Interim results

RNS Number : 6906U
Gattaca PLC
30 March 2023
 

30 March 2023

 

Gattaca plc
("Gattaca" or "the Group")

Interim Results for the six months ended 31 January 2023
Evolution of strategy

Gattaca plc ("Gattaca" or the "Group"), the specialist STEM staffing business, today announces its financial results for the six months ended 31 January 2023.

 

Financial Highlights

 


2023 H1

2022 H1

 


Continuing reported

Continuing underlying2

Continuing reported

Continuing underlying

Continuing reported

Continuing underlying


£m

£m

£m

£m

%

%

Revenue

194.7

194.7

202.2

202.2

-4%

-4%

Net Fee Income (NFI)1

22.7

22.7

21.6

21.6

5%

5%

EBITDA

1.4

1.7

(1.2)

0.9

n/a

91%








Profit / (Loss) before tax

0.8

0.9

(2.5)

(0.3)

n/a

n/a

Profit / (Loss) after tax

0.6

0.7

(2.4)

(0.2)

n/a

n/a

Discontinued operations

(0.2)

n/a

(0.6)

n/a

n/a

n/a

Reported profit / (loss) after tax

0.4

n/a

(3.1)

n/a

n/a

n/a








Basic earnings per share

1.7p

2.1p

(7.5)p

(0.8)p



Diluted earnings per share

1.7p

2.0p

(7.5)p

(0.8)p



Interim dividend

0p

n/a

0p

n/a



Net cash / (debt)

20.9

n/a

(0.1)

n/a



 

Highlights

 

· Group NFI of £22.7 million, up 5% year-on-year

UK NFI up 6% at £21.4 million (2022 H1: £20.3 million)

Energy, Defence and Infrastructure, representing 59% of Group NFI, delivered strong growth

Contract NFI, which grew by 2% year-on-year, represents 67% of Group NFI (2022 H1: 70%, FY22: 71%)

Contract vs Perm split in 2023 H1 was as expected with changing client mix; ratio will rebalance towards Contract as contract market recovers

Permanent NFI up 13% year-on-year, representing 33% of Group NFI (2022 H1: 30%)

· Early results from our increased external focus with two major client account wins in 2023 H1

· Group underlying profit before tax of £0.9m (2022 H1: loss before tax £(0.3)m), reflecting focus on productivity improvements and cost management

· NFI productivity per sales head improved by 20%, with enhanced performance management, total sales headcount in period down 11% versus 31 July 2022.

· Group net cash of £20.9 million (31 July 2022: £12.3 million)

· No interim dividend (2022 H1: nil pence); the Board remains committed to reviewing dividends at the year end

 



 

Strategic update

 

Continued focus on developing the four identified strategic priorities:

 

· External focus

Implemented client and candidate service feedback surveys, with average NPS of 8.5 and 8.9 respectively

Improved yield by increasing average contingent perm fee by 6%, and average contract timesheet value by 9%

Implemented two major client accounts in 2023 H1 

Reduced fulfilment headcount, increased sales effort, linked to major account service changes and market dynamics

Launched plans to simplify Brand Architecture, due to Go Live in Q4

· Culture

Completed two quarters of our new Performance Scorecard process

Integrated attrition reduction targets into our FY23 LTIP share option grant

Engagement score improved to 8.1 at 2023 H1, up from 7.6 at FY22

Attrition at 31 January 2023 of 40% and improving into H2; many regretted leavers returned to the business since new management appointed

· Operational performance

Successfully implemented nine automations, positively impacting customer experience, engagement, operational efficiency and data quality

Exited low margin work, resulting in an increase in +0.7 pp in Contract margin

Increased sales productivity due to enhanced group wide management information, growing average NFI per sales head 20%, and 14% per total head

Appointed a Head of Business Improvement leading a team driving positive change in how we operate

· Cost rebalancing

Continued focus on reducing third party costs, UK footprint from six buildings down to four, increasing collaboration and reducing cost

Implemented new automation and sales enablement technologies

Began the move toward a 'single pay' arrangement, with the majority of our contractor base expected to have migrated in 2023 H2, the first step to simplifying the corporate structure to drive down costs

Moved almost 70% of our manual time sheeting contractors to online timesheet submission, reducing administrative burden and increasing accuracy

 

Work on these strategic priorities will continue through 2023 H2 and onwards into FY24 as we focus on building back to sustained growth.

 

Outlook

 

Looking forward there remains a high level of macro-economic uncertainty; however, we continue to see good levels of vacancies in the STEM markets that we support, which, when combined with talent shortages, drives demand. The shift in demand towards contract labour is in line with our focus and traditional strength of providing contract resource.


The development of our strategic priorities will continue to strengthen the platform from which we grow in the future.

 

 

Matthew Wragg, Chief Executive Officer said:

 

"I am pleased that we have continued to progress during the first half of the year. As we continue to build to our full potential, the improvements in culture, staff retention and productivity are signs that we are on the right track to be a stronger business.

 

We continue to remain conscious of the macro-economic environment, which will have naturally slowed our speed of recovery, the markets that we operate in and the skillsets that we provide demonstrate the right long-term fundamentals."

 

 

The information contained within this announcement is deemed by the Group to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

 

The following footnotes apply, unless where otherwise indicated, throughout these Interim Results:

1. NFI is calculated as revenue less contractor payroll costs

2.  Continuing underlying results exclude the NFI and (losses) before taxation of discontinued operations (2023 H1: £(0.2)m, 2022 H1: £(0.7)m), non-underlying items within administrative expenses primarily related to restructuring costs (2023 H1: £0.2m, 2022 H1: nil), amortisation of acquired intangibles (2023 H1: £0.0m, 2022 H1: £0.3m), impairment of acquired intangibles (2023 H1: nil, 2022 H1: £2.0m), and exchange gains from revaluation of foreign assets and liabilities (2023 H1: £0.2m, 2022 H1: £0.1m).

For further information, please contact:

 

Gattaca plc

+44 (0) 1489 898989

Matthew Wragg, Chief Executive Officer

Oliver Whittaker, Chief Financial Officer


Liberum Capital Limited (Nomad and Broker)

+44 (0) 20 3100 2000

Lauren Kettle Richard Lindley


 



 

Operational Performance

 

Net Fee Income (NFI) £m

2023 H1

Restated1

2022 H1

 

Change

Infrastructure

7.2

6.7

7%

Defence

4.2

3.2

31%

Mobility

2.2

2.2

n/a

Energy

2.1

1.8

17%

Technology, Media & Telecoms

1.2

2.2

-45%

Gattaca Projects1

1.0

0.6

67%

Other1

3.5

3.6

-3%

Total UK

21.4

20.3

5%

International

1.3

1.3

n/a

Continuing Total Group NFI

22.7

21.6

5%

 

1. The Gattaca Projects operating segment meets the quantitative thresholds to be reported separately for the first time in the 6-month period to 31 January 2023. In line with the requirements of IFRS 8, comparative periods have been restated to present the Gattaca Projects segment separately from the "Other" segment in which it had previously been presented.

 

Infrastructure

Infrastructure NFI grew by 7% year-on-year, with robust growth in the Transportation and Water and Utilities sub-divisions, despite significant underperformance in the Rail site sub-division and one major permanent recruitment program. The demand for permanent candidates seen in FY22 has lessened slightly in 2023 H1 in line with wider market trends, and contractor demand has started to increase towards the end of 2023 H1. Trends in skills that are highest in-demand are for Project Managers, Highways and Infrastructure Engineers and Transport Planners, aligning to the current phase of public sector works ongoing in the UK. Within the water market AMP7 spend has moved into its delivery phase, delivering an increase of on-site work and contractor requirements; AMP8 awards are starting to be announced. The Government commitment to infrastructure programs is welcomed and Gattaca continues to be well-placed, delivering resource into the private sector companies who are actively working on the large regional and national projects such as HS2, highway schemes and the SDF framework, all of which have a healthy demand for talent.

 

Defence

Defence NFI grew by 31% year-on-year, pushed up by continuing high demand for permanent talent, with contract labour needs also robust. Resource demand in the UK Defence sector has increased by 15% over 2023 H1, on top of the increases seen in salaries and pay rates. Recent Budget announcements from the UK Government show commitment to £11bn of Defence spend over the next five years, an increase in previous levels of investment. The market is well recognised for stability during economic fluctuations and Gattaca's access to the major UK market is strong, serving over half of the UK MoD top 100 suppliers, across engineering, technology, manufacturing, and IT skills, with demand specifically for systems, software, and cyber security talent.

