Final Results
Hays PLC
07 September 2004
7th September 2004
Hays plc
PRELIMINARY RESULTS FOR THE YEAR TO 30 JUNE 2004
Financial Highlights
• Excellent performance from Specialist Recruitment
• Specialist Recruitment net fees1 of £404.7m, up 16% (11% on a
like-for-like basis)2
• Specialist Recruitment operating profit before goodwill and exceptional
items3 of £133.4m, up 17% (12% on a like-for-like basis)
• DX Services operating profit of £32.7m
• Group turnover of £2,165.3m and group profit before tax of £147.7m
• Group profit before tax, goodwill amortisation and exceptional items of
£181.0m4
• Net cash of £77.4m, £323.2m ahead of last year
• Earnings per share before goodwill amortisation and exceptional items of
7.23p, up 3%5
• Recommended final dividend of 2.0p per share (full year dividend 3.0p
per share)
1. Net fees are equal to turnover less payroll costs of temporary contractors
2. Like-for-like percentage changes are calculated before acquisitions and at
constant exchange rates
3. Specialist Recruitment operating profit is stated throughout this statement
before goodwill amortisation of £13.3m (2002/03: £13.0m) and an exceptional
item in 2002/03 of £26.1m
4. Goodwill amortisation of £13.3m and exceptional loss of £20.0m
5. Basic earnings per share of 3.87p (2002/03: (28.39)p as restated for UITF
38)
Specialist Recruitment
• Good growth across all three regions and all major activities
• Acceleration in the second half
• Accountancy & Finance returned to growth in the third quarter
• Excellent Continental European performance in start-ups and acquisitions
Group Transformation
• Group transformation will be completed by the demerger of DX Services
• Share buy-back to return at least £200m to shareholders
• Net exceptional charge before tax of £20m after providing for the whole
of our investment in Albion Group
Bob Lawson, Chairman, commented:
'We are delighted with the results of our Specialist Recruitment business.
Operating profit before goodwill amortisation increased by 12% on a
like-for-like basis. The recovery that we began to experience in the first half
accelerated, justifying our continued investment in the business over the recent
downturn and in the current year.'
'Today we confirmed our plans to demerge DX Services to our shareholders. DX
Services generates attractive financial returns and is strongly cash generative.
The business has an energetic and experienced management team and we believe
that it is well positioned to pursue growth opportunities in the deregulating
mail market. Following the demerger of DX Services we will have achieved our
objective, announced in March 2003, of transforming Hays into a business focused
exclusively on our market leading Specialist Recruitment business.'
'Our Specialist Recruitment business has generated net fee growth of 17% since
the year-end and we are confident in the outlook for the year.'
ENQUIRIES:
Denis Waxman Chief Executive, Hays plc + 44 (0)20 7628 9999
John Martin Group Finance Director, Hays plc + 44 (0)20 7628 9999
Jon Coles Brunswick + 44 (0)20 7404 5959
CONFERENCE CALL:
Hays plc will conduct a conference call for analysts and shareholders at 16:00
UK time on
7 September 2004. The dial-in details are as
follows:
Dial-in number: +44 (0)1452 561 263
Password: Hays
The call will be recorded and available for playback as follows:
Replay dial-in number: +44 (0)1452 550 000
Access code: 1764966#
The instant replay will be available until 14 September 2004.
DELAYED WEB-CAST:
The presentation to analysts will be available to view on the Hays website from
14:30 UK time on 7 September 2004 - www.haysplc.com
The presentation will also be filmed and distributed by RAW Communications to
those who subscribe to that service.
CHAIRMAN'S STATEMENT
I am delighted to be able to report on a period of significant achievement for
Hays. Most importantly, the return to growth in Specialist Recruitment that we
reported in the first half of the year accelerated, resulting in operating
profit well ahead of last year. We disposed of almost all of our non-core
businesses and assets during the year and in so doing we believe we achieved
good value for our shareholders. The demerger of DX Services will complete the
transformation of the Hays Group into a business focused exclusively on
Specialist Recruitment. Following the demerger of DX Services, we intend to
return cash of at least £200m to our shareholders through the on-market buy back
of our own shares.
