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PageGroup PLC Earnings Release 2021
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Earnings Release
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RNS Number : 4524D
PageGroup plc
03 March 2022
3 March 2022
Full Year Results for the Year Ended 31 December 2021
A Record Year for the Group
PageGroup plc ("PageGroup"), the specialist professional recruitment company, announces its full year results for the year ended 31 December 2021.
| Financial summary | 2021 | 2020 | Change | Change CC* |
| Revenue | £1,643.7m | £1,304.8m | +26.0% | +30.2% |
| Gross profit | £877.7m | £610.2m | +43.8% | +49.1% |
| Operating profit | £168.5m | £17.0m | >100% | >100% |
| Profit before tax | £166.6m | £15.5m | >100% | |
| Basic earnings per share | 37.2p | -1.8p | >100% | |
| Diluted earnings per share | 37.0p | -1.8p | >100% | |
| Total dividend per share (excl. special dividend) |
15.00p | - | ||
| Total dividend per share (incl. special dividend) |
41.71p | - |
HIGHLIGHTS*
· Group gross profit up 49.1% to £877.7m, a record year for the Group
· Group gross profit up 7% vs previous record year of 2019
· New record operating profit of £168.5m (2020: £17.0m)
· Conversion rate** increased to 19.2% (2020: 2.8%), 2021 H2 conversion rate of 22.0%
· Gross profit per fee earner up 43.7% to £157.2k (2020: £113.3k)
· Record gross profit in 22 countries
· Fee earner headcount increased by a net 55 (1%) vs Q4 2019, joiners include the hiring of c. 1,100 experienced fee earners since Q2 2020, total closing headcount of 7,838
· Strong cash position of £154.0m (2020: £166.0m)
· Interim and special dividends of £100.2m paid on 13 October 2021
· Final dividend proposed of 10.30p per share (2020: Nil)
*At constant currency - all growth rates in constant currency at prior year rates unless otherwise stated
**Operating profit as a percentage of gross profit
Commenting, Steve Ingham, Chief Executive Officer, said:
"I am pleased to report that 2021 was a record year for the Group for both gross profit and operating profit. We prioritised the protection and wellbeing of our employees, candidates and clients through the pandemic, whilst making clear decisions regarding strategic investments in our platform to take market share in the recovery. This is reflected in our record results.
"We saw strong quarterly improvement through the year, with the Group returning to growth vs. 2019 in Q2 onwards, delivering growth in constant currencies of 2%, 13% and 24% for Q2, Q3 and Q4 respectively.
"We have a resilient highly diversified business model, with focus on High Potential disciplines such as Technology and Healthcare & Life Sciences delivering robust results during the pandemic and in the recovery. Our Large, High Potential geographic markets all delivered a record year in 2021, up 60%, collectively, now representing 38% of the Group.
"We remain confident in our strategy of investing in and growing our platform. We continued to invest carefully in headcount, demonstrated by the c. 400 experienced hires we added in 2020, and the further c. 700 added in 2021. Our fee earner headcount is now up 1% on the pre-pandemic level at the end of 2019. We also continued to invest in implementing new technology and innovation, with our new operating system, Customer Connect, now live across the Group, excluding Latin America, which is scheduled to go live in H1 2022.
"Our strong focus on productivity, up 43.7% on 2020, resulted in an improvement in our conversion rate to 19.2% (2020: 2.8%). With gross profit growth accelerating and productivity increasing, our conversion rate in H2 rose to 22%.
"Today the Board has proposed a final dividend of 10.30p, reflecting confidence in the long-term strategic progress of the Group. Combined with the interim dividend of 4.70 pence per share and the special dividend of 26.71 pence per share, this represents a total dividend of 41.71p with a yield of 6.6% at the year end share price.
"As we enter 2022, we are alert to the macro-economic uncertainties that exist. However, we have a flexible and highly diversified business model which allows us to adapt quickly to changing market conditions. We continue to grow our platform, invest carefully in headcount, and prioritise the roll out of new technologies. We are the clear leader in many of our markets, with a highly experienced senior management team, which positions us well to take advantage of opportunities to grow our business. We maintain our focus on our vision for the Group to be the leading specialist recruiter in each of the markets in which we operate."
Enquiries:
| PageGroup plc | +44 (0) 20 3077 8172 |
| Steve Ingham, Chief Executive Officer | |
| Kelvin Stagg, Chief Financial Officer | |
| FTI Consulting | +44 (0) 20 3727 1340 |
| Richard Mountain/Susanne Yule |
The Company will host a conference call and presentation for analysts and investors at 8:00am today. The live presentation can be viewed by following the link:
https://www.investis-live.com/pagegroup/6214f027d99fcd0c006732f1/gthq
Please use the following dial-in numbers to join the conference:
United Kingdom (Local) 020 3936 2999
All other locations +44 20 3936 2999
Please quote the access code 42 84 04 to gain access to the call
The presentation and recording to accompany the call will be available on the Company's website later today at:
https://www.page.com/presentations/year/2022
MANAGEMENT REPORT
CAUTIONARY STATEMENT
This Management Report has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed.
This Management Report 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.
GROUP STRATEGY
At PageGroup we have a clear strategic vision via our four brands of Page Executive, Michael Page, Page Personnel and Page Outsourcing. 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 around a quarter of our gross profit is in temporary placements, where local culture and market conditions allow. 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.
Our mix of permanent to temporary recruitment reflects the balance of our business mix, both in terms of brands, where Michael Page, our largest brand, and Page Executive operating at higher salary levels, have a naturally higher level of permanent recruitment, as well as our geographic mix. We are market leaders in regions such as Latin America, Greater China and South East Asia, where we are also seeing the emergence of the white-collar temporary recruitment market.
PageGroup is focused on delivering against three key objectives to achieve its strategic vision and provide sustainable financial returns. These are: 1) to look for organic, high-margin and diversified growth; 2) to position the business to be scalable, efficient 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, succession 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 Group and is supported by significant balance sheet strength and cash flow generation.
Organic, scalable growth
Our strategy is to grow organically, achieved by drawing upon the skill 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 in downturns. Our strategy for organic growth has served the business well over the 45 years since its inception and we believe it will continue to do so. We have grown from a small, single-discipline recruitment company operating in one country to a large multidiscipline, multinational business, operating in 37 countries.
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, Page Personnel or Page Outsourcing, with the objective of being the leading specialist recruitment consultancy in each of our chosen markets.
The Group has designated five markets as Large, High Potential markets. These are typically under-developed in terms of recruitment, but where we have a successful track record and confidence in our ability to scale operations successfully. The five Large, High Potential markets are Germany, Greater China, Latin America, South East Asia and the US. India and Japan are two further markets which have the potential to be classified in this category in the future.
We have also designated two disciplines as being High Potential disciplines, Healthcare & Life Sciences and Technology.
As recruitment is a cyclical business, impacted significantly by the strength of economies, diversification is an important element of our strategy as it reduces 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 the highest calibre staff from a diverse 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.
Diversity and inclusion are key to our culture and the success of our business. It is not just an item on our to-do list, it's an inherent part of our culture and our business. We are a people business - the people who work here, the companies we do business with, the candidates whose lives we change for the better on a daily basis, and the communities and individuals we help as we give back to others. Understanding the values and cultural differences of our employees helps them reach their potential as we build a stronger, more successful business. A business which reflects society and the clients and candidates whose lives we change.
