Hays plc (LON:HAS)
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May 6, 2026, 4:53 PM GMT
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Trading Update
Oct 15, 2020
Hello, and welcome to the Hayes Q1 investor 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 your lines will be on listen only. However, you will have the opportunity to ask questions. I would now like to hand the call over to David Phillips, Head of Investor Relations.
To begin today's conference. Thank you.
Thank you, Molly, and good morning, everyone. Welcome to today's quarterly update call for the 3 months ended 30 September 2020. The first quarter of our 2021 financial year. And here with Paul Venables, Group Finance Director. Before we begin, Please be aware that this call is being recorded and with the recording accessible using the number and code provided in the release.
Please also be aware that our discussion may contain forward looking statements that are based on current expectations or beliefs as well as assumptions on future events. There are key risk factors, which could cause actual results to differ materially from those expressed in or implied by such statements. Haves disclaims any intention or obligation to revise or update any forward looking statements that have been made during the 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 highlights today's update, cover key themes and discuss regional performances before taking any questions. As usual, all net fee growth percentages stated want a like for like basis versus prior year unless stated otherwise. Performance review.
The pandemic continued to significantly impact the business through the quarter with net fees down 29%. While what markets remained tough across most of the world, the temp markets were stable overall and the perm markets improved sequentially across the quarter. There were no working day adjustments in the quarter, but currency translation had a slightly negative impact, decreasing headline net fees by circa 1%. I've highlighted the following key features: 1, considering the unique and uncertain backdrop of a global pandemic, Our fees continue to be reasonably predictable in all of our major markets around the world. To date, the shape of our recovery continues to be gradual.
2, whilst markets remain tough, fees improved sequentially and our fee decline improved from minus 34% in Q4, to minus 29% in Q1. Most of the improvement was in perm, especially in those countries, which had previously faced the toughest lockdown restrictions in March to June, including the UK, France, and Spain as though severe lockdown restrictions eased. 3, we saw a good rebound activity in the public sector markets around the world where declining fees improved from 24% in Q4 to 14% in Q1. And the rebounding private sector was more modest moving from 35% to 32%. 10% down 25% continue to outperform perm, which was down 35%.
However, the fee declined to differential between temp and perm narrowed from 18% to 10% in the quarter with more perm activity in most markets. 5. Whilst both group and consultant headcount reduced by 5% over the quarter, our consultant base is now appropriate for the current conditions and we expect modest increases from the return to growth initiatives over the next few quarters. 6, our current cost base is 6 $3,000,000 per period remains in line with the guidance given at our full year results in August, including GBP 1,000,000 per period in the return to growth projects. Kevin, during the quarter, we exited all major government support schemes globally.
8 of the 90% of our offices globally are currently open, and working under a hybrid office model. The level of interactions with clients and candidates remain strong. And initiatives like Hayes Thrive, our free online training and well-being platform continue to prosper with over 15,000 clients registered. And then finally, cash performance was again good and the group maintained its strong balance sheet. We ended the quarter with net cash of GBP 350,000,000, excluding short term deferrals of tax payments, only slightly below June 2020.
On our comments on the performance by each division in more detail, Australia and New Zealand, our ANZ division, which represents 19% of group net fees, declined by 26%. Temperatures represented 75% of ANZ fees declined by 19% but was stable. And whilst perm was down 40% was sequential improvements across the quarter. Public sector improved in the quarter to be down only 12%, while project sets remained difficult and was down 33%. Australia decreased by 27% and in New South Wales and Victoria, together 51% of our Australian business, net fees decreased by 34% 32%, respectively.
Encouragingly, stringent lockdown regulations in Victoria had only a limited impact on fees in the quarter. Queensland declined by 24% whilst Western Australia and ACT fared better down 15% and 11% respectively. At the Australian Specialism level, construction costs declined by 32% accounting finance 37% and office support 41%. But IT and our large property accounts were less impacted down 22% and 19% respectively. And New Zealand, which is 6% of A and Z fees fell 16% as activity rebounding strongly following the relaxing of lockdown rules.
