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Good morning, ladies and gentlemen, and welcome to the Hays Q3 Analyst Call. My name is Dave, and I will be your coordinator for today's conference. [Operator Instructions] I'm now handing you over to David Phillips to begin today's conference. Thank you.
Thank you. Good morning, everyone, and welcome to the Hays Quarterly Update Conference Call for the 3 months ended 31st March 2018, our third quarter of the financial year. I'm David Phillips, Head of Investor Relations, and with me is Paul Venables, Hay's Group Finance Director. I will cover some legal formalities before we start the business of the call. This call is being recorded, and the recording may be accessed using the number and access code provided in our press release. You should be aware that the discussions may contain forward-looking statements that are based on current expectations or beliefs as well as assumptions about future events. There are risk factors that could cause actual results to differ materially from those expressed in or implied by such statements.Hays disclaims any intention or obligation to revise any forward-looking statements that may be made during this conference call, regardless of whether these statements are affected as a result of new information, future events or otherwise.I will now hand you over to Paul.
Thank you, David. Good morning, everybody, and thanks for joining us.I'll summarize the highlights of today's update, cover some of the key themes, and then discuss the regional performances, before we take your questions. As usual, all net fee growth percentages I give for the quarter, will be on a like-for-like basis versus prior year.Highlights of the results. We delivered another good performance in Q3 in line with market estimates, with group net fee growth of 10%, despite lapping some tough year-on-year comparatives.During the quarter, there was one fewer trading day versus the prior year due to the timing of Easter, and we estimate that this had a circa 1% negative impact on group net fees, with 2% negative in Germany, 1% in the U.K. and ANZ. We expect this to reverse in Q4.Currency translation continues to move adversely and reduce headline net fees by 1% in the quarter. As a reminder, our main sensitivities are to the Australian dollar and the euro. And importantly, since our interim's on the 22nd of February, exchange rate moves represent a GBP 1.5 million reduction in full year operating profit or a GBP 3 million reduction since the Q2 IMS.I'll highlight the following key features in the results.Firstly, our performance was driven by the continued strength of our International business, which represents 76% of group net fees and grew 15%. Within this, growth was broad-based, with 20 of our 33 countries delivering growth in excess of 10% and 9 all-time records.Secondly, strong ANZ growth of 12% was driven by Australia, up 14%, and extended its run of consecutive growth quarters to 15.Third, our largest business in the group, Germany, delivered strong growth of 16% or 18% on a working days-adjusted basis.Fourth, our business in the UK & Ireland remained subdued, but broadly stable, with net fees down 2% or down 1% adjusted for working days.Five, performance in the rest of the world was strong, up 15%. Within this, Asia and the Americas delivered excellent growth of 23% and 24%, respectively, and Europe, ex Germany, was up 11%.And finally, we ended the quarter with net cash of GBP 5 million, a solid underlying performance.I'll now comment on the performance by each division in a little more detail.First, ANZ. Our ANZ division, which represents 18% of group net fees, delivered another strong performance with growth of 12% or 13% adjusted for working days. Our Temp business was up 13%, and Perm was up 10%. And public sector growth was slightly ahead of private at 13% and 12%, respectively.In Australia, specifically, we continued to see strong market-leading growth of 14%. Growth was again broad-based across all major specialisms and all states. In New South Wales and Victoria, which together represents 57% of our Australian business, net fees grew by 8% and 21%, respectively. Queensland, our third-largest state, saw growth of 20%. And elsewhere, South Australia was a stand-out, with growth at 36%.At the specialism level, Construction & Property, our largest business in Australia, continued to grow strongly, up 15%; IT accelerated to 14%; and HR was up an excellent 29%; and Accountancy & Finance was up 4%. And in New Zealand, which represents 6% of ANZ, net fees fell by 15%.Consultant head count in ANZ was up 6% in the quarter and up 14% year-on-year.Germany. Our largest market of Germany, which represents 27% of group net fees, grew strongly at 16% or circa 18% on an underlying basis. This represents an all-time record quarter and is against a year-on-year growth comparative, which accelerated from 7% to 23%.Contracting was up 9% or 11% underlying, whilst Temp was excellent at 23% or 26% underlying, and Perm continued its excellent performance and grew by 30%. Growth in our largest specialisms of IT and Engineering was 13% and 10%, respectively. And in our newer specialisms, performance