REG - Hays PLC - Final Results <Origin Href="QuoteRef">HAYS.L</Origin> - Part 3

HaysAnnouncement

27/08/2015 07:02

- Part 3: For the preceding part double click  ID:nRSa2198Xb 

defined as    
 cash and cash equivalents less bank 
 loans and overdrafts.               
                                                                                                                                                                                                                                          
 The Group completed the refinancing 
 of its five-year unsecured revolving 
 credit facility on 23 April 2015.   
 The new arrangement includes a      
 reduction in the core debt facility 
 from £300 million to £210 million   
 and an extension in maturity to     
 April 2020. The financial covenants 
 remain unchanged and require the    
 Group's interest cover ratio to be  
 at least 4:1 and its leverage ratio 
 (net debt to EBITDA) to be no       
 greater than 2.5:1. The interest    
 rate of the facility is based on a  
 ratchet mechanism with a margin     
 payable over LIBOR in the range of  
 0.90% to 1.55%.                     
                                                                                                                                                                                                                                          
 At 30 June 2015, £110 million of the 
 committed facility was undrawn.     
                                                                                                                                                                                                                                          
 12                                  ACQUISITION OF SUBSIDIARY                                                                                                                                                                            
 On 4 December 2014 the Group        
 acquired 80% of Veredus Corp., a    
 pure-play IT staffing company based 
 in Florida USA for a total cash     
 consideration of £36.1 million      
 comprising an initial cash payment  
 of £30.3 million on acquisition and 
 a tax equalisation payment of £5.8  
 million in March 2015. The          
 transaction has been accounted for  
 using the acquisition method of     
 accounting, and to reflect the      
 substance of the transaction using  
 the principles of IFRS10, has been  
 accounted for as if 100% of the     
 equity had been acquired. Net assets 
 acquired after fair value           
 adjustments, were £10.0 million.    
                                                                                                                                                                                                                                          
                                                                                                                                                                                                      Book        Fair value  Fair        
 (In £s million)                                                                                                                                                                        value         adjustment  value       
 Net assets acquired                                                                                                                                                                                                          
 Intangible assets                                                                                                                                                                      0.1           2.9         3.0         
 Property, plant and equipment                                                                                                                                                          0.1           -           0.1         
 Trade and other receivables                                                                                                                                                            7.2           (0.7)       6.5         
 Cash and cash equivalents                                                                                                                                                              0.4           -           0.4         
                                                                                                                                                                                                      7.8         2.2         10.0        
 Goodwill                                                                                                                                                                                                         34.3        
 Total consideration                                                                                                                                                                                              44.3        
 Satisfied by:                                                                                                                                                                                                                
 Cash paid in year                                                                                                                                                                                                36.1        
 Deferred consideration                                                                                                                                                                                           8.2         
                                                                                                                                                                                                                              44.3        
 Net cash outflow arising on                                                                                                                                                                                                  
 acquisition                                                                                                                                                                                                                  
 Cash consideration                                                                                                                                                                                               36.1        
 Cash and cash equivalents acquired                                                                                                                                                                               (0.4)       
                                                                                                                                                                                                                              35.7        
                                                                                                                                                                                                                                          
 The deferred consideration is       
 subject to a put/call arrangement   
 which provides Hays with an option  
 to acquire the remaining 20% of the 
 equity from the shareholders (who   
 have an equivalent right to sell the 
 remaining 20% of the equity). The   
 option is first available for       
 exercise in March 2018 at a pre     
 -determined multiple of earnings,   
 and is subject to a cap. The maximum 
 potential amount of all future      
 payments that the Group could be    
 required to make under the          
 contingent consideration arrangement 
 is £27.6 million. Fair value        
 adjustments to the net assets       
 acquired relate mainly to the       
 recognition of an intangible asset  
 in respect of the acquired Veredus  
 brand.                              
                                                                                                                                                                    
 The acquired business contributed   
 £33.8 million turnover, £10.0       
 million net fees and £0.3 million   
 operating profit to the Group       
 results before tax for the period   
 between the date of acquisition and 
 the balance sheet date. This was in 
 line with expectations with a good  
 trading performance offset by the   
 amortisation of the legacy brand,   
 one off costs related to the        
 transaction, and post-acquisition   
 development of the business.        
                                                                                                                                                                    
 If the acquisition had been         
 completed on the first day of the   
 financial year, Group turnover for  
 the year would have increased by    
 £25.9 million, net fees would have  
 increased by £8.1 million and       
 operating profit by £2.2 million.   
                                                                                                                                                                                                                                          
 13                                  LIKE-FOR-LIKE RESULTS                                                                                                                                                                                
 Like-for-like results represent                                                                                                                                    
 organic growth of continuing                                                                                                                                       
 activities at constant currency.                                                                                                                                   
                                                                                                                                                                                                                                          
 For the year ended 30 June 2015                                                                                                                                                        
 these are calculated as follows:                                                                                                                                                       
 (In £s million)                                                                                                                                                                                                              
 Net fees for the year ended 30 June                                                                                                                                                                  724.9       
 2014                                                                                                                                                                                                             
 Foreign exchange impact                                                                                                                                                                                          (35.8)      
 Net fees for the year ended 30 June                                                                                                                                           689.1    
 2014 at constant currency                                                                                                                                                              
 Net fee increase resulting from                                                                                                                                                                      10.0        
 acquisition                                                                                                                                                                                                      
 Net fee increase resulting from                                                                                                                                                                      65.1        
 organic growth                                                                                                                                                                                                   
 Net fees for the year ended 30 June                                                                                                                                                                  764.2       
 2015                                                                                                                                                                                                             
 Profit from operations for the year                                                                                                                                                    140.3         
 ended 30 June 2014                                                                                                                                                                                   
 Foreign exchange impact                                                                                                                                                                                          (9.6)       
 Profit from operations for the year                                                                                                                                130.7      
 ended 30 June 2014 at constant                                                                                                                                                
 currency                                                                                                                                                                      
 Profit from operations increase                                                                                                                                                        0.3           
 resulting from acquisition                                                                                                                                                                           
 Profit from operations increase                                                                                                                                                        33.1          
 resulting from organic growth                                                                                                                                                                        
 Profit from operations for the year                                                                                                                                                    164.1         
 ended 30 June 2015                                                                                                                                                                                   
                                                                                                                                                                                                                                          
 14                                  LIKE-FOR-LIKE RESULTS H1 vs. H2 ANALYSIS BY DIVISION                                                                                                             
                                                                                                                                                                                                                                          
 Net fee growth                      Q1                                                                                                                  Q2         H1         Q3       Q4            H2          FY          
 vs. same period last year           2015                                                                                                                2015       2015       2015     2015          2015        2015        
 Asia Pacific                        6%                                                                                                                  11%        8%         9%       8%            9%          8%          
 Continental Europe & Rest of World  8%                                                                                                                  9%         9%         8%       9%            9%          9%          
 United Kingdom & Ireland            13%                                                                                                                 14%        13%        8%       9%            9%          11%         
 Group                               9%                                                                                                                  11%        10%        8%       9%            9%          9%          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
 H1 2015 is the period from 1 July   
 2014 to 31 December 2014.  H2 2015  
 is the period from 1 January 2015 to 
 30 June 2015.                       
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                                    
 
 
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