Recruiter Hays eliminates debt as it continues with plans to double profit

Caitlin Morrison
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The recruiter says eliminating debt was a significant milestone

Recruitment firm Hays has hiked its dividend after earnings and profit for the year to 30 June were boosted, driven by strong international growth as well as an "excellent" UK performance.

The figures

Net fees increased by seven per cent to £810.3m during the year, up from £764.2m last year.

Operating profit was up 10 per cent at £181m, compared with £164.1m, and pre-tax profit grew 11 per cent to £173m from £156.1m.

Cash generated by operations fell 16 per cent to £159.3m from £189.8m, however Hays' net cash now stands at £36.8m - compared with net debt of £30.7m.

Earnings per share rose 14 per cent to 8.48p, from 7.44p, and the company hiked its dividend by five per cent to 2.9p from 2.76p.

Why it's interesting

First of all, Hays eliminated its net debt during the 12 months to the end of June - the company called it a "significant milestone".

The company also singled out "excellent public sector growth" in Australia as the driver of its fee growth in the Asia Pacific region.

And after suffering a dip in fees in the UK and Ireland during the run up to the EU referendum, Hays said that since the vote, it has observed increased uncertainty in the UK market, but nowhere else - so far.

The company is keeping a close eye on activity as it is "too early to tell" what the long-term impact of the Brexit vote will be. However, the firm still posted a 14 per cent profit increase in the UK during the year, "a testament to the strength of our business", although net fees were flat during the period.

What Hays said

Alistair Cox, Hays chief executive, said: "This is an excellent financial performance, with both earnings and cash ahead of market expectations. We delivered strong, broad-based net fee growth in our international businesses, with 22 countries growing by 10 per cent or more, and an excellent UK profit performance.

"After three years, we remain in line with our five-year aspiration to broadly double the group's operating profits. We also achieved the significant milestone of eliminating the group's net debt.

He added: "Following the EU referendum, there is increased uncertainty in the UK market, but we have seen no evidence of any impact elsewhere. It is too early to tell what the longer term impact may be and as ever, we will monitor activity levels closely.

"In our international businesses, we will continue to invest to meet growing demand and further diversify our business by geography, sector and contract form."

In short

Hays has had a positive start to the year, but it's not counting its chickens - the group was cautious in its outlook for the post-Brexit vote market.

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