Hays PLC - Trading Update & Equity Placing
TRADING UPDATE & EQUITY PLACING
Trading update & equity placing
Given the rapidly-developing global Covid-19 situation, Hays provides an update on current trading and announces an equity placing targeting gross proceeds of approximately
Hays has identified four immediate priorities:
· Protecting the health, safety and wellbeing of its employees, clients, temps and candidates.
· Delivering full operational capability with remote working and providing high service levels to all our stakeholders.
· Reinforcing the Group's strong financial position.
· Positioning the Group to gain market share from blue-chip clients, both in the near-term and as our end markets stabilise.
Trading between 1 January and 13 March was in line with our expectations, with like-for-like net fees down c.5% year-on-year. However, since then the rapidly escalating impact of Covid-19 has driven a very material deceleration in client and candidate activity. To date, across our major markets, the impact has been felt most in
Considering the uncertainties arising from Government restrictions worldwide on working and movement and how long these may remain in place, it is not currently possible to estimate the extent of the impact on the Group's earnings this financial year and beyond. However, we expect the impact will be substantial and Group operating profit for the year to
Our Executive team, which has been together for many years and successfully navigated the GFC, and our highly experienced regional management teams are taking all available actions to ensure Hays can withstand significant short-term pressures. In addition, management is seeking to ensure Hays is in the best possible position to gain market share once our end markets stabilise.
We have established an Executive sub-committee to closely monitor market conditions and update our advice to employees, temps and clients. This is helping to share best practice in business continuity planning and ensures our global operations are effectively coordinated. Most of our consultants are now working from home and business continuity plans are working well. The main exception is China, where all our offices have re-opened.
We are taking decisive steps to actively manage our costs and further strengthen our financial position. The following actions have already been initiated:
· Cost base: our aim is to proactively manage our cost base in the short-term, while protecting the core of our business to take advantage of medium and longer-term opportunities. Our monthly cost base, prior to Covid-19, was c.
· Dividends: the Board has taken the decision to cancel the 1.11p per share interim dividend which was due to be paid on
· Tax deferrals: we have had positive discussions with fiscal authorities globally to secure local support for our businesses and appreciate the speed and scale of government responses. Based on the discussions held directly with tax authorities thus far, we are confident that we will secure significant tax payment deferrals of more than
· Other Government initiatives: in many of our Group countries, there are existing and newly-initiated furloughing and short-time working arrangements. It is, as yet, too early to quantify the benefit of such schemes on our own business and our Temp workers in different countries. We are, however, in active discussions to explore all such options.
In addition, we are exploring other financing options such as government schemes across the world, including being at an advanced stage in seeking access to the
Strategy & outlook
Hays' strategy, which has been consistent for many years, is to be the undisputed global leader in white collar specialist recruitment. Our business model is based on having unrivalled scale and breadth across geographies, sectors and recruitment contract types.
Under this scenario, and implementing the proactive cost reductions noted earlier, we could reduce our total cost base by up to c.
Encouragingly, in recent weeks we have seen growing interest from many existing and prospective large blue-chip clients looking to consolidate their white-collar recruitment outsourcing with a financially strong partner. We expect this to increase further over the coming months. We believe that our industry is likely to see a material 'flight to quality' both during and in the aftermath of Covid-19. Therefore, while the current environment is highly challenging, there remain significant and attractive opportunities in our markets - both in the short and longer-term.
Background to equity placing
Over recent years Hays has consistently operated with a net cash balance sheet, and strongly believes this gives valuable confidence to both our clients and investors.
To ensure that we have a strong balance sheet and can continue with minimal or no debt once our end markets stabilise, the Board has concluded that it is prudent to now raise equity. This will both provide the Group with a further liquidity buffer and importantly best allow us to pursue organic growth opportunities with new and existing blue-chip clients. We are already seeing such opportunities begin to emerge and expect further vendor consolidation from our clients when markets stabilise.
Accordingly, Hays has separately announced today its intention to conduct a non-pre-emptive placing of new ordinary shares of the Company targeting gross proceeds of approximately
Hays Directors and members of the Executive management team, including the Chairman, CEO and FD, have committed to participate alongside the equity raise and intend in aggregate to contribute c.
Commenting on the unprecedented global situation, Alistair Cox, Chief Executive, said:
"The past few weeks have been unlike anything the world has seen in modern times and has severely impacted recruitment markets globally. These are hugely challenging times and I would like to thank sincerely all our colleagues at Hays for their support and commitment. Governments across the world also deserve major credit for the scale and speed of their response to support individuals and businesses through the Covid-19 pandemic.
"Today's equity fundraise is designed to further reinforce our business so that we are strongly placed to build on our market leading positions globally by supporting our clients and capturing additional market share."
| || |
+44 (0) 20 3978 2520
Trading update for the quarter ending
Full-year results for the year ending
This Trading Update (the "Report") has been prepared in accordance with the Disclosure Guidance and Transparency Rules of the
This announcement contains inside information.
LEI code: 213800QC8AWD4BO8TH08
This information is provided by RNS, the news service of the
Quick facts: Hays PLC
Market Cap: £1.96 billion
NO INVESTMENT ADVICE
The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...FOR OUR FULL DISCLAIMER CLICK HERE