 - 12
================================================== ============ =========== ========== ==========
At 31 January 2020 9,335 348 17 9,700
================================================== ============ =========== ========== ==========
At 1 August 2019 9,335 336 17 9,688
Reclassification of dilapidation
provision 1,535 - - 1,535
Additions 42 12 - 54
Effect of reassessment of lease
term (862) - - (862)
Effect of movement in exchange
rates (46) - (1) (47)
================================================== ============ =========== ========== ==========
At 31 July 2020 10,004 348 16 10,368
================================================== ============ =========== ========== ==========
Additions 305 - 5 310
Disposals (22) - - (22)
Effect of movement in exchange
rates 7 - 1 8
================================================== ============ =========== ========== ==========
At 31 January 2021 10,294 348 22 10,664
================================================== ============ =========== ========== ==========
Accumulated At 1 August 2019 - - - -
depreciation
Depreciation charge 834 86 4 924
================================================== ============ =========== ========== ==========
At 31 January 2020 834 86 4 924
================================================== ============ =========== ========== ==========
At 1 August 2019 - - - -
Reclassification of dilapidation
provision 576 - - 576
Depreciation charge 1,858 176 7 2,041
Impairment 432 - - 432
Effect of movement in exchange
rates (19) - - (19)
================================================== ============ =========== ========== ==========
At 31 July 2020 2,847 176 7 3,030
================================================== ============ =========== ========== ==========
Depreciation charge 866 83 4 953
Effect of movement in exchange
rates (1) - (1) (2)
================================================== ============ =========== ========== ==========
At 31 January 2021 3,712 259 10 3,981
================================================== ============ =========== ========== ==========
Net book
value At 31 January 2020 8,501 262 13 8,776
At 31 July 2020 7,157 172 9 7,338
At 31 January 2021 6,582 89 12 6,683
================================================== ============ =========== ========== ==========
At 1 August 2019, onerous lease provisions of GBP934,000
previously presented in non-current liabilities, were reclassified
against the cost of Property right-of-use assets, in line with the
practical expedient available on adoption of IFRS 16. At 31 July
2020, included within Property right-of-use assets is cost of
GBP1,577,000 and net book value of GBP802,000 relating to
dilapidation assets.
Properties Vehicles Other Total
unaudited unaudited unaudited 31 Jan-21
Lease liabilities GBP'000 GBP'000 GBP'000 GBP'000
=================== =========== ========== ========== ==========
Current 1,833 72 4 1,909
Non-current 5,030 20 6 5,056
=================== =========== ========== ========== ==========
6,863 92 10 6,965
=================== =========== ========== ========== ==========
Properties Vehicles Other Total
unaudited unaudited unaudited 31 Jan-20
Lease liabilities GBP'000 GBP'000 GBP'000 GBP'000
=================== =========== ========== ========== ==========
Current 1,894 171 1 2,066
Non-current 7,491 92 13 7,596
=================== =========== ========== ========== ==========
9,385 263 14 9,662
=================== =========== ========== ========== ==========
Total
Properties Vehicles Other 31 Jul-20
Lease liabilities GBP'000 GBP'000 GBP'000 GBP'000
=================== =========== ========== ========== ==========
Current 1,855 132 3 1,990
Non-current 5,696 44 6 5,746
=================== =========== ========== ========== ==========
7,551 176 9 7,736
=================== =========== ========== ========== ==========
Lease liabilities for properties have lease terms of between one
and eight years.
