Interim Results
PRESS RELEASE
28 February 2006
Interim results for the 6 months ended 31 December 2005
CONTINUED STRONG NET FEE AND PROFIT GROWTH AT HAYS
6 months ended 31 December 2005 2004 Actual Constant
£ million Growth Exchange
Net fees 259.1 226.1 +15% +14%
Profit from continuing operations 94.1 80.4 +17% +16%
Profit after tax 65.0 55.5 +17%
Basic earnings per share 4.16p 3.24p +28%
Interim dividend per share 1.45p 1.13p +28%
- Conversion rate (operating profit divided by net fees): + 76bps to 36.3%
(2004: 35.6%)
- Opened in Italy, Hong Kong and the United Arab Emirates
- Expansion of the office network: + 15 new offices opened during the period,
including 7 overseas
- Acquired RSG (for £18.5 million cash) to enter the Health and Social Care
markets
- Strong cash from operations before tax of £83.9 million
Commenting on these results, Denis Waxman, Chief Executive
of Hays, said:
'This is another excellent set of results. Net fee and profit growth in each
of our regions contributed to a substantial increase in profits, 17% ahead of
last year. This builds on the strong growth achieved over a number of years,
with profits more than 76% ahead of three years ago.
Overseas operations, which accounted for 29% of net fees, grew by 40% in the
period. We opened in Italy, Hong Kong and the United Arab Emirates and
expanded our existing operations in Australia, Germany, France, Spain and
Canada. In the United Kingdom we are successfully rolling out three new
activities: Sales & Marketing, Purchasing & Supply and Executive. We started
Hays Retail and entered the specialist Health and Social Care markets via the
acquisition of RSG.
Market conditions in the United Kingdom & Ireland remain favourable for Hays.
In our major international markets there are excellent growth opportunities
and we are continuing our strategy of aggressive investment across the Group
to generate strong growth in fees, profits and cash.'
Enquiries:
Denis Waxman Chief Executive Hays plc +44 (0)20 7628 9999
John Martin Finance Director
Richard Jackson Investor Relations
Mike Smith Brunswick +44 (0)20 7404 5959
Chairman's statement
I am delighted once again to report strong net fee and profit
growth for Hays. The Group continues to generate industry-leading
profitability and very strong cash flow.
The business is becoming progressively more international and
generated 29% of fees outside the United Kingdom & Ireland in the period, more
than double the proportion three years ago. Our strategy, which includes
ambitious organic growth objectives, is highly successful and we have
continued to develop the business within each of our chosen markets, to great
effect. We have also started to expand our international business outside our
established overseas regions and have recently opened offices in Hong Kong and
the United Arab Emirates. The international footprint of Hays is growing.
Net fees for the period of £259.1 million were 15% ahead of last
year (14% at constant exchange), with temporary net fees 12% ahead (11% at
constant exchange) and permanent net fees 18% ahead (17% at constant
exchange). Overall, temporary margins were slightly ahead of last year and
permanent pricing remained solid with salary inflation of about 3.5%. Profit
from continuing operations of £94.1 million was 17% ahead of last year (16% at
constant exchange). The conversion rate (operating profit divided by net fees)
of 36.3% was 76 bps higher than last year. Across the Group, we increased our
investment in recruitment consultants by 9% to 3,742 (2004: 3,440).
United Kingdom & Ireland
Our business in the United Kingdom & Ireland continued to produce
good levels of both net fee and profit growth against a backdrop of
below-trend economic growth. Net fees were 7% ahead of last year at £184.8
million (2004: £172.9 million) and operating profit was 6% ahead at £67.4
million (2004: £63.8 million). We continued our investment with the opening of
eight new offices. The number of recruitment consultants was broadly the same
as last year at 2,590 (2004: 2,582).
