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Annual Report and Financial

Statements for the year ended

31 March 2013

Company Number 3637683

Registered Office 2 Bartholomews

Brighton BN1 1HG

Telephone 01273 200100

Directors Anthony Antoniades (Chairman) David Wood (Chief Executive)

Emma Buckley (Executive) Nicholas Taylor (Non-Executive)

Secretary Richard Beeforth

Auditor Chantrey Vellacott DFK LLP

Russell Square House 10-12 Russell Square

London WC1B 5LF

Registrars RDF Group plc

Registered office

Contents

Page 2

Directors‟ Report

3

Independent Auditor‟s Report

7

Consolidated Statement of Comprehensive Income

9

Consolidated Balance Sheet

10

Consolidated Statement of Changes in Shareholders‟ Equity

11

Consolidated Cash Flow Statement

12

Notes to the Consolidated Financial Statements

13

Parent Company Balance Sheet

Parent Company Cash Flow Statement

28

29

Notes to the Parent Company Financial Statements

30

Directors’ Report

Page 3

The directors present their report and the audited financial statements of the Group for the year ended 31 March 2013 under International Financial Reporting Standards as adopted by the EU (“IFRS”). The financial statements of the Parent Company, RDF Group plc, continue to be prepared in accordance with UK GAAP.

Principal Activities, Business Review, Results, Dividends and Outlook RDF Group plc is a public limited company, incorporated in England. The principal activities of the Group during the year were the provision of IT related managed software services through bespoke software development, the provision of IT related temporary contracts and permanent recruitment placements. Although the Group ceased to be quoted on AIM in 2009, the directors continue to adhere to the practices and procedures appropriate to a quoted company. Revenue in the Managed Services Division increased during the year whilst Revenue in the Recruitment division decreased slightly resulting in overall revenues of £25.942m (2012: £24.808m). Operating profit was £1.127m (2012: £0.770m). The profit for the year after tax was £1.769m (2012: £0.686m), the details of which are shown in the consolidated statement of comprehensive income on page 9. The directors consider that the financial key performance indicators are revenue, operating profit, earnings per share and net cash. Non financial key performance indicators are not considered material to managing the financial performance of the Group. Managed Services Overall the division generated revenues of £13.403m (2012: £11.377m) and generated a profit for the year before interest and tax of £0.983m (2012: £0.545m). The division continues to maintain its levels of business with all major clients. Recruitment Overall the division generated revenues of £12.539m (2012: £13.431m), but despite this achieved similar profits for the year before interest and tax of £0.206m (2012: £0.223m). The division continues to pursue both temporary and permanent placements and intends to increase profitability in the coming year. Dividend Dividends of £208,000 were approved in relation to the year (2012: £208,000).

Directors’ Report

Page 4

Risks and Uncertainties There are a number of risks and uncertainties which could have an impact on the Group‟s long term performance and cause actual results to differ materially from expected and historical results. The directors seek to identify material risks and put in place policies and procedures to mitigate any exposure. (i) Competitor risk The market for IT services is extremely fragmented with a large number of suppliers operating in

all our markets. Very few of these suppliers have the combination of managed software services and temporary contracts and permanent recruitment placement services. However the competition may intensify through consolidation or new entrants to the market and in order to mitigate this risk and maintain our competitive position we work to build strong customer relationships and maintain and develop our services ahead of the competition.

(ii) Economic risk The IT industry has a reputation for being vulnerable to the ups and downs of the economy .The

directors have taken a number of steps to mitigate any perceived risk such as increasing the proportion of contracted recurring income and increasing the knowledge and skills of our staff.

In addition to the above, note 2 gives detail on the Group‟s financial risk management. Included in note 1 is the Group‟s policy in relation to critical accounting estimates and judgements.

Corporate Social Responsibility The directors are aware that business can have a significant impact on the community and, being a company built on its staff, the directors consider it important to continue to support local and national organisations as part of corporate social responsibility.

Directors The names of the directors who held office during the year are set out below. David Wood, Emma Buckley and Nicholas Taylor held office throughout the year. Anthony Antoniades held the position of Chairman throughout the year. The Group holds qualifying indemnity insurance on behalf of the directors.

Directors’ Report

Page 5

Employment of Disabled Persons It is the Group‟s policy to offer equal opportunities to disabled persons in matters of recruitment, training, career development and promotion. Where people become disabled during the course of their employment, the Group makes every effort to retain their services and to provide retraining where necessary.

Employee Involvement and Communication Information about the Group‟s affairs is communicated to employees through regular e-mails, news updates and coffee mornings with a director.

Suppliers The Group operates a standard payment practice to contractors and suppliers. The Group recognises the importance of maintaining good business relationships with its contractors and suppliers and settles their invoices within agreed terms unless there are good reasons not to do so. The average number of days‟ credit taken on the outstanding balance at the year end was 32 (2012: 30).

