Hays UK to sell bulk of operations as profits drop
the UK business services group, on Tuesday said it was exiting all activities, apart from personnel, through a programme of disposals as it announced a 26 per cent fall in interim profits.
The announcement sent shares in Hays up 8 per cent to 79p in early trade in London.
The company, which also operates in the logistics, mail and express and call centre and information management businesses, said there “were insufficient linkages between the four divisions to outweigh the advantages of focusing the group on a single activity.”
Hays went on to say that personnel would become the focus of the group.
“Personnel is our largest division and is well positioned to develop strongly in a growing market,” it said.
Hays said that other activities would be exited “in due course” through a disposals programme, adding that the strength of the group balance sheet meant that no forced sales would be required.
It also said it was expecting to return cash to shareholders. It said the strategic development of Hays Personnel was unlikely to require retention of cash resources since it was not a capital intensive activity and generated a very positive cash flow.
“Hence, at an appropriate time we expect to return cash to shareholders in the most efficient manner,” Hays said. Bob Lawson, chairman, added: “Our announcement today is radical and entirely appropriate for the future of Hays.”
Mr Lawson said he could not provide a timetable for the disposals at this stage, but said that the move would incur “some one-off costs”.
Alongside the restructuring, the group also announced that John Martin currently deputy finance director, would replace Neil McLachlan, finance director, who was suffering from a long-term illness.
The news came as the group reported pre-tax profits for the six months to the end of December down 26 per cent at £76.1m, while turnover was flat at £1.18bn. Operating profits were down 25 per cent to £82.3m while earnings per share were down 28 per cent to 2.83p.
