Hays House, Millmead
Guildford, Surrey GU2 5HJ
Telephone: (44) 1483-302-203
Fax: (44) 1483-300-388
Incorporated: 1965 as Farmhouse Securities
Sales: £1.55 billion (US $2.53 billion) (1998)
Stock Exchanges: London
Ticker Symbol: Hays
SICs: 4225 General Warehousing & Storage; 4515 Courier Services; 7361 Employment Agencies
Fast-growing Hays Plc is one of the United Kingdom's leading business services groups with more than 60 business units and 17,000 employees providing logistics and other services in three primary areas: distribution; commercial, including postal and other delivery services; and personnel placement. Although more than 60 percent of the company's sales continue to be placed in Great Britain, Hays has made active forays onto the European continent during the 1990s. The company has gained particularly strong entry into the French logistics and distribution markets, through subsidiaries Fril and FDS. These two companies have given Hays the number two position in specialized next-day delivery services in France. Hays also has been making inroads into the German, Italian, and Benelux markets, and plans an extension into Spain.
A series of acquisitions in the 1990s has helped the company in its revenue growth; however, the majority of the company's growth has come internally. In its 1998 fiscal year, the company recorded sales of some £1.55 billion, a jump of more than 38 percent over the previous year. In just four years the company has been able to nearly triple turnover. Hays also has been a profit leader, with steadily rising pretax profits reaching nearly £200 million in 1998. The company's solid growth performance has won it a place on Britain's prestigious FT-100 listing and a position as one of the London Stock Exchange's leading growth stocks.
Leading Hays's charge is Ronnie Frost, company chairman, who previously served the company as its chief executive. While encouraging the company's internal growth, Frost has taken Hays on an acquisition campaign both to strengthen its core areas in its United Kingdom base and to insert the company into the European market. Hays expects to continue to strengthen its network of distribution and logistics services throughout the European continent, especially with the emergence of a single-currency market in the turn-of-the-century period. Already by the late 1990s, Hays counts as one of Europe's leading business services firms.
Hays has carved out its position by focusing on innovative niche areas. The company provides distribution services, including dairy, meat, and other food product and retail product distribution for manufacturers and retailers; chemicals transport is another important focus area for Hays. Included under its group of distribution subsidiaries are warehousing and other logistics services. The company's Commercial division competes in the busy Mail and Express Services market by focusing on same-day and early morning delivery (as opposed to overnight or next-day delivery) and by targeting specific markets of expertise, such as the banking sector, medical clinic sector, and the accountancy market. Hays's third area of focus is its Personnel services division, providing temporary personnel and personnel recruitment services especially to the banking and finance industries, but also to other specialist sectors, including the information technology and computer industries.
Hays's three-prong approach has enabled the company to maintain steadily rising revenues--and profits--despite the difficult economic climate during much of the 1990s. After focusing on internal growth in the early 1990s, Frost has taken the company on an extended drive of so-called "bolt-on" acquisitions, bringing a large number of relatively small companies under the Hays Ltd banner.
Joining Distributors in the 1980s
Although Frost would become the chief architect of Hays Plc's growth, the company had been in the distribution business for nearly 125 years before coming under Frost's sway. The Hays business had begun in 1867, operating wharf facilities on the Thames in London, where it received dairy products shipped from New Zealand and other British colonies. Hays would gradually grow into a prominent cold storage provider, especially for dairy products. The company also would extend its services to distribution, while extending its London properties to include many prime Thames-side locations, including the eponymous Hays Wharf. By the late 1970s, Hays would come under control of the Kuwaiti Investment Office, acting as a holding company. In the late 1980s, however, Hays would be taken over by Ronnie Frost, who then took Hays public in 1989.
Ronnie Frost had had his own history with the Kuwaiti Investment Office. Frost started his own company, called Farmhouse Securities, in 1965. The company's original area of business was as a poultry wholesaler. Speaking of the period with the Financial Times, Frost would say: "Wonderful training. You'd approach someone, and in those days it could have been John Sainsbury himself or just a market trader. You'd have to adjust immediately." Frost's ability to "adjust" would become one of the principal assets of Farmhouse Securities, as was his dedication: it was not uncommon for Frost to put in 18-hour workdays. In the late 1960s and early 1970s the ambitious Frost extended the company into the distribution sphere, with an emphasis on cold storage facilities for its poultry and other products.
