Hello, and welcome to the Hays 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 the duration you're lines will be listen-only. Have the opportunity to ask question, this will be done by pressing star one on your telephone keypad to register your question. If you require assistance, kindly press star zero, and you will be connected to an operator. Let me will now call on to David Phillips, Head, Investor Relations. Thank you.
Thank you, Molly. Good morning, everyone. Welcome to Hays quarterly update call for the three months ending September 30, 2020, the first quarter of our 2021 financial year. 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 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 then or implied by such statements. Hays 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 of today's update, cover key themes, and discuss regional performances before taking any questions. As usual, all net fee growth percentages stated are on 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'd highlight the following key features. One, considering the unique and uncertain backdrop of the 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. Two, while markets remain tough, fees improved sequentially, our fee decline improved from -34% in Q4 to -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 U.K., France, and Spain, as their severe lockdown restrictions eased.
Three, we saw a good rebound in activity in the public sector markets around the world, where declining fees improved from 24% in Q4 to 14% in Q1. The rebound in private sector was more modest, moving from 35% to 32%. Temp, down 25%, continued to outperform perm, which was down 35%. However, the fee decline differential between temp and perm narrowed from 18% to 10% in the quarter, with more perm activity in most markets.
Five, 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. Six, our current cost base of GBP 63 million per period remains in line with the guidance given at our full-year results in August, including GBP 1 million per period in the return to growth projects.
Seven, during the quarter, we exited all major government support schemes globally. Eight, over 90% of our offices globally are currently open and working under a hybrid office model. The level of interactions with clients and candidates remains strong, and initiatives like Hays Thrive, our free online training and wellbeing platform, continue to prosper with over 15,000 clients registered. Finally, cash performance was again good, and the group maintained its strong balance sheet.
We ended the quarter with net cash of GBP 350 million, excluding short-term deferrals of tax payments, only slightly below June 2020. I'll now comment 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%. Temp, which represented 75% of ANZ fees, declined by 19% but was stable. Whilst perm was down 40%, we saw sequential improvements across the quarter.
Public sector improved in the quarter to be down only 12%, while private sector 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% and 32%, respectively. Encouragingly, stringent lockdown regulations in Victoria had only a limited impact on fees in the quarter.
Queensland declined by 24%, while Western Australia and A.C.T. fared better, down 15% and 11% respectively. At the Australian specialism level, construction and property declined by 32%, accounting and finance 37%, and office support 41%. IT and our large corporate accounts were less impacted, down 22% and 19% respectively. New Zealand, which is 6% of ANZ fees, fell 16% as activity rebounding strongly following the relaxing of lockdown rules.
Consultant headcount in ANZ was flat in the quarter, but down 21% year-on-year. Moving on to Germany. Conditions in Germany, our largest business at 26% of group net fees, remain tough but 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.
Excluding the impact of temp severance costs, German fees declined by 29%. Our contracting business, which represents 65% of German fees, was relatively resilient and declined by 18%. Temp remained the weakest sub-sector, with fees down 53%. The three drivers of this were, firstly, average temp volumes fell by 32% as clients controlled their costs and fewer new projects started. Second, the lower average utilization of temp workers reduced temp net fees by a net GBP 2.7 million or 12%.
However, the impact of the part-time work decreased through the quarter, and we exited the German short-time working scheme in September. Three, with lower client demand, we took the decision to release a further 260 temps in the quarter at a cost of GBP 1.9 million. This reduced temp fees by 9%. Perm, 15% 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 specialism in IT, which is 44% of the German business, saw net fees fall by 26%. Engineering, our second largest at 21% of fees, remained tough and fell by 47%, driven by the temp effects just discussed. Accounting, finance, and life sciences improved and fell 19% and 5%, respectively.
Consultant headcount was down 1% in the quarter and down 14% year-on-year. Moving on to the U.K. , whilst conditions in the U.K. and Ireland, 21% of group net fees, again remained tough, activity did improve through the quarter, especially in perm. Net fees declined by 34%, which represented an 8% sequential improvement versus Q4. Temp fees were down 29% and perm 41%. Both our private and especially our public sector businesses saw sequential improvement versus Q4.
Fees in the private sector, 65% of U.K. and Ireland, fell by 40%, with the public sector down 20%. All regions traded broadly in line with the overall business, except for the North and the Northwest, which declined by 41% and 38%, respectively. Our largest U.K. region of London, fell by 34%. In Ireland, net fees declined by 38%. At the specialism level, hardest hit areas were office support down 52% and accounting, finance down 44%.