Statement of Directors’ Responsibilities The directors are responsible for preparing the directors‟ report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the Group financial statements under applicable law and International Financial Reporting Standards as adopted by the European Union and the Parent Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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 the profit or loss of the Group for that period. In preparing those 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; - state whether applicable accounting standards have been followed, subject to any material

departures disclosed and explained in the financial statements; - prepare the financial statements on the going concern basis unless it is inappropriate to presume

that the Group will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Directors’ Report

Page 6

Charitable Donations During the year the Group made charitable donations totalling £4,319 (2012: £2,150), comprising several small donations to local charities. The Group did not make any political donations (2012: £nil).

Statement as to Disclosure of Information to the Auditor The directors who were in office at the date of approval of these financial statements have confirmed that, as far as they are aware, there is no relevant audit information of which the auditor is unaware. Each of the directors has confirmed that they have taken all the steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and establish that it has been communicated to the auditor.

Auditor A resolution to re-appoint Chantrey Vellacott DFK LLP as auditor to the Company for the ensuing year will be proposed at the forthcoming annual general meeting.

Staff Finally, the directors would like to thank the staff for their work and commitment to the Group over the last year and continuing to work to the highest levels of ability and dedication. By Order of the Board

David Wood

Director 19/08/2013

Independent Auditor’s Report

to the shareholders of RDF Group plc

Page 7

We have audited the financial statements of RDF Group plc for the year ended 31 March 2013 which comprise the Consolidated and Parent Company Balance sheets, the Consolidated Statement of Comprehensive Income, the Consolidated and Parent Company Cash Flow Statements, the Consolidated Statement of Changes in Shareholders‟ Equity and the related notes. The financial reporting framework that has been applied in the preparation of the consolidated financial statements is applicable law and International Financial Reporting Standards (IFRS) as adopted by the European Union. The financial reporting framework that has been applied in the preparation of the Parent Company financial statements is applicable law and United Kingdom Accounting Standards (United Kingdom 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, 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 Ethical Standards for Auditors. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group's and the Parent Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. 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 31 March 2013 and of the group's profit for the period then ended;

the Group financial statements have been properly prepared in accordance with IFRS as adopted by the European Union;

the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Independent Auditor’s Report

to the shareholders of RDF Group plc

Page 8

Opinion on other matters prescribed by the Companies Act 2006 In our opinion:

the information given in 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 where under the Companies Act 2006 we are required 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. IAN STAUNTON FCA (Senior Statutory Auditor) for and on behalf of CHANTREY VELLACOTT DFK LLP Chartered Accountants and Statutory Auditor London

2013

Consolidated Statement of

Comprehensive Income

For the year ended 31 March 2013

Page 9

2013 2012 Total Total

Note £000 £000

Revenue 3 25,942 24,808 Cost of sales 22,327 21,480

Gross profit 3,615 3,328 Administrative expenses (2,635) (2,558) Other operating income 147 -

Operating profit 4 1,127 770 Finance costs 7 (26) (42)

Profit on ordinary activities before taxation 1,101 728 Taxation 8 668 (42)

Total comprehensive income 1,769 686

The above results arise entirely from the Group's continuing operations.

Consolidated Balance Sheet

as at 31 March 2013

2013 2012

Note £000 £000

Page 10

Non-current assets Goodwill 10 538 538 Other intangible assets 11 - - Property, plant and equipment 12 279 246 Deferred tax assets 18 371 33

1,188 817 Current assets Trade and other receivables 14 6,599 4,490 Cash at bank and in hand 15 18 58

6,617 4,548

Total assets 7,805 5,365

Equity Share capital 16 208 208 Share premium account 103 103 Equity options reserve 69 69 Retained earnings 3,588 2,027

Total equity 3,968 2,407

Liabilities Non-current liabilities Deferred tax liabilities 18 - -

- -

Current liabilities Trade and other payables 19 3,027 2,632 Current tax liabilities 24 - Borrowings 17 786 326

3,837 2,958

Total liabilities 3,837 2,958

Total liabilities and equity 7,805 5,365

The financial statements on pages 9 to 27 were approved by the board of directors and authorised for issue on 19/08/2013 and are signed on its behalf by:

David Wood Director Registered Co No 3637683

Consolidated Statement of

Changes in Shareholders’ Equity

for the year ended 31 March 2013

Page 11

Share capital

Share premium account

Equity options reserve

Retained earnings Total

£000 £000 £000 £000 £000 At 1 April 2011 208 103 69 1,549 1,929 Comprehensive income for the financial year - - - 686 686 Dividends paid - - - (208) (208)

At 1 April 2012 208 103 69 2,027 2,407 Comprehensive income for the financial year - - - 1,769 1,769 Dividends paid - - - (208) (208)

At 31 March 2013 208 103 69 3,588 3,968

Consolidated Cash Flow Statement


Page 12

Note 2013 2012 £000 £000 Cash flows from operating activities Cash generated from operations 23 (54) 2,017 Net interest paid (26) (42) Taxation received/(paid) 32 (324)

Net cash (used in)/from operating activities (48) 1,651

Cash flows from investing activities Purchase of property, plant and equipment (140) (90)

Net cash used in investing activities (140) (90)

Cash flows from financing activities Repayment of finance leases - (13) Equity dividends paid (312) (208)

Net cash used in financing activities (312) (221)

(Decrease)/increase in cash and cash equivalents for the year (500) 1,340 Cash and cash equivalents at the beginning of the year (268) (1,608)

Cash and cash equivalents at the end of the year (768) (268)

Cash and cash equivalents consists of:

2013 £000

2012 £000

Cash 15 18 58 Invoice discounting advances 17 (786) (326)

(768) (268)

Notes to the Consolidated

Financial Statements for the

year ended 31 March 2013

Page 13

1 Accounting Policies

General Information

RDF Group plc is incorporated in England and operates in the United Kingdom. Its registered office is 2 Bartholomews, Brighton, BN1 1HG and its principal activities are the provision of IT related managed software services, the provision of IT related temporary contracts and permanent recruitment placements. The financial statements are prepared in pounds sterling.

