Trading Update

Apr 16, 2019

Earnings release

Hello, and welcome to the Haines Q3 analyst call. My name is Molly, and I'll be your coordinator for today's event. For the duration of the calls, your lines will be on listen only. However, there will be an opportunity to ask questions later in the call. Please note that this call is being recorded. And you will be connected to an operator. I will now hand you over to your host, David Phillips, to begin today's conference. Thank you. Good morning, everyone. Welcome to Hays quarterly update call for the 3 months ended 31st March 2019, the third quarter of our 2019 financial year. I'm David Phillips, Head of Investor Relations, and I'm here with Paul Denable's Group Finance Director. Before we start, please be aware that this call is being recorded with the recording accessible using the number and code provided in the release. Should be aware that our discussions may contain forward looking statements that are based on current expectations or beliefs as well as assumptions on our future events. There are risk factors which could cause actual results to differ materially from those expressed in or implied by such statements. Please disclaim 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 effective as a result of new information, future events or otherwise. I'll now hand over to Paul. Thank you, David. Good morning, everybody, and thanks for joining us. I'll summarize the highlights of today's update, cover the key themes, and discuss our regional performances before taking any questions. As usual, all net figure percentages I give for the quarter will be on a like for percent against increasingly tough year on year comparatives and uncertain macroeconomic conditions, particularly in Europe. Purrency translation continued to have a negative impact and reduced headline net fees by 1% in the quarter. I'd highlight the following key features in the results. One, our performance was again broad based with 17 of our 33 countries delivering double digit growth, including 8 all time quarterly records. Through growth was 5% in 10% and 7% in our perm business. The Australia delivered solid growth in net fees of 3% versus an increasingly difficult comparative and a tough construction property market. This extended its run of consecutive growth quarters through 'nineteen. 4 Germany delivered good growth of 6% against a more challenging economic backdrop with Tampa contracting up 6% and pern up 7%. 5 of UK and Ireland delivered another solid performance maintaining the 3% growth seen in Q1 and Q2. This was driven by strong 14% growth in our public sector business, while private sector fees fell by 1%. Fixed performance in the rest of the world was good at 9%. Within this, Asia and EMEA ex Germany grew strongly 12% and 10% respectively. Led by Greater China up 21% and Spain 18%. The Americas delivered good growth of 7% led by Canada up 18%. Selling group consultant headcount was down 1% in the quarter, but up 5% year on year as we focused on driving consultant productivity. In line with our long term plans, we opened 2 offices in the quarter. 8, we ended March with net cash of 1,000,000, a good performance, As in our recent financial years, we anticipate a strong cash performance in our fourth quarter. I'll now comment on the performance by each division in a little bit more detail. Earlier in New Zealand, Our AMZ division, which represents 17% of group net fees, delivered a solid quarter with net fees at 3% or 2% adjusted for Easter, despite the tough 13% underlying growth comparator and the construction property markets tough. This is our 19th consecutive quarter of growth. Our 10th business grew by 6% while perm continued to be subdued down 4%. And although year on year growth did slow over the quarter, mainly in perm and were in line with broader industry data, it's important to know that March was still an all time record net fee performance month. Public sector net fees grew by 7% with private sector up 1%. In Australia, net fees increased by 3% in New South Wales and Victoria, which together represent 59% of our Australian business, net fees grew by 11% and 3%, respectively. Queensland, our 3rd largest state, delivered growth of 2% and ACT, 9%. Although fees in South And Western Australia fell by 14% and 12%, respectively. At the specialties and level, net fee growth in IT was again excellent of 20% and HR grew by 9%. Construction Property, our largest business in Australia, declined by 7% as 3rd consecutive quarterly decline, while accounts in finance declined by 4%. In New Zealand, which represents about 5% of ANZ trading remained tough and net fees fell by 8%. However, encouragingly, our momentum improved through the quarter. And overall, consultant headcount in aims that increased by 1% in the quarter and by 5% year on year. Germany, our largest business, Germany, 27% of group net fees, grew by 6% or 5% adjusted for Easter. This was going to a tough 18% underlying growth comparator and a weaker macroeconomic backdrop. Our temp and contracting business together represents 85% of German net fees grew by 6%. And within this, contracting was up 3% whilst 10th delivered strong growth of 14%. Terminature presented 15% of Germany net freeze, delivered a good performance of 7%, including strong 10% growth in our core higher salary perm markets, however, our mid level salary perm restricted market