2019
Annual Report
and Accounts
Annual Report and Accounts 2019
PAGEGROUP
CHANGES LIVES
for
PEOPLE
through creating
OPPORTUNITY
to reach
POTENTIAL
CONTENTS
STRATEGIC REPORT
Chairman’s Introduction
Overview
Business Model
Strategic Review
Diversification
KPIs
Q&A with Steve Ingham, CEO
Culture & Employee Engagement
Regional Perspectives
Risk Management
Principal Risks and Uncertainties
Stakeholder Engagement
Review of the Year
CORPORATE GOVERNANCE
Chairman’s Introduction to Corporate Governance
Our Board of Directors
The Executive Board
Corporate Governance Report
Nomination Committee Report
Audit Committee Report
Directors’ Remuneration Report – Annual Statement
Directors’ Remuneration Report
Directors’ Report
Directors’ Statements of Responsibility
FINANCIAL STATEMENTS
Independent 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
ADDITIONAL INFORMATION
Shareholder information and advisers
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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 137 offices across 36 countries. Our Vision is to increase the scale
and diversification of PageGroup by organically growing existing and new teams, offices,
disciplines and markets.
OUR STRATEGY
We have established three categories into which we have grouped each of our geographical markets
based on criteria including the size of the opportunity and the potential for future growth.
Large,
High Potential
Large,
Proven
Typically under-developed
markets, but where we have
a successful track record and
confidence in our ability to scale
our operations substantially.
These are large markets where
we are already proven with
a strong track record and a
significant presence.
Small and
Medium,
High Margin
Markets which are, or could be,
significant profit contributors
with attractive conversion
margins, but each are unlikely
(or not yet proven) to be able
to grow to more than 300 fee
earners.
OUR BRANDS
Annual Report and Accounts 2019 5
Where we operate
36 Countries across
the world
Headcount
7,698
Offices
137
North America
UK
EMEA
Latin America
Asia
Australasia
HIGHLIGHTS
Gross Profit
£855.5m
+5.0%*
2018: £814.9m
Operating Profit
£146.7m
+2.2%*
2018: £142.5m
Basic Earnings Per Share
32.2p
-0.9%*
2018: 32.5p
Conversion
rate**
17.1%
2018: 17.5%
Ordinary and
Special Dividend
26.43p
2018: 25.83p
% Non-UK
Gross Profit
84.2%
2018: 83.0%
* in constant currency at prior year rates ** Operating Profit as a percentage of Gross Profit
Additional InformationSTRATEGIC REPORT STRATEGIC REPORT 1
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Annual Report and Accounts 2019
CHAIRMAN’S
INTRODUCTION
2019 Performance
We entered 2019 against heightened macro-
economic uncertainty and geopolitical instability,
with Brexit in the UK and the impact of trade tariffs
in Mainland China. Trading conditions deteriorated
during the year, exacerbated by social unrest in
Hong Kong and Chile, and a weakening macro-
economic climate in Continental Europe. These
unexpected and volatile market forces led to lower
than expected results, although we ended the year
slightly ahead of the prior year.
Despite the challenging conditions, the Board is
pleased with the results for the year. Overall the
Group delivered record gross profit, up 5.0% in
constant currencies to £855.5m, with operating
profit up 2.2% to £146.7m.
Our largest region, Europe, Middle East and
Africa grew gross profit 7%, with an excellent
performance in Germany, up 20%, despite weaker
economic conditions. France, the largest country in
the Group, impacted by the ‘gilet jaunes’ protests
and political unrest, grew 4%. Asia Pacific was flat,
impacted by trade tariffs in Mainland China and
social unrest in Hong Kong. The Americas was
our strongest performing region and grew 14%,
with two of our Large, High Potential markets, the
US and Latin America, growing 17% and 14%,
respectively. Finally, the UK declined 2% as the
uncertainty surrounding Brexit continued to impact
market sentiment.
Despite the challenges encountered during the
year, we continued our strategy of investing in
our Large, High Potential markets and in markets
where we saw the greatest opportunities for
growth.
These results demonstrate the flexibility and
resilience at the core of our business model,
together with the tenure and experience of our
executive leadership team who have successfully
guided the business through a challenging year.
These results would also not have been achieved
without the high levels of dedication from our
talented staff, who have once again embraced the
rapid pace of technological change, as we continue
to innovate to stay ahead of the market.
Dividends
We paid over £42m in ordinary dividends in 2019
and returned over £40m to shareholders by way
of a special dividend. We have now paid special
dividends totalling £190m in the last 5 years. We
generated cash from operations of £157.1m in
2019 and ended the year with cash of £97.8m and
a level of distributable reserves that support more
than three times this annual dividend.
Given this cash position, levels of distributable
reserves and our results for the year, we propose
to increase the final dividend to 9.4p. When taken
Annual Report and Accounts 2019 CHAIRMAN’S
INTRODUCTION
STRATEGIC REPORT
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together with the interim dividend paid in
October of 4.3p, this is a total dividend of
13.7p, an increase of 4.6% on 2018. This
ordinary dividend of 13.7p is covered 2.4
times by earnings, with a yield of 2.6%. If
the special dividend is taken into account,
using the year end share price of 523.0p,
the yield increases to 5.1%.
Board
Earlier in the year Steve Ingham, Chief
Executive Officer, was involved in a
serious skiing accident. Kelvin Stagg,
Chief Financial Officer, managed the
business during the period of his recovery,
and as a Board, we were pleased to
welcome Steve back to the business
during the second half of the year.
I remain committed to ensuring the
composition of the Board is both effective
and well balanced. It is vital that the Board
possess the correct skills and knowledge
to drive the business through cycles and
deliver our business strategy. A diverse
Board is also important to maximise
creativity, innovation and breadth of
experience.
We support the requirement of the
Hampton-Alexander review regarding
the gender balance of UK Boards and
have surpassed the requirement to
have 33% female representation on our
Group Board. However, with 100% male
representation on our Executive Board
there is still further work to do. This has
arisen from our culture of promoting
internally and will take time to change,
however we have implemented various
initiatives to address this. During 2019,
in addition to our Women@Page network
and our successful maternity coaching
plan, part of the remuneration scheme for
all of our Managing Directors was linked
to gender balance.
One of our main priorities going forward
is talent development across all levels
of the business and making sure that
succession plans are in place to produce
future leaders and representation at Board
level. The development of our senior
management team is of particular focus
and we have mentoring and coaching
plans in place, along with our Executive
leadership programme, to ensure that
there are adequate development and
training opportunities for the potential
leaders of tomorrow.
There have been no changes to the
composition of the Board during the
year. Full details of the work of the
Board and subjects discussed in the
year are set out in the Corporate
Governance Report.
Culture, purpose and
stakeholder engagement
PageGroup’s purpose is to change lives
for people through creating opportunity
to reach potential. We are committed to
providing professional success for our
clients, candidates and staff and this is
underpinned by our values of passion,
determination, working as a team while
enjoying what we do and making a
difference.
Following the issuance of the new UK
Corporate Governance Code, we have
reviewed our procedures to ensure a
greater emphasis is given to the concerns
of our stakeholders and our workforce.
During 2019 a new culture framework
was implemented that defines and
measures our culture and assesses its
customer and employee centricity. A
culture & engagement team was set
up that possesses a wide range of
knowledge and skills including talent
development, diversity & inclusion, internal
communications and operations. The
Board then worked closely with the team
to create an approach to assess our
culture and ensure the employee voice is
heard in the Boardroom.
Our employee engagement survey, ‘Have
Your Say’, was carried out in the second
half of the year, with a record response
rate of 85%. This, along with other
initiatives such as the inclusion of Board
members on our global communication
network, Yammer, has given the Board
valuable insight into employee views
and opinions.
The success of the Board’s Diversity and
Inclusion agenda is demonstrated by the
attainment of several awards, including the
BITC Gold Award and the Inclusive Top
50 Employers award. Diversity & Inclusion
was one of the highest scoring areas on
our ‘Have Your Say’ survey, with 83% of
employees giving a favourable response.
Our initiatives are embedded globally at
all stages of the employee lifecycle, with
dedicated content on inclusion included at
our Global Directors Academy.
During the year we have made further
progress on our gender diversity
agenda, with growth in our global female
mentoring programme. We have seen
significant improvements in retention of
women in leadership roles, with female
directors increasing from 27% to 30%
over the last twelve months.
In a world where the consumer voice is
increasing via social media and online
reviews, customer centricity is essential
to maintain our competitive edge, uphold
our reputation and enable our business
to thrive. As a Board we regularly monitor
and assess the views of both candidates
and clients so that procedures and system
innovations can be made to ensure we
continue to provide a high quality service.
The Board also acknowledges the growing
public interest surrounding climate change
during the year. Whilst our environmental
impact is considered to be small, we
already have many initiatives in place
such as reducing and minimising energy
consumption and business travel, recycling
waste and cycle to work schemes. As
a Board, we are mindful that there are
ongoing developments that could be
made in this area, so that we can further
minimise and mitigate our environmental
footprint.
Looking ahead
As we enter 2020 there are signs of
improving political stability in the UK
following the December election, although
the ongoing uncertainty surrounding Brexit
still exists. There are also initial indications
of a trade tariff agreement being reached
between Mainland China and the US.
However, the emergence of COVID-19
has created even greater global
uncertainty in the trading conditions we
face for the year ahead. We are working
with local management to co-ordinate
updates and guidance to our employees,
including travel advice and the use of
home working in badly affected locations.
It is too early to estimate the impact of
COVID-19 on the Group’s operations.
We remain committed to investing in our
Large, High Potential Markets and other
areas where we see the greatest potential
for growth. We will also continue to strive
to achieve our Vision of £1bn of gross
profit, £200-250m of operating profit and
10,000 headcount.
With the rapid development of
technologies over recent years, we have
already embraced a great deal of change.
Going forward we will continue to develop
and implement new and innovative
technologies to continue to provide a first
class service to our customers and retain
our position as a global recruitment leader.
Finally, we recognise that our continued
success is reliant upon the valuable
contributions and continued support
from our outstanding people. On behalf
of the Board I would like to say thank
you to all of our people for their excellent
achievements throughout the year.
David Lowden
Chairman
Corporate GovernanceFinancial StatementsAdditional InformationSTRATEGIC REPORT STRATEGIC REPORT 3
Annual Report and Accounts 2019
OVERVIEW
Financial
Strategic
People
Operational
Highly profitable
Sustainable organic growth
Maintain a strong balance
sheet
Highly cash generative
Diversification to mitigate
cyclicality by geography,
brand and discipline
Focus on operational
efficiency
Team-based service
delivery
Talent and skills
development/retention
Strong brands
Effective use of technology
P5
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P9
Long-term investment into
core markets:
Large, High Potential;
Large, Proven; and
Small and Medium,
High Margin
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To be the leading specialist
recruiter in each of the
markets in which we
operate
Career development
structure
Training
Global mobility
Assurance of a quality
service
Effective recruitment
process
P37
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Macro-economic exposure
Shift in business model
People development
Foreign exchange
translation risk
Delivery of operational
efficiencies
Attraction and retention
Technology; systems
transformation and
change; data security;
brand reputation; financial
management and control;
fiscal and legal compliance
P19
Gross profit growth
Gross profit diversification
Perm:Temp ratio
Cash
Earnings per share
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Fee earner headcount
growth
Employee satisfaction
survey
Measurement performed
at a granular level
Gross profit per fee earner
Management experience
D&I review ratings
Fee earner:operational
support staff ratio
Conversion rate
P70
EPS growth: three year
cumulative
Strategic targets
Systems and innovation
Leadership and people
development
Cost and financial
management
PBT performance
Comparator gross profit
growth
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P16
Maintain a strong balance
sheet
Maintain core ordinary
dividend
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Retention/succession
Risk management and
internal controls
IT strategic development
Return surplus cash to
shareholders by special
dividends and/or share
buybacks
Ensure dividends are paid
at sustainable levels such
that investment in the
business and its people is
maintained
First use of cash is to
satisfy operational and
investment needs, as well
as to hedge liabilities under
the Group’s share plans
A MESSAGE
FROM STEVE
STRATEGIC REPORT
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I would like to welcome you to our Strategic Report, where I will outline our strategic framework and business model.
I will then take you through how we approach investment in our markets and the relationship to our strategic plan. I will also
outline our Vision for the Group, as presented at our Investor Afternoon in May 2018.
Following on from this, I will take you through the source of our competitive advantage, together with how we see current
market dynamics.
We continue this year to relate how we measure performance, through our KPIs – both financial and non financial – with
associated risks. These risks then link directly to the four elements (financial, strategic, people and operational) of the
performance criteria in our current executive share plans.
Steve Ingham
CEO PageGroup
Financial StatementsAdditional Information STRATEGIC REPORT
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Annual Report and Accounts 2019
BUSINESS MODEL
Strategic framework
PageGroup is focused on delivering against three key objectives to achieve its Strategic Vision and deliver sustainable financial returns.
These are to:
1
and diversified growth 2Position the business to be
Look for organic, high margin
efficiently scalable and highly flexible
to react to market conditions
Organic, high margin and
diversified growth
Our business model is centred around
organic and diverse growth. The key
elements are derived from our team-
led approach as set out on page 12,
with great value placed on structured
career development and the value that
experienced management brings to the
business.
PageGroup’s diversification strategy has
led to a well-balanced business profile
and mitigation of exposure to any one
geographic area, brand or discipline.
In 2007 our Non-UK businesses
represented 61% of our business. Over
a decade later this has increased to 84%
as we have invested heavily in our Large,
High Potential markets.
Through global diversification, we have a
clear Strategic Vision: to be the leading
specialist recruiter in each of the markets
in which we operate. Our presence in
major global economies provides the
greatest potential for long-term growth in
gross profit at attractive conversion rates.
PageGroup’s historical success in each
of our markets has helped identify which
geographies will likely produce high-
margin growth, with the greatest potential
for long-term success. Our background is
in permanent recruitment, but 25% of the
business is now in the temporary market,
with this being dependent on local culture
and market conditions. Our service
offering covers a broad set of disciplines
and specialisations, solely within
professional and clerical recruitment.
Efficiently scalable and
highly flexible
Our ability to respond quickly to changes in
market conditions is critical to managing the
business efficiently through economic cycles.
We ensure that we always have the ability
to flex our capacity up and down, while
maintaining a core presence in each market
to service clients with excellence and retain
management experience.
Our team-based structure and profit share
business model is highly scalable. The small
size of our specialist teams also means that
we can increase our headcount rapidly to
achieve growth. When market conditions
tighten, these teams then reduce in size
largely through natural attrition. Consequently,
our cost base will be reduced in a slowdown.
Having invested years in training and
developing our highly capable management
teams, our objective is to ensure we retain
this expertise within the Group. By following
this course of action, we typically gain market
share during downturns and position our
businesses for market-leading growth when
economic conditions improve.
Our global footprint requires high levels of
operational efficiency in order to achieve this
strategic objective. Our focus on Shared
Service Centres has delivered greater
economies of scale and greater efficiencies.
It has driven consistency, increased flexibility
and improved the quality of service provided
to our operational business. Collectively
these Shared Service Centres allow us to
be more agile, reduce our fixed costs and
remove constraints on how fast we can react
to changing market conditions.
3
Nurture and develop
our people, driving our
meritocratic growth model
Developing our people
We recognise that it is our people who
are at the heart of everything we do,
particularly as an organically grown
business.
The recruitment, retention and
development of talent is fundamental
in our ability to achieve long-term
sustainable organic growth. Our
meritocratic culture and the experience
gained throughout a consultant’s career
is valued greatly and, as such, our
management team has some of the
longest tenure and experience in the
industry.
The mobility and loyalty of our people
enables Senior Management to react
to market conditions and ensure we
allocate resources efficiently to achieve
the greatest returns. Internal moves also
ensure that best practice knowledge is
shared throughout countries and across
disciplines.
We create worldwide opportunities and
clear career paths for our consultants
on their journeys to become Senior
Managers or Executive Board members.
STRATEGIC REPORT
6
Our strategy
The Group’s strategy aims to expand and diversify the business organically by professional
disciplines, brands and geographies, with the objective of being the leading specialist
recruitment consultancy in each of our chosen markets.
A focus on organic growth
PageGroup’s business model has proved itself both through economic cycles and as the business has expanded into a global enterprise.
At its core is a focus on organic growth.
Global management mobility
We regularly move experienced
directors into markets where they
can add the most value and
guide the business through the
challenges of a market cycle, while
allowing us to retain and motivate
key senior talent.
Experienced management pool
Experience through economic
cycles and across geographies
and disciplines reduces our
learning curve, maximises
scalability and is crucial for
placing resources where they will
add the most value.
Career development structure
PageGroup offers its consultants a
well-defined and varied career
in recruitment. This includes a
clear development structure with
significant opportunities for the
most talented.
Organic Growth
Productivity-led expansion
Our operational metrics focus on
productivity, by team, discipline
and geography. This bottom-up
approach aligns expansion criteria
throughout the Group, focusing
and optimising investment on key
priorities.
Team profit-led compensation
A focus on team-based
performance rather than the
individual promotes positive
corporate behaviour and
consistent quality of service for
both clients and candidates.
Agile and responsive
Recruitment is a fast-paced
and dynamic business. Our
agility gives us the confidence to
respond quickly to opportunities
and challenges as they appear.
Corporate GovernanceFinancial StatementsAdditional InformationSTRATEGIC REPORT 7
BUSINESS MODEL
What we do
PageGroup is a worldwide leader in specialised
recruitment. We have over 40 years recruitment
experience and deliver recruitment services to clients
across 36 countries through our network of
137 offices.
Discipline expertise
We’ve developed PageGroup’s reputation
as a global recruitment leader through our focus on
specialist areas of the market, replicated across our
international network. Within our four broad discipline
categories, we operate across 14 specialist discipline
teams. We then specialise further within these (e.g.
digital marketing within marketing) to ensure we
provide expert recruitment services to our clients.
Our brands
Geographic reach
Our substantial and well-balanced business reaches
across all regions, including Latin America and Asia.
Our global model allows us to source candidates
from domestic and international markets and
provide a comprehensive service to both local and
multinational clients.
Perm and temp mix
PageGroup is the international market leader
for permanent recruitment in the majority of the
countries in which we operate. We also have a
substantial and growing temporary recruitment
business in markets where temporary placements
for professionally qualified candidates are
culturally accepted.
Annual Report and Accounts 2019 Our disciplines
Einkauf & Supply Chain
Finanaz
Finanzas y Contabilidad
Page Executive
Our executive search division of PageGroup provides
a range of search, selection and talent management
solutions for organisations on a permanent and
interim basis. Recognised for our powerful in-house
research function, speed and flexibility of response
and assignment completion rates, organisations
worldwide use Page Executive to secure their senior
talent. The roles on which we focus typically sit at
the sub-board and Board levels.
Michael Page
The original PageGroup brand is normally established
as the first business in each new country that we
enter. Michael Page is comprised of 25 specialisms,
each providing a service to a specialist area of the
market, recruiting permanent, temporary, contract and
interim opportunities, typically at qualified professional
and management level. The businesses we work with
range from SMEs to global blue-chip organisations.
Page Personnel
Page Personnel offers specialist recruitment
services to clients requiring permanent
employees, temporary or contract staff. Mirroring
the geographical and sector coverage of
Michael Page, it provides specialist services to
organisations requiring talent at professional
clerical and support levels.
Page Outsourcing
Our newest brand, Page Outsourcing, harnesses the
power of the other PageGroup brands. Our flexible
recruitment outsourcing solution allows our clients to
focus on their core business. We manage a range of
recruitment activity from high volume needs to specialist
support for HR departments across all levels of the
recruitment market.
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Corporate GovernanceFinancial StatementsAdditional InformationSTRATEGIC REPORT STRATEGIC REPORT
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STRATEGIC REVIEW
How we categorise our markets
In 2013, PageGroup categorised each of its geographic
markets around the globe based on criteria such as the
potential for future growth. This growth potential was
assessed on a combination of expectations for economic
growth, size of the existing PageGroup operations relative
to the market, and competitive landscape.
The outcome was three categories (as set out in the
table to the right), into which the 36 geographical
markets in which we operate were placed. Five markets
were identified as Large, High Potential markets. These
include the large economies of the US, Germany and
Greater China, together with the regions of Latin America
and South East Asia. Typically under-developed from
a recruitment perspective, each satisfied key criteria,
including:
• Positive PageGroup track record;
• Ability to adapt PageGroup culture to local culture;
• Ability to hire and retain local consultants;
• Ability to roll-out disciplines and open offices;
• Attractive conversion rate potential; and
• Large-scale economies.
Six historically successful geographies were categorised
as Large, Proven, reflecting the fact that PageGroup
had, within the last economic cycle, operated substantial
businesses in each.
Finally, the remaining businesses were categorised as
Small and Medium, High Margin. This reflects the fact
that each individually will not have the scale or potential
to be a significant contributor to gross profit. However,
they each offer the prospect of attractive margins and
include countries with some of the highest fee rates and
conversion margins in the Group. Within this category are
two markets – Japan and India – that have the medium-
term potential to achieve Large, High Potential status.
Investment approach
Investment in the business has been focused on
developing the long-term sustainability of the business
and is supported by significant balance sheet strength
and cash flow generation. This market categorisation
provides an investment framework for the business.
Investment comes in a range of forms including
headcount, new offices and infrastructure, marketing
spend and minimum levels of market presence through
the economic cycle.
Large,
High Potential
Substantial, high-potential markets for
recruitment. Typically under-developed,
but where PageGroup has a successful
track record, and confidence in its ability
to successfully scale operations.
Germany, Greater China, Latin
America, South East Asia and the US.
Sustained investment through cycle –
adding headcount/offices/disciplines.
Create a market leading network of
offices, management and headcount.
c. 40% of Group gross profit/fee
earners; 20% conversion rates.
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Gross profit growth of 9% for the year,
despite challenging trading conditions in
Greater China, where gross profit declined
10%. Strong growth in Germany +20%,
Latin America +14% and the US +17%.
Represents 35% of Group gross profit
(2018: 33%).
Continue investment in new headcount
and management team, whilst improving
conversion rates and productivity.
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Annual Report and Accounts 2019
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Large,
Proven
Small and Medium,
High Margin
Large markets in which PageGroup is
already proven with a strong track record
and a significant presence.
Have been, or could be, significant
profit contributors for PageGroup,
but each not likely to be in excess of
300 fee earners.
UK, France, Australia, the Netherlands,
Italy and Spain.
Japan, Middle East, Africa, India,
Canada, Turkey and other European
countries.
Investment reflects gross profit growth and
market conditions.
Respond to market conditions, focus on
high margin opportunities.
Collectively return to 2007 peak levels
of operating profit and conversion rates;
equivalent to c. 45% of Group gross profit/
fee earners.
Investment responsive to market conditions.
Expected to represent c.15% of Group
gross profit/fee earners; 30% conversion
rates.
Gross profit growth of +3% for the year,
despite Brexit related uncertainty in the
UK, where gross profit declined 2.4%.
Stronger growth in Italy +10% and the
Netherlands +7%.
Gross profit growth of 3% for the year.
Tough trading conditions in the Middle
East and some European countries. Strong
growth in Belgium +13%, India +32% and
Japan +11%.
Continue to drive future growth through
existing capacity, as well as improving
conversion rates and productivity.
Continued focus on growth and improving
our conversion rates and productivity.
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11
STRATEGIC REVIEW
Page Vision
Headcount
10,000
Gross Profit
£1bn
Operating Profit
£200m-£250m
At our Investor Afternoon in May 2018, we outlined our updated Vision for the Group. This Vision remains consistent – to increase the scale and
diversification of PageGroup by organically growing existing and new teams, offices, disciplines and markets. In numbers, our Vision is to deliver
Group gross profit of a billion pounds, which, depending on how fast we get to that figure, will generate operating profit of between £200m
- £250m. To deliver these results, at 2018 productivity, we will require a total Group headcount of 10,000. We believe that with our focus on
operational support, we are now better placed to improve our fee earner to operational support staff ratio. The work we have done to standardise
and simplify our support functions will enable us to grow our fee earner headcount without a corresponding increase in our support headcount and
consequently, we believe that we can achieve a ratio of 82:18.
Aiming to double Operating Profit
Total Headcount
Gross Profit
Operating Profit
Vision
10,000
£1bn
£200m - £250m
2019
2009
7,698
3,549
£855m
£712m
£352m
£147m
£20m
Over the last few years we have made significant progress against our Vision in terms of gross profit, operating profit and total headcount. In line
with our strategy we have made considerable progress in growing our Large, High Potential markets, which delivered a record year, collectively.
Overall, these markets grew 9% in constant currency compared to the prior year.
During 2019 we have continued to invest in markets where we saw the greatest opportunities for growth, such as Germany and the US. Going
forward, we will continue to focus on driving profitable growth, while progressing our strategic investments to achieve our new Vision for the Group.
Investing in Large, High Potential market fee earners
369
676
953
2,307
1,230
3,280
10%
17%
2007
16%
38%
15%
40%
2019
Vision
73%
2,792
46%
2,767
45%
3,690
Large, High Potential
Large, Proven
Small & Medium, High Margin
Annual Report and Accounts 2019 12
Our competitive advantage
Our true competitive advantage is the combination of these three factors and the balance we have achieved in the business over the
past 43 years. We generate funds through fees earned for placing candidates in permanent and temporary roles.
Brand
We deliver specialised sector experience operated via four key brands: Page Executive,
Michael Page, Page Personnel and Page Outsourcing supported by supplementary
brands throughout our international locations.
The first class reputation of our brands gives high quality candidates assurance to
place key decisions on their future in our hands. Our superior level of expertise and the
knowledge of our consultants inspires trust and assurance of quality service, for both
clients and candidates enabling our brands to outperform other recruitment businesses.
Scale
Our scale enables PageGroup to commit to markets through economic cycles, which
combined with our strong financial standing has given clients confidence to build lasting
relationships with us. Temporary staff also derive comfort from our financial strength that
their services will be paid for.
The breadth of our client base, even in our new markets, gives us the ability to offer
diverse expertise across a wide range of complementary specialisms and geographies,
enhancing our offering to the market and the candidate pools we can access.
Our scale has facilitated us building an unrivalled skillset with high levels of experience,
which is available to clients of any size and across all sectors in which we operate.
Culture
PageGroup’s culture is unique in the sector and sets us apart from the competition.
Our global culture delivers a consistent approach both internally and externally, whilst
remaining accepting of each of our markets local characteristics.
A diverse team brings different perspectives and insight to our business and our promotion
of diversity and inclusion ensures we add value to the markets we recruit into on behalf of
our clients. We work closely with our clients to source and recruit from a diverse talent pool
to provide them with the best possible candidate.
We have ingrained values of how to do business ethically and to make long-term
decisions. Our purpose and our values that are the key to our success are set out on
page 25.
Corporate GovernanceFinancial StatementsAdditional InformationSTRATEGIC REPORT STRATEGIC REPORT 13
STRATEGIC REVIEW
Our value proposition
Our value proposition is based around expertise and specialism and for this to be delivered in a consistent manner, supported by high
quality processes.
When these elements are brought together, the potential for a successful outcome for both client and candidate is maximised. Such
successes enhance our reputation, brings greater repeat business and turns candidates into clients and vice-versa.
Our model at work
Clients
• Sector expertise
Leads to...
• Repeat business
• Appropriate candidate shortlist
• Greater exclusivity
• Professional high quality service
• Future candidates
Consultants
Leads to...
• Team-based structure and compensation
• Rapid career promotion
• Access to jobs across entire Group
• Career opportunities
• Consistent process
• Reward and recognition
Candidates
Leads to...
• Professional high quality service
• Career-long relationship
• Market understanding and client profiling
• Peer recommendations
• Career advice
• Future clients
Annual Report and Accounts 2019 14
Market dynamics
The professional recruitment sector has always been highly sensitive to fluctuating economic conditions and is strongly influenced by
client and candidate confidence. Market liquidity can change rapidly, whether in terms of availability of jobs and candidates, or candidate
confidence in taking the next step in their career.
