REG-SThree SThree: Final results for the year ended 30 November 2017 <Origin Href="QuoteRef">STHR.L</Origin> - Part 2
29/01/2018 07:06
- Part 2: For the preceding part double click ID:nEQ45cv1Ja
in the first year by the reduction in the deferred tax asset.
Other regulatory changes which may impact the group in future years include:
(i) The extent to which the OECD member countries continue to implement changes to domestic legislation as a
result of recommendations from the Base Erosion and Profit Shifting project.
(ii) The October 2017 announcement of the European Union Competition Commissioner's State Aid investigation
into the UK's Controlled Foreign Company legislation.
We will continue to monitor and assess the impact of any changes as they are implemented.
Earnings per share ('EPS')
On an adjusted basis, EPS was up by 2.5 pence at 25.7 pence (2016: adjusted 23.2 pence), due to an increase in the
adjusted profit before tax and a drop in the effective tax rate. On a reported basis, EPS remained broadly flat at
21.5 pence, up 0.3 pence on the prior year (2016: 21.2 pence), attributable mainly to an increase in restructuring
costs as explained above. The weighted average number of shares used for basic EPS remained stable at 128.6 million
(2016: 128.3 million). Reported diluted EPS was 20.8 pence (2016: 20.6 pence), up 0.2 pence. Share dilution mainly
results from various share options in place and expected future settlement of certain tracker shares. The dilutive
effect on EPS from tracker shares will vary in future periods depending on the profitability of the underlying
tracker businesses, the volume of new tracker arrangements created and the settlement of vested arrangements.
Dividends
In line with the Group's strategy to operate a policy of financing the activities and development of the Group from
retained earnings and to maintain a strong balance sheet position, the Board has proposed a maintained final
dividend of 9.3 pence per share (2016: 9.3 pence). Taken together with the interim dividend of 4.7 pence per share
(2016: 4.7 pence), this brings the total dividend for the year to 14.0 pence per share (2016: 14.0 pence). This
represents a dividend yield of 4% based on the average share price for the year (2016: 5%). The final dividend,
which amounts to c.£12.1 million, will be subject to shareholder approval at the 2018 Annual General Meeting. It
will be paid on 8 June 2018 to shareholders on the register on 27 April 2018.
Share options and tracker share arrangements
We recognised a share-based payment charge of £3.3 million during the year (2016: £2.9 million) for the Group's
various share-based incentive schemes. The greater charge in 2017 is primarily due to an increase in the number of
participants in the 2017 Long Term Incentive Plan ('LTIP'), and an improvement in regional performance metrics for
legacy LTIPs.
We also operate a tracker share model to help retain and motivate our entrepreneurial management within the
business. The programme gives our most senior front office sales colleagues a chance to invest in a business they
manage, with the support and economies of scale that the Group can offer them. In 2017, 38 employees invested an
equivalent of £0.4 million in 15 Group businesses.
We settled certain vested tracker shares during the year for a total consideration of £3.2 million (2016: £4.6
million) which was determined using a formula in the Articles of Association underpinning the tracker share
businesses. We settled the consideration in SThree plc shares either by issuing new shares (393,910 new shares were
issued on settlement of vested tracker shares in 2017) or treasury shares (in total 647,507 were used in settlement
of vested tracker shares in 2017). Consequently, the arrangement is deemed to be an equity-settled share-based
payment arrangement under IFRS 2 'Share-based payments'. There is no charge to the income statement as initially the
tracker shareholders subscribed to the tracker shares at their fair value. We expect future tracker share
settlements to be between £5 million to £15 million per annum. These settlements will either dilute the earnings of
SThree plc's existing ordinary shareholders if funded by new issue of shares or will result in a cash outflow if
funded via treasury shares.
Note 1 to the financial statements provides further details about all Group-wide discretionary share plans,
including the tracker share arrangements.
Balance sheet
At 30 November 2017, the Group's net assets increased to £80.7 million (2016: £75.7 million), mainly due to the
excess of net profit over the dividend payments and share buy backs during the year supported by a strengthening of
the Euro vs Sterling.
The most significant item in our statement of financial position is trade receivables (including accrued income)
which increased to £217.7 million (2016: £182.6 million), with £2.3 million of the increase due to a favourable
change in foreign exchange rate. Other drivers of an increase in receivables are a three day increase in Days Sales
Outstanding to 40.6 days (2016: 37.5 days) and a 14% increase in Contract GP in Q4 year-on-year. Trade and other
payables increased from £138.9 million to £159.6 million, with £2.2 million due to movements in foreign exchange
rates and the remainder primarily due to an increase in Contract GP. Creditor days were 18 days (2016: 19 days).
