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PageGroup plc - Half-year Report

Wed, 7th Aug 2019 07:00

RNS Number : 1602I
PageGroup plc
07 August 2019
 

 

 

7 August 2019

Half Year Results for the Period Ended 30 June 2019

 

PageGroup plc ("PageGroup"), the specialist professional recruitment company, announces its unaudited half year results for the period ended 30 June 2019.

 

Financial summary

(6 months to 30 June 2019)

2019

2018

Change

Change

CC*

Revenue

£820.5m

£751.6m

+9.2%

+9.5%

Gross profit

£433.5m

£396.0m

+9.5%

+9.5%

Operating profit

£75.6m

£67.2m

+12.5%

+11.4%

Profit before tax

£74.6m

£67.2m

+10.9%

Basic earnings per share

16.8p

15.5p

+8.4%

Diluted earnings per share

16.8p

15.4p

+9.1%

Interim dividend per share

4.30p

4.10p

+4.9%

Special dividend per share

12.73p

12.73p

 

 

 

HIGHLIGHTS

·       Group operating profit increased +11.4%* to £75.6m, +12.5% in reported rates

·       Increase in fee earner productivity of 2.2%**

·       Conversion rate*** increased to 17.4% (H1 2018: 17.0%)

·       Reduction of 81 (-1.3%) fee earners in H1 2019

·       Strong Balance Sheet with net cash of £81.7m (H1 2018: £87.0m)

·       Interim dividend up 4.9% to 4.30 pence per share, totalling £13.9m

·       Special dividend of 12.73 pence per share, totalling £41.0m

 

 

* in constant currency at prior year rates

** gross profit per fee earner

*** operating profit as a percentage of gross profit

 

 

Commenting, Kelvin Stagg, Chief Financial Officer, said:

 

"PageGroup delivered an increase of 9.5%* in gross profit and 11.4%* in operating profit in the first half of 2019, with fee earner productivity increasing 2.2% and the Group's conversion rate rising from 17.0% to 17.4%. This reflects our continued focus on productivity and conversion.

 

"Fee earner headcount fell by 81 (-1.3%) in the first half, to 6,035, mainly in markets where conditions were more challenging, such as Greater China and the UK. We continued to invest in markets where we saw the greatest growth, such as the US and India. We completed the implementation of our new Global Finance System, with roll-outs in Latin America and Europe during the first half. Our operational support staff headcount increased by 72 (4.3%), the majority of which were temporary, to support these roll-outs.

 

"We are announcing today an interim dividend of 4.30 pence per share, an increase of 4.9% over last year. In addition, in line with our policy of returning surplus capital to shareholders, we are also pleased to announce a special dividend of 12.73 pence per share (2018: 12.73 pence per share) totalling £41.0m, a fifth consecutive year of special dividends. Taking both dividend payments together, this amounts to a cash return to shareholders of £54.9m, payable on 9 October. Together with the 2018 final dividend paid in June of £29.0m, this represents a total of £83.9m returned to shareholders in 2019, or 26.03 pence per share.

 

"We are pleased with our first half performance, however we remain mindful of challenging macro-economic conditions seen in a number of our regions. We will continue to focus on driving profitable growth, while continuing our strategic investments towards our Vision of 10,000 headcount, £1bn of gross profit and £200m - £250m of operating profit."

 

 

 

PageGroup will host a conference call, with on-line slide presentation, for analysts and investors at 8.30am on 7 August 2019, the details of which are below.

 

Link:

 

https://www.investis-live.com/pagegroup/5d35b72e9add6d1100148e3b/usas 

 

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

 

United Kingdom (Local)

020 3936 2999

All other locations

+44 20 3936 2999

 

Please quote participant access code 41 06 07 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 7 August 2019 at:

 

http://www.page.com/investors/investor-library.aspx

 

Enquiries:

 

PageGroup

+44 (0)20 3077 8425

Kelvin Stagg, Chief Financial Officer

Jeremy Tatham, Group Financial Controller

FTI Consulting

+44 (0)20 3727 1340

Richard Mountain / Susanne Yule

 

 

 

 

INTERIM MANAGEMENT REPORT

 

GROUP RESULTS

 

GROSS PROFIT

£m

Growth Rates

% of Group

H1 2019

H1 2018

Reported

CC

EMEA

49%

213.1

194.9

+9.3%

+10.2%

Asia Pacific

19%

81.8

74.1

+10.4%

+9.0%

UK

16%

69.4

69.7

-0.3%

-0.3%

Americas

16%

69.2

57.3

+20.7%

+19.6%

Total

100%

433.5

396.0

+9.5%

+9.5%

Permanent

76%

330.6

304.2

+8.7%

+8.5%

Temporary

24%

102.9

91.8

+12.1%

+12.8%

 

The Group's revenue for the six months ended 30 June 2019 increased 9.2% to £820.5m (2018: £751.6m) and gross profit increased 9.5% to £433.5m (2018: £396.0m). In constant currencies, the Group's revenue and gross profit both increased by 9.5%. The Group's revenue mix between permanent and temporary placements was 41:59 (2018: 41:59) and for gross profit was 76:24 (2018: 77:23).

 

Revenue from temporary placements comprises the salaries of those placed, together with the margin charged. Overall, pricing has remained relatively stable across all regions. Fee earner productivity increased by 2.2%, reflecting our continued focus on productivity and conversion, following our COO office appointment last year.

 

Fee earner headcount fell by 81 (-1.3%) in the first half, to 6,035, mainly in markets where conditions were more challenging, such as Greater China and the UK. We continued to invest in markets where we saw the greatest growth, such as the US and India. We completed the implementation of our new Global Finance System, with roll-outs in Latin America and Europe during the first half. Our operational support staff headcount increased by 72 (4.3%), the majority of which were temporary, to support these roll-outs. Total headcount at the end of the first half was 7,763.

 

The Group's organic growth model and profit-based team bonus ensures costs remain tightly controlled. 79% of first half costs were employee related, including salaries, bonuses, share-based long-term incentives, and training and relocation costs.

 

In total, administrative expenses in the first half increased 8.9% to £357.9m (2018: £328.8m), driven by increases in headcount relative to H1 2018. In constant currency administrative expenses were up 9.1% and operating profit increased 11.4% to £75.6m (2018: £67.2m), an increase of 12.5% 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 17.4% (2018:17.0%) was an improvement on H1 2018, driven by a strong performance in EMEA, partially offset by more challenging trading conditions in Asia Pacific.

