Hello, and welcome to the Hays Q1 conference call. My name is Molly, and I'll be your coordinator for today's event. Please note that this call is being recorded, and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions. This can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press star zero and you will be connected to an operator. I will now hand you over to your host, Paul Venables, to begin today's conference. Thank you. Thanks, Molly. It's David first. Good morning, everybody, and welcome to Hays quarterly update call for the three months ended 30 September 2021, the first quarter of our 2022 financial year. I'm David Phillips, Head of Investor Relations, and I'm here with Paul Venables, Group Finance Director. Before we begin, please be aware that this call is being recorded, with the recording accessible using the number and code provided in the release. Please be aware that our discussions may contain forward-looking statements that are based on current expectations or beliefs, as well as assumptions on future events. There are risk factors which could cause actual results to differ materially from those expressed in or implied by such statements. Hays disclaims any intention or obligation to revise or update any forward-looking statements that have been made during this call, regardless of whether these statements are affected as a result of new information, future events, or otherwise. I'll now hand you over to Paul. Thank you, David. Good morning, everybody, and thanks for joining us. I'll present the highlights and key themes of today's update and discuss our regional performances before taking questions. As usual, all net figure percentages are on a like-for-like basis versus prior, unless stated otherwise. Performance overview. We've made a strong start to the year with net fees at 41% ahead of expectations and delivered good sequential growth in all regions, particularly in permanent recruitment, up an excellent 65%. Temp was up to 26%. Currency translation had a significant negative impact, decreasing headline net fees by 5%, and there were no material working days adjustments in the period. I'd highlight the following key features. One, trading in all regions continued to improve through the quarter, and we delivered quarterly fee records in 12 countries, including the strategically important markets of the U.S.A. and China. In Germany, our largest business, we exited the quarter with record contractor numbers. Two, perm, 44% of group fees, continued to rebound significantly faster than temp. Encouragingly, activity levels are high in both markets. Three, September delivered our highest period of fees since the start of the pandemic, with an exit rate of 40%, despite increasingly tough growth comparatives. Four, fees in the quarter were in line with two years ago, with perm up 6% and temp down 5%. Fees in September were 4% higher than September 2019. Five, at the specialism level, technology, our largest global specialism at 26% of group fees, delivered a record quarter with fees up 36%. Technology fees are now 7% above pre-pandemic levels. Six, we delivered record consultant productivity despite increasing consult headcount by 8% or 600 in the quarter, which included our normal seasonal graduate intake. Headcount is now up 19% year-on-year as we continue to invest to capitalize on the cyclical recovery and strategic growth opportunities. Seven, cash performance was good, and we ended the quarter with net cash of GBP 360 million, in line with our expectations. Subject to shareholder approval, we'll be making core and special dividend payments of a combined GBP 170 million in November. I'll now comment on the performance by each region in more detail. Our ANZ division, 17% of group net fees, increased by 34%. After a step-up in fees in July, fees remained broadly at the same level in August and September, despite the ongoing current lockdowns in place in the largest states, including New South Wales and Victoria. ANZ fees decreased by 1% versus Q1 FY 2020. Perm, 37% of ANZ fees, was up an outstanding 95%, while temp increased by 13% against a relatively resilient performance last year. The private sector, 66% of fees, increased by 45%, while public sector grew by 15%. Australia increased 32%, including a standout performance for Queensland at 42%, and our two largest specialisms, construction, property, and technology, grew by 18% and 44%, respectively. New Zealand, 7% of ANZ fees, increased by an excellent 58%. Consult headcount in Australia and New Zealand increased by 8% in the quarter and by 27% year-on-year. Germany, our largest business at 26% of group fees, reported good sequential fee improvement through the quarter, with net fees up 39%, supported by continued improvement in client and candidate confidence. Germany fees are down 4% versus Q1 FY 2020. Conditions in contracting, 57% of German fees, were strong with fees up 21%, and we ended the quarter with record number of contractors on assignments. Perm increased by 56% in the quarter, including a record month in September. Temp, which is mainly in engineering, continued to recover at 83% against a weak year-on-year comparative. Excluding the effect of temp underutilization and severance costs in the previous year, underlying temp fees increased by 27%. However, given slower recovery in the automotive manufacturing sectors, temp volumes remain circa 20% below pre-pandemic levels. As expected, average temp hours worked returned to more seasonally normal levels for the summer as temps took holiday. Headcount increased by 3% in the quarter in Germany and by 8% year-on-year. Coming to the U.K. and Ireland, which is 23% of group fees, it grew by 45%, led by excellent perm performance up 69% and temp up 29%. Fees are down 5% versus Q1 FY 2020. Growth in the private sector was excellent at 57%, with the public sector up 21%. Most regions traded broadly in line with the overall business, except the Northwest, which grew by 74%. Our largest U.K. region of London grew by 46%, including London City, which is predominantly private sector focused, up an excellent 73%. At the specialism level, we saw excellent growth in technology, which delivered another record up 57%, while the fastest growth in our larger specialisms was HR, up 127%. Consult headcount increased by 4% in the quarter and by 15% year-on-year. Moving on to the rest of the world, which represents 34% of group fees and comprises 28 countries. This grew by 45% and included 12 quarterly fee records. Perm, 68% of rest of world fees, increased by 59%, and temp up 22%. Our rest of the world fees increased by 6% versus Q1 FY 2020. In EMEA ex-Germany, fees increased by 37%, and activity levels remained high across this quarter, with much less of a seasonal summer slowdown than normal. Our largest rest of the world country of France was up 37%, and Switzerland produced a record performance up 18%. The Americas grew by 66%, including records in the U.S.A., our second-largest rest of the world country, up 63%, and Brazil up an outstanding 138%. In Asia, our fees increased by 44%. Both China, our third largest rest of the world country, up 45%, and Malaysia up 65%, delivered record quarterly performances. Consult headcount for rest of the world was up 14% in the quarter and 24% year-on-year. Moving on to cash. Cash collection was good, we ended the quarter with GBP 360 million in line with our expectations. Current trading and guidance. I'd make the following points. One, the positive trading momentum we entered FY 2022 has continued with an exit rate in line with the quarter as a whole and with September fees 4% ahead of September 2019. Two, after significant investment in consult headcount over the last nine months, we expect headcount investment to moderate to 2%-4% over the next quarter as we continue to balance adding productive capacity, including our strategic growth initiatives with driving strong consultant productivity and profit growth. Our SGI program is performing well and helping to accelerate the opening up of the many structural growth opportunities we see, specifically in technology. Three, the strengthening of sterling versus the euro and Australian dollar is currently profit in FY 2022. If we retranslate our FY 2021 operating profit of GBP 95.1 million at 11th of October 2021 exchange rates, operating profit would decline by GBP 5 million, similar to position at the interims. Importantly, as group operating profit increases materially in FY 2022, FX is highly likely to have a much larger negative impact. Four, I reiterate conversion rate guidance we gave at the prelims. We expect a drop through of incremental fees to profits of 40%-50% in FY 2022 and well above 50% in FY 2023. In conclusion, whilst there's a degree of global macroeconomic uncertainty, candidate and client confidence remains at very high levels, and there are clear signs of skill shortages and wage inflation, particularly at the higher salary levels. We've made a strong start to the year with good sequential growth, and we're confident we can deliver substantial profit growth in FY 2022 and beyond while significantly investing for the future. There are many opportunities to build much bigger businesses, and we are firmly focused on positioning Hays as the clear market leader in the most attractive long-term sectors and geography. I'll now hand you back to the administrator, and we are happy to take your questions. Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Please ensure that your line is unmuted locally. You'll then be advised when to go ahead with your question. The first question today comes from the line of James Rose, calling from Barclays. Please go ahead. Hi there. Morning, everyone. I've got three, please, if I may. The first is on perm and temp mix. Perm looks very strong within the mix. What gives you confidence that temp can come back very strongly in the rest of the year? The second is on, can you talk about the difference in trends you're seeing between lower paid and higher paid workers? Number three, are you seeing signs of upward fee pressure, not just in spot rates, but also on contracts? Any sign you could reset some of those upwards? Thank you. Thank you, James, and congratulations on your promotion into your new job. It's great to talk to you. On perm and temp mix, on temp mix, this is really good growth. I've been doing this job for more than 15 years, and our temp business, of course, didn't fall as far a year ago. The 26%, even if you take out, if you like, the slight catch-up in German temp, take out the exceptional cost we had a year ago, that is still growth of about 22% overall. I think generally what I've learned in temp is every quarter you can have 10%-20% growth. You take that, and that is excellent, because we can all see at the moment that the perm market is very strong, but at a certain point in time, some of that will start to weaken. Whereas the beauty of a temporary staffing and contracting business is the degree of stickiness. Let me give you an example of this. The most important statistic in these results is the fact that we've got contractors at all-time record levels in Germany, because it's the highest salary levels. On average, those contractors earn EUR 140,000. We get high margins, and of course, we get a high degree of stickiness because on average, those contracts historically have been about nine months, and at the moment, they're in excess of 12 months. We're delighted with permanent placements, and we're going to ride that