Provisions increased by £8.7 million primarily due to a £6.7 million increase in restructuring provisions, including
a provision for the relocation of central support functions from London to Glasgow (£5.6 million).
Cash Flow
On an adjusted basis, we generated lower cash from operations of £41.1 million (2016: £46.9 million on an adjusted
basis) due to continued growth of the contract runner book increasing our working capital and an increase in Days
Sales Outstanding. This resulted in a lower cash conversion ratio of 78.6% (2016: 96%) on an adjusted basis or 90.2%
(2016: 95.0%) on a reported basis.
Capital expenditure reduced to £5.8 million (2016: £7.2 million), of which 33% was related to investments in
innovative technology to improve our customer experience. We expect capital expenditure will further decline in
2018. Investments in associates and available for sale assets of £1.2 million (2016: £0.7 million) were made in the
year.
During the year, SThree plc bought back shares amounting to £7.8 million (2016: £6.8 million) to satisfy employee
share schemes in future periods. Small cash inflows were generated from share based payment schemes.
Income tax payments increased to £10.9 million (2016: £8.5 million). The figures shown for 2016 reflected a lower
than usual outflow due to advanced tax payments made in 2015. Small cash outflows were made for interest payments.
Dividend payments were £18.0 million (2016: £18.0 million) and there was a small cash outflow representing
distributions to tracker shareholders.
We started the year with the net cash of £10.0 million and closed the financial year with a lower but solid net cash
balance of £5.6 million. The year-on-year decrease primarily reflected increased cash absorbed in working capital.
Treasury management
We finance the Group's operations through equity and bank borrowings. The Group's cash management policy is to
minimise interest payments by closely managing Group cash balances and external borrowings. We intend to continue
this strategy while maintaining a strong balance sheet position. In general, we do not keep excess cash in any of
the countries in which we operate. We have central cash pooling facilities in place for Euros and US Dollars.
We maintain a committed Revolving Credit Facility ('RCF') of £50 million, along with an uncommitted £20 million
accordion facility, with Citibank and HSBC, giving the Group an option to increase its total borrowings to £70
million for general corporate purposes. We also have a separate £5 million overdraft facility with RBS. At the year
end the Group had drawn down £12 million (2016: £nil) on these facilities.
The RCF is subject to financial covenants whereby we need to maintain a ratio of net debt to adjusted EBITDA of 2.0
times or lower, and maintain interest cover of at least 1.2. In 2017, we ended the year with significant headroom on
our covenants, with a net cash balance of £5.6 million and interest cover (including dividends) of 3:1. The funds
borrowed under this facility bear interest at an annual rate of 1.3% above 3 month LIBOR giving an average interest
rate of 1.5% during the year (2016: 1.8%). The finance costs for the year amounted to £0.4 million (2016: £0.5
million). The RCF expires in May 2019 and we will renew the facility in the first half of 2018.
The Group's UK-based treasury function manages the Group's treasury risks in accordance with policies and procedures
set by the Board, and is responsible for day-to-day cash management; the arrangement of external borrowing
facilities; the investment of surplus funds; and the management of the Group's interest rate and foreign exchange
risks. The treasury function does not engage in speculative transactions or operate as a profit centre.
Foreign exchange
Foreign exchange volatility continues to be a significant factor in the reporting of the overall performance of the
business with the main functional currencies of the Group entities being Sterling, the Euro and the US Dollar. For
2017, movements in exchange rates between Sterling and the Euro and the US Dollar provided a strong tailwind to the
reported performance of the Group with the highest impact coming from Eurozone countries. Over the course of the
year, the exchange rate movements increased our reported 2017 GP and operating profit by c.£18.1 million and £5.0
million, respectively. Our financial performance KPIs remain materially sensitive to exchange rate movements. By way
of illustration, each one percent movement in annual exchange rates of the Euro and the US Dollar against Sterling
impacted our 2017 GP by £1.5 million and £0.6 million, respectively, and operating profit by £0.5 million and £0.2
million, respectively.
The Board considers it appropriate in certain cases to use derivative financial instruments as part of its
day-to-day cash management to provide the Group with protection against adverse movements in the Euro and the US
dollar during the settlement period. The Group does not use derivatives to hedge translational foreign exchange
exposure in its balance sheet and income statement.
Principal Risks and Uncertainties
Principal risks and uncertainties affecting the business activities of the Group are detailed within the strategic
section of the Annual Report.
In terms of macroeconomic environment risks, our strategy is to continue to grow the size of our international
business and newer sectors, in both financial terms and geographical coverage. This will help reduce our exposure or
reliance on any one specific economy, although a downturn in a particular market could adversely affect the Group's
key risk factors.
In the view of the Board, there is no material change expected to the Group's key risk factors in the foreseeable
future.
* Variances in constant currency
SThree plc
Consolidated income statement
For the year ended 30 November 2017
2017 2016
Before exceptional items Exceptional items Total
Note £'000 £'000 £'000 £'000
Continuing operations
Revenue 2 1,114,530 - 1,114,530 959,861
Cost of sales (826,858) - (826,858) (701,180)
Gross profit 2 287,672 - 287,672 258,681
Administrative expenses 3 (242,752) (6,741) (249,493) (220,913)
Operating profit 4 44,920 (6,741) 38,179 37,768
Finance income 124 - 124 79
Finance costs (439) - (439) (549)
Share of results of associate (147) - (147) -
Profit before taxation 44,458 (6,741) 37,717 37,298
Taxation 5 (11,392) 1,303 (10,089) (10,056)
Profit for the year attributable 33,066 (5,438) 27,628 27,242
to owners of the Company
Earnings per share 7 pence pence pence pence
Basic 25.7 (4.2) 21.5 21.2
Diluted 24.9 (4.1) 20.8 20.6
SThree plc
Consolidated statement of comprehensive income
For the year ended 30 November 2017
2017 2016
£'000 £'000
Profit for the year 27,628 27,242
Other comprehensive (loss)/income:
Items that may be subsequently reclassified to profit or loss:
Exchange differences on retranslation of foreign operations (1,083) 10,774
Total other comprehensive (loss)/income for the year (net of tax) (1,083) 10,774
Total comprehensive income for the year attributable to owners of the Company 26,545 38,016
SThree plc
Consolidated statement of financial position
As at 30 November 2017
30 November 30 November
2017 2016
Note £'000 £'000
Assets
Non-current assets
Property, plant and equipment 6,746 7,100
Intangible assets 11,386 11,597
Investment in associate 655 -
Other investments 1,110 727
Deferred tax assets 4,199 2,501
24,096 21,925
Current assets
Trade and other receivables 226,558 189,169
Current tax assets 1,534 4,650
Cash and cash equivalents 8 21,338 15,707
249,430 209,526
Total assets 273,526 231,451
Equity and Liabilities
Equity attributable to owners of the Company
Share capital 1,317 1,312
Share premium 28,806 27,406
Other reserves (8,556) (5,381)
Retained earnings 59,138 52,333
Total equity 80,705 75,670
Non-current liabilities
Provisions for liabilities and charges 2,172 907
Current liabilities
Borrowings 9 12,000 -
Bank overdraft 8 3,717 5,685
Provisions for liabilities and charges 12,352 4,953
Trade and other payables 159,556 138,859
Current tax liabilities 3,024 5,377
190,649 154,874
Total liabilities 192,821 155,781
Total equity and liabilities 273,526 231,451
SThree plc
Consolidated statement of changes in equity
For the year ended 30 November
2017
Capital Currency Total equity
Share Share redemption Capital Treasury translation Retained attributable to
capital premium reserve reserve reserve reserve earnings owners of the
Company
Note £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 30 1,295
November 2015 23,140 168 878 (1,318) (10,758) 46,001 59,406
Profit for the
year - - - - - - 27,242 27,242
Other
comprehensive 10,774 10,774
loss for the - - - - - -
year
Total
comprehensive 10,774 27,242
income for the - - - - - 38,016
year
Dividends paid
to equity 6 - - - - - - (17,972) (17,972)
holders
Distributions
to tracker - - - - - - (149) (149)
shareholders
Settlement of
vested tracker 14 3,706 - - - - (3,929) (209)
shares
Settlement of
share-based 3 560 - - 1,720 - (1,671) 612