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. Our organic and team-based business model allows us to grow strongly when market conditions are favourable, enabling us to increase our fee earner headcount investment rapidly. Conversely, 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 can retain our highly capable management teams in whom we have invested. 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.
Our strategic priorities comprise the following:
· increase the scale and diversification of PageGroup by organically growing existing and new teams, offices, disciplines, brands and countries;
· manage the business with a team and meritocratic culture, while 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 a market leading position;
· invest through cycles in our High Potential disciplines of Technology and Healthcare & Life Sciences;
· manage our fee earner headcount in all other markets to reflect prevailing market conditions, by adding selectively to geographies and disciplines where there is positive growth momentum, while reducing headcount where the outlook for growth or fee earner productivity is weak;
· focus on operational support consistency; and
· focus on succession planning and international career paths to encourage retention and development of key staff.
The main factors that could affect the business and the financial results are described in the "Principal Risks and Uncertainties" section in the PageGroup plc 2021 Annual Report and Accounts, which will be available to shareholders in April 2022.
Sustainability
Our ESG strategy drives purposeful impact today and will expand as our businesses grow in the future. At the start of 2021, we signed the UN Global Compact, which provides a framework for developing a more sustainable business. We also published our inaugural sustainability report and set out a ten-year sustainability vision, including ambitious targets. From an environmental perspective, during 2021 our total carbon emissions decreased by 17%, primarily due to the transition our offices to renewable energy and a continued reduction in business travel. We will continue to reduce our carbon emissions by further adoption of renewable energy sources, reducing waste and maintaining a focus on business travel. From a social impact perspective, during 2021 we changed approximately 114,000 lives through placements and social impact programmes such as webinars and CV and interview writing workshops with charities, another great step towards our target of changing over a million lives within ten years. We will achieve this by giving our skills back as a recruiter by placing candidates and working with charities and schools to breakdown the barriers to employment for minority groups. This work includes our social impact programmes such as mock interview and CV writing workshops. For further information on our sustainability efforts, please refer to https://www.page.com/sustainability.
GROUP RESULTS
| GROSS PROFIT | Reported | CC | |||
| % of Group | 2021 (£m) | 2020 (£m) | % | % | |
| EMEA | 49% | 432.0 | 319.4 | +35.3% | +40.3% |
| Asia Pacific | 20% | 179.3 | 121.1 | +48.0% | +53.1% |
| Americas | 16% | 138.5 | 88.8 | +56.0% | +66.9% |
| UK | 15% | 127.9 | 80.9 | +58.0% | +58.0% |
| Total | 100% | 877.7 | 610.2 | +43.8% | +49.1% |
| Permanent | 77% | 676.1 | 436.7 | +54.8% | +60.7% |
| Temporary | 23% | 201.6 | 173.5 | +16.2% | +19.8% |
At constant exchange rates, Group revenue increased 30.2% to £1,643.7m (2020: £1,304.8m) and gross profit increased 49.1% to £877.7m (2020: 610.2m) for the year ended 31 December 2021. Gross profit per fee earner increased 43.7% to £157.2k (2020: £113.3k).
The Group's revenue mix between permanent and temporary placements was 42:58 (2020: 34:66) and for gross profit was 77:23 (2020: 72:28), as the recovery in 2021 was driven by permanent recruitment. Revenue from temporary placements comprises the salaries of those placed, together with the margin charged. This margin on temporary placements increased to 21.0% in 2021 (2020: 20.1%) and we saw an improvement in our perm margin as well. Overall, pricing has improved, as a result of candidate shortages in the majority of our markets.
In our Large, High Potential markets category, which now represent 38% of the Group, gross profit increased 60% in constant currencies to £332.5m, outperforming the rest of the Group.
Total Group headcount increased by 1,144 in the year to 7,838. This comprised a net increase of 937 fee earners (+18.2%) and an increase of 207 operational support staff (+13.4%). This increase in our fee earner headcount was driven by continued investment as trading conditions improved. We added c. 700 experienced fee earners to the Group during the year, in addition to the c. 400 experienced fee earners that joined in 2020. This additional headcount was primarily into our strategic areas of investment, as well as those areas which have been more resilient during the COVID-19 pandemic. As a result of this increase in net fee earner headcount, our fee earner to operational support staff ratio improved to 78:22 (2020: 77:23).
In total, administrative expenses increased 19.6% to £709.2m (2020: £593.2m). The Group's operating profit from trading activities totalled £168.5m (2020: £17.0m), an increase of over 100%.
OPERATING PROFIT AND CONVERSION RATES
The Group's organic growth model and profit-based team bonus ensures cost control remains tight. Approximately three-quarters of costs were employee related, including wages, bonuses, share-based long-term incentives, and training & relocation costs. Depreciation and amortisation for the year totalled £53.7m (2020: £61.8m).
The Group's conversion rate for the year increased from 2.8% in 2020 to 19.2%. The conversion rate improved significantly as the year progressed, with a H2 conversion rate of 22.0% compared with a H1 conversion rate of 15.9%. This was due to the sharp increase in productivity and gross profit.
Conversion rates improved in all of the Group's regions. Asia Pacific was the Group's most profitable region, with a conversion rate of 21.8%, which represents a considerable increase on 2020. EMEA also remained highly profitable, with conditions improving towards the end of the year and the conversion rate of 21.6% was consistent with the pre-pandemic level in 2019. The UK and the Americas were most impacted by the COVID-19 pandemic, though their conversion rates recovered well in 2021 to 13.2% and 13.8% respectively, above their pre-pandemic levels in 2019.
A net interest charge of £1.9m (2020: £1.5m) was primarily due to an IFRS 16 interest charge of £1.3m. Excluding IFRS 16, the net interest charge of £0.6m reflected the continued low interest rate environment and borrowing facility charges.
Earnings per share and dividends
In 2021, basic and diluted earnings per share increased to 37.2p and 37.0p respectively (2020: -1.8p), as a result of the increase in profit due to the improved economic conditions.
The Group's strategy is to operate a policy of financing the activities and development of the Group from our retained earnings and to maintain a strong balance sheet position. The first use of our cash is to satisfy our operational and investment requirements and to hedge our liabilities under the Group's share plans. We then review our liquidity over and above these requirements to make returns to shareholders, firstly by way of an ordinary dividend.
Our policy is to grow this ordinary dividend over the course of the economic cycle, in line with our long-term growth rate. We believe this will enable us to sustain the level of ordinary dividend payments during a downturn as well as to increase 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 or share buybacks.
Having suspended our dividend policy in 2020 during the pandemic, in 2021 we announced the resumption of our dividend policy. In October 2021, we paid an interim dividend of 4.70 pence per share, an increase of 9.3%, being 4.5% for 2020 and 4.5% for 2021, over the 2019 interim dividend. In addition, in line with our policy of returning surplus capital to shareholders, we also paid a special dividend of 26.71 pence per share. Taking both dividends together, this amounted to a cash return to shareholders of £100.2m.
