5th Sep 2006 07:00
Hays plcPreliminary results for the year ended 30 June 2006HAYS INTERNATIONAL EXPANSION CONTINUESYear ended 30 June 2006 2005 Actual Like-for- ‚£ million growth Like1 Net Fees 538.2 470.6 +14% +13% Profit from continuing 193.0 166.2 +16% +15% operations Profit before tax 192.5 167.7 +15% Basic earnings per share 8.69p 6.82p +27% Dividend per share 4.35p2 3.40p +28% 1 Organic growth at constant currency2 Including a proposed final dividend of 2.90 pence per share* Fee growth of 7% achieved in the United Kingdom & Ireland (6% like-for-like1)* Excellent fee growth in the International Division of 38% (35%like-for-like1) - now 30% of total business* Conversion rate improved by 60bps to 35.9% (H1: 36.3%, H2: 35.4%)* Expansion of the office network with 37 new offices opened during the year (8 via acquisition)* 27% increase in basic earnings per share to 8.69 pence* Full year dividend of 4.35 pence per share, an increase of 28%Commenting on these results, Denis Waxman, Chief Executive of Hays, said:"The Group has once again delivered a strong set of results producing sustainedfee and profit growth. Overall net fee growth of 14% reflected excellent growthof 38% across our International Divisions and solid growth of 7% in the UnitedKingdom & Ireland. The business has continued to produce strong and consistentgrowth and over the last 3 years net fees have grown by 55% and profits by 69%.The newer activities in the United Kingdom & Ireland continued to growstrongly, but growth was more moderate within the UK major specialistactivities. Excellent performances across the International Divisionparticularly Australia and Germany, increased the International Division'scontribution to 30% of total fees (2005 - 25%). We have continued to expand ourinternational footprint by opening 19 new offices and entered Italy, the UnitedArab Emirates and China.In July and August the Group continued to generate strong like-for-like net feegrowth of 13%. Growth was 6% in the United Kingdom & Ireland, 28% in AsiaPacific and 37% in Continental Europe & Canada. For the full year the Groupexpects some slight erosion in Group margins from that achieved in the secondhalf of last year, arising from a modest margin reduction in the UK temporarybusiness and the impact of investment for future growth. Our continuedinvestment will allow the Group to take full advantage of its substantialgrowth opportunities".Enquiries:Denis Waxman Chief Executive Hays plc + 44 (0)20 7628 9999 Paul Venables Finance Director Richard Jackson Investor Relations Mike Smith Brunswick + 44 (0)20 7404 5959 Chairman's StatementResults summaryNet fees for the Group increased by 14% to ‚£538.2 million (2005 - ‚£470.6million) and profit before tax increased by 15% to ‚£192.5 million (2005 - ‚£167.7 million). We have seen contrasting performances between our businesses inthe United Kingdom & Ireland and in the International Divisions.In the United Kingdom & Ireland net fees grew by 7% and operating profit grewby 6% with moderate performance in the major specialist activities. Thereremain attractive growth opportunities in our specialist activities in theUnited Kingdom & Ireland and we are now investing accordingly.The Group continues to focus on the significant growth opportunities in theinternational specialist recruitment markets. The International Division hasproduced an excellent performance with net fee growth of 38% and operatingprofit growth of 53%, and has contributed ‚£55.5 million (2005 - ‚£36.3 million)to Group profits. The performance highlights the growing strength of ourInternational businesses and our ability to deliver the benefits from thestructural growth opportunities. International now represents 30% (2005 - 25%)of Group net fees and further reduces our dependence on the United Kingdom &Ireland.We have been able to finalise one of the last remaining legacy issues, thehistoric investment in Albion, the chemicals business. We received at the endof June this year a final net cash inflow of ‚£30.0 million after Albion waspurchased by the German speciality chemicals business, Brenntag.AcquisitionsWhilst the fundamental strategy of the Group is to create growth and value fromorganic development, geographic infill or the acquisition of specialist marketsector knowledge remains a part of our development