TIDMPAGE
RNS Number : 5886N
PageGroup plc
10 August 2017
10 August 2017
PageGroup plc
Half Year Results for the Period Ended 30 June 2017
PageGroup plc ("PageGroup"), the specialist professional
recruitment company, announces its unaudited half year results for
the period ended 30 June 2017.
Financial summary
(6 months to 30 June Change
2017) 2017 2016 Change CC*
----------------------- ---------- ---------- ------- -------
Revenue GBP673.1m GBP575.9m +16.9% +7.7%
----------------------- ---------- ---------- ------- -------
Gross profit GBP352.0m GBP299.2m +17.7% +8.3%
----------------------- ---------- ---------- ------- -------
Operating profit GBP56.9m GBP47.1m +20.9% +9.2%
----------------------- ---------- ---------- ------- -------
Profit before tax GBP56.9m GBP46.9m +21.4%
----------------------- ---------- ---------- -------
Basic earnings per
share 13.1p 10.8p +21.3%
----------------------- ---------- ---------- -------
Diluted earnings per
share 13.1p 10.8p +21.3%
----------------------- ---------- ---------- -------
Interim dividend per
share 3.90p 3.75p +4.0%
----------------------- ---------- ---------- -------
Special dividend per
share 12.73p
----------------------- ----------
*in constant currency at prior year rates
HIGHLIGHTS
-- Group operating profit increased 9.2%* to GBP56.9m, +20.9% in reported rates
-- Favourable FX movements increased reported gross profit by c.
GBP28m and operating profit by c. GBP6m
-- Conversion rate of gross profit to operating profit increased to 16.2% (H1 2016: 15.7%)
-- Interim dividend up 4.0% to 3.90 pence per share, totalling GBP12.3m
-- Special dividend of 12.73 pence per share, totalling GBP40.0m
Commenting, Steve Ingham, Chief Executive Officer, said:
"PageGroup delivered an increase of 8.3%* in gross profit and
9.2%* in operating profit in the first half of 2017, with the
Group's conversion rate rising to 16.2% from 15.7%, reflecting an
improved business performance and operational efficiencies.
"Movements in foreign exchange rates as a result of a weaker
Sterling have benefited our first half results by
c. GBP28m of gross profit and c. GBP6m of operating profit. At
June exchange rates, we anticipate the benefit in the second half
to be greatly reduced, at c. GBP2m of gross profit, with a marginal
benefit to operating profit.
"We experienced some improved macro-economic conditions,
particularly in Asia (ex-Singapore), Continental Europe, and Latin
America (ex-Brazil), which helped drive growth in the first half.
However, challenging market conditions continued in some of our
larger markets, including Brazil, Singapore and the UK.
"We made significant investments in our fee earner headcount
over the last 12 months, particularly in France, the US and Latin
America, ex. Brazil, up 19%, 28% and 22%, respectively. These
investments delivered a strong return, with gross profit growth of
24%, 16% and 24%. We will continue to make headcount investments
into our Large, High Potential markets, which represented only 22%
of the Group in 2010. These markets now represent 31% of the Group
and grew 12% in the first half. We will also continue to make
headcount investments into those other markets with favourable
trading conditions.
"Fee earner headcount grew 276 (+5.9%) to end the half year at a
record level for the Group of 4,987. With our continued focus on
operational efficiencies, we maintained our record fee earner to
operational support staff ratio of 77:23. Total headcount at the
end of the first half was 6,448.
"The Board has announced an interim dividend of 3.90 pence per
share, an increase of 4.0% over last year as a result of our
improved trading performance and strong balance sheet. In addition,
the Group is pleased to announce today a special dividend of GBP40m
(12.73 pence per share), making a third consecutive year of special
dividends, in line with its intention to return surplus capital to
shareholders. Taking both dividend payments together, this amounts
to a cash return to shareholders of GBP52.3m payable on 11 October
2017.
"We are pleased with our first half performance, but remain
mindful that a number of political and macro-economic uncertainties
will continue through 2017. We will continue to focus on driving
profitable growth, as we did in the first half, whilst remaining
able to respond quickly to any changes in market conditions."
PageGroup will host a conference call, with on-line slide
presentation, for analysts and investors at 8.30am on 10 August
2017, the details of which are below.
Link:
http://www.investis-live.com/pagegroup/596c7361c6702b0a0049d15d/gwag
Please use the following dial-in number to join the
conference:
+ 44 (0)20 3059 8125
Please quote "PageGroup" to gain access to the call
A presentation and recording to accompany the call will be
posted on the PageGroup website during the course of the morning of
10 August 2017 at:
http://www.page.com/investors/investor-library/2017.aspx
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
INTERIM MANAGEMENT REPORT
To the members of PageGroup plc
GROUP STRATEGY
At PageGroup we have a clear strategic vision. We aim to be the
leading specialist recruiter in each of the markets in which we
operate. We have sought to achieve this by developing a significant
market presence in major global economies, as well as targeting new
markets where we see the greatest potential for long-term gross
profit growth at attractive conversion rates.
We offer our services across a broad range of disciplines and
specialisms, solely within the professional recruitment market. Our
origins are in permanent recruitment, but nearly a quarter of the
gross profit of the business is now in temporary placements, where
local culture and market conditions allow. In particular, we focus
on opportunities where our industry and market expertise can set us
apart from our competition. This enables us to offer a premium
service that is valued by clients and attracts the highest calibre
of candidates.
PageGroup is focused on delivering against three key strategic
objectives to achieve its strategic vision and sustainable
financial returns. These are: 1) to look for organic and
diversified growth; 2) to position the business to be efficiently
scalable and highly flexible to reflect market conditions; and 3)
as a people-oriented, organically-driven business, to nurture and
develop talent and skills which are fundamental to us achieving
long-term sustainable growth.
We therefore invest significantly in our people, as the
recruitment, retention and development of the best talent available
is central to our ability to grow the business and to manage our
resources through economic cycles. Investment in the business has
been focused on developing the long-term sustainability of the
business and is supported by significant balance sheet strength and
cash flow generation.
Organic growth
Our strategy is to grow organically, achieved by drawing upon
the skills and experience of proven PageGroup management, ensuring
we have the best and most experienced, home-grown talent in each
key role. Our team-based structure and profit share business model
is highly scalable. The small size of our specialist teams means we
can increase headcount rapidly to achieve growth when market
conditions are favourable.
