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Hays plc Has Issued A Trading Update UK Down 10%

Hays plc Has Issued A Trading Update – UK Down 10%

Financial summary

Growth in net fees for the quarter ended 30 June 2012 (Q4)               Growth

(versus the same period last year)                                 Actual      LFL*

By region

    Asia Pacific                                                                     0%           1%

    Continental Europe & Rest of World                         5%           14%

    United Kingdom & Ireland                                           (10)%         (9)%

      Total                                                                             (1)%           2%

By segment

    Temporary                                                                   5%           8%

    Permanent                                                                   (8)%         (5)%

      Total                                                                             (1)%           2%

* LFL (like-for-like) growth represents organic growth at constant currency.


• Solid Group net fee growth of 2%* versus prior year

• International business delivered good growth of 8%* representing 71% of net fees

  in the quarter

• Strong growth of 14%* in Continental Europe & Rest of World, driven by continued

  excellent performance in Germany which grew by 25%*

• Growth of 1%* in Asia Pacific, with 2%* growth in Australia & New Zealand. Net

  fees decreased by 8%* in the rest of Asia

• Net fees decreased 9% in the UK & Ireland. Private sector net fees declined 14%,

  public sector net fees increased by 6%

• Resilient profit performance in the second half as a result of continued focus

  on cost control

• Net debt decreased to c.&pound135m, due to strong working capital management

• Consultant headcount was flat in the quarter, and ended June up 2% year-on-year

Commenting on the Group's performance in the fourth quarter, Alistair Cox, Chief

Executive, said: "Trading conditions in many markets became increasingly challenging through the

quarter as concern about the global economy reduced confidence amongst our clients

and candidates, particularly in the permanent recruitment markets. In that context,

I am pleased that we delivered solid growth in Group net fees, driven by growth of 8%*

in our International business, where 13 countries grew by more than 10%*, including

our market-leading German business. The UK remained very difficult, particularly

in the Banking and City-related specialisms.

Looking ahead, I expect overall conditions to remain challenging but growth

opportunities do still exist. We've deliberately built a business which is well

diversified by country and specialism and has a healthy balance of temp, interim

and permanent revenues. Each of these markets is different, and we will continue

to react quickly to changing conditions in each, investing selectively where we

see growth and defending profitability and cashflow where markets are more difficult."


In the quarter ended 30 June 2012, Hays, the leading global professional recruitment

group, increased net fees by 2% on a like-for-like basis* against prior year

(net fees declined by 1% on a headline basis). Net fees in the temporary placement

business, which accounts for 57% of Group net fees, grew by 8%*. Net fees in the

permanent placement business declined by 5%*, as heightened macro-economic concern

further impacted confidence amongst the Group's candidates and clients, most notably

in our Banking related specialisms around the world.

The exit rate for the quarter was flat* on the same period last year, as market

conditions became increasingly challenging as the quarter progressed.

The Group's underlying temporary placement margin** remained broadly stable and in

line with the previous quarter.

The Group's consultant headcount was flat during the quarter, and ended June up

2% year-on-year. We remain selective regarding areas of investment around the Group,

responding to opportunities which exist whilst at the same time defending Group


As a result of this selective investment approach, and continued focus on tight

cost control, the profitability of the Group in the second half of the financial

year has been resilient.


In Asia Pacific, which represents c.30% of Group net fees, we recorded net fee

growth of 1%*. In our market-leading Australia & New Zealand business, we recorded

net fee growth of 2%*, within which our temporary placement business performed well,

increasing by 13%*, but our permanent placement business declined by 12%*. We saw

further strong growth in Western Australia driven by Resources & Mining and associated

support specialisms, but this was largely offset by increasingly tough market conditions

in New South Wales and Victoria, particularly in our permanent placement businesses

where net fees declined.

In Asia, which accounted for 14% of the division, net fees declined by 8%*. In Japan,

we saw solid growth of 12%*. Elsewhere in the division, market conditions remained

difficult throughout the quarter, particularly in Hong Kong and Singapore which have

a significant weighting towards Banking and Financial Services.

Consultant headcount in the Asia Pacific division was down 1% in the quarter, and

ended June up 5% year-on-year. We opened Malaysia, our 7th Asia Pacific country

of operation, in June.

Continental Europe & Rest of World ('RoW')

In Continental Europe & RoW, our largest division, which represents circa 40% of

Group net fees, we recorded strong net fee growth of 14%*. The performance of our

German business was again excellent, growing net fees by 25%*, and growth was

broadly based across all sectors and each of our permanent, contracting and temporary

placement businesses.

Net fee growth in the rest of the division, which is primarily a permanent placement

business, slowed to 2%* as activity was significantly impacted by the Eurozone crisis

and more general macro-economic uncertainty. Market conditions across the division

were mixed however, and whilst 10 countries saw net fees decline in the quarter,

a further 10 countries increased net fees by 10%* or more, including Belgium, Brazil,

Canadaand Russia.

Consultant headcount in the Continental Europe & RoW division grew by 1% during

the quarter and ended June up 15% year-on-year.

United Kingdom & Ireland

In the United Kingdom & Ireland, net fees decreased by 9%. In our private sector

business, net fees were down 14% due to increasingly difficult conditions across

the market, but especially in our Banking and City-related specialisms. Elsewhere

in our private sector business our IT, Life Sciences and Energy businesses demonstrated

relative resilience. In our public sector business net fees were up 6% year-on-year,

and this business continues to perform in line with our expectations.

We continued to make good progress on our cost reduction plans through the quarter,

and therefore expect the financial performance of the UK business in the second half

to broadly reflect that of the first half.

Consultant headcount in the United Kingdom & Ireland division decreased 1% in the

quarter and ended June down 10% year-on-year.

Cash flow and balance sheet

As a result of strong working capital management, net debt decreased to around

&pound135 million (31 March 2012: &pound160 million) despite the payment of the &pound12m interim

dividend in April.

* LFL (like-for-like) growth represents organic growth at constant currency.

** the underlying temporary placement gross margin is calculated as temporary placement

net fees divided by temporary placement gross revenue and relates solely to temporary

placements in which Hays generates net fees and specifically excludes transactions

in which Hays acts as agent on behalf of workers supplied by third party agencies.


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