28th Feb 2006 07:00
PRESS RELEASE 28 February 2006Interim results for the 6 months ended 31 December 2005CONTINUED STRONG NET FEE AND PROFIT GROWTH AT HAYS6 months ended 31 December 2005 2004 Actual Constant‚£ million Growth ExchangeNet fees 259.1 226.1 +15% +14%Profit from continuing operations 94.1 80.4 +17% +16%Profit after tax 65.0 55.5 +17%Basic earnings per share 4.16p 3.24p +28%Interim dividend per share 1.45p 1.13p +28%- Conversion rate (operating profit divided by net fees): + 76bps to 36.3%(2004: 35.6%)- Opened in Italy, Hong Kong and the United Arab Emirates- Expansion of the office network: + 15 new offices opened during the period,including 7 overseas- Acquired RSG (for ‚£18.5 million cash) to enter the Health and Social Caremarkets- Strong cash from operations before tax of ‚£83.9 millionCommenting on these results, Denis Waxman, Chief Executiveof Hays, said:"This is another excellent set of results. Net fee and profit growth in eachof our regions contributed to a substantial increase in profits, 17% ahead oflast year. This builds on the strong growth achieved over a number of years,with profits more than 76% ahead of three years ago.Overseas operations, which accounted for 29% of net fees, grew by 40% in theperiod. We opened in Italy, Hong Kong and the United Arab Emirates andexpanded our existing operations in Australia, Germany, France, Spain andCanada. In the United Kingdom we are successfully rolling out three newactivities: Sales & Marketing, Purchasing & Supply and Executive. We startedHays Retail and entered the specialist Health and Social Care markets via theacquisition of RSG.Market conditions in the United Kingdom & Ireland remain favourable for Hays.In our major international markets there are excellent growth opportunitiesand we are continuing our strategy of aggressive investment across the Groupto generate strong growth in fees, profits and cash."Enquiries:Denis Waxman Chief Executive Hays plc +44 (0)20 7628 9999John Martin Finance DirectorRichard Jackson Investor RelationsMike Smith Brunswick +44 (0)20 7404 5959Chairman's statementI am delighted once again to report strong net fee and profitgrowth for Hays. The Group continues to generate industry-leadingprofitability and very strong cash flow.The business is becoming progressively more international andgenerated 29% of fees outside the United Kingdom & Ireland in the period, morethan double the proportion three years ago. Our strategy, which includesambitious organic growth objectives, is highly successful and we havecontinued to develop the business within each of our chosen markets, to greateffect. We have also started to expand our international business outside ourestablished overseas regions and have recently opened offices in Hong Kong andthe United Arab Emirates. The international footprint of Hays is growing.Net fees for the period of ‚£259.1 million were 15% ahead of lastyear (14% at constant exchange), with temporary net fees 12% ahead (11% atconstant exchange) and permanent net fees 18% ahead (17% at constantexchange). Overall, temporary margins were slightly ahead of last year andpermanent pricing remained solid with salary inflation of about 3.5%. Profitfrom continuing operations of ‚£94.1 million was 17% ahead of last year (16% atconstant exchange). The conversion rate (operating profit divided by net fees)of 36.3% was 76 bps higher than last year. Across the Group, we increased ourinvestment in recruitment consultants by 9% to 3,742 (2004: 3,440).United Kingdom & IrelandOur business in the United Kingdom & Ireland continued to producegood levels of both net fee and profit growth against a backdrop ofbelow-trend economic growth. Net fees were 7% ahead of last year at ‚£184.8million (2004: ‚£172.9 million) and operating profit was 6% ahead at ‚£67.4million (2004: ‚£63.8 million). We continued our investment with the opening ofeight new offices. The number of recruitment consultants was broadly the sameas last year at 2,590 (2004: 2,582).Net fees in Accountancy & Finance were 8% ahead of last year at ‚£78.0 million(2004: ‚£71.9 million). Temporary and permanent recruitment fees both grewduring the period. Net fees grew across all of the regions, with the strongestgrowth in Scotland and the Home Counties. New offices were opened in Torquay,Southend, Macclesfield and Keighley. Recruitment consultant headcount of 948was 2% higher than last year (2004: 930).Construction & Property generated net fees of ‚£51.3 million (2004:‚£49.5 million), 4% ahead of last year. The strongest growth was in Ireland,Scotland and the North East and new offices were opened in Exeter, Hastingsand Galway. The number of recruitment consultants was 2% lower than last yearat 749 (2004: 763).Our Information Technology business has generated excellent growthand consistently high profitability over several years. In the period itgenerated net fee growth of 7% to ‚£15.1 million (2004: ‚£14.1 million). Bothtemporary and permanent net fees grew during the period. We opened new officesin Manchester and Newcastle and the number of recruitment consultants wasconsistent with last year at 148.The development of new recruitment activities within the Group isoften "piloted" by the larger specialist businesses in the United Kingdom &Ireland. Having been successfully established, these new activities are thenrolled out more widely. The segmental analysis in the United Kingdom & Irelandhas been restated to reflect the transfer of a number of these activities fromAccountancy & Finance and Construction & Property to other specialistactivities.Within our other specialist activities in the United Kingdom &Ireland, net fees grew by 8% to ‚£40.4 million (2004: ‚£37.4 million). We aresuccessfully rolling out Hays Purchasing & Supply, Hays Executive and HaysSales & Marketing and each of these businesses grew strongly during theperiod. Hays Human Resources continued to gain market share and we are nowbeginning to supply the associated temporary and interim markets. Within ourEducation business we targeted attractive niche market segments to maintainhealthy growth. We are encouraged by the performance of our new Retailbusiness and the growth opportunity that it offers.We had identified the qualified Health and Social Care sectors asattractive growth markets. In February we acquired RSG, a United Kingdom basedspecialist recruitment business providing qualified skilled professionals intemporary, contract and permanent placements in the Health and Social Caresectors. The business has an excellent management team with the drive andability to ensure that we fulfil our ambitious growth objectives. Theconsideration for the acquisition was ‚£18.5 million cash with up to a further‚£3.0 million dependent on profitability over the next three years. In 2005 thebusiness generated net fees of ‚£8.4 million and operating profit of ‚£2.4million. The acquisition of RSG provides a very strong platform from which todevelop the business and to roll out these services across the existing Haysinternational network and client base.Continental Europe & CanadaWe have continued to aggressively expand our business inContinental Europe & Canada. During the period we started new operations inItaly, opened new offices in Germany, Canada, Spain and France and increasedthe number of recruitment consultants in the region by 36% to 572 (2004: 421).The region continued to grow strongly and net fees grew by 35% to ‚£32.9million (2004: ‚£24.3 million) and operating profit of ‚£6.6 million (2004: ‚£3.8million) increased by 74%. Notably, the conversion rate within ContinentalEurope & Canada increased to 20.1% despite a substantial level of newinvestment.Germany grew strongly with the continued development of ourtemporary and permanent businesses. Contractor numbers reached record levelsand we opened