Prime People reports 37.2% EBITDA decline in 2018 and 2.9 pp EBITDA Margin decline from 8.6% to 5.7%
22 Jun 2018 • About Prime People (
$PRP) • By InTwits
Prime People reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- Prime People has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.8%.
- The company has business model with low profitability: ROIC is 7.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue decreased on 5.4%. During the last 5 years Revenue growth topped in FY2016 at 24.7% and was decelerating since that time. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 2.9 pp from 8.6% to 5.7% in FY2018. During FY2014-FY2018 EBITDA Margin topped in FY2016 at 11.4% and was declining since that time.
Gross Margin increased on 3.3 pp from 54.1% to 57.4% in FY2018. SG&A as a % of Revenue increased on 5.9 pp from 46.2% to 52.2% in FY2018.
Net Income margin decreased on 2.2 pp from 6.7% to 4.5% in FY2018. During FY2014-FY2018 Net Income margin topped in FY2016 at 8.1% and was declining since that time.
Investments (CAPEX, working capital and M&A)
Prime People's CAPEX/Revenue was 0.91% in FY2018. The company showed almost no change in CAPEX/Revenue from FY2015 to FY2018. It's average CAPEX/Revenue for the last three years was 0.53%. During the last 5 years CAPEX as a % of Revenue bottomed in FY2017 at 0.22%.
Return on investment
The company operates at low ROIC (7.9%) and ROE (6.8%). ROIC decreased on 5.7 pp from 13.5% to 7.9% in FY2018. ROE decreased on 4.5 pp from 11.3% to 6.8% in FY2018. During the last 5 years ROIC topped in FY2016 at 16.1% and was declining since that time. During the last 5 years ROE topped in FY2016 at 12.6% and was declining since that time.
Leverage (Debt)
The company has no debt. Cash dropped on 48.8%.
Financial and operational results
FY ended 31 Mar 2018
Prime People ($PRP) key annual financial indicators| mln. £ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 14.442 | 16.647 | 20.755 | 24.213 | 22.916 | -5.4% |
| Gross Profit | 8.327 | 10.222 | 12.280 | 13.098 | 13.147 | 0.4% |
| SG&A | | 8.792 | 10.131 | 11.194 | 11.954 | 6.8% |
| EBITDA | 1.168 | 1.602 | 2.370 | 2.088 | 1.311 | -37.2% |
| Net Income | 0.842 | 1.126 | 1.690 | 1.612 | 1.027 | -36.3% |
Balance Sheet
|
|---|
| Cash | 2.963 | 1.009 | 0.953 | 2.409 | 1.234 | -48.8% |
| Short Term Debt | 0.001 | 0.000 | 0.000 | 0.000 | 0.000 | |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 0.180 | 0.156 | 0.097 | 0.053 | 0.209 | 294.3% |
Ratios
|
|---|
| Revenue growth | 10.8% | 15.3% | 24.7% | 16.7% | -5.4% | |
| EBITDA growth | 36.3% | 37.2% | 47.9% | -11.9% | -37.2% | |
|
|---|
| Gross Margin | 57.7% | 61.4% | 59.2% | 54.1% | 57.4% | 3.3% |
| EBITDA Margin | 8.1% | 9.6% | 11.4% | 8.6% | 5.7% | -2.9% |
| SG&A, % of revenue | | 52.8% | 48.8% | 46.2% | 52.2% | 5.9% |
| Net Income Margin | 5.8% | 6.8% | 8.1% | 6.7% | 4.5% | -2.2% |
| CAPEX, % of revenue | 1.2% | 0.9% | 0.5% | 0.2% | 0.9% | 0.7% |
|
|---|
| ROIC | 7.3% | 10.2% | 16.1% | 13.5% | 7.9% | -5.7% |
| ROE | 5.9% | 8.1% | 12.6% | 11.3% | 6.8% | -4.5% |
| Net Debt/EBITDA | -2.5x | -0.6x | -0.4x | -1.2x | -0.9x | 0.2x |
Peers in Support Services
Below we provide Prime People benchmarking against other companies in Support Services industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Mortice Ltd ($MORT) | 11.0% | 18.9% | 51.1% | 36.1% | |
| Rws Hldgs ($RWS) | 20.9% | 1.8% | 28.1% | 34.5% | |
| Empresaria Group ($EMR) | -3.3% | -0.3% | 44.4% | 32.1% | |
| Norish ($NSH) | 3.7% | 16.4% | 16.7% | 31.4% | |
| Capital Drilling Ltd ($CAPD) | -15.0% | -20.4% | 18.7% | 28.0% | |
| |
|---|
| Median (47 companies) | 5.0% | 6.9% | 2.2% | 6.9% | 8.7% |
|---|
| Prime People ($PRP) | | 15.3% | 24.7% | 16.7% | -5.4% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Inspired Energy ($INSE) | 78.7% | 76.2% | 80.5% | 83.1% | |
| Ienergizer Ltd ($IBPO) | 76.8% | 72.7% | 71.3% | 71.2% | |
| Spectra Systems Corp ($SPSY) | 51.4% | 47.6% | 68.3% | 71.1% | |
| Vianet Group ($VNET) | 58.8% | 69.2% | 70.1% | 69.7% | 69.9% |
| Grafenia ($GRA) | 56.1% | 70.8% | 66.3% | 63.0% | 57.0% |
| |
|---|
| Median (41 companies) | 29.2% | 28.1% | 27.0% | 27.9% | 24.4% |
|---|
| Prime People ($PRP) | 57.7% | 61.4% | 59.2% | 54.1% | 57.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Northgate ($67GX) | 40.6% | 39.4% | 38.3% | 35.9% | 35.4% |
| Spectra Systems Corp ($SPSY) | 12.3% | 6.0% | 19.7% | 34.0% | |
| Inspired Energy ($INSE) | 1.5% | 35.4% | 34.4% | 32.4% | |
| Vp ($VP.) | 24.2% | 26.2% | 28.4% | 28.6% | 27.2% |
| Rws Hldgs ($RWS) | 22.8% | 23.1% | 26.4% | 25.5% | |
| |
|---|
| Median (47 companies) | 6.7% | 6.9% | 4.9% | 5.7% | 8.9% |
|---|
| Prime People ($PRP) | 8.1% | 9.6% | 11.4% | 8.6% | 5.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Vp ($VP.) | 21.6% | 25.7% | 24.1% | 26.0% | 23.6% |
| Augean ($AUG) | 12.3% | 12.3% | 11.0% | 10.0% | |
| Petards Group ($PEG) | 0.5% | 0.9% | 1.7% | 10.0% | |
| Capital Drilling Ltd ($CAPD) | 13.9% | 10.1% | 13.7% | 9.0% | |
| Billing Services Group ($BILL) | 2.1% | 4.1% | 3.0% | 4.5% | |
| |
|---|
| Median (47 companies) | 1.0% | 1.0% | 1.1% | 0.9% | 2.7% |
|---|
| Prime People ($PRP) | 1.2% | 0.9% | 0.5% | 0.2% | 0.9% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Sthree ($STHR) | 38.1% | 50.2% | 46.2% | 43.4% | |
| Mortice Ltd ($MORT) | 19.6% | 21.9% | 14.5% | 23.2% | |
| Petards Group ($PEG) | 24.7% | 23.9% | 22.7% | 20.3% | |
| Rws Hldgs ($RWS) | 24.5% | 23.3% | 23.5% | 20.2% | |
| Latham(James) ($LTHM) | 17.5% | 16.8% | 19.2% | 19.3% | 17.4% |
| |
|---|
| Median (48 companies) | 11.1% | 10.7% | 7.8% | 7.6% | 6.7% |
|---|
| Prime People ($PRP) | 7.3% | 10.2% | 16.1% | 13.5% | 7.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Nakama Group ($NAK) | 5.2x | 1.4x | 3.1x | 48.5x | |
| 21St Century Technology ($C21) | -0.8x | -0.2x | | 11.2x | |
| Ceps ($CEPS) | 6.6x | 3.8x | 13.9x | 5.8x | |
| Ibex Global Solutions ($IBEX) | 2.7x | 1.0x | 1.7x | 4.5x | |
| Menzies(John) ($68HN) | 2.0x | 2.4x | 1.2x | 3.0x | |
| |
|---|
| Median (42 companies) | 0.3x | 0.2x | 0.3x | 0.5x | 1.8x |
|---|
| Prime People ($PRP) | -2.5x | -0.6x | -0.4x | -1.2x | -0.9x |
