Interim Results
Prime People PLC
22 November 2006
22 November 2006
Prime People plc
Interim Report for the six months ended 30 September 2006
Prime People plc, one of the UK's leading commercial property recruitment
specialists, announces its interim results for the six months to 30 September
2006.
Financial Highlights
• Profit before tax increased 18% to £0.78m (2005 Pro forma : £0.66m);
• Net fee income increased 28% to £4.91m (2005 Pro forma: £3.83m);
• Operating profit increased 24% to £0.82m (2005 Pro forma: £0.66m);
• Proposed interim dividend of 1.25p per share;
Operational Highlights:
• Fee earners increased by 20% to 79 consultants worldwide;
• Good performance from recently opened Dubai and Hong Kong offices;
• New UK business unit established to focus on architecture recruitment;
• International expansion continues, with Sydney office due to open in
December and opportunities being explored in South Africa.
Peter Moore, Managing Director of Prime People plc said:
'The performance of our main subsidiary, Macdonald & Company continues to be
very encouraging and we anticipate that there will be further opportunities for
significant organic growth both in the UK and internationally.
'In the UK, demand for property professionals remains strong. Our new
architecture business unit strengthens our offering and provides one of a number
of good opportunities for continued growth in the coming year.
'Our recently opened offices in Dubai and Hong Kong are performing well. We plan
to open an office in Sydney next month and are actively exploring opportunities
in South Africa.
'Acquisitions remain a part of our growth strategy and we continue to actively
explore opportunities.
'Our markets remain strong both in the UK and internationally and continue to
provide excellent opportunities for organic growth. We are confident of making
further good progress in the second half and producing results in line with
expectations.'
For further information please contact:
Prime People 020 7318 1785
Robert Macdonald, Executive Chairman
Peter Moore, Managing Director
Hogarth Partnership 020 7735 9477
James Longfield / Georgina Briscoe / Charlie Field
22 November 2006
Prime People plc
Interim Report for the six months ended 30 September 2006
Introduction
These results for the six months ended 30 September 2006 are the first in which
Prime People Plc has had the benefit of a full period of contribution from its
main operating business, Macdonald & Company Group Limited ('Macdonald') which
was acquired on 4 January 2006. I am pleased to report a profit before taxation
of £776,300 for the group which is in line with our expectations and which
compares to a loss before taxation for the nine month period ended 30 September
2005 of £115,400 when there was no contribution from Macdonald.
Set out below are the results for the six months ended 30 September 2006
compared with the same period for the previous year as if all ongoing businesses
had been in existence throughout that period.
The statutory results are set out in the financial tables at the end of this
report.
Six months Six months % change
ended 30 ended 30
September 2006 September 2005
£'000 £'000
Actual Pro forma
Gross Fee Income 9,289 7,748 + 19.9%
Direct Costs (4,380) (3,920)
------- -------
Net Fee Income 4,909 3,828 + 28.2%
Admin Expenses (4,088) (3,165)
------- -------
Operating Profit 821 663 + 23.8%
Net Interest (45) (6)
------- -------
Profit before tax 776 657 + 18.1%
Taxation at 30% (247) (199)
------- -------
Profit after tax 529 458 +15.5%
------- -------
Fully diluted EPS 4.40p 3.81p +15.5%
Operating Review
Since the financial year-end we have increased fee earner numbers by 20% from 66
to 79 consultants worldwide.
We have made good progress on our international expansion strategy in the first
half. Trading at our recently opened Dubai and Hong Kong offices has been
encouraging and each of these offices now employs 6 consultants.
Our overseas expansion strategy is intended to take advantage of long-term
opportunities in the global commercial property market and to provide the Group
with a degree of counter cyclical protection of our revenues. Further expansion
is planned in the second half with the opening of an office in Sydney and we
have relocated a fee earner to Johannesburg to investigate opportunities in the
Republic of South Africa where early indications are encouraging.
In the UK, we have continued to benefit from the strong demand for property
professionals. Our move to new premises in Manchester has started to show
positive results in increased performance from that region. We also established
an Architecture business unit in London by appointing a senior manager,
experienced in the sector, to head up this new division. Whilst initially
focused in the UK market, we anticipate that this business unit will be rolled
out internationally within the next twelve months. The strong organic growth we
are experiencing, will give rise to costs in the current year with benefit
accruing in subsequent years.
