TIDMPAGE
RNS Number : 9512R
PageGroup plc
06 March 2019
6 March 2019
Full Year Results for the Year Ended 31 December 2018
PageGroup plc ("PageGroup"), the specialist professional
recruitment company, announces its full year results for the year
ended 31 December 2018.
Financial summary 2018 2017 Change Change
CC*
Revenue GBP1,549.9m GBP1,371.5m +13.0% +14.0%
------------ ------------ ------- -------
Gross profit GBP814.9m GBP711.6m +14.5% +15.9%
------------ ------------ ------- -------
Operating profit GBP142.5m GBP118.3m +20.4% +20.7%
------------ ------------ ------- -------
Profit before tax GBP142.3m GBP118.2m +20.4%
------------ ------------ -------
Basic earnings per share 32.5p 26.5p +22.6%
------------ ------------ -------
Diluted earnings per share 32.4p 26.4p +22.7%
------------ ------------ -------
Total dividend per share (excl.
special dividend) 13.10p 12.50p +4.8%
------------ ------------ -------
Total dividend per share (incl.
special dividend) 25.83p 25.23p
------------ ------------
HIGHLIGHTS*
-- Group gross profit up 15.9% to GBP814.9m, a record year for the Group
-- Operating profit up 20.7% to GBP142.5m
-- Conversion rate** up to 17.5% (2017: 16.6%)
-- EPS +22.6% to a record 32.5p
-- Record gross profit for 23 countries and all five Large, High Potential markets:
o Germany +29%, Greater China +19%, Latin America +30%, South
East Asia +23% and the US +25%
-- Net increase of 619 fee earners (+11.3%); total headcount at a record level of 7,772
-- Improvement in fee earner to support staff headcount ratio, now 79:21
-- Total ordinary dividend increased 4.8% to 13.1p
-- GBP40.8m special dividend paid in October of 12.73p per share
*At constant currency - all growth rates in constant currency at
prior year rates unless otherwise stated
**Operating profit as a percentage of gross profit
Commenting on the results and the outlook, Steve Ingham, Chief
Executive Officer of PageGroup, said:
"2018 was a record year for the Group and we delivered our best
ever gross profit performance in each of our five Large, High
Potential Markets.
"Gross profit increased 15.9%, operating profit was up 20.7%,
and importantly, our conversion rate increased to 17.5%. This
result was due to a combination of improved business performance
and increased operational efficiencies, balanced by the level of
investment, which has produced positive operational gearing. We
delivered Earnings Per Share growth of 22.6% to 32.5 pence, a
record for the Group.
"We have made further progress on our strategic transformation
programmes, completing our network of regional shared service
centres, three out of four of which are now on our new global
finance system. We are also making good progress on the
transformation of our business technology function, which will
standardise our systems globally and move them into the Cloud. Our
progress was illustrated by our fee earner to operational support
staff ratio ending the year at a new record of 79:21.
"Today the Board has proposed a final dividend of 9.00 pence per
share, an increase of 4.7% on 2017, subject to Shareholders'
approval at the AGM. Combined with the interim dividend of 4.10
pence per share and the special dividend of 12.73 pence per share,
this represents a total dividend yield of 5.7% at the year end
share price.
"We are mindful of the macro-economic uncertainties that exist,
but 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."
Analyst meeting
The Company will be presenting to a meeting of analysts at
8.30am today at
FTI Consulting
200 Aldersgate
Aldersgate Street
London EC1A 4HD
If you are unable to attend in person, you can also follow the
presentation on the following link:
https://www.investis-live.com/pagegroup/5c5da00fcad1ac0c009dfd39/tgfs
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 the access code 49 27 03 to gain access to the
call
The presentation and a recording of the meeting will be
available on the Company's website later today at
http://www.page.com/investors/investor-library/2019.aspx
Enquiries:
PageGroup plc 01932 264446
Steve Ingham, Chief Executive Officer
Kelvin Stagg, Chief Financial Officer
FTI Consulting 020 3727 1340
Richard Mountain/Susanne Yule
MANAGEMENT REPORT
CAUTIONARY STATEMENT
This Management Report has been prepared solely to provide
additional information to shareholders to assess the Group's
strategies and the potential for those strategies to succeed.
This Management Report 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 report 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.
GROUP STRATEGY
At PageGroup we have a clear strategic vision. We aim to be the
leading specialist recruiter in each of the markets in which we
operate. We have sought to achieve this by developing a significant
market presence in major global economies, as well as targeting new
markets where we see the greatest potential for long-term gross
profit growth at attractive conversion rates.
We offer our services across a broad range of disciplines and
specialisms, solely within the professional recruitment market. Our
origins are in permanent recruitment, but a quarter of our gross
profit is in temporary placements, where local culture and market
conditions allow. In particular, we focus on opportunities where
our industry and market expertise can set us apart from our
competition. This enables us to offer a premium service that is
valued by clients and attracts the highest calibre of
candidates.
Our mix of permanent to temporary recruitment reflects the
balance of our business mix, both in terms of brands, where Michael
Page, our largest brand, operating at higher salary levels, has a
naturally higher level of permanent recruitment, as well as our
geographic mix. We are market leaders in regions such as Latin
America, Greater China and South East Asia, where for cultural
reasons, white collar temporary recruitment has only recently
emerged.
PageGroup is focused on delivering against three key objectives
to achieve its strategic vision and provide sustainable financial
returns. These are: 1) to look for organic, high margin and
diversified growth; 2) to position the business to be efficiently
scalable and highly flexible to reflect market conditions; and 3)
as a people-oriented, organically driven business, to nurture and
develop talent and skills which are fundamental to us achieving
long-term sustainable growth.
We therefore invest significantly in our people, as the
recruitment, retention and development of the best talent available
is central to our ability to grow the business and to manage our
resources through economic cycles. Investment in the business has
been focused on developing the long-term sustainability of the
business and is supported by significant balance sheet strength and
cash flow generation.
Organic, scalable growth
Our strategy is to grow organically, achieved by drawing upon
the skill and experience of proven PageGroup management, ensuring
we have the best and most experienced home-grown talent in each key
role. Our team-based structure and profit share business model is
highly scalable. The small size of our specialist teams means we
can increase headcount rapidly to achieve growth when market
conditions are favourable.
Conversely, when market conditions tighten, these
entrepreneurial, profit-sharing teams reduce in size largely
through natural attrition. Consequently, our cost base contracts in
downturns. Our strategy for organic growth has served the business
well over the 42 years since its inception and we believe it will
continue to do so. We have grown from a small, single-discipline
recruitment company operating in one country to a large
multidiscipline, multinational business, operating in 36 countries
represented by our four key brands of Page Executive, Michael Page,
Page Personnel and Page Outsourcing.
Diversification by region and discipline
Our strategy is to expand and diversify the Group by industry
sectors, professional disciplines, geography and level of focus, be
it Page Executive, Michael Page, Page Personnel or Page
Outsourcing, with the objective of being the leading specialist
recruitment consultancy in each of our chosen markets.
As recruitment is a cyclical business, impacted significantly by
the strength of economies, diversification is an important element
of our strategy as it reduces our dependency on individual
businesses or markets, thereby increasing the resilience of the
Group. This strategy is pursued entirely through the organic growth
of existing and new teams, offices, disciplines and countries,
maintaining a consistent team and meritocratic culture as we
grow.
Talent and skills development
We recognise that it is our people who are at the heart of
everything we do, particularly as an organically grown business
where ensuring we have a talent pool with experience through
economic cycles and across both geographies and disciplines is
critical. Investing in our people is, therefore, a vital element of
our strategy. We seek to find the highest calibre staff from a
diverse range of backgrounds and then do our very best to retain
them through offering a fulfilling career and an attractive working
environment.
