Final Results
Prime People PLC
07 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 real
estate, infrastructure and commercial property recruitment specialist, today
announces 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 and
South Africa
* Pro forma 2006 results have been provided in order to give a meaningful
comparison 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 in
the UK and excellent progress on our international expansion strategy. Demand
for our services has remained solid, driven by an ongoing pipeline of major UK
infrastructure projects and in commercial property internationally by the demand
for increasingly sophisticated expertise, in property investment and management.
'The performance of the business in the year to date has been encouraging and is
in line with our expectations, with our international operations performing
well. We anticipate that there will continue to be opportunities for good
organic growth both in the UK and internationally.'
-Ends-
For further information please contact:
Prime People 020 7493 5689
Robert Macdonald, Executive Chairman
Peter Moore, Managing Director
Hogarth Partnership 020 7357 9477
James Longfield
Arbuthnot Securities 020 7012 2000
Andrew Fullerton
Ian Williams
Chairman's Statement
Introduction
I am pleased to report the results for Prime People Plc for the year ended 31
March 2007, with good progress made in our core UK market as well as on our
international expansion strategy.
Profit before taxation for the year was £2.01 million, which is a 14.2 per cent
increase on the pro forma profit for the previous year of £1.76 million and is
in line with the trading statement issued on 3 May 2007. As this is our first
full year of trading since the Group's transformation in January 2006 by the
reverse takeover by Macdonald & Company Group Limited ('Macdonald'), pro forma
results have been provided to give a meaningful comparison of year on year
performance of the continuing business. On a statutory basis, the £2.01 million
reported profit before tax for 2007 compares to a loss for the 15 months ended
31 March 2006 of £11,000.
Prime People's 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.
Reflecting the positive conditions within the markets we serve and a continuing
demand for professional staff, gross fee income increased 22 per cent to £20.2
million (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 cent
increase on the previous year (2006 pro forma: £8.8 million).
In the UK, demand for property professionals remained strong throughout the
year. The people we place are involved in the investment, development and
management of all types of property asset. Our main revenues are generated from
placing permanent and contract staff who are specialists in disciplines such as
fund management, investment, development and financing, project management,
quantity surveying and building surveying, facilities management, town and
country planning, architecture and social housing. With a steady pipeline of
development, infrastructure and regeneration projects already committed to in
the UK, we expect to see continuing strong demand for candidates. In addition,
increases in NFI are also being supported by wage inflation arising from a
shortage of skilled candidates in the sectors we serve. Our new architecture and
social housing businesses, which commenced in the year, further strengthen our
offering and provide good opportunities for new revenue growth in the coming
year.
In line with our stated plans to broaden the Macdonald business overseas, during
the year new offices were established in Hong Kong, Australia and the Republic
of South Africa and our Dubai operation was strengthened. The Dubai and Hong
Kong offices are accessing areas of particularly high economic growth whilst the
Australian and South African offices, which opened more recently, address local
markets and further facilitate the global movement of the professionals that
Macdonald places. The decision to bring forward the opening of our Australian
office into the current year was opportunity driven and resulted in start-up
costs of approximately £0.09 million in the year, which were not originally
planned for. In the period being reported, the four overseas offices contributed
10 per cent of NFI (2006 - Nil). We expect NFI derived from overseas offices to
continue 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 to
propose a final dividend of 2.25p per ordinary share. This will be paid on 25
July 2007 to shareholders on the register on 29 June 2007 and brings the total
dividend 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. The
financial statements set out below provide a comparison with the 15 month period
to 31 March 2006.
Year ended Year ended
31 March 2007 31 March 2006
£'000 £'000
Actual Pro forma
Gross 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 Craven
Associates Limited ('Harper Craven').
Longer term growth opportunities
In pursuing our overall growth strategy, we continue to focus on organic
expansion - adding new consultants in existing and complimentary areas in the UK
and internationally. At the same time we continue actively to seek acquisition
targets of an appropriate size and operational fit. However, as yet none have
been found which meet our acquisition criteria.
Outlook
The performance of the Company in the year to date has been encouraging and is
in line with our expectations, with our international operations performing
well. We anticipate that there will continue to be opportunities for good
organic growth both in the UK and internationally.
I look forward to updating shareholders of developments in these various areas
in due course.
Robert Macdonald
Executive 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, a
sector comprising assets in the UK alone valued at over £640 billion.
The sector we serve has been buoyant during the past year, with strong demand
for professional staff, particularly for permanent placements. This has led to a
further increase in gross fee income and profit over the past year and the
business has maintained its record of consistent growth. NFI increased by 27.5
per cent from £8.23 million pro forma 2006 to £10.5 million, split 79/21 between
permanent 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 shown
below:
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 has
performed well in the year. We now have eight fee earners operating from this
office.
