TIDMHAS
RNS Number : 5497B
Hays PLC
11 January 2018
QUARTERLY UPDATE
FOR THE THREE MONTHSED
31 DECEMBER 2017
11 January 2018
Financial summary
Growth in net fees for the quarter ended 31 December 2017 (Q2
FY18)
(versus the same period last Growth
year)
-------------
Actual LFL
By region
Asia Pacific 10% 16%
Continental Europe & Rest
of World 19% 17%
United Kingdom & Ireland 1% 1%
------------------------------ ------- ----
Total 12% 13%
------------------------------ ------- ----
By segment
Temporary 10% 11%
Permanent 14% 15%
------------------------------ ------- ----
Total 12% 13%
------------------------------- ------- ----
Note: unless otherwise stated, all growth rates discussed in
this statement are LFL (like-for-like) fees, representing organic
growth of continuing operations at constant currency.
Highlights
-- Strong overall growth of 13%, led by excellent performance in
our International businesses, which now represent 76% of Group net
fees
-- Broad-based performance, with 24 of our 33 countries growing in excess of 10%
-- Excellent growth of 17% in Continental Europe & Rest of
World, with the Group's largest business, Germany, up 19% (c.23%
adjusted for working days(1) ) and France up 14%
-- Asia Pacific up 16%. Growth in Australia was strong, up 14%,
and Asia delivered an excellent performance, up 24%
-- Our business in the UK & Ireland remained stable, up 1%.
Our private sector business grew modestly at 4%, while public
sector markets remained tough and net fees were down 8%
-- Group consultant headcount up 3% in the quarter and up 13%
year-on-year. In particular, we continued to materially invest in
Germany (+30% YoY), Australia (+16% YoY) and USA (+16% YoY)
-- Our first half cash performance has been good. After paying
GBP94.3m in special and final dividends in November, we ended Q2
with c.GBP35 million net cash (30 September 2017: c.GBP60
million)
Commenting on the Group's performance, Alistair Cox, Chief
Executive, said:
"We have delivered another strong quarter of broad-based growth
with net fees up 13% and 24 of our 33 countries delivering
double-digit growth. Performance in Continental Europe was
excellent, led by Germany, our largest business, which grew by 19%
and where we continued to materially invest in consultant
headcount. Australia delivered another strong, market-leading
performance and in Asia we delivered excellent growth. In the UK
our business remained stable overall.
Whilst activity levels at the start of the New Year will be an
important driver of the Group's second half performance, we
continue to see strong trading conditions in the vast majority of
our international markets. Our diverse and balanced global
business, together with our highly experienced management teams and
our strong balance sheet means we are well-positioned to capitalise
on the many clear growth opportunities we currently see in most of
our markets, while maximising earnings and cash along the way".
Group
In the second quarter ended 31 December 2017 Group net fees
increased 12% on a headline and 13% on a like-for-like basis
against the prior year, representing our 19(th) consecutive quarter
of year-on-year growth. The relative strength of Sterling versus
the Australian dollar and our Asian currencies was partially offset
by Euro strength against Sterling.
The impact of these foreign exchange movements is that if we
retranslate the Group's FY17 operating profit of GBP211.5 million
at current exchange rates (AUD1.7309 and EUR1.1346 as at 9 January
2018), the actual reported result would increase by c.GBP3 million
to c.GBP214 million. This exchange uplift is c.GBP2 million lower
than that estimated in the Q1 quarterly update we released on 12
October 2017, and c.GBP9 million less than we estimated at our
preliminary results on 31 August 2017.
Net fees in our Perm business (42% fees) grew 15%, while our
Temp business (58% fees) grew by 11%.
In the quarter, Germany had two fewer trading days than prior
year due to two additional public holidays, which we estimate had a
c.1%(1) negative impact on net fees at Group level and a c.4%(1)
negative impact in Germany.
The exit rate across our divisions was broadly in line with the
Q2 growth rate. Looking ahead to Q3, Easter is evenly split in FY18
between Q3 and Q4, while in FY17 it fell entirely in Q4. We expect
this to have a c.1%(1) negative impact on net fees at Group level
in Q3 FY18, with a corresponding c.1%(1) benefit to Q4 FY18.
Consultant headcount was up 3% in the quarter and 13%
year-on-year as we continued to invest heavily in our key growth
markets. We expect headcount growth in H2 to be more selective, as
we focus on driving consultant productivity.