Results Summary
Operating profit before goodwill amortisation and exceptional items from
continuing operations was £166.1m (2002/03: £147.5m), 13% ahead of last year, on
turnover up 23% to £1,520.7m (2002/03: £1,234.7m). The financial statements also
include the results of several operations that were sold during the year. These
businesses contributed turnover of £644.6m (2002/03: £1,263.7m) and operating
profit before goodwill amortisation and exceptional items of £15.4m (2002/03:
£42.6m). Group profit before tax, goodwill amortisation and exceptional items
was £181.0m (2002/03: £178.9m) and group profit before tax, after goodwill
amortisation and exceptional items was £147.7m (2002/03: £(444.8)m).
Specialist Recruitment turnover in the year was £1,388.8m (2002/03 £1,107.1m),
an increase of 25% over the prior year and 18% on a like-for-like basis.
Specialist Recruitment generated net fees of £404.7m (2002/03: £347.6m), 16%
ahead of last year and 11% ahead on a like-for-like basis. Operating profit
before goodwill amortisation and exceptional items was £133.4m (2002/03:
£114.3m), an increase of 17%, and 12% on a like-for-like basis.
In March we reported that in the first half of our financial year, the markets
for our Specialist Recruitment business were recovering. This recovery
accelerated in the second half. Growth in Specialist Recruitment is now broadly
based across all three regions and all major activities. In particular, both
Accountancy & Finance and Information Technology, which were the most adversely
affected in the downturn, returned to growth in the period. Construction &
Property and Australia and New Zealand continued to grow strongly. Our business
in Continental Europe performed extremely well.
DX Services turnover of £131.9m was 3% ahead of last year (2002/03: £127.6m).
The business invested in the network it requires to deliver new licensed
products, and incurred additional costs of management and infrastructure needed
to enable it to operate independently. After absorbing these costs DX
Services generated operating profit of £32.7m (2002/03: £33.2m).
Our share of the operating profit from our 49% investment in Albion Group was
down on the prior year at £2.9m (2002/03: £6.1m). The distribution activities
performed well but poor prices for some commodity chemicals led to a decline in
operating profit. The net investment in Albion Group, which principally comprises
a vendor loan, stood at £43.9m at 30 June 2004. The business is less profitable
than it was three years ago at the time of the original transaction. Whilst
Albion Group is able to service its senior debt obligations, it is currently
unable to pay interest on our loan. Although this is not an act of
default, the loan is not repayable until 2010 and we believe that there is little
prospect of interest payments being resumed in the foreseeable future. As a result,
we have provided for the whole of the carrying value of the investment. We will
continue to seek a suitable exit from the investment.
Net gains on the disposal of businesses and surplus properties of £38.4m were
credited in the year, and £14.5m of costs associated with the demerger of DX
Services were provided.
Interest charges of £3.4m were substantially less than last year (2002/03:
£17.3m before exceptional items) principally as a result of the repayment of
debt out of the proceeds of disposals. The tax charge of £81.4m includes an
exceptional charge of £24.3m relating to disposals completed in the year, and
an effective tax rate on profit before exceptional items and goodwill amortisation
of 31.5%.
Transformation
In addition to the disposals that we have already announced, an additional
£48.7m was realised from the disposal of further surplus properties. Aggregate
net consideration after transaction costs for the disposal of 15 businesses and
more than 25 surplus properties during the year was £379.6m.
We confirmed today that, subject to shareholder approval, we will complete the
transformation of the Group later this year by demerging DX Services to our
shareholders. Following the demerger, the Group will be focused exclusively on
Specialist Recruitment, and will have no significant remaining non-core
activities.
Throughout the transformation process Denis Waxman and his team have remained
focused on the core Specialist Recruitment business and this is reflected in
today's results. They have also laid the corporate foundations for the future
Group. A small new head office was established in London and a new co-investment
plan was put in place that aligns senior managers' interests with those of our
shareholders. In addition, we launched a new brand identity across all our
businesses in 16 countries to reinforce our position as a market leader in
Specialist Recruitment.
