PageGroup Regulatory News (PAGE)

9 March 2023

Full Year Results for the Year Ended 31 December 2022

A Record Year for the Group

PageGroup plc ("PageGroup"), the specialist professional recruitment company, announces its full year results for the year ended 31 December 2022.

HIGHLIGHTS*

· Group gross profit up 20.2% to £1,076.3m, a record year for the Group

· Record operating profit of £196.1m (2021: £168.5m)

· Conversion rate** decreased to 18.2% (2021: 19.2%), reflecting lower consultant productivity in H2

· Gross profit per fee earner down 0.6% in constant currencies, but up 1.4% in reported rates

· Record gross profit in 27 countries

· Fee earner headcount increased by 861 (14.2%) vs 2021, total closing headcount of 9,020

· Strong cash position of £131.5m (2021: £154.0m)

· Total dividends of £133.2m paid during 2022

· Final dividend proposed of 10.76p per share (2021: 10.30p), resulting in total dividend growth of 4.5% (excluding special dividends)

*At constant currency - all growth rates in constant currency at prior year rates unless otherwise stated

**Operating profit as a percentage of gross profit

Commenting, Nicholas Kirk, Chief Executive Officer, said:

"2022 was a record year for the Group for both gross profit and operating profit. Gross profit grew 20.2% in constant currencies vs. 2021, and in 27 countries we delivered our best performance on record, demonstrating the strength of our globally diversified business model.

"Our strong focus on productivity resulted in significant gains in H1 2022 producing an H1 conversion rate of 21.4%. In H2, our Greater China business was impacted significantly by the COVID lockdowns and restrictions. This was combined with more challenging trading conditions and a softening in candidate and client confidence across the majority of our markets in Q4. Overall for the year, productivity was down 0.6% on 2021 and, as such, our conversion rate was 18.2%, down from 19.2% in the prior year.

"Today the Board has proposed an increase in the final dividend of 4.5% to 10.76 pence per share, reflecting confidence in the continued strategic progress of the Group, as well as the strength of our Balance Sheet. Combined with the interim dividend of 4.91p and the special dividend of 26.71p, this represents a total dividend of 42.38p.

"Looking forward, there remains a high level of global macro-economic and political uncertainty in the majority of our markets. However, against this backdrop, we continue to see candidate shortages and good levels of vacancies. Given our highly diversified and adaptable business model, with a variable cost base and a strong balance sheet, we believe we are well-positioned to weather the uncertainty and continue to deliver strong shareholder returns."

Enquiries:

The Company will host a conference call and presentation for analysts and investors at 8:30am today. The live presentation can be viewed by following the link:

https://www.investis-live.com/pagegroup/63f34a374aa86d1500a936db/wesa

Please use the following dial-in numbers to join the conference:

Please quote the access code 80 85 28 to gain access to the call

The presentation and recording to accompany the call will be available on the Company's website later today at:

https://www.page.com/presentations/year/2023

MANAGEMENT REPORT

CAUTIONARY STATEMENT

This Management Report has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed.

This Management Report contains certain forward-looking statements. These statements are made by the Directors in good faith based on the information available to them up to the time of their approval of this report and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward looking information.

GROUP STRATEGY

At PageGroup we have a clear strategic vision via our four brands of Page Executive, Michael Page, Page Personnel and Page Outsourcing. 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 around a quarter of our gross profit comes from temporary placements, where local culture and market conditions allow. We focus on opportunities where our industry and market expertise can set us apart from our competition. This enables us to offer a premium service that is valued by clients and attracts the highest calibre of candidates.

Our mix of permanent to temporary recruitment reflects the balance of our business mix, both in terms of brands, where Michael Page, our largest brand, and Page Executive operating at higher salary levels, have a naturally higher level of permanent recruitment, as well as our geographic mix. We are market leaders in regions such as Latin America, Greater China and South East Asia, where we are also seeing the emergence of the white-collar temporary recruitment market.

PageGroup is focused on delivering against three key objectives to achieve its strategic vision and provide sustainable financial returns. These are: 1) deliver organic, high-margin and diversified growth; 2) to position the business to be scalable, efficient and highly flexible to reflect market conditions and opportunities; 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, succession 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 Group and is supported by significant balance sheet strength and cash flow generation. 

