REG - Gattaca PLC - Final results for the year ended 31 July 2024
24/10/2024 07:00
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RNS Number : 3855J Gattaca PLC 24 October 2024
24 October 2024
Gattaca plc
("Gattaca" or the "Group")
Final results for the year ended 31 July 2024
"Resilient performance with underlying PBT slightly ahead of market
expectations"
Gattaca plc, the specialist staffing business, announces its audited financial
results for the year ended 31 July 2024.
Financial Highlights
2024 2023
restated(3)
£m £m
Continuing operations
Revenue 389.5 382.1
Net Fee Income (NFI)(1) 40.1 42.2
EBITDA 2.6 5.0
Profit before tax - reported 1.7 4.4
Profit before tax - underlying(2) 2.9 3.7
Profit after tax 0.8 3.4
Losses from discontinued operations after tax (0.6) (2.2)
Group reported profit after tax 0.2 1.2
Basic and diluted earnings per share 0.6p 3.8p
Basic underlying continuing earnings per share 6.0p 8.0p
Ordinary dividend per share 2.5p 2.5p
Special dividend per share 0.0p 2.5p
Net cash 20.7 21.6
· Group NFI of £40.1m, down 5% year on year ("YoY").
o Contract NFI up 3% YoY, with 8% increase in contractors over the last 6
months to 31 July 2024 ("H2").
o Gattaca Projects Statement of Work ("SoW") business achieved 35% YoY NFI
growth.
o The Group's two largest sectors showed positive trends, with Defence up 10%
YoY on a like-for-like basis(4), whilst Infrastructure grew by 14% in H2.
o Permanent NFI down 33% YoY in challenging market.
o Contract vs SoW vs Perm split 74% / 7% / 19% of Group NFI (FY23: 68% / 5% /
27%).
· Group continuing underlying profit before tax of £2.9m (FY23
restated: £3.7m), in a year of NFI decline as a result of margin enhancements
and rebalancing of costs.
· Group net cash of £20.7m as at 31 July 2024 (31 July 2023:
£21.6m).
· Full year dividend of 2.5 pence per share (FY23: 5.0 pence per
share including a special dividend).
Operational Highlights
Continued delivery and emphasis on developing the four identified Strategic
Priorities as the Group's focus remains on achieving sustained growth:
External Focus
· Built and deployed the new Business Development team as part of
the Group's investment in front-line sales capability and doubled the Energy
sales team with a focus on Renewables, increasing efforts in the core markets
(Infrastructure, Defence, Mobility, Energy and TMT).
· Implemented two new Solutions accounts and 100% success rate in
rebids for Solutions accounts
· Continued emphasis on client and candidate service feedback
surveys, with increased survey responses and ratings of 8.8 and 9.0 (out of
10) respectively for FY24, vs 7.7 and 8.5 in FY23.
Culture
· Winner of two Business Culture awards; Best Transformation and
Leading with Purpose.
· People engagement levels remain solid at 8.1 in FY24 (FY23: 8.1)
and attrition has improved to 31% (FY23: 33%, and FY22: 40%).
Operational Performance
· US-based operations exited.
· 11% growth in average NFI per total headcount and 13% growth in
average NFI per sales head.
· Externally focused improvements in the Group's technology stack
driving an improved candidate and contractor journey.
· Reset of operational leadership structure.
Cost Rebalancing
· Optimisation of the UK property portfolio now completed, with
property footprint reduced by over 60% across two UK locations.
· Restructure of Group Board and Leadership teams resulting in a
more agile, lower cost structure.
· Implementation of a single billing entity arrangement,
consolidating client billing from nine to two entities in FY24.
Outlook
The Board remain mindful of the macro-economic headwinds, which continue to
impact demand and candidate sentiment. It is seeing permanent recruitment
remaining subdued and is continuing its focus on contractor growth, which
takes longer to reflect in NFI. For FY25, it is expected that profitability
will be weighted to the second half of the year and FY25 continuing underlying
PBT will be in line with previous guidance of £3.0m.
Despite the current market conditions, the Board are optimistic about the
future for the Group. The proactive measures that have been taken, including
increased market focus, cost control initiatives and operational streamlining,
have delivered results and positioned Gattaca favourably. The Group is
actively pursuing growth opportunities only in sectors, services, and
geographies where it believes it can be a dominant provider and the strategic
investments will aim to enhance its capability in those markets.
Matthew Wragg, Chief Executive Officer of Gattaca, commented:
"The Group has delivered underlying PBT slightly ahead of expectations in
challenging markets, we have entered FY25 with momentum in our contractor base
and expect the permanent market will remain tough in the next financial year.
We believe that the sectors in which we operate and the STEM skillsets that we
provide have the right long-term fundamentals for success. We are improving as
a business week-on-week and expect to continue to grow market share as we make
further progress next year. I am very excited about the direction we are going
and what that means for all our stakeholders for the years to come."
The following footnotes apply, unless where otherwise indicated, throughout
these Final Results:
1. NFI is equivalent to gross profit, being revenue less direct costs.
2. Continuing underlying results exclude losses before taxation of
discontinued operations (2024: £(0.6)m, 2023 restated: £(2.2)m),
non-underlying items within administrative expenses relating to restructuring
costs (2024: £(0.5)m, 2023 restated: £(0.2)m), gains associated with exiting
properties (2024: £nil, 2023: £0.6m) and other items (2024: £(0.6)m, 2023:
£(0.2)m), amortisation of acquired intangibles (2024: £(0.1)m, 2023:
£(0.1)m), and net foreign exchange (losses)/gains (2024: £(0.1)m loss, 2023
restated: £0.5m gain).
3. 2023 results have been restated for the presentation of
discontinued operations, principally the Group's US based operations.
4. This excludes £1.4m NFI associated with a large permanent
Recruitment Process Outsourcing (RPO) client which we decided to exit in 2023.
The information contained within this announcement is deemed by the Group to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014. Upon the publication of this announcement via a Regulatory
Information Service, this inside information is now considered to be in the
public domain.
For further information, please contact:
Gattaca plc +44 (0) 1489 898989
Matthew Wragg, Chief Executive Officer
Oliver Whittaker, Chief Financial Officer
Panmure Liberum (Nomad and Broker) +44 (0) 20 3100 2000
Richard Lindley Will King
IFC Advisory (Financial PR and IR) +44 (0) 203 934 6630
Tim Metcalfe
Graham Herring
Florence Chandler
Chair's Statement
A simpler, more focused business
I am pleased to report to you for the first time as Gattaca's Chair. Having
been a Non-Executive Director until 2020, it is clear how much progress the
business has made since I was last on the Board. Over recent months I have met
people from across the Group and carefully reflected upon our strategy and
objectives. While there remains much to do, I am optimistic about the Group's
potential.
Strategy is fundamentally about making choices, such as the sectors you want
to serve, and then backing those decisions wholeheartedly. This requires a
deep understanding of how to scale and become the go-to player in your
markets. Great people are essential for competing effectively, supported by
the technology, culture and working environment to flourish. Gattaca is on
this journey, the actions to date show promise.
Being able to respond to unexpected events is a key test of a group's culture
and management. As Matt Wragg discusses in his Chief Executive's Statement, we
tragically lost two of our people in the year, including a long-standing
member of the senior team. The leadership and the Group responded in an
exemplary way in highly emotional circumstances, which is a tribute to the
values that underpin the Group.
Performance and Returns to Shareholders
As with most companies that provide workforce solutions and recruitment
services, the external environment has not been helpful to us over the last 12
months. We were successful in growing market share and increasing our
contractor base, which typically generates around 70% of our NFI each year.
This enabled us to meet our underlying profit expectations for FY24 and
propose a final dividend of 2.5 pence per share. Subject to shareholder
approval, this will be paid on 13 December 2024 to shareholders on the
register at 1 November 2024. Going forward, our objective is to maintain
dividend payouts, targeted to be approximately 50% of profits after tax.
We also returned £0.5m to shareholders through a share buyback programme in
the year, our second in two years. Our strategy prioritises organic growth,
followed by bolt-on acquisitions. If we have any excess funds, we will look at
further returns to shareholders.
The Board
As previously reported, several important changes to the Board took effect
after the AGM on 6 December 2023. Patrick Shanley stepped down after eight
years as Chair, allowing me to take up the role. George Materna, our founder
and still our largest shareholder, retired after nearly 40 years, including 15
years as a Non-Executive Director. His decision reflected his confidence in
the Board and leadership team and the progress with rebuilding the business.
George's retirement meant the Board had fewer non-independent directors and we
therefore decided to further refine the Board's composition, with Ros Haith
also stepping down.
The Board has five members, with me as Independent Non-Executive Chair, two
Independent Non-Executive Directors and two Executive Directors. The
streamlined and lower-cost Board reflects our current position and approach.
Looking Ahead
With much of the transformation plan now complete, the Board's priority is to
see this reflected in our numbers. We have a simpler, more focused Group with
a reduced cost base, which will allow more of the benefits of growth to drop
through to the bottom line. In the absence of improving markets, we have the
opportunity to continue to drive our productivity, grow market share and move
our key performance ratios in the right direction. Leveraging our digital
technology will be central to this. We also recognise the benefits of our ESG
commitments, which can drive the top line through growth in green jobs, help
us attract and retain talented people and further improve our efficiency.
In conclusion, the Group is well placed to outperform its markets and I look
forward to reporting to you on our progress.
Richard Bradford
Independent Non-Executive Chair
Chief Executive's Statement
Highlights
• Delivered underlying profit before tax of £2.9m, as a result of
executing our planned strategic initiatives for FY24
• Maintained target levels for our people engagement score and retention
• Successfully retained all Solutions accounts we rebid for and added
two new Solutions accounts
Excited about the momentum we're building
Gattaca is now in its 40th year and in many respects, we have entered a new
era. This reflects both the Board changes in FY24 and the vast amount of work
we have done to set the business up for success. We now have a great
environment, clear focus on market sectors where we are or can become the
dominant player, and we are hugely excited by our digital capabilities. The
early stages of our rebuild demanded maximum effort for few immediate gains.
However, we are now realising the results of our early efforts. We are
leveraging our digital investments to continually improve the way we work,
delivering returns that far outweigh the effort required.
Since the start of the calendar year, our new Chair has challenged and
validated our strategic focus and our operational targets. With the right plan
in place and an energised and motivated team, we are confident of delivering
our objectives over the coming years.
Performance
Our progress has enabled us to deliver a robust performance in FY24, in the
face of very difficult markets. We outperformed many of our peers, are now
winning back market share, growing contract momentum and delivered underlying
profit before tax of £2.9m (2023 restated: £3.7m), ahead of our
expectations.
Although the number of contractors across the market was flat, our focus
delivered market share gains that grew our contractor base organically for the
first time in eight years. This was our top priority for FY24, so it is
pleasing to have delivered, with the contractor base growing by 8% in the
second half of the financial year and representing 74% of our NFI (2023: 68%).
Our Gattaca Projects business outperformed targets in FY24, growing NFI by 35%
year on year and diversifying into new client offerings and building a trusted
specialist brand. We also successfully retained all major Solutions account
retention tenders we underwent in FY24, a testament to our valued customer
service and deep relationship with those clients over the years.
The permanent market has been hit by the UK economic recession across all
markets, skills and sectors that we serve. The technology sector was hit
earliest and has stayed tough the longest. Our Barclay Meade business, which
provides professional skills for STEM companies, has also been affected. The
slow market has largely been down to candidates lacking confidence to move,
with customer demand to fill roles remaining stronger than our performance
suggests. Crucially, we achieved our profit target for the year without
cutting our sales capacity, so we will be ready to take advantage as soon as
markets turn.
Strategy
We continued to make good progress with all aspects of our strategy in FY24,
as we built positive momentum in the business.
External Focus
Gattaca is a much simpler business than two years ago. We have consciously
focused on fewer sectors and territories and doubled down on STEM skill focus.
Our aim is to be the top player in all our marketplaces, with a multi-service
offering that ranges from supporting customers with a single hire through to
designing and running a complete talent programme or delivering outcome-based
subcontracted services. While organic growth is our first choice, we will
consider bolt-on acquisitions that strengthen our market position and deliver
faster growth.
Our organic growth investments in FY24 included a dedicated business
development team, which helped us achieve our contractor number and is now
building a multi-year pipeline. We have also recruited a seasoned professional
to lead our marketing team. While market conditions meant we controlled our
investment in sales headcount, we have doubled our Energy sales team. We have
focused on renewable energy generation and the opportunity associated with
upgrading the UK transmission and distribution network in the coming years. We
have also invested in our rapidly growing Statement of Work business, Gattaca
Projects.
Client and candidate service feedback has continued to improve, with average
ratings of 8.8 and 9.0 out of ten respectively (2023: 7.7 and 8.5). High
service levels helped us to renew two major accounts that retendered and we
also successfully implemented two new major Solutions accounts.
Culture
Culture is an obsession for us. Our Purpose, Vision, Mission and Values are
well embedded, our engagement levels remain stable at 8.1 (2023: 8.1) and
attrition has improved to 31% (2023: 33%). We were pleased to win two Business
Culture awards in the year, for Best Transformation and Leading with Purpose.
Further delayering the leadership has enabled us to move at even greater speed
and created opportunities for the new generation of leadership that we have
developed through. We have now had a full year of our performance scorecards,
which allow us to reward the right people and manage underperformance. This
links to the continued reduction in people leaving us within 12 months,
through our focus on hiring well and providing an environment where people can
be more successful.
In what has been a very emotional year, the hardest year of my career, our
resilience has been truly tested and the strength of our culture fully felt.
We lost two fantastic cultural characters and key team members this year.
Shanaz Tambe was our first hire in our successful Workforce Solutions support
function in Cape Town. She was an incredible human being, never allowing me to
get in the office before her on my visits, always a gift in hand for my
daughter on my departure and was an incredible team leader for so many. Sadly,
Shanaz lost her long, stoic battle with cancer in March.
Grahame Carter was a key member of my senior leadership team, as well as my
best man and friend. His tragic accident in February was a devasting loss for
the Group and wider industry. The outpouring of love was testament to the
quality of the man. It is devasting that Grahame, our greatest cheerleader,
won't be alongside us as we continue our progressive journey. However, he
would be chuffed in how he continues to be remembered and an inspiration
across the business.
I am sure that his "can do, will do", winning mentality has rubbed off on many
of us across the business and his legacy is woven into the fabric of the
Company and will continue to be a motivation and inspiration to myself, and I
am sure many others.
Personally, I cannot thank the business and our wider network enough for the
support they afforded me and each other during this tough year. I am
incredibly proud of how they have all responded to these very challenging
times.
Operational Performance
Our digital platforms are at the heart of our ongoing operational
improvements. Developments in the year have enhanced contractor onboarding,
increased the stability of our contractor book, improved our customer
platforms and added automations to streamline our processes.
This helped us to grow average NFI per sales head by 13% year on year. Our
sales productivity target for FY24 was £92k per total heads and we achieved
£90k, up 11% on FY23. Continuing to leverage our technology stack, including
more external-facing automations, will support further productivity
improvements.
Towards the end of FY24, we exited our US-based operations, due to persistent
loss-making results. We continue to support our route to market in the US from
our UK-based sales force, primarily in our Energy sector.
Cost Rebalancing
Our work to streamline the business in FY24 included rationalising the UK
payroll and billing entities, completing our review of the UK property
portfolio, simplifying the Group's corporate structure further and slimming
down the Board, all helping to reduce our cost base. Our sales to support
staff mix was 68:32, as we move towards our 80:20 target.
Environmental, Social and Governance
FY24 has seen us continuing to integrate sustainability into the way we work,
day to day. Our approach has now become integrated and authentic to us, as our
business sees the advantages of taking the lead. We have a good understanding
of where we can make the most difference, whether that is our Gender Equity
Programme, inclusive recruitment practices, workplace ED&I and wellbeing
awareness or making progress on our journey to Net Zero. This in turn helps us
to win and retain business, with customers giving us top scores on ESG
criteria and valuing our ED&I insights, and being a catalyst for change in
the sectors we serve. Our digital investments also enhance our internal
controls, underpinning our strong governance.
Outlook
We have entered FY25 with momentum in our contractor base and while we expect
the permanent market will remain tough in the next financial year, we are
confident that we will capitalise when the market does turn. We are improving
as a business week on week and we expect to continue to take market share as
we make further progress next year. I am very excited about the direction we
are now going and what that means for all our stakeholders for the years to
come.
Matt Wragg
Chief Executive Officer
Chief Financial Officer's Report
Highlights
• Delivered continuing underlying profit before tax ahead of market
expectation
• Net cash of £20.7m (2023: £21.6m)
• Ordinary dividend of 2.5 pence per share proposed
• Share buyback of £0.5m completed in the year
• Improved operational productivity, average NFI per head grew +11% year
on year
Financial Performance
On a continuing basis, revenue of £389.5m (2023 restated: £382.1m) generated
NFI of £40.1m (2023 restated: £42.2m). We achieved contract NFI of £29.6m
(2023 restated: £28.7m) at a margin of 8.0% (2023 restated: 7.9%), permanent
recruitment fees and other NFI of £7.7m (2023: £11.4m) and Statement of Work
(SoW) gross profit of £2.8m (2023: £2.1m). SoW services are all delivered
though contract labour provision on long term projects where the Group takes
responsibility for assignment deliverables. In the year contract NFI
represented 74% (2023: 68%) of Group NFI as we consciously shifted our focus
to contract.
The greatest impact of the market conditions on NFI was seen in permanent
recruitment, which was down -33% on the prior year, partly as a result of us
exiting a large RPO client in 2023, and also driven by continuing
industry-wide client and candidate challenges. We strived to control our
administration costs and achieved a year on year saving of £1.0m,
particularly pleasing in an inflationary UK environment. Control of staff
costs was a key driver of this as headcount was reduced in the year.
