Preliminary Results

Prime People PLC 04 March 2003 PRIME PEOPLE PLC Operations: principally specialist recruitment of senior managers for the leisure industry, together with a related training business PRELIMINARY RESULTS FOR THE YEAR ENDED DECEMBER 31, 2002 KEY POINTS • Group profit before tax up 68 % to £0.27m(2001 £0.16m) • Sales from continuing operations down 3% to 3.93 million (2001: £4.06m) • Diluted earnings per share up 100% to 0.48p (2001: 0.24p) • In the light of continued uncertainty in the hospitality sector no dividend will be paid • Portfolio Design International has been severely affected by the downturn in the tourism sector and as a result will close • The balance sheet has been strengthened with net funds of £1,156,626 Commenting on the results, chief executive David Coubrough said, 'The improvement in both profitability and the cash position is entirely down to the performance of our recruitment subsidiary, Portfolio International. Trading in the hotel and catering sector remains tough, but the Company has capitalised on the upturn in domestic tourism and the growing leisure market. In the current political and economic climate it is difficult to be anything other than extremely cautious when viewing the current year.' Press enquiries: David Coubrough, chief executive Chris Heayberd, finance director 020 7520 5000 PRIME PEOPLE Plc Chairman's statement ________________________________________________________________________________ Introduction Against an uncertain economic background which is reflected by disappointing results from our associate company Cameron Kennedy, and the Board decision subsequent to the year end to close our design business, I am pleased to be able to report that our core recruitment and training businesses have performed strongly. Results Whilst we are pleased to announce a 68% improvement in profit on ordinary activities from £158,900 to £266,746, it is disappointing to report that our share of the losses recorded by Cameron Kennedy amounted to £85,772 (2001 - £193,060 profit). Cameron Kennedy has found trading conditions in the financial recruitment sector particularly difficult in the last year. Although group sales from continuing business were marginally lower at £3.9m compared to £4.06m in 2001, the small operating loss of £39,894 the previous year turned to an operating profit of £348,878 - a strong performance which has given some confidence to the core businesses within the group and justified the difficult decision that we took to reduce consultant headcount in the latter part of 2001. Diluted earnings per share improved from 0.24p to 0.48p. Group cash-flow has been positive over the year producing an increase in cash and liquid resources of £0.53m and we end the year with nil gearing. Operating review After the problems of 2001, the hospitality industry continued to be faced with difficult circumstances, the most significant factor being the continued low average room rates of London hotels. This has significantly influenced the industry's investment in both people (affecting Portfolio International) and capital expenditure (affecting Portfolio Design International). Given this backdrop, the performance of Portfolio International has been resilient and provided the Group with an improved net profit and earnings per share, both of which have doubled, albeit from a low base. Portfolio International In the last quarter of 2001, Portfolio International reduced consultant headcount by 28%. This measure facilitated a return to profitability in 2002 as the turnover for the year was very similar to the prior year, but with a consequently much improved bottom line. The Company benefited from an upswing in domestic tourism and capitalised on the increasing UK leisure market where spend has continued to grow. The culinary sector also demonstrated improved sales rates and grew turnover by 26% as the demand for quality chefs has become an ever greater need of the hospitality industry. 2003 is presenting further difficulties. The current nervousness at potential world events is stalling appointments and the delay has an immediate impact on sales performance. It is still too early to predict the outcome on the year but, if necessary, there is still scope to reduce costs if turnover were to decline significantly. Portfolio Design International The Interior Design business has failed to really recover from the impact of events in 2001. The team was reduced by 50% in the last quarter of 2001 and has achieved further recognition for its work, principally at the new restaurant at the Mayfair Millennium Hotel. However, the costs of maintaining this business (loss in 2002 £39,894) have become too onerous, after a second year of failure