payments
Purchase of
own shares - - - - (6,845) - - (6,845)
Credit to
equity for
equity-settled - - - - - - 2,823 2,823
share-based
payments
Current and
deferred tax
on share-based 5 - - - - - - (12) (12)
payment
transactions
Total
movements in 17 4,266 - - (5,125) 10,774 6,332 16,264
equity
Balance at 30 1,312 16 75,670
November 2016 27,406 168 878 (6,443) 52,333
Profit for the
year - - - - - - 27,628 27,628
Other
comprehensive
loss for the - - - - - (1,083) - (1,083)
year
Total
comprehensive
(loss)/income - - - - - (1,083) 27,628 26,545
for the year
Dividends paid
to equity 6 - - - - - - (17,994) (17,994)
holders
Distributions
to tracker - - - - - - (115) (115)
shareholders
Settlement of
vested tracker 4 1,185 - - 2,746 - (3,060) 875
shares
Settlement of
share-based 1 215 - - 2,959 - (2,972) 203
payments
Purchase of
own shares - - - - (4,618) - - (4,618)
Purchase of
own shares by - - - - (3,179) - - (3,179)
Employee
Benefit Trust
Credit to
equity for
equity-settled - - - - - - 3,256 3,256
share-based
payments
Current and
deferred tax
on share-based 5 - - - - - - 62 62
payment
transactions
Total
movements in 5 1,400 - - (2,092) (1,083) 6,805 5,035
equity
Balance at 30 1,317 (1,067)
November 2017 28,806 168 878 (8,535) 59,138 80,705
SThree plc
Consolidated statement of cash flow
For the year ended 30 November 2017
2017 2016
Note £'000 £'000
Cash flows from operating activities
Profit before taxation after exceptional items 37,717 37,298
Adjustments for:
Depreciation and amortisation charge 5,744 5,716
Accelerated amortisation and impairment of intangible assets 309 -
Finance income (124) (79)
Finance cost 439 549
Loss on disposal of property, plant and equipment 4 110 194
Share of results of associate 147 -
Loss on disposal of subsidiaries 144 -
Non-cash charge for share-based payments 3,256 2,823
Operating cash flows before changes in working capital and provisions
47,742 46,501
Increase in receivables (35,712) (9,404)
Increase in payables 19,291 5,731
Increase/(decrease) in provisions 8,758 (632)
Cash generated from operations 40,079 42,196
Finance income 124 79
Income tax paid - net (10,921) (8,477)
Net cash generated from operating activities 29,282 33,798
Cash generated from operating activities before exceptional items 30,273 34,658
Cash outflow from recognised exceptional items (991) (860)
Net cash generated from operating activities 29,282 33,798
Cash flows from investing activities
Purchase of property, plant and equipment (2,374) (3,220)
Purchase of intangible assets (3,392) (3,973)
Investments designated as available-for-sale (383) (727)
Investment in an associate (802) -
Net cash used in investing activities (6,951) (7,920)
Cash flows from financing activities
Proceeds from borrowings 9 12,000 -
Finance cost (431) (549)
Employee subscription for tracker shares 98 192
Proceeds from exercise of share options 215 612
Purchase of own shares (7,797) (6,845)
Dividends paid to equity holders 6 (17,994) (17,972)
Distributions to tracker shareholders (115) (130)
Net cash used in financing activities (14,024) (24,692)
Net increase in cash and cash equivalents 8,307 1,186
Cash and cash equivalents at beginning of the year 10,022 6,159
Effect of exchange rate changes (708) 2,677
Net cash and cash equivalents at end of the year 8 17,621 10,022
SThree plc
Notes to the financial statements
For the year ended 30 November 2017
1. Basis of preparation
The financial information in this preliminary announcement has been extracted from the Group audited financial
statements for the year ended 30 November 2017 and does not constitute statutory accounts within the meaning of
section 434 of the Companies Act 2006. The Group financial statements and this preliminary announcement were
approved by the Board of Directors on 29 January 2018.
The auditors have reported on the Group's financial statements for the years ended 30 November 2017 and 30 November
2016 under s495 of the Companies Act 2006. The auditors' reports are unqualified and do not contain a statement
under section 498(2) or (3) of the Companies Act 2006. The Group's statutory financial statements for the year ended
30 November 2016 have been filed with the Registrar of Companies and those for the year ended 30 November 2017 will
be filed following the Company's Annual General Meeting.
