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Hays plc Investor day17 April 2008
Investor Day17 April 2008
Important notice
Specialist Recruitment page 1
Certain statements included or incorporated by reference within this presentation may constitute "forward looking statements". By their nature, forward looking statements involve a number of risks, uncertainties or assumptions that could cause actual results or events to differ materially from those expressed or implied by those statements. Forward looking statements regarding past trends or activities should not be taken as representation that such trends or activities will continue in the future. Accordingly, undue reliance should not be placed on forward looking statements. The Board considers the risks and uncertainties listed in its Annual Report to be the principal ones that might affect the Group's performance but cautions that the risks included in its Annual Report may not address all the factors that could cause results to differ materially.
The information contained in this presentation is not an invitation to invest in the shares of, or any other investments issued, by Hays or any other person or otherwise to engage in any activity in relation to investments. The information provided is neither a recommendation nor advice and should not be relied upon in connection with any investment decision.
The information contained in this presentation 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.
Investor Day17 April 2008
Objectives of the day
Specialist Recruitment page 2
Present the opportunities we see for Hays- in existing, emerging and new specialist recruitment markets
Share our strategy and priorities with you- our vision and plans for the medium term
Opportunity to meet our wider management team- > 20 members of the management team are here today
Provide a comprehensive picture of our business today- this is our first Investor Day since 2003
Trading update
Specialist Recruitment page 3
Q3as announced 10 April 2008
* LFL is like-for-like growth, which represents organic growth of continuing activities at constant currency. No adjustment is made for the two less trading days in the quarter ended 31 March 2008. The Q3 growth rates and the outlook statement are as disclosed in the Interim Management Statement issued on 10 April 2008. **It is estimated that Easter falling earlier this year reduced our growth by approximately 2% in the quarter
21%
47%
53%
7%
headline
5%UK & I
17%Group
38%CE & RoW
40%APAC
LFL*Net fee growth
Q4 trading update on 10 July 2008
Quarter ended 31 March 2008 (‘Q3’) Q3 Highlights
Outstanding International performance- 39% LFL growth
Good UK & I growth- after taking account of early Easter**
Excellent net fee growth- Perm 22% LFL growth; temp 13% LFL growth
Interim guidance confirmed- confident in outlook for the year
Specialist Recruitment page 4
Part I
Hays08- a profile of the Group today
Focused Evolution- the Group strategy
Focus by Division- divisional profile and strategy
Introduction- includes brief trading update
Cash is King- cash, balance sheet, financing
Hays through the cycle- performance in 2001/02 downturn
1:00
1:05
1:20
1:45
2:00
2:30
Refreshment breakSpeed expo
3:30
4:00
4:15
Refreshment breakSpeed expo
4:30 Summary- key takeaways
Q&A session
4:45 Q&A session5:00 Drinks in the Dali Gallery
Part 2
Page 1
Page 6
Page 22
Page 45
Page 79
Page 84
Page 96
APAC
CE & RoWUK & I
Investor Day17 April 2008Agenda
Page 45
Page 56
Page 69
Investor Day17 April 2008
Hays management attending the investor day
Specialist Recruitment page 5
Grahame Doyle - Director, New South Wales
Matt Underhill- Managing Director, Asia
Nigel Heap- Managing Director, APAC
Group
Klaus Breitschopf - Managing Dir, Germany
Dirk Hahn- Chief Op Officer, Germany
Tina Ling- Managing Dir, France
Laurent Jehle- Business Director, France
Nick Cox- Managing Dir, CE & RoW
Tim Cook- Managing Dir, UK & I C&P
Charles Logan- Managing Dir, UK & I HRM
Paul Venables - Group Finance Director
Bob Lawson- Chairman
Steve Weston- Group Technology Director
Alistair Cox- Chief Executive Officer
Alison Yapp- Company Secretary
Steve Witts - Head of Treasury & Tax
CE & RoWAPAC
Simon Gray- Group Financial Controller
Ross Hetherington- Managing Dir, UK & I A&F
Laura Alexander- Finance Director, Asia
Martin Abell - Head of Investor Relations
UK & Ireland
Specialist Recruitment page 6
I. Hays08- a profile of the Group today
II. Focused Evolution- the Group strategy
III. Focus by Division- profile and strategy
IV. Cash is King- cash, balance sheet and financing strategy
V. Hays through the cycle- performance in 2001/02 downturn
VI. Summary- key takeaways
APAC
CE & RoWUK & I
Appendices- Speed expos and speaker biographies
page 7
Focused 100% on the specialist recruitment market
Pure play specialist
recruitment
Generalist recruitment (mostly blue collar staff)
Specialist recruitment (mostly white collar staff)
The global staffing market
Executive search (head hunting)
Attractive market characteristics
Specialist Recruitment
Note: within the 3 segments, the Groups have been positioned in descending order according to size of net fees
Hays places candidates in the £15k - £75k salary banding
page 8
Hays market positioning by candidate salary bracket*C
andi
date
sal
ary
(£’0
00)
10
20
30
40
50
60
70
80
UK
& Ir
elan
d
Con
tinen
tal E
urop
e &
Res
t of W
orld
pred
omin
antly
£15k
-£5
0k
pred
omin
antly
£2
0k -
£75k
*Information is indicative only. For illustrative purposes, APAC and CE & RoW are based on UK equivalent salaries
Pure play specialist
recruitment
Specialist Recruitment
APA
Cpr
edom
inan
tly
£20k
-£7
5k
oppo
rtuni
ty
Specialist Recruitment page 9
Balanced portfolio
17 specialismsWe find jobs in a wide variety of professionswe placed 68,000 candidates last year
Jobs we place*
Accountancy & Finance
Construction & Property
Information Technology
14 Other Sectors
Architects
Building Control Officers
Carpenters
Civil Engineers
Facilities Managers
Interior Designers
Maintenance Engineers
Project Managers
Quantity Surveyors
Site Managers
Structural Engineers
Auditors
Bookkeepers
Corporate Tax Advisers
Credit Controllers
Finance Clerks
Finance Managers
Financial Analysts
Financial Controllers
Management Accountants
Office Support
Treasurers
Java Developers
Electronic Engineers
IT Architects
IT Consultants
Programme Managers
Project Managers
SAP Consultants
Software Developers
Solution Designers
System Administrators
Actuaries
Claims Managers
Clinical Trial Analysts
Compliance Directors
Customs Officers
Doctors
Financial Planners
Financial Traders
Geologists
Graphic Designers
HR Managers
Lawyers
Logistics Managers
Metallurgists
Nurses
Media & PR Officers
Brand Managers
Purchasing Directors
Product Development Managers
Retail Directors
Sales Managers
Store Managers
Teachers
*The above represents a sample of the jobs we place
page 10
£15 billion market
Fragmented markets
scope to increase market share
#1< 20%0.7Australia / NZ
#1< 15%0.4Germany
#2< 5%0.4France
top 10< 5%0.4Benelux
#5< 5%0.4Canada
#3< 5%0.3Japan
#2< 5%0.2Spain
Other
UK
US
Country
< 5%
< 15%
-
Hays share
Hays presence
Size (£bn)
5
2
10
3
7
top 10
#1
- £15bn (net fees)size of global specialist markets
#1~ 5%15Total
~ 10% shareof market that Hays addresses
~ 5% shareof global specialist market
Figures are based on Hays estimates as at 31 December 2007 and should be viewed as indicative only
Size of specialist recruitment market (by net fees)
(measured in net fees)
Specialist Recruitment
6 key market drivers
Specialist Recruitment page 11
2. Cultural changesincreasing penetration
>> penetration rates are low and growing rapidly driven by an increased willingness to use specialist recruitment consultants
Business growthnew job opens
Vacancy filled
Donor business 1 has vacancy
Vacancy filled
Donor business 2 has vacancy
Vacancy filledetc etc etc
