Interim Management Statement

9 October 2008

 

Interim Management Statement
for quarter ended 30 September 2008

Commenting on trading for the quarter ended 30 September 2008, Alistair Cox,
Chief Executive of Hays plc, said:

"10% net fee growth (4% on a like-for-like basis*) represents a solid start to
the year in an increasingly difficult economic environment. Our International
business, now representing 49% of the Group's net fees, and the UK public
sector business both achieved strong performances, offsetting further weakness
in the UK private sector market.

Currently, in the United Kingdom demand for temporary placements remains
stable, except in Construction & Property and demand for permanent placements
continues to fall. In Australia, we are still seeing good growth in demand for
temporary placements but demand for permanent placements has started to fall.
In most of the other countries in which we operate, we are still seeing strong
growth in demand for our services.

Whilst there is no doubt that many of our markets are getting tougher, the
experience of our management team, the flexibility of our cost base, the
increased diversification of the Group, and the strength of our balance sheet
positions us well to deal with these market conditions. In the last two
quarters we have continued to take action to reduce our cost base in those
markets already affected by the wider economic issues and going forward we will
continue to keep a tight control on costs, focus on cash generation and react
rapidly to changing market conditions."

 

Group

Growth in net fees for the quarter ended 30             Growth       
September 2008                                                          
(versus the same period last year)                                  
                                                                     
                                                     Actual LFL*                                                       
By region                                                            
                                                                     
      United Kingdom & Ireland                         (8)% (8)%     
                                                                     
      Asia Pacific                                      27%  13%      
                                                                     
      Continental Europe & Rest of World                54%  32%      
                                                                     
      Total                                             10%   4%       
                                                                     
                                                                     
                                                                     
By segment                                                           
                                                                     
      Permanent                                          7%   1%       
                                                                     
      Temporary                                         14%   8%       
                                                                     
           Total                                        10%   4%       
                                                                     


* LFL is like-for-like growth, which represents organic growth of continuing
activities at constant currency.  No adjustment is made for the one additional
trading day in the quarter ended 30 September 2008 versus the same period last
year.

 

In the quarter ended 30 September 2008, Hays plc, the leading global specialist
recruitment group, grew net fees by 10% (4% on a like-for-like basis*) over the
same period last year. The difference between the headline and like-for-like
growth rate is due to the more favourable Euro and Australian dollar exchange
rates in this period versus the same period last year. During the quarter,
headcount reduced by 2% with reductions in the United Kingdom & Ireland and
Asia Pacific partially offset by investment in Continental Europe & Rest of
World.

Net fees from the permanent placement business increased by 1% on a
like-for-like basis as market conditions continued to deteriorate in the United
Kingdom & Ireland and Australia & New Zealand. Net fees from the temporary
placement business increased by 8%*, benefiting from a particularly strong
performance in Germany. The overall Group like-for-like net fee growth rate
slowed across the quarter and by the end of the quarter it was broadly flat.

 

United Kingdom & Ireland

In the United Kingdom & Ireland, net fees fell by 8%* versus the same period
last year. Accountancy & Finance net fees were lower than the same period last
year due to declining client and candidate confidence, particularly at the
lower end of the market. Construction & Property had a difficult quarter
reflecting tough market conditions in the private sector across all regions.
The Information Technology business achieved modest growth. Among the Other
Specialist Recruitment Activities there were mixed performances. City related
activities and Legal were impacted by a significant reduction in demand, whilst
Education, Healthcare, Retail and Purchasing continued to perform strongly.
Last year, we shifted resources towards our public sector clients and this has
yielded 15% growth in our public sector net fees in the quarter.

In view of the difficult market conditions, we continue to focus on cost
control and productivity. Following the 7% reduction in headcount in the second
half of last year, we have reduced the headcount in the United Kingdom &
Ireland business by a further 5% during the first quarter.

 

Asia Pacific

In Asia Pacific, net fees increased by 13%*. In Australia & New Zealand, strong
performances in Resources & Mining, Information Technology and most of the
newer specialisms offset weaker performances in Accountancy & Finance, Legal
and Financial Services related activities. During the period we started
operations in the Northern Territory in Australia with an office opening in
Darwin. In Asia, our businesses continued their strong progress across the
region, with Japan, Hong Kong and Singapore performing particularly well.

