TIDMGATC
RNS Number : 1940O
Gattaca PLC
03 November 2016
3 November 2016
Gattaca plc
Preliminary Results for the year ended 31 July 2016
Gattaca plc ("Gattaca" or the "Group"), the specialist
Engineering and Technology (IT & Telecoms) recruitment agency,
today announces its Preliminary Results for the year ended 31 July
2016.
Financial Highlights
2016 2015 Change
================== ========================== ========================== ==========================
Statutory Underlying(2) Statutory Underlying(2) Statutory Underlying(2)
================== ========== ============== ========== ============== ========== ==============
GBPm GBPm GBPm GBPm % %
================== ========== ============== ========== ============== ========== ==============
Revenue 617.6 616.9 502.3 622.8 +23% (1%)
================== ========== ============== ========== ============== ========== ==============
Net Fee Income
(NFI) (1) 73.0 72.4 54.8 72.2 +33% +0%
================== ========== ============== ========== ============== ========== ==============
Profit from
operations 15.1 21.4 12.4 21.2 +22% +1%
================== ========== ============== ========== ============== ========== ==============
Profit before
tax 15.1 20.4 11.3 19.7 +34% +4%
================== ========== ============== ========== ============== ========== ==============
Basic earnings
per share 32.1p 31.0p +4%
================== ========== ============== ========== ============== ========== ==============
Diluted earnings
per share 31.0p 29.6p +5%
================== ========== ============== ========== ============== ========== ==============
Final dividend 17.00p 16.32p +4%
================== ========== ============== ========== ============== ========== ==============
Total dividend 23.00p 22.00p +5%
================== ========== ============== ========== ============== ========== ==============
Net debt at GBP25.0m GBP33.6m (GBP8.6m)
end of period
================== ========== ============== ========== ============== ========== ==============
The following footnotes apply, where indicated, throughout these
interim results:
(1) NFI is calculated as revenue less contractor payroll
costs
2 Underlying performance is calculated on a pro-forma basis, as
though Networkers had been owned by the Group for the entire prior
period. Underlying results exclude the trading and net proceeds of
divested businesses (2016: GBP0.3m loss; 2015: GBP0.6m loss),
acquisitions costs (2016: GBPnil; 2015: GBP1.7m), amortisation of
acquired intangibles (2016: GBP3.7m; 2015: GBP1.7m) and integration
and restructuring costs (2016: GBP2.4m; 2015: GBP1.0m), exchange
gains from revaluation of foreign assets and liabilities (2016:
GBP1.0m; 2015: GBP0.3m loss) and include implied interest from
acquisition funding (2016: nil; 2015 GBP0.7m).
Trading and Operational Highlights
-- Profits in line with market expectations
-- Strong performance in Engineering, with NFI growth of 6%
-- Technology NFI down 6%. Good growth in Telecoms (+9%) but
offset by underperformance in IT (-17%); changes made to market
focus and management structure are improving results
-- Integration of Networkers nearing completion with GBP3.1m of
synergies identified, to be realised in FY2017
-- Reinvestment of GBP1.8m of synergies made to strengthen the
business, including adding international headcount to support and
drive forward growth outside the UK.
-- Newly created Engineering Technology division, which combined
existing Networkers and Matchtech skill sets and targets the
"Internet of Things", is already one of our fastest growing
businesses
-- Full year dividend increased by 5% to 23.0 pence per share (2015: 22.0 pence)
Outlook
-- Since entering the new financial year we have a seen a
slowdown in trading in the UK with Group NFI in 2017 Q1 forecast to
be down 3% on 2016 Q1 (Contract down 2%; Permanent down 7%)
-- We are continuing to Invest in our overseas operations which
continue to enjoy growth and which will to some extent mitigate the
uncertainty around UK economy in the medium term
-- Full year effects of Networkers acquisition to come through
in FY17, with first concrete sales synergies now being realised
Commenting on the results, Brian Wilkinson, Chief Executive of
the Group said:
"I am pleased to report a positive year for the Group, where we
delivered solid results, made significant progress on the
integration of Networkers and introduced the new Group brand name,
Gattaca.
"The 2017 financial year has started with growth internationally
offset by a weaker performance in the UK. An early success this
year has been the first sales win by our Gattaca solutions service
line which significantly enhances our international delivery
capability.
"Looking forward, uncertainty about the future of the British
economy raises concerns for companies like ours, operating in what
is seen as a highly cyclical sector. Nevertheless, our well
established approach of partnering with our clients on long-term
public and private infrastructure projects mitigates this risk to
some extent, as does our increasing geographic diversification.
"The strategic repositioning of the Group is now complete. We
have two well regarded market facing brands -Matchtech and
Networkers - which are well placed to gain share in the highly
attractive Engineering and Technology markets. Our investment in
business development and international operations, as well as our
burgeoning solutions service line, give us great confidence in the
Company's future prospects."
For further information please contact:
Gattaca plc +44 (0) 1489 898989
----------------------------- ---------------------
Brian Wilkinson, Chief
Executive Officer
Tony Dyer, Chief Financial
Officer
----------------------------- ---------------------
Citigate Dewe Rogerson +44 (0) 20 7638 9571
----------------------------- ---------------------
Rob Newman / Nick Hayns
----------------------------- ---------------------
Numis Securities Limited +44 (0) 20 7260 1000
----------------------------- ---------------------
Michael Meade / Tom Ballard
----------------------------- ---------------------
Chairman's Statement
I am delighted to introduce the Group's 2016 Annual Results, my
first as Non-Executive Chairman, having joined in December
2015.
Since arriving, whenever I meet our employees I am always
impressed with the professionalism of the individuals, their
enthusiasm and the teamwork that exists. This makes for a strong
and unique culture, which we aim to retain as we grow the
business.
It has been a transformational year, with significant investment
in ensuring the successful integration of Networkers into the
Group, the strengthening of our international footprint in Asia and
North America and the launch of the new Group brand, Gattaca.
With Gattaca, we now have three distinct brands. Matchtech is
centred on engineering and Networkers on technology. Both brands
are long established and well known. The Group rebrand was the
final touch in the front office integration, and we can now push
forward on transforming our business into a truly global,
specialist recruitment group. While we have further work to
undertake in harmonizing systems, the majority of benefits will be
realised this coming year.
As a result of the Networkers acquisition, the Group's overall
results are up significantly on 2015. NFI increased 33%, although
on a like for like basis we are flat year on year. A robust
performance in Engineering was offset by some disappointing early
results in the IT sector of Technology. We responded quickly,
applying the same segmented marketing approach we developed in
Engineering, and have already seen an improvement in results.
Overall we are well placed to benefit from the growth opportunities
we see in many of the markets in which we operate as the demand for
skilled engineers and technology specialists continues to grow.
In the months immediately before and after the EU referendum
held on 23 June 2016, there was a pause in some clients'
recruitment, but activity returned quickly to pre-referendum
levels. Companies that were recruiting before have continued to do
so in the subsequent months. Demand for skilled engineers in both
the UK public and private sectors remains strong, and we have yet
to see any change to vacancy flow.
However, the outcome of the vote continues to make the economic
outlook uncertain, yet it is still too early to say what its
near-term impact will be for Gattaca. Whilst the amount of business
we conduct in Europe is not significant, the same cannot be said
for many of our clients and any uncertainty can have a knock-on
effect in the investment decisions our clients make.
In the longer term, our strength within the Engineering and
Technology sectors transcends international boundaries, and as the
trend towards globalisation continues, we are in a good position to
respond to any EU exit settlement eventually reached.
The Group's progressive dividend policy remains an important
part of our investment proposition. Diluted earnings per share of
31.0p (2015: 29.6p) was up 5% and the Board feels confident in
recommending to shareholders a final dividend per share of 17.0p
giving a 5% increase in the total dividend for the year to 23.0p
(2015: 22.0p). If approved by shareholders at the Annual General
Meeting, to be held on 7 December 2016, the final dividend will be
payable on 16 December 2016 to those shareholders on the register
on 18 November 2016.
On behalf of the Board, I would like to thank all staff for
their contribution to the success of the business. I would also
like to thank my colleagues on the Board, especially Ric Piper for
his time as Interim Chairman.
Outlook
The medium term outlook for Gattaca is positive, despite some
weakening in demand in the UK. The Board will continue to assess UK
trading over the coming months as clearly there is uncertainty over
how the EU referendum result will affect UK investment.
We are, however, well placed to increase our market share in the
UK, while pursing strong international growth through our regional
hubs.
We are exceptionally good at what we do - specialist Engineering
and Technology recruitment - and we know we have the employees who
can rise to the challenge of growing this business. I look forward
to the future with confidence.
Patrick Shanley
Chairman
Chief Executive's Review
Gattaca - a focused business
2016 has undoubtedly been the most significant year in the
company's history since our flotation ten years ago. Our
acquisition of Networkers in April 2015 saw us begin the complex
process of integrating two people-businesses.
Emerging from this, we decided to re-brand our Group to Gattaca,
a choice based on our culture, which is a major driver of our
success. With our founding shareholder on the Board, the Group
retains the feel of a family business. Gattaca expresses the idea
of a group of individuals who are part of a bigger entity, who have
shared DNA and a common purpose, but who each have their own
specialisms.
Recruitment is about relationships, and long-term success
follows a virtuous circle - we place candidates, who become
clients, who seek great candidates.
We are highly specialised, with a differentiated position - we
believe that there is no other recruiter of our size and
geographical spread who focuses purely on engineering and
technology disciplines.
We are recognised as the UK's number one engineering
recruiter(1) , yet estimate our market share at around only 5%. The
global engineering recruitment market is valued at US$26bn and the
technology recruitment market at US$57bn. Clearly, therefore, we
have capacity for substantial international growth without
diversification due to our 'narrow and deep' sales strategy. ((1)
Recruitment International Top 500 Report 2016)
By integrating Networkers and Matchtech, we are on track to
achieve considerable cost savings of GBP3.1m. These cost savings
have been largely redeployed through strategic investments of
GBP1.8m in areas that include internal recruitment, learning and
development, bids, business development and regional management.
This incorporates the appointment of managing directors for Asia
and the Americas. NFI from our international offices grew 30% and
we continue to invest in these areas.
European countries are tougher markets for UK recruiters than
English-speaking ones. We have laid foundations for planned
expansion, having won a pan-European managed service programme for
a major global technology client. For this, we established
operational teams in the Netherlands, Spain and Germany, which will
also make it easier to
provide services to other clients in the future.
Engineering Sector
The Engineering sector performed well with net fee income (NFI)
up 6% on 2015.
Infrastructure performed particularly strongly with 18% NFI
growth on the back of continued investment in the UK on major
projects including Crossrail, Thames Tideway, London Bridge, South
West Rail extension, major highway upgrades and High Speed 2. To
accelerate growth, we have increased headcount in our London
office. We also see significant opportunities internationally,
particularly in the US, where Texas Road & Highway Construction
alone has an annual budget of $2.5bn dedicated from 2018 and is an
opportunity to mirror one of Matchtech's strongest UK divisions in
our Dallas office.
Our energy business as a whole was down 7% on 2015 due to the
continued global downturn in Oil & Gas but was mitigated to
some extent by the Nuclear, Renewables and Transmission sectors.
There was growth in the Renewables markets in the UK, the Middle
East and East Africa. We are well placed to support the large-scale
upgrade and new-build power transmission projects, particularly in
the US, with billions of dollars in upgrades and new builds planned
for the coming decades. In the UK, delays to the nuclear new build
programme slowed activity, but the approval since the year end of
Hinkley Point and renewal of Trident should spur activity in the
coming years.
The automotive division saw NFI decrease by 4%. In the UK, new
car sales are at record levels and R&D investment is high, yet
there are acute skills-shortages with an estimated 50,000
additional automotive engineers needed in the UK by 2020. The
success of electric vehicles is transforming environmental
performance expectations, while the transport system is likely to
be impacted by connected cars and smart motorways. The sector
provides plenty of opportunity and we are confident of our ability
to maximise this.
The aerospace division saw growth of 12% on the back of Original
Equipment Manufacturers enjoying strong order books for existing
aircraft model production. We are seeing demand predominantly
across precision machining and interiors skill sets. Our teams
provide skills to clients looking to future-proof the next
five-to-ten years in materials development and technical
innovations.