to cover its own costs. Hence the Board have taken the decision, in consultation with the minority shareholder, to close the business. PRIME PEOPLE Plc Chairman's statement ________________________________________________________________________________ Harper Craven Associates This business has recovered its profitability, as it (like Portfolio International) reduced its cost base in the last quarter of 2001. Harper Craven has been successful in winning new business and in retaining work at a time of on-going pressure on training budgets. The quality of this niche business has won through in difficult times and is well placed to take advantage of any upturn in the market. Cameron Kennedy Resources This company specialises in financial recruitment to both the permanent and temporary market sectors. Our share of its losses in 2002 has been £85,772, which includes a loss of £20,250 arising from a dilution in our interest from 46.5% to 44.7%. It is difficult to predict an upturn this year as the marketplace Cameron Kennedy recruits for (banks, financial institutions etc.) has yet to return to commercial prosperity. For the time being the business remains focused and determined to trade through the hard times that have affected it for the last 14 months. Share Option Scheme Following the preliminary announcement of our 2001 results, we granted options under the 2001 Employee Share Option Scheme to certain key staff to subscribe for 543,298 at an exercise price of 6.333p. All options granted will be subject to achieving performance targets and are exercisable between 7 March 2005 and 7 March 2012. Employees As stated in last year's report, our management team has proved a tower of strength, particularly in Portfolio International. The loyalty and commitment of the team, whose average length of time with the company exceeds ten years, has been very much appreciated. Throughout the year, Portfolio International has maintained its commitment to training and employee development programmes and this has manifested itself in the resilient trading performance. Prospects The outlook for the recruitment industry remains very subdued. Costs remain closely monitored and will be further reduced should the current levels of business fall. We do not anticipate any significant changes to the performance of the training business in the coming year and we look forward to an improved result from Cameron Kennedy. In the light of the continued uncertainty we do not consider that the payment of a dividend would be appropriate. We will consider the position again during the coming year. Richard E M Lee Non Executive Chairman 3 March 2003 PRIME PEOPLE Plc Consolidated profit and loss account for the year ended 31 December 2002 _______________________________________________________________________________ Continuing operations Discontinued operations Note 2002 2001 2002 2001 2002 2001 £ £ £ £ £ £ Turnover 3,933,886 4,059,632 168,348 493,865 4,102,234 4,553,497 Cost of sales (169,285) (221,231) (3,366) (24,004) (172,651) (245,235) ________ ________ ________ ________ ________ ________ Gross profit 3,764,601 3,838,401 164,982 469,861 3,929,583 4,308,262 Administrative expenses (3,415,723) (3,878,295) (193,258) (486,161) (3,608,981) (4,364,456) ________ ________ ________ ________ ________ ________ Group operating profit/(loss) 348,878 (39,894) (28,276) (16,300) 320,602 (56,194) Share of operating (loss)/ profit in associates (53,522) 205,060 - - (53,522) 205,060 Amortisation of goodwill (12,000) (12,000) - - (12,000) (12,000) Loss arising from dilution of interest in associates (20,250) - - - (20,250) - (85,772) 193,060 - - (85,772) 193,060 ________ ________ ________ ________ ________ ________ Profit on ordinary activities before interest 263,106 153,166 (28,276) (16,300) 234,830 136,866 Interest receivable and similar income (group) 32,452 25,533 Interest payable and similar charges (group) (536) (3,499) ________ ________ Profit on ordinary activities before taxation 266,746 158,900 Taxation on profit on ordinary activities (91,906) (71,503) ________ ________ Profit on ordinary activities after taxation and transferred to reserves 174,840 87,397 ________ ________ Earnings per share - Basic 2 0.48p 0.24p - Diluted 2 0.48p 0.24p ________ ________ All recognised gains and losses are included in the profit and loss account. PRIME PEOPLE Plc Consolidated balance sheet at 31 December 2002 ________________________________________________________________________________ 2002 2002 2001 2001 £ £ £ £ Fixed assets Tangible assets 142,449 283,345 Investments: Investment in associate 630,652 699,378 ________ ________ 773,101 982,723 Current assets Debtors 1,235,628 1,195,853 Cash at bank and in hand 1,228,340 