Interim Results
Hays PLC
09 March 2004
9th March 2004
Hays plc
INTERIM RESULTS FOR THE 6 MONTHS TO 31 DECEMBER 2003
Financial Highlights
• Performance in line with our expectations
• Personnel turnover of £623.2m, up 24% (12% on a like-for-like basis)(1)
• Personnel operating profit(2) of £60.1m, up 12% (6% on a like-for-like basis)
• Mail operating profit stable at £16.3m on turnover up 2%
• Group profit before tax of £83.2m
• Group profit before tax, goodwill amortisation and exceptional items of
£87.9m(3)
• Net debt reduced to £94.5m
• Interim dividend rebased (as previously announced) to 1.0p per share
(1) Percentage change is calculated over the result for H1 2002/03 and
like-for-like percentage change calculated before acquisitions and at
constant exchange rates
(2) Personnel operating profit stated before goodwill amortisation of £6.6m
(2002/03: £2.5m)
(3) Goodwill amortisation of £6.6m and exceptional profit of £1.9m
Operating Highlights
• Increased Personnel operating profit for first time in two and a half years
- Continued gradual recovery in principal markets
- Continued strong growth in Montrose (technical) and Australia
- Return to growth in IT
- Accountancy performed well in regions but South East difficult
- Ascena performed well but Continental European markets challenging
• New mail products launched successfully and showing promising growth
Group Transformation
• Two thirds of Group transformation completed
• £355.0m gross headline consideration realised from disposals to date
• Board actively reviewing options for method and timing of divestment of Mail
Bob Lawson, Chairman, commented:
'We are delighted that after two and a half years of difficult trading
conditions our Personnel business has returned to creditable growth. We grew
operating profit before goodwill amortisation by 6% on a like-for-like basis
despite weak demand in the South East of England and Continental Europe.
Including acquisitions and favourable foreign exchange movements the growth was
12%. We are confident that we have performed well compared to the competition.
We continued to invest in the business adding a further 13 offices in the
period and we are well positioned to capitalise on future opportunities.'
'The new Mail management team has improved and developed the quality of the core
business. They have also successfully launched three new mail products which
we believe offer exciting potential in the deregulating UK mail market.'
'It is only one year since we announced our strategy to transform Hays into a
focussed specialist recruitment and HR services company. In that time we have
completed two thirds of the transformation, having sold substantially all of
our former Commercial and Logistics operations. We have made excellent
progress in disposing of other non-core assets and we are actively reviewing
our options with respect to Mail.'
'The financial performance of Hays Personnel in the period reflected slightly
more favourable economic conditions with net fees growing by 5% on a like-for-
like basis. During January and February comparative year on year growth in net
fees has been sustained at 5-6% with no evidence of any acceleration. We have
not yet seen a strong recovery in the South East of England or in Continental
European markets. Accordingly, our outlook remains cautious but we are well
placed for any future stronger upturn.'
ENQUIRIES:
Colin Matthews Chief Executive Officer, Hays plc + 44 (0)1483 302 203
Denis Waxman Chief Executive Designate, Hays plc + 44 (0)20 7628 9999
John Martin Group Finance Director, Hays plc + 44 (0)20 7628 9999
Jon Coles Brunswick + 44 (0)20 7404 5959
CONFERENCE CALL:
Hays plc will conduct a conference call for analysts and institutional
shareholders at 15:30 UK time on 9 March 2004. The dial-in details are as
follows:
Dial-in number: +44 (0)1452 561 263
Password: Hays
The call will be recorded and available for playback as follows:
Replay dial-in number: +44 (0)1452 550 000
Access code: 1022898#
The Instant Replay will be available until 16 March 2004.
DELAYED WEB-CAST:
The presentation to analysts will be available to view on the Hays website from
14:30 UK time on 9 March 2004 - www.hays.com
The presentation will also be filmed and distributed by RAW Communications to
those who subscribe to that service.
CHAIRMAN'S STATEMENT
The last six months has been a period of considerable achievement for the Group.
We have completed two thirds of our Group transformation, disposing of
substantially all of our former Commercial and Logistics operations. Hays
Personnel, our specialist recruitment and HR services business, has continued to
perform well in a recovering market, increasing operating profit for the first
time in two and a half years. Our Mail business is now generating stable
profits and has successfully launched three new products in the deregulating UK
mail market.
Results Summary
Group operating profit before goodwill amortisation and exceptional items of
£89.7m (2002/03: £94.7m) is in line with our expectations.
