UK-based international recruitment firm Hays (HAS: LN) reported turnover for the six months ending 31 December 2014 of £1.9 billion, an increase of 3% (7% on a like-for-like (LFL) basis) from £1.8 billion during the same period a year ago.

Exchange rate movements decreased net fees and operating profit by £16.3 million and £4.1 million, respectively.

The group derived 58% of net fee income from temporary recruitment and 42% from permanent placements. Net fees from temporary recruitment increased 7%, as a result of an 8% increase in volume, offset by a 1% decrease in hours worked. Net fees from permanent placement rose by 14%. Volumes increased by 11% driven by improved candidate and client confidence in the UK, several European countries, and Australia during the latter half of the six-month period.

Alister Cox, CEO of Hays, commented: “This is an excellent first half performance, driven by an acceleration in the permanent recruitment market, as candidate confidence continued to improve in many countries.”

“Conditions remained supportive in most markets and we rapidly invested in headcount to deliver strong fee growth alongside profit leverage. As a result, 19 countries delivered record first half net fee performances, including the key businesses of Germany, France, Canada, and Japan; and Australia returned to growth.”

“In the UK we grew net fees by 13% (LFL), where our investment in headcount, focus on improving consultant productivity, and the on-going benefits of our largely automated back office platform, drove excellent profit leverage as 71% (LFL) of incremental net fees converted into operating profit.”

“This combination of profit leverage and targeted revenue investment is key to how we manage the company. In addition, through the half we continued to make significant progress against each of our operational and strategic objectives, notably the acquisition of Veredus in the US which gives us a significant platform in the world’s largest recruitment market,” he added. 

Hays acquired 80% of Veredus Corp, a pure-play IT staffing company headquartered in Florida, for an initial consideration of USD 44.0 million (circa £29.0 million). The remaining 20% has been retained by the selling shareholders, all of whom continue in their senior leadership roles within the Hays US business.

In its home market, the UK and Ireland, Hays reported net fee growth of 13% (LFL) during H1 2015, compared with a year ago. 

Hays’ temporary recruitment business reported net fee growth of 8% (LFL), with permanent placement net fees increasing by 21% (LFL), as candidate confidence remained strong.

The company reported strong performances in the Midlands, the North West, the East, South Coast, and London (excluding the City), each of which grew net fees by more than 20% (LFL). Activity levels in the City returned to growth, increasing net fees by 1%, while in Ireland net fees rose by 2% (LFL).

At the specialism level, the company’s IT division delivered growth of 24% (LFL), Construction & Property performed strongly and was up 17% (LFL), whilst net fees in Hays’ largest specialism of Accountancy & Finance grew by 18% (LFL), within which the Senior Finance business grew by 21% (LFL).

Hays’ private sector business, which represented 71% of the division’s net fees in H1 2015, delivered strong net fee growth of 13% (LFL) with the public sector business delivered strong net fee growth of 14% (LFL), driven by a particularly good performance in Education and IT.

Across Continental Europe & Rest of World, Hays reported net fee growth of 9% on a like-for-like (LFL) basis. 

The difference between actual and LFL growth rates is primarily the result of the material depreciation in the rate of exchange between the Euro versus Sterling during the half, which reduced net fees by £10.9 million and operating profit by £2.4 million.

Germany, which represented 53% of the division’s net fees, delivered growth of 7% (LFL) and a record first half net fee performance. Hays reported growth across the region’s contractor and temporary recruitment divisions, which together grew by 6% (LFL), and permanent placement, which grew by 7% (LFL).

Strong growth was reported in the company’s newer specialisms, which now represent 27% of Germany net fees; particularly Accountancy & Finance, Sales & Marketing and Life Sciences, all of which grew by 10% (LFL) or more. Net fees in IT, which represents 41% of German net fees, grew by 7% (LFL), while net fees in Engineering increased by 3% (LFL).

There remains a degree of uncertainty regarding future regulations governing temporary and contractor markets and their impact on recruitment decision-making in certain client segments. However, the long-term structural growth opportunity in Germany remains unchanged, and Hays remains confident that it will continue to benefit from the increasing demand for specialist recruitment services.

Across the rest of the division, net fees rose by 12% (LFL). France, Hays’ second largest country in the division, delivered record first half net fees and growth of 11% (LFL), a strong performance against the backdrop of a market which remained subdued throughout the half. Elsewhere, 11 other countries delivered record first half net fee performances; including Belgium, Canada, Poland, and Switzerland.

In North America, Canada delivered net fee growth of 21% (LFL) with the US, excluding the Veredus acquisition, continuing to perform well; reporting net fee growth of 35% (LFL). Chile, Colombia and Mexico all continued to perform well, although Brazil remained challenging and net fees were down 17% (LFL).

Hays continued to invest in Asia Pacific, with headcount up 13% compared with last year. 

The difference between actual growth and LFL growth was the material depreciation in the exchange rate between the Australian Dollar and Japanese Yen with Sterling during the half. As a result, net fees and operating profit decreased by £5.2 million and £1.7 million, respectively.

In Australia & New Zealand net fees were up 7% (LFL) and operating profit up 6% (LFL) compared with last year. In Australia, net fees grew 5% (LFL), with the temporary recruitment business, which represents 69% of net fees, growing by 2% (LFL) and permanent placement net fees up 13% (LFL), on the back of improved candidate confidence.

In Asia, which accounted for 21% of the division’s net fees, Hays delivered net fee growth of 13% (LFL), with operating profit up by 12% (LFL). All countries in the region delivered record first half net fees on a LFL basis; Japan (8%), China (25%), Hong Kong (13%), Malaysia (61%), and Singapore (7%).

Looking ahead, Mr Cox added: “We exit the first half in a position of strength and we are confident in our outlook. We have the scale, diversity, people, and technology to capture the many long-term opportunities available to us, as well as driving our profits along the way.”

Despite the company’s positive results, in trading today, Hays’ share price decreased by 7.1% to £1.49, an increase of 9.5% compared with a year ago. Based on its current share price, the company has a market value of £2.1 billion.