Steve Ingham Chief Executive Officer - Home | Page Group · FY17 Headline Numbers Strategy Review Financial Review Regional Review Summary 30 Significant variations in recruitment

Steve Ingham

Kelvin Stagg

Chief Executive Officer

Chief Financial Officer

LSE: PAGE.L

Website: http://www.page.com/investors

7 March 2018

Full Year Results 2017

“A record year for the Group”

http://www.page.com/investors

Investor Afternoon

15 May

Headline Numbers

Steve Ingham, Chief Executive Officer

FY17

Headline Numbers Strategy Review Financial Review Regional Review Summary

4

Key financial highlights

A record year for the Group

£711.6m£621.0m FY 2016

+9.8%+3.0% FY 2016

Gross Profit

Constant

Currency

Growth

£118.3m£101.0m FY 2016

16.6%16.3% FY 2016

Operating

Profit

Conversion

Rate

£40.1m£20.1m FY 2016

25.23p18.44p FY 2016

Special

Dividend

Total

Dividends

£95.6m£92.8m FY 2016

Net Cash

Strategy Review

FY17


6

New Page Outsourcing Brand operating across our businesses

Global alignment of Brands

FY17


7

Delivering on our global diversification strategy

A growing international business

61%

39%

76%

24%

80%

20%

2007 2013 2017

Gross Profit

InternationalUK

FY17


8

Sustained investment has transformed the business

Large, High Potential Markets have driven growth

• All five markets experienced record years and double digit

growth in 2017

• Large, High Potential Markets gross profit CAGR 9.7%1

between 2013 and 2017

• Continue to focus on these markets in 2018 and beyond

1 Reported rates

154

223

100

140

180

220

2013 2017L

arg

e,

Hig

h P

ote

nti

al

Ma

rke

t G

ros

s P

rofi

t1(£

m)

+45%

0

150

300

450

600

Germany Greater China Latam South East Asia USA

Fe

e e

arn

er

he

ad

co

un

t

2013 2017

FY17


9

Key deliverables from the Page Vision in 2013

Operational efficiencies are being realised

Created network of

regional Shared

Service Centres

Driving economies

of scale, best

practice and

expertise

Global Systems;

GFS, PRS and

Nextgen website

Provide scale

and ability to

quickly innovate

Agile and

scalable

infrastructure

Flexible to react

to changes

in headcount

and demand

Harmonised

Systems

IT

Transition

Shared

Service Centres

FY17


10

A highly cash generative business model

Clear and established capital allocation strategy

£220m dividends

paid in

last 3 years

To satisfy

operational and

investment

requirements, and to

hedge liabilities

under the Group’s

share plans

To maintain the

ordinary dividend

through downturns

and to increase it

during more

prosperous times

To make a

supplementary

return to

shareholders either

by a share buyback

or special dividend

2nd use of cash 3rd use of cash1st use of cashReturns to

shareholders

Financial Review

Kelvin Stagg, Chief Financial Officer

FY17


12

Highest conversion rate since 2008

Strong top and bottom line growth

£711.6+9.8%1

Gross

Profit

(£m)

£118.3+11.3%1

16.6%+0.3ppts

Operating

Profit

(£m)

Conversion

Rate

(%)

