TIDMGATC
RNS Number : 6764G
Gattaca PLC
31 March 2022
31 March 2022
Gattaca plc
("Gattaca" or "the Group")
Interim Results for the six months ended 31 January 2022
Evolution of strategy
Gattaca plc ("Gattaca" or the "Group"), the specialist
Engineering and Technology staffing solutions business, today
announces its financial results for the six months ended 31 January
2022.
Financial Highlights
2022 H1 2021 H1 (restated)
(1)
========================= ================================= =========================
Continuing Continuing Continuing Continuing Continuing Continuing
reported underlying reported underlying reported underlying
(3)
=========== ============ =================== ============ =========== ============
GBPm GBPm GBPm GBPm % %
=========== ============ =================== ============ =========== ============
Revenue 202.2 202.2 204.8 204.8 -1% -1%
=========== ============ =================== ============ =========== ============
Net Fee Income
(NFI) (2) 21.6 21.6 20.5 20.5 5% 5%
=========== ============ =================== ============ =========== ============
EBITDA (1.2) 0.9 1.4 1.4 n/a -36%
=========== ============ =================== ============ =========== ============
Loss before tax (2.5) (0.3) (0.3) (0.0) n/a n/a
=========== ============ =================== ============ =========== ============
Loss after tax (2.4) (0.2) (0.2) 0.0 n/a n/a
=========== ============ =================== ============ =========== ============
Discontinued o
perations (0.6) n/a (0.2) n/a n/a n/a
=========== ============ =================== ============ =========== ============
Reported l oss
after t ax (3.1) n/a (0.4) n/a n/a n/a
=========== ============ =================== ============ =========== ============
Basic earnings
per share (7.5) (0.8) (0.7) 0.0
=========== ============ =================== ============ =========== ============
Diluted earnings
per share (7.5) (0.8) (0.7) 0.0
=========== ============ =================== ============ =========== ============
Interim dividend 0p n/a 0p n/a
=========== ============ =================== ============ =========== ============
Adjusted net cash GBP4.8m n/a GBP22.7m n/a
at end of period
(4)
=========== ============ =================== ============ =========== ============
Net (debt) / cash GBP(0.1)m n/a GBP15.8m n/a
=========== ============ =================== ============ =========== ============
Highlights
-- Group continuing underlying NFI of GBP21.6 million, up 5% year-on-year
UK NFI up 9% at GBP20.3 million (2021 H1: GBP18.6 million)
International NFI down 30%, driven by a decline in international
contract NFI. Most International regions are now predominantly
focused on the permanent market
Permanent NFI up 41% year-on-year, now representing 30% of
group NFI (2021 H1: 23%)
-- Investment in sales headcount continued, up 12% versus 31 July
2021
-- Group adjusted net cash (exc IFRS 16 lease liabilities) of GBP4.8
million (31 July 2021: GBP19.9 million), in the period the Group
repaid the final balance of GBP5.6m of deferred VAT. The Group
is covenant free.
-- No interim dividend (2021 H1: nil pence). The Board remains committed
to paying dividends when the Group returns to sustainable levels
of profitability.
-- Post period-end, Gattaca confirmed its Board succession plan
Kevin Freeguard, Chief Executive Officer, and Salar Farzad,
Chief Financial Officer, to step down from the Board at the
end of March 2022
Matt Wragg appointed to succeed Kevin as Chief Executive Officer
Oliver Whittaker appointed to succeed Salar as Chief Financial
Officer
Four priorities for new leadership
-- Increase external focus
-- Culture
-- Operational performance
-- Continued cost focus
Outlook
We are seeing encouraging trends across many of our sectors and
believe we are positioned to capture the opportunities that these
trends provide. The Group has now established its operating model,
fully integrated a new global technology platform, and
strategically invested in its sales headcount. With these critical
internal components now complete, Gattaca has the right
infrastructure and capabilities to capture the opportunities
presented across our markets.
Gattaca's challenge now is to capitalise on the actions already
taken and to take the necessary steps to position the Group for
growth in the medium to long term. We expect continuing underlying
profit before tax for its financial year ending 31 July 2022 to be
around breakeven as announced in January 2022. Looking to 2023 and
beyond, although the trajectory of the business has been slower
than previously anticipated we expect to see the benefits of our
investment in headcount and the technology platform begin to come
through, delivering a return to profitable and sustainable
long-term growth. This will continue to be supported by strong
market demand for STEM talent, which we believe will remain scarce
and in high demand.
Commenting on the results, Patrick Shanley, Chairman said:
"The first half of FY 2022 has been a period of mixed
performance for Gattaca. We see encouraging trends and positive
signs of growth across a number of our core markets however, our
contract business has taken longer to recover than expected which
is impacting the Group's performance.
To ensure we successfully capture the robust demand for STEM
skills across our markets, we plan to significantly increase our
external focus, particularly client acquisition and expansion, and
leverage our new operating model and technology platform to
increase efficiency and performance output.
Finally, on behalf of the entire Board, I would like to take the
opportunity to thank Kevin and Salar for their contribution over
the last 4/5 years and welcome Matt and Oliver who, following
careful succession planning, are well-prepared to lead us
forward."
Kevin Freeguard, Chief Executive Officer said:
"Following the significant improvement in capability made over
the last several years Gattaca is well positioned to take full
advantage of the strong demand for STEM talent. I am delighted that
we have developed our internal talent such that the Board has been
able to appoint internal candidates to succeed both myself and
Salar. I wish the Gattaca team every success for the future"
Matthew Wragg, incoming Chief Executive Officer said:
"Kevin and Salar have led us through some challenging times
while significantly reducing the Group's net debt, establishing our
new operating model, and overhauling our technology platforms.
Thanks to their contribution, we are now in a stronger position to
focus our energy once again on our STEM talent markets helping our
customers with their talent challenges during a period of
particularly high demand. It is against this backdrop that I am
optimistic for the future of the Group and excited for everyone in
the team."
The information contained within this announcement is deemed by
the Group 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. Results are restated following the April 2021 IFRS
Interpretations Committee agenda decision on cloud computing
arrangements, resulting in previously capitalised software assets
being expensed, and the results for the 6 months to January 2021
have been restated for the presentation of discontinued
operations
2. NFI is calculated as revenue less contractor payroll
costs
3. Continuing underlying results exclude the NFI and (losses)
before taxation of discontinued businesses predominantly being
operations in Mexico and South Africa (2022 H1: GBP(0.7)m, 2021 H1
: GBP(0.2)m), non-underlying items within administrative expenses
in 2021 primarily related to reversal of restructuring costs
provided for in prior year (2022 H1: GBP0.1m, 2021 H1 : GBP(0.2)m),
amortisation of acquired intangibles (2022 H1: GBP0.2m, 2021 H1 :
GBP0.2m), impairment of acquired intangibles (2022 H1: GBP2.0m,
2021 H1 : GBP0.0m), and exchange (losses) / gains from revaluation
of foreign assets and liabilities (2022 H1: GBP0.1m, 2021 H1 :
GBP(0.2)m).
4. Adjusted net cash is calculated as net cash excluding lease
liabilities, less any capitalised finance costs.
For further information please contact:
Gattaca plc +44 (0) 1489 898989
Matthew Wragg, Chief Executive Officer
designate
Oliver Whittaker, Chief Financial
Officer designate
Liberum Capital Limited (Nomad and
Broker) +44 (0) 20 3100 2000
Lauren Kettle
Robert Morton
Citigate Dewe Rogerson +44 (0) 20 7638 9571
Jos Bieneman
Lucy Eyles
Operational Review
The Group's trading performance in the first half of 2022 saw
the Group maintain year on year NFI growth of 5%, with the UK
operations achieving growth of 9%, driven by strong performance in
the permanent recruitment market. Group adjusted underlying loss
before tax was GBP0.3 million, driven by our mix of net fee income
growth offset by our ongoing investment in sales and fulfilment
headcount, which will mature into 2023 and beyond.
During H1 several key priority initiatives were progressed
across the Group. Gattaca's new global technology platform is now
integrated across the whole Group and we are starting to the
realise benefits of this single platform and the opportunities that
it presents. Furthermore we integrated a market leading AI sourcing
technology into our platform, enabling improved candidate
attraction and engagement. We also now have a comprehensive data
and MI platform working across the Group.
During the period, we continued to invest in our sales and
fulfilment teams. Headcount increased by 12% in sales and 29% in
fulfilment between July 2021 and January 2022, and Gattaca has
provided L&D investment to embed them into the Group.
Gattaca revisited its product offering, with a particular focus
on permanent packages of work to align with current market trends
and conditions.
In H1 2022 we launched the Group's refreshed Purpose, Vision,
Mission and Values to all of our staff, and have been focused on
ensuring that these values are part of our practices and processes
to ensure they become truly embedded in the organisation.
Also in the period, Gattaca established and communicated its ESG
ambitions, demonstrating the Group's commitment to sustainability.
These ambitions are:
-- Achieve net zero emissions by 2030
-- Ensure an equal gender balance in our management positions by
August 2026
-- To be in the top quartile for our employee engagement score by
2026
-- To positively impact 100,000 lives by 2025
Four priorities for new leadership
The new leadership team has identified four priority areas to
ensure the continued evolution of the Group's strategy. While there
has undoubtedly been important recent progress, Gattaca's challenge
now is to capitalise on the actions already taken and to take the
necessary steps to position the Group for growth in the medium to
long term.
There is a real opportunity to build on Gattaca's many great
strengths, the focus on in demand STEM skills; its core strength in
robust sectors; blue chip and long-standing client base; and the
strength of the balance sheet.
The priorities are:
-- Increase external focus
Leverage externally focused CEO; previously Chief Customer
Officer
Simplify the sales process
Invest in marketing to demonstrate key STEM skills messaging
Increase client acquisition and investment in client development
-- Culture
Bring through our next generation of leadership
Increase localised accountability
Embed purpose, vision, mission and values across the business
Increase staff engagement and participation
-- Operational performance
Realise operating model productivity
Increase efficiency and performance output
Leverage investment in technology to improve candidate attraction,
conversion and client experience
-- Continued cost focus
Rebalance the cost base: delayering infrastructure, estate,
and other third-party costs
Improve staff retention via culture, talent acquisition, learning
& development, performance management and leadership
Technology leveraged to automate process and enhance service
Operational review by sector
Net Fee Income (NFI) GBPm 2022 H1 2021 H1 (restated)(1) Change
Infrastructure 6.7 6.9 -2%
======== ====================== =======
Defence 3.2 2.9 10%
======== ====================== =======
Mobility 2.2 1.4 63%
======== ====================== =======
Technology, Media & Telecoms 2.2 1.9 18%
======== ====================== =======
Energy 1.8 2.1 -15%
======== ====================== =======
Other 4.1 3.5 18%
======== ====================== =======
Total UK 20.3 18.6 9%
======== ====================== =======
International 1.3 1.9 -30%
======== ====================== =======
Continuing Total Group
NFI 21.6 20.5 5%
======== ====================== =======
Infrastructure
Infrastructure NFI was down 2% year on year, partly impacted by
accounting related to the bankruptcy of one of our clients, NMCN,
and the loss of two significant clients. The Infrastructure market
for permanent recruitment is particularly strong, and we are
building our teams in this area to capitalise on this
opportunity.
UK Infrastructure demand has recovered to pre-Covid levels with
a shortage of skilled labour and increased requirement for
international attraction. The AMP and CP6 investment cycles in
water and rail have now moved into the build and construction
phases. Furthermore, nationwide investment in fibre and EV is
driving significant demand for skilled blue-collar workers in the
utilities market.
Defence
Defence was up 10% year-on-year, due to strong demand for
Technology skills and a strong Defence market including a well
performing large RPO deal.
While this sector tends to remain stable irrespective of
short-term economic fluctuations, demand for labour in the Defence
sector has increased 17.5%. Permanent recruitment has seen largest
demand, with some reduction of overall contractor workforce post
IR35 and Covid. Investment in the defence sector in both the UK and
US markets, creates an ongoing sustainable scale opportunity.
