| Management Board of Work Service S. A. company ("Issuer", "Company"), informs that on 28 November 2017 it made a decision to adopt a development strategy of the Issuer's capital group ("Group") for the years 2018-2020 ("Strategy"), which aims at the following: (i) the Issuer shall become a regional leader with undisputed share and established position on the HR services market in Central Europe (ranked within top three entities on each geographic market in which it operates), (ii) maintaining the growth of revenues at a two-digit level and at the same time higher than the average growth of the market, and (iii) achievement of viability at a level higher than the average for the industry by the end of the financial year 2020. The strategy shall in particular specify: 1) strategic priorities, such as: a) development of an extensive customer base, focusing on international customers ("blue chip"), b) investing in unique comprehensive solutions in the scope of the cross-border exchange of employees and recruitment abroad, c) execution of big HR projects using its own channels of acquiring employees outside the country, d) the use of factors that accelerate value-building (stable growth of revenues, sustainable margin increases, secure funding, optimised organisation and disciplined cost structure); 2) the Group's value growth factors, such as: a) stable growth of revenues (indicating the possibility of a 10%-12% annual growth of revenues), which requires: (i) focusing on the key value which is employee availability, offered in market segments with the highest growth potential, (ii) focusing on big customers and increasing the share of key international customers in the entire Group, (iii) developing the cross-border exchanges of employees and recruitment abroad for the international customer segment, (iv) entering new market segments, in particular the shared services centres (BPO/SSC) and a higher level of skills of external employees ("white collars", qualified "blue collars"), b) a sustainable increase in the EBIT margin (indicating a potential annual increase of 200-300 basis points), which requires: (i) the use of operational competences based on economies of scale to make the increase of indirect costs slower than the increase of margin, (ii) increasing the share of the cross-border exchange of employees in the service portfolio in order to achieve a better 1st level margin (indicating performance between sales revenues and direct costs of production and sale), c) secure funding (meaning the possibility of achieving the net debt/EBITDA ratio below 2.5), which requires: (i) tailored bank financing, appropriate to the business model, in order to reduce financing costs, (ii) the maximum reduction (to zero) of acquisition-related liabilities and the lack of minority interests in subsidiaries held by the Issuer, (iii) further optimisation of the tax rate, d) optimised organisation and disciplined cost structure (rendering the possibility of achieving an indirect cost/revenues ratio below 9% by the end of financial year 2020), which requires: (i) optimising internal employment in relation to the number of external employees (as a major cost optimisation factor), (ii) further optimisation of the processes through their digitalisation, (iii) reducing the Group's comprehensiveness by simplifying business line and subsidiary structures. As a result of the conducted analysis, the Issuer has concluded that it is reasonable to classify the information referred to above as confidential within the meaning of Article 17 (1) of the MAR, as published in this report. Legal basis: Article 17 (1) MAR (Regulation (EU) No. 596/2014 of the European Parliament and of the Council of 16 April 2014 on Market Abuse (Market Abuse Regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC). Signatures: Maciej Witucki – President of the Management Board Krzysztof Rewers – Vice-President of the Management Board | |
