Northgate Information Solutions Limited

Transcription

Contents
2
CEO Letter
9
Financial Highlights
10
Corporate Social Responsibility
14
Directors’ Report
17
Strategic Report
21
Financial Section
The signed financial statements filed with Companies House do not include the CEO Letter, Financial Highlights or Corporate Social Responsibility sections set out
in the contents of this Annual Report and Accounts.
1
Annual Report and Accounts 2014/2015
CEO Letter
One Company.
One Focus.
Advanced
Technology
Platforms and
Applications
Building on Our Advantage
Deep HR
Experience
and Insight
Global Portfolio
of Flexible Service
Delivery Options
To our Stakeholders:
Northgate Information Solutions has been on a transformative journey over the past several years – and in 2015 that journey
turned a milestone corner.
With the sale of Northgate Public Services (NPS) in December 2014 and the sale of Northgate Managed Services (NMS) in
2013, we have achieved an important strategic milestone of streamlining our portfolio and focusing exclusively on our core
business NGA HR – HR technologies and services. In fact, while Northgate Information Solutions continues to exist in name,
our business is now 100% focused on NGA Human Resources. As such, we are continuing our transformation as a peoplecritical partner for our clients. In last year’s annual report, we outlined NGA’s operating strategy for a market-segment focus,
which we have fully put into action this year. And, through it all, the key differentiator in our journey continues to be the NGA
Advantage – our combination of market experience and insight, advanced technology, and flexible service delivery – which will
continue to drive our success as we move forward.
NGA operates in an attractive market, where HR investments and transformation – focused on improving how companies
manage their human capital – are the top priorities of every board, big or small. We first saw the introduction of Software as
a Service (SaaS) in the HR space, which created new demand from clients around the world for us to help them transform
their HR operations and simplify their software, payroll, and HR administration services.
Over the last five years, we have grown into a leader in the markets in which we operate with our SaaS and BPaaS (Business
Process as a Service) offerings, and through partnerships with global HR SaaS leaders, bringing innovative HR as a Service
solutions to our clients.
As we developed and deployed our strategy, we had to work through a variety of headwinds. However, it’s the way in which
we as a company have dealt with these challenges that speaks volumes about NGA’s strength and resilience, and our
determination to succeed.
Looking back to 2012, to the start of our transformation, Northgate Information Solutions was made up of three largely
unrelated businesses, serving different market segments with unique value propositions and limited synergies between them.
Our first priority then was to streamline our portfolio and focus the business on core objectives, while at the same time drive
efficiencies. And so started the three-year transformation program, which brought us to where we are today.
2
CEO Letter continued
With the sale of NMS and NPS, we have accomplished our objective of streamlining our portfolio. We are now focused on
refining NGA strategy and go to market. FY15 was the first full year in which we brought that strategy to life by defining and
clarifying NGA’s market approach. This evolution in our strategy drove investments in four market segments with clear market
definitions, targeted offerings, dedicated teams and dedicated investments to enable their growth. Today, we have a clear
direction and market positioning for each market segment we play in, with unique and attractive value propositions to our
clients in each segment. The four market segments are:
UK Small and
Medium Market
UK and Ireland Large
and Mid-Market
ANZ Large and
Mid-Market
Global Enterprise
Market
SMBs are a vibrant and growing
segment around the world —
and one becoming more and
more reliant on external
expertise given the growing
complexities of legislation in the
UK. NGA leads this market in
the UK with integrated, cloudbased software solutions
supported by a range of
BPaaS services.
The UK and Ireland large and
mid-market segment is at the
heart of NGA’s success and
market leadership, with more than
4.2 million employees served and
a 28% market share. In the UK
& Ireland, NGA’s market-leading
ResourceLink platform covers
core HR, talent functionality, and
payroll, providing solutions for
organisations with more than
500 employees, including many
of the nation’s largest employers.
In Australia and New Zealand,
NGA has been a pioneer in SaaS
solutions providing the first
cloud-based HCM and payroll
solution – Preceda - for
employers with more than 200
employees since the early 2000s.
Our fast-growing ANZ business
is currently in a strong 2nd
position in the market, representing a market share of 13%.
The global enterprise market
is characterised for us as an
IT-led HR services business,
built around our unique
application and integration
technologies — with payroll
and workforce administration
at the foundation, and
enabled through a global HR
service delivery network with
capabilities in 145 countries.
Employers with up to
Employers with
Employers with
Employers with
500
employees
500+
employees
200+
employees
5,000+
employees
Payroll
Services
Application
HR
HR
Outsourcing Management Consulting
Services
Between 2012 and today, we invested in improving our service delivery scale and global footprint, which is critical to our
growth and competitiveness. We drove significant consolidation across a very fragmented delivery landscape. Starting with
more than 60 delivery points across the globe, we created seven strategic centres and three onshore premium centres with
scale, while maintaining a presence in local markets where our subject matter experts continue to support our clients and
our global delivery centres.
It was with this in mind that a team, specifically tasked with Service Delivery Architecture and Compliance, was created.
This new team’s mission was to implement a new way of working in HR service delivery and payroll operations, known in
short as the The NGA Way. Revisiting the way in which we work together, The NGA Way delivered a series of advancements,
including NGA Process Standards that define road maps and approaches for every HR process we deliver to clients, with
the objective of quickly deploying new projects and forging long-term client relationships.
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Starting in 2012, we saw a major shift in the HR consulting market, from complex on-premise system integration projects
to agile and fast-moving SaaS architectures. We were working with a skill set that did not match what our clients were
looking for and where the market was going. To this, we responded by transforming our HR consulting capabilities, offerings,
and size of the practice.
Today we have an agile and cloud-focused HR consulting practice with market-leading SaaS HR capabilities, giving us
a solid foundation from which we can grow. HR consulting’s strategic mission is to win new clients, help them with HR
technology landscapes, and act as the tip of the arrow for the rest of our offerings where we develop long-term, annuitybased client relationships.
The most challenging headwind we faced was in our HR outsourcing (HRO) line of business, where we faced attrition of
the legacy client base we acquired from Convergys. As a result, we needed to restructure and transition a number of older,
mature contracts from our Convergys acquisition. Convergys was acquired in June 2010 with the strategic ambition of NGA
becoming a leader in the enterprise HRO market by leveraging Convergys’ delivery capabilities, footprint in North America
and blue-chip customer base. The acquisition of Convergys HRM included 16 significant blue-chip corporate customer
contracts, which operated mainly under an outdated ‘lift and shift’ model that offered limited opportunity for transformation,
innovation and productivity improvements.
The anticipated nonrenewal at the time of the acquisition of four large customer contracts, which were acquired through
Convergys HRM, has impacted results over several years. The restructuring and transition effort around these contracts
spanned multiple years, and the revenue effects of attrition and de-scoping of contracts by remaining clients is expected to
end in FY17.
The restructuring efforts will leave us with a strong and trusted portfolio of remaining clients, with strong relationships,
modern operating models, and high levels of client satisfaction. This is illustrated by significant renewals from our largest and
most complex clients, who are taking advantage of the innovation, investments and service delivery improvements enabled
by NGA. The acquisition of Convergys HRM provided us with a solid global delivery platform and a remaining group of key
clients that we expect to work with for many years to come.
One of the key foundations of our company is our people. Over the last three years, we have created an integrated global
approach across the HR functions. This includes implementing a performance-based culture, investing in programs that
develop our employees, encouraging and enabling peer collaboration, delivering a supportive work environment, and
retaining our top talent. At NGA we are committed to investing in our people, providing them with an environment where
they can learn and grow as they take advantage of the opportunities NGA offers across the globe.
Over the past several years, we have invested significantly in innovation and further developing our Intellectual Property
Platforms, including our products and our process knowledge and expertise. Not too long ago we had a fragmented
product and offering development team. Two years ago we made a bold move by creating a global product and offerings
development team. We then tasked them to drive more innovation and shifted more of our investments into new platforms,
new products and new innovation. Today more than 60% of our R&D budget is spent on innovative new offerings that help
us maintain our leadership in the marketplace. As a result, we have seen several new product launches, including Payroll
Exchange, myHRW, Preceda and ResourceLink.
The above changes were challenging, but necessary to make NGA a competitive player in the HR technology and services
space, and critical to maintain our leadership in the market segments where we play. We have created a solid platform for
growth, with clear strategy and solid foundations. Our primary objective now is to get back to growth.
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Business Performance
As a result of our continued transformation and focus, FY15 saw a number of critical events across the company, delivering
variable results for NIS.
FY15 results for NGA Human Resources were mixed, with increased profitability across the business but also continued
headwinds in the enterprise segment. NGA closed the year with revenue of £451.7m (-6.9%) and EBITDA of £81.5m
(+0.1%). The reduction in revenue owed largely to two factors:
First, the erosion of the Convergys legacy contracts, as described above. The impact of these erosions in the year was
£7.7m revenue. We expect Convergys legacy contract erosion to complete and stabilise in FY17.
Second, we have completed the restructuring of our HR consulting business to reduce OnPremise systems integration work,
growing our cloud capabilities, rightsizing the business and building stronger, more strategic customer relationships. Our
business strategy is to be a predominantly annuity-based business through long-term relationships with our clients. As a
result we exited smaller, low-margin consulting projects, where there was no strategic relationship with larger or international
clients. Our planned and proactive transformation of the HR consulting business resulted in 32% (£18.4m) of revenue
loss but provides us with better profitability and a more stable client base to grow from. The strategic position of our HR
consulting activity is to be the tip of the spear for new client acquisitions and creating beachheads to sell annuity business.
Normalising for both of the above factors (Convergys legacy contracts erosion and HRC transformation) NGA performance
was £415.7m revenue, 3.2% CAGR in three years. This demonstrates true underlying performance of our business.
Underlying Business Revenue (£m)
Underlying
Business Revenue (£m)
450
FY13-15 CAGR:
3.2%
400
390.1
350
FY13
407.9
FY14
415.7
FY15
Note: NGA
NGA sales
excluding
HR consulting
and select
contracts. Allcontracts.
figures shown
at budget
rates.
Note:
salesFY13-FY15
FY13-FY15
excluding
HR consulting
andnon-renewed
select non-renewed
All figures
shown
for financial
year ending
30. year ending April 30.
atFinancials
budget shown
rates. are
Financials
shown
are forApril
financial
On December 22, 2014, we sold our
NPS business to Cinven, a leading
European private equity firm. Our Public
Services division had delivered a strong
performance in recent years, growing
7.2% in revenue and 6.9% in EBITDA, at
£181.0m and £42.0m respectively in FY14.
NPS delivered eight consecutive quarters
of growth in both the top line and bottom
line as part of Northgate. Stakeholders
welcomed the transition as it offered the
Public Services division a platform for
continued growth, and made NGA the
primary focus of Northgate.
After one-off restructuring and property costs of £24.8m, profit on sale of the NPS business of £24.8m and amortisation of
acquired intangibles of £45.1m, NIS recorded an operating profit of £26.0m. Net financing costs increased to £95.9m, and
loss on ordinary activities before tax was £69.9m.
Our Strategy for Growth
Our growth strategy incorporates several components. One element continues to be the NGA Advantage. The NGA
Advantage offers our clients a unique combination of deep market experience and insight, advanced technology platforms
and applications, and unparalleled, flexible service delivery, making us unique in the marketplace and very difficult to replicate.
Everything we do for our clients, and what makes us unique revolves around our combination of local and global HR
knowledge and expertise, our advanced technology platforms, and our highly flexible service delivery options offered around
the world. As we focus strictly on our HR business, our Advantage will only grow through continued focus and investment.
http://www.ngahr.com/about/nga-advantage
5
Overall, our strategy for growth has included four main focal points.
1. Market Leadership: We support more than 8 million employees globally and produce more than 50 million payslips per
year, with more than 1,000 HR implementations in 25 languages, supporting customers in 145+ countries. Clients and
advisors continue to position us as a strategic partner, resulting in continued top rankings in analyst reports, from Gartner
and Everest. We have organised ourselves around four market segments: UK SMB, UK Mid-Market, ANZ Mid-Market
and Global Enterprise, our strategy is to be a leader in each of these segments by continuously investing in our offerings
and teams supporting these segments.
Everest Group Performance | Experience | Ability | Knowledge (PEAK) Matrix
for MCPO (Multi-Country Payroll Outsourcing)
75th percentile
High
Major Contenders
ADP
Celergo
25th percentile
Market success
TMF Group
SGWI
Low
Talent2
CloudPay
Zalaris
Aon Hewitt
Emerging Players
Infosys
Toutatis HLA
NGA
Ceridian
75th percentile
Leaders
TCS
Neeyamo
Acrede
HCL
Low
25th percentile
High
MCPO delivery capability
(Scale, scope, technology solution, and delivery footprint)
Source: Everest Group (2016)
RESEARCH
Leaders
Major Contenders
Emerging Players
Copyright © 2016, Everest Global, Inc.
2. World-class delivery: We have been working hard on building our capabilities for success, including creation of
scalable delivery centres around the world (moving from 60+ centres to seven strategic and three premium centres),
establishing NGA standards, and driving automation and standardisation by leveraging our IP across our delivery
network. We will continue on this journey, with productivity, analytics and automation being our next areas of focus.
3. IP platforms: We strongly believe that intellectual property is a critical differentiator, both across our software and
services. In the last three years, we have refocused our investments in IP to innovation – user experience, automation,
plug-and-play connectors, cloud platforms, and analytics. This resulted in each of our segments having a strong IP
foundation – both in the form of dedicated, best-in-class SaaS and BPaaS HCM platforms (MoorepayHR, Preceda,
ResourceLink, myHRW and Payroll Exchange), and by being deeply embedded in our service delivery processes and
organisation.
4. Sustainable long-term client relationships: Deep, long-lasting relationships are NGA’s most important differentiator.
We believe that developing and nurturing deep, multipronged and long-lasting client relationships is the best way to
grow a business model that is built around long-term annuity-type revenue streams. Dedicated and focused service
delivery and account teams, intelligent client satisfaction surveys, and peer-to-peer client platforms are some of the
many mechanisms we’ve introduced to build client intimacy into every aspect of our business.
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Over the past four years, we have gone through a very significant transformation – from a portfolio of three businesses to
a single focus on NGA HR, which reflects our core strengths and our view that HR will be the best business for us over the
long term. Within our HR-focused business, we have refined our go-to-market strategy to be focused on four key segments,
which is a key platform for future growth.
Let me expand on the point above and speak further to the strategy behind our market segmentation. It recognises that
NGA is not one offering, but a group of offerings and value propositions tailored to the needs of different market segments.
Specifically, we have targeted four strategic product-market combinations: UK small and medium-sized business (SMB),
UK and Ireland large and mid-market, Australia/New Zealand mid-market, and global enterprise business. These segments
now compose the foundation of our growth strategy and our overall go-to-market approach. They represent how we
measure ourselves and how we will report results going forward. Let’s look at each.
UK SMB – Moorepay
The SMB mark is a vibrant and growing segment around the world – and one becoming more and more reliant
on external expertise given the growing complexities of legislation in the UK. NGA leads this market in the UK with
integrated software and services solutions under the Moorepay brand.
Through Moorepay, we market a BPaaS offering – business process as a service – that which combines
subscription to our leading software through the cloud, delivering payroll services on top of that software, and
accessing a pool of legislative and regulatory experts that small organisations typically don’t have access to on their
own. In addition to cloud-based HR software and payroll services, we provide our SMB clients with HR Services and
Health & Safety services, all managed by NGA, leveraging proprietary software platforms and our extensive local
knowledge and expertise. Today, Moorepay serves 5.7% of the UK SMB HR and payroll market, processes 12m
payslips and 250,000 HR service engagements on an annual basis.
Over the past few years, we overlooked this business, and, as a result, our growth suffered. With the dedicated
team, clear strategy, and focus on execution, we expect SMB to get back to growth in the next 12 months.
UK and Ireland Large and Mid-Market
Our UK and Ireland large and mid-market business remains strong. We have a market-leading offering, strong
market share, a buoyant market environment and an outstanding team. Our focus here is to get to new growth
levels by executing our growth plans.
In the UK and Ireland, we provide HR software and services on NGA’s proprietary ResourceLink platform that covers
core HR, talent functionality, and payroll. NGA is a market-leading player with 28% market share, more than 1,000
customers and 4.2 million employees served in the UK and Republic of Ireland.
