REG - Gattaca PLC - Interim Results
16/04/2024 07:00
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RNS Number : 6980K Gattaca PLC 16 April 2024
16 April 2024
Gattaca plc
("Gattaca" or "the Group")
Interim Results for the six months ended 31 January 2024
"Focus on our core strengths"
Gattaca plc, the specialist staffing business, today announces its financial
results for the six months ended 31 January 2024 ("2024 H1").
Financial Highlights
Continuing operations 2024 H1 2023 H1 Variance
(restated(2))
Revenue (£m) 188.4 192.8 -2%
Net Fee Income (NFI)(1) (£m) 19.7 22.5 -13%
Operating (loss) / profit (£m) (0.1) 0.4 -
Underlying profit before tax(3) (£m) 0.8 0.7 +10%
Profit before tax (£m) 0.5 0.6 -16%
Profit after tax (£m) 0.2 0.4 -44%
Loss after tax from discontinued operations - (0.2) -
Group profit after tax 0.2 0.2 +9%
Basic earnings per share (pence) 0.7 0.6 +17%
Net cash (£m) 22.3 20.9 +7%
Highlights
· Group NFI of £19.7 million, a decrease of 13% year-on-year ("YoY")
o UK NFI down 10% at £19.1 million (2023 H1(2): £21.3 million)
o Defence performed strongly with 12% year-on-year growth when excluding a
Recruitment Process Outsourcing ("RPO") contract we chose to exit in the prior
year
o Technology, Media & Telecoms ("TMT") showed 10% growth in 2024 H1
o Contract & Statement of Work ("SoW") vs Perm split 76% / 24% of Group
NFI (2023 H1: 68% / 32%)
o Contract NFI down 3% YoY, however exiting 2024 H1 with a growing contract book
o Permanent NFI down 36% YoY, due to challenging market conditions and against a
strong comparative including £0.9m from the RPO account we chose to exit
o Gattaca Projects Statement of Work ("SOW") NFI up 14% year-on-year, due to
phasing on long-term contracts in 2024 H1; full-year NFI expected to be in
line with FY23
· Group underlying profit before tax of £0.8m (2023 H1(2): £0.7m), offsetting
NFI underperformance with focus on cost management
· Total sales headcount of 306 at the end of the period down 1% versus 31 July
2023 and 11% down versus 31 January 2023; rebalancing in our Energy and
Business Development teams whilst reducing headcount in non-core areas
· Net cash of £22.3 million (31 July 2023: £21.6 million)
· No interim dividend (2023 H1: nil pence)
Strategic update
Continued emphasis on developing the four identified strategic priorities for
sustainable profitable growth:
External Focus
· Built and deployed our new Business Development team as part of our investment
in front-line sales capability and doubled our Energy sales team with a focus
on Renewables, increasing our efforts in our core markets
· Implemented two new major Solutions accounts and retained two major accounts
that retendered during the period
· Continued emphasis on client and candidate service feedback surveys, with
increased survey responses and ratings of 8.8 and 8.9 (out of 10)
respectively, vs 7.7 and 8.5 in FY23
Culture
· Winner of two Business Culture awards; Best Transformation and Leading with
Purpose
· People engagement remains stable at 8.1 for 2024 H1 (FY23: 8.1) and attrition
improved to 30% at 31 January 2024 (31 July 2023: 33%), showing our focus on
culture is fully embedded in the business
Operational Performance
· Average NFI per sales head has increased by +2%, and by +1% per total head YoY
(excluding an RPO perm client from 2023 H1 we chose to exit)
· Successfully launched a series of customer focused automations and enhanced
customer platforms, which will result in streamlined processes on the back of
our digital transformation
· Reset Board and validated strategy and leadership structure
Cost Rebalancing
· Ongoing optimisation of our UK property footprint, project to be completed in
H2 with further cost reduction to be realised
· Support functions in North America have been outsourced to ensure a
right-sized cost base for the region
· Slimmed down Board cost base
Progress on these strategic priorities will continue throughout the second
half of 2024 and extend into FY25 as we focus on building sustained growth.
Outlook
We continue to be mindful of the macro-economic headwinds, which have impacted
demand and candidate sentiment across the recruitment sector and negatively
affected performance. We continue to see permanent recruitment subdued in the
short term and our focus remains on growing our contractor base. As such we
expect full year underlying profit before tax to be in a range of £2.4m to
£2.7m.
Despite the current market conditions, we are optimistic about the future for
the Group. Our proactive measures, including cost-cutting initiatives and
operational streamlining, have positioned us favourably to capitalise on
market resurgence when it occurs. We are only actively pursuing growth
opportunities in sectors, services, and geographies where we believe we can be
a dominant provider. Our strategic investments will be aimed at enhancing our
capability in those markets.
Matthew Wragg, Chief Executive Officer said:
"Our strategy to invest in business development is starting to have a positive
impact on the business, with two large client extensions and two more Managed
Service Provider (MSP) wins for the Group in H1 and a growing pipeline. We
continue to see high engagement, staff attrition below long-term targets and
despite the market conditions, our productivity levels improving. In H1 we
have continued to focus on specific markets and geographies. We have taken our
first steps to reduce our workforce in North America to streamline the
regional cost base and will continue to develop our international strategy.
Economic conditions have led to a challenging market in H1, and we have not
been immune to this. Permanent fee income is down 38% due to much lower than
anticipated volumes during late 2023 and compounded by reduced NFI from the
exiting of a major programme last year. We have yet to see signs of
improvement in the lead indicators for Permanent fee income and expect demand
to remain subdued throughout the remainder of 2024. Contract income has
remained stable, and pleasingly we are starting to see growth in our contract
book.
Recognising that short term trading conditions are expected to remain
challenging, we will continue to keep tight control on operating costs. We are
mindful to ensure we are well placed to build market share in our chosen
sectors as the economy recovers."
The following footnotes apply, unless where otherwise indicated, throughout
these Interim Results:
1. NFI is calculated as revenue less contractor payroll costs
2. HY23 results have been restated for the correction of a revenue cut-off
error, and the subsequent reassessment of the Group's accounting policy over
how accrued revenue and accrued cost balances have been calculated at each
period end. The aggregated impact of these items on HY23 reported results is
£0.2m reduction to reported profit before tax. Further details are provided
in Note 1.5 of the HY24 Condensed Consolidated Interim Financial Statements.
3. Continuing underlying results exclude the NFI and (losses) before
taxation of discontinued operations (2024 H1: nil, 2023 H1: £(0.2)m),
non-underlying items within administrative expenses primarily related to
restructuring costs (2024 H1: £0.5m, 2023 H1: £0.2m), amortisation of
acquired intangibles (2024 H1: £0.0m, 2023 H1: £0.0m), impairment of
goodwill, acquired intangibles and right of use assets (2024 H1: £0.0m, 2023
H1: nil), and exchange gains from revaluation of foreign assets and
liabilities (2024 H1: £0.2m, 2023 H1: £0.2m).
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 as amended by the Market Abuse (Amendment) (EU Exit)
Regulations 2019. 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
Liberum Capital Limited (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
Operational Performance
Net Fee Income (NFI) £m 2024 H1 Restated(1) Change
2023 H1
Infrastructure 6.5 7.1 -9%
Defence 3.6 4.2 -12%
Mobility 2.2 2.2 +1%
Energy 1.8 2.1 -15%
Technology, Media & Telecoms 1.4 1.2 +10%
Gattaca Projects 1.2 1.0 +14%
Other 2.4 3.5 -31%
Total UK 19.1 21.3 -10%
International 0.6 1.2 -56%
Continuing Total Group NFI 19.7 22.5 -13%
1. 2023 H1 results have been restated for the correction of a revenue cut-off
error, and the subsequent reassessment of the Group's accounting policy over
how accrued revenue and accrued cost balances have been calculated at each
period end. The aggregated impact of these items on 2023 H1 reported results
is £0.2m reduction to reported profit before tax. Further details are
provided in Note 1.5 of the 2024 H1 Condensed Consolidated Interim Financial
Statements.
Infrastructure
Infrastructure NFI decreased by -9% year-on-year, with a challenging 6-month
period in the Transportation and Water sub-sectors, marginally offset by
modest growth in the Rail sub-sector. Contract demand stayed stable with low
growth across all sub-sectors and the start of an uptick seen at the end of
2024 H1. However, the struggling permanent market had an impact on NFI across
the board and the demand for permanent candidates was low, in line with wider
market trends. Within the water market AMP7 spend is in its delivery phase,
generating an increase in on-site work and contractor requirements. The
Government recognises the economic benefit of commitment to infrastructure
programmes, which is expected to continue past the next General Election and
Gattaca continues to be well-placed, delivering resource into the private
sector companies who are actively working on the large regional and national
projects such as the remaining parts of HS2, the UK National Highways
programme and the many other major rail projects in progress around the
country.
