PRELIMINARY RESULTS Year ended 30 June 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
STRONG GROUP FINANCIAL PERFORMANCE Net fees Operating profit** Basic earnings per share 5.47p FY 12 £ 734.0m FY 12 £ 128.1m FY 12 5.14p FY 13 £ 719.0m FY 13 £ 125.5m FY 13 £140.3m 6.13p £ 724.9m FY 14 FY 14 FY 14 £ 764.2m FY 15 7.44p FY 15 FY 15 £164.1m £810.3m FY 16 FY 16 £181.0m FY 16 8.48p Net fees EPS Operating profit £810.3m 8.48p £181.0m 7% increase* 14% increase 13% increase* FULL YEAR DIVIDEND INCREASED BY 5% TO 2.90p, WITH COVER OF 2.9X * LFL (‘like-for-like’) growth is organic growth at constant currency. 5 ** Continuing operations only.
STRONG GROUP FINANCIAL PERFORMANCE Income statement** 2015 Actual Year ended 30 June 2016 LFL* £m £m growth growth Turnover 4,231.4 3,842.8 10% 12% Net fees 810.3 764.2 6% 7% Operating profit 181.0 164.1 10% 13% Net finance cost (8.0) (8.0) Profit before tax 173.0 156.1 11% Tax (50.7) (51.9) Profit after tax 105.4 15% 121.1 EXCHANGE RATE MOVEMENTS DECREASED NET FEES AND OPERATING PROFIT BY £16.4 MILLION AND £4.5 MILLION RESPECTIVELY * LFL (‘like-for-like’) growth is organic growth at constant currency. 6 ** Continuing operations only.
STRONG PROFIT LEVERAGE; INCREASED CONVERSION RATE** TO 22.3% Performance by region 22% 45% 33% of net of net of net fees fees fees Continental Europe & RoW United Kingdom & Ireland Asia Pacific Net Fees £176.1m 4%* Net Fees £271.7m 0%* Net Fees £362.5m 15%* Op Profit £50.2m 8%* Op Profit £52.1m 14%* Op Profit £78.7m 16%* � 4%* growth in Australia & NZ led � Trading conditions became more � Strong 13%* net fee growth in by excellent public sector up 18%*; Germany to £175.1m challengingas theyear progressed operating profit up 8%* � Rest of division grew 17%*, with � Excellent operating leverage with � Solid performance in Asia despite profit up 14%* due to further 11 countries growing by over tough banking markets.Net fees up productivity improvements and 20%*, and delivered a material 4%* and operating profit up 10%* strong cost control increase in profit of £5.7m* * 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 FY 14 59% Temp 49% Temp FY 15 58% Temp GOOD GROWTH IN BOTH PERM AND TEMP NET FEES 52% Temp FY 16 58% Temp Review of Group Permanent and Temporary Businesses* Permanent placement business Temporary placement business 7% net fee growth 7% net fee growth 5% volume increase 6% volume increase 4% increase in mix/hours 1% average Perm fee increase (20) bps underlying margin decrease** � Volumes increased by 6% driven by £340.4m £469.9m improved client and candidate � Increase in volumes of 5% as client (58% of net fees ) (42% of net fees) confidence with significant growth in demand remained strong, especially Europe in Germany � Average Perm fee up 1% primarily as a � Mix/hours worked increased 4% result of salary inflation � Underlying Temp margin** down by 20bps, primarily in ANZ * Growth rates and margin change are for the year ended 30 June 2016 versus year ended 30 June 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 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. 8
THE AUSTRALIAN DOLLAR AND EURO REMAIN SIGNIFICANT FX TRANSLATION SENSITIVITIES FOR THE GROUP Key FX rates and sensitivities Year ended 30 June 2016 Average Closing Australian $ 2.0392 1.7877 Euro € 1.3373 1.1989 Impact of a one cent change per annum Net fees Op profit Australian $ +/- £0.8m +/- £0.3m Euro € +/- £2.5m +/- £0.8m � FX rates at 30 August 2016: £1 / AUD1.7421; £1 / €1.1744 � Retranslating the Group’s full year operating profit at current exchange rates would increase the actual result by c.£26m from £181.0m to c.£207m 9
WE CONTINUE TO DRIVE MATERIAL PROFIT LEVERAGE AND SUPERIOR CONVERSION RATE Medium-term guidance � Long-term industry norm of 30%-40%* in INCREMENTAL previous growth cycles FY14 68%* FEE TO PROFIT � Drop-through* of 51% in FY14-FY16 FY15 51%* � We expect a 40%-50%* drop-through over the DROP- medium-term assuming a normal growth rate** THROUGH FY16 40%* � Current UK market uncertainty makes any (LFL) guidance difficult for FY17 Conversion Rate � Sector-leading conversion rate of 22.3%, up 22.3% GROUP 21.5% 480bps in the last three years, driven by: CONVERSION • Significant increase in UK profit 19.4% • Strong trading in Europe (ex-Germany) leading RATE 17.5% to strong increase in profit and leverage FY13 FY14 FY15 FY16 EXPECT FURTHER 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 30.0% DRIVEN BY INCREASE IN UK PROFITS AND REDUCTION IN THE NUMBER OF COUNTRIES GENERATING TAX LOSSES Finance charge and taxation Year ended 30 June 2016 2015 £m £m Finance charge Net interest charge on debt (4.1) (2.9) Interest unwind of discount on Acquisition Liability (0.9) (0.4) IAS 19 pension charge (non-cash) (3.9) (3.0) PPF levy (0.3) (0.5) Net finance charge (8.0) (8.0) � We expect the net finance charge for the year ending 30 June 2017 to be c.£7 million Taxation Underlying effective tax rate 32.5% 30.0% � Material improvement in UK and smaller country profits reduces the Group effective tax rate to 30.0% � The Group’s effective tax rate for the year to June 2017 will be driven by the mix of profits generated during the year. We currently expect the rate to be between 30% and 35% 11
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