Cash flow
During the year the Group generated a net cash inflow of £323.2m, resulting in
net cash at the end of the year of £77.4m. Cash flow from disposals was
partially offset by a special contribution of £51.7m to the Hays Pension Scheme.
Return of Capital
We expect our net cash position to improve upon the demerger of DX Services
which will assume net debt of approximately £75m. As previously disclosed, our
target net debt range following the Group transformation remains £50m to £150m.
Following the demerger of DX Services, we intend to return cash of at least
£200m to our shareholders through the on-market buy back of our own shares. The
company has authorisation from its shareholders to acquire up to 260m shares,
and will seek to renew the authorisation at this year's Annual General Meeting.
Dividends
As previously announced, the dividend has been rebased to reflect a level that
the Board believes is appropriate to Hays once the transformation is complete.
The Board is recommending a final dividend of 2.0p per share which, if approved
at the Annual General Meeting, will make a total of 3.0p for the full year. The
recommended final dividend will be paid on 26 November 2004 to shareholders on
the register at 22 October 2004. The Board intends to follow a progressive
dividend policy.
Employees
Throughout the transformation process the management and employees of the Group
have shown great commitment to Hays and their respective businesses and I wish
to record my appreciation for their dedication and professionalism during a
challenging period.
Outlook
The outlook for growth in our Specialist Recruitment business in the United
Kingdom is positive. In particular, the return to growth in Accountancy &
Finance in the second half has been maintained. In Australia and New Zealand the
outlook remains good, though performance is now measured against some
particularly strong comparatives. The outlook in Continental Europe continues to
improve.
Our Specialist Recruitment business has generated net fee growth of 17% since
the year-end and we are confident in the outlook for the year.
Bob Lawson
Chairman
SPECIALIST RECRUITMENT OPERATING REVIEW
We are delighted with the performance of our Specialist Recruitment business in
the year, with growth across all three regions and all major activities and
similar rates of growth with public and private sector clients.
Turnover grew by 25% and on a like-for-like basis by 18%. Net fees were 16%
ahead of last year, 11% on a like-for-like basis, and operating profit before
goodwill amortisation and exceptional items increased by 17% and 12% on a
like-for-like basis.
We continued to invest in the business. At the end of the year the total number
of recruitment consultants, the best measure of our productive capacity, stood
at 3,107, 10% ahead of last year. During the year we also added a further 20
offices bringing the total to 313 in 16 countries. We are confident that the
value of our continued investment in the business is being proven by the growth
that we are now generating.
The proportion of net fees arising from temporary recruitment increased during
the period to 59.5% (2002/03: 59.1%) as a result of the acquisitions made last
year. Like-for-like permanent fee growth of 14% exceeded temporary net fee
growth of 9%. Before accounting for acquisitions, the proportion of permanent
fees would have increased by approximately 1%.
Fee rates for permanent placement services were either maintained at levels similar
to the prior year or increased.
The overall gross margin on temporary placements in the year was 19.7% and
compares to 21.3% in the prior year. The decrease results from some pricing
pressure in certain activities and changes in business mix. The changes in
business mix were caused by differing growth rates between activities and a
greater proportion of higher volume, lower margin contract business compared to
higher margin 'spot' transactions.
The overall efficiency in our business is measured by the proportion of net fees
converted to operating profit, which was 33.0% in the year. This was a slight
increase on the prior year (2002/03: 32.9%) and is a good result given the
investment we made in the business.
In the United Kingdom, net fees were up 8% on last year at £315.5m (2002/03:
£292.0m) and operating profit before goodwill amortisation was up 7% at £111.0m
(2002/03: £103.6m).
