REG - Hays PLC - Half-year Report <Origin Href="QuoteRef">HAYS.L</Origin> - Part 2
22/02/2017 07:06
- Part 2: For the preceding part double click ID:nRSV4869Xa
relating to components of other comprehensive income 2.4 5.7 (7.2)
(10.2) (23.6) 28.3
Items that may be reclassified subsequently to profit or loss:
Currency translation adjustments 12.3 11.6 64.3
Tax relating to components of other comprehensive income (2.8) - -
Other comprehensive income for the period net of tax (0.7) (12.0) 92.6
Total comprehensive income for the period 64.7 44.9 217.1
Attributable to equity shareholders of the parent Company 64.7 44.9 217.1
Condensed Consolidated Balance Sheet
31 December 31 December 30 June
2016 2015 2016
(In £'s million) Note (unaudited) (unaudited) (audited)
Non-current assets
Goodwill 224.4 204.3 220.4
Other intangible assets 19.3 24.5 21.6
Property, plant and equipment 20.7 18.0 19.8
Deferred tax assets 26.2 36.3 23.9
290.6 283.1 285.7
Current assets
Trade and other receivables 763.6 628.6 763.9
Cash and cash equivalents 114.0 64.4 62.9
Derivative financial instruments - - 6.6
877.6 693.0 833.4
Total assets 1,168.2 976.1 1,119.1
Current liabilities
Trade and other payables (529.0) (435.2) (573.3)
Current tax liabilities (29.9) (20.1) (27.1)
Bank loans and overdrafts (1.1) (0.5) (1.1)
Provisions 8 (2.9) (2.9) (3.1)
Derivative financial instruments (0.2) - -
(563.1) (458.7) (604.6)
Non-current liabilities
Bank loans (65.0) (120.0) (25.0)
Acquisition liabilities (12.7) (9.7) (11.2)
Retirement benefit obligations 7 (20.5) (82.7) (14.3)
Provisions 8 (6.2) (11.9) (6.2)
(104.4) (224.3) (56.7)
Total liabilities (667.5) (683.0) (661.3)
Net assets 500.7 293.1 457.8
Equity
Called up share capital 14.7 14.7 14.7
Share premium 369.6 369.6 369.6
Capital redemption reserve 2.7 2.7 2.7
Retained earnings 21.0 (123.3) (15.8)
Cumulative translation reserve 75.9 13.7 66.4
Equity reserve 16.8 15.7 20.2
Total shareholders' equity 500.7 293.1 457.8
Condensed Consolidated Statement of Changes in Equity
For the six months ended 31 December 2016
(In £'s million) Share capital Share premium account Capital redemption reserve Retained earnings Cumulative translation reserve Equity reserve Total
At 1 July 2016 14.7 369.6 2.7 (15.8) 66.4 20.2 457.8
Currency translation adjustments - - - - 12.3 - 12.3
Remeasurement of defined benefit pension schemes - - - (12.6) - - (12.6)
Tax relating to components of other comprehensive income - - - 2.4 (2.8) - (0.4)
Net expense recognised in other comprehensive income - - - (10.2) 9.5 - (0.7)
Profit for the period - - - 65.4 - - 65.4
Total comprehensive income for the period - - - 55.2 9.5 - 64.7
Dividends paid - - - (28.7) - - (28.7)
Share-based payments - - - 9.7 - (3.4) 6.3
Tax on share-based payment transactions - - - 0.6 - - 0.6
At 31 December 2016 (unaudited) 14.7 369.6 2.7 21.0 75.9 16.8 500.7
For the six months ended 31 December 2015
(In £'s million) Share capital Share premium account Capital redemption reserve Retained earnings Cumulative translation reserve Equity reserve Total
At 1 July 2015 14.7 369.6 2.7 (138.2) 2.1 18.7 269.6
Currency translation adjustments - - - - 11.6 - 11.6
Remeasurement of defined benefit pension schemes - - - (29.3) - - (29.3)
Tax relating to components of other comprehensive income - - - 5.7 - - 5.7
Net expense recognised in other comprehensive income - - - (23.6) 11.6 - (12.0)
Profit for the period - - - 56.9 - - 56.9
Total comprehensive income for the period - - - 33.3 11.6 - 44.9
