Trading Statement

8 January 2009

 

Trading update

for quarter ended 31 December 2008

 

Commenting on trading for the quarter ended 31 December 2008, Alistair Cox,
Chief Executive of Hays plc, said:

"We delivered a resilient performance in the second quarter in the context of
an increasingly difficult economic environment. Overall, Group net fees fell by
6% (10% on a like-for-like basis*) as market conditions deteriorated in most of
the countries in which we operate. 

Despite this, a number of our international businesses achieved good growth.
Our public sector business, which now represents around 30% of fees in the UK,
performed strongly. Our highly disciplined approach to cash management resulted
in another strong cash flow performance.

Demand for permanent placements continues to fall at an increasing rate in the
UK and Australia and has recently fallen in a number of other countries. Demand
for temporary placements has been resilient to date across most of the Group.
We expect the usual seasonal weakening in January and the outlook for the
re-engagement of temporary workers after the Christmas holiday is less clear
than in previous years.

Over the last year, we have reacted rapidly to deteriorating market conditions
by adjusting the cost base, focusing on cash generation, maximising our
opportunities in both the temporary and permanent placement markets and
redirecting resources to increase market share in the more defensive sectors.
The experience of our management teams around the world and the strength of our
balance sheet positions us well to deal with these market conditions."

 

Group

Growth in net fees for the quarter ended 31                Growth       
December 2008                                                        
(versus the same period last year)                                  
                                                                     
                                                     Actual      LFL*    
                                                                     
                                                                     
By region                                                            
                                                                     
      United Kingdom & Ireland                        (21)%     (22)%  
                                                                     
      Asia Pacific                                    (10)%      (9)%  
                                                                     
      Continental Europe & Rest of World                42%       21%      
                                                                     
      Total                                            (6)%     (10)%    
                                                                     
                                                                     
                                                                     
By segment                                                           
                                                                     
      Permanent                                       (20)%     (23)%    
                                                                     
      Temporary                                          7%        4%       
                                                                     
      Total                                            (6)%     (10)%    
                                                                     


* LFL is like-for-like growth, which represents organic growth of continuing
activities at constant currency. There is the same number of trading days in
the quarter ended 31 December 2008 versus the same period last year.

 

In the quarter ended 31 December 2008, Hays plc, the leading global specialist
recruitment group, saw a reduction in net fees of 6% (10% on a like-for-like
basis*) versus the same period last year. The difference between the headline
and like-for-like growth rate is due to the more favourable Euro exchange rate
partially offset by a less favourable Australian dollar exchange rate in this
period versus the same period last year. During the quarter, headcount reduced
by 8%**, with most of the reduction in the United Kingdom & Ireland and
Australia & New Zealand.

Net fees from the permanent placement business decreased by 23%* as market
conditions continued to deteriorate in our core markets. Net fees from the
temporary placement business increased by 4%*, benefiting from another strong
performance in Germany, which is our third largest business, and resilient
performances in all other core markets.

The pace of the fall in net fees increased across the quarter, with an exit
rate of around 15%* below the same period last year.

 

United Kingdom & Ireland

In the United Kingdom & Ireland, net fees fell by 22%* versus the same period
last year. Accountancy & Finance net fees were lower than the same period last
year due to falling client and candidate confidence across the whole market.
Construction & Property had another difficult quarter reflecting very tough
market conditions in the private sector. The Information Technology business
also experienced a reduction in activity. Among the Other Specialist
Recruitment Activities there were mixed performances. City related activities,
Legal and Human Resources were impacted by further reductions in demand levels,
whilst Education and Healthcare continued to perform well. Overall, our public
sector business, which represented around 30% of the United Kingdom & Ireland
net fees in the quarter, achieved 10% growth as we continued to leverage our
nationwide coverage and public sector expertise to take market share from
smaller competitors.

In view of the difficult market conditions and outlook, we will continue to
focus on cost control and productivity. We reduced the headcount in the United
Kingdom & Ireland business by a further 10%** during the quarter which brings
the total reduction to 20%** over the last 12 months.

 

Asia Pacific

In Asia Pacific, net fees decreased by 9%*. In Australia & New Zealand, there
were contrasting conditions between the permanent and temporary placement
markets. Whilst the temporary placement market continued to achieve good
growth, the permanent placement market saw a marked deterioration in demand
levels. Resources & Mining and the newer specialisms were the best performing
areas. In Asia, market conditions weakened as the global economic issues
started to impact recruitment.

