TIDMPAGE
RNS Number : 1414V
PageGroup plc
05 August 2020
5 August 2020
PageGroup plc
Half Year Results for the Period Ended 30 June 2020
PageGroup plc ("PageGroup"), the specialist professional
recruitment company, announces its unaudited half year results for
the period ended 30 June 2020.
Financial summary 2020 2019 Change Change
(6 months to 30 June 2020) CC*
Revenue GBP655.0m GBP820.5m -20.2% -19.4%
---------- ---------- -------- --------
Gross profit GBP300.7m GBP433.5m -30.6% -30.1%
---------- ---------- -------- --------
Operating profit GBP0.4m GBP75.6m -99.5% -101.1%
---------- ---------- -------- --------
(Loss)/Profit before tax -GBP0.8m GBP74.6m -101.0%
---------- ---------- --------
Basic earnings per share -0.5p 16.8p -103.0%
---------- ---------- --------
Diluted earnings per share -0.5p 16.8p -103.0%
---------- ---------- --------
Interim dividend per share - 4.30p
---------- ----------
Special dividend per share - 12.73p
---------- ----------
H1 Summary
-- Key priority remains the safety and wellbeing of employees, candidates and clients
-- Group operating profit of GBP0.4m (H1 2019: GBP75.6m)
-- Conversion rate** decreased to 0.1% (H1 2019: 17.4%)
-- Cost base reduction of c. 21% achieved in Q2, with
significant voluntary sacrifices from employees
-- Total headcount decreased by 713 (9.3%) to 6,985 at the end
of June, as we chose to lose recent joiners or those on performance
reviews
-- Suspension of dividend policy - fully intend to reinstate returns as conditions improve
-- Strong Balance Sheet with net cash of GBP161.7m (H1 2019: GBP81.7m, FY 2020: GBP97.8m)
-- Covenant waiver agreed on the Group's Revolving Credit
Facility with BBVA to 31 December 2021
-- Approval received for the Bank of England's Covid Corporate
Finance Facility ("CCFF"), with a facility limit of GBP300m
-- Strategy of maintaining and investing in our platform of
experienced consultants to take advantage of recovery as and when
it comes
-- Safe reopening of offices, bringing people back from furlough
and returning all staff to full pay from 1 July
* in constant currency at prior year rates
** operating profit as a percentage of gross profit
Commenting, Steve Ingham, Chief Executive Officer, said:
"Our main focus in the first half was to protect our people,
whilst maintaining and investing in our platform of experienced
consultants. I am incredibly proud of the reaction of our staff in
what continues to be extraordinary times.
"As COVID-19 progressively spread around the globe, we moved
quickly to ensure our people could work effectively from home,
staying engaged with candidates and clients and transacting
business remotely. In this unprecedented and highly challenging
period, many employees agreed to reduced working weeks, or
placement onto government assistance schemes. 450 of our most
senior employees, including the Main and Executive Boards, agreed
to salary cuts of 20%, and shareholders saw their 2019 final
dividend cancelled. I would like to thank all stakeholders for
their support and understanding in what has been a very challenging
first half.
"We took decisive management actions on costs to protect
near-term profitability, whilst at the same time investing in our
platform to ensure we emerge from this period in a position of
strength. We also focused on ensuring we retained a strong cash
position, which we achieved, and we have access to sizeable
borrowing facilities, if required. However, trading conditions
remain uncertain and, as such, we have taken the decision to
suspend our dividend policy. It is our intention to reinstate
shareholder returns when conditions improve.
"During the second quarter, activity levels started to pick up
in several of the Group's markets. As offices have been
progressively reopened, we have seen improvements in our main
forward looking KPIs, such as new opportunities, candidates sent to
clients, interviews and offers. Whilst trading conditions remain
unpredictable, we are choosing to invest in the business, returning
all our staff to full time working and full pay in Q3. We are also
investing in experienced hires from our competitors as well as
continuing to invest in systems, such as our new operating system,
Customer Connect.
"We are clear leaders in many of our markets, with a highly
experienced senior management team, which, we believe, positions us
well to continue to take advantage of all opportunities as and when
they arise."
INTERIM MANAGEMENT REPORT
GROUP RESULTS
GROSS PROFIT GBPm Growth Rates
% of Group H1 2020 H1 2019 Reported CC
----------- -------- -------- --------- -------
EMEA 51% 154.5 213.1 -27.5% -27.4%
----------- -------- -------- --------- -------
Asia Pacific 19% 56.9 81.8 -30.5% -30.0%
----------- -------- -------- --------- -------
Americas 16% 46.9 69.2 -32.2% -29.8%
----------- -------- -------- --------- -------
UK 14% 42.4 69.4 -38.9% -38.9%
----------- -------- -------- --------- -------
Total 100% 300.7 433.5 -30.6% -30.1%
----------- -------- -------- --------- -------
Permanent 70% 211.8 330.6 -35.9% -35.5%
----------- -------- -------- --------- -------
Temporary 30% 88.9 102.9 -13.6% -12.8%
----------- -------- -------- --------- -------
The Group's revenue for the six months ended 30 June 2020
decreased 20.2% to GBP655.0m (2019: GBP820.5m) and gross profit
decreased 30.6% to GBP300.7m (2019: GBP433.5m). In constant
currencies, the Group's revenue declined 19.4% and gross profit
decreased by 30.1%. The Group's revenue mix between permanent and
temporary placements was 33:67 (2019: 41:59) and for gross profit
was 70:30 (2019: 76:24), demonstrating the greater resilience of
temporary recruitment during the pandemic.
Revenue from temporary placements comprises the salaries of
those placed, together with the margin charged. Overall, pricing
has remained relatively stable across all regions. Fee earner
productivity decreased by 24.8%, reflecting the far more
challenging conditions. As a result of the global lockdown caused
by COVID-19, our fee earners have seen a significant reduction in
activity. This, along with our strategy of maintaining our platform
of experienced consultants as far as possible to take market share
as markets recover, has resulted in this short-term drop in
productivity.
The Group's organic growth model and profit-based team bonus
ensures costs remain tightly controlled. 74% of first half costs
were employee related, including salaries, bonuses, share-based
long-term incentives, and training and relocation costs.
In total, administrative expenses in the first half decreased
16.1% to GBP300.3m (2019: GBP357.9m), driven by decreases in
headcount as well as the cost savings initiatives implemented in
the second quarter. In constant currency, administrative expenses
were down 15.1% and operating profit decreased 101.1% to GBP0.4m
(2019: GBP75.6m), a decrease of 99.5% at reported rates.
The Group's conversion rate, which represents the ratio of
operating profit to gross profit, was 0.1% (2019: 17.4%) due to the
sharp decrease in gross profit due to the COVID-19 pandemic,
combined with our decision to maintain our platform, partially
mitigated by the cost saving initiatives in Q2.
FOREIGN EXCHANGE
Movements in foreign exchange had a negligible impact on the
Group's results. Overall, foreign exchange movements impacted the
Group's gross profit and operating profit by less than GBP3m.
OTHER ITEMS
Interest received and interest paid was consistent with H1 2019.
The charge for taxation at the half year was GBP0.8m, which is an
effective tax rate of -107.6% (H1 2019: 27.5%).
