TIDMHAS
RNS Number : 3827C
Hays PLC
13 April 2017
QUARTERLY UPDATE
FOR THE THREE MONTHSED
31 MARCH 2017
13 April 2017
Financial summary
Growth in net fees for the quarter ended 31 March 2017 (Q3
FY17)
(versus the same period last Growth
year)
----------------
Actual LFL(1)
By region
Asia Pacific 34% 12%
Continental Europe & Rest
of World 34% 18%
United Kingdom & Ireland (4)% (4)%
------------------------------ ------- -------
Total 21% 10%
------------------------------ ------- -------
By segment
Temporary 23% 12%
Permanent 19% 7%
------------------------------ ------- -------
Total 21% 10%
------------------------------- ------- -------
Highlights
-- All-time record quarterly net fee performance for the Group
-- Good overall growth of 10%(1) (underlying growth of c.8%(3)
adjusted for working days), driven by the continued strength of our
International businesses, which represent c.75% of Group net
fees
-- Continental Europe & Rest of World, representing 50% of
Group net fees, delivered excellent, broad-based 18%(1) growth led
by an acceleration to 23%(1) in Germany (c.18%(3) adjusted for
working days). France grew 14%(1) and 13 further countries grew by
over 10%(1)
-- Strong Asia Pacific growth of 12%(1) , driven by excellent,
broad-based 16%(1) growth in Australia. Asia grew 1%(1) as market
conditions stabilised
-- UK & Ireland down 4%(1) with activity levels sequentially
stable. Private sector, representing 74% of net fees, was down
1%(1) with continued signs of modest improvement, while conditions
remained tough in public sector markets where net fees decreased
13%(1)
-- Group consultant headcount was up 8% year-on-year and up 2%
in the quarter, primarily in Europe
-- Solid cash performance, with net cash ending Q3 at c.GBP40
million (31 December 2016: GBP47.9 million)
-- We expect full year operating profit to be at the top of the
current range of market estimates, which we understand to be GBP199
million to GBP209 million(4)
Commenting on the Group's performance, Alistair Cox, Chief
Executive, said:
"We have delivered an all-time quarterly record net fee
performance, capitalising on the many growth opportunities around
the Group. This gives us confidence to increase our expectations
for full year profits, to the top of the current range of market
estimates(4) . Growth was broad-based and driven by strong
performances in our International businesses. Europe delivered
excellent results, led by an all-time record performance in
Germany, as we continued to invest in additional headcount. Growth
in Australia accelerated further and was strong across all states.
In the UK, while the public sector market remained tough, we saw
continued signs of improvement in the private sector market.
Looking ahead, conditions remain good in the vast majority of
our markets, notably Australia, Europe and North America. In the
UK, market conditions remain in line with the underlying Q3 trends.
We are unrivalled in our industry in terms of the scale, balance
and diversity of the business we have built and our focus remains
to drive profitable, cash-generative growth. These strengths,
combined with our world-class, highly experienced teams around the
world, stand us in good stead and mean we continue to look to the
future with confidence."
Group
In the third quarter ended 31 March 2017 Group net fees
increased 21% on a headline basis and 10% on a like-for-like
basis(1) against the prior year, our 16(th) consecutive quarter of
year-on-year growth(1) . The difference between headline and
like-for-like growth was primarily the result of the significant
appreciation of the Euro and the Australian Dollar against
Sterling.
The impact of these foreign exchange movements means that if we
were to retranslate the Group's FY16 operating profit of GBP181.0
million at current exchange rates (AUD1.6660 and EUR1.1783 as at 11
April 2017), the actual reported result would increase by c.GBP29
million to c.GBP210 million.
Q3 had two additional trading days versus the prior year due to
the timing of Easter, which this year falls entirely into Q4. This
positively impacted activity levels in the major Temp and
Contractor businesses, most notably Germany, Australia and the UK.
In addition, Germany also benefitted from one extra trading day in
the quarter. As a result, we estimate a c.2%(3) positive impact on
Q3 Group net fee growth and we expect a commensurate decrease in
Q4. The estimated impact on a regional level was c.2% in Asia
Pacific, c.3% in Continental Europe & RoW (including c.5% in
Germany) and c.2% in the UK & Ireland.