wave as much as we can, and we're investing into it. We continue to focus on the long-term strategically attractive markets of temporary staffing and contractors. Of course, a large proportion of the IT market is in that space. We're happy with it, and we continue to focus on it. What we never do at any point in the cycle is allow our businesses to solely focus on perm. You've got to do both. I think we're doing that. We're really very pleased with these results because clearly the comps were getting harder coming into this quarter. Secondly, trends between lower and higher paid jobs. Without a doubt, the largest element of skill shortage is in the higher paid markets. Therefore, I think what we can see in our perm markets is for those jobs that are at GBP 40,000, GBP 50,000 salary levels and above, that's where there's the largest skill shortage. That's where those candidates have multiple offers at the moment. I think what's most intriguing about this market currently, and I mentioned this on a previous call, is that you get a lot of mandates where the client is looking to hire one person. You give them a shortlist of four to five people. That two of those candidates they determine are superb, and they take both candidates. There's no doubt that that is the highest bounce back part of the market. Interestingly, if I take another area of our business, something like office support, where we both dominate the high end, all of the kind of senior PAs, but we've also got a very large business in lower end office support. We saw strong growth across the board. I mean, what's most interesting, James, in this recovery so far is both the strength and the uniformity. From a skill shortage standpoint, and therefore eventually from a wage inflation standpoint, that's more focused on the higher end. That comes naturally to one of the opportunities to push fees. I think the beautiful part of it at the moment is, if I answer this kind of two ways. Clearly in the professional ranks, most people change jobs to get a promotion they can't get in their existing business or to get additional experience. When you're in that situation, you would expect moving from one job to another in, let's take in the last 10 years, to get at least a 10% increase in pay. What's interesting at the moment is two parts. First of all, your opportunity to get close to 15% or 20% is there for a number of the roles, specifically within technology, within digital marketing, which are the hottest markets we see. Also in some of the kind of the senior finance commercial markets. Secondly, of course, it enables you to hold firmer on the fee percentages. We're not seeing a lot of fee pressure at the moment. We're not seeing a large amount of procurement play, which of course, was a large aspect of the previous 10 years, with most companies focusing solely on reducing cost base and reducing payments to general suppliers, including agencies. Currently, our clients are very realistic. One of the reasons there is a strong perm market is they're making their decisions quicker. I think that helps agencies in both protecting our margins and particularly over time, increasing them. Clearly, time will tell, and in part that will be driven by how long the strength in this market lasts. I think kind of taking all of those together, we love perm and we love temp, and we're delighted with performance in both, better in the higher end, and some opportunities to improve margins over the next few years. Hopefully that answered your questions. Great. Thanks very much. Thank you. The next question comes from the line of Hans Pluijgers calling from Kepler Cheuvreux. Please go ahead. Yes, morning, gentlemen. Three questions from my side. First of all, on temp versus perm again. Could you maybe give some feeling how the trend was through the quarter, temp versus perm? Do you see, let's say, a further pickup in temp through the quarter? Could you give maybe some feeling on that? Secondly, on the cash development, down about GBP 50 million through the quarter. Could you give maybe some feeling on that? What was the background of that? Lastly, more detailed question. You give some, let's say, guidance on the drop-through rate for this year. I missed it. Could you please repeat that? Thank you, Hans, and if I don't answer those fully, please come back. Trends across the quarter. Let me give an overall view on this quarter first, and then I'll go into perm and temp. I think, in hindsight, we had a July in line with our expectations. We were happy. There's no doubt the end of August got much stronger, and that continued into September. That's been reasonably uniform. Of course, for us, we have general temp markets, and then we have some specific ones, such as education, which come back when the schools open. There is no doubt that because September is the largest month we've had post-pandemic, within that perm will have been the strongest. I think that is more seasonal, Hans, rather than a specific trend, because, of course, September is, for a lot of companies, when they start to invest pro summer. Secondly, on cash development, there's a combination of factors here. We had expected DSOs to go out slightly, and they have gone out by about one day in the quarter. The rest of that is broadly timing because, of course, being a kind of a GBP 6.5 billion turnover business, actually when period ends finish is quite important from some kind of a temp payroll standpoint. We're happy with the overall aging. We've had minimal bad debts, minimal increase in overall aging, about one day overall, but certainly at the higher end, overdue debt, no issues there at all. I think that's more timing and we'll see that as we go through the year. All I did, Hans, was just reiterate the