We are particularly pleased to report that Accountancy & Finance, which was
adversely affected during the recent market downturn, generated good growth in
the second half of our financial year. The beginning of the recovery in London
and the South East was welcome, particularly when combined with continued growth
in the regions. In the second half of our financial year we also saw a pick-up
in permanent recruitment business. Net fees in the year in Accountancy & Finance
were 5% ahead at £149.2m (2002/03: £142.2m).
Construction & Property, which serves both the construction and 'built
environment' sectors, continued its strong growth, with net fees up 12% to
£94.1m (2002/03: £84.0m). Sustained growth in the regions was achieved at the
same time as increased growth in London and the South East.
The recovery in our Information Technology business accelerated in the second
half of our financial year. Growth has now returned to the 'spot' market
following the earlier return to growth in large contract business. Net fees
increased by 14% to £23.4m (2002/03: £20.5m).
Within our other activities in the United Kingdom, net fees grew 8% to £48.8m
(2002/03: £45.3m). Our Banking business returned to strong growth in the year,
though demand in our Financial Services business was weaker. Our Education
business continued to grow. Our Legal recruitment business experienced difficult
market conditions in the year, however, recent signs are more encouraging. Net
fees in our Contact Centre business were similar to last year.
Our business in Australia and New Zealand grew strongly. This was broad-based
across all activities and we believe we increased market share. Net fees
increased to £48.3m (2002/03: £34.0m), an increase of 27% on a like-for-like
basis and operating profit increased 35% on a like-for-like basis to £19.8m
(2002/03: £13.0m).
In Continental Europe, our performance improved markedly in the second half. Our
German business, Hays Ascena, grew strongly on a like-for-like basis increasing
its market share in its core IT business and expanding its other recruitment
activities. The Ascena and Belgian IOS acquisitions have exceeded our initial
expectations. Overall in Continental Europe, operating profit before goodwill
amortisation and exceptional items was £2.6m and compares to a loss of £2.3m
last year. Net fees were 20% ahead on a like-for-like basis at £40.9m (2002/03:
£21.6m).
Overall, we believe that this was an excellent performance. Our management team,
our staff and I are all excited about Hays' enhanced prospects as a focused
Specialist Recruitment group. I am confident that our strategy, together with
the resources available to us, will enable us to capitalise on the significant
opportunities for growth in the future.
Denis Waxman
Chief Executive
Consolidated Profit and Loss Account
for the year ended 30 June 2004
(In £'s million) 2004 2003
(Restated)
TURNOVER
Continuing operations 1,520.7 1,234.7
Discontinued operations 644.6 1,263.7
________ _________
2,165.3 2,498.4
________ _________
OPERATING PROFIT / (LOSS)
Before goodwill amortisation and exceptional items 181.5 190.1
Goodwill amortisation (13.3) (27.3)
Exceptional operating items - (490.0)
________ _________
168.2 (327.2)
________ _________
OPERATING PROFIT / (LOSS)
Continuing operations 152.8 108.4
Discontinued operations 15.4 (435.6)
________ _________
168.2 (327.2)
Share of operating profit of associates 2.9 6.1
