Hays plc

Good morning and welcome everyone. I'm Mark Durnley and I'm excited to present my first set of results as the new CEO of Hayes. Our agenda today is slightly different from the usual format because we are announcing our new momentum strategy. We'll focus on this initially and then I will hand over to James to run through our financials. This is my first opportunity to meet you after my appointment as CEO. So please allow me a moment to share a few initial thoughts as we introduce our new momentum strategy to you today. Hayes has a tremendous heritage, an excellent client portfolio and deeply expert consultants. I have travelled extensively over the last few months to meet colleagues across the globe and many of our clients. I would like to thank our colleagues, candidates and clients for openly sharing their views, from which I draw two main conclusions. Firstly, a consultant-led approach enabled by advanced technology is an important element that clients wish to retain. And secondly, my colleagues at Hayes are genuinely excited by our new momentum strategy. I have four key messages for you to take away from our presentation today. To deliver improved market share and profitability, we will become a more focused specialist recruitment business. And we have already been taking decisive action to achieve this. We and our clients believe the consultant is key. A human in the loop, supported by great technology, is critical to the best hiring outcomes. Thirdly, momentum is first and foremost a growth strategy. We have already made a good start returning to year-on-year profit growth in the second half of FY26. And finally, over time, we will increase consultant net fee productivity by more than 50%, return Hays to a 25% plus conversion rate, and deliver superior returns for shareholders. Before we examine momentum in more detail, Let's initially examine why clients use recruitment agencies. Our clients need to secure the best talent to build successful businesses. Candidates need the best roles to build successful careers. And in both instances, the cost of making a wrong decision is significant. The impact of exiting unsuccessful hires increases exponentially with seniority due to exit packages, organizational disruption, and the direct cost of finding a replacement. As a percentage of the salary, our data indicates that these costs for a director-level role can be more than twice as high as for an associate. PAYS helps candidates and clients to improve the probability of success. Our fee is a modest insurance premium. virtually versus the potentially high cost of failure i mentioned earlier that our strategy has been shaped by what clients have told us the feedback from a recent survey is clear they universally want access to the highest quality candidates they also want haze consultants at the center of the process a strong technology platform is necessary but our clients are clear that our consultant-led approach is the critical element they wish to retain. So keeping the human in the loop remains key. Why is this? As you can see from the charts on this slide, price ranks well below the top two purchasing considerations for perm and temp and contracting recruitment processes. Instead, once baseline technical skill requirements have been achieved, then interpersonal skills are the key candidate attributes. HAYS consultants have deep domain knowledge of their clients, of their candidates and of their specialisms which they use to provide essential human insight when assessing these interpersonal skills such as leadership, communication and motivation. This presents HAYS with an opportunity to differentiate and grow in our markets. By leveraging our database of more than 10 million candidates and over 440,000 weekly interactions between our consultants and their clients and candidates, and by applying proprietary search and match algorithms that assess both hard and interpersonal skills. Through this, we can swiftly identify the highest quality candidates. And if we move to the next slide, clients tell us that these interpersonal skills will be increasingly important over the next five years for managers and directors, which represent the sweet spot of our business. So how do we at Hayes help clients and candidates improve the probability of success? We do it through our sources of competitive advantage with Hayes expert consultants at the centre. Our advantages include proprietary data and technology, our people, our brand and our reputation, how we go to market and our operational excellence. For example, Hayes has proprietary data and tools which our consultants use to swiftly and precisely match candidates and client demand and supply. The Hayes consultant sits at the centre of this flywheel and is key. they have deep domain expertise. They provide essential human insight when assessing values and behavioral alignment. Momentum places Hays Consultants at the center of a self-reinforcing flywheel and enables them with the best tools through investments in technology. It forges sustainable long-term relationships with our clients and candidates. Clients benefit by our speed of assessing the best candidates, reducing their recruitment costs and the risk of an unsuccessful hire. Candidates offered the best roles, successful placement outcomes and regular feedback. Our internal data confirms a strong link between financial returns and the rotational speed of this flywheel. Roles for which CVs have been sent on the same day achieve materially higher fill rates than responses over the next one or two days single cv submissions perform even better clearly demonstrating that candidate quality and judge and the judgment applied by hayes consultants are vital aspects of the matching process by building an unbeatable matching engine we will deliver faster and better matching allowing consultants to fill even more vacancies and generating a self-reinforcing flywheel. This results in higher market share, productivity and profitability for Hayes and improved outcomes for both clients and candidates. Five forces amplify this flywheel. Growth to specialism leadership, being experts in all we do, building an unbeatable matching engine powering productivity and delivering this through the Hayes way. Let's explore some of these over the next few slides. Firstly, specialism leadership. We will grow to specialism leadership through five dimensions of focus. Firstly, by concentrating