Our ResourceLink platform has been a pioneering cloud HR solution since 2000. In addition to our HR software
platform, we have been growing HR BPO/BPaaS services, providing our clients flexibility in service delivery models.
As we progress, we will expand our sales through new channels and more effective sales activities.
Over the last few years, our UKIE business has grown 2%–3%. With the new strategy and focus, we expect it to
grow in excess of 5%.
ANZ Large and Mid-Market
Similar to the UK, Australia and New Zealand are software-led opportunities for NGA – and NGA has been a pioneer
in SaaS solutions in those markets. With a highly localised solution, NGA can support our own software, or we can
add payroll and support to our Workday and SAP SuccessFactors partner solutions in these markets as well.
Our Preceda platform – the first cloud HR platform in the region – continues its growth as we’re targeting to get to
1 million employees served, either through stand-alone SaaS service or in combination with BPO and HR shared
services from our Sydney and regional delivery centres. Our Australia business is currently in a strong 2nd position in
the market, representing a market share of 13%.
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Last financial year, our ANZ mid-market business saw double-digit revenue growth in the second half of the year,
with revenue growth of 8.2% to achieve £17.9m GBP over the year and as such established a record year in terms
of revenue performance. The business entered the new year with strong momentum, making this segment living
proof that our strategy is working and investments are paying off. We anticipate a strong order intake over the next
year as well, ensuring that this segment continues to flourish.
Global Enterprise
This market is characterised for us as a technology platform–led HR services business, built around our unique
application and integration technologies – with payroll and workforce administration at the foundation, leveraging
global delivery capabilities and strong partnerships with SAP SuccessFactors and Workday.
Our global enterprise segment is of critical importance to NGA, but was also subject to several headwinds, as laid
out earlier, including the transformation of our HR consulting business and the results of the Convergys acquisition.
These headwinds are well understood and adequately managed. We recorded strong deal flow this past year in
the enterprise segment. This is especially true for our global payroll offering, which saw the introduction of Payroll
Exchange: a new, highly innovative capability to connect cloud HR solutions with payroll solutions in 145 countries.
At the time of publication, nine months after go-live of Payroll Exchange, 15 global multinationals and 250,000
employees signed up for the new offering.
This market segment–based structure allows us to combine our focus on local and regional customer requirements, with an
integrated sales and delivery organisation for the markets in which we operate. Each segment has started to deliver on the
growth plans it put forward, and we continue to feel confident about our growth strategy, built on a solid delivery footprint
and a market segment–focused view of the HR and payroll services marketplace.
Business Outlook
Today NGA is truly one company, with one focus…
We’ve come a long way, based on our team’s hard work, effort and determination. We’ve managed to transform ourselves
into a truly global player and our brand recognition is impressive. For the year ahead, we will continue to drive our segmentfocused strategy which we established two years ago, with growth as the main objective for all segments. The foundations
of our growth are laid in our focus on customer satisfaction, delivery quality, and innovation.
In March 2016, we completed our refinancing. Our new capital structure significantly strengthens our balance sheet and
will help accelerate the growth of NGA. Following agreement between our shareholders and our lenders, the Merchant
Banking Division of Goldman Sachs and funds advised by Park Square Capital are now the majority shareholders of
NGA Human Resources and its parent company Northgate. Northgate’s current shareholder, KKR, stays on as a minority
shareholder. The refinancing package comprises the conversion of subordinated debt into equity and a full repayment of
outstanding senior debt using proceeds from the sale of Northgate Public Services in December 2014 and from new
£395m term facilities.
I believe this is a major step forward for NGA, our clients, our employees, and our partners. This transaction will facilitate
growth and investment for the long term. Our focus today is more than ever on our clients and on developing integrated
and highly innovative HR and payroll solutions.
As I have done before, I would like to thank our customers, our staff and our shareholders — not only for understanding
and supporting our vision, but also for helping us to deliver on the NGA Advantage. NGA offers ‘a safe pair of hands’ for
our customers, an exciting career environment for our employees and a sound financial and operational opportunity for
our owners.
Adel Al-Saleh
Group Chief Executive
8
Financial Highlights
To clarify for the reader of the accounts, we have adjusted the continuing operating profit and EBITDA* for years ending
30 April 2014 and 30 April 2015, to account for one-off items, property provisions and amortisation of acquired intangibles.
Continuing
20152014
operations
Continuing
Continuingchange
operations
operations
(% yty)
Revenue
Adjusted operating profit before significant restructuring,
one-off items, property provisions, amortisation of intangibles,
depreciation and impairment of fixed assets (EBITDA)*
Adjusted operating profit before significant restructuring,
one-off items, property provisions, amortisation of acquired
intangibles and impairment of fixed assets
£451.7m£485.1m
(7)%
£81.5m£81.4m
(2)%
£54.2m£51.7m
1%
Significant restructuring, one-off items and property provisions
£(22.5)m£(48.2)m
53%
Amortisation of acquired intangibles
£(35.4)m£(34.2)m
4%
£(3.7)m£(30.7)m
82%
Group operating loss
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Corporate Social Responsibility
As a global business operating in 35 countries, NGA HR is committed to sustainable growth which promotes social,
economic and environmental improvement.
Our aim is to conduct our business in a socially responsible way, contributing to the communities in which we operate,
minimising our impact on the environment and respecting the needs of employees, clients and other stakeholders.
Governance
Our corporate responsibility agenda is included within the overall framework set by the Corporate Responsibility Group (CRG).
The CRG sets our Corporate Responsibility policy and strategy and is responsible for best practice across the Group.
Adel Al-Saleh, our Group Chief Executive, is Executive Sponsor of the CRG. Our corporate responsibility programme is
managed to ensure that corporate responsibility is embedded into day-to-day practice.
Sustainable Services
Our services have an impact on people all over the world.
In NGA we work to make organisations more efficient and effective, saving money and reducing environmental impact.
Improving organisational performance is at the core of what we do – at work, at home, in school and within the community.
Globally, we understand the business of HR and the role it plays within an organisation.
We help our clients become better employers through smarter, more streamlined business processes — to save money,
manage employee life cycles, and support globally connected, agile organisations.
The combination of deep HR experience and insight, advanced technology platforms and applications and a global portfolio
of flexible service delivery options is how NGA’s experience and insight make a measurable difference for our clients
outsourcing services.
We work with our clients to introduce remote and flexible working, reducing environmental impacts and improving quality
of life for employees. We continue to extend our Software as a Service delivery model, reducing environmental impact and
making services more readily available for our clients.
Combating climate change remains integral to developing sustainable services for NGA HR’s clients. Our business continues
to place a strong focus on improving our clients’ environmental performance by enabling them to access modern ‘on
demand’ technologies which enable working practices that reduce environmental footprint and generate considerable
savings.
Environmental sustainability is fully embedded into service delivery methodology. We focus both on reducing the number
of assets required as well as favouring energy-efficient energy consumption models. Assets are reused wherever possible
and where they are beyond economical repair, they are recycled in accordance with the Waste Electrical and Electronic
Equipment Directive (WEEE).
Further reductions are gained by equipping our employees with the tools and technology to enable flexible and mobile
working.
NGA has introduced a number of initiatives designed to reduce carbon emissions and improve the efficiency and effectiveness
of HR systems. These include online pay slips, recycled pay slips, self-service HR and the development of a carbon emissions
calculator that enables employees to calculate their CO2 emissions for business travel. The implementation of paperless HR
by using self service and online payslips, results in reduced environmental impact and costs for our Clients.
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Corporate Social Responsibility continued
Sustainable Procurement
Northgate is committed to ensuring that the products and services that we buy are sustainable. As such, we have integrated
corporate social responsibility criteria into our group-wide procurement activities. Sustainability considerations are integrated
across our entire procurement process - in the identification of needs, evaluation of options, evaluation of tenders, and postcontract management. This approach is applied globally to all new and existing major suppliers.
Together with our Legal, Finance and Compliance departments, our Procurement department has developed standards to
ensure we meet NGA’s commitment to the UN Global Compact principles and work to ensure that all suppliers who wish
to do business with any Northgate Company sign up to those same standards we hold ourselves up to. This approach
helps propagate the benefits and global best practices onto the workforces across our supply chain. We are continuously
evaluating suppliers who might not meet those principles with the objective of bringing our entire supplier base to the same
global standard.
Our People
Northgate continues to enhance skills and increase employability in our communities through Apprenticeships, Graduate
Trainee Schemes, Careers Visits, Work Experience and partnership with companies.
In the UK, the company has continued to support the Young Apprentice scheme. Within the last year, the company welcomed
Young Apprentices working across a range of services and clients, while gaining accreditations in ICT, Customer Service or
Business Administration. Several of these young adults have gone on to become permanent employees of the company and
several others have used the skills and experience they have gained to obtain permanent jobs with other organisations.
By enhancing employability through these schemes, Northgate is addressing shortages of skilled staff, gender issues and
supply chain issues, creating a skilled future workforce which will benefit the growth of the IT sector.
ActNow
Through Northgate’s ActNow programme every employee is encouraged to do something, however small, to help deliver
value and build sustainable and healthy communities. The programme’s initiatives embrace sustainability, community
involvement and engagement.
The company has sponsored numerous charities throughout the last year, encouraging employees to get involved in
activities in support of many good causes. Charities included Macmillan cancer care, Comic Relief, Children’s Toy Foundation
(CTF), India National Association for the Blind (NAB), United Way and the Red Cross.
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Key Highlights and Measurements for This Year:• In 2014 we have rolled out a Business Fundamentals Programme which was mandatory for all employees. This program
includes a module on CSR which explains our commitment to the UN Compact, explains the 10 principles and what
we do as a Company toward fulfilling our obligations. The course also includes information on responsibilities for our
employees to ensure they are aware and committed to helping us fulfill this commitment. This course is also mandatory for
all new joiners within 1 month of joining NGA.
• Northgate aims to be an employer of choice, for people from different backgrounds and to promote respect for the
individual, and equality of opportunity. Northgate is committed to eliminating discrimination and encouraging diversity.
Our aim is for our workforce to be truly representative of all sections of the wider community and for each employee to
feel respected and able to perform their duties to the best of their ability. We have recently updated our Equality, Diversity
and Dignity Policy and have published this on our intranet so all employees are aware of our expectations on acceptable
conduct.
• We have Mandatory Compliance training for all employees and this year the completion rate was 98%. The small amount
who did not complete this training were on Long Term absences – ie Maternity leave. Long term sick leave etc.
• We are a diverse organisation — geographically and culturally — and we celebrate our different talents and skills with
personalised development plans for each of our 8,500+ employees around the world. All employees at NGA HR are
required to participate in the yearly performance development review with their manager. We aim for 100% completion
for this program and this year 99% of employees received a performance review rating and had a performance and
development conversation with their manager. The small percentage of employees who did not complete this program,
have various reasons for non-completion, such as long term sick, maternity leave or they have joined NGA HR after the
start date for the program.
Donations / CSR Activities
Throughout all regions, NGA supports employees to find ways to give back to their communities, including mentoring,
volunteering, and donations to their favorite charities. Below are some examples of the last year of activities we have
supported.
• Our employees in the UK donated to nearly 100 different charities.
• As a business our Australia sites sponsor 2 children through World Vision. Employees are invited to donate each month
and NGA matches the donations received.
• Our Hyderabad site held their first Blood Donation Camp this year.
• Post-Haiyan Relief Operations - Through local and global donations and event savings, NGA HR PH raised funds for postHaiyan relief operations.
• Colleagues from Wincanton offshore team conducted “Kappa Fest” (by selling Kerala traditional dish prepared from
tapioca). The fund was raised for charity to help an old age home near to our site in Kochi, India.
• Colleagues in our BskyB Arrow offshore team raised funds from employees as part of their 1 year completion. The fund
was handed over to Karunalayam Charity home near to our Kochi site, to help disadvantaged children with education and
health.
• Through an initiative called Share and Care, our Mumbai team helped support the India National Association for the Blind
(NAB), by collecting donations and raising money to purchase items for the local NAB rehabilitation center, which works to
improve skills and place visually impaired people into employment.
12
• Our UK offices participated in fund raising activities for Red Nose Day in support of the national Comic Relief charity which
helps disadvantaged people throughout the world.
• Australia offices participated in Jeans for Genes day raising money for much needed research.
• Employees at our Jacksonville, Florida location hosted an annual charitable giving campaign for their local United Way,
a non-profit organisation that disperses funds in the most impactful ways to improve education health and income in
the community. In addition to raising thousands of dollars, many employees volunteer for local United Way agencies.
Most recently, hundreds of employees wrote letters of encouragement for graduating students to help motivate them to
continue along their current path of success.
• Employees in our Irvine Office in North America, recently donated equipment to one of our clients who is a charity, Camp
Alandale. They run summer and winter camps for abused children giving them hope and 1-2-1 counselling to assist them
in their future lives.
• Our Manila office works with Gawad Kalinga Community Development Foundation, Inc. (GK), which is a Philippine-based
movement that aims to end poverty for 5 million families, by first restoring the dignity of the poor. Our support included
community service by our employees in building houses, as well as Disaster recovery volunteerism when needed.
• We also support the Hands on Manila Servathon (HOM Servathon). This is a day of community service that mobilises
hundreds of volunteers, both first time as well as veterans, to work together in providing assistance to marginalised
sectors. NGA’s volunteers over the last year provided community service in restoring classrooms for Grade Schools, and
participating in ‘Run for a Cause’.
• Our St John’s office in North America supported the Janeway Children’s Hospital Telethon, manning the phones and
helping to raise funds.
• Employees in our St John’s office supported the Ronald McDonald House Home for Dinner Program, providing a meal for
families with sick children and took part in the Breast Cancer Foundation “Dress for the Cure” fundraiser, wearing pink in
support of the cause and donating contributions through the sales of pink ribbons.
Environment
• Our Kochi site celebrated World Environment Day with the theme Raise your Voice, not the Sea Level. NGA distributed
500 saplings to employees and created awareness about the importance of planting trees and caring for our environment.
• As part of our work with Hands on Manila Servathon (HOM Servathon), NGA’s volunteers participated in a Costal and river
clean-up this year.
• In the UK our Hemel and Peterborough offices have introduced new lighting technology for energy efficiency. We are now
in the process of expanding this scheme to our larger UK sites such as Halifax, Birmingham and Bristol offices.
13
Directors’ Report
The Directors present their report and financial statements for the year ended
30 April 2015.
Directors
The Board of Directors consists of the following members who possess the necessary range of backgrounds, qualities and
experience to lead and maintain effective control over Northgate’s activities.
Adel Al-Saleh Group Chief Executive
Joerg Metzner Non-Executive Director (appointed 27 November 2015)
William L. Cornog Non-Executive Director
Stuart Ross Group Finance Director (appointed 1 April 2015)
Edouard Pillot Non-Executive Director
Brian Carroll Chairman (resigned 27 November 2015)
John Stier Group Finance Director (resigned 20 April 2015)
Risk Assessment
The Board has overall responsibility for the Group’s approach to assessing risk and the systems of internal control, and
for monitoring their effectiveness in providing its ultimate stakeholders, certain funds advised by KKR, with a return that
is consistent with a responsible assessment and mitigation of risks. This includes reviewing financial, operational and
compliance controls and risk management procedures, which themselves include the security and controls around customer
and internal data. The Board has established on-going processes for identifying, evaluating and managing the significant
risks faced by the Group which accord with the Internal Control Guidance for Directors in the Combined Code (which only
applies to UK listed companies but is used for best practice). Further independent assurance is provided by an internal
audit function, operating across the Group, and the Group’s auditors. All employees are accountable for operating within
these policies.
Internal Control
Whilst the Board maintains full control and direction over appropriate strategic, financial, organisational and compliance
issues, it has delegated to executive management the implementation of the systems of internal control within an established
framework.
The Board has put in place an organisational structure which formally defines lines of responsibility and delegation of
authority. There are also established procedures for planning, capital expenditure, information and reporting systems and for
monitoring the Group’s businesses and their performances.
14
Directors’ Report continued
Assurance
On behalf of the Board, the Audit Committee examines the effectiveness of the Group’s:
• assessment of risk by reviewing evidence of risk assessment activity and a report from internal audit on the risk
assessment process; and
• systems of internal control primarily through agreeing the scope of the internal audit programme and reviewing its findings,
reviews of the annual financial statements and a review of the nature and scope of the external audit.
