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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Pagegroup Plc | LSE:PAGE | London | Ordinary Share | GB0030232317 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-1.60 | -0.36% | 442.00 | 445.00 | 445.80 | 446.40 | 440.00 | 441.60 | 526,750 | 16:35:14 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Employment Agencies | 2.01B | 77.07M | 0.2436 | 18.28 | 1.41B |
TIDMPAGE
RNS Number : 5886N
PageGroup plc
10 August 2017
10 August 2017
PageGroup plc
Half Year Results for the Period Ended 30 June 2017
PageGroup plc ("PageGroup"), the specialist professional recruitment company, announces its unaudited half year results for the period ended 30 June 2017.
Financial summary (6 months to 30 June Change 2017) 2017 2016 Change CC* ----------------------- ---------- ---------- ------- ------- Revenue GBP673.1m GBP575.9m +16.9% +7.7% ----------------------- ---------- ---------- ------- ------- Gross profit GBP352.0m GBP299.2m +17.7% +8.3% ----------------------- ---------- ---------- ------- ------- Operating profit GBP56.9m GBP47.1m +20.9% +9.2% ----------------------- ---------- ---------- ------- ------- Profit before tax GBP56.9m GBP46.9m +21.4% ----------------------- ---------- ---------- ------- Basic earnings per share 13.1p 10.8p +21.3% ----------------------- ---------- ---------- ------- Diluted earnings per share 13.1p 10.8p +21.3% ----------------------- ---------- ---------- ------- Interim dividend per share 3.90p 3.75p +4.0% ----------------------- ---------- ---------- ------- Special dividend per share 12.73p ----------------------- ----------
*in constant currency at prior year rates
HIGHLIGHTS
-- Group operating profit increased 9.2%* to GBP56.9m, +20.9% in reported rates
-- Favourable FX movements increased reported gross profit by c. GBP28m and operating profit by c. GBP6m
-- Conversion rate of gross profit to operating profit increased to 16.2% (H1 2016: 15.7%) -- Interim dividend up 4.0% to 3.90 pence per share, totalling GBP12.3m -- Special dividend of 12.73 pence per share, totalling GBP40.0m
Commenting, Steve Ingham, Chief Executive Officer, said:
"PageGroup delivered an increase of 8.3%* in gross profit and 9.2%* in operating profit in the first half of 2017, with the Group's conversion rate rising to 16.2% from 15.7%, reflecting an improved business performance and operational efficiencies.
"Movements in foreign exchange rates as a result of a weaker Sterling have benefited our first half results by
c. GBP28m of gross profit and c. GBP6m of operating profit. At June exchange rates, we anticipate the benefit in the second half to be greatly reduced, at c. GBP2m of gross profit, with a marginal benefit to operating profit.
"We experienced some improved macro-economic conditions, particularly in Asia (ex-Singapore), Continental Europe, and Latin America (ex-Brazil), which helped drive growth in the first half. However, challenging market conditions continued in some of our larger markets, including Brazil, Singapore and the UK.
"We made significant investments in our fee earner headcount over the last 12 months, particularly in France, the US and Latin America, ex. Brazil, up 19%, 28% and 22%, respectively. These investments delivered a strong return, with gross profit growth of 24%, 16% and 24%. We will continue to make headcount investments into our Large, High Potential markets, which represented only 22% of the Group in 2010. These markets now represent 31% of the Group and grew 12% in the first half. We will also continue to make headcount investments into those other markets with favourable trading conditions.
"Fee earner headcount grew 276 (+5.9%) to end the half year at a record level for the Group of 4,987. With our continued focus on operational efficiencies, we maintained our record fee earner to operational support staff ratio of 77:23. Total headcount at the end of the first half was 6,448.
"The Board has announced an interim dividend of 3.90 pence per share, an increase of 4.0% over last year as a result of our improved trading performance and strong balance sheet. In addition, the Group is pleased to announce today a special dividend of GBP40m (12.73 pence per share), making a third consecutive year of special dividends, in line with its intention to return surplus capital to shareholders. Taking both dividend payments together, this amounts to a cash return to shareholders of GBP52.3m payable on 11 October 2017.
"We are pleased with our first half performance, but remain mindful that a number of political and macro-economic uncertainties will continue through 2017. We will continue to focus on driving profitable growth, as we did in the first half, whilst remaining able to respond quickly to any changes in market conditions."
PageGroup will host a conference call, with on-line slide presentation, for analysts and investors at 8.30am on 10 August 2017, the details of which are below.
Link:
http://www.investis-live.com/pagegroup/596c7361c6702b0a0049d15d/gwag
Please use the following dial-in number to join the conference:
+ 44 (0)20 3059 8125
Please quote "PageGroup" to gain access to the call
A presentation and recording to accompany the call will be posted on the PageGroup website during the course of the morning of 10 August 2017 at:
http://www.page.com/investors/investor-library/2017.aspx
Enquiries:
PageGroup +44 (0)20 3077 8425 Steve Ingham, Chief Executive Officer Kelvin Stagg, Chief Financial Officer FTI Consulting +44 (0)20 3727 1340 Richard Mountain / Susanne Yule
INTERIM MANAGEMENT REPORT
To the members of PageGroup plc
GROUP STRATEGY
At PageGroup we have a clear strategic vision. We aim to be the leading specialist recruiter in each of the markets in which we operate. We have sought to achieve this by developing a significant market presence in major global economies, as well as targeting new markets where we see the greatest potential for long-term gross profit growth at attractive conversion rates.
We offer our services across a broad range of disciplines and specialisms, solely within the professional recruitment market. Our origins are in permanent recruitment, but nearly a quarter of the gross profit of the business is now in temporary placements, where local culture and market conditions allow. In particular, we focus on opportunities where our industry and market expertise can set us apart from our competition. This enables us to offer a premium service that is valued by clients and attracts the highest calibre of candidates.
PageGroup is focused on delivering against three key strategic objectives to achieve its strategic vision and sustainable financial returns. These are: 1) to look for organic and diversified growth; 2) to position the business to be efficiently scalable and highly flexible to reflect market conditions; and 3) as a people-oriented, organically-driven business, to nurture and develop talent and skills which are fundamental to us achieving long-term sustainable growth.
We therefore invest significantly in our people, as the recruitment, retention and development of the best talent available is central to our ability to grow the business and to manage our resources through economic cycles. Investment in the business has been focused on developing the long-term sustainability of the business and is supported by significant balance sheet strength and cash flow generation.
Organic growth
Our strategy is to grow organically, achieved by drawing upon the skills and experience of proven PageGroup management, ensuring we have the best and most experienced, home-grown talent in each key role. Our team-based structure and profit share business model is highly scalable. The small size of our specialist teams means we can increase headcount rapidly to achieve growth when market conditions are favourable.
Conversely, when market conditions tighten, these entrepreneurial, profit sharing teams reduce in size largely through natural attrition. Consequently, our cost base contracts during the lean times. Our strategy for organic growth has served the business well over the 40 years since its inception and we believe it will continue to do so. We have grown from a small, single discipline management recruitment company operating in one country to a large multidiscipline, multinational business, operating in 36 countries represented by our three key brands of Page Executive, Michael Page and Page Personnel.