Construction & Property saw some sequential improvement, was down 34%. IT continued to be relative outperformer down 12%, as was our large corporate accounts business down 22%. Consultant headcount decreased by 14% in the quarter and 21% year-on-year. We exited the U.K. furlough scheme at the end of July. Moving on to the rest of the world, which comprised 28 countries and 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, as lockdown restrictions eased. Our largest rest of the world country of France, declined by 30%, whilst Belgium and Italy were also tough, down 41% and 30% respectively. In Spain, trading improved significantly with fees only down 17%, while Switzerland was again a standout performer, down 6%.
The Americas declined 27%. The U.S., our second-largest rest-of-the-world country, declined by 23%, whilst Canada continued to be tough, down 34%. LATAM fell 33%, including Brazil, down 29%. In Asia, our fees fell by 33%. China, our third-largest rest-of-the-world country, declined by 31%, with mainland China significantly outperforming Hong Kong. Japan had a difficult quarter down 44%, although Malaysia was again relatively strong and down 16%. 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 at September 30 of GBP 350 million, excluding short-term deferral of tax payments of GBP 60 million. Cash collection remained strong. Current trading and guidance. I'd make the following points. First, the group's net fee exit rate at -26% was modestly ahead of the overall like-for-like fee decline in the quarter.
Two, it is too early to determine how much of the improvement 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. Three, whilst to date, the impact of more localized second wave lockdowns has only had a limited negative impact on fees. Clearly, the more these lockdowns proliferate, the greater the impact on the wider economic confidence of clients and candidates.
Four, we currently expect trading in the first half of FY 2021 to be modestly profitable. Five, any material recovery and profitability 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. Six, we expect group headcount to be broadly sequentially flat in Q2 FY 2021, outside of the return to growth initiatives, as we continue to balance appropriate cost controls in the more difficult markets with positioning the group to benefit from any market recovery.
Seven, our Strategic Return to Growth Program is making good progress, and we remain confident that the 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. Although many uncertainties remain, our highly experienced management teams are focused on best positioning the business for any recovery. With our strongest ever balance sheet and leading positions in key sectors, we are confident we can take further market share. I will now hand you back to the administrator, and we are happy to take your questions.
Thank you. If you'd 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 comes from the line of Rory McKenzie. Please go ahead.
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? Could you also give more detail on what you've seen in areas that have gone into phase II lockdown so far? Obviously, parts of Australia in particular, I guess. On the temp side, thanks for detailing in Germany, where it sounds like you're now moving past some of the headwinds. More generally, I guess temp still feels a bit sluggish to pick up. Do you think you're suffering from clients using government furlough and short-time working schemes as an alternative to the traditional temp channel?
Good questions, Rory, and hopefully I can do them justice. I think on the pace of improvement, I think the positive for me is that generally, the improvement has been very gradual and pretty predictable. It's not like we've suddenly had one large spike. The only question in my mind 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 and August, and we always have a very strong September. September, from a level of fees, is always the biggest month we have in a year.
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. I think there the question is, as the European markets came out of lockdown a little bit later, as they went across June into July, it would be quite natural for clients, if they were suddenly going to fill a number of roles that have been frozen, rather than starting those on the July 1 and the August 1, they would do it on the September 1 when more of their business, more of their individuals were back at work in whatever hybrid form they have.
I think Europe is the only one, whereas I think the improvements we've seen a little bit in Australia, certainly, the improvements we've seen in the U.K., I think was more gradual. The positive is I always reflect in some detail on exit rates and talking about them and the language we use. Therefore, I think everybody can take some comfort that the September rate, we think that sort of level will at least hold into October. Beyond that, of course, it is harder to determine. I think Europe is the only one where we will normally have October and November is a good GBP half a million to GBP 1 million lower than September. The question mark this year is where will that be? I think that's the only one.
On phase II lockdowns, I think the positive so far, if you take something like Victoria, as you guys know, I always go to Australia in the first week in August. Clearly, I couldn't do this year, but I did 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. I was actually on the trading call with the Aussies when Victoria was put into lockdown. They'd been put into lockdown about the day before. Of course, the Victorian lockdown has been very stringent, and it is still in place today. Our original belief was that our fees would fall by something like 15% in Victoria.
The first four weeks of that, which really takes us 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. I think it kind of continues to, so far, follow the guidance I've given previously, where I think the issue is more just delays recovering. What I can't tell you is would Australia have been, it's only 27% down, would it have been 25% down or 24% down in this quarter had we not had the lockdown in Victoria? It clearly had some negative impact, but, one, it wasn't too material in Victoria, and second, it had no discernible impact on the rest of Australia. I think that's quite important.