 

 

FOREIGN EXCHANGE

 

Movements in foreign exchange had a negligible impact on the Group's results. Overall, foreign exchange movements impacted the Group's gross profit and operating profit by less than £1m.

 

 

IFRS 16 - LEASES AND OTHER ITEMS

 

The Group is reporting under the new accounting standard, IFRS 16 Leases, for the first time. Under IFRS 16, the straight line rental expense for the first half of £20.4m has been replaced with a depreciation charge in respect of the right of use assets of £19.6m. This has resulted in an increase to EBITDA of £20.4m and an increase to EBIT of £0.8m. An interest charge in respect of the lease liabilities of £1.1m has also been recognised resulting in a decrease in profit before tax of £0.3m.

 

Underlying interest received and interest paid was consistent with 2018. The charge for taxation at the half year was 27.5% (2018: 26.5%). It is based on the full year forecast tax rate, allowing for prior year items arising from tax returns in the half year to 30 June.

 

Basic earnings per share for the six months ended 30 June 2019 was 16.8p, an increase of 8.4% and diluted earnings per share was also 16.8p, an increase of 9.1% (2018: basic earnings per share 15.5p; diluted earnings per share 15.4p).

 

CASH FLOW

 

The Group started the year with net cash of £97.7m. In the first half, £63.2m was generated from operations after funding an increase in working capital of £45.8m, mainly due to growth in our temporary and contracting business, which has a higher working capital requirement. Tax paid was £20.8m and net capital expenditure was £13.4m. During the first half, £3.5m was received from exercises of share options (2018: £19.1m). No shares were purchased in the Employee Benefit Trust to hedge exposures under share-based awards (2018: £9.9m) and dividends of £29.0m were paid to shareholders. As a result, the Group had net cash of £81.7m at 30 June 2019 (30 June 2018: £87.0m).

 

DIVIDENDS 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 to hedge its liabilities under the Group's share plans. The level of cash required for this purpose will vary depending upon the revenue mix of geographies, permanent and temporary recruitment, and point in the economic cycle.

 

Our second use of cash is to make returns to shareholders by way of an ordinary dividend. Our policy is to grow the ordinary dividend over the course of the economic cycle in a way that we believe we can sustain the level of ordinary dividend payment during downturns, as well as increasing it during more prosperous times.

 

Cash generated in excess of these first two priorities will be returned to shareholders through supplementary returns, using special dividends and/or share buybacks.

 

The Board has announced an interim dividend of 4.30 pence per share, an increase of 4.9% over last year. In addition, in line with its policy of returning surplus capital to shareholders, the Group is pleased to announce today a special dividend of 12.73 pence per share or £41.0m (2018: 12.73 pence per share), making it a fifth consecutive year of special dividends. Taking both dividend payments together, this amounts to a cash return to shareholders of £54.9m. Together with the 2018 final dividend paid in June of £29.0m, this represents a total of £83.9m returned to shareholders in 2019.

 

This special dividend will be paid, as in previous years, at the same time as the interim dividend on 9 October 2019 to shareholders on the register as at 6 September 2019.

 

During the first half, no purchases of shares into the Employee Benefit Trust to hedge exposures under share-based awards were made (2018: £9.9m).

 

 

 

All growth rates given below are in constant currency unless otherwise stated.

 

EUROPE, MIDDLE EAST AND AFRICA (EMEA)

 

EMEA

 £m

Growth rates

(49% of Group in H1 2019)

H1 2019

H1 2018

Reported

CC

Gross Profit

213.1

194.9

+9.3%

+10.2%

Operating Profit

45.6

40.9

+11.4%

+12.2%

Conversion Rate (%)

21.4%

21.0%

 

 

EMEA is the Group's largest region, contributing 49% of Group first half gross profit. In reported rates, revenue in the region increased by 9.7% to £427.7m (2018: £389.7m) and gross profit increased 9.3% to £213.1m (2018: £194.9m). In constant currency, revenue increased 10.6% on the first half of 2018 and gross profit increased by 10.2%.

 

The EMEA region performed strongly, with Michael Page and Page Personnel growing gross profit 9% and 11%, respectively. France, which now represents around a third of the region and 16% of the Group, grew gross profit by 7%. In Germany, one of our Large, High Potential markets, we grew 24%, with a standout performance from our Technology focused Interim business, which was up 37%. Southern Europe grew 9%, with Italy up 12% and Spain up 6%, however conditions became more challenging as the second quarter drew to a close. Benelux grew 12%, with Belgium and the Netherlands up 13% and 12% respectively. The Middle East and Africa grew 7%, driven mainly by growth in the UAE of 11%.

 

The 11.4% increase in operating profit for the first half of 2019 to £45.6m (2018: £40.9m) and improvement in the conversion rate to 21.4% (2019: 21.0%) was driven by a combination of improved fee earner productivity and generally favourable macro-economic conditions. Headcount across the region was broadly flat in the first half at 3,316 at the end of June 2019 (3,299 at 31 December 2018).

 

ASIA PACIFIC

 

Asia Pacific

 £m

Growth rates

(19% of Group in H1 2019)

H1 2019

H1 2018

Reported

CC

Gross Profit

81.8

74.1

+10.4%

+9.0%

Operating Profit

8.8

9.0

-1.6%

-4.8%

Conversion Rate (%)

10.8%

12.1%

 

In Asia Pacific, representing 19% of Group first half gross profit, revenue increased 7.5% in reported rates to £135.0m (2018: £125.6m), and gross profit increased 10.4% to £81.8m (2018: £74.1m). In constant currency, revenue increased 6.7% in the first half and gross profit increased by 9.0%.

 

Conditions in Asia Pacific in the first half were challenging due to the trade tariff uncertainty in Greater China, which overall grew gross profit 3%. South East Asia, another of the Group's Large, High Potential markets grew 9%. However, we saw more challenging conditions in Singapore during the second quarter, impacted by contagion from trade tariff uncertainty. Elsewhere in the region we saw standout performances from India and Japan, which grew 50% and 22% respectively. Australia was up 8%, driven by our Page Personnel business. 

