HAYS PLC
HALF-YEAR
REPORT
SIX MONTHS ENDED 31 DECEMBER
2023
22
February 2024
DECISIVE ACTIONS TAKEN IN CHALLENGING MARKETS. FOCUSED
STRATEGY TO IMPROVE MEDIUM-TERM PROFITABILITY & GROWTH,
UNDERPINNED BY OPERATIONAL EXECUTION
Six months ended 31 December
(In £s million)
|
2023
|
2022
|
Reported
growth
|
LFL
growth
|
|
Net fees (1)
|
583.3
|
651.9
|
(11)%
|
(9)%
|
Operating profit (before
exceptional items) (2)
|
60.1
|
97.0
|
(38)%
|
(37)%
|
Conversion rate
(3)
|
10.3%
|
14.9%
|
(460)
bps
|
|
Profit before tax (before
exceptional items) (2)
|
55.5
|
94.0
|
(41)%
|
(40)%
|
Profit before tax
|
27.6
|
94.0
|
(71)%
|
(70)%
|
Cash generated by
operations (4)
|
67.3
|
66.4
|
1%
|
|
Basic earnings per share (before
exceptional items) (2)
|
2.37p
|
4.11p
|
(42)%
|
|
Basic earnings per
share
|
0.77p
|
4.11p
|
(81)%
|
|
Core dividend per share
|
0.95p
|
0.95p
|
-
|
|
|
|
|
|
|
|
|
|
Note: unless otherwise stated all growth rates discussed in
this statement are LFL (like-for-like), YoY (year-on-year) net fees
and profits, representing organic growth of continuing operations
at constant currency. WDA = working-day adjusted.
Dirk Hahn, Chief Executive, commented:
"As previously reported, the half-year saw increasingly
challenging conditions, with a clear slowdown in most Perm markets
in December, while our larger Temp & Contracting business again
showed greater resilience. We acted decisively to drive consultant
productivity, better align our operations to market conditions and
opportunities, and reduce costs. Consequently, we
delivered £30
million of annualised savings between August and December and are
on track to deliver a further c.£20 million in
H2.
This said, I am not satisfied with our profit performance.
Our focused strategy targets the many structural growth
opportunities we see, while driving profitability through increased
resilience, operational rigour and enhanced execution. We will also
be guided by our 'Golden Rule' for our businesses, namely that
operating profit growth should exceed fee growth, which in turn
should exceed headcount growth through the cycle. As our end
markets stabilise and then recover, I am confident we can return
to, and then exceed, our previous peak profits. While our markets
today are challenging, and we are making some difficult decisions,
Hays is a strong business with a great team of talented colleagues,
and I am excited about what we can achieve
together".
•
|
Group fees down 9%, with Temp
more resilient and down 3% (down 2% WDA(5)), and Perm
down 15%. As reported at our Q2 results, overall trading slowed
through H1, particularly in December, and H1 pre-exceptional
operating profit decreased by 37% to £60.1 million (down 33%
WDA(5))
|
•
|
Decisive actions taken and
Group headcount down 9% YoY. We restructured Group management and
operations in several regions and accelerated back-office
efficiency programmes, which drove a £12.6 million exceptional
charge(2). Our H1 actions will deliver £30 million in
annualised cost savings, with a further c.£20 million expected in
H2
|
•
|
Strong balance sheet and cash generation
with net cash of £66.9 million and
H1 cash conversion(4) of 112%.
The Board proposes an unchanged FY24 interim dividend of 0.95 pence
per share
|
•
|
New Year Temp &
Contracting Return to work volumes are
building in line with prior year in the UK and Australia, although
are 2% behind prior year in Germany. Perm remains tough overall,
with slower decision-making impacting time-to-hire
|
•
|
Our focused strategy targets
the many structural growth opportunities we see and is designed to
increase our business resilience, quality of earnings and cash
generation through the cycle. Our long-term vision is to be
recognised as the leading business in Talent and Workforce
Solutions globally
|
•
|
Five strategic levers target
the most in-demand job categories, higher salary roles and most
resilient end-markets, while growing our proportion of non-Perm
fees and continuing to build stronger relationships with clients
& candidates
|
•
|
Enhanced operational execution & delivery
will underpin our strategy and help increase
profitability towards our medium-term Group conversion rate target
of 22-25%. We will drive consultant productivity in excess of
inflation, with greater use of dynamic pricing, technology tools
& data. We have identified efficiencies from greater
consistency of operating models, and we will better leverage our
overhead costs
|
|
|
|
(1)
|
Net fees comprise turnover less
remuneration of temporary workers and other recruitment
agencies.
|
(2)
|
H1 24 operating profit is
presented before exceptional costs of £27.9 million. This comprised
£12.6m relating to restructuring of Group management and our
operations in several regions, plus back-office functions. The
remaining £15.3 million non-cash exceptional charge related to the
partial impairment of goodwill in our US business.
|
(3)
|
Conversion rate is the conversion
of net fees into pre-exceptional operating
profit.
|
(4)
|
Cash generated by operations is
stated after lease payments of £26.2 million (2022: £24.6 million).
Cash conversion represents cash generated by operations divided by
pre-exceptional Group operating profit.
|
(5)
|
Due to the timing of public
holidays, our largest market of Germany had two fewer working days
in H1 24 versus H1 23 which had a £3.5 million net fee and
operating profit impact.
|
(6)
|
Underlying Temp margin is
calculated as Temp net fees divided by Temp gross revenue and
relates solely to Temp placements in which Hays generates net fees.
This specifically excludes transactions in which Hays acts as agent
on behalf of workers supplied by third party agencies and
arrangements where Hays provides major payrolling
services.
|
(7)
|
Represents percentage of Group net
fees and pre-exceptional operating
profit.
|
(8)
|
Due to our internal Group
reporting cycle, the Group's annual cost base equates to c.12.5x
our cost base per period. This is consistent with prior
years.
|
Enquiries
Hays plc
|
|
|
James Hilton
|
Group Finance Director
|
+ 44 (0) 203 978 2520
|
David Phillips
|
Head of Investor Relations &
ESG
|
+ 44 (0) 333 010 7122
|
|
|
|
FGS
Global
|
|
|
Guy Lamming / Anjali
Unnikrishnan
|
|
hays@fgsglobal.com
|
Results presentation & webcast
Our results webcast will take
place at 8.30am on 22 February 2024. To register for the webcast
only, please click or copy https://edge.media-server.com/mmc/p/ykfj3bz6.
To register and be able to ask questions via our audio link, please
click or copy this link
https://register.vevent.com/register/BI361365ca7ade4a5c9e434702d958253e.
A recording of the webcast will be available on our website
later the same day along with a copy of this press release and all
presentation materials.
Reporting calendar
Trading update for the quarter
ending 31 March 2024 (Q3 24)
|
17 April 2024
|
Trading update for the quarter
ending 30 June 2024 (Q4 24)
|
11 July 2024
|
Preliminary results for the year
ending 30 June 2024 (FY 24)
|
22 August 2024
|
Hays Group Overview
As at 31 December 2023, Hays had
c.12,300 employees in 249 offices in 33 countries, and our global
network helps position us in the most attractive long-term
structural growth sectors. In many of our global markets, the
majority of professional and skilled recruitment is still done
in-house, with minimal outsourcing to recruitment agencies, which
presents substantial long-term structural growth opportunities.
This has been a key driver of the diversification and
internationalisation of the Group, with the International business
representing 80% of the Group's net fees in Q2 24, compared with
25% in FY05.
Our consultants work in a broad
range of industries covering recruitment in 21 professional and
skilled specialisms. In H1 24 our four largest specialisms of
Technology (25% of Group net fees), Accountancy & Finance
(15%), Engineering (11%) and Construction & Property (10%)
collectively represented c.61% of Group fees.
In addition to our international
and sectoral diversification, in H1 24 the Group's net fees were
generated 59% from temporary and 41% from permanent placement
markets. This well-diversified business model continues to be a key
driver of the Group's financial performance.
In our 2023 employee 'YourVoice'
survey, 81% of employees said they would recommend Hays as a great
place to work.
Current trading
New Year Temp & Contracting
'Return to work' volumes are building in line with the prior year
in the UK and Australia, although are 2% behind the prior year in
Germany. Perm remains tough overall, with slower
decision-making
Group commentary
While we remain mindful of market
conditions, our Temp & Contracting ('T&C') New Year 'return
to work' has been in line with the prior year in the UK&I and
ANZ, with Germany volumes rebuilding 2% behind the prior year.
Overall Group T&C volumes are down 8% versus the prior year (Q2
24: down 8%).
In Perm, following previously
reported December weakness, we have seen New Year job flow and
activity levels in line with Q2. However, we continue to see slower
client and candidate decision-making, leading to a longer
time-to-hire.
Our key markets continue to be
supported by skill shortages, and we expect to see some further fee
benefit in the second half from the positive effects of wage
inflation globally, albeit at lower levels than in H1, with fee
margins stable.
There are no material working-day
effects year-on-year in the second half. However, Easter is evenly
split between Q3 and Q4, while in FY23 it fell entirely in Q4. We
expect this to have a c.1-2% negative impact on net fees at Group
level in Q3 24, primarily via our Temp business, with a
corresponding benefit to Q4 24.
As previously reported, we expect
total Group headcount will reduce by c.3-4% in Q3 24 as we continue
to focus on consultant productivity and deliver further back-office
efficiencies. This will further reduce our cost base per
period(8) in H2.
Germany
New Year Temp & Contracting
volumes are rebuilding 2% behind the prior year. Overall T&C
volumes are currently down 5% YoY, partially offset by ongoing
positive effects of mix and margins. Perm activity is relatively
resilient but is modestly down versus Q2.
UK&I and ANZ
New Year T&C volumes are
rebuilding in line with the prior year. T&C volumes are
currently down 11% YoY in UK&I and down 17% in ANZ. Perm
markets remain tough but are broadly stable, with new job inflows
in line with Q2.
RoW
EMEA activity levels are broadly
consistent with Q2 24. The Americas and Asia are also stable
sequentially.
Group Strategic & Operational update
Our focused strategy is designed
to build the leading Talent & Workforce Solutions business
globally, recognised for powering progress through people. It
focuses on the many structural growth opportunities we see and is
designed to increase our business resilience, quality of earnings
and cash generation. This will allow us to return to, and then
exceed, previous peak profits.
Our strategy is based on five key
strategic levers. These are proven drivers of resilient, long-term
growth, having been the cornerstone of our successful strategy in
Germany, where we have grown organically from £3 million of
operating profit in 2003, to over £100 million today:
1.
|
Grow our leading positions in the
most in-demand future job categories;
|
2.
|
Increase our focus on higher
skilled, higher paid roles;
|
3.
|
Greater focus on resilient and
growing industries and markets;
|
4.
|
Continue to build stronger
relationships with our clients and candidates; and
|
5.
|
Drive an increased proportion of
non-Perm fees across our businesses.
|
Recognising that each Hays country
faces a different starting point, we have defined three categories
of countries based on current market position, expertise,
management capability and the strength and depth of these five
strategic levers:
•
|
Key Countries (Germany,
Australia and the UK), where we have the management expertise,
scale, structure and track record to both increase our conversion
rates and materially grow each business.
|
•
|
Focus Countries (Austria,
France, Italy, Japan, Poland, Spain, Switzerland and the USA) are
future key drivers of long-term growth and will deliver greater
profit diversity.
|
•
|
Emerging Countries represent
the 22 countries in our global network. Each has the potential to
be an attractive growth market and are also important from a
network standpoint to service our Enterprise clients.
|
Overall, we are targeting greater
fee resilience within each Hays country, with more countries
driving material profit contributions.
