Final Results

RNS Number : 7165F

Prime People PLC

29 May 2013

 



29 May 2013

Prime People Plc

Results for the year ended 31 March 2013

Prime People Plc ("Prime People" or the "Group"), the global specialist recruitment business for professional and technical staff working in the Real Estate & Built Environment, Energy & Environmental, Insight & Analytics and Pharmaceutical sectors, today announces its results for the year ended 31 March 2013.

Highlights:

	Year ended 31 March 2013	Year ended 31 March 2012
Gross fee income Net fee income	£13.04m £7.60m	£12.65m £8.03m
Profit before tax	£0.78m	£0.95m
Profit after tax	£0.56m	£0.68m
Fully diluted earnings per share	4.67p	5.58p
Total dividend for the year	4.09p	4.09p

Peter Moore Managing Director of Prime People, said:

"We closed 2013 with profits slightly below last year but have maintained a strong cash position and propose a final dividend of 3.09p, making the year's dividend the same as 2012.

The results reflect our investment in our new Singapore office and the move of our London operations to new offices at Hanover Square after over 10 years in Dover Street.

We are cautiously positive about signs of an upturn in business and are well positioned to take advantage of these."

-Ends-

For further information please contact:

Prime People	020 7318 1785
Robert Macdonald, Executive Chairman
Chris Heayberd, Finance Director
Cenkos Securities	020 73978900
Elizabeth Bowman/Ivonne Cantu
Julian Morse (Sales/Broking)

Chairman's Statement & Operating Review

Introduction

The Group's activity is the delivery of permanent and temporary recruitment services. Historically the Group's focus has been to provide these services to the built environment sector through its main subsidiary Macdonald & Company. More recently the Group has broadened its focus to include provision of recruitment services for customer insight staff in the market research and data analysis sector, branded as Prime Insight, to the energy & environmental sector as Macdonald & Company and the pharmaceutical research sector as Prime Pharma.

Results

In 2013 gross revenue increased to £13.04m reflecting a small improvement in the level of temporary business (2012: £12.65m). 

Net fee income, which is, after profit, the most important measure of performance for the Group, decreased by 5.4% to £7.6m (2012: £8.03m), a consequence of some increased pressure on permanent fee margins in the UK and a small reduction in net fee income from our Asia businesses. 

The ratio of net fee income derived from permanent as against temporary placements is slightly reduced from 91:9 in 2012 to 90:10 in the year being reported.

The conversion rate of operating profit from net fee income decreased from 11.6% in 2012 to 10.3% in 2013.

Basic earnings per share decreased slightly to 4.70p (2012: 5.72p).

The Group maintained a strong net cash position with £2.3m as at 31 March 2013 (2012: £2.8m).

During the year the Group established an office in Singapore to further consolidate its presence in Asia. These results reflect costs associated with the opening of this new office.

Toward the end of the year the Group completed negotiations to surrender the lease of its London office, receiving a premium on the surrender. This has enabled a move to other prestigious Mayfair offices of the same size for equivalent occupancy costs. The results also reflect the financial effects of this transaction.

Cash & Dividends

As was the case last year the Company is holding a substantial cash balance. The Board continues to assess the most appropriate use of surplus cash generated by the Company. Historically this has focused on developing new business lines organically and more recently on a program of share buybacks. Possible acquisitions have been investigated every year but as yet, none have met the Company's stringent criteria, which include ensuring that scale of transaction should not have the potential to destabilise our continuing businesses and risks associated with acquisition should be minimal. The Board considers that the cash needed to complete the Group's current growth plans is more than adequate. Accordingly, subject to trading conditions, the Company expects to continue to return cash to shareholders via its annual dividends and by other means when and if appropriate.

The Board will be recommending a final dividend of 3.09p (2012: 2.25p) per share which combined with the interim dividend of 1.0p per share, will result in a total dividend of 4.09p (2012: 4.09p).

Share Buy Back

During the year 55,000 shares at a cost of £26,850 (2012: 248,234 shares at a cost of £167,809) were purchased through the Group's buyback programme and the Board will be seeking shareholder approval for the renewal of the authority to repurchase up to 10% of the Group's issued share capital at the Annual General Meeting on 25 June 2013.

Chairman's Statement & Operating Review (continued)

Strategy & Outlook

Since this time last year we have continued to advance our overseas strategy by seeking to extend our reach in Asia by organic growth. As referred to above, our Singapore office is now established and commenced business in April 2012. It is staffed by the Group's Managing Director together with, currently, four experienced fee earners, serving our property, insights and energy practices across South East Asia. Good progress has been made in the region with early indications of a pipeline of Real Estate work developing from Indonesia and Malaysia.