Underlying profit before tax from continuing operations was £2.9m (2023
restated: £3.7m). Statutory profit after tax for the total Group was £0.2m
(2023: £1.2m).
Net cash at 31 July 2024 was £20.7m (31 July 2023: £21.6m), a decrease of
£0.9m in net cash year on year after dividends of £1.6m and share buybacks
and treasury share purchases of £0.8m. The optimisation of the working
capital remains a key focus and throughout the year the Group maintained its
improved DSO seen last year through strong collection performance and
renegotiated trading terms.
FY23 results have been restated for the presentation of discontinued
operations as explained in Note 10 of the consolidated Financial Statements.
Discontinued operations and non-underlying costs
During the year the Group withdrew from its operations in the USA. Despite
investment in the US business since our acquisition of Networkers
International in 2015, US trading losses became unsustainable due to market
conditions, particularly in permanent recruitment, and we remained a small
player in an extremely large and competitive market.
The loss from discontinued operations includes trading losses of £0.7m,
£0.3m of non-underlying restructuring costs relating to the closure of US
operations and £0.4m of impairments.
FY23 results have been restated throughout the Annual Report and Accounts to
present results from the US operation comparably, in accordance with IFRS.
Non-underlying costs from continuing business are presented in line with the
Group's accounting policy.
Reconciliation of profit before tax for the total Group
The table below reconciles continuing underlying profit before tax to reported
statutory profit before tax for the total Group:
£'000 Profit before tax
Continuing underlying profit before tax 2,918
Restructuring costs in continuing business(1) (467)
Cost relating to ongoing closure of group undertakings(2) (609)
Cost associated with exiting properties (16)
Reversal of impairment of right-of-use leased assets 42
Operating loss relating to discontinued operations (725)
Closure of US operations (278)
Impairment of cash and cash equivalents(3) (408)
Amortisation of acquired intangibles (69)
Net foreign exchange gains 678
Profit before tax for the total Group 1,066
1 Restructuring costs arose primarily from employee rationalisation
programmes in the UK.
2 Costs associated with the ongoing closure of subsidiaries whose
operations were discontinued in prior periods, primarily Mexico, Malaysia,
Singapore, Qatar and Russia, are classified as continuing operations in the
current year and are reported within non-underlying items in line with the
Group's accounting policy. We will continue to incur costs associated with
discontinued legacy operations as the legal wind down of those entities is
concluded.
3 Cash on deposit in Russia was impaired due to the increased credit risk
associated with the financial and regulatory sanctions imposed on and by
Russia.
Taxation
The Group's reported effective tax rate was 82.6% (2023: 45.0%), driven by
overseas losses not recognised as deferred tax assets, and non-deductible
expenses arising from the corporate restructuring fees and streamlining of the
Group. Further detail is set out in Note 9 of the Financial Statements. The
continuing underlying effective tax rate was 35.2% (2023 restated: 29.9%).
Earnings per share
Basic earnings per share was 0.6 pence (2023: 3.8 pence), and on a fully
diluted basis was 0.6 pence (2023: 3.8 pence). Continuing underlying basic
earnings per share was 6.0 pence (2023 restated: 8.0 pence).
Dividends and share buyback
Our long-standing objective has been to achieve a through-the-cycle dividend
payout of approximately 50% of profits after tax. The Board has proposed to
pay a final ordinary dividend of 2.5 pence per share (2023: 2.5 pence). The
final dividend, which amounts to approximately £0.8m, will be subject to
shareholder approval at the 2024 Annual General Meeting. It will be paid on 13
December 2024 to shareholders on the register on 1 November 2024.
On 21 August 2023 the Board announced a share buyback which concluded on 29
November 2023 and returned £0.5m to shareholders.
Given the Group's sustained liquidity and recognising shareholder returns in
the previous year, the Board remain committed to returning capital to
shareholders.
Net assets and shares in issue at 31 July 2024
The Group had net assets of £28.3m (2023: £30.8m) and had 31.5m (2023:
31.9m) fully paid ordinary shares in issue.
Group net cash at 31 July 2024 was £20.7m (31 July 2023: £21.6m), a decrease
of £0.9m in a year where the Group returned cash to shareholders of £1.6m
via dividends, £0.5m via share buyback and used £0.3m for the purchase of
shares for its Employee Benefit Trusts.
We saw a strong performance in the Group's days sales outstanding (DSO) at 31
July 2024 of 43.0 days, consistent with the prior year (31 July 2023: 43.2
days). This was driven by maintaining high levels of cash collection and
improved payment terms mix. Trade receivables and accrued income balances, net
of expected credit loss allowances, have increased to £51.1m (31 July 2023:
£47.2m) due to the growth of our contractor book during FY24.
Net bank interest received was £0.7m (2023: £0.3m) as a result of the
positive net cash balance maintained throughout the year.
As at 31 July 2024, the Group had an invoice financing working capital
facility of £50m. 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.
At 31 July 2024, utilisation of the recourse facility was nil and utilisation
of the non-recourse facility was £2.3m, with unutilised facility headroom
after restrictions of £29.9m.
Parent Company investments
Gattaca plc, the Company, held investments in subsidiary undertakings of
£31.7m at 31 July 2024 (2023: £38.6m), following a £7.1m impairment charge
recorded in the Parent Company as a result of the year-end impairment review.
The valuation of the investment, calculated based upon a value-in-use
discounted cash flow, is sensitive to changes in key assumptions, largely due
to current economic headwinds. Accounting Standards permit for a subsequent
reversal of the impairment in the future if the value of the underlying asset
increases.
Critical accounting policies
The statement of significant accounting policies is set out in Note 1 to the
Financial Statements.
Group financial risk management
The Board reviews and agrees policies for managing financial risks. The
Group's finance function is responsible for managing investment and funding
requirements including banking and cash flow monitoring. It seeks to ensure
that adequate liquidity exists at all times, to meet its cash requirements.
The Group's financial instruments comprise cash, borrowings 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.
Credit risk
The Group seeks to trade only with recognised, creditworthy third parties.
During the period we reviewed our expected credit loss allowance for trade
receivables and accrued income and removed industry specific provisions which
we have held since 2020 against certain industries we considered high risk. As
a result of the changes to loss allowance rates, and combined with the
increase in trade receivables and accrued income, our loss allowance decreased
by £0.5m to £1.6m.
There are no significant concentrations of credit risk within the Group, with
no single debtor accounting for more than 9% (2023: 8%) of total receivables
balances at 31 July 2024.
Foreign currency risk
The Group generates 2% 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.
Outlook
The Group's performance during FY24 was resilient in the face of challenging
market conditions. It was pleasing to see the contractor base in growth, and
this sets the Group up to grow NFI into 2025. We will continue to invest where
we see opportunity for growth whilst maintaining a keen focus on our cost base
and operational efficiency.
Oliver Whittaker
Chief Financial Officer
Consolidated Income Statement
For the year ended 31 July 2024
Note 2024 Restated(1)
£'000 2023
£'000
Continuing operations
Revenue 2 389,533 382,095
Cost of sales (349,454) (339,875)
Gross profit 2 40,079 42,220
Administrative expenses(2) (38,999) (38,703)
Operating profit from continuing operations 4 1,080 3,517
Finance income 6 784 966
Finance cost 7 (180) (90)
Profit before taxation 1,684 4,393
Taxation 9 (916) (1,004)
Profit for the year after taxation from continuing operations 768 3,389
Discontinued operations
Loss for the year from discontinued operations (attributable to equity holders 10 (582) (2,160)
of the Company)
Profit for the year 186 1,229
Profit for the year is 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.
Total earnings per ordinary share Note 2024 2023
pence pence
Basic earnings per share 11 0.6 3.8
Diluted earnings per share 11 0.6 3.8
Earnings per share from continuing operations Note 2024 Restated(1)
pence 2023
pence
Basic earnings per share 11 2.4 10.5
Diluted earnings per share 11 2.4 10.5
1 FY23 results have been restated for the presentation of discontinued
operations as explained in Note 10.
2 Administrative expenses from continuing operations includes net
impairment releases on trade receivables and accrued income of £320,000
(2023: £334,000).
Reconciliation to adjusted profit measure
Underlying profit is the Group's key adjusted profit measure; profit from
continuing operations is adjusted to exclude non-underlying income and
expenditure as defined in the Group's accounting policy, amortisation and
impairment of goodwill and acquired intangibles, impairment of leased
right-of-use assets and net foreign exchange gains or losses.
Note 2024 Restated(1)
£'000 2023
£'000
Operating profit from continuing operations 1,080 3,517
Add:
Non-underlying items included within administrative expenses 4 1,092 (245)
Reversal of impairment of leased right-of-use assets 4 (42) -
Amortisation of acquired intangible assets 4 69 68
Depreciation of property, plant and equipment, leased right-of-use assets and 2 1,533 1,422
amortisation of software and software licences
Underlying EBITDA 3,732 4,762
Less:
Depreciation of property, plant and equipment, leased right-of-use assets and 2 (1,533) (1,422)
amortisation of software and software licences
Net finance income excluding foreign exchange gains and losses 2 719 329
Underlying profit before taxation from continuing operations 2,918 3,669
Underlying taxation (1,026) (1,096)
Underlying profit after taxation from continuing operations 1,892 2,573
Earnings per share from continuing underlying operations Note 2024 Restated(1)
pence 2023
pence
Basic earnings per share 11 6.0 8.0
Diluted earnings per share 11 5.9 7.9
1 FY23 results have been restated for the presentation of discontinued
operations as explained in Note 10.
Consolidated Statement of Comprehensive Income
For the year ended 31 July 2024
2024 2023
£'000 £'000
Profit for the year 186 1,229
Other comprehensive income/(loss)
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations 174 (243)
Reclassification adjustment on disposal of foreign operations (Note 10) (713) -
Other comprehensive loss for the year (539) (243)
Total comprehensive (loss)/income for the year attributable to equity holders (353) 986
of the parent
2024 Restated(1) 2023
£'000 £'000
Attributable to:
Continuing operations 925 3,269
Discontinued operations (1,278) (2,283)
(353) 986
1 FY23 results have been restated for the presentation of discontinued
operations as explained in Note 10.
Consolidated and Company Statements of Financial Position
As at 31 July 2024
Group Company
Note 31 July 2024 31 July 2023 31 July 2024 31 July 2023
£'000 £'000 £'000 £'000
Non-current assets
Goodwill(1) 12 1,712 1,712 - -
Intangible assets(1) 13 120 250 - 8
Property, plant and equipment 14 702 1,024 - -
Right-of-use assets 22 2,128 1,873 - -
Investments 15 - - 31,668 38,550
Deferred tax assets 16 342 440 - -
Total non-current assets 5,004 5,299 31,668 38,558
Current assets
Trade and other receivables 17 53,016 52,168 523 1,357
Corporation tax receivables 379 534 322 145
Cash and cash equivalents 22,817 23,375 38 8
Total current assets 76,212 76,077 883 1,510
Total assets 81,216 81,376 32,551 40,068
Non-current liabilities
Deferred tax liabilities 16 (12) (101) - -
Provisions 18 (396) (366) - -
Lease liabilities 22 (1,217) (964) - -
Total non-current liabilities (1,625) (1,431) - -
Current liabilities
Trade and other payables 19 (49,323) (46,895) - (2,742)
Provisions 18 (425) (1,046) - -
Current tax liabilities (686) (330) - -
Lease liabilities 22 (853) (857) - -
Total current liabilities (51,287) (49,128) - (2,742)
Total liabilities (52,912) (50,559) - (2,742)
Net assets 28,304 30,817 32,551 37,326
Equity
Share capital 23 315 319 315 319
Share premium 8,706 8,706 8,706 8,706
Capital redemption reserve 8 4 8 4
Merger reserve 224 224 - -
Share-based payment reserve 265 334 265 334
Translation reserve 157 696 - -
Treasury shares reserve 23 (601) (331) (442) (244)
Retained earnings 19,230 20,865 23,699 28,207
Total equity 28,304 30,817 32,551 37,326
1 Goodwill and intangible assets for FY23 have been adjusted to report
these separately, where they were previously presented combined.
The amount of loss generated by the Parent Company was £2,641,000 for the
year ended 31 July 2024 (2023:
£588,000).
The accompanying notes form part of these Financial Statements.
The Financial Statements were approved by the Board of Directors on 23 October
2024 and signed on its behalf
by
Oliver Whittaker
Chief Financial Officer
Consolidated and Company Statements of Changes in Equity
For the year ended 31 July 2024
A) Consolidated
Share Share Capital Merger Share-based Translation Treasury Retained Total
capital premium redemption reserve payment reserve shares earnings £'000
£'000 £'000 reserve £'000 reserve £'000 reserve £'000
£'000 £'000 £'000
At 1 August 2022 323 8,706 - 224 350 1,137 (147) 19,860 30,453
Profit for the year - - - - - - - 1,229 1,229
Other comprehensive loss - - - - - (243) - - (243)
Total comprehensive income - - - - - (243) - 1,229 986
Share-based payments credit (Note 23) - - - - (64) - - - (64)
Share-based payments reserves transfer - - - - 48 - - (48) -
Deferred tax movement in respect of share options - - - - - - - 126 126
Purchase of treasury shares - - - - - - (184) - (184)
Purchase and cancellation of own shares(1) (Note 23) (4) - 4 - - - - (500) (500)
Translation reserve movements on disposal of foreign operations - - - - - (198) - 198 -
Transactions with owners (4) - 4 - (16) (198) (184) (224) (622)
At 31 July 2023 319 8,706 4 224 334 696 (331) 20,865 30,817
At 1 August 2023 319 8,706 4 224 334 696 (331) 20,865 30,817
Profit for the year - - - - - - - 186 186
Other comprehensive loss - - - - - (539) - - (539)
Total comprehensive loss - - - - - (539) - 186 (353)
Share-based payments charge (Note 23) - - - - 201 - - - 201
Share-based payments reserves transfer - - - - (270) - - 201 (69)
Deferred tax movement in respect of share options - - - - - - - 46 46
Treasury shares issued to employees on exercise of LTIP share options (Note - - - - - - 69 - 69
23)
Purchase of treasury shares - - - - - - (339) - (339)
Purchase and cancellation of own shares(1) (Note 23) (4) - 4 - - - - (502) (502)
Dividends paid in the year (Note 29) - - - - - - - (1,566) (1,566)
Transactions with owners (4) - 4 - (69) - (270) (1,821) (2,160)
At 31 July 2024 315 8,706 8 224 265 157 (601) 19,230 28,304
1 Gattaca plc undertook a public share buyback in both the current and
prior year, and a capital redemption reserve was created as a result of the
subsequent cancellation of these shares, as discussed in Note 23.
B) Company
Share Share premium Capital redemption reserve Share-based payment reserve Treasury shares reserve Retained earnings Total
capital £'000 £'000 £'000 £'000 £'000 £'000
£'000
At 1 August 2022 323 8,706 - 350 (107) 29,343 38,615
Loss and total comprehensive loss for the year (Note 8) - - - - - (588) (588)
Share-based payments credit (Note 23) - - - (64) - - (64)
Share-based payments reserves transfer - - - 48 - (48) -
Purchase of treasury shares - - - - (137) - (137)
Purchase and cancellation of own shares(1) (Note 23) (4) - 4 - - (500) (500)
Transactions with owners (4) - 4 (16) (137) (548) (701)
At 31 July 2023 319 8,706 4 334 (244) 28,207 37,326
At 1 August 2023 319 8,706 4 334 (244) 28,207 37,326
Loss and total comprehensive loss for the year (Note 8) - - - - - (2,641) (2,641)
Share-based payments charge (Note 23) - - - 201 - - 201
Share-based payments reserves transfer - - - (270) - 201 (69)
Treasury shares issued to employees on exercise of LTIP share options (Note - - - - 69 - 69
23)
Purchase of treasury shares - - - - (267) - (267)
Purchase and cancellation of own shares(1) (Note 23) (4) - 4 - - (502) (502)
Dividends paid in the year (Note 29) - - - - - (1,566) (1,566)
Transactions with owners (4) - 4 (69) (198) (1,867) (2,134)
At 31 July 2024 315 8,706 8 265 (442) 23,699 32,551
1 Gattaca plc undertook a public share buyback in both the current and
prior year, and a capital redemption reserve was created as a result of the
subsequent cancellation of these shares, as discussed in Note 23.
Consolidated Cash Flow Statement
For the year ended 31 July 2024
Group
Note 2024 2023
£'000 £'000
Cash flows from operating activities
Profit for the year 186 1,229
Adjustments for:
Depreciation of property, plant and equipment and amortisation of intangible 4 588 591
assets, software and software licences
Depreciation of leased right-of-use assets 4 1,030 952
Loss on disposal of property, plant and equipment 4 24 17
Loss on disposal of software and software licences 4 - 8
Reversal of impairment of right-of-use assets 4 (42) -
Impairment of cash and cash equivalents 4 408 -
Profit on reassessment of lease term 22 - (672)
Profit on reassessment of dilapidation asset 22 - (58)
Interest income 6 (784) (328)
Interest costs 7 65 87
Taxation expense recognised in the Income Statement 9 880 1,007
(Increase)/decrease in trade and other receivables (940) 6,243
Increase in trade and other payables 2,428 476
Decrease in provisions 18 (616) (285)
Share-based payment charge/(credit) 23 201 (64)
Foreign exchange (gains)/losses (420) 37
Cash generated from operations 3,008 9,240
Interest paid 7 (2) (19)
Interest paid on lease liabilities 7 (63) (68)
Interest received 6 784 328
Income taxes received 789 61
Income taxes paid (1,117) -
Cash generated from operating activities 3,399 9,542
Cash flows from investing activities
Purchase of property, plant and equipment 14 (162) (178)
Sublease rent receipts 131 130
Cash used in investing activities (31) (48)
Cash flows from financing activities
Lease liability principal repayments (1,084) (1,200)
Purchase of treasury shares (339) (184)
Purchase of own shares for cancellation (502) (500)
Working capital facility repaid - (1,801)
Dividends paid (1,566) -
Cash used in financing activities (3,491) (3,685)
Non-cash movements
Effects of exchange rates on cash and cash equivalents (27) (202)
Impairment of cash and cash equivalents 4 (408) -
Total non-cash movements 27 (435) (202)
(Decrease)/increase in cash and cash equivalents (558) 5,607
Cash and cash equivalents at the beginning of the year 23,375 17,768
Cash and cash equivalents at end of year(1) 27 22,817 23,375
1 Cash and cash equivalents as at 31 July 2024 and 31 July 2023
includes restricted cash balances, for further details please refer to Note
27.