Once the impact of trading days is taken into account, we
estimate the exit rate for Group net fee growth to be broadly in
line with the underlying performance of the quarter as a whole.
The Temp business, which accounted for 59% of Group net fees in
the quarter, grew by 12%(1) and the underlying temp margin(2) was
broadly stable versus the prior quarter. Net fees in the Perm
business increased by 7%(1) .
Consultant headcount was up 8% year-on-year and 2% in the
quarter as we continued to invest selectively where market
conditions and outlook were supportive, notably in certain European
businesses and Australia. We expect that increases in Q4 will be
selective and at similar levels to Q3.
Asia Pacific
In Asia Pacific, which represented 24% of Group net fees, we
delivered strong growth of 12%(1) .
In Australia & New Zealand net fees were up 15%(1) ,
including a c.2%(3) positive working day impact. The Perm business
was up 11%(1) and Temp, which represented 64% of net fees in the
quarter, was up 17%(1) .
In Australia net fee growth accelerated further to 16%(1) .
Growth was uniform and broad-based across all regions and most
specialisms. Our largest regions of New South Wales and Victoria,
which account for 57% of Australia net fees, were up 11%(1) and
18%(1) respectively and we saw Queensland and Western Australia
returning to strong growth, up 21%(1) and 24%(1) respectively. ACT
(Canberra) also delivered a strong performance, with net fees up
14%(1) driven by continued strength in our public sector business,
up 12%(1) .
At the specialism level, we delivered strong 14%(1) growth in
Construction & Property, our largest business in Australia.
Accountancy & Finance grew 13%(1) , Office Support was up
15%(1) and IT saw excellent growth of 23%(1) . Net fees were
flat(1) in New Zealand.
In Asia, which accounted for 21% of the division, net fees grew
1%(1) as trading conditions stabilised although remained subdued
overall. China continued to deliver further good growth and was up
7%(1) while Hong Kong grew 29%(1) and Malaysia delivered an
excellent performance, up 45%(1) . Net fees in Japan were down
7%(1) and Singapore declined by 17%(1) largely due to continuing
challenging conditions in the banking market.
Consultant headcount in the division was up 4% in the quarter
and 10% year-on-year. Consultant headcount in Australia & New
Zealand was up 6% in the quarter and 13% year-on-year, and in Asia
was down 1% in the quarter and up 2% year-on-year.
Continental Europe & Rest of World ('RoW')
In Continental Europe & RoW, our largest division which
represented 50% of Group net fees, we delivered excellent,
broad-based growth of 18%(1) and an all-time record performance. In
Germany, net fees grew 23%(1) (underlying growth of c.18%(3)
adjusted for working days), with growth in our Temp &
Contractor business of 22%(1) and Perm growth of 32%(1) . We
delivered excellent growth in our core IT & Engineering
business, up 24%(1) and within our newer specialisms Accountancy
& Finance grew 17%(1) and Life Science was up 37%(1) .
The rest of Continental Europe delivered 15%(1) growth, with 11
countries growing by over 10%(1) , including Switzerland, Poland
and the Netherlands. France, the second largest business in the
division, delivered another strong, broad-based performance, up
14%(1) , our tenth consecutive quarter of double digit growth(1) .
In Southern Europe, despite tougher comparators, Spain delivered an
all-time record performance and grew 22%(1) while net fees in Italy
were broadly flat(1) .
In the Americas net fees grew by 9%(1) . Within this, we
delivered excellent growth in Canada, up 18%(1) and solid 6%(1)
growth in the USA. In Latin America, both Mexico and Colombia grew
in excess of 20%(1) , while net fees in Brazil declined 1%(1) ,
primarily due to tougher comparators.
Consultant headcount in the division was up 4% in the quarter
and up 16% year-on-year, as we continued to invest to drive growth
in stronger markets.