on 16 countries with a 100 billion and growing addressable market where we can build or extend leadership positions. Secondly, focusing on six global specialisms where Hayes has the strongest opportunity to extend or become a market leader, plus local specialisms where we already have profitable market leadership and expect continued growth. Thirdly, a focus on higher value roles where the cost of failure is higher and the potential impact from AI on these roles is lower. Fourthly, by targeting end market industries where demand for our products is greatest. And finally, we will operate across three products, recruitment, solutions and services. We have already taken important action to sharpen our focus in FY26, including decisive steps to reshape our country portfolio and define core specialisms. focus and market leadership allow our consultants to provide deep domain expertise to clients focus and market leadership also drive superior returns with data in the chart indicating that regional specialists with a top two share of clearly defined markets consistently deliver stronger growth higher margins and more resilient performance as our market share increases we will secure these economic benefits to higher productivity to achieve this we will invest to grow and build leadership in six global specialisms technology finance construction and property engineering life sciences and human resources countries may offer an additional one or two existing specialisms beyond this for example office support or resources and mining to reflect the composition of their local markets but only where there is an attractive opportunity and a clear path to leadership we are experts in specialist recruitment across a wide range of products recruitment is our existing temp and perm activity including spot placements and preferred supplier lists solutions combines our existing msp and rpo activities and finally services addresses the growing statement of work market although this may be a new terminology for many of you services primarily includes our existing german contracting business which has successfully provided project-based services to clients for many years we are also experts in compliance and need to be because our clients care deeply about it around the world regulations largely designed to avoid mock employment are becoming more complicated particularly for non-perm recruitment services and solutions as i mentioned earlier after decades in specialist recruitment pays benefits from more than 10 million candidates in our database and over 40 000 weekly interactions between our consultants and their clients and candidates. These are proprietary inputs and are very difficult to recreate. To leverage this competitive position, we are developing a next generation Hayes digital platform, including AI agents, which provide our consultants with best in class tools and powerful personalized data and insights for our customers. One example is our SmarterMeetings AI agent. With permission, this analyzes client and candidate conversations and captures structured actions, key CRM data, and actionable insights in real time. It is already materially improving the quality and depth of our candidate records, supporting better matching, analytics, and lead generation. We have a further pipeline of enterprise-level AI agent initiatives and are focused on generating returns from them at scale. In my previous position as Chief Technology Officer at Hayes, I was delighted to discover that we own our own core proprietary systems, including our CRM, client and candidate databases, and vendor management systems. These provide a powerful cost and flexibility advantage versus the off-the-shelf solutions and support the rapid training and development of the proprietary AI and analytics, which are essential to optimize staffing processes. To augment this technology, we are also establishing a people advantage. A Hays Academy will become our global center for learning, performance, reward, and career development bringing together onboarding leadership development and career progression into one connected experience we have also introduced a potential one-off share award for all our colleagues satisfied by existing shares which recognizes their contribution and reinforces alignment with shareholders the scale of this award will be determined by pre-exceptional operating profit in fy27 through broader share employee ownership and top quarter our reward we will strengthen engagement foster a long-term ownership mindset and incentivize select successful delivery of our momentum strategy i would like to thank our colleagues across the group for their professionalism resilience and commitment during the year their continued focus on supporting clients and candidates while simultaneously helping to reshape the business has been instrumental to our progress. As mentioned earlier, momentum will deliver a positive structural shift in our profitability, net free growth, cash flow and return on capital employed. Through sharper focus, market leadership, radically improved search and match capability and lower cost to serve, we can increase

consultant net fee productivity by more than 50 percent return haze to a 25 plus conversion rate and deliver superior return for shareholders i will now hand over to james to run through our financials in more detail thank you mark and good morning everyone today i'll cover the financial and divisional operational reviews along with current trading before handing back to mark for closing comments Summarizing our financial performance, on a like-for-like basis, net fees decreased by 8% to $906 million, with pre-exceptional operating profit up 3% to $48.6 million. Our strong cash conversions drove cash from operations of $92 million, and we finished the year in a $20.1 million net cash position. Turnover decreased by 4%, with fees down 8%. the higher declining fees relative to turnover was due to the more resilient performances in temp and contracting versus firm and in our solutions businesses pre-exceptional earnings per share was 1.21 pence an eight percent decrease versus prior year driven by a higher effective tax rate partially offset by higher operating profit over the next few slides we have summarized our fy26 actions and performances for each region In Germany, significant actions were taken to restructure our operations, reduce non-consultant headcount, and secure