TIDMHAS
RNS Number : 5190U
Hays PLC
13 July 2018
QUARTERLY UPDATE
FOR THE THREE MONTHSED
30 JUNE 2018
13 July 2018
Financial summary
Growth in net fees for the quarter ended 30 June 2018 (Q4
FY18)
(versus the same period last year) Growth
-------------
Actual LFL
By region
Australia & New Zealand ("ANZ") 8% 14%
Germany 19% 16%
United Kingdom & Ireland ("UK&I") 5% 5%
Rest of World ("RoW") 20% 23%
------------------------------------ ------- ----
Total 14% 15%
------------------------------------ ------- ----
By segment
Temporary 10% 11%
Permanent 19% 20%
------------------------------------ ------- ----
Total 14% 15%
------------------------------------- ------- ----
Note: unless otherwise stated, all growth rates discussed in
this statement are LFL (like-for-like) fees, representing organic
growth of continuing operations at constant currency.
Highlights
-- Strong overall growth of 15% (underlying 14%(1) adjusted for
working days). Record Group quarterly net fees, with growth
exceeding 10% in 24 of our 33 markets and 16 all-time country
records
-- Full-year operating profit is expected to be marginally ahead
of current consensus market expectations, which we understand to be
GBP240.9 million(2)
-- Australia & New Zealand: strong growth of 14% (underlying
c.13%(1) ), across all major specialisms. Strong Perm growth up
16%, with Temp up 13%
-- Germany: continued strong performance with net fees up 16%
(underlying c.14%(1) ). Excellent Perm growth of 42%, with
Contracting & Temp up 12%
-- UK & Ireland: growth of 5% (underlying 4%(1) ), partly
due to easier comparatives. Good Temp growth of 10%, with Perm
flat
-- Rest of World: excellent growth of 23%. France, our largest
RoW country, grew 15%, with Belgium up 23%. Our second largest RoW
country, the USA, had another record quarter up 40%, as did China
up 37%
-- Group consultant headcount was flat in the quarter and up 8%
year-on-year, with International headcount up 12% in FY18
-- Excellent Q4 cash performance, with year-end net cash of
c.GBP123 million (31 March 2018: GBP5 million)
Commenting on the Group's performance, Alistair Cox, Chief
Executive, said:
"We have ended our financial year with another record quarterly
net fee performance, excellent cash generation, and expect
full-year operating profit to be marginally ahead of current market
expectations(2) . Net fees in our International businesses
increased 18% and 24 of our 33 countries delivered double-digit
growth, including 16 all-time records. Australia and Germany
continued to perform strongly, and despite continuing economic
uncertainties our UK business has seen modest improvement.
Looking ahead, conditions remain positive in virtually all of
our markets. We continue to invest significantly in key growth
markets where we see structural and market share opportunities,
notably Germany, France and the USA. Our focus continues to be on
driving profitable, cash-generative growth, leveraging the largest
and most balanced global platform in our industry. That allows us
to look to the future with confidence."
Group
In the fourth quarter ended 30 June 2018, Group net fees
increased 14% on a headline basis and 15% on a like-for-like basis
against the prior year. This represented our 21st consecutive
quarter of year-on-year growth. The relative strength of Sterling,
particularly versus the Australian dollar, reduced our reported net
fee growth. This was partially offset by modest Euro strength
against Sterling.
Our Temp business, which represented 57% of Group net fees, grew
11% in the quarter. Net fees in our Perm business, which accounted
for 43% of quarterly Group net fees, grew strongly, up 20%.
This year, Easter was evenly split between our Q3 and Q4. We
estimate this had a c.1%(1) positive impact on net fees at Group
level in Q4 FY18. The estimated positive impact versus prior year
on a regional level in the quarter was c.2% in Germany, c.1% in
UK&I and c.1% in ANZ. After adjusting for working days, we
estimate underlying Group net fee growth was c.14%(1) in the
quarter.
We estimate the Group net fee exit rate, on a working
day-adjusted basis, was broadly in line with the performance of the
quarter as a whole. Regionally, the UK exit rate was below the
underlying UK growth rate for the quarter, while Germany exited the
quarter above its underlying growth rate.
Full-year operating profit is expected to be marginally ahead of
current consensus market expectations, which we understand to be
GBP240.9 million(2) .
During the year we have opened a net seven new offices globally
and expanded the capacity of a further 15 to facilitate future
growth in our International business.
Consultant headcount was flat in the quarter and up 8%
year-on-year. We expect headcount growth in Q1 FY19 to be up c.3-5%
sequentially, including the impact of our normal seasonal graduate
intake.
Moving into FY19, we will start to overlap tougher growth
comparators from the prior year, especially in Australia and
Europe, including our largest market of Germany.
Looking forward, exchange rate movements remain a material
sensitivity to the Group's reported profitability. If we
re-translate FY18 profits at 12 July 2018 exchange rates, we
currently estimate a negative c.GBP3m operating profit currency
headwind for FY19.