Basis of Preparation

The financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and with the Companies Act 2006.

IFRS have only been applied to the consolidated financial statements. The Company has elected to prepare its financial statements in accordance with UK GAAP. The financial statements of the Company are presented on pages 28 to 32.

The financial statements have been prepared under the historical cost convention. Standards and Interpretations Not Applied

The Group has adopted all of the new and revised Standards and Interpretations issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB that are relevant to its operations and effective for accounting periods beginning 1 April 2012. New standards and interpretations currently in issue but not effective for accounting periods commencing on 1 April 2012 are:

IFRS 9 Financial Instruments (effective 1 January 2015)

IFRS 10 Consolidated Financial Statements (effective 1 January 2013)

IFRS 11 Joint Arrangements (effective 1 January 2013)

IFRS 12 Disclosure of Interests in Other Entities (effective 1 January 2013)

IFRS 13 Fair Value Measurement (effective 1 January 2013)

IAS 19 Employee Benefits (Revised June 2012) (effective 1 January 2013)

IAS 27 (Revised), Separate Financial Statements (effective 1 January 2013)

IAS 28 (Revised), Investments in Associates and Joint Ventures (effective 1 January 2013)

Deferred Tax: Recovery of Underlying Assets - Amendments to IAS 12 Income Taxes (effective 1 January 2013)

Presentation of Items of Other Comprehensive Income - Amendments to IAS 1 (effective 1 July 2013) As at 31 March 2013, the following standards and interpretations were in issue:

IFRS 9 Financial Instruments (effective 1 January 2015)

IFRS 10 Consolidated Financial Statements (effective 1 January 2013)

IFRS 11 Joint Arrangements (effective 1 January 2013)

IFRS 12 Disclosure of Interests in Other Entities (effective 1 January 2013)

IFRS 13 Fair Value Measurement (effective 1 January 2013)

IAS 19 Employee Benefits (Revised June 2012) (effective 1 January 2013)

IAS 27 (Revised), Separate Financial Statements (effective 1 January 2013)

IAS 28 (Revised), Investments in Associates and Joint Ventures (effective 1 January 2013)

IFRS 7 (amendments), Offsetting Financial assets and Financial Liabilities (effective 1 January 2013)

IAS 32 (amendments), Offsetting Financial assets and Financial Liabilities (effective 1 January 2014)

Disclosures - Transfers of Financial Assets - Amendments to IFRS 7 (effective 1 July 2012)

Deferred Tax: Recovery of Underlying Assets - Amendments to IAS 12 Income Taxes (effective 1 January 2013)

Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters - Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards (effective 1 July 2012)

Presentation of Items of Other Comprehensive Income - Amendments to IAS 1 (effective 1 July 2013)

It is not practicable to provide a reasonable estimate of the effect of these standards until a detailed review has been completed.




Page 14

Basis of Consolidation

The consolidated financial statements incorporate the financial statements of RDF Group plc and of its subsidiaries. Subsidiaries are all entities over which the Group has the power to govern financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights. Subsidiaries are fully consolidated from the date on which the Group takes control.

The Group adopts the purchase method in accounting for the acquisition of subsidiaries. On acquisition the cost is measured at the fair value of the assets given, plus equity instruments issued and liabilities incurred or assumed at the date of exchange. The assets acquired, liabilities and contingent liabilities assumed in a business combination are measured at their fair value at the date of acquisition. Any excess of the fair value of the consideration over the fair value of the identifiable net assets acquired is recorded as goodwill. Any deficiency of the fair value of the consideration below the fair value of identifiable net assets acquired is credited to the statement of comprehensive income in the period of the acquisition.

The results of subsidiary undertakings acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition or up to the effective date of disposal.

Where necessary, adjustments are made to the financial statements of the Parent Company and subsidiaries to bring the accounting policies used into line with those used by the Group. Inter-company transactions and balances between Group companies are eliminated.

Critical Accounting Estimates and Judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The directors make estimates, assumptions and judgements concerning the carrying amount of assets and liabilities. Whilst the directors believe that the estimates and assumptions used in the preparation of the financial statements are reasonable, the resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates that have a significant risk of causing a material adjustment to the carrying values of assets and liabilities recognised in the financial statements are discussed below.

i) Impairment of goodwill

The Group tests annually whether goodwill has suffered any impairment. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations which require the use of estimates.

ii) Recoverability of disputed debts

The Group seeks appropriate legal advice on the recoverability of disputed debts and makes an assessment of the likely outcome in agreeing specific provisions for bad and doubtful debts.

iii) Tax credits

The Group has estimated the likely value of tax credits in relation to Research and Development available for the year, based on advice from external consultants. There is potential for this figure to change pending the final calculation for taxation purposes.

