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Net fees up 6% at year-end 2019 for Hays

Hays has released its preliminary results for the year ended 30th June 2019.


Solid profit growth despite weaker market conditions. Strong cashflow drives a record £138m in dividends

 

Year ended 30 June
(In £'s million)

2019

2018

Actual
growth

LFL
growth

Net fees(1)

1,129.7

1,072.8

5%

6%

Operating profit (before exceptional items)(2)

248.8

243.4

2%

4%

Cash generated by operations(3)

263.0

243.5

8%

 

Profit before tax (before exceptional items)(2)

246.3

238.5

3%

 

Profit before tax

231.2

238.5

(3%)

 

Basic earnings per share (before exceptional items)(2)

11.92p

11.44p

4%

 

Basic earnings per share

11.10p

11.44p

(3%)

 

Core dividend per share

3.97p

3.81p

4%

 

Special dividend per share

5.43p

5.00p

9%

 

Net cash

129.7

122.9

6%

 

Note: unless otherwise stated all growth rates discussed in this statement are LFL (like-for-like) year-on-year net fees and profits, representing organic growth of continuing operations at constant currency

·      Good 6% fee growth, with operating profit(2) up 4% to £248.8m, 80% of which was generated in International markets. Group Conversion Rate(4) down 70bps to 22.0% as fee growth slowed across the year 

·      Australia & New Zealand (ANZ): 4% net fee growth, with flat operating profit(2) as market conditions slowed in the second half. Record 22,000 Temp and Contracting workers in June 2019 

·      Germany: Record net fees, up 9% despite weakening market conditions. Operating profit(2) up 7% (c.6% adjusted for working days(5)). Fees in Temp & Contracting up 8%, Perm up 16%

·      UK & Ireland (UK&I): 2% net fee growth, with operating profit(2) up 4% on strong cost control. Signs of reduced business confidence in Q4

·      Rest of World (RoW): Good net fee growth of 8%, with operating profit(2) up 2% impacted by weaker market conditions in EMEA ex-Germany. Record net fees in 18 countries, including strong growth in Asia and the Americas

·      Strategic developments: Further investment in consultant productivity tools and back office scalability. We restructured several country operations, mainly in Europe, incurring an exceptional £6.8 million charge(2), which is expected to deliver c.£5 million of annualised pro-rata cost savings. We opened eight new offices globally, and made further significant office expansions in Asia, Europe and the Americas. Year-end Group consultant headcount up 4%, although decreased by 2% since 31 December 2018

·      Record closing net cash of £129.7m, with strong 106% conversion of operating profit(2) into operating cash flow(3)

·      Proposed increase in full-year core dividend of 4%, in line with earnings, to 3.97p per share and special dividend of £79.7m, up 9% to 5.43p per share. Total full-year dividends of £137.9m (2018: £128.3m)

 

Commenting on the results Alistair Cox, Chief Executive, said:

"We delivered solid profit(2) growth in 2019, backed up by strong cash generation, despite weakening macroeconomic conditions in many markets. 19 countries delivered all-time records, including Germany, France, Canada, the USA and China, and our International business grew net fees by 7%. We invested in strengthening our leading positions in key markets like Australia and Germany, while also restructuring some of our European businesses to maximise their profitability. Our UK business delivered a solid result, despite ongoing uncertainties.

"We ended the year with record cash, enabling the Board to propose increasing the full year core dividend by 4% and propose the Group's third successive special dividend, of £79.7 million. In the first two years of our five-year plan ending in June 2022, we have already paid or proposed over £265 million in core and special dividends.

"Over the years we have built a highly diversified business to access the world's most exciting markets and sectors. This strategy has driven much of our recent growth and positions us well to capitalise on the significant long-term structural opportunities we see. Looking ahead, despite an increasingly tough global economic backdrop, our market positions, combined with our highly experienced global management teams and strong financial position, means I am confident we will continue to appropriately balance our long-term potential with the more challenging markets we currently face."

(1)  Net Fees comprise turnover less remuneration of temporary workers and other recruitment agencies.

(2)  2019 operating profit is presented before exceptional costs of £15.1 million, comprising £8.3m relating to the Lloyds Banking Group legal ruling regarding equalisation of guaranteed minimum pensions for men and women in UK defined pension plans, and £6.8 million relating to restructuring charges, primarily in our European businesses. There were no exceptional items in the prior year.

(3)  2019 cash generated by operations excludes the cash impact of exceptional items of £2.9 million paid in the year.

(4)  Conversion Rate is the conversion of net fees into operating profit(2).

(5)  The estimated working day impact is calculated on our Temp & Contractor businesses only, we make no estimate of the impact on our Perm business. It represents an assumption based on recent trends of revenues / working day in our major Temp and Contractor businesses. 

(6)  The underlying Temp gross margin is calculated as Temp net fees divided by Temp gross revenue and relates solely to Temp 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 and arrangements where the Group provides major payrolling services.

(7)  Represents percentage of Group net fees and operating profit(2).

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