Any significant findings or identified risks are closely examined so that appropriate action can be taken. The work of
the internal audit department is focused on areas of priority as identified by the risk analysis and in accordance with the
annual audit plan approved by the Audit Committee and the Board. External auditors are engaged to express an opinion
on the financial statements. They review and test the systems of internal financial control and the data contained in the
financial statements to the extent necessary to express their audit opinion. They discuss with management the reporting of
operational results and the financial position of the Group and present their findings to the Audit Committee.
Audit Committee
The Committee assists the Board in fulfilling its overview responsibilities, primarily reviewing the reporting of financial and
non-financial information, the systems of internal control and risk management, and the audit process. It comprises
Edouard Pillot (Chairman) and Joerg Metzner. The Committee intends to meet at least three times a year and the Group
Chief Executive Officer, the Group Finance Director, the Group Internal Audit Director and our Auditors, currently KPMG LLP,
will attend the meetings by invitation.
Auditors
KPMG LLP was appointed by the Board as auditors of the Group during the period. KPMG LLP has confirmed its willingness
to continue in office as auditors of Northgate and in accordance with Section 485 of the Companies Act 2006, a resolution
to re-appoint it will be proposed at a future meeting of the Board.
Dividend Policy
The Board reviews the dividend policy in conjunction with a policy of retaining significant funds for future growth. No dividends
were declared during the year under review.
Employees
We actively promote an internal recruitment process encouraging internal succession planning and career development. All
UK employees have the opportunity to elect members to an Employee Consultation Group (ECG). The ECG meets formally
with Northgate’s management on a quarterly basis to discuss issues of importance. The Group also has a number of works
councils and employee groups in place across the globe to ensure effective communication takes place with all employees.
Equal Opportunities and Diversity
Northgate aims to be an employer of choice for people from different backgrounds and through our policy and mandatory
diversity training (completed annually) we promote respect for the individual and equality of opportunity for employment,
development and promotion. Opportunities also exist for employees of the Group who become disabled to continue their
employment or to be trained for other positions in the Group. An Equality Survey is conducted regularly.
Health and Safety
Northgate has an established health and safety policy that focuses on the ability to measure performance and to pursue
continuous improvement in managing health and safety. The policy is reviewed regularly by the Health and Safety Manager.
Financial
Northgate has access to sources of capital that are sufficient to develop the business. Its funds are provided by a syndicate
of leading banks and under the current agreements Northgate can call on up to £357.9m of unused facilities at 30 April
2015 (30 April 2014: £99.0m). These arrangements and the recurring nature of much of Northgate’s businesses give
confidence over Northgate’s financial strength, and provide the basis on which future investment decisions can be taken.
The Board continually reviews the performance of its divisions and regularly reviews its divestment versus investment
strategy in each case.
15
Directors’ Report continued
Donations
During the period the Group made no charitable or political donations.
Relationships with key stakeholders
Northgate manages its relationships with its key stakeholder groups as follows:
• Customers
Northgate appoints one or more individuals through which all customer contact with each customer is managed. Larger
customers have dedicated account managers, or teams that focus directly on customer needs. A number of active user
groups are in place where customers can provide feedback on product performance, future requirements and issues of
strategic significance.
• Suppliers and partners
Northgate performs reviews of its key suppliers and partners on a regular basis to ensure that maximum performance and
value are being obtained, and that risk and reward are equitably shared. Northgate negotiates agreements within which the
Group and its suppliers operate.
Significant events during the period
On December 22, 2014 we disposed of our Public Services (NPS) business for a cash consideration of £346.6m, generating
a profit on disposal of £24.8m.
Disclosure of information to auditors
The Directors who held office at the date of approval of this Directors’ Report confirm that, so far as they are each aware,
there is no relevant audit information of which the Group’s auditors are unaware; and each director has taken all the steps he
ought to have taken as a director to make himself aware of any relevant audit information and to establish that the Group’s
auditors are aware of that information.
This Directors’ Report was approved by the Board and signed on its behalf by:
Daniel William Schenck
Group Company Secretary
Registered Number: 6442582
16
Strategic Report
Principal Activities
The principal activity of the company is to provide technology solutions and services for human resources management
through our NGA Human Resources (NGA) business, founded on advanced technology platforms and applications, and a
global portfolio of flexible service delivery options.
Business Performance
Revenue from continuing operations declined by 6.9% to £451.7m (FY14: £485.1m), mainly due to attrition in legacy
Convergys contracts, as well as a planned HR consulting transformation. On December 22, 2014 we disposed of our
Public Services (NPS) business for a cash consideration of £346.6m, generating a profit on disposal of £24.8m.
NGA closed the year with revenues of £451.7m (-6.9%) and EBITDA of £81.5m (+0.1%). After one-off restructuring and
property costs of £24.8m (FY14: £49.9m), profit on disposal of the NPS business of £24.8m and amortisation of acquired
intangibles of £45.1m (FY14: £49.8m) the Group recorded an operating profit of £26.0m (FY14: loss of £13.9m). Net
financing costs increased to £95.9m (FY14: £85.7m). Loss on ordinary activities before tax was £69.9m (2014: £99.6m).
Our financial structure was further strengthened by our owners in the past year and we have restructured our debt to
support growth. This is important to our clients who seek a HR & payroll partner with the stability, longevity and strength to
execute multi-year contracts. NGA also continued to drive strong contract signings by recording a total contract value of
£450m GBP and an order book value of £968m.
The Northgate Information Solutions business continues to focus on certain key performance indicators, specifically on
revenue growth, earnings before interest, tax, depreciation and amortisation (EBITDA), margin % and order book total
contract value.
Business Model and Strategy
Over the course of FY15 NGA HR implemented a market-segment based business model, focused on its core markets
and segments. This market-segment approach is defined through four strategic product-market combinations: UK small
& medium-sized business (SMB), UK large & mid-market business, Australia and New Zeland business (ANZ), and global
enterprise business. These segments are now the foundation for our growth strategy and for our overall go-to-market
approach.
This market segment-based structure also allows us to combine our focus on local and regional customer requirements
with an integrated sales and delivery organisation. Each segment has started to deliver on the growth plans through the
integrated sales and delivery organisation structures and client-centric solution portfolios.
Customer satisfaction has been a particular focus area in FY15. Improved Service Level Agreement (SLA) performance
continued to reflect increased levels of client satisfaction and we continued to see company-wide delivery improvements,
both in terms of quality and efficiency.
We will continue to build on our client-centric and segment-focused foundations to deliver growth in revenue, profit and
cash flow.
17
Strategic Report continued
Principal Risks and Uncertainties
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations and arises principally from the Group’s trade and other receivables from customers.
Management has a credit policy in place and the exposure to credit risk is monitored on an on-going basis. Credit
evaluations are performed on all customers requiring credit over a certain amount. The Group does not require collateral in
respect of financial assets.
Interest rate risk
Interest rate risk is the risk of increased net financing costs due to increases in market interest rates. The Group finances its
operations and acquisitions through a mixture of retained profits, bank borrowings and equity; the Group’s main interest rate
risk therefore comes from its bank borrowings, which the Group borrows principally in Sterling and Euros.
The Group policy is to undertake interest rate hedging to protect itself against adverse movements in interest rates. Any
surplus cash is invested in short-term bank deposits at the prevailing rates of interest in order to achieve the market rate of
return.
Foreign exchange risk
The Group operates internationally and is exposed to foreign currency risk on transactions denominated in a currency other
than the functional currency and on the translation of the balance sheet and income statement of foreign operations into
sterling. The currencies giving rise to this risk are primarily US dollars and Euros. The Group has both cash inflows and
outflows in these currencies that create a natural hedge.
In managing currency risks the Group aims to reduce the impact of short-term fluctuations on the Group’s cash inflows and
outflows in a foreign currency. The Group also hedges any material foreign currency transaction exposure. Over the longer
term permanent changes in foreign exchange could have an impact on consolidation of foreign subsidiaries earnings.
Liquidity Risk
Liquidity risk is the risk that the Group will not be able to meet its financial commitments as they fall due.
The Group‘s objective is to ensure that adequate facilities are available through use of bank loans and finance leases. The
Group manages liquidity risk through regular cash flow forecasting and monitoring of cash flows, management review and
regular review of working capital and costs. The Group regularly monitors its available headroom under its borrowing facilities.
18
Business Risks
Risks to the business include the buoyancy of the world economy and levels of employment around the globe impacting
income in our HR services business. In addition, despite all the security systems and disaster recovery, business continuity
and crisis management plans and procedures in place to protect our infrastructure and business, a cyber attack or other
unforeseen events such as natural disasters may cause an interruption to our services and operations. As regards the risk
from loss of key personnel, the company has succession plans in place and continually monitors the situation. Price pressures
in the market are mitigated by improving the operational efficiency of our services. The Board are very conscious of these
matters and that we ensure we continually flex costs in the Group to meet client demand.
Employees
Northgate continues to enhance employability in our communities through Apprenticeships, Graduate Trainee Schemes,
Careers Visits, Work Experience and partnership with companies. By doing this, Northgate is addressing shortages of skilled
staff, gender issues and supply chain issues, creating a skilled future workforce which will benefit IT sector growth.
Northgate promotes respect for the individual and equality of opportunity for employment through our policy and mandatory
diversity training and actively encourages succession planning and career development. Northgate also provides employees
with a Flexible Benefits scheme, which enables them to choose benefits that best support their lifestyle. Opportunities also
exist for employees of the Group who become disabled to continue their employment or to be trained for other positions in
the Group. An Equality Survey is conducted regularly.
The Directors recognise the importance of good communications with Northgate’s employees and of informing and
consulting with them on a regular basis. This is mainly achieved through regular meetings, personal appraisals, e-mail
communications and the Your Say employee survey.
Health and Safety
Northgate has an established health and safety policy that focuses on the ability to measure performance and to pursue
continuous improvement in managing health and safety. The policy is reviewed regularly by the Health and Safety Manager.
Environmental Performance
Combating climate change remains integral to developing sustainable services for Northgate’s clients in all sectors. Our
businesses continue to place a strong focus on improving our clients’ environmental performance by enabling them to
access modern ‘on demand’ technologies which enable working practices that reduce environmental footprint and generate
considerable savings.
Environmental sustainability is fully embedded into service delivery methodology. We focus both on reducing the number
of assets required as well as favouring energy-efficient energy consumption models. Assets are reused wherever possible
and where they are beyond economical repair, they are recycled in accordance with the Waste Electrical and Electronic
Equipment Directive (WEEE). Further reductions are gained by equipping our employees with the tools and technology to
enable flexible and mobile working.
Subsequent Events
On 23 March 2016 the Group completed a capital restructuring. In summary, its subordinated debt of £389.3m, held by its
subsidiary Northgate Acquisitions Limited, was exchanged for £232m of equity in Northgate Information Solutions Limited.
Consequently the former holders of the subordinated debt, Goldman Sachs and Park Square, became majority shareholders
in the Group. On the same date the Group repaid its outstanding term loans of £345.1m, financed by new facilities of
£395.0m and by cash held on the balance sheet. Full details of these transactions are in Note 26 on page 61.
19
The table below shows the impact of the restructuring had it been completed on 30 April 2015, excluding the impact of
transaction fees incurred.
30 April 15
Actual
£m
Impact of
restructuring
£m
30April 15
Adjusted
£m
Non-current assets
Fixed assets
676.3
-
676.3
Other receivables
2.9
-
2.9
Total non-current assets
679.2
-
679.2
Current assets
Trade and other receivables
142.0
-
142.0
Cash and cash equivalents
349.9
(266.7)
83.2
Total current assets
Total assets
491.9
(266.7)
225.2
1,171.1
(266.7)
904.4
Non-current liabilities
Interest-bearing loans and borrowings
878.8(558.8) 320.0
Other non-current liabilities
65.5 -65.5
Total non-current liabilities
944.3(558.8) 385.5
Current liabilities
32.3(32.3)
Other current liabilities
236.9-236.9
Total current liabilities
Total liabilities
Net (liabilities)/assets
269.2(32.3) 236.9
1,213.5(591.1) 622.4
(42.4)324.4 282.0
Shareholders’ (deficit)/funds
(42.4)
324.4
282.0
Daniel William Schenck
Group Company Secretary
20
Financial Section
Statement of Directors’ Responsibilities In Respect of the Strategic Report,
the Directors’ Report and the Financial Statements
The Directors are responsible for preparing the Strategic Report, the Directors’ Report and the group and parent company
financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare group and parent company financial statements for each financial year.
Under that law they have elected to prepare the group financial statements in accordance with IFRSs as adopted by the EU
and applicable law and have elected to prepare the parent company financial statements in accordance with UK Accounting
Standards and applicable law (UK Generally Accepted Accounting Practice).
Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true
and fair view of the state of affairs of the group and parent company and of their profit or loss for that period. In preparing
each of the group and parent company financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• for the group financial statements, state whether they have been prepared in accordance with IFRSs as adopted by the EU;
• for the parent company financial statements, state whether applicable UK Accounting Standards have been followed,
subject to any material departures disclosed and explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the
parent company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent
company’s transactions and disclose with reasonable accuracy at any time the financial position of the parent company and
enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility
for taking such steps as are reasonably open to them to safeguard the assets of the group and to prevent and detect fraud
and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the
company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
21
Independent Auditor’s Report to the Members of Northgate Information
Solutions Limited
We have audited the financial statements of Northgate Information Solutions Limited for the year ended 30 April 2015 set
out on pages 10 to 54. The financial reporting framework that has been applied in the preparation of the group financial
statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the EU. The financial
reporting framework that has been applied in the preparation of the parent company financial statements is applicable law
and UK Accounting Standards (UK Generally Accepted Accounting Practice).
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are
required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the company and the company’s members, as a body, for our audit
work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors’ Responsibilities Statement set out on page 8, the directors are responsible for
the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to
audit, and express an opinion on, the financial statements in accordance with applicable law and International Standards
on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical
Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website at
www.frc.org.uk/auditscopeukprivate
Opinion on financial statements
In our opinion:
• the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at
30 April 2015 and of the group’s loss for the year then ended;
• the group financial statements have been properly prepared in accordance with IFRSs as adopted by the EU;
• the parent company financial statements have been properly prepared in accordance with UK Generally Accepted
Accounting Practice;
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and the Directors’ Report for the financial year for which the
financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if,
in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been
received from branches not visited by us; or
• the parent company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Mark Matthewman (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
London
E14 5GL
24 March 2016
The page numbers quoted in the above auditor’s opinion for the financial statements and statement of directors’ responsibilities refer to the relevant pages in the
signed financial statements filed with Companies House. The signed financial statements do not include the CEO Letter, Financial Highlights or Corporate Social
Responsibility sections set out in the contents of this Annual Report and Accounts.
22
Financial Section continued
Group income statement for the year ended 30 April 2015
Year ended 30 April 2015
Y
ear ended 30 April 2014
Continuing
Dis-TotalContinuing
Dis-
Total
Operations continued
Operations continued
OperationsOperations
(note 2)
(note 2)
Notes
£m
£m
£m£m£m£m
Revenue
451.7
119.8571.5485.1181.0666.1
Operating costs 3
(455.4)
(90.1)(545.5)(515.8)(164.2)(680.0)
Group operating profit/(loss)5
(3.7)
29.726.0
(30.7) 16.8(13.9)
Operating profit before significant
restructuring, one-off items,
property provisions, amortisation
of intangibles, depreciation and
impairment of fixed assets
81.5 23.1104.681.442.0
123.4
Amortisation of other intangible
fixed assets
Depreciation of tangible fixed assets
9
10
(19.0) (4.8)(23.8)(18.6) (6.4)(25.0)
(8.3)(1.4) (9.7)(11.1) (1.5)(12.6)
Operating profit before significant
restructuring, one-off items,
property provisions, amortisation of
acquired intangibles and impairment
of fixed assets 54.216.9 71.151.734.185.8
Significant restructuring, one-off
items and property provisions 3
(22.5) (2.3)(24.8)(48.2) (1.7)(49.9)
Profit on disposal of Public Services
business2
-24.8 24.8--
9
(35.4) (9.7)(45.1)(34.2)(15.6)(49.8)
Group operating profit/(loss)
(3.7)
29.7
26.0(30.7) 16.8(13.9)
Financial income
6
0.30.5 0.85.40.96.3
Financial expenses
6
(96.1) (0.6)(96.7)(91.0) (1.0)(92.0)
Net financing costs
6(95.8) (0.1) (95.9)(85.6) (0.1)(85.7)
Loss before tax
Tax credit
8
(99.5) 29.6(69.9)(116.3)
16.7 (99.6)
12.5 0.112.64.0
(Loss)/profit for the year from
continuing/discontinuing
operations(87.0) 29.7 (57.3)(112.3)
-4.0
16.7 (95.6)
Profit for the year from
discontinued operations
29.7
16.7
Attributable to:
Equity holders of the parent
(57.3)
(95.6)
The notes on pages 28 to 61 are an integral part of these consolidated financial statements.