Asia Pacific (23% net fees)
In Asia Pacific we delivered another strong performance with 16%
net fee growth.
In Australia & New Zealand net fees were up 14%, led by our
Perm business which accelerated to 17%. Temp, which represented 67%
of net fees in the quarter, increased by 12%.
Australia delivered another strong quarter of double digit
growth, up 14%. This was led by the private sector, which accounted
for 65% of our net fees and grew by 16%. Fees in our public sector
businesses were up 12%. Growth was broad-based across all states
and all major specialisms, as we continued to invest to take
account of favourable market conditions. Our largest regions of New
South Wales and Victoria, representing 57% of Australia net fees,
were up by 10% and 19% respectively. Western Australia delivered
the highest growth at 22%, while Queensland was also strong at
16%.
At the specialism level, we delivered strong 15% growth in
Construction & Property, our largest business in Australia.
Accountancy and Finance growth was also strong at 11%, as was
Office Support and HR which grew by 14% and 15% respectively. Net
fees in IT were up 5%. New Zealand returned to growth, with net
fees up 3%.
In Asia, which accounted for 23% of division fees, growth was
excellent at 24%. Our largest market, Japan, grew by 19% and fees
were also up by 25% in China, 51% in Hong Kong and 76% in
Malaysia.
Consultant headcount in Asia Pacific was flat in the quarter but
up 13% year-on-year. Within this, headcount in both Australia &
New Zealand and Asia was flat in the quarter but up 15% and 7%
respectively year-on-year.
Continental Europe & Rest of World ('RoW') (53% net
fees)
Our largest division of Continental Europe & RoW delivered
excellent growth of 17%, well balanced across our markets as 18 of
our 23 countries grew in excess of 10%.
In Germany, performance was excellent with net fees growing 19%
(or c.23%(1) adjusted for two less working days). Our Temp &
Contractor business delivered 18% net fee growth, while Perm, which
accounted for 15% of fees, increased by 29%. Our largest specialism
remains IT, which grew by 15%, while the next largest, Engineering,
grew by 20%. Both Accountancy & Finance and Sales &
Marketing delivered excellent performance with growth of 39% and
34% respectively, while Life Sciences was up 4%. During the quarter
we added three new offices in Essen, Augsburg and Walldorf and we
now have 22 offices in Germany.
Europe (ex-Germany) grew by 16% and encouragingly twelve
countries grew by more than 10%. Eight European countries also
produced record quarterly net fees in Q2, including France, our
second largest business in the region, which delivered another
strong performance, up 14%. This was our 13(th) consecutive quarter
of double-digit growth. Our third and fourth largest European
businesses, Belgium and Switzerland, grew by 22% and 15%
respectively.
Net fees in our Americas businesses grew by 16%, with five of
our six countries growing in excess of 10%. The US delivered strong
growth of 16%, while both Brazil and Canada each grew by 15%.
Consultant headcount in the division was up 5% in the quarter
and 21% year-on-year as we continued to invest to drive growth in
our stronger markets, especially Germany where headcount rose 7% in
the quarter and 30% year-on-year. We expect headcount growth in H2
to be more selective as we focus on driving consultant
productivity.
United Kingdom & Ireland (24% net fees)
In the United Kingdom & Ireland our business was stable and
net fees increased by 1%. In the private sector, which represents
74% of divisional net fees, we grew by 4%. This is most evident in
our Perm business, which was up 3%. Our Temp business was down 1%
as it continued to be negatively impacted by tough market
conditions in the public sector, as well as the annualised impact
of IR35 regulations. Overall, public sector net fees fell by
8%.
All regions traded broadly in line with the overall UK business,
with the exception of the South West and Wales which grew by 8%,
and the Midlands which fell by 7%. London was up 1% year-on-year.
In Ireland, our business delivered another strong performance, with
net fees up 11%.
At the specialism level, net fees in our largest UK business of
Accountancy & Finance increased by 1%. Construction &
Property was up by 4%, and Office Support grew by 8%. IT and
Education were down by 5% and 6% respectively, as they continued to
be impacted by the decline in public sector markets.
Consultant headcount in the division was down 1% in the quarter
and flat year-on-year.
