Global 2016-17 results: Hays is an awesome cash machine
My recent review of recruitment company data confirms that London-based Hays plc continues to demonstrate an outstanding record of financial performance, setting a benchmark for financial management that many companies aspire to.
Hays’ headline results from the most recent financial year, 1 July 2016 – 30 June 2017, shows how much progress has been made over the past five years, in the face of a range of challenging financial conditions in the 33 countries that Hays operates in around the world.
Here’s a summary of the key data, comparing it to the same reporting period last year, and five years ago, respectively:
In 2013 Hays Global CEO, Alistair Cox, set out a five year plan to double global operating profit from £125 million to £250 million in 2018.
Based on the results for 2017 (Operating Profit £211.5 million) the plan is on track to deliver the ambitious goal. Although the 2017 result was helped by very favourable currency fluctuations as the (UK) pound sterling devalued in the wake of the Brexit vote.
Impressively, Cox has been able to smooth out the Group’s reliance on earnings from its traditional UK and Ireland market to such an extent that the UK & Ireland division has gone from contributing 65% of group operating profit ten years ago to 20% in the most recent financial year.
Beyond the headline financial metrics the most impressive aspect of the Hays performance was the Hays cash result. In 2012, Hays had £133 million worth of debt on its balance sheet. Five years later Hays’ net cash positon of £112 million enabled them to make a £61.6 million special distribution to shareholders and keep around £50 million to reinvest in business growth.
The strength of the Hays cash machine is exemplified by the fact that £217 million of operating cash flow across the 2017 year represents an outstanding operating profit-to-cash conversion rate of 103%.
Underpinning any impressive cash position is a low Days Sale Outstanding (DSO). DSO is calculated as Accounts Receivable divided by Annual Sales multiplied by 365 days.
Staffing Industry Analysts conducted recent analysis on the latest financial data (2016 financial year) from the 25 largest staffing agencies in Australia from which Hays had the best DSO performance of all 25 agencies with a DSO of 22.1 days against an average of 37.9 days (the bottom three performing companies with respect to DSO were Workpac; 62.4, Brunel; 55.6 and Clarius/Ignite; 54.1).
This equates to a 71% better DSO performance than the average large agency and is even more impressive considering that Hays is the largest of the 25 agencies by revenue; approximately 17% larger than the second largest agency, Programmed/Skilled. Hays collect more cash than any other agency and they collect this cash ($6 million plus, daily average) at a higher rate of effectiveness than any other agency.
Hays is not only a formidable competitor in the battle for clients and candidates, its outstanding financial management magnifies its already significant advantage.
Note: special thanks to Staffing Industry Analysts for permission to use their data. You can find out more about SIA’s industry-specific research here
Deligiannis returns Hays Australia to star status in Hays Worldwide
Hays 2015/16 results: Germany surges, UK and Asia Pacific marking time
Hays: A top 10 performing Australian business across all sectors
Full steam ahead: A conversation with Hays Aus/NZ MD, Nick Deligiannis