PRP.L Regulatory News (PRP)

29 May 2013

Prime People Plc

Results for the year ended 31 March 2013

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 2013.

Highlights:

Peter Moore Managing Director of Prime People, said:

"We closed 2013 with profits slightly below last year but have maintained a strong cash position and propose a final dividend of 3.09p, making the year's dividend the same as 2012.

The results reflect our investment in our new Singapore office and the move of our London operations to new offices at Hanover Square after over 10 years in Dover Street.

We are cautiously positive about signs of an upturn in business and are well positioned to take advantage of these."

-Ends-

For further information please contact:

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 2013 gross revenue increased to £13.04m reflecting a small improvement in the level of temporary business (2012: £12.65m).

Net fee income, which is, after profit, the most important measure of performance for the Group, decreased by 5.4% to £7.6m (2012: £8.03m), a consequence of some increased pressure on permanent fee margins in the UK and a small reduction in net fee income from our Asia businesses.

The ratio of net fee income derived from permanent as against temporary placements is slightly reduced from 91:9 in 2012 to 90:10 in the year being reported.

The conversion rate of operating profit from net fee income decreased from 11.6% in 2012 to 10.3% in 2013.

Basic earnings per share decreased slightly to 4.70p (2012: 5.72p).

The Group maintained a strong net cash position with £2.3m as at 31 March 2013 (2012: £2.8m).

During the year the Group established an office in Singapore to further consolidate its presence in Asia. These results reflect costs associated with the opening of this new office.

Toward the end of the year the Group completed negotiations to surrender the lease of its London office, receiving a premium on the surrender. This has enabled a move to other prestigious Mayfair offices of the same size for equivalent occupancy costs. The results also reflect the financial effects of this transaction.

Cash & Dividends

As was the case last year the Company is holding a substantial cash balance. The Board continues to assess the most appropriate use of surplus cash generated by the Company. Historically this has focused on developing new business lines organically and more recently on a program of share buybacks. Possible acquisitions have been investigated every year but as yet, none have met the Company's stringent criteria, which include ensuring that scale of transaction should not have the potential to destabilise our continuing businesses and risks associated with acquisition should be minimal. The Board considers that the cash needed to complete the Group's 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 3.09p (2012: 2.25p) per share which combined with the interim dividend of 1.0p per share, will result in a total dividend of 4.09p (2012: 4.09p).

Share Buy Back

During the year 55,000 shares at a cost of £26,850 (2012: 248,234 shares at a cost of £167,809) 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 25 June 2013.

Chairman's Statement & Operating Review (continued)

Strategy & Outlook

Since this time last year we have continued to advance our overseas strategy by seeking to extend our reach in Asia by organic growth. As referred to above, our Singapore office is now established and commenced business in April 2012. It is staffed by the Group's Managing Director together with, currently, four experienced fee earners, serving our property, insights and energy practices across South East Asia. Good progress has been made in the region with early indications of a pipeline of Real Estate work developing from Indonesia and Malaysia.

Our Middle East and Africa businesses show early signs of improved activity as we enter the new financial year and there is some evidence of a degree of confidence returning to our core Real Estate market.

Despite a small reduction in UK net fee income in 2013 we are cautiously positive about signs of an upturn in business as we are well positioned to take advantage of any improvement in demand for our services. We have reorganised a number of our teams in preparation for this upturn which we have started to see through improved performance in our temporary markets which in turn we expect to have a favourable impact on our permanent business in 2014.

The economic uncertainties that recruitment businesses experience serve as a reminder that businesses need to retain a flexible approach. It is our intention to continue to invest appropriately in our established revenue lines and offices and when the opportunity arises to broaden the recruitment services that the Group offers within all its regions.

The Group continues to enjoy strong client relationships and a committed staff ready to exploit regional opportunities and the upturn as it occurs.

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

28 May 2013

Financial Review

Fee Income

Gross fee income for the year from continuing operations increased by 3.1% to £13.0m (2012: £12.65m).

Net fee income decreased by 5.4% to £7.6m (2012: £8.03m).

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.

Profit Before Taxation

Profit before taxation decreased by 18.3% to £0.78m (2012: £0.95m)

Administration Costs

The Group recorded a 1.3% decline in administration costs (after adjusting for a gain on surrender of its property lease of £0.17m) to £7.0m (2012: £7.1m) primarily arising from the fall in headcount which on average for 2013 was 12% lower at 95 (2012: 108).

Taxation

The taxation charge is £0.22m on a profit on ordinary activities before taxation of £0.78m which gives an overall tax rate of 28.5% (2012: 28.3%).

Earnings Per Share

Basic earnings per share decreased by 17.8% to 4.70p (2012: 5.72p).The diluted earnings per share decreased by 16.3% to 4.67p (2012: 5.58p).

Dividend

As outlined in the Chairman's statement & operating review, the Directors propose a final dividend of 3.09 pence which will, subject to shareholder approval at the Annual General Meeting, be paid on 28 June 2013 to shareholders who are on the register on 14 June 2013, 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 2013 is slightly up on last year at £14.08m (2012: £13.89m)

Trade receivables are slightly up on last year at £1.9m (2012: £1.46m) with an increase in the credit period taken by customers at 58 days (2012: 47 days).

Cash Flow and Cash Position

Net cash inflow of £0.19m (2012: inflow of £0.78m) was generated from operating activities during the year, which after net taxation payments of £0.19m (2012: net payment of £0.34m), resulted in a net cash outflow from operating activities of £0.01m (2012: inflow of £0.44m).

The Group operates a centralised treasury function with a net cash position at 31 March 2013 of £2.26m, compared to a net cash position of £2.83m at 31 March 2012.

Chris Heayberd

Finance Director

28 May 2013

The above results relate to continuing operations

Condensed consolidated Statement of Changes in Equity

For the year ended 31 March 2013

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 as adopted by the European Union and also comply with IFRIC interpretations and the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention modified as necessary so at include any items at fair value, as required by accounting standards.

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 2013 and does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. Group statutory accounts for 31 March 2012 have been delivered to the Registrar of Companies and those for 31 March 2013 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

Operating profit is the measure of profitability regularly reviewed by the Board, which collectively acts as the Chief Operating Decision Maker. Consequently no segmental analysis of interest or tax expenses are provided.

Included within operating profit are inter segment revenues/(charges) totalling £0.33m (2012 £0.465m) for the UK, £(0.19m) (2012 £(0.3m)) for Asia and £(0.14m) (2012 £(0.165m)) for the rest of the world.

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.

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 2013 of 3.09 pence per share (2012: 2.25 pence per share) which, subject to shareholder approval, will be paid on 28 June 2013 to shareholders who are on the register on 14 June 2013.

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 7 June 2013.