Conversely, when market conditions tighten, these
entrepreneurial, profit sharing teams reduce in size largely
through natural attrition. Consequently, our cost base contracts
during the lean times. Our strategy for organic growth has served
the business well over the 40 years since its inception and we
believe it will continue to do so. We have grown from a small,
single discipline management recruitment company operating in one
country to a large multidiscipline, multinational business,
operating in 36 countries represented by our three key brands of
Page Executive, Michael Page and Page Personnel.
Diversification by region and discipline
Our strategy is to expand and diversify the Group by industry
sectors, professional disciplines, geography and level of focus, be
it Page Executive, Michael Page or Page Personnel, with the
objective of being the leading specialist recruitment consultancy
in each of our chosen markets.
As recruitment is a cyclical business, impacted significantly by
the strength of economies, diversification is an important element
of our strategy in order to reduce our dependency on individual
businesses or markets, thereby increasing the resilience of the
Group. This strategy is pursued entirely through the organic growth
of existing and new teams, offices, disciplines and countries,
maintaining a consistent team and meritocratic culture as we
grow.
Talent and skills development
We recognise that it is our people who are at the heart of
everything we do, particularly as an organically grown business
where ensuring we have a talent pool with experience through
economic cycles and across both geographies and disciplines is
critical. Investing in our people is, therefore, a vital element of
our strategy. We seek to find the highest calibre staff from a wide
range of backgrounds and then do our very best to retain them
through offering a fulfilling career and an attractive working
environment.
This includes a team-based structure, a profit share business
model and continuous training and career development, often
internationally. Our strong track record of internal career moves
and promotion from within means that people who join us know that
they could be our future senior managers and Main Board
Directors.
Sustainable Growth
When we invest in a new business, be it a new country, a new
office or a new discipline, we do so for the long term. Downturns
in the general economy of a country or in specific industries will
inevitably have a knock-on effect on the recruitment market.
However, it has been our practice in the past, and remains our
intention, to maintain our presence in our chosen markets through
these downturns, while closely controlling our cost base. In this
way, we are able to retain our highly capable management teams in
whom we have invested and, normally, we find that we gain market
share during downturns, which positions our business for
market-leading rates of growth when the economy improves. Pursuing
this approach means that we carry spare capacity during downturns,
which can have a negative effect on profitability in the short
term. A strong balance sheet is, therefore, essential to support
the business at these times.
Strategic Priorities
-- increase the scale and diversification of PageGroup by
growing, organically, existing and new teams,
offices, disciplines and countries;
-- manage the business with a team and meritocratic culture,
whilst delivering a consistent and high quality client and
candidate experience;
-- invest through cycles in our Large, High Potential Markets of
Germany, Greater China, Latin America, South East Asia and the US
to achieve scale and market position;
-- manage our fee earner headcount in all other markets to
reflect prevailing market conditions, by selectively adding to
geographies and disciplines where there is positive growth
momentum, while reducing headcount where the outlook for growth or
fee earner productivity is poor;
-- focus on operational support consistency;
-- focus on succession planning and international career paths
to encourage retention and development of key staff; and
-- utilise innovation, particularly in new technologies, with
the aim of improving efficiency, attrition and productivity.
GROUP RESULTS
GROSS PROFIT Reported (GBPm) CC
-------------- ----------- --------------------------- -------
% of Group H1 2017 H1 2016 % %
-------------- ----------- -------- -------- ------- -------
EMEA 46% 162.1 129.1 +25.5% +13.8%
-------------- ----------- -------- -------- ------- -------
UK 21% 73.0 74.8 -2.3% -2.3%
-------------- ----------- -------- -------- ------- -------
Asia Pacific 19% 66.7 56.5 +17.9% +5.5%
-------------- ----------- -------- -------- ------- -------
Americas 14% 50.2 38.8 +29.6% +14.1%
-------------- ----------- -------- -------- ------- -------
Total 100% 352.0 299.2 +17.7% +8.3%
-------------- ----------- -------- -------- ------- -------
Permanent 76% 267.3 228.2 +17.2% +7.7%
-------------- ----------- -------- -------- ------- -------
Temporary 24% 84.7 71.0 +19.3% +10.2%
-------------- ----------- -------- -------- ------- -------
The Group's revenue for the six months ended 30 June 2017
increased 16.9% to GBP673.1m (2016: GBP575.9m) and gross profit
increased 17.7% to GBP352.0m (2016: GBP299.2m). At constant
currency, the Group's revenue increased by 7.7% and gross profit by
8.3%. The Group's revenue mix between permanent and temporary
placements was 40:60 (2016: 40:60) and for gross profit was 76:24
(2016: 76:24).
Revenue from temporary placements comprises the salaries of
those placed, together with the margin charged. This margin on
temporary placements improved slightly to 21.1% (2016: 20.7%) in
the first half of 2017. Overall, pricing has remained relatively
stable across all regions, although pricing has improved in markets
and disciplines where there have been increasing instances of
candidate shortages.
Total headcount increased by 349 while fee earner headcount grew
by 276 (+5.9%) to a record level for the Group of 4,987. Our fee
earner to operational support staff ratio has remained at its
record level of 77.23. We will continue to invest in our headcount
in the second half to react to trading conditions.
The Group's organic growth model and profit-based team bonus
ensures cost control remains tight. Approximately 75% of first half
costs were employee related, including salaries, bonuses,
share-based long-term incentives, and training and relocation
costs.
In addition to focusing on the operational performance of the
business, we continue to progress our strategic projects, with our
new Global Finance System ("GFS") in the UK Shared Service Centre
going live earlier this week.
In total, administrative expenses in the first half increased
17.1% to GBP295.1m (2016: GBP252.1m), driven by increases in
headcount and foreign exchange movements. In constant currency
administrative expenses were up 8.1% and operating profit increased
9.2% to GBP56.9m (2016: GBP47.1m), an increase of 20.9% at reported
rates.
The Group views its conversion rate, which represents the ratio
of operating profit to gross profit, as a key metric for the
business. This conversion rate is affected by macro-economic
conditions, the level of investment, particularly in fee earners
and the degree of spare capacity within the business. The Group's
conversion rate of 16.2% (2016: 15.7%) was an improvement on H1
2016, driven by a strong EMEA performance and a noticeable
improvement in the Americas, which offset a significant increase in
share plan charges of c. GBP3m.