Maritime had a challenging year, with the lull in naval build
programmes following the completion of the Queen Elizabeth class
aircraft carriers leading to a fall in Contract NFI of 17%.
However, with the new aircraft carriers due to arrive in Portsmouth
next year and with the Successor submarine programme approved by
Parliament, we expect a return to growth. Overseas, we continue to
build on our success sourcing talent for the CAD $26bn Canadian
surface combatant programme helping permanent fee income grow 11%
and we have recruited staff to capitalise on opportunities in
Europe and Australia.
We saw good growth of 10% in General Engineering which supplies
candidates across multiple sectors, where skill shortages are
considerable, including fast moving consumer goods (FMCG), medical
devices and special purpose machinery. Permanent fee income
increased by 25% as a result. Demand remains high for science and
medical staff in pharmaceutical and radiography in private
healthcare, where UK shortages prompted candidate attraction
campaigns in Europe and the US.
We saw a strong performance from Engineering Technology, with
contract NFI increasing by 17%. This division serves as the link
between our two specialist brands operating within the convergence
of engineering and IT skillsets. This sector is evolving rapidly
with advances in manufacturing process automation and product
innovation.
We also saw good growth in our professional staffing business,
which supplies finance, HR, procurement and sales staff to our
Engineering and Technology clients with NFI up 16%.
Technology Sector
The Technology sector underperformed with NFI down 6% on 2015.
Telecoms delivered strong growth of 9% in NFI, offset by IT which
was down 17% year on year but with the rate of decline slowing (H1
down 21%; H2 down 14%).
Telecoms performed well globally, particularly strong in Africa,
Asia and Latin America on the back of investment in 4G/LTE network
rollouts and upgrades. New markets of IP/broadcast, post-paid
billings and mobile money are also creating opportunities. The
convergence of Telecoms and IT skills has presented high-end roles
in IT security, Enterprise Resource Planning (ERP) and
development.
As reported at the half year, we have streamlined the IT
structure to focus on five specialisms; leadership (business
change), ERP, development, cloud, and security.
Our leadership business has performed steadily with NFI broadly
the same as last year, supplying change and transformation experts,
programme and project managers and business analysts to the
engineering, leisure and retail sectors in the UK.
ERP was down 30%, impacted by a major client outsourcing its
entire IT function. This business has predominantly been focused on
the European market delivered from the UK and to improve resilience
and growth opportunities we have increased headcount in the US and
Singapore.
We also saw a 20% reduction in demand from our corporate account
and public sector clients and we have integrated our two public
sector businesses and formed one, industry-focussed, business
unit.
Internationally, however, IT grew NFI by 8% with particularly
strong performances in the Middle East, Asia and North America.
Going forwards, IT development skill shortages in permanent
recruitment are resulting in an active contract market and our
focus on small and medium size organisations is gaining traction,
particularly in financial technology. We have a well-established
team in the UK and have invested in new headcount in our US and
Canada offices.
We work with system integrators on cloud implementation projects
and are seeing increased demand across Europe in the niche cloud
applications market and are looking to extend this into other
locations.
Cyber security is a relatively new specialism and we see this as
a growth market with businesses forecast to significantly increase
investment, based on the vast amounts of data being created and the
increasing importance of keeping it secure.
Outlook
"The 2017 financial year has started with growth internationally
offset by a weaker performance in the UK. An early success this
year has been the first sales win by our Gattaca solutions service
line, which significantly enhances our international delivery
capability.
"Looking forward, uncertainty about the future of the British
economy raises concerns for companies like ours, operating in what
is seen as a highly cyclical sector. Nevertheless, our well
established approach of partnering with our clients on long-term
public and private infrastructure projects mitigates this risk to
some extent, as does our increasing geographic diversification.
"The strategic repositioning of the Group is now complete. We
have two well regarded market facing brands -Matchtech and
Networkers - which are well placed to gain share in the highly
attractive Engineering and Technology markets. Our investment in
business development and international operations, as well as our
burgeoning solutions service line, give us great confidence in the
Company's future prospects."
Brian Wilkinson
Chief Executive Officer
Chief Financial Officer's Review
A solid financial performance leaves the Group in a strong
financial position with substantial investment headroom to
implement our growth strategy.
The new international footprint of the business provides
additional balance and resilience to the Group's business model and
delivers a ready-made platform for the Group to grow NFI faster
overseas which already represents 32% of the Group.
The Group has benefited from the combination of two cash
generative businesses, with GBP15.5m of cash generated before
dividends and since the year end we have extended our financing
facilities with HSBC for a further four years.
Altogether, our growing financial strength has enabled us to
continue our progressive dividend policy, with a proposed total
dividend for the year of 23.0 pence per share (2015: 22.0 pence) up
5%.
Performance
The following results include the first full year of Networkers
trading following a four month contribution in last year's
results.
Revenue of GBP617.6m (2015: GBP502.3m) generated net fee income
(NFI) of GBP73.0m (2015: GBP54.8m). Contract NFI of GBP53.9m (2015:
GBP40.1m) was delivered at a margin of 9.0% (2015: 8.2%), and
permanent recruitment fees were GBP19.1m (2015: GBP14.7m). The full
year effect of Networkers higher margin business meant gross
margins rose to 11.8% (2015: 10.9%).
Profits from operations of GBP15.1m were up 22% (2015:
GBP12.4m). The Group benefitted from a GBP1.0m revaluation of
foreign cash and assets significantly affected by the Sterling
devaluation post referendum leading to an increase in profits
before tax of 34% to GBP15.1m (2015: 11.3m).
On a pro-forma underlying basis, calculated as though Networkers
had been owned by the Group for the entire prior period and
excluding both GBP2.4m (2015: GBP2.7m) of non-recurring costs and
GBP3.7m (2015: GBP1.7m) of amortisation of acquired intangibles,
profits from operations were up 1% to GBP21.5m (2015:
GBP21.2m).
Profits after tax of GBP9.9m were up 6% with the full year
effect of the Networkers acquisition impacting the Group's
effective tax rate (ETR) which increased from 26.3% to 34.4%. Our
overseas entities are subject to a higher average corporate tax
rate than the UK standard rate and withholding taxes, which are
managed through higher gross margins charged to clients, also
increase the ETR.
Dividends paid
In the year, the Group paid a final dividend of 16.32 pence per
share on 11 December 2015 and an interim dividend of 6.00 pence per
share on 17 June 2016, totalling GBP6.9m.
Integration synergies
On the back of the acquisition the Group has achieved GBP3.1m of
cost synergies, the majority of which will be realised in FY2017. A
significant proportion of this has been reinvested to support
future growth. Large parts of the integration are complete but we
have further work in harmonising systems. We expect a final GBP0.5m
of integration related costs in the first half of FY2017.
Tangible and intangible assets
Capital expenditure in the year, including tangible assets and
software, was GBP0.9m (2015: GBP0.9m). Tangible assets at 31 July
2016 of GBP1.1m (2015: GBP1.5m) consist of the Group's motor fleet,
office equipment, leasehold improvements and computer equipment.
Intangible assets at 31 July 2016 were GBP48.4m (2015:
GBP52.2m).
Net assets and shares in issue
At 31 July 2016 the Group had net assets of GBP81.6m (2015:
GBP76.5m) and had 31.2m fully paid ordinary shares in issue (2015:
30.9m).
Working capital, cash flow and net debt
Debtor days of the combined Group at the year-end were 50 days
(31 July 2015: 49).
Net debt at 31 July 2016 was GBP25.0m (2015: GBP33.6m),
consisting of a working capital facility of GBP18.8m (2015:
GBP9.0m), bank term loan GBP13.6m (2015: GBP28.6m), bank overdrafts
GBPnil (2015: GBPnil) less cash GBP7.4m (2015: GBP4.0m).
Banking facilities
On 20 October 2016 the Group extended its financing facilities
with HSBC for a further four years, The Group has facilities of
GBP105m consisting of a GBP75m invoice financing facility and a
GBP30m revolving credit facility, both committed until October
2020.
Group financial risk management
The Board reviews and agrees policies for managing financial
risks. The Group's finance function is responsible for managing
investment and funding requirements including banking and cash flow
monitoring. It seeks to ensure that adequate liquidity exists at
all times in order to meet its cash requirements.
The Group's financial instruments comprise borrowings, cash and
various items, such as trade receivables and trade payables that
arise from its operations, and some matching forward foreign
exchange contracts. The Group does not trade in financial
instruments. The main risks arising from the Group's financial
instruments are described below.
Liquidity and interest rate risk
The Group had net debt of GBP25.0m at the year end, comprising
GBP32.4m debt less GBP7.4m cash. The Group's exposure to market
risk for changes in interest rates relates primarily to the Group's
bank loan and sales financing facility debt obligations. Bank
interest is charged on a floating rate basis.
Credit risk
The Group trades only with recognised, creditworthy third
parties. The international aspect of the acquisition of Networkers
does increase the credit risk of the Group. Receivable balances are
monitored on an on-going basis with the result that the Group's
Board feels that the exposure to bad debts is not significant.
There are no significant concentrations of credit risk within the
Group, with no single debtor accounting for more than 4% (2015: 3%)
of total receivables balances at 31 July 2016.
Foreign currency risk
Around 32% of the Group's annualised NFI is generated in
overseas markets. The Group does face risks to both its reported
performance and cash position arising from the effects of exchange
rate fluctuations. The Group manages this risk by matching sales
and direct costs in the same currency, by entering into forward
exchange contracts to minimise the gap in assets and liabilities
denominated in foreign currencies and by regularly exchanging
surplus foreign currency to minimise the gap in assets and
liabilities denominated in foreign currency.
Tony Dyer
Chief Financial Officer
Consolidated Income Statement
For the year ended 31 July 2016
2016 2015
Note GBP'000 GBP'000
-------------------------------------------- ---- --------- ---------
Revenue 617,604 502,293
Cost of sales (544,608) (447,474)
-------------------------------------------- ---- --------- ---------
GROSS PROFIT 2 72,996 54,819
Administrative expenses (57,934) (42,459)
-------------------------------------------- ---- --------- ---------
PROFIT FROM OPERATIONS 3 15,062 12,360
-------------------------------------------- ---- --------- ---------
Profit from operations before amortisation
of acquired intangibles and non-recurring
costs 21,089 16,750
Non-recurring costs included within
administrative expenses 3 (2,371) (2,710)
Amortisation of acquired intangibles 3 (3,656) (1,680)
-------------------------------------------- ---- --------- ---------
Profit on disposal of subsidiary 58 -
Finance income 5 1,025 -
Finance cost 6 (1,076) (1,074)
-------------------------------------------- ---- --------- ---------
PROFIT BEFORE TAX 15,069 11,286
Taxation 9 (5,152) (2,959)
-------------------------------------------- ---- --------- ---------
PROFIT FOR THE YEAR 9,917 8,327
-------------------------------------------- ---- --------- ---------
Attributable to:
Equity holders of the parent 9,917 8,311
Non-controlling interests - 16
-------------------------------------------- ---- --------- ---------
9,917 8,327
-------------------------------------------- ---- --------- ---------
All of the activities of the Group are classed as
continuing.