23
Group statement of comprehensive income for the year ended 30 April 2015
Year ended Year ended
30 April 2015
30 April 2014
Notes
£m£m
Loss for the year
(57.3)(95.6)
Items that will never be reclassified to profit or loss
Remeasurements of defined benefit pension schemes
15
(26.7)4.3
Deferred tax on remeasurements of defined benefit pension schemes
8
5.3(2.0)
(21.4)2.3
Items that are or may be reclassified to profit or loss
Foreign exchange translation differences
10.5(1.3)
10.5(1.3)
Total other comprehensive income
(10.9)1.0
Comprehensive income for the year
(68.2)(94.6)
Attributable to:
Equity holders of the parent
(68.2)(94.6)
24
Group statement of financial position as at 30 April 2015
20152014
Notes
£m
£m
Non-current assets
Goodwill9
496.9762.7
Acquired and other intangible assets
9
152.8284.3
Total intangible assets
Property, plant and equipment
Other receivables
9
10
11
649.71,047.0
26.633.8
2.95.7
Total non-current assets
679.21,086.5
Current assets
Inventories – goods for resale
-0.6
11
142.0200.4
13
349.968.0
Total current assets
491.9269.0
Total assets
1,171.11,355.5
14
878.8879.8
Employee benefits
15
42.037.4
Provisions16
2.44.7
Deferred tax liabilities
12
6.729.2
Other financial liabilities
20(f)
14.410.1
Total non-current liabilities
944.3961.2
Current liabilities
14
32.325.1
Provisions16
5.710.2
Taxation
5.87.8
Trade and other payables
17
221.2319.2
20(f)
4.26.2
Total current liabilities
269.2368.5
Total liabilities
1,213.51,329.7
Net (liabilities)/assets
(42.4)25.8
Issued share capital
18
108.2108.2
Share premium account
0.60.6
Capital contribution
497.2497.2
Retained earnings
(648.4)(580.2)
Shareholders’ (deficit)/funds
(42.4)25.8
Approved by the Board of Directors on 24 March 2016 and signed on its behalf by:
Stuart Ross
Group Finance Director
24 March 2016
25
Group statement of changes in equity as at 30 April 2015
Equity
Share
Share
Capital Retained
shareholders’
capital premiumcontribution earnings
funds
£m £m£m£m
£m
Balance at 30 April 2013
108.2
0.6
442.4
(485.6)
65.6
Loss for the period -
-
-
(95.6)
(95.6)
Capital contribution -
-
54.8
-
54.8
Other comprehensive income for the year:
-
-
-
4.3
Deferred tax on remeasurements of defined benefit
pension schemes
-
-
-
(2.0)
-
-
-
(1.3)
(2.0)
(1.3)
25.8
108.2
0.6
497.2
(580.2)
4.3
Loss for the period -
-
-
(57.3)
(57.3)
Other comprehensive income for the year:
-
-
-
(26.7)
(26.7)
Deferred tax on remeasurements of defined benefit
pension schemes
-
-
-
5.3
5.3
-
-
-
10.5
10.5
108.2
0.6
497.2
(648.4)
(42.4)
26
Group statement of cash flows for the year ended 30 April 2015
Year ended
Year ended
30 April 2015
30 April 2014
Notes
£m£m
Cash flows from operating activities
Loss for the period
(57.3)(95.6)
Adjustments for:
9
45.149.8
Amortisation of other intangibles
9
23.825.0
Depreciation10
9.712.6
Profit on disposal of business 2
(24.8)Net financing costs
6
95.985.7
Tax credit
8
(12.6)(4.0)
Net cash from operating activities before changes in
working capital and provisions
79.873.5
Foreign exchange movements
Change in trade and other receivables
Change in inventories
Change in trade and other payables
Change in provisions and employee benefits Additional pension deficit contributions
(3.3)(10.6)
(6.7)7.6
0.3(0.3)
(43.8)(13.1)
(5.6)5.3
(6.3)(6.6)
Net cash from operating activities before taxes paid
14.455.8
Cash flows from investing activities
Disposal of discontinued operations net of cash disposed
2
338.3Acquisition of intangible assets
(22.8)(28.3)
Acquisition of property, plant and equipment
(13.4)(14.6)
Net cash used in investing activities
302.1(42.9)
Net cash from operations after investing activities
316.512.9
Taxes paid
(1.9)(2.1)
Net cash from operations after investing activities and before
financing activities
314.610.8
Cash flows from financing activities
Interest received
0.81.0
Interest paid (34.5)(45.8)
Cash flows treated as finance costs – loan arrangement fees
-(9.6)
-54.8
Movement in borrowings
11.4(28.4)
Repayment of borrowings
(5.2)(5.3)
Increase in finance lease liabilities
11.116.4
Payment of finance lease liabilities
(16.3)(19.6)
Net cash from financing activities
(32.7)(36.5)
Cash and cash equivalents at 1 May
Net increase/(decrease) in cash and cash equivalents excluding effect of
foreign exchange rate movements on cash held
Effect of foreign exchange rate movements on cash held
68.093.7
281.9(25.4)
-(0.3)
Net increase/(decrease) in cash and cash equivalents
281.9(25.7)
Cash and cash equivalents at 30 April
13349.968.0
27
Notes to the consolidated accounts for the year ended 30 April 2015
1. ACCOUNTING POLICIES
Northgate Information Solutions Limited (the ‘Company’) is a company incorporated and domiciled in the United Kingdom.
The consolidated accounts of the Company for the year ended 30 April 2015 comprise the Company and its subsidiaries
(together referred to as the ‘Group’).
The financial statements were approved by the Directors and authorised for issue on 24 March 2016.
Statement of Compliance
The Group accounts have been prepared and approved by the Directors in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the EU (”adopted IFRS’s”). The Company has elected to prepare its parent company
accounts in accordance with UK GAAP and these are presented on pages 63 to 67. The parent company financial statements
present information about the Company as a separate entity and not about its Group.
Basis of Preparation
The Group’s business activities, together with the factors likely to affect its future development, performance and position are
set out in the Directors’ Report and Strategic Report set out on pages 14 to 20. Note 20 to the financial statements includes
the group’s objectives, policies and processes for managing its capital; its financial risk management objectives; details of its
financial instruments and hedging activities; and its exposures to credit risk and liquidity risk.
Details of how the Group is funded are set out in Note 14.
Notwithstanding the Group has net current liabilities, the Directors are satisfied that the Company and the Group have
adequate resources to continue in operational existence for the foreseeable future as set out in the Strategic Report on
page 17. For this reason they continue to adopt the going concern basis in preparing the accounts.
The accounts are presented in pounds sterling, rounded to the nearest 0.1 million and have been prepared under the historic
cost convention except for the following assets and liabilities that are stated at fair value: derivative financial instruments and
defined benefit pension schemes. Accounting policies have been applied consistently in the period.
Non-GAAP Performance Measures
The board believe that these measures provide additional useful information for the shareholders on the underlying
performance of the business. These measures are consistent with how business performance is monitored internally. The
adjusted operating profit is not a recognised profit measure under adopted IFRS and may not be directly comparable with
‘adjusted’ profit measures used by other companies. The adjustments made to operating profit have the effect of excluding
exceptional income and charges, which are predominantly one-off in nature and therefore create volatility in reported earnings.
Basis of Consolidation
The consolidated accounts incorporate the accounts of the Company and entities controlled by the Company (its
subsidiaries) made up to 30 April each period. The Group had one joint venture at the year end.
The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and
has the ability to affect those returns from its involvement with the entity and has the ability to affect those returns through its
power over the entity.
Subsidiaries
Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated
financial statements from the date that control commences until the date that control ceases. On acquisition, the assets and
liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the
cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill.
All business combinations are accounted for by applying the acquisition method. Business combinations are accounted for
using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group.
28
Notes to the consolidated accounts for the year ended 30 April 2015 (continued)
1. ACCOUNTING POLICIES (continued)
Basis of Preparation (continued)
Acquisitions on or after 1 January 2010
For acquisitions on or after 1 January 2010, the Group measures goodwill at the acquisition date as:
• the fair value of the consideration transferred; plus
• the recognised amount of any non-controlling interests in the acquiree; plus
• the fair value of the existing equity interest in the acquiree; less
• the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
Costs related to the acquisition, other than those associated with the issue of debt or equity securities, are expensed as
incurred.
Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is
classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to
the fair value of the contingent consideration are recognised in profit or loss.
Acquisitions between 1 May 2004 and 1 January 2010
For acquisitions between 1 May 2004 and 1 January 2010, goodwill represents the excess of the cost of the acquisition over
the Group’s interest in the recognised amount (generally fair value) of the identifiable assets, liabilities and contingent liabilities
of the acquiree. When the excess was negative, a bargain purchase gain was recognised immediately in profit or loss.
Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurred in
connection with business combinations were capitalised as part of the cost of the acquisition.
Change in subsidiary ownership and loss of control
Changes in the group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.
Where the group loses control of a subsidiary, the assets and liabilities are derecognised along with any related NCI and
other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest retained in the former
subsidiary is measured at fair value when control is lost.
Transactions eliminated on consolidation
Inter-company transactions and balances are eliminated on consolidation.
29
Use of Estimates and Judgements (see note 24)
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect
the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results
may differ from these estimates.
Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised and in any future periods affected. Judgements made by management in the
application of adopted IFRSs that have significant effect on the accounts and estimates with a significant risk of material
adjustment in the next period are disclosed in note 24.
In particular, information about significant areas of estimation and uncertainty and critical judgements in applying accounting
policies that have the most significant effect on the amount recognised in the financial statements are described in the
following notes:
Note 2 –Acquisition and disposal of subsidiaries
Note 9 –Intangible fixed assets
Note 12–Deferred tax
Note 15–Employee benefits
Note 16–Provisions
Note 20–Financial instruments
Note 24–Accounting estimates and judgements
Revenue recognition and goodwill are discussed in the relevant sections of the accounting policies note.
Intangible Assets
Goodwill
Goodwill arising on consolidation represents the excess of the cost of acquisition over the Company’s interest in the fair
value of the identifiable assets and liabilities of a subsidiary at the date of acquisition. Goodwill is recognised as an asset
and reviewed for impairment at least annually. Any impairment is recognised immediately in the income statement and is not
subsequently reversed.
On disposal of a subsidiary, the attributable net book value of goodwill is included in the determination of the profit or loss on
disposal.
Other intangible assets excluding goodwill
Acquired intangibles and purchased software are stated at the cost less accumulated amortisation and impairment losses.
New intangibles recognised under IFRS 3 relating to customer contracts and relationships, order backlog, technology based
assets and trade names are amortised straight-line over a useful economic life of 3-10 years.
Amounts capitalised under purchased software are amortised straight-line over periods between 3-5 years.
30
Intangible Assets (continued)
Research and development expenditure
Expenditure on research activities is recognised as an expense in the period in which it is incurred. An internally-generated
intangible asset arising from the Group’s software development is recognised only if all of the following conditions are met:
• an asset is created that can be identified;
• it is probable that the asset created will be technically and commercially feasible;
• the Group has sufficient resources to complete development;
• the asset will generate future economic benefits; and
• the development cost of the asset can be measured reliably.
The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads. Other
development expenditure is recognised in the income statement as an expense as incurred. Capitalised development costs
are stated at cost less accumulated amortisation and impairment losses.
Amortisation is charged to the income statement on a straight-line basis over a useful economic life of 3-5 years,
commencing from the date the asset is first ready for use.
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to
which it relates. All other expenditure, including expenditure on internally-generated goodwill and brands, is recognised in the
income statement when incurred.
Impairment excluding Inventory and Deferred Tax Assets
The carrying amounts of the Group’s assets are reviewed at each balance sheet date to determine whether there is any
indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. If the recoverable amount
of an asset (cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cashgenerating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments
of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been
adjusted. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is
increased to the revised estimate of its recoverable amount but so that the increased carrying amount does not exceed the
carrying amount that would have been determined, had no impairment loss been recognised for the asset (cash-generating
unit) in prior years. A reversal of an impairment loss is recognised as income immediately.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in
prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An
impairment loss is reversed if there has been a change in estimates used to determine the recoverable amount.
31
Revenue
Revenue on the outright sale of equipment and standard software, where no significant vendor obligations exist, is
recognised on despatch. Revenue on non-standard software or where significant vendor obligations exist is recognised on
customer acceptance. All revenue is reported exclusive of value added tax and other sales tax.
The Group’s approach to revenue recognition is that revenue is only recognised when:
1. persuasive evidence of an arrangement exists;
2. the price to the customer is fixed or determinable;
3. any services deliverable under the supply arrangement are clearly separable from the software supply;
4. physical delivery has occurred or services have been rendered;
5. contract milestones have been achieved; and
6. collectability is reasonably assured and there are no material outstanding conditions or contingencies attaching to the
receipt of monies due.
Revenue from the sale of perpetual software product licences is recognised at the time the software licence is granted in
accordance with agreed contractual triggers, typically the supply of the software product to the customer. Revenue from the
sale of term software product licences is recognised over the term of the license. Revenues from the attendant installation,
maintenance and support services are recognised proportionately over the period that the services are provided with due
regard for future anticipated costs. Payments received in advance of services are recorded in the balance sheet as deferred
income.
Revenue from professional services (project management, implementation and training) is recognised as the services are
performed. Revenue from software support and hardware maintenance agreements is recognised rateably over the term of
the agreement.
On contracts involving a combination of products and services, revenue is recognised separately on each deliverable in
accordance with the above policy, unless all deliverables are considered to be interdependent when revenue is recognised
on final acceptance.
On major contracts extending over more than one accounting period, revenue is taken based on the stage of completion
when the outcome of the contract can be foreseen with reasonable certainty and after allowing for costs to completion.
When equipment and software licences are sold on deferred payment terms that include a financing element the present
value of the amounts receivable, after calculating a deduction for maintenance, is recognised in revenue. Interest income
arising, which represents the turnover from this financing operation, is included in revenue and recognised over the term of
the lease.
When equipment is an equipment lease or interest in a software licence, revenue is taken on the sales value after deferral of
income for future maintenance, where applicable.
Revenue for maintenance on equipment or software licences as described above is released to revenue over the period
of the contract. The related interest is credited to profit over the same period and represents a constant proportion of the
balance outstanding.
32
Foreign Exchange
Transactions denominated in foreign currencies are translated into sterling at the rates ruling at the dates of transactions.
Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the rates ruling
at that date. Translation differences are taken to the income statement except for differences arising on retranslation of a
financial liability designated as a hedge of the net investment in a foreign operation, which are recognised directly in equity.
Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate at the date of the transaction.
On consolidation, results of overseas subsidiaries are translated using the average exchange rate for the period, unless
exchange rates fluctuate significantly. The balance sheets of overseas subsidiaries, including goodwill and fair value
adjustments arising on consolidation are translated to the Group’s presentational currency, Sterling, using the closing periodend rate. Exchange differences arising, if any, are taken to a translation reserve. Such translation differences are recognised
as income or as expenses in the period in which the operation is disposed of.
Financial Instruments
Non-derivative financial instruments
Non-derivative financial instruments comprise trade and other receivables, investments, equity and cash and cash
equivalents, bank borrowings, and trade and other payables.
Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or
loss, any directly attributable transaction costs, except as described below. Subsequent to initial recognition, non-derivative
financial instruments are measured as described below.
A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial
assets are derecognised if the Group’s contractual rights to the cash flows from the financial assets expire or if the Group
transfers the financial asset to another party without retaining control or substantially all risks and rewards of the asset.