FOREIGN EXCHANGE
The Group benefited in the period from the impact of movements
in foreign exchange rates, as Sterling weakened against almost all
of the currencies relevant to the Group's operations. In the first
half, this increased the Group's revenue, gross profit and
operating profit when expressed in Sterling by c. GBP53m, c. GBP28m
and
c. GBP6m, respectively. At June closing exchange rates, the
impact in the second half will be greatly reduced, with only a c.
GBP2m benefit to gross profit and a marginal benefit to operating
profit.
OTHER ITEMS
A net interest income of GBPnil (2016: GBP0.2m charge) reflected
the higher level of cash held this year compared to 2016 and the
continuing low interest rate environment. Interest income of
GBP0.2m on cash balances held through the period was offset by
financial charges related to the Group's Invoice Discounting
Facility and overdrafts used to support local operations.
The charge for taxation is based on the expected effective
annual tax rate of 28% (2016: 28%) on profit before taxation. The
principal drivers of the tax charge, as in previous years, are
share based remuneration, permanent differences between profits for
accounting and tax purposes and the geographical mix of profits
being taxed at different tax rates.
Basic earnings per share for the six months ended 30 June 2017
was 13.1p, an increase of 21.3% and diluted earnings per share was
also 13.1p, an increase of 21.3% (2016: basic earnings per share
10.8p; diluted earnings per share 10.8p).
CASH FLOW
The Group started the year with net cash of GBP92.8m. In the
first half, GBP52.5m was generated from operations after funding an
increase in working capital of GBP17.5m, primarily due to an
increase in trade receivables, largely due to foreign exchange. Tax
paid was GBP24.6m and net capital expenditure was GBP8.6m. Net
interest paid of GBP1.4m related to settlement of an GBP8m tax
liability to HMRC in respect of a refund of VAT dating back to
2010, when GBP28.4m was recognised as non-recurring income. Recent
case law has now concluded such VAT refunds in the relevant
circumstances are taxable, and as a consequence, the outstanding
balance was settled in H1 2017. The outstanding tax and associated
interest were accrued in prior years. During the first half,
GBP5.7m was received from exercises of share options and dividends
of GBP25.9m were paid to shareholders. As a result, the Group had
net cash of GBP88.9m at 30 June 2017.
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 operate while maintaining a strong balance sheet position.
The Group's first use of cash is to satisfy operational and
investment requirements, as well as hedging 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. Over the 16 years since
flotation, the Group has returned over GBP275m by share buybacks
and cancelled around 25% of its issued share capital. This is on
top of approaching GBP500m of dividend payments during the same
period.
The Board has announced an interim dividend of 3.90 pence per
share, an increase of 4.0% over last year. In addition, the Group
is pleased to announce today a special dividend of GBP40m (12.73
pence per share), making a third consecutive year of special
dividends, in line with its policy of returning surplus capital to
shareholders. Taking both dividend payments together, this amounts
to a cash return to shareholders of GBP52.3m. Together with the
2016 final dividend paid in June of GBP25.9m, this represents a
total of GBP78.2m returned to shareholders in 2017.
This special dividend will be paid, as in previous years, at the
same time as the interim dividend on 11 October 2017 to
shareholders on the register as at 8 September 2017.
During the first half, no shares were required to be purchased
by the employee benefit trust (2016: GBP15.1m).
All growth rates given below are in constant currency unless
otherwise stated.
EUROPE, MIDDLE EAST AND AFRICA (EMEA)
EMEA GBPm Growth rates
------------------ ------------------ ------------------
(46% of Group in
H1 2017) H1 2017 H1 2016 Reported CC
------------------ -------- -------- --------- -------
Gross Profit 162.1 129.1 +25.5% +13.8%
------------------ -------- -------- --------- -------
Operating Profit 31.4 23.8 +31.7% +17.3%
------------------ -------- -------- --------- -------
Conversion Rate
(%) 19.4% 18.5%
------------------ -------- -------- --------- -------
EMEA is the Group's largest region, contributing 46% of Group
first half gross profit. In reported rates, revenue in the region
increased by 27.0% to GBP323.1m (2016: GBP254.3m) and gross profit
increased 25.5% to GBP162.1m (2016: GBP129.1m). In constant
currency, revenue increased 15.2% on the first half of 2016 and
gross profit increased by 13.8%.
The EMEA region continued to experience strong trading
conditions throughout the first half. Page Personnel performed well
across the region, with growth of 18%. Our largest businesses in
France, Germany and Spain, together representing 59% of the region
by gross profit, grew 24%, 12% and 19% respectively. In France,
Page Personnel, which represents 64% of the business, had a record
first half performance, growing 27%. Overall, 9 countries,
representing 75% of the region, delivered double-digit growth
during the first half of the year. Our business in the Middle East
& Africa grew 4%, driven by South Africa and a slight
improvement in trading conditions in the UAE.
The 31.7% increase in operating profit for the first half of
2017 to GBP31.4m (2016: GBP23.8m), and improvement in the
conversion rate to 19.4% (2016: 18.5%) was due principally to both
favourable trading conditions and foreign exchange movements in
2017. Headcount across the region increased 165 (6%) in the first
half to 2,718 at the end of June 2017 (2,553 at 31 December
2016).
UNITED KINGDOM
UK GBPm Growth rates
--------------------- ------------------ -------------
(21% of Group in
H1 2017) H1 2017 H1 2016
--------------------- -------- -------- -------------
Gross Profit 73.0 74.8 -2.3%
--------------------- -------- -------- -------------
Operating Profit 8.7 11.6 -25.1%
--------------------- -------- -------- -------------
Conversion Rate (%) 11.9% 15.6%
--------------------- -------- -------- -------------
In the UK, representing 21% of Group first half gross profit,
revenue declined 3.6% to GBP160.7m (2016: GBP166.7m), and gross
profit declined 2.3% to GBP73.0m (2016: GBP74.8m), with Brexit
related uncertainty impacting clients' decision-making.
Technical disciplines such as Engineering (+13%) and Property
& Construction (+12%) performed well. However, market
conditions in our Accounting & Financial Services discipline
(-4%) and Marketing, Sales and Retail (-9%) disciplines were more
challenging.
These difficult trading conditions reduced conversion by just
under 1% on 2016. However, with both Executive Directors and most
of our Group functions located in the UK, the region suffered a
disproportionate impact from the significant increase in the share
plan charges, and as a result operating profit fell 25.1% to
GBP8.7m (2016: GBP11.6m) and the conversion rate fell to 11.9%
(2016: 15.6%).
Headcount increased by 13 (1%) during the first half of 2017 to
1,424 at the end of June 2017 (1,411 at 31 December 2016).
