9 December 2024
Hays plc
Defined benefit pension
scheme de-risked with full buy-in
|
·
|
Purchase of a £370 million bulk
annuity policy by trustee of the Hays Pension Scheme is the final
and most significant step towards Hays fully insuring its UK
defined benefit pension obligations.
|
|
·
|
The Group's current £18.2 million
annual deficit funding contribution has ceased, effective from the
date of the transaction.
|
|
·
|
A £12.6 million upfront cash
contribution has been paid with an expected further c.£6 million of
expenses to be paid through to final Scheme buy-out and
wind-up.
|
Hays plc (the "Group"), the global
leader in specialist recruitment and workforce solutions, is
pleased to announce the de-risking of the Group's legacy UK defined
benefit pension scheme (the "Scheme"), through a £370 million bulk
annuity policy ("buy-in") entered into by the Scheme trustee with
Pension Insurance Corporation plc ("PIC"). Building on the purchase
of a bulk annuity policy with Canada Life for a premium of £270.6
million on 6 August 2018, the new PIC policy fully insures the
Scheme's remaining benefit obligations.
The Hays Pension Scheme is a funded
final salary defined benefit scheme providing pensions and death
benefits to members, which was closed to future accrual from 30
June 2012 with pensions for the then-active members calculated up
until the point of closure. The last formal actuarial valuation was
performed at 30 June 2021 and quantified the Scheme deficit on a
buy-out basis at £192.1 million. A deficit funding schedule, in
line with the Group's strategy to achieve an eventual buy-out of
the Scheme, was agreed with effect from 1 July 2021 which
maintained the annual contribution at its previous level, subject
to a 3% per annum fixed uplift over a period of five and a half
years. The amount of deficit funding contributions related to the
Hays Pension Scheme expected to be paid in the year to 30 June 2025
was £18.2 million.
As a result of the buy-in, all the
financial and demographic risks relating to the Scheme's
liabilities are now fully insured, with the two policies paying a
regular stream of income that matches its pension payments to all
members. This buy-in is the final and most significant step towards
Hays fully insuring its UK pension obligations and, subject to
customary post-transaction data reconciliations and adjustments,
will provide the Group and the Trustee the option to proceed to a
full buy-out and winding-up of the Scheme at which point it will be
removed from the Group's balance sheet.
The transaction is expected to have
the following financial implications:
|
·
|
The elimination of pension related
balance sheet volatility due to reduced inflation, interest rate
and longevity risk.
|
|
·
|
The Group's current £18.2 million
annual deficit funding contribution has ceased, effective from the
date of the transaction.
|
|
·
|
A £12.6 million upfront cash
contribution has been paid with an expected further c.£6 million of
expenses to be paid through to final Scheme buy-out and
wind-up.
|
James Hilton, Chief Financial
Officer, said:
"Following constructive and collaborative dialogue with the
Scheme trustee over several years, we are pleased to fulfil our
longstanding ambition to achieve full buy-in of the Hays Pension
Scheme, fully insuring the Scheme liabilities with a cost-effective
approach that benefits all stakeholders.
From a Hays perspective, the transaction eliminates pension
related balance sheet volatility and is expected to have a
materially positive impact on Group free cash flow from FY26. Our
structurally improved cash generation will support investment in
growth and the return of excess capital to shareholders in the
medium-term."
Sean Burnard, Director at The Law
Debenture Pension Trustee Corporation plc and Chair of Trustees of
the Hays Pension Scheme, said:
"The buy-in transaction has helped us meet our objective of
securing the pensions of all members of the Scheme. We are
delighted to have partnered with PIC who were selected on their
strong track record and excellent customer service. Being well
prepared with good project management means we have secured good
contractual terms with attractive pricing for our
members."
This announcement contains inside
information. The person responsible for releasing this announcement
is Rachel Ford, General Counsel & Company Secretary.
Enquiries
|
Hays plc
Kean Marden
Robert Maguire
FGS Global
Guy Lamming / Anjali Unnikrishnan / Richard Crowley
|
Head of Investor Relations & ESG
Investor Relations & ESG Manager
|
+44 (0) 333 010 7122
+44 (0) 333 010 7103
hays@fgsglobal.com
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Hays Group overview
As at 30 September 2024, Hays had
c.11,100 employees in 229 offices in 33 countries. In many of our
global markets, the vast majority of professional and skilled
recruitment is still done in-house, with minimal outsourcing to
recruitment agencies, which presents substantial long-term
structural growth opportunities. This has been a key driver of the
diversification and internationalisation of the Group, with the
International business representing 80% of the Group's net fees in
Q1 FY25, compared with 25% in FY05.
Our consultants work in a broad
range of industries covering recruitment in 21 professional and
skilled specialisms. Our four largest specialisms of Technology
(25% of Group net fees), Accountancy & Finance (15%),
Engineering (11%) and Construction & Property (10%)
collectively represented c.61% of Group fees in FY24.
In addition to our international and
sectoral diversification, in Q1 FY25 the Group's net fees were
generated 61% from temporary and 39% from permanent placement
markets. This well-diversified business model continues to be a key
driver of the Group's financial performance.