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Pin to quick picksPageGroup Regulatory News (PAGE)

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Share Price: 466.40
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Change: 0.00 (0.00%)
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PageGroup plc - Annual Report & Accounts and Notice of AGM

Fri, 12th Apr 2019 09:46

RNS Number : 0410W
PageGroup plc
12 April 2019

PageGroup plc ("PageGroup" or the "Company")

Annual Report and Accounts and Notice of Annual General Meeting

PageGroup's Annual General Meeting will be held at 9:30am on Friday 24 May 2019 at Page House, 1 Dashwood Lang Road, The Bourne Business Park, Addlestone, Weybridge, Surrey, KT15 2QW.

In connection with this, the following documents have been posted or made available to shareholders today:

- Annual Report and Accounts for the year ended 31 December 2018;

- Notice of Annual General Meeting; and

- Proxy form for the Annual General Meeting.

The Annual Report and Accounts and the Notice of Annual General Meeting are now available to view or download from the following webpage: www.page.com. Copies of these documents have also been submitted to the National Storage Mechanism and will shortly be available for inspection at: http://www.morningstar.co.uk/uk/NSM.

A condensed set of the Company's financial statements and relevant extracts of the Company's management report were included in the Company's preliminary results announcement for the year ended 31 December 2018 which was published on 6 March 2019.  That information, together with the additional information contained in the Appendix to this announcement (which has been extracted from the Annual Report and Accounts) constitutes the material required to be communicated to media in unedited full text through a Regulatory Information Service for the purposes DTR 6.3.5R. This announcement should be read in conjunction with, and is not a substitute for, reading the full Annual Report and Accounts. 

For further information contact:

Kaye Maguire

General Counsel & Company Secretary

+44(0)20 3077 8069





Principal risks and uncertainties

Strategic Risks

Shift in Business Model

The emergence of new platforms technology and providers offering HR solutions and consulting may lead to increased competition and pressure on margins, which may adversely affect the Group's results if it is unable to respond effectively.

Actions to mitigate risk

·      We actively monitor developments in new technologies and their use in the recruitment sector.

·      As well as our ongoing day-to-day interaction with clients and candidates, we conduct formal surveys through our Exact Target programme which we have standardised across the Group to understand how candidate and client needs are developing.

·      We continue to develop Page Outsourcing in response to Recruitment Process Outsourcing (RPO's) and the expansion of internal recruitment functions.

·      We partner with the large media providers, such as LinkedIn and Facebook, to ensure that we use this form of media effectively to enhance our value to clients. All consultants are trained in utilising the benefits of social media in their day-to-day activity.

·      Our revenue attribution model built using Google Analytics and AI provides data-driven ROI information addressing online and offline conversions and spend allocations.

·      Our highly trained and often specialist consultants maintain an extensive qualified candidate database which we use to resource candidates for our clients at an overall cost that they cannot match.

·      We have established an innovation infrastructure with Executive Board governance and regional innovations groups embedded globally. These teams continually generate ideas that are evaluated and those that pass our criteria are developed and piloted using an externally managed innovation lab.

·      Our IT strategy and transformation initiative recognises the need for us to be able to act rapidly in rolling out enabling technologies.  

Transformation and change

The Group continues to invest in new systems and processes. These support our capabilities to continue to deliver appropriate services to our clients and candidates in a cost effective flexible manner. This change process brings inherent risks of quality, cost and time.

Key programmes in the current process are our new Global Finance System, successfully delivered in the UK, US, Middle East and Africa and Asia Pacific regions and our new Global Operating System which will be rolled out, starting in 2019.

Actions to mitigate risk

·      We have established and resourced business change programmes for each of our major initiatives. Each has a dedicated management team working across all areas of the business to ensure effective planning implementation and decision making.

·      We have a COO function that ensures effective governance of our programmes which are reviewed by our Executive Board on a regular basis to ensure delivery to plan.

·      We support our programmes with third party systems implementation expertise.

·      We have selected best-in-class software that has a global capability and can be rolled out to all our operating units.

·      We have a Group Programme Management Office (PMO) that supports our programme management teams with policies and processes to deliver programme change activities.


PageGroup brands and services

The quality and relevance of service we provide to both clients and candidates, could have a significant impact on how our brand is viewed.

As the way clients and candidates source information changes, the awareness of the PageGroup brand and services of clients and candidates could deteriorate.