EARNINGS PER ORDINARY SHARE
2016 2015
Note pence pence
---------------------------- ---- ------ ------
Basic 10 32.1 31.0
Diluted 10 31.0 29.6
---------------------------- ---- ------ ------
Statement of Comprehensive Income
For the year ended 31 July 2016
2016 2015
GBP'000 GBP'000
------------------------------------------------------------- -------- --------
PROFIT FOR THE YEAR 9,917 8,327
OTHER COMPREHENSIVE INCOME
Items that may be classified to profit or loss:
Exchange differences on retranslation of foreign operations 835 (109)
------------------------------------------------------------- -------- --------
OTHER COMPREHENSIVE INCOME FOR THE YEAR 835 (109)
------------------------------------------------------------- -------- --------
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 10,752 8,218
------------------------------------------------------------- -------- --------
Attributable to:
Equity holders of the parent 10,752 8,202
Non-controlling interests - 16
------------------------------------------------------------- -------- --------
10,752 8,218
------------------------------------------------------------- -------- --------
Statement of Changes in Equity
For the year ended 31 July 2016
A) Group
Share Translation
based of Non-
Share Share Merger payment foreign Retained controlling
capital premium reserve reserve operations earnings interests Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ -------- -------- -------- -------- ----------- --------- ------------ --------
At 1 August 2014 250 7,388 224 1,621 89 33,091 - 42,663
------------------------------ -------- -------- -------- -------- ----------- --------- ------------ --------
Profit for the year - - - - - 8,311 16 8,327
Other comprehensive
income - - - - (109) - - (109)
------------------------------ -------- -------- -------- -------- ----------- --------- ------------ --------
Total comprehensive
income - - - - (109) 8,311 16 8,218
------------------------------ -------- -------- -------- -------- ----------- --------- ------------ --------
Dividends paid in
the year - - - - - (5,382) - (5,382)
Deferred tax movement
re share options - - - - - 174 - 174
IFRS 2 charge - - - 1,623 - - - 1,623
Reacquisition of
non-controlling
interest - - - - - (650) - (650)
IFRS 2 reserves
transfer - - - (1,104) - 1,104 - -
Shares issued 59 1,306 28,526 - - - - 29,891
------------------------------ -------- -------- -------- -------- ----------- --------- ------------ --------
Transactions with
owners 59 1,306 28,526 519 - (4,754) - 25,656
------------------------------ -------- -------- -------- -------- ----------- --------- ------------ --------
At 31 July 2015 309 8,694 28,750 2,140 (20) 36,648 16 76,537
------------------------------ -------- -------- -------- -------- ----------- --------- ------------ --------
At 1 August 2015 309 8,694 28,750 2,140 (20) 36,648 16 76,537
------------------------------ -------- -------- -------- -------- ----------- --------- ------------ --------
Profit for the year - - - - - 9,917 - 9,917
Other comprehensive
income - - - - 835 - - 835
------------------------------ -------- -------- -------- -------- ----------- --------- ------------ --------
Total comprehensive
income - - - - 835 9,917 - 10,752
------------------------------ -------- -------- -------- -------- ----------- --------- ------------ --------
Dividends paid in
the year - - - - - (6,892) - (6,892)
Deferred tax movement
re share options - - - - - (185) - (185)
Acquisition of non-controlling
interest - - - - - (124) (16) (140)
IFRS 2 charge - - - 1,537 - - - 1,537
IFRS 2 reserves
transfer - - - (1,140) - 1,140 - -
Shares issued 3 2 - - - - - 5
------------------------------ -------- -------- -------- -------- ----------- --------- ------------ --------
Transactions with
owners 3 2 - 397 - (6,061) (16) (5,675)
------------------------------ -------- -------- -------- -------- ----------- --------- ------------ --------
At 31 July 2016 312 8,696 28,750 2,537 815 40,504 - 81,614
------------------------------ -------- -------- -------- -------- ----------- --------- ------------ --------
B) Company
Share
based
Share Share Merger reserve payment Retained
capital premium GBP'000 reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- -------- -------- ---------------- -------- ---------- ---------
At 1 August 2014 250 7,388 - 1,621 1,408 10,667
------------------------------- -------- -------- ---------------- -------- ---------- ---------
Profit and total comprehensive
income for the year - - - - 3,482 3,482
------------------------------- -------- -------- ---------------- -------- ---------- ---------
Dividends paid in the
year - - - - (5,382) (5,382)
IFRS 2 charge - - - 1,623 - 1,623
IFRS 2 reserves transfer - - - (1,104) 1,104 -
Shares issued 59 1,306 28,526 - - 29,891
------------------------------- -------- -------- ---------------- -------- ---------- ---------
Transactions with owners 59 1,306 28,526 519 (4,278) 26,132
------------------------------- -------- -------- ---------------- -------- ---------- ---------
At 31 July 2015 309 8,694 28,526 2,140 612 40,281
------------------------------- -------- -------- ---------------- -------- ---------- ---------
At 1 August 2015 309 8,694 28,526 2,140 612 40,281
------------------------------- -------- -------- ---------------- -------- ---------- ---------
Profit and total comprehensive
income for the year - - - - 7,298 7,298
------------------------------- -------- -------- ---------------- -------- ---------- ---------
Dividends paid in the
year - - - - (6,892) (6,892)
IFRS 2 charge - - - 1,537 - 1,537
IFRS 2 reserves transfer - - - (1,140) 1,140 -
Shares issued 3 2 - - - 5
------------------------------- -------- -------- ---------------- -------- ---------- ---------
Transactions with owners 3 2 - 397 (5,752) (5,350)
------------------------------- -------- -------- ---------------- -------- ---------- ---------
At 31 July 2016 312 8,696 28,526 2,537 2,158 42,229
------------------------------- -------- -------- ---------------- -------- ---------- ---------
Statements of Financial Position
For the year ended 31 July
2016 Group Company
-------------------- --------------------
2016 2015 2016 2015
Note GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- ---- --------- --------- --------- ---------
NON-CURRENT ASSETS
Intangible assets 11 48,371 52,230 - -
Property, plant and equipment 12 1,125 1,535 - -
Investments 13 - - 7,213 5,676
Deferred tax asset 14 969 1,237 - -
----------------------------------- ---- --------- --------- --------- ---------
Total Non-Current Assets 50,465 55,002 7,213 5,676
----------------------------------- ---- --------- --------- --------- ---------
CURRENT ASSETS
Trade and other receivables 15 100,811 98,897 80,335 72,135
Cash and cash equivalents 7,442 3,997 - -
----------------------------------- ---- --------- --------- --------- ---------
Total Current Assets 108,253 102,894 80,335 72,135
----------------------------------- ---- --------- --------- --------- ---------
TOTAL ASSETS 158,718 157,896 87,548 77,811
----------------------------------- ---- --------- --------- --------- ---------
NON-CURRENT LIABILITIES
Deferred tax liability 14 (4,286) (4,967) - -
Provisions 16 (278) (278) - -
Bank loans and overdrafts 22 (13,608) (28,608) (13,608) (28,608)
----------------------------------- ---- --------- --------- --------- ---------
Total Non-Current Liabilities (18,172) (33,853) (13,608) (28,608)
----------------------------------- ---- --------- --------- --------- ---------
CURRENT LIABILITIES
Trade and other payables 17 (37,861) (37,562) (31,711) (8,922)
Current tax liability (2,224) (911) - -
Bank loans and overdrafts 22 (18,847) (9,033) - -
----------------------------------- ---- --------- --------- --------- ---------
Total Current Liabilities (58,932) (47,506) (31,711) (8,922)
----------------------------------- ---- --------- --------- --------- ---------
TOTAL LIABILITIES (77,104) (81,359) (45,319) (37,530)
----------------------------------- ---- --------- --------- --------- ---------
NET ASSETS 81,614 76,537 42,229 40,281
----------------------------------- ---- --------- --------- --------- ---------
EQUITY
Called-up equity share capital 20 312 309 312 309
Share premium account 8,696 8,694 8,696 8,694
Merger reserve 28,750 28,750 28,526 28,526
Share based payment reserve 2,537 2,140 2,537 2,140
Translation of foreign operations 815 (20) - -
Retained earnings 40,504 36,648 2,158 612
----------------------------------- ---- --------- --------- --------- ---------
TOTAL EQUITY ATTRIBUTABLE
TO EQUITY HOLDERS OF THE PARENT 81,614 76,521 42,229 40,281
----------------------------------- ---- --------- --------- --------- ---------
Non-controlling interests - 16 - -
----------------------------------- ---- --------- --------- --------- ---------
TOTAL EQUITY 81,614 76,537 42,229 40,281
----------------------------------- ---- --------- --------- --------- ---------
These financial statements were approved by the Board of
Directors on 3 November 2016, and signed on their behalf by:
Tony Dyer
Chief Financial Officer
Consolidated Cash flow Statement
For the year ended 31 July 2016 Group Company
-------------------- --------------------
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------- --------- --------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Profit after taxation 9,917 8,327 7,298 3,482
Adjustments for:
Depreciation and amortisation 4,776 2,696 - -
Profit on disposal of property, plant and equipment (7) (13) - -
Interest income (1,025) - - -
Interest expense 1,076 1,074 - -
Taxation expense recognised in profit and loss 5,152 2,959 - -
(Increase)/decrease in trade and other receivables (1,914) 12,524 (8,200) 4,101
Increase/(decrease) in trade and other payables 299 (11,157) 22,789 6,733
Share based payment charge 1,537 1,623 - -
Investment income - - (8,200) (4,250)
------------------------------------------------------- --------- --------- --------- ---------
Cash generated from operations 19,811 18,033 13,687 10,066
Interest paid (1,186) (848) - -
Income taxes paid (4,067) (3,965) - -
------------------------------------------------------- --------- --------- --------- ---------
NET CASH FROM OPERATING ACTIVITIES 14,558 13,220 13,687 10,066
------------------------------------------------------- --------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (471) (524) - -
Purchase of intangible assets (462) (387) - -
Acquisitions net of cash received (390) (37,587) - (37,587)
Proceeds from sale of subsidiary 420 - - -
Proceeds from sale of property, plant and equipment 53 58 - -
Dividends received - - 8,200 4,250
------------------------------------------------------- --------- --------- --------- ---------
NET CASH USED IN INVESTING ACTIVITIES (850) (38,440) 8,200 (33,337)
------------------------------------------------------- --------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of share capital 5 6 5 6
Drawdown of term loan - 28,608 - 28,608
Repayment of term loan (15,000) - (15,000) -
Dividends paid (6,892) (5,382) (6,892) (5,382)
------------------------------------------------------- --------- --------- --------- ---------
NET CASH USED IN FINANCING (21,887) 23,232 (21,887) 23,232
------------------------------------------------------- --------- --------- --------- ---------
Effects of exchange rates on cash and cash equivalents 1,908 (143) - -
NET DECREASE IN CASH AND CASH EQUIVALENTS (6,271) (2,131) - (39)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR (5,240) (3,109) - 39
------------------------------------------------------- --------- --------- --------- ---------
CASH AND CASH EQUIVALENTS AT OF YEAR (11,511) (5,240) - -
------------------------------------------------------- --------- --------- --------- ---------
CASH AND CASH EQUIVALENTS
Cash 7,442 3,997 - -
Bank overdrafts (14) (14) - -
Working capital facility used (18,939) (9,223) - -
CASH AND CASH EQUIVALENTS IN CASH FLOW STATEMENTS (11,511) (5,240) - -
------------------------------------------------------- --------- --------- --------- ---------
Notes forming part of the financial statements
1 The Group and Company Significant Accounting Policies
i The Business and Address of the Group
Gattaca plc is a human capital resources business dealing with
contract and permanent recruitment in the private and public
sectors. The Company is incorporated in the United Kingdom. The
Group's address is: Gattaca plc, 1450 Parkway, Whiteley, Fareham,
Hampshire PO15 7AF.
ii Basis of Preparation of the Financial Statements
The Financial Statements have been prepared in accordance with
applicable International Financial Reporting Standards as adopted
by the European Union (EU) and which are effective at 31 July
2016.
These Financial Statements have been prepared under the
historical cost convention. The accounting policies have been
applied consistently throughout both the Group and the Company for
the purposes of preparation of these Financial Statements. A
summary of the principal accounting policies of the Group is set
out below.
iii Going Concern
The Directors have reviewed forecasts and budgets for the coming
year, which have been drawn up with appropriate regard for the
current macroeconomic environment and the particular circumstances
in which the Group operates. These were prepared with reference to
historical and current industry knowledge, taking future strategy
of the Group into account.
As a result, at the time of approving the Financial Statements,
the Directors consider that the Company and the Group have
sufficient resources to continue in operational existence for the
foreseeable future, and accordingly, that it is appropriate to
adopt the going concern basis in the preparation of the Financial
Statements. As with all business forecasts, the Directors cannot
guarantee that the going concern basis will remain appropriate
given the inherent uncertainty about future events.
iv New Standards and Interpretations
These following standards and amendments to existing standards
is applicable for the period ending 31 July 2016:
Effective date
(Annual periods
beginning on or
Standard after)
-------- ----------------------- ----------------
IAS 19 Defined Benefit Plans: 1 February 2015
Employee Contributions
-------- ----------------------- ----------------
The adoption of the above standards has had no material impact
on the financial statements.
New Standards in Issue, Not Yet Effective
The following relevant standards, amendments to existing
standards and Interpretations, which are new and yet to become
mandatory, have not been applied in the Group financial
statements.
