7 March 2024

 

 

Full Year Results for the Year Ended 31 December 2023

 

Resilient performance in challenging market conditions, restructured cost base, final dividend increased 4.5%

 

PageGroup plc ("PageGroup"), the specialist professional recruitment company, announces its full year results for the year ended 31 December 2023.

 

Financial summary	2023	2022	Change	Change CC*
Revenue	£2,010.3m	£1,990.3m	+1.0%	+1.1%
Gross profit	£1,007.1m	£1,076.3m	-6.4%	-6.3%
Operating profit	£118.8m	£196.1m	-39.4%	-39.4%***
Profit before tax	£117.4m	£194.4m	-39.6%
Basic earnings per share	24.4p	43.7p	-44.2%
Diluted earnings per share	24.3p	43.5p	-44.1%
Total dividend per share (excl. special dividend)	16.37p	15.67p
Total dividend per share  (incl. special dividend)	32.24p	42.38p

 

 

HIGHLIGHTS*

 

·    Group gross profit down 6.3% to £1,007.1m (2022: £1,076.3m)

·    Operating profit of £118.8m (2022: £196.1m)

·    Conversion rate** decreased to 11.8% (2022: 18.2%)

·    Fee earner headcount decreased by 1,092 (15.7%) vs 2022, total closing headcount of 7,859

·    Gross profit per fee earner at record levels as a result of action on fee earner headcount

·    Strong cash position of £90.1m (2022: £131.5m)

·    Total dividends of £100.1m paid during 2023

·    Final dividend proposed of 11.24p per share (2022: 10.76p), up 4.5%

 

*At constant currency - all growth rates in constant currency at prior year rates unless otherwise stated

**Operating profit as a percentage of gross profit

***Excluding impact of hyperinflation in Argentina

 

 

Commenting, Nicholas Kirk, Chief Executive Officer, said:

 

"We produced a resilient performance in 2023 in challenging market conditions. Despite the year-on-year decline in gross profit and operating profit, we saw good activity levels through most of the year, albeit the conversion of final interviews to accepted offers and therefore gross profit became increasingly challenging due to ongoing lower levels of candidate and client confidence. We saw a slower end to 2023 due to macro uncertainty impacting candidate and client sentiment, which has continued into January and February, albeit they are two of the smallest months of the year from a trading perspective.

 

"In response to the tougher trading conditions, we managed our headcount down from its peak at the end of Q3 2022. Overall for 2023, our fee earner headcount was down 1,092 or 15.7% and we now have a total headcount of 7,859 (2022: 9,020). As a result of this action on headcount, gross profit per fee earner, our measure of productivity, was flat on 2022 and remains at record levels.

 

"Today the Board has proposed an increase in the final dividend of 4.5% to 11.24 pence per share, reflecting confidence in the continued strategic progress of the Group, as well as the strength of our Balance Sheet. Combined with the interim dividend of 5.13p and the special dividend of 15.87p, this represents a total dividend of 32.24p.

 

"Looking ahead, macro-economic uncertainty persists. However, we have a highly diversified and adaptable business model, a strong balance sheet, and our cost base is under continuous review and can be adjusted rapidly to match market conditions. We are also seeing the benefits from our investments in innovation and technology. Customer Connect is supporting productivity and enhancing customer experience, Page Insights is providing real time data to inform business decisions for both Page and our customers, and we continue to work with our partners to deploy AI and automation tools into our working environment. We made improvements to customer engagement, with our client net promoter score increasing to 55 in 2023 from 52 in 2022. We also continued to develop our social impact programmes and as a business, we changed 133,575 lives in 2023. Given these fundamental strengths, we believe we will continue to perform well in the current challenging markets, and we are confident in our ability to implement our new strategy driving the long-term profitability of the Group." 

