RNS Number:2254I
Prime People PLC
04 March 2003
PRIME PEOPLE PLC
Operations: principally specialist recruitment of senior managers for the
leisure industry, together with a related training business
PRELIMINARY RESULTS FOR THE YEAR ENDED DECEMBER 31, 2002
KEY POINTS
* Group profit before tax up 68 % to #0.27m(2001 #0.16m)
* Sales from continuing operations down 3% to 3.93 million (2001: #4.06m)
* Diluted earnings per share up 100% to 0.48p (2001: 0.24p)
* In the light of continued uncertainty in the hospitality sector no
dividend will be paid
* Portfolio Design International has been severely affected by the downturn
in the tourism sector and as a result will close
* The balance sheet has been strengthened with net funds of #1,156,626
Commenting on the results, chief executive David Coubrough said, "The
improvement in both profitability and the cash position is entirely down to the
performance of our recruitment subsidiary, Portfolio International. Trading in
the hotel and catering sector remains tough, but the Company has capitalised on
the upturn in domestic tourism and the growing leisure market. In the current
political and economic climate it is difficult to be anything other than
extremely cautious when viewing the current year."
Press enquiries:
David Coubrough, chief executive
Chris Heayberd, finance director 020 7520 5000
PRIME PEOPLE Plc
Chairman's statement
________________________________________________________________________________
Introduction
Against an uncertain economic background which is reflected by disappointing
results from our associate company Cameron Kennedy, and the Board decision
subsequent to the year end to close our design business, I am pleased to be able
to report that our core recruitment and training businesses have performed
strongly.
Results
Whilst we are pleased to announce a 68% improvement in profit on ordinary
activities from #158,900 to #266,746, it is disappointing to report that our
share of the losses recorded by Cameron Kennedy amounted to #85,772 (2001 -
#193,060 profit). Cameron Kennedy has found trading conditions in the financial
recruitment sector particularly difficult in the last year.
Although group sales from continuing business were marginally lower at #3.9m
compared to #4.06m in 2001, the small operating loss of #39,894 the previous
year turned to an operating profit of #348,878 - a strong performance which has
given some confidence to the core businesses within the group and justified the
difficult decision that we took to reduce consultant headcount in the latter
part of 2001.
Diluted earnings per share improved from 0.24p to 0.48p.
Group cash-flow has been positive over the year producing an increase in cash
and liquid resources of #0.53m and we end the year with nil gearing.
Operating review
After the problems of 2001, the hospitality industry continued to be faced with
difficult circumstances, the most significant factor being the continued low
average room rates of London hotels. This has significantly influenced the
industry's investment in both people (affecting Portfolio International) and
capital expenditure (affecting Portfolio Design International).
Given this backdrop, the performance of Portfolio International has been
resilient and provided the Group with an improved net profit and earnings per
share, both of which have doubled, albeit from a low base.
Portfolio International
In the last quarter of 2001, Portfolio International reduced consultant
headcount by 28%. This measure facilitated a return to profitability in 2002 as
the turnover for the year was very similar to the prior year, but with a
consequently much improved bottom line.
The Company benefited from an upswing in domestic tourism and capitalised on the
increasing UK leisure market where spend has continued to grow. The culinary
sector also demonstrated improved sales rates and grew turnover by 26% as the
demand for quality chefs has become an ever greater need of the hospitality
industry.
2003 is presenting further difficulties. The current nervousness at potential
world events is stalling appointments and the delay has an immediate impact on
sales performance. It is still too early to predict the outcome on the year
but, if necessary, there is still scope to reduce costs if turnover were to
decline significantly.
Portfolio Design International
The Interior Design business has failed to really recover from the impact of
events in 2001. The team was reduced by 50% in the last quarter of 2001 and has
achieved further recognition for its work, principally at the new restaurant at
the Mayfair Millennium Hotel. However, the costs of maintaining this business
(loss in 2002 #39,894) have become too onerous, after a second year of failure
to cover its own costs. Hence the Board have taken the decision, in
consultation with the minority shareholder, to close the business.