Gattaca is currently working with 68% of the Ministry of Defense
Top 100 suppliers, and is well placed to service both Technology
and Engineering staffing requirements, with an opportunity for
growth in Manufacturing and IT.
Mobility
Strong growth in Mobility NFI, of 63% year-on-year, was achieved
off a relatively small base following significant market impact
during the pandemic period. In Q4 2022, a significant contract is
due to expire which will impact 2023.
The Mobility market is attractive as industry rebuilds, with
permanent recruitment demand outstripping contract, as businesses
rehire having downsized during the pandemic and the associated
market downturn. Mobility market s upply chains have been impacted
by the pandemic, semi-conductor shortages and now the conflict in
Ukraine. The supply of t echnician skills remains tight, and we see
investment in new technology driving high demand especially across
EV and battery development
Technology, Media & Telecoms (TMT)
TMT has seen a strong return to growth in H1 2022 with NFI up
18% year-on-year. This has been driven by increased headcount and
strong demand for technology skills.
Recruitment demand is robust with all sectors investing in
technology skills. These skillsets typically have lower barriers
associated with fixed geographical location, offering the option of
remote working. There is a strong demand for permanent hires and,
notably, we increasingly see clients buying "packages" of hires
(versus one-off hires), which provide more scalable opportunities.
Demand for contract recruitment lags permanent hiring, but it is
climbing as the 'great resignation' slows. Skills associated with
the development of cloud and security, infrastructure, data, and
enterprise resource planning are particularly in-demand. The market
is candidate-driven, resulting in average salaries increasing and
clients increasingly offering fully remote working.
Energy
Energy NFI was down 15% year on year, primarily driven by the
loss of a significant client and reduced focus on high cost to
serve international markets. Project related and seasonal demand is
creating solid market opportunity for contract recruitment.
Investment is increasing across all sectors within Energy.
Gattaca well positioned to capture market opportunities in nuclear,
transmission and distribution, renewables and oil and gas markets.
In particular, demand is focused around skills in project
management, controls and design engineers driven by the investment
in programmes.
UK Other
NFI was up 18% year-on-year driven by strong performance from
Gattaca Projects, our statement of work brand and Barclay Meade,
our professional services brand.
The Projects business has continued to grow in 2022 with a wider
client base that has benefited from our experience in project
management and in-depth technical expertise.
Demand for professional skill sets across accounting and
finance, procurement, HR and sales has been particularly strong in
the permanent recruitment market and our professional services
brand has successfully captialised on this market opportunity. We
continue to see high levels of demand resulting in salary and rate
increases.
International
International NFI was down 30% year on year, as we have
repositioned our North American business away from Telco contract
recruitment and towards Engineering and Technology contingent and
RPO permanent opportunities which are trending positively.
In North America and Europe hiring demand is tracking similar to
UK, with our regions predominantly focused on the permanent
recruitment market in three of our eight sectors. Within North
America and Europe we have an opportunity for expansion leveraging
a stabilised and maturing operating model.
Group contractor and permanent fee mix
Contract fees accounted for 70% of continuing underlying NFI in
H1 2022 (2021 H1 restated: 77%). During the period, the contract
base was relatively flat with approximately 5,100 contractors.
Permanent fees accounted for 30% of continuing underlying NFI in
H1 2022 (2021 H1 restated: 23%). There was increased demand for
permanent hires in our contingent and solutions business across
almost all our market sectors. Our professional services brands,
Alderwood and Barclay Meade, saw particularly high demand during
the period as their market recovered strongly.
People
Gattaca's full time equivalent headcount at 31 January 2022 was
540, an increase of 103, or 24%, from 31 January 2021. This
increase was primarily due to growth in sales headcount where we
added 85 new heads. The ratio of sales to support staff was 73:27,
compared to a ratio of 71:29 at 31 January 2021.
Financial Overview
Revenue for the period was GBP202.2 million (2021 H1: GBP204.8
million), down 1% year-on-year on a continuing basis.
NFI of GBP21.6 million represented a 5% year-on-year increase on
a continuing basis. The Contract NFI margin of 7.8% (2021 H1
restated: 8.0%) was down 0.2 percentage points compared with the
prior year.
Continuing underlying loss before tax for the period amounted to
GBP0.3 million (2021 H1 restated: loss before tax GBP(0.0)
million). On a continuing underlying basis, the effective tax rate
was 5% (2021 H1 restated: 100%). The Group's continuing underlying
effective tax rate reported at 31 July 2021 was 7%.
Basic underlying earnings per share from continuing operations
were (0.8)pence (2021 H1 restated: 0.0pence) and adjusted
underlying diluted earnings per share from continuing operations
were (0.8)pence (2021 H1 restated: 0.0pence).
Administrative costs
Underlying administrative costs of GBP21.7 million (2021 H1
restated: GBP20.2 million) increased by 7.4% on the prior year
period, as we invested in our staff base through additional
headcount and reward. During the period, we received no payments
from the UK Government Job Retention Scheme, having ended the
Group's participation in the UK Government Job Retention Scheme in
October 2020.
A breakdown of the increase in administrative costs is shown
below:
GBPm
======
H1 2021 continuing underlying administrative costs
restated(1) 20.2
======
UK Sales staff investment 0.9
======
Commission, bonus & incentives 0.7
======
UK Group Support 0.2
======
Contractor cost write offs associated with client
bad debt 0.3
======
Legal and professional fees (0.2)
======
Reduction in bad debt charges (0.3)
======
Reduction in software cost (0.3)
======
Other admin costs 0.2
======
H1 2022 continuing underlying administrative costs 21.7
======
Non-underlying costs and discontinued operations
The continuing non-underlying costs in H1 2022 of GBP2.3 million
(2021 H1 restated: costs of GBP0.3 million), relates predominantly
to the impairment of goodwill held in relating to the
'Infrastructure - RSL Rail' CGU. Non-underlying costs in the
comparative period primarily related to unfavourable foreign
exchange movements.
In the 2021 full year accounts, Mexican and South African
operations were classified as discontinued. Loss before tax in H1
2022 for all discontinued operations was GBP0.7 million (2021 H1
restated: loss GBP0.2 million).
Financing costs
Net financing costs of GBP0.1 million (2021 H1: GBP0.6 million)
were GBP0.5 million lower due to a decrease in interest payable and
a GBP0.2 million 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 GBP0.3 million lower than the
comparative period, predominantly due to prior year capitalised
borrowing costs being written off on the repayment of the revolving
credit facility in October 2020.
Debtors, cash flow, net debt and financing
Net (debt) / cash at 31 January 2022 was GBP(0.1) million (31
July 2021: GBP14.1 million; 31 January 2021: GBP15.8 million),
while adjusted net cash (net cash excluding IFRS 16 lease
liabilities) was GBP4.8 million (31 July 2021: GBP19.9 million; 31
January 2021: GBP22.7 million) at the period end. The Group has now
repaid all deferred VAT to HMRC.
The Group's trade and other receivables balance was GBP63.7m at
31 January 2022 (31 July 2021: GBP64.1m), of which debtor and
accrued income balances were GBP59.7 million, a GBP1.2 million
reduction over the 6 month period from 31 July 2021. The Group's
days sales outstanding ('DSO') over this period (on a weekly based
countback method) increased by 11 days from 52 to 63 days.
Approximately 5 days of this increase is attributable to payment
process difficulties with one client which is expected to be
resolved in the near future. Whilst DSO position at 31 July 21 is
considered to have been near optimal levels, there is room for
improvement on the current DSO, and we remain focused on improving
our time to bill and time to collect.
Capital expenditure in the period amounted to GBP0.1 million
(2021 H1 restated: GBP0.3 million). Following the publication of
the IFRS Interpretations Committee's ('IFRIC') final agenda
decision on accounting for configuration and customisation costs in
a SaaS arrangement, including for cloud-based arrangements, the
Group has updated its accounting policy. This change in accounting
policy has been applied to all relevant capitalised intangible
asset costs held on the balance sheet, see note 1.24 in the
accompanying interim financial statements.
As at 31 January 2022, the Group had a working capital facility
of GBP75 million. This facility includes both recourse and
non-recourse elements. Under the terms of the non-recourse
facility, the trade receivables are assigned to, and owned by, HSBC
and so have been derecognised 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 utilisation of this facility at 31 January 2022 was
GBP8.9 million recourse and GBP10.4 million non-recourse.
Dividend
The Board is mindful of the importance of dividends to
shareholders. A dividend of 1.5 pence per share was paid in the
period in relation to the 2021 financial year. The Board has not
proposed an interim dividend for 2022. The Board remains committed
to paying dividends when the Group returns to sustainable levels of
profitability.
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 45 to 53 of the Annual Report
for the year ended 31 July 2021.
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
We are seeing encouraging trends across many of our sectors and
believe we are positioned to capture the opportunities that these
trends provide. The Group has now established its operating model,
fully integrated a new global technology platform, and
strategically invested in its sales headcount. With these critical
internal components now complete, Gattaca has the right
infrastructure and capabilities to capture the opportunities
presented across our markets.
Gattaca's challenge now is to capitalise on the actions already
taken and to take the necessary steps to position the Group for
growth in the medium to long term. We expect continuing underlying
profit before tax for its financial year ending 31 July 2022 to be
around breakeven as announced in January 2022. Looking to 2023 and
beyond, although the trajectory of the business has been slower
than previously anticipated we expect to see the benefits of our
investment in headcount and the technology platform begin to come
through, delivering a return to profitable and sustainable
long-term growth. This will continue to be supported by strong
market demand for STEM talent, which we believe will remain scarce
and in high demand.
Condensed Consolidated Income Statement
For the period ended 31 January 2022
Restated Restated
6 months 12 months
6 months (1) (2) to 31/07/21
to 31/01/22 to 31/01/21 (1)
unaudited unaudited
Note GBP'000 GBP'000 GBP'000
============================================== ===== ============= ============= =============
Continuing operations
Revenue 2 202,199 204,799 415,726
Cost of sales (180,593) (184,277) (373,646)
============================================== ===== ============= ============= =============
Gross profit 2 21,606 20,522 42,080
Administrative expenses (3) (24,068) (20,223) (40,188)
============================================== ===== ============= ============= =============
(Loss)/profit from continuing operations 2 (2,462) 299 1,892
Finance income 73 24 56
Finance cost (153) (633) (1,136)
============================================== ===== ============= ============= =============
(Loss)/profit before taxation (2,542) (310) 812
Taxation 5 120 93 (41)
---------------------------------------------- ----- ------------- ------------- -------------
(Loss)/profit after taxation from continuing
operations (2,422) (217) 771
============================================== ===== ============= ============= =============
Discontinued operations
Loss for the period from discontinued
operations (attributable to equity holders
of the Company) 12 (643) (194) (1,208)
============================================== ===== ============= ============= =============
Loss for the period (3,065) (411) (437)
============================================== ===== ============= ============= =============
(1) Results are restated following the April 2021 IFRS
Interpretations Committee agenda decision on cloud computing
arrangements, resulting in previously capitalised software assets
being expensed, as explained further in Note 1.24.
(2) Results for the 6 months to January 2021 have been restated
for the presentation of discontinued operations as explained in
Note 12.
(3) Administrative expenses from continuing operations includes
net impairment losses on trade receivables and accrued income of
GBP172,000 (6 months to 31 January 2021 restated: losses of
GBP477,000 and 12 months to 31 July 2021: losses of
GBP420,000).
Loss for the period for 31 January 2022, 31 January 2021 and the
year to 31 July 2021 are wholly attributable to equity holders of
the Parent.
Restated Restated
6 months 12 months
6 months (1) (2) (1)
to 31/01/22 to 31/01/21 to 31/07/21
unaudited unaudited
Earnings per ordinary share Note pence pence pence
============================= ===== ============= ============= =============
Basic earnings per share 6 (9.5) (1.3) (1.4)
Diluted earnings per share 6 (9.5) (1.3) (1.4)
============================= ===== ============= ============= =============
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.
