Final Results

HAYS PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2011 1 September 2011 STRONG FINANCIAL PERFORMANCE DRIVEN BY EXCELLENT GROWTH IN THE INTERNATIONAL BUSINESS Year ended 30 June Actual LFL* (In £'s million) 2011 2010 growth growth Net fees 672.1 557.7 21% 18% Operating profit (before exceptional items)** 114.1 80.5 42% 33% Cash generated by operations*** 97.3 78.1 25% Profit before tax (before exceptional items)** 106.6 71.1 50% Profit before tax 110.7 29.7 273% Basic earnings per share (before exceptional items) ** 5.19p 3.25p 60% Basic earnings per share 5.69p 0.48p 1,085% Dividend per share 5.80p 5.80p - All numbers are from continuing operations only. Highlights · Strong International performance driving Group net fee growth of 18%* and operating profit growth of 33%* · Continued diversification of the business with 64% of Group net fees generated outside the UK · Excellent performance in Asia Pacific with 30%* net fee growth - Australia & New Zealand net fees up 27%*, with exceptional 51%* growth in Asia · Excellent performance in Continental Europe & Rest of World division with 33%* net fee growth - Division operating at record levels driven by 37%* growth in Germany, 60%* growth in Brazil and a further 14 countries growing net fees by more than 20%* · UK net fees down 1%, with 19% growth in private sector net fees offset by 35% decrease in public sector - Actions taken to reduce cost base and defend profitability going forward · Continued investment in the International business with 27% increase in consultant headcount and 12 new offices opened including launch of US and Mexican operations, with Colombia launched in July 2011 · Good cash performance with working capital increase driven by growth in temporary placement net fees · 60% growth in basic earnings per share** to 5.19p with full year dividend unchanged at 5.80p Commenting on these results Alistair Cox, Chief Executive, said: "This is a strong set of results with operating profits up by 42%**. Our International performance was excellent, delivering 31%* net fee growth with the majority of our overseas operations trading at record levels. We have invested heavily in those businesses and will continue to do so, where market conditions remain appropriate, as the long term structural growth opportunities are excellent. Our strategy of international diversification is delivering returns and two thirds of our Group's net fees are now generated outside the UK. The UK market has been tougher, particularly as recruitment activity in the public sector has dropped significantly over the year. The UK private sector grew strongly in the first half but growth slowed as the year progressed. Consequently, we took early action to both reduce costs as well as focusing our resources on those areas offering the best opportunities. Whilst we remain mindful of the continuing economic and fiscal uncertainty around the world, we continue to see good levels of momentum across most of our markets. In Asia Pacific we continue to see good growth in Australia & New Zealand and strong growth in Asia. In Continental Europe & Rest of World growth remains strong across the division, led by our German business. In the UK we have seen slowing levels of growth in the private sector business, with continued tough but broadly stable markets in the public sector. Looking ahead, we remain focused on taking advantage of the many opportunities available for Hays to grow a more profitable and diversified business." * LFL (like-for-like) growth represents organic growth of continuing activities at constant currency. There was one less trading day in 2011 versus 2010. ** 2011 numbers are presented before an exceptional credit of £4.1 million and 2010 numbers are presented before an exceptional charge of £41.4 million. *** 2011 numbers exclude cash impact of exceptional items of £15.4 million paid in the year and 2010 numbers exclude cash impact of exceptional items of £4.1 million paid in the year. Enquiries Hays plc Paul Venables Group Finance Director + 44 (0) 20 7383 2266 James Hilton / David Walker Investor Relations + 44 (0) 20 7383 2266 Maitland Liz Morley / Brian Hudspith + 44 (0) 20 7379 5151 Results presentation webcast The preliminary results presentation at 9.00am on 1 September 2011 will be available as a live webcast on our website, www.haysplc.com, and a recording will also be available on our website from 1:00pm. Reporting calendar Interim Management Statement for quarter ending 30 September 2011 6 October 2011 Trading Update for quarter ending 31 December 2011 11 January 2012 Interim Results for six months ending 31 December 2011 22 February 2012 Interim Management Statement for the quarter ending 31 March 2012 11 April 2012 Trading Update for the quarter ending 30 June 2012 11 July 2012 Note to editors Hays plc (the "Group") is a leading global professional recruiting group. The Group is the expert at recruiting qualified, professional and skilled people worldwide, being the market leader in the UK and Asia Pacific and one of the market leaders in Continental Europe and Latin America. The Group operates across the private and public sectors, dealing in permanent positions, contract roles and temporary assignments. As at 30 June 2011, the Group employed 7,620 staff operating from 255 offices in 31 countries across 20 specialisms. For the year ended 30 June 2011: - the Group reported net fees of £672 million and operating profit** of £114 million; - the Group placed around 60,000 candidates into permanent jobs and around 190,000 people into temporary assignments; - 31% of Group net fees were generated in Asia Pacific, 33% in Continental Europe & RoW (CERoW) and 36% in the United Kingdom & Ireland; - the temporary placement business represented 54% of net fees and the permanent placement business represented 46% of net fees; - Hays operates in the following countries: Australia, Austria,Belgium, Brazil, Canada, Colombia, China, the Czech Republic, Denmark, France,Germany, Hong Kong, Hungary, India, Ireland, Italy, Japan, Luxembourg, Mexico,the Netherlands, New Zealand, Poland, Portugal, Russia, Singapore, Spain,Sweden, Switzerland, UAE, the United Kingdom and the USA. Summary Income Statement growth Year ended 30 June (In £'s million) 2011 2010 Actual LFL* Turnover 3,256.0 2,691.1 21% 19% Net fees Temporary 365.4 323.5 13% 10% Permanent 306.7 234.2 31% 27% Total 672.1 557.7 21% 18% Operating profit** 114.1 80.5 42% 33% Conversion rate 17.0% 14.4% Underlying temporary margin**** 14.7% 15.2% Temporary fees as % of total 54% 58% Period end consultant headcount***** 4,943 4,463 11% * LFL (like-for-like) growth represents organic growth of continuing activities at constant currency. There was one less trading day in 2011 versus 2010. ** 2011 numbers are presented before an exceptional credit of £4.1 million and 2010 numbers are presented before an exceptional charge of £41.4 million. *** 2011 number excludes cash impact of exceptional items of £15.4 million paid in the year and 2010 numbers excludes cash impact of exceptional items of £4.1 million paid in the year. **** 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. ***** the change in consultants is shown on a closing basis, comparing 30 June 2011 versus 30 June 2010. The number of consultants has been re-stated in 2010 to include resource analysts in addition to front line consultants. The Group performed strongly during the year driven by excellent performances across the International business. Group turnover increased by 21% (or 19%* on a like for like basis) and net fees increased by 21% (18%* on a like for like basis), driving operating profit growth of 42%** (33%* on a like for like basis). Favourable exchange rate movements, principally the Australian Dollar, had a positive impact on the results increasing net fees and operating profit by £14.2 million and £5.3 million respectively, and fluctuations in exchange rates remain a significant sensitivity for the Group going forward. The temporary placement business, representing 54% of Group net fees, increased by 10%*. This comprised a volume increase of 6%, a favourable increase in mix/ hours worked of 8%, partially offset by underlying margins slightly lower at 14.7% (2010: 15.2%). Margins have, however, remained broadly stable through the year. The lower level of growth relative to permanent placement reflects the temporary placement business' greater resilience in the prior year and its higher weighting to the UK public sector. Net fees in the permanent placement business, representing 46% of the Group net fees, increased by 27%*, with permanent placement volumes increasing by 23%. We capitalised on the significant improvement in trading conditions across the vast majority of our markets this period, and recorded strong performances across Asia Pacific, Continental Europe, South America and the UK private sector. The average fee per placement increased by 4%* compared to last year, driven by mix and modest wage inflation in Asia Pacific and parts of Continental Europe. The Group's operating cost base, excluding exceptional items**, increased by 15%* versus prior year. This was principally due to the 11% increase in consultant headcount, together with an increase in commission payments which rose in line with net fees. The Group's conversion rate, which is the proportion of net fees converted into operating profit**, increased to 17.0% from 14.4% in the prior year. This was driven by net fee growth, an increase in average consultant productivity and by strong management and control of the Group's operating cost base. Group consultant headcount increased by 11% during the year. This was led by a 27% increase in consultants in the International business where we continue to invest in order to capitalise on the substantial opportunities for growth across the majority of our markets. This increase was partially offset by a 5% consultant headcount reduction in the UK where we continue to balance managing the difficult conditions in the public sector with capturing growth opportunities in the private sector. Investment In the majority of our global markets, the outsourcing of professional and skilled recruitment to agencies remains an immature industry and presents substantial long term structural growth opportunities for the Group. This has been a key driver in the rapid diversification and internationalisation of the Group, with the International business representing 64% of the Group's net fees compared with around 15% just 10 years ago. We have continued to build-out our International platform for growth by opening new offices in existing countries, together with expanding into new country operations. In Asia Pacific, we opened offices in Launceston (Australia), Suzhou (China) and Shinyuku (Japan). In Continental Europe & RoW we opened offices in Campinas and Curitiba (both Brazil), Gdynia and Poznan (both Poland), Turin (Italy), Delhi (India) and Arnhem (the Netherlands). In addition, we launched businesses in Mexico City and New Jersey, our first entries into the Mexican and United States markets, and our 29th and 30th country operations respectively. In the United Kingdom & Ireland we reduced our office network by 23 offices during the year as we continued to drive efficiency savings by consolidating operations in selected towns and cities. Since the year end we have opened our first office in Colombia, based in Bogota, to further develop our business in Central and South America. 30 June opened/ 30 June Office network 2011 (closed) (net) 2010 Asia Pacific 46 3 43 Continental Europe & RoW 84 5 79 United Kingdom & Ireland 125 (23) 148 Group 255 (15) 270 We continue to build a stronger, broader-based and more efficient business. We have completed the global roll-out of our new front office system and this now provides us with a state of the art operating platform. We are now focused on fully utilising the capacity of this system to improve service to our clients and candidates, together with improving our efficiency. We have also acquired a market-leading recruitment vendor management software solution at a cost of up to £6 million, which will provide us with a unique and proprietary platform to further enhance the service we provide to our larger corporate clients. We have also seen significant consultant investment in most countries across the Group. The increasing level of investment in training across the business has been instrumental in improving the processes of effective selection and training of new and experienced consultants. This will be greatly beneficial to the Group as we continue to build scale by bringing in new recruits in the future. Asia Pacific growth Year ended 30 June (In £'s million) 2011 2010 Actual LFL* Net fees 210.0 146.3 44% 30% Operating profit 78.1 52.0 50% 35% Conversion rate 37.2% 35.5% Period end consultant headcount***** 1,071 881 22% In Asia Pacific, net fees increased by 44% (30% on a like-for-like basis*) to £ 210.0 million and operating profit increased by 50% (35% on a like-for-like basis*) to £78.1 million. The difference between actual growth and like-for-like growth was predominantly due to the appreciation in the Australian Dollar. The business achieved a strong conversion rate of 37.2%, up from 35.5% in the prior year, as we carefully balanced profit growth with the significant investment made to capitalise on the long term growth potential of the region. In our market leading Australia & New Zealand business, net fees were up 27%* versus prior year. Temporary placement net fees increased by 23%* with demand increasing across all regions through the year and we exited the year at record temp levels. Permanent placement net fees increased by 33%* with a good performance across the year, particularly in the resource-based regions of Western and South Australia and notably in Accountancy & Finance, IT and Resources & Mining. Our public sector business, which accounts for 23% of net fees in Australia & New Zealand, remained strong with net fees increasing by 14%*. Our businesses in Brisbane and Christchurch responded strongly to the challenges imposed by the natural disasters earlier in the year, limiting the combined second half net fee and operating profit impact of these events to approximately £1 million. Our Asian business, which accounted for 13% of the division's net fees in the year, achieved net fee growth of 51%* versus prior year. Our businesses in Hong Kong, China and Singapore each achieved net fee growth in excess of 60%* and set several monthly net fee records during the year, driven by growth across a broad range of specialisms. Our business in Japan was significantly impacted by March's earthquake and subsequent disruption, with net fee growth decreasing from 43%* in the first half of the year to 5%* in the second half. The business has responded strongly to the challenges faced, limiting the second half net fee and operating profit impact to around £1.5 million. Consultant headcount in Asia Pacific increased by 22% during the year, with consultant headcount increasing by 15% in Australia & New Zealand and by 46% in Asia. In Australia & New Zealand, the outlook remains good and we continue to increase consultant headcount, most notably in Western and South Australia. In Asia, we have more than doubled our consultant headcount in the past 18 months and we are continuing to invest aggressively in order to capitalise on the substantial long term growth opportunities that exist across the region. Continental Europe & Rest of World ('RoW') growth Year ended 30 June (In £'s million) 2011 2010 Actual LFL* Net fees 220.4 167.5 32% 33% Operating profit** 32.4 17.1 89% 95% Conversion rate 14.7% 10.2% Period end consultant headcount***** 1,714 1,310 31% In Continental Europe & RoW, net fees increased by 32% (33% on a like-for-like basis*) to £220.4 million, a record for the division, and operating profit** increased by 89% (95% on a like-for-like basis*) to £32.4 million. The difference between actual growth and like-for-like growth was mainly due to the modest depreciation in the Euro. The conversion rate increased from 10.2% in 2010 to 14.7% in 2011 driven by strong net fee growth and the return to profitability in the majority of countries across the division during the year. Our German business, representing 48% of the division's net fees and the significant majority of the division's profits, recorded 37%* net fee growth and posted several record monthly performances as momentum remained strong through the year. Growth was broadly based across our contracting and temporary placement businesses and across all of the sectors in which we operate. Our diversification into Accountancy & Finance, Construction & Property, Sales & Marketing, Legal and Pharma, continues rapidly and these specialisms now account for 24% of total net fees (2010: 21%). Our market leading position and the increasing diversification of the business places us ideally to benefit from the continuing rapid development of the specialist recruitment market in Germany and the structural growth opportunities this presents. Our other businesses in this division, covering 21 countries and focused principally on the permanent placement markets, delivered strong net fee growth. In France, our second largest country in the division, we recorded 19%* net fee growth with strong momentum through the year. In Brazil, now our third largest country in the division and sixth largest country in the Group, we delivered exceptional net fee growth of 60%* and we continue to rapidly invest in our office network and consultant headcount. A further seven countries across the division recorded net fee growth in excess of 40%*, with our businesses in Italy, Belgium, Denmark, Poland, Russia and India having all achieved record monthly performances during the year. Consultant headcount increased by 31% during the year, led by increases of 34% and 50% in Germany and Brazil, respectively. Market demand and growth momentum remains strong in the majority of the countries within the division, and we are continuing to increase our consultant headcount. United Kingdom & Ireland growth Year ended 30 June (In £'s million) 2011 2010 Actual LFL* Net fees 241.7 243.9 (1)% (1)% Operating profit** 3.6 11.4 (68)% (68)% Conversion rate 1.5% 4.7% Period end consultant headcount***** 2,158 2,272 (5)% In the United Kingdom & Ireland, net fees decreased by 1% on an actual and like-for-like basis to £241.7 million, with operating profit** decreasing to £ 3.6 million. Net fees increased by 12% in the permanent placement business, but declined by 8% in the temporary placement business, as a result of its greater weighting to the public sector markets. The conversion rate declined from 4.7% to 1.5% as a result of the net fee reduction, full year depreciation costs in respect of the new IT systems, dual-running costs of the back office automation project and modest