TIDMPAGE
RNS Number : 9363M
PageGroup plc
14 January 2019
14 January 2019
PageGroup plc
FOURTH QUARTER AND FULL YEAR 2018 TRADING UPDATE
A record Quarter and Year for the Group
Q4 Highlights*
-- Group gross profit growth of +15.4% (+15.8% in reported rates), against a tough comparator
-- All four regions delivered growth, 20 countries grew over 20%
-- Large, High Potential markets (33% of Group) +25%
-- EMEA +13.9%; France +10%; Germany +28%
-- Asia Pacific +22.0%; Greater China +12%; SE Asia +30%; Australia +25%
-- UK +2.1%; Page Personnel +12%; Michael Page -1%
-- Americas +29.2%; US +32%; Latin America +28%
-- Professional services disciplines (25% of Group) fastest growing at +24.5%
-- Record headcount of 7,772; new record fee earner to
operational support staff ratio of 79:21 (Q3 2018: 78:22)
-- Strong balance sheet, net cash of c. GBP96m (Q3 2018: c. GBP122m, Q4 2017: c. GBP96m)
Q4 GROSS PROFIT ANALYSIS
Reported (GBPm) Constant
Year-on-year % of Group Q4 2018 Q4 2017 % %
----------- -------- -------- ------- ---------
EMEA 49% 104.4 90.9 +14.9% +13.9%
----------- -------- -------- ------- ---------
Asia Pacific 20% 41.2 33.5 +23.1% +22.0%
----------- -------- -------- ------- ---------
UK 16% 33.5 32.8 +2.1% +2.1%
----------- -------- -------- ------- ---------
Americas 15% 32.0 25.2 +27.0% +29.2%
----------- -------- -------- ------- ---------
Total 100% 211.1 182.4 +15.8% +15.4%
----------- -------- -------- ------- ---------
Permanent 76% 159.9 135.7 17.8% 17.6%
----------- -------- -------- ------- ---------
Temporary 24% 51.2 46.7 9.8% 9.0%
----------- -------- -------- ------- ---------
Full Year Results*
-- Group gross profit +15.9% (+14.5% in reported rates) to GBP815.0m, a record year
-- FX decreased reported gross profit by c. GBP10m and operating profit by c. GBP2m
-- 23 countries delivered record gross profit
-- Increase of 619 fee earners (+11.3%)
-- Operating profit expected to be in line with consensus**
* in constant currencies except where stated
** Company compiled consensus of GBP141.8m
FULL YEAR GROSS PROFIT ANALYSIS
Reported (GBPm) Constant
Year-on-year % of Group FY 2018 FY 2017 % %
----------- -------- -------- ------- ---------
EMEA 48% 394.2 332.3 +18.6% +17.9%
----------- -------- -------- ------- ---------
Asia Pacific 20% 161.3 137.2 +17.5% +20.7%
----------- -------- -------- ------- ---------
UK 17% 138.4 140.8 -1.7% -1.7%
----------- -------- -------- ------- ---------
Americas 15% 121.1 101.3 +19.5% +27.3%
----------- -------- -------- ------- ---------
Total 100% 815.0 711.6 +14.5% +15.9%
----------- -------- -------- ------- ---------
Permanent 76% 622.5 536.0 16.1% 17.9%
----------- -------- -------- ------- ---------
Temporary 24% 192.5 175.6 9.6% 9.9%
----------- -------- -------- ------- ---------
Steve Ingham, Chief Executive Officer, said:
"The Group delivered Q4 gross profit growth of 15.4%, against a
tough comparator, where growth improved from c. 9% in the first
three quarters of 2017 to c. 14% in Q4. 2018 was a record year for
the Group, and Q4 was a record quarter, with all of our four
regions delivering growth and 20 countries growing at over 20%.
"Our five Large, High Potential markets of Germany, Greater
China, Latin America, South East Asia and the US continued to
perform strongly, growing 25% collectively, with all five
delivering a record year. Germany grew 28%, with our Interim
business up 44%. In Asia Pacific, Greater China's growth slowed to
12% in Q4 from 31% in Q3, due to confidence in Mainland China being
affected by trade tariff uncertainty. South East Asia was up 30%,
with Singapore the standout performer, up 37%. The US grew 32%,
with strong growth in all offices. Latin America was up 28%, with
Brazil up 25%, and the other five countries in Latin America all up
over 20%.
"In our six Large, Proven markets, the UK delivered a second
consecutive quarter of marginal growth, up 2.1%, despite continued
Brexit related uncertainty. France grew 10% despite a tough
comparator and the impact of the disruption from the 'gilet jaunes'
protests. Italy and the Netherlands continued to perform well, up
23% and 15%, respectively. Spain, despite the continued challenges
in Catalonia, grew 10%, slightly above its Q3 growth rate.
Australia, following our investments in fee earner headcount and a
new office in Canberra, performed strongly, with growth of 25%, up
from 17% growth in Q3.
"Outside these two categories, we saw good growth in the
majority of our other markets, particularly in India and Japan,
which grew 79% and 28%, respectively.
