9th Oct 2008 07:00
9 October 2008 Interim Management Statementfor quarter ended 30 September 2008
Commenting on trading for the quarter ended 30 September 2008, Alistair Cox, Chief Executive of Hays plc, said:
"10% net fee growth (4% on a like-for-like basis*) represents a solid start tothe year in an increasingly difficult economic environment. Our Internationalbusiness, now representing 49% of the Group's net fees, and the UK publicsector business both achieved strong performances, offsetting further weaknessin the UK private sector market.Currently, in the United Kingdom demand for temporary placements remainsstable, except in Construction & Property and demand for permanent placementscontinues to fall. In Australia, we are still seeing good growth in demand fortemporary placements but demand for permanent placements has started to fall.In most of the other countries in which we operate, we are still seeing stronggrowth in demand for our services.Whilst there is no doubt that many of our markets are getting tougher, theexperience of our management team, the flexibility of our cost base, theincreased diversification of the Group, and the strength of our balance sheetpositions us well to deal with these market conditions. In the last twoquarters we have continued to take action to reduce our cost base in thosemarkets already affected by the wider economic issues and going forward we willcontinue to keep a tight control on costs, focus on cash generation and reactrapidly to changing market conditions."
Group
Growth in net fees for the quarter ended 30 Growth September 2008 (versus the same period last year) Actual LFL* By region United Kingdom & Ireland (8)% (8)% Asia Pacific 27% 13% Continental Europe & Rest of World 54% 32% Total 10% 4% By segment Permanent 7% 1% Temporary 14% 8% Total 10% 4% * LFL is like-for-like growth, which represents organic growth of continuingactivities at constant currency. No adjustment is made for the one additionaltrading day in the quarter ended 30 September 2008 versus the same period lastyear. In the quarter ended 30 September 2008, Hays plc, the leading global specialistrecruitment group, grew net fees by 10% (4% on a like-for-like basis*) over thesame period last year. The difference between the headline and like-for-likegrowth rate is due to the more favourable Euro and Australian dollar exchangerates in this period versus the same period last year. During the quarter,headcount reduced by 2% with reductions in the United Kingdom & Ireland andAsia Pacific partially offset by investment in Continental Europe & Rest ofWorld.
Net fees from the permanent placement business increased by 1% on a like-for-like basis as market conditions continued to deteriorate in the United Kingdom & Ireland and Australia & New Zealand. Net fees from the temporary placement business increased by 8%*, benefiting from a particularly strong performance in Germany. The overall Group like-for-like net fee growth rate slowed across the quarter and by the end of the quarter it was broadly flat.
United Kingdom & IrelandIn the United Kingdom & Ireland, net fees fell by 8%* versus the same periodlast year. Accountancy & Finance net fees were lower than the same period lastyear due to declining client and candidate confidence, particularly at thelower end of the market. Construction & Property had a difficult quarterreflecting tough market conditions in the private sector across all regions.The Information Technology business achieved modest growth. Among the OtherSpecialist Recruitment Activities there were mixed performances. City relatedactivities and Legal were impacted by a significant reduction in demand, whilstEducation, Healthcare, Retail and Purchasing continued to perform strongly.Last year, we shifted resources towards our public sector clients and this hasyielded 15% growth in our public sector net fees in the quarter.
In view of the difficult market conditions, we continue to focus on cost control and productivity. Following the 7% reduction in headcount in the second half of last year, we have reduced the headcount in the United Kingdom & Ireland business by a further 5% during the first quarter.
Asia Pacific
In Asia Pacific, net fees increased by 13%*. In Australia & New Zealand, strongperformances in Resources & Mining, Information Technology and most of thenewer specialisms offset weaker performances in Accountancy & Finance, Legaland Financial Services related activities. During the period we startedoperations in the Northern Territory in Australia with an office opening inDarwin. In Asia, our businesses continued their strong progress across theregion, with Japan, Hong Kong and Singapore performing particularly well.