Australia & New Zealand (19% net fees)
In Australia & New Zealand we delivered our best quarter
since 2008, with strong 14% net fee growth (underlying c.13 %(1) ).
Growth in our Temp business, which represents 67% of our ANZ net
fees, was 13%, while growth in our Perm business was 16%. Private
sector net fees, which represent 69% of ANZ, grew strongly at 15%,
with public sector net fees up 11%.
Australia delivered another strong quarter of double-digit
growth, up 16%. Market conditions remained favourable, and growth
was broad-based across all major specialisms. Our largest regions
of New South Wales and Victoria, representing 58% of Australia net
fees, were up by 13% and 26% respectively. Queensland and South
Australia both delivered excellent growth, up 21% and 20%
respectively.
At the specialism level, net fee growth in IT was excellent at
23% and Construction & Property, our largest business in
Australia, grew by 9%. HR delivered excellent growth of 29%, Office
Support was up 15% and Accountancy & Finance up 5%.
Net fees in New Zealand (which represents c.6% of ANZ net fees)
fell 13%.
Consultant headcount in ANZ was down 3% in the quarter, mainly
due to timing, but was up 10% year-on-year.
Germany (25% net fees)
Our largest market of Germany delivered a record quarter, with
strong growth of 16% (underlying c.14%(1) ), against increasingly
tough comparatives.
Our Temp & Contractor business, which represents 83% of
Germany net fees, grew by 12% (10%(1) underlying). Contracting
growth of 11% was slightly below our expectations, although growth
in Contractor numbers did accelerate in June. Temp delivered strong
growth of 17%, with Perm net fees up an excellent 42%.
Our largest specialisms of IT and Engineering both grew by 11%.
Growth in Accountancy & Finance was excellent at 40%, as was
Sales & Marketing, up 26%. Construction & Property and Life
Sciences were up 13% and 17% respectively.
Consultant headcount was flat in the quarter, and increased 13%
year-on-year. Given the substantial investment in headcount during
H1 FY18, we slowed the rate of consultant additions in the quarter
as we focused on driving productivity.
United Kingdom & Ireland (24% net fees)
Growth in the United Kingdom & Ireland was 5% (underlying up
c.4%(1) ), led by our public sector business up 12%. This was in
part due to easier comparatives following the negative impact of
IR35 changes in the public sector, implemented in April 2017.
Conditions remained broadly stable in private sector markets, which
represented 76% of UK&I net fees and grew by 3%. Overall in H2
FY18, UK&I net fee growth was 2%.
Our Temp business delivered strong growth, up 10% (underlying
c.8%(1) ). Growth in Public sector Temp was strong, up 13%, with
the Private sector up 8%. Our Perm business remained stable, with
net fees flat in the quarter.
All regions traded broadly in line with the overall UK business,
with the exception of London and the South West & Wales, up 9%
and 8% respectively, and Scotland and the Midlands, down 7% and 5%
respectively. In Ireland, our business delivered another excellent
performance, with net fees up 23%.
At the specialism level, IT delivered strong growth in net fees,
up 15%. Office Support grew by 11%, Construction & Property by
6% and Accountancy & Finance by 2%. Education was down 4%, as
it continued to be impacted by tough market conditions.
Consultant headcount was down 2% in the quarter and
year-on-year, as we continue to focus on driving consultant
productivity.
Rest of World (32% net fees)
Our Rest of World division, encompassing 28 markets, delivered
excellent net fee growth of 23%, with 21 markets delivering growth
of more than 10%, including 15 all-time quarterly records. As our
net fees in RoW are c.70% Perm, we estimate there was no material
trading day impact year-on-year.
Europe-ex Germany produced strong and broad-based growth of 18%.
France, our largest RoW market, continued to perform strongly and
grew 15%, and has delivered its fourth consecutive year of
double-digit net fee growth. Growth in our third largest RoW
business, Belgium, was excellent at 23%, as was Russia, up 48%.
After flat Q3 FY18 growth, Spain re-bounded to deliver a strong
19%.
Asia delivered excellent performance overall, with net fees up
25%. Mainland China, our second largest Asian market, continued to
have strong momentum, up 37%, while Hong Kong recorded the highest
growth of 57%, its second consecutive quarter above 40%. Japan grew
12%, although Singapore continues to be tough and decreased
16%.
Net fee growth in the Americas accelerated to 35%, led by our
largest market of the USA which delivered record quarterly net
fees, up an excellent 40% and Canada, our next largest business, up
41%. Growth in Brazil and Colombia net fees was also excellent,
each delivering 22%. Market conditions in Mexico continued to be
uncertain, although our performance improved slightly and net fees
grew 10%.
Consultant headcount in RoW was up 2% in the quarter and 13%
year-on-year.