 

Reflecting these more challenging conditions in the region, particularly in Greater China, alongside our year on year investment in fee earners in South East Asia, India and Japan, our conversion rate fell from 12.1% to 10.8%. Headcount across the region increased by 28 (1.6%) to 1,737 at the end of June 2019 (1,709 at 31 December 2018), with investments in India and Japan offset by a reduction in our fee earner headcount in Greater China.

 

UNITED KINGDOM

 

UK

 £m

Growth rate

(16% of Group in H1 2019)

H1 2019

H1 2018

Gross Profit

69.4

69.7

-0.3%

Operating Profit

12.5

10.5

+19.6%

Conversion Rate (%)

18.0%

15.0%

 

In the UK, representing 16% of Group first half gross profit, revenue increased 1.5% to £157.4m (2018: £155.0m), but gross profit declined 0.3% to £69.4m (2018: £69.7m), with Brexit related uncertainty continuing to impact decision-making from clients and candidates at the more senior levels of the market. Page Personnel, which has a higher proportion of temporary recruitment, grew 9%, while Michael Page, which is focused on more senior candidates, declined 3%.

 

Operating profit increased by 19.6% to £12.5m (2018: £10.5m), with the conversion rate increasing to 18.0% (2018: 15.0%). Given the more challenging trading conditions, we reduced our fee earner headcount to increase our focus on productivity and therefore improve our conversion rate. As we have highlighted previously, the UK takes a higher proportion of the Group's share scheme charges, as the majority of the Group's senior management are based in the UK. The charge for H1 2019 was less than H1 2018, which contributed to the conversion rate improvement.

 

Headcount decreased by 68 (4.7%) during the first half of 2019 to 1,368 at the end of June 2019 (1,436 at 31 December 2018).

 

THE AMERICAS

 

Americas

 £m

Growth rates

(16% of Group in H1 2019)

H1 2019

H1 2018

Reported

CC

Gross Profit

69.2

57.3

+20.7%

+19.6%

Operating Profit

8.7

6.8

+26.8%

+15.7%

Conversion Rate (%)

12.5%

11.9%

 

In the Americas, representing 16% of Group first half gross profit, revenue increased 23.6% in reported rates to £100.5m (2018: £81.3m), while gross profit increased 20.7% to £69.2m (2018: £57.3m). In constant currency, revenue increased by 23.4% and gross profit increased by 19.6%.

 

North America grew gross profit 20% overall, with growth of 23% in the US offset by an 8% decline in Canada. In the US, we saw particularly strong performances from our offices outside of New York, with notable results from our offices in Boston, Chicago, Houston and Los Angeles.

 

In Latin America, we increased fee earner headcount by 10% year-on-year and grew gross profit 19%. This investment was spread across the region, including the four countries outside of Brazil and Mexico, being Argentina, Chile, Colombia and Peru, where we now have a total headcount of over 300 and grew 14%, collectively. Elsewhere, Mexico, our largest business in Latin America, grew 31% and Brazil grew 14%.

 

Headcount in the Americas was up 14 (1.1%) in the first half, to 1,342 at the end of June 2019 (1,328 at 31 December 2018). Operating profit increased by 26.8% to £8.7m (2018: £6.8m), with an increase in the conversion rate to 12.5% (2018: 11.9%), due primarily to the increase in productivity.

 

 

 

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 growth

How measured: Gross profit represents 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 in net fees of the business as a whole. It demonstrates whether we are in line with our strategy to grow the business.

 

How we performed in H1 2019: With strong growth in many of our markets, gross profit in H1 2019 increased by 9.5% in both constant currency and at reported rates (H1 2018: 14.2% in constant currency, 12.5% in reported rates).

 

Relevant strategic objective: Organic growth

Gross profit diversification

How measured: Total gross profit from 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 2019: Geographies: the percentage outside the UK increased to 84.0% from 82.4% in 2018, demonstrating further diversification. This increase reflected the strength of growth outside the UK, as well as the continued weakness of Sterling. 

Disciplines: the percentage outside of Accounting and Financial Services was broadly flat at 65.3% (2018: 65.5%), with Accounting and Financial Services growth of 10.4%, compared to 9.0% elsewhere.

 

Relevant strategic objective: Diversification

Ratio of gross profits generated from permanent and temporary placements

How measured: Gross profit from each type of placement expressed as a percentage of total gross profit.

 

Why it's important: This ratio helps us to understand where we are in the economic cycle, since the temporary market tends to be more resilient when the economy is weak. However, in several of our core strategic markets, working in a temporary role or as a contractor or interim employee is not currently normal practice, for example Mainland China.

 

How we performed in H1 2019: 76% of our gross profit was generated from permanent placements, marginally below the 77% in 2018.

 

Relevant strategic objective: Organic growth

Gross profit per fee earner

How measured: Gross profit for the year 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 2019: Gross profit per fee earner was £70.7k in H1 2019 compared to £69.2k in H1 2018, an increase of 2.2%. This is in line with an increased focus on productivity and conversion, following our COO office appointment last year.

 

Relevant strategic objective: Organic growth

Conversion rate

How measured: Operating profit before interest and taxation (EBIT) as a percentage of gross profit.

 

Why it's important: This demonstrates the Group's effectiveness at controlling the costs and expenses associated with its normal business operations. It will be impacted by the level of productivity and the level of investment for future growth.

 

How we performed in H1 2019: Operating profit as a percentage of gross profit increased to 17.4% in 2019, up from 17.0% in the prior year, driven by a strong performance in EMEA, offset by more challenging trading conditions in Asia Pacific.

 

Relevant strategic objective: Build for the long-term

Basic earnings per share

How measured: Profit for the year attributable to the Group's equity shareholders, divided by the weighted average number of shares in issue during the year.

 

Why it's important: This measures the overall profitability of the Group.

 

How we performed in H1 2019: Earnings per share (EPS) in H1 2019 was 16.8p, an 8.4% improvement on the EPS in 2018 of 15.5p.

 

Relevant strategic objective: Build for the long-term, organic growth

Fee-earner: operational support staff headcount ratio

How measured: The percentage of fee-earners compared to operational support staff at the period-end, expressed as a ratio.

 

Why it's important: This reflects the operational efficiency in the business in terms of our ability to grow the revenue-generating platform at a faster rate than the staff needed to support this growth.

 

How we performed in H1 2019: The ratio was in line with H1 2018 at 78:22, but down on the year end ratio of 79:21. We reduced our fee earner headcount by 81 in the first half of 2019, in response to more challenging market conditions in markets such as France, Greater China and the UK. Our operational support headcount increased by 72, these additions were mainly temporary in nature to support the implementation of our new Global Finance System.

