Final Results

RNS Number : 7432H

Prime People PLC

03 June 2011

 



3 June 2011

Prime People Plc

Results for the year ended 31 March 2011

Prime People Plc ("Prime People" or the "Group"), the real estate, infrastructure and customer insights recruitment specialist, today announces its results for the year ended 31 March 2011.

Highlights:

	Year ended 31 March 2011	Year ended 31 March 2010	Change %
Gross fee income	£13.95m	£14.18m	-1.6%
Net fee income	£8.04m	£6.67m	20.5%
Profit before tax	£1.01m	£0.46m	119.6%
Fully diluted earnings per share	5.65p	2.71p	108.5%
Total dividend for the year	4.00p	3.50p	14.3%

Peter Moore Managing Director of Prime People, said:

"These results show a significant year on year improvement and are a testament to the continued hard work of our staff. I am pleased that the robustness and cash generative nature of our business has allowed us to pay both an interim and increased final dividend.
Our core business continued to perform solidly in the UK where we have also succeeded in generating revenue from new business areas. Our overseas businesses offer exposure to regions with substantial GDP and growth potential. Subject to the economies in which we operate not changing materially, we believe that the Company is well placed to have another successful year."

-Ends-

For further information please contact:

Prime People	020 73181785
Robert Macdonald, Executive Chairman Peter Moore, Managing Director
Chris Heayberd, Finance Director
Cenkos Securities	020 73978900
Elizabeth Bowman (Nomad)
Julian Morse (Sales/Broking)

Chairman's Statement

Introduction

We saw a continuation of the improvement in overall market conditions and both our net fee income and profitability in the year to 31 March 2011.

The recovery has been in permanent placements, where net fee income grew by 35% in the year. Our temporary business suffered a decline in sales and net fee income as a direct result of Public Sector spending cuts. The ratio of net fee income from permanent placements to temporary placements has increased from 78:22 in 2010 to 88:12 in the year being reported.

We have increased our permanent consultant headcount within our established areas of activity and broadened our business into new end markets.

The Group generated 29% of its net fee income outside the UK, which is broadly similar to the 30% achieved in 2010.

Results

Operating profit for the year was £1.01m (2010: £0.46m), a significant improvement on the prior year. Basic earnings per share increased to 5.86p (2010: 2.79p).

The conversion rate of operating profit from net fee income increased from 6.9% in 2010 to 12.5% in 2011.

Gross revenue was marginally down at £13.95m reflecting the lower level of temporary business (2010: £14.18m). However, net fee income increased by 20.5% to £8.04m (2010: £6.67m).

The Group maintained a strong net cash position with £3.03m as at 31 March 2011 (2010: £2.3m). During the year the Group repaid the final tranche of the bank loan entered into with Barclays Bank Plc in January 2006 to part fund the acquisition of Macdonald & Company Group Limited.

Dividends

The Board will be recommending an increase in the final dividend to 2.25p (2010: 1.50p) per share which combined with the interim dividend of 1.75p per share, will result in a total dividend of 4.00p (2010: 3.50p).

Share Buy Back

During the year 55,000 shares at a cost of £30,375 (2010: 25,000 shares at a cost of £8,750) were purchased through the Group's buy back 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 28 June 2011.

Strategy

With recruitment being driven to a very large extent by the economic cycle it is our strategy to broaden, whether by organic growth or acquisition, the recruitment service that the Group provides  when the time is right and the opportunity arises, both by geography and sector. We continue to invest in our established businesses and we are looking to extend our reach in South East Asia. We expect to add to our established presence in that region (Hong Kong since 2006) by opening an office in China.

Outlook

Whilst there continues to be uncertainty surrounding recovery in the UK, there is evidence of confidence returning to our markets. Our overseas revenues provide diversity to our business and, subject to there being no systemic shocks, we look forward with some confidence to 2012.

Our people

Finally, I should like to thank our staff for their hard work and commitment over the last twelve months.These results are a testament to their efforts.