Defence
Defence NFI grew £0.3m year-on-year on a like-for-like basis excluding the
£(0.9)m impact of proactively exiting a large RPO permanent recruitment
client in the middle of FY23; overall, with this client included in the prior
period, Defence contracted by £(0.6)m year-on-year. The sector continues to
perform with steady demand for talent and contract labour needs having seen
the most growth in 2024 H1.
Resource demand in the UK Defence sector continues to increase over 2024 H1,
accompanied by the increases seen in salaries and pay rates. The UK
government's budget announcements show continued commitment to a further
£11bn of Defence spend over the next five years. The market is well
recognised for stability during economic fluctuations and Gattaca's access to
the major UK market is strong, serving over half of the UK MoD's top 100
suppliers, across engineering, technology, manufacturing, and IT skills, with
demand specifically for systems and software engineering, and cyber security
talent.
Mobility
NFI in our Mobility market for 2024 H1 was up 1% against last half-year. This
was balanced, with challenges in contract demand offset by a surge forward in
permanent recruitment opportunity in 2024 H1 as Aerospace solutions clients
increased demand. However, at the turn of the calendar year, we have seen a
tightening in clients' staffing plans and some temporary hiring freezes coming
into place, indicating a tough 2024 H2 ahead for this sector. Longer term,
the increase in the airframe order book across the Aerospace sub-sector
remains strong and the demand for quality, manufacturing and production skills
remains high. We are also seeing the need for software, power electronics and
systems engineering skills remaining high across the Automotive sub-sector,
along with increasing levels of businesses looking for talent to support
battery, fuel cells and propulsion systems development as well as
manufacturing skills for low or zero carbon emitting vehicles.
Energy
Energy NFI was down 15% year-on-year, largely attributed to shortages in
demand for offshore oil and gas contractors in North America after a strong
2023 H1. Pressure on global energy production continues to create opportunity
in the UK market, and sector investment focus is increasing on green energy
generation and updates and technological advancements to improve transmission.
Gattaca is well positioned to capture market opportunities in renewables,
transmission and distribution, nuclear and oil and gas markets. In this half
year, we have doubled our Energy team to start to capitalise on this
opportunity.
Technology, Media & Telecoms (TMT)
TMT NFI has increased by 10% year-on-year, against a weaker 2023 H1 when mass
lay-offs were seen across the UK, European and North American markets; this
increase in 2024 H1 was largely driven by demand for contract roles. The
demand for experienced labour remains competitive and market focus remains
around skills in digital transformation, development, cloud, and cyber
security from all types and sizes of businesses in a hostile cyber
environment.
Gattaca Projects
Gattaca Projects' statement of work NFI has grown by 14% year-on-year. The
growth is attributed to the completion of a significant multi-year contract
and the successful acquisition of numerous smaller short-term contracts.
Gattaca continues to invest in the subcontracting market as we see growth
opportunity with our specialism in project management, supply chain management
and quality assurance packages of work. We are continuing to commit additional
resource to this team as the pipeline of work grows, and our capability
increases, as this adds stronger margin to our business mix.
UK Other
NFI across the aggregation of our other smaller markets was down 31%
year-on-year partly driven by a reduction in Barclay Meade, our permanent
recruitment biased professional services brand, which experienced a continued
drop-off in permanent market conditions for skill sets across accounting and
finance, procurement, HR, and sales. This aligns with broader patterns
observed in the UK staffing market. Trading in our Smart Manufacturing and
Public Sector sectors was similarly behind, due to sharp downturns in
production at some large blue-collar contract clients and permanent hiring
demand down as in other sectors. However, we secured a new contract MSP at the
end of 2024 H1, bringing volume to the contract book in Smart Manufacturing
which we expect to deliver increased NFI in 2024 H2.
International
International NFI was down 56% year-on-year, primarily driven by the end of a
large RPO permanent deal in the US technology sector in the prior year and the
decision to reduce the US sales workforce; we continue to review our strategy
in this country. We are increasing our focus on the Infrastructure and Energy
contract sector in Canada, working closely with our team in the UK.
Group contractor and permanent fee mix
Contract fees accounted for 70% of continuing underlying NFI in 2024 H1 (2023
H1 restated: 63%, FY23: 69%). During the period, the contract base grew by
2.5%, to approximately 4,220 contractors.
Permanent fees accounted for 24% of continuing underlying NFI in 2024 H1 (2023
H1 restated: 32%, FY23: 26%). In 2024 H1, we saw a reduction in demand for
permanent hires in our contingent and solutions business across almost all our
sectors, a reversal of the trend in FY22 and FY23. Aligned to the wider
recruitment sector, we have observed several clients temporarily halting
recruitment programmes due to nervousness about the UK economy.
Statement of Work NFI, from Gattaca Projects, was 6% of continuing underlying
NFI in 2024 H1 (2023 H1 restated: 5%. FY23: 5%). Phasing on long-term
contracts can impact NFI generation but our pipeline of projects delivering
project management, supply chain management and quality assurance work
packages remains strong and is widening to operate with clients across our
Defence and Energy sectors.
People
As at 31 January 2024 Gattaca's headcount was 446, marking a reduction of 51
employees (-10%) compared to 31 January 2023. This decrease was due to
performance management actions undertaken in the sales teams. The ratio of
sales to support staff was 69:31 at both 31 January 2024 and 31 January 2023.
The Group is committed to growing sales staff above 75% of overall employees.
Financial Overview
Revenue for the period was £188.4 million (2023 H1 restated: £192.8 million,
FY23: £385.2 million), down 2.3% year-on-year. NFI of £19.7 million (2023 H1
restated: £22.5 million, FY23: £43.4 million) represented a 12.8%
year-on-year decrease. Contract NFI margin of 8.1% (2023 H1 restated: 8.1%,
FY23: 8.5%) was flat compared with the same period in the prior year; due to a
marginal mix change of blue and white-collar contractors and pricing pressure
on contract renewals. Gattaca Projects SoW margin was 26.5% (2023 H1: 40.2%,
FY23: 27.8%), down against the same period in the prior year due to phasing of
project costs, but consistent with FY23.
Continuing underlying profit before tax for the period amounted to £0.8
million (2023 H1 restated: £0.7 million, FY23: £2.6 million). On a
continuing basis, the effective tax rate was 55% (2023 H1 restated: 32%). The
Group's continuing underlying effective tax rate reported at 31 July 2023 was
43%.
Basic and diluted earnings per share from continuing operations were both 0.7
pence (2023 H1 restated: 1.3 pence) and underlying basic and diluted earnings
per share from continuing operations were 1.6 pence (2023 H1 restated: 1.6
pence).
Administrative costs
Underlying administrative costs of £19.3 million (2023 H1: £21.8 million,
FY23: £41.0 million) represented a decrease of 11.5% during the period,
largely due to reduced staff costs, advisor fees and a reduction in the
Group's expected credit loss provision.
A breakdown of the decrease in administrative costs is shown below:
£m
2023 H1 continuing underlying administrative costs 21.8
Sales staff costs (0.7)
Commissions, bonuses and incentives (0.9)
Trade receivables and accrued income expected credit loss provision release (0.5)
Legal and professional fees (0.3)
Other costs (0.1)
2024 H1 continuing underlying administrative costs 19.3
Non-underlying costs and discontinued operations
The continuing non-underlying costs of £0.5 million (2023 H1: £0.3 million,
FY23: credit of £(0.2) million), relate predominantly to employee
restructuring costs in North America in 2024 H1.
In 2024 H1, no operational results have been presented as discontinued on the
basis that ongoing closure costs are immaterial. In the prior periods, the
loss before tax from discontinued operations of £(0.2)m in 2023 H1 (FY23:
£(0.5)m) arose from ongoing closure costs in connection with the Group's
recruitment operations in South Africa, Mexico and Asia which were either sold
or closed in prior periods.
Financing costs
Net finance income of £0.4 million (2023 H1: net finance costs of £0.0
million, FY23: net finance income of £0.2 million) reflected sustained lower
utilisation of the working capital facility and increased interest income on
money market deposits.
