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Making Hays while the sun is shining

The recruiter has made good progress in diversifying its business geographically, but the UK business has yet to see a meaningful recovery
February 24, 2017

Recruiters faced challenges throughout 2016, firstly due to concerns over the global economy, and then due to deferred decisions on job vacancies in the wake of the Brexit vote. Hays (HAS) group finance director* Paul Venables said the group tends to "take the pain very early" in such situations. In the event, neither issue weighed too heavily on performance; the conversion rate (of net fees into operating profit) remained broadly flat at 21.5 per cent and operating profit was up 16 per cent to £100m.

IC TIP: Hold at 149.2p

Its efforts to diversify globally appear to be paying off, as it reported net fee growth across most of its locales. This was strongest in continental Europe and the rest of the world, which grew 10 per cent, followed by Asia Pacific, which grew 6 per cent. But for the UK and Ireland net fees dropped 10 per cent, although the group reported the first signs of recovery, with job placements put on hold after the referendum beginning to reappear.

Most promisingly, the group managed to move into a net cash position of £47.9m, tantalisingly close to the £50m level at which Mr Venables said the group would start "looking to make a meaningful [one-off] dividend".

Analysts at Numis expect pre-tax profit of £192m in the year to June 2017, giving EPS of 9p (from £173m and 8.4p in FY2016)

*27 February 2017: The original version of this article incorrectly referred to Paul Venables as Hays chief executive. This has been updated.

 

HAYS (HAS)
ORD PRICE:149.2pMARKET VALUE:£2.15bn
TOUCH:149.2-149.3p12-MONTH HIGH:165pLOW: 91.1p
DIVIDEND YIELD:2%PE RATIO:16
NET ASSET VALUE:35pNET CASH: £47.9m

Half-year to 31 DecTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20152.0482.44.00.91
20162.4896.24.60.96
% change+22+17+14+5

Ex-div: 2 Mar

Payment: 7 Apr