strategy. During the year weacquired Recruitment Solutions Group for ‚£20.6 million (including deferredconsideration of ‚£2.7 million) to enter the specialist healthcare and socialcare markets. In considering this acquisition, the Board was aware that thecurrent market for healthcare professionals would be challenging due toconstraints in National Health Service funding, but over the long term thereare good opportunities for growth both in the specialist healthcare and socialcare markets.We also acquired for ‚£7.8 million (including deferred consideration of ‚£5.2million), St. George's Harvey Nash, a small permanent recruitment businessprimarily based in China, but with complementary search activities in Hong Kongto those of our organic start-up. This business holds the appropriate licencesto operate a recruitment business within China and hence provides us with aquality platform to exploit the longer term potential of the Chinese market.International financial reporting standards & foreign exchangeThese are the first full year's results we have prepared under InternationalFinancial Reporting Standards (IFRS) and the prior year comparatives have beenrestated accordingly. The impact of the adoption of IFRS which was described indetail in a press release on 8 February 2006, led to a reduction in operatingprofit from continuing operations before goodwill amortisation for the year to30 June 2005 of ‚£(0.9) million.The impact of movements in foreign exchange rates since last year has beenfavourable adding ‚£3.2 million to net fees and ‚£1.4 million to operating profitpredominantly caused by the strengthening of the Australian dollar.Tax and discontinued operationsTax on continuing operations for the period was ‚£60.1 million, an effectiverate of 31.2% (2005 - 31.3%). This is slightly better than last year and weexpect it to remain in the range 31.0% to 31.5% for the foreseeable future.Profits from discontinued operations after tax of ‚£52.5 million (2005 - ‚£30.7million) comprise ‚£30.0 million of profit on the final settlement of thehistoric investment in Albion, ‚£4.3 million profit net of tax realised from thedisposal of surplus properties and a tax credit of ‚£18.2 million arising fromprevious disposals.Cash flowGroup cash flow was strong during the period with net cash from operatingactivities of ‚£136.4 million (2005 - ‚£106.0 million) after investing ‚£24.2million in additional working capital, broadly commensurate with the growth ofthe business and tax paid of ‚£46.7 million. Investing activities comprised ‚£10.7 million of net capital expenditure, ‚£20.2 million in respect ofacquisitions made during the year and ‚£8.2 million in respect of acquisitionsmade in previous years. We received net proceeds from discontinued activitiesof ‚£20.4 million, primarily the proceeds from the Albion settlement net ofcontinued payments on legacy surplus property leases. ‚£56.7 million was paidout in dividends and ‚£209.2 million was used to buy-back our own shares,leaving net debt of ‚£77.0 million at the end of the period.Retirement benefitsThe Group's pension liability under IAS 19 at 30 June 2006 of ‚£55.9 million (‚£39.1 million net of deferred tax) decreased by ‚£13.8 million as compared to 30June 2005 primarily due to a higher than expected return on scheme assetsfollowing a 15.9% rise in the benchmark FTSE All Share Index. During the yearthe Group contributed ‚£5.1 million of cash into the main scheme and that isexpected to increase to circa ‚£7.0 million in 2007. There is a formal actuarialvaluation of the Scheme as at 30 June 2006, the results of which will be knownby the end of this calendar year.Capital structure and dividendThe business continued to generate strong free cash flow during the year. Thepriorities for our free cash flow are to fund Group development particularly inthe International Division, purchase of in-fill acquisitions as they arise,support a progressive dividend policy, and to buy-back shares as appropriate.The initial circa ‚£300 million of the share buy-back programme was completed atthe close of the first half this year. We have commenced the second stage ofthe share buy-back programme and during the second half of the year we havepurchased 32.7 million shares at a total cost of ‚£47.1 million. The totalnumber of shares purchased to date is 274.6 