ASIA PACIFIC
Asia Pacific GBPm Growth rates
------------------ ------------------ -----------------
(19% of Group in
H1 2017) H1 2017 H1 2016 Reported CC
------------------ -------- -------- --------- ------
Gross Profit 66.7 56.5 +17.9% +5.5%
------------------ -------- -------- --------- ------
Operating Profit 11.3 9.4 +20.4% +5.6%
------------------ -------- -------- --------- ------
Conversion Rate
(%) 17.0% 16.6%
------------------ -------- -------- --------- ------
In Asia Pacific, representing 19% of Group first half gross
profit, revenue increased 19.8% in reported rates to GBP116.9m
(2016: GBP97.6m), and gross profit increased 17.9% to GBP66.7m
(2016: GBP56.5m). In constant currency, revenue increased 5.9% in
the first half and gross profit increased by 5.5%.
Asia, comprising 14% of the Group and 71% of Asia Pacific, grew
7%. We continued to see improvements in Greater China which grew
9%. We saw strong performances from our businesses in Mainland
China, where we have a higher proportion of domestic clients.
Elsewhere in Asia, India, Indonesia and Malaysia combined grew 19%.
However in Singapore, where market conditions remained challenging,
gross profit fell 18%.
In Australasia, where Australia grew 2%, Western Australia
returned to growth, up 16%, with New South Wales delivering 5%
growth. Queensland and Victoria both had single-digit declines.
Operating profit increased 20.4% to GBP11.3m (2016: GBP9.4m),
resulting in an increase in the conversion rate to 17.0% (2016:
16.6%). Headcount across the region increased by 93 (8%) through
the first half to 1,298 at the end of June 2017 (1,205 at 31
December 2016).
THE AMERICAS
Americas GBPm Growth rates
--------------------- ------------------ -------------------
(14% of Group in H1
2017) H1 2017 H1 2016 Reported CC
--------------------- -------- -------- --------- --------
Gross Profit 50.2 38.8 +29.6% +14.1%
--------------------- -------- -------- --------- --------
Operating Profit 5.5 2.3 +144.8% +116.6%
--------------------- -------- -------- --------- --------
Conversion Rate (%) 11.0% 5.8%
--------------------- -------- -------- --------- --------
In the Americas, representing 14% of Group first half gross
profit, revenue increased 26.5% in reported rates to GBP72.5m
(2016: GBP57.3m) while gross profit increased 29.6% to GBP50.2m
(2016: GBP38.8m). In constant currency, revenue increased by 10.8%
and gross profit increased by 14.1%.
North America saw growth of 13%, though conditions remained
challenging in the now smaller New York Financial Services market,
which was down 16%. This market now represents 27% of our US
business, compared to 37% in H1 2016. We saw good growth elsewhere
in the US of 35%, as we continued to diversify our market presence
in the other cities and disciplines in which we operate.
Latin America was up 15%. Brazil (34% of Latin America) was flat
overall and remained profitable; it also returned to growth in the
second quarter.
Elsewhere, our other countries, which now represent 66% of gross
profit in Latin America, had another strong half, growing at 24%.
Our performances in Argentina, Mexico and Peru were particularly
strong. Mexico, which is our largest country in Latin America by
headcount, achieved growth of 20% in the half.
Headcount was up 79 (8%) in the first half, to 1,009 at the end
of June 2017 (930 at 31 December 2016). Operating profit increased
by 144.8% to GBP5.5m (2016: GBP2.3m), with an increase in the
conversion rate to 11.0% (2016: 5.8%). This was largely a result of
our smaller offices in the US reaching sufficient scale such that
they remain consistently profitable even with significant headcount
investment.
OUTLOOK
As we stated in our second quarter trading update, we are
pleased with our first half performance, but remain mindful that a
number of political and macro-economic uncertainties will continue
through 2017. We will continue to focus on driving profitable
growth, as we did in the first half, whilst remaining able to
respond quickly to any changes in market conditions.
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
growth revenue less 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 of the
net fees from the business as a whole.
It demonstrates whether we are in line
with our strategy to grow the business.
How we performed in H1 2017: With strong
growth in many of our markets, gross
profit income in H1 2017 increased by
8.3% in constant currency, although this
increased to 17.7% at reported rates
after the impact of foreign exchange
(H1 2016: 6.5% in reported rates, 3.6%
in constant currency).
Relevant strategic objective: Organic
growth
-------------------- --------------------------------------------------------
Gross profit How measured: Total gross profit from
diversification a) geographic 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 2017: Geographies:
the percentage increased to 79.3% from
75.0% in 2016, demonstrating further
diversification. This increase reflected
the economic recovery felt in Continental
Europe, along with the weakness of Sterling.
Disciplines: the percentage increased
to 63.1% (2016: 61.3%), with growth of
4% within accounting and financial services,
compared to 11% elsewhere, with a particularly
strong result from our Technical disciplines,
up 20%.
Relevant strategic objective: Diversification
-------------------- --------------------------------------------------------
Ratio of How measured: Gross profit from each
gross profits type of placement expressed as a percentage
generated of total gross profit.
from permanent Why it's important: This ratio helps
and temporary us to understand where we are in the
placements economic cycle since the temporary market
tends to be more resilient when the economy
is weak, although 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 2017: 76% of our
gross profit was generated from permanent
placements, in line with 2016, and 24%
from temporary.
Relevant strategic objective: Organic
growth
-------------------- --------------------------------------------------------
Gross profit How measured: Gross profit for the year
per fee earner divided by 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 2017: Gross profit
per fee earner was GBP72.3k in H1 2017
compared to GBP66.3k in H1 2016. There
has been an increase in productivity
compared to 2016 as a result of the impact
of favourable currency movements. If
stated in constant currency, productivity
is broadly flat year-on-year.
Relevant strategic objective: Organic
growth
-------------------- --------------------------------------------------------
Conversion How measured: Operating profit before
before exceptional interest and taxation (EBIT) before exceptional
items items 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 2017: Operating
profit as a percentage of gross profit
increased to 16.2% in 2017, up from 15.7%
in the prior year, driven by the work
done in 2016 to achieve consistency and
efficiency across the Group, as well
as an improvement in trading conditions
in Continental Europe.
Relevant strategic objective: Build for
the long-term
-------------------- --------------------------------------------------------
Basic earnings How measured: Profit for the year attributable
per share to the Group's equity shareholders, divided
before exceptional by the weighted average number of shares
items in issue during the year.
