INTERIM RESULTS Six months ended 31 December 2016
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
GOOD FIRST HALF FINANCIAL PERFORMANCE Net fees Operating profit** Basic earnings per share** H1 15 H1 15 £383.9m £81.5m H1 15 3.64p H2 15 £380.3m H2 15 3.80p H2 15 £82.6m H1 16 £86.3m H1 16 3.99p H1 16 £396.9m H2 16 H2 16 H2 16 £413.4m £94.7m 4.49p H1 17 £465.5m H1 17 £100.1m H1 17 4.55p Net fees EPS Operating profit £465.5m 4.55p £100.1m 3% increase* 14% increase 1% decrease* INTERIM DIVIDEND INCREASED BY 5% TO 0.96p * LFL (‘like-for-like’) growth is organic growth at constant currency. 5 ** Continuing operations only.
GOOD FIRST HALF FINANCIAL PERFORMANCE Income statement** 2015 Actual Six months ended 31 December 2016 LFL* £m £m growth growth Turnover 2,484.5 2,043.9 22% 7% Net fees 465.5 396.9 17% 3% Operating profit 100.1 86.3 16% (1)% Net finance cost (3.9) (3.9) Profit before tax 96.2 82.4 17% Tax (25.5) (30.8) Profit after tax 56.9 15% 65.4 EXCHANGE RATE MOVEMENTS INCREASED NET FEES AND OPERATING PROFIT BY £55.5 MILLION AND £14.8 MILLION RESPECTIVELY * LFL (‘like-for-like’) growth is organic growth at constant currency. 6 ** Continuing operations only.
GOOD GROWTH IN INTERNATIONAL BUSINESS OFFSETS DECLINE IN UK Performance by region 24% 49% 27% of net of net of net fees fees fees Continental Europe & RoW United Kingdom & Ireland Asia Pacific Net Fees £111.9m 6%* Net Fees £227.5m 10%* Net Fees £126.1m (10)%* Op Profit £33.3m 12%* Op Profit £18.2m (29)%* Op Profit £48.6m 6%* � 9%* growth in A&NZ led by private � Trading conditions tough but � Strong 10%* net fee growth in sector acceleration, up 10%*; Germany to £110.7m sequentially stable through the operating profit up 16%* half, with net fees down (10)%* � Rest of division grew 11%*, with � Asia, net fees down (5)%* and � Operating profit down (29)%*, in 13 countries growing by over operating profit (16)%* as banking line with management guidance 10%*, and delivered a strong 19%* markets remained tough increase in profit * LFL (‘like-for-like’) growth is organic growth at constant currency. 7 ** Represents the conversion of net fees into operating profit.
Split of net fees H1 16 58% Temp H2 16 58% Temp GOOD GROWTH ACROSS TEMP AND PERM H1 17 59% Temp Review of Group Permanent and Temporary Businesses* Permanent placement business Temporary placement business 4% net fee growth 1% net fee growth 6% volume increase 1% volume increase 1% increase in mix/hours 1% average Perm fee increase 40 bps underlying margin decrease** £192.0m £273.5m � 6% volume increase driven primarily by (59% of net fees ) (41% of net fees) � Strong volume increase in CE&RoW Germany and Australia offset a decrease in the UK&I � Mix/hours worked increased 1% � Average Perm fee up 1% primarily as � Underlying Temp margin** down 40bps a result of salary inflation primarily due to mix and a reduction in Temp margin in our Australia and UK public sector markets * Growth rates and margin change are for the 6m ended 31 December 2016 versus 6m ended 31 December 2015, 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 EURO REMAIN SIGNIFICANT FX TRANSLATION SENSITIVITIES FOR THE GROUP Key FX rates and sensitivities Six months ended 31 December 2016 Average Closing Australian $ 1.6963 1.7105 Euro € 1.1651 1.1739 Impact of a one cent change per annum Net fees Op profit Australian $ +/- £0.9m +/- £0.3m Euro € +/- £2.6m +/- £0.9m � FX rates at 20 February 2017: £1 / AUD1.6244; £1 / €1.1745 � Retranslating the Group’s FY16 full year operating profit at current exchange rates would increase the actual result by c.£29m from £181.0m to c.£210m 9
WE HAVE MAINTAINED OUR SECTOR-LEADING CONVERSION RATE* � Conversion Rate* 1H16 1H17 OVERALL GROUP CONVERSION RATE DECLINED 20bps TO 21.5% APAC 27.5% 29.8% � INCREASE IN APAC DRIVEN BY CE&RoW 21.8% 21.4% ACCELERATING GROWTH AND STRONG LEVERAGE IN AUSTRALIA UK&I 18.1% 14.4% GROUP 21.7% 21.5% � MODEST DECLINE IN CE & RoW DUE TO SIGNIFICANT HEADCOUNT INVESTMENT AND 3 LESS WORKING DAYS IN GERMANY � REDUCTION IN UK PARTIALLY MITIGATED EXPECT IMPROVEMENT IN SECOND BY EARLY PROACTIVE ACTION TO HALF CONVERSION RATE REDUCE COST BASE * Represents the conversion of net fees into operating profit. 10 10
INCREASE IN ‘ETR’ TO 32.0% DRIVEN BY DECREASE IN UK PROFITS Finance charge and taxation 2015 Six months ended 31 December 2016 £m £m Finance charge Net interest charge on debt (1.2) (1.3) Interest unwind of discount on Acquisition Liability (0.6) (0.5) IAS 19 pension charge (non-cash) (1.9) (1.0) PPF levy (0.2) (0.3) Other interest payable - (0.8) Net finance charge (3.9) (3.9) � We expect the net finance charge for the year ending 30 June 2017 to be c.£7 million Taxation Underlying effective tax rate 32.0% 31.0% � Decrease in profits in UK increases the Group effective tax rate to 32.0% � ETR for FY17 will be driven by the mix of profits. We currently expect the rate to be 32%. 11
Basic EPS 3.25p** H1 12 10 7.72p 3.99p H1 16 5.19p H2 12 11 5.19p** 4.49p H2 16 14% INCREASE IN EARNINGS PER SHARE 5.47p H1 13 12 H1 17 4.55p Basic earnings per share (EPS) Six months ended 31 December 2016 2015 Change Basic earnings £56.9m 15% £65.4m Weighted average number of shares* 1,425m 1,439m Basic earnings per share 4.55p 3.99p 14% Memo Shares in issue* at 31 December 2016 and 20 February 2017 1,443m 12 * Number of shares used for basic EPS calculation purposes excludes shares held in Treasury.
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