Share Search
Visit the Share Search
Prime People keeps divi suspended as Covid hits trading hard
10th Sep 2020 12:19
(Sharecast News) - Specialist recruitment company Prime People updated the market on its trading for the financial year ended 31 March on Thursday, expecting to report headline revenue of around £23.85m, down from £24.66m year-on-year.
The AIM-traded firm said net fee income was expected to have slipped to £15.38m from £15.78m, which would result in a profit before tax of at least £1.8m, down from £2.47m in the prior year.
It said its audit was ongoing, with the board evaluating goodwill impairment and considering an impairment charge for the year.
The final valuation and subsequent impact on net profit would be disclosed in the full year audited financial statements.
"In these extraordinary times, the group's results may be subject to audit adjustments that are unknown to the directors at the time of this announcement," the board cautioned in its statement.
Net cash, excluding the Coronavirus Business Interruption Loan Scheme (CBILS) loan, stood at £2.23m on Thursday, up from the year-end position of £2.05m, with the group saying it was "well-positioned" to meet its working capital requirements.
Post-year end, as a direct result of Covid-19, Prime People said it experienced a "significant" reduction in demand across its businesses, with the impact varying by location and sector.
Early action was taken by the board to implement a range of measures to protect the company from the financial impact of the coronavirus crisis, including managing staff costs through furlough and other governmental schemes in the countries in which it operates, reductions in remuneration, minimising discretionary spend, and "rigorous" cash flow management.
The board said the "depth and speed of impact" on the global economy of Covid-19 had been unprecedented, with the group's trading "severely impacted" in the first six months of the new financial year.
"We have acted swiftly to take the necessary actions to manage our cost base to reflect expected levels of business.
"Whilst this process is constantly under review, we consider we have taken the right decisions to secure our businesses," the directors explained.
"We have the necessary cash flows and bank support, including the CBILS loan announced on 12 June, for the foreseeable future and business appears to have settled at a sustainable level."
As it had previously announced, in order to strengthen the balance sheet and aid liquidity, the board had decided not to pay a final dividend for the year ended 31 March.
It said it remained committed to paying progressive dividends as soon as appropriate, and when there was better clarity on the financial consequences of the crisis.
Additionally, the board said it was intending to exercise its share buyback authority, as approved at the group's most recent annual general meeting, and expected the company to make market purchases of shares with a value of up to £0.25m.
"The initial financial effects of the global pandemic were experienced as early as January by our Asian business," said chief executive officer Peter Moore.
"The effect on our other businesses started to have impact in early March.
"Our current financial year will be significantly affected by the pandemic as a consequence of material reductions in net fee income and new job instructions."
Moore said that in the first six months of trading, UK net fee income was around 40% lower than the same period last year, with job instructions down by 54%.
He added that the Asia business had suffered a reduction of around 26% in net fee income, and a 26% fall in job instructions.
"Since June there has been a modest increase in activity, [although] half and full-year profitability will be severely impacted.
"As a result of challenging trading, we expect to take a material reduction in the value of goodwill on our balance sheet.
"At this time the group holds a strong cash position aided by CBILS arrangements."
Prime People said it intended to announce final results for the year ended 31 March at the end of October.
At 1155 BST, shares in Prime People were up 8.18% at 47.06p.
The AIM-traded firm said net fee income was expected to have slipped to £15.38m from £15.78m, which would result in a profit before tax of at least £1.8m, down from £2.47m in the prior year.
It said its audit was ongoing, with the board evaluating goodwill impairment and considering an impairment charge for the year.
The final valuation and subsequent impact on net profit would be disclosed in the full year audited financial statements.
"In these extraordinary times, the group's results may be subject to audit adjustments that are unknown to the directors at the time of this announcement," the board cautioned in its statement.
Net cash, excluding the Coronavirus Business Interruption Loan Scheme (CBILS) loan, stood at £2.23m on Thursday, up from the year-end position of £2.05m, with the group saying it was "well-positioned" to meet its working capital requirements.
Post-year end, as a direct result of Covid-19, Prime People said it experienced a "significant" reduction in demand across its businesses, with the impact varying by location and sector.
Early action was taken by the board to implement a range of measures to protect the company from the financial impact of the coronavirus crisis, including managing staff costs through furlough and other governmental schemes in the countries in which it operates, reductions in remuneration, minimising discretionary spend, and "rigorous" cash flow management.
The board said the "depth and speed of impact" on the global economy of Covid-19 had been unprecedented, with the group's trading "severely impacted" in the first six months of the new financial year.
"We have acted swiftly to take the necessary actions to manage our cost base to reflect expected levels of business.
"Whilst this process is constantly under review, we consider we have taken the right decisions to secure our businesses," the directors explained.
"We have the necessary cash flows and bank support, including the CBILS loan announced on 12 June, for the foreseeable future and business appears to have settled at a sustainable level."
As it had previously announced, in order to strengthen the balance sheet and aid liquidity, the board had decided not to pay a final dividend for the year ended 31 March.
It said it remained committed to paying progressive dividends as soon as appropriate, and when there was better clarity on the financial consequences of the crisis.
Additionally, the board said it was intending to exercise its share buyback authority, as approved at the group's most recent annual general meeting, and expected the company to make market purchases of shares with a value of up to £0.25m.
"The initial financial effects of the global pandemic were experienced as early as January by our Asian business," said chief executive officer Peter Moore.
"The effect on our other businesses started to have impact in early March.
"Our current financial year will be significantly affected by the pandemic as a consequence of material reductions in net fee income and new job instructions."
Moore said that in the first six months of trading, UK net fee income was around 40% lower than the same period last year, with job instructions down by 54%.
He added that the Asia business had suffered a reduction of around 26% in net fee income, and a 26% fall in job instructions.
"Since June there has been a modest increase in activity, [although] half and full-year profitability will be severely impacted.
"As a result of challenging trading, we expect to take a material reduction in the value of goodwill on our balance sheet.
"At this time the group holds a strong cash position aided by CBILS arrangements."
Prime People said it intended to announce final results for the year ended 31 March at the end of October.
At 1155 BST, shares in Prime People were up 8.18% at 47.06p.