PRP.L Regulatory News (PRP)

7 Jun 2007 07:01

Prime People PLC07 June 2007 7 June 2007 Prime People plc Preliminary Results for the year ended 31 March 2007 Prime People plc ("Prime People" or the "Company"), the international realestate, infrastructure and commercial property recruitment specialist, todayannounces its preliminary results for the year ended 31 March 2007. Highlights*: • Gross fee income up 22% to £20.2m (2006 pro forma £16.5m) • Net fee income up 23% to £10.8m (2006 pro forma £8.8m) • Profit before tax up 14.2% to £2.01m (2006 pro forma £1.76m) • Fully diluted earnings per share 10.93p • Final dividend of 2.25p making a total for the year of 3.5p • Year end fee earners increased by 31% to 81 • New international offices opened in the year in Hong Kong, Australia andSouth Africa * Pro forma 2006 results have been provided in order to give a meaningfulcomparison of year on year performance of the continuing business. Peter Moore, Managing Director of Prime People said: "I am very pleased with this set of results, which reflect continued growth inthe UK and excellent progress on our international expansion strategy. Demandfor our services has remained solid, driven by an ongoing pipeline of major UKinfrastructure projects and in commercial property internationally by the demandfor increasingly sophisticated expertise, in property investment and management. "The performance of the business in the year to date has been encouraging and isin line with our expectations, with our international operations performingwell. We anticipate that there will continue to be opportunities for goodorganic growth both in the UK and internationally." -Ends- For further information please contact: Prime People 020 7493 5689Robert Macdonald, Executive ChairmanPeter Moore, Managing Director Hogarth Partnership 020 7357 9477James Longfield Arbuthnot Securities 020 7012 2000Andrew FullertonIan Williams Chairman's Statement Introduction I am pleased to report the results for Prime People Plc for the year ended 31March 2007, with good progress made in our core UK market as well as on ourinternational expansion strategy. Profit before taxation for the year was £2.01 million, which is a 14.2 per centincrease on the pro forma profit for the previous year of £1.76 million and isin line with the trading statement issued on 3 May 2007. As this is our firstfull year of trading since the Group's transformation in January 2006 by thereverse takeover by Macdonald & Company Group Limited ("Macdonald"), pro formaresults have been provided to give a meaningful comparison of year on yearperformance of the continuing business. On a statutory basis, the £2.01 millionreported profit before tax for 2007 compares to a loss for the 15 months ended31 March 2006 of £11,000. Prime People's principal business activity is the provision of recruitmentservices to the UK and international real estate, infrastructure and commercialproperty sectors. This activity is operated through our main trading subsidiary,Macdonald. Reflecting the positive conditions within the markets we serve and a continuingdemand for professional staff, gross fee income increased 22 per cent to £20.2million (2006 pro forma: £16.5 million). This translated to net fee income("NFI") for the year ended 31 March 2007 of £10.8 million, a 23 per centincrease on the previous year (2006 pro forma: £8.8 million). In the UK, demand for property professionals remained strong throughout theyear. The people we place are involved in the investment, development andmanagement of all types of property asset. Our main revenues are generated fromplacing permanent and contract staff who are specialists in disciplines such asfund management, investment, development and financing, project management,quantity surveying and building surveying, facilities management, town andcountry planning, architecture and social housing. With a steady pipeline ofdevelopment, infrastructure and regeneration projects already committed to inthe UK, we expect to see continuing strong demand for candidates. In addition,increases in NFI are also being supported by wage inflation arising from ashortage of skilled candidates in the sectors we serve. Our new architecture andsocial housing businesses, which commenced in the year, further strengthen ouroffering and provide good opportunities for new revenue growth in the comingyear. In line with our stated plans to broaden the Macdonald business