Our Middle East and Africa businesses show early signs of improved activity as we enter the new financial year and there is some evidence of a degree of confidence returning to our core Real Estate market.

Despite a small reduction in UK net fee income in 2013 we are cautiously positive about signs of an upturn in business as we are well positioned to take advantage of any improvement in demand for our services. We have reorganised a number of our teams in preparation for this upturn which we have started to see through improved performance in our temporary markets which in turn we expect to have a favourable impact on our permanent business in 2014. 

The economic uncertainties that recruitment businesses experience serve as a reminder that businesses need to retain a flexible approach. It is our intention to continue to invest appropriately in our established revenue lines and offices and when the opportunity arises to broaden the recruitment services that the Group offers within all its regions.   

The Group continues to enjoy strong client relationships and a committed staff ready to exploit regional opportunities and the upturn as it occurs.

Our people

Finally, I should like to thank our staff for their hard work and commitment over the last twelve months. 

Robert Macdonald

Executive Chairman

28 May 2013

Financial Review

Fee Income

Gross fee income for the year from continuing operations increased by 3.1% to £13.0m (2012: £12.65m).

Net fee income decreased by 5.4% to £7.6m (2012: £8.03m).

The Group considers net fee income to be a key indicator of the performance of the business. This is defined as the income generated from permanent placements together with the contribution earned from contract and temporary staff.

Profit Before Taxation

Profit before taxation decreased by 18.3% to £0.78m (2012: £0.95m)

Administration Costs

The Group recorded a 1.3% decline in administration costs (after adjusting for a gain on surrender of its property lease of £0.17m) to £7.0m (2012: £7.1m) primarily arising from the fall in headcount which on average for 2013 was 12% lower at 95 (2012: 108).

Taxation

The taxation charge is £0.22m on a profit on ordinary activities before taxation of £0.78m which gives an overall tax rate of 28.5% (2012: 28.3%). 

Earnings Per Share

Basic earnings per share decreased by 17.8% to 4.70p (2012: 5.72p).The diluted earnings per share decreased by 16.3% to 4.67p (2012: 5.58p).

Dividend

As outlined in the Chairman's statement & operating review, the Directors propose a final dividend of 3.09 pence which will, subject to shareholder approval at the Annual General Meeting, be paid on 28 June 2013 to shareholders who are on the register on 14 June 2013, making a total dividend paid to shareholders for the year of 4.09 pence per ordinary share.

Balance Sheet

The Group's net assets position at 31 March 2013 is slightly up on last year at £14.08m (2012: £13.89m)

Trade receivables are slightly up on last year at £1.9m (2012: £1.46m) with an increase in the credit period taken by customers at 58 days (2012: 47 days).

Cash Flow and Cash Position

Net cash inflow of £0.19m (2012: inflow of £0.78m) was generated from operating activities during the year, which after net taxation payments of £0.19m (2012: net payment of £0.34m), resulted in a net cash outflow from operating activities of £0.01m (2012: inflow of £0.44m).

The Group operates a centralised treasury function with a net cash position at 31 March 2013 of £2.26m, compared to a net cash position of £2.83m at 31 March 2012.

Chris Heayberd

Finance Director

28 May 2013

Condensed consolidated statement of comprehensive income

For the year ended 31 March 2013

			Year ended
	Note		31 March 2013	31 March 2012
			£'000	£'000
Revenue	2		13,038	12,652
Cost of sales			(5,443)	(4,626)
Net fee income	2		7,595	8,026
Administrative expenses			(6,832)	(7,096)
Operating profit	2		763	930
Finance income			20	21
Finance expense			-	(3)
Profit before taxation			783	948
Income tax expense	3		(223)	(268)
Profit for the year Other comprehensive loss Foreign currency exchange differences			560 19	680 (9)
Total comprehensive income for the year			579	671
Attributable to:
Equity shareholders of the parent			579	671
Earnings per share	5
Basic earnings per share			4.70p	5.72p
Diluted			4.67p	5.58p

The above results relate to continuing operations

Condensed consolidated statement of financial position

For the year ended 31 March 2013

		2013		2012
		£'000		£'000
Assets
Non - current assets
Goodwill		9,769		9,769
Property, plant and equipment		264		195
Deferred tax asset		28		2
		10,061		9,966
Current assets
Trade and other receivables		3,452		2,920
Cash at bank and in hand		2,282		2,831
		5,734		5,751
Total assets		15,795		15,717
Liabilities
Current liabilities
Financial liabilities		26		7
Trade and other payables		1,526		1,711
Current tax liabilities		160		105
		1,712		1,823
Total liabilities		1,712		1,823
Net assets		14,083		13,894

