Interim Management Statement

RNS Number : 1541Q

Hays PLC

10 October 2013

 



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INTERIM MANAGEMENT STATEMENT

QUARTER ENDED

30 SEPTEMBER 2013

10 October 2013

Financial summary

Growth in net fees for the quarter ended 30 September 2013 (Q1 FY14)

(versus the same period last year)		Growth
		Actual	LFL(1)
By region
	Asia Pacific	(20)%	(12)%
	Continental Europe & Rest of World	13%	6%
	United Kingdom & Ireland	8%	8%
	Total	1%	2%
By segment
	Temporary	2%	2%
	Permanent	(1)%	1%
Total		1%	2%

Highlights

·     Solid performance with market conditions improving in many parts of the Group

·     Good growth of 8%⁽¹⁾ in UK & Ireland, with Perm up 9%⁽¹⁾ and Temp up 8%⁽¹⁾. Broad-based improvement across most regions and specialisms

·     Good growth of 6%⁽¹⁾ in Continental Europe & Rest of World including 7%⁽¹⁾  growth in Germany. Most markets showing initial signs of improvement

·     Asia Pacific net fees decreased 12%⁽¹⁾. In Australia, where the market remains tough, net fees decreased 18%⁽¹⁾ but our core business in NSW and Victoria was stable. Asia saw further improvement and net fees increased by 17%⁽¹⁾

·     Consultant headcount increased by 2% during the quarter and increased 1% year-on-year

Commenting on the Group's performance, Alistair Cox, Chief Executive, said:

"We have made an encouraging start to the new financial year. Conditions were stable overall and we saw improved performance in many parts of the business. We delivered meaningful growth in the UK, invested selectively to capitalise on opportunities and kept a tight control of costs in tougher markets to maximise our financial performance.

Looking ahead we see clear growth opportunities as a number of markets continue to improve, including some that have been challenging for some time, such as the UK and Asia. Our well balanced diverse business and focus on controlling costs and driving productivity position us well to deliver long-term, sustainable growth while continuing to drive profits and cash along the way."

Group

In the first quarter ended 30 September 2013 net fees increased 1% on a headline basis and 2% on a like-for-like basis⁽¹⁾ against the prior year. Net fees in the Temp business, which accounted for 59% of Group net fees in the quarter, increased 2%⁽¹⁾ and the underlying temp margin⁽²⁾ was broadly stable. Net fees in the Perm business increased by 1%⁽¹⁾.

Whilst the exit rate of overall Group net fees was broadly in line with the quarter as a whole, we saw improved momentum in many parts of the Group and improvement in trading conditions in several markets as the quarter progressed.

Consultant headcount was up 2% in the quarter and up 1% year-on-year. Across the Group we invested selectively where market conditions and outlook were supportive, whilst we continued to focus on tight cost control elsewhere to maximise Group financial performance.

Asia Pacific

In Asia Pacific, which represents 26% of Group net fees, net fees decreased by 12%⁽¹⁾.

In Australia & New Zealand net fees decreased by 17%⁽¹⁾ within which our Temp business decreased by 11%⁽¹⁾ and our Perm business decreased by 26%⁽¹⁾. Overall market conditions in Australia remained challenging. In New South Wales and Victoria, which together accounted for 50% of our Australian business, net fees decreased by 11%⁽¹⁾, although they were sequentially stable versus the prior quarter. In Western Australia and Queensland, which together accounted for 31% of our Australian business, net fees decreased by 32%⁽¹⁾, primarily due to continued tough conditions in our Resources & Mining business, which saw further gradual decline in the quarter and where net fees were down 61%⁽¹⁾. In New Zealand, net fees decreased by 7%⁽¹⁾.

In Asia, which accounted for 20% of the division, net fees increased by 17%⁽¹⁾ and we saw further improvement in market conditions through the quarter. Japan delivered strong net fee growth of 11%⁽¹⁾, and Hong Kong, Malaysia and Singapore each delivered net fee growth of over 20%⁽¹⁾.

Consultant headcount in the division was up 1% in the quarter but down 5% year-on-year. In Australia, consultant headcount was 2% down in the quarter and down 13% year-on-year. In contrast, in Asia consultant headcount was up 6% in the quarter and up 18% year-on-year.

Continental Europe & Rest of World ('RoW')

In Continental Europe & RoW, our largest division which represents 42% of Group net fees, we delivered good net fee growth of 6%⁽¹⁾ with two record monthly performances. Germany also delivered two record monthly fee performances in the quarter and net fees increased by 7%⁽¹⁾. During the quarter we saw a slight acceleration in growth and saw good performances in Accountancy & Finance, Construction & Property and Sales & Marketing as well as continued growth in our core specialisms of IT and Engineering.  

Net fees increased 6%⁽¹⁾ in the rest of the division, which is primarily a Perm business. Within this, 13 countries delivered net fee growth of 10%⁽¹⁾ or more and five had record monthly fee performances, including Belgium, Switzerland and Russia (where net fees increased 32%⁽¹⁾). Elsewhere, four countries recorded net fee declines. In France net fees were flat, which was another solid performance given market conditions in that country.

Consultant headcount in the division was flat in the quarter and down 1% year-on-year. During the quarter we opened an office in Seattle, our third in the USA, and closed an office in Mumbai, India.