overseas, duringthe year new offices were established in Hong Kong, Australia and the Republicof South Africa and our Dubai operation was strengthened. The Dubai and HongKong offices are accessing areas of particularly high economic growth whilst theAustralian and South African offices, which opened more recently, address localmarkets and further facilitate the global movement of the professionals thatMacdonald places. The decision to bring forward the opening of our Australianoffice into the current year was opportunity driven and resulted in start-upcosts of approximately £0.09 million in the year, which were not originallyplanned for. In the period being reported, the four overseas offices contributed10 per cent of NFI (2006 - Nil). We expect NFI derived from overseas offices tocontinue to increase as a proportion of total NFI in the years ahead. Dividend The strong underlying performance over the past year has led the Board topropose a final dividend of 2.25p per ordinary share. This will be paid on 25July 2007 to shareholders on the register on 29 June 2007 and brings the totaldividend paid to shareholders for the year to 3.5 pence per ordinary share(1.125p for the 15 months ended 31 March 2006). Results summary The Statutory results are set out in full in the financial statements. The table below provides the highlights of the Group's performance for the year,compared with the pro forma results for the year ended 31 March 2006. Thefinancial statements set out below provide a comparison with the 15 month periodto 31 March 2006. Year ended Year ended 31 March 2007 31 March 2006 £'000 £'000 Actual Pro formaGross fee income 20,179 16,504 +22.3%Direct Costs (9,344) (7,699) --------- --------Net fee income 10,835 8,805 +23.1%Admin Expenses (8,748) (6,997) --------- --------Operating profit 2,087 1,808 +15.4%Net interest (78) (51) --------- --------Profit before tax 2,009 1,757 +14.3%Taxation at 33% (2006: 30%) (665) (527) --------- --------Profit after tax 1,344 1,230 +9.3% ========= ========Fully diluted EPS 10.93p 10.23p +6.8% Prime People includes the trading businesses of Macdonald and Harper CravenAssociates Limited ("Harper Craven"). Longer term growth opportunities In pursuing our overall growth strategy, we continue to focus on organicexpansion - adding new consultants in existing and complimentary areas in the UKand internationally. At the same time we continue actively to seek acquisitiontargets of an appropriate size and operational fit. However, as yet none havebeen found which meet our acquisition criteria. Outlook The performance of the Company in the year to date has been encouraging and isin line with our expectations, with our international operations performingwell. We anticipate that there will continue to be opportunities for goodorganic growth both in the UK and internationally. I look forward to updating shareholders of developments in these various areasin due course. Robert MacdonaldExecutive Chairman 7 June 2007 Operating Review Macdonald Our core business is the provision of recruitment services to the real estate,infrastructure and commercial property markets in the UK and around the world, asector comprising assets in the UK alone valued at over £640 billion. The sector we serve has been buoyant during the past year, with strong demandfor professional staff, particularly for permanent placements. This has led to afurther increase in gross fee income and profit over the past year and thebusiness has maintained its record of consistent growth. NFI increased by 27.5per cent from £8.23 million pro forma 2006 to £10.5 million, split 79/21 betweenpermanent and temporary placements (prior year pro forma Perm/Temp split was 76/24). The growth in NFI also reflected an increase in fee earners of 31 per cent,bringing our total number of consultants to 81 at the year-end. Details of the split between temporary and permanent net fee income is shownbelow: Year ended Perm / Year ended Perm / NFI 31 March Temp 31 March Temp growth 2007 split 2006 split Actual Pro forma £'000 % £'000 % % Net fee income - permanent 8,308 79 6,282 76 +32.3%Net fee income - contract &temporary 2,190 21 1,951 24 +12.3% --------- --------Total net fee income 10,498 100 8,233 100 +27.5% ========= ======== We established our first overseas office in Dubai in January 2006 and this hasperformed well in the year. We now have eight fee earners operating from thisoffice. In July 2006 we commenced