8 Jun 2009 07:00
8 June 2009
Prime People Plc
Preliminary Results for the year ended 31 March 2009
Prime People Plc ("Prime People" or the "Group"), the built environment sector recruitment specialist, today announces its preliminary results for the year ended 31 March 2009.
Highlights:
| Year ended 31 March 2009 | Year ended 31 March 2008 | Change % | |
| Gross fee income | £20.67m | £24.28m | -14.9% |
| Net fee income | £10.41m | £14.04m | -25.8% |
| Profit before tax | £0.73m | £2.43m | -70.1% |
| Fully diluted earnings per share | 4.18 | 12.72p | -67.1% |
| Total dividend for the year | 0.00p | 3.75p |
Peter Moore Managing Director of Prime People, commented:
"Our lower profitability this year reflects continuing demanding trading conditions in our sector but our early recognition of the challenges ahead finds us with our market leading teams well focused and the Company ready to exploit cyclical opportunities as they arise. Our strong cash position and experienced management team can be expected to provide the opportunity of an overall increase in future market share.
We continue to concentrate on managing the costs of the business in relation to fee income and having consideration for the long term good of the Company."
-Ends-
For further information please contact:
| Prime People | 020 73181785 |
| Robert Macdonald, Executive Chairman | |
| Chris Heayberd, Finance Director | |
| Cenkos Securities | 020 73978900 |
| Elizabeth Bowman | |
| Julian Morse |
Prime People Plc
Chairman's statement
Introduction
The results for Prime People Plc for the year ended 31 March 2009 show profit before tax of £0.73m compared to £2.43m in 2008.
Our principal business activity is the provision of recruitment services to the UK and international real estate, infrastructure and commercial property sectors. This activity is operated through our main trading subsidiary, Macdonald & Company.
As has been widely reported and as was referred to in our Interim report for the six months ended 30 September 2008, global market conditions for Macdonald's activity have become increasingly difficult. These results reflect the challenging operating conditions we face and the impact of costs associated with ensuring that the Company is the correct size for the business it expects to do in 2009/10. However, they also reflect the early defensive steps taken by the Company to position itself to be sustainable, to be able to exploit cyclical opportunities that present themselves, and to be prepared for the upturn in its markets when they come. The results show a strong cash position and reduced but still significant Net fee Income ("NFI") for the year ended 31 March 2009 of £10.41m (2008: £14.04m).
In all our markets we experienced a marked decline in demand for permanent placements and a weakening demand in our UK freelance business. We expect that the worldwide global recession will continue to have a significant impact on our business. However, the dedication and performance of our market leading teams can be expected to provide the opportunity of an overall increase in future market share. During the year being reported, UK Permanent business represented 44.7 per cent (2008: 58.0 per cent) and Freelance recruitment activity, which is wholly UK based, represented 24.7 per cent (2008:17.8 per cent) of total NFI in the year. Our overseas offices contributed 30.7 per cent. of the Group's NFI (2008: 24.2 per cent.).
In the second half of the year an opportunity was identified to enter a new revenue area addressing recruitment in the Insights Industry, focussing on quantitative market researchers. This has been incubated over some six months and enters the new financial year with four fee earners, branded as Prime Insight.
Statutory Results
The Statutory results are set out in full in the financial statements and commented upon in the financial review.
The table below provides the highlights of the Company's performance for the year ended 31 March 2009.
| Year ended 31 March 2009 | Year ended 31 March 2008 | % Change | |||||
| £'000 | £'000 | ||||||
| Actual | Actual | ||||||
| Gross fee income | 20,668 | 24,279 | -14.9% | ||||
| Direct Costs | (10,255) | (10,241) | |||||
| Net fee income | 10,413 | 14,038 | -25.8% | ||||
| Admin Expenses | (9,663) | (11,525) | |||||
| Operating profit | 750 | 2,513 | -70.2% | ||||
| Net interest | (23) | (79) | |||||
| Profit before tax | 727 | 2,434 | -70.1% | ||||
| Taxation at 28% (2008:30%) | (190) | (803) | |||||
| Profit after tax | 537 | 1,631 | -66.3% | ||||
| Fully diluted EPS | 4.18p | 12.72p | |||||
Prime People includes the trading businesses of Macdonald and Harper Craven Associates
Macdonald
Our core business is the provision of executive and professional recruitment services to the built environment sector in the UK and internationally, a sector managing commercial property assets in the UK alone valued in 2007 at £762bn. We have seen a decrease in revenue and profit over the past year. Net fee income ("NFI") decreased by 27.0 per cent from £13.7 in 2008 to £10.0m in 2009. Details of the split between temporary and permanent net fee income is shown below:
| Year ended 31 March 2009 | Year ended 31 March 2008 | % change | ||||
| £'000 | £'000 | |||||
| Net fee income - contract & temporary | 2,570 | 2,502 | 2.7% | |||
| Net fee income - permanent | 7,413 | 11,176 | (33.6)% | |||
| Total net fee income | 9,983 | 13,678 | (27)% | |||
Harper Craven
Harper Craven, which has been in the group for a number of years, provides bespoke sales, marketing and management training and coaching programmes to a broad range of corporate clients. It has made a contribution of £53k to group profits before tax compared to £57k in 2008.