Net fees in Accountancy & Finance were 8% ahead of last year at £78.0 million
(2004: £71.9 million). Temporary and permanent recruitment fees both grew
during the period. Net fees grew across all of the regions, with the strongest
growth in Scotland and the Home Counties. New offices were opened in Torquay,
Southend, Macclesfield and Keighley. Recruitment consultant headcount of 948
was 2% higher than last year (2004: 930).
Construction & Property generated net fees of £51.3 million (2004:
£49.5 million), 4% ahead of last year. The strongest growth was in Ireland,
Scotland and the North East and new offices were opened in Exeter, Hastings
and Galway. The number of recruitment consultants was 2% lower than last year
at 749 (2004: 763).
Our Information Technology business has generated excellent growth
and consistently high profitability over several years. In the period it
generated net fee growth of 7% to £15.1 million (2004: £14.1 million). Both
temporary and permanent net fees grew during the period. We opened new offices
in Manchester and Newcastle and the number of recruitment consultants was
consistent with last year at 148.
The development of new recruitment activities within the Group is
often 'piloted' by the larger specialist businesses in the United Kingdom &
Ireland. Having been successfully established, these new activities are then
rolled out more widely. The segmental analysis in the United Kingdom & Ireland
has been restated to reflect the transfer of a number of these activities from
Accountancy & Finance and Construction & Property to other specialist
activities.
Within our other specialist activities in the United Kingdom &
Ireland, net fees grew by 8% to £40.4 million (2004: £37.4 million). We are
successfully rolling out Hays Purchasing & Supply, Hays Executive and Hays
Sales & Marketing and each of these businesses grew strongly during the
period. Hays Human Resources continued to gain market share and we are now
beginning to supply the associated temporary and interim markets. Within our
Education business we targeted attractive niche market segments to maintain
healthy growth. We are encouraged by the performance of our new Retail
business and the growth opportunity that it offers.
We had identified the qualified Health and Social Care sectors as
attractive growth markets. In February we acquired RSG, a United Kingdom based
specialist recruitment business providing qualified skilled professionals in
temporary, contract and permanent placements in the Health and Social Care
sectors. The business has an excellent management team with the drive and
ability to ensure that we fulfil our ambitious growth objectives. The
consideration for the acquisition was £18.5 million cash with up to a further
£3.0 million dependent on profitability over the next three years. In 2005 the
business generated net fees of £8.4 million and operating profit of £2.4
million. The acquisition of RSG provides a very strong platform from which to
develop the business and to roll out these services across the existing Hays
international network and client base.
Continental Europe & Canada
We have continued to aggressively expand our business in
Continental Europe & Canada. During the period we started new operations in
Italy, opened new offices in Germany, Canada, Spain and France and increased
the number of recruitment consultants in the region by 36% to 572 (2004: 421).
The region continued to grow strongly and net fees grew by 35% to £32.9
million (2004: £24.3 million) and operating profit of £6.6 million (2004: £3.8
million) increased by 74%. Notably, the conversion rate within Continental
Europe & Canada increased to 20.1% despite a substantial level of new
investment.
Germany grew strongly with the continued development of our
temporary and permanent businesses. Contractor numbers reached record levels
and we opened a new office in Berlin. We expanded our business in France in
both temporary and permanent recruitment with the roll out of new activities
across the network. A new office was opened in Strasbourg bringing the total
number of offices in France to fourteen. In Benelux, the business generated
good growth in both net fees and operating profits. After the sustained
investment last year in Canada the business has responded with strong growth
and there remain excellent opportunities for further expansion. In Spain and
Portugal the business grew strongly and a second office was opened in
Barcelona.
Throughout Continental Europe & Canada there are excellent
opportunities to develop the business. We are continuing our strategy of
ambitious investment in order to generate strong growth.
