TIDMPAGE
RNS Number : 6660Z
PageGroup plc
14 January 2020
14 January 2020
PAGEGROUP PLC
FOURTH QUARTER AND FULL YEAR 2019 TRADING UPDATE
Q4 Highlights*
-- Group gross profit decline of -0.4% (-2.6% in reported rates)
-- Large, High Potential markets (34% of Group) +4%
-- EMEA +2.3%; France +1%; Germany +16%
-- Asia Pacific -7.9%; Greater China -14%; SE Asia -4%; Australia -7%
-- Americas +5.0%; US +10%; Latin America +5%
-- UK -4.8%; Page Personnel -4%; Michael Page -5%
-- Fee earner headcount decreased by 54, decrease in operational support staff of 37
-- Strong balance sheet, net cash of c. GBP93m (Q3 2019: c. GBP92m, Q4 2018: c. GBP98m)
Q4 GROSS PROFIT ANALYSIS
Reported (GBPm) Constant
Year-on-year % of Group Q4 2019 Q4 2018 % %
----------- -------- -------- ------ ---------
EMEA 50% 103.6 104.5 -0.8% +2.3%
----------- -------- -------- ------ ---------
Asia Pacific 18% 37.5 41.1 -8.8% -7.9%
----------- -------- -------- ------ ---------
Americas 16% 32.6 31.9 +2.2% +5.0%
----------- -------- -------- ------ ---------
UK 16% 31.9 33.5 -4.8% -4.8%
----------- -------- -------- ------ ---------
Total 100% 205.6 211.0 -2.6% -0.4%
----------- -------- -------- ------ ---------
Permanent 74% 151.3 159.1 -4.9% -3.0%
----------- -------- -------- ------ ---------
Temporary 26% 54.3 51.9 +4.6% +7.5%
----------- -------- -------- ------ ---------
Full Year Results*
-- Group gross profit +5.0% (+5.0% in reported rates) to GBP856.0m, a record year
-- 19 countries delivered record gross profit
-- Decrease of 89 fee earners (-1.5%), total headcount of 7,698
-- Operating profit expected to be in line with previous guidance of GBP140m to GBP150m
* in constant currencies except where stated
FULL YEAR GROSS PROFIT ANALYSIS
Reported (GBPm) Constant
Year-on-year % of Group FY 2019 FY 2018 % %
----------- -------- -------- ------- ---------
EMEA 49% 418.5 394.3 +6.1% +7.0%
----------- -------- -------- ------- ---------
Asia Pacific 19% 163.3 161.2 +1.4% -0.2%
----------- -------- -------- ------- ---------
Americas 16% 139.1 121.0 +14.9% +14.0%
----------- -------- -------- ------- ---------
UK 16% 135.1 138.4 -2.4% -2.4%
----------- -------- -------- ------- ---------
Total 100% 856.0 814.9 +5.0% +5.0%
----------- -------- -------- ------- ---------
Permanent 75% 644.5 621.7 +3.7% +3.4%
----------- -------- -------- ------- ---------
Temporary 25% 211.5 193.2 +9.5% +10.2%
----------- -------- -------- ------- ---------
Steve Ingham, Chief Executive Officer, said:
"The majority of the Group's regions were impacted by
macro-economic and political uncertainty in Q4. Consequently, Group
gross profit declined -0.4% in constant currencies from growth of
2.1% in Q3. The Group delivered strong performances in Germany,
India, and the US, despite a slowing Financial Services market in
New York. However, trading conditions were more challenging in many
of our larger markets, including Greater China, the UK and
France.
"As a result of the heightened geopolitical and macro-economic
uncertainty seen in a number of the Group's markets, fee earner
headcount reduced by 54 in Q4, mainly in Greater China and the
UK.
"The Group was impacted by adverse foreign exchange movements
during Q4, decreasing our Q4 reported gross profit by 2.2
percentage points, or GBP4.6m. We expect that these foreign
exchange headwinds will persist, or possibly increase.
"Looking ahead, the tough trading conditions experienced during
Q4 across the majority of our regions are anticipated to continue.
There are challenges in EMEA, including social unrest in France and
heightened political tensions, notably in the Middle East. Asia
Pacific continues to be impacted by trade tariff uncertainty in
Mainland China, the protests in Hong Kong, as well as the fires in
Australia. In the Americas, the weak Financial Services market in
New York, as well as social unrest in Chile are expected to
continue to impact the region's results. In the UK, Brexit related
uncertainty is expected to be ongoing during 2020.