In line with the continued improvement in trading conditions, a final dividend of 10.30p (2019: 0.00p) per ordinary share is proposed. When taken together with the interim dividend of 4.70p (2019: 4.30p) per ordinary share, this is an increase in the total dividend for the year of 9.6% over the proposed 2019 ordinary dividends to 15.00p per ordinary share. The proposed final dividend, which amounts to £32.9m, will be paid on 17 June 2022 to shareholders on the register as at 20 May 2022, subject to shareholder approval at the Annual General Meeting on 31 May 2022.
We will continue to monitor our cash position in 2022 and will make returns to shareholders in line with the above policy.
Cash flow and balance sheet
Cash flow in the year was strong, with £186.3m (2020: £169.0m) generated from operations. The closing cash balance was £154.0m at 31 December 2021 (2020: £166.0m). The slight decrease on 2020 despite the stronger trading conditions is due primarily to the payment of interim and special dividends in the year, totalling £100.2m. Given the recovery in the Group's trading and strong cash position, the Board decided to repay the UK Government Furlough income of £3.4m in April 2021.
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, expiring in May 2023, with a total drawable amount of £30m. We have agreed a covenant waiver to the end of the agreement on this facility to ensure we retain access to these funds should they be required. Neither of these facilities were in use as at 31 December. These facilities are used on an ad hoc basis to fund any major Group GBP cash outflows.
Income tax paid in the year was £37.0m (2020: £31.7m) and net capital expenditure was £25.7m (2020: £21.7m). The expenditure increased due to increased spend on Customer Connect, our new Operating System, as well as investment into laptops and new IT equipment to support the fee earner headcount additions made during the year.
An interim and special dividend of £100.2m was paid in 2021 (2020: £0.0m). The significantly higher share price in 2021 meant that there was an increase in cash receipts from share option exercises, with £16.4m in 2021, compared to £0.4m in 2020. In 2021, £10.4m (2020: £14.4m) was also spent on the purchase of shares by the Employee Benefit Trust to satisfy future committed obligations under our employee share plans.
The most significant item in our balance sheet was trade receivables, which amounted to £254.6m at 31 December 2021 (2020: £186.1m), comprising permanent fees invoiced and salaries and fees invoiced in the temporary placement business, but not yet paid. Day's sales in debtors marginally increased due to the increase in the debtor book as a result of the improvement in trading conditions, particularly within permanent recruitment which tends to have a longer collection period.
EUROPE, MIDDLE EAST AND AFRICA (EMEA)
EMEA is the Group's largest region, contributing 49% of the Group's gross profit in the year. With operations in 17 countries, PageGroup has a strong presence in the majority of EMEA markets and is the clear leader in specialist permanent recruitment in the two largest, France and Germany, and many of the others. Across the region, permanent placements accounted for 70% and temporary placements 30% of gross profit.
The region includes four of our Large, Proven markets, France, Spain, Italy and the Netherlands, across which there is a broad range of competition. EMEA also includes Germany, one of the Group's Large, High Potential markets, which has low penetration rates (markets where less than 30% of recruitment is outsourced) and significant growth potential, particularly in temporary recruitment. In addition, there are markets such as Poland, Turkey and Africa, which are less developed, with limited competition, but are increasingly looking for professional recruitment services.
| EMEA | £m | Growth rates | ||
| (49% of Group in 2021) | 2021 | 2020 | Reported | CC |
| Gross Profit | 432.0 | 319.4 | +35.3% | +40.3% |
| Operating Profit | 93.4 | 30.6 | >100% | >100% |
| Conversion Rate (%) | 21.6% | 9.6% |
In constant currencies, revenue grew 25.5% to £869.6m (2020: £717.3m) and gross profit grew 40.3% to £432.0m (2020: £319.4m).
Trading conditions improved significantly during the year as vaccines were successfully rolled out across the region and lockdown restrictions eased. France, the Group's second largest market, grew 27%. Conditions were tougher in Page Personnel, which represents around 60% of France. Germany, our third largest market, grew 48% for the year, with strong growth and record performances across all brands. In our other European markets, Benelux grew 32% and Southern Europe, which was severely impacted by the pandemic in 2020, was up 60%, with Italy and Spain increasing 52% and 64%, respectively. The Middle East and Africa, which represented 3% of the region, grew 46%.
2021 operating profit increased over 100% to £93.4m (2020: £30.6m), returning to the 2019 conversion rate of 21.6%. The region was the most resilient to the COVID-19 pandemic, with conditions improving significantly through 2021. Headcount across the region increased by 468 (+15.7%) during the year, to 3,447 at the end of 2021 (2020: 2,979, 2019: 3,317), taking it above the pre-pandemic levels.
ASIA PACIFIC
Asia Pacific represented 20% of the Group's gross profit in 2021, with 80% of the region being Asia and 20% Australia. Other than in the financial centres of Hong Kong, Singapore and Tokyo, the Asian market is generally highly under-developed and offers attractive opportunities in both international and domestic markets at good conversion rates. Two of our Large, High Potential markets, Greater China and South East Asia, are in this region. With a highly experienced management team, approaching 1,500 staff and limited competition, the size of the opportunity in Asia is significant. Across Asia, driven by cultural attitudes towards white collar temporary recruitment, permanent placements accounted for 88% and temporary placements only 12% of gross profit, well below the Group average of 23%.
Australia, one of our Large, Proven markets, is a mature, well-developed and highly competitive recruitment market. PageGroup has a meaningful presence in permanent recruitment in the majority of the professional disciplines and major cities in Australia. Page Personnel has a growing presence and significant potential to expand and grow market share.
| Asia Pacific | £m | Growth rates | ||
| (20% of Group in 2021) | 2021 | 2020 | Reported | CC |
| Gross Profit | 179.3 | 121.1 | +48.0% | +53.1% |
| Operating Profit | 39.0 | 3.8 | >100% | >100% |
| Conversion Rate (%) | 21.8% | 3.1% |
In Asia Pacific, in constant currencies, revenue grew 34.3% to £282.0m (2020: £216.0m) and gross profit grew 53.1% to £179.3m (2020: £121.1m).
In Asia, representing 16% of the Group, gross profit increased 57% on 2020. Greater China increased 57% with Mainland China up 58% and Hong Kong up 65%. South East Asia was up 70%, with Singapore up 55%. India delivered a record year, up 87%, aided by the opening of our Bangalore office in Q4 2019. Japan was up 37% and delivered a record year. Australia grew 43%, despite having seen continued uncertainty around lockdowns, which varied significantly by state.
Operating profit increased more than 100% in constant currency to £39.0m (2020: £3.8m), with the conversion rate increasing significantly to 21.8% (2020: 3.1%). This was driven by the significant improvement in productivity, up 45% in the year, together with the improvement in trading conditions. Overall, the region had the highest conversion rate in the Group in 2021. Headcount across the region increased 324 (23.4%) in the year, ending the year at 1,709 (2020: 1,385, 2019: 1,679).
THE AMERICAS
The Americas represented 16% of the Group's gross profit in 2021, with North America representing 62% of the region and Latin America, 38%. The US and Latin America are two of the Large, High Potential markets in our growth strategy. The US, where we have eight offices, has a well-developed recruitment industry, but in many disciplines, especially technical, there is limited national competition of any scale. PageGroup's breadth of professional specialisms and geographic reach is uncommon and provides a competitive advantage.
