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PageGroup announces Q4 & full year 2013 trading update

Q4 GROSS PROFIT ANALYSIS

 

Reported

Constant

Year-on-year gross profit

% of Group Q4

Q4 2013

Q4 2012

%

%

EMEA

42%

&pound52.0m

&pound51.4m

1.1%

-1.4%

UK

25%

&pound31.8m

&pound30.2m

5.1%

5.1%

Asia Pacific

19%

&pound24.2m

&pound27.9m

-13.1%

-5.7%

Americas

14%

&pound17.0m

&pound17.0m

0.2%

6.7%

Total

100%

&pound125.0m

&pound126.5m

-1.2%

0.3%

 

 

 

Permanent

75%

&pound93.6m

&pound96.4m

-2.9%

-1.1%

Temporary

25%

&pound31.4m

&pound30.1m

4.3%

4.5%

 

FULL YEAR GROSS PROFIT ANALYSIS

 

Reported

Constant

Year-on-year gross profit

% of FY 2013

FY 2013

FY 2012

%

%

EMEA

40%

&pound207.7m

&pound218.4m

-4.9%

-8.2%

UK

24%

&pound124.1m

&pound121.4m

2.2%

2.2%

Asia Pacific

21%

&pound105.8m

&pound114.9m

-7.9%

-4.7%

Americas

15%

&pound76.3m

&pound72.2m

5.6%

8.8%

Total

100%

&pound513.9m

&pound526.9m

-2.5%

-2.7%

 Ingham continued, "EMEA saw its first quarterly year-on-year growth in reported currencies since Q1 2012. The UK, with a steadily improving job count, has now seen two consecutive quarters of 5% year-on-year growth. However, the fourth quarter also saw a continuation of the challenging trading conditions in Australia, which, with the effect of continued adverse foreign exchange movements, impacted the overall performance of the Asia Pacific region. In the Americas, we grew quarterly gross profit year-on-year by 6.7%*. Our business in the US performed particularly well, growing at 35%*. However, while conditions in Brazil worsened, our other Latin American businesses of Argentina, Chile, Colombia and Mexico continued to grow strongly. 

"We have been consistent with our key strategic objectives of continued investment in our high potential markets of China, South East Asia, Germany, Latin America and the US. In China we had a record year in gross profit, notwithstanding growth rates slightly slowing in Q4, and we grew our headcount by over 20% to approaching 450 in 10 offices. In the US we opened our ninth office, Los Angeles, and grew gross profit in Q4 by 35% in US Dollars. Another strategic objective in 2013 was to initiate a strong focus on the consistency and efficiency of our operational support teams. This has had a positive impact on our performance and cost base, the full benefit of which will be felt in 2014. As a result, since the start of the year, operational support headcount has been reduced by 155 (-10.5%) and with fee earner headcount up by 186 (5.1%), total headcount has increased by 31 (0.6%). 

"For the full year 2013, we reiterate our statement of October that we expect operating profit pre exceptional to be around &pound68m."

The Group will issue its Full Year Results for 2013 on 5 March 2014.

Group Trading Update

Michael Page International plc ("PageGroup") delivered fourth quarter gross profit of &pound125.0m, down 1.2% (0.3%*) on the &pound126.5m in Q4 2012. Headcount increased by 59 (1.2%) in the quarter to 5,130 at the end of December 2013, as we continued to invest selectively in our high potential markets and where we felt market conditions had improved. Since the start of the year, headcount increased by 31 (0.6%), with operational support headcount being reduced by 155    (-10.5%) and fee earner headcount increasing by 186 (5.1%).

*Denotes where overseas results denominated in foreign currencies have been translated at constant rates of exchange for constant currency illustrative purposes.

Perm/Temp mix

Group gross profit from permanent recruitment in the fourth quarter was &pound93.6m, down 2.9%        (-1.1%*) on the &pound96.4m in Q4 2012. Group gross profit from temporary recruitment in the fourth quarter was &pound31.4m, up 4.3% (4.5%*) on the &pound30.1m in Q4 2012.

The perm/temp gross profit ratio in the fourth quarter was 75:25.

Discipline analysis

 

Reported

Constant

Year-on-year gross profit

% of Group Q4

Q4 2013

Q4 2012

%

%

Finance & Accounting

42%

&pound52.2m

&pound53.1m

-1.8%

-0.5%

Legal, Technology, HR, Secretarial, Healthcare

20%

&pound25.6m

&pound26.5m

-3.5%

-1.3%

Engineering, Property & Construction, Procurement & Supply Chain

19%

&pound24.0m

&pound24.1m

-0.3%

0.7%

Marketing, Sales & Retail

19%

&pound23.2m

&pound22.8m

2.0%

3.4%

Total

100%

&pound125.0m

&pound126.5m

-1.2%

0.3%

Geographical analysis

Q4 GROSS PROFIT ANALYSIS

EMEA Gross Profit

(42% of Group in Q4 2013)

 

Growth rates

 

Reported

Constant

Q4 2013 vs. Q4 2012

&pound52.0m

&pound51.4m

1.1%

-1.4%

2013 vs. 2012

&pound207.7m

&pound218.4m

-4.9%

-8.2%

Headcount at 31 December 2013: 1,886 (30 September 2013: 1,850)

Gross profit at constant currency:

&middot   France (15% of the Group) -2% on Q4 2012 (-7% in Q3 against Q3 2012)

&middot   Germany (6% of the Group) -1% on Q4 2012 (-16% in Q3 against Q3 2012)

In our largest region, Europe, Middle East and Africa (EMEA), representing 42% of Group gross profit, market conditions remained challenging, but we reported year-on-year quarterly growth in reported currency for the first time since Q1 2012. In our larger businesses of France and Germany growth rates improved considerably, helped in part by prior year comparatives. In France, we operate under all three PageGroup brands. The largest is Page Personnel, which in itself would be a market leader in the professional recruitment market, with over 250 consultants. Year-on-year gross profit growth in Page Personnel France was 9% in quarter 4. Several countries had record quarters and several other countries posted impressive year-on-year growth, notably UAE, Spain and Turkey. There was an increase in headcount in the quarter of 36 (1.9%), which reflects improving optimism for the region.