Financial Results
Macdonald
Our core business, which is the provision of recruitment services to the
Commercial Property and Real Estate markets, has performed well during the
period. Net Fee Income (NFI) increased by 30.7% from £3.62m to £4.73m over the
same period last year.
Harper Craven
Harper Craven, which provides bespoke sales, marketing and management training
and coaching programmes, has performed in line with expectations during the
period and made a contribution of £29,022 to group profits in the first half
(2005: loss of £2,915).
Dividend
An interim dividend of 1.25 pence per ordinary share will be paid on 21 December
2006 to shareholders on the register at 8 December. The payment of this dividend
reflects the positive impact of the acquisition of Macdonald and the Board's
continuing intention is to have a progressive dividend policy.
Inheritance Taxation
The company is quoted and regulated solely on AIM. The Board and its advisers
believe that its activities and status makes investment in its Ordinary Shares
compliant for Inheritance Tax Relief. However, shareholders, as always, are
advised to seek professional advice in respect of their own tax positions.
Prospects
The performance of Macdonald continues to be very encouraging and we anticipate
that there will be further opportunities for significant organic growth both in
the UK and abroad.
As referred to above, in the UK and internationally demand for property
professionals remains strong. Our new architecture business unit, our recently
opened offices in Dubai and Hong Kong, and our opening of an office in Sydney
next month, all offer good prospects for solid organic growth.
Acquisitions remain a part of our overall growth strategy and we have held a
number of preliminary discussions during the period. However, none of these have
met our stringent acquisition criteria. We continue actively to explore
opportunities.
We look forward to the second half confident of making further good progress and
producing results in line with expectations.
R J G Macdonald
Executive Chairman
Consolidated income statement
for the six months ended 30 September 2006 (unaudited)
Notes Six months Nine months 15 months
ended 30 ended 30 ended 31
September September March 2006
2006 2005
£ £ £
Continuing operations
Gross fee income 9,289,344 490,049 5,373,053
Direct costs (4,380,192) (141,304) (2,256,403)
----------- ----------- -----------
Net fee income 4,909,152 348,745 3,116,650
----------- ----------- -----------
Administrative expenses (4,087,631) (533,982) (2,985,125)
----------- ----------- -----------
Operating profit / (loss) 821,521 (185,237) 131,525
Share of operating loss in associate - (20,825) (78,756)
Impairment loss in associated - (9,000) (155,920)
undertaking
- (29,825) (234,676)
Profit / (loss) before interest 821,521 (215,062) (103,151)
Interest receivable and similar 4,781 100,760 134,253
income
Interest payable and similar charges 2 (50,002) (1,098) (42,109)
----------- ----------- -----------
Profit / (loss) before taxation 776,300 (115,400) (11,007)
Taxation 3 (247,166) - (15,510)
----------- ----------- -----------
Profit/(loss) after tax for 529,134 (94,575) 52,239
continuing activities
Share of (loss)/profit after tax in - (20,825) (78,756)
associate
Profit/(loss) for the period
attributable to
equity shareholders 529,134 (115,400) (26,517)
Earnings / (loss) per share 5
- Basic 4.56p (3.13p) (0.52p)
- Diluted 4.40p - (0.52p)
- Continuing basic 4.56p (2.57p) 6.69p
- Continuing diluted 4.40p - 6.09p
----------- ----------- -----------
Consolidated statement of changes in shareholders equity
for the six months ended 30 September 2006 (unaudited)
Called up Shares to Share Other Share Retained Total
Share be issued premium reserve option earnings
capital account reserve
£ £ £ £ £ £ £
At 1 January 2005 368,467 - 909,925 173,077 - 1,888,868 3,340,337
Loss - - - - - (115,400) (115,400)
-------- -------- -------- -------- -------- -------- --------
At 30 September 368,467 - 909,925 173,077 1,773,468 3,224,937
2005
New shares issued 715,559 - 5,304,441 - - - 6,020,000
Consideration
shares to
be issued - 1,000,000 - - - - 1,000,000
Profit - - - - - 88,883 88,883
Equity dividends - - - - - (46,090) (46,090)
-------- -------- -------- -------- -------- -------- --------