Cash flow and balance sheet
Cash performance in the quarter was excellent, underpinned by
strong credit control, resulting in a closing net cash position of
c.GBP123 million (31 March 2018: c.GBP5 million, 30 June 2017:
GBP111.6 million). This, and underlying trading, will enable the
board to consider increasing shareholder returns significantly, in
line with our dividend policy.
(1) The estimated working day impact is calculated in relation
to the Temp and Contractor businesses only. For Q3 and Q4 FY18,
this equates to an adjustment of one working day in our major Temp
and Contractor markets. Consistent with our historical approach, we
make no estimate for any impact on our Perm business.
(2) As of 12 July 2018 we understand the average of analysts'
estimates for Operating Profit for the year ended 30 June 2018 to
be GBP240.9 million. Full analysts' consensus is available on
www.haysplc.com/investors.
Enquiries
Hays plc
Paul Venables
David Phillips
+44 (0) 20 7383 2266
Finsbury +44 (0) 20 3486 2022
Guy Lamming
Anjali Unnikrishnan Group Finance Director
Bryn Woodward Head of Investor Relations + 44 (0) 20 7251 3801
Conference call
Paul Venables and David Phillips of Hays plc will conduct a
conference call for analysts and investors at 8:00am United Kingdom
time on 13 July 2018. The dial-in details are as follows:
+44 (0) 20 3003
Dial-in number 2666
Dial-in number (UK +44 (0) 80 8109
toll free) 0700
Password Hays
The call will be recorded and available for playback for seven
days as follows:
+44 (0) 20 8196
Replay dial-in number 1998
Replay dial-in number +44 (0) 800 633
(UK toll free) 8453
Access code 5375370
Reporting calendar
Preliminary Results for the year ended 30 June
2018 30 August 2018
Trading Update for the quarter ending 30 September
2018 11 October 2018
Trading Update for the quarter ending 31 December
2018 15 January 2019
Hays Group overview
As at 31 December 2017, Hays had c10,800 employees in 256
offices in 33 countries / markets. In many of our global markets,
the vast majority of professional and skilled recruitment is still
done in-house, with minimal outsourcing to recruitment agencies
which presents substantial long-term structural growth
opportunities. This has been a key driver of the rapid
diversification and internationalisation of the Group, with the
International business representing c76% of the Group's net fees,
compared with 25% in 2005.
Our c.7,500 consultants work in a broad range of sectors, with
no sector specialism representing more than 21% of Group net fees.
While Accountancy & Finance, Construction & Property and IT
represent 51% of Group net fees, our expertise across 20
professional and skilled recruitment specialisms gives us
opportunities to rapidly develop newer markets by replicating these
long-established, existing areas of expertise.
In addition to this international and sectoral diversification,
the Group's net fees are generated 58% from temporary and 42%
permanent placement markets, and this balance gives our business
model relative resilience.
This well-diversified business model continues to be a key
driver of the Group's financial performance.
Cautionary statement
This Quarterly Update (the "Report") has been prepared in
accordance with the Disclosure Guidance and Transparency Rules of
the UK Financial Conduct Authority and is not audited. No
representation or warranty, express or implied, is or will be made
in relation to the accuracy, fairness or completeness of the
information or opinions contained in this Report. Statements in
this Report reflect the knowledge and information available at the
time of its preparation. Certain statements included or
incorporated by reference within this Report may constitute
"forward-looking statements" in respect of the Group's operations,
performance, prospects and/or financial condition. By their nature,
forward-looking statements involve a number of risks, uncertainties
and assumptions and actual results or events may differ materially
from those expressed or implied by those statements. Accordingly,
no assurance can be given that any particular expectation will be
met and reliance shall not be placed on any forward-looking
statement. Additionally, forward-looking statements regarding past
trends or activities shall not be taken as a representation that
such trends or activities will continue in the future. The
information contained in this Report is subject to change without
notice and no responsibility or obligation is accepted to update or
revise any forward-looking statement resulting from new
information, future events or otherwise. Nothing in this Report
shall be construed as a profit forecast. This Report does not
constitute or form part of any offer or invitation to sell, or any
solicitation of any offer to purchase or subscribe for any shares
in the Company, nor shall it or any part of it or the fact of its
distribution form the basis of, or be relied on in connection with,
any contract or commitment or investment decisions relating
thereto, nor does it constitute a recommendation regarding the
shares of the Company or any invitation or inducement to engage in
investment activity under section 21 of the Financial Services and
Markets Act 2000. Past performance cannot be relied upon as a guide
to future performance. Liability arising from anything in this
Report shall be governed by English Law, and neither the Company
nor any of its affiliates, advisors or representatives shall have
any liability whatsoever (in negligence or otherwise) for any loss
howsoever arising from any use of this Report or its contents or
otherwise arising in connection with this Report. Nothing in this
Report shall exclude any liability under applicable laws that
cannot be excluded in accordance with such laws.
This announcement contains inside information.
LEI code: 213800QC8AWD4BO8TH08
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END
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