Capital and reserves attributable to the Company's equity holders
Called up share capital			1,207		1,207
Capital redemption reserve fund			9		9
Treasury shares			(191)		(169)
Share premium account			7,109		7,109
Merger reserve			173		173
Share option reserve			97		81
Currency translation reserve			423		404
Retained earnings			5,256		5,080
Total equity			14,083		13,894

Condensed consolidated Statement of Changes in Equity

For the year ended 31 March 2013

	Called up share capital	Capital Redemp- tion reserve	Treasury shares	Share premium account	Merger reserve	Share option reserve	Foreign currency trans- lation	Retained earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 April 2011	1,194	9	(39)	7,095	173	108	413	4,840	13,793
Total comprehensive income for the year	-	-	-	-	-	-	(9)	680	671
Issue of ordinary shares	13	-	-	14	-	-	-	-	27
Adjustment in respect of share schemes	-	-	-	-	-	(27)	-	47	20
Shares purchased for treasury	-	-	(130)	-	-	-	-	-	(130)
Dividend	-	-	-	-	-	-	-	(487)	(487)
At 31 March 2012	1,207	9	(169)	7,109	173	81	404	5,080	13,894
Total comprehensive income for the year	-	-	-	-	-	-	19	560	579
Adjustment  in respect of share schemes	-	-	-	-	-	16	-	3	19
Shares purchased for treasury	-	-	(22)	-	-	-	-	-	(22)
Dividend	-	-	-	-	-	-	-	(387)	(387)
At 31 March 2013	1,207	9	(191)	7,109	173	97	423	5,256	14,083

Condensed consolidated cash flow statement

For the year ended 31 March 2013

			Year ended
			31 March 2013	31 March 2012
	Note		£'000	£'000
Cash generated from underlying operations	6		186	775
Income tax paid			(195)	(340)
Income tax received			-	3
Net cash (used by)/from operating activities			(9)	438
Cash flows from investing activities
Interest received			20	21
Net purchase of property, plant and equipment			(189)	(60)
Net cash used in investing activities			(169)	(39)
Cash flows from financing activities
Capital element of hire purchase obligations			-	(25)
Issue of ordinary share capital			-	27
Treasury shares			(22)	(130)
Dividend paid to shareholders			(387)	(487)
Interest paid			-	(3)
Net cash used in financing activities			(409)	(618)
Net decrease in cash and cash equivalents			(587)	(219)
Cash and cash equivalents at beginning of the year			2,824	3,052
Exchange gain/(loss) on cash and cash equivalents			19	(9)
Cash and cash equivalents at the end of the year			2,256	2,824

Notes to the financial statements

For the year ended 31 March 2013

1     Basis of preparation

Basis of preparation

The consolidated financial statements of the Prime People plc have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union and also comply with IFRIC interpretations and the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention modified as necessary so at include any items at fair value, as required by accounting standards.

The financial information in this preliminary announcement which comprises the Condensed Consolidated Statement of Comprehensive Income, Condensed Consolidated Statement of Financial Position, Condensed Consolidated Statement of Changes In Equity, Consolidated Cash Flow Statement and related notes is derived from the full Group financial statements for the year ended 31 March 2013 and does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. Group statutory accounts for 31 March 2012 have been delivered to the Registrar of Companies and those for 31 March 2013 will be delivered following the Company's annual general meeting. The auditors have reported on each set of Group statutory accounts and their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498(2) or Section 498(3) of the Companies Act 2006.

2    Segmental analysis 

a)     Revenue and net fee income, by geographical region

		Revenue Year ended			Net fee income Year ended
		31 March 2013		31 March 2012		31 March 2013		31March 2012
		£'000		£'000		£'000		£'000
UK		10,345		9,965		4,902		5,339
Asia		1,746		1,801		1,746		1,801
Rest of World		947		886		947		886
		13,038		12,652		7,595		8,026

All revenues disclosed are derived from external customers and are for the provision of recruitment services.  The accounting policies of the reportable segments are the same as the Group's accounting policies. Segment profit before taxation represents the profit earned by each segment after allocations of central administration costs.

b)     Revenue and net fee income, by classification

	Revenue Year ended			Net fee income Year ended
	31 March 2013		31 March 2012		31 March 2013		31March 2012
	£'000		£'000		£'000		£'000
Permanent
-UK -Asia -Rest of World	4,146            1,746               947		4,763         1,801           886		4,140       1,746          947		4,609         1,801           886
Temporary (UK)	6,199		5,202		762		730
Total	13,038		12,652		7,595		8,026

c)     Profit before taxation by geographical region

	Year ended
	31 March 2013		31 March 2012
	£'000		£'000
UK	841		691
Asia	(102)		324
Rest of World	24		(85)
Operating Profit	763		930
Net finance income	20		18
Profit before taxation	783		948

Operating profit is the measure of profitability regularly reviewed by the Board, which collectively acts as the Chief Operating Decision Maker. Consequently no segmental analysis of interest or tax expenses are provided.