Latin America is a highly under-developed region, where PageGroup enjoys the market leading position with around 800 employees in seven countries. There are few international competitors and none with regional scale. Across the Americas, permanent placements accounted for 88% of gross profit and temporary placements 12%.
| Americas | £m | Growth rates | ||
| (16% of Group in 2021) | 2021 | 2020 | Reported | CC |
| Gross Profit | 138.5 | 88.8 | +56.0% | +66.9% |
| Operating Profit | 19.2 | -7.0 | >100% | >100% |
| Conversion Rate (%) | 13.8% | -7.9% |
In constant currencies revenue increased by 53.9% to £220.7m (2020: £154.3m) while gross profit increased 66.9% to £138.5m (2020: £88.8m).
In North America, gross profit increased by 62%. The US grew 64% as trading conditions improved and we delivered growth in newer disciplines, including Technology. We also saw good growth in Construction, following the re-opening of construction sites during the year.
Latin America recovered well from the pandemic after a particularly challenging 2020, and delivered a record year. Gross profit was up 77%, with Brazil up 73%, Mexico up 81% and the other five countries increasing 76% collectively.
As a result of this improvement in trading conditions, operating profit increased to £19.2m (2020: -£7.0m), with a conversion rate of 13.8% (2020: -7.9%), despite significant investment in the 2 Large, High Potential geographic markets in the region. Headcount across the region increased by 226 (+19.6%) in 2021 to 1,381 (2020: 1,155, 2019: 1,376).
UNITED KINGDOM
The UK represented 15% of the Group's gross profit in 2021, operating from 26 offices covering all major cities. It is a mature, highly competitive and sophisticated market with the majority of vacant positions being outsourced to recruitment firms. PageGroup has a market leading presence in permanent recruitment across the UK and a growing presence in temporary recruitment. In the UK, permanent placements accounted for 75% and temporary placements 25% of gross profit.
The UK business operates under all four of our brands, with representation in 13 specialist disciplines via the Michael Page brand. There remain opportunities to launch new discipline businesses under the lower salary-level Page Personnel brand, which represented 22% of UK gross profit.
| UK | £m | ||
| (15% of Group in 2021) | 2021 | 2020 | Growth rate |
| Gross Profit | 127.9 | 80.9 | +58.0% |
| Operating Profit | 16.9 | -10.3 | >100% |
| Conversion Rate (%) | 13.2% | -12.8% |
In the UK, revenue increased 24.9% from £217.3m in 2020 to £271.5m, whilst gross profit increased 58.0% from £80.9m in 2020 to £127.9m.
COVID-19 continued to impact trading during the first half of 2021, with restrictions in place through most of Q1 and Q2. Trading conditions then began improving steadily, with the region returning to growth in Q3 compared to 2019. Overall, the UK grew 58% with Michael Page up 63% and Page Personnel up 46%. Trading conditions were tougher in Page Personnel, which operates at lower salary levels, but encouragingly they returned to growth in Q4 compared to 2019.
Operating profit for the year increased to £16.9m (2020: -£10.3m), with the conversion rate improving to 13.2% (2020: -12.8%). The 2021 conversion rate was negatively impacted by the repayment of furlough to HMRC during the year, excluding this item, the 2021 conversion rate would have been 15.8%.
Headcount increased 126 (+10.7%) in the year to 1,301 at the end of December 2021 (2020: 1,175, 2019: 1,326), marginally behind the pre-pandemic level.
OTHER FINANCIAL ITEMS
Foreign exchange
Foreign exchange impacted the Group's results for the year negatively, decreasing revenue by c. £55m, gross profit by c. £32m and operating profit by c. £8m.
Taxation
The tax charge for the year was £48.3m (2020: £21.3m). This represented an effective tax rate of 29.0% (2020: 136.9%). The rate is higher than the effective UK rate for the calendar year of 19% (2020: 19%) principally due to the impact of higher tax rates in overseas countries and to a lesser extent, disallowable expenditure. There are some countries in which the tax rate is lower than the UK, but the impact is small either because the countries are not significant contributors to Group profit, or the tax rate difference is not significant. The decrease in the effective tax rate from the prior year is a result of the significant one-off derecognition of deferred tax assets in 2020.
In 2021, the tax rate was impacted primarily by higher tax in overseas countries (+7.8%), derecognition of losses and other tax attributes of (+3.3%), prior year adjustments of (-2.9%), tax on share-based payments (-0.1%) and other permanent differences (+1.5%), principally employee related expenditure and entertainment expenses.
The tax charge for the year reflects the Group's tax strategy, which is aligned to business goals. It is PageGroup's policy to pay its fair share of taxes in the countries in which it operates and deal with its tax affairs in a straightforward, open and honest manner. The Group's tax strategy is set out in detail on our website in the Investor section under "Responsibilities".
Share options and share repurchases
At the beginning of 2021 the Group had 11.4m share options outstanding, of which 5.3m had vested, but had not been exercised. During the year, options were granted over 2.0m shares under the Group's share option plans. Options were exercised over 3.6m shares, generating £16.4m in cash, and options lapsed over 2.0m shares. At the end of 2021, options remained outstanding over 7.9m shares, of which 3.8m had vested, but had not been exercised. During 2021, 2.2m shares were purchased for the Group's Employee Benefit Trust, and no shares were cancelled (2020: 3.8m shares were purchased and no shares were cancelled).