declined by 5%. Our largest specialist in the IT, 41% of German net fees delivered good growth of 9%, but engineering, our 2nd largest slowed to 2% due primarily to weaker automotive markets. Accounting Finance And Construction Property grew by 73% respectively, our sales and marketing grew by an excellent 19%. Consult headcount was flat in the quarter and was up 7% year on year. Ukraine Island. In the UK and Ireland, 23% which represents 23% of group net fees, we delivered another solid performance particularly given the political and economic uncertainties, with net fees of 3% or 2% adjusted for Easter. Our temp and perm businesses grew by 4% and 2%, respectively. Growth was led by the public sector, which represented 29% of UK and Ireland, up 14% and within the public sector, 10th grew by 12% and perm 26%. Net fees in the private sector decreased by 1% overall across both 10% and perm. All regions traded broadly in line with the overall business except for Southwest and Wales and Northern Ireland, up 20 18%, respectively, and the Scotland and North, down 12% and 6%, respectively. And our largest UK region of London delivered 3% growth. Our Irish business delivered another good performance with net fees of 6%. Of course, our 5 largest specialisms, net fees in IT, agreeing grew strongly at 15% while the accounting finance and office support grew by 6 4% respectively. Construction property was flat and education, which continues to face tough market conditions, was down 6%. The top headcount was flat in the quarter and year on year as we continued to focus on driving consulting productivity. In our largest division, the rest of the world, which comprises operations in 28 Countries and represents 33% of group net fees, We delivered good broad based growth of 9% with 17 countries delivering growth in excess of 10% and 8 countries delivered all time. Quarterly flu record. EuroFX Germany was up the strong 10% despite tough comparatives. Our largest rest of the world market, France, grew by 8%, while Spain was up 18%, both quarterly records. Within France, our Paris business decreased by 6% whilst our regional business, which represents 58% of France fees, grew by strong 19%. In Italy, growth was excellent of 26% and where the Belgian and Netherlands remained tough and declined 7% and 9%, respectively. Asia delivered stronger overall of 12%. Greater China, our 3rd largest rest of our country grew by an excellent 21% within this, Hong Kong delivered a superb 34%. Elsewhere, Singapore continued to rebound up 29% the champ that Japan was tougher and decreased by 5%. In Americas, we saw good growth with net fee of 7% Canada grew a strong 18% while the US, our 2nd largest rest of the world country, this flat. This was due to tough comparatives and a 15% decline in our largest betas and by T, offset by an excellent construction property growth, up 50%. Brazil grew by 2% and Mexico returned to growth up 15%. The stock headcount in division was down 2% in the quarter, at up 9% year on year. Cash flow and balance sheet. We delivered a good underlying cash performance in the quarter with net cash circa GBP 30,000,000. This compares to GBP 5,000,000 in March 2018. We've historically delivered strong cash performance in our fourth quarter, and I anticipate this year being similar. Current trading with guidance. I'd highlight 6 points. 1, looking ahead, we continue to lap to lap tough year on year comparatives across our international businesses, And additionally, we remain mindful of the Australian general election in May, which may lead to a short term market hiatus, especially in the public sector activity. Through exchange rate movements, you remain in material sensitivity to the group's reported results. If we retranslate FY18 profits, current sterling spot rates, We estimate a negative £4,000,000 operating profit currency headwinds, FY19. This represents a further £1,000,000 negative move since reporting our half year results and circa GBP 7,000,000 negative from the position at our premium results in August 2018. Dayton technical guidance, Easter falls entirely in Q4 FY 'nineteen, while last year, it was even the split between our Q3 and Q4. Which we estimate this had a circa 1% benefit to our net fees in q3fy19 with a corresponding 1% negative impact in Q4 FY 2019. And additionally, there is 1 fewer trading day in Germany in the 4th quarter. Well, we estimate the exit rate on a working day adjusted basis with broadly in line with the underlying performance of the quarter as a whole. 5 overall, while we remain alert to more uncertain macroeconomic conditions, particularly in Europe, trading conditions remain positive in most of our markets. And finally, our focus remains on driving consultant productivity, while selectively investing in key markets. We anticipate group headcount to be sequentially stable in Q4 FY2019. In conclusion, this has been another good quarter of broad based growth in slightly tougher macroeconomic conditions. Performance was led by international business and with a predictable performance from the UK. Our focus remains on driving profitable cash generative growth and leveraging our global platform, the largest and most balanced in our industry. I'll now hand you back to the on your telephone keypads and ensure that your telephone line is unmuted locally. You'll be advised when to ask your question. First question comes from