 

Continental Europe & Rest of World ('RoW')

In Continental Europe & RoW, net fees increased by 32%*. This outstanding
growth stems from our investment in the region, the impact of deregulation in
key markets, and an increasing awareness and willingness by both candidates and
clients to use specialist recruitment consultants. The performance was led by
continued excellent growth in Germany, whilst our newer businesses in Italy,
United Arab Emirates, Brazil and Poland also performed very strongly. During
the period we opened new offices in Dortmund (Germany), Montreal (Canada) and
Krakow (Poland).

 

Share buy-back

The priorities for our free cash flow are to fund the Group's development,
support a sustainable dividend and to buy back shares when appropriate. During
the quarter, we purchased 1.7 million shares at a cost of £1.4 million. As
stated in our preliminary results announcement, the level of buy back this year
will be significantly lower than last year.

 

Cash flow and balance sheet

Cash generation was good in the quarter and the balance sheet remains strong.

 

Current Trading

Currently, in the United Kingdom demand for temporary placements remains
stable, except in Construction & Property and demand for permanent placements
continues to fall. In Australia, we are still seeing good growth in demand for
temporary placements but demand for permanent placements has started to fall.
In most of the other countries in which we operate, we are still seeing strong
growth in demand for our services.

Whilst there is no doubt that many of our markets are getting tougher, the
experience of our management team, the flexibility of our cost base, the
increased diversification of the Group, and the strength of our balance sheet
positions us well to deal with these market conditions. In the last two
quarters we have continued to take action to reduce our cost base in those
markets already affected by the wider economic issues and going forward we will
continue to keep a tight control on costs, focus on cash generation and react
rapidly to changing market conditions.

 

* LFL is like-for-like growth, which represents organic growth of continuing
activities at constant currency.  No adjustment is made for the one additional
trading day in the quarter ended 30 September 2008 versus the same period last
year.


Enquiries

Hays plc                                                                                  
Paul Venables   Finance Director                + 44 (0) 20 7383 2266
                                                                         
Martin Abell    Investor Relations              + 44 (0) 20 7383 2266                     

Brunswick                                                     
Gill Ackers                                     + 44 (0) 20 7404 5959                                                   
                                
Catherine Colloms                                                           
                                                                 
 
 

Conference call

Paul Venables and Martin Abell of Hays plc will conduct a conference call for
analysts and investors at 9:00am United Kingdom time on Thursday 9 October
2008. The dial in details are as follows:

Dial-in number                                   [phone]   
                                                                        
                                                                        
                                                                        
The call will be recorded and available for playback for seven days as  
follows:                                                                                                             
                                                                        
Replay dial-in number                            [phone]   
                                                                        
Access code                                      67455615#              
                                                                        

 

Reporting calendar

Trading statement for quarter ending 31                                
December 2008                                  8 January 2009          
                                                                       
Interim results for 6 months ending 31                                 
December 2008                                  26 February 2009        
                                                                       
Trading statement for quarter ending 31 March                          
2009                                           9 April 2009            
                                                                       
Trading statement for quarter ending 30 June                           
2009                                           9 July 2009             
                                                                       
Preliminary results for 12 months ending 30                            
June 2009                                      3 September 2009        
                                                                       

 

Note to editors

Hays plc is the leading global specialist recruitment group. It is market
leader in the UK and Australia, and one of the market leaders in Continental
Europe. As at 30 June 2008, the Group employed 8,872 staff operating from 393
offices in 27 countries across 17 specialisms. For the year ended 30 June 2008:

 

- the Group had revenues of £2.5 billion, net fees of £786.8
million and operating profit before exceptional items of £253.8 million;

- the Group placed around 80,000 candidates into permanent jobs
and around 300,000 people into temporary assignments;

- the temporary placement business represented 49% of net fees
and the permanent placement business represented 51% of net fees.

 

Important notice

Certain statements in this announcement are forward looking statements. By
their nature, forward looking statements involve a number of risks,
uncertainties or assumptions that could cause actual results or events to
differ materially from those expressed or implied by those statements. Forward
looking statements regarding past trends or activities should not be taken as
representation that such trends or activities will continue in the future.
Accordingly, undue reliance should not be placed on forward looking statements.

All information shown for the quarter ended 30 September 2008 is unaudited.