HAYS PLC ANNOUNCES PRELIMINARY RESULTS
HAYS PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2010
RETURN TO GROWTH IN SECOND HALF DRIVEN BY INTERNATIONAL BUSINESS
Year ended 30 June
(In 's million)
2010 2009 Actual growth LFL* growth
557.7 670.8 (17)% (21)%
Operating profit (before exceptional items)**
80.5 158.0 (49)% (53)%
Cash generated by operations***
78.1 260.9 (70)%
Profit before tax (before exceptional items)**
71.1 151.0 (53)%
Profit before tax
29.7 151.0 (80)%
Basic earnings per share (before exceptional items **
3.25p 7.72p (58)%
Basic earnings per share
0.48p 7.72p (94)%
Dividend per share
5.80p 5.80p -
All numbers are from continuing operations only.
Good profit protection against a difficult market environment,
particularly in the first half
Broad based recovery in the second half with sequential net fee
growth of 8%* and operating profit** growth of 23%*, versus the first half
Strong cash flow from operations*** of 78.1 million (representing
97% of operating profit**)
Strong balance sheet and dividend maintained at 5.80p
Continued diversification of the business with 58% of Group net fees
in the second half generated outside the UK
Permanent placement markets recovering more rapidly than temporary
placement in most geographies
Major IT projects substantially complete and now focused on driving
productivity and efficiency benefits
Over 200 consultants added across the International business in the
Commenting on these results, Alistair Cox, Chief Executive of Hays, said:
"After a tough first half to the year, we returned to growth in the second half
driven by excellent performances in Asia Pacific and Germany. In the fourth
quarter, 20 countries across the Group delivered net fee growth of over 10%* as we added headcount to capitalise on the upturn.
The outlook across 90% of our markets, including the UK private sector,
continues to improve. During the downturn we invested in building a stronger, more efficient and broader based business, and with our major investment programmes now substantially complete, this ideally positions us to capitalize on the significant growth opportunities that are increasingly present across our markets."
* LFL (like-for-like) growth represents organic growth of continuing activities
at constant currency. There were the same number of trading days in 2010 and 2009.
** 2010 numbers are presented before exceptional charges of 41.4
million, comprising 29.0 million relating to the OFT fine that is currently
under appeal and 12.4 million non-recurring restructuring costs relating
principally to the United Kingdom back office automation project.
*** excludes cash impact of exceptional items of 4.1 million paid in the
**** the number of office locations has been restated to exclude a number of locations in which Hays' consultants are based at a clients premises. These
locations had previously been included within the total number of offices for
each division. This has resulted in the opening office number being reduced
from 345 offices to 311 offices, with the closing number of offices reduced to
United Kingdom & Ireland
Year ended 30 June
(In 's million) 2010 2009 Actual LFL*
Net fees 243.9 330.7 (26)% (26)%
Operating profit** 11.4 63.5 (82)% (82)%
Conversion rate 4.7% 19.2%
Period end consultant headcount***** 2,272 2,387 (5)%
In the United Kingdom & Ireland, net fees declined by 26% to 243.9 million,
and operating profit** declined by 82% to 11.4 million. Net fees decreased by 23%* in the temporary placement business and by 32%* in the permanent placement business. The conversion rate declined from 19.2% to 4.7% this year.
Overall, demand remained sequentially stable throughout the period with net
fees in the second half of the year in line with the first half. In the private
sector, net fees improved sequentially in the second half versus the first half
with Pharma, Corporate Accounts and City-related recruitment all achieving
particularly strong growth. As expected, performances in the public sector were mixed. In frontline service areas we continued to achieve growth, with net fees in our Healthcare and Education businesses up 29% and 4%, respectively, versus prior year. In contrast, the pressures on public finances impacted the remainder of our public sector business, particularly in Construction & Property and back office functions. Overall public sector net fees, which currently represent 30% of our United Kingdom & Ireland net fees, decreased by 19% versus prior year, and are now more than a third below peak levels.
Consultant headcount in the United Kingdom & Ireland was reduced by 5% during the year with most of the reduction being undertaken near the start of the year. Throughout the year, we have supported growth in the private sector by redirecting resources from the public sector and we will continue to do this if current trends continue. As a result, we expect to broadly maintain headcount at current levels in the coming months.
In the year, 38 offices were closed as we have continued to drive efficiency
savings by consolidating operations in selected cities. We have also made
excellent progress on our key efficiency investment programmes this year. Our new front office system has been fully rolled out across the United Kingdom & Ireland business and we are now focused on leveraging this to increase consultant productivity and deliver enhanced client and candidate service. The back office automation project will complete in October 2010. As a result of this implementation, and the reduction in volumes during the downturn, our back office headcount will be reduced by around 50% from peak levels to around 300, of which a significant proportion will be based in India. We have also continued to strengthen our national corporate account management and recruitment outsource services. These investments have yielded several important client wins, including Bank of America, JP Morgan Chase, The Audit Commission and Northampton County Council, during the year. These wins have consolidated our market leading position, particularly in the City.