cost inflation, partially offset by the headcount reductions made during the year. In the private sector business, which currently represents 78% of UK net fees, we delivered strong net fee growth of 19%, with good growth in our Accountancy & Finance, Construction & Property, IT and Corporate Accounts businesses. We achieved excellent growth of 27% in the first half, however we saw growth decelerate in the second half with net fees increasing by 12%, in large part due to tougher market conditions in our Banking and City-related businesses. We have continued to build our presence in the Corporate Accounts market and have won a number of important contracts during the year including American Express and Siemens. Our public sector business faced tough market conditions throughout the year, with net fees decreasing by 35% and we exited the year down 57% from peak levels. Our front-line businesses have been relatively more resilient, with net fees decreasing by 17% versus prior year. However, market conditions in our back-office and Construction & Property businesses have been very difficult, with net fees now down around 70% from peak levels. The UK public sector business represented 24% of UK net fees and 9% of Group net fees in the year. Consultant headcount in the United Kingdom & Ireland was reduced by 5% during the year, as we balanced managing the recovery in the private sector with the difficult public sector market, however we expect consultant headcount to remain broadly at this level in the coming months. As a result of the lower level of momentum in the private sector recovery in the second half we have reduced the non-consultant cost base of the business. These actions will generate cost savings of around £7 million per annum going forward. Exceptional items The Group has recognised an exceptional credit of £4.1 million in the Consolidated Income Statement in 2011. This comprises a £24.0 million credit in respect of the Group's successful appeal in reducing the fine imposed by the Office of Fair Trading in September 2009, and which was previously fully provided for in the 2010 accounts. The fine which was reduced from £30.4 million to £5.9 million, has been paid in full and brings this matter to a close. In addition, the Group incurred a £10.0 million goodwill impairment charge in respect of the UK healthcare business acquired in February 2006 for £ 17.9 million, due to tougher conditions in the UK healthcare market, and a £9.9 million charge relating to the restructuring of the UK cost base. Including the effect of exceptional items, statutory profit before tax was £110.7 million, an increase of 273%. Net finance charge The net finance charge for the year was £7.5 million (2010: £9.4 million). The average interest rate on gross debt during the year was 2.5% (2010: 1.0%) following the renewal of the Group's banking facility on 1 July 2010, generating net bank interest payable, including amortisation of arrangement fees, of £6.0 million (2010: £1.6 million). The net interest charge on the defined benefit pension scheme obligations was £1.2 million (2010: £6.7 million) with the decrease primarily due to the higher scheme assets increasing expected returns and a lower discount rate reducing the interest cost. The charge for the Pension Protection Fund levy was £0.3 million (2010: £1.1 million). It is expected that the net finance charge for the year ending 30 June 2012 will be at similar levels to 2011. Taxation Taxation before exceptional items** for the year was £35.2 million, representing an effective tax rate of 33.0% (2010: 37.4%) which is representative of the Group's current geographical mix of profits. The Group also recognised a £2.8 million tax credit in respect of the exceptional restructuring cost incurred in the year, bringing the total tax charge in the year to £32.4 million. It is expected that the Group's effective tax rate will remain at a similar level in 2012. Earnings per share Basic earnings per share before exceptional items** increased 60% to 5.19 pence (2010: 3.25 pence). The increase in earnings per share reflects the Group's higher operating profit, the lower net finance charge and the reduction in the effective tax rate. Basic earnings per share post exceptional items increased to 5.69 pence (2010: 0.48 pence). Cash flow and balance sheet Cash flow in the year was good with 85% conversion of operating profit** into operating cash flow***. This was below cash flow conversion in the prior year (2010: 97%) primarily as a result of net fee growth in the temporary placement business, which increased the Group's working capital requirements and, in addition, trade debtor days increased to 38 days (2010: 35 days). Overall, cash outflow from working capital was £47.2 million and net cash generated by operations*** was £97.3 million (2010: £78.1 million). Net capital expenditure was lower at £18.6 million (2010: £29.8 million), reflecting the completion of the Group's major IT investment programmes. Capital expenditure is expected to reduce to around £15 million in 2012. Dividends paid in the year totalled £79.7 million and £8.5 million was paid out in net interest and banking facility arrangement fees. Net debt increased from £77.2 million at the start of the year to £134.8 million at the end of the year, primarily due to the payment of the dividend and the increase in working capital. The Group expects that net debt will increase in the six months to December 2011 due to the proposed payment of the final dividend, before reducing in the second half. The Group has a £300 million unsecured revolving credit facility available, which expires in January 2014. Capital structure and dividend The Board's current priorities for our free cash flow are to fund Group development, maintain the strength of the balance sheet and support a sustainable dividend policy. After taking account of this year's financial performance, the Board's current view on outlook and the strength of the Group's balance sheet, the Board proposes to maintain the final dividend at last year's level of 3.95 pence per share, equating to £54.3 million. This would make a total dividend for the full year of 5.80 pence per share (2010: 5.80 pence). The recommended dividend payment date will be 18 November 2011 and will be paid to shareholders on the