In the U.K., there's no doubt that whilst actually the improvement has been pretty much across the board. The region that is bouncing back the least 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 ? What does it do to things like offices, return to office? 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.
I think the real question mark is if it 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, all bets are off. 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 temp, you're right to say Well, first of all, we're still in that initial shock phase, and secondly, none of us have a recovery fact 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 lockdown phase were able to work remotely. They've generally been protected, and their assignments have been elongated.
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. The question mark comes, as each project comes to an end, and if a client doesn't then have new projects for them to work on and then releases them, have we got enough new projects to offset the projects that are completing? I think we're going to have this hiatus period for certainly another quarter. I do think when we get into calendar year 2021, that we'll move into a more normal recovery phase then in the economy, where most of the pickup will be in contracting, it'll be in temp, 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 a more sustainable sort of number. The question is, where do we move from here? Do I think that governments are using furlough schemes rather than using temps? I think there are lots of different reasons why companies have used furlough schemes around the world, and of course, the furlough schemes are very different from one country to another, with the type of flexibility that you have. I think most companies follow the same fact pattern. When the shock hits, and for as long as the shock lasts, you're trying to protect as many jobs in your own business as possible.
Normally, certainly for those countries which are more industrialized or unionized and there are redundancy programs and everything else, you always have to release temps for them, and there's certainly part of that in Germany. I'm not clear that that's going to. Pretty much all of the furlough schemes are ending. If you're in the hardest sectors, I think it's just going to be low demand. 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 will probably get some pickup in temp. It's very modest, I think we'll return to growth when we get to post-Christmas, Rory.
Great. Thanks. A lot of uncertainty, I know, but that's really helpful. Thank you very much.
The next question comes from the line of Hans Pluijgers calling from Kepler. Please go ahead.
Yes. Good morning, gentlemen. I heard what you say about, let's say, the exit rate on Europe, but could you maybe still give some more flavor on the exit rates by region? Secondly, on cash flows and cash returns to shareholders. You've been starting a buyback for the treasury shares for the employee share plan. Could you maybe elaborate a little bit on what your way of thinking is currently with respect to dividends, if you already had any thoughts on that? Lastly, more detailed question on Germany. Could you give maybe some feeling of the impact of the underutilization and maybe reduction in the number of temps on your Q4 numbers? What's your view currently on that?
Yeah. Thanks, Hans. 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. If you look at ANZ and U.K., they were only about 1% better than the quarter as a whole. Germany was 7% better, and the rest of the world was 6% better. Within the rest of the world, that was all Asia and Europe. EMEA was 3% better. Asia was actually 13% better. Really, it wasn't uniformly spread. It was primarily in Germany and in the rest of the world. Within the rest of the world, it was all in Europe and in Asia. The Americas was 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. First of all, that enables us to get straight on the front foot, step up the return to growth initiatives, except that's going to be a P&L hit in the financial year of GBP 15 million, more in the second half of the year than the first half.
It also enables us to put 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. That's a real positive. The other one is, of course, it positions us to return to dividends very early in the process. You're right. Traditionally, we have just issued shares to do any modest incentive schemes for 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 buy modestly on the market. That's only 10 million shares. 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.
Therefore, let's say that cash reduces to something like GBP 250 million, whatever that is. That clearly gives us optionalities, doesn't it? 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.
Secondly, we have options if we want to do some token dividends. I think the really pleasing part, certainly from my personal perspective, the really pleasing part of the investor roadshow was we had very strong 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. We've got very loyal shareholders. They were very loyal in the equity raise, and therefore, we'll be able to return funds to them through dividends, which is the most appropriate path. 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.
I think if we just think through the component parts in that business, I think we'll have another quarter of severance. Because really what is now happening is the lower average utilization of temp workers. In the previous quarter, so in Q4, that was a combination of two 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. Then, of course, we had an increased bench, and you pay through the bench. Then, of course, those temps are either getting new assignments with you, they are released at no cost, or because it might be the end of their back-to-back agreement, or we have to make a severance payment to them.
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, i.e., those temp workers that are working at our clients, 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. Still we've got a number of workers that are working into bench, so the bench percentage is higher than normal. 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 with those clients is that they are very close with us. They are very close with us and that puts us in a good position. There are very good open discussions with our clients and therefore, we have very open discussions. I think the positive bits in Germany is that we've got. 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. Temp 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 I expect that to be minimal when we get into the back end of the year. I think it is better, but there is still more to go, and I think the outlook clearly for certainly the automotive sector is very weak for the next couple of years for obvious reasons.