KEY PERFORMANCE INDICATORS (KPIs)
| KPI | Definition, method of calculation and analysis |
| Financial | |
| Gross profit growth | How measured: Gross profit growth represents revenue less cost of sales expressed as the percentage change over the prior year. It consists principally of placement fees for permanent candidates and the margin earned on the placement of temporary candidates. Why it's important: This metric indicates the degree of income growth in the business. It can be impacted significantly by foreign exchange movements in our international markets. Consequently, we look at both reported and constant currency metrics. How we performed in 2021: Gross profit increased 49.1% in constant currencies and 43.8% in reported rates against 2020. Trading conditions have improved significantly coming out of the COVID-19 pandemic with 22 countries delivering record years. 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 & 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 historical concentrations in the UK and from the Accounting & Financial Services disciplines. How we performed in 2021: Geographies: the percentage decreased to 85.4% from 86.7% in 2020 but was still up on the 84.2% in 2019. The significant increase seen in 2020 was largely a result of the UK being impacted severely by the COVID-19 pandemic. Disciplines: the percentage has increased in 2021 to 67.9% (2020: 65.2%), as we have delivered strong growth in other disciplines, particularly Technology. Relevant strategic objective: Diversification |
| Ratio of gross profit 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 reflects both the current stage of the economic cycle and our geographic spread, as a number of countries culturally have minimal white collar temporary roles. It gives a guide as to the operational gearing potential in the business, which is significantly greater for permanent recruitment. How we performed in 2021: The ratio increased to 77:23 (2020: 72:28). This was driven by the post-pandemic recovery being more weighted towards permanent recruitment, with temporary taking longer to recover. This is as a result of stronger recovery in the higher salary-levels, which is predominately permanent recruitment as well as the strength of our Technology discipline, which has higher levels of permanent recruitment. Relevant strategic objective: Diversification |
| Basic earnings per share (EPS) | 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 underlying profitability of the Group and the progress made against the prior year. How we performed in 2021: The Group saw a >100% increase in Basic EPS to 37.2p (2020: -1.8p). This was driven by the significant increase in profits, with the improved trading conditions driving a significant improvement in productivity. Relevant strategic objective: Sustainable growth |
| Cash | How measured: Cash and short-term deposits Why it's important: The level of cash reflects our cash generation and conversion capabilities and our success in managing our working capital. It determines our ability to reinvest in the business, to return cash to shareholders and to ensure we remain financially robust through cycles. How we performed in 2021: Cash decreased to £154.0m (2020: £166.0m). The Group demonstrated strong cash generation during 2021 as trading conditions improved. Cash generated during the year increased in line with profitability and is net of the interim and special dividends totalling £100.2m that were paid in October 2021. Relevant strategic objective: Sustainable growth |
| Strategic | |
| Fee earner headcount growth | How measured: Number of fee earners and directors involved in revenue-generating activities at the year-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 our expectations as to the level of future demand for our services above the existing capacity currently within the business. How we performed in 2021: Net fee earner headcount increased by 937, or +18.2% in the year, resulting in 6,082 fee earners at the end of the year. Our fee-earner headcount is now 1% above the pre-pandemic level at the end of 2019. We continued to invest in disciplines such as Technology and Healthcare & Life Sciences. We also added around 700 experienced fee earners in the year. Relevant strategic objective: Sustainable growth |
| Gross profit per fee earner | How measured: Gross profit divided by the average number of fee-generating staff, calculated on a rolling monthly average basis. Why it's important: This is our indicator of productivity, which is affected by levels of activity in the market, capacity within the business and the number of recently hired fee earners who are not yet at full productivity. Currency movements can also impact this figure. How we performed in 2021: In constant currencies, gross profit per fee earner was up 43.7% vs. 2020 to £157.2k (2020: £113.3k). This productivity increase was due largely to the improved trading conditions in 2021, combined with video interviewing reducing time to hire, wage inflation and improvements in fee rates from candidate shortages, alongside the strategic decisions and investments made during the pandemic. Relevant strategic objective: Organic growth |
| Fee earner: support staff headcount ratio | How measured: The percentage of fee earners compared to operational support staff at the year 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 2021: The ratio returned to the 2019 level of 78:22 from 77:23 in 2020. In line with our strategy of maintaining and investing in our platform, we have added c. 700 experienced hires to the Group in 2021. These, plus those who have joined from outside of recruitment, net of attrition, means that we have added 937 fee earners in the year. Our operational support staff headcount increased by 207. Relevant strategic objective: Sustainable growth |
| Conversion rate | How measured: Operating profit (EBIT) expressed as a percentage of gross profit. Why it's important: This reflects the level of fee-earner productivity and the Group's effectiveness at controlling costs in the business, together with the degree of investment being made for future growth. How we performed in 2021: The Group's conversion rate increased to 19.2% (2020: 2.8%) due to the increase in gross profit driven by increased productivity, demonstrating the operational gearing in the business. The conversion rate improved significantly as the year progressed, with a H2 conversion rate of 22.0% compared with a H1 conversion rate of 15.9%. Relevant strategic objective: Sustainable growth |
| People | |
| Employee engagement index | How measured: A key output of the employee surveys undertaken periodically within the business. Why it's important: A positive working environment and motivated team helps productivity and encourages retention of key talent within the business. How we performed in 2021: We recorded an 82% positive score for employee engagement in the latest Employee Survey in 2021. Our Survey told us that 91% of our people feel we have implemented effective systems for keeping connected with our customers while working remotely; 88% would describe PageGroup as an organisation that cares about its people; 84% feel their manager genuinely cares about their health and wellbeing; and 89% feel proud to work at PageGroup. Relevant strategic objective: Sustainable growth |
| Management experience | How measured: Average tenure of front-office management measured as years of service for directors and above. Why it's important: Experience through the economic cycle and across both geographies and disciplines is critical for an organic cyclical business operating across the globe. Our organic business model relies on an experienced management pool to enable flexibility in resourcing and senior management succession planning. How we performed in 2021: The average tenure of the Group's management was up marginally at 13.0 years (2020: 12.3 years). Relevant strategic objective: Talent and skills development |
| Total GHG emissions | How measured: Direct and Indirect GHG emissions calculated in line with the GHG Protocol. Why it's important: The emissions calculations look at the CO2e impact of our operations in absolute terms. How we performed in 2021: Total GHG emissions (scope 1, 2 and 3) reduced by 17% to 8,396 tonnes CO2e and combined scope 1 & 2 emissions reduced by 22% to 3,403 tonnes CO2e. Reductions have been driven primarily by the transition of our offices to renewable energy and a continued reduction in business travel. Relevant strategic objective: Sustainable growth. |
| Intensity values of GHG emissions | How measured: Intensity values for GHG emissions are based on property and vehicle emissions per 1,000 headcount. Headcount is viewed as being the most representative metric for PageGroup's activity levels and is unaffected by issues such as business mix or foreign exchange variations. Why it's important: Intensity values help to normalise the GHG metrics and place them in the context of the Group's changing business profile, particularly in terms of increases in headcount. It helps to identify where progress has been made on emissions reduction. How we performed in 2021: Tonnes of CO2e per employee reduced by 25% to 1.12 Tonnes of CO2e per employee, as we have decreased our absolute emissions while also increasing headcount. Relevant strategic objective: Sustainable growth. |
The source of data and calculation methods year-on-year are on a consistent basis, including changes resulting from the use of 2021 DEFRA conversion factors. The movements in KPIs are in line with expectations.