register at close of business on 14 October 2011. Retirement benefits The Group's pension liability under IAS 19 at 30 June 2011 of £11.9 million (£ 6.8 million net of deferred tax) decreased by £55.2 million compared to 30 June 2010, primarily due to higher than expected asset returns and increased Company contributions. During the year, the Company contributed £16.5 million of cash to the defined benefit scheme (2010: £5.5 million), which included £12.0 million additional funding towards the pension deficit in line with previous guidance. Board changes As announced on 19 May 2011, Lesley Knox will step down from the Board following the Annual General Meeting ('AGM') to be held on 9 November 2011. Lesley has been on the Board for the past nine years, latterly as Chairman of the Remuneration Committee and Senior Independent Director. Her incisive insight and contribution to strategic and operational debate has been crucial to the repositioning and successful development of the Group. Paul Harrison, our current Audit Committee Chairman, will replace Lesley as Chairman of the Remuneration Committee and Senior Independent Director following the AGM. We welcome Victoria Jarman to the Board as a non-executive director from 1 October 2011 and as Chairman of the Audit Committee at the conclusion of the AGM. Victoria, who is a chartered accountant, was previously Chief Operating Officer of Lazard's London and Middle East operations. Victoria is a non-executive director of De La Rue plc and a member of its audit and nomination committees. Current trading Whilst we remain mindful of the continuing economic and fiscal uncertainty around the world, we continue to see good levels of momentum across the majority of our markets. In Asia Pacific we continue to see good growth in Australia & New Zealand and strong growth in Asia. In Continental Europe & Rest of World growth remains strong across the division, led by strong growth in the German business. In the UK we have seen slowing levels of growth in the private sector business, with continued tough but broadly stable markets in the public sector. Treasury management The Group's treasury operations remain straight forward and uncomplicated with Group operations financed by retained earnings and bank borrowings. On 1 July 2010 the Group completed the renewal of its reduced £300 million revolving credit facility, in place until January 2014, and it uses this facility to manage its day-to-day working capital requirements as appropriate. All borrowings are raised by the Group's UK-based treasury department, which manages the Group's treasury risk in accordance with policies set by the Board. The Group's treasury department does not engage in speculative transactions and does not operate as a profit centre. The Board considers it appropriate to use certain derivative financial instruments to reduce its exposure to interest rate movements under its floating rate credit facility. During the period the Group entered into six interest rate swaps which exchange a fixed payment for floating rate receipt on a total debt value of £40 million with an equal mix of two-year and three-year maturities. Each of the interest rate swaps commence in October 2011. The group does not hold or use derivative financial instruments for speculative purposes Counterparty risk primarily arises from investment of any surplus funds. The Group restricts transactions to banks and money market funds that have an acceptable credit rating and limits exposure to each institution. Principal risks facing the business Hays plc operates an embedded risk management framework, which is monitored and reviewed by the Audit Committee. There are a number of potential risks and uncertainties that could have a material impact on the Group's financial performance and position. These include risks relating to the cyclical nature of our business, competitive environment, candidate due diligence, reliance on technology, talent, contract risk, changing legal and regulatory environment and foreign exchange. A full description of these risks and our mitigating actions will be provided in the 2011 Annual Report. Hays plc 250 Euston Road London NW1 2AF Cautionary statement The preliminary results (the "Report") have been prepared in accordance with the Disclosure Rules and Transparency Rules of the UK Financial Services Authority and are not audited. No representation or warranty, expressed 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, 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. Consolidated Income Statement for the year ended 30 June 2011 2010 2011 Exceptional 2010 Exceptional Before items (note 4) Before items (note 4) exceptional & discontinued exceptional & discontinued (In £'s million) Note items operations 2011 items operations 2010 Turnover Continuing operations 3,256.0 - 3,256.0 2,691.1 - 2,691.1 Net fees * Continuing operations 3 672.1 - 672.1 557.7 - 557.7 Operating profit from continuing operations 3 114.1 4.1 118.2 80.5 (41.4) 39.1 Finance income 6 1.0 - 1.0 0.7 - 0.7 Finance cost 6 (8.5) - (8.5) (10.1) - (10.1) Profit before tax 106.6 4.1 110.7 71.1 (41.4) 29.7 Tax 7 (35.2) 2.8 (32.4) (26.6) 3.5 (23.1) Profit from continuing operations after tax 71.4 6.9 78.3 44.5 (37.9) 6.6 Profit from discontinued operations - 1.8 1.8 - 2.7 2.7 Profit attributable to equity holders of the parent 71.4 8.7 80.1 44.5 (35.2) 9.3 Earnings per share from continuing operations - Basic 9 5.19p 0.50p 5.69p 3.25p (2.77)p 0.48p - Diluted 9 5.10p 0.49p 5.59p 3.21p (2.73)p 0.48p Earnings per share from continuing and discontinued operations - Basic 9 5.19p 0.63p 5.82p 3.25p (2.57)p 0.68p - Diluted 9 5.10p 0.62p 5.72p 3.21p (2.54)p 0.67p *Net fees comprise turnover less remuneration of temporary workers and other recruitment agencies. Consolidated Statement of Comprehensive Income for the year ended 30 June (In £'s million) 2011 2010 Profit for the year 80.1 9.3 Currency translation adjustments taken to equity 19.4 6.8 Mark to market valuation of derivative financial instruments (0.7) - Actuarial gain on defined benefit pension schemes 43.7 47.4 Tax on items taken directly to equity (11.6) (13.3) Net income recognised directly in equity 50.8 40.9 Total comprehensive income for the year 130.9 50.2 Attributable to equity shareholders of the parent Company 130.9 