Hays has published its quarterly trading update
Hays has published its quarterly trading update with a return to Year On Year growth.
Growth in net fees for the quarter ended 30 June 2010 (Q4)
(versus the same period last year)
Continental Europe & Rest of World
United Kingdom & Ireland
* LFL (like-for-like) growth represents organic growth at constant currency.
Return to year on year growth in Group net fees driven by the International business
8%* sequential growth versus the previous quarter with strong recovery in Asia Pacific and improving trends in Continental Europe, particularly Germany
Continued stability in the UK with growth in the private sector offset by reduced demand in the public sector
International now represents 59% of Group net fees
Consultant headcount added in Australia, Asia, Germany and Brazil
Commenting on trading for the quarter ended 30 June 2010, Alistair Cox, Chief Executive of Hays plc, said:
"This has been an encouraging quarter which has seen us return to year on year growth for the first time in two years. We have capitalised on the strong market recovery across Asia Pacific and improving trends in most of our other international markets, particularly in Germany and Brazil. With nearly 60% of Group net fees now generated outside the UK, we are well positioned to benefit from both the cyclical and structural growth in the international specialist recruitment markets.
In the UK, as expected, we have seen continuing weakness in certain parts of the public sector, which collectively represent less than 10% of Group net fees. This has been offset by growth in the private sector.
Whilst we remain mindful of the risks to the economic recovery in many of the countries in which we operate, the outlook in our markets continues to improve. The investments we have made during the recession in technology, marketing, and training, combined with our continued international diversification, mean that Hays is returning to growth with a stronger, broader based and more efficient business than ever before."
In the quarter ended 30 June 2010, Hays, the leading global specialist recruitment Group, increased net fees by 14% (8% on a like-for-like basis*) versus the same period last year. Net fees from the permanent placement business increased by 26%* but this was partially offset by a 3%* decrease in net fees from our temporary placement business due to its higher weighting to the United Kingdom & Ireland public sector market.
On a sequential basis, total Group net fees increased by 8%* versus the previous quarter. The underlying temporary placement margin** remained broadly flat through the quarter. The Group's consultant headcount increased by 1% during the quarter with ongoing investment in Australia, Asia, Germany and Brazil partially offset by some reductions in the United Kingdom & Ireland.
Overall, the Group's performance in the quarter has been in line with the Board's expectations.
In Asia Pacific we recorded 13%* sequential net fee growth versus the previous quarter, being the fourth consecutive quarter of growth, with net fees increasing by 28%* versus prior year. In our market leading Australian business we continued to capitalise on improving market conditions across all regions and sectors, particularly in our permanent placement business which achieved net fee growth of 59%* versus prior year. Our temporary placement business is recovering at a slower rate, recording an increase in net fees of 3%* versus prior year. In Asia, representing 14% of divisional net fees, we more than doubled net fees versus prior year with Japan, China and Singapore achieving all-time record fee months during the quarter. All countries in Asia are now performing at above pre-downturn levels.
Overall consultant headcount in the division was increased by 10% during the quarter. This marks a 22% increase since December and we will continue to invest as markets improve.
Continental Europe & Rest of World ('RoW')
In Continental Europe & RoW we recorded 12%* sequential net fee growth versus the previous quarter, with net fees increasing by 16%* versus prior year. Our German business achieved 17%* sequential net fee growth versus the previous quarter. Our Brazilian, Portuguese and Hungarian businesses each achieved all-time record fee months during the quarter whilst trends continued to improve in most of our other businesses. 11% of the division's net fees are based in the Southern and Eastern European countries and to date these markets have not been impacted by the sovereign debt issues.
Consultant headcount was flat during the quarter, with investment in Germany and Brazil offset by reductions in UAE and Spain.
United Kingdom & Ireland
In the United Kingdom & Ireland net fees remained broadly flat versus the previous quarter and decreased by 6% versus prior year. In the private sector, we achieved 10% sequential net fee growth versus the previous quarter, with strong growth in Pharma, City-related recruitment and Corporate Accounts. In the public sector, demand for frontline services, like Education and Healthcare, was stable during the period. However demand for administrative and other non-frontline services continued to weaken across the quarter. Public sector net fees in total, which represent a third of the division's net fees, decreased by 14% sequentially versus the previous quarter. Whilst we continue to redirect consultants from the public sector to the private sector, the overall consultant headcount decreased by 2% during the quarter.
We have made good progress with our back office automation project and expect to complete this project in the current quarter.
Cash flow and balance sheet
The Group delivered another excellent cash flow performance during the quarter with net debt remaining at around 80 million at the end of June (31 March 2010: 80 million). Significant cash outflows during the quarter included the final instalment paid of 17.9 million on the James Harvard acquisition following the very strong performance of this business and 25.4 million paid in respect of the interim dividend. These cash outflows were offset by continued strong management of working capital.
The Group completed the re-financing of its revolving credit banking facility on 1 July 2010. The new facility of 300 million provides considerable headroom versus current and future expected levels of Group debt.
The Group incurred a non-recurring restructuring cost of 14 million at the end of the quarter. This principally relates to impending back office staff redundancy costs and non-cash asset write-downs following the near completion of the United Kingdom back-office automation project. The Group will recognise this cost as an exceptional item in its results for the year ended 30 June 2010.