At 31 March 2006 1,084,026 1,000,000 6,214,366 173,077 - 1,816,261 10,287,730
New shares issued 118,864 (1,000,000) 881,136 - - - -
Profit - - - - - 529,134 529,134
Share option - - - - 22,671 - 22,671
charge
Equity dividends - - - - - (120,289) (120,289)
-------- -------- -------- -------- -------- -------- --------
At 30 September 1,202,890 - 7,095,502 173,077 22,671 2,225,106 10,719,246
2006
-------- -------- -------- -------- -------- -------- --------
Consolidated balance sheet
at 30 September 2006 (unaudited)
Notes As at 30 As at 30 As at 31
September September March 2006
2006 2005
£ £ £
Assets
Non-current assets
- Goodwill 9,769,229 - 9,769,229
- Property, plant and equipment 280,994 35,717 259,861
- Investment in associate - 381,851 -
- Deferred tax asset 70,337 - 74,669
---------- ---------- ----------
10,120,560 417,568 10,103,759
---------- ---------- ----------
Current assets
Investment held for sale - - 177,000
Trade and other receivables 3,837,708 290,183 3,332,890
Cash and cash equivalents 35,055 2,722,309 317,877
---------- ---------- ----------
3,872,763 3,012,492 3,827,767
---------- ---------- ----------
Total assets 13,993,323 3,430,060 13,931,526
---------- ---------- ----------
Liabilities
Current liabilities
Financial liabilities - 393,660 36,563 445,001
borrowings
Trade and other payables 1,653,834 161,686 1,771,922
Current tax liabilities 246,583 - 303,749
---------- ---------- ----------
2,294,077 198,249 2,520,672
---------- ---------- ----------
Non current liabilities
Financial liabilities - borrowings 980,000 6,874 1,123,124
---------- ---------- ----------
980,000 6,874 1,123,124
---------- ---------- ----------
Total liabilities 3,274,077 205,123 3,643,796
---------- ---------- ----------
Net assets 10,719,246 3,224,937 10,287,730
---------- ---------- ----------
Capital and reserves
Called up share capital 1,202,890 368,467 1,084,026
Share premium account 7,095,502 909,925 6,214,366
Other reserve 173,077 173,077 173,077
Consideration shares to be - - 1,000,000
issued
Share option reserve 22,671 - -
Retained earnings 2,225,106 1,773,468 1,816,261
---------- ---------- ----------
Equity shareholders' funds 10,719,246 3,224,937 10,287,730
---------- ---------- ----------
Consolidated Cash Flow Statement
for the six months ended 30 September 2006(unaudited)
Notes Six months Nine months 15 months
ended 30 ended 30 ended 31
September September March 2006
2006 2005
£ £ £
Cash flows from operating
activities
Cash generated by operations 6 270,427 (218,102) 154,792
Taxation received - - 4,815
Corporation tax paid (300,000) - (589,679)
---------- ---------- -----------
Net cash used in operating activites (29,573) (218,102) (430,072)
---------- ---------- -----------
Cash flows from investing
activities
Interest received 4,781 100,760 134,253
Interest paid (50,002) (1,098) (42,109)
Purchase of subsidiary undertaking - - (9,875,994)
Net cash acquired with business - - 202,368
Proceeds from sale of associate 177,000 - -
Net purchase of property, plant and
equipment (70,272) (2,874) (12,791)
---------- ---------- -----------
Net cash from /(used) in investing 61,507 96,788 (9,594,273)
activities
---------- ---------- -----------
Cash flows from financing
activities
Issue of ordinary share capital - - 6,020,000
New bank loan - - 1,400,000
Repayment of bank loan (140,000) -
Capital element of hire purchase (3,748) (5,623) (9,373)
obligations
Dividend paid to shareholders (120,289) - (46,090)
---------- ---------- -----------
Net cash (used)/from financing (264,037) (5,623) 7,364,537
activities
---------- ---------- -----------
Net decrease in cash and cash (232,103) (126,937) (2,659,808)
equivalents
Cash and cash equivalents at start 160,374 2,820,182 2,820,182
of period
---------- ---------- -----------
Cash and cash equivalents at end of (71,729) 2,693,245 160,374
period
---------- ---------- -----------
Notes to the Interim Financial Statements
for the six months ended 30 September 2006(unaudited)
1. Accounting Policies
The consolidated interim financial statements are for the six months ended 30
September 2006. They have been prepared in accordance with International
Financial Reporting Standards (IFRS) using the same accounting policies as those
used in the preparation of the accounts for the fifteen months period ended 31
March 2006.