further structural cost savings, which drove a sequentially stable pre-exceptional operating profits in the second half. Temp and contracting fees were resilient, while perm remained challenging due to lower demand and slower client decision-making. However, there were bright spots. Construction and property performed strongly again, with fees up 44%, driven by our focus on infrastructure and the energy sector. The UK and I recovered from losses in the prior year to deliver a 4 million operating profit. We delivered further improvements in consultant productivity of 14%, including actively managing our consultants to focus on higher value placements and stronger margins. We secured structural savings, which included 30 office closures, And we also invested in growth with the launch of a statement of work services business in the second half. In ANZ, we saw stable temporary and contracting volumes through the year, but PERM became slightly more challenging through our fourth quarter. ANZ more than doubled its operating profit to 8.5 million, driven by consultant productivity growth as we focused on higher skilled roles. and delivered structural cost savings including the closure of 11 offices and finally in rest of world although the division reported a slightly larger 5.1 million operating loss for the year it returned to profitability in the second half following significant cost and country portfolio actions in june we disposed of our operations in six european countries and announced that we are exploring options relating to a further seven countries emir x germany remain mixed overall france remains tough but our actions here to address productivity and cost drove improved profit performance in our fourth quarter and we reported all-time fee and record profit performances in spain and portugal as previously disclosed the us was impacted by the loss of a material contract although trading improved through our second half and net fees in asia grew by three percent with Japan up 10% driven by strong growth in contracting where we see huge long-term potential. Temp and contracting fees were resilient and decreased by 5%. Volumes declined by 4% with a further 1% or 6 million fee impact from lower average hours worked in Germany. Temp and contracting remained sequentially stable through the second half in our major markets of Germany, UK and ANZ. and included strong performances in Spain, Japan and in our services businesses. Perm fees decreased by 12% as weaker client and candidate confidence drove slower conversion of activity to placement, volumes declined 14% and our average fee was up 2% as we continued to target higher value roles. Over the next few slides we have set out the decisive actions we have taken to manage costs and increase profitability and structurally improve our cost base for the long term. As explained, we saw a significant reduction in net fees and our pay rises in July 25 increased payroll costs by circa 8 million. Our response has been decisive with our operating costs reduced by 8% or 70 million. Payroll costs were reduced by 68 million by actions taken to reduce consultant and non-fee earning headcount down 12% and 13% respectively. commission payments decreased in line with fees and profits partially offset by higher bonus payments versus prior year we delivered property property savings of 4.5 million although the majority of exits were in june 26 and therefore we expect a more significant cost saving in fy27 and finally we secured 3.5 million overhead savings from close control of third-party spend The next slide looks at our annualized cost savings delivered in the year. We delivered 25 million from our finance and technology transformation programs and our restructurings of our back office functions in several regions. We delivered 15 million through restructuring our sales operations in Germany, UK and Ireland, France and Asia. And we delivered 10 million through the closure or consolidation of 74 offices globally. Given the weighting of cost save activities to Q4, the in-year FY26 P&L benefit was around 20 million, with the remaining 30 million of P&L benefit to be realised in FY27. And as Mark has set out, our investment in technology and people will further improve our efficiency in our back office and middle office functions, and we target a further 50 million per annum saving in FY27. in addition our actions to better align consultant capacity to market opportunities and improve productivity together with the commission savings on lower fees delivered a further 33 million per annum of cost benefits our improved allocation of consultants resulted in seven percent productivity growth including the uk and i up a notable 14 percent and adjusting for our seasonally quieter second quarter productivity has now increased by 11 consecutive quarters we have worked hard to balance cost reduction with maintaining consultant capacity and we continue to carefully allocate consultants for business lines targeting higher skilled candidate roles and in investing in the best tools for our consultants we secured 50 million annualized savings in fy26 three years ahead of schedule and have now delivered 115 million of savings since the start of fy24 And with our clear ambition for further savings in FY27, this will take us to over 160 million per annum cumulative structural savings. The combined impact of our actions to improve productivity and structurally reduce costs for over return to year on year profit growth in H2. Our exceptional cost of 89.6 million comprise three parts. we incurred 45.1 million costs related to sales and back office restructuring which drove 40 million in annualized savings in addition we incurred 26.6 million charge from our global consolidation or exit of 74 offices and which drove a 10 million annualized saving the sale of our operations in czech republic denmark hungary luxembourg rumania and sweden resulted in an 8 million loss on disposal including associated transaction costs we also incurred a charge of 6.9 million from the partial impairment of goodwill in belgium and netherlands and 3 million from the net impairments of intangible assets from the acceleration of our digital program due to the ongoing and multi-year nature of our restructuring and transformation programs which are strategically reshaping our business in line with our momentum strategy we expect to incur significant further exceptional restructuring