 

Enquiries:

 

PageGroup plc	+44 (0) 19 3226 4022
Nicholas Kirk, 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 8:30am today. The live presentation can be viewed by following the link:

 

https://www.investis-live.com/pagegroup/65a909599608da1200b5aeca/sdgs

 

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 90 08 06 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/2024

 

 

 

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

Having delivered on our previous vision, namely £1bn of Gross Profit and £200m of Operating Profit in 2022, it was important to set our new strategy and vision for the Group. We took input from our customers, people and investors, as well as the demographic and technology trends that are shaping our industry. The new strategy will take the Group through to 2030 and has three key strategic goals: Operating Profit of £400m; 1 million lives changed; and a Net Promoter Score of over 60.

 

Our operating profit goal is more than double our previous record year in 2022 and is based on targeting gross profit of just under £2bn at a conversion rate in excess of 20%. We will deliver this by building on our existing strengths and leveraging our global platforms. We will focus on what we do best at a city and country level, growing our business in the areas where we see the greatest potential for growth.

 

The first pillar of growth is our core business, which we define as Michael Page and Page Personnel that covers all disciplines except technology. Our focus in the core business is to build on our previous investment strategy, strengthening our market leading positions and, in addition, no longer pursuing more marginal business lines in certain geographies.

 

Technology recruitment is a scale play for Page, enabling us to build high volume, high value business. It is a market in which we already have a high level of experience, as it's our second largest discipline. We will build on our existing strengths in this area whilst targeting key strategic investment opportunities.  We have collected valuable learnings through our IT contracting business in Germany, where we are delivering at record levels, and we will now look to take these learnings elsewhere in the Group, starting in France and Japan. Our strategic goal is to build a £350m gross profit business by 2030, with a 20% conversion rate.

 

We will build our capabilities in Page Executive, where our global offering has been well received by clients who are keen to look beyond geographic borders to identify the best leadership talent. Our objective is not to compete directly with the global executive search firms, but to grow our reputation in the market that sits just above the Michael Page brand, through to the lower end of where the global executive search firms operate. Our goal by 2030 is for Page Executive to be a business generating over £200m of gross profit, with a conversion rate above the average for the Group.

 

Our Strategic Customer Solutions team is focused on creating business partnerships, building out our capabilities and offering to our most significant customers, to create long-term mutual value. Our Page Outsourcing brand will play a significant role in this area to respond to evolving client demand. With our global footprint, combined with our capabilities in delivery and insights, we are best placed to develop an enhanced client solutions business. Our goal by 2030 is to deliver a global strategic customers business with gross profit of £500m, at a conversion rate of 20%.

 

Since 2020, we have been committed to the goal of changing one million lives by 2030.  By the end of 2023, we had changed just over 500,000 lives. We are driven to have a positive impact in the communities in which we operate. We will work to become an industry role model for ESG and we will achieve this by consciously focusing on the area of Social Impact by capitalising on our people expertise.  

 

Our third goal is focused on delivering a best-in-class customer experience by achieving a client Net Promoter Score of 60+. As a cross industry benchmark, this would see us exceeding what is classed as 'excellent'. This is a critical measure of how we build deeper, repeat relationships with clients to ensure our long-term success. In 2022 our score was 52 and this increased to 55 in 2023.

 

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 qualified 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 47 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.

 

We have an organic growth structure, investing in existing and new teams, offices, disciplines and countries, to ensure we maintain a consistent team and meritocratic culture as we grow. 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.

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 international 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. We are a business which reflects society and the clients and candidates whose lives we change.

 

Sustainability

 

We continue to strengthen our approach to sustainability and embed it across our organisation. Our purpose is to change lives and that is why our target to change one million lives by 2030 sits at the centre of our new corporate Strategy. We change lives by placing candidates and working with charities and other partners to break down the barriers to employment for those from under-represented backgrounds. In 2023, we changed a further 133,575 lives meaning we have changed over 500,000 lives since we set the target in 2020. We also furthered our commitment to the environment by setting long and near-term Net Zero science-based targets. These targets are with the Science-Based Targets initiative for formal validation. Our Scope 1 and 2 emissions decreased by a further 15% this year and we have put the processes and initiatives in place to ensure we reduce emissions across our full value chain over time, including a focus on reducing our business travel and supply chain emissions. Our sustainability business has continued its strong growth, and we are proud to place candidates into sustainability-related and green jobs around the world. For further information on our sustainability efforts, please refer to https://www.page.com/sustainability.

