TIDMHAS
RNS Number : 2174V
Hays PLC
13 April 2021
QUARTERLY UPDATE
FOR THE THREE MONTHSED
31 MARCH 2021
13 April 2021
Financial summary
Growth in net fees for the quarter ended 31 March 2021 (Q3
FY21)
(versus the same period last year) Growth
---------------
Actual LFL
By region:
Australia & New Zealand (ANZ) (5)% (13)%
Germany (4)% (5)%
United Kingdom & Ireland (UK&I) (14)% (14)%
Rest of World (RoW) (10)% (8)%
------------------------------------ ------- ------
Total (9)% (10)%
------------------------------------ ------- ------
By segment:
Temporary (6)% (7)%
Permanent (13)% (13)%
------------------------------------ ------- ------
Total (9)% (10)%
------------------------------------- ------- ------
Note: unless otherwise stated, all growth rates discussed in
this statement are LFL (like-for-like) fees, representing
year-on-year organic growth of continuing operations at constant
currency.
Overview
-- Fees down 10% (Q2 21: (19)%). Although markets remain
impacted by the pandemic, Temp and especially Perm activity
improved in all regions. Encouragingly, we saw strong sequential
fee growth, particularly in March
-- Given improving fees and good underlying cost management, and
assuming a continuation of current market conditions, FY21
operating profit is expected to be at least GBP85 million
-- Australia & New Zealand: fees down 13%, with momentum
improving gradually through the quarter, particularly in Perm. Temp
and Perm fees declined by 14% and 10% respectively
-- Germany: fees down 5%, with good sequential improvement
through the quarter as business confidence improved. Fees in our
largest market of Contracting declined by 4%, with improving
volumes. Temp fees were down 1%, driven by record hours per Temp
worker and high Temp utilisation . Perm fees down 16%
-- UK & Ireland: fees down 14%, with momentum improving
through the quarter, particularly in Perm. Temp & Perm down 12%
and 18% respectively, while the Public sector again showed
resilience, down 8%, despite school closures impacting Education
fees
-- Rest of World: fees down 8%. EMEA ex-Germany down 10%, with
France and Belgium down 16% and 15%, while Switzerland and Italy
grew by 2% and 7% respectively. Americas fees down 8%, helped by
flat fees in the USA. Asia down 2%, led by China up 20%, partly
helped by easier growth comparatives
-- Group consultant headcount was up 3% in the quarter and down 12% year-on-year
-- Cash collection remains strong, with underlying net cash of
c.GBP385 million (31 December 2020: GBP379.5 million; 30 June 2020:
GBP366.2 million). All short-term tax deferrals have now been paid
in full
Commenting on the Group's performance, Alistair Cox, Chief
Executive, said:
" Despite our markets remaining impacted by the pandemic, we
continued to see improving momentum across the quarter and I am
pleased to say Group fees were ahead of our expectations . This was
most evident in our largest market of Germany, driven by increased
business confidence and client investments. Australia and the UK
saw improvement, particularly in Perm, while fees in the Americas
and Asia both grew sequentially, led by the USA and China. Overall,
there are clear signs of skill shortages in certain industries,
notably Technology and Life Sciences.
"Looking ahead, we expect operating p rofit for FY21 to be at
least GBP85 million, ahead of market expectations(1) . This is
despite making significant investments in our 'Return to Growth'
programme, which is on-track and performing well. O ur
market-leading positions, strong management teams globally and
financial strength mean we are well-placed to capitalise on the
opportunities we see. We are confident we will continue to take
further market share as clients and candidates look for our expert
recruitment guidance, both during and after COVID."
Group
Q3 trading overview and sequential fee progress
The Board remains extremely grateful for the commitment and
innovation shown by our colleagues as they continue to operate
through challenging circumstances, including third-wave lockdowns
in most of Europe.