Consumer headcount in Aonzo was flat in the quarter, but down 21% year on year. Moving on to Germany. Conditions in Germany, our largest business at 26 percent of group net fees remained tough at stable, with fees down 31%. Overall, business confidence remain low, but again, is stable. However, the automotive and manufacturing sectors remain very tough.
This led to continued underutilization of our temp workers, albeit with trends improving through the quarter. And excluding the impact of tax severance costs, German fees declined by 29%. Our contracting business, which represents 5% of German fees is relatively resilient and declined by 18%. Temp remained a weak subsector with fees down 53% The 3 drivers of this were, firstly, average tent volume was fell by 32% as clients controlled their costs and fewer new projects started. 2nd, the lower average utilization of tank workers reduced net fees by a net 2,700,000 or 12 percent, However, the impact of the part time work decreased through the quarter, and we exited the German short time working scheme in September.
3, with lower client demand, we took the decision to release a further 2 60 temps in the quarter at a cost of GBP 1,900,000. This reduced temp fees by 9%. Perm 15 percent of fees declined by 36%. Our German Public Sector business, 16% of Germany Fees, delivered a strong relative performance with fees down by 3%. At specialism level, our largest special in MIT, which is 44% of the German business, saw net fees fall by 26% engineering, our 2nd largest 21% of fees remained tough and fell by 47% driven by the temp effects just discussed.
County and finance and lifestyle has improved and fell 19 5%, respectively. Consult headcount was down 1% in the quarter and down 14% year on year. Moving on to the UK, whilst conditions in the UK and Ireland, 21% of group met seeds, a grain remained tough, Activity did improve through the quarter, especially in perm. Net fees declined by 34%, which represented an 8% sequential improvement versus Q4, tempsies were down 29% and perm 41%. Both are private and especially our public sector businesses such sequential improvement versus Q4.
Fees in the private sector, 65% of UK and Ireland fell by 40% with the public sector down 20%. And all regions traded broadly in line with the overall business, except for the north and the northwest, which declined by 41% 38%, respectively. Our largest UK region of London fell by 34% and in Ireland, net fees declined by 38%. At the specialism level, hardest hit areas will offer support down 52% and accounting finance down 44%. Construction property saw some sequential improvement was down 34%.
IT continued to be relative out performer down 12% as was our large corporate accounts business down 22%. Consult headcount decreased by 14% in the quarter, and 21% year on year, and we exited the UK furlough scheme at the end of July. Moving on to the rest of the world, which comprised 28 Countries 34% of group net fees. This declined by 27%. In EMEA, ex Germany, fees reduced by 24%, representing an 8% sequential improvement versus Q4, especially in France and Spain with lockdown restrictions eased.
Our largest rest of the world country of France acquired by 30% while Belgium and Italy were also tough down 41% and 30% respectively. In Spain, trading improved significantly, received only down 17% while Switzerland was again a standard performer down 6%. The Americas declined 27%. The U. S.
Our 2nd largest rest of the world country declined by 23% whilst Canada continued to be tough, down 34%. Lafam fell 33%, including Brazil down 29%. And in Asia, our fees fell by 33%. China, our 3rd largest rest of the world country, declined by 31% with mainline China significantly outperforming Hong Kong. Japan had a difficult quarter, down 44%, although Malaysia was again relatively strong and down 16%.
And consultant headcount was down 3% in the quarter, and down 15% year on year. Cash flow and balance sheet, we delivered a good underlying cash performance in the quarter with net cash 30 September of GBP 350,000,000, excluding short term deferral of tax payments of GBP 60,000,000. Cash collection remains strong. Current trading and guidance. I'd make the following points.
1st, The group's net fee exit rate at minus 26 percent was modestly ahead of the overall like for like fee decline in the quarter. 2, it is too early to determine how much of the improvements in perm trading in the quarter is sustainable or simply the release of perm jobs frozen in the March to June lockdown phase, especially in Europe 3, whilst to date, the impact of more localized second wave lockdowns has only had a limited negative negative impact on fees, Clearly, the more these lockdowns perforate, the greater the impact on the wider economic confidence of clients and candidates. 4, we currently ability in the second half of the year will require a significant sequential increase in net fees across the whole of the second half and of course, no national lockdowns in our major markets. 6, we expect group headcount to be broadly sequentially flat, in Q2 FY 'twenty one, outside of the return to growth initiatives as we continue to power its appropriate cost controls in the more difficult markets with positioning the group to benefit from any market recovery. And 7, our strategic return to growth program is making good progress we remain confident that projects will accelerate our medium term growth.