Okay, thanks.
The next question comes from the line of Matthew Lloyd calling from HSBC. Please go ahead.
Good morning, gentlemen. Sorry. One 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 accruing at the moment. Then secondly, in the perm part of the business, have you seen lots of people hiring without interviews? 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 five days a week from 9 A.M. going forward?
Yeah, no, good questions, Matthew. I think certainly the latter one, it'll be fascinating to see, won't it, over the next few years. On the bad debt part, it's pretty de minimis. I think the thing I'm almost most proud about in all of my years is that, for a GBP 6 billion turnover business, we've never had bad debts more than GBP 4 million a year, it's really de minimis, therefore our accrued levels are quite normal.
We simply accrue a target number across the year. Then of course, at the half-year and the full year, we review that. Actually, we're certainly getting de minimis 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. All of that risk is in construction, property, and areas such as resource and mining.
You get de minimis bad debts outside of that area. It tends to be a large company that goes under or a small sub. Most of our bad debts are in the small subcontractor market, but it's pretty de minimis. No change at the moment. Actually, cash collection is very strong, and aging looks very good. On perm part of it, absolutely. Physical interviews have gone, haven't they, Matthew? It's a bit like your business, it's a bit like most of my reviews. It's all on Teams or Zoom. We've all got into that pattern. 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. Are you seeing the real candidate?
I think that technology works to such a great extent that 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. Then 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, that whilst 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 one or two or three years down the line, 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 three days a week, they may be at home two days a week.
The important part of that is that it is scheduled. What you can't have is random attendance in businesses because, of course, Teams have to work together. Now, most teams, of course, are working remotely on technology.
From a cultural standpoint and from on-the-job training part, which is important in the initial phases of most jobs, of course, there is a benefit in kind of physically being together. I think the day of you must be in, and you must be in five days a week in most roles are gone, outside of whether you're in retail or manufacturing or those sorts of areas. 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 that whilst accounting and finance has been quite a traditional market where everybody's physically interviewed up until this crisis, the IT market has been for years 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 some of the things you've written on that are spot on.
That's very kind. One last question. One of your rivals talked about having lots of interview rooms they don't need and therefore implied slightly less office space. Some of the others have talked about that. You, the last time we spoke, mentioned that you wouldn't be renewing a long lease again in a hurry. Is there scope to reduce your office costs? I mean, obviously, you're going to need offices because you've got sales teams. They need to work together.
Yeah
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 distanced. In most of our offices, Matthew, everybody wants to be back. They want to be back two, three, four days a week. We've got very high utilization in lots of places around the world, but we've all got to follow the social distance part of it, don't we? Therefore, the offices, those interview rooms have been naturally cannibalized, and it enables people to work so that we can space everybody out. We all need that additional space at the moment.
The bigger question, I think, is when we work our way through this and we get through the other end, if you come back to your earlier question where your attendance in the office in most jobs, including in recruitment, is scheduled. The team is together for two or three days a week. Let's say everybody below two years who are still kind of working, learning their trade to a varying degree, are in the office five days a week. If you work through the math on all of that, you probably end up over the longer term of needing something like 20% less office space. I think, but that is more in one or two years' time, rather than immediately when we've all got to deal with the socially distance part.
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 We've always got offices in places like Reading or wherever. You can see there being a benefit, I don't know, looking at people like David, having somewhere in Fulham or somewhere in Richmond. He's just voted for Fulham, you know what I mean, because I think that way, there is going to be an interesting question longer term about where you want people together. I think it is important that people work together, Matthew.
The one thing that is crystal clear. I said it earlier on, but on the basis you've asked the direct question is 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. There's no doubt that physical activity, even in a socially distanced and slightly weird world, is better, drives competition, drives up fees, 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 our way out of this. I think longer term, absolutely, we'll all be having a little bit less property, won't we?
Indeed. The future is as bright as Aston Villa's at the moment, which I know you'll appreciate, even if most of the listeners don't.
Well, I think at least we're 29 points from safety, Matthew. No, it's a great start.
Thank you very much indeed.
Before we move to the next question, please be reminded, if you do have a question, please press star one on your telephone keypads. The next question comes from the line of Amvesh Agrawal calling from Morgan Stanley. Please go ahead.
Yeah. Good morning, everyone. Most of my questions have been asked. It's just the one I have. You talked about Hays Thrive. I understand it's like a free training platform. What's the sort of route for monetization of that? Is it more like a goodwill thing? You would look to build the client relationship there? Maybe just one more, on the recovery, how should we think about the drop through in the second half? Assuming there is a recovery. Pretty much the incremental fees drop at 100%. There will be incremental cost related to that. Thank you.
Look, I think on Hays 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. 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 compliance and onboarding and safeguarding programs they have to go through. All we've done now is much greater broad than that, and it now covers the whole gamut. 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. I think it's just a good thing to do.
I think generally what we're trying to do on our platform with temps 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 bulk buy 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 Alistair and Steve Weston, and I think it's an important part in engagement, isn't it?
If you think about the whole concept of Find & 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 them, the better the relationship is. I think that's really important. From monetizing it, I think that comes later.
That would be a really good question for Alistair when we get to the interims or the prelims. David, you're looking very fetching, by the way, in a mask. I don't know whether he now thinks he's at real risk, it is quite funny. On the recovery part of it, there will be more commission across all of this. On the basis that for most recruiters, those activity levels in Q4 and even Q1 in the perm areas are still very low. There's a greater bounce back. I've always talked about 13%-15% of all of our fees going out in commission. That's more likely to be closer to 17%-20% in the initial recovery phase. The real question mark is, what do we do in headcount?
Of course, we said that in the return to growth, we're talking about around GBP 1 million a month in the first half. That's going to go to GBP 2 million, certainly when we get from about February, March onwards per month as we go through. I guess if you added all of that together, including the return to growth, it might reduce the drop through of, let's say it was 75%-80%, and that might reduce it to 65%-70%. The real question mark is perhaps not that. It's how strongly can our fees rebound from where they are at the moment. We've set our cost base out. Clearly, our fees are a couple of GBP million better than that consistently across the months now. We need significant sequential growth.
We need to get well into the GBP 70 million and the mid GBP 70 million, certainly in getting into Q3 and Q4 to do the sorts of numbers that a few of you have out there. Of course, all of that is possible. I think it's why I mentioned those comments about those kinds 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. I think that's going to be quite important in candidate confidence. Most larger clients who have already set out their route map, they know what they're doing. It is very logical. We're getting very few almost phantom jobs, where it's not a real job, hasn't been approved. 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 candidates, which means a number of those drop through. I think to get meaningful recovery in this financial year, we need both candidate and client confidence to continue to improvement across the period of time. Certainly, if you look out a good 6-12 months, I actually think all of the rebound so far is really very encouraging. I think FY 2022 and 2023 look pretty good at the moment. The real question mark is, how much profit can we drop through in the next six to nine months?
Oh, that's great. 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 unit, whether that's held up more resiliently than some of the lower-income groups. Has the higher-income hiring been more resilient? If so, have there been variations across industries or geographies? Thanks very much.
As a generic, we need to be careful on the phraseology of executive. Let me put it another way around and take one market. I know, really, I think really across all of the areas. Actually, one thing like Construction & Property, where we're the only one of the quoted U.K. recruiters really in that space, only got that's just been a recovery that's come through opening locations and everything else. 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. If you take Accountancy & Finance, the qualified up, the qualified and five years and upwards have been the strongest area, because in those parts, companies don't have any spare resources, and if they lose somebody, they've got to replace them. 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 leavers, and we're not seeing that much investment in those spaces. 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 entry-type roles.
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 kind of make those decisions. Yes, the senior market is running a good 10%-15% better than the junior market at the moment. Also, within this, remember, if you take qualified accountants, there's minimal, the 98%, 99% of them are in a job today.
There's very low levels of unemployment in the skilled markets. There has been for the last few years. That's continued across 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 you're teasing a candidate out of one company and placing them into another role. I think that's normal for this shape of a recovery. Also, with the uncertainty and furlough schemes and everything else, very few people in senior areas were ever put into those schemes in the first place. Whilst replacement jobs might have been frozen as the market has started to defrost and people have changed jobs, all or most of the activity is in the more senior end of the market.
Excellent. Thanks very much for that.
We have no further questions coming through on the phone line, so I'd like to hand the call back over to your host for any closing remarks.
I know I've got some sun lamp. Yeah. Thank you, look, guys. If that's all the questions today, we'd like to thank you all for joining us. I look forward to speaking at our next, the Q2 trading update on the 14th of January. Should anybody have any follow-up questions, David, 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.
Thank you for joining today's call. You may now disconnect your lines.