Diversification by region and discipline
Our strategy is to expand and diversify the Group by industry sectors, professional disciplines, geography and level of focus, be it Page Executive, Michael Page or Page Personnel, with the objective of being the leading specialist recruitment consultancy in each of our chosen markets.
As recruitment is a cyclical business, impacted significantly by the strength of economies, diversification is an important element of our strategy in order to reduce our dependency on individual businesses or markets, thereby increasing the resilience of the Group. This strategy is pursued entirely through the organic growth of existing and new teams, offices, disciplines and countries, maintaining a consistent team and meritocratic culture as we grow.
Talent and skills development
We recognise that it is our people who are at the heart of everything we do, particularly as an organically grown business where ensuring we have a talent pool with experience through economic cycles and across both geographies and disciplines is critical. Investing in our people is, therefore, a vital element of our strategy. We seek to find the highest calibre staff from a wide range of backgrounds and then do our very best to retain them through offering a fulfilling career and an attractive working environment.
This includes a team-based structure, a profit share business model and continuous training and career development, often internationally. Our strong track record of internal career moves and promotion from within means that people who join us know that they could be our future senior managers and Main Board Directors.
Sustainable Growth
When we invest in a new business, be it a new country, a new office or a new discipline, we do so for the long term. Downturns in the general economy of a country or in specific industries will inevitably have a knock-on effect on the recruitment market. However, it has been our practice in the past, and remains our intention, to maintain our presence in our chosen markets through these downturns, while closely controlling our cost base. In this way, we are able to retain our highly capable management teams in whom we have invested and, normally, we find that we gain market share during downturns, which positions our business for market-leading rates of growth when the economy improves. Pursuing this approach means that we carry spare capacity during downturns, which can have a negative effect on profitability in the short term. A strong balance sheet is, therefore, essential to support the business at these times.
Strategic Priorities
-- increase the scale and diversification of PageGroup by growing, organically, existing and new teams,
offices, disciplines and countries;
-- manage the business with a team and meritocratic culture, whilst delivering a consistent and high quality client and candidate experience;
-- invest through cycles in our Large, High Potential Markets of Germany, Greater China, Latin America, South East Asia and the US to achieve scale and market position;
-- manage our fee earner headcount in all other markets to reflect prevailing market conditions, by selectively adding to geographies and disciplines where there is positive growth momentum, while reducing headcount where the outlook for growth or fee earner productivity is poor;
-- focus on operational support consistency;
-- focus on succession planning and international career paths to encourage retention and development of key staff; and
-- utilise innovation, particularly in new technologies, with the aim of improving efficiency, attrition and productivity.
GROUP RESULTS
GROSS PROFIT Reported (GBPm) CC -------------- ----------- --------------------------- ------- % of Group H1 2017 H1 2016 % % -------------- ----------- -------- -------- ------- ------- EMEA 46% 162.1 129.1 +25.5% +13.8% -------------- ----------- -------- -------- ------- ------- UK 21% 73.0 74.8 -2.3% -2.3% -------------- ----------- -------- -------- ------- ------- Asia Pacific 19% 66.7 56.5 +17.9% +5.5% -------------- ----------- -------- -------- ------- ------- Americas 14% 50.2 38.8 +29.6% +14.1% -------------- ----------- -------- -------- ------- ------- Total 100% 352.0 299.2 +17.7% +8.3% -------------- ----------- -------- -------- ------- ------- Permanent 76% 267.3 228.2 +17.2% +7.7% -------------- ----------- -------- -------- ------- ------- Temporary 24% 84.7 71.0 +19.3% +10.2% -------------- ----------- -------- -------- ------- -------
The Group's revenue for the six months ended 30 June 2017 increased 16.9% to GBP673.1m (2016: GBP575.9m) and gross profit increased 17.7% to GBP352.0m (2016: GBP299.2m). At constant currency, the Group's revenue increased by 7.7% and gross profit by 8.3%. The Group's revenue mix between permanent and temporary placements was 40:60 (2016: 40:60) and for gross profit was 76:24 (2016: 76:24).
Revenue from temporary placements comprises the salaries of those placed, together with the margin charged. This margin on temporary placements improved slightly to 21.1% (2016: 20.7%) in the first half of 2017. Overall, pricing has remained relatively stable across all regions, although pricing has improved in markets and disciplines where there have been increasing instances of candidate shortages.
Total headcount increased by 349 while fee earner headcount grew by 276 (+5.9%) to a record level for the Group of 4,987. Our fee earner to operational support staff ratio has remained at its record level of 77.23. We will continue to invest in our headcount in the second half to react to trading conditions.
The Group's organic growth model and profit-based team bonus ensures cost control remains tight. Approximately 75% of first half costs were employee related, including salaries, bonuses, share-based long-term incentives, and training and relocation costs.
In addition to focusing on the operational performance of the business, we continue to progress our strategic projects, with our new Global Finance System ("GFS") in the UK Shared Service Centre going live earlier this week.
In total, administrative expenses in the first half increased 17.1% to GBP295.1m (2016: GBP252.1m), driven by increases in headcount and foreign exchange movements. In constant currency administrative expenses were up 8.1% and operating profit increased 9.2% to GBP56.9m (2016: GBP47.1m), an increase of 20.9% at reported rates.
The Group views its conversion rate, which represents the ratio of operating profit to gross profit, as a key metric for the business. This conversion rate is affected by macro-economic conditions, the level of investment, particularly in fee earners and the degree of spare capacity within the business. The Group's conversion rate of 16.2% (2016: 15.7%) was an improvement on H1 2016, driven by a strong EMEA performance and a noticeable improvement in the Americas, which offset a significant increase in share plan charges of c. GBP3m.
FOREIGN EXCHANGE
The Group benefited in the period from the impact of movements in foreign exchange rates, as Sterling weakened against almost all of the currencies relevant to the Group's operations. In the first half, this increased the Group's revenue, gross profit and operating profit when expressed in Sterling by c. GBP53m, c. GBP28m and
c. GBP6m, respectively. At June closing exchange rates, the impact in the second half will be greatly reduced, with only a c. GBP2m benefit to gross profit and a marginal benefit to operating profit.
OTHER ITEMS
A net interest income of GBPnil (2016: GBP0.2m charge) reflected the higher level of cash held this year compared to 2016 and the continuing low interest rate environment. Interest income of GBP0.2m on cash balances held through the period was offset by financial charges related to the Group's Invoice Discounting Facility and overdrafts used to support local operations.
The charge for taxation is based on the expected effective annual tax rate of 28% (2016: 28%) on profit before taxation. The principal drivers of the tax charge, as in previous years, are share based remuneration, permanent differences between profits for accounting and tax purposes and the geographical mix of profits being taxed at different tax rates.
Basic earnings per share for the six months ended 30 June 2017 was 13.1p, an increase of 21.3% and diluted earnings per share was also 13.1p, an increase of 21.3% (2016: basic earnings per share 10.8p; diluted earnings per share 10.8p).
CASH FLOW
The Group started the year with net cash of GBP92.8m. In the first half, GBP52.5m was generated from operations after funding an increase in working capital of GBP17.5m, primarily due to an increase in trade receivables, largely due to foreign exchange. Tax paid was GBP24.6m and net capital expenditure was GBP8.6m. Net interest paid of GBP1.4m related to settlement of an GBP8m tax liability to HMRC in respect of a refund of VAT dating back to 2010, when GBP28.4m was recognised as non-recurring income. Recent case law has now concluded such VAT refunds in the relevant circumstances are taxable, and as a consequence, the outstanding balance was settled in H1 2017. The outstanding tax and associated interest were accrued in prior years. During the first half, GBP5.7m was received from exercises of share options and dividends of GBP25.9m were paid to shareholders. As a result, the Group had net cash of GBP88.9m at 30 June 2017.
DIVIDS AND SHARE REPURCHASES
It is the Directors' intention to continue to finance the activities and development of the Group from retained earnings and to operate while maintaining a strong balance sheet position.
The Group's first use of cash is to satisfy operational and investment requirements, as well as hedging its liabilities under the Group's share plans. The level of cash required for this purpose will vary depending upon the revenue mix of geographies, permanent and temporary recruitment, and point in the economic cycle.
Our second use of cash is to make returns to shareholders by way of an ordinary dividend. Our policy is to grow the ordinary dividend over the course of the economic cycle in a way that we believe we can sustain the level of ordinary dividend payment during downturns, as well as increasing it during more prosperous times.
Cash generated in excess of these first two priorities will be returned to shareholders through supplementary returns, using special dividends and/or share buybacks. Over the 16 years since flotation, the Group has returned over GBP275m by share buybacks and cancelled around 25% of its issued share capital. This is on top of approaching GBP500m of dividend payments during the same period.
The Board has announced an interim dividend of 3.90 pence per share, an increase of 4.0% over last year. In addition, the Group is pleased to announce today a special dividend of GBP40m (12.73 pence per share), making a third consecutive year of special dividends, in line with its policy of returning surplus capital to shareholders. Taking both dividend payments together, this amounts to a cash return to shareholders of GBP52.3m. Together with the 2016 final dividend paid in June of GBP25.9m, this represents a total of GBP78.2m returned to shareholders in 2017.
This special dividend will be paid, as in previous years, at the same time as the interim dividend on 11 October 2017 to shareholders on the register as at 8 September 2017.
During the first half, no shares were required to be purchased by the employee benefit trust (2016: GBP15.1m).
All growth rates given below are in constant currency unless otherwise stated.
EUROPE, MIDDLE EAST AND AFRICA (EMEA)
EMEA GBPm Growth rates ------------------ ------------------ ------------------ (46% of Group in H1 2017) H1 2017 H1 2016 Reported CC ------------------ -------- -------- --------- ------- Gross Profit 162.1 129.1 +25.5% +13.8% ------------------ -------- -------- --------- ------- Operating Profit 31.4 23.8 +31.7% +17.3% ------------------ -------- -------- --------- ------- Conversion Rate (%) 19.4% 18.5% ------------------ -------- -------- --------- -------
EMEA is the Group's largest region, contributing 46% of Group first half gross profit. In reported rates, revenue in the region increased by 27.0% to GBP323.1m (2016: GBP254.3m) and gross profit increased 25.5% to GBP162.1m (2016: GBP129.1m). In constant currency, revenue increased 15.2% on the first half of 2016 and gross profit increased by 13.8%.
The EMEA region continued to experience strong trading conditions throughout the first half. Page Personnel performed well across the region, with growth of 18%. Our largest businesses in France, Germany and Spain, together representing 59% of the region by gross profit, grew 24%, 12% and 19% respectively. In France, Page Personnel, which represents 64% of the business, had a record first half performance, growing 27%. Overall, 9 countries, representing 75% of the region, delivered double-digit growth during the first half of the year. Our business in the Middle East & Africa grew 4%, driven by South Africa and a slight improvement in trading conditions in the UAE.
The 31.7% increase in operating profit for the first half of 2017 to GBP31.4m (2016: GBP23.8m), and improvement in the conversion rate to 19.4% (2016: 18.5%) was due principally to both favourable trading conditions and foreign exchange movements in 2017. Headcount across the region increased 165 (6%) in the first half to 2,718 at the end of June 2017 (2,553 at 31 December 2016).
UNITED KINGDOM
UK GBPm Growth rates --------------------- ------------------ ------------- (21% of Group in H1 2017) H1 2017 H1 2016 --------------------- -------- -------- ------------- Gross Profit 73.0 74.8 -2.3% --------------------- -------- -------- ------------- Operating Profit 8.7 11.6 -25.1% --------------------- -------- -------- ------------- Conversion Rate (%) 11.9% 15.6% --------------------- -------- -------- -------------
In the UK, representing 21% of Group first half gross profit, revenue declined 3.6% to GBP160.7m (2016: GBP166.7m), and gross profit declined 2.3% to GBP73.0m (2016: GBP74.8m), with Brexit related uncertainty impacting clients' decision-making.
Technical disciplines such as Engineering (+13%) and Property & Construction (+12%) performed well. However, market conditions in our Accounting & Financial Services discipline (-4%) and Marketing, Sales and Retail (-9%) disciplines were more challenging.
These difficult trading conditions reduced conversion by just under 1% on 2016. However, with both Executive Directors and most of our Group functions located in the UK, the region suffered a disproportionate impact from the significant increase in the share plan charges, and as a result operating profit fell 25.1% to GBP8.7m (2016: GBP11.6m) and the conversion rate fell to 11.9% (2016: 15.6%).
Headcount increased by 13 (1%) during the first half of 2017 to 1,424 at the end of June 2017 (1,411 at 31 December 2016).
ASIA PACIFIC
Asia Pacific GBPm Growth rates ------------------ ------------------ ----------------- (19% of Group in H1 2017) H1 2017 H1 2016 Reported CC ------------------ -------- -------- --------- ------ Gross Profit 66.7 56.5 +17.9% +5.5% ------------------ -------- -------- --------- ------ Operating Profit 11.3 9.4 +20.4% +5.6% ------------------ -------- -------- --------- ------ Conversion Rate (%) 17.0% 16.6% ------------------ -------- -------- --------- ------
In Asia Pacific, representing 19% of Group first half gross profit, revenue increased 19.8% in reported rates to GBP116.9m (2016: GBP97.6m), and gross profit increased 17.9% to GBP66.7m (2016: GBP56.5m). In constant currency, revenue increased 5.9% in the first half and gross profit increased by 5.5%.
Asia, comprising 14% of the Group and 71% of Asia Pacific, grew 7%. We continued to see improvements in Greater China which grew 9%. We saw strong performances from our businesses in Mainland China, where we have a higher proportion of domestic clients. Elsewhere in Asia, India, Indonesia and Malaysia combined grew 19%. However in Singapore, where market conditions remained challenging, gross profit fell 18%.
In Australasia, where Australia grew 2%, Western Australia returned to growth, up 16%, with New South Wales delivering 5% growth. Queensland and Victoria both had single-digit declines.