The increase in the effective tax rate for the first half has
been due primarily to changes in deferred tax asset recognition on
losses and other timing differences, due to uncertainty over the
availability of future taxable income in certain territories as a
result of Covid. The CVAE tax in France, which is linked to revenue
rather than profit, has also had a disproportionate impact on the
rate.
Basic loss per share and diluted loss per share for the six
months ended 30 June 2020 were both -0.5p, decreasing 103.0% (2019:
basic earnings per share 16.8p; diluted earnings per share
16.8p).
CASH FLOW
The Group started the year with net cash of GBP97.8m. In the
first half, GBP105.6m was generated from operations due to a
reduction in working capital of GBP73.1m, mainly due to the unwind
of debtors. Tax paid was GBP20.2m and net capital expenditure was
GBP10.6m. During the first half, GBP0.1m was received from
exercises of share options (2019: GBP3.5m) and the 2019 Final
dividend of GBP30.2m was also cancelled. As a result, the Group had
net cash of GBP161.7m at 30 June 2020, a significant increase on
the prior year of GBP81.7m and serves to demonstrate the highly
cash generative nature of our model in uncertain times.
DIVIDS AND SHARE REPURCHASES
It is the Directors' intention to continue to finance the
activities and development of the Group from retained earnings and
to maintain a strong balance sheet position.
The Group's first use of cash is to satisfy operational and
investment requirements, as well as to hedge its liabilities under
the Group's share plans. The level of cash required for this
purpose will vary depending upon the revenue mix of geographies,
permanent and temporary recruitment, and point in the economic
cycle.
Our second use of cash is to make returns to shareholders by way
of an ordinary dividend. Our policy is to grow the ordinary
dividend over the course of the economic cycle in a way that we
believe we can sustain the level of ordinary dividend payment
during downturns, as well as increasing 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 and/or share buybacks.
Following the severe reduction in activity across the Group as a
result of the global lockdown, the 2019 Final dividend of GBP30.2m
was cancelled. Given the ongoing level of uncertainty generated by
the pandemic, we have taken the decision to suspend our dividend
policy. Whilst activity levels are improving, this pandemic is
highly unpredictable and it remains our priority to protect
liquidity, fund future growth and take advantage of opportunities
to gain market share. We will continue to review our cash position
and fully intend to return to making shareholder returns when
conditions improve.
In mid-March, we purchased GBP1.6m of shares into the Employee
Benefit Trust to hedge exposures under share-based awards (2019:
nil).
GEOGRAPHICAL ANALYSIS ( All growth rates given below are in
constant currency unless otherwise stated )
EUROPE, MIDDLE EAST AND AFRICA (EMEA)
EMEA GBPm Growth rates
(51% of Group in H1
2020) H1 2020 H1 2019 Reported CC
-------- -------- --------- -------
Gross Profit 154.5 213.1 -27.5% -27.4%
-------- -------- --------- -------
Operating Profit 10.6 45.6 -76.8% -76.3%
-------- -------- --------- -------
Conversion Rate (%) 6.8% 21.4%
-------- -------- --------- -------
EMEA is the Group's largest region, contributing 51% of Group
first half gross profit. In reported rates, revenue in the region
decreased 17.5% to GBP352.9m (2019: GBP427.7m) and gross profit
decreased 27.5% to GBP154.5m (2019: GBP213.1m). In constant
currency, revenue decreased 17.4% on the first half of 2019 and
gross profit decreased by 27.4%.
Trading conditions in EMEA deteriorated due to COVID-19 at the
end of March and into Q2, though activity levels did improve as the
second quarter progressed with all offices except Istanbul open at
the end of the half. France and Southern Europe were most impacted,
down 32% and 34% respectively for the first half. Germany, one of
our Large, High Potential markets, was more resilient, down 12%
overall, with a standout performance from our Technology focused
Interim business, which was up 9%. Benelux declined 22%, with
Belgium and the Netherlands down 9% and 28% respectively. The
Middle East and Africa declined 31%.
The 76.8% decrease in operating profit for the first half to
GBP10.6m (2019: GBP45.6m) and decrease in the conversion rate to
6.8% (2019: 21.4%) was due to the tougher trading conditions as a
result of COVID-19, partially offset by a number of government
assistance schemes. EMEA remained our most profitable region.
Headcount across the region was reduced by 168 (5.1%) in the first
half to 3,149 at the end of June 2020 (3,317 at 31 December
2019).
ASIA PACIFIC
Asia Pacific GBPm Growth rates
(19% of Group in H1 2020) H1 2020 H1 2019 Reported CC
-------- -------- --------- --------
Gross Profit 56.9 81.8 -30.5% -30.0%
-------- -------- --------- --------
Operating Profit -3.6 8.8 -140.7% -142.1%
-------- -------- --------- --------
Conversion Rate (%) -6.3% 10.8%
-------- -------- --------- --------
In Asia Pacific, representing 19% of Group first half gross
profit, revenue decreased 22.0% in reported rates to GBP105.3m
(2019: GBP135.0m) and gross profit decreased 30.5% to GBP56.9m
(2019: GBP81.8m). In constant currency, revenue decreased 20.8% in
the first half and gross profit decreased by 30.0%.
Mainland China was the first of the Group's markets to be
impacted by COVID-19 in February. Since then all of our consultants
have returned to office based working and we have seen a gradual
improvement in trading conditions. Overall for the first half,
Mainland China was down 28%. Hong Kong was impacted significantly
by both COVID-19 and then the return of social unrest and was down
55% overall for the first half. South East Asia declined 22%.
Singapore, which like Mainland China re-opened at the end of
February, went back into lockdown in March. It was particularly
impacted due to its role as an international and regional hub, and
was down 30%. India and Japan were impacted later than the rest of
the region, down 10% and 18% respectively, but they exited the
second quarter slower, both being down 43% in June. Australia was
first affected by the devastating impact of the bushfires in
January and February, then in March by COVID-19. Overall for the
first half, Australia was down 35%.
Being the region impacted first and being felt throughout,
operating profit declined 140.7% to -GBP3.6m. Our conversion rate
was -6.3% as a result of the far tougher trading conditions for the
majority of H1, as well as no government assistance schemes except
in Singapore. Headcount across the region was reduced by 211
(12.6%) to 1,468 at the end of June 2020 (1,679 at 31 December
2019).
THE AMERICAS
Americas GBPm Growth rates
(16% of Group in H1 2020) H1 2020 H1 2019 Reported CC
-------- -------- --------- --------
Gross Profit 46.9 69.2 -32.2% -29.8%
-------- -------- --------- --------
Operating Profit -4.9 8.7 -157.0% -172.6%
-------- -------- --------- --------
Conversion Rate (%) -10.5% 12.5%
-------- -------- --------- --------
In the Americas, representing 16% of Group first half gross
profit, revenue decreased 21.6% in reported rates to GBP78.7m
(2019: GBP100.5m), while gross profit decreased 32.2% to GBP46.9m
(2019: GBP69.2m). In constant currency, revenue decreased by 16.9%
and gross profit decreased by 29.8%.
The Americas was our last region to be impacted by COVID-19.
North America was down 26% overall, with the US down 25%. Trading
conditions were particularly tough in our largest discipline,
Property & Construction, with the majority of construction
sites shut in Q2. In Latin America, conditions deteriorated sharply
during the second quarter. For the first half, Latin America was
down 36% with Mexico, our largest country in the region, down 42%
and Brazil down 34%. Being the last affected region and with all
offices except Monterrey closed at the end of June, we have not yet
seen improving activity levels in the Americas.