50.2 Consolidated Balance Sheet at 30 June (In £'s million) Note 2011 2010 Non-current assets Goodwill 183.5 185.6 Other intangible assets 62.9 62.1 Property, plant and equipment 23.4 23.8 Deferred tax assets 29.2 29.0 299.0 300.5 Current assets Trade and other receivables 524.2 407.2 Cash and cash equivalents 55.1 74.7 579.3 481.9 Total assets 878.3 782.4 Current liabilities Trade and other payables (405.0) (371.9) Current tax liabilities (31.0) (14.6) Bank loans and overdrafts (4.9) (151.9) Provisions 11 (8.5) (7.9) Derivative financial instruments (0.7) - (450.1) (546.3) Non-current liabilities Bank loans (185.0) - Trade and other payables (1.0) - Retirement benefit obligations 10 (11.9) (67.1) Provisions 11 (33.9) (36.7) (231.8) (103.8) Total liabilities (681.9) (650.1) Net assets 196.4 132.3 Equity Called up share capital 14.7 14.7 Share premium 369.6 369.6 Capital redemption reserve 2.7 2.7 Retained earnings (275.6) (313.0) Other reserves 85.0 58.3 Total shareholders' equity 196.4 132.3 The financial statements were approved by the Board of Directors and authorised for issue on 31 August 2011. Signed on behalf of the Board of Directors A M T Thomson P Venables Consolidated Cash Flow Statement for the year ended 30 June (In £'s million) Note 2011 2010 Operating profit from continuing operations 118.2 39.1 Adjustments for: Exceptional items 4 (19.5) 37.3 Depreciation of property, plant and equipment 9.4 11.8 Amortisation of intangible fixed assets 10.9 2.8 Loss on disposal of property, plant and equipment - 0.1 Net movements in provisions (2.4) (4.2) Share-based payments 12.5 8.5 10.9 56.3 Operating cash flow before movement in working capital 129.1 95.4 Changes in working capital Increase in receivables (93.5) (50.6) Increase in payables 46.3 29.2 (47.2) (21.4) Cash generated by operations 81.9 74.0 Income taxes paid (26.6) (22.1) Net cash inflow from operating activities 55.3 51.9 Investing activities Purchase of property, plant and equipment (8.9) (6.7) Proceeds from sales of business and related assets 0.5 1.1 Purchase of intangible assets (9.7) (23.1) Cash paid in respect of acquisitions made in previous years (3.2) (17.9) Interest received 1.0 0.7 Net cash used in investing activities (20.3) (45.9) Financing activities Interest paid (9.5) (4.0) Equity dividends paid (79.7) (79.5) Purchase of own shares - (0.4) Proceeds from exercise of share options 1.2 0.2 Repayment of loan notes - (0.8) Increase in bank loans and overdrafts 38.0 98.4 Pension scheme funding (12.0) (1.2) Net cash (used in)/from financing activities (62.0) 12.7 Net (decrease)/increase in cash and cash equivalents (27.0) 18.7 Cash and cash equivalents at beginning of year 74.7 55.0 Effect of foreign exchange rate movements 7.4 1.0 Cash and cash equivalents at end of year 12 55.1 74.7 Consolidated Statement of Changes in Equity for the year ended 30 June 2011 Share Capital Share premium redemption Retained Other (In £'s million) capital account reserve earnings reserves Total Balance at 1 July 2010 14.7 369.6 2.7 (313.0) 58.3 132.3 Currency translation adjustments - - - - 19.4 19.4 Mark to market of derivative financial instruments - - - - (0.7) (0.7) Actuarial gain on defined benefit pension schem - - - 43.7 - 43.7 Tax on items taken directly to equity - - - (11.6) - (11.6) Net income recognised directly in equity - - - 32.1 18.7 50.8 Profit for the year - - - 80.1 - 80.1 Total comprehensive income for the year - - - 112.2 18.7 130.9 Dividends paid - - - (79.7) - (79.7) Share-based payments - - - 4.9 6.7 11.6 Other share movements - - - - 1.3 1.3 Balance at 30 June 2011 14.7 369.6 2.7 (275.6) 85.0 196.4 for the year ended 30 June 2010 Share Capital Share premium redemption Retained Other (In £'s million) capital account reserve earnings reserves Total Balance at 1 July 2009 14.7 369.6 2.7 (282.6) 50.0 154.4 Currency translation adjustments - - - - 6.8 6.8 Actuarial gain on defined benefit pension schemes - - - 47.4 - 47.4 Tax on items taken directly to equity - - - (13.3) - (13.3) Net income recognised directly in equity - - - 34.1 6.8 40.9 Profit for the year - - - 9.3 - 9.3 Total comprehensive income for the year - - - 43.4 6.8 50.2 Dividends paid - - - (79.5) - (79.5) Share-based payments - - - 6.5 0.7 7.2 Other share movements - - - (0.8) 0.8 - Balance at 30 June 2010 14.7 369.6 2.7 (313.0) 58.3 132.3 Notes to the Consolidated Financial Statements 1 Statement under s498 - publication of non-statutory accounts The financial information set out in this preliminary announcement does not constitute statutory financial statements for the years ended 30 June 2011 or 2010, for the purpose of the Companies Act 2006, but is derived from those statements. Statutory financial statements for 2011, on which the Group's auditors have given an unqualified report which does not contain statements under Section 498(2) or (3) of the Companies Act 2006, will be filed with the Registrar of Companies prior to the Group's next annual general meeting. Statutory financial statements for 2010 have been filed with the Registrar of Companies. The Group's auditors have reported on those accounts; their reports were unqualified and did not contain statements under Section 498(2) or (3) of the Companies Act 2006. 2 Basis of preparation Whilst the financial information included in this preliminary announcement has been prepared in accordance with the International Financial Reporting Standards (IFRSs) as adopted for use in the European Union and as issued by the International Accounting Standards Board, this announcement does not itself contain sufficient information to comply with IFRS. The accounting policies applied in preparing this financial information are consistent with the Group's financial statements for the year ended June 2010 with the exception of the following new accounting standards and amendments which were mandatory for accounting periods beginning on or after 1 January 2010, none of which had any material impact on the Group's results or financial position. · Improvements to IFRSs 2010 · IFRS 2 (amendment) Group Cash Settled Share-Based Payment Transactions · IAS 32 (amendment) Financial Instrument Presentation · IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments Going Concern The Group's business activities, together with factors likely to effect the future development, performance and financial position, including its cash flows and liquidity position are described in this preliminary results announcement for the year ended 30 June 2011. The directors have formed the judgment that there is reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. As a result the directors continue to adopt the going concern basis in the preparation of the financial statements. 