Reconciliation of lease liabilities Properties Vehicles Other Total
movement in the period
GBP'000 GBP'000 GBP'000 GBP'000
======================================= =========== ========= ======== ========
At 1 August 2019 10,260 347 17 10,624
Lease payments (987) (91) (4) (1,082)
Interest expense on lease liabilities 112 7 1 120
======================================= =========== ========= ======== ========
At 31 January 2020 9,385 263 14 9,662
======================================= =========== ========= ======== ========
At 1 August 2019 10,260 347 17 10,624
Lease payments (2,011) (183) (7) (2,201)
Interest expense on lease liabilities 201 12 1 214
Effect of reassessment of lease
term (862) - - (862)
Effect of movement in exchange
rates (37) - (2) (39)
======================================= =========== ========= ======== ========
At 31 July 2020 7,551 176 9 7,736
======================================= =========== ========= ======== ========
Additions 257 - 5 262
Lease payments (1,037) (87) (4) (1,128)
Interest expense on lease liabilities 79 3 - 82
Effect of movement in exchange
rates 13 - - 13
======================================= =========== ========= ======== ========
At 31 January 2021 6,863 92 10 6,965
======================================= =========== ========= ======== ========
11 Share capital
Authorised share capital
6 months 6 months 12 months
31/01/21 31/01/20 31/07/20
unaudited unaudited
GBP'000 GBP'000 GBP'000
======================================= ========== ========== ==========
40,000,000 ordinary shares of GBP0.01
each 400 400 400
======================================= ========== ========== ==========
6 months 6 months 12 months
31/01/21 31/01/20 31/07/20
Allotted, called up, and fully paid unaudited unaudited
GBP'000 GBP'000 GBP'000
======================================= ========== ========== ==========
Ordinary shares of GBP0.01 each 323 323 323
======================================= ========== ========== ==========
The movement in the number of shares in issue is shown
below:
'000
============================= =======
In issue at 1 August 2019 32,285
Exercise of share options 6
============================= =======
In issue at 31 January 2020 32,291
============================= =======
In issue at 1 August 2019 32,285
Exercise of share options 5
============================= =======
In issue at 31 July 2020 32,290
============================= =======
In issue at 1 August 2020 32,290
Exercise of share options -
============================= =======
In issue at 31 January 2021 32,290
============================= =======
12 Discontinued Operations
2021
NWKI Consultancy FZ LLC has been deregistered on 8 October
2020.
2020
On 9 March 2020, the Group commenced communications with the
management and employees of its Chinese subsidiary, announcing its
intention to cease its remaining operations in China, having
previously ceased all Telecoms Infrastructure business undertaken
by China already in 2019. As at 31 July 2020, all operations and
staff had been terminated and the Group continues to work with
in-country advisors to commence company closure proceedings. As
this has now resulted in the Group's withdrawal from all operations
in China, the Group has classified its Chinese operations as
discontinued in the consolidated finance statements for year ended
31 July 2020 and 6 months period ended in 31 January 2021 and
restated the comparative results for January 2020 in line with
presentational requirements for discontinued operations.
2019
On 4 September 2018 the Group announced that it was withdrawing
from the contract Telecoms Infrastructure markets in Africa, Asia
and Latin America as well as its operations in the United Arab
Emirates, Singapore, Malaysia and Qatar. As a result, all
operations associated with that business stream have been
classified as discontinued in the 2019 and 2020 financial year. As
part of this withdrawal, on 25 June 2019 NWKI Communications LLC
was sold for cash consideration of GBP2,000. The entity has net
liabilities on disposal of GBP48,000 resulting in a gain of
GBP46,000.
Gattaca de Colombia SAS, Comms Resources Colombia and Gattaca
France SAS were liquidated during the financial year ended 31 July
2019, resulting in a gain of GBP89,000. These entities made a
trading loss of GBP68,000 during financial year ended 31 July 2019.
The results of these liquidated business are included in
discontinued operations in 2019.
Cash flows from discontinued operations
6 months Restated 12 months
6 months 31/07/20
(1)
31/01/21 31/01/20
unaudited unaudited
GBP'000 GBP'000 GBP'000
============================================ ========== ========== ==========
Net cash outflow from operating activities (15) (1,177) (1,109)
Net cash inflow from investing activities - - 77
Net cash used in financing activities - (76) (76)
Effects of exchange rates on cash and
cash equivalents (44) 65 (56)
============================================ ========== ========== ==========
Net decrease in cash and cash equivalents
from discontinued operations (59) (1,188) (1,164)
============================================ ========== ========== ==========
(1) 6 months to January 2020 figures have been rested for the
presentation of discontinued operations following the announcement
of withdrawal from China on 9 March 2020.
13 Net Debt
Net debt is the total amount of cash and cash equivalents less
interest-bearing loans and borrowings, including finance lease
liabilities. The table below also provides the required
reconciliation evaluating the changes in liabilities arising from
financing activities.
Net cash flows include the net drawdown of loans and borrowings
and cash interest paid relating to loans and borrowings.
A reconciliation to Adjusted Net Debt, which excludes lease
liabilities and it the Group's preferred net debt measure is also
shown below.