It can also be localised, whether by geography or discipline, and differ between temporary and permanent placements in the
same market.
In a number of geographic regions, such as Latin America or Greater China, our potential markets are very large, yet relatively immature.
This provides not only significant market share opportunities, but also business development challenges. New markets can take time to
crack, but the advantages of being an early participant and building scale can be considerable.
As well as the influence of the general macro-economic environment on business activity, there are a number of market-based drivers
which can materially impact PageGroup’s financial performance. These are split into elements which affect market liquidity and those
which influence gross profit and consultant productivity. It is the nature of the professional recruitment market that strong market
conditions will see drivers in both elements align, and this can have a dramatic impact on PageGroup’s overall performance and
conversion margins.
Market liquidity
Gross profit and productivity
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Candidate availability
Often highly discipline/geography-specific,
especially at midpoints in the cycle as client
confidence grows. This is a key driver of most
other elements, as the quality of a recruiter is
most clearly demonstrated through their ability
to source difficult-to-find candidates.
Candidate confidence
A major influence on market liquidity where
macro-environment is sufficiently stable,
candidates will look to progress their careers,
which helps to drive job liquidity.
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Fees/rates
Group average historically moves within a 10%
range over the cycle (19.5%-22%).
Wage inflation
Reflects level of candidate shortage and liquidity
within a particular discipline or geography, plus
macro-economic conditions.
Time to hire
As candidates become scarcer, companies
reduce the number of interviews and shorten
the decision making process in order not to
lose preferred candidates.
FINANCIAL IMPACT
Mainly visible through improvement in gross
profit, a buoyant market helps to drive consultant
productivity.
FINANCIAL IMPACT
Notable influence on both gross profit and also
conversion rate. Productivity, especially in permanent
recruitment, is significantly enhanced as these market
drivers positively align.
Corporate GovernanceFinancial StatementsAdditional InformationSTRATEGIC REPORT STRATEGIC REPORT 15
Annual Report and Accounts 2019
STRATEGIC REVIEW
Innovation and technology
The digital revolution has transformed
the recruitment market. The impact
of technology on behaviours and
expectations of both clients and
candidates, continues to grow at pace.
Our Innovation approach is focused on
how best to acquire, engage and nurture
customers to build long-term relationships.
In our operational business, we are utilising
technologies such as Salesforce and
Thunderhead to engage with customers
throughout their journey. Our use of these
technologies has resulted in click-through
rates twice the industry average.
Our internal Business Technology function
focuses on designing, implementing
and exploiting scalable global systems.
By improving our processes and tools
we empower consultants to be more
productive.
The use of technology allows us to
leverage growth in the business and
improve our conversion rate.
The online presence behind our reputable
brands, gives high quality candidates
confidence to place key decisions on their
future in our hands.
During 2019 we have seen strong growth in our candidate sourcing:
Our websites and mobile
apps have never been so
popular…
Engaging with our customers at scale, with
precision and with relevancy, using market-
leading customer engagement technology
Over
55m
visits in 2019
+9%
YoY
36m
visitors in 2019
+13%
YoY
An all-time record
An all-time record
Delivering exceptional customer experience, regardless of the device our customers prefer to use
Mobile has overtaken desktop
as the most popular device to
browse our jobs online
Candidates are increasingly likely to apply to jobs on their
mobile device
52% total visits on
a mobile device
47% last year
+21% increase in
applications
on mobile YoY
This is leading to the greatest ever rate of growth in our candidate database
All the more impressive given the backdrop of candidate shortages in most major markets
candidates in 2019
14m CVs received from
+4% YoY
An all-time record
to our database in 2019
3.6m vetted candidates added
+1.1% YoY
An all-time record
STRATEGIC REPORT
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Capital Allocation Policy
The Group’s strategy is to operate a
policy of financing the activities and
development of the Group from our
retained earnings and to maintain a
strong balance sheet position. We first
use our cash to satisfy our operational
and investment requirements and to
hedge our liabilities under the Group’s
share plans. We then review our liquidity
over and above this requirement to make
returns to shareholders, firstly by way of
ordinary dividends.
Our policy is to grow the ordinary dividend
over the course of the economic cycle,
in line with our long-term growth rate; we
believe this will enable us to sustain the
level of ordinary dividend payments during
a downturn as well as increasing it during
more prosperous times.
Cash generated in excess of these
first two priorities will be returned to
shareholders through supplementary
returns, using special dividends or share
buybacks.
Additional Information
17
Annual Report and Accounts 2019
DIVERSIFICATION
Recruitment activity is dependent on economic cycles. By being
more diverse, the dependency on individual markets and disciplines is
reduced, making the Group more resilient.
2019 has been a challenging and volatile year with Brexit in the UK, trade
tariff uncertainty and social unrest in Greater China, alongside weaker
macro-economic conditions in Continental Europe. Our well diversified
business is now better positioned than previous downturns to face
adverse economic and market movements.
We are now less dependent on our Large, Proven markets, such as
the UK and have greater opportunities in the large economies such as
Greater China and South East Asia, where we are highly profitable. In
2007, our Large, High Potential markets, with then just under 700 fee
earners, represented 17% of Group gross profit. We have invested
heavily in this category, and today it has over 2,300 fee earners,
representing 35% of the Group gross profit, highlighting the success of
our diversification strategy.
Colombia
Peru
Chile
GEOGRAPHIES
Our reliance on the UK is less, minimising
the severity of Brexit
Gross profit split
39%
16%
61%
2007
84%
2019
UK
Non-UK
DISCIPLINES
We have increased our discipline diversification
We have increased our geographical
diversification from:
25 countries
in 2007
36 countries
in 2019
Gross profit split
54%
2007
46%
35%
2019
65%
In line with our strategy to invest in our Large,
High Potential markets we have opened
several new countries within this category.
Non Accountancy
and Finance
Accountancy
and Finance
Our diversification strategy in the US away
from Financial Services has been particularly
successful.
US Non-Financial Services gross profit:
2007
53%
2019
88%
Since 2007: Chile, Malaysia, Colombia,
Indonesia, Peru, Vietnam and Thailand
Looking ahead, we will continue to invest
in new markets where we see the greatest
potential for future growth
Our Technical disciplines including
Engineering and Property & Construction
have a compound annual growth rate of:
With the advancement in digital
technologies our Technology discipline has
been a focus in many countries, with gross
profit growth of:
12% over the
last 12 years
130%
over the last
seven years
STRATEGIC REPORT
18
New countries
since 2007
Austria
Morocco
Turkey
India
Thailand
Vietnam
Malaysia
Indonesia
New Zealand
BRANDS
In 2007 Page Personnel operated in just
8 countries with a fee
earner headcount of 873
In 2019 Page Personnel now operates in
15 countries with a fee
earner headcount of 1,872
In Germany we have invested heavily in our
contracting brand Michael Page Interim,
which is mainly Technology focused
and grew
38%
in 2019
and now represents
22%
of Germany.
Our Page Executive brand was introduced
into France in 2005, with typical margins above
those of Michael Page and Page Personnel. In
2019, our Page Executive brand now operates
across 24 countries.
Our newest brand Page Outsourcing
represents a great opportunity for the Group
to accelerate growth across all segments of
the market.
Corporate GovernanceFinancial StatementsAdditional InformationSTRATEGIC REPORT 19
Annual Report and Accounts 2019
KEY PERFORMANCE INDICATORS
We measure our progress against our strategic objectives using the following key performance indicators:
Financial
Gross profit growth (%)*
2019
2018
2017
2016
2015
5.0
15.9
9.8
3.0
4.4
How measured: Gross profit growth represents revenue less cost of
sales expressed as the percentage change over the prior year. It consists
principally of placement fees for permanent candidates and the margin
earned on the placement of temporary candidates.
Why it’s important: This metric indicates the degree of income growth
in the business. It can be impacted significantly by foreign exchange
movements in our international markets. Consequently, we look at both
reported and constant currency metrics.
How we performed in 2019: Gross profit increased 5.0% in both
constant currencies and reported rates. This was a slowing from the
15.9% in constant currencies in 2018.
Relevant strategic objective: Organic growth.
* Increase in gross profit in constant currency over the prior year
Gross profit diversification (%)
84.2%
65.1%
Ex-UK
Ex-
Accounting
and Financial
Services
2015
2016
2017
2018
2019
Ex-UK
Ex-Finance
72.7
60.4
76.4
61.6
80.2
63.3
83.0
65.2
84.2
65.1
How measured: Total gross profit from: a) geographic regions outside
the UK; and b) disciplines outside of Accounting & Financial Services,
each expressed as a percentage of total gross profit.
Why it’s important: These percentages give an indication of how
the business has diversified its revenue streams away from its historic
concentrations in the UK and from the Accounting & Financial Services
disciplines.
How we performed in 2019:
Geographies: the percentage increased to 84.2% from 83.0% in 2018,
demonstrating a high degree of diversification. This reflects relatively
stronger trading in the majority of our overseas businesses, with more
challenging conditions in the UK due to Brexit related uncertainty.
Disciplines: the percentage decreased slightly to 65.1% (2018: 65.3%),
impacted by tougher trading conditions in our Marketing, Sales and
Retail discipline category.
Relevant strategic objective: Diversification.
Basic earnings per share (p)
2019
2018
2017
2016
2015
32.2
32.5
26.5
23.1
21.3
How measured: Profit for the year attributable to the Group’s equity
shareholders, divided by the weighted average number of shares in issue
during the year.
Why it’s important: This measures the underlying profitability of the
Group and the progress made against the prior year.
How we performed in 2019: The Group saw a 0.9% fall in Basic EPS to
32.2p, due to an increase in the effective tax rate from 27.1% to 28.3%.
Relevant strategic objective: Sustainable growth.
Cash (£m)
2019
2018
2017
2016
2015
97.8
97.7
95.6
92.8
95.0
How measured: Cash and short-term deposits
Why it’s important: The level of cash reflects our cash generation and
conversion capabilities and our success in managing our working capital.
It determines our ability to reinvest in the business, to return cash to
shareholders and to ensure we remain financially robust through cycles.
How we performed in 2019: Cash increased to £97.8m (2018: £97.7m).
This was after dividend payments of £83.5m (including a special dividend
of £40.7m).
Relevant strategic objective: Sustainable growth.
Ratio of permanent vs temporary placements
Gross profit
2015
2016
2017
2018
2019
Permanent
Temporary
76
24
76
24
75
25
76
24
75
25
How measured: Gross profit from each type of placement expressed as a
percentage of total gross profit.
Why it’s important: This ratio reflects both the current stage of the
economic cycle and our geographic spread, as a number of countries
culturally have minimal temporary placements. It gives a guide as to the
operational gearing potential in the business, which is significantly greater
for permanent recruitment.
How we performed in 2019: The ratio decreased slightly to 75:25 (2018:
76:24), with stronger growth in temporary recruitment due to the macro-
economic uncertainty in a number of our markets.
Relevant strategic objective: Diversification.
STRATEGIC REPORT
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Strategic
Fee earner headcount growth (%)
Fee earner:operational support staff ratio
-1.5 2019
2018
2017
2016
2015
5.1
4.8
11.3
16.7
2015
2016
2017
2018
2019
Fee earner
Support
77
23
77
23
78
22
79
21
78
22
How measured: The percentage of fee earners compared to
operational support staff at the year end, expressed as a ratio.
How measured: Number of fee earners and directors involved
in revenue-generating activities at the year end, expressed as the
percentage change compared to the prior year.
Why it’s important: This reflects the operational efficiency in the
business in terms of our ability to grow the revenue-generating
platform at a faster rate than the staff needed to support this growth.
Why it’s important: Growth in fee earners is a guide to our confidence
in the business and macro-economic outlook, as it reflects our
expectations as to the level of future demand for our services above
the existing capacity currently within the business.
How we performed in 2019: Fee earner headcount declined by 89,
or -1.5% in the year, resulting in 6,027 fee earners at the end of the
year. Our fee earner headcount reduced in markets where we saw
more challenging trading conditions, such as Greater China and the
UK. However, we continued to invest in markets where we saw the
strongest growth such as Germany, India and the US.
Relevant strategic objective: Sustainable growth.
How we performed in 2019: The ratio decreased to 78:22 from
79:21 in 2018. This was driven by a decline in our fee earner
headcount of 89, in response to the more challenging trading
conditions in a number of our markets. Our operational support
staff headcount increased by 15 to support a number of strategic
transformation programmes. A number of these programmes came
to an end in the year, with a reduction of 37 operational support staff
in Q4.
Relevant strategic objective: Sustainable growth.
Gross profit per fee earner (£’000)
Conversion rate (%)
2019
2018
2017
2016
2015
140.4
138.3
139.9
135.2
126.8
2019
2018
2017
2016
2015
17.1
17.5
16.6
16.3
16.2
How measured: Gross profit divided by the average number of fee-
generating staff, calculated on a rolling monthly average basis.
How measured: Operating profit (EBIT) expressed as a percentage
of gross profit.
Why it’s important: This is our indicator of productivity, which is
affected by levels of activity in the market, capacity within the business
and the number of recently hired fee earners who are not yet at full
productivity. Currency movements can also impact this figure.
How we performed in 2019: Productivity increased 1.5% to £140.4k
(2018: £138.3k). This was as a result of our focus on productivity
through our COO office, offset by more challenging trading conditions in
a number of the Group’s key markets.
Relevant strategic objective: Organic growth.
Why it’s important: This reflects the level of fee-earner productivity
and the Group’s effectiveness at controlling costs in the business,
together with the degree of investment being made for future growth.
How we performed in 2019: The Group’s conversion rate
decreased to 17.1% (2018: 17.5%), due to more challenging trading
conditions seen across a number of the Group’s markets, many of
which normally have the highest conversion rates in the Group.
Relevant strategic objective: Sustainable growth.
Financial StatementsAdditional Information
21
KEY PERFORMANCE INDICATORS
People
Employee index
How measured: A key output of the employee
surveys undertaken periodically within the
business.
83%
positive
engagement
score
Why it’s important: A positive
working environment and motivated team helps
productivity and encourages retention of key talent within the
business.
How we performed in 2019: We recorded an 83% positive score
for employee engagement in the latest Employee Survey in 2019. This
was a combination of questions, including: how valued our people felt;
how proud they were to work for PageGroup; and the level of trust
and recognition they received for their work.
Relevant strategic objective: Sustainable growth.
GHG Emissions
Total GHG emissions
Total energy-derived emissions (CO2e tonnes)
Source of emissions
Direct GHG emissions
Indirect GHG emissions
2018
1,879
5,396
2019
2,054
4,413
How measured: Direct and Indirect GHG emissions calculated in line
with the UK Government’s 2019 DEFRA reporting standards. Principally
based on data from a sample of our offices, covering 70% of the Group by
headcount, and extrapolated for the Group as a whole.
Why it’s important: The emissions calculations look at the CO2e impact
of our operations in absolute terms.
How we performed in 2019: Direct GHG emissions relating to the
combustion of fuel increased by 9.3% to 2,054 tonnes CO2e, while Indirect
GHG emissions, through the purchase of energy such as electricity,
decreased by 18.2% to 4,413 tonnes.
Relevant strategic objective: Sustainable growth.
Management experience
12.5 years
12.0 years
11.9 years
11.6 years
11.2 years
How measured: Average tenure of front-office management measured
as years of service for directors and above.
Why it’s important: Experience through the economic cycle and
across both geographies and disciplines is critical for an organic
cyclical business operating across the globe. Our organic business
model relies on an experienced management pool to enable flexibility in
resourcing and senior management succession planning.
How we performed in 2019: The average tenure of the Group’s
management increased from 12.0 years to 12.5 years, with a particular
increase in EMEA.
Relevant strategic objective: Talent and skills development.
Intensity values of GHG emissions
CO2e tonnes per 1,000 employees
Energy-derived emissions
2018
922
2019
827
How measured: Intensity values for GHG emissions are based on
property and vehicle energy-derived emissions per 1,000 headcount.
Headcount is viewed as being the most representative metric for
PageGroup’s activity levels and is unaffected by issues such as
business mix or foreign exchange variations.
Why it’s important: Intensity values help to normalise the GHG
metrics and place them in the context of the Group’s changing
business profile, particularly in terms of increases in headcount.
It helps to identify where progress has been made on emission
reduction.
How we performed in 2019: Energy-derived emissions were
reduced by 10.3% compared with 2018, largely due to a decrease in
headcount, along with changes in fuel sources and improvements in
office energy efficiencies.
Relevant strategic objective: Sustainable growth.
2018 Direct and Indirect GHG emissions were originally reported as 1,882 and 5,379 respectively. These have been restated to reflect the latest DEFRA fuel conversion rates in 2019. The 2018 intensity value
of energy-derived emissions has been restated from 920 to 922 on the same basis. The source of data and calculation methods year-on-year are on a consistent basis. The movements in KPIs are in line with
expectations.
Annual Report and Accounts 2019 22
Greenhouse Gas Emissions (“GHG”)
In line with the requirements of The Companies Act 2006 (Strategic Report and Directors’ Report Regulations), PageGroup reports on
all direct greenhouse gas (GHG) emissions (relating to the combustion of fuel and the operation of any facility, together with any fugitive
emissions); and indirect GHG emissions (through the purchase of electricity, heat, steam or cooling).
Since 2014, we have gathered energy data from our major offices. This is in conjunction with our environmental policy that focuses on
implementing efficiency measures in our offices to reduce energy consumption and carbon emissions. We have continued to enhance
the quality of our data collation process and this is reflected in some amendments to the previous years’ figures reported. As with 2018,
fugitive emissions are not reported as the Company is not responsible for maintenance of air conditioning in any of its offices.
The Company’s total 2019 emissions from energy and fuel used in its properties and vehicles, together with comparable data for the
previous 4 years, are reported below. This is the first year we have reported our emissions data covering a 5 year period.
Source of emissions
Direct GHG emissions (relating to the combustion of fuel and the operation of any facility)
Indirect GHG emissions (through the purchase of electricity, heat, steam or cooling)
Total emissions
Total energy derived emissions (tonnes CO2e) properties and vehicles
2015
2,303
4,909
7,212
2016
1,830
4,615
6,445
2017
1,824
4,881
6,705
2018
1,879
5,396
7,275
2019
2,054
4,413
6,467
The Company continues to relocate to
more energy efficient offices. One of these
office relocations has led to the elimination
of natural gas usage that has reduced
the Company’s overall gas usage by
around 50%, with a direct contribution to
reducing emissions. This initiative is in line
with PageGroup policy and the company
continues to seek and implement energy
saving and environmentally responsible
initiatives wherever possible. As well as
emissions from properties and vehicles,
this includes implementing efficiencies to
conserve natural resources and reduce
carbon emissions; taking reasonable
steps to reduce pollution and waste;
recycling unavoidable waste as far as
is practicable; promoting sustainable
procurement processes with our staff and
supply chain; and ensuring compliance
with all applicable environmental
legislation. Various parts of our business
also continue to benefit from the use of
energy efficient printers and the use of
dedicated recycling bins which are placed
throughout our offices.
See other initiatives in our culture section
page 31.
Emissions have been calculated in
line with the 2019 DEFRA reporting
standards, and calculated using 2019
DEFRA conversion factors for fuels,
gases and UK electricity, and International
Energy Agency (IEA) conversion factors
for non UK electricity generation.
Emissions derived from property
energy consumption directly under the
Company’s control have been calculated
by using a sample of offices across the
world (including the entire UK business).
This year we were able to increase the
sample with improved data collection
processes in a number of countries. The
offices sampled now represent over 70%
of the global headcount in 2019. The
emissions for the remaining offices were
calculated by extrapolating headcount.
Emissions derived from property energy
consumption amounted to around 69% of
total emissions.
Emissions from fuel consumed by
Company owned or leased vehicles
in 2019, were calculated using the
fuel consumed by the company car
fleets in a sample of countries (UK,
Germany, Italy, France, Netherlands and
Poland) representing around 42% of
the Company’s global car fleet. This is
a much larger sample than in 2018 and
considerably bigger than prior to 2017
when this calculation was based only
on the German Company car data. In
2019, the Company’s global car fleet
was just under 1,600 vehicles (around
12% increase on prior year). Some
of the increase in vehicles is due to
improved reporting from countries who
had previously not provided data, as well
as an increase in existing fleet size. The
mix of vehicles has continued to change
with hybrid and the first electric vehicles
now making up a proportion of the fleet.
The total vehicle emissions for the global
fleet were calculated by first extrapolating
the total diesel and petrol consumptions
per vehicle from the sample across
the entire fleet and then calculating the
resulting emissions.
This is the first year we are reporting
on total global energy as well as for our
UK operation. Our total global energy
consumption was 37,839,199 kWh with
UK energy consumption representing
9.8%.
The intensity values are based on
emissions derived from property energy
and vehicle fuel per 1,000 employees in
the headcount. This factor was chosen
as being most representative of the
Company’s activity levels, and being
unaffected by issues such as business
mix or foreign exchange variations.
Energy derived emissions – CO2e tonnes
per 1,000 employees
2015
2016
1,304
1,065
2017
993
2018
922
2019
827
2019 emissions intensity improved by
10.3% compared with 2018. In part this
was due to the change in vehicle fuel mix,
with a wider range of countries providing
data on fuel consumption. In 2018 and
prior years, diesel vehicles represented
approximately 96% of the known vehicle
fuel. With an increase in countries
providing fuel data, diesel fuel now
represents around 73% of vehicle fuel.
As petrol has a lower emissions factor
than diesel, this has contributed in part
to the reduction in emissions. In addition,
this year for some of the counties
reporting for the first time, electricity data
shows increased efficiency per head.
Corporate GovernanceFinancial StatementsAdditional InformationSTRATEGIC REPORT STRATEGIC REPORT 23
Annual Report and Accounts 2019
Q&A WITH STEVE INGHAM, CEO
How are you using technology to adapt to
changes in the recruitment market?
We are using technology to create a
connected customer experience. It’s about
using the right platforms and tools to identify
our customers, learn as much about them
as we can and engaging proactively to
nurture that relationship on an on-going
basis.
We have strategic partnerships with all the
key recruitment sector players in candidate
acquisition such as LinkedIn, Seek and
Zhaopin. Our global scale and capability
allows us to work closely with traditional
digital giants such as Microsoft, Facebook,
Baidu, WeChat and Google.
A key element of our strategy is Mobile,
with just over half of traffic coming through
mobile devices. Five years ago, we were
the first recruitment business to create
a responsive website that adjusts to
whichever device people use to access
it. Using native mobile technology on our
apps such as thumbprint logon, facial
recognition and push messaging, we have
seen customers spending more time and
coming back more frequently. We want to
ensure that interactions between customers
and ourselves are convenient whenever
they exist to reflect people’s changing work
habits.
Our CRM email campaigns, powered by
Salesforce, gives customers a personalised
experience more commonly associated with
large-scale, e-commerce businesses. We
know where each of our customers are on
their journey and based on their interactions
we deliver personalised communications
and opportunities to provide them with the
best next step in their career.
What is the impact of Brexit on
PageGroup anticipated to be, and how
will you minimise any disruption?
Clearly in the UK we have seen the
uncertainty caused by Brexit weigh on both
client and candidate confidence. Michael
Page, which is more focused on senior
opportunities, was impacted to a greater
extent and declined -4% in 2019. However,
Page Personnel fared better and grew 2%,
a record year.
As the UK enters the next stage of Brexit
negotiations following its withdrawal from
the EU, we will monitor candidate and client
confidence. If negotiations progress well,
then it is possible delayed decisions by
businesses could be released, with pent up
demand flowing into the market.
It’s also important to note how diverse we
are now as a Global business. The UK
represents just 16% of the Group, down
STRATEGIC REPORT
24
from 39% in 2007 and our UK business
itself is more diverse than ever. There
are also opportunities to roll-out further
disciplines under our lower salary level
Page Personnel brand.
We have established, mature businesses,
in all major European economies. If
there are cross-border job flows in either
direction, then we have consultants ready
to help facilitate this.
What is your outlook and biggest
challenge for 2020?
As we exited 2019, many of our regions
were impacted by heightened macro-
economic and political uncertainty. In
EMEA we saw social unrest in France
and weakening macro-economic data
from Germany. Trade tariff uncertainty
continued to impact Greater China,
particularly affecting our large international
clients, and social unrest in Hong Kong
caused widespread disruption and
weighed heavily on market sentiment.
In the Americas we experienced a weak
financial services sector in New York and
saw social unrest in Chile.
As we enter 2020, with the issues
experienced in 2019 remaining, we
also see additional challenges ahead.
Our Australian business has been
affected by the devastating wildfires.
The UK continues to be impacted by
Brexit related uncertainty following
the exit from the European Union in
January. The emergence of COVID-19,
particularly in Mainland China, Hong
Kong and Singapore, but having a wider
global impact, has created even greater
uncertainty in the trading conditions we
face for the year ahead.
“As we exited 2019,
many of our regions were
impacted by heightened
macro-economic and
political uncertainty.”
However, we remain committed to our
strategy of continued investment in our
five Large, High Potential markets of
Germany, Greater China, Latin America,
South East Asia and the US, as well
as those markets where we see good
conditions for growth such as India and
Japan.
Our flexible business model enables us
to react quickly to changes in market
conditions. We can grow our headcount
rapidly in a strong market, or, in these
more challenging conditions, use our staff
attrition to adjust our headcount lower,
focusing on productivity and conversion.
In tougher trading conditions, it’s also
not just about controlling headcount and
costs, but getting the best out of our
people. Our two Chief Operating Officers
are reviewing all aspects of our business
from how we hire, our use of technology
and our business practices to ensure
we are maximising the time consultants
spend on recruiting.
We are clear market leaders in many of
our markets, with a highly experienced
senior management team, which,
we believe, positions us well to take
advantage of all opportunities during
2020.
Our Vision remains to reach a headcount
of 10,000, gross profit of £1bn and
operating profit of £200m-£250m.
You have paid special dividends over
the past five years. Do you expect this
to continue?
We operate a highly cash generative
business model, with high levels of cash
conversion. We have a clear capital
allocation strategy, with three defined
uses of cash. We first use our cash to
satisfy our operational and investment
requirements, and to hedge our liabilities
under the Group’s share plans. We
then review our liquidity over and above
this requirement to make returns to
shareholders, firstly by way of ordinary
dividend.
Our policy is to grow this ordinary
dividend over the course of the economic
cycle, in line with our long term growth
rate. We believe this enables us to sustain
the level of ordinary dividend payments
during a downturn, as well as increasing it
during more prosperous times. The nature
of our business is that our working capital
position unwinds over a number of years
allowing us to sustain dividend payments
should we experience sustained tough
market conditions.
Cash generated in excess of these
first two priorities will be returned to
shareholders through supplementary
returns, using special dividends or share
buybacks. Since our flotation in 2001,
we have returned just under £1 billion to
shareholders with just under half of this
through supplementary returns.
In 2019, after consultation with our
shareholders, we made a supplementary
return of 12.73p per share. We will
continue to monitor our liquidity in 2020
and will make returns to shareholders in
line with the above policy.
What are the career progression
opportunities at PageGroup and how do
you invest in our leaders of the future?
We are an organic people focused
business and our people are at the centre
of all that we do. Recruiting and retaining
the best talent will allow us to effectively
deliver our Vision. We have a transparent
and meritocratic culture. Many of the
management team and myself as CEO,
started as consultants, demonstrating the
significant opportunities that we can offer.
One of our KPIs is length of service of
senior management, which is currently an
average of 12.5 years, demonstrating that
we are creating the right environment for
people to grow as individuals and further
their careers.