Dividends paid - - - (26.9) - - (26.9)
Share-based payments - - - 8.5 - (3.0) 5.5
At 31 December 2015 (unaudited) 14.7 369.6 2.7 (123.3) 13.7 15.7 293.1
For the year ended 30 June 2016
(In £'s million) Share capital Share premium account Capital redemption reserve Retained earnings Cumulative translation reserve Equity reserve Total
At 1 July 2015 14.7 369.6 2.7 (138.2) 2.1 18.7 269.6
Currency translation adjustments - - - - 64.3 - 64.3
Remeasurement of defined benefit pension schemes - - - 35.5 - - 35.5
Tax relating to components of other comprehensive income - - - (7.2) - - (7.2)
Net income recognised in other comprehensive income - - - 28.3 64.3 - 92.6
Profit for the period - - - 124.5 - - 124.5
Total comprehensive income for the period - - - 152.8 64.3 - 217.1
Dividends paid - - - (39.9) - - (39.9)
Share-based payments - - - 10.2 - 1.5 11.7
Tax on share-based payment transactions - - - (0.7) - - (0.7)
At 30 June 2016 (audited) 14.7 369.6 2.7 (15.8) 66.4 20.2 457.8
Condensed Consolidated Cash Flow Statement
Six months to Six months to Year to
31 December 31 December 30 June
2016 2015 2016
(In £'s million) Note (unaudited) (unaudited) (audited)
Operating profit from continuing operations 100.1 86.3 181.0
Adjustments for:
Depreciation of property, plant and equipment 4.5 3.9 7.7
Amortisation of intangible assets 7.8 7.6 14.2
Profit on disposal of property, plant and equipment (0.1) (0.1) -
Net movements in provisions (0.3) (0.3) (1.2)
Share-based payments 6.6 6.0 11.9
18.5 17.1 32.6
Operating cash flow before movement in working capital 118.6 103.4 213.6
Changes in working capital (34.8) (69.5) (54.3)
Cash generated by operations 83.8 33.9 159.3
Pension scheme deficit funding (7.4) (7.2) (14.4)
Income taxes paid (30.2) (19.6) (41.7)
Net cash inflow from operating activities 46.2 7.1 103.2
Investing activities
Purchase of property, plant and equipment (5.6) (6.1) (10.3)
Proceeds from sales of business assets 0.1 0.1 0.1
Purchase of intangible assets (4.5) (2.0) (4.7)
Interest received 0.3 0.2 0.5
Net cash used in investing activities (9.7) (7.8) (14.4)
Financing activities
Interest paid (1.6) (1.7) (4.1)
Equity dividends paid (28.7) (26.9) (39.9)
Proceeds from exercise of share options 0.4 0.6 1.5
Increase/(decrease) in bank loans and overdrafts 40.0 20.0 (74.4)
Net cash from/(used) in financing activities 10.1 (8.0) (116.9)
Net increase/(decrease) in cash and cash equivalents 46.6 (8.7) (28.1)
Cash and cash equivalents at beginning of period 62.9 69.8 69.8
Effect of foreign exchange rate movements 4.5 3.3 21.2
Cash and cash equivalents at end of period 9 114.0 64.4 62.9
(In £'s million) Note
Bank loans and overdrafts at beginning of period (26.1) (100.5) (100.5)
(Increase)/decrease in period (40.0) (20.0) 74.4
Bank loans and overdrafts at end of period (66.1) (120.5) (26.1)
Net cash/(debt) at end of period 9 47.9 (56.1) 36.8
1 Basis of preparation
The condensed consolidated interim financial statements ("interim
financial statements") are the results for the six months ended 31
December 2016. The interim financial statements have been prepared under
International Financial Reporting Standards ("IFRS") as adopted by the
European Union, in accordance with International Accounting Standard 34
'Interim Financial Reporting' and the Disclosure and Transparency Rules
of the Financial Conduct Authority. They are unaudited but have been
reviewed by the auditors and their report is attached.