This includes a team-based structure, a profit share business
model and continuous training and career development, often
internationally. Our strong track record of internal career moves
and promotion from within means that people who join us know that
they could be our future senior managers and main Board
Directors.
Sustainable growth
When we invest in a new business, be it a new country, a new
office or a new discipline, we do so for the long term. Our organic
and team-based business model allows us to grow strongly when
market conditions are favourable, enabling us to increase our fee
earner headcount investment rapidly. Conversely, downturns in the
general economy of a country or in specific industries will
inevitably have a knock-on effect on the recruitment market.
However, it has been our practice in the past, and remains our
intention, to maintain our presence in our chosen markets through
these downturns, while closely controlling our cost base. In this
way, we are able to retain our highly capable management teams in
whom we have invested. Normally, we find that we gain market share
during downturns, which positions our business for market-leading
rates of growth when the economy improves. Pursuing this approach
means that we carry spare capacity during downturns, which can have
a negative effect on profitability in the short term. A strong
balance sheet is, therefore, essential to support the business at
these times.
Our strategic priorities comprise the following:
-- increase the scale and diversification of PageGroup by
organically growing existing and new teams, offices, disciplines,
brands and countries;
-- manage the business with a team and meritocratic culture,
while delivering a consistent and high quality client and candidate
experience;
-- invest through cycles in our Large, High Potential markets of
Germany, Greater China, Latin America, South East Asia and the US
to achieve scale and a market leading position;
-- manage our fee earner headcount in all other markets to
reflect prevailing market conditions, by adding selectively to
geographies and disciplines where there is positive growth
momentum, while reducing headcount where the outlook for growth or
fee earner productivity is weak;
-- focus on operational support consistency; and
-- focus on succession planning and international career paths
to encourage retention and development of key staff.
The main factors that could affect the business and the
financial results are described in the "Principal Risks and
Uncertainties" section in the PageGroup plc 2018 Annual Report and
Accounts, which will be available to shareholders in April
2019.
GROUP RESULTS
GROSS PROFIT Reported CC
Year-on-year % of Group 2018 (GBPm) 2017 (GBPm) % %
----------- ------------ ------------ ------- -------
EMEA 48% 394.3 332.3 +18.7% +17.9%
----------- ------------ ------------ ------- -------
Asia Pacific 20% 161.2 137.2 +17.5% +20.6%
----------- ------------ ------------ ------- -------
UK 17% 138.4 140.8 -1.7% -1.7%
----------- ------------ ------------ ------- -------
Americas 15% 121.0 101.3 +19.4% +27.2%
----------- ------------ ------------ ------- -------
Total 100% 814.9 711.6 +14.5% +15.9%
----------- ------------ ------------ ------- -------
Permanent 76% 621.7 536.0 +16.0% +17.7%
----------- ------------ ------------ ------- -------
Temporary 24% 193.2 175.6 +10.0% +10.4%
----------- ------------ ------------ ------- -------
At constant exchange rates, the Group's revenue increased 14.0%
and gross profit increased 15.9% for the year ended 31 December
2018. At reported rates, revenue increased 13.0% to GBP1,549.9m
(2017: GBP1,371.5m) and gross profit increased 14.5% to GBP814.9m
(2017: GBP711.6m).
The Group's revenue mix between temporary and permanent
placements was 59:41 (2017: 60:40) and for gross profit our
permanent to temporary ratio was 76:24 (2017: 75:25). Revenue from
temporary placements comprises the salaries of those placed,
together with the margin charged. This margin on temporary
placements decreased slightly to 21.0% in 2018 (2017: 21.2%).
Overall, pricing remained relatively stable across all regions,
although a stronger pricing environment was experienced in markets
and disciplines where there were increased instances of candidate
shortages.
Our Large, High Potential markets' category increased gross
profit by 25% in constant currencies and achieved a record gross
profit of GBP270.3m. All five markets included within this category
achieved record gross profit.
Total Group headcount increased by 743 in the year, up 10.6% to
a record 7,772. This comprised a net increase of 619 fee earners
(+11.3%) and an increase of 124 operational support staff (+8.1%),
reflecting the continued strong focus on operational efficiency.
The ratio of net additions in the year was 83 fee earners to 17
operational support staff. As a result, our fee earner to
operational support staff ratio improved to a new record level of
79:21. In total, administrative expenses increased 13.3% to
GBP672.4m (2017: GBP593.2m). The Group's operating profit from
trading activities totalled GBP142.5m (2017: GBP118.3m), an
increase of 20.7% at constant rates and 20.4% in reported
rates.
The Group's conversion rate of gross profit to operating profit
from trading activities increased to 17.5% (2017: 16.6%). This
reflected a combination of steadily improving conditions in a
number of markets, as well as the benefits from our recent
investment to drive operational efficiencies. These were offset in
part by more challenging conditions in markets such as the UK, as
well as our continued investment in fee earner headcount.
OPERATING PROFIT AND CONVERSION RATES
The Group's organic growth model and profit-based team bonus
ensures cost control remains tight. Approximately three-quarters of
costs were employee related, including wages, bonuses, share-based
long-term incentives, and training & relocation costs.
The combination of gross profit growth and the ongoing focus on
cost control resulted in operating profit of GBP142.5m (2017:
GBP118.3m), an increase of 20.4% in reported rates and 20.7% in
constant currencies.
Depreciation and amortisation for the year totalled GBP19.7m
(2017: GBP19.1m). This included amortisation relating to our
operating system, PRS, of GBP6.9m (2017: GBP8.1m).
We have completed our transition to a shared service centre
delivery model, and also now have around half of the Group, by fee
earners, live on our new Global Finance System. We are continuing
with the transition of our Business Technology function to a global
model, closing data centres and transitioning to the Cloud. These
strategic investments have driven an improvement in both our fee
earner to operational support staff ratio and our conversion
rate.
Our fee earner to operational support staff ratio improved to a
record level of 79:21, with our ongoing focus on conversion rates
and maximising productivity from the investment of 786 fee earners
added in 2017, as well as the further 619 added in 2018. Net
additions in the year were at a ratio of 83 fee earners to 17
operational support staff.
The Group's conversion rate for the year of 17.5% was an
improvement from 16.6% in 2017. This was achieved alongside the
Group's investment programme, which was focused in particular on
our Large, High Potential markets, and despite the tough market
conditions faced in some of the Group's markets such as the UK, as
well as our operational support programmes.
In EMEA, conversion increased from 21.0% to 21.7%. This was
driven by the benefits of operational gearing coming through. In
the UK, the conversion rate fell from 11.4% to 9.7%, in line with
the tough trading conditions. In Asia Pacific, conversion fell
slightly to 16.6% (2017: 17.1%), due to our high level of fee
earner investment in the region. The Americas' conversion rate
increased from 9.0% to 13.8% in line with our increased growth rate
throughout the region.
The Group was adversely impacted by movements in foreign
exchange rates, as Sterling strengthened marginally against a
number of currencies in which the Group operates. The strengthening
of Sterling decreased the Group's revenue and gross profit by
GBP14m and GBP10m respectively, with a negligible impact on
operating profit.
A net interest charge of GBP0.2m reflected the continuing low
interest rate environment. Interest of GBP0.6m was received on cash
balances held through the year, offset by financial charges
relating to the Group's invoice discounting facility and overdrafts
used to support local operations of GBP0.8m.
Earnings per share and dividends
In 2018, basic earnings per share increased 22.6% to 32.5p
(2017: 26.5p), reflecting the improved business performance.
Diluted earnings per share, which takes into account the dilutive
effect of share options, was up 22.7% to 32.4p (2017: 26.4p).