UK Gross Profit

(25% of Group in Q4 2013)

 

Growth rates

 

 

Q4 2013 vs. Q4 2012

&pound31.8m

&pound30.2m

5.1%

2013 vs. 2012

&pound124.1m

&pound121.4m

2.2%

Headcount at 31 December 2013: 1,319 (30 September 2013: 1,303)

In the UK, our diversification and the depth of management experience continued to underpin our improved performance. We have had two consecutive quarters of year-on-year growth at 5%, with impressive growth rates in our smaller, newer disciplines, as well as strong growth in our more established businesses of Finance, Marketing, Sales and Supply Chain. Page Personnel, roughly one fifth of the UK business and focussed on professional roles with salaries of less than &pound40,000, grew 19%. Our Public Sector business, which now makes up 13% of the UK, grew at 14%. Headcount was up by 16 in Q4 and has increased by 82 since the start of the year, up 6.6%.

Asia Pacific Gross Profit

(19% of Group in Q4 2013)

 

Growth rates

 

Reported

Constant

Q4 2013 vs. Q4 2012

&pound24.2m

&pound27.9m

-13.1%

-5.7%

2013 vs. 2012

&pound105.8m

&pound114.9m

-7.9%

-4.7%

Headcount at 31 December 2013: 1,111 (30 September 2013: 1,126)

Gross profit at constant currency:

&middot   Asia (12% of the Group) 4% on Q4 2012 (8% in Q3 against Q3 2012)

&middot   Australia and New Zealand (7% of the Group) -18% on Q4 2012 (-20% in Q3 against Q3 2012)

In our Asia Pacific region, representing 19% of Group gross profit, market conditions in Australia remained challenging, which, with the effect ofcontinued adverse foreign exchange movements, impacted the overall performance of the Asia Pacific region, whilst 2013 has been a record year for our business in Asia. Trading conditions in China softened in the quarter, but in the year achieved a record result. Our businesses in Malaysia and Japan both delivered record quarters. Headcount across the region fell slightly in the quarter, but remained 75 up on last year (7.2%) and is up over 20% in China for the year.

Americas Gross Profit

(14% of Group in Q4 2013)

 

Growth rates

 

Reported

Constant

Q4 2013 vs. Q4 2012

&pound17.0m

&pound17.0m

0.2%

6.7%

2013 vs. 2012

&pound76.3m

&pound72.2m

5.6%

8.8%

Headcount at 31 December 2013: 814 (30 September 2013: 792)

Gross profit at constant currency:

&middot   Latin America (8% of the Group) -5% on Q4 2012 (12% in Q3 against Q3 2012)

&middot   North America (6% of the Group) 30% on Q4 2012 (25% in Q3 against Q3 2012)

In the Americas, representing 14% of Group gross profit, we grew gross profit year-on-year by 6.7%*. In North America, our business in the US performed particularly well, growing at 35%*. In Latin America, conditions in Brazil, representing roughly 60% of the region, worsened, with year-on-year growth in the fourth quarter down 17% in constant currency, against growth of 6% in the third quarter. Elsewhere in Latin America, our businesses in Argentina, Mexico, Chile and Colombia all grew strongly, together up 20%*. Headcount across the region increased during the quarter by 22, (2.8%), with Latin America down 3 and North America up 25.

Intangible assets

We continue to operate our new software in Boston in the US. Work on modifications to the system is developing in line with expectations and the roll-out plan. The 2013 charge for this intangible asset was &pound5.4m, reflecting the eight months of amortisation in 2013.

French profit share

In October 2013, Page Personnel France (PPF) received notice from the Competent Authorities of the UK and France of their decision regarding a transfer pricing case that had arisen as a result of a tax audit in March 2008. The decision, which was unexpected, increased the profit generated by PPF, which, as per the mandatory profit share or "participation aux r&eacutesultats de l'entreprise" that is particular to France, drove a requirement to pay increased employee profit share, both to employees of PPF and also to the temporary workers placed by that company. As a result, the Group will take in 2013 an exceptional operating profit charge of &pound2.7m relating to prior periods, and &pound0.6m that is included within operating profits from trading activities. A proportion of these charges were determined by the tax ruling, with the remainder for other years based on assumptions.

Shares

No share repurchases were made during the fourth quarter. During the quarter, 0.2m options were exercised and satisfied through newly issued shares. At 31 December 2013 there were approximately 320.8m shares in issue, of which 10.7m were held by the Employee Benefit Trust upon which dividends and voting rights are waived. Accordingly, 310.1m shares receive dividends and hold voting rights.

Financial Position

Save for the effects of trading in the third and fourth quarters and the payment of the 2013 interim dividend of &pound10.1m on 4 October 2013, there have been no other significant changes in the financial position of the Group since the publication of the results for the half year ended 30 June 2013.

Net cash at 31 December 2013 was in the region of &pound80m (30 September 2013: &pound72.0m).

The Group will issue its Full Year Results on 5 March 2014.

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