million at a total cost of ‚£352.1million representing 15.8% of the issued share capital.Basic Earnings Per Share from continuing operations for the year of 8.69 pencewas 27% ahead of last year (2005 - 6.82 pence). The improvement in Earnings PerShare arises from the strong growth in post tax profits from continuingoperations, 15% ahead of last year, combined with the favourable effects of theaccretion from the share buy-back programme to date.The Board is aware of the importance of both sustainable and progressivedividend growth and therefore the Board is recommending a final dividend of2.90 pence per share, which if approved at the Annual General Meeting will makea total of 4.35 pence per share for the full year. This represents a 28%increase on last year, with 15% of this increase attributable to the accretiveeffects of the share buy-back programme and 13% attributable to the underlyinggrowth in the profitability of the business. The recommended dividend will bepaid on the 21 November 2006 to shareholders on the register at 20 October2006.PeopleAs I announced at the Interim results in February, John Martin our previousGroup Finance Director left the Group in March to join Travelex plc. Johnplayed a pivotal role in the transformation and refocusing of Hays into aspecialist recruitment group and we wish him every success in the furtherdevelopment of his career. In May, Paul Venables joined the Group as hisreplacement. Since joining, Paul's depth of experience in the multi-nationalservice sector has already had a positive impact on the Group's activities. I,and the Board look forward to Paul having a long and fulfilling career with theGroup.Our business has many opportunities for our people. In the United Kingdom thechallenge is to capitalise on our market leading positions and to identify andexploit new opportunities, which can subsequently be developed internationally.For the International operations, the opportunity is to develop these marketsfor our business model and establish Hays in a market leadership position.Having visited many of our operations during the year, I am delighted to reportto you the enthusiasm, commitment and professionalism of our teams in meetingthese challenges.I do wish to thank each and every one of them for all their hard work andenthusiasm and look forward to them developing their careers and strengtheningthe business and its relationships with our clients and our candidates.Office of Fair Trading investigationAs previously announced the Office of Fair Trading ("OFT") is conducting aninvestigation into a number of recruitment companies involved in theconstruction recruitment sector. Hays is one of the companies currently beinginvestigated. The investigation relates to a small part of our Construction &Property business in the United Kingdom.As a Group we take this matter very seriously and are co-operating fully withthe OFT in its investigation under its leniency programme, but at this stage wedo not know when the OFT investigation will be completed. The Board believesthat any financial impact of the matters under investigation will not bematerial to the Group.Current tradingIn July and August the Group continued to generate strong like-for-like net feegrowth of 13%. Growth was 6% in the United Kingdom & Ireland, 28% in AsiaPacific and 37% in Continental Europe & Canada. For the full year the Groupexpects some slight erosion in Group margins from that achieved in the secondhalf of last year, arising from a modest margin reduction in the UK temporarybusiness and the impact of investment for future growth. Our continuedinvestment will allow the Group to take full advantage of its substantialgrowth opportunities.Chief Executive - Operational ReviewResults overviewHays Specialist Recruitment produced another year of strong growth. Turnovergrew by 11% to ‚£1,826.6 million (2005 - ‚£1,640.4 million). Net fees were 14%ahead of last year at ‚£538.2 million (2005 - ‚£470.6 million) and profit fromoperations was 16% ahead of last year at ‚£193.0 million (2005 - ‚£166.2million).Across the Group, permanent fees continued to grow more strongly than temporaryfees. The proportion of net fees arising from permanent recruitment increasedto 44.0% (2005 - 42.1%) an increase of 1.9% against last year. Candidate salaryinflation was in the range of 3.0 - 