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Prime People reports improved operating profit

Chairman's Statement

Overview

The Group is pleased to report improved Operating Profit of &pound0.6m in the first half of this year compared to &pound0.29m achieved in the comparable period last year.  The growth in the period has been generated from our permanent business which remains the main focus of our business, representing 93% of Net Fee Income (NFI) compared to 90% in the comparable period of 2013.

The improvement in performance highlighted in our 2014 annual Report has continued through in to the current period.  NFI in the period for the Group is &pound5.0m which is a 32% increase on last year (2013: &pound3.8m).  There were a number of strong NFI performances in both the UK and Asia.  In the UK NFI increased by 28% from &pound2.5m to &pound3.2m and in Asia NFI increased by 59% from &pound0.9m to &pound1.4m.

Our Singapore office, which is our most recently established office, has continued to develop and is now profitable, which compares well with the break even performance reported in the same period last year.

Financial Results

Group revenue increased by 18% for the period to &pound8m (2013:&pound6.8m).

Administrative costs for the group have increased from &pound3.5m in 2013 to &pound4.4m in the current period which is in part a consequence of higher commission paid to consultants for improved performance and in part an up lift in fee earning head-count of the Group.

Profit before taxation for the period has increased to &pound0.6m (2013:&pound0.3m)

The charge for taxation is based on the expected annual effective tax rate of 21% (2013: 23%).

Basic earnings per share for the period has increased to 4.17p (2013:1.94p).

Return of capital to shareholders

At the start of the year the Group had net cash of &pound2.96m.  As outlined when we announced our final results for 2014 it was the intention of the directors to return cash to shareholders.  A circular was sent to shareholders on 29 May 2014 explaining the background to and reasons for the proposed return of capital and convening a General Meeting on 16 June 2014.  At the meeting shareholders approved the reduction totalling &pound1.8m. On 16 July 2014 we announced that the capital reduction had been confirmed by the Court and on the 24 July cheques amounting to 14.809329 pence per share were sent to shareholders.

CHAIRMAN'S STATEMENT (cont)

Cash Flow

Following the return of capital of &pound1.8m the Group continues to maintain a strong net cash position.

After net taxation payments of &pound0.1m (2013: receipts &pound0.01m) cash generated from operations was &pound0.37m (2013: &pound0.99m).  A final dividend for 2014 of &pound0.38m was paid in June 2014 (2013: &pound0.37m).  At the end of the period the Group had net cash of &pound1.1m (2013: &pound2.8m)

Dividend

Given the level of trading in the first half of 2014 the Board will be declaring an interim dividend of 1.75p (2013: 1.00p).

Outlook

We have reasonable expectations that the UK businesses will continue to perform at least at similar levels to the first half of the year. We are looking for continued improved performance from our businesses in Asia which we believe will provide us with increased opportunities for growth in the mid to long term, but continue to have conservative expectations as to the likely performance from our businesses in the Rest of the World.

The focus for the Group is to maximize the returns from recent investment in the business and continue to recruit new heads into those markets where there is potential for NFI and profit growth.

 

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