 

Risks

 

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 2023 Annual Report and Accounts, which will be available to shareholders in April 2024.

 

GROUP RESULTS  

 

GROSS PROFIT		Reported			CC
	% of Group	2023 (£m)	2022 (£m)	%	%
EMEA	55%	549.5	538.5	+2.0%	+0.3%
Americas	17%	173.3	193.4	-10.4%	-9.2%
Asia Pacific	16%	159.6	195.3	-18.3%	-14.3%
UK	12%	124.7	149.1	-16.4%	-16.4%
Total	100%	1,007.1	1,076.3	-6.4%	-6.3%
Permanent	73%	733.6	826.3	-11.2%	-10.9%
Temporary	27%	273.5	250.0	+9.4%	+8.9%

 

At constant exchange rates, Group revenue increased 1.1% to £2,010.3m (2022: £1,990.3m), but gross profit decreased 6.3% to £1,007.1m (2022: £1,076.3m) for the year ended 31 December 2023. Gross profit per fee earner was flat in constant currencies but decreased by 0.3% in reported rates to £159.0k (2022: £159.4k).

 

The Group's revenue and gross profit mix between permanent and temporary placements were 37:63 (2022: 42:58) and 73:27 (2022: 77:23) respectively. This is reflective of the tougher trading conditions during the year, particularly within permanent recruitment, whereas temporary was more resilient. Revenue from temporary placements comprises the salaries of those placed, together with the margin charged. This margin on temporary placements was broadly in line with 2022 at 21.5% (2022: 21.6%). Overall, pricing remained strong, as we continued to see candidate shortages and high levels of vacancies in the majority of our markets.

 

Total Group headcount decreased by 1,161 in the year to 7,859. This comprised a net decrease of 1,092 fee earners (15.7%) and 69 operational support staff (3.3%). We reduced our headcount in all four quarters, with reductions in all regions, in line with the tougher trading conditions seen throughout 2023.

 

In total, administrative expenses increased 0.9% to £888.3m (2022: £880.2m). The Group's operating profit from trading activities totalled £118.8m (2022: £196.1m).

 

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 £66.8m (2022: £60.6m).

 

The Group's conversion rate for the year decreased from 18.2% in 2022 to 11.8%. This was due to the more challenging trading conditions experienced through 2023 in the majority of our markets, partially offset by the reduction in fee earner headcount.

 

As part of this refined strategy and our increased focus on our conversion rate target, we have already implemented a number of initiatives to reduce our cost base. These initiatives mainly focused on: removing management layers; some small office closures including our onshore presence in Sweden; and re-sizing our operational support function to reflect the reduction in fee earner headcount. 

 

These initiatives have incurred a one-off restructuring cost in 2023 of £10.6m, offset by the majority of the cost savings being realised in FY23. The net negative impact this year was c. £2m. Going forward, we expect these initiatives to deliver annualised savings of c. £20m per annum compared to our FY23 cost base from FY24 onwards. However, this will be partially offset by inflationary salary rises made in January, which will add c. £10m to our FY24 cost base.

 

EMEA was the Group's most profitable region in 2023, with a conversion rate of 16.8%. This was reflective of the region experiencing more resilient trading conditions through 2023. Conversion in Asia Pacific fell to 7.3% (2022: 18.0%) due primarily to the continued tough conditions in Greater China, as well as our strategic decision to hold on to our experienced headcount in this market. The Americas' conversion rate was 10.2%, with tougher market conditions in the US but Latin America being more resilient. While the UK trading business was profitable despite the tougher trading conditions, the high proportion of senior management and operational support based in the UK meant the region had a negative conversion rate of 2.2%.