operations in Hong Kong, when a senior member of staffwas relocated there. The cultural challenges of doing business in this regionmeant that it has taken longer to become established in this market than we hadoriginally anticipated, resulting in start-up losses of £0.08 million in theperiod being reported. The business is now performing well and we have addedadditional 'ex-pat' and local staff to this operation. We now have five feeearners serving the Asian region, which includes mainland China. In January 2007 we took the opportunity to bring forward our plans to open anoffice in Australia and established our office in Sydney with the secondment ofa senior member of staff who has subsequently been joined by another member ofour London team and four local hires. Our Johannesburg office comprises two fee earners and began trading in April2007. We are very pleased with the progress our overseas offices have made during theyear in contributing 10 per cent of total Group NFI. During the coming year we plan to consolidate our positions in overseas marketswith further hires. These, together with a full year of trading from the morerecently opened offices, will, we expect, result in an increase in NFI derivedfrom overseas offices in 2007/08. Harper Craven In addition to our core recruitment activity, the Group also owns Harper Craven,which provides bespoke sales, marketing and management training and coachingprogrammes to a broad range of corporate clients. This business has been part ofthe group for a number of years, prior to the reverse takeover by Macdonald, andhas made a small contribution to group profit before tax in the year. Outlook Prospects for Macdonald appear good with demand for its services continuing froma pipeline of UK infrastructure projects running long into the future and incommercial property internationally from demand for increasingly sophisticatedexpertise in property investment and property management. In the UK, our new revenue lines in architecture and social housing have eachmade a good start and we expect that they will make increasing contributions inthe coming years. Overseas we are heartened by the positive reception we have received fromlocally based employers, many of these are regional offices of internationalbusinesses with which we already have relationships in the UK. Our expectationsfor our overseas operations are enhanced by the higher economic growth beingseen in Middle and Far East markets, which we are now able to access directly. Our people Finally, I should once again like to thank our staff for their hard work andcommitment over the last twelve months and remind shareholders that theseresults are a testament to their efforts. Peter MooreManaging Director 7 June 2007 Prime People Plc Financial Review______________________________________________________________________________ The financial statements have been prepared in accordance with InternationalFinancial Reporting Standards (IFRS). Trading Results Gross fee income for the year from continuing operations increased by 22 percent to £20.18m (2006: pro forma £16.5m). NFI increased by 23 per cent to £10.84m (2006: pro forma £8.8m). The group considers NFI to be the key indicator of the performance of thebusiness and is defined as the income generated from permanent placementstogether with the contribution earned from contract and temporary staff. Administrative expenses totaled £8.75m which represents 80.7 per cent of net feeincome (2006: pro forma £7.0m - 79.5 per cent). Profit before tax increased by14.2 per cent to £2.01m (2006: pro forma £1.76m). The taxation charge is £0.67m on a profit on ordinary activities before taxationof £2.01m which gives an overall tax rate of 33 per cent (2006: pro forma 30 percent). Earnings Per Share The continuing diluted earnings per share is 10.93p (2006: pro forma 10.23p). Dividend As outlined in the chairman's statement, the directors propose a final dividendof 2.25p which will be paid on 25 July 2007 to shareholders who are on theregister on the 29th June 2007 making a total dividend for the period of 3.5p. Treasury Management. Net cash inflow of £1.27m (2006: inflow of £0.16m) was generated from operatingactivities during the year, which after net taxation payments of £0.53m (2006:net payment of £0.59m) resulted in a net cash inflow from operating activitiesof £0.74m (2006: outflow of £0.43m). The group operates a centralised treasury function with a