In the short-term, any event that could cause reputational damage is a risk to the Group, such as a failure to comply with legislation, or other regulatory requirements, or confidential data lost or stolen. Use of new social media network sites has increased the speed of communication and reach, increasing the impact of an incident.

Actions to mitigate risk

·      We have programmes that gain feedback actively from our clients and candidates. We utilise Exact Target, an event-based survey, and have developed an event-based approach of feedback gathering through the use of Qualtrix.

·      We actively monitor media online through Brandwatch to identify where there are unusual references to the PageGroup, Michael Page, Page Personnel, Page Executive and Page Outsourcing trademarks.

·      Our marketing strategy recognises the need to engage with candidates and clients using the latest media available in a way that reflects changing behaviours. We conduct ongoing surveys of clients and candidates to ensure that we understand their requirements and can adapt our processes and procedures accordingly.

·      We have a programme of activity which ensures that we communicate effectively the Page brands, keeping awareness high among current and potential clients and candidates.

·      We train our consultants to use new media effectively, making the channels available to them as part of their day-to-day activity.

·      We have a comprehensive brand management policy which includes key areas such as social media, data protection and information security.

·      We have in place a tested incident response process with clear escalation and activity guidelines to ensure any incidents are managed effectively.

·      We are supported by external advisers who provide ongoing advice on the protection and management of our brand.



People attraction, development and retention

PageGroup needs to hire, train and retain a large number of appropriately skilled people across the Group to achieve our Vision.

The factors that motivate, encourage and enable individuals to perform to their best have and will continue to evolve with an emphasis on work-life balance, flexibility and the working environment. 

Diversity is a key enabler to any successful business. A lack of diversity in our people will impact on the achievement of our objectives.

Our biggest challenge is to address attrition levels during the first year of training.

Actions to mitigate risk

·      We continue to make significant investment in HR resources, adding a Group Talent Director and business partners in each Region. These all support our HR programmes, which are focused on addressing issues around attraction, development and retention.

·      We are also addressing issues such as work-life balance, flexible working, benefits schemes and equality that are seen to have a positive impact on employees. Our programmes covering these areas have been rolled out across the Group. We conduct exit interviews to ensure that we are aware of any underlying issues that need to be addressed.

·      We have invested more in online learning capabilities, with BOOST!, our Global training application rolled out across the Group.

·      We have a talent, succession and development process that ensures a strong talent pipeline and addresses any gaps at senior management level.

·      We have Group-wide initiatives that look to address the issues around achieving diversity. These are part of our wider PageGroup programmes which combined ensure we have an open environment where working practices suit and encourage diversity in all its aspects.

·      We conduct employee surveys. This helps us to see how our people view working at PageGroup and provides feedback to address and focus on improving.


Financial Risks

Macro-economic exposure

Recruitment activity is driven largely by economic cycles and levels of business confidence. Businesses are less likely to need new hires and employees are less likely to move jobs when they do not have confidence in the market, thus leading to reduced recruitment activity.

The majority of the Group's revenue arises from fees that are contingent upon the successful placement of a candidate. If the client cancels the assignment at any stage in the process, the Group receives no remuneration.

The geopolitical tensions around trade tariffs between the US and China and the West's relationships with North Korea continue to drive uncertainty into the global economy.

In the UK, as Brexit nears, the level of uncertainty of the economic impact has increased.

Actions to mitigate risk

·      We continue to diversify our business to mitigate this risk. Firstly in terms of geography, we have diversified away from our historical reliance on the UK. We now operate in 36 countries and with 83% of Group gross profit being generated outside of the UK. In the fourth quarter, France also overtook the UK to become the largest single market in the Group.

·      We also look for opportunities to diversify through the brands and disciplines in which we operate. We have increased the number of disciplines we support, and continue to roll these out through our current office network. Overall we have also reduced our dependence on Accounting and Financial Services, with 65.3% of Group gross profit now being generated from disciplines outside of Accounting and Financial Services. We have established four brands to address the different levels of the recruitment market: the clerical professional sector; the qualified professional market; and the executive search sector.

·      We have also diversified our offering through the mix of permanent and temporary recruitment that we offer to the market. Temporary recruitment now epresents around a quarter of the Group, and we are seeing new temporary markets start to emerge in places such as Asia and Latin America, where historically one didn't exist due to cultural reasons. The temporary business tends to be more resilient in times of economic downturn.

·      We have also diversified by focusing on the local, domestic markets in which we operate.  When we first enter a market, our brand awareness is stronger with multinational clients. We have particularly grown our domestic businesses in markets such as Mainland China and Japan, giving us a more balanced portfolio, less sensitive to global macro economic trends.