 

A net interest charge of £1.4m (2022: £1.7m) was primarily due to an IFRS 16 interest charge of £2.5m.

 

Earnings per share and dividends

In 2023, basic and diluted earnings per share decreased to 24.4p and 24.3p respectively (2022: 43.7p basic and 43.5p diluted), as a result of the decrease in profits due to the tougher trading 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.

 

A proportion of the cash generated in excess of these first two priorities will be returned to shareholders through supplementary returns, using special dividends or share buybacks.

 

Given the high levels of surplus cash, we paid an interim dividend of 5.13 pence per share, an increase of 4.5% over the 2022 interim dividend. In addition, in line with our policy of returning surplus capital to shareholders, we also paid a special dividend of 15.87 pence per share. Taking both dividends together, this amounted to a cash return to shareholders of £66.2m, paid out in October 2023.

 

The Board has proposed a final dividend of 11.24p (2022: 10.76p) per ordinary share, up 4.5% on the 2022 final dividend. When taken together with the interim dividend of 5.13p (2022: 4.91p) per ordinary share, this is an increase in the total dividend for the year of 4.5%. The proposed final dividend, which amounts to £35.4m, will be paid on 21 June 2024 to shareholders on the register as at 17 May 2024, subject to shareholder approval at the Annual General Meeting on 3 June 2024.

 

We will continue to monitor our cash position in 2024 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 £212.0m (2022: £246.4m) generated from operations. The closing cash balance was £90.1m at 31 December 2023 (2022: £131.5m). The decrease on 2022 is due primarily to the cash returned to shareholders through the payment of dividends in the year, totalling £100.1m.

 

On 9 December 2022, PageGroup entered into a five year £80m committed multi-currency revolving credit facility agreement with HSBC and BBVA. In addition, PageGroup maintains an uncommitted Confidential Invoice Facility with HSBC whereby the Group has the option to discount receivables in order to advance cash. The Invoice Facility is for up to £50m depending on debtor levels. Neither of these facilities were drawn as at 31 December 2023. These facilities are used on an ad hoc basis to fund any major Group GBP cash outflows.

 

Income tax paid in the year was £59.0m (2022: £61.6m) and net capital expenditure was £30.8m (2022: £29.6m).

 

Total dividends of £100.1m were paid in 2023 (2022: £133.2m). Cash receipts from share option exercises in 2023 reflected the share price over that period, with £1.9m in 2023, compared to £0.4m in 2022. In 2023, £17.5m (2022: £14.8m) 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 £270.5m at 31 December 2023 (2022: £307.8m), comprising permanent fees invoiced and salaries and fees invoiced in the temporary placement business, but not yet paid. Day's sales in debtors decreased due to temporary recruitment, which has a shorter collection period, being more resilient in 2023 than permanent recruitment.

 

EUROPE, MIDDLE EAST AND AFRICA (EMEA)

 

EMEA is the Group's largest region, contributing 55% 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 67% and temporary placements 33% of gross profit.

 

EMEA	£m		Growth rates
(55% of Group in 2023)	2023	2022	Reported	CC
Gross Profit	549.5	538.5	+2.0%	+0.3%
Operating Profit	92.2	122.1	-24.5%	-25.7%
Conversion Rate (%)	16.8%	22.7%

 

In constant currencies, revenue grew 2.5% to £1,117.2m (2022: £1,069.3m) and gross profit grew 0.3% to £549.5m (2022: £538.5m).

 

We delivered resilient results in EMEA, despite trading conditions that became tougher as the year progressed. France, the Group's largest market, was flat, despite tougher trading conditions in Michael Page, down 2%, whereas Page Personnel was more resilient, up 1%, due to the higher degree of temporary recruitment. Germany, our second largest market, grew 4% for the year against a tough comparator in 2022, with the standout performance in our Technology-focused Interim business, up 15%. Elsewhere in the region, Benelux and Southern Europe both declined 1%. The Middle East and Africa grew 12%.