Operating profit decreased by 157.0% to -GBP4.9m (2019:
GBP8.7m), with a decrease in the conversion rate to -10.5% (2019:
12.5%). The Americas had the lowest conversion rate in the Group,
with there being very few government support schemes available in
the region to reduce the cost base. Headcount in the Americas was
reduced by 192 (14.0%) in the first half, to 1,184 at the end of
June 2020 (1,376 at 31 December 2019).
UNITED KINGDOM
UK GBPm Growth rate
(14% of Group in H1 2020) H1 2020 H1 2019
-------- -------- ------------
Gross Profit 42.4 69.4 -38.9%
-------- -------- ------------
Operating Profit -1.7 12.5 -113.3%
-------- -------- ------------
Conversion Rate (%) -3.9% 18.0%
-------- -------- ------------
In the UK, representing 14% of Group first half gross profit,
revenue decreased 25.0% to GBP118.1m (2019: GBP157.4m) and gross
profit declined 38.9% to GBP42.4m (2019: GBP69.4m).
Trading conditions deteriorated sharply at the end of March as
lockdown came into effect. Growth slowed to -60% in April and
remained broadly flat during the second quarter. The impact of
COVID-19 had a similar impact on Michael Page and Page Personnel,
down 39% and 40% in the first half respectively. Temporary
recruitment was more resilient, down 19%, whereas permanent
recruitment was impacted more significantly, down 48% overall.
Operating profit decreased by 113.3% to -GBP1.7m (2019:
GBP12.5m), with the conversion rate decreasing to -3.9% (2019:
18.0%). Whilst the decline in gross profit was most significant in
the UK, the impact on operating profit was partially mitigated by
the government assistance schemes available, as well as a reduced
IFRS 2 charge, which, as we have said before, disproportionately
impacts the UK. Headcount was reduced by 142 (10.7%) during the
first half to 1,184 at the end of June 2020 (1,326 at 31 December
2019).
COVID-19 Operational and Financial Update
Our People and other stakeholders
Above all else, our priority is to protect the health and safety
of our employees, candidates and clients. Initially, the Group took
action to protect our employees by ensuring that all consultants
were able to work from home. This was implemented swiftly,
benefiting from the Group's experience in our Greater China
business.
As local guidelines have allowed, we have progressively opened
our offices around the world, with 109 out of 142 open as at the
end of July. However, returning to the office is voluntary and we
have modified our offices to keep our people safe and to comply
with all social distancing and local regulatory requirements.
We believe our clear, consistent and frequent communications
through times of great difficulty and uncertainty for everyone, has
given us a workforce that is engaged, motivated and will be the
foundation for building our future success.
Throughout this pandemic, all stakeholders have come together in
these difficult times. In the second quarter, employees agreed to
reduced working weeks or placement onto government assistance
schemes. 450 of our most senior employees, including the Main and
Executive Boards, agreed to salary cuts of 20% and shareholders
have forgone their 2019 Final dividend and 2020 Interim dividend.
We are all in this together and we thank everyone for their
commitment, solidarity and collective support in what has been a
very challenging first half.
Balance Sheet and Liquidity
The Group has a strong balance sheet, with net cash of GBP161.7m
(H1 2019: GBP81.7m). The increase this year is due primarily to the
partial unwind of our temporary debtor receivable, a strong focus
on cash collection, as well as the cancellation of the 2019 Final
dividend of GBP30.2m.
Debtor days remain at pre-COVID levels. We have good banking
relationships and facilities, including a GBP30m committed
Revolving Credit Facility, expiring in 2022. We have agreed a
covenant waiver to 31 December 2021 on this facility, to ensure we
retain access to these funds should they be required.
The Group has also been approved for the Bank of England's Covid
Corporate Finance Facility (CCFF). This facility has a maximum
availability of GBP300m, although we do not currently expect to
utilise it.
We continue to model a range of different scenarios to ensure
the Group has sufficient liquidity at all times.
Managing our Cost Base
We have a flexible and highly diversified business model that
enables us to react quickly to changes in market conditions. Our
aim is to balance tight cost management, while ensuring we position
the Group to take full advantage of all opportunities as conditions
improve.
As previously announced, we sought to reduce our cost base in Q2
by around 20-25% compared to March. Through a mixture of voluntary
salary cuts, reduced working weeks, government assistance schemes,
reduced travel, and reduced client and candidate entertaining, we
achieved this reduction in our cost base. We are thankful to all
our people who volunteered to take salary reductions, work four day
weeks or make other sacrifices for the long-term benefit of the
Group during this period.
Following the fall in headcount of 132 in Q1, it fell a further
255 in April as previously forecasted, and then a further 326 in
May and June combined, a reduction of 713 in total in the first
half. Our Fee earner headcount fell by 635, with 531 in Q2, mainly
in the UK and the Americas. These were recent joiners, who were
therefore very inexperienced in recruitment, or those on
performance review. Our operational support headcount decreased by
78, with 50 in Q2. As a result of these changes in headcount, our
fee earner to operational support staff ratio was 77:23. This
represented 5,392 fee earners and a total headcount of 6,985. This
figure is inclusive of 406 full time furloughed employees in the UK
and the US (327 fee earners and 79 support staff). Where staff are
on partial furlough, as is the case in parts of Continental Europe,
they are still represented by 1 FTE.
Forward activity levels improving
During the second quarter, activity levels started to pick up in
several of the Group's markets. As we have progressively reopened
offices, we have seen improvements in our main forward looking
KPIs, such as new opportunities, candidates sent to clients,
interviews and offers. To enable the Group to continue to drive
this activity into gross profit, we have reinstated all of our
staff back to full pay from 1 July. Importantly, we want to
maximise the engagement, motivation and loyalty of our people as we
as a leadership team will be judged on how we led this business
through this difficult time, measured by the loyalty and commitment
of our experienced people in future months and years. Compared to
March, we expect this to reduce the saving in our cost base from c.
21% in Q2 to c. 10% in Q3. Whilst we believe this is in the Group's
best interests and will drive future gross profit, there is always
a lag between increased activity and gross profit, particularly
within permanent recruitment. We are taking these actions at this
point because we believe this is the right thing to do, but clearly
this pandemic is also unpredictable and the shape of any recovery
is unknown.
Capitalise on market opportunities
Having lost our fee earners with little experience, we are also
selectively hiring experienced fee earners from the competition at
all levels and we have seen an unprecedented level of applications
during the period. We believe the Group is well positioned to take
market share as and when trading conditions improve.
Financial Guidance
With COVID-19 continuing to impact the majority of our markets
around the world, it is too early to estimate the impact on the
Group's operations and, as such, any financial guidance for current
and future years remains suspended. We will monitor the situation
closely and will provide updates when appropriate.
KEY PERFORMANCE INDICATORS ("KPIs")
We measure our progress against our strategic objectives using
the following key performance indicators:
KPI Definition, method of calculation and analysis
Gross profit How measured: Gross profit represents revenue less
growth cost of sales and consists of the total placement
fees of permanent candidates, the margin earned on
the placement of temporary candidates and the margin
on advertising income, i.e. it represents net fee
income. The measure used is the increase or decrease
in gross profit as a percentage of the prior year
gross profit.
Why it's important: The growth of gross profit relative
to the previous year is an indicator of the growth
in net fees of the business as a whole. It demonstrates
whether we are in line with our strategy to grow the
business.