EXCEPTIONAL ITEMS
Profit / (loss) on disposal of businesses 38.4 (85.3)
Amounts written off investments (43.9) -
Fundamental restructuring - costs of DX services demerger (14.5) -
Net interest payable (3.4) (38.4)
________ _________
PROFIT / (LOSS) ON ORDINARY ACTIVITIES 147.7 (444.8)
BEFORE TAXATION
Tax on profit/(loss) on ordinary activities (81.4) (40.8)
________ _________
PROFIT / (LOSS) ON ORDINARY ACTIVITIES 66.3 (485.6)
AFTER TAXATION
Equity minority interests - (0.1)
________ _________
PROFIT / (LOSS) FOR THE FINANCIAL YEAR 66.3 (485.7)
Dividends (51.5) (92.1)
________ _________
Transferred to / (from) reserves 14.8 (577.8)
======= =======
EARNINGS PER SHARE
Basic 3.87p (28.39)p
Before goodwill amortisation and exceptional items 7.23p 7.01p
Diluted earnings per share 3.86p (28.38)p
DIVIDEND PER SHARE 3.00p 5.38p
Consolidated Balance Sheet
at 30 June 2004
(In £'s million) 2004 2003
(Restated)
FIXED ASSETS
Intangible assets 99.2 113.6
Tangible assets 38.7 326.0
Investments - 45.1
_________ _________
137.9 484.7
CURRENT ASSETS
Stocks 0.1 17.3
Debtors due within one year 268.6 493.4
Debtors due after more than one year 44.2 6.2
Cash at bank and in hand 79.4 154.6
_________ _________
392.3 671.5
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Borrowings (1.9) (196.7)
Other creditors (321.6) (627.7)
_________ _________
(323.5) (824.4)
NET CURRENT ASSETS / (LIABILITIES) 68.8 (152.9)
TOTAL ASSETS LESS CURRENT LIABILITIES 206.7 331.8
CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE
YEAR
Borrowings (0.1) (203.7)
Other creditors (6.7) (9.4)
PROVISIONS FOR LIABILITIES AND CHARGES (125.4) (121.3)
_________ _________
NET ASSETS / (LIABILITIES) 74.5 (2.6)
======== ========
CAPITAL AND RESERVES
Called up share capital 17.4 17.3
Share premium account 369.4 368.9
Profit and loss account (296.0) (371.7)
Own shares (16.3) (17.7)
_________ _________
EQUITY SHAREHOLDERS' INTERESTS 74.5 (3.2)
EQUITY MINORITY INTERESTS - 0.6
_________ _________
74.5 (2.6)
======== ========
Reconciliation of Movements in Consolidated Equity Shareholders' Interests
for the year ended 30 June 2004
(In £'s million) 2004 2003
(Restated)
Profit / (loss) for the financial year 66.3 (485.7)
Dividends (51.5) (92.1)
________ ________
14.8 (577.8)
Other recognised gains and losses relating to the year (2.3) 1.8
New share capital subscribed 0.6 0.2
Disposal of own shares 1.4 0.4
Goodwill written back relating to impairment charge - 151.8
Goodwill written back relating to disposals 63.2 1.2
________ ________
Net increase / (decrease) in equity shareholders'
interests 77.7 (422.4)
Opening equity shareholders' interests as previously
reported 14.5 469.3
Prior period adjustment in respect of UITF Abstract 38 (17.7) (50.1)
________ ________
Closing equity shareholders' interests as restated 74.5 (3.2)
======= =======
The results, balance sheet, statement of total recognised gains and losses and
movement in equity shareholders' interests for the years ended 30 June 2002 and
30 June 2003 have been restated as a result of the adoption of UITF Abstract 38
- Accounting for ESOP trusts. The adoption of UITF Abstract 38 has resulted in a
decrease in opening shareholders' funds at 1 July 2002 of £50.1 million and a
decrease in opening shareholders' funds at 1 July 2003 of £17.7 million. The
adoption of this policy has also reduced by £32.0 million the loss arising in
the profit and loss account for the year ended 30 June 2003.
