full year results 2016 · 8 2016 2015 % profit before tax 100.0 90.7 +10.3 tax charge 27.9 24.5...
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Full Year Results 2016
Agenda
Financial Review
Regional Review
Business Strategy
Summary
3
2016 Group Financial Highlights
2016 vs 2015 constant
Gross Profit £621.0m 11.7% 3.0%
Operating Profit £101.0m 12.1% 1.4%
Profit Before Tax £100.0m 10.3%
Diluted EPS 23.1p 9.5%
Net Cash £92.8m £2.2m
Total Ordinary Dividend (proposed) 11.98p 4.2%
Special Dividend 6.46p
Financial Review
5
Income Statement
£m 2016 2015 Change
Constant
currency
change
Revenue 1,196.1 1,064.9 +12.3% +3.6%
Gross Profit 621.0 556.1 +11.7% +3.0%
Operating Profit 101.0 90.1 +12.1% +1.4%
Net Interest (Expense)/Income (1.0) 0.6
Profit Before Tax 100.0 90.7 +10.3%
Taxation (27.9) (24.5) +13.9%
Effective tax rate on profit 27.9% 27.0%
Profit After Tax 72.1 66.2 +8.9%
Earnings per share
Basic (pence) 23.1 21.3 +8.5%
Diluted (pence) 23.1 21.1 +9.5%
6
75%
10%
6%9%
• Total operating costs +2% in constant currencies (12%*)
• Employee costs (78% of total costs) +5% (+13%*) driven by +4.5% headcount,
inflationary salary rises
• Increase in other costs mainly due to foreign exchange
• Fee earners added at a ratio of 86:14 to support staff
Operating Costs
£m Actual 2015 changecc
change
Employee 405.2 357.9 +13% +5%
Other
costs114.9 108.1 +6% -1%
Total 520.1 466.0 +12% +2%
* In reported rates
2016 2015 %
Headcount 6,099 5,835 +4.5%
10
15
20
25
30
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
%
Support staff as % of Group headcount
FY16 77:23
7
Gross Profit (£m)Constant
Currency
Actual vs
Constant
Actual
Rates
UK 146.3 – 146.3
EMEA 242.0 29.9 271.9
Asia Pacific 106.7 13.0 119.7
Americas 77.7 5.4 83.1
Group 572.7 48.3 621.0
Operating Profit 91.3 9.7 101.0
2016 impact:
• Gross profit increased by c. 8% or £48.3m
• Operating profit increased by c. 11% or £9.7m
• 1% weakening of GBP would increase gross profit by c. £6m and operating profit by
c. £1m
Impact of Foreign Exchange
8
2016 2015 %
Profit Before Tax 100.0 90.7 +10.3
Tax Charge 27.9 24.5 +13.9
Underlying 27.4% 29.4%
Losses and deferred tax on share plans 0.5% (2.4%)
ETR 27.9% 27.0%
• UK corporation tax rate decreased to 20% from 20.25% in 2015
• Underlying rate down by 2% - due to geographic mix and tax rate changes
• Recognition (-0.53%) and de-recognition (+0.79%) of losses increased underlying rate by 0.26%
• Tax on share plans increased rate by 0.26%
• 2017 effective tax rate expected to be around 28%
Group Effective Tax Rate (ETR)
9
£m 2016 2015
Intangible assets 37.9 36.3
Tangible assets 29.5 21.4
67.4 57.7
Trade and other receivables 267.0 217.4
Trade, other payables, current and deferred taxes (180.6) (148.3)
86.4 69.1
Net cash 92.8 95.0
Net assets 246.6 221.8
Balance Sheet
• Strong balance sheet with £92.8m net cash at 31 December 2016
• Movements reflect effect of foreign exchange and increased trading activity
10
PageGroup Michael Page Page Personnel
£m 2016 2015 Growth rates 2016 2015 Growth rates 2016 2015 Growth rates
Gross ProfitReported
Constant
CurrencyReported
Constant
CurrencyReported
Constant
Currency
Permanent 470.0 424.0 +10.8% +2.3% 367.6 339.1 +8.4% +0.4% 102.4 84.9 +20.5% +10.2%