The Group's strategy is to operate a policy of financing the
activities and development of the Group from our retained earnings
and to maintain a strong balance sheet position. We first use our
cash to satisfy our operational and investment requirements and to
hedge our liabilities under the Group's share plans. We then review
our liquidity over and above this requirement to make returns to
shareholders, firstly by way of ordinary dividend.
Our policy is to grow this ordinary dividend over the course of
the economic cycle, in line with our long-term growth rate. We
believe this enables us to sustain the level of ordinary dividend
payments during a downturn as well as to increase it during more
prosperous times.
Cash generated in excess of these first two priorities will be
returned to shareholders through supplementary returns, using
special dividends or share buybacks.
In line with the improved growth rates and increase in operating
profits, a final dividend of 9.00p (2017: 8.60p) per ordinary share
is proposed. When taken together with the interim dividend of 4.10p
(2017: 3.90p) per ordinary share, this would imply an increase in
the total dividend for the year of 4.8% over 2017 to 13.1p per
ordinary share.
The proposed final dividend, which amounts to GBP29.2m, will be
paid on 17 June 2019 to shareholders on the register as at 17 May
2019, subject to shareholder approval at the Annual General Meeting
on 24 May 2019.
After consultation with our shareholders, we also paid a special
dividend of 12.73p per share (2017: 12.73p per share) on 10 October
2018, totalling GBP40.8m (2017: GBP40.1m). We will continue to
monitor our cash position in 2019 and will make returns to
shareholders in line with the above policy.
Cash flow and balance sheet
Cash flow in the year was strong, with GBP131.7m (2017:
GBP124.5m) generated from operations. The closing net cash balance
was GBP97.7m at 31 December 2018, broadly in line with the prior
year. The movements in the Group's cash flow in 2018 reflected the
underlying trading conditions, with a GBP37.7m increase in working
capital.
The Group had a GBP50m invoice financing arrangement and GBP21m
uncommitted overdraft facilities to support cash flows across its
operations and ensure rapid access to funds should they be
required. None of these were in use at the year end.
Income tax paid in the year was GBP41.0m (2017: GBP38.2m) and
net capital expenditure in 2018 was GBP24.4m (2017: GBP16.2m).
Spending on software increased from 2017 as we continued the
roll-out of our new Global Finance System. Spending on property,
plant and equipment increased, mainly due to the increase in our
fee earner and operational support headcount.
Dividend payments were up on the prior year at GBP81.3m (2017:
GBP78.3m), as a result of the increased ordinary and special
dividends paid in 2018. There was also a significant increase in
cash receipts from share option exercises. In 2018, GBP26.9m was
received by the Group from the exercise of options compared to
GBP12.7m received in 2017, driven by the higher share price. In
2018, GBP11.6m was also spent on the purchase of shares by the
Employee Benefit Trust to satisfy future obligations under our
employee share plans. No such purchase was made in 2017.
The most significant item in our balance sheet was trade
receivables, which amounted to GBP288.2m at 31 December 2018 (2017:
GBP245.4m), comprising permanent fees invoiced and salaries and
fees invoiced in the temporary placement business, but not yet
paid. Day's sales in debtors at 31 December 2018 were 54 days
(2017: 53 days).
EUROPE, MIDDLE EAST AND AFRICA (EMEA)
EMEA is the Group's largest region, contributing 48% of the
Group's gross profit in the year. With operations in 17 countries,
PageGroup has a strong presence in the majority of EMEA markets,
and is the clear leader in specialist permanent recruitment in the
two largest, France and Germany. Across the region, permanent
placements accounted for 70% and temporary placements 30% of gross
profit.
The region includes four of our Large, Proven markets, France,
Spain, Italy and the Netherlands, across which there is a broad
range of competition. EMEA also includes Germany, one of the
Group's Large, High Potential markets, which has low penetration
rates (markets where less than 30% of recruitment is outsourced)
and significant growth potential, particularly in temporary
recruitment. In addition, there are a number of markets such as
Poland, Turkey and Africa, which are less developed, with limited
competition, but are increasingly looking for professional
recruitment services. The Middle East, where PageGroup is the
largest international recruiter, has one of the Group's highest
conversion rates.
EMEA GBPm Growth rates
(48% of Group in 2018) 2018 2017 Reported CC
------ ------ --------- -------
Gross Profit 394.3 332.3 +18.7% +17.9%
------ ------ --------- -------
Operating Profit 85.6 69.7 +22.8% +21.9%
------ ------ --------- -------
Conversion Rate (%) 21.7% 21.0%
------ ------ --------- -------
In 2018, the EMEA region saw strong market conditions, with 11
countries delivering record gross profit for the year. In constant
currency, revenue increased 17.1% on 2017 and gross profit
increased by 17.9%. In reported rates, revenue in the region was up
18.0% to GBP797.4m (2017: GBP676.0m), and gross profit increased
18.7% to GBP394.3m (2017: GBP332.3m). The region benefited from
favourable foreign exchange movements which increased revenue and
gross profit by GBP6m and GBP2m, respectively.
Our largest businesses in the region, France and Germany,
together representing nearly half of the region by gross profit,
grew 16% and 29% respectively, for the full year in constant
currencies. Michael Page Interim in Germany, where we continue to
invest heavily in temporary and contracting recruitment, grew 42%.
Elsewhere we saw strong growth in Benelux of +19%, Italy +23% and
Spain +8%, despite challenging trading conditions in Catalonia.
The Middle East and Africa, which represented 4% of the region,
saw a notable improvement compared to the prior year, with growth
of 17% (2017: -1%).
The 22.8% increase in operating profit for 2018 to GBP85.6m
(2017: GBP69.7m) and the increase in the conversion rate to 21.7%
(2017: 21.0%) were the result of the benefit of operational gearing
coming through, partially offset by significant investments in our
Interim and contracting businesses, such as Germany, which have
driven gross profit growth, but in the short-term impacted our
conversion rate.
Headcount across the region increased by 303 (+10.1%) to 3,299
at the end of 2018 (2017: 2,996). The majority of this increase was
fee earners, as the business added headcount where growth
opportunities were strongest, predominately in France and
Germany.
ASIA PACIFIC
Asia Pacific represented 20% of the Group's gross profit in
2018, with 75% of the region being Asia and 25% Australasia. Other
than in the financial centres of Hong Kong, Singapore and Tokyo,
the Asian market is generally highly under-developed, and offers
attractive opportunities in both international and domestic markets
at good conversion rates. Two of our Large, High Potential Markets,
Greater China and South East Asia, are in this region. With a
highly experienced management team, over 1,300 staff and limited
competition, the size of the opportunity in Asia is significant.
Across Asia, driven by cultural attitudes towards white collar
temporary recruitment, permanent placements accounted for 95% and
temporary placements 5% of gross profit.
Australasia is a mature, well-developed and highly competitive
recruitment market. PageGroup has a meaningful presence in
permanent recruitment in the majority of the professional
disciplines and major cities in Australia and New Zealand. Page
Personnel has a growing presence and significant potential to
expand and grow market share.
ASIA PACIFIC GBPm Growth rates
(20% of Group in 2018) 2018 2017 Reported CC
------ ------ --------- -------
Gross Profit 161.2 137.2 +17.5% +20.6%
------ ------ --------- -------
Operating Profit 26.8 23.5 +13.8% +16.6%
------ ------ --------- -------
Conversion Rate (%) 16.6% 17.1%
------ ------ --------- -------
In Asia Pacific, in constant currencies, revenue increased 16.6%
and gross profit increased by 20.6%. In reported rates, revenue
increased 12.9% to GBP266.7m (2017: GBP236.3m), while gross profit
rose 17.5% to GBP161.2m (2017: GBP137.2m). The region was adversely
impacted by foreign exchange movements, which reduced reported
revenue and gross profit by GBP9m and GBP4m, respectively.