Revenue Recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of services in the ordinary course of the Group‟s activities. Revenue is shown net of value added tax, returns, rebates and discounts and after eliminating sales within the Group.

The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and when specific criteria have been met for each of the Group‟s activities as described below. The amount is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The Group bases its estimates on historical results taking into account the type of customer, the type of transaction and the specifics of each arrangement.

i) Sale of IT Managed Software Solutions and IT Personnel

The Group provides IT Managed Software Solutions and IT personnel on a time spent basis. Revenue arising from the sale of these services is recognised at the time that the work is carried out provided that all the Group‟s obligations associated with the sale of the services have been fulfilled.

ii) Permanent Placement Fee Income

The Group provides permanent placement recruitment search services to clients on a contingency basis. Revenue for this service is recognised when the Group‟s obligations associated with the sale of the service have been




Page 15

fulfilled. This is normally at the time that a candidate starts their employment with a client.

iii) Interest income

Interest income is recognised on a time proportion basis using the effective interest method.

Segmental Reporting

A business segment is a group of assets and operations engaged in providing products and services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products and services within a particular economic environment in which the risks and returns are different from those operating in other economic environments.

Operating Profit

Operating profit represents the profit generated from operations before investment income and finance costs.

Borrowing Costs

All borrowing costs are recognised in the statement of comprehensive income in the period to which they relate.

Property, Plant and Equipment

Property, plant and equipment is initially recorded at cost. Depreciation is calculated to write down the cost less estimated residual value of all property, plant and equipment by equal annual instalments over its expected useful lives. The rates generally applicable are:

Leasehold property improvements over the length of the lease Computer equipment and software 33% Office equipment 10% - 20% Motor vehicles 33%

Assets‟ residual values and useful lives are reviewed and adjusted if appropriate at each balance sheet date.

Intangible Assets

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Company‟s share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Separately identified goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill.

Goodwill is allocated to cash-generating units for the purposes of impairment testing. The allocation is made to those cash-generating units that are expected to benefit from the business combination in which the goodwill arose.

Product development

Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring into use the specific software. These costs are amortised over their estimated useful lives at rates of 33% to 50%.

Costs associated with the production of identifiable and unique software products, including the payroll costs of the development teams, are recognised as intangible assets when they meet the following criteria:

i) an asset is created that can be separately identified ii) the technical and commercial feasibility of the product can be demonstrated iii) it is probable that the product will generate future economic benefit iv) the costs of the product can be reliably measured v) the Group has the necessary resources available to complete the development of the product

Computer software development costs capitalised as assets are amortised over their expected useful lives of 2 years with amortisation commencing once the computer software is fully implemented and brought into use. Where no internally generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it is incurred.

Customer contracts and customer relationships

Customer contracts and customer relationships acquired with subsidiaries are recognised at their fair value at the date of acquisition and amortised over periods not exceeding 10 years.

Impairment of Intangible Assets and Property, Plant and Equipment

Intangible assets that have an indefinite life and are not subject to amortisation are tested annually for impairment.




Page 16

Property, plant and equipment and intangible assets that are subject to amortisation or depreciation are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset‟s carrying amount exceeds its recoverable amount. Any impairment losses are charged to the statement of comprehensive income in the period in which they are identified. Where an asset does not generate cash flows that are independent of other assets, the assets are allocated to cash-generating units and the Group tests the recoverable amount of the cash-generating unit to which the asset belongs.

Employee Benefits

Pensions

Pension contributions are made for a number of employees on a defined contribution basis. Contributions payable for the year are charged to the statement of comprehensive income as they fall due. The Group has no further payment obligations once the contributions have been paid.

Taxation

Tax expense represents the aggregate of the current tax and deferred tax charges. The current tax charge is based on taxable profit for the period. Taxable profit differs from profit before tax as reported in the statement of comprehensive income as it excludes items of income or expense that are taxable or deductible in other years or are never taxable or deductible. The Group‟s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred taxation is provided in full using the liability method on material temporary differences between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is determined using tax rates that have been enacted at, or substantively enacted by, the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Leases

Rentals payable under operating leases are charged to the statement of comprehensive income on a straight line basis over the period of the lease.

Cash and Cash Equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short term, highly liquid funds with original maturities of three months or less and invoice discounting advances.

Financial Instruments

Financial assets and liabilities are recognised in the balance sheet when the Group becomes party to the contractual provisions of the instrument.

Trade and Other Receivables

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for the impairment of trade receivables is established when there is objective evidence the Group will not be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference between the asset‟s carrying value and the present value of future cash flows discounted at the original effective interest rate, The carrying value of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the statement of comprehensive income within „administrative expenses‟. When a trade receivable is uncollectible it is written off against the allowance amount for trade receivables. Subsequent recoveries of amounts previously written off are credited against „administrative expenses‟ in the statement of comprehensive income.