United Kingdom & Ireland
In the United Kingdom & Ireland, which represented 26% of
the Group, net fees decreased 4%(1) (underlying decrease of c.6%(3)
adjusted for working days) although remained sequentially stable.
Net fees in our private sector business, representing 74% of the
division, were down 1%(1) as modest signs of improvement continued.
This was particularly evident in the Perm business, where net fees
were also down 1%(1) in the quarter. Our Temp business was down
6%(1) , primarily as a result of continued tough market conditions
in the public sector, exacerbated by the uncertainties created by
the recent implementations of the IR35 regulations. Overall, public
sector net fees were down 13%(1) .
All regions traded broadly in line with the overall UK business,
with the exception of London, where net fees were down 8% as
conditions remained challenging, and the Midlands, where net fees
were flat. In Ireland our business delivered another strong
performance, with net fees up 14%(1) .
At a specialism level, Accountancy & Finance, our largest
business in the division, grew 2%(1) , while Construction &
Property was down 1%(1) and Office Support was flat. Net fees in IT
decreased 17%(1) , in part due to the sharp decline in the public
sector market, and Education was down 11%(1) .
Consultant headcount in the division was down 1% in the quarter
and down 6% year-on-year.
Cash flow and balance sheet
Cash performance in the quarter was solid, with net cash of
c.GBP40 million as of 31 March 2017 (31 December 2016: GBP47.9
million, 31 March 2016: GBP45.7 million net debt).
(1) LFL (like-for-like) growth represents organic growth at
constant currency and excludes the impact of acquisitions.
(2) The underlying Temp gross margin is calculated as Temp net
fees divided by Temp gross revenue and relates solely to Temp
placements in which Hays generates net fees. This specifically
excludes transactions in which Hays acts as agent on behalf of
workers supplied by third party agencies and arrangements where the
Company provides major payrolling services.
(3) The estimated working day impact is calculated in relation
to the Temp and Contractor businesses only, we make no estimate of
the impact on the Perm business. It represents an assumption based
on recent trends of revenues / working day in our major Temp and
Contractor businesses.
(4) As of 12 April 2017 we understand the range of analysts'
estimates for Operating Profit in the financial year ending 30 June
2017 to be GBP199 million to GBP209 million. (Source: FactSet).
Enquiries
+ 44 (0) 20 7383
Hays plc 2266
Paul Venables + 44 (0) 20 7383
David Walker 2266
Bell Pottinger Group Finance Director
John Sunnucks / Head of Investor + 44 (0) 20 3772
Elly Williamson Relations 2485
Conference call
Paul Venables and David Walker of Hays plc will conduct a
conference call for analysts and investors at 8:00am United Kingdom
time on 13 April 2017. The dial-in details are as follows:
+44 (0)20 3139
Dial-in number 4830
Dial-in number +44 (0)80 8237
(UK toll free) 0030
Password 29789821#
The call will be recorded and available for playback
for seven days as follows:
+44 (0)20 3426
Replay dial-in number 2807
Replay dial-in number +44 (0)80 8237
(UK toll free) 0026
Access code 685920#
Reporting calendar
Trading Update for the quarter ending
30 June 2017 14 July 2017
Preliminary Results for the year ending 31 August
30 June 2017 2017
Trading Update for the quarter ending 12 October
30 September 2017 2017
Trading Update for the quarter ending 11 January
31 December 2017 2018
Hays Group overview
Hays has c.9,600 employees based across 251 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 and this 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 c.75% of the Group's net fees as at 31 December 2016,
compared with around 35% 10 years ago.
Our 6,606 expert consultants work in a broad range of sectors,
with Accountancy & Finance, Construction & Property and IT
representing 52% 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 this balance gives our business
model relative resilience.
This well diversified business model continues to be a key
driver of the Group's financial performance.
Cautionary statement
This Quarterly Update (the "Report") has been prepared in
accordance with the Disclosure Guidance and Transparency Rules of
the UK Financial Conduct 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 contained 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 shall not be placed on any forward-looking
statement. Additionally, forward-looking statements regarding past
trends or activities shall 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
shall 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, advisors 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.
This announcement contains inside information.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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