In July 2006 we commenced operations in Hong Kong, when a senior member of staff
was relocated there. The cultural challenges of doing business in this region
meant that it has taken longer to become established in this market than we had
originally anticipated, resulting in start-up losses of £0.08 million in the
period being reported. The business is now performing well and we have added
additional 'ex-pat' and local staff to this operation. We now have five fee
earners serving the Asian region, which includes mainland China.
In January 2007 we took the opportunity to bring forward our plans to open an
office in Australia and established our office in Sydney with the secondment of
a senior member of staff who has subsequently been joined by another member of
our London team and four local hires.
Our Johannesburg office comprises two fee earners and began trading in April
2007.
We are very pleased with the progress our overseas offices have made during the
year in contributing 10 per cent of total Group NFI.
During the coming year we plan to consolidate our positions in overseas markets
with further hires. These, together with a full year of trading from the more
recently opened offices, will, we expect, result in an increase in NFI derived
from 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 coaching
programmes to a broad range of corporate clients. This business has been part of
the group for a number of years, prior to the reverse takeover by Macdonald, and
has made a small contribution to group profit before tax in the year.
Outlook
Prospects for Macdonald appear good with demand for its services continuing from
a pipeline of UK infrastructure projects running long into the future and in
commercial property internationally from demand for increasingly sophisticated
expertise in property investment and property management.
In the UK, our new revenue lines in architecture and social housing have each
made a good start and we expect that they will make increasing contributions in
the coming years.
Overseas we are heartened by the positive reception we have received from
locally based employers, many of these are regional offices of international
businesses with which we already have relationships in the UK. Our expectations
for our overseas operations are enhanced by the higher economic growth being
seen 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 and
commitment over the last twelve months and remind shareholders that these
results are a testament to their efforts.
Peter Moore
Managing Director
7 June 2007
Prime People Plc
Financial Review
______________________________________________________________________________
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS).
Trading Results
Gross fee income for the year from continuing operations increased by 22 per
cent 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 the
business and is defined as the income generated from permanent placements
together with the contribution earned from contract and temporary staff.
Administrative expenses totaled £8.75m which represents 80.7 per cent of net fee
income (2006: pro forma £7.0m - 79.5 per cent). Profit before tax increased by
14.2 per cent to £2.01m (2006: pro forma £1.76m).
The taxation charge is £0.67m on a profit on ordinary activities before taxation
of £2.01m which gives an overall tax rate of 33 per cent (2006: pro forma 30 per
cent).
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 dividend
of 2.25p which will be paid on 25 July 2007 to shareholders who are on the
register 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 operating
activities 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 activities
of £0.74m (2006: outflow of £0.43m).
The group operates a centralised treasury function with a net debt position at
31 March 2007 of £0.84m, compared to £1.25m at 31 March 2006.
Christopher Heayberd
Finance 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 fee
income 20,179 5,373
Direct costs (9,344) (2,256)
--------- ---------
Net fee income 10,835 3,117
Administrative
expenses (8,748) (2,985)
--------- ---------
Operating
profit 2,087 132
--------- ---------
Share of
operating loss
in associate - (79)
Impairment
loss in
associated
undertaking - (156)
--------- ---------
- (235)
--------- ---------
--------- ---------
Profit/(loss)
before
interest 2,087 (103)
Interest
receivable and
similar income 18 134
Interest
payable and
similar
charges (96) (42)
--------- ---------
Profit/(loss)
before
taxation 2,009 (11)
Taxation (665) (16)
--------- ---------
Profit after
tax for
continuing
activities 1,344 52
Share of loss
after tax in
associate - (79)
--------- ---------
--------- ---------
Profit/(loss) for the period attributable
to equity
shareholders 1,344 (27)
========= =========
Earnings/(loss)
per share 2
- Basic 11.38p (0.52p)
- Diluted 10.93p (0.52p)
- Continuing
basic 11.38p 6.69p
- Continuing
diluted 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 3,340
2005
New shares 716 - 5,304 - - - 6,020
issued
Consideration
shares to be - 1,000 - - - - 1,000
issued
Equity - - - - - (46) (46)
dividends
Loss for the - - - - - (27) (27)
year
-------- -------- -------- -------- -------- -------- --------
At 31 March 1,084 1,000 6,214 - 173 1,816 10,287
2006
Consideration
shares issued 119 (1,000) 881 - - - -