Debtors, cash flow, net cash / (debt) and financing
Net cash at 31 January 2024 was £22.3 million (31 July 2023: £21.6 million;
31 January 2023: £20.9 million).
The Group's trade and other receivables balance was £46.8 million at 31
January 2024 (31 July 2023: £52.2 million), of which debtor and accrued
income balances were £44.1 million (31 July 2023: £47.2 million), a £3.1
million reduction over the 6-month period from 31 July 2023. The Group's days
sales outstanding ("DSO") over this period (on a weekly based countback
method) increased by 10 days from 43 to 53 days at 31 January 2024, although 6
days lower than the DSO position at 31 January 2023. The DSO position at 31
July 2023 is considered to have been near optimal levels; there is
consistently a seasonal increase in DSO following the Christmas and New Year
period.
In 2024 H1, £0.5m of cash was returned to shareholders through a share
buyback programme, a total of 422,586 shares were purchased and cancelled at
an average price of 118 pence per share.
Capital expenditure in the period amounted to £0.1 million (2023 H1: £0.1
million, FY23: £0.2 million).
As at 31 January 2024, the Group had a working capital facility of £50
million (31 July 2023: £50m, 31 January 2023: £60m). This facility includes
both recourse and non-recourse elements. Under the terms of the non-recourse
facility, the trade receivables are assigned to and owned by HSBC and so are
not recognised in the Group's statement of financial position. In addition,
the non-recourse working capital facility does not meet the definition of
loans and borrowings under IFRS. The utilisation of this facility at 31
January 2024 was £2.0 million in credit on the recourse facility and £(4.6)
million borrowing on the non-recourse facility.
Dividend
The Board is mindful of the importance of dividends to shareholders. The Board
has not proposed an interim dividend for 2024 (2023 H1: nil). The Board will
review in line with our policy at the year end.
Risks
The Board considers strategic, financial, and operational risks and identifies
actions to mitigate those risks. Key risks and their mitigations were
disclosed on pages 58 to 65 of the Annual Report for the year ended 31 July
2023.
We continue to manage several potential risks and uncertainties including
contingent liabilities as noted in the interim accounts - many of which are
common to other similar businesses - which could have a material impact on our
longer-term performance.
Outlook
We continue to be mindful of the macro-economic headwinds, which have
impacted demand and candidate sentiment across the recruitment sector and
negatively affected performance. We continue to see permanent recruitment
subdued in the short term and our focus remains on growing our contractor
base. As such we expect full year underlying profit before tax to be in a
range of £2.4m to £2.7m.
Despite the current market conditions, we are optimistic about the future for
the Group. Our proactive measures, including cost-cutting initiatives and
operational streamlining, have positioned us favourably to capitalise on
market resurgence when it occurs. We are only actively pursuing growth
opportunities in sectors, services, and geographies where we believe we can be
a dominant provider. Our strategic investments will be aimed at enhancing our
capability in those markets.
Condensed Consolidated Income Statement
For the period ended 31 January 2024
6 months to 31/01/2024 Restated(2) 12 months to 31/07/2023
unaudited 6 months
to 31/01/2023
unaudited
Note £'000 £'000 £'000
Continuing operations
Revenue 2 188,443 192,786 385,174
Cost of sales (168,780) (170,243) (341,773)
Gross profit 2 19,663 22,543 43,401
Administrative expenses(1) (19,801) (22,122) (40,967)
(Loss)/profit from continuing operations 4 (138) 421 2,434
Finance income 671 242 408
Finance cost (26) (61) (87)
Profit before taxation 507 602 2,755
Taxation 5 (280) (194) (1,004)
Profit after taxation from continuing operations 227 408 1,751
Discontinued operations
Loss for the period from discontinued operations (attributable to equity 6 - (199) (522)
holders of the
Company)
Profit for the period 227 209 1,229
(1) Administrative expenses from continuing operations includes net impairment
releases on trade receivables and accrued income of £843,000 (period ending
31 January 2023: £393,000, year ending 31 July 2023: £334,000).
(2) HY23 results have been restated as explained further in Note 1.5.
Profits for the periods to 31 January 2024, 31 January 2023 and the year to 31
July 2023 are wholly attributable to equity holders of the parent.
6 months Restated(1) 12 months
to 31/01/2024 6 months to 31/07/2023
unaudited to 31/01/2023
unaudited
Earnings per ordinary share Note pence pence pence
Basic earnings per share 7 0.7 0.6 3.8
Diluted earnings per share 7 0.7 0.6 3.8
Reconciliation to adjusted profit measure
Underlying profit is the Group's key adjusted profit measure; profit from
continuing operations is adjusted to exclude non-underlying income and
expenditure as defined in the Group's accounting policy, amortisation and
impairment of goodwill and acquired intangibles, impairment of leased
right-of-use assets and net foreign exchange gains or losses.
6 months Restated(1)
to 31/01/2024 6 months 12 months
unaudited to 31/01/2023 to 31/07/2023
unaudited
Note £'000 £'000 £'000
(Loss)/profit from continuing operations (138) 421 2,434
Add:
Non-underlying items included within administrative expenses 4 480 300 (175)
Amortisation of acquired intangibles 4 32 35 68
Depreciation of property, plant and equipment, leased right-of-use assets and 4 766 734 1,475
amortisation of software and software licences
Underlying EBITDA 1,140 1,490 3,802
Less:
Depreciation of property, plant and equipment, leased right-of-use assets and (766) (734) (1,475)
amortisation of software and software licences
Net finance income/(costs) excluding foreign exchange gains and losses 443 (10) 241
Underlying profit before taxation 817 746 2,568
Underlying taxation (303) (222) (1,096)
Underlying profit after taxation from continuing operations 514 524 1,472
(1) HY23 results have been restated as explained further in Note 1.5.
Condensed Consolidated Statement of Comprehensive Income
For the period ended 31 January 2024
Restated(1)
6 months 6 months 12 months
to 31/01/2024 to 31/01/2023 to 31/07/2023
unaudited unaudited
£'000 £'000 £'000
Profit for the period 227 209 1,229
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations (23) (285) (243)
Other comprehensive loss for the period (23) (285) (243)
Total comprehensive income/(loss) for the period attributable to equity 204 (76) 986
holders of the parent
Restated(1)
6 months 6 months 12 months
to 31/01/2024 to 31/01/2023 to 31/07/2023
unaudited unaudited
£'000 £'000 £'000
Attributable to:
Continuing operations 204 108 1,708
Discontinued operations - (184) (722)
Total comprehensive income/(loss) for the period attributable to equity 204 (76) 986
holders of the parent
(1) HY23 results have been restated as explained further in Note 1.5.
Condensed Consolidated Statement of Financial Position
As at 31 January 2024
Restated(1)
31/01/2024 31/01/2023 31/07/2023
unaudited unaudited
Note £'000 £'000 £'000
Non-current assets
Goodwill and intangible assets 1,897 2,007 1,962
Property, plant and equipment 848 1,243 1,024
Right-of-use assets 1,732 2,391 1,873
Deferred tax assets 410 465 440
Total non-current assets 4,887 6,106 5,299
Current assets
Trade and other receivables 9 46,758 49,243 52,168
Corporation tax receivables 132 1,133 534
Cash and cash equivalents 23,893 24,304 23,375
Total current assets 70,783 74,680 76,077
Total assets 75,670 80,786 81,376
Non-current liabilities
Deferred tax liabilities (19) (9) (101)
Provisions 10 (389) (661) (366)
Lease liabilities (930) (1,886) (964)
Total non-current liabilities (1,338) (2,556) (1,431)
Current liabilities
Trade and other payables (43,504) (45,090) (46,895)
Provisions 10 (816) (951) (1,046)
Current tax liabilities (388) (287) (330)
Lease liabilities (689) (1,175) (857)
Bank loans and borrowings - (342) -
Total current liabilities (45,397) (47,845) (49,128)
Total liabilities (46,735) (50,401) (50,559)
Net assets 28,935 30,385 30,817
Equity
Share capital 11 316 323 319
Share premium 8,706 8,706 8,706
Capital redemption reserve 8 - 4
Merger reserve 224 224 224
Share-based payment reserve 204 348 334
Translation reserve 673 852 696
Treasury shares reserve (479) (214) (331)
Retained earnings 19,283 20,146 20,865
Total equity 28,935 30,385 30,817
(1) HY23 results have been restated as explained further in Note 1.5.
The accompanying notes form part of these interim financial statements.
