Preliminary Results for the year ended 31 July 22

About this update from Gattaca Plc

[{"type":"text","content":"\n \n \n 3 November 2022 \n \n \n \n   \n \n \n \n \n Gattaca plc \n \n \n \n \n   \n \n \n \n \n Preliminary Results for the year ended 31 July 2022 \n \n \n \n \n   \n \n \n \n \n Ongoing focus on improvement \n \n \n \n   \n \n \n Gattaca plc (\"Gattaca\" or the \"Group\"), the specialist engineering and technology staffing solutions business, today announces its Preliminary Results for the year ended 31 July 2022. \n \n \n \n   \n \n \n \n \n Financial Highlights \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 2022 \n \n \n \n \n \n \n Restated 2021 \n \n \n \n \n   \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 \n Continuing underlying 2 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n £m \n \n \n \n \n \n \n £m \n \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 \n \n \n \n Revenue \n \n \n \n \n \n 403.3 \n \n \n \n \n \n \n 403.3 \n \n \n \n \n \n 415.7 \n \n \n \n \n 415.7 \n \n \n \n \n -3.0 \n \n \n \n \n \n -3.0 \n \n \n \n \n \n \n \n Net Fee Income (NFI) 1 \n \n \n \n \n \n 44.1 \n \n \n \n \n \n \n 44.1 \n \n \n \n \n \n 42.1 \n \n \n \n \n 42.1 \n \n \n \n \n 4.9 \n \n \n \n \n \n 4.9 \n \n \n \n \n \n \n \n (Loss)/profit from operations \n \n \n \n \n \n (5.1) \n \n \n \n \n \n \n 0.5 \n \n \n \n \n \n 1.9 \n \n \n \n \n 2.2 \n \n \n \n \n n/a \n \n \n \n \n \n -77.5 \n \n \n \n \n \n \n \n (Loss)/profit before taxation \n \n \n \n \n \n (4.8) \n \n \n \n \n \n \n 0.3 \n \n \n \n \n \n 0.8 \n \n \n \n \n 1.8 \n \n \n \n \n n/a \n \n \n \n \n \n -86.0 \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 \n \n \n \n \n \n \n   \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Basic (loss)/earnings per share \n \n \n \n \n \n (13.4)p \n \n \n \n \n \n \n 0.3p \n \n \n \n \n \n 2.4p \n \n \n \n \n 5.3p \n \n \n \n \n n/a \n \n \n \n \n \n -94.0 \n \n \n \n \n \n \n \n Diluted (loss)/earnings per share \n \n \n \n \n \n (13.4)p \n \n \n \n \n \n \n 0.3p \n \n \n \n \n \n 2.4p \n \n \n \n \n 5.3p \n \n \n \n \n n/a \n \n \n \n \n \n -94.0 \n \n \n \n \n \n \n \n Dividend per share \n \n \n \n \n \n 0.0p \n \n \n \n \n \n \n n/a \n \n \n \n \n \n 1.5p \n \n \n \n \n n/a \n \n \n \n \n n/a \n \n \n \n \n \n n/a \n \n \n \n \n \n \n \n Statutory net cash at end of period \n \n \n \n \n \n 12.3 \n \n \n \n \n \n \n n/a \n \n \n \n \n \n 14.1 \n \n \n \n \n n/a \n \n \n \n \n -12.6 \n \n \n \n \n \n n/a \n \n \n \n \n \n \n \n \n Continuing business excludes the discontinued business in South Africa and Mexico, which were closed in July 2021 \n \n \n \n \n   \n \n \n \n \n Financial Performance \n \n \n \n \n   \n \n \n \n \n \n \n \n · \n \n \n \n \n NFI £44.1m (2021: £42.1m), up 5% on the prior year \n \n \n \n \n \n \n O \n \n \n \n \n Contract NFI represents 71% of Group NFI on a continuing basis (2021 restated: 74%). Contract NFI was flat year on year driven by contract losses primarily within contract in H1. \n \n \n \n \n \n \n O \n \n \n \n \n Benefit is expected to come in the contract market in FY23 as demand for contractors is shifting to outweigh permanent combined with increased project demand in our core sectors \n \n \n \n \n \n \n O \n \n \n \n \n Permanent NFI represents 29% of Group NFI (2021 restated: 26%), recording a 18% growth year on year, driven by recovery post COVID-19 pandemic \n \n \n \n \n \n \n · \n \n \n \n \n Group continuing underlying profit before tax of £0.3m (2021 restated: £1.8m), reflecting investment in headcount \n \n \n \n \n \n \n · \n \n \n \n \n Robust balance sheet: \n \n \n \n \n \n \n O \n \n \n \n \n Group statutory net cash position of £12.3m at 31 July 2022 (2021: £14.1m net cash) \n \n \n \n \n \n \n O \n \n \n \n \n Movement in cash partially driven by £5.6m of deferred VAT fully repaid in the year \n \n \n \n \n \n \n O \n \n \n \n \n DSO at 31 July 2022 was 51 days (2021: 52 days), a recovery of the DSO position from 62 days reported at 31 January 2022, and a return to the long term trend \n \n \n \n \n \n \n O \n \n \n \n \n The Group is covenant free \n \n \n \n \n \n \n · \n \n \n \n \n During the year, we took a further impairment charge of £4.6m (2021: £0.2m), writing off all remaining goodwill, intangible assets and right-of-use leased asset values relating to the Resourcing Solutions business acquired in 2017, due to an expected sustained reduction in future profitability of the division \n \n \n \n \n \n \n · \n \n \n \n \n No final dividend (2021: 1.5 pence). The Board remains committed to paying dividends when the Group returns to sustainable levels of profitability \n \n \n \n \n \n \n · \n \n \n \n \n Continued investment in total Group sales headcount up 10% versus FY21 \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n Strategic Update \n \n \n \n \n   \n \n \n \n Continued focus on developing the four identified strategic priorities:  \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \n · \n \n \n \n \n Increase external focus \n   \n \n \n \n   \n \n \n \n \n \n O \n \n \n \n \n New Chief Sales Officer appointed to combine client acquisition and growth across all sectors and geographies \n   \n \n \n \n   \n \n \n \n \n \n O \n \n \n \n \n Investment in brand and enhanced social media presence  \n   \n \n \n \n   \n \n \n \n \n \n O \n \n \n \n \n Creation of Group-wide Performance Scorecards including targets set for all sales colleagues focused on client engagement and sustainable growth \n   \n \n \n \n   \n \n \n \n \n \n · \n \n \n \n \n Culture \n   \n \n \n \n   \n \n \n \n \n \n O \n \n \n \n \n Alignment of leadership team with business objectives, increased visibility, communication, and openness  \n   \n \n \n \n   \n \n \n \n \n \n O \n \n \n \n \n Appointed Head of Engagement, ED&I & Talent  \n   \n \n \n \n   \n \n \n \n \n \n O \n \n \n \n \n Enhanced staff engagement and continued focus  \n   \n \n \n \n   \n \n \n \n \n \n · \n \n \n \n \n Operational performance \n   \n \n \n \n   \n \n \n \n \n \n O \n \n \n \n \n Appointed new COO to focus on internal operational performance \n   \n \n \n \n   \n \n \n \n \n \n O \n \n \n \n \n Embedded our new technology systems, launched at the end of FY21, into Group operating processes and procedures with all colleagues now operating on a single platform \n   \n \n \n \n   \n \n \n \n \n \n O \n \n \n \n \n Deployment of enhanced candidate sourcing tool into our technology platform \n   \n \n \n \n   \n \n \n \n \n \n O \n \n \n \n \n Enhanced visibility of key management information to enable better data-backed decision making \n , supporting and informing decisions to exit inefficient and low-margin business \n   \n \n \n \n   \n \n \n \n \n \n · \n \n \n \n \n Cost rebalancing \n   \n \n \n \n   \n \n \n \n \n \n O \n \n \n \n \n Restructuring of sales leadership \n   \n \n \n \n \n \n \n O \n \n \n \n \n Optimisation of office space and cost \n   \n \n \n \n \n \n \n O \n \n \n \n \n Funded 5% cost of living increase for all staff across the group \n   \n \n \n \n \n \n \n O \n \n \n \n \n Reduced DSO thus reducing our borrowing costs \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n Evolution and development of the four strategic priorities to continue in 2023 with further progress already underway in the new financial year.  \n   \n \n \n   \n \n \n \n Outlook \n \n \n \n   \n \n \n We are mindful of the current macro-economic conditions, but as a STEM skills focused business we do not believe they will have a significant impact on our business model as we continue to see robust demand in our key markets. There remains a shortage of candidates which plays to our key strength of deep knowledge and understanding of our sectors and niche skills.  \n   \n \n \n   \n \n \n The development of our strategic priorities will continue as planned and we are confident that the changes we have made in the last six months combined with the long-term fundamentals in our core STEM markets leave us well placed for the future. Our expectations for FY23 remain unchanged at underlying profit before tax of £2.5m for the year.  \n   \n \n \n \n   \n \n \n \n \n   \n \n \n \n \n Matthew Wragg, CEO commented: \n \n \n \n   \n \n \n \"Although the performance of the business during the year is not acceptable for a business with our capability, I am pleased with the progress that we have made during the second half of the year. We have worked hard to transform the business through the building of our culture and once again becoming a winning team. Today, with a new leadership structure, a more engaged workforce and early signs of more consistent and improved performance, we are on track to be a stronger business.  \n   \n \n \n   \n \n \n \"Whilst we remain conscious of the uncertain macro-economic environment, we are far better set up for success than we were 12 months ago and have a roadmap for further improvements. I am excited about the journey that we are all on and the start that we have made.