Documents

Strategic Report for the year ended 31 March 2019

The directors present the strategic report for the year ended 31 March 2019.

Fair review of the business

The activities of the group are delivered through a number of companies operated by 3173 Limited.

The group’s results for the year, as set out on page 14, show a profit after tax of £2,048,298 (FY18 £1,840,682). Turnover increased from £11,645,691 in FY18 to £14,975,667 in FY19 whilst profit after taxation rose from £1,840,682 to £2,084,298 over the same period.

The increase in turnover reflects continued new business success during FY19 for the group’s businesses, strong client retentionand a compelling pipeline of prospective clients continues into FY20. The group’s administrative costs increased from £9,395,232 in FY18 to £12,554,202 in FY19 and the profit margin declined from 15.8% to 13.9%. Increased headcount was required to deliver the increased turnover shown above – the average number of employees increased from 114 in FY18 to 142 in FY19. A significant proportion of the increase in administrative costs is associated with the increased wages and other costs associated with the increased headcount. There is always a lag in new staff reaching the expected levels of utilisation and the directors are satisfied that this explains in large part the fact that the increase in turnover did not result in a proportionate increase in profit. The directors expect, and the FY20 budget reflects, that profit margins are expected to return to 19% in FY20 to reflect the fact that staff recruited in FY19 become more fully utilised. It should be noted that there is a continued expectation of significant recruitment in FY20 to support increased revenues, but not at the scale seen in FY19.

The group’s ongoing growth allows us to continue to create and deliver opportunities to provide interesting, worthwhile and healthy careers for our staff at all levels. Consequently, we see great service for our clients and returns for our shareholders.