Net decrease in cash and cash equivalents from discontinued operations was
£849,000 (2023 restated:
£743,000).
Notes Forming Part of the Financial Statements
1 The Group and Company Material Accounting Policies
1.1 The Business of the Group
Gattaca plc (the Company) and its subsidiaries (together the Group) is a human
capital resources business providing contract and permanent recruitment
services in the private and public sectors across the UK, Europe and North
America regions. The Company is a public limited company, which is listed on
the Alternative Investment Market (AIM) and is incorporated and domiciled in
England, United Kingdom. The Company's address is 1450 Parkway, Solent
Business Park, Whiteley, Fareham, Hampshire, PO15 7AF. The registration number
is 04426322.
1.2 Basis of preparation of the Financial Statements
The consolidated 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. The Company's Financial Statements have been prepared
in accordance with Financial Reporting Standard 101 'Reduced Disclosure
Framework' and the Companies Act 2006.
As permitted by Section 408 of the Companies Act 2006, the Company's Income
Statement has not been presented. The Company, as permitted by FRS 101, has
taken advantage of the disclosure exemptions available under that standard in
relation to:
• Cash Flow Statement and related notes;
• Financial instruments;
• Disclosures in respect of transactions with wholly owned
subsidiaries;
• The effects of new but not yet effective IFRSs;
• Disclosures in respect of the compensation of Key Management
Personnel; and
• Disclosures of transactions with a management entity that provides
key management personnel services to the Company.
As the consolidated Financial Statements of Gattaca plc include the equivalent
disclosures, the Company has also taken the exemptions under FRS 101 available
in respect of the following disclosures:
• IFRS 2 Share-Based Payments in respect of group settled share-based
payments; and
• Certain disclosures required by IAS 36 Impairment of assets in
respect of the impairment of goodwill and indefinite life intangible assets.
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 is set out below.
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 1.22.
1.3 Going concern
The Group's business activities, together with the factors likely to affect
its future development, performance and position are set out in the Strategic
Report. The financial position of the Group, its cash flows and liquidity are
described in the Chief Financial Officer's Report.
At the year-end the Group reported a strong balance sheet with statutory net
cash of £20.7m (2023: £21.6m). The Group ensures the availability of working
capital through close management of customer payment terms. There is
sufficient headroom on our working capital facilities to absorb a level of
customer payment term extensions, but we would also manage supply to the
customer if payment within an appropriate period was not being made. Whilst
there is no evidence that it would occur, a significant deterioration in
average payment terms has the potential to impact the Group's liquidity.
The Directors have prepared detailed cash flow forecasts, covering a period of
at least 12 months from the date of approval of these Financial Statements.
The forecasts are prepared with appropriate regard for the current
macroeconomic headwinds and particular circumstances in which the Group
operates, including demand and candidate sentiment across the UK recruitment
sector and the economic outlook for STEM markets in the UK in which our
customers operate. The forecasts assume sustained growth in NFI and cost
rebalancing aligned with the Group's strategic priorities.
We continue to see permanent recruitment remaining subdued, in line with our
peers, and our focus remains on contractor growth, which takes longer to
reflect in NFI. As such we expect profitability will be weighted to second
half of the year. Strong contract pipelines in Defence and Mobility sectors,
combined with increasing customer demand for Statement of Work contracts,
underpin the Group's Net Fee Income expectations for FY25 and beyond.
The output of the forecasting process has been used to perform sensitivity
analysis on the Group's cash flows to the potential effects should principal
risks actually occur. The sensitivity analysis modelled a severe but plausible
scenario including:
• Reduced NFI growth of 2% per annum;
• Increased operating costs by 1% per annum; and
• Customer payment terms extended by five days.
The effects of commercial mitigating actions that the Directors would
implement in response to adverse changes in the Group's profitability and
liquidity were excluded.
Given the nature of the temporary and contract recruitment business,
significant working capital inflows typically arise in periods of severe
downturn, thus protecting short-term liquidity, as was the case during the
COVID-19 pandemic. The sensitised forecasts illustrate that the Group's
liquidity is resilient to adverse changes in profitability and customer
payment terms. The sensitised forecasts show a 60% reduction in net cash at 31
July 2025, to £6.6m.
A key assumption in preparing the cash flow forecasts is the continued
availability of Group's invoice financing facility throughout the forecast
period. The unutilised facility headroom at 31 July 2024 was £29.9m (2023:
£27.6m). The current £50m facility has no contractual renewal date; the
Directors remain confident that the facility will remain available.
After making appropriate enquiries and considering key judgements and
assumptions 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.
1.4 New standards and interpretations
The following are new standards or improvements to existing standards that are
mandatory for the first time in the Group's accounting period beginning on 1
August 2023 and no new standards have been early adopted. The Group's July
2024 consolidated Financial Statements have adopted these amendments to IFRS:
• IFRS 17, 'Insurance contracts' as amended in December 2021
• Amendments to IAS 1 and IFRS Practice Statement 2 - Disclosure of
Accounting Policies
• Amendments to IAS 8 - Definition of Accounting Estimates
• Amendments to IAS 12 - Deferred Tax relating to Assets and
Liabilities arising from a Single Transaction
• Amendments to IAS 12 - International Tax Reform - Pillar Two Model
Rules
There have been no alterations made to the accounting policies as a result of
considering all of the amendments above that became effective in the year, as
these were either not material or were not relevant to the Group or Company.
New standards in issue, not yet adopted
The Group has not yet adopted certain new standards, amendments and
interpretations to existing standards, which have been published but which are
effective for the Group accounting periods beginning on or after 1 August
2024. These new pronouncements are listed as follows:
• Amendments to IAS 1 - Classification of Liabilities as Current or
Non-current (effective 1 January 2024)
• Amendments to IAS 1 - Non-current Liabilities with Covenants
(effective 1 January 2024)
• Amendments to IAS 7 and IFRS 7 - Supplier Finance (effective 1
January 2024)
• Amendments to IFRS 16 - Lease Liability in a Sale and Leaseback
(effective 1 January 2024)
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.
1.5 Basis of consolidation
Subsidiaries are 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 consolidated
from the date on which control is transferred to the Group. They are
deconsolidated from the date on which that control ceases. The results of all
subsidiaries, including those with non-coterminous reporting dates, are
consolidated in line with the Group's financial reporting period.
The Group applies the acquisition method to account for business combinations.
The consideration transferred for the acquisition of a subsidiary is the fair
value of the assets transferred, the liabilities incurred to the former owners
of the acquiree, and the equity interests issued by the Group. The
consideration transferred includes the fair value of any asset or liability
resulting from a contingent consideration arrangements. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair value at the acquisition
date. The Group recognises any non-controlling interest in the acquiree on an
acquisition-by-acquisition basis, either at fair value or at the
non-controlling interest's proportionate share of the recognised amounts of
the acquiree's identifiable net assets. Acquisition-related costs are expensed
as incurred.
Intercompany transactions, balances and unrealised gains and losses on
transactions between Group companies are eliminated. Where necessary, amounts
reported by subsidiaries have been adjusted to conform to the Group's
accounting policies.
1.6 Revenue
Revenue is measured by reference to the fair value of consideration received
or receivable by the Group for services provided, excluding VAT and trade
discounts.
The Group is the principal for both its temporary and permanent placements and
as such presents its revenue gross, being the whole amount collected from its
customers, and then presents Net Fee Income as gross profit.
Contractual rebate arrangements in respect of volume and value of sales are
variable consideration reducing revenue and are estimated at the most likely
amount of consideration based on forecasts of customer activity informed by
historical experience.
Temporary placements
For FY24, the Group has changed its accounting policy in connection with the
timing of revenue recognition for temporary placements. Revenue reported in
the Consolidated Income Statement and contract assets and liabilities reported
in the Consolidated Statement of Financial Position are unaffected by this
change, for more details refer to Note 3.
Revenue from temporary (contract) placements, which represents amounts billed
for the services of temporary workers including the salary costs of those
workers, is recognised over time in line with when the temporary worker
provides services, typically over a weekly or monthly timesheet period.
Customers are invoiced in arrears following receipt of an approved timesheet;
timing differences between the provision of services and invoicing are
recognised as accrued income. Customer credit terms are between 30 and 60
days.
The Group has assessed its use of third party providers to supply temporary
workers under the agent or principal criteria and has determined that it is
the principal because it retains primary responsibility for provision of the
services.
Permanent placements
Revenue from permanent placements on non-retained assignments, which is
typically based on a percentage of the candidate's remuneration package, is
recognised at a point in time when the candidate commences employment. For
retained assignments, revenue is recognised in line with completion of defined
stages of work. Customers are invoiced in arrears following commencement of
the candidate's employment; timing differences between the provision of
services and invoicing are recognised as accrued income. Customer credit terms
are between 30 and 60 days.
Some permanent placements are subject to a claw-back period whereby if a
candidate leaves within a defined 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.
Revenue cut-off: temporary and permanent placements
Revenue is recognised in the financial year to which it relates, to the extent
that the Group has, within two months of the year-end date, received
confirmation that the contractual performance obligation has been satisfied;
either through receipt of a client-approved timesheet or confirmation of
commencement of employment (for permanent placements).
Other
Other revenue includes the provision of engineering management services
through Statement of Work packages and other fees.
Revenue from the provision of engineering management services, where the
customer benefits from the services provided as the Group performs those
services, is recognised over time. Progress against long-term contractual
performance obligations is estimated using an input method, by reference to
the proportion of costs incurred to date compared with total expected costs
for the contract. This is considered to best reflect the benefit the customer
receives from the Group's performance.
Other fees mainly relate to the management of our recruitment process
outsourcing services. Revenue from other fees is recognised either at a point
in time if we have agreed a fee per placement or over time if we have agreed a
fee for managing the recruitment process during
a certain period.
1.7 Non-underlying items
Non-underlying items are income or expenditure that are considered unusual or
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 Directors consider that these
items should be separately identified within the Income Statement to enable a
proper understanding of the Group's business performance.
Items which are included within this category include but are not limited to:
• material restructuring costs, including related professional fees
and staff costs, and costs relating to disposal and closure of discontinued
business;
• costs of acquisitions;
• lease exit costs; and
• integration costs following acquisitions.
In addition, the Group also excludes from underlying results amortisation of
acquired intangibles, impairments (excluding expected credit loss allowances
for trade receivables and accrued income) and net foreign exchange gains or
losses.
Specific adjusting items are included as non-underlying based on the following
rationale:
Item Distorting due to irregular nature year on year Distorting due to fluctuating nature (size) Does not reflect in-year operational performance of continuing business
Material restructuring costs x x x
Lease exit costs x x x
Amortisation of acquired intangibles x
Impairment of goodwill and acquired intangibles x x x
Impairment of right-of-use leased assets x x x
Impairment of cash and cash equivalents x x x
Net foreign exchange gains and losses x x
Tax impact of the above x x x
1.8 Property, plant and equipment
Property, plant and equipment is stated at cost, net of depreciation and any
provision for impairment.
Depreciation is calculated so as to write off the cost of an asset, less its
estimated residual value, over the useful economic life of that asset in terms
of annual depreciation as follows:
Fixtures, fittings and equipment 12.5% to 33.3% Straight-line
Leasehold improvements Over the period of the lease term Straight-line
The assets' residual values and useful lives are reviewed, and adjusted if
appropriate, at the end of each reporting period.
An asset's carrying amount is written down immediately to its recoverable
amount if the asset's carrying amount is greater than its estimated
recoverable amount.
1.9 Goodwill
Goodwill arising on business combinations 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
impairments.
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 (CGUs), being the lowest level at which
goodwill is monitored. The carrying value of the assets of the CGU, including
goodwill, intangible and tangible assets, leased right-of-use 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 a business are reported net of the carrying amount of any
corresponding goodwill.
1.10 Intangible assets
Customer relationships
Customer relationships comprise principally of existing customer relationships
which may give rise to future orders, 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. The remaining amortisation period of customer
relationships is one year.
Trade names and trademarks
Trade names and trademarks, acquired as part of a businesses or separately
purchased, are initially recognised at fair value at the acquisition date and
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. Trade names and trademarks have
been fully amortised in the current year.
Software and software licences
Acquired computer software licences are capitalised on the basis of the costs
incurred to acquire and bring into use the specific software. Software and
software licences are determined to have a useful life of between two and five
years and are amortised on a straight-line basis. Subsequent licence renewals
are expensed to profit or loss as incurred.
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 amortised over
a useful life of between two and ten years. The remaining amortisation period
of software and software licences is between one and eight years.
Software-as-a-Service arrangements
Software-as-a-Service (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, these will not meet the definition of an
intangible asset under IAS 38. Implementation costs relating to cloud-based
software under SaaS arrangements are either recognised as an intangible asset
under IAS 38 if they meet the relevant capitalisation criteria or, more
likely, are expensed to the Income Statement; as incurred, where
implementation services are distinct from access to the software, or otherwise
recognised as an expense over the period of the service contract.
Other
Other intangible assets acquired by the Group have a finite useful life
between five and ten years and are measured at cost less accumulated
amortisation and impairment losses. Other intangibles have been fully
amortised.
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. An impairment loss is recognised for the amount
by which the carrying value of intangible assets exceeds the recoverable
amount. The recoverable amount is the higher of the assets' fair value less
costs of disposal and value in use.
Amortisation of intangible assets and impairment losses are recognised in the
Income Statement within administrative expenses.
1.11 Investments
Investments in subsidiary undertakings are initially recognised at cost and
subsequently carried at cost less accumulated impairment.
Investments are tested for impairment at the reporting date if events arise
that indicate an impairment may be triggered. An impairment loss is recognised
for the amount by which the carrying amount of the investment exceeds its
recoverable amount. The recoverable amount
is the higher of fair value less costs of disposal and value in use.
Impairment losses on investments are recognised in the Income Statement in
administrative expenses.
1.12 Leases
The Group leases office property, motor vehicles and equipment. Rental
contracts typically range from monthly to five years.
At inception of a contract, the Group assesses whether a contract is, or
contains, a lease. A contract is, or contains, a lease if the contract conveys
the right to control the use of an identified asset for a period of time in
exchange for consideration.
Assets and liabilities arising from a lease are initially measured at present
value at the lease commencement date. Lease liabilities include the net
present value of the fixed payments less any lease incentives receivable,
variable lease payments that are based on an index or a rate, amounts expected
to be payable by the Group under residual value guarantees, the exercise price
of any purchase option if the Group is reasonably certain to exercise that
option, and payments of penalties for terminating the lease if that option is
expected to be taken. Lease payments to be made under reasonably certain
extension options are also included in the measurement of the liability.
Lease payments are discounted at either the interest rate implicit in the
lease or when this interest rate cannot be readily determined, the Group's
incremental borrowing rate is associated with a similar asset. When
calculating lease liabilities, the Group uses its incremental borrowing rate,
being the rate it would have to pay to borrow the funds necessary to obtain an
asset of similar value in a similar economic climate with similar terms,
security and conditions. This is estimated using publicly available data
adjusted for changes specific to the lease in financing conditions, lease
term, country and currency.
The Group does not have leases with variable lease payments based on an index
or rate.
Extension or termination options are included in a number of the Group's
leases. In determining the lease term, the Group considers all facts and
circumstances that create an economic incentive to exercise, or not to
exercise, an option. Extension options are only included in the lease term if
the lease is reasonably certain to be extended. The lease term is reassessed
if an option is actually exercised or the Group becomes obliged to exercise
(or not to exercise) it. The assessment of reasonable certainty is only
revised if a significant event or a significant change in circumstances occurs
that is within the control of the Group.
Lease payments are allocated between principal and finance cost. The finance
cost is charged to profit or loss over the lease period so as to produce a
constant periodic rate of interest on the remaining balance of the liability
for each period.
Right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability;
• any lease payments made at or before the commencement date less any
lease incentives received;
• any initial direct costs; and
• restoration costs.
Right-of-use assets are depreciated on a straight-line basis over the term of
the lease with depreciation expense recognised in the Income Statement.
Right-of-use 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. An impairment loss is recognised for the amount
by which the carrying value of right-of-use assets exceeds the recoverable
amount. The recoverable amount is the higher of the asset's fair value less
costs of disposal and value in use. Impairment losses on right-of-use assets
are recognised in the Income Statement in administrative expenses.
Lease modifications are a change in scope of a lease that was not part of the
original lease. Any change that is triggered by a clause already part of the
original lease contract is a reassessment and not a modification. Changes to
lease cash flows as part of a reassessment may result in a remeasurement of
the lease liability using an updated discount rate where required by the
standard.