Our Personnel business generated turnover of £623.2m, up 24% over the equivalent
period last year (2002/03: £502.2m), and operating profit before goodwill
amortisation(1) of £60.1m (2002/03: £53.6m), up 12%. On a like-for-like basis,
excluding the benefit of acquisitions and favourable foreign exchange
movements, turnover increased by 12% and operating profit before goodwill
amortisation by 6%.
After two and a half years in which trading has been challenging, the markets
for our Personnel business now appear to be recovering. Whilst the overall
results are positive, the pace of recovery varies. Australia, the Northern
regions of the UK, Montrose, IT and Ascena in Germany all performed well, but
other markets in Continental Europe and those for Accountancy in the South East
of England continued to be difficult.
Once again, we believe that Hays Personnel has performed well compared to the
competition. We continue to strive to gain market share and increase
efficiencies, as well as invest for future growth adding a further 13 offices
in the period.
1. Operating profit of Personnel is stated throughout the Chairman's statement
before goodwill amortisation of £6.6m (2002/03: £2.5m)
Hays Personnel generated an excellent net operating margin in the period of
9.6%, compared to 10.7% in the same period last year. Over half of the
reduction in operating margin is as a result of the acquisition of two
specialist temporary recruitment businesses in Continental Europe, Ascena in
Germany and IOS in Belgium, whose performance has matched our expectations.
Our UK IT and Contact Centre businesses grew quickly, contributing to overall
profit growth but diluting average margins. In addition, in the period we won a
number of recruitment management contracts. These contracts enable us to
capture a higher share of a client's regular specialist recruitment business
but result in a reduction in reported margin as a result of having to record
the gross fees for those temps sourced from third parties on which we earn a
management fee. The overall margin has also been impacted by further
investment, particularly in Accountancy where we have continued to build new
specialisms. In the period, we saw little evidence of the opportunity to
generate significant operating leverage at this stage of the cycle.
Mail turnover of £65.5m was 2% ahead of the same period last year (2002/03:
£64.1m) and operating profit was stable at £16.3m. We are pleased that the
benefits of a strengthened management team and the focus on our UK operations
are now evident. During the period, the business successfully launched three
new products under its new licence which are demonstrating promising growth
potential in the liberalising mail market. The business has borne the
associated launch costs without significantly impacting its results.
The financial statements for the period include the results of several
operations that have been sold or are being disposed. In the period, these
businesses contributed turnover of £553.0m (2002/03: £622.2m) and operating
profit before goodwill amortisation of £13.3m (2002/03: £24.8m). The management
teams of these businesses remained dedicated to their customers and employees
and we are confident that they will capitalise on the opportunities for
development under new ownership.
Our investment in Albion Chemicals generated operating profits of £1.2m during
the period (2002/03: £2.4m). Whilst the distribution activities performed
well, manufacturing faced increased utility costs and weakness in selling
prices, accounting for the decline in operating profits.
Interest charges of £3.0m compare favourably to the same period last year
(2002/03: £8.6m) as a result of the repayment and refinancing of higher rate
debt facilities, lower interest rates and continued careful control of working
capital. Tax includes an exceptional charge of £20.5m relating to the disposals
completed in the period. The net exceptional gain of £1.9m is as a result of
accounting for the disposals concluded in the period.
Transformation
In March 2003 we announced our intention to transform the Group into a pure
specialist recruitment and HR services business. We have made good progress
since that date, having disposed of substantially all of our former Commercial
and Logistics operations.
In addition to the IMS, BPO and Logistics disposals previously announced, during
the period we also completed the sale of our former Field Support, Sameday
Courier, US Home Delivery and German Multi-user Network businesses, as well as
several surplus properties.
Post Balance Sheet Events
On 4 February 2004 we completed the disposal of the bulk of our Logistics
operations.
On 5 March 2004, we disposed of the remainder of our German Logistics business.
The business lost £2.6m in the year to 30 June 2003 and was disposed for
nominal consideration with net cash of approximately £4.9m which will enable
the new owners to complete the necessary restructuring. We have also recently
entered into a contract for the disposal of the French and Belgian courier
businesses. These businesses generated losses of £4.4m in the year to 30 June
2003 and also require further restructuring. The businesses will be sold for
nominal consideration with net cash of £14.0m and we expect to complete this
transaction shortly.
Aggregate gross headline consideration from disposals to date (including
Logistics, a number of surplus properties, the German logistics business and
the French and Belgian Courier businesses which have completed or are expected
to complete shortly) amounts to £355.0m.
