The Investment Column: Hays celebrates 10th birthday with yet another rise in profits

HAYS, the business services group, is 10 years old this year and it is fitting that Ronnie Frost's empire should celebrate the anniversary with what he described yesterday as yet another "boring" set of brilliant results.

Full-year profits climbed 17 per cent to pounds 236m. With Sir Clive Thompson stumbling at Rentokil, Hays has quietly established itself as the premier outfit in the highly rated support services sector.

Hays shares have outperformed the All-Share by 152 per cent over the past five years, the kind of growth associated with Internet or telecoms businesses. It is little wonder that Mr Frost, the chairman, controlling almost 5 per cent of the pounds 6bn company, is taking a step back from the day-to-day operations to work around three days a week. John Cole has already been appointed group managing director and is gradually being introduced to the City.

Not that he had much explaining to do yesterday. Hays' three-legged structure of distribution, personnel and commercial document services is still looking well-balanced. The City yesterday was pleased by Hays' strong organic growth - 70 per cent of last year's pounds 330m sales growth was from existing operations.

Added to the pounds 165m spent on acquisitions last year and a record number of new contracts in the pipeline, several years of steady growth are in prospect. There was, however, a nasty surprise in chemicals distribution, where profits took a pounds 3m hit following a slump in caustic soda prices.

Going forward, the usual diet of continental European acquisitions can be expected. Deals in the commercial and distribution sectors are the priority. Hays hopes to benefit from the deregulation of post offices by clinching deals in specialist corporate mailing services. On full-year profit forecasts of pounds 270m the shares, up 21.5p at 676p, trade on a forward p/e of 30. Not cheap, but still a good buy.