a new office in Berlin. We expanded our business in France inboth temporary and permanent recruitment with the roll out of new activitiesacross the network. A new office was opened in Strasbourg bringing the totalnumber of offices in France to fourteen. In Benelux, the business generatedgood growth in both net fees and operating profits. After the sustainedinvestment last year in Canada the business has responded with strong growthand there remain excellent opportunities for further expansion. In Spain andPortugal the business grew strongly and a second office was opened inBarcelona.Throughout Continental Europe & Canada there are excellentopportunities to develop the business. We are continuing our strategy ofambitious investment in order to generate strong growth.Australia & New ZealandOur business in Australia & New Zealand continues to produceexcellent results and net fees from both temporary and permanent recruitmentcontinued to grow strongly. Overall net fees increased by 43% (34% at constantexchange) to ‚£41.4 million (2004: ‚£28.9 million) and operating profitincreased by 57% (46% at constant exchange) to ‚£20.1 million (2004: ‚£12.8million). All of our specialist activities gained market share. We are excitedby the opportunities to continue the rollout of new activities throughout theregion. The number of recruitment consultants increased by 33% to 580 (2004:437).International financial reporting standards & foreign exchangeThese are the first results we have prepared under InternationalFinancial Reporting Standards (IFRS) and the prior year comparatives have beenrestated accordingly. The impact of the adoption was described in detail in apress release on 8 February 2006, and led to a restatement of operating profitfor continuing operations before goodwill amortisation for the six months to31 December 2004 by ‚£0.2 million (0.25%).The impact of movements in foreign exchange rates since last yearhas been favourable, adding ‚£1.0 million (1%) to operating profit.Tax, Earnings Per Share and discontinued operationsTax on continuing operations for the period was ‚£29.6 million, aneffective rate of 31.3% (2004: 31.6%). This is slightly better than last yearand we expect it to remain in the range 31.0% to 31.5% for the foreseeablefuture.Basic Earnings Per Share from continuing operations for the periodof 4.16 pence per share were 28% ahead of last year (2004: 3.24 pence pershare). The improvement in Earnings Per Share arises from the strong growth inpost tax profits, 17% ahead of last year, combined with the favourable effectsof the accretion from the share buy-back programme to date.A profit from discontinued operations of ‚£17.2 million in theperiod relates to the write-back of tax-related accruals that are no longerrequired. Since the balance sheet date, the Group has disposed of a surplusfreehold property which gave rise to a gain on disposal of ‚£6.1 million and anet cash inflow of ‚£3.4 million.Cash flowCash flow was once again very strong with net cash from continuingoperations of ‚£83.9 million after investing ‚£13.3 million in additionalworking capital, commensurate with the growth in the business. Tax paid oncontinuing operations was ‚£26.4 million. In addition a one-off tax repaymentof ‚£19.3 million was received in respect of discontinued operations. Netcapital expenditure on new office accommodation, IT equipment andrefurbishments was ‚£3.3 million. ‚£10.6 million was paid in respect of residualliabilities, in line with earlier guidance. ‚£35.6 million was paid out individends and ‚£168.1 million was used to buy-back our own shares, leaving netdebt of ‚£73.4 million at the end of the period.Retirement benefitsThe Group's pension obligations under IAS 19 are shown on thebalance sheet for the first time. The liability of ‚£87.3 million (‚£61.1million net of deferred tax) is higher than in June 2005 principally due tofurther falls in AA bond