Share Capital

Ordinary Shares are classified as equity. Equity instruments issued by the Company are recorded at the proceeds received net of direct issue costs.

Trade and Other Payables

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised




Page 17

in the statement of comprehensive income over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months from the balance sheet date.

2 Financial risk management

(a) Financial risk factors

The Group‟s activities expose the Group to a variety of financial risks including market risk, interest rate risk, credit risk and liquidity risk. The Group manages these risks through an effective risk management programme that seeks to minimise potential adverse effects on the Group‟s financial performance.

Risk management is carried out by the central finance department under policies approved by the board of directors. An assessment of the risks is provided to the board at board meetings on a regular basis and are discussed to ensure that risk management complies with Group policy and that any new risks are identified and appropriately managed.

(b) Capital management

The Group‟s main objective when managing capital is to protect returns to shareholders by ensuring the Group will continue to trade in the foreseeable future. The Group manages its capital with regard to the risks inherent in the business and the sector within which it operates.

The Group considers its capital to include share capital, share premium, and retained earnings.

The Group does not have any externally imposed capital requirements.




Page 18

3 Segmental reporting Primary business segment

Segmental information is presented in respect of the Group‟s business segments. The primary business segments are based on the Group‟s reporting structures. Segmental results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate and head office items, and amounts in relation to intercompany transactions eliminated on consolidation. Segmental liabilities relate to directly attributable liabilities to each primary business segment.

Year ended 31 March 2013 Managed

Services Recruitment

Services Unallocated

Total

Group £000 £000 £000 £000 Revenue Sales to external customers 13,403 12,539 - 25,942

Results Operating profit 983 206 (62) 1,127

Profit before interest and tax 983 206 (62) 1,127

Net finance expense (11) (15) - (26)

Profit before tax 1,101 Taxation 668

Profit for the year 1,769

Assets and liabilities Segment assets 4,446 3,174 185 7,805 Segment liabilities 1,932 2,880 (975) 3,837

Total net assets 2,514 294 1,160 3,968

Other segmental information Capital expenditure 8 4 128 140 Property, plant and equipment 149 22 108 279 Intangibles - - 538 538 Depreciation 78 10 20 108

Information on major customers In the year ended 31 March 2013 the Group had three customers exceeding 10% of total revenue, being £7.34m, £4.91m and £2.64m respectively All the Group‟s operations are in the United Kingdom.




Page 19

3 Segmental reporting (continued)

Year ended 31 March 2012 Managed Services

Recruitment Services

Unallocated

Total Group

£000 £000 £000 £000 Revenue Sales to external customers 11,377 13,431 - 24,808 Results Operating profit 545 223 2 770

Profit before interest and tax 545 223 2 770

Net finance expense (22) (20) - (42)

Profit before tax 728

Taxation (42)

Profit for the year 686

Assets and liabilities Segment assets 2,555 2,394 416 5,365 Segment liabilities 1,540 2,225 (807) 2,958

Total net assets 1,015 169 1,223 2,407

Other segmental information Capital expenditure 90 - - 90 Property, plant and equipment 218 28 - 246 Intangibles - - 538 538 Depreciation 75 13 - 88

All the Group‟s operations are in the United Kingdom.




Page 20

4 Operating profit The operating profit is stated after charging:

2013 2012 £000 £000 Depreciation of property, plant and equipment 108 88 Loss on sale of fixed assets 1 25 Operating lease costs:

Rent paid on land and buildings 267 291 Other (including motor vehicles) 104 108

Employee costs (see note 5) 4,601 4,618

Auditor’s remuneration

The total fees paid by the Group in respect of audit, tax and other services is shown below: 2013 2012 £000 £000 Statutory audit of parent and consolidated accounts 10 10 Other services: The auditing of the accounts of subsidiaries 15 15 Tax services 6 6 Other 161 -

192 31

5 Employees

The average number of staff employed by the Group, including the executive directors, during the financial year

amounted to:

2013 2012 No No Selling and administration 32 35 Consultants 49 50

81 85

The aggregate payroll costs of the above were: 2013 2012 £000 £000 Wages and salaries 4,048 4,044 Social security costs 452 462 Employer‟s pension costs 101 112

4,601 4,618




Page 21

6 Directors’ emoluments

The directors‟ aggregate emoluments in respect of qualifying services were:

2013 2012 £000 £000 Emoluments receivable 411 365

411 365

Emoluments of highest paid director: 2013 £000

2013 2012 £000 £000 Emoluments receivable 280 279

280 279

No directors (2012: nil) accrued benefits under defined contribution pension arrangements during the year. No share options were granted or exercised during the year.