Equity - - - - - (271) (271)
dividends
Share option - - - 78 - - 78
charge
Profit for - - - - - 1,344 1,344
the year -------- -------- -------- -------- -------- -------- --------
At 31 March 1,203 - 7,095 78 173 2,889 11,438
2007 ======== ======== ======== ======== ======== ======== ========
Prime People Plc
Consolidated balance sheet at 31 March 2007
2007 2006
£'000 £'000
Assets
Non - current assets
Goodwill 9,769 9,769
Property, plant and equipment 316 260
Deferred tax asset 91 75
--------- ---------
10,176 10,104
--------- ---------
Current assets
Investment held for sale - 177
Trade and other receivables 4,601 3,333
Cash and cash equivalents 304 318
--------- ---------
4,905 3,828
--------- ---------
Total assets 15,081 13,932
--------- ---------
Liabilities
Current liabilities
Financial liabilities 308 445
Trade and other payables 2,034 1,773
Current tax liabilities 461 304
--------- ---------
2,803 2,522
--------- ---------
Non-current liabilities
Financial liabilities - borrowings 840 1,123
--------- ---------
Total liabilities 3,643 3,645
--------- ---------
Net assets 11,438 10,287
========= =========
Capital and reserves
Called up share capital 1,203 1,084
Share premium account 7,095 6,214
Other reserve 173 173
Consideration shares to be issued - 1,000
Share 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 activities
Cash generated
by operations 3 1,266 155
Taxation
received - 5
Corporation
tax paid (525) (590)
----------- ---------
Net cash
from/(used in)
operating
activities 741 (430)
----------- ---------
Cash flows from investing activities
Interest
received 18 134
Interest paid (96) (42)
Purchase of
subsidiary
undertaking - (9,876)
Disposal of
investment
held for sale 178 -
Net cash
acquired with
business - 202
Net purchase
of property,
plant and
equipment (164) (13)
----------- ---------
Net cash used
in investing
activities (64) (9,595)
----------- ---------
Cash flows from financing activities
Issue of
ordinary share
capital - 6,020
New bank loan - 1,400
Repayment of
borrowings (280) -
Capital
element of
hire purchase
obligations (7) (9)
Dividend paid
to
shareholders (271) (46)
----------- ---------
Net cash (used
in)/from
financing
activities (558) 7,365
----------- ---------
Net
increase/(decr
ease) in cash
and cash
equivalents 119 (2,660)
Cash and cash
equivalents at
1 April 2006 160 2,820
----------- ---------
Cash and cash
equivalents at
31 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 financial
statements are outlined below.
These financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS) and the International Financial Reporting
Interpretations Committee (IFRIC) interpretations applicable at the balance
sheet date, and with those parts of the Companies Act 1985 applicable to
companies reporting under IFRS. These financial statements have been prepared
under the historical cost convention. The Group is required to provide
comparative information for the prior reporting period.
The group used the equity accounting method to include the group's share of
operating profit and corporation tax charge, for its associated undertaking. In
the previous period the associated undertaking has been written down to its fair
value.
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 (loss)/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 calculation of
earnings per share are shown below.
12 months 15 months
ending 31 March ending 31 March
2007 2006
£'000 £'000
Retained
profit/(loss)
for basic
earnings/(loss)
per share 1,344 (27)
Tax on
profit/(loss) 665 16
Exceptional
item - 186
Loss arising
from associate
undertaking - 235
--------- ---------
Profit before
tax,
exceptional
items 2,009 410
Taxation (665) (71)
--------- ---------
Adjusted
retained
profit for
adjusted
earnings per
share 1,344 339
========= =========
Number Number
Weighted average number of shares used for basic
and
continuing
earnings per
share 11,810,511 5,052,844
Dilutive
effect of
share options
and shares to
be issued 482,768 257,522
--------- ---------
Diluted weighted average number of shares used
for diluted
earnings per
share 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 discontinued
operations, associated undertakings and exceptional costs.
3 Reconciliation of operating profit to net cash inflow from operating
activities
12 months 15 months
ending 31 March ending 31 March
2007 2006
£'000 £'000
=== ===
Group
operating
profit 2,087 132
Depreciation 108 38
Share option
reserve
movement 78 -
Increase in
debtors (1,268) (206)
Increase in
creditors 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 one
year (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 in
section 240 of the Companies Act 1985. The financial information for the 12
months ended 31 March 2007 is extracted from the group's financial statements to
that date which received an unqualified auditors' report and will be filed with
the Registrar of Companies. The financial information for the 15 month period
ended 31 March 2006 is extracted from the financial statements to that date
which received an unqualified auditors' report and have been filed with the
Registrar 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 the
Company's registered office: 40a Dover Street, Mayfair, London W1S 4NW.
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