Condensed Consolidated Statement of Changes in Equity
For the period ended 31 January 2024
Restated(1)
Share capital Share premium Capital redemption reserve Merger reserve Share-based payment reserve Translation reserve Treasury shares reserve Restated(1) Restated(1)
Retained earnings Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 August 2022, as originally presented 323 8,706 - 224 350 1,137 (147) 19,404 29,997
Retrospective adjustments to revenue cut-off (Note 1.5) - - - - - - - 456 456
Restated total equity at 1 August 2022 323 8,706 - 224 350 1,137 (147) 19,860 30,453
Profit for the period - - - - - - - 210 210
Other comprehensive loss - - - - - (285) - - (285)
Total comprehensive loss - - - - - (285) - 210 (75)
Share-based payments charge - - - - 75 - - - 75
Share-based payments reserve transfer - - - - (77) - - 77 -
Deferred tax movement in respect of share options - - - - - - - (1) (1)
Purchase of treasury shares - - - - - - (67) - (67)
Transactions with owners - - - - (2) - (67) 76 7
Total equity at 31 January 2023 (unaudited) 323 8,706 - 224 348 852 (214) 20,146 30,385
Restated total equity 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 (loss)/ income - - - - - (243) - 1,229 986
Share-based payments credit - - - - (64) - - - (64)
Share-based payments reserve 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(2) (4) - 4 - - - - (500) (500)
Translation reserve movements on disposal of foreign operations - - - - - (198) - 198 -
Transactions with owners (4) - 4 - (16) (198) (184) (224) (622)
Total equity at 31 July 2023 319 8,706 4 224 334 696 (331) 20,865 30,817
Total equity at 1 August 2023 319 8,706 4 224 334 696 (331) 20,865 30,817
Profit for the period - - - - - - - 227 227
Other comprehensive loss - - - - - (23) - - (23)
Total comprehensive (loss)/ income - - - - - (23) - 227 204
Share-based payments charge - - - - 80 - - - 80
Share-based payments transfer - - - - (210) - - 210 -
Deferred tax movement in respect of share options - - - - - - - 50 50
Shares issued on exercise of LTIP share options 1 - - - - - - - 1
Purchase of treasury shares - - - - - - (148) - (148)
Purchase and cancellation of own shares(2) (4) - 4 - - - - (503) (503)
Dividend paid - - - - - - - (1,566) (1,566)
Transactions with owners (3) - 4 - (130) - (148) (1,809) (2,086)
Total equity at 31 January 2024 (unaudited) 316 8,706 8 224 204 673 (479) 19,283 28,935
(1) HY23 results have been restated as explained further in Note 1.5.
(2) During the periods ended 31 January 2024 and 31 July 2023, Gattaca plc
undertook a public share buyback and a capital redemption reserve was created
as a result of the subsequent cancellation of these shares, as discussed in
Note 11.
Condensed Consolidated Cash Flow Statement
For the period ended 31 January 2024
6 months Restated Restated
to 31/01/23 6 months ⁽¹⁾ ⁽²⁾ 12 months ⁽¹⁾
unaudited to 31/01/22 to 31/07/22
unaudited
6 months Restated(1) 12 months
to 31/01/2024 6 months to 31/07/2023
unaudited to 31/01/2023
unaudited
£'000 £'000 £'000
Note
Cash flows from operating activities
Profit after taxation 227 209 1,229
Adjustments for:
Depreciation of property, plant and equipment and amortisation of 322 284 591
intangible assets, software and software licences
Depreciation of leased right-of-use assets 476 485 952
Loss on disposal of property, plant and equipment 5 14 17
Loss on disposal of software and software licences - 8 8
Reversal of impairment on right-of-use assets (42) - -
Profit on reassessment of lease term - - (672)
Profit on reassessment of dilapidation asset - - (58)
Interest income (469) (52) (328)
Interest costs 26 61 87
Taxation expense recognised in the income statement 279 188 1,007
Decrease in trade and other receivables 5,377 9,225 6,243
(Decrease)/increase in trade and other payables (3,391) (1,333) 476
Decrease in provisions (207) (88) (285)
Share-based payment charge/(credit) 80 75 (64)
Foreign exchange (losses)/gains (55) (199) 37
Cash generated from operations 2,628 8,877 9,240
Interest paid (1) (23) (19)
Interest on lease liabilities (25) (38) (68)
Interest received 469 52 328
Income taxes repaid 188 5 61
Cash generated from operating activities 3,259 8,873 9,542
Cash flows from investing activities
Purchase of property, plant and equipment (87) (129) (178)
Sublease rent receipts 76 - 130
Cash used in investing activities (11) (129) (48)
Cash flows from financing activities
Lease liability principal repayment (557) (614) (1,200)
Purchase of treasury shares (148) (67) (184)
Purchase of own shares for cancellation (503) - (500)
Working capital facility repaid - (1,459) (1,801)
Dividends paid (1,566) - -
Cash used in financing activities (2,774) (2,140) (3,685)
Effects of exchange rates on cash and cash equivalents 44 (68) (202)
Increase in cash and cash equivalents 518 6,536 5,607
Cash and cash equivalents at beginning of the period 23,375 17,768 17,768
Cash and cash equivalents at end of the period 23,893 24,304 23,375
12
(1) HY23 results have been restated as explained further in Note 1.5.
Net decrease in cash and cash equivalents from discontinued operations was
£nil (6 months to 31 January 2023: decrease of £253,000, year to 31 July
2023: decrease of £281,000).
NOTES
Forming part of the condensed consolidated interim financial statements
1 Basis of preparation and significant accounting policies
1.1 General information
Gattaca plc ('the Company') and its subsidiaries (together 'the Group') is a
human capital resources business providing contract and permanent recruitment
services in the private and public sectors 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 registered office address is 1450
Parkway, Solent Business Park Whiteley, Fareham, Hampshire, PO15 7AF. The
Company's registration number is 04426322.
1.2 Basis of preparation
These unaudited condensed consolidated interim financial statements are for
the six months ended 31 January 2024 and do not constitute statutory accounts
as defined by section 435 of the Companies Act 2006. The interim financial
statements have been prepared in accordance with the AIM rules and IAS 34,
'Interim Financial Reporting'. Whilst the financial information included in
the interim financial statements has been prepared in accordance with
UK-adopted International Accounting Standards, the interim financial
statements do not include all of the information required for full annual
financial statements, and should be read in conjunction with the consolidated
financial statements for the year ended 31 July 2023 which have been filed
with the Registrar of Companies and are available from the Group's website,
www.gattacaplc.com/investors. The statutory financial statements for the year
ended 31 July 2023 received an unqualified report from the auditors and did
not contain a statement under section 498 of the Companies Act 2006.
The accounting policies applied in the interim financial statements are
consistent with those used in the preparation of the Group's consolidated
financial statements for the year ended 31 July 2023, as described in the
latest Annual Report and Accounts. No alterations have been made to the
Group's accounting policies as a result of adopting new standards, amendments
and interpretations which became effective in the period, as these were either
not material or not relevant to the Group.
1.3 Going concern
The Group's business activities, together with the factors likely to affect
its future development, performance and position are set out in the Strategic
Report of the Group's Annual Report and Accounts for the year ended 31 July
2023. The financial position of the Group, its cash flows and liquidity are
described in the Chief Financial Officer's Report of the 2023 Annual Report.
At the half year the Group reported a strong balance sheet with statutory net
cash of £22.3m. 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 interim financial
statements. This base case is prepared with appropriate regard for the current
macroeconomic headwinds and particular circumstances in which the Group
operates, including demand and candidate sentiment across the recruitment
sector and the economic outlook for STEM markets in the UK in which our
customers operate. The base case assumes 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 the 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 the second half of FY24
and beyond.
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 January 2024 was £22.9m. The
current £50m facility has no contractual renewal date; the Directors remain
confident that the facility will remain available.
The output of the base case forecasting process has been used to perform
sensitivity analysis on the Group's cash flows to the potential effects should
principal risks actually occur. The sensitivity analysis modelled a severe but
plausible scenario including:
- Reduced NFI growth, including nil growth beyond the end of the current
financial year;
- Increased operating costs by between 5% and 10%; 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.
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 44% reduction in net cash at 31 July 2025, to £10.0m,
compared with the base case. The sensitised forecasts confirm management's
expectation that the Group will remain in a positive net cash position for at
least the next 12 months.
After making appropriate enquiries and considering key judgements and
assumptions described above, the Directors have a reasonable expectation at
the time of approving these interim 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 Accounting estimates and judgements
Preparation of the interim financial statements requires the Directors to make
assumptions and estimates that affect the application of accounting policies.