\" \n   \n \n \n   \n \n \n The following footnotes apply, unless where otherwise indicated, throughout these Preliminary Results: \n   \n \n \n   \n \n \n \n \n 1  \n \n \n NFI is calculated as revenue less contractor payroll costs  \n   \n \n \n \n \n 2 \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 (2022: £(0.3)m, 2021: £(1.2)m), non-underlying items within administrative expenses in 2022 primarily relating to employee restructuring and fees associated with exiting properties (2022: £0.6m, 2021: £(0.2)m), amortisation of acquired intangibles (2022: £0.4m, 2021: £0.5m), impairment of acquired intangibles and right of use assets (2022: £4.6m, 2021: £0.2m), and exchange (losses) / gains from revaluation of foreign assets and liabilities (2022: £0.6m, 2021: £(0.7)m) \n \n \n \n \n 3 \n \n \n NFI commentary is on a continuing underlying like for like basis \n   \n \n \n   \n \n \n \n For further information please contact: \n \n \n \n \n \n \n \n \n Gattaca plc \n \n \n \n \n \n \n +44 (0) 1489 898989 \n \n \n \n \n \n \n \n Matthew Wragg, Chief Executive Officer \n \n \n Oliver Whittaker, Chief Financial Officer \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Liberum Capital Limited (Nomad and Broker) \n \n \n \n \n \n \n +44 (0) 20 3100 2000 \n \n \n \n \n \n \n \n Lauren Kettle \n \n \n Richard Lindley \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 Citigate Dewe Rogerson \n \n \n \n \n \n \n +44 (0) 20 7638 9571 \n \n \n \n \n \n \n \n Ellen Wilton \n \n \n Anna Clauser \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 \n \n \n \n   \n \n \n \n \n Chair's Statement \n \n \n \n   \n \n \n The financial year certainly did not turn out as we had expected. Whilst the pandemic had a small carryover effect in the first half of the year, there was a recovery in the market, mainly in permanent placements, which represents only 29% of our business. Our expected growth within the contract placement market failed to materialise. Whilst the market demand was there, the combination of major client losses, increased focus on permanent recruitment and the business adapting to new systems and operating model meant we didn't capture the market opportunity. We have continued to invest in our technology and our sales people and we are confident we can move forward with these building blocks in place. \n \n \n It also became apparent during the year that to move forward with pace, agility and confidence we needed to accelerate the planned change in leadership, given the scale of further improvement required in the business. It was therefore agreed that Kevin Freeguard would retire from the Board on 1 April 2022 and be replaced by Matt Wragg as Chief Executive Officer. \n \n \n Matt brings with him a wealth of recruitment experience, knowledge of our business and has the support and commitment of both the Board and our Senior Leadership Team. Salar Farzad agreed to leave the business at the same time and stepped aside to allow Oliver Whitaker to take over as Chief Financial Officer. Oliver has been with the business since 2018 and has made a seamless transition into his new role. In December 2021, Ros Haith joined the Board as a Non-Executive Director. \n \n \n Our previous Board review concluded that we would benefit from someone with a sales background; Ros has extensive experience in leading sales at several large organisations, with a strong focus in digital and technology. \n \n \n Following the appointment of Matt Wragg as CEO there has been an internal reset within the business with more focus on the external environment, both the customer and the market. Equally, we have a renewed and reenergised team who have clear and aligned objectives and targets for everyone to deliver against. Our Values are being embedded: we are once again focused on our people and the initiative we undertook in 2021 on our Purpose, Vision, Mission and Values is at the bedrock of everything we do. Our priority within the business is on delivering to our clients and finding the best STEM talent to fulfil their needs. As we anticipated, we are in a 'candidate short' market where there are more talent opportunities than candidates; this is when we are at our best. We have every confidence that we have the right leadership team to encourage our people and deliver success through growth. \n \n \n \n Overview \n \n \n \n The market recovery in the first half of the year was in permanent placements whilst our contract markets were much slower to recover. We saw a 33% increase in permanent placements largely through contingency recruitment and also via our Recruitment Process Outsourcing (RPO) contracts. Towards the end of our financial year, we saw some improvement in our contractor sectors which bodes well for FY23. We lost a small number of Managed Service Provider (MSP) clients during the year which had some impact on NFI, less so at net profit level, and we have also seen a reversal of this trend in the early part of FY23 with several quality client wins. Our STEM markets are candidate driven and will continue to be so for the foreseeable future. \n \n \n During the year, our new leadership team has been challenged with bedding in our new systems and adding a suite of packages which are now available as a result of the investment we undertook over the last five years. In the early part of our system implementation, we placed additional pressure on our sales and back-office teams which was a distraction when we should have been focused on our customers. These early teething problems are now behind us and we are starting to see the benefits of our new systems, which is starting to reflect in higher productivity from our sales consultants. As with most businesses, we have seen an increase in people turnover. Our focus on culture has already begun to show a positive impact on attrition at the end of the year; we will continue to develop this going forward. \n \n \n In the second half of the year, we have focused on addressing our cost base. Firstly, by streamlining the decision-making process with the removal of a management layer across the global sales business. We have broadened sales representation in our Senior Leadership Team, to allow for a wider understanding of key issues and higher clarity on agreed actions. \n \n \n To optimise our property costs, we have reduced our footprint in the UK and US; at our head office we have reduced our buildings from three to one, achieved through hybrid working and a more effective use of space. Further work remains ongoing in relation to third party costs. \n \n \n Our net cash position at the end of the year was £12.3m, a reduction from July 2021, when it was £14.1m, driven by final repayments of the temporary COVID VAT deferral of £5.6m offset by improved working capital management. The Group's DSO at the year end of 51.2 days was also slightly ahead of last year (51.6 days) and substantially below the January 2022 reported DSO of 61.7 days. This reduction was the result of resolving a major customer dispute and new system implementation issues that had impacted billing cycles. \n \n \n As at 31 July 2022, the Group had a working capital facility of £60million, reduced from £75million in the year. \n \n \n   \n \n \n \n Dividend \n \n \n \n Our long-standing objective has been to achieve a through-the-cycle dividend pay-out of approximately 50% of profits after tax. Last year, the Board felt comfortable reinstating the dividend and felt that 1.5p per share was a reasonable first step towards our objective. However, as a result of the loss for the year, the Board decided not to propose a dividend. The Board remains committed to paying dividends when the Group returns to sustainable levels of profitability. \n \n \n \n Diversity and inclusion \n \n \n \n This year we continued to address the gender balance on the Board. With the appointment of Ros we now have nearly 30% representation. As a Group, we remain committed to becoming a more diverse organisation; as part of this, we continue to work towards our previously set targets of a 40% management gender balance by 2024 and 50% by 2026. Aligned to our focus on equity, diversity and inclusions, we are developing our strategy to support all forms of diversity. \n \n \n We have promoted diversity training throughout the year, having engaged several external partners to help with fostering a wider understanding throughout the organisation. We have launched our Limitless programme aimed at tackling the gender imbalance across our business, set up communities for LGBTQ+ colleagues and are looking externally to see how we can support our clients in their endeavours in this area. \n \n \n \n Outlook \n \n \n \n There is no doubt that Gattaca is well positioned to reap the demand for STEM talent and, whilst there may be macroeconomic headwinds ahead, we do not believe they will have a significant impact on our business model. What is clear is that we are a people business; we will only be successful if we can harness the potential of our talented people and truly embed our Values of Trust, Professionalism, Ambition and Fun in everything we do. Whilst we have achieved many positive things over the years, we are conscious that in recent years, execution has been our Achilles heel; with our new leadership in place, we have started to tackle this. \n \n \n We continue to believe that our key STEM markets will remain short of candidates which bodes well for our inch-wide, mile-deep knowledge. As the economy softens we should see a better balance between demand and skills available but do not expect to be faced with an abundance of candidates. We believe that large infrastructure and defence projects will continue under existing government policies; however, in the UK, spend is likely to be slower to materialise due to economic headwinds and therefore the next six months will remain relatively flat. We are confident that the changes we have made in the business leave us better placed for the future. \n \n \n Patrick Shanley \n \n \n Non-Executive Chair \n \n \n   \n \n \n \n   \n \n \n \n \n Chief Executive's Statement \n \n \n \n   \n \n \n \n Key Highlights \n \n \n \n • We have aligned our four strategic priorities to our sales growth targets \n \n \n • We have taken steps towards a fundamental shift in our culture, with increased focus on embodying our Values, working to reduce attrition and supporting our ED&I goals \n \n \n • Substantially increased the regularity and authenticity of our internal communications \n \n \n   \n \n \n \n Overview \n \n \n \n This year has been one of substantial change for Gattaca. Just over a year ago we announced our Purpose, Vision, Mission and Values as the bedrock of our identity, our future direction