Summarised Consolidated Cash Flow Statement
for the year ended 30 June 2004
(In £'s million) 2004 2003
CASH INFLOW FROM OPERATING ACTIVITIES 104.8 286.1
_________ _________
Returns on investments and servicing of finance (22.1) (10.6)
Taxation (40.7) (62.6)
Capital expenditure (24.0) (93.6)
Capital receipts - 19.1
_________ _________
NET CASH INFLOW BEFORE ACQUISITIONS AND
DISPOSALS 18.0 138.4
Net disposal proceeds / acquisitions 334.0 (52.6)
Equity dividends paid (79.3) (84.0)
_________ _________
NET CASH INFLOW BEFORE FINANCING 272.7 1.8
Financing (347.2) 40.1
_________ _________
(DECREASE) / INCREASE IN CASH IN THE YEAR (74.5) 41.9
======== ========
RECONCILIATION OF NET CASH FLOW TO MOVEMENT
IN NET DEBT
(DECREASE) / INCREASE IN CASH IN THE YEAR (74.5) 41.9
Cash outflow / (inflow) from movement in debt and
lease financing 349.2 (39.5)
_________ _________
Change in net debt resulting from cash flows 274.7 2.4
Borrowings disposed 44.9 3.2
Loan notes issued - (2.2)
Exchange adjustments 3.6 (17.2)
_________ _________
MOVEMENT IN NET DEBT IN THE YEAR 323.2 (13.8)
OPENING NET DEBT (245.8) (232.0)
_________ _________
CLOSING NET CASH / (DEBT) 77.4 (245.8)
======== ========
Segmental Information - Consolidated Profit and Loss Account Extracts
for the year ended 30 June 2004
(In £'s million) Specialist DX Services Discontinued Group
Recruitment Operations
TURNOVER
Continuing operations
United Kingdom 1,059.3 131.9 - 1,191.2
Continental Europe 171.7 - - 171.7
Australia & New Zealand 157.8 - - 157.8
__________ __________ _________ _________
1,388.8 131.9 - 1,520.7
Discontinued operations - - 644.6 644.6
__________ __________ _________ _________
1,388.8 131.9 644.6 2,165.3
======== ========= ======== ========
OPERATING PROFIT
(before goodwill
amortisation and
exceptional items)
Continuing operations:
United Kingdom 111.0 32.7 - 143.7
Continental Europe 2.6 - - 2.6
Australia & New Zealand 19.8 - - 19.8
__________ __________ _________ _________
133.4 32.7 - 166.1
Discontinued operations - - 15.4 15.4
__________ __________ _________ _________
133.4 32.7 15.4 181.5
======== ========= ======== ========
OPERATING PROFIT/(LOSS)
(after goodwill
amortisation
and exceptional items)
Continuing operations
United Kingdom 103.7 32.7 - 136.4
Continental Europe (3.4) - - (3.4)
Australia & New Zealand 19.8 - - 19.8
__________ __________ _________ _________
120.1 32.7 - 152.8
Discontinued operations - - 15.4 15.4
__________ __________ _________ _________
120.1 32.7 15.4 168.2
======== ========= ======== ========
for the year ended 30 June 2003
(In £'s million) Specialist DX Services Discontinued Group
Recruitment Operations
TURNOVER
Continuing
operations
United Kingdom 911.3 127.6 - 1,038.9
Continental Europe 89.7 - - 89.7
Australia & New
Zealand 106.1 - - 106.1
___________ ___________ ___________ __________
1,107.1 127.6 - 1,234.7
Discontinued
operations - - 1,263.7 1,263.7
___________ ___________ ___________ __________
1,107.1 127.6 1,263.7 2,498.4
========== ========== ========== =========
OPERATING PROFIT/(LOSS)
(before goodwill
amortisation and
exceptional items)
Continuing operations:
United Kingdom 103.6 33.2 - 136.8
Continental Europe (2.3) - - (2.3)
Australia & New
Zealand 13.0 - - 13.0
___________ ___________ ___________ __________
114.3 33.2 - 147.5
Discontinued
operations - - 42.6 42.6
___________ ___________ ___________ __________
114.3 33.2 42.6 190.1
========== ========== ========== =========
OPERATING PROFIT/(LOSS)
(after goodwill
amortisation and
exceptional items)
Continuing
operations
United Kingdom 96.3 33.2 - 129.5
Continental Europe (34.1) - - (34.1)
Australia & New
Zealand 13.0 - - 13.0
___________ ___________ ___________ __________
75.2 33.2 - 108.4
Discontinued
operations - - (435.6) (435.6)
___________ ___________ ___________ __________
75.2 33.2 (435.6) (327.2)
========== ========== ========== =========
Segmental Information - Consolidated Balance Sheet Extracts
at 30 June 2004
(In £'s million) Specialist DX Services Other Group
Recruitment
Intangible assets 99.2 - - 99.2
Tangible assets & investments 14.8 18.2 5.7 38.7