was excellent, including our third-largest of Accountancy & Finance at 49%; and Sales & Marketing, 37%.After considerable investments in half 1, as expected, the rate of consultant head count growth moderated to 19% year-on-year. We saw a small head count decline of 3% in the quarter, which is down to natural attrition, plus the slowing of net consultant additions in the quarter as we focused on driving productivity.We remain highly focused on delivering our 2022 plan of doubling German profits, which, as a reminder, assumed a 13% head count CAGR. We expect modest sequential growth in German head count in Q4 FY '18 as we balance high consultant productivity with long-term structural opportunities.UK & Ireland. In UK & Ireland, which represents 24% of the group, net fees declined by 2% or 1% down on an underlying basis. Activity levels remained subdued, but broadly stable overall. Having delivered low single-digit growth in recent quarters, net fees in our private sector business, which represents 74% of the division, started to overlap tougher year-on-year comparatives and fell 3%. This was most evident in Perm, which was down 6% in the quarter. Whilst we continue to see our clients replacing levers, client activity related to new investments, continued to be very subdued.The rate of decline in public sector fees improved slightly, mainly due to easier comparatives, and was down 2%. And our Temp business, overall, was flat. All regions traded broadly in line with the U.K. business, with the exception of the Midlands, where net fees are down 14%. London, our largest U.K. region, was up 3%. And Ireland delivered another strong performance with net fees up 14%.Across our 5 largest specialisms, net fees in Office Support grew by 2%; Construction & Property, 1%; and IT was flat, whilst Accounting & Finance fell 9%. Education continued to face tough market position -- conditions and declined 13%. Consultant head count in the division was down 1% in the quarter and flat year-on-year.Rest of the World. Our largest division, our Rest of the World, made up of 28 markets and representing 31% of group net fees, grew strongly at 15%, and 8 countries delivered all-time record net fees. Europe ex Germany was up 11%. And our largest markets of France and Belgium continued their strong performance, with growth of 17% and 15%, respectively. Our business in France where Accounting & Finance of 20% and Construction & Property 29%, deserves special mention, as it is now in its fourth year of double-digit growth and delivering strong growth against tough comparatives. Elsewhere, Poland was up 16%, although we did see a slowing in Spain, which was flat; and Switzerland, which was down 8%.Asia delivered excellent growth of 23%, with our 2 largest markets, Japan and China, up 17% and 51%, respectively. Hong Kong was up 40%, although Singapore remained tough and declined 25%.In the Americas, we also saw excellent growth with net fees at 24%. Our largest market, the U.S.A., accelerated to 34%, driven by excellent growth in IT, up 28%, and Construction & Property 70%, whilst Canada was up 12% and Brazil was up 16%. Mexico remains tough and declined by 6%. Head count in the division was up 2% in the quarter and 14% year-on-year. We expect to increase head count in our key growth markets in Q4.Cash flow and balance sheet. We delivered a solid underlying cash performance in the quarter, with net cash of GBP 5 million. Debtor days remained unchanged. And in January, we made the final payment of $18.5 million on Veredus. Similar to previous years, we anticipate a strong cash performance in the fourth quarter.Current trading and guidance. I would highlight 3 points. The exit rate of the group, on a working days-adjusted basis, was broadly in line with the quarter as a whole, with no significant differences by region. Exchange rate movements remain a material sensitivity to the group's reported results, especially the euro and Australian dollar. And for example, if we retranslate the group's FY '17 operating profit at currency exchange rates, the actual reported results will be unchanged to GBP 111.5 million. As I mentioned earlier, the exchange rate difference is 3% less than estimated at the Q2 quarterly update, and GBP 1.5 million less than was estimated at our interim 7 weeks ago.As previously guided, our consultant head count investment will be more selective in the quarter as we focus on driving productivity. We anticipate Q4 will see slightly higher head count investment as we look to build on our market positions in structurally growing markets.In conclusion, this has been another strong quarter of broad-based growth, led by international businesses, which now represent over 75% of group net fees. We continue to see strong trading conditions in most international markets. We have the largest and most balanced global portfolio in our industry. Together with our highly experienced management teams and our strong balance sheet, we are very well positioned to capitalize on the many growth opportunities we see in our markets, whilst, of course, maximizing earnings and cash along the way.I'll now hand you back to the administrator, and we are happy to take your questions.
