PageGroup publishes full year results
· Continued investment in high potential markets of China, South East Asia, Germany, LatAm and USA
· 2 new offices opened in the Americas, Los Angeles and Monterrey (Mexico)
· EMEA represented 40% of gross profit UK 24% Asia Pacific 21% Americas 15%
. Operational support headcount reduced by 155 (-10.5%) in 2013 delivering recurring £20m pa savings
· Fee earner headcount increased by 186 (5.1%)
· Strong balance sheet with net cash at 31 December 2013 of £85.4m
· Total dividend increased by 5% to 10.5p
Operating profit before exceptional items **
Profit before tax before exceptional items
Basic earnings per share before exceptional items
Diluted earnings per share before exceptional items
Profit before tax
Basic earnings per share
Diluted earnings per share
Total dividend per share
*Constant Exchange Rates
** Exceptional items: 2013 operating profit charge of £2.5m (2012: £nil) relating to Page Personnel France. 2013 restructuring charge of £nil (2012: £7.8m). These items are described fully in note 4.
Commenting, Steve Ingham, CEO, said, "Although 2013 was a challenging year for the recruitment industry and the global economy in general, PageGroup was able to deliver a robust performance, with our key measure of gross profit (net fee income) just 2.5% lower than 2012, at £514m. However, as a result of our focus on operational efficiencies, we delivered an operating profit before exceptional items of £68.2m, exceeding the prior year by 4.7%.
"We achieved good performances in our significant UK and US markets, and also in Spain, the UAE, Mexico and Japan. There were also some signs of recovery in Continental Europe towards the end of the year. In contrast, Australia remained a difficult market, with the continued downturn in the resources sector, and our largest business in Latin America, Brazil, felt the impact of more challenging conditions. The refocusing of the business in the USA has been highly successful. We now have a fast growing and profitable business in this region which has considerable potential for PageGroup. Overall, year-on-year gross profit growth was experienced in 20 of the 34 countries in which we operate.
"A strategic objective in 2013 was to initiate a stronger focus on the consistency and efficiency of our operational support teams. Operational support headcount has been reduced by 155, while fee earner headcount has increased by 186, a net overall increase in headcount of 31. At the same time, we continue to work on ways to deliver the optimal infrastructure and technology to enable our people to best serve the needs of clients and candidates alike.
"The savings made in operational support had a positive impact on our cost base of approximately £10m in 2013 and hence our performance. In total, approximately £20m of recurring costs were removed from the business, with the full benefit to be felt in 2014. These savings will help mitigate cost base growth elsewhere, such as salary increases representing £14m at c. 3% per head investments in additional fee earner headcount and in the supporting infrastructure, including the first full year of amortisation of the Gateway IT project intangible asset of around £8.5m (2013: £5.4m).
"During 2013, we also continued to invest in our large, high potential markets of China, South East Asia, Germany, Latin America and the USA, identified in our long-term growth strategy. We see these markets as sizable long-term opportunities to achieve, or in most cases improve, our significant market share and consolidate our position as the established market leader. We are also mindful that these markets will develop according to local conditions and market character, and along differing timeframes. Our financial commitment to these markets is coupled with the investment in transferring highly experienced PageGroup managers to lead the efforts in country which also ensures that the unique PageGroup culture and best practice is adopted from the outset. This is a significant advantage for us, and is fundamental to our consistent organic growth strategy, both across the economic cycle and as we look to grow in new markets.
"The strength and timing of any recovery in world economic markets is uncertain, our visibility relatively short and we remain exposed to some volatile economies. This is demonstrated by the recent adverse movements in foreign currencies that are impacting our overseas results when translated into Sterling (impact on 2014 operating profit of c. £4m at current exchange rates). However, we have continued to invest in additional fee earner headcount in selected markets since the start of the year. We believe our clear and consistent growth strategy, our geographic and discipline diversity and our strong balance sheet, with £85 million of net cash at year end, ensures that we remain in a strong position to respond to any improvements in market conditions in 2014. This is also reflected in our proposed increase of 5% in the total dividend to 10.5p."