How we performed in H1 2020: The global lockdown
due to COVID-19 resulted in gross profit decreasing
by 30.1% in H1 2020 in constant currency and 30.6%
at reported rates (H1 2019: 9.5% increase in constant
currency and reported rates).
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 and 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 and Financial Services discipline.
How we performed in H1 2020: Geographies: the percentage
outside the UK increased to 85.9% from 84.0% in 2019,
largely as a result of the UK being impacted more
severely by the global pandemic.
Disciplines: the percentage outside of Accounting
and Financial Services was broadly flat at 64.9% (2019:
65.3%), with the COVID-19 pandemic affecting the Group's
operations in all disciplines.
Relevant strategic objective: Diversification
--------------------------------------------------------------
Ratio of gross How measured: Gross profit from each type of placement
profits generated expressed as a percentage of total gross profit.
from permanent
and temporary Why it's important: This ratio helps us to understand
placements where we are in the economic cycle, since the temporary
market tends to be more resilient when the economy
is weak. However, in several of our core strategic
markets, working in a temporary role or as a contractor
or interim employee is not currently normal practice,
for example Mainland China.
How we performed in H1 2020: 70% of our gross profit
was generated from permanent placements, below the
76% in 2019. As is usually the case in downturns,
permanent recruitment is hit harder when trading conditions
deteriorate. Temporary and Contracting recruitment
was more resilient to the tougher trading conditions,
particularly in disciplines such as Technology.
Relevant strategic objective: Organic growth
--------------------------------------------------------------
Gross profit How measured: Gross profit for the year divided by
per fee earner the average number of fee earners in the year.
Why it's important: This is a key indicator of productivity.
How we performed in H1 2020: Gross profit per fee
earner was GBP53.2k in H1 2020 compared to GBP70.7k
in H1 2019, a decrease of 24.8%. During the lockdown,
our fee earners saw a significant reduction in activity,
which together with our strategy of maintaining our
platform of experienced consultants as far as possible
to take market share when markets recover, resulted
in a short-term drop in productivity.
Relevant strategic objective: Organic growth
--------------------------------------------------------------
Conversion rate How measured: Operating profit before interest and
taxation (EBIT) as a percentage of gross profit.
Why it's important: This demonstrates the Group's
effectiveness at controlling the costs and expenses
associated with its normal business operations. It
will be impacted by the level of productivity and
the level of investment for future growth.
How we performed in H1 2020: Operating profit as
a percentage of gross profit decreased to 0.1% in
2020 from 17.4% in the prior year. This was due to
the sharp decrease in gross profit due to COVID-19,
partly mitigated by the reduction in headcount and
cost savings in the second quarter.
Relevant strategic objective: Build for the long-term
--------------------------------------------------------------
Basic earnings How measured: Profit for the year attributable to
per share 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 overall profitability
of the Group.
How we performed in H1 2020: Earnings per share (EPS)
in H1 2020 was -0.5p, a 103.0% decrease on the EPS
in 2019 of 16.8p. This is driven by the significant
reduction in profits caused by the challenging trading
conditions due to COVID-19.
Relevant strategic objective: Build for the long-term,
organic growth
--------------------------------------------------------------
Fee-earner: operational How measured: The percentage of fee-earners compared
support staff to operational support staff at the period-end, expressed
headcount ratio 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 H1 2020: The ratio was 77:23
(H1 2019: 78:22). We reduced our fee earner headcount
by 635 in the first half of 2020. These were primarily
recent joiners, very inexperienced in recruitment,
or those under performance reviews who have struggled
against the backdrop of COVID-19. Our operational
support headcount decreased by 78.
Relevant strategic objective: Sustainable growth
--------------------------------------------------------------
Fee-earner headcount How measured: Number of fee-earners and directors
growth involved in revenue-generating activities at the period
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 expectations as to the level
of future demand above the existing capacity within
the business.
How we performed in H1 2020: We reduced our fee earner
headcount by 635 in H1 2020 (H1 2019: 81 decrease)
due to the tougher trading conditions from COVID-19.
These leavers were generally those with very limited
experience in recruitment, typically less than 9 months,
or those that were on performance reviews.
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 is a key
measure of our success in managing our working capital
and determines our ability to reinvest in the business
and to return cash to shareholders.
How we performed in H1 2020: Net cash at 30 June
2020 was GBP161.7m (H1 2019: GBP81.7m). The increase
was due primarily to the partial unwind of our temporary
debtor receivable, the deferral of c. GBP22m of tax
payments, a strong focus on cash collection, as well
as the cancellation of the 2019 final dividend of
GBP30.2m.
Relevant strategic objective: Build for the long-term
--------------------------------------------------------------
The source of data and calculation methods year-on-year are on a
consistent basis. The movements in KPIs are in line with
expectations. Disclosure for GHG emissions and People KPIs is
provided annually.
PRINCIPAL RISKS AND UNCERTAINTIES
The management of the business and the execution of the Group's
strategy are subject to a number of risks.
The main risks that PageGroup believes could potentially impact
the Group's operating and financial performance for the remainder
of the financial year remain those as set out in the Annual Report
and Accounts for the year ending 31 December 2019 on pages 39 to
42.
However, since December 2019 the COVID-19 pandemic has impacted
the level of all these risks. We see the main impact being to
increase significantly the gross risk levels in; Macro - economic,
People, Cyber security and Financial management.
To date we have responded to mitigate the impact with
appropriate management actions in each area supported by our Group
crisis management process. We continue to monitor the situation as
it unfolds and will take the necessary actions to continue to
mitigate, where possible, the impact of the pandemic.
Our initial review of our Group crisis management process has
indicated a robust response. We will continue this review and
incorporate learnings into processes to mitigate the impact of any
future Global events. Management will consider the need to add an
additional Global event risk to our principal risks in our year end
reporting.
TREASURY MANAGEMENT, BANK FACILITIES AND CURRENCY RISK
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 and UK business utilise the notional cash pool
and the Asia Pacific subsidiaries operate the interest enhancement
facility. The structures facilitate interest compensation for cash
whilst supporting working capital requirements.
PageGroup maintains a Confidential Invoice Facility with HSBC
whereby the Group has the option to discount receivables in order
to advance cash. The Group also has a Revolving Credit Facility
with BBVA, expiring in 2022, with a total drawable amount of
GBP30m. We have agreed a covenant waiver to 31 December 2021 on
this facility, to ensure we retain access to these funds should
they be required. Neither of these facilities were in use as at 30
June. These facilities are used on an ad hoc basis to fund any
major Group GBP cash outflows.
The Group also has access to the Bank of England Covid Corporate
Finance Facility, with a limit of GBP300m, which has not been drawn
against. We do not currently expect to draw down the facility.
In line with the Group's investment policy, excess cash is
invested in a range of products; including call accounts, money
market deposits and money market funds. The Group actively monitors
its counterparty exposure to protect its capital investments and
reduce risk. Accordingly, as the Group's cash balance increased
through the second quarter, the Group opened two additional money
market funds, both of which hold an AAA rating.
The main functional currencies of the Group are Sterling, Euro,
Chinese Renminbi, US Dollar, Singapore Dollar, Hong Kong Dollar and
Australian Dollar. The Group does not have material transactional
currency exposures. The Group is exposed to foreign currency
translation differences in accounting for its overseas operations.