3. The multiplier effect and cyclical growth
1. Increasing deregulation opening new markets
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
234567891011
Spain
France
Germ
any
Italy
UK
US
Data from Amro staffing note, 16/01/08
Employment protection indices (max = 6; min = 0; average 2000-06)
Regulation of temporary employmentRequirements for collective dismissalProtection of permanent staffUnemployment rate % (RHS)
Japan
rateRegion
Middle East, Africa
South America
Rest of Asia
Continental Europe
UK & I
North America
Penetration
Cultural changes
increasing penetration
The multiplier
effect& cyclical
growth
Increasingderegulation
opening new markets
6. Increasing job velocity4. Increasing skill shortages 5. Increasing flexibility demands
Specialist Recruitment page 12
Hays Groupnet fees: £374.8m
operating profit: £125.0m conversion rate: 33.4%
consultants: 5,718 offices: 391
CE & RoWnet fees: £68.9m
operating profit: £15.8m conversion rate: 22.9%
consultants: 1,234offices: 82
UK & Inet fees: £225.3m
operating profit: £70.6m conversion rate: 31.3%
consultants: 3,355 offices: 259
APACnet fees: £80.6m
operating profit: £38.6m conversion rate: 47.9%
consultants: 1,129 offices: 50
Note: Financials are based on results for 6 months ended 31 December 2007 (‘FY08 H1’). Consultants and offices are as at 31 December 2007. Pie chart at the top right of the page shows net fees by region (FY08 H1). Conversion rate is operating profit / net fees
UK&I
APAC
CE+
• #1 market position• wide geographical coverage and large SME weighting• 23% public sector
• #1 position in Australia & NZ• 93% of business is Aus & NZ• SME and large corporate focus• rolling out rapidly in Asia
The Group structure
• top 3 position in major markets• rapidly growing markets• 2/3 of business is Germany (principally IT) & France
information is based on 6 months ended 31 December 2007
Specialist Recruitment page 13
*Indicative purposes only based on information for the 6 months ended 31 December 2007
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Spot
Recruitmentcontracts
Public sector
Private sector
Top 40
30,000 customers
Temp
Perm
Net fees by type*
Other
Balanced portfolio
breadthBalanced portfolioRelatively defensive versus peer group
Accountancy & Finance
Construction & Property
IT
~ 20%
~ 80%
~ 20%
~ 80%
~ 15%
~ 85%
49%
51%
26%
14%
25%
35%
Balanced portfolioperm & temp businesses
Specialist Recruitment page 14
Driving growth on 2 fronts
• Number 1 in global perm specialist recruitment
• 68,000 candidates placed in FY07
• Cyclical business giving good momentum when economies are buoyant
• Low working capital
Temporaryplacement market
Permanentplacement market
55%
• Number 2 in global temp specialist recruitment
• 1 day to 1 year placements• 46,000 temps paid weekly in
FY07• Less cyclical giving Hays more
defensive qualities• Large back office support
function• Better earnings visibility
Shared platform51% of Hays business 49% of Hays business
Shared platform with synergies
- shared management- shared offices- shared marketing- backed by one brand
Temp and Perm split is based on net fees for 6 months ended 31 December 2007
Specialist Recruitment page 15
Balanced portfolio
private & public sector
Quality and broad client basemix of blue chip companies and SMEs
*Based on net fees for 6 months ended 31 December 2007
Public Sector
80% private sector* 20% public sector*
Accountancy & Finance
Construction & Property
Information Technology
Other Sectors
Business model
replicatesproven track record
Specialist Recruitment page 16
4 decades of evolution
2007
2006
2005
2008
New countries
1997
1998
1999
2000
2001
2002
2003
2004
New specialismsYE 30 June
Early 1990s
Pre 1990
Brazil
China, HK
organic acquisition
A&F C&P
France
Czech Re.
Netherlands
Portugal
Canada
Belgium
Germany SwitzerlandSpain
Austria Sweden Poland
Australia
N’ Zealand
Slovakia Singapore
Italy UAELuxembourg
UK
Key
Legal
Banking Fin. Services
Education
Contact Ce.
HRMHR
Sales & Ma.
ExecutiveRetail Healthcare
Purchasing
IT
Japan Pharma
Oil & Gas
Hungary Denmark
replicated into 27 countries principally through organic growthAccelerating
pace
Ireland
Market leading positions#1 worldwide
Specialist Recruitment page 17
Global footprint emergingHays is becoming increasingly international
Top 3 in most major economies
Hays presence
Net fee development
Number 1
Just arrived
Just arrived
InternationalInformation as at April 2008
£155m £23m
£225m
UK & I
H1 FY03
H1 FY04
H1 FY05
H1 FY06
H1 FY07
£150m
40%60%
.
Number 1 with unrivalled coverage
H1 FY08
.
page 18
A global leader in specialist recruitment
Market leading positions
in established & embryonic markets
SThree
MPS Group
Michael Page
Robert Half
Competitor*
£229m2
£149m3
£66m4
£52m5
£239m
profit
Global Number 1
1
Rank Operating
Specialist Recruitment
United KingdomIreland
Spain
New Zealand
Japan
France
Germany
Italy
Top 3 in 9 countries
Australia
embryonic market
embryonic market
embryonic market
embryonic market
*Competitor ranking is based on operating profits disclosed for calendar year ended 31 December 2007. Pure play specialist recruitment groups shown only. Robert Half recruitment profits only shown. SThree profit is for the year ended 2 December 2007
embryonic market
embryonic market
Our target is always top 3 market position
+ top 10 and growing rapidly in our other 18 other countries
Specialist Recruitment
0%
20%
40%
60%
80%
100%
Hays
MichaelPage
SThree
RobertH
alf
MPS
Group
Robert
Walters
Cost Profit
Specialist Recruitment page 19
Strong cost and cash control
Strong cost control
#1 conversion rate
Disciplined cost controldelivering industry leading conversion rate
Net fees conversion to operating profit Conversion of profit into cash
Excellent cash conversionreflecting simplicity of accounting & business
Highly cash generative
low capital intensity
Left hand graph is based on results for the year ended 31 December 2007. In right hand graph, operating cash flow is operating cash flow post capital expenditure and working capital movements. Operating profit is before goodwill and exceptional items
0
50
100
150
200
250
FY05 FY06 FY07
(£m) Operating cash flowOperating profit
FY05 FY06 FY07
200
250
150
100
50
0
Specialist Recruitment page 20
Impressive track record
Strong managementproven track record
Operating profit of Hays Specialist Recruitment business
020406080
100120140160180200220
FY92
FY93
FY94
FY95
FY96
FY97
FY98
FY99
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
£5m
£216m
Recruitment business operating profit shown only; information extracted from financial statements
£m
Profit growth in 14 out oflast 16 years
Long term growth story(29% CAGR% FY92 – FY07)
Simple accounting(very few one off costs in recruitment)
Grown presence from 3 to 27 countries
The record over 16 years
>95% of growth is organic
Consistency demonstratesresilience (versus competitors)
Specialist Recruitment page 21
Pure play specialist
recruitment>£2bn revenue
391 offices
Attractive markets
worldwidewith strong long term
growth drivers
Highly cash generativewith low capital
intensity
Strong management
with proven track record underpinned by
‘Hays DNA’
Market leading positions
#1 UK, #1 Australia, and growing in
Continental Europe
Business model
replicateson global scale with low expansion risk
Strong cost control
market leading conversion ratio
& flexible cost base
Balanced portfolio27 countries
17 specialisms perm & temp business
strong on-line presence
Information as at April 2008
The 8 key characteristics of our business
Specialist Recruitment page 22
I. Hays08- a profile of the Group today
II. Focused Evolution- the Group strategy
III. Focus by Division- profile and strategy
IV. Cash is King- cash, balance sheet and financing strategy
V. Hays through the cycle- performance in 2001/02 downturn
VI. Summary- key takeaways
APAC
CE & RoWUK & I
Appendices- Speed expos and speaker biographies