Australia & New Zealand
Our business in Australia & New Zealand continues to produce
excellent results and net fees from both temporary and permanent recruitment
continued to grow strongly. Overall net fees increased by 43% (34% at constant
exchange) to £41.4 million (2004: £28.9 million) and operating profit
increased by 57% (46% at constant exchange) to £20.1 million (2004: £12.8
million). All of our specialist activities gained market share. We are excited
by the opportunities to continue the rollout of new activities throughout the
region. The number of recruitment consultants increased by 33% to 580 (2004:
437).
International financial reporting standards & foreign exchange
These are the first results we have prepared under International
Financial Reporting Standards (IFRS) and the prior year comparatives have been
restated accordingly. The impact of the adoption was described in detail in a
press release on 8 February 2006, and led to a restatement of operating profit
for continuing operations before goodwill amortisation for the six months to
31 December 2004 by £0.2 million (0.25%).
The impact of movements in foreign exchange rates since last year
has been favourable, adding £1.0 million (1%) to operating profit.
Tax, Earnings Per Share and discontinued operations
Tax on continuing operations for the period was £29.6 million, an
effective rate of 31.3% (2004: 31.6%). This is slightly better than last year
and we expect it to remain in the range 31.0% to 31.5% for the foreseeable
future.
Basic Earnings Per Share from continuing operations for the period
of 4.16 pence per share were 28% ahead of last year (2004: 3.24 pence per
share). The improvement in Earnings Per Share arises from the strong growth in
post tax profits, 17% ahead of last year, combined with the favourable effects
of the accretion from the share buy-back programme to date.
A profit from discontinued operations of £17.2 million in the
period relates to the write-back of tax-related accruals that are no longer
required. Since the balance sheet date, the Group has disposed of a surplus
freehold property which gave rise to a gain on disposal of £6.1 million and a
net cash inflow of £3.4 million.
Cash flow
Cash flow was once again very strong with net cash from continuing
operations of £83.9 million after investing £13.3 million in additional
working capital, commensurate with the growth in the business. Tax paid on
continuing operations was £26.4 million. In addition a one-off tax repayment
of £19.3 million was received in respect of discontinued operations. Net
capital expenditure on new office accommodation, IT equipment and
refurbishments was £3.3 million. £10.6 million was paid in respect of residual
liabilities, in line with earlier guidance. £35.6 million was paid out in
dividends and £168.1 million was used to buy-back our own shares, leaving net
debt of £73.4 million at the end of the period.
Retirement benefits
The Group's pension obligations under IAS 19 are shown on the
balance sheet for the first time. The liability of £87.3 million (£61.1
million net of deferred tax) is higher than in June 2005 principally due to
further falls in AA bond yields used to discount liabilities to 4.73%
accompanied by increasing inflation to 2.75%. The liability is based on the
latest mortality assumptions which have added 3 years to average life
expectancy. The Group and the trustee are considering the options available to
address the deficit.
Dividends and capital structure
In November 2004 the Group commenced a programme to return surplus cash from
the disposal of non-core activities via a buy-back of its own shares. The
Group has now purchased 247.8 million shares representing 14.3% of the share
capital of the Company at a cost of £312.3 million. Future cash flow generated
from the Group's operations will be used to finance the organic expansion of
the business, acquisitions and dividend payments. Share buy-backs will
continue to be used to return to shareholders surplus cash that is not
required for these purposes.
The Group has continued to generate impressive levels of profit and
cash and consequently the Board has decided to pay an interim dividend of 1.45
pence per share. This represents an increase of 28% on last year, with 15% of
this increase attributable to the accretive effects of the share buy-back
programme and 13% attributable to the underlying growth in profitability of
the business. The dividend is payable on Friday 26 May 2006 to shareholders on
the register at the close of business on Friday 21 April 2006. The Board
remains committed to making sustainable and progressive dividend payments in
the future.
In February the Group established a new Revolving Credit Facility
with a syndicate of 11 banks. The five year facility, which was heavily
oversubscribed, closed at £460 million. The Group has also reviewed the
appropriate capital structure in light of its aggressive growth plans, and the
Board believes that it is appropriate to target a net debt range of £150
million to £250 million for the foreseeable future.