Why it's important: This measures the
overall profitability of the Group.
How we performed in H1 2017: Earnings
per share (EPS) in H1 2017 was 13.1p,
a 21.3% improvement on the EPS in 2016
of 10.8p.
Relevant strategic objective: Build for
the long-term, Organic growth
-------------------- --------------------------------------------------------
Fee-earner: How measured: The percentage of fee-earners
operational compared to operational support staff
support staff at the period-end, expressed as a ratio.
headcount Why it's important: This reflects the
ratio 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 2017: The ratio
continued at a record 77:23 despite the
increase in our support headcount of
73 since year end. We have added 276
fee earners in that same period. (H1
2016: 77:23).
Relevant strategic objective: Sustainable
growth
-------------------- --------------------------------------------------------
Fee-earner How measured: Number of fee-earners and
headcount directors involved in revenue-generating
growth 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 2017: Fee earner
headcount grew at 5.9% (2016: 1%), resulting
in 4,987 fee-earners at the period end,
as we invested in our large, high potential
markets as well as those markets experiencing
strong growth.
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 2017: Net cash
at 30 June 2017 was GBP88.9m (2016: GBP73.6m).
This was as a result of share purchases
into the Employee Benefit Trust of GBP15.1m
in 2016 that was not incurred in 2017,
as well as GBP5.7m received in 2017 as
a result of the exercise of share options,
which was not received in 2016.
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 2016 on pages 27 to 31.
There have been no changes to these risk categories in the first
half to 30 June 2017. However, there remains an increased degree of
uncertainty in the UK as a result of Brexit, as well as the recent
General Election result where no single party managed to win an
overall majority. This General Election result injected further
uncertainty and instability into the Brexit process. It is too
early to say how this will impact our business going forward,
although following the EU Referendum in June 2016, Sterling
weakened significantly, which has benefited our results.
We have a proven track record of being able to manage our
headcount and costs effectively throughout the economic cycle and
it should be noted that the UK is a more resilient market due to
its size and maturity. We also expect Continental Europe, the US,
Latin America outside of Brazil and Asia outside of Singapore to
continue to remain positive. In light of these mixed trading
conditions, we will continue to focus on activity levels, adjusting
headcount during the second half to react to market conditions. As
always, we remain focused on driving profitable growth, whilst
remaining able to respond quickly and effectively to any changes in
market conditions.
TREASURY MANAGEMENT, BANK FACILITIES AND CURRENCY RISK
It is the Directors' intention to continue to finance the
activities and development of the Group from retained earnings and
to operate while maintaining a strong balance sheet position.
The Group's first use of cash is to satisfy operational and
investment requirements, as well as hedging 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.
Cash surpluses are invested in short-term deposits, with any
working capital requirements being provided from Group cash
resources, Group facilities, or by local overdraft facilities. The
Group has a multi-currency notional cash pool between the Eurozone
subsidiaries and the UK-based Group Treasury subsidiary. The
structure facilitates interest and balance compensation of cash and
bank overdrafts. The Group has an Invoice Financing facility with
HSBC Bank, the availability of which is limited to the level of UK
trade receivable available for financing. This facility is subject
to conventional banking covenants.
The main functional currencies of the Group are Sterling, Euro,
Chinese Renminbi, US Dollar and Australian Dollar. The Group does
not have material exposure to foreign denominated monetary assets
and liabilities. The Group does not hedge its exposure to
translation risk.
In certain cases, where the Group gives or receives short-term
loans to and from other Group companies with different reporting
currencies, it may use short-dated foreign exchange swap derivative
financial instruments to manage the currency and interest rate
exposure that arises on these loans. The Group has entered into
hedges to cover its investment in foreign entities in the US and
Canada.
GOING CONCERN
The Board has undertaken a recent and thorough review of the
Group's forecasts and associated risks and sensitivities. Despite
the uncertainty in the economy and its inherent risk and impact on
the business, the Board has concluded, given the level of cash in
the business and Group borrowing facilities, the geographical and
discipline diversification, limited concentration risk, as well as
the ability to manage the cost base, 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
9 August 2017 9 August 2017
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 2017 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 related notes 1
to 13. 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 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 Ireland) 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 2017 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Ernst & Young LLP
London
9 August 2017
Condensed Consolidated Income Statement
For the six months ended 30 June 2017
Six months ended Year ended
30 June 30 June 31 December
2017 2016 2016
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
Revenue 3 673,146 575,891 1,196,125
Cost of sales (321,159) (276,740) (575,091)
Gross profit 3 351,987 299,151 621,034
Administrative expenses (295,067) (252,053) (520,082)
---------- ---------- ------------
Operating profit 3 56,920 47,098 100,952
Financial income 4 148 50 117
Financial expenses 4 (120) (241) (1,073)
Profit before tax 3 56,948 46,907 99,996
Income tax expense 5 (16,036) (13,134) (27,900)
---------- ---------- ------------
Profit for the period 40,912 33,773 72,096
---------- ---------- ------------
Attributable to:
Owners of the parent 40,912 33,773 72,096
---------- ---------- ------------
Earnings per share
Basic earnings per share
(pence) 8 13.1 10.8 23.1
Diluted earnings per
share (pence) 8 13.1 10.8 23.1
---------- ---------- ------------
The above results all relate to continuing operations
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2017
Six months ended Year ended
30 June 30 June 31 December
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Profit for the period 40,912 33,773 72,096
Other comprehensive (loss)/income
for the period
Items that may subsequently
be reclassified to profit and
loss:
Currency translation
differences (1,935) 18,622 22,105
Gain / (loss) on hedging instruments 706 (1,393) (2,468)
Total comprehensive income
for the period 39,683 51,002 91,733
---------- ---------- ------------
Attributable to:
