Final Results

RNS Number : 5696E

Prime People PLC

01 June 2012

 



31 May 2012

Prime People Plc

Results for the year ended 31 March 2012

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 2012.

Highlights:

	Year ended 31 March 2012	Year ended 31 March 2011	Change %
Net fee income	£8.03m	£8.04m	0%
Profit before tax	£0.93m	£1.01m	-7.9%
Profit after tax	£0.68m	£0.7m	-2.9%
Fully diluted earnings per share	5.58p	5.65p	-1.2%
Total dividend for the year	4.09p	4.00p	+2.2%

Peter Moore Managing Director of Prime People, said:

"We closed 2012 broadly in line with last year and have maintained a strong cash position and a final dividend of 2.25p. Whilst the economic and political uncertainties in Europe and the Middle East remain, we still continue to invest appropriately in our established revenue lines and offices.

Our Far East and South East Asia plans are advancing and these regions are expected to make an increasingly important contribution to continuing profitability and offers exposure to regions with significant percentage growth."

-Ends-

For further information please contact:

Prime People	020 73181785
Robert Macdonald, Executive Chairman Peter Moore, Managing Director
Chris Heayberd, Finance Director
Cenkos Securities	020 73978900
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 2012 gross revenue reduced to £12.65m reflecting the lower level of temporary business (2011: £13.95m). 

Net fee income, which is, after profit, the most important measure of performance for the Group, was in line with the previous year at £8.03m (2011: £8.04m).

Whilst Group net fee income at the half year was 8% ahead of the same period in the prior year, our second half saw increased rather than diminished economic uncertainty affecting both the UK and Middle East activity for our businesses resulting in a 12% fall in net fee income in the full year from £7.06m to £6.2m from those regions. By way of contrast, as the segment analysis in Note 2 shows, our Asia business continues to prosper and we are pleased to report an 80% increase in net fee income from £1m to £1.8m. Overseas revenue has increased year on year and the Group generated 33% of its net fee income outside the UK, compared to the 29% achieved in 2011.

The ratio of net fee income derived from permanent as against temporary placements continues to rise from 88:12 in 2011 to 91:9 in the year being reported.

During the year, we continued to increase our permanent consultant headcount within certain of our established areas of activity and, as referred to above, we have broadened our business into new end markets. The larger part of the overall headcount increase has been recruited to work in our Asia operations.  

Productivity from our investment in people made in the year has been slower to achieve than expected, resulting in an 8% decrease in operating profit for the full year from £1.01m to £0.93m.

The conversion rate of operating profit from net fee income decreased from 12.5% in 2011 to 11.6% in 2012.

Basic earnings per share decreased slightly to 5.72p (2011: 5.86p).

The Group maintained a strong net cash position with £2.8m as at 31 March 2012 (2011: £3.03m).

Cash & Dividends

The Company continues to hold a substantial cash balance. The Board is continually assessing the most appropriate use of surplus cash generated by the Company. Historically this has focussed on developing new business lines organically and more recently on a program of share buyback. Possible acquisitions have been investigated every year but as yet, none has met the Company's stringent criteria, which include ensuring that scale of transaction should not have the potential to destabilise our continuing businesses and risk associated with acquisition should be minimal. The Board considers that cash needed to complete 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 2.25p (2011: 2.25p) per share which combined with the interim dividend of 1.84p per share, will result in a total dividend of 4.09p (2011: 4.00p).

Chairman's Statement & Operating Review (continued)

Share Buy Back

During the year 248,234 shares at a cost of £167,809 (2011: 55,000 shares at a cost of £30,375) 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 26 June 2012.

Strategy & Outlook

Since this time last year, we have continued to advance our overseas strategy by seeking to extend our reach in Asia. To this end the Company has committed to the establishment of an office in Singapore with a senior manager and first hires in place at the date of this report.

The political and economic background to our UK and European activity has become more rather than less uncertain and visibility has become further clouded. However, the Group has strong client relationships and a committed staff ready to exploit regional opportunities and the upturn when it occurs.

Whilst the economic uncertainties in Europe and the Middle East remain, we will still continue to invest appropriately in our established revenue lines and offices, to grow overseas activity and to look for opportunities to broaden the recruitment services the Group offers within all our regions.

Our Far East and South East Asia plans are advancing and these regions are expected to make an increasingly important contribution to continuing profitability.

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

31 May 2012

Financial Review

Trading results

Gross fee income for the year from continuing operations decreased by 9.3% to £12.65m (2011: £13.95m).

Net fee income decreased by 0.01% to £8.03m (2011: £8.04m).

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.

Administrative costs totalled £7.1m which represents 88% of net fee income (2011: £7.03m: 87%).  Profit before tax decreased by 7 per cent to £0.95m (2011: £1.01m).