3.5% and the fee rates for permanentplacements strengthened by circa 10%. The gross margin on temporary placementsacross the Group was broadly flat at 19.0%.We expanded the geographic reach of our network, particularly in ourinternational markets and in total we added another 37 new offices - 19 in theInternational Division (including 4 from an acquisition) and 18 in the UnitedKingdom & Ireland (including 4 from an acquisition). The expansion ofspecialist activities across our network gathered pace and there was a 14%increase in the number of business units bringing the total number to 824. Weenhanced the productive capacity of the International Division by increasingthe number of recruitment consultants by 38% to 1,364 (2005 - 989). In theUnited Kingdom & Ireland the number of recruitment consultants remained flat at2,698 (2005 - 2,694).There was an improvement in the overall efficiency of the business during theyear. The conversion rate, which is the proportion of net fees converted intooperating profit, improved to 35.9% (2005 - 35.3%) an increase of 60bps on theprior year. The first half conversion rate of 36.3% reduced to 35.4% in thesecond half as a result of the impact of seasonality, IFRS accounting changes,some modest margin reduction in the UK temporary business and the RSGacquisition.United Kingdom & IrelandIn our largest market, net fees were 7% ahead of last year at ‚£378.4 million(2005 - ‚£354.7 million) and operating profit was up 6% to ‚£137.5 million (2005- ‚£129.9 million).The performance of the business in the United Kingdom & Ireland has beenmoderate in the major specialist activities. A year ago we were uncertain aboutthe outlook for the economy in the UK. As a consequence of our caution wedecided not to invest last year in either additional recruitment consultants orsignificant new office openings. This decision impacted the growth levelswithin the major specialist activities. We are currently taking actions toimprove the performance of these businesses, one of which is the creation of anew role, a UK Managing Director to maximise our opportunities in thesemarkets. On the basis of current market conditions we are now selectivelyadding recruitment consultant headcount and new office and business unitopenings within the UK business.Net fees in Accountancy & Finance were 6% ahead of last year at ‚£158.0 million(2005 - ‚£149.0 million). The overall performance of Accountancy & Finance wasmoderate and fee growth slowed from a combination of both weaker volumes andpricing pressure on the temporary margin as we reached the end of the year.There was strong growth in the Home Counties but this was off-set by weakperformances elsewhere.Construction & Property, which serves both the construction and "built"environment sectors, generated net fees of ‚£101.6 million (2005 - ‚£97.0million), 5% ahead of last year. There was strong growth in the North East,Scotland and Ireland but with weak performance in the South East. We havecontinued to see shortages of some skilled professionals and permanent feegrowth has been strong which provides some evidence of client confidence in thelonger term market. However we have experienced pricing pressure on thetemporary margin in the second half of the year.Our Information Technology business produced net fees of ‚£30.7 million (2005 -‚£29.3 million), 5% ahead of last year. Permanent fees continued to growstrongly but this was offset by flat temporary fees and contractor volumes. Thebusiness achieved improved operational efficiency increasing operating profitby 10% to ‚£11.0 million (2005 - ‚£10.0 million).Within our other specialist activities, net fees grew by 11% to ‚£88.1 million(2005 - ‚£79.4 million). The newer activities, Sales & Marketing, Purchasing andExecutive grew strongly and we will continue to expand these specialistactivities across our extensive network. Our larger businesses, HumanResources, Recruitment Management, Education and Legal all continued togenerate good levels of fee growth. Hays Retail, our organic start-up, hasperformed strongly and we are encouraged by its level of growth.We have continued to see net fee growth from the public sector but at a ratelower than our overall net fee growth rate in the United Kingdom & Ireland. Theproportion of net fees from the public sector as a total of the United