Group revenue down slightly in H1 2017 for Prime People
Prime People Plc has reported its half-year ended 30th September 2017.
Market conditions in the period became more challenging for its overseas businesses whereas the group’s businesses in the UK performed well. The outcome for the period reflects the overseas businesses' performance and the Company's expenditure on, and commitment to long term growth internationally and to supporting new business lines across the Group.
Group revenue was 1.83% lower than the same period last year at £11.27m (2016: £11.48m).
Net fee income ("NFI") in the period for the group was £6.15m (2016: £6.33m). The company’s UK business showed strong NFI performance with an increase to £3.84m (2016: £3.40m). Its overseas NFI was £2.31m (2016: £2.93m).
Administrative costs for the group were £5.50m during the period (2016: £5.57m). Whilst continuing to exercise careful cost control, the company has invested in the growth and diversification of its businesses increasing consultant headcount across the Group by 3%.
The reduction in profit before taxation in the period to £0.65m, after exceptional costs of £50,000 in the period relating to the acquisition of Command Recruitment, (2016: £0.76m) is the result of lower levels of activity in its overseas businesses and fixed staff costs associated with talent investment.
In the UK profit before tax grew to £0.51m from £0.10m in the same period in the prior year, driven by good growth in NFI in both Prime People’s permanent and contract businesses.
The group’s Asia business, which covers the Group activities in Hong Kong and Singapore, closed the period with profit before tax of £0.26m (2017: £0.60m). The regional performance was affected by Chinese capital control policies, which resulted in reduced demand in its core real estate market. Action has been taken to refocus business development activity and to address training needs. This is having positive outcomes and it expects an improved performance from the region in the second half of the year.
Its business in Dubai is reported under Rest of the World below and represents 3.04% of Group's activities. The business experienced reduced NFI of £0.19m (2016: £0.33m). The business has relatively high fixed costs and the slower than expected development of a new revenue stream together with staff movements resulted in a negative contribution in the period of £0.12m. Performance from the region is expected to improve in the second half.
The charge for taxation of £0.14m (2016: £0.16m) is based on the expected annual effective tax rate of 19% (2016: 20%).
Basic earnings per share for the period were 4.16p (2016: 4.92p).
The Group continues to maintain a strong net cash position. At the end of the period the Group had net cash of £2.57m (2016: £1.34m). Following payment of £1.00m for the acquisition of the interest in Command Recruitment Group (H.K.) Limited, the Group cash held as at the date of this statement was £1.86m.
The Board will be declaring an interim dividend of 1.75p (2016: 1.75p) payable on 24th November 2017 to those shareholders whose names are on the register on 17th November 2017.
On 11th October 2017, shortly after the half year's end, our Hong Kong subsidiary, Macdonald and Company Limited acquired 60% of the equity capital of Command Recruitment Group (H.K.) Limited ("CMD") for consideration of HK$9.9 million (£1.0 million).
The consideration for the acquisition was funded from the Group's existing cash reserves. The key management of CMD will remain with the business post-acquisition and they, as a group, will retain the remaining 40% of CMD's equity capital. Under the terms of the shareholders' agreement, the Group has the option to purchase CMD's remaining equity capital after 30th June 2018.
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