Operating profit increased 20.4% to GBP11.3m (2016: GBP9.4m), resulting in an increase in the conversion rate to 17.0% (2016: 16.6%). Headcount across the region increased by 93 (8%) through the first half to 1,298 at the end of June 2017 (1,205 at 31 December 2016).
THE AMERICAS
Americas GBPm Growth rates --------------------- ------------------ ------------------- (14% of Group in H1 2017) H1 2017 H1 2016 Reported CC --------------------- -------- -------- --------- -------- Gross Profit 50.2 38.8 +29.6% +14.1% --------------------- -------- -------- --------- -------- Operating Profit 5.5 2.3 +144.8% +116.6% --------------------- -------- -------- --------- -------- Conversion Rate (%) 11.0% 5.8% --------------------- -------- -------- --------- --------
In the Americas, representing 14% of Group first half gross profit, revenue increased 26.5% in reported rates to GBP72.5m (2016: GBP57.3m) while gross profit increased 29.6% to GBP50.2m (2016: GBP38.8m). In constant currency, revenue increased by 10.8% and gross profit increased by 14.1%.
North America saw growth of 13%, though conditions remained challenging in the now smaller New York Financial Services market, which was down 16%. This market now represents 27% of our US business, compared to 37% in H1 2016. We saw good growth elsewhere in the US of 35%, as we continued to diversify our market presence in the other cities and disciplines in which we operate.
Latin America was up 15%. Brazil (34% of Latin America) was flat overall and remained profitable; it also returned to growth in the second quarter.
Elsewhere, our other countries, which now represent 66% of gross profit in Latin America, had another strong half, growing at 24%. Our performances in Argentina, Mexico and Peru were particularly strong. Mexico, which is our largest country in Latin America by headcount, achieved growth of 20% in the half.
Headcount was up 79 (8%) in the first half, to 1,009 at the end of June 2017 (930 at 31 December 2016). Operating profit increased by 144.8% to GBP5.5m (2016: GBP2.3m), with an increase in the conversion rate to 11.0% (2016: 5.8%). This was largely a result of our smaller offices in the US reaching sufficient scale such that they remain consistently profitable even with significant headcount investment.
OUTLOOK
As we stated in our second quarter trading update, we are pleased with our first half performance, but remain mindful that a number of political and macro-economic uncertainties will continue through 2017. We will continue to focus on driving profitable growth, as we did in the first half, whilst remaining able to respond quickly to any changes in market conditions.
KEY PERFORMANCE INDICATORS ("KPIs")
We measure our progress against our strategic objectives using the following key performance indicators:
KPI Definition, method of calculation and analysis -------------------- -------------------------------------------------------- Gross profit How measured: Gross profit represents growth revenue less cost of sales and consists of the total placement fees of permanent candidates, the margin earned on the placement of temporary candidates and the margin on advertising income, i.e. it represents net fee income. The measure used is the increase or decrease in gross profit as a percentage of the prior year gross profit. Why it's important: The growth of gross profit relative to the previous year is an indicator of the growth of the
net fees from the business as a whole. It demonstrates whether we are in line with our strategy to grow the business. How we performed in H1 2017: With strong growth in many of our markets, gross profit income in H1 2017 increased by 8.3% in constant currency, although this increased to 17.7% at reported rates after the impact of foreign exchange (H1 2016: 6.5% in reported rates, 3.6% in constant currency). Relevant strategic objective: Organic growth -------------------- -------------------------------------------------------- Gross profit How measured: Total gross profit from diversification a) geographic regions outside the UK; and b) disciplines outside of accounting and financial services, each expressed as a percentage of total gross profit. Why it's important: These percentages give an indication of how the business has diversified its revenue streams away from its historic concentrations in the UK and from the accounting and financial services discipline. How we performed in H1 2017: Geographies: the percentage increased to 79.3% from 75.0% in 2016, demonstrating further diversification. This increase reflected the economic recovery felt in Continental Europe, along with the weakness of Sterling. Disciplines: the percentage increased to 63.1% (2016: 61.3%), with growth of 4% within accounting and financial services, compared to 11% elsewhere, with a particularly strong result from our Technical disciplines, up 20%. Relevant strategic objective: Diversification -------------------- -------------------------------------------------------- Ratio of How measured: Gross profit from each gross profits type of placement expressed as a percentage generated of total gross profit. from permanent Why it's important: This ratio helps and temporary us to understand where we are in the placements economic cycle since the temporary market tends to be more resilient when the economy is weak, although in several of our core strategic markets, working in a temporary role, or as a contractor or interim employee, is not currently normal practice, for example mainland China. How we performed in H1 2017: 76% of our gross profit was generated from permanent placements, in line with 2016, and 24% from temporary. Relevant strategic objective: Organic growth -------------------- -------------------------------------------------------- Gross profit How measured: Gross profit for the year per fee earner divided by the average number of fee earners in the year. Why it's important: This is a key indicator of productivity. How we performed in H1 2017: Gross profit per fee earner was GBP72.3k in H1 2017 compared to GBP66.3k in H1 2016. There has been an increase in productivity compared to 2016 as a result of the impact of favourable currency movements. If stated in constant currency, productivity is broadly flat year-on-year. Relevant strategic objective: Organic growth -------------------- -------------------------------------------------------- Conversion How measured: Operating profit before before exceptional interest and taxation (EBIT) before exceptional items items as a percentage of gross profit. Why it's important: This demonstrates the Group's effectiveness at controlling the costs and expenses associated with its normal business operations. It will be impacted by the level of productivity and the level of investment for future growth. How we performed in H1 2017: Operating profit as a percentage of gross profit increased to 16.2% in 2017, up from 15.7% in the prior year, driven by the work done in 2016 to achieve consistency and efficiency across the Group, as well as an improvement in trading conditions in Continental Europe. Relevant strategic objective: Build for the long-term -------------------- -------------------------------------------------------- Basic earnings How measured: Profit for the year attributable per share to the Group's equity shareholders, divided before exceptional by the weighted average number of shares items in issue during the year. Why it's important: This measures the overall profitability of the Group. How we performed in H1 2017: Earnings per share (EPS) in H1 2017 was 13.1p, a 21.3% improvement on the EPS in 2016 of 10.8p. Relevant strategic objective: Build for the long-term, Organic growth -------------------- -------------------------------------------------------- Fee-earner: How measured: The percentage of fee-earners operational compared to operational support staff support staff at the period-end, expressed as a ratio. headcount Why it's important: This reflects the ratio operational efficiency in the business in terms of our ability to grow the revenue-generating platform at a faster rate than the staff needed to support this growth. How we performed in H1 2017: The ratio continued at a record 77:23 despite the increase in our support headcount of 73 since year end. We have added 276 fee earners in that same period. (H1 2016: 77:23). Relevant strategic objective: Sustainable growth -------------------- -------------------------------------------------------- Fee-earner How measured: Number of fee-earners and headcount directors involved in revenue-generating growth activities at the period end, expressed as the percentage change compared to the prior year. Why it's important: Growth in fee-earners is a guide to our confidence in the business and macro-economic outlook, as it reflects expectations as to the level of future demand above the existing capacity within the business. How we performed in H1 2017: Fee earner headcount grew at 5.9% (2016: 1%), resulting in 4,987 fee-earners at the period end, as we invested in our large, high potential markets as well as those markets experiencing strong growth. Relevant strategic objective: Sustainable growth -------------------- -------------------------------------------------------- Net cash How measured: Cash and short-term deposits less bank overdrafts and loans. Why it's important: The level of net cash is a key measure of our success in managing our working capital and determines our ability to reinvest in the business and to return cash to shareholders. How we performed in H1 2017: Net cash at 30 June 2017 was GBP88.9m (2016: GBP73.6m). This was as a result of share purchases into the Employee Benefit Trust of GBP15.1m in 2016 that was not incurred in 2017, as well as GBP5.7m received in 2017 as a result of the exercise of share options, which was not received in 2016. Relevant strategic objective: Build for the long-term -------------------- --------------------------------------------------------
The source of data and calculation methods year-on-year are on a consistent basis. The movements in KPIs are in line with expectations. Disclosure for GHG emissions and People KPIs is provided annually.