We invest a significant amount of time
and resource in succession planning
at all levels of the business. We offer a
competitive remuneration package, run
executive coaching schemes, internal
and external mentoring programmes,
personal development planning, a Global
Directors Academy and an Executive
Leadership programme. Our employees
recognise the value this adds to their
careers. In our most recent Global
Employee Engagement survey they told
us that availability of career opportunities
at PageGroup was well ahead of other
similar companies.
“We are an organic
people focused business
and our people are at
the centre of all that
we do.”
Two years ago we rolled out our digital-
learning platform, BOOST!, to enable our
people to learn in a virtual environment.
This enables them to develop their skills
and capabilities at a pace and time that
suits them.
Diversity and Inclusion is key to our
culture and success as a business.
Understanding the values and cultural
differences of our employees helps
them reach their potential, as we build a
stronger more successful business. Our
internal programmes such as Women@
Page, Ability@Page and Pride@Page,
ensure everyone’s voice is heard and
an equal opportunity is given to all.
Our international mobility programme
continues to be a success, with
individuals at all levels travelling across the
globe to find new opportunities and ways
to further themselves.
Corporate GovernanceFinancial StatementsAdditional InformationSTRATEGIC REPORT 25
CULTURE & ENGAGEMENT FRAMEWORK
OUR PURPOSE
OUR VALUES
What we do every day
Reflected in everything
we do, setting us apart
from our competition
Culture – our approach
PageGroup is a people business focussed on a
culture that puts our people and customers at the
heart of everything we do.
Defining and measuring our culture and ensuring
we are listening to our employees has been a key
priority for the Board during the year. In 2019 we
took the opportunity to formally develop a culture
and engagement framework designed to ensure
we can measure our levels of employee and
customer centricity. We established a culture &
engagement team, drawing on a broad knowledge
and skills from across the business including,
talent development, diversity & inclusion, internal
communications and operations.
The Board worked closely with the team to create
an approach that ensures and demonstrates the
importance of hearing our employees’ voice in the
Boardroom as well as articulating and monitoring
our culture.
The purpose of the framework is to demonstrate
our culture and how it centres around the voice
of our people and our customers. It also includes
measures of success to help us drive continuous
improvement and, where appropriate, meaningful
change.
The Culture & Engagement
Framework
The framework is structured into 5 pillars that
highlight our focus on our people, our customers
and society as a whole.
The pillars were established by asking
representatives from across the business what
they felt was at the heart of our culture. The
Board and culture & engagement team used that
feedback to create a framework drawing together:
Our purpose – the reason we are in business
Our values – the way we behave and what sets
us apart from our competition
Our culture – our business is about people and
how we support and listen to them, both our own
people and our customers
Innovation – which enables us to stay ahead,
lead our industry and expand our culture
Our measures – to keep us focussed and on track
Annual Report and Accounts 2019 CULTURE & ENGAGEMENT FRAMEWORK
26
OUR CULTURE
INNOVATION
OUR MEASURES
PageGroup is all about
people
Staying ahead – leading
our industry
Keeping us on track,
focused on continuous
improvement
OUR PEOPLE &
OUR CUSTOMERS
A key enabler:
Creating new opportunities to
engage with people through key
life moments;
having valuable conversations –
more frequent and more relevant;
Building lasting relationships
with our clients, candidates and
consultants;
Improving processes and tools to
support consultant productivity;
Setting us apart from the
competition and delivering an
excellent experience for our
customers and our people.
OUR PEOPLE
Career progression
Transparent and meritocratic career
paths
Talent development
Industry-leading training
Diversity & Inclusion
A culture of inclusion
Giving back to others
Changing lives in the communities
where we live and work
Rewards & Wellbeing
Celebrating success; fostering a high
trust, high performance culture
OUR CUSTOMERS
Customers at the centre of our
business
Aiming to be the most customer centric
recruiter
Leveraging technology
Improving our customer experience
Innovative approaches
Providing a more effective service
Building relationships
A personal, professional service
creating the opportunity for candidates
and clients to reach their potential
OUR PEOPLE
Employee voice
Retention
Career progression & mobility
Talent Development
Diversity & Inclusion
Changing lives, giving back to others
Rewards & Recognition
Wellbeing
Environment
OUR CUSTOMERS
Engaging our customers – NPS,
customer satisfaction and loyalty
Retaining our customers – repeat
business, PSAs
Innovation
EXTERNAL
RECOGNITION
Public Commitments
Awards
Corporate GovernanceFinancial StatementsAdditional InformationSTRATEGIC REPORT STRATEGIC REPORT 27
CULTURE & ENGAGEMENT FRAMEWORK
OUR PURPOSE
OUR VALUES
PageGroup’s purpose was launched globally at the end
of 2017 with ongoing activation and communication. Our
employee survey in October 2019 confirmed that 91% of our
people are aware of our purpose, with 87% seeing how it
links to their role, overall the highest scoring question in the
employee survey.
PAGEGROUP
CHANGES LIVES
for
PEOPLE
through creating
OPPORTUNITY
to reach
POTENTIAL
We have always lived by our strong values, which we
refreshed and relaunched in 2018, with nearly 80% of
our people agreeing that our values match the culture of
PageGroup.
WE MAKE A DIFFERENCE
WE ENJOY WHAT WE DO
WE VALUE DETERMINATION
WE WORK AS A TEAM
WE ARE PASSIONATE
Our purpose and values resonate strongly with our people and we believe that is vital for our on-going success. It sets expectations for how we
behave, helping everyone understand, enjoy and care about all aspects of our business, while providing a clear, solid foundation for delivering
exceptional customer service. When we asked our employees to describe PageGroup in any three words, many of the top words spontaneously
given reflected our purpose and values.
OUR Values
HAVE YOUR SAY – OUR EMPLOYEE ENGAGEMENT SURVEY
What 3 words would you use
to describe PageGroup?
Have
your
say
Employees who commented 5,057
OUR PURPOSE
OUR VALUES
Annual Report and Accounts 2019
CULTURE & ENGAGEMENT FRAMEWORK
28
OUR CULTURE
Our people and customers
The insight we have into our culture
demonstrates that we have created an
environment where developing our people
and achieving results for our customers is
paramount. Equally important is the health
and wellbeing of everyone at PageGroup,
our support for society as a whole and
the environment. Details of some of our
key cultural highlights are below.
Our people have told us that talent
development is key for them and 80% of
them feel they are given the opportunity
to improve their skills. Our online learning
portal (Boost!) supports our integrated
learning model with over 1,800 pieces of
content supporting our blended learning
strategy. During 2019 we had over 89,000
log-ins accessing that content. Our Global
Director Academy takes place twice a
year, actively supporting inclusion with
a ratio of 50:50 male:female. We offer a
range of international opportunities with
52 international moves made in 2019
alone.
Giving back to others has always been
part of our culture. Worldwide we help
change lives through a variety of charities
within our communities by donating
money, time and expertise. Across our
regions activities include providing CV
and recruitment advice to students and
disadvantaged members of society,
alongside charity-supporting events
and donations. Examples include our
partnership with Great Ormond Street
Hospital in the UK, support for Smart
Works in the UK, Action against Hunger
in Spain, the Children Are Us Foundation
in Taiwan, The Smith Family supporting
school children in need in Australia, and
the ‘Al Wifak’ Association providing Iftar
during Ramadan.
Fundraising across the world has included
charity runs, dedicated dress-up days in
the office and Movember, and our people
have spent time supporting community
initiatives including beach clean-ups and
helping provide food for those in need.
Wellbeing is a clear priority for us
and our people supported that view
with 41% telling us in our employee
engagement survey, “Have Your Say”
that their employer helping with work-life
balance is the biggest factor in improving
productivity and performance. Globally
our leadership teams have signed a
dynamic working charter which supports
flexible working, and across the world we
have a variety of employee assistance
programmes in place alongside benefits
supporting health and wellbeing.
Our employees are encouraged to be
active, and their efforts are supported
and recognised – they share and
celebrate their achievements through our
global internal social network, Yammer.
PageGroup has also supported local
communities and the interests of our
employees by sponsoring local sporting
teams such as the Singapore Sharks AFL
Youth Team, and the Thailand Women’s
Cricket Team.
“
Yesterday PageGroup
Rotterdam joined the Harbour
run. Proud of all runners who
did a great job. Work and
Sport together :)
“
Corporate GovernanceFinancial StatementsAdditional InformationSTRATEGIC REPORT STRATEGIC REPORT 29
CULTURE & ENGAGEMENT FRAMEWORK
Engaged employees are the foundation from which we deliver the best results for our customers and we believe customer satisfaction and
loyalty are a strong indicator of a strong and successful culture. We are passionate about listening to our customers (clients and candidates), and
we measure customer satisfaction in each market. At the heart of our customer engagement are processes that create a smooth, friction-free
experience for our clients and candidates. We work with systems that help us engage with our customers depending on where they are in their
recruitment journey and anticipate their next steps so that we can give them the best possible outcome.
UK
USA
EUROPE
ASIA PACIFIC
LATAM
4.9 /5
4.9 /5
4.7 /5
4.7 /5
4.4 /5
2019 customer rating highlights from our review platforms Feefo and Google Reviews across countries within our regions.
What our customers have said about our service
“
UK
Excellent service start to finish.
Provided good prep ahead of
interviews and was given a
number of great opportunities.
“
“
The best recruitment agency I have every worked with.
They are very efficient, have a very good candidate
database, and have the best recruiters! All the
employees I hired through Michael Page are proved to
be very good employees!
“
Hong Kong
“
They understand what
exactly a candidate needs
and is looking for.
India
“
“
Spain
Excellent service, very organized
and with very friendly staff.
“
“
UK
Provided a great range of candidates for
a role we had been struggling with. Kept
me updated throughout the process and
had the details I needed on hand.
“
Annual Report and Accounts 2019 30
INNOVATION
Embedding innovation in our culture
is key to continuously improving our
customer experience and the working life
of our people.
We have led the recruitment sector in our
application of technologies focused on
our ongoing relationship with customers –
our connected customer experience.
Our people are at the heart of what we do,
with online innovation groups open to all,
allowing them a voice in how we use new
technologies to improve our productivity
and customer experience.
The scale of our business brings
opportunity both in terms of infrastructure
and investment to bring in the best of
new technology from outside recruitment.
Giving our candidates a more relevant
online experience makes them more likely
to trust us with their job search. Using
Thunderhead AI technology, we create a
personalised experience across web and
email, and Jobmatch helps deliver them
the most relevant jobs and deliver the
most relevant candidates to
our consultants. We already led the
industry in mobile technology before
last year launching our mobile app.
It uses native technology to deliver an
enhanced experience and more efficient
relationship with our temporary workers
enabling them to carry out basic admin
tasks on the app. Our most significant
innovations are now centred on the new
operating system we are rolling out to our
consultants. The driving principle of the
system is enabling a step change in our
service to both candidates and clients.
OUR MEASURES
Employee and workforce
voice
Under the fifth pillar of our culture
framework we collate and monitor data
from a variety of sources. Listening to our
people has always been an important
part of our culture. Our most recent all
employee survey (Have Your Say) in
October 2019 had an 85% response rate.
We had an employee engagement score
of 83% and 88% of people said they were
proud to work at PageGroup.
Our Have Your Say survey is such
a valuable part of our framework for
listening to our employees that in 2019
we took the decision to make it an annual
survey (having previously been every
two years). Our people know their voice
has been heard and acted upon through
active communication of both the survey
results and the outcomes of action
plans that are created collaboratively
immediately after the results are shared.
As well as our survey, we listen to our
people every day in a variety of ways.
Our primary internal communication
channel is Yammer – a global,
collaborative work-based social network
that promotes open and honest
communication and effective knowledge
management and retention. All our
employees, including our leadership
teams, share best-practice, their stories
of success and personal journeys.
Our extensive use of Yammer helps bring
to life global campaigns, including support
for International Women’s Day, World
Mental Health Day and Pride Month, and
actively encourages our employees to
join in the conversation – and they do.
During 2019 we saw over 100,000 posts
on Yammer, with nearly 350,000 likes and
75,000 comments, demonstrating true
engagement and collaboration across all
our regions. All our employees are on the
network, including all Board members
who can see our culture in action and are
able to comment and post in real time.
This is in addition, of course, to regular
team meetings, one-to-one meetings
with managers, and twice-yearly formal
discussions focusing on career and
development opportunities for all our
people.
When considering the Code’s
requirements on effective workforce
engagement, rather than adopt one of
the three specified engagement methods
set out in the Code, the Board felt that
it, as a whole, should be responsible for
the organisation’s culture. The Board
also felt that engagement would be most
effective with each Director having a role
to play in understanding the views of our
employees and acting upon them.
Supporting the Board is the combination
of information and results from our
measurements it receives through our
culture and engagement framework, with
the twice-yearly Board sessions that are
dedicated to reviewing the measures.
The insights the Board gathered from the
2019 culture work has helped inform its
principal decision making, for example,
it approved a more robust exit interview
programme and more frequent pulse
surveys as part of a continuous listening
strategy to be implemented within the
business to give even greater insight into
our culture and in respect of workforce
related issues such as reasons for leaving.
The Board considers that these
alternative arrangements allow for
effective engagement with the workforce
as all members of the Board are involved
in the engagement process and gain
different insights and perspectives from a
range of employees.
Our Non-Executive Directors attended
our leadership conference, giving them
an opportunity to meet and engage
with our people from across the world.
This engagement helps inform the
Board’s view of our culture and Board
members discussed their insights from
the conference at the following Board
meeting. Further, our Non-Executive
Directors attend specific company events
throughout the year – Angela Seymour
Jackson has been a panel member and
spoken at numerous internally organised
high profile events focused on nurturing
female talent. Sylvia Metayer engaged
directly with our Head of Diversity &
Inclusion to arrange presentations and
gain greater insight into our approach to
inclusion. Opportunities like these ensure
that our Non-Executive Directors are
available to our workforce and provide
another avenue by which to gain insight
into our culture. It also assists our Non-
Executive Directors to assess the extent to
which our talent development programmes
and diversity initiatives are working and
feed these back to the Board.
The Board is pleased with cultural
activity during 2019 and is committed to
continuing progress, particularly in the
area of diversity and inclusion. For greater
insight, see our details of our focus on
Diversity & Inclusion on page 33.
Corporate GovernanceFinancial StatementsAdditional InformationSTRATEGIC REPORT STRATEGIC REPORT 31
CULTURE & ENGAGEMENT FRAMEWORK
OUR MEASURES
The environment and
sustainability
We aim to be a business that all our
stakeholders are proud to be associated
with and minimising our impact on the
environment plays an important role in
that. In 2019 we continued to manage
and minimise the impacts resulting from
operating our business. As a service
organisation, our environmental impacts
are small compared with many other
businesses and we have processes in place
to monitor and report on our greenhouse
gas emissions. Our impact is predominantly
through energy consumption and business
travel. See pages 21 and 22 for GHG
reporting for 2019.
Across our regions we have a strong focus
on reducing waste, for example eliminating
the use of plastic cups in the UAE; giving
employees in Barcelona reusable coffee
cups; and in France people have been
encouraged to reduce waste, e.g. removing
disposable cutlery, recycling waste, printing
fewer documents, and not using plastic
bags. In the UK, cycling to work is actively
encouraged through our cycle-to-work
scheme.
UK
Reducing plastic usage globally
FRANCE
DUBAI OFFICE
Saving almost 7,500 plastic glasses from going into the
trash by the end of the year!
#PLASTICFREEJULY
BEGREEN
Annual Report and Accounts 2019 32
OUR MEASURES
External recognition & awards
During 2019 we continued to win awards recognising our work and culture.
Europe
USA
Asia Pacific
UK
Latam
Latam
MEA
We signed a number of pledges and charters demonstrating our commitment to inclusion in the workplace.
AND MATERNITY RIGHTS
Corporate GovernanceFinancial StatementsAdditional InformationSTRATEGIC REPORT STRATEGIC REPORT9 33
33
Annual Report and Accounts 2019
CULTURE & ENGAGEMENT FRAMEWORK
OUR MEASURES
Diversity and Inclusion
Diversity and inclusion is key to our culture
and the success of our business. It is not
just an item on our to-do list. At PageGroup
it’s an inherent part of our culture and our
business. We are a people business – the
people who work here, the companies we
do business with, the candidates whose
lives we change for the better on a daily
basis, and the communities and individuals
we help as we give back to others.
It’s in our DNA to focus on people,
constantly looking for ways to improve –
and that begins with our employees. Our
purpose states that ‘PageGroup changes
lives for people through creating opportunity
to reach potential’.
Understanding the values and cultural
differences of our employees helps them
reach their potential as we build a stronger,
more successful business. A business
which reflects society and the clients and
candidates whose lives we change.
Since focusing on our D&I strategy, we
have seen progress internally with greater
numbers of women in management roles
and a positive return rate in respect of
maternity returners, 86.8% in 2018. We
have also received more positive employee
engagement scores demonstrated
throughout our global employee survey.
Gender diversity
Board Directors & Officers
2019
2018
5 (56%)
5 (56%)
4 (44%)
4 (44%)
Senior Management
2019
2018
323 (70%)
140 (30%)
312 (73%)
118 (27%)
Other employees
2019
3,760 (45%)
4,581 (55%)
2018
3,426 (46%)
4,022 (54%)
We have seen PageGroup positioned as an
employer of choice with our people telling us
they like working at PageGroup because, as
well as clear career paths and progression,
we’re passionate about the things they
care about. Our approach aims to value
and encourage every employee to bring
their true self to work. We are proud to say
that diversity and inclusion is an area where
sentiment is strongest in our employee
survey. In 2019 it was the third highest
scoring category at 82% favourable and
there was a +5 point increase over 2017 in
answer to the question ‘At PageGroup, all
employees, regardless of their differences,
are treated fairly’.
HOW DO WE SUPPORT INCLUSION ACROSS PAGEGROUP?
We pride ourselves on leading from the front and are fully committed to supporting and promoting an inclusive culture and working
environment where all our employees feel valued and heard. The framework supporting inclusion at PageGroup includes:
Support networks: Ability@Page,
Age@Page, Parents@Page, Pride@
Page, Unity@Page, Women@Page:
These are dedicated networks run by
our employees and supported by the
business.
Dynamic Working: We understand the need to be flexible in our approach to working
and have implemented a dynamic working charter to ensure we are focused on creating
a modern work environment that places performance, not presenteeism first.
Global mentoring programme for women: a pivotal
part of our Women@Page strategy to support, develop,
advance and retain talented women
International Women’s Day: activities
included senior leaders sharing their
support and commitments, events with
guest speakers, and personal stories
from women across PageGroup.
Health and Wellbeing Week including World Mental
Health Day with personal, powerful and inspiring stories
shared from every region. In our “Have Your Say” survey,
health and wellbeing saw a +6 point net difference when
compared to our previous survey.
Embedding D&I throughout our
employee lifecycle: from attracting
employees and on-boarding through
to career management, succession
planning, recognition/reward,
performance management and employee
communication and engagement.
On-going global communication programme: we
share career journeys which demonstrate the success
of ‘people like me’ (A Woman’s Journey) – 55 stories
shared across all regions during 2019.
Pride Month: our LGBT community and allies all
sharing messages of support and sharing photos from
events, spreading the message of acceptance without
exception.
Three global D&I campaigns
a year with high levels of
engagement, driving increased
membership of our support
networks.
Leadership training focused
on inclusion: our Global
Director Academy has dedicated
content on what inclusive
leadership means at PageGroup.
Managing Directors Reward:
our Managing Directors’ annual
performance objectives take into
account progression in diversity
and inclusion.
Annual Report and Accounts 2019 STRATEGIC REPORT
34
34
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HOW DO WE SUPPORT INCLUSION ACROSS PAGEGROUP?
We aim to support our employees balance the demands of work and family through a range of policy changes, initiatives and
programmes to support both mothers and fathers.
Parenting seminars – allows parents
(and partners) across all our regions
globally to dial in via webinars – topics
such as “Technology Matters – how to
keep your kids safe online” and “Emotions
Matter – how to listen so your kids talk”.
Real People/Real Stories Campaign
– our fathers and mothers sharing their
personal stories of being able to combine a
fulfilling career with an engaged family life –
building a network of ‘visible role models’.
Affiliation with the P3 network - for our
LGBT parents, or parents of LGBT children.
New Parents and Pre/Post Maternity Workshops – where our parents from
across the business can ask questions, and share experiences – we want to ensure
everyone is aware of all the resources available to them to make sure they feel fully
supported.
Work+Family Space Portal -
includes free Emergency Back-
Up Child/Elder Care, access to
resources and an ‘ask an expert’
resource.
Initiatives such as ‘Bring your kids
into Work’ days – across all regions
globally.
Signing the Working Forward Pledge – supporting pregnant women and new
parents at work.
PUBLICLY DEMONSTRATING OUR COMMITMENT
We appreciate the importance of publicly stating our commitment to our Inclusion agenda so our clients, employees, suppliers
and society can assess our approach to diversity and inclusion matters. We have committed to a variety of initiatives and been
accredited in various ways:
We are a Global Stonewall Diversity
Champion.
We have joined the Valuable 500 – a global movement putting disability
inclusion on the business leadership agenda and celebrating those who are
already committed to inclusion.
We have received the BITC Gold Award and been awarded the Inclusive Top 50
Employers award, a list of UK based organisations, that promote inclusion across all
protected characteristics, throughout each level of employment within their organisation.
We have signed the Social
Mobility Pledge and signed the
Race at work charter.
Looking ahead
We appreciate that we must keep pushing our diversity and inclusion agenda forward and monitor our progress given that inclusion
is such an important part of our culture. In 2020 we will be focused on ensuring we continue to support the initiatives we have
implemented while driving accountability within the business for further positive change.
Additional Information STRATEGIC REPORT
35
REGIONAL PERSPECTIVES
EMEA
What are your priorities for 2020?
We remain mindful of the increased macro-economic and political
uncertainty experienced by a number of our markets across the region
as we enter 2020.
We will, however, look to invest in markets where we see good
growth, such as our Technology focused Interim business in Germany.
We will also seek to drive improvements in fee earner productivity,
in order to maximise the return on our significant fee earner headcount
investment, which increased by just under 25% in the past
three years.
Asia Pacific
What are your priorities for 2020?
In our two Large, High Potential markets of Greater China and South
East Asia, we expect the more challenging market conditions to
continue. The impact of the COVID-19 virus and the duration of any
further trade tariff uncertainty or social unrest remains unclear.
We will continue to drive investment in India and Japan, two
markets which have the potential to be Large, High Potential
markets in the future.
How did you deliver against your 2019 priorities?
We delivered our fifth consecutive record year with overall growth of
7.0% and 9 of our countries in the region had record years. France
and Germany, together representing half of the region by gross profit,
grew 4% and 20% respectively.
How did you deliver against your 2019 priorities?
Asia Pacific gross profit declined by -0.3% compared to the prior
year. Greater China declined by 10% with confidence impacted by
the continuing trade tariff uncertainty, as well as the social unrest in
Hong Kong.
Across the region, headcount increased marginally by 18 (+0.5%).
We invested in markets where we saw growth, such as Germany, but
managed our headcount through natural attrition where we saw more
challenging conditions.
South East Asia had a record year, up 6%, with strong performances
in our newer countries such as Indonesia, Thailand and Vietnam,
offset by tougher trading conditions in Singapore, which was
impacted by the trade tariff uncertainty.
This record performance, led to an increase in our operating profit
from £85.6m in 2018 to £90.3m in 2019, which represents a
consistent conversion rate of 21.6% (2018: 21.7%).
India, where we now have around 160 fee earners, grew 32%, a
record year. Japan, grew 11%, also a record year, despite tougher
trading conditions in the second half of the year, particularly amongst
our international clients.
Australia grew 3%, with tougher trading conditions in New South Wales.
Headcount declined by 30 (-1.8%) as increases in India and Japan
were offset by a decrease in Greater China, in response to the tougher
trading conditions.
Gross profit £m
Gross profit £m
2019
2018
2017
£418.3m
£394.3m
£332.3m
2019
2018
2017
£163.3m
£161.2m
£137.2m
Permanent to temporary ratio
Permanent to temporary ratio
32%
68%
Permanent
Temporary
Headcount
2019
2018
2017
3,317
3,299
2,996
13%
87%
Headcount
2019
2018
2017
Permanent
Temporary
1,679
1,709
1,553
Annual Report and Accounts 2019 36
The Americas
What are your priorities for 2020?
In North America, we will continue our strategy of diversification,
with particular focus on our regional offices, which now account
for over half of gross profit. There are significant opportunities
for expansion, particularly in our Technical and Property &
Construction disciplines nationwide.
In Latin America, where we are continuing to see an emerging
temporary market, we will invest in our fee earner headcount to
increase our already market leading position.
UK
What are your priorities for 2020?
We expect Brexit related uncertainty to continue in 2020 as the
UK negotiates a new relationship with the European Union. We will
continue to respond to market conditions as they develop. With
our flexible business model, we are able to manage our headcount,
and therefore our cost base, through natural attrition. Conversely,
we can increase headcount rapidly should market conditions
improve.
We will look to increase fee earner headcount in disciplines and
offices where we see opportunities for growth.
How did you deliver against your 2019 priorities?
The Americas continues to be our fastest growing region, up
13.8%, with both North and Latin America having record years.
How did you deliver against your 2019 priorities?
The UK experienced challenging trading conditions throughout
2019 due to Brexit related uncertainty.
In the US, one of our Large, High Potential markets, our
strategy of diversification continues, with particularly strong
performances from our regional offices in Boston, Chicago,
Houston and Los Angeles.
Latin America, another of our Large, High Potential markets,
delivered a record year, up 14%. Brazil grew 14%, with Mexico,
our largest country by fee earner headcount in Latin America,
delivering growth of 20%. Elsewhere, the other four countries in the
region grew 10% collectively, despite tougher trading conditions in
Chile, as a result of the political and social unrest.
Fee earner headcount increased by 34 in the year, mainly into our
US and Mexico businesses.
Our Michael Page business, which was impacted by lower senior
candidate confidence, declined -4%. However, our Page Personnel
business, fared better and grew 2%, delivering a record year.
During the year, our fee earner headcount reduced by 86 (8.6%),
in response to the challenging market conditions.
Operating profit increased by £3.9m to £17.3m, which represents
a conversion rate of 12.8% (2018: 9.7%). Given the more
challenging trading conditions, we reduced our fee earner
headcount to increase our focus on productivity and therefore
improve our conversion rate.
Gross profit £m
Gross profit £m
2019
2018
2017
£138.8m
£121.0m
£101.3m
2019
2018
2017
£135.1m
£138.4m
£140.8m
Permanent to temporary ratio
Permanent to temporary ratio
12%
88%
Headcount
2019
2018
2017
Permanent
Temporary
1,376
1,328
1,093
31%
69%
Headcount
2019
2018
2017
Permanent
Temporary
1,326
1,436
1,407
Corporate GovernanceFinancial StatementsAdditional InformationSTRATEGIC REPORT STRATEGIC REPORT 37
RISK MANAGEMENT
Principal risks
The Group recognises that the effective
management of risk is key to achieving
our objectives.
A Groupwide risk review process is in place
which identifies the principal risks that could
impact our business and determines the
mitigating actions required to ensure that
these risks are controlled to an acceptable
level. Our agreed level of risk appetite,
approved by the Board, guides the
level of acceptable risk.
Risk management is an integral part of
our business, forming part of our strategy
review, our business plans and the delivery
of our daily activity.
Our risk process is supported by risk
registers that are maintained locally at
country and process level and consolidated
twice a year. This is then combined with a
top-down review of risks conducted with
senior management. The summarised
output is formally reviewed by the Executive
Board and the Audit Committee on behalf of
the Board.
In the intervening periods the risks
associated with changes in either the
external environment or internal operations
are discussed as part of our ongoing
business reviews and are responded
to accordingly.
In key risk areas we also have compliance
teams whose role it is to ensure we
comply with processes on an ongoing
basis. These are in IT security, revenue
recognition, project management and
regional legal teams.