 

Continental Europe & Rest of World ('RoW')

In Continental Europe & RoW, net fees increased by 21%*. This strong
performance was led by continued excellent growth in Germany, whilst our newer
businesses in Italy, United Arab Emirates, Brazil, Denmark and Hungary also
achieved good growth. However, conditions weakened towards the end of the
quarter in a number of our major countries in the region including France,
Benelux, and Spain.

 

Share buy-back

The priorities for our free cash flow are to fund the Group's development,
support a sustainable dividend and to buy back shares when appropriate. No
shares were bought back during the quarter and we have no plans to buy back
further shares in the current financial year (year to date buy back: 1.7
million shares at a cost of £1.4 million).

 

Cash flow and balance sheet

Cash generation was strong in the quarter benefiting from our highly
disciplined approach to working capital management. The balance sheet remains
strong, and following the payment of the final dividend, net debt at the period
end was broadly in line with year end levels.

 

Management Changes

On 14 October, Tim Cook was appointed Managing Director of the United Kingdom &
Ireland business taking over from Alistair Cox, Group Chief Executive, who had
been acting Managing Director since February 2008. Tim has held a number of
roles during his 21 year career at Hays, most recently as Managing Director of
the Construction & Property business in the United Kingdom & Ireland.

 

Current Trading

Demand for permanent placements continues to fall at an increasing rate in the
UK and Australia and has recently fallen in a number of other countries. Demand
for temporary placements has been resilient to date across most of the Group.
We expect the usual seasonal weakening in January and the outlook for the
re-engagement of temporary workers after the Christmas holiday is less clear
than in previous years.

Over the last year, we have reacted rapidly to deteriorating market conditions
by adjusting the cost base, focusing on cash generation, maximising our
opportunities in both the temporary and permanent placement markets and
redirecting resources to increase market share in the more defensive sectors.
The experience of our management teams around the world and the strength of our
balance sheet positions us well to deal with these market conditions.


* LFL is like-for-like growth, which represents organic growth of continuing
activities at constant currency.  There is the same number of trading days in
the quarter ended 31 December 2008 versus the same period last year.

**changes to headcount refer to changes in consultant headcount.



Enquiries

Hays plc                                                                                  
Paul Venables   Finance Director           + 44 (0) 20 7383 2266
Martin Abell    Investor Relations         + 44 (0) 20 7383 2266                     

Brunswick                                                               
Gill Ackers                                + 44 (0) 20 7404 5959   
Catherine Colloms                                         
                                                                                
                                                                                           

Conference call

Paul Venables and Martin Abell of Hays plc will conduct a conference call for
analysts and investors at 9:00am United Kingdom time on Thursday 8 January
2009. The dial in details are as follows:

Dial-in number                             [phone]   
                                                                        
Password                                   Hays                   
                                                                        
                                                                                                                 
The call will be recorded and available for playback for seven days as  
follows:                                                                                                           
                                                                        
Replay dial-in number                      [phone]   
                                                                        
Access code                                78453895#              
                                                                        
 

Reporting calendar

Interim results for 6 months ended 31 December 2008        26 February 2009
Trading update for quarter ending 31 March 2009            9 April 2009
Trading update for quarter ending 30 June 2009             9 July 2009             
Preliminary results for 12 months ending 30 June 2009      3 September 2009                            
       
                                                                       

Note to editors

Hays plc is the leading global specialist recruitment group. It is market
leader in the UK and Australia, and one of the market leaders in Continental
Europe. As at 30 June 2008, the Group employed 8,872 staff operating from 393
offices in 27 countries across 17 specialisms. For the year ended 30 June 2008:

-  the Group had revenues of £2.5 billion, net fees of £786.8 million and 
   operating profit before exceptional items of £253.8 million;

-  the Group placed around 80,000 candidates into permanent jobs and around 
   300,000 people into temporary assignments;

-  the temporary placement business represented 49% of net fees and the 
   permanent placement business represented 51% of net fees.

 

Important notice

Certain statements in this announcement are forward looking statements. By
their nature, forward looking statements involve a number of risks,
uncertainties or assumptions that could cause actual results or events to
differ materially from those expressed or implied by those statements. Forward
looking statements regarding past trends or activities should not be taken as
representation that such trends or activities will continue in the future.
Accordingly, undue reliance should not be placed on forward looking statements.

All information shown for the quarter ended 31 December 2008 is unaudited.