Hays (HAS) chief finance officer Paul Venables says a special dividend in excess of £50m could be on the cards in September 2017 if the recruiter can equal last year’s profit performance.
Three-quarters of Hays’ business is outside the UK meaning it’s possible the professional services recruitment specialist will grow its profit despite a major slowdown in its home market.
In a call with Shares alongside a trading update published today, Venables said Hays is now a more diversified and financial resilient business than it was in the past.
| EARNINGS ESTIMATES | |||
| Hays - Key metrics (£m) | |||
| 2016 | 2017e | 2018e | |
| Net fee income | 4,231 | 4,711 | 4,670 |
| Operating profit | 181 | 180 | 177 |
| Earnings per share | 8.4p | 8.1p | 7.9p |
| Dividend per share | 2.9p | 6.9p | 7.4p |
| Source: UBS (Year-end: 30 Jun) | |||
‘We generated £110m of cash last year so if we deliver the same again - and we would hope to do... we would expect a material special dividend well in excess of £50m because we would distribute anything in excess of £50m on our balance sheet,’ said Venables.
‘Ten years ago when I started working at Hays, if someone told me that the UK recruitment market would be down 10% and our business would grow I wouldn’t have believed them. But it is highly likely we will grow our profit this year and perhaps by a significant amount, so we currently expect a large special dividend this year.'
Hays would benefit from a £35m foreign exchange tailwind to operating profit if current exchange rates hold until the end of its current financial year, on 30 June 2017.
In the three months to 30 September, the first quarter of Hays’ financial year, net fee income (NFI) gained 3% excluding the impact of currency movements.
Currency gains added 14 percentage points to NFI at actual rates, for a result of 17% growth.