1 Constant Currency

FY17


75%

25%

Perm Temp

83%

17%

Perm Temp

57%

43%

Perm Temp

13

Business balance reflects brands and geographic mix

Strong brand growth with consistent mix

• Gross Profit growth in

permanent +9.4% to £536.0m

• Temporary +11.1% to £175.6m

• Perm:Temp ratio 75:25 broadly

in line with prior year







FY17


• Employee costs driven by +9.5% increase in average

headcount and inflationary salary rises

• Increase in other costs mainly due to FX

• Fee earners added at a ratio of 85:15 to support staff

Fee earners to support staff ratio at new record 78:22

Costs driven by headcount and salaries

15

18

21

24

27

30

2008 2011 2014 2017S

up

po

rt s

taff

as

% o

f G

rou

p h

ea

dc

ou

nt

14

£m 2017 Constant %

Employee 454.4 +9.5%

Other costs 138.8 +9.8%

Total 593.2 +9.6%

Average headcount increase +9.5%

FY17


Impact mainly in H1

Significant benefit from FX

Gross Profit (£m) Constant Currency Actual vs Constant Actual Rates

UK 140.8 - 140.8

EMEA 312.7 19.6 332.3

Asia Pacific 131.9 5.3 137.2

Americas 96.8 4.5 101.3

Group 682.2 29.4 711.6

Operating Profit 112.3 6.0 118.3

• Benefit to Gross Profit of £29.4m, Operating Profit of £6.0m

• 1% weakening of GBP would increase Gross Profit by c. £7m and Operating Profit by c. £1m

15

FY17


Underlying tax rate broadly flat on prior year

Increase in tax charge due to US tax reform

2017 2016 %

Profit Before Tax 118.2 100.0 +18.2

Tax Charge 35.1 27.9 +25.7

Underlying +27.5% +27.4%

US Tax Reform and other +2.2% +0.5%

Effective Tax Rate 29.7% 27.9%

• US tax reform resulted in a write down of deferred assets

• 2018 Effective Tax Rate expected to be c. 27%

16

FY17


Movements reflect effect of FX and increased trading activity

A strong and robust balance sheet

(£m) 2017 2016

Intangible assets 34.2 37.9

Tangible assets 30.2 29.5

64.4 67.4

Trade and other receivables 309.6 267.0

Trade, other payables, current and deferred taxes (199.5) (180.6)

110.1 86.4

Net cash 95.6 92.8

Net assets 270.1 246.6

17

FY17


Total dividend £78.3m including £40m special dividend

Strong cash flow generation

Cash Increase Decrease

92.8 95.6

(40.1)

(0.1)

144.1

(19.6)

(39.8)

(16.2) 12.7

(38.2)

50

90

130

170

210

250

Dec 16 EBITDA Working Capital Tax and netinterest

Net capex Net optionexercises/EBT

purchases

Dividends Paid Exchange Dec 17

£m

18

FY17


Committed to returning cash to shareholders

A growing dividend through the cycle

11.6 12.3

24.6 25.9

20.1

40.1

0

10

20

30

40

50

60

70

80

2016 2017£

m

Dividends Paid

Interim Final Special

• Final 2017 dividend proposed 8.6p

• Payable 18 June 2018

• Total dividend for year 25.23p

2017 Pence per Share

Interim 3.90

Final 8.60

Special 12.73

Total 25.23

19

+39%

FY17


20

Impacting every function of our business

GDPR is a big undertaking

Resource costs c. £1m

Team are also looking at the China Cyber Secuity law and ePrivacyRegulation

Appointed a Group Data Protection Officer

Changes to policies and procedures, websites, candidate systems, marketing platforms and supporting technologies

