RNS Number:1829S
Public Recruitment Group plc
02 March 2007
Public Recruitment Group PLC
Preliminary Results for the year ended 31 December 2006
Business and Financial Highlights
o Turnover of #86.7m (2005: #80.2m) increased by 8%
o Top 2 position in our three chosen markets of education, social work
and health
o Gross margin increased to 21.3% (2005: 21.2%)
o Normalised EBITA* increased by 23% to #6.1m (2005: #4.9m)
o Organic operating profit growth of 14%
o Conversion of net fee income to normalised EBITA* increased to 32.8%
(2005: 29.0%)
o Adjusted earnings per share** of 10.5p (2005: 10.3p) up 2%
o Basic earnings per share of 0.6p (2005: 0.4p), up 42%.
*Normalised EBITA is operating profit before amortisation of goodwill and
exceptional administrative expenses
**Earnings per share adjusted for amortisation of goodwill and exceptional items
Commenting on the results, Rich Benton, Non-executive Chairman of PRG, said:
'I am pleased to report another year of solid growth for the Group with
normalised EBITA exceeding #6m. The convergence of the local authority education
and social services departments plays to our strengths. In addition, the
continued evolution of the locum doctor market will offer opportunities to
increase market share. The outlook remains positive and the Board looks forward
to the future with confidence.'
Contact: Darren McLaney
Chief Executive Officer, Public Recruitment Group PLC
Nick Williams
Group Finance Director, Public Recruitment Group PLC
Ginny Pulbrook / Fiona Bradshaw
Citigate Dewe Rogerson
Telephone: Citigate Dewe Rogerson, +44 (0) 207 638 9571 until 17:30
Thereafter: Katharine Spedding, Company Secretary, 0114 283 4925
Chairman's Statement
I am pleased to report another year of solid growth for the Group with
normalised EBITA exceeding #6m. The year has seen good progress in all three of
our chosen sectors of education, social work and health care.
Group turnover for the period was #86.7m (2005: #80.2m), an increase of 8%.
Gross margin has been increased to 21.3% (2005: 21.2%) and the conversion of net
fee income to normalised EBITA increased to 32.8% (2005: 29.0%), reflecting our
tight control over costs whilst increasing turnover.
Normalised EBITA of #6.1m (2005: #4.9m) was an increase of 23%.
Adjusted earnings per share have increased to 10.5p (2005: 10.3p) up 2% on the
previous year. Basic earnings per share rose to 0.6p (2005: 0.4p), an increase
of 42%.
PRG is well placed in each of its chosen sectors for the year ahead.
Education Division
In the education division, turnover increased by 13% to #38.1m (2005: #33.7m).
The division achieved margins of 28.2% (2005: 26.8%), which more than offset the
small organic revenue shortfall of 4%. The market is still being affected by the
use of non-qualified teaching assistants rather than qualified teachers, but
good teachers are still in demand and are commanding higher margins.
The education and social work divisions are being combined within PRG in
response to The Children Act, 2004. The Act requires that the local authority
education and social service departments have integrated planning and delivery
of co-ordinated services and have increased accountability.
PRG is in an excellent position to capitalise on this opportunity, providing
both staffing and administration services to the newly merged local authority
departments. In November 2006, we secured our first combined education and
social work pilot in Warwickshire. This is an important development for PRG, as
a successful implementation will ensure future nationwide opportunities for the
Group.
Social Work Division
The two social work businesses, Action First and Academy, position the Group as
one of the leading providers of qualified social workers in the UK. Whilst
turnover fell by 4% to #21.9m (2005: #22.7m), this was largely due to reduced
permanent fees and the cessation of placing clerical staff. The placement of
qualified social workers on temporary contracts was in line with last year and
margins achieved have improved to 18.4% (2005: 17.8%).
Health Care Division
Turnover has increased by 12% to #26.7m (2005: #23.8m). Normalised EBITA has
increased to #0.6m (2005: #0.3m).
The medical locum market has developed quickly during 2006. The National
Framework Agreement was introduced in September 2005 and it was envisaged that
individual hospitals would contract with their chosen agency on a one-to-one
basis. However, hospitals soon combined their requirements with their near
neighbours to form larger local hubs and are now further consolidating into
geographical regions to maximise the volume related discounts that are
available.