Management and employees
This strong set of results continues to demonstrate the ability of
our staff and their enthusiasm to provide excellent service to our clients and
candidates. I would like to record the Board's appreciation for their
dedication and commitment.
John Martin, who joined the Group in 2000 and was appointed to the
Board in 2003 has resigned his position to become Chief Financial Officer of
Travelex and will leave the Group in March 2006. John worked tirelessly on the
transformation and refocusing of Hays into a specialist recruitment group and
we wish him every success in the further development of his career. Paul
Venables, previously Deputy Finance Director of Exel plc, will join the Group
in May 2006 as the new Group Finance Director. We are delighted to welcome
Paul to the Board of Hays where he will contribute significantly to the
ongoing growth and development of the business.
Outlook
The business has generated net fee growth of approximately 13% since the start
of January, with growth rates across our regions broadly similar to the last
six months. If growth continues at these rates, the full year performance is
now likely to be towards the top end of current market expectations. Our plans
for investment and expansion, both in international markets and within the
United Kingdom & Ireland, will continue in the second half of our financial
year.
Bob Lawson, Chairman
HAYS plc CONSOLIDATED INCOME STATEMENT
(In £'s million) Notes Six months Six months Year to
to 31 to 31 30 June
December December 2005
2005 2004
(Unaudited
(Unaudited) and
restated *) (Restated *)
TURNOVER
Continuing operations 3 888.7 800.7 1,640.4
NET FEES **
Continuing operations 3 259.1 226.1 470.6
PROFIT FROM OPERATIONS
Continuing operations 3 94.1 80.4 166.2
Finance income 2.0 2.5 6.4
Finance cost (1.5) (1.8) (4.9)
4 0.5 0.7 1.5
PROFIT BEFORE TAX 94.6 81.1 167.7
Tax 5 (29.6) (25.6) (52.5)
PROFIT FROM CONTINUING OPERATIONS AFTER TAX 65.0 55.5 115.2
PROFIT FROM DISCONTINUED OPERATIONS AFTER TAX 6 17.2 7.2 30.7
PROFIT ATTRIBUTABLE TO EQUITY HOLDERS 82.2 62.7 145.9
Earnings per share from continuing operations
- Basic 8 4.16p 3.24p 6.82p
- Diluted 8 4.14p 3.23p 6.75p
Earnings per share from discontinued
operations
- Basic 8 1.10p 0.42p 1.82p
- Diluted 8 1.09p 0.42p 1.80p
Total earnings per share
- Basic 8 5.26p 3.66p 8.64p
- Diluted 8 5.23p 3.65p 8.55p
* All comparative data for the six months ended 31 December 2004 and for the
year ended 30 June 2005 has been restated to take into account the effects of
International Financial Reporting Standards as described in note 2.
** Net fees are equal to turnover less payroll costs of temporary contractors
and workers.