Restated Restated
6 months 12 months
6 months (1) (2) (1)
to 31/01/22 to 31/01/21 to 31/07/21
unaudited unaudited
GBP'000 GBP'000 GBP'000
================================================ ======================= ============= ===================
(Loss)/profit from continuing operations (2,462) 299 1,892
Add
Depreciation of property, plant and equipment,
depreciation of leased right-of-use assets
and amortisation of software and software
licences 995 1,089 2,185
Non-underlying items included within
administrative expenses 90 (197) (193)
Amortisation and impairment of goodwill
and acquired intangibles and impairment
of leased right-of-use assets 2,264 193 548
================================================= ======================= ============= ===================
Underlying EBITDA 887 1,384 4,432
================================================= ======================= ============= ===================
Less
Depreciation and impairment of property,
plant and equipment, leased right-of-use
assets and amortisation of software and
software licenses (995) (1,089) (2,185)
Net finance costs excluding foreign exchange
gains and losses (153) (335) (412)
================================================= ======================= ============= ===================
Underlying (loss)/profit before taxation (261) (40) 1,835
================================================= ======================= ============= ===================
Underlying taxation 14 40 (132)
================================================= ======================= ============= ===================
Underlying (loss)/profit after taxation
from continuing operations (247) - 1,703
================================================= ======================= ============= ===================
(1) Results are restated following the April 2021 IFRS
Interpretations Committee agenda decision on cloud computing
arrangements, resulting in previously capitalised software assets
being expensed, as explained further in Note 1.24.
(2) Results for the 6 months to January 2021 have been restated
for the presentation of discontinued operations as explained in
Note 12.
Condensed Consolidated Statement of Comprehensive Income
For the period ended 31 January 2022
Restated Restated
6 months 12 months
6 months (1) (2) (1)
to 31/01/22 to 31/01/21 to 31/07/21
unaudited unaudited
GBP'000 GBP'000 GBP'000
================================================== ======================= ============= ==================
Loss for the period (3,065) (411) (437)
Other comprehensive (loss)/income
Items that may be reclassified subsequently
to profit or loss
Exchange differences on translation of foreign
operations (85) 12 281
================================================== ======================= ============= ==================
Other comprehensive (loss)/income for the
period (85) 12 281
================================================== ======================= ============= ==================
Total comprehensive loss for the period
attributable
to equity holders of the parent (3,150) (399) (156)
================================================== ======================= ============= ==================
Restated Restated
6 months 12 months
6 months (1) (2) (1)
to 31/01/22 to 31/01/21 to 31/07/21
unaudited unaudited
GBP'000 GBP'000 GBP'000
================================================== ======================= ============= ==================
Attributable to:
Continuing operations (3,254) (253) 1,004
Discontinued operations 104 (146) (1,160)
================================================== ======================= ============= ==================
(3,150) (399) (156)
================================================== ======================= ============= ==================
(1) Results are restated following the April 2021 IFRS
Interpretations Committee agenda decision on cloud computing
arrangements, resulting in previously capitalised software assets
being expensed, as explained further in Note 1.24.
(2) Results for the 6 months to January 2021 have been restated
for the presentation of discontinued operations as explained in
Note 12.
Condensed Consolidated Statement of Changes in Equity
For the period ended 31 January 2022
Retained
Share-based Treasury earnings
Share Share Merger payment Translation shares (1)
capital premium reserve reserve reserve reserve (2) Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
================ ======== ======== ======== ============ ============ ========= ========= ========
Total equity at
1 August
2020 as
reported 323 8,706 28,750 526 (147) (97) 1,711 39,772
================ ======== ======== ======== ============ ============ ========= ========= ========
Adjustments due
to change
of accounting
policy,
net of tax - - - - - - (4,738) (4,738)
================ ======== ======== ======== ============ ============ ========= ========= ========
Restated total
equity
at 1 August
2020 323 8,706 28,750 526 (147) (97) (3,027) 35,034
================ ======== ======== ======== ============ ============ ========= ========= ========
Loss for the
period - - - - - - (411) (411)
Other
comprehensive
income - - - - 12 - - 12
================ ======== ======== ======== ============ ============ ========= ========= ========
Total
comprehensive
loss - - - - 12 - (411) (399)
================ ======== ======== ======== ============ ============ ========= ========= ========
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
================ ======== ======== ======== ============ ============ ========= ========= ========
Restated total
equity
at 31 January
2021 323 8,706 28,750 483 (135) (80) (3,367) 34,680
================ ======== ======== ======== ============ ============ ========= ========= ========
Total equity at
1 August
2020 as
reported 323 8,706 28,750 526 (147) (97) 1,711 39,772
================ ======== ======== ======== ============ ============ ========= ========= ========
Adjustments due
to change
of accounting
policy,
net of tax - - - - - - (4,738) (4,738)
================ ======== ======== ======== ============ ============ ========= ========= ========
Restated total
equity
at 1 August
2020 323 8,706 28,750 526 (147) (97) (3,027) 35,034
================ ======== ======== ======== ============ ============ ========= ========= ========
Loss for the
period - - - - - - (437) (437)
Other
comprehensive
income - - - - 281 - - 281
================ ======== ======== ======== ============ ============ ========= ========= ========
Total
comprehensive
loss - - - - 281 - (437) (156)
================ ======== ======== ======== ============ ============ ========= ========= ========
Deferred tax
movement
in respect of
share options - - - - - - 65 65
Share-based
payments
charge - - - 104 - - - 104
Share-based
payments
reserve
transfer - - - (176) - - 176 -
Issue of
treasury
shares
to employees - - - - - 60 - 60
================ ======== ======== ======== ============ ============ ========= ========= ========
Transactions
with owners - - - (72) - 60 241 229
================ ======== ======== ======== ============ ============ ========= ========= ========
Restated total
equity
at 31 July
2021 323 8,706 28,750 454 134 (37) (3,223) 35,107
================ ======== ======== ======== ============ ============ ========= ========= ========
Restated total
equity
at 1 August
2021 323 8,706 28,750 454 134 (37) (3,223) 35,107
================ ======== ======== ======== ============ ============ ========= ========= ========
Loss for the
period - - - - - - (3,065) (3,065)
Other
comprehensive
loss - - - - (85) - - (85)
================ ======== ======== ======== ============ ============ ========= ========= ========
Total
comprehensive
loss - - - - (85) - (3,065) (3,150)
================ ======== ======== ======== ============ ============ ========= ========= ========
Dividend paid
in the
year - - - - - - (484) (484)
Deferred tax
movement
in respect of
share options - - - - - - (66) (66)
Share-based
payments
charge - - - 13 - - - 13
Share-based
payments
reserve
transfer - - - (78) - - 78 -
Translation
reserves
movements due
to disposal
of foreign
operations - - - - 881 - (881) -
Purchase of
treasury
shares - - - - - (68) - (68)
================ ======== ======== ======== ============ ============ ========= ========= ========
Transactions
with owners - - - (65) 881 (68) (1,353) (605)
================ ======== ======== ======== ============ ============ ========= ========= ========
Total equity at
31 January
2022 323 8,706 28,750 389 930 (105) (7,641) 31,352
================ ======== ======== ======== ============ ============ ========= ========= ========
(1) Results are restated following the April 2021 IFRS
Interpretations Committee agenda decision on cloud computing
arrangements, resulting in previously capitalised software assets
being expensed, as explained further in Note 1.24.
(2) Results for the 6 months to January 2021 have been restated
for the presentation of discontinued operations as explained in
Note 12.
Condensed Consolidated Statement of Financial Position
As at 31 January 2022
(1) (2) (1)
21 21
Restated Restated
6 months 12 months
6 months (1) (1)
to 31/01/22 to 31/01/21 to 31/07/21
unaudited unaudited
Note GBP'000 GBP'000 GBP'000
================================== ===== ======================== ========================= ======================
Non-current assets
Goodwill and intangible assets 7 3,980 6,984 6,343
Property, plant and equipment 1,465 1,332 1,578
Right-of-use assets 10 5,069 6,683 5,674
Investments - 19 -
Deferred tax assets 470 1,107 971
Total non-current assets 10,984 16,125 14,566
================================== ===== ======================== ========================= ======================
Current assets
Trade and other receivables (As
at 31
January 2022: GBP134,000 is
falling
due after one year, GBPnil for
31 January
2021 and 31 July 2021) 8 63,652 45,605 64,135
Corporation tax receivables 1,226 64 818
Cash and cash equivalents 13 13,731 27,082 29,238
Assets classified as
held-for-sale - - 346
================================== ===== ======================== ========================= ======================
Total current assets 78,609 72,751 94,537
================================== ===== ======================== ========================= ======================
Total assets 89,593 88,876 109,103
================================== ===== ======================== ========================= ======================
Non-current liabilities
Deferred tax liabilities (21) (30) (14)
Provisions (1,248) (1,522) (1,269)
Lease liabilities 10 (3,421) (5,056) (4,281)
Total non-current liabilities (4,690) (6,608) (5,564)
================================== ===== ======================== ========================= ======================
Current liabilities
Trade and other payables (42,115) (40,136) (56,121)
Provisions (900) (751) (464)
Current tax liabilities (169) (454) (796)
Lease liabilities 10 (1,477) (1,909) (1,480)
Bank loans and borrowings 9 (8,890) (4,338) (9,348)
Liabilities directly associated
with
assets classified as
held-for-sale - - (223)
================================== ===== ======================== ========================= ======================
Total current liabilities (53,551) (47,588) (68,432)
================================== ===== ======================== ========================= ======================
Total liabilities (58,241) (54,196) (73,996)
================================== ===== ======================== ========================= ======================
Net assets 31,352 34,680 35,107
================================== ===== ======================== ========================= ======================
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 389 483 454
Translation reserve 930 (135) 134
Treasury shares reserve (105) (80) (37)
Retained earnings (7,641) (3,367) (3,223)
================================== ===== ======================== ========================= ======================
Total equity 31,352 34,680 35,107
================================== ===== ======================== ========================= ======================
The accompanying notes are an integral part of these interim
Financial Statements.
(1) Results are restated following the April 2021 IFRS
Interpretations Committee agenda decision on cloud computing
arrangements, resulting in previously capitalised software assets
being expensed, as explained further in Note 1.24.
Condensed Consolidated Cash Flow Statement
For the period ended 31 January 2022
Restated Restated
6 months 12 months
6 months (1) (2) (1)
to 31/01/22 to 31/01/21 to 31/07/21
unaudited unaudited
Restated Restated
6 months 12 months
6 months (1) (2) (1)
to 31/01/22 to 31/01/21 to 31/07/21
unaudited unaudited
Total Total Total
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Loss after taxation (3,065) (411) (437)
Adjustments for:
Depreciation of property, plant and equipment
and amortisation of goodwill, intangible
assets and software and software licences 563 387 901
Depreciation of leased right-of-use assets 728 953 1,875
Loss from sale of subsidiary, associate 55 - -
or investment
Loss on disposal of property, plant and
equipment 12 27 8
Impairment of goodwill and acquired intangibles 2,000 - -
Impairment of right-of-use assets - - 183
Impairment of property, plant and equipment - - 18
Interest income (132) (88) (65)
Interest costs 160 650 1,218
Taxation (credit)/expense recognised in
Income Statement (153) (71) 26
Decrease/(increase) in trade and other
receivables 617 2,912 (15,498)
(Decrease)/increase in trade and other
payables (14,005) (6,009) 10,098
Increase/(decrease) in provisions 408 (547) (1,064)
Share-based payment charge 13 86 271
==================================================== ============= ============= ======================
Cash used in operations (12,799) (2,111) (2,466)
Interest paid (96) (83) (320)
Interest on lease liabilities (64) (82) (156)
Interest received - 32 65
Income taxes paid (493) (1,048) (1,322)
==================================================== ============= ============= ======================
Cash used in operating activities (13,452) (3,292) (4,199)
==================================================== ============= ============= ======================
Cash flows from investing activities
Purchase of plant and equipment (102) - (332)
Purchase of intangible assets - (293) (83)
Cash used in investing activities (102) (293) (415)
==================================================== ============= ============= ======================
Cash flows from financing activities
Lease liability principal repayment (970) (1,046) (2,355)
(Purchase)/sale of treasury shares (68) 17 60
Working capital facility (repaid)/withdrawn (458) 4,572 9,197
Dividend paid (484) - -
Repayment of term loan - (7,500) (7,500)
==================================================== ============= ============= ======================
Cash used in financing activities (1,980) (3,957) (598)
==================================================== ============= ============= ======================
Effects of exchange rates on cash and cash
equivalents 27 (172) (346)
Decrease in cash and cash equivalents (15,507) (7,714) (5,558)
Cash and cash equivalents at beginning of
period 29,238 34,796 34,796
==================================================== ============= ============= ======================
Cash and cash equivalents at end of period
((3)) 13,731 27,082 29,238
==================================================== ============= ============= ======================
Net decrease in cash and cash equivalents for discontinued
operations was GBP1,156,000 (6 months to 31 January 2021 restated:
decrease of GBP1,447,000 and year to 31 July 2021: decrease of
GBP1,534,000).