Included within operating profit are inter segment revenues/(charges) totalling £0.33m (2012 £0.465m) for the UK, £(0.19m) (2012 £(0.3m)) for Asia and £(0.14m) (2012 £(0.165m)) for the rest of the world.

 

d)     Segment assets and liabilities by geographical region

		Total non-current assets				Total liabilities
		31 March 2013		31March 2012		31 March 2013		31March 2012
		£'000		£'000		£'000		£'000
UK		10,018		9,952		979		881
Asia		34		12		577		601
Rest of World		9		2		156		341
Total		10,061		9,966		1,712		1,823

The analysis above is of the carrying amount of reportable segment assets, liabilities and non-current assets.  Segment assets and liabilities include items directly attributable to a segment and include income tax assets and liabilities.  Non-current asset include property, plant and equipment and computer software.

3. Taxation on profits on ordinary activities

	Year Ended
	31 March 2013	31 March 2012
	£'000	£'000
Analysis of charge in the year
Current tax
UK Corporation tax	247	231
UK tax over provided in previous years	2	13
Total current tax	249	244
Deferred tax
Origination and reversal of temporary differences	(26)	24
Total income tax expense in the income statement	223	268
The tax assessed for the year is equal to that obtained by applying the standard rate of corporation tax in the UK.  Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. Reconciliation of the effective tax rate
	Year Ended
	31 March 2013	31 March 2012
Profit before taxation	783	948
UK corporation tax at the standard rate of 24% (2012: 26%) on profit on ordinary activities	188	246
Effects of:
Expenses not deductible for tax purposes	20	25
Capital allowances for the period less than depreciation	7	(7)
Tax losses not utilised/(utilised)	59	7
Tax rate differences	(14)	(40)
Temporary differences recognised	(13)	-
Overprovision provision in prior years	2	13
Tax charge for the year	249	244

 

4      Dividends

	Year ended
	31 March 2013	31 March 2012
	£'000	£'000
Final dividend for 2012: 2.25 pence per share (2011: 2.25 pence per share)	267	267
Interim dividend for 2013: 1.00 pence per share (2012: 1.84 pence per share)	120	220
	387	487

The Directors propose to pay a final dividend in respect of the year ended 31 March 2013 of 3.09 pence per share (2012: 2.25 pence per share) which, subject to shareholder approval, will be paid on 28 June 2013 to shareholders who are on the register on 14 June 2013.

5      Earnings per share

Earnings per share is calculated by dividing the profit attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year.

Fully diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares by existing share options assuming dilution through conversion of all existing options.

Earnings and weighted average number of shares from continuing operations used in the calculations are shown below.

	Year ended
	31 March 2013	31 March 2012
	£'000	£'000
Retained profit for basic and diluted earnings per share	560	680
	Number	Number
Weighted average number of shares used for basic earnings per share	11,896,544	11,890,089
Dilutive effect of share options	83,393	297,234
Diluted weighted average number of shares used for diluted earnings per share	11,979,936	12,187,323
	Pence	Pence
Basic earnings per share	4.70p	5.72p
Diluted earnings per share	4.67p	5.58p

6      Reconciliation of profit before tax to net cash inflow from operating activities

		Group
		Year ended
		31 March 2013 £'000		31 March 2012 £'000
Profit before taxation		783		948
Adjust for:
Depreciation		94		120
Share option reserve movement		19		20
Loss/(profit) on sale of plant & equipment		26		2
Net finance income		(20)		(18)
Operating cash flow before changes in working capital		902		1,072
(Increase)/decrease in receivables		(532)		37
Decrease in payables		(184)		(334)
Cash generated from underlying operations		186		775

7      Analysis of net cash

Group	At 1 April 2012		Cash flow		At 31 March 2013
	£'000		£'000		£'000
Cash at bank and in hand	2,831		(549)		2,282
Bank overdraft	(7)		(19)		(26)
	2,824		(568)		2,256

8      Availability of Annual Report

A copy of the company's Annual report will be available on the Company's website www.prime-people.co.uk and will be posted to those shareholders who have requested a copy on or around 7 June 2013.

 

END

 

 

FR EALSPAEADEFF