Work Service regains the top spot

HR company spent 70 million PLN on two acquisitions. It left competitors far behind. It is finalizing further transactions to become number one in the region.

"We will acquire four companies this year," announced Tomasz Hanczarek, CEO of Work Service, in January in Puls Biznesu, on the occasion of the entry of the PineBridge fund, which took up a 20 percent stake for over 100 million PLN. Eight months have passed, and he is beginning to turn words into deeds. He has just announced two purchases—for 70 million PLN he will acquire Antal International, the leader in the recruitment market in Poland, and Work Express, the domestic number six in job outsourcing.

"Interesting changes have occurred on the Polish market. Randstad, i.e., number two, took over operations in eight countries from USG People, including Poland, and announced that it had become number one on our market. This prompted us to look for opportunities not only abroad but also on the domestic market. We managed to acquire two companies. Thanks to this, we have pulled away from competitors for good, securing the number one position in Poland for a long time," says Tomasz Misiak, chairman of the supervisory board and main shareholder of Work Service.

New fields… The transactions also allowed Work Service to instantly expand its competencies. "In the recruitment sector, we have so far dealt mainly with mass services; we were only just developing competencies in manager recruitment, which Antal deals with. By taking over the leader, we instantly become number one in Poland, and additionally, we can use the brand in the region. We believe this will be a similar success to Exacto, which turned from a small local company into an international one," says Tomasz Hanczarek, CEO of Work Service.

The acquisition of Work Express means a jump in turnover and entry into a new segment. "This is a company specialized in sending employees abroad, also in the medical care sector, which is very promising. In our strategy, we do not have building structures in France, the Netherlands, Germany, Austria, Belgium, Sweden, or Norway, because companies with an established position operate there, but we want to earn money there. Thanks to the takeover of Work Express, this will be possible," says Tomasz Hanczarek.

…and hunting grounds… Work Service bosses convince that it will not end with the takeover of well-prospering companies. They have a plan for them. "Antal, which currently has about 20 million PLN in revenue, can grow. It will get access to the client base in the group. We will introduce it to other markets in the region. It has a great team that knows how to develop business," says Tomasz Hanczarek.

The company will spend approx. 70 million PLN on both acquisitions: it will pay 28 million PLN for Antal, and 42 million PLN for 80 percent of Work Express shares (it will buy the rest within three years). "The prices we managed to negotiate are very reasonable," assures Tomasz Misiak. The acquired companies will increase the group's revenues by approx. 200 million PLN, and EBIT by over 10 million PLN. However, Work Service's appetite is still unsatisfied.

"We are working on further acquisitions—in Germany, Hungary, and Romania. Negotiations are advanced. If we manage to close the transactions, we will add another 1 billion PLN to the 1 billion PLN in annual revenue we currently achieve. Thanks to this, in a year we will achieve the goal we planned to realize in a few years," says Tomasz Misiak.

Contrary to market speculation, the company will not take over Promedica24—a company from the PineBridge portfolio operating in the medical sector. Work Service considers this market attractive but has a different idea for it. "We want to develop in it, but through a company we already have in the group. We are waiting for legal, and above all mental changes, which will sharply drive demand for outsourcing services," says Tomasz Hanczarek.

The group may be complemented by a company providing services on the internet. "We lack a strong online presence. We are analyzing various scenarios," says Tomasz Misiak. Ambitious plans make an impression. And who will pay for all this? "The money we raised from the issuance for PineBridge will not be enough. Therefore, the shareholders decided to issue bonds worth up to 100 million PLN," says Tomasz Misiak.

…to keep growing Work Service does not live by acquisitions alone. Revenues in the first half of the year increased by 16 percent to 410 million PLN, and EBIT profit by 9 percent to 19.8 million PLN. Foreign revenues are approx. 21 percent. They are slightly higher than a year ago. The company grew fastest, by as much as 180 percent, in Germany, while its revenues in Russia fell. "Germany has opened up to Polish employees. Russia is a very difficult market, but we are fighting. We signed two promising contracts," says Tomasz Hanczarek.

The gem in the group is Exact System, a company dealing with quality control. Its revenues increased by 31 percent during the year. "Currently, in a month, it generates such EBIT as it achieved in a year before the takeover. It recently launched in Romania and is preparing to enter China and Brazil. A global player made us an offer to buy back Exact System, but we believe we can make it a global player," says Tomasz Misiak.

Work Service has been growing continuously since its inception, with one exception—the collapse in 2009. The crisis drives demand for outsourcing services, but the owners convince that the awakening recovery does not worry them at all. "Now companies use our services because they are looking for savings. When the economy revives, they will use them so as not to hire and create a buffer," says Tomasz Misiak.

THROUGH THE EYES OF A COMPETITOR Temporary potential

GRZEGORZ TYSZKA CEO of Impel Job Service The perspectives of the temporary work market are very good because the mentality of people managing Polish business is changing. Previously, not all companies liked employing temporary workers. The crisis meant that trust in this form of employment was somewhat forced on the market, although temporary work developed dynamically also during the boom. This solution was most appreciated by the electronic and automotive industries and various segments of the food industry. The mental change translated into building good relationships between companies and agencies that began to specialize in this. This favored their development. Currently, Polish temporary employment agencies can match global players. Domestic companies operate internationally—our temporary employees were hired in England, Ireland, Germany, or the Czech Republic—and they have no reason to have complexes. Now we compete not only on price but also on the quality of employees.