Routine purchases and sales of financial assets are accounted for at trade date, i.e. the date that the Group commits itself
to purchase or sell the asset. Financial liabilities are derecognised if the Group’s obligations specified in the contract expire or
are discharged or cancelled.
Trade receivables
Trade receivables (other than lease-book receivables) do not carry any interest and are stated at their nominal value as
reduced by appropriate allowances for estimated irrecoverable amounts. Lease-book receivables are stated net of unearned
interest receivable, at their present value.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered
into. An equity instrument is any contract that evidences a residual interest in the Group’s assets after deducting all of its
liabilities. Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.
Bank borrowings
Interest-bearing bank loans and overdrafts are initially recorded at fair value which is the proceeds received, net of direct
issue costs. Subsequent to initial recognition, interest-bearing bank loans and overdrafts are stated net of issue costs, which
are amortised over the period of the debt.
Finance charges are accounted for on an accruals basis to the income statement using the effective interest method and are
added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.
33
Financial Instruments (continued)
Trade and other payables
Trade and other payables are not interest-bearing and are stated at their nominal value.
Derivative financial instruments and hedge accounting
Derivative financial instruments are recognised on the Group’s balance sheet at fair value. The Group has not applied hedge
accounting except as described below and changes in the fair value of derivative financial instruments are recognised in the
income statement as they arise.
Derivative instruments utilised by the Group are interest rate collars and foreign currency swaps. The Group does not enter
into speculative derivative contracts. All such instruments are used for hedging purposes to alter the risk profile of an existing
underlying exposure of the Group in line with the Group’s risk management policies.
The use of financial derivatives is governed by the Group’s policies approved by the Board of Directors which provide written
principles on the use of financial derivatives. The largest net investment held in a foreign currency is ARINSO International NV
held in Euros, and borrowings in the same currency, which relate to this acquisition, have been hedged against the fair value
of the Euro net investment (€360 million). This hedge is regularly monitored for effectiveness.
Interest Rate Hedges
The fair value of interest rate hedges and collars are determined by valuations provided by the issuing financial institution of
those instruments.
Share Capital
Ordinary shares
Incremental costs directly attributable to issue of ordinary shares and share options are recognised as a deduction from equity.
Property, Plant and Equipment
Property, plant and equipment are stated at cost less any applicable discounts less accumulated depreciation and
impairment losses. Depreciation is provided at rates calculated to write down the cost of property, plant and equipment over
their estimated useful life on a straight-line basis.
The annual rates of depreciation, by category of fixed asset, are as follows:
• Freehold land
• Freehold property
• Short leasehold improvements
• Fixtures and fittings • Plant and office equipment
• Motor vehicles • Equipment held for leasing
None
50 years
Life of the lease
2 – 10 years
2 – 10 years
4 years
4 years
At each balance sheet date, the Group reviews the carrying amounts of its tangible assets to determine whether there is any
indication that those assets have suffered an impairment. Residual values, remaining useful lives and depreciation methods
are reviewed annually and adjusted if appropriate.
Inventories
Inventories, which comprise goods held for resale, are stated at the lower of cost and net realisable value. Cost includes
all costs in acquiring the inventories and bringing each product to its present location and condition. Net realisable value
represents the estimated selling price and costs to be incurred in marketing, selling and distribution.
34
Cash and Cash Equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and
form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the
purpose of the statement of cash flows.
Leased Assets
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as operating leases.
Assets held under finance leases are included in the balance sheet at fair value or, if lower, at the present value of the
minimum lease payments, each determined at inception of the lease less depreciation and impairment losses. These assets
are depreciated in accordance with the Group’s normal accounting policy for the class of asset concerned or over the period
of the lease if shorter. The present value of future rentals is shown as a liability. The interest element of rental obligations is
charged to the income statement over the period of the lease in proportion to the balance of capital repayments outstanding.
Finance charges are charged directly against income.
Rentals payable under operating leases are charged to the income statement on a straight-line basis over the period of the
lease. Lease incentives received are recognised in the income statement as an integral part of the total lease expense.
Net Financing Costs
Net financing costs comprise interest payable, interest on the defined benefit pension plan obligations and expected return
on pension scheme assets (together referred to as net pension finance expense), amortisation of issue costs on borrowings,
interest receivable on funds invested, foreign exchange gains and losses, and gains and losses on hedging instruments that
are recognised in the income statement.
Interest income and interest payable is recognised in the income statement as it accrues, using the effective interest method.
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the period using rates enacted or substantially enacted at the balance
sheet date and any adjustment to tax payable in respect of previous years. Taxable profit differs from net profit as reported
in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it
further excludes items that are never taxable or deductible.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes and is accounted for using the balance sheet liability
method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised
to the extent that it is probable that taxable profits will be available against which deductible temporary differences can
be utilised. The following temporary differences are not provided for: goodwill not deductible for tax purposes, the initial
recognition of assets or liabilities that affect neither accounting nor taxable profit, and differences relating to investments in
subsidiaries to the extent that they will probably not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates enacted or substantially enacted at the balance sheet date. Deferred tax is charged
or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the
deferred tax is also included within equity.
Retirement Benefit Costs
The Group operates various defined contribution pension schemes. The assets of the schemes are held separately from
those of the Group in independently administered funds. The amounts charged to the income statement represent the
contributions payable to the schemes in respect of the accounting period.
35
Retirement Benefit Costs (continued)
The Group also operates two defined benefit pension schemes (2014: three). The Group’s net obligation in respect of
defined benefit plans is calculated separately for each plan by estimating the amount of the future benefit that employees
have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.
The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit
method. When the calculation results in a potential asset for the Group, the recognised asset is limited to the present value of
economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To
calculate the present value of the economic benefits, consideration is given to any applicable minimum funding requirements.
Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets
(excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in other
comprehensive income. The Group determines the net interest expense (income) on the net defined benefit liability (asset) for
the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period
to the then-net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during
the period as a result of contributions and benefit payments.
Net interest expense and other expenses related to the defined benefit plans are recognised in the profit and loss. When
the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or
the gain or loss on curtailment is recognised immediately in profit or loss. The Group recognises gains and losses on the
settlement of a defined benefit plan when the settlement occurs.
Provisions
Provisions arise from legal or constructive obligations resulting from a past event where expected costs can be assessed
with reasonable certainty and it is probable that an outflow of economic benefit will be required to settle the obligation. If the
effect is material, the provision is determined by discounting the expected future cash flows.
Property provisions
A property provision is recognised when the expected benefits to be derived from the property are lower than the
unavoidable cost of meeting the contractual obligations on that property.
Restructuring provisions
A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan, and the
restructuring has either commenced or has been announced publicly. Future operating costs are not provided for.
Adopted IFRSs and Interpretations not yet applied
During the period, the IASB and the International Financial Reporting Committee (IFRIC) have issued the following standards
and interpretations with an effective date after the date of these accounts:
IFRS 9
Financial Instruments
IFRS 12
Disclosure of Interest in Other Entities
IFRIC 21
Levies
IFRS 15
Revenue Recognition
The Directors are in the process of determining the impact of the adoption of these standards and interpretations on the
consolidated accounts in the period of initial application. This is not expected to have any material impact on the accounts
going forwards however.
Dividends
Dividends unpaid at the balance sheet date are only recognised as a liability at that date to the extent that they are
appropriately authorised and are no longer at the discretion of the Company. Unpaid dividends that do not meet these
criteria are disclosed in the notes to the accounts.
36
2. ACQUISITION AND DISPOSAL OF SUBSIDIARIES
Disposal of Northgate Public Services – Discontinued Operations
On 22 December 2014, the Group disposed of the Northgate Public Services division for a cash consideration of £346.6m
and a profit on disposal of £24.8m.
Enterprise value
£m
Consideration
346.6
Finance lease liabilities
4.3
Defined benefit pension liabilities – estimated actuarial valuation
21.5
Total enterprise value* 372.4
*Enterprise value is defined as the underlying value of the PS division’s trade before adjustments for the pension scheme and
finance lease liabilities. Based on an annual EBITDA of £42.0m the sale generated a multiple of 8.25 times EBITDA.
Goodwill of £248.0m and acquired intangibles of £66.2m were disposed of on the sale. As part of the disposal, hire
purchase liabilities of £4.3m and defined benefit pension scheme liabilities (estimated actuarial valuation) of £21.5m were
also disposed of.
Profit on disposal
Notes
£m
Consideration
346.6
Fees
(9.9)
Disposal of goodwill
9
(248.0)
Disposal of acquired intangibles
9
(65.3)
Disposal of net assets 1.4
Profit on disposal
24.8
The loss for the year from discontinued operations is shown on the Group Income Statement on page 23.
There were no significant disposals or acquisitions during the year. Movements in goodwill which are not related to
acquisitions through business combinations are shown in note 9, and comprise change in the value of the net investment
hedge and revaluation of foreign denominated goodwill.
37
3. OPERATING COSTS
Year ended
Year ended
30 April 2015 30 April 2014
£m£m
Change in inventories of goods for resale, excluding impact of disposals
Purchase of goods for resale, raw materials and consumables
Other external operating charges
Staff costs
- wages and salaries
- social security costs
- other pension costs defined contribution
- other pension costs defined benefit – current year service cost
Depreciation of owned assets
Depreciation of assets held under finance leases
Amortisation of development costs and purchased software
Profit on sale of Public Services division (note 2)
0.3(0.3)
55.359.5
48.662.0
320.7347.4
32.062.4
8.49.8
1.61.9
4.010.2
5.72.4
23.825.0
45.149.8
(24.8)-
522.2630.1
Severance and restructuring
9.215.8
Business integration, development and business transformation
3.67.1
Contract termination costs
-3.6
Property provisions
2.213.4
Non recurring efficiency and productivity projects and other
9.810.0
Significant restructuring and property provisions
24.849.9
Total operating costs 545.5680.0
These one off costs principally relate to the group’s on-going cost reduction programme, including offshoring of operational
and back office functions and the impact of product strategy review and include:
• £9.2m of severance costs in Group restructuring programmes;
• £3.6m of project resource costs. These are made up of business integration costs, restructuring programme resources,
costs of moving contract fulfilment locations, migration from legacy systems and one off productivity improvement plans;
• £2.2m of property exceptional costs made up of vacant space provisions and dilapidation costs;
• £9.8m of other costs include non recurring professional fees and pension liability management.
4. DIRECTORS’ EMOLUMENTS
Year ended
Year ended
30 April 2015
30 April 2014
£m£m
Directors’ emoluments
1.91.4
Company contributions to money purchase pension plans
0.10.1
2.01.5
The aggregate emoluments of the highest paid director were £1,437,000 (2014: £879,000) including £40,000 (2014: £45,000)
paid into a money purchase pension plan. At 30 April 2015 no directors (30 April 2014: one director) had benefits accruing
under a defined benefit pension scheme and two directors (30 April 2014: one director) had benefits accruing under a money
purchase pension plan.
38
5. GROUP OPERATING LOSS
Group operating loss is stated after charging/(crediting):
Year ended
Year ended
30 April 2015
30 April 2014
£m
£m
Research and development – expenditure not capitalised
11.812.4
Amortisation of development costs and purchased software 23.825.0
Operating lease rentals – property rentals
12.616.4
Operating lease rentals – property, planty and equipment
4.42.9
Profit on disposal of Public Services division
(24.8)Within operating costs are the fees paid to the Auditor and their associates which are categorised as follows:
Year ended
Year ended
30 April 2015
30 April 2014
Auditors’ remuneration
£m
£m
Audit of these financial statements 0.10.1
Audit of subsidiaries pursuant to such legislation 0.40.4
Other audit services pursuant to such legislation
-Services relating to taxation 0.50.5
All other services
1.20.5
2.21.5
Amounts paid to the Company’s Auditor in respect of services to the Company, other than the audit of the Company’s
financial statements, have not been disclosed as the information required is instead disclosed on a consolidated basis.
6. NET FINANCING COSTS
Year ended
Year ended
30 April 2015
30 April 2014
£m
£m
Interest income - bank and other interest receivable
0.81.0
Changes in the fair value of derivative financial instruments
-5.3
Financial income
0.86.3
Interest expense – bank loans and overdrafts – cash spend
Interest expense – bank loans and overdrafts – accrued
Non cash mezzanine bank loan interest – added to loan
Amortisation of loan arrangement fees
Net foreign exchange loss
Finance charges payable under finance leases
Net pension finance expense (note 15)
Changes in the fair value of derivative financial instruments
32.142.8
5.17.5
37.020.1
4.05.1
7.811.7
2.43.0
1.31.8
7.0-
Financial expenses
96.792.0
Net financing costs
95.985.7
39
7. STAFF NUMBERS
The average number of persons employed by the Group, including Executive Directors, during the year was as follows:
Year ended
Year ended
30 April 2015
30 April 2014
NumberNumber
Sales
416396
Operations
6,5386,978
Product Support
2,0401,779
HR Consulting
544524
Support Functions
887915
10,42510,592
8. TAX EXPENSE
The credit for the period comprises:
Year ended
Year ended
30 April 2015
30 April 2014
£m
£m
Current tax expense
UK corporation tax – adjustments for prior years
0.50.7
Overseas tax
1.22.1
Total current tax expense
1.72.8
Deferred tax (credit) (see note 12)
Deferred tax – current
(19.0)(7.9)
Deferred tax – rate change adjustment
0.4(2.5)
Deferred tax – adjustments for prior years
4.33.6
Total deferred tax credit
(14.3)(6.8)
Total tax credit in income statement
(12.6)(4.0)
40
8. TAX EXPENSE (continued)
Reconciliation of effective tax rate
Year ended
30 April 2015
£m
Year ended
30 April 2014
£m
Loss before tax
(69.9)(99.6)
Tax on loss at UK corporation tax rate of 20.9% (2014: 22.8%)
Chargeable gain not taxable
Expenses not tax effected
Effect of different rates for overseas tax
Effect of tax losses not recognised
Tax rate change effect on deferred tax
Other timing differences
Adjustments for prior years (14.6)(22.8)
(5.2)-
(0.1)8.7
4.42.8
1.95.7
0.9(2.2)
0.7(0.5)
(0.6)4.3
Total tax credit
(12.6)(4.0)
Deferred tax recognised directly in equity
Year ended
30 April 2015
£m
Year ended
30 April 2014
£m
5.3(2.0)
A reduction in the UK corporation tax rate to 21% (effective from 1 April 2014) and 20% (effective from 1 April 2015) was
substantively enacted on 8 July 2013. In the Budget on 8 July 2015, the Chancellor announced additional planned reductions
to 18% by 2020. This will reduce the company’s future current tax charge accordingly. The deferred tax asset at 30 April 2015
should be calculated based on the rate of 20% substantively enacted at the balance sheet date.
It has not yet been possible to quantify the full anticipated effect of the announced further 2% rate reduction to 18%, although
this will further reduce the company’s future current tax charge and reduce the company’s deferred tax asset accordingly.
41
9. INTANGIBLE FIXED ASSETS
Acquired Intangibles
Goodwill
Acquired Development
Total
intangibles
costs and
purchased
software
£m£m£m£m
Cost:
At 1 May 2013
771.3
542.4
151.2
1,464.9
Revaluation of goodwill and acquired intangibles
related to net investment hedge
(4.1)
(3.0)
-
(7.1)
Revaluation of foreign denominated goodwill
(4.5)
-
-
(4.5)
Exchange differences
-
-
(4.7)
(4.7)
Transfers from property, plant and equipment
-
-
12.5
12.5
Additions
-
- 28.328.3
At 30 April 2014
762.7
539.4
187.3
1,489.4
At 1 May 2014
Revaluation of goodwill and acquired intangibles
related to net investment hedge
Revaluation of foreign denominated goodwill
Additions
Disposals
762.7
539.4
187.3
1,489.4
(19.5)
(5.9)
-
(25.4)
1.7
-
-
1.7
-
-
(1.2)
(1.2)
-
- 27.127.1
(248.0) (181.8) (78.1)(507.9)
At 30 April 2015
496.9
351.7
135.1
983.7
Amortisation and impairment losses:
At 1 May 2013
-
271.2
93.2
364.4
-
-
(2.5)
(2.5)
Transfers from property, plant and equipment
-
-
5.7
5.7
Amortisation charge for the year
-
49.8
25.0
74.8
At 30 April 2014
-
321.0
121.4
442.4
At 1 May 2014
Amortisation charge for the year
Disposals
-
321.0
121.4
442.4
-
-
(0.5)
(0.5)
-
45.1
23.8
68.9
- (116.5) (60.3)(176.8)
At 30 April 2015
-
249.6
84.4
334.0
Net book value:
At 30 April 2015
496.9
102.1
50.7
649.7
At 30 April 2014
762.7
218.4
65.9
1,047.0
42
9. INTANGIBLE FIXED ASSETS (continued)
Impairment tests for cash-generating units containing goodwill
Cash-generating units containing goodwill are subject to annual impairment reviews.
