Income tax paid - net                                                     (10,504)            (12,958) 
 
Net cash generated from operating activities                              66,503      40,215 
 
Cash generated from operating activities before exceptional items         66,503      41,904 
Net cash outflow from exceptional items                                   -                   (1,689) 
Net cash generated from operating activities                              66,503      40,215 
 
Cash flows from investing activities 
Purchase of property, plant and equipment                                 (4,669)             (3,102) 
Purchase of intangible assets                                             (609)               (1,455) 
 
Net cash used in investing activities                                     (5,278)             (4,557) 
 
Cash flows from financing activities 
Proceeds from borrowings                                             9    50,000      - 
Repayment of borrowings                                              9    (50,000)    (37,428) 
Interest paid                                                             (481)                  (894) 
Lease principal payments                                                  (13,579)    - 
Proceeds from exercise of share options                                   869                     327 
Employee subscription for tracker shares                                  291         536 
Purchase of own shares                                                    (2,031)             (2,506) 
Dividends paid to equity holders                                     6    (6,659)           (18,778) 
Distribution to tracker shareholders                                      -           (218) 
 
Net cash used in financing activities                                     (21,590)    (58,961) 
 
Net increase/(decrease) in cash and cash equivalents                      39,635      (23,303) 
Cash and cash equivalents at beginning of the year                        10,555             33,323 
Exchange (losses)/gains relating to cash and cash equivalent              (295)               535 
 
Net cash and cash equivalents at end of the year                     9    49,895      10,555

The above Consolidated Statement of Cash Flow should be read in conjunction with the accompanying notes.

Notes to the Financial information

for the year ended 30 November 2020 1. Accounting policies

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 2020 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 22 January 2021.

The auditors have reported on the Group's financial statements for the years ended 30 November 2020 and 30 November 2019 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 2019 were filed with the Registrar of Companies and those for the year ended 30 November 2020 will be filed following the Company's Annual General Meeting.

In 2020, selected UK subsidiaries were exempt from the requirements of the UK Companies Act 2006 ('the Act') relating to the audit of individual accounts by virtue of s479A of the Act. The Company provides a guarantee concerning the outstanding liabilities of these subsidiaries under section 479C of the Act.

The Group's financial statements have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and the international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.

Going concern

The Group's financial statements have been prepared on a going concern basis under the historical cost convention.

The Group's business model has been tested during the recent period of particularly challenging market conditions and has been found to be effective and resilient.

When assessing the Group's ability to continue as a going concern, the Directors reviewed assumptions about the future trading performance, capital expenditure, working capital requirements and available funding facilities contained within the Group's five-year plan. The Directors have also considered the principal risks in the business, credit, market and liquidity risks, including forecast covenant compliance, as well as the other matters discussed in connection with the viability statement that can be found in the Group Annual Report 2020 under Compliance Statements. Further stress testing has been carried out to ensure the Group has sufficient cash resources and complies with bank covenants to continue in operation for at least 12 months from the date of signing this report. This stress testing included severe but plausible scenarios of the shape and severity of economic consequences of enforced lockdown restrictions on the aggregate demand for the Group's services, deterioration in credit risk and days sales outstanding, partially offset by mitigating cost reduction actions. Through this process the Directors have satisfied themselves that the Group will be able to meet its commitments and obligations for at least the next twelve months from the date of this report.

The key assumptions of two severe but plausible scenarios linked to certain principal risks are shown below.

Scenario 1:

The COVID-19 global health crisis and the impact on the global economy have been considered. In this scenario we assume that sales activity in the first half of 2021 is significantly impacted, being down 7% versus H1 2020, the period when the majority of our markets went into lockdown and were significantly impacted in the early stages of the health crisis.

Under 'Scenario 1' the Group forecasts to be in a strong cash position throughout 2021 and Q1 2022 with significant headroom against its banking covenants.

Following this period, it is assumed that there is recovery, and the Group returns to a more normal trading performance in 2022.

Scenario 2:

Under 'Scenario 2' we extended the impact of COVID-19 with an additional wave of lockdown restrictions and demand reductions for the period from August to the end of November 2021. Sales activity for Q1 and Q2 mirror the performance of 'Scenario 1'. The Q3 and Q4 impact is further offset by proportionate mitigating cost reduction actions.

Under 'Scenario 2' the Group forecasts to be in a strong cash position throughout 2021 and Q1 2022 with significant headroom against its banking covenants.

Following this period, it is assumed that there is recovery, and the Group returns to a more normal trading performance in 2022.

The results of the stress testing demonstrated that due to the Group's significant free cash flow, strong balance sheet, immediately accessible liquidity of GBP154.9 million (falling to GBP104.9 million on 23 March 2021 when the Group's access to the Bank of England's COVID-19 Corporate Financing Facility expires), and the Board's ability to adjust the cost base further, including the discretionary share buyback programme, it would be able to withstand the impact and remain cash generative.

Based on the above, together with their knowledge and experience of the recruitment services industry and STEM markets, the Directors continue to adopt the going concern basis in preparing the financial statements for the year ended 30 November 2020.

Significant accounting policies

The same accounting policies, presentation and computation methods are followed in this preliminary announcement as in the preparation of the Group's financial statements. The Group's principal accounting policies, as set out below, have been consistently applied in the preparation of these financial statements of all the periods presented, except where otherwise indicated.

New standards and interpretations

A number of new or amended standards became applicable for the current reporting period. None of these, however, other than the adoption of IFRS16 Leases, had a significant impact on the Group's accounting policies or the Consolidated Financial Statements.

IFRS 16 Leases

This note explains the impact of the adoption of IFRS 16 Leases ('IFRS 16') on the Group's financial statements and also discloses the new accounting policies that have been applied from 1 December 2019, where they are different to those applied in prior periods.

(a) Impact on the financial statements

The Group adopted IFRS 16 under the modified retrospective transition approach from 1 December 2019 but has not restated comparatives for the prior reporting period, as permitted under the specific transitional provisions in the standard. As presented below, the reclassifications and the adjustments arising from the adoption of the new leasing standard are therefore recognised in the opening balance sheet on 1 December 2019.

(MORE TO FOLLOW) Dow Jones Newswires

January 25, 2021 02:02 ET (07:02 GMT)