 

 

Mobility

NFI in our Mobility market for 2023 H1 was flat against last half-year, despite a strong 2022 H2. As the Aerospace sub-division continues to recover and sees significantly increased build demand from the major OEMS, the demand for quality, manufacturing and production skills remains high. We are also seeing the need for software, power electronics and systems engineering skills remaining high across the Automotive sub-division as clients in the sector continue to catch up on post-pandemic production backlogs. We have been successful with several permanent RPO programs in this market, which means our permanent demand has outweighed that of contract. Investment into the market remains strong, reflective of the elevated level of project work across the market; we are confident Gattaca's presence in this sector will continue to rebuild alongside.

 

 

Energy

Energy NFI was up 17% year-on-year, primarily driven by pressures on global energy production creating opportunity in the UK market, sector investment focus is increasing on green energy and the use of technology. Gattaca is well positioned to capture market opportunities in renewables, transmission and distribution, nuclear and oil and gas markets. In particular, demand continues to be focused on skills in project management, controls and design engineers driven by the investment in programs.

 

 

Technology, Media & Telecoms (TMT)

TMT NFI has decreased by 45% year-on-year, against a strong 2022 H1; this decline was largely driven by reduced demand across a large European RPO and MSP contract. The demand for experienced labour remains competitive; the much-publicised news of major technology companies reducing their workforces has not impacted this need in the UK but has brought more candidates to the market where there were previously shortages. Contract demand has increased, and market focus remains around skills in digital transformation, development, cloud, and security.

 

Gattaca Projects

Gattaca Projects NFI has grown by 67% year-on-year, although a large portion of this is in relation to contract accounting on a long-term project which is nearing the end of its delivery phase. Gattaca continues to invest in the subcontracting market as we see solid opportunity growth for us. We will continue to commit additional resource in this team as the pipeline of work grows, and our capability increases.

 

UK Other

NFI across the aggregation of our other smaller markets was down 3% year-on-year. Barclay Meade, our professional services brand, was up 5% year-on-year driven by continued strong permanent market conditions and sustained increases in salaries for head office skills in STEM companies. Demand for professional skill sets across accounting and finance, procurement, HR, and sales continues to be high in the permanent recruitment market with candidate shortages still a challenge. Trading in our Consumer, Manufacturing & Retail (CMR) was behind due to sharp downturns in production at some large blue-collar contract clients. Within the general training and education market we have actively taken the decision to reduce focus on the low margin skills that Alderwood has been providing, to focus more effort on our core markets and skills.

 

Internationa l

International NFI was down 3% year-on-year, primarily driven by the end of a large RPO permanent deal in the US technology sector. In the wider market, demand in North America is outstripping that in the UK and Europe, with Gattaca putting an increased focus on growing its contracting workforce across STEM skills. Skill trends in technology include cyber security, technology sales, software development and 'big data', alongside more traditional engineering skills across energy transmission and distribution, infrastructure, and EPC. Gattaca has now aligned the cost base in North America to focus on business development in technology skills and the Energy market.

 


Group contractor and permanent fee mix

 

Contract fees accounted for 67% of continuing underlying NFI in 2023 H1 (2022 H1: 70%, FY22: 71%). During the period, the contract base was flat with approximately 5,150 contractors.

 

Permanent fees accounted for 33% of continuing underlying NFI in 2023 H1 (2022 H1: 30%, FY22: 29%). In 2023 H1, we saw a sustained demand for permanent hires in our contingent and solutions business across almost all our sectors, a trend which has continued from FY22, with an increase of 11% across our contingent placement fee. Aligned to the wider recruitment sector, we have observed marginal lengthening of lead times and some hesitation on offers as clients and candidates became nervous of a potential UK recession in early 2023.

 


People

 

Gattaca's headcount at 31 January 2023 was 497, a decrease of 43, or 8%, from 31 January 2022. This decrease was partly due to the loss of two large resource intensive clients and performance management actions undertaken in the sales and fulfilment divisions. The ratio of sales to support staff was 69:31 at 31 January 2023, compared to a ratio of 73:27 at 31 January 2022. The Group are committed to grow sales staff above 75%.

 


Financial Overview

 

Revenue for the period was £194.7 million (2022 H1: £202.2 million, FY22: £403.3 million), down 4% year-on-year. NFI of £22.7 million (2022 H1: £21.6 million, FY22: £44.1 million) represented a 5% year-on-year increase. Contract NFI margin of 8.1% (2022 H1: 7.7%, FY22: 7.8%) was up 0.4 percentage points compared with the same period in the prior year; this was driven by a reduction in  low-margin business, strategic pricing initiatives and achievement of certain milestones on long-term contracts within Gattaca Projects.

 

Continuing underlying profit before tax for the period amounted to £0.9 million (2022 H1: loss before tax £(0.3) million, FY22: profit before tax £0.3 million). On a continuing underlying basis, the effective tax rate was 29% (2022 H1: 5%). The Group's continuing underlying effective tax rate reported at 31 July 2022 was 60%.

 

Basic underlying earnings per share from continuing operations were 2.1 pence (2022 H1: (0.8) pence) and adjusted underlying diluted earnings per share from continuing operations were 2.0 pence (2022 H1: (0.8) pence).

 

Administrative costs

Underlying administrative costs of £21.8 million (2022 H1: £21.7 million, FY22: £43.6 million) increased by 0.3% during the period, as the 5% wages increase implemented on 1 August 2022 was offset by other third-party cost savings, such as reductions in property leases, insurances and advisor fees.

 

A breakdown of the increase in administrative costs is shown below:

 


£m

2022 H1 continuing underlying administrative costs

21.7

Sales staff costs

0.4

Commissions, bonuses and incentives

0.2

Group Support staff costs

0.1

Travel and entertaining

0.2

Online advertising

0.2

Trade receivables and accrued income expected credit loss allowance credit

(0.5)

Sales ledger credits

(0.4)

Dilapidations provisions

0.4

Depreciation charges

(0.3)

Other admin costs (including Legal & Professional Fees and other provisions)

(0.2)

2023 H1 continuing underlying administrative costs

21.8

 

 

Non-underlying costs and discontinued operations

The continuing non-underlying costs in 2023 H1 of £0.3 million (2022 H1: £2.4 million, FY22: £5.6 million), relate predominantly to employee restructuring costs. In the comparative 6-month period to 31 January 2022, costs of £2.0 million arose from impairment of goodwill held in relating to the 'Infrastructure - RSL Rail' CGU (Cash Generating Unit); no impairment of goodwill and intangible assets was recorded in 2023 H1.

 

The loss from discontinued operations for the period arises from ongoing closure costs in connection with the Group's recruitment operations in South Africa, Mexico and Asia which were either sold or closed in prior periods. Loss before tax in 2023 H1 for all discontinued operations was £0.2 million (2022 H1: loss of £0.7 million, FY22: loss of £0.4 million).

 

Financing costs

Net finance income of £0.2 million (2022 H1: net finance costs of £0.1 million, FY22: net finance income of £0.3 million) reflected lower utilisation of the working capital facility and favourable foreign exchange gains (treated as non-underlying) compared to prior period.

 

Debtors, cash flow, net cash / (debt) and financing

Net cash at 31 January 2023 was £20.9 million (31 July 2022: £12.3 million; 31 January 2022: net debt of £(0.1) million).

 

The Group's trade and other receivables balance was £47.7 million at 31 January 2023 (31 July 2022: £54.8 million), of which debtor and accrued income balances were £44.0 million, a £7.7 million reduction over the 6-month period from 31 July 2022. The Group's days sales outstanding ('DSO') over this period (on a weekly based countback method) increased by 7 days from 51 to 58 days at 31 January 2023, although still 4 days lower than the DSO position at 31 January 2022. The DSO position at 31 July 22 is considered to have been near optimal levels; there is consistently a seasonal increase in DSO following the Christmas and New Year period.

 

Capital expenditure in the period amounted to £0.1 million (2022 H1: £0.1 million, FY22: £0.4 million).

 

As at 31 January 2023, the Group had a working capital facility of £60 million (31 July 2022: £60m, 31 January 2022: £75m). This facility includes both recourse and non-recourse elements. Under the terms of the non-recourse facility, the trade receivables are assigned to and owned by HSBC and so have been derecognised from the Group's statement of financial position. In addition, the non-recourse working capital facility does not meet the definition of loans and borrowings under IFRS. The utilisation of this facility at 31 January 2023 was £0.3 million in credit on recourse and £(7.0) million borrowing on non-recourse.

