ANNUAL REPORT
AND ACCOUNTS 2013
CONTENTS
Overview
Our Core Values
Our Performance in 2013
Chairman’s Statement
Strategic Report
Our Global Presence at a Glance
Our Business Model
Our Business
Chief Executive’s Performance Overview
Key Performance Indicators
Our Performance in 2013
Regional Reviews
Our Strategy
The People Behind the Plan
Corporate Responsibility
Principal Risks and Uncertainties
Corporate Governance
Chairman’s Introduction to Corporate Governance
Our Board of Directors
Executive Committee
Our Corporate Governance Framework
How our Governance Framework operates
Nomination Committee Report
Audit Committee Report
Directors’ Remuneration Report
Annual Statement
Directors’ Remuneration Policy Report
Directors’ Annual Remuneration Report
Directors’ Report
Directors’ Report
Financial Statements
Contents
Independent Auditor’s Report
Financial Statements
2
3
5
7
9
11
17
19
21
25
33
40
43
45
50
51
53
54
55
61
63
67
69
75
87
91
92
95
Additional Information and Notice of AGM
Shareholder information and Advisers
Articles of Association
AGM Notice
123
124
127
PageGroup is the trading name of Michael Page International plc
OUR CORE VALUES
Our five values are key to our success. They form a platform for our methods, approach to business and staff motivation.
More than mere words, we believe our values are the essence of our brand and influence the way we work, day in, day out.
TAKE PRIDE
We take pride in what we do, in who we are and what we stand for. We are
proud of our brand, our colleagues and our achievements.
BE PASSIONATE
Our passion to provide the best service for our clients and candidates drives us
to triumph over our competition.
NEVER GIVE UP
We welcome a challenge; we show strength of character and resilience in our
approach. We see difficulty as an opportunity to demonstrate ability.
WORK AS A TEAM
Working as one team makes us stronger, more efficient and adds value to the
business and our brand.
MAKE IT FUN
We recognise that fun is a key factor within our working environment;
we’re sociable and enjoy celebrating our successes.
PROUD TO BE ONE OF
THE WORLD’S MOST
RESPECTED AND
GLOBALLY DIVERSE
RECRUITMENT
CONSULTANCIES
O
V
E
R
V
E
W
I
I
S
T
R
A
T
E
G
C
R
E
P
O
R
T
G
O
V
E
R
N
A
N
C
E
C
O
R
P
O
R
A
T
E
R
E
M
U
N
E
R
A
T
O
N
R
E
P
O
R
T
I
I
D
R
E
C
T
O
R
S
’
I
D
R
E
C
T
O
R
S
R
E
P
O
R
T
’
I
I
F
N
A
N
C
A
L
S
T
A
T
E
M
E
N
T
S
I
A
N
D
N
O
T
C
E
O
F
A
G
M
I
A
D
D
T
O
N
A
L
I
I
N
F
O
R
M
A
T
O
N
I
1
Overview
PageGroup Annual Report And Accounts 2013
PageGroup Annual Report And Accounts 2013
Overview
2
2
OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTOR’S REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMOverviewPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS
PAGEGROUP
GROSS PROFIT AND HEADCOUNT
Gross Profit (Net Fee Income)
2013
Q1
Q2
Q3
Q4
£126.8m
£135.1m
£126.9m
£125.1m
2012
Q1
Q2
Q3
Q4
£135.9m
£138.0m
£126.5m
£126.5m
HEADCOUNT (YEAR END)
2013: 5,130
2012: 5,099
GROSS PROFIT PERMANENT TO TEMPORARY RATIO
2013
2012
Permanent
76%
78%
Temporary
24%
22%
GROSS PROFIT BY DISCIPLINE
2012
2013
20%
20%
41%
19%
OUR PERFORMANCE
IN 2013
Although 2013 was a challenging year for the recruitment
industry and the global economy in general, PageGroup was
able to deliver a robust performance. We were pleased with
the strong results from many of our businesses, including
the UK and the US, and saw some signs of recovery in
Continental Europe towards the end of the year. Together, these
performances resulted in our key measure of gross profit
(net fee income) being just 2.5% lower than 2012, at £513.9m.
2013 was also a year when we focused on operational
efficiencies, enabling us to return an operating profit before
exceptional items of £68.2m, exceeding the prior year by 4.7%.
Key performance data summary:
2013
2012
Reported rate
Constant currency
Growth rates
Finance & Accounting
Marketing, Sales and Retail
Legal, Technology, HR, Secretarial and Healthcare
Engineering, Property & Construction, Procurement & Supply Chain
Revenue
Gross profit (net fee income)
£1,005.5m
£989.9m
£513.9m
£526.9m
Admin expenses before exceptional items
(£445.7m)
(£461.7m)
Operating profit before exceptional items
£68.2m
£65.1m
+1.6%
-2.5%
-3.5%
+4.7%
Profit before tax
£64.1m
£57.0m
+12.4%
Conversion (operating profit/gross profit)
13.3%
12.4%
Basic EPS before exceptional items
Headcount
15.1p
5,130
13.6p
5,099
+11.0%
+0.6%
+1.2%
-2.7%
HIGHLIGHTS
• Operating profit before exceptional items up 4.7%
• Strong performances in UK, USA and Asia and
signs of recovery in Europe
• Australia continues to be a challenging market
• Strong balance sheet with £85m net cash
£513.9m
Gross profit
(-2.5%)
£68.2m
Operating profit
before exceptional items
(+4.7%)
£64.1m
Profit before tax
(+12.4%)
15.1p
Basic EPS before exceptional items
(+11.0%)
5,130
Headcount
(+0.6%)
10.5p
Dividend
(including proposed dividend)
(+5.0%)
3
4
OverviewPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTOR’S REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMOverviewPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS42%18%20%20% In last year’s Chairman’s Statement I mentioned that a higher
proportion of women on our Board would not only bring
different skills and perspectives, but also support our gender
diversity objectives across the Group. So we are delighted
that Danuta Gray joined our Board in December, adding
considerable international line leadership and non-executive
experience as well as a strong technology background.
Together with Ruby McGregor-Smith, our Senior Independent
Director, women now make up 40% of our independent
non-executive directors and 29% of our Board. Over 80%
of our Board members also have considerable international
business experience. This is critical given the global nature
of PageGroup.
There is much more on our Board and our governance,
including the results of our independent board effectiveness
review, in our report on Corporate Governance.
Strategic Report
Following my statement is the Strategic Report where we
describe more fully PageGroup’s performance during 2013,
along with our business model, our strategy and the people
behind the business. We also outline the key performance
indicators we use to measure our business and the principal
risks and uncertainties we face along with our approach to
corporate responsibility.
Looking Ahead
Our priorities for 2014 are clear. We will continue to refine
and execute on our organic growth strategy. We will enhance
the development of our worldwide leadership team. We will
maintain and strengthen our performance culture. We will
continue both the roll-out of our improved operating systems
and the efficiency improvements of our support teams. Your
Board will concentrate on supporting and challenging the
executive management to ensure this happens.
PageGroup continues to grow, develop and change. I never
cease to be impressed by the can-do attitude of PageGroup
people as they grasp the challenges – and the opportunities –
that the economy and this dynamic business provide.
We are very grateful to them.
Robin Buchanan
Chairman
4 March 2014
CHAIRMAN’S STATEMENT
2013 has been a year of delivering benefits from the alterations
to the management structure we made in 2012, continuing our
investment in people and technology, bedding-in our Board and
governance changes, and laying the foundations for sustainable
future growth around the world. In each area PageGroup has made
good progress.
Performance
The macro-economic headwinds which had been holding us
back for much of the year started to abate, especially in the USA
and the UK. Continental Europe’s economic decline slowed and
the emerging markets, with some exceptions, have continued to
grow. Within that changing environment PageGroup delivered a
creditable performance with gross profit of £514 million, down
2.5% on 2012.
In order to prepare the business for a more favourable global
economy, PageGroup management further streamlined our support
functions. We also started the roll-out of our new operating system
and related applications, which will improve both our consultants’
effectiveness and our operational efficiency.
Our focus on sustainable profitable growth is also reflected in
your Board’s decision to step up investment across our large
high potential markets – China, South East Asia, Germany, USA
and Latin America. We look forward to the results from those
investments in the years to come.
Dividend
Your Board is mindful of the role the dividend has to play in
delivering shareholder value. We are committed to increasing the
dividend over the course of the economic cycle in line with our
long-term growth rate. That way we can maintain a sustainable
level of dividend payment during downturns, as well as during
more prosperous times. Given our results and our cash position,
we intend to increase the final dividend to 7.25p, which together
with the interim dividend paid in October of 3.25p, delivers an
increase of 5% on 2012.
Robin Buchanan (Chairman)
The Board
The changes we made to your Board in 2012 have also borne
fruit. In the last Annual Report I explained that we had appointed
a new Remuneration Committee Chairman, David Lowden, and
were about to appoint a new Audit Committee Chairman, Simon
Boddie. Both have performed with distinction during 2013,
adding to the effectiveness of our Board and our governance.
We have also put in place a new remuneration plan for Executive
Directors, better aligning their interests and objectives with those
of our shareholders.
The appointment of Kelvin Stagg as Acting Chief Financial
Officer immediately following the resignation of Andrew Bracey
in October reflects the focus we have given to succession
planning. Kelvin had already been identified as the leading
internal succession candidate given his considerable
experience of the business as Group Financial Controller
and Company Secretary for over seven years. Development
and succession planning remains one of your Board’s most
important priorities.
5
6
OverviewPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTOR’S REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMOverviewPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS STRATEGIC REPORT
OUR GLOBAL PRESENCE AT A GLANCE
With over 76% of gross profit (net fee income) generated outside the UK, PageGroup is a truly international
business with operations in 34 countries. We manage the business in 4 regions.
EMEA
UK
Asia Pacific
The Americas
£208m gross profit
40%
1,886 staff
of group
£124m gross profit
24 %
1,319 staff
of group
£106m gross profit
21%
1,111 staff
of group
£76m gross profit
15%
814 staff
of group
See page 25
See page 27
See page 29
See page 31
UNITED KINGDOM
Aberdeen
Birmingham
Brighton
Bristol
Cambridge
Cardiff
Chiswick
Coventry
Edinburgh
Glasgow
Guildford
Leeds
Leicester
Liverpool
London
Maidstone
Manchester
Milton Keynes
Newcastle
Nottingham
Oxford
Reading
Sheffield
Slough
Southampton
St Albans
Weybridge
IRELAND
Dublin
Bordeaux
Cergy Pontoise
Lille
Lyon
Marseille
Massy
Monaco
Nantes
Neuilly sur Seine
FRANCE
Nice
Noisy Le Grand
Orleans
Paris
Rennes
Rouen
Strasbourg
Toulouse
Versailles
RUSSIA
Moscow
BELGIUM
Antwerp
Brussels
SWEDEN
Gothenburg
Stockholm
SWITZERLAND
Geneva
Lausanne
Zurich
LUXEMBOURG
Luxembourg
AUSTRIA
Vienna
PORTUGAL
Lisbon
Porto
SPAIN
Barcelona
Bilbao
Madrid
Seville
Valencia
ITALY
Bologna
Milan
Padova
Rome
Turin
THE NETHERLANDS
Amsterdam
Breda
Eindhoven
Rotterdam
Utrecht
Tilburg
GERMANY
Berlin
Dusseldorf
Frankfur t
Hamburg
Munich
Stuttgart
Cologne
POLAND
Warsaw
USA
Boston
Chicago
Houston
Iselin
Los Angeles
New York
Philadelphia
San Francisco
Stamford
MEXICO
Mexico City
Monterrey - Nuevo León
CHILE
Santiago
ARGENTINA
Buenos Aires
CANADA
Montreal
Toronto
TURKEY
Istanbul
MOROCCO
Casablanca
COLOMBIA
Bogota
BRAZIL
Alphaville
Barra da Tijuca
Belo Horizonte
Campinas
Curitiba
Porto Alegre
Recife
Rio de Janeiro
São Paulo
JAPAN
Tokyo
CHINA & HONG KONG
Beijing
Guangzhou
Hong Kong
Kowloon
Pudong
Shanghai
Shenzhen
Suzhou
Taipei
AUSTRALIA
Brisbane
Chatswood
Melbourne
Parramatta
Perth
Sydney
Wheelers Hill
NEW ZEALAND
Auckland
QATAR
Doha
UAE
Dubai
Abu Dhabi
INDIA
New Delhi
Mumbai
MALAYSIA
Kuala Lumpur
SINGAPORE
Jurong
SOUTH AFRICA
Johnannesburg
Cape Town
MICHAEL PAGE AFRICA
Operates out of Paris, France
7
Strategic Report
8
PageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTOR’S REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMStrategic ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS OUR BUSINESS MODEL
HOW WE GENERATE VALUE
We achieve our objectives by utilising our assets, executing
our strategic priorities and operating our business responsibly
through effective governance and adherence to our core values.
We have developed a balanced business with geographic
diversity, discipline diversity and a permanent and temporary
placement mix according to the job types in the markets
in which we operate. Our commitment to be a responsible
business underpins everything we do, with strong attention to
effective governance throughout. The PageGroup difference is a
“make it happen” culture. Our core values reflect this.
POWERFUL PLATFORM
Key
Assets
Market
Approach
Experienced
management
Quality of
consultants
Tactical
approach
to different
markets
Deep
relationships
(Candidate & Client)
Differentiated
brand
offerings
Network:
scale &
breadth
Brand
& market
leadership
Financial
scale
Diversity in
geography and
discipline
RECRUITMENT
MODEL
R MODEL AT W
K > O
U
R
O
W
T
A
L
E
D
O
M
R
U
O
>
K
R
O
W
T
A
L
E
D
O
M
R
U
O
>
K
R
O
W
T
A
L
E
D
O
M
R
U
O
>
K
R
O
W
U R M O D E L AT WORK > OUR MODEL AT WORK > O
K > O
O R
U
R
M
CLIENTS
• Sector expertise and advice
• Appropriate candidate
shortlist
• Professional
high-quality service
Leads to:
• Repeat business
• Greater exclusivity
• Future candidate
CONSULTANTS
• Team-based structure
and compensation
• Access to jobs across the
entire Page network
• Consistent process
Leads to:
• Rapid promotion
• Career opportunities
• Reward and
recognition
O
D
E
L
A
T
W
O
R
K
>
O
U
R
M
O
D
E
L
A
T
W
O
R
K
>
O
U
R
M
O
D
E
L
A
T
W
O
R
K
>
O
U
R
M
O
D
E
L
A
T
W
O
R
Leads to:
• Career-long
relationship
• Peer recommendation
• Future client
K > O
UR MODEL AT W
CANDIDATES
• Professional
high quality service
• Market understanding
and client profiling
T
A
L
E
D
O
• Careers advice
M
R
U
K > OUR MODEL AT WORK > OUR MODEL AT WORK > O
O
R
SUSTAINABLE GROWTH
Operational
Financial
Organic
growth
Long-term
investment
Scalable
& flexible
capacity
Cash
generation
Talent & skill
development
Consistency
of shareholder
returns
Agile &
responsive
Strong
balance
sheet
OUR VALUES
Take pride
Be passionate
Never give up
Work as a team
Make it fun
9
10
RECRUITMENT
MODEL
Strategic ReportPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTOR’S REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMStrategic ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS
OUR BRANDS
PageGroup is organised into three brands operating at different
levels of the recruitment market.
Michael Page is the original PageGroup brand and is normally
established as the first business in each country we enter,
operating at the qualified professional and management
level. Page Personnel offers specialist recruitment services to
organisations requiring technical and administrative support,
professional clerical and junior management level staff.
Page Executive provides a range of search and selection
services for organisations looking for leadership talent at
senior management and board level.
More details are provided on pages 13 and 14.
TARGETED SECTORS
EXECUTIVE
SEARCH
QUALIFIED
PROFESSIONAL
CLERICAL
PROFESSIONAL
GENERALIST
STAFFING
OUR BUSINESS
We are one of the world’s best known and most respected specialist
recruitment consultancies. We deliver recruitment services to clients
through a network of 153 offices across 34 countries.
OUR OBJECTIVE
To deliver above market returns to our shareholders by:
Being the leading
specialist recruitment
consultancy in
each of our chosen
markets
Delivering
profitable
growth across
the business
OUR SERVICE
Over the last 38 years PageGroup has built a reputation for
excellence by placing skilled candidates into specialist job roles.
We build strong relationships with employers, enabling us to fully
understand the needs of their individual businesses and, through
our large candidate database and the implementation of rigorous
candidate assessments, provide a best-in-class recruitment service
in terms of speed of search and choice of candidates.
We provide recruitment services for permanent, contract and
temporary staff at clerical professional, qualified professional
and executive level. Our revenue (fee income) from permanent
placements is based typically on a percentage of the candidate’s
remuneration package and is mainly derived from contingent fee
based assignments, but also includes some retained assignments.
There is no associated cost of sales with our permanent placements
other than the cost of advertising so the majority of the revenue
drops down to the gross margin (net fee income) line in our
financial statements. Revenue from temporary, contract and interim
placements represents amounts billed to clients for the services
of temporary, contract or interim staff and, therefore, includes the
salaries paid to those staff plus a margin. The salaries are included
in cost of sales.
Gross profit growth is the key indicator which we monitor as gross
profit represents total fee income for permanent placements after
advertising costs and the margin on temporary placements. We call
the ratio of operating profit to gross profit our “conversion rate”.
This is also a key measure in our business.
With skill shortages around the world, we believe that there remains
a significant need for specialist recruitment services and we are
optimistic about our ability to grow our business in the long-term.
11
12
Strategic ReportPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTOR’S REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMStrategic ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS OUR BRANDS
Michael Page is the original PageGroup brand and is normally established as the
first business in each new country that we enter. Michael Page is comprised of
15 broad disciplines, each providing a service to a specialist area of the market.
Operating at the qualified professional and management level, Michael Page
recruits on a permanent, temporary, contract or interim basis. Michael Page
operates in 34 countries worldwide, across Africa, Asia Pacific, Europe, North
and Latin America.
Our approach
We focus on developing a thorough understanding of our clients’ businesses,
from technical and soft skill requirements to future growth plans. We are then
able to partner effectively to manage their recruitment requirements to support
expansion, diversification or change programmes.
How we reach our audience
Michael Page utilises a variety of methods to source candidates from our
industry-leading databases through social media, networking and managed
advertising campaigns.
Opportunities for growth
Michael Page aims to grow by organic expansion: by establishing new specialist
disciplines in existing markets; by increasing operations geographically; and
by moving into new market sectors in the geographic regions in which we
currently operate.
The executive search business of PageGroup, Page Executive,
offers a range of search, selection and management solutions for
organisations to attract and retain their leadership talent. The roles
on which we focus typically sit at the sub-board and board levels.
Page Executive has a global presence, operating across Africa,
Asia Pacific, Europe, North and Latin America.
Our approach
We have a flexible approach to talent attraction based on
client requirements. We offer global reach combined with local
expertise. Our diverse shortlists are based on a thorough search of
the market. Results are delivered quickly and accurately.
How we reach our audience
Page Executive has a developed network of senior contacts
across our operating territories and markets. This enables us to
approach and attract the top talent in the market for organisations
wishing to make a leadership hire. We also run managed selection
campaigns which can include high profile or niche advertising.
Opportunities for growth
Page Executive aims to diversify by market sector and geography
across our international network.
Page Personnel offers specialist recruitment services to organisations
requiring permanent employees or temporary or contract staff at the
technical and administrative support, professional clerical and junior
management levels. Page Personnel operates in 21 countries across
Asia Pacific, Europe, North and Latin America.
Our approach
Employers and candidates in a high activity, high volume market require
a responsive recruitment partner – a service that Page Personnel is proud
to provide. Speed and accuracy define our proposition; we react quickly
to ensure that organisations have access to the skills they require.
Page Personnel operates in the permanent, contract and temporary
recruitment fields.
How we reach our audience
Page Personnel supports employers needing to make hiring decisions
quickly by maintaining and actively growing a pool of high quality candidates
ready for their next opportunity.
Opportunities for growth
Page Personnel is one of the fastest growing PageGroup businesses,
diversifying by market and geography across our international network.
13
14
Strategic ReportPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTOR’S REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMStrategic ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS OUR BUSINESS
OUR MARKETS
While the global economy remains challenging
we are optimistic about the long-term future of
the recruitment market.
macro-economic factors are weak and businesses and candidates
have low confidence in the market, the market for recruitment
services will contract. The key driver of growth in the recruitment
market is churn rather than the creation of new jobs.
During 2013, the difficult market conditions stemming from the
2008 global financial crisis continued to have an impact and many
economies across the world remained weak, but with significant
regional variations. This is particularly relevant to our business,
since the provision of recruitment services is impacted strongly by
confidence in the wider economy.
Business confidence is a major factor in determining the number
of new job roles created and candidates’ levels of confidence are
a key determinant of the number of candidates seeking new roles.
When the economy is strong the confidence of both businesses
and candidates leads to a high recruitment churn rate, which
is positive for the recruitment industry. Conversely, when
Our markets are not just defined by the countries within which
we operate, but also the industry sectors. We are impacted
significantly by the changes in fortunes of different sectors as
well as different countries.
Peaks and troughs in different sectors have a huge impact on our
business. For example, demand from China led to a huge boom in
the mining and natural resources sector in both Australia and Brazil
in 2010-2012 and our businesses in these countries grew rapidly
as we fulfilled the crucial role of finding staff to satisfy the needs
of this sector. However, the mining and natural resources sector
slowed in the second half of 2012 and our revenue was impacted
strongly. This has continued during 2013.
PERMANENT/TEMPORARY MIX
DIVERSIFICATION OF DISCIPLINES
In order to provide an added-value specialist recruitment
service to our clients, we organise our staff into specialist
teams, typically with consultants who were previously working
within those specialist areas before moving into recruitment.
We operate under four broad categories, which breakdown
into 15 sub-disciplines as shown in the key below.
Below this level we specialise further to ensure our specialist
recruitment services meet our clients’ requirements.
For example, tax and treasury services within Finance,
and digital marketing within Marketing.
Each of the disciplines in which we operate respond differently
to changes in market conditions and, therefore, diversification
of discipline is key to reducing our risk in weak markets. In
addition, different disciplines tend to dominate in different
geographic regions. Therefore, as we expand geographically,
new revenue opportunities arise from new disciplines.
In the past, PageGroup has used its experience and track
record to prioritise which disciplines it launches and grows.
Historically, this has meant that we launched offices in new
countries by focusing on the recruitment of Finance staff.
However, today, we take a more proactive business approach,
basing our decision on the size of the market, competitive
landscape, fee rate potential, etc. In Southern Greater China
for example, we are prioritising Engineering, Supply Chain
Gross Profit by Discipline
and Logistics rather than our traditional core business area of
Finance. The graph below demonstrates how the discipline mix
has changed over the last five years. We can assume that this
mix will continue to develop in the future.
Given these trends, we expect in the future to be more
dependent on the technical disciplines such as Engineering,
Technology and Marketing than we are today. We believe
the more specialist we are, the greater leverage we will have
to counter internal or outsourced resource teams who will
advertise and/or use social media for more mainstream or
commodity type roles.
Gross profit by discipline 2013
41%
20%
20%
19%
Our strategy is to achieve the same ratio of permanent to
temporary recruitment as exists within the workforce of each of
our geographic markets. We use all three brands to maximise this
balance at all salary levels.
Gross Profit Permanent/Temporary Mix
%
100
80
60
40
20
0
2007
2008
2009 2010 2011 2012
2013
The ratio of permanent to temporary recruitment tends to be an
indicator of where we are in the economic cycle. The proportion
of gross profit arising from permanent placements generally
varies between 70% and 80% depending on where we are in the
economic cycle. In 2013, 76% of our gross profit was derived from
permanent placements and 24% from temporary placements.
The graph to the left shows the ratio over the last seven years.
In several of our core strategic markets, working in a temporary
role, or as a contractor or interim employee, is not currently
normal practice. This is the case, for example, in Greater China,
Singapore, Malaysia and Latin America. The ratio of permanent
to temporary placements in the future will, therefore, be in part
determined by our success in diversifying into these markets.
The ratio is also impacted by the salary level at which we recruit.
Our Page Personnel brand typically recruits a higher proportion of
temporary staff compared to our other brands.
% Permanent
%Temporary
100
%
80
60
40
20
0
2007
2008
2009
2010
2011
2012
2013
KEY:
Finance and Accounting
Marketing, Sales & Retail
Engineering, Property and Construction, Procurement and Supply Chain
Legal, Technology, HR, Secretarial, Healthcare
Finance and Accounting
Sales and Marketing
Engineering and Supply Chain
Legal, Technology, HR and other
Finance
Financial Services
Sales
Retail
Marketing
Engineering
Oil and Gas
Property and Construction
Procurement/Supply Chain/ Logistics
Legal
Technology
Assistant/Secretarial
Human Resources
Healthcare/Life Sciences
Hotel and Catering
15
Strategic Report
16
PageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTOR’S REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMStrategic ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS Current trading and Outlook
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
approximately £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.
We will next update the market on our first quarter trading for
2014 in an announcement on 15 April 2014.
This Strategic Report set out on pages 7 to 49 was approved
by the Board on 4 March 2014.
Steve Ingham,
Chief Executive Officer
4 March 2014
WE BELIEVE THAT OUR GOAL OF GROWTH OVER THE
NEXT FEW YEARS IS ACHIEVABLE
We have the management depth and experience
We have a proven track record of scaling the business
We have world-renowned and fully integrated brands
We have highly trained and motivated consultants
We have the financial resources
We have the ability to improve the quality and cost
effectiveness of the operational support functions
We are at a promising point in the economic cycle
with markets starting to show signs of improvement
CHIEF EXECUTIVE’S
PERFORMANCE OVERVIEW
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 on 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 approximately
3% per head; investments in additional fee earner headcount;
and in the supporting infrastructure, including the first full year of
Steve Ingham (Chief Executive Officer)
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 sizeable 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.
17
18
Strategic ReportPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTOR’S REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMStrategic ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS KEY PERFORMANCE INDICATORS
We measure our progress against our strategic objectives using the following key performance indicators:
Gross profit growth
How measured: Gross profit represents revenue less cost of sales and
consists of the total placement fees of permanent candidates, the margin
earned on the placement of temporary candidates and the margin on
advertising income, ie. it represents net fee income. The measure used is
the increase or decrease in gross profit as a percentage of the prior year
gross profit.
Why it’s important: The growth of gross profit relative to the previous year
is an indicator of the growth of the net fees from the business as a whole. It
demonstrates whether we are in line with our strategy to grow the business.
How we performed in 2013: With continued economic weakness in
many of our markets, gross profit decreased by 2.5% in 2013. However,
the Group remains profitable in all established markets and there were signs
of improvement towards the end of the year.
Relevant strategic objective: Organic growth
Percentage of gross profit generated outside the UK
How measured: Total gross profit from regions outside the UK expressed as
a percentage of total gross profit.
Why it’s important: To measure the success of our strategy to diversify into
new markets which are less competitive/less developed than the UK market.
How we performed in 2013: 76% of our gross profit was generated outside
the UK compared to 77% in 2012. We have continued our strategy of
geographic diversification but the proportion of business generated outside
the UK has fallen back slightly due to a good performance in the UK in 2013
and slightly weaker performances in EMEA and Asia Pacific relative to the
prior year.
Relevant strategic objective: Diversification
Gross profit outside finance and accountancy
How measured: Total gross profit from disciplines outside of finance
and accounting expressed as a percentage of total gross profit.
Why it’s important: We look at the proportion of gross profit from the different
disciplines to measure the success of our strategy of diversification into more
disciplines to reduce our exposure to any one sector. A key indicator is the
percentage outside of our original core discipline of finance and accountancy.
How we performed in 2013: 59% of our gross profit was generated from
disciplines outside the core areas of finance and accounting. This compares
to 58% in 2012 as we continue to follow our diversification strategy.
Relevant strategic objective: Diversification
Ratio of gross profits 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 helps us to understand where we are in the
economic cycle since the temporary market tends to be more resilient when
the economy is weak.
How we performed in 2013: In 2013, 76% of our gross profit was generated
from permanent placements and 24% from temporary. This compares to
78% permanent and 22% temporary in 2012.
Relevant strategic objective: Diversification
19
40
30
20
10
0
-10
-20
-30
-40
100
80
60
40
20
0
100
80
60
40
20
0
100
80
60
40
20
0
2010
2011
2013
2012
% growth
2009
% UK
% Outside UK
% Finance and
accounting
% Outside Finance
and accounting
% Temporary
% Permanent
2009 2010 2011 2012 2013
2009 2010 2011 2012 2013
2009 2010 2011 2012 2013
Gross profit per fee earner
How measured: Gross profit for the year divided by the average
number of fee generating operating staff in the year.
Why it’s important: This is a key indicator of productivity.
How we performed in 2013: Gross profit per fee earner was £139.2k
in 2013 compared to £140.4k in 2012. There has been a marginal
decrease in productivity compared to 2012 relating to continued
competitive pressure on fees and investment in fee earning heads
during the year who are not yet at full productivity.
Relevant strategic objective: Organic growth, Recruit and develop the
best people
Conversion before exceptional items
How measured: Operating profit before interest and taxation (EBIT)
before exceptional items as a percentage of gross profit.
Why it’s important: This demonstrates the Group’s effectiveness at
controlling the costs and expenses associated with its normal business
operations. It will be impacted by the level of productivity and the level
of investment for future growth.
How we performed in 2013: Operating profit as a percentage of gross
profit increased to 13.3% in 2013, up from 12.4% in the prior year.
Improving efficiency is a strategic priority for the Group and during
2013 there has been a focus on streamlining support areas and cutting
costs. Operational support heads were reduced by 155 during the year.
However, there has been corresponding increase in fee earning heads
and the benefits are not expected to feed through until 2014 when the
new heads are fully productive.
Relevant strategic objective: Build for the long-term
Basic earnings per share before exceptional items
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 overall profitability of the Group.
How we performed in 2013: Earnings per share in 2013 was 15.1p,
an 11.0% improvement on the EPS in 2012 of 13.6 pence.
Relevant strategic objective: Build for the long-term, Organic growth
Days sales outstanding (DSO)
How measured: Calculated by comparing how many days’ billings it
takes to cover the outstanding debtor balance at the year end.
Why it’s important: This measures the length of time taken for us
to receive payment from our clients and indicates how well we are
managing the Group’s major asset.
How we performed in 2013: DSO was 47 days at the end of 2013 in
line with the prior year (2012: 47 days).
Relevant strategic objective: Build for the long-term
Net cash
How measured: Cash and short-term deposits less bank overdrafts
and loans.
Why it’s important: The level of net cash is a key measure of our
success in managing our working capital and determines our ability
to reinvest in the business and to return cash to shareholders.
How we performed in 2013: Net cash increased during the year to
£85.4m (2012: £61.4).
Relevant strategic objective: Build for the long-term
200
150
100
50
0
20
15
10
5
0
20
15
10
5
0
55
50
45
40
160
140
120
100
80
60
40
20
0
£’000 gross profit per fee earner
2009
2010
2011
2012
2013
EBIT as % of Gross Profit
2009
2010
2011
2012
2013
Earnings per share (pence)
2009
2010
2011
2012
2013
Days sales outstanding (no. of days)
2009
2010
2011
2012
2013
£m
2009
2010
2011
2012
2013
20
Strategic ReportPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTOR’S REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMStrategic ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS OUR PERFORMANCE IN 2013
Market conditions in 2013 made for another challenging year, but the Group delivered an increase over 2012 in operating profit (before
and after exceptional items), despite gross profit (net fee income) being down 2.5%. We were encouraged by our performance in Q4,
which saw our first positive growth in constant currency since Q1 of 2012, and by the improvement in the year-on-year quarterly gross
profit growth rate in each of the last three quarters. Year-on-year gross profit growth was experienced in 20 countries and we finished the
year with a strong balance sheet and £85m of net cash.
Revenue
Revenue for the year ended 31 December 2013 was £1,005.5m, exceeding our revenue in 2012 of £989.9m by 1.6%. Our revenue from
permanent placements decreased by 4.5% to £403.1m (2012: £422.0m), while revenue from temporary recruitment was up by 6.1%
at £602.5m (2012: £567.9m). The differences in these performances are in line with what we would normally expect at this point in the
cycle, as temporary recruitment tends to pick up earlier in the recovery but will be overtaken by the subsequent much faster recovery in
permanent recruitment.
Gross Profit (net fee income)
Gross profit for the year fell by 2.5% to £513.9m (2012: £526.9m).
Perm/Temp gross profit
2013 (£’m)
2012 (£’m)
Reported rate Constant currency
Growth rates
Permanent
Temporary
Total Gross Profit
Ratio (Perm/Temp)
392.2
121.7
513.9
76:24
409.7
117.2
526.9
78:22
-4.3%
+3.8%
-2.5%
-4.3%
+2.7%
-2.7%
Gross profit from permanent placements decreased by 4.3% and represented 76.3% of Group gross profit (2012: 77.8%) while gross
profit from temporary placements increased by 3.8% representing 23.7% (2012: 22.2%) of Group gross profit.
Group gross margin decreased to 51.1% (2012: 53.2%) reflecting the 1.5% growth in the proportion of temporary business and a small
reduction in the gross margin achieved on temporary placements to 20.2% (2012: 20.6%), where strong pricing in rapidly growing
markets has been offset by competitive pressures elsewhere.
Gross Profit by discipline
Proportion
2013 (£’m)
2012 (£’m)
Reported rate Constant currency
Growth rates
Finance & Accounting
Legal, Technology, HR, Secretarial and other
Engineering, Property & Construction
Procurement & Supply Chain
Marketing, Sales & Retail
Total
41%
20%
20%
19%
100%
211.7
105.2
101.0
96.0
513.9
220.6
106.4
102.8
97.1
526.9
-4.0%
-1.1%
-1.8%
-1.1%
-2.5%
-4.4%
-1.5%
-1.6%
-1.4%
-2.7%
Diversification by discipline is a core element of our strategy. Our oldest discipline, Finance and Accounting, now represents just
41% of Group gross profit, while 59% is generated from other areas, significantly reducing our exposure to any particular market sector
and reducing our overall risk. Our diversification into Engineering, Procurement & Supply Chain and Property & Construction has been
particularly successful and this category now represents nearly 20% of our gross profit. Financial Services, once approximately 14%
of Group gross profit, now only represents approximately 7% of Group and 4% of UK gross profit, but has remained stable at this level
for the past six quarters.
Gross Profit by region
EMEA
UK
Asia Pacific – Australia and New Zealand
Asia
Total
Americas
Group Total
21
Proportion
2013 (£’m)
2012 (£’m)
Reported rate Constant currency
Growth rates
40%
24%
21%
15%
100%
207.8
124.1
39.7
66.1
105.8
76.2
513.9
218.4
121.4
51.7
63.2
114.9
72.2
526.9
-4.9%
+2.2%
-23.1%
+4.6%
-7.9%
+5.6%
-2.5 %
-8.2%
+2.2%
-19.0%
+6.9%
-4.7%
+8.7%
-2.7%
by 186 during the year. Naturally it takes some time before
these new fee-earners reach full productivity and this, together
with the other start-up costs incurred as investments are
made to open or expand new offices, adversely impacted
the conversion rate.
Administration expenses in the year included share based
charges of £6.8m, including social security, (2012: £13.2m)
in respect of the Group’s deferred annual bonus scheme,
long-term incentive plan and share option schemes.
The reduction in the charge compared to 2012 was primarily
due to some performance elements not being met, causing
charges for these plans made in previous years to be credited
in 2013.
The net position taking into account savings made from
our operational support efficiency initiatives, the cost of
investments in fee-earners and our operating platform and
share costs was an overall net increase of 31 heads, but
a decrease of £16.0m in our administration costs (before
exceptional items), a 3.5% reduction on 2012. Our conversion
rate of gross profit to operating profit increased to 13.3%
during the year (2012: 12.4%).
In normal circumstances, the operational gearing of the
business model leads us to expect that a decline in gross profit
will lead to a larger proportionate decrease in operating profit.
However, in 2013, although there was a 2.5% decrease in
gross profit, operating profit before exceptional items increased
by 4.7%, as a result of the streamlining of our operational
support functions.
Our strategy of diversification by region has reduced our
exposure to changes in market conditions. The rate of growth
is impacted by the strengths of the economies and the
maturity/competitiveness of the recruitment markets in each
region. We have continued to invest in the large, high potential
markets of the US, Germany, Latin America, Greater China and
South East Asia and have seen some of the benefits of this
investment with year-on-year growth of 8.7% in the Americas
and 6.9% in Asia. We delivered year-on-year gross profit
growth in 20 countries and record breaking performances in
China, Japan, Turkey, Russia, UAE, Malaysia, Mexico
and Chile.
Administration costs and conversion of
gross profit to operating profit
During the year we remained focused on the conversion of
gross profit to operating profit through improved operational
efficiency. During 2013 we undertook an exercise to
standardise and streamline many of our operational support
functions, which drove significant cost savings; a reduction of
approximately £10m in operational support costs in 2013 and
run-rate savings of approximately £20m by the end of the year.
With around 75% of our cost base relating to employee costs,
a decrease of 155 operational support staff during 2013 drove
significant savings. Most of this decrease was in our European
operations, which with relatively high employment and social
charges meant that associated one-off costs offset some of the
savings achieved in 2013. The full benefit of this exercise will
be seen in 2014.
The conversion of gross profit to operating profit is also
impacted by our investment strategy. In 2013 we continued to
pursue our strategy of investing in our high potential markets
as well as investing in our existing markets to drive their long-
term potential. Overall, we increased our fee-earner headcount
Group quarterly Headcount and Gross Profit
200
150
100
50
.
4
1
5
.
5
9
4
.
8
7
4
.
9
3
4
.
0
5
4
.
0
5
4
.
7
5
4
.
8
2
4
.
7
6
5
.
3
2
5
.
5
3
5
.
1
8
4
d
e
t
r
o
p
e
r
s
a
)
m
£
(
t
i
f
o
r
P
s
s
o
r
G
.
2
9
6
.
3
8
9 6
9
5
.
.
1
9
8
.
4
7
2 8
9
2 7
0
7
.
.
.
2
8
2
1
.
4
3
2
1
.
0
1
2
1
.
5
5
0
1 1
3
9
.
.
4
2
5
3 1
0
4
1
.
.
3
1
4
1
.
7
8
1
1
.
0
5
9
.
8
3
8
.
8
7
4
1
.
6
2
4
1
.
1
6
3
1
.
3
7
2
1
.
0
8
3
1
.
9
5
3
1
.
5
6
2
1
.
5
6
2
1
1
.
5
3
1
.
8
6
2
1
9
6
2
1
1
.
5
2
1
.
9
9
1
1
.
7
1
1
1
.
8
2
1
1
6000
4500
3000
H
e
a
d
c
o
u
n
t
1500
.
.
9
7
6 9
0
3 9
2
8
.
0
Q4Q3Q2Q1
Q4Q3Q2Q1
Q4Q3Q2Q1
Q4Q3Q2Q1
Q4Q3Q2Q1
Q4Q3Q2Q1
Q4Q3Q2Q1
Q4Q3Q2Q1
Q4Q3Q2Q1
Q4Q3Q2Q1
Q1
Q2
Q4Q3
0
Q4Q3Q2Q1
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
22
Strategic ReportPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTOR’S REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMStrategic ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS
OUR PERFORMANCE IN 2013
Exceptional Items
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 French 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 résultats
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 has taken in 2013, an exceptional operating
profit charge of £2.5m, interest expense on late payment of
corporation tax and profit share of £0.6m and an additional tax
charge on the exceptional item of £0.7m relating to prior periods.
A further £0.6m relating to 2013 is included within operating profits
from underlying activities, together with a tax credit of £0.1m,
which have not been treated as exceptional items. A proportion
of these charges were determined by the tax ruling, with the
remainder for other years based on assumptions.
Restructuring charge
In 2012 there was an exceptional restructuring charge of £7.8m,
relating to the removal of a layer of management in Continental
Europe and the Americas.
Amortisation of intangible assets
In May, we commenced use of our new operating system and
related applications in Boston, USA, and accordingly, began the
amortisation of these intangible assets over a five year period.
The 2013 charge for these intangible assets was £5.4m, reflecting
the eight months of amortisation in 2013.
Taxation
Tax on profit was £21.5m (2012: £20.8m). This represented an
effective tax rate of 33.5% after exceptional items (2012: 36.5%).
Before exceptional items the Group’s effective tax rate was 30.9%
(2012: 36.0%). The rate is higher than the effective UK Corporation
Tax rate for the year of 23.25% due to disallowable items of
expenditure and profits being generated in countries where
corporation tax rates are higher than in the UK. The effective tax
rate is lower than in 2012 due to the benefit of additional net future
and current deductions for share based reward plans in the UK and
overseas territories of approximately 4.1%, partially offset by taxes
on the current year exceptional item of approximately 1.1%.
Share Options and Share repurchases
At the beginning of 2013, the Group had 22.8m share options
outstanding, of which 3.5m had vested, but had not been
exercised. During the year, options were granted over 4.6m shares
under the Group’s Share Option Plans, options were exercised
over 4.5m shares, generating £14.4m in cash, and options
lapsed over 1.1m shares. At the end of 2013, options remained
outstanding over 21.8m shares, of which 7.9m had vested but had
not been exercised. During 2013, the Group’s Employee Benefit
Trust did not purchase any shares to satisfy employee share plan
awards (2012: £18m) and no shares were repurchased by the
Company and cancelled during the year (2012: nil).
Earnings per share and dividends
In 2013, basic earnings per share before exceptional items
increased by 11.0% to 15.1p (2012: 13.6p), reflecting our focus
on improving efficiency, and a lower effective tax rate. Diluted
earnings per share, before exceptional items, which takes
into account the dilution effect of share plans, was 14.9p
(2012: 13.5p). After exceptional items, basic earnings per share
was 13.8p, an increase of 16.0% on 11.9p in 2012 and diluted
earnings per share was 13.7p (2012: 11.7p).
The Group’s strategy is to pay dividends to shareholders at a
level that the Board believes is sustainable through economic
cycles, while maintaining a strong balance sheet to support the
required investment in the growth and development of the Group.
In line with the increase in operating profits, the improved gross
profit growth rates experienced as the year progressed and the
improved outlook in a number of the Group’s markets, a final
dividend of 7.25p (2012: 6.75p) per ordinary share is proposed,
which, together with the interim dividend of 3.25p (2012: 3.25p)
per ordinary share, increases the total dividend for the year by
5.0% over 2012 to 10.5p per ordinary share. The proposed final
dividend, which amounts to £22.2m, will be paid on 23 June 2014
to shareholders on the register as at 23 May 2014, subject to
shareholder approval at the Annual General Meeting.
Cash Flow and Balance Sheet
Cash flow in the year was strong with £24.0m of net cash being
generated to bring the closing net cash balance to £85.4m at
31 December 2013. The Group has a £50m invoice financing
arrangement and a £10m committed overdraft facility in place to
ease cash flow across its operations and ensure access to funds
should they be required, but neither of these were in use at the
year end.
The diagram below shows the main drivers of our cash flow during
the year:
£m
160
150
140
130
120
110
100
90
80
70
60
50
40
30
20
10
0
10.3
25.4
88.8
12.7
30.8
14.4
61.4
85.4
December
2012
EBITDA
Working
Capital
Tax &
Interest
Paid
Net
capex
Dividends
paid
December
2013
Income
from
option
exercises
The movements in the Group’s cash flow in 2013 reflected
improvements in many of the Group’s markets as the
year progressed. The increase of 1.6% in the Group’s revenue
drove a £10.3m increase in working capital. This comprised
an increase of £8.5m in receivables, compared to a decrease
of £7.5m in 2012, as well as a decrease in payables of £1.8m,
compared to last year’s decrease of £5.1m.