 

Relevant strategic objective: Sustainable growth

Fee-earner headcount growth

How measured: Number of fee-earners and directors involved in revenue-generating activities at the period end, expressed as the percentage change compared to the prior year.

 

Why it's important: Growth in fee-earners is a guide to our confidence in the business and macro-economic outlook, as it reflects expectations as to the level of future demand above the existing capacity within the business.

 

How we performed in H1 2019: We reduced our fee earner headcount by 81 in H1 2019 (H1 2018: 319 increase). Fee earner headcount fell in markets where we saw more challenging conditions, such as France, Greater China and the UK, but we continued to invest in markets where we saw the greatest growth such as the US and India.

 

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 2019: Net cash at 30 June 2019 was £81.7m (H1 2018: £87.0m). This was as a result of £3.5m received in H1 2019 as a result of the exercise of share options, compared to £19.1m in H1 2018. No share purchases were made into the Employee Benefit Trust in H1 2019 (H1 2018 £9.9m). The balance was principally driven by movements in working capital.  

 

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 2018 on pages 31 to 35.

 

There have been no changes to these risk categories in the first half to 30 June 2019. However, there remains a degree of uncertainty in the UK as a result of Brexit, Greater China due to trade tariff uncertainty and slower economies in parts of continental Europe.

 

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 now only 16% of the Group, but a more resilient market due to its size and maturity. Whilst some of our other markets are also more challenging, we expect them 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

 

The Group operates multi-currency cash concentration and notional cash pools, and an interest enhancement facility. The Eurozone subsidiaries and the UK-based Group Treasury subsidiary participate in the cash concentration arrangement, the Group Treasury subsidiary retains the notional cash pool and the Asia Pacific subsidiaries operate the interest enhancement facility. The structures facilitate interest compensation of cash whilst supporting working capital requirements.

PageGroup maintains a Confidential Invoice Facility with HSBC whereby the Group has the option to discount receivables in order to advance cash. The Group also has a Revolving Credit Facility with BBVA, with a total drawable amount of £30m. Neither of these facilities were in use as at 30 June. These facilities are only used on an ad hoc basis to fund any major Group GBP cash outflows.

 

The main functional currencies of the Group are Sterling, Euro, Chinese Renminbi, US Dollar, Singapore Dollar, Hong Kong Dollar and Australian Dollar. The Group does not have material transactional currency exposures. The Group is exposed to foreign currency translation differences in accounting for its overseas operations. The Group policy is not to hedge translation exposures.

 

In certain cases, where the Group gives or receives short-term loans to and from other Group companies, which differ from the Group's reporting currency, it may use short-dated foreign exchange swap derivative financial instruments to manage the currency and interest rate exposure that arises on these loans. The Group had 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

6 August 2019

6 August 2019

 

 

INDEPENDENT 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 2019 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated balance sheet, the condensed consolidated statement of changes in equity, the condensed consolidated statement of cash flows and the related notes 1 to 12. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

 

This report is made solely to the company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.

 

Directors' Responsibilities

 

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

 

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

 

Our Responsibility

 

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

 

Scope of Review

 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Conclusion

 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2019 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

 

 

Ernst & Young LLP

London

6 August 2019 Condensed Consolidated Income Statement

For the six months ended 30 June 2019

 

Six months ended

Year ended

30 June

30 June

31 December

2019

2018

2018

Unaudited

Unaudited

Audited

Note

£'000

£'000

£'000

Revenue

3

820,515

751,580

1,549,941

Cost of sales

(386,978)

(355,561)

(735,039)

Gross profit

3

433,537

396,019

814,902

Administrative expenses

(357,927)

(328,795)

(672,439)

Operating profit

3

75,610

67,224

142,463

Financial income

4

208

182

631

Financial expenses

4

(1,234)

(176)

(819)

Profit before tax

3

74,584

67,230

142,275

Income tax expense

5

(20,511)

(17,818)

(38,572)

Profit for the period

54,073

49,412

103,703

Attributable to:

Owners of the parent

54,073

49,412

103,703

Earnings per share

Basic earnings per share (pence)

8

16.8

15.5

32.5

Diluted earnings per share (pence)

8

16.8

15.4

32.4

 

The above results all relate to continuing operations

 

 

Condensed Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2019

 

Six months ended

Year ended

30 June

30 June

31 December

2019

2018

2018

Unaudited

Unaudited

Audited

£'000

£'000

£'000

Profit for the period

54,073

49,412

103,703

Other comprehensive income/(loss) for the period

Items that may subsequently be reclassified to profit and loss:

Currency translation differences

2,208

(525)

4,359

Gain/(Loss) on hedging instruments

283

(612)

(988)

Total comprehensive income for the period

56,564

48,275

107,074

Attributable to:

Owners of the parent

56,564

48,275

107,074

 

Condensed Consolidated Balance Sheet

As at 30 June 2019

 

30 June

30 June

31 December

2019

2018

2018

Unaudited

Unaudited

Audited

Note

£'000

£'000

£'000

Non-current assets

Property, plant and equipment

9

35,505

31,868

35,564

Right-of-use assets

129,541

-

-

Intangible assets - Goodwill and other intangible

2,047

1,681

2,019

                            - Computer software

34,474

31,697

31,377

Deferred tax assets

21,045

17,100

17,487

Other receivables

10

14,439

11,680

12,746

237,051

94,026

99,193

Current assets

Trade and other receivables

10

378,767

335,033

349,111

Current tax receivable

18,138

15,617

17,206

Cash and cash equivalents

12

81,704

87,048

97,673

478,609

437,698

463,990

Total assets

3

715,660

531,724

563,183

Current liabilities

Trade and other payables

11

(193,020)

(187,625)

(204,353)

Lease liabilities

(33,159)

-

-

Current tax payable

(18,549)

(21,695)

(20,145)

(244,728)

(209,320)

(224,498)

Net current assets

233,881

228,378

239,492

Non-current liabilities

Other payables

11

(10,604)

(16,702)

(19,474)

Deferred tax liabilities

(3,892)

(1,339)

(630)

Lease liabilities

(105,331)

-

-

(119,827)

(18,041)

(20,104)

Total liabilities

3

(364,555)