Enhanced operational delivery
Underpinning our strategy is an
increased focus on operational execution, which we are driving
across the Group. We will improve medium-term consultant
productivity in excess of inflation, with a greater focus on
dynamic pricing, technology tools and data. We have also identified
efficiencies from greater consistency of operating models globally,
and we will better leverage our overhead costs.
For strategic levers 1, 2 and 3 we
will make better use of data to track growth in job categories and
evaluate each business line's performance against local market
opportunities. We are closely tracking our progress in areas like
STEM recruitment, and the development of our pricing and average
candidate salary. For lever 4, we will assess the delivery models
in place and drive productivity further in our delivery teams. In
Enterprise clients, we will better understand the client's needs
and structure, and increase our network effect within clients to
win market share. For lever 5, in addition to non-Perm being highly
complementary to many of our future job categories and targeted
resilient industries, we will closely manage our resources
in-country, and better automate our end-to-end Temp workflow,
reducing compliance and admin time, and costs.
We have accelerated our
back-office efficiency programmes, to standardise and globalise
processes, removing duplicated costs and better leveraging our
shared service centres. We will also drive significant medium-term
benefits from investing in our own technology stack, working with
best-in-class partners, and bringing in the best of AI and
automation into our processes worldwide.
Outcomes
We have strong, market leading
businesses, many of which are implementing our strategy well. But
we need to ensure this is happening across all countries, and we
expect all businesses to be able to deliver a conversion rate of at
least 25%. Large businesses like Germany and Switzerland, which
have proven to be resilient over time, have delivered high compound
growth. However, we also have some businesses which are volatile
and more cyclical, and we have a plan to address this. We can
improve our focus on the key growth industries and job categories
of the future in all countries. And we have some business lines
which are sub-scale, and which are not profitable enough, which we
are addressing, and some may close.
Overall, we are implementing a
'Golden Rule' for all
countries that operating profit growth should be greater than fee
growth, which should in turn exceed headcount growth through the
cycle. This underpins our long-term focus on growing consultant
productivity at least in line with inflation and increasing
operating leverage to drive greater profitability through the
cycle, with a medium-term Group conversion rate target of
22-25%.
H1 Financial & Operational review
Summary Income Statement
|
|
|
|
Growth
|
Six months ended 31 December
(In £s million)
|
2023
|
2022
|
|
Reported
|
LFL
|
Turnover
|
3,538.4
|
3,839.8
|
|
(8)%
|
(5)%
|
|
|
|
|
|
|
Temp
|
341.6
|
359.5
|
|
(5)%
|
(3)%
|
Perm
|
241.7
|
292.4
|
|
(17)%
|
(15)%
|
Net fees (1)
|
583.3
|
651.9
|
|
(11)%
|
(9)%
|
Administrative expenses
|
(523.2)
|
(554.9)
|
|
(6)%
|
(4)%
|
Operating profit (before
exceptional items (2))
|
60.1
|
97.0
|
|
(38)%
|
(37)%
|
Operating profit (after
exceptional items (2))
|
32.2
|
97.0
|
|
(67)%
|
(66)%
|
|
|
|
|
|
|
Conversion rate
(3)
|
10.3%
|
14.9%
|
|
|
|
Underlying Temp margin
(6)
|
15.2%
|
15.3%
|
|
|
|
Temp fees as % of total net
fees
|
59%
|
55%
|
|
|
|
Period-end consultant
headcount
|
7,971
|
9,099
|
|
(12)%
|
|
H1 24: lower fees in challenging market
conditions
Turnover for the six months to 31
December 2023 decreased by 5% (8% on a reported basis).
Net fees in the six months to 31 December 2023
decreased by 9% on a like-for-like basis, and by 11% on a reported
basis, to £583.3 million. This represented a like-for-like fee
decline of £55.1 million versus the prior year, with the fee
decline accelerating through the half-year, including a December
net fee exit rate of minus 13% WDA(5).
The decrease in Group fees was due
to lower volumes in both Temp and Perm, partially offset by
increases in our average fees per placement,
which were driven by management actions and the impact of wage inflation.
The higher net fee decline compared to turnover
was due to relatively resilient performance in Temp fees versus
Perm.
Temp fees (59% of Group) were
relatively resilient and decreased by 3%, or down 2%
WDA(5). Temp volumes decreased by 7% YoY, with a further
1% decline from fewer working days YoY, partially offset by 5%
growth from positive mix effects and higher Temp rates. Our
underlying Temp margin(6) was stable YoY at 15.2%. Temp
volumes remained stable sequentially through our second quarter but
did not benefit from our normal seasonal uplift through
Q2.
Perm fees (41% of Group) decreased
by 15%, with activity slowing through the half-year. Overall, Perm
volumes decreased by 25% as job inflow decreased and hiring
processes extended, notably in December. As with FY23, this was
partially offset by good growth in our average Perm fee, up
10%.
Fees in the Private sector (83% of
Group), decreased by 10%, with the Public sector more resilient,
down 1%.
Our largest global specialism of
Technology (25% of Group fees) decreased by 10%, with Accountancy
& Finance down 6%, which included Senior Finance hires
outperforming lower salary levels. Engineering performed well and
grew by 6%, although Construction & Property decreased by 14%.
Direct and indirect outsourcing fees with Enterprise clients
decreased by 5%, although we continue to have a good pipeline of
opportunities.
H1 operating profit impacted by lower fees, however decisive
cost actions taken
H1 24
pre-exceptional(2) Group operating profit of £60.1
million represented a like-for-like decrease of 37% (down 33%
WDA(5)). Group conversion rate(2) decreased
by 460 bps year-on-year to 10.3% (10.8% WDA(5)). As
reported at our Q2 results, given the deceleration in fees we saw
at the end of the quarter (December fees decreased by 15% on a
reported basis), the December fee slowdown directly impacted our H1
24 operating profit.
As market conditions became more
challenging, we moved decisively to align consultant capacity to
market demand and reduced consultant headcount, while protecting
our core business. Overall, Group consultant headcount in H1 24 was
decreased by 619, or 7%, and by 12% YoY, through a mix of natural
attrition and performance management. We also restructured
operations in several regions which included refocusing and
delayering of management and accelerated our back-office efficiency
programmes. This led to a 3% reduction in non-consultant headcount
in Q2 24.
Since our FY23 preliminary results
in August, our actions have reduced our costs per
period(8) by c.£2.5 million, which equates to annualised
Group cost savings of £30 million. Of these savings, c.£20 million
arose from the 7% reduction in consultant headcount delivered in
H1. A further c.£10 million of savings resulted from the
restructuring of operations and back-office functions, which
resulted in an exceptional restructuring charge in H1 of £12.6
million(2), detailed below. Looking ahead, we expect our
ongoing actions will deliver further annualised Group cost
reductions of c.£20 million in H2 24.
Like-for-like costs decreased by
4% YoY or £20.0million (£31.7 million on reported basis). This was
driven by a 9% lower Group headcount, lower commissions and bonuses
and reduced operational overhead spend. This was partially offset
by our own salary increases and underlying cost inflation, notably
in property and insurance costs.
Overall Group average fee
productivity per consultant was solid, given market conditions, but
remained below peak levels. Productivity was supported by our
actions to manage consultant headcount, increase our fee margins
and focus on higher value roles. Market conditions meant that Group
average volume productivity per consultant was down significantly
YoY, and versus pre-pandemic levels. We remain focused on driving
productivity in H2 24 and beyond.
Exchange rate movements decreased
net fees and operating profit by £13.5 million and £1.8 million,
respectively. This resulted from the strengthening in the average
rate of exchange of sterling versus our main trading currencies,
notably the Australian dollar. Currency fluctuations remain a
significant Group sensitivity.
Working-day adjustments
As previously reported, our
Germany business had two fewer working days versus the prior year,
which impacted our fees and operating profit by c.£3.5 million.
Therefore, on a WDA basis Group operating profit was £63.6 million,
down 33% YoY, and represented a conversion rate of 10.8%. There are
no material working-day impacts in H2. However, in H2 Easter is
evenly split between Q3 and Q4, while in FY23 it fell entirely in
Q4. We expect this to have a c.1-2% negative impact on net fees at
Group level in Q3 FY24, primarily via our Temp business, with a
corresponding benefit to Q4 24.
Impairment of goodwill and exceptional restructuring
charge
During the half-year, the Group
incurred an exceptional charge of £27.9 million (2022: £nil). Of
this, £15.3 million is a non-cash exceptional charge resulting from
the partial impairment of the carrying value of goodwill relating
to the 2014 Veredus acquisition in the USA, given ongoing
challenges in the US market. The goodwill impairment charge is a
material non-cash item that based on its size and nature is
considered to be exceptional. The remaining Veredus goodwill
balance at 31 December 2023 is £7.1 million
In a direct and decisive response
to increasingly challenging market conditions and a clear slowdown
in most markets, we restructured the business operations of several
countries across the Group, to better align business operations to
market opportunities and reduce operating costs. The restructuring
exercise led to the redundancy of a number of employees, including
senior and operational management and back-office positions. As
reported at our Q2 results, the combined costs relating to this
were £12.6 million, and are considered exceptional given their size
and impact on business operations. The cash impact of the
exceptional charge in the half-year was £6.8 million, with a
further £2.5 million cash outflow expected in the six months to 30
June 2024. We estimate that these restructuring actions will result
in c.£10 million per annum in longer-term cost savings, which are
included in the overall £30 million of annualised cost savings
resulting from our H1 actions.
Net finance charge
The net finance charge for the
half-year was £4.6 million (2022: £3.0 million). The increase YoY
was primarily due to a £0.8 million charge on defined benefit
pension scheme obligations (2022: credit of £0.4 million), and is
non-cash. Net bank interest payable (including amortisation of
arrangement fees) was £1.3 million (2022: £1.3 million). The
interest charge on lease liabilities under IFRS 16 was £2.4 million
(2022: £2.0 million), and the Pension Protection Fund levy was £0.1
million (2022: £0.1 million). We expect the net finance charge for
FY24 to be c.£9 million, modestly higher YoY driven by higher
non-cash items of c.£6 million.
Taxation
Taxation for the half-year was
£15.3 million (2022: £27.3 million), representing a
pre-exceptional(2) effective tax rate (ETR) of 32.0%
(2022: 29.0%). The increase in the ETR year-on-year is primarily
driven by the geographic mix of operating profit, notably the
impact of Germany, which has one of our highest country tax rates
and which accounted for 68% of group profits in the half-year. We
expect the Group's ETR will be c.32% in FY24.
Earnings per share
The Group's pre-exceptional basic
Earnings per share (EPS) of 2.37p was 42% lower than the prior
year. The reduction was primarily driven by 37% lower
pre-exceptional operating profit. In addition, we incurred a
modestly higher net finance charge and a higher ETR, both noted
above. The impact on EPS was partially offset by
a 2.1% reduction in average shares in issue, resulting from our
FY23 share buyback programme.
Strong balance sheet and cash generation
Our net cash position at 31
December 2023 was £66.9 million. We converted 112% of operating
profit(2) into operating cash
flow(4), significantly up YoY (2022:
68%(4)). We saw a working capital outflow of £3.6
million in the half-year (2022: £44.3 million outflow), with a
reduction in our Temp debtor book offset by a decrease in payables,
and a modest increase in debtor days to 36 days (2022: 35 days),
due to the timing of customer payments and geographic mix of
business. Debtor days remain below pre-pandemic levels.
Cash tax paid in the half-year was
£28.5 million (2022: £33.2 million) and included some pre-payments
to certain tax authorities. Net capital expenditure was £13.7
million (2022: £12.3 million), with continued investments in
technology infrastructure and cyber security. We expect capital
expenditure will be c.£30 million in FY24.
Company pension contributions were
£9.1 million (2022: £8.8 million) and net interest paid was £1.3
million (2022: £1.4 million). The cash impact of the exceptional
restructuring charge in H1 24 was £6.8million.
During the half-year we paid
a £32.6 million final core dividend for FY23 and
a special dividend of £35.7 million. During the half-year we
also purchased £12.3 million in shares under our Treasury share
buyback programme announced in September 2023, which has been
completed.
Retirement benefits
The Group's defined benefit
pension scheme position under IAS 19 at 31 December 2023 has
resulted in a surplus of £26.4 million (30 June 2023: surplus of
£25.7 million). This £0.7 million increase in surplus was driven by
employer contributions of £9.1 million, plus higher-than-expected
return on the scheme assets, partially offset by a decrease in the
discount rate adopted within the key financial assumptions, which
increased the calculation of the schemes' liabilities.
During the half-year, the Group
contributed £9.1 million of cash to the defined benefit scheme
(2022: £8.8 million), in line with the agreed deficit recovery
plan. The 2021 triennial valuation quantified the actuarial deficit
at £23.9 million on a Technical Provisions basis. Our long-term
objective continues to be reaching full buy-out of the scheme and
therefore our recovery plan remained unchanged and comprised an
annual payment of £16.7 million from July 2021, with a fixed 3%
uplift per year. The scheme was closed to new entrants in 2001 and
to future accrual in June 2012.
Capital allocation
Our business model remains highly
cash generative. The Board's free cash flow priorities are to fund
the Group's investment and development, maintain a strong balance
sheet, deliver a progressive, sustainable and appropriate core
dividend and to return any surplus cash to shareholders through a
combination of special dividends and share buybacks, subject to the
economic outlook.
The Board has declared an
unchanged interim core dividend of 0.95 pence per share, reflecting
our strong financial position and the Board's confidence in the
Group's strategy. This represents pre-exceptional dividend cover of
2.5x, within our target core full year dividend cover range of 2.0
to 3.0x earnings. The ex-dividend date is 29 February 2024, and our
dividend payment date will be 9 April 2024.
Our policy for returning surplus
cash to shareholders remains unchanged and is based on paying
capital above our cash buffer at each financial year-end (30 June)
of £100 million, subject to the economic outlook. We have a strong
track record of paying cash to shareholders, with c.£950 million in
core and special dividends paid in respect of FY17 to FY23, and
additionally £93.2 million of share buybacks since April
2022.
Foreign exchange
Overall, net currency movements
versus sterling negatively impacted results in the half-year,
decreasing net fees by £13.5 million, and operating profit by £1.8
million, primarily due to the strengthening of sterling versus the
Australian dollar.
Fluctuations in the rates of the
Group's key operating currencies versus sterling represent a
significant sensitivity for the reported performance of our
business. By way of illustration, based on our H1 24 results, each
1 cent movement in annual exchange rates of the euro and Australian
dollar impacts net fees by c.£4.9 million and c.£0.8 million
respectively per annum, and operating profits by c.£1.2 million and
c.£0.1 million respectively per annum.
The rate of exchange between the
Australian dollar and sterling over the half-year averaged AUD
$1.9205 and closed at AUD $1.8661. As at 20 February 2024 the rate
stood at AUD 1.9271. The rate of exchange between the euro and
sterling over the half-year averaged €1.1587 and closed at €1.1517.
As at 20 February 2024 the rate stood at €1.1690.
The strengthening of sterling
versus our main trading currencies of the euro and Australian
dollar is currently a headwind to Group operating profit in
FY24.
Movements in consultant headcount and office network
changes
Consultant headcount at 31
December 2023 was 7,971, down 12% year-on-year and 7% lower than
June 2023. Total Group headcount decreased by 9% year-on-year. We
expect total headcount will decrease by c.3-4% in Q3 FY24, as we
continue our focus on improving productivity and managing our
overall cost base.
Consultant headcount
|
31 Dec
2023
|
31
Dec
2022
|
Net change
(vs. 31 Dec
2022)
|
30
Jun
2023
|
Net change
(vs. 30 Jun
2023)
|
Germany
|
2,055
|
2,072
|
(1)%
|
2,044
|
1%
|
United Kingdom &
Ireland
|
1,800
|
2,082
|
(14)%
|
1,935
|
(7)%
|
Australia & New
Zealand
|
887
|
1,110
|
(20)%
|
1,071
|
(17)%
|
Rest of World
|
3,229
|
3,835
|
(16)%
|
3,540
|
(9)%
|
Group
|
7,971
|
9,099
|
(12)%
|
8,590
|
(7)%
|
We consolidated several smaller
locations, meaning our office network decreased by a net three
locations in the half-year.
Office network
|
31 Dec
2023
|
30
Jun
2023
|
Net change
(vs. 30 Jun
2023)
|
31
Dec
2022
|
Germany
|
26
|
26
|
-
|
26
|
United Kingdom &
Ireland
|
85
|
85
|
-
|
87
|
Australia & New
Zealand
|
38
|
39
|
(1)
|
39
|
Rest of World
|
100
|
102
|
(2)
|
103
|
Group
|
249
|
252
|
(3)
|
255
|
Germany (32%(7) net fees, 68%(7)
operating profit)
Resilient performance, with
operating profit up 3% WDA(5) despite a tougher economic
backdrop
|
|
|
|
Growth
|
Six months ended 31
December
(In £s million)
|
2023
|
2022
|
|
Reported
|
LFL
|
Net fees (1)
|
186.2
|
180.2
|
|
3%
|
3%
|
Operating profit
(2)
|
40.8
|
43.2
|
|
(6)%
|
(6)%
|
Conversion rate
(3)
|
21.9%
|
24.0%
|
|
|
|
Period-end consultant
headcount
|
2,055
|
2,072
|
|
(1)%
|
|
Our largest market of Germany saw
net fees increase by 3% to £186.2 million. Operating profit
decreased by 6% to £40.8 million, mainly due to two fewer working
days in H1 24 versus the prior year, which as previously reported
impacted fees and profit by £3.5 million. Adjusting for two fewer
working days, fees increased by 5% and operating profit growth was
3%. Conversion rate was 21.9% (2023: 24.0%), or 23.4%
WDA(5). Currency impacts were minimal in the
half-year.
We have delivered this growth
despite German GDP declining over the last 18 months, highlighting
the relative resilience of demand for skilled Contractors and
Temps, driven by talent shortages. At the specialism level, our
largest specialism of Technology (33% of Germany fees), decreased
by 3%, with Engineering, our second largest, up 11%. Accountancy
& Finance and Construction & Property increased by 4% and
6% respectively, with HR flat. Fees in our Public sector business
(15% of Germany fees) increased by 16%.
Temp and Contracting, (82% of
Germany fees), increased by 3%, or up 5% WDA(5).
This was driven by 1% growth in volumes and 5%
from the positive impact of price and mix, partially offset by 2%
from two fewer working days and 1% from slightly lower average
hours worked. Pricing and mix remained solid in the half-year and
is expected to remain a positive tailwind in H2 24, albeit at lower
levels than H1. As previously reported at our Q2 results, Temp and
Contracting volumes were sequentially stable through H1, however we
did not see our normal seasonal volume increase in Q2.
Perm, 18% of Germany fees,
increased by 2%. This included a 10% increase in our average Perm
fee, partially offset by 8% lower Perm volumes.
Consultant headcount decreased by
1% year-on-year and increased by 1% in the half.
United Kingdom & Ireland (20%(7) net fees,
9%(7) operating profit)
Markets slowed sharply through the
half-year, particularly in Perm, significantly impacting
profit
|
|
|
|
Growth
|
Six months ended 31
December
(In £s million)
|
2023
|
2022
|
|
Reported
|
LFL
|
Net fees (1)
|
118.1
|
136.9
|
|
(14)%
|
(14)%
|
Operating profit
(2)
|
5.7
|
15.2
|
|
(63)%
|
(63)%
|
Conversion rate
(3)
|
4.8%
|
11.1%
|
|
|
|
Period-end consultant
headcount
|
1,800
|
2,082
|
|
(14)%
|
|
In the United Kingdom &
Ireland ("UK&I"), net fees decreased by 14% to £118.1 million.
Operating profit of £5.7 million represented a decrease of 63%
versus the prior year, and a conversion rate of 4.8% (2023:
11.1%).
Perm markets slowed materially
through the half-year, impacted by negative GDP and decreased
client and candidate confidence, with Temp remaining broadly stable
sequentially, but down YoY. Our UK&I costs decreased by 8%,
driven by headcount reductions, and costs will reduce further in H2 as a number of restructuring projects
complete. However, given the pace of
decline in fees through the half-year, we incurred negative
operating profit leverage, particularly in Q2, amplified by
December's fee exit rate of minus 20%.
Temp (56% of UK&I), decreased
by 11%, with Temp volumes also down 11% and the mix of price and
margin flat YoY. Our Perm business saw fees decrease by 17%, with
volumes down 28%, partially offset by an 11% increase in average
Perm fee. The Private sector (67% of UK&I fees) declined by
18%, with the Public sector down 3%.
All UK&I regions traded
broadly in line with the overall UK&I business, except for
Yorkshire & the North, down 5%, and Scotland, down 20%. Our
largest region of London decreased by 18%, while Ireland declined
by 6%. Direct fees with Enterprise clients were more resilient, up
9%.
Our largest UK&I specialism of
Accountancy & Finance decreased by 10%, with Construction &
Property down 11%. Technology and Office Support decreased by
26% and 21% respectively.
Consultant headcount decreased by
14% year-on-year and decreased by 7% in the half.
Australia & New Zealand (13%(7) net fees,
11%(7) operating profit)
Markets slowed sharply through the
half-year, particularly in Perm, significantly impacting
profit
|
|
|
|
Growth
|
Six months ended 31
December
(In £s million)
|
2023
|
2022
|
|
Reported
|
LFL
|
Net fees (1)
|
74.3
|
99.9
|
|
(26)%
|
(19)%
|
Operating profit
(2)
|
6.4
|
17.8
|
|
(64)%
|
(60)%
|
Conversion rate
(3)
|
8.6%
|
17.8%
|
|
|
|
Period-end consultant
headcount
|
887
|
1,110
|
|
(20)%
|
|
In Australia & New Zealand
("ANZ"), net fees decreased by 19% to £74.3 million, with operating
profit down 60% to £6.4 million. This represented a conversion rate
of 8.6% (2023: 17.8%). Currency impacts were negative in the
half-year, decreasing net fees by £8.5 million.
Cost decreases of 10% were driven
by 15% lower average consultant headcount in the half-year,
partially offset by our own cost inflation. Having changed our ANZ
leadership team in H2 23, we continued to take decisive action to
improve our performance. We undertook a restructuring of the
business, focusing on improving consultant productivity and driving
operational efficiencies. We also conducted a full review of
operational management capacity, which we aligned to market
conditions. This said, the pace of decline in fees through the
half-year meant we incurred negative operating profit leverage,
which was amplified by the further slowdown in December.
Temp (63% of ANZ) decreased by
15%, with volumes down 17%, but remained sequentially stable
through the half-year. Fees continued to be impacted by the Federal
government's policy decision to reduce the use of Temps in the
Public sector, and by reduced activity in some large Enterprise
clients. Perm fees decreased by 25%, with volumes down 21% and
slowing through the half-year, including a particularly difficult
December. The Private sector (62% of ANZ fees), declined by 22%,
with Public sector fees down 13%.