The Group's financial statements have been prepared in accordance with International Financial Reporting Standards
('IFRSs') and IFRS Interpretations Committee ('IFRS IC') as adopted and endorsed by the European Union and have been
prepared under the historical cost convention with the exception of certain financial instruments classified as
available for sale.
The same accounting policies, presentation and computation methods are followed in this preliminary announcement as
in the preparation of the Group financial statements. The accounting policies have been applied consistently by the
Group.
Going concern
The Group's business activities, together with the factors likely to affect its future development, performance, its
financial position, cash flows, liquidity position and borrowing facilities are described in the strategic section
of the Annual Report. In addition, notes to the Group financial statements include details of the Group's treasury
activities, funding arrangements and objectives, policies and procedures for managing various risks including
liquidity, capital management and credit risks.
The Directors have considered the Group's forecasts, including taking account of reasonably possible changes in
trading performance, and the Group's available banking facilities. Based on this review and after making enquiries,
the Directors have a reasonable expectation that the Group has adequate resources to continue in operational
existence for the foreseeable future. For this reason, the Directors continue to adopt a going concern basis in
preparing these financial statements and this preliminary announcement.
2. Segmental analysis
IFRS 8 'Segmental Reporting' requires operating segments to be identified on the basis of internal results about
components of the Group that are regularly reviewed by the entity's chief operating decision maker to make strategic
decisions and assess segment performance.
Management has determined the chief operating decision maker to be the Group Management Board ('GMB') made up of the
Chief Executive Officer, the Chief Financial Officer, the Chief Operating Officer, the Chief People Officer and the
Chief Sales Officer, with other senior management attending via invitation. Operating segments have been identified
based on reports reviewed by the GMB, which consider the business primarily from a geographical perspective. The
Group segments the business into four regions: the United Kingdom & Ireland ('UK&I'), Continental Europe, the USA
and Asia Pacific & Middle East ('APAC & ME').
The Group's management reporting and controlling systems use accounting policies that are the same as those
described in note 1 to the Group financial statements in the summary of significant accounting policies.
Revenue and Gross Profit by reportable segment
The Group measures the performance of its operating segments through a measure of segment profit or loss which is
referred to as "Gross Profit" in the management reporting and controlling systems. Gross profit is the measure of
segment profit comprising revenue less cost of sales.
Intersegment revenue is recorded at values which approximate third party selling prices and is not significant.
REVENUE GROSS PROFIT
2017 2016 2017 2016
£'000 £'000 £'000 £'000
UK&I 269,777 290,285 55,687 64,032
Continental Europe 576,018 448,606 150,636 127,543
USA 212,737 171,313 64,369 50,682
APAC & ME 55,998 49,657 16,980 16,424
1,114,530 959,861 287,672 258,681
Continental Europe primarily includes Austria, Belgium, France, Germany, Luxembourg, Netherlands, Spain and
Switzerland.
APAC & ME mainly includes Australia, Dubai, Hong Kong, Japan, Malaysia and Singapore.
Other information
The Group's revenue from external customers, its gross profit and information about its segment assets (non-current
assets excluding deferred tax assets) by key location are detailed below:
REVENUE GROSS PROFIT
2017 2016 2017 2016
£'000 £'000 £'000 £'000
UK 259,028 275,839 51,922 58,828
Germany 256,825 206,130 78,021 67,739
USA 212,737 171,313 64,369 50,682
Netherlands 180,602 131,174 38,039 29,201
Other 205,338 175,405 55,321 52,231
1,114,530 959,861 287,672 258,681
NON-CURRENT ASSETS
30 November 30 November
2017 2016
£'000 £'000
UK 15,702 15,044
USA 1,608 2,481
Germany 1,132 589
Netherlands 431 165
Other 1,024 1,145
19,897 19,424
The following segmental analysis by brands, recruitment classification and sectors (being the profession of
candidates placed) have been included as additional disclosure to the requirements of IFRS 8.
REVENUE GROSS PROFIT
2017 2016 2017 2016
£'000 £'000 £'000 £'000
Brands
Progressive 344,537 275,729 77,105 65,859
Computer Futures 311,134 265,751 83,700 75,231
Real Staffing Group 230,330 225,123 70,684 67,915
Huxley Associates 228,529 193,258 56,183 49,676
1,114,530 959,861 287,672 258,681
Other brands including Global Enterprise Partners, Hyden, JP Gray, Madison Black, Newington International and Orgtel
are rolled into the above brands.
