Download Annual Report
Total Page:16
File Type:pdf, Size:1020Kb
THE ULTIMATE PEOPLE BUSINESS Hays plc Annual Report & Financial Statements 2018 HAYS AT A GLANCE Our business is structured across four divisions, made up of 33 countries and 257 offices Market-leading breadth and depth of platform Australia & Germany New Zealand 3 11 17 potential 9 potential Specialisms to add Specialisms to add covered covered Countries (33) Australia & New Zealand Germany UK & Rest of UK & Ireland Rest of World (28) Ireland World* Sectors (20) 4 12 • Accountancy & Finance • Executive 16 potential 8 potential Specialisms to add Specialisms to add • Construction & Property • Financial Services covered covered • Information Technology • Health & Social Care • Life Sciences • Human Resources • Sales & Marketing • Legal • Banking & Capital Markets • Office Professionals • Contact Centres • Purchasing *Average specialisms per country • Education • Retail • Energy, Oil & Gas • Resources & Mining • Engineering & Manufacturing • Telecoms Pre-internet Wave 1: Wave 2: 20th Century Job Boards Networking Almost all job searches were 1990s 2000s The Evolution conducted via print ads and personal Starting first with job boards and A wide range of social of White Collar networks. The internet’s arrival ripped evolving to social media platforms media platforms and this model apart, improving accuracy, and networks, then accelerated networks emerge, opening Job Search reach and reducing cost. It also created by new internet aggregators, new channels to reach far more applicants per position, Since our birth in 1968, information and data have become and attract candidates. increasing the burden on employers. Hays’ strategy has intrinsic to the search process. evolved in a rapidly changing world. The onset of the internet 1968 1970s 1990s 2000s has accelerated our pace Founded Entered the Australian Expansion into France, NZ and Entered 21 countries, of change and innovation. in London and Irish markets, Czech Republic, plus new including Ascena initially via A&F specialisms in Financial Services, acquisition in Germany 1980s Office Support and Education Expanded specialisms including C&P and Technology Australia & New Zealand Germany Group net fees Net fees Group net fees Net fees 19% £199.4m 26% £276.0m Offices Consultants Offices Consultants 39 1,000 Group 22 1,700 Perm Temp net fees Perm Temp 35% 65% 2018 15% 85% Operating profit Operating profit £69.1m £1,072.8m £86.0m (+12% FY18) UK & Rest of Ireland World Group net fees Net fees Group net fees Net fees 24% £258.2m 31% £339.2m Offices Consultants Offices Consultants 97 1,917 99 2,847 Temp 58% 42% Perm Perm Temp Perm Temp 44% 56% 68% 32% Operating profit Operating profit £47.0m £41.3m Wave 3: Wave 4: Aggregators Find & Engage 2010s Today Search technology enables websites Hays has pioneered a move to bring together advertised from ‘Advertise & Apply’ vacancies from job boards and model to ‘Find & Engage’, employer/recruiter sites, further the ability to conduct high streamlining job searches. quality headhunting at scale in white collar specialisms. 50 years of the ultimate people business Post 2000s 2012 2015/17 2017 Identification of Pioneering LinkedIn SEEK and Xing ‘Find & Engage’ four megatrends partnership partnerships model launched in specialist white 2013 2017/18 collar recruitment Ground-breaking Announcement of our Find out more 5-year plan ambitious 2022 plan on Megatrends P6 – P13 Every day across our business, c.11,000 people work with clients and candidates in 33 countries to power the world of work. The balance, scale and diversity of our platform provides unrivalled breadth of expertise. It means we can respond quickly to the needs of our clients, enabling businesses, their people and the communities in which they operate to flourish. We are Hays. The ultimate people business. Hays is powered by our people worldwide. We focus on hiring, training and developing the best consultants in our industry. As the ultimate people business, everything we do is focused on placing the right candidates into the right roles. We are trusted partners to our candidates as they build careers, while helping our clients to find the skilled talent they need. Employees Consultants More information online: 10,978 7,464 Our award-winning investor site gives you fast 2017: 10,000 2017: 6,884 direct access to a wide range of Company information. See haysplc.com/investors Read our views and advice on the world of work. Permanent jobs Temporary and Contractor See haysplc.com/viewpoint filled last year roles filled last year 77,000 244,000 Follow us on social media: 2017: 70,000 2017: 220,000 linkedin.com/company/hays twitter.com/HaysWorldwide facebook.com/HaysUK youtube.com/user/HaysTV Financial summary Contents Net fee income Operating profit Strategic report Financial statements A description of our business Financial statements for the model, markets and strategy. Group including a report from £1,072.8m £243.4m the Independent Auditor. 