Hays to return £150mln surplus capital via special dividends as recruitment sector points at recover

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Hays PLC (LON:HAS) said it has identified £150mln of surplus capital which it intends to return to shareholders via special dividends, in two phases.

The recruiter plans to resume core dividends after trading and cash generation proved more resilient than expected, with the first payouts to be announced at the full-year results in August.

READ: Hays upgraded to ‘buy’ by UBS as recruiter enters new cycle

Analysts at UBS noted that this cash distribution plan shows confidence in a return to work as several sectors continue to recover.

The Swiss bank reiterated its ‘buy’ recommendation, with a price target of 180p, and said total yield should rise to 4-5% per annum.

Chief executive Alistair Cox said in a statement the company is investing in the most requested skills at the moment, in areas like Technology, large Corporate Accounts, Life Sciences and the Green Economy.

“Considering the latter, it is only right that we increase our own contribution to the environment and combatting climate change and we are committing to being a ‘Net Zero’ carbon business by the end of 2021,” he added.

In terms of trading, the New Year ‘return to work’ was slower than in prior years, but activity rebounded to pre-Christmas levels by early February.

In the six months to December 31, net fees tumbled 25% to £422mln, with profit before tax down 78% to £21mln. The period ended with net cash of £379mln, from £366mln in June 2020.

Performance was significantly impacted by the COVID-19 pandemic, but trading in all the FTSE 250 firm’s major markets improved through the half.

Shares were flat at 158.4p on Thursday at noon.

–Adds analyst comment, shares–

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