 

The region delivered operating profit of £92.2m (2022: £122.1), with a conversion rate of 16.8% (2022: 22.7%). This was the highest conversion rate in the Group, despite the tougher macro-economic conditions as the year progressed. Headcount across the region decreased by 271 (6.6%) during the year, to 3,814 at the end of 2023 (2022: 4,085).

 

 

THE AMERICAS

The Americas accounted for 17% of the Group's gross profit in 2023, with North America representing 55% of the region and Latin America, 45%. The US, where we have 7 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 real competitive advantage. 

 

Latin America is a highly under-developed region, where PageGroup enjoys the market leading position with over 800 employees in seven countries. There are few international competitors and none with regional scale. Across the Americas, permanent placements accounted for 84% of gross profit and temporary placements 16%.

 

 

Americas	£m		Growth rates
(17% of Group in 2023)	2023	2022	Reported	CC
Gross Profit	173.3	193.4	-10.4%	-9.2%
Operating Profit	17.7	17.9	-0.8%	-1.4%*
Conversion Rate (%)	10.2%	9.2%

 

In constant currencies revenue increased 12.9% to £311.7m (2022: £282.9m) while gross profit declined 9.2% to £173.3m (2022: £193.4m). This is representative of current market conditions, where trading is much tougher within permanent recruitment, whereas temporary has been more resilient.

 

In North America, gross profit decreased 20%, with tough market conditions throughout the year. The US declined 20% due to tough trading conditions impacting candidate and client confidence, particularly within Technology and Financial Services. Over 90% of our gross profit in the US is permanent recruitment, where conditions have been much tougher during 2023.

 

Latin America grew 8%, albeit this was partially due to the hyperinflationary environment in Argentina. Excluding Argentina the region grew 3% for the year. Brazil was up 2%, whereas Mexico was down 6% and the other four countries increased 13%, collectively.

 

The Americas delivered operating profit of £17.7m (2022: £17.9m) due to the resilience of our business in Latin America, offset by tougher trading conditions in the US, where we have strategically held on to our headcount. Across the region, headcount decreased by 361 (21.4%) in 2023 to 1,329 (2022: 1,690).

 

*Excluding the impact of hyperinflation in Argentina

 

ASIA PACIFIC

Asia Pacific represented 16% of the Group's gross profit in 2023, with 78% of the region being Asia and 22% 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.  With a highly experienced management team, more than 1,300 staff and limited competition, the size of the opportunity in Asia is significant. Across Asia Pacific, driven by cultural attitudes towards white collar temporary recruitment, permanent placements accounted for 85% and temporary placements only 15% of gross profit, well below the Group average.  

 

Australia 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.

 

 

Asia Pacific	£m		Growth rates
(16% of Group in 2023)	2023	2022	Reported	CC
Gross Profit	159.6	195.3	-18.3%	-14.3%
Operating Profit	11.6	35.2	-67.0%	-62.5%
Conversion Rate (%)	7.3%	18.0%

 

In Asia Pacific, in constant currencies, revenue declined 6.1% to £284.8m (2022: £318.4m) and gross profit declined 14.3% to £159.6m (2022: £195.3m).

 

We experienced tough market conditions in Asia Pacific during 2023, particularly within Greater China, where gross profit declined 29% with Mainland China down 31% and Hong Kong down 23%. Whilst COVID restrictions were eased, the recovery was slower than anticipated. This also impacted trading in South East Asia, which was down 16%, with Singapore down 18%. India delivered the standout result and a record year, up 6% on 2022. Japan was down 2% on 2022. Conditions were also tough in Australia which was down 10% on 2022.

 

The region delivered operating profit of £11.6m (2022: £35.2m), with the conversion rate decreasing to 7.3% (2022: 18.0%). This was a result of the tougher trading conditions across the region and our decision to strategically hold on to our headcount in China, partially offset by the reduction in headcount elsewhere. Headcount across the region decreased 290 (15.7%) in the year, ending the year at 1,552 (2022: 1,842).