Capital expenditure was £3.6m lower in 2013 at £13.3m
(2012: £16.9m). Our capital expenditure is driven primarily by
headcount, in terms of expenditure on office accommodation
and infrastructure, and by the development and maintenance
of our IT systems. The lower level of capital expenditure
reflects the reduced spending on software development.
Dividend payments were in line with the prior year at £30.8m
(2012: £30.6m). However, there were sizeable differences
in cashflow as a result of the purchase and issue of shares
related to share options. In 2013, £14.4m was received by the
Group from the exercise of options compared to only £7.8m
received in 2012. In addition, in 2013, no cash was used to
purchase shares for the Employee Benefit Trust to satisfy future
employee share awards, whereas, in 2012, £18.0m was used
for this purpose.
The most significant item in our balance sheet is trade
receivables which amounted to £146.7m at 31 December 2013
(2012: £141.7m). Days sales in debtors at 31 December 2013
was 47 days (2012: 47 days).
Treasury Management and Currency Risk
It is the Directors’ intention to continue to finance the activities
and development of the Group from retained earnings and
to operate the Group’s business while maintaining a strong
balance sheet position.
Cash surpluses are invested in short-term deposits, with any
working capital requirements being provided from Group cash
resources, Group facilities, or by local overdraft facilities. The
Group has a multi-currency notional cash pool between the
Eurozone subsidiaries and the UK-based Group Treasury
subsidiary which facilitates interest and balance compensation
of cash and bank overdrafts.
Foreign Exchange Translation risk
In 2013 the Group operated in 34 countries around the world
and carried out transactions recorded in twenty five local
currencies. In line with normal accounting policies, the Group’s
Income Statement and Cash Flow Statement are reported in
Pounds Sterling using the average exchange rate for each
month to translate the local currency into Sterling and the
balance sheet is translated at the closing rate of exchange at
the balance sheet date. The Group is therefore exposed to
foreign currency translation differences in accounting for its
overseas operations. Our policy is not to hedge this exposure.
Foreign Exchange Transaction risk
As a service company, most of the Group’s transactions are
within the respective territories in which the local businesses
operate and therefore there are few cross-border transactions
between Group companies. This means that the Group does
not have a material exposure to transactional currency risk nor
a material exposure to foreign denominated monetary assets
and liabilities.
Royalties are charged for the use of the Group’s trademarks
and management fees are charged for Group and regional
functions that provide services to other Group subsidiary
companies. Foreign exchange gains and losses are
recognised in accordance with IFRS on the settlement of
these transactions where the cash received, when converted
into Sterling, differs from the amounts previously recorded in
the Income Statement. These exchange gains and losses are
included within operating profit.
In certain cases, where the Group gives or receives short-
term loans to and from other Group companies with different
reporting currencies, it may use foreign exchange swap
derivative financial instruments to manage the currency and
interest rate exposure that arises on these loans. It is the
Group’s policy not to seek to designate these derivatives
as hedges.
The table below shows the relative movements of the
Group’s main trading currencies against Sterling during 2013,
when compared to those prevalent during 2012. Negative
percentages indicate that Sterling has weakened against the
foreign currency during the period.
Movement in
the average
exchange rate
used for Income
Statement
translation
between 2012
and 2013
Movement in
the year end
exchange rate
used for Balance
Sheet translation
between 2012
and 2013
-4%
-2%
10%
-1%
7%
-1%
-1%
-4%
20%
-3%
-1%
17%
2%
18%
2%
5%
-1%
24%
Currency
Euro
Swiss Franc
Brazilian Real
US Dollar
Australian Dollar
Hong Kong Dollar
Singapore Dollar
Chinese Renminbi
Japanese Yen
A table showing the impact of a 10% strengthening of Sterling
against the main currencies to which the Group is exposed on
both the Group’s equity at the balance sheet date and on profit
before tax for the year is shown on page 121.
23
24
Strategic ReportPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTOR’S REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMStrategic ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS EMEA
GROSS PROFIT AND HEADCOUNT
Gross Profit (Net Fee Income)
2013
Q1
Q2
Q3
Q4
£52.1m
£55.1m
£48.5m
£52.1m
2012
Q1
Q2
Q3
Q4
£60.3m
£57.6m
£49.0m
£51.5m
HEADCOUNT (YEAR END)
2013: 1,886
2012: 2,040
GROSS PROFIT PERMANENT TO TEMPORARY RATIO
Permanent
Temporary
2013
2012
72%
75%
28%
25%
GROSS PROFIT BY DISCIPLINE
2012
2013
23%
19%
41%
17%
Finance & Accounting
Marketing, Sales and Retail
Legal, Technology, HR, Secretarial and Healthcare
Engineering, Property & Construction, Procurement & Supply Chain
HIGHLIGHTS
• EMEA gross profit declined by 4.9% at reported
rates and 8.2% in constant currency
• However, growing optimism in the outlook for
the region
• Operational support heads decreased by 21%
• 9 countries experienced gross profit growth
£207.8m
Gross profit
£25.9m
Operating profit
before exceptional items
40%
of PageGroup gross profit
1,886
Headcount
71
Offices
14
Disciplines
26
CONTINENTAL EUROPE,
MIDDLE EAST & AFRICA
2013 Regional Review
EMEA is our largest region, representing 40% of the Group’s
gross profit for the year (2012: 41%). Revenue in the year was
£407m, which was 1% higher than 2012 (constant currency
-2.9%). However, gross profit at £208m was 4.9% lower than
2012 (constant currency -8.2%).
Market conditions remained challenging across the region,
particularly in our largest markets of France and Germany, which
is a predominantly permanent recruitment business. France and
Germany make up 50% of our EMEA region and both countries
saw gross profit decrease in the year. However, while these two
markets remain challenging, they improved as the year progressed
and our optimism has increased with regard to their outlook. In
France we operate under all three of our brands; Page Executive,
Michael Page and Page Personnel. Page Personnel alone would
be France’s market leader in professional recruitment with over
250 consultants and a focus on salaries below 45,000 Euro. It is
primarily a temporary recruitment business, but also undertakes
permanent recruitment. In the fourth quarter this business grew
9.1%, with permanent recruitment up 1.2% and temporary
recruitment up 15.2%.
Germany is seen as a strategic high potential growth market for the
Group. As discussed in the strategy section, we remain, therefore,
committed to continuing our investment in Germany to grow the
business despite continued challenging trading conditions.
Revenue
Gross Profit (net fee income)
Operating profit before exceptional items
Conversion (operating profit/gross profit)
Year end staff headcount
Percentage of Group gross profit
25
While our businesses in EMEA experienced a decline of 8.2%
in gross profit at constant currency over the year, there were
encouraging signs of improvement as the year progressed, with
the decline in the fourth quarter only 1.3%. At the end of the year,
France and Germany looked close to returning to positive growth.
In addition, strong performances were seen in many countries,
most notably in the UAE (+15%), Turkey (+46%) and Spain (+9%),
as well as in Portugal, Sweden, Poland, Ireland, Russia and Qatar.
Our headcount in the region declined during the year by 154
heads. This was largely a result of our strategy to seek out
efficiencies and consistency across the regions, with 130 of the
decrease related to operational support roles, representing a 21%
decrease in operational support heads. Fee-earner headcount
declined by 24 during the year, but was up 47 in the fourth quarter,
reflecting our growing optimism in the region.
2013
2012 Reported rate
Constant currency
Growth rates
£407.0m
£207.8m
£25.9m
12.5%
1,886
40.4%
£403.2m
£218.4m
£22.1m
10.1%
2,040
41.4%
+0.9%
-4.9%
+17.5%
-7.5%
-2.9%
-8.2%
Strategic ReportPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTOR’S REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMStrategic ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS40%17%21%22% UK
GROSS PROFIT AND HEADCOUNT
Gross Profit (Net Fee Income)
2013
Q1
Q2
Q3
Q4
£30.4m
£31.2m
£31.0m
£31.5m
2012
Q1
Q2
Q3
Q4
£30.6m
£31.1m
£29.5m
£30.2m
HEADCOUNT (YEAR END)
2013: 1,319
2012: 1,237
GROSS PROFIT PERMANENT TO TEMPORARY RATIO
2013
2012
Permanent
71%
70%
Temporary
29%
30%
GROSS PROFIT BY DISCIPLINE
2013
2012
17%
18%
22%
43%
Finance & Accounting
Marketing, Sales and Retail
Legal, Technology, HR, Secretarial and Healthcare
Engineering, Property & Construction, Procurement & Supply Chain
HIGHLIGHTS
• UK market showing signs of recovery
• Gross Profit grew 2.2% in 2013 with the growth
therefore, in line with the job market at this level, recruits a higher
proportion of temporary roles. Typically, as markets recover,
lower-level job recruitment tends to improve first, which was
reflected in the growth rate for permanent recruitment being
higher than in temporary.
We continue to focus on our conversion rate. Operating profit
before exceptional items increased by 16.6% to £18.4m and
conversion of gross profit to operating profit increased to 14.8%
in the year, from 13% in 2012.
Headcount increased by 82 during 2013, the majority of which
were fee earners, reflecting stronger market conditions and,
with confidence slowly improving, we believe that we are well
positioned to take advantage should the economy continue its
recovery in 2014.
2013
£298.6m
£124.1m
£18.4m
14.8%
1,319
24.1%
2012
Growth rate
rate improving each quarter
£295.9m
£121.4m
£15.8m
13.0%
1,237
23.0%
+0.9%
+2.2%
+16.6%
+6.6%
• Page Personnel (19% of UK) gross profit up 14%
• Michael Page/Page Executive (81% of UK) gross
profit in line with 2012
• Procurement and Supply Chain, Digital Marketing,
Property and Construction all performed strongly
£124.1m
Gross profit
£18.4m
Operating profit
before exceptional items
24%
of PageGroup gross profit
1,319
Headcount
28
Offices
13
Disciplines
UK
2013 Regional Review
The UK is the most established and largest business in the Group,
but following our strategy of geographic diversification now
represents just 24% of Group gross profits. Growth returned to the
UK in the second quarter of 2013 and full year revenue increased
by 0.9% on 2012 to £299m. Full year gross profit grew by 2.2% to
£124m, with gross profit growth rates increasing throughout 2013.
The UK business is highly diverse, recruiting for many industries
and professions and across a broad salary spectrum. Although
markets remained challenging in 2013, we continued to capitalise
on our discipline diversification and depth of management
experience. Strong performances were seen in our Logistics,
Procurement & Supply Chain, and Property & Construction
businesses. Our newer disciplines such as Digital Marketing and
Design also performed very well year-on-year. Public sector, which
comprises just over 13% of the UK business, grew 25% year-
on-year while growth in the private sector remained flat. The UK
region’s dependence on financial services has fallen considerably
in recent years and now represents a stable 4% of UK gross profit,
compared to its peak of approximately 11% in 2007.
Our Page Personnel brand, representing 19% of the UK business,
grew by 21% in the fourth quarter of the year, with permanent
recruitment up 27% and temporary recruitment up 13%. Page
Personnel focuses on roles with a salary below £40,000 and,
Revenue
Gross Profit (net fee income)
Operating profit before exceptional items
Conversion (operating profit/gross profit)
Year end staff headcount
Percentage of Group gross profit
27
28
Strategic ReportPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTOR’S REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMStrategic ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS44%22%17%17% ASIA PACIFIC
GROSS PROFIT AND HEADCOUNT
Gross Profit (Net Fee Income)
2013
Q1
Q2
Q3
Q4
£26.1m
£28.2m
£27.3m
£24.2m
2012
Q1
Q2
Q3
Q4
£26.3m
£30.6m
£30.2m
£27.8m
HEADCOUNT (YEAR END)
2013: 1,111
2012: 1,036
GROSS PROFIT PERMANENT TO TEMPORARY RATIO
2013
2012
Permanent
85%
85%
Temporary
15%
15%
GROSS PROFIT BY DISCIPLINE
2013
2012
17%
25%
39%
19%
Finance & Accounting
Marketing, Sales and Retail
Legal, Technology, HR, Secretarial and Healthcare
Engineering, Property & Construction, Procurement & Supply Chain
In contrast, our Asia businesses continued to grow year-on–year
delivering a record gross profit performance in 2013 with growth
of 7% on the prior year. Asia now represents 62% of the region’s
gross profit, compared to 55% in 2012 and only 39% in 2008.
Greater China grew by 1% in terms of gross profit year-on-year,
India by 23%, Malaysia by 80% and Japan grew by 25%
and finished the year with a record quarterly performance in
quarter four.
Headcount across the region as a whole increased by 75 (7%),
with Australasia headcount down by 8% and Asia up by 18%.
We expect that headcount will continue to increase in Asia in
2014 in line with our strategy of investing in our strategic high-
potential growth markets, which include Greater China and
South East Asia.
Growth rates
• Asia delivered record gross profit
HIGHLIGHTS
2013
2012 Reported rate
Constant currency
£189.4m
£105.8m
£19.2m
18.2%
1,111
20.6%
£192.2m
£114.9m
£29.0m
25.2%
1,036
21.8%
-1.5%
-7.9%
-33.6%
+7.2%
+3.4%
-4.7%
• Headcount in Greater China up over 19% in 2013
• Australia still experiencing difficult
trading conditions and adverse foreign
exchange movements
£105.8m
Gross profit
£19.2m
Operating profit
before exceptional items
21%
of PageGroup gross profit
1,111
Headcount
23
Offices
13
Disciplines
30
ASIA PACIFIC
2013 Regional Review
Trading in our Asia Pacific region continued to be impacted by the
difficult trading conditions in Australia. The region contributed 21%
of Group gross profit in 2013 (2012: 22%). Revenue decreased
1.5% to £189.4m, gross profit decreased by 7.9% and operating
profit decreased by 33.6%.
In constant currency gross profit for the region decreased by 4.7%,
with combined gross profit for Australia and New Zealand down
19% on the previous year as a result of the continued slow-down
in the mining and natural resources sector in Australia and its effect
on the wider economy. Consequently, having represented 44% of
the region’s gross profit in 2012, this fell to 36% in 2013. In 2011
and 2012, we achieved an exceptional performance from our
Australian business, largely driven by the expansion of the mining
and natural resources sector that drove the Australian economy,
despite the effects of the global financial crisis experienced in most
major economies around the world. However, as the resources
sector slowed impacting the wider economy, our Australian
business found trading conditions difficult during 2013 and gross
profit declined by 20% in constant currency to approximately
£38m. Market conditions in Australia remain difficult but stable.
Revenue
Gross Profit (net fee income)
Operating profit before exceptional items
Conversion (operating profit/gross profit)
Year end staff headcount
Percentage of Group gross profit
29
Strategic ReportPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTOR’S REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMStrategic ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS42%19%22%17% THE AMERICAS
GROSS PROFIT AND HEADCOUNT
Gross Profit (Net Fee Income)
2013
Q1
Q2
Q3
Q4
£18.4m
£20.6m
£20.2m
£17.0m
2012
Q1
Q2
Q3
Q4
£18.7m
£18.7m
£17.8m
£17.0m
HEADCOUNT (YEAR END)
2013: 814
2012: 786
GROSS PROFIT PERMANENT TO TEMPORARY RATIO
2013
2012
Permanent
86%
89%
Temporary
14%
11%
GROSS PROFIT BY DISCIPLINE
2013
2012
20%
22%
42%
16%
Finance & Accounting
Marketing, Sales and Retail
Legal, Technology, HR, Secretarial and Healthcare
Engineering, Property & Construction, Procurement & Supply Chain
THE AMERICAS
2013 Regional Review
The Americas region represented 15% of the Group’s gross profit
during 2013 (2012: 14%). Revenue increased by 12.1% to £111m
(2012: £99m) and gross profit increased by 5.6% to £76m (2012:
£72m). In constant currency, gross profit grew by 8.7%.
Operating profit increased significantly to £4.6m from a loss of
£1.7m in 2012, with the conversion rate increasing to 6.1% from
-2.3% in 2012.
In North America, the USA performed particularly well with gross
profit growing 31% to £25.8m. Market sentiment continued to
improve in the USA and this, along with the management changes
in 2012 and subsequent investments made in 2013 to strengthen
the teams across the region, has driven improvements in gross
profit and the conversion rate. The USA business now operates
from nine offices, having opened an office in Los Angeles during
the year.
In Latin America, our largest business, Brazil, felt the impact of
tougher economic conditions and consequently gross profit fell
by 8%. However, overall gross profit in Latin America increased
by 1% due to our other Latin American countries, representing
37% of our Latin American region, performing extremely well, with
Mexico increasing gross profit by 22% to £8.2m, Chile increasing
its gross profit by 20% to £5.0m, and our newer business in
Colombia growing gross profit in excess of 100%; all three
recorded record gross profit years.
Overall headcount in the Americas region increased by 28.
Headcount in the USA was up by 20% and is now approaching
250, and we have over 500 heads in Latin America.
2013
2012 Reported rate Constant currency
• Strong regional performance led by the USA
Growth rates
HIGHLIGHTS
Revenue
Gross profit (net fee income)
Operating profit before exceptional items
Conversion (operating profit/gross profit)
Year end staff headcount
Percentage of Group gross profit
£110.5m
£76.2m
£4.6m
6.1%
814
14.8%
£98.6m
£72.2m
-£1.7m
-2.3%
786
13.7%
+12.1%
+5.6%
+374%
3.6%
+15.1%
+8.7%
• Gross profit in USA up 31%, with a new office in
Los Angeles
• Tough economic conditions in Brazil, but a
record year for Mexico, Colombia and Chile
£76.2m
Gross profit
£4.6m
Operating profit
before exceptional items
15%
of PageGroup gross profit
814
Headcount
31
Offices
13
Disciplines
31
32
Strategic ReportPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTOR’S REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMStrategic ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS45%16%19%20% OUR STRATEGY
OUR STRATEGY IS CLEAR AND CONSISTENT
ORGANIC GROWTH
Our strategy is to grow organically, achieved
by drawing upon the skills and experiences
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 good.
Conversely, when market conditions tighten,
these entrepreneurial, profit sharing teams
reduce in size through natural attrition.
Consequently, our cost base contracts
during the lean times.
Our strategy for organic growth has
served the business well over the thirty-
eight years since its inception and we
believe it will continue to do so. We have
grown from a small, single discipline
management recruitment company operating
in one country to a large multidiscipline,
multinational business, operating in 34
countries represented by three key brands.
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 or
Page Personnel, with the objective of
being the leading specialist recruitment
consultancy in each of our chosen markets.
As recruitment is a cyclical business,
impacted significantly by the strength of
economies, diversification is an important
element of our strategy in order to reduce
our dependency on individual businesses
or markets and to increase 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.
BUILD FOR THE LONG-TERM
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.
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 are able to retain our highly
capable management teams in whom
we have invested and, 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 the downturn,
which has a negative effect on profitability
in the short-term. A strong balance sheet is,
therefore, essential to support the business
through these times.
RECRUIT THE BEST PEOPLE,
DEVELOP THEIR TALENT AND
PROMOTE FROM WITHIN
We recognise that it is our people who are
at the heart of everything we do, particularly
as an organically grown business. Investing
in them is, therefore, a vital element of
our strategy. Our strategy is to find the
highest calibre staff from a wide range of
backgrounds and then do our very best
to retain them through a team-based
structure, a profit share business model
and continuous career development, often
internationally. Our strong track record of
internal career moves and promotion from
within means that people who join us know
that one day they can be our future senior
managers and main Board directors. Steve
Ingham, our Chief Executive Officer, joined
PageGroup 27 years ago at recruitment
consultant level. Similarly, all of the
operational members of our Executive
Committee started their PageGroup careers
at consultant level and have a total of
125 years of PageGroup experience
across the five individuals.
Current strategic priorities are highlighted on page 35.
The key performance indicators used to measure our progress against our strategy can be found on pages 19 and 20.
33
34
Strategic ReportPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTOR’S REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMStrategic ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS THE GROUP HAS TRANSFORMED OVER
THE PAST THIRTEEN YEARS, WITH 50%
OF OUR FEE EARNERS NOW POSITIONED
IN THE LEAST COMPETITIVE MARKETS
2013
Fee earners: 3,810
50%
1,909
11%
Rest of EMEA*
15%
Asia
10%
14%
Latin America
Canada,
Germany, Italy,
New Zealand,
Spain
19% 731
France, Holland
and USA
2000
Fee earners: 1,657
12% 196
30% 501
OUR STRATEGY
OUR PLAN FOR GROWTH
Our Goal
Our strategic goal is to move back to and then exceed the peak
gross profit performance achieved in each region in 2008 prior
to the impact of the global financial crisis of late 2008. The
achievement of this goal will be driven largely by consultant
headcount and a return to higher levels of consultant productivity.
A focus on the improvement of overall operational efficiency will
be used to increase conversion rates and profit before tax.
Current Strategic Priorities
Positioned for Growth
•
•
•
Increase the scale and diversification of PageGroup by
growing organically existing and new teams, offices,
disciplines and countries (see pages 8, 16 and 33)
Scale the business with a team and meritocratic culture whilst
delivering a consistent and high quality client and candidate
experience (see pages 33, 34, 40 and 41)
Invest principally in identified large, high potential markets –
Greater China, Germany, Latin America, South East Asia and
the USA (see page 37)
•
Manage our fee earner headcount in other markets to reflect
market conditions (see page 34)
• Focus on operational support consistency and efficiency
including the rollout of our new operating system (see page 39)
•
Focus on succession planning and international career paths to
encourage retention and development of key staff (see pages
34 and 41)
Constant investment has transformed the shape of our business
and will continue to transform it in the future.
We have identified Greater China, Germany, Latin America, South
East Asia and the USA as large, high potential markets in which we
intend to focus our investment in the next few years. In the main
these are less developed recruitment markets where competition
is limited. Many of our new markets are emerging economies and
are growing more quickly than established markets. Naturally our
strongest opportunity to grow quickly is in markets which have the
potential to develop and where competition is weak.
In 2000, 58% of our fee earners were based in the UK and
Australia, the most developed and competitive recruitment
markets, and only 12% in the least developed and least
competitive markets. However, as shown in the diagram opposite,
at the end of December 2013 half of our fee earners were based
in these high potential markets. We are now well positioned
for growth.
58% 960
31% 1,170
Australia and UK
PROPORTION OF RECRUITMENT
THAT IS OUTSOURCED
KEY:
<30%
30-70%
>70%
Fee Earners
* Austria, Belgium, Ireland, Luxembourg, Morocco, Poland, Portugal, Qatar, Russia, South Africa,
Sweden, Switzerland, Turkey, UAE
35
36
Strategic ReportPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTOR’S REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMStrategic ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS
OUR STRATEGY
SPOTLIGHT ON LARGE, HIGH POTENTIAL MARKETS
Historically, when economic growth has slowed, we have reduced
consultant headcount and not reinvested until the market
recovered. However, in the five markets identified as large, high
potential markets – Greater China, Germany, Latin America, South
East Asia and USA – we will now take a more proactive approach
with increased and sustained investment through economic
cycles. This will require setting targets for consultant remuneration
appropriate for the market conditions.
The markets identified are substantial, high potential markets
for recruitment. In the main, they are under-developed, less
competitive recruitment markets where PageGroup has already
met the criteria it uses to assess business potential and, therefore,
we can have confidence that we can now successfully scale up
our success.
The criteria are as follows:
Criteria: Strength of management
Factors: Ability to hire, train, retain, promote locals
Ability to adapt PageGroup culture to local culture
Ability to roll out disciplines and open offices
Criteria: Conversion rates
Factors: High fee rates/salaries
High gross profit per fee earner
Criteria: Size and prospects of economy
Factors: Competitor landscape
Client/candidate receptiveness
Employee/employer legislation
Criteria: Track record
Factors: PageGroup growth rates
Progress on gross profit/operating profit
Year End headcount and discipline track record in Greater China, Germany,
Latin America, South East Asia and USA
KEY:
Countries
Country Disciplines
Directors
Headcount
5
27
9
263
4
9
4
85
1
1
1
10
1993
1999
2004
7
63
31
682
2009
10
104
81
1,613
2013
GREATER CHINA
USA
Approximate headcount: 450
Offices: 10
Approximate headcount: 250
Offices: 9
In Greater China we have had considerable success in recent
years, principally as a result of our investment in management
and by transferring proven managers from other established
PageGroup offices. As the market leader in Greater China by
offices, headcount, gross profit and trading profit, we are
well positioned.
Our track record of growing headcount, training, retaining,
promoting locals, opening offices, strong conversion rates,
developing international and Chinese clients, leads us to be
optimistic about future prospects in this territory. Numerous
opportunities exist to expand existing offices and open new
ones, launch and roll out disciplines, and, therefore, grow both
headcount and gross profit.
GERMANY
Approximate headcount: 250
Offices: 7
To date, our main focus in Germany has been on permanent
recruitment and we are widely regarded as the market leader
in this area. However, in weaker market conditions, Germany’s
strong employment legislation encourages clients to avoid
hiring permanent employees and to ‘switch’ to hiring
temporary staff.
Our opportunity is to grow further our permanent recruitment
business and to create a robust temporary business. In 2013
we strengthened the management team with the transfer
in of two Senior Directors, both of whom have temporary
recruitment experience and, combined, have over 30 years
of PageGroup experience.
Germany’s economy, based on GDP, is approximately
40% larger than the UK economy, is more de-centralised and
has a far less developed recruitment market compared to the
UK and other major European economies. These factors make
it a very attractive opportunity for PageGroup.
SOUTH-EAST ASIA
Approximate headcount: 200
Offices: 2
Of the five markets we have identified as high potential
strategic markets, South East Asia is PageGroup’s least
developed market. Currently our presence consists of a
market-leading position in Singapore and a new but rapidly
growing business in Malaysia.
Outside of Singapore, South East Asia’s recruitment market is
under-developed. We have proven that the region is capable
of high margins. We are currently in the process of establishing
the necessary licences for an Indonesian operation – we
have an ‘Indonesian team’ with over 20 years of PageGroup
experience operating from Kuala Lumpur. Our depth of
management experience is very strong and is overweight for
the size of the operations we have today.
Despite difficult trading conditions and poor performances
during 2008-2012, we have renewed confidence in the
USA market and our USA business. Our gross profit growth
rate year-on-year was 31% in 2013. In 2012, we made key
management changes and over the last year we have
realigned our US business, transforming it back into a
typical PageGroup business and culture. Several more key
managers have transferred into the US business and we
expect there to be a steady flow of additional international
transfers to the USA which is an attractive market for many
of our current employees.
The USA recruitment market is very competitive, though less
so than the UK and Australia. It is driven mostly by contingent
fees, but with higher salaries and fee rates than we see in the
UK. In addition, the typical cut-off between what is contingent
and what is seen as the start of the head-hunter market is set
at a higher level; the contingency market can reach as high
as $250k. As the world’s largest economy, the USA offers
PageGroup numerous opportunities for growth.
LATIN AMERICA
Approximate headcount: 550
Offices: 20
In Latin America, we are clear market leaders. Our largest
presence is in Brazil and we also have offices across Mexico,
Chile, Argentina and Colombia. We plan to continue to invest
in the region and build on our clear market leadership.
Latin America is a region where the recruitment of middle
management or professionally qualified staff is largely done
‘in-house’ and the recruitment industry is very immature.
The combined GDP of the five countries in which we operate
would rank fourth in the world below Japan and above
Germany. The immaturity of these markets represents
a huge opportunity.
Strength of management has been consistently high and
is improving further as management matures. Given the
challenges experienced in the recruitment market in Spain
and Portugal over the last few years, we have taken the
opportunity to successfully transfer a number of Spanish
and Portuguese speaking staff to Latin America.
The PageGroup LatAm culture is strong, encouraging the
retention of staff and we have proved we can roll out profitable
new offices and disciplines across the region. Currently this
market is almost entirely driven by permanent recruitment
but we have successfully rolled out Page Personnel in
preparation for when temporary recruitment becomes more
culturally acceptable.
Approximate headcount is based on February 2014 data.
37
38
Strategic ReportPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTOR’S REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMStrategic ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS
OUR STRATEGY
OPERATIONAL SUPPORT STRATEGY
The core operational support strategy is to have a consistent,
market-leading operational support on a highly cost-effective
basis. We are targeting to improve the delivery of support services
across the business while reducing costs as much as possible.
The actions being taken in each of the core areas are as follows:
Finance and Administration Strategy
In order to improve efficiency we are reviewing the current
provision of these services and their delivery mechanisms.
For example, the use of the shared service centre model will be
used across a greater proportion of the Group.
Human Resources
During the year we appointed a Group Human Resources Director
and are taking a co-ordinated global approach to recruitment,
retention, training and development, promotion, international
transfers, succession management and remuneration.
Procurement and property strategy
We have appointed a Global Procurement Director with the aim of
moving to common procurement processes across the business in
order to improve operational efficiency and reduce costs.
Investor Relations
Marketing
We have appointed a Director of Investor Relations to focus on
communication with our shareholders.
Information Technology Strategy
We have recently made significant changes in the delivery of IT to
the PageGroup business. A new Chief Information Officer has been
hired and substantial changes have been made to the senior IT
team. In terms of delivery, we are moving away from an approach
of building, owning and maintaining core IT infrastructure and
applications, and are generally moving to a delivery that is based
on a web applications model where the key applications and
data are third-party hosted on a global industrial framework in
the Cloud.
In May, we piloted the new version of our operating system and
related applications in our Boston office and these are planned to
be rolled out further in 2014. Work on modifications to the system
that were noted in the pilot is developing in line with expectations
and the roll-out plan. The total system covers a wide range of our
operating activities, being broadly:
•
•
•
CRM (Customer Relationship Management system) –
recruitment process management
Search – global search capability over all databases and
social streams
Reporting and analytics – covering operational and financial
data Group-wide
• CV parsing – automatic coding and loading of CVs
• Job posting – managing and tracking jobs and applications
•
Finance systems and interfaces – full integration into finance
systems for billing, temporary workers’ timesheets and payroll
• Single global website – responsive to any device.
The systems are being delivered on the latest versions of the host
applications and have been developed to be agile, so that we can
always take advantage of the latest versions without significant
upgrade costs or timelines. They are also utilising Cloud based
solutions, with the related improvements in scalability, cost
and flexibility.
Elements of our IT strategy have commenced roll-out elsewhere
in the Group, for example, the next generation website has been
launched in Asia Pacific.
In the Michael Page name we have a strong established brand
in our major markets. We still face challenges in achieving better
awareness for Michael Page in our newer markets and across
all markets for our other core brands, Page Executive and Page
Personnel. In 2012, we re-branded to PageGroup, with clarity on
brand hierarchy and consistency in brand deployment.
With the rise of digital media, the way customers become aware
of and interact with brands in the recruitment space has changed
significantly and will continue to change. We have established
significant presence in the digital space but we recognise the
need to remain consistent in approach and agile in marketing our
services in order to continue to be the recruitment brand of choice
in the business sectors in which we operate.
We have appointed a Group Marketing Director who now has
global control of the marketing function and will ensure the key
focus is towards activity that drives added value to the brand.
We will continue to empower the business with sales support
activity that is responsive to local and cultural factors but this
tactical activity can be delivered using technology based on a
simple centralised approach. Future strategy will be through a
marketing function with fewer people but more expertise
in essential marketing skills with a bias towards online and
social channels.
We will use our internal expertise, supplemented with external
advice in both marketing and technology, to monitor and evaluate
emerging trends, particularly in the digital space. Our aim will
be to build on our hard won brand reputation by maximising the
application of new technology.
We have appointed a Director
of Investor Relations to focus
on communication with
our shareholders.
THE PEOPLE BEHIND
THE PLAN
Our Employees
We never forget that the people who work at PageGroup will
always be our most valuable assets. It is these individuals who
drive the Company forward and take it in the right direction.
We, therefore, value their ideas and contribution, encourage
them to maximise their potential and invest heavily in learning
and development. This means that every member of staff has
a fair opportunity to excel and to develop a full and rewarding
career, potentially rising to Executive Director level.
Our Clients
We have always treated our clients as our partners and
recognise that we have a responsibility to represent them in the
best possible way. We spend time getting to know our clients
so that we understand their businesses. In order to present the
widest possible pool of talent to our clients, we ensure diversity
in our candidate shortlists by conducting searches which reach
minority groups.
Our Candidates
Our Investors
Candidates can be assured that they will always be assessed
purely on their skill-set and presented to clients without bias,
to ensure competition for jobs is on a level playing field.
We value our candidates and enjoy keeping in touch with
them – yesterday’s candidate is frequently tomorrow’s client.
We communicate regularly with our investors, keeping them
well informed of our activities. Feedback from investors has
helped shape our clear business strategy. More information on
how we communicate with our investors is shown on page 60
in the Corporate Governance section.
Our Community
Throughout the world we seek to work closely with local
communities, looking to give something back to the societies
in which we operate. Further details can be found in the
Corporate Responsibility section on page 43.
39
40
Strategic ReportPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTOR’S REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMStrategic ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS THE PEOPLE BEHIND THE PLAN
DIVERSITY AND INCLUSION
OUR EMPLOYEES
Hiring the best
Employee engagement
Inclusion for all
Sourcing and retaining the highest calibre employees from a
wide range of backgrounds is key to our strategy. The service we
provide to all our customers is only as good as the people who
represent our brand. Our strategy to grow organically by promoting
from within presents enormous opportunities for employees who
range from new graduates to experienced professionals from other
disciplines – normally from the disciplines we recruit for. It is also
extremely important to us to recognise that when we recruit we
are hiring our senior management of the future. We aspire to help
people maximise their potential.
At the heart of our company is the camaraderie of team work,
so much so that “team work” is also one of our company values.
We are a very sociable company, with regular team activities in
and out of the office including quarterly team building events
and premium international trips to reward our high performing
consultants and managers. Our way of rewarding consultants
through bonuses is different to the rest of the industry.
At PageGroup we reward teams with profit share which is
then allocated to the individuals based on their total contribution
to the team.
We run several initiatives worldwide to monitor employee
engagement. For example, in the UK, we participate, in the
Sunday Times ‘Best 100 Companies to Work For’ survey, and have
been recognised for the last nine consecutive years as
one of the top 100 companies to work for in the UK. In 2013 we
were also recognised in Crain’s ‘Best places to work in New York
City’, and in Apertura Magazine’s ‘Best employers’ in Argentina.
We were delighted to be recognised in the Recruitment
International Awards 2013 as the best recruitment company to
work for in the £100m+ category.
In 2013, we also undertook an employee engagement and diversity
survey which was externally managed to allow employees an
opportunity to provide candid feedback in the knowledge that their
views and opinions were confidential and anonymous.
Learning and Development
It is visible both inside and out, that at PageGroup we are
passionate about developing our people. We support our
employees to develop in their roles, and build a solid foundation
for their future career with us, through a diverse range of education
and experience opportunities. This includes encouraging
international assignments within PageGroup. From their first day
with us, our people continuously undertake development and
succession planning programmes including induction training,
quarterly appraisals, coaching, and people management training
using 360 degree feedback. Our focus on the provision of a
specialised service has led us to establish dedicated Learning
& Development teams across the Group who customise our
programmes to ensure training is appropriate for different cultures
and working environments across the world.
Retaining the most talented people
With a solid strategy of organic growth and using existing expertise
as a platform for growing into new markets, we have a strong
commitment to internal promotion, international career moves and
employee empowerment which has continually helped us retain
our very best people. At the highest level, we want people who
are immersed thoroughly in our company culture and understand
the intricacies of our business. Retaining our best people is
fundamental to our long-term success and continuity. Due to
this philosophy of nurturing our own talent, succession planning
is an inherent part of the business process. It is one of the key
responsibilities of all levels of management to have a clear plan of
development for their direct reports and for themselves.
Pursuing an agenda of diversity and inclusion in the workplace
is not only ethically right but, given its importance to the
liberation of the full potential of the labour market, it is also
critical to our strategy as a leading global recruitment company.
PageGroup is an equal opportunities employer and a strong
advocate in the industry encouraging other businesses to give
every individual the same opportunities for employment and
promotion based on their ability, qualifications and suitability
for the position.
Inclusion in recruitment and employment is about recognising
and appreciating that every individual is different. It is about
ensuring that everyone, whether they are a candidate seeking
work through PageGroup or one of our own employees, is
valued and respected. Regardless of individual characteristics,
suitability for recruitment, training or promotion is always based
on professional merit.
At PageGroup, we are committed to promoting inclusion
and continually developing our understanding and approach
to upholding an inclusive working environment. We are
determined to lead the way on inclusion within the recruitment
industry and we work closely with our clients to support their
diversity strategies, from consultation through to delivery.
To further our insight into inclusion issues we work
with a number of external organisations such as Race for
Opportunity, the Business Disability Forum and the Employers’
Network for Equality and Inclusion. Our senior staff are actively
involved with these and many other organisations through
work-streams and joint initiatives, ensuring we are constantly
learning from their experience and using our own resources to
share best practice and ideas.
Gender diversity
At 31 December 2013
Women@
Page
Since 2012 we have operated the Women@Page initiative
to help us achieve better gender diversity across all levels of
our global business. We aim to create an inclusive working
environment by developing the pipeline of female talent
and retaining that talent. The first tangible step for
Women@Page was a Global Mentoring Programme to support
talented women at management level. Mentors include senior
managers within the Group who undergo external training to
better equip them to provide key guidance to their mentees.
In particular, mentors challenge their mentees to think
differently, consider their options and honestly analyse their
strengths and weaknesses. This programme was initially
introduced in the UK and France in 2012 and has now
been rolled out across ten countries. We have also set clear
maternity guidelines for all managers to better support staff
during their maternity period including during their return
to work.
In addition to the global initiatives run by Women@Page,
there are also a large number of initiatives being driven
locally. For example, in South Africa, Michael Page has
continued its learning scheme for women, the Michael Page
South Africa Learnership Programme, to show its commitment
to skills development and female empowerment in South
Africa. In 2013, the 12 month programme offered five
women from disadvantaged backgrounds the opportunity
to gain professional hands-on experience across Michael
Page disciplines and to attend a fully funded course in
Business Administration.
Number of people on Board of Directors
Number of senior managers excluding Directors
Male
%
Female
%
5
71%
276
77%
2
29%
83
23%
Total number of employees in PageGroup
2,520
49%
2,610
51%
Total
7
359
5,130
41
42
Further diversity statistics and information regarding our approach to diversity and corporate social responsibility can be found in our
2013 Corporate Responsibility Report which can be found on our website at www.page.com/investors
Strategic ReportPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTOR’S REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMStrategic ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTSAt 31 December 2012Male%Female%TotalNumber of people on Board of Directors686%114%7Number of senior managers excluding Directors27382%5818%331Total number of employees in PageGroup2,54850%2,55150%5,099 Environmental matters
We fully recognise our responsibilities in relation to the
environment and our carbon footprint. As an office-based
business, our main environmental impact comes from the
generation of carbon emissions through the consumption of
gas and electricity in order to heat, cool and light our offices
and from business travel by road, rail or air, as well as
office-based waste such as paper and toners.
Our Board is committed to improving the way in which our
activities affect the environment by:
• Minimising the extent of the environmental impacts of
operations within the Group’s sphere of influence
• Striving to minimise any emissions of effluents in our
properties that may cause environmental damage
• Conserving energy through minimising consumption and
waste and maximising efficiency
• Promoting efficient procurement, which will both minimise
waste and allow materials to be recycled where appropriate
• Employing sound waste management practices and
encouraging re-use and recycling
• Putting in place procedures and supporting information
that enables compliance with the law, regulation and code
of practice relating to environmental issues
• Adopting a systematic energy use data collection procedure
and audit across all sites with annual monitoring
• Deploying an environmental monitoring system across
PageGroup operations which will ensure systematic, robust,
effective environmental data collection
Greenhouse gas emissions
Total Emissions CO2e in 2013 from global operations
We commissioned Trucost, a specialist company working
in the area of environmental risk, to analyse energy use and
business travel data collected by PageGroup in order to
provide an overview of the carbon performance and
efficiency of our global operations. Trucost identifies GHG
emissions to air in line with the Greenhouse Gas Protocol, an
international corporate accounting and reporting framework
developed by the World Resources Institute and the World
Business Council for Sustainable Development.
The overall, global GHG footprint of PageGroup’s operations
in 2013 was calculated to be 12,472 tonnes of carbon dioxide
equivalent (CO2e). 39% of emissions resulted from electricity
use, 32% from the group’s vehicle fleet, 12% from the use
of refrigerants, 12% from business travel by rail and air and
5% from the use of natural gas for operations.
As we have only recorded similar GHG data in respect of
the UK in previous years, we are not able to provide a global
comparative for 2012. In future years a comparative will
be shown.
Natural Gas
Business travel
5%
12%
Refrigerants
12%
Electricity
39%
32%
Vehicle Fleet
Greenhouse Gas Protocol 2013
Scope 1 direct emissions from sources
which a company owns
Fuel use for operations
Vehicle Fleet
Total scope 1 direct emissions
Other direct emissions not included in scope 1
by the Kyoto Protocol
Refrigerants
Scope 2 indirect emissions
re-generation of purchased electricity
Electricity
District heating
Total scope 2 indirect emissions
Scope 3 other indirect emissions including
business travel
Rail Travel
Air travel
Total scope 3 other indirect emissions
Total GHG emissions
Total tonnes CO2e per employee (5,130 employees)
Tonnes CO2e
% of measured
emissions
626
3,939
4,565
1,559
4,842
1
4,843
181
1,324
1,505
12,472
2.43
5%
32%
37%
12%
39%
12%
100%
CORPORATE
RESPONSIBILITY
OUR CORPORATE
RESPONSIBILITY VISION
To engage, encourage and equip all
our people to make a positive impact
on the clients and communities with
which we work.
Ethical, responsible practices and total commitment to minimising
our impact on the environment are the key motivators behind our
corporate responsibility strategy.
Communities and Charities
As a company we pride ourselves on our integrity and we take
our corporate responsibility very seriously. Throughout the world,
we seek to work closely with local communities, looking to give
something back to the societies in which we operate. To achieve
this, we encourage our staff to be pro-active in seeking projects
within their own communities. Projects include consultants going
into schools and giving CV and interview advice, volunteers
helping out on community and environmental projects and raising
funds for charitable causes. For example, in the UK we have
committed to a two year partnership with Alzheimer’s Research
UK Association and aim to raise £200,000 over the two year
period to provide two three year PhD scholarships for work on
key research projects related to the prevention or cure of this
debilitating disease. To this end, during the year, our employees
have participated enthusiastically in a variety of fund raising events
including, triathlons, cake sales, pub quizzes, and the Yorkshire
Three Peaks Challenge. In addition, our CEO and 100 employees
participated in the Great Wall of China marathon in Beijing in 2013.
This hard work and dedication to give back saw our 5,130
employees globally raise around £123,000 in 2013, and the
Group donated a further £134,000 so making a total close to
£257,000 donated to charitable causes during the year.
Human rights
Our policy with regard to human rights is included in our Group
Code of Conduct which is communicated to all new employees
as part of the induction process. We require that all staff treat
colleagues, candidates, clients and business partners with equality,
fairness and respect, regardless of their gender, race, colour,
ethnic or national origins, marital status, family circumstances,
age, disability, sexual orientation, political or religious belief. We
uphold the right of our employees and candidates to work in a safe
environment, free from discrimination, bullying and harassment.
We are supportive of upholding human rights principles and take
into account internationally accepted human rights standards.
We will not engage in or support the use of forced labour and do
not tolerate the use of child labour.
Further information on our approach to corporate responsibility
can be found in our Corporate Responsibility Report at:
www.page.com/investors
43
44
Strategic ReportPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTOR’S REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMStrategic ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS AUDIT COMMITTEE
On behalf of the Board, the Audit
Committee has oversight of the risk
management process, reviews annually
the Group Risk Profile and ensures the
adequacy and effectiveness of the
Group Risk Process.