Our aim is to build the pre-eminent global business in specialist recruitment
a strategy ofour approach is
Specialist Recruitment page 23
4 components of focused evolution
Specialist Recruitment page 24
Building the global leader
in specialist recruitment
Designed for growth
Specialist Recruitment page 25
ur businessreplicatingGrowth by
New specialisms in existing locations
New teams in existing locations
New territories existing & new countries
HAYS
1
Replicate teams in existing locations and expand footprint
Specialist Recruitment page 26
Planned office openings are based on current business plans and include new countries in the region
Repl
icate
team
s in ex
istin
g lo
catio
ns
Office roll out plans are predominantly focused on Continental Europe & RoW division
Continental Europe & RoW office roll out
H1 FY05 H1 FY11H1 FY08
54
+28 82
+49 131
Clear office roll out plans49 new offices planned in C Europe & RoW
projection
Expand existing officesthe core source of our growth
London Sydney Paris Madrid Tokyo AmsterdamSingapore Frankfurt Toronto Dubai Sao Paulo
Offices in existence at H1 FY05
Offices opened in last 3 yearsOffices planned in next 3 years
Replicate business into new specialisms
Specialist Recruitment
we are filling the grid prioritising the highest growth opportunitiesSw
eden
Resource Management
Slovakia
Sales & Marketing
PurchasingSingapore
Pharmaceutical
Spain
Netherlands
Poland
Portugal
UK
&I
Aus &
NZ
China &
HK
Japan
Austria
Belgium
Brazil
Canada
Czech
Denm
ark
France
Germ
any
Hungary
Italy
Luxembourg
Switzerland
Oil & Gas
Executive
Financial Services
Healthcare
Human Resources
Legal
Education
UA
E
Banking
Contact Centres
Resources & Mining
Information Technology
Construction & Property
Accountancy & Finance
>10% of country net fees
<10% of country net fees
Key priorities in embryonic countries
UK APAC Continental Europe & Rest of World
Case studyreplication into
new specialismsTrack record of successful replication of specialisms
Specialist Recruitment page 28
Net fees
FY07
FY06
FY05
FY04 £2.0m
£4.0m
£7.5m
£10.7m
Net fees
FY07
FY06
FY05
FY04
FY03
FY02 £1.7m
£6.4m
£10.1m
£11.1m
£4.0m
£13.5m
UK&I Human Resources
Opened in 2002, achieved breakeven in 6 months and now in 25 officesStill very small compared to the market opportunityMarket still opening up
UK & I Sales & Marketing, Purchasing
Opened in 2004 and growing rapidlywith improving conversion rateExcellent growth in this business available for a number of yearsBig market to attack
case study case study
Replicate business into new countries
Vision(4-5 yrs
time)
Infancy(early days –
building scale)
High growth phase
(geographical growth in core
sectors)
Established business
(core sector critical mass achieved; now
rollout of smaller sectors)
Ireland
BrazilChinaCzech RepublicDenmarkHong KongHungaryItalyJapanLuxembourgPolandSingaporeSlovakiaSwedenUAE
AustriaBelgiumCanadaNetherlands
ArgentinaFinlandIndiaMalaysiaMexicoNorway QatarRussiaSouth AfricaSouth KoreaUSA
Growth
Other AsiaOther C EuropeOther E EuropeOther Middle East
New countries*
Businesses at different stages of the life cycle
pipeline for growth over next 10 years
Growth
Growth
Growth
Growth
Specialist Recruitment page 29
*‘New countries’ represent countries Hays is reviewing for potential entry over the next 3 years based on current business plans
Under review
(opportunity identified)
New ZealandPortugalSpainSwitzerland
UK
Australia
Germany
France
Current priorities
Key
Track record of successful replication into new countries
Specialist Recruitment page 30
Hays Australia & NZ net fees by specialism
Pie charts are based on net fees for the 6 months ended 31 December 2007. Bottom left graph is based on financial years ended 30 June
0
20
40
60
80
100
120
FY03 FY04 FY05 FY06 FY070%
10%
20%
30%
40%
50%
60%Net fees CR%
Net
fees
(£m
)
Con vers io n ratio %
54%46% Perm
Temp
39%
24%
7%
7%
23%
Accountancy& FinanceConstruction& PropertyIT
Resource &MiningOther
Hays Australia & NZ growth Hays Australia & NZ net fees by segment
Organic start up and now firmly entrenched as #1 in marketConversion rate improved as business achieved critical massRoll out of smaller specialisms still at early stage
Hays Australia & NZ
Case studyreplication into new countries
Australia & NZ is the blueprint
case study
Bolt-on acquisitions to supplement organic growth
Specialist Recruitment page 31
Acquisition strategy
Acquisition criteria
Principally specialist based businesses onlyBusinesses similar in nature to Hays (culture and model)Track recordStrong management with depth who will stay post acquisition
Bolt-on acquisitions (in line with past policy) Focus on specific markets - all internationalAcquisition targets must give one of:
scale in large market where we are smallearly entry in priority new countrynew specialisms in existing priority markets
Case study: James Harvard (2007)*
Operating profit since acquisition
Provided entry into Japan– headcount increased from 47 to 100 since
acquisition– rolled out Hays’ core specialisms– expanded to Osaka
Provided entry into Pharmaceutical specialism in UK– now rolled out into 12 European countries using
Hays office network*bought for initial consideration of £24m in 2007
*bought for £48m in 2003 to enter Germany & Switzerland
£7.2m
FY03
FY04
FY05
FY06
FY07
£1.0m (4 months)
£4.6m
£13.2m
Case study: Ascena (2003)*
£16.1m
Specialist Recruitment page 32
optimiseproductivity
in the UK
usetechnology
to gain advantage
Priorities for next 24 months
(see UK section)
2
Leverage benefits of scaleperational effectiveness
page 33
Use technology to gain advantagedevelop a scaleable, efficient, sustainable and integrated IT platform
90% common processesSingle database per countryPowerful search engineGlobal job board integrationInnovative use of internet
An automated billing and finance engine
Web enabled pay and bill engineClient and temp self servicePaperless billing and payrollExtensive KPI information
The aim
fully integrated
The benefit
Low cost per “transaction”Standardised methodologiesEasy-to-use yet extremely powerfulScaleable and rapid to deploy Provide multiple routes to market
Underpin our market leading position with a market leading technology platform
The implementation
3 year implementation programmePilot systems in small areas of our business and incremental roll out£30m-£35m cost spread over 5 years. P/L neutral after taking account of cost benefits
Incremental implementation approach
Specialist Recruitment
A global candidate / client management system
Specialist Recruitment page 34
best pe plein the industry
Develop the 3
Build capability to pursue growth on multiple fronts in parallel
page 35
Developing the best people in the industry
A career with Hays
home grown talent:
lateral hires for specialist functional skills
assessment centres, milkrounds, referrals
induction programme to set expectations
Technical training CompensationRecruit
12 weeks modular training
on-the-job training
mentoring
monthly / quarterly formal reviews
performance related pay philosophy:
Specialist Recruitment
- graduates- second jobs- mid-late 20s
- consultants geared to commission (immediate cash)
- regional managers geared to local profit targets (annual cash)
- executives geared to divisional and Group profit targets (annual cash and shares, and long term shares)
page 36
Developing the best people in the industry (continued)
A career with Hays
Leadership training
Career growth & mobility
Performance management
200 person leadership training
external management courses (Insead, London Business School etc)
twin career track
fast track management
career mobility
agreed hurdles for productivity
weekly productivity statistics by consultant / manager
attrition management
twice yearly senior talent review at Management Board for top 300
Specialist Recruitment
- fee earning- management
- national- international- permanent v.
