REVIEW OF BUSINESS
Financial performance
Gross profit was £8,227k (2022 - £7,752k) and profit before taxation was £3,923k (2022 - £2,814k). Gross Margin reflects the growth in the average number of contractors and a minor decrease in the average margin per contractor as the company looks to remain competitive in this market.
The company continues to invest in operations, IT and its sales team for future growth which is reflected in the minor reduction in EBITDA from the previous year.
The company’s key financial and other performance indicators during the year are as follows:
| 2023 £ | 2022 £ |
Turnover | 783,192,075 | 689,549,257 |
Profit Before Taxation | 3,923,271 | 2,813,713 |
EBITDA* | 2,615,540 | 2,740,077 |
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Average number of workers on assignment | 8,201 | 7,920 |
*Earnings before Interest, Taxation, Depreciation and Amortisation |
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Service level and performance were achieved at the standard set at the start of the year. There was no significant deviation from either process or service that would have a material impact on the business operation in general.
We continue to focus on quality led technology, processes, and support services to fulfil our strategy across the Giant group of companies to provide complimentary compliance driven global workforce solutions via our cloud- based end to end proprietary software and managed services. Through continuous innovation of services, knowledge of clients and the market, Giant continues to offer a straightforward and compliant service to all our clients.
Our rigorous international security standard ISO 27001 assures that sensitive data is secure and GDPR- compliant, providing protection from financial and reputational risk. We also adhere to ISO 9001 – international quality standard and ISO 14001 – environmental management. Compliance audit was last completed in December 2022.
Margin and contractor employees remain our main KPI’s for the business together with the monitoring of cash balances and trade debtors’ management. The company continues to focus on engaging with a wider number of agencies and gaining more contracts this year in line with previous successes.
Worker tenure and pay rates positively contributed to improved revenues and margins for the year. Margin management and overhead cost control continue to be the main themes for the success of the business as well as the focus on customer service and technology.
Investment in our business
We continue to invest in our business in line with changes in tax and employment legislation, client requirements and continual improvement of our information technology capability. In addition, we remain focused on quality processes and training for our people to enable excellent customer service. Moreover, our recent investments in the IT systems have enabled us to introduce seamless operations in areas such as worker onboarding which has reduced potential operational issues.
Investment in our communities
Our company remains committed to supporting our communities where we can either via our key customers or suppliers or from our contacts within the local business community.
The year ahead
Our strategy across the Giant group of companies continues to be providing a mix of software and services to help companies manage their workforce. There have been calls for the umbrella business to be regulated, which we would welcome as a way of driving improved compliance across the industry. We continue to consider additional revenue streams which are offered to both our existing and future customers.
Management attention is given to the cash flow forecast on a weekly basis. The Board have considered these forecasts and are satisfied that the cash flow forecast for the period of 12 months from the date of signing the financial statements show that the Company can meet its liabilities as they fall due.
Diversity
The company continues to attract and employ regardless of ethnic, religious, culture or gender background. This is reflected in all levels of management and teams across the company.
Principal Risks and Uncertainties
Our regular meetings at various management levels across the business continue to operate an effective corporate governance system to identify and evaluate the key business risks against the strategic objectives in place.
Our market sectors, competitors, partnerships, and the impact of political decisions may have an effect on our trading activity and therefore primary sources for risk assessments.
Regulatory risk
The company operates within a specialised industry that is subject to regulatory and legislative changes. Any alterations in employment law have a direct impact on the company, making it critical for us to stay updated on new developments in this area. The company maintains continuous contact with various professional advisors to ensure a thorough awareness of all current legal trends. Due to the possible introduction of legislation that may regulate the Umbrella industry in the future, compliance will remain a key priority for the company in the fast-growing and highly specialised agency and contractor segment.
Price risk
Within a highly competitive industry, price risk remains a focus. As a result, the company is continually engaged in understanding the competitive landscape by studying existing market offerings, and assessing various pricing strategies.
Cash flow and Liquidity risk
The company finances its operations through a mixture of retained profits and cash balances. It operates a treasury function appropriate for the size and complexity of its business, which is responsible for managing the regulatory, liquidity and credit risks. Unplanned interest rate increases in the financial year have presented good short term cash deposit opportunities that are reflected in our reported interest receivable income in the financial year.
