Hays has released its preliminary results for the year ended 30th June 2018.
Net fees for the year were £1,072.8m, up 12% of the previous year’s figure. Operating profit increased by 15% to £243.4m. Profit before tax for the full year was £238.5m, an increase of 17% on 2017. Basic earnings per share and core dividend per share both increased by 18% to 11.44p and 3.81p respectively.
In the United Kingdom & Ireland, net fees increased 2% to £258.2m, with operating profit up 13% to £47.0m, representing a conversion rate of 18.2% (2017: 16.4%).
Overall, the UK market remained uncertain but stable overall. Temp, which represented 56% of division net fees, grew by 3%, with Hays’ perm business up 1%. Public sector markets remained tough and net fees declined 2%, although the rate of decline improved in H2 FY18, in part due to easier comparatives following the negative impact of IR35 changes in the public sector, implemented in April 2017. The company’s larger private sector business, which represented 75% of net fees, grew by 3%.
All regions traded broadly in line with the overall UK business, with the exception of the South West & Wales, up 8%, Northern Ireland up 7%, East down 7% and the Midlands, down 6%. Hays’ largest region of London, c.32% of UK&I net fees, grew by 3%. Ireland delivered strong net fee growth of 16%.
At the specialism level, accountancy & finance, its largest UK&I business, was flat, while construction & property, office support and IT were up by 3%, 7% and 1% respectively. Net fees in education decreased by 10%, as the sector continued to be negatively impacted by declining public sector spending.
Alistair Cox (pictured), chief executive, said, "2018 was a landmark year for the Group. We successfully completed our ambitious 2013 plan, passed £1 billion in net fees for the first time and 22 countries delivered all-time records. Our RoW business was the standout performer with excellent profit growth of 51%, despite significant investment. We further strengthened our leading positions in key markets like Australia and Germany, and our UK business delivered a good profit performance, despite macro uncertainty. Overall cash generation was excellent, enabling the Board to propose increasing the full year core dividend by 18% and propose the Group's second special dividend, of £72.9 million.
“Looking ahead, conditions remain positive in virtually all of our markets. We are investing significantly in key growth markets where we see structural and market share opportunities, notably Germany, France and the USA. We continue to build on our scale and diversity and are focused on driving profitable, cash-generative growth. The sheer scale and diversity of our global platform combined with our highly experienced management teams means we are well-positioned to capitalise on the growth opportunities identified in our 2022 plan."
In Australia & New Zealand, net fees increased by 14% to £199.4m and operating profit was up 14% to £69.1m. This represented a conversion rate of 34.7% (2017: 34.8%).
Net fees in perm grew strongly by 16%, while temp, which represented 65% of ANZ net fees in the year, grew by 13%.
In Australia, net fee growth accelerated to 16%. This was driven by private sector activity, which represented 65% of our net fees, up a strong 18%. Public sector net fees increased by 13%.
Growth in Australia was broad-based across all regions and specialisms. Hays’ largest regions of New South Wales and Victoria, which together accounted for 57% of Australia net fees, were up 11% and 22% respectively. Queensland delivered an excellent performance, with net fees up 21%. Elsewhere, South Australia and Western Australia both grew strongly, up 19% and 14% respectively. Net fees in ACT, which has higher public sector exposure, increased by 8%.
At the specialism level, construction & property, the company’s largest specialism in Australia, delivered strong 16% growth. IT grew by 15%, accountancy & finance was up 9% and HR increased by an excellent 25%. New Zealand (6% of ANZ net fees) was down 9% after a tough second half of the year.
In Germany, Hays’ largest market, net fees grew strongly by 16% to £276.0m, with operating profit up by 4% to £86.0m. The company’s temp and contracting business, which represented 85% of Germany fees, delivered strong growth of 14%. Within this, its largest business of contracting was up 11%, while temp growth was excellent at 22%, despite the negative working day impact. Hays’ perm business, which represented 15% of Germany fees, also delivered excellent growth of 34%.
IT, its largest specialism accounting for 41% of Germany net fees, grew by 13%. Its next largest area of engineering also increased by 13%. Hays saw excellent growth in its newer specialisms, which now make up c.30% of Germany net fees, particularly accountancy & finance, up 42%, sales & marketing, 32%, and legal, which grew by 74%.
Hays’ Rest of World division, which comprises 28 countries, delivered strong net fee growth of 17% to £339.2m. Operating profit grew by 51% to £41.3m, with conversion rate improving by 300bps to 12.2% (2017: 9.2%). Growth was broad-based, with 21 markets delivering all-time record net fees. Perm net fees, which represented 68% of RoW, were up by 21%, while temp net fees rose 10%.
Europe ex-Germany delivered strong, broad-based net fee growth of 15% and excellent profit growth of 32%. 11 of its 17 countries grew by more than 15%, and 12 countries generated record net fees in the year. This included France, Hays’ largest RoW market, which increased net fees by 14%, representing a fourth consecutive year of double-digit net fee growth, led by strong growth in its largest French specialisms of accountancy & finance and construction & property, up 16% and 18% respectively. Banking also delivered excellent growth, up 45%. Belgium, its second largest business in the sub-region, delivered strong growth of 18%, as did Spain up 15%.
The Americas grew net fees by 21%, including four of its six countries with all-time records. Hays continued to invest significantly in the region, particularly in Canada and the USA, where headcount rose by 23% and 21% respectively. Net fees in the USA grew by 28%, with an acceleration in H2, and Canada grew by 16%. In Latin America, Brazil delivered strong net fee growth of 16%, although Mexico was tougher and declined by 2%. In absolute terms, operating profit in the Americas rose £2.5mn, a strong result given its investments.
Asia delivered an excellent performance, with net fees up 23% and operating profit 72%. Five of Hays’ six businesses in the region delivered record net fee performances. Within this, Hong Kong, its third largest market, delivered the highest growth with net fees up 57%. Japan and China, its largest and second largest markets, grew by 13% and 29% respectively. Japan, Hong Kong and China were the largest absolute profit growth contributors.