secondment
Specialist Recruitment page 37
ne HAYSaround the world
Aus
tral
iaA
ustr
iaB
elgi
umB
razi
lC
anad
aC
hina
Cze
ch R
epub
licD
enm
ark
Fran
ceG
erm
any
Hon
g K
ong
Hun
gary
Irela
ndIta
lyJa
pan
Luxe
mbo
urg
Net
herla
nds
New
Zea
land
Pola
ndPo
rtug
alSi
ngap
ore
Slov
akia
Spai
nSw
eden
Switz
erla
ndU
nite
d A
rab
Emira
tes
Uni
ted
Kin
gdom
One
pla
tform
4
Build competitive advantage by integrating our global operations
Leveraging global reach and scale to build advantage
page 38Specialist Recruitment
Achieve more with the HAYS brand
page 39
What a powerful brand can deliver
Clients engage you- confident of service delivery
Consultants see you as the best employer- alleviates constraint on growth
Best candidates register with you- providing a strong candidate base
Long term competitive advantage- reflected in performance and valuation
Specialist Recruitment
Global market leader with reputation for:
A powerful brand
Employing the best people- trained the most effectively
Delivering best services to market- seen in each local market as the expert
+
=
>> New Group Marketing Director appointed to extract more of the benefits of our brand
Summary of the Group strategy
page 40
Build scale in existing locationsRoll out new offices, particularly in CE & RoWRoll out our specialisms across our networkEnter new countries and add bolt-on acquisitionsFocus on priority areas (largest 4 countries)
1. Growth by replicating our business
3. Develop the best people in the industry4. One Hays around the worldUtilise the ‘Hays Way’ across the worldwide networkLeverage our scale and geographical reachInvest in our worldwide brand
Utilise a reliable, scaleable, and integrated IT platform worldwideFocus on efficiency improvements in the UK & I
Build capability to execute on multiple opportunities in parallelMaintain strong performance based culture and systems
Specialist Recruitment
2. Operational effectiveness
Specialist Recruitment
Q&A sessionpart 1
Part 1meet the country
managementSpeed expo focusing on 4 key countries
Specialist Recruitment page 42
Strengthen our business through increasing operational effectiveness
Continue market beating performance in Australia & New Zealand and build the newer specialisms
Ger
man
yU
K &
IA
us &
NZ
Fran
ce
Strengthen market leading position in IT and roll out other specialisms
Continue roll out in the provinces and build scale in Paris
Specialist Recruitment page 43
I. Hays08- a profile of the Group today
II. Focused Evolution- the Group strategy
III. Focus by Division- profile and strategy
IV. Cash is King- cash, balance sheet and financing strategy
V. Hays through the cycle- performance in 2001/02 downturn
VI. Summary- key takeaways
APAC
CE & RoWUK & I
Appendices- Speed expos and speaker biographies
Clear objectives by region
Specialist Recruitment page 44
Continue market beating performancein Australia & New Zealand and roll out our business in Asia
Strengthen our business through increasing operational effectiveness
Aggressively roll out our business to establishtop 3 market positions in each of the key geographies
UK
& I
APA
CC
E &
RoW
Specialist Recruitment page 45
I. Hays08- a profile of the Group today
II. Focused Evolution- the Group strategy
III. Focus by Division- profile and strategy
IV. Cash is King- cash, balance sheet and financing strategy
V. Hays through the cycle- performance in 2001/02 downturn
VI. Summary- key takeaways
APAC
CE & RoWUK & I
Appendices- Speed expos and speaker biographies
page 46
A clear objective
Aggressively roll out our business to establishtop 3 market positions in each of the key geographies
Specialist Recruitment
Balanced portfolio
15 specialisms18 countriesContinental Europe & RoW profile
Specialist Recruitment page 47
net fees: £68.9moperating profit: £15.8mconversion rate: 22.9%
countries: 18consultants: 1,234
offices: 82
Net fees by specialism
Temp : Perm
Private : Public sector
49% 51%
97% 3%
18%
18%
42%
6%
16%
Accountancy & FinanceConstruction & PropertyITSales & MarketingOther
Net fees by country
41%
18%
10%
7%
5%
19%
GermanyFranceBeneluxCanadaSpainOther
Rapidly developing markets
Broad geographical coverage
Focused on corespecialisms
Information is for 6 months ended 31 December 2007
CR% increases with scale58% CAGR fee growth over 5 years
Balanced portfolio
15 specialisms18 countriesContinental Europe & RoW track record
Specialist Recruitment page 48
Net fees
oper
atin
g pr
ofit
(£m
) convers ion ra te %
Operating profit & conversion rate %
0
10
20
30
40
50
60
70
80
H1 FY03
H2 FY03
H1 FY04
H2 FY04
H1 FY05
H2 FY05
H1 FY06
H2 FY06
H1 FY07
H2 FY07
H1 FY08
net f
ees
(£m
)
(4) (2)
02468
1012141618
H1 FY03
H2 FY03
H1 FY04
H2 FY04
H1 FY05
H2 FY05
H1 FY06
H2 FY06
H1 FY07
H2 FY07
H1 FY08
(30)%
(20)%
(10)%
0%
10%
20%
30%Op profit CR%
page 49
The competitive landscape
Embryonic marketssubstantial opportunity
Internal corporate HR departments
Specialist recruitment groups
Specialist recruitment in Continental Europe & RoW region
Currently, it’s not about the competition. It’s about persuading potential clients to use specialist recruitment groups
Michael Page
HR departments
Competitor
2
3
Our market in CE & RoW
1
Rank
Pie chart is indicative only
Specialist Recruitment
Allocating resources to the best opportunities
Specialist Recruitment page 50
Develop our 4 core
specialisms in perm placement
markets
Develop newer
specialisms in existing
geographies
Develop the temp market
in existing geographies
Prio
rity
4 core specialisms are:Accountancy & Finance, Construction & Property, IT, Sales & MarketingFocus development predominantly on perm marketsBuild capacity in key citiesExpand regional network
Not a core area of focus now but a substantial opportunity in the futureCurrently an opportunistic approach: will incubate & roll out other specialisms if there is a market and it does not detract from the development of our core specialisms
Not a core area of focus now (except in Germany) but a substantial opportunity in the future Started to roll out German IT contracting model into Benelux and NordicsWe are undertaking preliminary market research
Key priorities
Specialist Recruitment page 51
Germany- diversify the business whilst growing the core IT specialism
Aggressively develop footprint across the region- focusing on core specialisms principally in the perm markets
Develop strength in depth in the management team- accelerated management development programme
Recruitment and development- growth plan requires rapid and substantial headcount increase
France- build Paris scale and continue roll out in provinces
Opening new offices is low risk and low cost
Specialist Recruitment page 52
Business replicates
low set up costs
Office modest premises, IT and low kit out cost
Growth
New consultantstypically 5 - 7 consultants (30% variable in year 1)
Advertising and promotionlocal advertising and internet
Regional & Group supportmarket research, start up, legislation
Low first year cost
~ £100k pa
~ £230k pa
~ £20k
£NILincremental cost
~ £350ktotal year 1 cost
Typically breakeven after 6 – 18 months & full payback within 12 – 24 months
Indica
tive b
ased
on of
fice o
penin
g in E
U
Year 1 new office cost
Simple market proposition
Specialist Recruitment page 53
enables rapid penetration into new markets
2. Approach target clients who are recruiting- explain our “no placement, no fee” approach
3. Clients engage Hays- fee is contingent on success so minimal downside for client
5. Organise interviews and offer process - & keep in regular contact with candidates and clients after making placements
6. Next time client recruits, they phone Hays- the beginning of a relationship
Developing new markets
knocking down doors
Ope
ning
up
in a
new
mar
ket
1. Build candidate database- through advertising: paper and web, networking locally and internationally
4. Match selected candidates to client requirements- draw from our database and further advertising
Rapid traction in new markets
Specialist Recruitment page 54
track record indicates model works in wide range of economies
Business replicates
across geographies
Spain (entry: FY02)
>> breakeven within 24 months
FY07
FY06
FY05
FY04
FY03
FY02
net f
ees
(£m
)
£0.4m
£2.1m
£3.2m
£5.2m
£1.2m
£7.2m
Canada (entry: FY02)
>> breakeven within 24 months
Brazil (entry: FY07)