Kingdom& Ireland business was 26%.The results of Recruitment Solutions Group are included within other specialistactivities. Since its acquisition on the 2 February 2006 the business generatednet fees of ‚£2.3 million and an operating loss of ‚£0.3 million. The resultshave been adversely affected by the impact of funding constraints in theNational Health Service but we remain confident of the long term growthopportunities within the healthcare and social care specialist recruitmentmarkets. The business is now fully integrated into the Hays operation in theUnited Kingdom with the resulting economies of scale. We are expanding thesocial care specialist activity into an initial nine offices within the Hays UKnetwork.Asia PacificThe excellent growth that our business has produced during the year has furtherenhanced its market leading position in the region with net fees increasing by37% to ‚£85.7 million (2005 - ‚£62.6 million). Operating profit increased by 50%to ‚£41.7 million (2005 - ‚£27.8 million).It has been another year of both outstanding fee and profit growth from ourbusiness in Australia & New Zealand. We have produced double-digit rates ofgrowth from all of our specialist activities and across all states. The majorspecialist activities continued to grow rapidly and it has been veryencouraging that our relatively young organic start-up activity, Resources &Mining, now generates 10% of net fees in the region and produced net fee growthof 87% during the year. The new niche activities, Legal, Sales & Marketing andHuman Resources all continued to grow strongly and our strategy is to expandthese specialist activities across our extensive office network in the region.The investment in recruitment consultants continued and was 38% ahead of lastyear at 707 (2005 - 513). There was strong growth in both permanent andtemporary recruitment and the proportion of fees arising from permanentrecruitment was 51%. The management team in Australia & New Zealand have builtupon the impressive conversion rate achieved last year and have produced animprovement of 430 bps to 48.7% for this year (2005 - 44.4%).In May this year we completed the acquisition of St. George's Harvey Nash, asmall specialist recruitment business based in Hong Kong and mainland China.The business has now been fully integrated into our operations in the AsiaPacific region and reports to our regional management team in Australia. I ampleased with the performance of the business since it joined Hays and we areexcited by the growth opportunities in the region.Continental Europe & CanadaFee growth and profit generation have again both been excellent from ourbusinesses in Continental Europe & Canada. Net fees of ‚£74.1 million (2005 - ‚£53.3 million) increased by 39% and operating profit increased by 62% to ‚£13.8million (2005 - ‚£8.5 million).We continued to invest heavily in the region during the period and the numberof recruitment consultants increased by 38% to 657 (2005 - 476). Our investmentalso included the establishment of new start-up operations in Italy and theUnited Arab Emirates. We are pleased with the early performance of these newoperations and we will continue to invest for growth in each of these markets.Germany, our largest business in the region, produced excellent fee growth andstrong profit conversion and has continued to gain market share in its coreInformation Technology business. We have increased the number of recruitmentconsultants by 33% and opened a new office in Berlin during the year. Thebusiness in France grew strongly and built on its growing market position. Wehave continued to invest, increasing the number of recruitment consultants by54% and we opened a new office in Strasbourg and expanded the number ofbusiness units.The performance of our smaller operations in the region has also beenexcellent. Fees from operations in Iberia have grown in excess of 90% and wenow have 81 recruitment consultants operating out of 5 offices. There wasstrong growth in Sweden, Poland, Benelux and Switzerland. Our Canadian businesswhich operates from 6 offices, increased recruitment consultant headcount by38% to 80 and continued to grow net fees strongly.We now have 824 business units operating from 348 offices in 20 countries. Aswe enter the new financial year we have continued our investment in