Organic, scalable growth

Our strategy is to grow organically, achieved by drawing upon the skill and experience of proven PageGroup management, ensuring we have the best and most qualified home-grown talent in each key role. Our team-based structure and profit share business model is highly scalable. The small size of our specialist teams means we can increase headcount rapidly to achieve growth when market conditions are favourable.

Conversely, when market conditions tighten, these entrepreneurial, profit-sharing teams reduce in size, largely through natural attrition. Consequently, our cost base contracts in downturns. Our strategy for organic growth has served the business well over the 46 years since its inception and we believe it will continue to do so. We have grown from a small, single-discipline recruitment company operating in one country to a large multidiscipline, multinational business, operating in 37 countries.

Diversification by region and discipline

Our strategy is to expand and diversify the Group by industry sectors, professional disciplines, geography and level of focus, be it Page Executive, Michael Page, Page Personnel or Page Outsourcing, with the objective of being the leading specialist recruitment consultancy in each of our chosen markets.

The Group has designated five markets as Large, High Potential markets. These are under-developed in terms of recruitment, but where we have a successful track record and confidence in our ability to scale operations successfully. The five Large, High Potential markets are Germany, Greater China, Latin America, South East Asia and the US. India and Japan are two further markets which have the potential to be classified in this category in the future.

We have also more recently designated two disciplines as being High Potential disciplines, Technology and Healthcare & Life Sciences.

As recruitment is a cyclical business, impacted significantly by the strength of economies, diversification is an important element of our strategy as it reduces our dependency on individual businesses or markets, thereby increasing the resilience of the Group. This strategy is pursued entirely through the organic growth of existing and new teams, offices, disciplines and countries, maintaining a consistent team and meritocratic culture as we grow.

Talent and skills development

We recognise that it is our people who are at the heart of everything we do, particularly as an organically grown business, where ensuring we have a talent pool with experience through economic cycles and across both geographies and disciplines is critical. Investing in our people is, therefore, a vital element of our strategy. We seek the highest calibre staff from a diverse range of backgrounds and then do our very best to retain them through offering a fulfilling career and an attractive working environment. 

This includes a team-based structure, a profit share business model and continuous training and career development, often internationally. Our strong track record of international 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.

Diversity and inclusion are key to our culture and the success of our business. It is not just an item on our to-do list, it's an inherent part of our culture and our business. We are a people business - the people who work here, the companies we do business with, the candidates whose lives we change for the better on a daily basis, and the communities and individuals we help as we give back to others. Understanding the values and cultural differences of our employees helps them reach their potential as we build a stronger, more successful business. We are a business which reflects society and the clients and candidates whose lives we change.

Sustainable growth

When we invest in a new business, be it a new country, a new office or a new discipline, we do so for the long term. Our organic and team-based business model allows us to grow strongly when market conditions are favourable, enabling us to increase our fee earner headcount investment rapidly. Conversely, downturns in the general economy of a country or in specific industries will inevitably have a knock-on effect on the recruitment market. However, it has been our practice in the past, and remains our intention, to maintain our presence in our chosen markets through these downturns, while closely controlling our cost base. In this way, we can retain our highly capable management teams in whom we have invested. Normally, we find that we gain market share during downturns, which positions our business for market-leading rates of growth when the economy improves. Pursuing this approach means that we carry spare capacity during downturns, which can have a negative effect on profitability in the short term. A strong balance sheet is, therefore, essential to support the business at these times.

Our strategic priorities comprise the following:

· increase the scale and diversification of PageGroup by organically growing existing and new teams, offices, disciplines, brands and countries;

· manage the business with a team and meritocratic culture, while delivering a consistent and high-quality client and candidate experience;

· invest through cycles in our Large, High Potential markets of Germany, Greater China, Latin America, South East Asia and the US to achieve scale and a market leading position;

· invest through cycles in our High Potential disciplines of Technology and Healthcare & Life Sciences;

· manage our fee earner headcount in all other markets to reflect prevailing market conditions, by adding selectively to geographies and disciplines where there is positive growth momentum, while reducing headcount where the outlook for growth or fee earner productivity is weak;

· focus on operational support consistency; and

· focus on succession planning and international career paths to encourage retention and development of key staff.