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 assets,
and to account for leases with similar characteristics as a portfolio with a
single discount rate. 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.
Sublease of office space at certain of the Group's leased properties is
accounted for in accordance with IFRS 16; the right-of-use asset relating to
the head lease is derecognised to the extent that control of the asset (or a
proportion thereof) is transferred to the sublessee, and the net investment in
the sublease is recognised as a net finance lease receivable. The lease
liability relating to the head lease, representing future lease payments due
to the head lessor, is unaffected by the sublease arrangement.
1.13 Taxation
The tax expense for the year comprises current and deferred tax. Tax is
recognised in the Income Statement, except to the extent that it relates to
items recognised in other comprehensive income or directly in equity. In this
case, the tax is also recognised in other comprehensive income or directly in
equity, respectively.
The current tax charge is calculated on the basis of the tax laws enacted or
substantively enacted at the reporting date in the countries where the Company
and its subsidiaries operate and generate taxable income. Management
periodically evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to interpretation. It
establishes provisions, where appropriate, on the basis of amounts expected to
be paid to the tax authorities.
Deferred income taxes are calculated using the liability method on temporary
differences. Deferred tax is generally provided on the difference between the
carrying amounts of assets and liabilities and their tax bases. However,
deferred tax is not provided on the initial recognition of goodwill, nor on
the initial recognition of an asset or liability unless the related
transaction is a business combination or affects tax or accounting profit.
Deferred tax liabilities are provided in full, with no discounting. Deferred
tax assets are recognised to the extent that it is probable that the
underlying deductible temporary differences will be able to be offset against
future taxable income. Current and deferred tax assets and liabilities are
calculated at tax rates that are expected to apply to their respective period
of realisation, provided they are enacted or substantively enacted at the
reporting date.
Deferred tax on temporary differences associated with shares in subsidiaries
is not provided for if these temporary differences can be controlled by the
Group and it is probable that reversal will not occur in the foreseeable
future.
Deferred tax assets and liabilities are offset only where there is a legally
enforceable right to the offset and there is an intention to settle balances
on a net basis.
Changes in deferred tax assets or liabilities are recognised as a component of
tax expense in the Income Statement, except where they relate to items that
are charged or credited directly to equity (such as share-based payments) in
which case the related deferred tax is also charged or credited directly to
equity.
1.14 Pension costs
The Group operates a number of country-specific defined contribution plans for
its employees. A defined contribution plan is a pension plan under which the
Group pays fixed contributions into a separate entity. Once the contributions
have been paid the Group has no further payment obligations. The contributions
are recognised as an expense when they are due. Amounts not paid are shown in
other creditors in the Statement of Financial Position. The assets of the plan
are held separately from the Group in independently administered funds.
1.15 Share-based payments
All share-based remuneration is ultimately recognised as an expense in the
Income Statement with a corresponding credit to the share-based payment
reserve. All goods and services received in exchange for the grant of any
share-based remuneration are measured at their fair values. Fair values of
employee services are indirectly determined by reference to the fair value of
the share options awarded. Their value is appraised at the grant date and
excludes the impact of non-market vesting conditions (for example,
profitability and sales growth targets).
If vesting periods or other non-market vesting conditions apply, the expense
is allocated over the vesting period, based on the best available estimate of
the number of share options expected to vest. Estimates are subsequently
revised if there is any indication that the number of share options expected
to vest differs from previous estimates. Any cumulative adjustment prior to
vesting is recognised in the current period. No adjustment is made to any
expense recognised in prior periods if share options ultimately exercised are
different to that estimated on vesting. Upon exercise of share options,
proceeds received net of attributable transaction costs are credited to share
capital and share premium.
The Company is the granting and settling entity in the Group share-based
payment arrangement where share options are granted to employees of its
subsidiary companies. The Company recognises the share-based payment expense
as an increase in the investment in subsidiary undertakings.
The Group operates a Long-Term Incentive Plan (LTIP) share options scheme for
Executive Directors and senior management. Options have exercise prices at or
above £0.01. Grants have been made as part of a CSOP scheme, depending on the
terms of specific grants.
The Group also operates a Share Incentive Plan (SIP), the Gattaca plc Share
Incentive Plan (The Plan), which is approved by HMRC. The Plan is held by
Gattaca plc UK Employee Benefit Trust (the SIP EBT), the purpose of which is
to enable employees to purchase Company shares out of pre-tax salary. For each
share purchased the Group grants an additional share at no cost to the
employee. The expense in relation to these 'matched' shares is recorded as
employee remuneration and measured at fair value of the shares issued as at
the date of grant. The assets and liabilities of the SIP EBT are included in
the Consolidated Statement of Financial Position.
1.16 Financial instruments
Financial assets
IFRS 9 contains a classification and measurement approach for financial assets
that reflects the business model in which assets are managed and their cash
flow characteristics. Under IFRS 9, all financial assets are measured at
either amortised cost, fair value through profit and loss (FVTPL) or fair
value through other comprehensive income (FVOCI).
Financial assets: debt instruments
The Group's debt instruments are initially recognised at fair value, including
transaction costs that are directly attributable to their acquisition of
issue, and are subsequently measured at amortised cost.
Interest income from these financial assets is included in finance income
using the effective interest rate method. Any gain or loss arising on
derecognition is recognised directly in profit or loss and presented in other
gains/(losses), together with foreign exchange gains and losses.
The Group holds unclaimed aged sales ledger credits on the balance sheet that
arise in the course of normal trading operations due to the high volume of
timesheet invoices and customer receipts. Unclaimed sales ledger credits are
released to the Income Statement after all reasonable steps have been taken to
return funds to the customer and two years have elapsed since receipt of the
funds. If a customer were to legitimately seek reimbursement of unclaimed
sales ledger credits after its release, the Group would endeavour to settle
this.
Impairment of financial assets
IFRS 9 requires the application of the Expected Credit Loss model (ECL). This
applies to all financial assets except equity investments.
The Group assesses on a forward-looking basis the expected credit losses
associated with its debt instruments.
The Group has reviewed each category of its financial assets to assess the
level of credit risk and ECL allowance to apply:
• Trade receivables: the Group has chosen to take advantage of the
practical expedient in IFRS 9 when assessing default rates over its portfolio
of trade receivables, to estimate the ECL allowance based on historical
default rates specific to groups of customers by industry and geography that
carry similar credit risks.
• Accrued income is in respect of temporary placements where a
candidate has provided services or permanent placements where a candidate has
commenced employment, but no invoice has been raised. Default rates have been
determined by reference to historical data.
• Cash and cash equivalents are held with established financial
institutions. The Group has determined that based on the external credit
ratings of counterparties, this financial asset has a very low credit risk and
that the estimated expected credit loss allowance is not material. During
FY24, the Group impaired its cash on deposit in Russia due to the increased
credit risk associated with the financial and regulatory sanctions imposed on
and by Russia.
The Company assesses credit risk and ECL allowance over amounts due from Group
undertakings in the context of subsidiary trading results and net assets. At
each reporting date, the ECL allowance is reviewed to reflect changes in
credit risk and historical default rates and other economic factors. Changes
in the ECL allowance are recognised in the Income Statement within
administrative expenses.
Financial liabilities
Financial liabilities are obligations to pay cash or other financial assets
and are recognised when the Group becomes a party to the contractual
provisions of the instrument and comprise trade and other payables and bank
borrowings. Financial liabilities are recorded initially at fair value, net of
direct issue costs and are subsequently measured at amortised cost using the
effective interest rate method.
A financial liability is derecognised only when the obligation is
extinguished, that is, when the obligation is discharged, cancelled or
expires.
Non-recourse receivables factoring is not recognised as a financial liability
as there is no contractual obligation to deliver cash; subsequently, the
receivables are de-recognised and any difference between the receivable value
and amount received through non-recourse factoring
is recognised as a finance cost.
1.17 Cash and cash equivalents
In the Consolidated Cash Flow Statement, cash and cash equivalents include
cash in hand, deposits held at call with banks, other short-term highly liquid
investments with original maturities of three months or less and bank
overdrafts. In the Statement of Financial Position and Cash Flow Statement,
bank overdrafts are netted against cash and cash equivalents where the
offsetting criteria are met.
Cash in transit inbound from, or outbound to, a third party is recognised when
the transaction is no longer reversible by the party making the payment. This
is determined to be in respect of all electronic payments and receipt
transactions that commence before or on the reporting date and complete within
one business day after the reporting date.
Restricted cash and cash equivalent balances are those which meet the
definition of cash and cash equivalents but are not available for wider use by
the Group. These balances arise from the Group's non-recourse working capital
arrangements as well as from balances for which the Group cannot access the
accounts and hence cannot withdraw funds, but is still the legal owner.
1.18 Provisions
Provisions are recognised where the Group has a present legal or constructive
obligation as a result of past events; it is probable that an outflow of
resources will be required to settle the obligation; and the amount has been
reliably estimated. Provisions are not recognised for future operating losses.
1.19 Dividends
Dividend distributions payable to equity shareholders are included in 'other
short term financial liabilities' when the dividends are approved in a general
meeting prior to the reporting date.
1.20 Foreign currencies
Items included in the financial statements of each of the Group's entities are
measured using the currency of the primary economic environment in which each
entity operates (the functional currency). The consolidated financial
statements are presented in Pounds Sterling (£GBP), which is the Group's
presentation currency.
Transactions in foreign currencies are translated at the exchange rate ruling
at the date of the transaction. Monetary assets and liabilities in foreign
currencies are translated at the rates of exchange ruling at the reporting
date. Non-monetary items that are measured at historical cost in a foreign
currency are translated at the exchange rate at the date of the transaction.
Non-monetary items that are measured at fair value in a foreign currency are
translated using the exchange rates at the date when the fair value was
determined. Income and expenses are translated at the actual rate.
Any exchange differences arising on the settlement of monetary items or on
translating monetary items at rates different from those at which they were
initially recorded are recognised in the Income Statement in the year in which
they arise.
The assets and liabilities in the financial statements of foreign subsidiaries
are translated at the rate of exchange ruling at the reporting date.
The individual financial statements of each Group company are presented in its
functional currency. On consolidation, the assets and liabilities of overseas
subsidiaries, including any related goodwill, are translated to Sterling at
the rate of exchange at the reporting date. The results and cash flows of
overseas subsidiaries are translated to Sterling using the average rates of
exchange during the period. Exchange adjustments arising from retranslation of
the opening net investment and the results for the period to the period end
rate are accounted for in the translation reserve in the statement of
Comprehensive Income. On divestment, these exchange differences are
reclassified from the translation reserve to the Income Statement.
1.21 Equity
Equity comprises the following:
• Share capital represents the nominal value of equity shares.
• Share premium represents the excess over nominal value of the fair
value of consideration received for equity shares, net of expenses of the
share issue.
• Capital redemption reserve represents the nominal value of equity
shares that have been cancelled and are no longer in issue.
• Merger reserve represents the equity balance arising on the merger
of Matchtech Engineering and Matchmaker Personnel, less any amounts
subsequently realised and reclassified to distributable reserves.
• Share-based payment reserve represents equity-settled share-based
employee remuneration until such share options are exercised or lapse.
• Translation reserve represents the foreign currency differences
arising on translating foreign operations into the presentational currency of
the Group.
• Treasury shares reserve represents Company shares purchased directly
by the Group to satisfy obligations under the employee share plans.
• Retained earnings represents retained profits.
1.22 Critical accounting judgements and key sources of estimation
uncertainty
Preparation of the Consolidated Financial Statements requires judgement,
estimations and assumptions to be made in conformity with IFRS requirements.
Estimates and judgements are continually evaluated. They are based on
historical experience and other factors, including expectations of future
events that may have a financial impact on the Group and that are believed to
be reasonable under the circumstances.
The Directors have considered the impact of climate change on the Group and
have concluded that there is no material impact on financial reporting
judgements and estimates, the long-term viability of the Group, and carrying
value of goodwill, other intangibles or property and plant and equipment.
Whilst the Directors have concluded that there is no material impact of
climate change on the financial reporting judgements and estimates for the
current year, the Group will continue to monitor these risks and their
potential impacts in the future.
Critical accounting judgements
The critical accounting judgements that carry a risk of causing a material
adjustment within the next 12 months are discussed below:
Identifying indications of impairment of non-current assets
An impairment test is required for all assets within the scope of IAS 36 when
there is an indication of impairment at the reporting date. In addition,
goodwill must be tested for impairment annually, irrespective of whether there
is any indication of impairment.
Indications of impairment may be internal or external. Key external sources of
external information considered by the Group include recruitment market trends
and the economic conditions prevailing in the countries in which it operates.
The Group operates principally in the United Kingdom and we are providing
services to customers in STEM markets, so key considerations include factors
that impact the UK economic outlook such as UK inflation, interest rates, pay
rates, vacancy numbers and talent availability. Key internal sources of
information include management information and financial trading results.
Determining cash-generating units (CGUs)
For the purpose of impairment testing, where an asset does not generate cash
flows independently, such as goodwill acquired in a business combination,
management must use judgement in identifying the asset's CGU and associated
future cash flows. CGUs must be identified consistently from one period to the
next, unless a change is justified.
At the year end, management reassessed the Group's goodwill-carrying CGU
following operational changes during the year. The Energy CGU was previously
identified as the London-based Energy team, a sub-division of the Energy
sector. During the year, further integration of our specialist Energy
recruitment teams occurred, including:
• An organisational restructure implemented by the Executive Board,
identified Energy as one of five core sectors and established the Head of
Energy role with remit to scale the Energy sector as a single business unit;
• Operational management, strategy, client marketing and sub-sector
focus areas of all Energy sub-divisions, across our London and Whiteley HQ
locations, was aligned under the supervision of the Head of Energy; and
• Management reporting to the Board in FY25 and preparation of the
FY25 budget is performed on a fully consolidated basis, with no demarcation
remaining between geographical locations.
As result of these changes, management considered that the cash flows from the
London-based team are no longer largely independently of the wider Energy
sector and have concluded that for the year end impairment test the future
cash flows of the goodwill-carrying Energy CGU are those of the whole Energy
operating segment.
More detail on impairment testing for the Energy CGU can be found in Note 12.
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation
uncertainty at the reporting date that carry a risk of causing a material
adjustment within the next 12 months are discussed below:
Estimating Expected Credit Loss (ECL) allowances in respect of trade
receivables, accrued income and cash and cash equivalents
Trade receivables and accrued income
The Group's policy for default risk over receivables is based on the ongoing
evaluation of the credit risk of its trade receivables. Estimation is used in
assessing the ultimate realisation of these receivables, including reviewing
the potential likelihood of default, the past collection history of each
category of customers, any insurance coverage in place and the current and
future economic conditions. As a result, an ECL allowance for impairment of
trade receivables and accrued income has been recognised, as discussed in Note
17.
During the year, the Group reduced its general expected loss allowances rates
to reflect a lower historical credit loss rate, supported by economic
forecasts. The reduction in general expected loss rates gave rise to credits
to the Income Statement on release of loss allowances of £194,000 for trade
receivables and £93,000 for accrued income. The balance of the release of
loss allowances to the Income Statement arise due to changes in specific debt
allowances and changes in value of gross receivables since the last reporting
date.
The Group has performed sensitivity analysis over its general expected loss
allowances rates as a key accounting estimate. As at 31 July 2024, a 50 basis
points increase in the general expected loss allowances rates applied by the
Group would result in a charge to the Income Statement for impairment losses
of £175,000 for trade receivables and £85,000 for accrued income.
Cash and cash equivalents
During the year, the Group impaired its cash on deposit in Russia due to the
increased credit risk associated with the financial and regulatory sanctions
imposed on and by Russia. Impairment losses on cash and cash equivalents of
£408,000 have been recognised in loss for the year from discontinued
operations. The carrying amount of the Group's cash and cash equivalents in
Russia as at 31 July 2024 was £nil (2023: £391,000).
Estimating recoverable amount of non-current assets and goodwill
In assessing impairment, management estimates the recoverable amount of each
asset or cash generating unit based on expected future cash flows and uses an
interest rate to discount them. Estimation uncertainty relates to assumptions
about future operating results and the determination of suitable growth rates
and discount rate as inputs to the value-in-use model. More detail on the
assumptions used can be found in Note 12.
At the reporting date, the recoverable amount of the Energy CGU's assets was
£3,139,000, an excess of £443,000 above the carrying amount. The Directors
have therefore concluded that the CGU's goodwill and intangible assets are not
impaired. Sensitivity analysis has been undertaken on changes in the key
assumptions representing a reasonably possible downside scenario, further
details can be found in Note 12.
Estimating recoverable amount of investments in subsidiaries (Parent Company)
The Parent Company's investments in subsidiary undertakings are tested for
impairment at the reporting date if events arise that indicate an impairment
may be triggered. This requires an estimate to be made of the recoverable
amount of the investments, including forecasting future cash flows of the
asset and forming assumptions over the growth rates, discount rate and working
capital requirement applied in the value-in-use calculation. More detail of
the assumptions used can be found in Note 15.
At the reporting date, the recoverable amount of the Company's investments was
£31,668,000, a deficit of £7,060,000 below the carrying amount. The
Directors have therefore concluded that the investment is impaired and have
recorded an impairment in the Company's results for the year to reduce the
carrying amount to the recoverable amount. Sensitivity analysis has been
undertaken on changes in the key assumptions representing a reasonably
possible downside scenario, further details can be found in Note 15.
Other areas of judgement and accounting estimates
The consolidated financial statements include other areas of judgement and
accounting estimates. While these areas do not meet the definition under IAS 1
of significant accounting estimates or critical accounting judgements, the
recognition and measurement of certain material assets and liabilities are
based on assumptions and/or are subject to longer term uncertainties. The
other areas of judgement and accounting estimates are:
• Revenue from contracts with customers: Contractual rebate
arrangements are variable consideration reducing revenue and are estimated at
the most likely amount of consideration based on forecasts of customer
activity informed by historical experience.