recruitmentconsultants, new offices and the roll out of specialist activities across ournetwork. Our continuing investment both in the UK and in our InternationalDivisions should give a strong indication of our confidence in the future.CONSOLIDATED INCOME STATEMENTfor the year ended 30 June(In ‚£'s million) 2006 2005 Restated* TURNOVER Continuing operations 1,826.6 1,640.4 NET FEES Continuing operations 538.2 470.6 PROFIT FROM OPERATIONS Continuing operations 193.0 166.2 Finance income 4.7 6.4 Finance cost (5.2) (4.9) (0.5) 1.5 PROFIT BEFORE TAX 192.5 167.7 Tax (60.1) (52.5) PROFIT FROM CONTINUING OPERATIONS AFTER 132.4 115.2TAX PROFIT FROM DISCONTINUED OPERATIONS 52.5 30.7 PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 184.9 145.9 Earnings per share from continuing operations - Basic 8.69p 6.82p - Diluted 8.65p 6.75p Earnings per share from continuing and discontinued operations - Basic 12.14p 8.64p - Diluted 12.08p 8.55p\* The comparative numbers shown above have been restated from those previouslyreported as the Group has adopted International Financial Reporting Standards(IFRS) for the first time this year and has restated comparatives accordingly.CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSEfor the year ended 30 June(In ‚£'s million) 2006 2005 Profit for the financial year 184.9 145.9 Currency translation adjustments taken to 0.3 2.8equity Actuarial profits on defined benefit pension 15.8 4.6scheme Tax on items taken directly to equity (4.8) (1.3) Net income recognised directly in equity 11.3 6.1 Total recognised income and expense for the 196.2 152.0year Attributable to equity shareholders of the 196.2 152.0parent CONSOLIDATED BALANCE SHEETAt 30 June(In ‚£'s million) 2006 2005 Restated NON-CURRENT ASSETS Goodwill 126.2 99.4 Other intangible assets 1.6 1.4 Property, plant and equipment 20.1 18.1 Deferred tax assets 22.2 27.1 170.1 146.0 CURRENT ASSETS Trade and other receivables 330.2 292.6 Cash and cash equivalents 52.8 71.2 383.0 363.8 Assets held for sale - 0.2 TOTAL ASSETS 553.1 510.0 CURRENT LIABILITIES Trade and other payables (208.9) (195.5) Current tax liabilities (49.4) (53.3) Obligations under finance leases - (0.1) (258.3) (248.9) NON-CURRENT LIABILITIES Bank loans and overdrafts (129.8) (6.8) Trade and other payables (7.9) - Retirement benefit obligations (55.9) (69.7) Deferred tax liabilities (0.9) (2.2) Provisions (57.0) (76.4) (251.5) (155.1) TOTAL LIABILITIES (509.8) (404.0) NET ASSETS 43.3 106.0 EQUITY Called up share capital 15.7 17.4 Share premium account 369.6 369.6 Capital redemption reserve 1.7 - Retained earnings (354.8) (278.8) Other reserves 11.1 (2.2) TOTAL SHAREHOLDERS' EQUITY 43.3 106.0CONSOLIDATED CASH FLOW STATEMENTfor the year ended 30 June(In ‚£'s million) 2006 2005 OPERATING PROFIT FROM CONTINUING 193.0 166.2OPERATIONS OPERATING PROFIT FROM DISCONTINUED - 8.4OPERATIONS 193.0 174.6 Adjustments for: Depreciation of property, plant and 6.5 8.6equipment Amortisation of intangible fixed assets 0.2 0.2 Net movement in provisions (0.2) (0.4) Movement in employee benefits and other 7.8 4.3items 14.3 12.7 OPERATING CASH FLOW BEFORE MOVEMENT IN 207.3 187.3WORKING CAPITAL Changes in working capital Increase in receivables (37.6) (26.0) Increase in share-based payments - 0.5 Increase in payables 13.4 (0.5) (24.2) (26.0) CASH GENERATED BY OPERATIONS 183.1 161.3 Income taxes paid (46.7) (55.3) NET CASH FROM OPERATING ACTIVITIES 136.4 106.0 INVESTING ACTIVITIES Purchases of property, plant and equipment (10.5) (10.0) Proceeds from sale of property, plant and 0.2 0.4equipment Purchase of intangible assets (0.4) (0.5) Cash paid in respect of acquisitions made (8.2) -in previous years Acquisition of subsidiaries (20.2) - Sale of businesses & related assets 20.4 (6.8) Net repayment of DX Services loan notes - 68.1 Interest received 4.7 6.4 Net cash (used) / generated from investing (14.0) 57.6activities FINANCING ACTIVITIES Interest paid (6.3) (3.0) Equity dividends paid (56.7) (53.4) Cash outflow in respect of share buy-back (209.2) (128.1) Disposal of own shares 8.7 6.9 Net proceeds from issue of ordinary share - 0.2capital Repayment of borrowings (0.1) (0.8) Issue of loan notes 0.4 - Increase in bank overdrafts 122.6 5.7 Net cash used in financing activities (140.6) (172.5) NET DECREASE IN CASH AND CASH EQUIVALENTS (18.2) (8.9) CASH