net debt position at31 March 2007 of £0.84m, compared to £1.25m at 31 March 2006. Christopher HeayberdFinance Director 7 June 2007 Prime People Plc Consolidated income statement for the year ended 31 March 2007______________________________________________________________________________ Note 12 months 15 months ending 31 March ending 31 March 2007 2006 £'000 £'000 £ £ Gross feeincome 20,179 5,373Direct costs (9,344) (2,256) --------- --------- Net fee income 10,835 3,117Administrativeexpenses (8,748) (2,985) --------- --------- Operatingprofit 2,087 132 --------- ---------Share ofoperating lossin associate - (79)Impairmentloss inassociatedundertaking - (156) --------- --------- - (235) --------- --------- --------- ---------Profit/(loss)beforeinterest 2,087 (103) Interestreceivable andsimilar income 18 134Interestpayable andsimilarcharges (96) (42) --------- ---------Profit/(loss)beforetaxation 2,009 (11)Taxation (665) (16) --------- ---------Profit aftertax forcontinuingactivities 1,344 52Share of lossafter tax inassociate - (79) --------- --------- --------- ---------Profit/(loss) for the period attributableto equityshareholders 1,344 (27) ========= =========Earnings/(loss)per share 2- Basic 11.38p (0.52p)- Diluted 10.93p (0.52p) - Continuingbasic 11.38p 6.69p- Continuingdiluted 10.93p 6.09p Prime People Plc Consolidated statement of changes in shareholders' equity at 31 March 2007______________________________________________________________________________ Called up Shares to Share Share Other Retained Total share be issued premium option reserve earnings capital account reserve £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 1 January 368 - 910 - 173 1,889 3,3402005 New shares 716 - 5,304 - - - 6,020issued Considerationshares to be - 1,000 - - - - 1,000issued Equity - - - - - (46) (46)dividends Loss for the - - - - - (27) (27)year -------- -------- -------- -------- -------- -------- -------- At 31 March 1,084 1,000 6,214 - 173 1,816 10,2872006 Considerationshares issued 119 (1,000) 881 - - - - Equity - - - - - (271) (271)dividends Share option - - - 78 - - 78charge Profit for - - - - - 1,344 1,344the year -------- -------- -------- -------- -------- -------- -------- At 31 March 1,203 - 7,095 78 173 2,889 11,4382007 ======== ======== ======== ======== ======== ======== ======== Prime People Plc Consolidated balance sheet at 31 March 2007 2007 2006 £'000 £'000 AssetsNon - current assetsGoodwill 9,769 9,769Property, plant and equipment 316 260Deferred tax asset 91 75 --------- --------- 10,176 10,104 --------- --------- Current assetsInvestment held for sale - 177Trade and other receivables 4,601 3,333Cash and cash equivalents 304 318 --------- --------- 4,905 3,828 --------- --------- Total assets 15,081 13,932 --------- --------- LiabilitiesCurrent liabilitiesFinancial liabilities 308 445Trade and other payables 2,034 1,773Current tax liabilities 461 304 --------- --------- 2,803 2,522 --------- --------- Non-current liabilitiesFinancial liabilities - borrowings 840 1,123 --------- --------- Total liabilities 3,643 3,645 --------- --------- Net assets 11,438 10,287 ========= ========= Capital and reservesCalled up share capital 1,203 1,084Share premium account 7,095 6,214Other reserve 173 173Consideration shares to be issued - 1,000Share option reserve 78 -Retained earnings 2,889 1,816 --------- --------- Equity shareholders' funds 11,438 10,287 ========= ========= Prime People Plc Consolidated cash flow statement for the year ended 31 March 2007 12 months 15 months ending 31 March ending 31 March 2007 2006 Note £'000 £'000 Cash flows from operating activitiesCash generatedby operations 3 1,266 155 Taxationreceived - 5 Corporationtax paid (525) (590) ----------- --------- Net cashfrom/(used in)operatingactivities 741 (430) ----------- --------- Cash flows from investing activitiesInterestreceived 18 134 Interest paid (96) (42) Purchase ofsubsidiaryundertaking - (9,876) Disposal ofinvestmentheld for sale 178 - Net cashacquired withbusiness - 202 Net purchaseof property,plant andequipment (164) (13) ----------- --------- Net cash usedin investingactivities (64) (9,595) ----------- --------- Cash flows from financing activitiesIssue ofordinary sharecapital - 6,020 New bank loan - 1,400 Repayment ofborrowings (280) - Capitalelement ofhire purchaseobligations (7) (9) Dividend paidtoshareholders (271) (46) ----------- --------- Net cash (usedin)/fromfinancingactivities (558) 7,365 ----------- --------- Netincrease/(decrease) in cashand cashequivalents 119 (2,660) Cash and cashequivalents at1 April 2006 160 2,820 ----------- --------- Cash and cashequivalents at31 March 2007 4 279 160 =========== ========= Prime People Plc Notes to the preliminary announcement for the 12 months ended 31 March 2007______________________________________________________________________________ 1 Basis of preparation The principal accounting policies applied in the preparation of these financialstatements are outlined below. These financial statements have been prepared in accordance with InternationalFinancial Reporting Standards (IFRS) and the International Financial ReportingInterpretations Committee (IFRIC) interpretations applicable at the balancesheet date, and with those parts of the Companies Act 1985 applicable tocompanies reporting under IFRS. These financial statements have been preparedunder the historical cost convention. The Group is required to providecomparative information for the prior reporting period. The group used the equity accounting method to include the group's share ofoperating profit and corporation tax charge, for its associated undertaking. Inthe previous period the associated undertaking has been written down to its fairvalue. 2 Earnings per share Earnings per share (EPS) has been calculated in accordance with IAS 33 "Earningsper share" and is calculated by dividing the (loss)/profit attributable toordinary shareholders by the weighted average number of ordinary shares in issueduring the year. Earnings and weighted average number of shares used in the calculation ofearnings per share are shown below. 12 months 15 months ending 31 March ending 31 March 2007 2006 £'000 £'000 Retainedprofit/(loss)for basicearnings/(loss)per share 1,344 (27) Tax onprofit/(loss) 665 16 Exceptionalitem - 186 Loss arisingfrom associateundertaking - 235 --------- --------- Profit beforetax,exceptionalitems 2,009 410 Taxation (665) (71) --------- --------- Adjustedretainedprofit foradjustedearnings pershare 1,344 339 ========= ========= Number Number Weighted average number of shares used for basicandcontinuingearnings pershare 11,810,511 5,052,844 Dilutiveeffect ofshare optionsand shares tobe issued 482,768 257,522 --------- --------- Diluted weighted average number of shares usedfor dilutedearnings pershare 12,293,279 5,310,366 ========= ========= Pence Pence Basic earnings per share 11.38p (0.52p) Diluted earnings per share 10.93p (0.52p) Continuing basic earnings per share 11.38p 6.69p Continuing diluted earnings per share 10.93p 6.09p The continuing earnings per share is calculated after excluding discontinuedoperations, associated undertakings and exceptional costs. 3 Reconciliation of operating profit to net cash inflow from operatingactivities 12 months 15 months ending 31 March ending 31 March 2007 2006 £'000 £'000 === ===Groupoperatingprofit 2,087 132 Depreciation 108 38 Share optionreservemovement 78 - Increase indebtors (1,268) (206) Increase increditors 261 191 --------- --------- 1,266 155 ========= ========= 4 Analysis of net funds/(debt) At 1 April 2006 Cash flow At 31 March 2007 £'000 £'000 £'000 Cash at bank and in hand 318 (14) 304 Bank overdraft (158) 133 (25) --------- --------- --------- 160 119 279 Bank loans due within oneyear (280) - (280) Bank loans due after one year (1,120) 280 (840) Hire purchase obligations (10) 7 (3) --------- --------- --------- Total net debt (1,250) 406 (844) ========= ========= ========= 5 Nature of the financial information The financial information does not constitute statutory accounts as defined insection 240 of the Companies Act 1985. The financial information for the 12months ended 31 March 2007 is extracted from the group's financial statements tothat date which received an unqualified auditors' report and will be filed withthe Registrar of Companies. The financial information for the 15 month periodended 31 March 2006 is extracted from the financial statements to that datewhich received an unqualified auditors' report and have been filed with theRegistrar of Companies. 6 Availability of Annual Report Copies of the annual report will be posted to shareholders in due course.Additional copies will be available to the public, free of charge, from theCompany's registered office: 40a Dover Street, Mayfair, London W1S 4NW. This information is provided by RNS The company news service from the London Stock Exchange