Robert Macdonald

Executive Chairman

2 June 2011

Operating Review

The Business

The Group's principal activity is the delivery of permanent and temporary recruitment services. Historically, the Group's focus has been to provide these services into the built environment sector. More recently the Group has successfully broadened its sector focus to include provision of recruitment services for customer insight staff in the market research and data analysis sectors.

The Group has delivered strong net fee income growth of 20.5% increasing net fee income from £6.67m to £8.04m producing an operating profit of £1.01m (2010: £0.46m).

In the UK business a number of our teams have had a strong year.  It is very encouraging to report that Prime Insight, the customer insight recruitment business closed with net fee income up by 147%. Against this net fee income from our temporary business reduced by 33% from £1.47m to £0.98m, as referred to in the Chairman's Statement this area has been affected by the government spending cuts.

On the international front, net fee income grew by 15.8% from £2.02m to £2.34m, reflecting a partial return of confidence to the Middle East market and the strength of the South East Asia market. With respect to the latter we have doubled the consultant headcount in our Hong Kong office during the course of the year, which we expect to provide strong net fee income growth in 2012.

During the year we continued to invest in new market sectors. We have established teams in both the UK and Internationally serving the environment and energy sectors and, in the UK, serving the pharmaceutical research sector. These teams have now been in place since June 2010 and we expect them to generate net fee income growth  in 2012.

Our Staff

The success of our business is reliant on the quality of our staff and we have adopted an improved recruitment and training process during the year. Whilst overall headcount has remained similar to 2010, productivity per head has increased by 16% and we are looking for this to further improve in 2012.

A testament to the above approach is that our largest brand, Macdonald & Company, was placed in the top 100 companies to work for by the Sunday Times and  achieved 2 Star Status in "The Sunday Times 100 Best Small Companies To Work For 2011".

Current Trading

The outlook for the year remains positive. We believe that the strong market position of our UK business combined with the continued investment in new sectors and our overseas businesses will enable us to further increase  the net fee income generated by the Group.

Peter Moore

Managing Director

2 June 2011

Financial Review

Trading results

Gross fee income for the year from continuing operations decreased by 1.6% to £13.95m (2010: £14.18m).

Net fee income increased by 20.5% to £8.04m (2010: £6.67m).

The group considers net fee income to be the 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 £7.03m which represents 87% of net fee income (2010: £6.21m: 93%).  A significant contributor to the reduction as a percentage of net fee income was the improvement in fee productivity across the group. Profit before tax increased by 120 per cent to £1.01m (2010: £0.46m).

The taxation charge is £0.33m on a profit on ordinary activities before taxation of £1.02m which gives an overall tax rate of 31.8% (2010: 27.9 %).  The reasons for the difference from the standard UK corporation tax rate of 28% are detailed in note 8 of the accounts. 

Earnings per share

Basic earnings per share increased by 110% to 5.86pence (2010: 2.79 pence).The diluted earnings per share increased by 108% to 5.65pence (2010: 2.71pence).

Dividend

As outlined in the Chairman's statement, the Directors propose a final dividend of 2.25 pence which will, subject to shareholder approval at the Annual General Meeting, be paid on 1 July 2011 to shareholders who are on the register on 17 June 2011, making a total dividend paid to shareholders for the year of 4.00 pence per ordinary share.

Balance sheet

The Group's net assets position at 31 March 2011 is similar to last year at £13.79m (2010:13.53m)

Trade receivables are slightly down on last year at £1.72m (2010:£1.78m) as is the average credit period taken by customers at 45 days (2010: 46 days).

Cash flow and cash position

Net cash inflow of £1.58m (2010: inflow of £0.89m) was generated from operating activities during the year, which after net taxation payments of £0.23m (2010: net taxation payment of £0.03m), resulted in a net cash inflow from operating activities of £1.35m (2010: inflow of £0.86m).

The group operates a centralised treasury function with a net cash position at 31 March 2011 of £3.03m, compared to a net cash position of £2.3m at 31 March 2010.