Asia, representing 15% of the Group, delivered gross profit
growth of 23%. Greater China delivered a record year, up 19% (2017:
+14%) with strong growth throughout. In Hong Kong, where we have a
large number of multinational clients, we saw an improvement in
market conditions and delivered growth of 23%. However, Mainland
China experienced more challenging trading conditions in the fourth
quarter, driven by trade tariff uncertainty. South East Asia was up
23% on the prior year, with a strong performance in Singapore, up
29%. We also opened in Vietnam during the year, giving us our fifth
country in South East Asia. India, where we now have over 120 fee
earners, delivered a record year with growth of 49%. Japan, where
we invested heavily in fee earners, saw growth of 30% and delivered
a record year. In Australia, following our investment in fee
earners and a new office in Canberra, we delivered growth of
14%.
Operating profit rose 13.8% to GBP26.8m (2017: GBP23.5m), with
the conversion rate marginally down at 16.6% (2017: 17.1%), due to
our fee earner investment in the region. Headcount across the
region rose by 177 (11.6%) in the year, ending the year at 1,709
(2017: 1,532). The majority of these headcount additions were in
Asia, particularly Greater China, India and Japan.
UNITED KINGDOM
The UK represented 17% of the Group's gross profit in 2018,
operating from 27 offices covering all major cities. It is a
mature, highly competitive and sophisticated market with the
majority of vacant positions being outsourced to recruitment firms.
PageGroup has a market leading presence in permanent recruitment
across the UK and a growing presence in temporary recruitment. In
the UK, permanent placements accounted for 69% and temporary
placements 31% of gross profit.
The UK business operates under the four brands of Michael Page,
Page Personnel, Page Executive and Page Outsourcing, with
representation in 13 specialist disciplines via the Michael Page
brand. There remains opportunity to roll-out new discipline
businesses under the lower salary level Page Personnel brand, which
now represents 25% of UK gross profit.
UK GBPm
(17% of Group in 2018) 2018 2017 Growth rate
------ ------ -------------
Gross Profit 138.4 140.8 -1.7%
------ ------ -------------
Operating Profit 13.4 16.0 -16.2%
------ ------ -------------
Conversion Rate (%) 9.7% 11.4%
------ ------ -------------
In the UK, revenue increased 0.2% to GBP313.5m (2017:
GBP312.9m), whereas gross profit declined 1.7% to GBP138.4m (2017:
GBP140.8m), reflecting continued economic uncertainty.
The UK experienced challenging market conditions throughout the
year due to continued Brexit uncertainty impacting candidate and
client confidence. Page Personnel, which represents a quarter of
the UK, grew 8% and delivered a record year. Michael Page, which is
focused on more senior opportunities and was impacted to a greater
extent by the uncertainty, declined -4%. These challenging market
conditions resulted in a decline in operating profit of 16.2% to
GBP13.4m (2017: GBP16.0m) and a reduction in the conversion rate to
9.7% (2017: 11.4%).
Headcount marginally increased to 1,436 at the end of December
2018 (2017: 1,407). The additions were in operational support, to
deliver the Group's operational support strategic transformation
programmes, with our fee earner headcount broadly flat in the year.
With a relatively high staff turnover of newer, less experienced
consultants, we will continue to monitor activity and will, if
needed, use that turnover to lower headcount, and therefore costs,
by natural attrition.
THE AMERICAS
The Americas represented 15% of the Group's gross profit in
2018, being North America (58% of the region) and Latin America
(42% of the region). The US and Latin America are two of the Large,
High Potential Markets in our growth strategy. The US, where we
have eight offices, has a well-developed recruitment industry, but
in many disciplines, especially technical, there is limited
national competition of any scale. PageGroup's breadth of
professional specialisms and geographic reach is uncommon and
provides a competitive advantage. Latin America is a very
under-developed region, where PageGroup enjoys the market leading
position with over 800 employees in six countries and 13 offices.
There are few international competitors and none with regional
scale. Across Latin America, permanent placements accounted for 93%
of gross profit and temporary placements 7%.
AMERICAS GBPm Growth rates
(15% of Group in 2018) 2018 2017 Reported CC
------ ------ --------- -------
Gross Profit 121.0 101.3 +19.4% +27.2%
------ ------ --------- -------
Operating Profit 16.7 9.2 +82.7% +87.3%
------ ------ --------- -------
Conversion Rate (%) 13.8% 9.0%
------ ------ --------- -------
In constant currencies, revenue increased by 25.5% and gross
profit increased by 27.2%. In reported rates, revenue increased by
17.7% to GBP172.3m (2017: GBP146.3m) while gross profit improved
19.4% to GBP121.0m (2017: GBP101.3m). During the year, the region
was impacted by adverse foreign exchange movements that decreased
revenue and gross profit by GBP11m and GBP8m, respectively.
In North America, our gross profit increased by 25% in constant
currencies with both the US and Canada delivering record years. In
the US, which grew 25%, our strategy of diversification continued,
with particularly strong performances from our regional offices of
Boston, Chicago, Houston and Los Angeles. We increased our US fee
earner headcount by 15% compared to last year, as we continued to
invest in this Large, High Potential market.
In Latin America, gross profit was up 30% year-on-year in
constant currencies. We added nearly 150 fee earners in the year,
an increase of 30%, as we continued to invest in this Large, High
Potential market. Our business in Brazil delivered growth of 20%,
with Mexico, our largest country in Latin America, delivering a
record year, with growth of 33%. Elsewhere, the other four
countries in the region, with a fee earner headcount of over 250,
saw growth of 36% collectively, and all delivered record years.
Operating profit increased 82.7% to GBP16.7m (2017: GBP9.2m),
with a conversion rate of 13.8% (2017: 9.0%). Headcount increased
by 234 (+21.4%) in 2018 to 1,328 (2017: 1,094).
OTHER FINANCIAL ITEMS
Foreign exchange
Foreign exchange had an adverse impact on our reported results
for the year, decreasing gross profit by GBP10m, administrative
expenses by GBP10m and therefore no impact on operating profit.
This impact was mainly within the Americas and Asia Pacific
regions, partially offset by a favourable impact in EMEA.
Taxation
The tax charge for the year was GBP38.6m (2017: GBP35.1m). This
represented an effective tax rate of 27.1% (2017: 29.7%). The rate
is higher than the effective UK rate for the calendar year of 19%
(2017: 19.25%) principally due to the impact of higher tax rates in
overseas countries and to a lesser extent disallowable expenditure.
There are some countries in which the tax rate is lower than the
UK, but the impact is very small either because the countries are
not significant contributors to Group profit or the tax rate
difference is not significant.
The effective rate in 2017 was impacted principally by the US
tax reform which reduced the headline rate of tax from 35% to 21%
from 1 January 2018. This resulted in a write down of US deferred
tax assets which, together with other adjustments in the US,
increased the tax charge by 2.4%. In 2018, the tax rate was
impacted primarily by tax on share based payments (1.2% decrease)
and the recognition/derecognition of losses (0.6% increase).
The tax charge for the year reflects the Group's tax strategy,
which is aligned to business goals. It is PageGroup's policy to pay
its fair share of taxes in the countries in which it operates and
deal with its tax affairs in a straightforward, open and honest
manner. The Group's tax strategy is set out in detail on our
website in the Investor section under "Responsibilities".
Share options and share repurchases
At the beginning of 2018 the Group had 15.5m share options
outstanding, of which 8.6m had vested, but had not been exercised.