PRIME PEOPLE Plc
Chairman's statement
________________________________________________________________________________
Harper Craven Associates
This business has recovered its profitability, as it (like Portfolio
International) reduced its cost base in the last quarter of 2001. Harper Craven
has been successful in winning new business and in retaining work at a time of
on-going pressure on training budgets. The quality of this niche business has
won through in difficult times and is well placed to take advantage of any
upturn in the market.
Cameron Kennedy Resources
This company specialises in financial recruitment to both the permanent and
temporary market sectors. Our share of its losses in 2002 has been #85,772,
which includes a loss of #20,250 arising from a dilution in our interest from
46.5% to 44.7%.
It is difficult to predict an upturn this year as the marketplace Cameron
Kennedy recruits for (banks, financial institutions etc.) has yet to return to
commercial prosperity. For the time being the business remains focused and
determined to trade through the hard times that have affected it for the last 14
months.
Share Option Scheme
Following the preliminary announcement of our 2001 results, we granted options
under the 2001 Employee Share Option Scheme to certain key staff to subscribe
for 543,298 at an exercise price of 6.333p. All options granted will be subject
to achieving performance targets and are exercisable between 7 March 2005 and 7
March 2012.
Employees
As stated in last year's report, our management team has proved a tower of
strength, particularly in Portfolio International. The loyalty and commitment
of the team, whose average length of time with the company exceeds ten years,
has been very much appreciated.
Throughout the year, Portfolio International has maintained its commitment to
training and employee development programmes and this has manifested itself in
the resilient trading performance.
Prospects
The outlook for the recruitment industry remains very subdued. Costs remain
closely monitored and will be further reduced should the current levels of
business fall.
We do not anticipate any significant changes to the performance of the training
business in the coming year and we look forward to an improved result from
Cameron Kennedy.
In the light of the continued uncertainty we do not consider that the payment of
a dividend would be appropriate. We will consider the position again during the
coming year.
Richard E M Lee
Non Executive Chairman
3 March 2003
PRIME PEOPLE Plc
Consolidated profit and loss account for the year ended 31 December 2002
_______________________________________________________________________________
Continuing operations Discontinued operations
Note 2002 2001 2002 2001 2002 2001
# # # # # #
Turnover 3,933,886 4,059,632 168,348 493,865 4,102,234 4,553,497
Cost of sales (169,285) (221,231) (3,366) (24,004) (172,651) (245,235)
________ ________ ________ ________ ________ ________
Gross profit 3,764,601 3,838,401 164,982 469,861 3,929,583 4,308,262
Administrative expenses (3,415,723) (3,878,295) (193,258) (486,161) (3,608,981) (4,364,456)
________ ________ ________ ________ ________ ________
Group operating
profit/(loss) 348,878 (39,894) (28,276) (16,300) 320,602 (56,194)
Share of operating (loss)/
profit in associates (53,522) 205,060 - - (53,522) 205,060
Amortisation of goodwill (12,000) (12,000) - - (12,000) (12,000)
Loss arising from
dilution of
interest in associates (20,250) - - - (20,250) -
(85,772) 193,060 - - (85,772) 193,060
________ ________ ________ ________ ________ ________
Profit on ordinary
activities before
interest 263,106 153,166 (28,276) (16,300) 234,830 136,866
Interest receivable and
similar income (group) 32,452 25,533
Interest payable and
similar charges (group) (536) (3,499)
________ ________
Profit on ordinary
activities before taxation 266,746 158,900
Taxation on profit on
ordinary activities (91,906) (71,503)
________ ________
Profit on ordinary
activities after taxation
and transferred to
reserves 174,840 87,397
________ ________
Earnings per share
- Basic 2 0.48p 0.24p
- Diluted 2 0.48p 0.24p
________ ________
All recognised gains and losses are included in the profit and loss account.