| Steve Ingham | Kelvin Stagg |
| Chief Executive Officer | Chief Financial Officer |
| 2 March 2022 |
Consolidated Income Statement
For the year ended 31 December 2021
| 2021 | 2020 | ||||||||
| Note | £'000 | £'000 | |||||||
| Revenue | 3 | 1,643,740 | 1,304,791 | ||||||
| Cost of sales | (766,020) | (694,542) | |||||||
| Gross profit | 3 | 877,720 | 610,249 | ||||||
| Administrative expenses | (709,210) | (593,221) | |||||||
| Operating profit | 3 | 168,510 | 17,028 | ||||||
| Financial income | 4 | 290 | 588 | ||||||
| Financial expenses | 4 | (2,155) | (2,072) | ||||||
| Profit before tax | 3 | 166,645 | 15,544 | ||||||
| Income tax expense | 5 | (48,289) | (21,286) | ||||||
| Profit/(Loss) for the year | 118,356 | (5,742) | |||||||
| Attributable to: | |||||||||
| Owners of the parent | 118,356 | (5,742) | |||||||
| Earnings per share | |||||||||
| Basic earnings per share (pence) | 8 | 37.2 | (1.8) | ||||||
| Diluted earnings per share (pence) | 8 | 37.0 | (1.8) | ||||||
| The above results all relate to continuing operations | |||||||||
| Consolidated Statement of Comprehensive Income | |||||||||
| For the year ended 31 December 2021 | |||||||||
| 2021 | 2020 | ||||||||
| £'000 | £'000 | ||||||||
| Profit/(loss) for the year | 118,356 | (5,742) | |||||||
| Other comprehensive income/(loss) for the year | |||||||||
| Items that may subsequently be reclassified to profit and loss: | |||||||||
| Currency translation differences | (8,423) | 5,945 | |||||||
| Total comprehensive income for the year | 109,933 | 203 | |||||||
| Attributable to: | |||||||||
| Owners of the parent | 109,933 | 203 | |||||||
Consolidated Balance Sheet
As at 31 December 2021
| Re-presented | ||||||
| 2021 | 2020 | |||||
| Note | £'000 | £'000 | ||||
| Non-current assets | ||||||
| Property, plant and equipment | 9 | 24,836 | 26,401 | |||
| Right-of-use assets | 94,956 | 95,414 | ||||
| Intangible assets - Goodwill and other intangible | 2,065 | 2,097 | ||||
| - Computer software | 47,100 | 39,708 | ||||
| Deferred tax assets | 19,659 | 17,688 | ||||
| Other receivables | 10 | 12,849 | 13,169 | |||
| 201,465 | 194,477 | |||||
| Current assets | ||||||
| Trade and other receivables | 10 | 355,797 | 252,476 | |||
| Current tax receivable | 13,214 | 16,889 | ||||
| Cash and cash equivalents | 12 | 153,983 | 165,987 | |||
| 522,994 | 435,352 | |||||
| Total assets | 3 | 724,459 | 629,829 | |||
| Current liabilities | ||||||
| Trade and other payables | 11 | (230,382) | (175,337) | |||
| Provisions | (6,755) | (5,425) | ||||
| Lease liabilities | (30,125) | (32,711) | ||||
| Current tax payable | (22,241) | (12,365) | ||||
| (289,503) | (225,838) | |||||
| Net current assets | 233,491 | 209,514 | ||||
| Non-current liabilities | ||||||
| Other payables | 11 | (18,332) | (12,483) | |||
| Lease liabilities | (72,215) | (70,758) | ||||
| Deferred tax liabilities | (354) | (1,589) | ||||
| Provisions | (3,950) | (3,260) | ||||
| (94,851) | (88,090) | |||||
| Total liabilities | 3 | (384,354) | (313,928) | |||
| Net assets | 340,105 | 315,901 | ||||
| Capital and reserves | ||||||
| Called-up share capital | 3,286 | 3,286 | ||||
| Share premium | 99,564 | 99,564 | ||||
| Capital redemption reserve | 932 | 932 | ||||
| Reserve for shares held in the employee benefit trust | (47,338) | (55,498) | ||||
| Currency translation reserve | 16,897 | 25,320 | ||||
| Retained earnings | 266,764 | 242,297 | ||||
| Total equity | 340,105 | 315,901 | ||||
The Balance Sheet has been re-presented to provide separate disclosure for provisions within current and non-current liabilities which were previously disclosed within accruals. Further information is disclosed in Note 2 to the Financial Statements.
Consolidated Statement of Changes in Equity
For the year ended 31 December 2021
| 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 2020 | 3,286 | 99,507 | 932 | (47,662) | 19,375 | 248,949 | 324,387 | |||||||||
| Currency translation differences | - | - | - | - | 5,945 | - | 5,945 | |||||||||
| Net income recognised directly in equity | - | - | - | - | 5,945 | - | 5,945 | |||||||||
| Loss for the year ended 31 December 2020 | - | - | - | - | - | (5,742) | (5,742) | |||||||||
| Total comprehensive income/(expense) for the year | - | - | - | - | 5,945 | (5,742) | 203 | |||||||||
| Purchase of shares held in employee benefit trust | - | - | - | (14,369) | - | - | (14,369) | |||||||||
| Exercise of share plans | - | 57 | - | - | - | 330 | 387 | |||||||||
| Reserve transfer when shares held in the employee benefit trust vest | - | - | - | 6,533 | - | (6,533) | - | |||||||||
| Credit in respect of share schemes | - | - | - | - | - | 5,275 | 5,275 | |||||||||
| Credit in respect of tax on share schemes | - | - | - | - | - | 18 | 18 | |||||||||
| - | 57 | - | (7,836) | - | (910) | (8,689) | ||||||||||
| Balance at 31 December 2020 and 1 January 2021 | 3,286 | 99,564 | 932 | (55,498) | 25,320 | 242,297 | 315,901 | |||||||||
| Currency translation differences | - | - | - | - | (8,423) | - | (8,423) | |||||||||
| Net expense recognised directly in equity | - | - | - | - | (8,423) | - | (8,423) | |||||||||
| Profit for the year ended 31 December 2021 | - | - | - | - | - | 118,356 | 118,356 | |||||||||
| Total comprehensive (expense)/income for the year | - | - | - | - | (8,423) | 118,356 | 109,933 | |||||||||
| Purchase of shares held in employee benefit trust | - | - | - | (10,369) | - | - | (10,369) | |||||||||
| Exercise of share plans | - | - | - | - | - | 16,431 | 16,431 | |||||||||
| Reserve transfer when shares held in the employee benefit trust vest | - | - | - | 18,529 | - | (18,529) | - | |||||||||
| Credit in respect of share schemes | - | - | - | - | - | 7,052 | 7,052 | |||||||||
| Credit in respect of tax on share schemes | - | - | - | - | - | 1,387 | 1,387 | |||||||||
| Dividends | - | - | - | - | - | (100,230) | (100,230) | |||||||||
| - | - | - | 8,160 | - | (93,889) | (85,729) | ||||||||||
| Balance at 31 December 2021 | 3,286 | 99,564 | 932 | (47,338) | 16,897 | 266,764 | 340,105 |
Condensed Consolidated Statement of Cash Flows
For the year ended 31 December 2021
| 2021 | 2020 | ||||||
| Note | £'000 | £'000 | |||||
| Profit before tax | 166,645 | 15,544 | |||||
| Depreciation and amortisation charges | 53,728 | 61,782 | |||||
| (Profit)/loss on sale of property, plant and equipment, and computer software | (59) | 262 | |||||
| Share scheme charges | 7,052 | 5,275 | |||||
| Net finance costs | 1,864 | 1,484 | |||||
| Operating cash flow before changes in working capital | 229,230 | 84,347 | |||||
| (Increase)/decrease in receivables | (115,318) | 124,370 | |||||
| Increase/(decrease) in payables | 72,372 | (39,760) | |||||
| Cash generated from operations | 186,284 | 168,957 | |||||
| Income tax paid | (37,046) | (31,747) | |||||
| Net cash from operating activities | 149,238 | 137,210 | |||||
| Cash flows from investing activities | |||||||
| Purchases of property, plant and equipment | (10,233) | (4,892) | |||||
| Purchases of intangible assets | (18,130) | (17,770) | |||||
| Proceeds from the sale of property, plant and equipment, and computer software | 2,629 | 918 | |||||
| Interest received | 290 | 588 | |||||
| Net cash used in investing activities | (25,444) | (21,156) | |||||
| Cash flows from financing activities | |||||||
| Dividends paid | (100,230) | - | |||||
| Interest paid | (841) | (413) | |||||
| Lease liability principal repayment | (37,026) | (39,234) | |||||
| Issue of own shares for the exercise of options | 16,431 | 387 | |||||
| Purchase of shares into the employee benefit trust | (10,369) | (14,369) | |||||
| Net cash used in financing activities | (132,035) | (53,629) | |||||
| Net increase in cash and cash equivalents | (8,241) | 62,425 | |||||
| Cash and cash equivalents at the beginning of the year | 165,987 | 97,832 | |||||
| Exchange (loss)/gain on cash and cash equivalents | (3,763) | 5,730 | |||||
| Cash and cash equivalents at the end of the year | 12 | 153,983 | 165,987 |
Notes to the consolidated preliminary results
For the year ended 31 December 2021
1. Corporate information
PageGroup plc (the "Company") is a limited liability company incorporated in Great Britain and domiciled within the United Kingdom whose shares are publicly traded. The consolidated preliminary results of the Company as at and for the year ended 31 December 2021 comprise the Company and its subsidiaries (together referred to as the "Group").