 

UNITED KINGDOM

The UK represented 12% of the Group's gross profit in 2023, operating from 22 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 69% and temporary placements 31% 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 increase the size and breadth of our reach under the higher salary-level Page Executive brand and by building on our existing strengths across Michael Page and Page Personnel.

 

 

UK	£m
(12% of Group in 2023)	2023	2022	Growth rate
Gross Profit	124.7	149.1	-16.4%
Operating (Loss)/Profit	(2.7)	20.9	<100%
Conversion Rate (%)	-2.2%	14.0%

 

In the UK, revenue decreased 7.2% on 2022 to £296.7m (2022: £319.6m) and gross profit decreased 16.4% from £149.1m in 2022 to £124.7m. Michael Page declined 19% and Page Personnel 11%.

 

Operating result for the year decreased to a loss of -£2.7m (2022: profit of £20.9m). While the UK trading business was profitable despite the tougher trading conditions, the high proportion of senior management and operational support based in the UK meant the region had a negative conversion rate of 2.2%. Headcount decreased 239 (17.0%) in the year to 1,164 at the end of December 2023 (2022: 1,404).

 

 

OTHER FINANCIAL ITEMS

 

Taxation

 

The tax charge for the year was £40.4m (2022: £55.4m). This represented an effective tax rate of 34.4% (2022: 28.5%). The rate is higher than the UK rate for the calendar year of 23.5% (2022: 19%) principally due to the impact of higher tax rates in overseas countries, changes to deferred tax recognition and 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.

 

In 2023, the tax rate was impacted primarily by higher tax in overseas countries (5.6%), derecognition of losses and other tax attributes of (2.3%), prior year adjustments of (0.3%) and other permanent differences (2.4%), 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 2023 the Group had 9.8m share options outstanding, of which 5.7m had vested, but had not been exercised. During the year, options were granted over 2.6m shares under the Group's share option plans. Options were exercised over 0.6m shares, generating £1.9m in cash, and options lapsed over 0.4m shares. At the end of 2023, options remained outstanding over 11.4m shares, of which 6.1m had vested, but had not been exercised. During 2023, 3.9m shares were purchased by the Group's Employee Benefit Trust, and no shares were cancelled (2022: 2.9m 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 2023: Gross profit decreased 6.3% in constant currencies and 6.4% in reported rates against 2022. This was due to the tough trading conditions in 2023, which impacted client and candidate confidence.   Relevant strategic objective: Organic growth
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 2023: The ratio decreased from 2022 to 73:27 (2022: 77:23). Market conditions were tougher within permanent recruitment, whereas temporary recruitment was more resilient to the uncertainty, as is normally the case in tougher economic conditions.   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 2023: The Group saw a 44.2% decrease in Basic EPS to 24.4p, due to the decline in operating profit from our record year in 2022.    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 2023: Cash decreased to £90.1m (2022: £131.5m). The decline was as a result of the tougher trading conditions impacting results, as well as having paid out £100.1m in dividends during 2023.   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 2023: Net fee earner headcount decreased by 1,092, or 15.7% in the year, resulting in 5,851 fee earners at the end of the year. As trading conditions became more challenging from the end of 2022 into 2023, we reduced our headcount accordingly, with reductions in all regions.   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 2023: Productivity was flat in constant currencies on 2022, but declined 0.3% in reported rates to £159.0k (2022: £159.4k). Whilst we experienced tough trading conditions in 2023, our action on fee earner headcount through the year meant productivity stayed flat on 2022 and at record levels for the Group.    Relevant strategic objective: Organic 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 2023: The Group's conversion rate for the year decreased to 11.8% (2022: 18.2%). This was reflective of the tougher trading conditions during the year, partly offset by the reduction in fee earner headcount.   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 2023: We recorded an 85% positive score for employee engagement in the latest Employee Engagement Survey in 2023. This compares with 87% in the last equivalent survey performed in 2022, which was a record year in terms of financial performance. The 2023 survey was a combination of questions, including: how valued our people felt; how proud they were to work for PageGroup; and how they can see their work relates to PageGroup's purpose of changing lives.   Relevant strategic objective: Sustainable growth
To become Net Zero across our full value chain by 2050	How measured: Direct and Indirect GHG emissions calculated in line with the GHG Protocol.   Why it's important: The CO2e impact of our operations and value chain is examined in absolute terms in the emissions estimates.   How we performed in 2023: Total GHG emissions (Scope 1, 2 and 3) decreased by -1% to 64,518 tCO2e. Operational emissions (Scope 1 and 2 emissions) reduced by -15% to 2,534 tCO2e due to the continued transition of our offices to renewable energy. Value chain emissions (Scope 3) decreased by -1% to 61,984 tCO2e. A reduction in emissions from our supply chain and waste was offset by increased commuting and travel in our first full year without disruption from COVID-19.   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 2023: Tonnes of CO2e per employee increased by 10% to 7.9 Tonnes of CO2e per employee. The percentage reduction in headcount was greater than the reduction in overall emissions. Therefore, intensity values have increased.     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 2023 DEFRA conversion factors. The movements in KPIs are in line with expectations.