Recruitment classification
Contract 1,030,359 874,440 203,501 173,260
Permanent 84,171 85,421 84,171 85,421
1,114,530 959,861 287,672 258,681
Sectors
Information & Communication Technology 502,299 447,560 124,746 115,844
Banking & Finance 181,007 168,263 43,502 41,735
Life Sciences 176,870 147,056 62,351 54,262
Energy 142,822 107,889 26,494 19,595
Engineering 97,469 79,016 25,851 23,253
Other 14,063 10,077 4,728 3,992
1,114,530 959,861 287,672 258,681
Other includes Procurement & Supply Chain and Sales & Marketing.
3. Administrative expenses - Exceptional items
On 1 November 2017, the Group communicated to the market that it was commencing a consultation with employees on the
proposed relocation of central support functions away from its London headquarters to a new facility located within
Glasgow and a restructuring of the marketing department. The purpose of this strategic restructuring is to realise
annualised cost savings of approximately £4.0 million per annum.
The restructuring is expected to result in certain material one-off costs totalling approximately £14 million to £16
million, of which an estimated £15 million is operating expenses and approximately £0.5 million is property fit out
costs (to be capitalised), less approximately £2 million of grant receivable from Scottish Enterprise. The costs are
mainly related to people, property and professional advisor fees.
In 2017, restructuring costs of £6.7 million have been charged to the Consolidated Income Statement, including £1.1
million of restructuring costs incurred or accrued, mainly for professional advisor fees, and £5.6 million as a
provision for redundancy costs. A restructuring provision can only include the direct expenditure arising from the
announced strategic restructuring, which are costs that are both necessarily entailed by the restructuring and not
associated with the ongoing activities of the entity. Restructuring items related to the transition, design and set
up of the new support function or for which there is no constructive obligation at year end have not been included
within the 2017 restructuring provision and will be recognised each year up to 2020.
Due to the material size and non-recurring nature of this strategic restructuring project, the associated costs have
been separately disclosed as exceptional items in the Consolidated Income Statement. Disclosure of items as
exceptional, highlights them and provides a clearer, comparable view of underlying earnings.
Items classified as exceptional were as follows:
2017 2016
£'000 £'000
Exceptional items - charged to operating profit
Personnel costs - redundancy 5,709 -
Professional advisor fees 1,017 -
Other 15 -
Total exceptional costs 6,741 -
4. Operating profit
Operating profit is stated after charging/(crediting):
2017 2016
£'000 £'000
Depreciation 2,516 2,276
Amortisation 3,228 3,440
Accelerated amortisation and impairment of intangible assets 309 -
Foreign exchange gains (345) (849)
Staff costs 187,419 168,971
Movement in bad debt provision and debts directly written off 496 573
Loss on disposal of property, plant and equipment 110 194
Loss on disposal of intangible assets 66 44
Exceptional restructuring costs 6,741 -
Loss on disposal of subsidiaries(2) 144 -
Operating lease charges
- Motor vehicles 1,790 1,449
- Land and buildings 12,005 11,279
(1) The accumulated foreign exchange net loss reclassified from Currency Translation Reserve to the Consolidated
Income Statement on liquidation of subsidiary companies.
5. Taxation
(a) Analysis of tax charge for the year
2017 2016
Before exceptional Exceptional items Total
items
£'000 £'000 £'000 £'000
Current taxation
Corporation tax charged on profits for 13,520 (946) 12,574 9,349
the year
Adjustments in respect of prior periods (758) - (758) 1,281
Total current tax charge/(credit) 12,762 (946) 11,816 10,630
Deferred taxation
Origination and reversal of temporary (743) (357) (1,100) (768)
differences
Adjustments in respect of prior (627) - (627) 194
periods
Total deferred tax credit (1,370) (357) (1,727) (574)
Total income tax charge/(credit) in 11,392 (1,303) 10,089 10,056
the income statement
(b) Reconciliation of the effective tax rate
The Group's tax charge for the year exceeds (2016: exceeds) the UK statutory rate and can be reconciled as follows:
2017 2016
Before Exceptional Total
exceptional items items
£'000 £'000 £'000 £'000
Profit before taxation 44,458 (6,741) 37,717 37,298
Profit before taxation multiplied by the standard
rate of corporation tax in the UK at 19.33% (2016:
20%) 8,594 (1,303) 7,291 7,460
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