[Operator Instructions] The first question is from Paul Checketts from Barclays.
I have got 3 questions, please. The first is on Germany. How would you say the growth and the head count progression in the quarter compared at what you expected it to turn out? And what are your thoughts on how the next 2, 3 quarters are likely to trend or at least the next -- at least Q4? And if you look at the -- your progress in the quarter, what are your expectations now for drop-through margins in the second half? Has there been any change? And then the last question is on France. We sometimes don't talk that much about it, but could you just tell us how you're managing the balance of investment and conversion rates in that country, please?
Thank you, Paul. And if I miss any part of this, please, please do come back. I think, on Germany, let's start with the head count. Ideally, we would have preferred head count to be flat across this quarter, and we'd have exited the quarter with something like 22%, 23% year-on-year head count. The very nature of most large businesses is, as we were pretty open and honest when we did the interims, we had slightly more head count than we expected in the first 6 months, and therefore, the risk is always that you kind of adjust on the other side. We had said previously that there had been little or no attrition in the first 6 months. We had a little bit more in these 3 months, and therefore, we're 19% up year-on-year. We were 3% down in the quarter. I'd have preferred that we'd have kept head count broadly flat or slightly up. I expect us to return to head count growth in Q4. And on growth, first of all, I think -- and this is a pervasive comment across all of the regions,remember, when we do this kind of Easter adjusted, all we do is take the one working day out, i.e. the impact of not having Easter Friday. The very nature of all of this is, of course, that we have more contractors in Temps that will take more time off than just one day. And of course, it can also have an impact on the Perm business. Fundamentally, I can't calculate that, therefore, we keep a very simple methodology. Therefore, in Germany, we're saying it's 18% underlying, if we adjust for the one working day. Fundamentally, what I've said previously, I certainly said on the Q2, is that we needed to get to 21% to 22% fee growth as we got into this quarter and coming into the second half of the year. And I think we were 1 to 2 percentage points below that. The flip side of that is, having looked where we were in December, where we were in January, we've done exactly what you would have expected us to. And therefore, on the kind of discretionary spend, away from kind of consultant head count, around some of the overhead spend, we've taken appropriate action to adjust the spending levels down. And that's pretty easy to do in Germany. I mean, if you take the U.K., of course, we've had cost pressure for a long period of time, and therefore, the cost base is screwed to the floor. In Germany, we've had very strong growth for a period of time, it's easy to make some discretionary adjustments. And therefore, what we've done by doing that is managed to offset kind of any -- pretty much most of the reduction in any fee growth through a reduction in spend. Coming in then to Q4, that's a $60 million question, even more when you come to the next 2 to 3 quarters. Fundamentally, the most interesting thing will be when we take Q3 and Q4 together, that would give us the real underlying growth. My expectation at the moment is that's going to be something like 20% across the 2 quarters, which we've clearly seen in our pickup in Q4. But we have to deliver that, so we've put the head counts in. A lot of the head count is going at the productivity curve. We now need to see the underlying fee growth continue. From a volume perspective, we're still at about 19% in Temp and contractors. And then on top of that, we got a little bit of, kind of wage and margin growth as well. So a little bit more to do. And I'm happy with the performance. Like everything in life, you want a little bit more, and we need to see a pickup as we go through to Q4. The long-term opportunities in Germany are absolutely superb, we are an increasingly dominant player in that marketplace. And I think when you look at our Perm business growing at 30%, it gives you an idea of the potential growth in that space over the next few years. On drop-through, I presume the question was for the group as a whole. No change in that at all, Paul. We were very explicit when we did the interims. I think I said something along the lines that we had 27% drop-through in the first 6 months, and I expected that we'd have very similar in the second 6 months. We don't have the benefit of all that flow-through of depreciation pickup in the U.K. We clearly have the investment we put in, in the first 6 months, and that heavily weighing in the January and February period of time, we always knew that. We do expect to see sequential growth as we get into Q4. We have the Easter rubbish out of the way. That positions us well, I think, as we go into the Q4 period of time, and therefore, I would expect to see the drop-through to be in line with what we said before. I don't think we had -- I mean, funnily enough, if I took at