Prime People's profits jump but recruitment sector likely to soften

Recruiter Prime People impressed with much improved profits last year thanks to a good performance in the UK property recruitment sector and from the Hong Kong office, although it cautioned that market conditions are likely be softer in the remainder of 2016.

The AIM-listed company reported a net fee income (NFI) of £12.28m up 20.16% for the year ended 31 March 2016, the result of contract and technical recruitment in the property sector.

Profit before tax rose 49% to £2.15m for the year after a 50.35% increase in operating profit for the year, which reflected the company’s control of costs and an increase in productivity.

Earnings per share rose by 49.14% to 13.84p but the total dividend of 8.84p was kept flat year-on-year, made up of two interim payments and no final payment.

Managing director Peter Moore said the company’s Hong Kong office established in 2007, "exceeded expectations" as it made the largest contribution to NFI of all the business units. NFI grew by 21.40% to £3.63m. The region covers Hong Kong and Singapore and represented 29.56% of the company’s NFI.

“Singapore performed slightly below expectations due to staff changes. However, the office finished the year strongly and we have confidence in the staff structure of the office going forward.”

The Dubai office generated a strong fee income despite negative sentiment linked to the falling oil price and the board “continues to watch the region carefully and sets conservative expectations in an uncertain environment”.

Executive chairman Robert Macdonald said: “Following three years of buoyant trading in the recruitment sector, we anticipate that market conditions will be softer in the remainder of 2016.

“Surveying the business environment, we are conscious of several macroeconomic headwinds, including the UK referendum on European Union membership, turbulent emerging markets and other volatility that may affect our clients' hiring plans.

“However, the group continues to find opportunities for expansion and has successfully incubated new business lines over the past 12 months while increasing productivity per head and diversifying outside the UK”.

Prime People’s shares rose 4.11% to 99.95 at 1320 BST.