Goodwill, customer relationships, technology based assets and marketing related assets have been allocated to the appropriate
cash generating units (CGUs) identified. Amounts recognised at the balance sheet date are shown in the table below:
Goodwill
Customer
Technology Trade names Total
relationships
based assets
and other
marketing
related assets
£m £m£m £m£m
NGA Human Resources 496.9
74.1
16.6
11.4
599.0
At 30 April 2015
496.9
74.1
16.6
11.4
599.0
The recoverable amounts of the CGUs are determined from value-in-use calculations which use discounted pre-tax cash
flows from approved budgets and three year forecasts and extrapolated cash flows for the periods beyond these using
estimated long term growth rates. The key assumptions are:
• Long term average growth rates are used to extrapolate cash flows. Growth rates are determined with reference to internal
approved budgets and forecasts.
• Discount rates are calculated separately for each CGU and reflect the individual nature and specific risks relating to the
market in which it operates.
• Gross margins are based on past performance and management’s expectations of market development. No
improvements to margins beyond periods covered by approved budgets and forecasts have been assumed.
The sole CGU is the NGA Human Resources business. The pre (and post) tax discount rates used in the impairment test for
the businesses was 10.5% (11.3%). The Public Services Division was disposed of during the prior year.
As a result of performing these impairment tests, the Directors believe that currently no reasonably possible change in
income would reduce the headroom in the NGA Human Resources CGU to zero.
43
10. PROPERTY, PLANT AND EQUIPMENT
Leasehold Fixtures, fittings,
Total
improvementsequipment and
motor vehicles
£m£m£m
Cost:
At 1 May 2013
4.1
53.3
57.4
Exchange adjustments(0.9)(2.7)(3.6)
Additions 0.9 16.717.6
Transfers to development costs and purchased software
-
(12.5)
(12.5)
Disposals(1.0)(2.9)(3.9)
At 30 April 2014
3.1
51.9
55.0
At 1 May 2014
3.1
51.9
55.0
Exchange adjustments--Additions 1.1 10.311.4
Reclassifications 0.4(0.3) 0.1
Disposals (1.5) (11.1)(12.6)
At 30 April 2015
3.1
50.8
53.9
Depreciation and impairment losses:
At 1 May 2013
0.3
20.2
20.5
Exchange adjustments(0.6)(2.2)(2.8)
Depreciation charge for the year
1.1
11.5
12.6
Transfers to development costs and purchased software
-
(5.7)
(5.7)
Disposals(0.8)(2.6)(3.4)
At 30 April 2014
-
21.2
21.2
At 1 May 2014
-
21.2
21.2
Exchange adjustments
(0.1)
-
(0.1)
Depreciation charge for the year
1.1
8.6
9.7
Reclassifications 0.4(0.3) 0.1
Disposals(0.2)(3.4)(3.6)
At 30 April 2015
1.2
26.1
27.3
Net book value:
At 30 April 2015
1.9
24.7
26.6
At 30 April 2014
3.1
30.7
33.8
The net book value of fixtures, fittings, equipment and motor vehicles includes £12.7m (2014: £6.1m) in respect of assets
held under finance leases. Depreciation on these assets during the year was £5.7m (2014: £2.4m). The cost of property,
plant and equipment is not materially different from the fair value.
44
11. TRADE AND OTHER RECEIVABLES
20152014
£m£m
Non-current assets
Other receivables (long-term trade debtors)
2.95.7
Current assets
Trade receivables
73.889.3
Tax recoverable
3.93.9
Other receivables and prepayments
64.3107.2
142.0200.4
Included in trade receivables and other receivables are assets of £6.6m secured by liabilities of £3.3m due under a year
and £3.0m due over a year (2014: £11.0m secured by liabilities of £6.2m due under a year and £4.8m due over a year)
(see note 20(f)).
12. DEFERRED TAX
The Group’s deferred tax is attributable to the following:
Assets
Liabilities
Net
2015
2014
2015
2014
2015
2014
£m
£m
£m
£m
£m
£m
Intangible assets
--
(29.3)(55.9) (29.3)(55.9)
9.113.2
--
9.113.2
Trading losses
0.20.2 --
0.20.2
Employee benefits
8.58.2 --
8.58.2
Provisions and other timing differences
2.34.0 --
2.34.0
Financial liabilities
2.51.1 --
2.51.1
Net tax assets/(liabilities)
22.626.7(29.3)(55.9) (6.7)(29.2)
The Group has gross unutilised trading losses carried forward of £77.5m (2014: £53.3m), predominately non-UK and gross
unutilised non-trading losses and excess management expenses carried forward of approximately £322m (2014: £308m).
A deferred tax asset has been recognised in respect of certain NorthgateArinso trading tax losses where it is probable that
future taxable profits will be available against which the Group can utilise these benefits. Subject to specific rules regarding
changes in ownership and the nature of trade, trading losses can be carried forward indefinitely in most jurisdictions.
USA: Net operating losses (NOLs) are available to carry forward for a period of 20 years. As at 30th April 2014 there are
NOLs in the US trade of approximately $18.5m (£11.4m) (2014: $27.7m (£17.2m)). The NOLs start to expire in different
years, the first of which being the year ended April 2016.
Canada: Trading losses can be carried forward for a period of 20 years. There are trading losses brought forward of
approximately Can $24.1m (£13.0m) which will expire in different years commencing in 2030.
Germany: Trading losses can be carried forward indefinitely. There are trading losses carried forward of approximately
€9.1m (£6.6m).
45
12. DEFERRED TAX (continued)
Movement in temporary differences during the period ended 30 April 2015
Balance at
Recognised
Recognised
Disposals
Balance at
1 May 14
in income
in equity
30 April 15
£m £m £m£m£m
Intangible assets
(55.9)
14.1
-
12.5
(29.3)
13.2
(0.7)
-
(3.4)
9.1
Trading losses
0.2
-
-
-
0.2
Employee benefits
8.2
0.9
5.3
(5.9)
8.5
4.0
(1.5)
-
(0.2)
2.3
1.1
1.4
-
-
2.5
(29.2)14.2 5.3 3.0(6.7)
Movement in temporary differences during the period ended 30 April 2014
Balance at
Recognised
Recognised
Balance at
1 May 13
in income
in equity
30 April 14
£m £m£m£m
Intangible assets
(69.8)
13.9
-
(55.9)
17.7
(4.5)
-
13.2
Trading losses
0.3
(0.1)
-
0.2
Employee benefits
11.2
(1.0)
(2.0)
8.2
4.2
(0.2)
-
4.0
2.4
(1.3)
-
1.1
(34.0)
6.8 (2.0)(29.2)
13. CASH AND CASH EQUIVALENTS
2015
£m
Cash at bank and in hand
349.968.0
Cash and cash equivalents in the cash flow statement
349.968.0
2014
£m
46
14. INTEREST-BEARING LOANS AND BORROWINGS
20152014
£m£m
Secured bank loans
870.7867.0
8.112.8
878.8879.8
Current liabilities
Secured bank loans
23.015.4
9.39.7
32.325.1
The Group’s net bank loans are secured by a cross guarantee and a fixed and floating charge over the assets of the
Company and its material subsidiaries. Interest on the loans is paid as cash interest plus a payment in kind (PIK) Margin.
The cash interest rate applicable to the Sterling denominated bank loans is LIBOR plus a margin which varies between
1.75% and 4.5%, depending on the tranche and the business ratio of debt to EBITDA. The cash interest rate applicable to
the Euro denominated bank loans is EURIBOR plus a margin which varies between 1.75% and 4.5%, depending on the
tranche and the business ratio of debt to EBITDA. The PIK Margin, depending on the tranche, varies between 0.5% and
10.5%. All bank loans at the period end are due in Sterling, Euros or Australian dollars. Details of the repayment profile are
shown in note 20(d). The Group’s loan notes are secured by a bank guarantee.
Group bank loans are stated net of unamortised issue costs of £10.7m (2014: £14.7m). Issue costs, together with the
interest expenses, are allocated to the income statement at a constant rate on the carrying amount. Group bank loans are
subject to the following covenant restrictions:
•Ratio of consolidated net borrowings to consolidated EBITDA
• Ratio of cash flow to consolidated debt service (interest plus mandated repayments)
• Ratio of consolidated EBITA to consolidated net interest
• Value of Capital Expenditure in each Financial Year
All covenants are based on International Financial Reporting Standards (“IFRS”). Failure to meet the covenant restrictions
results in all amounts outstanding, becoming immediately due and payable. There have been no breaches in covenants in
the year or since the inception of the loans.
Finance lease liabilities are payable:
Minimum
Minimum
lease
lease
payments
Interest
Principal
payments Interest
Principal
201520152015
2014 2014
2014
£m£m£m £m £m£m
Less than one year
10.31.09.311.6 1.9 9.7
Between one and five years
8.60.58.1 14.2 1.412.8
18.9 1.517.4 25.8 3.322.5
Under the terms of the lease arrangements, no contingent rents are payable.
47
15. EMPLOYEE BENEFITS
20152014
£m£m
Total employee benefit liabilities – net defined benefit liability
42.037.4
For details on the related employee benefit expenses see note 3.
The Group contributes to the following post-employment defined benefit plans: Northgate HR Pension Scheme (‘the
Northgate Scheme’) and the Rebus Group Pension Scheme (‘the Rebus Scheme’). The schemes are closed to new
employees, who are instead eligible to join another defined contribution scheme.
The Group contributed to the the Northgate Public Services Pension Scheme until 22 December 2014, at which point it was
disposed as part of the Public Services division, giving rise to a £17.2m curtailment gain.
Benefits are related to salary close to retirement or leaving service (if earlier) and also to years of pensionable service. Assets
are held in separate, trustee administered funds. Employer contributions to the schemes are determined on the basis of
regular valuations undertaken by independent, qualified actuaries. As the schemes are closed to new entrants for pension
accrual, under the method used to calculate pension costs in accordance with IAS19, the cost as a percentage of covered
pensionable payroll will tend to increase as the average age of the membership increases.
These defined benefit plans expose the Group to actuarial risks, such as longevity risk, currency risk, interest rate risk and
market (investment) risk.
Funding
Both plans are funded by the Group’s subsidiaries. Over the next year, the Group will pay estimated contributions of
£4.4m (2014: £6.9m) to the defined benefit schemes. The funding requirements are based on the pension fund’s actuarial
measurement framework set out in the funding policies of the plan. This includes the additional contributions aimed at
removing the deficit of the Schemes. Contributions to the defined contribution schemes are in addition to the contributions
to the UK defined benefit schemes.
48
15. EMPLOYEE BENEFITS (continued)
Movements in the net defined benefit liability
The following table shows a reconciliation from the opening balances to the closing balances for the net defined benefit and
its components.
Defined benefit
obligation
Fair value of
plan assets
Net defined
benefit liability
2015201420152014 20152014
£m£m£m£m£m£m
Balance at 1 May
285.5286.0
(248.1)(239.8) 37.446.2
Included in income statement Current service cost
1.51.9 --
1.51.9
Past service cost and gains on
curtailment
-(0.2) ---(0.2)
Curtialment/settlement (105.6)
-
88.4-
(17.2)Interest cost
11.212.4(9.9)(10.6) 1.31.8
(92.9)14.178.510.6(14.4)(3.5)
Included in statement of
comprehensive income
Remeasurement loss (gain):
Actuarial loss (gain) arising from:
Financial assumptions
44.8(6.7) 0.80.745.6(6.0)
Experience Adjustment
0.1(1.4) --
0.1(1.4)
Return on plan assets excluding
interest income
--
(19.0)3.1
(19.0)3.1
44.9(8.1)
(18.2)3.826.7(4.3)
Other Contributions paid by the employer
--
(7.7)(8.0)(7.7)(8.0)
Benefits paid (6.8)(6.5) 6.86.5 -
(6.8)(6.5)(0.9)(1.5)(7.7)(8.0)
At 30 April
49
230.7285.5
(188.7)(248.1)
42.037.4
Fair value of plan assets
The plan assets are all in investment funds which do not have quoted prices, although the majority of assets held within
those funds will have quoted prices. The assets with the funds are split as follows:
20152014
£m£m
Equities
37.654.3
LDI Funds
24.240.3
Multi-asset credit
13.719.3
Property 17.724.5
Emerging market multi asset
17.423.7
Diversified growth funds
61.883.5
Cash
16.32.5
At 30 April
188.7248.1
The expected rate of return on pension plan assets is determined as the Company’s best estimate of the long term return of
the major asset classes - equities, bonds, LDI, and diversified growth funds - weighted by the current strategic allocation at
the measurement date less expenses.
Defined benefit obligation
Actuarial assumptions
The principal actuarial assumptions at the balance sheet date were:
20152014
%%
Discount rate 3.6%4.5%
Future salary increases
1.0%1.0%
Retail price inflation
3.1%3.3%
Consumer price inflation (CPI)
2.0%2.2%
Future pension increases (2.5% LPI) 1.7%-2.2%1.8%-2.2%
Future pension increases (5.0% LPI) 2.1%-3.0%2.2%-3.2%
The weighted average durations of the expected benefit payments is between 19-22 years across the schemes. The current
longevities underlying the values in the defined benefit obligation at the reporting date were as follows:
20152014
Years
Years
Longevity at age 65 for current pensioners Males
22.922.8
Females
24.324.2
Longevity at age 65 for current members aged 45
Males
25.925.8
Females
26.126.1
50
Defined benefit obligation
Sensitivity Analysis
Reasonable possible changes at the reporting date to one of the relevant actuarial assumptions, holding the other
assumptions constant, would have affected the defined benefit obligation by the amounts shown below:
30 April 2015
2015
2015
£m
£m
Increase Decrease
Discount rate (0.1% movement)
(4.6)
4.8
Future pension growth (0.1% movement)
1.3
(1.2)
Inflation and related future pension growth (0.1% movement)
2.2
(2.1)
CPI (deferred revaluation increases)
0.9
(0.9)
Life expectancy (1 year movement)
7.2
(7.2)
Although the analysis does not take account of the full distribution of cash flows expected under the plans, it does provide
an approximation of the sensitivity of the assumptions shown.
Defined contribution arrangements
The Group also operates various defined contribution arrangements for its UK and overseas employees. The contributions
paid to defined contribution schemes amounted to £8.4m (2014: £9.8m). The amount recognised as an expense was £8.4m
(2014: £9.8m). The amount paid into pension schemes for overseas employees was £5.1m (2014: £4.3m). Amounts payable
in respect of defined contribution arrangements at 30 April 2015 were £0.3m (2014: £0.4m).
16. PROVISIONS
Property
Restructuring
provisions
and other
provisions
£m
£m
At 1 May 2014
9.7
5.2
Foreign exchange differences
0.3
(0.1)
Recognised in the income statement
4.1
1.3
Disposals(1.0)
(0.2)
Utilised in the period
(6.0)
(5.2)
At 30 April 2015
7.1
Total
£m
14.9
0.2
5.4
(1.2)
(11.2)
1.0
8.1
Current5.1
Non-current2.0
0.6
0.4
5.7
2.4
At 30 April 2015
1.0
8.1
7.1
Current8.2
Non-current1.5
2.0
3.2
10.2
4.7
At 30 April 2014
5.2
14.9
51
9.7
16. PROVISIONS (continued)
Property provisions
The provision relates to Group properties that have either been sublet or are vacant. It consists of the discounted value of the
differential between future liabilities on the property less any expected future sublet receipts extrapolated to the earliest break
point in the contract. In addition there is a dilapidations provision to make the property good at the end of the lease. This is
made for all leased properties expiring within the next three years.