1 August Net cash Non-cash 31 January
2020 flows movements 2021
31 January 2021 unaudited GBP'000 GBP'000 GBP'000 GBP'000
================================ ========= ========= =========== ===========
Cash and cash equivalents 34,796 (7,714) - 27,082
Interest-bearing term loan (7,500) 7,500 - -
Working capital facilities (151) (4,187) - (4,338)
Lease liabilities (7,736) 1,128 (357) (6,965)
================================ ========= ========= =========== ===========
Total net cash/(debt) 19,409 (3,273) (357) 15,779
================================ ========= ========= =========== ===========
Capitalised finance costs 196 - (196) -
================================ ========= ========= =========== ===========
Total net cash/(debt) after
capitalised finance costs 19,605 (3,273) (553) 15,779
================================ ========= ========= =========== ===========
Excluding lease liabilities 7,736 (1,128) 357 6,965
================================ ========= ========= =========== ===========
Adjusted total net cash/(debt)
excluding lease liabilities 27,341 (4,401) (196) 22,744
================================ ========= ========= =========== ===========
1 August Net cash Non-cash 31 January
2019 flows movements 2020
31 January 2020 unaudited restated GBP'000 GBP'000 GBP'000 GBP'000
(1)
==================================== ========= ========= =========== ===========
Cash and cash equivalents 19,173 177 - 19,350
Interest-bearing term loan (15,000) 5,000 - (10,000)
Working capital facilities (29,119) 16,390 - (12,729)
Lease liabilities (10,624) 1,082 (120) (9,662)
==================================== ========= ========= =========== ===========
Total net (debt)/cash (35,570) 22,649 (120) (13,041)
==================================== ========= ========= =========== ===========
Capitalised finance costs 124 222 (42) 304
==================================== ========= ========= =========== ===========
Total net (debt)/cash after
capitalised finance costs (35,446) 22,871 (162) (12,737)
==================================== ========= ========= =========== ===========
Excluding lease liabilities 10,624 (1,082) 120 9,662
==================================== ========= ========= =========== ===========
Adjusted total net (debt)/cash
excluding lease liabilities (24,822) 21,789 (42) (3,075)
==================================== ========= ========= =========== ===========
(1) The net debt table for 31 January 2020 has been restated to include the lease liabilities.
1 August Net cash Non-cash 31 July
2019 flows movements 2020
31 July 2020 GBP'000 GBP'000 GBP'000 GBP'000
================================ ========= ========= =========== ========
Cash and cash equivalents 19,173 15,623 - 34,796
Interest-bearing term loan (15,000) 7,500 - (7,500)
Working capital facilities (29,119) 28,968 - (151)
Lease liabilities (10,624) 2,201 687 (7,736)
================================ ========= ========= =========== ========
Total net (debt)/cash (35,570) 54,292 687 19,409
================================ ========= ========= =========== ========
Capitalised finance costs 124 223 (151) 196
================================ ========= ========= =========== ========
Total net (debt)/cash after
capitalised finance costs (35,446) 54,515 536 19,605
================================ ========= ========= =========== ========
Excluding lease liabilities 10,624 (2,201) (687) 7,736
================================ ========= ========= =========== ========
Adjusted total net (debt)/cash
excluding lease liabilities (24,822) 52,314 (151) 27,341
================================ ========= ========= =========== ========
14 Contingent Liabilities
We continue our cooperation with the United States Department of
Justice and in the 6 month period to 31 January 2021 have incurred
GBP28,700 (6 months to 31 January 2020: GBP1.3m, year to 31 July
2020: GBP1.4m) in advisory fees on this matter. The Group is not
currently in a position to know what the outcome of these enquiries
may be and therefore we are unable to quantify the likely outcome
for the Group.
15 Subsequent events after the reporting period end
There were no subsequent events following 31 January 2021.
16 Statement of Directors' Responsibilities
The Directors' confirm that these condensed interim Financial
Statements have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union and that the interim management report
includes a fair view of the information required by DTR 4.2.7 and
DTR 4.2.8, namely:
-- an indication of important events that have occurred during
the first six months and their impact on the condensed set
of Financial Statements, and a description of the principal
risks and uncertainties for the remaining six months of the
financial year; and
-- material related-party transactions in the first six months
and any material changes in the related-party transactions
described in the last annual report.
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END
IR URSBRANUOOAR
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