No Pain, No Gain: Women on top send company's profits soaring


Hat Pin must be a unique quoted company. As perhaps the name implies, women are in the ascendancy. This dominance is evident in the boardroom, where four of the seven directors are women, and is even more pronounced elsewhere, with females accounting for 85 per cent of the workforce.

Hat Pin must be a unique quoted company. As perhaps the name implies, women are in the ascendancy. This dominance is evident in the boardroom, where four of the seven directors are women, and is even more pronounced elsewhere, with females accounting for 85 per cent of the workforce.

The feminine touch is paying off. Interim profits more than doubled to £306,000 and Adrian Kearsey at the stockbroker Evolution is looking for a year's outcome of £530,000 against £400,000 last time. Next year he expects £650,000.

Mind you, it has not always been moonlight and roses. Hat Pin is a recruiter for the advertising and marketing industries and, like so many companies where the assets go up and down in the lift, it had a rocky time at the start of the millennium. For two years it was in the red, emerging back into the black last year. Now it is prospering, as advertising and marketing demand improves. In addition, it is reaping the benefit of overseas growth. Indeed, it looked as though the group had got its timing hopelessly wrong when it increased its international presence in the teeth of the advertising downturn. But as the trading environment strengthens, Hat Pin's brave expansion looks eminently sensible.

With trading encouraging - and cash in the bank - it is on the takeover trail. Talks are currently going on. I would not be surprised if it achieved more than one acquisition in the near future, strengthening its operations in this country as well as overseas, where it has offices in the US and Hong Kong and is about to open in China. It is also expected to diversify into other areas of recruitment.

The group is still very much a stock-market tiddler, with a capitalisation of only £6.7m. The Hat Pin story dates back to 1978 but Gay Haines, the chairman, arrived in 1993 and led the 1996 flotation. Directors account for 35 per cent of the capital (Gay Haines has 23 per cent) and the serial investor Bob Morton (MacLellan, Multi Group, Vitesse Media) is the largest outside shareholder, with 18 per cent. The rest of the shares are spread among some 300 private shareholders, with apparently not a solitary institution represented on the share register.

Hat Pin's modest size does not completely explain the absence of institutional interest. A number of funds specialise in seeking out the brighter elements on the stock market undercard and, unless I am very much mistaken, Hat Pin looks a little gem. So, perhaps some of the more adventurous investment big hitters will soon admit the group's attractions.

Certainly, at 61p, the shares seem cheap for a group with undoubted prospects. They are on a lower rating than those of many similar companies. In 2000 they hit a 140p peak and have since been as low as 25p. The lack of dividends is one drawback, but I would imagine that if progress continues, cheques will eventually land on shareholders' doormats.

The proposed takeover spree could also help the shares. Almost certainly any acquisitions will be financed, at least in part, by share issues. Although, in a people company, it is always wise to ensure that vendors have a continuing incentive and become shareholders, any major deal could also encourage institutions to take an interest. As Mr Kearsey says: "With organic growth transforming the profits profile, we anticipate the market will begin to take an interest. In addition, the prospect of acquisitions could act as a catalyst for interest in the share price."

Hat Pin certainly looks an intriguing candidate for the No Pain, No Gain portfolio which, as far as the number of constituents is concerned, is under strength. As I said recently, I am becoming increasingly disillusioned with a couple of my selections and could well be tempted to bite the bullet and indulge in a little reshaping.

However S&U, the finance group that was on my hit list, has more than redeemed itself with impressive interim profits and a sturdy dividend increase. At 560p the shares are comfortably above my 292.5p buying price. The loans group is well managed but operates in an industry attracting increasing Westminster interest. And that could create problems.

There is a growing danger of Government interference and shareholders can expect little consideration should the current administration get involved. So I would not be surprised if, despite its excellent record, I have to reconsider S&U's portfolio membership. As I have said on many occasions, the portfolio is for the long haul and I try to avoid too much chopping and changing. But when the environment changes, even well-run companies can become casualties.

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