During the year, options were granted over 1.7m shares under the
Group's share option plans. Options were exercised over 6.1m
shares, generating GBP26.9m in cash, and options lapsed over 0.5m
shares. At the end of 2018, options remained outstanding over 10.6m
shares, of which 4.3m had vested, but had not been exercised.
During 2018, 2.2m shares were purchased for the Group's Employee
Benefit Trust, and no shares were cancelled (2017: no shares were
purchased or cancelled).
KEY PERFORMANCE INDICATORS (KPIs)
KPI Definition, method of calculation and analysis
Financial
Gross profit How measured: Gross profit growth represents
growth revenue less cost of sales expressed as the
percentage change over the prior year. It consists
principally of placement fees for permanent
candidates and the margin earned on the placement
of temporary candidates.
Why it's important: This metric indicates the
degree of income growth in the business. It
can be impacted significantly by foreign exchange
movements in our international markets. Consequently,
we look at both reported and constant currency
metrics.
How we performed in 2018: Gross profit increased
14.5% in reported rates, 15.9% in constant currencies,
as adverse currency movements impacted the full-year
figures.
Relevant strategic objective: Organic growth
-----------------------------------------------------------
Gross profit How measured: Total gross profit from: a) geographic
diversification regions outside the UK; and b) disciplines outside
of Accounting & Financial Services, each expressed
as a percentage of total gross profit.
Why it's important: These percentages give an
indication of how the business has diversified
its revenue streams away from its historic concentrations
in the UK and from the Accounting & Financial
Services disciplines.
How we performed in 2018: Geographies: the percentage
increased to 83.0% from 80.2% in 2017, demonstrating
a high degree of diversification. This reflects
strong trading conditions in the majority of
our overseas businesses.
Disciplines: the percentage increased to 65.3%
(2017: 63.3%), as our professional services
disciplines performed strongly, combined with
good growth in our technical disciplines, comprising
Property & Construction, Procurement & Supply
Chain and Engineering.
Relevant strategic objective: Diversification
-----------------------------------------------------------
Ratio of gross How measured: Gross profit from each type of
profit generated placement expressed as a percentage of total
from permanent gross profit.
and temporary Why it's important: This ratio reflects both
placements the current stage of the economic cycle and
our geographic spread, as a number of countries
culturally have minimal temporary placements.
It gives a guide as to the operational gearing
potential in the business, which is significantly
greater for permanent recruitment.
How we performed in 2018: The ratio increased
slightly to 76:24 (2017: 75:25), with strong
growth in markets where we have a higher ratio
of permanent recruitment such as Asia and Latin
America.
Relevant strategic objective: Diversification
-----------------------------------------------------------
Basic earnings How measured: Profit for the year attributable
per share (EPS) to the Group's equity shareholders, divided
by the weighted average number of shares in
issue during the year.
Why it's important: This measures the underlying
profitability of the Group and the progress
made against the prior year.
How we performed in 2018: The Group saw a 22.6%
rise in Basic EPS to 32.5p. Improvements in
trading and operational efficiencies drove strong
growth in the Group's EPS in 2018.
Relevant strategic objective: Sustainable growth
-----------------------------------------------------------
Net cash How measured: Cash and short-term deposits less
bank overdrafts and loans.
Why it's important: The level of net cash reflects
our cash generation and conversion capabilities
and our success in managing our working capital.
It determines our ability to reinvest in the
business, to return cash to shareholders and
to ensure we remain financially robust through
cycles.
How we performed in 2018: Net cash increased
to GBP97.7m (2017: GBP95.6m). This was after
dividend payments of GBP81.3m (including a special
dividend of GBP40.8m).
Relevant strategic objective: Sustainable growth
-----------------------------------------------------------
Strategic
Fee earner headcount How measured: Number of fee earners and directors
growth involved in revenue-generating activities at
the year end, expressed as the percentage change
compared to the prior year.
Why it's important: Growth in fee earners is
a guide to our confidence in the business and
macro-economic outlook, as it reflects our expectations
as to the level of future demand for our services
above the existing capacity currently within
the business.
How we performed in 2018: Fee earner headcount
grew by 619, or 11.3% in the year, resulting
in 6,116 fee earners at the end of the year,
a record for the Group.
Relevant strategic objective: Sustainable growth
-----------------------------------------------------------
Gross profit How measured: Gross profit divided by the average
per fee earner number of fee-generating staff, calculated on
a rolling monthly average basis.
Why it's important: This is our indicator of
productivity, which is affected by levels of
activity in the market, capacity within the
business and the number of recently hired fee
earners who are not yet at full productivity.
Currency movements can also impact this figure.
How we performed in 2018: In constant currency,
it increased slightly to GBP140.0k (2017: GBP139.9k)
as a result of the improved trading conditions.
However, in reported rates, this decreased to
GBP138.3k.
Relevant strategic objective: Organic growth
-----------------------------------------------------------
Fee earner: How measured: The percentage of fee earners
support staff compared to operational support staff at the
headcount ratio year end, expressed as a ratio.
Why it's important: This reflects the operational
efficiency in the business in terms of our ability
to grow the revenue-generating platform at a
faster rate than the staff needed to support
this growth.
How we performed in 2018: The ratio improved
to a new record of 79:21 from 78:22 in 2017.
This was driven by 11.3% fee earner headcount
growth, as well as benefiting from our operational
support initiatives. The ratio of new joiners
in the year was 83:17.
Relevant strategic objective: Sustainable growth
-----------------------------------------------------------
Conversion rate How measured: Operating profit (EBIT) before
exceptional items expressed as a percentage
of gross profit.
Why it's important: This reflects the level
of fee-earner productivity and the Group's effectiveness
at cost control in the business, together with
the degree of investment being made for future
growth.
How we performed in 2018: The Group's conversion
rate increased to 17.5% (2017: 16.6%), with
a combination of steadily improving conditions
in a number of markets and the benefits of operational
efficiencies, offset by sustained investment
in our fee earner headcount.
Relevant strategic objective: Sustainable growth
-----------------------------------------------------------
People
Employee engagement How measured: A key output of the employee surveys
index undertaken periodically within the business.
Why it's important: A positive working environment
and motivated team helps productivity and encourages
retention of key talent within the business.
How we performed in 2018: We recorded an 83%
positive score for employee engagement in the
latest Employee Survey in 2017. This was a combination
of questions, including: how valued our people
felt; how proud they were to work for PageGroup;
and the level of trust and recognition they
received for their work. No survey was performed
in 2018 and the next one is planned for 2019.
Relevant strategic objective: Sustainable growth
-----------------------------------------------------------
Management experience How measured: Average tenure of front-office
management measured as years of service for
directors and above.
Why it's important: Experience through the economic
cycle and across both geographies and disciplines
is critical for an organic cyclical business
operating across the globe. Our organic business
model relies on an experienced management pool
to enable flexibility in resourcing and senior
management succession planning.
How we performed in 2018: The average tenure
of the Group's management increased from 11.9
years to 12.0 years, with a particular increase
in the Americas.
Relevant strategic objective: Talent and Skills
development
-----------------------------------------------------------
Total GHG emissions How measured: Direct and Indirect GHG emissions
calculated in line with the UK Government's
2018 DEFRA reporting standards. Principally
based on data from a sample of our offices,
covering 68% of the Group by headcount, and
extrapolated for the Group as a whole.
Why it's important: The emissions calculations
look at the CO2e impact of our operations in
absolute terms.
How we performed in 2018: Direct GHG emissions
relating to the combustion of fuel decreased
by 4.3% to 1,882 tonnes CO2e, while Indirect
GHG emissions, through the purchase of energy
such as electricity, increased by 10.4% to 5,379
tonnes.
Relevant strategic objective: Sustainable growth.