In our third quarter, Group net fees continued to be impacted by
the pandemic, decreasing by 10% on a like-for-like basis versus the
prior year. On an actual basis, net fees decreased by 9%, with the
weakening of Sterling versus the Australian Dollar and the Euro
modestly increasing our reported net fees. Overall consultant
engagements with clients and candidates increased during the
quarter and since the onset of the pandemic, the Group's quarterly
net fee trend has improved from minus 34% (Q4 FY20) to minus 29%
(Q1 FY21), minus 19% (Q2 FY21) and now minus 10%. For reference,
fees in Q3 FY20 declined by 7%.
Like-for-like net fees in Temp (61% of Group fees) and Perm (39%
of Group fees) declined by 7% and 13% respectively. Encouragingly,
in Temp we have seen a lengthening of the average duration of
assignments, together with an increase in average Temp hours
worked, helped by very low levels of Temp worker vacations and
sickness. Perm activity also significantly increased in February
and March.
Overall, our largest specialism of IT (c.26% of Group fees) fell
by 7%, Construction & Property fell by 11% and Accountancy
& Finance by 17%. Life Sciences grew by a strong 12%, and our
large Corporate Accounts business, Hays Talent Solutions, was again
resilient, with fees down 1%.
FY21 operating profit outlook and Group headcount
Activity levels improved in all regions and we saw strong
sequential Group fee growth, particularly in March which
encouragingly delivered our highest period(2) of net fees since the
start of the global pandemic. March 2021 fees were c.4% above March
2020 fees, although remain c.13% below March 2019. To date, second
and third-wave lockdowns have had minimal negative impact on our
fees. However, the unpredictable nature of the pandemic means our
forward visibility remains limited.
Our cost base increased slightly over the quarter to an average
of c.GBP68 million per period(2) , primarily as consultant
commissions increased proportionately with the rise in net fees,
together with the additional cost of increased consultant
headcount. We continue to tightly manage all discretionary costs,
but also recognise that lockdowns and travel restrictions mean our
non-payroll costs remain artificially low, c.GBP3.5 million per
period(2) below pre-pandemic levels. As restrictions ease and
offices reopen, we expect some of these costs will increase,
especially in FY22.
As a result of improving net fee performance and good cost
control, Group operating profit for FY21 is expected to be at least
GBP85 million.
This includes c.GBP15 million of operating expenditure relating
to our 'Return to Growth' (RTG) investment programme. As previously
guided, c.GBP11 million of RTG investment is expected in H2, and is
included in the above cost base per period(2) . We remain confident
that our RTG projects, targeting attractive structural growth
sectors including IT, Life Sciences and large Corporate Accounts,
will accelerate medium-term growth and position Hays to take
further market share. We anticipate investing at least the same net
amount in RTG projects in FY22.
Group consultant headcount increased by 3% in the quarter and
decreased by 12% year-on-year. Overall, we expect Group headcount
will increase by a further 2-4% in Q4 FY21, as we invest in both
our 'Return to Growth' investment programme and in other
recruitment specialisms. The positive fee momentum noted above has
significantly improved our average productivity per consultant to
historically high levels and, going forward, material fee growth
will increasingly be driven by additional consultant headcount.
As with FY20, Easter falls entirely in our fourth quarter. We
therefore expect no material year-on-year working day effects in Q4
FY21.
(1) As at 12 April 2021, Bloomberg reports market consensus
operating profit for the year to 30 June 2021 to be c.GBP61
million.
(2) Due to the cycle of our internal Group reporting, the
Group's annual cost base equates to c.12.5x our cost base per
period. We report our annual fees over 13 periods, based on a
mixture of four-weekly and monthly reporting businesses This is
consistent with prior years.
Australia & New Zealand (17% net fees)
Net fees in Australia & New Zealand (ANZ) declined by 13%,
against a relatively resilient Q3 FY20, particularly in Temp.
Overall net fees improved modestly through the quarter, with Perm
rebounding faster than Temp.
Our Temp business, which represented 69% of our ANZ net fees,
reduced by 14% while Perm net fees fell by 10%. Public sector net
fees, which represented 36% of ANZ, decreased by 10%, while Private
sector net fees fell by 15%.
Australia net fees decreased by 14%. Our largest regions of New
South Wales and Victoria, which represented 51% of Australia net
fees, declined by 16% and 21% respectively. South Australia, ACT
and Queensland demonstrated relative resilience, down 3%, 6% and
11% respectively.
At the Australia specialism level, Construction & Property,
our largest business, declined by 17%. Accountancy & Finance,
IT and Office Support were also difficult, down 25%, 16% and 15%
respectively, although HR grew by a good 7%. Our other smaller
specialisms collectively fell by 4%.
New Zealand decreased by 1%, as momentum improved following the
relaxing of lockdown rules.
ANZ consultant headcount increased by 7% in the quarter and
declined by 6% year-on-year.
Germany (27% net fees)
Net fees in Germany fell by 5%, with good sequential fee
improvement through the quarter. Overall business confidence
continued to improve, including increased client investments,
particularly in Contracting.
Our largest Germany specialism of IT decreased by 9%, while our
second largest, Engineering, declined by 10%. Accountancy &
Finance fell by 6%, although Life Sciences and Construction &
Property were both much stronger and each grew by 15%. We also saw
solid growth in fees in the Public sector (14% of Germany fees),
which increased by 4%.
Our largest area of Contracting (c.56% of Germany net fees),
which is primarily in the IT sector and where we operate a
freelance model, declined by 4%, with improving volumes .
Temp (c.29% of Germany net fees), where we employ temporary
workers as required under German law, primarily in Automotive and
Manufacturing sectors, saw net fees decline by 1%. Average Temp
volumes, while down versus prior year, improved through the
quarter. We also saw record hours per Temp worker, driven by very
high levels of Temp utilisation, mainly due to low vacation and
sickness levels, some of which will reverse in the coming months.
As expected, there were no temp severance costs in the quarter.
Perm, which represented c.15% of Germany net fees, declined by
16%.
Consultant headcount increased by 3% in the quarter and declined
by 5% year-on-year.
United Kingdom & Ireland (22% net fees)
Net fees in the United Kingdom & Ireland (UK&I) declined
by 14%, but with improved momentum, particularly in Perm. Our
largest business of Temp, 63% of UK&I fees, fell by 12% while
Perm fees decreased by 18%.
The Private sector, 66% of UK&I net fees, declined by 17%.
The Public sector again showed relative resilience and decreased by
8%, despite c.GBP2 million lower Education fees as schools were
closed due to the pandemic for much of the quarter. Encouragingly,
activity in Education has significantly rebounded since schools
reopened.
All regions traded broadly in line with the overall UK business,
apart from the South West & Wales and Northern Ireland, which
both declined by 10%, and Scotland and the North, down 20% and 19%
respectively. Our largest UK region of London fell by 17%, and in
Ireland our business decreased by 11%.
At the specialism level, Life Sciences and IT again performed
resiliently, with fees down 3% and 4% respectively. Our large
Corporate Accounts business, Hays Talent Solutions, again
substantially outperformed the UK average, with flat fees.
Construction & Property and Office Support both saw improved
momentum, down 13% and 12% respectively, although Accountancy &
Finance and Education remained tough, down 25% and 34%
respectively, with the latter driven by school closures.
Consultant headcount increased by 3% in the quarter and declined
by 17% year-on-year.
Rest of World (34% net fees)
Our Rest of World (RoW) division, comprising 28 countries, saw
net fees decline by 8%, with improvement across all sub-regions .
Perm, which represented 65% of RoW net fees, decreased by 11%. Temp
was more resilient and declined by 2%.
EMEA ex-Germany (61% of RoW net fees) net fees decreased by 10%.
Fees in France, our largest RoW country, declined by 16%, while
Belgium and Spain declined by 15% and 14% respectively. Poland
again demonstrated relative resilience, with flat fees, while
encouragingly Italy and Switzerland both grew, by 7% and 2%
respectively.
The Americas (22% of RoW) net fees decreased by 8%. The USA, our
second-largest RoW country, showed strong momentum through the
quarter and delivered flat fees, including a record performance in
March, although Canada was weaker and declined by 17%. Latin
America fell by 20%, including Brazil down 6%.
Asia (17% of RoW) net fees decreased by 2%, helped in part by
easier year-on-year growth comparatives given the pandemic started
earlier in parts of Asia. China, our third largest RoW country,
grew by an excellent 20%, with Mainland China again significantly
outperforming Hong Kong. Singapore grew by 1% and Malaysia declined
by 4%, although Japan remained tough with fees down 23%.
RoW consultant headcount increased by 2% in the quarter and
declined by 14% year-on-year.
Cash flow and balance sheet
Underlying net cash of c.GBP385 million as at 31 March 2021 (31
December 2020: GBP379.5 million; 30 June 2020: GBP366.2 million).
Cash collection from our clients remained strong, and during the
quarter we paid the last remaining pandemic-related short-term tax
payment deferrals.
Enquiries
Hays plc +44 (0) 203 978 2520
Paul Venables Group Finance Director +44 (0) 333 010 7122
David Phillips Head of Investor Relations
Finsbury hays@finsbury.com
Guy Lamming
Anjali Unnikrishnan
Conference call
Paul Venables and David Phillips of Hays plc will conduct a
conference call for analysts and investors at 9:00am United Kingdom
time on 13 April 2021. The dial-in details are as follows:
+44 (0) 330 551
Dial-in number 0200
Dial-in number (UK +44 (0) 808 109
toll free) 0700
Password Hays
The call will be recorded and available for playback for seven
days as follows:
+44 (0) 20 8196
Replay dial-in number 1480
Access code 7065337#
Reporting calendar
Trading update for the quarter ending 30 June
2021 15 July 2021
Trading update for the quarter ending 30 September
2021 14 October 2021
Preliminary results for the year ending 30 June
2021 26 August 2021
Trading update for the quarter ending 31 December
2021 18 January 2022
Hays Group overview
As at 31 December 2020, Hays had c.10,000 employees in 257
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 diversification and
internationalisation of the Group, with the International business
representing c.78% of the Group's net fees in H1 FY21, compared
with 25% in FY05.
Our consultants work in a broad range of sectors covering 20
professional and skilled recruitment specialisms, and during H1
FY21 our three largest specialisms of IT (26% of Group net fees),
Accountancy & Finance (14%) and Construction & Property
(12%) together represented 52% of Group fees.
In addition to our international and sectoral diversification,
in H1 FY21 the Group's net fees were generated 62% from temporary
and 38% from 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.
Purpose, Net Zero, Equality and our Communities
Our purpose is to benefit society by helping people succeed and
enabling organisations to thrive, creating opportunities and
improving lives. Becoming lifelong partners to millions of people
and thousands of organisations also helps to make our business
sustainable.
Our key company value is that we should always try to focus on
doing the right thing. As part of this, Hays has endorsed three
United Nations Sustainable Development Goals (UNSDG's) - Decent
Work & Economic Growth, Gender Equality and Climate Action.
These call upon businesses to advance sustainable development
through the investments they make, the solutions they develop and
the practices they adopt.
We believe that responsible companies should have Equality,
Diversity & Inclusion at their heart. Our global ED&I
council helps co-ordinate and drive our actions, sharing best
practice.
As a business which exists to help people further their careers
and fulfil their potential, the goal of Decent Work already sits
very close to Hays' purpose. Over the last four years we have
placed over one million people worldwide in their next job. We are
proud of this as it helps the individual, their employer and
society in general. We have reinforced our Decent Work and Economic
Growth commitment through the launch of Hays Thrive, our
free-to-use online Training & Wellbeing platform, which is
designed to help candidates upskill and to help employees deal with
very difficult times.
We also believe we have a significant role to play in combating
climate change. Accordingly, as part of our ongoing commitment to
Environmental, Social & Governance matters (ESG), we will set
material, ongoing carbon reduction targets across our businesses,
and we will become 'Net Zero' in terms of carbon emissions by the
end of 2021. We also recognise the significant opportunities which
'Green' and 'Sustainable' economies present. We are already a large
recruiter of skilled workers into low carbon, social infrastructure
and ESG roles, and we are actively looking to grow our ESG talent
pools, helping to solve global skill and talent shortages.
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.
LEI code: 213800QC8AWD4BO8TH08
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END
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