Hays (HAS) H2 2014 earnings summary

Executive summary

• FY14 net fees rose 5% LFL to £724.9m; operating profit increased 20% LFL to £140.3m, with strong UK growth and improved profitability across Continental Europe & RoW.

• Cash generation and debt reduction supported a 5% increase in the full-year dividend to 2.63p per share.

Financial highlights

• Turnover was £3,678.5m; net fees £724.9m, up 1% reported and 5% LFL; operating profit £140.3m, up 12% reported and 20% LFL.

• Profit before tax was £132.3m; profit after tax rose 20% to £86.0m from £71.7m.

• Basic EPS increased 19% to 6.13p from 5.14p; net finance cost was £8.0m versus £7.0m.

• Free cash flow was £108.4m versus £82.8m; operating cash flow reached £175.6m, up from £136.3m.

• FX reduced net fees by £27.9m and operating profit by £8.3m, primarily from Sterling appreciation versus the Australian dollar.

Outlook and guidance

• FY15 net finance charge guidance: ~£7.5m; effective tax rate guidance: ~33.5%.

• FY15 capital expenditure guidance: ~£15m; depreciation and amortisation guidance: ~£22m.

• Current trading: broad-based UK growth and strong client and candidate confidence; Germany continued to grow, while Australia remained tough but sequentially stable for eight months.

• Five-year net fee CAGR assumptions: UK & Ireland 5%-9%, Australia & NZ 1%-5%, Germany 7%-12%, and Other Countries 8%-12%; objectives are not forecasts.