-----------------------------------------------------------
Intensity values How measured: Intensity values for GHG emissions
of GHG emissions are based on property and vehicle energy-derived
emissions per 1,000 headcount. Headcount is
viewed as being the most representative metric
for PageGroup's activity levels and is unaffected
by issues such as business mix or foreign exchange
variations.
Why it's important: Intensity values help to
normalise the GHG metrics and place them in
the context of the Group's changing business
profile, particularly in terms of increases
in headcount. It helps to identify where progress
has been made on emissions reduction.
How we performed in 2018: Energy-derived emissions
were reduced by 9.2% compared with 2017, largely
due to an increase in headcount without a corresponding
increase in the number of offices, along with
changes in fuel sources and improvements in
office energy efficiencies.
Relevant strategic objective: Sustainable growth.
-----------------------------------------------------------
The source of data and calculation methods year-on-year are on a
consistent basis, including changes resulting from the use of 2018
DEFRA conversion factors. The movements in KPIs are in line with
expectations.
Steve Ingham Kelvin Stagg
Chief Executive Officer Chief Financial Officer
5 March 2019
Consolidated Income Statement
For the year ended 31 December 2018
2018 2017
Note GBP'000 GBP'000
Revenue 3 1,549,941 1,371,534
Cost of sales (735,039) (659,966)
Gross profit 3 814,902 711,568
Administrative expenses (672,439) (593,246)
---------- ----------
Operating profit 3 142,463 118,322
Financial income 4 631 229
Financial expenses 4 (819) (389)
Profit before tax 3 142,275 118,162
Income tax expense 5 (38,572) (35,082)
---------- ----------
Profit for the year 103,703 83,080
---------- ----------
Attributable to:
Owners of the parent 103,703 83,080
---------- ----------
Earnings per share
Basic earnings per share (pence) 8 32.5 26.5
Diluted earnings per share (pence) 8 32.4 26.4
---------- ----------
The above results all relate to continuing operations
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2018
2018 2017
GBP'000 GBP'000
Profit for the year 103,703 83,080
Other comprehensive income/(loss)
for the year
Items that may subsequently be reclassified
to profit and loss:
Currency translation differences 4,359 (2,888)
(Loss) / gain on hedging
instruments (988) 1,340
Total comprehensive income for the
year 107,074 81,532
-------- --------
Attributable to:
Owners of the parent 107,074 81,532
-------- --------
Consolidated Balance Sheet
As at 31 December 2018
2018 2017
Note GBP'000 GBP'000
Non-current assets
Property, plant and equipment 9 35,564 30,158
Intangible assets - Goodwill and other
intangibles 2,019 1,685
- Computer software 31,377 32,473
Deferred tax assets 17,487 14,637
Other receivables 10 12,746 10,513
99,193 89,466
---------- ----------
Current assets
Trade and other receivables 10 349,111 299,089
Current tax receivable 17,206 15,652
Cash and cash equivalents 12 97,673 95,605
463,990 410,346
---------- ----------
Total assets 3 563,183 499,812
---------- ----------
Current liabilities
Trade and other payables 11 (204,353) (187,730)
Current tax payable (20,145) (22,166)
(224,498) (209,896)
---------- ----------
Net current assets 239,492 200,450
---------- ----------
Non-current liabilities
Other payables 11 (19,474) (19,489)
Deferred tax liabilities (630) (370)
(20,104) (19,859)
---------- ----------
Total liabilities 3 (244,602) (229,755)
Net assets 318,581 270,057
---------- ----------
Capital and reserves
Called-up share capital 3,284 3,268
Share premium 98,502 92,677
Capital redemption reserve 932 932
Reserve for shares held in the employee
benefit trust (50,673) (58,931)
Currency translation reserve 34,217 29,858
Retained earnings 232,319 202,253
Total equity 318,581 270,057
---------- ----------
Consolidated Statement of Changes in Equity
For the year ended 31 December 2018
Reserve
for shares
held in
Called-up Capital the Currency
share Share redemption employee translation Retained Total
benefit
capital premium reserve trust reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
January 2017 3,259 90,458 932 (72,941) 32,746 192,107 246,561
---------- -------- ----------- ----------- ------------ --------- ---------
Currency
translation
differences - - - - (2,888) - (2,888)
---------- -------- ----------- ----------- ------------ --------- ---------
Net loss
recognised
directly
in equity - - - - (2,888) - (2,888)
Profit on hedging
instruments - - - - - 1,340 1,340
Profit for the
year ended 31
December
2017 - - - - - 83,080 83,080
Total
comprehensive
(loss)/income
for
the year - - - - (2,888) 84,420 81,532
---------- -------- ----------- ----------- ------------ --------- ---------
Exercise of share
plans 9 2,219 - - - 10,458 12,686
Transfer from
reserve for
shares held
in the employee
benefit trust - - - 14,010 - (14,010) -
Credit in respect
of share
schemes - - - - - 6,809 6,809
Credit in respect
of tax on
share schemes - - - - - 720 720
Dividends - - - - - (78,251) (78,251)
9 2,219 - 14,010 - (74,274) (58,036)
---------- -------- ----------- ----------- ------------ --------- ---------
Balance at 31
December 2017
and 1 January
2018 3,268 92,677 932 (58,931) 29,858 202,253 270,057
---------- -------- ----------- ----------- ------------ --------- ---------
Currency
translation
differences - - - - 4,359 - 4,359
---------- -------- ----------- ----------- ------------ --------- ---------
Net income
recognised
directly
in equity - - - - 4,359 - 4,359
Loss on hedging
instruments - - - - - (988) (988)
Profit for the
year ended 31
December
2018 - - - - - 103,703 103,703
---------- -------- ----------- ----------- ------------ --------- ---------
Total
comprehensive
income for the
year - - - - 4,359 102,715 107,074
---------- -------- ----------- ----------- ------------ --------- ---------
Purchase of
shares held in
employee
benefit trust - - - (11,567) - - (11,567)
Exercise of share
plans 16 5,825 - - - 21,072 26,913
Transfer from
reserve for
shares held
in the employee
benefit trust - - - 19,825 - (19,825) -
Credit in respect
of share
schemes - - - - - 7,048 7,048
Credit in respect
of tax on
share schemes - - - - - 368 368
Dividends - - - - - (81,312) (81,312)
16 5,825 - 8,258 - (72,649) (58,550)
---------- -------- ----------- ----------- ------------ --------- ---------
Balance at 31
December 2018 3,284 98,502 932 (50,673) 34,217 232,319 318,581
---------- -------- ----------- ----------- ------------ --------- ---------
Consolidated Statement of Cash Flows
For the year ended 31 December 2018
2018 2017
Note GBP'000 GBP'000
Profit before tax 142,275 118,162
Depreciation and amortisation charges 19,661 19,094
Loss/(Income) on sale of property, plant and
equipment and computer software 281 (159)
Share scheme charges 7,043 6,796
Net finance costs 181 160
--------- ---------
Operating cash flow before changes in working
capital 169,441 144,053
--------- ---------
Increase in receivables (49,278) (42,629)
Increase in payables 11,534 23,040
--------- ---------
Cash generated from operations 131,697 124,464
--------- ---------
Income tax paid (41,001) (38,154)
--------- ---------
Net cash from operating activities 90,696 86,310
--------- ---------
Cash flows from investing activities
Purchases of property, plant and equipment (15,668) (13,415)
Purchases and capitalisation of intangible
assets (9,944) (7,508)
Proceeds from the sale of property, plant and equipment,
and computer software 1,204 4,688
Interest received 631 229
--------- ---------
Net cash used in investing activities (23,777) (16,006)
--------- ---------
Cash flows from financing activities
Dividends paid (81,312) (78,251)
Interest paid (818) (1,845)
Issue of own shares for the exercise of options 26,913 12,686
Purchase of shares into the employee benefit
trust (11,567) -
Net cash used in financing activities (66,784) (67,410)
--------- ---------
Net increase in cash and cash equivalents 135 2,894
Cash and cash equivalents at the beginning
of the year 95,605 92,796
Exchange gain/(loss) on cash and cash equivalents 1,933 (85)
Cash and cash equivalents at the end of the
year 12 97,673 95,605
--------- ---------
Notes to the consolidated preliminary results
For the year ended 31 December 2018
1. Corporate information
PageGroup plc (the "Company") is a limited liability company
incorporated in Great Britain and domiciled within the United
Kingdom whose shares are publicly traded. The consolidated
preliminary results of the Company as at and for the year ended 31
December 2018 comprise the Company and its subsidiaries (together
referred to as the "Group").