In conclusion, it's been another very challenging quarter, but our teams have performed admirably. Notwithstanding the risks of prolonged second wave lockdowns, it is encouraging that momentum improved throughout the quarter. And although many uncertainties remain, our highly experienced management teams are focused on best positioning the business for any recovery. With our strongest other balance sheet and leading positions in key sectors, we are confident we can take further market share. I'll now hand you back to the administrator we're happy to take
Please ensure that your line is unmuted of Rory McKenzie. Please go ahead.
Good morning all. It's Rory here. Two questions first please on pace of improvement. Firstly, which data are you looking at internally to try and assess how much of the perm recovery so far reflects pent up demand versus maybe more underlying and sustainable trends. And could you also give more detail on what you've seen in areas that are I've gone into phase 2 lockdown so far.
Obviously, parts of Australia in particular, I guess. And then on the temp side, thanks for detailing in Germany, where it sounds like you're now moving past some of the headwinds. But more generally, I guess, temp store feels a bit a bit sluggish to kind of pick up. Do you think you're suffering from clients using, you know, government follow and and short time working schemes as an alternative to to the traditional tech channel?
Yes, good questions, Rory, and happy I can do them justice. I think on the pace of improvement, the positive for me is, generally, the improvements has been very gradual and pretty predictable. So it's not like we've suddenly had one large spike. The only question in my mind is, is Europe, as most of you on the call know, the European markets And even more so, the ones outside of Germany, we see a very slow hiatus almost across July August, and we always have a very strong September. So September, from a level of fees is always, you know, the biggest month we have in a year.
So I think the question there is one of the largest parts of sequential improvement, for example, we had in September versus the quarter as a whole was in the rest of the world business. And a large part of that was in Europe. So I think there The question is, you know, as the European markets came out and locked down a little bit later, you know, as they went across June into Europe into July, it would be quite natural for clients to bring, if they were bringing, if they were suddenly going to fill a number of roles that have been frozen, rather than starting those on the 1st July 1st August, they would do it on 1st September when more of the business, more of their individuals were we're back at work in, you know, whatever hybrid form they have. So I think Europe is the only one whereas I think the improvements we've seen little bit in Australia, certainly the improvements we've seen in the UK, I think was more gradual. Now the positive is, you know, I always reflect in some detail on on exit rates and talking about them and and the language we use.
And therefore, I think you can everybody can take some comfort that that's September 8. We think that sort of level will at least hold into October beyond that, of course, it is harder to determine. But I think Europe is the only one where we will normally have October November is a good $500,000 to $1,000,000 lower than September. And the question mark this year is where will that be? So I think that's the only one.
On phase 2 lockdowns, I think the positive so far if you take something like Victoria, and I remember I was actually on, as you guys know, I always go to Australia in the 1st week in, in August, clearly, I couldn't do this year, But in all of the normal meetings, external and internal, just by getting up in the middle of the night and having no sleep and doing them. Was actually on the trading call with the Aussies when Victoria was put into lockdown, it'd been put into lockdown about the day before. And of course, the Victorian lockdown has been very stringent, and it is still in place today. And our original belief was that our fees before by something like 15% in Victoria, The 1st 4 weeks of that, it really touched across August. Yes, we had some fall, but it was closer to 10%.
When we got back into September, we actually got back to where we were ahead of that lockdown. So I think it kind of continues to so far follow the, it's kind of the guidance I've given previously where I think the issue is more just delayed recovering. So what I can't tell you is what Australia have been instead of 27% down, will it have been 25% down or 24% down in this quarter, had we not had the lockdown in Victoria clearly had some negative impact But it won, it didn't wasn't too material in Victorian. And secondly, it had no discernible impact on the rest of Australia, and I think that's quite important. So far in the UK, and there's no doubt that whilst actually we've had a pretty good at the improvements has been much across the board.