Effective date
(Annual periods beginning
Standard on or after)
----------------- ----------------------------------- --------------------------
IFRS 11 Joint Arrangements 1 January 2016
IFRS 14 Regulatory Deferral Accounts 1 January 2016
Equity Method in Separate Financial
IAS 27 Statements 1 January 2016
IFRS 9 Fair Values 1 January 2018
IFRS 15 Revenue 1 January 2018
IFRS 16 Leases 1 January 2019
IFRS improvements Various Various
----------------- ----------------------------------- --------------------------
The Board needs to assess the impact of the above new standards,
however, based on the Group's current business model and accounting
policies. The Directors do not expect material impacts on the
figures in the Group's Financial Statements when the
interpretations become effective.
The Group does not intend to apply any of these pronouncements
early.
v Basis of Consolidation
The Group financial statements consolidate those of the Company
and all of its subsidiary undertakings drawn up to the Statement of
Financial Position date. Subsidiaries are entities controlled by
the Group. The Group controls an entity when it is exposed to, or
has rights to, variable returns through its involvement with an
entity and it has the ability to affect those returns through its
power over the entity. The financial statements of subsidiaries are
included in the consolidated financial statements from the date
that control commences until the date that control ceases.
Acquisitions of subsidiaries are dealt with by the purchase
method. The purchase method involves the recognition at fair value
of all identifiable assets and liabilities, including contingent
liabilities of the subsidiary, at the acquisition date, regardless
of whether or not they were recorded in the financial statements of
the subsidiary prior to acquisition. On initial recognition, the
assets and liabilities of the subsidiary are included in the Group
Statement of Financial Position at their fair values, which are
also used as the bases for subsequent measurement in accordance
with Group accounting policies.
Transactions between Group companies are eliminated on
consolidation.
vi 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. Revenue on temporary
placements is recognised upon receipt of a client approved
timesheet or equivalent. Revenue from permanent placements, which
is based on a percentage of the candidate's remuneration package,
is recognised when candidates commence employment, at which point
it is probable that the economic benefits associated with the
transaction will be transferred. Fees for the provision of
engineering services are recognised on completion of work performed
in accordance with customer contracts. Other fees are recognised on
confirmation from the client committing to the agreement.
vii Non-recurring Items
Non-recurring items are items that are unusual 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 true and fair
understanding of the Group's results.
Items which are included within this category include:
costs of acquisitions;
integration costs following acquisitions;
significant restructuring costs;
other particularly significant or unusual items.
viii 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
equipment 12.5% to 33.0% Straight line
Over the period
Leasehold Improvements of the lease term Straight line
---------------------- ------------------ ----------------
Residual value estimates are updated as required, but at least
annually, whether or not the asset is revalued.
ix Intangible Assets
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 is allocated to cash-generating units and is not
amortised, but is tested at least annually for impairment. For the
purpose of impairment testing, goodwill acquired in a business
acquisition is allocated to each of the cash generating units
(CGUs), or groups of CGUs that is expected to benefit from the
synergies of the combination. Each unit or group of units to which
the goodwill is allocated represents the lowest level within the
entity at which the goodwill is monitored for internal management
purposes. Goodwill is monitored at the operating segment level.
Goodwill impairment reviews are undertaken annually or more
frequently if events or changes in circumstances indicate
a potential impairment. The carrying value of goodwill is
compared to the recoverable amount, which is the higher of value in
use and fair value less costs to sell. Any impairment is recognised
immediately as an 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.
Expenditure on internally generated goodwill, brands and
intangibles is expensed in the Income Statement when incurred.
Intangible Assets
Customer relationships
Acquired customer relationships comprise principally of existing
customer relationships which may give rise to future orders
(customer relationships), and existing order books (backlog
orders). Acquired customer relationships are recognised at fair
value at the acquisition date and have a finite useful life.
Amortisation of customer relationships is amortised in line with
the expected cashflows. Acquired customer relationships are stated
at cost less accumulated amortisation and impairment. Backlog
orders are recognised at fair value at the acquisition date and
amortised in line with the expected cash flows. Backlog orders are
stated at cost less accumulated amortisation and impairment.
Customer relationships are amortised over their useful economic
life of between 2 and 10 years.
Trade names and trademarks
Trade names and trademarks have arisen on the consolidation of
acquired businesses and are recognised at fair value at the
acquisition date. Where trade names and trademarks are considered
to have a finite useful life, amortisation is calculated using the
straight line method to allocate the cost of trade names and
trademarks over their estimated useful lives. Where trade names and
trademarks are considered to have an indefinite useful life, they
are not subject to amortisation; they are tested annually for
impairment and when there are indications that the carrying value
may not be recoverable, detailed within the impairment of
non-financial assets section below. Trade names and trademarks are
stated at cost less accumulated amortisation and impairment. Trade
names and trademarks are amortised over their useful economic life
of between 2 and 11 years.
Other
Other intangible assets acquired by the Group that have a finite
life useful life are measured at cost less accumulated amortisation
and accumulated losses. Other intangibles are amortised over their
useful economic life of between 2 and 5 years.
Amortisation of intangible assets is recognised in the income
statement under administrative expenses. Provision is made against
the carrying value of intangible assets where an impairment in
value is deemed to have occurred. Impairment losses are recognised
in the Income Statement under administrative expenses.
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 2 and 5 years. Software licences are stated at
cost less accumulated amortisation.
x 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.
xi Operating Lease Agreements
Rentals applicable to operating leases are charged against
profits on a straight line basis over the lease term. Lease
incentives are spread over the term of the lease.
xii Taxation
Current tax is the tax currently payable based on taxable profit
for the year.
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 if these temporary differences can be
controlled by the Group and it is probable that reversal will not
occur in the foreseeable future.
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.
xiii Pension Costs
The Company operates defined contribution pension schemes for
employees. The assets of these schemes are held separately from
those of the Company. The annual contributions payable are charged
to the Income Statement as they accrue.
xiv Share-based Payments
The transitional arrangements of IFRS 1 have been applied to all
grants of equity instruments after 7 November 2002 that were
unvested at 1 August 2006. All share-based remuneration is
ultimately recognised as an expense in the Income Statement with a
corresponding credit to "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 a Share Incentive Plan (SIP) which is HMRC
approved, and enables employees to purchase Company shares out of
pre-tax salary. For each share purchased the Company 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.
xv Business Combinations Completed Prior to Date of Transition
to IFRS
The Group has elected not to apply IFRS 3 Business Combinations
retrospectively to business combinations prior to 1 August
2006.
Accordingly the classification of the combination (merger)
remains unchanged from that used under UK GAAP. Assets and
liabilities are recognised as at the date of transition if they
would be recognised under IFRS, and are measured using their UK
GAAP carrying amount immediately post-acquisition as deemed cost
under IFRS, unless IFRS requires fair value measurement. Deferred
tax is adjusted for the impact of any consequential adjustments
after taking advantage of the transitional provisions.
xvi Financial Assets
All financial assets are recognised when the Group becomes a
party to the contractual provisions of the instrument. Financial
assets are recognised at fair value plus transaction costs.
In the Company financial statements, investment in the
subsidiary Company is measured at cost, and provision made where an
impairment value is deemed to have occurred.
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. Trade receivables are classified as loans and receivables.
Loans and receivables are measured subsequent to initial
recognition at amortised cost using effective interest method, less
provision for impairment. Any change in their value through
impairment or reversal of impairment is recognised in the Income
Statement.
Provision against trade receivables is made when there is
objective evidence that the Group will not be able to collect all
amounts due to it in accordance with the original terms of those
receivables. The amount of the write-down is determined as the
difference between the asset's carrying amount and the present
value of estimated future cash flows.
A financial asset is derecognised only where the contractual
rights to cash flows from the asset expire or the financial asset
is transferred and that transfer qualifies for derecognition. A
financial asset is transferred if the contractual rights to receive
the cash flows of the asset have been transferred or the Group
retains the contractual rights to receive the cash flows of the
asset but assumes a contractual obligation to pay the cash flows to
one or more recipients. A financial asset that is transferred
qualifies for derecognition if the Group transfers substantially
all the risks and rewards of ownership of the asset, or if the
Group neither retains nor transfers substantially all the risks and
rewards of ownership but does transfer control of that asset.
Trade receivables subject to the invoice discounting facility
are recognised in the Statement of Financial Position until they
are settled by the customer.
xvii 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 or
cancelled or expires.
xviii Financial instruments
Financial instruments often consist of a combination of debt and
equity and the Group has to decide how to attribute values to each.
They are treated as equity only to the extent that they meet the
following two conditions:
(i) they include no contractual obligations upon the Group to
deliver cash or other financial assets or to exchange financial
assets or financial liabilities with another party under conditions
that are potentially unfavourable to the Group; and
(ii) where the instrument will or may be settled in the Group's
own equity instruments, it is either a non-derivative that includes
no obligation to deliver a variable number of the Group's own
equity instruments or is a derivative that will be settled by the
Group exchanging a fixed amount of cash or other financial assets
for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of
issue are classified as a financial liability, and where such an
instrument takes the legal form of the Company's own shares, the
amounts presented in these financial statements for called up share
capital and share premium account exclude amounts in relation to
those shares.
Finance payments associated with financial liabilities are dealt
with as part of finance costs. Finance payments associated with
financial instruments that are classified in equity are dividends
and are recorded directly in equity
The Group uses financial instruments, in particular forward
currency contracts to manage the financial risks associated with
the Group's underlying business activities. The forward exchange
contracts are used to hedge foreign currency exposures arising on
forecast receipts and payments in foreign currencies. These forward
contracts are revalued to the rates of exchange at the Statement of
Financial Position date and any aggregate unrealised gains and
losses arising on revaluation are included in other debtors or
creditors. At maturity, or when the contract ceases to be a hedge,
gains and losses are taken to the Income Statement. The Group does
not undertake any trading activity in financial instruments.
Fair value hierarchy
The Group analyses financial instruments carried at a fair value
by valuation method. The different levels have been defined as
follows:
- Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities;
- Level 2: inputs other than quoted prices included within Level
1 that are observable for assets or liabilities, either directly
(i.e. as prices) or indirectly (i.e. directly from prices); and
- Level 3: inputs for assets or liabilities that are not based
on observable market data (unobservable inputs).
xix Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand, on demand
deposits, bank overdrafts and working capital facilities.
xx Dividends
Dividend distributions payable to equity shareholders are
included in "other short term financial liabilities" when the
dividends are approved in the annual general meeting prior to the
balance sheet date.
xxi Foreign Currencies
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.
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
profit or loss in the period 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. Income and expenses
are translated at the actual rate. The exchange differences arising
from the retranslation of the opening net investment in
subsidiaries are taken directly to "Translation of foreign
operations" in equity. On disposal of a foreign operation the
cumulative translation differences are transferred to the Income
Statement as part of the gain or loss on disposal.
As permitted by IFRS 1, the balance on the cumulative
translation adjustment on retranslation of subsidiaries' net assets
has been set to zero at the date of transition to IFRS.
xxii 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.
"Share based payment reserve" represents equity-settled
share-based employee remuneration until such share options are
exercised.
"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
consideration on the acquisition of Networkers International
plc
"Translation of foreign operations" represents the foreign
currency differences arising on translating foreign operations into
the presentational currency of the Group.
"Retained earnings" represents retained profits.
xxiii Alternative Performance Measures
Alternative performance measures used within the Group's Annual
Report are explained within Note 24 to the Financial
Statements.
xxiv Significant Accounting Estimates and Judgments
Estimates and assumptions concerning the future and judgments
are made in the preparation of the financial statements. They
affect the application of the Group's accounting policies, reported
amounts of assets, liabilities, income and expenses, and
disclosures made. They are assessed on an on-going basis and are
based on experience and relevant factors, including expectations of
future events that are believed to be reasonable under the
circumstances.
Critical Judgments
The judgments made which, in the opinion of the Directors, are
critical in drawing up the financial statements are as follows:
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 are discussed below. These are included for completeness,
although it is the Directors' view that none of these have
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial
year.
Impairment Loss of Trade and Other Receivables
The Group's policy for doubtful receivables is based on the
on-going evaluation of the collectability and ageing analysis of
the trade and other receivables and on management's judgments.
Considerable judgment is required in assessing the ultimate
realisation of these receivables, including the current
creditworthiness and the past collection history of each debtor. If
the financial conditions of the Group's receivables were to
deteriorate, resulting in an impairment of their ability to make
payments, additional impairment loss of trade and other receivables
may be required. The carrying amounts of these assets are shown in
note 15.