The sale of further surplus properties is ongoing and we expect to make
substantial progress on this in the second half of this financial year. In
addition, processes to dispose of the small, but profitable, Rentacrate and
Management Services businesses are ongoing. The dismantling of shared facilities
in the UK is also proceeding well.
Finally, we are actively reviewing our options for the method and timing of the
divestment of our Mail business.
Cash flow
Operating cash flow in the period, after a one-off contribution to the Hays
Pension Scheme of £51.7m and exceptional cash costs relating to the Group
transformation of £1.6m, was £28.3m (2002/03: £136.9m). After proceeds of
disposals and payment of the final dividend for the last financial year, net
cash flow of £151.3m reduced net debt to £94.5m.
Net capital receipts in the period of £18.3m comprise £36.5m of receipts from
the sale of properties less £18.2m capital investment principally relating to
Logistics. Net cash flow from disposals was £198.8m. Exceptional cash costs
of £18.0m were incurred in connection with the restructuring of our debt
facilities.
Dividends
The Board has declared an interim dividend of 1.0p per share payable on 28 May
2004 to shareholders on the register at the close of business on 23 April 2004.
As previously announced, the dividend has been rebased to reflect a level
appropriate to Hays once the transformation is complete. We expect that the
ratio of interim to final dividends will be broadly similar to earlier years.
The Board is mindful of the importance of maintaining a progressive dividend
policy.
Our target net debt range following the Group transformation remains £50m to
£150m, as previously indicated. The Group remains committed to returning
surplus cash proceeds from disposals to shareholders on conclusion of the
transformation.
Review of Operations
Personnel
Our Personnel business has returned to underlying growth for the first time in
two and a half years. During the period our principal markets continued their
gradual recovery. Operating profit before goodwill amortisation increased by
12% on turnover up 24% compared to the prior year, with growth in each of the
four principal markets of UK, Eire, Australia and Germany. On a like-for-like
basis, excluding acquisitions and favourable foreign exchange movements,
operating profit was 6% ahead of the same period last year on turnover 12%
higher.
The ratio of net temp fees to perm fees in the period was 61:39. The
higher proportion of net temp fees compared to the same period last year
(2002/03: 59:41) is attributable to the acquisitions of Ascena and IOS. On an
underlying basis the ratio was consistent.
We have continued to invest in the business, adding a further 13 offices in the
period bringing our total number of offices at 31 December 2003 to 306 in 16
countries. At the end of the period our total number of consultants stood at
3,025, a 7% increase on the number at 30 June 2003.
In the UK, total gross fees were £475.5m, up 11% on the same period last year
(2002/03: £430.0m). Net fees were 3% ahead at £141.8m (2002/03: £137.4m) and
operating profit before goodwill amortisation was up 3% at £50.7m (2002/03:
£49.0m).
Accountancy Personnel continued to perform strongly in the regions, but market
conditions in London and the South East remained difficult throughout the
period. Whilst gross fees were 4% ahead of last year at £159.0m (2002/03:
£153.6m), net fees reduced by 1% to £66.4m (2002/03: £66.8m).
Hays Montrose, which services the technical and 'built environment' sectors,
continued its strong growth across all of its operations, with gross fees up
13% to £151.1m (2002/03: £133.2m) and net fees up 10% to £44.3m (2002/03:
£40.3m).
Conditions in the IT sector improved and our IT business grew gross fees by 11%
to £104.7m (2002/03: £94.7m) and net fees by 5% to £10.2m (2002/03: £9.7m).
Within our other specialisms in the UK, market conditions were mixed. Overall,
gross fees grew 25% to £60.7m (2002/03: £48.5m) and net fees grew 1% to £20.9m
(2002/03: £20.6m). Contact Centres was the largest individual contributor to
gross fee growth as a result of winning a major new contract. However, because
of this contract and the successful conclusion of a sizeable one-off project,
margins were lower in this area, accounting for the difference between the
growth rates in gross and net fees. Education and Banking also grew both gross
and net fees. Financial Services and Legal have continued to experience
difficult market conditions, although careful cost control restricted the
impact on the overall performance of the Group.
Our business in Australia generated strong growth, increased its market share,
and turned in an excellent overall performance. Gross fees increased 57% to
£72.3m (2002/03: £46.1m) or 40% excluding the favourable foreign exchange
effect. Net fees increased 39% to £21.8m (2002/03: £15.7m). Operating profit
increased 42% on a headline basis and 24% after eliminating the foreign exchange
effect to £8.8m (2002/03: £6.2m).
