Computer People Group Plc saw lower profits for the year ending December 31 than were expected at the interim stage due to a drop in recruitment revenues in the UK and lower volume sales of consultancy services in the US. Pre-tax profits fell 85.6% to UKP145,000, on turnover down 7.3% to UKP62.7m. Although the board paid an interim dividend of 0.65 pence, it has decided at this stage to invest its funds in the business – the amount available, says chairman Rupert Bayfield, would have been negligible anyway. While Bayfield said he was disappointed with the results, he was pleased to see the London W company returning to profit after a small loss in the first half. The turning point came in the second quarter, he said, but loss of confidence as a result of the exchange rate crisis hit UK recruitment in the fourth quarter, although it is now starting to grow again. Although revenues from consulting in the UK declined during 1991, he said that there was steady growth throughout 1992, and sales remained at 1991 levels overall. Despite a reduction in overheads, however, profits were hit by intense competition putting pressure on margins. Turnover from the US consulting business was also down, but improved margins combined with lower overheads to achieve higher operating profits in both sterling and US dollar terms than in 1991. Bayfield says the US business can remain profitable at lower volumes because it now has a reduced cost base. Although he is cautious about predicting how rapidly or how strongly profits will grow in 1993, he believes the UK business has made a good start to the year, with revenues from both consulting and recruitment ahead of budget. Overheads will continue to be reduced in the US, he promised.