So far, the the the the region that is is is bouncing about the lease has actually been London, which of course has got no lockdown issues to it. The northwest, we've had a pretty good August. Some of the activity levels are a bit lower today, and I think the real question mark is, Are they short and targeted, or are they a longer term? And then what does it do to the to things like offices return to office because there's no doubt as we've seen more of our clients return a bit more to office And as we've returned a bit more to office, that's also given a bit of a pickup in fees. So I think the real question, Mark, is is if this is a coordinated short term effort, I don't see there being too much of an issue.
Clearly, if there's a national lockdown in a major country or bets are off, But it's too early to tell at the moment. Most governments are trying to minimize the impact on work and clearly trying to have a greater impact on hospitality. When we come to 10th, I think 10th is you're right to say that. Well, first of all, we're still in that initial shop phase. And secondly, none of us had a recovery fat pattern for a global pandemic, which is ongoing.
What is clear in the temp market is that those contractors and temps that were with clients through the, through the, through the lockdown phase, we're able to work remotely. They've generally been protected and their, and their assignments have been elongated. So in a number of sectors now, even more in the sectors where we tend to have more short term temp assignments, the temp assignments are elongating. They are longer. Then the question mark comes, as each project comes to an end and if a client doesn't then have newest new projects for them to work on and then releases them, Have we got enough new projects to offset the projects that are completed?
I think we're gonna have this hiatus period for another certainly another quarter, but I do think when we get into calendar year 2021, that we're moving to a more normal recovery phase then in the economy where most of pickup will be in contracting. It'll be in 10, and it'll be in interim markets in the perm part. I do think, however, I put this, that perm fell too far in the previous quarter, and that was the lockdown part. This may well be this may well be a more sustainable sort of number, and the question is where do we move from here? Do I think that governments are using furlough schemes rather than using Kent.
I think there's lots of different reasons why companies have used furlough schemes around the world. And of course, the furlough schemes are very from one country to another with the type of flexibility that you have. I think most companies follow the same fact pattern. When the shop hits and as long as the shop lasts, you're trying to protect as many jobs in your own business as possible, And normally, certainly for those countries which are more industrialized or unionized and the redundancy programs and everything else, you always have to release 10 for that, and they're certainly part of that and they're certainly part of that in Germany. But I'm not clear that that's going to, I mean, in the end, pretty much all of the further schemes are ending.
If you're in the hardest sectors, then I think it's just going to be low demand. And for us, the most obvious one is automotive around the world, clearly outside of our business, it would be hospitality. I think in the other areas, the next quarter will also be similar. I think we we will probably get some pickup in terms of very modest, but I think we return to growth when we get to post post Christmas, Roy.
Great. Thanks a lot lots on certainty and overlap. That's really helpful. Thank you very much.
The next question comes from the line of Hans Plusever calling from Kepler. Please go ahead.
Yes. Good morning, gentlemen. I hear what you say about, say, the the exit rate on the on the Europe but, could you maybe still give some more flavor on the exit rates by by region? And then secondly, all, cash flows and and cash returns to to shareholders. You've been starting a buyback for the treasury shares for the employee, share plan.
That you could maybe elaborate a little bit on what, let's say, what your way of thinking is currently with respect to dividends if you already had any thoughts on that. And lastly, more detailed question on Germany. Could you give some, maybe, some feeling of the impact of the unitization and maybe reduction in the number of temps on your Q4 numbers, but what's your view currently on that?
Yes. Thanks, Hans. And again, if I miss any of those, please do come back On the exit rate, the bulk of the improvement actually is in two areas. It's in Germany and it's in the rest of the world. Look at ANZ and UK, they were only about 1% better than the quarter as a whole.
Germany was 7% better, and the rest of the world was percent better within the rest of the world. That was all Asia and Europe. EMEA was 3% better. Asia was actually 13% better. So So really, it wasn't uniformly spread.
