Prime People : Interim Report for the six months ended 30 September 2017

Prime People Plc

Interim Report

for the six months ended 30 September 2017

2017

PRIME PEOPLE PLC

UNAUDITED CONDENSED CONSOLIDATED INTERIM REPORT

For the six months ended 30 September 2017

Contents Page

Chairman's statement 1

Unaudited condensed consolidated interim statement of comprehensive income 4

Unaudited condensed consolidated interim statement of financial position 5

Unaudited condensed consolidated interim statement of changes in equity 6

Unaudited condensed consolidated interim statement of cash flow 7

Notes to the unaudited condensed consolidated report 8

9thNovember 2017

Prime People Plc Unaudited Condensed Consolidated Interim Report for the six months ended 30 September 2017 CHAIRMAN'S STATEMENT Overview

I am pleased to report the results for Prime People Plc for the half-year ended 30 September 2017.

Market conditions in the period became more challenging for our overseas businesses whereas our 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.

Net Fee Income ("NFI") in the period for the Group was £6.15m (2016: £6.33m). The profit before tax for the first half, on a like for like basis, was £0.70m (2016: £0.76m).

The interim dividend will be 1.75p per share (2016: 1.75p).

Financial Results

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). Our UK business showed strong NFI performance with an increase to £3.84m (2016: £3.40m). Our 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, we have invested in the growth and diversification of our businesses increasing consultant headcount across the Group by 3%.

CHAIRMAN'S STATEMENT (cont)

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 our 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 our permanent and contract businesses.

Our 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 our core real estate market. Action has been taken to refocus business development activity and to address training needs. This is having positive outcomes and we expect an improved performance from the region in the second half of the year.

Our business in Dubai is reported under Rest of the World below and represents 3.04 per cent 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).

Cash Flow

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.

Dividend

The Board will be declaring an interim dividend of 1.75p (2016: 1.75p) payable on 24 November 2017 to those shareholders whose names are on the register on 17 November 2017.

Command Recruitment Group (H.K.) Limited

On 11thOctober 2017, shortly after the half year's end, our Hong Kong subsidiary, Macdonald and Company Limited acquired 60 per cent 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 per cent 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 30 June 2018.

CMD specialises in providing professional and executive staff for the construction & engineering, design & development, infrastructure and professional services sectors. The transaction adds considerably to the Group's client reach and our span of services in the Asia Pacific and Middle East regions. The fit with our current business is complementary and we have identified a range of opportunities arising from the investment.