Dubai (entry: FY06)
>> breakeven within 9 months
FY07
FY06
FY05
FY04
FY03
FY02
net f
ees
(£m
)
£0.2m
£0.4m
£0.7m
£1.5m
£3.1m
£6.0m
Number of offices: 1
Number of specialisms: 8
FY08F net fees: £3m
Number of offices: 2
Number of specialisms: 8
FY08F net fees: £2.5m
>> breakeven within 12 months
Plan to aggressively develop our footprint
Specialist Recruitment page 55
Planned office roll out over next 3 years
Existing offices
11Austria, Germany & Switzerland
France
Benelux
Canada
Iberia & Italy
S America
Other
Planned offices
+11
+9
+6
+6
+9
16
21
9 +8
CE & RoW # of offices
H1 07H1 06
H1 08
6661
82
Develop existing officesbuild critical mass in major cities
Roll out new officesincrease # of offices by 60% over 3 years
8
15
Existing offices are as at 31 December 2007. Planned office openings are based on current business plans for existing and new countries
2
Specialist Recruitment page 56
I. Hays08- a profile of the Group today
II. Focused Evolution- the Group strategy
III. Focus by Division- profile and strategy
IV. Cash is King- cash, balance sheet and financing strategy
V. Hays through the cycle- performance in 2001/02 downturn
VI. Summary- key takeaways
APAC
CE & RoWUK & I
Appendices- Speed expos and speaker biographies
page 57
A clear objective
Strengthen our business through increasing operational effectiveness
Specialist Recruitment
Balanced portfolio
16 specialismsUK & Ireland profile
Specialist Recruitment page 58
net fees: £225.3moperating profit: £70.6mconversion rate: 31.3%
consultants: 3,355offices: 259
Net fees by specialism
Temp : Perm
Private : Public sector
50% 50%
77% 23%
Net fees by region
26%
25%22%
14%
8%5%
LondonNorth & ScotlandHome CountiesMidlands & East AngliaSouth West & WalesIreland
#1 market position Broad geographical coverage
Increasingly diversesector exposure
39%
27%
7%
27%
Accountancy & FinanceConstruction & PropertyITOther
Information is for 6 months ended 31 December 2007
Balanced portfolio
16 specialismsUK & Ireland track record
Specialist Recruitment page 59
Net fees
oper
atin
g pr
ofit
(£m
) convers ion ra te %
Operating profit & conversion rate %
0
50
100
150
200
250
H1 FY03
H2 FY03
H1 FY04
H2 FY04
H1 FY05
H2 FY05
H1 FY06
H2 FY06
H1 FY07
H2 FY07
H1 FY08
net f
ees
(£m
)
0
10
20
30
40
50
60
70
80
H1 FY03
H2 FY03
H1 FY04
H2 FY04
H1 FY05
H2 FY05
H1 FY06
H2 FY06
H1 FY07
H2 FY07
H1 FY08
0%
5%
10%
15%
20%
25%
30%
35%
40%Op profit CR%
8% CAGR profit growth over 5 years10% CAGR fee growth over 5 years
Balanced portfolio
16 specialisms
Specialist Recruitment page 60
Other Specialisms growth Analysis of Other Specialisms (by net fees)
Many at early stage of development18% CAGR fee growth over 3 years
Investing significantly in Other Specialisms in the UK & IOther Specialisms now represent 27% of UK & I net fees
net f
ees
(£m
)
0
10
20
30
40
50
60
70
H1 FY05
H2 FY05
H1 FY06
H2 FY06
H1 FY07
H2 FY07
H1 FY08
15%
12%
12%
10%9%8%
6%
28%
Resource Management
Human Resources
Education
Banking
Financial Services & Insurance
Legal
Purchasing
Other
Pie chart is based on net fees for 6 months ended 31 December 2007
A solid platform to build on
Specialist Recruitment page 61
The market leader
#1 in temp & perm
Nationwide footprint> 250 offices
unrivalled coverage
Balanced portfolio16 specialisms
public & private sector
A market leading CR%
business model works well
Strong sales focus
with experienced management team
net fees over 16 years
Track record
0
50
100
150
200
250
300
350
400
450
FY92 FY94 FY96 FY98 FY00 FY02 FY04 FY06
strong on-line presence
UK
& I
busi
ness
An operational plan in 3 phases
Specialist Recruitment page 62
reinvigorate top line growth
Phase II >>increase
operational effectiveness
Phase I >>
Phase III >>other opportunities
in our sights
Current key priorities
Secondary priorities
FY07 / FY08 focus
Focused evolution
refining the model
Nationwide public sector strategyIncrease presence in higher end marketsLeverage our brand valueLow cost delivery model for lower end market
Develop Account Management
Improve front office productivity
Improve back office efficiency
>>
>>
>>
Net fee growth in last 18 months (ave: 10% LFL) has compared favourably to the market
Develop Account Management
Specialist Recruitment page 63
Phase IIAccount
Management focuscross sell services into large clients
SME clients
Strong share of SME market
Regionalised approach works
Large corporate clients
Enviable client list
Large cross sell opportunity
currently underweight in large corporate market
currently no consistent approach to client account management
Modest cross sell opportunity Ability to join up client service
£332m(80%)
£85m(20%)
*Pie chart represents UK & I net fees split between SMEs and large corporates based on FY07 data. Information should be viewed as indicative only
Analysis of UK & I net fees*
Develop account management (continued)
Specialist Recruitment
page 64
Phase IIAccount
Management focusincrease share of client spend
National Accounts Director appointed
Assigning account managers to large clients
Joined up UK approach over-layering specialist reporting lines
Benefits
Cross sell between specialisms and regionsCross sell between perm and temp businessesCompetitive advantage through single point of contact and ‘one stop shop’Improved and consistent client service levelsLow cost implementation and incremental client by client implementation mitigates risk
Cross sell opportunities(sample of clients for illustrative purposes)
HSBC
Banking
Accountancy &
Fin.
Construction &
Prop.
IT HR
Financial Services
Sales & M
arketing
Purchasing
Office Support
IBM
GE
Sodexho
Fujitsu
Siemens
BT
HBOS
RBS
strong relationshipuntapped opportunity
Specialist Recruitment
Improve front office productivity
Specialist Recruitment
page 65
action plan
Specialist Recruitment
Phase IIfocus on front
office productivity
Planning started now
Begin to roll out operational changes in Autumn 2008
Start to see benefits from July 2009 and full benefits from July 2010
Understand and deploy best practice across offices - practices and procedures, organisational structure, reward
Reduce administrative burden - re-engineer processes, technology
Utilise technology to find opportunities and candidates- webtools, Adapt upgrade
Programme to move higher in candidate salary bands- increase presence in > £40,000 market
Tighten pricing and discounting procedures- price / volume trade off
Performance review management- consistent approach
Improve fee generation per consultant- increase volume, improve mix, increase price
Timeframe
Specialist Recruitment page 66
Candidate contact activity (26%)
Client contact activity (32%) Non contact activity (42%)
Analysis of consultant activity by time spent*
*Analysis is based on research conducted on a sample of our UK offices. It should be viewed as indicative only
Phase IIfocus on front
office productivity
Improve front office productivity (continued)increase share of consultant time spent on fee generating activity
Fee generating activity
Fee generating activity
Non fee generating activity
Cost of non contact activity
~ £60m pa
focused on using this spend better
Increasing client contact activity by 1% could increase net fees by £7m pa
Net fees generated
£417m (FY07)
1% contact activity = £7m net fees
Improve back office efficiency
Specialist Recruitment page 67
Phase IIfocus on back
office efficiencyreconfigure the back office by June 2010
Future back office profile Current back office profile
Manually intensive
Projected financial information is based on management estimates as at April 2008. *‘MIS’ is management information systems. **Capex cost is included in the total IT Group estimate included in the ‘Focused Evolution’ section
Automated and efficient
~ £13m - £16m paCost base~ £21m paCost base
Scaleable but few economies of scale Scaleable with economies of scale
phased implem
entation already in progress
MIS* good but regimented MIS* good and versatile
Manual client / candidate interface Automated client / candidate interface
Well run and managed Well run and managed
+ contribute to improved front office productivity
Capex cost ~ £15m - £20m**depreciated over 5 yearsCash saving ~ £5m - £8m pa
Solid UK business with opportunities for enhancement
Specialist Recruitment page 68
Growth
The market leader
#1 in temp & perm
Strong on-line.