In Continental Europe market conditions were challenging. However, the Ascena
and IOS acquisitions both continued to meet our expectations. Overall in
Continental Europe, gross fees increased to £75.4m from £26.1m and net fees
increased to £16.9m from £6.9m showing the effect of these acquisitions.
Operating profit before goodwill amortisation was £0.6m compared to a loss of
£1.6m in the same period last year.
Mail
Our Mail management team made significant progress on a number of fronts in the
period. Firstly, they continued to focus on operational efficiency and service
levels with the pleasing result that profits have been stabilised after
previous years' declines. Secondly, the Mail business has successfully launched
three new products under its new licence. It is the only operator to have
launched new products targeting the next day business-to-business mail market
in the UK. In a relatively short period, these products have grown to volumes
of over 300,000 items per week. Whilst the current financial contribution from
these products is relatively modest compared to the existing business, the
potential is significant. Finally, management has made substantial progress in
establishing independent back-office functions to enable the business to operate
on a stand-alone basis.
Management and Employees
Xavier Urbain served as a director of Hays plc for seven years prior to the
disposal of the Logistics business in February 2004. He brought valuable
insights to the Board of Hays along with extensive logistics experience and was
vital to maintaining the confidence of clients of the logistics business during
the disposal process. We wish him good fortune in his new role.
The management and employees of the Group have shown tremendous commitment to
the transformation of our business and I wish to record my appreciation for
their dedication and professionalism in support of Hays during a challenging
period.
Current Trading and Outlook
Mail
Volumes within our core business are stable. We believe that the new licence
presents excellent prospects for profitable growth and having launched our
three new products successfully, we are well placed to capitalise on them.
Personnel
The financial performance of the business in the period reflected slightly more
favourable economic conditions with net fees growing by 5% on a like-for-like
basis. During January and February comparative year on year growth in net fees
has been sustained at 5-6% with no evidence of any acceleration. We have not
yet seen a strong recovery in the South East of England or in Continental
European markets. Accordingly, our outlook remains cautious but we are well
placed for any future stronger upturn.
Bob Lawson
Chairman
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 2003 which comprises the profit and loss
account, the balance sheet, the cash flow statement, the statement of total
recognised gains and losses, the reconciliation of movements in equity
shareholders' interests and related notes 1 to 14. 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.
REVIEW WORK PERFORMED
We conducted our review in accordance with 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 United Kingdom Auditing Standards 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 2003.
Deloitte & Touche LLP
Chartered Accountants
London
8 March 2004
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the half year ended 31 December 2003
(In £'s Half year to Half year to Year to
million) 31 December 31 December 30 June
2003 2002 2003
(Unaudited) (Unaudited) (Restated)
TURNOVER
Continuing operations 756.4 626.5 1,365.8
Discontinued
operations 485.3 562.0 1,132.6
___________ ___________ ___________
1,241.7 1,188.5 2,498.4
____________________________________________________________________________________
OPERATING PROFIT / (LOSS)
Before goodwill
amortisation and
exceptional
items 89.7 94.7 190.1
Goodwill amortisation (6.6) (12.4) (27.3)
Exceptional operating
items note 4 - - (490.0)
___________ ___________ _____________
83.1 82.3 (327.2)
____________________________________________________________________________________
OPERATING PROFIT / (LOSS)
Continuing operations 66.2 57.7 (54.5)
Discontinued
operations 16.9 24.6 (272.7)
___________ ___________ ___________
83.1 82.3 (327.2)
Share of operating
profit of associated
company 1.2 2.4 6.1
___________ ___________ ___________
84.3 84.7 (321.1)
EXCEPTIONAL ITEMS note 4 1.9 - (85.3)
Net interest payable (3.0) (8.6) (17.3)
Exceptional finance
charges note 4 - - (21.1)