·      We continue to focus on our costs structure, ensuring that is variable to levels of demand. As well as our variable operational staffing costs, principally bonus payments, our move to an IT service based model, as well as our transition in to the Cloud, enhances this capability. Our regional Shared Service Centre approach to support activities gives us greater flexibility in resource reallocations.

Foreign exchange translation

The majority of the Group's operating profit is derived from operations outside of the UK, so material changes in the strength of Sterling against the Group's main functional currencies could have an adverse effect on the Group's reported Sterling profits in the financial statements. The main functional currencies in addition to Sterling are the Euro, Australian Dollar, Swiss Franc, Chinese Renminbi, Hong Kong Dollar and US Dollar.

Actions to mitigate risk

·      We do not hedge our exposure to foreign exchange translation risk, instead focusing on ensuring the market correctly adjusts for any impact.

·      We repatriate profits and convert them to Sterling to fund returns to shareholders. Our Group Treasury function takes a proactive role in the management of our cash resources.

·      We have a negligible amount of cross border trading activity so the impact on transactions is limited.

Operational Risks

Information Systems

Our systems are an integral part of our operations. A major loss of systems capability would have a high impact on our performance, impacting the quality of service we provide to clients and candidates and our financial performance.

Failure of our IT systems to adapt to levels of business activity could result in lost opportunities during periods of rapid expansion or excessive costs during periods of contraction.

The move to the delivery of IT as a flexible service increases our reliance on third party vendors for service delivery. Should one of these vendors fail we are at risk of a service disruption.

Our systems must be able to adapt to the evolving technologies around the Cloud to allow faster implementation of innovation or we could miss business opportunities.

Actions to mitigate risk

·      Our core operating systems standards have been defined globally and under tight global governance are delivered regionally. We have standard platforms, procedures and processes, which gives us a greater degree of resilience.

·      We have a standard disaster recovery plan appropriate for all regions with the option of transferring to a Cloud service for each of our services in the event of a disaster with our core systems. Our core finance systems are in the process of migrating onto a Cloud service. Our IT transformation programme includes the migration of core IT services to third party providers on a SAAS basis. Activity can quickly and economically be scaled up or down with business requirements.

·      We select vendors through a robust vendor selection process that ensures those chosen have the ongoing capability to support our business requirements effectively. This is reviewed and managed on an ongoing basis through our Service Delivery Team. Our Central Procurement Team, in addition to supporting management in commercial negotiations, ensures that relationships with third party suppliers are appropriately defined and operationalised.

·      We have invested in resource to support vendor and asset management. We have in place service delivery contracts with our key vendors which include levels of resilience appropriate to the nature of our business.

·      Our Global Service Delivery model enables fast rollout of our piloted new services, which is possible as we have standardised our infrastructure and applications across the Group. Our Global Service Delivery model ensures these services operate effectively and achieve the benefits planned before they are deployed.

Cyber Security

Confidential, sensitive and personal data is held across the Group. Failure to secure and handle this data properly could expose the Group to loss of business, financial penalties and/or reputational damage.

Our flexible services IT model increases our reliance on third parties. As a consequence, we also have an increased reliance on the third parties' IT security to secure our confidential and sensitive data.

We operate in an external environment that is seeing an increase in, and sophistication of, cyber-attacks from organised crime and nation states. In addition, the increased use of social media and digital communications channels, as well as reliance on third parties, Cloud computing and mobile data facilities, increase our exposure.

Actions to mitigate risk

·      We have information security policies in place for the management of confidential, sensitive and personal data. Security risks are identified through a structured process of assessment and a programme of remediation activities is executed, with activities prioritised according to the associated level of business risk.

·      We have a dedicated Global Information Security team that ensures our information remains protected. This includes ensuring appropriate multi-layered protection at network and system levels, and regular monitoring and third party testing of our capabilities. The Information Security team comprises Security Operations, Security Architecture and Information Security Management. The team deals with IT security matters, and works directly with suppliers and key business stakeholders to ensure everyone across the business protects the data of our Group, clients and candidates.

·      We have technical security protections in place that mitigate the risks posed by the use of modern communications media, Cloud services and mobile devices. The threat landscape is under constant review to ensure our technology provides the right level of protection.

·      Supplier contracts are negotiated and reviewed to ensure data protection and IT security obligations are included as a standard requirement.