PRINCIPAL RISKS AND UNCERTAINTIES
The management of the business and the execution of the Group's strategy are subject to a number of risks. The main risks that PageGroup believes could potentially impact the Group's operating and financial performance for the remainder of the financial year remain those as set out in the Annual Report and Accounts for the year ending 31 December 2016 on pages 27 to 31.
There have been no changes to these risk categories in the first half to 30 June 2017. However, there remains an increased degree of uncertainty in the UK as a result of Brexit, as well as the recent General Election result where no single party managed to win an overall majority. This General Election result injected further uncertainty and instability into the Brexit process. It is too early to say how this will impact our business going forward, although following the EU Referendum in June 2016, Sterling weakened significantly, which has benefited our results.
We have a proven track record of being able to manage our headcount and costs effectively throughout the economic cycle and it should be noted that the UK is a more resilient market due to its size and maturity. We also expect Continental Europe, the US, Latin America outside of Brazil and Asia outside of Singapore to continue to remain positive. In light of these mixed trading conditions, we will continue to focus on activity levels, adjusting headcount during the second half to react to market conditions. As always, we remain focused on driving profitable growth, whilst remaining able to respond quickly and effectively to any changes in market conditions.
TREASURY MANAGEMENT, BANK FACILITIES AND CURRENCY RISK
It is the Directors' intention to continue to finance the activities and development of the Group from retained earnings and to operate while maintaining a strong balance sheet position.
The Group's first use of cash is to satisfy operational and investment requirements, as well as hedging its liabilities under the Group's share plans. The level of cash required for this purpose will vary depending upon the revenue mix of geographies, permanent and temporary recruitment, and point in the economic cycle.
Our second use of cash is to make returns to shareholders by way of an ordinary dividend. Our policy is to grow the ordinary dividend over the course of the economic cycle in a way that we believe we can sustain the level of ordinary dividend payment during downturns, as well as increasing it during more prosperous times.
Cash generated in excess of these first two priorities will be returned to shareholders through supplementary returns, using special dividends and/or share buybacks.
Cash surpluses are invested in short-term deposits, with any working capital requirements being provided from Group cash resources, Group facilities, or by local overdraft facilities. The Group has a multi-currency notional cash pool between the Eurozone subsidiaries and the UK-based Group Treasury subsidiary. The structure facilitates interest and balance compensation of cash and bank overdrafts. The Group has an Invoice Financing facility with HSBC Bank, the availability of which is limited to the level of UK trade receivable available for financing. This facility is subject to conventional banking covenants.
The main functional currencies of the Group are Sterling, Euro, Chinese Renminbi, US Dollar and Australian Dollar. The Group does not have material exposure to foreign denominated monetary assets and liabilities. The Group does not hedge its exposure to translation risk.
In certain cases, where the Group gives or receives short-term loans to and from other Group companies with different reporting currencies, it may use short-dated foreign exchange swap derivative financial instruments to manage the currency and interest rate exposure that arises on these loans. The Group has entered into hedges to cover its investment in foreign entities in the US and Canada.
GOING CONCERN
The Board has undertaken a recent and thorough review of the Group's forecasts and associated risks and sensitivities. Despite the uncertainty in the economy and its inherent risk and impact on the business, the Board has concluded, given the level of cash in the business and Group borrowing facilities, the geographical and discipline diversification, limited concentration risk, as well as the ability to manage the cost base, that the Group has adequate resources to continue in operational existence for the foreseeable future, being a period of at least 12 months from the date of this announcement.
CAUTIONARY STATEMENT
This Interim Management Report ("IMR") has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The IMR should not be relied on by any other party or for any other purpose. This IMR contains certain forward-looking statements. These statements are made by the directors in good faith based on the information available to them up to the time of their approval of this report and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.
This IMR has been prepared for the Group as a whole and therefore gives greater emphasis to those matters that are significant to PageGroup plc and its subsidiary undertakings when viewed as a whole.
Page House
The Bourne Business Park
1 Dashwood Lang Road
Addlestone
Weybridge
Surrey
KT15 2QW
By order of the Board,
Steve Ingham Kelvin Stagg Chief Executive Officer Chief Financial Officer 9 August 2017 9 August 2017
INDEPENT REVIEW REPORT TO PAGEGROUP PLC
Introduction
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2017 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated balance sheet, the condensed consolidated statement of changes in equity, the condensed consolidated statement of cash flows and related notes 1 to 13. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2017 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Ernst & Young LLP
London
9 August 2017
Condensed Consolidated Income Statement
For the six months ended 30 June 2017
Six months ended Year ended 30 June 30 June 31 December 2017 2016 2016 Unaudited Unaudited Audited Note GBP'000 GBP'000 GBP'000 Revenue 3 673,146 575,891 1,196,125 Cost of sales (321,159) (276,740) (575,091) Gross profit 3 351,987 299,151 621,034 Administrative expenses (295,067) (252,053) (520,082) ---------- ---------- ------------ Operating profit 3 56,920 47,098 100,952 Financial income 4 148 50 117 Financial expenses 4 (120) (241) (1,073) Profit before tax 3 56,948 46,907 99,996 Income tax expense 5 (16,036) (13,134) (27,900) ---------- ---------- ------------ Profit for the period 40,912 33,773 72,096 ---------- ---------- ------------ Attributable to: Owners of the parent 40,912 33,773 72,096 ---------- ---------- ------------ Earnings per share Basic earnings per share (pence) 8 13.1 10.8 23.1 Diluted earnings per share (pence) 8 13.1 10.8 23.1 ---------- ---------- ------------
The above results all relate to continuing operations
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2017
Six months ended Year ended 30 June 30 June 31 December 2017 2016 2016 Unaudited Unaudited Audited GBP'000 GBP'000 GBP'000 Profit for the period 40,912 33,773 72,096 Other comprehensive (loss)/income for the period Items that may subsequently be reclassified to profit and loss: Currency translation differences (1,935) 18,622 22,105 Gain / (loss) on hedging instruments 706 (1,393) (2,468) Total comprehensive income for the period 39,683 51,002 91,733 ---------- ---------- ------------ Attributable to: Owners of the parent 39,683 51,002 91,733 ---------- ---------- ------------