7 Finance income and costs 2013 2012 £000 £000 Finance costs Interest on short term borrowings repayable within five years 26 42

26 42

8 Taxation 2013 2012 £000 £000 Current tax expense UK Corporation tax - 146 Prior year tax credits (329) (70)

Total current tax (329) 76

Deferred tax (Credit) for the year (339) - Origination and reversal of timing differences - (34)

Total taxation reported in the consolidated financial statements (668) 42

Reconciliation of effective tax rate

The tax assessed for the year is lower (2012: lower) than the standard rate of corporation tax in the UK of 24% (2012:

26%). The differences are explained below: 2013 2012 £000 £000 Profit on ordinary activities before taxation 1,101 728

Profit on ordinary activities multiplied by the standard rate of tax 264 189 Expenses not deductible for tax purpose 27 24 Income not taxable (35) - Short term timing differences (1) 2 Capital allowances in excess of depreciation 1 (7) Tax credits (256) (60) Tax at lower rate - (2) Prior year tax credits (329) (70)

Total current tax (329) 76




Page 22

9 Dividends The following dividends have been approved in respect of the year:

2013 2012 £000 £000 Dividends of 0.5 pence per share and 1.5 pence per share (2012: Two dividends each of 1.0 pence per share) 208 208

10 Goodwill £000 Cost at 1 April 2011 and 31 March 2012 and 1 April 2012 and 31 March 2013 538

Carrying value at 1 April 2011 and 31 March 2012 and 1 April 2012 and 31 March 2013 538

Goodwill is allocated to the Group‟s contract and permanent recruitment division which is regarded as a cash generating unit (CGU). The recoverable amount of the CGU is determined based on value in use calculations. These calculations use pre-tax cash flow projections covering a 5 year period based on the Group‟s business plan. Cash flows beyond the 5 year period are extrapolated using the estimated growth rates stated below. The key assumptions used for the value in use calculations are as follows: Gross margin at 10% Growth rate at 3% Discount rate at 7.50% Gross margin is based on past performance, the growth rate is based on the long term growth rate in the UK economy and the discount rate is based on the Group‟s weighted average cost of capital.

11 Other intangible assets

Product development

Customer contracts and relationships

Total

£000 £000 £000 Cost 1 April 2011 and 31 March 2012 and 1 April 2012 and 31 March 2013 299 276 575

Amortisation 1 April 2011 and 31 March 2012 and 1 April 2012 and 31 March 2013 299 276 575

Net book value 31 March 2013 - - -




Page 23

12 Property, plant and equipment

Leasehold property

improvements

Motor vehicles

Office equipment

Software Computer equipment

Total

£000 £000 £000 £000 £000 £000 Cost 1 April 2011 234 56 207 52 173 722 Additions 23 - 3 12 52 90 Disposals - (56) - - - (56)

31 March 2012 257 - 210 64 225 756 Additions - 49 - 91 140 Disposals - - - (4) (9) (13)

31 March 2013 257 - 259 60 307 883

Depreciation 1 April 2011 90 28 138 47 150 453 Charge for year 30 3 27 5 23 88 Disposals - (31) - - - (31)

31 March 2012 120 - 165 52 173 510

Charge for year 39 36 2 31 108 Disposals - - (14) - - (14)

31 March 2013 159 - 187 54 204 604

Net Book Value 31 March 2013 98 - 72 6 103 279

31 March 2012 137 - 45 12 52 246

13 Group entities

Subsidiary undertakings Class of share

Percentage held at 31 March 2013

Nature of business

RDF Consulting Limited Ordinary 100% Provision of computer managed services RDF Resources Limited Ordinary 100% Temporary contract and permanent placement services IPS Europe Limited Ordinary 100% Dormant

All of the entities are incorporated and operate in England.




Page 24

14 Trade and other receivables

2013 2012 £000 £000 Trade receivables 5,397 3,826 Taxation recoverable 501 29 Other receivables 245 238 Prepayments and accrued income 456 397

6,599 4,490

The Group utilises an invoice discounting arrangement. Amounts advanced against trade debtors are disclosed in note

17.

All trade and other receivables are recoverable within one year. The average period of credit taken is 76 days (2012: 60 days). The carrying value of trade and other receivables is the same as the fair value. There are no significant concentrations of credit risk.

At 31 March 2013 the Group had trade receivables of £22,945 that were passed due other than those written off in the year to the consolidated statement of comprehensive income.

Movement on the Group provision for impairment of trade receivables was as follows

2013 2012 £000 £000 At 1 April 2012 - (15) Provision for bad and doubtful debt - 9 Receivables written off as irrecoverable - 6

At 31 March 2013 - -

15 Cash 2013 2012 £000 £000 Cash at bank and in hand 18 58

The carrying value of cash is the same as its fair value.

16 Share capital 2013 2012 £000 £000 Authorised 20,000,000 Ordinary Shares of 2 pence each 400 400

Allotted, called up and fully paid 10,400,000 Ordinary Shares of 2 pence each 208 208




Page 25

17 Borrowings

2013 2012 Current £000 £000 Invoice discounting 786 326

The directors consider that the fair value of borrowings approximates to the carrying value. The Group utilises an invoice discounting arrangement secured on trade receivables. Interest is variable at 2.25% over the Bank of England‟s base rate.