___________ ___________ ___________
PROFIT / (LOSS) ON
ORDINARY ACTIVITIES
BEFORE TAXATION 83.2 76.1 (444.8)
Tax charge - non
exceptional (29.1) (27.6) (40.8)
Tax charge -
exceptional note 7 (20.5) - -
___________ ___________ ___________
Tax on profit /
(loss) on ordinary
activities (49.6) (27.6) (40.8)
___________ ___________ ___________
PROFIT / (LOSS) ON
ORDINARY ACTIVITIES
AFTER TAXATION 33.6 48.5 (485.6)
Equity minority
interests (0.1) (0.1) (0.1)
___________ ___________ ___________
PROFIT / (LOSS) FOR
THE PERIOD 33.5 48.4 (485.7)
Dividends (17.4) (30.0) (92.1)
___________ ___________ ___________
TRANSFERRED TO
RESERVES 16.1 18.4 (577.8)
=========== =========== ===========
Basic earnings per
share 1.96p 2.83p (28.39)p
Earnings per ordinary
share before goodwill
amortisation and
exceptional items 3.43p 3.56p 7.01p
Diluted earnings per
share 1.95p 2.83p (28.38)p
DIVIDEND PER SHARE 1.00p 1.75p 5.38p
INTEREST COVER 30x 11x 11x
CONSOLIDATED SUMMARISED BALANCE SHEET
as at 31 December 2003
(In £'s million) 31 December 31 December 30 June
2003 2002 2003
(Unaudited) (Unaudited and (Restated)
restated)
Goodwill and
intangible
fixed assets 107.4 210.3 113.6
Tangible fixed
assets 203.0 509.7 326.0
Investments 48.4 55.2 45.1
Net current
liabilities (50.9) (14.5) (110.8)
Other creditors
due after more
than one year (8.5) (2.1) (9.4)
Provisions for
liabilities and
charges (128.5) (81.2) (121.3)
___________ __________ ___________
170.9 677.4 243.2
=========== ========== ===========
Called up share
capital 17.4 17.3 17.3
Share premium
account 369.2 368.8 368.9
Profit and loss
account (292.6) 105.5 (371.7)
Own shares (17.7) (50.1) (17.7)
___________ ___________ ___________
Equity
shareholders'
interests 76.3 441.5 (3.2)
Minority
interests 0.1 0.6 0.6
___________ ___________ ___________
76.4 442.1 (2.6)
Net debt 94.5 235.3 245.8
___________ ___________ ___________
170.9 677.4 243.2
=========== =========== ===========
CONSOLIDATED SUMMARISED CASH FLOW STATEMENT
for the half year ended 31 December 2003
(In £'s million) Half year to Half year to Year to
31 December 31 December 30 June
2003 2002 2003
(Unaudited) (Unaudited)
OPERATING ACTIVITIES
Total operating profit /
(loss) 83.1 82.3 (327.2)
Depreciation and
amortisation 29.5 45.3 96.3
Amounts written off
fixed assets - - 430.1
Other operating
activities - 2.2 (1.3)
Pension contribution in
September 2003 (51.7) - -
(Increase) / decrease in
working capital (32.6) 7.1 88.2
_____________ _____________ _____________
NET CASH INFLOW FROM
OPERATING ACTIVITIES 28.3 136.9 286.1
Returns on investment
and servicing of finance (3.4) (8.5) (10.6)
Tax paid (9.4) (36.1) (62.6)
Net capital receipts /
(expenditure) 18.3 (32.3) (74.5)
_____________ _____________ _____________
CASH INFLOW BEFORE
ACQUISITIONS AND
DISPOSALS 33.8 60.0 138.4
Net acquisitions and
disposals 198.8 (6.4) (52.6)
Equity dividends paid (62.2) (54.1) (84.0)
_____________ _____________ _____________
CASH INFLOW / (OUTFLOW)
BEFORE FINANCING 170.4 (0.5) 1.8
Financing (207.4) 0.2 40.1
Exceptional finance
costs (18.0) - -
_____________ _____________ _____________
(DECREASE) / INCREASE IN
CASH (55.0) (0.3) 41.9
============= ============= =============
RECONCILIATION OF NET CASH
FLOW TO MOVEMENTS
IN NET DEBT
(Decrease) / increase in
cash (55.0) (0.3) 41.9
Cash flow from financing 207.7 - (39.5)
_____________ _____________ _____________
Change in net debt
resulting from cash
flows 152.7 (0.3) 2.4
Borrowings disposed 0.3 - 3.2
Loan notes issued - (2.2) (2.2)
Exchange adjustment and
other (1.7) (0.8) (17.2)
_____________ _____________ _____________
MOVEMENT IN NET DEBT IN
THE PERIOD 151.3 (3.3) (13.8)
OPENING NET DEBT (245.8) (232.0) (232.0)
_____________ _____________ _____________
CLOSING NET DEBT (94.5) (235.3) (245.8)
============= ============= =============
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the half year ended 31 December 2003
(In £'s million) Half year to Half year to Year to
31 December 31 December 30 June
2003 2002 2003
(Unaudited) (Unaudited) (Restated)
Profit / (loss)
for the period 33.5 48.4 (485.7)
Currency
translation
differences on
foreign currency
net investments (0.1) 2.0 1.8
_______________ _______________ _____________
Total recognised
gains and losses
for the period 33.4 50.4 (483.9)
=============== =============== =============
Details of the prior period adjustment arising from adoption of UITF abstract 38
are shown below in the reconciliation of movements in equity shareholders'
interests. The prior period adjustment has no cumulative effect on retained
profits.
RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' INTERESTS
for the half year ended 31
December 2003
(In £'s million) Half year to Half year to Year to
31 December 31 December 30 June
2003 2002 2003
(Unaudited) (Unaudited and (Restated)
restated)
Profit / (loss)
for the period 33.5 48.4 (485.7)
Dividends (17.4) (30.0) (92.1)
_______________ _______________ ______________
16.1 18.4 (577.8)
Exchange
differences on
translation (0.1) 2.0 -
Other recognised
gains & losses
relating to the
period - - 1.8
New share capital
subscribed 0.3 0.1 0.2
Goodwill written
back relating to
impairment charge - - 151.8
Goodwill written
back 63.2 1.8 1.2
_______________ _______________ ______________
Net increase /
(decrease) in
equity
shareholders'
interests 79.5 22.3 (422.8)
Opening
shareholders'
interests as
previously
reported 14.5 469.3 469.3
Prior period
adjustment in
respect of UITF
abstract 38 (17.7) (50.1) (49.7)
_______________ _______________ ______________
Closing
shareholders'
interests as
restated 76.3 441.5 (3.2)
============== ============== ============
The results, summarised balance sheet, statement of total recognised gains and
losses and movement in equity shareholders' interests for the periods ended 31
December 2002 and 30 June 2003 have been restated as a result of the adoption of
UITF abstract 38 - Accounting for ESOP trusts. The adoption of UITF abstract 38
has resulted in a decrease in opening shareholders' funds at 1 July 2002 of
£50.1 million and a decrease in opening shareholders' funds at 1 July 2003 of
£17.7 million. The adoption has also resulted in the reversal of the impairment
charge of £32.0 million recorded in the profit and loss account for the year
ended 30 June 2003.
NOTES
1 STATEMENT UNDER S240 - PUBLICATION OF NON STATUTORY ACCOUNTS
The financial information contained in this interim statement does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985. The financial information for the full preceding year is based on the
statutory accounts for the financial year ended 30 June 2003. Those accounts,
upon which the auditors issued an unqualified opinion, have been delivered to
the Registrar of Companies.
2 BASIS OF PREPARATION OF INTERIM FINANCIAL INFORMATION
The interim financial information has been prepared on the basis of the
accounting policies set out in the Group's statutory accounts for the year ended
30 June 2003, as amended for UITF abstract 38.
3 SEGMENTAL INFORMATION (BEFORE GOODWILL AMORTISATION AND EXCEPTIONAL OPERATING
COSTS)
(In £'s million) Half year to Half year to Year to
31 December 2003 31 December 2002 30 June 2003
Turnover Operating Turnover Operating Turnover Operating
(Unaudited) Profit (Unaudited) Profit Profit
(Unaudited) (Unaudited)
BY BUSINESS
SECTOR
Continuing
Operations
Personnel 623.2 60.1 502.2 53.6 1,107.1 114.3
Mail 65.5 16.3 64.1 16.3 127.6 33.2
_________ ________ _________ _______ ________ _______
688.7 76.4 566.3 69.9 1,234.7 147.5
Businesses
being
disposed 67.7 (3.6) 60.2 (7.8) 131.1 (11.6)
_________ ________ _________ _______ ________ _______
756.4 72.8 626.5 62.1 1,365.8 135.9
Discontinued
Operations 485.3 16.9 562.0 32.6 1,132.6 54.2
_________ ________ _________ _______ ________ _______
1,241.7 89.7 1,188.5 94.7 2,498.4 190.1
======== ======= ======== ====== ======= ======
BY
GEOGRAPHIC
AREA
Continuing
Operations
United 550.3 65.7 504.4 63.4 1,059.2 132.3
Kingdom
Continental
Europe 132.4 (1.6) 75.5 (7.5) 200.5 (9.4)
Rest of the
World 73.7 8.7 46.6 6.2 106.1 13.0
_________ ________ _________ _______ ________ _______
756.4 72.8 626.5 62.1 1,365.8 135.9
Discontinued
Operations 485.3 16.9 562.0 32.6 1,132.6 54.2
_________ ________ _________ _______ ________ _______
1,241.7 89.7 1,188.5 94.7 2,498.4 190.1
========= ======== ========= ======= ======== =======
SEGMENTAL INFORMATION (AFTER GOODWILL AMORTISATION AND EXCEPTIONAL OPERATING COSTS)
(In £'s million) Half year to Half year to Year to