(227,361)

(244,602)

Net assets

351,105

304,363

318,581

Capital and reserves

Called-up share capital

3,285

3,279

3,284

Share premium

99,206

96,676

98,502

Capital redemption reserve

932

932

932

Reserve for shares held in the employee benefit trust

(41,225)

(53,427)

(50,673)

Currency translation reserve

36,425

29,333

34,217

Retained earnings

252,482

227,570

232,319

Total equity

351,105

304,363

318,581

Condensed Consolidated Statement of Changes in Equity

For the six months ended 30 June 2019

 

Reserve

for shares

Called-up

Capital

held in the

Currency

share

Share

redemption

employee

translation

Retained

Total

capital

premium

reserve

benefit trust

reserve

earnings

equity

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 1 January 2018

3,268

92,677

932

(58,931)

29,858

202,253

270,057

Currency translation differences

-

-

-

-

(525)

-

(525)

Net expense recognised directly in equity

-

-

-

-

(525)

-

(525)

Loss on hedging instruments

-

-

-

-

-

(612)

(612)

Profit for the six months ended 30 June 2018

-

-

-

-

-

49,412

49,412

Total comprehensive (loss)/income for the period

-

-

-

-

(525)

48,800

48,275

Purchase of shares held in employee benefit trust

-

-

-

(9,898)

-

(9,898)

Exercise of share plans

11

3,999

-

-

-

15,116

19,126

Reserve transfer when shares held in the employee benefit trust vest

-

-

-

15,402

-

(15,402)

-

Credit in respect of share schemes

-

-

-

-

-

3,684

3,684

Credit in respect of tax on share schemes

-

-

-

-

-

552

552

Dividends

-

-

-

-

-

(27,433)

(27,433)

11

3,999

-

5,504

-

(23,483)

(13,969)

Balance at 30 June 2018

3,279

96,676

932

(53,427)

29,333

227,570

304,363

Currency translation differences

-

-

-

-

4,884

-

4,884

Net income recognised directly in equity

-

-

-

-

4,884

-

4,884

Loss on hedging instruments

-

-

-

-

-

(376)

(376)

Profit for the six months ended 31 December 2018

-

-

-

-

-

54,291

54,291

Total comprehensive income for the period

-

-

-

-

4,884

53,915

58,799

Purchase of shares held in employee benefit trust

-

-

-

(1,669)

-

-

(1,669)

Exercise of share plans

5

1,826

-

-

-

5,956

7,787

Reserve transfer when shares held in the employee benefit trust vest

-

-

-

4,423

-

(4,423)

-

Credit in respect of share schemes

-

-

-

-

-

3,364

3,364

Debit in respect of tax on share schemes

-

-

-

-

-

(184)

(184)

Dividends

-

-

-

-

-

(53,879)

(53,879)

5

1,826

-

2,754

-

(49,166)

(44,581)

 

 

 

 

 

 

 

Balance at 31 December 2018

3,284

98,502

932

(50,673)

34,217

232,319

318,581

Loss on adoption of IFRS 16 - (note 2)

-

-

-

-

-

(2,140)

(2,140)

Balance at 1 January 2019 (restated)

3,284

98,502

932

(50,673)

34,217

230,179

316,441

Currency translation differences

-

-

-

-

2,208

-

2,208

Net income recognised directly in equity

-

-

-

-

2,208

-

2,208

Profit on hedging instruments

-

-

-

-

-

283

283

Profit for the six months ended 30 June 2019

-

-

-

-

-

54,073

54,073

Total comprehensive income for the period

-

-

-

-

2,208

54,356

56,564

Exercise of share plans

1

704

-

-

-

2,833

3,538

Reserve transfer when shares held in the employee benefit trust vest

-

-

-

9,448

-

(9,448)

-

Credit in respect of share schemes

-

-

-

-

-

3,477

3,477

Credit in respect of tax on share schemes

-

-

-

-

-

63

63

Dividends

-

-

-

-

-

(28,978)

(28,978)

1

704

-

9,448

-

(32,053)

(21,900)

Balance at 30 June 2019

3,285

99,206

932

(41,225)

36,425

252,482

351,105

 

Condensed Consolidated Statement of Cash Flows

For the six months ended 30 June 2019

 

30 June

30 June

31 December

2019

2018

2018

Unaudited

Unaudited

Audited

Note

£'000

£'000

£'000

Profit before tax

74,584

67,230

142,275

Depreciation and amortisation charges

29,890

9,486

19,661

Loss on sale of property, plant and equipment, and computer software

100

39

281

Share scheme charges

3,477

3,684

7,043

Net finance costs/(income)

1,026

(6)

181

Operating cash flow before changes in working capital

109,077

80,433

169,441

Increase in receivables

(32,968)

(38,688)

(49,278)

(Decrease)/increase in payables

(12,864)

(1,255)

11,534

Cash generated from operations

63,245

40,490

131,697

Income tax paid

(20,763)

(19,747)

(41,001)

Net cash from operating activities

42,482

20,743

90,696

Cash flows from investing activities

Purchases of property, plant and equipment

(5,326)

(6,841)

(15,668)

Purchases of intangible assets

(8,431)

(4,022)

(9,944)

Proceeds from the sale of property, plant and equipment, and computer software

317

83

1,204

Interest received

208

182

631

Net cash used in investing activities

(13,232)

(10,598)

(23,777)

Cash flows from financing activities

Dividends paid

(28,978)

(27,433)

(81,312)

Interest paid

(172)

(174)

(818)

Lease liability principal repayment

(20,662)

-

-

Issue of own shares for the exercise of options

3,538

19,126

26,913

Purchase of shares into the employee benefit trust

-

(9,898)

(11,567)

Net cash used in financing activities

(46,274)

(18,379)

(66,784)

Net (decrease)/increase in cash and cash equivalents

(17,024)

(8,234)

135

Cash and cash equivalents at the beginning of the period

97,673

95,605

95,605

Exchange gain/(loss) on cash and cash equivalents

1,055

(323)

(1,933)

Cash and cash equivalents at the end of the period

12

81,704

87,048

97,673

 

 

Notes to the condensed set of interim results

For the six months ended 30 June 2019

 

1.         General information

 

The information for the year ended 31 December 2018 does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

 

The unaudited interim condensed consolidated financial statements of PageGroup plc and its subsidiaries (collectively, the Group) for the six months ended 30 June 2019 were authorised for issue in accordance with a resolution of the directors on 6 August 2019.