Nationwide footprint > 250 offices
Balanced portfolio
16 specialisms public & private
A leading CR%
business model works well
Strong sales focus
experienced management fees over 16 yrs
Track record
Phase III of plan for 2009+
Phase II of plan in progressPhase I of plan implemented FY07 / FY08
reinvigorated top line growth
increase operational effectivenessother
opportunities in our sights
0
50
100
150
200
250
300
350
400
450
FY92 FY94 FY96 FY98 FY00 FY02 FY04 FY06
Improve front office productivity
Develop Account Management
Improve back office efficiencyCle
ar o
bjec
tive
Specialist Recruitment page 69
I. Hays08- a profile of the Group today
II. Focused Evolution- the Group strategy
III. Focus by Division- profile and strategy
IV. Cash is King- cash, balance sheet and financing strategy
V. Hays through the cycle- performance in 2001/02 downturn
VI. Summary- key takeaways
APAC
CE & RoWUK & I
Appendices- Speed expos and speaker biographies
page 70
A clear objective
Continue market beating performancein Australia & New Zealand and roll out our business in Asia
Specialist Recruitment
Balanced portfolio
17 specialismsAPAC profile
page 71
net fees: £80.6moperating profit: £38.6mconversion rate: 47.9%
countries: 6 consultants: 1,129
offices: 50
Net fees by specialism
Temp : Perm
Private : Public sector
44% 56%
15%85%
38%
24%
10%
7%
21%
Accountancy & FinanceConstruction & PropertyITResources & MiningOther
Net fees by country
93%
Australia / NZJapanHong KongChinaSingapore
#1 Market position Increasingly diversesector exposure
Big in Australia & rapidly growing in Asia
Specialist Recruitment
Information is for 6 months ended 31 December 2007
39% CAGR fee growth over 5 years
Balanced portfolio
17 specialismsAPAC track record
page 72
Net fees
oper
atin
g pr
ofit
(£m
) convers ion ra te %
Operating profit & conversion rate %
0102030405060708090
H1 FY03
H2 FY03
H1 FY04
H2 FY04
H1 FY05
H2 FY05
H1 FY06
H2 FY06
H1 FY07
H2 FY07
H1 FY08
net f
ees
(£m
)
05
1015202530354045
H1 FY03
H2 FY03
H1 FY04
H2 FY04
H1 FY05
H2 FY05
H1 FY06
H2 FY06
H1 FY07
H2 FY07
H1 FY08
0%
10%
20%
30%
40%
50%
60%Op profit CR%
44% CAGR profit growth over 5 years
Specialist Recruitment
8 reasons why we will continue to outperform
page 73
Excellent market
positionstrength across
all states
Brand strength
the “go to” brand underpinned by large advertising presence
One Haysbusiness
operates as one
Confidencerepeated market leading performance in strong economy engenders
success culture
Consultant training
strong training culture and programmes
Excellent customer service
quality people delivering the highest
standards
Leading IT platform
highly efficient and automated back office
Strong management
with proven track record underpinned by
‘Hays DNA’
in Australia & New Zealand
8key strengths
in Australia & NZ
Specialist Recruitment
#1 in Australia & New Zealand by a distance
page 74
#1 market position
strength across all states
Robert Walters
Michael Page
Hudson
Competitor*
£50m2
£33m3
~ £30m4
£134m
Net
Australia & New Zealand
1
Rankfees
*Net fees of Hays and competitors is based on year ended 31 December 2007. Robert Walters net fees are an estimate
#1#1
#1
#1#1
#1
#1
Specialist Recruitment
Refining the model in Australia & New Zealand
page 75
Recruitment and retention- being the employer of choice
Strengthen account management- exploit more opportunities to cross sell
Develop the smaller specialisms- Hays best positioned to capitalise on market opportunity
Continue to strengthen infrastructure for growth- people and systems
Sustain our outperformance versus the market- focus on core specialisms
Focu
s ov
er n
ext 1
8 m
onth
s
Upgrade our training programmes- consultants and managers
Specialist Recruitment
Asia represents a substantial long term opportunity
page 76
Rapid
ly de
velo
ping
econ
omies
Rapid
ly in
crea
sing
serv
ice se
ctor
s
Rapid
ly de
velo
ping
wor
kfor
ce sk
ills
“By 2030, Asia will be 58% of the world’s GDP. By 2050, China will be the largest economy, with 45% of world GDP and India will be at 28%”*
= substantial long term opportunity
Asia
Asia Asia
Develop Asia presence
build critical mass
*Quote is from Milken Institute, AAPPS Bulletin, Vol 16, No 4
Specialist Recruitment
for specialist recruitment
Japan
Hong Kong
China
Singapore
Rolling out our business across Asia
page 77
Net fees by country (6m ended 31 Dec 2007)
£1.8m
£0.5m
£2.8m
Build a solid platform- infrastructure and local management
Develop critical mass in major cities- existing locations and office roll out
Develop presence in new countries- India, Malaysia, South Korea
Strategy in Asia
Focus on core specialisms- primarily in perm markets
£0.7m
Office locations in Asia
1122
33
88
44
55 6677
Beijing
Tokyo
Osaka
Shanghai
11
22
33
44
Guangzhou
Shenzhen
Hong Kong
Singapore
55
66
77
88
Specialist Recruitment
Part 2meet the country
managementSpeed expo focusing on 4 key countries
Specialist Recruitment page 78
Strengthen our business through increasing operational effectiveness
Continue market beating performance in Australia & New Zealand and build the newer specialisms
Ger
man
yU
K &
IA
us &
NZ
Fran
ce
Strengthen market leading position in IT and roll out other specialisms
Continue roll out in the provinces and build scale in Paris
Specialist Recruitment page 79
I. Hays08- a profile of the Group today
II. Focused Evolution- the Group strategy
III. Focus by Division- profile and strategy
IV. Cash is King- cash, balance sheet and financing strategy
V. Hays through the cycle- performance in 2001/02 downturn
VI. Summary- key takeaways
APAC
CE & RoWUK & I
Appendices- Speed expos and speaker biographies
Extremely cash generative business
Specialist Recruitment Page 80
Operating profit & cash flow (£m) Uses of cash flow (indicative only)
Highly cash generative business model- strong track record
Tight working capital control- strict debtor control (debtor days: ~ 40)
0
50
100
150
200
250
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
Operating cash flow* Operating profit
0%
20%
40%
60%
80%
100%
*Note: operating cash flow is post capital expenditure and working capital movements. Operating profit is before goodwill and exceptional items
Cash follows profit consistently- average 94% conversion in last 8 years
Low capital intensity- ave capex of £12m pa over last 3 years
Taxation
Dividends
Surplus for buyback, acquisitions & other
Working capital / other
Highly cash generative
track record
Cash returned to shareholders
Specialist Recruitment Page 81
FY08 YTD share buyback is as at 31 March 2008. FY08F share buyback is our current guidance for the full year
0
50
100
150
200
250
300
FY05 FY06 FY07 FY08(YTD)
0%
5%
10%
15%
20%
25%
Dividend per share
Shar
e bu
y-ba
ck (£
m)
Cum
ulat i ve % of s hare ca pit al
Share buy back programme
Sustainable & progressive dividend policy- dividend cover policy: 1.5x – 2.5x
Shares bought back since Nov 2004: 20%- FY08F share buyback: ~£100m (~5% share cap)
1.0p
2.0p
3.0p
4.0p
5.0p
6.0p
FY04 FY05 FY06 FY07 FY08
Interim dividendFull year dividend
+13%
+28%+15%
Rebasing of dividend in FY06
Cum % of share cap bought backBuy back
Return of cash following business disposals
£128m
£215m
£53m £64m
£72.4m
£55.1m£51.5m
£63.5m
+16%
Return of cash funded by operations
Dividends & buy back
track record