Our Internal Audit programme of activity
aligns the provision of assurance to the
controls that mitigate the principal risks
identified from this process.
Our risk management process categorises
our principal risks into Strategic, Financial,
People and Operational.
Within this process we assess all risks that
could have a significant impact on the ability
of the business to deliver its short-term plans
and medium and long-term strategy. This
includes reviewing for any emerging risks.
The Executive Board and the Board
continue to focus on Strategic, People and
Financial risks. For these, we disclose KPIs
which we use to monitor the risk impact,
and the rewards and incentives we apply to
ensure effective management.
See strategic framework on page 9.
Our Operational risks are those that the
Executive Board have agreed can be
managed by our people on a day-to-day
basis. These are included within our risk
registers and are reviewed by the Board on
an exceptions basis.
The risks around cyber security and
compliance with Data Protection legislation
are such exceptions which are reviewed at
Board level on an ongoing basis.
Our risk evaluation includes matters
relating to all our key stakeholders
and encompasses considerations of
governance, social, environmental and legal
requirements.
Our Risk and Control Framework
Controls
Functions
Review
Risk and Control Framework
Business
Reviews/ Internal
Control Checklists
Management
Policies and Procedures
Compliance Team
Risk Registers
Group Finance
Risk Management/
Group Financial Control
Executive Board
Board/Audit Committee
Audit Reports
Quarterly Updates
Internal Audit
Annual Report and Accounts 2019
38
Risk appetite and
net risk levels
Recruitment is inherently sensitive
to the economic environment and
thus financially dependent on the
economic cycle.
PageGroup operates in this environment
with a low risk appetite, seeking to
mitigate its strategic risks, maintain a
strong financial position and only taking
the operational risks it has the experience
and capability to manage.
Our growth model is organic, rolling out
the proven disciplines for our brands
to a wide geographic spread. We drive
this by developing and promoting our
people from within the business, ensuring
consistency of model and business
culture across the Group.
We continue to focus on the services
we provide to our clients and candidates
ensuring quality engagements in a
manner that meets both their needs
and expectations and our targets for
process efficiency.
We maintain a strong sales driven,
meritocratic culture with a commitment
to operating in an ethical, legal and
sustainable manner.
We will always operate a conservative
financial position with a strong balance
sheet, reflecting the degree of operational
gearing inherent in the business.
This measured approach to taking
risk ensures we are best placed for
success globally.
Risk categories
Strategic
People
Operational
Financial
People attraction,
development and retention
Shift in business model
Transformation
and change
PageGroup brands
and reputation
Macro-economic
exposure
Foreign exchange –
translation risk
Information systems
Cyber security
Fiscal and
legal compliance
Financial management
and control
Data protection
regulations
Net risk level
LOW
MEDIUM
HIGH
Intended improvements
Unacceptable to take risk
Higher willingness to take risk
1. Macro economic exposure
2. Shift in Business Model
3. People
4. PageGroup brands and service
5. Foreign exchange translation
6. Information systems
7. Transformation and change
8. Cyber security
9. Fiscal and legal compliance
10. Data protection regulations
11. Financial management and control
2018
2019
2018
/19
2018
/19
2018
/19
2018 2019
2018
/19
2018
/19
2018 2019
2018 2019
2018
/19
2017
/18
2018
/19
LOW
MEDIUM
HIGH
Risk appetite range
2019
PageGroup actual net risk assessment
Corporate GovernanceFinancial StatementsAdditional InformationSTRATEGIC REPORT STRATEGIC REPORT 39
PRINCIPAL RISKS AND UNCERTAINTIES
The Board’s view of direction of travel of gross risk:
Similar to prior year
Lower than prior year
Increased since prior year
Strategic Risks
Shift in Business Model
Actions to mitigate risk
The emergence of new technology
platforms and providers offering HR
solutions and consulting 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 fail to take advantage of technology
opportunities to support our drive on
productivity and customer and candidate
experience.
Transformation and change
The Group continues to invest in new
systems and processes. These are required
to support our capabilities to continue to
deliver appropriate services to our clients
and candidates in a cost effective, flexible
manner.
These investments bring inherent change
risks of quality, cost or time.
Having delivered a Global Finance System,
Shared Service Centres and transformed
our IT capability into a global service, the key
programme in progress is the change of our
global front end systems which commenced
in 2019 and has so far been successfully
implemented in two countries.
PageGroup brands and services
As the way clients and candidates source
information changes, the awareness of the
PageGroup brand and services for clients
and candidates could deteriorate.
The quality and relevance of service we
provide to both clients and candidates,
could have a significant impact on how our
brand is viewed.
An event such as a failure to comply
with legislation, or other regulatory
requirements, or confidential data lost or
stolen could cause reputational damage
to the Group. Use of new social media
network sites has increased the speed of
communication and reach, increasing the
impact of any such event.
Incidents such as the outbreak of the
COVID-19 virus could impact on our ability
to deliver services to our clients
and candidates.
• We actively monitor developments in new technologies and their use in the recruitment sector.
• As well as our ongoing day-to-day interaction with clients and candidates we conduct formal surveys
through our Exact Target programme which we have standardised across the Group to understand how
candidate and client needs are developing.
• We have established an innovation infrastructure with Executive Board Governance and regional innovations
groups embedded globally. These teams continually generate ideas that are evaluated and those that pass
our criteria are developed and piloted through an externally managed innovations lab. The team is focused
on driving both productivity and provision of new services (link to Brands and services risk).
• We partner with the large media providers, such as LinkedIn and Facebook, to ensure that we use this form
of media effectively to enhance our value to clients. All consultants are trained in utilising the benefits of
social media in their day-to-day activity.
• We train our consultants in the use of the new technologies to enable them to resource candidates for our
clients at an overall cost that they cannot match.
• Our Global IT strategy and organisation structure enables us to act rapidly in rolling out new technologies
across the Group.
• We are driving improved quality and use of data including accessibility to enable greater insights.
Improvements in data, tools and processes will enable increased sales performance.
Actions to mitigate risk
• We have a COO function that ensures effective Governance of our programmes which are reviewed by our
Executive management team on a regular basis to ensure delivery to plan.
• This is supported by a Group Programme Management Office, PMO, which defines policies and processes
to deliver programme change activities.
• We establish and resource business change programmes for each of our major initiatives. Each has
a dedicated management team working across all areas of the business to ensure effective planning
implementation and decision making. A team led by experienced operations personnel has been
established to lead the change to our front end systems.
• We support our programmes with third party systems implementation expertise.
• We have selected best in class software that has a global capability and can be rolled out to all our
operating units.
• A global finance structure with Global Process Owners, shared service centres and a technical Hub has
been established to ensure our processes support the Global Finance System across all regions.
Actions to mitigate risk
• We actively monitor media online through Brandwatch to identify where there are unusual references to the
PageGroup, Michael Page, Page Personnel, Page Executive and Page Outsourcing trademarks.
• Our marketing strategy recognises the need to engage with candidates and clients using the latest media
available in a way that reflects changing behaviours. We conduct ongoing surveys of clients and candidates
to ensure that we understand requirements and can adapt our processes and procedures accordingly.
• Our innovations process enables ongoing development of our proposition from idea generation and piloting
through to industrialisation, which is effective at filtering innovations to focus on higher quality ideas.
• We have a programme of activity which ensures that we communicate effectively the Page brands, keeping
awareness high among both current and potential clients and candidates.
• We train our consultants to use new media effectively, making the channels available to them as part of their
day-to-day activity.
• We have centralised and developed a comprehensive brand management policy which includes key areas
such as social media, data protection and information security.
• We are supported by external advisers who provide ongoing advice on the protection and management of
our brand.
• We have in place a tested incident response process with clear escalation and activity guidelines to ensure
any incidents are managed effectively.
Annual Report and Accounts 2019 40
People
People attraction, development
and retention
PageGroup needs to hire, train and retain a
large number of appropriately skilled people
across the Group to achieve its vision.
The factors that motivate, encourage and
enable individuals to perform to their best
have and will continue to evolve with an
emphasis on work life balance, flexibility and
the working environment.
Diversity is a key enabler to any successful
business. A lack of diversity in our people
will impact on the achievement of our
objectives.
Our biggest challenge is still to address
attrition levels during the first year of training.
The wellbeing of our people is an important
aspect of our business. The recent outbreak
and uncertainty around the COVID-19 virus
has put this clearly into focus.
Actions to mitigate risk
• We promote the Group’s purpose through our value proposition to ensure we can attract the right
quality of individual and retain our current people.
• We continue to make significant investment in HR resources at Group and Regional levels.
These all support our HR programmes which are focused on addressing issues around attraction,
development and retention.
• We are also addressing issues such as work-life balance, flexible working, benefits schemes and
equality that are seen to have a positive impact on employees. Our Page programmes covering
these areas have been rolled out around the Group. We conduct exit interviews to ensure that we
are aware of any underlying issues that need to be addressed.
• We have invested in online learning capabilities. BOOST!, our Global training application is
incorporated into a blended learning experience for our people.
• We have a truly Global talent, succession and development process that ensures a strong talent
pipeline and addresses any gaps at senior management level.
• We have Group-wide initiatives which look at the issues around achieving diversity. These are part
of our wider PageGroup programmes which combined will ensure we create an open environment
where working practices suit and encourage diversity in all its aspects.
• We conduct regular employee surveys, the latest in 2019. This helps us to see how our people
view working at PageGroup and provides feedback to enhance areas we do well and address
areas for improvement.
• We have in place both a Group-wide health and safety policy, which places the health and safety
of our people and the wider community involved with Page at the heart of our business. It also
defines operational requirements which when combined with a tested incident response process
enables us to effectively manage incidents which impact on our personnel.
Operational Risks
Information Systems
Actions to mitigate risk
• We have aligned our IT management structure to meet business requirements with a focus on
demand management and the processes to manage the delivery of IT change.
• We have increased the quality of support services implementing self service capabilities,
simplifying and standardising our technology including the user desktop experience.
• Focus is given to programmes delivering the greatest benefits with greater engagement with
business users to ensure that we build relevant IT systems.
• We have transitioned our activities to a Cloud based service model providing scalable and
resilient services.
• Our central procurement team, in addition to supporting management in commercial
negotiations, ensures that relationships with third parties are appropriately defined and managed.
This includes strategic reviews, service delivery, compliance and process resilience.
Our systems are an integral part of our
operations. A major loss of systems’
capability would have a high impact on
our performance, impacting the quality
of service we provide to clients and
candidates and our ability to deliver our
financial performance.
Failure of our IT systems to adapt to
levels of business activity could result in
lost opportunity during periods of rapid
expansion or excessive costs during
periods of contraction.
The move to the delivery of IT as a flexible
service increases our reliance on third party
vendors for service delivery. Should one of
these vendors fail we are at risk of a service
disruption.
Our systems must be able to adapt to the
evolving technologies around Cloud to allow
faster implementation of innovation or we
could miss business opportunities.
Corporate GovernanceFinancial StatementsAdditional InformationSTRATEGIC REPORT STRATEGIC REPORT 41
Operational Risks
Cyber Security
Actions to mitigate risk
Confidential, sensitive and personal
data is held across the Group. Failure
to secure and handle this data properly
could result in loss of data or impairment
of data quality, exposing the Group to
loss of business, financial penalties and/or
reputational damage.
The business relies on the use of systems
to operate our activities effectively – any
unauthorised access to these systems
could disrupt their operation.
Our migration to a Cloud based
service model, significant use of digital
communications and the developing
social media environment has increased
the Group’s exposure to external threats.
We operate in an external environment
that is seeing an increase in number
and sophistication of cyber attacks from
sources including organised crime and
nation states.
• We have information security policies in place for the management of confidential, sensitive and
personal data. Security risks are identified through a structured process of assessment and a
programme of remediation activities is executed with activities prioritised according to the associated
level of business risk.
• We have a dedicated Global Information Security team that ensures our information remains protected.
This includes ensuring appropriate multi-layered protection at network and system levels, and regular
monitoring and third party testing of our capabilities. The team comprises Security Operations, Security
Architecture and Information Security Management. The team deals with IT security matters and works
directly with suppliers and key business stakeholders to ensure everyone across the business protects
the data of our Group, our clients and our candidates.
• We have technical security protections in place that mitigate the risks posed by the use of modern
communications media, Cloud services and mobile devices. The threat landscape is under constant
review to ensure our technology provides the right level of protection.
• Supplier contracts are negotiated and reviewed to ensure data protection and IT security obligations are
included as a standard requirement.
• New IT projects and initiatives are reviewed for security risk, to ensure new technologies are adopted
safely.
• Security vulnerabilities are assessed regularly and the remediation of identified risks and alerts is tracked
to conclusion. Regular security assurance checks take place across all regions and penetration testing is
undertaken by specialist third parties.
• The Board and Audit Committee reviews data security on a regular basis and receives updates on the
status of our security programme.
• We run an employee security awareness programme which includes training and security simulations.
Fiscal and legal compliance
Actions to mitigate risk
The Group operates in a large number of
legal jurisdictions that have varying legal,
tax and compliance requirements. Any
non-compliance with either client contract
requirements or legislation and regulatory
requirements could have an adverse effect
on the Group’s brands or financial results.
• The General Counsel & Company Secretary and local legal and compliance teams are advised by leading
external advisers, as required, with regard to changes in legislation that affect the Group’s business,
including employment, legislation, tax and corporate governance.
• Our staff receive induction training and regular updates regarding the Group’s policies and procedures
and compliance with relevant legislation covering, for example, discrimination, anti-bribery and corruption,
sanctions and pre-employment checks.
• The Group has central tax and treasury functions, which support the management of the Group’s tax and
cash compliance including sanctions.
• The Group tax function regularly monitors transfer pricing requirements and developments to ensure that
appropriate actions are being taken and appropriate documentation is being maintained to meet local
reporting and compliance requirements.
• The Group holds all normal business insurance cover including employers’ liability, public liability and
professional indemnity insurance.
• Sales and procurement contracts include clauses to ensure the Group’s rights are protected. All non
standard contracts are legally reviewed and where appropriate approved by senior management.
Financial management and control
Actions to mitigate risk
Failure to maintain adequate financial
and management processes and
controls could lead to either poor quality
management decisions or errors in the
Group’s financial reporting.
• The Group has in place financial policies and procedures which are reviewed on a regular basis.
• Regional and local finance teams ensure that Group reporting adheres to these policies as well as
ensuring local statutory requirements are met. The Group Finance function reviews submissions to ensure
policies are adhered to.
• Monthly management information is produced that supports effective financial management
• The Group operates regional shared service centres under a Global reporting structure which, as well
as driving efficiencies, enables more effective control of activities through common processes and
segregation of control activities.
• The Finance Structure supports local, regional and Group management structures.
• There are compliance teams located in each region that support the local, regional and Group
management in ensuring revenues are appropriately recognised.
• Internal Audit regularly review local and regional financial controls and report on the results to the
Executive Board and the Audit Committee.
Annual Report and Accounts 2019 Operational Risks
Data Protection Regulations
Actions to mitigate risk
42
A Global operating business which relies
on effective management of data needs to
ensure it complies with the varying legislative
requirements. These requirements have
evolved significantly.
New European data protection legislation
which came into force in May 2018
increased data governance and management
requirements significantly, as well as
increasing the potential penalties for non
compliance or data breaches.
Legislation introduced in June 2017 in the
People’s Republic of China, requires data of
Chinese citizens to be held and processed in
Mainland China.
Change proposals are in process in countries
such as Brazil which will continue to change
the requirements on how business processes
are operated.
Failure to maintain compliance in this
changing environment could lead
to increasing levels of penalty, legal
consequences and reputational damage.
Financial Risks
Macro-economic exposure
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
profits arise from fees that are contingent
upon the successful placement of a
candidate. In these cases if the client cancels
the assignment at any stage in the process,
the Group receives no remuneration.
The Geopolitical tensions around trade tariffs
between the US and China continue to drive
uncertainty into the Global economy.
In the UK, Brexit continues to create
uncertainty, causing a nervous
trading environment impacting on
the performance of the economy.
The outbreak of the COVID-19 virus which
has already impacted economic activity in
China could have further significant impact
on the economies in which we operate.
• A data protection office has been created with resources at Group and regional levels to ensure
that processes continue to deliver against compliance requirements.
• The Group has engaged with external specialist providers of DPO services in each region to
support our processes and ensure they continue to meet good practice requirements.
• A review of our processes and procedures in China has been conducted with the support of a
third party specialist consultancy to validate compliance with an action plan in place to address
any deficiencies.
• A Privacy Director has been recruited to support local management in developing plans to
address new requirements in Brazil and the USA.
• Policies and processes such as crisis management, change management, contracts, third party
service providers and HR and payroll policies have all been updated to reflect the additional
requirements from data protection legislation.
Actions to mitigate risk
• We continue to diversify our business in terms of geography, and our historic reliance on the
UK. We now operate in 36 countries with 84% of the Group’s gross profit being generated outside
of the UK.
• We also look for opportunities to diversify through the brands and disciplines in which we operate.
We have increased the number of disciplines we support and continue to roll these out through
our current office network. We have established 4 brands to address the different levels of the
recruitment market, the clerical professional sector, the qualified professional market and the
executive market, as well as project or volume recruitment
• We have also diversified our offering through the mix of permanent and temporary recruitment that
we offer to the market. Temporary recruitment now represents over a quarter of the Group, and
we are seeing new temporary markets start to emerge in places such as Asia and Latin America,
where historically for cultural reasons one did not exist. The temporary business tends to be more
resilient in times of economic downturn.
• We have also diversified by focusing on the local, domestic markets in which we operate. When we
first enter a market, our brand awareness is stronger with multinational clients.
• We continue to focus on our cost structures, ensuring that costs are variable to levels of demand.
As well as our variable operational staffing costs, our move to an IT service based model with our
transition to the Cloud, enhances this capability. Our regional Shared Service Centre approach to
support activities also gives us greater flexibility in resource allocations.
Foreign exchange translation
Actions to mitigate risk
The majority of the Group’s operating
profit is derived from operations outside
of the UK, so material changes in the
strength of Sterling against the Group’s
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,
Swiss Franc, Chinese Renminbi, Hong
Kong and US Dollars.
• We do not hedge our exposure to foreign exchange translation risk, instead focusing on ensuring
the market adjusts correctly for any impact.
• We repatriate funds converting them to Sterling to fund returns to shareholders. Our Group
Treasury function takes a lead role in the management of our cash resources.
• We have a negligible amount of cross border trading activity, so the impact on transactions
is limited.
Corporate GovernanceFinancial StatementsAdditional InformationSTRATEGIC REPORT STRATEGIC REPORT 43
PRINCIPAL RISKS AND UNCERTAINTIES
Going concern
In adopting the going concern basis for
preparing the financial statements for
accounting purposes under International
Accounting Standard 1 “Presentation of
Financial Statements”, the Directors have
considered the business activities of the
Group as well as the principal risks and
uncertainties as set out on pages 39 to 42.
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
Directors are satisfied that the Group
has adequate resources to continue in
operational existence for the foreseeable
future, being a period of at least 12 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.
Viability statement
Assessing the prospects of the
Company
Our strategy and the key risks we face
are described on pages 9 to 16 and 38 to
42. A full business forecasting process is
performed on a quarterly basis, with a full
budget for the following year created during
October and November, being presented to
the Board in December. The Board reviews
the Group’s 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. Discussion
around strategy is undertaken by the Board
in its normal course of business, as well as
at an annual dedicated strategy day.
We also prepare longer-term projections
which drive our Strategic Vision. These are
typically three years. Our Strategic Vision
provides a clear vision for the Group, aligns
the Group to one clear culture, provides
Description
Business Model
clarity on investment priorities, branding,
belief in achievable goals, and clarity on the
goals for our financial vision.
The period over which we
confirm longer-term viability
Within the context of the above, in
accordance with provision 31 of the 2018
revision of the UK Corporate Governance
Code, the Board has assessed the viability
of the Group. Given the inherent uncertainty
involved, the period over which the Directors
consider it possible to form a reasonable
expectation as to the Group’s longer term
viability is the three year period to 31
December 2022. This period has been
selected as it is short enough to present
the Board and, therefore, users of the
Annual Report with a reasonable degree
of confidence, while still providing an
appropriate longer-term outlook. While the
Board has no reason to believe the Group
will not be viable over a longer period, the
Board has taken into account the short-term
visibility inherent in a recruitment business
with a permanent recruitment bias.
Stress testing
The forecasting and budgeting process
is also supported by scenarios that
encompass a broad range of potential
outcomes. These scenarios are designed
to explore the resilience of the Group
to the potential impact of the significant
risks as set out on pages 39 to 42, or a
combination of those risks. We considered
cyber incidents, disintermediation by way
of innovation, changes in technology,
movements in foreign exchange rates, and a
global downturn, which included modelling
of the impact of global incidents such as
COVID-19. We have assumed that, as in
the past, as downside risks materialise our
headcount will flex through natural attrition
in line with the drop in gross profit, such that
the impact on operating profit is partially
mitigated.
The scenarios were designed to be severe,
but plausible and were modelled individually
and in combination. In each case, the Group
remained viable throughout. However, it
is considered extremely unlikely that this
combination of events would ever occur.
Controls are also in place, where possible, to
mitigate the impact of these scenarios and
these are described on pages 39 to 42.
Various events may also alert the Main and
Executive Boards to a potential threat to
viability for example, a drop in GDP in a
particular country may lead to a reduction
in gross profit growth rates. We consider
that this stress testing based assessment of
the Group’s prospects is reasonable in the
circumstances given the inherent uncertainty
involved.
Confirmation of longer-term
viability
The Directors confirm that their assessment
of the principal risks and uncertainties facing
the Group was robust.
Based upon the robust assessment of the
principal risks and uncertainties facing the
Company and the stress testing based
assessment of the Company’s prospects,
all of which are described above, the
Directors have a reasonable expectation
that the Company will be able to continue in
operation and meet its liabilities as they fall
due over the period to 31 December 2022.
However, we operate in an environment of
limited visibility, dependent upon confidence
in the global marketplace. Further weakness
in the macro-economic outlook may cause
us to adapt our strategy during the three-
year period in response, leading to a re-
evaluation of additional risks involved which
might impact the business model.
Compliance with Section 414 of
the Companies Act 2006
We have complied with the requirements
under the provisions of The Companies Act
2006 contained in Sections 414CA and
414CB of the Companies Act 2006. The
relevant references can be found below:
Non-financial Key Performance Indicators
Description and management of principal risk and impact of business activity
Employees
Social and community
Respect for human rights
Anti-corruption and anti-bribery
Environmental matters
Page
5
19-22
37-42
25-34
25-34
25-34
61 and 69
21-22 and 31
Annual Report and Accounts 2019 44
STAKEHOLDER ENGAGEMENT
Section 172 of the Companies Act
2006 requires Directors to take into
consideration the interests of stakeholders
in their decision-making.
In particular, section 172(1) states that
regard should be had to the long term
consequences of decisions, the interests
of the company’s employees, the
need to foster the company’s business
relationships with suppliers, customers
and others, the impact of the company’s
operations on the community and the
environment, and the desirability of the
company maintaining a reputation for high
standards of business conduct.
Consideration of stakeholders’ interests
has always been integral to the work of
the Board and in its decision making.
The Board understands that providing
global recruitment services touches many
people’s lives. It also understands the
importance of ensuring it has an effective
engagement framework to capture
feedback on the business’s impact. With
this in mind, in 2019 the Board took the
opportunity to formalise its approach to
stakeholder engagement and adopted
a stakeholder engagement policy. The
policy sets out its understanding of
the Company’s key stakeholders, their
interests and how it seeks to engage
with them.
The Board has had guidance on
stakeholder issues and briefings from the
General Counsel & Company Secretary
and it has introduced a requirement that
papers on topics which may impact
stakeholder groups should seek to set
out stakeholder interest matters wherever
relevant.
The following describes how the directors
have had regard to the matters set out
in section 172(1) of the Companies
Act 2006. This section of the strategic
report and the pages to which it refers,
comprises the Company’s section 172(1)
statement together with the statements
as to how the directors have engaged
with employees and had regard to their
interests and how the directors have
had regard to the Company’s business
relationships with customers, suppliers
Our commitment to our stakeholders
and other external stakeholders.
During the year the Board reviewed and
assessed who they considered to be
the Company’s key stakeholder groups.
These are identified below together with
the reasons why each stakeholder group
is consider key.
Clients & Candidates: the success of
the business depends on offering first
class recruitment services and solutions
to our customers.
Investors: providing returns to those
who invest in the Company ensures our
sustainability.
Employees: we are a people business
and delivering the best service possible
can only be achieved through having an
engaged workforce.
Suppliers: our business needs
responsible business partners with
expertise in areas outside of recruitment.
Communities & Government: having a
positive impact on society is inextricably
linked to our culture.
Investors
Clients & Candidates
Employees
Look for investment growth and
want confidence their investment
is under sound stewardship.
Rely on us to provide world class specialist recruitment
services and solutions to help drive their business and
careers forward.
Communities & Government
Suppliers
Need businesses that have a positive impact.
Seek strong and enduring partnerships
based on fair terms.
Want to work in a
supportive, inclusive
culture where they
experience real
opportunities for
development and
a long and rewarding
career.
Mechanisms of Engagement & Feedback
Investors
Communities & Government
Employees
AGM
Investor Roadshows
Consultation programmes
Communications and
publications – regular
investor report provided
to Board
Review of CSR activity as part of culture review
Have Your Say & glassdoor surveys
Annual consideration of tax strategy & modern
slavery policy
Regular updates to the Board on regulatory
engagement
@Page networks
Yammer
Board attendance at senior leadership
conferences, office visits and company events
Speak up helpline
Clients & Candidates
Suppliers
Customer satisfaction surveys
Market deep dive presentations
Key Supplier relationships update
Review of modern slavery policy and anti-bribery and corruption arrangements
Corporate GovernanceFinancial StatementsAdditional InformationSTRATEGIC REPORT STRATEGIC REPORT 45
REVIEW OF STAKEHOLDER ENGAGEMENT
• The Board consider it important to pay
suppliers promptly. Our UK trading
company’s latest payment practice
reporting shows that the average time
taken to pay invoices is 2 days and 98%
of invoices are paid within 30 days.
Case Study: Capital Allocation
Special Dividend
The Board declared a dividend of 26.43p
for the year, of which 12.73p was a special
dividend. This was a principal decision of
the Company during the year. In determining
whether to approve the special dividend the
Directors considered a number of factors.
The Directors considered the long-term
success of the Company and the interests
of the company’s other stakeholders before
approving the special dividend. The Board’s
consideration of those issues included
a review of the Group’s cash position,
investment projects, history of returns,
consensus for dividend per share, our
competitors return rates and the appropriate
allocation method i.e. special dividend vs.
share buyback. It considered the Group’s
strong cash position net of investment and
took account of on-going costs including
employee and supplier costs and proposed
investment into the business and its people.
The Board concluded that payment of the
dividend would benefit shareholders as a
whole while ensuring the Company had
appropriate resources to support other key
stakeholder groups.
Clients & Candidates
• The Board reviews summary reports on
client satisfaction surveys such as Feefo
ratings and Net Promoter Scores. The
Group’s Marketing Director and Chief
Operating Officer regularly attended
Board meetings and strategy sessions
to discuss feedback from clients and
enabled review of initiatives designed
to aid understanding of our customers’
needs. This engagement has helped
the Board prioritise investment in new
technologies.
• To ensure it has up to date knowledge
of market trends and economic factors,
each year the Board identifies markets or
regions it wishes to engage in deep dive
sessions. In 2019 sessions on LATAM,
India and Japan occurred and has
resulted in assisting the Board making the
key decisions in terms of location strategy
and market focus.
Investors
• Quarterly reports are provided to the
Board on shareholders’ feedback.
• An extensive programme of investor
engagement has occurred. In 2019, nine
roadshows were undertaken. The Chief
Executive Officer, Chief Finance Officer
and Investor Relations team have also
met with a number of shareholders over
the course of the year.
• The Chairman has written to all of our
largest shareholders and held individual
meetings by way of follow up where
shareholders are available.
• An extensive shareholder consultation
exercise was undertaken across the
shareholder base to gather views on
the remuneration policy review. In
total we engaged with investors that
represent over two-thirds of our shares
in circulation, and three key shareholder
bodies.
• All of these engagement activities give rich
feedback to our Board on investors’ views
on strategy and governance matters and
has helped inform its decision making
in many ways such as retention of the
Group’s remuneration structure and on-
going commitment to the Group’s Vision.
Employees
• Board members dedicated considerable
time in the year to overseeing
implementation of a robust culture
framework and ensuring the employee
voice is heard in the Boardroom.
• Our Non-Executive Directors gain insights
into our workforce in a number of ways,
including attendance at various Company
events.
• Principal decision-making which took
account of employees’ interests included
investing in a new operating system for
consultants and undertaking to implement
a more robust exit interview programme.
• Feedback from our all employee survey
helped contribute to the new operating
system being rolled out to consultants to
consultants (see details on page 30) and
insights from our employees contributed
to the decision to launch a new exit
interview programme.
• The Board is appraised of all calls to our
“Speak Up” helpline and reviews the work
undertaken in response to any
calls received.
• Further discussion of Board engagement
with our people is set out on page 30.
Communities & Government
• The Board strongly supports CSR and
fundraising activity which is carried out
around the world.
• Areas considered as crucial to the
conduct of the Group’s business in
the wider community such as modern
slavery and the Group’s tax strategy are
discussed at the Board or its Committees
on an annual basis.
Suppliers
• Relationships with key suppliers are
regularly discussed in Board meetings
as seen this year with the quarterly
updates the Board received on progress
of the Global Finance System roll-out,
which included details of the key supplier
relationship.
• To ensure fairness and best practice for
our suppliers the directors oversaw the
roll-out of a refreshed anti-bribery and
corruption policy and training programme.
Annual Report and Accounts 2019 46
REVIEW OF THE YEAR
Financial summary
Revenue
Gross profit
Operating profit
Profit before tax
Basic earnings per share
Diluted earnings per share
Total dividend per share (excl. special dividend)
Total dividend per share (incl. special dividend)
Change
CC*
+7.0%
+5.0%
+2.2%
2019
2018
Change
£1,653.9m
£1,549.9m
£855.5m
£146.7m
£144.2m
32.2p
32.2p
13.70p
26.43p
£814.9m
£142.5m
£142.3m
32.5p
32.4p
13.10p
25.83p
+6.7%
+5.0%
+3.0%
+1.4%
-0.9%
-0.6%
+4.6%
*At constant currency – all growth rates in constant currency at prior year rates unless otherwise stated
At constant exchange rates, the Group’s
revenue increased 7.0% and gross profit
increased 5.0% for the year ended 31
December 2019. At reported rates,
revenue increased 6.7% to £1,653.9m
(2018: £1,549.9m) and gross profit
increased 5.0% to £855.5m (2018:
£814.9m).
The Group’s revenue mix between
temporary and permanent placements
was 61:39 (2018: 59:41) and for gross
profit our permanent to temporary ratio
was 75:25 (2018: 76:24). Revenue
from temporary placements comprises
the salaries of those placed, together
with the margin charged. This margin
on temporary placements increased
slightly to 21.1% in 2019 (2018: 21.0%).
Overall, pricing remained relatively stable
across all regions, although a stronger
Regional reviews
Gross profit
Year-on-year
EMEA
Asia Pacific
Americas
UK
Total
Permanent
Temporary
pricing environment was experienced
in markets and disciplines where there
were increased instances of candidate
shortages.
Our Large, High Potential markets
category increased gross profit by 9%
in constant currencies and achieved a
record gross profit of £298.1m, now
representing 35% of the Group. This was
achieved despite the tougher trading
conditions in Greater China, due to trade
tariff uncertainty in Mainland China and
social unrest in Hong Kong. Excluding
Greater China, growth was 16%.
Total Group headcount decreased by
74 in the year to close at 7,698. This
comprised a net decrease of 89 fee
earners (-1.5%) and an increase of 15
operational support staff (+0.9%). Our
fee earner headcount responded to the
increasingly tough market conditions
seen as the year progressed, with
macro-economic uncertainties in many
of our markets. Our operational support
headcount increased to support our
strategic transformation projects, although
many of these came to an end towards
the end of the year, with a net reduction of
37 in Q4. As a result of these movements,
our fee earner to operational support
staff ratio was 78:22 (2018: 79:21). In
total, administrative expenses increased
5.4% to £708.8m (2018: £672.4m). The
Group’s operating profit from trading
activities totalled £146.7m (2018:
£142.5m), an increase of 2.2% in constant
currencies and 3.0% in reported rates.
% of Group
2019 (£m)
2018 (£m)
Reported
49%
19%
16%
16%
100%
75%
25%
418.3
163.3
138.8
135.1
855.5
643.8
211.7
394.3
161.2
121.0
138.4
814.9
621.7
193.2
%
+6.1%
+1.3%
CC
%
+7.0%
-0.3%
+14.7%
+13.8%
-2.4%
+5.0%
+3.5%
+9.6%
-2.4%
+5.0%
+3.3%
+10.4%
Corporate GovernanceFinancial StatementsAdditional InformationSTRATEGIC REPORT STRATEGIC REPORT 47
REVIEW OF THE YEAR
Europe, Middle East and Africa (EMEA)
EMEA
Gross profit (£m)
Growth rates
(49% of Group in 2019)
Gross profit
Operating profit
2019
418.3
90.3
Conversion rate (%)
21.6%
2018
394.3
85.6
21.7%
Reported
+6.1%
+5.5%
CC
+7.0%
+6.5%
Market presence
EMEA is the Group’s largest region,
contributing 49% of the Group’s gross profit
in the year. With operations in 17 countries,
PageGroup has a strong presence in the
majority of EMEA markets and is the clear
leader in specialist permanent recruitment in
the two largest, France and Germany. Across
the region, permanent placements accounted
for 68% and temporary placements 32% of
gross profit.
The region includes four of our Large,
Proven markets, France, Spain, Italy and the
Netherlands, across which there is a broad
range of competition. EMEA also includes
Germany, one of the Group’s Large, High
Potential markets, which has low penetration
rates (markets where less than 30% of
recruitment is outsourced) and significant
Asia Pacific
growth potential, particularly in temporary
recruitment. In addition, there are markets
such as Poland, Turkey and Africa, which
are less developed, with limited competition,
but are increasingly looking for professional
recruitment services.
Performance
In 2019, the EMEA region saw market
conditions deteriorate as the year
progressed, despite this, 9 countries
delivered record gross profit for the year.
In constant currencies, revenue increased
9.0% on 2018 and gross profit increased
by 7.0%. In reported rates, revenue in the
region was up 8.1% to £861.8m (2018:
£797.4m), and gross profit increased 6.1%
to £418.3m (2018: £394.3m).
Our largest businesses in the region, France
Asia Pacific
Gross profit (£m)
Growth rates
(19% of Group in 2019)
Gross profit
Operating profit
2019
163.3
19.8
Conversion rate (%)
12.1%
2018
161.2
26.8
16.6%
Reported
+1.3%
-26.0%
CC
-0.3%
-28.7%
Market presence
Asia Pacific represented 19% of the Group’s
gross profit in 2019, with 76% of the region
being Asia and 24% Australasia. Other
than in the financial centres of Hong Kong,
Singapore and Tokyo, the Asian market
is generally highly under-developed and
offers attractive opportunities in both
international and domestic markets at
good conversion rates. Two of our Large,
High Potential markets, Greater China and
South East Asia, are in this region. With a
highly experienced management team, over
1,300 staff and limited competition, the
size of the opportunity in Asia is significant.
Across Asia, driven by cultural attitudes
towards white collar temporary recruitment,
permanent placements accounted for 94%
and temporary placements 6% of gross
profit.
Australasia is a mature, well-developed
and highly competitive recruitment market.
PageGroup has a meaningful presence in
permanent recruitment in the majority of the
professional disciplines and major cities in
Australia and New Zealand. Page Personnel has
a growing presence and significant potential to
expand and grow market share.
Performance
In Asia Pacific, in constant currencies, revenue
increased 1.7% and gross profit decreased by
-0.3%. In reported rates, revenue increased
2.5% to £273.4m (2018: £266.7m), while gross
profit rose 1.3% to £163.3m (2018: £161.2m).
In Asia, representing 14% of the Group, gross
profit declined -1%. Greater China declined
-10% with trade tariff uncertainty impacting
confidence, as well as social unrest in Hong
Kong. South East Asia was up 6% on the
prior year, with strong performances in our
newer countries of Indonesia, Thailand and
Vietnam, offset by tougher trading conditions
in Singapore, which was impacted by the
and Germany, together representing half
of the region by gross profit, grew 4% and
20% respectively, for the full year in constant
currencies. Michael Page Interim in Germany,
which is mainly focussed on technology
and where we continue to invest heavily in
temporary and contracting recruitment, grew
38%. Elsewhere we saw good growth in
Benelux of +9%, Italy +10% and Spain +5%,
despite macro-economic uncertainty across
the region.
The Middle East and Africa, which
represented 4% of the region, grew 1%,
with tougher trading conditions in Africa.
2019 operating profit increased 5.5% to
£90.3m (2018: £85.6m), with the conversion
rate broadly flat at 21.6% (2018: 21.7%). The
region has the highest conversion rate in the
Group, though was slightly moderated by
more challenging macro-economic conditions
as the year progressed.
Headcount across the region increased by
18 (+0.5%) to 3,317 at the end of 2019
(2018: 3,299). We continued to invest in
markets where we saw growth, such as
Germany, offset by managing down our
headcount where we saw more challenging
conditions.
contagion from trade tariff uncertainty. India,
where we now have around 160 fee earners,
delivered a record year with growth of 32%.
Japan, where we invested heavily in fee
earners, saw growth of 11% and delivered a
record year. This was despite tougher trading
conditions in the second half of the year,
particularly amongst our international clients.
Australia grew 3%, with tougher trading in
New South Wales.
Operating profit decreased -26.0% to £19.8m
(2018: £26.8m), with the conversion rate
down at 12.1% (2018: 16.6%). Operating
profit and conversion rate in the region were
impacted by our continued investments in the
two large, high potential markets, as well as
investments in new offices in Bangalore and
Canberra, the Nikkei market in Japan and
new disciplines in Page Personnel Australia.
Operating profit was also impacted by tougher
trading conditions as a result of the trade tariff
uncertainty in Mainland China, which also
affected other markets in Asia, as well as the
social unrest in Hong Kong.
Headcount across the region declined by
-30 (-1.8%), ending the year at 1,679 (2018:
1,709). Our fee earner headcount in Greater
China decreased in response to the tougher
trading conditions, but we continued to invest
elsewhere, particularly in India and Japan.
Annual Report and Accounts 2019 48
The Americas
Americas
Gross profit (£m)
Growth rates
(16% of Group in 2019)
Gross profit
Operating profit
2019
138.8
19.3
Conversion rate (%)
13.9%
2018
121.0
16.7
13.8%
Reported
+14.7%
+15.2%
CC
+13.8%
+8.1%
Market presence
The Americas represented 16% of the
Group’s gross profit in 2019, being
North America (59% of the region) and
Latin America (41% of the region). The
US and Latin America are two of
the Large, High Potential markets in
our growth strategy. The US, where
we have eight offices, has a well-
developed recruitment industry, but in
many disciplines, especially technical,
there is limited national competition of
any scale. PageGroup’s breadth of
professional specialisms and geographic
reach is uncommon and provides a
competitive advantage. Latin America is
a highly under-developed region, where
PageGroup enjoys the market leading
position with around 800 employees in
six countries and 13 offices. There are
few international competitors and none
with regional scale. Across Latin America,
permanent placements accounted for
87% of gross profit and temporary
placements 13%.
Performance
In constant currencies, revenue increased
by 18.9% and gross profit increased
by 13.8%. In reported rates, revenue
increased by 19.0% to £205.1m (2018:
£172.3m) while gross profit increased
14.7% to £138.8m (2018: £121.0m).
In North America, our gross profit
increased by 13% in constant currencies.
The US grew 17%, despite a weaker
financial services sector in New York. Our
strategy of diversification continued, with
particularly strong performances from
our regional offices of Boston, Chicago,
Houston, Los Angeles and Philadelphia.
We increased our US fee earner
United Kingdom
UK
Gross profit (£m)
Growth rate
(16% of Group in 2019)
Gross profit
Operating profit
2019
135.1
17.3
Conversion rate (%)
12.8%
2018
138.4
13.4
9.7%
-2.4%
+28.9%
Market presence
The UK represented 16% of the Group’s
gross profit in 2019, operating from
26 offices covering all major cities. It
is a mature, highly competitive and
sophisticated market with the majority
of vacant positions being outsourced
to recruitment firms. PageGroup has a
market leading presence in permanent
recruitment across the UK and a growing
presence in temporary recruitment. In the
UK, permanent placements accounted for
69% and temporary placements 31% of
gross profit.
The UK business operates under the four
brands of Michael Page, Page Personnel,
Page Executive and Page Outsourcing,
with representation in 13 specialist
disciplines via the Michael Page brand.
There remains opportunity to roll-out new
discipline businesses under the lower
salary-level Page Personnel brand, which
now represents 26% of UK gross profit.
Performance
In the UK, revenue was flat on 2018 at
£313.6m (2018: £313.5m), whereas gross
profit declined -2.4% to £135.1m (2018:
£138.4m), reflecting a slight swing to
temporary recruitment as a result of the
continued economic uncertainty.
The UK experienced challenging market
conditions throughout the year due to
continued Brexit uncertainty impacting
candidate and client confidence. Page
Personnel, which represents a quarter of
headcount by 14% compared to last year,
as we continued to invest in this Large,
High Potential market.
In Latin America, gross profit was up 14%
year-on-year in constant currencies. Our
business in Brazil delivered growth of 14%,
with Mexico, our largest country in Latin
America, delivering a record year, with
growth of 20%. Elsewhere, the other four
countries in the region, with a headcount of
over 300, saw growth of 10%, collectively,
despite tougher trading conditions in
Chile in the second half of the year due to
political and social unrest.
Operating profit increased 15.2% to
£19.3m (2018: £16.7m), with a conversion
rate of 13.9% (2018: 13.8%). The Americas
was our fastest growing region. However,
the conversion rate was broadly flat on the
prior year as improvements in growth and
productivity in most markets were offset by
our continued investment in the two Large,
High Potential markets in the region, as
well as the challenging Financial Services
market in New York and social unrest
in Chile. Headcount across the region
increased by 48 (+3.6%) in 2019 to 1,376
(2018: 1,328).
the UK, grew 2% and delivered a record
year. Michael Page, which is focused
on more senior opportunities and was
impacted to a greater extent by the
uncertainty, declined -4%.
Despite these challenging market
conditions, operating profit increased
28.9% to £17.3m (2018: £13.4m) with the
conversion rate increasing to 12.8% (2018:
9.7%). While some of the improvement in
profitability was through tight control of our
cost base, partly as a result of the reduction
in headcount, our Customer First initiative
that was implemented in 2018, also led to
an increase in our conversion rate during
the year. Customer First restructured
the business, moving from operating on
a discipline to a regional basis, to more
closely align with our customers. This had
the effect of increasing productivity and
repeat business, a reduction in travel and
drove a reduction in the UK management
team.
Headcount decreased to 1,326 at the end
of December 2019 (2018: 1,436). Our fee
earner headcount reduced by 86 (8.6%)
in response to the challenging trading
conditions seen throughout the year.
Corporate GovernanceFinancial StatementsAdditional InformationSTRATEGIC REPORT STRATEGIC REPORT 49
REVIEW OF THE YEAR
Operating profit
and conversion rates
The Group’s organic growth model and
profit-based team bonus ensures cost
control remains tight. Approximately
three-quarters of costs were employee
related, including wages, bonuses, share-
based long-term incentives, and training &
relocation costs.
Depreciation and amortisation for the
year totalled £57.5m (2018: £19.7m), the
increase being due to £36.6m of additional
depreciation as a result of IFRS 16.
Amortisation relating to our operating system,
PRS, was £6.2m (2018: £6.9m).
Our fee earner to operational support staff
ratio was 78:22, as we reduced our fee
earner headcount in response to the more
challenging trading conditions seen across
many of the Group’s markets.
The Group’s conversion rate for the year of
17.1% was a decline from 17.5% in 2018.
This was due primarily to the tough trading
conditions seen in a number of the Group’s
markets, many of which have the highest
conversion rates in the Group.
In EMEA, conversion was broadly flat on
2018 at 21.6%. This was a combination
of more challenging macro-economic
conditions, offset by our continued focus
on conversion. In the UK, the conversion
rate increased from 9.7% to 12.8% as we
managed our cost base in response to the
continued Brexit uncertainty. In Asia Pacific,
conversion fell to 12.1% (2018: 16.6%),
mainly due to the tougher trading conditions
as a result of the trade tariff uncertainty in
Mainland China and social unrest in Hong
Kong. The Americas’ conversion rate was
broadly in line with 2018 at 13.9%. This
was our fastest growing region, benefiting
from our investment in its two Large, High
Potential markets.
A net interest charge of £2.4m was primarily
due to an IFRS 16 interest charge of £2.0m.
Excluding IFRS 16, the net interest charge of
£0.4m reflected borrowing facility charges,
partially offset by interest income, albeit in
the continued low interest rate environment.
Earnings per share
and dividends
In 2019, basic earnings per share decreased
-0.9% to 32.2p (2018: 32.5p), due to an
increase in the effective tax rate from 27.1%
to 28.3%. Diluted earnings per share, which
includes the dilutive effect of share options,
decreased -0.6% to 32.2p (2018: 32.4p).
The Group’s strategy is to operate a policy
of financing the activities and development
of the Group from our retained earnings
and to maintain a strong balance sheet
position. We first use our cash to satisfy our
operational and investment requirements
and to hedge our liabilities under the Group’s
share plans. We then review our liquidity
over and above these requirements to make
returns to shareholders, firstly by way of an
ordinary dividend.
Our policy is to grow this ordinary dividend
over the course of the economic cycle, in
line with our long-term growth rate. We
believe this will enable us to sustain the
level of ordinary dividend payments during
a downturn as well as to increase it during
more prosperous times.
Cash generated in excess of these first two
priorities will be returned to shareholders
through supplementary returns, using
special dividends or share buybacks.
In line with the growth rates and increase
in operating profits, a final dividend of
9.40p (2018: 9.00p) per ordinary share is
proposed. When taken together with the
interim dividend of 4.30p (2018: 4.10p) per
ordinary share, this is an increase in the total
dividend for the year of 4.6% over 2018 to
13.70p per ordinary share.
The proposed final dividend, which amounts
to £30.2m, will be paid on 19 June 2020 to
shareholders on the register as at 22 May
2020, subject to shareholder approval at the
Annual General Meeting on 4 June 2020.
After consultation with our shareholders,
we also paid a special dividend of 12.73p
per share (2018: 12.73p per share) on 9
October 2019, totalling £40.7m. We will
continue to monitor our cash position in
2020 and will make returns to shareholders
in line with the above policy.
Cash flow and balance sheet
Cash flow in the year was strong, with
£194.1m (2018: £131.7m) generated from
operations. The closing cash balance was
£97.8m at 31 December 2019, broadly in
line with the prior year. The movements in
the Group’s cash flow in 2019 reflected the
underlying trading conditions, with a £15.9m
increase in working capital.
The Group had a £50m invoice financing
arrangement, £30m revolving credit facility
and £21m uncommitted overdraft facilities
to support cash flows across its operations
and ensure rapid access to funds should
they be required. None of these were in use
at the year end.
Income tax paid in the year was £37.0m
(2018: £41.0m) and net capital expenditure
in 2019 was £24.6m (2018: £24.4m).
Spending on software increased from 2018
as we completed the roll-out of our new
Global Finance System and commenced
the implementation of our new Customer
Connect operating system. Spending on
property, plant and equipment decreased,
with no significant office moves in the year,
as well as a reduction in our fee earner
headcount.
Dividend payments were up on the prior
year at £83.5m (2018: £81.3m). The
generally lower share price in 2019 meant
that there was a decrease in cash receipts
from share option exercises, with £7.2m
in 2019, compared to £26.9m in 2018. In
2019, £10.0m (2018: £11.6m) was also
spent on the purchase of shares by the
Employee Benefit Trust to satisfy future
obligations under our employee share plans.
The most significant item in our balance
sheet was trade receivables, which
amounted to £271.1m at 31 December
2019 (2018: £288.2m), comprising
permanent fees invoiced and salaries and
fees invoiced in the temporary placement
business, but not yet paid. Day’s sales in
debtors at 31 December 2019 were 52 days
(2018: 54 days).
Foreign exchange
Foreign exchange had a negligible impact
on the Group’s results for the year. However,
if 2019 results were restated at current
exchange rates, this would reduce Group
gross profit by c. £15m and operating profit
by c. £3m. In addition, current rates also
remain substantially below pre-Brexit levels.
IFRS 16 – Leases
The Group is reporting under the new
accounting standard, IFRS 16, for the first
time. Under IFRS 16, the straight-line rental
expense of £38.5m has been replaced with
a depreciation charge in respect of the right
of use assets of £36.6m. This has resulted
in an increase to EBITDA of £38.5m and
an increase to EBIT of £1.9m. An interest
charge in respect of the lease liabilities of
£2.0m has also been recognised resulting in
a decrease in Profit Before Tax of £0.1m.
Annual Report and Accounts 2019 50
Cash flow waterfall 2019
15.9
37.4
210.0
24.6
7.2
10.0
320
280
240
200
£m
160
120
80
40
97.7
38.2
(40.1)
83.5
7.5
97.8
Dec 2018
EBITDA
Working
Capital
Tax and net
interest
Net
Capex
Share options
exercised
EBT share
purchases
Lease
Liability
repayments
Dividends
paid
Exchange
Dec 2019
Cash
Increase
Decrease
currently plans to announce the outcome
of the process ahead of the Annual
General Meeting on 4 June 2020.
Approved by the Board on 4 March 2020
and signed on its behalf by:
Kelvin Stagg
Chief Financial Officer
Taxation
The tax charge for the year was £40.8m
(2018: £38.6m). This represented
an effective tax rate of 28.3% (2018:
27.1%). The rate is higher than the
effective UK rate for the calendar year
of 19% (2018: 19%) principally due
to the impact of higher tax rates in
overseas countries and to a lesser extent
disallowable expenditure. There are some
countries in which the tax rate is lower
than the UK, but the impact is small either
because the countries are not significant
contributors to Group profit, or the tax
rate difference is not significant.
In 2019, the tax rate was impacted
primarily by higher tax in overseas
countries (+4.0%), tax on share-based
payments (+0.8) and other permanent
differences (+1.0%), principally employee
related expenditure and entertainment
expenses.
The tax charge for the year reflects the
Group’s tax strategy, which is aligned
to business goals. It is PageGroup’s
policy to pay its fair share of taxes in the
countries in which it operates and deal
with its tax affairs in a straightforward,
open and honest manner. The Group’s
tax strategy is set out in detail on our
website in the Investor section under
“Responsibilities”.
Share options and share
repurchases
At the beginning of 2019 the Group
had 10.6m share options outstanding,
of which 4.3m had vested, but had not
been exercised. During the year, options
were granted over 1.9m shares under the
Group’s share option plans. Options were
exercised over 1.7m shares, generating
£7.2m in cash, and options lapsed over
0.5m shares. At the end of 2019, options
remained outstanding over 10.3m shares,
of which 4.2m had vested, but had not
been exercised. During 2019, 2.2m
shares were purchased for the Group’s
Employee Benefit Trust, and no shares
were cancelled (2018: 2.2m shares were
purchased and no shares were cancelled).
Audit tender
The Company last tendered its audit
services in 2011. In accordance with
good governance practices, this year the
Company will undertake a competitive
tender for its external audit services and
Corporate GovernanceFinancial StatementsAdditional InformationSTRATEGIC REPORT STRATEGIC REPORT 51
Annual Report and Accounts 2019
CHAIRMAN’S INTRODUCTION TO
CORPORATE GOVERNANCE
Corporate governance
This Corporate Governance Report sets out
how the Company has complied with the
UK Corporate Governance Code 2018 (the
“Code”). It also seeks to explain the work
and activities of the Board, and the work
of its Committees and details the annual
evaluation process.
In 2019 the Board worked hard to ensure
that the principles and provisions of the
Code had been fully adopted across the
business. The Board has also sought to
build meaningfully upon the Company’s
corporate governance framework by
ensuring the insights and results produced
by the Code’s changes are utilised in
its decision making. The changes have
undoubtedly supported the Board in its
stewardship of the Company in the year
under review and the Board is confident that
this will continue in the future.
A summary of the corporate governance
changes implemented due to the
introduction of the updated Code together
with the key changes the Board has overseen
via its Committees, can be found on page 59.
The Group’s Main Board and Committee
structure is outlined below. This framework
underpins the Board’s ability to set the
overall strategic direction of the Group. It
also supports its core values, policies and
procedures, which in turn, creates a culture
in which our business and employees can
act effectively and with integrity, while driving
profitable growth.
Board composition
and activities
The Board regularly reviews its composition
to ensure it can draw upon a wide range
of skills and experiences to discharge its
responsibilities and that it is well placed to
respond to future challenges. The Board
understands the importance of regularly
refreshing its membership. The most recent
additions to the Board were made in late
2017, with the appointment of Sylvia Metayer
and Angela Seymour-Jackson. In 2019 there
David Lowden,
Chairman
Dear Shareholder,
On behalf of the Board, I am pleased
to present the Company’s Corporate
Governance Report for the financial
year ended 31 December 2019. Your
Board continues to believe that sound
governance, embedded across the Group,
is fundamental to the long-term success
and sustainability of the business.
Our Corporate Governance Framework
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 58 to 62.
Nomination Committee
Audit Committee
Remuneration Committee
Responsible for ensuring
that the Company has the
executive and non-executive
Board leadership it requires.
Details on pages 63 to 64.
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 pages 65 to 69.
Responsible for the review,
recommendation and
implementation of the Group’s
remuneration strategy, its
framework and cost.
Details on pages 70 to 94.
CORPORATE GOVERNANCE
52
S
t
r
a
t
e
g
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c
R
e
p
o
r
t
C
O
R
P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E
were no changes to the Board. The Board
is confident that it has built a strong and
well balanced team, able to assess the
current environment in which the Group
operates, and the Board’s stability will
help guide the business in the foreseeable
future.
In addition to the focus on governance
throughout the year, the Board’s activities
have focused primarily on implementing
the Group’s strategy against a backdrop
of more difficult economic conditions.
It also sought to embed the Group’s
culture framework, monitor and progress
our diversity and inclusion agenda and
succession planning, and ensure all of our
stakeholders are properly recognised and
considered.
I hope you find our Corporate
Governance Report informative. I will
be available at the 2020 Annual General
Meeting to respond to any questions you
may have on this Report.
David Lowden
Chairman
4 March 2020
Chief Financial Officer (CFO)
Chief Executive Officer (CEO)
Responsible for managing the
financial risks, reporting and
planning of the Group.
Key responsibility is to develop and deliver
the Group’s strategy within the policies and
values established by the Board.
General Counsel &
Company Secretary
Responsible for ensuring the Board
complies with all legal, regulatory and
governance requirements.
Executive Board
The Executive Board is chaired by the CEO
and includes the CFO. The Executive Board
is responsible for overseeing operations in
our regions and for overseeing business
operational functions Group-wide.
Details on page 57.