Share Consolidation and Purchase of Own Shares
Prime People has a history as a quoted company going back some twenty years and over this time its share register has developed 'legacy holdings' where the number of shares held is very small and the servicing of which costs the Company, in some cases, more than the value of the holding. In order to save costs the Directors will be seeking consent to a share consolidation and the return of cash to shareholders with fewer than 501 shares. Subsequently, in order to have a nominal share price that reflects the position prior to the proposed consolidation, there is planned to be a division of 500 for 1. The details of the arrangements are set out in the letter sent to all shareholders separately to be put before shareholders at an Extraordinary General Meeting immediately following the AGM which will be held at the offices of Howard Kennedy,
19 Cavendish Square London W1A 2AW on Tuesday 7 July 2009 at 11.00am.
In recognition that current market conditions are challenging and that liquidity for dealing in the Company's shares is constrained, within the limits of the resolution dealing with the purchase of its own shares at the forthcoming meeting (if duly passed by shareholders) and with an aggregate consideration not exceeding £100,000 the Company plans, from time to time, to purchase its shares in the market and to cancel them.
Dividend
The Company's focus on cash management has resulted in a significant increase in the Group's cash position. As at 31 March 2009, the Group had net cash of £1.79 million compared to net debt of £0.16 million as at 31 March 2008. However the Board, having taken account of the prevailing economic conditions, has decided that it is both prudent and appropriate not to declare a final dividend for 2009.
Future Activity & Outlook
Since our year-end, performance across our offices and revenue areas has continued to be challenging. As mentioned above, we took early defensive steps to position the Company to be sustainable and we continue to concentrate on managing the costs of the business in relation to revenue and for the long term good of the Group. With our strong cash position, we expect to be able to retain our high quality employees for when market conditions improve. We also expect to be able to exploit cyclical opportunities that present themselves. The Prime Insight start-up and incubation provides a model for the use of the Company's solid platform from which to grow new recruitment businesses and we are actively looking for similar opportunities.
Our people
Finally, I should once again like to thank our staff for their hard work and commitment over the last twelve months and remind shareholders that these results are a testament to their efforts in difficult times.
Robert Macdonald
Executive Chairman
5 June 2009
Prime People Plc
Consolidated income statement for the year ended 31 March 2009
| Note | Year ended 31 March 2009 | Year ended 31 March 2008 | |||
| £'000 | £'000 | ||||
| Gross fee income | 20,668 | 24,279 | |||
| Direct costs | (10,255) | (10,241) | |||
| Net fee income | 10,413 | 14,038 | |||
| Administrative expenses | (9,663) | (11,525) | |||
| Operating profit | 750 | 2,513 | |||
| Finance income | 14 | 12 | |||
| Finance expense | (37) | (91) | |||
| Profit before taxation | 727 | 2,434 | |||
| Tax expense | 3 | (190) | (803) | ||
| Profit after tax attributable to equity shareholders | 537 | 1,631 | |||
| Earnings per share | 2 | ||||
| -Basic | 4.47p | 13.56p | |||
| -Diluted | 4.18p | 12.72p | |||
| -Continuing basic | 4.47p | 13.56p | |||
| -Continuing diluted | 4.18p | 12.72p | |||
Consolidated statement of changes in shareholders' equity at 31 March 2009
_______________________________________________________________________________________
| Called up share capital £'000 | Share premium account £'000 | Other Reserve £'000 | Share option reserve £'000 | Foreign currency translation £'000 | Retained earnings £'000 | Total £'000 | ||||||||
| At 1 April 2007 | 1,203 | 7,095 | 173 | 78 | - | 2,889 | 11,438 | |||||||
| Equity dividends | - | - | - | - | - | (433) | (433) | |||||||
| Share option charge | - | - | - | 58 | - | - | 58 | |||||||
| Currency translation differences | - | - | - | - | (15) | - | (15) | |||||||
| Profit for the year | - | - | - | - | - | 1,631 | 1,631 | |||||||
| At 31 March 2008 | 1,203 | 7,095 | 173 | 136 | (15) | 4,087 | 12,679 | |||||||
| Equity dividends | - | - | - | - | - | (289) | (289) | |||||||
| Share option charge | - | - | - | 40 | - | - | 40 | |||||||
| Currency translation differences | - | - | - | - | 501 | - | 501 | |||||||
| Profit for the year | - | - | - | - | - | 537 | 537 | |||||||
| At 31 March 2009 | 1,203 | 7,095 | 173 | 176 | 486 | 4,335 | 13,468 | |||||||
Consolidated balance sheet at 31 March 2009
| 2009 | 2008 | ||||
| £'000 | £'000 | ||||