yields used to discount liabilities to 4.73%accompanied by increasing inflation to 2.75%. The liability is based on thelatest mortality assumptions which have added 3 years to average lifeexpectancy. The Group and the trustee are considering the options available toaddress the deficit.Dividends and capital structureIn November 2004 the Group commenced a programme to return surplus cash fromthe disposal of non-core activities via a buy-back of its own shares. TheGroup has now purchased 247.8 million shares representing 14.3% of the sharecapital of the Company at a cost of ‚£312.3 million. Future cash flow generatedfrom the Group's operations will be used to finance the organic expansion ofthe business, acquisitions and dividend payments. Share buy-backs willcontinue to be used to return to shareholders surplus cash that is notrequired for these purposes.The Group has continued to generate impressive levels of profit andcash and consequently the Board has decided to pay an interim dividend of 1.45pence per share. This represents an increase of 28% on last year, with 15% ofthis increase attributable to the accretive effects of the share buy-backprogramme and 13% attributable to the underlying growth in profitability ofthe business. The dividend is payable on Friday 26 May 2006 to shareholders onthe register at the close of business on Friday 21 April 2006. The Boardremains committed to making sustainable and progressive dividend payments inthe future.In February the Group established a new Revolving Credit Facilitywith a syndicate of 11 banks. The five year facility, which was heavilyoversubscribed, closed at ‚£460 million. The Group has also reviewed theappropriate capital structure in light of its aggressive growth plans, and theBoard believes that it is appropriate to target a net debt range of ‚£150million to ‚£250 million for the foreseeable future.Management and employeesThis strong set of results continues to demonstrate the ability ofour staff and their enthusiasm to provide excellent service to our clients andcandidates. I would like to record the Board's appreciation for theirdedication and commitment.John Martin, who joined the Group in 2000 and was appointed to theBoard in 2003 has resigned his position to become Chief Financial Officer ofTravelex and will leave the Group in March 2006. John worked tirelessly on thetransformation and refocusing of Hays into a specialist recruitment group andwe wish him every success in the further development of his career. PaulVenables, previously Deputy Finance Director of Exel plc, will join the Groupin May 2006 as the new Group Finance Director. We are delighted to welcomePaul to the Board of Hays where he will contribute significantly to theongoing growth and development of the business.OutlookThe business has generated net fee growth of approximately 13% since the startof January, with growth rates across our regions broadly similar to the lastsix months. If growth continues at these rates, the full year performance isnow likely to be towards the top end of current market expectations. Our plansfor investment and expansion, both in international markets and within theUnited Kingdom & Ireland, will continue in the second half of our financialyear.Bob Lawson, ChairmanHAYS plc CONSOLIDATED INCOME STATEMENT (In ‚£'s million) Notes Six months Six months Year to to 31 to 31 30 June December December 2005 2005 2004 (Unaudited (Unaudited) and restated *) (Restated *) TURNOVERContinuing operations 3 888.7 800.7 1,640.4 NET FEES **Continuing operations 3 259.1 226.1 470.6 PROFIT FROM OPERATIONSContinuing operations 3 94.1 80.4 166.2 Finance income 2.0 2.5 6.4Finance cost (1.5) (1.8) (4.9) 4 0.5 0.7 1.5 PROFIT BEFORE TAX 94.6 81.1 167.7 Tax 5 (29.6) (25.6) (52.5) PROFIT FROM CONTINUING OPERATIONS AFTER TAX 65.0 55.5 115.2 PROFIT FROM DISCONTINUED OPERATIONS AFTER TAX 6 17.2 7.2 30.7 PROFIT ATTRIBUTABLE TO EQUITY HOLDERS 82.2 62.7 145.9 Earnings per share from continuing operations- Basic 8 4.16p 3.24p 6.82p- Diluted 8 4.14p 3.23p 6.75p Earnings per share from discontinuedoperations- Basic 8 1.10p 0.42p 1.82p- Diluted 8 1.09p 0.42p 1.80p Total earnings per share- Basic 8 5.26p 3.66p 8.64p- Diluted 8 5.23p 3.65p 8.55p* All comparative data for the six months ended 31 December 2004 and for theyear ended 30 June 2005 has been restated to take into account the effects ofInternational Financial Reporting Standards as described in note 2.