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 â€¢ Profit before tax increased 18% to Â£0.78m (2005 Pro forma : Â£0.66m); â€¢ Net fee income increased 28% to Â£4.91m (2005 Pro forma: Â£3.83m); â€¢ Operating profit increased 24% to Â£0.82m (2005 Pro forma: Â£0.66m); â€¢ Proposed interim dividend of 1.25p per share; Operational Highlights: â€¢ Fee earners increased by 20% to 79 consultants worldwide; â€¢ Good performance from recently opened Dubai and Hong Kong offices; â€¢ New UK business unit established to focus on architecture recruitment; â€¢ 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 Â£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 Â£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 Â£'000 Â£'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 Â£3.62m to Â£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 Â£29,022 to group profits in the first half (2005: loss of Â£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 Â£ Â£ Â£ 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 Â£ Â£ Â£ Â£ Â£ Â£ Â£ 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 Â£ Â£ Â£ 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 Â£ Â£ Â£ 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 Â£ Â£ Â£ 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 Â£ Â£ Â£ 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 Â£ Â£ Â£ 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 Â£ Â£ Â£ 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 AA

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