HAYS plc CONSOLIDATED BALANCE SHEET
(In £'s million) Notes 31 December 31 December 30 June
2005 2004 2005
(Unaudited) (Unaudited)
Goodwill 100.3 101.9 99.4
Other intangible assets 1.6 1.1 1.4
Property, plant & equipment 18.4 16.4 18.1
Deferred tax assets 32.5 34.9 27.1
NON-CURRENT ASSETS 152.8 154.3 146.0
Trade & other receivables 311.7 291.7 292.6
Cash & cash equivalents 33.7 115.0 71.2
CURRENT ASSETS 345.4 406.7 363.8
Assets held for sale - 0.2 0.2
TOTAL ASSETS 498.2 561.2 510.0
Bank loans & overdrafts (107.0) (1.2) (6.8)
Trade & other payables (165.7) (143.0) (169.1)
Tax liabilities (91.8) (92.7) (79.7)
Obligations under finance leases (0.1) - (0.1)
CURRENT LIABILITIES (364.6) (236.9) (255.7)
Trade & other payables - (9.2) -
Retirement benefit obligations 9 (87.3) (85.7) (69.7)
Deferred tax liabilities (2.3) (2.6) (2.2)
Provisions & other liabilities 10 (64.8) (108.3) (76.4)
Obligations under finance leases - (0.1) -
NON-CURRENT LIABILITIES (154.4) (205.9) (148.3)
TOTAL LIABILITIES (519.0) (442.8) (404.0)
NET (LIABILITIES)/ASSETS (20.8) 118.4 106.0
Called up share capital 16.5 17.4 17.4
Capital redemption reserve 0.9 - -
Share premium account 369.6 369.5 369.6
Retained earnings (411.6) (261.1) (278.8)
Other reserves 3.8 (7.4) (2.2)
TOTAL EQUITY (20.8) 118.4 106.0
HAYS plc CONSOLIDATED CASH FLOW STATEMENT
(In £'s million) Notes Six months Six months Year to
to to 30 June
31 December 31 December 2005
2005 2004
(Unaudited) (Unaudited)
CASH FLOW FROM OPERATING ACTIVITIES
Profit from continuing operations 94.1 80.4 166.2
Depreciation 3.1 3.9 6.5
Movements in working capital and employee benefits (13.3) (9.2) (14.7)
Net cash from continuing operations 83.9 75.1 158.0
Tax paid on continuing operations (26.4) (17.6) (55.3)
Discontinued operations (net of tax) 19.3 (27.1) 3.3
Net cash from operations 76.8 30.4 106.0
INVESTING ACTIVITIES
Purchases of property, plant & machinery (3.5) (4.5) (10.5)
Proceeds from sale of property, plant & machinery 0.2 4.7 0.4
Sale of businesses & related assets (10.6) - (6.8)
Amounts paid in respect of prior years acquisitions (1.6) - -
Net repayment of DX Services loan notes - 68.1 68.1
Net cash generated from investing activities (15.5) 68.3 51.2
FINANCING ACTIVITIES
Dividends paid (35.6) (34.4) (53.4)
Purchase of own shares 2.7 - 6.9
Net proceeds from issue of ordinary share capital - - 0.2
Share buy-back programme (168.1) (30.4) (128.1)
Repayment of debt - - (0.8)
Increase in bank overdraft 100.6 0.4 6.4
Interest received 3.2 2.5 6.4
Interest paid (1.6) (1.2) (3.0)
Net cash used in financing activities (98.8) (63.1) (165.4)
NET (DECREASE)/INCREASE IN CASH & CASH 11 (37.5) 35.6 (8.2)
EQUIVALENTS
CASH & CASH EQUIVALENTS AT BEGINNING OF PERIOD 71.2 79.4 79.4
CASH & CASH EQUIVALENTS AT END OF PERIOD 33.7 115.0 71.2
(In £'s million) Notes
BANK LOANS, OVERDRAFTS AND FINANCE LEASE
OBLIGATIONS AT BEGINNING OF PERIOD (6.9) (2.0) (2.0)
Increase in period (100.6) (0.4) (6.4)
Effect of exchange rate movements 0.4 1.1 1.5
BANK LOANS, OVERDRAFTS AND FINANCE LEASE
OBLIGATIONS AT END OF PERIOD (107.1) (1.3) (6.9)
NET (DEBT)/CASH AT END OF PERIOD 11 (73.4) 113.7 64.3
CONSOLIDATED RECONCILIATION OF MOVEMENTS IN EQUITY
For the six months ended 31 December 2005
(In £'s million) Share Capital Share Retained Other Total
