TIDMPAGE
RNS Number : 3730E
PageGroup plc
07 July 2021
7 July 2021
PAGEGROUP PLC
Q2 BACK TO 2019 RECORD LEVEL: INCREASING 2021 GUIDANCE
Q2 Highlights
Note: Given the magnitude of the impact of COVID-19 in 2020, we
are providing comparisons in constant currencies against 2019, to
ensure the most appropriate representation of current trading.
Comparisons to 2020 are also given in the tables.
-- Group gross profit of GBP219.7m, +94.1% vs. 2020 (+2.0% vs. 2019)
-- Improvement in the exit rate, exiting June at +11% vs. 2019
-- Gross profit per fee earner up 15% on Q2 2019
-- 17 record quarters including 4 of our 5 Large, High Potential markets
-- Large, High Potential markets (38% of Group) +16% vs. 2019
-- EMEA +0.4%: France -11%; Germany +26% all vs. 2019
-- Asia Pacific +10.5%: Greater China +10%; SE Asia +35%; India +47% all vs. 2019
-- Americas +7.7%: US +8%; Latin America +11% all vs. 2019
-- UK -9.0%: Michael Page -4%; Page Personnel -24% all vs. 2019
-- Increase in fee earner headcount of 176 to 5,443 (Q2 2019: 6,035)
-- Strong cash position, net cash of c. GBP168m (Q1 2021: c. GBP136m, Q2 2020: c. GBP162m)
Outlook
-- Full year operating profit expected to be within the range of GBP125m - GBP135m
Q2 Gross Profit Analysis
Gross Profit (GBPm) Growth Rates (%)
Reported Constant
Year-on-year % of Group 2021 2020 2019 vs. 2020 Constant vs. 2020 vs. 2019
----------- ------- ------- ------ ---------- ------------------ ----------
EMEA 49% 107.3 63.3 108.9 +69.5% +75.8% +0.4%
----------- ------- ------- ------ ---------- ------------------ ----------
Asia Pacific 21% 46.0 25.6 43.7 +79.8% +89.7% +10.5%
----------- ------- ------- ------ ---------- ------------------ ----------
Americas 16% 34.5 16.0 37.0 +115.8% +137.9% +7.7%
----------- ------- ------- ------ ---------- ------------------ ----------
UK 14% 31.9 13.5 35.1 +136.1% +136.1% -9.0%
----------- ------- ------- ------ ---------- ------------------ ----------
Total 100% 219.7 118.4 224.7 +85.6% +94.1% +2.0%
----------- ------- ------- ------ ---------- ------------------ ----------
H1 Gross Profit Analysis
Gross Profit (GBPm) Growth Rates (%)
Constant
Year-on-year % of Group 2021 2020 2019 Reported vs. 2020 Constant vs. 2020 vs. 2019
----------- ------- ------- ------ ------------------ ------------------ ----------
EMEA 50% 203.4 154.5 213.1 +31.6% +33.3% -3.8%
----------- ------- ------- ------ ------------------ ------------------ ----------
Asia Pacific 20% 81.8 56.9 81.8 +43.9% +48.7% +3.6%
----------- ------- ------- ------ ------------------ ------------------ ----------
Americas 15% 61.3 46.9 69.2 +30.6% +44.2% +1.6%
----------- ------- ------- ------ ------------------ ------------------ ----------
UK 15% 57.6 42.4 69.4 +35.9% +35.9% -17.0%
----------- ------- ------- ------ ------------------ ------------------ ----------
Total 100% 404.1 300.7 433.5 +34.4% +38.3% -3.7%
----------- ------- ------- ------ ------------------ ------------------ ----------
Steve Ingham, Chief Executive Officer, PageGroup, said:
"Throughout the pandemic we have continued to focus on the
protection and wellbeing of our employees, candidates and clients,
whilst progressing strategic investments in our platform to take
advantage of the recovery. The tough and challenging year in 2020
has strengthened our culture, diversity and the values in the
business which are now re-affirmed at the forefront of our
operations. I am immensely proud of the spirit, resilience, and
commitment of all our people. This, I believe, is reflected in our
results.
"Given the magnitude of the impact of COVID-19 on 2020, we are
continuing to compare our results to 2019, our record gross profit
year. I am pleased to report that the improvement in results we saw
in Q1 continued into April and May, both of which were down 3% on
2019, broadly in line with the exit rate in March. We then saw a
significant improvement in June, which was up 11% on 2019. Overall,
this meant the Group was up 2.0% for the quarter compared to 2019.
This noticeable improvement in Q2 was seen throughout the Group and
was achieved despite the backdrop of continued restrictions or
lockdowns in many of our markets. We delivered record quarters in 4
of our 5 Large, High Potential Markets and in 17 countries.
