PageGroup : Pdf (661.3 KB)

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	15.00p	-
(excl. special dividend)
Total dividend per share	41.71p	-
(incl. special dividend)

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	[phone]
Steve Ingham, Chief Executive Officer
Kelvin Stagg, Chief Financial Officer
FTI Consulting	[phone]
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	[phone]

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.