It was primarily in Germany and in the rest of the world. And within the rest of the world, it all in Europe and in Asia. The Americas is actually slightly worse. Moving on to cash flows. The positive, I think, thing under all of the scenarios at the moment is we're clearly in a very strong cash position.
The first of all, that enables us to get straight on the front foot, staff at the return to growth initiatives, except that's going to be, you know, a P and L hit in the financial year of $15,000,000 more in second half of the year than the first half. It also enables us to have some related CapEx there, and we've got other CapEx. And we can get on and do that and do whatever we think is appropriate for the business a real positive. And then the other one is, of course, it positions us to return to dividends very early in the process. You're right.
We are traditionally, we have just, issued shares to do any, any modest, incentive schemes the top 300 people in the business. This time, we are using the cash position. And of course, the low share price, it makes more sense to to buy modestly on the market, but that's a it's only 10,000,000 shares. So we'll work our way through that. That's still going to leave a very large amount of cash.
Of course, at some point, the temp book will unwind, sorry, will start to grow again. And therefore, let's say that cash reduces to something like 250,000,000 whatever that is. But that clearly gives us optionalities, doesn't it? And the first of that, I think, is to return to making core dividends early. Of course, we need to see sustainable profitability to make that appropriate, but we can look to do that early enough.
And we would hope to be able to do that when we get towards the end of this financial year. And then secondly, we have options if we wanted to do some total token dividends. And I think they're really pleasing parts, certainly from my personal perspective, they're really pleasing parts of the investor roadshow. Was we had very strong support to support from our shareholders in the actions that we've taken so far. Clearly, we're in a very strong cash position.
And therefore, we can return to dividend growth early. We're not interested in a broader buyback program. I personally don't believe in it. And we've got very loyal shareholders. They were very loyal in the equity raised, and therefore, we'll be able to return funds to them through dividends.
Is the most appropriate part. And I think on Germany, there are some clear positives in here. Clearly the hard part is that the manufacturing and automotive sector is by far the most difficult element of it. But I think if we just think through the component parts in that business. I think we'll have another quarter of, of severance because really what is happening is the lower average utilization of temp workers in the previous quarter, so in Q4, that was a combination of 2 factors.
It was less hours actually being worked by those temps with our clients. So a number of those temps were part time working for our clients And then, of course, we had an increased bench, and you pay through the bench. And then, of course, those tenants are either getting new assignments with you. They are released at no cost, or because it might be the end of the back to back agreement, or we have to make a severance payment to them. So what is clear in the manufacturing and automotive sector is that, as you've seen, temp numbers have reduced further.
And I'd expect that to continue to go into the next quarter. Actually, the utilization of our temp workers are those temp workers that are working at our parts is now at a high level. And it's only a few percentage points, certainly in September, it was only a few percentage points where it would normally be, but still we've got a a number of workers are working into bench, so the bench percentage is higher than normal. And I would expect that the next quarter will be the last quarter, materially impacted by this. We'll have some more severance costs that may be similar to this.
I think we'll have less, lower average utilization because that really just will be bench now. We've got a really good program well managed. I think the beauty of working in Germany and certainly the long term relationships we've got those clients is that they are very close with us. They are very close with us, and, that puts us in a in a good position. You know, there's very good open discussions with our clients.
And, and, and therefore, we have very open discussions. So I think the positive bits in Germany is that we've got a much greater, you know, the contracting market continues to be, stable and we're sequentially growing in volumes across the quarter, but clearly nowhere near what we were doing a year ago. Term market is still difficult, but I think we're coming out of the worst of it. Certainly, I think the next quarter, there'll be another hit not as much, but expect that to be minimal when we get into the back end of the year. So I think it is better that there's still more to go.
And I think the outlook clearly for the automotive sector is very weak for the next couple of years for obvious reasons.
The next question comes from the line of Matthew Lloyd calling from HSBC. Please go ahead.
Good morning, gentlemen. Sorry. One sort of more technical question. I just wondered what if you could remind me what bad debt, assumption you were accruing at historically and what you're doing, what bad debt assumption you're occurring at at the moment. And then secondly, in the perm part of the business, have you have you seen lots of people hiring without interviews?