 

2.         Accounting policies

 

Basis of preparation

 

The unaudited interim condensed consolidated financial statements for the six months ended 30 June 2019 have been prepared in accordance with IAS 34 'Interim financial reporting' and with the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority.

 

The unaudited interim condensed consolidated financial statements do not constitute the Group's statutory financial statements. The Group's most recent statutory financial statements, which comprise the annual report and audited financial statements for the year ended 31 December 2018, were approved by the directors on 5 March 2019. The interim condensed consolidated financial statements should be read in conjunction with the Annual Report and Accounts for the year ended 31 December 2018, which have been prepared in accordance with International Financial Reporting Standards ('IFRSs') as adopted by the European Union.

 

During the period the Group adopted 'IFRS 16 - Leases' with an explanation of the impact on these financial statements provided below. The Group also adopted IFRIC Interpretation 23 - Uncertainty over Income Tax Treatment. All other 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 2018.

 

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

 

As at 1 January 2019 the Group adopted the new accounting standard IFRS 16 - Leases. The impact this has had on these financial statements is detailed below.

 

The Group also adopted IFRIC Interpretation 23 - Uncertainty over Income Tax Treatment. The Interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of IAS 12 Income Taxes. The adoption of IFRIC 23 did not have a material impact on the Group's results.

 

The Group applies judgement in identifying uncertainties over income tax treatments. Since the Group operates in a complex multinational environment, it assessed whether the Interpretation had an impact on its consolidated financial statements. The Company's and the subsidiaries' tax filings in different jurisdictions include deductions related to transfer pricing and the taxation authorities may challenge those tax treatments. The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

 

a) Adoption of IFRS 16 Leases

IFRS 16 was issued in January 2016 and it replaces IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS 17. A lessee can choose to apply the standard using either a full retrospective approach or a modified retrospective approach.

 

The Group adopted IFRS 16 using the modified retrospective method of adoption, with the date of initial application of 1 January 2019. Under this method, the standard is applied retrospectively, with the cumulative effect of initially applying the standard recognised at the date of initial application. The Group elected to use the practical expedient on transition allowing the standard to be applied only to contracts that were previously identified as leases applying IAS 17 and IFRIC 4 at the date of initial application. The Group also elected to use the recognition exemptions for lease contracts that, at the commencement date, have a lease term of 12 months or less and do not contain a purchase option ('short-term leases'), and lease contracts for which the underlying asset is of low value ('low-value assets').

 

The adoption under the Modified Retrospective approach is a combination of both the Modified (a) and Modified (b) method, depending on the specific lease. The application of the two methods is set out below:

 

·      Modified (a) method - an adjustment to reserves is made on transition. The lease liability is calculated on a retrospective basis and a discount rate at the date of initial application has to be used. A full restatement of comparatives is not necessary.

·      Modified (b) method - an adjustment to reserves is made on transition. The present value of the future lease payments is equal to the lease liability. A full restatement of comparatives is not necessary.

 

Impact on the Condensed Consolidated Statement of Financial Position (increase/(decrease)) as at 1 January 2019

 

£'000

Right-of-use assets

131,462

Prepayments

(2,204)

Total Assets

129,258

Liabilities

Lease liabilities

(140,519)

Deferred income

9,121

Total Liabilities

(131,398)

Equity

(2,140)

 

b) Nature of the effect of adoption of IFRS 16

The Group recognised right-of-use assets and lease liabilities for those leases previously classified as operating leases, except for short-term leases and leases of low-value assets. The £131.5m right of use asset recognised on transition related to Property leases for offices rented (£115.0m), Motor Vehicles of (£15.9m) and Other Assets of (£0.6m). The right-of-use assets for most leases were recognised based on the carrying amount as if the standard had always been applied, apart from the use of the incremental borrowing rate at the date of initial application. The right-of-use assets were recognised based on the amount equal to the lease liabilities, adjusted for any related prepaid and accrued lease payments previously recognised. Lease liabilities were recognised based on the present value of the remaining lease payments, discounted using the incremental borrowing rate at the date of initial application.

 

c) Amounts recognised in the Condensed Consolidated Statement of Financial Position and Condensed Consolidated Income Statement

Set out below, are the carrying amounts of the Group's right-of-use assets and lease liabilities and the movements during the period:

 

Condensed Consolidated Income Statement

 

£'000

Depreciation expense (included in Administrative expenses)

(19,561)

Rental expenses (included in Administrative expenses)

20,386

Operating profit

825

Finance costs

(1,062)

Profit before tax

(237)

 

Condensed Consolidated Statement of Financial Position

Right-of-use Assets

Lease Liabilities

 

Property

Motor Vehicles

Other Assets

Total

Total

£'000

£'000

£'000

£'000

£'000

 

 

As at 1 January 2019

115,031

15,870

561

131,462

(140,519)

 

Additions

13,844

3,166

717

17,727

(17,658)

 

Disposals

-

(67)

(20)

(87)

87

 

Depreciation expense

(14,289)

(4,985)

(287)

(19,561)

-

 

Interest expense

-

-

-

-

(1,062)

 

Payments

-

-

-

-

20,662

 

As at 30 June 2019

114,586

13,984

971

129,541

(138,490)

 

 

d) Summary of new accounting policies

Set out below are the new accounting policies of the Group upon adoption of IFRS 16, which have been applied from the date of initial application:

 

·      Right-of-use assets

The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are subject to impairment.

 

·      Lease liabilities

At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognised as expense in the period on which the event or condition that triggers the payment occurs.

 

In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.

 

·      Short-term leases and leases of low-value assets

The Group applies the short-term lease recognition exemption to its short-term leases of property, motor vehicles and equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered of low value (i.e., below $5,000 or c. £4,000). Lease payments on short-term leases and leases of low-value assets are recognised as an expense on a straight-line basis over the lease term.

 

·      Significant judgement in determining the lease term of contracts with renewal options

The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.

 

The Group has the option, under some of its leases, to lease the assets for additional terms of one to ten years. The Group applies judgement in evaluating whether it is reasonably certain to exercise the option to renew. That is, it considers all relevant factors that create an economic incentive for it to exercise the renewal. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise (or not to exercise) the option to renew (e.g., a change in business strategy).

