Registered number:
For the Year Ended
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Kinetic Recruitment Services Limited
Company Information
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Kinetic Recruitment Services Limited
Contents
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Kinetic Recruitment Services Limited
Strategic Report
For the Year Ended 31 March 2023
Kinetic Recruitment Services Limited provides human resource and staffing services to the manufacturing, engineering and technical markets predominantly in the UK.
The company is well diversified in a number of core segments, principally within engineering and manufacturing.
The company's growth strategy will continue with further diversification into industrial and engineering markets with our contract and permanent offerings within the UK as well as enhancing the human resource and staffing services offerings within its other brands.
The key financial and other performance indicators during the year were as follows:
2023 2022 % Change Turnover £'000 13,107 13,534 (3%) Gross profit £'000 2,013 1,737 16% Equity shareholders funds £'000 3,545 3,647 (3%) Fixed assets £'000 157 192 (18%) Current assets as a % of current liabilities 191% 191% 0% Average number of employees 35 34 3%
Turnover decreased by 3% delivering a consistent result to the prior year however gross profit increased 16% mainly attributable to an increase in permanent revenue. The business has been affected by effects of rising inflation and increased staffing costs leading to an increase in administrative expenses of £112k (5.7% increase). Rising interest rates has resulted in an increase in interest payable of £54k on the prior year.
The number of employees remains consistent in comparison to 2022. There are plans to increase the employee numbers into 2023 to enable further growth within the business. Kinetic Recruitment Services continuing commitment to employees being the company's greatest asset as an employee owned company. All employees equally share in the success of the business. All employee owners receive detailed updates on the performance of the business and are engaged at all levels with the goal to work as a group supporting one another.
Commercial risks to the core business continue to be challenging external market forces and industry legislation costs. There is an acute shortage of skilled engineering personnel in the UK impacted by Brexit and the restrictions to the flow of candidates from the continent. Such risks we have mitigated with further investment in other platforms and tools to attract suitable candidates alongside our well established in house database.
For risk management of Brexit, a full review of the customer base has been carried out including supply chain wherever possible. Kinetic plc is not exposed to import or export trading and has all cash reserves in sterling with no debt. Challenges within the current economic climate with increased inflation and interest rates are having to be managed very carefully in an attempt to control overhead costs. Bad debts remain a significant risk and we have robust systems in place to mitigate such risks. We credit check all potential clients and have credit insurance in place for our key customers that are reviewed monthly for exposure. The directors have reviewed Kinetic plc’s business model and strategy and we operate a full risk register managed within our BS 9001:2015 British Quality Standard accreditation.
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Kinetic Recruitment Services Limited
Strategic Report (continued)
For the Year Ended 31 March 2023
Operational KPI’s: Numbers of timesheets on a weekly basis alongside the number of trading clients on a monthly basis. Full forecasts of the following months permanent recruitment pipeline are tracked to actual results on a monthly basis. Scheduled interviews, candidates placed, number of calls made and number of client visits are all measured and reported real time via monitors set up in each of the offices.
Key financial indicators are measured at an office level to compare actual results against budgets and the prior year on a monthly basis. These are all reported on a monthly basis via the monthly management accounts along with the profit and loss accounts for each of the businesses in the group.
Kinetic plc also operates balanced scorecard to monitor strategy and to ensure the business is continuing to drive innovation and cost management throughout the organisation. Critical success factors continue to be focused on customer development and satisfaction, internal business process, finance and employee learning and growth. Examples of additional measures are application rates and placement rates from the job boards and other tools we use to ensure a good return on investment.
This report was approved by the board and signed on its behalf.
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Kinetic Recruitment Services Limited
Directors' Report
For the Year Ended 31 March 2023
The directors present their report and the financial statements for the year ended 31 March 2023.
The directors are responsible for preparing the Strategic report, 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 financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 Company and of the profit or loss of the Company for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Company's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙state whether applicable UK 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 Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The loss for the year, after taxation, amounted to £102,184 (2022 -loss £141,877).
Dividends of £nil were paid in the year (2022: £305,000). The directors do not recommend payment of final dividend.
The directors who served during the year were:
An indication of the likely future developments in the company's business is provided in the Strategic Report.