(1) Results are restated following the April 2021 IFRS
Interpretations Committee agenda decision on cloud computing
arrangements, resulting in previously capitalised software assets
being expensed, as explained further in Note 1.24.
(2) Results for the 6 months to January 2021 have been restated
for the presentation of discontinued operations as explained in
Note 12.
(3) Included in Cash and cash equivalents is GBP902,000 of
restricted cash (6 months to 31 January 2021: GBP1,588,000 year to
31 July 2021: GBP7,115,000) which meets the definition of cash and
cash equivalents but is not available for use by the Group. This
balance arises from the Group's non-recourse working capital
arrangements.
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 31 July 2021, as described in those annual Financial
Statements, with the exception of policies, amendments and
interpretations effective as of 1 August 2021 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 2022. 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 2021
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 2021 or
are expected to be adopted and effective at 1 August 2021.
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 Group's 2021 Annual
Report. The financial position of the Group, its cash flows and
liquidity position mirror those of the ultimate parent company and
can be found in the Chief Financial Officer's Report of the 2021
Annual Report for Gattaca plc.
The majority of our staff have now adopted a hybrid working
style between our offices and remote working 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 reduce our working capital
requirements during growth. We have seen signs of extensions in
debtor days as a result of the ongoing pandemic recovery 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.
The Directors have prepared detailed cash flow forecasts to July
2025, covering a period of 40 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 steady growth in the Group's
contract and permanent NFI year on year.
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 with significantly lower NFI growth rates and extended
DSO considered. The Group has modelled the impact of a severe but
plausible scenario including growth of 0%-0.6% in contract NFI
across FY23 to FY25, with customer receivables DSO extended to 60
days.
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 interim 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 2021 and no new standards
have been early adopted. The Group's January 2022 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)
Following the IFRS Interpretations Committee's agenda decision
published in April 2021, during the 6 months to 31 January 2022,
the Group voluntarily changed its accounting policy relating to the
capitalisation of certain software costs, specifically relating to
the capitalisation of implementation costs such as configuration
and customisation costs for cloud-based software under SaaS
arrangements. This is further described, along with the financial
impact, in Note 1.24.
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 2021. 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 2021 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
IFRS 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.
Costs incurred for the development of software code that
enhances or modifies, or creates additional capability to existing
on premise systems and meets the definition of and recognition
criteria for an intangible asset are recognised as intangible
software assets and depreciated over a useful life of between two
and ten years.
Implementation costs for cloud-based software under
Software-as-a-Service (SaaS) arrangements
SaaS arrangements are service contracts providing the Group with
the right to access the cloud provider's application software over
the contract period. In most cases, this will not meet the
definition of an intangible asset under IAS 38. The following
outlines the accounting treatment of implementation costs incurred
in relation to SaaS arrangements:
-- Implementation costs relating to cloud-based software under SaaS
arrangements are assessed as they are incurred. These would include
implementation support, consultancy, configuration costs, customisation
costs and testing services. If the services are provided by the
cloud supplier or a third party and are considered to be separate
from the access to the software, then they are either recognised
as an intangible asset under IAS 38 if they meet the relevant
capitalisation criteria or, more likely, they are expensed to
the income statement as incurred. If the implementation services
are provided by the cloud provider but are not considered to be
separate from access to the software, which generally is the case
for customisation costs for cloud-based software, then they are
recognised as an expense over the period of the service contract,
resulting in a prepayment asset if the services are paid for in
advance.
Internally generated intangible assets
Internal development costs that are directly attributable to the
design and testing of identifiable and unique non-cloud based
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 internal
expenditure that does not meet these criteria is recognised as an
expense to profit or loss as incurred. Software development
internal 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
Note 1.24 describes the Group's change in accounting policy in
respect of configuration and customisation costs incurred in
implementing Software-as-a-service (SaaS) arrangements. In applying
the entity's accounting policy, the directors made the following
key judgements that may have the most significant effect on the
amounts recognised in financial statements.
Determination of whether configuration and customisation
implementation services are separate from the cloud-based SaaS
software access
-- Under the new accounting policy application guidance, implementation
costs including costs to configure or customise the cloud-based
provider's software are recognised as operating expenses when
the services are received, if they are separate from the provision
of the SaaS contract.
-- Where the SaaS arrangement supplier provides both configuration
and customisation services, judgement has been applied to determine
whether these services are separate from the underlying use of
the SaaS software. Separate configuration and customisation costs
are expensed as incurred as the software is configured or customised
(i.e. upfront). Non-separate configuration and customisation costs
are expensed over the SaaS contract term.
Capitalisation of configuration and customisation implementation
costs in SaaS arrangements
-- In implementing SaaS arrangements, suppliers have developed software
code that either enhances, modifies or creates additional capability
to the existing owned software or to software held under SaaS
arrangements. Where modifications have been made to owned software,
this is used to connect with the SaaS arrangement cloud-based
applications.
-- Judgement has been applied in determining whether the changes
to the owned software or software held under a SaaS arrangement
meets the definition of and recognition criteria for an intangible
asset in accordance with IAS 38 Intangible Assets.
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 the ongoing economic recovery from
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 the ongoing
economic recovery from COVID-19 has been reflected in the forecast
future cash flows.
1.24 Changes in accounting policy - Software-as-a-service (SaaS)
arrangements
In the 6 months to 31 January 2022, following the IFRS
Interpretation Committee's agenda decision published in April 2021,
the Group changed its accounting policy relating to the
capitalisation of certain software costs, specifically relating to
the capitalisation of implementation costs such as configuration
and customisation costs for cloud-based software under SaaS
arrangements.
The Group's accounting policy was previously to capitalise costs
directly attributable to the development of intangible software
assets, including configuration and customisation costs,
irrespective of whether the services were performed by the SaaS
supplier or a third party. Following the adoption of the IFRIC
agenda guidance, all software intangible assets were identified and
assessed to determine if they related to cloud-based software under
SaaS arrangements. The Group then assessed whether they had control
over the software and any associated capitalised implementation
costs. For those arrangements where the Group did not have control
of the developed cloud-based software under the updated IFRIC
agenda guidance, to the extent that the implementation services
were performed by a third party, the Group determined if the
service was separate from the underlying software service contract
and if so, derecognised the intangible asset previously
capitalised. Amounts paid to a supplier for customisation costs
that were not separate from the underlying software service
contract, were treated as a prepayment over the period of the
service contract.
Accordingly, in line with the treatment prescribed in IAS 8 and
IAS 1 in respect of changes in accounting policies, this change has
been applied retrospectively, restating the prior period balance
sheet at 1 August 2020 and 31 July 2021. The full impact of the
change in accounting policy is detailed below.
Condensed Consolidated Income Statement
For the 6 month period ended 31 As previously
January reported/restated
2021 (1) Adjustment As restated
GBP'000 GBP'000 GBP'000
================================= ============================= ========================== ========================
Continuing operations
Gross profit 20,522 - 20,522
================================= ============================= ========================== ========================
Administrative expenses - other
administrative
expenses (19,561) - (19,561)
Administrative expenses -
expense of
implementation costs - (546) (546)
Administrative expenses -
reversal of
amortisation of software
implementation
costs (109) 45 (64)
Administrative expenses -
unwinding of
the prepaid software
implementation costs - (52) (52)
================================= ============================= ========================== ========================
Profit before taxation 852 (553) 299
Net finance costs (609) - (609)
Taxation (12) 105 93
================================= ============================= ========================== ========================
Profit/(loss) after taxation
from continuing
operations 231 (448) (217)
================================= ============================= ========================== ========================
Profit/(loss) for the period 38 (449) (411)
================================= ============================= ========================== ========================
(1) Figure for the 6 months to January 2021 has been restated
for the presentation of discontinued operations as explained in
Note 12.