 

 

3.         Segment reporting

 

All revenues disclosed are derived from external customers.

 

The accounting policies of the reportable segments are the same as the Group's accounting policies. Segment operating profit represents the profit earned by each segment including allocation of central administration costs. This is the measure reported to the Group's Board, the chief operating decision maker, for the purpose of resource allocation and assessment of segment performance.

 

(a)        Revenue, gross profit and operating profit by reportable segment

 

Revenue

Gross Profit

 

Six months ended

Year ended

Six months ended

Year ended

 

30 June

30 June

31 December

30 June

30 June

31 December

2019

2018

2018

2019

2018

2018

£'000

£'000

£'000

£'000

£'000

£'000

EMEA

427,657

389,685

797,427

213,145

194,976

394,337

United Kingdom

157,413

155,027

313,525

69,415

69,657

138,392

Asia Pacific

Australia and New Zealand

54,930

55,273

112,930

20,128

19,407

40,592

Asia

80,059

70,336

153,794

61,669

54,676

120,566

Total

134,989

125,609

266,724

81,797

74,083

161,158

Americas

100,456

81,259

172,265

69,180

57,303

121,015

820,515

751,580

1,549,941

433,537

396,019

814,902

Operating Profit

 

Six months ended

Year ended

 

30 June

30 June

31 December

2019

2018

2018

£'000

£'000

£'000

EMEA

45,594

40,945

85,586

United Kingdom

12,497

10,453

13,392

Asia Pacific

Australia and New Zealand

1,499

1,467

4,291

Asia

7,340

7,515

22,474

Total

8,839

8,982

26,765

Americas

8,680

6,844

16,720

Operating profit

75,610

67,224

142,463

Financial (expense)/income

(1,026)

6

(188)

Profit before tax

74,584

67,230

142,275

 

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, right-of-use assets, goodwill and other intangibles.

 

 

(b)        Segment assets, liabilities and non-current assets by reportable segment

 

Total Assets

Total Liabilities

 

Six months ended

Year ended

Six months ended

Year ended

 

30 June

30 June

31 December

30 June

30 June

31 December

2019

2018

2018

2019

2018

2018

£'000

£'000

£'000

£'000

£'000

£'000

EMEA

317,334

244,044

246,687

196,619

124,352

131,948

United Kingdom

146,316

112,813

121,058

51,210

35,335

40,398

Asia Pacific

Australia and New Zealand

34,928

24,646

29,719

14,990

10,432

11,059

Asia

98,065

72,152

85,501

29,972

14,072

18,744

Total

132,993

96,798

115,220

44,962

24,504

29,803

Americas

100,879

62,452

63,012

53,215

21,475

22,308

Segment assets/liabilities

697,522

516,107

545,977

346,006

205,666

224,457

Income tax

18,138

15,617

17,206

18,549

21,695

20,145

715,660

531,724

563,183

364,555

227,361

244,602

Property, Plant & Equipment

Intangible Assets

 

Six months ended

Year ended

Six months ended

Year ended

 

30 June

30 June

31 December

30 June

30 June

31 December

2019

2018

2018

2019

2018

2018

£'000

£'000

£'000

£'000

£'000

£'000

EMEA

14,147

12,489

13,654

2,920

3,316

3,171

United Kingdom

6,136

6,466

6,254

32,957

29,786

29,554

Asia Pacific

Australia and New Zealand

1,675

1,323

1,557

243

1

274

Asia

5,088

5,250

5,604

257

26

207

Total

6,763

6,573

7,161

500

27

481

Americas

8,459

6,340

8,495

144

249

190

35,505

31,868

35,564

36,521

33,378

33,396

 

The below tables are the right-of-use assets and corresponding lease liabilities recognised following the adoption of IFRS 16 - Leases accounting standard:-

 

Right-of-use Assets

Lease Liabilities

30 June

30 June

2019

2019

£'000

£'000

EMEA

73,940

77,019

United Kingdom

22,130

24,221

Asia Pacific

Australia and New Zealand

3,742

4,093

Asia

11,087

11,664

Total

14,829

15,757

Americas

18,642

21,493

129,541

138,490

 

The below analyses in notes (c) revenue and gross profit by discipline (being the professions of candidates placed), (d) revenue and gross profit generated from permanent and temporary placements and (e) revenue and gross profit by strategic market have been included as additional disclosure over and above the requirements of IFRS 8 "Operating Segments".

 

 

(c)        Revenue and gross profit by discipline

 

Revenue

Gross Profit

Six months ended

Year ended

Six months ended

Year ended

30 June

30 June

31 December

30 June

30 June

31 December

2019

2018

2018

2019

2018

2018

£'000

£'000

£'000

£'000

£'000

£'000

Accounting and Financial Services

327,707

294,679

609,131

150,428

136,711

282,653

Legal, Technology, HR, Secretarial and Other

217,130

193,604

402,321

107,373

94,448

196,773

Engineering, Property & Construction, Procurement & Supply Chain

182,102

166,932

345,654

105,355

94,746

194,562

Marketing, Sales and Retail

93,576

96,365

192,835

70,381

70,114

140,914

820,515

751,580

1,549,941

433,537

396,019

814,902

 

 

(d)        Revenue and gross profit generated from permanent and temporary placements

 

Revenue

Gross Profit

Six months ended

Year ended

Six months ended

Year ended

30 June

30 June

31 December

30 June

30 June

31 December

2019

2018

2018

2019

2018

2018

£'000

£'000

£'000

£'000

£'000

£'000

Permanent

333,978

308,948

629,136

330,650

304,202

621,746

Temporary

486,537

442,632

920,805

102,887

91,817

193,156

820,515

751,580

1,549,941

433,537

396,019

814,902

 

 

(e)        Revenue and gross profit by strategic market

 

Revenue

Gross Profit

Six months ended

Year ended

Six months ended

Year ended

30 June

30 June

31 December

30 June

30 June

31 December

2019

2018

2018

2019

2018

2018

£'000

£'000

£'000

£'000

£'000

£'000

Large, Proven markets

481,814

459,324

935,800

218,724

208,869

419,102

Large, High Potential markets

233,552

194,396

414,245

148,062

126,266

270,311

Small and Medium, High Margin markets

105,149

97,860

199,896

66,751

60,884

125,489

820,515

751,580

1,549,941

433,537

396,019

814,902

 

 

 

 

4.         Financial income / (expenses)

 

Six months ended

Year ended

30 June

30 June

31 December

2019

2018

2018

£'000

£'000

£'000

Financial income

Bank interest receivable

208

182

631

Financial expenses

Bank interest payable

(172)

(176)

(598)

Interest on discounting of French construction participation tax

-

-

(221)

Interest on lease liabilities

(1,062)

-

-

(1,234)

(176)

(819)

 

 

5.         Taxation

 

Taxation for the six month period is charged at 27.5% (six months ended 30 June 2018: 26.5%; year ended 31 December 2018: 27.1%). It is based on the full year forecast tax rate, allowing for prior year items arising from tax returns in the half year to 30 June.