 


Dividend

 

The Board is mindful of the importance of dividends to shareholders. The Board has not proposed an interim dividend for 2023. The Board remains committed to reviewing dividends at the year end.

 


Risks

 

The Board considers strategic, financial, and operational risks and identifies actions to mitigate those risks. Key risks and their mitigations were disclosed on pages 51 to 54 of the Annual Report for the year ended 31 July 2022.

 

We continue to manage several potential risks and uncertainties including contingent liabilities as noted in the interim accounts - many of which are common to other similar businesses - which could have a material impact on our longer-term performance.

 

Outlook

 

Looking forward there remains a high level of macro-economic uncertainty, however we continue to see talent shortages and good levels of vacancies in the STEM markets that we support. The shift in demand towards contract labour is in line with our traditional strength of providing contract resource.


The development of our strategic priorities will continue to strengthen the platform from which we grow in the future.


Condensed Consolidated Income Statement

For the period ended 31 January 2023

 

 







 

 

 



6 months to 31/01/2023

unaudited

6 months

to 31/01/2022

unaudited

12 months to 31/07/2022


Note

£'000

£'000

£'000

Continuing operations





Revenue

2

194,742

202,199

403,346

Cost of sales


(172,009)

(180,593)

(359,206)

Gross profit

2

22,733

21,606

44,140

Administrative expenses


(22,122)

(24,068)

(49,244)

Profit/(loss) from continuing operations

2

611

(2,462)

(5,104)

Finance income


242

73

570

Finance cost


(61)

(153)

(253)

Profit/(loss) before taxation


792

(2,542)

(4,787)

Taxation

5

(242)

120

460

Profit/(loss) after taxation from continuing operations


550

(2,422)

(4,327)

 

Discontinued operations


 



Loss for the period from discontinued operations (attributable to equity holders of the Company)

6

(199)

(643)

(346)

Profit/(loss) for the period


351

(3,065)

(4,673)

 

 

Profits/(losses) for the periods to 31 January 2023, 31 January 2022 and the year for 31 July 2022 are wholly attributable to equity holders of the parent.

 

 








6 months

to 31/01/2023

unaudited

 

6 months

to 31/01/2022

unaudited

 

12 months

to 31/07/2022

Total earnings per ordinary share

Note

pence

pence

pence

Basic earnings/(loss) per share

7

1.1

(9.5)

(14.5)

Diluted earnings/(loss) per share

7

1.1

(9.5)

(14.5)

 

 

Reconciliation to adjusted profit measure

Underlying profit is the Group's key adjusted profit measure; profit from continuing operations is adjusted to exclude non-underlying income and expenditure as defined in the Group's accounting policy, amortisation and impairment of goodwill and acquired intangibles, impairment of leased right-of-use assets and net foreign exchange gains or losses.

 

 











 

 


6 months

to 31/01/2023

unaudited

 

6 months

to 31/01/2022

unaudited

 

12 months

to 31/07/2022


Note

£'000

£'000

£'000

Profit/(loss) from continuing operations


611

(2,462)

(5,104)

Add





Depreciation of property, plant and equipment, depreciation of leased right-of-use assets and amortisation of software and software licences

4

734

995

2,210

Non-underlying items included within administrative expenses

4

300

90

558

Amortisation and impairment of goodwill and acquired intangibles and impairment of leased right-of-use assets

4

35

2,264

5,051

Underlying EBITDA


1,680

887

2,715

Less


 



Depreciation of property, plant and equipment, leased right-of-use assets and amortisation of software and software licenses


(734)

(995)

(2,210)

Net finance costs excluding foreign exchange gains and losses


(10)

(153)

(249)

Underlying profit/(loss) before taxation


936

(261)

256

Underlying taxation


(271)

14

(154)

Underlying profit/(loss) after taxation from continuing operations


665

(247)

102

 

 

 

 

Condensed Consolidated Statement of Comprehensive Income

For the period ended 31 January 2023





 


 

 

 


6 months

to 31/01/2023

unaudited

6 months

to 31/01/2022

unaudited

12 months

to 31/07/2022


£'000

£'000

£'000

Profit/(loss) for the period

351

(3,065)

(4,673)

 

 



Other comprehensive income

 



Items that may be reclassified subsequently to profit or loss

 



Exchange differences on translation of foreign operations

(285)

(85)

72

Other comprehensive (loss)/income for the period

(285)

(85)

72

 

 



Total comprehensive income/(loss) for the period attributable to equity holders of the parent

66

(3,150)

(4,601)


 

 

 


6 months

to 31/01/23

unaudited

6 months

to 31/01/22

unaudited

 

12 months

to 31/07/22


£'000

£'000

£'000

Attributable to:

 



  Continuing operations

250

(2,391)

(4,024)

  Discontinued operations

(184)

(759)

(577)

Total comprehensive income/(loss) for the period attributable to equity holders of the parent

66

(3,150)

(4,601)

 

 

Condensed Consolidated Statement of Financial Position

As at 31 January 2023



 

 

 





 31/01/2023

unaudited

31/01/2022

unaudited

 

 31/07/2022


Note

£'000

£'000

£'000

Non-current assets


 



Goodwill and intangible assets


2,007

3,980

2,072

Property, plant and equipment


1,243

1,465

1,359

Right-of-use assets


2,391

5,069

3,065

Investments


-

-

-

Deferred tax assets


474

470

604

Total non-current assets


6,115

10,984

7,100

Current assets


 



Trade and other receivables

8

47,721

63,652

54,767

Corporation tax receivables


1,133

1,226

1,263

Cash and cash equivalents


24,304

13,731

17,768

Total current assets


73,158

78,609

73,798

Total assets


79,273

89,593

80,898



 



Non-current liabilities


 



Deferred tax liabilities


(9)

(21)

(25)

Provisions

9

(661)

(1,248)

(517)

Lease liabilities


(1,886)

(3,421)

(2,490)

Total non-current liabilities


(2,556)

(4,690)

(3,032)

Current liabilities


 



Trade and other payables


(43,843)

(42,115)

(43,406)

Provisions

9

(951)

(900)

(1,187)

Current tax liabilities


(336)

(169)

(340)

Lease liabilities


(1,175)

(1,477)

(1,135)

Bank loans and borrowings


(342)

(8,890)

(1,801)

Total current liabilities


(46,647)

(53,551)

(47,869)

Total liabilities


(49,203)

(58,241)

(50,901)



 



Net assets


30,070

31,352

29,997



 



Equity


 



Share capital

10

323

323

323

Share premium


8,706

8,706

8,706

Merger reserve


224

28,750

224

Share-based payment reserve


348

389

350

Translation reserve


852

930

1,137

Treasury shares reserve


(214)

(105)

(147)

Retained earnings


19,831

(7,641)

19,404

Total equity


30,070

31,352

29,997

 

The accompanying notes form part of these interim financial statements.

Condensed Consolidated Statement of Changes in Equity

For the period ended 31 January 2023











Share capital

Share premium

Merger reserve

Share-based payment reserve

Translation reserve

Treasury shares reserve

Retained earnings

Total

 


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

Total equity at 1 August 2021

323

8,706

28,750

454

134

(37)

(3,223)

35,107

 

Loss for the period

-

-

-

-

-

-

(3,065)

(3,065)

 

Other comprehensive loss

-

-

-

-

(85)

-

-

(85)

 

Total comprehensive loss

-

-

-

-

(85)

-

(3,065)

(3,150)

 

Dividends paid in the period

-

-

-

-

-

-

(484)

(484)

 

Deferred tax movement in respect of share options

-

-

-

-

-

-

(66)

(66)

 

Share-based payments charge

-

-

-

13

-

-

-

13

 

Share-based payments reserve transfer

-

-

-

(78)

-

-

78

-

 

Translation reserves movements on disposal of foreign operations

-

-

-

-

881

-

(881)

-

 

Purchase of treasury shares

-

-

-

-

-

(68)

-

(68)

 

Transactions with owners

-

-

-

(65)

881

(68)

(1,353)

(605)

 










 

Total equity at 31 January 2022 unaudited

323

8,706

28,750

389

930

(105)

(7,641)

31,352

 










 

Total equity at 1 August 2021

323

8,706

28,750

454

134

(37)

(3,223)

35,107

 

Loss for the year

-

-

-

-

-

-

(4,673)

(4,673)

 

Other comprehensive income

-

-

-

-

72

-

-

72

 

Total comprehensive loss

-

-

-

-

72

-

(4,673)

(4,601)

 

Dividends paid in the year

-

-

-

-

-

-

(484)

(484)

 

