The director presents the strategic report for the year ended 31 December 2024.

Business environment:

The Group delivered a positive performance in 2024 in what continues to be a very challenging environment for recruitment. Ongoing global uncertainty and instability means that many clients remain cautious about long term hiring commitments and as a result, job vacancies declined across many sectors in 2024, particularly permanent placements. Candidates have also been hesitant to move in the current climate which means it has taken longer than normal to fill some roles.

Results and performance:

Against this difficult trading background, the Group has demonstrated resilience increasing turnover by 3.7% year on year, reflecting strong client demand and continued robust engagement with our client base. However there has been a significant change in the permanent/contract (service) mix which is reflected in the reduction of net financial income from 27% in 2023 to 19% in 2024. Although contractor net financial income grew by 1% in 2024, permanent placement net financial income fell by 38%, largely due to the reasons outlined above (which have affected the global recruitment market).

The Group’s disciplined forecasting processes enabled adjustments to be made to overheads in response to margin pressures and the change in the service mix, reflecting its ability to adapt to changing market conditions. As a result, sales staff costs have reduced to 63% of net financial income in 2024 and EBITDA has improved slightly to 2.09% this year. The Group’s headcount has reduced from 53 at the start of 2024 to 42 at the end of December.

Despite these sector wide challenges, the Group has continued to focus on delivering a highly personalised approach to every recruitment brief, understanding the needs of every client, maintaining overall client service quality, positive candidate experiences and operational efficiency.

The Group’s strong focus on cash management and liquidity ensured that the impact of reduced profitability and changes in the service mix was effectively managed, despite the challenging environment. A significant proportion of the Group’s debt was repaid in 2024 reducing the interest cost to the business to support profitability and cashflow moving into next year.

Strategy:

Going into 2025, the recruitment market remains subdued but the Group has always been adaptable and resilient in the face of change. We will continue to focus on areas where we can effectively create an impact delivering recruitment solutions for the benefit of all our stakeholders; our clients, contractors, employees, suppliers, shareholders and our local community.

We believe that our approach to recruitment is unique and for that reason, our future growth will continue to be driven organically and sustainably, recruiting and training in house to maintain the high levels of customer service and drive growth in new markets. We are well positioned to navigate the current challenges and to take advantage of new growth opportunities as they arise.

Key performance indicators

The group monitors progress across a range of financial targets. The main key performance indicators are:

*Total turnover less contractor invoices as a percentage of total turnover

** Earnings before interest, tax, depreciation, amortisation, exceptional items and unrealised gains or losses on foreign exchange contracts. This is considered a more representative approximation of the underlying trading profitability of the company.

*** Sales team costs include salary, fees, commission, pension bonus and employment related taxes

Principal risks and uncertainties

Our risk management processes provide assurance to all key stakeholders that we will achieve our performance and profitability objectives. While we do focus on managing and identifying risks, equal emphasis is placed on identifying opportunities as well.

Key customers

Our business model focuses on niche AI, Software and Hardware clients, many of whom are the market leaders in their field. The Group prides itself on providing a high level of customer service and quality processes to maintain excellent relationships with clients. Changes in the Group’s service mix during the year, with contractor net financial income increasing to 38% have resulted in the largest client accounting for more than 10% of net financial income. While this reflects the strength of the relationship and confidence placed in the Group’s service delivery, it also increases exposure to client concentration risk. The Board are aware of this and are actively seeking to further diversify the client base to reduce customer dependency going forward.

Interest rate risk

The Group is exposed to interest rate risk on its variable rate borrowings, being the invoice finance facility and some of the bank loans we have in place. Cash and borrowing is managed centrally to minimise interest expense and ensure that the Group has sufficient liquid resources to meet its operating needs, as well as minimising day to day borrowing requirements under the invoice finance facility. Although the interest rate on all the loans, except one, was at a premium to the market rate at the time, the rates are all fixed, which has reduced our risk to the interest rate hikes considerably. However, the continued volatility and significant increase in interest rates over the last couple of years means that effective debt collection to reduce unnecessary borrowing remains a high priority and key focus for the Group to manage this risk.

Foreign currency risk

The Group's principal foreign currency exposures arise from trading with overseas companies and branches. The risk has reduced over the last year as less than half of our turnover is now non-sterling (down from almost two thirds last year) and the bulk of that is derived from euros. Where possible, we reduce our foreign exchange exposure through the matching of receipts and payments in individual currencies. In the latter part of 2024, the Board took the opportunity to realise the existing gains in our forward contracts in order to crystallise the value in them and realign currency exposures with operational needs. The Group has secured further flexible forward contracts in 2025 to ensure that foreign currency exchange risk exposure continues to be well managed and controlled.

Credit risk

The Group has a strong history of managing its credit risk from trade debtors. The majority of customers are blue-chip, highly liquid, companies consistently achieving a high credit score. Trade debtors remain under constant review and we continue to perform our own due diligence when taking on any new clients. There has been no bad debt in 2024.

Technology risk

We are dependent on IT systems and externally supported software for most of our principal business processes. The failure of a key system through an internal or external threat (including a cyber-attack) could cause disruption to operations or result in a loss of revenue. We have a duty to ensure customer and employee data is only used within the legislative requirements of the Data Protection Act and for the purposes to which data subjects have consented. We have an external IT department responsible for the management of our technology and data security risk. System controls (many of which are built into the external software we use), disaster recovery and business continuity arrangements are in place to mitigate the risk of a critical system failure. Our external IT team deploy a wide range of preventative and detective controls to minimise the threat to our system from cyber-attacks. Ongoing investment in this and staff training will be maintained to mitigate the risks of this threat which continues to evolve.