Condensed Consolidated Balance Sheet
As at 30 June 2017
30 June 30 June 31 December 2017 2016 2016 Unaudited Unaudited Audited Note GBP'000 GBP'000 GBP'000 Non-current assets Property, plant and equipment 9 29,541 26,834 29,461 Intangible assets - Goodwill and other intangible 1,677 1,672 1,696 - Computer software 35,375 34,787 36,187 Deferred tax assets 14,616 14,542 16,547 Other receivables 10 9,110 4,254 7,640 90,319 82,089 91,531 ---------- ---------- ------------ Current assets Trade and other receivables 10 278,239 258,443 259,328 Current tax receivable 16,488 11,237 12,743 Cash and cash equivalents 13 88,946 82,222 92,796 383,673 351,902 364,867 ---------- ---------- ------------ Total assets 3 473,992 433,991 456,398 ---------- ---------- ------------ Current liabilities Trade and other payables 11 (173,524) (159,516) (175,059) Bank overdrafts 13 - (8,588) - Current tax payable (17,325) (20,663) (24,404) (190,849) (188,767) (199,463) ---------- ---------- ------------ Net current assets 192,824 163,135 165,404 ---------- ---------- ------------ Non-current liabilities Other payables 11 (12,334) (7,731) (9,944) Deferred tax liabilities (1,081) (1,902) (430) (13,415) (9,633) (10,374) ---------- ---------- ------------ Total liabilities 3 (204,264) (198,400) (209,837) ---------- ---------- ------------ Net assets 269,728 235,591 246,561 ---------- ---------- ------------ Capital and reserves Called-up share capital 3,276 3,259 3,259 Share premium 92,054 90,393 90,458 Capital redemption reserve 932 932 932 Reserve for shares held in the employee benefit trust (65,780) (73,348) (72,941) Currency translation reserve 30,811 29,263 32,746 Retained earnings 208,435 185,092 192,107 Total equity 269,728 235,591 246,561 ---------- ---------- ------------
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2017
Reserve for shares held in Called-up Capital the Currency share Share redemption employee translation Retained Total benefit capital premium reserve trust reserve earnings equity GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Balance at 1 January 2016 3,258 90,268 932 (61,365) 10,641 178,025 221,759 ---------- -------- ----------- --------- ------------ --------- --------- Currency translation differences - - - - 18,622 - 18,622 ---------- -------- ----------- --------- ------------ --------- --------- Net income recognised directly in equity - - - - 18,622 - 18,622 Loss on hedging instruments - - - - - (1,393) (1,393) Profit for the six months ended 30 June 2016 - - - - - 33,773 33,773 Total comprehensive income for the period - - - - 18,622 32,380 51,002 ---------- -------- ----------- --------- ------------ --------- --------- Purchase of shares held in employee benefit trust - - - (15,058) - - (15,058) Exercise of share plans 1 125 - - - 41 167 Reserve transfer when shares held in the employee benefit trust vest - - - 3,075 - (3,075) - Credit in respect of share schemes - - - - - 2,488 2,488 Debit in respect of tax on share schemes - - - - - (203) (203) Dividends - - - - - (24,564) (24,564)
1 125 - (11,983) - (25,313) (37,170) ---------- -------- ----------- --------- ------------ --------- --------- Balance at 30 June 2016 3,259 90,393 932 (73,348) 29,263 185,092 235,591 ---------- -------- ----------- --------- ------------ --------- --------- Currency translation differences - - - - 3,483 - 3,483 ---------- -------- ----------- --------- ------------ --------- --------- Net income recognised directly in equity - - - - 3,483 - 3,483 Loss on hedging instruments - - - - - (1,075) (1,075) Profit for the six months ended 31 December 2016 - - - - - 38,323 38,323 Total comprehensive income for the period - - - - 3,483 37,248 40,731 ---------- -------- ----------- --------- ------------ --------- --------- Exercise of share plans - 65 - - - 132 197 Reserve transfer when shares held in the employee benefit trust vest - - - 407 - (407) - Credit in respect of share schemes - - - - - 1,954 1,954 Debit in respect of tax on share schemes - - - - - (165) (165) Dividends - - - - - (31,747) (31,747) - 65 - 407 - (30,233) (29,761) ---------- -------- ----------- --------- ------------ --------- --------- Balance at 31 December 2016 and 1 January 2017 3,259 90,458 932 (72,941) 32,746 192,107 246,561 ---------- -------- ----------- --------- ------------ --------- --------- Currency translation differences - - - - (1,935) - (1,935) ---------- -------- ----------- --------- ------------ --------- --------- Net loss recognised directly in equity - - - - (1,935) - (1,935) Profit on hedging instruments - - - - - 706 706 Profit for the six months ended 30 June 2017 - - - - - 40,912 40,912 ---------- -------- ----------- --------- ------------ --------- --------- Total comprehensive (loss)/income for the period - - - - (1,935) 41,618 39,683 ---------- -------- ----------- --------- ------------ --------- --------- Exercise of share plans 17 1,596 - - - 4,049 5,662 Reserve transfer when shares held in the employee benefit trust vest - - - 7,161 - (7,161) - Credit in respect of share schemes - - - - - 4,019 4,019 Debit in respect of tax on share schemes - - - - - (337) (337) Dividends - - - - - (25,860) (25,860) 17 1,596 - 7,161 - (25,290) (16,516) ---------- -------- ----------- --------- ------------ --------- --------- Balance at 30 June 2017 3,276 92,054 932 (65,780) 30,811 208,435 269,728 ---------- -------- ----------- --------- ------------ --------- ---------
Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2017
Year ended 30 June 30 June 31 December 2017 2016 2016 Unaudited Unaudited Audited Note GBP'000 GBP'000 GBP'000 Cash generated from operations 12 52,495 41,262 121,319 Income tax paid (24,628) (14,802) (32,499) ---------- ---------- ------------ Net cash from operating activities 27,867 26,460 88,820 ---------- ---------- ------------ Cash flows from investing activities Purchases of property, plant and equipment (4,863) (7,269) (14,111) Purchases of intangible assets (4,387) (4,634) (11,153) Proceeds from the sale of property, plant and equipment, and computer software 630 994 1,890 Interest received 148 50 117 ---------- ---------- ------------ Net cash used in investing activities (8,472) (10,859) (23,257) ---------- ---------- ------------ Cash flows from financing activities Dividends paid (25,860) (24,564) (56,311) Interest paid (1,579) (124) (460) Issue of own shares for the exercise of options 5,662 167 364 Purchase of shares into the employee benefit trust - (15,058) (15,058) Net cash used in financing activities (21,777) (39,579) (71,465) ---------- ---------- ------------ Net decrease in cash and cash equivalents (2,382) (23,978) (5,902) Cash and cash equivalents at the beginning of the period 92,796 95,018 95,018 Exchange (loss)/gain on cash and cash equivalents (1,468) 2,594 3,680 Cash and cash equivalents at the end of the period 13 88,946 73,634 92,796 ---------- ---------- ------------
Notes to the condensed set of interim results
For the six months ended 30 June 2017
1. General information
The information for the year ended 31 December 2016 does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.