3 Segmental information The Group's continuing operations comprise one class of business, that of qualified, professional and skilled recruitment. The Group's Management Board, which is regarded as the chief operating decision maker, uses net fees by segment as its measure of revenue in internal reports. This is because net fees exclude the remuneration of temporary workers, and payments to other recruitment agencies where the Group acts as principal, which are not considered relevant in allocating resources to segments. The Group's Management Board considers net fees for the purpose of making decisions about allocating resources. The reconciliation of turnover to net fees can be found in note 5. (In £'s million) 2011 2010 Net fees from continuing operations Asia Pacific 210.0 146.3 Continental Europe & Rest of World 220.4 167.5 United Kingdom & Ireland 241.7 243.9 672.1 557.7 2011 2010 Before 2011 Before 2010 exceptional Exceptional exceptional Exceptional (In £'s million) items items 2011 items items 2010 Operating profit from continuing operations Asia Pacific 78.1 - 78.1 52.0 - 52.0 Continental Europe & Rest of World 32.4 - 32.4 17.1 (1.4) 15.7 United Kingdom & Ireland 3.6 4.1 7.7 11.4 (40.0) (28.6) 114.1 4.1 118.2 80.5 (41.4) 39.1 4 Exceptional items During the year, the Group recognised an exceptional credit of £4.1 million in relation to the following items: On 1 April 2011, the Competition Appeal Tribunal (CAT) announced its judgment in respect of Hays' appeal against the level of the fine imposed by the Office of Fair Trading (OFT) in September 2009. The fine was reduced from £30.4 million to £5.9 million and has been paid in full, bringing this matter to a close. The effect of the reduction in fine has been recognised in the Income Statement as a non-cash exceptional credit of £24.0 million (2010: non-cash exceptional charge £29.0 million). The Group has recognised a non-cash exceptional charge of £10.0 million resulting from the impairment of the carrying value of Goodwill in relation to the UK Healthcare business which was acquired in February 2006. The Group incurred restructuring costs in the UK of £9.9 million comprising redundancy costs of £7.0 million, onerous property leases of £2.1 million and a non-cash fixed asset write down of £0.8 million. The exceptional charge generated a tax credit of £2.8 million. In the prior year the Group incurred an exceptional charge of £41.4 million, comprising £29.0 million in respect of the OFT fine and £12.4 million restructuring costs principally in the UK. The exceptional charge generated a tax credit of £3.5 million. The cash impact of the exceptional items during the year was as follows: Cash paid in respect of current year exceptional items was £4.0 million with a further £5.1 million cash outflow expected in the future, primarily in the financial year to 30 June 2012. Cash paid in respect of prior year exceptional items was £11.4 million, comprising £6.0 million OFT fine including interest, and prior year restructuring costs of £5.4 million. The non-cash impact of the current year exceptional credit and cash paid in respect of the prior year exceptional charge of £19.5 million are shown together in the Cash Flow Statement. 5 Operating profit from continuing operations The following costs are deducted from turnover to determine net fees from continuing operations: (In £'s million) 2011 2010 Turnover 3,256.0 2,691.1 Remuneration of temporary workers (2,125.8) (1,811.8) Remuneration of other recruitment agencies (458.1) (321.6) Net fees 672.1 557.7 Profit from operations is stated after charging/(crediting) the following items to net fees of £672.1 million (2010: £557.7 million): 2011 2010 Before 2011 Before 2010 exceptional Exceptional exceptional Exceptional (In £'s million) items items 2011 items items 2010 Staff costs 406.9 7.0 413.9 345.0 7.9 352.9 Depreciation of property, plant and equipment 9.4 0.8 10.2 11.8 2.0 13.8 Amortisation of intangible assets 10.9 10.0 20.9 2.8 - 2.8 Auditors' remuneration - for statutory audit services 1.0 - 1.0 1.0 - 1.0 - for other services 0.3 - 0.3 0.2 - 0.2 Other external charges 129.5 (21.9) 107.6 116.4 31.5 147.9 558.0 (4.1) 553.9 477.2 41.4 518.6 6 Finance income and finance cost Finance income (In £'s million) 2011 2010 Interest on bank deposits 1.0 0.7 6 Finance income and finance cost (continued) Finance cost (In £'s million) 2011 2010 Interest payable on bank overdrafts and loans (7.0) (2.3) Pension Protection Fund levy (0.3) (1.1) Net interest on pension obligations (1.2) (6.7) (8.5) (10.1) Net finance charge (7.5) (9.4) 7 Tax Factors affecting the tax charge for the year The current tax charge for the year differs from the standard rate of corporation tax in the UK of 27.5% (2010: 28.0%). The differences are explained below: 2011 2010 Before 2011 Before 2010 exceptional Exceptional exceptional Exceptional (In £'s million) items items 2011 items items 2010 Profit before tax from continuing 106.6 4.1 110.7 71.1 (41.4) 29.7 operations Tax at the standard rate of UK corporation tax of 27.5% (2010: 28.0%) (29.3) (1.1) (30.4) (19.9) 11.6 (8.3) Factors affecting charge for year: Tax effect of expenses that are not deductible in determining taxable profit (2.9) - (2.9) (2.9) (8.1) (11.0) Adjustments in respect of foreign tax rates (4.6) - (4.6) (2.9) - (2.9) Prior year adjustments 6.9 - 6.9 1.8 - 1.8 Unrelieved losses (4.9) - (4.9) (1.5) - (1.5) Non-taxable income - 6.6 6.6 - - - Impairment of assets - (2.7) (2.7) - - - Impact of share-based payment charges and share options (0.4) - (0.4) (1.2) - (1.2) Tax on continuing operations (35.2) 2.8 32.4) (26.6) 3.5 (23.1) Effective tax rate for the year on continuing operations 33.0% (68.3%) 29.3% 37.4% 8.5% 77.8% 8 Dividends The following dividends were paid by the Group and have been recognised as distributions to equity shareholders in the year: 2011 2010 pence per 2011 pence per 2010 share £ million share £ million Previous year final dividend 3.95 54.3 3.95 54.2 Current year interim dividend 1.85 25.4 1.85 25.3 79.7 79.5 The following dividends are proposed by the Group in respect of the accounting year presented: 2011 2010 pence per 2011 pence per 2010 share £ million share £ million Interim dividend 1.85 25.4 1.85 25.3 Final dividend (proposed) 3.95 54.3 3.95 54.2 5.80 79.7 5.80 79.5 The final dividend for 2011 of 3.95 pence per share (£54.3 million) will be proposed at the Annual General Meeting on 9 November 2011 and has not been included as a liability as at 30 June 2011. If approved, the final dividend will be paid on 18 November 2011 to shareholders on the register at the close of business on 14 October 2011. 