- Management intends to resume core dividends
- Operating profits pull back sharply
Shareholders in Hays (HAS) would have been understandably apprehensive as we moved into 2021. With economies artificially propped-up and commercial activity petering out (to a degree) after the latest round of lockdowns, prospects for the labour market were not promising.
Half-year figures bear this out, with net fees down by a quarter. There was a predictable decline in the conversion rate, with the result that operating profits of £25.1m were down three-quarters on the first half of FY2020.
Recruitment fees were under pressure across all the group’s locales, and the in-house headcount has been pared back by 14 per cent.
Hays finished the half-year with net cash of £380m (excluding short-term deferrals of tax payments), reflecting better than expected cash generation. So, management intends to resume core dividends, with a single full-year payment based on 3x earnings to be declared in August. Hays also said that it will commence a phased pay-out of special dividends at the time of the full-year results, as it has identified £150m of surplus capital. Hold.
Last IC view: Hold, 118p, 27 Aug 2020
| HAYS (HAS) | ||||
| ORD PRICE: | 156p | MARKET VALUE: | £2.62bn | |
| TOUCH: | 155.8-155.9p | 12-MONTH HIGH: | 160p | LOW: 92p |
| DIVIDEND YIELD: | nil | PE RATIO: | 22 | |
| NET ASSET VALUE: | 48p* | NET CASH: | £169m | |
| Half-year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2019 | 3.1 | 95.6 | 4.60 | nil |
| 2020 | 2.8 | 21.1 | 0.75 | nil |
| % change | -11 | -78 | -84 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £252m or 15p a share | ||||
