HAYS PLC
TRADING UPDATE
QUARTER ENDED
31 DECEMBER 2012
10 January 2013
Financial summary
Growth in net fees for the quarter ended 31 December 2012 (Q2 FY13) (versus the same
period last year)
Growth
Actual LFL(1)
By region
Asia Pacific (14)% (14)%
Continental Europe & Rest of World 6% 12%
United Kingdom & Ireland (3)% (3)%
Total (3)% (1)%
By segment
Temporary (1)% 1%
Permanent (7)% (5)%
Total (3)% (1)%
(1) LFL (like-for-like) growth represents organic growth at
constant currency.
Highlights
· Group net fees decreased 1%(1) versus prior year
· Strong growth of 12%(1) in Continental Europe & Rest of
World, driven by
continued strong performance in Germany which grew 14%(1)
· Asia Pacific net fees
decreased 14%(1). Australia &
New Zealand decreased
15%(1) with a step-down in activity in the Resources &
Mining business.
Asia decreased 6%(1)
· Net fees decreased 3% in the UK & Ireland and were sequentially stable
through
the quarter. Private sector decreased 9%, public sector grew
15%
· Increasingly selective investment approach and focussed cost
control through
the quarter
· Consultant headcount was down 1% in the quarter and ended
December down 3%
year-on-year
· Net debt ended the quarter at c.£145 million, in line with
expectations
Commenting on the Group's performance in the second quarter,
Alistair Cox, Chief Executive,
said:
"Whilst several markets around the world were fragile, the fact
that we've built such a well-diversified and balanced business
enabled us to deliver a solid result in the quarter. 12 countries
around the Group delivered net fee growth of 10%(1) or more
including Germany, which is
operating at record levels, and key markets such as Brazil, Canada and Russia. Other markets remained tough, notably
the UK, Southern Europe and
Banking-related specialisms, and we saw a step-down in activity
levels in our Australian Resources & Mining business.
The start to the New Year is always a key time and we are
closely monitoring activity levels in all of our markets. Overall,
we expect conditions to remain fragile but we continue to see
opportunities for growth in several key parts of our business. We
will invest accordingly to fully capitalise on these growth
opportunities, while also controlling costs tightly and improving
productivity across the Group in order to maximise
profitability."
Group
In the second quarter ended 31 December
2012 net fees decreased by 1% on a like-for-like basis(1)
against prior year (net fees decreased by 3% on a headline basis).
Net fees in the temporary placement business, which accounted for
59% of Group net fees, increased by 1% year-on-year(1) and the
underlying temporary placement margin(2) was stable. Net fees in
the permanent placement business decreased by 5%(1).
The exit rate of Group net fees for the quarter was
approximately (3)%(1).
Consultant headcount was down 1% during the quarter and ended
December down 3% year-on-year. We became increasingly selective as
the quarter progressed regarding areas of investment around the
Group and continued to focus on tight cost control to maximise
Group financial performance.
Exchange rate movements reduced net fees by 2% in the quarter,
primarily due to depreciation in the rate of exchange of the Euro.
Fluctuations in exchange rates remain a significant sensitivity for
the Group.
Asia Pacific
In Asia Pacific, which
represents 29% of Group net fees, net fees decreased by 14%(1).
In Australia & New Zealand net fees decreased by 15%(1)
within which our temporary placement business decreased by 10%(1)
and our permanent placement business decreased by 23%(1). Overall
market conditions in Australia
became more challenging as the quarter progressed, especially in
the permanent markets. In New South
Wales and Victoria, which
together account for 44% of our Australian business, conditions
remained challenging but broadly sequentially stable. In our
Resources & Mining business, we have seen a step-down in
activity in Western Australia, and
conditions in Queensland continued
to be challenging. New Zealand
continued to perform well, delivering net fee growth of 16%(1).
In Asia, which accounted for
15% of the division, net fees decreased by 6%(1). In Japan net fees decreased by 10%(1) and
elsewhere in the division market conditions remained challenging
but stable.
As the quarter progressed, we took action to reduce consultant
headcount in the division, which was down 6% in the quarter and
ended December down 9% year-on-year.
Continental Europe & Rest
of World ('RoW')
In Continental Europe & RoW, our largest division which
represents 40% of Group net fees, we delivered further strong net
fee growth of 12%(1). The performance of our German business, which
now represents 21% of Group net fees, was again strong. Net fees
increased by 14%(1) to record levels, and growth continued to be
broad based across all sectors and each of our contracting,
temporary and permanent placement businesses.
We delivered net fee growth of 9%(1) in the rest of the
division, which is primarily a permanent placement business, and
where market conditions remained mixed and fragile overall. 10
countries delivered net fee growth of 10%(1) or more, including the
key markets of Brazil,
Canada and Russia. Activity elsewhere continues to be
significantly impacted by adverse macro-economic conditions with 7
countries recording net fee declines in the quarter, and conditions
in Southern Europe were
particularly difficult.
Consultant headcount in the division grew by 2% in the quarter
and ended December up 13% year-on-year.
United Kingdom & Ireland
In the United Kingdom &
Ireland, net fees were
sequentially stable through the quarter and decreased by 3%
year-on-year. Within this, our temporary placement business was
flat and our permanent placement business decreased by 9%. In our
private sector business, net fees decreased by 9% as market
conditions remained challenging overall, especially in our Banking
and City-related and Construction & Property specialisms.