United Kingdom & Ireland

In the United Kingdom & Ireland, net fees increased 8%⁽¹⁾. Our Temp business increased 8%⁽¹⁾ and our Perm business increased 9%⁽¹⁾. We saw a continued improvement in activity levels through the quarter, notably amongst clients, and this was broad-based as 8 of our 12 regions delivered year-on-year net fee growth, including Scotland and Northern Ireland, the North West, the Midlands, London (other than City-related), all of which grew by more than 10%. Ireland performed well and delivered net fee growth of 17%⁽¹⁾.

In our private sector business, net fees increased 4%⁽¹⁾. Overall market conditions saw further gradual improvement, with our Construction & Property, IT, Office Support and Sales & Marketing businesses all growing by more than 10%⁽¹⁾ but our Banking and City-related specialisms remained subdued. Our public sector business delivered strong net fee growth of 21%⁽¹⁾, driven primarily by a strong performance in our Education business at the start of the new academic year and Healthcare.

Consultant headcount in the division was up 5% in the quarter and 6% year-on-year.

Cash flow and balance sheet

Cash performance in the quarter was good, with net debt at the end of September at c.£97 million (30 June 2013: £105.2 million). The Group's final dividend for the year ended 30 June 2013 will be paid during the second quarter.

(1)   LFL (like-for-like) growth represents organic growth at constant currency.

(2)   The underlying temp gross margin is calculated as temp net fees divided by temp gross revenue and relates solely to temporary placements in which Hays generates net fees and specifically excludes transactions in which Hays acts as agent on behalf of workers supplied by third party agencies.

Enquiries

Hays plc Paul Venables David Walker Bell Pottinger Gavin Davis / Elly Williamson

Group Finance Director Head of Investor Relations

+ 44 (0) 20 7383 2266 + 44 (0) 20 7383 2266 + 44 (0) 20 7861 3232

Conference call

Paul Venables and David Walker of Hays plc will conduct a conference call for analysts and investors at 9:00am United Kingdom time on 10 October 2013. The dial-in details are as follows:

Dial-in number		[phone]
Password		46969780#
The call will be recorded and available for playback for seven days as follows:
Replay dial-in number		[phone]
Access code		642546#

Investor Day 2013

Hays will host an Investor Day on 7 November in central London. Details (including how to register for the day) can be found at hays.com/investors/investor-day-2013.

Reporting calendar

Hays Investor Day 2013	7 November 2013
Annual General Meeting	13 November 2013
Trading Update for quarter ending 31 December 2013	9 January 2014
Interim Results for the six months ending 31 December 2013	26 February 2014
Interim Management Statement for quarter ending 31 March 2014	10 April 2014
Trading Update for quarter ending 30 June 2014	10 July 2014
Preliminary Results for the year ending 30 June 2014	28 August 2014

Hays Group overview

Hays has 7,840 employees in 239 offices in 33 countries. In many of our global markets, the vast majority of professional and skilled recruitment is still done in-house, with minimal outsourcing to recruitment agencies which presents substantial long-term structural growth opportunities. This has been a key driver of the rapid diversification and internationalisation of the Group, with the International business representing 69% of the Group's net fees as at 30 June 2013, compared with around 15% just 10 years ago.

Our 5,159 consultants work in a broad range of sectors with no sector specialism representing more than 25% of Group net fees. While Accountancy & Finance, Construction & Property and IT represent 65% of Group net fees, our expertise across 20 professional and skilled recruitment specialisms gives us opportunities to rapidly develop newer markets by replicating these long-established, existing areas of expertise.

In addition to this international and sectoral diversification, the Group's net fees are generated 59% from temporary and 41% permanent placement markets, and we believe that this balance gives our business model relative resilience in the current environment.

This well diversified business model continues to be a key driver of the Group's financial performance.

Hays operates in the following countries: Australia, Austria, Belgium, Brazil, Canada, Colombia, Chile, China, the Czech Republic, Denmark, France, Germany, Hong Kong, Hungary, India, Ireland, Italy, Japan, Luxembourg, Malaysia, Mexico, the Netherlands, New Zealand, Poland, Portugal, Russia, Singapore, Spain, Sweden, Switzerland, UAE, the United Kingdom and the USA.

Cautionary statement

This Interim Management Statement (the "Report") has been prepared in accordance with the Disclosure Rules and Transparency Rules of the UK Financial Conduct Authority and is not audited. No representation or warranty, express or implied, is or will be made in relation to the accuracy, fairness or completeness of the information or opinions made in this Report. Statements in this Report reflect the knowledge and information available at the time of its preparation. Certain statements included or incorporated by reference within this Report may constitute "forward-looking statements" in respect of the Group's operations, performance, prospects and/or financial condition. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions and actual results or events may differ materially from those expressed or implied by those statements.  Accordingly, no assurance can be given that any particular expectation will be met and reliance should not be placed on any forward-looking statement.  Additionally, forward-looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The information contained in this Report is subject to change without notice and no responsibility or obligation is accepted to update or revise any forward-looking statement resulting from new information, future events or otherwise. Nothing in this Report should be construed as a profit forecast. This Report does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase or subscribe for any shares in the Company, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any contract or commitment or investment decisions relating thereto, nor does it constitute a recommendation regarding the shares of the Company or any invitation or inducement to engage in investment activity under section 21 of the Financial Services and Markets Act 2000. Past performance cannot be relied upon as a guide to future performance. Liability arising from anything in this Report shall be governed by English Law, and neither the Company nor any of its affiliates, advisers or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this Report or its contents or otherwise arising in connection with this Report. Nothing in this Report shall exclude any liability under applicable laws that cannot be excluded in accordance with such laws.

 

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