The Group policy is not to hedge translation exposures.
In certain cases, where the Group gives or receives short-term
loans to and from other Group companies that differ from the
Group's reporting currency, it may use short-dated foreign exchange
swap derivative financial instruments to manage the currency and
interest rate exposure that arises on these loans.
GOING CONCERN
The Board has undertaken a review of the Group's forecasts and
associated risks and sensitivities, considering the expected impact
of COVID-19 on trading in the period to 12 months from approval of
the interim financial statements.
Following the reduction in activity starting in February the
Group adopted a number of cost control and cash conservation
measures. The monthly cost base as measured for April to June 2020
has been reduced by 21% compared to March 2020 by a combination of
salary cuts, reduced working weeks, government assistance schemes,
reduced travel, and other costs. Through the second quarter,
activity levels started to pick up in several of the Group's
markets. The activity improvements are reflected in KPIs, such as
new opportunities, candidates sent to clients, interviews and
offers in several of our markets. This has allowed us to reverse
certain of the cost cutting measures e.g. salary cuts and reduced
working week from 1 July.
The Group had GBP161.7m of cash as at 30 June 2020 with no debt
except for IFRS 16 lease liabilities of GBP121.0m. Debt facilities
relevant to the review period comprise a committed GBP30m BBVA RCF
(May 2022 maturity), an uncommitted GBP300m government CCFF
(available to March 2022 if drawn in March 2021), an uncommitted UK
trade debtor discounting facility (up to GBP50m depending on debtor
levels) and an uncommitted GBP20m UK bank overdraft facility.
The Group has developed Base Case and Downside scenarios that
demonstrate the Board's best estimate and severe but plausible
downside scenarios respectively. The Base Case and Downside
forecasts are based on assumptions for gross profit and costs that
take account of the possibility of a second COVID wave and further
recessionary pressures, but not all the cost containment measures
that are available to the Group if required. Both scenarios
demonstrate significant cash headroom, thereby not needing to
utilise any of the facilities. However, in the remote likelihood
that conditions worsen materially beyond our current Downside
scenario, we may need to draw upon our GBP30m RCF, where we have
negotiated a covenant waiver that expires on 31 December 2021. The
Directors expect that access to the uncommitted Bank of England
CCFF GBP300m facility would also be available.
Having considered the Group's forecasts, the level of cash
resources available to the business and the Group's borrowing
facilities, the Group's geographical and discipline
diversification, limited concentration risk, as well as the ability
to manage the cost base, the Board has concluded that the Group has
adequate resources to continue in operational existence for the
foreseeable future, being a period of at least 12 months from the
date of this announcement.
CAUTIONARY STATEMENT
This Interim Management Report ("IMR") 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 IMR should not be relied on by any other party or for
any other purpose. This IMR 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.
This IMR has been prepared for the Group as a whole and
therefore gives greater emphasis to those matters that are
significant to PageGroup plc and its subsidiary undertakings when
viewed as a whole.
Page House
The Bourne Business Park
1 Dashwood Lang Road
Addlestone
Weybridge
Surrey
KT15 2QW
By order of the Board,
Steve Ingham Kelvin Stagg
Chief Executive Officer Chief Financial Officer
4 August 2020 4 August 2020
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
This announcement contains inside information for the purposes
of article 7 of EU Regulation 596/2014. The person responsible for
making this notification is Kelvin Stagg, Chief Financial
Officer.
INDEPENT REVIEW REPORT TO PAGEGROUP PLC
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2020 which comprises the condensed
consolidated income statement, the condensed consolidated statement
of comprehensive income, the condensed consolidated balance sheet,
the condensed consolidated statement of changes in equity, the
condensed consolidated statement of cash flows and the related
notes 1 to 12. We have read the other information contained in the
half yearly financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we
have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting", as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2020 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union and the Disclosure Guidance and Transparency Rules
of the United Kingdom's Financial Conduct Authority.
Ernst & Young LLP
London
4 August 2020
Condensed Consolidated Income Statement
For the six months ended 30 June 2020
Six months ended Year ended
30 June 30 June 31 December
2020 2019 2019
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
Revenue 3 654,989 820,515 1,653,948
Cost of sales (354,282) (386,978) (798,498)
Gross profit 3 300,707 433,537 855,450
Administrative expenses (300,344) (357,927) (708,781)
---------- ---------- ------------
Operating profit 3 363 75,610 146,669
Financial income 4 85 208 494
Financial expenses 4 (1,199) (1,234) (2,918)
(Loss)/Profit before tax 3 (751) 74,584 144,245
Income tax expense 5 (809) (20,511) (40,800)
---------- ---------- ------------
(Loss)/Profit for the period (1,560) 54,073 103,445
---------- ---------- ------------
Attributable to:
Owners of the parent (1,560) 54,073 103,445
---------- ---------- ------------
Earnings per share
Basic earnings per share (pence) 8 (0.5) 16.8 32.2
Diluted earnings per share (pence) 8 (0.5) 16.8 32.2
---------- ---------- ------------
The above results all relate to continuing operations
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2020
Six months ended Year ended
30 June 30 June 31 December
2020 2019 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
(Loss)/Profit for the period (1,560) 54,073 103,445
Other comprehensive (loss)/income for
the period
Items that may subsequently be reclassified
to profit and loss:
Currency translation differences 12,752 2,208 (14,842)
Gain/(loss) on hedging instruments - 283 (939)
Total comprehensive income for the period 11,192 56,564 87,664
---------- ---------- ------------
Attributable to:
Owners of the parent 11,192 56,564 87,664
---------- ---------- ------------
Condensed Consolidated Balance Sheet
As at 30 June 2020
30 June 30 June 31 December
2020 2019 2019
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 9 29,966 35,505 31,925
Right-of-use assets 110,774 129,541 120,246
Intangible assets - Goodwill and
other intangible 2,062 2,047 2,087
- Computer software 39,381 34,474 36,967
Deferred tax assets 24,405 21,045 18,915
Other receivables 10 15,037 14,439 15,036
221,625 237,051 225,176
---------- ---------- ------------
Current assets
Trade and other receivables 10 266,759 378,767 365,555
Current tax receivable 26,810 18,138 13,008
Cash and cash equivalents 12 161,651 81,704 97,832
455,220 478,609 476,395
---------- ---------- ------------
Total assets 3 676,845 715,660 701,571
---------- ---------- ------------
Current liabilities
Trade and other payables 11 (188,631) (193,020) (215,811)
Lease liabilities (37,097) (33,159) (29,139)
Current tax payable (16,905) (18,549) (19,110)
(242,633) (244,728) (264,060)
---------- ---------- ------------
Net current assets 212,587 233,881 212,335
---------- ---------- ------------
Non-current liabilities
Other payables 11 (10,410) (10,604) (11,613)
Deferred tax liabilities (3,962) (3,892) (2,038)