OUR APPROACH TO MANAGING RISK
BOARD
Ultimate accountability for ensuring that risk
is managed effectively
Risk is considered in all strategic
decision-making
Review the Group Risk Profile annually and
challenge constructively.
EXECUTIVE COMMITTEE
Reviews the Group Risk Profile annually and
validates its contents before it is submitted to
the Board. Monitors the ongoing status and
progress of mitigating actions.
GROUP RISK CO-ORDINATOR
This role is undertaken by the Group Internal
Audit Director who consolidates the risks
identified by operating companies and
managers of each group function into a risk
register, with key Group risks and mitigating
actions reported to the Audit Committee
annually in the form of a Group Risk Profile.
Internal Audit’s role is to review the risk
process and provide assurance.
SENIOR MANAGEMENT
OF GROUP FUNCTIONS
Finance, Marketing, Procurement, IT and HR identify
and assess key risks and mitigating actions and pass to
Group Risk Co-ordinator annually.
EMEA UK ASIA PAC AMERICAS
Senior management in the regions identify and
assess key risks and mitigating actions locally and
pass to Group Risk Co-ordinator annually.
PRINCIPAL RISKS AND
UNCERTAINTIES
As with any business, we face risks and uncertainties every day.
The careful management of risk is, therefore, important to the
achievement of our strategic objectives and to sustainable growth
for the Group.
An annual review of risks is a well established process within
the Group. Historically this has been undertaken at Group level
in conjunction with operational management, supported by the
completion of internal control checklists by senior management
from each country to identify any key risks locally. In 2013, the
Board commissioned a review of risk and controls supported by
staff from Deloitte LLP with specialist experience in this area.
The purpose of this review was:
• to identify and quantify the key risks for PageGroup
• to confirm key controls and mitigating factors
•
to establish a plan for rolling out and embedding the process at
region/country level
• to further develop the reporting and governance framework
The review included interviews with key stakeholders, including
Board members and senior managers from the Group functional
areas. The key risks and controls were then summarised in a
Group Risk Profile for review by the Executive Committee and then
subsequently by the Audit Committee and the Board of Directors.
This approach is being rolled out across the regional businesses,
supported by the Internal Audit function.
45
46
Strategic ReportPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTOR’S REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMStrategic ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS Actions to mitigate risk
Risk
Actions to mitigate risk
PRINCIPAL RISKS & UNCERTAINTIES
GROUP RISK PROFILE
Risk
Our people
The Group’s strategy of organic growth,
with nearly all senior operational positions
being filled from within, relies on its
ability to recruit, develop and retain high
performing individuals. The failure to
attract and retain employees with the
right skill-set, particularly the resignation
of key individuals, may adversely affect
the Group’s operating performance and
financial results.
We have a strong focus on succession planning at all levels of the business with
particular focus on the development of high-performing individuals identified as
future leaders.
We continue to have a strategy of filling senior operational positions from within,
which is a key part of our retention strategy. Our employees observe high performers
being rewarded with promotion and know that PageGroup provides sustainable
career opportunities.
Key high performing individuals are identified and have progression plans, recognising
their specific needs at different stages of their development.
PageGroup targets its recruitment process to attract and employ high quality people.
We have a strong sense of pride in everything we do, with a strong sense of teamwork
core to PageGroup culture. This drives determination to succeed, both individually
and as a team, increasing the motivation of our staff and making their careers more
rewarding.
We have a well established appraisal process where personal development as well as
progress against sales targets is discussed.
We make significant investments in employee training and development across the
organisation, including the opportunity for international career development. Training
is aligned at the consultant level, set at a high standard and is both broad based and
individually focused to support leaders as they develop through PageGroup.
We are committed to a competitive pay and benefits structure and use benchmarking
to ensure we remain competitive. We operate a performance-led culture with bonus
representing a proportion of pay. This bonus structure is based on team profitability,
which has been shown to encourage the retention of high-performing individuals even
in economic downturns.
We make awards of share options linked to the Group’s financial performance to
key senior employees which provide a long-term retention incentive and align their
motivations with those of our shareholders.
PageGroup employment contracts contain protection in the event of an employee
leaving, which, at a senior level, usually contain notice periods and provisions relating
to confidentiality and non-solicitation.
Shift in business model
The emergence of new technology
platforms including, for example, the
growing use of social media, may lead
to increased competition and pressure
on margins which may adversely affect
the Group’s results if it is unable to
respond effectively.
We actively monitor developments in the recruitment industry and have a pro-active
social media strategy.
The use of social media, newspapers, the Internet and other forms of media involve
additional and highly skilled internal resources for clients and so it may prove less costly
for PageGroup to provide the service.
We have access to an extensive, qualified candidate database through highly trained
and often specialised consultants.
We partner with the large providers, such as LinkedIn and Facebook, to ensure that
we use this form of media to enhance our value to clients. All consultants are trained in
utilising the benefits of social media.
Macro economic exposure – risk
of downturn
Recruitment activity is driven largely by
economic cycles and the levels of business
confidence. Businesses are less likely to
need new hires and employees are less
likely to move jobs when they do not have
confidence in the market so leading to
reduced recruitment activity.
A substantial proportion of the Group’s
profit arises from fees that are contingent
upon the successful placement of a
candidate in a position. If the client cancels
the assignment at any stage in the process,
the Group receives no remuneration.
We have diversified our business by expansion geographically, by increasing the
number of disciplines in which we specialise, and by establishing three brands to
address the different levels of the recruitment market; the clerical professional sector;
the qualified professional market; and the executive search sector.
We also continue to balance our business between permanent and temporary
staff in line with the ratio of permanent to temporary in each of the markets in
which we operate. The temporary business tends to be more resilient in times of
economic downturn.
The relatively low fixed cost base allows the Group to scale up and down
according to the economic environment, with circa 75% of the Group’s cost base
being employment related costs, so mitigating the impact of the downturn on
Group profitability.
Damage to reputation or
PageGroup Brands
Our brands are material assets of the Group
and maintaining their reputation is key to
continued success. Any event that could
cause reputational damage is a risk to
PageGroup such as a failure to comply with
legislation, or other regulatory requirements,
or confidential data being lost or stolen.
We have a process to identify risks, allocate owners and monitor actions with the
Internal Audit Function providing assurance over key risks. Our corporate governance
framework includes a review of internal controls. We have comprehensive policies for
key areas including Social Media, Data Protection and Information Security.
We actively monitor media to identify where there are unusually high references to the
PageGroup/Michael Page name. We have a clear escalation/reporting path so that any
potential incidents can be managed effectively. We are supported by FTI Consulting
who provide on-going advice on the protection and management of our brand.
Other mitigating actions are included under legal compliance and data management.
Technology
The Group is reliant on a number of
IT systems to provide its services to
clients and candidates. The current IT
infrastructure is complex and ageing,
increasing the risk of significant systems
failure. A serious system disruption, loss
of data or security breach could have a
material impact on our operations and on
the Group’s financial results.
IT Transformation and Change
The new suite of operating software
and related applications was piloted in
the Boston office from May 2013 and is
planned to be rolled out further during
2014. There is a risk of disruption to
the business should the software fail to
function adequately or if staff are not
properly trained. If the system failed it
could affect our ability to provide a high-
quality recruitment service to our clients
and could affect our operational and
financial performance.
Our technology strategy is a regular focus at Board meetings and at meetings of the
Executive Committee to ensure that it supports the strategic objectives of the Group.
A programme of work has commenced to update the IT infrastructure and deliver a
new operating system and related applications.
The Group has a Disaster Recovery Plan which includes the storing of back-up
data off-site and the ability to quickly establish disaster recovery sites should there
be a critical systems failure. The performance of external technology suppliers is
continually monitored to ensure business critical services are maintained.
This project is reviewed regularly by both the Board and Executive Committee to
ensure that it is on target. The roll-out will be done in stages so that there is limited
interruption to the business. Any issues that arise during the pilot in Boston will
be resolved at that location before it is implemented elsewhere in North America
and then on to other global offices. The plan includes a significant investment in
staff training.
The risks to the delivery of a high-quality service and the consequent impacts upon
our business performance are mitigated by the greater part of the recruitment service
not being system dependent, for example, candidate interviews, telephone activity,
client meetings, etc.
47
48
Strategic ReportPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTOR’S REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMStrategic ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS
PRINCIPAL RISKS & UNCERTAINTIES
GROUP RISK PROFILE (CONTINUED)
Risk
Actions to mitigate risk
Data Management
Confidential, sensitive and personal data
is held across the Group. Failure to handle
this data properly could expose the Group
to financial penalties and reputational risk.
We have adopted a comprehensive IT security strategy and have management
policies and control documents which include metrics on performance and risk.
These are reviewed regularly.
We have a global security team and established IT governance to ensure defined
controls are operating as expected.
IT risk management is also in place, which reports directly to the Chief Information
Officer. This team ensures the effectiveness of the Group’s security solution and
controls, monitors and addresses any cyber security threats, in partnership with our
external security partner.
Security vulnerability is assessed and the remediation of identified risks and alerts
is tracked. Regular security assurance checks take place across all regions and
penetration testing is undertaken. To date this has not identified any material issues.
We have comprehensive data protection policies in place and procedures for the
handling and storing of confidential, sensitive and personal data.
The Group’s Legal department, the Company Secretary, and local legal and
compliance teams are advised by leading external advisors, as required, in regard
to changes in legislation that affect the Group’s business, including employment
legislation and corporate governance.
Our consultants and operational support staff receive induction training and regular
update training regarding the Group’s policies and procedures and compliance with
relevant legislation and regulations, for example, around discrimination legislation and
pre-employment checks.
The Group holds all normal business insurance cover including employers’ liability,
public liability and professional indemnity insurance.
Contracts include clauses to ensure PageGroup’s rights are protected.
Our strategy of continued geographical diversification reduces our exposure to
translation risk. The Group does not actively attempt to hedge the exposure from
translation risk as this is a reporting risk only and not an operational risk.
The Group does not have material transactional currency exposures nor is there a
material exposure to foreign denominated monetary assets and liabilities.
Note 21 to the financial statements includes a sensitivity analysis showing the effect
of a 10% strengthening of sterling against other key currencies.
Legal Compliance and contracts
The Group operates in a large number
of legal jurisdictions that have varying
legal and compliance regulations. Any
non compliance with client contract
requirements and legislative or regulatory
requirements could have an adverse effect
on the Group’s financial results.
Foreign Exchange – translation risk
73% of the Group’s operating profit is
derived from operations outside the
UK, so material changes in the strength
of sterling against the main functional
currencies could have an adverse effect on
the Group’s reported sterling profits in the
financial statements. The main functional
currencies in addition to sterling, are the
Euro, Australian Dollar, US Dollar, Chinese
Renminbi and Brazilian Real.
CHAIRMAN’S INTRODUCTION
TO CORPORATE GOVERNANCE
Robin Buchanan (Chairman)
Dear Shareholder,
At PageGroup we are committed to high standards of corporate governance. Good governance underpins
sustainable performance. We welcome warmly the movement to increased openness, transparency and clarity
brought by the new reporting requirements.
There are three elements of our governance that are particularly important. The Board debates and decides on
strategy, holding the Executive team accountable for its execution. We ensure that we have and will have the
most talented leadership, both within the Executive team and on the Board. We always ask, “What is the right
thing to do?” so that everyone involved with PageGroup can continue to be proud of us. My job is to make sure
these three things happen.
The Board of Directors has overall responsibility for the running of the business and therefore must be equipped
with the character, skills and experience required to direct a global recruitment consultancy with large ambitions.
Over the last two years we have built a strong, well balanced Board which operates in a trusting and honest
environment. During 2013 this team made good progress and the Board is well positioned for the coming year.
We were delighted to appoint Danuta Gray as a Non-Executive Director on 10 December 2013. Danuta’s
considerable international experience, both in line leadership roles and non-executive directorships, will be
very valuable. Her background in technology as well as in sales and marketing is also particularly useful. With
Danuta’s appointment, we have added another talented woman to your Board. Given the gender mix of our
clients, candidates and staff, it is a strategic as well as a governance imperative to improve the diversity of the
Board. We will continue to seek to add to your Board people who have the character, skills and experience the
business requires.
The recruitment industry is more exposed to global economic troubles than many other sectors. As a result,
the Group has operated in a difficult environment for the last few years. A high quality Board applying strong
corporate governance, including rigorous risk management, has been particularly useful during this time.
Going forward your Board, within this strong governance framework, will continue to challenge and support
management as they implement our strategies for growth.
Further details of how PageGroup is governed and how the Board is run are laid out in the pages that follow.
Robin Buchanan
Chairman
4 March 2014
49
Strategic Report
50
PageGroup Annual Report And Accounts 2013Corporate GovernancePageGroup Annual Report And Accounts 2013OVERVIEWDIRECTORS’ REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMFINANCIAL STATEMENTS
OUR BOARD OF DIRECTORS
Our business is led by our Board of Directors (the “Board”). Biographical details of the Directors as at 4 March 2014 are as follows:
Robin Buchanan – Chairman
Danuta Gray – Independent Non-Executive Director
Skills and Experience: Prior to joining the Board of Michael Page, Robin served as Dean and President
of London Business School and as the Senior Partner of Bain & Company in the United Kingdom. Past
Board appointments include Bain & Company Inc, Shire plc and Liberty International plc. Robin qualified
as a Chartered Accountant with a predecessor firm of Deloitte Touche Tohmatsu.
Other current appointments:
Non-Executive Director, Schroders plc • Non-Executive Director, Lyondell Basell Industries NV
Member of Remuneration Committee, Coller Capital Ltd • Senior Advisor to Bain & Company
Member of the International Advisory Council of Recipco
Date of Appointment: Director August 2011, Chairman December 2011
Board Committees: Nomination Committee (Chairman)
Skills and Experience: Danuta was Chairman of Telefónica O2 in Ireland until December 2012, having
previously been its Chief Executive from 2001 to 2010. Prior to that, Danuta was a Senior Vice President
for BT Europe in Germany and during her career gained experience in sales, marketing, customer
service and technology and in leading and changing large businesses. She previously served for seven
years on the board of Irish Life and Permanent plc and was a director of Business in the Community
Ireland and Aer Lingus plc.
Other current appointments:
Non-Executive Director, Old Mutual plc • Non-Executive Director, Paddy Power plc
Date of Appointment: December 2013 | Board Committees: Audit, Remuneration, Nomination
Steve Ingham – Chief Executive Officer, Executive Director
David Lowden – Independent Non-Executive Director
Skills and Experience: Steve joined Michael Page in 1987 as a consultant with Michael Page Marketing
and Sales. He was responsible for setting up the London Marketing and Sales businesses and was
promoted to Operating Director in 1990. He was appointed Managing Director of Michael Page
Marketing and Sales in 1994. Subsequently Steve took additional responsibility for Michael Page’s Retail,
Technology, Human Resources and Engineering businesses. He was promoted to the Board as Executive
Director of UK Operations in February 2001 and subsequently to Managing Director of UK Operations in
May 2005. Steve was appointed Chief Executive Officer in April 2006.
Other current appointments:
Non-Executive Director, Debenhams plc • Member of the Corporate Partnership Board, Great Ormond
Street Hospital
Date of Appointment: Director February 2001, Chief Executive Officer April 2006 | Board Committees: None
Skills and Experience: David was a member of the Board of TNS plc, the marketing services business,
from 1999 to 2009, becoming Chief Executive Officer in 2006. Before joining TNS plc David held senior
finance positions in Asprey plc, A. C. Nielsen Corporation and Federal Express Corporation.
Other current appointments:
Senior Independent Director and Chairman of the Remuneration Committee, Berensden plc
Non-Executive Director and Chairman of the Audit Committee, William Hill plc • Chairman,
Rice 2 Limited
Date of Appointment: August 2012 | Board Committees: Remuneration (Chairman), Audit, Nomination
Ruby McGregor-Smith CBE – Senior Independent Director
Tim Miller – Independent Non-Executive Director
Skills and Experience: Ruby is the Chief Executive of Mitie Group plc. She qualified as a Chartered
Accountant with BDO Stoy Hayward. In December 2002 Ruby joined MITIE Group PLC as Group Finance
Director and was appointed Chief Operating Officer in September 2005 before being appointed CEO in
March 2007.
Other current appointments:
Chief Executive Officer MITIE Group PLC • Member of Board of Trustees, Business in the Community
Chairperson of the Women’s Business Council
Date of Appointment: May 2007 | Board Committees: Audit, Remuneration, Nomination
Simon Boddie – Independent Non-Executive Director
Skills and Experience: Simon is a Chartered Accountant and has been Group Finance Director of
Electrocomponents plc since September 2005. Simon joined Electrocomponents plc from Diageo
where he held a variety of senior finance positions over a 13 year career, latterly as Finance Director
of Key Markets.
Other current appointments:
Group Finance Director, Electrocomponents plc
Date of Appointment: September 2012 | Board Committees: Audit (Chairman), Remuneration, Nomination
Skills and Experience: Tim was appointed a Director of Standard Chartered Bank in December 2004.
In July 2013 he was appointed Vice-Chairman, Governance as well as continuing to be Chairman of
Standard Chartered Bank Korea.
Other current appointments:
Director, Standard Chartered Bank • Chairman of the Environment Committee, Standard Chartered
Bank • Chairman, Standard Chartered Korea • Chairman of Governors, School of Oriental & African
Studies and Member of the School Advisory Board • Special Professor of Strategy, Nottingham
University Business School
Date of Appointment: August 2005 | Board Committees: Audit, Remuneration, Nomination
Kelvin Stagg –
Acting Chief Financial Officer
Appointed 14 October 2013.
See page 53 for biography.
Elaine Marriner
Company Secretary
Appointed 10 December 2013.
Prior to this appointment
Elaine was Company
Secretary and General
Counsel of HMV Group plc.
51
52
Corporate GovernancePageGroup Annual Report And Accounts 2013Corporate GovernancePageGroup Annual Report And Accounts 2013OVERVIEWDIRECTORS’ REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMFINANCIAL STATEMENTS
EXECUTIVE COMMITTEE
OUR CORPORATE GOVERNANCE FRAMEWORK
The Executive Committee is a committee of the Board and is known within PageGroup as the ‘Executive Board’.
Steve Ingham
Mark Lockton-Goddard
Chief Executive Officer, Executive Director
Chief Information Officer
Mark joined PageGroup from PricewaterhouseCoopers where
he was a Director in the Business and Technology Transformation
Consulting business for three years. Prior to that he worked for
other “Big 4” accounting and consulting firms for over fifteen years.
In that time he assisted a range of FTSE 250 businesses across
multiple market sectors, including recruitment and professional
services, to reduce complexity and drive operational performance
through the better use of technology.
Kelvin Stagg
Acting Chief Financial Officer
Kelvin joined PageGroup in July 2006 as Group Finance Controller
and Company Secretary. Prior to joining PageGroup, Kelvin spent
six years at Allied Domecq and three years at Unilever in a variety
of finance functions. He has significant international experience
and has high levels of compliance, change management, large
teams and systems experience, across almost every finance
discipline. He is a Chartered Management Accountant. Kelvin was
appointed Acting CFO in October 2013 and he held the title of
Company Secretary up until December 2013.
Oliver Watson
Executive Board Director, UK, Middle East, South Africa,
Eastern USA & Canada
Oliver joined Michael Page in 1995 as a consultant in London.
He was appointed Director of Michael Page UK Sales in 1997
and then Managing Director in 2002. In 2006, he was appointed
Regional Managing Director for Michael Page UK Sales, Marketing
and Retail. In 2007, he launched Michael Page Middle East and
has since developed our office network across the region. In 2009,
he became Regional Managing Director for Michael Page UK
Finance, Marketing and Sales, Middle East, Scotland and Ireland.
He is now responsible for PageGroup operations in the UK, Middle
East, South Africa, Eastern USA and Canada.
Kelvin Stagg (Acting Chief Financial Officer)
See biography on page 51.
Patrick Hollard
Executive Board Director, Latin America, Southern & Western
USA
Patrick joined Michael Page in France in 1996, having worked
previously for KPMG Peat Marwick. Prior to that, he had been
Vice-President of AISEC International, the student led organisation,
from 1991 to 1992. Appointed Director in 1999, he moved to Sao
Paulo to launch Michael Page Brazil, and then launched offices in
Mexico in 2006, Argentina in 2008, Chile in 2010 and Colombia in
2011. Appointed Regional Managing Director in 2007, he is now
responsible for PageGroup’s operations in Latin America, and
Southern and Western USA.
Gary James
Executive Board Director, Asia Pacific
Gary joined Michael Page Finance in London in 1984. He was
appointed Director of Michael Page UK Sales & Marketing
in 1994 and Managing Director of Michael Page UK Marketing
in 1997. In 2002 he transferred to the USA on his appointment
as Managing Director of our business in North America. He was
appointed Managing Director of the Asia Pacific region in August
2006, based initially in Australia and more recently in Singapore.
Fabrice Lacombe
Executive Board Director, France, Central & Eastern Europe
Fabrice joined Michael Page Finance in 1994 as a consultant
in Paris. In 1996, he launched Michael Page Engineering and
became a Director in 1998. In 1999, he was appointed Executive
Director and then, in 2001, Managing Director of Michael Page
France. He launched Michael Page Africa in 2005 and in 2007 took
responsibility for Page Personnel France. He became Regional
Managing Director for France and Africa in 2010. He is now
responsible for PageGroup operations in France, and Central and
Eastern Europe.
Olivier Lemaitre
Executive Board Director, Continental Europe & Africa
Olivier joined Michael Page Finance in Paris in 1997, having
worked previously as a Controller for Renault in Poland. In 1999,
he moved to Sao Paulo to launch Michael Page Brazil, before
returning to Europe in November 2002 to lead our Michael Page
Frankfurt office. He was appointed Managing Director of Michael
Page Germany in 2004. In 2007, he was appointed Regional
Managing Director in charge of Austria, Belgium, Germany,
Holland, Luxembourg and Switzerland. He is now responsible
for PageGroup’s operations in Continental Europe and North and
West Africa.
THE BOARD
The Board’s role is to provide entrepreneurial leadership of the Group within a framework of prudent and effective controls
which enable risk to be assessed and managed. It has a formal schedule of matters reserved for its decision.
More details on pages 55 to 60.
CHIEF EXECUTIVE
OFFICER (CEO)
Key responsibility is to develop
and deliver the Group’s strategy
within the policies and values
established by the Board.
Details on page 56.
EXECUTIVE COMMITTEE
The Executive Committee is
chaired by the CEO and includes
the CFO. The Committee is
responsible for overseeing
operations in our regions and for
overseeing business operational
functions Group-wide.
Details on page 55.
CHIEF FINANCIAL
OFFICER (CFO)
Responsible for managing the
financial risks, reporting and
planning of the Group.
Details on page 56.
NOMINATION COMMITTEE
Responsible for ensuring that the
Company has the executive and
non-executive Board leadership
it requires.
Details on page 61.
AUDIT COMMITTEE
Responsible for the integrity of the
Company’s financial statements
and performance, ensuring the
necessary internal controls and risk
management systems are in place
and effective.
Details on page 63.
COMPANY SECRETARY
Responsible for ensuring the Board
comply with all legal, regulatory and
governance requirements.
Details on page 56.
REMUNERATION
COMMITTEE
Responsible for the review,
recommendation and implementation
of the Group’s remuneration strategy,
its framework and cost
Details on page 67.
Compliance with the UK Corporate Governance Code
During the year ended 31 December 2013 and to the date of this document, the Company has complied with the provisions of the UK Corporate
Governance Code 2012 (the “Code”). The Code is publicly available on the FRC website (www.frc.org.uk). In the following “Corporate Governance”
section, together with the “Directors’ Remuneration Report” on page 67 and the “Directors’ Report” on page 87, we describe how we have applied the
main principles of the Code.
53
54
Corporate GovernancePageGroup Annual Report And Accounts 2013Corporate GovernancePageGroup Annual Report And Accounts 2013OVERVIEWDIRECTORS’ REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMFINANCIAL STATEMENTS
HOW OUR GOVERNANCE FRAMEWORK OPERATES
LEADERSHIP
Board Committees
The Board has a Nomination Committee, an Audit Committee
and a Remuneration Committee. The Chairman of the Board is
Chairman of the Nomination Committee. All other Committee
members are independent Non-Executive Directors. Each of the
Audit and Remuneration Committees comprise solely independent
Non-Executive Directors. Reports from these three Committees
can be found on pages 61 to 86. The Company Secretary acts
as secretary to each of the Committees. Minutes of Committee
meetings are circulated to all Committee members and to all
members of the Board unless it would be inappropriate to do so.
The terms of reference for the Nomination Committee, Audit
Committee and Remuneration Committee were reviewed and
updated by the Board in February 2014 and these can be found
on the Group’s website – www.page.com/investors
The Executive Committee
The Executive Committee (known within PageGroup as the
‘Executive Board’) has been established by the Board, is chaired
by the Chief Executive Officer and includes the Acting Chief
Financial Officer and other senior executives, biographies of
whom can be found on page 53. The Executive Committee usually
meets four times a year and is responsible for assisting the Chief
Executive Officer in the performance of his duties, including the
development and implementation of strategy, operational plans,
policies, procedures and budgets. These activities are performed
at a regional level by Regional Boards for each of the UK, EMEA,
Asia Pacific and the Americas. Each Regional Board usually meets
at least four times a year.
Chairman and Chief Executive
To ensure that no one individual has unfettered powers of
decision, there is a clear division of responsibilities between the
role of the Chairman, Robin Buchanan, and the role of the Chief
Executive Officer, Steve Ingham. The roles are set out in writing
and have been approved by the Board. Their different roles and
responsibilities are set out on the opposite page.
Steve Ingham (Chief Executive Officer)
The Board and its operation
The Board of Michael Page International plc is the body
responsible for the overall conduct of the Group’s business and
has the powers and duties set out in relevant laws of England
and Wales and in its Articles of Association.
The Board’s role is to provide entrepreneurial leadership of the
Group within a framework of prudent and effective controls which
enable risk to be assessed and managed. It has a formal schedule
of matters reserved for its decision which includes:
• Group strategy and corporate objectives
•
determining the nature and extent of the significant risks the
Board is willing to take in achieving the strategic objectives of
the Company
•
major changes to the nature, scope or scale of the business of
the Group
• corporate governance matters
•
•
approval of Nomination Committee recommendations
on the appointment and removal of Directors and
succession planning
changes to the Group’s capital structure and approval of
any business plan prior to a new entity being established in
a new territory
• financial reporting, audit and tax matters
•
material contracts and transactions not in the ordinary course
of business
• material capital expenditure projects
• approval of the annual budget
• obtaining major finance
•
communications with stakeholders and complying with
regulatory requirements
The Board meets regularly throughout the year, usually nine times
a year.
Composition of the Board
The Board currently comprises the Chairman, the Chief Executive
Officer and five Non-Executive directors. The biographies of each
of these Directors can be found on pages 51 to 52. Six of these
Directors served throughout the year under review. Andrew
Bracey resigned as Chief Financial Officer on 11 October 2013.
Danuta Gray was appointed a Non-Executive Director on
10 December 2013.
Executive and Non-Executive Directors are equal members of the
Board and have collective responsibility for Board decisions. The
Non-Executive Directors bring a wealth of skills and experience to
the Board and its standing committees. Their role in particular is to:
•
• challenge constructively managements’ proposals on strategy
challenge constructively the performance of management in
•
meeting agreed goals and objectives
bring a strong, independent and external perspective to
Board discussions
assess risk and the integrity of the financial statements and
system of internal controls
determine the Group’s policy for executive remuneration,
in particular the specific remuneration package for the
Executive Directors and the fees for the Chairman
•
•
KEY ROLES AND RESPONSIBILITIES:
The Chairman – Robin Buchanan
•
•
leadership and development of the Board
setting the agenda for the Board, including strategy,
leadership, performance, financial strength, risk
and governance
• effectiveness of Board operations
• chairing the Board and the Nomination Committee
Senior Independent Director –
Ruby McGregor-Smith
• acting as a sounding board for the Chairman
• serving as an intermediary for other Directors
•
providing a point of contact for those shareholders who
wish to raise issues with the Board, other than through the
normal channels of the Chairman or Chief Executive Officer
setting the style and tone of Board discussions, including
promoting openness and debate
•
leading the annual appraisal of the Chairman’s performance
by the Non-Executive Directors
•
•
ensuring that all Directors receive accurate, timely and
clear information
The Chief Executive Officer – Steve Ingham
•
•
developing vision and strategy for the Board’s review
and approval
implementing Board approved strategic objectives
and policies
• day-to-day management of PageGroup’s operations
•
•
•
maintaining a good working relationship with the Chairman
and the Board
chairing the Executive Committee to execute the delivery
of the annual operating plans
leading the programme of communication
with shareholders
Acting Chief Financial Officer – Kelvin Stagg
• acting as a strategic partner and advisor to the CEO
•
•
responsible for accurate and timely financial information,
including forecasting and modelling
stakeholder engagement, including shareholders, analysts,
creditors, employees and management
• capital structure strategy
•
leadership of the finance and support functions
Company Secretary – Elaine Marriner
•
•
•
•
responsible for providing legal and governance support to
the Board and to individual directors
ensuring the Board complies with all legal, regulatory and
governance requirements
assisting the Chairman in ensuring that all Directors have
timely access to accurate and clear information
assisting the Chairman by organising induction and
training programmes
Biographical details of the Chairman, Chief Executive Officer and Senior Independent Director can be found on page 51 and on the
Group’s website at www.page.com/investors
BOARD FOCUS IN 2013
STRATEGY
DEVELOPMENT
SUCCESSION
PLANNING
RISK EVALUATION
AND MANAGEMENT
CEO AND CFO
UPDATE
REVIEW OF
QUARTERLY FORECASTS
AND BUDGET
APPROVAL OF
QUARTERLY TRADING
UPDATES/INTERIM/FULL
YEAR ANNOUNCEMENTS
PRESENTATIONS TO
THE BOARD FROM
MEMBERS OF THE
EXECUTIVE BOARD
DIVIDEND
RECOMMENDATIONS
IT UPDATE
AND REVIEW
OPERATIONAL
SUPPORT STRUCTURE
AND COSTS REVIEW
REVIEW OF
CENTRAL RESOURCES
55
56
Corporate GovernancePageGroup Annual Report And Accounts 2013Corporate GovernancePageGroup Annual Report And Accounts 2013OVERVIEWDIRECTORS’ REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMFINANCIAL STATEMENTS HOW OUR GOVERNANCE FRAMEWORK OPERATES
EFFECTIVENESS
The Board annually reviews its composition to ensure there is
an appropriate balance between Executive and Non-Executive
Directors and an appropriate mix of skills, experience, and
knowledge to enable the Directors to effectively discharge their
respective duties and responsibilities.
Tenure of Non-Executive Directors
The Code suggests that length of tenure is one factor to consider
when determining the independence of Non-Executive Directors.
The table below shows the tenure and independence of the Board
Chairman and each of our Non-Executive Directors. The Board
considers all Non-Executive directors to be independent.
Years
from
first
elect-
ion to
2014
AGM
Date first
elected by
share-
holders
Director
Robin Buchanan
Chairman May 2012
Ruby McGregor-
Smith
SID
May 2007
Simon Boddie
NED
June 2013
David Lowden
NED
June 2013
Tim Miller
NED
May 2006
2
7
1
1
8
Consid-
ered to be
independ-
ent by the
Board
Note 1
Yes
Yes
Yes
Yes
Danuta Gray
NED
Standing
for election
June 2014
n/a
Yes
Note 1: Robin Buchanan was considered to be independent on his
appointment as Chairman
Board appointments and diversity
The Nomination Committee leads the process for Board
appointments. A description of the Nomination Committee
and its work can be found on page 61.
Board Attendance in 2013
Attendance at meetings of the Board is summarised below:
Director
A
B
Percentage
of meetings
attended
Robin Buchanan
Chairman
10
10
100%
Steve Ingham
CEO
10
10
100%
Andrew Bracey*
CFO
Ruby McGregor-
Smith
SID
9
10
8
9
89%
90%
Simon Boddie
NED
10
10
100%
David Lowden
NED
Tim Miller
NED
Danuta Gray **
NED
10
10
1
9
8
1
90%
80%
100%
A = Maximum number of meetings the Director could have attended
B = Number of meetings the Director actually attended
*Andrew Bracey resigned as CFO on 11 October 2013 and he did not
attend the Board meeting on the day prior to his resignation
** Danuta Gray was appointed on 10 December 2013
The other instances of non-attendance arose where the Director had a
conflict with another business meeting.
Directors unable to attend a Board meeting are provided with full sets of
briefing papers and can discuss any matters with the Chairman and/or
Chief Executive Officer.
Company Secretary
All Directors have access to the advice and services of the
Company Secretary who is responsible for ensuring that Board
procedures and applicable rules and regulations are observed.
There is an agreed procedure for Directors to obtain independent
professional advice, if necessary, at the Company’s expense.
Commitment
Induction and training programme
To enable Executive Directors to gain external Board exposure
as part of their personal development, whilst at the same time
ensuring that sufficient time and focus is spent on the Company’s
business, the Board has established a policy permitting Executive
Directors to hold external non-executive directorships, subject to
Board approval. The Executive Directors are allowed to retain
any fees from their Non-Executive Director roles. Details of these
fees are shown in the Directors’ Annual Remuneration Report
on page 86.
The external commitments of the Non-Executive Directors are
disclosed, together with their biographies, on pages 51 and 52.
Their key commitments are reviewed each year to ensure they
are able to give sufficient time to their PageGroup responsibilities.
The Chairman is responsible for the induction of new directors
and is assisted by the Company Secretary. On appointment to
the Board, each Director discusses with the Chairman and the
Company Secretary the extent of training required. A tailored
induction programme to cover their individual requirements is then
compiled. Elements of the programme typically consist of meeting
senior management, site visits, attending internal conferences and
consultant shadowing to understand the day-to-day activities of
a recruitment consultant. In addition, information is provided on
the Company’s services, Group structure, Board arrangements,
financial information, major competitors and major risks.
The content of the induction programme is reviewed annually to
ensure it remains relevant and appropriate.
To maintain their effectiveness it is essential for all Directors to
be kept up to date with the business, corporate governance,
legal and regulatory matters as they develop. This is achieved
through the following:
•
•
•
•
presentations on different aspects of the Company’s
business from members of the Executive Committee
or other members of senior management
the Non-Executive Directors meet senior operational
management at the annual global senior management
conference
financial plans, including budgets and forecasts are
regularly discussed at Board meetings
feedback from investor road shows is provided to the
Directors via reports from the Company’s brokers
• Directors are provided with written briefings and meetings to
keep them up to date on legal, regulatory and governance
matters by the Company Secretary, the Company’s Auditors
and other external advisers where appropriate
The Chairman regularly reviews and agrees with each Director
their training needs. In particular, the Chairman discusses
development and training requirements with individual
Directors as part of their annual performance evaluation.
Performance evaluation
In line with the Code, the Board undertakes a formal and
rigorous annual evaluation of its own performance, that of
its Committees and its individual Directors. The Chairman
holds meetings with the Directors to appraise their individual
performance and the Senior Independent Director meets with
the Non-Executive Directors, without the Chairman present,
to appraise the performance of the Chairman.
In 2013 the evaluation was undertaken by an external
facilitator. As reported in the 2012 Annual Report, this external
evaluation had originally been planned for 2012 but was
delayed until 2013 due to the extensive changes to the Board
made during 2012. A thorough performance evaluation was
undertaken over the period April to June 2013 by Ffion Hague
of Independent Board Evaluation, a specialist in such reviews.
Mrs Hague has no other connection with the Company. The
review was conducted through Board and Committee meeting
observations and interviews with each of the Directors and key
non-Board contributors.
The findings of this external evaluation process were
presented in report format and then discussed with the
relevant parties. Board performance was discussed with the
whole Board. Feedback regarding Board Committees was
presented to the Chairman of the Board and to the relevant
Committee Chairmen. Individual Board member reports were
presented to the Chairman of the Board who subsequently
had one-to-one discussions with each of the Directors.
A report on the Chairman of the Board was presented to
the Senior Independent Director who then consulted with
the other Non-Executive Directors before giving feedback to
the Chairman.
The main message from this evaluation process was that
the PageGroup Board was bedding down well after very
considerable change in the previous 18 months – a new
Chairman, two of the three Executive Directors and two
Non-Executive Directors departing, the appointment of a new
Chief Financial Officer and two new Non-Executive Directors.
The feedback from the Board members and senior executives
within the Company was distinctly positive.
The main areas for improvement cited were the need for further
development of the strategy, greater attention to development
and succession plans for the most senior executives, additional
time to be spent on risk management, and the beefing up of
the company secretarial support function.
As a result of these recommendations the Board agreed to:
• develop further its approach to strategic planning
•
increase its focus on development and succession planning,
especially for our most senior positions
• develop further its approach to risk management
• appoint a dedicated Company Secretary
Good progress has already been made in all of these areas:
the Board held a well received Strategy Day with an in-depth
review of the economics of our business model; we have
appointed a Group Human Resources Director with the
specific remit of ensuring that we further upgrade the
development and succession plans of our most important
executives; a review of the Group’s risk management process
was undertaken as reported on page 45 in the Strategic Report
section and is being developed further in 2014; and the Board
has appointed Elaine Marriner as a dedicated, experienced
Company Secretary.
Succession Planning
Executive succession planning discussions were held in the
summer focusing especially on succession candidates for
the Chief Executive Officer and Chief Financial Officer. This
was particularly useful given the then Chief Financial Officer’s
departure in October allowing the Board to appoint Kelvin
Stagg, Acting Chief Financial Officer.
Succession and development planning is a critical part of the
Chief Executive Officer’s performance objectives for annual
bonus and long-term remuneration.
Re-election of Directors
Danuta Gray, who was appointed a Director since the last
Annual General Meeting (AGM), will stand for election at the
forthcoming AGM. All other Directors shall, in accordance
with the Code, submit themselves for annual re-election at
the AGM.
Following the annual performance evaluation, the Board
considers that each Director continues to be effective
and has demonstrated commitment to their role. The
Board, therefore, strongly supports their re-election at the
forthcoming AGM.
Conflicts of interest
The Company has implemented robust procedures, in line
with the Companies Act 2006, requiring Directors to seek
appropriate authorisation from the Board prior to entering into
any outside business interests which have, or could have, a
direct or indirect interest that conflicts, or may conflict, with the
Group’s interests. The Nomination Committee is responsible
for reviewing any potential conflicts of interest. It makes
recommendations to the Board as to whether such a conflict
should be authorised and the terms and conditions on which
any such authorisation should be given by the Board. Only
Directors without an interest in the matter being considered
will be involved in the decision and each Director must act in
a way they consider, in good faith, will promote the success of
the Group. All Directors are aware of their continuing obligation
to report any new interests, or changes in existing interests,
that might amount to a possible conflict of interest in order
that these may be considered by the Board and appropriate
authorisations given.
57
58
Corporate GovernancePageGroup Annual Report And Accounts 2013Corporate GovernancePageGroup Annual Report And Accounts 2013OVERVIEWDIRECTORS’ REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMFINANCIAL STATEMENTS HOW OUR GOVERNANCE FRAMEWORK OPERATES
ACCOUNTABILITY
Responsibilities
The Directors acknowledge their responsibility for the preparation
of the Annual Report. The Statement of Directors’ Responsibilities
is shown in the Directors’ Report on page 90. A statement by the
Auditor concerning their reporting responsibilities is shown in the
Independent Auditor’s Report on page 92. A statement regarding
going concern is included in the Directors’ Report on page 89.
Strategy
A detailed explanation of the basis on which the Company
generates value over the longer term and the strategy for delivering
the objectives of the Company is included in the Strategic Report
on pages 7 to 49.
Risk Management and Internal Control
Internal control
The Board has overall responsibility for the Group’s system of
internal control. The procedures established by the Board provide
an ongoing process for identifying, evaluating and managing
significant risks and implementing the Turnbull Guidance, “Internal
Control: Revised Guidance for Directors on the Combined Code”.
The system of internal control includes financial and operational
controls which are designed to meet the Group’s particular
needs. They aim to safeguard Group assets, ensure that proper
accounting records are maintained and that the financial
information used within the business and for publication is reliable.
Any system of internal control can only provide reasonable, but not
absolute, assurance against material misstatement or loss.
In practice the Board delegates the implementation of the Board’s
policy on risk and control to executive management and this is
monitored by an independent Internal Audit Function which reports
back to the Board through the Audit Committee.
Key elements of our system of internal control are as follows:
• Group organisation
The Board of Directors meets at least nine times a year,
focusing both on strategic issues and operational and financial
performance. There is also a defined policy on matters reserved
strictly for the Board. The Regional Managing Director of each of
our four regions is accountable for establishing and monitoring
internal controls within their respective divisions.
• Annual Business Plan
The Board reviews the Group strategy and approves an annual
Group budget. Performance is then monitored by the Board
through the review of monthly reports showing comparisons of
results against budget, quarterly forecasts and the prior year,
with explanations provided for significant variances.
• Policies and Procedures
Policies and procedures are documented over both financial
controls and non-quantifiable areas such as the Group’s
Whistleblowing policy and Code of Conduct and Ethics.
• Risk Management
The Board has established a framework for identifying and
managing risk, both at a strategic and operational level.
An overview of this framework and a summary of the principal
risks identified, together with mitigating actions, can be found
in the Strategic Report on pages 45 to 49.
• Internal Audit
The Group Internal Audit Function examines business
processes throughout the Group on a risk basis and reports
to the Audit Committee.
• Confirmations from Executive Management
The Managing Director and Finance Director of our operations
in each country formally certify annually whether the business
has adhered to the system of internal control during the period
including compliance with Group policies. The statement also
requires the reporting of any significant control issues that have
emerged, including suspected or reported fraud, so that areas
of Group concern can be identified and investigated as required.
These confirmations and supporting Controls Self Assessment
Questionnaires are reviewed by the Internal Audit Function and
a summary of findings is provided to the Audit Committee
for review.
Review of Effectiveness of Internal Controls
The Board, with the assistance of the Audit Committee, have
reviewed the effectiveness of the Group’s system of internal
controls including financial, operational and compliance
controls, and risk management in accordance with the Code
for the period from 1 January 2013 to the date of this Annual
Report. No significant failings or weaknesses were identified.
A confirmation of any necessary actions is, therefore, not provided.
However, had there been any such failings or weaknesses, the
Board confirms that necessary actions would have been taken to
remedy them.
The notice of the AGM is on page 127. Voting on all resolutions
at the next AGM will be by way of a poll. The results of
shareholder voting are published on the Company’s website
and announced via the Regulatory News Service after the
close of the AGM.
Annual Report and Accounts
The Annual Report and Accounts is designed to present
a fair, balanced and understandable view of the Group’s
position and prospects and, therefore, is an important part
of our communication with shareholders. We welcome the
introduction this year of the Strategic Report as a separate
section of the Annual Report and Accounts. It includes a
description of the Group’s objectives, strategy and business
model, the main trends and factors affecting the Company,
a description of the key risks facing the business, the key
performance indicators, an analysis of the development and
performance of the business, and disclosures around the
environment, employees, social issues, and diversity.
The Annual Report and Accounts is sent to all shareholders
on our Register and is also available on our website.
An interim report is also produced at the end of the half
year and this is available for download from our website
(www.page.com/investors).
RELATIONS WITH SHAREHOLDERS
Board contact with shareholders
Communications with shareholders are given a high priority.
The majority of contact between the Board and shareholders
is through the Chief Executive Officer and the Acting Chief
Financial Officer who make themselves available, where
possible, to meet with shareholders and analysts at their
request. These meetings frequently take place in the UK but
also in other countries when the Chief Executive Officer and
the Acting Chief Financial Officer are visiting on business.