The main factors that could affect the business and the financial results are described in the "Principal Risks and Uncertainties" section in the PageGroup plc 2022 Annual Report and Accounts, which will be available to shareholders in April 2023.

Sustainability

Our sustainability strategy continues to drive purposeful impact across PageGroup. In 2022 we made strong progress against our ambitious targets. We also continued to embed sustainability across the business, including through the launch of a sustainability training programme across our Managing Director population. From a social impact perspective, we changed approximately 135,000 lives in 2022. This is the highest number since we started measuring our impact and another great step towards our target of changing over a million lives by 2030. We change lives by placing candidates and working with charities and other partners to break down the barriers to employment for those from disadvantaged backgrounds. From an environmental perspective, we increased the breadth of our scope 3 GHG emissions disclosures to include all material categories and improved our data quality and processes. Overall, scope 1 & 2 emissions decreased by 30% in 2022 due to the continued success of our energy transition to renewables, as well as improvements in data visibility. Scope 3 emissions in 2022 are higher than emissions in 2021 driven by headcount growth. For further information on our sustainability efforts, please refer to https://www.page.com/sustainability.

GROUP RESULTS  

At constant exchange rates, Group revenue increased 19.3% to £1,990.3m (2021: £1,643.7m) and gross profit increased 20.2% to £1,076.3m (2021: £877.7m) for the year ended 31 December 2022. Gross profit per fee earner decreased by 0.6% in constant currencies, but was up 1.4% in reported rates, to £159.4k, (2021: £157.2k).

The Group's revenue and gross profit mix between permanent and temporary placements were unchanged at 42:58 (2021: 42:58) and 77:23 (2021: 77:23) respectively. Growth in permanent recruitment was stronger in the first half of the year, whilst temporary growth improved in the second half, as trading conditions became more challenging. Revenue from temporary placements comprises the salaries of those placed, together with the margin charged. This margin on temporary placements increased to 21.6% in 2022 (2021: 21.0%) and we also saw an improvement in our permanent margin. Overall, pricing improved, as we continued to see candidate shortages and high levels of vacancies in the majority of our markets.

In our Large, High Potential markets category, which now represents 39% of the Group (2021: 38%), gross profit increased 18% in constant currencies to £417.3m. Excluding Greater China, which was impacted heavily by COVID restrictions through H2, this growth rate was 27%.

Total Group headcount increased by 1,182 in the year to 9,020. This comprised a net increase of 861 fee earners (+14.2%) and an increase of 321 operational support staff (+18.2%). This additional headcount was primarily into our areas of strategic investment, as well as those markets with the strongest trading conditions. Compared with 2020 and 2021, a lower proportion of these fee earner headcount additions were experienced hires, as the availability of these hires has become more limited. Our support staff headcount additions were made to support this fee earner growth, as well as build capabilities in our newest brand, Page Outsourcing. As a result, our fee earner to operational support staff ratio decreased marginally to 77:23 (2021: 78:22).

In total, administrative expenses increased 24.1% to £880.2m (2021: £709.2m). The Group's operating profit from trading activities totalled £196.1m (2021: £168.5m), an increase of 14.3% in constant currencies and 16.4% in reported rates.

OPERATING PROFIT AND CONVERSION RATES

The Group's organic growth model and profit-based team bonus ensures cost control remains tight. Approximately three-quarters of costs were employee related, including wages, bonuses, share-based long-term incentives, and training & relocation costs. Depreciation and amortisation for the year totalled £60.6m (2021: £53.7m).

The Group's conversion rate for the year decreased from 19.2% in 2022 to 18.2%. The conversion rate was higher in H1 at 21.4%, compared with H2 at 15.0%. This was due to the more challenging trading conditions experienced through the second half in the majority of our markets, together with the impact of COVID restrictions in Greater China.