Owners of the parent 39,683 51,002 91,733
---------- ---------- ------------
Condensed Consolidated Balance Sheet
As at 30 June 2017
30 June 30 June 31 December
2017 2016 2016
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 9 29,541 26,834 29,461
Intangible assets - Goodwill
and other intangible 1,677 1,672 1,696
- Computer software 35,375 34,787 36,187
Deferred tax assets 14,616 14,542 16,547
Other receivables 10 9,110 4,254 7,640
90,319 82,089 91,531
---------- ---------- ------------
Current assets
Trade and other receivables 10 278,239 258,443 259,328
Current tax receivable 16,488 11,237 12,743
Cash and cash equivalents 13 88,946 82,222 92,796
383,673 351,902 364,867
---------- ---------- ------------
Total assets 3 473,992 433,991 456,398
---------- ---------- ------------
Current liabilities
Trade and other payables 11 (173,524) (159,516) (175,059)
Bank overdrafts 13 - (8,588) -
Current tax payable (17,325) (20,663) (24,404)
(190,849) (188,767) (199,463)
---------- ---------- ------------
Net current assets 192,824 163,135 165,404
---------- ---------- ------------
Non-current liabilities
Other payables 11 (12,334) (7,731) (9,944)
Deferred tax liabilities (1,081) (1,902) (430)
(13,415) (9,633) (10,374)
---------- ---------- ------------
Total liabilities 3 (204,264) (198,400) (209,837)
---------- ---------- ------------
Net assets 269,728 235,591 246,561
---------- ---------- ------------
Capital and reserves
Called-up share capital 3,276 3,259 3,259
Share premium 92,054 90,393 90,458
Capital redemption reserve 932 932 932
Reserve for shares held
in the employee benefit
trust (65,780) (73,348) (72,941)
Currency translation reserve 30,811 29,263 32,746
Retained earnings 208,435 185,092 192,107
Total equity 269,728 235,591 246,561
---------- ---------- ------------
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2017
Reserve
for
shares
held
in
Called-up Capital the Currency
share Share redemption employee translation Retained Total
benefit
capital premium reserve trust reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 January
2016 3,258 90,268 932 (61,365) 10,641 178,025 221,759
---------- -------- ----------- --------- ------------ --------- ---------
Currency translation
differences - - - - 18,622 - 18,622
---------- -------- ----------- --------- ------------ --------- ---------
Net income recognised
directly in equity - - - - 18,622 - 18,622
Loss on hedging
instruments - - - - - (1,393) (1,393)
Profit for the
six months ended
30 June 2016 - - - - - 33,773 33,773
Total comprehensive
income for the
period - - - - 18,622 32,380 51,002
---------- -------- ----------- --------- ------------ --------- ---------
Purchase of shares
held in employee
benefit trust - - - (15,058) - - (15,058)
Exercise of share
plans 1 125 - - - 41 167
Reserve transfer
when shares held
in the employee
benefit trust
vest - - - 3,075 - (3,075) -
Credit in respect
of share schemes - - - - - 2,488 2,488
Debit in respect
of tax on share
schemes - - - - - (203) (203)
Dividends - - - - - (24,564) (24,564)
1 125 - (11,983) - (25,313) (37,170)
---------- -------- ----------- --------- ------------ --------- ---------
Balance at 30
June 2016 3,259 90,393 932 (73,348) 29,263 185,092 235,591
---------- -------- ----------- --------- ------------ --------- ---------
Currency translation
differences - - - - 3,483 - 3,483
---------- -------- ----------- --------- ------------ --------- ---------
Net income recognised
directly in equity - - - - 3,483 - 3,483
Loss on hedging
instruments - - - - - (1,075) (1,075)
Profit for the
six months ended
31 December 2016 - - - - - 38,323 38,323
Total comprehensive
income for the
period - - - - 3,483 37,248 40,731
---------- -------- ----------- --------- ------------ --------- ---------
Exercise of share
plans - 65 - - - 132 197
Reserve transfer
when shares held
in the employee
benefit trust
vest - - - 407 - (407) -
Credit in respect
of share schemes - - - - - 1,954 1,954
Debit in respect
of tax on share
schemes - - - - - (165) (165)
Dividends - - - - - (31,747) (31,747)
- 65 - 407 - (30,233) (29,761)
---------- -------- ----------- --------- ------------ --------- ---------
Balance at 31
December 2016
and 1 January
2017 3,259 90,458 932 (72,941) 32,746 192,107 246,561
---------- -------- ----------- --------- ------------ --------- ---------
Currency translation
differences - - - - (1,935) - (1,935)
---------- -------- ----------- --------- ------------ --------- ---------
Net loss recognised
directly in equity - - - - (1,935) - (1,935)
Profit on hedging
instruments - - - - - 706 706
Profit for the
six months ended
30 June 2017 - - - - - 40,912 40,912
---------- -------- ----------- --------- ------------ --------- ---------
Total comprehensive
(loss)/income
for the period - - - - (1,935) 41,618 39,683
---------- -------- ----------- --------- ------------ --------- ---------
Exercise of share
plans 17 1,596 - - - 4,049 5,662
Reserve transfer
when shares held
in the employee
benefit trust
vest - - - 7,161 - (7,161) -
Credit in respect
of share schemes - - - - - 4,019 4,019
Debit in respect
of tax on share
schemes - - - - - (337) (337)
Dividends - - - - - (25,860) (25,860)
17 1,596 - 7,161 - (25,290) (16,516)
---------- -------- ----------- --------- ------------ --------- ---------
Balance at 30
June 2017 3,276 92,054 932 (65,780) 30,811 208,435 269,728
---------- -------- ----------- --------- ------------ --------- ---------
Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2017
Year ended
30 June 30 June 31 December
2017 2016 2016
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
Cash generated from operations 12 52,495 41,262 121,319
Income tax paid (24,628) (14,802) (32,499)
---------- ---------- ------------
Net cash from operating
activities 27,867 26,460 88,820
---------- ---------- ------------
Cash flows from investing
activities
Purchases of property, plant
and equipment (4,863) (7,269) (14,111)
Purchases of intangible
assets (4,387) (4,634) (11,153)
Proceeds from the sale of
property, plant and equipment,
and computer software 630 994 1,890
Interest received 148 50 117
---------- ---------- ------------
Net cash used in investing
activities (8,472) (10,859) (23,257)
---------- ---------- ------------
Cash flows from financing
activities
Dividends paid (25,860) (24,564) (56,311)
Interest paid (1,579) (124) (460)
Issue of own shares for
the exercise of options 5,662 167 364
Purchase of shares into
the employee benefit trust - (15,058) (15,058)
Net cash used in financing
activities (21,777) (39,579) (71,465)
---------- ---------- ------------
Net decrease in cash and
cash equivalents (2,382) (23,978) (5,902)
Cash and cash equivalents
at the beginning of the
period 92,796 95,018 95,018
Exchange (loss)/gain on
cash and cash equivalents (1,468) 2,594 3,680
Cash and cash equivalents
at the end of the period 13 88,946 73,634 92,796
---------- ---------- ------------
Notes to the condensed set of interim results
For the six months ended 30 June 2017
1. General information
The information for the year ended 31 December 2016 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.