Temporary 151.0 132.1 +14.4% +5.1% 74.6 67.0 +11.4% +3.7% 76.4 65.1 +17.4% +6.5%
Ratio
(Perm:Temp)76:24 76:24 83:17 84:16 57:43 57:43
Permanent vs Temporary
76%
24% 17%
83% 57%43%
Perm Temp
11
95.0 92.8
122.4
3.7
(1.1)
(32.8)
(23.4)
(14.7)
(20.1)
50
75
100
125
150
175
200
225
Dec 2015 EBITDA WorkingCapital
Tax and netinterest
Net Capex Net optionexcercises/EBT
purchases
Dividends Paid Exchange Dec 2016
Cash Increase Decrease
(36.2)
Cash Flow (£m)
• Decrease of £2.2m in net cash vs Dec 2015
• £20.1m Special Dividend paid
• Purchase of shares into EBT decreased cash by £15.1m
• +4.2% increase in Ordinary Dividends paid
12
Dividends
2016 2015
Pence per Share £m Pence per Share £m
Interim 3.75 11.6 3.60 11.3
Final 8.23 25.6 7.90 24.7
Special 6.46 20.1 16.0 50.1
Total 18.44 57.3 27.5 86.1
Number of shares (m) 311.0 313.3
• Final dividend proposed of 8.23p (+4.2%)
• Payable on 19 June 2017
• Special dividend paid in October 2016 of £20.1m
• Total dividend for year of 18.44p
Regional Review
14
Regional Results Summary
EMEA (44%*)+11.5% gross profit
1,995 FE headcount (+11.8%)
19.0% conversion
£51.7m operating profit
Americas (13%*)-0.9% gross profit
769 FE headcount (+12.1%)
5.3% conversion
£4.4m operating profit
UK (24%*)-3.5% gross profit
1,014 FE headcount (-7.7%)
16.5% conversion
£24.2m operating profit
Asia Pacific (19%*)-2.2% gross profit
933 FE headcount (+2.0%)
17.3% conversion
£20.7m operating profit
* Percentage of Group gross profit
Growth rates are 2016 vs 2015 in constant currencies
15
Europe, Middle East, Africa
£m 2016 2015Reported
rates
Constant
currency
Gross Profit 271.9 217.0 +25.3% +11.5%
Operating Profit 51.7 31.9 +62.1% +41.8%
Conversion 19.0% 14.7% +4.3ppts +4.0ppts
Headcount 2,553 2,295 +11.2%
Gross
Profit by
geography
31%
22% 15%
5%
27%
France
Germany
S. Europe
ME & Africa
Other
• Positive FX impact on operating profit of £6.5m
• Gross profit records in 12 countries and Southern Europe region
• France: +6%, Page Personnel +9%
• Germany: +9%, Page Personnel +17%
• Southern Europe: +19%, with Spain +23%
• Benelux: +25%
• Middle East and Africa: -7% (5% of region)
71:29Perm vs
Temp
44%of Gross
Profit
63Offices
14Disciplines
16
United Kingdom
£m 2016 2015 Change
Gross Profit 146.3 151.6 -3.5%
Operating Profit 24.2 29.2 -17.4%
Conversion 16.5% 19.3% -2.8ppts
Headcount 1,411 1,516 -6.9%
• Market sentiment of caution and uncertainty due to Brexit
• London -7%, UK excluding London -1%
• Financial Services - 8%, Marketing and Sales -11%
• Page Personnel: +2%; Michael Page -5%
• Legal +10%, Technology +10%, Procurement & Supply Chain +5%
• Public sector: -4% (13% of UK business), Private -3%
• Conversion rate down 2.8ppts to 16.5%
London
South
North
Midlands
36%
25%
22%
17%
Gross
Profit by
geography
70:30Perm vs
Temp
24%of Gross
Profit
27Offices
13Disciplines
17
Asia Pacific
87:13£m 2016 2015 Reported
rates
Constant
currency
Gross Profit 119.7 109.1 +9.7% -2.2%
Operating Profit 20.7 22.7 -8.8% -21.5%
Conversion 17.3% 20.8% -3.5ppts -4.1ppts
Headcount 1,205 1,180 +2.1%
• Greater China: -4%, c. 450 people
• Taipei +19%, Mainland flat, Hong Kong -12%
• Record years in India, Indonesia, Malaysia, New Zealand
