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UK — Hays operating profit down by 38%

03 September 2009

Hays plc (HAS:LSE), the 5th largest staffing company in Europe, today announces preliminary results for the 12 months ending 30 June 2009. Net fees were down by -15% from 786.8 million Pounds in June 2008 to 670.8 million Pounds in June 2009. Operating profit fell by -38% from 253.8 million Pounds in 2008 to 158 million Pounds in 2009. Profit before tax was down -43% from 264.4 million Pounds in 2008 to 151 million Pounds in 2009. Dividends are unchanged at 5.80p per share.

Temporary placement net fees are down by -7%, permanent placement net fees are down by -29% compared to 2008. The cost base was reduced by -24% compared to 2008. The company has closed a total of 48 offices (net of openings) in the year, principally in the United Kingdom & Ireland, reducing the total office network to 345 offices. Restructuring costs incurred during the year totalled 8 million Pounds.

In the UK & Ireland, which represents almost half of Hays’ business, net fees declined by 27% to 330.7 million Pounds, with operating profit down 54% to 63.5 million Pounds. UK & Irish Temporary placement net fees decreased by 15%, with most of the decline in the second half of the year, however, the underlying temporary placement margin was broadly in line with last year. Hays claim that efficiencies have been made in the UK & Ireland through an increase in temporary workers paid online which rose to 80% of their temporary workforce compared to 25% in the prior year.

In Continental Europe & RoW, which represents approximately 28% of Hay’s business, net fees increased by 21% (5% on a like-for-like basis) to 191.0 million Pounds and operating profit remained flat (but decreased by 16% on a like-for-like basis) at 33.1 million Pounds. The difference between actual growth and like-for-like growth was predominately due to the appreciation in the Euro. Hays’ German business, which is predominantly IT contracting, was responsible for nearly all the profit in this region and achieved a 19% like-for-like increase in net fees. Hays plans to diversify Germany further with a broader range of specialisms, including Accountancy & Finance, Construction & Property, Legal and Pharmaceutical.

Other Continental European markets which include Belgium, France, Italy, Netherlands, Spain and Switzerland are focused principally on permanent placement and, hence, were more exposed to the impact of the economic downturn.Hays plc Chief Executive Alistair Cox, said "the recruitment markets in the past year have been the most challenging on record. However, Hays has performed creditably due to our scale, the strength of our market positions, our early action to address the cost base and our ability to redirect resources to more resilient sectors such as Education, Healthcare, Oil & Gas and Pharmaceutical. We are also continuing to gain market share across the world and are investing in new markets including India and Russia. In addition, we are very pleased to have signed a series of significant recruitment contracts with leading global companies drawing on the full range of our expertise."

" The Continental European markets, which entered the downturn later than the other regions, are still experiencing deteriorating conditions. Whilst we anticipate that 2010 will be another tough year for our industry, we will continue to take advantage of the downturn to build market share and pursue our investment plans to strengthen our operations for the long term. We are managing the short term whilst investing for the long term."

In early trading Hays's shares were down by -4.06% to 95.75 Pence.



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