The Group has a website with an investor section
(www.page.com/investors) that contains Company
announcements and other shareholder information. Quarterly
trading updates are presented live by conference call with
slide presentations and live telephone question and answer
sessions. These conference calls are recorded and made
available on our website. Live presentations of preliminary
annual and interim results announcements are made to
analysts and shareholders and these can also be found on
our website.
The Chief Executive Officer and the Acting Chief Financial
Officer also undertake two major investor “road shows” each
year in the Spring and Autumn, in which numerous one-to-one
meetings are held with shareholders. The outcome of these
meetings and the views of shareholders are then relayed back
to the Board by the Company’s corporate brokers. The Group’s
corporate brokers also report monthly to the Board on broking
activity during the month and any issues that may have been
raised with them.
When requested by shareholders, individual matters can be
discussed with the Chairman or, if appropriate, the Senior
Independent Director. In addition, the Chairman of the
Remuneration Committee is available to discuss remuneration
matters with shareholders.
Annual General Meeting (AGM)
All shareholders are entitled to attend the AGM. It provides an
ideal opportunity for investors, including private investors, to
raise any questions with the Board and the Chairmen of the
Standing Committees, as well as an opportunity to vote on
the formal resolutions. Shareholders are free to ask questions
of the Board formally during the meeting and also informally
following the end of the formal business.
59
60
Corporate GovernancePageGroup Annual Report And Accounts 2013Corporate GovernancePageGroup Annual Report And Accounts 2013OVERVIEWDIRECTORS’ REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMFINANCIAL STATEMENTS What is the purpose of the Committee?
The Nomination Committee is responsible for ensuring that
the Company has the executive and non-executive Board
leadership it requires, both now and in the future.
What are its key responsibilities?
• to assess and nominate members to the Board
•
•
•
•
to maintain the right mix of character, skills and experience
on the Board and its committees
to make recommendations to the Board on succession and
development plans for members of both the Board and
senior management
to approve job descriptions and written terms of
appointment for Directors
to review the independence of Non-Executive Directors,
taking into account their other directorships.
Who attends meetings?
Only the members of the Committee are entitled to attend the
meetings. Other individuals such as the Chief Executive Officer,
the Group Human Resources Director and external advisers
may be invited to attend for all or part of any meeting, as and
when appropriate and necessary.
What were the main activities of the
Committee during the year?
The main activities of the Committee during the year were
focused on succession planning throughout the business
including the appointment of an additional Non-Executive
Director. The Company was assisted in its search for a new
Non-Executive Director by an independent executive search
company, The Zygos Partnership, which has no connection
with the Company other than the provision of this service.
A detailed role profile was agreed by the Committee and
candidates were identified and selected on merit against
objective criteria and with due regard to the benefits of
diversity on the Board, including gender. A shortlist of
candidates was interviewed by the Chairman of the Board,
the Chief Executive Officer and members of the Nomination
Committee. As described in the Chairman’s Statement, this
resulted in a recommendation to the Board of the appointment
of Danuta Gray. Danuta joined the Board as a Non-Executive
Director on 10 December 2013.
The Board was also delighted to appoint Elaine Marriner as
Company Secretary on the same date.
What is the plan for 2014?
The Committee will continue to review the size of the Board
and its mix of skills and experience.
Robin Buchanan
Chairman
4 March 2014
NOMINATION COMMITTEE
REPORT
Nomination Committee Chairman’s Overview
During the year the Committee has focused on strengthening,
broadening and balancing the range of skills, experience and
diversity on the Board and its Committees. We were delighted
to secure the appointment of Danuta Gray as a Non-Executive
Director on 10 December 2013.
The Board follows formal and transparent procedures when
appointing Directors, with appointments being made on merit
against objective criteria. All shortlisted candidates are
interviewed by the Chairman and the Chief Executive Officer
with the final shortlist of candidates being interviewed by the
Nomination Committee members. Thereafter a recommendation
of appointment is made to the Board.
Diversity at Board level is as important as diversity at every other
level in the business. It is our policy to seek diversity in order to
create a talented high-performing Board with a suitable mix of
experience and capability.
Who is on our Nomination Committee?
Director
From
A
B
Percentage
of
meetings
attended
Robin Buchanan
(Committee
Chairman)
10 Aug 2011
Simon Boddie
24 Sept 2012
Danuta Gray
10 Dec 2013
David Lowden
22 Aug 2012
Ruby McGregor-
Smith
23 May 2007
Tim Miller
15 Aug 2005
7
7
1
7
7
7
7
6
1
6
7
6
100%
86%
100%
86%
100%
86%
A = Maximum number of meetings the Director could have attended
B = Number of meetings the Director actually attended
The instances of non-attendance arose where the Director had a conflict
with another business meeting.
61
62
Corporate GovernancePageGroup Annual Report And Accounts 2013Corporate GovernancePageGroup Annual Report And Accounts 2013OVERVIEWDIRECTORS’ REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMFINANCIAL STATEMENTS
AUDIT COMMITTEE REPORT
AUDIT COMMITTEE
REPORT
Simon Boddie (Committee Chairman)
Audit Committee Chairman’s Overview
Who is on our Audit Committee?
The main role of the Audit Committee is to support the Board
in ensuring the integrity of the financial statements. All financial
information published by the Group is subject to the approval of
the Audit Committee. The activities of the Committee through the
year are, therefore, largely determined by the corporate timetable
for the announcement of quarterly, interim and annual results.
In order to fulfil its responsibilities the Committee met ten times
during the year.
This Audit Committee Report summarises the responsibilities of
the Committee and how it has discharged those responsibilities
during 2013.
This is the first year of the new regulations which require the
Board to consider whether the Annual Report and Accounts,
taken as a whole, are fair, balanced and understandable and the
Board has updated the Terms of Reference of the Committee to
add to its responsibilities the task of considering this question in
detail and advising the Board accordingly. We welcome this new
approach to ensuring that our shareholders are well informed
and welcome your feedback with regard to our Annual Report
and Accounts.
What is the purpose of the Committee?
The Audit Committee is the guardian of the integrity of the
Company’s financial statements and external reporting of
performance. The Audit Committee also has the responsibility
for ensuring that the necessary internal controls and risk
management systems are in place and effective.
Director
From
A
B
Percentage
of
meetings
attended
Simon Boddie
(Committee
Chairman)
24 Sept 2012
10
10
100%
Danuta Gray
10 Dec 2013
David Lowden
22 Aug 2012
Ruby McGregor-
Smith
23 May 2007
Tim Miller
15 Aug 2005
1
10
10
10
1
9
9
100%
90%
90%
10
100%
A = Maximum number of meetings the Director could have attended
B = Number of meetings the Director actually attended
The instances of non-attendance arose where the Director had a conflict
with another business meeting.
The Committee members have broad experience and knowledge
of financial reporting. Their relevant qualifications and experience
are shown in their biographies on pages 51 and 52. The Chairman
of the Audit Committee, Simon Boddie, is a Chartered Accountant
and is currently the Chief Financial Officer of Electrocomponents
plc. The Board also considers David Lowden and Ruby McGregor-
Smith to have recent and relevant financial experience.
What are its key responsibilities?
•
•
•
•
to advise the Board on whether the Committee believes
the Annual Report and Accounts, taken as a whole, is fair,
balanced and understandable and provides the information
necessary for shareholders to assess the Company’s
performance, business model and strategy
to monitor the integrity of the financial statements, including
the annual and half-yearly reports, interim management
statements and any other formal announcement relating to
financial performance, reviewing and reporting to the Board
on significant financial reporting issues and judgements
which they contain, having regard to matters communicated
to it by the Company’s external advisers
to report to shareholders in the Annual Report and
Accounts the primary areas of judgement considered by the
Committee and how these were addressed
to keep under review the adequacy and effectiveness of the
Company’s internal financial controls, internal control and
risk management systems
What were the main activities of the
Committee during the year?
During the year under review the Committee has fulfilled
its responsibilities in each of the key areas highlighted
above in order to assist the Board in carrying out its overall
responsibilities in relation to financial reporting requirements,
risk management and the assessment of internal controls.
The main activities of the Committee during 2013 were:
• reviewing quarterly, interim and annual results
for publication
• reviewing the annual audit plan and reviewing the results
of the audit
• reviewing the Annual Report and Accounts to ensure, taken
as a whole, it is fair, balanced and understandable and
reporting the primary areas of judgement
• further developing the Group’s risk process and the matrix
of key risks
• reviewing the independence and effectiveness of the
external auditor and considering their reappointment
• to review the Company’s overall risk tolerance and monitor
• reviewing the scope and work plan of the Group Internal
the risk profile against this tolerance, with the Board
approving the risk tolerance limits for the Group
•
•
•
•
•
•
to monitor and review annually the external auditor’s
independence and objectivity and the effectiveness of the
audit process
to develop and implement policy on the engagement of
the external auditor to supply non-audit services, taking
into account relevant guidance regarding the provision of
non-audit services by the external audit firm
to make recommendations to the Board, for it to put to
shareholders for their approval in general meeting, in
relation to the appointment, reappointment or removal of
the external auditor and to approve their remuneration and
terms of engagement
to report to the Board on the appropriateness of our
accounting policies and practices
to review the scope, resources, results and effectiveness
of the activity of the Group Internal Audit Function
to review the adequacy and security of the Company’s
arrangements for its employees and contractors to raise
concerns in confidence about any possible wrongdoing in
financial reporting and other matters
•
to review the Company’s procedures for detecting fraud
•
to report to the Board on how it has discharged
its responsibilities
Who attends meetings?
Only the members of the Committee are entitled to attend
the meetings, but the Chairman of the Board, Chief Executive
Officer, Chief Financial Officer, the Company Secretary,
the Head of Internal Audit and the external audit partner
are regularly invited to attend meetings to make proposals as
appropriate and necessary. The Committee can invite others
to attend as appropriate.
The Audit Committee met with the external auditor during
the year without the presence of management in order to
provide the opportunity for confidential discussion. The
Head of Internal Audit and the external auditor have direct
access to the Chairman of the Audit Committee throughout
the year.
Audit Function and reviewing its findings
• reviewing the Group’s Whistleblowing policy and procedures
• recommending to the Board revised Terms of Reference for
the Committee
Further information on these activities is given below.
Financial Reporting
With regard to its role in ensuring that the Annual Report
and Accounts complies with relevant statutory and Listing
requirements, the Committee has, amongst other things,
reviewed the appropriateness of accounting policies and
controls, the financial and narrative disclosures and the areas
where significant judgement has been applied.
The significant issues considered by the Audit Committee,
including the primary areas of judgement, in relation to the
2013 financial statements were:
• The appropriateness of the accounting for the new
operating system intangible asset
The operating system and related applications were
piloted in the Boston office from May 2013 and are
planned to be rolled out further during 2014. Work on
modifications to the system is developing in line with
expectations and the roll-out plan. The Committee reviewed
the status of the project with management and also
considered the intangible assets for any indications
of impairment. The Committee agreed with management’s
conclusion that there were no indications of impairment.
Another key area of judgement was the estimation of their
useful economic lives and thus the appropriate amortisation
periods. The Committee agreed that the assets should be
amortised on a straight-line basis over five years, starting
from the date the operating system and related applications
were first piloted in Boston.
• Direct and indirect taxes and related accounting issues
The Committee discussed with management the latest
position on all significant open tax matters and the
reconciliation of the effective tax rate. We also reviewed
with management the appropriateness of the tax provision,
particularly in relation to profit sharing in France and the
related tax and interest elements that have been recognised
as exceptional items and are explained in note 5 to the
financial statements.
63
64
Corporate GovernancePageGroup Annual Report And Accounts 2013Corporate GovernancePageGroup Annual Report And Accounts 2013OVERVIEWDIRECTORS’ REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMFINANCIAL STATEMENTS AUDIT COMMITTEE
What were the main activities of the Committee
during the year? (continued)
• Revenue recognition for permanent and temporary
placements
The main areas of judgement in our revenue recognition
are the provisions for revenue earned but not yet invoiced
and for non-completion of contractual placements.
The Committee regularly reviews these areas with
management and remains satisfied that Group accounting
policies with regard to revenue recognition have been
adhered to and that the year end provision for bad debt
is appropriate.
• Annual Report and Accounts (ARA)
The Committee was required to use its judgement to determine
whether the ARA is fair, balanced and understandable and
provides the shareholder with the information required to assess
the Company’s performance, business model and strategy.
The Committee based its judgement on its discussions with
management regarding the procedure followed in compiling the
ARA and through the members of the Committee reviewing the
ARA in the light of their collective experience and knowledge of
the business. The Committee judged that the ARA, taken as a
whole, is fair, balanced and understandable.
External Auditor’s Independence
The Audit Committee continually monitors the objectivity and
independence of the external auditor. Ernst & Young LLP
were appointed as auditor of the Company in 2011 following a
tender process. Prior to that Deloitte LLP had been the auditor
since the Company’s listing in 2001. The Company is mindful
that the Code and best practice now require the external audit
contract to be put out to tender at least every ten years. In
addition, in accordance with professional standards, Ernst &
Young LLP operate a policy of rotating the Audit Partner at
least every five years.
The objectivity and independence of the external auditor is
safeguarded by:
•
•
•
•
obtaining assurances from the external auditor that
adequate policies and procedures exist within its firm to
ensure the firm and its staff are independent of the Group
by reason of family, finance, employment, investment and
business relationships (other than in the normal course
of business)
enforcing a policy of reviewing all cases where it is proposed
that a former employee of the external auditor be employed by
the Group in a senior management position
monitoring the external auditor’s compliance with applicable UK
ethical guidance on the rotation of audit partners
enforcing a policy concerning the provision of non-audit
services by the auditor which governs the types of work:
i. from which the external auditor is excluded
ii. for which the external auditor can be engaged without
referral to the Audit Committee
iii. for which a case-by-case decision is required
The Audit Committee has recommended and the Board has
determined that it is not acceptable for the external auditor to
undertake any of the following non-audit services:
• election, design or implementation of key financial systems
•
maintaining or preparing the accounting books and
records or the preparation of financial accounts or other
key financial data
• provision of outsourced financial systems
• provision of outsourced operational management functions
• recruitment of senior finance or other executives
• secondment of senior finance or other senior executives
• provision of internal audit services
• valuation services or fairness opinions
•
any services specifically prohibited to be provided by a listed
company’s external auditor under UK regulations
The following criteria also need to be met before the external
auditor is contracted to provide any non-audit services:
•
•
•
•
the firm has the necessary skills and experience to undertake
the work
there are no potential conflicts that may arise as a result of
carrying out the activity
the external audit firm is subject to the Company’s normal
tendering processes
in addition to the normal authorisation procedures and prior
to inclusion in a tender, approval has to be given by the
Chief Financial Officer and, if the fee exceeds a certain level,
the Audit Committee
Fees paid to Ernst & Young LLP during 2013 in respect of non-
audit services are shown in the Financial Statements on page 106.
External Auditor’s Evaluation
To assess the effectiveness of the external auditor, the Audit
Committee reviewed:
•
•
•
•
•
the arrangements for ensuring the external auditor’s
independence and objectivity
the robustness of the external auditor’s plan and its
identification of key risks
the fulfilment of the agreed external audit plan and any
variations from the plan
the robustness and perceptiveness of the external auditor in
handling key accounting and audit judgements
the content of reports provided to the Audit Committee by the
external auditor including reporting on internal control
• feedback from management
The review of the robustness of the external auditor’s plan is
vital given that the effectiveness of the external audit process is
dependent on appropriate audit risk identification. At the start of
the audit cycle the Company received a detailed audit plan from
Ernst & Young LLP identifying their assessment of the key risks.
Due to the judgements necessarily required in these areas, for
2013 these risks were:
• Revenue recognition for permanent and temporary
placements, with particular focus on period end cut off and
appropriate accounting treatment in accordance with IFRS
and Group accounting policies
• Accounting for the new operating system and related
applications intangible assets, with particular focus on
appropriate cost capitalisation and carrying value
The Committee reviewed with Ernst & Young LLP the
methodology used to test the assumptions and estimates
made by management in each of these areas.
To provide additional opportunity for open dialogue and
feedback from the Committee and the external auditor,
meetings are held between the Chairman of the Audit
Committee and the external auditor during the year without
management being present. Matters typically discussed
may include, amongst other items, the auditor’s assessment
of business risks and related management activity, external
auditor independence and confirmation that there has been
no restriction in scope placed on them by management, the
transparency and openness of interactions with management,
records made available and how they have exercised their
professional scepticism.
External Auditor’s Reappointment
Following a full evaluation of the external auditor at the end
of the 2013 audit the Committee recommended to the Board
the reappointment of Ernst & Young LLP as auditor of the
Company at the forthcoming AGM.
Risk Management and Internal Control
During the year, in accordance with its Terms of Reference,
the Audit Committee, with the assistance of the Internal
Audit Function, reviewed the adequacy and effectiveness of
the Group’s internal financial controls and the Group’s risk
management and internal control systems. The identification
of major business risks was carried out at Group level
in conjunction with operational management. The Audit
Committee reviewed and further developed the Group’s risk
assessment procedure, the risks identified and the steps taken
to monitor and mitigate risk to ensure that appropriate action is
being taken.
The risk process together with the key risks identified and
mitigating actions are described in the Strategic Report on
pages 45 to 49.
Internal Audit Activities
During the year, the Audit Committee monitored and reviewed
the effectiveness of the Internal Audit Function in accordance
with the Code.
The Group’s Internal Audit Function comprises a Group Internal
Audit Director and a team of internal auditors. Although the
Group Internal Audit Director reports to the Chief Financial
Officer on a day-to-day basis, he has direct access to the
Audit Committee in order to ensure that there is opportunity
for frank and open dialogue. The scope of the internal audit
work for the year is agreed with the Audit Committee and
reports are presented to both the Executive Board and the
Audit Committee. Businesses are visited on a risk-based and
rotational basis to assess the effectiveness of controls
in mitigating specific risks. In addition, risks are regularly
reviewed and changes are made to the risk profile where
necessary. No significant weaknesses were identified during
the year.
Public Interest Disclosure Policy (Whistleblowing)
The Audit Committee has reviewed arrangements by which
the Company’s staff may, in confidence, raise concerns about
possible improprieties in matters of financial reporting or other
matters. Arrangements are in place for the proportionate and
independent investigation of such matters and for appropriate
follow-up action. There have been no matters raised during
the year.
Audit Committee Effectiveness Evaluation
During the year a review of the effectiveness of the Audit
Committee in discharging its responsibilities was facilitated by
an external facilitator. Details of the evaluation process can be
found on page 60.
Review of Annual Report
PageGroup management introduced a new process for the
review of the 2013 Annual Report and Accounts (ARA) in order
to ensure that the ARA is ‘fair, balanced and understandable’.
This process included a thorough understanding of the
revised regulatory requirements, a process to determine the
accuracy, consistency and clarity of the data and language,
and detailed review by all appropriate parties including
external advisers. A checklist outlining all the elements of
the process was completed to document the process and to
provide assurance to the Audit Committee that the appropriate
procedures had been undertaken.
The Audit Committee has reviewed the Company’s 2013
ARA and has advised the Board that, in its opinion, the ARA,
taken as a whole, is fair, balanced and understandable and
provides the information necessary to assess the Company’s
performance, business model and strategy.
What is the plan for 2014?
In 2014 the Committee will continue to prioritise oversight
of financial and regulatory requirements and also to further
develop the risk process within the business.
Simon Boddie
Chairman of the Audit Committee
4 March 2014
65
66
Corporate GovernancePageGroup Annual Report And Accounts 2013Corporate GovernancePageGroup Annual Report And Accounts 2013OVERVIEWDIRECTORS’ REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMFINANCIAL STATEMENTS
What were the main activities and decisions
of the Committee during the year?
The main activities and decisions of the Committee since the
last report were:
•
•
•
consultation with shareholders and shareholder bodies with
regard to remuneration policy
reviewing and approving rules of new share plans prior to
approval at the 2013 AGM
reviewing shareholder voting on remuneration matters
following the 2013 AGM
• monitoring executives’ progress on strategic objectives
• reviewing new reporting regulations regarding remuneration
•
•
•
the appointment of new remuneration advisors following a
re-tendering process
an annual review and approval of salaries of the Chief
Executive Officer and other senior executives
the approval of bonuses and share plan awards for
the executives based on the achievement of pre-set
performance targets for 2013
I hope that you will feel able to support the resolutions on
remuneration proposed at the AGM.
David Lowden
Chairman of the Remuneration Committee
4 March 2014
What is the purpose of the Committee?
The Committee is responsible for the review, recommendation
and implementation of the Group’s remuneration strategy, its
framework and cost, ensuring that the Executive Directors and
other senior executives are fairly and responsibly rewarded.
What are its key responsibilities?
•
•
•
•
•
•
to monitor and make recommendations to the Board on
the policy of remuneration for the Chairman of the Board,
the Executive Directors and other senior executives of
the Group
within the terms of the agreed policy, to determine the
total remuneration packages for the Executive Directors
and other senior executives including bonuses, incentive
payments, share awards, pension rights and any
compensation on termination of office
to ensure compliance with current regulations and principles
of good governance
to review the design of all share option and share incentive
plans, and any changes thereto, for approval by the Board
and shareholders and to determine each year whether
awards will be made
to prepare a Directors’ Remuneration Report for inclusion in
the Annual Report and Accounts
through the Chairman of the Remuneration Committee,
to maintain contact with shareholders with regard to
PageGroup remuneration matters
Who attends meetings of the Committee?
Only members of the Committee are entitled to attend
meetings of the Remuneration Committee. However, the
Chairman of the Board and Chief Executive Officer are normally
invited to attend meetings except when their own remuneration
is under consideration. Other advisors are also invited to
attend meetings as required, for example the Group Human
Resources Director and the Group’s remuneration consultants,
New Bridge Street. No Director is involved in deciding his or
her own remuneration.
DIRECTORS’
REMUNERATION REPORT
ANNUAL STATEMENT
I am delighted to present the Directors’ Remuneration Report
in accordance with the new regulations on the disclosure and
approval of directors’ remuneration. Accordingly, this report
includes the following:
•
•
the Remuneration Policy Report (pages 69 to 74) which will be
subject to a binding shareholder resolution at the forthcoming
AGM and every three years thereafter
the Directors’ Annual Remuneration Report (pages 75 to 86)
which describes how our Remuneration Policy was implemented
in 2013 and how we intend to apply the policy in 2014 and will
be subject to an advisory vote at the forthcoming AGM
During the early part of 2013 we finalised our review of the
remuneration structure which had served us well over the previous
decade but which we felt needed to be rebalanced to encourage
longer term decision making. Our proposed revised policy on
Executive Directors’ Remuneration was outlined in our 2012
Annual Report, issued in March 2013. That policy now forms
the basis of the policy described in the Remuneration Policy
Report and on which you will have an opportunity to vote at our
forthcoming AGM.
Our policy is guided by the objective of attracting and retaining
high calibre executives. Management continuity and retention is
particularly critical in the PageGroup business which has built its
success on organic growth and promotion from within. The policy
aims to create a strong performance-orientated environment
which rewards achievement of meaningful targets over the short
and long-term. Short-term incentives are reinforced by long-
term performance measures which support our strategic focus
on profitability, organic growth and the creation of sustainable
shareholder value.
David Lowden (Remuneration Committee Chairman)
During the year, I have consulted with many of our significant
investors and shareholder representative bodies and the
Committee has reviewed the guidance on remuneration reporting
produced by the GC100 and Investor Group. Their views were
taken into account in devising our remuneration policy and in
presenting our report. A significant proportion of remuneration
is performance based and delivered through shares. Our bonus
deferral policy and shareholding guidelines also encourage
ongoing commitment to the business and align the motives of
executives with those of shareholders.
Who is on our Remuneration Committee?
Director
From
A
B
Percentage
of
meetings
attended
David Lowden
(Committee
Chairman)
22 Aug 2012
8
Simon Boddie
24 Sept 2012 8
Danuta Gray
10 Dec 2013
Ruby McGregor-
Smith
23 May 2007
Tim Miller
15 Aug 2005
1
8
8
8
8
1
7
6
100%
100%
100%
88%
75%
A = Maximum number of meetings the Director could have attended
B = Number of meetings the Director actually attended
The instances of non-attendance arose where the Director had
a conflict with another business meeting.
67
68
Directors’ Remuneration ReportPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTORS’ REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMDirectors’ Remuneration ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS DIRECTORS’ REMUNERATION POLICY REPORT
PageGroup is a global business that operates in a cyclical
industry in which the retention of key executives and management
continuity is critical to the success of the Company. As a result,
the Directors’ Remuneration Policy set out in this report has
been designed to encourage long-term decision making, to
remove undue volatility from remuneration outcomes, and to
act as an effective retention tool during market downturns.
The Committee believes that the best way to implement
such a policy is to pay competitive market salaries, profit
based bonuses, which are not subject to excessive annual
fluctuations, and a long-term incentive plan based on a
longer term performance horizon.
The Remuneration Policy set out below will take effect, subject to shareholder approval, from 5 June 2014 (the date of the AGM).
FUTURE POLICY TABLE FOR EXECUTIVE DIRECTORS
Element
Salary
(Fixed pay)
Purpose and link
to strategy
Operation
Maximum opportunity
Attract, retain
and reward high
calibre Executive
Directors
Salary levels (and subsequent increases) are set after reviewing
various factors including individual and Company performance, role
and responsibility, internal relativities such as the increases awarded
to other employees and prevailing market levels for Executive
Directors at companies of comparable status and market value,
taking into account the total remuneration package.
Current CEO salary
level is £565,000 which
can be increased in line
with the parameters set
out under the column
‘Operation’.
Salaries are normally reviewed annually.
Salary is paid monthly and increases are generally effective from
1 January.
Aim for market
competitive salaries.
Salaries will not increase
by more than RPI +5%
except increases in
excess of this may be
awarded in the case of
new Executive Directors
where it is appropriate
to offer a below market
salary initially on
appointment and a series
of staged increases,
subject to performance
and experience in role,
to bring to a market
competitive salary.
Benefits
(Fixed pay)
Attract, retain
and reward high
calibre Executive
Directors
Competitive benefits including car allowance or company car
(including running costs), private medical insurance for the
individual and family, permanent health insurance and four times
salary life assurance.
Competitive benefits in
line with market practice.
Provision of
opportunities for
connecting with
clients, investors
and staff to
facilitate growth
strategy
Provision of relocation assistance and any associated costs or
benefits (including but not limited to housing benefits, personal
tax advice and school fees) upon appointment if/when applicable.
The Company may also provide tax equalisation arrangements.
Membership of clubs as appropriate for the development
of business.
Element
Annual
Bonus
(Variable
pay)
Purpose and link
to strategy
Operation
Incentivise the
delivery of annual
financial and
strategic targets
At least half based on audited financial measures, such as
Profit Before Tax. No more than one half assessed against other
strategic targets.
Any strategic element will be payable only if the Committee is also
satisfied in the circumstances with the underlying performance of
the business.
Performance below the threshold of the financial performance
target will result in zero payment of the financial element of the
annual bonus. Payments rise from 20% to 100% of the maximum
opportunity for levels of performance between the threshold and
maximum targets.
Clawback provisions will be put in place for misstatement
and misconduct.
Maximum opportunity
Maximum award of
175% of salary.
Deferred
Bonus Plan
(Variable
pay)
Focus Executive
Directors on
long-term
performance and
align the interests
of Executive
Directors with
shareholders
The terms of the new Deferred Bonus Plan, as referred to below,
were approved by shareholders at the 2013 AGM.
Compulsory deferral in shares applies to any annual bonus payment
above a hurdle of 125% of salary. The Committee can lower the
hurdle for compulsory deferral.
Deferred shares vest in equal amounts after one and two years.
Deferred shares are not subject to further performance conditions
as they are awarded in lieu of previously earned annual bonus.
Not applicable
(see “Annual Bonus”
section above).
Dividends accrue or are paid on unvested awards over the
vesting period.
Clawback provisions are in place for misstatement
and misconduct.
The terms of the new Long-term Incentive Plan, as referred to
below, were approved by shareholders at the 2013 AGM.
Maximum award of
200% of salary.
Awards are granted in the form of restricted shares or
nil-cost options.
Awards have a performance period of at least three financial years.
At least 62.5% of any award is based on financial measures, such
as EPS.
At least 12.5% of any award will be based on relative growth
compared to a peer group.
The remainder of any award is subject to performance measures
based on long-term strategic objectives, such as people and
leadership development, strategy development, IT strategy and
Corporate Centre development, which are disclosed in the Annual
Report on Remuneration in the year of grant.
Performance below the threshold of the performance target for the
financial performance results in no vesting for the financial element
of the LTIP award. For performance between the threshold target
and maximum target, vesting starts at 25% and rises to 100%.
There is no opportunity to re-test performance measures.
Vested shares must be held for a further two years if the
shareholding guideline (set out below in the section
“Executive shareholding guidelines”) has not been met.
Dividends accrue or are paid on unvested awards over the
vesting period.
Clawback provisions are in place for misstatement and misconduct.
Executive Directors may receive a defined contribution pension
benefit or cash supplement.
CEO: 25% of salary.
Other Executive
Directors: 20% of salary.
Long-term
Incentive
Plan
(Variable
pay)
Incentivise share
ownership and
long-term
performance in
line with Group
strategy
Pension
(Fixed pay)
Attract, retain
and fairly reward
high calibre
Executive
Directors
69
70
Directors’ Remuneration ReportPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTORS’ REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMDirectors’ Remuneration ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS Good leavers’ awards normally vest at the usual time unless
the Committee determines, in exceptional circumstances,
that they should vest earlier. In addition, awards normally will
be pro-rated to reflect the time served since the award date
unless the Committee determines otherwise but are always
based on the achievement of any performance conditions.
In the case of death, all awards will vest immediately subject
to any performance criteria but with no time pro-rating.
Under the Deferred Bonus Plan and the Long-term Incentive
Plan, awards will also vest on the occurrence of a corporate
event affecting the Company based on the achievement of any
performance conditions. Awards normally will be pro-rated
to reflect the time to the date of the relevant event unless the
Committee determines otherwise.
The extent to which any awards made under legacy share
plans prior to the effective date of this policy would vest upon
cessation of employment would be determined in accordance
with their terms.
In considering the exercise of discretion as set out
above, the Committee will take into account all relevant
circumstances. Factors that the Committee may (but shall
not be obliged to) take into account will include, but not be
limited to, the following:
• the best interests of the Company
•
the contribution of the Executive Director to the success
of the Company during their tenure
• the need to ensure continuity
•
the need to compromise any claims that the Executive
Director may have
• whether the Executive Director received a PILON payment
•
•
•
whether a greater proportion of the outstanding award
may have vested had the Executive Director served out
his notice
whether the Executive Director has presided over an
orderly handover
adjustment of performance outcomes to ensure that payout
is fair and reasonable in the context of the Company’s
overall performance
Choice of performance measures and
target setting
Information on performance measures and targets for each annual
award is disclosed in detail in the Directors’ Annual Remuneration
Report. When choosing performance measures and setting targets
the Committee is guided by the following principles:
•
•
•
•
performance measures should drive and reward the
achievement of key short and long-term financial and
strategic goals
performance measures should provide alignment between
the interests of management and those of shareholders
a significant proportion of any incentive scheme should be
linked to Group financial performance
PBT and EPS are used currently because they are key
measures of business performance and profitability
Strategic measures in the annual bonus arrangements are specific
to the individual and reward the delivery of key strategic objectives
for the business.
•
targets for financial and strategic measures should be stretching
yet achievable, and set with reference to internal plans and
external expectations
• targets should not incentivise excessive risk taking
Legacy arrangements
In approving this Directors’ Remuneration Policy Report, authority
is given to the Company to honour any commitments entered into
with current or former Directors (such as the payment of a pension
Our approach to recruitment
or awards pursuant to the terms of the legacy share schemes)
granted prior to the date that this policy takes effect. Details
of any such payments will be set out in the Directors’ Annual
Remuneration Report as they arise.
Consistency with remuneration for the
wider group
The Committee reviews and considers remuneration across
PageGroup when setting the Executive Director remuneration
policy. Remuneration levels for all employees are set in the
context of internal relativities and market levels of remuneration for
comparable roles. Policy for Executive Directors differs from other
senior executives in that Executive Director variable remuneration
is capped, whereas for other senior executives it is uncapped.
This is in line with practice in the recruitment industry where
variable remuneration is funded from an uncapped profit pool.
This arrangement provides a strong incentive for employees
to grow PageGroup profit and is a fundamental part of our
remuneration policy.
Executive shareholding guidelines
Shareholding guidelines are operated to align Executive Directors’
interests with those of shareholders. The current guideline is 200%
of salary and will be achieved through the retention of half of any
vesting share awards, net of tax.
This would normally be expected to be achieved within five years.
Executive Director shareholdings are disclosed annually in the
Directors’ Annual Remuneration Report.
The Committee intends to structure the remuneration package of any new Executive Director as set out in the table below:
Element of
remuneration
Ongoing
remuneration
package
External recruits
Internal recruits
The remuneration package may include any
of the elements set out in the Future Policy Table
for Executive Directors.
The remuneration package may include any of the
elements set out in the Future Policy Table for
Executive Directors.
Ongoing remuneration will be subject to the
maximum levels as set out in the approved
remuneration policy in force at the time of
appointment. As a result, the maximum level of
variable remuneration is 375% of salary (excluding
any ‘buy out’ payments as referred to below).
Ongoing remuneration will be subject to the maximum
levels as set out in the approved remuneration policy
in force at the time of appointment. As a result, the
maximum level of variable remuneration is 375% of salary.
Treatment of
outstanding awards
of variable
remuneration
May offer additional cash and/or share-based
elements when considered to be in the best interests
of the Company and, therefore, shareholders, in order
to ‘buy out’ forfeited remuneration.
Any variable pay element awarded in respect of the prior
role may be allowed to pay out according to its terms
on grant.
Any ‘buy-out’ payments would be based solely on
remuneration lost when leaving the former
employer and would be on terms that are no more
favourable than the delivery mechanism (i.e. cash,
shares, options) and time horizons. Where
forfeited remuneration is performance related, any
‘buy-out’ payment would be subject to performance
conditions determined by the Committee.
The Committee may need to avail itself of the
current Listing Rule 9.4.2 R to make such awards
where doing so is necessary to facilitate, in
exceptional circumstances, the recruitment of
the relevant individual.
In addition, the structure of remuneration for a new Executive
Director may differ temporarily from that in effect for other
Executive Directors. The circumstances in which this may
occur are set out below:
•
•
•
when it is appropriate to offer a below market salary
initially, a series of salary increases may be given over
the following few years subject to individual performance
and experience in role which bring the incumbent to the
determined salary level, reflective of the policy to pay
market competitive salaries
different performance measures may be set initially for
the annual bonus, taking into account the responsibilities
of the individual and the point in the financial year that
they joined
the Committee may agree that the Company will meet
certain costs associated with the recruitment (for example
legal fees)
Policy on payment for loss of office
On termination, any compensation payments due to an
Executive Director are calculated in accordance with normal
legal principles, including mitigation, as appropriate. Should
notice be served by either party, an Executive Director can
continue to receive basic salary, benefits and pension for the
duration of his notice period during which time the Company
may require the individual to continue to fulfil his current duties
or may place the individual on garden leave. The Company
can make a payment in lieu of notice (PILON) as a lump sum
equivalent to the amount of base salary, benefits and pension
that would have been payable to the executive. This payment
can be phased over the remainder of the notice period
and be subject to reduction if there are alternative earnings.
The phasing and reduction of PILON will not apply to
Executive Directors in post at 31 December 2013. A payment
may be made in respect of accrued but untaken holiday.
In respect of annual bonus, an Executive Director who ceases
employment or is under notice prior to the payment of bonus
may, if the individual is considered by the Committee in its
discretion to be a good leaver, receive a payment in cash.
Any payment would be on a pro-rata basis reflecting the
period of time served from the start of the financial year to
the date of termination (or to the date of notice and/or garden
leave, if earlier), other than where the Committee decides
otherwise in exceptional circumstances. Any bonus paid
would normally be subject to the normal bonus targets,
although the Committee may modify these in exceptional
circumstances, taking into account the individual’s role during
the year of termination, and provided that any new targets are
no easier than the original targets.
Under the rules of the new Deferred Bonus Plan and the
new Long-term Incentive Plan, each as approved by
shareholders at the 2013 AGM, outstanding awards vest
if an Executive Director dies or leaves for a specified
“good leaver” reason, including:
• redundancy, retirement, injury or disability
•
•
a transfer of employment in connection with the disposal of
a business or undertaking
the company with which the Executive Director holds office
or employment ceasing to be a member of the Group
In all other circumstances awards will lapse, provided that the
Committee has discretion to determine otherwise, in which
case the provisions applicable to good leavers will apply.
71
72
Directors’ Remuneration ReportPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTORS’ REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMDirectors’ Remuneration ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS Future Policy Table for Board Chairman and Non-Executive Directors
The Board Chairman and Non-Executive Directors receive a fee for their services and do not receive any other benefits from the
Group, nor do they participate in any of the bonus or share schemes. The fees recognise the responsibility of the role and the time
commitments required, and are not performance related or pensionable. They are paid monthly in cash and there are no other benefits.
Element
Fees
Purpose and link
to strategy
Operation
Attract, retain and
fairly reward high
calibre individuals.
Reviewed by the Board after recommendation
by the Chairman and Chief Executive (and by the
Committee in the case of the Chairman) taking
into account individual responsibilities, such as
committee Chairmanship, time commitment, general
employee pay increases, and prevailing market levels
at companies of comparable status and market value.
Fee increases are normally reviewed annually and are
generally effective from 1 January.
Maximum opportunity
The maximum
aggregate fees for all
Directors allowed by the
Company’s Articles of
Association is £600,000.
Current fee levels are
set out in the Directors’
Annual Remuneration
Report.
The above principles will also be applied for the recruitment of new Non-Executive Directors.
Service contracts and letters of appointment
All Executive Directors’ service contracts contain a twelve
month notice period. The service contracts also contain
restrictive covenants preventing the Executive Directors
from competing with the Group for six months following the
termination of employment and preventing the Executive
Directors from soliciting key employees, clients and candidates
of the employing company and Group companies for twelve
months following termination of employment.
Non-Executive Directors, including the Chairman of the Board,
are engaged under letters of appointment and do not have
service contracts with the Company. They are appointed for a
fixed term of three years, during which period the appointment
may be terminated by either party upon one month’s written
notice or in accordance with the Articles of Association of
the Company. There are no provisions on payment for early
termination in the letters of appointment. After the initial
three year term they may be reappointed for a further term
of three years, subject to annual re-election at Annual
General Meetings.
Further detail on service contracts and letters of
appointment are set out on page 84 and copies are
available for inspection at the Company’s registered office
during normal business hours.
Illustration of the application of our
remuneration policy
Statement of consideration of
shareholder views
The chart below gives an indication of the total remuneration
which could be received by the Chief Executive Officer under
the policy. Three scenarios are presented: the minimum
remuneration receivable; the amount receivable if he performs
in line with the Company’s expectations; and the maximum
remuneration receivable.
The Committee considers shareholder feedback received in
relation to the AGM each year at its first meeting following the
AGM. The Remuneration Committee Chairman will seek to
inform major shareholders of any material changes to the
remuneration policy in advance and will generally offer a
meeting to discuss these.
Chief Executive Officer
Key areas of discretion
£2,855k
39%
35%
£1,895k
30%
31%
Key areas of Committee discretion in our remuneration policy
include (but are not limited to):
•
•
•
the choice of financial performance measures in variable
remuneration and the choice of performance targets for
those measures
the treatment of leavers in the Annual Bonus Plan (as described
in the “Policy on payment for loss of office” section on page 72)
certain discretions as set out in the plan rules relating to the
vesting of long-term incentive awards and Deferred Bonus Plan
awards, such as:
£736k
– the timing of grant of award and/or payment
£’000
3000
2500
2000
1500
1000
500
0
– the size of an award and/or a payment (subject to the
maximums set out in the Future Policy Table for Executive
Directors)
– determination of a good leaver (in addition to any specified
categories) for incentive plan purposes based on the rules
of each plan, and the resulting treatment of the award
(as described in the “Policy on payment for loss of office”
section on page 72)
– adjustments required in certain circumstances (e.g. rights
issues, corporate restructuring and special dividends)
– the ability to adjust existing performance conditions for
exceptional events so that they can still fulfil their original
purpose (subject to the amended condition not being
materially less challenging)
External Non-Executive Director positions
Subject to Board approval, Executive Directors are permitted to
take on non-executive positions with other companies. Executive
Directors are permitted to retain their fees in respect of such
positions. Details of outside directorships held by the Executive
Directors and any fees that they received are provided on page 84
of the Directors’ Annual Remuneration Report.
100%
39%
26%
Minimum
Target
Maximum
Fixed remuneration
Annual Bonus
Long-Term Incentive
Note that the charts are only indicative as share price movement
and dividend accruals have been excluded. Assumptions for each
scenario are as follows:
•
•
•
Minimum: fixed remuneration only (i.e. salary, benefits
and pension)
Target: fixed remuneration plus 60% of maximum annual bonus
opportunity plus 50% vesting of awards under long-term
incentive awards
Maximum: fixed remuneration plus maximum annual
bonus opportunity plus 100% vesting of long-term
incentive awards
The charts are based on an annual salary of £565,000 and
assume a maximum annual bonus opportunity of 175% of salary
and maximum long-term incentive awards of 200% of salary,
in accordance with the above policy.
Statement of consideration of employment
conditions elsewhere in the Group
PageGroup does not consult directly with employees when
determining remuneration policy for Executive Directors.
However, increases in pay across the senior management
population and the wider workforce are taken into account
when setting pay levels for Executive Directors.
73
74
Directors’ Remuneration ReportPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTORS’ REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMDirectors’ Remuneration ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS
Directors’ remuneration as a single figure
The tables below report a single figure for total remuneration for each Director for the years ended 31 December 2013
and 31 December 2012.
2013
Benefits
(note 2)
£’000
Pension
(note 3)
£’000
Short-
term
incentives
(note 4)
£’000
Lapse of
short-term
incentives)
(note 5)
£’000
Long-
term
incentives
(note 6)
£’000
Dividends
paid on
unvested
shares
£’000
Lapse
of
joining
award)
(note 8)
Other
(note 7)
£’000
Total
(note 4)
£’000
Robin Buchanan
220
Salary
and
Fees
(note 1)
£’000
550
365
Salary
and
Fees
(note 1)
£’000
450
249
59
159
55
3
58
55
48
13
21
58
47
19
36
Executive
Steve Ingham
Andrew Bracey
Non Executive
Simon Boddie
Danuta Gray
David Lowden
Ruby McGregor
Smith
Tim Miller
Total
2012
Executive
Steve Ingham
Andrew Bracey
Charles-Henri
Dumon
Stephen Puckett
Non Executive
Simon Boddie
David Lowden
Ruby McGregor
Smith
Tim Miller
Hubert Reid
Reg Sindall
Total
Robin Buchanan
220
1,354
54
211
765
(269)
Benefits
(note 2)
£’000
Pension
(note 3)
£’000
Short-
term
incentives
(note 4)
£’000
Lapse of
short-term
incentives)
(note 5)
£’000
Long-
term
incentives
(note 6)
£’000
Dividends
paid on
unvested
shares
£’000
30
24
–
–
–
–
–
–
138
73
558
207
–
(269)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
28
17
19
15
–
–
–
–
–
–
–
113
48
22
40
–
–
–
–
–
–
–
1,122
690
–
250
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
42
13
–
–
–
–
–
–
–
–
1,318
286
(187)
512
–
–
–
–
–
–
–
–
–
–
–
–
220
55
3
58
55
48
55
286
(187)
2,269
Other
(note 7)
£’000
–
360
2,531
–
–
–
–
–
–
–
–
Lapse
of
joining
award
(note 8)
Total
(note 4)
£’000
–
–
–
–
–
–
–
–
–
–
–
–
2,723
1,372
2,631
487
220
13
21
58
47
19
36
7,627
958
–
–
–
–
–
–
–
–
–
–
52
8
–
23
–
–
–
–
–
–
–
1,331
79
223
2,062
958
83
2,891
DIRECTORS’ ANNUAL
DIRECTORS’ ANNUAL
REMUNERATION REPORT
REMUNERATION REPORT
This part of the report has been prepared in accordance with
Part 3 of The Large and Medium-sized Companies and
Groups (Accounts and Reports) (Amendment) Regulations 2013.
