Hays (HAS) shares fell back on the release of these half-year results, even though net fees, operating profit and conversion rates all improved. Of course, investors who got their timing right might just be banking some of the gains - the stock is up more than a third over the past 12 months.
True, there’s uncertainty around the UK market, and a slightly lower number of working days in the third quarter could add pressure before the year-end, but analysts at UBS still expect further margin expansion in the second half. Even a 12 per cent squeeze in the level of cash generated from operations isn’t anything to worry about, says finance director Paul Venables: an unexpected £10m-£20m boost last June inevitably unwound, while the company traditionally generates most of its cash in the second half anyway.
For now, global recruitment markets look strong – even the UK where Brexit-related uncertainty has resulted in some caution around sectors such as construction and manufacturing. Net fees in the UK and Ireland still grew by 1 per cent on an underlying basis (hardly a disaster), while tight cost control helped lift operating profit by close to a quarter.
Prior to these results, JP Morgan expected pre-tax profits of £231m for the year ending June 2018, giving EPS of 11.1p, compared with £205m and 9.5p in FY2017.
| HAYS (HAS) | ||||
| ORD PRICE: | 195.4p | MARKET VALUE: | £2.83bn | |
| TOUCH: | 195.2-195.6p | 12-MONTH HIGH: | 206p | LOW: 143p |
| DIVIDEND YIELD: | 1.7% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 40p* | NET CASH: | £34.5m | |
| Half-year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 2.48 | 96.2 | 4.6 | 0.96 |
| 2017 | 2.83 | 114 | 5.4 | 1.06 |
| % change | +14 | +18 | +18 | +10 |
| Ex-div: | 01 Mar | |||
| Payment: | 12 Apr | |||
*Excludes special dividends **Includes intangible assets of £242m, or 17p a share | ||||