The consolidated preliminary results of the Group for the year
ended 31 December 2018 were approved by the directors on 5 March
2019. The Annual General Meeting of PageGroup plc will be held at
the registered office, Page House, The Bourne Business Park, 1
Dashwood Lang Road, Addlestone, Surrey, KT15 2QW on 24 May 2019 at
9.30am.
2. Accounting policies
Basis of preparation
Whilst the information included in this preliminary announcement
has been prepared in accordance with the recognition and
measurement criteria of International Financial Reporting Standards
("IFRSs") as adopted for use in the European Union and as issued by
the International Accounting Standards Board, this announcement
does not itself contain sufficient information to comply with
IFRSs.
The consolidated financial statements comprise the financial
statements of the Group as at 31 December 2018 and are presented in
UK Sterling and all values are rounded to the nearest thousand (UK
GBP'000), except when otherwise indicated.
Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Management Report. The Management Report also
includes a summary of the Group's financial position, its cash
flows and its borrowing facilities.
The directors believe the Group is well placed to manage its
business risks successfully. The Group's forecasts and projections,
taking account of reasonably possible changes in trading
performance, show that the Group should be able to operate within
the level of its current committed facilities.
After making enquiries, the directors have a reasonable
expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future, a
period of not less than 12 months from the date of this report.
Accordingly, they continue to adopt the going concern basis in
preparing the Annual Report and Accounts.
Nature of financial information
The financial information contained within this preliminary
announcement for the 12 months to 31 December 2018 and 12 months to
31 December 2017 do not comprise statutory financial statements for
the purpose of the Companies Act 2006, but are derived from those
statements. The statutory accounts for PageGroup plc for the 12
months to 31 December 2017 have been filed with the Registrar of
Companies and those for the 12 months to 31 December 2018 will be
filed following the Company's Annual General Meeting.
The auditor's reports on the accounts for both the 12 months to
31 December 2018 and 12 months to 31 December 2017 were unqualified
and did not include a statement under Section 498 (2) or (3) of the
Companies Act 2006.
The Annual Report and Accounts will be available for
Shareholders in April 2019.
New accounting standards, interpretations and amendments adopted
by the Group
The accounting policies adopted in the preparation of the
consolidated preliminary results are consistent with those followed
in the preparation of the Group's annual consolidated financial
statements for the year ended 31 December 2018.
During the year the Group completed the transition to "IFRS 15 -
Revenue from Contracts with Customers" and IFRS 9 - Financial
Instruments". No adjustment was required for the transition to
either standard.
We are continuing with our review and implementation of "IFRS 16
- Leases". The potential impact on our accounts of this Standard is
disclosed in our Annual Report and Accounts for the year ended 31
December 2018.
The Group has not early adopted any standard, interpretation or
amendment that has been issued but is not yet effective.
3. Segment reporting
All revenues disclosed are derived from external customers.
The accounting policies of the reportable segments are the same
as the Group's accounting policies. Segment operating profit
represents the profit earned by each segment including allocation
of central administration costs. This is the measure reported to
the Group's Board, the chief operating decision maker, for the
purpose of resource allocation and assessment of segment
performance. Segments are aggregated in accordance with management
ownership, determined by the possession of similar characteristics
such as geography, market maturity and economic environment. No
judgements were applied to identify the reportable segments.
(a) Revenue, gross profit and operating profit by reportable segment
Revenue Gross Profit
---------------------- ------------------
2018 2017 2018 2017
GBP'000 GBP'000 GBP'000 GBP'000
EMEA 797,427 675,983 394,337 332,288
United Kingdom 313,525 312,915 138,392 140,768
Australia and New
Asia Pacific Zealand 112,930 110,602 40,592 37,703
Asia 153,794 125,688 120,566 99,469
---------- ---------- -------- --------
Total 266,724 236,290 161,158 137,172
Americas 172,265 146,346 121,015 101,340
1,549,941 1,371,534 814,902 711,568
---------- ---------- -------- --------
Operating Profit
-----------------
2018 2017
GBP'000 GBP'000
EMEA 85,586 69,674
United Kingdom 13,392 15,978
Australia and New
Asia Pacific Zealand 4,291 5,480
Asia 22,474 18,039
----------------- --------
Total 26,765 23,519
Americas 16,720 9,151
Operating profit 142,463 118,322
Financial expense (188) (160)
Profit before tax 142,275 118,162
----------------- --------
The above analysis by destination is not materially different to
analysis by origin.
The analysis below is of the carrying amount of reportable
segment assets, liabilities and non-current assets. Segment assets
and liabilities include items directly attributable to a segment as
well as those that can be allocated on a reasonable basis. The
individual reportable segments exclude current income tax assets
and liabilities. Non-current assets include property, plant and
equipment, computer software, goodwill and other intangible.
(b) Segment assets and liabilities by reportable segment
Total Assets Total Liabilities
------------------ ------------------------
2018 2017 2018 2017
GBP'000 GBP'000 GBP'000 GBP'000
EMEA 246,687 219,024 131,948 109,100
United Kingdom 121,058 123,423 40,398 51,193
Australia and New
Asia Pacific Zealand 29,719 24,639 11,059 10,349
Asia 85,501 61,176 18,744 18,132
-------- -------- --------- ---------
Total 115,220 85,815 29,803 28,481
Americas 63,012 55,898 22,308 18,815
Segment assets/liabilities 545,977 484,160 224,457 207,589
Income tax 17,206 15,652 20,145 22,166
563,183 499,812 244,602 229,755
-------- -------- --------- ---------
Property, Plant &
Equipment Intangible Assets
-------------------- --------------------
2018 2017 2018 2017
GBP'000 GBP'000 GBP'000 GBP'000
EMEA 13,654 12,218 3,171 3,668
United Kingdom 6,254 6,894 29,554 30,116
Australia and New
Asia Pacific Zealand 1,557 1,174 274 2
Asia 5,604 3,397 207 31
--------- --------- --------- ---------
Total 7,161 4,571 481 33
Americas 8,495 6,475 190 341
--------- --------- --------- ---------
35,564 30,158 33,396 34,158
--------- --------- --------- ---------
The below analyses in notes (c) revenue and gross profit by
discipline (being the professions of candidates placed) relates to
the requirements of IFRS 15 to disclose disaggregated revenue
streams.
(c) Revenue and gross profit by discipline
Revenue Gross Profit
---------------------- ------------------
2018 2017 2018 2017
GBP'000 GBP'000 GBP'000 GBP'000
Accounting and Financial
Services 609,131 559,480 282,653 261,062
Legal, Technology, HR, Secretarial
and Other 402,321 337,857 196,773 161,424
Engineering, Property & Construction,
Procurement & Supply Chain 345,654 290,830 194,562 158,714
Marketing, Sales and Retail 192,835 183,367 140,914 130,368
1,549,941 1,371,534 814,902 711,568
---------- ---------- -------- --------
The analysis in Notes (d) revenue and gross profit generated
from permanent and temporary placements and (e) revenue and gross
profit by strategic markets have been included as additional
disclosure over and above the requirements of IFRS 8 "Operating
Segments".