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Kinetic Recruitment Services Limited
Directors' Report (continued)
For the Year Ended 31 March 2023
The company makes little use of financial instruments other than trade debtors, trade creditors, cash at bank and an invoice discounting facility. The objective is to ensure that there is a continuity of funding, that cash levels are sufficient to meet the ongoing needs of the business, and that there is flexibility to deal with unforeseen events. The policy is to smooth cash management and to arrange funding ahead of requirements, should it be needed.
Credit risk The objective is to reduce the risk of loss arising from default by customers. The policy is to ensure customer debt and credit ratings are routinely monitored, as well as the use of a credit insurance policy. Interest risk The objective is to limit the company's exposure to interest rate fluctuations. At present, the company only has secured bank borrowings in the form of an invoice discounting facility and maintains a policy of interest rate management.
There have been no significant events affecting the Company since the year end.
The auditors, Hurst Accountants Limited, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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Kinetic Recruitment Services Limited
Independent auditors' report to the members of Kinetic Recruitment Services Limited
We have audited the financial statements of Kinetic Recruitment Services Limited (the 'Company') for the year ended 31 March 2023, which comprise the Statement of comprehensive income, the Balance sheet, the Statement of changes in equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' report thereon. The directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
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Kinetic Recruitment Services Limited
Independent auditors' report to the members of Kinetic Recruitment Services Limited (continued)
In our opinion, based on the work undertaken in the course of the audit:
∙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; and
∙the Strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report or the Directors' report.
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Kinetic Recruitment Services Limited
Independent auditors' report to the members of Kinetic Recruitment Services Limited (continued)
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Identifying and assessing potential risks related to irregularities In identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered the following: • The nature of the industry and sector in which the company operates; the control environment and business performance including key drivers for directors' remuneration, bonus levels and performance targets. • The outcome of enquiries of local management and parent company management, including whether management was aware of any instances of non-compliance with laws and regulations, and whether management had knowledge of any actual, suspected, or alleged fraud. • Supporting documentation relating to the Company's policies and procedures for: - Identifying, evaluating, and complying with laws and regulations - Detecting and responding to the risks of fraud • The internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations. • The outcome of discussions amongst the engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud. • The legal and regulatory framework in which the Company operates, particularly those laws and regulations which have a direct effect on the financial statements, such as the Companies Act 2006, pensions and tax legislation, or which had a fundamental effect on the operations of the Company, including application of the Employment Agencies Act 1973, Agency Workers Regulations 2010, Working Time Regulations 1998, Conduct of Employment Agencies and Regulations 2003, General Data Protection Requirements, and Anti-bribery and Corruption. Audit response to risks identified Our procedures to respond to the risks identified included the following: • Reviewing the financial statements disclosures and testing to supporting documentation to assess compliance with the provisions of those relevant laws and regulations which have a direct effect on the financial statements. • Discussions with management, including consideration of known or suspected instances of non-compliance with laws and regulations and fraud. • Evaluation of management’s controls designed to prevent and detect irregularities. • Enquiring of management about any actual and potential litigation and claims. • Performing analytical procedures to identify any unusual or unexpected relationships which may indicate risks of material misstatement due to fraud. We have also considered the risk of fraud through management override of controls by: • Testing the appropriateness of journal entries and other adjustments. We have used data analytics software to identify accounting transactions which may pose a heightened risk of material misstatement, whether due to fraud or error. • Challenging assumptions made by management in their significant accounting estimates, and assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and
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Kinetic Recruitment Services Limited
Independent auditors' report to the members of Kinetic Recruitment Services Limited (continued)
• Evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit. There are inherent limitations in the audit procedures described above, and the further removed non-compliance with laws and regulations are from the events and transactions reflected in the financial statements, the less likely we would become aware of them. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' report.
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 Auditors' 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.
for and on behalf of
Chartered Accountants and Statutory Auditors
Lancashire Gate
21 Tiviot Dale
SK1 1TD
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Kinetic Recruitment Services Limited
Statement of Comprehensive Income
For the Year Ended 31 March 2023
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Kinetic Recruitment Services Limited
Registered number: 01628477
Balance Sheet
As at
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 12 to 24 form part of these financial statements.