• Accrued income: Relates to the Group's right to consideration for
temporary and permanent placements where services have been performed and
contractual performance obligations satisfied but the customer has not yet
been billed at the reporting date. Accrued income in respect of late
contractor timesheets and permanent placement notifications is estimated at
each reporting date based upon historic timesheet data and current run rates.
• Other revenue: Progress against long-term contractual performance
obligations is estimated using an input method, by reference to the proportion
of costs incurred to date compared with total expected costs for the contract.
This is considered to best reflect the benefit the customer receives from the
Group's performance.
• Non-underlying items: Management apply judgement in the
classification of income and expenditure as non-underlying items, separate to
underlying trading results because of their size, nature or incidence. Refer
to Note 4 for further details.
• Non-current assets: Useful lives and residual values of depreciable
assets. Refer to Note 13 (Intangible Assets) and Note 14 (Property, Plant and
Equipment) for further details.
• Deferred taxation: Unrecognised deferred tax assets in connection
with overseas operations. Refer to Note 16 for further details.
• Provisions: Valuation and expected timing of realisation of
dilapidation provisions and other provisions. Refer to Note 18 for further
details.
• Equity-settled share-based payment arrangements: Valuation of and
vesting probabilities of share options under the Long-Term Incentive Plan.
Refer to Note 23 for further details.
• Contingent liabilities: Matters in connection with potential claims
against the Group over which the outcome is uncertain, or the likelihood of a
future material economic outflow is not probable and an estimate cannot be
measured reliably. Refer to Note 28 for further details.
Climate-related matters
The long-term consequences of climate change on the financial statements are
difficult to predict and require the Group to make significant assumptions and
develop estimates, as described above. Assumptions used by the Group are
subject to uncertainties, including relating to future regulatory changes, new
environmental commitments made by the Group to meet its emission reduction
goals and development of new technologies. Due to these uncertainties, results
reported in the Group's future financial statements could differ from the
estimates established at the time these financial statements were approved.
2 Segmental Information
An operating segment, as defined by IFRS 8 'Operating segments', is a
component of the Group that engages in business activities from which it may
earn revenues and incur expenses.
The Gattaca plc Group defines its operating segments by reference to the
sectors in which it operates. Segmentation of the Group's activities by sector
is consistent with the segmentation of information provided internally to the
chief operating decision maker, being the Board of Directors of Gattaca plc.
Reportable segments are identified by reference to quantitative and
qualitative thresholds prescribed in IFRS 8. There were no operating segments
that met the criteria for aggregation with other operating segments.
Year ended 31 July 2024
All amounts in £'000 Mobility Energy Defence Technology, Media and Telecoms Infrastructure Gattaca Projects International(2) Other Continuing underlying operations Non-recurring items and amortisation of acquired intangibles Discontinued Total
Group
Revenue 33,416 37,792 92,077 31,630 149,247 11,359 3,277 30,735 389,533 - 1,209 390,742
Gross profit 4,609 3,615 7,135 2,821 13,913 2,818 632 4,536 40,079 - 347 40,426
Operating contribution 2,031 1,943 4,081 639 6,319 1,869 (330) 1,205 17,757 - (709) 17,048
Depreciation and amortisation (132) (149) (363) (125) (585) (45) (13) (121) (1,533) (69) (16) (1,618)
Impairments (net) - - - - - - - - - 42 (408) (366)
Central overheads (1,836) (908) (2,136) (1,310) (4,132) (463) (995) (2,245) (14,025) (1,092) (278) (15,395)
Operating profit/(loss) 63 886 1,582 (796) 1,602 1,361 (1,338) (1,161) 2,199 (1,119) (1,411) (331)
Finance income/(costs), net 719 (115) 793 1,397
Profit/(loss) before tax 2,918 (1,234) (618) 1,066
Year ended 31 July 2023 restated(1)
Energy Defence Technology, Media and Telecoms Infrastructure International(1,2) Other Continuing underlying operations(1) Non-recurring items and amortisation of acquired intangibles Discontinued(1) Total
Gattaca Projects Group
All amounts in £'000 Mobility
Revenue 40,387 40,605 80,652 27,660 148,843 5,512 3,464 34,972 382,095 - 3,079 385,174
Gross profit 4,536 4,119 8,003 2,569 14,094 2,091 984 5,824 42,220 - 1,181 43,401
Operating contribution 2,227 2,624 4,768 580 5,776 1,364 (2,228) 1,580 16,691 - (960) 15,731
Depreciation and amortisation (155) (155) (309) (106) (570) (21) 28 (134) (1,422) (68) (53) (1,543)
Central overheads (1,588) (685) (2,018) (1,160) (4,473) (346) 770 (2,429) (11,929) 245 (256) (11,940)
Operating profit/(loss) 484 1,784 2,441 (686) 733 997 (1,430) (983) 3,340 177 (1,269) 2,248
Finance income/(costs), net 329 547 (888) (12)
Profit/(loss) before tax 3,669 724 (2,157) 2,236
1 FY23 results have been restated for the presentation of discontinued
operations as explained in Note 10.
2 International segment revenue and gross profit is generated from the
location of the commission-earning sales consultant, as opposed to the
domicile of the respective subsidiary by which they are employed.
A segmental analysis of total assets has not been included as this information
is not used by the Board; the majority of assets are centrally held and are
not allocated across the reportable segments.
Geographical information
Total Group revenue Non-current assets
All amounts in £'000 2024 2023 2024 2023
UK 384,233 375,436 4,963 5,173
Rest of Europe 801 775 1 2
Middle East and Africa - - 9 24
Americas 5,708 8,963 31 100
Total 390,742 385,174 5,004 5,299
Revenue and non-current assets are allocated to the geographical market based
on the domicile of the respective subsidiary.
3 Revenue from Contracts with Customers
Revenue from contracts with customers is disaggregated by major service line
and operating segment, as well as timing of revenue recognition as follows:
Major service lines - continuing underlying operations
2024 Mobility Energy Defence Technology, Media and Telecoms Infrastructure Gattaca Projects International Other Continuing underlying operations
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Temporary placements 31,437 37,525 91,022 30,765 147,721 - 2,878 28,682 370,030
Permanent placements 1,902 218 861 865 1,520 - 270 2,053 7,689
Other 77 49 194 - 6 11,359 129 - 11,814
Total 33,416 37,792 92,077 31,630 149,247 11,359 3,277 30,735 389,533
2023 Mobility Energy Defence Technology, Media and Telecoms Infrastructure Restated(2) Restated(1) Other Restated(1)
£'000 £'000 £'000 £'000 £'000 Gattaca Projects International £'000 Continuing underlying operations
£'000 £'000 £'000
Temporary placements 38,426 40,155 77,916 26,660 146,584 - 2,274 31,896 363,911
(as restated(1,2))
Permanent placements 1,771 268 2,427 778 1,978 - 1,190 3,037 11,449
Other (as restated(1,2)) 190 182 309 222 281 5,512 - 39 6,735
Total 40,387 40,605 80,652 27,660 148,843 5,512 3,464 34,972 382,095
1 FY23 results have been restated for the presentation of discontinued
operations as explained in Note 10.
2 Revenue for Gattaca Projects has been allocated wholly to 'other'
service line to more accurately reflect the nature of the services which
Gattaca Projects provided to its customers. For comparability, FY23 has been
restated accordingly.
Timing of revenue recognition - continuing operations(2)
2024 Mobility Energy Defence Technology, Media and Telecoms Infrastructure Gattaca Projects International Other Continuing underlying operations
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Point in time 1,902 218 861 865 1,520 - 270 2,053 7,689
Over time 31,514 37,574 91,216 30,765 147,727 11,359 3,007 28,682 381,844
Total 33,416 37,792 92,077 31,630 149,247 11,359 3,277 30,735 389,533
2023 Mobility Energy Defence Technology, Media and Telecoms Infrastructure Gattaca Projects Restated(1) International Other Restated1 Continuing underlying operations
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Point in time (as restated(1,2)) 1,771 268 2,427 778 1,978 - 1,190 3,037 11,449
Over time (as restated(1,2)) 38,616 40,337 78,225 26,882 146,865 5,512 2,274 31,935 370,646
Total 40,387 40,605 80,652 27,660 148,843 5,512 3,464 34,972 382,095
1 FY23 results have been restated for the presentation of discontinued
operations as explained in Note 10.
2 The Group has revised its revenue accounting policy upon timing of
recognition of revenue from temporary placements to address an inconsistency
with IFRS 15. Previously recognised at a point in time upon receipt of a
client-approved timesheet, revenue from temporary placements is now recognised
over time, in line with when the temporary worker provides services. The Group
considers that this more accurately reflects the Group's satisfaction of its
contractual performance obligations under IFRS 15. The change is applied
retrospectively in accordance with IAS 8 and comparative information has been
restated. Revenue reported in the Consolidated Income Statement and contract
assets and liabilities reported in the Consolidated Statement of Financial
Position are unaffected.
No single customer contributed more than 10% of the Group's revenues (2023:
none).
The Group's contract liabilities from contracts with customers are deferred
income. The Group has no contract assets from contracts with customers.
31 July 2024 31 July 2023 31 July 2022
£'000 £'000 £'000
Deferred income (135) (129) (330)
Deferred income at a given reporting date is recognised as revenue in the
following financial year once performance obligations are satisfied and is
classified in current liabilities.
4 Profit from Total Operations
2024 2023
£'000 £'000
Profit from total operations is stated after charging/(crediting):
Depreciation of property, plant and equipment (Note 14) 458 489
Depreciation of right-of-use leased assets (Note 22) 1,030 952
Amortisation of acquired intangibles (Note 13) 69 68
Amortisation of software and software licences (Note 13) 61 34
Reversal of impairment of right-of-use leased assets (Note 22) (42) -
Impairment of cash and cash equivalents (Note 27) 408 -
Release of sales ledger credits(1) (117) (538)
Gain on reassessment of lease term(2) - (672)
Loss on disposal of property, plant and equipment 24 17
Loss on disposal of software and software licences - 8
Plant and machinery rental expenses for leases out-of-scope of IFRS 16 104 59
Non-recourse working capital facility bank charges 451 515
Share-based payment charges/(credits)(3) (Note 23) 201 (64)
Gain on release of provisions (Note 18) (486) (234)
1 The Group holds unclaimed aged sales ledger credits on the Statement
of Financial Position that arise in the course of normal trading operations
due to the high volume of timesheet invoices and customer receipts. Releases
of unclaimed sales ledger credits to the Income Statement are made in
accordance with the Group's accounting policy, discussed further in Note 1.16.
2 The gain on reassessment of lease term resulted from the exercise of
a break clause on a property that was fully impaired in FY22, as discussed in
more detail in Note 22, and is presented in non-underlying items.
3 The share-based payments credit in the prior year arises from the
reversal of charges accrued in prior years as a result of a change in
expectation of vesting outcomes of LTIP share options.
The aggregate auditors' remuneration was as follows:
2024 2023
£'000 £'000
Fees payable for the audit of the financial statements 225 379
Total auditors' remuneration 225 379
The auditors do not provide any non-audit services.
Non-underlying items included within administrative expenses were as follows:
Continuing operations 2024 Restated(1) 2023
£'000 £'000
Restructuring costs(2) 467 179
Net costs/(income) associated with exiting properties(3) 16 (614)
Write down of acquired working capital balances(4) - 190
Reversal of impairment of leased right-of-use assets(5) (42) -
Costs relating to ongoing closure of group undertakings(6) 609 -
Non-underlying items included in profit from continuing operations 1,050 (245)
Discontinued operations 2024 Restated(1) 2023
£'000 £'000
Restructuring costs(7) 278 70
Advisory fees(8) - 2
Costs relating to closure of group undertakings(6) - 184
Impairment of cash and cash equivalents(9) 408 -
Non-underlying items included in loss from discontinued operations 686 256
Total non-underlying items 1,736 11
1 FY23 results have been restated for the presentation of discontinued
operations as explained in Note 10.
2 Restructuring costs of £467,000 (2023 restated: £179,000) were
recognised as a result of strategic personnel reorganisations and changes in
the Board and senior management.
3 Net income in the prior year includes a gain of £672,000 upon exercise
of a break clause for a leased office property that was fully impaired in the
year ended 31 July 2022.
4 Write down of unsupportable and uncollectable working capital balances
in subsidiaries acquired during previous years' business combinations.
5 An impairment recorded in FY22 was partially reversed upon sub-letting
of an office property to a third party during the year.
6 Ongoing costs relating to closure of entities affected by the cessation
of the contract with Telecoms Infrastructure business in 2018 as well as the
ongoing closure costs of the Group's operations in Russia, South Africa,
including late filing penalties in Qatar and impairment of certain capital
working balances. Included in losses from discontinued operations in the prior
year, the Group has presented these ongoing closure costs as continuing items
in the current year, as discussed further in Note 10.
7 Costs incurred associated with closure of the Group's USA-based
operations, including personnel re-organisation costs, as discussed further in
Note 10.
8 Legal fees incurred relating to the Group's co-operation with certain
voluntary enquiries from the US Department of Justice, as discussed in further
detail in Note 28.
9 Cash on deposit in Russia was impaired due to the increased credit risk
associated with the financial and regulatory sanctions imposed on and by
Russia.
5 Particulars of Employees
The monthly average number of staff employed by the Group, including
Directors, during the financial year amounted to:
Total operations 2024 2023
No. No.
Sales 308 347
Administration 137 148
Directors 6 7
Total 451 502
UK employees are directly contracted with the ultimate parent company, Gattaca
plc, and staff costs are paid by Matchtech Group (UK) Limited, then recharged
to fellow UK subsidiaries.
The aggregate payroll costs of the above were:
Total operations 2024 2023
£'000 £'000
Wages and salaries 22,935 24,877
Social security costs 2,859 2,978
Other pension costs 928 915
Share-based payments(1) (Note 23) 201 (64)
Total 26,923 28,706
1 The share-based payments credit in the prior year arises from the
reversal of costs accrued in prior years as a result of a change in
expectation of vesting outcomes of LTIP share options.
Amounts due to defined contribution pension providers at 31 July 2024 were
£167,000 (2023: £158,000).
During the year the Group reorganised its leadership structure resulting in
redefinition of its key management personnel. In FY23 and the first half of
FY24 this consisted of the Directors and the Senior Leadership Team. For the
second half of FY24 the Group's key management personnel were defined as the
Directors and the wider Leadership Community. Disclosure of the remuneration
of Group's key management personnel, as required by IAS 24, is detailed below:
Key management personnel remuneration 2024 2023
£'000 £'000
Short-term employee benefits 2,119 1,739
Contributions to defined contribution pension schemes 100 77
Share-based payments 152 (5)
Total 2,371 1,811
6 Finance Income
Continuing operations 2024 Restated(1) 2023
£'000 £'000
Interest income 784 419
Net gains on foreign currency translation - 547
Total 784 966
1 FY23 results have been restated for the presentation of discontinued
operations as explained in Note 10.
7 Finance Costs
Continuing operations 2024 Restated(1) 2023
£'000 £'000
Bank interest expense 2 22
Interest expense on lease liabilities 63 68
Net losses on foreign currency translation 115 -
Total 180 90
1 FY23 results have been restated for the presentation of discontinued
operations as explained in Note 10.
8 Parent Company Loss
2024 2023
£'000 £'000
The amount of loss generated by the parent company was: (2,641) (588)
9 Taxation
Analysis of charge/(credit) in the year Continuing Discontinued Continuing Discontinued
2024 2024 2023 2023
£'000 £'000 £'000 £'000
Current tax:
UK corporation tax 654 - 641 -
Overseas corporation tax 3 - (1) 3
Adjustments in respect of prior years 204 (36) 5 -
861 (36) 645 3
Deferred tax (Note 16):
Origination and reversal of temporary differences 81 - 421 -
Adjustments in respect of prior years (26) - (46) -
Changes in tax rate - - (16) -
55 - 359 -
Income tax charge/(credit) for the year 916 (36) 1,004 3
UK corporation tax has been charged at 25% (2023: 21%).
The charge for the year can be reconciled to profit/(loss) in the Income
Statement as follows:
Continuing Discontinued Restated(1) Continuing Restated(1) Discontinued
2024 2024 2023 2023
£'000 £'000 £'000 £'000
Profit/(loss) before tax 1,684 (618) 4,393 (2,157)
Profit/(loss) before tax multiplied by the standard rate of corporation tax 421 (155) 923 (453)
in the UK of 25% (2023: 21%)
Expenses not deductible for tax purposes 467 (15) 192 65
Income not taxable (209) - (182) -
Effect of share-based payments (23) - (1) -
Irrecoverable withholding tax 3 - 2 -
Overseas losses not recognised as deferred tax assets 84 140 160 403
Difference between UK and overseas tax rates (4) 30 (33) (12)
Adjustment to tax charge in respect of prior years 177 (36) (41) -
Changes in tax rate - - (16) -
Total taxation charge/(credit) for the year 916 (36) 1,004 3
1 FY23 results have been restated for the presentation of discontinued
operations as explained in Note 10.
Tax credit recognised in equity:
2024 2023
£'000 £'000
Deferred tax credit recognised directly in equity (46) (126)
Total tax credit recognised directly in equity (46) (126)
Reconciliation of statutory continuing tax charge to continuing underlying tax
charge:
2024 2023
£'000 £'000
Income tax expense 916 1,004
Non-underlying items 110 75
Foreign currency exchanges differences - 17
Underlying income tax expense 1,026 1,096
Tax rate applied
The main UK corporation tax rate increased to 25% from 1 April 2023. Deferred
tax has been valued based on the substantively enacted rates at each balance
sheet date at which the deferred tax is expected to reverse.