Deferred tax movement in respect of share options

-

-

-

-

-

-

(60)

(60)

 

Share-based payments charge

-

-

-

145

-

-

-

145

 

Share-based payments reserve transfer

-

-

-

(249)

-

-

249

-

 

Purchase of treasury shares

-

-

-

-

-

(110)

-

(110)

 

Translation reserve movements on disposal of foreign operations

-

-

-

-

931

-

(931)

-

 

Transfer of merger reserve1

-

-

(28,526)

-

-

-

28,526

-

 

Transactions with owners

-

-

(28,526)

(104)

931

(110)

27,300

(509)

 










 

Total equity at 31 July 2022

323

8,706

224

350

1,137

(147)

19,404

29,997

 










 

Total equity at 1 August 2022

323

8,706

224

350

1,137

(147)

19,404

29,997

 

Profit for the period

-

-

-

-

-

-

351

351

 

Other comprehensive income

-

-

-

-

(285)

-

-

(285)

 

Total comprehensive income

-

-

-

-

(285)

-

351

66

 

Deferred tax movement in respect of share options

-

-

-

-

-

-

(1)

(1)

 

Share-based payments charge

-

-

-

75

-

-

-

75

 

Share-based payments reserve transfer

-

-

-

(77)

-

-

77

-

 

Purchase of treasury shares

-

-

-

-

-

(67)

-

(67)

 

Transactions with owners

-

-

-

(2)

-

(67)

76

7

 


 

 

 

 

 

 

 

 

 

Total equity at 31 January 2023 unaudited

323

8,706

224

348

852

(214)

19,831

30,070

 

 

 

1 A merger reserve was created in 2015 in Gattaca plc under section 612 of the Companies Act 2006, relating to the acquisition of Networkers International plc. Gattaca plc's investment in Networkers International plc was subsequently transferred to a subsidiary undertaking in exchange for consideration of an intercompany receivable.  The asset to which the merger reserve relates, being the goodwill and acquired intangible assets recognised on consolidation as part of the acquisition, was impaired in 2018, 2019 and 2021.  Additionally, the intercompany receivable was settled in 2020 in exchange for qualifying consideration of offset with an intercompany payable. As a result, the full merger reserve of £28,526,000 became realised across these years. A choice has now been made to transfer the realised merger reserve to retained earnings in the year ended 31 July 2022 to present all distributable reserves in one place.

Condensed Consolidated Cash Flow Statement

For the period ended 31 January 2023


6 months

to 31/01/23

unaudited

Restated

6 months ¹ ²

to 31/01/22

unaudited

Restated

12 months ¹

to 31/07/22


6 months

to 31/01/2023

unaudited

 

6 months

to 31/01/2022

unaudited

 

12 months

to 31/07/2022

   Note

£'000

£'000

£'000

Cash flows from operating activities




Profit/(loss) after taxation

351

(3,065)

  (4,673)

Adjustments for:

 



Depreciation of property, plant and equipment and amortisation of

intangible assets

284

563

  1,078

  Depreciation of leased right-of-use assets

485

728

  1,552

  Loss from sale of subsidiary, associate or investment

-

55

  82

  Loss on disposal of property, plant and equipment

14

12

  33

  Loss on disposal of software and software licences

8

-

  12

  Impairment of goodwill and acquired intangibles

-

2,000

  3,780

  Impairment of right-of-use assets

-

-

852

  Profit on reassessment of lease term

-

-

  (27)

  Interest income

(52)

(132)

  (4)

  Interest costs

61

160

  253

  Taxation expense/(credit) recognised in the income statement

237

(153)

  (467)

  Decrease in trade and other receivables

7,268

617

9,368

  Increase/(decrease) in trade and other payables

434

(14,005)

  (12,715)

  (Decrease)/increase in provisions

(88)

408

  (54)

  Share-based payment charge

75

13

  145

  Foreign exchange (losses)/gains

(200)

-

  31

Cash generated by/(used in) operations

8,877

(12,799)

  (754)

Interest paid

(23)

(96)

  (138)

Interest on lease liabilities

(38)

(64)

  (115)

Interest received

52

-

  4

Income taxes repaid/(paid)

5

(493)

  (200)

Cash generated by/(used in) operating activities

8,873

(13,452)

  (1,203)


 



Cash flows from investing activities

 



Purchase of property, plant and equipment

(129)

(102)

  (370)

Purchase of intangible assets

-

-

  (29)

Cash used in investing activities

(129)

(102)

  (399)


 



Cash flows from financing activities

 



Lease liability principal repayment

(614)

(970)

  (1,924)

Purchase of treasury shares

(67)

(68)

  (110)

Working capital facility repaid

(1,459)

(458)

  (7,547)

Dividends paid

-

(484)

  (484)

Cash used in financing activities

(2,140)

(1,980)

  (10,065)


 



Effects of exchange rates on cash and cash equivalents

(68)

27

  197


 

 


Increase/(decrease) in cash and cash equivalents

6,536

(15,507)

(11,470)

Cash and cash equivalents at beginning of period

17,768

29,238

  29,238

Cash and cash equivalents at end of period  11

24,304

13,731

  17,768

 

 

Net decrease in cash and cash equivalents for discontinued operations was £253,000 (6 months to 31 January 2022: decrease of £1,156,000, year to 31 July 2022: decrease of £742,000).

 



 

NOTES

Forming part of the condensed consolidated interim financial statements

 

1  Basis of preparation and significant accounting policies

 

1.1  General information

 

Gattaca plc ('the Company') and its subsidiaries (together 'the Group') is a human capital resources business providing contract and permanent recruitment services in the private and public sectors. The Company is a public limited company, which is listed on the Alternative Investment Market (AIM) and is incorporated and domiciled in England, United Kingdom. The Company's address is: 1450 Parkway, Solent Business Park Whiteley, Fareham, Hampshire, PO15 7AF. The registration number is 04426322.

 

1.2  Basis of preparation

 

These unaudited condensed consolidated interim financial statements are for the six months ended 31 January 2023 and do not constitute statutory accounts as defined by section 435 of the Companies Act 2006. The interim financial statements have been prepared in accordance with the AIM rules and IAS 34, 'Interim Financial Reporting'. Whilst the financial information included in the interim financial statements has been prepared in accordance with UK-adopted International Accounting Standards, the interim financial statements do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements for the year ended 31 July 2022 which have been filed with the Registrar of Companies. The statutory financial statements for the year ended 31 July 2022 received an unqualified report from the auditors and did not contain a statement under section 498 of the Companies Act 2006.

 

The accounting policies applied in the interim financial statements are consistent with those used in the preparation of the Group's consolidated financial statements for the year ended 31 July 2022, as described in the latest Annual Report and Accounts. No alterations have been made to the Group's accounting policies as a result of adopting new standards, amendments and interpretations which became effective in the period, as these were either not material or not relevant to the Group.

 

 

1.3  Going concern

 

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategic Report of the Group's Annual Report and Accounts for the year ended 31 July 2022. The financial position of the Group, its cash flows and liquidity position mirror those of our ultimate parent company and can be found in the Chief Financial Officer's Report of the 2022 Annual Report for Gattaca plc.

 

The Group has maintained mitigating actions to enhance working capital availability, including increases to the payment terms of certain types of contractors. These actions have created a permanent working capital benefit and reduce our working capital requirements during growth. There is sufficient headroom on our working capital facilities to absorb a level of customer payment term extensions, but we would also manage supply to the customer if payment within an appropriate period was not being made. Whilst there is no evidence that it would occur, a significant deterioration in average payment terms has the potential to impact the Group's liquidity.

 

The Directors have prepared detailed cash flow forecasts to July 2025, covering a period of 29 months from the date of approval of these interim financial statements. This base case is drawn up with appropriate regard for the current macroeconomic environment and the particular circumstances in which the Group operates. This conservative base case assumes a steady growth in the Group's contract and permanent NFI year-on-year.

 

A key assumption in preparing the cash flow forecasts is the continued availability of Group's invoice financing facility throughout the forecast period. The current £60m facility has no contractual renewal date; the Directors remain confident that the facility will remain available.

 

The output of the base case forecasting process has been used to perform sensitivity analysis on the Group's cash flows to model the potential effects should principal risks actually occur either individually or in unison. The sensitivity analysis modelled scenarios with significantly lower NFI growth rates and significantly increased operating cost inflation. The Group has modelled the impact of a severe but plausible scenario including nil growth in contract and permanent NFI across FY23 to FY25 and operating cost inflation of 5%-10%.