"Having added 561 fee earners in the first three quarters,
additions in Q4 slowed to 58. Whilst additions in Q4 are normally
lower, we are also mindful of the heightened geopolitical and
macro-economic uncertainty, which has the potential to impact
client and candidate confidence.
"We will continue to focus on driving profitable growth, while
continuing our strategic investments towards our Vision of 10,000
headcount, GBP1bn of gross profit and GBP200m - GBP250m of
operating profit. Our flexible and diversified business model
ensures that we are able to respond quickly to changes in market
conditions. We are pleased with the Group's performance and expect
2018 operating profit to be in line with consensus**."
**Company compiled consensus operating profit of GBP141.8m
Group Trading Update
PageGroup delivered fourth quarter gross profit of GBP211.1m, a
record quarter, up 15.4% in constant currencies and 15.8% in
reported rates. For the full year, foreign exchange decreased our
reported gross profit by c. GBP10m and operating profit by c.
GBP2m. In constant currencies, Michael Page grew 14%, with Page
Personnel growing faster, up 18% in the quarter.
Headcount
Having added 561 fee earners in the first three quarters,
additions in Q4 slowed to 58. These additions were mainly into our
Large, High Potential markets, as well as those markets where we
saw the greatest opportunities for growth, such as India. Our
operational support headcount decreased by 4 in the quarter, and
therefore our fee earner to operational support staff ratio reached
a new record for the Group at 79:21. This represented 6,116 fee
earners and a total headcount of 7,772.
Perm/Temp mix
Gross profit from permanent recruitment grew 17.8% in reported
rates and 17.6% in constant currencies, to GBP159.9m (Q4 2017:
GBP135.7m). Gross profit from temporary recruitment grew 9.8% in
reported rates and 9.0% in constant currencies, to GBP51.2m (Q4
2017: GBP46.7m). This resulted in a ratio of permanent to temporary
recruitment of 76:24.
Q4 Gross Profit - Discipline analysis
Reported (GBPm) Constant
Year-on-year % of Group Q4 2018 Q4 2017 % %
----------- -------- -------- ------- ---------
Finance
Accounting and Financial Services 35% 74.6 66.7 +11.8% +11.7%
----------- -------- -------- ------- ---------
Professional Services
Legal, Technology, HR, Secretarial, Healthcare 25% 51.8 41.4 +25.0% +24.5%
----------- -------- -------- ------- ---------
Technical
Engineering, Property & Construction, Procurement & Supply
Chain 24% 50.2 42.4 +18.5% +17.5%
----------- -------- -------- ------- ---------
Marketing, Sales and Retail 16% 34.5 31.9 +8.4% +8.4%
----------- -------- -------- ------- ---------
Total 100% 211.1 182.4 +15.8% +15.4%
----------- -------- -------- ------- ---------
Geographical analysis (unless otherwise stated all growth rates
are in constant currency)
EMEA Gross Profit (GBPm) Growth Rates
(49% of Group) Reported Constant
---------- ---------- ----------- -----------
Q4 2018 vs. Q4 2017 104.4 90.9 +14.9% +13.9%
---------- ---------- ----------- -----------
2018 vs 2017 394.2 332.3 +18.6% +17.9%
---------- ---------- ----------- -----------
Headcount at 31 December 2018: 3,299 (30 September 2018: 3,290)
* France (17% of Group) +10%
* Germany (8% of Group) +28%
EMEA Q4 gross profit grew 13.9%, against a tough comparator of
19.3% in Q4 2017, to GBP104.4m. Both Michael Page and Page
Personnel continued to deliver strong performances, with growth of
13% and 15%, respectively. France, representing 17% of the Group,
grew 10%, despite a particularly tough comparator in Q4 2017 of
28%. This was a record quarter, despite the impact caused by the
disruption from the 'gilet jaunes' protests. Germany, where we
added over 100 fee earners during the year, grew 28%, with our
Interim business growing 44%. Italy grew 23% and Spain was up 10%,
slightly above its Q3 growth rate, with a marginal decline in
Catalonia offset by strong growth elsewhere. Benelux grew 13%, with
the Netherlands up 15%. The Middle East and Africa grew 19%, with
continued strong growth in the UAE, up 46%. Fee earner headcount
across the region increased by 17 in the quarter, mainly into
Germany.
Asia Pacific Gross Profit (GBPm) Growth Rates
(20% of Group) Reported Constant
---------- ---------- ----------- -----------
Q4 2018 vs. Q4 2017 41.2 33.5 +23.1% +22.0%
---------- ---------- ----------- -----------
2018 vs 2017 161.3 137.2 +17.5% +20.7%
---------- ---------- ----------- -----------
Headcount at 31 December 2018: 1,709 (30 September 2018: 1,719)
* Asia (15% of Group) +21%
* Greater China (8% of Group and 54% of Asia) +12%
* Australasia (5% of Group) +25%
In Asia Pacific, our second largest region, gross profit grew
22.0% to GBP41.2m. Greater China, one of our Large, High Potential
markets grew 12%, below its Q3 growth rate of 31%, due to
confidence in Mainland China being affected by trade tariff
uncertainty. While Hong Kong remained strong, Mainland China
experienced slowing activity in the quarter. South East Asia,
another of our Large, High Potential markets grew 30%, with a
strong performance from Singapore, up 37%, in line with its Q3
growth rate. Japan, where we continue to focus on both the
Gaishikei and Nikkei markets, grew 28%, a third consecutive record
quarter. India, where we now have over 120 fee earners, grew 79% up
from 68% in Q3. Australia, following our investment in fee earners
and a new office in Canberra, grew 25%, with strong growth in all
offices. Overall fee earner headcount in the region grew 6 in the
quarter.