a high level, there wasn't much new news for me in this quarter other than exchange. And finally, on France, look, I think Tina and the team have just done a superb job over a long period of time. This is now -- we are well into our fourth year of strong double-digit growth. We've taken material market share over this period of time, and we effectively put no limits on what investment Tina wants to do. Our business model in France tends to be that we have a heavily skewed intake of graduates and interns coming in at the start of the financial year and that we keep that head count level as we go across the year. Tina has done exactly the same this year. So there's not much incremental investment, other than some specific and certain specialisms going in at the moment, but that business continues to do very well. And I think, if anything, be it on the upside, to deliver 17% with the comps they've got is pretty impressive. So hopefully, that answered your questions.
And the next question is from the line of Bilal Aziz from UBS.
Just 2 quick questions from me, please. Firstly, Paul, in Australia, can you just perhaps comment on where you stand, in your view of that market over the next, perhaps, 6 months? Clearly, you've had strong double-digit growth for a while now. But election is potentially getting pushed out further, so some of your views there, clearly, would be helpful. And secondly, in the U.K., particularly around the Perm market, there appears to be a wide range of commentary out there from some of your peers and it's been quite resilient for you up until now. Can you just perhaps give us some level of confidence, or lack of confidence, rather, in that marketplace?
It's very easy to get a lack of confidence in the U.K. There's no doubt about that. Let me pick Australia first. I think at 14% for that business, another strong quarter. I've continued to be surprised on the upside of how Construction & Property is going. That is the area that we are more sensitive to because it's a large percentage of our business. I think it was 28% of our business in the first 6 months. And of course, we're now into the fourth year of the construction boom in Australia. We are a dominant player in construction and property, and therefore, at some point in time, that has to start to get more difficult. Also, I continue to be surprised that, with all of the data we have across all of the quoted companies around the world, we are still continuing to grow at about 2x all of our competitors put together. In many respects, I know we have a great team, and if I didn't say that, they would beat me up after this call, but I think that it doesn't tend to be the way things happen in life as the largest business, when you're as big as #2, 3, 4 and 5 put together. It's hard to sustain significant growth well ahead of the market. I do think, though, that on the basis we're into that fourth year of that growth, when we did the Investor Day scenarios, as you know, we went with a growth range of 4% to 9% over a 5-year period of time, I do think that we are at the peak, in percentage terms, I do expect that to slow down over the next few quarters. I do expect, within the next year, we'll have a quarter that we are sub-10% in Australia. Equally, I think that, that market is pretty good at the moment. Assuming that Turnbull survives, and let's assume that because there are some questions about that at the moment. He has -- came out 2 days ago and said that he now expects that the election will be in the first 6 months of the next calendar year, so in the January-to-June time frame. That is, of course, a positive for the near term. 33% of our business in Australia is in the public sector at the moment. That is always a little bit higher than I would kind of like because, as we've discussed before, private sector is what drives economies. Public sector can be more timing and tactical. However, in Australia, you have the benefit of a very, very strong financial position of both the federal government and most of the large states. So for example, New South Wales, and to a slightly lesser extent, Victoria. And therefore, some large investment projects going ahead, [ and they were our ] reasons why that would slow down. So I think the market is quite supportive. We would love to have some wage growth, we're seeing not a lot. Interest rates look to be fairly benign in Australia for the next year or so, reading the latest stuff that came out from their Treasury earlier this week. So good conditions. We're doing well. Our growth will moderate because of tough comparatives, and you can only do double digit for so long. On the U.K., I think your question is spot on. I think the comments I made at the interims, and it's worth reiterating here because it remains exactly the same, is our Temp book is absolutely rock-solid. And we have around at various points, depending on kind of score terms and everything else, between 22,000 and 24,000 temps in the U.K. That looks rock-solid. And what we're continuing to see across the private and public sector is a continued demand for temps, for interims in that space. I think, Perm, we were coming into a quarter where our comparatives were harder a year ago. Some of the private sector jobs that were put on hold, post the Brexit