Hays (LSE:HAS) reported net fees down 8% on a like-for-like basis to £905.5 million for the year ended 30 June, as weak Permanent recruitment activity offset relative resilience in Temporary & Contracting.
The recruitment group, which operates in 23 countries, posted pre-exceptional operating profit of £48.6 million, up 3% like-for-like, with the conversion rate improving 70 basis points to 5.4%.
Statutory pre-tax loss widened to £54.5 million from a £1.5 million profit a year earlier, driven by an £89.6 million exceptional charge covering operational restructuring, property rationalisation, a six-country European disposal and goodwill impairments in Belgium and the Netherlands.
Hays generated £92 million of cash from operations, down 28%, with net cash of £20.1 million at year-end against £37 million a year earlier, on 189% cash conversion.
"We delivered a return to strong year-on-year profit growth in the second half with full year pre-exceptional operating profit increasing by 3%," said chief executive Mark Dearnley.
The board proposed a final dividend of 0.29p per share, unchanged from FY25, bringing the total payout to 0.44p and representing 2.8 times pre-exceptional earnings cover.
The company's new Momentum strategy narrows its footprint to 16 countries and six global specialisms, targets a 50%-plus rise in net fee productivity over the medium term, and aims for a further £50 million of annualised structural cost savings in FY27, having already secured c.£50 million in FY26, three years ahead of schedule.
Current trading in July and August has been in line with expectations, with no significant change in activity from the fourth quarter; Hays said September, its key first-quarter trading month, remains too early to assess.
The next trading update, covering the quarter ending 30 September, is due 12 October.
Mark Crouch, market analyst for eToro, said that Hays' operating profit of £48.6m had comfortably beaten expectations despite an 8% fall in net fees, showing management’s aggressive cost work is beginning to carry real weight.
The analyst, in a note, added that permanent hiring remains weak and the absence of improvement in July and August suggests a broader recruitment recovery has yet to arrive, making September a key near-term indicator. He highlights that further targeted structural savings and punchy productivity ambitions, alongside a maintained dividend, leave scope for a stronger profit recovery if demand eventually improves.
In London, however, fell 5.6% to change hands at 67.45p.
News Intelligence what this means for the company
Hays reported net fees down 8% to £905.5m but swung to pre-exceptional operating profit growth of 3%, driven by a 70 basis point improvement in conversion to 5.4%—a sign of cost discipline offsetting revenue weakness. The statutory loss of £54.5m reflects £89.6m in restructuring charges tied to its new Momentum strategy, which narrows the company to 16 countries and targets £50m in annualised cost savings by FY27, already ahead of a three-year schedule. Cash generation fell 28% to £92m and net cash halved to £20.1m, a material tightening that constrains flexibility even as the board held the dividend flat.
The profit growth on shrinking revenue shows Hays can engineer margin recovery through restructuring, but the 8% fee decline and 28% drop in operating cash flow signal a market still under pressure. The dividend hold at 2.8x earnings cover is prudent given the cash position, but investors betting on a swift return to growth will need to see whether September trading—flagged as too early to call—breaks the pattern of weakness in permanent recruitment.
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