For the year ended 31 July 2021 As previously
reported Adjustment As restated
GBP'000 GBP'000 GBP'000
================================== ============================= ========================== =======================
Continuing operations
Gross profit 42,080 - 42,080
================================== ============================= ========================== =======================
Administrative expenses - other
administrative
expenses (38,374) - (38,374)
Administrative expenses - expense
of
implementation costs - (1,544) (1,544)
Administrative expenses -
reversal of
amortisation of software
implementation
costs (422) 283 (139)
Administrative expenses -
unwinding of
the prepaid software
implementation costs - (131) (131)
================================== ============================= ========================== =======================
Profit before taxation 3,284 (1,392) 1,892
Net finance costs (1,080) - (1,080)
Taxation (415) 374 (41)
================================== ============================= ========================== =======================
Profit after taxation from
continuing
operations 1,789 (1,018) 771
================================== ============================= ========================== =======================
Profit/(loss) for the year 581 (1,018) (437)
================================== ============================= ========================== =======================
Condensed Consolidated Statement of Changes in Equity
As previously
reported Adjustment As restated
GBP'000 GBP'000 GBP'000
=============================== ============== =========== ============
Total equity at 1 August 2020 39,772 (4,738) 35,034
Profit/(loss) for the period 38 (449) (411)
Balance at 31 January 2021 39,867 (5,187) 34,680
=============================== ============== =========== ============
As previously
reported Adjustment As restated
GBP'000 GBP'000 GBP'000
=============================== ============== =========== ============
Total equity at 1 August 2020 39,772 (4,738) 35,034
Profit/(loss) for the period 581 (1,018) (437)
Balance at 31 July 2021 40,863 (5,756) 35,107
=============================== ============== =========== ============
Condensed Consolidated Statement of Financial Position
As previously As restated
reported as at 1 August
as at Adjustment 2020
1 August as at 1 August
2020 2020
GBP'000 GBP'000 GBP'000
================================ ============================ ========================= =========================
Non-current assets
Goodwill and intangible assets 12,877 (5,929) 6,948
Deferred tax assets - 859 859
================================ ============================ ========================= =========================
Total non-current assets 21,726 (5,070) 16,656
================================ ============================ ========================= =========================
Current assets
Trade and other receivables 48,862 84 48,946
================================ ============================ ========================= =========================
Total current assets 83,684 84 83,768
================================ ============================ ========================= =========================
Total assets 105,410 (4,986) 100,424
================================ ============================ ========================= =========================
Non-current liabilities
Deferred tax liabilities (277) 248 (29)
================================ ============================ ========================= =========================
Total non-current liabilities (14,914) 248 (14,666)
================================ ============================ ========================= =========================
Total liabilities (65,638) 248 (65,390)
================================ ============================ ========================= =========================
Net assets 39,772 (4,738) 35,034
================================ ============================ ========================= =========================
Equity
Retained earnings 1,711 (4,738) (3,027)
================================ ============================ ========================= =========================
Total equity 39,772 (4,738) 35,034
================================ ============================ ========================= =========================
As previously Adjustment As restated
reported as at 31 as at 31
as at January 2021 January 2021
31 January
2021
GBP'000 GBP'000 GBP'000
================================ ======================== ======================= =======================
Non-current assets
Goodwill and intangible assets 13,512 (6,528) 6,984
Deferred tax assets - 1,107 1,107
================================ ======================== ======================= =======================
Total non-current assets 21,546 (5,421) 16,125
================================ ======================== ======================= =======================
Current assets
Trade and other receivables 45,475 130 45,605
================================ ======================== ======================= =======================
Total current assets 72,621 130 72,751
================================ ======================== ======================= =======================
Total assets 94,167 (5,291) 88,876
================================ ======================== ======================= =======================
Non-current liabilities
Deferred tax liabilities (134) 104 (30)
================================ ======================== ======================= =======================
Total non-current liabilities (6,712) 104 (6,608)
================================ ======================== ======================= =======================
Total liabilities (54,300) 104 (54,196)
================================ ======================== ======================= =======================
Net assets 39,867 (5,187) 34,680
================================ ======================== ======================= =======================
Equity
Retained earnings 1,820 (5,187) (3,367)
================================ ======================== ======================= =======================
Total equity 39,867 (5,187) 34,680
================================ ======================== ======================= =======================
As previously Adjustment As restated
reported as at 31 as at 31
as at July 2021 July 2021
31 July 2021
GBP'000 GBP'000 GBP'000
================================ ============================= ========================== ========================
Non-current assets
Goodwill and intangible assets 13,778 (7,435) 6,343
Deferred tax assets - 971 971
================================ ============================= ========================== ========================
Total non-current assets 21,030 (6,464) 14,566
================================ ============================= ========================== ========================
Current assets
Trade and other receivables 63,937 198 64,135
================================ ============================= ========================== ========================
Total current assets 94,339 198 94,537
================================ ============================= ========================== ========================
Total assets 115,369 (6,266) 109,103
================================ ============================= ========================== ========================
Non-current liabilities
Deferred tax liabilities (524) 510 (14)
================================ ============================= ========================== ========================
Total non-current liabilities (6,074) 510 (5,564)
================================ ============================= ========================== ========================
Total liabilities (74,506) 510 (73,996)
================================ ============================= ========================== ========================
Net assets 40,863 (5,756) 35,107
================================ ============================= ========================== ========================
Equity
Retained earnings 2,533 (5,756) (3,223)
================================ ============================= ========================== ========================
Total equity 40,863 (5,756) 35,107
================================ ============================= ========================== ========================
Condensed Consolidated Cash Flow Statement
For period ended 31 January 2021 As previously
reported Adjustment As restated
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Profit/(loss) after taxation 38 (449) (411)
Cash used in operating activities (2,648) (644) (3,292)
============================================ ============== =========== ============
Cash flows from investing activities
Purchase of intangible assets (937) 644 (293)
============================================ ============== =========== ============
Cash used in investing activities (937) 644 (293)
============================================ ============== =========== ============
Cash and cash equivalents at end of period 27,082 - 27,082
============================================ ============== =========== ============
For year ended 31 July 2021 As previously
reported Adjustment As restated
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Profit/(loss) after taxation 581 (1,018) (437)
Cash used in operating activities (2,411) (1,789) (4,200)
========================================== ============== =========== ============
Cash flows from investing activities
Purchase of intangible assets (1,872) 1,789 (83)
========================================== ============== =========== ============
Cash used in investing activities (2,204) 1,789 (415)
========================================== ============== =========== ============
Cash and cash equivalents at end of year 29,238 - 29,238
========================================== ============== =========== ============
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
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.
Previously, the Group was managed through its three reporting
segments, UK Engineering, UK Technology and International. From
August 2021 the Group aligned its operating model to the markets in
which its clients operate. From December 2021 financial information
provided to the Board was based on this new reporting and operating
structure. As a result of this change, the segmental information
for 6 months to 31 January 2022 has been presented based on the new
structure in line with the requirements of IFRS 8: Operating
Segments and the information for 6 months to 31 January 2021 and 12
months to 31 July 2021 have been restated accordingly.
6 months
to 31
January
2022
unaudited
Non-recurring
items
and
Technology, Continuing amortisation
All amounts Media Infra- Inter- underlying of acquired Total
in GBP'000 Mobility Energy Defence & Telecoms structure national Other operations intangibles Dis-continued Group
================ ============= ======== ============ =============== ============ =========== ============ =========== ============== ============== ========
Revenue 24,095 19,152 32,325 21,951 72,011 3,896 28,769 202,199 - - 202,199
Gross
profit 2,231 1,777 3,179 2,211 6,743 1,335 4,130 21,606 - (10) 21,596
Operating
contribution 1,163 953 1,478 1,290 1,974 (246) 1,603 8,215 - (569) 7,646
Depreciation,
impairment
and
amortisation (118) (94) (159) (108) (355) (19) (142) (995) (2,264) (32) (3,291)
================ ============= ======== ============ =============== ============ =========== ============ =========== ============== ============== ========
Profit/(loss)
from
reportable
segments 1,045 859 1,319 1,182 1,619 (265) 1,461 7,220 (2,264) (601) 4,355
Central
overheads (7,328) (90) (127) (7,545)
================ ============= ======== ============ =============== ============ =========== ============ =========== ============== ============== ========
Loss
from
operations (108) (2,354) (728) (3,190)
Finance
(cost)/
income,
net (153) 73 52 (28)
================ ============= ======== ============ =============== ============ =========== ============ =========== ============== ============== ========
Loss
before
tax (261) (2,281) (676) (3,218)
================ ============= ======== ============ =============== ============ =========== ============ =========== ============== ============== ========
6 months
to 31
January
2021
unaudited/
restated
(1)
(2)
Non-recurring
items
and
Technology, Continuing amortisation
All amounts Media Infra- Inter- underlying of acquired Total
in GBP'000 Mobility Energy Defence & Telecoms structure national Other operations intangibles Dis-continued Group
================ ============= ======= ============ ================= ============ =========== ============= =========== ============== ============== ========
Revenue 19,947 25,911 34,457 21,935 71,485 5,141 25,923 204,799 - 1,682 206,481
Gross
profit 1,366 2,101 2,888 1,873 6,896 1,902 3,496 20,522 - 534 21,056
Operating
contribution 405 1,111 1,544 595 3,556 (581) 1,164 7,794 - (29) 7,765
Depreciation,
impairment
and
amortisation (106) (137) (183) (117) (380) (27) (139) (1,089) (193) (58) (1,340)
================ ============= ======= ============ ================= ============ =========== ============= =========== ============== ============== ========
Profit/(loss)
from
reportable
segments 299 974 1,361 478 3,176 (608) 1,025 6,705 (193) (87) 6,425
Central
overheads (6,410) 197 (132) (6,345)
================ ============= ======= ============ ================= ============ =========== ============= =========== ============== ============== ========
Profit/(loss)
from
operations 295 4 (219) 80
Finance
(cost)/
income,
net (335) (274) 47 (562)
================ ============= ======= ============ ================= ============ =========== ============= =========== ============== ============== ========
Loss
before
tax (40) (270) (172) (482)
================ ============= ======= ============ ================= ============ =========== ============= =========== ============== ============== ========
12 months
to 31
July
2021
unaudited/
restated
(1)
Non-recurring
items
and
Technology, Continuing amortisation
All amounts Media Infra- Inter- underlying of acquired Total
in GBP'000 Mobility Energy Defence & Telecoms structure national Other operations intangibles Dis-continued Group
================ ============= ======== ============= ============== ============ ============ ============= =========== ============== ============== =========
Revenue 43,251 48,854 67,680 42,319 146,286 9,816 57,520 415,726 - 3,432 419,158
Gross
profit 3,141 3,916 5,858 3,735 14,182 3,528 7,720 42,080 - 1,047 43,127
Operating
contribution 1,102 2,049 2,976 1,211 7,164 (520) 2,952 16,934 - (213) 16,721
Depreciation,
impairment
and
amortisation (227) (257) (356) (222) (769) (52) (302) (2,185) (548) (244) (2,977)
================ ============= ======== ============= ============== ============ ============ ============= =========== ============== ============== =========
Profit/(loss)
from
reportable
segments 875 1,792 2,620 989 6,395 (572) 2,650 14,749 (548) (457) 13,744
Central
overheads (12,502) 193 (693) (13,002)
================ ============= ======== ============= ============== ============ ============ ============= =========== ============== ============== =========
Profit/(loss)
from
operations 2,247 (355) (1,150) 742
Finance
(cost)/
income,
net (412) (668) (73) (1,153)
================ ============= ======== ============= ============== ============ ============ ============= =========== ============== ============== =========
Loss
before
tax 1,835 (1,023) (1,223) (411)
================ ============= ======== ============= ============== ============ ============ ============= =========== ============== ============== =========
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 Restated Restated
(3) (3)
6 months 6 months 12 months 6 months 6 months 12 months
to 31/01/22 to 31/01/21 to 31/07/21 to 31/01/22 to 31/01/21 to 31/07/21
======================== ============ ============= ============= === ============= ============= =============
UK 196,434 197,038 402,254 10,592 15,343 13,740
Rest of Europe 274 1,621 2,316 1 1 -
Middle East and Africa - 729 1,685 16 344 551
Americas 5,491 7,093 12,903 375 437 275
Total 202,199 206,481 419,158 10,984 16,125 14,566
======================== ============ ============= ============= === ============= ============= =============
Revenue and non-current assets are allocated to the geographic
market based on the domicile of the respective subsidiary.
(1) Segmental disclosures for the 6 months to 31 January 2021
and year to 31 July 2021 have been restated as a result of the
change in operating model structure.
(2) Figure for the 6 months to January 2021 have been restated
for the presentation of discontinued operations as explained in
Note 12.
(3) Results are restated following the April 2021 IFRS
Interpretations Committee agenda decision on cloud computing
arrangements, resulting in previously capitalised software assets
being expensed, as explained further in Note 1.24.