the line of Envesh Agrawal calling from Morgan Stanley. Please go ahead. Hi, good morning. I just got a couple of questions. First in Germany, I mean, the drop you have seen in autos, do you think that kind of approaching trough or when you speak to the clients, what's the feeling you get? Has it got worse as you move through the quarter? And then in rest of the world, if just look at the mix of the growth, probably U. S. Slowing a little bit. How does it impact the drop through to the profits? And if you can comment on the drop through rate in overall for the second half as well for the group? Thank you. Yes. On Germany, without that, the big change over the quarter was the written incentives in the in the automotive markets. That represents about 20% of our business. We certainly expect it to grow by something like 5% in this quarter, but actually, we declined by close to 5%. So it's about 2 thirds of, you know, if we were If we're expecting to do something like 9% growth in Germany in this quarter, about 2 thirds of that is a reduction in automotive. I think it's far too early to to say what, whether, you know, we are seeing a bottom in whether it's further weakness. What we have seen is that that reduction has really been across the board. So we haven't seen specifically large termination of any projects that hasn't happened at all. But what we're getting is a lot less growth. And therefore, as projects have come to a natural conclusion, we're getting less growth than we were having to to replace those ones have come to an end. And I think you can see that's across the patch because both in contracting, which is weak for automotive temp, hand in perm, we saw that across the board and across both the primary kind of the end end automotive customers and the subcontractors. Outside of that, in the rest of Germany, I think we just saw a very, a pretty strong, still pretty strong growth underlying a little bit more cost control than we had in the previous 2 quarters. So, you know, we're still still reasonably happy with the performance in Germany, the headcounts in the back of the right space. We've got good control of the cost base. But clearly, in the end, our growth level is a few percentage points below what we expected both for this quarter and for the final quarter. And I think for the rest of the world, of course, that's the hardest one to give a view on things like drop through because you've got a large number of countries with 28 countries in that market. My growth still held at a kind of a creditable, 9%, light for light for the quarter. But, whilst the drop through will be slightly better than we achieved in the in the 1st 6 months of the year in in the rest of the world, because our head count is in a better space. It's nowhere near similar to the drop through we had a year ago. And for the group overall, how should we think about our plans? I think I think similar to the first half because you know, in the end, what what have we got? We've got a bit less fee growth. We've got our cost base is in a better position. But if you think through the first half of the year, had the weakness that we saw in September, and since September, you know, the guys out in the field have done a great job in adjusting our cost base just through natural attrition into about the right space. Overall, I can set the headcounts up 5%. Fees on a working days adjusted basis are up about 5%. So I think we're doing a pretty good job. And I think, you know, therefore, a drop through of around 20%. You know, I would have thought is is likely to be there, accepting that, of course, we've got a hell of a Q Four to come. So Q4 is the biggest quarter that we have. There's a lot of activity that needs to take place. We need to drive a lot of fees that's sitting here today. I think, I think, something like 20% drop through. The next question comes from the line of Paul Checketts calling from Barclays. Please go ahead. Morning. I've got 3 questions, please, Paul. The first is, I suppose on Germany and Australia, for me, the question is whether weaknesses seen in autos and engineering and construction and property in Australia spreads into the other segments. Would you give us your thoughts on what you're seeing on that? Please. And the second is around working capital. If in the past, we always thought that if you're growing the contracting business in Germany, strongly at Consumer's working capital. If it's growing a bit slower, does that work in in reverse? Just if you just confirm that. And then lastly, I know it's relatively small, but those are the U. S. Numbers in your COVID, IT, flat, and construction up so strongly. Could you flesh out a bit what what's going on there? Because, obviously, more generally, we're seeing the construction and property segment in in the US slow somewhat. Thanks. Yeah. So I think, and during that, I think the backdrop to it is, you know, 3 to 6 months ago, There had been some weakness in the external German data, but most of it was believed to be technical. If you remember back of the weak GDP that was in September. A lot of the concern a lot of the commentary then was about it was all about the fixing of the, of the diesel engines. This was short term, and they'll be returned to stronger. Of course, that didn't happen in the last quarter of 2018. On top of that, you've seen some very weak, PMI data, you know, for most of you follow