Credit risk
The company proactively manages its credit risks to ensure the stability of its financial position and protect against potential disruptions to cash flows. The company diligently assesses the creditworthiness of both new and existing customers by evaluating their credit scores, payment history, and any other relevant external factors. Furthermore, the risk of delayed or non-payments persists due to unfavorable economic conditions or challenges in the industry. As a result, appropriate credit limits are established at the outset of any new customer relationship, and credits provided outside of standard terms are only extended when a relevant credit insurance plan is in place.
Foreign currency risk
The exchange risk for the company is relatively low, as it primarily trades in pounds sterling.
Data Protection and Cybersecurity risk
We have implemented extensive security controls within our information infrastructure and conduct comprehensive training to familiarise our employees with the latest GDPR requirements, specific risks, scenarios, and the preventive/corrective actions to be undertaken. Keeping up with strong, scalable functional frameworks is significant in an exceptionally transactional business. The company takes the issue of network protection very seriously due to which we have undertaken extensive penetration testing of frameworks, fortified information back-up processes and also invested in new hardware and firewall infrastructures.
Corporate social responsibility
The Company holds ISO 14001 certification demonstrating its commitment to reducing its impact on the environment and providing assurance to management and employees as well as external stakeholders that its environmental impact is being measured and improved.
Charitable Donations
The Company has continued with "giant giving" - its charitable initiative. The primary chosen charity is the Great Ormond Street Hospital (GOSH) who the Company has entered into a corporate partnership with and is committed to raising both donations and awareness of the hospital. This is achieved by the company and its employees actively contributing to the fundraising efforts and taking part in activities, such as charity walks or hikes.
Non-Financial And Sustainability Information Statement
Governance
Board Oversight
The Group Executive Board is currently composed of the CEO, COO, CFO and CTO with inputs from CEOs of Screening Limited and Finance+ plc together with the MD for Strategic Accounts and Global.
While majority of our headquarter staff operate from home, leading to reduced energy consumption and a lower climate risk, Giant Group recognizes climate change as an important consideration. At present, however, climate change does not form one of the important agendas in board meeting but going forward, the Board plans to integrate discussions on the company's climate strategy into future board meetings, emphasizing corporate social responsibilities, climate-related risks, sustainability, and HSSE concerns.
The board intends to set an overall risk-based culture that will be adopted throughout the Group with conscious efforts being made to ensure the climate-related risks and opportunities are integrated well into the organisation's overall risk management processes.
As a board, we are clear and regularly discuss key risks for the business and what can be done to reduce any inherent risk.
These include: -
Need for travel and use of offices.
Supplier appetite and policies.
Equipment selection (climate as well as suitability)
Expectations of our clients with regards to compliance and commitments.
The Board is responsible for ensuring that the company's disclosures align with Climate-related Financial Disclosure Regulation 2022. This includes overseeing the process of identifying and assessing climate-related risks and opportunities and disclosing relevant information to stakeholders.
At present, the Company has not established a dedicated body tasked with overseeing management of the climate related risks as Energy consumption across the group is fewer than 40,000 kwH per annum and the overall potential climate-related risk is assessed as low. In future, the Board may structure a dedicated Committee or designate responsibility to an existing Committee for overseeing climate-related disclosures and report on the embedding of sustainability across the group. The Committee will keep the Board and management team aware of the climate-related risks and opportunities which would serve as one of the key considerations when developing strategy, performance, and budgets.
Management's Role
Senior management is responsible for assessing and managing climate-related risks and opportunities in accordance with risk strategy as set by the Board. They will ensure that appropriate measures are employed to understand, identify, monitor, control, and report risk in accordance with the risk parameter as set by the Board. This responsibility is integrated into the strategic planning process.
Risk Management
We have assessed that currently the Group is not exposed to significant climate-related risk or opportunities. However, we recognise that this is a developing area whereby situations can evolve rapidly, and we therefore plan to develop an independent climate risk register. The goal of formulating a separate risk register will be to identify climate-based threats that may affect financial results, operation viability, reputation, and delivery of key strategic objectives, and to assess their significance and recommend appropriate remedial measures. Not only will the risk register include immediate risks, but also emerging risks, which may arise from future technological development, legislation, and socio-cultural change. This will enable both the board and senior management to remain prepared and focused. The intended target date set for finalising the risk register is May 24.