"However, we have a flexible and highly diversified business
model that enables us to react quickly to changes in market
conditions. We are clear market leaders in many of our markets,
with a highly experienced senior management team, which, we
believe, positions us well to take advantage of all opportunities
during 2020.
"We will continue to focus on driving profitable growth, while
progressing our strategic investments towards our Vision of 10,000
headcount, GBP1bn of gross profit and GBP200m - GBP250m of
operating profit. Despite the increased tough trading conditions in
Q4, we expect FY 2019 operating profit to be in line with our
previous guidance of GBP140m to GBP150m."
Group Trading Update
PageGroup delivered fourth quarter gross profit of GBP205.6m, a
decline of -0.4% in constant currencies and -2.6% in reported
rates. In constant currencies, Michael Page was down -0.1%, with
Page Personnel declining -1.0% in the quarter.
Foreign Exchange
The Group was impacted by adverse foreign exchange movements
during Q4, decreasing our reported gross profit by 2.2 percentage
points, or GBP4.6m. However, for the full year, foreign exchange
had a minimal impact on Group gross profit.
Should current exchange rates continue through 2020, foreign
exchange would decrease our reported gross profit by c. GBP25m and
operating profit by c. GBP4m. In addition, current rates also
remain substantially below pre-Brexit levels.
Headcount
As a result of the heightened geopolitical and macro-economic
uncertainty in a number of the Group's markets, fee earner
headcount reduced by 54 in Q4, mainly in Greater China and the UK.
Our operational support headcount decreased by 37 in the quarter as
some of our global transformation programmes, particularly our new
Global Finance System implementation, came to an end. Our fee
earner to operational support staff ratio remained at 78:22. This
represented 6,027 fee earners and a total headcount of 7,698.
Perm/Temp mix
Gross profit from permanent recruitment declined -4.9% in
reported rates and -3.0% in constant currencies, to GBP151.3m (Q4
2018: GBP159.1m). Gross profit from temporary recruitment grew 4.6%
in reported rates and 7.5% in constant currencies, to GBP54.3m (Q4
2018: GBP51.9m). This resulted in a ratio of permanent to temporary
recruitment of 74:26.
Q4 Gross Profit - Discipline analysis
Reported (GBPm) Constant
Year-on-year % of Group Q4 2019 Q4 2018 % %
----------- -------- -------- ------ ---------
Finance
Accounting and Financial Services 35% 72.5 74.5 -2.7% -0.4%
----------- -------- -------- ------ ---------
Professional Services
Legal, Technology, HR, Secretarial, Healthcare 24% 50.0 52.1 -4.0% -2.0%
----------- -------- -------- ------ ---------
Technical
Engineering, Property & Construction, Procurement & Supply Chain 24% 48.8 50.1 -2.7% -0.6%
----------- -------- -------- ------ ---------
Marketing, Sales and Retail 17% 34.3 34.3 +0.0% +2.2%
----------- -------- -------- ------ ---------
Total 100% 205.6 211.0 -2.6% -0.4%
----------- -------- -------- ------ ---------
Geographical analysis (unless otherwise stated all growth rates
are in constant currency)
EMEA Gross Profit (GBPm) Growth Rates
(50% of Group) Reported Constant
---------- ---------- ----------- -----------
Q4 2019 vs. Q4 2018 103.6 104.5 -0.8% +2.3%
---------- ---------- ----------- -----------
2019 vs 2018 418.5 394.3 +6.1% +7.0%
---------- ---------- ----------- -----------
Headcount at 31 December 2019: 3,317 (30 September 2019: 3,344)
* France (17% of Group) +1%
* Germany (9% of Group) +16%
EMEA Q4 gross profit grew 2.3% to GBP103.6m, down from growth of
5.6% in Q3 as macro-economic uncertainty continued to impact market
confidence. Michael Page was up 4%, growing faster than Page
Personnel, which was flat. France, representing 17% of the Group,
grew 1%, impacted by increased macro-economic uncertainty as well
as the recent large scale strikes. Despite weak macro-economic
data, Germany delivered another excellent quarter, up 16%, with our
Interim business, mainly focused on technology, growing 50%. Italy
grew 3% and Spain was up 2%, broadly in line with its Q3 growth
rate. Benelux grew 6%, with Belgium delivering a record quarter.
The Middle East and Africa declined -3% with tougher trading
conditions, particularly in Africa. Fee earner headcount across the
region decreased by 9 in the quarter.