"We remain confident in our strategy of maintaining and
investing in our platform by continuing to invest carefully in
headcount, demonstrated by the c. 400 experienced hires we added in
2020, which continued in 2021 to now approaching 800, as well as
rolling-out new technology and innovation. Our headcount is
currently down 8% on the pre-pandemic level at the end of 2019. As
a result of the more favourable trading conditions in Q2, as well
as this reduction in our fee earner headcount, our gross profit per
fee earner is up 15% on Q2 2019 and 86% on Q2 2020. We are the
clear leader in many of our markets, with a highly experienced
senior management team, which, we believe, positions us well to
take advantage of opportunities to grow and improve our business.
We have maintained our focus on driving progress towards our
long-term strategic goals.
"Given the lower headcount, as well as reduced spending on
travel and entertaining due to the pandemic, our underlying
pre-bonus cost base is currently c. 5% below 2019 levels. However,
bonus levels have been higher given the increase in pre-bonus
profit and if visibility continues to improve, we will further
invest in our fee earner headcount in H2. As a result, our
underlying cost base would increase.
"Looking ahead, there continues to be a high degree of global
macro-economic uncertainty as COVID-19 remains a significant issue
and restrictions remain in a number of the Group's markets.
Additionally, at this stage of the recovery, it is not easy to
determine whether the improved performance is still the result of
pent-up supply and demand, or a sustainable trend. However, and
notwithstanding the early stage in the year, the strength of our
performance in H1, and notably in June, has further increased
confidence in our outlook for the year. Subject to other unexpected
events, we now expect full year operating profit to be within the
range of GBP125m - GBP135m."
Headcount
In 2020 we reduced our fee earner headcount by 882, primarily
those on performance review or those with very limited experience
in recruitment. This was net of adding c. 400 experienced fee
earners in 2020. We have subsequently added a further c. 400 in the
first half of this year. These, plus those who have joined from
outside recruitment, net of attrition, mean that we have added 298
fee earners in the first half of 2021. Our operational support
headcount rose by 64 in Q2, and, as such, our ratio of fee earners
to operational support staff was maintained at 77:23. Overall, the
Group had 5,443 fee earners and a total headcount of 7,075,
compared to 6,035 and 7,763 in Q2 2019 respectively.
Productivity
As a result of the more favourable trading conditions in Q2, as
well as the reduction in our fee earner headcount, our gross profit
per fee earner was up 15% on Q2 2019 and 86% on Q2 2020.
Geographical Analysis (unless otherwise stated all growth rates
are in constant currency and vs. 2019)
EMEA Gross Profit (GBPm) Growth Rates
Reported Constant Constant
(49% of Group) 2021 2020 2019 vs. 2020 vs. 2020 vs. 2019
-------- ------- ------- ------------ ------------ ------------
Q2 107.3 63.3 108.9 +69.5% +75.8% +0.4%
-------- ------- ------- ------------ ------------ ------------
H1 203.4 154.5 213.1 +31.6% +33.3% -3.8%
-------- ------- ------- ------------ ------------ ------------
Unless otherwise stated, all growth rates are for the quarter in constant
currency and vs. 2019
* France (14% of Group) -11%
* Germany (11% of Group) +26%
* Benelux -9%
o Belgium +2%
* Southern Europe +7%
o Italy +5%
o Spain +7%
* Middle East and Africa, -10%
* June +9.9%
Headcount at 30 June 2021: 3,143 (30 June 2019: 3,316)
In Europe, Middle East and Africa, the improvement in trading
conditions we experienced at the end of Q1 continued into Q2, which
was up 0.4% overall against Q2 2019. France declined 11%, an
improvement on the decline of 19% in Q1, with June showing further
improvement, exiting the quarter down 6%. Germany, the Group's
third largest market, delivered another record quarter, up 26%,
with June up 43%. Growth was strongest in our Technology focused
Interim business, up 50% for the quarter. Benelux was down 9%
overall, with a decline in the Netherlands of 14%, partially offset
by growth in Belgium of 2%. Italy and Spain both delivered record
quarters, up 5% and 7%, respectively. The Middle East and Africa
was down 10%. There were also record quarters in Poland, Portugal
and Turkey. In line with the improved trading conditions, our fee
earner headcount increased by 81.