2. Accounting policies
Basis of preparation
The unaudited interim condensed consolidated financial statements for the six months ended 30 June 2017 have been prepared in accordance with IAS 34 'Interim financial reporting' and with the Disclosure and Transparency Rules of the Financial Conduct Authority.
The unaudited interim condensed consolidated financial statements do not constitute the Group's statutory financial statements. The Group's most recent statutory financial statements, which comprise the annual report and audited financial statements for the year ended 31 December 2016, were approved by the directors on 7 March 2017. The interim condensed consolidated financial statements should be read in conjunction with the Annual Report and Accounts for the year ended 31 December 2016, which have been prepared in accordance with International Financial Reporting Standards ('IFRSs') as adopted by the European Union.
The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2016.
Going concern
The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the interim management report. The interim management report also includes a summary of the Group's financial position, its cash flows and its borrowing facilities.
The directors believe the Group is well placed to manage its business risks successfully. The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its current committed facilities.
After making enquiries, the directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the half-yearly financial report.
New accounting standards, interpretations and amendments adopted by the Group
We are continuing with our review and implementation of two new Accounting Standards, "IFRS 15 - Revenue from Contacts with Customers" and "IFRS 16 - Leases". The potential impact on our accounts of both of these Standards were disclosed in our Annual Report and Accounts for the year ended 31 December 2016. Our expectations as to their impact remain in line with these disclosures. A final conclusion on IFRS 15 and a further update on IFRS 16 will be provided in this year's Annual Report and Accounts. The Group doesn't anticipate that "IFRS 9 - Financial Instruments' will have a material impact on the Group's financial statements once it becomes effective from 1 January 2018.
The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.
3. Segment reporting
All revenues disclosed are derived from external customers.
The accounting policies of the reportable segments are the same as the Group's accounting policies. Segment operating profit represents the profit earned by each segment including allocation of central administration costs. This is the measure reported to the Group's Board, the chief operating decision maker, for the purpose of resource allocation and assessment of segment performance.
(a) Revenue, gross profit and operating profit by reportable segment Revenue Gross Profit -------------------------------- -------------------------------- Six months Year Six months Year ended ended ended ended 30 30 30 June 30 June 31 December June June 31 December 2017 2016 2016 2017 2016 2016 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 EMEA 323,092 254,341 538,403 162,117 129,137 271,863 United Kingdom 160,675 166,655 324,548 73,020 74,743 146,313 Australia Asia and New Pacific Zealand 56,256 48,025 103,979 19,010 16,310 35,085 Asia 60,616 49,537 105,692 47,644 40,215 84,644 -------- -------- ------------ -------- -------- ------------ Total 116,872 97,562 209,671 66,654 56,525 119,729 Americas 72,507 57,333 123,503 50,196 38,746 83,129 673,146 575,891 1,196,125 351,987 299,151 621,034 -------- -------- ------------ -------- -------- ------------ Operating Profit --------------------------------- Six months ended Year ended 30 June 30 June 31 December 2017 2016 2016 GBP'000 GBP'000 GBP'000 EMEA 31,397 23,841 51,685 United Kingdom 8,706 11,623 24,153 Asia Australia and Pacific New Zealand 2,557 1,998 4,592 Asia 8,741 7,382 16,135 --------- -------- ------------ Total 11,298 9,380 20,727 Americas 5,519 2,254 4,387 Operating profit 56,920 47,098 100,952 Financial income/(expense) 28 (191) (956) Profit before tax 56,948 46,907 99,996 --------- -------- ------------
The above analysis by destination is not materially different to analysis by origin.
"The analysis below is of the carrying amount of reportable segment assets, liabilities and non-current assets. Segment assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. The individual reportable segments exclude current income tax assets and liabilities. Non-current assets include property, plant and equipment, computer software, goodwill and other intangibles.
(b) Segment assets, liabilities and non current assets by reportable segment Total Assets Total Liabilities -------------------------------- --------------------------------- Six months Year Year ended ended Six months ended ended 30 30 30 June June 31 December 30 June June 31 December 2017 2016 2016 2017 2016 2016 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 EMEA 200,716 166,280 187,257 97,687 81,624 96,270 United Kingdom 109,452 124,919 119,036 43,680 57,220 43,306 Australia Asia and New Pacific Zealand 26,528 24,415 24,869 12,141 10,661 10,526 Asia 61,587 57,686 56,182 14,708 14,798 16,462 -------- -------- ------------ --------- -------- ------------ Total 88,115 82,101 81,051 26,849 25,459 26,988 Americas 59,221 49,454 56,311 18,723 13,434 18,869 -------- -------- ------------ --------- -------- ------------ Segment assets/liabilities 457,504 422,754 443,655 186,939 177,737 185,433 Income tax 16,488 11,237 12,743 17,325 20,663 24,404 473,992 433,991 456,398 204,264 198,400 209,837 -------- -------- ------------ --------- -------- ------------ Property, Plant & Equipment Intangible Assets -------------------------------- -------------------------------- Six months Year Six months Year ended ended ended ended 30 30 30 June 30 June 31 December June June 31 December 2017 2016 2016 2017 2016 2016 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 EMEA 11,342 8,561 10,707 3,892 2,981 3,862 United Kingdom 6,989 7,209 7,142 32,664 32,769 33,278 Australia Asia and New Pacific Zealand 1,133 1,362 1,376 11 50 22 Asia 3,136 2,599 3,053 40 42 31 -------- -------- ------------ -------- -------- ------------ Total 4,269 3,961 4,429 51 92 53 Americas 6,941 7,103 7,183 445 617 690 -------- -------- ------------ -------- -------- ------------ 29,541 26,834 29,461 37,052 36,459 37,883 -------- -------- ------------ -------- -------- ------------
The below analyses in notes (c) revenue and gross profit by discipline (being the professions of candidates placed) and (d) revenue and gross profit generated from permanent and temporary placements have been included as additional disclosure over and above the requirements of IFRS 8 "Operating Segments".
(c) Revenue and gross profit by discipline Revenue Gross Profit -------------------------------- --------------------------------- Six months Year Year ended ended Six months ended ended 30 30 June June 31 December 30 June 30 June 31 December 2017 2016 2016 2017 2016 2016 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Accounting and Financial Services 278,831 248,789 511,449 129,975 115,767 238,366 Legal, Technology, HR, Secretarial and Other 163,819 142,119 294,972 79,299 66,859 138,830 Engineering, Property & Construction, Procurement & Supply Chain 138,442 105,125 227,908 76,358 58,420 125,545 Marketing, Sales and Retail 92,054 79,858 161,796 66,355 58,105 118,293 673,146 575,891 1,196,125 351,987 299,151 621,034 -------- -------- ------------ --------- -------- ------------ (d) Revenue and gross profit generated from permanent and temporary placements Revenue Gross Profit -------------------------------- --------------------------------- Six months Year Year ended ended Six months ended ended 30 30 June June 31 December 30 June 30 June 31 December 2017 2016 2016 2017 2016 2016 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Permanent 270,852 232,129 476,321 267,287 228,136 469,960 Temporary 402,294 343,762 719,804 84,700 71,015 151,074 673,146 575,891 1,196,125 351,987 299,151 621,034 -------- -------- ------------ --------- -------- ------------ 4. Financial income / (expenses) Six months ended Year ended 30 June 30 June 31 December 2017 2016 2016 GBP'000 GBP'000 GBP'000 Financial income Bank interest receivable 148 50 117 --------- -------- ------------ Financial expenses Bank interest payable (120) (241) (465) Interest on discounting of French construction participation tax - - (608) (120) (241) (1,073) --------- -------- ------------ 5. Taxation
Taxation for the six month period is charged at 28.2% (six months ended 30 June 2016: 28.0%; year ended 31 December 2016: 27.9%), representing the best estimate of the average annual effective tax rate expected for the full year, applied to the pre-tax income for the six month period.
