INTERIM RESULTS Six months ended 31 December 2015
CAUTIONARY STATEMENT This presentation contains certain statements that are neither reported financial results nor other historical information. The information contained in this presentation is not audited, is for personal use and informational purposes only and is not intended for distribution to, or use by, any person or entity in any jurisdiction in any country where such distribution or use would be contrary to law or regulation, or which would subject any member of the Hays Group to any registration requirement. 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 made in this presentation. Statements in this presentation reflect the knowledge and information available at the time of its preparation. Certain statements included or incorporated by reference within this presentation 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 should not be placed on any forward-looking statement. Additionally, forward-looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. 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 presentation should be construed as a profit forecast. This presentation does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase 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 decision 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 presentation 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 presentation or its contents or otherwise arising in connection with this presentation. Nothing in this presentation shall exclude any liability under applicable laws that cannot be excluded in accordance with such laws. 2
AGENDA 1 FINANCIAL REVIEW PAUL VENABLES, FINANCE DIRECTOR 2 OPERATING REVIEW ALISTAIR COX, CHIEF EXECUTIVE 3 STRATEGY UPDATE ALISTAIR COX, CHIEF EXECUTIVE 4 CURRENT TRADING ALISTAIR COX, CHIEF EXECUTIVE 5 APPENDICES 3
1. FINANCIAL REVIEW PAUL VENABLES GROUP FINANCE DIRECTOR
STRONG GROUP FINANCIAL PERFORMANCE Net fees Operating profit** Basic earnings per share H1 14 £363.4m H1 14 £66.7m H1 14 2.90p 3.23p H2 14 £361.5m H2 14 £73.6m H2 14 £81.5m 3.64p H1 15 £383.9m H1 15 H1 15 £380.3m H2 15 H2 15 £82.6m H2 15 3.80p H1 16 £396.9m H1 16 £86.3m H1 16 3.99p Net fees EPS Operating profit £396.9m 3.99p £86.3m 8% increase* 10% increase 15% increase* INTERIM DIVIDEND INCREASED BY 5% TO 0.91p * LFL (‘like-for-like’) growth is organic growth at constant currency. 5 ** Continuing operations only.
STRONG GROUP FINANCIAL PERFORMANCE Income statement** 2014 Actual Six months ended 31 December 2015 LFL* £m £m growth growth Turnover 2,043.9 1,912.0 7% 13% Net fees 396.9 383.9 3% 8% Operating profit 86.3 81.5 6% 15% Net finance cost (3.9) (4.2) Profit before tax 82.4 77.3 7% Tax (25.9) (25.5) Profit after tax 51.4 11% 56.9 EXCHANGE RATE MOVEMENTS DECREASED NET FEES AND OPERATING PROFIT BY £24.7 MILLION AND £6.8 MILLION RESPECTIVELY * LFL (‘like-for-like’) growth is organic growth at constant currency. 6 ** Continuing operations only.
EXCELLENT PROFIT LEVERAGE; INCREASED CONVERSION RATE TO 21.7% Performance by region 44% 35% 21% of net of net of net fees fees fees Continental Europe & RoW United Kingdom & Ireland Asia Pacific Net Fees £84.4m 4%* Net Fees £173.1m 14%* Net Fees £139.4m 3%* Op Profit £23.2m 6%* Op Profit £37.8m 17%* Op Profit £25.3m 20%* � Australia & NZ net fees up 3%*, � Germany net fees up 12%*, � Private sector solid, up 4%* conditions remained mixed but following significant investment � Public sector increasingly tough, sequentially stable � Rest of division grew 17%*, with up 1%* � Net fees up 7%* in Asia, driven by 16 countries growing by 10%* or � Exceptional 93%* drop-through of all-time records in Japan, up 8%* more, and it delivered a material incremental net fee growth into and China, up 16%* increase in profit of £3.6m* operating profit * LFL (‘like-for-like’) growth is organic growth at constant currency. 7
Split of net fees H1 15 58% Temp H2 15 58% Temp GOOD GROWTH ACROSS TEMP AND PERM H1 16 58% Temp Review of Group Permanent and Temporary Businesses* Permanent placement business Temporary placement business 8% net fee growth 8% net fee growth 6% volume increase 7% volume increase 4% increase in mix/hours 1% average Perm fee increase 30 bps underlying margin decrease** £166.8m £230.1m � Increase in volumes of 6% driven (58% of net fees ) (42% of net fees) � Volumes increased by 7% primarily by Germany growth � Average Perm fee up 1% primarily � Mix/hours worked increased 4% as a result of salary inflation � Underlying Temp margin** down 30bps through the half primarily as a result of a reduction in ANZ temp margin * Growth rates and margin change are for the 6m ended 31 December 2015 versus 6m ended 31 December 2014, on a like-for-like basis which is organic growth at constant currency. ** The underlying Temp gross margin is calculated as Temp net fees divided by Temp gross revenue and relates solely to Temp placements in which Hays generates net fees and specifically 8 excludes transactions in which Hays acts as agent on behalf of workers supplied by third party agencies and arrangements where the Company provides major payrolling services.
THE AUSTRALIAN DOLLAR AND THE EURO REMAIN SIGNIFICANT FX TRANSLATION SENSITIVITIES FOR THE GROUP Key FX rates and sensitivities Six months ended 31 December 2015 Average Closing Australian $ 2.1219 2.0261 Euro € 1.3894 1.3573 Impact of a one cent change per annum Net fees Op profit Australian $ +/- £0.6m +/- £0.2m Euro € +/- £1.8m +/- £0.6m � FX rates at 19 February 2016: £1 / AUD2.0042; £1 / €1.2917 � If current rates of exchange were to remain unchanged for the remainder of the financial year, the impact on the full year reported operating profit performance would be c.£7m negative. 9
STRENGTH OF OUR BUSINESS MODEL DRIVES MATERIAL PROFIT LEVERAGE AND SUPERIOR CONVERSION RATE Medium-term guidance � Long-term industry norm of 30%-40%* in previous INCREMENTAL growth cycles FEE TO PROFIT FY 15 51%* � We continue to expect 40%-50%* drop-through over DROP- the medium-term assuming a normal growth rate** 40%* THROUGH H1 16 � FY16 drop-through will be below 40%* if UK (LFL) trading remains at current levels Conversion Rate � Conversion rate up 330bps in the last two years, GROUP driven by: CONVERSION • Significant increase in UK profit • Strong trading in EMEA (ex-Germany)leading to RATE strong increase in profit and leverage H1 14 H1 15 H1 16 EXPECT MATERIAL INCREASE IN CONVERSION RATE IN THE MEDIUM-TERM TOWARDS 30% * Percentage of incremental like-for-like net fees which drop-through to operating profit. 10 10 ** Defined as growth in all three major countries and growth of 5% or more like-for-like at Group level.
DECREASE IN ‘ETR’ TO 31.0% DRIVEN BY INCREASE IN UK PROFITS AND REDUCTION IN THE NUMBER OF COUNTRIES GENERATING TAX LOSSES Finance charge and taxation Six months ended 31 December 2015 2014 £m £m Finance charge Net interest charge on debt (2.4) (1.3) IAS 19 pension charge (non-cash) (1.9) (1.5) Interest unwind of discount on Acquisition Liability (0.5) - PPF levy (0.2) (0.3) Net finance charge (3.9) (4.2) � We expect the net finance charge for the year ending 30 June 2016 to be c.£7.5 million Taxation Underlying effective tax rate 33.5% 31.0% � Continued improvement in UK and smaller country profits reduces the Group effective tax rate to 31.0% � Effective tax rate guidance for the year ending 30 June 2016 of 31.0% 11
Basic EPS 3.25p** H1 12 10 7.72p H1 15 3.64p 5.19p H2 12 11 5.19p** H2 15 3.80p 10% INCREASE IN EARNINGS PER SHARE 5.47p H1 13 12 H1 16 3.99p Basic earnings per share (EPS) Six months ended 31 December 2015 2014 Change Basic earnings £51.4m 11% £56.9m Weighted average number of shares* 1,414m 1,425m Basic earnings per share 3.99p 3.64p 10% Memo Shares in issue* at 31 December 2015 and 22 February 2016 1,432m 12 * Number of shares used for basic EPS calculation purposes excludes shares held in the Hays Employee Share Trust.
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