AND CASH EQUIVALENTS AT BEGINNING OF 71.2 79.4YEAR Effect of foreign exchange rate changes (0.2) 0.7 CASH AND CASH EQUIVALENTS AT END OF YEAR 52.8 71.2SEGMENTAL INFORMATIONTURNOVER AND PROFIT FROM OPERATIONSfor the year ended 30 June 2006(In ‚£'s million) 2006 2005 TURNOVER Continuing operations United Kingdom & Ireland 1,266.9 1,223.4 Continental Europe & Canada 286.5 216.7 Asia Pacific 273.2 200.3 1,826.6 1,640.4 NET FEES Continuing operations United Kingdom & Ireland 378.4 354.7 Continental Europe & Canada 74.1 53.3 Asia Pacific 85.7 62.6 538.2 470.6 PROFIT FROM OPERATIONS Continuing operations United Kingdom & Ireland 137.5 129.9 Continental Europe & Canada 13.8 8.5 Asia Pacific 41.7 27.8 193.0 166.2There is no material difference between the split of the Group's turnover bygeographic origin and destination. Discontinued operations arose in the UnitedKingdom & Ireland.CONSOLIDATED BALANCE SHEET EXTRACTSat 30 June 2006(In ‚£'s million) United Continental Asia Corporate Group Kingdom Europe Pacific & Other & Ireland & Canada Goodwill & intangible 68.7 51.3 7.8 - 127.8fixed assets Property, plant & 15.2 3.2 1.2 0.5 20.1equipment Net working capital & 123.6 6.2 11.5 (56.0) 85.3other Provisions for - (1.0) - (56.0) (57.0)liabilities & charges Retirement benefit - - - (55.9) (55.9)obligation 207.5 59.7 20.5 (167.4) 120.3 Net debt - - - (77.0) (77.0) Net assets / 207.5 59.7 20.5 (244.4) 43.3(liabilities) at 30 June 2005 (In ‚£'s million) United Continental Asia Corporate Group Kingdom Europe Pacific & Other & Ireland & Canada Goodwill & intangible 50.7 50.1 - - 100.8fixed assets Property, plant & 13.0 1.8 0.8 2.5 18.1equipment Net working capital & 97.2 6.4 9.4 (44.1) 68.9other Provisions for - (0.7) - (75.7) (76.4)liabilities & charges Retirement benefit - - - (69.7) (69.7)obligation 160.9 57.6 10.2 (187.0) 41.7 Net cash - - - 64.3 64.3 Net assets / 160.9 57.6 10.2 (122.7) 106.0(liabilities) Corporate & Other includes assets and liabilities relating to certain assetsand liabilities that are managed at the Group level including cash andborrowings, Group pension and employee benefits, intercompany balancesand corporate tax balances.SEGMENTAL INFORMATION (CONTINUED)CONSOLIDATED CASH FLOW STATEMENT EXTRACTSfor the year ended 30 June 2006(In ‚£'s million) United Continental Asia Corporate Group Kingdom Europe Pacific & Other & & Canada Ireland Operating profit 137.5 13.8 41.7 - 193.0 Depreciation / 5.2 0.8 0.5 0.2 6.7amortisation of tangible / intangible assets Movement in (26.4) 0.5 (2.1) 11.9 (16.1)working capital and other 116.3 15.1 40.1 12.1 183.6 Capital (7.3) (2.3) (1.1) (0.2) (10.9)expenditure for the year ended 30 June 2005 (In ‚£'s million) United Continental Asia Corporate Group Kingdom Europe Pacific & Other & & Canada Ireland Operating profit 129.9 8.4 27.9 8.4 174.6 Depreciation / 5.4 0.8 0.4 2.2 8.8amortisation of tangible / intangible assets Movement in (17.0) 1.9 (0.5) (10.4) (26.0)working capital and other 118.3 11.1 27.8 0.2 157.4 Capital (7.3) (0.9) (0.6) (1.7) (10.5)expenditure The results of the discontinued businesses which have been included in theconsolidated income statement, were as follows:(In ‚£'s millions) 2006 2005 Turnover - 42.6 Operating costs - (34.2) Operating profit - 8.4 Profit from disposal of business assets 6.0 24.4 Write back of amounts previously provided against 27.0 -fixed asset investments Interest 4.0 - Share of pre tax profit from associate - 0.8 Profit before tax 37.0 33.6 Tax 15.5 (2.9) Post tax profit from discontinued operations 52.5 30.7All turnover and operating profit from discontinued operations was generated inthe United Kingdom & Ireland. Tax on operating profit from discontinuedactivities was nil (2005 - ‚£2.6 million).Profits from discontinued operations in the year were generated from surplusproperty disposals of ‚£6.0 million (2005 - ‚£1.8 million) and the receipt of ‚£31.0 million as final settlement of amounts receivable from the acquirers ofHays Chemicals.The tax credit of ‚£15.5 million in the current year is the result of a ‚£18.2million write-back of tax related accruals that were established when the Groupcompleted the disposal of non-core activities between March 2003 and November2004 and in the light of subsequent events are no longer required, less ‚£2.7 millionof tax charge arising from the disposal