And have you seen any trend some of your peers have talked about most notably, Robert Half? Of people sort of being prepared to hire on much wider geographies because they don't expect people to be in the office 5 days a week from 9 AM going forward.
Yeah. No. Good questions, Matthew. And I think certainly the latter ones that we're fascinating to see won't get over the few years. On the bad debt part, it's pretty de minimis.
I mean, I think the thing I'm almost most proud about in all of my years is that for a 6,000,000,000 turn of a business, we've never had bad debts more than 4,000,000 a year. So it's really de minimis, and therefore, our our accrued levels are quite normal. We simply accrue a target number across the year. And then, of course, at the half year and the full year, we'll review that. And, actually, we're certainly getting enormous bad debts across the whole of this period of time.
I think it's really been one of the most pleasing parts. Clearly, for us, and all of that risk is in construction property in areas such as resource and mining. You get de minimis bad debts outside of that area. It tends to be, you know, a large company that goes under or, you know, a small sub most of our bad debts in the small sub contractor market, but pretty minimal. There's no change at the moment.
And actually, cash collection is very strong and aging looks very good. On perm part of it, absolutely. I mean, physical interviews have gone out there, Matthew. It's a bit like your business, and it's a bit like most of my reviews. It's all on teams or Zoom.
We've all got into that pattern. And, and I think that the beauty of the technology, the key in an interview is that you get a feel for the person and their chemistry, and you get to feel whether there's any bullshit, you know, are you seeing the real candidate? And I think that technology work to such a great extent that I felt we've had no problems at all both in our business and me personally, in parts of our team, we've been able to move on and hire remotely. That's the world we're in. And then on the on the wider geography, I think absolutely.
I think that there is a general acceptance in the professional recruitment markets that, and generally in greater business once we don't yet know what the final rhythm is going to be going forward, most, people When they're out of any probation period, when they know the business well, there is a strong expectation, even if you go 1 or 2 or 3 years down lines. So hopefully, when we're through the worst of the pandemic, that there's going to be a hybrid model where people may well be in the office 3 days a week, they may be at home 2 days a week, The important part of that is that it is scheduled.
What you
can't tell is random attendance in businesses, because, of course, teams have to work together. And most teams of course are working remotely on technology. But from a cultural standpoint, And from on the job training part, which is important in in the initial phases of most jobs, of course, there is, there is a benefit in in some in kind of physically being together, but I think the day of you must be in and you must be in 5 days a week in in most roles are gone outside of, you know, whether you're in retail or or manufacturing or those sorts of areas. So what that does do is it means that candidates have a much greater geographic, map that they can focus on. And I think all of those, are positives you could actually make an argument, Matthew, that that's been the IT market forever, in the, you know, whilst the county and finance has been at a traditional market where everybody is physically interviewed up until this crisis.
The IT market has been for years, remote remote, interviewing and, of course, primarily remote working. Other than when you're working on a large change project and that team needs to be together in the mobilization phase and towards the sharper end of the project. I think this gives real flexibility both for clients, companies, and it gives real flexibility for candidates and workers. And, I think kind of some of the things you've written on that spot on.
That's very kind. One last question. One of your your rivals talked about having lots of interview rooms. They don't need and therefore implied. Slightly at office space.
Some of the others has talked about that. You the last time we spoke mentioned that you wouldn't be, renewing a a long lease again in hurry, is the scope to reduce your office costs? I mean, obviously, you're gonna need offices because
you're you've got sales teams.
They need to work together in the culture, but is there a scope there?
I think one of the ways of looking at it is we just need to ignore the next 12, 18 months. Because one of the benefits, of course, of having those meeting rooms, is it enables us to work socially distant. So In most of our in most of our offices, Matthew, everybody wants to be packed. They wanna be back 2, 3, 4 days a week. You know, we've got very high utilization, lots of places around the world, but we've all got to follow the social distance part of it, don't you?
So Therefore, the offices have been noted interview rooms have been naturally cannibalized. And, you know, and it enables people to to work so that we can space everybody out. So we all need that additional space at the moment. Of course, we've all But, the bigger question I think is when we work our way through this and we get through the other end, if you then come back to your earlier question, where your attendance in the office in most jobs, including in recruitment is scheduled. So the team is together for all of the teams together for, you know, 2 or 3 days a week.