the stacking space, CMI indices are the best forward indicators. Now that doesn't mean porn that 44 is frightening. You know, we're growing at We grew at 5% underlying in this quarter. I'm very confident we will continue to grow in the next quarter and into next year sitting here today. But there is no doubt that what we're seeing is most of the most of the larger manufacturing companies have suddenly got very cautious about investment over the next 3, 6, 12 months. We discussed on the previous call, the main reasons for that without a doubt, trade war, A, between the U. S. And China, which has now been going on for almost a year. But, B, the expectation that even if that deal gets resolved, that issue gets resolved, but the US will now, take on Europe is, of course, a big concern for German companies, 50% of GDP in Germany is export related. And I think if you act to look at a number of articles that have come out of Mittelstand, what they started to see is a weakening therefore, with all the books specifically coming out of China, but other parts of the world. So I think therefore, with that as a backdrop, And the second backdrop of, you know, 4 or 5 very strong years of growth in Germany, our clients have just dabbled the brakes. And we saw that originally, of course, in September, where we saw a week of September in Germany and across Europe, We then saw, secondly, in the, renewal of the contractor base, coming after Christmas where our contractor the level was, you know, the renewal was about 3% lower. And I think we've seen a bit more here. So We see not one sign of any distress in the German market. We've had no projects canceled ahead of their time. All of that is positive. We continue to grow in Germany, but what is clear is that after 4 to 5 very strong years, very strong economic backdrop and good growth. We're seeing slightly weaker, at the moment. So I need you to stand back. All the structural reasons for growth are positive in Germany. But I do think for the next quarter or 2, until our clients get a better view as to where the tariff issues are going. They are deciding And I think with all of the economic backdrop in Germany, if that makes sense, coming on to ANZ. I think that's in a very different position because instruction property, we've had an absolutely massive boom over a 6 year period of time. This isn't even a normal upcycle. This has been phenomenal and strong. And of course, that has benefited us significantly. I think we've done a very good job this year to be growing at all when we've had our largest specialism, that was not far off 30% of our business a year ago, in decline. So what the guys have done in the IT space has been really positive and continues to give good growth. But I think, I think there's a the the mix in Australia at the moment, as you see, the retail data is weak. There's a lot of concern as to why there hasn't been a larger increase in wage levels, etcetera, so that's not just a UK phenomenon. It's a global one. Now I think we've still got a reasonably measured economy in Australia. So again, I'm not seeing any real signs of distress other than the pre planning and planning phase of construction, we're now seeing significant declines. As we expected, and I guess the context for this is our 5 year plan from Australia had 49% growth. We grew at 14% in the 1st year, and we will be growing within that band for the whole of this year. So the only specific, uncertainty we have at the moment is the election with an expectation of a change in government and, you know, kind of we've been in Australia since 1976, so we'll deal with it. But, that, of course, has a percent of bigger impacts on our business. And then you're completely right when you flow through into working capital, and I think you can see it in these numbers already. And our guys continue to do a very good job, but our working cash position is, you know, higher than it was a year ago. And in part, And unfortunately, some of that is we haven't got as much contracting growth, and therefore, our cash generation is higher. And if you actually look through what we've been able to do over the last couple of years in fourth quarter, which is a beautiful period of time, little or no corporate taxation going out. Few of our clients have a junior year end, whereas around December, wars have gains paid against us, If we deliver the same sort of uplift in q 4, then without a doubt, we would have a record, cash performance and year end cash balance, certainly a record in my 13 years as F. D. So, so I think all of that is a positive, I'd rather have higher growth, of course, and and more working capital, but that's live. And then coming on to the US, and I think the question is is is correct. Actually, the the slight weakness that we saw interestingly goes back to November, December, and January. The positive is that we've seen a really good exit in the end of Feb and in March in the IT space. Construction continues to be strong. We are too small to be seen as a bellwether on the US Construction Property Market. Whilst we are probably now already number 1 in the market, Our business could still be fifty times bigger. So, you know, this is not we're not a call on that marketplace, but the business is doing very well. And of course, the fact that we can bring experts in from various parts of the world out of the UK, out of Canada, out of Australia, and