costs in fy 27 as we drive towards our 50 million annualized cost saving target the board is committed to materially reducing exceptional costs thereafter our net finance charge for the year was 13.5 million broadly unchanged and we expect the net finance charge for fy 27 to be to be around 12 million due to a lower non-cash lease interest charge consistent with our half-year results our pre-exceptional tax rate increased by 10 percentage points to 45 percent driven by the concentration of profits in higher tax rates countries coupled with the impact of losses arising in countries where no tax benefit has been recognized and the impact of disallowable items we expect the group's tax rate to be slightly lower in fy27 the tax rate remains highly sensitive to both the geographical mix of profits and losses and we would expect to reduce materially to more normal levels as profits rebuild over time we delivered a strong cash performance in the year with cash from operations of 92 million and this represented a 189 cash conversion our working capital inflow was 24.9 million driven by the reduction in temp fees and a one-day improvement in our dso we paid tax of 19.8 million and net interest of 8.2 million the cash impact of exceptional restructuring charges was 42 million overall this led to free cash flow of 22 million and our uses of free cash flow were the payment of 7 million of dividends the purchase of our own share for employee incentive awards at 11.7 million and capex of 24.1 million the cash flow benefited significantly following the full pension buy-in in fy25 that previously required annual deficit funding contributions of 18 million per annum we expect capex in the 30 to 35 million range in fy27 to support our ongoing investments in technology and at a similar run rate to our h2 capex of 14 million We ended the year with net cash of 20.1 million. The SOs improved by one day, driven by good collection performance, and our aged debt profile remained strong. Bad debt write-offs were minimal and remained at historically low levels. The group continues to maintain a strong balance sheet. Provisions increased due to restructuring activity, including staff and property closures across through the year. net cash decreased after paying 7 million of dividends in the year 11.7 million in respect to share purchases for employee share awards and the 42 million cash exceptional charges our business model remains highly cash generative with a strong balance sheet and the group maintains a clear capital allocation framework our priorities for the use of free cash flow are to group to fund the group's investment and development requirements to maintain a strong balance sheet fund a dividend that is affordable and appropriate and return surface cash to shareholders through a combination of special dividends and share buybacks the final dividend of 0.29 pence per share is consistent with the revised capsule allocation framework and dividend policy we announced at the fy25 results and brings the full year dividend to 0.44 pence representing a dividend cover of 2.8 times we remain committed to maintaining balance sheet strength and a two to three times dividend cover while investing in the business. In summary, fees declined by 8% but excellent progress with structural cost savings together with 7% productivity growth drove 3% increase in our operating profits. Volumes declined in both TEMP and PERM, although TEMP remains significantly more resilient saw improving trading conditions in several markets with around 30 percent of our business in year-on-year growth in q4 we remain resolutely focused on repositioning the business in line with our momentum strategy and delivering further significant structural cost savings of 50 million pounds in fy27 this will drive another material exceptional charge next year we maintain the strong balance sheet underpinned by strong levels of cash conversion and this will fund our transformation and long-term growth initiatives generating attractive returns to our shareholders as our profitability rebuilds over time. Turning to current trading, July and August to date have been in line with our expectations with no significant change to activity levels from Q4 in either contracting, temp or perm. September is our largest trading month of the quarter and it is currently too early to assess trends. at a group level there are no material working day effects in q1 and given our ongoing focus on driving consultant productivity we expect overall group consultant headcount will remain broadly stable in q1 we'll also continue to deliver on our structural efficiency programs which will further reduce our cost base for a period through fy27 i'd now like to hand back to mark thank you james so to recap

momentum is our strategy to accelerate profit growth and improve market share in our chosen markets by helping haze solve specialist talent selection processes better than anyone else in the market in addition when market conditions allow we will return to net free growth our strategy anticipates changes in the world of work shaped by our 60 years of experience and client feedback about what they need, responding to increasingly complex workforce challenges and the greater pressures they face to make the right hiring decisions. Getting it wrong can be costly. It also leverages our 40,000 weekly interactions between expert Hays consultants and their clients and candidates to provide deep insights into specialist recruitment markets. This is a powerful combination, a key point of differentiation, and one where we've only just started to capture its potential. Momentum is a compelling strategy because it is shaped by colleagues, candidates and clients. Compelling because it is a growth strategy delivered through superior and sharper focus and market leadership. And compelling because it will deliver significant increase in profitability, cash flow and shareholder returns. Over time, we will increase consultant net fee productivity by more than 50%, return Hays to a 25% plus conversion rate and deliver superior returns for shareholders. As you have heard, we are already delivering momentum at pace after taking decisive action and executing strongly over the last few months. FY27 will be an exciting year. We will accelerate our execution and start to unlock Hay's full potential. I will now hand you back to the administrator and we're very happy to take your questions.