capital redemption premium earnings reserves
reserve
Balance at 1 July 2005 17.4 - 369.6 (278.8) (2.2) 106.0
Currency translation
adjustments - - - - 1.3 1.3
Actuarial losses on defined
benefit pension scheme - - - (16.2) - (16.2)
Tax on items taken directly
to reserves - - - 4.9 - 4.9
Net (expense)/income
recognised directly in
equity - - - (11.3) 1.3 (10.0)
Profit for the period - - - 82.2 - 82.2
Total recognised income for
the period - - - 70.9 1.3 72.2
Dividends paid - - - (35.6) - (35.6)
Share based payment schemes - - - - 2.0 2.0
Cancellation of shares (0.9) 0.9 - - - -
Disposal of own shares - - - - 2.7 2.7
Share buy-back - - - (168.1) - (168.1)
Balance at 31 December 2005 16.5 0.9 369.6 (411.6) 3.8 (20.8)
CONSOLIDATED RECONCILIATION OF MOVEMENTS IN EQUITY - OTHER RESERVES
For the six months ended 31 December 2005
(In £'s million) Own Equity Cumulative Total
shares reserve translation
Balance at 1 July 2005 (9.4) 4.4 2.8 (2.2)
Currency translation adjustments - - 1.3 1.3
Total recognised income/(expense) for the period - - 1.3 1.3
Share based payment schemes - 2.0 - 2.0
Disposal of own shares 2.7 - - 2.7
Balance at 31 December 2005 (6.7) 6.4 4.1 3.8
CONSOLIDATED STATEMENT OF RECOGNISED INCOME & EXPENSE
(In £'s million) Six months Six months Year to
to to 30 June
31 December 31 December 2005
2005 2004
(Unaudited) (Unaudited)
Profit for the period 82.2 62.7 145.9
Currency translation adjustments 1.3 4.3 2.8
Actuarial (losses)/profits on defined benefit
pension scheme (16.2) (14.0) 4.6
Tax on items taken directly to reserves 4.9 4.2 (1.3)
72.2 57.2 152.0
NOTES TO THE ACCOUNTS
1 STATEMENT UNDER S240 - PUBLICATION OF NON STATUTORY ACCOUNTS
The interim financial statement has been prepared in accordance
with applicable International Financial Reporting Standards (IFRS). The
information for the year ended 30 June 2005 does not constitute statutory
accounts as defined in Section 240 of the Companies Act 1985. A copy of the
statutory accounts for that year prepared under UK GAAP has been delivered to
the Registrar of Companies. The auditors' report on those accounts was
unqualified and did not contain a statement under Section 237 (2) or (3) of
the Companies Act 1985.
2 BASIS OF PREPARATION OF INTERIM FINANCIAL INFORMATION
Hays plc will be presenting its 30 June 2006 financial statements
in accordance with applicable International Financial Reporting Standards
which are effective at 30 June 2006.
The same accounting policies and methods of computation have been
followed in these interim financial statements. These accounting policies were
published by Hays plc on 8 February 2006 and are available on the Group's
website on www.haysplc.com. These accounting policies have been used
consistently in dealing with items which are considered material.
The disclosures concerning the transition from UK GAAP to IFRS,
namely the reconciliations of the balance sheet at 1 July 2004 (the date of
transition to IFRS), at 30 June 2005 (the date of the last UK GAAP financial
statements) and at 31 December 2004 and the reconciliations of profit and cash
flows for the year ended 30 June 2005, as required by IFRS 1, and for the six
months ended 31 December 2004, were published on the Group's website
www.haysplc.com on 8 February 2006.