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
Continuing
Technology, Infra- Inter- underlying
Mobility Energy Defence Media structure national Other operations
6 months to January GBP GBP GBP & Telecoms GBP GBP GBP GBP
2022 '000 '000 '000 GBP '000 '000 '000 '000 '000
====================== ========= ======= ======== ============ =========== ========== ======= ============
Temporary placements 23,423 19,034 31,236 21,475 70,848 2,797 23,845 192,658
Permanent placements 672 118 1,089 476 1,163 1,099 1,938 6,555
Other - - - - - - 2,986 2,986
====================== ========= ======= ======== ============ =========== ========== ======= ============
Total 24,095 19,152 32,325 21,951 72,011 3,896 28,769 202,199
====================== ========= ======= ======== ============ =========== ========== ======= ============
Major service lines - continuing
underlying operations
Continuing
Technology, Infra- Inter- underlying
Restated 6 months Mobility Energy Defence Media structure national Other operations
to January 2021 GBP GBP GBP & Telecoms GBP GBP GBP GBP
(1) '000 '000 '000 GBP '000 '000 '000 '000 '000
====================== ========= ======= ======== ============ =========== ========== ======= ============
Temporary placements 19,594 25,761 33,543 21,547 70,802 3,986 23,669 198,902
Permanent placements 344 133 892 380 637 1,151 1,126 4,663
Other 9 17 22 8 46 4 1,128 1,234
====================== ========= ======= ======== ============ =========== ========== ======= ============
Total 19,947 25,911 34,457 21,935 71,485 5,141 25,923 204,799
====================== ========= ======= ======== ============ =========== ========== ======= ============
Major service lines - continuing
underlying operations
Continuing
Technology, Infra- Inter- underlying
Mobility Energy Defence Media structure national Other operations
Restated 12 months GBP GBP GBP & Telecoms GBP GBP GBP GBP
to July 2021 (1) '000 '000 '000 GBP '000 '000 '000 '000 '000
====================== ========= ======= ======== ============ =========== ========== ======= ============
Temporary placements 42,326 48,559 65,581 41,376 144,298 7,575 52,430 402,145
Permanent placements 903 259 2,050 922 1,883 2,240 2,557 10,814
Other 22 36 49 21 105 1 2,533 2,767
====================== ========= ======= ======== ============ =========== ========== ======= ============
Total 43,251 48,854 67,680 42,319 146,286 9,816 57,520 415,726
====================== ========= ======= ======== ============ =========== ========== ======= ============
Timing of revenue recognition - continuing operations
'000 '000 '000 '000 '000 '000 '000 '000
Continuing
Technology, Infra- Inter- underlying
Mobility Energy Defence Media structure national Other operations
6 months to January GBP GBP GBP & Telecoms GBP GBP GBP GBP
2022 '000 '000 '000 GBP '000 '000 '000 '000 '000
===================== ========= ======= ======== ============ =========== ========== ======= ============
Point in time 24,095 19,152 32,325 21,951 72,011 3,896 25,783 199,213
Over time - - - - - - 2,986 2,986
===================== ========= ======= ======== ============ =========== ========== ======= ============
Total 24,095 19,152 32,325 21,951 72,011 3,896 28,769 202,199
===================== ========= ======= ======== ============ =========== ========== ======= ============
'000 '000 '000 '000 '000 '000 '000 '000
Continuing
Technology, Infra- Inter- underlying
Restated 6 months Mobility Energy Defence Media structure national Other operations
to January 2021 GBP GBP GBP & Telecoms GBP GBP GBP GBP
(1) '000 '000 '000 GBP '000 '000 '000 '000 '000
=================== ========= ======= ======== ============ =========== ========== ======= ============
Point in time 19,947 25,911 34,457 21,935 71,485 5,141 24,810 203,686
Over time - - - - - - 1,113 1,113
=================== ========= ======= ======== ============ =========== ========== ======= ============
Total 19,947 25,911 34,457 21,935 71,485 5,141 25,923 204,799
=================== ========= ======= ======== ============ =========== ========== ======= ============
'000 '000 '000 '000 '000 '000 '000 '000
Continuing
Technology, Infra- Inter- underlying
Mobility Energy Defence Media structure national Other operations
Restated 12 months GBP GBP GBP & Telecoms GBP GBP GBP GBP
to July 2021 (1) '000 '000 '000 GBP '000 '000 '000 '000 '000
==================== ========= ======= ======== ============ =========== ========== ======= ============
Point in time 43,251 48,854 67,680 42,319 146,286 9,816 55,022 413,228
Over time - - - - - - 2,498 2,498
==================== ========= ======= ======== ============ =========== ========== ======= ============
Total 43,251 48,854 67,680 42,319 146,286 9,816 57,520 415,726
==================== ========= ======= ======== ============ =========== ========== ======= ============
No single customer contributed more than 10% of the Group's
revenues (6 months to 31 January 2021 and 12 months to 31 July
2021: 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 31/01/22 to 31/01/21 to 31/07/21
unaudited unaudited
Total Total Total
GBP'000 GBP'000 GBP'000
============================ ============= ============= =============
Trade receivables (Note 8) 39,993 29,488 34,187
Accrued income (Note 8) 19,779 12,518 26,742
Deferred income (576) (803) (880)
============================ ============= ============= =============
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) As explained in Note 1.24, reported operating segments have
changed at 31 January 2022 as a result of a change in internal
operating structure; consequently, all prior period information has
been restated on the new basis. In addition, South African and
Mexican operations have been restated from the International
segment to Discontinued in the 6-month period to 31 January 2021,
as explained in Note 12.
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 31/01/22 to 31/01/21 to 31/07/21
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 43
UK Government Coronavirus Job
Retention
Scheme grant income recognised
in Administrative
Expenses for employees - 458 458
================================== ============================= ======================== =========================
Total - 501 501
================================== ============================= ======================== =========================
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 2021: claim period is from
August 2020 to November 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 were retained in employment but placed on
furlough. From 1 August 2021 National Insurance contributions and
pension contributions were 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 was 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 all
periods have been received, 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 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 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
21
Restated Restated
6 months 12 months
6 months (1) (2) (1) to 31/07/21
to 31/01/22 to 31/01/21
unaudited unaudited
Total Total Total
Analysis of (credit)/charge in the period GBP'000 GBP'000 GBP'000
for continuing operations
================================================ ============= ============= =================
(Loss)/profit before tax for continuing
operations (2,542) (310) 812
================================================ ============= ============= =================
(Loss)/profit before tax multiplied by
the standard rate of corporate tax in
the UK of 19% (31 January 2021: 19.0%,
31 July 2021: 19.0%) (483) (59) 154
Expenses not deductible for tax purposes
and goodwill impairment loss 360 3 139
Income not taxable (10) - -
Effect of share-based payments 12 (4) (19)
Irrecoverable withholding tax 2 1 56
Changes in tax rate (25) - (29)
Overseas losses not recognised as deferred
tax assets 21 (49) 46
Difference between UK and overseas tax
rates 3 17 (85)
Adjustment to tax charge in respect of
previous periods - (2) (221)
================================================ ============= ============= =================
Total taxation (credit)/charge for the
period for continuing operations (120) (93) 41
================================================ ============= ============= =================
Total taxation (credit)/charge for the
period for discontinued operations (33) 22 (15)
================================================ ============= ============= =================
Deferred tax assets of GBP470,000, after offset against deferred
tax liabilities, have been recognised at 31 January 2022 in respect
of trading losses in the UK, on the basis that future taxable
profits are expected to be available for the losses to be utilised
against.
((1)) The prior period comparative figures have been restated,
following the adoption of the IFRS Interpretations Committee's
decision on configuration or customisation costs in a cloud
computing arrangement. The pre-tax restatements result in restated
deferred tax assets in these prior periods, which unwind in the
year ending 31 July 2022 when current year tax deductions are
available.
((2)) 6 months to January 2021 figures have been restated for
the presentation of discontinued operations following announcements
relating to the full closure of our Mexico operations and sale of
our South African recruitment operations on 30 July 2021.
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
dilutive for the year ended 31 July 2021 and therefore have been
included in the calculations below. The effect of potential
ordinary shares are not considered dilutive for the 6 months to 31
January 2022 or the 6 months to 31 January 2021 and therefore have
not been included in the calculations below.
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:
Restated Restated
(1) (1)
6 months 6 months 12 months
to 31/01/22 to 31/01/21 to 31/07/21
unaudited unaudited
Total earnings GBP'000 GBP'000 GBP'000
=============== ==================== ========================== ========================= ========================
Total loss attributable to
ordinary share holders (3,065) (411) (437)
===================================== ========================== ========================= ========================
Number of 000's 000's 000's
shares
=============== ==================== ========================== ========================= ========================
Basic weighted average number
of ordinary shares in issue 32,290 32,290 32,290
Dilutive potential ordinary
shares - - 68
===================================== ========================== ========================= ========================
Diluted weighted average number
of shares 32,290 32,290 32,358
===================================== ========================== ========================= ========================
Total earnings Restated Restated
per share (2) (2)
pence pence pence
=============== ==================== ========================== ========================= ========================
Earnings per
ordinary
share * Basic (9.5) (1.3) (1.4)
===============
* Diluted (9.5) (1.3) (1.4)
==================================== ========================== ========================= ========================
Earnings for Restated Restated
continuing (1) (1)
operations GBP'000 GBP'000 GBP'000
=============== ==================== ========================== ========================= ========================
Total (loss)/profit for period (2,422) (217) 771
===================================== ========================== ========================= ========================
Total earnings
per share for Restated Restated
continuing (2) (2)
operations pence pence pence
=============== ==================== ========================== ========================= ========================
Earnings per
ordinary
share
from
continuing
operations * Basic (7.5) (0.7) 2.4
===============
* Diluted (7.5) (0.7) 2.4
==================================== ========================== ========================= ========================
Earnings for Restated Restated
discontinuing (1) (1)
operations GBP'000 GBP'000 GBP'000
=============== ==================== ========================== ========================= ========================
Total loss for the period (643) (194) (1,208)
===================================== ========================== ========================= ========================
Total earnings
per share for Restated Restated
discontinuing (2) (2)
operations pence pence pence
=============== ==================== ========================== ========================= ========================
Earnings per
ordinary
share
from
discontinuing
operations * Basic (2.0) (0.6) (3.7)
===============
* Diluted (2.0) (0.6) (3.7)
==================================== ========================== ========================= ========================
Earnings from
continuing Restated Restated
underlying (1) (1)
operations GBP'000 GBP'000 GBP'000
=============== ==================== ========================== ========================= ========================
Total (loss)/profit for the
period (247) - 1,703
===================================== ========================== ========================= ========================
Total earnings
per share for
continuing Restated Restated
underlying (2) (2)
operations pence pence pence
=============== ==================== ========================== ========================= ========================
Earnings per
ordinary
share
for
continuing
underlying
operations * Basic (0.8) - 5.3
* Diluted (0.8) - 5.3
==================================== ========================== ========================= ========================
(1) Historical financial information has been restated to
account for the impact of the change in accounting policy in
relation to SaaS arrangements as explained in Note 1.24. In
addition, 6 months to January 2021 figures have been restated for
the presentation of discontinued operations as explained in Note
12.
(2) As explained above, EPS for year ended 31 July 2021 has been
restated due to the restated results for the year. For the 6 months
to 31 January 2021 the effect of potential ordinary shares is no
longer considered to be dilutive, as such, EPS has been restated as
a result of a change in result, as well as a change in the number
of shares included in the calculations.
7 Intangibles
In the 6 months to 31 January 2022, following the IFRS
Interpretation Committee's agenda decision published in April 2021,
the Group changed its accounting policy relating to the
capitalisation of certain software costs, specifically relating to
the capitalisation of implementation costs such as configuration
and customisation costs for cloud-based software under
Software-as-a-service (SaaS) arrangements. Please refer to Note
1.24 for more details. The change of the accounting policy has
resulted in a reclassification of certain cloud-based software
intangible assets to either a prepaid asset in the Statement of
Financial Position or to an expense in the Income Statement,
impacting both the current and prior periods presented.