 

6.         Dividends

 

Six months ended

Year ended

30 June

30 June

31 December

2019

2018

2018

£'000

£'000

£'000

Amounts recognised as distributions to equity holders in the year:

Final dividend for the year ended 31 December 2018 of 9.00p per ordinary share (2017: 8.60p)

28,978

27,433

27,433

Interim dividend for the year ended 30 June 2018 of 4.10p per ordinary share (2017: 3.90p)

-

-

13,117

Special dividend for the year ended 31 December 2018 of 12.73p per ordinary share (2017: 12.73p)

-

-

40,762

28,978

27,433

81,312

Amounts proposed as distributions to equity holders in the year:

Proposed interim dividend for the period ended 30 June 2019 of 4.30p per ordinary share (2018: 4.10p)

13,853

13,078

-

Proposed special dividend for the year ended 31 December 2019 of 12.73p per ordinary share (2018: 12.73p)

41,011

40,606

-

Proposed final dividend for the year ended 31 December 2018 of 9.00p per ordinary share

-

-

29,171

 

The proposed interim and special dividends have not been approved by the Board at 30 June 2019 and therefore have not been included as a liability. The comparative interim and special dividends at 30 June 2018 were also not recognised as a liability in the prior period.

 

The proposed interim dividend of 4.30p (2018: 4.10p) per ordinary share and special dividend of 12.73p (2018: 12.73p) per ordinary share will be paid on 9 October 2019 to shareholders on the register at the close of business on 6 September 2019.

 

 

7.         Share-based payments

 

In accordance with IFRS 2 "Share-based Payments", a charge of £4.1m has been recognised for share options and other share-based payment arrangements (including social charges) (30 June 2018: £4.8m, 31 December 2018: £8.4m).

 

 

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

2019

2018

2018

Earnings for basic and diluted earnings per share (£'000)

54,073

49,412

103,703

Number of shares

Weighted average number of shares used for basic earnings per share ('000)

321,031

317,795

318,877

Dilution effect of share plans ('000)

638

2,227

1,627

Diluted weighted average number of shares used for diluted earnings per share ('000)

321,669

320,022

320,504

Basic earnings per share (pence)

16.8

15.5

32.5

Diluted earnings per share (pence)

16.8

15.4

32.4

 

The above results all relate to continuing operations.

 

 

9.         Property, plant and equipment

 

Acquisitions and Disposals

During the period ended 30 June 2019 the Group acquired property, plant and equipment with a cost of £5.3m (30 June 2018: £6.8m, 31 December 2018: £15.7m).

 

Right-of-use assets of £131.5m were recognised as at 1 January 2019 following the adoption of the new IFRS 16 - Lease accounting standard. As at 30 June 2019 this had marginally decreased to £129.5m due to depreciation of these assets, partially offset by new leases taken out in the period.

 

 

10.        Trade and other receivables

 

Six months ended

Year ended

30 June

30 June

31 December

2019

2018

2018

£'000

£'000

£'000

Current

Trade receivables

301,114

277,016

297,380

Less allowance for expected credit losses and revenue reversals

(10,596)

(7,923)

(9,174)

Net trade receivables

290,518

269,093

288,206

Other receivables

7,978

8,579

3,814

Accrued income

62,108

40,612

44,430

Prepayments

18,163

16,749

12,661

378,767

335,033

349,111

Non-current

Other Receivables

14,439

11,680

12,746

 

 

 

11.        Trade and other payables

 

Six months ended

Year ended

30 June

30 June

31 December

2019

2018

2018

£'000

£'000

£'000

Current

Trade payables

3,135

2,571

6,594

Other tax and social security

63,101

50,142

58,186

Lease liabilities

33,159

-

-

Other payables

31,443

28,125

26,870

Accruals

94,919

104,966

111,040

Deferred income

422

1,821

1,663

226,179

187,625

204,353

Non-current

Deferred income

9,149

15,173

18,453

Other tax and social security

1,455

1,529

1,021

Lease liabilities

105,331

-

-

115,935

16,702

19,474

 

 

12.        Cash and cash equivalents

 

Six months ended

Year ended

30 June

30 June

31 December

2019

2018

2018

£'000

£'000

£'000

 Cash at bank and in hand

81,704

86,543

97,626

 Short-term deposits

-

505

47

 Cash and cash equivalents

81,704

87,048

97,673

 Cash and cash equivalents in the statement of cash flows

81,704

87,048

97,673

 

The Group operates multi-currency cash concentration and notional cash pools, and an interest enhancement facility. The Eurozone subsidiaries and the UK-based Group Treasury subsidiary participate in the cash concentration arrangement, the Group Treasury subsidiary retains the notional cash pool and the Asia Pacific subsidiaries operate the interest enhancement facility. The structures facilitate interest compensation of cash whilst supporting working capital requirements.

 

PageGroup maintains a Confidential Invoice Facility with HSBC whereby the Group has the option to discount receivables in order to advance cash. The Group also has a Revolving Credit Facility with BBVA, with a total drawable amount of £30m. Neither of these facilities were in use as at 30 June. These facilities are only used on an ad hoc basis to fund any major Group GBP cash outflows.

 

 

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

 

6 August 2019

 

 

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.aspx

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
END
 
 
IR EAXPKEAXNEFF
Date   Source Headline
8th Oct 20197:00 amRNSTHIRD QUARTER 2019 TRADING UPDATE
2nd Oct 201911:06 amRNSBlock listing Interim Review
2nd Oct 201910:03 amRNSTotal Voting Rights
21st Aug 201910:01 amRNSPageGroup plc - Holding(s) in Company
16th Aug 20199:59 amRNSPageGroup plc - Holding(s) in Company

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