EMEA was the Group's most profitable region in 2022, with a conversion rate of 22.7%, up from 21.6% in 2021. This improvement is due to the continued focus on conversion across the region and despite macro-economic conditions becoming more challenging in the second half of the year. Conversion in Asia Pacific fell to 18.0% (2021: 21.8%) due primarily to the tough conditions in Greater China. The Americas' conversion rate reduced to 9.2% from 13.8% in 2021, as a result of the continued investments in these Large, High Potential Markets, as well as the slowdown seen in the second half. In the UK, conversion increased to 14.0% (13.2%) driven by improved productivity.

A net interest charge of £1.7m (2021: £1.9m) was primarily due to an IFRS 16 interest charge of £1.6m.

Earnings per share and dividends

In 2022, basic and diluted earnings per share increased to 43.7p and 43.5p respectively (2021: 37.2p basic and 37.0p diluted), as a result of the increase in profit from the record results.

The Group's strategy is to operate a policy of financing the activities and development of the Group from our retained earnings and to maintain a strong balance sheet position. The first use of our cash is to satisfy our operational and investment requirements and to hedge our liabilities under the Group's share plans. We then review our liquidity over and above these requirements to make returns to shareholders, firstly by way of an ordinary dividend.

Our policy is to grow this ordinary dividend over the course of the economic cycle, in line with our long-term growth rate. We believe this will enable us to sustain the level of ordinary dividend payments during a downturn as well as to increase it during more prosperous times.

A proportion of the cash generated in excess of these first two priorities will be returned to shareholders through supplementary returns, using special dividends or share buybacks.

Given the strong results in 2022, combined with high levels of surplus cash, we paid an interim dividend of 4.91 pence per share, an increase of 4.5% over the 2021 interim dividend. In addition, in line with our policy of returning surplus capital to shareholders, we also paid a special dividend of 26.71 pence per share. Taking both dividends together, this amounted to a cash return to shareholders of £100.5m, paid out in October 2022.

The Board has proposed a final dividend of 10.76p (2021: 10.30p) per ordinary share, up 4.5% on the 2021 final dividend. When taken together with the interim dividend of 4.91p (2021: 4.70p) per ordinary share, this is an increase in the total dividend for the year of 4.5%. The proposed final dividend, which amounts to £34.2m, will be paid on 19 June 2023 to shareholders on the register as at 19 May 2023, subject to shareholder approval at the Annual General Meeting on 1 June 2023.

We will continue to monitor our cash position in 2023 and will make returns to shareholders in line with the above policy.

Cash flow and balance sheet

Cash flow in the year was strong, with £246.4m (2021: £186.3m) generated from operations. The closing cash balance was £131.5m at 31 December 2022 (2021: £154.0m). The decrease on 2021, despite the stronger results, is due primarily to the cash returned to shareholders through the payment of dividends in the year, totalling £133.2m.

On 9 December 2022, PageGroup entered into a five year £80m committed multi-currency revolving credit facility agreement with HSBC and BBVA. In addition, PageGroup maintains an uncommitted Confidential Invoice Facility with HSBC whereby the Group has the option to discount receivables in order to advance cash. The invoice Facility is for up to £50m depending on debtor levels. Neither of these facilities were drawn as at 31 December 2022. These facilities are used on an ad hoc basis to fund any major Group GBP cash outflows.

Income tax paid in the year was £61.6m (2021: £37.0m) and net capital expenditure was £29.6m (2021: £25.7m).

Total dividends of £133.2m were paid in 2022 (2021: £100.2m). The lower share price in 2022 meant that there was a decrease in cash receipts from share option exercises, with £0.4m in 2022, compared to £16.4m in 2021. In 2022, £14.8m (2021: £10.4m) was also spent on the purchase of shares by the Employee Benefit Trust to satisfy future committed obligations under our employee share plans.

The most significant item in our balance sheet was trade receivables, which amounted to £307.8m at 31 December 2022 (2021: £254.6m), comprising permanent fees invoiced and salaries and fees invoiced in the temporary placement business, but not yet paid. Day's sales in debtors marginally increased due to the significant increase in the debtor book as a result of the strong trading conditions in a large part of the year.

EUROPE, MIDDLE EAST AND AFRICA (EMEA)

EMEA is the Group's largest region, contributing 50% of the Group's gross profit in the year. With operations in 17 countries, PageGroup has a strong presence in the majority of EMEA markets and is the clear leader in specialist permanent recruitment in the two largest, France and Germany, and many of the others. Across the region, permanent placements accounted for 70% and temporary placements 30% of gross profit.

The region includes four of our Large, Proven markets, France, Spain, Italy and the Netherlands, across which there is a broad range of competition. EMEA also includes Germany, one of the Group's Large, High Potential markets, which has low penetration rates (markets where less than 30% of recruitment is outsourced) and significant growth potential, particularly in temporary recruitment. In addition, there are markets such as Poland, Turkey and Africa, which are less developed, with limited competition, but are increasingly looking for professional recruitment services.

In constant currencies, revenue grew 23.7% to £1,069.3m (2021: £869.6m) and gross profit grew 25.5% to £538.5m (2021: £432.0m).

2022 represented a record year for EMEA, with strong performances delivered throughout the region. France, the Group's second largest market, grew 17%, with good growth across both Michael Page and Page Personnel, up 18% and 16%, respectively. Germany, our third largest market, grew 31% for the year against a tough comparator in 2021, with the standout performance in our Technology-focused Interim business, up 46%. In our other European markets, Benelux grew 31% and Southern Europe was up 30%, with record results in all four markets of Italy, Spain, Portugal and Turkey. The Middle East and Africa grew 22%.

2022 operating profit increased 32.0% in constant currencies to £122.1m (2021: £93.4m), with a conversion rate of 22.7% (2021: 21.6%). The region had the highest conversion rate in the Group, despite the tougher macro-economic conditions in the second half of the year. Headcount across the region increased by 637 (+18.5%) during the year, to 4,085 at the end of 2022 (2021: 3,447).

ASIA PACIFIC

Asia Pacific represented 18% of the Group's gross profit in 2022, with 79% of the region being Asia and 21% Australia. Other than in the financial centres of Hong Kong, Singapore and Tokyo, the Asian market is generally highly under-developed and offers attractive opportunities in both international and domestic markets at good conversion rates. Two of our Large, High Potential markets, Greater China and South East Asia, are in this region. With a highly experienced management team, more than 1,500 staff and limited competition, the size of the opportunity in Asia is significant. Across Asia, driven by cultural attitudes towards white collar temporary recruitment, permanent placements accounted for 87% and temporary placements only 13% of gross profit, well below the Group average of 23%.

Australia, one of our Large, Proven markets, is a mature, well-developed and highly competitive recruitment market. PageGroup has a meaningful presence in permanent recruitment in the majority of the professional disciplines and major cities in Australia. Page Personnel has a growing presence and significant potential to expand and grow market share.

In Asia Pacific, in constant currencies, revenue grew 8.8% to £318.4m (2021: £282.0m) and gross profit grew 4.7% to £195.3m (2021: £179.3m).

We delivered record gross profit in Asia Pacific, up 4.7% against 2021. This was achieved despite the adverse impact of COVID restrictions on Greater China. Greater China declined 16% with Mainland China down 23% and Hong Kong down 8%. This was due initially to the COVID lockdowns, with the subsequent relaxation of restrictions and resulting high infection rate also impacting activity levels. South East Asia delivered a record year, up 22%, with Singapore up 10%. India and Japan also achieved record results, up 39% and 10%, respectively. Australia continued its post-pandemic recovery and grew 12% versus 2021.

Operating profit declined 12.1% in constant currencies to £35.2m (2021: £39.0m), with the conversion rate decreasing to 18.0% (2021: 21.8%). This was driven by the decline in productivity of 11% in the year, due primarily to the challenging trading conditions in Greater China. Headcount across the region increased 133 (7.8%) in the year, ending the year at 1,842 (2021: 1,709).