Cash flow and balance sheet
Cash performance in the quarter was good, with net cash of
c.GBP35 million as of 31 December 2017 (30 September 2017: c.GBP60
million, 31 December 2016: c.GBP48 million). This is after the
payment of GBP94.3m in final and special dividends in November
2017.
(1) The estimated working day impact is calculated in relation
to the Temp and Contractor businesses only, we make no estimate of
the impact on the Perm business. It represents an assumption based
on recent trends of revenues / working day in our major Temp and
Contractor businesses.
Enquiries
+ 44 (0) 20 7383
Hays plc 2266
Paul Venables + 44 (0) 20 3486
David Phillips 2022
Finsbury Group Finance Director
Guy Lamming Head of Investor + 44 (0) 20 7251
Anjali Unnikrishnan Relations 3801
Conference call
Paul Venables and David Phillips of Hays plc will conduct a
conference call for analysts and investors at 8:00am United Kingdom
time on 11 January 2018. The dial-in details are as follows:
+44 (0) 20
Dial-in number 3003 2666
Dial-in number +44 (0) 80
(UK toll free) 8109 0700
Password Hays
The call will be recorded and available for playback
for seven days as follows:
+44 (0) 20
Replay dial-in number 8196 1998
Replay dial-in number +44 (0) 800
(UK toll free) 633 8453
Access code 1443163#
Reporting calendar
Interim Results for the six months 22 February
ended 31 December 2017 2018
Trading Update for the quarter ending
31 March 2018 12 April 2018
Trading Update for the quarter ending
30 June 2018 12 July 2018
Hays Group overview
As at 30 June 2017, Hays had 10,000 employees in 250 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 c76% of the Group's net fees, compared with 30% 10
years ago.
Our 6,884 consultants work in a broad range of sectors with no
sector specialism representing more than 20% of Group net fees.
While Accountancy & Finance, Construction & Property and IT
represent 51% of Group net fees, our expertise across 20
professional and skilled recruitment specialisms gives us
opportunities to rapidly develop newer markets by replicating these
long-established, existing areas of expertise.
In addition to this international and sectoral diversification,
the Group's net fees are generated 59% from temporary and 41%
permanent placement markets, and this balance gives our business
model relative resilience.
This well diversified business model continues to be a key
driver of the Group's financial performance.
Cautionary statement
This Quarterly Update (the "Report") has been prepared in
accordance with the Disclosure Guidance and Transparency Rules of
the UK Financial Conduct Authority and is not audited. No
representation or warranty, express or implied, is or will be made
in relation to the accuracy, fairness or completeness of the
information or opinions contained in this Report. Statements in
this Report reflect the knowledge and information available at the
time of its preparation. Certain statements included or
incorporated by reference within this Report may constitute
"forward-looking statements" in respect of the Group's operations,
performance, prospects and/or financial condition. By their nature,
forward-looking statements involve a number of risks, uncertainties
and assumptions and actual results or events may differ materially
from those expressed or implied by those statements. Accordingly,
no assurance can be given that any particular expectation will be
met and reliance shall not be placed on any forward-looking
statement. Additionally, forward-looking statements regarding past
trends or activities shall not be taken as a representation that
such trends or activities will continue in the future. The
information contained in this Report is subject to change without
notice and no responsibility or obligation is accepted to update or
revise any forward-looking statement resulting from new
information, future events or otherwise. Nothing in this Report
shall be construed as a profit forecast. This Report does not
constitute or form part of any offer or invitation to sell, or any
solicitation of any offer to purchase or subscribe for any shares
in the Company, nor shall it or any part of it or the fact of its
distribution form the basis of, or be relied on in connection with,
any contract or commitment or investment decisions relating
thereto, nor does it constitute a recommendation regarding the
shares of the Company or any invitation or inducement to engage in
investment activity under section 21 of the Financial Services and
Markets Act 2000. Past performance cannot be relied upon as a guide
to future performance. Liability arising from anything in this
Report shall be governed by English Law, and neither the Company
nor any of its affiliates, advisors or representatives shall have
any liability whatsoever (in negligence or otherwise) for any loss
howsoever arising from any use of this Report or its contents or
otherwise arising in connection with this Report. Nothing in this
Report shall exclude any liability under applicable laws that
cannot be excluded in accordance with such laws.
This announcement contains inside information.
LEI code: 213800QC8AWD4BO8TH08
This information is provided by RNS
The company news service from the London Stock Exchange
END
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