3 SEGMENTAL INFORMATION
TURNOVER, NET FEES AND PROFIT FROM CONTINUING OPERATIONS
(In £'s million) Six months Six months Year to
to to 30 June
31 December 31 December 2005
2005 2004
(Unaudited) (Unaudited)
TURNOVER
United Kingdom & Ireland 623.2 604.3 1,223.4
Continental Europe & Canada 129.8 101.8 216.7
Australia & New Zealand 135.7 94.6 200.3
888.7 800.7 1,640.4
NET FEES
United Kingdom & Ireland 184.8 172.9 354.7
Continental Europe & Canada 32.9 24.3 53.3
Australia & New Zealand 41.4 28.9 62.6
259.1 226.1 470.6
PROFIT FROM OPERATIONS
United Kingdom & Ireland 67.4 63.8 129.9
Continental Europe & Canada 6.6 3.8 8.4
Australia & New Zealand 20.1 12.8 27.9
94.1 80.4 166.2
4 NET INVESTMENT INCOME
(In £'s million) Six months Six months Year to
to to 30 June
31 December 31 December 2005
2005 2004
(Unaudited) (Unaudited)
INVESTMENT INCOME
Interest on bank deposits 2.0 2.5 6.4
FINANCE COSTS
Bank overdrafts and other loans (2.0) (0.7) (2.4)
Other finance costs in respect of
pensions 0.5 (1.1) (2.5)
(1.5) (1.8) (4.9)
0.5 0.7 1.5
5 TAXATION ON ORDINARY ACTIVITIES
The tax charge for the six months to 31 December 2005 is based on
the estimated effective rate for the full year of 31.3%.
6 PROFIT FROM DISCONTINUED OPERATIONS
Between March 2003 and November 2004 the Group completed the
disposal of a number of non-core activities to focus entirely on Specialist
Recruitment. The level of provisions established at that time has been
reviewed in light of subsequent events and this has led to the write-back of
£17.2 million of tax-related accruals.
7 DIVIDENDS
(In £'s million) Six months Six months Year to
to to 30 June
31 December 31 December 2005
2005 2004
(Unaudited) (Unaudited)
Amounts recognised per ordinary share
as distributions to equity holders in
the period:
Final dividend for the year ended 30
June 2004 of 2.0 pence per share - 34.4 34.4
Interim dividend for the period to 31
December 2004 of 1.13 pence per share - - 19.0
Final dividend for the year ended 30
June 2005 of 2.27 pence per share 35.6 - -
35.6 34.4 53.4
The proposed interim dividend for the period ended 31 December 2005
of 1.45 pence per share is not included as a liability in the balance sheet as
at 31 December 2005.
8 EARNINGS PER SHARE
(In £'s million) Six months Six months Year to
to 31 to 30 June
December 31 December 2005
2005 2004
(Unaudited) (Unaudited)
Earnings from continuing operations 94.6 81.1 167.7
Tax on earnings from continuing
operations (29.6) (25.6) (52.5)
Basic earnings from continuing
operations 65.0 55.5 115.2
Earnings from discontinued operations - 10.5 33.6
Tax on earnings from discontinued
operations 17.2 (3.3) (2.9)
Basic earnings from discontinued
operations 17.2 7.2 30.7
Number of shares:
Weighted average number of shares 1,564.2 1,712.1 1,690.0
Dilution effect of share options 6.9 8.4 15.8
Weighted average number of shares used
for diluted EPS 1,571.1 1,720.5 1,705.8
Basic earnings per share from continuing
operations 4.16p 3.24p 6.82p
Basic earnings per share from
discontinued operations 1.10p 0.42p 1.82p
Total basic earnings per share 5.26p 3.66p 8.64p
Diluted earnings per share from
continuing operations 4.14p 3.23p 6.75p
Diluted earnings per share from
discontinued operations 1.09p 0.42p 1.80p
Total diluted earnings per share 5.23p 3.65p 8.55p
9 RETIREMENT BENEFIT OBLIGATIONS
(In £'s million) Six months Six months Year to
to 31 to 30 June
December 31 December 2005
2005 2004
(Unaudited) (Unaudited)
Deficit in scheme brought forward (69.7) (69.2) (69.2)
Current service cost (4.3) (3.9) (7.7)
Contributions and other 2.4 2.5 5.1
Finance income/(charge) 0.5 (1.1) (2.5)
Actuarial (loss)/profit (16.2) (14.0) 4.6
Deficit in scheme carried forward (87.3) (85.7) (69.7)
10 PROVISIONS AND OTHER LIABILITIES
(In £'s million) Property Deferred Other Total
employee
benefits
Balance at 1 July 2005 26.2 2.4 47.8 76.4
Exchange adjustments - - 0.1 0.1
Charged to Income Statement - - 0.1 0.1
Utilised (1.6) (0.3) (9.9) (11.8)
24.6 2.1 38.1 64.8
Property provisions are for rents and other related amounts payable
on certain leased properties for periods in which they are not anticipated to
be in use by the Group. The leases expire in periods up to 2015. Deferred
employee benefits include provision for the Performance Share Scheme and other
employee related provisions. It is not possible to estimate the timing of
payments against the deferred employee benefit provision. Other provisions
comprise liabilities arising as a result of business disposals and the Group
transformation.