 

After making appropriate enquiries and considering the uncertainties described above, the Directors have a reasonable expectation at the time of approving these interim financial statements that the Group has adequate resources to continue in operational existence for the foreseeable future. Following careful consideration the Directors do not consider there to be a material uncertainty with regard to going concern and consider it is appropriate to adopt the going concern basis in preparing these interim financial statements.

 

1.4  Accounting estimates and judgements

 

Preparation of the interim financial statements requires the Directors to make assumptions and estimates that affect the application of accounting policies.  The key assumptions and sources of estimation uncertainty identified by the Directors were consistent with those identified in the Group's Annual Report and Accounts for the year ended 31 July 2022. The Directors are of the opinion that there are no critical accounting judgements.

 

 



 

2  Segmental Information

 

An operating segment, as defined by IFRS 8 'Operating segments', is a component of the Group that engages in business activities from which it may earn revenues and incur expenses.  The Group determines and presents operating segments based on the information that is provided internally to the chief operating decision maker, which has been identified as the Board of Directors of Gattaca plc.

 

 

6 months to 31 January 2023 unaudited








 





 




All amounts in £'000

Mobility

Energy

Defence

Technology, Media & Telecoms

Infra- structure

Gattaca

Projects

Inter- national1

Other

Continuing underlying operations

Revenue (Note 3)

21,295

20,978

38,921

13,983

74,668

2,564

3,839

18,494

194,742

Gross profit

2,230

2,123

4,186

1,249

7,205

1,029

1,290

3,421

22,733

Operating contribution

1,077

1,440

2,372

189

2,906

648

(473)

937

9,096

Depreciation, impairment and amortisation

(80)

(79)

(147)

(53)

(281)

(10)

(14)

(70)

(734)

Central overheads

(768)

(355)

(1,097)

(629)

(2,350)

(185)

(744)

(1,288)

(7,416)

Profit/(loss) from operations

229

1,006

1,128

(493)

275

453

(1,231)

(421)

946

Finance (cost)/income, net



 

 

 

 

 

 

  (10)

Profit/(loss) before tax

 

 

 

 

 

 

 


936

 

All amounts in £'000

Continuing underlying operations

Non-recurring items and amortisation of acquired intangibles

Discontinued

Total Group

Revenue (Note 3)

194,742

-

-

194,742

Gross profit

22,733

-

-

22,733

Operating contribution

9,096

-

-

9,096

Depreciation, impairment and amortisation

(734)

(35)

-

(769)

Central overheads

(7,416)

(300)

(208)

(7,924)

Profit/(loss) from operations

946

(335)

(208)

403

Finance (cost)/income, net

(10)

191

4

185

Profit/(loss) before tax

936

(144)

(204)

588

 

6 months to 31 January 2022 unaudited









 






 




All amounts in £'000

Mobility

Energy

Defence

Technology, Media & Telecoms

Infra- structure

Restated2

Gattaca

Projects

Inter- national1

Restated2

Other

Continuing underlying operations

Revenue (Note 3)

24,095

19,152

32,325

21,951

72,011

1,972

3,896

26,797

202,199

Gross profit

2,231

1,777

3,179

2,211

6,743

622

1,335

3,508

21,606

Operating contribution

1,163

953

1,478

1,290

1,974

174

(246)

1,429

8,215

Depreciation, impairment and amortisation

(118)

 (94)

  (159)

  (108)

  (355)

  (10)

  (19)

  (132)

(995)

Central overheads

(600)

(410)

(1,349)

(490)

(2,361)

(169)

(803)

(1,146)

(7,328)

Profit/(loss) from operations

445

449

(30)

692

(742)

(5)

(1,068)

151

(108)

Finance (cost)/income, net









  (153)

Loss before tax









(261)

 

All amounts in £'000

Continuing underlying operations

Non-recurring items and amortisation of acquired intangibles

Restated3

Discontinued

Total Group

Revenue (Note 3)

202,199

  - 

763

202,962

Gross profit

21,606

  - 

  238

21,844

Operating contribution

8,215

  - 

  (569)

7,646

Depreciation, impairment and amortisation

(995)

  (2,264)

  (32)

(3,291)

Central overheads

(7,328)

(90)

(127)

(7,545)

Profit/(loss) from operations

(108)

(2,354)

(728)

(3,190)

Finance (cost)/income, net

  (153)

73

  52

(28)

(261)

(2,281)

(676)

(3,218)

 

 

12 months to 31 July 2022









 






 




All amounts in £'000

Mobility

Energy

Defence

Technology, Media & Telecoms

Infra- structure

Restated2

Gattaca

Projects

Inter- national1

Restated2

Other

Continuing underlying operations

Revenue (Note 3)

47,766

40,779

69,811

41,660

140,422

5,317

7,969

49,622

403,346

Gross profit

4,571

3,884

6,720

4,246

13,561

1,313

2,779

7,066

44,140

Operating contribution restated4

2,151

2,175

3,278

1,838

5,634

725

(581)

1,828

17,048

Depreciation, impairment and amortisation restated4

(262)

(223)

(383)

(228)

(769)

(29)

(44)

(272)

(2,210)

Central overheads

(1,128)

(774)

(2,753)

(992)

(4,418)

(329)

(1,609)

(2,330)

(14,333)

Profit/(loss) from operations

761

1,178

142

618

447

367

(2,234)

(774)

505

Finance (cost)/income, net









(249)

Profit/(loss) before tax









256

 

All amounts in £'000

Continuing underlying operations

Non-recurring items and amortisation of acquired intangibles

Discontinued

Total Group

Revenue (Note 3)

403,346

781

404,127

Gross profit

44,140

238

44,378

Operating contribution restated4

17,048

  (440)

16,608

Depreciation, impairment and amortisation restated4

(2,210)

 (5,051)

  (31)

(7,292)

Central overheads

(14,333)

(558)

  (100)

(14,991)

Profit/(loss) from operations

505

(5,609)

(571)

(5,675)

Finance (cost)/income, net

  (249)

566

218

535

Profit/(loss) before tax

256

(5,043)

(353)

(5,140)

 

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.

 

1 International revenue and gross profit is generated from the location of the commission earning sales consultant, opposed to the domicile of the respective subsidiary by which they are employed.

2 The Gattaca Projects operating segment meets the quantitative thresholds to be reported separately for the first time in the 6-month period to 31 January 2023. In line with the requirements of IFRS 8, comparative periods have been restated to present the Gattaca Projects segment separately from the "Other" segment in which it had previously been presented.

3 Discontinued operations for the 6 months ended 31 January 2022 have been restated to include the results of the Group's South African recruitment operations, sold on 14 December 2021 as part of the management buy-out agreement announced in July 2021.

4 Operating contribution and depreciation, impairment and amortisation has been restated for the year ended 31 July 2022 to present depreciation on right-of-use assets in the depreciation line.

   

 









Geographical information


 




 



Total Group revenue


Non-current assets

All amounts in £'000

6 months to 31/01/2023

unaudited

Restated5

6 months to 31/01/2022

unaudited

12 months to 31/07/2022


6 months to 31/01/2023

unaudited

6 months to 31/01/2022

unaudited

 

12 months to 31/07/2022

UK

189,401

196,434

390,861


5,856

10,592

6,726

Rest of Europe

404

274

662


1

1

1

Middle East and Africa

-

763

781


34

16

59

Americas

4,937

5,491

11,823


224

375

314

Total

194,742

202,962

404,127

 

6,115

10,984

7,100

 

Revenue and non-current assets are allocated to the geographic market based on the domicile of the respective subsidiary.

 

5 Geographical information for the 6-month period to 31 January 2022 is restated to report total group revenue, where previously revenue from continuing operations was presented.