THE AMERICAS

The Americas accounted for 18% of the Group's gross profit in 2022, with North America representing 62% of the region and Latin America, 38%. The US and Latin America are two of our Large, High Potential markets. The US, where we have 8 offices, has a well-developed recruitment industry, but in many disciplines, especially technical, there is limited national competition of any scale. PageGroup's breadth of professional specialisms and geographic reach is uncommon and provides a real competitive advantage. 

Latin America is a highly under-developed region, where PageGroup enjoys the market leading position with over 1,000 employees in seven countries. There are few international competitors and none with regional scale. Across the Americas, permanent placements accounted for 89% of gross profit and temporary placements 11%.

In constant currencies revenue increased 17.6% to £282.9m (2021: £220.7m) while gross profit was up 26.7% to £193.4m (2021: £138.5m), making the Americas our fastest growing region in 2022.

In North America, gross profit increased 24%, with record years delivered by both our US and Canada markets. The US grew 23% due to strong trading conditions and the continued growth of our newer disciplines, including Technology. We also saw good growth in Construction, our largest discipline in the US, although we saw a slowing in residential builds and reduced funding for commercial projects through H2.

Latin America also delivered a record year, with gross profit up 30%. Brazil was up 17%, Mexico up 25% and the other five countries increased 45%, collectively. Our newest brand Page Outsourcing performed ahead of plan in Latin America, with potential for strong future growth.

Despite the strong growth in 2022, operating profit decreased to £17.9m (2021: £19.2m), with a conversion rate of 9.2% (2021: 13.8%). The conversion rate in H1 increased, from 14.3% in H1 2021 to 14.7%. However, more challenging trading conditions in H2, combined with the ongoing headcount investment in the 2 Large, High Potential geographic markets in the region, resulted in a lower overall conversion rate. Headcount across the region increased by 309 (+22.4%) in 2022 to 1,690 (2021: 1,381).

UNITED KINGDOM

The UK represented 14% of the Group's gross profit in 2022, operating from 26 offices covering all major cities. It is a mature, highly competitive and sophisticated market with the majority of vacant positions being outsourced to recruitment firms. PageGroup has a market leading presence in permanent recruitment across the UK and a growing presence in temporary recruitment. In the UK, permanent placements accounted for 74% and temporary placements 26% of gross profit.

The UK business operates under all four of our brands, with representation in 13 specialist disciplines via the Michael Page brand. There remain opportunities to increase the size and breadth of our reach under the higher salary-level Page Executive brand.

In the UK, revenue increased 17.7% on 2021 to £319.6m (2021: £271.5m), whilst gross profit increased 16.6% from £127.9m in 2021 to £149.1m. Michael Page grew 4% and Page Personnel 57%. Trading conditions continued to improve in Page Personnel, which operates at lower salary levels and had been slower to recover post-pandemic.

Operating profit for the year increased to £20.9m (2021: £16.9m), with the conversion rate improving to 14.0% (2021: 13.2%). This was due to the improved productivity achieved in the year, although the conversion rate was lower in the second half as trading conditions slowed. Headcount increased 103 (+7.9%) in the year to 1,404 at the end of December 2022 (2021: 1,301).

OTHER FINANCIAL ITEMS

Foreign exchange

Foreign exchange had a favourable impact on the Group's results for the year, increasing revenue by c. £29m, gross profit by c. £22m and operating profit by c. £3m.

Taxation

The tax charge for the year was £55.4m (2021: £48.3m). This represented an effective tax rate of 28.5% (2021: 29.0%). The rate is higher than the effective UK rate for the calendar year of 19% (2021: 19%) principally due to the impact of higher tax rates in overseas countries and to a lesser extent, disallowable expenditure. There are some countries in which the tax rate is lower than the UK, but the impact is small either because the countries are not significant contributors to Group profit, or the tax rate difference is not significant.

In 2022, the tax rate was impacted primarily by higher tax in overseas countries (6.7%), derecognition of losses and other tax attributes of (2.4%), prior year adjustments of (-0.3%), and other permanent differences (0.9%), principally employee related expenditure and entertainment expenses.

The tax charge for the year reflects the Group's tax strategy, which is aligned to business goals. It is PageGroup's policy to pay its fair share of taxes in the countries in which it operates and deal with its tax affairs in a straightforward, open and honest manner. The Group's tax strategy is set out in detail on our website in the Investor section under "Responsibilities".