• Launched in Thailand in November
• Australia: +2%, a record year for Page Personnel +9%
18%
29%
42%
11%
Gross
Profit by
geography
SE Asia & India
Greater China
Japan
Australasia
87:13Perm vs
Temp
19%of Gross
Profit
25Offices
14Disciplines
18
Americas
£m 2016 2015 Reported
rates
Constant
currency
Gross Profit 83.1 78.4 +6.0% -0.9%
Operating Profit 4.4 6.2 -29.6% -33.4%
Conversion 5.3% 7.9% -2.6ppts 0ppts
Headcount 930 844 +10.2%
• LatAm ex-Brazil (65% of LatAm): +19%, clear #1 in market
• Brazil: -21%, Mexico: +15%,
• Record year in Mexico, Argentina, Colombia and Peru
• US: -3%, New York Financial Services -23%; elsewhere +11%
• Canada: -8%, oil and gas sector remained tough
15%
6%
16%
50%
Gross
Profit by
geography
Brazil
Rest of LatAm
Mexico
Canada
USA
85:15Perm vs
Temp
13%of Gross
Profit
25Offices
14Disciplines
13%
Business Strategy
20
Diversification Strategy
21
Market Penetration
22
Market Categories
23
Brands
24
Perm/Temp Gross Profit Split
Perm Temp
71%
29%
2009
76%
24%
2016
Discipline Gross Profit Split
Non Financial services and
Accounting
Accounting and Financial services
50%50%
2009
62%
38%
2016
25
Diversification Strategy
26
Investment Strategy
• Temp and contracting in Germany
• Japanese Nikkei market
• US outside of New York Financial Services
• Chinese domestic market
• Latin America outside of Brazil
• South East Asia: launched in Bangkok, Thailand
• Temporary, interim and contracting
• Page Personnel
27
Page Personnel
£66.0m
£183.5m
651
1,414
0
400
800
1,200
1,600
£0.0
£50.0
£100.0
£150.0
£200.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
No.
of F
E &
Dir
Gro
ss P
rofit £m
GP growth in constant currency
GP £m (CC)
16.7%
28.8%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
% Group Gross Profit
16
13
11 1110 10
98
54 4
3 3
0
2
4
6
8
10
12
14
16
18 No. of Countries by Discipline 12 1211
10
8 8
6 6 6 65 5
4 43
1
0
2
4
6
8
10
12
14No. of Disciplines by Country
10 year CAGR of 12% | Growth of 9% in 2016 in constant currency | Over 1,400 Fee earners | 107 Country Disciplines
28
Technology – Strategy
Completed
roll-out of
Page Recruitment
System (PRS)
Digital Learning Platform developed and launched
Innovation
pipeline
embedded
29
Operational Support Investments
European Shared Service Centre
• Transition of European finance functions completed
• Marketing also complete
• IT transition two thirds complete - will continue in line with Cloud Strategy
New Global Finance System
• Global system and processes
• UK Shared Service Centre live in H2 2017
Summary
31
Summary
• Record gross profit performance, with EMEA +11.5%
• Conversion rate increased slightly to 16.3%
• Total Dividends paid of £56.3m; year end cash balance £92.8m
• Completed roll-out of PRS our new operating system
• Completed European finance transition to new European
Shared Service Centre in Barcelona
• Continental Europe remains strong
• Post UK referendum uncertainty in the UK
• Brazil, Financial Services market in New York and Greater China
expected to remain challenging
• 2017 Q1 update on 12 April
Summary
32
Cautionary Statement
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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