Stocks - 0.1 - 0.1
Debtors 226.6 25.6 60.6 312.8
Creditors (129.2) (47.0) (152.1) (328.3)
Provisions for liabilities
and charges (0.7) - (124.7) (125.4)
_________ _________ ________ _________
210.7 (3.1) (210.5) (2.9)
Net cash / (debt) - - 77.4 77.4
_________ _________ ________ _________
Net assets / (liabilities) 210.7 (3.1) (133.1) 74.5
========= ========= ======== =========
at 30 June 2003
(In £'s million) Specialist DX Other Group
Recruitment Services
Intangible assets 113.2 - 0.4 113.6
Tangible assets &
investments 16.2 19.1 335.8 371.1
Stocks - 0.1 17.2 17.3
Debtors 191.6 23.0 285.0 499.6
Creditors (128.1) (41.0) (468.0) (637.1)
Provisions for liabilities
and charges (1.2) - (120.1) (121.3)
__________ _________ __________ __________
191.7 1.2 50.3 243.2
Net cash / (debt) - - (245.8) (245.8)
__________ _________ __________ __________
Net assets / (liabilities) 191.7 1.2 (195.5) (2.6)
========== ========= ========== ==========
Net assets / (liabilities) before net debt are analysed by geographical area as
follows: United Kingdom £(65.0) million (2003 - £65.6 million), Continental
Europe £56.0 million (2003 - £164.6 million) and Australia & New Zealand £6.1
million (2003 - £13.0 million). For the segmental balance sheet, 'Other'
comprises investments, tax balances, dividends payable, restructuring and
disposal provisions. The prior year also includes discontinued operations.
Discontinued operations include the former Logistics and Commercial divisions
and the non-core Mail activities.
Creditors includes all of the creditors of the respective segment, both current
and non-current, but excludes amounts owed to other members of the Hays Group.
Net cash / (debt) comprises all borrowings, both current and non-current, net of
cash.
Segmental Information - Consolidated Cash Flow Statement Extract
for the year ended 30 June 2004
(In £'s Specialist DX Services Discontinued Other Group
million) Recruitment
OPERATING
ACTIVITIES
Total
operating
profit 120.1 32.7 15.4 - 168.2
Depreciation
and
amortisation 19.8 5.0 21.8 - 46.6
Pension cash
contribution
(5 Sept - - - (51.7) (51.7)
2003)
Movement in
working
capital and
provisions (35.4) 3.4 (26.3) - (58.3)
__________ __________ ___________ ________ __________
NET CASH
INFLOW /
(OUTFLOW)
FROM
OPERATING
ACTIVITIES 104.5 41.1 10.9 (51.7) 104.8
Returns on
investments
and servicing
of
finance - - - (22.1) (22.1)
Tax paid - - - (40.7) (40.7)
Net capital
expenditure (5.3) (4.7) (14.0) - (24.0)
__________ __________ ___________ ________ __________
CASH INFLOW
/ (OUTFLOW)
BEFORE
ACQUISITIONS
AND 99.2 36.4 (3.1) (114.5) 18.0
DISPOSALS
Net
acquisitions
and - - - 334.0 334.0
disposals
Equity
dividends - - - (79.3) (79.3)
paid
__________ __________ ___________ ________ __________
NET CASH
INFLOW /
(OUTFLOW)
BEFORE
FINANCING 99.2 36.4 (3.1) 140.2 272.7
========= ========= ========== ======= =========
for the year ended 30 June 2003
(In £'s Specialist DX Services Discontinued Other Group
million) Recruitment
OPERATING
ACTIVITIES
Total
operating
profit before
exceptional items 101.3 33.2 28.3 - 162.8
Depreciation
and
amortisation 19.5 5.1 71.7 - 96.3
Other
operating
activities (0.1) - (1.2) - (1.3)
Movement in
working
capital and
provisions 25.9 9.1 (6.7) - 28.3
__________ __________ __________ ________ _________
NET CASH
INFLOW FROM
OPERATING
ACTIVITIES 146.6 47.4 92.1 - 286.1
Returns on
investments
and
servicing - - - (10.6) (10.6)
of finance
Tax paid - - - (62.6) (62.6)
Net capital
expenditure (4.3) (3.9) (66.3) - (74.5)
__________ __________ __________ ________ _________
CASH INFLOW
/ (OUTFLOW)
BEFORE
ACQUISITIONS
AND 142.3 43.5 25.8 (73.2) 138.4
DISPOSALS
Net
acquisitions
and (48.9) - (3.7) - (52.6)
disposals
Equity
dividends - - - (84.0) (84.0)
paid
__________ __________ __________ ________ _________
NET CASH
INFLOW /
(OUTFLOW)
BEFORE
FINANCING 93.4 43.5 22.1 (157.2) 1.8
========= ========= ========= ======= =========
Other comprises tax payments, dividend payments, all financial costs, all
proceeds arising from acquisitions and disposals and the pension cash
contribution made on 5 September 2003.