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Kinetic Recruitment Services Limited
Statement of Changes in Equity
For the Year Ended 31 March 2023
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Kinetic Recruitment Services Limited
Notes to the Financial Statements
For the Year Ended 31 March 2023
Kinetic Recruitment Services Limited is a private company limited by members capital and incorporated in England and Wales, registered number 01628477. The address of the registered office and principal place of business is Lancastrian Office Centre, Talbot Road, Stretford, Manchester, M32 0FP. The nature of the company's operation and principal activity is human resource management services.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙the requirements of Section 7 Statement of Cash Flows;
∙the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
∙the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of Kinetic Plc as at 31 March 2023 and these financial statements may be obtained from Companies House.
The financial statements have been prepared on a going concern basis. The following paragraphs set out the basis of which the directors have reached their conclusion.
Whilst the economic impact within the manufacturing and engineering recruitment markets has been significant, the company is well capitalised with a diversified business model to withstand the current and future climate. The company currently meets its working capital requirements through their cash and bank funding. Based on the company's forecasts and projections, the directors believe they have sufficient facilities to trade through the next 12 months. Therefore, the directors believe it is appropriate to prepare the accounts to 31 March 2023 on a going concern basis and that there will be no adverse effect on solvency for more than 12 months after the date of approval of the financial statements.
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Kinetic Recruitment Services Limited
Notes to the Financial Statements
For the Year Ended 31 March 2023
2.Accounting policies (continued)
The company operates a defined contribution pension scheme and the pension charge represents the amounts payable by the company to the fund in respect of that year.
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Kinetic Recruitment Services Limited
Notes to the Financial Statements
For the Year Ended 31 March 2023
2.Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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Kinetic Recruitment Services Limited
Notes to the Financial Statements
For the Year Ended 31 March 2023
2.Accounting policies (continued)
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Kinetic Recruitment Services Limited
Notes to the Financial Statements
For the Year Ended 31 March 2023
2.Accounting policies (continued)
Recoverable value of trade debtors The company has recognised trade debtors with a carrying value of £3,428,286 (2022: £3,380,043). The recoverability of trade debtors is regularly reviewed in the light of the available economic information specific to each debtor and specific provisions are recognised for balances considered to be at risk or irrecoverable. Tangible fixed assets The management of the company exercises judgement in estimating the useful economic life of fixtures & fittings and computer equipment. At the year end tangible fixed assets have a net book value of £156,803 (2022: £192,235). Accruals and provision Accruals and provisions are entered in the financial statements based on management expectations, taking into account various business and economic factors relevant to each individual item.
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Kinetic Recruitment Services Limited
Notes to the Financial Statements
For the Year Ended 31 March 2023
Page 17
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Kinetic Recruitment Services Limited
Notes to the Financial Statements
For the Year Ended 31 March 2023
Page 18
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Kinetic Recruitment Services Limited
Notes to the Financial Statements
For the Year Ended 31 March 2023
The main rate of corporation tax increased to 25% in the tax year commencing 1 April 2023 for companies where profits exceed £250,000. A tapered rate was introduced for profits above £50,000 up to the £250,000 limit.
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Kinetic Recruitment Services Limited
Notes to the Financial Statements
For the Year Ended 31 March 2023
Page 20
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Kinetic Recruitment Services Limited
Notes to the Financial Statements
For the Year Ended 31 March 2023
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Kinetic Recruitment Services Limited
Notes to the Financial Statements
For the Year Ended 31 March 2023
Page 22
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Kinetic Recruitment Services Limited
Notes to the Financial Statements
For the Year Ended 31 March 2023
Profit & loss account
The profit and loss account includes all current and prior period retained profits and losses.
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Kinetic Recruitment Services Limited
Notes to the Financial Statements
For the Year Ended 31 March 2023
The Company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £62,800 (2022: £55,723). Contributions totalling £32,057 (2022: £31,053) were payable to the fund at the balance sheet date.
The company is exempt from the obligation to prepare and deliver group accounts. The company is a subsidiary undertaking of Kinetic Plc which is the ultimate parent company, incorporated in England and Wales, registered number 06545585. The company is under the ultimate control of the Kinetic Employee Ownership Trust by virtue of its 94.91% interest in the voting share capital of Kinetic Plc.
The largest group in which the results of the company are consolidated is that headed by Kinetic Plc. The consolidated financial statements of this group are available to the public and may be obtained from the Registrar of Companies, Companies House, Crown Way, Maindy, Cardiff, CF4 3UZ. No other group accounts include the results of the company.
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Kinetic Recruitment Services Limited
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