Swallow profits and sell high-flyer Michael Page

Headlam's magic carpet ride; Minorplanet is one to track for now

That cliché about one swallow not making a summer was being repeated a lot yesterday by Terry Benson, the chief executive of the recruitment group Michael Page International. Investors, though, are excitable ornithologists and have a particularly keen interest in taking the UK's economic temperature. And so it was that, after one quarter's strong results, Michael Page's overheated shares soared another 9 per cent in anticipation of a rebound in the UK recruitment market.

So what about this swallow? Trading in May and June was stronger than anticipated, the group said yesterday, which meant that its first-half profit before tax was £11.6m, down 36 per cent on last year but better than the City had been forecasting. The outperformance appears to have been in the sales and marketing sector of Michael Page's UK business.

And the chances of summer? Crucially, it is the UK consumer-focused sectors that were unexpectedly up, not the geographies and sectors most affected by the downturn, not the City, not the professional services such as management consultancy or accountancy which could send Michael Page profits surging. Confidence appears to be hardening across the world, but there have been false dawns before and it will be the autumn before we can be really sure. This time last year, too, Michael Page was being relatively upbeat. This year, employment costs have been jacked up by the UK's national insurance rises, and shareholders still appear more interested in having their companies maximise profits than investing in expansion.

Michael Page's shares were floated at 175p in 2001, just after the peak of the dot.com bubble in the finance industry. The group will not easily make that year's £62m profit again. It has strong positions around the globe and ambitions in the US. Its placement services may again become indispensable since it is true - if unpalatable - that the world does not have enough management consultants to go round. But with shares already back up to 160.5p, on 40-odd times this year's earnings and even 27 times its bubble-time peak earnings, the shares are simply too expensive. Sell.

Headlam's magic carpet ride

Headlam, a distributor of carpets and other floor coverings, posted a strong set of interim results yesterday, matching its house broker's forecasts. The figures were "in lino" with expectations, you might say.

Headlam is the middle man between the carpet manufacturers and the small independent retailers who do plucky battle against the might of Allied Carpets and Carpetright. The continuing strength of UK consumer confidence and the housing market has meant redecorating continues apace and Headlam was able to boast a 10 per cent rise in turnover, to £194.2m, for the six months to 30 June, and a 9 per cent rise in pre-tax profit, to £13.9m.

The improvement in operating profit margins was a particular highlight of the figures, showing that Headlam's 42 businesses have benefited from the expenditure on expanded warehouse facilities which form the backbone of the group. Further warehouse extentions or openings are being planned. The group has a cash cushion of £10.8m to support the ongoing capital expenditure.

There was also better news from Continental Europe where Headlam operates in France, the Netherlands and Switzerland. The economic situation is not so favourable and operating profit slipped by a third, but turnover was still growing and the long-term opportunities remain strong. Distribution to small retailers on the continent is as fragmented as it had been in the UK when Headlam began its acquisition spree a decade ago.

Headlam may find itself floored by a consumer downturn in the short term. But it is a strong performer and, up 9.5p at 317p, the shares yield a 4 per cent dividend. Hold.

Minorplanet is one to track for now

Minorplanet systems has gone from a standing start six years ago to one of the UK's leading telematics companies, whose technology is sold to more than 6,000 customers who use it to track their fleet of company cars, vans and lorries. Useful software already, preventing employees wandering off the job and improving fuel efficiency, among other things. The company is being backed by General Electric, which owns 20 per cent. Longer term, its sytems might allow the electronic road charging that the Government is edging towards supporting.

Right now, sadly, Minorplanet has made a bit of a dog's dinner of its finances. It bought a big stake in a US company as a means of distributing its product overseas, but is now giving most of that stake away in order to staunch the losses. It is handing 42.1 per cent of Minorplanet USA to an unnamed third party, and there will have to be a big write-off in final results later this year. There are also big restructuring charges to come, as the new chief executive, Rob Kelly, slims down the UK and European business. He promises that the company - which still has a nest egg of £4.8m in the bank - will be cash positive next year, but it is not clear yet how he will revitalise sales growth, which has slowed to just 5 per cent according the third quarter figures yesterday.

As the company works through new accounting policies and puzzles over its future direction, there is no hurry to buy, although investors should track its progress. Existing shareholders should hang on for the ride.

Start your day with The Independent, sign up for daily news emails
Voices
Barn owls are among species that could be affected
charity appeal
News
Sarah Silverman (middle) with sister Reform Rabbi Susan Silverman (right) and sister actress Laura Silverman (left) at Jerusalem's Western Wall for feminist Hanuka candle-lighting ceremony
peopleControversial comedian stages pro-equality Hanukkah lighting during a protest at Jerusalem's Wailing Wall
Arts and Entertainment
The Bach Choir has been crowned the inaugural winner of Sky Arts’ show The Great Culture Quiz
arts + ents140-year-old choir declared winner of Sky Arts' 'The Great Culture Quiz'
Sport
After another poor series in Sri Lanka, Alastair Cook claimed all players go through a lean period
cricketEoin Morgan reportedly to take over ODI captaincy
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas