REG - PageGroup plc - Half-year Report
RNS Number : 1602IPageGroup plc07 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
Kelvin Stagg, Chief Financial Officer
Jeremy Tatham, Group Financial Controller
FTI Consulting
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 StatementFor 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.ENDIR EAXPKEAXNEFF
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