Intangibles
The Group determines whether goodwill and other intangible
assets (including acquired intangibles) are impaired on an annual
basis or otherwise when changes in events or situations indicate
that the carrying value may not be recoverable. This is requires an
estimation of the recoverable amount of the cash generating unit to
which the assets are allocated. Consideration is given to the
future cash flows of each cash generating unit and the discount
rate applied to calculate the present value of those cash
flows.
2 Segmental information
The chief operating decision maker, as defined in IFRS 8, has
been identified as the Board of Directors of Gattaca plc. The
information reported below is consistent with the reports regularly
provided to the Board of Directors.
Reportable segments
For the year to 31 July 2015, the Group was reported in three
main segments: Engineering, Professional Services and Networkers.
Following the integration of Networkers, from 1 August 2015 the
reporting structure of the Group was changed to two main reporting
segments, Engineering and Technology.
The new Engineering reporting segment includes the Engineering
business previously reported together with the Engineering business
included within Networkers and the Professional Services brands of
Barclay Meade and Alderwood.
The Technology segment includes the Connectus brand previously
reported within Professional Services and the remaining Networkers
business. An explanation of the changes between the new and
previous segment reporting is included below.
2016
Non-
recurring
items
and amortisation
Divested of acquired Group
All amounts in GBP'000 Engineering Technology Total businesses intangibles Total
----------------------- ----------- ---------- -------- ----------- ----------------- ---------
Revenue 397,737 219,095 616,832 772 - 617,604
Gross profit 43,508 28,879 72,387 609 - 72,996
Operating contribution 23,583 14,640 38,223 (46) - 38,177
Central overheads (9,614) (7,112) (16,726) (362) (6,027) (23,115)
----------------------- ----------- ---------- -------- ----------- ----------------- ---------
Profit/(loss) from
operations 13,969 7,528 21,497 (408) (6,027) 15,062
Profit on disposal
of subsidiary 58 58
Finance cost, net (51)
----------------------- ----------- ---------- -------- ----------- ----------------- ---------
Profit before tax 15,069
----------------------- ----------- ---------- -------- ----------- ----------------- ---------
Depreciation and
amortisation 877 243 1,120 3,656 4,776
Segment assets 63,292 34,864 98,156 98,156
Unallocated net
liabilities (16,542)
----------------------- ----------- ---------- -------- ----------- ----------------- ---------
Total net assets 81,614
----------------------- ----------- ---------- -------- ----------- ----------------- ---------
2015
Non-
recurring
items
and amortisation
Divested of acquired Group
All amounts in GBP'000 Engineering Technology Total businesses intangibles Total
----------------------- ----------- ---------- -------- ----------- ----------------- ---------
Revenue 366,628 129,054 495,682 6,611 - 502,293
Gross profit 37,853 14,605 52,458 2,361 - 54,819
Operating contribution 21,135 6,925 28,060 224 - 28,284
Central overheads (8,030) (2,683) (10,713) (821) (4,390) (15,924)
----------------------- ----------- ---------- -------- ----------- ----------------- ---------
Profit/(loss) from
operations 13,105 4,242 17,347 (597) (4,390) 12,360
Finance cost, net (1,074)
----------------------- ----------- ---------- -------- ----------- ----------------- ---------
Profit before tax 11,286
----------------------- ----------- ---------- -------- ----------- ----------------- ---------
Depreciation and
amortisation 749 267 1,016 1,680 2,696
Segment assets 69,595 24,277 93,872 93,872
Unallocated net
liabilities (17,335)
----------------------- ----------- ---------- -------- ----------- ----------------- ---------
Total net assets 76,537
----------------------- ----------- ---------- -------- ----------- ----------------- ---------
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. Only trade receivables are reported by segment
and as such they are included as segment assets above. Unallocated
net liabilities include non-current assets, other receivables, cash
and cash equivalents and current liabilities.
Changes to segment reporting from 2015 audited Financial
Statements
For the year to 31 July 2015, the segment reporting was
presented in three segments: Professional Services, Networkers and
Engineering. The analysis below is a breakdown into the new
segments reported above.
Professional Services Networkers
All amounts Divested Divested
in GBP'000 Engineering Technology businesses Total Engineering Technology businesses Total
----------------- ----------- ---------- ----------- ------- ----------- ---------- ----------- ------
Revenue 47,503 79,515 5,764 132,782 6,631 49,539 847 57,017
Gross
profit 7,557 7,572 1,548 16,677 1,608 7,033 813 9,454
Profit/(loss)
from operations 2,062 2,498 (347) 4,213 497 1,744 (250) 1,991
----------------- ----------- ---------- ----------- ------- ----------- ---------- ----------- ------
The total of the Engineering segment reported for the year ended
31 July 2015 is reported within the revised Engineering segment
above.
Geographical Information
Revenue Non-current assets
------------------ --------------------
All amounts in GBP'000 2016 2015 2016 2015
----------------------- -------- -------- --------- ---------
UK 586,842 488,611 49,940 54,582
Rest of Europe 1,378 1,575 - -
Middle East and Africa 5,532 4,298 227 199
Americas 20,594 6,103 138 57
Asia Pacific 3,258 1,706 160 164
----------------------- -------- -------- --------- ---------
617,604 502,293 50,465 55,002
----------------------- -------- -------- --------- ---------
Revenue and non-current assets are allocated to the geographic
market based on the domicile of the respective subsidiary.
Largest Customers
No single client contributed more than 10% of the Group's
revenues (2015: none).
3 Profit from Operations
2016 2015
GBP'000 GBP'000
-------------------------------------------------------------------------------------------------- -------- --------
Profit from operations is stated after charging/(crediting):
Depreciation 835 743
Amortisation of acquired intangibles 3,656 1,680
Amortisation of software licences 285 273
(Profit)/loss on disposal of property, plant and equipment (7) (13)
Auditors' remuneration - fees payable for the audit of the Parent
Company financial statements 10 10
- fees payable for the audit of the Subsidiary Company financial
statements 238 234
- Non audit services: taxation 45 73
other services pursuant to
legislation - 41
Operating lease costs: - Plant and machinery 312 272
- Land and buildings 1,610 1,121
Share based payment charge 1,537 1,623
Net (gain)/loss on foreign currency exchange differences (1,025) 288
Non-recurring costs included within administrative expenses:
Acquisition costs - 1,685
Restructuring costs 2,371 1,025
-------------------------------------------------------------------------------------------------- -------- --------
4 Particulars of Employees
The average number of staff employed (including Directors) by
the Group during the financial year amounted to:
2016 2015
No. No.
--------------- ---- ----
Sales 526 383
Administration 203 147
Directors 11 10
--------------- ---- ----
Total 740 540
--------------- ---- ----
The aggregate payroll costs of the above were:
2016 2015
GBP'000 GBP'000
---------------------- -------- --------
Wages and salaries 32,578 23,344
Social security costs 3,262 2,515
Other pension costs 1,255 1,190
---------------------- -------- --------
Total 37,095 27,049
---------------------- -------- --------
Disclosure of the remuneration of key management personnel, as
required by IAS 24, is detailed below. Disclosure of the
remuneration of the statutory Directors is further detailed in the
Directors' Remuneration Report contained in the Annual Report and
Accounts.
2016 2015
GBP'000 GBP'000
----------------------------- -------- --------
Short term employee benefits 2,319 2,180
Post employment benefits 113 212
Share based payments 600 1,039
----------------------------- -------- --------
Total 3,032 3,431
----------------------------- -------- --------
5 Finance Income
2016 2015
GBP'000 GBP'000
Foreign currency exchange differences 1,025 -
------------------------------------- -------- --------
Total 1,025 -
------------------------------------- -------- --------
6 Finance Cost
2016 2015
GBP'000 GBP'000
------------------------------------------ -------- --------
Bank interest payable 977 773
Amortisation of capitalised finance costs 99 13
Foreign currency exchange differences - 288
------------------------------------------ -------- --------
Total 1,076 1,074
------------------------------------------ -------- --------
7 Dividends
2016 2015
GBP'000 GBP'000
---------------------------------------------------------------- -------- --------
Equity dividends paid during the year at 22.32 pence per share
(2015: 20.27 pence) 6,892 5,382
---------------------------------------------------------------- -------- --------
Equity dividends proposed after the year end (not recognised as
a liability) at 17.00 pence per share (2015: 16.32 pence) 5,298 5,046
---------------------------------------------------------------- -------- --------
A dividend will be declared from Matchtech Group (Holdings)
Limited prior to the payment of the proposed dividend above.
8 Parent Company Profit
2016 2015
GBP'000 GBP'000
----------------------------------------------------------------- -------- --------
The amount of profit dealt within the accounts of the Company is 7,298 3,482
----------------------------------------------------------------- -------- --------
The Company has taken advantage of the exemption in S408 of the
Companies Act 2006 not to present the parent Company's Income
Statement.
9 Taxation
2016 2015
GBP'000 GBP'000
-------------------------------------------- -------- --------
Current tax: UK corporation tax 3,606 2,977
Overseas corporation tax 2,153 626
Prior year over provision (9) (235)
-------------------------------------------- -------- --------
5,750 3,368
Deferred tax (note 14) (598) (409)
-------------------------------------------- -------- --------
Income tax expense 5,152 2,959
-------------------------------------------- -------- --------
UK corporation tax has been charged at 20.0% (2015: 20.7%).
The charge for the year can be reconciled to the profit as per
the income statement as follows:
2016 2015
GBP'000 GBP'000
----------------------------------------------------------------- -------- --------
Profit before tax 15,069 11,286
----------------------------------------------------------------- -------- --------
Profit before tax multiplied by the standard rate of corporation
tax in the UK of 20.0% (2015: 20.7%) 3,014 2,336
Expenses not deductible for tax purposes 610 386
Irrecoverable withholding tax 1,137 340
Adjustments to tax charge in respect of previous periods (9) (235)
Overseas losses not provided for - 46
Difference between UK and overseas tax rates 400 86
----------------------------------------------------------------- -------- --------
Total tax charge for period 5,152 2,959
----------------------------------------------------------------- -------- --------
Tax charge recognised directly in equity:
2016 2015
GBP'000 GBP'000
------------------------------------------- -------- --------
Deferred tax recognised directly in equity (185) 174
------------------------------------------- -------- --------
Total tax recognised directly in equity (185) 174
------------------------------------------- -------- --------
The 2015 Summer Budget on 8 July 2015 announced that the UK
corporation tax rate would reduce to 18% by 2020, a further
reduction to 17% was announced on 16 March 2016.
Deferred tax at 31 July 2016 has been calculated based on the
rate of 18% substantively enacted at the Statement of Financial
Position date.
10 Earnings Per Share
Earnings per share has been calculated by dividing the
consolidated profit 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.
There are no changes to the profit (numerator) as a result of the
dilutive calculation.
2016 2015
GBP'000 GBP'000
------------------------------------------------------- -------- --------
Profit after tax attributable to ordinary shareholders 9,917 8,327
------------------------------------------------------- -------- --------
2016 2015
'000s '000s
---------------------------------------------------- ------- -------
Weighted average number of ordinary shares in issue 30,887 26,841
Effect of dilutive potential ordinary shares 1,153 1,263
---------------------------------------------------- ------- -------
Total 32,040 28,104
---------------------------------------------------- ------- -------
2016 2015
pence pence
-------- ------ ------
Basic 32.1 31.0
Diluted 31.0 29.6
-------- ------ ------
11 Intangible Assets
Customer Trade Software
Goodwill relationships names Other licences Total
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- ------------- -------- -------------- --------- -------- --------- --------
At 1 August
COST 2014 1,643 1,600 166 876 951 5,236
Additions - - - - 777 777
Acquisitions 24,808 18,552 4,741 1,560 41 49,702
----------------------------- -------- -------------- --------- -------- --------- --------
At 1 August
2015 26,451 20,152 4,907 2,436 1,769 55,715
Additions 23 - - 250 189 462
Disposals (380) - - - - (380)
----------------------------- -------- -------------- --------- -------- --------- --------
At 31 July
2016 26,094 20,152 4,907 2,686 1,958 55,797
----------------------------- -------- -------------- --------- -------- --------- --------
At 1 August
AMORTISATION 2014 - 453 15 511 553 1,532
Charge for
the year - 946 511 223 273 1,953
----------------------------- -------- -------------- --------- -------- --------- --------
At 31 July
2015 - 1,399 526 734 826 3,485
Charge for
the year - 2,097 915 644 285 3,941
----------------------------- -------- -------------- --------- -------- --------- --------
At 31 July
2016 - 3,496 1,441 1,378 1,111 7,426
----------------------------- -------- -------------- --------- -------- --------- --------
At 31 July
NET BOOK VALUE 2015 26,451 18,753 4,381 1,702 943 52,230
--------------- ------------- -------- -------------- --------- -------- --------- --------
At 31 July
2016 26,094 16,656 3,466 1,308 847 48,371
----------------------------- -------- -------------- --------- -------- --------- --------
Goodwill arising on business combinations is reviewed and tested
on an annual basis or more frequently if there is indication that
goodwill might be impaired. Goodwill has been tested for impairment
by comparing the carrying amount of each cash-generating unit
(CGU), including goodwill, with the recoverable amount.
