the times | Friday August 28 2020 1GM 43Business
Fees at the world’s biggest recruitment
agency fell by more than 10 per cent
over the year to the end of June as
businesses stopped hiring.
Hays said yesterday that fees in the
12-month period had fallen by 12 per
cent to £996.2 million after activity fell
away during the spring and the
emergence of Covid-19. Its pre-tax
profit fell by 63 per cent to £86.3 million.
The annual figure was dragged down
by a collapse in April, the first full
month of lockdown. Hays said that the
drop in fees was on a similar scale to
that recorded during the 2008 financial
crisis, although that decline took place
over six weeks rather than eight.
Hays, which places workers in indus-
tries such as IT and finance, said that
there had been a “modest” improve-
ment in the market for permanent jobs
now that the lockdown had been eased
and businesses were returning to nor-
mal. It said that fees had been stable in
May and June.
Although business is starting to pickup again, activity is likely to remain
below pre-lockdown levels for some
time to come. Hays, which has 10,000
staff working in 33 countries, said that it
was likely to cut jobs in the year ahead.
It has already furloughed 18 per cent of
its workforce and 9 per cent have been
made redundant.
Analysts said that the strong rebound
in activity might reflect the release of
pent-up demand and warned that the
recovery could soon peter out. Theygroup announced a maiden dividend of
0.66p a share.
The London-based company has 366
staff. Its market capitalisation has risen
from £190 million to about £290 million
in the five months since it floated.
Geoff Rowley, 49, chief executive,
said: “With a significant and growing
market share, FRP is well placed to
service increasing levels of restructur-
ing assignments in the UK, both on in-
creasingly high-profile, complex cases
and across regional businesses through
our national network.”
The group expects consumer-based
companies in sectors such as casual
dining, retail, travel and hotels to come
under particular stress. It also antici-
pates more restructuring activity in the
financial services industry. Ithopes to
steal further market share away from
KPMG, Deloitte, PWC and EY, the Big
Four professional services firms.
Shares in FRP closed down 8½p, or
6.5 per cent, at 122½p.The London stock market is set for its
largest technology takeover since
Covid-19 hit global equities after two
leading British translation companies
agreed to merge.
RWS and SDL are planning a £2.8 bil-
lion tie-up that they claim will enable
them to create a combined language
software service with a “truly global
presence”, serving some of the world’s
largest businesses.
The proposed company, to be called
RWS, would be one of the largest stocks
on Aim, the junior stock market, with
revenues of £732 million and adjusted
pre-tax profits of £109 million.
Under the planned all-share merger
agreed by the two boards, investors in
SDL would receive 1.2246 shares in
RWS for every share they hold in SDL.
This values SDL shares at 907p, a 52 per
cent premium on their 598p closing
price on Wednesday and putting its
market value at £854 million.
The deal would form a business with
operations in Europe, the Americas
and Asia, RWS said yesterday, projec-
ting a double-digit boost to earnings.
RWS, which is based in Chalfont St
Peter, Buckinghamshire, dates back to- It has 2,500 staff, was floated on
Aim in 2003 and claims to translate
more than two billion words each year.
SDL, headquartered in Maidenhead,
Berkshire, has 4,300 staff worldwide
and claims to translate 1.4 billion words
annually. Unlike RWS, it is listed on
London’s main stock market.
Shares in RWS fell by 91p, or 12.3 per
cent, to 660p after the announcement.
In contrast, SDL shares rose by 184p, or
30.8 per cent, to 782p.
Shareholders in SDL would own
about 29.5 per cent of the merged com-
pany, which will be based at the head
office of RWS. Directors outlined
improved margins and projected
annual cost synergies of at least £15 mil-
lion after a full financial year.
The proposal is subject to respective
shareholder votes and regulatory
approvals. SDL investors holding 34 per
cent of shares in the company have
indicated their support. Andrew Brode,
chairman of RWS, owns 32.76 per cent
of its shares.
Mr Brode, 69, will become chairman
of the new company. Richard Thomp-
son, 58, chief executive of RWS, will be
its chief executive and Desmond Glass,
50, chief financial officer at RWS, will
have the same title.
While Azad Ootam, 54, chief tech-
nology officer at SDL, will have the
same role at the combined group,
Adolfo Hernandez, 50, SDL’s chief
executive, and Xenia Walters, 50, its
chief financial officer, will depart.
David Clayton, 63, SDL’s chairman, will
become a non-executive director.
Mr Brode hailed RWS’s “proven
track record” of generating shareholder
value by successfully integrating
businesses and told investors that itsplanned merger with SDL would have
compelling benefits.
“Bringing together our businesses
creates the world’s leading language
services and technology group,
allowing us to provide a broader and
enhanced offer to an expanded client
base,” he said. “We will have compre-
hensive capabilities across a range of
language services, language and con-
tent software and solutions and IP ser-
vices, further enhancing the two com-
panies’ customer propositions.”
Mr Clayton thanked the departing
management team, suggesting that the
52 per cent premium offer from RWS
reflected their achievements. “The
scale of the combined group will pro-
vide significant opportunities for our
employees to play a significant role in
transforming our industry,” he said.Tie-up translates
into biggest tech
deal since Covid
Callum JonesHays takes hit as companies stop hiring
Gurpreet Narwan also said that the threat of a weak
economic recovery and a resurgence in
coronavirus cases was hanging over the
business.
Rory McKenzie, an analyst at UBS,
the Swiss bank, said: “Some of this may
be a ‘catch-up’, with locations hit the
hardest by lockdowns seeing a stronger
bounce, for example in the UK. How-
ever, the risk of second waves and lock-
downs remains.”
Alistair Cox, 59, who has been chief
executive of Hays since 2007, said: “The
pandemic severely impacted all our
markets globally. Facing conditions far
harsher than I have known, our busi-
ness rose to the challenge and I am im-
mensely proud of the commitment and
innovation of all our people. Overall,
we have protected our business, while
taking actions to appropriately reduce
costs. Conditions in all regions were
very tough, yet the business we have
purposefully built showed its strength.”
Shares in the company, which is a
member of the mid-cap FTSE 250
share index, closed down ½p, or 0.4 per
cent, at 116¾p last night.FRP cashes in as troubled
firms fail in the pandemic
Louisa Clarence-SmithA corporate restructuring specialist
working on the collapses of Deben-
hams and Carluccio’s has announced
its maiden dividend alongside a 16 per
cent rise in annual revenue.
FRP Advisory, which floated on Aim,
the junior stock market, in March, said
that an increase in administration
appointments had helped to increase
its revenue to £63.2 million for the year
to the end of April.
It won 189 administration appoint-
ments over the period, up 34 per cent on
the previous year. It expects to benefit
from a rise in restructuring activity as
coronavirus support schemes are
phased out and the impact of Brexit is
felt across the economy.
FRP was spun out of Vantis, the
former Aim-listed accountancy firm
that fell into administration in 2010.
Adjusted annual profit increased by
31.7 per cent to £18.7 million and theduring lockdown
A rise in casino games made up for the cancellation of mainstream sporting events such as football, rugby and racingBRIAN LAWLESS; MATT CROSSICK/PABad job
Hays share price
200p150100500
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2019 2020Andrew Brode,
RWS chairman,
will have the same
role in the new
company