then ally that to a lot of local hiring. I think that business is doing very well. On the IT space, it was actually in the contracting numbers that we saw a bit of weakness, as I said, in kind of October, November, December, January, a a good pickup since So, I'm very confident that we will grow in the US in Q4 and deliver a better result than we've got here. But I think it's a sign that what we've had over the last 3, 6, 9 months is we've kind of got rolling surprises in a number of countries. So On the basis of our 33 countries, I would say, we're delighted with the management in about 31 or 32 of them. Ben, I think it's a sign that, you know, what, there's a a little bit more cautiousness around a number of countries in the world. And we've certainly seen this over the last to 9 months. In the past, we've talked about in Germany, if there was slower growth, some of the levers you could pull would include opening the new branches, locations less quickly. Are you at that point yet, or is it more, continue until there's more information? Now we continue. Paul, we are the market leader in Germany by a hell of a long way. We are as big as 2, 3, 4, and 5 together. And in absolute growth, muddy terms, we'll have still delivered the highest growth in in kind of absolute size in this quarter. So us, we have a one off opportunity to dominate that market, and we will continue to invest in it. So we've got a great team there. All of you have met that team over the investor days and everything else. This is just, this is just a slightly tougher market that I have no doubt there will be a point in the, you know, not too distant future that we'll return to strong growth again in Germany. The long term opportunity is undiminished we may just have a bit of short term weakness. The next question comes from the line of Rory McKenzie calling from UBS. Please go ahead. Hi. Good morning. It's Roy here on behalf of Bilal Aziz. Firstly, just on the comment you made that Australia slowed throughout the quarter. Oh, was that just on on the tougher comps, month on month? Or did you detect a further drop in activity levels as we get closer and closer to that election? And then secondly, with the headcount down 1% in the quarter, I guess you're referring to not replacing natural attrition at the start of the year. Did you say you want to now hold this level sequentially into Q4? And what would that imply in terms of the year on year trend for headcount, please? Yeah. Well, that's a blast my pass. Boy, good to hear from you. On Australia, it's all about tougher comps. And we've been, you know, we have, battered the phrase tougher comps. And Australia in the same sentence for about the last eight results because it's true. And, a year ago, you know, we were growing at phenomenally strong double digit growth across both Q3 and Q4. We were always going to slow as we came into this period of time. So it is primarily tougher comps. The activity levels remain pretty good. We we naturally will see it. We're already seeing the first signs of kind you must quite kind of get a a lockdown on perm hiring. In the public sector, so that has already happened. But it's why I said earlier on that March was an all time record fee performance for us in Australia. So not a and not a record since the crash. This is an all time record for March, and I think that's again a sign that the guys are doing a good job. Clearly, the market is slightly slower than it was a year ago. So fees are 2 or 3% headcount at 5% year on year. Probably in about the right space because your productivity is always gonna be a little bit lower when decision making slows a bit. So I think the market's in a pretty decent space that the construction property part, has further to run because, Of course, the nature of construction is that we see it in the front end first, we see it in planning receipt and architecture receipts in quality and quantity surveying and then it rolls through, has prices in Sydney and Melbourne, for example, are down about 10% off peak it depends where you look at these things because they went up by 40% and now they've come down by 10%. So all this thing is slightly slower. Growth in the Australian market. Interesting. You know, some talk overnight from the, the central bank of, you know, potentially some sort of interest rate reduction at some stage because, of course, it had increased interest rates. So I think you can kind of understand that there. And and if you look at the seat data, I mean, CECL, the dominant job board where the dominant recruitment company and they're down about 4%, which is primarily perm, and we're down 4%. So I think it's kind of aligned with the market. So I think we're doing a good job I think we're quite happy with headcount and then coming to the overall growth of headcount. I think there's still a little bit of time to go yet because Of course, you know, all we've done today is, is our businesses. We know what our businesses are looking to do in April and and May and what they want to do in June, final decision in timing on June will be made over the next few weeks. But I think we'll be broadly flat across this quarter. And that means that our headcount growth, I don't have the absolute number at year end, but rather than being 5%. It's more likely to be 4 or 3%. And I think for where we are at the moment, that's that's okay. We would rather, focus on driving productivity where the markets are there. Mean, if we had great certainty on the UK, we will be looking to increase headcount in the UK, but for obvious reasons, that doesn't make a lot sense at the moment, and we will simply drive profitability in the UK market. We're happy with where we are on Germany, and we're still minded if anything increase headcount growth in Germany rather than reduce it, whereas I think in Europe and the rest of the world, after what we saw in September, we decided to We decided to be more cautious. And, we've got more than enough productive capacity in our business today. To do something like 5% for you guys is what we've got, you know, what you add in headcount for for where you think you will be in a year's time. And at the moment, I think we'll be more cautious today, drive profitability. And then when we come to the end of the year, that could give us a position then to to push on with headcount for next year. The next question comes from the line of Hans Plegas calling from Kepler Cheuvreux. Please go ahead. Yes. Good morning, gentlemen. A few questions from my side. I'm just looking at Germany, you are indicating that, especially bigger clients are holding back. And automotive, especially you see some some some weakness. Is it mainly visible, let's say, in that conversion rates are coming down, or is she also a number of vacancies requests coming down. So, and more in general, also in Germany and the rest of the world, what are your key KPIs telling you, through the quarter? Q3 and, let's say, for the beginning of Q4, especially looking at vacancies, conversion rates and and candidate availability, And then second question on, the fee earners, and you said it indicated to be flat. So should we, let's say, we would expect the same development that we've seen in Q3. So across the board, about the same development, or do you still see some opportunities to grow? And do you expect maybe also some other regions that you maybe should should reduce your fee earning some more? That was the last one. First, I think we're pretty happy overall with where the head count is. If underlying fee growth is 5% and consultant headcount growth is 5%. We're in about the right space and most of the markets there I think we're gonna do two times in in this business if we've got world class operators across the world, and and we adjust very quickly, and I think that will continue. And they are the guys in the best place to determine what to do on head counts, and Alastair and myself, leave it predominately to them to decide what they want to do. Even within that, of course, when our big shifts are taken Australia, we've added about a 100 consultants into our IT specialists over the last 18 months. About 10% of our business. We've shifted into that space, and you can see that now in the significant growth that we've been able to deliver on a consistent basis for the last year, while at the same time, of course, we're reducing the headcount we have in construction property. So underneath the hood, whilst it might look very stable at the top level underneath the hood. We're repositioning, you know, we're bringing new people into growth areas we're allowing and the tougher area to natural attrition headcount to to reduce slightly. I see that continuing. I don't think this will be the right point to suddenly say, you know what, we're gonna increase headcount by the by a further 5% in the last quarter. Equally, it would be the wrong decision to say we're gonna reduce it. I think neither of those are appropriate. What's nice at the moment, everywhere around the world, which is a very measured recruitment business, We are seeing no signs of distress in any country anywhere in the world. I think one of the benefits I'm not sure benefits the right word, but one of the benefits of, you know, what all of our clients and ourselves have been through over the last 10 to 15 years is we're used to change, and we're used to things changing very rapidly. And I think, you know, our our clients are on top of that. We're on top of that. We have discussions with them, etcetera. So pretty happy with where the headcount is. Don't expect to see much change in the fourth quarter. And on Germany, it's a bit of both, why why you are right to ask about conversions is that we're having to, do more prospecting work now. To get each incremental piece of business. And, you know, we kind of like most of this, you have prospect even more in the kind of as we've opened up all these regional lockers in the funds are outside of the bigger clients. We're having to do more perspective work prospecting work to get each job through than we were 6 or 9 months ago. That's something like 8% more work we have to do to get each job in. That's part of this. We've got to do more work to get there. And secondly, it takes a little bit longer to to kind of close those deals. And all of that, I think, is a sign that the mark is getting a little bit more cautious. And I think for us, we've seen that in the longer term areas of the business, you know, perm has come down from growth at 20 percent to about 7, contracting is 3%, whereas the tech marketplace, which gives a bit greater flexibility, of course, whilst it's still very high end salary levels, you know, we saw growth of 14%. So I think just a little bit more cautious, and pretty much across the board. So, I think our guys have done a good job, good job in converting the opportunities but it's certainly harder to convert them than it is a year ago. And if you look, let's say, at the the rest of the world, you can just get some indication also in there to keep your eyes, conversions, and and the vacancies Yeah. Pretty good, actually. I mean, March was, in many respects, I think, the rest of the world, outside of the US of Covington made earlier on. You know, the growth level there is very much in line with what we've done in the previous quarter. Maybe 1% lower than I would have liked in an ideal world, but, I actually think the performance was pretty consistent across the board. I think we saw that in France. And I got a bit of color earlier on. You know, I think a common thing from all the recruiters is they're getting we're still getting in to buy some of the demonstrations. You know, our building in house rent was completely bricked the first time. We've had to have holdings up on pretty much every weekend now for the last 2 or 3 months. But the nice thing is we built a very large business in the regions. We've been building that over the whole of my time here now. Not far off 60% of our business in the group, but I'm not far off 20%. So I think we're doing all the right things. Actually, I think I think Northern Europe Manufacturing Heartland more cautious for obvious reasons. The rest of Europe continuing to feel reasonably confident good opportunities for growth and within Asia still good opportunities for growth. You know, our business in Greater China. It's had another strong performance. It will be very close to it. It's in the £10,000,000. Kind of seminal profit targets this year and both the business in Hong Kong, where I was about 3 weeks ago now, doing very well, both South China in Shenzhen and Guangzhou, doing well. But also in in Shanghai and Beijing. So I think we're, you know, we're we're doing well in that marketplace. But, so I think that's probably the region that is the clearest in here. But if I was the only part, I would say we're seeing a bit more cautious in this in the whole of Northern Europe. Okay. Thanks. The next question comes from the line of Steve Wolf calling from New Mist Securities. Please go ahead. Morning. Just one for me. Just a bit more commentary on Japan, which seems to be a a little bit stand out terms of the the negative fee growth for this period. So just any more color you can give on that, please? Yeah. I think that's a bit one of those kind of classics is a bit of the market and there's a bit of us. Without a doubt, we saw that In the in the pharmaceutical, in the manufacturing space, which again, have more exposure to export We still had a weaker quarter in there. For us, that translates into some part of recruitment, in the professional specialisms as well. So That part of our business is probably about a quarter of our business in Japan, was was was quite a bit weaker. Ecluedo, I think the Japanese marketplace is in a reasonable a reasonable position. I think I was in Tokyo and Azaka, 3 weeks ago. And, you know, we've got a lot of guys and girls doing good job driving the business forward. But I think we've had to go to a manufacturing part of it, has been harder than that. So that's been quite heavily backwards and, has impacted her overall growth. But I'd expect to return to growth certainly within the next, either the next quarter, the one after that. There's enough activity in the market for us to grow. I think it's a bit of market and a bit of us. Perfect. That's great. Thank you. You. The next question comes from the line of Rajesh Kumar calling from HSBC. Please go ahead. Good morning, Paul. I appreciate, you've given a lot of color on the German growth rate. Can you incrementally add some color on the volume trends you're seeing in Germany? In terms of, the number of contractors replacing number of temps replacing or recruitment, anything that can give us a better handle of what's the differential between value and volume growth rate in that market? There's no doubt that we continue to see a reasonable level of wage inflation, in Germany. And I think in our own space, which is in, remember we're a very large business. So, but I think if you took across the whole of that, we've gotta be in the 3% sort of level. So, you know, we've we've kind of got 2 to 3% volume. We've got 2 to 3% pricing. And other than that, fully, I probably covered all of you a bit early on without repeating, you know, automotive Manufacturing weaker, professional services, banking still reasonably good position. So I'm not sure I'd have anything anything more than that, really. We we certainly didn't see, you know, in the exit rate in Germany, is in line with the kind of around 5%. So, so we didn't see anything different in there. And, our margins have continued to be stable in Germany. So, so that's probably the only bits of color I could give you, Ramesh. Thanks, sir. Just, on the wage inflation figure you're you're using in that, estimate. When when you look at the the when you had your double digit growth in Germany, would you say that your volume growth was running between 7 to 8% and that has tapered down to 3% now. Yeah. So without a doubt, the only shift has been in volume with just shows. If the question was, Are we seeing no reduction in wage levels or increases? No, not at all. We're back to Germany is significantly short of unlikely professionals and engineers. There's about 80,000 shortage of individuals. That's been part of a backdrop on which we built by far the best recruitment business in Germany, and we dominate the IT and engineering space for nice parts that is a significant score shortage. The only thing that is different today versus, let's say, 2 years ago is you've got a global spat on tariffs between the 2 largest economies in the world, which represent 33% of GDP. And the US is threatening to bring in Europe into that, which combined would represent 57% of GDP. So you'd have that. And then specifically within the automotive space, all of the issues on diesels, all the investment is having to go in in the electric and everything else. I think we're seeing it understandably a bit more cautious from our clients this quarter than the previous quarter. But it remains very measured. And I think all we're seeing here is a is a slight hiatus of growth. I have no doubt that over a longer time horizon, we will return to very strong growth levels as well because the structure opportunity is undiminished. Thank you very much. The next question comes from the line of Rahim Curim calling from Liberum. Please go ahead. Good morning gents. One question for me on the UK. I guess the private sector kind of momentum is is understandable given the backdrop, but I was surprised to see how strong the public sector was. It's just useful to get any additional color you can provide on that. Is it IL 35 rolling off, or or what is it, and just for actual thoughts on what we should expect in terms of private sector, public sector split over in fourth quarter? Yeah. Look, I think it was There's more money being spent in the authorities at the bottom line. There's no doubt that central government has tried to ensure that there's been a bit more funding into, the NHS. The NHS is of course not one client, which is 636 authorities, and we saw a massive bid in activity levels over 3 to 4 year period of time, where our overall fee levels went for something like 12,000,000 down to about 5,000,000 were back up something like 7,000,000 today. And, actually, it's across the pack. So we've seen the improvement in central government, we've seen improvements in initiatives We've seen an improvement in the public sector for us, but the largest growth area has been, IT and property. So we've seen a big pickup in IT initiatives. And I think it's also back to why we have, you know, the biggest and most profitable recruiting business in the UK, is that when times were tough in the public sector over 3 or 4 years, we've honked tough in all of the markets. We maintain very strong relationships with all of those authorities, and we simply said to them, when you have some money to spend, we'll be happy to help you. And I think the good news is all those relationships have come to bear and that was a little bit more money. There's no doubt that the, local council market remains difficult. There is still significant squeeze on funding there. And, of course, education for which, you know, where the market leader remains a hard marketplace, but outside of that, a bit more money. We've continued to grow. This may well be the high percentage for him, and it's got nothing to the IR 35 now where we we drop that one from this in this stuff. But I I think I do think that we've had, this has been a strong rebound. And of course, there is often a situation in authorities when you come to the end of a fiscal year, not if I have any money left. I'd like to get on get on and and spend it, and we've certainly seen a pickup in activity across the January, February, March time frame. I think we'll see a more measured, I think we'll continue to grow in the public sector. I think it'll be more measured. The key, of course, is the private sector. Overall, I'm happy with minus 1% because I think there's a sheer amount of turmoil that's been in place. Over the last 2 to 3 months. I think the fact that we've kind of held a very large business to across the whole of the UK is good testament to our operators. And again, it's back to that number of thought. You know, we've got flat headcounts overall, but we've got a number of areas where we're increasing headcounts a number we're reducing. So I think the UK, is going to be another subdued quarter. We've clearly got, Eastern negatives, so the headline will be lower. I do think it'll be a subdued quarter just because, I think you're gonna have it'll be fascinating to see whether all of the fun. The end of March from being in inverted commas as to how much of that kind of reaches into the underlying economy. So far, we've seen nothing. So we started April okay, but, but we're delighted with the results, and we're delighted with the profits we're able to drive off that. And, and I would take another quarter like that in a heartbeat. We have no further questions in the queue. So I'd like to hand the call back over to your host for any concluding remarks. Thank you. If that's all the questions for today, we'd like to thank you all again for joining the call. I look forward to speaking to you next, our Q4 FY 2019 results and the 16 of July. Should anybody have any follow-up questions, David, Charles and I will be available to take calls with us today. Thank you very much, and have a great Easter. Thanks. Bye. Thank you for joining today's call. You may now disconnect