Final Results

Hays PLC 10 September 2001 10th September 2001 Hays plc PRELIMINARY RESULTS FOR THE YEAR TO 30 JUNE 2001 CONTINUED GROWTH AND INVESTMENT FOR THE FUTURE Financial Highlights: Year to 30 June 2001 2000 Turnover from continuing operations £2,453.3m £2,009.9m +22% Operating profit* £288.4m £261.4m +10% Pre-tax profit* £262.1m £249.5m +5% Earnings per share** 11.4p 11.1p +3% Dividend per share 4.07p 3.54p +15% * Before goodwill amortisation, exceptional items and operating profits from discontinued operations of £9.6 million (2000 - £13.1 million). ** Before goodwill amortisation and exceptional items. Business Highlights: Group _____ -- Strong organic growth in sales by every core activity. -- Increasingly focussed Group with the disposal of Mail Services in Spain and the sale of a majority shareholding in Chemicals. Commercial __________ -- Business Process Outsourcing grew sales and profit by more than 20%. -- National contract won to provide a management information system to all 43 Police Forces in England and Wales. -- Licence applications to provide specialist mail services in the UK have received the support of Postcomm. Personnel _________ -- Superb result with operating profit up 24%. Organic growth in operating profit 18%. -- Strong growth in outsourced HR Solutions and in revenue with the public sector. -- Expansion in France, Holland, Belgium and Portugal. Logistics _________ -- Sales up 16% with contract wins during the year totalling £165 million p.a. -- Lower volumes in specialist networks, serving the telecommunications and retail support sectors, and new business start up costs, have reduced profits in the year. Bob Lawson, Chairman, commented 'The growth in sales by the Group demonstrates the inherent quality of Hays' services. Notwithstanding the current difficult economic climate, sales in Personnel are ahead of prior year although the Division's profit for the first two months of 2001/02 is similar to last year. The other divisions of Hays are less affected by changes in business confidence or rates of economic growth and their outlook is unchanged. Overall the Group's mix of businesses gives it considerable resilience and we are continuing to invest for the future as well as increasing our business focus to deliver premium returns and growth for our shareholders. We are well placed to exploit the growing trend across Europe towards the outsourcing of business critical processes'. Enquiries: Bob Lawson Chairman 01483 302203 Hays plc Neil McLachlan Group Finance Director 01483 302203 Hays plc Jon Coles Brunswick 020 7404 5959 Conference call Bob Lawson, Neil McLachlan and Graham Williams of Hays plc will conduct a conference call for analysts at 3pm UK time on 10 September 2001. The dial-in details are as follows: UK/European dial-in number: +44 (0)20 8240 8240 USA dial-in number: +44 1 800 521 5428 Password: Hays The call will be recorded and available for playback for 10 working days on the following: UK/European replay dial-in number: +44 (0)20 8288 4459 UK/European access code: 690452 USA replay dial-in number: +1 800 625 5288 USA access code: 1172635 The Instant Replay will be available until 21st September 2001. Presentation on the web-site and delayed web-cast: The presentation to analysts will be available to view on the Hays website from 14:00 UK time on 10 September 2001 - www.hays-plc.com The presentation will also be filmed and distributed by RAW Communications to those who subscribe to that service. Chairman's Statement This is my first Report to you as Chairman following Ronnie Frost's retirement on 30 June 2001, at the end of the financial year. Ronnie, who created the modern Hays, prepared me well for the challenges ahead. Although we issued a trading statement in June which reduced market expectations, the Group has fundamental strength which will show through in the coming months and years. Financial Highlights In the year to 30 June 2001 turnover on continuing operations was up by 22% to £2,453.3 million and operating profit on continuing operations was up 10% to £288.4 million before goodwill amortisation and exceptional items and on a similar basis profit before tax increased by 5% to £262.1 million. Earnings per share before goodwill amortisation and exceptional items increased by 3% to 11.4p. Exceptional charges totalled £87.4 million. £64.9 million (including £60.3 million of goodwill) represented the loss on disposal of our Chemical activities and mail services in Spain. The balance of £22.5 million related to reorganisation costs, the impairment of goodwill, tangible and intangible assets and related balances. The net cash impact of these items was an £8.1 million cash inflow. During the year we invested £158.5 million in capital projects and acquisitions. Interest was covered 11 times before