TIDMHAS
RNS Number : 9572T
Hays PLC
12 January 2017
QUARTERLY UPDATE
FOR THE THREE MONTHSED
31 DECEMBER 2016
12 January 2017
Financial summary
Growth in net fees for the quarter ended 31 December 2016 (Q2
FY17)
(versus the same period last Growth
year)
----------------
Actual LFL(1)
By region
Asia Pacific 35% 7%
Continental Europe & Rest
of World 30% 8%
United Kingdom & Ireland (9)% (10)%
------------------------------ ------- -------
Total 17% 2%
------------------------------ ------- -------
By segment
Temporary 18% 3%
Permanent 16% 1%
------------------------------ ------- -------
Total 17% 2%
------------------------------- ------- -------
Highlights
-- Solid overall growth of 2%(1) (underlying growth of 3%(3)
adjusted for working days) led by further good performances in our
International businesses, which now represent 75% of Group net
fees
-- Good broad-based growth of 8%(1) in Continental Europe &
Rest of World, with Germany up 7%(1) (underlying growth of 11%(3)
adjusted for working days). France grew 14%(1) , one of 11
countries to deliver growth of over 10%(1)
-- Good Asia Pacific growth of 7%(1) , as we delivered further
acceleration in Australia to 13%(1) , including private sector
growth of 14%(1) . Net fees in Asia were down 5%(1) as conditions
remain tough
-- Net fees in the UK & Ireland were down 10%(1)
year-on-year, and broadly sequentially stable through the quarter.
Conditions in public sector markets remain tough and net fees
decreased 13%(1) . The private sector business was down 9%(1) with
early signs of improvement towards the end of the quarter
-- Group consultant headcount was up 2% year-on-year and up 1% in the quarter
-- Our first half cash performance has been strong, with net
cash ending Q2 at GBP48 million (30 September 2016: GBP20.2
million)
Commenting on the Group's performance, Alistair Cox, Chief
Executive, said:
"This has been another encouraging quarter of growth, our 15(th)
in a row, led by the continued strength of our International
businesses. Performance across Continental Europe was broad-based,
as nine countries delivered double-digit growth(1) and we saw good
performances in both Germany and France, our two largest businesses
in Europe. In Australia market confidence in the private sector
continued to improve and our growth accelerated significantly. In
the UK, while conditions remained tough, we saw an improvement in
private sector markets in December.
As ever, activity levels at the start of the new year will be
important to the Group's second half performance and we are
monitoring these closely. As we ended the first half, conditions
remained good in the vast majority of our markets, especially
Europe, Australia and the Americas. In the UK, public sector
markets remain tough, but we see early signs of improvement in the
private sector market. At Hays, we are unique in the world in terms
of the scale, balance and diversity of the business we have built
and our focus remains on driving profitable, cash generative
growth, capitalising on long-term opportunities, while maximising
returns along the way. These strengths, combined with our
world-class, highly experienced teams around the world, stand us in
good stead and allow us to look to the future with confidence."
Group
In the second quarter ended 31 December 2016 Group net fees
increased 17% on a headline basis and 2% on a like-for-like
basis(1) against the prior year, our 15(th) consecutive quarter of
year-on-year growth(1) . The difference between headline and
like-for-like growth was primarily the result of the significant
appreciation of the Euro and the Australian Dollar against
Sterling.
The impact of these foreign exchange movements is that if we
retranslate the Group's FY16 operating profit of GBP181.0 million
at current exchange rates (AUD1.6527 and EUR1.1542 as at 10 January
2017), the actual reported result would increase by c.GBP30 million
to c.GBP211 million. This exchange uplift is c.GBP5 million less
than that estimated in the Q1 quarterly update we released on 18
October 2016.
Q2 had one less trading day versus the prior year overall and in
Germany there were two additional trading days lost due to the
timing of public holidays. We estimate this to have had a 1%-2%(3)
negative impact on net fees at Group level, including a c.1%(3)
negative impact on net fees in both the UK and Australia and a
c.4%(3) negative impact in Germany.
We estimate the exit rate for Group net fee growth for the
quarter to be c.4%(1) , which is 1%(1) above the underlying 3%(1)
growth rate for the quarter as a whole, once the impact of trading
days is taken into account. In both Continental Europe & Rest
of World and Asia Pacific, the exit rate was broadly in line with
the underlying growth rates for the quarter as a whole, while in
the UK the exit rate was c.(7)%(1) .
The Temp business, which accounted for 59% of Group net fees in
the quarter, grew by 3%(1) and the underlying temp margin(2) was
broadly stable versus the prior quarter. Net fees in the Perm
business increased by 1%(1) .
Consultant headcount was up 2% year-on-year and 1% in the
quarter as we continued to invest selectively where market
conditions and outlook were supportive, notably in certain European
businesses and Australia. We expect that increases in Q3 will be
selective and minimal overall.
Asia Pacific
In Asia Pacific, which represented 24% of Group net fees, we
delivered good growth of 7%(1) .
In Australia & New Zealand net fees were up 11%(1) . The
Perm business was up 7%(1) and Temp, which represented 66% of net
fees in the quarter, was up 12%(1) .
In Australia net fee growth accelerated to 13%(1) driven by
growth in the private sector of 14%(1) . Growth was broad-based
across most regions and specialisms. Our largest regions of New
South Wales and Victoria, which account for 57% of Australia net
fees, were up 14%(1) and 18%(1) respectively and ACT (Canberra)
also delivered an excellent performance, with net fees up 17%(1)
driven by continued strength in our public sector business, up
11%(1) .
At the specialism level, we delivered strong 11%(1) growth in
Construction & Property, our largest business in Australia, and
excellent growth of 26%(1) in IT. In New Zealand net fees were down
10%(1) , in part due to factors external to Hays affecting the
country.
In Asia, which accounted for 22% of the division, trading
conditions remained challenging and net fees decreased 5%(1) .
China delivered further good growth of 10%(1) and Hong Kong grew
17%(1) . Net fees in Japan were down 8%(1) and Singapore declined
by 34%(1) largely due to continuing challenging conditions in the
banking market.
Consultant headcount in the division was up 2% in the quarter
and 3% year-on-year. Consultant headcount in Australia & New
Zealand was up 1% in the quarter and 9% year-on-year, and in Asia
was up 2% in the quarter but down 6% year-on-year.
Continental Europe & Rest of World ('RoW')
In Continental Europe & RoW, our largest division which
represented 50% of Group net fees, we delivered good, broad-based
growth of 8%(1) . In Germany, net fees grew 7%(1) (underlying
growth of 11%(3) adjusted for working days), with growth in our
Temp & Contractor business of 5%(1) . Perm grew 30%(1) . Growth
in our core IT & Engineering business was 8%(1) and within our
newer specialisms Accountancy & Finance delivered strong growth
of 10%(1) .
The rest of Continental Europe delivered 9%(1) growth, with nine
countries growing by over 10%(1) , including all-time record
performances in the Netherlands, Russia and France, our second
largest business in the division, which delivered another strong,
broad-based performance, up 14%(1) , our ninth consecutive quarter
of double digit growth(1) . In Southern Europe, growth continued to
slow versus tougher comparators, with Spain growing 3%(1) while
Italy was up 19%(1) .
In the Americas net fees grew by 5%(1) . Within this, we
delivered good growth in Canada, up 5%(1) , the USA up 8%(1) , and
Brazil, where we grew 19%(1) despite continued tough market
conditions. Net fees in Mexico declined 32%(1) , in part due to
more challenging market conditions.
Consultant headcount in the division was up 4% in the quarter
and up 11% year-on-year, as we continued to invest to drive growth
in stronger markets.
United Kingdom & Ireland
In the United Kingdom & Ireland, which represented 26% of
the Group, net fees decreased 10%(1) , but remained broadly
sequentially stable through the quarter. Perm net fees were down
10%(1) , as client confidence remained subdued, and our Temp
business was also down 10%(1) primarily as a result of continued
challenging conditions in the public sector, which was down 13%(1)
. Net fees in our private sector business, representing 71% of the
division, were down 9%(1) but we exited the quarter with early
signs of improvement.
All regions traded broadly in line with the overall UK business,
with the exception of London, which was down 15%, and Scotland
& Northern Ireland, where net fees were broadly flat. In
Ireland our business delivered another strong performance, with net
fees up 14%(1) .
At a specialism level, our Accountancy & Finance business
was down 9%(1) , while Construction & Property and IT were down
7%(1) and 14%(1) respectively. Net fees in Office Support decreased
7%(1) and Education, primarily a public sector business, was down
15%(1) .
Consultant headcount in the division was down 4% in the quarter
and down 10% year-on-year.
Cash flow and balance sheet
Cash performance in the quarter was strong, with net cash of
GBP48 million as of 31 December 2016 (30 September 2016: GBP20.2
million, 31 December 2015: net debt GBP56.1 million) despite the
payment in November of the Group's final dividend of GBP28.7
million.
(1) LFL (like-for-like) growth represents organic growth at
constant currency and excludes the impact of acquisitions.
(2) The underlying Temp gross margin is calculated as Temp net
fees divided by Temp gross revenue and relates solely to Temp
placements in which Hays generates net fees. This specifically
excludes transactions in which Hays acts as agent on behalf of
workers supplied by third party agencies and arrangements where the
Company provides major payrolling services.
(3) 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
2266
Hays plc + 44 (0) 20 7383
Paul Venables 2266
David Walker
Group Finance Director
Bell Pottinger Head of Investor + 44 (0) 20 3772
Elly Williamson Relations 2573
Conference call
Paul Venables and David Walker of Hays plc will conduct a
conference call for analysts and investors at 8:00am United Kingdom
time on 12 January 2017. The dial-in details are as follows:
+44 (0)20 3139
Dial-in number 4830
Dial-in number +44 (0)80 8237
(UK toll free) 0030
Password 51564669#
The call will be recorded and available for playback
for seven days as follows:
+44 (0)20 3426
Replay dial-in number 2807
Replay dial-in number +44 (0)80 8237
(UK toll free) 0026
Access code 681123#
Reporting calendar
Interim Results for the six months 22 February
ended 31 December 2016 2017
Trading Update for the quarter ending
31 March 2017 13 April 2017
Trading Update for the quarter ending
30 June 2017 13 July 2017
Hays Group overview
As at 30 June 2016, Hays had 9,214 employees in 252 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 66% of the Group's net fees, compared with 30% 10
years ago.
Our 6,268 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 50% 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 58% from temporary and 42%
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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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