The consolidated preliminary results of the Group for the year ended 31 December 2021 were approved by the directors on 2 March 2022. The Annual General Meeting of PageGroup plc will be held at the registered office, 200 Dashwood Lang Road, Addlestone, Surrey, KT15 2QW on 31 May 2022 at 9.30am.
2. Accounting policies
Basis of preparation
Whilst the information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Accounting Standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No.1606/2002 as it applies in the European Union, this announcement does not itself contain sufficient information to comply with IFRSs.
The consolidated financial statements comprise the financial statements of the Group as at 31 December 2021 and are presented in UK Sterling and all values are rounded to the nearest thousand (UK £'000), except when otherwise indicated.
It is the directors view that provisions are sufficiently material to be separately disclosed within the balance sheet, where in previous years these were disclosed within accruals. Accordingly, comparatives have been represented on a consistent basis. No third balance sheet is presented because the representation at the beginning of the comparative period is not considered material. There is no impact on the income statement, cashflow or net assets in the balance sheet as a result of this representation.
As a result, the balance sheet for 2020 includes current and non-current provisions of £10.7m and an associated reduction in accruals.
Refer to Note 16 of the Group Annual Report and Accounts for disclosures in accordance with IAS 37.
Going concern
The Board has undertaken a review of the Group's forecasts and associated risks and sensitivities, considering the expected impact of COVID-19 on trading in the period from the date of approval of the financial statements to March 2023.
The Group had £154.0m of cash as at 31 December 2021, with no debt except for IFRS 16 lease liabilities of £102.3m. Debt facilities relevant to the review period comprise a committed £30m BBVA RCF (May 2023 maturity), an uncommitted UK trade debtor discounting facility (up to £50m depending on debtor levels) and an uncommitted £20m UK bank overdraft facility.
Throughout 2021, activity levels picked up in most of the Group's markets and the cost control and cash preservation methods used in 2020 were not repeated. However, due to the pandemic reductions in travel and entertaining expenses remain. There continues to be a high degree of global macro-economic uncertainty, as COVID-19 remains a significant issue and restrictions remain in a number of countries across the Group.
However, given the analysis performed, there are no plausible downside scenarios that we believe would cause an issue. As a result, given the strength of performance in the year, the level of cash in the business and Group's borrowing facilities, the geographical and discipline diversification, limited concentration risk, as well as the ability to manage the cost base, the Board has concluded that the Group has adequate resources to continue in operational existence for the period through to March 2023.
Nature of financial information
The financial information contained within this preliminary announcement for the 12 months to 31 December 2021 and 12 months to 31 December 2020 do not comprise statutory financial statements for the purpose of the Companies Act 2006, but are derived from those statements. The statutory accounts for PageGroup plc for the 12 months to 31 December 2020 have been filed with the Registrar of Companies and those for the 12 months to 31 December 2021 will be filed following the Company's Annual General Meeting.
The auditors' reports on the accounts for both the 12 months to 31 December 2021 and 12 months to 31 December 2020 were unqualified and did not include a statement under Section 498 (2) or (3) of the Companies Act 2006.
The Annual Report and Accounts will be available for Shareholders in April 2022.
New accounting standards, interpretations and amendments adopted by the Group
The accounting policies adopted in the preparation of the condensed consolidated preliminary results are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2021.
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 | ||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||
| £'000 | £'000 | £'000 | £'000 | ||||||||||
| EMEA | 869,574 | 717,294 | 431,960 | 319,360 | |||||||||
| Asia Pacific | 282,008 | 215,959 | 179,296 | 121,113 | |||||||||
| Americas | 220,671 | 154,257 | 138,520 | 88,791 | |||||||||
| United Kingdom | 271,487 | 217,281 | 127,944 | 80,985 | |||||||||
| 1,643,740 | 1,304,791 | 877,720 | 610,249 |
| Operating Profit | ||||||||||||||
| 2021 | 2020 | |||||||||||||
| £'000 | £'000 | |||||||||||||
| EMEA | 93,435 | 30,605 | ||||||||||||
| Asia Pacific | 39,004 | 3,789 | ||||||||||||
| Americas | 19,163 | (7,021) | ||||||||||||
| United Kingdom | 16,908 | (10,345) | ||||||||||||
| Operating profit | 168,510 | 17,028 | ||||||||||||
| Financial expense | (1,865) | (1,484) | ||||||||||||
| Profit before tax | 166,645 | 15,544 | ||||||||||||
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 intangible.
(b) Segment assets, liabilities and non-current assets by reportable segment
| Total Assets | Total Liabilities | ||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||
| £'000 | £'000 | £'000 | £'000 | ||||||||||
| EMEA | 285,573 | 230,350 | 201,748 | 163,961 | |||||||||
| Asia Pacific | 132,995 | 111,090 | 64,405 | 54,899 | |||||||||
| Americas | 94,581 | 80,662 | 43,789 | 41,071 | |||||||||
| United Kingdom | 198,096 | 190,838 | 52,171 | 41,632 | |||||||||
| Segment assets/liabilities | 711,245 | 612,940 | 362,113 | 301,563 | |||||||||
| Income tax | 13,214 | 16,889 | 22,241 | 12,365 | |||||||||
| 724,459 | 629,829 | 384,354 | 313,928 |
| Property, Plant & Equipment | Intangible Assets | ||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||
| £'000 | £'000 | £'000 | £'000 | ||||||||||
| EMEA | 10,571 | 10,810 | 2,247 | 2,666 | |||||||||
| Asia Pacific | 4,318 | 4,451 | 279 | 371 | |||||||||
| Americas | 5,325 | 6,052 | - | 120 | |||||||||
| United Kingdom | 4,622 | 5,088 | 46,639 | 38,648 | |||||||||
| 24,836 | 26,401 | 49,165 | 41,805 |
| Right-of-use assets | Lease liabilities | ||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||
| £'000 | £'000 | £'000 | £'000 | ||||||||||
| EMEA | 54,413 | 47,941 | 57,143 | 51,070 | |||||||||
| Asia Pacific | 16,132 | 13,924 | 17,154 | 14,532 | |||||||||
| Americas | 10,692 | 14,862 | 13,432 | 17,590 | |||||||||
| United Kingdom | 13,719 | 18,687 | 14,611 | 20,277 | |||||||||
| 94,956 | 95,414 | 102,340 | 103,469 |
The below analyses in notes (c) relates to the requirement of IFRS 16 to disclose disaggregated revenue streams
(c) Revenue and gross profit generated from permanent and temporary placements
| Revenue | Gross Profit | ||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||
| £'000 | £'000 | £'000 | £'000 | ||||||||||
| Permanent | 682,233 | 441,467 | 676,099 | 436,689 | |||||||||
| Temporary | 961,507 | 863,324 | 201,621 | 173,560 | |||||||||
| 1,643,740 | 1,304,791 | 877,720 | 610,249 |
The below analyses in notes (d) revenue and gross profit by discipline (being the professions of candidates placed) 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".