Chris Heayberd

Finance Director

2 June 2011

Condensed consolidated statement of comprehensive income

For the year ended 31 March 2011

			Year ended
	Note	31 March 2011			31 March 2010
				£'000	£'000
Revenue	2			13,953	14,180
Cost of sales				(5,913)	(7,507)
Net fee income	2			8,040	6,673
Administrative expenses				(7,031)	(6,212)
Operating profit	2			1,009	461
Finance income				19	12
Finance expense				(7)	(11)
Profit before taxation				1,021	462
Income tax expense	3			(325)	(129)
Profit for the year Other comprehensive loss Foreign currency exchange differences				696 (55)	333 (18)
Total comprehensive income for the year				641	315
Attributable to:
Equity shareholders of the parent				641	315
Earnings per share	5
Basic earnings per share				5.86p	2.79p
Diluted				5.65p	2.71p

The above results relate to continuing operations

Condensed consolidated statement of financial position

As at 31 March 2011

		2011	2010
		£'000	£'000
Assets
Non - current assets
Goodwill		9,769	9,769
Property, plant and equipment		258	251
Deferred tax asset		26	54
		10,053	10,074
Current assets
Trade and other receivables		2,956	2,795
Cash and cash equivalents		3,104	2,783
		6,060	5,578
Total assets		16,113	15,652
Liabilities
Current liabilities
Financial liabilities		56	476
Trade and other payables		2,045	1,514
Current tax liabilities		198	130
		2,299	2,120
Non-current liabilities
Financial liabilities - borrowings		21	-
Total liabilities		2,320	2,120
Net assets		13,793	13,532

Called up share capital			1,194	1,194
Capital redemption reserve fund			9	9
Treasury shares			(39)	(9)
Share premium account			7,095	7,095
Merger reserve			173	173
Share option reserve			108	77
Currency translation reserve			413	468
Retained earnings			4,840	4,525
Total equity			13,793	13,532

Condensed consolidated statement of changes in equity

For the year ended  31 March 2011

	Called up share capital	Capital Redemp tion reserve	Treasury shares	Share premium account	Merger reserve	Share option reserve	Foreign currency trans- lation	Retained earnings	Total
	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000
At 1 April 2009	1,203	-	-	7,095	173	176	486	4,335	13,468
Total comprehensive income for the year	-	-	-	-	-	-	(18)	333	315
Adjustment in respect of share schemes	-	-	-	-	-	(99)	-	113	14
Shares purchased for cancellation	(9)	9	-	-	-	-	-	(18)	(18)
Shares purchased for treasury	-	-	(9)	-	-	-	-	-	(9)
Dividend	-	-	-	-	-	-	-	(238)	(238)
At 31 March 2010	1,194	9	(9)	7,095	173	77	468	4,525	13,532
Total comprehensive income for the year	-	-	-	-	-	-	(55)	696	641
Adjustment in respect of share schemes	-	-	-	-	-	31	-	6	37
Shares purchased for treasury	-	-	(30)	-	-	-	-	-	(30)
Dividend	-	-	-	-	-	-	-	(387)	(387)
At 31 March 2011	1,194	9	(39)	7,095	173	108	413	4,840	13,793

 

Condensed consolidated cash flow statement

For the year ended 31 March 2011

		Year ended		Year ended
			31 March 2011	31 March 2010
	Note		£'000	£'000
Cash generated from underlying operations	6		1,577	887
Income tax paid			(229)	(78)
Income tax received			1	51
Net cash from operating activities			1,349	860
Cash flows from investing activities
Interest received			19	12
Net purchase of property, plant and equipment			(169)	(51)
Net cash (used in)/from investing activities			(150)	(39)
Cash flows from financing activities
Repayment of borrowings			(280)	(280)
Capital element of hire purchase obligations			25	-
Purchase of own shares			-	(18)
Treasury shares			(30)	(9)
Dividend paid to shareholders			(387)	(238)
Interest paid			(7)	(11)
Net cash used in financing activities			(679)	(556)
Net increase in cash and cash equivalents			520	265
Cash and cash equivalents at beginning of the year			2,587	2,350
Exchange loss on cash and cash equivalents			(55)	(28)
Cash and cash equivalents at the end of the year	7		3,052	2,587

Notes to the financial statements

For the year ended 31 March 2011

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 2011 and does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. Group statutory accounts for 31 March 2010 have been delivered to the Registrar of Companies and those for 31 March 2011 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)     Gross fee revenue, net fee income and operating profit by geographic region

	Gross fee income			Net fee income				Operating profit
	31 March 2011		31 March 2010		31 March 2011		31March 2010		31 March 2011		31 March 2010
	£'000		£'000		£'000		£'000		£'000		£'000
UK	11,617		12,163		5,704		4,656		1,120		628
Other	2,336		2,017		2,336		2,017		(111)		(167)
Total	13,953		14,180		8,040		6,673		1,009		461

All revenues disclosed are derived from external customers.