The interim financial statements do not constitute statutory accounts as
defined in Section 434 of the Companies Act 2006 as they do not include
all of the information required for full statutory accounts. The interim
financial statements should be read in conjunction with the statutory
accounts for the year ended 30 June 2016, which were prepared in
accordance with IFRS as adopted by the European Union and have been filed
with the Registrar of Companies. The auditors' report on those accounts
was unqualified, did not draw attention to any matters by way of emphasis
and did not contain a statement under Section 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 2016. These accounting policies are consistent with those
applied in the preparation of the financial statements for the year ended
30 June 2016 except as where stated below.
The fair value of trade receivables, trade payables, financial assets,
bank loans and overdraft is not materially different to their book value.
The following are new standards or improvements to existing standards
that are mandatory for the first time in the Group's accounting period
beginning on 1 July 2016 and no new standards have been early adopted.
The Group's December 2016 interim financial statements have adopted these
amendments to IFRS, none of which had any material impact on the Group's
results or financial position:
Ÿ IFRS 14 Regulatory Deferral Accounts (effective 1 January 2016)
Ÿ IFRS 10 and IAS 28 (amendments) Investment Entities Applying the Consolidation Exemption (effective from 1 January 2016)
Ÿ IFRS 11 (amendments) Accounting for Acquisitions of Interests in Joint Operations (effective 1 January 2016)
Ÿ IAS 1 (amendments) Presentation of Financial Statements (effective from 1 January 2016)
Ÿ IAS 16 and IAS 38 (amendment) Clarification of Acceptable Methods of Depreciation and Amortisation (effective 1 January 2016)
Ÿ IAS 27 (amendments) Equity Method in Separate Financial Statements (effective from 1 January 2016)
Ÿ Annual Improvements to IFRSs 2014 (effective 1 January 2016)
There have been no alterations made to the accounting policies as a
result of considering all of the above amendments that became effective
in the period, as these were either not material or were not relevant.
Going concern
The Group's business activities, together with the factors likely to
effect its future development, performance and financial position,
including its cash flows and liquidity position are described in the Half
Year Report.
The Group has an unsecured revolving credit facility of £210 million that
expires in April 2020. The Group uses the facility to manage its day-to
-day working capital requirements as appropriate. As at 31 December 2016,
£145 million of the committed facility was un-drawn.
The Group's facility, together with internally generated cash flows, will
continue to provide sufficient sources of liquidity to fund its current
operations, including contractual and commercial commitments, future
growth and any proposed dividends. Therefore the Group is well placed to
manage its business risks, despite the current uncertain economic
outlook.
The directors have formed the judgement, at the time of approving the
interim financial statements, that there is reasonable expectation that
the Group has adequate resources to continue in operational existence for
the foreseeable future. For this reason, the directors continue to adopt
the going concern basis 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 continues to segment the business into three
regions, Asia Pacific, Continental Europe & Rest of World, and United
Kingdom & Ireland. There is no material difference between the
segmentation of the Group's turnover by geographic origin and
destination.
The Group's continuing operations comprise one class of business, that of
qualified, professional and skilled recruitment.
Net fees and profit from continuing operations
The Group's Management 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 Management
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 Income Statement.
Net fees and profit from continuing operations
Six months to Six months to Year to
31 December 31 December 30 June
2016 2015 2016
(In £'s million) (unaudited) (unaudited) (audited)
Net fees
Asia Pacific 111.9 84.4 176.1
Continental Europe & Rest of World 227.5 173.1 362.5
United Kingdom & Ireland 126.1 139.4 271.7
465.5 396.9 810.3
Operating profit from continuing operations
Asia Pacific 33.3 23.2 50.2
Continental Europe & Rest of World 48.6 37.8 78.7
United Kingdom & Ireland 18.2 25.3 52.1
100.1 86.3 181.0
3 Net finance charge
Six months to Six months to Year to
31 December 31 December 30 June
2016 2015 2016
(In £'s million) (unaudited) (unaudited) (audited)
Interest received on bank deposits 0.3 0.3 0.5
Interest payable on bank loans, overdrafts (1.5) (1.6) (2.7)
Other interest payable (0.8) - (0.7)
Interest unwind on acquisition liability (0.6) (0.5) (0.9)
Pension Protection Fund levy (0.3) (0.2) (0.3)
Net interest on pension obligations (1.0) (1.9) (3.9)
Net finance charge (3.9) (3.9) (8.0)
4 Tax on ordinary activities
The Group's consolidated effective tax rate in respect of continuing
operations for the six months to 31 December 2016 is based on the
estimated effective tax rate for the full year of 32.0% (31 December
2015: 31.0%, 30 June 2016: 30.0%).