** Net fees are equal to turnover less payroll costs of temporary contractorsand workers.HAYS plc CONSOLIDATED BALANCE SHEET (In ‚£'s million) Notes 31 December 31 December 30 June 2005 2004 2005 (Unaudited) (Unaudited) Goodwill 100.3 101.9 99.4Other intangible assets 1.6 1.1 1.4Property, plant & equipment 18.4 16.4 18.1Deferred tax assets 32.5 34.9 27.1NON-CURRENT ASSETS 152.8 154.3 146.0 Trade & other receivables 311.7 291.7 292.6Cash & cash equivalents 33.7 115.0 71.2CURRENT ASSETS 345.4 406.7 363.8 Assets held for sale - 0.2 0.2 TOTAL ASSETS 498.2 561.2 510.0 Bank loans & overdrafts (107.0) (1.2) (6.8)Trade & other payables (165.7) (143.0) (169.1)Tax liabilities (91.8) (92.7) (79.7)Obligations under finance leases (0.1) - (0.1)CURRENT LIABILITIES (364.6) (236.9) (255.7) Trade & other payables - (9.2) -Retirement benefit obligations 9 (87.3) (85.7) (69.7)Deferred tax liabilities (2.3) (2.6) (2.2)Provisions & other liabilities 10 (64.8) (108.3) (76.4)Obligations under finance leases - (0.1) -NON-CURRENT LIABILITIES (154.4) (205.9) (148.3) TOTAL LIABILITIES (519.0) (442.8) (404.0) NET (LIABILITIES)/ASSETS (20.8) 118.4 106.0 Called up share capital 16.5 17.4 17.4Capital redemption reserve 0.9 - -Share premium account 369.6 369.5 369.6Retained earnings (411.6) (261.1) (278.8)Other reserves 3.8 (7.4) (2.2)TOTAL EQUITY (20.8) 118.4 106.0HAYS plc CONSOLIDATED CASH FLOW STATEMENT (In ‚£'s million) Notes Six months Six months Year to to to 30 June 31 December 31 December 2005 2005 2004 (Unaudited) (Unaudited) CASH FLOW FROM OPERATING ACTIVITIESProfit from continuing operations 94.1 80.4 166.2Depreciation 3.1 3.9 6.5Movements in working capital and employee benefits (13.3) (9.2) (14.7)Net cash from continuing operations 83.9 75.1 158.0Tax paid on continuing operations (26.4) (17.6) (55.3)Discontinued operations (net of tax) 19.3 (27.1) 3.3Net cash from operations 76.8 30.4 106.0 INVESTING ACTIVITIESPurchases of property, plant & machinery (3.5) (4.5) (10.5)Proceeds from sale of property, plant & machinery 0.2 4.7 0.4Sale of businesses & related assets (10.6) - (6.8)Amounts paid in respect of prior years acquisitions (1.6) - -Net repayment of DX Services loan notes - 68.1 68.1Net cash generated from investing activities (15.5) 68.3 51.2 FINANCING ACTIVITIESDividends paid (35.6) (34.4) (53.4)Purchase of own shares 2.7 - 6.9Net proceeds from issue of ordinary share capital - - 0.2Share buy-back programme (168.1) (30.4) (128.1)Repayment of debt - - (0.8)Increase in bank overdraft 100.6 0.4 6.4Interest received 3.2 2.5 6.4Interest paid (1.6) (1.2) (3.0)Net cash used in financing activities (98.8) (63.1) (165.4) NET (DECREASE)/INCREASE IN CASH & CASH 11 (37.5) 35.6 (8.2)EQUIVALENTS CASH & CASH EQUIVALENTS AT BEGINNING OF PERIOD 71.2 79.4 79.4CASH & CASH EQUIVALENTS AT END OF PERIOD 33.7 115.0 71.2 (In ‚£'s million) Notes BANK LOANS, OVERDRAFTS AND FINANCE LEASEOBLIGATIONS AT BEGINNING OF PERIOD (6.9) (2.0) (2.0) Increase in period (100.6) (0.4) (6.4)Effect of exchange rate movements 0.4 1.1 1.5BANK LOANS, OVERDRAFTS AND FINANCE LEASEOBLIGATIONS AT END OF PERIOD (107.1) (1.3) (6.9) NET (DEBT)/CASH AT END OF PERIOD 11 (73.4) 113.7 64.3CONSOLIDATED RECONCILIATION OF MOVEMENTS IN EQUITYFor the six months ended 31 December 2005 (In ‚£'s million) Share Capital Share Retained Other Total capital redemption premium earnings reserves reserve Balance at 1 July 