Asia Pacific Gross Profit (GBPm) Growth Rates
Reported Constant Constant
(21% of Group) 2021 2020 2019 vs. 2020 vs. 2020 vs. 2019
------- ------- ------- ------------ ------------ ------------
Q2 46.0 25.6 43.7 +79.8% +89.7% +10.5%
------- ------- ------- ------------ ------------ ------------
H1 81.8 56.9 81.8 +43.9% +48.7% +3.6%
------- ------- ------- ------------ ------------ ------------
Unless otherwise stated, all growth rates are for the quarter in constant
currency and vs. 2019
* Asia (17% of Group) +19%
o Greater China (9% of Group and 50% of Asia) +10%
o Mainland China +29%
o Hong Kong -16%
* South East Asia +35%
o Singapore +10%
* Japan +17%
* India +47%
* Australia -13%
* June +17.4%
Headcount at 30 June 2021: 1,538 (30 June 2019: 1,737)
In Asia Pacific, gross profit for Q2 was up 10.5% to GBP46.0m, a
record quarter. Mainland China was up 29% for the quarter and
exited June strongly, up 46%. Hong Kong, where trading conditions
remained challenging, was down 16%, though this was an improvement
on Q1. Overall, Greater China grew 10% for the quarter. The Large,
High Potential market of South East Asia delivered a record
quarter, up 35%. Singapore was up 10%, with the other five
countries in the region growing 58%, collectively. Japan grew 17%,
a record quarter and a significant improvement from growth of 2% in
Q1. India, despite being one of the worst affected countries by
COVID-19, also delivered a record quarter, growing 47%. Australia
declined 13% for the quarter, although we saw an improvement in
June, exiting down only 2%. Our fee earner headcount in the region
increased by 70 in the quarter, mainly in South East Asia and
India.
Americas Gross Profit (GBPm) Growth Rates
Reported Constant Constant
(16% of Group) 2021 2020 2019 vs. 2020 vs. 2020 vs. 2019
-------- ------- ----- ----------- ----------- -----------
Q2 34.5 16.0 37.0 +115.8% +137.9% +7.7%
-------- ------- ----- ----------- ----------- -----------
H1 61.3 46.9 69.2 +30.6% +44.2% +1.6%
-------- ------- ----- ----------- ----------- -----------
Unless otherwise stated, all growth rates are for the quarter in
constant currency and vs. 2019
* North America (10% of Group) +6%
o US +8%
* Latin America (6% of Group) +11%
o Brazil +27%
o Mexico -4%
* June +16.8%
Headcount at 30 June 2021: 1,185 (30 June 2019: 1,342)
In the Americas, despite being one of the worst COVID-19
affected regions, gross profit for Q2 was up 7.7%, a record
quarter. In the US, where the improvements in trading conditions we
saw at the end of Q1 continued, we grew 8%, a record quarter and
exited June strongly, up 19%. In Latin America, gross profit grew
11%, a record quarter, up from a decline of 2% in Q1. Mexico, our
largest country in the region, was down 4% for the quarter but
exited June +3%. Brazil was up 27% for the quarter. Elsewhere in
Latin America, the remaining countries grew 15% for the quarter,
collectively, with record quarters from Argentina, Colombia and
Panama. We increased our fee earner headcount by 31 across the
region in the quarter, mainly in the US.
UK Gross Profit (GBPm) Growth Rate Growth Rate
(14% of Group) 2021 2020 2019 vs. 2020 vs. 2019
------- ------- ------ -------------- --------------
Q2 31.9 13.5 35.1 +136.1% -9.0%
------- ------- ------ -------------- --------------
H1 57.6 42.4 69.4 +35.9% -17.0%
------- ------- ------ -------------- --------------
Unless otherwise stated, all growth rates are for the quarter in
constant currency and vs. 2019
* Michael Page -4%
* Page Personnel -24%
* June -1.7%
Headcount at 30 June 2021: 1,209 (30 June 2019: 1,368)
In the UK, gross profit declined 9.0% in the quarter, an
improvement from a decline of 25.1% in Q1. Michael Page (-4% in Q2)
was more resilient than Page Personnel (-24% in Q2). The UK's
performance improved in June, down just 1.7%, with Michael Page
growing 7%. Our fee earner headcount declined by 6 in the
quarter.
Financial Position
Save for the effects of Q2 trading detailed above, there have
been no other significant changes in the financial position of the
Group since the publication of the results for the quarter ended 31
March 2021. Net cash at 30 June 2021 was c. GBP168m (Q1 2021: c.
GBP136m; Q2 2020: c. GBP162m).
Shares
At 30 June 2021 there were 328,618,774 Ordinary shares in issue,
of which 11,863,101 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 10,381,016 shares and consequently
these shares should be excluded when calculating earnings per
share. The total number of voting rights in the Company is
328,618,774.
Cautionary Statement
This Second Quarter and First Half 2021 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.
The Group will issue its interim results for the six months
ending 30 June 2021 on 9 August 2021.
This announcement contains inside information for the purposes
of article 7 of EU Regulation 596/2014 and Article 7 of Onshore
Regulation (EU) 596/2014 as it forms part of domestic law by virtue
of the EUWA. The person responsible for making this announcement on
behalf of PageGroup is Kelvin Stagg, Chief Financial Officer.
Enquiries:
PageGroup +44 (0)20 3077 8172
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 9:00am today. The live presentation can
be viewed by following the link:
https://www.investis-live.com/pagegroup/60d0aff74f5e110c004dbb5c/q2-2021-trading-update
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 78 56 62 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
7 July 2021 at:
https://www.page.com/presentations/year/2021
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END
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