Half Year Results 2017
Agenda Financial Review Capital Strategy and Returns Summary
Financial Review
H1 2017 Group Financial Highlights Reported Constant H1 2017 H1 2016 % % Revenue £673.1m £575.9m +16.9% +7.7% Gross Profit £352.0m £299.2m +17.7% +8.3% Operating Profit £56.9m £47.1m +20.9% +9.2% Basic Earnings Per Share 13.1p 10.8p +21.3% Net Cash £88.9m £73.6m +20.8% Interim Dividend Per Share 3.90p 3.75p +4.0% Special Dividend Per Share 12.73p 6.46p 4
Income Statement H1 2017 H1 2016 Reported Constant £m £m % % Gross Profit 352.0 299.2 +17.7% +8.3% Administrative Expenses 295.1 252.1 +17.1% +8.1% Operating Profit 56.9 47.1 +20.9% +9.2% Net Interest Expense - (0.2) Profit Before Tax 56.9 46.9 Taxation (16.0) (13.1) Profit After Tax 40.9 33.8 Effective Tax Rate (%) 28.2% 28.0% H1 2017 H1 2016 Closing Average £m £m % % Total Headcount 6,448 5,919 +8.9% +6.5% 5
Impact of Foreign Exchange H1 2017 H2* 2017 FY 2017 Reported Constant Foreign Foreign Foreign Rates Currency Exchange Exchange Exchange £m £m £m £m £m Gross Profit 352 324 28 2 30 Operating Profit 57 51 6 - 6 Conversion Rate** 16.2% 15.9% • Sterling weakened post EU Referendum at end of June 2016 • Little FX benefit expected H2 2017 * H2 estimate at June 2017 exchange rates ** Conversion Rate is the amount of Gross Profit converted into Operating Profit 6
Conversion* by Region H1 2017 H1 2016 Gross Operating Conversion Gross Operating Conversion Profit Profit Rate Profit Profit Rate £m £m % £m £m % GROUP 352.0 56.9 16.2 299.2 47.1 15.7 EMEA 162.1 31.4 19.4 129.1 23.8 18.5 UK 73.0 8.7 11.9 74.8 11.6 15.6 ASIA PACIFIC 66.7 11.3 17.0 56.5 9.4 16.6 AMERICAS 50.2 5.5 11.0 38.8 2.3 5.8 • Increase in share and deferred remuneration charges of c. £3m due to 60% increase in share price • UK Conversion before non-trading items down 1% * Conversion Rate is the amount of Gross Profit converted into Operating Profit 7
Depreciation, Amortisation and Capital Expenditure H1 2017 H1 2016 £m £m Depreciation 4.2 4.4 Amortisation 4.9 3.8 Total 9.1 8.2 Capital expenditure Tangible assets 4.9 7.3 Intangible assets 4.4 4.6 Total 9.3 11.9 • Reduced Capex in 2017 due to 3 significant office moves in 2016 • Capital expenditure of c. £4m on new Global Finance System 8
Balance Sheet H1 H1 2017 2016 £m £m Intangible assets 37.1 36.5 Tangible assets 29.5 26.8 Trade and other receivables 287.3 262.7 Trade, other payables, current and deferred taxes (173.1) (164.0) Net cash 88.9 73.6 Net assets 269.7 235.6 • Trade and other receivables increased by c. £20m due to foreign exchange movements 9
H1 Cash Flow H1 2017 H1 2016 Movement in net cash (£m) (3.9) ( 21.4) £m 10
Capital Strategy and Returns
Capital Strategy • To finance the activities and development of the Group from retained earnings while maintaining a strong balance sheet position First use of cash is to satisfy operational and investment requirements, as well as hedging the • Group’s liabilities under its share plans • Second use of cash is to fund ordinary dividends: - To grow the ordinary dividend over the course of the economic cycle - Sustain the level of ordinary dividend payment during downturns - Increase the ordinary dividend during more prosperous times Cash generated in excess of these first two priorities will be returned to shareholders through • supplementary returns using: - Special dividend and /or - Share buybacks 12
Track Record of Shareholder Returns £m 13
Assessment of Surplus Cash H1 2017 H1 2016 Special Dividend (£m) 40.0 20.0 £m 14
Dividends H1 2017 H1 2017 H1 2016 H1 2016 (pence per share) £m (pence per share) £m Interim 3.90 12.3 3.75 11.6 Special 12.73 40.0 6.46 20.0 Total 16.63 52.3 10.21 31.6 • Interim dividend increased by 4.0% Special dividend of £40.0m • Both payable to shareholders on 11 th October 2017 • • Ordinary dividend yield of 2.5% Total dividend yield of 5.2% • Dividend yield calculated using a half year share price of 475.8p 15
Summary
Summary Ongoing focus on conversion rates and productivity • - Gross Profit of £352.0m, up 8.3% in constant currency (+17.7% in reported rates) Summary Summary - Conversion rate up slightly to 16.2% (H1 2016: 15.7%) - Fee earner movements to react to market conditions both up and down - Continued focus on standardisation and efficiency • Returning cash to shareholders - Interim dividend of 3.90p, up 4.0%, total £12.3m - Special dividend of 12.73p, total £40.0m Trading conditions anticipated to remain challenging in some key markets • - Brexit negotiations and political uncertainty in the UK - Election in Germany - Brazil’s ongoing macro -economic challenges • Continue to focus on driving profitable growth, whilst remaining able to respond quickly to any changes in market conditions 17
19 Cautionary Statement This presentation contains certain statements that are neither reported financial results nor other historical information. The information contained in this presentation is not audited, is for personal use and informational purposes only and is not intended for distribution to, or use by, any person or entity in any jurisdiction in any country where such distribution or use would be contrary to law or regulation, or which would subject any member of the PageGroup plc group of companies to any registration requirement. No representation or warranty, express or implied, is or will be made in relation to the accuracy, fairness or completeness of the information or opinions made in this presentation. Certain statements included or incorporated by reference within this presentation may constitute “forward -looking statements” that are based on current expectations or beliefs, as well as assumptions about future events. There are risk factors that can cause actual results to differ materially from those expressed in or implied by such statements. Accordingly, no assurance can be given that any particular expectation will be met and reliance should not be placed on any forward-looking statement. PageGroup plc disclaims any intention or obligation to revise or update any forward-looking statements that may be made in this presentation, regardless of whether those statements are affected as a result of new information, future events or otherwise. Nothing in this presentation should be construed as a profit forecast. This presentation does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase any shares in PageGroup plc, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any contract or commitment or investment decision relating thereto, nor does it constitute a recommendation regarding the shares of PageGroup plc. Past performance cannot be relied upon as a guide to future performance. Liability arising from anything in this presentation shall be governed by English Law. Nothing in this presentation shall exclude any liability under applicable laws that cannot be excluded in accordance with such laws.
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