Multi country, multi function team dedicated to the programme

Regional Review

Steve Ingham, Chief Executive Officer

FY17


France33%

S. Europe21%

Germany15%

Benelux15%

Other16%

• France 16% of Group, strong growth +25%

• Germany also performed well +12%, strong growth in Page

Interim +19%

• Spain +16%, despite challenging conditions in Catalonia in H2

• Positive FX gross profit impact of c. £20m

Gross profit records in France, Germany and 8 other countries

EMEA saw strong market conditions

22

47% of Group

£m 2017 2016 Reported % Constant %

Gross Profit 332.3 271.9 +22.2% +15.0%

Operating Profit 69.7 51.7 +34.8% +26.2%

Conversion 21.0% 19.0% +2.0ppts

Headcount 2,996 2,553 +17.4%

Gross Profit

by Geography

FY17


London36%

North24%

South23%

Midlands17%

• Brexit continued to weigh on market sentiment

• Some multinationals and senior permanent candidates

most impacted

• But some disciplines showed growth: Property & Construction

+10%, Technology +7% and Engineering +6%

• Excluding share plan charges conversion would be

2ppts higher

Although pockets of growth in some disciplines

United Kingdom remained challenging

23

20% of Group

£m 2017 2016 Reported %

Gross Profit 140.8 146.3 -3.8%

Operating Profit 16.0 24.2 -33.8%

Conversion 11.4% 16.5% -5.1ppts

Headcount 1,407 1,411 -0.3%

Gross Profit

by Geography

FY17


Greater China43%

Australasia27%

SE Asia & India18%

Japan12%

• Greater China, our third largest market and 8% of the Group,

strong growth +14%

• Investment in Japan delivered a record performance +23%

• South-East Asia, 3% of Group, had a record year +12%

despite headwinds in Singapore

• Australia +1%, opened new office in Canberra

Record years for Greater China, India, Japan and South East Asia

Asia Pacific performed well

24

19% of Group


Gross Profit 137.2 119.7 +14.6% +10.2%


Conversion 17.1% 17.3% -0.2ppts

Headcount 1,532 1,205 +27.1%

Gross Profit

by Geography

FY17


USA51%

Brazil14%

Mexico13%

Canada5%

Rest of Latam17%

• Diversification strategy in USA delivered good growth +21%

driven by Property & Construction and Marketing

• Brazil returned to growth +3% but expected to

remain challenging

• Latam (ex. Brazil), strong growth +20%, records in

all countries

A strong rebound and a record year

Americas returned to growth

25

14% of Group


Gross Profit 101.3 83.1 +21.9% +16.4%


Conversion 9.0% 5.3% +3.7ppts

Headcount 1,094 930 +17.6%

Gross Profit

by Geography

Summary

FY17


Continue to invest in Large, High Potential Markets

A record Gross Profit performance

Total dividends paid £78.3m and strong net cash position

Continue to invest in Large, High Potential Markets

Conversion rate increased to 16.6%

Continental Europe remains strong

Gross Profit +9.8% in constant currency

Record year for the Group

27

FY17


28

Investor Afternoon – 15 May 2018

Recap

on strategy

Venue

TBCPage Vision

How we can

leverage our

Conversion Rate

How we

use technology

Our views on RPO

Vision:To be the leading

specialist recruiter

in the markets

we operate

RPO

Appendix

FY17


30

Significant variations in recruitment mix

70% 70%

87% 85%

30% 30%

13% 15%

EMEA UK Asia Pacific Americas

Temp Perm

83%

57%

17%

43%

Michael Page Page Personnel

Geography Brands

FY17


1,174

1,657 1,657 1,466 1,444

1,708 2,075

2,763

3,837 3,654

2,515

3,273

3,797 3,624

3,810

4,278 4,484

4,711

5,497

-

1,000

2,000

3,000

4,000

5,000

6,000

1990-99 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Fe

e E

arn

er

He

ad

co

un

t

AMERICAS

ASIA

PACIFIC

EMEA

31

Notable fee earner and international growth

1985-1990 1990-19992000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Portugal

(2000)

Switzerland

(2001)

Belgium

(2001)

Sweden

(2001)

Poland S Africa

Ireland

UAE

Austria

Turkey

Luxembourg

Morocco

ThailandIndonesiaTaiwanIndia

Malaysia

New

Zealand

Japan

(2001)

China

(2003)

Australia

(1985)

USA (1988) Brazil (2000) Canada Mexico Chile Colombia Peru

INT

ER

NA

TIO

NA

L G

RO

WT

H

France

(1980)

Netherlands

(1987)

Germany

(1991)

Spain

(1997)

Italy

(1997)

Hong Kong

(1995)

Singapore

(1996)

