The Investment Column: The three facets of Hays

Ronnie Frost, chairman of Hays, has a point when he complains about investors' inordinate interest in the distribution side of the group. Though distribution - hauling M&S clothes or sulphuric acid around Europe by lorry - clearly remains important, given Hays tried to merge with Christian Salvesen last year, logistics is less than two-fifths of total profits. The other two divisions - the commercial business, involving mail and document transfer, and recruitment - warrant equal attention.

Hays is growing all three legs impressively. While falling margins on food distribution contracts are crippling the likes of Salvesen, Hays' future looks assured, helped by its small-company management style and good acquisition record. Though recession in the key German market left logistics profits in the year to June down, the UK and France are going great guns. International customers like M&S and Nestle want pan-European distributors, and Mr Frost rightly plans to keep building its German business. Hays is also planning to go into northern Italy with a French food retailing customer - probably Carrefour - and later into Spain.

In the UK, new contracts with BP and Shell mean Hays has sewn up most of the market supplying petrol forecourts with things like fresh food. However, Mr Frost's most urgent desire is growing the commercial side, with the chances of a pounds 100m acquisition coming before Christmas.

With gearing at just 26 per cent and interest cover at 19 times, the group has the firepower to keep building. NatWest Securities forecasts pounds 185m profits next year. The shares, down 11p to 641.5p, are on a forward multiple of 21 times. Still a good bet.