Software
Customer Trade and software
Goodwill Relationships Names Other licenses Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============== =================== ========= ============== ======== ======== ============= ========
Cost At 1 August 2020 28,739 22,245 5,346 3,809 2,521 62,660
Additions - - - - 937 937
Reclassification
to prepayments
as a result of
change of
accounting
policy - - - - (98) (98)
Reclassification
to Income
Statement
as a result of
change of
accounting
policy - - - - (546) (546)
=================== ========= ============== ======== ======== ============= ========
At 31 January
2021 28,739 22,245 5,346 3,809 2,814 62,953
=================== ========= ============== ======== ======== ============= ========
At 1 August 2020 28,739 22,245 5,346 3,809 2,521 62,660
Additions - - - - 1,872 1,872
Reclassification
to assets held
for sale - - - - (2) (2)
Reclassification
to prepayments
as a result of
change of
accounting
policy - - - - (245) (245)
Reclassification
to Income
Statement
as a result of
change of
accounting
policy - - - - (1,544) (1,544)
=================== ========= ============== ======== ======== ============= ========
At 31 July 2021 28,739 22,245 5,346 3,809 2,602 62,741
=================== ========= ============== ======== ======== ============= ========
Disposals - - - - (70) (70)
=================== ========= ============== ======== ======== ============= ========
At 31 January
2022 28,739 22,245 5,346 3,809 2,532 62,671
=================== ========= ============== ======== ======== ============= ========
Amortisation
and
impairment At 1 August 2020 24,382 20,530 5,057 3,527 2,216 55,712
Amortisation for
the period - 119 19 55 109 302
Reclassification
to prepayments
as a result of
change of
accounting
policy - - - - (4) (4)
Reclassification
to Income
Statement
as a result of
change of
accounting
policy - - - - (41) (41)
=================== ========= ============== ======== ======== ============= ========
At 31 January
2021 24,382 20,649 5,076 3,582 2,280 55,969
=================== ========= ============== ======== ======== ============= ========
At 1 August 2020 24,382 20,530 5,057 3,527 2,216 55,712
Amortisation for
the period - 332 45 171 422 970
Reclassification
to assets held
for sale - - - - (1) (1)
Reclassification
to prepayments
as a result of
change of
accounting
policy - - - - (19) (19)
Reclassification
to Income
Statement
as a result of
change of
accounting
policy - - - - (264) (264)
=================== ========= ============== ======== ======== ============= ========
At 31 July 2021 24,382 20,862 5,102 3,698 2,354 56,398
=================== ========= ============== ======== ======== ============= ========
Amortisation for
the period - 134 22 108 87 351
Impairment 2,000 - - - - 2,000
Released on
disposal - - - - (58) (58)
=================== ========= ============== ======== ======== ============= ========
At 31 January
2022 26,382 20,996 5,124 3,806 2,383 58,691
=================== ========= ============== ======== ======== ============= ========
Net book At 31 January
value 2021 4,357 1,596 270 227 534 6,984
At 31 July 2021 4,357 1,383 244 111 248 6,343
=================== ========= ============== ======== ======== ============= ========
At 31 January
2022 2,357 1,249 222 3 149 3,980
=================== ========= ============== ======== ======== ============= ========
The costs and carrying amount of goodwill allocated to Cash
Generating Unit's (CGU's) before impairment is as follows:
22 31/01/21
6 months 6 months 12 months
31/01/22 31/01/21 31/07/21
unaudited unaudited
GBP'000 GBP'000 GBP'000
======================================== =========== =========== ==========
Energy (previously UK Engineering) 1,712 1,712 1,712
Infrastructure - RSL Rail (previously
Resourcing Solutions Limited) 2,645 2,645 2,645
Total 4,357 4,357 4,357
======================================== =========== =========== ==========
As part of the operational restructure discussed further in Note
2, the Cash Generating Unit's (CGU's) to which goodwill and
intangible assets have been allocated to previously have been
amended as follows: UK Engineering to Energy which is a reportable
segment, and Resourcing Solutions to Infrastructure - RSL Rail, a
sub-division of the reportable operating segment Infrastructure for
which distinct financial information is available but not used by
the Chief Operating Decision Maker (CODM). These changes best
represent the original business units that the assets were
allocated to.
Impairment testing
Goodwill and intangible assets are reviewed and tested for
impairment on an annual basis or more frequently to determine if
there is an indication of impairment.
If any indication of impairment exists, then the recoverable
amount of a CGU's goodwill and intangible asset's recoverable
amount is determined using value-in-use calculations.
As a result of management's trading forecasts now being lower
that those at time of acquisition, total impairment losses of
GBP2,000,000 (6 months to 31 January 2021: GBPnil, year to 31 July
2021: GBPnil) have been recorded in respect of goodwill and
acquired intangible assets within the Infrastructure - RSL Rail
CGU.
The key assumptions and estimates used when calculating a CGU's
value-in-use, are as follows:
Cash flows from operations
Cash flows from operations are based on the Group's 3 year
business plan and applying the over-arching Group NFI and cost
growth rates for the 3 year period on top of the FY22 full year
forecast for the Energy and Infrastructure - RSL Rail sectors.
Discount rates
The pre-tax rates used to discount the forecast cash flows
ranged from 18.4% to 18.9% (6 months to 31 January 2021: 14.4% to
14.9%, year to 31 July 2021: 15.0% to 16.0%) reflecting the Group's
weighted average cost of capital, adjusted for specific risks
associated with the asset's estimated cash flows. The discount rate
is based on the weighted average cost of capital (WACC). The
risk-free rate, based on government bond rates, is adjusted for
equity and industry risk premiums, reflecting the increased risk
compared to an investor who is investing the market as a whole. Net
present values are calculated using pre-tax discount rates derived
from the Group's post-tax WACC of 13.3% (6 months to 31 January
2021: 12.9%, year to 31 July 2021: 12.5%) for CGUs assessed.
Growth rates
The medium-term growth rates are based on management forecasts,
reflecting past experience and economic environment. Long-term
growth rates are based on external sources of an average estimated
growth rate of 2.0% (6 months to 31 January 2021: 2.0%, year to
July 2021: 2.0%), using a weighted average of operating country
real growth expectations.
As a result of these forecasts, total impairment losses of
GBP2,000,000 (6 months to 31 January 2021: GBPnil, year to 31 July
2021: GBPnil,) have been recorded in respect of goodwill within the
Infrastructure - RSL Rail CGU.
6 months 6 months 6 months 6 months 12 months 12 months
31/01/22 31/01/22 31/01/22 31/01/22 31/07/21 31/07/21
unaudited unaudited unaudited unaudited
Goodwill Intangible Goodwill Intangible Goodwill Intangible
assets assets assets
Impairment expenses GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============================= =========== =========== ============= ============= ============ =============
Energy (previously - - - - - -
UK Engineering)
Infrastructure - RSL 2,000 - - - - -
Rail (previously Resourcing
Solutions Limited)
============================= =========== =========== ============= ============= ============ =============
Total 2,000 - - - - -
============================= =========== =========== ============= ============= ============ =============
Sensitivity analysis has been performed to show the impact of
reasonable or possible changes in key assumptions, in particular
with reference to the economic uncertainty surrounding the ongoing
recovery from the COVID-19 pandemic. An increase in the post-tax
discount rate by a factor of 0.2% to 13.5%, or a reduction in the
long-term growth rate to 1.8%, would not trigger a further material
impairment for any of the CGU's. For both the Infrastructure - RSL
Rail CGU and the Energy CGU, a reduction of 33% in management's
mid-term forecasts for FY23-FY27 would not trigger any material
further impairment.
8 Trade and Other Receivables
Restated Restated
6 months 6 months 12 months
31/01/22 31/01/21 31/07/21
unaudited unaudited
GBP'000 GBP'000 GBP'000
======================================== =========== =========== ===========
Trade receivables from contracts with
customers, net of loss allowance 39,933 29,488 34,187
Other receivables 2,292 1,857 1,817
Prepayments 1,648 1,742 1,389
Accrued income 19,779 12,518 26,742
======================================== =========== =========== ===========
Total 63,652 45,605 64,135
======================================== =========== =========== ===========
Prepayments as at 31 January 2021 and 31 July 2021 have been
restated as a result of change of accounting policy in light of the
International Financial Reporting Standards Interpretations
Committee (IFRIC) latest guidance on SaaS arrangements. Please
refer to Note 1.24 for more details.
Included in other receivables as at 31 January 2022 is
GBP134,000 in respect of deferred consideration from the South
African entities' disposal which is due after more than one
year.
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
31/01/22 31/01/21 31/07/21
unaudited unaudited
GBP'000 GBP'000 GBP'000
======================================== ====================== ====================== ==========
Trade receivables from contracts with
customers, gross amounts 42,591 33,693 37,636
Loss allowance (2,658) (4,205) (3,449)
======================================== ====================== ====================== ==========
Trade receivables from contracts with
customers, net of loss allowance 39,933 29,488 34,187
======================================== ====================== ====================== ==========
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. Additionally,
the projected post-COVID economic recovery based on external
reports, forecast data and scenario analysis has been taken into
account when assessing the credit risk profiles for specific
industries and geographies.
The loss allowance for trade receivables was determined as
follows:
31 January More than More than More than
2022 30 days 60 days 90 days
unaudited Current past due past due due Total
============= ==================== ====================== ===================== ==================== ===================
Weighted
expected
loss
rate (%) 3.8% 4.7% 5.7% 53.8%
Gross
carrying
amount -
trade
receivables
(GBP'000) 37,945 2,300 351 1,995 42,591
Loss
allowance
(GBP'000) 1,456 109 20 1,073 2,658
============= ==================== ====================== ===================== ==================== ===================
31 January More than More than More than
2021 30 days 60 days 90 days
unaudited Current past due past due due Total
============= ==================== ====================== ===================== ==================== ===================
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 July 2021 More than More than More than
30 days 60 days 90 days
Current past due past due due Total
============= ==================== ====================== ===================== ==================== ===================
Weighted
expected
loss
rate (%) 5.2% 5.0% 18.6% 60.9%
Gross
carrying
amount -
trade
receivables
(GBP'000) 33,741 654 743 2,498 37,636
Loss
allowance
(GBP'000) 1,756 33 138 1,522 3,449
============= ==================== ====================== ===================== ==================== ===================
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
31/01/22 31/01/21 31/07/21
unaudited unaudited
GBP'000 GBP'000 GBP'000
================================== ======================= ======================== =======================
Opening loss allowance for the
period 3,449 3,987 3,987
Increase/(release) in loss
allowance
recognised in profit and loss
during
the period 5 439 (296)
Receivable written off during the
period
as uncollectable (796) (221) (242)
================================== ======================= ======================== =======================
Closing loss allowance for the
period 2,658 4,205 3,449
================================== ======================= ======================== =======================
Impairment of accrued income
6 months 6 months 12 months
31/01/22 31/01/21 31/07/21
unaudited unaudited
GBP'000 GBP'000 GBP'000
======================================== ====================== ====================== ==========
Gross accrued income 20,621 12,743 27,807
Loss allowance (842) (225) (1,065)
======================================== ====================== ====================== ==========
Closing loss allowance for the period 19,779 12,518 26,742
======================================== ====================== ====================== ==========
31 January More than More than More than
2022 30 days 60 days 90 days
unaudited Current past due past due due Total
============= ====================== ====================== ======================= ===================== =====================
Weighted
expected
loss
rate (%) 2.5% 2.5% 2.5% 32.1%
Gross
carrying
amount -
trade
receivables
(GBP'000) 17,932 903 690 1,096 20,621
Loss
allowance
(GBP'000) 450 23 17 352 842
============= ====================== ====================== ======================= ===================== =====================
31 January More than More than More than
2021 30 days 60 days 90 days
unaudited Current past due past due due Total
============= ====================== ====================== ======================= ===================== =====================
Weighted
expected
loss
rate (%) 0.0% 0.0% 0.0% 14.2%
Gross
carrying
amount -
trade
receivables
(GBP'000) 9,753 640 765 1,585 12,743
Loss
allowance
(GBP'000) - - - 225 225
============= ====================== ====================== ======================= ===================== =====================
31 July 2021 More than More than More than
30 days 60 days 90 days
Current past due past due due Total
============= ====================== ====================== ======================= ===================== =====================
Weighted
expected
loss
rate (%) 2.9% 2.7% 2.6% 23.7%
Gross
carrying
amount -
trade
receivables
(GBP'000) 21,455 3,546 1,519 1,287 27,807
Loss
allowance
(GBP'000) 624 96 40 305 1,065
============= ====================== ====================== ======================= ===================== =====================
The loss allowance for accrued income at the period end
reconciles to the opening loss allowance as per below:
6 months 6 months 12 months
31/01/22 31/01/21 31/07/21
unaudited unaudited
GBP'000 GBP'000 GBP'000
=========================== ======================== =========================== =============================
Opening loss allowance for
the period 1,065 269 269
Amount utilised in the (350) - -
period
Increase/(release) in loss
allowance
recognised in profit and
loss during
the period 127 (44) 796
Closing loss allowance for
the period 842 225 1,065
=========================== ======================== =========================== =============================
9 Loans and Borrowings
6 months 6 months 12 months
31/01/22 31/01/21 31/07/21
unaudited unaudited
GBP'000 GBP'000 GBP'000
======================================== =========== =========== ==========
Working capital facility 8,890 4,338 9,348
Finance costs capitalised - - -
======================================== =========== =========== ==========
Bank loans and borrowings due in less
than one year 8,890 4,338 9,348
======================================== =========== =========== ==========
Bank loans and borrowings due in more - - -
than one year
======================================== =========== =========== ==========
Total bank loans and borrowings 8,890 4,338 9,348
======================================== =========== =========== ==========
The Group has 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 all the reporting periods
above, 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 1.75% (year to 31
July 2021: 1.75%) over HSBC Bank base rate of 0.5% (year to 31 July
2021: 0.1%).
