Hays PLC Trading Statement
Hays PLC Trading Statement FOR QUARTER ENDED 31 DECEMBER 2009 7 January 2010 Financial summary Growth in net fees for the quarter ended 31 December 2009 (Q2) growth (versus the same period last year) actual LFL* By region United Kingdom & Ireland (30)% (30)% Asia Pacific (12)% (32)% Continental Europe & Rest of World (21)% (27)% Total (24)% (30)% By segment Permanent (33)% (39)% Temporary (16)% (22)% Total (24)% (30)% * LFL (like-for-like) growth represents organic growth at constant currency. Financial and operational highlights Stabilisation in demand in all major markets, with modest sequential improvement in Asia Pacific Sequential net fee growth in the private sector, broadly offset by reduced demand in the public sector Headcount held at current levels with selective investment where market trends are favourable Strong cash generation with a low level of net debt of circa GBP40 million Commenting on trading for the quarter ended 31 December 2009, Alistair Cox, Chief Executive of Hays plc, said: "Although specialist recruitment markets continue to be very challenging, candidate and client sentiment have improved over recent months and this is encouraging for future trends in the business. We are currently seeing stability in demand in all our major markets. In Asia Pacific, we have seen a return to sequential growth in demand, albeit at a modest rate. We have now successfully implemented our new IT database system in the UK and in a number of the International businesses. This provides us with an industry leading technology platform and, together with a strong global brand and experienced management team, will enable us to continue to win new accounts and take market share." Group In the quarter ended 31 December 2009, Hays plc, the leading global specialist recruitment group, saw a decrease in net fees of 24% (30% on a like-for-like basis*) versus the same period last year. However, net fees were broadly flat quarter on quarter with signs of improving trends towards the end of the period. Net fees from the permanent placement business decreased by 39%* and net fees from the temporary placement business decreased by 22%*. Net fees in our private sector business were down 33%* as market conditions across all of our markets remained tough, although net fees were sequentially higher than the quarter ended 30 September 2009. Net fees in our public sector business decreased by 17%* this period, which represented a small sequential decline versus the last quarter. The underlying temporary placement margin decreased by circa 140 basis points in the six months ended 31 December 2009 versus the same period last year, although it remained stable through the second quarter. This margin decrease was broadly split between the mix effect of a greater proportion of placements being made through large volume contracts, together with greater pricing pressure. During the quarter, we held the level of headcount broadly flat across the business and are now increasing headcount selectively where market trends are favourable. United Kingdom & Ireland In the United Kingdom & Ireland we have seen quarter on quarter stability in net fees. Modest sequential growth in demand in the private sector business has been offset by a decline in public sector business, particularly in administrative and non-front line placements. During the quarter headcount remained broadly flat. Asia Pacific In Asia Pacific we recorded modest quarter on quarter net fee growth. This has been driven by sequential growth in demand in private sector business across all countries in the region, which more than offset the decrease in our public sector business. There was a small increase in headcount in the quarter following selective investment. Continental Europe & Rest of World ('RoW') In Continental Europe & RoW quarter on quarter net fees remained broadly flat as we saw stability in demand across most countries in the region. Our German business, which is primarily focused on the IT contracting market, recorded a small sequential increase in net fees this period, whilst net fees in the principally permanent placement businesses remained broadly stable. Headcount was flat during the quarter. Cash flow and balance sheet Operating cash flow in the quarter was again strong and following the payment of the dividend we exited the quarter with a low level of net debt in the region of GBP40 million. The GBP30.4 million OFT fine is subject to an appeal and has not been paid. * lFL (like-for-like) growth represents organic growth at constant currency.