Financial StatementsAdditional Information
53
OUR BOARD OF DIRECTORS
David Lowden,
Chairman
Date of Appointment:
Director
August 2012
Chairman
December 2015
Steve Ingham,
Chief Executive
Officer, Executive
Director
Date of Appointment:
Plc Board
February 2001
Chief Executive Officer
April 2006
Past Roles:
Skills and Experience:
David was a member of the Board of Taylor Nielson
Sofres plc, the marketing services business, from
1999 to 2009, becoming Chief Executive Officer
in 2006. Before joining Taylor Nielson Sofres plc
David held senior financial positions in Asprey plc,
A.C. Nielsen Corporation and Federal Express
Corporation. David was also Senior Independent
Director and Chairman of the Remuneration
Committee of Berensden plc from March 2010 until
September 2017. From April 2011 to March 2019 he
was a Non-Executive Director and Chairman of the
Audit and Risk Committee of William Hill plc.
Other Current Appointments:
Non-Executive Director of Huntsworth plc with effect
from 1 January 2019 and Chairman of the Board
of Huntsworth plc and Nomination Committee with
effect from 6 March 2019. Senior Independent
Director from 1 January 2019 of Morgan Sindall
Group plc.
Board Committees:
Nomination (Chairman)
•
•
•
•
•
Extensive experience in both general
management and financial management
Many years of operating within international
businesses with cultural diversity
Strong strategic understanding
Proven ability for delivering shareholder value
Strong financial, marketing and commercial
skills
•
Experienced non-executive in several sectors
Contribution:
The Company’s long-term sustainability is
safeguarded by having an effective chair of the Board
and David Lowden successfully fulfils this role. His
experience is significant having held senior non-
executive and chair positions across a range of listed
companies. The Board draws upon his experience
and guidance regularly and his deep understanding
of the business enables him to ensure the needs of
the business are met across the range of strategic
and governance matters affecting the Company.
Past Roles:
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 business and was promoted to Operating
Director in 1990. Having launched several new
discipline businesses, he was appointed Managing
Director of Michael Page Marketing and Sales
in 1994. Subsequently Steve took additional
responsibility for several 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.
Prior to joining PageGroup Steve spent four years
at Johnson Matthey in Sales and Marketing as a
qualified metallurgist. From 8 January 2013 to 9 April
2019 he held the position of Non-Executive Director,
Debenhams plc.
Other Current Appointments:
Member of the Corporate Partnership Board, Great
Ormond Street Hospital.
Board Committees:
None
Skills and Experience:
•
•
33 years’ service with the Group and
recruitment industry
13 years as a CEO of a FTSE 250 public
company, with strong IR skills, delivering
shareholder value
•
•
•
•
•
•
•
Strong entrepreneurial and strategic skills
having initiated and grown many new global
businesses
Extensive experience in business development
and account management
Significant international experience including
the emerging markets of SE Asia, China, Latin
America and India
Leadership of a global people business having
seen PageGroup grow from 200 to approaching
8,000 employees
Taken the Group through a restructure to
ensure total global consistency of all operational
support functions
Experience in other sectors and industries
having worked on the Boards of a major charity
and retailer
Awarded the Institute of Recruitment
Professionals Lifetime Achievement Award
in 2017
Contribution:
Steve Ingham’s contribution is necessary to enable
the Company to deliver its strategy to shareholders
and its wider stakeholders. He has unparalleled
understanding of the business, culture and future
goals of the Company. These skills are gained by his
extensive experience of working within the industry
and for the organisation itself. He has 33 years’
experience of the Company and the recruitment
sector and has a strong record of delivering
sustainable success for the Company over the last
decade.
Annual Report and Accounts 2019 54
Past Roles:
Kelvin joined PageGroup plc in July 2006
as Group Financial Controller and Company
Secretary. He was appointed Acting Chief
Financial Officer in October 2013. He held the
title of Company Secretary until December
2013. In June 2014 Kelvin was appointed Chief
Financial Officer. Prior to joining the Group,
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.
Other Current Appointments:
None
Board Committees:
None
Skills and Experience:
•
More than ten years in the Group with
a detailed knowledge of the Group’s
operations
Past Roles:
Simon qualified as a Chartered Accountant
with Price Waterhouse. He was Group Finance
Director of Electrocomponents plc from 2005
until 2015. Prior to that Simon held a variety
of senior finance positions with Diageo over a
13-year career, latterly Finance Director of Key
Markets.
Other Current Appointments:
Chief Financial Officer, Coats Group plc.
Board Committees:
Audit (Chairman), Nomination, Remuneration
Kelvin Stagg,
Chief Financial Officer,
Executive Director
Date of Appointment:
June 2014
Simon Boddie,
Independent
Non-Executive
Director
Date of Appointment:
September 2012
Skills and Experience:
• CFO of FTSE 250 public company for over
ten years
•
Extensive experience in financial, audit and
risk management
• Many years of operating within international
businesses with cultural diversity
•
•
•
Extensive experience in finance, audit and
risk management
Significant international experience
including roles in the UK, Continental
Europe and Asia
High levels of compliance, change
management, large teams and systems
experience, across almost every finance
discipline
•
Strong network of finance professionals
Contribution:
Kelvin Stagg is integral to the Company’s
long-term success as he manages the financial
risks, reporting and planning of the business,
contributes to the Company’s strategy and
oversees global delivery of all support services
to the business including implementation
of all large scale projects. He has extensive
experience of managing multi-discipline areas
and having been employed for over 13 years at
the Company, he understands the operation of
the business at all levels.
•
•
Emerging markets experience
Strong strategic and commercial
understanding
• Broad industry experience, including
consumer goods, distribution and
manufacturing
•
Proven ability for delivering shareholder
value
Contribution:
Simon Boddie’s contribution to the Board
and the Audit Committee can be summarised
by reference to his thorough understanding
of financial matters facing large listed global
entities. For over 10 years he has held executive
director positions in global FTSE 250 businesses
as a Chief Financial Officer and, as such, is
ideally placed to ensure scrutiny and rigour in
respect of financial reporting and internal and
external controls.
CORPORATE GOVERNANCEFinancial StatementsAdditional InformationStrategic Report CORPORATE GOVERNANCE 55
OUR BOARD OF DIRECTORS
Michelle Healy,
Independent
Non-Executive Director
Date of Appointment:
October 2016
Past Roles:
organisational change and transformation
Before joining Kerry Group plc, Michelle was Group
People & Culture Officer for ISS World Services
A/S. Prior to this she has held a number of senior
executive roles including Director, Group Integrated
Change Programme at SABMiller plc and General
Manager UK & Ireland for British American Tobacco
plc, having previously undertaken a number
of senior HR roles within the Group. Michelle’s
executive career spans four global listed companies
and she has lived and worked in nine countries
across Europe and Asia.
Other Current Appointments:
Chief Human Resources Officer, Kerry Group plc
Board Committees:
Audit, Nomination, Remuneration
Skills and Experience:
•
Extensive experience in global human
resources leadership
•
Extensive experience in leading and delivering
• Breadth and depth of leadership experience in
global listed businesses in service, consumer
and business to business
•
•
Strong strategic understanding
Extensive experience in general management
Contribution:
The Company’s long-term success is highly
influenced by ensuring it has a well thought
through human capital strategy. It recognises
its people are at the heart of everything it
does, particularly as an organically grown business.
Michelle Healy offers the Board deep insight into its
approach in this respect. She has held a number
of senior HR leadership roles while also having run
businesses at an operational level.
Patrick De Smedt,
Senior Independent
Director
Date of Appointment:
August 2015
Past Roles:
Patrick spent 23 years at Microsoft during which
time he founded the Benelux subsidiaries, led the
development of its Western European business
and served as Chairman of Microsoft for Europe,
Middle East and Africa. Since leaving Microsoft
in 2006, Patrick has served on the boards of a
number of European public and private companies.
His previous appointments include, Non-Executive
Director and Chairman of the Remuneration
Committee of Victrex plc, Senior Independent
Director and Chairman of the Remuneration
Committee of Morgan Sindall plc and Chairman
(Interim) KCOM Group plc. He has deep knowledge
of international markets and information technology,
and experience as a non-executive in diverse
industry sectors.
Other Current Appointments:
Non-Executive Director of EMIS Group plc with
effect from 1 January 2020 and Chairman of
the Board of EMIS Group plc and Nomination
Committee with effect from May 2020. Non-
Executive Director of Kodak Alaris Holdings Ltd
and Non-Executive Chairman of GCI Management
Services Ltd.
Board Committees:
Audit, Nomination, Remuneration
Skills and Experience:
•
•
•
•
•
•
Extensive experience of technology and
customer services
Experienced non-executive in several sectors
Extensive experience in general management
Many years of operating within international
businesses with cultural diversity
Proven ability for delivering shareholder value
Leading and changing large businesses
Contribution:
Patrick De Smedt brings extensive understanding
of technology to the Board, a key consideration for
any company’s long-term success. His experience
at Microsoft and involvement with a range of
technological industries in international markets
is invaluable in the Board’s decision making. He
understands large-scale transformation projects and
can assist the Board in determining the benefits and
threats posed by technologies in the sector.
Annual Report and Accounts 2019 56
Past Roles:
Sylvia has previously held a variety of finance
and general management roles in companies
operating in a number of sectors, including
Mattel Inc., Vivendi SA, and Houghton Mifflin
Harcourt & Co.
Other Current Appointments:
Chief Growth Officer of Sodexo SA leading
strategy, digital, marketing and sales and
member of the Sodexo Group Executive
Committee. Trustee of the Quebec-Labrador
Foundation and a member of the International
Advisory Board of HEC Business School, Paris.
Board Committees:
Audit, Nomination, Remuneration
Skills and Experience:
•
Extensive experience and understanding of
international markets, including the USA,
Europe, China, India, and South East Asia
•
•
•
•
Extensive experience in general and
financial management
Leading and delivering change
Finance, HR, IT and Supply Chain
management
Proven ability for delivering shareholder
value
•
Strong strategic understanding
Contribution:
Sylvia Metayer has significant experience
working for international organisations in finance
and general management leadership positions.
Her guidance and observations on the demands
and challenges in the various international
markets in which the Company operates strongly
supports the Company’s expansion and its
ongoing success. Further, her financial acumen
adds additional strength and depth to the
Company’s strategic decision-making.
Past Roles:
Skills and Experience:
Angela has previously held Executive Director
roles with Aegon UK, RAC Motoring Services
Limited and Aviva UK Limited, and was Senior
Advisor to Lloyds Banking Group (insurance).
Prior to that Angela held senior marketing roles
with Bluecycle.com Limited, CGU Insurance plc,
General Accident plc and the Norwich Union
Insurance Group. Angela has also served as a
Non-Executive Director of esure plc.
Other Current Appointments:
Deputy Chairman, Senior Independent Director
and Chair of the Remuneration Committee at
GoCompare.com Group plc; Non-Executive
Director at Janus Henderson Group plc,
Rentokil Initial plc and Trustpilot Limited.
Board Committees:
Audit, Nomination, Remuneration
• Wealth of experience in service focused
organisations
•
•
•
Experienced executive and non-executive in
several sectors
Strong marketing and commercial skills
Strong strategic understanding
• Member of the Chartered Institute of
Marketing
Contribution:
Angela Seymour-Jackson has held numerous
senior executive marketing roles and non-
executive director appointments in highly
regulated environments. She therefore provides
key skills to the Board in respect of marketing
and customer services which are significant
areas of focus for the Company. Her experience
in the highly regulated industries means that
Angela makes a valuable contribution as Chair of
the Remuneration Committee.
Past Roles:
Skills and Experience:
Prior to joining PageGroup plc, Kaye spent
over 9 years at Legal & General Group plc and
held a variety of senior positions including Chief
Resourcing & Legal Officer at Legal & General
Investment Management Limited. Prior to this
she worked as a solicitor for a number of top tier
law firms including Hogan Lovells and Allen &
Overy.
• Over 16 years’ experience in legal and
company secretarial matters for public
companies
•
•
Extensive listed company, compliance,
litigation and corporate governance
experience
Senior legal counsel experience in FTSE
250 companies across different sectors
Sylvia Metayer,
Independent
Non-Executive
Director
Date of Appointment:
September 2017
Angela Seymour-
Jackson,
Independent
Non-Executive Director
Date of Appointment:
October 2017
Kaye Maguire,
General Counsel &
Company Secretary
Date of Appointment:
October 2018
CORPORATE GOVERNANCEFinancial StatementsAdditional InformationStrategic Report CORPORATE GOVERNANCE 57
THE EXECUTIVE BOARD
Steve Ingham
Chief Executive Officer,
Executive Director
See biography on page 53.
Kelvin Stagg
Chief Financial Officer,
Executive Director
See biography on page 54.
Gary James
Patrick Hollard
COO & Executive Board Director,
Australasia
Gary joined Michael Page Finance in
London in 1984. He was appointed
director of Michael Page UK Sales and
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 Regional Managing Director of
the Asia Pacific region in August 2006.
Since 2019 Gary has been responsible for
the Group’s global HR functions.
Executive Board Director,
Latin America, Middle East and Africa
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, Middle East
and Africa.
Anthony Thompson
Executive Board Director,
Asia
Anthony moved from South Australia
to commence his Michael Page career
in Hong Kong in 2001. He managed
and established several disciplines and
brands in Hong Kong and China and was
appointed Managing Director, Hong Kong
and Southern China in 2006. In 2012,
he was appointed Regional Managing
Director for Greater China with several
offices established across China, Hong
Kong and Taiwan. In 2015, Anthony
moved to Singapore with additional
responsibility for PageGroup in South
East Asia which now encompasses
offices in Singapore, Malaysia, Indonesia,
Thailand and Vietnam. In 2016 he also
became responsible for India. Anthony
is currently responsible for PageGroup's
operations in Asia.
Oliver Watson
COO & Executive Board Director,
North America
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’s
operations in, USA and Canada. In
2018 Oliver was appointed COO with
responsibility for increasing productivity
through innovation, technology and
people. He is responsible for the Group’s
Global IT functions.
Annual Report and Accounts 2019 58
CORPORATE GOVERNANCE REPORT
The Board and its operation
The Board of PageGroup plc is the body
responsible for the overall management
and conduct of the Group’s business, and
agreeing its strategy. It 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 strategic
leadership to the Group within a
framework of prudent and effective
controls which enables risk to be
anticipated, assessed and managed.
The Board is responsible collectively
to the Company’s shareholders for the
long-term success of the Company and
for ensuring the Company contributes to
all its stakeholders and to wider society
as a whole.
Composition of the Board
As at the end of the year under review the
Board comprised the Chairman,
the Chief Executive Officer, the Chief
Financial Officer and five independent
Non-Executive Directors. The biographies
of each of the Directors and the
contribution each Director makes to the
Board can be found on pages 53 to 56.
The composition of the Board is kept
under review to ensure it has at its
disposal the necessary skills and
experience to lead the Group. It also
monitors the independence of the
Directors. The Board considers all current
Non-Executive Directors to be
independent. In addition, the Board
determined that David Lowden
was independent at the time of his
appointment as Chairman.
There is a clear division of responsibilities
between the role of the Chairman and
that of the Chief Executive Officer. While
the Board is responsible collectively
for the success of the Company, the
Chairman manages the Board to ensure
that the Company has appropriate
objectives and an effective strategy. He
ensures that there is a Chief Executive
Officer with a team to implement the
strategy and that there are procedures in
place to inform the Board of performance
against objectives. The Chairman also
ensures that the Company operates in
accordance with the principles of good
corporate governance. The Chairman’s
other significant commitments are
noted on page 53. The Board considers
that these are not a constraint on the
Chairman’s agreed time commitment to
the Company.
Patrick De Smedt, as Senior Independent
Director, acts as an alternative channel
of communication for shareholders. He
also acts as a sounding board for the
Chairman and serves as an intermediary
for other Directors.
Steve Ingham, the Chief Executive
Officer, has overall responsibility for the
day-to-day management of the Group’s
operations. He develops the vision
and strategy for the Board’s review,
implements the Board’s strategy and
chairs the Executive Committee (known
within the Group as the “Executive
Board”) which executes the delivery of
the annual operating plans. He also leads
the programme of communication with
shareholders.
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 Committees.
The Board has a formal schedule of
matters reserved for its decision which
include:
• 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; and
communications with stakeholders
and complying with regulatory
requirements.
Induction, training
and information
Relevant training, advice and information
is made available to Directors to enable
the Board to function effectively and
efficiently. This is achieved through a
variety of means such as internal and
external presentations from advisors and
tailored guidance briefings circulated
to Board members. As and when new
Directors join the Board, the Chairman
assisted by the General Counsel &
Company Secretary are responsible for
their induction. On appointment to the
Board, each Director discusses with the
Chairman and the General Counsel &
Company Secretary the extent of the
training required. A tailored induction
programme to cover their individual
requirements is then compiled. Elements
of the programme consist typically of
meetings with senior executives, 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 and environmental, social and
governance information, detailed market
presentations, and significant and
emerging risks.
Directors update and refresh their
knowledge and familiarity with the
Group through site visits, participation
at meetings with, and receiving
presentations, from senior management.
This is in addition to the access that
every Director has to the advice and
services of the General Counsel &
Company Secretary. The General Counsel
& Company Secretary is present at all
Board meetings and is responsible to the
Board for ensuring that Board procedures
are complied with as well as advising the
Board on new legislation and corporate
governance matters. Board Committees
and Directors are also given access to
independent professional advice at the
Group’s expense if the Directors deem it
necessary in order for them to carry out
their responsibilities.
The Board operates an annual cycle
of matters for its consideration,
supplemented with strategic topics and
governance matters. Governance matters
are reviewed to ensure a strong link to
strategy. Board agendas are also kept
under continuous review to ensure any
matter that requires escalation to the
Board can be accommodated. For each
Board and Committee meeting Directors
CORPORATE GOVERNANCEFinancial StatementsAdditional InformationStrategic Report CORPORATE GOVERNANCE 59
CORPORATE GOVERNANCE REPORT
receive a pack of relevant information on
the matters to be discussed. The Board
uses a third party board portal to distribute
information quickly and securely. The Chief
Executive Officer presents a comprehensive
update on the business issues across the
Group to the Board and the Chief Financial
Officer presents a detailed analysis of the
financial performance. The Board also
receives at each Board Meeting an Investor
Relations Report, including any feedback
from investors and Investor Roadshows.
Regional Managing Directors and other
senior managers also attend relevant parts
of Board meetings and the Board Strategy
Day in order to make presentations on their
areas of responsibility. All of the above gives
a comprehensive view on the issues facing
the business and enables robust review of
the current and future performance of the
Group.
Board activities
Culture and engagement: To ensure
senior appointments are considered against
a backdrop of the Company’s purpose,
culture, strategy and values all senior
management promotions are discussed at
the Board.
The Board commenced its formal work
on culture in 2018 and embedded this
throughout 2019. The five-pillar culture
framework was discussed in depth at
the Group’s strategy day and results of
the measures monitoring culture were
considered at the end of the year. This
enabled the Board to make decisions and
consider actions in light of the information
it received. In 2019, the review of culture
prompted the Board to approve rolling out
a more robust exit interview programme
and adopt more frequent pulse surveys to
monitor progress in areas of focus. Both
steps aimed at gaining even greater insight
into the culture of the company.
Financial Performance and Strategy:
The Group’s financial performance and
year-to-go forecasts are considered at every
Board meeting alongside the progress being
made in various markets to ensure the
Group’s strategy is on track.
Compliance and Regulation: The Board
received regular reports on compliance
matters such as the Corporate Governance
Code and related regulations and guidance.
The Board prioritises data protection and
information security matters and receives
quarterly updates on the Group’s data
privacy compliance and any regulatory
engagement across the world. It also
reviews the company’s cyber security
maturity on a quarterly basis.
Change and Innovation: the Board
understands the importance of monitoring
the Group’s large scale change projects.
In 2019 it spent time understanding the
Group’s digital engagement strategy with a
view to ensuring the Company remains at
the forefront of innovation in the sector.
Board committees
The Board has three Board Committees,
each of which regularly reports to the
Board: the Audit Committee, Nomination
Committee and Remuneration Committee.
The Audit and Remuneration Committees
are comprised solely of independent Non-
Executive Directors.
The Nomination Committee is comprised
of all Non-Executive Directors and is
chaired by the Chairman of the Board
who was independent on appointment.
Details of the composition and activities
of each Committee can be found in the
respective reports of each Committee: Audit
Committee Report on pages 65 to 69;
the Nomination Committee Report on
pages 63 to 64; and the Directors’
Remuneration Report on pages 81 to 94.
Each Committee has clear terms of
reference which are reviewed annually,
copies of which can be found on the
Company’s website www.page.com.
Each Committee also reviews its
effectiveness and makes recommendations
to the Board of any appropriate changes as
and when required. The Chairman of each
of the Board Committees will be available
to answer shareholders’ questions at the
forthcoming Annual General Meeting.
The General Counsel & Company Secretary
acts as secretary to each of these
Committees and minutes of meetings are
circulated to all Committee members and to
all members of the Board unless it would be
inappropriate to do so.
The Group also has an Executive Board
which is chaired by the Chief Executive
Officer. It comprises the Chief Financial
Officer and other senior executives,
biographies for whom can be found on
page 57. The Executive Board usually meets
four times a year and is responsible for
assisting the Chief Executive Officer in the
performance of his duties. These include
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, North America,
Continental Europe, Asia Pacific and Latin
America, Middle East and Africa. Each
regional board usually meets at least four
times a year.
Compliance with the UK
Corporate Governance Code
During the year ended 31 December
2019 and to the date of this document,
the Company has complied with all of the
provisions of the UK Corporate Governance
Code 2018 (the “Code”). The Code is
publicly available on the FRC website (www.
frc.org.uk). In this Corporate Governance
section, together with the Strategic
Report on pages 1 to 50, the Directors’
Remuneration Report on pages 70 to 94,
the description of the work undertaken
in respect to culture and engagement
on pages 25 to 34 and 44 to 45 and the
Directors’ Report on pages 95 to 97, we
describe how we have applied the principles
of the Code.
While not an exhaustive list, a summary of
key governance changes introduced in 2019
to ensure compliance with the Code include:
•
•
•
•
Establishing a Culture Framework to
enable the Board to assess, monitor
and report on culture and ensure
the employee voice is heard in the
Boardroom;
Adoption of a stakeholder engagement
policy setting out the Company’s
stakeholders and principal means of
engagement with them;
Ensuring a structure is in place to
horizon scan for emerging risks
combined with review of whistleblowing
activity being considered by the Board;
and
Introducing a post-cessation holding
period for executive director share
awards, extending post-vesting
holding periods under the Executive
Share Incentive Plan and aligning
pension contributions for new
executive appointments to the Board
to the contribution rates of the wider
workforce.
Board and committee
attendance
The table below sets out the number of
meetings of the Board held during the year
and individual attendance by the Directors at
these meetings, demonstrating commitment
to their role as Directors of the Company.
Attendance by the relevant members of
each Committee can be found on page 65
(Audit Committee), page 64 (Nomination
Committee) and page 81 (Remuneration
Committee). The Board met eight times
during the year. During the year under review
the Non-Executive Directors met on several
Annual Report and Accounts 2019 60
occasions without the Executive Directors
being present. The Non-Executive
Directors also met without the presence
of the Chairman.
Director
David Lowden
Simon Boddie
Patrick De Smedt
Michelle Healy
Steve Ingham
No. of
meetings
attended
8 out of 8
8 out of 8
8 out of 8
8 out of 8
8 out of 8
Sylvia Metayer
71 out of 8
Angela Seymour-
Jackson
Kelvin Stagg
8 out of 8
8 out of 8
1. Absence due to unforeseen circumstances
Succession planning
Executive development and succession
planning discussions are held each
year. These discussions focus on the
development and succession of the
Executive Directors, Executive Board
members and other senior managers
in the Group, with the aim of ensuring
that existing senior executives are
being developed and that there is a
pipeline of talented senior individuals
within the business. Development and
succession planning is a critical part of
the Chief Executive Officer’s performance
objectives for annual bonus and long-
term remuneration. The Group operates
an extensive Talent, Succession &
Development programme across the
business which assesses development
needs and nurtures high potential
employees throughout the various stages
of their careers. Diversity considerations
are a fundamental element of the
programme.
In addition, the Nomination Committee
also considers the breadth and depth
of experience of the Non-Executive
Directors and considers on a regular basis
succession planning for the Board as a
whole. Information on the Board’s policy
on diversity both at Board level and the
Group can be found in the Nomination
Committee Report on page 64 and the
Strategic Report on page 33.
Performance evaluation
The Code requires that there is a formal
and rigorous annual evaluation of the
Board, its Committees and individual
Directors. In 2018 the evaluation was
conducted internally and key themes
that emerged included ensuring
continuation of key market deep dives
in areas of strategic importance to the
Group, increased focus by the Board
on monitoring productivity initiatives,
additional Board time dedicated to
various technology and innovation
initiatives and market trends, and
continued monitoring of succession
planning activities. The Board considers
it has made good progress in respect of
these items during the year.
In 2019 deep dive market presentations
took place regarding the Group’s Latin
American, Japanese and Indian markets.
Board members were provided with
the opportunity to review productivity,
technology and innovation initiatives at
its 2019 strategy sessions. The Board
also ensured that its views in respect of
progress in these areas formed part of
the Remuneration Committee’s decision
in terms of executive reward. Further,
the Nomination Committee has driven
forward the succession and talent
development agenda. This has resulted
in a new international succession pool
being established in 2019 and the
introduction of the Page Potential Model.
The model has provided clarity about the
expectations from leaders to support our
strategic plans, and provided objective
criteria for the evaluation of potential of
our leaders.
In keeping with good corporate
governance practices, for 2019 the
Company considered that the Board and
Committee review should be externally
facilitated by Lintstock (an independent
advisory firm specialising in Board
evaluations with no connection to the
Group or any individual Director). The
choice of external facilitator was taken
by the Chairman from a short-list of
submissions from third party evaluators
following in-person meetings with the
General Counsel & Company Secretary.
The objective and scope of the evaluation
was to conduct a comprehensive review
of all aspects of the Board’s effectiveness.
Lintstock was chosen as the preferred
external facilitator for a variety of reasons,
one of which was that it conducted
external reviews for the Company in 2016
and 2017, and it was felt that Lintstock
was well placed to gauge progress in the
Board’s and Committees’ governance
performance.
Lintstock representatives engaged with
the Chairman and the General Counsel
& Company Secretary to set the context
for the evaluation, and to tailor survey
content to the specific circumstances
of the Group. Lintstock communicated
directly with the Board members and
the anonymity of all responses was
guaranteed throughout the process to
promote open and honest feedback.
Directors were also able to raise any
issues beyond the scope of the survey in
confidence with Lintstock.
Lintstock analysed the survey results
and delivered detailed reports on
the performance of the Board, the
Committees, and the Chairman. A
Lintstock representative briefed the
General Counsel & Company Secretary
and provided further context on the
output, including peer comparison. The
results of the Board and Committee
reviews were then discussed at a
subsequent Board meeting.
While the outcome of the 2019 review
was positive overall, the Board aims for
continuous improvement and several
constructive recommendations emerged
from the exercise. These included
continued focus and maintaining
momentum on understanding the
customer, candidate and employee
voice. On Board composition, the review
confirmed that the Board currently has an
appropriate mix of skills, knowledge and
expertise, but future succession planning
remains a key priority, not only for senior
roles across the business, but in respect
of future non-executive positions given
length of tenure. Additionally, given
the impact of macro-economics on
the recruitment sector, the evaluation
also revealed that the Board is acutely
aware that it needs to remain focused
on productivity and be poised to react
appropriately to any market sensitivities
in the various regions where the Group
operates.
Additionally, the Senior Independent
Director conducted a review of the
Chairman and the Chairman evaluated
the performance of the individual
Directors, by means of interviews for both
review processes.