The critical accounting judgements and key assumptions and sources of
estimation uncertainty identified by the Directors were consistent with those
identified in the Group's Annual Report and Accounts for the year ended 31
July 2023.
1.5 Prior period restatement
Whilst reviewing the Group's revenue cut-off policy during the 2023 year end,
management identified a revenue cut-off error affecting the prior financial
year. Data relating to late timesheet approvals and permanent placements was,
due to human error, incorrectly extracted from the Group's ERP system during
the July 2022 year end close process. This resulted in a £204,000
understatement of Net Fee Income (NFI) in the Income Statement for the year
ended 31 July 2022, comprising an understatement of accrued income of
£1,668,000 and associated accrued costs of £1,464,000. The Group's financial
position at 31 July 2022 and the results and cash flows for the year then
ended have been restated for correction of this error. Reversal of the revenue
cut-off error has impacted results previously reported for the six-month
period ended 31 January 2023.
Identification of this error led management to reassess how accrued revenue
and accrued cost balances have been calculated at each period end. The Group's
upgraded ERP system, implemented during 2021 allowed for a more accurate
assessment of the Group's revenue and contractor cost cut-off position. On
this basis, management concluded that it would have been appropriate to have
extended the cut-off period for late receipt of approved timesheets.
In line with the treatment prescribed in IAS 8 and IAS 1, this change has been
applied retrospectively, restating the Group's opening reserves at 1 August
2022, its financial position as at 31 January 2023, and the results and cash
flows of the Group for the six-month period year then ended. The impact of the
change as at 31 January 2023 is to increase Group net assets and retained
earnings by £297,000, increase accrued income (trade and other receivables)
by £1,522,000 and increase contractor wages payable (trade and other
payables) by £1,247,000. The combined impact of these changes is detailed
below.
Condensed Consolidated Income Statement
For the period ended 31 January 2023
Extension of cut-off period assessment Adjustment
As previously reported due to
incorrect FY22 cut-off data As restated
£'000 £'000 £'000 £'000
Revenue 194,742 (288) (1,668) 192,786
Cost of sales (172,009) 302 1,464 (170,243)
Gross profit 22,733 14 (204) 22,543
Profit before taxation from continuing operations 792 14 (204) 602
Taxation (242) (4) 53 (193)
Profit after taxation from continuing operations 550 10 (151) 409
Profit for the year 351 10 (151) 210
Condensed Consolidated Statement of Changes in Equity
Extension of cut-off period assessment Adjustment
As previously reported due to
incorrect FY22 cut-off data As restated
£'000 £'000 £'000 £'000
Total equity at 1 August 2022 29,997 283 173 30,453
Profit for the period 351 10 (151) 210
Balance at 31 January 2023 30,070 293 22 30,384
Condensed Consolidated Statement of Financial Position
As previously reported Extension Adjustment due to incorrect FY22 cut-off data As restated
31 January 2023 of cut-off period assessment 31 January 2023
£'000 £'000 £'000 £'000
Non-current assets
Deferred tax assets 474 (31) 22 465
Total non-current assets 6,115 (31) 22 6,106
Current assets
Trade and other receivables 47,721 1,522 - 49,243
Total current assets 73,158 1,522 - 74,680
Total assets 79,273 1,491 22 80,786
Current liabilities
Trade and other payables (43,743) (1,257) - (45,090)
Current tax liabilities (336) 49 - (287)
Total current liabilities (46,647) (1,198) - (47,845)
Total liabilities (49,203) (1,198) - (50,401)
Net assets 30,070 293 22 30,385
Equity
Retained earnings 19,831 293 22 20,146
Total equity 30,070 293 22 30,385
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.
6 months to 31 January 2024 unaudited
All amounts in £'000 Mobility Energy Defence Technology, Media & Telecoms Infra- structure Gattaca Inter- national(1) Other Continuing underlying operations
Projects
Revenue (Note 3) 16,404 18,874 44,452 14,455 72,874 4,386 2,633 14,365 188,443
Gross profit 2,224 1,786 3,633 1,360 6,516 1,164 560 2,420 19,663
Operating contribution 951 1,036 2,080 265 2,919 757 (502) 652 8,158
Depreciation and amortisation (67) (77) (181) (59) (295) (18) (11) (58) (766)
Central overheads (916) (381) (1,039) (645) (2,022) (214) (606) (1,195) (7,018)
Profit/(loss) from operations (32) 578 860 (439) 602 525 (1,119) (601) 374
Finance income, net 443
Profit before tax 817
All amounts in £'000 Continuing underlying operations Non-recurring items and amortisation of acquired intangibles Discontinued Total Group
Revenue (Note 3) 188,443 - - 188,443
Gross profit 19,663 - - 19,663
Operating contribution 8,158 - - 8,158
Depreciation and amortisation (766) (32) - (798)
Central overheads (7,018) (480) - (7,498)
Profit/(loss) from operations 374 (512) - (138)
Finance income, net 443 202 - 645
Profit before tax 817 (310) - 507
6 months to 31 January 2023 restated(2) unaudited
All amounts in £'000 Mobility Energy Defence Technology, Media & Telecoms Infra- structure Gattaca Inter- national(1) Continuing underlying operations
Projects Other
Revenue (Note 3) 21,081 20,767 38,530 13,843 73,919 2,538 3,800 18,308 192,786
Gross profit 2,211 2,105 4,151 1,239 7,146 1,020 1,279 3,392 22,543
Operating contribution 1,058 1,422 2,337 179 2,847 639 (484) 908 8,906
Depreciation and amortisation (80) (79) (147) (53) (281) (10) (14) (70) (734)
Central overheads (768) (355) (1,097) (629) (2,350) (185) (744) (1,288) (7,416)
Profit/(loss) from operations 210 988 1,093 (503) 216 444 (1,242) (450) 756
Finance (costs)/income, net (10)
Profit before tax 746
All amounts in £'000 Continuing underlying operations Non-recurring items and amortisation of acquired intangibles Total Group
Discontinued
Revenue (Note 3) 192,786 - - 192,786
Gross profit 22,543 - - 22,543
Operating contribution 8,906 - - 8,906
Depreciation and amortisation (734) (35) - (769)
Central overheads (7,416) (300) (208) (7,924)
Profit/(loss) from operations 756 (335) (208) 213
Finance (costs)/income, net (10) 191 4 185
Profit before tax 746 (144) (204) 398
12 months to 31 July 2023
All amounts in £'000 Mobility Energy Defence Technology, Media & Telecoms Infra- structure Inter- national(1) Continuing underlying operations
Gattaca Other
Projects
Revenue (Note 3) 40,387 40,605 80,652 27,660 148,843 5,512 6,543 34,972 385,174
Gross profit 4,536 4,119 8,003 2,569 14,094 2,091 2,165 5,824 43,401
Operating contribution 2,227 2,624 4,768 580 5,776 1,364 (994) 1,580 17,925
Depreciation and amortisation (155) (155) (309) (106) (570) (21) (25) (134) (1,475)
Central overheads (1,588) (685) (2,018) (1,160) (4,473) (346) (1,424) (2,429) (14,123)
Profit/(loss) from operations 484 1,784 2,441 (686) 733 997 (2,443) (983) 2,327
Finance (costs)/income, net 241
Profit before tax 2,568
All amounts in £'000 Continuing underlying operations Non-recurring items and amortisation of acquired intangibles Discontinued Total Group
Revenue (Note 3) 385,174 - - 385,174
Gross profit 43,401 - - 43,401
Operating contribution 17,925 - - 17,925
Depreciation and amortisation (1,475) (68) - (1,543)
Central overheads (14,123) 175 (186) (14,134)
Profit/(loss) from operations 2,327 107 (186) 2,248
Finance (costs)/income, net 241 80 (333) (12)
Profit before tax 2,568 187 (519) 2,236
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.
(1) 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.
(2) HY23 results have been restated as explained further in Note 1.5.
Geographical information
Total Group revenue Non-current assets
All amounts in £'000 6 months to 31/01/2024 Restated(1) 12 months to 31/07/2023 6 months to 31/01/2024 Restated(1)
unaudited 6 months to 31/01/2023 unaudited 6 months to 31/01/2023 12 months to 31/07/2023
unaudited unaudited
UK 184,660 187,445 375,436 4,808 5,847 5,173
Rest of Europe 369 404 775 2 1 2
Middle East and Africa - - - 16 34 24
Americas 3,414 4,937 8,963 61 224 100
Total 188,443 192,786 385,174 4,887 6,106 5,299
(1) HY23 results have been restated as explained further in Note 1.5.