Asia Pacific Gross Profit (GBPm) Growth Rates
(18% of Group) Reported Constant
---------- ---------- ----------- -----------
Q4 2019 vs. Q4 2018 37.5 41.1 -8.8% -7.9%
---------- ---------- ----------- -----------
2019 vs 2018 163.3 161.2 +1.4% -0.2%
---------- ---------- ----------- -----------
Headcount at 31 December 2019: 1,679 (30 September 2019: 1,711)
* Asia (14% of Group) -8%
* Greater China (7% of Group and 49% of Asia) -14%
* Australasia (4% of Group) -10%
In Asia Pacific, our second largest region, gross profit
declined -7.9% to GBP37.5m in Q4. Greater China, one of our Large,
High Potential markets, declined -14%. Mainland China declined -7%,
which was an improvement on the -27% in Q3, as the comparators
became easier and the business adapted to the more challenging
conditions. The protests continued to impact our Hong Kong
business, down -27%, in line with Q3. South East Asia, another of
our Large, High Potential markets declined -4%, with good growth in
some of our newer countries offset by Singapore, which was down
-19%, albeit against a tough comparator of 37%. Japan declined -1%,
down from its Q3 growth rate of 5%, with continued weaker growth
from our multinational clients. India, where we now have around 160
fee earners, grew 13%, against a particularly tough comparator of
79%. Australia declined -7%, also against a tough comparator of
25%, with challenging trading in New South Wales. Overall fee
earner headcount in the region decreased by 31 in the quarter,
mainly in Greater China.
Americas Gross Profit (GBPm) Growth Rates
(16% of Group) Reported Constant
---------- ---------- ----------- -----------
Q4 2019 vs. Q4 2018 32.6 31.9 +2.2% +5.0%
---------- ---------- ----------- -----------
2019 vs 2018 139.1 121.0 +14.9% +14.0%
---------- ---------- ----------- -----------
Headcount at 31 December 2019: 1,376 (30 September 2019: 1,366)
* North America (10% of Group) +5%
* Latin America (6% of Group) +5%
The Americas continued to be our fastest growing region in Q4,
up 5.0% to GBP32.6m. The US grew 10%, despite a weaker Financial
Services sector in New York, with particularly strong growth in
Boston, Chicago and Los Angeles. Latin America grew 5% with Brazil
up 4% and Mexico, our largest country in the region, up 9%.
Elsewhere, our other four countries in the region grew 4%,
collectively, with record performances from Argentina, Colombia and
Peru, partially offset by tougher trading conditions in Chile, as a
result of the political and social unrest. We added 13 fee earners
across the Americas in the quarter, mainly into the US and
Mexico.
UK Gross Profit (GBPm) Growth Rate
(16% of Group)
----------- --------- -----------------
Q4 2019 vs. Q4 2018 31.9 33.5 -4.8%
----------- --------- -----------------
2019 vs 2018 135.1 138.4 -2.4%
----------- --------- -----------------
Headcount at 31 December 2019: 1,326 (30 September 2019: 1,368)
The UK declined -4.8% in Q4, with disruption from Brexit
increasing uncertainty and impacting confidence. Page Personnel,
which represents around a quarter of the UK, suffered from low
client confidence, and declined -4%, while Michael Page continued
to be impacted by low senior candidate confidence and declined -5%.
Fee earner headcount decreased by 27 in the quarter, mainly in our
Michael Page business.
Financial Position
Save for the effects of trading in the fourth quarter described
above and the payments of the 2019 interim and special dividends
totalling GBP54.5m on 9 October 2019, 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
2019. Net cash at 31 December 2019, was in the region of GBP93m (Q3
2019: c. GBP92m, Q4 2018: c. GBP98m).
Shares
At 31 December 2019 there were 328,603,774 Ordinary shares in
issue, of which 10,433,864 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 7,960,864 shares and
consequently these shares should be excluded when calculating
earnings per share. The total number of voting rights in the
Company is 328,603,774.
Cautionary Statement
This Fourth Quarter and Full Year 2019 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/5ddce291e231010d0068f6ee/nyfy
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 71 35 66 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 2020 at:
https://www.page.com/investors/investor-library.aspx
The Group will issue its Full Year Results on 5 March 2020 and
its First Quarter Trading Update on 15 April 2020.
This information is provided by RNS, the news service of the
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of this information may apply. For further information, please
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END
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