Financial disciplinestrong balance
sheetStrong balance sheet with conservative debt level
Specialist Recruitment Page 82
* Ratios are for the year ended 30 June 2007. **£41m is as at 31 December 2007, net of deferred tax (gross: £58.8m). DB is the defined benefit scheme
(19.6)(19.6)Acquisition deferred consideration
(50.2)(48.4)Other provisions and liabilities
188.2216.2
(76.2)(114.9)Net debt
112.0101.3Net assets
(43.5)(58.8)Retirement benefit obligations
(35.9)
154.0
28.3
28.2
168.4
Dec 2007
(31.7)
123.3
22.7
25.2
162.0
June 2007
Tax liabilities
Net working capital
Net deferred tax
Property, plant & equipment
Goodwill & intangibles
Balance sheet £m
Net debt / EBITDA: 0.34x- debt covenant: < 3
EBITDA / Interest: 38x- debt covenant: > 4
Low pension deficit of £41m**- DB scheme closed to new members
Strong working capital control- debtor days: ~ 40
£150m - £250m net debt guidance- FY08 YTD ave net debt ~ £100m
£460m bank facilities in place- 5 year facility to February 2011
Cash is Kingcash focusA cash focused approach
Specialist Recruitment Page 83
Extremely cash generative business- average conversion of 94% in last 8 years
Buy back is a recurring theme- bought back 20% of share capital in 4 years
Consistent focus on cash- engrained in our culture
Strong balance sheet- conservative view on net debt
Sustainable and progressive dividend- +66% increase in DPS* in the last 3 years
Excess cash returned to shareholders- through dividends and buy back
*DPS is dividend per share
Summary
Specialist Recruitment page 84
I. Hays08- a profile of the Group today
II. Focused Evolution- the Group strategy
III. Focus by Division- profile and strategy
IV. Cash is King- cash, balance sheet and financing strategy
V. Hays through the cycle- performance in 2001/02 downturn
VI. Summary- key takeaways
APAC
CE & RoWUK & I
Appendices- Speed expos and speaker biographies
Specialist Recruitment Page 85
The Hays Specialist Recruitment business was not a stand alone group for the majority of the last 15 years. It was a division of the wider business services group of Hays plc until the Hays plc transformation completed in 2004. As such, much of the data presented within this section of the presentation has been extracted from the internal, unaudited, management accounts and associated information of the specialist recruitment division. Overseas currencies have been translated into GBP£ at the prevailing average exchange rates for the relevant half year and full year.All financial information for periods ending after 30 June 2004 has been prepared under IFRS and all financial information for periods prior to this has been prepared under UK GAAP. The impact of the change to IFRS is not material to the trends shown in this presentation.
Investor Day17 April 2008
Important notice
Hays proved relatively resilient in the last downturn
Specialist Recruitment Page 86
*Net fees, profit and conversion rate (CR%) of recruitment business only; CR% is the proportion of net fees converted into profit. Information extracted from financial statements and management accounts information
0
100
200
300
400
500
600
700
FY92
FY93
FY94
FY95
FY96
FY97
FY98
FY99
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
£216
m
£m
£146
m
Con
vers
ion
rate
%
In the ‘02 downturn
- net fees fell 9%
- operating profit fell 22%
- CR% fell 920 bps
(peak to trough)
Net fees and operating profit of Hays Specialist Recruitment
£366
m
£634
m
Net fees Operating profit CR%
long term growth
Short term cycles, long term growth- growth in 14 out of 16 years
- 29% CAGR profit over 15 years
long term growthTemp business was more resilient than perm business
Specialist Recruitment Page 87
*Recruitment business net fees shown only; information derived from financial statements and management account information
Group temp placement net fees (£m) Group perm placement net fees (£m)
0
50
100
150
200
250
300
350
FY99
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
56%
net
fees
60%
net
fees
51%
net
fees
0
50
100
150
200
250
300
350
FY99
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
40%
net
fees
49%
net
fees
44%
net
fees
£205
m
£324
m
£161
m
£310
m
Temp net fees fell 4% in last downturn- peak to trough
Perm net fees fell 16% in last downturn- peak to trough
long term growthUK & I proved the most resilient division in last downturn
Specialist Recruitment Page 88
Recruitment business net fees shown only; information derived from financial statements and management account information.The disposed French business results have been included within CE & RoW prior to FY03. *APAC was Aus & NZ only up to and including FY05
0
100
200
300
400
500
600
700
FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07
£m
34% International
13% International
UK & I APAC* CE & RoW
16% International
Group net fees by division
(H1 FY08: 40%)Net fees fell by- UK & I – 7% - APAC – 28%- CE & RoW – 11%
‘02 downturn
long term growthUK & I profits reduced by 17% in the last downturn
Specialist Recruitment Page 89
*Recruitment business net fees shown only; information derived from financial statements and management account information
£m
0
50
100
150
200
250
300
350
400
450
FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY070%
10%
20%
30%
40%
50%
Con
vers
ion
rate
%
£306
.3m
£417
.1m
£125
.1m
£140
.8m
£103
.6m
£285
.7m
UK & I net fees and operating profit since FY99
Operating profit Net fees CR%
CR% fell 840 bps(FY00 to FY03)
Op profit fell 17% (peak to trough)
Net fees fell 7%- A&F decreased 9% - C&P grew 7%- IT decreased 26%- Other decreased 5%
51% A&F weighting in FY01 - 39% in FY08 H1
‘02 downturn
long term growthPublic sector growth underpinned the resilience in UK & I
Specialist Recruitment Page 90
UK & I Accountancy & Finance
0
30
60
90
120
150
FY99
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
Net
fees
(£m
)
0
5
10
15
20
25
Publ
ic s
ecto
r fee
s as
% to
tal f
ees
UK & I Construction & Property
0
20
40
60
80
100
FY99
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
Net
fees
£m
0
5
10
15
20
25
30
35
40
Publ
ic s
ecto
r fee
s as
% to
tal f
ees
Public sector Private sector
*Net fees of the A&F and C&P specialisms shown, split between public and private sector; information derived from management accounts, and historic management information systems. The financials presented as dotted / shaded have been estimated from internal management information sources
Public sector fees as % total feesPublic sector Private sectorPublic sector fees as % total fees
FY01 to FY02, A&F net fees fell by 9%- private sector fell 13%; public sector fees grew 12%
A&F public sector weighting increased- from 14% in FY01 to 20% in FY07
FY01 to FY02, C&P net fees grew by 7%- private sector fell 1%; public sector fees grew 38%
C&P public sector weighting increased- from 20% in FY01 to 26% in FY07
long term growthAus & NZ profit reduced by 33% in the last downturn
Specialist Recruitment Page 91
*Recruitment business net fees shown only; information derived from financial statements and management account information
£m
Operating profit Net fees
Con
vers
ion
rate
%
CR%
Australia & NZ net fees and operating profit
0
20
40
60
80
100
120
FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY070%
10%
20%
30%
40%
50%
60%
£39.
1m
£109
.5m
£53.
8m
£16.
9m
£28.
0m £11.