31 December 2003 31 December 2002 30 June 2003
Turnover Operating Turnover Operating Turnover Operating
(Unaudited) Profit (Unaudited) Profit Profit
(Unaudited) (Unaudited)
BY BUSINESS
SECTOR
Continuing
Operations
Personnel 623.2 53.5 502.2 51.1 1,107.1 75.2
Mail 65.5 16.3 64.1 16.3 127.6 33.2
_________ ________ _________ _______ ________ _______
688.7 69.8 566.3 67.4 1,234.7 108.4
Businesses
being 67.7 (3.6) 60.2 (9.7) 131.1 (162.9)
disposed
_________ ________ _________ _______ ________ _______
756.4 66.2 626.5 57.7 1,365.8 (54.5)
Discontinued
Operations 485.3 16.9 562.0 24.6 1,132.6 (272.7)
_________ ________ _________ _______ ________ _______
1,241.7 83.1 1,188.5 82.3 2,498.4 (327.2)
========= ======== ========= ======= ======== =======
BY
GEOGRAPHIC
AREA
Continuing
Operations
United 550.3 62.2 504.4 62.1 1,059.2 79.4
Kingdom
Continental
Europe 132.4 (4.7) 75.5 (10.6) 200.5 (146.9)
Rest of the
World 73.7 8.7 46.6 6.2 106.1 13.0
_________ ________ _________ _______ ________ _______
756.4 66.2 626.5 57.7 1,365.8 (54.5)
Discontinued
Operations 485.3 16.9 562.0 24.6 1,132.6 (272.7)
_________ ________ _________ _______ ________ _______
1,241.7 83.1 1,188.5 82.3 2,498.4 (327.2)
========= ======== ========= ======= ======== =======
4 EXCEPTIONAL ITEMS
(In £'s million) Half year to Half year to Year to
31 December 31 December 30 June
2003 2002 2003
(Unaudited) (Unaudited)
EXCEPTIONAL OPERATING ITEMS
Impairment of goodwill and
tangible assets - - (442.8)
Restructuring costs - - (47.2)
____________ ___________ ___________
TOTAL EXCEPTIONAL OPERATING
ITEMS - - (490.0)
OTHER EXCEPTIONAL ITEMS
Net profit/(losses) on
disposals of businesses 1.9 - (21.9)
Provision for losses for
businesses sold after the
period end - - (63.4)
Exceptional finance charges - - (21.1)
____________ ___________ ___________
TOTAL EXCEPTIONAL ITEMS 1.9 - (596.4)
============ =========== ===========
The operating exceptional items for the year ended 30 June 2003 included £442.8
million for the impairment of goodwill and tangible assets arising after the
Group had reviewed the carrying value of a number of non-core operations and its
French IT services business. It also included £47.2 million for restructuring
costs arising as a result of the reorganisation and termination of certain
shared facilities employed by the Group and the restructuring of the Group's
BPO, German Logistics and Dutch operations during the year.
The exceptional profit for the period ended 31 December 2003 arises from the
disposal of the Group's IMS business, its BPO businesses, its Field Support
business, its German MUN business and its Hays Home Delivery Services business.
The exceptional losses in the period ended 30 June 2003 arose from the disposal
of the Group's French call centre business, its 50% stake in a secure
destruction business and the disposal of substantially all of the businesses
within its former Commercial division.
5 INTEREST PAYABLE AND SIMILAR CHARGES
(In £'s million) Half year to Half year to Year to
31 December 31 December 30 June
2003 2002 2003
(Unaudited) (Unaudited)
INTEREST PAYABLE AND SIMILAR
CHARGES
Bank overdrafts and other
loans (4.8) (10.5) (20.2)
Finance leases (1.1) (1.1) (2.5)
Share of interest payable of
associate (2.1) (2.0) (4.1)
___________ ___________ ___________
(8.0) (13.6) (26.8)
Exceptional finance charge - - (21.1)
___________ ___________ ___________
(8.0) (13.6) (47.9)
INTEREST RECEIVABLE AND SIMILAR
INCOME
Deposits 3.2 2.9 5.4
Interest receivable on loan to
associate 1.8 2.1 4.1
___________ ___________ ___________
5.0 5.0 9.5
___________ ___________ ___________
(3.0) (8.6) (38.4)
=========== =========== ===========
6 TAX ON PROFIT ON ORDINARY ACTIVITIES
The tax charge for the six months to 31 December 2003 is based on the estimated
effective rate for the full year before goodwill amortisation and exceptional
items of 33.1%.