2. Interest
Six months Nine months 15 months
ended 30 ended 30 ended 31
September September March 2006
2006 2005
£ £ £
Interest expense:
Interest payable on bank
borrowings 49,270 - 40,279
Interest payable on
finance leases 732 1,098 1,830
---------- ---------- ----------
50,002 1,098 42,109
---------- ---------- ----------
3. Taxation on profit on ordinary activities
Taxation has been provided by applying the standard rate of corporation tax in
the UK.
4. Dividends
Six months Nine months 15 months
ended 30 ended 30 ended 31
September September March 2006
2006 2005
£ £ £
Interim dividend for 2006
of 1.25 pence per share - - 46,090
Final dividend for 2006 of
1 pence per share 120,289 - -
---------- ---------- ----------
120,289 - 49,090
---------- ---------- ----------
An interim dividend of 1 pence per ordinary share will be paid on 21 December
2006 to those shareholders whose names are on the register on 8 December 2006.
5. Earnings per share
Earnings per share (EPS) has been calculated in accordance with IAS 33 'Earnings
per share' and is calculated by dividing the profit/(loss) attributable to
ordinary shareholders by the weighted average number of ordinary shares in issue
during the period.
Earnings and weighted average number of shares used in the calculations are
shown below:
Six months Nine months 15 months
ended 30 ended 30 ended 31
September September March 2006
2006 2005
£ £ £
Retained profit/(loss) for basic
earnings/(loss)
per share 529,134 (115,400) (26,517)
Tax on profit / (loss) 247,166 15,510
Exceptional item - 185,700
Loss arising from associate undertaking - 20,825 234,676
--------- ---------- ----------
Profit before tax, exceptional items 776,300 (94,575) 409,369
Taxation (247,166) - (71,220)
--------- ---------- ----------
Adjusted retained profit/(loss) for
adjusted earnings per share 529,134 (94,575) 338,149
--------- ---------- ----------
Number Number Number
Weighted average number of shares used
for basic
and continuing earnings per share 11,593,516 3,684,670 5,052,844
Dilutive effect of share options and
shares to be issued 434,259 187,608 257,522
--------- ---------- ----------
Diluted weighted average number of
shares used
for diluted earnings per share 12,027,775 3,872,278 5,310,366
--------- ---------- ----------
Pence Pence Pence
Basic diluted earnings per share 4.56p (3.31p) (0.52p)
Diluted earnings per share 4.40p - (0.52p)
Continuing basic earnings per share 4.56p (2.57p) 6.69p
Continuing diluted earnings per share 4.40p - 6.09p
6. Reconciliation of operating profit/(loss) to net cash inflow/(outflow) from
operating activities
Six months Nine months 15 months
ended 30 ended 30 ended 31
September September March 2006
2006 2005
£ £ £
Operating profit/(loss) 821,521 (185,237) 131,525
Depreciation 49,171 11,096 38,127
Profit/(loss) on sale of
tangible
fixed assets (32) 90 90
Share option charge 22,671 - -
Increase in debtors (504,816) (28,131) (205,943)
Increase/(decrease) in creditors (118,088) (15,920) 190,993
--------- --------- ---------
Net cash inflow/(outflow) from
operating activities 270,427 (218,102) 154,792
--------- --------- ---------
7. Nature of the financial information
The interim financial information for the six months ended 30 September 2006,
was approved by the board on 21 November 2006.
The financial information set out above does not constitute full accounts within
the meaning of Section 254 of the Companies Act 1985. The comparative results
for the fifteen months ended to 31 March 2006 have been extracted from the
Group's financial statements for that period which have received an unqualified
audit report and have been filed with the Registrar of Companies.
Copies of the interim results are being sent to shareholders. Further copies can
be obtained from the company's registered office at: 40a Dover Street, Mayfair,
London W1S 4NW.
This information is provided by RNS
The company news service from the London Stock Exchange
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