guidance I gave at the prelims, which is for this financial year, a drop-through rate of incremental fees to profit of 40%-50%, and then we believe that will increase significantly above 50% in the following year. Okay, clear. Thanks. The next question comes from the line of Andy Grobler calling from Credit Suisse. Please go ahead. Hi, good morning. Three from me as well, if that's okay. Firstly, on productivity, which was very good again in the quarter. Two questions there. How do you balance in the short term that your kind of optimism for the long-term future of the market with productivity gains? Do you focus on one over the other? Secondly, to what extent are these productivity gains going to be sustained? I know you've talked to that before, but the underlying reality continues to evolve. Second question on wage inflation. You talked to seeing some of that in certain end markets. A bit more detail would be fantastic. Thirdly, in Germany, you mentioned that that was the most important statistic within the release. Which end client are you seeing that specific demand for? You mentioned that automotive and manufacturing was still quite tough within temping. Is that true within contracting? If so, where is the specific demand? Thank you very much. Andy, there were a lot of kind of sub-questions then. Yeah, sorry about that. I almost certainly will miss one. Let me answer Germany first. Contracting is mainly in the IT space, and that really is very broad across our customer base. First of all, I think it's a clear sign of confidence. In some respects, within the overall temp book, of course, contracting has some perm-like characteristics because it's high salary levels, very skill short, and long assignments. Really outside of automotive, all of the markets in Germany are very strong at the moment. I think the pleasing aspect is, whilst the election result might not be what business would have liked one year or two years or three years ago, actually, the fact that has the coalition with SPD and the Liberals in it, I think is seen as a real positive. I see no election issues. Secondly, coming on to productivity. We're about 4% up versus two years ago. That's actually about 15% in the perm space. It's slightly lower in the temp space. How do we balance over the next few quarters? Look, the very nature of bringing our own recruitment in is the interviews that we do in May or June are the people that land in July and August. We got to a stage where the various assessment centers we were doing around the world, we had a very high quality of potential candidates. You will see that we increased headcount by 8% in this quarter. That is slightly higher than we'd guided coming into the quarter, but the candidate strengths were there. The market volumes and forward indicators were positive, and therefore we landed that. Therefore, the reduction in Q2 to 2%-4% is more accepting that we're already ahead of the curve in the first quarter. How we balance it is pretty clear. In the strategic growth markets, we continue to invest whatever happens because as we will set out when we do our capital markets day, our biggest opportunity for strategic growth in the next few years is first of all in the IT sector, to double the size of our IT business from GBP 250 million -GBP 500 million over the next five years. That will be worth a lot on its own incremental, about GBP 100 million profit versus pre-pandemic. That's a key strategic area. We're doing incredibly well in that space, and we're more minded to accelerate rather than to put the brakes on. I think in the more cyclical recovery markets, We are both investing and driving productivity. If you looked at a lot of the professional specialisms, we're absolutely driving productivity. In the perm part of it, we're investing slightly behind the curve because I think that's the appropriate thing to do. None of us knows yet what the level of perm activity will end up being over the next one to two years. I think we're happy with the start to the year. We gave very clear guidance and we set out a stall in the prelims, and we think we can both invest and drive significant profit growth, certainly this year and next. Now, we've got more than enough productive headroom to drive growth this year, so further headcount investment is more about the following year than it is now. You asked how much of that is sustained. That's your crystal ball. You've got to get a great crystal ball and make a lot of judgments. I've only been doing this job 15 years, Andy. You've probably been around slightly longer. I have, I'm afraid. Therefore, I think that's hard. I think you're back to skill shortage is here to stay. The opportunity for a lot of countries to fix that via immigration in whatever its way is clearly more restricted. At some point, that may change in certain markets. Certainly Australia is an interesting one at the moment because historically they increased their population by about 1.5% a year, predominantly through immigration. There's been none of that over the last couple of years. I think what we're also confident in is a lot of the technology changes we're doing behind the scenes will drive significant productivity. Then finally, that's why I gave the answer to the earlier question that in addition to focusing on maximizing and riding perm, we'll continue to drive temp and contracting because the stickability that will give us for the longer term. Finally on wage inflation, I think you need a bit more than a quarter to drive real conclusions, but there's no doubt that technology and marketing are the hottest market areas. I think to an extent there's a virtuous circle at the moment, isn't there? It's not just that client confidence has increased, and they are focused on