6. Dividends Six months ended Year ended 30 June 30 June 31 December 2017 2016 2016 GBP'000 GBP'000 GBP'000 Amounts recognised as distributions to equity holders in the year: Final dividend for the year ended 31 December 2016 of 8.23p per ordinary share (2015: 7.90p) 25,860 24,564 24,564 Interim dividend for the period ended 30 June 2016 of 3.75p per ordinary share (2015: 3.60p) - - 11,660 Special dividend for the year ended 31 December 2016 of 6.46p per ordinary share (2015: 16.0p) - - 20,087 25,860 24,564 56,311 --------- -------- ------------
Amounts proposed as distributions to equity holders in the year:
Proposed interim dividend for the period ended 30 June 2017 of 3.90p per ordinary share (2016: 3.75p) 12,253 11,617 - ------- ------- ------- Proposed special dividend for the year ended 31 December 2017 of 12.73p per ordinary share (2016: 6.46p) 40,000 20,013 - ------- ------- ------- Proposed final dividend for the year ended 31 December 2016 of 8.23p per ordinary share - - 25,599 ------- ------- -------
The proposed interim and special dividends have not been approved by the Board at 30 June 2017 and therefore have not been included as a liability. The comparative dividend at 30 June 2016 was also not recognised as a liability in the prior period.
The proposed interim dividend of 3.90p (2016: 3.75p) per ordinary share and special dividend of 12.73p (2016: 6.46p) per ordinary share will be paid on 11 October 2017 to shareholders on the register at the close of business on 8 September 2017.
7. Share-based payments
In accordance with IFRS 2 "Share-based Payment", a charge of GBP4.3m has been recognised for share options and other share-based payment arrangements (including social charges) (30 June 2016: GBP2.0m, 31 December 2016: GBP4.2m).
8. Earnings per ordinary share
The calculation of the basic and diluted earnings per share is based on the following data:
Six months ended Year ended 30 June 30 June 31 December Earnings 2017 2016 2016 Earnings for basic and diluted earnings per share (GBP'000) 40,912 33,773 72,096 --------- -------- ------------ Number of shares Weighted average number of shares used for basic earnings per share ('000) 312,072 312,249 311,534 Dilution effect of share plans ('000) 1,222 974 802 Diluted weighted average number of shares used for diluted earnings per share ('000) 313,294 313,223 312,336 --------- -------- ------------ Basic earnings per share (pence) 13.1 10.8 23.1 Diluted earnings per share (pence) 13.1 10.8 23.1
The above results all relate to continuing operations.
9. Property, plant and equipment
Acquisitions
During the period ended 30 June 2017 the Group acquired property, plant and equipment with a cost of GBP4.9m (30 June 2016: GBP7.3m, 31 December 2016: GBP14.1m).
10. Trade and other receivables Six months ended Year ended 30 June 30 June 31 December 2017 2016 2016 GBP'000 GBP'000 GBP'000 Current Trade receivables 225,853 198,152 210,145 Less provision for impairment of receivables (6,497) (6,715) (5,070) --------- -------- ------------ Net trade receivables 219,356 191,437 205,075 Other receivables 5,235 12,084 9,612 Accrued income 42,861 43,901 37,623 Prepayments 10,787 11,021 7,018 278,239 258,443 259,328 --------- -------- ------------ Non-current Other Receivables 9,110 4,254 7,640 --------- -------- ------------ 11. Trade and other payables Six months ended Year ended 30 June 30 June 31 December 2017 2016 2016 GBP'000 GBP'000 GBP'000 Current Trade payables 1,331 8,738 7,515 Other tax and social security 52,416 47,052 46,813 Other payables 21,113 12,292 21,407 Accruals 97,374 89,729 98,084 Deferred income 1,290 1,705 1,240 173,524 159,516 175,059 --------- -------- -------------- Non-current Deferred income 11,943 7,432 9,702 Other tax and social security 391 299 242
12,334 7,731 9,944 --------- -------- -------------- 12. Cash flows from operating activities Six months ended Year ended 30 June 30 June 31 December 2017 2016 2016 GBP'000 GBP'000 GBP'000 Profit before tax 56,948 46,907 99,996 Depreciation and amortisation charges 9,083 8,221 17,065 (Income)/loss on sale of property, plant and equipment, and computer software (34) (9) 186 Share scheme charges 4,019 2,414 4,235 Net finance (income)/cost (28) 191 956 --------- --------- ------------ Operating cash flow before changes in working capital 69,988 57,724 122,438 Increase in receivables (18,660) (22,599) (21,061) Increase in payables 1,167 6,137 19,942 --------- --------- ------------ Cash generated from operations 52,495 41,262 121,319 --------- --------- ------------ 13. Cash and cash equivalents Six months ended Year ended 30 June 30 June 31 December 2017 2016 2016 GBP'000 GBP'000 GBP'000 Cash at bank and in hand 83,316 74,773 78,022 Short-term deposits 5,630 7,449 14,774 --------- -------- ------------ Cash and cash equivalents 88,946 82,222 92,796 Bank overdrafts - (8,588) - Cash and cash equivalents in the statement of cash flows 88,946 73,634 92,796 --------- -------- ------------
The Group operates a multi-currency notional cash pool. Currently the main Eurozone subsidiaries and the UK-based Group Treasury subsidiary participate in this cash pool. The structure facilitates interest and balance compensation of cash and bank overdrafts.
PageGroup maintains a Confidential Invoice Facility with HSBC whereby the Group has the option to discount facilities in order to advance cash on its receivables. The facility is used only ad hoc in case the Group needs to fund any major GBP cash outflow.
RESPONSIBILITY STATEMENT
The Directors confirm that to the best of their knowledge:-
a) the condensed set of interim financial statements has been prepared in accordance with IAS 34 "Interim Financial Reporting"
b) the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and
c) the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).
On behalf of the Board
S Ingham K Stagg Chief Executive Officer Chief Financial Officer
9 August 2017
Copies of the condensed interim financial statements are now available and can be downloaded from the Company's website
http://www.page.com/investors/investor-library/2017.aspx
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EAPPNELAXEFF
(END) Dow Jones Newswires
August 10, 2017 02:01 ET (06:01 GMT)
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