As part of our future risk management efforts, constant oversight will also be maintained by monitoring possible greenhouse gas emission, although minimal, produced by various operation of the group (such as supply chains and use of IT-based resources) and taking necessary corrective measures to reduce them to acceptable level.
Strategy
Owing to low energy consumption across the group due to majority of staff members working from home and no obligatory requirement of the group to submit Carbon reporting, the level of risk arising from climate change is assessed as relatively low and therefore, not identified as principal risk.
Key reference with regards to our current strategy in place is our Quality and Environmental Policy which is in place as part of our ISO 14001 certification. As a result, our operations are almost entirely paperless, and we continuously reinforce efficient usage of resources by minimizing waste, recycling, and adopting other environment friendly measures. We also put a strong focus on upgrading of IT equipment and identification of energy efficiency initiatives across the workplace.
Giant have established this policy to be consistent with the purpose and context of our organisation. It supports our intention to satisfy customers’ regulatory and legislative requirements as well as our commitment to continually improve our management systems. This document is a framework of overarching Quality and Environmental objectives against which all business functions and levels will identify objectives where appropriate to ensure that the Quality and Environmental Policy is supported.
As we develop our full list of risks, we will ensure that these are assessed in terms of likelihood and impact, as well as the mitigation strategies to be implemented. The above mentioned risk register will be reviewed at least once on annual basis for completeness, consistency and relevance.
Metrics and Targets
Due to the nature of our business being purely service-oriented, and the fact that a significant portion of our headquarters employees now operate from home after vacating our main office during the current fiscal year on May 23, the Group has consumed less than 40,000 kWh of energy, and the same operating strategy is intended to be maintained for the foreseeable future. As a result, the board believes that the climate-based risk will stay relatively low and will not be included in the principal risks, hence no specific key metrics and targets have been established.
Giant group currently commits to and has simple metrics in place that we expect to develop in the next year:
High number of employees working from home (reduced travel and office costs)
IT selection process considering climate / environmental factors (efficiency factors becoming a growing influence)
Reports from suppliers on energy consumption (data centre) and plan to reduce
We will look to track all key metrics such as carbon emissions, energy consumption, etc. where relevant and available by May 2024 and report to senior management.
This section of the Strategic Report outlines how the directors have considered the matters stated in Section 172(1) of the Companies Act 2006 ('s172') while fulfilling their duty to promote the success of the company for the benefit of its shareholders. The Board acknowledges its obligations to enhance the firm's performance for the benefit of its members and all other stakeholders, who play a crucial role in the ongoing success of the company. The board ensures fair and equitable treatment of all stakeholders to ensure sustained business success. Regarding the matters outlined in Section 172 of the Act, the directors believe they have acted in good faith to advance the group's success on behalf of the stakeholders. We consider our employees, clients, suppliers, and regulatory bodies as the main stakeholders and the engagements we have with them are outlined below:
Employee interest
In discharging our duties as directors of Giant Group, we acknowledge and consider the importance of our employees as an integral factor in the long-term growth and success of the company. Hence, we are devoted to making sure that the company succeeds in the long run, benefiting everyone, including our employees.
In making decisions that may affect the interests of employees, we place special importance on their working conditions, diversity and inclusion, and opportunities for professional development. We recognise that a motivated and skilled workforce is essential for the company's long-term growth and success.
We are also committed to engaging with employees through various channels, including internal newsletters, notice boards, the intranet, and surveys. These communication methods will ensure that their perspectives and concerns are considered when making strategic decisions that may affect them. Additionally, our commitment extends to corporate training programs, health and safety initiatives, and biannual appraisals. These measures aim to enhance employee well-being, skill development, and overall job satisfaction.
This collaborative approach reflects our commitment to maintaining a positive and inclusive working environment.
Clients
As directors of Giant Group, we acknowledge that our clients are our most valuable assets, standing as one of the prime pillars towards our growth and the primary driving force behind our ability to innovate.