growth and therefore they don't want to be left short of skilled headcount. I think there's also strong candidate confidence, and that's both remarkable 18 months after the pandemic. That's what's increased the most over the last quarter, Andy. For us, I said we had a good July. We had a superb end to August. It continued into September. Within that, there's no doubt that perm picked up further. I think that's a sign of strong candidate confidence, and in itself, that will drive increases in wages because you have to pay a little bit more to get somebody good to leave somewhere and join you. Companies will turn round and they're likely to start to do modest increases in wage increases. Either that 2% that we've seen over the last few years may well be 3%-4% in a year's time as companies focused on retaining skilled staff. Excellent. Thank you very much, Paul. Thank you. The next question comes from the line of Anvesh Agrawal calling from Morgan Stanley. Please go ahead. Hey, good morning. I just got one question and slightly sort of longer term on this entire wage inflation, labor shortage dynamic and the impact probably it have on the temp business. If we have sort of very acute shortage and high wage inflation that probably we are seeing in some areas now, will that really sort of impact the temp business in the longer term? Yes, the fee rates will go up, but the volumes then start to come under pressure. Therefore as a business, would you prefer more normalized wage inflation and probably more labor supply? Do you think then the opportunity in the perm side will be immense so there is a natural offset in your business? Just trying to understand if we entered into a structural labor short market, how it could impact your business. Anvesh, the line was quite weak, so I was getting about two out of three words. If I miss the essence of this, please do come back. The main part of the question was around the impact of wage inflation on temp and if jobs becomes very skill short, very people short, will there be a constraint on temp growth? Of course, how we will see that is we'll get an increased margin per hour worked because if temps are getting higher pay, which certainly in construction and property, we've certainly started to see already around the world, and we're seeing that in the temp part, we'll get a higher margin per hour worked that will improve our fee level and our profitability. I think you've heard me over the years talk about wage inflation being the icing on the cake. We didn't have a lot of icing from 2010 -2 020. I think what we're seeing now is clear signs that the icing bag is being ready to be piped. I think we're going to see some more over the next two years. I think where you went to was if it becomes very skill short, does temp lose out to perm? I don't think so, Anvesh. Clearly, in the lower end of certain professional specialisms, there will be temps doing temp work that in many respects as well because of the pandemic and the issues that may have had on them not having the security of a permanent role. Some of those may want to move more into the perm space, you know what? That's fine and we'll place them into perm jobs. We've got a great business in perm. We've got a great business in temp. We can do both. We can meet all of our candidates' needs, whatever is the case. When you come to the IT space, without a doubt, most IT candidates prefer to be contractors. They prefer to be interims, to have that flexibility. A lot of them are project-based roles. They want to gain different skills. They like the security of a contract for 12 months-18 months, and they tend to secure contracts well ahead of the end of those terms. I think we will have both of those markets, and without a doubt, that's the case in IT, it's the case in life sciences. I said early on, I actually think higher-end contracting is kind of quasi-perm. I think at the moment, clearly we've had this unique set of circumstances where international markets have been frozen. You haven't had opportunity for people to change countries and everything else. That will start to change over the next few years. Clearly, the U.K. may have some different circumstances, but without a doubt, in Germany, the pool of highly skilled, very hungry Eastern Europeans looking to work for large German companies and get skills and advance their careers and earn more money and make the standard of living better for them and their families, that will continue forever. Again, that's the beauty of having a global network, in that you can meet those supplies. I think at the moment, this is very skill short market, and there's some unique features that make it that greater. Certainly at the moment, we are set fair for, in the perm part of it, another strong quarter to two quarters beyond. I think we're also very encouraged by the continued growth we're achieving in contracting and temp, and I think it's a pretty good market. I hope I answered the question. I said it was quite hard to pick up all the points. No, that's fair. It's just trying to understand the dynamic of a structurally labor short market and the perm business. That's really helpful. Thank you so much. Thank you. We have no further questions in the queue at the moment, so I'll hand the call back over to your hosts. Thank you. Brilliant. If that's all the questions for today, we'd like to thank you all again for joining the call and look forward to speaking to our next Q2 trading update on the 18th of January, 2022. Should anybody have any follow-up questions, David, Charles, and myself will be available to take calls for the rest of the day. Thank you very much for joining us. Thank you for joining today's call. You may now disconnect your lines. Hosts, please stay connected.