Elsewhere, our Life Sciences and HR businesses were amongst those
which delivered good growth. Our public sector business delivered
net fee growth of 15% driven primarily by job churn in the
permanent segment, and activity was notably strong in our Education
and Healthcare businesses.
The range of cost reduction measures we implemented in the
previous financial year combined with further actions through the
first half of the current financial year have improved the
financial performance of the division.
Consultant headcount in the division was down 3% in the quarter
and ended December down 14% year-on-year.
Cash flow and balance sheet
Net debt ended December in line with expectations at around £145
million (30 September 2012: c.£140
million) following the payment in November of the Group's final
dividend. We expect Group net debt to reduce in the second half of
the financial year.
(1) LFL (like-for-like) growth represents organic growth at
constant currency.
(2) The underlying temporary placement gross margin is
calculated as
temporary placement net fees divided by temporary placement gross revenue and
relates solely to temporary placements in which Hays generates net fees and
specifically excludes transactions in which Hays acts as agent on behalf of
workers supplied by third party agencies.
Enquiries
Hays plc
Paul Venables Group Finance Director + 44 (0) 20 7383 2266
David Walker Head of Investor Relations + 44 (0) 20 7383 2266
Maitland
Liz Morley + 44 (0) 20 7379 5151
Conference call
Paul Venables and David Walker of Hays plc will conduct a
conference call for analysts and investors at 9:00am United
Kingdom time on 10 January
2013. The dial-in details are as follows:
Dial-in number +44 (0) 20 3139 4830
Password 38855690#
The call will be recorded and available for playback for seven
days as follows:
Replay dial-in number +44 (0) 20 3426 2807
Access code 635453#
Reporting calendar
Interim Results for the six months ending 31 December 2012 28
February 2013 Interim Management statement for the quarter
ending 31 March 2013 11 April 2013 Trading Update for the quarter
ending 30 June 2013
11 July 2013
Preliminary Results for the year ending 30 June 2013 29 August 2013
Hays Group overview
Hays has 7,800 employees in 245 offices in 33 countries. In many
of our global markets, the vast majority of professional and
skilled recruitment is still done in-house, with minimal
outsourcing to recruitment agencies. This presents substantial
long-term structural growth opportunities and has been a key driver
of the rapid diversification and internationalisation of the Group,
with the International business representing 69% of the Group's net
fees in FY2012, compared with around 15% just 10 years ago.
Our 5,013 consultants work in a broad range of sectors with no
one sector specialism representing more than 26% of Group net fees.
While Accountancy & Finance, Construction & Property and IT
represented 64% of Group net fees in FY2012, our expertise across
20 professional and skilled recruitment specialisms gives us
opportunities to rapidly develop newer markets by replicating these
long-established, existing areas of expertise.
In addition to this international and sectoral diversification,
in FY2012 the Group's net fees were generated 56% from temporary
and 44% permanent placement markets, and we believe that this
balance provides relative resilience to our business model in the
current environment.
Hays operates in the following countries: Australia, Austria, Belgium, Brazil, Canada, Colombia, Chile, China,
the Czech Republic, Denmark, France, Germany, Hong
Kong, Hungary, India, Ireland, Italy, Japan,
Luxembourg, Malaysia, Mexico, the
Netherlands, New Zealand,
Poland, Portugal, Russia, Singapore, Spain, Sweden, Switzerland, UAE, the United Kingdom and the USA.
Cautionary statement
This Trading Update (the "Report") has been prepared in
accordance with the Disclosure Rules and Transparency Rules of the
UK Financial Services Authority and is not audited. No
representation or warranty, express or implied, is or will be made
in relation to the accuracy, fairness or completeness of the
information or opinions made in this Report. Statements in this
Report reflect the knowledge and information available at the time
of its preparation. Certain statements included or incorporated by
reference within this Report may constitute "forward-looking
statements" in respect of the Group's operations, performance,
prospects and/or financial condition. By their nature,
forward-looking statements involve a number of risks, uncertainties
and assumptions and actual results or events may differ materially
from those expressed or implied by those statements. Accordingly,
no assurance can be given that any particular expectation will be
met and reliance should not be placed on any forward-looking
statement. Additionally, forward-looking statements regarding past
trends or activities should not be taken as a representation that
such trends or activities will continue in the future. The
information contained in this Report is subject to change without
notice and no responsibility or obligation is accepted to update or
revise any forward-looking statement resulting from new
information, future events or otherwise. Nothing in this Report
should be construed as a profit forecast. This Report does not
constitute or form part of any offer or invitation to sell, or any
solicitation of any offer to purchase or subscribe for any shares
in the Company, nor shall it or any part of it or the fact of its
distribution form the basis of, or be relied on in connection with,
any contract or commitment or investment decisions relating
thereto, nor does it constitute a recommendation regarding the
shares of the Company or any invitation or inducement to engage in
investment activity under section 21 of the Financial Services and
Markets Act 2000. Past performance cannot be relied upon as a guide
to future performance. Liability arising from anything in this
Report shall be governed by English Law, and neither the Company
nor any of its affiliates, advisers or representatives shall have
any liability whatsoever (in negligence or otherwise) for any loss
howsoever arising from any use of this Report or its contents or
otherwise arising in connection with this Report. Nothing in this
Report shall exclude any liability under applicable laws that
cannot be excluded in accordance with such laws.