 

 

 

Nicholas Kirk	Kelvin Stagg
Chief Executive Officer	Chief Financial Officer
6 March 2024	6 March 2024

 

 

 

Consolidated Income Statement

For the year ended 31 December 2023

 

						2023			2022
				Note		£'000			£'000
Revenue				3		2,010,303			1,990,287
Cost of sales						(1,003,171)			(913,993)
Gross profit				3		1,007,132			1,076,294
Administrative expenses						(888,317)			(880,215)
Operating profit				3		118,815			196,079
Financial income				4		2,236			1,104
Financial expenses				4		(3,615)			(2,817)
Profit before tax				3		117,436			194,366
Income tax expense				5		(40,368)			(55,354)
Profit for the year						77,068			139,012
Attributable to:
Owners of the parent						77,068			139,012
Earnings per share
Basic earnings per share (pence)				8		24.4			43.7
Diluted earnings per share (pence)				8		24.3			43.5
The above results all relate to continuing operations
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2023
						2023			2022
						£'000			£'000
Profit for the year						77,068			139,012
Other comprehensive income for the year
Items that may subsequently be reclassified to profit and loss:
Currency translation differences						(12,353)			15,441
Actuarial loss on retirement benefits						(1,735)			-
Deferred tax from actuarial loss on retirement benefits						435			-
Total comprehensive income for the year						63,415			154,453
Attributable to:
Owners of the parent						63,415			154,453

 

 

Consolidated Balance Sheet

As at 31 December 2023

			2023			2022
	Note		£'000			£'000
Non-current assets
Property, plant and equipment	9		47,452			36,123
Right-of-use assets			98,386			100,996
Intangible assets - Goodwill and other intangible			1,859			1,955
Computer software			30,239			38,045
Deferred tax assets			19,856			18,641
Other receivables	10		13,017			13,224
			210,809			208,984
Current assets
Trade and other receivables	10		380,243			437,247
Current tax receivable			23,384			17,233
Cash and cash equivalents	12		90,138			131,480
			493,765			585,960
Total assets	3		704,574			794,944
Current liabilities
Trade and other payables	11		(259,856)			(289,108)
Provisions			(4,298)			(2,772)
Lease liabilities			(31,746)			(31,268)
Current tax payable			(5,958)			(18,050)
			(301,858)			(341,198)
Net current assets			191,907			244,762
Non-current liabilities
Other payables	11		(10,156)			(14,951)
Lease liabilities			(79,187)			(78,564)
Deferred tax liabilities			(2,342)			(1,345)
Provisions			(4,543)			(6,683)
			(96,228)			(101,543)
Total liabilities	3		(398,086)			(442,741)
Net assets			306,488			352,203
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			(66,813)			(56,626)
Currency translation reserve			19,985			32,338
Retained earnings			249,534			272,709
Total equity			306,488			352,203