| Assets | |||||
| Non - current assets | |||||
| Goodwill | 9,769 | 9,769 | |||
| Property, plant and equipment | 379 | 314 | |||
| Deferred tax asset | 49 | 66 | |||
| 10,197 | 10,149 | ||||
| Current assets | |||||
| Trade and other receivables | 3,351 | 5,751 | |||
| Cash and cash equivalents | 2,499 | 688 | |||
| 5,850 | 6,439 | ||||
| Total assets | 16,047 | 16,588 | |||
| Liabilities | |||||
| Current liabilities | |||||
| Financial liabilities | 429 | 292 | |||
| Trade and other payables | 1,848 | 2,577 | |||
| Current tax liabilities | 22 | 480 | |||
| 2,299 | 3,349 | ||||
| Non-current liabilities | |||||
| Financial liabilities - borrowings | 280 | 560 | |||
| Total liabilities | 2,579 | 3,909 | |||
| Net assets | 13,468 | 12,679 | |||
| Capital and reserves | |||||
| Called up share capital | 1,203 | 1,203 | |||
| Share premium account | 7,095 | 7,095 | |||
| Other reserve | 173 | 173 | |||
| Share option reserve | 176 | 136 | |||
| Currency translation differences | 486 | (15) | |||
| Retained earnings | 4,335 | 4,087 | |||
| Equity shareholders' funds | 13,468 | 12,679 | |||
Group cash flow statement for the year ended 31 March 2009
| Year ended 31 March 2009 | Year ended 31 March 2008 | ||||
| Note | £'000 | £'000 | |||
| Cash inflow from operating activities | |||||
| Cash generated by operations | 5 | 3,187 | 2,096 | ||
| Corporation tax paid | (631) | (758) | |||
| Net cash from/(used in) operating activities | 2,556 | 1,338 | |||
| Cash flows from investing activities | |||||
| Interest received | 14 | 12 | |||
| Interest paid | (37) | (91) | |||
| Net purchase of property, plant and equipment | (290) |
(146) | |||
| Net cash (used in)/from investing activities | (313) | (225) | |||
| Cash flows from financing activities | |||||
| Repayment of borrowings | (280) | (280) | |||
| Capital element of hire purchase obligations | - | (3) | |||
| Dividend paid to shareholders | (289) | (433) | |||
| Net cash used in financing activities | (569) | (716) | |||
| Net increase in cash and cash equivalents | 1,674 | 397 | |||
| Cash and cash equivalents at 1 April 2008 | 676 | 279 | |||
| Cash and cash equivalents at 31 March 2009 | 2,350 | 676 | |||
Notes to the preliminary announcement for the year ended 31 March 2009
1 Basis of preparation
The consolidated financial statements of Prime People Plc have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU), IFRIC interpretations and the Companies Act 1985 applicable to Companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention.
2 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 attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year.
Earnings and weighted average number of shares used in the calculations are shown below.
| Year ended 31 March 2009 | Year ended 31 March 2008 | ||
| £'000 | £'000 | ||
| Retained profit for basic earnings per share | 537 | 1,631 | |
| Number | Number | ||
| Weighted average number of shares used for basic and continuing earnings per share | 12,028,899 | 12,028,899 | |
| Dilutive effect of share options and shares to be issued | 835,156 | 795,289 | |
| Diluted weighted average number of shares used for diluted earnings per share | 12,864,055 | 12,821,488 | |
| Pence | Pence | ||
| Basic earnings per share | 4.47p | 13.56p | |
| Diluted earnings per share | 4.18p | 12.72p | |
| Continuing basic earnings per share | 4.47p | 13.56p | |
| Continuing diluted earnings per share | 4.18p | 12.72p |
3 Taxation
| Year ended 31 March 2009 | Year ended 31 March 2008 | ||
| £'000 | £'000 | ||
| Current tax | |||
| UK Corporation tax | 190 | 780 | |
| UK tax over provided in previous years | (17) | (2) | |
| Total current tax | 173 | 778 | |
| Deferred tax | |||
| Origination and reversal of temporary differences | 17 | 25 | |
| Total income tax expense in the income statement | 190 | 803 | |
4 Dividends
| Year ended 31 March 2009 | Year ended 31 March 2008 | ||
| £'000 | £'000 | ||
| Final dividend for 2008: 2.40p per share (2007: 2.25p per share) | 288 | 271 | |
| Interim dividend for 2009: 0p per share (2008: 1.35p per share) | - | 162 | |
| 288 | 433 | ||
The directors do not propose to pay a final dividend in respect of the year ended 31 March 2009.
5 Reconciliation of operating profit to net cash inflow from operating activities
| Year ended 31 March 2009 | Year ended 31 March 2008 | ||||||
| £'000 | £'000 | ||||||
| Group operating profit | 750 | 2,513 | |||||
| Depreciation | 224 | 147 | |||||
| Share option reserve movement | 40 | 59 | |||||
| Effect of exchange rate changes | 501 | (15) | |||||
| Decrease / (Increase) in debtors | 2,400 | (1,150) | |||||
| (Decrease) / Increase in creditors | (728) | 542 | |||||
| 3,187 | 2,096 | ||||||
6 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 posted to those shareholders who have requested a copy on or around 12 June 2009.