 

 



 

3  Revenue from Contracts with Customers   

Revenue from contracts with customers is disaggregated by major service line and operating segment, as well as timing of revenue recognition as follows: 

 

 

Major service lines - continuing underlying operations

 

 

 

 

 

 

6 months to 31 January 2023 unaudited

Mobility

£ '000

Energy

£ '000

Defence

£ '000

Technology, Media & Telecoms

£ '000

Infra- structure

£ '000

 

Gattaca

Projects

£'000

Inter- national

£ '000

Other

£ '000

Continuing underlying operations

£ '000

 

Temporary placements

20,349

20,764

37,241

13,571

73,248

1,125

3,004

16,582

185,884

 

Permanent placements

813

182

1,537

428

1,203

-

672

1,881

6,716

 

Other

133

32

143

(16)

217

1,439

163

31

2,142

 

Total

21,295

20,978

38,921

13,983

74,668

2,564

3,839

18,494

194,742

 

 

 

 

 

 

 

 

 

6 months to 31 January 2022 unaudited

Mobility

£ '000

Energy

£ '000

Defence

£ '000

Technology, Media & Telecoms

£ '000

Infra- structure

£ '000

Restated1

Gattaca

Projects

£'000

Inter- national

£ '000

Restated1 Other

£ '000

Continuing underlying operations

£ '000

 

Temporary placements

23,423

19,034

31,236

21,475

70,848

819

2,797

24,859

194,491

 

Permanent placements

672

118

1,089

476

1,163

-

1,099

1,938

6,555

 

Other

-

-

-

-

-

1,153

-

-

1,153

 

Total

24,095

19,152

32,325

21,951

72,011

1,972

3,896

26,797

202,199

 

 

 

 

 

 

 

 

 

12 months to 31 July 2022

Mobility

£ '000

Energy

£ '000

Defence

£ '000

Technology, Media & Telecoms

£ '000

Infra- structure

£ '000

Restated1 Gattaca

Projects

£'000

Inter- national

£ '000

Restated1

Other

£ '000

Continuing underlying operations

£ '000

 

Temporary placements

46,249

40,612

67,652

40,493

138,027

2,814

5,863

45,914

387,624

 

Permanent placements

1,483

158

1,909

1,115

2,363

-

2,106

3,652

12,786

 

Other

34

9

250

52

32

2,503

-

56

2,936

 

Total

47,766

40,779

69,811

41,660

140,422

5,317

7,969

49,622

403,346

 

 

 

 

Timing of revenue recognition - continuing underlying operations

 

 

 

 

 

 

 

 

6 months to 31 January 2023 unaudited

Mobility

£ '000

Energy

£ '000

Defence

£ '000

Technology, Media & Telecoms

£ '000

Infra- structure

£ '000

Gattaca

Projects

£'000

Inter- national

£ '000

Other

£ '000

Continuing underlying operations

£ '000

 

Point in time

21,295

20,978

38,921

13,983

74,668

1,125

3,839

18,494

193,303

 

Over time

-

-

-

-

-

1,439

-

-

1,439

 

Total

21,295

20,978

38,921

13,983

74,668

2,564

3,839

18,494

194,742

 

 

 

 

 

 

 

 

 

6 months to 31 January 2022 unaudited

Mobility

£ '000

Energy

£ '000

Defence

£ '000

Technology, Media & Telecoms

£ '000

Infra- structure

£ '000

Restated1

Gattaca

Projects

£'000

Inter- national

£ '000

Restated1 Other

£ '000

Continuing underlying operations

£ '000

 

Point in time

24,095

19,152

32,325

21,951

72,011

819

3,896

26,797

201,046

 

Over time

-

-

-

-

-

1,153

-

-

1,153

 

Total

24,095

19,152

32,325

21,951

72,011

1,972

3,896

26,797

202,199

 

 

 

 

 

 

 

 

 

12 months to 31 July 2022

Mobility

£ '000

Energy

£ '000

Defence

£ '000

Technology, Media & Telecoms

£ '000

Infra- structure

£ '000

Restated1

Gattaca

Projects

£'000

Inter- national

£ '000

Restated1

Other

£ '000

Continuing underlying operations

£ '000

 

Point in time

47,766

40,779

69,811

41,660

140,422

2,814

7,969

49,622

400,843

 

Over time

-

-

-

-

-

2,503

-

-

2,503

 

Total

47,766

40,779

69,811

41,660

140,422

5,317

7,969

49,622

403,346

 

   

No single customer contributed more than 10% of the Group's revenues (6 months to 31 January 2022 and year ended 31 July 2022: none). 

 

1 The Gattaca Projects operating segment meets the quantitative thresholds to be reported separately for the first time in the 6-month period to 31 January 2023. In line with the requirements of IFRS 8, comparative periods have been restated to present the Gattaca Projects segment separately from the "Other" segment in which it had previously been presented.

 

 

4  Profit from Total Operations

 

 


6 months to 31/01/2023

unaudited

6 months to 31/01/2022

unaudited

12 months to 31/07/2022

 

£'000

£'000

£'000

Profit from total operations is stated after charging/(crediting):

 

 

 

Depreciation of property, plant and equipment

228

209

570

Depreciation of leased right-of-use assets

485

692

1,552

Amortisation of acquired intangibles

35

264

420

Amortisation of software and software licences

21

94

88

Impairment of goodwill and acquired intangibles

-

2,000

3,780

Impairment of leased right-of-use assets

-

-

852

Net impairment (release)/loss on trade receivables and accrued income

(228)

172

(295)

Non-recourse working capital bank facility charges

243

149

323

Release of sales ledger credits1

(396)

-

-

Share-based payment charges

75

(17)

114

 

1 The Group holds unclaimed sales ledger credits on the balance sheet that arise in the course of normal trading operations due to the high volume of timesheet invoices and customer receipts. Following a review of credit control procedures, the Group has reinstated its policy of releasing any unclaimed sales ledger credits to the income statement after all reasonable steps have been taken to return funds to the customer and two years have elapsed since receipt of the funds.

 

 

Non-underlying items included within administrative expenses were as follows:

 


6 months to 31/01/2023

unaudited

6 months to 31/01/2022

unaudited

12 months to 31/07/2022

Continuing operations

£'000

£'000

£'000

Restructuring costs2

172

-

405

Costs associated with exiting properties3

128

90

153

Impairment of goodwill, acquired intangibles and right-of-use leased assets

-

2,000

4,632

Non-underlying items included in profit from continuing operations

300

2,090

5,190


 

 

 

Discontinuing operations

£'000

£'000

£'000

Advisory fees4

1

27

33

Costs relating to discontinuation of group undertakings5

207

100

5

Costs associated with properties previously exited

-

-

57

Non-underlying items included in loss from discontinued operations

208

127

95


 



Total non-underlying items

508

2,217

5,285

 

 

2 Restructuring costs of £154,000 (6 months to 31 January 2022: £nil and year ended 31 July 2022: £nil) were recognised as a result of personnel re-organisations throughout the business. Restructuring costs of £18,000 (6 months to 31 January 2022: £nil and year ended 31 July 2022: £405,000) were recognised as a result of changes in the Board. 

3 Costs have been recognised in relation to the exit of a number of UK office buildings that are no longer in use by the business. 

4 Legal fees incurred in each period relating to the Group's co-operation with certain voluntary enquiries from the US Department of Justice, as discussed in further detail in Note 13.  

5 Ongoing costs relating to closure of entities affected by the closure of the contract Telecoms Infrastructure business in 2018 as well as the closure of the Group's operations in Mexico and South Africa, including staff termination costs and impairment of certain working capital balances in prior periods. 

 



 

5  Taxation

 



22

 


 

6 months

to 31/01/2023

unaudited

6 months

to 31/01/2022

unaudited

12 months

to 31/07/2022

Analysis of charge in the period for continuing operations

£'000

£'000

£'000

Profit/(loss) before tax for continuing operations

792

(2,542)

(4,787)





Profit before tax multiplied by the standard rate of corporate tax in the UK of  21.0% (31 January 2022: 19.0%, 31 July 2022: 19.0%)

166

(483)

(909)





  Expenses not deductible for tax purposes

26

-

15

  Income not taxable

(28)

(10)

-

  Effect of goodwill impairment loss

-

360

502

  Effect of share-based payments

(1)

12

60

  Irrecoverable withholding tax

1

2

3

  Changes in tax rate

13

(25)

(84)

  Overseas losses not recognised as deferred tax assets

97

21

156

  Difference between UK and overseas tax rates

2

3

(9)

  Adjustment to tax charge in respect of previous periods

(34)

-

(194)

  Total taxation charge/(credit) for the period for continuing operations

242

(120)

(460)





Total taxation credit for the period for discontinued operations

(5)

(33)

(7)

 

 

The forecast average annual tax rate for continuing operations for the year to 31 July 2023 used to estimate the tax charge for the period to 31 January 2023 is 30.8% (period to 31 January 2022: forecast average annual tax rate of 4.7%, year to 31 July 2022: actual tax rate of 9.6%). The increase in the effective tax rate for the period to 31 January 2023 is primarily driven by an increase in overseas losses not recognised as deferred tax assets. A lower tax recovery was recognised in the period to 31 January 2022 due to the effect of the goodwill impairment in the period.

 

 

6  Discontinued Operations

 

The loss from discontinued operations for the period arises from ongoing closure costs in connection with the Group's recruitment operations in South Africa, Mexico and Asia which were either sold or closed in prior periods.