(d) Revenue and gross profit by discipline
| Revenue | Gross Profit | ||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||
| £'000 | £'000 | £'000 | £'000 | ||||||||||
| Accounting and Financial Services | 609,012 | 528,202 | 281,549 | 212,243 | |||||||||
| Legal, Technology, HR, Secretarial and Other | 511,466 | 374,406 | 260,819 | 166,249 | |||||||||
| Engineering, Property & Construction, Procurement & Supply Chain | 349,770 | 273,771 | 207,200 | 141,829 | |||||||||
| Marketing, Sales and Retail | 173,492 | 128,412 | 128,152 | 89,928 | |||||||||
| 1,643,740 | 1,304,791 | 877,720 | 610,249 |
(e) Revenue and gross profit by strategic market
| Revenue | Gross Profit | ||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||
| £'000 | £'000 | £'000 | £'000 | ||||||||||
| Large, Proven markets | 867,634 | 728,736 | 406,618 | 289,202 | |||||||||
| Large, High Potential markets | 551,547 | 397,166 | 332,539 | 218,196 | |||||||||
| Small and Medium, High Margin markets | 224,559 | 178,889 | 138,563 | 102,851 | |||||||||
| 1,643,740 | 1,304,791 | 877,720 | 610,249 |
4. Financial income / (expenses)
| 2021 | 2020 | |||||||
| £'000 | £'000 | |||||||
| Financial income | ||||||||
| Bank interest receivable | 290 | 588 | ||||||
| Financial expenses | ||||||||
| Bank interest payable | (841) | (413) | ||||||
| Interest on lease liabilities | (1,314) | (1,659) | ||||||
| (2,155) | (2,072) |
5. Taxation
Tax on profit was £48.3m (2020: £21.3m). This represented an effective tax rate of 29.0% (2020: 136.9%). The rate is higher than the effective UK Corporation Tax rate for the year of 19.00% (2020: 19.00%) due to profits and disallowable items of expenditure being generated in countries where corporation tax rates are higher than in the UK.
6. Dividends
| 2021 | 2020 | |||||||
| £'000 | £'000 | |||||||
| Amounts recognised as distributions to equity holders in the year: | ||||||||
| Final dividend for the year ended 31 December 2020 of 0.00p per ordinary share (2019: 0.00p) | - | - | ||||||
| Interim dividend for the year ended 31 December 2021 of 4.70p per ordinary share (2020: 0.00p) | 14,998 | - | ||||||
| Special dividend for the year ended 31 December 2021 of 26.71p per ordinary share (2020: 0.00p) | 85,232 | - | ||||||
| 100,230 | - | |||||||
| Amounts proposed as distributions to equity holders in the year: | ||||||||
| Proposed final dividend for the year ended 31 December 2021 of 10.30p per ordinary share (2020: 0.00p) | 32,912 | - |
The proposed final dividend had not been approved by the Board at 31 December and therefore has not been included as a liability.
The proposed final dividend of 10.30p (2020: nil) per ordinary share will be paid on 17 June 2022 to shareholders on the register at the close of business on 20 May 2022.
7. Share-based payments
In accordance with IFRS 2 "Share-based Payment", a charge of £7.8m has been recognised for share options and other share-based payment arrangements (including social charges) (31 December 2020: £4.3m).
8. Earnings per ordinary share
| The calculation of the basic and diluted earnings per share is based on the following data: | ||||
| Earnings | 2021 | 2020 | ||
| Earnings for basic and diluted earnings per share (£'000) | 118,356 | (5,742) | ||
| Number of shares | ||||
| Weighted average number of shares used for basic earnings per share ('000) | 318,237 | 319,664 | ||
| Dilution effect of share plans ('000) | 1,232 | 925 | ||
| Diluted weighted average number of shares used for diluted earnings per share ('000) | 319,469 | 320,589 | ||
| Basic earnings per share (pence) | 37.2 | (1.8) | ||
| Diluted earnings per share (pence) | 37.0 | (1.8) |
The above results all relate to continuing operations.
9. Property, plant and equipment
Acquisitions and Disposals
During the year ended 31 December 2021 the Group acquired property, plant and equipment with a cost of £10.2m (2020: £4.9m).
Property, plant and equipment with a carrying amount of £2.2m were disposed of during the year ended 31 December 2021 (2020: £0.8m), resulting in a loss on disposal of £0.0m (2020: loss of £0.3m).
10. Trade and other receivables
| 2021 | 2020 | |||
| £'000 | £'000 | |||
| Current | ||||
| Trade receivables | 265,727 | 197,195 | ||
| Less allowance for expected credit losses and revenue reversals | (11,086) | (11,061) | ||
| Net trade receivables | 254,641 | 186,134 | ||
| Other receivables | 7,018 | 4,393 | ||
| Accrued income | 81,186 | 51,282 | ||
| Prepayments | 12,952 | 10,667 | ||
| 355,797 | 252,476 | |||
| Non-current | ||||
| Other Receivables | 12,849 | 13,169 |
11. Trade and other payables
| 2021 | 2020 | |||
| £'000 | £'000 | |||
| Current | ||||
| Trade payables | 5,908 | 3,993 | ||
| Other tax and social security | 46,946 | 44,890 | ||
| Other payables | 34,698 | 35,664 | ||
| Accruals | 142,830 | 90,790 | ||
| 230,382 | 175,337 | |||
| Non-current | ||||
| Accruals | 16,310 | 11,836 | ||
| Other tax and social security | 2,022 | 647 | ||
| 18,332 | 12,483 |
12. Cash and cash equivalents
| 2021 | 2020 | |||||||||
| £'000 | £'000 | |||||||||
| Cash at bank and in hand | 153,983 | 108,849 | ||||||||
| Short-term deposits | - | 57,138 | ||||||||
| Cash and cash equivalents | 153,983 | 165,987 | ||||||||
| Cash and cash equivalents in the statement of cash flows | 153,983 | 165,987 |
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 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.
13. Annual General Meeting
The Annual General Meeting of PageGroup plc will be held at 200 Dashwood Lang Road, Addlestone, Surrey, KT15 2QW on 31 May 2022 at 9.30am.
14. Publication of Annual Report and Accounts
This preliminary statement is not being posted to shareholders. The Annual Report and Accounts will be posted to shareholders in due course and will be delivered to the Registrar of Companies following the Annual General Meeting of the Company.
Copies of the Annual Report and Accounts can be downloaded from the Company's website:
https://www.page.com/presentations/year/2022
Responsibility statement of the directors on the annual report
The responsibility statement below has been prepared in connection with the company's full annual report for the year ending 31 December 2021. Certain parts of the annual report are not included within this announcement.
We confirm that, to the best of our knowledge:-
a) that the consolidated financial statements, prepared in accordance with UK-adopted international accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the parent company and undertakings included in the consolidation taken as a whole; and
b) the management report, which is incorporated into the directors' report, includes a fair review of the development and performance of the business and the position of the company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties they face.
On behalf of the Board
| S Ingham | K Stagg |
| Chief Executive Officer | Chief Financial Officer |
| 2 March 2022 | 2 March 2022 |
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