Australia, 92% of ANZ, saw fees
decrease by 18%. New South Wales and Victoria decreased by 22% and
19% respectively. Queensland fell by 11%, with ACT down 22%. At the
ANZ specialism level, Construction & Property (19% of fees),
decreased by 24%, with Technology down 20%. Accountancy &
Finance decreased by 16%, although Banking and HR were less
impacted, down 11% and 9% respectively. New Zealand fees decreased
by 26%.
ANZ consultant headcount decreased
by 20% year-on-year and decreased by 17% in the half.
Rest of World (35%(7) net fees, 12%(7)
operating profit)
Slowing markets in EMEA and
challenging conditions in China and the Americas negatively
impacted operating profit
|
|
|
|
Growth
|
Six months ended 31
December
(In £s million)
|
2023
|
2022
|
|
Reported
|
LFL
|
Net fees (1)
|
204.7
|
234.9
|
|
(13)%
|
(11)%
|
|
|
|
|
|
|
Operating profit
(2)
|
7.2
|
20.8
|
|
(65)%
|
(65)%
|
|
|
|
|
|
|
Conversion rate
(3)
|
3.5%
|
8.9%
|
|
|
|
Period-end consultant
headcount
|
3,229
|
3,835
|
|
(16)%
|
|
Fees in our Rest of World ("RoW")
division, which comprises 28 countries, decreased by 11%. Fees in
Temp (37% of RoW) were resilient and flat YoY, with Perm down 16%
as markets slowed through the half-year. Operating profit decreased
by 65% to £7.2 million, with RoW operating costs down 6% YoY,
representing a conversion rate of 3.5% (2023: 8.9%). Currency
impacts were negative in the half-year, decreasing fees by £5.1
million and operating profit by £0.1 million.
EMEA ex-Germany (63% of RoW)
fees decreased by 4%. France, our largest RoW country, delivered
flat fees, however activity slowed through the half-year. Belgium
and Spain increased by 6% and 1% respectively, and the UAE
delivered record fees, up 26%. Switzerland and Poland decreased by
4% and 23% respectively. In response to market conditions, we
reduced EMEA ex-Germany headcount at the end of the
half-year.
The Americas (21% of RoW)
fees decreased by 26% and with tough conditions throughout the
region. The USA declined by 26%, Latin America by 27% and Canada by
28%. Given the extent of the fee declines, the Americas was
modestly loss-making in the half-year.
Asia (16% RoW) fees decreased
by 14%, with China down 22%. Japan and Malaysia decreased by 2% and
5% respectively. Overall, we made a small operating profit in Asia,
however Mainland China was modestly loss-making.
In response to market conditions,
we restructured our Americas and Asia businesses, including a
right-sizing and de-layering of operational management, and a
reduction in non-fee earner headcount. Overall consultant headcount
in the RoW division decreased by 16% year-on-year. EMEA ex-Germany
consultant headcount decreased by 10%, the Americas decreased by
33% and Asia was down 10%.
Purpose, Net Zero, Equity and our
Communities
Our purpose is to benefit society
by investing in lifelong partnerships that empower people and
organisations to succeed, creating opportunities and improving
lives. Becoming lifelong partners to millions of people and
thousands of organisations also helps to make our business
sustainable. Our core company value is that we should always strive
to 'do the right thing'. Linked to this and our commitment to
Environmental, Social & Governance (ESG) matters, Hays has
shaped its Sustainability Framework around the United Nations
Sustainable Development Goals (UNSDG's), and further details can be
found in our
FY23 ESG report.
Treasury management
The Group's operations are
financed by retained earnings and cash reserves. In addition, the
Group has in place a £210 million revolving credit facility, which
reduces in November 2024 to £170 million and expires in November
2025. This provides considerable headroom versus current and future
Group funding requirements.
The covenants within the facility
require the Group's interest cover ratio to be at least 4:1 (ratio
as at 31 Dec 2023: 177:1) and its leverage ratio (net debt to
EBITDA) to be no greater than 2.5:1 (as at 31 December 2023 the
Group held a net cash position). The interest rate of the facility
is on a ratchet mechanism with a margin payable over Compounded
Reference Rate in the range of 0.70% to 1.50%.
As at 31 December 2023, £125
million of the committed facility was undrawn (31 December 2022:
£120m of the committed facility was undrawn).
The Group's UK-based Treasury
function manages the Group's currency and interest rate risks in
accordance with policies and procedures set by the Board and is
responsible for day-to-day cash management; the arrangement of
external borrowing facilities; and the investment of surplus funds.
The Treasury function does not operate as a profit centre or use
derivative financial instruments for speculative
purposes.
Principal risks facing the business
Hays plc operates a comprehensive enterprise
risk management framework, which is monitored and reviewed by the
Board. There are a number of potential risks and uncertainties that
could have a material impact on the Group's financial performance
and position. These include risks relating to the cyclical nature
of our business and inflation, business model, talent recruitment
and retention, compliance, reliance on technology, cyber security,
data protection, contracts and the covid pandemic. These risks and
our mitigating actions are set out in the
2023 Annual Report, and remain relevant.
There are no additional risks since this date which impact Hays'
financial position or performance, although as noted earlier in
this statement, with macroeconomic uncertainties increasing, we are
closely monitoring our activity levels and KPI's.
Responsibility Statement
We confirm that, to the best of our
knowledge:
•
|
the unaudited condensed Consolidated Interim
Financial Statements have been presented in accordance with IAS 34
"Interim Financial Reporting" and give a true and fair view of the
assets, liabilities, financial position and profit for the
Group;
|
•
|
the interim management report includes a fair
review of the information required by DTR 4.2.7R (indication of
important events during the first six months of the financial year
and their impact on the condensed financial statements, and
description of principal risks and uncertainties for the remaining
six months of the financial year); and
|
•
|
the interim management report includes a fair
review of the information required by DTR 4.2.8R (disclosure of
related parties transactions in the first six months of the
financial year and any changes in the related parties transactions
described in the last Annual Report).
|
This interim report was approved and
authorised for issue by the Board of Directors on 21 February
2024.
Dirk
Hahn
James Hilton
Chief Executive
Group Finance Director
Hays plc
20 Triton Street
London
NW1 3BF
haysplc.com/investors
Cautionary statement
This Preliminary Report (the "Report") has
been prepared in accordance with the Disclosure Guidance and
Transparency Rules of the UK Financial Conduct Authority and is not
audited. No representation or warranty, express or implied, is or
will be made in relation to the accuracy, fairness or completeness
of the information or opinions contained in this Report. Statements
in this Report reflect the knowledge and information available at
the time of its preparation. Certain statements included or
incorporated by reference within this Report may constitute
"forward-looking statements" in respect of the Group's operations,
performance, prospects and/or financial condition. By their nature,
forward-looking statements involve a number of risks, uncertainties
and assumptions and actual results or events may differ materially
from those expressed or implied by those statements. Accordingly,
no assurance can be given that any particular expectation will be
met and reliance shall not be placed on any forward-looking
statement. Additionally, forward-looking statements regarding past
trends or activities shall not be taken as a representation
that such trends or activities will continue in the future. The
information contained in this Report is subject to change without
notice and no responsibility or obligation is accepted to update or
revise any forward-looking statement resulting from new
information, future events or otherwise. Nothing in this Report
shall be construed as a profit forecast. This Report does not
constitute or form part of any offer or invitation to sell, or any
solicitation of any offer to purchase or subscribe for any shares
in the Company, nor shall it or any part of it or the fact of its
distribution form the basis of, or be relied on in connection with,
any contract or commitment or investment decisions relating
thereto, nor does it constitute a recommendation regarding the
shares of the Company or any invitation or inducement to engage in
investment activity under section 21 of the Financial Services and
Markets Act 2000. Past performance cannot be relied upon as a guide
to future performance. Liability arising from anything in this
Report shall be governed by English Law, and neither the Company
nor any of its affiliates, advisors or representatives shall have
any liability whatsoever (in negligence or otherwise) for any loss
howsoever arising from any use of this Report or its contents or
otherwise arising in connection with this Report. Nothing in this
Report shall exclude any liability under applicable laws that
cannot be excluded in accordance with such laws.
LEI code: 213800QC8AWD4BO8TH08
Independent Review Report to Hays plc
|
Report on the Condensed Consolidated Interim Financial
Statements
|
|
|
Our
conclusion
|
|
|
We have reviewed Hays plc's
condensed consolidated interim financial statements (the "interim
financial statements") in the Half-year report of Hays plc for the
6 month period ended 31 December 2023 (the "period").
|
|
|
Based on our review, nothing has
come to our attention that causes us to believe that the interim
financial statements are not prepared, in all material respects, in
accordance with UK adopted International Accounting Standard 34,
'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
|
|
|
The interim financial statements
comprise:
|
|
|
•
|
the Condensed Consolidated Balance
Sheet as at 31 December 2023;
|
•
|
the Condensed Consolidated Income
Statement and the Condensed Consolidated Statement of Comprehensive
Income for the period then ended;
|
•
|
the Condensed Consolidated Cash Flow
Statement for the period then ended;
|
•
|
the Condensed Consolidated Statement
of Changes in Equity for the period then ended; and
|
•
|
the explanatory notes to the interim
financial statements.
|
|
|
The interim financial statements
included in the Half-year report of Hays plc have been prepared in
accordance with UK adopted International Accounting Standard 34,
'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
|
|
|
Basis for conclusion
|
|
|
We conducted our review in
accordance with International Standard on Review Engagements (UK)
2410, 'Review of Interim Financial Information Performed by the
Independent Auditor of the Entity' issued by the Financial
Reporting Council for use in the United Kingdom ("ISRE (UK) 2410").
A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures.
|
|
|
A review is substantially less in
scope than an audit conducted in accordance with International
Standards on Auditing (UK) and, consequently, does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
|
|
|
We have read the other information
contained in the Half-year report and considered whether it
contains any apparent misstatements or material inconsistencies
with the information in the interim financial
statements.
|
|
|
Conclusions relating to Going Concern
|
|
Based on our review procedures,
which are less extensive than those performed in an audit as
described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors
have inappropriately adopted the going concern basis of accounting
or that the directors have identified material uncertainties
relating to going concern that are not appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410. However, future events or
conditions may cause the group to cease to continue as a going
concern.
|
|
|
Responsibilities for the interim financial statements and the
review
|
|
|
Our
responsibilities and those of the Directors
|
|
|
The Half-year report, including
the interim financial statements, is the responsibility of, and has
been approved by the directors. The directors are responsible for
preparing the Half-year report in accordance with the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority. In preparing the Half-year report,
including the interim financial statements, the directors are
responsible for assessing the group's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or to cease
operations, or have no realistic alternative but to do
so.
|
|
|
Our responsibility is to express a
conclusion on the interim financial statements in the Half-year
report based on our review. Our conclusion, including our
Conclusions relating to going concern, is based on procedures that
are less extensive than audit procedures, as described in the Basis
for conclusion paragraph of this report. This report, including the
conclusion, has been prepared for and only for the company for the
purpose of complying with the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct
Authority and for no other purpose. We do not, in giving this
conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent
in writing.
|
|
|
|
|
PricewaterhouseCoopers
LLP
|
Chartered Accountants
|
London
|
21 February 2024
|
Condensed Consolidated Income Statement
|
|
|
|
|
|
|
|
|
|
|
Six months
to
|
Six
months to
|
Year
to
|
|
|
31
December
|
31
December
|
30
June
|
|
|
2023
|
2022
|
2023
|
(In £s million)
|
Note
|
(unaudited)
|
(unaudited)
|
(audited)
|
Turnover
|
2
|
3,538.4
|
3,839.8
|
7,583.3
|
Net
fees (1)
|
2
|
583.3
|
651.9
|
1,294.6
|
Administrative expenses
(2)
|
|
(523.2)
|
(554.9)
|
(1,097.6)
|
Operating profit before exceptional
items
|
2
|
60.1
|
97.0
|
197.0
|
Exceptional items
(3)
|
3
|
(27.9)
|
-
|
-
|
Operating profit
|
2
|
32.2
|
97.0
|
197.0
|
Net finance charge
|
4
|
(4.6)
|
(3.0)
|
(4.9)
|
Profit before tax
|
|
27.6
|
94.0
|
192.1
|
Tax (4)
|
5
|
(15.3)
|
(27.3)
|
(53.8)
|
Profit after tax
|
|
12.3
|
66.7
|
138.3
|
Profit attributable to equity holders of the parent
company
|
|
12.3
|
66.7
|
138.3
|
Earnings per share before
exceptional items (pence)
|
|
|
|
|
|
- Basic
|
7
|
2.37p
|
4.11p
|
8.59p
|
|
- Diluted
|
7
|
2.36p
|
4.08p
|
8.52p
|
Earnings per share
(pence)
|
|
|
|
|
|
- Basic
|
7
|
0.77p
|
4.11p
|
8.59p
|
|
- Diluted
|
7
|
0.77p
|
4.08p
|
8.52p
|
|
|
|
|
|
(1) Net fees comprise turnover less remuneration of temporary
workers and other recruitment agencies.
|
|
|
(2) Administrative expenses include impairment loss on trade
receivables of £1.7 million (2022: £2.4 million).
|
|
(3) Exceptional items for the six months to 31 December 2023
comprise goodwill impairment of £15.3 million and a restructuring
charge of £12.6
|
million.
|
(4) The tax charge for the six months ended 31 December 2023 of
£15.3 million included a £2.5 million tax credit in respect of
exceptional items. The
|
pre-exceptional tax charge of £17.8
million represents an effective tax rate of 32.0% against a
pre-exceptional profit before tax of £55.5 million. On a
|
post-exceptional basis the effective
tax rate was 55.4%.
|
|
|
|
|
|
|
Condensed Consolidated Statement of Comprehensive
Income
|
|
|
|
|
|
|
|
Six months
to
|
Six
months to
|
Year
to
|
|
|
31
December
|
31
December
|
30
June
|
|
|
2023
|
2022
|
2023
|
(In £s million)
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
Profit for the period
|
|
12.3
|
66.7
|
138.3
|
Items that will not be reclassified subsequently to profit or
loss:
|
|
|
|
|
Actuarial remeasurement of defined
benefit pension schemes
|
|
(7.6)
|
(76.6)
|
(95.1)
|
Tax relating to components of other
comprehensive income
|
|
1.8
|
15.1
|
19.5
|
|
|
(5.8)
|
(61.5)
|
(75.6)
|
Items that may be reclassified subsequently to profit or
loss:
|
|
|
|
|
Currency translation
adjustments
|
|
6.6
|
9.5
|
(15.6)
|
Other comprehensive income/(loss)
for the period net of tax
|
|
0.8
|
(52.0)
|
(91.2)
|
Total comprehensive income for the
period
|
|
13.1
|
14.7
|
47.1
|
Attributable to equity shareholders
of the parent company
|
|
13.1
|
14.7
|
47.1
|
Condensed Consolidated Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
31
December
|
31
December
|
30
June
|
|
|
2023
|
2022
|
2023
|
(In £s million)
|
Note
|
(unaudited)
|
(unaudited)
|
(audited)
|
Non-current assets
|
|
|
|
|
Goodwill
|
8
|
186.1
|
205.1
|
200.3
|
Other intangible assets
|
|
59.6
|
49.6
|
53.7
|
Property, plant and
equipment
|
|
27.5
|
29.5
|
29.7
|
Right-of-use assets
|
9
|
180.6
|
176.3
|
176.1
|
Deferred tax assets
|
|
21.4
|
20.8
|
21.4
|
Retirement benefit
surplus
|
11
|
26.4
|
34.6
|
25.7
|
|
|
501.6
|
515.9
|
506.9
|
Current assets
|
|
|
|
|
Trade and other
receivables
|
10
|
1,119.8
|
1,174.1
|
1,244.6
|
Corporation tax debtor
|
|
6.8
|
5.2
|
6.8
|
Cash and cash equivalents
|
13
|
151.9
|
191.4
|
145.6
|
Derivative financial
instruments
|
|
-
|
-
|
0.1
|
|
|
1,278.5
|
1,370.7
|
1,397.1
|
Total assets
|
|
1,780.1
|
1,886.6
|
1,904.0
|
Current liabilities
|
|
|
|
|
Trade and other payables
|
|
(862.0)
|
(894.2)
|
(991.3)
|
Lease liabilities
|
9
|
(45.6)
|
(42.2)
|
(41.3)
|
Corporation tax
liabilities
|
|
(0.8)
|
(22.0)
|
(16.2)
|
Provisions
|
12
|
(16.3)
|
(11.5)
|
(10.8)
|
|
|
(924.7)
|
(969.9)
|
(1,059.6)
|
Non-current liabilities
|
|
|
|
|
Bank loans
|
13
|
(85.0)
|
(90.0)
|
(10.0)
|
Deferred tax liabilities
|
|
(2.9)
|
(4.4)
|
(2.8)
|
Lease liabilities
|
9
|
(149.2)
|
(147.5)
|
(148.5)
|
Provisions
|
12
|
(9.1)
|
(8.9)
|
(12.8)
|
|
|
(246.2)
|
(250.8)
|
(174.1)
|
Total liabilities
|
|
(1,170.9)
|
(1,220.7)
|
(1,233.7)
|
Net
assets
|
|
609.2
|
665.9
|
670.3
|
|
|
|
|
|
Equity
|
|
|
|
|
Called up share capital
|
|
16.0
|
16.2
|
16.0
|
Share premium
|
|
369.6
|
369.6
|
369.6
|
Merger reserve
|
|
43.8
|
43.8
|
43.8
|
Capital redemption
reserve
|
|
3.4
|
3.2
|
3.4
|
Retained earnings
|
|
90.6
|
131.4
|
155.4
|
Cumulative translation
reserve
|
|
64.6
|
83.1
|
58.0
|
Equity reserve
|
|
21.2
|
18.6
|
24.1
|
Total equity
|
|
609.2
|
665.9
|
670.3
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statement of Changes in
Equity
|
|
|
|
For the six months ended 31 December
2023
|
|
|
|
|
|
|
|
|
(In £s million)
|
Called
up share capital
|
Share
premium
|
Merger
reserve
|
Capital
redemption reserve
|
Retained
earnings
|
Cumulative translation reserve
|
Equity
reserve
|
Total
equity
|
At 1 July 2023
|
16.0
|
369.6
|
43.8
|
3.4
|
155.4
|
58.0
|
24.1
|
670.3
|
Currency translation
adjustments
|
-
|
-
|
-
|
-
|
-
|
6.6
|
-
|
6.6
|
Remeasurement of defined benefit
pension schemes
|
-
|
-
|
-
|
-
|
(7.6)
|
-
|
-
|
(7.6)
|
Tax relating to components of other
comprehensive income
|
-
|
-
|
-
|
-
|
1.8
|
-
|
-
|
1.8
|
Net income recognised in other
comprehensive income
|
-
|
-
|
-
|
-
|
(5.8)
|
6.6
|
-
|
0.8
|
Profit for the period
|
-
|
-
|
-
|
-
|
12.3
|
-
|
-
|
12.3
|
Total comprehensive income for the
period
|
-
|
-
|
-
|
-
|
6.5
|
6.6
|
-
|
13.1
|
Dividends paid
|
-
|
-
|
-
|
-
|
(68.3)
|
-
|
-
|
(68.3)
|
Purchase of own shares
|
-
|
-
|
-
|
-
|
(12.3)
|
-
|
-
|
(12.3)
|
Share-based payments charged to the
income statement
|
-
|
-
|
-
|
-
|
-
|
-
|
6.4
|
6.4
|
Share-based payments settled on
vesting
|
-
|
-
|
-
|
-
|
9.3
|
-
|
(9.3)
|
-
|
At
31 December 2023 (unaudited)
|
16.0
|
369.6
|
43.8
|
3.4
|
90.6
|
64.6
|
21.2
|
609.2
|
|
|
|
|
|
|
|
|
|
For the six months ended 31 December
2022
|
|
|
|
|
|
|
|
|
(In £s million)
|
Called
up share capital
|
Share
premium
|
Merger
reserve
|
Capital
redemption reserve
|
Retained
earnings
|
Cumulative translation reserve
|
Equity
reserve
|
Total
equity
|
At 1 July 2022
|
16.7
|
369.6
|
43.8
|
2.7
|
268.2
|
73.6
|
21.6
|
796.2
|
Currency translation
adjustments
|
-
|
-
|
-
|
-
|
-
|
9.5
|
-
|
9.5
|
Remeasurement of defined benefit
pension schemes
|
-
|
-
|
-
|
-
|
(76.6)
|
-
|
-
|
(76.6)
|
Tax relating to components of other
comprehensive income
|
-
|
-
|
-
|
-
|
15.1
|
-
|
-
|
15.1
|
Net expense recognised in other
comprehensive income
|
-
|
-
|
-
|
-
|
(61.5)
|
9.5
|
-
|
(52.0)
|
Profit for the period
|
-
|
-
|
-
|
-
|
66.7
|
-
|
-
|
66.7
|
Total comprehensive income for the
period
|
-
|
-
|
-
|
-
|
5.2
|
9.5
|
-
|
14.7
|
Dividends paid
|
-
|
-
|
-
|
-
|
(149.9)
|
-
|
-
|
(149.9)
|
Purchase of own shares
|
(0.5)
|
-
|
-
|
0.5
|
(0.8)
|
-
|
-
|
(0.8)
|
Share-based payments charged to the
income statement(1)
|
-
|
-
|
-
|
-
|
-
|
-
|
5.6
|
5.6
|
Share-based payments settled on
vesting(1)
|
-
|
-
|
-
|
-
|
8.6
|
-
|
(8.6)
|
-
|
Tax on share-based payment
transactions
|
-
|
-
|
-
|
-
|
0.1
|
-
|
-
|
0.1
|
At 31 December 2022
(unaudited)
|
16.2
|
369.6
|
43.8
|
3.2
|
131.4
|
83.1
|
18.6
|
665.9
|
|
|
|
|
|
|
|
|
|
For the year ended 30 June
2023
|
|
|
|
|
|
|
|
|
(In £s million)
|
Called
up share capital
|
Share
premium
|
Merger
reserve
|
Capital
redemption reserve
|
Retained
earnings
|
Cumulative translation reserve
|
Equity
reserve
|
Total
equity
|
At 1 July 2022
|
16.7
|
369.6
|
43.8
|
2.7
|
268.2
|
73.6
|
21.6
|
796.2
|
Currency translation
adjustments
|
-
|
-
|
-
|
-
|
-
|
(15.6)
|
-
|
(15.6)
|
Remeasurement of defined benefit
pension schemes
|
-
|
-
|
-
|
-
|
(95.1)
|
-
|
-
|
(95.1)
|
Tax relating to components of other
comprehensive income
|
-
|
-
|
-
|
-
|
19.5
|
-
|
-
|
19.5
|
Net expense recognised in other
comprehensive income
|
-
|
-
|
-
|
-
|
(75.6)
|
(15.6)
|
-
|
(91.2)
|
Profit for the year
|
-
|
-
|
-
|
-
|
138.3
|
-
|
-
|
138.3
|
Total comprehensive income for the
year
|
-
|
-
|
-
|
-
|
62.7
|
(15.6)
|
-
|
47.1
|
Dividends paid
|
-
|
-
|
-
|
-
|
(165.1)
|
-
|
-
|
(165.1)
|
Purchase of own shares
|
(0.7)
|
-
|
-
|
0.7
|
(19.0)
|
-
|
-
|
(19.0)
|
Share-based payments charged to the
income statement
|
-
|
-
|
-
|
-
|
-
|
-
|
11.1
|
11.1
|
Share-based payments settled on
vesting
|
-
|
-
|
-
|
-
|
8.6
|
-
|
(8.6)
|
-
|
At 30 June 2023 (audited)
|
16.0
|
369.6
|
43.8
|
3.4
|
155.4
|
58.0
|
24.1
|
670.3
|
|
|
|
|
|
|
|
|
|
(1) The Share-based payments charged to the Consolidated Income
Statement and Share-based payments settled on vesting were
previously presented net as "Share-based payments". The
presentation for the six months ended 31 December 2022 has been
updated to enhance the consistency and understandability of the
disclosures. There has been no change in the underlying
activity.
|
Condensed Consolidated Cash Flow Statement
|
|
|
|
|
|
|
|
|
|
Six months
to
|
Six
months to
|
Year
to
|
|
|
31
December
|
31
December
|
30
June
|
|
|
2023
|
2022
|
2023
|
(In £s million)
|
Note
|
(unaudited)
|
(unaudited)
|
(audited)
|
Operating profit
|
|
32.2
|
97.0
|
197.0
|
Adjustments for:
|
|
|
|
|
Exceptional items
|
3
|
27.9
|
-
|
-
|
Depreciation of property, plant and equipment
|
|
5.5
|
5.4
|
10.9
|
Depreciation of right-of-use assets
|
9
|
23.9
|
22.8
|
46.0
|
Amortisation of intangible assets
|
|
5.4
|
5.5
|
10.0
|
Loss
on disposal of business assets
|
|
-
|
-
|
0.1
|
Net
movements in provisions (excluding exceptional items)
|
|
(2.5)
|
(1.3)
|
1.9
|
Share-based payments
|
|
4.7
|
5.9
|
12.0
|
|
|
64.9
|
38.3
|
80.9
|
Operating cash flow before movement in working
capital
|
|
97.1
|
135.3
|
277.9
|
Movement in working
capital:
|
|
|
|
|
Decrease/(increase) in
receivables
|
|
136.3
|
49.8
|
(53.2)
|
(Decrease)/increase in
payables
|
|
(139.9)
|
(94.1)
|
24.5
|
Movement in working
capital
|
|
(3.6)
|
(44.3)
|
(28.7)
|
Cash generated by operations
|
|
93.5
|
91.0
|
249.2
|
Cash paid in respect of exceptional
items from current year
|
|
(6.8)
|
-
|
-
|
Pension scheme deficit
funding
|
11
|
(9.1)
|
(8.8)
|
(17.7)
|
Income taxes paid
|
|
(28.5)
|
(33.2)
|
(65.8)
|
Net
cash inflow from operating activities
|
|
49.1
|
49.0
|
165.7
|
Investing activities
|
|
|
|
|
Purchase of property, plant and
equipment
|
|
(3.6)
|
(5.8)
|
(12.3)
|
Purchase of intangible
assets
|
|
(10.1)
|
(6.5)
|
(16.8)
|
Acquisition of
subsidiaries
|
|
-
|
-
|
(1.0)
|
Interest received
|
|
1.7
|
0.7
|
2.0
|
Net
cash used in investing activities
|
|
(12.0)
|
(11.6)
|
(28.1)
|
Financing activities
|
|
|
|
|
Interest paid
|
|
(3.0)
|
(2.1)
|
(3.7)
|
Lease liability
repayments
|
9
|
(26.2)
|
(24.6)
|
(49.9)
|
Purchase of own shares
|
|
(12.3)
|
(57.6)
|
(75.7)
|
Equity dividends paid
|
6
|
(68.3)
|
(149.9)
|
(165.1)
|
Increase in bank loans and
overdrafts
|
13
|
75.0
|
90.0
|
10.0
|
Net
cash used in financing activities
|
|
(34.8)
|
(144.2)
|
(284.4)
|
Net
increase/(decrease) in cash and cash equivalents
|
|
2.3
|
(106.8)
|
(146.8)
|
Cash and cash equivalents at
beginning of period
|
|
145.6
|
296.2
|
296.2
|
Effect of foreign exchange rate
movements
|
|
4.0
|
2.0
|
(3.8)
|
Cash and cash equivalents at end of period
|
13
|
151.9
|
191.4
|
145.6
|
|
|
|
Bank loans and overdrafts at beginning of
period
|
|
(10.0)
|
-
|
-
|
Increase in period
|
13
|
(75.0)
|
(90.0)
|
(10.0)
|
Bank loans and overdrafts at end of period
|
|
(85.0)
|
(90.0)
|
(10.0)
|
Net
cash at end of period
|
13
|
66.9
|
101.4
|
135.6
|
|
|
|
|
|
|
|
|
|
|
|
The notes on pages 22 to 29 form
part of these Interim Financial Statements.
|
|
|
|
|
|
|
Notes to the Condensed Consolidated Interim Financial
Statements
|
For the six months ended 31 December
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Basis of preparation
|
|
|
|
|
|
|
|
|
The condensed Consolidated Interim
Financial Statements ("Interim Financial Statements") are the
results for the six months ended 31 December 2023. The Interim
Financial Statements have been prepared in accordance with UK
adopted International Accounting Standard 34, 'Interim Financial
Reporting' and the Disclosure Guidance and Transparency Rules (DTR)
sourcebook of the United Kingdom's Financial Conduct Authority. The
Interim Financial Statements are presented in sterling, the
functional currency of Hays plc.
|
|
The Interim Financial Statements
represent a 'condensed set of financial statements' as referred to
in the DTR. Accordingly, they do not include all of the information
required for a full annual financial report and are to be read in
conjunction with the Consolidated Financial Statements for the year
ended 30 June 2023 which have been prepared in accordance with UK
adopted International Accounting Standards.
|
|
|
|
|
|
|
|
|
The Interim Financial Statements
do not constitute statutory accounts as defined in section 434 of
the Companies Act 2006. The financial information for the year
ended 30 June 2023 included in this report was derived from the
statutory accounts for the year ended 30 June 2023, a copy of which
has been delivered to the Registrar of Companies. The auditor's
report on these accounts was unqualified, did not include a
reference to any matters to which the auditor drew attention by way
of an emphasis of matter and did not contain a statement under
sections 498 (2) or (3) of the Companies Act 2006.
|
|
Accounting policies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Interim Financial Statements
have been prepared on the basis of the accounting policies and
methods of computation applicable for the year ended 30 June 2023.
These accounting policies are consistent with those applied in the
preparation of the Consolidated Financial Statements for the year
ended 30 June 2023, except as where stated below:
|
|
|
|
|
|
|
|
|
•
|
The tax charge recognised for the
interim period is based on the estimated weighted average annual
income tax expense for the full financial year.
|
|
The fair value of trade
receivables, trade payables, financial assets, bank loans and
overdraft is not materially different to their book
value.
|
|
The following new standard is
mandatory for the first time in the Group's accounting period
beginning on 1 July 2023 and no new standards have been early
adopted. The Group's interim financial statements have adopted the
new standard, but it has had no material impact on the Group's
results or financial position:
|
|
•
|
IFRS 17 - Insurance contracts
(effective 1 January 2023)
|
The Group's accounting policies
align to the requirements of IAS 1 and IAS 8. There have been no
alterations made to the accounting policies as a result of
considering all of the other amendments above that became effective
in the period, as these were either not material or were not
relevant.
|
|
The Group has not yet adopted
certain new standards, amendments and interpretations to existing
standards, which have been published but which are only effective
for the Group accounting periods beginning on or after 1 July 2024.
These new pronouncements include:
|
|
|
|
|
|
|
|
|
•
|
IFRS 16 (amendments) 'Lease
accounting', on sale and leaseback (effective 1 January
2024);
|
•
|
IAS 1 (amendments) 'Presentation
of Financial Statements', on non-current liabilities with covenants
(effective 1 January 2024); and
|
•
|
IAS 7 (amendments) 'Financial
instruments', on supplier finance (effective 1 January
2024).
|
|
The Directors are currently
evaluating the impact of the adoption of all standards, amendments
and interpretations but do not expect them to have a material
impact on the Group's operations or results.
|
|
|
|
|
|
|
|
|
Going Concern
|
|
|
|
|
|
|
|
|
The Group's business activities,
together with the factors likely to affect its future development,
performance and financial position, including its cash flows and
liquidity position, are described in the Half-year
report.
|
|
In addition, and in making this
statement, the Board carried out a robust assessment of the
principal risks facing the Group, including those that would
threaten the Group's business model, future performance and
liquidity. Whilst the review has considered all the principal risks
identified by the Group, the resilience of the Group to the
occurrence of these risks in severe yet plausible scenarios has
been evaluated.
|
|
At 31 December 2023, the Group had
a net cash position of £66.9 million. In addition, the Group
currently has an unsecured revolving credit facility of £210
million that reduces to £170 million in November 2024, and expires
in November 2025. As at 31 December 2023, £125 million of the
committed facility was undrawn. The net cash position is stated
after deducting the amount drawn on the RCF.
|
|
The Board approves an annual
budget and reviews monthly management reports and quarterly
forecasts. The output of the planning and budgeting processes has
been used to forecast the Group's cash flow throughout the Going
Concern period, being at least 12 months from the date of approval
of the Interim Financial Statements.
|
|
|
|
|
|
|
|
|
The Board also considered the
possible impact on the Group's financial position in the event of a
sustained loss of business arising from a prolonged global
downturn, similar in scale to the one caused by the Covid-19
pandemic in the year ended 30 June 2020. This scenario also
forecasted both a strong net cash position and for the drawdown on
the revolving credit facility to reduce throughout the Going
Concern period, with significant headroom against its banking
covenants.
|
|
|
|
|
|
|
|
|
In addition, the Group's strong
balance sheet position and history of strong cash generation, tight
cost control and flexible workforce management provides further
protection.
|
|
|
|
|
|
|
|
|
The Group has sufficient financial
resources which, together with internally generated cash flows,
will continue to provide sufficient sources of liquidity to fund
its current operations, including its contractual and commercial
commitments and any proposed dividends. The Group is therefore
well-placed to manage its business risks. After making enquiries,
the Directors have formed the judgment at the time of approving the
Interim Financial Statements that there is a reasonable expectation
that the Group has adequate resources to continue in operational
existence throughout the Going Concern period, being at least 12
months from the date of approval of the Interim Financial
Statements. For this reason, they continue to adopt the Going
Concern basis of accounting in preparing the Interim Financial
Statements.
|
|
2
|
Segmental information
|
|
|
|
|
|
|
|
|
IFRS 8, Operating segments
|
|
|
|
|
|
|
|
|
IFRS 8 requires operating segments
to be identified on the basis of internal reports about components
of the Group that are regularly reviewed by the chief operating
decision maker to allocate resources to the segment and to assess
their performance.
|
|
As a result, the Group segments
the business into four regions, Germany, United Kingdom &
Ireland, Australia & New Zealand and Rest of World. There is no
material difference between the segmentation of the Group's
turnover by geographic origin and destination.
|
|
The Group's operations comprise
one class of business, that of qualified, professional and skilled
recruitment.
|
|
Turnover, net fees and operating profit
|
|
|
|
|
|
|
|
|
The Group's Executive Board, which
is regarded as the chief operating decision maker, uses net fees by
segment as its measure of revenue in internal reports, rather than
turnover. This is because net fees exclude the remuneration of
temporary workers, and payments to other recruitment agencies where
the Group acts as principal, which are not considered relevant in
allocating resources to segments. The Group's Executive Board
considers net fees for the purpose of making decisions about
allocating resources. The Group does not report items below
operating profit by segment in its internal management reporting.
The full detail of these items can be seen in the Condensed
Consolidated Income Statement.
|
|
|
|
|
|
|
|
|
|
Turnover
|
|
|
Six months
to
|
Six
months to
|
Year
to
|
|
|
31
December
|
31
December
|
30
June
|
|
|
2023
|
2022
|
2023
|
(In £s million)
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
Germany
|
|
989.1
|
940.0
|
1,956.3
|
United Kingdom &
Ireland
|
|
810.4
|
856.5
|
1,714.6
|
Australia & New
Zealand
|
|
670.9
|
825.7
|
1,583.3
|
Rest of World
|
|
1,068.0
|
1,217.6
|
2,329.1
|
Group
|
|
3,538.4
|
3,839.8
|
7,583.3
|
|
|
|
|
|
|
|
|
Net
fees
|
|
|
|
Six months
to
|
Six
months to
|
Year
to
|
|
|
31
December
|
31
December
|
30
June
|
|
|
2023
|
2022
|
2023
|
(In £s million)
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
Germany
|
|
186.2
|
180.2
|
382.0
|
United Kingdom &
Ireland
|
|
118.1
|
136.9
|
266.1
|
Australia & New
Zealand
|
|
74.3
|
99.9
|
188.4
|
Rest of World
|
|
204.7
|
234.9
|
458.1
|
Group
|
|
583.3
|
651.9
|
1,294.6
|
|
|
|
|
|
|
|
|
Operating profit
|
|
|
|
|
|
|
|
|
Six
months to
|
Six
months to
|
|
|
|
|
|
|
31
December
|
31
December
|
|
|
|
|
|
|
2023
|
2023
|
Six months
to
|
Six
months to
|
Year
to
|
|
|
|
Pre-exceptional
|
Exceptional
|
31
December
|
31
December
|
30
June
|
|
|
|
items
|
items
|
2023
|
2022
|
2023
|
(In £s million)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(audited)
|
Germany
|
|
40.8
|
(2.5)
|
38.3
|
43.2
|
100.2
|
United Kingdom &
Ireland
|
5.7
|
(1.6)
|
4.1
|
15.2
|
28.7
|
Australia & New
Zealand
|
6.4
|
(2.7)
|
3.7
|
17.8
|
32.1
|
Rest of World
|
7.2
|
(21.1)
|
(13.9)
|
20.8
|
36.0
|
Group
|
|
60.1
|
(27.9)
|
32.2
|
97.0
|
197.0
|
|
|
|
|
|
|
|
|
3
|
Exceptional items
|
|
|
|
|
|
|
|
|
|
|
|
|
During the six months ended 31
December 2023, the Group incurred an exceptional charge of £27.9
million (2022: £nil). Of this, £15.3 million is a non-cash
exceptional charge resulting from the partial impairment of the
carrying value of goodwill relating to the 2014 Veredus acquisition
in the USA, which was partially impaired in the year ended 30 June
2020. The goodwill impairment charge is a material non-cash item
that based on its size and nature is considered to be exceptional.
The remaining Veredus goodwill balance at 31 December 2023 is £7.1
million.
|
|
In response to increasingly
challenging market conditions and a clear slowdown in most markets,
we restructured the business operations of several countries across
the Group, to better align business operations to market
opportunities and reduce operating costs. The restructuring
exercise led to the redundancy of a number of employees, including
senior and operational management and back-office positions and the
closure of several offices. Effective 31 August 2023, after 16
years of service, Alistair Cox stepped down as CEO and from the
Board. The combined costs relating to this were £12.6 million, and
are considered exceptional given their size and impact on business
operations. The cash impact of the exceptional charge in the
half-year was £6.8 million, with a further £2.5 million cash
outflow expected in the six months to 30 June 2024.
|
|
In total the exceptional charge
generated a tax credit of £2.5 million (2022: £nil).
|
|
The last time that the Group
recognised an exceptional restructuring charge was in the year
ended 30 June 2020, in the immediate aftermath of the Covid-19
pandemic.
|
|
|
|
|
|
|
|
|
4
|
Net
finance charge
|
|
|
|
|
|
|
Six months
to
|
Six
months to
|
Year
to
|
|
|
31
December
|
31
December
|
30
June
|
|
|
2023
|
2022
|
2023
|
(In £s million)
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
Interest received on bank
deposits
|
|
1.7
|
0.7
|
2.0
|
Interest payable on bank loans and
overdrafts
|
|
(3.0)
|
(2.0)
|
(3.7)
|
Interest on lease
liabilities
|
|
(2.4)
|
(2.0)
|
(4.2)
|
Pension Protection Fund
levy
|
|
(0.1)
|
(0.1)
|
(0.1)
|
Net interest on pension
obligations
|
|
(0.8)
|
0.4
|
1.1
|
Net
finance charge
|
|
(4.6)
|
(3.0)
|
(4.9)
|
|
|
|
|
|
|
|
|
5
|
Tax
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group's consolidated effective
tax rate for the six months ended 31 December 2023 is based on the
forecasted pre-exceptional effective tax rate for the full year of
32.0% (31 December 2022: 29.0%, 30 June 2023: 28.0%). The tax rate
is higher than the UK statutory tax rate of 25.0% due to higher tax
rates in a number of jurisdictions in which the Group
operates.
|
|
|
|
|
|
|
|
|
The tax charge for the six months
ended 31 December 2023 of £15.3 million included a £2.5 million tax
credit in respect of the exceptional charge. The pre-exceptional
tax charge of £17.8 million represents an effective tax rate of
32.0% against a pre-exceptional profit before tax of £55.5 million.
On a post-exceptional basis the effective tax rate was
55.4%.
|
|
|
|
|
|
|
|
|
The net deferred tax balance at 31
December 2023 is an asset of £18.5 million (31 December 2022: asset
of £16.4 million, 30 June 2023: asset of £18.6 million).
|
|
|
|
|
|
|
|
|
On 20 June 2023, Finance (No 2)
Act 2023 was substantively enacted in the UK, introducing a global
minimum effective tax rate of 15%. The legislation implements a
domestic top-up tax and a multinational top-up tax, effective for
accounting periods starting on or after 31 December 2023. The Group
applied the exception under the IAS12 amendment to recognising and
disclosing information about deferred tax assets and liabilties
related to top-up income taxes.
|
|
6
|
Dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
The following dividends were paid
by the Group and have been recognised as distributions to equity
shareholders:
|
|
|
|
|
|
|
|
|
|
|
Six months
to
|
Six
months to
|
Year
to
|
|
|
31
December
|
31
December
|
30
June
|
|
|
2023
|
2022
|
2023
|
(In £s million)
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
Final dividend for the year ended 30
June 2022 of 1.90 pence per share
|
-
|
30.8
|
30.8
|
Special dividend for the year ended
30 June 2022 of 7.34 pence per share
|
-
|
119.1
|
119.1
|
Interim dividend for the period to
31 December 2022 of 0.95 pence per share
|
-
|
-
|
15.2
|
Final dividend for the year ended 30
June 2023 of 2.05 pence per share
|
32.6
|
-
|
-
|
Special dividend for the year ended
30 June 2023 of 2.24 pence per share
|
35.7
|
-
|
-
|
Total dividends paid
|
68.3
|
149.9
|
165.1
|
|
The final dividend for the year
ended 30 June 2023 of 2.05 pence per share and the special dividend
for the year ended 30 June 2023 of 2.24 pence per share were paid
out of retained earnings.
|
|
|
|
|
|
|
|
|
The proposed interim dividend for
the six months ended 31 December 2023 of 0.95 pence per share is
not included as a liability in the balance sheet as at 31 December
2023.
|
|
|
|
|
|
|
|
|
7
|
Earnings per share
|
|
|
|
|
|
Six months
to
|
Six
months to
|
Year
to
|
|
|
31
December
|
31
December
|
30
June
|
|
|
2023
|
2022
|
2023
|
(In £s million)
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
Earnings from operations before
exceptional items
|
55.5
|
94.0
|
192.1
|
Tax on earnings from operations
before exceptional items
|
(17.8)
|
(27.3)
|
(53.8)
|
Basic earnings before exceptional items
|
37.7
|
66.7
|
138.3
|
|
|
|
|
|
|
|
|
Profit before tax
|
27.6
|
94.0
|
192.1
|
Tax on earnings after exceptional
items
|
(15.3)
|
(27.3)
|
(53.8)
|
Profit after tax
|
12.3
|
66.7
|
138.3
|
|
|
|
|
|
|
|
|
Number of shares (millions):
|
|
|
|
Weighted average number of
shares
|
1,588.5
|
1,622.3
|
1,610.0
|
Dilution effect of share
options
|
6.3
|
10.6
|
13.9
|
Weighted average number of shares used for diluted
EPS
|
1,594.8
|
1,632.9
|
1,623.9
|
|
|
|
|
|
|
|
|
Before exceptional items (in
pence):
|
|
|
|
Basic earnings per share before
exceptional items
|
2.37p
|
4.11p
|
8.59p
|
Diluted earnings per share before
exceptional items
|
2.36p
|
4.08p
|
8.52p
|
|
|
|
|
|
|
|
|
After exceptional items (in
pence):
|
|
|
|
|
Basic earnings per share
|
0.77p
|
4.11p
|
8.59p
|
Diluted earnings per
share
|
0.77p
|
4.08p
|
8.52p
|
|
|
|
|
|
|
|
|
Reconciliation of earnings
|
|
|
|
|
|
|
|
|
|
|
Six months
to
|
Six
months to
|
Year
to
|
|
|
|
|
|
31
December
|
31
December
|
30
June
|
|
|
|
|
|
2023
|
2022
|
2023
|
(In £s million)
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
Basic earnings before exceptional
items
|
|
|
37.7
|
66.7
|
138.3
|
Exceptional items (note
3)
|
|
|
(27.9)
|
-
|
-
|
Tax credit on exceptional items
(note 3)
|
|
|
2.5
|
-
|
-
|
Profit after tax
|
|
|
12.3
|
66.7
|
138.3
|
|
|
|
|
|
|
|
|
8
|
Goodwill
|
|
|
|
|
|
|
Six months
to
|
Six
months to
|
Year
to
|
|
|
31
December
|
31
December
|
30
June
|
|
|
2023
|
2022
|
2023
|
(In £s million)
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
At 1 July
|
|
200.3
|
202.3
|
202.3
|
Exchange adjustments
|
|
1.1
|
2.8
|
(2.0)
|
Impairment loss
|
|
(15.3)
|
-
|
-
|
Carried forward
|
|
186.1
|
205.1
|
200.3
|
|
|
|
|
|
|
|
|
Goodwill arising on business
combinations is reviewed and tested on an annual basis for
impairment, or more frequently if there is an indication that
goodwill might be impaired. Goodwill as at 31 December 2023 has
been assessed for triggers for impairment as required under IAS 34
and accordingly, an impairment loss of £15.3m has been recorded in
respect of the US business. At this stage, the remaining carrying
value of goodwill is £7.1 million, however dependent upon the
future impact of the current trading conditions, there is potential
for change in the key assumptions that may give rise to an
additional impairment. Refer to note 3.
|
|
|
|
|
|
|
|
|
9
|
Right-of-use assets and lease liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Right-of-use assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Motor
|
Other
|
Total
|
Lease
|
(In £s million)
|
Property
|
vehicles
|
assets
|
lease
assets
|
liabilities
|
As at 1 July 2023
|
164.5
|
11.5
|
0.1
|
176.1
|
(189.8)
|
Exchange adjustments
|
1.7
|
0.1
|
-
|
1.8
|
(2.2)
|
Lease additions
|
21.6
|
5.2
|
-
|
26.8
|
(26.8)
|
Lease disposals
|
(0.1)
|
(0.1)
|
-
|
(0.2)
|
0.2
|
Depreciation of right-of-use
assets
|
(20.4)
|
(3.5)
|
-
|
(23.9)
|
-
|
Lease liability
repayments
|
-
|
-
|
-
|
-
|
26.2
|
Interest on lease
liabilities
|
-
|
-
|
-
|
-
|
(2.4)
|
At
31 December 2023 (unaudited)
|
167.3
|
13.2
|
0.1
|
180.6
|
(194.8)
|
|
|
|
|
|
|
|
|
|
|
31
December
|
31
December
|
30
June
|
|
|
2023
|
2022
|
2023
|
(In £s million)
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
Current
|
|
|
|
(45.6)
|
(42.2)
|
(41.3)
|
Non-current
|
|
|
(149.2)
|
(147.5)
|
(148.5)
|
Total lease liabilities
|
|
|
(194.8)
|
(189.7)
|
(189.8)
|
|
|
|
|
|
|
|
|
10
|
Trade and other receivables
|
|
|
|
|
|
|
|
|
|
|
|
31
December
|
31
December
|
30
June
|
|
|
2023
|
2022
|
2023
|
(In £s million)
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
Trade receivables
|
|
756.5
|
835.0
|
746.1
|
Less provision for
impairment
|
|
(20.1)
|
(21.2)
|
(19.1)
|
Net trade receivables
|
736.4
|
813.8
|
727.0
|
Net accrued income
|
335.2
|
306.5
|
476.8
|
Prepayments and other
debtors
|
|
48.2
|
53.8
|
40.8
|
Trade and other receivables
|
|
1,119.8
|
1,174.1
|
1,244.6
|
|
|
|
|
|
|
|
|
The required provision for
impairment of both trade receivables and accrued income is analysed
using a provision matrix to measure the expected credit losses, in
which the allowance for impairment increases as balances age.
Expected credit losses are measured using historical losses for the
past five years, adjusted for forward-looking factors impacting the
economic environment, such as the GDP growth outlook, and
commercial factors deemed to have a significant impact on expected
credit loss rates. The provision for impairment has decreased
compared to 31 December 2022 in line with movement on trade
receivables.
|
|
|
|
|
|
|
|
|
11
|
Retirement benefit surplus
|
|
|
|
|
|
|
Six months
to
|
Six
months to
|
Year
to
|
|
|
31
December
|
31
December
|
30
June
|
|
|
2023
|
2022
|
2023
|
(In £s million)
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
Surplus in the scheme brought
forward
|
25.7
|
102.0
|
102.0
|
Administration costs
|
(1.5)
|
(1.6)
|
(3.2)
|
Employer contributions (towards
funded and unfunded schemes)
|
9.1
|
8.8
|
17.7
|
Net interest income
|
0.7
|
2.0
|
4.3
|
Remeasurement of the net defined
benefit surplus
|
(7.6)
|
(76.6)
|
(95.1)
|
Surplus in the scheme carried forward
|
26.4
|
34.6
|
25.7
|
|
The £7.6 million loss on the
remeasurement of the net defined benefit surplus is mainly due to a
decrease in the discount rate adopted within the key financial
assumptions, which increased the calculation of the schemes'
defined benefit obligation, partially offset by a higher than
expected return on the scheme assets.
|
|
In respect of IFRIC 14, the
Schemes' Definitive Deeds and Rules are considered to provide Hays
with an unconditional right to a refund of surplus assets and
therefore the recognition of a net defined benefit scheme asset is
not restricted. Agreements to make funding contributions do not
give rise to any additional liabilities in respect of the
scheme.
|
|
|
|
|
|
|
|
|
12
|
Provisions
|
|
|
|
|
|
|
|
(In £s million)
|
Restructuring
|
Legal,
tax and other matters
|
Total
|
At 1 July 2023
|
-
|
23.6
|
23.6
|
Charged to income
statement
|
11.1
|
2.3
|
13.4
|
Credited to income
statement
|
|
|
-
|
(4.5)
|
(4.5)
|
Utilised
|
(6.8)
|
(0.3)
|
(7.1)
|
At
31 December 2023 (unaudited)
|
4.3
|
21.1
|
25.4
|
|
|
|
|
|
|
|
|
|
|
31
December
|
31
December
|
30
June
|
|
|
2023
|
2022
|
2023
|
(In £s million)
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
Current
|
|
|
|
16.3
|
11.5
|
10.8
|
Non-current
|
|
|
9.1
|
8.9
|
12.8
|
Total provisions
|
25.4
|
20.4
|
23.6
|
|
Restructuring provisions are
disclosed in note 3. Of the £12.6 million restructuring charge,
£1.5 million related to early vesting on Performance Share Plans
(PSPs) and has been charged to equity.
|
|
As a global specialist in
recruitment and workforce solutions and in common with other
similar organisations, in the ordinary course of our business the
Group is exposed to the risk of legal, tax and other disputes.
Where costs are likely to arise in defending and concluding such
disputes, and these costs can be measured reliably, they are
provided for in the Consolidated Financial Statements. These items
affect various Group subsidiaries in different geographic regions
and the amounts provided for are based on management's assessment
of the specific circumstances in each case. The timing of
settlement depends on the circumstances in each case and is
uncertain.
|
|
Management does not consider it
reasonably possible that any of these balances will materially
change in the next 12 months.
|
|
13
|
Cash and cash equivalents
|
|
|
|
|
|
|
31
December
|
31
December
|
30
June
|
|
|
2023
|
2022
|
2023
|
(In £s million)
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
Cash and cash equivalents
|
|
151.9
|
191.4
|
145.6
|
Bank loans and overdrafts
|
|
(85.0)
|
(90.0)
|
(10.0)
|
Net
cash
|
|
66.9
|
101.4
|
135.6
|
|
The Group's £210 million unsecured
revolving credit facility matures in November 2025, although at the
lower value of £170 million in its final year due to reduced lender
commitments received. The financial covenants within the facility
remain unchanged and require the Group's interest cover ratio to be
at least 4:1 (ratio as at 31 December 2023: 177:1) and its leverage
ratio (net debt to EBITDA) to be no greater than 2.5:1 (as at 31
December 2023 the Group held a net cash position). The interest
rate of the facility is based on a ratchet mechanism with a margin
payable over SONIA in the range of 0.70% to 1.50%.
|
|
As at 31 December 2023, £125
million of the committed facility was undrawn (31 December 2022:
£120 million of the committed facility was undrawn).
|
|
|
|
|
|
|
|
|
14
|
Events after the balance sheet date
|
|
|
|
|
|
|
|
|
There are no significant events
after the balance sheet date to report.
|
|
|
|
|
|
|
|
|
15
|
Like-for-like results
|
|
|
|
|
|
|
|
|
Like-for-like results represent
organic growth of operations at constant currency. For the six
months ended 31 December 2023 these are calculated as
follows:
|
|
|
Six
months to
|
|
31
December
|
|
Six months
to
|
|
31
December
|
Foreign
|
2022
|
|
31
December
|
|
2022
|
exchange
|
at
constant
|
Organic
|
2023
|
(In £s million)
|
(unaudited)
|
impact
|
currency
|
growth
|
(unaudited)
|
Net
fees
|
|
|
|
|
|
|
Germany
|
180.2
|
0.1
|
180.3
|
5.9
|
186.2
|
United Kingdom &
Ireland
|
136.9
|
-
|
136.9
|
(18.8)
|
118.1
|
Australia & New
Zealand
|
99.9
|
(8.5)
|
91.4
|
(17.1)
|
74.3
|
Rest of World
|
234.9
|
(5.1)
|
229.8
|
(25.1)
|
204.7
|
Group
|
651.9
|
(13.5)
|
638.4
|
(55.1)
|
583.3
|
|
Operating profit before exceptional items
|
|
|
|
|
|
Germany
|
43.2
|
-
|
43.2
|
(2.4)
|
40.8
|
United Kingdom &
Ireland
|
15.2
|
-
|
15.2
|
(9.5)
|
5.7
|
Australia & New
Zealand
|
17.8
|
(1.7)
|
16.1
|
(9.7)
|
6.4
|
Rest of World
|
20.8
|
(0.1)
|
20.7
|
(13.5)
|
7.2
|
Group
|
97.0
|
(1.8)
|
95.2
|
(35.1)
|
60.1
|
|
|
|
|
|
|
|
|
16
|
Like-for-like results H1 analysis by
division
|
|
|
|
|
|
|
|
|
Net fee growth/(decline) versus same
period last year:
|
|
Q1
|
Q2
|
H1
|
|
|
|
2024
|
2024
|
2024
|
|
|
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
Germany
|
|
|
7%
|
0%
|
3%
|
United Kingdom &
Ireland
|
|
|
(11)%
|
(17)%
|
(14)%
|
Australia & New
Zealand
|
|
|
(17)%
|
(20)%
|
(19)%
|
Rest of World
|
|
|
(11)%
|
(11)%
|
(11)%
|
Group
|
|
|
(7)%
|
(10)%
|
(9)%
|
|
H1 2024 is the period from 1 July
2023 to 31 December 2023.
|
|
|
|
|
|
|
|
|
The Q1 and Q2 net fee
like-for-like growth percentages are as reported in the Q1 and the
Q2 Quarterly Updates.
|
|
|
|
|
|
|
|
|
17
|
Disaggregation of net fees H1 2024
|
|
|
|
|
|
|
|
|
IFRS 15 requires entities to
disaggregate revenue recognised from contracts with customers into
relevant categories that depict how the nature, amount and cash
flows are affected by economic factors. As a result, the following
information is considered to be relevant:
|
|
|
|
|
|
|
|
|
(unaudited)
|
Germany
|
United Kingdom &
Ireland
|
Australia & New
Zealand
|
Rest of
World
|
Group
|
Temporary placements
|
82%
|
56%
|
63%
|
37%
|
59%
|
Permanent placements
|
18%
|
44%
|
37%
|
63%
|
41%
|
Total
|
|
100%
|
100%
|
100%
|
100%
|
100%
|
|
|
|
|
|
|
|
|
Private sector
|
85%
|
67%
|
62%
|
98%
|
83%
|
Public sector
|
15%
|
33%
|
38%
|
2%
|
17%
|
Total
|
|
100%
|
100%
|
100%
|
100%
|
100%
|
|
|
|
|
|
|
|
|
Technology
|
33%
|
16%
|
16%
|
28%
|
25%
|
Accountancy & Finance
|
17%
|
20%
|
12%
|
11%
|
15%
|
Engineering
|
27%
|
2%
|
0%
|
7%
|
11%
|
Construction &
Property
|
4%
|
16%
|
19%
|
9%
|
10%
|
Office Support
|
0%
|
9%
|
11%
|
5%
|
5%
|
Other
|
|
19%
|
37%
|
42%
|
40%
|
34%
|
Total
|
|
100%
|
100%
|
100%
|
100%
|
100%
|