2017: £954.6m 2017: £211.5m 03 Our investment case 04 The global jobs market 100 Independent Auditor’s 06 Industry megatrends Report Conversion rate Profit before tax 14 Chief Executive’s Review 106 Consolidated Group 19 Our strategy Financial Statements 22 Our business model 136 Hays plc Company 22.7% £238.5m 26 Key performance indicators Financial Statements 2017: 22.2% 2017: £204.6m 28 Divisional operating review 34 Financial Review Shareholder information 38 Principal risks Special dividend Core dividend Supporting information 43 Acting responsibly per share per share for investors. Governance report 145 Shareholder Information 146 Financial calendar How our Board of Directors sets 5.00p 3.81p 147 Hays online 2017: 4.25p 2017: 3.22p strategic direction and provides 148 Glossary oversight and control. 50 Chairman’s statement Basic EPS 52 Board of Directors 54 Leadership 11.44p 59 Relations with shareholders 2017: 9.66p 60 Effectiveness 63 Accountability 68 Remuneration Report 95 Directors’ Report 98 Directors’ responsibilities Hays plc Annual Report & Financial Statements 2018 STRATEGIC REPORT OUR BUSINESS MODEL Our revenue model is relatively simple: We focus on net fees rather than turnover, we earn a percentage fee, usually on a most of which is simply the ‘pass through’ contingent basis, when we successfully of Temp salary. Our ability to convert net place a candidate in a role with a client. fees into operating profit (our ‘conversion Our delivery model is based on deep rate’) is our key profit metric. At 22.7%, industry expertise across Temp, we have one of the highest conversion Contracting and Perm recruitment markets. rates in the industry. Our consultants are long-term, trusted Group net fees drive our operational partners to both clients and candidates. leverage, given high levels of incremental They are equipped with the best profit ‘drop-through’. Our business is also technology, tools and data analytics highly cash-generative, with relatively low in the industry. capital requirements. Hays plc Annual Report & Financial Statements 2018 Strategic report Governance Financial statements Shareholder information 03 OUR INVESTMENT CASE Our business philosophy balances the need to invest to support long-term growth with driving shorter-term financial performance. In practical terms, this means we continually focus on: consultant and business productivity; strategic investment where we see clear opportunities for profitable growth; cash generation and returns to shareholders. We believe there are four simple and compelling reasons to invest in Hays. 1. Our business model breadth 2. Our balanced exposure to both across sector and contract type mature and structural growth markets – We have built a global recruitment platform with unrivalled scale, – Many of the 33 countries across our global platform represent clear balance and diversity. structural growth opportunities, where the use of agencies such – We are positioned across Permanent, Temporary and Contractor as Hays to source skilled employees is a relatively new practice. markets, at a scale unique amongst our peers. – 54% of our Group net fees are generated in these structural – c.60% of net fees are in non-Perm white collar recruitment, growth markets which include places such as Germany, France, a structural growth area. We are market leaders in Flex working. Latin America and Asia, where the first-time outsourcing of the recruitment of skilled staff is a key long-term opportunity. – We focus on execution in each of our local markets, delivered by the best people, sector-leading technology, recruitment – The remaining 46% of net fees come from more mature markets, tools and our world-class brand. such as the UK, the US and Australia, where the use of agencies is a long established practice in the skilled jobs market. In these – We have strong and experienced operational and senior markets, activity levels are more driven by the stage of the regional management teams across the Group. economic cycle. – We focus on developing and delivering the best services and products for clients and candidates, meeting their evolving needs. Specialisms Countries Group net fees 20 33 54% 46% Structural growth markets Mature/cyclical markets 3. Our ability to deliver superior financial 4. Our potential to generate significant performance through the cycle cashflow and dividends – Our scale and balance adds relative resilience to earnings through – In addition to driving material profitable growth, we are the economic cycle. This contributes to the out-performance of a highly cash-generative business, with a clear set of free our business versus peers. cash flow priorities. – Non-Perm recruitment tends to be less cyclical than Perm. – These include ongoing investment in the development of the Candidate assignments can extend up to 12 months, giving some business, maintaining a strong balance sheet and delivering a ‘run-rate’ net fee visibility. By giving clients access to high quality, sustainable and progressive dividend. flexible talent, we help them replace fixed costs with variable. – Our core dividend cover is at the upper end of our targeted 2.0- – We remain focused on further diversifying our earnings and 3.0x range, providing resilience.