Preliminary Results for the year ended 31 July 21

About this update from Gattaca Plc

[{"type":"text","content":"\n \n \n \n RNS Number : 3365R \n Gattaca PLC \n 04 November 2021 \n   \n \n \n 4 November 2021 \n   \n Gattaca plc \n   \n Unaudited Preliminary Results for the year ended 31 July 2021 \n Improvement plan complete; well positioned for growth \n   \n Gattaca plc (\"Gattaca\" or the \"Group\"), the specialist Engineering and Technology recruitment solutions business, today announces its unaudited Preliminary Results for the year ended 31 July 2021. \n   \n Financial Highlights \n \n \n \n \n   \n \n \n \n Unaudited 2021 \n \n \n \n \n Restated 2020 \n \n \n \n   \n \n \n \n \n   \n \n \n \n Continuing \n \n \n Reported \n \n \n \n \n Continuing underlying 2 \n \n \n \n \n Continuing \n \n \n Reported \n \n \n \n \n Continuing underlying 2 \n \n \n \n \n Continuing \n \n \n Reported \n \n \n \n \n Continuing underlying 2 \n \n \n \n \n \n   \n \n \n \n £m \n \n \n \n \n £m \n \n \n \n \n £m \n \n \n \n \n £m \n \n \n \n \n % \n \n \n \n \n  % \n \n \n \n \n \n \n Revenue \n \n \n \n \n 415.7 \n \n \n \n \n 415.7 \n \n \n \n \n 534.7 \n \n \n \n \n 534.7 \n \n \n \n \n -22% \n \n \n \n \n -22% \n \n \n \n \n \n \n Net Fee Income (NFI) 1 \n \n \n \n \n 42.1 \n \n \n \n \n 42.1 \n \n \n \n \n 52.8 \n \n \n \n \n 52.8 \n \n \n \n \n -20% \n \n \n \n \n -20% \n \n \n \n \n \n \n Profit from operations \n \n \n \n \n 3.3 \n \n \n \n \n 3.6 \n \n \n \n \n 3.5 \n \n \n \n \n 6.2 \n \n \n \n \n -7% \n \n \n \n \n -41% \n \n \n \n \n \n \n Profit before taxation \n \n \n \n \n 2.2 \n \n \n \n \n 3.2 \n \n \n \n \n 1.3 \n \n \n \n \n 4.8 \n \n \n \n \n 68% \n \n \n \n \n -32% \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n Basic earnings per share \n \n \n \n \n 5.5 \n \n \n \n \n 8.4 \n \n \n \n \n 2.3 \n \n \n \n \n 11.7 \n \n \n \n \n 139% \n \n \n \n \n -28% \n \n \n \n \n \n \n Diluted earnings per share \n \n \n \n \n 5.5 \n \n \n \n \n 8.4 \n \n \n \n \n 2.2 \n \n \n \n \n 11.7 \n \n \n \n \n 150% \n \n \n \n \n -28% \n \n \n \n \n \n \n Dividend per share \n \n \n \n   \n \n \n \n 1.5 \n \n \n \n   \n \n \n \n 0.0 \n \n \n \n   \n \n \n   \n \n \n \n \n \n Net cash at end of period (excluding IFRS 16 lease liabilities) \n \n \n \n   \n \n \n \n 19.9 \n \n \n \n   \n \n \n \n 27.3 \n \n \n \n   \n \n \n   \n \n \n \n \n   \n Financial Performance \n   \n \n \n \n \n \n · \n \n \n \n Notwithstanding the significant impact of the pandemic on NFI, strong cost management resulted in continuing underlying PBT £3.2m (2020 restated: £4.8m) down 32% on year to 31 July 2020 \n \n \n \n \n \n · \n \n \n \n Robust balance sheet: \n \n \n \n \n   \n \n \n o \n \n \n Group adjusted net cash position of £19.9m at 31 July 2021 (31 July 2020: £27.3m net cash). Reported net cash (including IFRS16 lease liabilities) was £14.1m (2020: £19.6m).  \n \n \n \n \n   \n \n \n o \n \n \n Revolving credit facility ('RCF') repaid in full \n \n \n \n \n   \n \n \n o \n \n \n The Group is now covenant free \n \n \n \n \n   \n \n \n o \n \n \n £4.7m of deferred VAT repaid \n \n \n \n \n \n · \n \n \n \n Dividends restarting at 1.5 pence per share (2020: nil pence) \n \n \n \n   \n   \n   \n   \n \n \n \n   \n   \n \n Operational Performance \n 3 \n \n   \n \n \n \n \n \n · \n \n \n \n The entire reporting period was impacted by the global pandemic resulting in Group continuing underlying NFI of £42.1m, 20% down on year to 31 July 2020 \n \n \n \n \n \n · \n \n \n \n Contract NFI represents 74% of group NFI (2020 restated: 74%) on a continuing basis \n \n \n \n \n   \n \n \n o \n \n \n Increased activity from our \"RPO\" (Permanent Recruitment Process Outsourcing solutions) clients as the market recovery has been led by permanent recruitment \n \n \n \n \n   \n \n \n o \n \n \n Further improvement to come on the contract front including in our core infrastructure unit, which will benefit from strong demand driven by major initiatives such as UK Fibre investment, HS2 and Offshore 2025 \n \n \n \n \n \n · \n \n \n \n UK Engineering, providing STEM skills to crucial engineering projects, proved resilient. While NFI was down 17% year-on-year, H2 2021 was up 10% on H1 2021 \n \n \n \n \n \n · \n \n \n \n UK Technology NFI was 25% down year-on-year, with H2 2021 flat on H1. Significant investment has been made in this area, with signs of growth evident post year-end \n \n \n \n \n \n · \n \n \n \n International continuing NFI was 30% lower year-on-year. During the year, operations in Mexico were closed and the South Africa business was in the process of being sold, both are treated as discontinued \n \n \n \n   \n   \n   \n   \n \n \n \n   \n Strategic update \n   \n \n \n \n \n \n · \n \n \n \n The successful completion of the Group's Improvement Plan: \n \n \n \n \n   \n \n \n o \n \n \n Group wide restructuring completed to focus on our eight target industry sectors including Defence and Infrastructure \n \n \n \n \n   \n \n \n o \n \n \n Expansion of our fulfilment function, both in the UK and via lower cost offshore resource \n \n \n \n \n   \n \n \n o \n \n \n Global technology platform live (from April 2021) \n \n \n \n \n   \n \n \n o \n \n \n Roll out of targeted marketing approach \n \n \n \n \n \n · \n \n \n \n The Group is now well positioned to grow \n \n \n \n \n   \n \n \n o \n \n \n Hiring continues within our sales and fulfilment functions to support growth \n \n \n \n \n   \n \n \n o \n \n \n UK sales headcount up 16% between Jan 21 and July 21 \n \n \n \n \n   \n \n \n o \n \n \n Over the coming year we will continue to invest in our people and technology \n \n \n \n \n \n · \n \n \n \n The Group has refreshed its purpose, vision, mission and values, focused on STEM skills which remain in short supply \n \n \n \n   \n   \n   \n   \n \n \n \n   \n   \n Outlook \n   \n Given the current market conditions, our clients are finding it more challenging to identify and secure specialist talent, which plays well to Gattaca's expertise in delivering critical skills and talent for their businesses. With strong demand for STEM skills, and our investment in our people and technology, we are well positioned for growth.  \n Notwithstanding evolving pandemic and macro supply chain factors, the business continues to trade in line with market expectations. We continue to invest to ensure sustainable growth over the long-term in our chosen markets. \n   \n Kevin Freeguard, CEO commented: \n   \n \"Despite the challenges posed by the COVID-19 pandemic during the financial year, we successfully completed our Group wide Improvement Plan which included an organisational restructure, the creation of a core fulfilment function, the establishment of market sector facing sales structures, and implementing an integrated global technology platform. Furthermore, we recently refreshed Gattaca's purpose, vision, mission and values, helping to embed the right mindset and culture across the Group. With these fundamental initiatives complete and our markets recovering, we are now in the right place, with the right tech platform as we invest in people to support growth. \n   \n To support our new operating model, between January and July 2021, we increased sales headcount by 16%. Since July 2021, we have continued to invest in sales headcount in our core growth STEM sectors which offer significant long-term sustainable growth potential. All of our core sectors are now in various stages of recovery, and I anticipate continued improvement as momentum builds.  Given our confidence in the business, I am pleased that we are resuming dividends.\"  \n   \n \n The following footnotes apply, unless where otherwise indicated, throughout these unaudited Preliminary Results: \n \n \n   \n \n \n \n \n 1   \n \n \n \n NFI is calculated as revenue less contractor payroll costs \n \n \n \n \n \n 2 \n \n \n \n Continuing underlying results exclude the NFI and profits / (losses) before taxation of discontinued businesses predominantly being operations in Mexico and South Africa (2021: £(1.2)m, 2020 : £(2.5)m), non-underlying items within administrative expenses in 2021 primarily related to reversal of restructuring costs provided for in prior year (2021: £(0.2)m, 2020 : £1.2m), amortisation of acquired intangibles (2021: £0.5m, 2020: £0.6m), impairment of acquired intangibles (2021: £0.0m, 2020: £0.3m) and exchange (losses) / gains from revaluation of foreign assets and liabilities (2021: £(0.7)m, 2020 restated: £(0.8)m). \n \n \n \n \n \n 3 \n \n \n \n NFI commentary is on an continuing underlying like for like constant currency basis \n \n \n \n \n \n 4 \n \n \n \n Cooperation with the US Department of Justice continues with respect to historical transactions in our discontinued telecommunication infrastructure business \n \n \n   \n For further information please contact: \n \n \n \n \n Gattaca plc \n \n \n +44 (0) 1489 898989 \n \n \n \n \n Kevin Freeguard, Chief Executive Officer \n Salar Farzad, Chief Financial Officer  \n   \n \n \n   \n \n \n \n \n Liberum Capital Limited (Nomad and Broker) \n \n \n +44 (0) 20 3100 2000 \n \n \n \n \n Lauren Kettle \n Robert Morton \n Euan Brown \n \n \n   \n \n \n \n \n   \n \n \n   \n \n \n \n \n Citigate Dewe Rogerson \n \n \n +44 (0) 20 7638 9571 \n \n \n \n \n \n Jos Bieneman \n \n \n \n   \n \n \n \n \n \n Lucy Eyles \n \n \n \n   \n \n \n \n \n \n \n   \n \n \n The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain \n \n \n . \n \n \n \n   \n \n \n Chair's Statement \n \n \n The pandemic had a significant impact on nearly all our clients, candidates and colleagues throughout the whole of the financial period. There was a noticeable positive change around mid-year as many of our clients reassessed their talent requirements. It is also notable that the STEM skill shortages that we have often discussed are even more apparent as the economy improves. We are very quickly moving to a candidate-led market. \n \n \n We are determined that whilst the pandemic has had an impact on our operations we will not let it define us. Our leadership team and colleagues have grown immensely as a result of the challenges thrown at them and we commend them accordingly. It has allowed us to re-look at how we operate and we have found that hybrid working, when done well, can be as productive as working full-time in the office. This also enables us to recruit our own talent from a wider pool, with many consultants able to be based closer to their clients. This is the new 'norm' and we will embrace it. \n \n \n Overview \n \n \n The financial year has been a year of two halves. The first six months remained significantly impacted by the pandemic as clients were cautious in the search for talent. By mid-year there were early signs of a recovery and the market for STEM skills had rebounded. It is not back to the pre-pandemic levels as there are a number of key markets where the recovery is slower than others, but it is moving in the right direction. Initially we have seen a step up in permanent opportunities and we also expect further growth from our contractor base. The balance has swung in favour of candidates and indeed in many areas there is a shortage of STEM skills. This has always been anticipated but the speed of the change has been surprising. There is no single reason for this and we look forward to the challenge to support our clients and to be seen as the STEM partner of choice. \n \n \n Our leadership team have been exceptional throughout the year, even though the majority of our people were working from home for the whole period. They have used the opportunity to reset the business for the post-pandemic period. The Improvement Plan is now completed and in the final stages we implemented a revitalised commission scheme, focused on core delivery for our larger clients, embraced hybrid working, successfully supported our customers through IR35 and launched our new systems. At the same time they have worked tirelessly to support our people to ensure everyone remains connected. In July we launched our new Purpose, Vision, Mission and Values which we believe will ensure we deliver a service that is so trusted that our clients, candidates and colleagues recommend us without hesitation. \n \n \n As part of the reset we initially had to make a number of colleagues redundant during October 2020. This allowed us to keep our costs under control at the low point of the pandemic cycle but it has subsequently allowed us to address the balance of skills required in the business. We have seen our numbers employed in UK sales gradually increase in the second half (16% from January to July). \n \n \n   \n \n \n Towards the end of the year we chose to close our operations in Mexico as recent government legislation prohibiting outsourcing of workers meant that it would no longer be financially viable to operate in the market. We also agreed the divestment of our South African operations to a management buyout. The sales operation in South Africa was always borderline and we took the decision to focus on our core support centre in the region who provide delivery support for our UK and North American operations. \n \n \n We remain focused on managing our working capital and our net cash position. We ended the year with £19.9m of net cash (excluding lease liabilities), compared with £27.3m at the end of 2020. This is largely due to the repayment of £4.7m of deferred VAT together with a deterioration in debtor days. The latter is closely monitored and we are cognisant that as our clients emerge from the pandemic their balance sheets are often stretched. \n \n \n Following the repayment of our revolving credit facility last year we no longer have any covenant restrictions. In addition, we have £53.4m liquidity at the year end, being our cash resources and our undrawn invoice financing facility. Whilst future growth will see the need for additional working capital we have mitigated this to some extent by changes in contractor terms and therefore we expect to maintain a strong balance sheet. \n \n \n Dividend \n \n \n When we announced we would not be paying any dividends in 2018, the decision was not taken lightly. At that time we had net debt of £40m and needed to address our balance sheet. We believe we have now done so and feel confident that we can manage any challenges thrown up by the pandemic. Our long-standing objective has been to achieve a through-the-cycle dividend pay-out of approximately 50% of profits after tax. The Board believe that this year we should reinstate the dividend and feel that 1.5p per share is a reasonable first step \n fulling \n towards our objective. \n \n \n Diversity and inclusion \n \n \n We recognise that we fell short on the gender balance on the Board and indeed within our leadership group. We are grateful that Tracey James joined the Board as a non-executive director with effect from December 2020. Tracey chairs the Audit Committee and is a member of the Remuneration Committee. Tracey is a chartered accountant who has spent 26 years with Grant Thornton, the latter 14 years as an audit partner. As a result David Lawther has moved over to chair the Remuneration Committee. It is the Board's intention to appoint a further independent non-executive director in the near term to address the balance between independent and non-independent directors. \n \n \n Below Board level we have also committed to ensuring that by 2024, 40% of our leadership group will be female. We recognise as an organisation we need to redress the balance within the Group and Tracey has agreed to provide Board sponsorship with Kevin to chair our Diversity and Inclusion steering group. This group will look at the wider aspects of diversity and inclusion. \n \n \n   \n \n \n Outlook \n \n \n The fundamentals of our business model position us well for the upswing in the economy. It is well recognised that the demand for STEM skills will only increase and we are well balanced to fulfil our role with our clients in finding the talent that they require. Last year we were cautious regarding the timing and whilst we feel more confident today we are also aware that this pandemic may well be wounded but is not yet finished. There may well be twists and turns over the coming months. \n \n \n What we do know is that our business is in the best possible position to exploit any market growth having been focused on our core markets for over 37 years. We have left behind us Brexit, IR35, new systems implementation and hopefully the worst of COVID-19. What lies ahead is a period where the expectation for major infrastructure projects in the UK is unprecedented and an optimism amongst our client base that we are entering a growth phase for STEM skills with a shortage of candidates. We are therefore hopeful that as the markets return we will see a significant recovery in the medium-term to our level of profitability. \n \n \n Patrick Shanley \n \n \n Non-Executive Chair \n \n \n   \n \n \n CEO's Statement \n \n \n Introduction \n \n \n This has been a challenging year for our clients, candidates and colleagues as we continued to be significantly impacted by the effects of the global pandemic. Whilst successfully operating remotely for a significant part of the year, we focused on ensuring that we continued to support our clients with their talent requirements through the challenges posed by the pandemic, alongside managing operational costs to an appropriate level. \n \n \n This could not have been achieved without the commitment, dedication and expertise of our people. I would like to thank them all as they have continued to focus on our clients, contractors and candidates whilst managing the complexities of the new environment that we have all had to adapt to. Each colleague is a valued member of the Gattaca family. \n \n \n   \n \n \n Some difficult decisions were needed in the early part of the year whilst the impact of the pandemic continued, namely the reset of our cost base with a redundancy programme. We ensured the appropriate operational scale during this time but also proactively accelerated our plans to align the organisation with the markets and our client's needs. This included the closure of our Mexico business and the sale of our trading operations in South Africa. \n \n \n We worked extensively with our client and contractor base in the period leading up to the much delayed IR35 changes in the private sector which were implemented in April 2021, with relatively little disruption compared to 2016 when the changes came into force in the public sector. \n \n \n Since February we have seen the markets returning to growth across the majority of our major sectors, which has led to a candidate short market. We are now in investment mode and in January embarked on a sales hiring programme to invest in talent with skill sets aligned to our new operating model. At the end of the year our people numbers were 512 colleagues compared to 587 the previous year. \n \n \n The Group delivered net fee income of £42.1m (2020 restated: £52.8m). The pandemic primarily impacted the last quarter of the prior financial year, whereas it has impacted all of our 2021 results, albeit that we saw sequential growth of 5% in the second half of the year. The Group is reporting continuing underlying profits before tax of £3.2m (2020 restated: £4.8m), exceeding our expectations at the beginning of the year. \n \n \n During the year we also accelerated our plans to adjust our operating model and I am pleased that these foundations are now in place. \n \n \n Accelerating the rebuild \n \n \n The year ended July 2021 has been a significant year of rebuilding for the Group as together with the senior leaders of the business we accelerated and implemented a number of key initiatives which were introduced in our last annual report. Whilst this investment will be a factor in 2022 profits, it will set the business up for growth in the medium and long-term. \n \n \n Through our UK Engineering, Technology and International businesses, we will be focused on the following market sectors: \n \n \n \n \n \n \n ● \n \n \n \n \n Defence, \n \n \n \n \n \n \n ● \n \n \n \n \n Energy, \n \n \n \n \n \n \n ● \n \n \n \n \n Finance, banking and insurance, \n \n \n \n \n \n \n ● \n \n \n \n \n Infrastructure, \n \n \n \n \n \n \n ● \n \n \n \n \n Mobility, \n \n \n \n \n \n \n ● \n \n \n \n \n Public sector technology, \n \n \n \n \n \n \n ● \n \n \n \n \n Retail manufacturing and life sciences, and \n \n \n \n \n \n \n ● \n \n \n \n \n Technology, media and telecoms. \n \n \n \n \n \n \n   \n \n \n These are sectors that have significant requirement for STEM skills and that offer long-term sustainable growth potential. \n \n \n With our focus on STEM skills, our sales activities are now aligned to market sectors with an agile structure around account management, account development and new client acquisition and we have further increased the scale of our centralised delivery capability. \n \n \n Following our major systems investment programme we were pleased to go live with our new technology platform across all businesses in April. This is the biggest change programme the Group has ever undertaken. This platform replaced all of our core systems and whilst such a major change programme did inevitably cause some brief disruption, we are already seeing substantial benefits. We now have a holistic view of all our operations with granular visibility to underlying activity, enabling more efficient and effective customer delivery capability and deeper business insight for the Group. \n \n \n There is an increasing focus on Environmental, Social and Governance ('ESG') matters and whilst this is an area that has always been part of Gattaca's DNA we are mindful there is more we can do. \nAs such, during the year we started to take a more structured approach which is covered in more detail later in the strategic report. \n \n \n As we emerged from lockdown we have chosen to embrace hybrid working as a core practice having observed some of the benefits arising from the working patterns adopted during the pandemic. This offers greater flexibility to our people which helps retention and we believe enhances productivity, but also enables access to wider markets for internal talent. \n \n \n We have also revised our purpose, vision, mission and values to ensure it is fully aligned to support the direction of the Group. I am pleased with progress as we roll out and embed this across the organisation. \n \n \n Our vision to be the STEM staffing partner of choice is underpinned by our four strategic priorities: \n \n \n \n \n \n \n ● \n \n \n \n \n Sell to a market - growing our customer base and deepening relationships, \n \n \n \n \n \n \n ● \n \n \n \n \n Add value by product - innovating and developing products to meet customer needs, \n \n \n \n \n \n \n ● \n \n \n \n \n Expert fulfilment by skill - enriching the customer experience and enhancing our service delivery capability, and \n \n \n \n \n \n \n ● \n \n \n \n \n Collaborative high performing culture - improving organisational alignment and performance \n \n \n \n \n \n \n . \n \n \n With these changes made, our business model will now be better positioned to support market demand. \n \n \n Outlook \n \n \n The demand for STEM skills remains high and in certain areas clients are finding it more challenging to identify and secure specialist talent. This plays well to our core capability which is all about finding critical skills and expertise for businesses. \n \n \n   \n \n \n We have seen increasing optimism within our clients and continued significant investment in major infrastructure projects in the UK. We \n \n \n continue to invest in sales headcount and expect sustainable growth over the medium to long term in our chosen markets. \n \n \n   \n \n \n Finally, as part of our increasing confidence in the future we are pleased to be resuming dividends. \n \n \n   \n \n \n Kevin Freeguard \n \n \n Chief Executive Officer \n \n \n Chief Financial Officers Report \n \n   \n \n Key highlights \n \n \n \n \n \n \n ● \n \n \n \n \n Continuing underlying profit before tax of £3.2m for the year (2020 restated: £4.8m) in a period which continued to be significantly impacted by the pandemic. \n \n \n \n \n \n \n ● \n \n \n \n \n Adjusted net cash, which excludes IFRS 16 finance lease liabilities, of £19.9m (2020: £27.3m). \n \n \n \n \n \n \n ● \n \n \n \n \n Revolving credit facility ('RCF') repaid in October 2020 leaving the group covenant free. \n \n \n \n \n \n \n ● \n \n \n \n \n Completion of our new group-wide technology platform. \n \n \n \n \n \n \n ● \n \n \n \n \n Investment in our staff adding 16% to our UK sales headcount between January and July 2021. \n \n \n \n \n \n \n   \n \n \n Financial performance \n \n \n On a continuing basis, revenue of £415.7m (2020 restated: £534.7m) generated NFI of £42.1m (2020 restated: £52.8m). We achieved contract NFI of £31.3m (2020 restated: £39.3m) at a margin of 7.5% (2020 restated: 7.3%), and permanent recruitment fees of £10.8m (2020 restated: £13.5m). \n \n \n Underlying profit before tax from continuing operations was £3.2m (2020 restated: £4.8m). Statutory profit after tax for the total group was £0.6m (2020: loss of £1.8m). \n \n \n Net cash at 31 July 2021 (excluding lease liabilities) was £19.9m (31 July 2020: £27.3m), the reduction in net cash year-on-year of £7.4m predominantly as a result of £4.7m repayments of temporary VAT deferral (outstanding VAT deferral payment at 31 July 2021: £5.6m). Whilst we continued to optimise working capital including with regard to payment terms for certain contractors, we had a significant but largely temporary increase in our DSO ('Day Sales Outstanding'). \n \n \n Continuing underlying results \n \n \n Continuing underlying results are shown beneath the consolidated income statement. Continuing underlying profit before tax at £3.2m (2020 restated: £4.8m) was £1.6m below last year with the most significant factor being the impact of the COVID-19 pandemic through most of the period. \n \n \n Whilst we moved to full remote working within days of the various national restrictions without any interruption to our operational capability, we saw a significant and relatively sudden reduction in trading volumes, and having anticipated this, took early mitigating actions on our cost base, including acceleration of Improvement Plan efficiencies. We were also able to achieve significant positive changes in terms of digitalisation and process optimisation. \n \n \n   \n \n \n Discontinued operations and non-underlying costs \n \n \n The group-wide Improvement Plan continued at pace during 2021 and drove some of the non-underlying costs below: \n \n \n \n \n \n \n £'000 \n \n \n \n \n Profit before tax \n \n \n \n \n \n \n Continuing underlying profit before tax \n \n \n \n \n 3,227 \n \n \n \n \n \n \n Restructuring costs and onerous lease payments \n \n \n \n \n 193 \n \n \n \n \n \n \n Operating loss related to discontinued operations \n \n \n \n \n  (457) \n \n \n \n \n \n \n Restructuring and closure costs relating to discontinued operations \n \n \n \n \n (693) \n \n \n \n \n \n \n Amortisation of acquired intangibles \n \n \n \n \n  (548) \n \n \n \n \n \n \n Foreign exchange differences \n \n \n \n \n  (741) \n \n \n \n \n \n \n Reported statutory profit before tax for the total group \n \n \n \n \n  981 \n \n \n \n \n \n \n   \n \n \n In October 2020, the Group completed the UK restructure and the final staff exit costs were lower than anticipated which led to a £0.2m credit to continuing non-underlying costs above. On 30 July 2021, we announced the closure of our Mexican business and sale of our South African trading operations which were not generating appropriate returns, allowing us to devote resources to markets with greater potential. We have retained a team in South Africa to support our ongoing UK fulfilment and solutions operations. \n \n \n We continue to co-operate with the US Department of Justice and there have been no significant new matters in this regard during the year. Legal fees on this matter were £29,000 in the year (2020: £1.4m). As shown in Note 28 to the financial statements, the Group is not currently in a position to know what the outcome of these enquiries may be and we are therefore unable to quantify the potential financial impact, if any. \n \n \n   \n \n \n Cost actions and UK Government Coronavirus Job Retention Scheme \n \n \n During the year we claimed £0.5m of government grants (2020: £3.8m) with respect to our staff and contractors who were placed on the Coronavirus Job Retention Scheme. Following the successful conclusion of our group restructure in October 2020 we ended our participation in the scheme. The group restructure allowed us to rebalance resource levels in response to the new levels of demand as a result of COVID-19. As demand started to return in the UK recruitment market, we have added sales headcount based on our new operating model and skill requirements, facing those markets where we see most opportunity, growing our sales headcount by 16% between January and July 2021. \n \n \n Taxation \n \n \n The Group's reported effective tax rate was 40.7% (2020: 50.5%) as set out in Note 10. One of the drivers of our reduced rate was due to a loss carry back claim under the COVID-19 related US Cares Act enabling additional utilisation of local brought forward losses. The continuing underlying effective tax rate was 15.7% (2020 restated: 20.8%), similarly impacted by the same overseas loss claims. \n \n \n Earnings per share \n \n \n Basic earnings per share was 1.8 pence (2020: (5.5) pence), and on a fully diluted basis was 1.8 pence (2020: (5.5) pence). \n \n \n Continuing underlying basic earnings per share was 8.4 pence (2020 restated: 11.7 pence). \n \n \n Dividends \n \n \n The Board proposes to pay a final dividend of 1.5 pence (2020: nil pence), amounting to £0.5 million in total. This will be paid on 17 December 2021 to shareholders on the register as at close of business on 12 November 2021.  The ex-dividend date will be 11 November 2021. \n \n \n Capital expenditure \n \n \n Capital expenditure in the period of £2.2m (2020: £2.5m) was mainly investment in software related to our Primary Business Systems initiative where we have replaced our in-house built legacy systems with fully integrated industry leading third party systems. This will enhance the data flow and performance management across the entire group. Following the successful go-live of this substantial investment program in April 2021, we expect moderate to more normal levels of capital expenditure in 2022. \n \n \n Net assets and shares in issue at 31 July 2021 \n \n \n The Group had net assets of £40.9m (2020: £38.7m) and had £32.3m (2020: £32.3m) fully paid ordinary shares in issue. \n \n \n Cash flow and net cash/net debt \n \n \n Working capital optimisation continues to be a key focus for the Group. Net cash at 31 July 2021 was £14.1m (2020: £19.6m). Adjusted net cash (net cash excluding IFRS 16 lease liabilities) was £19.9m (2020: £27.3m). \n \n \n During the period, we repaid £4.7m of deferred VAT to HMRC and the outstanding VAT deferral payment as at 31 July 2021 was £5.6m, which will be repaid in full by 31 January 2022. We have also repaid the outstanding balance on our RCF (31 July 2020: £7.5m) thus eliminating all covenants and significantly reducing financial risk. \n \n \n We have continued the roll out of the change to payment terms of certain contractors from 7 to 28 days which is in alignment with normal payment cycles for businesses and most company employees. During the financial year this has resulted in further cashflow benefit of £3.3m. \n \n \n There was a significant increase in DSO to 43.9 (2020: 35.3) using the countback methodology. Our high performing pay, bill and collections team were heavily involved in the go-live of our new technology platform which was the single biggest change initiative undertaken in the Group's history, and this inevitably caused some short term disruption and slightly longer billing times leading to higher levels of accrued revenue. We estimate that approximately 75% of the increase in DSO was driven by this temporary disruption. The remainder is largely driven by a change in mix of clients, for example in infrastructure, where industry custom is for longer payment terms and more complex, and therefore longer, billing processes. \n \n \n Cash used in operating activities was £2.4m compared to £57.6m cash generated in 2020. In 2020 cash from operating activities was significantly positively impacted by the sudden reduction in trading and therefore