2005 17.4 - 369.6 (278.8) (2.2) 106.0Currency translation adjustments - - - - 1.3 1.3Actuarial losses on definedbenefit pension scheme - - - (16.2) - (16.2) Tax on items taken directly to reserves - - - 4.9 - 4.9 Net (expense)/incomerecognised directly inequity - - - (11.3) 1.3 (10.0)Profit for the period - - - 82.2 - 82.2Total recognised income for the period - - - 70.9 1.3 72.2Dividends paid - - - (35.6) - (35.6)Share based payment schemes - - - - 2.0 2.0Cancellation of shares (0.9) 0.9 - - - -Disposal of own shares - - - - 2.7 2.7Share buy-back - - - (168.1) - (168.1)Balance at 31 December 2005 16.5 0.9 369.6 (411.6) 3.8 (20.8)CONSOLIDATED RECONCILIATION OF MOVEMENTS IN EQUITY - OTHER RESERVESFor the six months ended 31 December 2005 (In ‚£'s million) Own Equity Cumulative Total shares reserve translation Balance at 1 July 2005 (9.4) 4.4 2.8 (2.2)Currency translation adjustments - - 1.3 1.3Total recognised income/(expense) for the period - - 1.3 1.3Share based payment schemes - 2.0 - 2.0Disposal of own shares 2.7 - - 2.7Balance at 31 December 2005 (6.7) 6.4 4.1 3.8CONSOLIDATED STATEMENT OF RECOGNISED INCOME & EXPENSE (In ‚£'s million) Six months Six months Year to to to 30 June 31 December 31 December 2005 2005 2004 (Unaudited) (Unaudited) Profit for the period 82.2 62.7 145.9Currency translation adjustments 1.3 4.3 2.8Actuarial (losses)/profits on defined benefit pension scheme (16.2) (14.0) 4.6Tax on items taken directly to reserves 4.9 4.2 (1.3) 72.2 57.2 152.0NOTES TO THE ACCOUNTS1 STATEMENT UNDER S240 - PUBLICATION OF NON STATUTORY ACCOUNTSThe interim financial statement has been prepared in accordancewith applicable International Financial Reporting Standards (IFRS). Theinformation for the year ended 30 June 2005 does not constitute statutoryaccounts as defined in Section 240 of the Companies Act 1985. A copy of thestatutory accounts for that year prepared under UK GAAP has been delivered tothe Registrar of Companies. The auditors' report on those accounts wasunqualified and did not contain a statement under Section 237 (2) or (3) ofthe Companies Act 1985.2 BASIS OF PREPARATION OF INTERIM FINANCIAL INFORMATIONHays plc will be presenting its 30 June 2006 financial statementsin accordance with applicable International Financial Reporting Standardswhich are effective at 30 June 2006.The same accounting policies and methods of computation have beenfollowed in these interim financial statements. These accounting policies werepublished by Hays plc on 8 February 2006 and are available on the Group'swebsite on www.haysplc.com. These accounting policies have been usedconsistently in dealing with items which are considered material.The disclosures concerning the transition from UK GAAP to IFRS,namely the reconciliations of the balance sheet at 1 July 2004 (the date oftransition to IFRS), at 30 June 2005 (the date of the last UK GAAP financialstatements) and at 31 December 2004 and the reconciliations of profit and cashflows for the year ended 30 June 2005, as required by IFRS 1, and for the sixmonths ended 31 December 2004, were published on the Group's websitewww.haysplc.com on 8 February 2006.3 SEGMENTAL INFORMATIONTURNOVER, NET FEES AND PROFIT FROM CONTINUING OPERATIONS (In ‚£'s million) Six months Six months Year to to to 30 June 31 December 31 December 2005 2005 2004 (Unaudited) (Unaudited)TURNOVER United Kingdom & Ireland 623.2 604.3 1,223.4Continental Europe & Canada 129.8 101.8 216.7Australia & New Zealand 135.7 94.6 200.3 888.7 800.7 1,640.4 NET FEES United Kingdom & Ireland 184.8 172.9 354.7Continental Europe & Canada 32.9 24.3 53.3Australia & New Zealand 41.4 28.9 62.6 259.1 226.1 470.6 PROFIT FROM OPERATIONS United Kingdom & Ireland 67.4 63.8 129.9Continental Europe & Canada 6.6 3.8 8.4Australia & New Zealand 20.1 12.8 27.9 94.1 80.4 166.24 NET INVESTMENT INCOME (In ‚£'s million) Six months Six months Year to to to 30 June 31 December 31 