The Annual Remuneration Report will be put to an advisory
shareholder vote at the 2014 AGM. The information on pages
76 to 86 has been audited where required under the regulations.
Notes:
1. Salary and fees represent the salary and fees paid in cash in respect of the financial year.
2. Benefits represent the taxable value of the benefits provided in the year and comprises company car or cash alternative, fuel, permanent health
insurance, medical insurance, life insurance and, in the case of the CEO, golf club membership used for corporate entertaining.
3. Pension includes the cash value of Company contributions to defined contribution pension plans and cash payments in lieu of
pension contributions.
4. The variance in short-term and total remuneration is driven by the new reporting methodology as described in detail in ‘transition to the new
executive remuneration strategy’ on page 77.
5. The ISP Deferred Award granted to Andrew Bracey on 11 March 2013, over 54,299 shares, lapsed on Andrew Bracey resigning. The value of this
award was included in the 2012 single figure for remuneration (within the “Short-term incentives” figure) and therefore the lapse of the award in
2013 is shown as a negative figure. The negative value is calculated using the share price on the date of notice of resignation, 11 October 2013,
of 494.5p. Further detail regarding payments for loss of office is provided on page 83.
6. The value of long-term incentives in 2013 is nil since the performance target was not met for the award granted on 11 March 2011 with a
performance period ended 31 December 2013. Details are provided on page 80. The value of £958k in respect of Steve Ingham in 2012 represents
the value of the performance element of the ISP award of 9 March 2009 being £695k (153,785 shares valued at the share price on the vesting date
of 10 March 2013 which was 451.8p, see page 81) and the value of the share options vesting on 10 March 2013 under the Executive Share Option
Scheme which was £263k, valued at that same date and price. Further detail regarding the ESOS award is shown on page 82.
7. 2013 Other: The sum of £286k is the payment in lieu of notice made to Andrew Bracey in respect of the value of the salary and contractual benefits,
including pension payments, which would have accrued to him during the balance of his notice period following his resignation from the Company
on 11 October 2013, taking account of his continued cover under the Company’s private medical insurance scheme until 31 March 2014.
2012 Other: Andrew Bracey was granted a deferred share award on appointment of 75,472 shares, being one times base salary of £360,000
converted into shares at 477p. See page 80 for details. Charles-Henri Dumon received compensation for loss of office of £2,531,000 as detailed in
the 2012 Annual Report.
8. The second tranche of the Joining Award granted to Andrew Bracey on 23 April 2013, over 37,736 shares, lapsed on Andrew Bracey resigning.
The value of this award was included in the 2012 single figure for remuneration (within the “Other” figure) and therefore the lapse of the award in
2013 is shown as a negative figure. The negative value is calculated using the share price on the date of notice of resignation, 11 October 2013,
of 494.5p. Further detail regarding the Joining Award is provided on pages 80 and 82.
75
76
Directors’ Remuneration ReportPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTORS’ REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMDirectors’ Remuneration ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS
Andrew Bracey – former CFO
These amounts are shown as follows:
Andrew Bracey served notice of his resignation from his employment on 11 October 2013 (and formally resigned his directorship on
14 November 2013). He was placed on garden leave by the Company on 11 October 2013 until his employment terminated on
24 February 2014. Andrew Bracey was, in accordance with the terms of his service contract, paid in lieu of the balance of his notice period.
The sum paid in lieu of notice was £286,317, comprising the value of his basic salary and the value of contractual benefits (including a cash
alternative equivalent to the normal pension contribution) for the balance of his notice period (taking account of the fact that Andrew Bracey’s
membership of the Company’s private medical insurance scheme shall continue until 31 March 2014). As a result of his resignation,
all unvested share awards held by Andrew Bracey lapsed.
On the basis that Andrew Bracey remained employed for the entirety of the financial year ending 31 December 2013, he was, under the terms
of his service contract, eligible to receive an annual bonus at the discretion of the Committee. Taking into account all relevant performance
targets and the period of the year actively worked by him, the Committee determined to award Andrew an annual bonus payment totalling
£206,572. The basis on which this payment was determined is set out in the “Determination of annual bonus for the financial year ending
31 December 2013” section opposite.
Share awards
Although Andrew Bracey’s joining award was subject to a deferral period, it is required to be included in the single total figure of remuneration
table for 2012, the year of award. Similarly, the Deferred Award under the ISP granted to Andrew Bracey in March 2013 was granted by
reference to Company performance in 2012, and so is included in the 2012 single figure.
The subsequent lapse of these awards is therefore shown as a negative figure in 2013, representing the lapse of these awards due to Andrew
Bracey’s resignation. The negative figure is calculated using the share price on the date of resignation, 11 October 2013, of 494.5p.
Andrew Bracey was also granted a Performance Award under the ISP during the year. As this was subject to further performance conditions,
the value of the award is not included in the single figure of remuneration for 2012 or 2013 (any value that vested would have been included
in the single figure for 2015). As the value of this award has not yet been reported in the single figure table, the lapse of this award is also not
shown as a negative value.
Transition to the new executive remuneration strategy
The figures in this single figure table represent a transitional period due to the change in the Company’s executive remuneration strategy that
was described to shareholders in the 2012 Annual Report.
Until last year, the old Michael Page Incentive Share Plan (the “Incentive Share Plan” or “ISP”) was the executive share plan operated by the
Company. The Incentive Share Plan was funded with a percentage of Group profits in the financial year preceding grant, and up to 30% of
that amount was available for awards to the Executive Directors. Awards were made over shares in the Company. Two-thirds of the shares
were subject to a three-year deferral period, but no further performance conditions (the “Deferred Awards”). The remaining one-third was
subject to further performance conditions over a three year period (the “Performance Awards”).
The Deferred Awards granted in March 2013, based on profits for the financial year ending 31 December 2012, are included in the 2012
“short-term incentives” figure. As no further Deferred Awards are being granted, there is no corresponding amount included in the 2013
“short-term incentives” figure.
The decrease in the “short-term incentives” figure from 2012 to 2013 therefore shows the phasing out of ISP Deferred Awards. There will be a
corresponding increase in the “long-term incentives” figures in due course, representing the move from the ISP structure to the new Michael
Page Long-term Incentive Plan (the “Long-term Incentive Plan” or “LTIP”), as approved by shareholders at the 2013 AGM. However, due to
the way the single figure for total remuneration is required to be reported under the new regulations, this increase in the long-term element of
executive remuneration will not show in the single figure table until the 2016 Annual Report (when the vesting value of the first LTIP Awards to
be granted in March 2013 will be shown).
Short-term incentives included in the single figure table
For the financial year ended 31 December 2013, the “short-term incentives” figure includes (1) the annual cash bonus and (2) the deferred
element of the bonus, which will be granted in March 2014 as an award under the new Michael Page Deferred Bonus Plan (the “new Deferred
Bonus Plan”), as approved by shareholders at the 2013 AGM.
For the financial year ending 31 December 2012, the “short-term incentives” figure includes (1) the annual cash bonus; (2) the deferred
element of bonus, which was granted in March 2013 as an award under the old Michael Page Annual Bonus Plan (the “old Annual Bonus
Plan”); and (3) the Deferred Award granted in March 2013 under the Incentive Share Plan (as explained above).
2013
Executive
Steve Ingham
Andrew Bracey
Total
2012
Executive
Steve Ingham
Andrew Bracey
Stephen Puckett
Total
Annual cash bonus
Deferred bonus
element
ISP Deferred Award
558
207
765
–
–
–
–
–
–
Annual cash bonus
Deferred bonus
element
ISP Deferred Award
675
450
250
1,375
76
0
0
76
371
240
0
611
Total shown
in single
figure table
558
207
765
Total shown
in single
figure table
1,122
690
250
2,062
Determination of annual bonus for the financial year ended 31 December 2013
The annual bonus payment for the financial year ended 31 December 2013 for Steve Ingham, Chief Executive Officer,
was determined as follows:
Bonus for Profit Before
Tax (PBT) performance
Bonus for Strategic
Performance
Total bonus
Potential
Actual
Potential
Actual
Potential
Actual
£k
£687,500
£305,300
£275,000
£253,000
£962,500
£558,300
Role
CEO
% of salary
% of maximum
125%
71%
56%
44%
50%
29%
46%
92%
175%
100%
102%
58%
The PBT threshold and maximum targets were £53.9m and £89.8m. The actual outcome of PBT before exceptional items was
£67.1m which resulted in a payment to Steve Ingham of £305.3k, as shown above. This represented 44% of the maximum payable
under this element.
Performance against the strategic performance measures was assessed against a number of areas. These areas, together with the
Committee’s assessment of performance, are set out in the table below:
Strategic performance
measure
Asia and Americas
divisional performance
US and Canada divisional
performance
Diversification
by discipline
People
Assessment of 2013 performance
The maximum payment for the delivery of strategic performance objectives in 2013 was equal to 50%
of salary and was assessed against the following performance measures:
• Asia and Americas divisional performance
• US and Canada divisional performance
• Diversification by discipline
• People
The Committee assessed performance against these measures at the end of 2013 in line with the
framework set out at the beginning of the year. It was determined that performance targets relating
to divisional performance had been exceeded. In particular, very strong growth in the US and
Canada division represented a level of performance which significantly exceeded the Commitee’s
expectations at the beginning of 2013. Objectives relating to ‘diversification by discipline’ were
achieved, whilst objectives relating to ‘people’ did not fully satisfy the Remuneration Committee in all
respects, although good progress had been made.
Based on this assessment, the Committee determined that a bonus of 46% of salary was payable to Steve Ingham which
represented 92% of the maximum payable under this element.
77
78
Directors’ Remuneration ReportPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTORS’ REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMDirectors’ Remuneration ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS The annual bonus payment for the financial year ended 31 December 2013 for Andrew Bracey, former Chief Financial Officer, was determined
as follows:
Bonus for Profit Before
Tax (PBT) performance
Bonus for Strategic Performance
Total bonus
Role
Potential
Notional
(before
prorating)
Actual
(after
prorating)
Notional
(before
prorating)
Actual
(after
prorating)
Notional
(before
prorating)
Actual
(after
prorating)
Potential
Potential
CFO
£k
£365,000
£160,600
£123,662
£182,500
£107,675
£82,910
£547,500
£268,275
£206,572
% of salary
100%
% of maximum
67%
44%
44%
34%
34%
50%
33%
30%
59%
23%
45%
150%
100%
74%
49%
57%
38%
The PBT threshold and maximum targets were £53.9m and £89.8m. The actual outcome of PBT before exceptional items was £67.1m which
resulted in a payment to Andrew Bracey of £123,662 as shown above. This represented 34% of the maximum payable under this element.
The Committee considered it appropriate to time pro-rate Andrew Bracey’s annual bonus payment to 11 October 2013, being the date on
which he went on garden leave and after which he was accordingly no longer required to provide active services. The tables set out directly
above and below reflect the annual bonus amounts before and after the application of time pro-ration.
Performance against the strategic performance measures was assessed against a number of areas. These areas, together with the
Committee’s assessment of performance, are set out in the table below:
Strategic performance
measure
Assessment of 2013 performance
Delivery of new
IT systems
The maximum payment for the delivery of strategic performance objectives in 2013 was 50% of salary and
was assessed against the following performance measures:
Finance & Administration
Taxation
Central Finance Team
Accounting
· Delivery of new IT systems
· Finance and administration
· Taxation
· Central Finance Team
· Accounting
The committee assessed performance against these measures at the end of 2013 in line with the framework
set out at the beginning of the year. It was determined that progress in the IT system pilot identified
enhancements which were required before the further roll-out across the Group. Progress was made in
reducing the finance and administration headcount and expenditure year on year; further plans to realise
future benefits were developed at the end of the year. Plans for taxation and accounting were partially
delivered and development of the central finance team took place towards the end of the year and into
early 2014.
Based on this assessment, the Committee determined that a bonus of 23% of salary was payable to Andrew Bracey which represented
45% of the maximum payable under this element.
Deferred Annual Bonus
Any bonus for the CEO above 125% of salary is deferred in shares. As shown on page 80, the bonus for the financial year ended
31 December 2013 was 102% of salary and, therefore, no bonus was deferred.
Determination of ISP Deferred Awards granted in March 2013
In 2013, the CEO and CFO were eligible to receive ISP awards. Andrew Bracey, in accordance with his employment contract, was awarded one
times salary (£360,000). All other ISP awards were funded from a pool equal to 6% of Group profits in 2012. Based on 2012 results, this pool
was equal to £4,664,148. From this pool, £556,500 was allocated to Steve Ingham. Two thirds of the awards to the CEO and CFO were awarded
as Deferred Awards which, subject to continued employment, will in the normal course vest three years after grant, as follows:
ISP Deferred Shares
Executive
Steve Ingham
Andrew Bracey
Value
£371,000
£240,000
Number of shares subject to Award
83,937 shares
54,299 shares
Note: the cash value of the ISP Deferred Awards was converted into a number of shares using the share price on 11 March 2013,
the date of grant. The share price was 442p.
The remaining one third of the allocation from the ISP pool was awarded as Performance Awards. As these Performance Awards are
subject to further conditions, they are not included in the single figure of remuneration for 2012. Further details of these Performance
Awards are set out on page 81.
Following Andrew Bracey’s resignation from the Group on 11 October 2013, both the deferred and the performance elements of the
2013 ISP award lapsed.
Long-term incentives included in the single figure table
The “long-term incentives” figure represents the Performance Awards granted under the old ISP.
The 2013 value represents an estimate of the value of the percentage of the Performance Award held by the CEO that was granted
on 11 March 2011. The performance period of this Performance Award ended on 31 December 2013 and details of the performance
condition is set out on page 81 with the description of outstanding share awards. Over the performance period, PageGroup’s average
annual EPS growth was equal to RPI -7.1%. This resulted in no shares vesting and therefore there is no value for long-term incentives
included in the single figure table in 2013.
The EPS calculation is set out below:
2011 LTIP Award – Performance condition measurement
Base year 2010 adjusted* EPS
Actual 2013 adjusted* EPS
RPI index for December 2010
RPI index for December 2013
18.62
16.32
216.90
236.2
Earnings growth across the period
-12.36%
RPI growth across the period
% EPS growth across the period
Average annual EPS growth
8.90%
-21.30%
-7.10%
*To ensure that EPS measurement is consistent across years, adjustments are made to exclude the charge for share options and
incentive share plans, together with related taxation, from both the base and the measurement year. The EPS is not adjusted for the
cost of the Executives’ deferred bonus shares where relevant.
One-off joining award included in the single figure table
Andrew Bracey was granted a one-off joining award on 23 April 2012 over 75,472 shares, being one-times base salary of £360,000
converted into shares at 477p. This grant was made in two equal tranches, the first subject to a deferral period of one year and
the second subject to a deferral period of two years. Although this joining award was subject to the deferral period, it is required
by the governing regulations to be included in the single figure total of remuneration table for the year of award as there were no
performance conditions, and must also be shown separately to the “long-term incentives” figure.
The first equal tranche of the award vested on 23 April 2013. Following Andrew Bracey’s resignation from the Group on 11 October 2013,
the second tranche of the award lapsed.
Percentage change in remuneration of the Chief Executive Officer
The following table provides a summary of the 2013 increase in base salary for the Chief Executive Officer compared to the average
increase for the Group head office population in the same period. We have also provided the proposed 2014 salary increase for
comparison.
2014 increase %
2013 increase %
2012 increase %
2.7%
3.0% (a)
Salary
Benefits
Short-term
Incentives
Chief Executive
Group head office population
Chief Executive
Group head office population
Chief Executive
Group head office population
(a) represents average increase
22.2%
3.0% (a)
5%
0%
-50%
18%
14.8%
2.9% (a)
0%
0%
6%
21%
The Group head office population has been selected as the most relevant population for comparison purposes since the CEO is
based in the UK, as are the Group head office staff, and the head office population does not include operational staff incentivised
against sales targets.
Short-term incentives include cash bonuses, any deferred element of the bonus and ISP deferred awards under the old ISP plan
which did not have performance conditions. As explained on page 77, the decrease in the “short-term incentives” figure from 2012
to 2013 shows the phasing out of ISP Awards.
79
80
Directors’ Remuneration ReportPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTORS’ REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMDirectors’ Remuneration ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS Details of long-term incentive pay awarded in 2013
Incentive Share Plan – Deferred Awards
As explained on page 79, ISP awards in 2013 were granted in March 2013 to the CEO and CFO. £556,500 was awarded to Steve Ingham
and £360,000 was awarded to Andrew Bracey. Two thirds of these allocations were awarded as the Deferred Awards under the ISP which are
described on page 79 (and the value of which have been included in the single total figure of remuneration for 2012).
The remaining one third of this allocation was awarded as Performance Awards under the ISP. These Performance Awards will vest after three
years subject to an EPS performance condition and continued employment. Details of these awards which were granted on 15 March 2013
are set out below:
ISP performance shares
Executive
Type of award
Basis
Face Value
% of salary
vesting at
threshold
End of
performance
period
Performance condition
Steve Ingham
41,968 shares
Andrew Bracey
27,149 shares
One third of
allocation from
2012 ISP pool
One third of
allocation from
2012 ISP pool
£185,500
50%
31/12/2015
£120,000
50%
31/12/2015
Based on PageGroup EPS
performance in excess of
RPI over the financial years
2013, 2014 and 2015.
Further detail is provided
below
Note: The ISP performance shares set out above for Steve Ingham will be included in the 2015 single figure for remuneration (if vested).
Note: Face value calculated using the share price on the date of grant, 11 March 2013, being 442p
Following Andrew Bracey’s resignation from the Group on 11 October 2013 both the deferred and performance elements of the
2013 ISP award lapsed.
Outstanding Share Awards
This section sets out the outstanding interests of the Executive Directors under the old Incentive Share Plan, the old Annual Bonus
Plan and the legacy Michael Page International plc Executive Share Option Scheme, and details of the joining award granted to
Andrew Bracey.
Incentive Share Plan – Performance Award
Details of Performance Awards made under the Incentive Share Plan are as follows:
Executive
Grant date
Number
of shares
at 1
January
2013
Granted
during
year
Vested
during
year
Lapsed
during
year
Number
of shares
at 31
December
2013
End of
performance
period
Vesting date
Steve Ingham
9 March 2009
153,785
Steve Ingham
11 March 2011
34,020
Steve Ingham
12 March 2012
41,005
–
–
–
Steve Ingham
11 March 2013
–
41,968
(153,785)
–
–
–
Total
228,810
41,968
(153,785)
–
–
–
–
–
Andrew Bracey
11 March 2013
Total
–
–
27,149
27,149
–
(27,149)
(27,149)
116,993
–
–
–
31 December 2012
10 March 2013
34,020
31 December 2013
12 March 2014
41,005
31 December 2014
12 March 2015
41,968
31 December 2015
11 March 2016
The performance conditions for the Performance Awards made to Steve Ingham are set out below. Following Andrew Bracey’s resignation
from the Group on 11 October 2013 the above award made to him lapsed.
Value of Shares subject to performance
conditions vesting on Award Date
Shares with value greater than 75% of Participant’s Salary at Award Date
Shares with value between 50% and 75% of Participant’s Salary at Award Date
Shares with value up to 50% of Participant’s Salary at Award Date
Average annual growth in Company
EPS in excess of the increase in the
Retail Prices Index over three years
10%
7.5%
5%
Details of Deferred Awards made under the Incentive Share Plan that remain outstanding at 31 December 2013 are as follows:
Granted
during
year
Vested
during
year
Lapsed
during
year
Executive
Grant date
Steve Ingham
11 March 2011
Steve Ingham
12 March 2012
Number
of shares
at 1
January
2013
68,039
82,011
–
–
Steve Ingham
11 March 2013
–
83,937
Total
Andrew Bracey
11 March 2013
Total
150,050
83,937
–
–
54,299
54,299
Number
of shares
at 31
December
2013
68,039
82,011
83,937
233,987
–
–
End of
performance
period
n/a
n/a
n/a
Vesting date
12 March 2014
12 March 2015
11 March 2016
n/a
11 March 2016
–
–
–
–
–
–
–
–
–
–
(54,299)
(54,299)
Following Andrew Bracey’s resignation from the Group on 11 October 2013 the above award made to him lapsed.
Annual Bonus Plan
Details of awards made under the old Annual Bonus Plan that remain outstanding at 31 December 2013 are as shown in the
table below.
Executive
Grant date
Number
of shares
at 1
January
2013
Granted
during
year
Vested
during
year
Lapsed
during
year
Number
of shares
at 31
December
2013
End of
performance
period
Steve Ingham
11 March 2011
70,162
Steve Ingham
12 March 2012
Steve Ingham
12 March 2012
Steve Ingham
11 March 2013
Steve Ingham
11 March 2013
8,116
8,116
–
–
–
–
–
8,631
8,631
(70,162)
(8,116)
–
–
–
Total
86,394
17,262
(78,278)
–
–
–
–
–
–
–
–
8,116
8,631
8,631
25,378
n/a
n/a
n/a
n/a
n/a
Vesting date
12 March 2013
12 March 2013
12 March 2014
11 March 2014
11 March 2015
Andrew Bracey Joining Award
Details of the Joining Award granted to Andrew Bracey are set out below:
Executive
Grant date
Andrew
Bracey
Total
23 April 2012
23 April 2012
Number of
shares at
1 January
2013
37,736
37,736
75,472
Granted
during
year
Vested
during
year
Lapsed
during
year
Number
of shares
at 31
December
2013
End of
performance
period
–
–
–
(37,736)
–
–
(37,736)
(37,736)
(37,736)
–
–
–
n/a
n/a
Vesting date
23 April 2013
23 April 2014
Following Andrew Bracey’s resignation from the Group on 11 October 2013 the second tranche of his joining award lapsed.
Details of options granted under the Michael Page International plc Executive Share Option Scheme that were outstanding during the
year ending 31 December 2013 are as shown in the table below.
The market price of the shares at 31 December 2013 was 488p with a range during the year of 356.0p to 502.5p.
Number of
shares at
1 January
2013
Grant date
28 February 2005
50,000
10 March 2010
400,000
450,000
Exercised
during year
Lapsed
during year
Number
of shares
at 31
December
2013
Exercise
price (p)
Period of
exercise
–
–
–
–
50,000*
190.75
2008-2015
(25,853)
374,147*
381.50
2013-2020
(25,853)
424,147*
Steve Ingham
Total
* At 31 December 2013, all share options have vested and are available for exercise.
The share options granted to Steve Ingham on 10 March 2010 had a performance condition based on 2012 PBT before exceptional
items. The vesting percentage was on a straight line basis from 0% at £48m to 100% at £66m. PBT before exceptional items for
the year ended 31 December 2012 was £64,836,602 and therefore 374,147 (93.54%) of the 400,000 share options vested on
10 March 2013. The value of the shares vesting using the share price on 10 March 2013 (451.8p) less the exercise price of the shares
(381.5p) was £263k and this value is included in the 2012 single figure table under long-term incentives.
31 December 2015
11 March 2016
Executive Share Option Scheme
81
82
Directors’ Remuneration ReportPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTORS’ REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMDirectors’ Remuneration ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS Statement of Directors’ shareholdings
Service Contracts and Letters of Appointment
It is PageGroup policy that Executive Directors are required to build and hold, as a minimum, a direct beneficial interest in the Company’s
ordinary shares equal to two times their base salary. As at 31 December 2013, the Chief Executive Officer complied with this requirement.
Andrew Bracey joined the Company in April 2012 and was in the process of building the required minimum holding prior to his departure.
The beneficial interests of the Directors who served during the year, and their families, in the ordinary shares of the Company are shown in
the table below. This table shows interests that are held outright, and does not include interests in shares which are subject to ongoing
vesting and/or performance conditions which are set out on pages 81 and 82.
Shares acquired on vesting
of share awards
Andrew
Bracey
Joining
Award
ISP
ABP
Purchased
in year
Disposal
in year
Total
As at 31
December
2013
Executive
Directors
Value of
holding
as at 31
December
as a % of
salary
Value of
holding
as at 31
December
2013
(£’000)
Executive
Directors
Ordinary
shares of
1p
At 1
January
2013
Direct
Executive Director
Service Contract date
Unexpired term at 31 December 2013
Notice period
Steve Ingham
31/12/2010
No specific term
12 months
Non-Executive Director Letter of Appointment date Unexpired term at 31 December 2013
Robin Buchanan
10/08/2011
David Lowden
22/08/2012
Ruby McGregor-Smith
23/05/2013
Simon Boddie
Dr Tim Miller
Danuta Gray
24/09/2012
13/08/2011
10/12/2013
8 months
20 months
29 months
21 months
8 months
35 months
Steve Ingham
Holding 1,567,174
153,785
78,278
–
232,063
Andrew Bracey
Direct
Holding
–
–
–
37,736
37,736
–
–
121,521
1,677,716
8,187
1449%
The notice period for all Non-Executive Directors is one month or in accordance with the Articles of Association which are
summarised on page 124 to 126.
17,879
19,857
97
26%
Implementation of the Remuneration Policy for Executive Directors in 2014
1. In addition to the shares in this table, Steve Ingham has the beneficial interest in the shares listed on pages 81 and 82 as outstanding
awards under the Incentive Share Plan and Annual Bonus Plan.
Base salary
2. Steve Ingham: 153,785 shares vested pursuant to a performance award under the ISP during the year, and 78,278 shares vested pursuant
to an award under the old Annual Bonus Plan during the year.
3. Andrew Bracey: 37,736 shares vested pursuant to the first part of his Joining Award during the year.
4. Value of holding at 31 December 2013 uses the closing share price on 31 December 2013 which was 488p.
Non-Executive
Directors
Ordinary
shares of 1p
At
1 January
2013
Purchased in
year
As at
31 December
2013
Robin Buchanan
Direct
Holding
39,678
53,362
93,040
No other Non-Executive Director had an interest in the shares of the Company during the year.
Payments for loss of office
Andrew Bracey served notice of his resignation from his employment on 11 October 2013 (and formally resigned his directorship on
14 November 2014). He was placed on garden leave by the Company on 11 October 2013 until his employment terminated on 24 February
2014. Andrew received a payment in lieu of notice (PILON) for salary, contractual benefits (taking account of the fact that his membership of
the Company’s private medical insurance scheme shall continue until 31 March 2014) and a cash alternative equivalent to the normal pension
contribution due for the remaining portion of his notice period and a bonus payment as described on page 79. Andrew did not receive any
payment for loss of office and his outstanding share awards, both under the Incentive Share Plan and his Joining Award, lapsed. These have
been included in the single figure for total remuneration table on page 76.
Payments to past Executive Directors
Payments made in 2013 to Charles-Henri Dumon (Executive Director, resigned 28 February 2012) were in line with the disclosure in the
Remuneration Report on page 62 of the 2012 Annual Report and Accounts.
Relative importance of spend on pay
The graph below shows details of PageGroup’s retained profit after tax, distributions by way of dividends and share buybacks, overall spend
400
on pay to all employees (see note 4 in the financial statements on page 106), overall spend on Directors pay as included in the single figure
table on page 76 and tax paid in the financial year. The percentage change compared to prior year is also shown.
400
300
200
100
0
-5%
321.0
305.0
2013
2012
+18%
+1%
42.6
36.2
30.8
30.6
Profit after
tax (£m)
Dividends
paid (£m)
-100%
18.0
0
Shares
purchased by
the EBT (£m)
-70%
2.3
7.3
0%
24.4
24.4
Overall spend
on pay (£m)
Overall spend
on Director’s pay (£m)
Tax paid
(£m)
300
200
100
0
The base salaries of the Executive Directors were considered with reference to the general salary increases across the Group head
office population and other market benchmarks. After consideration the Committee decided to increase the Chief Executive Officer’s
salary by 2.7% to £565,000.
Annual bonus
The operation of the annual bonus will remain unchanged for 2014 with the same weighting between financial measures and other
strategic measures as in 2013. The Company is of the view that the targets under each of these measures are currently commercially
sensitive given the link to the Company’s strategic priorities over the coming year. Performance against these measures and the
relevant targets will be disclosed in the next Directors’ Annual Remuneration Report.
Long-term Incentive
The first award under the new Long-term Incentive Plan will be made in March 2014. It is currently the Committee’s intent that this
award will be equal to 200% of salary for the CEO and that the following performance measures and weightings will apply:
Performance measure
Weighting
% of award vesting at threshold
Cumulative 3-year real EPS
125%
Comparator gross profit growth
25%
Strategic targets
50%
25%
25%
25%
Pensions
In line with the Remuneration Policy the Executive Directors receive a contribution to a defined contribution pension scheme or a
cash equivalent. The Chief Executive Officer receives a contribution equivalent to 25% of his base salary.
Implementation of the Remuneration Policy for the Board Chairman
and Non-Executive Directors in 2014
The fees per annum for the Board Chairman and the Non-Executive Directors have been agreed as follows:
2013
Chairman
2013
£220,000
Non-Executive Director basic fee
£48,000
Additional fees payable:
Senior Independent Director
£5,000
Retained Profits
Chairman of Remuneration Committee £10,000
Dividends
buybacks
Overall spend
on pay
Overall spend on
dirs pay
Chairman of Audit Committee
£10,000
2012
From March 2014
£230,000
£51,000
£5,000
£14,000
Tax paid
£14,000
83
84
Directors’ Remuneration ReportPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTORS’ REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMDirectors’ Remuneration ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS
Total Shareholder Return (TSR)
The performance graph below shows the movement in the value of £100 invested in shares in the Company compared to an investment in
the FTSE 250 Index and the FTSE Support Services Index over the period from 31 December 2008 to 31 December 2013. The graph shows
the Total Shareholder Return generated by the movement in share price and the reinvestment of dividends. We have selected the FTSE 250
Index and the FTSE Support Services Index for comparison purposes as the Company has been a member of each Index throughout
the period.
31 Dec 2008
31 Dec 2009
31 Dec 2010
31 Dec 2011
31 Dec 2012
31 Dec 2013
300
250
200
150
100
100.0
270.7
191.9
163.2
181.3
150.6
132.5
287.9
263.6
255.3
217.7
201.8
201.7
173.6
172.6
162.6
Michael Page
Support Services
FTSE250
The table below shows the total remuneration for the Chief Executive over the same
five year period.
CEO
2009
2010
2011
2012
2013
A full schedule in respect of shareholder voting on the above and all resolutions at the 2013 Annual General Meeting is available on
the PageGroup website at http://www.page.com/investors
Considerations by the Directors of matters relating to Directors’ remuneration
The members of the Remuneration Committee are detailed on page 67. During the year the Committee received advice from
independent remuneration consultants Deloitte LLP in relation to certain executive remuneration matters. Following a competitive
retender, the Committee decided to appoint New Bridge Street as its independent remuneration consultants from September 2013.
Both Deloitte LLP and New Bridge Street are members of the Remuneration Consultants Group and as such voluntarily operate
under the code of conduct in relation to executive remuneration consulting in the UK. In addition to remuneration advisory services,
Deloitte LLP provided consultancy services totalling £597k during 2013. New Bridge Street is part of the Aon Group who provided
insurance services to PageGroup during 2013. £636k was paid to Aon in 2013 for global insurance policies and £107k in respect of
broker fees.
The Committee also received advice from the Chairman, Chief Executive Officer, Company Secretary and Group HR Director who
attend the Remuneration Committee by invitation. No Executive Director takes part in discussions relating to their own remuneration.
External Advisor
Deloitte LLP
New Bridge Street
External Directorships
Total cost of advice to the Committee
(£’000)
Reason for pay
21.0
36.5
Independent advice to the Committee
Independent advice to the Committee
During the year Steve Ingham, Chief Executive Officer, earned and retained £42,500 (2012: £nil) in respect of fees from his role as a
Non-Executive Director of Debenhams plc. No other Executive Director earned any fees from external Directorships.
Elements of the Directors’ Annual Remuneration Report subject to audit
a) single total figure for remuneration and the accompanying notes
b) details of the performance against metrics for variable awards included in the single sum
c) details of long-term variable pay awarded in 2013
d) details on payments to past directors
e) details on payments for loss of office
f) section on outstanding share awards
£1,010k
£2,184k
£1,647k
£2,723k
£1,318k
This Directors’ Remuneration Report, including both the Directors’ Remuneration Policy Report and the Directors’ Annual
Remuneration Report has been approved by the Board of Directors.
Single remuneration total
Annual bonus
(% of maximum) (note 1)
Long-term incentives
(% of maximum) (note 1)
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
58%
n/a
Note that prior to 2012 PageGroup operated uncapped incentives which, by definition, did not have the concept of ‘maximum’. As a result
it is not possible to provide this information historically. However, following the changes in 2012 it will be possible to provide this information
for future years.
Statement of voting at the general meeting
At the PageGroup Annual General Meeting held on 6 June 2013, shareholders approved the Remuneration Report for the year ended
31 December 2012 and also approved the rules of the Michael Page International Long-term Incentive Plan (LTIP) and the Michael Page
International Deferred Bonus Plan (DBP). The table below shows the result in respect of the resolutions, which required a simple majority
(i.e. 50%) of the votes cast to be in favour in order for the resolutions to be passed.
Resolution
Votes for
%
Votes against
%
Votes withheld
Approve the Remuneration
Report
Approve the LTIP
Approve the DBP
185,273,884
267,730,996
273,811,733
82.2
97.2
98.7
40,036,111
17.8
7,653,348
3,555,058
2.8
1.3
52,636,733
1,962,384
560
Following this shareholder vote, the Committee reviewed feedback from shareholders and noted that those shareholders who voted against
the Remuneration Report were mainly influenced by the level of payments made to former Directors, the discretion exercised over departing
directors’ share awards, as well as the increase to the CEO’s salary, which shareholders would have preferred to be staggered over a number
of years. The Committee also noted that shareholders generally approved of the spirit of the changes to remuneration, namely, an increased
focus on long-term performance and a reduction in volatility of remuneration. In addition, shareholders generally welcomed the introduction
of strategic measures, the increased shareholding guidelines, the introduction of a bonus cap and the introduction of clawback.
Signed on behalf of the Board of Directors
David Lowden
Chairman of the Remuneration Committee
4 March 2014
85
86
Directors’ Remuneration ReportPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTORS’ REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMDirectors’ Remuneration ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS Directors’ Interests
Shares Held in the Employee Benefit Trust
Details of the interests of the Directors and their connected
persons in the ordinary shares of the Company are outlined
in the Directors’ Remuneration Report. Steve Ingham, is also
deemed to have an interest in the ordinary shares held in the
Employee Benefit Trust.
Share Capital
The issued share capital of the Company is shown in Note 18
to the financial statements.
At the Annual General Meeting held on 6 June 2013 the
Company renewed its authority to make market purchases of
its own ordinary shares up to a maximum of 10% of the issued
share capital. No shares were repurchased during the year.
A further resolution in this respect will be put to shareholders
at the forthcoming Annual General Meeting.
There were 3.1m shares issued to satisfy share options
exercised during the year.
Share Capital, Restrictions on Transfer of
Shares and Other Additional Information
To the extent not discussed in this Directors’ Report,
information relating to the Company’s share capital structure,
restrictions on the holding or transfer of its shares or on the
exercise of voting rights attached to such securities required by
the Companies Act 2006 is set out in the following sections of
the Annual Report:
• Directors’ Remuneration Report
• Notes to the Accounts (Note 18: Called-up share capital)
• The summary of the provisions of the Company’s Articles
of Association
Each of the above sections is incorporated by reference into,
and forms part of, this Directors’ Report.
The Trustee of the Michael Page International plc Employee
Benefit Trust (“EBT”) has agreed not to vote at any general
meeting in respect of any shares where the EBT has a deemed
beneficial interest.
Results and Dividends
The profit after taxation for the year ended 31 December 2013
for the Group amounted to £42.6m (2012: £36.2m).
A final dividend for 2012 of 6.75 pence per ordinary share
was paid on 21 June 2013. An interim dividend for 2013 of
3.25 pence per ordinary share was paid on 4 October 2013.
The Directors recommend the payment of a final dividend for
the year ended 31 December 2013 of 7.25 pence per ordinary
share on 23 June 2014 to shareholders on the register of
members on 23 May 2014 which, if approved at the Annual
General Meeting, will result in a total dividend for the year of
10.5 pence per ordinary share (2012: 10.0 pence).
Anti-Bribery and Business Ethics
Anti-bribery and corruption is, unfortunately, a feature of
corporate and public life in many countries across the world.
Governments, businesses and non-governmental organisations
such as Transparency International are working together to
tackle the issue but, despite our collective efforts, eradicating
all forms of bribery and corruption will take time. PageGroup,
therefore, has a clear policy on Bribery and Business Ethics
and we support our employees to make decisions in line with
our stated position.
Our Group Code of Conduct can be found on our website
(www.page.com) and is based on our commitment to
acting professionally, fairly and with integrity. PageGroup
maintains a zero-tolerance approach against corruption.
Facilitation payments are also not permitted within
PageGroup’s operations.
Interest in voting rights
Health and Safety
At 31 December 2013, the Company had been notified,
in accordance with Chapter 5 of the Disclosure and
Transparency Rules, of the following interests in its ordinary
share capital:
Shareholder
Number
of ordinary
shares
Causeway Capital Management LLC
18,832,766
Sleep, Zakaria and Co (Nomad)
18,347,573
The Capital Group of Companies Inc
15,492,600
Franklin Templeton Institutional LLC
15,308,070
FIL Limited
15,103,870
% of
voting
rights
6.14
5.92
5.03
5.03
4.98
The following notifications were received during the period
1 January 2014 to 4 March 2014:
Holder
Sleep, Zakaria and Co (Nomad)
Number
of ordinary
shares
15,252,929
% of
voting
rights
4.92
We recognise that Health and Safety is an integral part of
our responsibilities. The day-to-day services we provide do
not pose a great risk to either our employees or our clients.
However, we endeavour to maintain a safe and active
environment. Each office is responsible for its own fire risk
assessment and emergency procedures and has an allocated
Facilities and Health and Safety Representative.
Employment Policy and Employee
Involvement
The Group continues to give full and fair consideration to
applications for employment made by disabled persons,
having regard to their respective aptitudes and abilities.
The policy includes, where practicable, the continued
employment of those who may become disabled during
their employment and the provision of training and career
development and promotion, where appropriate. The Group
also remains committed to employee involvement throughout
the business. Employees are kept well informed of the
performance and strategy of the Group through personal
briefings, regular meetings, emails and other communications
from the Chief Executive Officer and members of the Executive
Committee. Further details of employment policies and
employee involvement can be found in the Strategic Report
on page 41.
DIRECTORS’ REPORT
Elaine Marriner (Company Secretary)
Other Statutory Information
The Directors present their Report together with the audited
consolidated financial statements for the year ended
31 December 2013.
Certain information for disclosure in this Report is provided in
other sections of the Annual Report and Accounts. These include
a fair review of the business, including its development and
performance, during the year to 31 December 2013; the position
of the Group at the end of the financial year, together with a
description of the principal risks and uncertainties facing the
Group; corporate governance and remuneration reports; the Group
financial statements and notes to those statements; whistleblowing
procedures; and disclosures concerning greenhouse gas
emissions and accordingly these are incorporated into this
Report by reference.
Composition of the Board
The following are Directors of the Company as at the date
of the Report.
Robin Buchanan
Steve Ingham
Simon Boddie
Danuta Gray (appointed 10 December 2013)
David Lowden
Ruby McGregor-Smith
Dr Tim Miller
Biographies of the currently serving directors are provided on
pages 51 and 52 of this Report.
The powers of the Directors and the rules governing their
appointment and replacement are set out in the Company’s
Articles of Association which are summarised on pages 124 to 126.
At the forthcoming Annual General Meeting and in accordance with
the UK Corporate Governance Code, Danuta Gray will offer herself
for election and all other Directors will offer themselves for
annual re-election.
No Director, at any time during the period under review, had any
material interest in any contracts with the Company or any of its
subsidiary undertakings, other than the Executive Directors who
had such an interest through their service agreements with the
Company, details of which are summarised on page 84.
Each of the above Directors, except Danuta Gray, served
throughout the period under review. Andrew Bracey resigned
as Chief Financial Officer on 11 October 2013.
The Company maintains directors’ and officers’ liability insurance
which gives appropriate cover for any legal action brought against
its Directors.
87
88
Directors’ ReportPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS’ REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMDirectors’ ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS •
•
state whether IFRS as adopted by the EU has been
followed, subject to any material departures disclosed
and explained in the Group and parent Company financial
statements respectively
2. The Directors’ Report and the Strategic Report include a fair
review of the development and performance of the business
and the position of the Group, together with a description of
the principal risks and uncertainties that it faces.
prepare the statements on the going concern basis,
unless it is inappropriate to presume that the Company will
continue in business
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any
time the financial position of the Company and the Group and
to enable them to ensure that the financial statements and the
Directors’ Remuneration Report comply with the Companies
Act 2006 and, as regards the Group’s financial statements,
Article 4 of the EU IAS Regulation. They are also responsible
for safeguarding the assets of the Company and the Group
and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Directors’ Responsibility Statement
Disclosure of Information to the Auditors
Each of the Directors as at the date of this Report confirms
that:
1. So far as the Director is aware, there is no relevant audit
information of which the Company’s Auditor is unaware.
2. The Director has taken all the steps that he/she ought to
have taken as a Director to make himself/herself aware
of any relevant audit information and to establish that the
Company’s Auditor is aware of that information.
Words and phrases used in this confirmation should be
interpreted in accordance with the provisions of s418 of the
Companies Act 2006.
Directors’ Confirmation
The Directors as at the date of this Report consider that
the Annual Report and Accounts, taken as a whole, is fair,
balanced and understandable and provides the information
necessary for shareholders to assess the Company’s
performance, business model and strategy.
The Directors as at the date of this Report confirm that, to the
best of their knowledge:
By order of the Board
1. The Group’s financial statements, prepared in accordance
with International Financial Reporting Standards as adopted
by the EU, give a true and fair view of the assets, liabilities,
financial position and profit of the Group.
Elaine Marriner
Company Secretary
Page House, 1 Dashwood Lang Road, The Bourne Business
Park, Addlestone, Weybridge, Surrey KT15 2QW.
4 March 2014
DIRECTORS’ REPORT
Dilution
The Company reviews the awards of shares made under the various
employee and executive share plans in terms of their effect on
dilution limits and complies with the dilution limits recommended by
the Association of British Insurers.
Post Balance Sheet Events
There have been no significant events since 31 December 2013.
Related Party Transactions
Details of the related party transactions in 2013 are described in
note 25 to the Consolidated Financial Statements.
Political Donations
No political donations were made during the year. PageGroup has
a policy of not making political donations to political organisations
or independent election candidates or incurring political
expenditure anywhere in the world as defined in the Political
Parties, Election and Referendums Act 2000.