Lease liabilities (83,880) (105,331) (99,473)
(98,252) (119,827) (113,124)
---------- ---------- ------------
Total liabilities 3 (340,885) (364,555) (377,184)
---------- ---------- ------------
Net assets 335,960 351,105 324,387
---------- ---------- ------------
Capital and reserves
Called-up share capital 3,287 3,285 3,286
Share premium 99,564 99,206 99,507
Capital redemption reserve 932 932 932
Reserve for shares held in the employee
benefit trust (43,016) (41,225) (47,662)
Currency translation reserve 32,127 36,425 19,375
Retained earnings 243,066 252,482 248,949
Total equity 335,960 351,105 324,387
---------- ---------- ------------
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2020
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 31
December 2018 3,284 98,502 932 (50,673) 34,217 232,319 318,581
---------- -------- ----------- ---------- ------------ --------- ---------
Loss on adoption
of IFRS 16 (Note
1) (2,140) (2,140)
Balance at 1
January 2019 3,284 98,502 932 (50,673) 34,217 230,179 316,441
---------- -------- ----------- ---------- ------------ --------- ---------
Currency
translation
differences - - - - 2,208 - 2,208
---------- -------- ----------- ---------- ------------ --------- ---------
Net income
recognised
directly in
equity - - - - 2,208 - 2,208
Gain on hedging
instruments - - - - - 283 283
Profit for the six
months ended 30
June 2019 - - - - - 54,073 54,073
Total
comprehensive
income for the
period - - - - 2,208 54,356 56,564
---------- -------- ----------- ---------- ------------ --------- ---------
Exercise of share
plans 1 704 - - - 2,833 3,538
Reserve transfer
when shares held
in the employee
benefit trust
vest - - - 9,448 - (9,448) -
Credit in respect
of share schemes - - - - - 3,477 3,477
Credit in respect
of tax on share
schemes - - - - - 63 63
Dividends - - - - - (28,978) (28,978)
1 704 - 9,448 - (32,053) (21,900)
---------- -------- ----------- ---------- ------------ --------- ---------
Balance at 30 June
2019 3,285 99,206 932 (41,225) 36,425 252,482 351,105
---------- -------- ----------- ---------- ------------ --------- ---------
Profit on adoption
of IFRS 16 - - - - - 690 690
Balance at 30 June
2019 3,285 99,206 932 (41,225) 36,425 253,172 351,795
Currency
translation
differences - - - - (17,050) - (17,050)
---------- -------- ----------- ---------- ------------ --------- ---------
Net expense
recognised
directly in
equity - - - - (17,050) - (17,050)
Loss on hedging
instruments - - - - - (1,222) (1,222)
Profit for the six
months ended 31
December 2019 - - - - - 49,372 49,372
Total
comprehensive
(expense)/income
for the period - - - - (17,050) 48,150 31,100
---------- -------- ----------- ---------- ------------ --------- ---------
Purchase of shares
held in employee
benefit trust - - - (10,000) - - (10,000)
Exercise of share
plans 1 301 - - - 3,403 3,705
Reserve transfer
when shares held
in the employee
benefit trust
vest - - - 3,563 - (3,563) -
Credit in respect
of share schemes - - - - - 2,313 2,313
Debit in respect
of tax on share
schemes - - - - - (35) (35)
Dividends - - - - - (54,491) (54,491)
1 301 - (6,437) - (52,373) (58,508)
---------- -------- ----------- ---------- ------------ --------- ---------
Balance at 31
December 2019 3,286 99,507 932 (47,662) 19,375 248,949 324,387
---------- -------- ----------- ---------- ------------ --------- ---------
Balance at 1 January 2020 3,286 99,507 932 (47,662) 19,375 248,949 324,387
------ ------- ---- --------- ------- -------- --------
Currency translation differences - - - - 12,752 - 12,752
------ ------- ---- --------- ------- -------- --------
Net income recognised directly in
equity - - - - 12,752 - 12,752
Loss for the six months ended 30 June
2020 - - - - - (1,560) (1,560)
------ ------- ---- --------- ------- -------- --------
Total comprehensive income/(expense)
for the period - - - - 12,752 (1,560) 11,192
------ ------- ---- --------- ------- -------- --------
Purchase of shares held in employee
benefit trust - - - (1,609) - - (1,609)
Exercise of share plans 1 57 - - - - 58
Reserve transfer when shares held
in the employee benefit trust vest - - - 6,255 - (6,255) -
Credit in respect of share schemes - - - - - 1,932 1,932
1 57 - 4,646 - (4,323) 381
------ ------- ---- --------- ------- -------- --------
Balance at 30 June 2020 3,287 99,564 932 (43,016) 32,127 243,066 335,960
------ ------- ---- --------- ------- -------- --------
Note 1 - The opening reserve adjustment of GBP1.45m was
originally disclosed as GBP2.1m in the 2019 Interim announcement.
The change in value was due to further analysis of the lease
portfolio.
Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2020
30 June 30 June 31 December
2020 2019 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Note
(Loss)/Profit before tax (751) 74,584 144,245
Depreciation and amortisation charges 30,086 29,890 57,500
Loss on sale of property, plant
and equipment, and computer software 120 100 21
Share scheme charges 1,932 3,477 5,790
Net finance costs 1,114 1,026 2,424
---------- ---------- ------------
Operating cash flow before changes
in working capital 32,501 109,077 209,980
Decrease/(Increase) in receivables 113,411 (32,968) (37,934)
(Decrease)/Increase in payables (40,335) (12,864) 22,036
---------- ---------- ------------
Cash generated from operations 105,577 63,245 194,082
Income tax paid (20,183) (20,763) (36,960)
---------- ---------- ------------
Net cash from operating activities 85,394 42,482 157,122
---------- ---------- ------------
Cash flows from investing activities
Purchases of property, plant and
equipment (2,474) (5,326) (9,615)
Purchases and capitalisation of
intangible assets (8,526) (8,431) (16,735)
Proceeds from the sale of property,
plant and equipment, and computer
software 434 317 1,740
Interest received 85 208 494
---------- ---------- ------------
Net cash used in investing activities (10,481) (13,232) (24,116)
---------- ---------- ------------
Cash flows from financing activities
Dividends paid - (28,978) (83,469)
Interest paid (290) (172) (953)
Lease liability principal repayment (18,034) (20,662) (38,215)
Issue of own shares for the exercise
of options 58 3,538 7,243
Purchase of shares into the employee
benefit trust (1,609) - (10,000)
Net cash used in financing activities (19,875) (46,274) (125,394)
---------- ---------- ------------
Net increase in cash and cash equivalents 55,038 (17,024) 7,612
Cash and cash equivalents at the
beginning of the period 97,832 97,673 97,673
Exchange gain/(loss) on cash and
cash equivalents 8,781 1,055 (7,453)
Cash and cash equivalents at the
end of the period 12 161,651 81,704 97,832
---------- ---------- ------------
Notes to the condensed set of interim results
For the six months ended 30 June 2020
1. General information
The information for the year ended 31 December 2019 does not
constitute statutory accounts as defined in section 435 of the
Companies Act 2006. A copy of the statutory accounts for that year
has been delivered to the Registrar of Companies. The auditors
reported on those accounts: their report was unqualified, did not
draw attention to any matters by way of emphasis and did not
contain a statement under section 498(2) or (3) of the Companies
Act 2006.
The unaudited interim condensed consolidated financial
statements of PageGroup plc and its subsidiaries (collectively, the
Group) for the six months ended 30 June 2020 were authorised for
issue in accordance with a resolution of the directors on 4 August
2020.
2. Accounting policies
Basis of preparation
The unaudited interim condensed consolidated financial
statements for the six months ended 30 June 2020 have been prepared
in accordance with IAS 34 'Interim financial reporting' and with
the Disclosure Guidance and Transparency Rules of the Financial
Conduct Authority.
The unaudited interim condensed consolidated financial
statements do not constitute the Group's statutory financial
statements. The Group's most recent statutory financial statements,
which comprise the annual report and audited financial statements
for the year ended 31 December 2019, were approved by the directors
on 5 March 2020. The interim condensed consolidated financial
statements should be read in conjunction with the Annual Report and
Accounts for the year ended 31 December 2019, which have been
prepared in accordance with International Financial Reporting
Standards ('IFRSs') as adopted by the European Union.
Going concern
The Board has undertaken a review of the Group's forecasts and
associated risks and sensitivities, considering the expected impact
of COVID-19 on trading in the period to 12 months from approval of
the interim financial statements.
Following the reduction in activity starting in February the
Group adopted a number of cost control and cash conservation
measures. The monthly cost base as measured for April to June 2020
has been reduced by 21% compared to March 2020 by a combination of
salary cuts, reduced working weeks, government assistance schemes,
reduced travel, and other costs. Through the second quarter,
activity levels started to pick up in several of the Group's
markets. The activity improvements are reflected in KPIs, such as
new opportunities, candidates sent to clients, interviews and
offers in several of our markets. This has allowed us to reverse
certain of the cost cutting measures e.g. salary cuts and reduced
working week from 1 July.
The Group had GBP161.7m of cash as at 30 June 2020 with no debt
except for IFRS 16 lease liabilities of GBP121.0m. Debt facilities
relevant to the review period comprise a committed GBP30m BBVA RCF
(May 2022 maturity), an uncommitted GBP300m government CCFF
(available to March 2022 if drawn in March 2021), an uncommitted UK
trade debtor discounting facility (up to GBP50m depending on debtor
levels) and an uncommitted GBP20m UK bank overdraft facility.
The Group has developed Base Case and Downside scenarios that
demonstrate the Board's best estimate and severe but plausible
downside scenarios respectively. The Base Case and Downside
forecasts are based on assumptions for gross profit and costs that
take account of the possibility of a second COVID wave and further
recessionary pressures, but not all the cost containment measures
that are available to the Group if required. Both scenarios
demonstrate significant cash headroom, thereby not needing to
utilise any of the facilities. However, in the remote likelihood
that conditions worsen materially beyond our current Downside
scenario, we may need to draw upon our GBP30m RCF, where we have
negotiated a covenant waiver that expires on 31 December 2021. The
Directors expect that access to the uncommitted Bank of England
CCFF GBP300m facility would also be available.
Having considered the Group's forecasts, the level of cash
resources available to the business and the Group's borrowing
facilities, the Group's geographical and discipline
diversification, limited concentration risk, as well as the ability
to manage the cost base, the Board has concluded that the Group has
adequate resources to continue in operational existence for the
foreseeable future, being a period of at least 12 months from the
date of this announcement.
New accounting standards, interpretations and amendments adopted
by the Group
The Group has not early adopted any standard, interpretation or
amendment that has been issued but is not yet effective. The same
accounting policies and methods of computation as were followed in
the most recent annual financial statements
During the period the Group utilised various Government
assistance schemes. The income received has been accounted for in
line with IAS 20 - Government Grants and presented net within
administrative expenses.
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.
(a) Revenue, gross profit and operating profit by reportable segment
Revenue Gross Profit
--------------------------------- ---------------------------------
Six months ended Year ended Six months ended Year ended
30 June 30 June 31 December 30 June 30 June 31 December
2020 2019 2019 2020 2019 2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
EMEA 352,888 427,657 861,827 154,540 213,145 418,328
Asia Pacific 105,263 134,989 273,437 56,852 81,797 163,255
Americas 78,716 100,456 205,074 46,926 69,180 138,791
United Kingdom 118,122 157,413 313,610 42,389 69,415 135,076
654,989 820,515 1,653,948 300,707 433,537 855,450
--------- -------- ------------ --------- -------- ------------
Operating Profit
---------------------------------
Six months ended Year ended
30 June 30 June 31 December
2020 2019 2019
GBP'000 GBP'000 GBP'000
EMEA 10,565 45,594 90,333
Asia Pacific (3,596) 8,839 19,810
Americas (4,946) 8,680 19,268
United Kingdom (1,660) 12,497 17,258
Operating profit 363 75,610 146,669
Financial expense (1,114) (1,026) (2,424)
(Loss)/Profit
before tax (751) 74,584 144,245
--------- -------- ------------
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 intangibles.
(b) Segment assets, liabilities and non-current assets by reportable segment
Total Assets Total Liabilities
----------------------------------------- ---------------------------------
Six months ended Year ended Six months ended Year ended
30 June 30 June 31 December 30 June 30 June 31 December
2020 2019 2019 2020 2019 2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
EMEA 233,400 317,334 294,597 184,243 196,619 196,473
Asia Pacific 109,775 132,993 119,110 46,976 44,962 45,832
Americas 94,012 100,879 111,649 45,164 53,215 53,288
United Kingdom 212,848 146,316 163,207 47,597 51,210 62,481
----------- ---------- ---------------- --------- -------- ------------
Segment assets/liabilities 650,035 697,522 688,563 323,980 346,006 358,074
Income tax 26,810 18,138 13,008 16,905 18,549 19,110
676,845 715,660 701,571 340,885 364,555 377,184
----------- ---------- ---------------- --------- -------- ------------
Property, Plant & Equipment Intangible Assets
----------------------------------------- ---------------------------------
Six months ended Year ended Six months ended Year ended
30 June 30 June 31 December 30 June 30 June 31 December
2020 2019 2019 2020 2019 2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
EMEA 12,409 14,147 12,732 2,862 2,920 2,818
Asia Pacific 4,851 6,763 5,560 431 500 495
Americas 7,115 8,459 7,471 184 144 162
United Kingdom 5,591 6,136 6,162 37,966 32,957 35,579
29,966 35,505 31,925 41,443 36,521 39,054
----------- ---------- ---------------- --------- -------- ------------
The below analysis in note (c) relates to the requirement of
IFRS 15 to disclose disaggregated revenue streams.
(c) Revenue and gross profit generated from permanent and temporary placements
Revenue Gross Profit
--------------------------------- ---------------------------------
Six months ended Year ended Six months ended Year ended
30 June 30 June 31 December 30 June 30 June 31 December
2020 2019 2019 2020 2019 2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Permanent 213,525 333,978 649,948 211,805 330,650 643,787
Temporary 441,464 486,537 1,004,000 88,902 102,887 211,663
654,989 820,515 1,653,948 300,707 433,537 855,450
--------- -------- ------------ --------- -------- ------------
The below analyses in notes (d) revenue and gross profit by
discipline (being the professions of candidates placed) and (e)
revenue and gross profit by strategic market have been included as
additional disclosure over and above the requirements of IFRS 8
"Operating Segments".
