PRP.L Regulatory News (PRP)

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:

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-

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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

The above results relate to continuing operations

Condensed consolidated statement of financial position

Condensed consolidated statement of financial position (continued)

Condensed consolidated statement of changes in equity

For the year ended 31 March 2012

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

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

c) Profit before taxation by geographical region

d) Segment assets and liabilities by geographical region

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

4 Dividends

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.

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

7 Analysis of net cash

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.