goodwill amortisation and exceptional items. Dividend We paid our shareholders an interim dividend of 1.32p per share on 31 May 2001. The Board is recommending a final dividend of 2.75p per share in respect of the year to 30 June 2001, for payment on 30 November 2001 to shareholders on the register at 26 October 2001. The total dividend of 4.07p per share for the year is a rise of 15%. The Board's policy is to continue to provide shareholders with a steadily rising income whilst maintaining our ability to invest in future growth. Group Overview In the last months of the financial year John Cole left the Group. He gave much to the strategic development of the Group and I wish him well. At this point we are considering all options for the future appointment of the next Chief Executive Officer. Work has commenced with a leading executive search consultancy, but I do not expect an appointment to be made in the short term. Fortunately this has given me an ideal opportunity to assess the Group in detail as the Chief Executive Officer. The strategy of Hays remains absolutely unchanged, but we are currently focusing the Divisions much more to ensure leadership in their sectors and hence higher value creation for our customers and shareholders. Our objective is that all Hays' Divisions should operate as leaders in each segment addressed. This is critical to enable the Group to earn the optimum return on its investment. For each Division and the segments within, this is the first priority and currently we are reviewing our plans to ensure that this objective has either been attained or can be achieved. As has been previously reported, the emerging growth driver for the Group is to combine the market-leading elements of the individual Hays' Divisions to provide a unique integrated service solution that gives value to our customers. These major integrated service propositions are of interest to the largest European companies allowing them to concentrate on their 'core competencies'. They are large complex projects involving substantial change and shift in resource for the customer. Inevitably they take time to develop and to implement. Personnel Hays Personnel has had an exceptional year with significant growth in profits by 24% to £146.0 million, and also considerable expansion of its operations in Continental Europe and Australia. The Internet portal, haysworks.com has achieved UK leadership in its specialised markets with over 46,000 visitors per week. A key component of its success has been the ability to leverage the market leading Hays Personnel brands through this channel. Personnel has now focused on the organic development of its European network centred upon Hays Accountancy Personnel, Hays Montrose (personnel provision to the construction industries) and Hays IT. Alongside our specialist temporary and permanent recruitment activities we are developing a fast growing HR Solutions business which provides a complete outsourced HR service for our customers. The prospects for this core division remain exceptional. Business Process Outsourcing This is an exciting and developing opportunity for the Group which during the year has been consolidated into two sub Divisions, Data Solutions and IT & Consulting Solutions. Hays' offshore services have been strengthened to offer UK enterprises outsourced data entry and synthesis at lower prices and with a substantial enhancement in quality. During the year we were delighted to win a national contract to install a new information system in all 43 Police Forces in England and Wales. The development of Business Process Outsourcing will be a major emphasis for growth by the Group, initially centred upon the UK and to be followed by a drive to take our market leading services to Continental Europe. Mail and Express The Hays Document Exchange business in the UK remains the leader in reliable cost effective delivery of mail between central exchanges. Volumes continue to grow by 5% - 6% per annum. Development of the business has been constrained by the monopoly position of Consignia. However, this position is now changing and Hays has applications for three licences under consideration by Postcomm, the Government agency for liberalisation. The prospects for development for Hays DX will become more attractive on receipt on these licences. Hays DX France is in the process of being returned to profits under the guidance of strengthened local management. Hays DX Spain could not achieve Hays' corporate objectives and was sold for £0.5 million with an exceptional charge of £10.2 million (including £7.7 million of goodwill). Logistics Hays Logistics was the foundation upon which the modern Hays was built. However, elements of conventional logistics are rapidly becoming a commodity business with margins that are unattractive to the