Revenue and non-current assets are allocated to the geographic 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
6 months to Mobility Energy Defence Technology, Media & Telecoms Infra- structure Inter- national Other Continuing underlying operations
31 January 2024 unaudited £'000 £'000 £'000 £'000 £'000 Gattaca £'000 £'000 £'000
Projects
£'000
Temporary placements 15,350 18,789 43,631 13,997 72,146 1,981 2,323 13,175 181,392
Permanent placements 995 43 589 458 700 - 268 1,190 4,243
Other 59 42 232 - 28 2,405 42 - 2,808
Total 16,404 18,874 44,452 14,455 72,874 4,386 2,633 14,365 188,443
6 months to Mobility Energy Defence Technology, Media & Telecoms Infra- structure Inter- national Other Continuing underlying operations
31 January 2023 unaudited restated (1) £'000 £'000 £'000 £'000 £'000 Gattaca £'000 £'000 £'000
Projects
£'000
Temporary placements 20,142 20,560 36,863 13,436 72,525 1,099 2,966 16,402 183,993
Permanent placements 806 175 1,524 423 1,177 - 671 1,875 6,651
Other 133 32 143 (16) 217 1,439 163 31 2,142
Total 21,081 20,767 38,530 13,843 73,919 2,538 3,800 18,308 192,786
Year to 31 July 2023 Mobility Energy Defence Technology, Media & Telecoms Infra- structure Inter- national Other Continuing underlying operations
£'000 £'000 £'000 £'000 £'000 Gattaca £'000 £'000 £'000
Projects
£'000
Temporary placements 38,426 40,155 77,916 26,660 146,584 2,572 5,353 31,896 369,562
Permanent placements 1,771 268 2,427 778 1,978 - 1,190 3,037 11,449
Other 190 182 309 222 281 2,940 - 39 4,163
Total 40,387 40,605 80,652 27,660 148,843 5,512 6,543 34,972 385,174
Timing of revenue recognition - continuing underlying operations
6 months to Mobility Energy Defence Technology, Media & Telecoms Infra- structure Gattaca Inter- national Other Continuing underlying operations
31 January 2024 unaudited £'000 £'000 £'000 £'000 £'000 Projects £'000 £'000 £'000
£'000
Point in time 16,404 18,874 44,452 14,455 72,874 1,981 2,633 14,365 186,038
Over time - - - - - 2,405 - - 2,405
Total 16,404 18,874 44,452 14,455 72,874 4,386 2,633 14,365 188,443
6 months to Mobility Energy Defence Technology, Media & Telecoms Infra- structure Inter- national Other Continuing underlying operations
31 January 2023 unaudited restated(1) £'000 £'000 £'000 £'000 £'000 Gattaca £'000 £'000 £'000
Projects
£'000
Point in time 21,081 20,767 38,530 13,843 73,919 1,099 3,800 18,308 191,347
Over time - - - - - 1,439 - - 1,439
Total 21,081 20,767 38,530 13,843 73,919 2,538 3,800 18,308 192,786
Year to 31 July 2023 Mobility Energy Defence Technology, Media & Telecoms Infra- structure Inter- national Other Continuing underlying operations
£'000 £'000 £'000 £'000 £'000 Gattaca £'000 £'000 £'000
Projects
£'000
Point in time 40,387 40,605 80,652 27,660 148,843 2,572 6,543 34,972 382,234
Over time - - - - - 2,940 - - 2,940
Total 40,387 40,605 80,652 27,660 148,843 5,512 6,543 34,972 385,174
(1) HY23 results have been restated as explained further in Note 1.5.
No single customer contributed more than 10% of the Group's revenues (6 months
to 31 January 2023 and year ended 31 July 2023: none).
Revenue recognised over time is recognised based on costs incurred to date as
a proportion of total forecast costs.
4 Profit/(loss) from Total Operations
6 months to 31/01/2024 6 months to 31/01/2023 12 months to 31/07/2023
unaudited unaudited
£'000 £'000 £'000
Profit/(loss) from total operations is stated after charging/(crediting):
Depreciation of property, plant and equipment 257 228 489
Depreciation of right-of-use leased assets 476 485 952
Amortisation of acquired intangibles 32 35 68
Amortisation of software and software licences 33 21 34
Release of sales ledger credits(1) (31) (396) (538)
Loss on reassessment of lease term - - (672)
Net impairment release on trade receivables and accrued income (Note 8) (843) (393) (334)
Loss on disposal of property, plant and equipment 5 14 17
Loss on disposal of software and software licences - - 8
Plant and machinery rental expenses for leases out-of-scope of IFRS 16 40 - 59
Non-recourse working capital bank facility charges 293 243 515
Share-based payment charges/(credits) 86 75 (64)
(1)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. The Group releases any unclaimed
sales ledger credits to the Income Statement after all reasonable steps have
been taken to return funds to the customer and two years have elapsed since
receipt of the funds.
Non-underlying items included within administrative expenses were as follows:
6 months to 31/01/2024 6 months to 31/01/2023 12 months to 31/07/2023
unaudited unaudited
Continuing operations £'000 £'000 £'000
Restructuring costs(2) 452 172 249
Net costs/(income) associated with exiting properties(3) 16 128 (614)
Write down of acquired working capital balances(4) - - 190
Reversal of impairment of right-of-use leased assets(5) (42) - -
Cost relating to ongoing closure of group undertakings(6) 54 - -
Non-underlying items included in profit/(loss) from continuing operations 480 300 (175)
Discontinuing operations £'000 £'000 £'000
Cost relating to discontinuation of group undertakings(6) - 207 184
Advisory fees(7) - 1 2
Non-underlying items included in loss from discontinued operations - 208 186
Total non-underlying items 408 508 11
(2) Restructuring costs were recognised in connection with personnel
re-organisations throughout the business.
(3) Costs have been recognised in relation to the exit of a number of UK
office buildings that are no longer in use by the business. During the year
ended 31 July 2023, the net gain includes £672,000 profit on reassessment of
lease term resulted from the exercise of a break clause on a property that had
previously been fully impaired.
(4) Write down of unsupportable and uncollectable working capital balances in
subsidiaries acquired during previous years' business combinations.
(5) A gain of £42,000 was recognised on partial reversal of the impairment of
a right-of-use leased property asset following its sublease. The impairment
was initially recognised in during the year ended 31 July 2022 and was
included in non-underlying items.
(6) Ongoing costs relating to closure of entities affected by the closure of
the contract Telecoms Infrastructure business in 2018 as well as the closure
of the Group's operations in Russia, South Africa, including late filing
penalties in Qatar. Presented in discontinued operations in prior periods, the
Group has presented these costs as continuing items for the period ended 31
January 2024, as discussed further in Note 6.
(7) Legal fees incurred in previous periods relating to the Group's
co-operation with certain voluntary enquiries from the US Department of
Justice, as discussed in further detail in Note
14.
5 Taxation
22
6 months Restated(1) 12 months
to 31/01/2024 6 months to 31/07/2023
unaudited to 31/01/2023
unaudited
Analysis of tax charge in the period £'000 £'000 £'000
Profit before tax from continuing operations 507 602 2,755
Profit before tax multiplied by the standard rate of corporation tax in the UK 128 126 579
of 25.0% (31 January 2023 and 31 July 2023: 21.0%)
Expenses not deductible for tax purposes 73 26 145
Income not taxable (8) (28) (182)
Effect of share-based payments (1) (1) (1)
Irrecoverable withholding tax - 1 2
Overseas losses not recognised as deferred tax assets 84 82 563
Difference between UK and overseas tax rates 11 2 (45)
Adjustment to tax charge in respect of prior periods - (27) (41)
Changes in tax rate (7) 13 (16)
Total taxation charge for the period for continuing operations 280 194 1,004
Total taxation (credit)/charge for the period for discontinued operations - (5) 3
(1) HY23 results have been restated as explained further in Note 1.5.
The forecast average annual tax rate for continuing operations for the year to
31 July 2024 used to estimate the tax charge for the period to 31 January 2024
is 41.0% (period to 31 January 2023: forecast average annual tax rate of
28.9%, year to 31 July 2023: actual tax rate of 36.5%). The increase in the
effective tax rate for the period to 31 January 2024 is primarily driven by
the increase in the UK tax rate and an increase in non-deductible costs.
6 Discontinued Operations
During the period, the Group has incurred ongoing closure costs associated
with discontinued 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 new operations have been
discontinued in the current period or prior year.