Re-election of Directors
The Code requires all Directors to retire
and stand for re-election at each Annual
General Meeting. All Directors will
submit themselves for re-election at the
forthcoming Annual General Meeting on
4 June 2020.
Internal control and risk
management
The Board retains responsibility for the
Group’s overall risk appetite and for the
effectiveness of its risk management and
internal control systems. The procedures
established by the Board have been
designed and implemented to meet the
requirements of the Group and the risks
to which it is exposed and are reviewed
on a regular basis.
CORPORATE GOVERNANCEFinancial StatementsAdditional InformationStrategic Report CORPORATE GOVERNANCE 61
Annual Report and Accounts 2019
CORPORATE GOVERNANCE REPORT
These procedures also provide an ongoing
process for identifying, evaluating and
managing principal and emerging risks. The
system of internal control includes financial,
compliance and operational controls, which
are designed to meet the Group’s needs.
These controls aim to safeguard Group
assets, ensure that proper accounting
records are maintained, that the financial
information used within the business and
for publication is reliable and support the
successful delivery of the Group’s Vision.
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 risks
and control to executive management and
this is monitored by an Internal Audit function
which reports back to the Board through the
Audit Committee.
The key elements of our system of internal
control are as follows:
•
Group Organisation – The Board
of Directors meets eight 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, supported by a Regional
Finance Director, of each of our regions
is accountable for establishing and
monitoring internal controls within our
respective regions.
• Annual Business Plan – The Board
reviews the Group’s 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 its policy
relating to anti-bribery and corruption
and gifts and hospitality.
• Risk Management – The Board has
established a framework for identifying
current and emerging risks and
processes and controls for managing
risk, both at a strategic and operational
level. As a minimum, this is reviewed
on an annual basis. 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 37 to 42.
Internal Audit – The Group’s Internal
Audit function examines business
process controls throughout the
Group on a risk basis and reports the
findings to the Executive Board and
Audit Committee. Agreed actions are
monitored and reported to the
Audit Committee.
• Confirmations from Executive
Management – The Managing Director
and Finance Director of our operations
in each country formally certify twice a
year 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
frauds, 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.
In accordance with the requirements of
the Code and the recommendations of
the FRC’s Guidance on Risk Management
and Related Financial and Business
Reporting, the Board has reviewed and
agreed its approach to risk and its risk
appetite when considering its strategy
and the management of its risks. It has
also considered its longer-term viability.
Details on the Board’s risk appetite and
its assessment of its longer-term viability
can be found in the Strategic Report on
pages 37 to 43. Further, the Board, with
the assistance of the Audit Committee, has
carried out a review of the effectiveness of
the Group’s risk management and internal
control systems, including a review of the
Internal Audit activities and the financial,
operational and compliance controls for the
period from 1 January 2019 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.
Whistleblowing
The Board takes its oversight duties of the
Company’s whistleblowing arrangements
very seriously. PageGroup operates an
external global confidential ‘Speak-Up’
helpline supported by a speaking-up policy
available on each country’s website and
translated into all PageGroup languages.
The Board reviews all instances that the
helpline is utilised in the year. In 2019 three
instances were recorded, relating to non-
financial matters. The Board was satisfied
with the Company’s response in each case.
Directors’ confirmation
The Directors are responsible for preparing
the Annual Report in accordance with
applicable law and regulations. Having taken
advice from the Audit Committee, the Board
considers the Annual Report and Accounts,
taken as a whole, as fair, balanced and
understandable and that it provides the
information necessary for shareholders
to assess the Company’s position and
performance, business model and strategy.
Neither the Company nor the Directors
accept any liability to any person in relation
to the Annual Report except to the extent
that such liability could arise under English
law.
Relations with shareholders
Understanding the views of shareholders
and active engagement with our
shareholders is always considered a key
priority for the Board. There were a variety
of ways in which Board members have to
engage with shareholders in 2019.
The Chief Executive Officer and the
Chief Financial Officer supported by the
Investor Relations team make themselves
available, wherever possible, to meet with
shareholders and analysts at their request.
In 2019, nine investor roadshows were
undertaken and c. 20 individual meetings
and telephone calls were held. This
regular engagement is supplemented with
presentations to analysts after our quarterly
and full year results. The Chairman has also
met with shareholders throughout the year
and wrote to all the Company’s substantial
shareholders inviting each of them to meet
at their convenience.
Further, in respect of remuneration
matters and in advance of proposing the
revised remuneration policy, an extensive
shareholder consultation took place with
holders of over 70% of issued share capital
being invited to discuss the proposals with
Angela Seymour-Jackson, the Chair of the
Remuneration Committee.
The Annual Report and Accounts is
available to all shareholders either in hard
copy or via the Company’s website
Annual Report and Accounts 2019 62
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www.page.com. The website contains
up-to-date information on the Group’s
activities, published financial results and
the presentations used for briefings and
investor meetings held during the year.
These are available to download.
The Annual General Meeting is an
additional opportunity for Board
members to meet with shareholders
and investors and give them the
opportunity to ask questions. Final
voting results are published through a
Regulatory Information Service and on the
Company’s website following the Meeting.
Conflicts
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. These procedures
have operated effectively throughout
the year under review. The Nomination
Committee is responsible for reviewing
possible conflicts of interest. It makes
recommendations to the Board as to
whether 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
authorisation given.
David Lowden
Chairman
4 March 2020
Additional Information CORPORATE GOVERNANCE
63
NOMINATION COMMITTEE REPORT
Purpose
Responsibilities
The Nomination Committee is responsible
for ensuring that the Company has the
executive and non-executive Board
leadership it requires, both now and for
the future. It reviews all key senior roles
to ensure that comprehensive succession
plans are in place to safeguard the
organisation’s stability and to ensure talented
individuals are provided with opportunities
to develop. It is an important component
of the Company’s governance framework
and our organic growth strategy as we want
to develop and retain the highest calibre of
leaders to manage the business now and in
the future.
Membership
During the year under review the members
of the Committee were David Lowden,
who was Chairman of the Committee,
Simon Boddie, Patrick De Smedt,
Michelle Healy, Sylvia Metayer and Angela
Seymour-Jackson. Board and Committee
appointments are for three year periods. As
mentioned above, Michelle Healy completed
three years service on the Board in 2019
and her appointment was extended for a
further three years. Please see page 88
for further details. No director is entitled
to vote in respect of their own continuing
appointment.
Details of David Lowden’s and all Committee
members other significant commitments
can be found on pages 53 to 56. The
Committee considers and approves any
additional appointments held by Directors.
In early 2020, Patrick De Smedt was
appointed to the Board of AIM listed, EMIS
Group plc, as its Chairman designate
which was considered to be a significant
additional appointment for the purposes
of the Code. Following due consideration,
it was determined that this appointment
was not likely to interfere with Patrick De
Smedt’s duties and time commitment to the
Company, in particular in light of fact that
Patrick stepped down as Chairman of listed
company KCOM plc following completion of
its takeover in August 2019.
Only members of the Committee are entitled
to attend meetings. Other individuals,
such as the Chief Executive Officer, the
Group Human Resources Director and
external advisers, may attend meetings by
invitation when appropriate and necessary.
This arrangement fosters appropriate
challenge, questioning and debate of the
recommendations made by the Committee
to the Board.
The key responsibilities of the Committee
are to:
•
assess and nominate members to the
Board in accordance with the process
and diversity considerations outlined
below;
• maintain the right mix of character, skills
and experience on the Board and its
Committees;
• make recommendations to the Board
on development and succession plans
for members of the Board and senior
management;
•
•
•
approve job descriptions and written
terms of appointment for Directors;
review the independence of Non-
Executive Directors, taking into account
their other directorships; and
consider diversity and inclusion
objectives in terms of the Group’s talent
pipeline and new senior appointments.
When the Committee considers an
appointment it follows a formal and
transparent procedure. It is assisted in its
search for new Non-Executive Directors by
an independent executive search company.
With each new search the Committee
selects the executive search company
which it considers the most appropriate and
relevant for the assignment. These executive
search companies have no connection with
the Company other than the provision of
the search services. With each assignment
a detailed candidate profile is compiled
and discussed by the Committee, taking
into consideration the balance of skills and
experience of existing Board members and
the requirements of the Company and its
future strategy. Once finalised the profile
is recommended by the Committee to the
Board for its approval.
If approved, a search and selection
process based on that profile is undertaken.
The recruitment process places importance
on diversity considerations. Further
details can be found on page 64.
Candidates are identified and selected
against objective criteria including their skills
and experience while having due regard
to the benefits of diversity on the Board.
A shortlist of candidates is then interviewed
by the Chairman of the Board, the Chief
Executive Officer and members of the
Committee. Thereafter a recommendation
of appointment is made to the Board. The
Committee monitors length of tenure for the
Board and Committee members to ensure
ongoing independence.
David Lowden,
Committee Chairman
Dear Shareholder,
I am pleased to present the Nomination
Committee Report for the year ended
31 December 2019. The Committee strongly
believes that the success and development
of our people is key to the Company’s
on-going success.
Throughout 2019 the Committee continued
its focus on talent management and
development, while ensuring that robust
succession plans were in place for all critical
roles across the Group. The Committee
is acutely aware of the need to consider
our pipeline through a diversity lens and to
encourage diversity in all its forms including
social background, thinking style and
approach. This is also to ensure that our
leaders now and in the future represent our
clients, candidates and society as a whole.
The Committee therefore monitors the
pipeline with diversity considerations
in mind.
As I mentioned in my Chairman’s statement
on page 2, membership of the Board and
each Committee did not change during the
course of the year. However, the Committee
did consider and recommended to the
Board, that Michelle Healy’s appointment be
renewed. Michelle’s business and change
management experience coupled with her
expertise in Human Resources make her
a key contributor to the work of both the
Nomination Committee and the Board.
The Board represents a range of nationalities
and backgrounds. The Nomination
Committee was satisfied that the Board and
its Committees had an appropriate mix of
skills, experience and knowledge. However,
it is aware that consideration should be
given to the length of service of the Board
as a whole and membership regularly
refreshed. The Committee therefore keeps
composition under continuous review and
Non-Executive Director succession is a
priority for the Committee in 2020.
Annual Report and Accounts 2019 64
Activities during the year
During 2019 the Committee met on
three occasions. Details of the members’
attendance at meetings of the Committee
are as follows:
Director
David Lowden
Simon Boddie
Patrick De Smedt
Michelle Healy
Sylvia Metayer
No. of
meetings
attended
3 out of 3
3 out of 3
3 out of 3
3 out of 3
3 out of 3
Angela Seymour-Jackson
3 out of 3
Committee’s focus during 2019
The Group’s Talent, Succession &
Development programmes continues to
evolve and notable improvements have
been made. In 2019, the Committee
reviewed a consolidated view of all senior
leaders at PageGroup against extensive
external benchmark analysis. Committee
members were provided with an update
on progress of the talent programmes
operating across the Group, namely
the Global Director Academy and the
programme run by YSC Consulting (an
independent leadership consultancy firm)
for senior manager level participants.
Not only does the Committee monitor
access to these talent programmes
to ensure gender and other diversity
balance, but the reporting output from the
programmes gives a high level of insight
into the Group’s talent. It also enables the
Committee to identify with confidence,
successors for senior and critical roles.
An international succession talent pool
was established in 2019 to provide a
readily available internal source of talent
for new international roles as and when
these arise. The Company also agreed
a “Potential Model” which has provided
clarity about the expectations from
leaders to support our strategic plans,
and it provides objective criteria for the
evaluation of the potential of leaders.
The Committee spent considerable
time determining the competencies it
considers necessary for the key executive
roles in the future.
Committee members attend the
Company’s global senior leadership
conference. This ensures that
the Committee is provided with an
opportunity to engage with management
below Executive Director level and
assess the quality of skills and experience
existing within our senior leadership.
The activities of the Committee were
reviewed as part of the annual Board
evaluation process which, in 2019 was
externally facilitated by Lintstock. Details
of the evaluation process can be found in
the Corporate Governance Report on
page 60.
Diversity
As a recruitment company we are
passionately committed to promoting
diversity, inclusion and equality in the
workplace both internally and externally.
Our Company Purpose is to change lives
for people by creating opportunities to
reach potential, as such diversity and
inclusion is inextricably linked to our Vision
and strategy.
The Committee views diversity and
inclusion in its broadest sense. It is fully
committed across the organisation to
a diversity policy which seeks diversity
of experience, capability, geographic
experience, gender and all other qualities
which makes each of us unique.
The Board’s diversity and inclusion policy
is available on the Company’s website
at www.page.com. The Nomination
Committee implements the policy and a
summary of its key objectives are below:
•
to ensure different perspectives and
insight are brought to all areas of
the business, including the Board,
generating creativity, problem-solving
capability and sustainability that
would not otherwise be possible;
• maintain Board and Committee
membership to be at least one-third
female; and
•
ensure candidate lists for Board
positions should include individuals
drawn from a wide range of
experiences and backgrounds.
Objective
Maintain Board and Committee
membership to be at least one-third female
Implementation and progress
Met: Board currently has over one-third
female representation
Objective
Company aspires to meet the Parker Review
objective of one director from a non-white
ethnic background by 2024
Status
Ongoing: wherever possible for future
appointments shortlisted candidates will
include representation from non-white
ethnic backgrounds
As noted above, the Committee is
cognisant of the recommendations of
the Parker Review as regards ethnic
representation on Boards and will take
steps to ensure that wherever possible it
has candidates with non-white ethnicity
in future selection processes. The
Committee also seeks to continue to
exceed the recommendations of the
Hampton-Alexander Review with over
33% of the Board being female. We
recognise, however, that there is currently
a lower proportion of women holding
senior roles below Board level positions.
The Company has been working hard to
address this and actions taken include:
•
•
•
identifying and tracking high
potential womens’ progress as part
of the Global Talent, Succession &
Development Programme;
continuing support for a global
mentoring programme and
Women@Page, a global network
aimed at engagement, enablement
and empowerment of women across
the organisation;
ensuring the Global Director
Academy has equality in gender
balance in respect of each cohort
and the content of the Academy
includes deep dive sessions on
inclusive leadership and what this
means at PageGroup; and
• Managing Directors’ have gender
diversity objectives relating directly to
their remuneration.
Board
Men
5 (62.5%)
Women
3 (37.5%)
Executive Board & Direct Reports
Men
37 (78.8%)
Women
10 (21.2%)
Further details regarding increasing
representation of women across the
organisation can also be found on
pages 33 and 34.
Plan for 2020
In 2020 the Committee will continue to
ensure that succession plans for Board
and senior level positions remain robust
and continue to assess the output and
value received from the investment in
talent development programmes.
CORPORATE GOVERNANCEFinancial StatementsAdditional InformationStrategic Report CORPORATE GOVERNANCE 65
AUDIT COMMITTEE REPORT
the Director of Internal Audit and the external
audit partner are regularly invited to attend
meetings as necessary. The Committee can
invite others to attend as appropriate.
The Board annually assesses the
competence of those sitting on the
Committee, and in 2019 it was satisfied
that the Chairman of the Committee has
the recent and relevant financial experience
required by the Code. Sylvia Metayer
also has relevant financial and accounting
experience and other members of the
Committee have a sufficiently wide range of
business experience and expertise such that
the Committee as a whole has competence
relevant to the sector in which the Company
operates. The relevant qualifications and
experience of the Committee members are
shown in their biographies on pages 53 to
56. The Committee met with the Director of
Internal Audit and external auditor during the
year without the presence of management
in order to provide an opportunity for
confidential discussion. The Director of
Internal Audit and the external auditor
also met with, and have direct access
on an ongoing basis, to the Chair of the
Committee. Additionally, the Committee
held private sessions with the Chief Financial
Officer and the General Counsel & Company
Secretary.
Principal areas of focus
The Committee is committed to maintaining
and monitoring the quality and integrity of
financial reporting, as well as assessing
the Company’s risk management systems
and internal control environment to ensure
they remain appropriate. Much of the
Committee’s focus for the year under review
related to ensuring continued accuracy
of financial reporting and trading updates
and monitoring current and potential
risks associated with the business. The
Committee also reviewed the accounting
treatment of large scale projects such
as the roll-out of the Group’s Global
Finance System and also progressed crisis
management readiness through the review
of plausible scenario testing.
The Company's treasury policy was reviewed
with particular focus on counterparty
limits to ensure diversification of banking
partners. Further, the Company’s tax strategy
was considered by the Committee and
recommended for approval by the Board.
It is published on the Company's website
www.page.com. Set out in the table
overleaf is a summary of the main activities
of the Committee during 2019. Key issues
covered by the Committee are reported
through regular reports to the Board.
The Committee met on seven occasions.
Committee meetings are set to coincide with
key dates of the financial reporting calendar
and the audit cycle. The Committee is
provided with sufficient resources to
undertake its duties.
Details of the members’ attendance
at the meetings of the Committee are
as follows:
Director
Simon Boddie
Patrick De Smedt
Michelle Healy
Sylvia Metayer
No. of
meetings
attended
7 out of 7
7 out of 7
7 out of 7
61 out of 7
Angela Seymour-Jackson
7 out of 7
1. Absence due to unforeseen circumstances
Financial reporting
In its financial reporting to shareholders and
other interested parties, the Board aims to
present a fair, balanced and understandable
assessment of the Group’s position and
long-term sustainability, providing necessary
information for shareholders to assess
the Company’s business model, strategy
and performance. The Company has an
established process for reviewing the
Annual Report and Accounts to ensure it
is fair, balanced and understandable. This
was used again this year. It included a
thorough understanding of the regulatory
requirements for the Annual Report and
Accounts; a process to determine the
accuracy, consistency and clarity of
the data and language; and a detailed
review by all appropriate parties including
external advisers. A checklist of all the
elements of the process was completed
to document the process and cascaded
sign-off implemented through the Group’s
management structure to provide assurance
to the Committee that the appropriate
procedures had been undertaken by all
Group companies.
The Committee has reviewed the Company’s
2019 Annual Report and Accounts. It
provided comments that were incorporated
into the Annual Report and Accounts and
has advised the Board that, in its opinion,
the Annual Report and Accounts taken as a
whole is fair, balanced and understandable
and provides the information necessary
to assess the Company’s performance,
business model and strategy.
Simon Boddie,
Committee Chair
Dear Shareholder,
I am pleased to present the Audit
Committee Report for the year ended
31 December 2019. In keeping with the
Audit Committee’s responsibilities, the areas
of key focus for the year included ensuring
the integrity of the Company’s published
financial statements, assessing the principal
and emerging risks facing the Group
and reviewing internal and external audit
processes and controls. The Committee
also took initial preparatory steps to enable a
tender to take place in 2020 for the Group’s
external audit services.
Purpose
The Audit Committee is a fundamental
part of the Group’s governance framework
being the guardian of the integrity of the
Company’s financial statements and external
reporting of performance. It also has the
responsibility for ensuring that the necessary
internal controls and risk management
systems are in place and effective.
Membership
The Committee’s membership did not
change in 2019. Simon Boddie serves
as the Chair of the Committee. Patrick
De Smedt, Michelle Healy, Sylvia Metayer
and Angela Seymour-Jackson all served
as Committee members throughout the
year. Each member of the Committee has
a wealth of business experience across a
range of sectors making them well placed
to perform the work of the Committee.
The Committee’s training takes place on a
regular and ongoing basis primarily through
updates provided by the Company’s
external auditor, on developments in
corporate reporting, legislation and
regulatory guidance.
Only members of the Committee are entitled
to attend meetings. Other individuals, such
as the Chairman of the Board, the Chief
Executive Officer, the Chief Financial Officer,
the General Counsel & Company Secretary,
Annual Report and Accounts 2019 66
Main activities of the Audit Committee during 2019
The Committee has an agreed, rolling programme of agenda items which the Committee Chair and General Counsel & Company
Secretary keep under regular review to ensure that all key financial reporting and risk matters are properly considered. The list below
summarises the key items considered by the Committee during the year.
January
April
October
Review of Financial Statements
• Quarter 4 trading update
Review of Financial Statements
• Quarter 1 trading update
Review of Financial Statements
• Quarter 3 trading update
March
July
Review of Financial Statements
• Quarter 2 trading update
Compliance
• Update on statutory accounts
and tax filings
• Consideration of external audit
tender
Review of Financial Statements
• Draft preliminary announcement
and 2018 Annual Report and
Accounts
•
External auditor’s year-end
report
• Going concern analysis
•
•
•
Viability Statement
Fair, balanced and
understandable review
Judgemental and Accounting
issues
• Management letter of
representation
• Confirmation of External
auditor’s Independence
• Review of IFRS 16 reporting
Risk and Internal Control
• Ratification of principal risks
•
Internal Audit update
Compliance
• Review of Litigation Register
• Review of Tax Strategy
• Meeting with external auditor
without Executive Directors
• Meeting with Head of Internal
Audit without Executive
Directors
External Auditor
•
External auditor effectiveness
and rigour survey
• Reappointment of external
auditor
August
December
Review of Financial Statements
Review of Financial Statements
• Draft interim report
•
Judgemental and Accounting
issues
Risk and Internal Control
•
Internal Audit update and
strategy review
• Crisis Management Update
• Risk review and confirmation of
principal and emerging risks
• Review of Group Insurance
Renewal
External Auditor
•
•
•
•
External auditor’s 2018 year end
management letter
External auditor’s interim review
Scope of the full year audit
Interim review management
letter of representations
Compliance
• Meeting with Head of Internal
Audit and General Counsel &
Company Secretary without
Executive Directors
• Review of Litigation Register
• Review of 2019 Annual Report
and Accounts process
Risk and Internal Control
•
•
Internal Audit update
Approval of Internal Audit plan
for 2020
• Risk review and confirmation of
principal and emerging risks
•
Annual review of anti-bribery
compliance
External Auditor
• Audit progress update report
Compliance
•
Year-end legislative and
procedural matters
•
Terms of Reference Review
Tax and Treasury
• Review of Tax Strategy
• Review of Treasury Policy
Regulatory update
• Review of FRC Audit Chair letter
• UK Corporate Governance
Code compliance
CORPORATE GOVERNANCEFinancial StatementsAdditional InformationStrategic Report CORPORATE GOVERNANCE 67
AUDIT COMMITTEE REPORT
Significant accounting issues and areas of judgement
The Committee focuses in particular on key accounting policies and practices adopted by the Group and any significant areas of judgement
that may materially impact reported results as well as the clarity of disclosures, compliance with financial reporting standards and the relevant
requirements around financial and governance reporting. Details on accounting policies can be found on pages 108 to 112.
The significant issues and areas of judgement considered by the Committee during the year and how these were addressed were
as follows:
Significant issue
How the Committee addressed the issue
Revenue
Recognition
Context: 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.
Revenue from permanent placements 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). There is a risk that a candidate reverses their decision to
take up a placement before the start date and as such the revenue recognised would be reversed. A provision is made
by management, based on past historical experience, for the proportion of those placements where this is expected
to occur. Revenue from temporary placements, which represents amounts billed for the services of temporary staff,
including the salary cost of these staff, is recognised when the service has been provided.
Actions taken: As in previous years, the Committee assesses the Group's revenue recognition policies relative to IFRS
and the sector to ensure they are appropriate, and challenges management on the internal control and compliance
processes over revenue recognition, taking into account the views of Internal Audit and the external auditors. The
external auditor explained to the Committee the procedures they performed to address the revenue recognition,
including the procedures performed around period-end cut-off and assessment of provision recognised in respect
of expected revenue reversals. On the basis of their audit work, the external auditor concluded that the revenue
recognition is in accordance with the Group’s revenue recognition policy and IFRS, and the provision for expected
revenue reversals is appropriate.
Conclusions and rationale: The Committee concluded that the approach to revenue recognition was consistent with
the policies and the judgements made were appropriate.
The Committee discussed the methodology used to test the assumptions and estimates made by management in each of these areas.
External auditor’s independence
and effectiveness
The Committee monitors the objectivity,
independence and effectiveness of the
external auditor. The Company is mindful of
the provisions of the Code, best practice,
the Competition and Market Authority Audit
Order 2014 and EU audit legislation in
particular as regards audit firm rotation and
the provision of non-audit services.
Ernst & Young LLP, the Company’s current
external auditor, was appointed in 2011
following a competitive tender process. In
accordance with audit regulation, Ernst &
Young LLP operate a policy of rotating the
Audit Partner every five years. The current
Audit Partner, Bob Forsyth, was appointed
in 2016.
The Committee approved and implemented
in 2014 a policy for the tender of external
audit services. This policy provides that
in accordance with applicable law and
regulation, the Company will re-tender the
external audit at least every ten years and
will change the external auditor at least
every 20 years. The Company reviews the
position regarding when is the optimum
time to tender external audit services. In
2019 the Committee determined that it
was in the best interests of shareholders to
commence a competitive tender of external
audit services, with the tender to take place
in 2020.
During 2019 the Committee took initial
preparatory steps in respect of the tender,
including agreeing a timeline for the tender
process and the tender participants. The
Committee currently plans to conclude the
tender in time to bring a recommendation to
the Company’s Annual General Meeting on
4th June 2020.
The Committee considers that in 2019 it has
complied with the Competition and Market
Authority Audit Order 2014.
The Committee regularly reviews its
policy on the use of the external auditor
for non-audit services in order to ensure
auditor independence and objectivity are
safeguarded. In accordance with FRC’s
2016 Ethical Standard relevant to Public
Interest Entities, the policy prohibits
the external auditor from providing
certain services which could give rise to
independence threats such as tax advisory
and compliance assignments, computing
tax provisions, global mobility and payroll
services, acting as an advocate, internal
audit and system design. The total non-audit
fees in respect of non-audit services for
the year under review amounted to £6,600
which was below the threshold amount
requiring pre-approval by the Committee.
These non-audit fees related to certifying
revenue in the Netherlands for local filing
requirements, factually reporting licence fees
recognised by the South African business
and issuing a solvency letter for a licence
application for Page Australia. No other
non-audit services were provided by the
external auditor.
Further, during the year under review,
the Committee discussed and agreed
the scope of the year-end audit and
approved the audit fee of £836,000. The
Committee regularly reviews the objectivity
and independence of the external auditor
and has concluded this is safeguarded by:
• Obtaining assurances from the
external auditor that adequate policies
and procedures exist within its firm
to ensure that the firm and staff are
Annual Report and Accounts 2019 68
•
independent of the Group by reason
of family, finance, employment,
investment and business relationship
(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 or at
Board level;
• Monitoring the external auditor’s
compliance with applicable UK
ethical guidance on the rotation of
audit partners; and
•
Enforcing a policy concerning the
provision of non-audit services by the
external auditor.
The quality, performance and
effectiveness of the external auditor is
reviewed annually by the Committee.
This covers qualification, expertise and
resources as well as assurance that there
are no issues which could adversely affect
the external auditor’s independence and
objectivity taking into account the relevant
standards. The Committee considers how
the auditor has demonstrated professional
scepticism and challenged management’s
assumptions.
The Committee reviews the:
• Robustness of the external auditor’s
plan and its identification of key risks;
•
Approach to the agreed audit plan
and fulfilment of the agreed external
audit plan and any variations from
the plan;
• Robustness (including the audit's
team's ability to challenge
management) and perceptiveness of
the external auditor in handling key
accounting and audit judgements
including demonstrating professional
scepticism and independence;
• Quality and content of reports
provided to the Committee by the
external auditor including reporting
on internal control;
•
Feedback from management which
is ascertained from staff surveys
completed by staff involved in the
audit process; and
• Communications in and outside
of meetings, between the external
auditor and the Committee.
Internal control and
risk management
The Board’s responsibilities for, and
their report on, risk management and
the systems of internal control and their
effectiveness are set out in the Corporate
Governance Report on pages 60 to 61.
On behalf of the Board, the Audit
Committee undertakes a robust
assessment of principal and emerging
risk. This involves reviewing the Group’s
risk assessment procedures and risk
registers and its longer term viability.