18 Deferred taxation

Accelerated tax

depreciation

Short term timing

differences

Tax loss carried

forward

Share based payments

Total £000 £000 £000 £000 £000 At 1 April 2011 (24) 4 - 19 (1) Credit/(charge) to the statement of comprehensive income (6) 1 41 (2)

(1) 34

At 1 April 2012 (30) 5 41 17 33 Credit/(charge) to the statement of comprehensive income 4 (1) 336 (1) 338

At 31 March 2013 (26) 4 377 16 371

The following is the analysis of deferred tax balances for financial reporting purposes:

Accelerated tax

depreciation

Short term timing

differences

Tax loss carried

forward

Share based payments

Total £000 £000 £000 £000 £000 2013 Deferred tax assets - 4 377 16 397 Deferred tax liabilities (26) - - - (26)

(26) 4 377 16 371

2012

Deferred tax assets - 5 41 17 63 Deferred tax liabilities (30) - - - (30)

(30) 5 41 17 33

The Group has no unrecognised deferred tax assets.

19 Trade and other payables

2013 2012 £000 £000 Trade payables 1,525 1,101 Other taxes and social security 130 147 Dividend payable - 104 Other payables 433 407 Accruals and deferred income 939 873

3,027 2,632

The directors consider that the fair value of trade and other payables approximates to their carrying value.




Page 26

20 Contingencies The Company has a potential liability for an estimated £600k compensation payment in relation to the employment

contract of Mr David Wood. In the event that Mr Wood or the Company terminates the contract between them under certain conditions listed in the agreement this liability will arise.

The directors do not currently foresee circumstances in which the liability would arise.

21 Related party transactions

Mr Anthony Antoniades is the beneficial owner of 9,850,000 Ordinary Shares, being 94.7% of the issued share capital of the Company and is the ultimate controlling party. Mr David Wood is the beneficial owner of 5,000 Ordinary Shares, being 0.048% of the issued share capital of the Company. At the prior year end a loan was outstanding to Innovative People Solutions Australia Pty Ltd, a company ultimately owned by Mr Antoniades, amounting to £80,819. The full amount was outstanding at the year end and included in other receivables. During the year the Company entered into transactions with International Programming & Systems Inc, a company ultimately owned by Mr Antoniades, with sales to the value of £461,908 (2012: £375,419) and margin of £nil (2012: £nil).

Subsidiary companies and directors The Company has a related party relationship with its subsidiary companies and with its directors. Transactions between the Company and its subsidiaries, a list of which is set out in note 13, have been eliminated on

consolidation and are not disclosed in this note. Details of directors‟ emoluments are set out in note 6. At the prior year end, a loan was outstanding to David Wood for £70,000. The full amount of the debt was outstanding

at the balance sheet date. Mr Nicholas Taylor is a partner at Healys LLP solicitors and during the year the Company entered into transactions

totalling £3,840 (2012: £10,432) with Healys Solicitors for legal advice sought in relation to employment law. There were no further material transactions or balances between the Group and the directors other than

remuneration paid in accordance with the terms of each director‟s service contract and dividends paid to directors in respect of the equity shares they own.

22 Leases Operating lease commitments The Group leases various offices under non-cancellable operating lease agreements. The leases have varying terms,

escalation clauses and renewal rights. The Group also leases various plant and machinery under non-cancellable operating lease agreements. The total value

of future minimum payments under these leases no later than one year is £64k, and later than one year and not later than five years is £50k. The lease expenditure charged to the statement of comprehensive income is disclosed in note 4.

The total value of future minimum lease payments in respect of land and buildings under non cancellable operating

leases for each of the following periods is: 2013 2012 £000 £000 No later than one year 235 244 Later than one year and not later than five years 365 485

600 729




Page 27

23 Reconciliation of net operating profit to net cash flow from operations

2013 2012 £000 £000 Operating profit 1,127 770 Depreciation 108 88 Loss on disposal of fixed assets 1 25

Operating cash flows before movements in working capital 1,236 883 (Increase)/decrease in receivables (1,846) 517 Increase/(decrease) in payables 556 617

Cash generated (used in)/from operations (54) 2,017

24 Share based payments

Employee share options All of the share options have been granted with an exercise price equal to the market price of the Company‟s shares at the date of grant (market price options) and the only condition with these options is that they can only be exercised after the third anniversary of the date of grant and not exercised any later the tenth anniversary for the EMI Scheme options. No options granted can be transferred, assigned, mortgaged, or charged and options can only be exercised by option holders if they are still employees or directors of the Company. At 31 March 2013, the following share options were outstanding in respect of Ordinary Shares:

Date of grant Number of

shares Period of option Price per

share

EMI Scheme 20 July 2004 298,507 20 July 2007 – 20 July 2014 33.5p The number and weighted average exercise prices of share options are as follows: 2013 2013 2012 2012 Weighted

average exercise price

£ Number of

options

Weighted average

exercise price £

Number of options

Outstanding at the beginning of the period 0.37 323,507 0.37 323,507 Granted during the period - - - - Forfeited / lapsed during the period - - - - Outstanding at the end of the period 0.37 323,507 0.37 323,507 Exercisable at the end of the period 0.37 323,507 0.37 323,507

The options outstanding at the year end have an exercise price in the range of 33.5p to 74.5p and a weighted average contractual life of 1.5 years (2012: 2.5 years).

