PRP.L Regulatory News (PRP)

29 January 2021

Prime People Plc

Interim Results

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 and Technology, Digital & Data Analytics sectors, announces its unaudited interim results for the six months ended 30 September 2020.

CHAIRMAN'S STATEMENT

Overview

Covid-19 has had a very considerable impact on many businesses through reductions in external staffing spend and hiring freezes. As previously reported, the Group's trading was severely impacted in the first six months of the financial year by Covid-19. As a result, the Group's Net Fee Income fell by 43.24% in the period compared to the six months to 30 September 2019. However, the Group remained profitable through a combination of timely and decisive cost savings realised across the Group to reflect expected levels of business and aided by our diversity, both by sector and geography, as well as taking advantage of governmental support where possible.

The Group recorded an operating profit for the period of £0.13m (H1 2020: £1.73m) on revenue of £8.66m (H1 2020: £13.17m).

Financial Results

Group revenue of £8.66m was 34.24% lower than the same period last year (H1 2020: £13.17m).

Group Net Fee Income ("NFI") was £4.99m (H1 2020: £8.80m). NFI for the UK business was £2.15m (H1 2020: £3.71m). Our overseas performance was Asia NFI of £2.67m (H1 2020: £4.83m); Rest of World NFI £0.17m (H1 2020: £0.26m); Command Recruitment Group (HK) Ltd ("CMD"), our Hong Kong subsidiary, recorded NFI of £0.94m (H1 2020: £2.28m). Contract NFI represented 7.14% of Group NFI (H 2020: 5.71%) during the period.

Administrative costs for the Group in the period were £4.86m (H1 2020: £7.07m). As reported in April and November 2020, the Group has utilised any available Government Employment Protection Schemes in the regions where they were relevant. While significant cost reductions were put in place, we have protected key investments in core technologies, as these are critical for the Group in maximising recovery post the pandemic and our ability to successfully deliver on our strategic objectives.

In the UK, profit before tax was £0.12m against £0.48m in H1 2020. Our Asia business, which covers the Group activities in Hong Kong and Singapore, generated a profit before tax before adjustment for minority interest of £0.21m for the period (H1 2020: £1.24m).

In September 2020, we were pleased to open our first office in the United States in Houston, Texas. The newly established business has started well and is performing ahead of management expectations, and it is disclosed within the Rest of the World.

The charge for Group taxation of £0.01m (H1 2020: £0.31m) is based on the expected annual effective tax rate of 19% in the UK (H1 2020: 19%), 16.5% in Hong Kong (H1 2020: 16.50%), and 17% in Singapore (H1 2020: 17%).

Basic earnings per share for the period were 0.95p (H1 2020: 9.33p).

Cash Flow

As previously announced, in June 2020, the Group secured a Coronavirus Business Interruption Loan ("CBILS") of £2m which remains un-utilised at the time of this announcement.

At the start of the current financial year, the Group had cash of £2.1m. At the period end the Group had available cash of £4.15m, and net cash after the CBILS of £2.15m (H1 2020: £3.04).

Dividend

The Board will not be declaring an interim dividend this year (H1 2020: 1.80p).

Outlook

As stated in our Final Results announcement on 4 November 2020, all our markets have been and continue to be impacted by Covid-19, and, whilst we experienced reasonable progress in the UK following the easing of the lockdown imposed on 26th March 2020, levels of activity did not recover to pre Covid-19 levels. This was also the case in Asia, where the region experienced a very similar contraction in trading to that in the UK. We had anticipated a gradual improvement in trading in H2 to 31st March 2021. However, the significant new lockdown measures imposed or being imposed around the World could see progress slow.

The information communicated in this announcement contains inside information for the purposes of Article 7 of the UK version of the EU Market Abuse Regulation (2014/596) which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended and supplemented from time to time.

Robert Macdonald

Executive Chairman

28 January 2021

For further information please contact:

PRIME PEOPLE PLC

UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 September 2020

The above results relate to continuing operations.

The notes below form an integral part of this unaudited condensed consolidated interim report.

PRIME PEOPLE PLC

UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION

As at 30 September 2020

The notes below form an integral part of this unaudited condensed consolidated interim report.

