Weak sterling boosts PageGroup in first half

Specialist professional recruitment company PageGroup reported solid first-half revenue growth on Thursday, with the figure rising 16.9% compared to last year to £673.1m, or 7.7% at constant currencies.

The FTSE 250 firm said its gross profit was 17.7% higher than last year in the six months to 30 June at £352m, or 8.3% at constant currencies, while operating profit grew 20.9% to £56.9m, or 9.2% at constant currencies.

Its profit before tax was 21.4% firmer at £56.9m, while basic and diluted earnings per share grew 21.3% to 13.1p.

The board declared an interim dividend of 3.9p per share, an increase of 4% year-on-year, and also declared a special dividend per share of 12.73p.

“PageGroup delivered an increase of 8.3% in gross profit and 9.2% in operating profit in the first half of 2017, with the group's conversion rate rising to 16.2% from 15.7%, reflecting an improved business performance and operational efficiencies,” said chief executive Steve Ingham.

“Movements in foreign exchange rates as a result of a weaker sterling have benefited our first half results by £28m of gross profit and £6m of operating profit.

“At June exchange rates, we anticipate the benefit in the second half to be greatly reduced, at £2m of gross profit, with a marginal benefit to operating profit.”

Ingham said the company experienced some improved macroeconomic conditions, particularly in Asia, excluding Singapore, Continental Europe, and Latin America, excluding Brazil, which helped drive growth in the first half.

However, challenging market conditions continued in some of PageGroup’s larger markets, including Brazil, Singapore and the UK, he added.

“We made significant investments in our fee earner headcount over the last 12 months, particularly in France, the US and Latin America excluding Brazil, up 19%, 28% and 22%, respectively.

“These investments delivered a strong return, with gross profit growth of 24%, 16% and 24%.

“We will continue to make headcount investments into our large, high potential markets, which represented only 22% of the group in 2010.”

Those markets now represented 31% of the group and grew 12% in the first half, Ingham said, adding that the board would also continue to make headcount investments into other markets with favourable trading conditions.

“Fee earner headcount grew 276 - 5.9% - to end the half year at a record level for the group of 4,987,” Ingham explained.

“With our continued focus on operational efficiencies, we maintained our record fee earner to operational support staff ratio of 77:23.

“Total headcount at the end of the first half was 6,448.”

Ingham noted that the board announced an interim dividend of 3.9p per share, an increase of 4.0% over last year, as a result of PageGroup’s improved trading performance and strong balance sheet.

In addition, the group announced a special dividend of £40m, or 12.73p per share, making a third consecutive year of special dividends, in line with its intention to return surplus capital to shareholders.

Taking both dividend payments together, it amounted to a cash return to shareholders of £52.3m payable on 11 October 2017.

“We are pleased with our first half performance, but remain mindful that a number of political and macroeconomic uncertainties will continue through 2017,” Ingham noted.

“We will continue to focus on driving profitable growth, as we did in the first half, whilst remaining able to respond quickly to any changes in market conditions.”