Parent Company Balance Sheet

as at 31 March 2013

Page 28

2013 2012 Notes £000 £000 Fixed assets Investments 2 - - Tangible fixed assets 3 108 - Current assets Debtors 4 676 838

676 838 Creditors Amounts falling due within one year 6 (162) (153)

Net current assets 514 685

Total assets less current liabilities 622 685

Capital and reserves Called up equity share capital 8 208 208 Share premium account 9 103 103 Equity option reserve 9 69 69 Profit and loss account 9 242 305

Shareholders’ funds 622 685

The financial statements on pages 28 to 32 were approved by the board of directors and authorised for issue 19/08/2013 and are signed on its behalf by:

David Wood Director Company Registration Number 3637683

Parent Company

Cash Flow Statement


Page 29

2013 2012 £000 £000 Cash flows from operating activities Operating profit 139 302 Depreciation 20 - Decrease/(Increase) in receivables (37) (77) Increase/(Decrease) in payables 118 (18)

Cash generated from operations 240 207

Taxation paid - -

Net cash from operating activities 240 207

Cash flows from investing activities Purchase of software (128) -

Net cash used in investing activities

(128) -

Cash flows from financing activities Dividends received 200 - Equity dividends paid (312) (208)

Net cash used in financing activities (112) (208)

(Decrease)in cash for the year - (1) Cash at the beginning of the year - 1

Cash at the end of the year - -

Notes to the Parent Company



Page 30

1 Accounting policies Basis of Preparation The financial statements have been prepared under the historical cost convention. The directors have taken advantage of the exemption available under Section 408 of the Companies Act 2006 and not presented a profit and loss account for the Company alone. The Company made a profit after tax of £144,994 (2012: loss £5,817).

Share Based Payments

The Company currently operates a share option scheme which allows employees to acquire shares in the Company. Where the Company awards share options under these schemes, the fair value of options granted is calculated at the grant date using the Black Scholes Model and the resulting cost is charged to the statement of comprehensive income over the vesting period during which the recipient becomes unconditionally entitled to exercise the option and credited to the Equity Options Reserve. Related Party Transactions The Company has taken advantage of the exemption in Financial Reporting Standard No. 8 “Related Party Disclosures” and has not disclosed transactions with Group undertakings. Operating Lease Agreements Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged to the profit and loss account on a straight line basis over the lease term. Deferred Taxation Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. Timing differences are differences between taxable profits and profits as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the financial statements. Deferred tax is measured at the average tax rates that are expected to apply in the periods in which timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantially enacted by the balance sheet date. Deferred tax is measured on a non-discounted basis.

2 Fixed asset investments

Shares in Group

undertakings £000 Cost 31 March 2012 293 Impairment 31 March 2012 (293) Carrying value 31 March 2013 -

A list of the Company‟s subsidiary undertakings is set out in note 13 to the consolidated financial statements.




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3 Tangible fixed assets

Computer equipment

& software £

Cost At 1 April 2012 - Additions 128 At 31 March 2013 128

Depreciation

At 1 April 2012 - Charge for the year 20 At 31 March 2013

20

Net book value At 31 March 2013 108 ========================== At 31 March 2012 - ==========================

4 Debtors

2013 2012 £000 £000 Amounts due from subsidiary undertakings 561 773 VAT recoverable 22 11 Current tax recoverable 15 - Deferred tax (note 5) 8 18 Other debtors 37 28 Prepayments and accrued income 33 8

676 838

5 Deferred tax

Capital allowances

Share based payment Totals

£000

£000

£000

At 1 April 2011 - (20) (20) Charged to the profit and loss account - 3 3

At 1 April 2012 - (17) (17) Charged to the profit and loss account 8 1 9

At 31 March 2013 8 (16) (8)

6 Creditors: amounts falling due within one year 2013 2012 £000 £000 Amounts due to subsidiary undertakings 64 - Trade creditors 54 9 Corporation tax - 5 Dividend payable - 104 Accruals and deferred income 44 35

162 153




Page 32

7 Contingencies The Company is registered with HM Revenue and Customs as a member of a group for VAT purposes and as a result is

jointly and severally liable for amounts owing by RDF Consulting Limited and RDF Resources Limited in respect of unpaid VAT. At the balance sheet date the amount outstanding for VAT by these other Group companies was £417,187 (2012: £388,046).

The Company has a potential liability for an estimated £600k compensation payment in relation to the employment

contract of Mr David Wood. In the event that Mr Wood or the Company terminates the contract between them under certain conditions listed in the agreement this liability will arise. The directors do not currently foresee circumstances in which the liability would arise.

The directors do not expect any loss to arise from these contingent liabilities.

8 Share capital 2013 2012 £000 £000

Authorised: 20,000,000 Ordinary Shares of 2 pence each 400 400

Allotted, called up and fully paid:

10,400,000 Ordinary Shares of 2 pence each 208 208

Details of outstanding options over the Company‟s shares and the movements during the year are set out in note 24 to the consolidated financial statements.

9 Reserves

Share premium

account Equity

option reserve Profit and loss

account Total

£000 £000 £000 £000 At the beginning of the year 103 69 305 477 Profit for the year - - 145 145 Dividends - - (208) (208)

Balance carried forward 103 69 242 414

`

Page 33

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