Goodwill is allocated to CGUs, which are determined as the reportable 2016 2015
segments, as follows: GBP'000 GBP'000
---------------------------------------------------------------------- -------- --------
Professional Services 1,643 1,643
Engineering 4,379 4,379
Technology 20,072 20,429
26,094 26,451
---------------------------------------------------------------------- -------- --------
The recoverable amounts of the CGUs are determined from
value-in-use calculations, the key assumptions for the value-in-use
calculations are as follows:
Profit from operations Profit from operations is based on the
latest annual forecast approved by the Group's Board of Directors
which was prepared using expectations of revenue and operating cost
growth
Discount rates The pre-tax rate used to discount the forecast
Engineering and Technology cash flows was 15.4% (2015: 12.5%). The
pre-tax rate used to discount the forecast Professional Services
cashflows was 12.5% (2015:12.5%).
Growth rates The long-term growth rates are based on management
forecasts which are consistent with external sources at an average
growth rate of 2.5% (2015: 2.5%)
Impairment reviews are performed at the year end by comparing
the carrying value of goodwill with the recoverable amount of the
CGUs to which goodwill has been allocated.
The impairment review determined that there has been no
impairment to any of the CGUs. Sensitivity analysis has been
performed in assessing recoverable amounts of goodwill by changing
key assumptions in growth and discount rates. The sensitivity
analysis shows no impairment would be reasonably foreseeable under
each scenario for any of the CGUs.
Amortisation is charged through administrative expenses in the
Income Statement.
12 Property, Plant and Equipment
Fixtures
fittings
Motor Leasehold &
vehicles improvements equipment Total
Group GBP'000 GBP'000 GBP'000 GBP'000
--------------- --------------------- --------- ------------- ---------- ---------
COST At 1 August 2014 1,173 823 2,956 4,952
Additions - 351 173 524
Acquisitions - 94 377 471
Disposals (233) - (16) (249)
------------------------------------- --------- ------------- ---------- ---------
At 1 August 2015 940 1,268 3,490 5,698
Additions - 58 413 471
Disposals (211) - (248) (459)
------------------------------------- --------- ------------- ---------- ---------
At 31 July 2016 729 1,326 3,655 5,710
------------------------------------- --------- ------------- ---------- ---------
DEPRECIATION At 1 August 2014 768 270 2,586 3,624
Charge for the year 102 262 379 743
Released on disposal (204) - - (204)
------------------------------------- --------- ------------- ---------- ---------
At 31 July 2015 666 532 2,965 4,163
Charge for the year 67 340 428 835
Released on disposal (182) - (231) (413)
------------------------------------- --------- ------------- ---------- ---------
At 31 July 2016 551 872 3,162 4,585
------------------------------------- --------- ------------- ---------- ---------
NET BOOK VALUE At 31 July 2015 274 736 525 1,535
--------------- --------------------- --------- ------------- ---------- ---------
At 31 July 2016 178 454 493 1,125
------------------------------------- --------- ------------- ---------- ---------
Included within Leasehold Improvements is a cost of GBP215,000
(2015: GBP215,000) relating to the dilapidations provision (see
note 16).
There were no capital commitments as at 31 July 2016 or 31 July
2015.
13 Investments
Company
------------------
2016 2015
GBP'000 GBP'000
--------------------------------------------- -------- --------
Investments in Group Companies at 1 August 5,676 3,403
Acquisition of Networkers - 58,471
Transfer of Networkers to subsidiary company - (58,471)
Acquisition of non-controlling interest - 650
Capital contribution 1,537 1,623
--------------------------------------------- -------- --------
Investments in Group Companies at 31 July 7,213 5,676
--------------------------------------------- -------- --------
The movement in investments in Group companies represents a
capital contribution made in Matchtech Group (UK) Limited relating
to share based payments.
Subsidiary Undertakings
Country Share % held
Company of Incorporation Class 2016 Main Activities
-------------------------------- ----------------- -------- ------- ------------------------
Matchtech Group (Holdings) United Ordinary 100% Holding
Limited Kingdom
-------------------------------- ----------------- -------- ------- ------------------------
Matchtech Group Management United Ordinary 100% Non trading
Company Limited Kingdom
-------------------------------- ----------------- -------- ------- ------------------------
Matchtech Group (UK) Limited United Ordinary 99.998% Provision of recruitment
Kingdom consultancy
-------------------------------- ----------------- -------- ------- ------------------------
Matchtech Engineering Limited United Ordinary 100% Non trading
Kingdom
-------------------------------- ----------------- -------- ------- ------------------------
Matchtech Limited United Ordinary 100% Non trading
Kingdom
-------------------------------- ----------------- -------- ------- ------------------------
Barclay Meade Limited United Ordinary 100% Provision of recruitment
Kingdom consultancy
-------------------------------- ----------------- -------- ------- ------------------------
Alderwood Education Limited United Ordinary 100% Provision of recruitment
Kingdom consultancy
-------------------------------- ----------------- -------- ------- ------------------------
Gattaca Solutions Limited United Ordinary 100% Provision of recruitment
Kingdom consultancy
-------------------------------- ----------------- -------- ------- ------------------------
Connectus Technology Limited United Ordinary 100% Provision of recruitment
Kingdom consultancy
-------------------------------- ----------------- -------- ------- ------------------------
Gattaca Recruitment Limited United Ordinary 100% Non trading
Kingdom
-------------------------------- ----------------- -------- ------- ------------------------
Matchtech GmbH Germany Ordinary 100% Provision of recruitment
consultancy
-------------------------------- ----------------- -------- ------- ------------------------
Matchtech BV Netherlands Ordinary 100% Non trading
-------------------------------- ----------------- -------- ------- ------------------------
Matchtech Engineering Inc USA Ordinary 100% Non trading
-------------------------------- ----------------- -------- ------- ------------------------
Application Services Limited United Ordinary 100% Provision of recruitment
Kingdom consultancy
-------------------------------- ----------------- -------- ------- ------------------------
Provanis Limited United Ordinary 100% Non trading
Kingdom
-------------------------------- ----------------- -------- ------- ------------------------
Networkers International Limited United Ordinary 100% Holding
Kingdom
-------------------------------- ----------------- -------- ------- ------------------------
Networkers International (UK) United Ordinary 100% Provision of recruitment
Limited Kingdom consultancy
-------------------------------- ----------------- -------- ------- ------------------------
Networkers International LLC United Ordinary 100% Non trading
States
-------------------------------- ----------------- -------- ------- ------------------------
Networkers Telecommunications United Ordinary 100% Provision of recruitment
Inc. States consultancy
-------------------------------- ----------------- -------- ------- ------------------------
NWI de Mexico S. de R.L. de Mexico Ordinary 100% Provision of recruitment
C.V. consultancy
-------------------------------- ----------------- -------- ------- ------------------------
Networkers International South South Africa Ordinary 87% Provision of recruitment
Africa Proprietary Limited consultancy
-------------------------------- ----------------- -------- ------- ------------------------
Networkers International China Ordinary 100% Provision of recruitment
(China) Co. Limited consultancy
-------------------------------- ----------------- -------- ------- ------------------------
Networkers International Malaysia Ordinary 100% Provision of recruitment
(Malaysia) Sdn Bhd consultancy
-------------------------------- ----------------- -------- ------- ------------------------
Networkers International Canada Ordinary 100% Provision of recruitment
(Canada) Inc consultancy
-------------------------------- ----------------- -------- ------- ------------------------
Networkers International United Ordinary 100% Non trading
Trustees Limited Kingdom
-------------------------------- ----------------- -------- ------- ------------------------
The Comms Group Limited United Ordinary 100% Holding
Kingdom
-------------------------------- ----------------- -------- ------- ------------------------
CommsResources Limited United Ordinary 100% Provision of recruitment
Kingdom consultancy
-------------------------------- ----------------- -------- ------- ------------------------
Gattaca Malaysia Sdn Bhd Malaysia Ordinary 100% Provision of recruitment
consultancy
-------------------------------- ----------------- -------- ------- ------------------------
Comms Software Limited United Ordinary 100% Non trading
Kingdom
-------------------------------- ----------------- -------- ------- ------------------------
Gattaca de Colombia SAS Colombia Ordinary 100% Provision of recruitment
consultancy
-------------------------------- ----------------- -------- ------- ------------------------
Elite Computer Staff Limited United Ordinary 100% Non trading
Kingdom
-------------------------------- ----------------- -------- ------- ------------------------
NWKI FZ LLC (formerly SNS FZ Dubai Ordinary 100% Provision of recruitment
LLC) consultancy
-------------------------------- ----------------- -------- ------- ------------------------
Networkers Recruitment United Ordinary 100% Non trading
Services Limited Kingdom
-------------------------------- ----------------- -------- ------- ------------------------
MSB International GmbH Germany Ordinary 100% Provision of recruitment
consultancy
-------------------------------- ----------------- -------- ------- ------------------------
NWKI Communications LLC Dubai Ordinary 49% Provision of recruitment
consultancy
-------------------------------- ----------------- -------- ------- ------------------------
Networkers Consultancy Singapore Ordinary 100% Provision of recruitment
(Singapore) PTE Limited consultancy
-------------------------------- ----------------- -------- ------- ------------------------
Cappo Group Limited United Ordinary 100% Holding
Kingdom
-------------------------------- ----------------- -------- ------- ------------------------
Cappo International Limited United Ordinary 100% Provision of recruitment
Kingdom consultancy
-------------------------------- ----------------- -------- ------- ------------------------
Cappo Qatar LLC Qatar Ordinary 49% Provision of recruitment
consultancy
-------------------------------- ----------------- -------- ------- ------------------------
Networkers Consultoria Em Brazil Ordinary 100% Non trading
Technologia Da Informacao
Limiteda
-------------------------------- ----------------- -------- ------- ------------------------
Networkers International (India) India Ordinary 100% Non trading
Private Limited
-------------------------------- ----------------- -------- ------- ------------------------
Kithara Limited South Africa Ordinary 100% Holding
-------------------------------- ----------------- -------- ------- ------------------------
All holdings are indirect except Matchtech Group (Holdings)
Limited, Matchtech GmbH and Matchtech Group Management Company
Limited.
The Group consolidates NWKI Communications LLC and Cappo Qatar
LLC as subsidiaries in the consolidation due to contractual
arrangements in place giving the Group effective control of the
entities.
14 Deferred Tax
Credited/ Credited/
(charged) (charged)
Asset Liability Net to profit to equity
2016 2016 2016 2016 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------- -------- --------- -------- ---------- ----------
Share based payments 675 - 675 (143) (185)
Depreciation in excess of capital allowances 108 - 108 32 -
Acquired intangibles - (4,286) (4,286) 681 -
Other temporary and deductible differences 186 - 186 28 -
--------------------------------------------- -------- --------- -------- ---------- ----------
Net deferred tax assets/(liabilities) 969 (4,286) (3,317) 598 (185)
--------------------------------------------- -------- --------- -------- ---------- ----------
Credited/ Credited/
(charged) (charged)
Asset Liability Net to profit to equity
2015 2015 2015 2015 2015
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------- -------- --------- -------- ---------- ----------
Share based payments 1,003 - 1,003 116 174
Depreciation in excess of capital allowances 76 - 76 (44) -
Acquired intangibles - (4,967) (4,967) 336 -
Other temporary and deductible differences 158 - 158 1 -
--------------------------------------------- -------- --------- -------- ---------- ----------
Net deferred tax assets/(liabilities) 1,237 (4,967) (3,730) 409 174
--------------------------------------------- -------- --------- -------- ---------- ----------
The movement on the net deferred tax (liability)/asset is as
shown below:
Group
------------------
2016 2015
GBP'000 GBP'000
--------------------- -------- --------
At 1 August (3,730) 388
Acquired intangibles - (4,971)
Acquisitions - 270
Recognised in income 598 409
Recognised in equity (185) 174
--------------------- -------- --------
At end of year (3,317) (3,730)
--------------------- -------- --------
The rate of UK corporation tax applied to deferred tax
calculations is 18% (2015: 20%).