857,357 ________ ________ 2,463,968 2,053,210 Creditors: amounts falling due within one year 796,955 790,659 _________ ________ Net current assets 1,667,013 1,262,551 ________ ________ Total assets less current liabilities 2,440,114 2,245,274 _________ _________ Capital and reserves Called up share capital 363,467 363,467 Share premium account 884,925 864,925 Merger reserve 173,077 173,077 Profit and loss account 1,018,645 843,805 ________ ________ Equity shareholders' funds 2,440,114 2,245,274 ________ ________ PRIME PEOPLE Plc Consolidated cash flow statement for the year ended 31 December 2002 ________________________________________________________________________________ Note 2002 2002 2001 2001 £ £ £ £ Net cash inflow from operating activities 3 502,582 383,022 Dividend from associated undertaking - 158,100 Returns on investment and servicing of finance Interest received 32,452 25,533 Interest paid (536) (3,499) ________ ________ 31,916 22,034 Taxation (7,963) (200,201) Capital expenditure and financial investment Purchase of tangible fixed assets (33,313) (203,778) Sale of tangible fixed assets 30,300 34,212 ________ ________ (3,013) (169,566) ________ ________ Net cash inflow before management of liquid resources and financing 523,522 193,389 Management of liquid resources Purchase of treasury deposits (600,000) (100,000) Financing Capital element of finance lease payments (13,828) (12,565) ________ ________ (Decrease)/increase in cash 4 (90,306) 80,824 ________ ________ PRIME PEOPLE Plc Notes to the preliminary announcement for the year ended 31 December 2002 ________________________________________________________________________________ 1 Accounting Policies The final results have been prepared on the same basis and using the same accounting policies as those used in the preparation of the accounts for the year ended 31 December 2001, except that the group has adopted FRS19, Deferred Taxation in 2002. This change in accounting policy has had no impact on the results of the group. 2 Earnings per share The earnings per share is calculated based on a weighted average number of shares of 36,346,692 (2001 - 36,346,692) and the profit of £174,841 (2001 - £87,397), giving earnings per share of 0.48p (2001 - 0.24p). Diluted earnings per share is based on the above earnings and adjusts the basic weighted average number of shares to 36,571,381 (2001 - 36,651,887) as a result of dilutive share options, giving earnings per share of 0.48p (2001 - 0.24p). The weighted average number of shares in issue calculated under the different methods reconciles as follows: 2002 2001 £ £ Basic 36,346,692 36,346,692 Number of shares under option 1,043,298 500,000 Number of shares which would have been issued at fair value (818,609) (194,805) _________ _________ Diluted 36,571,381 36,651,887 _________ _________ 3 Reconciliation of operating profit to net cash inflow from operating activities 2002 2001 £ £ Group operating profit/(loss) 320,602 (56,194) Depreciation 151,205 179,652 Profit on sale of tangible fixed assets (7,296) (1,763) (Increase)/Decrease in debtors (39,775) 364,764 Increase/(Decrease) in creditors 77,846 (103,437) ________ ________ Net cash inflow from operating activities 502,582 383,022 ________ ________ PRIME PEOPLE Plc Notes to the preliminary announcement for the year ended 31 December 2002 ________________________________________________________________________________ 4 Reconciliation of net cash inflow to movement in net funds 2002 2002 2001 2001 £ £ £ £ (Decrease)/Increase in cash in the year (90,306) 80,824 Cash outflow from decrease in debt and lease financing 13,828 12,565 Cash outflow from increase in liquid resources 600,000 100,000 ________ ________ Increase in net funds resulting from cash flows in the year 523,522 193,389 Opening net funds 633,104 439,715 ________ ________ Closing net funds 1,156,626 633,104 ________ ________ 5 Nature of the financial information The financial information does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The financial information for the year ended 31 December 2002 is extracted from the group's financial statements to that date which received an unqualified auditors' report and will be filed with the Registrar of Companies. The financial information for the year ended 31 December 2001 is extracted from the financial statements to that date which received an unqualified auditors' report and have been filed with the Registrar of Companies. This information is provided by RNS The company news service from the London Stock Exchange

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Macdonalds & Company Holdings ltd (formerly Prime People plc - PRP) (MAC.AMPX)
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