The accounting policies of the reportable segments are the same as the Group's accounting policies. Segment operating profit represents the profit earned by each segment after allocation of central administration costs.

2    Segmental analysis (continued)

b)     Gross fee income and net fee income generated from permanent and temporary placements

					Gross fee income					Net fee income
					31 March 2011		31March 2010		31 March 2011			31 March 2010
					£'000		£'000		£'000			£'000
Permanent					7,261		5,392		7,060			5,206
Temporary					6,692		8,788		980			1,467
Total					13,953		14,180		8,040			6,673

3      Taxation on profits on ordinary activities

	Year Ended
	31 March 2011	31 March 2010
	£'000	£'000
Analysis of charge in the year
Current tax
UK Corporation tax	297	135
UK tax over provided in previous years	-	(1)
Total current tax	297	134
Deferred tax
Origination and reversal of temporary differences	28	(5)
Total income tax expense in the income statement	325	129
The tax assessed for the year is equal to that obtained by applying the standard rate of corporation tax in the UK.  Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

3      Taxation on profits on ordinary activities (continued) Reconciliation of the effective tax rate
	Year Ended
	31 March 2011	31 March 2010
Profit before taxation	1,021	462
UK corporation tax at the standard rate of 28% (2010: 28%) on profit on ordinary activities	286	129
Effects of:
Expenses not deductible for tax purposes	22	24
Capital allowances for the period less than depreciation	22	4
Tax losses utilised	(5)	(13)
Tax rate differences	2	(12)
Marginal relief	(2)	(2)
Overprovision provision in prior years	-	(1)
Tax charge for the year	325	129

4      Dividends

	Year ended
	31 March 2011	31 March 2010
	£'000	£'000
Final dividend for 2010: 1.5 pence per share (2009: NIL pence per share)	178	-
Interim dividend for 2011: 1.75pence per share (2010: 2.0 pence per share)	209	238
	387	238

The Directors propose to pay a final dividend in respect of the year ended 31 March 2011 of 2.25 pence per share (2010: 1.50 pence per share) which, subject to shareholder approval, will be paid on 1 July 2011 to shareholders who are on the register on 17 June 2011.

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.

	Year ended
	31 March 2011	31 March 2010
	£'000	£'000
Retained profit for basic and diluted earnings per share	696	333
	Number	Number
Weighted average number of shares used for basic earnings per share	11,883,121	11,956,824
Dilutive effect of share options	440,537	314,761
Diluted weighted average number of shares used for diluted earnings per share	12,323,657	12,271,585
	Pence	Pence
Basic earnings per share	5.86p	2.79p
Diluted earnings per share	5.65p	2.71p

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

				Year ended
				31 March 2011 £'000			31 March 2010 £'000
Profit before taxation				1,021			462
Adjust for:
Depreciation				163			189
Share option reserve movement				37			14
Profit on sale of plant & equipment				(3)			-
Net finance income				(12)			(1)
Operating cash flow before changes in working capital				1,206			664
(Increase)/decrease in receivables				(160)			555
Increase/(decrease) payables				531			(332)
Cash generated from underlying operations				1,577			887

7      Analysis of net cash

Group	At 1 April 2010	Cash flow	At 31 March  2011
	£'000	£'000	£'000
Cash at bank and in hand	2,783	321	3,104
Bank overdraft	(196)	144	(52)
	2,587	465	3,052
Bank loans due within one year	(280)	280	-
Obligations under finance lease < 1 year > 1 year	-                 -	(2)               (23)	(2)               (23)
Total cash	2,307	720	3,027

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 2011.

 

END

 

 

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