receivables balances. In 2021, our receivables have begun to increase as we return to growth. We expect our working capital requirement to be lower as we grow, due to the recent change in certain contractors payment terms from 7 to 28 days. \n \n \n Banking facilities and interest rate risk \n \n \n On 27 October 2020, the Group repaid the £7.5m remaining outstanding RCF balance and cancelled the facility. As a result the Group no longer has any covenant obligations. As of 31 July 2021 the Group had a working capital facility of £75m. This facility includes both recourse and non-recourse facility. Under the terms of the non-recourse facility, the trade receivables assigned to the facility are 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 July 2021 was £9.3m recourse and £14.2m non-recourse with £7.1m restricted cash collected from customers relating to non-recourse facility. \n \n \n Critical accounting policies \n \n \n The statement of significant accounting policies is set out in Note 1 to the financial statements. \n \n \n Group financial risk management \n \n \n 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, 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. \n \n \n Credit risk \n \n \n The Group seeks to trade only with recognised, creditworthy third parties. We monitor receivable and unbilled balances on an ongoing basis and in 2021 have taken a conservative approach to receivables and unbilled risk and have increased our loss allowance by £0.2m to £4.5m. \n \n \n There are no significant concentrations of credit risk within the group, with no single debtor accounting for more than 7% (2020: 8%) of total receivables balances at 31 July 2021. \n \n \n In October 2021 NMCN Plc entered into administration. We first became aware that this client had some financial difficulties and had embarked on a refinancing path in February 2021 and since then we continued to support them to protect our existing receivable asset in the expectation that the refinancing was likely to be successful. Our exposure at 31 July 2021 was £0.8m (which had increased to £1.4m in total by in October 2021 when the client went into administration). The July exposure was covered by the existing expected credit loss provision thus not impacting PBT. We had increased this provision during the pandemic taking account of market conditions and the situation of this particular client. \n \n \n Foreign currency risk \n \n \n The Group generates 8% of its annualised NFI from continuing business in international 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 these risks by matching sales and direct costs in the same currency and where appropriate entering into forward exchange contracts to effect the same where sales and costs are not in the same currency. \n \n \n Salar Farzad \n \n \n Chief Financial Officer \n \n   \n \n Consolidated Income Statement \n \n \n For the year ended 31 July 2021 \n \n   \n \n \n \n \n   \n \n \n \n Note \n \n \n \n \n 2021 \n \n \n unaudited \n \n \n £'000 \n \n \n \n \n 2020 \n \n \n Restated 1 \n \n \n £'000 \n \n \n \n \n \n \n Continuing operations \n \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n Revenue \n \n \n \n \n 2 \n \n \n \n \n 415,726 \n \n \n \n \n 534,709 \n \n \n \n \n \n \n Cost of sales \n \n \n \n   \n \n \n \n (373,646) \n \n \n \n \n (481,953) \n \n \n \n \n \n \n Gross profit \n \n \n \n \n 2 \n \n \n \n \n 42,080 \n \n \n \n \n 52,756 \n \n \n \n \n \n \n Administrative expenses 2 \n \n \n \n   \n \n \n \n (38,796) \n \n \n \n \n (49,218) \n \n \n \n \n \n \n Profit from continuing operations \n \n \n \n \n 4 \n \n \n \n \n 3,284 \n \n \n \n \n 3,538 \n \n \n \n \n \n \n Finance income \n \n \n \n \n 6 \n \n \n \n \n 56 \n \n \n \n \n 24 \n \n \n \n \n \n \n Finance cost \n \n \n \n \n 7 \n \n \n \n \n (1,136) \n \n \n \n \n (2,245) \n \n \n \n \n \n \n Profit before taxation \n \n \n \n   \n \n \n \n 2,204 \n \n \n \n \n 1,317 \n \n \n \n \n \n \n Taxation \n \n \n \n \n 10 \n \n \n \n \n (415) \n \n \n \n \n (590) \n \n \n \n \n \n \n Profit for the year after taxation from continuing operations \n \n \n \n   \n \n \n \n 1,789 \n \n \n \n \n 727 \n \n \n \n \n \n \n Discontinued operations \n \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n Loss for the year from discontinued operations \n(attributable to equity holders of the Company) \n \n \n \n \n 11 \n \n \n \n \n (1,208) \n \n \n \n \n (2,508) \n \n \n \n \n \n \n Profit/(loss) for the year \n \n \n \n   \n \n \n \n 581 \n \n \n \n \n (1,781) \n \n \n \n \n \n \n   \n \n \n Profit/(loss) for the year for 2021 and 2020 are wholly attributable to equity holders of the Company. The Company has elected to take the exemption under section 408 of the Companies Act 2006 from presenting the parent company income statement. \n \n \n \n \n \n \n Total earnings per ordinary share \n \n \n \n \n Note \n \n \n \n \n 2021 \n \n \n unaudited \n \n \n pence \n \n \n \n \n 2020 \n \n \n   \n \n \n pence \n \n \n \n \n \n \n Basic earnings per share \n \n \n \n \n 12 \n \n \n \n \n 1.8 \n \n \n \n \n (5.5) \n \n \n \n \n \n \n Diluted earnings per share \n \n \n \n \n 12 \n \n \n \n \n 1.8 \n \n \n \n \n (5.5) \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n Earnings from continuing operations per ordinary share \n \n \n \n \n Note \n \n \n \n \n 2021 \n \n \n \n unaudited \n \n \n \n \n \n \n pence \n \n \n \n \n Restated 1 \n \n \n 2020 \n \n \n pence \n \n \n \n \n \n \n Basic earnings per share \n \n \n \n \n 12 \n \n \n \n \n 5.5 \n \n \n \n \n 2.3 \n \n \n \n \n \n \n Diluted earnings per share \n \n \n \n \n 12 \n \n \n \n \n 5.5 \n \n \n \n \n 2.2 \n \n \n \n \n \n \n   \n \n \n Reconciliation to adjusted profit measure \n \n \n 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. \n \n \n \n \n \n   \n \n \n \n Note \n \n \n \n \n 2021 \n \n \n unaudited \n \n \n £'000 \n \n \n \n \n 2020 \n \n \n Restated 1 \n \n \n £'000 \n \n \n \n \n \n \n Profit from continuing operations \n \n \n \n   \n \n \n \n 3,284 \n \n \n \n \n 3,538 \n \n \n \n \n \n \n Add \n \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n Depreciation of property, plant and equipment, depreciation of leased right-of-use assets and amortisation of software and software licences \n \n \n \n \n 2 \n \n \n \n \n 2,467 \n \n \n \n \n 3,088 \n \n \n \n \n \n \n Non-underlying items included within administrative expenses \n \n \n \n \n 2,4 \n \n \n \n \n (193) \n \n \n \n \n 1,248 \n \n \n \n \n \n \n Amortisation and impairment of goodwill and acquired intangibles and impairment of leased right-of-use assets \n \n \n \n \n 2 \n \n \n \n \n 548 \n \n \n \n \n 1,382 \n \n \n \n \n \n \n Underlying EBITDA \n \n \n \n   \n \n \n \n 6,106 \n \n \n \n \n 9,256 \n \n \n \n \n \n \n Less \n \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n Depreciation and impairment of property, plant and equipment, leased right-of-use assets and amortisation of software and software licences \n \n \n \n   \n \n \n \n (2,467) \n \n \n \n \n (3,088) \n \n \n \n \n \n \n Net finance costs excluding foreign exchange gains and losses \n \n \n \n \n 6,7 \n \n \n \n \n (412) \n \n \n \n \n (1,389) \n \n \n \n \n \n \n Underlying profit before taxation \n \n \n \n   \n \n \n \n 3,227 \n \n \n \n \n 4,779 \n \n \n \n \n \n \n Underlying taxation \n \n \n \n \n 10 \n \n \n \n \n (506) \n \n \n \n \n (995) \n \n \n \n \n \n \n Underlying profit after taxation from continuing operations \n \n \n \n   \n \n \n \n 2,721 \n \n \n \n \n 3,784 \n \n \n \n \n \n \n   \n \n \n 1  2020 figures have been restated for the presentation of discontinued operations as explained in Note 11. \n \n \n 2  Administrative expenses from continuing operations includes net impairment losses on trade receivables and accrued income of £420,000 (2020 restated: £2,554,000). \n \n \n \n Consolidated Statement of Comprehensive Income \n \n \n For the year ended 31 July 2021 \n \n   \n \n \n \n \n   \n \n \n \n 2021 \n \n \n unaudited \n \n \n £'000 \n \n \n \n \n 2020 \n \n \n   \n \n \n £'000 \n \n \n \n \n \n \n Profit/(loss) for the year \n \n \n \n \n 581 \n \n \n \n \n (1,781) \n \n \n \n \n \n \n Other comprehensive income/(loss) \n \n \n \n   \n \n \n   \n \n \n \n \n \n Items that may be reclassified subsequently to profit or loss: \n \n \n \n   \n \n \n   \n \n \n \n \n \n Exchange differences on translation of foreign operations \n \n \n \n \n 281 \n \n \n \n \n (1,091) \n \n \n \n \n \n \n Other comprehensive income/(loss) for the year \n \n \n \n \n 281 \n \n \n \n \n (1,091) \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n Total comprehensive income/(loss) for the year attributable to equity holders of the parent \n \n \n \n \n 862 \n \n \n \n \n (2,872) \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n   \n \n \n \n 2021 \n \n \n unaudited \n \n \n £'000 \n \n \n \n \n 2020 \n \n \n Restated 1 \n \n \n £'000 \n \n \n \n \n \n \n Attributable to: \n \n \n \n   \n \n \n   \n \n \n \n \n \n Continuing operations \n \n \n \n \n 2,022 \n \n \n \n \n 507 \n \n \n \n \n \n \n Discontinued operations \n \n \n \n \n (1,160) \n \n \n \n \n (3,379) \n \n \n \n \n \n   \n \n \n \n 862 \n \n \n \n \n (2,872) \n \n \n \n \n \n \n   \n \n \n 1  2020 figures have been restated for the presentation of discontinued operations as explained in Note 11. \n \n   \n \n Consolidated and Company Statement of Changes in Equity (unaudited) \n \n \n For the year ended 31 July 2021 \n \n   \n \n A) Consolidated \n \n \n \n \n \n   \n \n \n \n Share capital \n \n \n £'000 \n \n \n \n \n Share premium \n \n \n £'000 \n \n \n \n \n Merger reserve \n \n \n £'000 \n \n \n \n \n Share-based payment \n \n \n reserve \n \n \n £'000 \n \n \n \n \n Translation reserve \n \n \n £'000 \n \n \n \n \n Treasury shares reserve £'000 \n \n \n \n \n Retained earnings \n \n \n £'000 \n \n \n \n \n Total \n \n \n £'000 \n \n \n \n \n \n \n At 1 August 2019 as per \noriginally presented \n \n \n \n \n 323 \n \n \n \n \n 8,706 \n \n \n \n \n 28,750 \n \n \n \n \n 753 \n \n \n \n \n 944 \n \n \n \n \n (140) \n \n \n \n \n 2,571 \n \n \n \n \n 41,907 \n \n \n \n \n \n \n Adjustment on initial application of IFRS 16, net of tax \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n 770 \n \n \n \n \n 770 \n \n \n \n \n \n \n Restated total equity at \n1 August 2019 \n \n \n \n \n 323 \n \n \n \n \n 8,706 \n \n \n \n \n 28,750 \n \n \n \n \n 753 \n \n \n \n \n 944 \n \n \n \n \n (140) \n \n \n \n \n 3,341 \n \n \n \n \n 42,677 \n \n \n \n \n \n \n Loss for the year \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n (1,781) \n \n \n \n \n (1,781) \n \n \n \n \n \n \n Other comprehensive loss \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n (1,091) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n (1,091) \n \n \n \n \n \n \n Total comprehensive loss \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n (1,091) \n \n \n \n \n - \n \n \n \n \n (1,781) \n \n \n \n \n (2,872) \n \n \n \n \n \n \n Deferred tax movement in respect of share options \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n (16) \n \n \n \n \n (16) \n \n \n \n \n \n \n Reversal of share-based payments charge (Note 23) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n (60) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n (60) \n \n \n \n \n \n \n Share-based payments reserves transfer \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n (167) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n 167 \n \n \n \n \n - \n \n \n \n \n \n \n Issue of treasury shares to employees \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n 43 \n \n \n \n \n - \n \n \n \n \n 43 \n \n \n \n \n \n \n Transactions with owners \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n (227) \n \n \n \n \n - \n \n \n \n \n 43 \n \n \n \n \n 151 \n \n \n \n \n (33) \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n At 31 July 2020 \n \n \n \n \n 323 \n \n \n \n \n 8,706 \n \n \n \n \n 28,750 \n \n \n \n \n 526 \n \n \n \n \n (147) \n \n \n \n \n (97) \n \n \n \n \n 1,711 \n \n \n \n \n 39,772 \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n At 1 August 2020 \n \n \n \n \n 323 \n \n \n \n \n 8,706 \n \n \n \n \n 28,750 \n \n \n \n \n 526 \n \n \n \n \n (147) \n \n \n \n \n (97) \n \n \n \n \n 1,711 \n \n \n \n \n 39,772 \n \n \n \n \n \n \n Profit for the year \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n 581 \n \n \n \n \n 581 \n \n \n \n \n \n \n Other comprehensive income \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n 281 \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n 281 \n \n \n \n \n \n \n Total comprehensive income \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n 281 \n \n \n \n \n - \n \n \n \n \n 581 \n \n \n \n \n 862 \n \n \n \n \n \n \n Deferred tax movement in respect of share options \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n 65 \n \n \n \n \n 65 \n \n \n \n \n \n \n Share-based payments charge \n(Note 23) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n 104 \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n 104 \n \n \n \n \n \n \n Share-based payments reserves transfer \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n (176) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n 176 \n \n \n \n \n - \n \n \n \n \n \n \n Issue of treasury shares to employees \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n 60 \n \n \n \n \n - \n \n \n \n \n 60 \n \n \n \n \n \n \n Transactions with owners \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n (72) \n \n \n \n \n - \n \n \n \n \n 60 \n \n \n \n \n 241 \n \n \n \n \n 229 \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n At 31 July 2021 \n \n \n \n \n 323 \n \n \n \n \n 8,706 \n \n \n \n \n 28,750 \n \n \n \n \n 454 \n \n \n \n \n 134 \n \n \n \n \n (37) \n \n \n \n \n 2,533 \n \n \n \n \n 40,863 \n \n \n \n \n \n \n   \n \n \n B) Company \n \n \n \n \n \n   \n \n \n \n Share capital \n \n \n £'000 \n \n \n \n \n Share premium \n \n \n £'000 \n \n \n \n \n Merger reserve \n \n \n £'000 \n \n \n \n \n Share-based payment \n \n \n reserve \n \n \n £'000 \n \n \n \n \n Treasury shares reserve £'000 \n \n \n \n \n Retained earnings \n \n \n £'000 \n \n \n \n \n Total \n \n \n £'000 \n \n \n \n \n \n \n At 1 August 2019 \n \n \n \n \n 323 \n \n \n \n \n 8,706 \n \n \n \n \n 28,526 \n \n \n \n \n 753 \n \n \n \n \n - \n \n \n \n \n 2,390 \n \n \n \n \n 40,698 \n \n \n \n \n \n \n Loss and total comprehensive expense for \nthe year (Note 9) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n (1,111) \n \n \n \n \n (1,111) \n \n \n \n \n \n \n Reversal of share-based payments charge \n(Note 23) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n (60) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n (60) \n \n \n \n \n \n \n Share-based payments reserves transfer \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n (167) \n \n \n \n \n - \n \n \n \n \n 167 \n \n \n \n \n - \n \n \n \n \n \n \n Transactions with owners \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n (227) \n \n \n \n \n - \n \n \n \n \n 167 \n \n \n \n \n (60) \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n At 31 July 2020 \n \n \n \n \n 323 \n \n \n \n \n 8,706 \n \n \n \n \n 28,526 \n \n \n \n \n 526 \n \n \n \n \n - \n \n \n \n \n 1,446 \n \n \n \n \n 39,527 \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n At 1 August 2020 \n \n \n \n \n 323 \n \n \n \n \n 8,706 \n \n \n \n \n 28,526 \n \n \n \n \n 526 \n \n \n \n \n - \n \n \n \n \n 1,446 \n \n \n \n \n 39,527 \n \n \n \n \n \n \n Loss and total comprehensive expense \nfor the year (Note 9) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n (866) \n \n \n \n \n (866) \n \n \n \n \n \n \n Share-based payments charge (Note 23) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n 104 \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n 104 \n \n \n \n \n \n \n Share-based payments reserves transfer \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n (176) \n \n \n \n \n - \n \n \n \n \n 176 \n \n \n \n \n - \n \n \n \n \n \n \n Purchase of treasury shares \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n (16) \n \n \n \n \n - \n \n \n \n \n (16) \n \n \n \n \n \n \n Transactions with owners \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n (72) \n \n \n \n \n (16) \n \n \n \n \n 176 \n \n \n \n \n 88 \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n At 31 July 2021 \n \n \n \n \n 323 \n \n \n \n \n 8,706 \n \n \n \n \n 28,526 \n \n \n \n \n 454 \n \n \n \n \n (16) \n \n \n \n \n 756 \n \n \n \n \n 38,749 \n \n \n \n \n \n \n   \n \n \n \n Consolidated and Company Statement of Financial Position \n \n \n As at 31 July 2021 \n \n   \n \n \n \n \n   \n \n \n   \n \n \n \n \n Group \n \n \n \n \n \n \n Company \n \n \n \n \n \n \n   \n \n \n \n Note \n \n \n \n \n 2021 \n \n \n \n unaudited \n \n \n \n \n \n \n £'000 \n \n \n \n \n 2020 \n \n \n restated 1 \n \n \n £'000 \n \n \n \n \n 2021 \n \n \n \n unaudited \n \n \n \n \n \n \n £'000 \n \n \n \n \n 2020 \n \n \n   \n \n \n £'000 \n \n \n \n \n \n \n Non-current assets \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n Goodwill and intangible assets \n \n \n \n \n 13 \n \n \n \n \n 13,778 \n \n \n \n \n 12,877 \n \n \n \n \n 13 \n \n \n \n \n 16 \n \n \n \n \n \n \n Property, plant and equipment \n \n \n \n \n 14 \n \n \n \n \n 1,578 \n \n \n \n \n 1,492 \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n Right-of-use assets \n \n \n \n \n 22 \n \n \n \n \n 5,674 \n \n \n \n \n 7,338 \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n Investments \n \n \n \n \n 15 \n \n \n \n \n - \n \n \n \n \n 19 \n \n \n \n \n 38,463 \n \n \n \n \n 8,520 \n \n \n \n \n \n \n Deferred tax assets \n \n \n \n \n 16 \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n Total non-current assets \n \n \n \n   \n \n \n \n 21,030 \n \n \n \n \n 21,726 \n \n \n \n \n 38,476 \n \n \n \n \n 8,536 \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n Current assets \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n Trade and other receivables \n \n \n \n \n 17 \n \n \n \n \n 63,937 \n \n \n \n \n 48,862 \n \n \n \n \n 3,046 \n \n \n \n \n 101,610 \n \n \n \n \n \n \n Corporation tax receivables \n \n \n \n   \n \n \n \n 818 \n \n \n \n \n 26 \n \n \n \n \n 195 \n \n \n \n \n 275 \n \n \n \n \n \n \n Cash and cash equivalents \n \n \n \n   \n \n \n \n 29,238 \n \n \n \n \n 34,796 \n \n \n \n \n 4 \n \n \n \n \n - \n \n \n \n \n \n \n Assets classified as held for sale \n \n \n \n \n 11 \n \n \n \n \n 346 \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n Total current assets \n \n \n \n   \n \n \n \n 94,339 \n \n \n \n \n 83,684 \n \n \n \n \n 3,245 \n \n \n \n \n 101,885 \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n Total assets \n \n \n \n   \n \n \n \n 115,369 \n \n \n \n \n 105,410 \n \n \n \n \n 41,721 \n \n \n \n \n 110,421 \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n Non-current liabilities \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n Deferred tax liabilities \n \n \n \n \n 16 \n \n \n \n \n (524) \n \n \n \n \n (277) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n Provisions \n \n \n \n \n 18 \n \n \n \n \n (1,269) \n \n \n \n \n  (1,587) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n Lease liabilities \n \n \n \n \n 22 \n \n \n \n \n (4,281) \n \n \n \n \n (5,746) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n Bank loans and borrowings \n \n \n \n \n 20 \n \n \n \n \n - \n \n \n \n \n (7,304) \n \n \n \n \n - \n \n \n \n \n (7,304) \n \n \n \n \n \n \n Total non-current liabilities \n \n \n \n   \n \n \n \n (6,074) \n \n \n \n \n  (14,914) \n \n \n \n \n - \n \n \n \n \n (7,304) \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n Current liabilities \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n Trade and other payables \n \n \n \n \n 19 \n \n \n \n \n (56,121) \n \n \n \n \n (46,129) \n \n \n \n \n (2,972) \n \n \n \n \n (63,590) \n \n \n \n \n \n \n Provisions \n \n \n \n \n 18 \n \n \n \n \n (464) \n \n \n \n \n  (1,207) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n Current tax liabilities \n \n \n \n   \n \n \n \n (796) \n \n \n \n \n (1,247) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n Lease liabilities \n \n \n \n \n 22 \n \n \n \n \n (1,480) \n \n \n \n \n (1,990) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n Bank loans and borrowings \n \n \n \n \n 20 \n \n \n \n \n (9,348) \n \n \n \n \n (151) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n Liabilities directly associated with assets classified as held for sale \n \n \n \n \n 11 \n \n \n \n \n (223) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n Total current liabilities \n \n \n \n   \n \n \n \n (68,432) \n \n \n \n \n  (50,724) \n \n \n \n \n (2,972) \n \n \n \n \n (63,590) \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n Total liabilities \n \n \n \n   \n \n \n \n (74,506) \n \n \n \n \n (65,638) \n \n \n \n \n (2,972) \n \n \n \n \n (70,894) \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n Net assets \n \n \n \n   \n \n \n \n 40,863 \n \n \n \n \n 39,772 \n \n \n \n \n 38,749 \n \n \n \n \n 39,527 \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n Equity \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n Share capital \n \n \n \n \n 23 \n \n \n \n \n 323 \n \n \n \n \n 323 \n \n \n \n \n 323 \n \n \n \n \n 323 \n \n \n \n \n \n \n Share premium \n \n \n \n   \n \n \n \n 8,706 \n \n \n \n \n 8,706 \n \n \n \n \n 8,706 \n \n \n \n \n 8,706 \n \n \n \n \n \n \n Merger reserve \n \n \n \n   \n \n \n \n 28,750 \n \n \n \n \n 28,750 \n \n \n \n \n 28,526 \n \n \n \n \n 28,526 \n \n \n \n \n \n \n Share-based payment reserve \n \n \n \n   \n \n \n \n 454 \n \n \n \n \n 526 \n \n \n \n \n 454 \n \n \n \n \n 526 \n \n \n \n \n \n \n Translation reserve \n \n \n \n   \n \n \n \n 134 \n \n \n \n \n (147) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n Treasury shares reserve \n \n \n \n   \n \n \n \n (37) \n \n \n \n \n (97) \n \n \n \n \n (16) \n \n \n \n \n - \n \n \n \n \n \n \n Retained earnings \n \n \n \n   \n \n \n \n 2,533 \n \n \n \n \n 1,711 \n \n \n \n \n 756 \n \n \n \n \n 1,446 \n \n \n \n \n \n \n Total equity \n \n \n \n   \n \n \n \n 40,863 \n \n \n \n \n 39,772 \n \n \n \n \n 38,749 \n \n \n \n \n 39,527 \n \n \n \n \n \n \n   \n \n \n The amount of loss generated by the parent Company was £866,000 for the year ended 31 July 2021 (2020: loss of £1,111,000). \n \n \n Salar Farzad \n \n \n Chief Financial Officer \n \n \n   \n \n \n 1  Presentation of provisions between current and non-current liabilities for the year ended 31 July 2020 has been restated as explained in Note 1.24 \n \n \n \n Consolidated and Company Cash Flow Statements \n \n \n For the year ended 31 July 2021 \n \n   \n \n \n \n \n   \n \n \n \n Note \n \n \n \n \n \n Group \n \n \n \n \n \n \n Company \n \n \n \n \n \n \n \n 2021 \n \n \n unaudited \n \n \n £'000 \n \n \n \n \n 2020 \n \n \n   \n \n \n £'000 \n \n \n \n \n 2021 \n \n \n unaudited \n \n \n £'000 \n \n \n \n \n 2020 \n \n \n   \n \n \n £'000 \n \n \n \n \n \n \n Cash flows from operating activities \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n Profit/(loss) after taxation \n \n \n \n   \n \n \n \n  581 \n \n \n \n \n  (1,781) \n \n \n \n \n  (866) \n \n \n \n \n  (1,111) \n \n \n \n \n \n \n Adjustments for: \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \nDepreciation of property, plant and equipment and amortisation \nof goodwill and intangible assets \n \n \n \n \n 4 \n \n \n \n \n  1,183 \n \n \n \n \n  1,831 \n \n \n \n \n  3 \n \n \n \n \n  4 \n \n \n \n \n \n \n Depreciation of leased right-of-use assets \n \n \n \n \n 4 \n \n \n \n \n  1,875 \n \n \n \n \n  2,041 \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n Profits from sale of subsidiary, associate or investment \n \n \n \n   \n \n \n \n - \n \n \n \n \n  (304) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n Loss on disposal of property, plant and equipment \n \n \n \n \n 4 \n \n \n \n \n  8 \n \n \n \n \n  52 \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n Impairment of goodwill and acquired intangibles \n \n \n \n \n 4 \n \n \n \n \n - \n \n \n \n \n  334 \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n Impairment of right-of-use assets \n \n \n \n \n 4 \n \n \n \n \n  183 \n \n \n \n \n  432 \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n Impairment of property, plant and equipment \n \n \n \n \n 4 \n \n \n \n \n  18 \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n Interest income \n \n \n \n   \n \n \n \n  (65) \n \n \n \n \n  (91) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n Interest costs \n \n \n \n   \n \n \n \n  1,218 \n \n \n \n \n  1,936 \n \n \n \n \n  260 \n \n \n \n \n  593 \n \n \n \n \n \n \n Taxation expense recognised in income statement \n \n \n \n   \n \n \n \n  400 \n \n \n \n \n  598 \n \n \n \n \n  (189) \n \n \n \n \n  (339) \n \n \n \n \n \n \n (Increase)/decrease in trade and other receivables \n \n \n \n   \n \n \n \n  (15,384) \n \n \n \n \n  47,537 \n \n \n \n \n  68,992 \n \n \n \n \n - \n \n \n \n \n \n \n Increase /(decrease) in trade and other payables \n \n \n \n   \n \n \n \n  10,098 \n \n \n \n \n  5,453 \n \n \n \n \n (60,617) \n \n \n \n \n  9,120 \n \n \n \n \n \n \n (Decrease)/increase in provisions \n \n \n \n   \n \n \n \n  (1,064) \n \n \n \n \n  1,085 \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n Share-based payment charge \n \n \n \n \n 23 \n \n \n \n \n  271 \n \n \n \n \n  77 \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n Cash (used in)/generated from operations \n \n \n \n   \n \n \n \n  (678) \n \n \n \n \n  59,200 \n \n \n \n \n 7,583 \n \n \n \n \n  8,267 \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n Interest paid \n \n \n \n   \n \n \n \n  (320) \n \n \n \n \n  (1,052) \n \n \n \n \n (63) \n \n \n \n \n  (524) \n \n \n \n \n \n \n Interest on lease liabilities \n \n \n \n   \n \n \n \n  (156) \n \n \n \n \n  (214) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n Interest received \n \n \n \n   \n \n \n \n  65 \n \n \n \n \n  91 \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n Income taxes paid \n \n \n \n   \n \n \n \n  (1,322) \n \n \n \n \n  (387) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n Cash (used in)/generated from operating activities \n \n \n \n   \n \n \n \n  (2,411) \n \n \n \n \n  57,638 \n \n \n \n \n  7,520 \n \n \n \n \n  7,743 \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n Cash flows from investing activities \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n Purchase of plant and equipment \n \n \n \n \n 14 \n \n \n \n \n  (332) \n \n \n \n \n  (191) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n Purchase of intangible assets \n \n \n \n \n 13 \n \n \n \n \n  (1,872) \n \n \n \n \n  (2,348) \n \n \n \n \n - \n \n \n \n \n  (20) \n \n \n \n \n \n \n Purchase of investments \n \n \n \n \n 15 \n \n \n \n \n - \n \n \n \n \n  (19) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n Proceeds from sale of subsidiary, associate or investment \n \n \n \n   \n \n \n \n - \n \n \n \n \n  304 \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n Cash used in investing activities \n \n \n \n   \n \n \n \n  (2,204) \n \n \n \n \n  (2,254) \n \n \n \n \n - \n \n \n \n \n  (20) \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n Cash flows from financing activities \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n Lease liability principal repayment \n \n \n \n   \n \n \n \n  (2,355) \n \n \n \n \n  (1,987) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n Issue from/(purchase of) treasury shares \n \n \n \n   \n \n \n \n  60 \n \n \n \n \n  (67) \n \n \n \n \n  (16) \n \n \n \n \n - \n \n \n \n \n \n \n Working capital facility utilised/(repaid) \n \n \n \n   \n \n \n \n  9,197 \n \n \n \n \n  (28,968) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n Finance costs paid \n \n \n \n   \n \n \n \n - \n \n \n \n \n  (223) \n \n \n \n \n - \n \n \n \n \n  (223) \n \n \n \n \n \n \n Repayment of term loan \n \n \n \n   \n \n \n \n  (7,500) \n \n \n \n \n  (7,500) \n \n \n \n \n  (7,500) \n \n \n \n \n  (7,500) \n \n \n \n \n \n \n Cash used in financing activities \n \n \n \n   \n \n \n \n  (598) \n \n \n \n \n  (38,745) \n \n \n \n \n  (7,516) \n \n \n \n \n  (7,723) \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n Effects of exchange rates on cash and cash equivalents \n \n \n \n   \n \n \n \n  (345) \n \n \n \n \n  (1,016) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n (Decrease)/increase in cash and cash equivalents \n \n \n \n   \n \n \n \n  (5,558) \n \n \n \n \n  15,623 \n \n \n \n \n  4 \n \n \n \n \n - \n \n \n \n \n \n \n Cash and cash equivalents at the beginning of year \n \n \n \n   \n \n \n \n  34,796 \n \n \n \n \n  19,173 \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n \n Cash and cash equivalents at end of year \n \n \n 1 \n \n \n \n \n   \n \n \n \n  29,238 \n \n \n \n \n  34,796 \n \n \n \n \n  4 \n \n \n \n \n - \n \n \n \n \n \n \n   \n \n \n Net decrease in cash and cash equivalents for discontinued operations was £1,534,000 (2020 restated: decrease of £3,059,000). \n \n \n 1   Included in cash and cash equivalents is £7,115,000 of restricted cash (2020: £2,034,000) which meets the definition of cash and cash equivalents but is not available for use by the Group. This balance arises from the Group's non-recourse working capital arrangements, which were entered into in 2020 as explained in Note 20. \n \n \n \n Unaudited Notes Forming Part of the Financial Statements \n \n   \n \n 1  The Group and Company Significant Accounting Policies (unaudited) \n \n \n 1.1  The Business of the Group \n \n \n 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. \n \n \n 1.2  Basis of preparation of the financial statements \n \n \n The unaudited financial statements of Gattaca plc have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. \n \n \n The information for the year ended 31 July 2021 does not constitute statutory accounts for the purposes of section 435 of the Companies Act 2006. A copy of the accounts for the year ended 31 July 2020 was delivered to the Registrar of Companies. The auditors' report on those accounts was not qualified and did not contain statements under section 498(2) or 498(3) of the Companies Act 2006. The audit of the statutory accounts for the year ended 31 July 2021 is not yet complete. These accounts will be finalised on the basis of the financial information presented by the Directors in this 'preliminary results' and will be delivered to the Registrar of Companies following the Company's annual general meeting. \n \n \n These financial statements have been prepared under the historical cost convention. The accounting policies have been applied consistently to all years 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 are set out below. \n \n \n The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in Note 1.23. \n \n \n 1.3  Going concern \n \n \n 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. 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 2021 annual report for Gattaca plc. \n \n \n The majority of our staff have now been working remotely for over twelve months and there has not been any significant impact to our ability to operate effectively. The initial reduction in contractor numbers in April 2020, whilst impacting profitability, has resulted in reduced working capital requirements and has created further liquidity. The Group has also undertaken other actions, including an increase to the payment terms of certain contractors and these actions have created a permanent working capital benefit, and will reduce our working capital requirements during growth. We have seen signs of extensions in debtor days as a result of the pandemic impact on trading at our clients and we continue to be alert for any sudden changes. There is sufficient headroom on our working capital facilities to absorb a level of extensions, but we would also manage supply to the customer if payment within an appropriate period was not being made. A significant deterioration in payment terms would significantly impact the Group's liquidity. \n \n \n The Directors have prepared detailed cash flow forecasts to July 2024, covering a period of 33 months from the date of approval of these financial statements. This base case is drawn up with appropriate regard for the current macroeconomic environment and the particular circumstances in which the Group operates. This conservative base case assumes a recovery of the UK business to 100% of pre-COVID-19 contract and permanent NFI by July 2022, with a further growth to 115% of pre-COVID-19 by