Exceptional Items
for the year ended 30 June 2004
(In £'s million) Note 2004 2003
(Restated)
(Note (iv))
EXCEPTIONAL OPERATING ITEMS
Impairment of goodwill and tangible assets - (442.8)
Restructuring costs - (47.2)
__________ __________
- (490.0)
OTHER EXCEPTIONAL ITEMS
Net profit / (loss) on disposal of (i) 38.4 (85.3)
businesses
Amounts written off investments (ii) (43.9) -
Fundamental restructuring - costs of DX
Services (iii) (14.5) -
demerger
Exceptional finance charges - (21.1)
__________ __________
TOTAL EXCEPTIONAL ITEMS (20.0) (596.4)
========= =========
(i) During the year the Group completed the disposal of a number of non-core
operations for an aggregate profit on disposal of £38.4 million after
taking into account the impairment charges recognised last year. The
disposal of the former Logistics businesses and associated properties
generated a net profit of £9.0 million. The disposal of the former
Commercial businesses and associated surplus properties generated a net
profit of £16.4 million after deducting goodwill of £63.2 million
previously written off to reserves. The disposal of certain non-core Mail
businesses generated a net profit of £13.0 million.
(ii) The Group has an investment in its associated company, Albion Group
Limited, which principally comprises a loan made to the acquiror of Hays
Chemicals in 2001 which is repayable in 2010. The business is less
profitable than it was at the time of the original transaction and the
business has not generated sufficient funds to pay the interest on this
loan. The Directors have concluded that the outlook for the profitability
of the business has deteriorated and that the recoverability of the loan
is in doubt. Consequently the full amount of the investment has been
provided for, resulting in an exceptional charge of £43.9 million.
(iii) On 3 June 2004 the Group announced its intention to demerge DX Services to
its shareholders. The total costs of the demerger, estimated at £14.5
million, have been recognised in the period
(iv) In the prior year the Group recognised impairment charges of £442.8
million principally relating to goodwill and tangible assets of businesses
being disposed. £47.2 million was charged for restructuring following the
strategy review announced in March 2003. The Group completed the disposal
of two commercial businesses which gave rise to net losses on disposal of
£21.9 million and provided £63.4 million for goodwill and tangible assets
of its former BPO businesses which were disposed in the year ended 30 June
2004. £21.1 million of exceptional finance charges were incurred in
connection with the replacement of the Group's financing facilities.
Exceptional items in the year resulted in a cash inflow of £345.5 million, net
cash disposed of £18.2 million and a tax charge of £24.3 million.
Statement under S240 - Publication of non-statutory accounts
The financial information contained in this preliminary announcement does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985. The financial information is based on the statutory accounts for the
financial years ended 30 June 2004 and 30 June 2003. The financial statements
for 30 June 2004, upon which the auditors issued an unqualified opinion, that
did not contain a statement under Section 237 (2) or (3) of the Companies Act
1985, have yet to be delivered to the Registrar of Companies. The financial
statements for 30 June 2003 upon which the auditors issued an unqualified
opinion, have been delivered to the Registrar of Companies.
This information is provided by RNS
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