Group and in some cases we have decided not to renew contracts. In France developments to share major infrastructure investments between different customers are enabling us to give exceptional value to our customers and generate more attractive margins. On the Continent of Europe we are pleased with the value of new contracts won last year (notably Auchan, Siemens, Unilever and Sara Lee). In the UK the emphasis has been on the provision of value added services to major supermarkets. The provision and management of crates for fresh produce, particularly with Sainsbury's, has grown significantly. Total supply chain management for major European groups utilising other Hays' divisional skills remains our development focus. To be credible to a customer in such rapidly evolving markets we must have proven conventional logistics skills as well as a strong consulting, solution design, IT and change management capability. It is this foundation on which future value added services will be built. Chemicals The Chemicals Division was non-core to Hays' future and was sold to Albion Chemicals Ltd on 27 July 2001. To facilitate the sale, Hays retained 49% of the equity and Neil McLachlan and Graham Williams will join the Board of the new Company to represent our interests. I am confident that the combination of the former Hays Chemical infrastructure and activities with the Albion team expertise will enable Albion to achieve sustainable higher standards and profitability. Management The Executive management team is high quality and is the nucleus of Hays' future. We continue to invest in the development and training of all Hays' people as it is their skills that create a differential advantage for the Group with each of its customers. No report to you would be complete without recording Ronnie Frost's retirement. Ronnie devoted 40 years of his life to creating and building the modern Hays, its people and its market position. Whilst in the last few months the Group experienced a change in investor sentiment, the fundamental underlying strength and quality of the Group remains intact. Ronnie has bequeathed to the Group an inherent strength which will show through in the years ahead. It is a pleasure on behalf of all Hays' people and shareholders to wish Ronnie and his wife Beryl many happy years of retirement. Finally, can I thank all the people of Hays on two fronts; the first is for all their hard work and attention to customers over the last year, secondly for making me so welcome. Prospects The growth in sales by the Group demonstrates the inherent quality of Hays' services. Notwithstanding the current difficult economic climate sales in Personnel are ahead of prior year although the division's profit for the first two months of 2001/02 is similar to last year. The other divisions of Hays are less affected by changes in business confidence or rates of economic growth and their outlook is unchanged. Such market changes create opportunities for outsourced services as businesses address their cost base and concentrate on their core activities. Hays will continue to invest in its core divisions to ensure that they are positioned to win such new business as and when it arises. Costs will be managed to ensure that Hays remains lean and responsive. These tactics, combined with our clear and unchanged strategy, will deliver major benefits to our shareholders, customers and people. Overall the Group's mix of businesses gives it considerable resilience and we are continuing to invest for the future as well as increasing our business focus to deliver premium returns and growth for our shareholders. We are well placed to exploit the growing trend across Europe towards the outsourcing of business critical processes. Hays plc Consolidated Profit and Loss Account for the year ended 30 June 2001 (In £'s million) 2001 2001 2001 2000 Pre-exceptional Exceptional Total Total Items TURNOVER Continuing operations 2,436.3 - 2,436.3 2,009.9 Acquisitions 17.0 - 17.0 - _______ _______ _______ _______ 2,453.3 - 2,453.3 2,009.9 Discontinued operations 181.0 - 181.0 206.5 _______ _______ _______ _______ 2,634.3 - 2,634.3 2,216.4 ======= ======= ======= ======= PROFIT FROM OPERATIONS Continuing operations 286.2 (22.5) 263.7 261.4 Acquisitions 2.2 - 2.2 - _______ _____ _______ _______ 288.4 (22.5) 265.9 261.4 Discontinued operations 9.6 - 9.6 13.1 _______ _______ _______ _______ 298.0 (22.5) 275.5 274.5 _______ _______ _______ _______ GOODWILL AMORTISATION (18.5) - (18.5) (10.3) OPERATING PROFIT Continuing operations 270.7 (22.5) 248.2 251.7 Acquisitions (0.4) - (0.4) - _______ _______ _______ _______ 270.3 (22.5) 247.8 251.7 Discontinued operations 9.2 - 9.2 12.5 _______ _______ _______ _______ 279.5 (22.5) 257.0 264.2 EXCEPTIONAL ITEMS Loss on disposal and closure of businesses - (64.9) (64.9) (46.0) Loss on disposal of fixed assets - - - (2.7) _______ _______ _______ _______ 279.5 (87.4) 192.1 215.5 Net interest payable (26.3) - (26.3) (11.9) _______ _______ _______ _______ PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 253.2 (87.4) 165.8 203.6 Tax on profit on ordinary activities (77.4) 5.3 (72.1) (72.3) _______ _______ _______ _______ PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 175.8 (82.1) 93.7 131.3 Equity minority interests (0.2) - (0.2) (0.5) _______ _______ _______ _______ PROFIT FOR THE FINANCIAL YEAR 175.6 (82.1) 93.5 130.8 Dividends (69.2) - (69.2) (60.3) _______ _______ _______ _______ Transferred to reserves 106.4 (82.1) 24.3 70.5 ======= ======= ======= ======= EARNINGS PER SHARE Basic 5.5p 7.7p Before goodwill and exceptional items 11.4p 11.1p Diluted earnings per share 5.4p 7.6p Dividend per share 4.07p 3.54p Interest cover before exceptional items and goodwill amortisation 11X 23X Hays plc Consolidated Balance Sheet At 30 June 2001 (In £'s million) 2001 2000 FIXED ASSETS Intangible assets 286.7 298.7 Tangible assets 555.2 490.9 Investments 54.3 38.9 _____ ______ 896.2 828.5 _____ ______ CURRENT ASSETS Stocks 40.3 36.6 Debtors 541.9 513.2 Cash at bank and in hand 133.0 96.5 _____ ______ 715.2 646.3 _____ ______ CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR Borrowings (45.3) (49.6) Other creditors (609.6) (635.2) _____ ______ (654.9) (684.8) _____ ______ NET CURRENT ASSETS/(LIABILITIES) 60.3 (38.5) _____ ______ TOTAL ASSETS LESS CURRENT LIABILITIES 956.5 790.0 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR Borrowings (408.6) (323.9) Other creditors (25.6) (36.3) PROVISIONS FOR LIABILITIES AND CHARGES (37.0) (21.0) _____ ______ 485.3 408.8 ===== ===== CAPITAL AND RESERVES Called up share capital 17.3 17.3 Share premium account 365.5 359.2 Profit and loss account 101.7 30.8 _____ ______ EQUITY SHAREHOLDERS' INTERESTS 484.5 407.3 EQUITY MINORITY INTERESTS 0.8 1.5 _____ ______ 485.3 408.8 ===== ===== NET DEBT AS % OF SHAREHOLDERS' FUNDS 66% 68% AND MINORITY INTERESTS Hays plc Summarised Consolidated Cash Flow Statement For the year ended 30 June 2001 (In £'s million) 2001 2000 OPERATING ACTIVITIES Operating profit 257.0 264.2 Depreciation, amortisation and amounts written off intangible fixed assets 95.9 65.4 (Profit)/loss on sale of fixed assets (20.0) 0.9 Increase in working capital (31.9) (22.0) ______ _____ NET CASH INFLOW FROM OPERATING ACTIVITIES 301.0 308.5 Returns on investments and servicing of finance (27.0) (12.0) Tax paid (83.1) (76.6) Capital expenditure (net) (111.7) (81.4) ______ _____ NET CASH INFLOW BEFORE ACQUISITIONS AND DISPOSALS 79.2 138.5 Acquisitions and disposals (net) (46.8) (146.9) Equity dividends paid (63.1) (54.8) ______ _____ Net cash outflow before financing (30.7) (63.2) FINANCING Issue of ordinary share capital 6.3 7.5 Purchase of own shares (15.7) (20.8) Increase in borrowings 81.4 97.4 Capital element of finance lease rentals (3.6) (2.8) ______ _____ NET CASH INFLOW FROM FINANCING 68.4 81.3 ______ _____ INCREASE IN CASH 37.7 18.1 ====== ======= Movement in net debt For the year ended 30 June 2001 (In £'s million) 2001 2000 Increase in net borrowing (53.6) (84.9) Foreign exchange movement 9.7 4.9 Opening net debt (277.0) (197.0) ______ _____ CLOSING NET DEBT (320.9) (277.0) ====== ======= Hays plc Reconciliation of movements in equity shareholders' interests For the year ended 30 June 2001 (In £'s million) 2001 2000 Profit for the financial year 93.5 130.8 Dividends (69.2) (60.3) _____ ______ 24.3 70.5 Other recognised gains and losses relating to the year (2.5) (2.2) New share capital subscribed 6.3 7.6 Goodwill written back 49.1 34.2 _____ ______ Net increase in equity shareholders' interests 77.2 110.1 Opening equity shareholders' interests 407.3 297.2 _____ ______ Closing equity shareholders' interests 484.5 407.3 ===== ===== Hays plc Segmental Information For the year ended 30 June 2001 Before goodwill amortisation and exceptional items (In £'s million) 2001 2001 2001 2000 2000 2000 Turnover Operating Operating Turnover Operating Operating profit net profit net assets assets BY BUSINESS SECTOR Continuing operations Commercial 476.3 89.0 120.8 439.1 84.9 130.5 Personnel 1,084.0 146.0 121.1 802.6 117.5 81.3 Logistics 893.0 53.4 297.8 768.2 59.0 278.4 _______ _____ _____ _______ _____ ______ 2,453.3 288.4 539.7 2,009.9 261.4 490.2 Discontinued operations 181.0 9.6 74.6 206.5 13.1 71.9 _______ _____ _____ _______ _____ ______ 2,634.3 298.0 614.3 2,216.4 274.5 562.1 ======= ===== ===== ======= ===== ===== BY GEOGRAPHICAL AREA Continuing operations United Kingdom 1,617.4 232.4 306.8 1,281.2 205.3 282.9 Other Europe 686.9 37.1 217.1 606.4 38.5 189.7 Rest of the World 149.0 18.9 15.8 122.3 17.6 17.6 _______ _____ _____ _______ _____ ______ 2,453.3 288.4 