of Albion and surplus properties.In the prior year, operating profit from discontinued operations was generatedfrom the DX Services mail business which was demerged from the Group on 1November 2004.DIVIDENDSThe following dividends were paid by the Group and have been recognised asdistributions to equity shareholders in the year. 2006 2005 pence per ‚£ million pence per ‚£ million share share Previous year final 2.27 35.6 2.00 34.4dividend Current year interim 1.45 21.1 1.13 19.0dividend The following dividends were proposed by the Group in respect of the accountingyear presented: 2006 2005 pence per ‚£ million pence per ‚£ million share share Interim dividend 1.45 21.1 1.13 19.0 Final dividend 2.90 42.4 2.27 36.1(proposed) 4.35 63.5 3.40 55.1 The proposed final dividend of 2.90p (‚£42.4 million) is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. MOVEMENT IN NET CASH / (DEBT)(In ‚£'s million) 1 July Cash Exchange 30 June 2005 Flow movement 2006 Cash & cash equivalents 71.2 (18.2) (0.2) 52.8 Bank loans & overdrafts (6.8) (123.0) - (129.8) Finance leases (0.1) 0.1 - - 64.3 (141.1) (0.2) (77.0)The table above is presented as additional information to show movement in netcash / (debt), defined as cash and cash equivalents less overdraft and bankloans.CALLED UP SHARE CAPITALAuthorised share capital 2006 2006 2005 2005 Number ‚£'s Number ‚£'s 000's million 000's millon Ordinary shares of 8,890,894 88.9 8,890,894 88.91p each Called up, allotted and fully paid share capital Share capital Share number capital 000's ‚£'s millionAt 1 July 2005 1,735,891 17.4 Cancellation of shares (171,794) (1.7) At 30 June 2006 1,564,097 15.7SHARE PREMIUM(In ‚£'s million) 2006 2005 At 1 July 369.6 369.4 New share capital issued - 0.2 At 30 June 369.6 369.6CAPITAL REDEMPTION RESERVE(In ‚£'s million) 2006 2005 At 1 July - - Cancellation of shares 1.7 - At 30 June 1.7 -RETAINED EARNINGS(In ‚£'s million) 2006 2005 At 1 July (278.8) (328.8) Actuarial profits on defined benefits scheme 15.8 4.6 Tax on items taken directly to reserves (4.8) (1.3) Profit for the period 184.9 145.9 Dividends paid (56.7) (53.4) Dividend in specie - 82.3 Share buy-back (215.2) (128.1) At 30 June (354.8) (278.8)OTHER RESERVES(In ‚£'s million) 2006 2005 Own shares (0.7) (9.4) Equity reserve 8.7 4.4 Cumulative translation 3.1 2.8 11.1 (2.2) a. Other reserves - own shares (In ‚£'s million) 2006 2005 At 1 July (9.4) (16.3) Disposal of own shares 8.7 6.9 At 30 June (0.7) (9.4) b. Other reserves - equity reserve (In ‚£'s million) 2006 2005 At 1 July 4.4 0.7 Share-based payments 4.3 3.7 At 30 June 8.7 4.4 c. Other reserves - cumulative translation reserve (In ‚£'s million) 2006 2005 At 1 July 2.8 - Currency translation 0.3 2.8adjustments At 30 June 3.1 2.8Hays plcStatement under S240 - Publication of non-statutory accountsThe financial information contained in this preliminary announcement does notconstitute statutory accounts as defined in section 240 of the Companies Act1985. The financial information is based on the statutory accounts for thefinancial years ended 30 June 2006 and 30 June 2005. The financial statementsfor 30 June 2006, upon which the auditors issued an unqualified opinion, thatdid not contain a statement under Section 237 (2) or (3) of the Companies Act1985, have yet to be delivered to the Registrar of Companies. The financialstatements for 30 June 2005 upon which the auditors issued an unqualifiedopinion, have been delivered to the Registrar of Companies.Basis of preparationWhilst the financial information included in this preliminary announcement hasbeen computed in accordance with International Financial Reporting Standards(IFRSs), this announcement does not itself contain sufficient information tocomply with IFRSs. The Company expect to publish full financial statements thatcomply with IFRSs in October 2006.The disclosures concerning the transition from UK GAAP to IFRS, namely thereconciliations of the balance sheet at 1 July 2004 (the date of transition toIFRS), at 30 June 2005 (the date of the last UK GAAP financial statements) andat 31 December 2004 and the reconciliations of profit and cash flows for theyear ended 30 June 2005, as required by IFRS 1, and for the six months ended 31December 2004, were published on the Group's website www.haysplc.com on 8February 2006. ENDHAYS PLCRelated Shares:
Hays