PRIME PEOPLE PLC

UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 September 2020

PRIME PEOPLE PLC

UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 September 2020

PRIME PEOPLE PLC

UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOW

For the six months ended 30 September 2020

The notes below form an integral part of this unaudited condensed consolidated interim report.

PRIME PEOPLE PLC

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM REPORT

For the six months ended 30 September 2020

1. General information

Prime People Plc ('the Company') and its subsidiaries (together 'the Group') is an international recruitment services organisation with offices in the United Kingdom, the USA, Germany, the Middle East and the Asia Pacific region from which it serves an international client base. The Group offers both permanent and contract specialist recruitment consultancy for large and medium sized organisations.

Prime People Plc is the Group's ultimate parent company. The Company is a limited liability company incorporated and domiciled in the United Kingdom. The address of Prime People Group's registered office and its principal place of business is 2 Harewood Place, London, W1S 1BX, England. Prime People Group's shares are quoted on the AIM Market of the London Stock Exchange ("AIM"). The registered number of the Company is 1729887.

This unaudited condensed consolidated interim report for the six months ended 30 September 2020 (including comparatives) is presented in GBP '000 and was approved and authorised for issue by the Board of Directors on 28 January 2021.

Copies of the interim results are available at the Company's registered office and on the Company's website - www.prime-people.co.uk.

This unaudited condensed consolidated interim report does not constitute statutory accounts of the Group within the meaning of section 434 of the Companies Act 2006. The financial information for the year ended 31 March 2020 has been extracted from the statutory accounts for that year, which have been filed with the Registrar of Companies. The auditor's report on those accounts was unqualified and did not contain a statement under section 498 of the Companies Act 2006.

2. Basis of preparation

The unaudited condensed consolidated interim report for the six months ended 30 September 2020 has been prepared using accounting policies consistent with International Financial Reporting Standards ("IFRSs") and in accordance with 'IAS 34, Interim financial reporting', as adopted by the European Union. The condensed consolidated interim report should be read in conjunction with the annual financial statements for the year ended 31 March 2020 which were prepared in accordance with IFRSs as adopted by the European Union.

The Group was profitable for the period and has financial resources comprising £2.15m of net cash as at 30 September 2020. After making enquiries, the Directors have formed a judgement, at the time of approving the six months results, that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, a period of not less than 12 months. For this reason, the Directors continue to adopt the going concern basis in preparing the condensed set of financial statements.

These financial statements have been prepared under the historical cost convention.

IAS 20 - Accounting for Government Grants and Disclosure of Government Assistance sets out the accounting for, and the disclosure of, government grants and the disclosure of other forms of government assistance. Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises expenses for the related costs for which the grants are intended to compensate.

Note 3 provides further information on how the Group accounts for Government grants.

3. Segment reporting

(a) Revenue and net fee income by geographical region

All revenues disclosed by the Group 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

Note 1

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

Note 2

UK Operating profit for 31 March 2020 is before Goodwill impairment costs of £4.02m

Note 3

Profit before taxation in the six months to September 2020 is after a total of £0.55m Covid-19 Job Retention Government Support received in the UK, Asia, and Germany.

Government grants utilised in the period were UK Job Retention Scheme, Germany "Kurzarbeit" Scheme, Hong Kong Anti-epidemic Fund Employment Support Scheme ("ESS") and Singapore Job Support Scheme (JSS).

Government grants of £0.55m (2020 - £Nil) are included in the 'Administrative expenses' line item, offset against staff costs. There are no unfulfilled conditions or other contingencies attaching to these grants.

(d) Segment Assets and Liabilities by Geographical Region

The analysis above is of the carrying amount of reportable segment assets and liabilities. Segment assets and liabilities include items directly attributable to a segment and include income tax assets and liabilities.

4. Income tax expense

The charge for taxation on profits for the interim period amounted to £15k (2020: £308k) an effective rate of 15.00% (2020: 17.81%).

5. Dividends

6. Earnings per share

Earnings per share (EPS) are calculated by dividing the profit attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the period.

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:

7. Reconciliation of profit before tax to cash flow from operating activities

8. Reconciliation of net cash flow to movement in net funds

9. Trade and other receivables

10. Trade and other payables

11. Treasury Shares

At 30 September 2019, the total number of ordinary shares held in Treasury and their values were as follows: