Trading Statement

HAYS PLC - Trading Statement

PR Newswire

London, January 9

Growth in net fees for the quarter ended 31 December 2012 (Q2 FY13)(versus the same period last year)

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

Highlights

· Group net fees decreased 1%(1) versus prior year

· Strong growth of 12%(1) in Continental Europe & Rest of World, driven by

continued strong performance in Germany which grew 14%(1)

· Asia Pacific net fees decreased 14%(1). Australia & New Zealand decreased

15%(1) with a step-down in activity in the Resources & Mining business.

Asia decreased 6%(1)

· Net fees decreased 3% in the UK & Ireland and were sequentially stable through

the quarter. Private sector decreased 9%, public sector grew 15%

· Increasingly selective investment approach and focussed cost control through

the quarter

· Consultant headcount was down 1% in the quarter and ended December down 3%

year-on-year

· Net debt ended the quarter at c.£145 million, in line with expectations

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

"Whilst several markets around the world were fragile, the fact that we'vebuilt such a well-diversified and balanced business enabled us to deliver asolid result in the quarter. 12 countries around the Group delivered net feegrowth of 10%(1) or more including Germany, which is operating at recordlevels, and key markets such as Brazil, Canada and Russia. Other marketsremained tough, notably the UK, Southern Europe and Banking-relatedspecialisms, and we saw a step-down in activity levels in our AustralianResources & Mining business.

The start to the New Year is always a key time and we are closely monitoringactivity levels in all of our markets. Overall, we expect conditions to remainfragile but we continue to see opportunities for growth in several key parts ofour business. We will invest accordingly to fully capitalise on these growthopportunities, while also controlling costs tightly and improving productivityacross the Group in order to maximise profitability."

Group

In the second quarter ended 31 December 2012 net fees decreased by 1% on alike-for-like basis(1) against prior year (net fees decreased by 3% on aheadline basis). Net fees in the temporary placement business, which accountedfor 59% of Group net fees, increased by 1% year-on-year(1) and the underlyingtemporary placement margin(2) was stable. Net fees in the permanent placementbusiness decreased by 5%(1).

The exit rate of Group net fees for the quarter was approximately (3)%(1).

Consultant headcount was down 1% during the quarter and ended December down 3%year-on-year. We became increasingly selective as the quarter progressedregarding areas of investment around the Group and continued to focus on tightcost control to maximise Group financial performance.

Exchange rate movements reduced net fees by 2% in the quarter, primarily due todepreciation in the rate of exchange of the Euro. Fluctuations in exchangerates remain a significant sensitivity for the Group.

Asia Pacific

In Asia Pacific, which represents 29% of Group net fees, net fees decreased by14%(1).

In Australia & New Zealand net fees decreased by 15%(1) within which ourtemporary placement business decreased by 10%(1) and our permanent placementbusiness decreased by 23%(1). Overall market conditions in Australia becamemore challenging as the quarter progressed, especially in the permanentmarkets. In New South Wales and Victoria, which together account for 44% of ourAustralian business, conditions remained challenging but broadly sequentiallystable. In our Resources & Mining business, we have seen a step-down inactivity in Western Australia, and conditions in Queensland continued to bechallenging. New Zealand continued to perform well, delivering net fee growthof 16%(1).

In Asia, which accounted for 15% of the division, net fees decreased by 6%(1).In Japan net fees decreased by 10%(1) and elsewhere in the division marketconditions remained challenging but stable.

As the quarter progressed, we took action to reduce consultant headcount in thedivision, which was down 6% in the quarter and ended December down 9%year-on-year.

Continental Europe & Rest of World ('RoW')

In Continental Europe & RoW, our largest division which represents 40% of Groupnet fees, we delivered further strong net fee growth of 12%(1). The performanceof our German business, which now represents 21% of Group net fees, was againstrong. Net fees increased by 14%(1) to record levels, and growth continued tobe broad based across all sectors and each of our contracting, temporary andpermanent placement businesses.

We delivered net fee growth of 9%(1) in the rest of the division, which isprimarily a permanent placement business, and where market conditions remainedmixed and fragile overall. 10 countries delivered net fee growth of 10%(1) ormore, including the key markets of Brazil, Canada and Russia. Activityelsewhere continues to be significantly impacted by adverse macro-economicconditions with 7 countries recording net fee declines in the quarter, andconditions in Southern Europe were particularly difficult.

Consultant headcount in the division grew by 2% in the quarter and endedDecember up 13% year-on-year.

In the United Kingdom & Ireland, net fees were sequentially stable through thequarter and decreased by 3% year-on-year. Within this, our temporary placementbusiness was flat and our permanent placement business decreased by 9%. In ourprivate sector business, net fees decreased by 9% as market conditions remainedchallenging overall, especially in our Banking and City-related andConstruction & Property specialisms. Elsewhere, our Life Sciences and HRbusinesses were amongst those which delivered good growth. Our public sectorbusiness delivered net fee growth of 15% driven primarily by job churn in thepermanent segment, and activity was notably strong in our Education andHealthcare businesses.

The range of cost reduction measures we implemented in the previous financialyear combined with further actions through the first half of the currentfinancial year have improved the financial performance of the division.

Consultant headcount in the division was down 3% in the quarter and endedDecember down 14% year-on-year.

Cash flow and balance sheet

Net debt ended December in line with expectations at around £145 million (30September 2012: c.£140 million) following the payment in November of theGroup's final dividend. We expect Group net debt to reduce in the second halfof the financial year.

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

(2) The underlying temporary placement gross margin is calculated as

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

The call will be recorded and available for playback for seven days as follows:

Interim Results for the six months ending 31 December 2012 28 February 2013 Interim Management statement for the quarter ending 31 March 2013 11 April 2013 Trading Update for the quarter ending 30 June 2013

Hays Group overview

Hays has 7,800 employees in 245 offices in 33 countries. In many of our globalmarkets, the vast majority of professional and skilled recruitment is stilldone in-house, with minimal outsourcing to recruitment agencies. This presentssubstantial long-term structural growth opportunities and has been a key driverof the rapid diversification and internationalisation of the Group, with theInternational business representing 69% of the Group's net fees in FY2012,compared with around 15% just 10 years ago.

Our 5,013 consultants work in a broad range of sectors with no one sectorspecialism representing more than 26% of Group net fees. While Accountancy &Finance, Construction & Property and IT represented 64% of Group net fees inFY2012, our expertise across 20 professional and skilled recruitmentspecialisms gives us opportunities to rapidly develop newer markets byreplicating these long-established, existing areas of expertise.

In addition to this international and sectoral diversification, in FY2012 theGroup's net fees were generated 56% from temporary and 44% permanent placementmarkets, and we believe that this balance provides relative resilience to ourbusiness model in the current environment.

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 Trading Update (the "Report") has been prepared in accordance withthe Disclosure Rules and Transparency Rules of the UK Financial ServicesAuthority and is not audited. No representation or warranty, express orimplied, is or will be made in relation to the accuracy, fairness orcompleteness of the information or opinions made in this Report. Statements inthis Report reflect the knowledge and information available at the time of itspreparation. Certain statements included or incorporated by reference withinthis Report may constitute "forward-looking statements" in respect of theGroup's operations, performance, prospects and/or financial condition. By theirnature, forward-looking statements involve a number of risks, uncertainties andassumptions and actual results or events may differ materially from thoseexpressed or implied by those statements. Accordingly, no assurance can begiven that any particular expectation will be met and reliance should not beplaced on any forward-looking statement. Additionally, forward-lookingstatements regarding past trends or activities should not be taken as arepresentation that such trends or activities will continue in the future. Theinformation contained in this Report is subject to change without notice and noresponsibility or obligation is accepted to update or revise anyforward-looking statement resulting from new information, future events orotherwise. Nothing in this Report should be construed as a profit forecast.This Report does not constitute or form part of any offer or invitation tosell, or any solicitation of any offer to purchase or subscribe for any sharesin the Company, nor shall it or any part of it or the fact of its distributionform the basis of, or be relied on in connection with, any contract orcommitment or investment decisions relating thereto, nor does it constitute arecommendation regarding the shares of the Company or any invitation orinducement to engage in investment activity under section 21 of the FinancialServices and Markets Act 2000. Past performance cannot be relied upon as aguide to future performance. Liability arising from anything in this Reportshall be governed by English Law, and neither the Company nor any of itsaffiliates, advisers or representatives shall have any liability whatsoever (innegligence or otherwise) for any loss howsoever arising from any use of thisReport or its contents or otherwise arising in connection with this Report.Nothing in this Report shall exclude any liability under applicable laws thatcannot be excluded in accordance with such laws.