December 2005 2005 2004 (Unaudited) (Unaudited)INVESTMENT INCOMEInterest on bank deposits 2.0 2.5 6.4 FINANCE COSTSBank overdrafts and other loans (2.0) (0.7) (2.4)Other finance costs in respect of pensions 0.5 (1.1) (2.5) (1.5) (1.8) (4.9) 0.5 0.7 1.55 TAXATION ON ORDINARY ACTIVITIESThe tax charge for the six months to 31 December 2005 is based onthe estimated effective rate for the full year of 31.3%.6 PROFIT FROM DISCONTINUED OPERATIONSBetween March 2003 and November 2004 the Group completed thedisposal of a number of non-core activities to focus entirely on SpecialistRecruitment. The level of provisions established at that time has beenreviewed in light of subsequent events and this has led to the write-back of‚£17.2 million of tax-related accruals.7 DIVIDENDS (In ‚£'s million) Six months Six months Year to to to 30 June 31 December 31 December 2005 2005 2004 (Unaudited) (Unaudited)Amounts recognised per ordinary shareas distributions to equity holders inthe period: Final dividend for the year ended 30 June 2004 of 2.0 pence per share - 34.4 34.4Interim dividend for the period to 31 December 2004 of 1.13 pence per share - - 19.0Final dividend for the year ended 30 June 2005 of 2.27 pence per share 35.6 - - 35.6 34.4 53.4 The proposed interim dividend for the period ended 31 December 2005of 1.45 pence per share is not included as a liability in the balance sheet asat 31 December 2005.8 EARNINGS PER SHARE (In ‚£'s million) Six months Six months Year to to 31 to 30 June December 31 December 2005 2005 2004 (Unaudited) (Unaudited) Earnings from continuing operations 94.6 81.1 167.7Tax on earnings from continuing operations (29.6) (25.6) (52.5)Basic earnings from continuing operations 65.0 55.5 115.2 Earnings from discontinued operations - 10.5 33.6Tax on earnings from discontinued operations 17.2 (3.3) (2.9)Basic earnings from discontinued operations 17.2 7.2 30.7 Number of shares: Weighted average number of shares 1,564.2 1,712.1 1,690.0Dilution effect of share options 6.9 8.4 15.8Weighted average number of shares usedfor diluted EPS 1,571.1 1,720.5 1,705.8 Basic earnings per share from continuing operations 4.16p 3.24p 6.82p Basic earnings per share from discontinued operations 1.10p 0.42p 1.82p Total basic earnings per share 5.26p 3.66p 8.64p Diluted earnings per share from continuing operations 4.14p 3.23p 6.75pDiluted earnings per share from discontinued operations 1.09p 0.42p 1.80pTotal diluted earnings per share 5.23p 3.65p 8.55p9 RETIREMENT BENEFIT OBLIGATIONS (In ‚£'s million) Six months Six months Year to to 31 to 30 June December 31 December 2005 2005 2004 (Unaudited) (Unaudited) Deficit in scheme brought forward (69.7) (69.2) (69.2)Current service cost (4.3) (3.9) (7.7)Contributions and other 2.4 2.5 5.1Finance income/(charge) 0.5 (1.1) (2.5)Actuarial (loss)/profit (16.2) (14.0) 4.6Deficit in scheme carried forward (87.3) (85.7) (69.7)10 PROVISIONS AND OTHER LIABILITIES (In ‚£'s million) Property Deferred Other Total employee benefits Balance at 1 July 2005 26.2 2.4 47.8 76.4Exchange adjustments - - 0.1 0.1Charged to Income Statement - - 0.1 0.1Utilised (1.6) (0.3) (9.9) (11.8) 24.6 2.1 38.1 64.8 Property provisions are for rents and other related amounts payableon certain leased properties for periods in which they are not anticipated tobe in use by the Group. The leases expire in periods up to 2015. Deferredemployee benefits include provision for the Performance Share Scheme and otheremployee related provisions. It is not possible to estimate the timing ofpayments against the deferred employee benefit provision. Other provisionscomprise liabilities arising as a result of business disposals and the Grouptransformation.11 MOVEMENT IN NET CASH/(DEBT) (In ‚£'s million) 1 July Cash Exchange 31 December 2005 flow movement 2005 Cash & cash equivalents 71.2 (37.5) - 33.7Bank loans and overdrafts (6.8) (100.6) 0.4 (107.0)Finance leases (0.1) - - (0.1)Net