Restructuring and other provisions
The Group has provided in full for the anticipated costs of restructuring certain divisions and is management’s best estimate
of this cost. The provisions are expected to be used within the next 1 to 2 years.
17. TRADE AND OTHER PAYABLES
20152014
£m£m
Current liabilities
Trade payables
50.047.8
Accruals
100.8124.7
Deferred income
40.5104.1
Social security and other taxation
19.834.0
Other payables
10.18.6
221.2319.2
18. SHARE CAPITAL
The share capital of the Company is as follows:
20152014
£m£m
Called up and fully paid:
108,154,141 (2014: 108,154,141) ordinary shares of £1.00 each
108.2108.2
The holders of ordinary shares are entitled to receive dividends from time to time and are entitled to one vote per share at
meetings of the company.
52
19. NET DEBT
Net debt includes cash and cash equivalents, secured bank loans and loan notes and finance lease liabilities.
2015
2014
Notes
£m£m
Cash and cash equivalents 13
349.968.0
Secured bank loans and loan notes– current
14
(23.0)(15.4)
– non-current 14
(870.7)(867.0)
Finance lease liabilities – current 14
(9.3)(9.7)
– non-current
14
(8.1)(12.8)
Other financial liabilities– current
20(f)
(3.3)(6.2)
– non-current
20(f)
(3.0)(4.8)
(567.5)(847.9)
Set out below is a reconciliation in cash and cash equivalents to the increase in net borrowings at 30 April 2015.
2015
2014
£m£m
Net (increase)/decrease in cash and cash equivalents (281.9)25.4
Effect of foreign exchange rate movements on cash held
-0.3
Cash and cash equivalents net inflow from increase in debt and debt financing 1.0(36.9)
Movement in net borrowings resulting from cash flows
Amortisation of loan arrangement fees
Capitalised finance costs
Non cash mezzanine bank loan interest – added to loan
Disposal of lease liabilities
Currency translation differences
(280.9)(11.2)
4.05.1
-(9.6)
37.020.1
(4.7)(35.8)(11.2)
Movement in net debt in the year
Net debt at 1 May
(280.4)(6.8)
847.9854.7
Net debt at 30 April
53
567.5847.9
20. FINANCIAL INSTRUMENTS
The Group’s financial assets and liabilities mainly comprise bank borrowings, cash, liquid resources and various items, such
as trade and other receivables and trade and other payables that arise directly from operations.
The main financial market risks arising from the Group’s operations are credit risk, interest rate risk, foreign exchange risk and
liquidity risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below.
he main purpose of the financial instruments is to provide a hedge against the interest rate risk for the Group’s financial
T
liabilities.
(a) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations and arises principally from the Group’s trade and other receivables from customers.
Management has a credit policy in place and the exposure to credit risk is monitored on an on-going basis. Credit
evaluations are performed on all customers requiring credit over a certain amount. The Group does not require collateral in
respect of financial assets.
At the balance sheet date, there were no significant concentrations of credit risk. The maximum exposure to credit risk is
represented by the carrying amount of each financial asset in the balance sheet, principally trade and other receivables.
The Group provides credit to customers in the normal course of business and the amount that appears in the balance
sheet is net of a provision for impairment of £2.2m (2014: £1.9m). The provision for impairment is calculated in accordance
with the Group’s policy based on the age of the financial asset at each period end and specific doubtful debts. Past history
suggests that no provision for impairment is required for trade and other receivables not past due.
The ageing of trade receivables at the year-end was:
20152014
Gross
Gross
£m£m
Not past due
52.959.9
Past due 0-30 days
7.218.7
Past due 31-60 days 3.26.6
Past due 61-90 days 1.41.7
Past due 90 days and above
2.84.3
67.591.2
In addition to the above at 30 April 2015 there were also other receivables (long term debtors) of £2.9m (2014: £5.7m).
An allowance for impairment of £2.2m (30 April 2014: £1.9m) has been added back to debtors past due 90 days and above
in arriving at these figures.
The movement in the allowance for impairment in respect of trade and other receivables during the period was as follows:
2015
2014
£m£m
At 1 May
1.92.8
Additional bad debt provision
0.90.5
Utilised in the period
(0.3)(1.4)
Disposed in the period
(0.3)
2.21.9
54
20. FINANCIAL INSTRUMENTS (continued)
(b) Interest rate risk
Interest rate risk is the risk of increased net financing costs due to increases in market interest rates. The Group finances its
operations and acquisitions through a mixture of retained profits, bank borrowings and equity; the Group’s main interest rate
risk therefore comes from its bank borrowings, which the Group borrows principally in Sterling and Euros.
The Group policy is to undertake interest rate hedging to protect itself against adverse movements in interest rates (see note
20(g)). Any surplus cash is invested in short-term bank deposits at the prevailing rates of interest in order to achieve the
market rate of return.
At 30 April 2015, the Group had interest rate hedges in place to reduce its exposure to changes in interest rates. Hedging
contracts are in place fixing approximately two thirds of the Group’s interest rate exposure for the next 3 financial years.
The need for further interest rate hedges is reviewed by the Board of Directors annually. This is set out in detail in note 20(g).
At the period end the interest rate profile of the Group’s interest-bearing financial instruments was:
2015
Variable rate instruments
£m
Secured bank loans
2014
£m
893.7882.4
As noted above, interest rate hedges are in place to manage the risk from changing interest rates affecting the cost of these
bank loans.
2015
Fixed rate instruments
£m
2014
£m
17.422.5
(c) Foreign exchange risk
The Group operates internationally and is exposed to foreign currency risk on transactions denominated in a currency other
than the functional currency and on the translation of the balance sheet and income statement of foreign operations into
sterling. The currencies giving rise to this risk are primarily US dollars and Euros. The Group has both cash inflows and
outflows in these currencies that create a natural hedge.
In managing currency risks the Group aims to reduce the impact of short-term fluctuations on the Group’s cash inflows and
outflows in a foreign currency. The Group also hedges any material foreign currency transaction exposure. The Group has
treated €360m of the long term funding of a subsidiary as a net investment hedge. At 30 April 2015 exchange rates the long
term funding was £260.8m (2014: £295.3m) and the net investment shown in goodwill was £257.2m (2014: £295.3m).
Over the longer term permanent changes in foreign exchange could have an impact on consolidation of foreign subsidiaries
earnings. It is estimated that a general increase of one percentage point in the value of sterling against other currencies
would have reduced the Group’s loss before tax by approximately £0.1m (2014: (reduced) £0.3m).
55
(d) Liquidity Risk
Liquidity risk is the risk that the Group will not be able to meet its financial commitments as they fall due.
The Group‘s objective is to ensure that adequate facilities are available through use of bank loans and finance leases. The
Group manages liquidity risk through regular cash flow forecasting and monitoring of cash flows, management review and
regular review of working capital and costs.
The Group regularly monitors its available headroom under its borrowing facilities. At 30 April 2015, £357.9m (2014: £99.0m)
of undrawn facilities were available (see note 20(e)).
In respect of the Group’s financial liabilities including estimated interest where applicable, the table below includes details (at
the balance sheet date) of the periods in which they mature.
FutureLess
Book cash
than 11-2 2-33-44-5
value flows yearyears yearsyearsyears
30 April 2015
Notes £m £m £m£m £m£m£m
Secured bank loans
14
(893.7)
(1,133.4)
(64.6)
(52.7)
(148.8) (483.7) (383.6)
Finance lease liabilities *
14
(17.4)
(17.4)
(9.9)
(5.0)
(1.8)
(0.6)
(0.1)
Trade payables
17
(50.0)
(50.0)
(50.0)- --Interest rate collars/SWAPS
20(f)
(12.3)
(12.3)
(0.9)
(11.4)
-
-
20(f) (6.3) (6.3) (3.2)(1.6) (0.9)(0.4)(0.2)
(979.7) (1,219.4) (128.6) (70.7) (151.5)(484.7)(383.9)
FutureLess
Book cash
than 11-2 2-33-44-5
value flows yearyears yearsyearsyears
30 April 2014
Notes £m £m £m£m £m£m£m
Secured bank loans
14
(882.4)
(1,125.0)
(67.3)
(69.9)
(53.2) (588.9) (345.7)
Finance lease liabilities *
14
(22.5)
(22.5)
(9.7)
(6.4)
(4.4)
(1.6)
(0.4)
Trade payables
17
(47.8)
(47.8)
(47.8)- --Interest rate collars/SWAPS
20(f)
(5.3)
(5.3)
-
(3.4)
-
(1.9)
20(f)
(11.0)
(11.0)
(6.2)
(2.9)
(1.4)
(0.5)
(969.0) (1,211.6) (131.0) (82.6) (59.0)(592.9)(346.1)
*These liabilities bear interest at a fixed rate
56
(e) Borrowing facilities
The Group has syndicated Senior and Subordinated facility agreements with a number of banks and investment companies
providing £660 million and €360 million of available funding. Of these facilities, the Group has the following available
committed floating rate borrowing facilities and cash at 30 April 2015 in respect of which all conditions precedent had been
met at that date:
2015
2014
£m£m
Expiring between 2 and 10 years
357.999.0
In addition the Group has a facility secured on UK and US trade receivables, providing up to £27.5m of additional liquidity.
In July 2013 the Group completed an amendment to the Senior and Subordinated Facilities. This extended the debt maturity
profile of majority of the Group’s loans, with only 5% of bank facilities due to be repaid before 2017.
(f) Fair values of financial assets and financial liabilities
• The table below analyses financial instruments, into a fair value hierarchy based on the valuation technique used to
determine fair value.
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(i.e., as prices) or indirectly (i.e., derived from prices)
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Carrying amount
Fair value
2015201420152014
Notes
Level
£m£m£m£m
11
3
73.889.373.889.3
Other receivables (long-term trade debtors)
11
3
2.95.72.95.7
13
3
349.968.0
349.968.0
Secured bank loans 14
3
(893.7)(882.4)(893.7)(882.4)
14
3
(17.4)(22.5)(17.4)(22.5)
Other financial liabilities – current
Interest rate collars/SWAPs - Liabilities
1
(0.9)-
(0.9)Other financial liabilities
3
(3.3)(6.2)(3.3)(6.2)
(4.2)(6.2)(4.2)(6.2)
Other financial liabilities – non-current
Other financial liabilities 3
(3.0)(4.8)(3.0)(4.8)
Interest rate collars/SWAPs – Liabilities
1
(11.4)(5.3)
(11.4)(5.3)
(14.4)(10.1)(14.4)(10.1)
(503.1)(758.2)(503.1)(758.2)
Included in other financial liabilities are assets of £6.6m secured by other financial liabilities of £3.5m due under a year and
£3.1m due over a year (2014: £11.0m secured by other financial liabilities of £4.8m due under a year and £6.2m due over a
year) (see note 11).
57
(f) Fair values of financial assets and financial liabilities (continued)
Estimation of fair values
The fair values of financial instruments reflect the market value at the balance sheet date. The market value of interest rate
collars is determined from valuations provided by the issuing financial institution adjusted for credit risk. All other financial
instruments are stated at their carrying values which are not materially different to the market value.
(g) Hedging
In respect of our overall borrowings this covers approximately 66% of our interest exposure in 2015/16 and 2016/17. The
average rate of interest fixed over the period is in the range 1.02% to 2.01% for Sterling and 0.87% to 2.01% for Euros plus
margin. The effect of the arrangement is to limit any detrimental interest rate moves over the period to the amount of debt
not covered by these instruments. These positions are reviewed annually by the Board.
The Group also hedges any material foreign currency transaction exposure. Transaction exposures are reviewed periodically
and hedged.
The Group undertakes interest rate hedging to protect itself against adverse movements in interest rates. Hedging is put in
place when significant amounts of borrowing are incurred. A summary of the Group’s interest rate hedging position (including
interest rate hedges taken on as part of the “acquired group”) is given in note 20(d). The figures quoted represent total
interest costs including funding margin.
Note 20(d) gives details of the carrying value and expected future cash flows associated with the interest rate hedges. The
Group has not applied hedge accounting to the interest rate hedges. The fair value of the interest rate hedges is determined
by valuations provided by the issuing financial institution of those instruments and is taken through the income statement.
(h) Capital Management
The Group’s objectives when managing capital (retained profits and bank borrowings) are to safeguard the Group’s ability to
continue as a going concern support the growth of the business and to maintain an optimal capital structure to reduce the
cost of borrowing. The Group finances its operations through a combination of retained profits, equity and bank borrowings
(see note 14).
21. FINANCIAL COMMITMENTS
Group capital commitments at 30 April 2015 amounted to £5.2m (2014: £3.0m). At 30 April 2015, the Group’s noncancellable operating lease rentals are payable as follows:
Land and buildingsOther
2015201420152014
£m
£m
£m£m
Leases expiring:
Within one year
12.012.0 2.53.5
Within two to five years
16.813.2 4.59.0
Thereafter
5.84.7
-2.5
34.6
29.9
7.015.0
A number of the Group’s leased properties have been sublet by the Group. Based upon the existing sublease contracts,
committed sublease payments of £0.9m (2014: £0.9m) are expected to be received by the Group over the terms of the
underlying subleases.
58
22. CONTINGENT LIABILITY
There are no significant contingent liabilities in the Group other than bank guarantees entered into in the normal course of
business.
23. RELATED PARTY TRANSACTIONS
Identity of related parties
The immediate parent company is NIS Holdings No. 4 Limited, a company registered in England and Wales, and the ultimate
parent company is New NIS Holdings S.à.r.l, a company registered in Luxembourg. Consolidated accounts are prepared by
New NIS Holdings S.à.r.l and are available from our registered office (see page 68). The Group is ultimately owned by funds
advised by Kohlberg Kravis Roberts & Co. L.P. (‘’KKR’’).
The Group, in its normal course of business, transacts with other entities controlled or significantly influenced by KKR.
All transactions are carried out on an arm’s length basis.
During the year ended 30 April 2015, KKR is entitled to a monitoring fee amounting to £0.7m per year (2014: £0.7m per year).
The remuneration of key management (main board directors and Executive Leadership team) for the period was £6.9m
(2014: (main board directors and divisional directors) £2.6m).
As part of the take private acquisition, the executive Directors together with other senior managers were invited to participate
in the management equity plan which is designed to enable them, as investors, to share in the future financial success of the
Group through an investment of personal capital. To assist participation, the Group offered loans under commercial terms
to key management personnel of £1.3m (2014: £1.3m) and at 30 April 2015 the loan amounts outstanding in respect of key
management personnel was £0.2m (2014: £0.7m). The loans are repayable when holders sell their shares in the business
and bear interest at rates in line with Inland Revenue recommendations for loans on commercial terms.
The principal subsidiary undertakings at 30 April 2015, the nature of whose business is the sale of computer solutions and
services (except as noted) and which are all wholly-owned were:
Identity of related parties
Name
Country of incorporation and operation
NIS Acquisitions Limited
Northgate Information Solutions Holdings Limited
PRO IV Technology Inc.
Boundary Way One Limited (Holding company) Boundary Way Two Limited (Property ownership company)
NorthgateArinso UK Limited
Moorepay Limited
Northgate Information Solutions Company (Holding company)
NorthgateArinso Belgium NV
NorthgateArinso Peoplechecking Limited
TNIS Holdings Australia Pty Limited
England and Wales
England and Wales
USA
England and Wales
England and Wales
England and Wales
England and Wales
Republic of Ireland
Belgium
England and Wales
Australia
A full list of subsidiary and associated undertakings is included in note 4 to the Company accounts on pages 64 to 66.
24. ACCOUNTING ESTIMATES AND JUDGEMENTS
The following sets out the key assumptions concerning the future and key sources of estimation and uncertainty at the balance
sheet date that may cause material adjustment to the carrying amounts of assets or liabilities within the next financial year.
59
24. ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
Revenue recognition
The revenue and profit of fixed price contracts is recognised on a percentage completion basis when the outcome of a
contract can be estimated reliably. Management exercises judgement in determining whether a contract’s outcome can be
estimated reliably. Management also make some estimates in the calculation of future contract costs, which are used in
determining the value of amounts recoverable on contracts. Estimates are continually revised based on changes in the facts
relating to each contract.
Pensions
Details of the principal actuarial assumptions used in calculating the recognised liability for the defined benefit plans are
given in note 15. Changes to the discount rate, mortality rates and actual return on plan assets may necessitate material
adjustments to this liability in the future.
