REG - Hays PLC - DB pension scheme de-risked with full buy-in

HaysAnnouncement

09/12/2024 14:45

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20241209:nRSI3815Pa&default-theme=true

RNS Number : 3815P  Hays PLC  09 December 2024

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                                              Head of Investor Relations & ESG

Kean Marden
Investor Relations & ESG Manager

Robert Maguire                                                                                    +44 (0) 333 010 7122

+44 (0) 333 010 7103
 FGS Global

Guy Lamming / Anjali Unnikrishnan / Richard Crowley

                                                                                                  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.

 

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  STRQKCBNQBDDQBK