(d) Revenue and gross profit generated from permanent and temporary placements
Revenue Gross Profit
---------------------- -------------
2018 2017 2018 2017
GBP'000 GBP'000 GBP'000 GBP'000
Permanent 629,136 543,262 621,746 536,010
Temporary 920,805 828,272 193,156 175,558
1,549,941 1,371,534 814,902 711,568
---------- ---------- ------------- --------
(e) Revenue and gross profit by strategic market
Revenue Gross Profit
---------------------- --------------------
2018 2017 2018 2017
GBP'000 GBP'000 GBP'000 GBP'000
Large, Proven markets 935,800 860,415 419,102 383,027
Large, High Potential markets 414,245 338,002 270,311 222,676
Small and Medium, High Margin
markets 199,896 173,117 125,489 105,865
1,549,941 1,371,534 814,902 711,568
---------- ---------- -------- --------
4. Financial income / (expenses)
2018 2017
GBP'000 GBP'000
Financial income
Bank interest receivable 631 229
-------- --------
Financial expenses
Bank interest payable (598) (241)
Interest on discounting of French construction
participation tax (221) (148)
(819) (389)
-------- --------
5. Taxation
Tax on profit was GBP38.6m (2017: GBP35.1m). This represented an
effective tax rate ("ETR") of 27.1% (2017: 29.7%). The ETR was
higher in 2017 mainly because of the impact of US tax reform which
reduced the federal corporate income tax rate, resulting in the
write-down of the US deferred tax assets. The rate is higher than
the effective UK rate for the calendar year of 19% (2017: 19.25%)
principally due to the impact of higher tax rates in overseas
countries and to a lesser extent disallowable expenditure. There
are some countries in which the tax rate is lower than the UK, but
the impact is very small either because the countries are not
significant contributors to Group profit or the tax rate difference
is not significant.
6. Dividends
2018 2017
GBP'000 GBP'000
Amounts recognised as distributions to equity holders in the
year:
Final dividend for the year ended 31 December 2017 of 8.60p
per ordinary share (2016: 8.23p) 27,433 25,857
Interim dividend for the year ended 31 December 2018 of 4.10p
per ordinary share (2017: 3.90p) 13,117 12,287
Special dividend for the year ended 31 December 2018 of 12.73p
per ordinary share (2017: 12.73p) 40,762 40,107
81,312 78,251
-------- --------
Amounts proposed as distributions to equity holders in the
year:
Proposed final dividend for the year ended 31 December 2018
of 9.00p per ordinary share (2017: 8.60p) 29,171 27,144
-------- --------
The proposed final dividend had not been approved by the Board
at 31 December and therefore has not been included as a liability.
The comparative final dividend at 31 December 2017 was also not
recognised as a liability in the prior year.
The proposed final dividend of 9.00p (2017: 8.60p) per ordinary
share will be paid on 17 June 2019 to shareholders on the register
at the close of business on 17 May 2019.
7. Share-based payments
In accordance with IFRS 2 "Share-based Payment", a charge of
GBP8.4m has been recognised for share options and other share-based
payment arrangements (including social charges) (31 December 2017:
GBP7.7m).
8. Earnings per ordinary share
The calculation of the basic and diluted earnings per share is
based on the following data:
Earnings 2018 2017
Earnings for basic and diluted earnings per share
(GBP'000) 103,703 83,080
-------- --------
Number of shares
Weighted average number of shares used for basic
earnings per share ('000) 318,877 313,491
Dilution effect of share plans ('000) 1,627 1,287
Diluted weighted average number of shares used
for diluted earnings per share ('000) 320,504 314,778
-------- --------
Basic earnings per share (pence) 32.5 26.5
Diluted earnings per share (pence) 32.4 26.4
The above results all relate to continuing operations.
9. Property, plant and equipment
Acquisitions and Disposals
During the year ended 31 December 2018 the Group acquired
property, plant and equipment with a cost of GBP15.7m (2017:
GBP13.4m).
Property, plant and equipment with a carrying amount of GBP1.2m
were disposed of during the year ended 31 December 2018 (2017:
GBP3.9m), resulting in a loss on disposal of GBP0.2m (2017: profit
of GBP0.2m).
10. Trade and other receivables
2018 2017
GBP'000 GBP'000
Current
Trade receivables 297,380 253,555
Less allowance for expected credit losses and
revenue reversals (9,174) (8,161)
-------- --------
Net trade receivables 288,206 245,394
Other receivables 3,814 9,839
Accrued income 44,430 31,938
Prepayments 12,661 11,918
349,111 299,089
-------- --------
Non-current
Other Receivables 12,746 10,513
-------- --------
11. Trade and other payables
2018 2017
GBP'000 GBP'000
Current
Trade payables 6,594 6,240
Other tax and social security 58,186 54,615
Other payables 26,870 28,312
Accruals 111,040 97,467
Deferred income 1,663 1,096
204,353 187,730
-------- --------
Non-current
Accruals 18,453 18,628
Other tax and social security 1,021 861
19,474 19,489
-------- --------
12. Cash and cash equivalents
2018 2017
GBP'000 GBP'000
Cash at bank and in hand 97,626 95,327
Short-term deposits 47 278
-------- --------
Cash and cash equivalents 97,673 95,605
Cash and cash equivalents in the statement
of cash flows 97,673 95,605
-------- --------
The Group operates multi-currency cash concentration and
notional cash pools, and an interest enhancement facility. The
Eurozone subsidiaries and the UK-based Group Treasury subsidiary
participate in the cash concentration arrangement, the Group
Treasury subsidiary retains the notional cash pool and the Asia
Pacific subsidiaries operate the interest enhancement facility. The
structures facilitate interest compensation of cash whilst
supporting working capital requirements.
PageGroup maintains a Confidential Invoice Facility with HSBC
whereby the Group has the option to discount facilities in order to
advance cash on its receivables. The facility is used only ad hoc
in case the Group needs to fund any major GBP cash outflow.
13. Annual General Meeting
The Annual General Meeting of PageGroup plc will be held at Page
House, The Bourne Business Park, 1 Dashwood Lang Road, Addlestone,
Weybridge, Surrey, KT15 2QW on 24 May 2019 at 9.30am.
14. Publication of Annual Report and Accounts
This preliminary statement is not being posted to shareholders.
The Annual Report and Accounts will be posted to shareholders in
due course and will be delivered to the Registrar of Companies
following the Annual General Meeting of the Company.
Copies of the Annual Report and Accounts will be available from
the Company's website in April 2019.
http://www.pagegroup.co.uk/investors/reports-and-presentations/annual-and-interim-reports/2018.aspx
Responsibility statement of the directors on the annual
report
The responsibility statement below has been prepared in
connection with the Company's full annual report for the year
ending 31 December 2018. Certain parts of the annual report are
not included within this announcement.
We confirm that, to the best of our knowledge:-
a) the financial statements, prepared in accordance with IFRSs
as adopted by the European Union, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the
company and the undertakings included in the consolidation taken as
a whole; and
b) the management report, which is incorporated into the
directors' report, includes a fair review of the development
and
performance of the business and the position of the company and
the undertakings included in the consolidation taken
as a whole, together with a description of the principal risks
and uncertainties they face.
On behalf of the Board
S Ingham K Stagg
Chief Executive Officer Chief Financial Officer
5 March 2019 5 March 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
FR LFFVIVVIEIIA
(END) Dow Jones Newswires
March 06, 2019 02:01 ET (07:01 GMT)
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