The inevitable cut-back in hiring activity and weaker confidence among employers following the coronavirus outbreak led Hays (HAS) to report an 11 per cent decline in net fees over the year to June. There was a natural correlation between the severity of lockdown measures introduced in each market and the downturn in fee income, evidenced by a 44 per cent contraction in France during the fourth quarter.
Restructuring some operations following the pandemic and impairing goodwill associated with the US business also led to almost £40m in exceptional items, which further eroded operating profit. Group consultant headcount declined 11 per cent and is expected to fall further by the end of September.
Yet despite a looming rise in unemployment and dire economic backdrop, management is planning to expand operations in IT and large corporate accounts across markets including Australia and Germany, as part of its ‘return to growth’ strategy. In particular, the boom in homeworking is increasing the importance of IT functions for large corporates, says finance director Paul Venables. "It's been the fastest growing industry for more than 10 years now and all the pandemic has done is increase the demand for IT," he said.
Consensus forecasts put adjusted pre-tax profits at £53m and adjusted EPS of 2.19p for the year to June 2021, rising to £137m and 6.26p the following year.
| HAYS (HAS) | ||||
| ORD PRICE: | 118p | MARKET VALUE: | £ 1.98bn | |
| TOUCH: | 117.9-118.2p | 12-MONTH HIGH: | 186p | LOW: 85p |
| DIVIDEND YIELD: | Nil | PE RATIO: | 38 | |
| NET ASSET VALUE: | 51p* | NET CASH: | £256m | |
| Year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 4.23 | 173 | 8.5 | 2.90 |
| 2017 | 5.08 | 205 | 9.7 | 3.22 |
| 2018 | 5.75 | 239 | 11.4 | 3.81 |
| 2019 | 6.07 | 231 | 11.1 | 3.97 |
| 2020 | 5.93 | 86.3 | 3.1 | nil |
| % change | -2 | -63 | -72 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £258m, or 15p a share | ||||