No trading activities remain for the discontinued businesses, however the
Group continues to incur costs associated with closure of the subsidiary
statutory entities. The Group has considered the nature and amount of these
costs in the current period and has classified all as continuing operations.
Costs associated with closure of discontinued businesses are reported within
non-underlying items in line with the Group's accounting policy.
Financial performance
( )
6 months 6 months 12 months to 31/07/23
to 31/01/2024 to 31/01/2023
unaudited unaudited
£'000 £'000 £'000
Revenue - - -
Cost of sales - - -
Gross profit - - -
Administrative expenses(1) - (208) (186)
Loss from operations - (208) (186)
Finance income - - -
Finance costs - - -
Exchange gains/(losses) - 4 (333)
Loss before taxation - (204) (519)
Taxation - 5 (3)
Loss for the period after taxation from discontinued operations - (199) (522)
Exchange differences on translation of discontinued operations - 15 (200)
Other comprehensive loss from discontinued operations - (184) (722)
(1) For the periods ending 31 January 2023 and 31 July 2023, all
administrative expenses from discontinued operations are presented as
non-underlying items, as detailed in Note 4.
Cash flows from discontinued operations
( )
6 months 6 months 12 months to 31/07/23
to 31/01/2024 to 31/01/2023
unaudited unaudited
£'000 £'000 £'000
Net cash outflow from operating activities - (116) (281)
Net cash outflow from investing activities - - -
Net cash outflow from financing activities - - -
Effect of exchange rates on cash and cash equivalents - (137) -
Net cash used by discontinued operations - (253) (281)
7 Earnings Per Share
Earnings per share (EPS) has been calculated by dividing the consolidated
profit or loss after taxation attributable to ordinary shareholders by the
weighted average number of ordinary shares in issue during the period.
Diluted earnings per share has been calculated on the same basis as above,
except that the weighted average number of ordinary shares that would be
issued on the conversion of all the dilutive potential ordinary shares into
ordinary shares has been added to the denominator. The Group's potential
ordinary shares, being the Long Term 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 is reflected in diluted EPS only when
they are dilutive. Potential ordinary shares are considered to be dilutive
when the monetary value of the subscription rights attached to the outstanding
share options is less than the average market share price of the Company's
shares during the period. Furthermore, potential ordinary shares are only
considered dilutive when their inclusion in the calculation would decrease
earnings per share, or increase loss per share, in accordance with IAS 33.
There are no changes to the profit numerator as a result of the dilution
calculation.
The earnings per share information has been calculated as follows:
6 months to 31/01/2024
unaudited Restated(1) 12 months to 31/07/2023
6 months to 31/01/2023
unaudited
Total earnings £'000 £'000 £'000
Total profit attributable to ordinary shareholders 227 209 1,229
Number of shares 000's 000's 000's
Basic weighted average number of ordinary shares in issue 31,649 32,294 32,196
Dilutive potential ordinary shares 565 348 487
Diluted weighted average number of shares 32,214 32,642 32,683
Restated(1)
Total earnings per share pence pence pence
Earnings per ordinary share - Basic 0.7 0.6 3.8
- Diluted 0.7 0.6 3.8
Restated(1)
Earnings from continuing operations £'000 £'000 £'000
Total profit for the period from continuing operations 227 408 1,751
Restated(1)
Total earnings per share for continuing operations pence pence pence
Earnings per ordinary share from continuing operations - Basic 0.7 1.3 5.4
- Diluted 0.7 1.3 5.4
Restated(1)
Earnings from discontinued operations £'000 £'000 £'000
Total loss for the period from discontinued operations - (199) (522)
Restated(1)
Total earnings per share for discontinued operations pence pence pence
Loss per ordinary share from discontinued operations - Basic - (0.6) (1.6)
- Diluted - (0.6) (1.6)
Restated(1)
Earnings from continuing underlying operations £'000 £'000 £'000
Total profit for the period from continuing underlying operations 514 524 1,472
Restated(1)
Total earnings per share from continuing underlying operations pence pence pence
Earnings per ordinary share from continuing underlying operations - Basic 1.6 1.6 4.6
- Diluted 1.6 1.6 4.5
(1) HY23 results have been restated as explained further in Note 1.5.
8 Goodwill and Intangible Assets
Impairment Testing
Goodwill and intangible assets are 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 cash generating unit (CGU), including goodwill,
intangible assets and right-of-use assets, is determined as the higher of its
value in use or fair value less costs to
sell.
Trading results for the Energy CGU in H1 2024, in line with other areas of the
business, have been adversely affected by softening of the permanent
recruitment market, resulting in management's trading forecasts now being
lower than previously expected. This was considered an indication of
impairment, so an impairment test has been performed at the
half-year.
At 31 January 2024, the recoverable amount of the Energy CGU's non-current
assets was £3,173,000, an excess of £1,004,000 above the carrying amount.
The Directors have therefore concluded that the CGU's non-current 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 were prepared based on the Group's
Board-approved business plan for FY24-FY26, starting with management's FY24
forecast and applying over-arching NFI and cost growth rates in FY27 and FY28.
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 Group'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 18.7% (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, is 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 14.1%
(FY23:
14.1%).
Growth
rates
The medium-term growth rates are based on management forecasts, reflecting
past experience and the economic environment. Long-term growth rates are based
on external sources of an average estimated growth rate of 2.0% (FY23: 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 influenced by the forecast
level of operating contribution (NFI and direct operating costs) of the CGU
across the 5-year forecast period. Scenarios modelled by management illustrate
a range of outcomes, some of which indicated a possible impairment, include a
12-month delayed return to overall NFI growth or a sustained period of subdued
NFI growth and operating cost growth. The latter, a reduction of expected NFI
growth (75% down in FY25, 50% down in FY26-FY28) and operating cost growth
(50% down in FY25, 33% down in FY26-FY28), resulted in possible impairment of
the CGU's non-current assets of £551,000 at 31 January 2024.
The following changes in other key assumptions, when considered individually
or in aggregate, do not indicate a possible impairment of the non-current
assets of the
CGU:
• 200 basis points increase in the pre-tax discount rate; and
• 20 basis points decrease in the long-term growth
rate.
9 Trade and Other Receivables
Restated(1) 31/07/2023
31/01/2024 31/01/2023
unaudited unaudited
£'000 £'000 £'000
Trade receivables from contracts with customers, net of loss allowance 27,442 28,589 31,905
Other receivables 1,196 2,195 3,714
Finance lease receivables 113 160 95
Prepayments 1,392 1,376 1,145
Accrued income 16,615 16,923 15,309
Total 46,758 49,243 52,168
(1) HY23 results have been restated as explained further in Note 1.5.
The Directors consider that the carrying amount of trade and other receivables
approximates to their fair value
Other receivables includes retentions of £494,000 (31 January 2023:
£835,000, 31 July 2023: £2,838,000) on trade receivable balances assigned to
HSBC under the non-recourse invoice financing facility.
Accrued income relates to the Group's right to consideration for temporary and
permanent placement made but not billed at the period end. These transfer to
trade receivables once billing occurs.
Impairment of trade receivables from contracts with
customers
31/01/2024 31/01/2023 31/07/2023
unaudited unaudited
£'000 £'000 £'000
Trade receivables from contracts with customers, gross amounts 28,315 30,247 33,538
Loss allowance (873) (1,658) (1,633)
Trade receivables from contracts with customers, net of loss allowance 27,442 28,589 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 ageing 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 along with other
macroeconomic factors have been taken into account when assessing the credit
risk profiles for specific industries and geographies.
During the period ending 31 January 2024, the Group reduced its general
expected loss 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 £386,000
for trade receivables and £87,000 for accrued income.
The loss allowance for trade receivables was determined as follows:
31 January 2024 unaudited Current More than 30 days past due More than 60 days past due More than 90 days due Total
Weighted expected loss rate (%) 2.0% 3.1% 6.9% 94.7%
Gross carrying amount - trade receivables (£'000) 27,555 350 87 323 28,315
Loss allowance (£'000) 550 11 6 306 873
31 January 2023 unaudited Current More than 30 days past due More than 60 days past due More than 90 days due Total
Weighted expected loss rate (%) 3.8% 5.5% 5.5% 61.2%
Gross carrying amount - trade receivables (£'000) 28,283 659 457 848 30,247
Loss allowance (£'000) 1,078 36 25 519 1,658
31 July 2023 Current More than 30 days past due More than 60 days past due More than 90 days due Total
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 the period end reconciles to the
opening loss allowance as follows:
6 months 6 months 12 months to 31/07/2023
to 31/01/2024 to 31/01/2023
unaudited unaudited
£'000 £'000 £'000
Opening loss allowance 1,633 2,077 2,077
Decrease in loss allowance recognised in profit and loss during the period(1) (680) (290) (156)
Receivables written off during the period as uncollectible (80) (129) (288)
Closing loss allowance 873 1,658 1,633
(1) Includes a credit of £386,000 relating to the reduction of general
expected loss rates.