Going Concern Statement
In adopting the going concern basis for preparing the financial
statements, the Directors have considered the business activities
of the Group as well as the principle risks and uncertainties as
set out on pages 47 to 49. Based on the Group’s level of cash,
the level of borrowing facilities available, the geographical and
discipline diversification, the limited concentration risk, as well as
the ability to manage the cost base, the Board is satisfied that the
Group has adequate resources to continue in operational existence
for the foreseeable future, being a period of at least twelve months
from the date of approval of these accounts. As a result, the
going concern basis continues to be appropriate in preparing the
financial statements.
Significant Agreements containing change of
control provisions
The Company has an invoice discounting facility that terminates on
a change of control, with prepaid amounts becoming payable.
Directors’ and employees’ employment contracts do not normally
provide for compensation for loss of office or employment as a
result of a change of control. However, the Company operates
several share schemes for the benefit of its Executive Directors
and employees and the rules of the share schemes and plans
contain provisions which may cause options and awards granted
to Executive Directors and employees to vest on a change
of control.
The Directors consider that the
Annual Report and Accounts is
fair, balanced and understandable
Financial Instruments and Financial Risk
Management
The Company’s use of Financial Instruments is described in the
Treasury section of the Strategic Report on page 24. Details of the
financial instruments entered into, and any associated exposure to
price risk, credit risk, liquidity risk or cash flow risk, are included in
note 21 to the Consolidated Financial Statements.
Disclaimer
The purpose of this Annual Report and Accounts is to provide
information to the members of the Company. It has been prepared
for the members of the Company, as a body, and for no other
persons. The Company, its Directors and employees, agents
and advisers do not accept or assume any responsibility to any
other person to whom this document is shown or into whose
hands it may come and any such responsibility or liability is
expressly disclaimed.
The Strategic 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.
Reappointment of Auditors
Ernst & Young LLP are willing to continue in office and accordingly
resolutions as regards their reappointment and to authorise
the Directors to set their remuneration will be proposed at the
forthcoming Annual General Meeting.
Annual General Meeting
The Annual General Meeting will be held on 5 June 2014
and the notice of meeting can be found on page 127 and
will be available on our website at www.page.com/investors
Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report and
Accounts and the Group and parent Company financial statements
in accordance with applicable laws and regulations.
Company law requires the Directors to prepare such financial
statements for each financial year. Under that law the Directors
are required to prepare the Consolidated Financial Statements
in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union (EU) and Article 4 of
the lAS Regulation The Directors have also chosen to prepare the
parent company financial statements under IFRSs as adopted by
the European Union. Under company law the directors must not
approve the accounts unless they are satisfied that they give a true
and fair view of the state of affairs of the Company and of the profit
or loss of the Company for that period.
In preparing these financial statements the Directors are
required to:
•
•
elect suitable accounting policies and then apply them
consistently
make judgements and estimates that are reasonable
and prudent
89
90
Directors’ ReportPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS’ REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMDirectors’ ReportPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF MICHAEL PAGE
INTERNATIONAL PLC
We have audited the financial statements of Michael Page
International plc (the “Group”) for the year ended 31 December
2013 which comprise the Consolidated Income Statement,
the Consolidated Statement of Comprehensive Income, the
Consolidated and Parent Company Balance Sheets, the
Consolidated and Parent Company Statement of Changes
in Equity and the Consolidated and Parent Company Cash
Flow Statements and the related notes 1 to 25. The financial
reporting framework that has been applied in their preparation
is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union and, as
regards the parent company financial statements, as applied
in accordance with the provisions of the Companies Act 2006.
This report is made solely to the company’s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so
that we might state to the company’s members those matters
we are required to state to them in an auditor’s report and for
no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the
company and the company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
Respective responsibilities of directors
and auditor
As explained more fully in the Directors’ Responsibilities
Statement set out on page 89 and 90, the directors are
responsible for the preparation of the Group financial
statements and for being satisfied that they give a true and fair
view. Our responsibility is to audit and express an opinion on
the financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices
Board’s Ethical Standards for Auditors.
Scope of the audit of the financial
statements
An audit involves obtaining evidence about the amounts
and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free
from material misstatement, whether caused by fraud or error.
This includes an assessment of: whether the accounting
policies are appropriate to the Group’s and the parent
company’s circumstances and have been consistently applied
and adequately disclosed; the reasonableness of significant
accounting estimates made by the directors; and the overall
presentation of the financial statements. In addition, we read
all the financial and non-financial information in the Annual
Report and Accounts 2013 to identify material inconsistencies
with the audited financial statements and to identify any
information that is apparently materially incorrect based on,
or materially inconsistent with, the knowledge acquired by us
in the course of performing the audit. If we become aware of
any apparent material misstatements or inconsistencies we
consider the implications for our report.
Opinion on financial statements
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the
state of the Group’s and of the parent company’s affairs as
at 31 December 2013 and of the Group’s profit for the year
then ended
the Group financial statements have been properly
prepared in accordance with IFRSs as adopted by the
European Union
the parent company financial statements have been
properly prepared in accordance with IFRSs as adopted by
the European Union and as applied in accordance with the
provisions of the Companies Act 2006
the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006 and,
as regards the Group financial statements, Article 4 of the
IAS Regulation
Our assessment of risk of material
misstatement
We identified the following risks that have had the greatest
effect on the overall audit strategy; the allocation of resources
in the audit; and directing the efforts of the engagement team:
•
•
revenue recognition for permanent and temporary
placements, with particular focus on period end cut-off and
appropriate accounting treatment in accordance with IFRS
and Group accounting policies
accounting for the new operating system intangible asset,
with particular focus on appropriate cost capitalisation and
carrying value
•
the Group’s exposure to direct and indirect taxes and the
related accounting judgements
Our application of materiality
We apply the concept of materiality both in planning
and performing our audit, and in evaluating the effect of
misstatements on our audit and on the financial statements.
For the purposes of determining whether the financial
statements are free from material misstatement we define
materiality as the magnitude of misstatement that makes
it probable that the economic decisions of a reasonably
knowledgeable person, relying on the financial statements,
would be changed or influenced. We also determine a level of
performance materiality which we use to determine the extent
of testing needed to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality for the financial statements
as a whole.
When establishing our overall audit strategy, we determined
a magnitude of uncorrected misstatements that we judged
would be material for the financial statements as a whole.
We determined materiality for the Group to be £3.4 million,
which is approximately 5% of adjusted profit before tax for
the year ended 31 December 2013. We used adjusted profit
before tax to exclude those items classified as exceptional
items within the financial statements.
FINANCIAL STATEMENTS
Indepent Auditor’s Report
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated and Parent Company Balance Sheets
Consolidated Statement of Changes in Equity
Statement of Changes in Equity – Parent Company
Consolidated and Parent Company Cash
Flow Statements
Notes to the financial statements
1. Significant accounting policies
2. Segment reporting
3. Profit for the year
4. Employee information
5. Exceptional items
6. Financial income/(expenses)
7. Taxation on profits on ordinary activities
8. Current tax assets and liabilities
9. Dividends
10. Earnings per share
11. Property, plant and equipment
12.
Intangible assets
13.
Investments
92
95
95
96
97
98
99
100
104
106
106
107
107
107
108
108
108
109
110
111
14. Trade and other receivables
15. Trade and other payables
16. Bank overdrafts
17. Deferred tax
18. Called-up share capital
19. Reserves
20. Cash and cash equivalents
21. Financial risk management
22. Commitments
23. Contingent liabilities
24. Events after the balance sheet date
25. Related party transactions
Five Year Summary
113
113
114
114
115
117
117
117
121
122
122
122
122
91
92
Financial StatementsPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMFinancial StatementsPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS Notes:
1. The maintenance and integrity of the Michael Page
International plc web site is the responsibility of the
directors; the work carried out by the auditors does not
involve consideration of these matters and, accordingly, the
auditors accept no responsibility for any changes that may
have occurred to the financial statements since they were
initially presented on the web site.
2. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
On the basis of our risk assessments, together with our
assessment of the Group’s overall control environment, our
judgement is that overall performance materiality (i.e. our tolerance
for misstatement in an individual account or balance) for the Group
should be 50% of materiality, namely £1.7 million. Our objective
in adopting this approach is to ensure that total uncorrected and
undetected audit differences do not exceed our materiality of
£3.4 million for the financial statements as whole. This provided
a basis for determining the nature, timing and extent of risk
assessment procedures, identifying and assessing the risk of
material misstatement and determining the nature, timing and
extent of further audit procedures.
We agreed with the Audit Committee that we would report to the
Committee all audit differences in excess of £0.17 million, as well
as differences below that threshold that, in our view warranted
reporting on qualitative grounds.
An overview of the scope of our audit
Following our assessment of the risk of material misstatement to
the Group financial statements, we performed audit procedures
at the Group’s Head office and in 16 countries in the Group which
represent the principal business units within the Group’s four
reportable segments and account for 90% of the Group’s total
assets, 93% of the Group’s revenue, 89% of the Group’s gross
profit and 91% of the Group’s profit before tax. Of the 16 in-scope
countries, four, being the UK, France, Australia and Brazil, were
subject to a full scope audit and represent 61% of the Group’s
revenue and 51% of the Group’s gross profit. A further ten
countries were subject to a specific scope audit, where the extent
of the audit work was based on our assessment of the risk of
material misstatement and the materiality of the Group’s business
operations at those locations. The remaining two countries were
subject to analytical review procedures designed to confirm that
no further risks of misstatement existed that were material to the
Group financial statements.
The audit work at the 16 countries was performed at a
materiality level calculated by reference to a proportion of Group
materiality appropriate to the individual relative scale of the
business concerned.
The Group audit team determined the level of our involvement
needed in the audits of the 16 in-scope countries based on the
extent of audit procedures being performed and the risk profile
of the individual countries. For all full scope countries, the Group
audit team led by the Senior Statutory Auditor participated in the
component team’s planning including discussion of the potential
for material fraud and error. The Group audit team, led by the
Senior Statutory Auditor, also held detailed meetings at the
conclusion of the full scope country audits with all the full scope
countries’ local audit teams as well as with the client’s regional
management at which all key areas of judgement were discussed
and challenged. The Senior Statutory Auditor attended the audit
closing meeting for the Group’s largest component, the UK, which
represents 30% of the Group’s revenue and 24% of the Group’s
gross profit.
With the exception of the 16 countries in scope, no other country
represents more than 6% of the Group’s revenue or gross profit.
Based on the Group’s business model we consider the risks to be
similar at each country in which they operate.
Our responses to the risks of material misstatement identified
above were as follows:
Opinion on other matters prescribed by the
Companies Act 2006
Revenue recognition for permanent and
temporary placements
•
we updated our understanding of the revenue processes
and tested key management controls around recognition
and measurement of revenue, including non-completion of
contractual placements and bad debt provisions, at
key locations
•
we performed detailed testing over the timing of revenue
recognition, in particular around cut off, for adherence to IFRS
and Group accounting policies
Accounting for the new operating system
•
•
•
we assessed the ongoing status of the roll-out of the new
operating system and challenged management on potential
indicators of impairment
we tested the amounts capitalised as part of the
intangible asset for compliance with IFRS and Group asset
capitalisation policy
we evaluated management’s assessment on the applicability
of the useful life and related amortisation period and assessed
the pattern of allocation of amortisation spread over its useful
life for consistency with the estimated consumption of future
economic benefits by the Group
Direct and indirect taxes and related accounting issues
•
•
•
•
we updated our understanding of the tax processes and the
reporting of taxation in the year-end financial statements,
and we understood the latest position in all material open tax
matters including any conclusions reached during the year
we read all material correspondence with HMRC and other tax
authorities in the period for entities in scope for tax (full scope
countries) to form our view on the appropriate tax treatment of
judgemental items
we tested the income tax expense recognised in the Income
Statement and the reconciliation of the effective tax rate, and
we tested the calculation of deferred tax assets and liabilities
to support the valuation and presentation at year end
we concluded on the appropriateness of the tax provision,
including the exposure in relation to profit sharing in France
and the related tax and interest elements, recognised by
management as an exceptional item explained in Note 5
In our opinion:
•
•
the part of the Directors’ Remuneration Report to be
audited has been properly prepared in accordance with
the Companies Act 2006
the information given in the Strategic Report and the
Directors’ Report for the financial year for which the
financial statements are prepared is consistent with the
financial statements
Matters on which we are required to report
by exception
We have nothing to report in respect of the following:
Under the ISAs (UK and Ireland), we are required to report to
you if, in our opinion, information in the annual report is:
•
•
materially inconsistent with the information in the audited
financial statements
apparently materially incorrect based on, or materially
inconsistent with, our knowledge of the Group acquired in
the course of performing our audit
•
Is otherwise misleading
In particular, we are required to consider whether we have
identified any inconsistencies between our knowledge
acquired during the audit and the directors’ statement that they
consider the annual report is fair, balanced and understandable
and whether the annual report appropriately discloses those
matters that we communicated to the audit committee which
we consider should have been disclosed.
Under the Companies Act 2006 we are required to report to
you if, in our opinion:
•
•
•
•
adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have not
been received from branches not visited by us
the parent company financial statements and the part of
the Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns
certain disclosures of directors’ remuneration specified by
law are not made
we have not received all the information and explanations
we require for our audit
Under the Listing Rules we are required to review:
•
•
the directors’ statement, set out on page 89, in relation to
going concern
the part of the Corporate Governance Statement relating to
the company’s compliance with the nine provisions of the
UK Corporate Governance Code specified for our review
Iain Wilkie (Senior Statutory Auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
4 March 2014
93
94
Financial StatementsPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMFinancial StatementsPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2013
CONSOLIDATED AND PARENT COMPANY BALANCE SHEETS
As at 31 December 2013
Group
Company
Note
2013
£’000
2012
£’000
2013
£’000
Before
exceptional
items 2013
£’000
1,005,502
(491,621)
513,881
Exceptional
items
(note 5)
2013
£’000
After
exceptional
items 2013
£’000
Before
exceptional
items 2012
£’000
Exceptional
items
(note 5)
2012
£’000
After
exceptional
items 2012
£’000
–
–
–
1,005,502
989,882
(491,621)
(463,013)
513,881
526,869
–
–
–
989,882
(463,013)
526,869
(445,703)
(2,453)
(448,156)
(461,748)
(7,834)
(469,582)
68,178
(2,453)
65,725
65,121
(7,834)
57,287
531
–
531
(1,625)
(574)
(2,199)
67,084
(3,027)
64,057
907
(1,191)
64,837
–
–
(7,834)
907
(1,191)
57,003
(20,733)
(720)
(21,453)
(23,332)
2,526
(20,806)
46,351
(3,747)
42,604
41,505
(5,308)
36,197
Note
2
2
2
6
6
2
7
3
42,604
36,197
13.8
13.7
11.9
11.7
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
Financial income
Financial expenses
Profit before tax
Income tax (expense)/income
Profit for the year
Attributable to:
Owners of the parent
Earnings per share
Basic earnings per share (pence)
Diluted earnings per share (pence)
10
10
The above results relate to continuing operations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2013
Profit for the year
Other comprehensive loss for the year
Items that may subsequently be reclassified to profiit and loss:
Currency translation differences
Total comprehensive income for the year
Attributed to:
Owners of the parent
2013
£’000
2012
£’000
42,604
36,197
(4,700)
37,904
(5,171)
31,026
37,904
31,026
Non-current assets
Property, plant and equipment
Intangible assets
- Goodwill and other intangible
- Computer software (including
assets held under construction)
Investments
Deferred tax assets
Other receivables
Current assets
Trade and other receivables
Current tax receivable
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Bank overdrafts
Current tax payable
Net current assets/(liabilities)
Non-current liabilities
Other payables
Deferred tax liabilities
Total liabilities
Net assets
Capital and reserves
Called-up share capital
Share premium
Capital redemption reserve
Reserve for shares held in the employee benefit trust
Currency translation reserve
Retained earnings
Total equity
11
12
12
13
17
14
14
8
20
2
15
16
8
15
17
2
18
19
19
19
19
2012 as
restated
(note 1)
£’000
–
–
–
25,238
28,913
1,971
2,091
40,126
42,006
–
–
–
–
–
496,300
493,544
10,377
2,865
9,192
3,310
–
–
–
–
80,577
85,512
496,300
493,544
186,488
182,507
603,054
578,292
7,060
6,970
87,070
70,769
–
–
–
20
280,618
260,246
603,054
578,312
361,195
345,758
1,099,354
1,071,856
(133,664)
(138,733)
(607,776)
(594,259)
(1,676)
(9,396)
(11,780)
(12,612)
–
–
–
–
(147,120)
(160,741)
(607,776)
(594,259)
133,498
99,505
(4,722)
(15,947)
(4,697)
(2,779)
(891)
(850)
(5,588)
(3,629)
–
–
–
–
–
–
(152,708)
(164,370)
(607,776)
(594,259)
208,487
181,388
491,578
477,597
3,208
3,178
3,208
71,739
60,221
71,739
932
932
932
(50,022)
(62,071)
20,415
25,115
–
–
3,178
60,221
932
–
–
162,215
154,013
415,699
413,266
208,487
181,388
491,578
477,597
95
96
The financial statements of Michael Page International plc (Company Number 3310225) set out on pages 95 to 122 were approved
by the Board of Directors and authorised for issue on 4 March 2014.
Signed on behalf of the Board of Directors
Steve Ingham
Chief Executive Officer
Financial StatementsPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMFinancial StatementsPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2013
STATEMENT OF CHANGES IN EQUITY – PARENT COMPANY
For the year ended 31 December 2013
2013
Note
Called-
up share
capital
£’000
Share
premium
£’000
Capital
redemption
reserve
£’000
Reserve
for shares
held in the
employee
benefit trust
£’000
Currency
translation
reserve
£’000
Retained
earnings
£’000
Total
equity
£’000
Company
Note
Balance at 1 January 2013
3,178
60,221
932
(62,071)
25,115
154,013
181,388
Balance at 1 January 2013
Called-
up share
capital
£’000
Share
premium
£’000
Capital
redemption
reserve
£’000
3,178
60,221
932
–
–
30
–
–
30
3,208
–
–
11,518
–
–
11,518
71,739
–
–
–
–
–
–
932
Reserve
for shares
held in the
employee
benefit trust
£’000
–
–
–
–
–
–
–
–
Retained
earnings
£’000
Total equity
£’000
413,266
477,597
27,680
27,680
27,680
–
5,602
27,680
11,548
5,602
(30,849)
(30,849)
(25,247)
(13,699)
415,699
491,578
3,167
57,215
932
(65,652)
404,850
400,512
–
–
3,167
57,215
–
932
–
–
11
–
–
11
–
–
3,006
–
–
3,006
60,221
–
–
–
–
–
–
932
65,652
15,514
81,166
–
–
–
–
–
–
–
–
420,364
481,678
11,693
11,693
11,693
–
11,843
11,693
3,017
11,843
(30,634)
(30,634)
(18,791)
(15,774)
413,266
477,597
Profit for the year
Total comprehensive income for
the year
Exercise of share plans
Credit in respect of share schemes
Dividends
Balance at 31 December 2013
Balance at 1 January 2012
Adjustment to opening balance
Balance at 1 January 2012 (restated)
Profit for the year
Total comprehensive income for
the year
Exercise of share plans
Credit in respect of share schemes
Dividends
9
1
9
Balance at 31 December 2012
3,178
Currency translation differences
Net expense recognised
directly in equity
Profit for the year
Total comprehensive
(loss)/income for the year
Exercise of share plans
Transfer from reserve for shares
held in the employee benefit trust
Credit in respect of share schemes
Credit in respect of tax on
share schemes
Dividends
9
Balance at 31 December 2013
–
–
–
–
–
–
–
–
30
11,518
–
–
–
–
–
–
–
–
30
3,208
11,518
71,739
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
12,049
–
–
–
12,049
(4,700)
(4,700)
–
–
–
42,604
(4,700)
42,604
2,881
(4,700)
(4,700)
42,604
37,904
14,429
–
–
–
–
–
–
(12,049)
–
5,602
5,602
13
13
(30,849)
(30,849)
(34,402)
(10,805)
932
(50,022)
20,415
162,215
208,487
2012
Note
Called-
up share
capital
£’000
Share
premium
£’000
Capital
redemption
reserve
£’000
Reserve
for shares
held in the
employee
benefit trust
£’000
Currency
translation
reserve
£’000
Retained
earnings
£’000
Total
equity
£’000
Balance at 1 January 2012
3,167
57,215
932
(65,652)
30,286
154,650
180,598
Currency translation differences
Net expense recognised directly
in equity
Profit for the year
Total comprehensive
(loss)/income for the year
Purchase of shares held in the
employee benefit trust
Exercise of share plans
Transfer from reserve for shares
held in the employee benefit trust
Credit in respect of share schemes
Debit in respect of tax on
share schemes
Dividends
9
Balance at 31 December 2012
–
–
–
–
–
–
–
–
–
–
11
3,006
–
–
–
–
–
–
–
–
11
3,178
3,006
60,221
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(5,171)
(5,171)
–
–
–
36,197
(5,171)
(5,171)
36,197
(5,171)
36,197
31,026
(17,952)
–
21,533
–
–
–
3,581
–
–
–
–
–
–
–
–
(17,952)
4,799
7,816
(21,533)
–
11,843
11,843
(1,309)
(1,309)
(30,634)
(30,634)
(36,834)
(30,236)
932
(62,071)
25,115
154,013
181,388
97
98
Financial StatementsPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMFinancial StatementsPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS CONSOLIDATED AND PARENT COMPANY CASH FLOW STATEMENTS
For the year ended 31 December 2013
Profit before tax
Exceptional items
Note
2
5
Profit before tax and exceptional items
Depreciation and amortisation charges
11/12
Loss on sale of property, plant and equipment, and
computer software
5
11
12
Share scheme charges
Net finance costs
Operating cash flow before changes in working
capital, finance costs and exceptional items
(Increase)/decrease in receivables
(Decrease)/increase in payables
Cash generated from underlying operations
Exceptional items
Cash generated from operations
Income tax paid
Net cash from operating activities
Cash flows from investing activities
Purchases of investments
Proceeds in respect of share scheme recharges
to subsidiaries
Purchases of property, plant and equipment
Purchases of intangibles
Proceeds from the sale of property, plant and
equipment, and computer software
Interest received
Net cash used in investing activities
Cash flows from financing activities
Dividends paid
Interest paid
Issue of own shares for the exercise of options
Purchase of shares held in the employee
benefit trust
Net cash used in financing activities
Net increase/(decrease) in cash and
cash equivalents
Cash and cash equivalents at the beginning
of the year
Exchange loss on cash and cash equivalents
Cash and cash equivalents at the end of the year
20
Group
Company
2013
£’000
64,057
3,027
67,084
17,461
10
5,611
1,668
91,834
(8,506)
(1,795)
81,533
(3,027)
78,506
2012
£’000
57,003
7,834
64,837
15,073
5
11,884
284
2013
£’000
2012
£’000
27,680
11,686
–
–
27,680
11,686
–
–
–
–
–
–
–
8
92,083
27,680
11,694
7,454
(24,762)
(21,125)
(5,066)
94,471
(7,834)
86,637
13,517
16,435
–
39,961
30,530
–
16,435
30,530
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2013
1. Significant accounting policies
Statement of compliance
Michael Page International plc is a company incorporated in
the United Kingdom under the Companies Act. The financial
statements have been prepared under the historical cost
convention and in accordance with current International
Financial Reporting Standards (IFRS) as adopted by the
European Union and therefore comply with Article 4 of the
EU IAS Regulation.
Basis of preparation
The financial statements of Michael Page International plc
consolidate the results of the Company and all its subsidiary
undertakings. As permitted by Section 408 of the Companies
Act 2006, the profit and loss account of the Company has
not been included as part of these financial statements.
The Company’s profit for the financial year amounted to
£27.7m (2012: £11.7m). The increase in the Company’s
profit this year is as a result of increased dividend income.
The financial statements have been prepared on a going
concern basis. Refer to page 89 for further details.
(24,367)
(24,371)
–
–
54,139
62,266
16,435
30,530
Basis of consolidation
(i) Subsidiaries
–
–
–
–
(8,480)
(4,815)
(7,919)
(9,012)
565
531
449
907
(2,172)
(2,908)
5,018
–
–
–
–
–
–
–
–
76
(12,199)
(15,575)
2,846
(2,832)
(30,849)
(30,634)
(30,849)
(30,634)
(1,475)
14,429
(1,218)
7,816
–
11,548
(84)
3,017
–
(17,952)
–
–
(17,895)
(41,988)
(19,301)
(27,701)
24,045
4,703
(20)
61,373
(24)
85,394
58,168
(1,498)
61,373
20
–
–
(3)
23
–
20
Subsidiaries are entities controlled by the Company.
Control exists when the Company has the power, directly
or indirectly, to govern the financial and operating policies
of an entity so as to obtain benefits from its activities.
In assessing control, potential voting rights that presently
are exercisable or convertible are taken into account.
The financial statements of subsidiaries are included in the
consolidated financial statements from the date that control
commences until the date that control ceases.
(ii) Transactions eliminated on consolidation
Intragroup balances and any unrealised gains and losses
or income and expenses arising from intragroup transactions,
are eliminated in preparing the consolidated financial
statements. Unrealised losses are eliminated in the same way
as unrealised gains, but only to the extent that there is no
evidence of impairment.
(iii) Employee Benefit Trust
Shares in Michael Page International plc held by the trust are
shown as a reduction in shareholders’ funds.
Change in accounting policy and prior year restatement
The assets and liabilities of the Employee Benefit Trust
were previously recorded within the parent company
as well as in the consolidated Group accounts. In 2013,
the accounting policy has been amended such that
they are no longer recorded within the parent company.
The prior year comparatives for the company only have been
restated accordingly. This had an effect of increasing the net
assets by £81.2m with no impact on profit. The net assets,
profit and cash flows of the Group are unaffected by this
adjustment. With the exception of the change in policy referred
to above, the remaining policies, set out below, have been
consistently applied to all the periods presented.
Change in accounting policy – new accounting
standards, interpretations and amendments
The accounting policies adopted are consistent with those
of the previous financial year, except for the following
amendments to IFRS effective as of 1 January 2013:
•
•
•
•
•
•
•
•
•
IAS 1 Presentation of Items of Other Comprehensive
Income – Amendments to IAS 1
IAS 19 Employee Benefits (Revised)
IAS 28 Investments in Associates and Joint Ventures
(as revised in 2011)
IFRS 1 Government Loans – Amendments to IFRS 1
IFRS 7 Disclosures — Offsetting Financial Assets and
Financial Liabilities — Amendments to IFRS 7
IFRS 10 Consolidated Financial Statements, IAS 27
Separate Financial Statements
IFRS 12 Disclosure of Interests in Other Entities
IFRS 13 Fair Value Measurement
IFRIC 20 Stripping Costs in the Production Phase
of a Surface Mine
The adoption of the standards or interpretations did not have
any impact on the accounting policies, financial position or
performance of the Group except for the change below which
affected presentation only.
IAS 1 Presentation of Items of Other Comprehensive
Income – Amendments to IAS 1
The amendments to IAS 1 changed the grouping of items
presented in other comprehensive income (OCI). Items that
could be reclassified (or ‘recycled’) to profit or loss at a
future point in time (for example, net gain on hedge of net
investment, exchange differences on translation of foreign
operations, net movement on cash flow hedges and net loss
or gain on available-for-sale financial assets) now have to be
presented separately from items that will never be reclassified
(for example, actuarial gains and losses on defined benefit
plans and revaluation of land and buildings). The amendment
affected presentation only and had no impact on the Group’s
financial position or performance.
Standards issued but not yet effective
The standards and interpretations that are issued, but not yet
effective, up to the date of issuance of the Group’s financial
statements are disclosed below. The Group intends to adopt
these standards, if applicable, when they become effective but
they are not expected to have any impact on the accounting
policy, financial position on performance of the Group.
•
•
IAS 32 Offsetting Financial Assets and Financial Liabilities
— Amendments to IAS 32
IFRS 9 Financial Instruments: Classification
and Measurement
•
IFRS 11 Joint Arrangements
The Group has not early adopted any other standard,
interpretation or amendment that has been issued but is
not yet effective.
Going concern
The Directors have, at the time of approving the financial
statements, a reasonable expectation that the Company and
the Group have adequate resources to continue in operational
existence for the foreseeable future. Thus, they continue to
adopt the going concern basis of accounting in preparing
the financial statements. Further detail is contained in the
Directors’ Report on page 89.
99
100
Financial StatementsPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMFinancial StatementsPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS •
all resulting exchange differences are recognised in other
comprehensive income.
loss is recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount.
a) Revenue and income recognition
Revenue, which excludes value added tax (“VAT”), constitutes
the value of services undertaken by the Group from its principal
activities, which are recruitment consultancy and other ancillary
services. These consist of:
•
•
revenue from temporary placements, which represents amounts
billed for the services of temporary staff, including the salary
cost of these staff. This is recognised when the service has
been provided;
revenue from permanent placements is typically based on a
percentage of the candidate’s remuneration package and is
derived from both retained assignments (income recognised
on completion of defined stages of work) and non-retained
assignments (income recognised at the date an offer is
accepted by a candidate and where a start date has been
determined). The latter includes revenue anticipated, but not
invoiced, at the balance sheet date, which is correspondingly
accrued on the balance sheet within prepayments and accrued
income. A provision is made against accrued income for
possible cancellations of placements prior to, or shortly after,
the commencement of employment; and
•
revenue from amounts billed to clients for expenses incurred on
their behalf (principally advertisements) is recognised when the
expense is incurred.
Interest income is accrued on a time basis, by reference to the
principal outstanding and at the effective interest rate applicable.
b) Cost of sales
Cost of sales consists of the salary cost of temporary staff and
costs incurred on behalf of clients, principally advertising costs.
c) Gross profit
Gross profit represents revenue less cost of sales and consists
of the total placement fees of permanent candidates, the margin
earned on the placement of temporary candidates and the margin
on advertising income.
d) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of
the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates
(“the functional currency”). The consolidated financial statements
are presented in sterling, which is the Company’s functional and
presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the respective
functional currency using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the
translation at year end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in the
income statement.
(iii) Group companies
The results and financial position of all the Group entities
(none of which has the currency of a hyperinflationary economy)
that have a functional currency different from the presentation
currency are translated into the presentation currency as follows:
•
assets and liabilities for each balance sheet presented
are translated at the closing rate at the date of that
balance sheet;
•
income and expenses for each income statement are translated
at average exchange rates; and
e) Intangible assets
(i) Goodwill
Goodwill represents the excess of the cost of an acquisition over
the fair value of the Group’s share of the net identifiable assets of
the acquired subsidiary at the date of acquisition. Goodwill on the
acquisition of subsidiaries is included in intangible assets. Goodwill
is stated at cost less any accumulated impairment losses. Goodwill
is allocated to cash-generating units and is not amortised, but is
tested at least annually for impairment (see accounting policy h).
Gains and losses on the disposal of an entity include the carrying
amount of goodwill relating to the entity sold.
(ii) Computer software
Computer software acquired or developed by the Group is stated
at cost less accumulated amortisation (see below). The Group
reviews intangible software assets for any indication of impairment
annually. The Group performed this test on the carrying amount of
computer software at 31 December 2013 and noted no indications
of impairment.
(iii) Software under construction
Software under construction relates to cost capitalised in relation
to the development of a new operating system and related
applications. Costs are capitalised when they fulfil the criteria in
IAS 38 regarding internally developed intangible assets. While still
under construction, assets are tested for impairment annually.
The Group tested the carrying amount of software under
construction at 31 December 2013 and noted no impairment was
necessary. Assets are moved from software under construction to
computer software when they become available for use.
(iv) Trademark
Acquired trademarks are stated at cost and are written down over
five years on a straight line basis, which represents the estimated
useful life of the intangible.
(v) Amortisation
Amortisation is charged to the income statement on a straight-
line basis over the estimated useful lives of intangible assets
unless such lives are indefinite. Goodwill has an indefinite useful
life. Computer software is amortised at 20% per annum unless
it is considered to have a shorter life, in which case the period of
amortisation is reduced. The cumulative amount of goodwill written
off directly to retained earnings in respect of acquisitions prior to
31 December 1997 is £311.7m (2013: £311.7m).
f) Property, plant and equipment
Property, plant and equipment are stated at original cost less
accumulated depreciation. Depreciation is calculated to write off
the cost less estimated residual value of each asset evenly over its
expected useful life at the following rates:
•
Leasehold improvements 10% per annum or period of
lease if shorter
• Furniture, fixtures and equipment 10-20% per annum
• Motor vehicles 25% per annum
g) Investments
Fixed asset investments are stated at cost less provision
for impairment.
h) Impairment of assets
Assets that have an indefinite useful life are not subject to
amortisation and are tested annually for impairment. An impairment
The recoverable amount is the higher of an asset’s fair value
less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels
for which there are separately identifiable cash flows (cash-
generating units).
A financial asset is assessed at each reporting date to
determine whether there is any objective evidence that
it is impaired.
A financial asset is considered to be impaired if objective
evidence indicates that one or more events has had a negative
effect on the estimated future cash flows of that asset. For
certain categories of financial asset, such as trade receivables,
assets that are assessed not to be impaired individually are
subsequently assessed for impairment on a collective basis.
Objective evidence of impairment for a portfolio of receivables
could include the Group’s past experience of collecting
payments, an increase in the number of delayed payments in
the portfolio, as well as observable changes in national or local
economic conditions that correlate with default on receivables.
The carrying amount of the financial asset is reduced by
the impairment loss directly for all financial assets with the
exception of trade receivables, where the carrying amount
is reduced through the use of an allowance account. When
a trade receivable is considered uncollectible, it is written
off against the allowance account. Subsequent recoveries
of amounts previously written off are credited against the
allowance account. Changes in the carrying amount of the
allowance account are recognised in the income statement.
i) Taxation
Income tax expense represents the sum of the corporation tax
and deferred tax charges. The tax currently payable is based
on taxable profit for the year. Taxable profit differs from profit
as reported in the income statement because it excludes items
of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or
deductible. The Group’s liability for current tax is calculated
using tax rates that have been enacted or substantively enacted
by the balance sheet date.
Deferred tax is calculated at the tax rates that are expected
to apply in the period when the liability is settled or the
asset realised.
Deferred tax is charged or credited to the income statement,
except when it relates to items charged or credited directly
to equity, in which case the deferred tax is also dealt with in
equity. Deferred tax assets and liabilities are offset when there
is a legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes
levied by the same taxation authority and the Group intends to
settle its current tax assets and liabilities on a net basis.
j) Pension costs
The Group operates defined contribution pension
schemes. The assets of the schemes are held separately
from those of the Group in independently administered funds.
The pension costs charged to the income statement represent
the contributions payable by the Group to the funds during
each period.
k) Leased assets
Leases are classified as finance leases whenever the terms
of the lease transfer substantially all the risks and rewards
of ownership to the lessee. All other leases are classified as
operating leases.
The Group does not currently have any finance leases.
Rentals under operating leases are charged to the income
statement on a straight-line basis over the term of the lease.
Benefits received and receivable as an incentive to enter into
an operating lease are also spread on a straight-line basis over
the lease term.
l) Segment reporting
IFRS 8 requires operating segments to be identified on the
basis of internal reports about components of the Group that
are regularly reviewed by the Chief Executive Officer to allocate
resources to the segments and to assess their performance.
Information provided to the Chief Executive Officer is focused
on regions and as a result, reportable segments are on a
regional basis.
m) Dividend distribution
Deferred tax is recognised on differences between the carrying
amounts of assets and liabilities in the financial statements
and the corresponding tax bases used in the computation of
taxable profit and is accounted for using the balance sheet
liability method.
Dividend distribution to the Company’s shareholders is
recognised as a liability in the Group’s financial statements
in the period in which the dividends are approved by
(for final dividends) or paid to (for interim dividends) the
Company’s shareholders.
Deferred tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are recognised
to the extent that it is probable that taxable profits will be
available against which deductible temporary differences can
be utilised. Such assets and liabilities are not recognised if the
temporary difference arises from goodwill or from the initial
recognition (other than in a business combination) of other
assets and liabilities in a transaction that affects neither the
taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries, except
where the Group is able to control the reversal of the temporary
difference and it is probable that the temporary difference will
not reverse in the foreseeable future. The carrying amount of
deferred tax assets is reviewed at each balance sheet date and
reduced to the extent that it is no longer probable that sufficient
taxable profits will be available.
n) Share-based compensation
The Group operates a number of equity-settled, share-based
compensation plans. The accounting treatments for the Group
and parent company are similar and are described below:
(i) Share option schemes
The fair value of the employee services received in exchange
for the grant of the options is recognised as an expense in
the income statement of the Group with a corresponding
adjustment to equity. In the parent company, it is capitalised
as an investment, with a corresponding adjustment to equity.
The total amount to be expensed over the vesting period is
determined by reference to the fair value of the options granted,
excluding the impact of any non-market vesting conditions (for
example, earnings per share). Non-market vesting conditions
are included in assumptions about the number of options that
are expected to become exercisable. At each balance sheet
date, the estimate of the number of options that are expected to
101
102
Financial StatementsPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMFinancial StatementsPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS become exercisable is revised. The Group recognises the impact of
the revision of original estimates, if any, in the income statement, and
the corresponding adjustment to equity over the remaining vesting
period. In the parent company, it is capitalised as an investment,
with a corresponding adjustment to equity.
(ii) Deferred Annual Bonus and Long-term Incentive Plans
Where deferred awards are made to Directors and senior executives
under either the Incentive Share Plan or the Annual Bonus Scheme,
to reflect that the awards are for services over a longer period, the
value of the expected award is charged to the income statement of
the Group on a straight-line basis over the vesting period to which
the award relates. In the parent company, it is capitalised as an
investment, with a corresponding adjustment to equity.
o) Repurchase of share capital
When share capital recognised as equity is repurchased,
the amount of the consideration paid, including any directly
attributable costs, is recognised as a change in equity.
Where deemed significant, fair values are adjusted to reflect the
impact of our credit risk for the derivatives that are in a liability
position and counterparty credit risk for the derivatives that are in
an asset position.
s) Critical accounting estimates and judgements
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates and
judgements. It also requires management to exercise judgement in
the process of applying the Company’s accounting policies.
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
In particular, information about significant areas of estimation
uncertainty and critical judgements in applying accounting policies
that have the most significant effect on the amount recognised in the
financial statements are described in the following notes:
p) Provisions
• Note 1 – revenue recognition
A provision is recognised in the balance sheet when the Group
has a present legal or constructive obligation as a result of a past
event, and it is probable that an outflow of economic benefits will
be required to settle the obligation. Provisions are measured at the
Directors’ best estimate of the expenditure required to settle the
obligation at the balance sheet date, and are discounted to present
value where the effect is material.
In making its judgement, management considered the detailed
criteria for the recognition of revenue from permanent placements
where a position has been accepted by a candidate, a start date
agreed, but employment has not yet commenced. A provision is
made by management, based on past historical experience, for the
proportion of those placements where the candidate is expected to
reverse their acceptance prior to the start date.
q) Borrowing costs
• Note 12 – intangibles
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalised as
part of the cost of the asset. All other borrowing costs are expensed
in the period they occur. Borrowing costs consist of interest and
other costs that an entity incurs in connection with the borrowing of
funds. The Group has not capitalised any borrowing costs in either
the current or preceding years.
r) Financial assets and liabilities
Financial assets and liabilities are recognised in the Group’s
balance sheet when the Group becomes a party to the contractual
provisions of the instrument. Non-derivative financial instruments
comprise trade and other receivables, cash and cash equivalents,
loans and borrowings and trade and other payables.
Trade receivables and other receivables that have fixed or
determinable payments that are not quoted in an active market
are classified as loans and receivables. Loans and receivables are
measured at amortised cost using the effective interest method,
less any impairment. Interest income is recognised by applying the
effective interest rate, except for short-term receivables when the
recognition of interest would be immaterial.
Cash and cash equivalents includes cash-in-hand, deposits
held at call with banks, and other short-term highly liquid
investments with original maturities of three months or less. Bank
overdrafts that are repayable on demand and form an integral part
of the Group’s cash management are included as a component
of cash and cash equivalents for the purpose of the statement of
cash flows.
Trade and other payables are stated at cost. Other financial
liabilities, including borrowings, are initially measured at fair value,
net of transaction costs.
The Group has derivative contracts at the balance sheet date that
have been valued at fair value through the income statement.
The Group determines whether goodwill and other intangible
assets are impaired on an annual basis or otherwise when changes
in events or situations indicate that the carrying value may not be
recoverable. This requires an estimation of the recoverable amount
of the cash generating unit to which the assets are allocated.
Estimating the value-in-use requires the Group to make an
estimate of the future cash flows from the cash-generating unit and
also to choose a suitable discount rate in order to calculate the
present value of those cash flows.
• Note 14 – trade and other receivables
There is uncertainty regarding customers who may not be able
to pay as their invoices fall due. In reviewing the appropriateness
of the provisions in respect of recoverability of trade receivables,
consideration has been given to the economic climate in the
respective markets, the ageing of the debt and the potential
likelihood of default.
• Note 17 – deferred tax
Management has estimated the likely value of deferred tax assets
in respect of trading losses carried forward.
• Note 18 – share-based payments
The Group’s policy for share-based payments is stated in note
1 (n). The fair value of equity settled share-based payments is
partly derived from estimates of factors such as lapse rates
and achievement of performance criteria. It is also derived from
assumptions such as the future volatility of the Company’s share
price, expected dividend yields and risk-free interest rates.
t) Exceptional items
Exceptional items are those items the Group considers
to be one-off or material in nature that should be brought
to the reader’s attention in understanding the Group’s
financial performance.
2. Segment reporting
All revenues disclosed are derived from external customers.
The accounting policies of the reportable segments are the same as the Group’s accounting policies described in note 1. Segment
operating profit represents the profit earned by each segment including allocation of central administration cost. This is the measure
reported to the Group’s Chief Executive Officer, the chief operating decision maker, for the purpose of resource allocation and
assessment of segment performance.
(a) Revenue, gross profit and operating profit by reportable segment
Operating Profit
Revenue
2013
£’000
Gross
Profit
2013
£’000
Before
exceptional
items 2013
£’000
Exceptional
items
(note 5)
2013
£’000
After
exceptional
items 2013
£’000
407,013
207,771
25,925
(2,453)
23,472
298,579
124,060
18,387
2013
EMEA
United Kingdom
Americas
Operating profit
Financial expenses
–
–
–
–
–
18,387
6,700
12,543
19,243
4,623
Asia Pacific
Australia and New Zealand
110,642
39,730
6,700
Asia
78,754
66,076
12,543
Total – Asia Pacific
189,396
105,806
19,243
110,514
76,244
4,623
–
–
–
–
68,178
(2,453)
65,725
(1,094)
(574)
(1,668)
Revenue/gross profit/profit before tax
1,005,502
513,881
67,084
(3,027)
64,057
2012
EMEA
United Kingdom
Asia Pacific
Australia and New Zealand
Asia
Total – Asia Pacific
Americas
Operating profit
Financial expenses
Operating Profit
Revenue
2012
£’000
Gross
Profit
2012
£’000
Before
exceptional
items 2012
£’000
Exceptional
items
(note 5)
2012
£’000
After
exceptional
items 2012
£’000
403,223
218,382
295,876
121,408
119,344
72,853
51,677
63,177
192,197
114,854
22,070
15,771
14,164
14,803
28,967
98,586
72,225
(1,687)
(6,090)
(1,744)
–
–
–
–
15,980
14,027
14,164
14,803
28,967
(1,687)
–
–
–
–
65,121
(7,834)
57,287
(284)
–
(284)
Revenue/gross profit/profit before tax
989,882
526,869
64,837
(7,834)
57,003
The above analysis by destination is not materially different to the analysis by origin.
The analysis opposite is of the carrying amount of reportable segment assets, liabilities and non-current assets. Segment assets and
liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
The individual reportable segments exclude income tax assets and liabilities. Non-current assets include property, plant and
equipment, computer software, goodwill and other intangibles.