 

Financial performance

 


 

6 months

to 31/01/2023

unaudited

Restated2

6 months

to 31/01/2022

unaudited

 

12 months to 31/07/22

 

£'000

£'000

£'000

Revenue

-

763

781

Cost of sales

-

(525)

(543)

Gross profit

-

238

238

 




Administrative expenses1

(208)

(966)

(809)

Loss from operations

(208)

(728)

(571)

 

 

 


Finance income

-

59

-

Finance costs

-

(7)

-

Exchange gain

4

-

218

Loss before taxation

(204)

(676)

(353)


 

 


Taxation

5

33

7

Loss for the period after taxation from discontinued operations

(199)

(643)

(346)


 

 


Exchange differences on translation of discontinued operations

15

(116)

(231)

Other comprehensive loss from discontinued operations

(184)

(759)

(577)

 

1 Included in administrative expenses are £208,000 (6 months to 31 January 2022: £127,000, year ended 31 July 2022: £95,000) of non-underlying items, as detailed in Note 4.

2 The financial performance of discontinued operations for the 6 months to 31 January 2022 is restated to correctly present results of the Group's South African recruitment operations, sold on 14 December 2021 as part of the management buy-out agreement announced in July 2021.

 

 

 

 

 

 

 

 

Cash flows from discontinued operations

 


6 months

to 31/01/2023

unaudited

6 months

to 31/01/2022

unaudited

12 months

to 31/07/22

 

£'000

£'000

£'000

Net cash outflow from operating activities

(116)

(990)

(650)

Net cash outflow from investing activities

-

(45)

-

Net cash outflow from financing activities

-

(68)

(92)

Effect of exchange rates on cash and cash equivalents

(137)

(53)

-

Net decrease in cash generated by discontinued operations

(253)

(1,156)

(742)

 

 

7  Earnings Per Share

 

Earnings per share (EPS) has been calculated by dividing the consolidated profit or loss after taxation attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the period.

 

Diluted earnings per share has been calculated on the same basis as above, except that the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares has been added to the denominator. The Group's potential ordinary shares, being the Long Term Plan Options, are deemed outstanding and included in the dilution assessment when, at the reporting date, they would be issuable had the performance period ended at that date.

 

The effect of potential ordinary shares are reflected in diluted EPS only when they are dilutive. Potential ordinary shares are considered to be dilutive when the monetary value of the subscription rights attached to the outstanding share options is less than the average market share price of the Company's shares during the period. Furthermore, potential ordinary shares are only considered dilutive when their inclusion in the calculation would decrease earnings per share, or increase loss per share, in accordance with IAS 33. There are no changes to the profit numerator as a result of the dilution calculation.

 

The earnings per share information has been calculated as follows:

 



6 months to 31/01/2023

unaudited

 

6 months to 31/01/2022

unaudited

 

12 months to 31/07/2022

 

Total earnings


£'000

£'000

£'000

Total profit/(loss) attributable to ordinary share holders


351

(3,065)

(4,673)

 

 


 



Number of shares


000's

000's

000's

Basic weighted average number of ordinary shares in issue


32,294

32,290

32,290

Dilutive potential ordinary shares


348

-

210

Diluted weighted average number of shares


32,642

32,290

32,500

 

 


 



Total earnings per share


pence

Pence

pence

Earnings/(loss) per ordinary share

Basic

  1.1

  (9.5)

  (14.5)

Diluted

  1.1

  (9.5)

  (14.5)

 

 


 



Earnings for continuing operations


£'000

£'000

 

£'000

Total profit/(loss) for period


550

(2,422)

(4,327)



 



Total earnings per share for continuing operations


pence

pence

pence

Earnings/(loss) per ordinary share from continuing operations

Basic

  1.7

  (7.5)

  (13.4)

Diluted

  1.7

  (7.5)

  (13.4)



 



Earnings for discontinuing operations


£'000

£'000

£'000

Total loss for the period


(199)

(643)

(346)



 



Total earnings per share for discontinuing operations


pence

pence

pence

Loss per ordinary share from discontinuing operations

Basic

  (0.6)

  (2.0)

  (1.1)

Diluted

  (0.6)

  (2.0)

  (1.1)

 

 


 



Earnings from continuing underlying operations


£'000

£'000

£'000

Total profit/(loss) for the period


665

(247)

102



 

 

 

Total earnings per share for continuing underlying operations


pence

pence

pence

Earnings/(loss) per ordinary share for continuing underlying operations

Basic

  2.1

(0.8)

  0.3

Diluted

  2.0

(0.8)

  0.3

 

 

 

 

 

 

 

8  Trade and Other Receivables


23

 

 31/01/22

 

 

 

 


 

31/01/2023

unaudited

 31/01/2022

unaudited

31/07/2022

 

 

£'000

£'000

£'000

 

Trade receivables from contracts with customers, net of loss allowance

28,589

39,933

36,367

 

Other receivables

2,195

2,292

1,701

 

Finance lease receivables

160

-

-

 

Prepayments

1,376

1,648

1,372

 

Accrued income

15,401

19,779

15,327

 

Total

47,721

63,652

54,767

 


 



The Directors consider that the carrying amount of trade and other receivables approximates to the fair value.

 

Other receivables at 31 January 2023 includes £130,000 (31 January 2022: £134,000) of deferred consideration which is due within one year (31 January 2022: due after more than one year).

 

Finance lease receivables are recognised in connection with the sublease of UK office space to a third party entered into during the period. At 31 January 2023, £28,000 was due after more than one year.

 

Accrued income relates to the Group's right to consideration for temporary and permanent placement made but not billed at the year end. These transfer to trade receivables once billing occurs.

 

 

Impairment of trade receivables from contracts with customers   






31/01/2023

unaudited

31/01/2022

unaudited

31/07/2022

 

 

£'000

£'000

£'000

 

Trade receivables from contracts with customers, gross amounts

30,247

42,591

38,444

 

Loss allowance

  (1,658)

  (2,658)

(2,077)

 

Trade receivables from contracts with customers, net of loss allowance

28,589

  39,933

36,367

 

 

Trade receivables are amounts due from customers for services performed in the ordinary course of business. They are generally settled within 30-60 days and are therefore all classified as current.

 

The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics by geographical region or customer industry.

 

The expected loss rates are based on the payment profiles of sales over a period of 36 months before the relevant period end and the corresponding historical credit losses experienced within this period. The historic loss rates are adjusted to reflect any relevant current and forward-looking information expected to affect the ability of customers to settle the receivables. Additionally, external economic forecasts and scenario analysis has been taken into account along with other macro-economic factors when assessing the credit risk profiles for specific industries and geographies.

 

The loss allowance for trade receivables was determined as follows:

 

31 January 2023 unaudited

Current

More than 30 days past due

More than 60 days past due

More than 90 days due

Total

Weighted expected loss rate (%)

3.8%

5.5%

5.5%

61.2%

 

Gross carrying amount - trade receivables (£'000)

28,283

  659

  457

  848

  30,247

Loss allowance (£'000)

1,078

  36

  25

  519

  1,658






 

31 January 2022 unaudited

Current

More than 30 days past due

More than 60 days past due

More than 90 days due

Total

Weighted expected loss rate (%)

3.8%

4.7%

5.7%

53.8%


Gross carrying amount - trade receivables (£'000)

  37,945

  2,300

  351

  1,995

42,591

Loss allowance (£'000)

  1,456

  109

  20

  1,073

  2,658






 

31 July 2022

Current

More than 30 days past due

More than 60 days past due

More than 90 days due

Total

Weighted expected loss rate (%)

4.0%

7.9%

15.9%

48.0%


Gross carrying amount - trade receivables (£'000)

  35,817

  1,241

  327

  1,059

  38,444

Loss allowance (£'000)

  1,418

  99

  52

  508

 2,077

 

 

 

 

The loss allowance for trade receivables at the period end reconciles to the opening loss allowance as follows: 

 






6 months

to 31/01/2023

unaudited

6 months

to 31/01/2022

unaudited

 

12 months to 31/07/2022

 

 

£'000

£'000

£'000

 

Opening loss allowance

  2,077

  3,449

  3,449

 

(Decrease)/increase in loss allowance recognised in profit and loss during the period

(290)

  5

  136

 

Receivable written off during the period as uncollectable

  (129)

(796)

 

Closing loss allowance

  1,658

  2,658

  2,077

 

 

 

Impairment of accrued income

 