PRIME PEOPLE Plc
Consolidated balance sheet at 31 December 2002
________________________________________________________________________________
2002 2002 2001 2001
# # # #
Fixed assets
Tangible assets 142,449 283,345
Investments:
Investment in associate 630,652 699,378
________ ________
773,101 982,723
Current assets
Debtors 1,235,628 1,195,853
Cash at bank and in hand 1,228,340 857,357
________ ________
2,463,968 2,053,210
Creditors: amounts falling due
within one year 796,955 790,659
_________ ________
Net current assets 1,667,013 1,262,551
________ ________
Total assets less current liabilities 2,440,114 2,245,274
_________ _________
Capital and reserves
Called up share capital 363,467 363,467
Share premium account 884,925 864,925
Merger reserve 173,077 173,077
Profit and loss account 1,018,645 843,805
________ ________
Equity shareholders' funds 2,440,114 2,245,274
________ ________
PRIME PEOPLE Plc
Consolidated cash flow statement for the year ended 31 December 2002
________________________________________________________________________________
Note 2002 2002 2001 2001
# # # #
Net cash inflow from
operating activities 3 502,582 383,022
Dividend from associated
undertaking - 158,100
Returns on investment and
servicing of finance
Interest received 32,452 25,533
Interest paid (536) (3,499)
________ ________
31,916 22,034
Taxation (7,963) (200,201)
Capital expenditure and financial
investment
Purchase of tangible
fixed assets (33,313) (203,778)
Sale of tangible fixed assets 30,300 34,212
________ ________
(3,013) (169,566)
________ ________
Net cash inflow before management
of liquid resources and financing 523,522 193,389
Management of liquid resources
Purchase of treasury deposits (600,000) (100,000)
Financing
Capital element of finance
lease payments (13,828) (12,565)
________ ________
(Decrease)/increase in cash 4 (90,306) 80,824
________ ________
PRIME PEOPLE Plc
Notes to the preliminary announcement for the year ended 31 December 2002
________________________________________________________________________________
1 Accounting Policies
The final results have been prepared on the same basis and using the same
accounting policies as those used in the preparation of the accounts for the
year ended 31 December 2001, except that the group has adopted FRS19, Deferred
Taxation in 2002. This change in accounting policy has had no impact on the
results of the group.
2 Earnings per share
The earnings per share is calculated based on a weighted average number of
shares of 36,346,692 (2001 - 36,346,692) and the profit of #174,841 (2001 -
#87,397), giving earnings per share of 0.48p (2001 - 0.24p).
Diluted earnings per share is based on the above earnings and adjusts the basic
weighted average number of shares to 36,571,381 (2001 - 36,651,887) as a result
of dilutive share options, giving earnings per share of 0.48p (2001 - 0.24p).
The weighted average number of shares in issue calculated under the different
methods reconciles as follows:
2002 2001
# #
Basic 36,346,692 36,346,692
Number of shares under option 1,043,298 500,000
Number of shares which would have
been issued at fair value (818,609) (194,805)
_________ _________
Diluted 36,571,381 36,651,887
_________ _________
3 Reconciliation of operating profit to net cash inflow from operating
activities
2002 2001
# #
Group operating profit/(loss) 320,602 (56,194)
Depreciation 151,205 179,652
Profit on sale of tangible
fixed assets (7,296) (1,763)
(Increase)/Decrease in debtors (39,775) 364,764
Increase/(Decrease) in creditors 77,846 (103,437)
________ ________
Net cash inflow from operating
activities 502,582 383,022
________ ________
PRIME PEOPLE Plc
Notes to the preliminary announcement for the year ended 31 December 2002
________________________________________________________________________________
4 Reconciliation of net cash inflow to movement in net funds
2002 2002 2001 2001
# # # #
(Decrease)/Increase in cash in the year (90,306) 80,824
Cash outflow from
decrease in debt and lease financing 13,828 12,565
Cash outflow from increase in
liquid resources 600,000 100,000
________ ________
Increase in net funds resulting
from cash flows in the year 523,522 193,389
Opening net funds 633,104 439,715
________ ________
Closing net funds 1,156,626 633,104
________ ________
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 year
ended 31 December 2002 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 year ended 31
December 2001 is extracted from the financial statements to that date which
received an unqualified auditors' report and have been filed with the Registrar
of Companies.
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