July 2023 and 124% growth of pre-COVID-19 by July 2024 years. Trading has been broadly in line with this forecast since the year end. \n \n \n The output of the base case forecasting process has been used to perform sensitivity analysis on the Group's cash flow to model the potential effects should principal risks actually occur either individually or in unison. The sensitivity analysis modelled scenarios in which the Group incurred a sustained loss of business arising from a prolonged global downturn as a result of the COVID-19 pandemic, with a slower recovery scenario considered. The Group has modelled the impact of a severe but plausible scenario including a reduction in recovery to 80% of pre-COVID NFI by July 2022, and subsequent slow recovery to 90% of pre-COVID NFI by July 2023, as well as the impact of a subsequent 5 day deterioration in the recovery of customer receivables. \n \n \n After making appropriate enquiries and considering the uncertainties described above, the Directors have a reasonable expectation at the time of approving these financial statements that the Group and the Company has adequate resources to continue in operational existence for the foreseeable future. Following careful consideration the Directors do not consider there to be a material uncertainty with regards to going concern and consider it is appropriate to adopt the going concern basis in preparing the financial statements. \n \n \n 1.4  New standards and interpretations \n \n \n The following are new standards or improvements to existing standards that are mandatory for the first time in the Group's accounting period beginning on 1 August 2020 and no new standards have been early adopted. The Group's July 2021 consolidated financial statements have adopted these amendments to IFRS: \n \n \n \n \n \n \n · \n \n \n \n Amendment to IFRS 16, 'Leases' - COVID-19 related rent concessions (effective 1 June 2020) \n \n \n \n \n \n · \n \n \n \n Amendment to IFRS 9, IAS39 and IFRS 7 - Interest rate benchmark reform (effective 1 January 2020) \n \n \n \n \n \n · \n \n \n \n Amendments to IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors - Definition of material (effective 1 January 2020) \n \n \n \n \n \n · \n \n \n \n IFRS 3 (amendments) Business Combinations - Definition of a business (effective 1 January 2020) \n \n \n \n \n \n · \n \n \n \n Revised Conceptual Framework for Financial Reporting - Various interpretation amendments (effective 1 January 2020) \n \n \n \n \n \n   \n \n \n There have been no alterations made to the accounting policies as a result of considering all of the other amendments above that became effective in the year, as these were either not material or were not relevant to the Group or Company. \n \n \n New standards in issue, not yet adopted \n \n \n The Group has not yet adopted certain new standards, amendments and interpretations to existing standards, which have been published but which are only effective for the Group accounting periods beginning on or after 1 August 2021. Forthcoming amendments are noted below. \n \n \n The directors continually evaluate the impact of the adoption of new standards, amendments and interpretations but currently do not expect them to have a material impact on the Group's or Company's operations or results. \n \n \n Forthcoming requirements \n \n \n The following amendments are required for application for the Group's year beginning after 1 August 2021 or later: \n \n \n \n \n \n \n Standard \n \n \n \n \n Effective date (annual periods beginning on or after) \n \n \n \n \n \n \n IAS 1 Amendments \n \n \n \n \n Classification of liabilities as current or non-current \n \n \n \n \n 1 January 2022 \n \n \n \n \n \n \n IAS 16 Amendments \n \n \n \n \n Property, plant and equipment: proceeds before intended use \n \n \n \n \n 1 January 2022 \n \n \n \n \n \n \n IAS 37 Amendments \n \n \n \n \n Onerous contracts - cost of fulfilling a contract \n \n \n \n \n 1 January 2022 \n \n \n \n \n \n \n IFRS 3 Amendments \n \n \n \n \n Reference to the conceptual framework \n \n \n \n \n 1 January 2022 \n \n \n \n \n \n \n IFRS Standards 2018-2022 \n \n \n \n \n Annual improvements on IFRS 9, IFRS 16 and IFRS 1 \n \n \n \n \n 1 January 2022 \n \n \n \n \n \n \n   \n \n \n 1.5  Basis of consolidation \n \n \n Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date on which that control ceases. \n \n \n The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners of the acquiree, and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair value at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the recognised amounts of the acquiree's identifiable net assets. \n \n \n Acquisition-related costs are expensed as incurred. \n \n \n Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated. Where necessary, amounts reported by subsidiaries have been adjusted to conform to the Group's accounting policies. \n \n \n 1.6  Revenue \n \n \n 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. \n \n \n Temporary placements \n \n \n Revenue from temporary, or contract placements is recognised at the point in time when the candidate provides services, upon receipt of a client-approved timesheet or equivalent proof of time worked. Timing differences between the receipt of a client-approved timesheet and the raising of an invoice are recognised as accrued income. The Group has assessed its use of third party providers to supply candidates for temporary placements under the agent or principal criteria and has determined that it is the principal on the grounds that it retains primary responsibility for provision of the services. \n \n \n A number of contractual rebate arrangements are in place in respect of volume and value of sales; these are accounted for as variable consideration reducing revenue and estimated in line with IFRS 15. Variable consideration is calculated on a contract-by-contract basis and dependent on the volume of candidate placements in a given period or the achievement of certain pricing thresholds holds. \n \n \n Any consideration payable at the start of contracts to customers is recognised as a prepayment and released to profit or loss over the terms of the contract it relates to, as a reduction to revenue. \n \n \n Permanent placements \n \n \n Revenue from permanent placements, which is based on a percentage of the candidate's remuneration package, is recognised when candidates commence employment which is the point at which the performance obligation of the contract is considered met. Some permanent placements are subject to a 'claw-back' period whereby if a candidate leaves within a set period of starting employment, the customer is entitled to a rebate subject to the Group's terms and conditions. Provisions as a reduction to revenue are recognised for such arrangements if material. In addition, a number of contractual rebate arrangements are in place in respect of volume and value of sales; these are accounted for as variable consideration reducing revenue and estimated in line with IFRS 15. \n \n \n Other \n \n \n Other revenue streams are generated from provision of engineering services and other fees. Revenue for certain engineering services is measured based on the consideration specified in a contract and recognised when the Group provides a service to a customer, taking into account the requirements of IFRS 15 'Revenue from Contracts with Customers'. The requirements include identifying the different performance obligations within each contract separately and applying the recognition when the obligation has been satisfied, taking into account contract modifications and variable consideration. \n \n \n 1.7  Government grants \n \n \n Government grants are assistance by government in the form of transfers of resources to an entity in return for past or future compliance with certain conditions relating to operating activities. \n \n \n Government grants are recognised when there is a reasonable assurance that the Group will comply with the conditions attached to it and that the grant will be received. They are recognised in the consolidated income statement on a systematic basis over the periods in which the related costs that they compensate are recognised as expenses. \n \n \n Grants are either presented as grant income or deducted in reporting the related expense they compensate in the income statement. \n \n \n 1.8  Non-underlying items \n \n \n Non-underlying items are income or expenditure that are considered unusual and separate to underlying trading results because of their size, nature or incidence and are presented within the income statement but highlighted through separate disclosure. The Group's directors consider that these items should be separately identified within the income statement to enable a proper understanding of the Group's business performance. \n \n \n Items which are included within this category include but are not limited to: \n \n \n \n \n \n \n ● \n \n \n \n \n material restructuring costs including related professional fees and staff costs; \n \n \n \n \n \n \n ● \n \n \n \n \n costs of acquisitions; and \n \n \n \n \n \n \n ● \n \n \n \n \n integration costs following acquisitions. \n \n \n \n \n \n \n In addition, the Group also excludes from underlying results amortisation and impairment of goodwill and acquired intangibles, impairment of leased right-of-use assets and net foreign exchange gains or losses. \n \n \n Specific adjusting items are included as non-underlying based on the following rationale: \n \n \n \n \n \n \n Item \n \n \n \n \n Distorting due to irregular nature year on year \n \n \n \n \n Distorting due to fluctuating nature (size) \n \n \n \n \n Does not reflect in-year operational performance of continuing business \n \n \n \n \n \n \n Material restructuring costs \n \n \n \n   \n \n \n \n • \n \n \n \n \n • \n \n \n \n \n \n \n Amortisation and impairment of goodwill and acquired intangibles \n \n \n \n \n • \n \n \n \n \n • \n \n \n \n \n • \n \n \n \n \n \n \n Impairment of leased right-of-use assets \n \n \n \n \n • \n \n \n \n \n • \n \n \n \n \n • \n \n \n \n \n \n \n Net foreign exchange gains and losses \n \n \n \n   \n \n \n \n • \n \n \n \n \n • \n \n \n \n \n \n \n Costs of acquisitions \n \n \n \n \n • \n \n \n \n \n • \n \n \n \n \n • \n \n \n \n \n \n \n Integration costs following acquisitions \n \n \n \n \n • \n \n \n \n   \n \n \n \n • \n \n \n \n \n \n \n Tax impact of the above \n \n \n \n \n • \n \n \n \n \n • \n \n \n \n \n • \n \n \n \n \n \n \n   \n \n \n 1.9  Property, plant and equipment \n \n \n Property, plant and equipment is stated at cost, net of depreciation and any provision for impairment. \n \n \n 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. Annual depreciation rates are as follows: \n \n \n Motor vehicles  25.0%  Reducing balance \n \n \n Fixtures, fittings and equipment            12.5% to 