Apart from a reduction in operating cash flow, shareholders would have difficulty in pinpointing any metrics from Hays ' (HAS) full-year returns that wouldn’t instil a general sense of wellbeing. Yet you’re still left with the feeling that the recruiter remains circumspect over its immediate prospects. That’s probably explicable in terms of post-Brexit uncertainties, particularly with regard to the issue of ‘passporting’ for the UK financial services sector, while the domestic construction and property markets have also suffered in the aftermath of the vote. Those matters are out of management’s control, but these figures certainly suggest that the right levers are being pulled within its sphere of influence.
The group posted a 7 per cent increase in net fee income to £810m on a like-for-like basis, with the rate of growth applicable to both its permanent and temporary recruitment segments. The inherent benefits of Hays' geographic spread were apparent, with strong growth in Europe and North America more than offsetting broadly flat income in the Asia-Pacific region and in UK/Ireland. According to Paul Venables, Hays' finance chief, the domestic market had exhibited signs of weakness well in advance of June's referendum.
Both Hays’ German and US operations recorded double-digit growth, though it was the group’s French business that turned in the standout performance with a 17 per cent rise in net fee income. France’s unemployment rate dipped below 10 per cent for the first time since 2012, but Hays’ progress across the channel has more to do with the continued successful rollout of its contracting model. Hays has captured market share in the republic at a prodigious rate by tailoring its contract and temporary models to fit the country’s exacting labour laws.
Around half the growth in continental Europe’s fee income during the period was attributable to companies utilising employment outsourcing for the first time, confirmation perhaps that employers are looking to gain more control over fixed costs through flexible labour strategies.
UBS anticipates diluted EPS of 7.89p in the year to June 2017, on net earnings of £114m, falling to 7.62p in FY2018 (FY2016: 7.31p).
| HAYS (HAS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 125p | MARKET VALUE: | £1.79bn | |
| TOUCH: | 125p-126p | 12M HIGH / LOW: | 164p | 91p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 32p* | NET CASH: | £36.8m | |
| Year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 3.65 | 122 | 5.5 | 2.50 |
| 2013 | 3.70 | 119 | 5.1 | 2.50 |
| 2014 | 3.68 | 132 | 6.1 | 2.63 |
| 2015 | 3.84 | 156 | 7.4 | 2.76 |
| 2016 | 4.23 | 173 | 8.5 | 2.90 |
| % change | +10 | +11 | +14 | +5 |
Ex-div:13 Oct Payment:11 Nov *Includes intangible assets of £242m, or 17p a share. | ||||