2. Accounting policies
Basis of preparation
The unaudited interim condensed consolidated financial
statements for the six months ended 30 June 2017 have been prepared
in accordance with IAS 34 'Interim financial reporting' and with
the Disclosure 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 2016, were approved by the directors
on 7 March 2017. The interim condensed consolidated financial
statements should be read in conjunction with the Annual Report and
Accounts for the year ended 31 December 2016, which have been
prepared in accordance with International Financial Reporting
Standards ('IFRSs') as adopted by the European Union.
The accounting policies adopted in the preparation of the
interim condensed consolidated financial statements are consistent
with those followed in the preparation of the Group's annual
consolidated financial statements for the year ended 31 December
2016.
Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the interim management report. The interim
management report also includes a summary of the Group's financial
position, its cash flows and its borrowing facilities.
The directors believe the Group is well placed to manage its
business risks successfully. The Group's forecasts and projections,
taking account of reasonably possible changes in trading
performance, show that the Group should be able to operate within
the level of its current committed facilities.
After making enquiries, the directors have a reasonable
expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future, a
period of not less than 12 months from the date of this report.
Accordingly, they continue to adopt the going concern basis in
preparing the half-yearly financial report.
New accounting standards, interpretations and amendments adopted
by the Group
We are continuing with our review and implementation of two new
Accounting Standards, "IFRS 15 - Revenue from Contacts with
Customers" and "IFRS 16 - Leases". The potential impact on our
accounts of both of these Standards were disclosed in our Annual
Report and Accounts for the year ended 31 December 2016. Our
expectations as to their impact remain in line with these
disclosures. A final conclusion on IFRS 15 and a further update on
IFRS 16 will be provided in this year's Annual Report and Accounts.
The Group doesn't anticipate that "IFRS 9 - Financial Instruments'
will have a material impact on the Group's financial statements
once it becomes effective from 1 January 2018.
The Group has not early adopted any standard, interpretation or
amendment that has been issued but is not yet effective.
3. Segment reporting
All revenues disclosed are derived from external customers.
The accounting policies of the reportable segments are the same
as the Group's accounting policies. Segment operating profit
represents the profit earned by each segment including allocation
of central administration costs. This is the measure reported to
the Group's Board, the chief operating decision maker, for the
purpose of resource allocation and assessment of segment
performance.
(a) Revenue, gross profit and operating profit by reportable segment
Revenue Gross Profit
-------------------------------- --------------------------------
Six months Year Six months Year
ended ended ended ended
30 30 30
June 30 June 31 December June June 31 December
2017 2016 2016 2017 2016 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
EMEA 323,092 254,341 538,403 162,117 129,137 271,863
United Kingdom 160,675 166,655 324,548 73,020 74,743 146,313
Australia
Asia and New
Pacific Zealand 56,256 48,025 103,979 19,010 16,310 35,085
Asia 60,616 49,537 105,692 47,644 40,215 84,644
-------- -------- ------------ -------- -------- ------------
Total 116,872 97,562 209,671 66,654 56,525 119,729
Americas 72,507 57,333 123,503 50,196 38,746 83,129
673,146 575,891 1,196,125 351,987 299,151 621,034
-------- -------- ------------ -------- -------- ------------
Operating Profit
---------------------------------
Six months ended Year ended
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
EMEA 31,397 23,841 51,685
United Kingdom 8,706 11,623 24,153
Asia Australia and
Pacific New Zealand 2,557 1,998 4,592
Asia 8,741 7,382 16,135
--------- -------- ------------
Total 11,298 9,380 20,727
Americas 5,519 2,254 4,387
Operating profit 56,920 47,098 100,952
Financial income/(expense) 28 (191) (956)
Profit before tax 56,948 46,907 99,996
--------- -------- ------------
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 Year Year
ended ended Six months ended ended
30 30
30 June June 31 December 30 June June 31 December
2017 2016 2016 2017 2016 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
EMEA 200,716 166,280 187,257 97,687 81,624 96,270
United Kingdom 109,452 124,919 119,036 43,680 57,220 43,306
Australia
Asia and New
Pacific Zealand 26,528 24,415 24,869 12,141 10,661 10,526
Asia 61,587 57,686 56,182 14,708 14,798 16,462
-------- -------- ------------ --------- -------- ------------
Total 88,115 82,101 81,051 26,849 25,459 26,988
Americas 59,221 49,454 56,311 18,723 13,434 18,869
-------- -------- ------------ --------- -------- ------------
Segment assets/liabilities 457,504 422,754 443,655 186,939 177,737 185,433
Income
tax 16,488 11,237 12,743 17,325 20,663 24,404
473,992 433,991 456,398 204,264 198,400 209,837
-------- -------- ------------ --------- -------- ------------
Property, Plant &
Equipment Intangible Assets
-------------------------------- --------------------------------
Six months Year Six months Year
ended ended ended ended
30 30 30
June 30 June 31 December June June 31 December
2017 2016 2016 2017 2016 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
EMEA 11,342 8,561 10,707 3,892 2,981 3,862
United Kingdom 6,989 7,209 7,142 32,664 32,769 33,278
Australia
Asia and New
Pacific Zealand 1,133 1,362 1,376 11 50 22
Asia 3,136 2,599 3,053 40 42 31
-------- -------- ------------ -------- -------- ------------
Total 4,269 3,961 4,429 51 92 53
Americas 6,941 7,103 7,183 445 617 690
-------- -------- ------------ -------- -------- ------------
29,541 26,834 29,461 37,052 36,459 37,883
-------- -------- ------------ -------- -------- ------------
The below analyses in notes (c) revenue and gross profit by
discipline (being the professions of candidates placed) and (d)
revenue and gross profit generated from permanent and temporary
placements have been included as additional disclosure over and
above the requirements of IFRS 8 "Operating Segments".