10 Discontinued Operations
During the year, the Group announced the decision to restructure its USA
operations and by 31 July 2024 US-based trading had ceased, support operations
had been outsourced or transferred to the UK and all US-based sales and
support staff exited. The Group continues to operate in the USA market in
established sectors serviced by its UK-based sales consultants. The Group's
closed US-based operations have been classified as a discontinued operation in
accordance with IFRS 5.
Discontinued operations includes impairment of cash and cash equivalents
balance held in the Russian branch of Networkers International (UK) Ltd ('the
Branch') which ceased to trade in 2019. This has been disclosed within
administrative expenses.
The Group has also incurred ongoing closure costs associated with previously
discontinued trading businesses, including its contract Telecomm
Infrastructure business (closed in 2018) and operations in Malaysia, Singapore
and the Middle East (closed in 2018), China (closed in 2020), and Mexico
closure and South African sub-group sale (closed in 2021). No trading
activities remain for these businesses and all trading activities ceased over
24 months ago, however the Group continues to incur professional fees and
other corporate costs associated with the ongoing corporate governance
maintenance and statutory closure processes of these now-dormant subsidiary
statutory entities. The Group has considered the nature and amount of these
costs in the current year and has classified these ongoing closure costs as
continuing operations, as part of the ongoing costs of corporate closures.
Costs associated with closure of discontinued businesses are reported within
non-underlying items in line with the Group's accounting policy.
Financial performance
2024 Restated(1)
£'000 2023
£'000
Revenue 1,209 3,079
Cost of sales (862) (1,898)
Gross profit 347 1,181
Administrative expenses(2) (1,758) (2,450)
Loss from discontinued operations (1,411) (1,269)
Finance costs - (88)
Exchange gain/(loss) 793 (800)
Loss before taxation from discontinued operations (618) (2,157)
Taxation 36 (3)
Loss for the year after taxation from discontinued operations (582) (2,160)
Exchange differences on translation of discontinued operations 17 (123)
Reclassification adjustment on disposal of foreign operations (713) -
Total comprehensive loss from discontinued operations (1,278) (2,283)
1 FY23 results have been restated for the presentation of trading
arising from US-based operations discontinued operations as explained above.
2 Included in administrative expenses are £686,000 (2023 restated:
£256,000) of non-underlying items, as detailed in Note 4.
Cash flows from discontinued operations
2024 Restated(1)
£'000 2023
£'000
Net cash outflow from operating activities (850) (684)
Net cash outflow from investing activities - (3)
Net cash outflow from financing activities - -
Effect of exchange rates on cash and cash equivalents 1 (56)
Net cash used by discontinued operations (849) (743)
1 FY23 results have been restated for the presentation of trading
arising from US-based operations discontinued operations as explained above.
11 Earnings Per Share
Earnings per share (EPS) has been calculated by dividing the consolidated
profit or loss after taxation attributable to ordinary shareholders by the
weighted average number of ordinary shares in issue during the period.
Diluted earnings per share has been calculated on the same basis as above,
except that the weighted average number of ordinary shares that would be
issued on the conversion of all the dilutive potential ordinary shares into
ordinary shares has been added to the denominator. The Group's potential
ordinary shares, being the Long-Term Incentive Plan options, are deemed
outstanding and included in the dilution assessment when, at the reporting
date, they would be issuable had the performance period ended at that date.
The effect of potential ordinary shares are reflected in diluted EPS only when
they are dilutive. Potential ordinary shares are considered to be dilutive
when the monetary value of the subscription rights attached to the outstanding
share options is less than the average market share price of the Company's
shares during the period. Furthermore, potential ordinary shares are only
considered dilutive when their inclusion in the calculation would decrease
earnings per share, or increase loss per share, in accordance with IAS 33.
There are no changes to the profit numerator as a result of the dilution
calculation.
The earnings per share information has been calculated as follows:
Total earnings 2024 2023
£'000 £'000
Total profit attributable to ordinary shareholders 186 1,229
Number of shares 2024 2023
'000 '000
Basic weighted average number of ordinary shares in issue 31,587 32,196
Dilutive potential ordinary shares 660 487
Diluted weighted average number of shares 32,247 32,683
Total earnings per share 2024 2023
pence pence
Earnings per ordinary share Basic 0.6 3.8
Diluted 0.6 3.8
Earnings from continuing operations 2024 Restated(1)
£'000 2023
£'000
Total profit for the year from continuing operations 768 3,389
Total earnings per share from continuing operations 2024 Restated(1)
pence 2023
pence
Earnings per ordinary share from continuing operations Basic 2.4 10.5
Diluted 2.4 10.5
Earnings from discontinued operations 2024 Restated(1)
£'000 2023
£'000
Total loss for the year from discontinued operations (582) (2,160)
Total loss per share from discontinued operations 2024 Restated(1)
pence 2023
pence
Loss per ordinary share from discontinued operations Basic (1.8) (6.6)
Diluted (1.8) (6.6)
Earnings from continuing underlying operations 2024 Restated(1)
£'000 2023
£'000
Total profit for the year from continuing underlying operations 1,892 2,573
Total earnings per share from continuing underlying operations 2024 Restated(1)
pence 2023
pence
Earnings per ordinary share from continuing underlying operations Basic 6.0 8.0
Diluted 5.9 7.9
1 FY23 figures have been restated for the presentation of discontinued
operations as explained in Note 10.
12 Goodwill
Group Goodwill Total
£'000 £'000
Cost At 1 August 2022 28,739 28,739
At 31 July 2023 28,739 2
8
,
7
3
9
At 31 July 2024 28,739 2
8
,
7
3
9
Impairment At 1 August 2022 27,027 27,027
At 31 July 2023 27,027 2
7
,
0
2
7
At 31 July 2024 27,027 2
7
,
0
2
7
Net book value At 31 July 2023 1,712 1,712
At 31 July 2024 1,712 1
,
7
1
2
Impairment testing
The carrying amount of goodwill is allocated wholly to the Energy
cash-generating unit (CGU). At the year-end, management reassessed the Energy
CGU following operational changes during the year, further details can be
found in Note 1.22.
Goodwill is reviewed and tested for impairment on an annual basis or more
frequently if it is determined that there is an indication of impairment. For
the purpose of impairment testing, the recoverable amount of the CGU,
including goodwill, intangible assets, right-of-use leased assets and working
capital, is determined as the higher of its value-in-use or fair value less
costs to sell.
At 31 July 2024, the recoverable amount of the Energy CGU's assets was
£3,139,000, an excess of £443,000 above the carrying amount. The Directors
have therefore concluded that the CGU's assets are not impaired.
The key assumptions and estimates used when calculating a CGU's value-in-use,
are as follows:
Cash flows from operations
Discounted cash flows from operations for the Energy CGU were prepared based
on forecasts for the Energy sector, starting with management's FY25 budget and
applying over-arching NFI growth and cost inflation rates from FY26 to FY29.
The Group prepares cash flow forecasts adjusted for allocations of Group
overhead costs and extrapolates cash flows into perpetuity based on long-term
growth rates. The CGU's working capital requirement is expected to increase
proportionately with revenue growth.
Discount rates
The pre-tax rate used to discount the forecast cash flows was 20.4% (FY23:
18.7%) reflecting the Group's weighted average cost of capital, adjusted for
specific risks associated with the asset's estimated cash flows. The nominal
discount rate is based on the weighted average cost of capital (WACC). The
risk-free rate, based on UK Government bond rates, adjusted for equity and
industry risk premiums, reflecting the increased risk compared to an investor
who is investing the market as a whole. Net present values are calculated
using pre-tax discount rates derived from the Group's post-tax WACC of 14.4%
(FY23: 14.1%).
Growth rates
Medium-term growth rates are based on management forecasts, reflecting past
experience and the economic environment in which the Group operates.
Conservative mid-term NFI growth rates have been used, reflecting a degree of
uncertainty over current market headwinds and the timing of recovery of the
permanent recruitment market. Long-term growth rates are based on external
sources of an average estimated growth rate of 2.0% (2023: 2.0%), using a
weighted average of operating country real growth expectations.
Sensitivity analysis
The Directors have considered and assessed reasonably possible changes in the
key assumptions and have performed sensitivity analysis on the estimates of
recoverable amount.
Cash flows from operations for value-in-use are driven by the forecast level
of operating contribution (NFI and operating costs) of the CGU across the
5-year forecast period. Scenarios modelled by management illustrate a range of
possible outcomes, some of which indicated an immaterial impairment, which
included a sustained period of subdued NFI growth and controlled operating
cost inflation. A reduction in expected NFI growth (held at 50% of budgeted
NFI growth in FY25, then 2% per annum in FY26-FY29) and operating cost
inflation (in line with budget in FY25, then 1% per annum in FY26-FY29)
resulted in a potential impairment of the CGU's non-current assets of
£351,000 at 31 July 2024.
The sensitised scenario represents a reasonably possible downside, however it
does not model the full extent of cost mitigations that management would
implement commercially to protect profitability if NFI targets were not
achieved. Such strategic levers available to management to reduce operating
costs during periods of low NFI growth include closely managing staff costs
and limiting non-critical investment in marketing and technology.
13 Intangible Assets
Group Customer relationships Trade Software and software licences Other Total
£'000 names £'000 £'000 £'000
£'000
Cost At 1 August 2022 22,245 5,346 2,561 3,809 33,961
Disposals(1) - - (1,956) - (1,956)
At 31 July 2023 22,245 5,346 605 3,809 32,005
Disposals (9,220) (5,346) (292) (3,809) (18,667)
At 31 July 2024 13,025 - 313 - 13,338
Amortisation and impairment At 1 August 2022 22,077 5,334 2,384 3,806 33,601
Amortisation for the period 62 3 34 3 102
Released on disposal(1) - - (1,948) - (1,948)
At 31 July 2023 22,139 5,337 470 3,809 31,755
Amortisation for the period 60 9 61 - 130
Released on disposal (9,220) (5,346) (292) (3,809) (18,667)
At 31 July 2024 12,979 - 239 - 13,218
Net book value At 31 July 2023 106 9 135 - 250
At 31 July 2024 46 - 74 - 120
1 Software and software licences in relation to legacy systems no
longer in use were disposed in the prior year.
During the year, management have rationalised the Group's intangible asset
registers and have recorded disposals of assets that are fully depreciated and
are no longer in use by the business.
14 Property, Plant and Equipment
Group Leasehold Fixtures, fittings & equipment Total
improvements £'000 £'000
£'000
Cost At 1 August 2022 2,986 4,742 7,728
Additions 61 117 178
Disposals (800) (3,790) (4,590)
Effects of movements in exchange rates (7) (16) (23)
At 31 July 2023 2,240 1,053 3,293
Additions 89 73 162
Disposals (658) (188) (846)
Effects of movements in exchange rates - (3) (3)
At 31 July 2024 1,671 935 2,606
Depreciation and impairment At 1 August 2022 1,856 4,513 6,369
Recategorisation of accumulated depreciation 207 (207) -
Charge for the year 290 199 489
Released on disposal (800) (3,773) (4,573)
Effects of movements in exchange rates (6) (10) (16)
At 31 July 2023 1,547 722 2,269
Charge for the year 256 202 458
Released on disposal (657) (165) (822)
Effects of movements in exchange rates - (1) (1)
At 31 July 2024 1,146 758 1,904
Net book value At 31 July 2023 693 331 1,024
At 31 July 2024 525 177 702
During the prior year, management rationalised the Group's property, plant and
equipment registers and recorded disposals of assets that were fully
depreciated and no longer in use by the business.
There were no capital commitments as at 31 July 2024 or 31 July 2023.
15 Investments in Subsidiary Undertakings
Company Total
£'000
Cost At 1 August 2022 38,608
Reversal of capital contributions (58)
At 31 July 2023 38,550
Capital contributions 200
At 31 July 2023 38,750
Impairment At 1 August 2022 -
At 31 July 2023 -
Impairment of investment in Matchtech Group (Holdings) Limited 7,060
Impairment of investment in Gattaca GmbH(1) 22
At 31 July 2024 7,082
Net book value At 31 July 2023 38,550
At 31 July 2024 31,668
1 The Company's direct investment in Gattaca GmbH, a subsidiary
company, has been fully impaired as Gattaca GmbH has ceased to trade during
the year.
The movement in cost of investments in the Parent Company represents capital
contributions made relating to share-based payments.
Details of the Group's subsidiary undertakings are provided in Note 31.
Impairment testing: Matchtech Group (Holdings) Limited
The Directors identified that the carrying amount of the Parent Company's
investment in Matchtech Group (Holdings) Limited, the principal trading
sub-group, exceeded the Group's market capitalisation at the year-end, and the
Group's financial performance, in terms of NFI and continuing underlying
profit before tax, fell below its budget for the year ended 31 July 2024.
These factors were deemed to be indicators of impairment of the Parent
Company's investments in subsidiary undertakings and as a result the Directors
have performed an impairment review in accordance with IAS 36.
The recoverable amount of the investment has been determined based on
value-in-use calculations, which require the use of estimates. Discounted cash
flows from operations were prepared based on forecasts for the Group, starting
with management's FY25 budget and applying over-arching NFI growth and cost
inflation rates from FY26 to FY29. A pre-tax discount rate of 20.9% has been
used, reflecting the Group's post-tax weighted average cost of capital,
adjusted for specific risks associated with the asset's estimated cash flows.
Medium-term growth rates modelled are based on management forecasts,
reflecting past experience and the economic environment in which the Group
operates. Long-term growth rates are based on external sources of an average
estimated growth rate of 2.0% (2023: 2.0%), using a weighted average of
operating country real growth expectations. The Group's working capital
requirement, assessed at 2.5% of revenue, is expected to increase
proportionately with revenue growth.
At 31 July 2024, the recoverable amount of the investment was £31,668,000, a
deficit of £7,060,000 below the carrying amount. The Directors have therefore
concluded that the investment is impaired and have recorded an impairment in
the Company's results for the year to reduce the carrying amount to the
recoverable amount.
The Directors have considered and assessed reasonably possible changes in the
key assumptions and have performed sensitivity analysis on the estimates of
recoverable amounts. The changes considered in aggregate, including a 100
basis points increase in both the discount rate and working capital
requirement (as a percentage of revenue), represent a reasonably possible
downside scenario but does not model changes in NFI growth rates, nor the full
extent of mitigations that management would implement commercially to protect
profitability if NFI targets were not achieved. The result indicates a
possible further impairment of the investment of £1,853,000, bringing the
recoverable amount in line with the Group's market capitalisation at the
reporting date. Further downside sensitisation of any of the key assumptions
reduces the calculated value-in-use below the Group's market capitalisation,
being the fair value less costs to sell, which would trigger a change in
management's basis for assessment of recoverable amount.
16 Deferred Tax
2024 Asset Liability Net Credited/ (charged) to profit Credited to equity Foreign exchange
Group £'000 £'000 £'000 £'000 £'000 £'000
Share-based payments 224 - 224 6 46 -
Accelerated capital allowances 23 - 23 (11) - -
Acquired intangibles 22 (12) 10 16 - -
Tax losses 2 - 2 2 - -
Other temporary and deductible differences 71 - 71 (68) - -
Gross deferred tax assets/(liabilities) 342 (12) 330 (55) 46 -
Amounts available for offset - - -
Net deferred tax assets/(liabilities) 342 (12) 330
2023 Asset Liability Net Credited/ (charged) to profit Credited to equity Foreign exchange
Group £'000 £'000 £'000 £'000 £'000 £'000
Share-based payments 172 - 172 3 126 -
Accelerated capital allowances 126 (92) 34 16 - -
Acquired intangibles 17 (23) (6) 12 - -
Tax losses - - - (418) - -
Other temporary and deductible differences 139 - 139 28 - 2
Gross deferred tax assets/(liabilities) 454 (115) 339 (359) 126 2
Amounts available for offset (14) 14 -
Net deferred tax assets/(liabilities) 440 (101) 339
The movement on the net deferred tax asset/(liability) is shown
below:
Group
2024 2023
£'000 £'000
At 1 August 339 570
Recognised in income (Note 9) (55) (359)
Recognised in equity 46 126
Foreign exchange - 2
At end of year 330 339
2024 2023
£'000 £'000
Deferred tax assets reversing within 1 year 64 188
Deferred tax liabilities reversing within 1 year (12) (90)
At end of year 52 98
2024 2023
£'000 £'000
Deferred tax assets reversing after 1 year 278 252
Deferred tax liabilities reversing after 1 year - (11)
At end of year 278 241
Deferred tax has been valued based on the substantively enacted rates at each
reporting date at which the deferred tax is expected to reverse.
Unrecognised deferred tax assets
Group
2024 2023
£'000 £'000
Tax losses carried forward against profits of future years 2,620 2,347
Net unrecognised deferred tax assets 2,620 2,347
Of the unused tax losses £9,988,000 (2023: £5,465,000) can be carried
forward indefinitely, £977,000 (2023: £887,000) expires within 10 years and
£171,000 (2023: £3,763,000) expires within 20 years. £139,000 (2023:
£139,000) of the unused tax losses carried forward indefinitely relate to
unrecognised capital losses which may be offset against future chargeable
(capital) gains only.
No deferred tax is recognised on unremitted earnings of overseas subsidiaries
as the Group is in a position to control the timing of the reversal of
temporary differences and it is probable that such differences will not
reverse in the foreseeable future. The temporary differences associated with
the investments in subsidiaries for which a deferred tax liability has not
been recognised aggregate to £1,549,000 (2023: £902,000). If the earnings
were remitted, tax of £3,000 (2023: £nil) would be payable.