(d) Revenue and gross profit by discipline
Revenue Gross Profit
--------------------------------- ---------------------------------
Six months ended Year ended Six months ended Year ended
30 June 30 June 31 December 30 June 30 June 31 December
2020 2019 2019 2020 2019 2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Accounting
and Financial
Services 266,783 327,707 662,458 105,528 150,428 298,648
Legal, Technology,
HR, Secretarial
and Other 188,805 217,130 442,648 81,087 107,373 212,244
Engineering,
Property &
Construction,
Procurement
& Supply Chain 134,933 182,102 359,216 70,181 105,355 203,275
Marketing,
Sales and Retail 64,468 93,576 189,626 43,911 70,381 141,283
654,989 820,515 1,653,948 300,707 433,537 855,450
--------- -------- ------------ --------- -------- ------------
(e) Revenue and gross profit by strategic market
Revenue Gross Profit
--------------------------------- ---------------------------------
Six months ended Year ended Six months ended Year ended
30 June 30 June 31 December 30 June 30 June 31 December
2020 2019 2019 2020 2019 2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Large, Proven
markets 371,589 481,814 962,424 142,322 218,724 426,178
Large, High
Potential markets 194,297 233,552 478,950 107,483 148,062 298,139
Small and Medium,
High Margin
markets 89,103 105,149 212,574 50,902 66,751 131,133
654,989 820,515 1,653,948 300,707 433,537 855,450
--------- -------- ------------ --------- -------- ------------
4. Financial income / (expenses)
Six months ended Year ended
30 June 30 June 31 December
2020 2019 2019
GBP'000 GBP'000 GBP'000
Financial income
Bank interest receivable 85 208 494
--------- -------- ------------
Financial expenses
Bank interest payable (290) (172) (953)
Interest on lease liabilities (909) (1,062) (1,965)
(1,199) (1,234) (2,918)
--------- -------- ------------
5. Taxation
The charge for taxation at the half year was GBP0.8m, which is
an effective tax rate of -107.6% (H1 2019: 27.5%).
The increase in the effective tax rate for the first half has
been due primarily to changes in deferred tax asset recognition on
losses and other timing differences, due to uncertainty over the
availability of future taxable income in certain territories as a
result of Covid. The CVAE tax in France, which is linked to revenue
rather than profit, has also had a disproportionate impact on the
rate.
6. Dividends
Six months ended Year ended
30 June 30 June 31 December
2020 2019 2019
GBP'000 GBP'000 GBP'000
Amounts recognised as distributions to equity
holders in the year:
Final dividend for the year ended 31 December
2019 of 9.40p per ordinary share (2018: 9.00p) - 28,978 28,978
Interim dividend for the year ended 30 June
2019 of 4.30p per ordinary share (2018: 4.10p) - - 13,759
Special dividend for the year ended 31 December
2019 of 12.73p per ordinary share (2018:
12.73p) - - 40,732
- 28,978 83,469
----------- -------- --------------
Amounts proposed as distributions to equity
holders in the year:
Proposed interim dividend for the period
ended 30 June 2020 of 0p per ordinary share
(2019: 4.30p) - 13,853 -
----------- -------- --------------
Proposed special dividend for the year ended
31 December 2020 of 0p per ordinary share
(2019: 12.73p) - 41,011 -
----------- -------- --------------
The comparative interim and special dividends at 30 June 2019
were not approved by the Board as at 30 June 2019 and therefore
were not included as a liability.
The proposed final dividend for 2019 of 9.40p per ordinary
share, or GBP30.2m, which was due for payment in June 2020, was
cancelled as a result of the ongoing uncertainty as a result of the
COVID-19 pandemic.
7. Share-based payments
In accordance with IFRS 2 "Share-based Payment", a charge of
GBP1.4m has been recognised for share options and other share-based
payment arrangements (including social charges) (30 June 2019:
GBP4.1m, 31 December 2019: GBP6.8m).
8. Earnings per ordinary share
The calculation of the basic and diluted earnings per share is
based on the following data:
Six months ended Year ended
30 June 30 June 31 December
Earnings 2020 2019 2019
Earnings for basic and diluted earnings per
share (GBP'000) (1,560) 54,073 103,445
--------- -------- ------------
Number of shares
Weighted average number of shares used for
basic earnings per share ('000) 320,650 321,031 320,789
Dilution effect of share plans ('000) 1,096 638 375
Diluted weighted average number of shares
used for diluted earnings per share ('000) 321,746 321,669 321,164
--------- -------- ------------
Basic earnings per share (pence) (0.5) 16.8 32.2
Diluted earnings per share (pence) (0.5) 16.8 32.2
The above results all relate to continuing operations.
9. Property, plant and equipment
Acquisitions
During the period ended 30 June 2020 the Group acquired
property, plant and equipment with a cost of GBP2.5m (30 June 2019:
GBP5.3m, 31 December 2019: GBP9.6m).
10. Trade and other receivables
Six months ended Year ended
30 June 30 June 31 December
2020 2019 2019
GBP'000 GBP'000 GBP'000
Current
Trade receivables 203,711 301,114 281,176
Less allowance for credit losses and revenue
reversals (13,561) (10,596) (10,081)
--------- --------- ------------
Net trade receivables 190,150 290,518 271,095
Other receivables 20,012 7,978 10,643
Accrued income 36,789 62,108 70,421
Prepayments 19,808 18,163 13,396
266,759 378,767 365,555
--------- --------- ------------
Non-current
Other receivables 15,037 14,439 15,036
--------- --------- ------------
11. Trade and other payables
Six months ended Year ended
30 June 30 June 31 December
2020 2019 2019
GBP'000 GBP'000 GBP'000
Current
Trade payables 6,317 3,135 6,702
Other tax and social security 63,214 63,101 51,687
Other payables 23,259 31,443 31,216
Accruals 95,841 94,919 126,206
Deferred income - 422 -
188,631 193,020 215,811
--------- -------- ------------
Non-current
Accruals 9,574 9,149 10,330
Other tax and social security 836 1,455 1,283
10,410 10,604 11,613
--------- -------- ------------
12. Cash and cash equivalents
Six months ended Year ended
30 June 30 June 31 December
2020 2019 2019
GBP'000 GBP'000 GBP'000
Cash at bank and in hand 86,651 81,704 90,856
Short-term deposits 75,000 - 6,976
--------- -------- ------------
Cash and cash equivalents 161,651 81,704 97,832
Cash and cash equivalents in the statement
of cash flows 161,651 81,704 97,832
--------- -------- ------------
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.
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 and UK business utilise the notional cash pool
and the Asia Pacific subsidiaries operate the interest enhancement
facility. The structures facilitate interest compensation for cash
whilst supporting working capital requirements.
PageGroup maintains a Confidential Invoice Facility with HSBC
whereby the Group has the option to discount receivables in order
to advance cash. The Group also has a Revolving Credit Facility
with BBVA, expiring in 2022, with a total drawable amount of
GBP30m. We have agreed a covenant waiver to 31 December 2021 on
this facility, to ensure we retain access to these funds should
they be required. Neither of these facilities were in use as at 30
June. These facilities are used on an ad hoc basis to fund any
major Group GBP cash outflows.
The Group also has access to the Bank of England Covid Corporate
Finance Facility, with a limit of GBP300m, which has not been drawn
against. We do not currently expect to utilise it.
RESPONSIBILITY STATEMENT
The Directors confirm that to the best of their knowledge:-
a) the condensed set of interim financial statements has been
prepared in accordance with IAS 34 "Interim Financial
Reporting"
b) the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year); and
c) the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein).
On behalf of the Board
S Ingham K Stagg
Chief Executive Officer Chief Financial Officer
4 August 2020
Copies of the condensed interim financial statements are now
available and can be downloaded from the Company's website
https://www.page.com/presentations/year/2020
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
IR USOKRRVUWRAR
(END) Dow Jones Newswires
August 05, 2020 02:00 ET (06:00 GMT)
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