In the 1970s Frost would take Farmhouse Securities on a massive expansion program, opening or acquiring cold storage and other facilities throughout the United Kingdom. By the late 1970s Farmhouse Securities had built up a network of facilities capable of providing products to more than two-thirds of the United Kingdom. The company also built a fleet of trucks--one of the country's largest&mdashø serve its storage facilities and its customers.
Farmhouse Securities' expansion would leave the company vulnerable to changes in the economic climate. After nearly three decades of strong growth since the Second World War, the British economy, along with much of the West, collapsed in the 1970s. Spurred by the Arab Oil Embargo and the oil-producing countries' sudden decision to raise world oil prices, the recession would strike particularly hard in the United Kingdom. Farmhouse Securities' finances, given its huge fleet of trucks, came under attack both from the rising oil prices and the drop in distribution activity. Despite its efforts to surmount its fragility in the new economic climate, Farmhouse Securities quickly found itself struggling to survive.
By the end of the 1970s Farmhouse Securities was on the verge of declaring bankruptcy. Frost, however, was not about giving up, telling the Financial Times: "There was too much blood and time invested in this business to let it go, but it was scary. We'd got to the stage of banks stopping cheques." Frost hung on into the new decade. But by 1981 it was too late. In that year Frost sold Farmhouse Securities to the Kuwaiti Investment Office. Frost would remain in charge of the company he had founded, however.
Expansion for the 1990s
Giving up control of Farmhouse Securities had enabled the company to survive its financial problems as the British economy began to recover in the 1980s. Frost had had no intention of relinquishing permanent control of Farmhouse Securities: even as he sold the company, Frost made plans to buy back not only Farmhouse Securities, but the Hays wharf and distribution business as well.
Regaining control of the company proved more difficult than expected. It was not until 1987--the day after the October stock market crash--that the Kuwaiti Investment Office finally agreed to sell Frost back his business. For pounds 257 million, Frost regained control not only of the Farmhouse Securities businesses, but the Hays Distribution companies as well, which provided the name for the new company, Hays Plc. Joining the company's ranks was also a personnel and recruitment arm, which had been founded in 1969 and added to the Hays group in 1986. Another Hays business was its Document Exchange Service, later known as Hays DX, which had started up in 1975, offering business-to-business, overnight, and other specialty mail and delivery services. Hays DX would later build a strong focus on such sectors as the banking and accounting industries.
Frost set about imposing Hays as one of the United Kingdom's premier logistics and business services groups. To fund the company's proposed expansion, Frost led Hays to a public listing in 1989. The public offering would get off to a rocky start, however. Coming on the same day as the resignation of Britain's chancellor of the exchequer, Nigel Lawson, the Hays stock float would be forced to cut its initial price by some 15 percent. This proved to be only a temporary setback. In the 1990s Hays would become the darling of the London Stock Exchange, posting some of the decade's strongest performances.
Hays's growth would come primarily from the company's own internal expansion, as the company captured a stronger share of its market and expanded into new markets. Unwilling to compete with larger firms, the company shrewdly sought out niche opportunities in which to focus its energy, capturing leading shares of such segments as the chemicals transportation and logistics segment. The company also avoided direct exposure in the retail distribution market, which was undergoing a cutthroat shakeout in the 1990s, leading to more and more meager margins as the United Kingdom slipped into the extended recession of the first part of the decade.
While parts of Hays's business inevitably suffered from the recession and the resulting drop in demand for its distribution services, the company's three-prong approach enabled it to achieve some stability. The difficult economic climate, for example, would prove a boon to Hays's personnel services division, as companies looked more and more for temporary personnel, rather than hiring permanent employees. At the same time, Hays began to look for new markets, extending the company's delivery services into more general postal services, such as sorting and other services for the British post office. Another niche of interest to the company was computer-based records management and data storage, a segment the company would come to dominate after the acquisition of Rockall Scotia Resources in 1994.