103
104
Financial StatementsPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMFinancial StatementsPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS (b) Segment assets, liabilities and non-current assets by reportable segment
3. Profit for the year
EMEA
United Kingdom
Asia Pacific
Australia and New Zealand
Asia
Total – Asia Pacific
Americas
Segment assets/liabilities
Income tax
EMEA
United Kingdom
Asia Pacific
Australia and New Zealand
Asia
Total – Asia Pacific
Americas
(c) Revenue and gross profit by discipline
Finance and Accounting
Legal, Technology, HR, Secretarial and other
Total Assets
Total Liabilities
2013
£’000
2012
£’000
124,070
125,560
130,280
104,392
2013
£’000
68,912
42,733
2012
£’000
70,596
48,414
21,492
40,926
62,418
26,842
43,159
70,001
8,310
8,785
11,809
9,182
17,095
20,991
37,367
38,835
12,188
11,757
354,135
338,788
140,928
151,758
Profit for the year is stated after charging:
Employment costs (Note 4)
Net exchange losses
Depreciation of property, plant and equipment – owned (note 11)
Amortisation of intangibles (note 12)
Impairment of trade receivables
Loss on sale of property, plant and equipment and computer software
Operating lease rentals
– Land and buildings
– Plant and machinery
7,060
6,970
11,780
12,612
Fees payable to the Company’s auditor:
361,195
345,758
152,708
164,370
Fees payable to the Company’s auditor for the audit of the Company’s annual accounts
Property, Plant and
Equipment
Intangible Assets
2013
£’000
7,668
7,307
1,799
2,100
3,899
2012
£’000
9,034
7,968
1,454
2,599
4,053
2013
£’000
441
2012
£’000
495
41,078
42,712
78
49
127
100
116
216
6,364
7,858
451
674
25,238
28,913
42,097
44,097
Fees payable to the Company’s auditor and associates for other services:
– The audit of the Company’s subsidiaries pursuant to legislation
– Audit related assurance services
Total audit fees
– Tax compliance services for the Company and its subsidiaries
– Tax advice for the Company, its subsidiaries and individual employees
re moving employees internationally
– Tax advisory services
Total non-audit fees
Total fees
4. Employee information
2013
£’000
2012
£’000
305,038
321,010
100
439
10,661
10,549
6,800
6,960
10
27,733
5,117
124
352
82
558
173
140
204
517
1,075
4,538
5,620
5
28,596
5,563
114
341
32
487
37
109
189
335
822
The average number of employees (including Executive Directors) during the year and total number of employees (including Executive
Directors) at 31 December 2013 were as follows:
Revenue
Gross Profit
2013
£’000
2012
£’000
2013
£’000
2012
£’000
464,763
465,378
211,658
220,561
230,490
219,980
105,275
106,422
Management
Client services
Administration
2013
Average
No.
2012
Average
No.
At 31 Dec
2013
No.
At 31 Dec
2012
No.
285
3,405
1,373
5,063
237
3,519
1,527
5,283
288
3,522
1,320
5,130
261
3,364
1,474
5,099
2013
£’000
2012
£’000
253,433
261,152
32,385
12,079
7,141
34,129
12,763
12,966
305,038
321,010
Engineering, Property & Construction, Procurement & Supply Chain
181,343
177,883
100,977
102,817
Marketing, Sales and Retail
128,906
126,641
95,971
97,069
Employment costs (including Directors’ emoluments) comprised:
(d) Revenue and gross profit generated from permanent and temporary placements
Permanent
Temporary
105
1,005,502
989,882
513,881
526,869
Revenue
Gross Profit
2013
£’000
2012
£’000
2013
£’000
2012
£’000
403,051
422,005
392,213
409,660
602,451
567,877
121,668
117,209
1,005,502
989,882
513,881
526,869
Wages and salaries
Social security costs
Pension costs – defined contribution plans
Share-based payments and deferred cash plan
No staff are employed by the parent company (2012 : none) hence no remuneration has been disclosed for the Company.
Remuneration for Directors for their services on behalf of the parent company are included in the Director’s Remuneration Report
on pages 67 to 86.
106
Financial StatementsPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMFinancial StatementsPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS
5. Exceptional items
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 French 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 résultats 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 has taken in 2013, an exceptional operating profit charge of £2.5m, interest expense
on late payment of corporation tax and profit share of £0.6m and an additional tax charge on the exceptional item of £0.7m relating to prior
periods. A further £0.6m relating to 2013 is included within operating profits from underlying activities, together with a tax credit of £0.1m,
which have not been treated as exceptional items. A proportion of these charges were determined by the tax ruling, with the remainder for
other years based on assumptions.
Restructuring charge
8. Current tax assets and liabilities
The current tax asset of £7.1m (2012: £7.0m), and current tax liability of £11.8m (2012: £12.6m) for the Group, and current tax asset
and liability of £nil (2012: £nil) for the parent company, represent the amount of income taxes recoverable and payable in respect of
current and prior periods.
9. Dividends
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 December 2012 of 6.75p per ordinary share (2011: 6.75p)
Interim dividend for the year ended 31 December 2013 of 3.25p per ordinary share (2012: 3.25p)
2013
£’000
2012
£’000
20,798
10,051
30,849
20,779
9,855
30,634
In 2012 there was an exceptional restructuring charge of £7.8m, relating to the removal of a layer of management in Continental Europe and
the Americas.
Amounts proposed as distributions to equity holders in the year:
6. Financial income/(expenses)
Financial income
Bank interest receivable
Financial expenses
Bank interest payable
Exceptional interest payable (Note 5)
7. Taxation on profits on ordinary activities
The charge for taxation is based on the effective annual tax rate of 33.5% on profit before tax (2012: 36.5%).
Analysis of charge in the year
UK income tax at 23.25% (2012: 24.5%) for year
Adjustments in respect of prior year
Overseas income tax
Deferred tax expense
Adjustment in respect of prior year
Origination and reversal of temporary differences
Benefit of tax losses recognised
Deferred tax income
Total income tax expense in the income statement
Reconciliation of effective tax rate
Profit before taxation
Profit on ordinary activities before tax multiplied by the
standard rate of corporation tax in the UK
Effects of:
Disallowable items and other permanent timing differences
Unrelieved overseas losses
Utilisation of losses not previously recognised
Recognition of overseas losses
Higher tax rates on overseas earnings
Movement of rate difference
Adjustment to tax charge in respect of prior periods
Tax expense and effective rate for the year
Tax recognised directly in equity
Relating to equity settled transactions
107
2013
£’000
2012
£’000
531
907
(1,625)
(574)
(2,199)
(1,191)
–
(1,191)
2013
£’000
9,527
458
13,403
23,388
(125)
(1,666)
(144)
(1,935)
21,453
2012
£’000
57,003
2012
£’000
8,045
35
13,507
21,587
354
509
(1,644)
(781)
20,806
%
Proposed final dividend for the year ended 31 December 2013 of 7.25p per ordinary share (2012: 6.75p)
22,192
20,503
The proposed final dividend had not been approved by shareholders at 31 December 2013 and therefore has not been included as a
liability. The comparative final dividend at 31 December 2012 was also not recognised as a liability in the prior year.
The proposed final dividend of 7.25p (2012: 6.75p) per ordinary share will be paid on 23 June 2014 to shareholders on the register at
the close of business on 23 May 2014, subject to approval by shareholders.
When the Company pays a dividend to shareholders, there may be income tax consequences. The impact will depend upon the
individual circumstances of the shareholder.
10. Earnings per ordinary share
The calculation of the basic and diluted earnings per share is based on the following data:
Earnings
Earnings for basic and diluted earnings per share (£‘000)
Exceptional items (£’000) (note 5)
Earnings for basic and diluted earnings per share before exceptional items (£’000)
Number of shares
Weighted average number of shares used for basic earnings per share (‘000)
Dilution effect of share plans (‘000)
Diluted weighted average number of shares used for diluted earnings per share (‘000)
Basic earnings per share (pence)
Diluted earnings per share (pence)
Basic earnings per share before exceptional items (pence)
Diluted earnings per share before exceptional items (pence)
2013
£’000
2012
£’000
42,604
3,747
46,351
36,197
5,308
41,505
number
307,858
number
305,345
2,561
3,136
310,419
308,481
pence
pence
13.8
13.7
15.1
14.9
11.9
11.7
13.6
13.5
2013
£’000
64,057
%
14,893
23.3
13,965
24.5
The above results relate to continuing operations.
Basic
(2,212)
340
(591)
–
8,748
(58)
333
21,453
(3.5)
0.5
(0.9)
–
13.7
(0.1)
0.5
33.5
1,786
1,244
(207)
(209)
3,897
(59)
389
20,806
2013
£’000
13
3.1
2.2
(0.4)
(0.4)
6.8
(0.1)
0.8
36.5
2012
£’000
(1,309)
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average
number of ordinary shares in issue during the year, excluding ordinary shares purchased by the Employee Benefit Trust and held in
the reserve.
Diluted
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. This calculation determines the number of shares that could have been acquired at
fair value (determined as the average market price of the Company’s shares) based on the monetary value of the subscription rights
attached to the outstanding share options. The number of shares calculated in the basic earnings per share is then adjusted to reflect
the number of shares deemed to be issued for nil consideration as a result of the potential exercise of existing share options.
The remaining share options that are currently not dilutive and hence excluded from the dilutive earnings per share calculation remain
potentially dilutive until they are either exercised or they lapse.
108
Financial StatementsPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMFinancial StatementsPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS
11. Property, plant and equipment
12. Intangible assets
Group
Cost
At 1 January
Additions
Disposals
Effect of movements in foreign exchange
At 31 December
Depreciation
At 1 January
Charge for the year
Disposals
Effect of movements in foreign exchange
At 31 December
Net book value
At 31 December
Group
Cost
At 1 January
Additions
Disposals
Effect of movements in foreign exchange
At 31 December
Depreciation
At 1 January
Charge for the year
Disposals
Effect of movements in foreign exchange
At 31 December
Net book value
At 31 December
2013
Leasehold
improve-
ments
£’000
Furniture,
fixtures and
equipment
£’000
Motor
vehicles
£’000
34,984
50,630
4,682
(3,484)
(864)
35,318
2,885
(1,666)
(1,401)
50,448
22,306
36,346
5,086
(3,416)
(433)
23,543
4,816
(1,499)
(1,030)
38,633
3,129
913
(1,045)
(148)
2,849
1,178
759
(658)
(78)
1,201
Total
£’000
88,743
8,480
(6,195)
(2,413)
88,615
59,830
10,661
(5,573)
(1,541)
63,377
11,775
11,815
1,648
25,238
2012
Leasehold
improve-
ments
£’000
Furniture,
fixtures and
equipment
£’000
Motor
vehicles
£’000
35,158
50,415
2,421
3,932
(1,393)
(2,081)
(1,202)
(1,636)
2,585
1,566
(889)
(133)
Total
£’000
88,158
7,919
(4,363)
(2,971)
Group
Cost
At 1 January
Additions
Disposals
Transfers
Effect of movements in
foreign exchange
At 31 December
Amortisation
At 1 January
Charge for the year
Disposals
Transfers
Effect of movements in
foreign exchange
At 31 December
Net book value
At 31 December
Group
Cost
2013
Computer
software,
assets
under
construction
£’000
Computer
software
£’000
Subtotal
£’000
Goodwill
£’000
Trademark
£’000
Subtotal
£’000
Total
16,625
38,053
54,678
1,539
746
2,285
56,963
305
(120)
4,510
–
40,274
(40,274)
4,815
(120)
–
(307)
(80)
(387)
–
–
–
–
–
–
–
–
–
–
–
–
4,815
(120)
–
(387)
56,777
2,209
58,986
1,539
746
2,285
61,271
12,672
6,680
(260)
11
(243)
18,860
–
–
–
–
–
–
12,672
6,680
(260)
11
(243)
18,860
–
–
–
–
–
–
194
120
–
–
–
194
120
–
–
–
12,866
6,800
(260)
11
(243)
314
314
19,174
37,917
2,209
40,126
1,539
432
1,971
42,097
2012
Computer
software,
assets
under
construction
£’000
Computer
software
£’000
Subtotal
£’000
Goodwill
£’000
Trademark
£’000
Subtotal
£’000
Total
34,984
50,630
3,129
88,743
At 1 January
10,845
35,435
46,280
1,539
20,041
33,927
4,280
5,513
(1,419)
(2,101)
(596)
(993)
980
756
(510)
(48)
54,948
10,549
(4,030)
(1,637)
22,306
36,346
1,178
59,830
12,678
14,284
1,951
28,913
Additions
Disposals
Transfers
Effect of movements in
foreign exchange
At 31 December
Amortisation
At 1 January
Charge for the year
Disposals
Effect of movements in
foreign exchange
At 31 December
Net book value
At 31 December
3,038
(79)
5,777
8,815
–
(79)
–
3,153
(3,153)
(332)
(6)
(338)
–
–
–
–
549
197
–
–
–
2,088
48,368
197
9,012
–
–
–
(79)
–
(338)
16,625
38,053
54,678
1,539
746
2,285
56,963
8,541
4,427
(38)
(258)
12,672
–
–
–
–
–
8,541
4,427
(38)
(258)
12,672
–
–
–
–
–
83
111
–
–
83
111
–
–
8,624
4,538
(38)
(258)
194
194
12,866
3,953
38,053
42,006
1,539
552
2,091
44,097
109
110
Financial StatementsPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMFinancial StatementsPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS Name of undertaking
Country of incorporation
Principal activity
1,539
1,539
Michael Page International Recruitment Pvt Ltd
Impairment tests for goodwill
Goodwill is allocated to the Group’s cash-generating units (CGUs) identified according to the country of operation. A summary of the goodwill
allocation is presented below:
UK
USA
Singapore
2013
£’000
1,274
214
51
2012
£’000
1,274
214
51
In assessing value in use, the estimated future cash flows are calculated by preparing cash flow forecasts derived from the most recent
financial budget, management projections for five years, followed by an assumed growth rate of 3%, which does not exceed the long-
term average growth rate of the relevant markets and reflects long-term wage inflation fee growth. Management applied a discount rate of
10%, representing the weighted average cost of capital for the Group, to the estimated future cash flows to calculate the terminal value of
those cash flows. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset
is reduced to its recoverable amount. An impairment loss is recognised as an expense. Management believes that no reasonably possible
change in any of the above key assumptions would cause the carrying value of goodwill allocated to any CGU to materially exceed its
recoverable amount.
The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. It is the opinion
of the Directors that at 31 December 2013 there was no impairment of goodwill.
Impairment tests for assets under construction
The Group tests assets under construction annually for impairment, or more frequently if there are indications that assets under construction
might be impaired. It is the opinion of the Directors that at 31 December 2013 there was no impairment of assets under construction.
Impairment test for computer software
The Group tests computer software for impairment only when there is an indication of impairment. During 2013 there was no such indication
and therefore computer software was not tested for impairment.
13. Investments
Company
Cost at 1 January 2013
Addition
Transactions relating to share plans for subsidiaries’ employees
Cost at 31 December 2013
Subsidiary undertakings
(as restated note 1)
£’000
493,544
2,172
584
496,300
Michael Page International (France) SAS
Michael Page Financial Services SAS
Page Personnel SAS
Michael Page International (Deutschland) GmbH
Page Personnel (Deutschland) GmbH
Michael Page International (Hong Kong) Limited
Michael Page International (Ireland) Limited
Michael Page International Italia Srl
Page Personnel Italia SpA
Michael Page International (Japan) K.K.
Employee Benefit Trust
Michael Page International Mexico Reclutamiento
Especializado, S.A. de C.V.
Michael Page International Mexico Servicios
Corporativos SA de CV
Michael Page International (Maroc) SARL AU
Michael Page International (Nederland) BV
Page Interim BV
France
France
France
Germany
Germany
Hong Kong
India
Ireland
Italy
Italy
Japan
Jersey
Mexico
Morocco
Netherlands
Netherlands
Michael Page International (New Zealand) Limited.
New Zealand
Michael Page International (Poland) Sp.z.o.o
Poland
Michael Page International Empressa de Trabalho Temporário
e Serviços de Consultadoria Lda
Michael Page International Qatar (Branch)
Michael Page International Russia LLC
Michael Page International Pte Limited*
Michael Page International (SA) (Pty) Limited
Michael Page International (España) SA
Michael Page Holding (España) SL
Page Personnel Seleccion SA
Michael Page International (Sweden) AB
Michael Page International (Switzerland) SA
Portugal
Qatar
Russia
Singapore
South Africa
Spain
Spain
Spain
Sweden
Switzerland
Recruitment consultancy
Support services
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Trust for share plans
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Holding company
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Michael Page International (Malaysia) Sdn Bhd
Malaysia
Mexico
Recruitment consultancy
The addition in the year represents investment in Michael Page International Inc. The Company’s principal subsidiary undertakings at
31 December 2013, their principal activities and countries of incorporation are set out below:
Michael Page International NEM Istihdam Danismanligi
Limited Sirketi
Turkey
Name of undertaking
Country of incorporation
Principal activity
Michael Page International Argentina SA
Michael Page International (Australia) Pty Limited
Michael Page International GmbH
Michael Page International (Belgium) NV/SA
Page Interim (Belgium) NV/SA
Michael Page International (Brasil) SC Ltd
Page Personnel Recruit. Especializ. E Servs. Corpor. Ltda
Michael Page International Canada Limited
Michael Page International Chile Ltda
Michael Page (Beijing) Recruitment Co. Ltd
Michael Page (Shanghai) Recruitment Co. Ltd
Michael Page International Colombia SAS
Argentina
Australia
Austria
Belgium
Belgium
Brazil
Brazil
Canada
Chile
China
China
Colombia
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Michael Page International (UAE) Limited
United Arab Emirates
Recruitment consultancy
Michael Page Holdings Limited
Michael Page International Holdings Limited
Michael Page International Recruitment Limited*
United Kingdom
United Kingdom
United Kingdom
Support services
Holding company
Recruitment consultancy
Michael Page International Southern Europe Limited*
United Kingdom
Holding company
Michael Page UK Limited
Michael Page Limited
Michael Page Recruitment Group Limited
Michael Page International Inc*
United Kingdom
United Kingdom
United Kingdom
United States
Recruitment consultancy
Recruitment consultancy
Holding company
Recruitment consultancy
*The equity of these subsidiary undertakings is held directly by Michael Page International plc. All companies have been included in
the consolidation and operate principally in their country of incorporation.
The percentage of the issued share capital held is equivalent to the percentage of voting rights held. The Group holds 100% of all
classes of issued share capital. The share capital of all the subsidiary undertakings comprise ordinary shares.
111
112
Financial StatementsPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMFinancial StatementsPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS
Bank overdrafts
Group
2013
£’000
1,676
2012
£’000
9,396
Company
2013
£’000
–
2012
£’000
–
The carrying amounts of the Group’s borrowings are denominated in sterling.
Bank overdrafts are repayable on demand.
The Group has a £10m committed overdraft facility with Deutsche Bank. All other bank overdrafts and facilities are repayable
on demand.
At 31 December 2013, the Group had available £10m (2012: £10m) of undrawn committed borrowing facilities with Deutsche Bank
and £28.2m of undrawn borrowing facilities under the Invoice Discounting arrangement with HSBC. All conditions precedent on each
of these facilities had been met.
The Group’s exposure to interest rate, foreign currency and liquidity risk for financial assets and liabilities is disclosed in Note 21.
17. Deferred tax
The following are the major deferred tax (assets)/liabilities recognised by the Group, and the movements thereon, during the current
and prior reporting periods.
14. Trade and other receivables
16. Bank overdrafts
Current
Trade receivables
Less provision for impairment of receivables
Net trade receivables
Amounts due from Group companies
Other receivables
Prepayments and accrued income
Non-current
Other receivables
Group
Company
2013
£’000
2012
£’000
2013
£’000
2012
as restated
(note 1)
£’000
153,339
148,438
(6,658)
(6,732)
146,681
141,706
–
–
–
–
–
–
–
–
603,047
578,227
4,663
35,144
4,653
36,148
–
7
–
65
186,488
182,507
603,054
578,292
2,865
3,310
–
–
All non-current receivables are due within five years from the balance sheet date.
The Group’s exposure to credit and currency risks and impairment losses related to trade and other receivables is disclosed in Note 21.
15. Trade and other payables
Current
Trade payables
Amounts owed to Group companies
Other tax and social security
Other payables
Accruals
Deferred income
Non-current
Deferred income
Other tax and social security
2013
£’000
2012
£’000
2013
£’000
2012
as restated
(note 1)
£’000
10,709
9,605
–
–
–
42,098
8,996
70,643
1,218
–
607,776
594,259
39,709
16,679
71,920
820
–
–
–
–
–
–
–
–
133,664
138,733
607,776
594,259
4,455
242
4,697
2,653
126
2,779
–
–
–
–
–
–
Group
Company
At 1 January 2013
Recognised in equity for the year
Recognised in profit or loss for the year
Exchange differences
At 31 December 2013
At 1 January 2012
Recognised in equity for the year
Recognised in profit or loss for the year
Exchange differences
At 31 December 2012
Share-
based
payments
£’000
Tax losses
£’000
Other
£’000
Total
£’000
(1,515)
(3,173)
(3,654)
(8,342)
741
(2,304)
–
–
(144)
–
–
513
50
741
(1,935)
50
(3,078)
(3,317)
(3,091)
(9,486)
(2,771)
(1,536)
(3,811)
(8,118)
330
926
–
–
(1,637)
–
–
(70)
227
330
(781)
227
(1,515)
(3,173)
(3,654)
(8,342)
2013
£’000
2012
£’000
(10,377)
(9,192)
891
850
(9,486)
(8,342)
Certain deferred tax assets and liabilities have been offset in accordance with the Group’s accounting policy. The following is the
analysis of the deferred tax balances (after offset) for balance sheet purposes:
The fair values of trade and other payables are not materially different to those disclosed above. There is no material effect on pre-tax profit
if the instruments are accounted for at fair value or amortised cost.
The total liability relating to other tax and social security includes a balance of £1.6m (2012: £1.3m) relating to social charges on share
based payments.
Deferred tax assets
Deferred tax liabilities
The Group’s exposure to currency and liquidity risk related to trade and other payables is disclosed in Note 21.
At 31 December 2013, unremitted earnings of overseas Group companies amounted to £83.3m (2012: £82.0m). Unremitted earnings
may be liable to some overseas tax, but should not be liable to UK tax if they were to be distributed as dividends.
Certain of the Group’s overseas operations have current and prior year tax losses, the future utilisation of which is uncertain.
Accordingly, the Group has not recognised a deferred tax asset of £7.4m (2012: £8.1m) in respect of tax losses of overseas
companies. These tax losses are available to offset future taxable profits in the respective jurisdictions.
All of the deferred tax asset for losses of £3.3m is dependent on generating future taxable profits. Of the recognised deferred tax
asset, £0.2m is recognised within territories that were loss making in the current year.
113
114
Financial StatementsPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMFinancial StatementsPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS 18. Called-up share capital
Allotted, called-up and fully paid
At 1 January
Shares issued
At 31 December
Share Option Plans
2013
2012
£’000
Number of
shares
£’000
Number of
shares
3,178
317,750,075
3,167
316,678,415
30
3,076,092
11
1,071,660
3,208
320,826,167
3,178
317,750,075
The Group has share option awards currently outstanding under an Executive share option scheme (ESOS) and a share option scheme
(SOS). These plans are described opposite.
At 31 December 2013 the following options had been granted and remained outstanding in respect of the Company’s ordinary shares of 1p
under both the Michael Page Executive Share Option Scheme and the Share Option Scheme. All options granted are settled by the physical
delivery of shares. The Group has no legal or constructive obligation to repurchase or settle the options in cash.
Year of grant
2004 (Note 1)*
2005 (Note 1)*
2006 (Note 1)*
Balance at
1 January
2013
105,178
258,889
247,667
Granted
in year
Exercised
in year
Lapsed
in year
–
–
–
(57,678)
(29,415)
(22,667)
–
–
–
No. of
options
outstanding
at 31
December
2013
47,500
229,474
Base
EPS/OP
range†
4.1
7.5
Exercise price
per share
Exercise period
171p-190.3p
March 2007 – March 2014
190.75p-191.5p
March 2008 – March 2015
225,000
15.5
309.9p
March 2009 – March 2016
For the 2010 share option grant for Executive Directors only, the vesting of awards will be subject to profit before tax performance
conditions measured over a three year period. Vesting will occur on a phased basis, with 30% of the award vesting for threshold
performance, increasing on a straight line basis to 100% of the award for maximum performance.
Share Option Scheme (SOS)
Note 2
Executive Directors of the Company are not eligible to participate in this scheme. Any exercises of awards made under this plan must
be settled by market purchased shares.
This new scheme was created in 2009 to provide an effective plan under which to grant awards in 2009. It was the Board’s view
that grants made under the existing ESOS plan, which would have required an increase over the 2008 base earnings per share of at
least 3% per annum above the growth in the UK Retail Price Index by 2011, would not be achievable due to the impact of the global
downturn on the Group’s EPS and thus would not provide the required retention incentive.
The 2009 grant made under the SOS plan is subject to a performance condition that will be tested, initially, three years after the
date of grant and then annually until either the entire grant has vested, or ten years from the date of the award have elapsed, in which
case any awards outstanding under the grant will lapse. The performance condition is directly linked to the Group’s Operating Profit.
If Operating Profit is £30m then 30% of the award would vest. For every £1m of Operating Profit over £30m, a further 1% would
vest. 100% of the award would vest if Operating Profit was £100m.
As the Group’s 2011 Operating Profit was £86.0m, 86% of this award vested on 10 March 2012. The remaining 14% was retested in
March 2013, but with 2012 Operating Profit at £65.1m being lower than in 2011, no additional options vested.
Further grants under the SOS plan were made in 2011 and 2012. The performance conditions for these grants are also directly linked
to the Group’s Operating Profit.
For the 2011 grant, if Operating Profit is in excess of £100m, 1% of the award will vest for every additional £1m of Operating Profit
achieved, up to a maximum of 100% at Operating Profit of £200m or more.
For the 2012 grant, if Operating Profit is in excess of £50m, a proportion of the award equivalent to the amount of Operating Profit
achieved will vest up to a maximum of 100% if the Operating Profit is £100m or more.
For the 2013 grant, if Operating Profit is in excess of £50m, a proportion of the award equivalent to the amount of Operating Profit
achieved will vest up to a maximum of 100% if the Operating Profit is £100m or more.
2009 (Note 2)
3,414,326
– (1,397,273)
(56,715)
1,960,338 OP range
187.5p-211.84p
March 2012 – March 2019
Share Option valuation and measurement
2010 (Note 1)
10,346,225
– (2,966,332)
(99,700)
7,280,193
6.6
381.5p-383.0p
March 2013 – March 2020
2011 (Note 2)
2012 (Note 2)
2013 (Note 2)
3,742,320
4,688,560
–
–
–
4,565,500
–
–
–
(324,000)
3,418,320 OP range
491.0p-492.9p
March 2014 – March 2021
(506,030)
4,182,530 OP range
477.0p
March 2015 – March 2022
(125,000)
4,440,500 OP range
442.0p March 2016 – March 2023
Total 2013
22,803,165
4,565,500 (4,473,365)
(1,111,445) 21,783,855
Weighted average
exercise price
2013 (£)
3.85
4.42
3.19
4.54
4.09
In 2013, options were granted on 10 March with the estimated fair value of the options granted on that day of £0.97. In 2012, options
were granted on 11 March. The estimated fair values of the options granted on that date was £1.38.
Share options are granted under service and non-market performance conditions. These conditions are not taken into account in the
fair value measurement at grant date. There are no market conditions associated with the share option grants.
Other share-based payment plans
The Company also operates an Incentive Share Plan for the Executive Directors and senior employees and an Annual Bonus Plan for
the Executive Directors. Details of these schemes are disclosed in the Directors’ Remuneration Report and are settled by the physical
delivery of shares, currently satisfied by shares held in the Employee Benefit Trust, to the extent that service and performance
conditions are met.
Total 2012
22,904,832
4,961,000 (3,647,396)
(1,415,271) 22,803,165
Share Option valuation and measurement
Weighted average
exercise price
2012 (£)
3.39
4.77
2.14
3.70
3.85
*These options have fully vested
†The Operating Profit ranges for each award are fully disclosed in Note 2 of this Note.
9,382,199 options were exercisable at the end of 2013 at a weighted average exercise price of £3.42 (2012: £2.02). The weighted average
share price at the date of exercise was £4.46.
Note 1
Executive Share Option Scheme (ESOS)
Using the ESOS, awards of share options can be made to key management personnel and senior employees to receive shares in
PageGroup. Share options are exercisable at the market price of the shares at the date of the grant.
No awards were made under the ESOS scheme in 2009, 2011, 2012 or 2013.
For grants under the ESOS plan, the performance condition is tested on the third anniversary and no retesting will occur thereafter. These
options were granted subject to a performance condition requiring that an option may only be exercised, in normal circumstances, if there
has been an increase in base earnings per share of at least 3% per annum above the growth in the UK Retail Price Index. The respective
base earnings per share for each grant are shown in the table above.
The options outstanding at 31 December 2013 have an exercise price in the range of 171.0 pence to 492.9 pence and a weighted
average contractual life of 7.1 years. The fair values of options and other share awards granted during the year were calculated using
the Black-Scholes option pricing model. The inputs into the model were as follows:
Share price (£)
Average exercise price (£)
Weighted average fair value (£)
Expected volatility
Expected life
Risk free rate
Expected dividend yield
Share Option Plans
Incentive Share Scheme Deferred Bonus Shares
2013
4.42
4.42
0.97
31%
5 years
0.86%
2.62%
2012
4.77
4.77
1.38
40%
2013
4.42
Nil
4.12
31%
2012
4.77
Nil
4.47
40%
2013
4.42
Nil
4.22
31%
2012
4.77
Nil
4.56
40%
5 years
3 years
3 years
2 years
2 years
0.87%
2.10%
0.34%
0.73%
0.22%
0.50%
Nil
Nil
Nil
Nil
Expected volatility was determined by reference to historical volatility of the Company’s share price since flotation. The expected
life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise
restrictions and behavioural considerations. Expectations of early exercise are incorporated into the Black-Scholes option
pricing model.
The Group recognised total expenses of £6.8m, including social security, (2012: £13.2m) related to share-based payment
transactions during the year.
115
116
Financial StatementsPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMFinancial StatementsPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS
19. Reserves
Share premium
The share premium account has been established to represent the excess of proceeds over the nominal value for all share issues, including
the excess of the exercise share price over the nominal value of the shares on the exercise of share options.
Capital redemption reserve
The capital redemption reserve relates to the cancellation of the Company’s own shares.
Reserve for shares held in the employee benefit trust
At 31 December 2013, the reserve for shares held in the employee benefit trust consisted of 12,789,313 ordinary shares (2012: 15,715,157
ordinary shares) held for the purpose of satisfying awards made under the Incentive Share Plan, the Annual Bonus Plan and the Share Option
Scheme (SOS), representing 4.0% of the called-up share capital with a market value of £62.4m (2012: £62.1m).
There are 10,722,795 of these shares held in the trust on which dividends are waived.
Currency translation reserve
Since first-time adoption of the International Financial Reporting Standards, the currency translation reserve comprises all foreign exchange
differences arising from the translation of the financial statements of foreign operations that are integral to the operations of the Company.
20. Cash and cash equivalents
(i) Credit risk
Credit risk is the risk of financial loss to the Group if a client or counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group’s receivables from clients. Management has a credit policy in place and the
exposure to credit risk is monitored on an ongoing basis.
At the balance sheet date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented
by the carrying amount of each financial asset in the balance sheet.
Trade and other receivables
Total trade receivables (net of allowances) held by the Group at 31 December 2013 amounted to £146.7m (2012: £141.7m).
An initial credit period is made available on invoices. No interest is charged on trade receivables from the date of the invoice
during this credit period. Thereafter, interest is charged on the outstanding balance. The Group has provided fully for all receivables
over 150 days because historical experience is such that receivables past due beyond 150 days are generally not recoverable.
Trade receivables below 150 days are provided for based on estimated irrecoverable amounts from the provision of our services,
determined by reference to past default experience.
Included in the Group’s trade receivables balance are debtors with a carrying amount of £68.7m (2012: £58.6m) that are past
due at the reporting date for which the Group has not provided as the amounts are still considered recoverable. The Group does
not hold any collateral over these balances. The average age of these receivables is 54 days in excess of the initial credit period
(2012: 58 days).
The ageing of trade receivables at the reporting date was:
Cash at bank and in hand
Short-term deposits
Cash and cash equivalents
Bank overdrafts
Cash and cash equivalents in the statement of cash flows
Net funds
Group
2013
£’000
79,777
7,293
87,070
(1,676)
85,394
85,394
2012
£’000
62,431
8,338
70,769
(9,396)
61,373
61,373
Company
2013
£’000
2012
£’000
–
–
–
–
–
–
20
–
20
–
20
20
Not past due
Past due 0-30 days
Past due 31-150 days
More than 150 days
Gross trade
receivables
2013
£’000
Provision
2013
£’000
Net trade
receivables
2013
£’000
Gross trade
receivables
2012
£’000
Provision
2012
£’000
Net trade
receivables
2012
£’000
78,448
47,264
22,463
5,164
153,339
433
235
826
5,164
6,658
78,015
47,029
21,637
–
83,890
41,157
17,930
5,461
146,681
148,438
779
215
586
5,152
6,732
83,111
40,942
17,344
309
141,706
The Group operates a multi-currency notional cash pool. Currently the main Eurozone subsidiaries and the UK-based Group Treasury
subsidiary participate in this cash pool, although it is the Group’s intention to extend the scope of the participation to other Group companies
going forward. The structure facilitates interest and balance compensation of cash and bank overdrafts.
21. Financial risk management
The Group has exposure to the following risks from its use of financial instruments:
(i) credit risk
(ii) liquidity risk
(iii) market risk
This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for
measuring and managing risk, and the Group’s management of capital. Further quantitative disclosures are included throughout these
consolidated financial statements.
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework.
The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and
controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in
market conditions and the Group’s activities. The Group, through its training and management standards and procedures, aims to develop a
disciplined and constructive control environment in which all employees understand their roles and obligations.
The Group Audit Committee oversees how management monitors compliance with the Group’s risk management policies and procedures
and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Group Audit Committee is
assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and
procedures, the results of which are reported to the Audit Committee.
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each client. The demographics of the
Group’s client base, including the country in which clients operate, also has an influence on credit risk. Less than 3% of the Group’s
revenue is attributable to sales transactions with a single client. The geographic diversification of the Group’s revenue also reduces
the concentration of credit risk.
The majority of the Group’s clients have been transacting with the Group for several years, with losses rarely occurring. In monitoring
client credit risk, clients are grouped according to their credit characteristics, including geographic location, industry, ageing profile,
maturity and existence of previous financial difficulties.
Movement in the allowance for doubtful debts:
Balance at beginning of the year
Impairment losses recognised on receivables
Amounts written off as uncollectable
Amounts recovered during the year
Impairment losses reversed
Balance at end of the year
2013
£’000
6,732
6,960
(483)
(1,997)
(4,554)
6,658
2012
£’000
7,093
5,620
(1,644)
(2,237)
(2,100)
6,732
Most of the allowance for doubtful debts represents individually impaired trade receivables with a balance of £0.5m (2012: £1.6m)
which has been placed in litigation, as well as a further provision for debts more than 150 days past their due date.
The impairment recognised represents the difference between the carrying amount of these trade receivables and the present value
of the expected liquidation proceeds. The Group does not hold any collateral over these balances.
117
118
Financial StatementsPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMFinancial StatementsPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS Exposure to credit risk
The maximum exposure to credit risk for net trade receivables at the reporting date by geographic region was:
EMEA
United Kingdom
Asia Pacific
Americas
The maximum exposure to credit risk for accrued income at the reporting date by geographic region was:
EMEA
United Kingdom
Asia Pacific
Americas
Carrying amount
2013
£’000
77,042
35,227
21,012
13,400
2012
£’000
71,741
33,262
23,613
13,090
146,681
141,706
Carrying amount
2013
£’000
1,371
10,664
9,720
5,212
26,967
2012
£’000
1,363
10,184
10,244
4,301
26,092
The entire accrued income balance is not past due. The fair values of trade and other receivables are not materially different to those
disclosed above and in note 14. There is no material effect on pre-tax profit if the instruments are accounted for at fair value or
amortised cost.
(ii) Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board, which has built an appropriate liquidity risk management framework
that aims to ensure that the Group has sufficient cash or credit facilities at all times to meet all current and forecast liabilities as they fall due.
It is the Directors’ intention to continue to finance the activities and development of the Group from retained earnings.
Cash surpluses are invested in short-term deposits, with any working capital requirements being provided from Group cash
resources, Group facilities, or by local overdraft facilities. Cash generated in excess of these requirements will be used to buy back the
Company’s shares. The Group also operates a multi-currency notional cash pool to facilitate interest and balance compensation of cash and
bank overdrafts.
The following are the contractual maturities of financial liabilities:
Capital is equity attributable to the equity holders of the parent. The primary objective of the Group’s capital management is
to ensure that it maintains a strong credit rating and healthy capital ratios to support its business and maximise shareholder value.
The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or
adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders through share
repurchases with subsequent cancellation, or issue new shares. No changes were made in the objectives, policies or processes for
managing capital during the years ended 31 December 2013 and 31 December 2012.
(iii) Market risk and sensitivity analysis
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates,
but these risks are not deemed to be material. However, a sensitivity analysis showing hypothetical fluctuations in Pounds Sterling
against the Group’s main exposure currencies is shown on page 123. There has been no material change in the Group’s exposure to
market risks or the manner in which it manages and measures the risk.
For additional information on market risk, refer to ‘Treasury management and currency risk’ in the Strategic Report on page 24.
Interest rate risk management
Borrowings are arranged at floating rates, thus exposing the Group to cash flow interest rate risk. The Group does not consider this
risk as significant. The benchmark rates for determining floating rate liabilities are based on relevant national LIBOR equivalents.
The Group’s only interest bearing assets and liabilities at 31 December 2013 relate to cash and bank overdrafts.
The average interest rate paid on bank overdrafts was 2.23% (2012: 2.02%).
Currency rate risk
The Group publishes its results in Pounds Sterling and conducts its business in many foreign currencies. As a result, the Group is
subject to foreign currency exchange risk due to exchange rate movements. The Group is exposed to foreign currency exchange
risk as a result of transactions in currencies other than the functional currencies of some of its subsidiaries and the translation of the
results and underlying net assets of foreign subsidiaries.
The main functional currencies of the Group are Sterling, Euro, Chinese Renminbi, Brazilian Real and Australian Dollar. The Group
does not have material transactional currency exposures, nor is there a material exposure to foreign denominated monetary assets
and liabilities. The Group is exposed to foreign currency translation differences in accounting for its overseas operations although our
policy is not to hedge this exposure.
In certain cases, where the Company gives or receives short-term loans to and from other Group companies with different reporting
currencies, it may use foreign exchange swap derivative financial instruments to manage the currency and interest rate exposure that
arises on these loans. It is the Group’s policy not to seek to designate these derivatives as hedges.
All derivative financial instruments not in a hedge relationship are classified as derivatives at fair value through the income statement.
The group does not use derivatives for speculative purposes. All transactions in derivative financial instruments are undertaken to
manage the risks arising from underlying business activities.
Information on the fair value of derivative financial instruments held at the balance sheet date is shown in the table below. Derivatives
are disclosed within cash on the face of the balance sheet.
Fair values are not adjusted for credit risk, as required by IFRS 13, because credit impact is not material given the low fair value levels.
Derivative Financial Instruments
2013
Trade payables
Accruals and other payables
Bank overdraft
2012
Trade payables
Accruals and other payables
Bank overdraft
Less than
1 month
£’000
1-3 months
£’000
3-12 months
£’000
More than
12 months
£’000
7,089
3,439
181
–
61,798
38,890
22,267
4,697
1,676
–
–
–
Less than
1 month
£’000
6,162
40,386
9,396
1-3 months
£’000
3-12 months
£’000
More than
12 months
£’000
2,950
39,653
–
493
–
29,410
2,779
–
–
Derivative Assets
Derivative Liabilities
Net Derivative Assets
Derivatives at fair value
2013
£m
0.5
(0.2)
0.3
2012
£m
0.1
(0.1)
–
119
120
Financial StatementsPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMFinancial StatementsPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS Sensitivity analysis – currency risk
A 10% strengthening of Sterling against the following currencies at 31 December would have increased/(decreased) equity and profit or loss
by the amounts shown below. This analysis is applied currency by currency in isolation, i.e. ignoring the impact of currency correlation, and
assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2012.
The amounts generated from the sensitivity analysis are forward-looking estimates of market risk assuming certain adverse market conditions
occur. Actual results in the future may differ materially from those projected, due to developments in the global financial markets which may
cause fluctuations in interest and exchange rates to vary from the hypothetical amounts disclosed in the table below, which therefore should
not be considered a projection of likely future events and losses.
23. Contingent liabilities
Guarantees
The Company has provided guarantees to other Group undertakings amounting to £80k (2012: £78k) in the ordinary course of
business. It is not anticipated that any material liabilities will arise from the contingent liabilities.
VAT group registration
As a result of group registration for VAT purposes, the Company is contingently liable for VAT liabilities arising in other companies
within the VAT group which at 31 December 2013 amounted to £4.4m (2012: £4.7m).
2013 equity
£’000
2013 PBT
£’000
24. Events after the balance sheet date
Euro
Australian Dollar
Swiss Franc
Hong Kong Dollar
Brazilian Real
United States Dollar
Chinese Renminbi
Japanese Yen
Singapore Dollar
Other
Euro
Australian Dollar
Swiss Franc
Hong Kong Dollar
Brazilian Real
United States Dollar
Chinese Renminbi
Japanese Yen
Other
(3,205)
(1,392)
(1,550)
(699)
(751)
904
(770)
(563)
(824)
(300)
(924)
(354)
(285)
(139)
(101)
1,134
(206)
(461)
(111)
494
2012 equity
£’000
2012 PBT
£’000
(3,361)
(1,988)
(1,948)
(754)
(1,194)
764
(618)
(671)
(1,556)
457
(477)
(464)
(83)
68
1,241
(221)
(165)
(167)
A 10 percent weakening of sterling against the above currencies at 31 December would have had the equal but opposite effect on the above
currencies to the amounts shown above, on the basis that all other variables remain constant.
22. Commitments
Operating lease commitments
At 31 December 2013 the Group was committed to make the following payments in respect of non-cancellable operating leases:
Leases which expire:
Within one year
Within two to five years
After five years
Total
Land and buildings
Other
2013
£’000
2,711
41,442
51,568
95,721
2012
£’000
4,423
51,547
28,301
84,271
2013
£’000
798
4,774
–
5,572
2012
£’000
617
6,509
–
7,126
The Group leases various offices under non-cancellable operating lease agreements. The leases have varying terms, escalation clauses and
renewal rights.
Between 31 December 2013 and 4 March 2014, 39,200 options were exercised, leading to an increase in share capital of £392 and
an increase in share premium of £86,700.
25. Related party transactions
Identity of related parties
The Company has a related party relationship with its Directors and members of the Executive Committee, and subsidiaries
(Note 13).