5 Dividends
The following dividends were paid by the Group and have been recognised
as distributions to equity shareholders in the year:
Six months to Six months to Year to
31 December 31 December 30 June
2016 2015 2016
(In £'s million) (unaudited) (unaudited) (audited)
Final dividend for the year ended 30 June 2015 of 1.89 pence per share - 26.9 26.9
Interim dividend for the period to 31 December 2015 of 0.91 pence per - - 13.0
share
Final dividend for the year ended 30 June 2016 of 1.99 pence per share 28.7 - -
28.7 26.9 39.9
The interim dividend for the period ended 31 December 2016 of 0.96 pence
per share is not included as a liability in the balance sheet as at 31
December 2016.
6 Earnings per share
Six months to Six months to Year to
31 December 31 December 30 June
2016 2015 2016
(In £'s million) (unaudited) (unaudited) (audited)
Earnings from continuing operations 96.2 82.4 173.0
Tax on earnings from continuing operations (30.8) (25.5) (51.9)
Basic earnings 65.4 56.9 121.1
Number of shares (million):
Weighted average number of shares 1,438.8 1,424.7 1,428.4
Dilution effect of share options 15.3 18.8 19.0
Weighted average number of shares used for diluted EPS 1,454.1 1,443.5 1,447.4
From continuing operations:
Basic earnings per share 4.55p 3.99p 8.48p
Diluted earnings per share 4.50p 3.94p 8.37p
From continuing and discontinued operations:
Basic earnings per share 4.55p 3.99p 8.72p
Diluted earnings per share 4.50p 3.94p 8.60p
7 Retirement benefit obligations
Six months to Six months to Year to
31 December 31 December 30 June
2016 2015 2016
(In £'s million) (unaudited) (unaudited) (audited)
Deficit in the scheme brought forward (14.3) (58.7) (58.7)
Effect of settlement - - (1.6)
Administration cost (0.8) (0.9) (1.9)
Employer contributions 7.4 7.2 14.4
Net interest expense (0.2) (1.0) (2.0)
Remeasurement of the net defined benefit liability (12.6) (29.3) 35.5
Deficit in the scheme carried forward (20.5) (82.7) (14.3)
8 Provisions
(In £'s million) Discontinued Continuing Total
At 1 July 2016 (6.9) (2.4) (9.3)
Utilised 0.2 - 0.2
At 31 December 2016 (unaudited) (6.7) (2.4) (9.1)
Current (2.9)
Non-current (6.2)
(9.1)
Discontinued provisions comprise of potential exposures arising as a
result of the business disposals that were completed in 2004, together
with deferred employee benefits relating to former employees.
9 Movement in net cash
31 December
1 July Cash Exchange 2016
(In £'s million) 2016 flow movement (unaudited)
Cash and cash equivalents 62.9 46.6 4.5 114.0
Bank loans and overdrafts (26.1) (40.0) - (66.1)
Net cash 36.8 6.6 4.5 47.9
The table above is presented as additional information to show movement
in net cash, defined as cash and cash equivalents less bank loans and
overdrafts.
The Group's £210 million unsecured revolving credit facility expires in
April 2020. The financial covenants require the Group's interest cover
ratio to be at least 4:1 and its leverage ratio (net debt to EBITDA) to
be no greater than 2.5:1. The interest rate of the facility is based on a
ratchet mechanism with a margin payable over LIBOR in the range of 0.90%
to 1.55%.
As at 31 December 2016, £145 million of the committed facility was un
-drawn.
10 Events after the balance sheet date
There are no significant events after the balance sheet date to report.
11 Like-for-like results
Like-for-like results represent organic growth/(decline) of continuing
activities at constant currency.
For the six months ended 31 December 2016 these are calculated as
follows:
(In £'s million)
Net fees for the six months ended 31 December 2015 396.9
Foreign exchange impact 55.5
Net fees for the six months ended 31 December 2015 at constant currency 452.4
Net fee increase resulting from organic growth 13.1
Net fees for the six months ended 31 December 2016 (unaudited)
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