and the culture we wanted to create. It is the work that has taken place over the past year to create alignment with these principles that has started to transform the business. Today, with a new leadership structure, a more engaged workforce and early signs of more consistent and improved performance, we are in a much stronger position than 12 months ago. \n \n \n These changes came against the backdrop of three challenging years: our operating model and infrastructure, key legislation, financial structures and systems all saw significant upheaval, combined with the macro-economic uncertainty from the COVID-19 pandemic and a fundamental change in global working models to remote and hybrid working. \n \n \n One of the things that I am most aware of after my first seven months as CEO, is that it feels like a new chapter - there is a marked improvement in the atmosphere and culture of the business, and we have achieved some positive client wins. Our key challenge now will be to convert this momentum into consistent growth and deliver the performance we know we are capable of over a sustained period. \n \n \n I would like to thank the Board for their belief and backing in me and my leadership team to steer the business through our new chapter, building on the work that has been done. \n \n \n \n Performance \n \n \n \n Whilst we saw positive signs of improvement in the second half of the year, overall performance in FY22 was below our expectations at the outset of the year. \n \n \n Although we could see the scale of the external opportunity as the recruitment markets recovered strongly in the wake of COVID-19, we overestimated the operational capability of the business to capitalise on this. We also underestimated the continued impact of the necessary business and operational changes we were making to build a stronger business. \n \n \n Although external demand has been high, demand for contract lagged behind permanent recruitment, and the battle for talent resulting from the shortage of candidates within our niche STEM focus areas led to far higher offer-to-reject ratios. With new technology systems embedding, we also struggled to cope with the significant increase in headcount needed to service the demand and, like most recruitment companies, suffered from higher attrition among our own people than we had traditionally seen. Over the year we saw a significant growth in our permanent recruitment business, with 18% growth year-on-year, driven to some extent by increased demand from our major Recruitment Process Outsourcing (RPO) contracts as we saw recovery out of the COVID-19 pandemic. \n \n \n   \n \n \n During the second half of the year, we delivered against our adjusted expectations for the full year results and began building positive momentum by winning our first opportunities of significant scale for a couple of years. We also began delivering consistent week-on-week growth across both permanent and contract recruitment. This was as a result of our focus on cultural transformation, system enhancement optimisation, reducing attrition and enabling our newly hired frontline sales people to be productive more quickly. \n \n \n \n Strategy \n \n \n \n At the outset of Q4 we announced four strategic priority areas to deliver performance: \n \n \n • External Focus \n \n \n • Culture \n \n \n • Operational Performance \n \n \n • Cost Rebalancing \n \n \n I am confident that these continue to be the right strategic priorities to ensure Gattaca fulfil its fantastic potential and capitalise on its many great strengths. I am pleased to report we have made good strides in the last six months across all four areas and work continues. \n \n \n   \n \n \n \n External Focus \n \n \n \n We are committed to being market driven and people-oriented. \n \n \n We have fantastic insights, 'inch-wide, mile-deep' knowledge and understanding of our sectors and the niche STEM skills that they require. We appointed Grahame Carter, a long-standing member of the sales leadership team, as Chief Sales Officer, to work on driving client acquisition and growth across all our sectors and through the implementation of new performance management processes, all our sales people have targets focused on client engagement and growth. With the business refocused externally, we remain confident that these fundamental strengths will drive us forward as we return to growth. \n \n \n Businesses in all sectors today are in heavy competition for talent; for us to deliver for our clients we have had to increase the quality of our candidate experience. Fortunately, this has been a fundamental ingredient to our performance for over three decades and, as such, it has come naturally to our leadership and colleagues. \n \n \n We have invested in sales training, leadership development and increased marketing and business development for our brands which will begin to generate returns in the year ahead. \n \n \n \n Culture \n \n \n \n We have made huge strides in embedding our culture: engagement, collaboration and accountability are all up and attrition is improving. We've increased communication, visibility of leadership and focus on non-financial recognition across the business and we will see more of this over the months and years to come. \n \n \n As a business that helps 'find people to work with people', diversity and inclusion is something I'm passionate about. As such, I'm really pleased that we have appointed Sally Spicer as our Head of Engagement, ED&I and Talent. Sally has been a high performer within our permanent recruitment sales business for a number of years. Among Sally's first achievements in her new role is the launch of our 'Limitless' programme aimed at tackling the gender imbalance within the Group and the set-up of LGBTQ+ communities for our people. Sally will develop our internal ED&I strategy, build external partnerships and support the business to take that expertise to market. \n \n \n \n Operational Performance \n \n \n \n We are continuing to refine our operational processes to improve the client and candidate journey. This will naturally see us rebalancing our cost base towards the skills, tooling and locations where we can benefit most. \n \n \n We appointed Paul King, previously Head of our Solutions division, to Chief Operating Officer; his remit is to simplify our delivery and improve our productivity. In FY22, we embedded our technology systems, focusing on user training to embed behaviours and drive efficiencies. Alongside this, the integration of an enhanced candidate sourcing tool into our new technology platform has substantially increased the volume of candidates we can source through searches which is critical in a candidate-short market. Modern systems have naturally driven higher quality and more extensive data to better inform our decision-making. As an example, we took a strategic decision to exit a major but very low margin client in the year, enabling our people to be rediverted to more profitable delivery. \n \n \n \n Cost Rebalancing \n \n \n \n Alongside investments in technology and people, we've managed to reduce costs in other key areas of the business, including those associated to leadership, property and third-party contracts. The savings generated from this cost rationalisation have been used to invest in further technology tools, marketing and colleague engagement projects and to fund a cost-of-living pay increase for our people who are currently living through a time of extreme pressure on living costs. \n \n \n \n Outlook \n \n \n \n Clearly the performance of the business during the year is not acceptable for a business with our capability, however I am pleased with the progress that we have made during the second half of the year. We have worked to transform the business through the building of our culture and becoming a winning team. Today, with a new leadership structure, a more engaged workforce and early signs of more consistent and improved performance, we are in a much stronger position as a business. \n \n \n We are better set up for success than we were 12 months ago but remain conscious of the uncertain macro-economic environment and that we have much to do to get ourselves to the level we are aiming for. I am excited about the journey that we are all on and we have made a solid start. \n \n \n \n Matt Wragg \n \n \n \n \n Chief Executive Officer \n \n \n \n   \n \n \n   \n \n \n \n Chief Financial Officer's Report \n \n \n \n \n   \n \n \n \n \n Key Highlights \n \n \n \n • NFI growth of 5% YoY on a continuing underlying basis \n \n \n • Continuing underlying profit before tax of £0.3m in FY22 (2021: £1.8m restated) \n \n \n • Adjusted statutory net cash of £12.3m (2021: £14.1m) \n \n \n • Investment in our people adding 10% to our Group sales headcount during the year \n \n \n • New leadership team in place with revised strategic priorities launched \n \n \n   \n \n \n \n Financial Performance \n \n \n \n On a continuing basis, revenue of £403.3m (2021: £415.7m) generated NFI of £44.1m (2021: £42.1m). We achieved contract and Statement of Work (SoW) NFI of £31.4m (2021: £31.3m) at a margin of 8.0% (2021: 7.6%), and permanent recruitment fees of £12.8m (2021: £10.8m). SoW NFI, included within contract NFI, of £1.3m (2021: £1.2m) is all delivered though contract labour provision on long term projects. Contract NFI was flat year-on-year due to the loss of some key MSP clients including TfL, UKPN and BMW UK, and losses associated with the collapse of NMCN plc dampening growth. \n \n \n Underlying profit before tax from continuing operations was £0.3m (2021 restated: £1.8m). Statutory loss after tax for the total Group was £(4.7)m (2021 restated: loss of £(0.4)m). Within underlying trading, credits of £0.4m were recorded as a result of revaluation of dilapidation provisions associated with our property portfolio. \n \n \n Statutory net cash at 31 July 2022 was £12.3m (31 July 2021: £14.1m); the reduction in net cash year-on-year of £1.8m included final repayments of £5.6m of temporary VAT deferral. The optimisation of the Group's working capital is a key focus and during the second half of the year the group has benefitted from a significant improvement from the half year as we have reduced DSO through improved collection performance and resolution of a substantial disputed debtor balance. \n \n \n \n Discontinued operations and non-underlying costs \n \n \n \n The below table reconciles continuing underlying profit before tax to reported statutory loss before tax for the total Group: \n \n \n \n \n \n \n £'000 \n \n \n \n \n Profit/(loss) before tax \n \n \n \n \n \n Continuing underlying profit before tax \n \n \n \n 256 \n \n \n \n \n \n Restructuring costs \n \n \n \n (405) \n \n \n \n \n \n Other continuing non-underlying costs \n \n \n \n (153) \n \n \n \n \n \n Operating loss related to discontinued operations \n \n \n \n (476) \n \n \n \n \n \n Restructuring and closure costs relating to discontinued operations \n \n \n \n (95) \n \n \n \n \n \n Amortisation and Impairment of goodwill, acquired intangibles and ROU leased assets \n \n \n \n (5,051) \n \n \n \n \n \n Foreign exchange differences \n \n \n \n 784 \n \n \n \n \n \n Loss before tax for the total Group \n \n \n \n (5,140) \n \n \n \n \n \n \n   \n \n \n Restructuring costs in the year related to the continued activities are primarily notice payments for previous Executive management and senior leadership. Costs associated with discontinued operations related to ongoing closure costs of those operations treated as discontinued in prior periods, primarily Mexico, South Africa and Malaysia. We will continue to incur costs associated with discontinuing legacy operations as the legal wind down of those operations is concluded over the coming years. \n \n \n During the year, we took a further impairment charge of £4.6m (2021: £0.2), writing off all remaining goodwill, intangible assets and right-of-use leased asset values relating to the Resourcing Solutions business acquired in 2017, due to a downgrade in forecasts for future profitability of the division. Amortisation of acquired intangible assets was £0.4m. \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 £33,000 in the year (2021: £29,000). 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 Taxation \n \n \n \n The Group's reported effective tax rate was -9.1% (2021 restated: -6.3%), driven down by non-deductible expenses such as goodwill impairment and overseas losses not recognised as deferred tax assets, reducing taxable losses. Further detail is set out in Note 10 of the consolidated financial statements. The continuing underlying effective tax rate was 60.2% (2021 restated: 7.2%). \n \n \n \n Earnings per share \n \n \n \n Basic (loss) per share was (14.5) pence (2021 restated: (1.4) pence), and on a fully diluted basis was (14.5) pence (2021 restated: (1.4) pence). Continuing underlying basic earnings per share was 0.3 pence (2021 restated: 5.3 pence). \n \n \n \n Dividends \n \n \n \n Our long-standing objective has been to achieve a through-the-cycle dividend payout of approximately 50% of profits after tax. Last year, the Board felt comfortable reinstating the dividend and felt that 1.5p per share was a reasonable first step towards our objective. However, this year the Board decided not to recommend a dividend. The Board remains committed to paying dividends when the Group returns to sustainable levels of profitability. \n \n \n \n Capital expenditure \n \n \n \n The Group incurred capital expenditure in the period of £0.4m (2021 restated: £0.4m). Following the publication of the IFRS Interpretations Committee's ('IFRIC') final agenda decision on accounting for configuration and customisation costs in a SaaS arrangement, including for cloud-based arrangements, the Group has updated its accounting policy for this area. This change in accounting policy has been applied to all relevant capitalised intangible asset costs held on the balance sheet, see Note 1.25 of the consolidated financial statements. \n \n \n \n Net assets, equity and shares In Issue at 31 July 2022 \n \n \n \n The Group had net assets of £30.0m (2021 restated: £35.1m) and had 32.3m (2021: 32.3m) fully paid ordinary shares in issue. During the year, the merger reserve in Gattaca plc relating to the Networkers 2015 acquisition of £28.5m was transferred to retained earnings in order to present all distributable reserves in one place. This merger reserve had become fully realised in prior periods, as detailed in Note 23. \n \n \n \n Cash flow and net cash position \n \n \n \n Group statutory net cash at 31 July 2022 was £12.3m (31 July 2021: £14.1m). The reduction in net cash year-on-year of £1.8m included £5.6m of repayments of temporary VAT deferral, which is now repaid to HMRC in full. The Group's trade and other receivables balance was £54.8m at 31 July 2022 (31 July 2021: £64.1m), of which debtor and accrued income balances were £51.7m (31 July 2021: £60.9m), a £9.2m reduction over the 12 month period. \n \n \n The Group's days sales outstanding ('DSO') at 31 July 2022 of 51.2 days is a reduction of 0.4 days since 31 July 2021, however a reduction of 10.5 days on DSO reported at 31 January 2022. The challenges that the Group was encountering at 31 January 2022 in relation to a key customer dispute and system implementation issues are now resolved, which has resulted in the substantial reduction to normalised levels of DSO. In addition to this, the loss of a highly working capital intensive MSP client has resulted in an unwind of working capital. \n \n \n As at 31 July 2022, the Group had a working capital facility of £60m, reduced from £75m in the year as the higher limit was not required; this facility includes both recourse and non-recourse elements. Under the terms of the non-recourse facility, the trade receivables are assigned to, and owned by, HSBC and so have been derecognised from the Group's statement of financial position. In addition, the non-recourse working capital facility does not meet the definition of loans and borrowings under IFRS. The utilisation of this facility at 31 July 2022 was £(1.8)m recourse and £(9.6)m non-recourse, with unutilised facility headroom of £33.1m. \n \n \n \n Critical accounting policies \n \n \n \n The statement of significant accounting policies is set out in Note 1.24 to the consolidated financial statements. \n \n \n \n Group financial risk management \n \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. The Group does not trade in financial instruments. The main risks arising from the Group's financial instruments are described below. \n \n \n \n Credit risk \n \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 2022 have continued to take a conservative approach to receivables and unbilled risk in light of the challenges in the UK and overseas economies, tempered by an overall reduction in trade receivables and accrued income balances and the write-off of certain irrecoverable receivables (such as balances with NMCN plc), resulting in a decrease to our loss allowance by £(1.8)m to £2.8m. \n \n \n There are no significant concentrations of credit risk within the Group, with no single debtor accounting for more than 8% (2021: 7%) of total receivables balances at 31 July 2022. \n \n \n In October 2021 NMCN Plc entered into administration. Our total client exposure at this point was £1.4m, of which £0.8m exposure at the prior year end was covered by existing credit loss provisions. In the current year we also utilised existing credit loss provisions against the total exposure suffered. \n \n \n \n Foreign currency risk \n \n \n \n The Group generates 6% 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   \n \n \n \n Oliver Whittaker \n \n \n \n \n Chief Financial Officer \n \n \n   \n   \n Consolidated Income Statement \n For the year ended 31 July 2022 \n   \n   \n \n \n \n \n \n \n \n \n \n \n \n \n Note \n \n \n \n \n 2022 \n \n \n £'000 \n \n \n \n \n Restated 1 \n \n \n 2021 \n \n \n £'000 \n \n \n \n \n \n Continuing operations \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 Revenue \n \n \n 2 \n \n \n \n 403,346 \n \n \n \n 415,726 \n \n \n \n \n Cost of sales \n \n \n \n \n \n \n \n \n \n \n (359,206) \n \n \n \n (373,646) \n \n \n \n \n Gross profit \n \n \n 2 \n \n \n \n 44,140 \n \n \n \n 42,080 \n \n \n \n \n Administrative expenses² \n \n \n \n \n \n \n \n \n \n \n (49,244) \n \n \n \n (40,188) \n \n \n \n \n (Loss)/profit from continuing operations \n \n \n 4 \n \n \n \n (5,104) \n \n \n \n 1,892 \n \n \n \n \n Finance income \n \n \n 6 \n \n \n \n 570 \n \n \n \n 56 \n \n \n \n \n Finance cost \n \n \n 7 \n \n \n \n (253) \n \n \n \n (1,136) \n \n \n \n \n (Loss)/profit before taxation \n \n \n \n \n \n \n \n \n \n \n (4,787) \n \n \n \n 812 \n \n \n \n \n Taxation \n \n \n 10 \n \n \n \n 460 \n \n \n \n (41) \n \n \n \n \n (Loss)/profit for the year after taxation from continuing operations \n \n \n \n \n \n \n \n \n \n \n (4,327) \n \n \n \n 771 \n \n \n \n \n Discontinued operations \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 Loss for the year from discontinued operations (attributable to equity holders of the Company) \n \n \n 11 \n \n \n \n (346) \n \n \n \n (1,208) \n \n \n \n \n Loss for the year \n \n \n \n \n \n \n \n \n \n \n (4,673) \n \n \n \n (437) \n \n \n \n \n   \n Loss for the year for 2022 and 2021 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 Total earnings per ordinary share \n \n \n \n Note \n \n \n \n \n 2022 \n \n \n pence \n \n \n \n \n Restated 1 \n \n \n 2021 \n \n \n pence \n \n \n \n \n \n Basic loss per share \n \n \n 12 \n \n \n \n (14.5) \n \n \n \n (1.4) \n \n \n \n \n Diluted loss per share \n \n \n 12 \n \n \n \n (14.5) \n \n \n \n (1.4) \n \n \n \n \n   \n \n \n \n \n Earnings from continuing operations per ordinary share \n \n \n \n Note \n \n \n \n \n 2022 \n \n \n pence \n \n \n \n \n Restated 1 \n \n \n 2021 \n \n \n pence \n \n \n \n \n \n Basic (loss)/earnings per share \n \n \n 12 \n \n \n \n (13.4) \n \n \n \n 2.4 \n \n \n \n \n Diluted (loss)/earnings per share \n \n \n 12 \n \n \n \n (13.4) \n \n \n \n 2.4 \n \n \n \n \n   \n Reconciliation to adjusted profit measure \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 \n \n \n 2022 \n \n \n £'000 \n \n \n \n \n Restated 1 \n \n \n 2021 \n \n \n £'000 \n \n \n \n \n \n (Loss)/profit from continuing operations \n \n \n \n (5,104) \n \n \n \n 1,892 \n \n \n \n \n Add: \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Depreciation of property, plant and equipment, leased right-of-use assets and amortisation of software and software licences \n \n \n \n 2,210 \n \n \n \n 2,185 \n \n \n \n \n Non-underlying items included within administrative expenses \n \n \n \n 558 \n \n \n \n (193) \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 5,051 \n \n \n \n 548 \n \n \n \n \n Underlying EBITDA \n \n \n \n 2,715 \n \n \n \n 4,432 \n \n \n \n \n Less: \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Depreciation of property, plant and equipment, leased right-of-use assets and amortisation of software and software licences \n \n \n \n (2,210) \n \n \n \n (2,185) \n \n \n \n \n Net finance costs excluding foreign exchange gains and losses \n \n \n \n (249) \n \n \n \n (412) \n \n \n \n \n Underlying profit before taxation \n \n \n \n 256 \n \n \n \n 1,835 \n \n \n \n \n Underlying taxation \n \n \n \n (154) \n \n \n \n (132) \n \n \n \n \n Underlying profit after taxation from continuing operations \n \n \n \n 102 \n \n \n \n 1,703 \n \n \n \n \n   \n \n \n \n \n 1. \n \n \n Results are restated following the March 2021 IFRS Interpretations Committee agenda decision on cloud computing arrangements, resulting in previously capitalised software assets being expensed, as explained further in Note 1.25. \n \n \n \n \n 2. \n \n \n Administrative expenses from continuing operations includes net impairment release on trade receivables and accrued income of £295,000 (2021: losses of £420,000). \n \n \n \n \n   \n   \n Consolidated Statement of Comprehensive Income \n For the year ended 31 July 2022 \n   \n \n \n \n \n \n \n \n \n \n \n \n \n Note \n \n \n \n \n 2022 \n \n \n £'000 \n \n \n \n \n Restated 1 \n \n \n 2021 \n \n \n £'000 \n \n \n \n \n \n Loss for the year \n \n \n \n \n \n \n \n \n \n \n (4,673) \n \n \n \n (437) \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 \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 \n \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 \n \n \n \n \n \n 72 \n \n \n \n 281 \n \n \n \n \n Other comprehensive income for the year \n \n \n \n \n \n \n \n \n \n \n 72 \n \n \n \n 281 \n \n \n \n \n Total comprehensive loss for the year attributable to equity holders of the parent \n \n \n \n \n \n \n \n \n \n \n (4,601) \n \n \n \n (156) \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 2022 \n \n \n £'000 \n \n \n \n \n Restated 1 \n \n \n 2021 \n \n \n £'000 \n \n \n \n \n \n Attributable to: \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 Continuing operations \n \n \n \n \n \n \n \n \n \n \n (4,024) \n \n \n \n 1,004 \n \n \n \n \n Discontinued operations \n \n \n \n \n \n \n \n \n \n \n (577) \n \n \n \n (1,160) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (4,601) \n \n \n \n (156) \n \n \n \n \n   \n \n \n \n \n 1. \n \n \n Results are restated following the March 2021 IFRS Interpretations Committee agenda decision on cloud computing arrangements, resulting in previously capitalised software assets being expensed, as explained further in Note 1.25. \n \n \n \n \n   \n   \n Consolidated and Company Statements of Changes in Equity \n For the year ended 31 July 2022 \n   \n A) Consolidated \n \n \n \n \n \n \n \n \n \n \n \n \n Share \ncapital \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 reserve \n \n \n £'000 \n \n \n \n \n Translation reserve \n \n \n £'000 \n \n \n \n \n Treasury shares reserves \n \n \n £'000 \n \n \n \n \n Restated¹ 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 2020 as per originally presented \n \n \n \n 323 \n \n \n 8,706 \n \n \n 28,750 \n \n \n 526 \n \n \n (147) \n \n \n (97) \n \n \n 1,711 \n \n \n 39,772 \n \n \n \n \n Adjustments due to change of accounting policy, net of tax (Note 1.25) \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (4,738) \n \n \n (4,738) \n \n \n \n \n \n Restated total equity at 1 August 2020 \n \n \n \n 323 \n \n \n 8,706 \n \n \n 28,750 \n \n \n 526 \n \n \n (147) \n \n \n (97) \n \n \n (3,027) \n \n \n 35,034 \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 (437) \n \n \n (437) \n \n \n \n \n Other comprehensive income \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 281 \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 281 \n \n \n - \n \n \n (437) \n \n \n (156) \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 65 \n \n \n 65 \n \n \n \n \n Share-based payments charge (Note 23) \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 104 \n \n \n \n \n Share-based payments reserves transfer \n \n \n - \n \n \n - \n \n \n - \n \n \n (176) \n \n \n - \n \n \n - \n \n \n 176 \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 60 \n \n \n - \n \n \n 60 \n \n \n \n \n \n Transactions with owners \n \n \n \n - \n \n \n - \n \n \n - \n \n \n (72) \n \n \n - \n \n \n 60 \n \n \n 241 \n \n \n 229 \n \n \n \n \n \n At 31 July 2021 \n \n \n \n 323 \n \n \n 8,706 \n \n \n 28,750 \n \n \n 454 \n \n \n 134 \n \n \n (37) \n \n \n (3,223) \n \n \n 35,107 \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 \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 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 (3,223) \n \n \n \n \n 35,107 \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 (4,673) \n \n \n \n \n (4,673) \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 72 \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n 72 \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 72 \n \n \n \n \n - \n \n \n \n \n (4,673) \n \n \n \n \n (4,601) \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 (60) \n \n \n \n \n (60) \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 145 \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n 145 \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 (249) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n 249 \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 \n \n \n \n (110) \n \n \n \n \n - \n \n \n \n \n (110) \n \n \n \n \n \n Translation reserve movements on disposal of foreign operations 2 \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n 931 \n \n \n \n \n - \n \n \n \n \n (931) \n \n \n \n \n - \n \n \n \n \n \n Dividends paid in the year (Note 29) \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 (484) \n \n \n \n \n (484) \n \n \n \n \n \n Transfer of merger reserve (Note 23) \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n (28,526) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n 28,526 \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 (28,526) \n \n \n \n \n (104) \n \n \n \n \n 931 \n \n \n \n \n (110) \n \n \n \n \n 27,300 \n \n \n \n \n (509) \n \n \n \n \n \n \n At 31 July 2022 \n \n \n \n \n 323 \n \n \n \n \n 8,706 \n \n \n \n \n 224 \n \n \n \n \n 350 \n \n \n \n \n 1,137 \n \n \n \n \n (147) \n \n \n \n \n 19,404 \n \n \n \n \n 29,997 \n \n \n \n \n \n \n   \n \n \n   \n \n B) Company \n \n \n \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 £'000 \n \n \n \n \n Treasury shares reserves \n \n \n £'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 At 1 August 2020 \n \n \n 323 \n \n \n 8,706 \n \n \n 28,526 \n \n \n 526 \n \n \n - \n \n \n 1,446 \n \n \n 39,527 \n \n \n \n \n \n Loss and total comprehensive expense for the year (Note 9) \n \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (866) \n \n \n (866) \n \n \n \n \n Share-based payments charge (Note 23) \n \n \n - \n \n \n - \n \n \n - \n \n \n 104 \n \n \n - \n \n \n - \n \n \n 104 \n \n \n \n \n Share-based payments reserves transfer \n \n \n - \n \n \n - \n \n \n - \n \n \n (176) \n \n \n - \n \n \n 176 \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 (16) \n \n \n - \n \n \n (16) \n \n \n \n \n \n Transactions with owners \n \n \n \n - \n \n \n - \n \n \n - \n \n \n (72) \n \n \n (16) \n \n \n 176 \n \n \n 88 \n \n \n \n \n At 31 July 2021 \n \n \n 323 \n \n \n 8,706 \n \n \n 28,526 \n \n \n 454 \n \n \n (16) \n \n \n 756 \n \n \n 38,749 \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 \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 2021 \n \n \n 323 \n \n \n 8,706 \n \n \n 28,526 \n \n \n 454 \n \n \n (16) \n \n \n 756 \n \n \n 38,749 \n \n \n \n \n \n Profit and total comprehensive income for 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 296 \n \n \n \n \n 296 \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 145 \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n 145 \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 (249) \n \n \n \n \n - \n \n \n \n \n 249 \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 (91) \n \n \n \n \n - \n \n \n \n \n (91) \n \n \n \n \n \n Dividends paid \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 (484) \n \n \n \n \n (484) \n \n \n \n \n \n Transfer of merger reserve (Note 23) \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n (28,526) \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n 28,526 \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 (28,526) \n \n \n \n \n (104) \n \n \n \n \n (91) \n \n \n \n \n 28,291 \n \n \n \n \n (430) \n \n \n \n \n \n At 31 July 2022 \n \n \n \n 323 \n \n \n \n \n 8,706 \n \n \n \n \n - \n \n \n \n \n 350 \n \n \n \n \n (107) \n \n \n \n \n 29,343 \n \n \n \n \n 38,615 \n \n \n \n \n \n   \n \n \n \n \n 1. \n \n \n Results are restated following the March 2021 IFRS Interpretations Committee agenda decision on cloud computing arrangements, resulting in previously capitalised software assets being expensed, as explained further in Note 1.25. \n \n \n \n \n 2. \n \n \n The movement through the translation reserve in the year ended 31 July 2022 is in respect of disposal of foreign operations relates to the sale of the South African recruitment operations in December 2021 and the realisation of previously unrealised foreign exchange losses. \n \n \n \n \n   \n   \n Consolidated and Company Statements of Financial Position \n As at 31 July 2022 \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Group \n \n \n Company \n \n \n \n \n \n Note \n \n \n \n \n 31-Jul-22 \n \n \n £'000 \n \n \n \n \n Restated¹ \n31-Jul-21 \n \n \n £'000 \n \n \n \n \n Restated 1 \n01-Aug-20 2 \n \n \n £'000 \n \n \n \n \n 31-Jul-22 \n \n \n £'002 \n \n \n \n \n 31-Jul-21 \n \n \n £'000 \n \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 \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 Goodwill and intangible assets \n \n \n 13 \n \n \n \n 2,072 \n \n \n \n 6,343 \n \n \n 6,948 \n \n \n \n 11 \n \n \n \n 13 \n \n \n \n \n Property, plant and equipment \n \n \n 14 \n \n \n \n 1,359 \n \n \n \n 1,578 \n \n \n 1,492 \n \n \n \n - \n \n \n \n - \n \n \n \n \n Right-of-use assets \n \n \n 22 \n \n \n \n 3,065 \n \n \n \n 5,674 \n \n \n 7,338 \n \n \n \n - \n \n \n \n - \n \n \n \n \n Investments \n \n \n 15 \n \n \n \n - \n \n \n \n - \n \n \n 19 \n \n \n \n 38,608 \n \n \n \n 38,463 \n \n \n \n \n Deferred tax assets \n \n \n 16 \n \n \n \n 604 \n \n \n \n 971 \n \n \n 859 \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 \n \n \n 7,100 \n \n \n \n 14,566 \n \n \n 16,656 \n \n \n \n 38,619 \n \n \n \n 38,476 \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 \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 \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 Trade and other receivables \n \n \n 17 \n \n \n \n 54,767 \n \n \n \n 64,135 \n \n \n 48,946 \n \n \n \n 2,757 \n \n \n \n 3,046 \n \n \n \n \n Corporation tax receivables \n \n \n \n \n \n \n \n \n \n \n 1,263 \n \n \n \n 818 \n \n \n 26 \n \n \n \n 238 \n \n \n \n 195 \n \n \n \n \n Cash and cash equivalents \n \n \n \n \n \n \n \n \n \n \n 17,768 \n \n \n \n 29,238 \n \n \n 34,796 \n \n \n \n 7 \n \n \n \n 4 \n \n \n \n \n Assets classified as held for sale \n \n \n 11 \n \n \n \n - \n \n \n \n 346 \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 \n \n \n 73,798 \n \n \n \n 94,537 \n \n \n 83,768 \n \n \n \n 3,002 \n \n \n \n 3,245 \n \n \n \n \n Total assets \n \n \n \n \n \n \n \n \n \n \n 80,898 \n \n \n \n 109,103 \n \n \n 100,424 \n \n \n \n 41,621 \n \n \n \n 41,721 \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 \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 \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 Deferred tax liabilities \n \n \n 16 \n \n \n \n (25) \n \n \n \n (14) \n \n \n (29) \n \n \n \n - \n \n \n \n - \n \n \n \n \n Provisions \n \n \n 18 \n \n \n \n (517) \n \n \n \n (1,269) \n \n \n (1,587) \n \n \n \n - \n \n \n \n - \n \n \n \n \n Lease liabilities \n \n \n 22 \n \n \n \n (2,490) \n \n \n \n (4,281) \n \n \n (5,746) \n \n \n \n - \n \n \n \n - \n \n \n \n \n Bank loans and borrowings \n \n \n 20 \n \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 Total non-current liabilities \n \n \n \n \n \n \n \n \n \n \n (3,032) \n \n \n \n (5,564) \n \n \n (14,666) \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 \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 Trade and other payables \n \n \n 19 \n \n \n \n (43,406) \n \n \n \n (56,121) \n \n \n (46,129) \n \n \n \n (3,006) \n \n \n \n (2,972) \n \n \n \n \n Provisions \n \n \n 18 \n \n \n \n (1,187) \n \n \n \n (464) \n \n \n (1,207) \n \n \n \n - \n \n \n \n - \n \n \n \n \n Current tax liabilities \n \n \n \n \n \n \n \n \n \n \n (340) \n \n \n \n (796) \n \n \n (1,247) \n \n \n \n - \n \n \n \n - \n \n \n \n \n Lease liabilities \n \n \n 22 \n \n \n \n (1,135) \n \n \n \n (1,480) \n \n \n (1,990) \n \n \n \n - \n \n \n \n - \n \n \n \n \n Bank loans and borrowings \n \n \n 20 \n \n \n \n (1,801) \n \n \n \n (9,348) \n \n \n (151) \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 11 \n \n \n \n - \n \n \n \n (223) \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 \n \n \n (47,869) \n \n \n \n (68,432) \n \n \n (50,724) \n \n \n \n (3,006) \n \n \n \n (2,972) \n \n \n \n \n Total liabilities \n \n \n \n \n \n \n \n \n \n \n (50,901) \n \n \n \n (73,996) \n \n \n (65,390) \n \n \n \n (3,006) \n \n \n \n (2,972) \n \n \n \n \n Net assets \n \n \n \n \n \n \n \n \n \n \n 29,997 \n \n \n \n 35,107 \n \n \n 35,034 \n \n \n \n 38,615 \n \n \n \n 38,749 \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 \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 \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 Share capital \n \n \n 23 \n \n \n \n 323 \n \n \n \n 323 \n \n \n 323 \n \n \n \n 323 \n \n \n \n 323 \n \n \n \n \n Share premium \n \n \n \n \n \n \n \n \n \n \n 8,706 \n \n \n \n 8,706 \n \n \n 8,706 \n \n \n \n 8,706 \n \n \n \n 8,706 \n \n \n \n \n Merger reserve \n \n \n 23 \n \n \n \n 224 \n \n \n \n 28,750 \n \n \n 28,750 \n \n \n \n - \n \n \n \n 28,526 \n \n \n \n \n Share-based payment reserve \n \n \n \n \n \n \n \n \n \n \n 350 \n \n \n \n 454 \n \n \n 526 \n \n \n \n 350 \n \n \n \n 454 \n \n \n \n \n Translation reserve \n \n \n \n \n \n \n \n \n \n \n 1,137 \n \n \n \n 134 \n \n \n (147) \n \n \n \n - \n \n \n \n - \n \n \n \n \n Treasury shares reserve \n \n \n \n \n \n \n \n \n \n \n (147) \n \n \n \n (37) \n \n \n (97) \n \n \n \n (107) \n \n \n \n (16) \n \n \n \n \n Retained earnings \n \n \n \n \n \n \n \n \n \n \n 19,404 \n \n \n \n (3,223) \n \n \n (3,027) \n \n \n \n 29,343 \n \n \n \n 756 \n \n \n \n \n Total equity \n \n \n \n \n \n \n \n \n \n \n 29,997 \n \n \n \n 35,107 \n \n \n 35,034 \n \n \n \n 38,615 \n \n \n \n 38,749 \n \n \n \n \n \n   \n \n \n \n \n \n 1. \n \n \n Results are restated following the March 2021 IFRS Interpretations Committee agenda decision on cloud computing arrangements, resulting in previously capitalised software assets being expensed, as explained further in Note 1.25. \n \n \n \n \n 2. \n \n \n Following the material restatement of the comparative information in relation to cloud computing arrangements, as explained further in Note 1.25, a third balance sheet has been presented as at 1 August 2020, in line with the requirements of IAS 1. \n \n \n \n \n   \n   \n The amount of profit generated by the parent Company was £296,000 for the year ended 31 July 2022 (2021: loss of £866,000). \n The financial statements were approved by the board of directors on 2 November 2022 and signed on its behalf by \n   \n Oliver Whittaker \n Chief Financial Officer \n \n   \n \n Consolidated and Company Cash Flow Statements \n For the year ended 31 July 2022 \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Group \n \n \n Company \n \n \n \n \n \n Note \n \n \n \n \n 2022 \n \n \n £'000 \n \n \n \n \n Restated¹ \n \n \n 2021 \n \n \n £'000 \n \n \n \n \n 2022 \n \n \n £'000 \n \n \n \n \n 2021 \n \n \n £'000 \n \n \n \n \n \n \n \n Cash flow 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 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (Loss)/profit after taxation \n \n \n \n \n \n \n \n \n \n \n (4,673) \n \n \n \n (437) \n \n \n \n 296 \n \n \n \n (866) \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 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Depreciation of property, plant and equipment and amortisation of goodwill and intangible assets, software and software licences \n \n \n 4 \n \n \n \n 1,078 \n \n \n \n 901 \n \n \n \n 2 \n \n \n \n 3 \n \n \n \n \n Depreciation of leased right-of-use assets \n \n \n 4 \n \n \n \n 1,552 \n \n \n \n 1,875 \n \n \n \n - \n \n \n \n - \n \n \n \n \n Loss from sale of subsidiary, associate or investment \n \n \n \n \n \n \n \n \n \n \n 82 \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 \n \n \n \n \n \n 33 \n \n \n \n 8 \n \n \n \n - \n \n \n \n - \n \n \n \n \n Loss on disposal of software and software licences \n \n \n \n \n \n \n \n \n \n \n 12 \n \n \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 4 \n \n \n \n 3,780 \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 4 \n \n \n \n 852 \n \n \n \n 183 \n \n \n \n - \n \n \n \n - \n \n \n \n \n Profit on reassessment of lease term \n \n \n \n \n \n \n \n \n \n \n (27) \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 \n \n \n \n \n \n - \n \n \n \n 18 \n \n \n \n - \n \n \n \n - \n \n \n \n \n Interest income \n \n \n 6 \n \n \n \n (4) \n \n \n \n (65) \n \n \n \n (1) \n \n \n \n - \n \n \n \n \n Interest costs \n \n \n 7 \n \n \n \n 253 \n \n \n \n 1,218 \n \n \n \n - \n \n \n \n 260 \n \n \n \n \n Taxation (credit)/expense recognised in income statement \n \n \n 10 \n \n \n \n (467) \n \n \n \n 26 \n \n \n \n (235) \n \n \n \n (189) \n \n \n \n \n Decrease/(increase) in trade and other receivables \n \n \n \n \n \n \n \n \n \n \n 9,368 \n \n \n \n (15,499) \n \n \n \n 582 \n \n \n \n 68,992 \n \n \n \n \n (Decrease)/increase in trade and other payables \n \n \n \n \n \n \n \n \n \n \n (12,715) \n \n \n \n 10,098 \n \n \n \n (67) \n \n \n \n (60,617) \n \n \n \n \n Increase in provisions \n \n \n \n \n \n \n \n \n \n \n (54) \n \n \n \n (1,064) \n \n \n \n - \n \n \n \n - \n \n \n \n \n Share-based payment charge \n \n \n 23 \n \n \n \n 145 \n \n \n \n 271 \n \n \n \n - \n \n \n \n - \n \n \n \n \n Investment income \n \n \n \n \n \n \n \n \n \n \n - \n \n \n \n - \n \n \n \n (1,350) \n \n \n \n - \n \n \n \n \n Foreign exchange gains \n \n \n \n \n \n \n \n \n \n \n 31 \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 \n \n \n (754) \n \n \n \n (2,467) \n \n \n \n (773) \n \n \n \n 7,583 \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 \n \n \n \n \n \n \n \n \n \n \n \n Interest paid \n \n \n 7 \n \n \n \n (138) \n \n \n \n (320) \n \n \n \n - \n \n \n \n (63) \n \n \n \n \n Interest on lease liabilities \n \n \n 7 \n \n \n \n (115) \n \n \n \n (156) \n \n \n \n - \n \n \n \n - \n \n \n \n \n Interest received \n \n \n 6 \n \n \n \n 4 \n \n \n \n 65 \n \n \n \n 1 \n \n \n \n - \n \n \n \n \n Income taxes paid \n \n \n \n \n \n \n \n \n \n \n (200) \n \n \n \n (1,322) \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 \n \n \n (1,203) \n \n \n \n (4,200) \n \n \n \n (772) \n \n \n \n 7,520 \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 \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 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Purchase of property, plant and equipment \n \n \n 14 \n \n \n \n (370) \n \n \n \n (332) \n \n \n \n - \n \n \n \n - \n \n \n \n \n Purchase of intangible assets \n \n \n 13 \n \n \n \n (29) \n \n \n \n (83) \n \n \n \n - \n \n \n \n - \n \n \n \n \n Dividends received \n \n \n \n \n \n \n \n \n \n \n - \n \n \n \n - \n \n \n \n 1,350 \n \n \n \n - \n \n \n \n \n Cash (used in)/generated from investing activities \n \n \n \n \n \n \n \n \n \n \n (399) \n \n \n \n (415) \n \n \n \n 1,350 \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 \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 \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 \n \n \n (1,924) \n \n \n \n (2,355) \n \n \n \n - \n \n \n \n - \n \n \n \n \n (Purchase)/issue of treasury shares \n \n \n \n \n \n \n \n \n \n \n (110) \n \n \n \n 60 \n \n \n \n (91) \n \n \n \n (16) \n \n \n \n \n Working capital facility (repaid)/utilised \n \n \n \n \n \n \n \n \n \n \n (7,547) \n \n \n \n 9,197 \n \n \n \n - \n \n \n \n - \n \n \n \n \n Repayment of term loan \n \n \n \n \n \n \n \n \n \n \n - \n \n \n \n (7,500) \n \n \n \n - \n \n \n \n (7,500) \n \n \n \n \n Dividends paid \n \n \n 29 \n \n \n \n (484) \n \n \n \n - \n \n \n \n (484) \n \n \n \n - \n \n \n \n \n Cash used in financing activities \n \n \n \n \n \n \n \n \n \n \n (10,065) \n \n \n \n (598) \n \n \n \n (575) \n \n \n \n (7,516) \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 \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 \n \n \n 197 \n \n \n \n (345) \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 \n \n \n (11,470) \n \n \n \n (5,558) \n \n \n \n 3 \n \n \n \n 4 \n \n \n \n \n Cash and cash equivalents at the beginning of the year \n \n \n \n \n \n \n \n \n \n \n 29,238 \n \n \n \n 34,796 \n \n \n \n 4 \n \n \n \n - \n \n \n \n \n Cash and cash equivalents at end of year² \n \n \n \n \n \n \n \n \n \n \n 17,768 \n \n \n \n 29,238 \n \n \n \n 7 \n \n \n \n 4 \n \n \n \n \n \n   \n \n \n \n \n \n 1 \n \n \n Results are restated following the March 2021 IFRS Interpretations Committee agenda decision on cloud computing arrangements, resulting in previously capitalised software assets being expensed, as explained further in Note 1.25. \n \n \n \n \n 2 \n \n \n Included in cash and cash equivalents is the following restricted cash which meets the definition of cash and cash equivalents but is not available for use by the Group: £615,000 of restricted cash (2021: £7,115,000) arising from the Group's non-recourse working capital arrangements, as discussed further in Note 20; and £1,662,000 of restricted cash (2021: £1,240,000) on deposit in accounts controlled by the Group but not available to be immediately be drawn down. \n \n \n \n \n \n Net decrease in cash and cash equivalents for discontinued operations was £742,000 (year to 31 July 2021: decrease of £1,534,000). \n \n \n   \n \n Notes Forming Part of the Financial Statements \n   \n 1. The Group and Company Significant Accounting Policies \n 1.1 The Business of the Group \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 1.2 Basis of preparation of the financial statements \n The financial statements of Gattaca plc have been prepared in accordance with UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards. \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 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 1.24. \n 1.3 Going concern \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 are described in the Chief Financial Officer's Report. \n Post-pandemic, the Group has maintained mitigating actions to enhance working capital availability, including increases to the payment terms of certain types of contractors and these actions have created a permanent working capital benefit, and reduce our working capital requirements during growth. There is sufficient headroom on our working capital facilities to absorb a level of customer payment term extensions, but we would also manage supply to the customer if payment within an appropriate period was not being made. Whilst there is no evidence that it would occur, a significant deterioration in average payment terms has the potential to impact the Group's liquidity. The hybrid working style adopted by the majority of our staff is now fully integrated with our core business processes and there continues to be no significant impact to our ability to operate effectively. \n The Group anticipates macroeconomic challenges over the next financial year, significantly in the UK where increases in energy prices continue to drive rising inflation and real potential for a UK recession. The UK Government's Mini-Budget on 23 September 2022 resulted in increased short-term economic uncertainty and fluctuations in currency markets. The Bank of England's response has seen interest rates rise by 100 basis points since the year end. \n The Directors have prepared detailed cash flow forecasts to July 2025, 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 base case assumes a return to pre-pandemic NFI in 2026. Trading has been broadly in line with the forecast since the year end. \n A key assumption in preparing the cash flow forecasts is the continued availability of Group's invoice financing facility to provide liquidity throughout the forecast period. The current £60m facility has no contractual renewal date and the Directors remain confident that the facility will remain available. \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 with significantly lower NFI growth rates, significantly increased operating cost inflation and increased finance costs associated with variable rate borrowings considered. The Group has modelled the impact of a severe but plausible scenario including nil growth in contract and permanent NFI across FY23 to FY25, operating cost inflation of 5.00%-10.00% and further increases in the Bank of England's base rate to 5.00%. \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 have 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 these financial statements. \n 1.4 New standards and interpretations \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 2021 and no new standards have been early adopted. The Group's July 2022 consolidated financial statements have adopted these amendments to IFRS: \n \n \n \n \n \n · \n \n \n \n Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform - Phase 2 (effective 1 January 2021) \n \n \n \n \n \n · \n \n \n \n Following the IFRS Interpretations Committee's agenda decision published in March 2021, during the year to 31 July 2022, the Group voluntarily changed its accounting policy relating to the capitalisation of certain software costs, specifically relating to the capitalisation of implementation costs such as configuration and customisation costs for cloud-based software under SaaS arrangements. This is further described, along with the financial impact, in Note 1.25. \n \n \n \n \n With the exception of the accounting policy change described above, there have been no further 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 New standards in issue, not yet adopted \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 2022. These new pronouncements are listed as follows: \n \n \n \n \n \n · \n \n \n \n Amendments to IAS 1 - Classification of liabilities as current or non-current (effective 1 January 2022) \n \n \n \n \n \n · \n \n \n \n Amendments to IAS 16 - Property, plant and equipment: proceeds before intended use (effective 1 January 2022) \n \n \n \n \n \n · \n \n \n \n Amendments to IAS 37 - Onerous contracts - cost of fulfilling a contract (effective 1 January 2022) \n \n \n \n \n \n · \n \n \n \n Amendments to IFRS 3 - Reference to the conceptual framework (effective 1 January 2022) \n \n \n \n \n \n · \n \n \n \n Amendments to IFRS Standards 2018-2022 - Annual improvements on IFRS 9, IFRS 16 and IFRS 1 (effective 1 January 2022) \n \n \n \n \n   \n The Directors are currently evaluating the impact of the adoption of all other standards, amendments and interpretations but do not expect them to have a material impact on the Group's operations or results. \n Forthcoming requirements \n The following amendments are required for application for the Group's periods beginning after 1 August 2022 or later: \n \n \n \n \n Standard \n \n \n \n Effective date (annual period beginning on or after) \n \n \n \n \n \n IAS 1 and IFRS Practice Statement 2 \n \n \n Improve accounting policy disclosures \n \n \n 1 January 2023 \n \n \n \n \n IAS 8 \n \n \n Clarify distinction between accounting policies and accounting estimates \n \n \n 1 January 2023 \n \n \n \n \n IAS 12 \n \n \n Deferred tax related to assets and liabilities arising from a single transaction \n \n \n 1 January 2023 \n \n \n \n \n   \n 1.5 Basis of consolidation \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 The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners of the acquiree, and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangements. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair value at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the recognised amounts of the acquiree's identifiable net assets. \n Acquisition-related costs are expensed as incurred. \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 1.6 Revenue \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 Temporary placements \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 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 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 Permanent placements \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 considered probable. 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 Other \n \n Other revenue streams are generated from the provision of engineering management services and other fees. Revenue from the provision of engineering management services is recognised either over a period of time (where the customer benefits from the services provided as the group performs those services) or at a point in time upon receipt of client-approved timesheets. Where the group determines revenue should be recognised over time an estimate is made of progress using an input method, by reference to the proportion of costs incurred to date compared to total expected costs for the contract. Other fees mainly relate to account management fees for providing recruitment services. Revenue from other fees is recognised following client commitment to the agreement at either a point in time or over time in accordance with terms of each individual agreement. \n \n 1.7 Government Grants \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 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 Grants are either presented as grant income or deducted in reporting the related expense they compensate in the Income Statement. \n 1.8 Non-underlying items \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 consolidated Income Statement but highlighted through separate disclosure. The Group's Directors consider that these items should be separately identified within the income statement to enable a proper understanding of the Group's business performance. \n Items which are included within this category include but are not limited to: \n \n \n \n \n \n · \n \n \n \n material restructuring costs, including related professional fees and staff costs, and costs relating to disposal of discontinued business; \n \n \n \n \n \n · \n \n \n \n costs of acquisitions; \n \n \n \n \n \n · \n \n \n \n lease exit costs; and \n \n \n \n \n \n · \n \n \n \n integration costs of acquisitions. \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 Specific adjusting items are included as non-underlying based on the following rationale: \n \n \n \n \n Item \n \n \n \n Distorting due to irregular nature year \non 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 Material restructuring costs \n \n \n X \n \n \n X \n \n \n X \n \n \n \n \n Lease exit costs \n \n \n X \n \n \n X \n \n \n X \n \n \n \n \n Amortisation and impairment of goodwill and acquired intangibles \n \n \n X \n \n \n X \n \n \n X \n \n \n \n \n Impairment of leased right-of-use assets \n \n \n X \n \n \n X \n \n \n X \n \n \n \n \n Net foreign exchange gains and losses \n \n \n \n \n \n \n \n \n \n X \n \n \n X \n \n \n \n \n Tax impact of the above \n \n \n X \n \n \n X \n \n \n X \n \n \n \n \n   \n 1.9 Property, plant and equipment \n Property, plant and equipment is stated at cost, net of depreciation and any provision for impairment. \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 in terms of annual depreciation as follows: \n \n \n \n \n Fixtures, fittings and equipment \n \n \n 12.5% to 33.3% \n \n \n Straight line \n \n \n \n \n Leasehold improvements \n \n \n Over the period of the lease term \n \n \n 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 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 1.10 Goodwill \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 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 1.11 Intangible assets \n Customer relationships \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 Trade names and trademarks \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 Software and software licences \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 Costs incurred for the development of software code that enhances or modifies, or creates additional capability to existing on premise systems and meets the definition of and recognition criteria for an intangible asset are recognised as intangible software assets and depreciated over a useful life of between two and ten years. \n Implementation costs for cloud-based software under Software-as-a-Service (SaaS) arrangements \n SaaS arrangements are service contracts providing the Group with the right to access the cloud provider's application software over the contract period. In most cases, this will not meet the definition of an intangible asset under IAS 38. The following outlines the accounting treatment of implementation costs incurred in relation to SaaS arrangements: \n Implementation costs relating to cloud-based software under SaaS arrangements are assessed as they are incurred. These would include implementation support, consultancy, configuration costs, customisation costs and testing services. If the services are provided by the cloud supplier or a third party and are considered to be distinct from the access to the software, then they are either recognised as an intangible asset under IAS 38 if they meet the relevant capitalisation criteria or, more likely, they are expensed to the income statement as incurred. If the implementation services are provided by the cloud provider but are not considered to be distinct from access to the software, which generally is the case for customisation costs for cloud-based software, then they are recognised as an expense over the period of the service contract, resulting in a prepayment asset if the services are paid for in advance. \n Internally generated intangible assets \n Internal development costs that are directly attributable to the design and testing of identifiable and unique non-cloud based software products are capitalised as part of internally generated software and include employee costs and professional fees attributable to the development of the asset. Other internal expenditure that does not meet these criteria is recognised as an expense to profit or loss as incurred. Software development internal costs recognised as assets are amortised on a straight-line basis over their estimated useful lives of between two and ten years. \n Expenditure on internally generated brands and other intangible assets is expensed to profit or loss as incurred. \n Other \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 Amortisation of intangible assets and impairment losses are recognised in profit or loss within administrative expenses. \n Intangible assets are tested for impairment either as part of a goodwill-carrying cash-generated unit, or when events arise that indicate an impairment may be triggered. Provision is made against the carrying value of an intangible asset where an impairment is deemed to have occurred. Impairment losses on intangible assets are recognised in the income statement under administrative expenses. \n 1.12 Investments \n Investments in subsidiary undertakings are initially recognised at cost and subsequently carried at cost less accumulated impairment. \n Investments are tested for impairment at the reporting date if events arise that indicate an impairment may be triggered. Provision is made against the carrying value of an investment where an impairment is deemed to have occurred. Impairment losses on investments are recognised in the income statement under administrative expenses. \n 1.13 Disposal of assets \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 1.14 Leases \n The Group has applied IFRS 16 using the modified retrospective approach, effective from 1 August 2019. The comparative information prior to this date has not been restated and continues to be reported under IAS17 and IFRIC 14. \n The Group leases office property, motor vehicles and equipment. Rental contracts range from monthly to six years. \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 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 Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. \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 The Group does not have leases with variable lease payments based on an index or rate. \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 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 Right-of-use assets are measured at cost comprising the following: \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 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 any initial direct costs, and \n \n \n \n \n \n · \n \n \n \n restoration costs. \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 Right-of-use assets no longer utilised by the Group but for which lease liabilities still exist, for example a property exited before the end of the lease term or break clause, are fully impaired with the expense recognised in the income statement. \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 re-assessment and not a modification. Changes to lease cash flows as part of a re-assessment result in a re-measurement of the lease liability using an updated discount rate and a corresponding adjustment to the carrying value of the right-of-use asset. \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 1.15 Taxation \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 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 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 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...

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