In this changing environment we have secured numerous contract wins and this
growth has been achieved in a market that, in the opinion of the Board, has
contracted by up to 30%. The consolidation towards a market where there are a
smaller number of customers, each placing a higher volume, is welcomed. We have
the experience, cost base and the resources to grow market share profitably
under this scenario.
Earnings per share
Adjusted earnings per share amounted to 10.5p (2005: 10.3p), an increase of 2%.
Basic earnings per share rose to 0.6p (2005: 0.4p), an increase of 42%.
Cash flow and net debt
Net cash inflow from operating activities amounts to #5.7m (2005: #5.6m) The
Group spent #1.8m on interest, #1.3m on tax payments and #0.1m on tangible
assets in the year. Debtors represent 40 days of sales at the year end (2005: 40
days).
Net debt increased in the year to #24.2m (2005: #18.8m). New improved banking
facilities were agreed in April 2006 with Barclays Bank. This increased facility
allowed deferred acquisition consideration of #7.2m to be financed through debt,
thereby avoiding a substantial share price dilution for existing shareholders.
If we had allowed the earn-out to be settled by the issue of shares, the Group
would have seen a reduction in net debt in the year.
Board Changes
I am delighted to welcome Dean Kelly and Matthew Ellis to the Board of Public
Recruitment Group PLC. Dean and Matt are the founders of Kellis, acquired by PRG
in September 2005, and their primary role is to merge and develop the education
and social work divisions.
Outlook
The Group expects to make further progress in the current year. The convergence
of the local authority education and social services departments plays to our
strengths. In addition, the continued evolution of the locum doctor market will
offer opportunities to increase market share.
Whilst the environment continues to be challenging, growth opportunities exist
in our chosen sectors. The outlook remains positive and the Board looks forward
to the future with confidence.
Rich Benton
Non-executive Chairman
1 March 2007
Public Recruitment Group PLC
Consolidated profit and loss account
for the year ended 31 December 2006
2006 2005
Restated
Note #000 #000
Turnover 86,745 80,224
Cost of sales (68,288) (63,234)
Gross profit 18,457 16,990
Administrative expenses (15,120) (14,497)
Operating profit before amortisation of 6,061 4,922
goodwill
and exceptional administrative expenses
Exceptional administrative expenses 3 (362)
(555)
Amortisation of goodwill (2,362) (1,874)
Operating profit 3,337 2,493
Reorganisation costs -
(235)
Net interest payable and similar charges 4 (340) -
-restructuring
Net interest payable and similar charges (2,074) (1,100)
-other
Net interest payable and similar charges (2,414) (1,100)
Profit on ordinary activities before 923 1,158
taxation
Taxation on profit from ordinary activities (759) (1,059)
Profit for the financial year 164 99
Earnings per ordinary share
Basic 6 0.6p 0.4p
Diluted 6 0.6p 0.4p
All amounts for the current and prior year relate to continuing activities.
Public Recruitment Group PLC
Consolidated statement of recognised gains and losses
for the year ended 31 December 2006
2006 2005
Restated
#000 #000
Profit for the financial year 164 99
Total recognised gains and losses relating to the year 164 99
Prior year adjustment (as explained in note 2) (569)
Total gains and losses recognised since last annual report (405)
Public Recruitment Group PLC
Consolidated balance sheet
at 31 December 2006
2006 2005
Restated
Note #000 #000
Fixed assets
Intangible assets 41,163 43,905
Tangible assets 501 731
41,664 44,636
Current assets
Debtors 10,541 11,918
Cash at bank and in hand 351 2,113
10,892 14,031
Creditors: amounts falling due within one year (16,341) (25,809)
Net current liabilities (5,449) (11,778)
Total assets less current liabilities 36,215 32,858
Creditors: amounts falling due after more
than one year (15,409) (13,435)
Net assets 20,806 19,423
Capital and reserves
Called up share capital 3,291 2,828
Share premium 12,316 12,316
Merger reserve (425)
(425)
Share scheme reserve 2 41 569
Other reserve 4,790 3,506
Profit and loss account 793 629
Shareholders' funds 20,806 19,423
Public Recruitment Group PLC
Consolidated cash flow statement
for the year ended 31 December 2006
2006 2005
#000 #000
Net cash inflow from operating activities 5,668 5,613
Returns on investment and servicing of finance (1,835) (1,218)