Impairment of accrued income
31/01/2024 Restated(1) 31/07/2023
unaudited 31/01/2023
unaudited
£'000 £'000 £'000
Gross accrued income 16,956 17,502 15,813
Loss allowance (341) (579) (504)
Accrued income, net of loss allowance 16,615 16,923 15,309
The loss allowance for accrued income was determined as follows:
31 January 2024 unaudited Current More than 30 days past due More than 60 days past due More than 90 days due Total
Weighted expected loss rate (%) 1.9% 1.7% 0.0% 58.6%
Gross carrying amount - accrued income (£'000) 16,803 115 9 29 16,956
Loss allowance (£'000) 322 2 - 17 341
31 January 2023 unaudited restated(1) Current More than 30 days past due More than 60 days past due More than 90 days due Total
Weighted expected loss rate (%) 2.3% 2.5% 2.5% 33.1%
Gross carrying amount - accrued income (£'000) 15,840 867 239 556 17,502
Loss allowance (£'000) 367 22 6 184 579
31 July 2023 Current More than 30 days past due More than 60 days past due More than 90 days due Total
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
(1) HY23 results have been restated as explained further in Note 1.5.
The loss allowance for accrued income at the period end reconciles to the
opening loss allowance as follows:
6 months 6 months 12 months
to 31/01/2024 to 31/01/2023 to 31/07/2023
unaudited unaudited
£'000 £'000 £'000
Opening loss allowance 504 682 682
Decrease in loss allowance recognised in profit and loss during the period(1) (163) (103) (178)
Closing loss allowance 341 579 504
(1) Includes a credit of a £87,000 relating to the reduction of general
expected loss rates.
10 Provisions
Dilapidations Other Provisions Total
6 months to 31 January 2024 unaudited £'000 £'000 £'000
Balance at the start of the period 677 735 1,412
Provisions made in the period 5 281 286
Provisions utilised (55) (98) (153)
Provisions released - (340) (340)
Effect of movements in exchange rates - - -
Balance at the end of the period 627 578 1,205
Dilapidations Other Provisions Total
As at 31 January 2024 unaudited £'000 £'000 £'000
Non-current 352 37 389
Current 275 541 816
Total 627 578 1,205
Dilapidations Other Provisions Total
6 months to 31 January 2023 unaudited £'000 £'000 £'000
Balance at the start of the period 880 824 1,704
Provisions made in the period 154 141 295
Provisions utilised (353) (30) (383)
Provisions released (1) - (1)
Effect of movements in exchange rates (1) (2) (3)
Balance at the end of the period 679 933 1,612
Dilapidations Other Provisions Total
As at 31 January 2023 unaudited £'000 £'000 £'000
Non-current 661 - 661
Current 18 933 951
Total 679 933 1,612
Dilapidations Other Provisions Total
12 months to 31 July 2023 £'000 £'000 £'000
Balance at the start of the period 880 824 1,704
Provisions made in the period 187 194 381
Provisions utilised (353) (79) (432)
Provisions released (35) (199) (234)
Effect of movements in exchange rates (2) (5) (7)
Balance at the end of the period 677 735 1,412
Dilapidations Other Provisions Total
As at 31 July 2023 £'000 £'000 £'000
Non-current 347 19 366
Current 330 716 1,046
Total 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 lease term, ranging between one
and four years.
Other provisions made during the period ending 31 January 2024 relate
primarily to restructuring activities for both UK and US operations, as
discussed further in Note 4. In addition to the restructuring provisions
raised during the period, other provisions held as at 31 January 2024 relate
to claims for certain legal and tax
matters.
11 Share capital
31/01/2024 31/07/2023
unaudited 31/01/2023
unaudited
Authorised share capital £'000 £'000 £'000
40,000,000 Ordinary shares of £0.01 each 400 400 400
31/01/2024 31/01/2023 31/07/2023
unaudited unaudited
Allotted, called up, and fully paid £'000 £'000 £'000
31,525,525 Ordinary shares of £0.01 each 316 323 319
(31 January 2023: 32,303,612, 31 July 2023: 31,856,612)
The movement in the number of shares in issue is shown below:
31/01/2024 31/01/2023 31/07/2023
unaudited unaudited
'000 '000 '000
In issue at the start of the period 31,857 32,290 32,290
Exercise of LTIP share options 91 14 14
Shares cancelled (423) - (447)
In issue at the end of the 31,857
period
31,525 32,304
The Company has one class of ordinary shares. Each share is entitled to one
vote in the event of a poll at a general meeting of the Company. Each share is
entitled to participate in dividend distributions.
Share buyback and cancellation
During the period the Company made market purchases of and subsequently
cancelled 422,586 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, with prices ranging from £1.05 to £1.29.
The total cost of the share buyback, financed from the Group's cash reserves,
was £503,000 which has been deducted from retained earnings. On cancellation
of the shares, the aggregate nominal value of shares was transferred out of
share capital to a capital redemption reserve.
Share options
During the period the Group granted share options under the Long-Term
Incentive Plan ("LTIP") for Executive Directors and senior management. 643,305
share options with an exercise price of £0.01 each were granted on 6 December
2023 to members of staff to be held over a three-year vesting period and are
subject to various performance conditions. All share options have a life of 10
years from grant date and are equity settled on exercise.
12 Net Cash
Net cash is the total amount of cash and cash equivalents less
interest-bearing loans and borrowings, including lease liabilities.
Net cash flows include the net drawdown of loans and borrowings and cash
interest paid relating to loans and borrowings.
01/08/2023 Net cash flows Non-cash movements 31/01/2024
31 January 2024 unaudited £'000 £'000 £'000 £'000
Cash and cash equivalents 23,375 474 44 23,893
Working capital facilities - - - -
Lease liabilities (1,821) 557 (355) (1,619)
Total net cash 21,554 1,031 (311) 22,274
01/08/2022 Net cash flows Non-cash movements 31/01/2023
31 January 2023 unaudited £'000 £'000 £'000 £'000
Cash and cash equivalents 17,768 6,604 (68) 24,304
Working capital facilities (1,801) 1,459 - (342)
Lease liabilities (3,625) 614 (50) (3,061)
Total net cash/(debt) 12,342 8,677 (118) 20,901
01/08/2022 Net cash flows Non-cash movements 31/07/2023
31 July 2023 £'000 £'000 £'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:
31/01/2024 31/01/2023 31/07/2023
unaudited unaudited
£'000 £'000 £'000
Balances arising from the Group's non-recourse working capital arrangements 196 1,173 253
Cash on deposit in accounts controlled by the Group but not available for 1,103 1,370 1,101
immediate drawdown
Total restricted cash 1,299 2,543 1,354
Included within restricted cash is £382,000 (31 January 2023: £508,000, 31
July 2023: £391,000) held on deposit in a Russian bank account, to which the
Group currently has no access. Following legal consultation, the Directors
have implemented a plan to regain access to this account with a view to
repatriating the cash to the UK at the earliest opportunity.
13 Transactions with Related Parties
There were no related party transactions during the period with entities
outside of the Group (6 months to 31 January 2023 and year ended 31 July 2023:
none) and no related party balances at 31 January 2024 (31 January 2023 and 31
July 2023: none).
During the period, 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.
14 Contingent Liabilities
We continue our cooperation with the United States Department of Justice and
in the 6 month period to 31 January 2024 no costs were incurred (6 months to
31 January 2023: £1,000, and year to 31 July 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.
15 Statement of Directors' Responsibilities
The Directors' confirm that these condensed interim financial statements have
been prepared in accordance with UK-adopted International Accounting Standard
34, 'Interim Financial Reporting' and that the interim management report
includes a fair view of the information required by DTR 4.2.7 and DTR 4.2.8,
namely:
• an indication of important events that have occurred during
the first six months and their impact on the condensed set of financial
statements, and a description of the principal risks and uncertainties for the
remaining six months of the financial year; and
• material related-party transactions in the first six months
and any material changes in the related-party transactions described in the
last Annual Report.
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