The taxation charge is £0.27m on a profit on ordinary activities before taxation of £0.95m which gives an overall tax rate of 28.3% (2011: 31.8%). 

Earnings per share

Basic earnings per share decreased by 2% to 5.72pence (2011: 5.86pence).The diluted earnings per share decreased by 1% to 5.58pence (2011: 5.65pence).

Dividend

As outlined in the Chairman's statement & operating review, the Directors propose a final dividend of 2.25 pence which will, subject to shareholder approval at the Annual General Meeting, be paid on 29 June 2012 to shareholders who are on the register on 15 June 2012, 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 2012 is slightly up on last year at £13.89m (2011: £13.79m)

Trade receivables are slightly down on last year at £1.46m (2011:£1.72m) with a slight increase in the credit period taken by customers at 47 days (2011: 45 days).

Cash flow and cash position

Net cash inflow of £0.78m (2011: inflow of £1.58m) was generated from operating activities during the year, which after net taxation payments of £0.34m (2011: net taxation payment of £0.23m), resulted in a net cash inflow from operating activities of £0.44m (2011: inflow of £1.35m).

The group operates a centralised treasury function with a net cash position at 31 March 2012 of £2.82m, compared to a net cash position of £3.03m at 31 March 2011.

Chris Heayberd

Finance Director

31 May 2012

Condensed consolidated statement of comprehensive income

For the year ended 31 March 2012

			Year ended
	Note		31 March 2012	31 March 2011
			£'000	£'000
Revenue	2		12,652	13,953
Cost of sales			(4,626)	(5,913)
Net fee income	2		8,026	8,040
Administrative expenses			(7,096)	(7,031)
Operating profit	2		930	1,009
Finance income			21	19
Finance expense			(3)	(7)
Profit before taxation			948	1,021
Income tax expense	3		(268)	(325)
Profit for the year Other comprehensive loss Foreign currency exchange differences			680 (9)	696 (55)
Total comprehensive income for the year			671	641
Attributable to:
Equity shareholders of the parent			671	641
Earnings per share	5
Basic earnings per share			5.72p	5.86p
Diluted			5.58p	5.65p

The above results relate to continuing operations

Condensed consolidated statement of financial position

As at 31 March 2012

		2012		2011
		£'000		£'000
Assets
Non - current assets
Goodwill		9,769		9,769
Property, plant and equipment		195		258
Deferred tax asset		2		26
		9,966		10,053
Current assets
Trade and other receivables		2,920		2,956
Cash at bank and in hand		2,831		3,104
		5,751		6,060
Total assets		15,717		16,113
Liabilities
Current liabilities
Financial liabilities		7		56
Trade and other payables		1,711		2,045
Current tax liabilities		105		198
		1,823		2,299
Non-current liabilities
Financial liabilities - borrowings		-		21
Total liabilities		1,823		2,320
Net assets		13,894		13,793

Condensed consolidated statement of financial position (continued)

As at 31 March 2012

		2012		2011
		Note	£'000		£'000
Capital and reserves attributable to the company's equity holders
Called up share capital			1,207		1,194
Capital redemption reserve fund			9		9
Treasury shares			(169)		(39)
Share premium account			7,109		7,095
Merger reserve			173		173
Share option reserve			81		108
Currency translation reserve			404		413
Retained earnings			5,080		4,840
Total equity			13,894		13,793

Condensed consolidated statement of changes in equity

For the year ended  31 March 2012

	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 2010	1,194	9	(9)	7,095	173	77	468	4,525	13,532
Total comprehensive income for the year	-	-	-	-	-	-	(55)	696	641
Adjustment in respect of share schemes	-	-	-	-	-	31	-	6	37
Shares purchased for treasury	-	-	(30)	-	-	-	-	-	(30)
Dividend	-	-	-	-	-	-	-	(387)	(387)
At 31 March 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

Condensed consolidated cash flow statement

For the year ended 31 March 2012

			Year ended
			31 March 2012	31 March 2011
	Note		£'000	£'000
Cash generated from underlying operations	6		775	1,577
Income tax paid			(340)	(229)
Income tax received			3	1
Net cash from/(used by) operating activities			438	1,349
Cash flows from investing activities
Interest received			21	19
Net purchase of property, plant and equipment			(60)	(169)
Net cash (used in)/from investing activities			(39)	(150)
Cash flows from financing activities
Repayment of borrowings			-	(280)
Capital element of hire purchase obligations			(25)	25
Issue of ordinary share capital			27	-
Treasury shares			(130)	(30)
Dividend paid to shareholders			(487)	(387)
Interest paid			(3)	(7)
Net cash used in financing activities			(618)	(679)
Net increase in cash and cash equivalents			(219)	520
Cash and cash equivalents at beginning of the year			3,052	2,587
Exchange loss on cash and cash equivalents			(9)	(55)
Cash and cash equivalents at the end of the year			2,824	3,052

Notes to the financial statements

For the year ended 31 March 2011

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 ("IFRS") as endorsed by the European Union and also comply with IFRIC interpretations and Company Law applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities at fair value through the statement of comprehensive income.