We are deeply committed to prioritising the interests and satisfaction of our clients in every decision and action we undertake. Our commitment to client interests encompasses the following:
Competitive Product Offerings: We strive to provide competitive and innovative products/services that meet or exceed the expectations of our clients
Customer Relations: We recognise the importance of maintaining strong relationships with our clients. We do this by maintaining open lines of communication, addressing concerns promptly, and actively seeking feedback to enhance our services.
Access to Service and Support Staff: We are committed to providing accessible and responsive service and support staff, ensuring that our clients have a reliable and efficient channel for assistance and guidance.
Information and Transparency: We are committed to maintaining a high level of transparency in our interactions with clients, providing accurate and timely information where necessary.
Client feedback is also essential to our commitment towards continuous improvement. We actively seek and value the insights of our clients.
By upholding these principles, we aim to align our services with client expectations, fostering a climate of trust and mutual success.
Suppliers
We place a high value on maintaining positive relations with our suppliers, recognising their indispensable role in our service delivery.
Our commitment to these relationships is reflected in the following principles:
Fair Payment Practices: We are committed to ensuring that our suppliers are paid fairly and promptly for their goods and services, following the best payment practices as prevailing in the industry.
Transparent Communication: We prioritise clear and open communication with our suppliers to foster collaboration and understanding of expectations.
Fair Payment Terms: We promise to maintain fair payment terms in line with industry standards, aiming for mutually beneficial and positive relationships with our suppliers.
By following these principles, our goal is to build a mutually beneficial partnership that supports the success of both parties.
Regulators
As directors of Giant Group, we are dedicated to maintaining positive connections with regulators, acknowledging their vital role in maintaining necessary oversight so that our business runs in a compliant manner. Our efforts extend to our commitment to FCSA accreditation, further exemplifying our commitment to industry best practices.
Our dedication to transparency, adherence to regulations, and cooperative efforts encompasses the following actions:
Meetings, Calls, and Correspondence: We ensure to actively engage in open and constructive communication through meetings, calls, and correspondence with regulators. This commitment ensures a continuous exchange of information and provides them with a clear understanding of our business activities.
Site Visits: We welcome and facilitate site visits from regulatory authorities. This commitment allows regulators to gain firsthand insights into our operations, promoting transparency and providing an opportunity for building mutual understanding.
Responding to Consultations and Calls for Evidence: We participate in consultations and respond to calls for evidence initiated by regulatory bodies.
By following FCSA accreditation standards, we show regulators our commitment to working together, being transparent, and actively participating and following industry benchmarks. This thorough approach builds trust and understanding, making Giant Group a strong supporter of responsible, compliant, and ethical business practices in the eyes of regulators and the wider industry community.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 May 2023.
The results for the year are set out on page 15.
Ordinary dividends were paid amounting to £4,000,000 The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.
There is a minimum level of exchange risk for the company as trading is predominately in pounds sterling.
Disabled Persons
Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the company continues and that the appropriate training is arranged. It is the policy of the company that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.
The company's policy is to consult directly with employees, at meetings and through bulletins or reports on matters likely to affect employees' interests.
EMPLOYMENT AND EMPLOYEE ENGAGEMENT
Our people and their welfare
Being a privately owned and managed business, we ensure that the right people, principles and culture remain key to our success. We provide a helpline (Employee Assistance Program) for any additional support that may be required but find our "open door" policy together with being straightforward and clear in our communication the best process.
Employee voice and communication
Employees are informed about matters that are important to them through information bulletins and reports that seek to raise, where appropriate, everyone's awareness of the financial and economic factors affecting the group's performance.
The business has invested in a training session for professional development that has significantly increased employee satisfaction and personal development.
Saffery LLP have expressed their willingness to continue in office.
Published by the Financial Reporting Council (FRC) in December 2018, the Wates Corporate Governance Principles for large private companies has been applied by Giant Professional Limited for the period ending 31st May, 2023. The company has also applied the Wates principles as an appropriate framework when making disclosure regarding corporate governance arrangements. The company has applied these principles through:
Purpose and leadership
Through continuous innovation of services, knowledge of clients and the market. The company vision is to offer a straightforward compliant service to all clients and provide continuous development opportunities to our employees. The fundamental approach to making effective decisions remains the need to consider the interests of the company employees together with the business relationships of our customers and suppliers.
