Recruiter Hays (HAS) ticked all the boxes with these results. Improving market conditions, solid profit growth and the first dividend increase in three years. What's more, net debt has been reduced by 40 per cent to £63m, so for the first time Hays has outlined plans for a special dividend. The group says it will return any excess free cash flow to shareholders once it has hit a net cash balance of around £50m.
Yet the shares were unmoved. After a flying start to the year, our Recovery Tip of the Year (128p, 2 Jan 2014) has looked distinctly unloved over the past few months. Finance director Paul Venables says institutional investors are adopting a "risk off" approach as they wait to see how current geopolitical events and economic indicators evolve. And that means the recruiters, a highly cyclical bunch, are out of favour.
Needless to say, Mr Venables remains positive on the group's potential to continue on its profit recovery path. He believes the UK is seeing a broad-based jobs recovery, the crucial Australian market is now moving off the bottom, and that the group's high single-digit net fee growth can be converted into "significant" profit growth.
Broker Jefferies expects earnings per share of 7.5p this year (from 6p in 2013-14).
| HAYS (HAS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 130p | MARKET VALUE: | £1.8bn | |
| TOUCH: | 129-130p | 12-MONTH HIGH: | 158p | LOW: 100p |
| DIVIDEND YIELD: | 2.0% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 17p* | NET DEBT: | 26% | |
| Year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 2.69 | 30 | 0.5 | 5.80 |
| 2011 | 3.26 | 111 | 5.2 | 5.80 |
| 2012 | 3.65 | 122 | 5.5 | 2.50 |
| 2013 | 3.70 | 119 | 5.1 | 2.50 |
| 2014 | 3.68 | 132 | 6.1 | 2.63 |
| % change | -0.5 | +12 | +19 | +5 |
Ex-div: 9 Oct Payment: 14 Nov *Includes intangible assets of £207m, or 15p a share | ||||