17 Trade and Other Receivables
Group Company
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Trade receivables from contracts with customers, net of loss allowance 34,320 31,905 - -
Amounts owed by group undertakings - - 523 1,357
Other receivables 935 3,809 - -
Prepayments 1,004 1,145 - -
Accrued income 16,757 15,309 - -
Total 53,016 52,168 523 1,357
The Directors consider that the carrying amount of trade and other receivables
approximates to the fair value.
Amounts owed to the Company by group undertakings includes an intercompany
loan receivable totalling £nil (2023: £1,350,000), upon which interest is
charged at a market rate. Amounts owed by group undertakings are unsecured,
repayable on demand and accrue no interest, with the exception of the loan
receivable noted above, and are considered to approximate fair value.
Other receivables includes retentions of £273,000 (2023: £2,838,000) on
trade receivables assigned to HSBC under the non-recourse invoice factoring
facility, discussed further in Note 20.
Accrued income relates to the Group's right to consideration for temporary and
permanent placements made but not billed at the year end. These transfer to
trade receivables once billing occurs.
Impairment of trade receivables from contracts with customers
Group
2024 2023
£'000 £'000
Trade receivables from contracts with customers, gross amounts 35,600 33,538
Loss allowance (1,280) (1,633)
Trade receivables from contracts with customers, net of loss allowance 34,320 31,905
Trade receivables are amounts due from customers for services performed in the
ordinary course of business. They are generally settled within 30-60 days and
are therefore all classified as current.
The Group uses a third party credit scoring system to assess the
creditworthiness of potential new customers before accepting them. Credit
limits are defined by customer based on this information. All customer
accounts are subject to review on a regular basis by senior management and
actions are taken to address debt aging issues.
Trade receivables are subject to the expected credit loss model. The Group
applies the IFRS 9 simplified approach to measuring expected credit losses
which uses a lifetime expected loss allowance for all trade receivables.
To measure the expected credit losses, trade receivables have been grouped
based on shared credit risk characteristics by geographical region or customer
industry.
The expected loss rates are based on the payment profiles of sales over a
period of 36 months before the relevant period end and the corresponding
historical credit losses experienced within this period. The historic loss
rates are adjusted to reflect any relevant current and forward-looking
information expected to affect the ability of customers to settle the
receivables. Additionally, external economic forecasts and scenario analysis
has been taken into account along with other macroeconomic factors when
assessing the credit risk profiles for specific industries and geographies.
During the year, the Group reduced its general expected loss allowances rates
to reflect a lower historical credit loss rate, supported by economic
forecasts. The reduction in general expected loss rates gave rise to credits
to the Income Statement on release of loss allowances of £194,000 for trade
receivables and £93,000 for accrued income.
The loss allowance for trade receivables can be analysed as:
31 July 2024 Current More More More Total
than 30
than 60
than 90
days past
days past
days past
Weighted expected loss rate (%) 2.6% 7.8% 53.2% 96.1%
Gross carrying amount - trade receivables (£'000) 34,312 914 122 252 35,600
Loss allowance (£'000) 902 71 65 242 1,280
31 July 2023 Current More More More Total
than 30
than 60
than 90
days past
days past
days past
Weighted expected loss rate (%) 3.6% 3.7% 15.4% 69.5%
Gross carrying amount - trade receivables (£'000) 31,973 903 13 649 33,538
Loss allowance (£'000) 1,147 33 2 451 1,633
The loss allowance for trade receivables at year end reconciles to the opening
loss allowance as follows:
Group
2024 2023
£'000 £'000
Opening loss allowance at 1 August 1,633 2,077
Decrease in loss allowance recognised in the year(1) (166) (156)
Receivables written off during the year as uncollectable (187) (288)
Closing loss allowance at 31 July 1,280 1,633
1 Includes a credit of £194,000 (2023: £nil) relating to the
reduction of general expected loss rates.
Impairment of accrued income
Group
2024 2023
£'000 £'000
Gross accrued income 17,107 15,813
Loss allowance (350) (504)
Accrued income, net of loss allowance 16,757 15,309
The loss allowance for accrued income can be analysed as:
31 July 2024 Current More More More Total
than 60
than 90
than 30
days past
days past
days past
Weighted expected loss rate (%) 2.0% 2.0% 2.0% 9.5%
Gross carrying amount - accrued income (£'000) 16,349 561 88 109 17,107
Loss allowance (£'000) 327 11 2 10 350
31 July 2023 Current More More More Total
than 90 days past
than 30 than 60
days past
days past
Weighted expected loss rate (%) 2.3% 2.8% 18.3% 98.5%
Gross carrying amount - accrued income (£'000) 15,476 143 60 134 15,813
Loss allowance (£'000) 357 4 11 132 504
The loss allowance for accrued income at year reconciles to the opening loss
allowance as follows:
Group
2024 2023
£'000 £'000
Opening loss allowance at 1 August 504 682
Decrease in loss allowance recognised in profit and loss during the year(2) (154) (178)
Closing loss allowance at 31 July 350 504
2 Includes a credit of £93,000 (2023: £nil) relating to the
reduction of general expected loss rates.
18 Provisions
2024 2023
Group Dilapidations Other provisions Total Dilapidations Other provisions Total
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 August 677 735 1,412 880 824 1,704
Provisions made in the year 15 378 393 187 194 381
Provisions utilised (220) (288) (508) (353) (79) (432)
Provisions released (110) (376) (486) (35) (199) (234)
Effect of movements in exchange rates - 10 10 (2) (5) (7)
Balance at 31 July 362 459 821 677 735 1,412
2024 2023
Group Dilapidations Other provisions Total Dilapidations Other provisions Total
£'000 £'000 £'000 £'000 £'000 £'000
Non-current 362 34 396 347 19 366
Current - 425 425 330 716 1,046
Total 362 459 821 677 735 1,412
Dilapidation provisions are held in respect of the Group's office properties
where lease obligations include contractual obligations to return the property
to its original condition at the end of the remaining lease term, ranging
between one and three years. Certain of the Group's property leases include
obligations to reinstate the property into the same condition as when the
lease commenced. Management estimate the value of the future obligation by
reference to historical information, such as dilapidation settlements paid by
the Group for equivalent properties in the past, and to available market
information regarding the potential future cost of refurbishments. Where
applicable, dilapidation provisions are expected to be settled within 12
months of the end of the lease.
During the year the Group exited one office property and agreed dilapidation
settlement for the exited office. Remaining dilapidation provisions have been
reassessed reflecting new information available, including the cost of
settlements in the year.
Other provisions held at 31 July 2024 are primarily in relation to claims for
legal and tax matters, relating to both UK operations and certain discontinued
operations. Where uncertainty exists over the expected timing of realisation
of contractual or constructive obligations other provisions are presented as
current. Management estimate the value of the future obligation by reference
to historical information, such as settlements reached upon similar claims,
and information from our legal and tax advisers.
Non-current provisions are presented at their book value in the financial
statements and are not discounted to present value. The Directors consider the
effect of discounting non-current provisions to be immaterial.
No provisions are held by the Parent Company (2023: £nil).
19 Trade and Other Payables
Group Company
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Trade payables 7,237 5,048 - -
Amounts owed to group undertakings - - - 2,742
Taxation and social security 6,472 7,139 - -
Contractor wages payable 28,469 27,146 - -
Accruals and deferred income 4,414 4,256 - -
Other payables 2,731 3,306 - -
Total 49,323 46,895 - 2,742
Amounts owed to Group undertakings are unsecured, repayable on demand and
accrue no interest. The Directors consider that the carrying amount of trade
and other payables approximates to their fair value.
20 Loans and Borrowings
The Group holds both recourse and non-recourse working capital facilities with
no balances outstanding at the current and prior year end.
Under the terms of the non-recourse facility, the trade receivables assigned
to the facility are owned by HSBC and so have been de-recognised from the
Group's Statement of Financial Position; in addition, the non-recourse working
capital facility does not meet the definition of loans and borrowings under
IFRS. The Group continues to collect cash from trade receivables assigned to
the non-recourse facility on behalf of HSBC which is then transferred to them
periodically each month. Any cash collected from trade receivables under the
non-recourse facility at the end of reporting period that had not been
transferred to HSBC, is presented as restricted cash included within the
Group's cash balance. At 31 July 2024, the Group had agreed invoice financing
working capital facilities with HSBC totalling £50m (2023: £50m) covering
both recourse and non-recourse.
The Group's working capital facilities are secured by way of an all assets
debenture, which contains fixed and floating charges over the assets of the
Group. This facility allows certain companies within the Group to borrow up to
90% of invoiced or accrued income up to a maximum of £50m (2023: £50m).
Interest is charged on the recourse borrowings at a rate of 1.67% (2023:
1.90%) over the Bank of England base rate of 5.25% (2023: 5.00%).
The Company did not have any other loans or borrowings during 2024 or 2023.
21 Financial Assets and Liabilities Statement of Financial Position
Clarification
The carrying amount of the Group's financial assets and liabilities at the
reporting date may also be categorised as follows:
Financial assets are included in the Statement of Financial Position within
the following headings:
Group
2024 2023
£'000 £'000
Trade and other receivables (Note 17)
- Financial assets recorded at amortised cost 52,012 51,023
Cash and cash equivalents
- Financial assets recorded at amortised cost 22,817 23,375
Total 74,829 74,398
Financial liabilities are included in the Statement of Financial Position
within the following headings:
Group
2024 2023
£'000 £'000
Leases (Note 22)
- Financial liabilities recorded at amortised cost 2,070 1,821
Trade and other payables (Note 19)
- Financial liabilities recorded at amortised cost 42,851 39,756
Total 44,921 41,577
22 Leases
The Statement of Financial Position reports the following amounts related to
leases where the Group is a lessee:
Right-of-use assets Buildings Vehicles Other Total
£'000 £'000 £'000 £'000
Cost At 1 August 2022 9,555 392 8 9,955
Additions - 20 - 20
Disposals (1,905) (352) - (2,257)
Effect of reassessment of dilapidation assets 161 - - 161
Derecognition of assets sub-let to third parties(1) (740) - - (740)
Effect of movement in exchange rates (34) - - (34)
At 31 July 2022 7,037 60 8 7,105
At 1 August 2023 7,037 60 8 7,105
Additions 1,225 44 21 1,290
Disposals (2,814) - - (2,814)
Derecognition of assets sub-let to third parties(2) (166) - - (166)
Effect of movement in exchange rates (7) - - (7)
At 31 July 2024 5,275 104 29 5,408
Accumulated depreciation At 1 August 2022 6,506 379 5 6,890
and impairment
Depreciation charge 937 13 2 952
Disposals (1,904) (352) - (2,256)
Effect of reassessment of dilapidation assets 103 - - 103
Derecognition of assets sub-let to third parties(1) (444) - - (444)
Effect of movement in exchange rates (13) - - (13)
At 31 July 2023 5,185 40 7 5,232
At 1 August 2023 5,185 40 7 5,232
Depreciation charge 1,009 14 7 1,030
Disposals (2,814) - - (2,814)
Reversal of impairment(3) (42) - - (42)
Derecognition of assets sub-let to third parties(2) (124) - - (124)
Effect of movement in exchange rates (2) - - (2)
At 31 July 2024 3,212 54 14 3,280
Net book value At 31 July 2023 1,852 20 1 1,873
At 31 July 2024 2,063 50 15 2,128
1 During the prior year, the Group entered into sublease agreements
with third parties to sublet a portion of the office space within the London
and Toronto offices. The right-of-use assets corresponding to the sublet
portion of the offices have been derecognised in line with the requirements of
IFRS 16. Finance lease receivables of £275,000 were recognised in other
receivables.
2 During the current year, the Group entered into sublease arrangements
with a third party to sublet its Derby office. The right-of-use asset has been
derecognised in line with the requirements of IFRS 16. Finance lease
receivables of £38,000 were recognised in other receivables.
3 An impairment recorded in FY22 was partially reversed upon
sub-letting of an office property to a third party during the year.
At 31 July 2024, included within property right-of-use assets is costs of
£327,000 (2023: £677,000) and net book value of £118,000 (2023: £198,000)
relating to dilapidation assets.
Lease liabilities
2024 2023
Buildings Vehicles Other Total Buildings Vehicles Other Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Current 818 29 6 853 840 15 2 857
Non-current 1,182 29 6 1,217 945 18 1 964
Total 2,000 58 12 2,070 1,785 33 3 1,821
Lease liabilities for properties have lease terms of between one and five
years.
The discount rates used to measure the lease liabilities at 31 July 2024 range
between 2.1% to 7.3% for properties (2023: 2.0% to 6.2%), 4.7% to 9.0% for
vehicles (2023: 4.7% to 6.0%) and 10.1% to 11.5% for other leases (2023:
10.1%).
Reconciliation of lease liabilities movement in the year
Buildings Vehicles Other Total
£'000 £'000 £'000 £'000
At 1 August 2022 3,582 38 5 3,625
Additions - 20 - 20
Lease payments (1,171) (27) (2) (1,200)
Interest expense of lease liabilities 66 2 - 68
Effect of reassessment of lease terms (672) - - (672)
Effect of movement in exchange rates (20) - - (20)
At 31 July 2023 1,785 33 3 1,821
At 1 August 2023 1,785 33 3 1,821
Additions 1,208 46 21 1,275
Lease payments (1,048) (23) (13) (1,084)
Interest expense of lease liabilities 60 2 1 63
Effect of movement in exchange rates (5) - - (5)
At 31 July 2024 2,000 58 12 2,070
Total cash outflow for leases in the year was £1,251,000 (2023: £1,327,000).
Amounts in respect of leases recognised in the Income Statement
2024 2023
£'000 £'000
Depreciation expense of right-of-use assets 1,030 952
Interest expense on lease liabilities 63 68
Expense relating to leases of low-value assets and short-term leases (included 104 59
in administrative expenses)
23 Share Capital
Authorised share capital:
2024 2023
£'000 £'000
40,000,000 (2023: 40,000,000) ordinary shares of £0.01 each 400 400
Allotted, called up and fully paid:
2024 2023
£'000 £'000
31,532,686 (2023: 31,856,612) ordinary shares of £0.01 each 315 319
The number of shares in issue by the Company is shown below:
2024 2023
'000 '000
In issue at 1 August 31,857 32,290
Exercise of LTIP share options 99 14
Shares cancelled (423) (447)
In issue at 31 July 31,533 31,857
The Company has one class of ordinary shares. Each share is entitled to one
vote in the event of a poll at a general meeting of the Company. Each share is
entitled to participate in dividend distributions.
Share buyback and cancellation
During the year, the Company made market purchases of, and subsequently
cancelled, 423,000 (2023: 447,000) of its own ordinary shares as part of a
public share buyback. The buyback and cancellation were approved by
shareholders at the Annual General Meeting held in December 2022. The shares
were acquired at an average price per share of £1.18 (2023: £1.11), with
prices ranging from £1.05 to £1.29 (2023: £0.94 to £1.16). The total cost
of the share buyback, financed from the Group's cash reserves, was £502,000
(2023: £500,000) which has been deducted from retained earnings. On
cancellation, the aggregate nominal value of shares was transferred out of
share capital to the capital redemption reserve.
Share Options: Long-Term Incentive Plan (LTIP)
Share option arrangements exist over the Company's shares, awarded under the
LTIP to incentivise Executive Directors and senior management to maximise the
Group's medium and long term performance and therefore drive higher returns
for shareholders.
Under the LTIP, participants are granted options which vest if certain
performance conditions are met over the vesting period, typically three years.
Performance conditions upon which option vesting is assessed in current live
grants include total shareholder return (TSR) ranking, growth in adjusted
earnings per share (EPS), growth in underlying profit before tax (PBT) and
reduction in people attrition.
Once vested, each option may be converted into one ordinary share of the
Company for consideration of £0.01 or above. The options remain exercisable
for a period of up to 10 years from the grant date.
Participation in the LTIP and the quantum and timing of awards is at the
Board's discretion, and no individual has a contractual right to receive any
guaranteed benefits.
An employee benefit trust (the Apex EBT) exists as a branch of Gattaca plc to
purchase Company shares to be used to settle LTIP share-based payment
arrangements that are due to vest in future. Apex Financial Services Limited
is appointed as the Trustee and the administrator to this EBT. During the
year, the Apex EBT purchased 240,000 (2023: 240,000) Company shares and
transferred 61,446 (2023: nil) Company shares to beneficiaries of the LTIP. At
31 July 2024 the Apex EBT held 418,554 (2023: 240,000) shares of Gattaca plc.
The movement in LTIP share options is shown below:
2024 2023
Number Weighted average exercise price Weighted average share price Number Weighted average exercise price Weighted average share price
'000 (pence) (pence) '000 (pence) (pence)
Outstanding at 1 August 1,717 1.0 1,103 1.0
Granted 817 1.0 864 1.0
Forfeited/lapsed (433) 1.0 (230) 1.0
Exercised (160) 1.0 115.0 (13) 1.0 73.5
Expired - 1.0 (7) 1.0
Outstanding at 31 July 1,941 1.0 1,717 1.0
Exercisable at 31 July 194 1.0 102 1.0
The numbers and weighted average exercise prices of LTIP share options vesting
in the future are shown below:
2024 2023
Exercisable from Weighted average remaining contract life Number Weighted average exercise price Weighted average remaining contract life Number Weighted average exercise price
(months) '000 (pence) (months) '000 (pence)
1 December 2023 - - - 4 160 1.0
16 December 2024 5 351 1.0 17 461 1.0
9 May 2025 9 130 1.0 22 130 1.0
6 December 2025 16 729 1.0 29 864 1.0
6 December 2026 28 731 1.0 - - -
Outstanding at 31 July 1,941 1,615
Fair value of LTIP options granted
For LTIP share options granted during the year, the fair value at grant date
was independently determined with the valuation method depending on the
performance condition:
Fair values of NFI, EPS, PBT and people attrition awards are determined using
the Black-Scholes model with reference to the share price at grant date,
discounted to exclude any expected dividends.
Fair value of TSR awards is determined using a Monte Carlo simulation model
that takes into account the probability of achieving the performance
conditions, based on the expected volatility of the Company and the comparator
companies.
The model inputs and associated fair values determined for options granted
during the year are as follows:
2024 2023
NFI, EPS, TSR EPS, TSR
PBT and
PBT and
people attrition
people attrition
Exercise price (£) 0.01 0.01 0.01 0.01
Grant date 06/12/2023 06/12/2023 06/12/2022 06/12/2022
Expiry date 01/12/2033 01/12/2033 06/12/2032 06/12/2032
Share price at grant date (£) 1.22 1.22 0.74 0.74
Expected volatility of the Company's shares(1) 59.63% 59.58% 66.06% 60.41%
Expected dividend yield 5.00% 5.00% 6.00% 6.00%
Risk-free rate 4.15% 4.15% 3.22% 3.22%
Fair value per option at grant date (£) 1.04 0.82 0.61 0.44
1 Expected volatility was calculated independently, by using the
historical daily share price of the Company over a term commensurate with the
expected life of the award.
At 31 July 2024, liabilities arising from share-based payment transactions
total £48,000 (31 July 2023: £33,000). This relates to a provision for
employer's National Insurance contributions that would be payable on exercise
of LTIP share options.
Other share-based payment arrangements
The Group operates a Share Incentive Plan (SIP), which is a HMRC approved plan
available to all employees enabling them to purchase shares out of pre-tax
salary at the current market value. For each share purchased the Company
grants an additional matching share at no cost to the employee which vests
after a three year period of employment. Matching shares are forfeited if the
employee resigns or sells the purchased shares before the vesting date. For
the purposes of valuing shares and to arrive at the corresponding share-based
payment charge, management uses the market price at which matching shares were
purchased at the time of their allocation to an employee's account. During the
year the Company purchased 68,670 shares (2023: 75,809) under this scheme.
The SIP is held by an Employee Benefit Trust (the SIP EBT) for tax purposes.
The SIP EBT buys Company shares at market value with funds from the Group and
employees, and shares held by the SIP EBT are distributed to employees once
vesting conditions are satisfied. The Group has control over the SIP EBT and
therefore it has been consolidated at 31 July 2024 and 31 July 2023.
As at 31 July 2024, excess funds of £64,000 (2023: £13,000) were held by the
SIP EBT and the Apex EBT, which has been included in cash and cash
equivalents.
Expenses arising from equity-settled share-based payment transactions
The following expenses or credits were recognised in the Income Statement in
relation to equity-settled share-based payment arrangements:
2024 2023
£'000 £'000
Long-Term Incentive Plan 156 (81)
Share Incentive Plan 45 17
Total 201 (64)
24 Transactions with Directors and Related Parties
There were no related party transactions with entities outside of the Group
(2023: none) and no related party balances at 31 July 2024 (2023: none).
During the year, Matchtech Group (Holdings) Limited purchased 1 ordinary share
of Matchtech Group (UK) Limited, being the entire minority interest in the
subsidiary, from George Materna, a then-Director of Gattaca plc (resigned 6
December 2023). The share purchase was made at market value.
The remuneration of key management personnel is disclosed in Note 5.
25 Financial Instruments
The financial risk management policies and objectives including those related
to financial instruments and the qualitative risk exposure details, comprising
credit and other applicable risks, are included within the Chief Financial
Officer's report under the heading 'Group financial risk management'.
Maturity of financial liabilities
The following table sets out the contractual maturities of financial
liabilities, including interest payments. This analysis assumes that interest
rates prevailing at the reporting date remain constant:
Group 0 to 1 to 2 to 5 years Contractual cash flows
< 1 years < 2 years < 5 years and over £'000
£'000 £'000 £'000 £'000
2024
Lease liabilities 1,000 882 301 - 2,183
Trade and other payables 38,437 - - - 38,437
Total 39,437 882 301 - 40,620
Group 0 to 1 to 2 to 5 years Contractual cash flows
< 1 years < 2 years < 5 years and over £'000
£'000 £'000 £'000 £'000
2023
Lease liabilities 1,002 444 611 - 2,057
Trade and other payables 35,500 - - - 35,500
Total 36,502 444 611 - 37,557
Company
The Company had no financial liabilities at the reporting date (2023: £nil)
other than amounts due to Group undertakings, which are unsecured and
repayable on demand.
Interest rate sensitivity
The Group's exposure to fluctuations in interest rates on borrowings is
limited to its recourse working capital facility, as explained in Note 20. The
Directors have considered the potential increase in finance costs and
reduction in pre-tax profits due to increases in the Bank of England's base
rate over a range of possible scenarios. Having performed sensitivity
analysis, based upon on the actual utilisation of the facility during FY24,
the effect of a 100 basis point increase in interest rates would be an
increase to the FY24 net interest expense of £2,000 (2023: £1,000).
Borrowing facilities
The Group makes use of working capital facilities, details of which can be
found in Note 20. The undrawn working capital facilities available at year end
in respect of which all conditions precedent had been met was as follows:
Group
2024 2023
£'000 £'000
Undrawn working capital facility 29,942 27,565
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting
the obligations associated with its financial liabilities that are settled by
delivering cash or another financial asset. The Group has a robust approach to
forecasting both net cash/debt and trading results on a monthly basis, looking
forward to at least the next 12 months. At 31 July 2024, the Group had agreed
banking facilities with HSBC totalling £50m (2023: £50m) comprised solely of
a £50m invoice financing working capital facility (2023: £50m invoice
financing working capital facility). The Directors consider that the available
financing facilities in place are sufficient to meet the Group's forecast cash
flows.
Foreign currency risk
The Group's principal foreign currency risk is the short-term risk associated
with the trade receivables denominated in US Dollars and Euros relating to the
UK operations whose functional currency is Sterling. The risk arises on the
difference between exchange rates at the time the invoice is raised to when
the invoice is settled by the client. For sales denominated in foreign
currency, the Group ensures that direct costs associated with the sale are
also denominated in the same currency. Further foreign exchange risk arises
where there is a gap in the amount of assets and liabilities of the Group
denominated in foreign currencies that are required to be translated into
Sterling at the year end rates of exchange. Where the risk to the Group is
considered to be significant, the Group will enter into a matching forward
foreign exchange contract with a reputable bank. No such contracts existed at
31 July 2024.
Net foreign currency monetary assets are shown below:
Group
2024 2023
£'000 £'000
US Dollar 1,447 4,968
Euro 756 1,142
The Directors have considered the effect of a change in the Sterling exchange
rate with the US Dollar and Euro on the balances of cash, aged receivables and
aged payables held at the reporting date, assuming no other variables have
changed. The effect of a 10% (2023: 10%) strengthening and weakening of
Sterling against the US Dollar and Euro is set out below. The Group's exposure
to other foreign currencies is not material.
Group
2024 2023
£'000 £'000
USD / EUR exchange rate - increase 10% (2023: 10%) 192 527
USD / EUR exchange rate - decrease 10% (2023: 10%) (163) (449)
The Company only holds balances denominated in its functional currency and so
is not exposed to foreign currency risk.
26 Capital Management Policies and Procedures
Gattaca plc's capital management objectives are:
• to ensure the Group's ability to continue as a going concern;
• to provide an adequate return to shareholders; and
• by pricing products and services commensurately with the level of
risk.
The Group monitors capital on the basis of the carrying amount of equity as
presented in the Statement of Financial Position.
The Group sets the amount of capital in proportion to its overall financing
structure, i.e. equity and financial liabilities. The Group manages the
capital structure and makes adjustments in the light of changes in economic
conditions and risk characteristics of the underlying assets. Capital for the
reporting year under review is summarised as follows:
Group
2024 2023
£'000 £'000
Total equity 28,304 30,817
Cash and cash equivalents (22,817) (23,375)
Capital 5,487 7,442
Total equity 28,304 30,817
Lease liabilities 2,070 1,821
Overall financing 30,374 32,638
Capital to overall financing ratio 18% 23%
27 Net Cash
Net cash is the total amount of cash and cash equivalents less
interest-bearing loans and borrowings, including finance lease liabilities.
Net cash flows include the net drawdown of loans and borrowings and cash
interest paid relating to loans and borrowings.
2024 1 August Net cash flows Non-cash movements(1) 31 July
2023 £'000 £'000 2024
£'000 £'000
Cash and cash equivalents 23,375 (123) (435) 22,817
Lease liabilities (1,821) 1,147 (1,396) (2,070)
Total net cash 21,554 1,024 (1,831) 20,747
1 Non-cash movements includes impairment of cash and cash equivalents
of £408,000 (2023: £nil).
2023 1 August Net cash flows Non-cash movements 31 July
2022 £'000 £'000 2023
£'000 £'000
Cash and cash equivalents 17,768 5,809 (202) 23,375
Working capital facilities (1,801) 1,801 - -
Lease liabilities (3,625) 1,200 604 (1,821)
Total net cash 12,342 8,810 402 21,554
Restricted cash
Included in cash and cash equivalents is the following restricted cash which
meets the definition of cash and cash equivalents but is not available for use
by the Group:
2024 2023
£'000 £'000
Balances arising from the Group's non-recourse working capital arrangements 16 253
Cash on deposit in accounts controlled by the Group but not available for 706 1,101
immediate drawdown
Total restricted cash 722 1,354
Included within restricted cash is £nil (2023: £391,000) held on deposit in
a Russian bank account, to which the Group currently has no access. During the
year, the Group impaired its cash on deposit in Russia due to the increased
credit risk associated with the financial and regulatory sanctions imposed on
and by Russia.
28 Contingent Liabilities
We continue our cooperation with the United States Department of Justice and
in the year ended 31 July 2024 have incurred £nil (2023: £2,000) in advisory
fees on this matter. The Group is not currently in a position to know what the
outcome of these enquiries may be and therefore we are unable to quantify the
likely outcome for the Group.
The Directors are aware of other potential claims against the Group from a
client which may result in a future liability. The Group considers that at the
date of approval of these Financial Statements, the likelihood of a future
material economic outflow is not probable and an estimate of any future
economic outflow cannot be measured reliably, therefore no provision is being
made.
29 Dividends
2024 2023
£'000 £'000
Equity dividends proposed after the year end (not recognised as a liability) 778 1,580
at 2.5 pence per share (2023: 5.0 pence per share)
Dividends paid in the year totalled £1,566,000, consisting of the final (2.5
pence per share) and special (2.5 pence per share) dividends for FY23
announced in August 2023. On 15 August 2024, the Board announced its
intentions to recommend a full year dividend of 2.5 pence per share which is
expected to be paid in December 2024.
30 Events After the Reporting Date
The Group has not identified any subsequent events.
31 Subsidiary Undertakings
The subsidiary undertakings at the year end are as follows:
Registered Office Note Country of Share Class % Held 2024 % Held 2023 Main Activities
Incorporation
Alderwood Education Ltd(1) 1 United Kingdom Ordinary 100% 100% Non-trading
Barclay Meade Ltd(1) 1 United Kingdom Ordinary 100% 100% Non-trading
Cappo Group Limited 1 United Kingdom Ordinary 100% 100% Holding
Cappo International Limited(1) 1 United Kingdom Ordinary 100% 100% Non-trading
CommsResources Limited(1) 1 United Kingdom Ordinary 100% 100% Non-trading
Connectus Technology Limited(1) 1 United Kingdom Ordinary 100% 100% Non-trading
Gattaca Projects Limited(1) 1 United Kingdom Ordinary 100% 100% Engineering and technical services via Statement of Work
Gattaca Solutions Limited(1) 1 United Kingdom Ordinary 100% 100% Non-trading
Matchtech Group (Holdings) Limited(1) 1 United Kingdom Ordinary 100% 100% Holding
Matchtech Group (UK) Limited(1,2) 1 United Kingdom Ordinary 100% 99.998% Provision of recruitment consultancy
Matchtech Group Management Company Limited 1 United Kingdom Ordinary 100% 100% Non-trading
Networkers International (UK) Limited(1) 1 United Kingdom Ordinary 100% 100% Holding
Networkers International Limited(1) 1 United Kingdom Ordinary 100% 100% Holding
Networkers Recruitment Services Limited(1) 1 United Kingdom Ordinary 100% 100% Non-trading
Resourcing Solutions Limited(1,3) 1 United Kingdom Ordinary 100% 100% Provision of recruitment consultancy
The Comms Group Limited(1) 1 United Kingdom Ordinary 100% 100% Holding
Gattaca BV 1 Netherlands Ordinary 100% 100% Non-trading
Gattaca GmbH 2 Germany Ordinary 100% 100% Non-trading
Gattaca Information Technology Services SLU 3 Spain Ordinary 100% 100% Provision of recruitment consultancy
Cappo Inc. 4 United States Ordinary 100% 100% Non-trading
Networkers Inc. 4 United States Ordinary 100% 100% Provision of recruitment consultancy
Networkers International LLC 4 United States Ordinary 100% 100% Non-trading
Networkers International (Canada) Inc. 5 Canada Ordinary 100% 100% Provision of recruitment consultancy
Gattaca Mexico Services, S.A. de C.V 6 Mexico Ordinary 100% 100% Non-trading
NWI Mexico, S. de R.L. de C.V. 6 Mexico Ordinary 100% 100% Non-trading
Gattaca Services South Africa Pty Limited 7 South Africa Ordinary 100% 100% Provision of support services
Networkers International (China) Co. Limited 8 China Ordinary 100% 100% Non-trading
CommsResources Sdn Bhd(5) 9 Malaysia Ordinary 100% 100% Non-trading
Networkers International (Malaysia) Sdn Bhd 9 Malaysia Ordinary 100% 100% Non-trading
Cappo Qatar LLC(4) 10 Qatar Ordinary 49% 49% Non-trading
Networkers Consultancy (Singapore) PTE. Limited 11 Singapore Ordinary 100% 100% Non-trading
1 For the year ended 31 July 2024, Gattaca plc has provided a legal
guarantee dated 23 October 2024 under s479a-s479c of the Companies Act 2006 to
these subsidiaries for audit exemption.
2 The minority interest in Matchtech Group (UK) Limited was purchased
by Matchtech Group (Holdings) Limited on 3 October 2023.
3 The trade and certain of the net assets of Resourcing Solutions
Limited were transferred to Matchtech Group (UK) Limited on 31 May 2024 as
part of the Group's strategic legal entity rationalisation plan. There is no
income statement, balance sheet or cash flow impact to the Group or Company as
a result of the corporate restructuring undertaken during the year.
4 Cappo Qatar LLC is considered to be a subsidiary as Gattaca plc has
operational control over this entity.
5 CommsResources Sdn Bhd was liquidated on 12 August 2024.
In addition, the following subsidiaries and branches were liquidated during
the financial year:
Registered Office Note Country of Incorporation Share Class % Held at closure % Held 2023 Main Activities
Elite Computer Staff Ltd 1 United Kingdom Ordinary 100% 100% Non-trading
Gattaca Recruitment Limited 1 United Kingdom Ordinary 100% 100% Non-trading
Matchtech Engineering Limited 1 United Kingdom Ordinary 100% 100% Non-trading
MSB Consulting Services Limited 1 United Kingdom Ordinary 100% 100% Non-trading
Networkers International (UK) Russia branch 1 United Kingdom Ordinary 100% 100% Non-trading
All holdings by Gattaca plc are indirect except for Matchtech Group (Holdings)
Limited, Gattaca GmbH and Matchtech Group Management Company Limited.
The Group's Share Incentive Plan (SIP) is held by Gattaca plc UK EBT (the SIP
EBT). The Group has control over the SIP EBT and therefore it has been
consolidated in the Group's results.
Gattaca plc has a branch for an Employee Benefit Trust (the Apex EBT). Apex
Financial Services Limited is the Trustee and the administrator to this EBT.
The Group and Company has control over the Apex EBT and therefore it has been
consolidated in the Group and Company's results.
Registered office addresses
1 1450 Parkway, Solent Business Park, Whiteley, Fareham, Hampshire, PO15 7AF,
United Kingdom
2 c/o ETL Breiler & Schnabl GmbH, Steuerberatungsgesellschaft,
Bahnhofstraße, 55-57, 65185 Wiesbaden, Germany
3 Calle General, Moscardo 6. Espaco Office, Madrid 28020, Spain
4 c/o Gottfried Alexander Law firm, 1505 West Sixth, Austin, Tx 78703, USA
5 1 Richmond Street West, Suite 902, Toronto, Ontario, M5H 3W4, Canada
6 Avenida Paseo de la Reforma No. 296 Piso 15 Oficina A, Colonia Juárez,
Delegación Cuauhtémoc, Código Postal 06600. Ciudad de México, Mexico
7 201 Heritage House, 20 Dreyer Street, Claremont, 7735, South Africa
8 B-2701, Di San Zhi Ye Building, No. A1 Shuguang Xili, Chao Yang District,
Beijing, China
9 6th Floor, Menara Boustead, 69, Jalan Raja Chulan, 50200 Kuala Lumpur,
Malaysia
10 Suite #204, Office #40 Al Rawabi Street, Muntazah, Doha, State of Qatar. PO
Box 8306
11 3 Phillip Street #14-05 , Royal Group Building, Singapore 048693
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