7 EXCEPTIONAL TAX CHARGE
The exceptional tax charge arises from the disposal of the IMS business, the BPO
businesses and the disposal of the Hays Home Delivery Services business. All of
these disposals were completed during the period.
8 EARNINGS PER SHARE
Earnings per share (EPS) is based on profits from ordinary activities after
taxation and minority interests of £33.5 million and a weighted average of
1,711.9 million shares. To enable comparisons with previous periods, EPS has
also been calculated before goodwill and exceptional items using earnings of
£58.7 million. The weighted average number of shares in issue excludes shares
held by the Hays Employee Share Trust Ltd and the Hays plc Qualifying Employee
Share Ownership Trust. The dilution effect of share options issued to employees
but not yet exercised is 1.7 million shares and diluted EPS is 1.95p.
9 DIVIDENDS
(pence) Half year to Half year to Year to
31 December 31 December 30 June
2003 2002 2003
(Unaudited) (Unaudited)
Interim - pence per
ordinary share 1.00 1.75 1.75
Final - pence per
ordinary share - - 3.63
_____________ _____________ ____________
1.00 1.75 5.38
============= ============= ============
(In £'s million) Half year to Half year to Year to
31 December 31 December 30 June
2003 2002 2003
(Unaudited) (Unaudited)
Interim 17.4 30.0 30.0
Final - - 62.1
_____________ _____________ ____________
17.4 30.0 92.1
============= ============= ============
10 INVESTMENTS
(In £'s million) 31 December 31 December 30 June
2003 2002 2003
(Unaudited) (Unaudited and (Restated)
restated)
Loan to Albion
associate 44.7 52.8 42.8
Interest in
Albion
associate (0.3) - 1.0
Other
investments 4.0 2.4 1.3
_______________ _______________ ______________
48.4 55.2 45.1
=============== =============== ==============
11 PROVISIONS FOR LIABILITIES AND CHARGES
(In £'s million) Pensions Deferred Property Deferred Other Total
taxation employee
benefits
At 1 July 2003 (14.4) (17.1) (34.9) (12.6) (42.3) (121.3)
Exchange
adjustments - (0.2) - (0.1) (0.2) (0.5)
Charged to P&L (17.6) - - - (26.9) (44.5)
account
Credited to
P&L account - 5.0 - - - 5.0
Utilised 24.7 - 1.3 1.1 5.7 32.8
________ _______ _______ _______ ______ ______
At 31
December (7.3) (12.3) (33.6) (11.6) (63.7) (128.5)
2003
======== ======== ======== ======== ======= ======
12 ACQUISITIONS AND DISPOSALS
No acquisitions were completed during the period. The IMS business, the former
BPO businesses, the Sameday courier business, the Field Support courier business
and the Hays Home Delivery Services business were all disposed during the
period.
13 MOVEMENT IN NET DEBT
(In £'s million) Cash Debt Net debt
At 1 July 2003 154.6 (400.4) (245.8)
Foreign exchange
movements 0.9 (2.6) (1.7)
Movement during period (48.3) - (48.3)
Loan notes redeemed
and borrowings repaid - 207.7 207.7
Cash/borrowings
disposed (6.7) 0.3 (6.4)
____________ ___________ ____________
At 31 December 2003 100.5 (195.0) (94.5)
============ =========== ============
Cash comprises cash at bank and in hand, less overdrafts. Debt includes
borrowings and finance lease liabilities.
14 POST BALANCE SHEET EVENTS
On 4 February 2004 the Group completed the disposal of the principal trading
operations and certain assets of the former logistics division, as described in
a circular to shareholders dated 28 November 2003.
On 5 March 2004 the Group completed the disposal of its German logistics
subsidiary, Hays Logistics GmbH.
On 5 March 2004 the Group entered into a contract for the disposal of its French
and Belgian courier businesses. This transaction is expected to complete
shortly.
This information is provided by RNS
The company news service from the London Stock Exchange
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