33.3%                                                       Straight line \n \n \n Leasehold improvements                      Over the period of the lease term                           Straight line \n \n \n   \n \n \n The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. \n \n \n An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. \n \n \n 1.10   Goodwill \n \n \n 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. \n \n \n Goodwill impairment reviews are undertaken annually, or more frequently if events or changes in circumstances indicate a potential impairment. Goodwill is allocated to cash-generating units, being the lowest level at which goodwill is monitored. The carrying value of the assets of the cash-generating unit, including goodwill, intangible and tangible assets and working capital balances, is compared to its recoverable amount, which is the higher of value-in-use and fair value less costs to sell. Any excess in carrying value over recoverable amount is recognised immediately as an impairment expense and is not subsequently reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. \n \n \n 1.11    Intangible assets \n \n \n Customer relationships \n \n \n Customer relationships comprise principally of existing customer relationships which may give rise to future orders (customer relationships), and existing order books. They are recognised at fair value at the acquisition date, and subsequently measured at cost less accumulated amortisation and impairment. Customer relationships are determined to have a useful life of ten years and are amortised on a straight-line basis. \n \n \n Trade names and trademarks \n \n \n Trade names and trademarks have either arisen on the consolidation of acquired businesses or have been separately purchased and are recognised at fair value at the acquisition date. They are subsequently measured at cost less accumulated amortisation and impairment. Trade names and trademarks are determined to have a useful life of ten years and are amortised on a straight-line basis. \n \n \n Software and software licences \n \n \n Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring into use the specific software. These costs are amortised using the straight-line method to allocate the cost of the software licences over their useful lives of between two and five years. Subsequent licence renewals are expensed to profit or loss as incurred. Software licences are stated at cost less accumulated amortisation and impairment. \n \n \n Internally generated intangible assets \n \n \n Development costs that are directly attributable to the design and testing of identifiable and unique software products are capitalised as part of internally generated software and include employee costs and professional fees attributable to the development of the asset. Other expenditure that does not meet these criteria is recognised as an expense to profit or loss as incurred. Software development costs recognised as assets are amortised on a straight-line basis over their estimated useful lives of between two and ten years. \n \n \n Expenditure on internally generated brands and other intangible assets is expensed to profit or loss as incurred. \n \n \n Other \n \n \n Other intangible assets acquired by the Group have a finite useful life between five and ten years and are measured at cost less accumulated amortisation and accumulated losses. \n \n \n Amortisation of intangible assets and impairment losses are recognised in profit or loss within administrative expenses. \n \n \n Intangible assets are tested for impairment either as part of a goodwill-carrying cash-generating unit, or when events arise that indicate an impairment may be triggered. Provision is made against the carrying value of an intangible asset where an impairment is deemed to have occurred. Impairment losses on intangible assets are recognised in the income statement under administrative expenses. \n \n \n 1.12  Disposal of assets \n \n \n The gain or loss arising on the disposal of an asset is determined as the difference between the disposal proceeds and the carrying amount of the asset and is recognised in the income statement at the time of disposal. \n \n \n 1.13    Leases \n \n \n The Group leases office property, motor vehicles and equipment. Rental contracts range from monthly to seven years. \n \n \n At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Contracts may contain both lease and non-lease components, and consideration is allocated in the contract to the lease and non-lease components based on their relative stand-alone prices. \n \n \n Assets and liabilities arising from a lease are initially measured on a present value basis at the lease commencement date. Lease liabilities include the net present value of the fixed payments less any lease incentives receivable, variable lease payments that are based on an index or a rate, amounts expected to be payable by the Group under residual value guarantees, the exercise price of any purchase option if the Group is reasonably certain to exercise that option, and payments of penalties for terminating the lease if that option is expected to be taken. \n \n \n Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. \n \n \n Lease payments are discounted at either the interest rate implicit in the lease or when this interest rate cannot be readily determined, the Group's incremental borrowing rate associated with a similar asset. When calculating lease liabilities, the Group uses its incremental borrowing rate, being the rate it would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic climate with similar terms, security and conditions. This is estimated using publicly available data adjusted for changes specific to the lease in financing conditions, lease term, country and currency. \n \n \n The Group does not have leases with variable lease payments based on an index or rate. \n \n \n Extension or termination options are included in a number of the Group's leases. In determining the lease term, the Group considers all facts and circumstances that create an economic incentive to exercise, or not to exercise, an option. Extension options are only included in the lease term if the lease is reasonably certain to be extended. The lease term is reassessed if an option is actually exercised or the Group becomes obliged to exercise (or not to exercise) it. The assessment of reasonable certainty is only revised if a significant event or a significant change in circumstances occurs that is within the control of the Group. \n \n \n Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. \n \n \n Right-of-use assets are measured at cost comprising the following: \n \n \n \n \n \n \n ● \n \n \n \n \n the amount of the initial measurement of lease liability, \n \n \n \n \n \n \n ● \n \n \n \n \n any lease payments made at or before the commencement date less any lease incentives received, \n \n \n \n \n \n \n ● \n \n \n \n \n any initial direct costs, and \n \n \n \n \n \n \n ● \n \n \n \n \n restoration costs. \n \n \n \n \n \n \n Right-of-use assets are depreciated on a straight-line basis over the term of the lease with depreciation expense recognised in the income statement. \n \n \n Lease modifications are a change in scope of a lease that was not part of the original lease. Any change that is triggered by a clause already part of the original lease contract is a reassessment and not a modification. Changes to lease cash flows as part of a reassessment result in a remeasurement of the lease liability using an updated discount rate and a corresponding adjustment to the carrying value of the right-of-use asset. \n \n \n A lease is deemed to be onerous where the costs required to fulfil the contract are higher than the economic benefit to be obtained from the contract. Where leases are deemed to be onerous, the carrying value of the right-of-use asset is reduced by way of an impairment charge recognised in the income statement. \n \n \n Advantage has been taken of the practical expedients for exemptions provided for leases with less than 12 months to run, for leases of low value, to account for leases with similar characteristics as a portfolio with a single discount rate and to present existing onerous lease provisions against the carrying value of right-of-use assets. Payments associated with short-term leases and leases of low value are recognised on a straight-line basis as an expense in profit or loss. \n \n \n 1.14    Taxation \n \n \n The tax expense for the year comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. \n \n \n The current tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the statement of financial position date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions, where appropriate, on the basis of amounts expected to be paid to the tax authorities. \n \n \n 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. \n \n \n 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. \n \n \n Deferred tax on temporary differences associated with shares in subsidiaries is not provided for if these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future. \n \n \n Deferred tax assets and liabilities are offset only where there is a legally enforceable right to the offset and there is an intention to settle balances on a net basis. \n \n \n 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. \n \n \n 1.15    Pension costs \n \n \n The Group operates a number of country-specific defined contribution plans for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations. The contributions are recognised as an expense when they are due. Amounts not paid are shown in other creditors in the consolidated statement of financial position. The assets of the plan are held separately from the Group in independently administered funds. \n \n \n 1.16 Share-based payments \n \n \n All share-based remuneration is ultimately recognised as an expense in the income statement with a corresponding credit to the share-based payment reserve. All goods and services received in exchange for the grant of any share-based remuneration are measured at their fair values. Fair values of employee services are indirectly determined by reference to the fair value of the share options awarded. Their value is appraised at the grant date and excludes the impact of non-market vesting conditions (for example, profitability and sales growth targets). \n \n \n 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. \n \n \n 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. \n \n \n The Group operates two long-term incentive share option plans. The Zero Priced Share Option Bonus covers all share options issued with an exercise price of £0.01; the Long-Term Incentive Plan Options have an exercise price above £0.01. Grants under both categories have been made as part of a CSOP sc...

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