Let's say everybody below 2 years who are still kind of working now at learning their trade to a varying degree are in the office 5 days a week. Then if you work through the map on all of that, you probably end up over the longer term of needing something like 20% less office space. So I think, but that is more in 1 or 2 years' time, rather than immediately when we've all got to deal with the the socially distance part. But I think it's, all of us, you could easily see a situation rather than needing a large amount of space in Central London that you would actually want some satellite offices in the regions that would be in the, you know, we've always got offices in place like a wedding or whatever. But you can see that being a benefit, I don't know, looking at people like David, you know, having somewhere in Fulham or somewhere in Richmond, he just voted for Fulham.
But you know what I mean? Because I think that that way, there is going to be an interesting question longer term about where you want people together, but I think it is important that people work together, Matthew, is the one thing that is crystal clear, and I said it earlier on, but on the basis, you've asked the direct question. Is we have one of the reasons our fees have improved in this quarter, I believe, is that we've now got more of our people working more together. That brings a natural sales culture and competitiveness. And there's no doubt that that physical activity, even in a social distance, slightly weird world, is better, drives competition, drives at seas, and also in the end for all of us in the industry, enables us to keep more of our employees because we all need to, of course, sequentially grow away after this.
But I think long the term, absolutely, we'll all be having a little bit less property, won't we?
Indeed, the future is as proactive as our stimulus at the moment, which I know you'll appreciate even if most of the listeners don't.
Well, I think I think at least at least the 20 twenty nine points from being from safety enough for you, but no. It's a great start.
Thank you very much indeed.
The next question comes from the line of Ambeesh Agarwal calling from Morgan Stanley. Please go ahead.
Yes, good morning, everyone. In most of
my questions have been asked. Is just the one I have. You talked about Hayes Thrive, and I understand it's like a free training platform. So what's the sort of route for monetization that, or is it more like a goodwill thing and then you would look to build the client relationship there? And maybe just one more, like, on the recovery, how think about the drop through in the second half, I mean, assuming there is a recovery, pretty much the incremental fees drop at 100% or there will be incremental cost related to that.
Thank you.
Yes. Look, I think on Thrive, at the moment, this just is all about goodwill, isn't it? You've got a lot of people who've been at home remote often in organizations where they're not connecting everybody. And it's been well received by our clients, It was already a platform that we developed originally for the education sector because of all of the education and, clients and onboarding and safeguarding programs they have to go through. And all we've done now is much greater broad than that, and it now covers the whole gamut.
And I think the positive part is lots of clients are using it. More than 60,000 individuals are using it. It's being rolled out worldwide. So I think it's just a good thing to do. And I think like generally what we're trying to do on our platform with camps and contractors is getting them to come into our website on a more frequent basis, offering them additional services such as, professional indemnity insurance, where we can vote by on their behalf and then they can buy because most professionals need that, training programs, loyalty programs, and That's a really big push from Alastair and Steve Weston.
And I think it's an important part in engagement, isn't it? You know, if you think about the whole concept of finding engage, the more ongoing discussions and pinch points we have with all of our candidates, the better we get to know them, the better we service and the better the relationship is. So I think that's, that's really important. From monetizing it, I think that comes later. And, that will be a really good question for, for Alastair, when we get to the interims or the prelims.
David is looking very fetching, by the way, in a mask. I don't know whether he's now thinks he's at real risk, but it is quite funny. On the recovery part of it, there will be more commission across all of this. And, on the basis that for most recruiters, you know, those activity levels in in Q4 and even in Q1 in the perm areas are still very low. So there's a greater bounce back.
I've always talked about 13% to 15% of all of our fees going out in commission, it's more likely to be closer to 17% to 20% in the initial recovery phase. And then the real question, Mark, is what do we do in headcount? Of course, we said that in the return to growth. You know, we're talking about around 1,000,000 a month in the first half. That's going to go to 2,000,000 certainly when we get from about February, March onwards per month as we go through.
So I guess if you added all of that together, including the return to growth, that might reduce locked down. So it might reduce the drop through of, let's say, it was 75 to 80%. That might reduce it to 65 to 70%. The real question mark is perhaps not that. It's, you know, how strongly can our fees rebound from where they are at the moment.
We've set our cost base out. Clearly, our fees are, you know, a couple of 1,000,000 better than that consistently across the months now. But we need significant sequential growth. You know, we we need to get well into the 70,000,000 and the mid 70,000,000 certainly in getting into Q3 and Q4 to do the sort of numbers that a few of you have out there. Of course, all of that is possible.
And I think it's why I mentioned those comments about those kind of second waves. What none of us knows now is how far and how deep Clearly, in certain countries, it's a very logical structured controlled methodology in other countries, as we know, it's a bit more haphazard. But, I think that's going to be quite important in candidate confidence. Most larger clients who have already set out the route map. They know what they're doing.
It is very logical. We're getting very few almost Phantom job, it's not a real job, hasn't been approved. You know, we're getting a high flow through on jobs, includes completion. We are normally getting the sort of thing. You get this point where you get counter offers for for candidates, which means a number of those drop through.
That's normally in a weak economy. But I think to get meaningful recovery in this financial year, we need both candidates and client confidence to continue to improvement across the period of time. But certainly, if you look at a good 6 to 12 months, I actually think all of the rebound so far, is really very encouraging. So I think FY 'twenty two and 'twenty three looks pretty good at the moment. The real question mark is, you know, how much profit can we drop through in the next 6 to 9 months?
Oh, that's very helpful. Thank you so much for it.
The final question comes from the line of Joe Easton calling from Bloomberg News. Please go ahead.
Oh, hi there guys. I just wanted to ask about the executive units, whether that's held up more resiliency than some of the lower income groups. So the hiring so has the higher income hiring, being more resilient. And if so, have there been variations across industries or geographies? Thanks very much.
As a generic, I mean, we need to be careful on the phraseology of executive, but let me put it another way around and take one market. I know, Rudy, I think really across all of the areas, actually one, things like construction property where we're the only one of the quoted UK recruiters really in that space and you've got that's just been a recovery that's come through opening locations and everything else. So that's been across the board. Outside of that absolutely. All of the strongest fee performers have been in the more senior qualified ends of the market.
So if you take accounts in finance, the qualified up, the qualified in 5 years and upwards have been the strongest area. Because in those parts, companies don't have any spare resource, and if they lose some, they've got to replace that's been an instant replacement. Clearly, in the more junior areas, in the more administrative areas, companies have been much more reticent about replacing any levers, and we're not seeing that much investment in those space. And of course, a common trend over the last few years for most companies, including our own company, in what we do, is you're always looking to automate and therefore, Generally, you're automating data, data entry type roles. But of course, decision making, whilst technology is important in giving enablers, you still need people with sharp brains.
Thank god for all of us on this call to, to, to kind of make those decisions. So yes, the senior market is running a good 10% to 15% better than the junior market at the moment. And also within this, remember, if you take qualified accountants, there's minimal, you know, the 98 9% of them are in a job today. So there's very low levels of unemployment in the skilled markets that has been for the last few years. That's continued to cross this downturn.
Whereas, of course, most of the issues on unemployment, and we're still today 99% of all the people we place are in a job and therefore your teaching a candidate out of one company and placing them into another role. But I think that's normal for this shape of a recovery. And also with the uncertainty and furlough schemes and everything else, very few people in the senior areas wherever it put into those schemes in the first place. So whilst their jobs may have replacement jobs might have been frozen, as the market has started to defrost and people have changed jobs, all of most of the activities in the more senior end market
Excellent. Thanks very much for that.
We have no further questions connected on the phone lines. Hand the call back over to your host for any closing remarks.
I've now got some sunshine. Yep. Thank you, look, guys. If that's for all the questions today, we'd like to thank you all for joining us. I look forward to speaking at our next at the Q2 trading update on 14th of January.
Should anybody have any follow-up questions? JV Charles and I will be available to take your calls for the rest of the day. Thank you very much and have a great day. Bye.
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