15 Trade and Other Receivables
Group Company
------------------ ------------------
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- -------- -------- -------- --------
Trade receivables 98,156 93,872 - -
Amounts owed by Group companies - - 80,335 72,135
Other receivables 887 3,438 - -
Prepayments 1,768 1,587 - -
-------------------------------- -------- -------- -------- --------
Total 100,811 98,897 80,335 72,135
-------------------------------- -------- -------- -------- --------
The amounts due from Group undertakings in the Company Statement
of Financial Position are considered to approximate to fair
value.
Days sales outstanding at the year end based upon the preceding
3 months' revenue were 50.2 days (2015: 49.4 days). The allowance
for doubtful debts has been determined by reference to previous
experience and management assessment of recoverability.
The Directors consider that the carrying amount of trade and
other receivables approximates to the fair value.
Included in the Group's trade receivable balance are debtors
with a carrying amount of GBP10,407,000 (2015: GBP10,056,000) which
are past due at the reporting date for which the Group has not
provided as the Directors do not believe there has been a
significant change in credit quality and consider the amounts to be
recoverable in full. The Group does not hold any collateral over
these balances.
The Group uses a third party credit scoring system to assess the
credit worthiness 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 ageing
issues.
The Directors believe that there is no requirement for further
provision over and above the allowance for doubtful debts.
Ageing of past due but not impaired trade receivables:
Group
------------------
2016 2015
GBP'000 GBP'000
----------- -------- --------
0-30 days 7,427 7,585
31-60 days 2,046 1,663
61-90 days 744 458
91+ days 190 350
----------- -------- --------
Total 10,407 10,056
----------- -------- --------
Movement in the allowance for doubtful debts:
Group
------------------
2016 2015
GBP'000 GBP'000
---------------------------------------- -------- --------
At 1 August 1,235 300
Acquisitions - 867
Impairment losses (reversed)/recognised (320) 68
---------------------------------------- -------- --------
At 31 July 915 1,235
---------------------------------------- -------- --------
Ageing of impaired trade receivables:
Group
------------------
2016 2015
GBP'000 GBP'000
------------------------------- -------- --------
Not past due at reporting date - 319
0-30 days - 58
30-60 days 1 -
60-90 days - -
90+ days 914 858
------------------------------- -------- --------
Total 915 1,235
------------------------------- -------- --------
16 Provisions
Group
------------------
2016 2015
GBP'000 GBP'000
------------------------------------ -------- --------
At 1 August 626 278
Acquisition - 364
Provisions released during the year (24) (16)
------------------------------------ -------- --------
At 31 July 602 626
------------------------------------ -------- --------
Non-current 278 278
Current 328 348
------------------------------------ -------- --------
602 626
------------------------------------ -------- --------
Provisions are included based on the requirement to return
leased buildings to their original condition at the end of the
lease term, the leases expire between June 2017 and March 2027.
17 Trade and Other Payables
Group Company
------------------ ------------------
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- -------- -------- -------- --------
Trade payables 456 538 - -
Amounts owed to Group companies - - 31,711 8,922
Taxation and Social Security 5,134 5,415 - -
Contractor wages creditor 19,087 16,698 - -
Accruals and deferred income 10,885 14,227 - -
Provisions 324 348 - -
Other payables 1,975 336 - -
-------------------------------- -------- -------- -------- --------
Total 37,861 37,562 31,711 8,922
-------------------------------- -------- -------- -------- --------
18 Financial Assets and Liabilities Statement of Financial
Position Classification
The carrying amount of the Group's financial assets and
liabilities as recognised at the Statement of Financial Position
date of the reporting periods under review may also be categorised
as follows:
Financial assets are included in the Statement of Financial
Position within the following headings:
Group Company
------------------ ------------------
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- -------- -------- --------
Trade and other receivables
- Loan and receivables 99,043 97,310 80,335 72,135
Cash and cash equivalents
- Loan and receivables 7,442 3,997 - -
---------------------------- -------- -------- -------- --------
Total 106,485 101,307 80,335 72,135
---------------------------- -------- -------- -------- --------
Financial liabilities are included in the Statement of Financial
Position within the following headings:
Group
------------------
2016 2015
GBP'000 GBP'000
--------------------------------------------------- -------- --------
Current liabilities
Borrowings
- Financial liabilities recorded at amortised cost 32,455 37,641
Trade and other payables
- Financial liabilities recorded at amortised cost 32,403 32,147
--------------------------------------------------- -------- --------
Total 64,858 69,788
--------------------------------------------------- -------- --------
The amounts at which the assets and liabilities above are
recorded are considered to approximate to fair value.
On 20 October 2016 the Group extended its banking facilities
with HSBC for a further four years until October 2020 with agreed
bank facilities of GBP105m comprising a GBP75m Invoice Financing
Facility and a GBP30m Revolving Credit Facility.
These facilities replaced the previous GBP95m facilities.
The Group's working capital facilities with HSBC are secured by
way of an all assets debenture, which contains fixed and floating
charges over the assets of the Group. This facility allows the
Company to borrow up to 90% of its invoiced debtors up to a maximum
of GBP75m. Interest is charged on borrowings at a rate of 1.1% over
HSBC base rate.
The GBP30m Revolving Credit Facility is secured by way of a
fixed and floating charge over assets of the Group. Interest is
charged on borrowings at a rate of 3% over HSBC LIBOR rate.
19 Commitments under Operating Leases
At 31 July 2016 the Group had commitments to pay the following
amounts under non-cancellable operating leases as set out
below:
Group
------------------
2016 2015
GBP'000 GBP'000
--------------- ---------------------- -------------------- -------- --------
Land/buildings Payments falling due: within 1 year 1,340 1,057
within 1 to 5 years 5,221 1,157
after 5 years 5,307 -
--------------- ---------------------- -------------------- -------- --------
Other Payments falling due: within 1 year 300 269
within 1 to 5 years 316 483
----------------------------------------------------------- -------- --------
20 Share Capital
Authorised Share Capital Company
------------------
2016 2015
GBP'000 GBP'000
------------------------------------------- -------- --------
40,000,000 Ordinary shares of GBP0.01 each 400 400
------------------------------------------- -------- --------
Allotted, called up and fully paid:
Company
------------------
2016 2015
GBP'000 GBP'000
-------------------------------------------------------------- -------- --------
31,167,000 (2015: 30,922,000) Ordinary shares of GBP0.01 each 312 309
-------------------------------------------------------------- -------- --------
The number of shares in issue in the Company is shown below:
Company
----------------
2016 2015
'000 '000
--------------------------- ------- -------
In issue at 1 August 30,922 24,965
Exercise of share options 245 399
Issue of restricted shares - 119
Share placing - 5,439
--------------------------- ------- -------
In issue at 31 July 31,167 30,922
--------------------------- ------- -------
Share Options
The following options arrangements exist over the Company's
shares:
Exercise period
-------------------- ------ ------ ---------- -------- ----------------------
Exercise
2016 2015 Date of price
'000s '000s grant pence From To
-------------------- ------ ------ ---------- -------- ---------- ----------
Key Share Options - 5 01/12/2005 146 01/06/2007 01/12/2015
Target/Loyalty
Share Options - 2 01/12/2005 146 01/12/2006 01/12/2015
Deferred Share
Bonus - 6 18/01/2010 1 18/01/2012 18/01/2020
Deferred Share
Bonus - 6 18/01/2010 1 18/01/2013 18/01/2020
Zero Priced Share
Option Bonus 1 1 18/01/2010 1 18/01/2012 18/01/2020
Zero Priced Share
Option Bonus 1 1 18/01/2010 1 18/01/2013 18/01/2020
Zero Priced Share
Option Bonus 1 1 04/02/2011 1 25/01/2013 04/02/2021
Zero Priced Share
Option Bonus 1 2 04/02/2011 1 03/02/2014 04/02/2021
Long Term Incentive
Plan Options 9 23 31/01/2012 1 30/01/2015 31/01/2022
Zero Priced Share
Option Bonus 1 1 31/01/2012 1 30/01/2014 31/01/2022
Zero Priced Share
Option Bonus 2 12 31/01/2012 1 30/01/2015 31/01/2022
Long Term Incentive
Plan Options 31 32 31/01/2013 1 30/01/2016 31/01/2023
Zero Priced Share
Option Bonus 4 4 31/01/2013 1 30/01/2015 31/01/2023
Zero Priced Share
Option Bonus 11 206 31/01/2013 1 30/01/2016 31/01/2023
Long Term Incentive
Plan Options 104 104 24/01/2014 1 24/01/2017 24/01/2024
Deferred Share
Bonus 10 10 24/01/2014 1 24/01/2015 24/01/2024
Deferred Share
Bonus 10 10 24/01/2014 1 24/01/2016 24/01/2024
Zero Priced Share
Option Bonus 11 51 01/01/2014 1 01/01/2016 01/01/2024
Zero Priced Share
Option Bonus 233 292 01/01/2014 1 01/01/2017 01/01/2024
Zero Priced Share
Option Bonus 15 22 28/01/2015 1 28/01/2017 28/01/2025
Zero Priced Share
Option Bonus 108 137 28/01/2015 1 28/01/2018 28/01/2025
Zero Priced Share
Option Bonus 44 44 30/01/2015 1 30/01/2018 30/01/2025
Zero Priced Share
Option Bonus 16 16 26/06/2015 1 26/06/2018 26/06/2025
Value Creation
Plan 389 389 02/07/2015 1 18/11/2016 18/11/2021
Value Creation
Plan 389 389 02/07/2015 1 18/11/2017 18/11/2021
Long Term Incentive
Plan Options 45 - 11/02/2016 1 11/02/2019 11/02/2026
Zero priced share
option bonus 76 - 11/02/2016 1 11/02/2018 11/02/2026
Zero priced share
option bonus 76 - 11/02/2016 1 11/02/2019 11/02/2026
Long Term Incentive
Plan Options 31 - 11/02/2016 225 11/02/2018 11/02/2026
Long Term Incentive
Plan Options 31 - 11/02/2016 225 11/02/2019 11/02/2026
-------------------- ------ ------ ---------- -------- ---------- ----------
Total 1,650 1,766
-------------------- ------ ------ ---------- -------- ---------- ----------
During the year, the Group granted share options under a Long
Term Incentive Plan (LTIP) for Executive Directors and for key
staff a Zero Priced Share Option Bonus and Long Term Incentive Plan
Options. The LTIP options were granted on 11 February 2016 and are
subject to an EPS performance target. The zero priced share options
were granted on 11 February 2016 to members of staff subject to two
and three year holding periods. The Long Term Incentive Plan
Options were granted to staff on 11 February 2016 and were subject
to two and three year holding periods with a release price of
591.75 pence per share. All share options have a life of 10 years
and are equity settled on exercise.
The movement in share options is shown below:
2016 2015
------------------------------- -------------------------------
Weighted Weighted
average Weighted average Weighted
exercise average exercise average
Number price share price Number price share price
'000s (pence) (pence) '000s (pence) (pence)
------------------------ ------ --------- ------------ ------ --------- ------------
Outstanding at 1 August 1,766 1.7 - 2,051 1.7 -
Granted 277 56.0 - 1,074 1.0 -
Forfeited/lapsed (145) 11.0 - (986) 1.0 -
Exercised (248) 4.6 431.0 (373) 1.0 525.0
------------------------ ------ --------- ------------ ------ --------- ------------
Outstanding at 31 July 1,650 9.3 1,766 1.7
Exercisable at 31 July 94 1.0 70 1.3
------------------------ ------ --------- ------------ ------ --------- ------------
The number of share options granted includes the deferred share
bonus options.
The numbers and weighted average exercise prices of share
options vesting in the future are shown below.