poll shock, started to get released in that January, February, March time frame. We had a pickup in activity. And what we haven't found is a similar pickup this time, and I see no reason why we would get that. I think, fundamentally, most medium to large corporates in the U.K. and in the small sector, which we're heavily exposed to, are very, very tight on their cost control. And the fact that we've got a transition deal now, whoopee, all that does is kind of extend the -- it's to make sure that we don't have a cliff edge -- potential cliff edge in 12 months' time. But fundamentally, it just pushes that out by 21 months. Until we get a trade deal, which I do think will be a stimulus -- in any sort of half-decent trade deal, will be a stimulus for a release of some investment in the U.K. And then, until we get some certainty in the service area, I think this market is likely to continue as it is now. And we were up 1% in the first 6 months. Underlying, we're down 1%. In this period of time, I'd expect us to be flat or at 1% in the next quarter. Fundamentally, there's no forward momentum in the U.K. economy and in the staffing market within it. And actually, at least there's reasonable stability. And in reasonable stability, what the guys do a brilliant job of is controlling their cost base. They will continue to do that. And therefore, I am pretty confident that our profitability in the U.K., the guys will do a good job. But I see no catalyst about why growth would suddenly go to 3% or 5%. Equally, answering this on the other side, I see no reason why we would suddenly go to 3% or 5% negatively. So I think we're a very big diversified business across the whole of the U.K., and that puts us in a strong position in what's a tough market.
And the next question's from Chris Hartley from Redburn.
A couple of questions on Germany from me, please. Firstly, just going back to the head count numbers. And previously, you said you have particularly low attrition of your staff, and that appears to have picked up a little bit this quarter. Was that something, sort of a conscious decision by you, an increased competitor activity or just sort of a return to -- nothing behind that return to normal? And secondly, on Germany, it's an area that a few people have noted as being a particularly sort of excited market. Are you seeing any increased competitor activity there or anything that would impact your performance?
I mean, a simple answer to that, Chris, and welcome to the call, but a simple answer I think is, on the head count, it's a return to normal. And the very nature of when a business slightly overinvests, and look, head count is not the easiest thing to do when you've got -- when you have both additions, you're having a natural attrition. As I said, we got a little bit -- the business got a little bit ahead of itself in the first 6 months. And the risk is always, you correct on the other side, just by not bringing enough people in and attrition return to normal levels. So I think no real issues or drama there. I would like to see head count increase in the next 3 months. That's certainly the -- and I was with our German team, we were doing a statutory review of our Swiss business in Zürich earlier this week, and we're looking to invest. We have a great team, a great business, and we're looking to invest further over the next year or so. On competition, I'm never going to be blasé on this, but we need to put this into context. We are a dominant business in Germany. We are miles bigger than the competition. And I think, therefore, of much more interest is what is the underlying economy doing, where is sentiment in that, what are the large companies looking to do? And then within that certain sectors, I've said several times before that about 20% of our business, if you kind of cut through Engineering and IT, about 20% of our overall business is in the automotive space. Quite a lot of that going into investment in new engine technology and development. And I think the overall position then is the German economy continues to look very positive. Our competition -- of course, we agree with most of our competition who say that Germany is the most attractive business in the world. The nice thing for us is we have, by far, the biggest business. We are as big -- certainly, when I started in this business all those years ago, our business in Germany was a similar size to companies like Brunel and a similar size to Amadeus Fire. We are now as big as #2, 3, 4 put together. And our growth continues to be very material. So the market conditions are good. We will continue to put some head count in. We're continuing to look at new offices. And we need to try to balance this position of trying to drive some profit growth along the way, accepting that we're not as focused on profit growth in Germany as we are in most other countries around the world. So we are very good at getting this mixed balance, and our team did a very good job of offsetting. I said we are 1 to 2 percentage points growth lower than we would liked to have been, but they've done a really good job on the discretionary cost size to offset a good slug of that. And we'll drive good profitability in Germany this year and at the group level. So great opportunities, Chris, for the future.
And the next question is from Tom Sykes from Deutsche Bank in London.
Just on pricing, your gross margins, I think, were down 50 basis points at the half year stage. Obviously, down over 100 over the last 3 years. So what are your expectations for pricing? And do you expect your gross margins in Germany to be up or down this year, please?
I think our gross margin in Germany will be pretty similar, Tom. But certainly...
Is that down slightly then?
Slightly, but we're -- one of the benefits of Germany is it's not a mature market. We've got a lot of first-time outsourcing. As we've moved, obviously, into the Mittelstand, we have a larger number and greater diversification of our client base. And as you guys will know, you tend to get bigger margins from smaller customers. The issue is how many transactions you do per consultant, per month. So the pricing market in the German market is very benign. Lots of the opportunities...
Sorry, just to come back on that. If you're moving into SMEs and you're dominant, like you've said several times on this call, why would your gross margins go down?
I think the very nature is you have the SME on one side and you've got the large corporates on the other. And you know what the large corporates are not going to do is they're going to tell us we do a fabulous job, but they're not going to say they want us -- they want to pay us more. So pricing is not an issue in the German market, it is an issue in some of the more mature markets, and I haven't really seen any major change over this period of time. Of course, what all of us are looking for and hoping for is to see a little bit of acceleration in the wage side of it, because, traditionally, if we go back to when I joined all those years ago, you had wage inflation, which helped offset some of the margin pressure. We're not seeing any real change in wage levels and push at the moment. But what is interesting is we're seeing a lot more discussion about, will wage increases start to push up, and let's hope that's positive over the next period of time. So I think in the [ earning ] in Germany, if we're 10 or 20 basis points down across the whole year, I don't see that as being particularly significant over a large business.
So just -- but say, if you're 10 to 20, or whatever basis points, down in Germany, and you're moving into SME, we should be assuming that your large account business is down 30 to 50 basis points, something like that?
A little bit more than that, but not significant. So I mean, I think the nice part is that -- I don't -- I'm not clear this is the relevant discussion in Germany, there's a big opportunity to continue to grow our business at 15%-plus for several years. And if -- as part of that and as part of building stronger and deeper relationships with all of our clients, we get more jobs from them, we get a greater percentage of their wallet, the very nature with the larger corporates is there will always be a discussion about what your margins are. And in that, staffing is no different from any outsourced business or any banking business. So for us, the critical issue is to continue with strong fee growth, to continue with strong profit growth, to continue the diversification of business by specialism, by region and by customer base, and we're doing a pretty good job on that.
Okay. And just to be sort of clear on that then. So when we look at the overall for the group of volume versus price versus wage, is the pricing and wage rate growth broadly sort of offsetting each other? So what we're seeing at the moment is just the effect of volumes or are you actually getting a net benefit of wage over price at all at the moment? I appreciate it's lots of different markets and lots of different countries.
Yes. And that's why I've kind of moved to talking about that on a 6-month basis and even more when you have kind of rubbish-like Easter floating around from one quarter to another, which by its very nature...
Okay. We could take a rolling 6 months, [ wouldn't have to ] take the quarter.
I've seen no change at all versus what I discussed in the previous quarter. I think the issue about wages is not that it's hit yet. It is more that there is a lot more discussion going on now about whether 2% remains appropriate. Personally, if I was running any large business, I will be holding the line at 2%, currently, because I don't think there is a urgent need. What we are seeing more of is a lot more individual bespoke deals in certain parts of the market and if that broadens, that will be positive. But the day that I can say that across a consistent period of time, wage increases are more than offsetting any margin squeeze, Tom, I will have it as the first bullet in our announcement, so rest assured.
Okay. If it's possible just to ask one thing on specialisms. Could you maybe just pick out the specialisms where you're adding the most head count or where you're most excited across your group, please?
Yes. I think it's a funny market at the moment, Tom, because, [ intuitively ], one of the things that we do is all of our businesses have organic growth strategies, and that's both a 5-year and a 1-year basis of time. What we then do over the top is, collectively, with all of our major countries, we agree some specific areas where we want to make a incremental head count push. And the fairly blindingly obvious area at the moment is we have a very strong push globally to increase the scale of our IT business. We have a massive IT business in Germany. We have increasingly strong IT businesses across the world. But what's intriguing at the moment, if I just, as I'm doing at the moment, scan down all of our specialisms, we've got pretty strong growth year-to-date across all of them, and we're in this interesting situation. 2 to 3 years ago, most of the growth we were seeing were in the technical specialisms, being driven by Construction & Property, being driven by IT, being driven by Life Sciences, et cetera. These were areas where companies were starting to, coming out of the various downturns, invest their money and drive growth and need more people. At the moment, it's quite balanced, so the major specialisms globally for us this year, Engineering is up 13%, but Accountancy & Finance is up 12%. So there is interesting balance, and I think you can see that if you had a collective of the specialist recruiters, that there's a reasonable balance across all those. So we have a bench to put more head count continuously into the IT, into the digital marketing space, because we would believe, on a 1-, 3-, 5-, 10-year process of time, those are the markets which would continue to grow the greatest. Within some of the more traditional professional specialisms, what we are beginning to see, what we've seen over the last year, 18 months, is a bit more churn. So more candidate-driven, not client-driven, more candidate-driven. And I think we've got this nice balance at the moment, which is that outside of the U.K., the global economy is very supportive, a lot of companies are focused on growth. A lot of individuals have been in a company for a long period of time have said, "I really love working in this company, but I'm not getting as much wage increase as I would like." Back to an earlier point, and therefore, I am confident in the economy being good and SME to move. And I think, collectively, the specialist recruiters have seen more churn, that's helped Perm. It's why Perm is growing greater than Temp and has done now for 3 or 4 quarters. I think that's positive. So we've got this nice balance outside of the U.K. where there's good investments in the technical specialisms, there's good churn in the professional specialisms. But if you're taking a 10- to 20-year view, as we set out at the Investor Day, you would focus very heavily on the IT, digital marketing areas, because there's a lot of investment going into those by companies globally.
The next question is from Steve Woolf from Numis Securities.
Just thoughts on the cash performance at the end of the year, given your comments on debtor days and such thoughts on the payments on Veredus as we head through Q3 and into Q4.