Transactions with key management personnel
Key management personnel are deemed to be the Directors and members of the Executive Committee as detailed in the biographies
on page 53. The remuneration of Directors and members of the Executive Committee is determined by the Remuneration Committee
having regard to the performance of individuals and market trends. For transactions with Directors see the Remuneration Report on
pages 67 to 86. Over and above these transactions, equity settled transactions for the year were £1.4m (2012: £1.7m). Transactions
with the remaining members of the Executive Committee are disclosed below:
Related party transactions
Short-term employee benefits
Pension costs – defined contribution plans
Company
2013
£’000
3,846
85
2012
£’000
4,817
125
Transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on
consolidation. Details of transactions between the parent company and subsidiary undertakings are shown below.
Dividends received
Amounts owed
by related parties
Amounts owed
to related parties
2013
£’000
2012
£’000
2013
£’000
2012
As restated
(note 1)
£’000
2012
As restated
(note 1)
£’000
2013
£’000
Transactions
27,538
11,695
603,047
578,227
607,776
594,259
FIVE YEAR SUMMARY
Revenue
Gross profit
Operating profit before exceptional items
Operating profit after exceptional items
Profit before tax
Profit attributable to equity holders
2009
£’000
2010
£’000
2011
£’000
2012
£’000
2013
£’000
716,722
832,296
1,019,087
989,882
1,005,502
351,694
442,207
553,781
526,869
513,881
20,203
20,203
71,527
88,652*
21,068
100,656*
12,430
67,484*
5.7%
16.2%
86,035
86,035
86,147
56,857
15.5%
65,121
68,178
57,287*
65,725*
57,003*
64,057*
36,197*
42,604*
12.4%
13.3%
3.9
21.6*
18.7
11.9*
13.8*
The Group also leases various plant and machinery under operating lease agreements. The Group is required to give varying notice for the
termination of these agreements.
Conversion†
Capital commitments
The Group had contractual capital commitments of £0.6m as at 31 December 2013 relating to property, plant and equipment (2012: £0.5m).
The Group had no contractual capital commitments as at 31 December 2013 relating to computer software (2012: £2.3m).
Basic earnings per share (pence)
* Includes exceptional items.
121
122
† Operating profit before exceptional items as a percentage of gross profit.
Financial StatementsPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTORS REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMFinancial StatementsPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS SHAREHOLDER INFORMATION AND ADVISERS
Annual General Meeting
To be held on 5 June 2014 at 12.00 noon at Page House, The Bourne Business Park, 1 Dashwood Lang Road, Addlestone, Weybridge,
Surrey, KT15 2QW. Every shareholder is entitled to attend and vote at the meeting.
Final dividend for the year ended 31 December 2013
To be paid (if approved) on 23 June 2014 to shareholders on the register on 23 May 2014.
Company Secretary
Elaine Marriner
Company number
3310225
Registered office, domicile and legal form
The Company is a limited liability company incorporated and domiciled within the United Kingdom.
The address of its registered office is:
Page House,
The Bourne Business Park,
1 Dashwood Lang Road,
Addlestone,
Weybridge,
Surrey KT15 2QW.
Tel: 01932 264144
Fax: 01932 264297
Auditor
Ernst & Young LLP
1 More London Place
London SE1 2AF
Solicitors
Herbert Smith LLP
Exchange House
Primrose Street
London EC2A 2HS
Bankers
HSBC Bank plc
West End Business
Banking Centre
70 Pall Mall
London SW1Y 5GZ
Deutsche Bank Netherlands N.V.
De Entree 99
1101 HE Amsterdam
The Netherlands
Key dates
Ex-Dividend date
Record date
Annual General Meeting
Payment of proposed final ordinary dividend
Interim results announcement
Joint corporate brokers
Citigroup
33 Canada Square
Canary Wharf
London E14 5LB
Deutsche Bank
Winchester House
1 Great Winchester Street
London EC2N 2DB
Registrars
Capita Registrars Ltd
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
21 May 2014
23 May 2014
5 June 2014
23 June 2014
13 August 2014
ARTICLES OF ASSOCIATION
The following summarises certain provisions of the Company’s
Articles of Association (as adopted on 21 May 2010) and
applicable English Law. The summary is qualified in its entirety
by reference to the Companies Act 2006 of Great Britain
(the “Act”), as amended, and the Company’s Articles of
Association. Under the Act, the Memorandum of Association
of the Company has now become a document of record, and
no longer contains any operative provisions.
Incorporation
The Company is incorporated under the name Michael Page
International plc and is registered in England and Wales with
registered number 3310225.
Share capital
The Act abolished the concept of, and requirement for a
company to have, an authorised share capital. As such, the
Company no longer has an authorised share capital.
Alteration of capital
The Company may from time to time by ordinary resolution:
(a) consolidate and divide all or any of its share capital into
shares of larger amount than its existing shares;
(b) sub-divide its shares, or any of them, into shares of a
If a member or any person appearing to be interested in
shares held by a member has been duly served with a notice
under the Act and is in default for the prescribed period in
supplying to the Company information thereby required,
unless the Directors otherwise determine, the member shall
not be entitled in respect of the default shares to be present or
to vote (either in person or by representative or proxy) at any
general or class meeting of the Company or on any poll or to
exercise any other right conferred by membership in relation
to such meeting or poll. In certain circumstances, any dividend
due in respect of the default shares shall be withheld and
certain certificated transfers may be refused.
A member entitled to more than one vote need not, if he votes,
use all his votes or cast all the votes he uses in the same way.
A member is entitled to appoint another person as his proxy to
exercise all or any of his rights to attend and speak and vote
at a meeting of the Company. A proxy need not be a member.
A member may appoint more than one proxy to attend on
the same occasion. This does not preclude the member from
attending and voting at the meeting or at any adjournment of it.
Limitations and non-resident or foreign shareholders
English law treats those persons who hold the shares and
are neither UK residents nor nationals in the same way as
UK residents or nationals. They are free to own, vote on and
transfer any shares they hold.
smaller amount than its existing shares; and
Variation of rights
(c) determine that, as between the shares resulting from such
a sub-division, any of them may have any preference or
advantage as compared with the others.
If at any time the capital of the Company is divided into
different classes of shares, the rights attached to any class
may be varied either:
Subject to the provisions of the Act, the Company may
by special resolution reduce its share capital, any capital
redemption reserve and any share premium account, in
any way.
Purchase of own shares
Subject to the provisions of the Act, the Company may
purchase its own shares, including redeemable shares. The
Company proposes to renew its authority to purchase its
own shares for another year in item 16 of the Annual General
Meeting notice.
General meetings and voting rights
The Directors may call general meetings whenever and at
whatever time and location they so determine. Subject to
the provisions of the Act, an annual general meeting and all
general meetings (which shall be called extraordinary general
meetings) shall be called by at least 21 clear days’ notice.
Subject to the provisions of the Act, the Company may resolve
to reduce the notice period for general meetings (other than
annual general meetings) to 14 days on an annual basis. The
Company proposes to renew its authority to hold general
meetings on 14 days’ notice for another year in item 17 of the
Annual General Meeting notice. Two persons entitled to vote
upon the business to be transacted shall be a quorum.
The Articles of Association provide that subject to any rights or
restrictions attached to any shares, on a show of hands every
member and every duly appointed proxy present shall have
one vote. Every corporate representative present who has been
duly authorised by a corporation has the same voting rights as
the corporation would be entitled to. On a poll every member
present in person or by a duly appointed proxy or corporate
representative shall have one vote for every share of which he
is a holder or in respect of which his appointment as proxy or
corporate representative has been made. No member shall be
entitled to vote in respect of any share held by him if any call or
other sum payable by him to the Company remains unpaid.
(a) in such manner (if any) as may be provided by those rights;
or
(b) in the absence of any such provision, with the consent in
writing of the holders of three-quarters in nominal value
of the issued shares of the class (excluding any shares of
that class held as treasury shares) or with the sanction of a
special resolution passed at a separate general meeting of
the holders of the shares of the class,
but not otherwise, and may be so varied either whilst the
Company is a going concern or during, or in contemplation
of, a winding-up. At every such separate general meeting
the necessary quorum shall be at least two persons together
holding or representing by proxy at least one-third in nominal
value of the issued shares of the class (excluding any shares
of that class held as treasury shares), save that at any
adjourned meeting any holder of shares of the class (other
than treasury shares) present or by proxy shall be a quorum.
Unless otherwise expressly provided by the rights attached
to any class of shares, those rights shall be deemed not to
be varied by the purchase by the Company of any of its own
shares or the holding of such shares as treasury shares.
Dividend rights
Holders of the Company’s ordinary shares may by ordinary
resolution declare dividends but no such dividend shall exceed
the amount recommended by the Directors. If, in the opinion
of the Directors, the profits of the Company available for
distribution justify such payments, the Directors may, from time
to time, pay interim dividends on the shares of such amounts
and on such dates and in respect of such periods as they
think fit. The profits of the Company available for distribution
and resolved to be distributed shall be apportioned and paid
proportionately to the amounts paid up on the shares during
any portion of the period in respect of which the dividend is
paid. The members may, at a general meeting declaring a
dividend upon the recommendation of the Directors, direct
123
124
Additional InformationPageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTOR’S REPORTCORPORATE GOVERNANCEADDITIONAL INFORMATION AND NOTICE OF AGMAdditional InformationPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS
that it shall be satisfied wholly or partly by the distribution of
specific assets.
No dividend shall be paid otherwise than out of profits available for
distribution as specified under the provisions of the Act.
Any dividend unclaimed after a period of twelve years from the
date of declaration of such dividend shall, if the Directors so
resolve, be forfeited and shall revert to the Company.
Calls on shares
Subject to the terms of allotment, the Directors may make calls
upon members in respect of any amounts unpaid on their shares
(whether in respect of nominal value or premium) and each
member shall pay to the Company as required by the notice the
amount called on his shares.
Transfer of shares
Any member may transfer all or any of his shares in certificated form
by instrument of transfer in the usual common form or in any other
form which the Directors may approve. The transfer instrument shall
be signed by or on behalf of the transferor and, except in the case
of fully-paid shares, by or on behalf of the transferee.
Where any class of shares is for the time being a participating
security, title to shares of that class which are recorded as being
held in uncertificated form, may be transferred (to not more than
four transferees) by the relevant system concerned.
The Directors may in their absolute discretion refuse to register
any transfer of shares (being shares which are not fully paid or on
which the Company has a lien), provided that if the share is listed
on the Official List of the UK Listing Authority such refusal does
not prevent dealings in the shares from taking place on an open
and proper basis.
The Directors may also refuse to register a transfer of shares
(whether fully paid or not) unless the transfer instrument:
(a) is lodged at the registered office, or such other place as the
Directors may appoint, accompanied by the relevant share
certificate(s)
(b) is in respect of only one class of share
(c) is in favour of not more than four transferees
The Directors of the Company may refuse to register the transfer
of a share in uncertificated form to a person who is to hold it
thereafter in certificated form in any case where the Company is
entitled to refuse (or is excepted from the requirements) under the
Uncertificated Securities Regulations 2001 to register the transfer.
Directors
The Company’s Articles of Association provide for a Board of
Directors, consisting of (unless otherwise determined by the
Company by ordinary resolution) not fewer than two Directors,
who shall manage the business of the Company. The Directors
may exercise all the powers of the Company, subject to the
provisions of the Articles of Association and any directions given
by special resolution. If the quorum is not fixed by the Directors,
the quorum shall be two.
Subject to the provisions of the Company’s Articles of Association,
the Directors may delegate any of their powers:
(a) to such person or committee
(b) by such means (including power of attorney)
(c) to such an extent
(d) in relation to such matters or territories
(e) on such terms and conditions
as in each case they think fit, and such delegation may include
authority to sub-delegate all or any of the powers delegated, may
be subject to conditions and may be revoked or varied.
The Directors may also, by power of attorney or otherwise, appoint
any person, whether nominated directly or indirectly by the
Directors, to be the agent of the Company for such purposes and
subject to such conditions as they think fit, and may delegate any
of their powers to such an agent.
The Articles of Association place a general prohibition on a
Director voting on any resolution concerning a matter in which he
has, directly or indirectly, a material interest (other than an interest
in shares, debentures or other securities of, or otherwise in or
through the Company), unless his interest arises only because the
case falls within one or more of the following:
(a) the giving to him of a guarantee, security, or indemnity in
respect of money lent to, or an obligation incurred by him
for the benefit of, the Company or any of its subsidiary
undertakings
(b) the giving to a third party of a guarantee, security, or indemnity
in respect of an obligation of the Company or any of its
subsidiary undertakings for which the Director has assumed
responsibility in whole or in part and whether alone or jointly
with others under a guarantee or indemnity or by the giving
of security
(c) the giving to him of any other indemnity which is on
substantially the same terms as indemnities given or to be
given to all of the other directors and/or the funding by the
Company of this expenditure on defending proceedings or
the doing by the Company of anything to enable him to avoid
incurring such expenditure where all other directors have been
given or are to be given substantially the same arrangements
(d) the purchase or maintenance for any director or directors of
insurance against liability
(e) his interest arises by virtue of his being, or intending to become
a participant in the underwriting or sub-underwriting of an
offer of any shares in or debentures or other securities of the
Company for subscription, purchase or exchange
(f) any arrangement for the benefit of the employees and directors
and/or former employees and former directors of the Company
or any of its subsidiaries and/or the members of their families
or any person who is or was dependent on such persons,
including but without being limited to a retirement benefits
scheme and an employees’ share scheme, which does
not accord to him any privilege or advantage not generally
accorded to employees and/or former employees to whom the
arrangement relates
(g) any transaction or arrangement with any other company in
which he is interested, directly or indirectly (whether as a
director or shareholder or otherwise), provided that he is not the
holder of or beneficially interested in at least 1% of any class
of shares of that company (or of any other company through
which his interest is derived), and is not entitled to exercise
at least 1% of the voting rights available to members of the
relevant company
If a question arises at a Directors’ meeting as to the right of a
Director to vote, the question may be referred to the Chairman of
the meeting (or if the Director concerned is the Chairman, to the
other Directors at the meeting), and his ruling in relation to any
Director (or, as the case may be, the ruling of the majority
of the other Directors in relation to the Chairman) shall be final
and conclusive.
The Act requires a Director of a company who is in any way
interested in a proposed transaction or arrangement with the
125
Additional Information
company to declare the nature of his interest at a meeting
of the Directors of the company (save that a director need
not declare an interest if it cannot reasonably be regarded as
giving rise to a conflict of interest). The definition of “interest”
includes the interests of spouses, civil partners, children,
companies and trusts.
Borrowing powers of the Directors
The Directors shall restrict the borrowings of the Company
and exercise all powers of control exercisable by the
Company in relation to its subsidiary undertakings so as
to secure (as regards subsidiary undertakings so far as by
such exercise they can secure) that the aggregate principal
amount (including any premium payable on final repayment)
outstanding of all money borrowed by the Group (excluding
amounts borrowed by any member of the Group from any
other member of the Group), shall not at any time, save
with the previous sanction of an ordinary resolution of the
Company, exceed an amount equal to three times the
aggregate of:
(a) the amount paid up on the share capital of the Company
(b) the total of the capital and revenue reserves of the Group,
including any share premium account, capital redemption
reserve, capital contribution reserve and credit balance
on the profit and loss account, but excluding sums set
aside for taxation and amounts attributable to outside
shareholders in subsidiary undertakings of the Company
and deducting any debit balance on the profit and loss
account, all as shown in the latest audited consolidated
balance sheet and profit and loss account of the Group, but
adjusted as may be necessary in respect of any variation in
the paid up share capital or share premium account of the
Company since the date of that balance sheet and further
adjusted as may be necessary to reflect any change since
that date in the companies comprising the Group
Director’s appointment, retirement and removal
At each annual general meeting, there shall retire from office
by rotation:
(a) all Directors of the Company who held office at the time of
the two preceding annual general meetings and who did
not retire by rotation at either of them
(b) such additional number of Directors as shall, when
aggregated with the number of Directors retiring under
paragraph (a) above, equal either one third of the number of
Directors, in circumstances where the number of Directors
is three or a multiple of three, or in all other circumstances,
the whole number which is nearest to but does not
exceed one-third of the number of Directors (the “Relevant
Proportion”) provided that:
(i) the provisions of this paragraph (b) shall only apply if the
number of Directors retiring under paragraph (a) above
is less than the Relevant Proportion
(ii) subject to the provisions of the Act and to the relevant
provisions of the Articles of Association, the Directors to
retire under this paragraph (b) shall be those who have
been longest in office since their last appointment or
reappointment, but as between persons who became
or were last reappointed Directors on the same day
those to retire shall (unless they otherwise agree among
themselves) be determined by lot
If the Company, at the meeting at which a director retires by
rotation, does not fill the vacancy the retiring Director shall,
if willing to act, be deemed to have been reappointed unless
a resolution not to fill the vacancy or not to reappoint that
Director is passed.
In addition to any power of removal under the Act, the
Company may, by special resolution, remove a director before
the expiration of his period of office (without prejudice to
any claim for damages for breach of any contract of service
between the director and the Company) and, subject to the
Articles of Association, may by ordinary resolution, appoint
another person who is willing to act as a director, and is
permitted by law to do so, to be a director instead of him.
The newly appointed person shall be treated, for the purposes
of determining the time at which he or any other director is to
retire as if he had become a director on the day on which the
director in whose place he is appointed was last appointed or
reappointed as a Director.
A Director shall be disqualified from holding office as soon as:
(a) that person ceases to be a director under the provisions of
the Act or is prohibited by law from being a Director
(b) a bankruptcy order is made against that person
(c) a composition is made with that person’s creditors
generally in satisfaction of that person’s debts
(d) by reason of that person’s mental health, a court makes
an order which wholly or partly prevents that person from
personally exercising any powers or rights which that
person would otherwise have
(e) notification is received by the Company from that person
that he is resigning or retiring from his office as director,
and such resignation or retirement has taken effect in
accordance with its terms
(f) in the case of an Executive Director, his appointment as
such is terminated or expires and the Directors resolve
that he should cease to be a Director
(g) that person is absent from Directors’ meetings for more
than six consecutive months (without permission of the
other Directors) and the Directors resolve that he should
cease to be a Director
(h) a notice in writing is served on him signed by all the
Directors stating that that person shall cease to be a
Director with immediate effect
There is no requirement of share ownership for a
Director’s qualification.
Amendments to the articles of association
Subject to the Act, the Articles of Association of the Company
can be altered by special resolution of the members.
Winding-up
If the Company is wound up, the liquidator may, with the
sanction of a special resolution of the Company and any other
sanction required by law:
(a) divide among the members in kind the whole or any part
of the assets of the Company and, for that purpose, set
such values as he deems fair upon any property to be
divided and determine how the division shall be carried
out between the members
(b) vest the whole or any part of the assets in trustees upon
such trusts for the benefit of members as the liquidator
shall think fit, but no member shall be compelled to accept
any assets upon which there is a liability
I
A
N
D
N
O
T
C
E
O
F
A
G
M
I
A
D
D
T
O
N
A
L
I
I
N
F
O
R
M
A
T
O
N
I
126
PageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTOR’S REPORTCORPORATE GOVERNANCEAdditional InformationPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS
Michael Page International plc (the “Company”)
(Registered in England and Wales No. 03310225)
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR
IMMEDIATE ATTENTION. If you are in any doubt as to the
action you should take, you are recommended to seek your
own independent financial advice from a stockbroker, bank
manager, solicitor, accountant, or other financial adviser
authorised under the Financial Services and Markets Act 2000.
If you have sold or otherwise transferred all of your shares in
the Company, please send this document, together with the
accompanying documents (but not the personalised Form of
Proxy), as soon as possible to the purchaser or transferee, or to
the stockbroker, bank or other agent through whom the sale or
transfer was effected, for delivery to the purchaser or transferee.
Annual General Meeting
Notice of Meeting
NOTICE is hereby given that the Annual General Meeting of the
Company will be held at Page House, 1 Dashwood Lang Road,
The Bourne Business Park, Addlestone, Weybridge, Surrey
KT15 2QW on Thursday 5 June 2014 at 12.00 noon for the
following purposes:
Ordinary Business
As ordinary business to consider, and if thought fit, pass
Resolutions 1 to 13 inclusive, which will be proposed as
Ordinary Resolutions:
1. To receive and consider the Directors’ and Auditor’s
Reports and the Statement of Accounts for the year ended
31 December 2013.
2. To approve the Directors’ Remuneration Report, other than
the Directors’ Remuneration Policy, in the form set out in the
Company’s Annual Report and Accounts, for the year ended
31 December 2013. (Note 8)
3. To approve the Directors’ Remuneration Policy in the form set
out in the Directors’ Remuneration Report in the Company’s
Annual Report and Accounts, for the year ended 31
December 2013. (Note 8)
4. To declare a final dividend on the ordinary share capital of
the Company for the year ended 31 December 2013 of 7.25p
per share.
5. To re-elect Robin Buchanan as a Director of the Company.
(Note 9)
6. To re-elect Simon Boddie as a Director of the Company.
(Note 9)
7. To re-elect Steve Ingham as a Director of the Company.
(Note 9)
8. To re-elect David Lowden as a Director of the Company.
(Note 9)
9. To re-elect Ruby McGregor-Smith as a Director of the
Company. (Note 9)
10. To re-elect Tim Miller as a Director of the Company.
(Note 9)
11. To elect Danuta Gray as a Director of the Company. (Note 9)
12. To reappoint Ernst & Young LLP as Auditor of the Company
to hold office until the conclusion of the next Annual General
Meeting at which accounts are laid before the Company.
13. To authorise the Directors to determine the remuneration of
the Auditor.
Special Business
(a) the allotment of equity securities in connection with an
To consider and, if thought fit, pass the following Resolutions, of
which 14 and 15 will be proposed as Ordinary Resolutions and 16,
17 and 18 will be proposed as Special Resolutions.
14. Ordinary Resolution – Authority to Allot Shares (Note 10)
THAT the Directors be and they are hereby generally and
unconditionally authorised in accordance with section 551 of
the Companies Act 2006 (the ‘Act’) to exercise all the powers
of the Company to allot shares in the Company and to grant
rights to subscribe for, or to convert any security into, shares
in the Company (‘Rights’) up to an aggregate nominal amount
of £1,071,452, provided that this authority, shall expire at the
conclusion of the next Annual General Meeting of the Company
or, if earlier, on 5 September 2015, save that the Company shall
be entitled to make offers or agreements before the expiry of
such authority which would or might require shares to be allotted
or Rights to be granted after such expiry and the Directors shall
be entitled to allot shares and grant Rights pursuant to any such
offer or agreement as if this authority had not expired; and all
unexercised authorities previously granted to the Directors to allot
shares and grant Rights be and are hereby revoked.
15. Ordinary Resolution – Donations to Political Organisations and
Political Expenditure (Note 11)
THAT in accordance with sections 366 and 367 of the Act the
Company, and all companies that are subsidiaries of the Company
at the date on which this Resolution 15 is passed or during the
period when this Resolution 15 has effect, be generally and
unconditionally authorised to:
(a) make political donations to political parties (or independent
election candidates) as defined in the Act, not exceeding
£25,000 in total;
(b) make political donations to political organisations other than
political parties, as defined in the Act, not exceeding £25,000
in total; and
(c) incur political expenditure, as defined in the Act, not
exceeding £25,000 in total;
during the period commencing on the date of passing this
Resolution 15 and ending on 5 September 2015 or at the
close of business of the next Annual General Meeting of
the Company (whichever is the earlier) provided that the
authorised sum referred to in paragraphs (a), (b) and (c)
above, may be comprised of one or more amounts in different
currencies which, for the purposes of calculating the said
sum, shall be converted into pounds sterling at the exchange
rate published in the London edition of the Financial Times
on the date on which the relevant donation is made or
expenditure incurred (or the first business day thereafter) or,
if earlier, on the day on which the Company enters into any
contract or undertaking in relation to the same provided that,
in any event, the aggregate amount of political donations
and political expenditure made or incurred by the Company
and its subsidiaries pursuant to this Resolution 15 shall not
exceed £75,000.
16. Special Resolution – Disapplication of Pre-emption Rights
(Note 12)
THAT the Directors be and they are hereby empowered pursuant
to sections 570 and 573 of the Act to allot equity securities (within
the meaning of section 560 of the Act) for cash either pursuant to
the authority conferred by Resolution 14 above or by way of a sale
of treasury shares as if section 561(1) of the Act did not apply to
any such allotment provided that this power shall be limited to:
offer of securities in favour of the holders of ordinary
shares on the register of members at such record date as
the Directors may determine where the equity securities
respectively attributable to the interests of the ordinary
shareholders are proportionate (as nearly as may be
practicable) to the respective numbers of ordinary shares
held or deemed to be held by them on any such record
date, subject to such exclusions or other arrangements as
the Directors may deem necessary or expedient to deal
with treasury shares, fractional entitlements or legal or
practical problems arising under the laws of any overseas
territory or the requirements of any regulatory body or
stock exchange or by virtue of shares being represented
by depositary receipts or any other matter; and
(b) the allotment (otherwise than pursuant to sub-paragraph
(a) of this Resolution 16) to any person or persons of
equity securities up to an aggregate nominal amount of
£160,717, and shall expire upon the expiry of the general
authority conferred by Resolution 14 above, save that the
Company shall be entitled to make offers or agreements
before the expiry of such power which would or might
require equity securities to be allotted after such expiry
and the Directors shall be entitled to allot equity securities
pursuant to any such offer or agreement as if the power
conferred hereby had not expired.
17. Special Resolution – Power to Buy Back Shares in the
Market (Note 13)
THAT the Company be generally and unconditionally
authorised to make market purchases (within the meaning of
section 693(4) of the Act) of ordinary shares of 1p each of the
Company on such terms and in such manner as the Directors
may from time to time determine, provided that:
(a) the maximum number of ordinary shares hereby
authorised to be acquired is 32,143,569 representing 10%
of the issued ordinary share capital of the Company as at
8 April 2014;
(b) the minimum price which may be paid for each ordinary
share is 1p;
(c) the maximum price which may be paid for any such
ordinary share is an amount equal to 105% of the average
of the middle market quotations for an ordinary share
in the Company as derived from The London Stock
Exchange Daily Official List for the five business days
immediately preceding the day on which such share is
contracted to be purchased;
(d) the authority hereby conferred shall expire at the
conclusion of the next Annual General Meeting or 5
September 2015 whichever is earlier unless previously
renewed, varied or revoked by the Company in general
meeting; and
(e) the Company may make a contract to purchase its
ordinary shares under the authority hereby conferred
prior to the expiry of such authority, which contract will
or may be executed wholly or partly after the expiry of
such authority, and may purchase its ordinary shares in
pursuance of any such contract.
18. Special Resolution – Notice of General Meetings
(Note 14)
THAT a general meeting, other than an annual general
meeting, may be called on not less than 14 clear days’ notice.
The Board consider that all the proposals to be considered at
the Annual General Meeting are likely to promote the success
of the Company and are in the best interests of the Company
and its shareholders as a whole. The Directors unanimously
recommend that you vote in favour of the Resolutions as
they intend to do in respect of their own beneficial holdings
which amount to 2,300,236 shares representing 0.72% of the
existing issued share capital of the Company.
By order of the Board
Elaine Marriner
Company Secretary – Michael Page International plc
Page House,
1 Dashwood Lang Road,
The Bourne Business Park,
Addlestone,
Weybridge,
Surrey KT15 2QW
Registered in England No. 03310225
8 April 2014
Notes
1.
2.
3.
4.
A member entitled to attend and vote at the Annual
General Meeting (the ‘Meeting’) may appoint another
person(s) (who need not be a member of the Company) to
exercise all or any of his rights to attend, speak and vote
at the Meeting. A member can appoint more than one
proxy in relation to the Meeting, provided that each proxy
is appointed to exercise the rights attaching to different
shares held by him. Your proxy will vote as you instruct
and must attend the Meeting for your vote to be counted.
Details of how to appoint the Chairman or another person
as your proxy using the Form of Proxy are set out in the
notes to the Form of Proxy.
Appointing a proxy does not preclude you from
attending the Meeting and voting in person. If you attend
the Meeting in person, your proxy appointment will
automatically be terminated.
A Form of Proxy which may be used to make this
appointment and give proxy instructions accompanies
this Notice. If you do not have a Form of Proxy and
believe that you should have one, please contact Capita
Asset Services on 0871 664 0300 (calls cost 10p per
minute plus network extras), lines are open Monday to
Friday, 8.30am to 5.30pm. If you require additional copies
you may photocopy the Form of Proxy.
In order to be valid an appointment of proxy must be
returned (together with any authority under which it is
executed or a copy of the authority certified (or in some
other way approved by the Directors)) by one of the
following methods:
(a)
(b)
in hard copy form by post, by courier or by hand to
the Company’s Registrar, at, PXS1, 34 Beckenham
Road, Beckenham BR3 4ZF;
in the case of CREST members, by utilising the
CREST electronic proxy appointment service in
accordance with the procedures set out in
Note 6 below;
and in each case must be received by the Company
not less than 48 hours before the time of the Meeting.
I
A
N
D
N
O
T
C
E
O
F
A
G
M
I
A
D
D
T
O
N
A
L
I
I
N
F
O
R
M
A
T
O
N
I
127
Notice of AGM
Notice of AGM
128
PageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTOR’S REPORTCORPORATE GOVERNANCEPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS
5.
6.
7.
A copy of this Notice has been sent for information only to
persons who have been nominated by a member to enjoy
information rights under section 146 of the Act (a ‘Nominated
Person’). The rights to appoint a proxy cannot be exercised
by a Nominated Person: they can only be exercised by the
member. However, a Nominated Person may have a right
under an agreement between him and the member by whom
he was nominated to be appointed as a proxy for the Meeting
or to have someone else so appointed. If a Nominated Person
does not have such a right or does not wish to exercise
it, he may have a right under such an agreement to give
instructions to the member as to the exercise of voting rights.
CREST members who wish to appoint a proxy or proxies
by utilising the CREST electronic proxy appointment service
may do so by utilising the procedures described in the
CREST Manual on the Euroclear website (www.euroclear.
com/CREST). CREST Personal Members or other CREST
sponsored members, and those CREST members who have
appointed a voting service provider(s), should refer to their
CREST sponsor or voting service provider(s), who will be able
to take the appropriate action on their behalf. In order for a
proxy appointment made by means of CREST to be valid, the
appropriate CREST message (a ‘CREST Proxy Instruction’)
must be properly authenticated in accordance with Euroclear
UK & Ireland Limited’s (‘EUI’) specifications and must contain
the information required for such instructions, as described
in the CREST Manual. The message (regardless of whether it
constitutes the appointment of a proxy or an amendment to
the instruction given to a previously appointed proxy) must,
in order to be valid, be transmitted so as to be received by
the issuer’s agent (ID number – RA10) by the latest time(s)
for receipt of proxy appointments specified in the notice of
meeting. For this purpose, the time of receipt will be taken
to be the time (as determined by the timestamp applied
to the message by the CREST Applications Host) from
which the issuer’s agent is able to retrieve the message by
enquiry to CREST in the manner prescribed by CREST. The
Company may treat as invalid a CREST Proxy Instruction
in the circumstances set out in regulation 35(5)(a) of the
Uncertificated Securities Regulations 2001.
CREST members and, where applicable, their CREST
sponsors or voting service providers should note that EUI
does not make available special procedures in CREST for any
particular messages. Normal system timings and limitations
will therefore apply in relation to the input of CREST Proxy
Instructions. It is the responsibility of the CREST member
concerned to take (or, if the CREST member is a CREST
personal member or sponsored member or has appointed a
voting service provider(s), to procure that his CREST sponsor
or voting service provider(s) take(s)) such action as shall
be necessary to ensure that a message is transmitted by
means of the CREST system by any particular time. In this
connection, CREST members and, where applicable, their
CREST sponsors or voting service providers are referred, in
particular, to those sections of the CREST Manual concerning
practical limitations of the CREST system and timings.
8.
Resolutions 2 and 3 – Approval of the Directors’
Remuneration Report
There are new requirements this year in relation to the content
of the Directors’ Remuneration Report and the approval of the
Report, following changes made to the Act. In accordance
with the new provisions, the Directors’ Remuneration Report
in the Annual Report and Accounts contains:-
(a) a statement by David Lowden, Remuneration
Committee Chairman;
(b)
(c)
the Annual Report on Remuneration, which sets out
payments made in or relating to the financial year ending
2013; and
the Directors’ Remuneration Policy (the ‘Remuneration
Policy’) in relation to future payments to the Directors
and former directors.
The statement by the Remuneration Committee Chairman
and the Annual Report on Remuneration will, as in the past,
be put to an annual advisory shareholder vote by Ordinary
Resolution. The Remuneration Policy part of the Report,
which sets out the Company’s forward looking policy on
directors’ remuneration (including the approach to exit
payments to directors), is subject to a binding shareholder
vote by Ordinary Resolution at least every three years.
The Directors’ Remuneration Report is set out in full in the
Annual Report and Accounts on pages 67 to 86. Resolution
2 is the Ordinary Resolution to approve the Directors’
Remuneration Report, other than the part containing the
Remuneration Policy on pages 69 to 74. Resolution 2
is an advisory resolution and does not affect the future
remuneration paid to any director.
Resolution 3 is the Ordinary Resolution to approve the
Remuneration Policy which is set out in the Directors’
Remuneration Report on pages 69 to 74 of the Annual
Report and Accounts. The Remuneration Policy will
commence on 5 June 2014 and payments will continue to
be made to the Directors and former directors in line with
existing contractual arrangements until this date. Once the
Remuneration Policy has been approved, all payments by the
Company to the Directors and any former directors must be
made in accordance with the Remuneration Policy (unless
a payment has been separately approved by a shareholder
resolution). If the Remuneration Policy is approved and
remains unchanged, it will be valid for up to three financial
years without a new shareholder approval. If the Company
wishes to change the Remuneration Policy, it will need to
put the revised policy to a vote before it can implement the
new policy. If the Remuneration Policy is not approved for
any reason, the Company will, if and to the extent permitted
by the Act, continue to make payments to the Directors in
accordance with existing contractual arrangements and will
seek shareholder approval of a revised policy as soon as
practicable.
9. Resolutions 5 to 11 – Election/Re-election of Directors
In keeping with the Board’s aim of following best corporate
practice, each member of the Board is standing for re-
election, and in the case of Danuta Gray, who has been
appointed a Director since the last Annual General Meeting,
election by the shareholders at this year’s Meeting. Tim Miller
has contributed significantly to the Board during his tenure
and continues to do so. He was subject to the thorough
Board evaluation review which was undertaken during 2013.
The Board still considers Tim Miller as independent and an
effective member of the Board. The Nomination Committee
keeps succession planning under review and, as Tim Miller
will complete nine years on the Board later this year, will
consider, in due course, whether he should remain a Director
of the Company until the next Annual General Meeting.
Biographical information on each of the Directors is contained
on pages 51 and 52 of the Annual Report and Accounts.
The Chairman confirms that, following formal performance
evaluation, all Directors standing for election/re-election
continue to perform effectively and demonstrate commitment
to the role.
10. Resolution 14 – Directors’ Authority to Allot Shares
(b)
If passed, Resolution 14 will give the Directors authority to
allot ordinary shares in the capital of the Company up to
a maximum nominal amount of £1,071,452 representing
approximately one-third of the Company’s issued ordinary
share capital as at 8 April 2014 (the latest practicable
date before publication of this Notice). This authority will
lapse 15 months from the passing of the Resolution or
at the next Annual General Meeting, whichever shall first
occur. Other than the allotment of shares arising from the
vesting of shares or the exercise of options in respect
of the Company’s share and share option schemes, the
Directors have no present intention of exercising this
authority. As at the date of this Notice the Company
does not hold any ordinary shares in the capital of the
Company in treasury.
shares up to a maximum nominal value of £160,717
representing approximately 5% of the issued
ordinary share capital of the Company as at 8 April
2014 (the latest practicable date prior to publication
of this Notice) otherwise than in connection with an
offer to existing shareholders.
The Directors have no present intention of exercising this
authority. The Directors confirm their intention to follow
the provisions of the Pre-emption Group’s Statement
of Principles regarding cumulative usage of authorities
within a rolling three-year period. The Principles provide
that companies should not issue for cash shares
representing in excess of 7.5% of the Company’s issued
share capital in any rolling three-year period, other than
to existing shareholders, without prior consultation with
shareholders.
11. Resolution 15 – Donations to Political Organisations and
13. Resolution 17 – Power to Buy Back Shares in the Market
Political Expenditure
For the purpose of this Resolution, ‘political donations’,
‘political organisations’ and ‘political expenditure’ have
the meanings given to them in sections 363 to 365 of the
Act. In accordance with its business principles, it is the
Company’s policy not to make contributions to political
parties. There is no intention to change it. However, what
constitutes a ‘political party’, a ‘political organisation’,
‘political donations’ or ‘political expenditure’ under the
Act is not easy to decide as the legislation is capable of
wide interpretation. Sponsorship, subscriptions, payment
of expenses, paid leave for employees fulfilling public
duties and support for bodies representing the business
community in policy review or reform, among other things,
may fall within these terms. Therefore, notwithstanding
that the Company has not made a political donation in
the past, and has no intention of, either now or in the
future, making any political donation or incurring any
political expenditure in respect of any political party,
political organisation or independent election candidate,
the Board has decided to put forward Resolution 15 to
renew the authority granted by shareholders at the last
Annual General Meeting of the Company. This will allow
the Company to continue to support the community and
put forward its views to wider business and Government
interests without running the risk of being in breach
of the law. As permitted under the Act, Resolution 15
also covers any of these activities by the Company’s
subsidiaries.
12. Resolution 16 – Disapplication of Pre-emption Rights
Resolution 16 will give the Directors authority to allot
shares in the capital of the Company pursuant to the
authority granted under Resolution 14 for cash without
complying with the pre-emption rights in the Act in certain
circumstances. This authority will permit the Directors
to allot:
(a)
shares up to a nominal amount of £1,071,452,
(representing approximately one-third of the
Company’s issued share capital) on an offer to
existing shareholders on a pre-emptive basis (in
each case subject to adjustments for fractional
entitlements and overseas shareholders as the
Directors see fit); and
Resolution 17 gives the Company authority to buy back
its own ordinary shares in the market as permitted by the
Act. The authority limits the number of shares that could
be purchased to a maximum of 32,143,569 (representing
10% of the Company’s issued ordinary share capital as at
8 April 2014 the latest practicable date prior to publication
of this Notice) and sets minimum and maximum prices.
This authority will expire 15 months from the passing of
the Resolution or at the next Annual General Meeting,
whichever shall first occur.
The Directors have no present intention of exercising the
authority to purchase the Company’s ordinary shares but
will keep the matter under review, taking into account
the financial resources of the Company, the Company’s
share price and future funding opportunities. The authority
will be exercised only if the Directors believe that to do
so would result in an increase in earnings per share and
would be in the interests of shareholders generally. Any
purchases of ordinary shares would be by means of
market purchases through the London Stock Exchange.
Listed companies purchasing their own shares are
allowed to hold them in treasury as an alternative to
cancelling them. No dividends are paid on shares while
they are held in treasury and no voting rights attach to
treasury shares.
If Resolution 17 is passed at the Meeting, it is the
Company’s current intention to cancel all of the shares
it may purchase pursuant to the authority granted to it.
However, in order to respond properly to the Company’s
capital requirements and prevailing market conditions,
the Directors will need to reassess at the time of any
and each actual purchase whether to hold the shares in
treasury or cancel them, provided it is permitted to do so.
As at 8 April 2014 (the latest practicable date prior to the
publication of this Notice), there were 973,924, options
to subscribe for shares in the capital of the Company
representing 0.30% of the Company’s issued share
capital. If this authority to purchase the Company’s
ordinary shares and the existing authority to purchase
taken at last year’s Annual General Meeting (which expires
at the end of this year’s Meeting) were to be exercised
in full, these options would represent 0.38% of the
Company’s issued share capital.
I
A
N
D
N
O
T
C
E
O
F
A
G
M
I
A
D
D
T
O
N
A
L
I
I
N
F
O
R
M
A
T
O
N
I
129
Notice of AGM
Notice of AGM
130
PageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTOR’S REPORTCORPORATE GOVERNANCEPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS
NOTES
14. Resolution 18 – Notice of General Meetings
18. Members satisfying the thresholds in section 527 of the
Act can require the Company to publish a statement on its
website setting out any matter relating to (a) the audit of the
Company’s accounts (including the Auditor’s Report and the
conduct of the audit) that is to be laid before the Meeting;
or (b) any circumstances connected with an auditor of the
Company ceasing to hold office since the last Annual General
Meeting, that the members propose to raise at the Meeting.
The Company cannot require the members requesting the
publication to pay its expenses. Any statement placed on the
website must also be sent to the Company’s Auditor no later
than the time it makes the statement that the Company has
been required to publish on its website.
19. The Company must cause to be answered at the Meeting
any question relating to the business being dealt with at the
Meeting that is put by a member attending the Meeting,
except in certain circumstances, including if it is undesirable
in the interests of the Company or the good order of the
Meeting that the question be answered or if to do so would
involve the disclosure of confidential information.
20. Copies of the contract of service for Mr S Ingham and
the letters of appointment for the Chairman and the Non-
Executive Directors of the Company are available for
inspection on the day of the Meeting, at the place of the
Meeting, from at least 30 minutes prior to the Meeting until its
conclusion. The same documents are otherwise available for
inspection at the Registered Office Address of the Company
during normal business hours Monday to Friday (Bank
Holidays excepted).
21. You may not use any electronic address in this Notice to
communicate with the Company for any purpose other than
those expressly stated.
This Resolution seeks to renew the authority granted at the
2013 Annual General Meeting to allow the Company to call
general meetings, other than an annual general meeting, on
14 clear days’ notice. The minimum notice period for general
meetings of listed companies is 21 days, but companies may
reduce this period to 14 days (other than for annual general
meetings) provided that two conditions are met. The first
condition is that a company offers a facility for shareholders to
vote by electronic means. This condition is met if a company
offers a facility, accessible to all shareholders, to appoint a
proxy by means of a website. The second condition is that
there is an annual resolution of shareholders approving the
reduction of the minimum notice period from 21 days to 14
days. If approved, the Resolution will allow the Company
to retain maximum flexibility to seek shareholder approval
for any future change or transaction that may require such
approval. This authority will be effective until the next Annual
General Meeting, when it is intended that a similar resolution
will be proposed. The Board will consider on a case by
case basis whether the use of the flexibility offered by the
shorter notice period is merited, taking into account the
circumstances, including whether the business of the meeting
is time sensitive.
15. A member of the Company which is a corporation may
authorise a person or persons to act as its representative(s)
at the Meeting. In accordance with the provisions of the
Act, each such representative may exercise (on behalf of
the corporation) the same powers as the corporation could
exercise if it were an individual member of the Company,
provided that they do not do so in relation to the same
shares. It is no longer necessary to nominate a designated
corporate representative.
16. As at 8 April 2014 (being the latest practicable date prior to
the publication of this Notice) the Company’s issued share
capital consisted of 321,435,690 ordinary shares. No shares
are held in treasury. Therefore the total voting rights in the
Company are 321,435,690.
17. The contents of this Notice, details of the total number of
shares in respect of which members are entitled to exercise
voting rights at the Meeting, details of the totals of the voting
rights that members are entitled to exercise at the Meeting
and, if applicable, any members’ statements, members’
resolutions or members’ matters of business received by the
Company after the date of this Notice will be available on the
Company’s website: www.page.com/investors.
131
Notice of AGM
I
A
N
D
N
O
T
C
E
O
F
A
G
M
I
A
D
D
T
O
N
A
L
I
I
N
F
O
R
M
A
T
O
N
I
132
PageGroup Annual Report And Accounts 2013OVERVIEWDIRECTOR’S REMUNERATION REPORTSTRATEGIC REPORTDIRECTOR’S REPORTCORPORATE GOVERNANCEPageGroup Annual Report And Accounts 2013FINANCIAL STATEMENTS
Part of
www.page.com
PageGroup is the trading name of Michael Page International plc