Group net fee income (NFI) rose 5 per cent to £205.3m, driven by a strong performance in Germany, the US and Australia - NFI, on a constant currency basis, rose 14 per cent, 49 per cent and 38 per cent, respectively, in these markets. Moreover, NFI generated from outside the UK rose 8.2 per cent to £134.4m. But the UK operation continued to struggle with NFI there having slipped 0.5 per cent to £70.9m - a weak banking market was a factor. Customers are also delaying permanent staffing decisions and are filling gaps with temporary contract staff. Contract placement numbers rose 9.2 per cent to 5,122, while permanent placements fell 1.2 per cent to 7,434 - so the proportion of group NFI generated from permanent placements fell from 52 per cent to 50 per cent.
Broker Investec Securities currently forecasts adjusted pre-tax profit of £28m for 2013, giving EPS of 15.4p - but expects to nudge those down by around 3.5 per cent.
|ORD PRICE:||344p||MARKET VALUE:||£417m|
|TOUCH:||340-344p||12-MONTH HIGH:||349p||LOW: 242p|
|DIVIDEND YIELD:||4.1%||PE RATIO:||24|
|NET ASSET VALUE:||51p**||NET CASH:||£28.3m|
Even though cash generated from operations fell 10 per cent, management thinks the dividend remains safe. Still, recruitment conditions are uncertain given today's tough economic backdrop and the growth of contract work will hit margins. That leaves the shares, rated on a toppy 22 times forecast earnings, lacking catalysts for upside. Hold.
Last IC view: Hold, 263p, 16 Jul 2012