539.7 2,009.9 261.4 490.2 Discontinued operations 181.0 9.6 74.6 206.5 13.1 71.9 _______ _____ _____ _______ _____ ______ 2,634.3 298.0 614.3 2,216.4 274.5 562.1 ======= ===== ===== ======= ===== ===== After goodwill amortisation and operating exceptional items (In £'s million) 2001 2001 2001 2000 2000 2000 Turnover Operating Operating Turnover Operating Operating profit net profit net assets assets BY BUSINESS SECTOR Continuing operations Commercial 476.3 67.4 120.8 439.1 78.6 130.5 Personnel 1,084.0 138.3 121.1 802.6 114.4 81.3 Logistics 893.0 42.1 297.8 768.2 58.7 278.4 _______ _____ _____ _______ _____ ______ 2,453.3 247.8 539.7 2,009.9 251.7 490.2 Discontinued operations 181.0 9.2 74.6 206.5 12.5 71.9 _______ _____ _____ _______ _____ ______ 2,634.3 257.0 614.3 2,216.4 264.2 562.1 ======= ===== ===== ======= ===== ====== BY GEOGRAPHICAL AREA Continuing operations United Kingdom 1,617.4 203.2 306.8 1,281.2 199.6 282.9 Other Europe 686.9 25.7 217.1 606.4 34.5 189.7 Rest of the World 149.0 18.9 15.8 122.3 17.6 17.6 _______ _____ _____ _______ _____ ______ 2,453.3 247.8 539.7 2,009.9 251.7 490.2 Discontinued operations 181.0 9.2 74.6 206.5 12.5 71.9 _______ _____ _____ _______ _____ ______ 2,634.3 257.0 614.3 2,216.4 264.2 562.1 ======= ===== ===== ======= ===== ====== Operating net assets are net assets excluding interest bearing assets, goodwill, corporation tax, and dividend balances. Hays plc Exceptional Items For the year ended 30 June 2001 (In £'s million) Note 2001 EXCEPTIONAL OPERATING COSTS Net credit on reorganisation of the information management business (i) 6.2 Other reorganisation costs (ii) (13.0) Provision against impairment of goodwill, tangible and intangible assets (iii) (15.7) ______ TOTAL EXCEPTIONAL OPERATING COSTS (22.5) OTHER EXCEPTIONAL ITEMS Loss on disposal of Spanish mail services operations (iv) (10.2) Impairment of goodwill in anticipation of disposal of business (v) (54.7) ______ TOTAL OTHER EXCEPTIONAL ITEMS (64.9) ______ TOTAL EXCEPTIONAL ITEMS (87.4) ====== (i) During the year the Group commenced a substantial investment programme to modernise its information management business. This involves site consolidation, relocation of the business to state of the art new premises and the disposal of less suitable properties. The modernisation programme will take 24 months to complete and will be financed from the proceeds of disposal of vacated properties. The related profit on sale of property in the period amounted to £18.1 million. A charge of £11.9 million has been made to reflect the anticipated reorganisation costs associated with the programme. (ii) In response to the sharp economic turndown, the Group acted to reduce overhead costs, particularly in respect of network operations, in the year and incurred restructuring and associated costs of £13.0 million, principally in relation to redundancy and termination costs. (iii) A review of goodwill, intangible assets and related balances was conducted during the year. As a result management have concluded that assets totalling £15.7 million have insufficient or uncertain future revenue prospects to justify continued capitalisation. £4.0 million of this relates to goodwill purchased in prior years. (iv) During the year the Group disposed of its loss making Spanish mail services operations. This transaction gave rise to a loss on disposal of £10.2 million including the write off of £7.7 million of goodwill. (v) The Group announced the completion of the disposal of its non-core chemical activities on 27 July 2001. The Group has written off the whole of the goodwill attributable to the business of £51.5 million, a substantial part of which relates to an allocation of goodwill arising from the buyout in 1987. The Group disposed of its small retail installation services business on 29 August 2001 and a provision for impairment of assets of £3.2 million (including £1.1 million of goodwill) was made as a result. The trading results of the Chemicals, Spanish mail services and retail installation services businesses are shown in discontinued operations. Exceptional items resulted in a cash inflow of £8.1 million and a tax credit of £5.3 million. Note 1 STATEMENT UNDER S240 - PUBLICATION OF NON STATUTORY ACCOUNTS The financial information contained in this preliminary announcement does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The financial information is based on the statutory accounts for the financial years ended 30 June 2001 and 30 June 2000. The financial statements for 30 June 2001, upon which the auditors issued an unqualified opinion have yet to be delivered to the Registrar of Companies. The financial statements for 30 June 2000 upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies.

Companies

Hays (HAS)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today