(c) Revenue and gross profit by discipline
Revenue Gross Profit
-------------------------------- ---------------------------------
Six months Year Year
ended ended Six months ended ended
30 30
June June 31 December 30 June 30 June 31 December
2017 2016 2016 2017 2016 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Accounting and
Financial Services 278,831 248,789 511,449 129,975 115,767 238,366
Legal, Technology,
HR, Secretarial
and Other 163,819 142,119 294,972 79,299 66,859 138,830
Engineering, Property
& Construction,
Procurement &
Supply Chain 138,442 105,125 227,908 76,358 58,420 125,545
Marketing, Sales
and Retail 92,054 79,858 161,796 66,355 58,105 118,293
673,146 575,891 1,196,125 351,987 299,151 621,034
-------- -------- ------------ --------- -------- ------------
(d) Revenue and gross profit generated from permanent and temporary placements
Revenue Gross Profit
-------------------------------- ---------------------------------
Six months Year Year
ended ended Six months ended ended
30 30
June June 31 December 30 June 30 June 31 December
2017 2016 2016 2017 2016 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Permanent 270,852 232,129 476,321 267,287 228,136 469,960
Temporary 402,294 343,762 719,804 84,700 71,015 151,074
673,146 575,891 1,196,125 351,987 299,151 621,034
-------- -------- ------------ --------- -------- ------------
4. Financial income / (expenses)
Six months ended Year ended
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Financial income
Bank interest receivable 148 50 117
--------- -------- ------------
Financial expenses
Bank interest payable (120) (241) (465)
Interest on discounting of French
construction participation tax - - (608)
(120) (241) (1,073)
--------- -------- ------------
5. Taxation
Taxation for the six month period is charged at 28.2% (six
months ended 30 June 2016: 28.0%; year ended 31 December 2016:
27.9%), representing the best estimate of the average annual
effective tax rate expected for the full year, applied to the
pre-tax income for the six month period.
6. Dividends
Six months ended Year ended
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Amounts recognised as distributions
to equity holders in the year:
Final dividend for the year ended
31 December 2016 of 8.23p per
ordinary share (2015: 7.90p) 25,860 24,564 24,564
Interim dividend for the period
ended 30 June 2016 of 3.75p per
ordinary share (2015: 3.60p) - - 11,660
Special dividend for the year
ended 31 December 2016 of 6.46p
per ordinary share (2015: 16.0p) - - 20,087
25,860 24,564 56,311
--------- -------- ------------
Amounts proposed as distributions to equity holders in the
year:
Proposed interim dividend for
the period ended 30 June 2017
of 3.90p per ordinary share (2016:
3.75p) 12,253 11,617 -
------- ------- -------
Proposed special dividend for
the year ended 31 December 2017
of 12.73p per ordinary share (2016:
6.46p) 40,000 20,013 -
------- ------- -------
Proposed final dividend for the
year ended 31 December 2016 of
8.23p per ordinary share - - 25,599
------- ------- -------
The proposed interim and special dividends have not been
approved by the Board at 30 June 2017 and therefore have not been
included as a liability. The comparative dividend at 30 June 2016
was also not recognised as a liability in the prior period.
The proposed interim dividend of 3.90p (2016: 3.75p) per
ordinary share and special dividend of 12.73p (2016: 6.46p) per
ordinary share will be paid on 11 October 2017 to shareholders on
the register at the close of business on 8 September 2017.
7. Share-based payments
In accordance with IFRS 2 "Share-based Payment", a charge of
GBP4.3m has been recognised for share options and other share-based
payment arrangements (including social charges) (30 June 2016:
GBP2.0m, 31 December 2016: GBP4.2m).
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 2017 2016 2016
Earnings for basic and diluted
earnings per share (GBP'000) 40,912 33,773 72,096
--------- -------- ------------
Number of shares
Weighted average number of shares
used for basic earnings per share
('000) 312,072 312,249 311,534
Dilution effect of share plans
('000) 1,222 974 802
Diluted weighted average number
of shares used for diluted earnings
per share ('000) 313,294 313,223 312,336
--------- -------- ------------
Basic earnings per share (pence) 13.1 10.8 23.1
Diluted earnings per share (pence) 13.1 10.8 23.1
The above results all relate to continuing operations.
9. Property, plant and equipment
Acquisitions
During the period ended 30 June 2017 the Group acquired
property, plant and equipment with a cost of GBP4.9m (30 June 2016:
GBP7.3m, 31 December 2016: GBP14.1m).
10. Trade and other receivables
Six months ended Year ended
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Current
Trade receivables 225,853 198,152 210,145
Less provision for impairment
of receivables (6,497) (6,715) (5,070)
--------- -------- ------------
Net trade receivables 219,356 191,437 205,075
Other receivables 5,235 12,084 9,612
Accrued income 42,861 43,901 37,623
Prepayments 10,787 11,021 7,018
278,239 258,443 259,328
--------- -------- ------------
Non-current
Other Receivables 9,110 4,254 7,640
--------- -------- ------------
11. Trade and other payables
Six months ended Year ended
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Current
Trade payables 1,331 8,738 7,515
Other tax and social security 52,416 47,052 46,813
Other payables 21,113 12,292 21,407
Accruals 97,374 89,729 98,084
Deferred income 1,290 1,705 1,240
173,524 159,516 175,059
--------- -------- --------------
Non-current
Deferred income 11,943 7,432 9,702
Other tax and social security 391 299 242
12,334 7,731 9,944
--------- -------- --------------
12. Cash flows from operating activities
Six months ended Year ended
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Profit before tax 56,948 46,907 99,996
Depreciation and amortisation
charges 9,083 8,221 17,065
(Income)/loss on sale of property,
plant and equipment, and computer
software (34) (9) 186
Share scheme charges 4,019 2,414 4,235
Net finance (income)/cost (28) 191 956
--------- --------- ------------
Operating cash flow before changes
in working capital 69,988 57,724 122,438
Increase in receivables (18,660) (22,599) (21,061)
Increase in payables 1,167 6,137 19,942
--------- --------- ------------
Cash generated from operations 52,495 41,262 121,319
--------- --------- ------------
13. Cash and cash equivalents
Six months ended Year ended
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Cash at bank and in hand 83,316 74,773 78,022
Short-term deposits 5,630 7,449 14,774
--------- -------- ------------
Cash and cash equivalents 88,946 82,222 92,796
Bank overdrafts - (8,588) -
Cash and cash equivalents in
the statement of cash flows 88,946 73,634 92,796
--------- -------- ------------
The Group operates a multi-currency notional cash pool.
Currently the main Eurozone subsidiaries and the UK-based Group
Treasury subsidiary participate in this cash pool. The structure
facilitates interest and balance compensation of cash and bank
overdrafts.
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.
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
9 August 2017
Copies of the condensed interim financial statements are now
available and can be downloaded from the Company's website
http://www.page.com/investors/investor-library/2017.aspx
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EAPPNELAXEFF
(END) Dow Jones Newswires
August 10, 2017 02:01 ET (06:01 GMT)
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