Business Relationships
The Directors and Operational Board regularly review how the Group maintains positive relationships with all its stakeholders including suppliers, customers, and others. We ensure that our payment terms with all suppliers are fair and in compliance with normal practices. The Group has established a strong reputation for customer service and active engagement with our partners.
Remuneration
The company adopts clear remuneration structures that are aligned with the company's purpose, values and culture. Our policies include robust consideration of the reputational and behavioural risks to the company that can result from inappropriate incentives and excessive rewards.
Culture
The values of the company's employees serve as the culture's guiding principles, and are used by the Board, acting as a guiding framework for decision making. Good governance and effective communication are essential to ensuring business decisions and conduct are of a high standard. This assists with the delivery of our purpose, whilst at the same time protecting the company's reputation.
Training
There remains continuous training and development plans to ensure that director awareness of standards, policies and company strategy are understood.
Staff
Working from home continues to be the business and its employees preferred option. Individuals have the flexibility to work from the office where there is a business or personal need. There are regular one-to-ones to set clear goals and regular company-wide management briefings. Our wellness sessions for all employees with an external provider continued throughout the year and are still ongoing.
Opportunity and risk
As noted in our strategic report, our matrix of meetings at various management levels across the business continue to operate and be effective for decision making and evaluate key business risks. All risks are assessed against the strategic objectives in place. Our rigorous international security standard ISO 27001 assures that sensitive data is secure and GDPR-compliant, providing protection from financial and reputational risk. We also adhere to ISO 9001 - international quality standard and ISO 14001 - environmental management. Compliance audit was last completed in December 2022.
Stakeholder relationships
Giant Professional Limited is a wholly owned subsidiary of Giant Group Plc. Both directors of the company are also directors of Giant Group Plc and members of the board.
STREAMLINED ENERGY AND CARBON REPORT (SECR) 2020/21
The Company is committed to achieving net zero carbon emissions by 2050, in line with the UK Government's overall target. The Company will deliver this by building on our track record of innovation. underpinned by our model of self-delivery.
Energy consumption
The reporting boundary is the financial year 2022/23 and covers the operations of the Company. The majority of our headquarter staff members continued to work from home which resulted in less energy being consumed at our London office which we vacated in May 2023. Based on our best estimate, the Company consumed less than 40,000 kWH of energy. Due to low power consumption below the 40,000 kWH threshold, the group qualifies as a low energy user as defined within SECR reporting guidelines and therefore the SECR disclosures are not required.
This comprises of the Group Chief Technical Officer and the Group Chief Financial Officer who are also directors of the company. In addition, both the Group CEO and Group Chief Operating Officer sit on the board as well as there being representation from Directors from associated companies.
The Company holds Board meetings throughout the year and is supported by management and various departmental divisions providing timely and detailed information in support of the Board's decision making. The Board operates an agenda of items appropriate to the size and complexity of the business
We have audited the financial statements of Giant Group PLC (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 May 2023 which comprise the group profit and loss account, 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).
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 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 group or the 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 directors 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 directors are responsible for the other information. 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 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 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 directors' 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 directors' responsibilities statement, as set out on page 11, the directors are 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 directors determine 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 directors are 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 directors either intend to liquidate the parent company or to cease operations, or have 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.
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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud is detailed below.
We assessed the susceptibility of the group and parent company’s financial statements to material misstatement and how fraud might occur, including through discussions with the directors, discussions within our audit team planning meeting, updating our record of internal controls and ensuring these controls operated as intended. We evaluated possible incentives and opportunities for fraudulent manipulation of the financial statements. We identified laws and regulations that are of significance in the context of the group and parent company by discussions with directors and by updating our understanding of the sector in which the group and parent company operate.
Laws and regulations of direct significance in the context of the group and parent company include The Companies Act 2006, and UK Tax legislation.
Audit response to risks identified:
We considered the extent of compliance with these laws and regulations as part of our audit procedures on the related financial statement items including a review of group and parent company financial statement disclosures. We reviewed the parent company’s records of breaches of laws and regulations, minutes of meetings and correspondence with relevant authorities to identify potential material misstatements arising. We discussed the parent company’s policies and procedures for compliance with laws and regulations with members of management responsible for compliance.
