Hays plc – Annual report – 30 June 2022
Industry: recruitment
BOARD CASE STUDY
S.172 IN ACTION
With the onset of the Russia-Ukraine crisis during the year, the Hays’ Russian business was considered as a high geo-political risk. The Russian business had performed well during the years and Hays had many colleagues employed in the region, whose welfare was a primary consideration. The situation remained under constant review by the Executive Board, led by the Chief Executive.
In February 2022, the matter was discussed by the Hays plc Board. The Board considered all options for the Russian business, including ceasing trading in Russia at short notice in addition to ancillary matters such as cyber security risk, the increasing cost of insurance, where available, and challenges to normal treasury activity due to increasing sanctions. The Board was cognisant of the broad range of stakeholder groups that were impacted by the crisis, and that would be impacted by any decisions taken by the Company with regard to its future in the region. Steps were taken initially to mitigate cyber risk as the wider interests of clients and candidates and their data security and privacy is at the heart of everything we do at Hays.
The Board debated how the Russian business could be separated efficiently, including separation of the corporate structure while also considering the impact on corporate functions, including employees.
An initial plan to liquidate the business was developed, in case suitable and viable alternatives were not forthcoming and in view of the potential time scale for completion of such an exercise. Members of the Executive Board remained engaged with their Russian colleagues and kept the plc Board informed throughout this process, from which a management buyout (MBO) proposal was forthcoming. The financial stability of the business within Russia was such that, without any additional financial support from the Group, the business remained viable for some time, enabling a proper due diligence exercise to be undertaken for the MBO proposal. The Board ensured protection for the employees through provisions in the draft sale and purchase agreement, and undertook a full evaluation of the accounting impact. To facilitate the complicated, sensitive and time-critical nature of the process involved with maintaining the liquidation option while thoroughly considering and validating the MBO proposal, the plc Board delegated authority to complete the Group’s exit from Russia to members of the Executive Board.
In June 2022, having considered the interests of stakeholders, both short- and long-term consequences and the impact of operations on the host countries, governments and communities in their decision-making processes, while acting in a way that promotes the success of the Company for the benefit of its shareholders, the Board concluded the cessation of our operations in Russia through a management buyout, the transfer of the business receiving final registration in Russia in July 2022.
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