4m
CR% fell 640 bps(FY00 to FY03)
Op profit fell 33% (peak to trough)
Net fees fell 28%- A&F fell 36% - C&P grew 8%- perm fees fell 26%- temp fees fell 30%
70% A&F weighting in FY01 - 38% in FY08 H1
‘02 downturn
Strong managementproven track recordExperienced at managing our business through the cycle
Specialist Recruitment Page 92
Length of service with Hays
0
5
10
15
20
25
30
UK
Finance Director
Managing D
irector (A&
F)
Managing D
irector (C&
P)
Managing D
irector (IT)
Managing D
irector (Other)
Managing D
irector (Other)
Managing D
irector (HR
M)
AP
AC
Managing D
irector
AP
AC
Finance Director
Managing D
irector (Asia)
Managing D
irector (RM
)
Regional D
irector
Regional D
irector
Regional D
irector
CE
& R
oW M
anaging Director
CE
& R
oW Finance D
irector
CE
& R
oW O
perations Director
Germ
any Managing D
irector
France Managing D
irector
Benelux M
anaging Director
S E
urope Managing D
irector
Information as at April 2008
year
s
(main divisional directors below plc Board level)
UK & I Directors APAC Directors
ave: 16 years
CE& RoW Directors
Business set up to respond to market conditions rapidly
Specialist Recruitment Page 93
The key performance indicators we measure
Perm & temp
volumesabsolute & trend
Temp margin %
absolute & trend
Average perm fee
absolute & trend
Placements per
consultantabsolute & trend
Recruitment cycle
trend
By country
By sector
By branch
By employee
By type
New assignmentsnumber & length,
trend
Number of interviews
number & length, trend
Responsive management
on top of the business
Highly variable cost base calibrates to market conditions
Specialist Recruitment
0%
20%
40%
60%
80%
100%
Page 94
Cost base analysis
Information extracted from management accounts. *P&P represents print and postage
Cost base characteristics
66% of employees are consultants- ~ 50% of consultant pay is variable
Properties are on rolling leases- typically 3 year lease breaks
75% of cost base is people related- manage cost base through attrition
Payroll costs (75%)
Occupancy (10%)
Advertising & P&P* (5%)IT & Professional (4%)
Other (6%)
Agile cost base
adapts rapidly
Built to withstand short term cycles and grow long term
Page 95
Large scale business- net fees £634m (FY01: £366m)
Experienced management team- average 16 years experience
Resilient public sector business- 20% public sector weighting
Balanced business- 49% temp business weighting
Highly variable cost base- 75% of cost base is people related
40% international across 27 countries - FY01: 16%; 9 countries
17 specialisms - FY01: 8 specialisms
Mix of large and SME customers- 30,000 customers
Broad in-country geographical coverage> 250 offices across UK & I
Impressive track record over 40 years- short term cycles; long term growth
17% profit CAGR since last downturn& 29% CAGR over 15 years
0
50
100
150
200
250
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
Operating profit (£m)
17% CAGR
Specialist Recruitment
long term growth
Specialist Recruitment page 96
I. Hays08- a profile of the Group today
II. Focused Evolution- the Group strategy
III. Focus by Division- profile and strategy
IV. Cash is King- cash, balance sheet and financing strategy
V. Hays through the cycle- performance in 2001/02 downturn
VI. Summary- key takeaways
APAC
CE & RoWUK & I
Appendices- Speed expos and speaker biographies
Specialist Recruitment page 97
Attractive markets worldwide
with strong long term growth
drivers
Strong cost control
market leading CR% & flexible
cost base
Strong management
with proven track record
underpinned by ‘Hays DNA’
Market leading positions
#1 UK #1 Australia
& growing in CE
Pure play specialist
recruitment>£2bn revenue
391 offices
Business model replicates
on global scale with low
expansion risk
Highly cash generative
with low capital intensity
Balanced portfolio
27 countries 17 sectors
perm & temp on-line presence
Growth
0
20
40
60
80
100
120
140
160
180
200
FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07
profit over 16 years
Consistent delivery
Positioned for growth
Information as at April 2008
Immediate strategic imperatives by region
Specialist Recruitment page 98
Group
Continued internationalisation to complete global footprintIntegrate operations around the world to leverage scaleStrengthen and deepen management capability Roll out technology platform to support growthRetain focus on profit and cash generation for a strong balance sheet
Continental Europe & RoWFocus on establishing core specialisms in each marketFocus on priority markets (Germany, France)Diversify the German business whilst growing the core IT specialismDevelop the French business by building scale in Paris and rolling out in the provincesAggressively increase number of offices and achieve critical mass in major cities
UK & Ireland
APACMaintain focus on core specialisms whilst aggressively growing the smaller specialisms in Australia & NZTake advantage of buoyant markets to achieve critical mass and management depth across Asia
One HAYSworldwide
Focus on operational effectiveness:- develop Account Management- improve front office productivity- improve back office efficiencyAggressively rollout smaller specialismsStart work on second priority areas (‘Phase III’)
Long term market opportunities are substantial
Specialist Recruitment page 99
our track record shows we can capture these
Substantial opportunity
Hays positioned to take it
UK
Germany
Spain
France
Italy
Netherlands
Belgium
Canada
Hays net fees Country population (country population viewed as a proxy for potential market size in long term)
Other countries in CE
The market developmentwhich drove UK profits from £5m to £140m over 16 years is now beginning across Europe….
Our vision of the future
Specialist Recruitment page 100
We will still be talking about skilled candidate shortages- a key driver of growth for a long time
3 or 4 groups will have built global businesses- and will be the market leaders in all the key markets
6 predictions for Hays and specialist recruitment markets in 2018
Continental Europe will be our largest division- the UK & I will represent about a third of our Group
Our markets will still be growing strongly- growth will be subject to the economic cycle, but many more good years than bad
Hays will be substantially bigger than today- and will be making money in 40+ countries (2008: 27 countries)
Leading our marketsin specialist recruitment
Hays will be widely recognised as the leading brand in our industry- helping us attract consultants, clients and candidates
Building the global leader in specialist recruitment
Specialist Recruitment
1997 - 2007
2008 - 2018
Facing more opportunities than ever before
Specialist Recruitment
Q&A sessionpart 2
Short term cycles; long term growth
Specialist Recruitment page 103
I. Hays08- a profile of the Group today
II. Focused Evolution- the Group strategy
III. Focus by Division- profile and strategy
IV. Cash is King- cash, balance sheet and financing strategy
V. Hays through the cycle- performance in 2001/02 downturn
VI. Summary- key takeaways
APAC
CE & RoWUK & I
Appendices- Speed expos and speaker biographies
Specialist Recruitment page 108
I. Hays08- a profile of the Group today
II. Focused Evolution- the Group strategy
III. Focus by Division- profile and strategy
IV. Cash is King- cash, balance sheet and financing strategy
V. Hays through the cycle- performance in 2001/02 downturn
VI. Summary- key takeaways
APAC
CE & RoWUK & I
Appendices- Speed expos and speaker biographies
Speaker biographies
Specialist Recruitment page 109
Alistair Cox, Chief Executive
Appointed to the Board on 1 September 2007, he succeeded Denis Waxman as Chief Executive. A Chartered Engineer, he was previously Chief Executive of Xansa plc and formerly Regional President of Asia for Blue Circle Industries.
Paul Venables, Group Finance Director
Appointed Group Finance Director on 2 May 2006. A Chartered Accountant, he came to the Group from DHL Logistics, a division of Deutsche Post World Net. Prior to the acquisition of Exel plc by Deutsche Post in December 2005, he was Deputy Group Finance Director and a member of the executive board of Exel plc. During 13 years with Exel he held a number of senior finance and operational roles, including Finance Director of Exel’s European and Global operations.
Appendices
Speaker biographies
Specialist Recruitment page 110
Nigel Neap, Managing Director, APAC
Appointed Managing Director, APAC in 1997. Previously he worked in Hays’ UK & I Accountancy & Finance business as Regional Director (1991 – 1997, Yorkshire & East Midlands), Regional Manager (1991 – 1993, Yorkshire), Senior Manager (1989 – 1991, Leeds), Branch Manager (1989, Hull) and Consultant (1988 – 1989, Altrincham).
Nick Cox, Managing Director, CE & RoW
Appointed Managing Director, CE & RoW in 2006. Previously he worked in Hays’UK & I business as Managing Director of ‘Other Specialisms’ (2000 – 2006) and as Managing Director, UK & Europe IT (1997 – 2000). Between 1983 and 1997,he held a number of roles in the UK & I Accountancy & Finance and Banking businesses as he progressed from being Consultant in 1983 to a Regional Director in 1997.
Appendices