INTERIM MANAGEMENT STATEMENT
QUARTER ENDED 31 MARCH 2013
11 April 2013
Financial summary
Growth in net fees for the quarter ended 31 March 2013 (Q3 FY13) (versus the same period
last year)
Growth
Actual LFL(1)
By region
Asia Pacific (15)% (14)%
Continental Europe & Rest of World 5% 4%
United Kingdom & Ireland 0% 0%
Total (3)% (3)%
By segment
Temporary 1% 1%
Permanent (9)% (8)%
Total (3)% (3)%
Highlights
* Temp fees resilient with an encouraging return to work across key markets;
Perm markets remain fragile
* Solid 4%(1) growth in Continental Europe & Rest of World; markets remain
fragile and mixed, although stable overall. Good growth of 7%(1)in Germany
* Net fees were flat in the UK & Ireland and we saw modest sequential growth
through the quarter, driven by Temp. Private sector decreased 6%, public
sector grew 17%
* Asia Pacific net fees decreased 14%(1). Australia decreased 19%(1)but was
sequentially stable through the quarter. Asia net fees increased 14%(1)
although market conditions remained subdued
* Consultant headcount was up 1% in the quarter and flat year-on-year as we
continued our selective investment approach
* We expect full year operating profit to be at the top of the current range
of market estimates(2),based on an encouraging start to the second half in
key Temp markets and our continued focus on cost control around the Group,
as well as beneficial movements in key exchange rates
Commenting on the Group's performance, Alistair Cox, Chief Executive, said:
"We have delivered a resilient performance against an economic
backdrop that continues to be mixed and fragile overall. The start
to the second half in our key Temp and Contractor markets has been
encouraging and although many Perm markets remain challenging, they
are broadly stable. Our proven ability to react quickly to the
world as it changes, investing in stronger markets while keeping
firm control on costs around the Group, continues to yield benefit
in terms of our financial performance.
Looking ahead, we expect conditions to remain fragile but mixed.
Although several markets are likely to remain challenging, these
sit alongside clear opportunities for growth. The diverse business
we have built positions us well and we remain focussed on
delivering long term sustainable growth while driving profits along
the way."
Group
In the third quarter ended 31 March
2013 net fees decreased by 3% on a like-for-like basis(1)
against prior year (net fees decreased by 3% on a headline basis).
Net fees in the Temp business, which accounted for 59% of Group net
fees, increased 1% year-on-year(1) and the underlying temporary
placement margin(3) was stable. Net fees in the Perm business
decreased by 8%(1).
The exit rate of Group net fees for the quarter was broadly in
line with the quarter as a whole.
Consultant headcount was up 1% during the quarter and flat
year-on-year. We remained selective through the quarter regarding
areas of investment and continued to focus on tight cost control to
maximise Group financial performance.
Based on an encouraging start to the second half in key Temp
markets and our continued focus on cost control around the Group,
as well as beneficial movements in key exchange rates, we expect
full year operating profit to be at the top of the current range of
market estimates(2).
Asia Pacific
In Asia Pacific, which
represents 28% of Group net fees, net fees decreased by 14%(1).
In Australia & New Zealand net fees decreased by 18%(1)
within which our Temp business decreased by 12%(1) and our Perm
business decreased by 26%(1). Overall market conditions in
Australia remained challenging but
sequentially stable through the quarter. In New South Wales and Victoria, which together account for 48% of
our Australian business, net fees were down 13%(1) and conditions
remained particularly challenging in the Perm business. In
Western Australia and Queensland, which together account for 34% of
our Australian business, net fees decreased by 28%(1) primarily due
to continued tough conditions in our Resources & Mining
business. New Zealand delivered
good net fee growth of 7%(1).
In Asia, which accounted for
15% of the division, net fees increased by 14%(1), mainly due to
weaker comparatives. In Hong Kong,
net fees increased over 100% (1)and in China net fees increased 15%(1), whereas in
Japan net fees were flat (1).
Overall, market conditions remained subdued.
Consultant headcount in the division was up 1% in the quarter
but down 9% year-on-year.
Continental Europe & Rest
of World (`RoW')
In Continental Europe & RoW, our largest division which
represents 41% of Group net fees, we delivered solid net fee growth
of 4%(1). In Germany, net fees
increased by 7%(1) with strong performances in Accountancy &
Finance, Construction & Property and Life Sciences and solid
growth in IT and Engineering. As the quarter progressed we saw a
slowdown in the rates of growth.
Net fees were flat(1) in the rest of the division, which is
primarily a Perm business, and where market conditions remained
mixed and fragile overall. Eight countries delivered net fee growth
of 10%(1) or more, including the key markets of Canada and Russia. Activity elsewhere continues to be
significantly impacted by adverse macro-economic conditions with 12
countries recording net fee declines in the quarter.
Consultant headcount in the division was down 1% in the quarter
but up 9% year-on-year.
United Kingdom &
Ireland
In the United Kingdom &
Ireland, net fees were flat
year-on-year with modest sequential growth through the quarter.
Within this, our Temp business increased by 4%, our Perm business
decreased by 7% and by region, we saw good growth in Yorkshire, the Home Counties, Scotland and the Midlands.
In our private sector business, net fees decreased by 6% as
market conditions remained fragile overall, especially in our
Banking and City-related specialisms. Elsewhere, our Construction
& Property, Life Sciences and IT businesses were amongst those
which delivered good growth. Our public sector business delivered
net fee growth of 17%, driven primarily by job churn in the
permanent segment, and activity was notably strong in our Education
and Healthcare businesses.
Consultant headcount in the division was up 3% in the quarter
but down 4% year-on-year.
Cash flow and balance sheet
Net debt ended March at £140 million (31
December 2012: £145.4 million). We expect Group net debt to
continue to reduce in the fourth quarter.
(1)LFL (like-for-like) growth represents organic growth at
constant currency.
(2)As of 10 April 2013 we
understand the range of analysts' estimates for
Operating Profit in the financial year ended June 2013 to be £112.3m to £
122.5m.
(3)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 11 April 2013.
The dial-in details are as follows:
Dial-in number +44 (0) 20 3139 4830
Password 28930095#
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 638181#
Reporting calendar
Trading Update for quarter ending 30 June 2013 11 July 2013
Preliminary Results for year ending 30 June 2013 29 August 2013
Interim Management Statement for quarter ending
30 September 2013 10 October 2013
Hays Group overview
Hays has 7,810 employees in 240 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 which presents substantial
long-term structural growth opportunities. This has been a key
driver of the rapid diversification and internationalisation of the
Group, with the International business representing 70% of the
Group's net fees as at 31 December
2012, compared with around 15% just 10 years ago.
Our 5,038 consultants work in a broad range of sectors with no
sector specialism representing more than 25% of Group net fees.
While Accountancy & Finance, Construction & Property and IT
represent 64% of Group net fees, 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,
the Group's net fees are generated 59% from temporary and 41%
permanent placement markets, and we believe that this balance gives
our business model relative resilience in the current
environment.
This well diversified business model continues to be a key
driver of the Group's financial performance.
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 Interim Management Statement (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.