Taxation (1,288) (1,354)
Capital expenditure and financial investment (114) (326)
Acquisitions (2,521) (7,616)
Cash outflow before financing (90) (4,901)
Financing (1,406) 3,964
Decrease in cash in the year (1,496) (937)
Reconciliation of net cash flow to movement in net debt
for the year ended 31 December 2006
2006 2005
#000 #000
Decrease in cash in the year (1,496) (937)
Cash ouflow/(inflow) from debt financing 1,156 (3,974)
Change in net funds resulting from cash flows (340) (4,911)
Conversion of preference shares - 4,620
Issue of loan stock (4,966) -
Interest capitalised (22) -
Amortisation of loan issue costs (108) -
Net debt acquired with subsidiaries - (30)
Movement in net debt in the year (5,436) (321)
Opening net debt (18,804) (18,483)
Closing net debt (24,240) (18,804)
Public Recruitment Group PLC
Notes to the consolidated accounts
for the year ended 31 December 2006
1. Financial Information
The financial statements have been prepared under the historic cost convention
and are in accordance with applicable accounting standards. They have been drawn
up using accounting policies and principles consistent with those applied in the
preparation of the audited accounts of Public Recruitment Group PLC for the year
ended 31 December 2005, except for the change described in note 2 below.
The financial information set out herein does not constitute the Group's
financial statements for the year ended 31 December 2006 and 31 December 2005,
but is derived from those financial statements. The financial statements for the
year ended 31 December 2005 have been delivered to the Registrar of Companies,
and those for the year ended 31 December 2006 will be delivered following the
Annual general meeting to be held on 25 April 2007. The auditors have reported
on those financial statements; their reports were unqualified and did not
contain statements under section 237(2) or (3) of the Companies Act.
2. Changes to accounting policies
The group has adopted FRS 20 "Share based payment", which requires the
recognition of share based payments at fair value over the vesting period.
For the year ended 31 December 2005, the change has resulted in a decrease in
profit of #541,000 and for the year ended 31 December 2006, the change has
resulted in an increase in profit of #528,000.
The share based payment expense has been included within the administrative
expenses line on the consolidated profit and loss account. For all periods the
change in accounting policy has not effected net assets.
3. Exceptional administrative expenses
2006 2005
#000 #000
Rental dispute with landlord - 217
Termination and office closures costs 362 338
362 555
4. Exceptional interest payable and similar charges
During the year, the group incurred breakage fees of #340,000 as part of a
refinancing exercise. Tax relief of #102,000 is available in respect of these
costs.
5. Dividend
There are no dividends declared or paid during the period.
Public Recruitment Group PLC
Notes to the consolidated accounts
for the year ended 31 December 2006
6. Earnings per Share
The calculation of basic earnings per share is based on the profit for the
financial year of #164,000 (2005: #99,000) divided by the weighted average
number of ordinary shares in issue of 28,854,000 (2005: 24,653,000).
Diluted earnings per share is based on the profit for the financial year of
#164,000 (2005: #99,000) divided by the weighted average number of ordinary
shares in issue, including potentially dilutive shares, amounting to 28,854,000
(2005: 27,942,000).
Adjusted earnings per share before reorganisation costs, exceptional
administrative expenses, and the amortisation of goodwill is disclosed to
indicate the underlying profitability of the Group and is based on profit of
#3,017,000 (2005: #2,529,000).
2006 2005
Pence Pence
Basic earnings per share 0.6 0.4
Exceptional items (net of tax) 1.7 2.3
Amortisation of goodwill 8.2 7.6
Adjusted earnings per share 10.5 10.3
Diluted earnings per share 0.6 0.4
Calculation of adjusted earnings
#000 #000
Basic earnings 164 99
Exceptional items (net of tax) 491 556
Amortisation of goodwill 2,362 1,874
Adjusted earnings 3,017 2,529
Calculation of number of shares
Number Number
000's 000's
Weighted average number of shares in issue during the year 28,854 24,653
Contingent consideration - 3,289
28,854 27,942
This information is provided by RNS
The company news service from the London Stock Exchange
END
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