2,347

1,238

1,009

903

Argentina

UKASIA

PACIFICEMEA AMERICAS

FY17


32

Fee earner investment and support staff discipline

0

1,000

2,000

3,000

4,000

5,000

6,000

H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2

He

ad

co

un

t

Fee Earner Support Staff

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

FY17


33

Year-on-Year Gross Profit Rates

2015 2016 2017

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

EMEA +12.1% +11.4% +13.0% +10.6% +10.3% +13.6% +10.4% +12.4% +14.8% +13.2% +12.6% +19.3%

UK +11.3% +12.8% +12.5% +2.4% +0.0% -2.3% -4.7% -6.7% -0.1% -4.5% -7.6% -2.8%

Asia Pacific +10.8% +5.6% +5.3% -1.3% -2.0% -3.3% -4.7% +1.7% +3.9% +6.8% +13.9% +14.9%

– Asia +14.1% +8.8% +9.2% +2.4% -1.5% -6.9% -7.9% -0.5% +3.6% +10.2% +21.9% +20.8%

– Australasia +3.9% -1.8% -2.3% -9.3% -3.0% +6.6% +3.9% +8.1% +4.7% -1.5% -4.4% +0.7%

Americas +7.1% +11.5% +5.3% +5.7% -0.6% -1.1% -2.0% +0.9% +15.2% +13.8% +18.4% +18.8%

– North America +10.6% +21.1% +18.0% +23.5% +9.2% -1.9% -10.8% -8.4% +12.5% +14.6% +26.5% +18.7%

– Latin America +4.2% +3.8% -4.8% -8.9% -9.8% -0.1% +9.6% +14.3% +19.2% +12.8% +9.1% +19.0%

Group Total +10.9% +10.6% +10.0% +5.5% +3.6% +3.7% +1.3% +3.8% +9.1% +7.7% +8.8% +13.8%

FY17


34

Contacts and Calendar

Contacts

Jeremy Tatham – Group Financial Controller

Tel: +44 (0) 1932 264 143

Email: [email protected]

Web: http://www.page.com/investors

Date Event

11 April 2018 Q1 2018 Trading Update

15 May 2018 Investor Afternoon

11 July 2018 Q2 2018 Trading Update

8 August 2018 HY 2018 Results

10 October 2018 Q3 2018 Trading Update

FY17


35

Disclaimer

This presentation contains certain statements that are neither reported financial results nor other historical information.

The information contained in this presentation is not audited, is for personal use and informational purposes only and is

not intended for distribution to, or use by, any person or entity in any jurisdiction in any country where such distribution or

use would be contrary to law or regulation, or which would subject any member of the PageGroup plc group of companies

to any registration requirement. No representation or warranty, express or implied, is or will be made in relation to the

accuracy, fairness or completeness of the information or opinions made in this presentation.

Certain statements included or incorporated by reference within this presentation may constitute “forward-looking

statements” that are based on current expectations or beliefs, as well as assumptions about future events. There are risk

factors that can cause actual results to differ materially from those expressed in or implied by such statements.

Accordingly, no assurance can be given that any particular expectation will be met and reliance should not be placed on

any forward-looking statement.

PageGroup plc disclaims any intention or obligation to revise or update any forward-looking statements that may be made

in this presentation, regardless of whether those statements are affected as a result of new information, future events or

otherwise. Nothing in this presentation should be construed as a profit forecast.

This presentation does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to

purchase any shares in PageGroup plc, nor shall it or any part of it or the fact of its distribution form the basis of, or be

relied on in connection with, any contract or commitment or investment decision relating thereto, nor does it constitute a

recommendation regarding the shares of PageGroup plc. Past performance cannot be relied upon as a guide to future

performance. Liability arising from anything in this presentation shall be governed by English Law. Nothing in this

presentation shall exclude any liability under applicable laws that cannot be excluded in accordance with such laws.

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Steve Ingham Chief Executive Officer - Home | Page Group · FY17 Headline Numbers Strategy Review Financial Review Regional Review Summary 30 Significant variations in recruitment