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 2020 10,004 348 16 10,368
Effect of reassessment of lease
term 283 - 5 288
Effect of movement in exchange
rates 7 - 1 8
================================================= ========== ========= ======== ========
At 31 January 2021 10,294 348 22 10,664
================================================= ========== ========= ======== ========
At 1 August 2020 10,004 348 16 10,368
Effect of reassessment of lease
term 416 - 5 421
Effect of movement in exchange
rates 41 - 1 42
Reclassification to assets held
for sale (216) - (14) (230)
================================================= ========== ========= ======== ========
At 31 July 2021 10,245 348 8 10,601
================================================= ========== ========= ======== ========
Additions 118 30 - 148
Change of lease consideration (20) (9) - (29)
Effect of movement in exchange
rates 17 - - 17
================================================= ========== ========= ======== ========
At 31 January 2022 10,360 369 8 10,737
================================================= ========== ========= ======== ========
Accumulated
depreciation At 1 August 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
================================================= ========== ========= ======== ========
At 1 August 2020 2,847 176 7 3,030
Depreciation charge 1,749 119 7 1,875
Impairment 183 - - 183
Effect of movement in exchange
rates 40 - - 40
Reclassification to assets held
for sale (190) - (11) (201)
================================================= ========== ========= ======== ========
At 31 July 2021 4,629 295 3 4,927
================================================= ========== ========= ======== ========
Depreciation charge 698 29 1 728
Effect of movement in exchange
rates 13 - - 13
================================================= ========== ========= ======== ========
At 31 January 2022 5,340 324 4 5,668
================================================= ========== ========= ======== ========
Net book
value At 31 January 2021 6,582 89 12 6,683
At 31 July 2021 5,616 53 5 5,674
At 31 January 2022 5,020 45 4 5,069
================================================= ========== ========= ======== ========
At 31 January 2022, included within property right-of-use asset
is dilapidation costs of GBP1,504,000 (31 January 2021:
GBP1,627,000, 31 July 2021: GBP1,491,000) and net book value of
GBP440,000 (31 January 2021: GBP662,000, 31 July 2021:
GBP526,000).
Properties Vehicles Other Total
unaudited unaudited unaudited 31 January
22
Lease liabilities GBP'000 GBP'000 GBP'000 GBP'000
=================== =========== ========== ========== ===========
Current 1,448 27 2 1,477
Non-current 3,399 19 3 3,421
=================== =========== ========== ========== ===========
4,847 46 5 4,898
=================== =========== ========== ========== ===========
Properties Vehicles Other Total
31 January
unaudited unaudited unaudited 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
=================== =========== ========== ========== ===========
Total
31 July
Properties Vehicles Other 21
Lease liabilities GBP'000 GBP'000 GBP'000 GBP'000
=================== =========== ========== ========== ===========
Current 1,423 55 2 1,480
Non-current 4,268 9 4 4,281
=================== =========== ========== ========== ===========
5,691 64 6 5,761
=================== =========== ========== ========== ===========
Lease liabilities for properties have lease terms of between one
and seven years (31 January 2021: one and eight years, 31 July
2021: one and seven years).
Reconciliation
of lease
liabilities
movement in the
period Properties Vehicles Other Total
GBP'000 GBP'000 GBP'000 GBP'000
================ ========================= ============================ ========================== ===========================
At 1 August
2020 7,551 176 9 7,736
Lease payments (1,037) (87) (4) (1,128)
Interest
expense on
lease
liabilities 79 3 - 82
Effect of
reassessment
of lease
term 257 - 5 262
Effect of
movement in
exchange
rates 13 - - 13
================ ========================= ============================ ========================== ===========================
At 31 January
2021 6,863 92 10 6,965
================ ========================= ============================ ========================== ===========================
At 1 August
2020 7,551 176 9 7,736
Lease payments (2,387) (116) (8) (2,511)
Interest
expense on
lease
liabilities 151 4 1 156
Effect of
reassessment
of lease
term 268 - 5 273
Effect of
movement in
exchange
rates 120 - 1 121
Liabilities
directly
associated
with assets
held for sale (12) - (2) (14)
================ ========================= ============================ ========================== ===========================
At 31 July 2021 5,691 64 6 5,761
================ ========================= ============================ ========================== ===========================
Additions 110 30 - 140
Lease payments (1,002) (31) (1) (1,034)
Interest
expense on
lease
liabilities 63 1 - 64
Changes of
lease
consideration (20) (18) - (38)
Effect of
movement in
exchange
rates 5 - - 5
================ ========================= ============================ ========================== ===========================
At 31 January
2022 4,847 46 5 4,898
================ ========================= ============================ ========================== ===========================
11 Share Capital
Authorised share capital 6 months 6 months 12 months
31/01/22 31/01/21 31/07/21
unaudited unaudited
GBP'000 GBP'000 GBP'000
======================================= ======================== ======================== ========================
40,000,000 ordinary shares of GBP0.01
each 400 400 400
======================================= ======================== ======================== ========================
Allotted, called up, and fully paid 6 months 6 months 12 months
31/01/22 31/01/21 31/07/21
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 2020 32,290
Exercise of share options -
============================= =======
In issue at 31 January 2021 32,290
============================= =======
In issue at 1 August 2020 32,290
Exercise of share options -
============================= =======
In issue at 31 July 2021 32,290
============================= =======
In issue at 1 August 2021 32,290
Exercise of share options -
============================= =======
In issue at 31 January 2022 32,290
============================= =======
12 Discontinued Operations
2022
The assets and liabilities relating to South African recruitment
operations have been sold at the end of November 2021. The net loss
of GBP55,000 from the South African recruitment operation disposal
has been recognised in non-underlying costs. The deferred
consideration of GBP134,000 has been recognised in the other
receivables. There were no further changes to discontinued
operations during the period.
2021
On 30 July 2021, the Group announced the decision to close its
Mexico operations. In addition, the Group also announced a
management buy-out agreement of the South Africa recruitment
operations which is expected to complete within one year of 31 July
2021. The Fulfilment, Solutions and Group Support functions of the
South African operations will be retained and transferred to a new
South African entity. As a result, the Group has reclassified its
entire Mexican operations and South African recruitment operations
as discontinued in the consolidated financial statements for the
year ended 31 July 2021.
Restated 12 months
6 months to 31/07/21
6 months (1)
to 31/01/22 to 31/01/21
unaudited unaudited
Total Total Total
GBP'000 GBP'000 GBP'000
============================================ ======================= ======================= ===================
Revenue - 1,682 3,432
Cost of sales (10) (1,148) (2,385)
--------------------------------------------- ----------------------- ----------------------- -------------------
Gross (loss)/profit (10) 534 1,047
Administrative expenses (2) (718) (753) (2,197)
--------------------------------------------- ----------------------- ----------------------- -------------------
Loss from operations (728) (219) (1,150)
Finance income 59 64 39
Finance cost (7) (17) (112)
--------------------------------------------- ----------------------- ----------------------- -------------------
Loss before taxation (676) (172) (1,223)
Taxation 33 (22) 15
--------------------------------------------- ----------------------- ----------------------- -------------------
Loss after taxation from continuing
operations (643) (194) (1,208)
============================================= ======================= ======================= ===================
Exchange differences on translation of
discontinued operations 747 48 48
--------------------------------------------- ----------------------- ----------------------- -------------------
Other comprehensive profit/(loss) from
discontinued operations 104 (146) (1,160)
============================================= ======================= ======================= ===================
Cash flows from discontinued operations
22 21
Restated 12 months
6 months 31/07/21
6 months (1)
31/01/22 31/01/21
unaudited unaudited
GBP'000 GBP'000 GBP'000
=========================================== =========== =========== ==========
Net cash used in operating activities (990) (1,396) (1,348)
Net cash used in investing activities (45) - (32)
Net cash used in financing activities (68) (67) (139)
Effects of exchange rates on cash and
cash equivalents (53) 16 (15)
=========================================== =========== =========== ==========
Net decrease in cash and cash equivalents
from discontinued operations (1,156) (1,447) (1,534)
=========================================== =========== =========== ==========
(1) 6 months to January 2021 figures have been rested for the
presentation of Mexican and South African discontinued operations
as explained above.
(2) Included in administrative expenses are GBP127,000 (6 months
to 31 January 2021: GBP132,000, 12 months to 31 July 2021:
GBP693,000) of non-underlying items relating to employee costs,
professional fees and administrative expenses relating to business
closures. In addition, it includes net impairment reversals on
trade receivables from discontinued operations of GBP40,000 (6
months to 31 January 2021 restated: impairment reversals of
GBP82,000, 12 months to 31 July 2021: impairment losses of
GBP80,000).
13 Net Debt
Net debt is the total amount of cash and cash equivalents less
interest-bearing loans and borrowings, including finance lease
liabilities.
Net cash flows include the net drawdown of loans and borrowings
and cash interest paid relating to loans and borrowings.
1 August Net cash Non-cash 31 January
2021 flows movements 2022
31 January 2022 GBP'000 GBP'000 GBP'000 GBP'000
unaudited
================== ============================= ============================= ============================ =============================
Cash and cash
equivalents 29,238 (15,507) - 13,731
Interest-bearing - - - -
term loan
Working capital
facilities (9,348) 458 - (8,890)
Lease liabilities (5,761) 1,034 (171) (4,898)
================== ============================= ============================= ============================ =============================
Total net
cash/(debt) 14,129 (14,015) (171) (57)
================== ============================= ============================= ============================ =============================
Capitalised - - - -
finance costs
================== ============================= ============================= ============================ =============================
Total net
cash/(debt)
after
capitalised
finance costs 14,129 (14,015) (171) (57)
================== ============================= ============================= ============================ =============================
1 August Net cash Non-cash 31 January
2020 flows movements 2021
31 January 2021 GBP'000 GBP'000 GBP'000 GBP'000
unaudited
================== ========================= ============================= =========================== =============================
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 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
================== ========================= ============================= =========================== =============================
.
1 August Net cash Non-cash 31 July
2020 flows movements 2021
31 July 2021 GBP'000 GBP'000 GBP'000 GBP'000
================================== ========= ========= ============================ ========
Cash and cash equivalents 34,796 (5,558) - 29,238
Interest-bearing term loan (7,500) 7,500 - -
Working capital facilities (151) (9,197) - (9,348)
Lease liabilities (7,736) 2,511 (536) (5,761)
================================== ========= ========= ============================ ========
Total net cash 19,409 (4,744) (536) 14,129
================================== ========= ========= ============================ ========
Capitalised finance costs 196 - (196) -
================================== ========= ========= ============================ ========
Total net cash after capitalised
finance costs 19,605 (4,744) (732) 14,129
================================== ========= ========= ============================ ========
14 Dividends
The Group declared a final dividend in respect of the year ended
31 July 2021 on 4 November 2021, which was paid on 10 December
2021.
22 21
6 months 6 months 12 months
31/01/22 31/01/21 31/07/21
unaudited unaudited
GBP'000 GBP'000 GBP'000
========================================== =========== =========== ==========
Equity dividends paid at 1.5 pence per 484 - -
share (6 months to 31 January 2021: nil
pence, 12 months to 31 July 2021: nil
pence)
========================================== =========== =========== ==========
15 Contingent Liabilities
We continue our cooperation with the United States Department of
Justice and in the 6 month period to 31 January 2022 have incurred
GBP27,000 (6 months to 31 January 2021: GBP29,000, year to 31 July
2021: GBP29,000) 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.
16 Events after the Reporting Period End
In March 2022, the Group exercised the break clause relating to
one of its UK property leases, shortening the lease term from March
2027 to September 2022. This has been disclosed as a non-adjusting
post balance sheet event.
17 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
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