2016 2015
----------------------------- ------------------------------
Weighted Weighted
average Weighted average Weighted
remaining average remaining average
contract exercise contract exercise
life Number price life Number price
Exercise Date (months) '000s (pence) (months) '000s (pence)
-------------- ---------- ------ --------- ----------- ------ ---------
01/01/2016 - - - 5 51 1.0
24/01/2016 - - - 6 10 1.0
30/01/2016 - - - 6 242 1.0
18/11/2016 4 389 1.0 16 389 1.0
01/01/2017 5 233 1.0 17 292 1.0
24/01/2017 6 104 1.0 18 104 1.0
28/01/2017 6 15 1.0 18 22 1.0
18/11/2017 16 389 1.0 28 389 1.0
28/01/2018 18 108 1.0 30 137 1.0
30/01/2018 18 44 1.0 30 44 1.0
11/02/2018 19 107 46.3 - - -
26/06/2018 23 16 1.0 35 16 1.0
11/02/2019 31 151 65.2 - - -
-------------- ---------- ------ --------- ----------- ------ ---------
Total 1,556 1,696
-------------- ---------- ------ --------- ----------- ------ ---------
In addition to the share option schemes, the Group operated a
share incentive plan (SIP), which is an HMRC-approved plan
available to all employees enabling them to purchase shares out of
pre-tax salary. For each share purchased, the Company grants an
additional share at no cost.
The fair values of the LTIP options were calculated using the
Monte Carlo simulation method along with the assumptions detailed
below. The values of the zero price options granted in the year
were calculated using the Black Scholes method along with the
assumptions as detailed below. The fair values of the SIPS were
calculated as the market values on the date of the grant adjusted
for the assumptions as detailed below.
Share
Price
on Risk
the Free
date Rate
of Exercise Vesting Dividend of Fair
grant Price Volatility Period Yield interest Value
Date of grant (GBP) (GBP) (%) (yrs) (%) (%) (GBP)
-------------- ----------- ------ -------- ---------- ------- -------- --------- ------
01/01/2014 LTIP 5.75 0.01 16.8% 3.00 3.1% 1.2% 5.22
Zero price
24/01/2014 bonus 5.93 0.01 17.0% 3.00 3.0% 1.2% 5.40
28/01/2015 LTIP 5.08 0.01 16.4% 2.00 3.9% 0.7% 4.51
28/01/2015 LTIP 5.08 0.01 16.4% 3.00 3.9% 0.7% 4.51
Zero price
30/01/2015 bonus 5.08 0.01 16.4% 3.00 3.9% 0.6% 4.51
26/06/2015 LTIP 5.49 0.01 16.4% 3.00 3.9% 1.1% 4.90
06/07/2015 SIP 5.58 0.01 N/A 3.00 N/A N/A 5.58
05/08/2015 SIP 5.81 0.01 N/A 3.00 N/A N/A 5.81
04/09/2015 SIP 5.64 0.01 N/A 3.00 N/A N/A 5.64
05/10/2015 SIP 5.18 0.01 N/A 3.00 N/A N/A 5.18
03/11/2015 SIP 5.45 0.01 N/A 3.00 N/A N/A 5.45
08/12/2015 SIP 5.43 0.01 N/A 3.00 N/A N/A 5.43
05/01/2016 SIP 5.35 0.01 N/A 3.00 N/A N/A 5.35
05/02/2016 SIP 5.08 0.01 N/A 3.00 N/A N/A 5.08
11/02/2016 LTIP 4.35 0.01 21.4% 2.00 5.1% 0.4% 1.45
11/02/2016 LTIP 4.35 0.01 21.4% 3.00 5.1% 0.4% 1.45
11/02/2016 LTIP 4.35 0.01 21.4% 2.00 5.1% 0.4% 0.88
11/02/2016 LTIP 4.35 0.01 21.4% 3.00 5.1% 0.4% 0.88
Zero price
11/02/2016 bonus 4.50 0.01 20.9% 3.00 4.9% 0.5% 3.88
07/03/2016 SIP 4.29 0.01 N/A 3.00 N/A N/A 4.29
14/04/2016 SIP 4.74 0.01 N/A 3.00 N/A N/A 4.74
10/05/2016 SIP 4.65 0.01 N/A 3.00 N/A N/A 4.65
06/06/2016 SIP 4.25 0.01 N/A 3.00 N/A N/A 4.25
05/07/2016 SIP 3.54 0.01 N/A 3.00 N/A N/A 3.54
-------------- ----------- ------ -------- ---------- ------- -------- --------- ------
The volatility of the Company's share price on each date of
grant was calculated as the average of the annualised standard
deviations of daily continuously compounded returns on the
Company's stock, calculated over five years back from the date of
grant, where applicable. The risk-free rate is the yield to
maturity on the date of grant of a UK gilt strip, with term to
maturity equal to the life of the option. The 2013 LTIP awards are
subject to a TSR test - this market-based condition is taken into
account in the date of grant fair calculation.
21 Transactions with Directors and Related Parties
During the year, the Group made sales of GBP370,000 (2015:
GBP114,000) to InHealth Group which is a related party by virtue of
the common directorship of Richard Bradford, and sales of
GBP915,000 (2015: GBP624,000) to the Waterman Group by virtue of
common directorship of Ric Piper. As at the year end, Waterman
Group has a balance outstanding of GBP85,000 (2015: GBP137,000) and
InHealth Group has a balance outstanding of GBP98,000 (2015:
GBP20,000). All transactions were undertaken at an arm's length
price.
There were no other related party transactions with entities
outside of the Group.
During the year, Matchtech Group (UK) Limited charged Gattaca
plc GBP901,000 (2015: GBP767,000) for provision of management
services. Further details of transactions with directors are
included in the Director's Remuneration Report on pages 44 to
63..
22 Financial Instruments
The financial risk management policies and objectives including
those related to financial instruments and the qualitative risk
exposure details, comprising credit and other applicable risks, are
included within the Chief Financial Officer's report under the
heading Group financial risk management.
Maturity of Financial Liabilities
The Group financial liabilities analysis at 31 July 2016 was as
follows:
Group Company
------------------ ------------------
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- -------- -------- --------
In less than one year or on
demand:
Bank overdrafts 14 14 - -
Working capital facility 18,939 9,223 - -
Finance costs capitalised (106) (204) - -
---------------------------- -------- -------- -------- --------
Bank loans and overdrafts 18,847 9,033 - -
Trade and other payables 32,403 32,147 - -
---------------------------- -------- -------- -------- --------
Total 51,250 41,180 - -
---------------------------- -------- -------- -------- --------
More than one year but less
than three years:
Term loan 13,608 28,608 28,608 -
---------------------------- -------- -------- -------- --------
Borrowing Facilities
The Group makes use of working capital facilities and a term
loan, details of which can be found in note 18. The undrawn
facility available at 31 July 2015 in respect of which all
conditions precedent had been met was as follows:
Group Company
------------------ ------------------
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ -------- -------- -------- --------
Expiring in one to five years 76,061 57,169 16,392 1,392
------------------------------ -------- -------- -------- --------
The Directors have calculated that the effect on profit of a 1%
movement in interest rates would be GBP450,000 (2015:
GBP420,000).
The Directors believe that the carrying value of borrowings
approximates to their fair value.
Foreign Currency Risk
The Group's main foreign currency risk is the short-term risk
associated with the trade debtors denominated in US Dollars and
Euros relating to the UK operations whose functional currency is
Sterling. The risk arises on the difference between exchange rates
at the time the invoice is raised to when the invoice is settled by
the client. For sales denominated in foreign currency, the Group
ensures that direct costs associated with the sale are denominated
in the same currency. Further foreign exchange risk arises where
there is a gap in the amount of assets and liabilities of the Group
denominated in foreign currencies that are required to be
translated into Sterling at the year end rates of exchange. Where
the risk to the Group is considered to be significant, the Group
will enter into a matching forward foreign exchange contract with a
reputable bank.
Net foreign currency monetary assets are shown below:
Group
------------------
2015 2014
GBP'000 GBP'000
---------- -------- --------
US Dollar 10,120 6,821
Euro 4,802 2,720
---------- -------- --------
The effect of a 25c strengthening of the Euro and Dollar against
Sterling at the balance sheet date on the Euro/Dollar denominated
trade and other receivables and payables carried at that date
would, all other variables held constant, have resulted in a net
increase in pre-tax profit for the year and increase of net assets
of GBP2,433,000. A 25c weakening in the exchange rates would, on
the same basis, have decreased pre-tax profit and reduced net
assets by GBP3,616,000.
Company
The Company holds no material balances of this nature other than
intercompany balances, which are not subject to a fair value
adjustment.
23 Capital Management Policies and Procedures
Gattaca plc's capital management objectives are:
to ensure the Group's ability to continue as a going
concern;
to provide an adequate return to shareholders; and
by pricing products and services commensurately with the level
of risk.
The Group monitors capital on the basis of the carrying amount
of equity as presented in the Statement of Financial Position.
The Group sets the amount of capital in proportion to its
overall financing structure, i.e. equity and financial liabilities.
The Group manages the capital structure and makes adjustments in
the light of changes in economic conditions and risk
characteristics of the underlying assets. Capital for the reporting
period under review is summarised as follows:
Group
------------------
2016 2015
GBP'000 GBP'000
----------------------------------- -------- --------
Total equity 81,614 76,537
Cash and cash equivalents (7,442) (3,997)
----------------------------------- -------- --------
Capital 74,172 72,540
----------------------------------- -------- --------
Total equity 81,614 76,537
Borrowings 32,561 37,845
----------------------------------- -------- --------
Overall financing 114,175 114,382
----------------------------------- -------- --------
Capital to overall financing ratio 65% 63%
----------------------------------- -------- --------
24 Alternative Performance Measures
Alternative performance measures are disclosed below to show the
adjusted and underlying trading performance of the Group.
The adjusted basis is reported excluding non-recurring items,
amortisation of acquired intangibles and results from divested
businesses. The Underlying basis shows the trading performance of
the Group on a pro-forma basis as if Networkers had been owned by
the Group for the entire 12 month period.
2016
Amortisation Proforma Proforma
All amounts Statutory Non-recurring of acquired Divested Adjusted Networkers underlying
in GBP'000 basis costs intangibles businesses basis results basis
------------- --------- ------------- ------------ ----------- ---------- ----------- -----------
Revenue 617,604 - - (772) 616,832 - 616,832
Gross profit 72,996 - - (609) 72,387 - 72,387
Profit from
operations 15,062 2,371 3,656 408 21,497 - 21,497
------------- --------- ------------- ------------ ----------- ---------- ----------- -----------
2015
Amortisation Proforma Proforma
All amounts Statutory Non-recurring of acquired Divested Adjusted Networkers underlying
in GBP'000 basis costs intangibles businesses basis results basis
------------- --------- ------------- ------------ ----------- ---------- ----------- -----------
Revenue 502,293 - - (6,611) 495,682 108,491 604,173
Gross profit 54,819 - - (2,361) 52,458 19,711 72,169
Profit from
operations 12,360 2,710 1,680 597 17,347 3,849 21,196
------------- --------- ------------- ------------ ----------- ---------- ----------- -----------
Net Debt
Net debt is calculated as follows: Group
-----------------------
2016 2015
GBP'000 GBP'000
------------------------------------ --------- ------------
Cash and cash equivalents 7,442 3,997
Bank loans and overdrafts (32,455) (37,641)
Net debt (25,013) (33,644)
------------------------------------ --------- ------------
25 Subsequent Events
On 20 October 2016 the Group extended its banking facilities
with HSBC for a further four years until October 2020 with agreed
bank facilities of GBP105m comprising a GBP75m Invoice Financing
Facility and a GBP30m Revolving Credit Facility.
The financial information set out above does not constitute the
company's statutory accounts for the years ended 31 July 2016 or
2015 but is derived from those accounts. Statutory accounts for
2015 have been delivered to the registrar of companies, and those
for 2015 will be delivered in due course. The auditor has reported
on those accounts; their reports were (i) unqualified, (ii) did not
include a reference to any matters to which the auditor drew
attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006.
The financial information presented on this web site does not
comprise the statutory accounts of Matchtech Group plc for the
financial years ended 31 July 2016 and 31 July 2015 but represents
extracts from them. These extracts do not provide as full an
understanding of the financial performance and position, or
financial and investing activities, of the company as the complete
Annual Report.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BTBLTMBJMBAF
(END) Dow Jones Newswires
November 03, 2016 03:00 ET (07:00 GMT)
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