Share options and share repurchases

At the beginning of 2022 the Group had 7.9m share options outstanding, of which 3.8m had vested, but had not been exercised. During the year, options were granted over 2.2m shares under the Group's share option plans. Options were exercised over 0.1m shares, generating £0.4m in cash, and options lapsed over 0.1m shares. At the end of 2022, options remained outstanding over 9.8m shares, of which 5.7m had vested, but had not been exercised. During 2022, 2.9m shares were purchased for the Group's Employee Benefit Trust, and no shares were cancelled (2021: 2.2m shares were purchased and no shares were cancelled).

KEY PERFORMANCE INDICATORS (KPIs)

The source of data and calculation methods year-on-year are on a consistent basis, including changes resulting from the use of 2022 DEFRA conversion factors. Purchased goods and services and commuting has been included in 2022 for the first time and 2021 emissions figures have been retrospectively calculated. The movements in KPIs are in line with expectations.

Consolidated Income Statement

For the year ended 31 December 2022

Consolidated Balance Sheet

As at 31 December 2022

Consolidated Statement of Changes in Equity

For the year ended 31 December 2022

Condensed Consolidated Statement of Cash Flows

For the year ended 31 December 2022

Notes to the consolidated preliminary results

For the year ended 31 December 2022

1. Corporate information

PageGroup plc (the "Company") is a limited liability company incorporated in Great Britain and domiciled within the United Kingdom whose shares are publicly traded. The consolidated preliminary results of the Company as at and for the year ended 31 December 2022 comprise the Company and its subsidiaries (together referred to as the "Group").

The consolidated preliminary results of the Group for the year ended 31 December 2022 were approved by the directors on 8 March 2023. The Annual General Meeting of PageGroup plc will be held at the registered office, 200 Dashwood Lang Road, Addlestone, Surrey, KT15 2QW on 1 June 2023 at 9.30am.

2. Accounting policies

Basis of preparation

Whilst the information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Accounting Standards in conformity with the requirements of Section 408 of the Companies Act 2006 and UK-adopted International Accounting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs.

The consolidated financial statements comprise the financial statements of the Group as at 31 December 2022 and are presented in UK Sterling and all values are rounded to the nearest thousand (UK £'000), except when otherwise indicated.

Going concern

The Board has undertaken a review of the Group's forecasts and associated risks and sensitivities, in the period from the date of approval of the financial statements to 31 March 2024 (review period).

The Group had £131.5m of cash as at 31 December 2022, with no debt except for IFRS 16 lease liabilities of £109.8m. Debt facilities relevant to the review period comprise a committed £80m RCF maturing December 2027, an uncommitted UK trade debtor discounting facility (up to £50m depending on debtor levels) and an uncommitted £20m UK bank overdraft facility.

Despite the macroeconomic and political uncertainty that currently exists, and its inherent risk and impact on the business, based on the analysis performed there are no plausible downside scenarios that the Board believes would cause a liquidity issue. As a result, given the strength of performance in 2022, the level of cash in the business and Group's borrowing facilities, the geographical and discipline diversification, limited customer 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 period through to 31 March 2024.

Nature of financial information

The financial information contained within this preliminary announcement for the 12 months to 31 December 2022 and 12 months to 31 December 2021 do not comprise statutory financial statements for the purpose of the Companies Act 2006 but are derived from those statements. The statutory accounts for PageGroup plc for the 12 months to 31 December 2021 have been filed with the Registrar of Companies and those for the 12 months to 31 December 2022 will be filed following the Company's Annual General Meeting.

The auditors' reports on the accounts for both the 12 months to 31 December 2022 and 12 months to 31 December 2021 were unqualified and did not include a statement under Section 498 (2) or (3) of the Companies Act 2006.

The Annual Report and Accounts will be available for Shareholders in April 2023.

New accounting standards, interpretations and amendments adopted by the Group

The accounting policies adopted in the preparation of the condensed consolidated preliminary results are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2022.

The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective, that has had a material impact on the financial statements.

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