Future developments

In terms of the plans for the future, European Recruitment intends to continue doing what it does best; providing clients with a high quality personalised service offering a range of recruitment solutions to meet their needs. We believe that this service provided by our team of niche technology experts is something that differentiates us from other companies in the market place, so we will continue to build and invest in the Group going forward. The tough trading conditions and market volatility we have experienced in 2023 and 2024 mean that 2025 will also be a challenging year. However the Group has always been resilient, flexible and adaptable and able to respond quickly to both challenges and opportunities in the industry and we will use these qualities to strengthen and invest in our existing stakeholder relationships as well as continuing to win new business.

On behalf of the board

The director presents his annual report and financial statements for the year ended 31 December 2024.

The principal activity of the company and group continued to be that of recruitment consultancy.

The results for the year are set out on page 9.

Ordinary dividends were paid amounting to £13,910 (2023: £192,821). The director does not recommend payment of a further dividend.

The director who held office during the year and up to the date of signature of the financial statements was as follows:

The auditor, Sumer Audit, is deemed to be reappointed under section 487(2) of the Companies Act 2006

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.

This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.

The director is responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the director is required to:

• select suitable accounting policies 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 group and company will continue in business.

The director is responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

We have audited the financial statements of European Recruitment Ltd (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2024 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including 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).

In our opinion the financial statements:

• give a true and fair view of the state of the group's and the parent company's affairs as at 31 December 2024 and of the group's profit for the year then ended;

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

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

Basis for opinion

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 Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’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.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the director's 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 group's and parent 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 director with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The director is 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.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

• the information given in the strategic report and the director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the director's report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the director's report.

We have nothing to report in respect of the following matters in relation to which 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.

As explained more fully in the director's responsibilities statement, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the director is responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the parent company or to cease operations, or has no realistic alternative but to do so.

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 auditor's 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.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures included the following:

• Obtaining an understanding of the legal and regulatory framework that the group operates in, focusing on those laws and regulations that had a direct effect on the financial statements and operations;

• Obtaining an understanding of the group’s policies and procedures on fraud risks, including knowledge of any actual, suspected or alleged fraud;

• Discussing among the engagement team how and where fraud might occur in the financial statements and any potential indicators of fraud through our knowledge and understanding of the group and company and our sector-specific experience.

As a result of these procedures, we considered the opportunities and incentives that may exist within the group for fraud. We are also required to perform specific procedures to respond to the risk of management override. As a result of performing the above, we identified the following areas as those most likely to have an impact on the financial statements: health & safety, employment law and compliance with the UK Companies Act.

In addition to the above, our procedures to respond to risks identified included the following:

• Making enquiries of management about any known or suspected instances of non-compliance with laws and regulations and fraud;

• Challenging assumptions and judgements made by management in their significant accounting estimates; and

• Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness.

Due to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). For instance, the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely the auditor is to become aware of it or to recognise the non-compliance.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our 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 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.

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £89,567 (2023 - £206,545 profit).

European Recruitment Ltd (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 39 Upper Gardner Street, Brighton, East Sussex, BN1 4AN.

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £1.

The financial statements have been prepared under the historical cost convention, modified to include certain financial instruments at fair value. The principal accounting policies adopted are set out below.

The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:

• Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;

• Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill.

The consolidated financial statements incorporate those of European Recruitment Limited and its subsidiaries (i.e. entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits).

All financial statements are made up to 31 December 2024. All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation.

At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. The directors have considered relevant information, including the company’s principal risks and uncertainties, the annual budget, forecast future cash flows and the impact of subsequent events in making their assessment. Based on these assessments and having regard to the resources available to the entity, the directors have concluded that there is no material uncertainty and that they can continue to adopt the going concern basis in preparing the annual report and financial statements.

Turnover comprises income from contract and permanent placements and is measured at the fair value of the consideration received or receivable. Contract placement turnover is recognised by the company as services are supplied on a month by month basis. Permanent placement turnover is recognised when candidates commence employment with the client after allowing for contractual cancellations for candidates that leave their placements shortly after commencing.

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.

In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

At each reporting period end 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 loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Basic financial liabilities, including creditors, bank loans and loans from fellow group companies, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability.

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

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 year.

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

The costs of short-term employee benefits are recognised as a liability and an expense.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.

When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.

Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

In the application of the group’s accounting policies, the director is required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

The average monthly number of persons (including directors) employed by the group and company during the year was:

Their aggregate remuneration comprised:

The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

Details of the company's subsidiaries at 31 December 2024 are as follows:

Bank loans are secured over all assets of the company.

Included within bank loans are secured factoring facilities. The debts on these facilities are secured against the receivable invoices. The interest is applied at rates between 5.37% and 14.46% and the loans are due to be fully repaid between April 2026 and May 2027.

The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:

The deferred tax liability set out above is expected to reverse within 12 months and relates to accelerated capital allowances that are expected to mature within the same period.

A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.

Of the 1,600 Ordinary B share options outstanding at the year end, 400 share options have conditions agreed.

For those where conditions are agreed the share options are exercisable where the option holder has remained in employment with the company to an agreed date.

After this condition has been met the option holder has until June 2032 to exercise the share options, if they do not do so they will lapse.

Included in the profit and loss reserves is £5,546 (2023: £2,840) of cumulative differences arising on the annual translation of companies subsidiaries to Sterling. These amounts relate to the group only and are non-distributable.

At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

During the year the group and company had the following transactions with related parties, all of whom are related parties by virtue of having either common directors or shareholders.

During the year the company made sales of £13,976 (2023: £35,002) to 55 Exec Search Limited. The amount was paid in full prior to the year end.

At the year end the company were owed £5,769 (2023: £5,769) by USA Recruitment Limited, the amounts are included within trade receivables and other debtors.