31/01/2023

unaudited

31/01/2022

unaudited

31/07/2022

 

 

£'000

£'000

£'000

 

Gross accrued income

  15,980

  20,621

16,009

 

Loss allowance

  (579)

  (842)

 

Accrued income, net of loss allowance

  15,401

  19,779

15,327

 

 

The loss allowance for accrued income was determined as follows:

 

31 January 2023 unaudited

Current

More than 30 days past due

More than 60 days past due

More than 90 days due

Total

Weighted expected loss rate (%)

2.6%

2.5%

2.5%

33.1%


Gross carrying amount - accrued income (£'000)

  14,318

  867

  239

  556

15,980

Loss allowance (£'000)

  367

  22

  6

  184

579






 

31 January 2022 unaudited

Current

More than 30 days past due

More than 60 days past due

More than 90 days due

Total

Weighted expected loss rate (%)

2.5%

2.5%

2.5%

32.1%


Gross carrying amount - accrued income (£'000)

17,932

  903

  690

  1,096

  20,621

Loss allowance (£'000)

  450

  23

  17

  352

   842






 

31 July 2022

Current

More than 30 days past due

More than 60 days past due

More than 90 days due

Total

Weighted expected loss rate (%)

2.5%

2.5%

2.5%

30.6%


Gross carrying amount - accrued income (£'000)

  13,269

  1,090

  649

  1,001

  16,009

Loss allowance (£'000)

  333

27

16

306

682

 

 

The loss allowance for accrued income at the period end reconciles to the opening loss allowance as follows:

 

 





 


6 months

to 31/01/2023

unaudited

6 months

to 31/01/2022

unaudited

12 months

to 31/07/2022

 

 

£'000

£'000

£'000

 

Opening loss allowance

682

1,065

1,065


Amounts utilised in the period

-

(350)

-


(Decrease)/increase in loss allowance recognised in profit and loss during the period

(103)

127

(383)


Closing loss allowance

579

842

682


 

 



 

9  Provisions  

 





 

 



 


Dilapidations

Other Provisions

Total

 

6 months to 31 January 2023 unaudited

£'000

£'000

£'000

 

Balance at 1 August

880

824

1,704

 

Provisions made

154

141

295

 

Provisions utilised

(353)

(30)

(383)

 

Provisions released

(1)

-

(1)

 

Effect of movements in exchange rates

(1)

(2)

(3)

 

Balance at period end

679

933

1,612

 

 

 

 

 

 


Dilapidations

Other Provisions

Total

 

31 January 2023 unaudited

£'000

£'000

£'000

 

Non-current

661

-

661

 

Current

18

933

951

 

Total

679

933

1,612

 

 





 

 



 


Dilapidations

Other Provisions

Total

 

6 months to 31 January 2022 unaudited

£'000

£'000

£'000

 

Balance at 1 August

1,680

53

1,733

 

Provisions made

7

681

688

 

Provisions utilised

-

(40)

(40)

 

Provisions released

(223)

(13)

(236)

 

Effect of movements in exchange rates

3

-

3

 

Balance at period end

1,467

681

2,148

 

 

 

 

Dilapidations

Other Provisions

Total

 

31 January 2022 unaudited

£'000

£'000

£'000

 

Non-current

1,024

224

1,248

 

Current

443

457

900

 

Total

1,467

681

2,148

 

 





 

 



 


Dilapidations

Other Provisions

Total

 

12 months to 31 July 2022

£'000

£'000

£'000

 

Balance at 1 August

1,680

53

1,733

 

Provisions made

18

824

842

 

Provisions utilised

(145)

(40)

(185)

 

Provisions released

(698)

(13)

(711)

 

Effect of movements in exchange rates

25

-

25

 

Balance at period end

880

824

1,704

 

 

 

 

Dilapidations

Other Provisions

Total

 

31 July 2022

£'000

£'000

£'000

 

Non-current

517

-

517

 

Current

363

824

1,187

 

Total

880

824

1,704

 

 

 

Dilapidation provisions are held in respect of the Group's office properties where lease obligations include contractual obligations to return the property to its original condition at the end of the lease term, ranging between one and six years. During the period the Group agreed dilapidations settlements over two of its UK office properties which were exited in the previous period.

 

Other provisions have been recognised in respect of restructuring activities relating to discontinuation of overseas operations and claims for certain legal matters. Other provisions held as at 31 January 2023, 31 January 2022 and 31 July 2022 are primarily in respect of claims for certain legal matters.

 

 



 

10  Share capital

 

 

 

 

 


31/01/2023

unaudited

 

31/01/2022

unaudited

31/07/2022

Authorised share capital

£'000

£'000

£'000

40,000,000 ordinary shares of £0.01 each

400

400

400






31/01/2023

unaudited

31/01/2022

unaudited

31/07/2022

Allotted, called up, and fully paid

£'000

£'000

£'000

32,303,612 Ordinary shares of £0.01 each (31 January 2022 and 31 July 2022: 32,290,400)

323

323

323

 

 

The movement in the number of shares in issue is shown below:

 

'000

In issue at 1 August 2022

32,290

Exercise of LTIP share options

14

In issue at 31 January 2023

32,304

 

The Company has one class of ordinary shares. Each share is entitled to one vote in the event of a poll at a general meeting of the Company. Each share is entitled to participate in dividend distributions.

 

Share options

During the period, the Group granted share options under the Long-Term Incentive Plan ("LTIP") for Executive Directors and senior management. 864,130 share options with an exercise price of £0.01 each were granted on 6 December 2022 to members of staff to be held over a three-year vesting period and are subject to various performance conditions. All share options have a life of 10 years from grant date and are equity settled on exercise.

 

 

11  Net Cash/(Debt)

 

Net cash/(debt) is the total amount of cash and cash equivalents less interest-bearing loans and borrowings, including lease liabilities.

 

Net cash flows include the net drawdown of loans and borrowings and cash interest paid relating to loans and borrowings.      

 

01/08/2022

Net cash flows

Non-cash movements

31/01/2023

31 January 2023 unaudited

£'000

£'000

£'000

£'000

Cash and cash equivalents

  17,768

  6,604

 (68)

  24,304

Working capital facilities

 (1,801)

  1,459

  - 

  (342)

Lease liabilities

  (3,625)

  614

  (50)

  (3,061)

Total net cash

  12,342

  8,677

  (118)

  20,901

 

 

01/08/2021

Net cash flows

Non-cash movements

31/01/2022

31 January 2022 unaudited

£'000

£'000

£'000

£'000

Cash and cash equivalents

29,238

  (15,507)

13,731

Working capital facilities

  (9,348)

458

  (8,890)

Lease liabilities

  (5,761)

  1,034

  (171)

  (4,898)

Total net cash/(debt)

14,129

  (14,015)

  (171)

  (57)

.

 

01/08/2021

Net cash flows

Non-cash movements

31/07/2022

31 July 2022

£'000

£'000

£'000

£'000

Cash and cash equivalents

29,238

(11,667)

197

17,768

Working capital facilities

(9,348)

7,547

 - 

(1,801)

Lease liabilities

(5,761)

2,038

  98

(3,625)

Total net cash

14,129

(2,082)

295

12,342

 

 



 

Restricted cash

Included in cash and cash equivalents is the following restricted cash which meets the definition of cash and cash equivalents but is not available for use by the Group:


 

31/01/2023

unaudited

31/01/2022

unaudited

31/07/2022

 

£'000

£'000

£'000

Balances arising from the Group's non-recourse working capital arrangements

1,173

902

615

Cash on deposit in accounts controlled by the Group but not available for immediate drawdown

1,370

1,271

1,662

Total restricted cash

2,543

2,173

2,277

 

 

12  Transactions with Related Parties

 

There were no related party transactions during the period with entities outside of the Group (6 months to 31 January 2022: none, year ended 31 July 2022: none) and no related party balances at 31 January 2023 (31 January 2022: none, 31 July 2022: none).

 

 

13  Contingent Liabilities

 

We continue our cooperation with the United States Department of Justice and in the 6 month period to 31 January 2023 have incurred £1,000 (6 months to 31 January 2022: £27,000, and year to 31 July 2022: £33,000) in advisory fees on this matter. The Group is not currently in a position to know what the outcome of these enquiries may be and therefore we are unable to quantify the likely outcome for the Group.

   

 

14  Statement of Directors' Responsibilities

 

The Directors' confirm that these condensed interim financial statements have been prepared in accordance with UK-adopted International Accounting Standard 34, 'Interim Financial Reporting' and that the interim management report includes a fair view of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

 

· an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

· material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.

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