·      New IT projects and initiatives are reviewed for security risk, to ensure new technologies are adopted safely.

·      Security vulnerabilities are assessed regularly and the remediation of identified risks and alerts is tracked to conclusion. Regular security assurance checks take place across all regions and penetration testing is undertaken by specialist third parties.

·      The Board and Audit Committee reviews data security on a regular basis and receives updates on the status of our security programme.

·      We run an employee security awareness programme which includes training and security simulations.

Fiscal and legal compliance

The Group operates in a large number of legal jurisdictions that have varying legal, tax and compliance requirements. Any non-compliance with client contract requirements and legislation or regulatory requirements could have an adverse effect on the Group's brands or financial results.

Actions to mitigate risk

·      The General Counsel & Company Secretary and local legal and compliance teams are advised by leading external advisers, as required, with regard to changes in legislation that affect the Group's business, including employment, legislation, tax and corporate governance.

·      Our staff receive induction training and regular updates regarding the Group's policies and procedures and compliance with relevant legislation covering for example, discrimination legislation, anti-bribery and corruption, sanctions and pre-employment checks.

·      The Group has central tax and treasury functions, which manage the Group's cash and tax compliance.

·      The Group tax function regularly monitors transfer pricing requirements and developments to ensure that appropriate actions are being taken and appropriate documentation is being maintained to meet local reporting and compliance requirements.

·      The Group holds all normal business insurance cover including employers' liability, public liability and professional indemnity insurance.

·      Sales and procurement contracts include clauses to ensure the Group's rights are protected. All non-standard contracts are legally reviewed and where appropriate approved by senior management.

·      The Group continues to invest in systems and processes to enable compliance with requirements as they evolve. For example we have established processes to effectively manage the health and safety requirements in the placement of temporary workers in Australia.

Financial management and control

Failure to maintain adequate financial and management processes and controls could lead to poor quality management decisions, resulting in the Group not achieving its financial targets or in errors in the Group's financial reporting.

·      The Group has financial policies and procedures which are reviewed on a regular basis. Changes are approved by the Audit Committee.

·      Regional and local finance teams ensure that Group reporting requirements adhere to these policies as well as ensuring local statutory requirements are met. The Group Finance function reviews submissions to ensure policies are adhered to.

·      Monthly management information is produced that supports effective financial management.

·      The Group operates regional shared service centres which, as well as driving efficiencies, enable more effective control of activities through common processes and segregation of control activities.

·      The Finance structure mirrors and supports local, regional and Group management structures.

·      There are compliance teams located in each region that support the local, regional and Group management in ensuring revenues are appropriately recognised.

·      Internal Audit regularly review local and regional financial controls and report on the results to the Executive Board and the Audit Committee.

Data Protection Regulations

New European data protection legislation came into force in May 2018. This increased data governance and management requirements significantly, as well as increasing the potential penalties for non-compliance or data breaches.

Legislation was also introduced in June 2017 in the People's Republic of China, which requires data of Chinese citizens to be held and processed in Mainland China.

Actions to mitigate risk

·      A GDPR Steering Committee was created with responsibility for ensuring the business has in place appropriate processes to ensure compliance with the requirements of GDPR. This Committee will continue to monitor events and further developments in practice to ensure we effectively maintain compliance.

·      A Data Protection Office has been created with resources at Group and regional levels to ensure that processes continue to deliver compliance.

·      Regional Steering Teams have been established to ensure ongoing compliance as legislation in different regions evolves. Our other policies and processes, such as crisis management, change management, contracts, third party service providers and HR and payroll policies have all been updated to reflect the additional requirements from data protection legislation.


Related Party Transactions

Identity of related parties

The Company has a related party relationship with its Directors and members of the Executive Committee, and subsidiaries

Transactions with key management personnel

Key management personnel are deemed to be the Directors and members of the Executive Committee as detailed in the biographies on pages 42 to 46 of the Company's Annual Report and Accounts. The remuneration of Directors and members of the Executive Committee is determined by the Remuneration Committee having regard to the performance of individuals and market trends. The transactions for the year were:


Related party transactions

2018 £'000

2017 £'000

Wages and salaries



Social security costs



Pension costs - defined contribution plans



Share-based payments and deferred cash plan









Transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation.  Details of transactions between the parent company and subsidiary undertakings are shown below.



Dividends received

Amounts owed by related parties

Amounts owed to related parties


2018 £'000

2017 £'000

2018 £'000

2017 £'000

2018 £'000

2017 £'000









This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
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