During the planning meeting with the audit team, the engagement partner drew attention to the key areas which might involve non-compliance with laws and regulations or fraud. We enquired of management whether they were aware of any instances of non-compliance with laws and regulations or knowledge of any actual, suspected or alleged fraud. We addressed the risk of fraud through management override of controls by testing the appropriateness of journal entries and identifying any significant transactions that were unusual or outside the normal course of business. We assessed whether judgements made in making accounting estimates gave rise to a possible indication of management bias. At the completion stage of the audit, the engagement partner’s review included ensuring that the team had approached their work with appropriate professional scepticism and thus the capacity to identify non-compliance with laws and regulations and fraud.
There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. 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 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 £3,999,970 (2022: £1,497,645 profit).
Giant Group PLC (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Fourth Floor, 90 High Holborn, London, United Kingdom, WC1V 6LJ.
The group consists of Giant Group PLC and all of its subsidiaries.
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 £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The consolidated group financial statements consist of the financial statements of the parent company Giant Group PLC together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 May 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.
Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.
If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.
Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.
At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
There are two types of workers in Giant Professional in terms of their payroll processing frequency i.e., weekly and monthly.
Revenue is recognised for both types of workers based on system generated reports. For weekly workers, the system generated report is based on tax weeks while for monthly workers the report is generated based on the tax month (i.e. the period ending on the 5th of each month).
Invoices are raised automatically on submission of timesheets by workers. Amounts are initially debited to a debtors control account and credited to deferred income.
Revenue is then recognised based on worker type as mentioned below:
Weekly workers – revenue is recognised based on the workers who are sent to payroll during a tax week. Revenue is recognised based on system generated reports for all tax weeks that commence within the accounting period (1 June to 31 May).
Monthly workers – revenue is recognised for the tax months falling within the accounting period. The accounting period ends on 31 May whereas tax month ends on 5 June, so revenue is recognised based on system generated reports in respect of services carried out by workers that are sent to payroll up to 5 June and revenue is released from deferred income based on these reports. At year end, an amount relating to accrued income is recorded for workers who are sent to payroll after the year end but prior to 5 June.
This methodology for recording revenue is considered to be appropriate by the directors as it would not be practical to apply a cut-off for revenue and the associated cost of those workers as at 31 May.
Prior year adjustments
Prior year balances for accrued income and deferred income have been grossed up by £2,178,931, in order to be consistent with the current year treatment. There is no impact on profit or net assets of this adjustment.
Other operating income
Other operating income includes a range of management cross charges to other associated groups and companies and where appropriate receipts which are held as credit balances. These balances may be credited in the group income statement / group statement of comprehensive income after a period of six years, if the reasonable efforts to allocate have been unsuccessful.
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.
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
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.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.
Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.
In the parent company financial statements, investments in associates are accounted for at cost less impairment.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible 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.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
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.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, 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.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest 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.
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. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
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. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates 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. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
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 directors are 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 following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
The company gives its workers a choice of accrued or rolled up holiday pay. The number choosing accrued holiday is very low. Workers with accrued holidays are given regular reminders to take their holiday.
A provision is made for bad and doubtful debts, where management believes there is an issue in the recoverability of trade and other debtors. In the current year, management believe all balances to be recoverable and hence no provision is included within the financial statements.
Within this financial year we have accounted for a release of furlough payment provisions and a credit from HMRC, stemming from historic reconciliations in relation to PAYE. These are categorised as exceptional due to its non-recurring and non-operational nature.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
Investment income includes the following:
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:
In 2021 an increase in the corporation tax rate to 25% with effect from 1 April 2023 was substantively enacted. The 20% rate used above reflects 2 months of this new rate and 10 months of the previous rate of 19%.
The impairment losses in respect of financial assets are recognised in other gains and losses in the profit and loss account.
Details of the company's subsidiaries at 31 May 2023 are as follows:
In line with the accounting policy, prior year balances for accrued income and deferred income have been grossed up by £2,178,931. There is no impact on profit or net assets of this adjustment
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The deferred tax asset set out above is expected to reverse within 12 months and relates to fixed asset timing differences and short term timing differences.
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.
This represents cumulative profits or losses net of distributions to owners and other adjustments.
This reserve records the nominal value of shares repurchased by the company.
The remuneration of key management personnel is as follows.
During the year the group entered into the following transactions with related parties:
The following amounts were outstanding at the reporting end date: