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Hays plc Quarterly Update

Hays plc Quarterly Update

INTERIM MANAGEMENT STATEMENT
FOR QUARTER ENDED 30 SEPTEMBER 2009
8 October 2009

Financial summary

Growth in net fees for the quarter ended 30 September 2009
(versus the same period last year)
growth
actual LFL*
By region
United Kingdom & Ireland (41)% (41)%
Asia Pacific (40)% (45)%
Continental Europe & Rest of World (27)% (32)%

Total (37)% (40)%

By segment
Permanent (50)% (52)%
Temporary (24)% (27)%

Total (37)% (40)%

* LFL is like-for-like growth, which represents organic growth at constant
currency.

Financial and operational highlights

- Early signs of net fee stabilisation in the UK market and broader signs of
stability in Australia

- Percentage decline in net fees in Q1 at 40%* (Q4 2009: (40)%*)

- Public sector recruitment markets becoming increasingly difficult

- Continued cost control, strong cash generation and modest net debt
position

- Intention to maintain the current level of headcount across the Group

- The Group intends to appeal against the OFT decision and fine

Commenting on trading for the quarter ended 30 September 2009, Alistair Cox,Chief Executive of Hays plc, said:

'The specialist recruitment markets continue to be very challenging. As we said at our preliminary results, we are seeing early signs of stability in the United Kingdom and broader signs of stability in Asia Pacific, although at
present no indications of recovery in either market. The Continental Europe markets, which entered into the downturn later than other regions, are still experiencing deteriorating conditions although the rate of decline has
moderated. Whilst the indications are that this year will be another tough year for our industry, the downturn presents opportunities for market leading companies like Hays to gain share and we will continue to pursue those
opportunities and invest in our business accordingly.

At Hays we understand that our clients and candidates want to talk to experts in their own sector for their recruiting needs. That's why we are investing more in training our own people and building our business to be deeply specialised in the various industries and disciplines we operate in. By underpinning our expertise with the advanced technology platforms we are installing, we believe we can deliver the most efficient and tailored services available in our industry. This positions us well to both build stronger leadership positions in today's market as well as benefit from any economic upturn.'

Group

In the quarter ended 30 September 2009, Hays plc, the leading global specialist recruitment group, saw a reduction in net fees of 37% (40% on a like-for-like basis*) versus the same period last year which is in line with the 40%* reduction in net fees experienced in the quarter to June 2009. The difference between the headline and like-for-like growth rate is primarily due to the more favourable Euro and Australian dollar exchange rates. Net fees from the permanent placement business decreased by 52%* and net fees from the temporary placement business decreased by 27%*.

Net fees in our private sector business were down 47%* as we continued to see tough market conditions across all of our markets. Net fees in our public
sector business decreased by 13%* this period as market conditions became more difficult across both our United Kingdom and Australian public sector
businesses. We are also beginning to experience increasing pressure on our
underlying temporary placement margin in each of our core temporary placement markets.

During the quarter, we reduced headcount by 5%. Most of this headcount
reduction took place at the beginning of the period and we are now actively
seeking to maintain headcount especially in our International business.

United Kingdom & Ireland

In the United Kingdom & Ireland, net fees fell by 41%* versus the same period last year. Market conditions remained difficult across our private sector permanent and temporary placement businesses. However, we did see the early signs of stability in demand across a number of these markets during the quarter. We are seeing increasingly tough markets in our public sector business and fees decreased by 11%* this period. During the quarter headcount was reduced by 4% and we have continued to drive efficiency by consolidating operations in some locations, resulting in the closure of nine offices, which reduces the number of offices in the United Kingdom & Ireland to 203.

AsiaPacific

In Asia Pacific, net fees decreased by 45%*. Conditions in the private sector
permanent and temporary placement markets continued to be difficult but demand remained stable in most sectors and regions across the quarter. Market conditions deteriorated in our public sector business with net fees declining by 16%* versus the same period last year. Headcount was reduced by 5% during the quarter.

Continental Europe & Rest of World ('RoW')

In Continental Europe & RoW, net fees decreased by 32%*. Our German business, which is primarily focused on the IT contracting market, experienced a 19%* reduction in net fees as market conditions continued to deteriorate. In our other major countries in the region, which are principally focused on the permanent placement markets, net fees fell by 42%* overall. Headcount was reduced by 8% during the quarter with most of this reduction taking place at the beginning of the period.

Cash flow and balance sheet

Cash flow in the quarter was again strong although the Group returned to a
modest net debt position following the repayment of the one-time 20 million
cash inflow which resulted from the withdrawal of the staff hire concession and which was disclosed in the preliminary results.

OFT investigation

On 30 September 2009, The Office of Fair Trading ('OFT') issued its decision
finding that Hays' Construction & Property business in the UK had breached
competition law in the period October 2004 to November 2005. Hays has
co-operated fully with the OFT in its investigation under the leniency regime
and has been fined 30.4 million. The Group will be taking an exceptional
charge in this financial year in the region of 25 million. Whilst Hays take
the findings of the OFT's investigation seriously, we believe that the level of
the fine is arbitrary and wholly disproportionate with the activities to which
it relates, Hays' involvement in those activities and the way in which the OFT
has dealt with other cases in the past. The Group intends to appeal against
this decision.

Current Trading

The specialist recruitment markets continue to be very challenging. As we said at our preliminary results, we are seeing early signs of stability in the United Kingdom and broader signs of stability in Asia Pacific, although at
present no indications of recovery in either market. The Continental Europe
markets, which entered into the downturn later than other regions, are still
experiencing deteriorating conditions although the rate of decline has
moderated. Whilst the indications are that this year will be another tough year
for our industry, the downturn presents opportunities for market leading
companies like Hays to gain share and we will continue to pursue those
opportunities and invest in our business accordingly.

* LFL is like-for-like growth, which represents organic growth at constant
currency.

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