9 Earnings per share Weighted average number of Per share Earnings Shares amount For the year ended 30 June 2011 (£'s million) (million) (pence) Continuing operations before exceptional items: Basic earnings per share from continuing operations 71.4 1,376.0 5.19 Dilution effect of share options - 24.3 (0.09) Diluted earnings per share from continuing operations 71.4 1,400.3 5.10 Continuing operations after exceptional items: Basic earnings per share from continuing operations 78.3 1,376.0 5.69 Dilution effect of share options - 24.3 (0.10) Diluted earnings per share from continuing operations 78.3 1,400.3 5.59 Discontinued operations: Basic earnings per share from discontinued operations 1.8 1,376.0 0.13 Dilution effect of share options - 24.3 - Diluted earnings per share from discontinued operations 1.8 1,400.3 0.13 Continuing and discontinued operations: Basic earnings per share from continuing and discontinued operations 80.1 1,376.0 5.82 Dilution effect of share options - 24.3 (0.10) Diluted earnings per share from continuing and discontinued operations 80.1 1,400.3 5.72 Reconciliation of earnings (In £'s million) Earnings Continuing operations before exceptional items 71.4 Exceptional items (note 4) 4.1 Tax credit on exceptional items (note 7) 2.8 Continuing operations 78.3 9 Earnings per share (continued) Weighted average number of Per share Earnings Shares amount For the year ended 30 June 2011 (£'s million) (million) (pence) Continuing operations before exceptional items: Basic earnings per share from continuing operations 44.5 1,371.1 3.25 Dilution effect of share options - 15.0 (0.04) Diluted earnings per share from continuing operations 44.5 1,386.1 3.21 Continuing operations after exceptional items: Basic earnings per share from continuing operations 6.6 1,371.1 0.48 Dilution effect of share options - 15.0 - Diluted earnings per share from continuing operations 6.6 1,386.1 0.48 Discontinued operations: Basic earnings per share from discontinued operations 2.7 1,371.1 0.20 Dilution effect of share options - 15.0 (0.01) Diluted earnings per share from discontinued operations 2.7 1,386.1 0.19 Continuing and discontinued operations: Basic earnings per share from continuing and discontinued operations 9.3 1,371.1 0.68 Dilution effect of share options - 15.0 (0.01) Diluted earnings per share from continuing and discontinued operations 9.3 1,386.1 0.67 Reconciliation of earnings (In £'s million) Earnings Continuing operations before exceptional items 44.5 Exceptional items (note 4) (41.4) Tax credit on exceptional items (note 7) 3.5 Continuing operations 6.6 The weighted average number of shares in issue for both years exclude shares held in treasury and shares held by the Hays plc Employee Share Trust. 10 Retirement benefit obligations (In £'s million) 2011 2010 Deficit in the scheme brought forward (67.1) (109.2) Current service cost (3.8) (4.1) Contributions 16.5 5.5 Net financial return (1.2) (6.7) Actuarial gain 43.7 47.4 Deficit in the scheme carried forward (11.9) (67.1) 11 Provisions (In £'s million) Property Other Total At 1 July 2010 18.6 26.0 44.6 Exchange adjustments 0.3 0.3 0.6 Charged to income statement 1.6 3.5 5.1 Utilised (4.0) (3.9) (7.9) At 30 June 2011 16.5 25.9 42.4 (In £'s million) 2011 2010 Current 8.5 7.9 Non-current 33.9 36.7 42.4 44.6 Property provisions are for rents and other related amounts payable on certain leased properties for periods in which they are not anticipated to be in use by the Group. The leases expire in periods up to 2015 and the amounts will be paid over this period. Other provisions include warranty and environmental claim liabilities arising as a result of the business disposals that were concluded in 2004, deferred employee benefit provisions, and restructuring provisions (see note 4). Of these provisions, £8.5 million is expected to be paid in the next 12 months and it is not possible to estimate the timing of the payments for the other items. 12 Movement in net debt 1 July Cash Exchange 30 June (In £'s million) 2010 flow movement 2011 Cash and cash equivalents 74.7 (27.0) 7.4 55.1 Bank loans and overdrafts (151.9) (38.0) - (189.9) Net debt (77.2) (65.0) 7.4 (134.8) The table above is presented as additional information to show movement in net debt, defined as cash and cash equivalents less overdrafts and bank loans. 13 Like-for-like results Like-for-like results represent organic growth of continuing activities at constant currency. For the year ended 30 June 2011 these are calculated as follows: (In £'s million) Net fees for the year ended 30 June 2010 557.7 Foreign exchange impact 14.2 Net fees for the year ended 30 June 2010 at constant currency 571.9 Net fee increase resulting from organic growth 100.2 Net fees for the year ended 30 June 2011 672.1 Profit from operations for the year ended 30 June 2010 80.5 Foreign exchange impact 5.3 Profit from operations for the year ended 30 June 2010 at constant currecncy 85.8 Profit from operations increase resulting from organic growth 28.3 Profit from operations for the year ended 30 June 2011 114.1 14 Like-for-like results H1 v H2 analysis by division Net fee growth Q1 Q2 H1 Q3 Q4 H2 FY versus same period last year 2011 2011 2011 2011 2011 2011 2011 Asia Pacific 39% 36% 38% 23% 18% 22% 30% Continental Europe & Rest of World 27% 37% 33% 35% 28% 33% 33% United Kingdom & Ireland 1% 1% 1% (2%) (6%) (3%) (1%) Group 18% 21% 20% 16% 11% 15% 18% H1 2011 is the period from 1 July 2010 to 31 December 2010. H2 2011 is the period from 1 January 2011 to 30 June 2011.

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