cash/(debt) 64.3 (138.1) 0.4 (73.4)The table above is presented as additional information to showmovement in net cash/(debt), defined as cash and cash equivalents lessoverdrafts, bank loans and finance leases.12 EVENTS AFTER THE BALANCE SHEET DATEAs part of the share buy-back programme, the Company has purchasedan additional 12.6 million shares for a total cost of ‚£16.1 million since thebalance sheet date.On 2 February 2006 the Group acquired RSG, a UK based specialistrecruitment business providing qualified skilled professionals in temporary,contract and permanent placements in the Health and Social Care sectors. Theconsideration for the acquisition was ‚£18.5 million cash with up to a further‚£3.0 million dependent on profitability over the next three years.On 17 February 2006 the Group disposed of a surplus freeholdproperty with a book value of ‚£1.3 million for gross consideration of ‚£8.4million. The transaction gave rise to a gain on disposal of ‚£6.1 million and,after deducting a cash deposit held at the balance sheet date, led to a cashinflow of ‚£3.4 million.INDEPENDENT REVIEW REPORT TO HAYS PLCIntroductionWe have been instructed by the Company to review the financial information forthe six months ended 31 December 2005 which comprises the consolidated incomestatement, the consolidated balance sheet, the consolidated cash flowstatement, the consolidated reconciliation of movements in equity, theconsolidated statement of recognised income and expense and related notes 1 to12. We have read the other information contained in the interim report andconsidered whether it contains any apparent misstatements or materialinconsistencies with the financial information.This report is made solely to the Company in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so thatwe might state to the company those matters we are required to state to themin an independent review report and for no other purpose. To the fullestextent permitted by law, we do not accept or assume responsibility to anyoneother than the Company, for our review work, for this report, or for theconclusions we have formed.Directors' responsibilitiesThe interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with theListing Rules of the Financial Services Authority which require that theaccounting policies and presentation applied to the interim figures areconsistent with those applied in preparing the preceding annual accountsexcept where any changes, and the reasons for them, are disclosed.International Financial Reporting StandardsAs disclosed in note 2, the next annual financial statements of the group willbe prepared in accordance with International Financial Reporting Standards asadopted for use in the EU. Accordingly, the interim report has been preparedin accordance with the recognition and measurement criteria of InternationalFinancial Reporting Standards and the disclosure requirements of the ListingRules.Review work performedWe conducted our review in accordance with the guidance contained in Bulletin1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of group management andapplying analytical procedures to the financial information and underlyingfinancial data and, based thereon, assessing whether the accounting policiesand presentation have been consistently applied unless otherwise disclosed. Areview excludes audit procedures such as tests of controls and verification ofassets, liabilities and transactions. It is substantially less in scope thanan audit performed in accordance with International Standards on Auditing (UKand Ireland) and therefore provides a lower level of assurance than an audit.Accordingly, we do not express an audit opinion on the financial information.Review conclusionOn the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 December 2005.Deloitte & Touche LLPChartered AccountantsLondonUnited Kingdom27 February 2006ENDHAYS PLCRelated Shares:
Hays