Continental Europe & Rest of World ('RoW')
In Continental Europe & RoW, net fees increased by 32%*. This outstandinggrowth stems from our investment in the region, the impact of deregulation inkey markets, and an increasing awareness and willingness by both candidates andclients to use specialist recruitment consultants. The performance was led bycontinued excellent growth in Germany, whilst our newer businesses in Italy,United Arab Emirates, Brazil and Poland also performed very strongly. Duringthe period we opened new offices in Dortmund (Germany), Montreal (Canada) andKrakow (Poland). Share buy-back
The priorities for our free cash flow are to fund the Group's development,support a sustainable dividend and to buy back shares when appropriate. Duringthe quarter, we purchased 1.7 million shares at a cost of ‚£1.4 million. Asstated in our preliminary results announcement, the level of buy back this yearwill be significantly lower than last year.
Cash flow and balance sheet
Cash generation was good in the quarter and the balance sheet remains strong.
Current TradingCurrently, in the United Kingdom demand for temporary placements remainsstable, except in Construction & Property and demand for permanent placementscontinues to fall. In Australia, we are still seeing good growth in demand fortemporary placements but demand for permanent placements has started to fall.In most of the other countries in which we operate, we are still seeing stronggrowth in demand for our services.Whilst there is no doubt that many of our markets are getting tougher, theexperience of our management team, the flexibility of our cost base, theincreased diversification of the Group, and the strength of our balance sheetpositions us well to deal with these market conditions. In the last twoquarters we have continued to take action to reduce our cost base in thosemarkets already affected by the wider economic issues and going forward we willcontinue to keep a tight control on costs, focus on cash generation and reactrapidly to changing market conditions. * LFL is like-for-like growth, which represents organic growth of continuingactivities at constant currency. No adjustment is made for the one additionaltrading day in the quarter ended 30 September 2008 versus the same period lastyear.EnquiriesHays plc Paul Venables Finance Director + 44 (0) 20 7383 2266 Martin Abell Investor Relations + 44 (0) 20 7383 2266
Brunswick Gill Ackers + 44 (0) 20 7404 5959 Catherine Colloms Conference call
Paul Venables and Martin Abell of Hays plc will conduct a conference call for analysts and investors at 9:00am United Kingdom time on Thursday 9 October 2008. The dial in details are as follows:
Dial-in number +44 (0) 1452 541 077 The call will be recorded and available for playback for seven days as follows: Replay dial-in number +44 (0) 1452 550 000 Access code 67455615# Reporting calendarTrading statement for quarter ending 31 December 2008 8 January 2009 Interim results for 6 months ending 31 December 2008 26 February 2009 Trading statement for quarter ending 31 March 2009 9 April 2009 Trading statement for quarter ending 30 June 2009 9 July 2009 Preliminary results for 12 months ending 30 June 2009 3 September 2009 Note to editorsHays plc is the leading global specialist recruitment group. It is marketleader in the UK and Australia, and one of the market leaders in ContinentalEurope. As at 30 June 2008, the Group employed 8,872 staff operating from 393offices in 27 countries across 17 specialisms. For the year ended 30 June 2008:
- the Group had revenues of ‚£2.5 billion, net fees of ‚£786.8 million and operating profit before exceptional items of ‚£253.8 million;
- the Group placed around 80,000 candidates into permanent jobs and around 300,000 people into temporary assignments;
- the temporary placement business represented 49% of net fees and the permanent placement business represented 51% of net fees.
Important notice
Certain statements in this announcement are forward looking statements. Bytheir nature, forward looking statements involve a number of risks,uncertainties or assumptions that could cause actual results or events todiffer materially from those expressed or implied by those statements. Forwardlooking statements regarding past trends or activities should not be taken asrepresentation that such trends or activities will continue in the future.Accordingly, undue reliance should not be placed on forward looking statements.
All information shown for the quarter ended 30 September 2008 is unaudited.
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