Thanks, Steve. If I didn't answer this, the line was quite quiet. But I think what you said was kind of how do you feel about cash performance and what might be achieved in the next quarter. And David Phillips, his statistic of the quarter, which I shall repeat slavishly, and that's got a smile on his face, which is always a good thing from a Scotsman, other than when they beat England at rugby, is that over the last -- certainly the last 2 years, Q4, we've had an inflow of about GBP 75 million to GBP 80 million. And I think -- I guess, we should start with, why do we get a greater inflow in Q4? And we had a good discussion of this, I think, in the Q1 and Q2 part of it. Look, the nice part of it is, in some of the outflows in places like corporation tax, et cetera, the way the tax authorities have set out most corporates now, is it's heavily skewed to payments earlier in the year, so we go into Q4 with not large amounts of tax payments to make. Secondly, we have a nice free roam. We don't have the rubbish around the end of December, where corporates find lots of excuses not to pay us, including some of the -- your own businesses on this line. We don't have the rubbish of Q3 where Easter and all that sort of crap. And I, therefore, see no reason why we won't continue to have a strong cash inflow in Q4. I'd be very honest to say that we outperformed a year ago. And equally, as always, because this is the, "trying to preserve Paul Venables' employment in Hays" is to say that there's GBP 120 million-worth of cash going through our business every single week. It just happens to be, over the 12 year-ends that I've had here so far, and let's say if I have a 13th or a 14th, et cetera, that we've managed to land on a pinhead and we've kind of got to the position that we should get to. If we do that, there is no reason why we won't be, at H2 GBP 100 million at year-end. I see no reason why we won't be there by then. And all we've got to do is to execute against that. So that would put us in a pretty good position. The most pleasing thing for me, and which is the one I'm always honest about is, where are we on debtor days and clearly, for us, internally, where are we on overdue debt? And in places like the U.K. at the moment, we've got the lowest level of overdue debt that we've had in my time as FD. So we're doing a really good job on the collections part, overall debtor days are the same. That's pretty good, considering a lot of our growth is coming out of Europe where we have higher salary levels and longer payment terms. So there's no reason why we won't deliver a good job. And clearly, we'll let you know when we get to the 13th of July or whenever it is.
[Operator Instructions] We have a question from Andy Grobler from Crédit Suisse.
Just a couple from me, if I may. The first one, a fairly specific one. You mentioned that Education in the U.K. was down 13-odd percent. Just going back to the Investor Day, you talked about your Hays Education platform. I just wondered what progress that has made and kind of some of the market dynamics within U.K. education. And then, secondly, just picking up on Tom's question from earlier. You talked about pricing in Germany. Could you give a bit of detail around what is happening in your more mature markets, so the U.K. and Australia, please?
So I think, on the pricing side first, Andy, I don't think there's much difference versus where we were at the -- at the interim, is where we gave the color. So I think we continue to live in a world where companies continue to look to get greater value at a lower cost. We have minimum pricings in place in all of our markets. We have expected pricings that we expect to get in the Temp and Perm business. And we have differences between spot and some of the larger corporates. So a very tight cost control, a very tight margin control. But equally, we're a very big business, and we want to continue with our market share. On Education, look, I think that's just a tough market. So the rollout of Hays Education platform going very well, gone through kind of pilot stage, and is now being rolled out across the U.K. So that's a good, attractive product that I think will give us some good opportunities to capture and more tightly control spend from schools and move it via Hays. I think the education market for anybody dealing with it in at the moment is in a tough space. I don't really expect that to continue. A number of you on the call may well be governors of schools, if you are, then there's been a lot of -- whilst budgets continue to increase, they don't continue to increase in line with some of the "market pricing cost pressures" that authorities have giving in the area of pensions and areas of property. And therefore, I think it will continue to be difficult. And I don't really expect to see much change in education. The positives are, I think, that we're not seeing the markets getting any worse. There's an annualization of what we're expecting to get at the moment. I'd be very interested to see where the Perm position will be when we get to September, that's always a big quarter for us. Clearly, we have perms at the start of each term. But I think that's a hard market to be in. I think it's hard to be a head teacher at the moment. I don't expect to get any relief. And I think that's more of a sign of where U.K. public sector is.
That's, currently, all the questions coming through.
Excellent. So 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 at our next IMS on the 13th of July. Should anyone have any follow-up questions, David, Vincenzo and myself are available to take calls for the rest of the day. And finally, I'd like to give thanks to Vincenzo for all of his skilled work in the Hays IR team over the last 4 years. As some of you may know, Vincenzo is a graduate of the Hays ACA program. And as part of this, he's now moving internally with Hays to become a Regional Finance Director in our U.K. business, where I am very, very confident he will do an excellent job. So thank you, Vincenzo. Thanks, everybody, for joining the call today. Have a good day. Goodbye.
Ladies and gentlemen, thank you for joining today's conference. You may now replace your handsets. Thank you.