11 MOVEMENT IN NET CASH/(DEBT)
(In £'s million) 1 July Cash Exchange 31 December
2005 flow movement 2005
Cash & cash equivalents 71.2 (37.5) - 33.7
Bank loans and overdrafts (6.8) (100.6) 0.4 (107.0)
Finance leases (0.1) - - (0.1)
Net cash/(debt) 64.3 (138.1) 0.4 (73.4)
The table above is presented as additional information to show
movement in net cash/(debt), defined as cash and cash equivalents less
overdrafts, bank loans and finance leases.
12 EVENTS AFTER THE BALANCE SHEET DATE
As part of the share buy-back programme, the Company has purchased
an additional 12.6 million shares for a total cost of £16.1 million since the
balance sheet date.
On 2 February 2006 the Group acquired RSG, a UK based specialist
recruitment business providing qualified skilled professionals in temporary,
contract and permanent placements in the Health and Social Care sectors. The
consideration for the acquisition was £18.5 million cash with up to a further
£3.0 million dependent on profitability over the next three years.
On 17 February 2006 the Group disposed of a surplus freehold
property with a book value of £1.3 million for gross consideration of £8.4
million. The transaction gave rise to a gain on disposal of £6.1 million and,
after deducting a cash deposit held at the balance sheet date, led to a cash
inflow of £3.4 million.
INDEPENDENT REVIEW REPORT TO HAYS PLC
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 31 December 2005 which comprises the consolidated income
statement, the consolidated balance sheet, the consolidated cash flow
statement, the consolidated reconciliation of movements in equity, the
consolidated statement of recognised income and expense and related notes 1 to
12. We have read the other information contained in the interim report and
considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.
This report is made solely to the Company in accordance with Bulletin 1999/4
issued by the Auditing Practices Board. Our work has been undertaken so that
we might state to the company those matters we are required to state to them
in an independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone
other than the Company, for our review work, for this report, or for the
conclusions we have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the
Listing Rules of the Financial Services Authority which require that the
accounting policies and presentation applied to the interim figures are
consistent with those applied in preparing the preceding annual accounts
except where any changes, and the reasons for them, are disclosed.
International Financial Reporting Standards
As disclosed in note 2, the next annual financial statements of the group will
be prepared in accordance with International Financial Reporting Standards as
adopted for use in the EU. Accordingly, the interim report has been prepared
in accordance with the recognition and measurement criteria of International
Financial Reporting Standards and the disclosure requirements of the Listing
Rules.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of group management and
applying analytical procedures to the financial information and underlying
financial data and, based thereon, assessing whether the accounting policies
and presentation have been consistently applied unless otherwise disclosed. A
review excludes audit procedures such as tests of controls and verification of
assets, liabilities and transactions. It is substantially less in scope than
an audit performed in accordance with International Standards on Auditing (UK
and Ireland) and therefore provides a lower level of assurance than an audit.
Accordingly, we do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 December 2005.
Deloitte & Touche LLP
Chartered Accountants
London
United Kingdom
27 February 2006
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