Increasing competition in other sectors would bring opportunity to Hays. When British supermarkets began installing gasoline pumps, the country's traditional service stations, including Shell and British Petroleum, found their business under extreme pressure. In response, these companies began developing onsite grocery and convenience services. Hays seized the opportunity to propose its logistics services--coordinating an extremely complex provisions operation combining goods from various segments, from foods to clothing to other products, into one service. The initiative paid off: Hays was awarded contracts from Shell, followed by British Petroleum, in 1996.
Hays had already become adept at such complex logistics operations through its association with Carrefour, the French hypermarket giant. Where the company had remained focused on the United Kingdom markets, in the 1990s the company recognized the need to expand its services onto the European continent. France would provide the company's initial entry, as Hays began making small acquisitions of companies in its three primary sectors. Germany and the Benelux countries would soon follow.
Hays continued to target internal growth, while preparing an extensive series of so-called "bolt-on" acquisitions to boost its presence in specific markets, and especially in building its continental presence. Most of these acquisitions were on a relatively modest scale. In January 1999, for example, the company announced the purchase of France Partner, one of that country's top express parcel delivery services, for £19.5 million. This acquisition, however, followed on that of Colirail, in December 1998 for £40 million, and Delta Medical Express Group, acquired for £2.2 million in 1998, boosting the company to a 20 percent market share in the next-day parcel sector in France.
These acquisitions also complemented the strong moves that the company had made in building out its logistics network, with acquisitions including FDS in 1997 and Fril in 1994, strengthening the company's presence in France and the Benelux countries, as well as the takeover of Mordhorst, in 1993, which provided Hays with its German market foothold. The acquisition of Sodibelco in April 1998 brought the company's logistics operations into Italy. In the late 1990s Hays also began spreading its personnel and recruitment wings, with acquisitions including France's Sitinfo in October 1998, itself following on the June 1998 purchases of Alpha TT, Quasar, and Arec, three French specialist recruitment agencies.
By 1999 Hays had established a firm position in each of its three specialty areas across much of Western Europe, with near-future plans to expand into Spain, as well as to build a presence in the Eastern European market as well. While Ronnie Frost remained the guiding force of the company's growth, Hays would receive credit for building a strong management team, including retaining most of the executive staff of its acquisitions. This team was expected to continue to build on Hays' status as a world-leading business services group.
Principal Subsidiaries: Hays Logistics International (UK); Hays Logistics UK; Hays Logistique France; Hays Logistics Italy; Hays Logistics Germany; Hays Logistics Benelux; Hays Logistics USA; Hays Chemicals; Hays Chemical Distribution; Hays Process Chemicals; Hays Sulfur; Hays Distillation Services; Hays DX; Hays Customer Solutions; Hays Information Management; Hays Rentacrate; Hays Clinical Support Services; Hays Paperstream; Hays DEI; Hays Accountancy Personnel; Hays Banking Personnel; Hays Recruitment; Hays Montrose; Hays Richard Owen; Hays IT; Hays Read Carroll; Hays Alpha (France); Hays Executive; Hays International.
Ahmad, Sameena, "Acquisitive Hays Set for Next Pounds 100m Buy," Independent, August 21, 1997, p. 18.
Cope, Nigel, "Hays Delivering the Goods in France," Independent, January 6, 1999, p. 17.
Gresser, Charis, "The Thrill of Making Money for Others," Financial Times, September 24, 1997.
Grimond, Magnus, "The Three Facets of Hays," Independent, September 17, 1997, p. 26.
"Hays Shrugs Off the Threat of Recession," Independent, September 15, 1998, p. 23.
Potter, Ben, "New Ideas Help Frost Chill the Opposition," Daily Telegraph, September 15, 1998.
Richard, Phillips, "Hays Delivers the Goods," Independent, December 15, 1996, p. B6.
"Return of the Milk Train," Dairy Industries International, November 1, 1997, p. 33.
Stevenson, Tom, "A Bargain To Be Made in Hays While It's Marked Down," Independent, March 4, 1997, p. 16.
Tringham, Melanie, "Hays's Sights on Euro Expansion," Daily Telegraph, March 5, 1998.
Source: International Directory of Company Histories, Vol. 27. St. James Press, 1999.