Provisions
Provisions are recognised in the period when it becomes probable that there will be a future outflow of funds resulting
from past operations or events which can be reasonably estimated. The timing of recognition requires the application
of judgement to existing facts and circumstances, which can be subject to change. Note 16 to the accounts contain
information about the assumptions made concerning the Group’s provisions.
Fair value measurement on a business combination
The measurement of fair values on a business combination requires the recognition and measurement of the identifiable
assets, liabilities and contingent liabilities. The key judgements involved are the identification and valuation of intangible
assets which require the estimation of future cash flows and the selection of a suitable discount rate.
Impairment of intangible assets, including goodwill
Following the acquisition of Northgate Information Solutions plc in 2007/08, the Group has significant carrying values of
goodwill and intangible assets, such as customer relationships, technology based assets and trade names and other
marketing related assets. Goodwill and other intangible assets are tested annually for impairment. The impairment tests
involve estimation of future cash flows and the selection of a suitable discount rate. These require an estimation of the valuein-use of the cash generating units to which the intangible assets are allocated (note 9).
Recognition of internally generated intangible assets from development
Under IFRS, internally generated intangible assets from the development phase are recognised if certain conditions are met.
These conditions include the technical feasibility, intention to complete, the ability to use or sell the asset under development
and the demonstration how the asset will generate probable future economic benefits. The cost of a recognised internally
generated intangible asset comprises all directly attributable cost necessary to make the asset capable of being used as
intended by management. In contrast, all expenditures arising from the research phase are expensed as incurred.
We believe that the determination whether internally generated intangible assets from development are to be recognised as
intangible assets requires significant judgement, particularly in the following areas:
• The determination whether activities should be considered research activities or development activities;
• The determination whether the conditions for recognising an intangible asset are met requires assumptions about future
market conditions, customer demand and other developments;
• The term ‘technical feasibility’ is not defined in IFRS, and therefore the determination whether completing an asset is
technically feasible requires a company-specific and necessary judgemental approach;
• The determination of the future ability to use or sell the intangible asset arising from the development and the determination
of probability of future benefits from sale or use, and
• The determination whether a cost is directly or indirectly attributable to an intangible asset and whether a cost is necessary
for completing a development.
60
24. ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
Taxation
The Group is subject to corporate taxes in numerous jurisdictions. Management is required to exercise significant judgement
in determining the worldwide provision for corporate taxes. Certain transactions require the use of estimates and judgements
to determine the financial effect where the ultimate tax determination is uncertain. When the final outcome of such matters is
different, from previous estimates, such differences will impact on the corporate tax in the period in which the determination
is made.
25. GROUP STATEMENT OF CASH FLOWS
20152014
£m£m
Continuing activities
Net cash from operating activities
45.1
12.5
307.2
(30.7)
Taxes paid
(1.9)
(2.1)
(35.2)
(40.1)
Discontinued activities
Net cash from operating activities
(27.4)
43.3
(8.3)
(12.2)
2.43.6
Net (decrease)/increase in cash and cash equivalents
281.9(25.7)
26. SUBSEQUENT EVENTS
Secured loans of £893.7m at 30 April 2015 (note 14) included £335.1m of subordinated debt held by NIS Acquisitions Ltd with
the remaining balance of £558.6m of loans at 30 April 2015 being senior debt. On 23 March 2016 the value of the subordinated
debt had increased to £389.3m due to interest accrued since 30 April 2015. The entire subordinated debt of £389.3m held by
NIS Acquisitons Limited was cancelled on 23 March 2016 in exchange for an issue of new shares to Northgate UK Holdings 1
Ltd, at which time Northgate UK Holdings 1 Ltd held the controlling interest in NIS Acquisitions Limited.
Northgate UK Holdings 1 Ltd subsequently acquired the entire existing share capital of Northgate Information Solutions
Limited and transferred its shares in NIS Acquisitions Limited to Northgate Information Solutions Limited in exchange for
£232m of equity. Northgate UK Holdings 1 Ltd then immediately transferred its shares in Northgate Information Solutions
Limited to Northgate UK Holdings 2 Ltd in exchange for newly issued shares of Northgate UK Holdings 2 Ltd. Northgate
UK Holdings 2 Ltd immediately transferred the shares in Northgate Information Solutions Limited to Northgate UK Holdings
3 Ltd in exchange for newly issued shares in Northgate UK Holdings 3 Ltd. Northgate UK Holdings 3 Ltd immediately
transferred the shares in Northgate Information Solutions Limited to Northgate UK Holdings 4 Ltd in exchange for newly
issued shares in Northgate UK Holdings 4 Ltd.
On 23 March 2016 the remaining balance of senior debt was £345.1m, following a repayment of £209.5m in December
2015 and £14.3m on 18 March 2016 and £11.5m on 21 March 2016 out of existing cash balances, £6.1m of interest
accrued since 30 April 2015 and 15.7m exchange loss. This balance was repaid in full on 23 March 2016 using remaining
cash on the balance sheet and new debt finance. A new debt facility was entered into by Northgate Information Solutions
Ltd with an external syndicate of lenders with a value of £320.0m, and a new revolving credit facility of £75m was made
available to Northgate Information Solutions Holdings Limited.
Following these transactions the immediate parent company is Northgate UK Holdings 4 Ltd, a company registered in
England and Wales, and the ultimate parent company is Northgate Luxembourg Holdings GP Sàrl, a company registered in
Luxembourg. The company is ultimately controlled by The Goldman Sachs Group, Inc.
61
Company statement of financial position as at 30 April 2015
Notes
Fixed assets
Investments4
20152014
£m£m
-435.8
Net assets
-435.8
Capital and reserves
Issued share capital
5
108.2108.2
Share premium account
6
0.60.6
6
497.2497.2
Retained earnings
6
(606.0)(170.2)
Shareholders’ funds7
-435.8
Approved by the Board of Directors on 24 March 2016 and signed on its behalf by:
Stuart Ross
Director
24 March 2016
62
Notes to the company accounts for the year ended 30 April 2015
1. ACCOUNTING POLICIES
he accounting policies have been applied consistently in dealing with items which are considered material in relation to the
T
accounts.
Basis of Preparation
The separate accounts of the Company are presented as required by the Companies Act 2006. As permitted by that Act,
the separate accounts statements have been prepared in accordance with applicable accounting standards under UK
Generally Accepted Accounting Principles (UK GAAP) and on the historical cost basis.
Under section 408 of the Companies Act 2006 the Company is exempt from the requirement to present its own profit and
loss account.
The Company has taken advantage of the exemption in FRS 1 and has not presented its own cash flow statement.
The principal accounting policies are summarised below. They have been applied consistently throughout the period.
The Company has taken advantage of the exemption contained in FRS 8 and has therefore not disclosed transactions or
balances with entities which form part of the Group.
Investments
Investments in subsidiary undertakings are stated at cost unless, in the opinion of the Directors, there has been impairment
to their value in which case they are immediately written down to their estimated recoverable amount.
2. STAFF NUMBERS
The only employees of the Company were the Directors. The average number employed during the year was 4 (2014: 4).
No remuneration was paid by the Company to the Directors (2014: nil).
3. RESULT FOR THE FINANCIAL YEAR
The Company did not trade during the year. Investments were impaired during the year giving a £435.8m loss (2014: £170.2m
loss) for the period.
63
Notes to the company accounts for the year ended 30 April 2015 (continued)
4. INVESTMENTS
Subsidiary undertakings
£m
Cost:
Investment in NIS Acquisitions Limited
At 1 May 2014 and 30 April 2015
606.0
Impairment losses:
At 1 May 2014
(170.2)
Impairment charge for the year
(435.8)
At 30 April 2015
(606.0)
Net book value:
At 30 April 2015
-
At 30 April 2014
435.8
The subsidiary undertakings at 30 April 2015, the nature of whose business is the sale of computer solutions and services
(except as noted) and the ordinary share capital, of all of which are wholly-owned and consolidated were:
Name
NIS Acquisitions Limited *
ARINSO Africa SA
ARINSO Argentina SA
ARINSO Australia Pty Ltd
ARINSO Finland Oy
ARINSO France SAS
ARINSO Iberica S.A.U
ARINSO International Philippines Inc
ARINSO Luxembourg SA
ARINSO Mexico SA de CV
Arinso People Services Limited
ARINSO Portugal - Sistemas, Software e Servicios, SA
ARINSO Singapore Pte Ltd
ARINSO UK Limited
Australian Payroll Services Pty Ltd
Boundary Way One Limited
Boundary Way Two Limited
Business Information Management Limited
Cara Information Technology Limited
Engage Technologies Limited
Engage Technologies Support Limited
Harvest Limited
HR Link Limited
Human & Legal Resources Limited
Jamy Investments Limited
Lansdowne Creative Marketing Limited
%
Shareholding
Country of incorporation
and operation
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
99.96%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
United Kingdom
Morocco
Argentina
Australia
Finland
France
Spain
Philippines
Luxembourg
Mexico
United Kingdom
Portugal
Singapore
United Kingdom
Australia
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Ireland
Ireland
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
64
4. INVESTMENTS (continued)
Leo Computer Company Limited
Link Group Consultants Limited
Liquid HR Limited
Marketwide Systems Limited
Mills Associates Limited
Moorepay Compliance Limited
Moorepay Group Limited
Moorepay Limited
Neller Employer Services Pty Ltd
Neller Pty Ltd
NGA Africa (Proprietary) Limited
NGA Benefits Singapore Pte Ltd
NGA HR India Pvt Ltd
NGA Human Resources Denmark A/S
NGA Japan Kabushiki Kaisha
NGA Outsourcing Canada Inc
NGA Outsourcing Malaysia Sdn Bhd
NGA Outsourcing Singapore Pte Ltd
NIS Holdings Australia Pty Ltd
NIS Holdings BV
NIS Operations Australia Pty Ltd
NIS Payroll Solutions (India) Private Limited
NIS Receivables No. 2 Limited
NIS Receivables No. 1 Limited
Northgate Arinso Hungary Korlatolt Felelossegu Tarsasag
Northgate Computer Services Limited
Northgate HR Pensions Holdings Limited
Northgate HR Pensions Limited
Northgate Information Solutions Australia Pte Ltd
Northgate Information Solutions China Ltd
Northgate Information Solutions Company
Northgate Information Solutions Holdings Limited
Northgate Information Solutions New Zealand Ltd
Northgate PWA Empower Limited
Northgate Recruitment Limited
Northgate UK Company
NorthgateArinso Austria AG
NorthgateArinso Belgium SA/NV
NorthgateArinso Brazil Informatica Ltda
NorthgateArinso Canada Inc
NorthgateArinso Deutschland GmbH
NorthgateArinso France Holdings SAS
NorthgateArinso Granada S.A.U
NorthgateArinso HR Services LLC
NorthgateArinso Inc
NorthgateArinso Information Technology Services (Dalian) Co
NorthgateArinso Ireland Limited
NorthgateArinso Israel Limited
NorthgateArinso Italia Srl
NorthgateArinso Malaysia Sdn Bhd
NorthgateArinso Nederland BV
NorthgateArinso Peoplechecking Limited
NorthgateArinso Poland Sp z o.o
NorthgateArinso Services Ireland Limited
NorthgateArinso Singapore Pte Ltd
65
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
50.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Australia
Australia
South Africa
Singapore
India
Denmark
Japan
Canada
Malaysia
Singapore
Australia
Netherlands
Australia
India
United Kingdom
United Kingdom
Hungary
United Kingdom
United Kingdom
United Kingdom
Australia
Hong Kong
Ireland
United Kingdom
New Zealand
United Kingdom
United Kingdom
United Kingdom
Austria
Belgium
Brazil
Canada
Germany
France
Spain
Russian Federation
United States
China
Ireland
Israel
Italy
Malaysia
Netherlands
United Kingdom
Poland
Ireland
Singapore
4. INVESTMENTS (continued)
NorthgateArinso Spain S.A.U
NorthgateArinso Sweden AB
NorthgateArinso Switzerland Ltd
NorthgateArinso Thailand Company Ltd
NorthgateArinso Turkey HR Consultancy and Outsourcing Ltd
NorthgateArinso UK Limited
Personnel Computer Services Limited
Peterborough Software (UK) Limited
Preceda Holdings Pty Ltd
Pro Iv Limited
Pro-iv Holdco Limited
Pro Iv Technology LLC
Pwa Group Limited
Rebus Group Limited
Rebus Holdings Limited
Rebus HR Group Ltd
Rebus HR Holdings Limited
Rebus HR Management Limited
Rebus Human Resources Services Limited
Rebus Human Resources Limited
Rebus Personnel Services Limited
Rebus Software Limited
The Association for Payroll Specialists Pty Ltd
The Policy Network Limited
100.00%
Spain
100.00%
Sweden
100.00%
Switzerland
100.00%
Thailand
99.00%
Turkey
100.00%
United Kingdom
100.00%
United Kingdom
100.00%
United Kingdom
100.00%Australia
100.00%
United Kingdom
100.00%
United Kingdom
100.00%
United States
100.00%
United Kingdom
100.00%
United Kingdom
100.00%
United Kingdom
100.00%
Bermuda
100.00%
United Kingdom
100.00%
United Kingdom
100.00%
United Kingdom
100.00%
United Kingdom
100.00%
United Kingdom
100.00%
United Kingdom
100.00%
Australiav
100.00%
United Kingdom
* held directly by Northgate Information Solutions Limited
All shares held are ordinary shares.
The Directors have considered the value in use of the investments using a combination of Income Approach and Market
valuation methodologies and have concluded that an impairment in investment value is appropriate.
5. SHARE CAPITAL
The share capital of the Company is as follows:
20152014
£m£m
Allotted, called up and fully paid:
108,154,141 (2014: 108,154,141) shares of £1 each
108.2108.2
The holders of ordinary shares are entitled to receive dividends from time to time and are entitled to one vote per share at
meetings of the company.
66
6. CAPITAL AND RESERVES
Reconciliation of movement in total equity
Share Share CapitalRetained
Total
capital premiumcontribution
earnings
equity
£m£m£m £m£m
Result for the year
108.2
-
0.6
-
497.2
-
(170.2)
(435.8)
435.8
(435.8)
108.2
0.6
497.2
(606.0)
-
7. RECONCILIATION OF MOVEMENT IN SHAREHOLDERS’ FUNDS
20152014
£m£m
Balance at 1 May 2014
Investment impairment
435.8551.2
-54.8
(435.8)(170.2)
Net (decrease) in shareholders’ funds
(435.8)(115.4)
Closing shareholders’ funds
-435.8
8. CONTINGENT LIABILITY
The company has in the normal course of business issued guarantees securing the performance by itself and other group
undertakings of certain contracts and undertakings from which no liabilities are expected to arise other than those provided
for in these accounts.
The company participates in the group’s syndicated banking facility agreement.
The group has syndicated Senior and Subordinated facility agreements with a number of banks and investment companies
providing £660 million and €360 million of available funding (excluding interest). Of these facilities, the group has the following
available committed floating rate borrowing facilities at 30 April 2014 in respect of which all conditions precedent had been
met at that date:
20152014
£m£m
Expiring between 2 and 10 years
357.9100.9
9. ULTIMATE PARENT COMPANY
The immediate parent company is NIS Holdings No. 4 Limited, a company registered in England and Wales, and the ultimate
parent company is New NIS Holdings S.à.r.l, a company registered in Luxembourg. The Company is ultimately controlled by
The Goldman Sachs Group, Inc.
67
Directors and Advisers
Directors
Adel Al-Saleh Group Chief Executive
Stuart Ross Group Finance Director
William L. Cornog Non-Executive Director
Edouard Pillot Non-Executive Director
Joerg Metzner Non-Executive Director
Registered Office
Peoplebuilding 2
Peoplebuilding Estate
Maylands Avenue
Hemel Hempstead
HP2 4NW
United Kingdom
Registered Number
6442582
Auditors
KPMG LLP
15 Canada Square
London E14 5GL
Bankers
Barclays Bank Plc
28 George Street
Luton LU1 2AE
68
Northgate Information
Solutions Limited
Peoplebuilding 2
Peoplebuilding Estate
Maylands Avenue
Hemel Hempstead
HP2 4NW
United Kingdom
+44 (0) 1442 232424
www.northgate-is.com

Northgate Information Solutions Limited

Transcription

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