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 2012 and does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. Group statutory accounts for 31 March 2011 have been delivered to the Registrar of Companies and those for 31 March 2012 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 2012		31 March 2011		31 March 2012		31March 2011
		£'000		£'000		£'000		£'000
UK		9,965		11,617		5,339		5,704
Asia		1,801		975		1,801		975
Rest of World		886		1,361		886		1,361
		12,652		13,953		8,026		8,040

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 2012		31 March 2011		31 March 2012		31March 2011
	£'000		£'000		£'000		£'000
Permanent
-UK -Asia -Rest of World	4,763            1,801               886		4,925           975         1,361		4,609       1,801          886		4,724           975         1,361
Temporary (UK)	5,202		6,692		730		980
Total	12,652		13,953		8,026		8,040

c)     Profit before taxation by geographical region

	Year ended
	31 March 2012		31 March 2011
	£'000		£'000
UK	691		1,120
Asia	324		96
Rest of World	(85)		(207)
Operating Profit	930		1,009
Net finance income	18		12
Profit before taxation	948		1,021

d)     Segment assets and liabilities by geographical region

		Total non-current assets				Total liabilities
		31 March 2012		31March 2011		31 March 2012		31March 2011
		£'000		£'000		£'000		£'000
UK		9,952		10,039		881		1,955
Asia		12		14		601		108
Rest of World		2		-		341		257
Total		9,966		10,053		1,823		2,320

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.

Given the increasing importance of operations outside the UK to the group additional segmental information has been provided for Asia and Rest of World.  Previously the results of these two segments were combined.

3. Taxation on profits on ordinary activities

	Year Ended
	31 March 2012	31 March 2011
	£'000	£'000
Analysis of charge in the year
Current tax
UK Corporation tax	231	297
UK tax over provided in previous years	13	-
Total current tax	244	297
Deferred tax
Origination and reversal of temporary differences	24	28
Total income tax expense in the income statement	268	325
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 2012	31 March 2011
Profit before taxation	948	1,021
UK corporation tax at the standard rate of 26% (2011: 28%) on profit on ordinary activities	246	286
Effects of:
Expenses not deductible for tax purposes	25	22
Capital allowances for the period less than depreciation	(7)	22
Tax losses not utilised/(utilised)	7	(5)
Tax rate differences	(40)	2
Marginal relief	-	(2)
Overprovision provision in prior years	13	-
Tax charge for the year	244	325

4      Dividends

	Year ended
	31 March 2012	31 March 2011
	£'000	£'000
Final dividend for 2011: 2.25 pence per share (2010: 1.5 pence per share)	267	178
Interim dividend for 2012: 1.84pence per share (2011: 1.75 pence per share)	220	209
	487	387

The Directors propose to pay a final dividend in respect of the year ended 31 March 2012 of 2.25 pence per share (2011: 2.25 pence per share) which, subject to shareholder approval, will be paid on 29 June 2012 to shareholders who are on the register on 15 June 2012.

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 2012	31 March 2011
	£'000	£'000
Retained profit for basic and diluted earnings per share	680	696
	Number	Number
Weighted average number of shares used for basic earnings per share	11,890,089	11,883,121
Dilutive effect of share options	297,234	440,537
Diluted weighted average number of shares used for diluted earnings per share	12,187,323	12,323,657
	Pence	Pence
Basic earnings per share	5.72p	5.86p
Diluted earnings per share	5.58p	5.65p

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

	Year ended
	31 March 2012 £'000		31 March 2011 £'000
Profit before taxation	948		1,021
Adjust for:
Depreciation	120		163
Share option reserve movement	20		37
Loss/(profit) on sale of plant & equipment	2		(3)
Net finance income	(18)		(12)
Operating cash flow before changes in working capital	1,072		1,206
Decrease/(increase) in receivables	37		(160)
Decrease/(increase) payables	(334)		531
Cash generated from/(used by) underlying operations	775		1,577

7      Analysis of net cash

	At 1 April 2011		Cash flow		At 31 March 2012
	£'000		£'000		£'000
Cash at bank and in hand	3,104		(273)		2,831
Bank overdraft	(52)		45		(7)
	3,052		(228)		2,824
Bank loans due within one year	-
Obligations under finance lease < 1 year > 1 year	(2)             (23)		2                  23		-                    -
Total cash	3,027		(203)		2,824

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 6 June 2012.

 

END

 

 

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