UK Gross Profit (GBPm) Growth Rate
(16% of Group)
----------- --------- -----------------
Q4 2018 vs. Q4 2017 33.5 32.8 +2.1%
----------- --------- -----------------
2018 vs 2017 138.4 140.8 -1.7%
----------- --------- -----------------
Headcount at 31 December 2018: 1,436 (30 September 2018: 1,418)
The UK grew 2.1%, its second consecutive quarter of marginal
growth, despite continued Brexit uncertainty impacting candidate
and client confidence. Page Personnel, which represents a quarter
of the UK, grew 12%. Michael Page, which is focused on more senior
opportunities and was impacted by the uncertainty to a greater
extent, declined -1%. Fee earner headcount increased by 15 in the
quarter, wholly into Page Personnel.
Americas Gross Profit (GBPm) Growth Rates
(15% of Group) Reported Constant
---------- ---------- ----------- -----------
Q4 2018 vs. Q4 2017 32.0 25.2 +27.0% +29.2%
---------- ---------- ----------- -----------
2018 vs 2017 121.1 101.3 +19.5% +27.3%
---------- ---------- ----------- -----------
Headcount at 31 December 2018: 1,328 (30 September 2018: 1,291)
* North America (9% of Group) +30%
* Latin America (6% of Group) +28%
The Americas continues to be our fastest growing region and grew
29.2% to GBP32.0m. North America grew 30%, with the US up 32% and
Canada up 20%. In the US, growth was strong in all offices, with
notable performances from Boston, Houston and Los Angeles. Latin
America grew 28%, a record quarter for the region. The Brazilian
market continued to perform well, growing 25%, its fifth
consecutive quarter of double digit growth. Mexico, the largest
country in the region, grew 30%. Elsewhere, the other four
countries in the region all grew in excess of 20%, with a record
performance from Colombia. We added 20 fee earners across the
Americas in the quarter.
Financial Position
Save for the effects of trading in the fourth quarter described
above and the payments of the 2018 interim and special dividends
totalling GBP53.9m on 10 October 2018, there have been no other
significant changes in the financial position of the Group since
the publication of the results for the quarter ended 30 September
2018. Net cash at 31 December 2018, was in the region of GBP96m (31
December 2017: c. GBP96m, Q3 2018: c. GBP122m).
Shares
At 31 December 2018 there were 328,339,724 Ordinary shares in
issue, of which 11,024,316 were held by the Employee Benefit Trust
(EBT). The rights to receive dividends and to exercise voting
rights have been waived by the EBT over 7,775,732 shares and
consequently these shares should be excluded when calculating
earnings per share. The total number of voting rights in the
Company is 328,339,724.
Cautionary Statement
This Fourth Quarter and Full Year 2018 Trading Update has been
prepared solely to provide additional information to shareholders
to assess the Group's strategies and the potential for those
strategies to succeed. The Trading Update should not be relied on
by any other party or for any other purpose. This Trading Update
contains certain forward-looking statements. These statements are
made by the Directors in good faith based on the information
available to them up to the time of their approval of this Trading
Update and such statements should be treated with caution due to
the inherent uncertainties, including both economic and business
risk factors, underlying any such forward-looking information. This
Trading Update has been prepared for the Group as a whole and
therefore gives greater emphasis to those matters that are
significant to PageGroup and its subsidiary undertakings when
viewed as a whole.
Enquiries:
PageGroup +44 (0)20 3077 8425
Steve Ingham, Chief Executive Officer
Kelvin Stagg, Chief Financial Officer
FTI Consulting +44 (0)20 3727 1340
Richard Mountain / Susanne Yule
The Company will host a conference call and presentation for
analysts and investors at 8:30 am today. The live presentation can
be viewed by following the link:
https://www.investis-live.com/pagegroup/5c2c9ce6cad1ac0c00e7dacc/q4fy
Please use the following dial-in numbers to join the
conference:
United Kingdom (Local) 020 3936 2999
All other locations +44 20 3936 2999
Please quote participant access code 88 31 93 to gain access to
the call.
A presentation and recording to accompany the call will be
posted on the Company's website during the course of the morning of
14 January 2019 at:
https://www.page.com/investors/investor-library.aspx
The Group will issue its Full Year Results on 6 March 2019 and
its First Quarter Trading Update on 10 April 2019.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
TSTDMGMMLMGGLZM
(END) Dow Jones Newswires
January 14, 2019 02:00 ET (07:00 GMT)
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