The risk assessment takes account of
all top down and aggregate risk and
presents the effectiveness of the controls
to mitigate the principal risks of the
business including environmental, social
and governance matters, inherent in the
strategy of the business and its plan.
In 2019, in line with the Code, processes
were introduced across the Group to
consider emerging risks. Within our
Group operational risk assessment and
reporting process cycle, twice per annum
management are formally required to
consider and disclose any emerging
risk. These are reviewed at a Group level
together with a top down perspective
gained from discussion with senior
management. In addition, our internal
audit programme reviews the basis of
risk submissions with local management
for principal risks including any emerging
risks. Prior to presentation to the Audit
Committee the principal risk reports are
independently reviewed with the external
auditors to identify the potential risks that
the Group should be considering and
anticipating. While no emerging risk was
considered sufficiently material to warrant
inclusion into the Company’s principal
risks set out at page 37 to 42, this
however remains under regular review.
For example, in 2019 we considered
climate change as an emerging risk and
assessed its impact on the Group and
the associated mitigating actions. We will
continue to scrutinise this emerging risk
to ensure we assess its impact on the
business appropriately.
The Company’s risk review procedures
include regular reports to the Committee
from the Director of Internal Audit on the
performance of the system of internal
control and on its effectiveness in
managing material and emerging risks
and identifying any control failings or
weaknesses.
The Committee reviews the Group’s risk
management process annually, with the
outcome being reported to the Board.
This, together with regular updates to the
Board on material risks, allows the Board
to make the assessment on the systems
of internal control and the residual risk
for the purpose of making its public
statement. The risk process, together with
the key risks and their indicators, have
been identified and mitigating actions
are described in the Strategic Report
on pages 37 to 42. Key performance
indicators and management incentives
are highlighted for the main financial,
strategic and people risks in the Strategic
Report on pages 19 to 21.
Where weaknesses have been identified
in the internal control system for the
mitigation of risks to an acceptable level,
plans to strengthen the control system are
put in place. Action plans in this respect
are regularly monitored until complete.
During the period under review there were
no control failings or weaknesses that
resulted in unforeseen material losses.
Internal audit activities
The Group’s Internal Audit function
comprises a Director of Internal Audit and
a team of internal auditors. The Director
of Internal Audit reports to the Audit
Committee and works with the CFO and
CEO to determine priorities. He also has
direct access to the Committee and the
Board. This ensures there is opportunity
for frank and open dialogue.
The scope of work for the Internal Audit
function is agreed with the Committee
annually with the findings from internal
audits being reported to the Executive
Board and the Audit Committee.
Businesses are visited on a rotational
risk-based approach to assess the
effectiveness of controls to mitigate risks
to an acceptable level. All major risks
are addressed in this process, including
Group functions and change programmes
as are those around governance,
environmental and social related matters.
Actions to maintain and improve the
effectiveness of the control environment
are agreed with the Executive Board
and are monitored and reported to the
Committee. Risks are also regularly
reviewed and required changes are made
to the risk profile and, where necessary, to
the activity of Internal Audit. All changes
to the Internal Audit plan are agreed with
the Chairman of the Committee and
reported to the Executive Board and the
Committee.
Committee evaluation
The activities of the Committee were
reviewed as part of the Board evaluation
process performed during the year under
review. The 2019 evaluation process was
externally facilitated by Lintstock and
covered the Committee’s effectiveness in
respect of reviewing and assessing the
work of the internal and external auditors,
the Company’s financial reporting and
system of internal controls. The overall
performance of the Committee was rated
highly. Further details of the outcome
of the Board and Committee evaluation
process, and the areas of focus for
2019 can be found in the Corporate
Governance Report on page 60.
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AUDIT COMMITTEE REPORT
Fraud
The Committee reviews the procedures
for the prevention and detection of fraud
in the Group. Suspected cases of fraud
must be reported to the Chief Financial
Officer and the Director of Internal Audit and
investigated by operational management
and Internal Audit. The outcome of any
investigation is reported to the Committee.
A register of all suspected fraudulent activity
and the outcome of any investigation is kept
and is circulated to the Committee on a
regular basis. During the year in question, no
frauds of a significant nature were reported.
Anti-Bribery and corruption and
business ethics
The Company has a Code of Conduct
which can be found on its website
www.page.com. This sets out the
standards of behaviour by which all
employees of the Group are bound and is
based on the Company’s commitment to
acting professionally, fairly and with integrity.
The Group maintains a zero tolerance
approach against corruption. It has an
established anti-bribery and corruption
policy, which includes guidance on the
giving and receiving of gifts and hospitality.
This policy applies throughout the Group.
The policy and the training materials were
reviewed and updated in 2019. Anti-bribery
and corruption training is undertaken by
senior managers, and staff in risk areas
across the Group. In order to capture
any concerns that employees or external
parties may have in relation to bribery and
corruption, the policy highlights internal
contacts who can assist in any queries
surrounding gifts and hospitality or concerns
around bribery and corruption. Additionally,
the Company operates a global “Speak Up”
helpline and actively promotes its use for any
ethical matters.
The gifts and entertainment policy was
reviewed and updated in 2019.
A register is maintained and reviewed by
the Committee to ensure transparency.
A review of compliance with the policy
is undertaken annually and reported to
the Committee. The review undertaken
in 2019 showed there was a good
understanding of the issues and no
breaches were reported.
Simon Boddie
Chair of the Audit Committee
4 March 2020
Annual Report and Accounts 2019 70
DIRECTORS’ REMUNERATION REPORT
Our Executive Single Incentive
Plan (“ESIP”)
The ESIP was introduced within our
Remuneration Policy in 2017 specifically
to align with the PageGroup business
model. We are a people business of
purely organic growth requiring long-
term strategic planning led through our
senior management team. Recruitment
generally is cyclical in nature, however, it
is through our enduring commitment to
diversification, by building out our brands,
geographies and disciplines, that we
have reduced our exposure to any one
particular market, region or sector. The
desire to follow this diversification strategy
for the benefit of the Group requires a
remuneration structure that ensures the
Executives are focused on the long term,
while remaining mindful of day-to-day
trading performance.
Our new Policy represents an evolution
of the existing ESIP structure, something
which has served us well, has had positive
feedback from shareholders, and which
has been an effective mechanism to align
reward with performance in the volatile
and cyclical sector in which PageGroup
operates. The ESIP has successfully
focused Executives on delivery of
sustained performance and value creation
for shareholders throughout the life of
the economic cycle, and delivered a
significant portion of reward in shares to
align Executives with shareholder interests
over the long term.
Recognising market best practice and
the views expressed by shareholders
and shareholder bodies during our
consultation, we have made the following
enhancements to the ESIP:
• Greater transparency: Disclosure
of EPS targets at the point they
are set by the Committee at the
beginning of the respective 3-year
performance period, including
retrospective disclosure in this
Directors’ Remuneration Report
of targets for in-flight ESIP awards
where these have not been disclosed
to date;
Simplified design: Individual
performance removed as a category
within the assessment in response to
shareholder feedback and to simplify
the overall design;
•
• Greater focus on long-term
performance: Increased weighting
on long-term financial metrics within
the assessment of the ESIP and an
associated reduction in the weighting
allocated to strategic measures;
• Delivery over a longer timeframe:
Extension of the vesting period such
that shares awarded under the ESIP
are released later than under the
existing structure, and a minimum of
a 5 year period from when we start to
assess performance through to being
accessible by an executive; and
• Calculation of EPS performance:
For the period January 2020 to
December 2022 and beyond we
will change to calculate EPS on a
constant currency basis to remove
the impact of exchange rate
fluctuations in determining award
outcomes.
Further information on the feedback
received during consultation and how
this informed the changes proposed in
the new Policy is set out on pages 74 to
77. The diagram below shows how the
proposed ESIP aligns Executives with
PageGroup’s strategic priorities.
Alignment of Strategy and Metrics used in Reward
PageGroup Strategic Priorities
ESIP Performance Measures
Organic, high-margin and diversified growth
Annual PBT Performance
3-year EPS growth
Efficiently scalable and highly flexible to react
to market conditions
Gross Profit growth relative to defined peer
group
Nurture and develop people
Strategic measures
Innovation
Strategic measures
Angela Seymour-Jackson
Committee Chair
SECTION 1:
ANNUAL STATEMENT
Dear Shareholder,
On behalf of the Board, I am pleased
to present the Directors’ Remuneration
Report for 2019, which will be subject to
two shareholder votes at our AGM
in 2020:
•
The application in 2019 of the
existing Directors’ Remuneration
Policy is subject to an advisory vote;
• Our new Directors’ Remuneration
Policy (“Policy”), described within this
report, is subject to a binding vote
and, subject to approval, will apply
for up to three years.
Approaching the new Policy
We remain committed to ensuring that
our approach to reward supports the
underlying strategy of the business. As we
experience periods of global economic
volatility and uncertainty, it is as important
as ever that we can attract, retain and
motivate high quality leadership within the
business to drive our strategy forward.
We carried out a full review of the Policy
in 2019 and undertook an extensive
consultation exercise with many of our
shareholders. In total we engaged with
investors that represent over two-thirds
of our shares in circulation, and three key
shareholder bodies. I would like to thank
all those who gave their time to contribute
to this process and who shared their
views and perspectives on our proposals.
We heard strong endorsement on our
approach from across our shareholder
base and some constructive suggestions
for further changes or enhancements.
CORPORATE GOVERNANCEFinancial StatementsAdditional InformationStrategic Report CORPORATE GOVERNANCE 71
DIRECTORS’ REMUNERATION REPORT
the legacy LTIP as well as awards from the
2019 ESIP, containing both the cash element
(worth 40% of the award) and the amount
deferred into shares (the remaining 60% of
the award). This is a consequence of the way
we are obliged to report these values under
the legislation and represents the final year
of transition from the previous structure of
bonus and LTIP to the ESIP. The payments
from these two schemes have been clearly
separated on the following page to allow the
reader to differentiate between each award,
and to further illustrate the respective award
levels between the ESIP award made in 2018
and that made in 2019.
Consideration of the wider
workforce
As a Committee we determine the reward
structure for senior Directors in the business,
but also review reward arrangements in place
across the business and the way these can
change as people progress into bigger or
different jobs within the Company. Elsewhere
within the Annual Report are examples of what
employment with the business represents
and the focus placed by the business on
creating a strong employment brand and
a place of diversity and inclusion. We have
been reporting on our Gender Pay position
for a number of years and this year we have
disclosed the CEO pay ratio for the first time.
Within this disclosure we cover both metrics,
including outlining the differences in the way
these measures are actually determined under
the respective legislation.
Conclusion
We always seek to engage with our
shareholders openly and constructively.
I am grateful to shareholders for their open
and thoughtful feedback throughout the Policy
review. I hope both remuneration resolutions
receive your support at the forthcoming AGM
and I look forward to our continued dialogue in
the coming year.
Angela Seymour-Jackson
Chair of the Remuneration Committee
4 March 2020
Other enhancements to Policy
We are also proposing other changes to
our Policy, to align with the provisions of
the new UK Corporate Governance Code,
best practice in the market and changing
expectations from shareholders. These
changes include:
• Pension alignment: Any future
appointments will have a level of pension
contribution aligned to the wider UK
workforce. Additionally, we have agreed
to freeze pension contribution levels for
incumbent executive directors at the cash
level paid in 2019 through to the end of
2022 and then any future contributions
will align to the prevailing rate available to
UK employees;
Introduction of post-cessation
shareholding policy: The introduction
of a post cessation shareholding Policy
for executives to align them to company
performance after they have ceased
employment with the business; and
Enhanced malus and clawback:
Enhanced malus and clawback
provisions to include “serious reputational
damage”.
•
•
The full Policy is set out on pages 76 to 78 of
this report.
Business performance and
reward outcomes through
the ESIP
PageGroup’s strategy of geographic
diversification and ensuring it understands
the potential and dynamics of each market
in which it operates has allowed it to perform
robustly against a rapidly changing and
evolving economic outlook. The Group has
continued to make good progress
in delivering its long-term strategy objectives
of:
• Delivering organic, diversified growth;
• Building an efficiently scalable and highly
flexible business; and
• Nurturing and developing our people.
Over the 3-year period January 2017 to
December 2019 the business has delivered
Total Shareholder Return (TSR) of 56.1%,
exceeding the FTSE250 by 24.4 points over
the same period.
The outcome of the ESIP reflects the
nature of the performance achieved in
both 2019 and over the 3-year period to
which certain targets are set. Annual profit
before tax (“PBT”) of £144.2m was at the
lower range of the performance range set
by the Committee ahead of the 2019 year.
As outlined elsewhere in the report, many
of the Group’s regions were impacted by
macro-economic and political uncertainty
including the impact of Brexit in the UK, social
unrest in France and trade tariff disruption in
Mainland China. As such, the award under
the annual PBT element was only 31% of
maximum. Continued progress was seen
against individual and strategic metrics, with
full details behind these disclosed later within
this report. Over the 3-year period we saw
strong EPS growth, with a cumulative EPS
of 91.2p exceeding the stretch target set
in 2017 of 84p. Additionally, relative gross
profit performance was comfortably in the
upper quartile against the stated peer group,
reinforcing the quality of performance of the
Company in the sector over the three-year
period with average annual growth of over
10%.
The Committee was content that the formulaic
ESIP outturns were a fair reflection of the
overall performance of the business and
did not apply any discretion in respect of
this outcome. As a result, Steve Ingham,
Chief Executive Officer, received £1,780,214
which represents 75.4% of the maximum
under the ESIP. Kelvin Stagg, Chief Financial
Officer, received £884,248 which represents
74.3% of the maximum. In line with the ESIP
structure, 60% of each award will be deferred
into shares vesting over the next three
years subject to the minimum shareholding
requirement being met. Full details of the
performance targets, assessment and
outcomes are set out on pages 83 and 84.
Legacy Long-Term Incentive Plan
outcomes
The legacy 2017 LTIP (the last award under
the previous Policy before the introduction
of the ESIP) was based on performance
through to 31 December 2019. The
performance metrics for these awards were
cumulative EPS, relative gross profit against
peer companies, and a range of strategic
objectives for each Director. The business has
performed strongly over the 3-year period with
robust EPS performance and outperformance
against the stated peer group. As a result,
following assessment of performance against
each performance metric, shares amounting
to 96% of those granted in 2017 will vest in
March 2020 for the CEO and 94.9% for
the CFO.
Further detail is set out on pages
85 and 86.
Total remuneration figure
for 2019
The total remuneration figures (the “single
figure”) include both indicative values from
Annual Report and Accounts 2019 72
SECTION 2: AT A GLANCE
What executives were paid in 2019 – Single Figure
Base Salary & Benefits
Steve Ingham
CEO
Kelvin Stagg
CFO
•
Salaries were effective from
1 January 2019
• Benefits include a car allowance
and a pension allowance of
25% of base for CEO and 20%
for CFO
ESIP
• Overall award 75.4% of
maximum for CEO and 74.3%
of maximum for CFO
•
60% of award deferred into
company shares vesting over
next 3 years
Legacy LTIP
•
Awards vested at 96% of
maximum for CEO and 94.9%
of maximum for CFO
Salary
£629,800
Benefits
£ 394,278
Salary
£366,300
Benefits
£ 98,346
ESIP
£1,780,214
Maximum
£2,361,750
ESIP
£884,248
Maximum
£1,190,475
Indicates Maximum Potential
Shares released 265,332
Shares released 133,523
Indicative Value
£1,228,485
Maximum
£1,279,672
Indicative Value
£618,213
Maximum
£651,265
Total
Total
£4,104,721
Total
£2,003,721
Dividends
£71,944
LTIP
£1,228,485
Dividends
£36,614
LTIP
£618,213
ESIP
£1,780,214
ESIP
£884,248
Base pay and benefits
£1,024,078
Base pay and benefits
£464,646
At a glance
CEO Pay Ratio
Gender Pay Gap
Shareholding levels of Executives
Ratio of CEO to UK Median = 105:1
2019 Mean Gender pay gap = 19%
2019 Median Gender pay gap = 14%
CEO = 963% of salary
CFO = 417% of salary
(Against a guideline of 200%)
More details are provided on page 91
More details are provided on page 89
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DIRECTORS’ REMUNERATION REPORT
At a Glance – Variable Reward Outcomes for 2019 and structure for 2020
ESIP – 2019 and 2020
2019 ESIP Outturn
• Overall award 75.4% of maximum for CEO and 74.3% of maximum for CFO
Assessment/Weighting
0%
50%
100%
Achievement for CEO/CFO (% max)
31% / 31%
PBT
(30%)
Strategic
(15%)
Individual
(10%)
EPS (2017 to 2019)
(35%)
Relative Gross Profit (2017 to
2019) (10%)
80% / 80%
91% / 80%
100% / 100%
100% / 100%
• Opportunity level of 375% of salary and 325% of salary results in award of £1.78m and £0.88m to CEO and CFO respectively
•
60% of award deferred into company shares vesting over next 3 years
2020 ESIP Structure
• Overall opportunity unchanged, CEO 375%, CFO 325%
•
Increased weighting towards long-term metrics (from 45% to 55% of total opportunity)
PBT
(30%)
Strategic
(15%)
EPS (2018 to 2020)
(35%)
Relative Profit (2018 to 2020)
(20%)
KEY POINTS
•
•
•
Simplification of structure
Increased weighting towards long-term metrics
60% of award continued to be deferred into shares
which are released at later stage than the 2019 ESIP
structure and subject to minimum shareholding being
in place
•
Enhanced clawback and malus provisions
Annual Report and Accounts 2019
74
nature of share vesting further supports
alignment and management of reward
volatility.
Wider reward changes
In addition, the wider landscape for
reward has evolved since the last Policy
was set and we include some changes
that reflect this. These include:
•
•
•
commitment to executive pension
contribution rates consistent
with the wider workforce for new
appointments and an agreed plan to
align to this level for incumbents by
the end of the new Policy (end 2022);
introduction of a post-cessation
shareholding policy; and
enhanced malus and clawback
provisions to cover “serious
reputational damage”.
SECTION 3: OUR REMUNERATION POLICY
We are seeking approval from
Shareholders at our 2020 AGM for a new
Directors’ Remuneration Policy. In line
with prevailing legislation, this would be
expected to apply for three years from the
date approved by shareholders.
Our ESIP structure
We have spent a considerable amount of
time reviewing the operation of the current
Policy, and specifically the use of the
Executive Single Incentive Plan (‘ESIP’)
that was approved by shareholders in
2017. We are now in the third year of the
operation of this Plan and have had the
opportunity to review the effectiveness
of what was envisaged when the Plan
was launched against its subsequent
operation.
By carrying out a full review, and
then undertaking a comprehensive
consultation exercise with shareholders
and shareholder bodies, we have been
able to outline in more detail the rationale
behind the Plan and get constructive
feedback from shareholders on their
views.
The ESIP was introduced to align with the
PageGroup business model. It provides a
structure that:
•
•
•
•
firmly aligns pay with performance;
recognises the cyclical nature of the
industry;
reduces undue volatility to drive
performance and retention of
executives throughout all stages of
the economic cycle; and
ensures that executives build up
meaningful shareholdings to align
with shareholders.
The ESIP structure rewards executives
for the appropriate delivery of our
strategy and value to shareholders.
The Committee believes this model is
an appropriate fit for the PageGroup
business – ultimately our key
responsibility in considering reward.
The ESIP recognises the cyclical
nature of the recruitment sector, and
as a way of motivating leaders, drives
superior business outcomes and acts
as a retention mechanism through the
economic cycle.
We heard strong support for the ESIP
structure from our shareholders through
the consultation process. They cited that
they were comfortable with the structure,
saw it as an effective way of aligning
performance with reward, and recognised
the structure had delivered against its
stated aims. We proposed some changes
to shareholders to improve the design,
and incorporated further changes based
on shareholder feedback. These changes
include:
•
•
•
•
prospective disclosure of 3-year EPS
targets;
extension of Vesting period;
increase minimum portion of
assessment linked to long-term
metrics; and
simplification and consolidation of
performance measures.
The ESIP is motivational, trusted by
our executives and has subsequently
been cascaded to lower levels of leaders
within the business to drive alignment
and consistency in the way we operate
reward.
It allows us to implement a pay for
performance philosophy without
undue volatility, drives higher levels
of shareholding in the business and
ensures alignment of executives with the
experience of shareholders. The phased
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DIRECTORS’ REMUNERATION REPORT
Engagement with shareholders
and shareholder feedback
We reached out to 26 of our top investors,
representing 70% of our shares in circulation.
During our engagement campaign we held
meetings with and received feedback from
13 of shareholders covering a total of 43%
of our shareholder base, along with the key
shareholder bodies that represent in total over
70% of our issued share capital.
The final Policy table is shown on pages 76
and 77 and shows both the full breakdown
of our Policy, and also the changes from the
Policy approved by shareholders in 2017.
As with all consultation processes, we heard
a range of feedback and opinions and it
would be impossible to meet all requests or
comments provided. As a Committee we have
discussed the feedback received in detail and
considered the changes we want to make in
light of this. Ultimately our role is to ensure
that our Remuneration Policy is aligned to
the strategic nature of the business and the
resulting shareholder experience, and we are
confident that this is the case. The table below
illustrates some of the comments or questions
we received through consultation and our final
position and associated rationale.
Topic
Example Shareholder
Comment Raised
Company Consideration
Conclusion
Assessment should exclude
this measure, and be through
financial metrics alone.
We felt that strategic progress is something that we want to
encourage and recognise and is a key driver of future business
success.
Maintain Strategic Assessment
as a metric within the ESIP.
Overall weighting towards
strategic measures feels
too high within the overall
assessment of the ESIP.
There was a consolidation of strategic and individual measures
within the previous design, designed to simplify the overall
structure.
Strategic
Measures
We will reduce the overall
level of weighting further than
originally planned to 15% from
25%, with an associated higher
weighting on relative gross profit
performance of PageGroup
against a stated peer group over
a 3-year period (from 10% to
20%).
Role of strategic measures
and way targets set.
Strategic measures will align to the overall strategy of the business
as set by the Board. We want to use the strategic element to
drive superior performance or place additional emphasis by the
Executives in particular areas.
No change. Commitment to
quantifiable targets where
possible with associated
disclosure.
Importance of environmental
factors as a metric in
executive reward.
We recognise the importance of acting in a responsible
way and the importance of wider sustainability in how the
business operates.
We will consider this when
setting strategic targets each
year.
Pension
Provision
Will Policy change to align
allowance for executives with
the UK workforce?
Change in policy such that future allowances for new
appointments align with the wider UK workforce.
We recognise the shareholder sentiment on this point and are
committed to aligning to the wider UK workforce over time while
reflecting the existing contractual provisions and arrangements in
place for individuals.
Post
cessation
shareholding
Variable
Reward
Structure
Tapering off of requirement
in the 12 to 24 month period
post cessation.
Why not operate an annual
bonus and PSP structure?
We want executives aligned to performance and to experience
the consequences of the strategy they stand over and implement
during their tenure. Recruitment is a very fast-moving and non-
capital-intensive sector. As a result, business decisions can be
made and implemented quickly, and we believe this tapering is
appropriate for the sector and aligns former executives effectively
to their previous business post-employment whilst recognising
the degree of change that could be implemented by new
management.
We believe the ESIP is an effective way of delivering reward in a
highly cyclical business and has been demonstrated to align pay
with performance. It is something now in place at levels below
Executive Director in the business, and also acknowledge that
any move away from the ESIP is likely to involve additional
transitionary measures.
Have you considered just
having an annual plan with
significant deferral?
Many shareholders indicated they liked the combination of 1 year
and 3-year metrics within the design. This came through when we
first discussed ESIP in 2017 and again this year.
Provision for new appointments
will reflect the UK workforce.
Monetary value for incumbents
will be fixed at 2019 levels until
end of 2022 and will then realign
to the prevailing rate of the UK
workforce.
Maintain a tapering off such that
2x salary requirement for first
12 months and 1x for next 12
months.
No change and maintain ESIP
with changes outlined within
amended Policy.
Annual Report and Accounts 2019 Executive Directors’ Policy Table
Base Salary
Benefits
Pension
Incentives
Shareholding
76
Purpose
Attract, retain and
reward high calibre
Executive Directors.
Operation
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,
considering the total
remuneration package.
Salaries are normally
reviewed annually.
Salary is paid monthly,
and increases are
generally effective from
1 January.
Attract, retain
and reward high
calibre Executive
Directors. Provision
of opportunities for
connecting with clients,
investors and staff to
facilitate growth strategy.
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.
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.
To align Executives to
company performance
through meaningful
levels of mandatory
shareholding.
Post-cessation Policy
to align executives
beyond termination of
employment.
Shareholding
requirements are
operated to align
Executive Directors’
interests with those of
shareholders.
The current requirement
is 200% of base salary.
A new post-cessation
shareholding policy will
require leavers to hold
2x salary for the first
12 months post
cessation and 1x salary
for the subsequent
12 months.
Attract, retain
and fairly reward
high calibre
Executive
Directors.
Rewards both short and
long-term performance.
Aligns interests of Executive
Directors with shareholders.
Executive
Directors
may receive
a defined
contribution
pension
benefit or cash
supplement.
Awards are paid in cash
(40%) and deferred shares
(60%) vesting at defined future
dates subject to continued
employment.
The plan consists of metrics
linked to annual performance
only, and other metrics that
consider performance over a
3-year period. At least 50%
of any award will depend on
assessment against longer
term metrics.
Performance will be measured
against a balanced scorecard,
to support the Company’s
strategy. Performance targets
will be a mix of financial
and strategic targets which
may comprise, but are not
limited to, the following:
PBT; key strategic projects;
people development; cost
management; relative Gross
Profit vs a comparator group;
and EPS. A maximum of 25%
vesting will apply for threshold
performance.
A post-vesting holding period
applies. Directors who have
not reached the shareholding
requirement of 200% of
base salary will be required
to hold vested shares from
each tranche of the ESIP for
a further two years post-
vesting, except for sales for
the purposes of meeting
tax liabilities on vesting and
exercise.
A minimum of 80% of the
possible award will normally
be linked to financial metrics.
Dividend equivalents accrue
during the vesting period
but are only released to the
extent awards vest. Malus
and clawback provisions
will apply to the total award,
including cash and deferred
portions, for misstatement
of performance, substantial
failure of risk control, and
gross misconduct.
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DIRECTORS’ REMUNERATION REPORT
Executive Directors’ Policy Table (continued)
Base Salary
Benefits
Pension
Incentives
Shareholding
Competitive benefits
in line with market
practice.
Maximum Salaries will not
normally 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.
Aim for market
competitive salaries.
Maximum award for
CEO = 375% of salary.
Maximum award for
CFO = 325% of salary.
New appointments at
the Executive Director
level will receive a
cash allowance in
line with the wider UK
workforce.
Pension contribution
levels for incumbent
Executive Directors
will be frozen at the
level received in 2019
through to the end of
2022 and then replace
to align to the prevailing
rate of the wider UK
workforce from 1
January 2023.
None.
Proposed
changes
(compared
to Policy
approved
in 2017)
None – for information
the salaries for the CEO
and CFO for 2020
will be unchanged
from the 2019 level at
£629,800 and £366,300
respectively.
Freezing of existing
contribution levels
(at 2019 value) for
incumbents through to
end of 2022 and then
reduced to rate aligned
to UK workforce.
Level for new
appointments to reflect
UK workforce from
appointment.
Change in weighting to
long-term performance from
minimum of 40% to 50%.
Introduction of post-
cessation shareholding
policy.
Minimum of 80% of ESIP
linked to financial metrics
(previously 70%).
Amended deferral structure
such that deferred awards are
released later.
Choice of performance
conditions and target setting
for variable compensation
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 focus Executives on
key drivers that underpin long-term financial
performance. The Committee are mindful
that:
•
•
targets for financial and strategic
measures should be stretching yet
achievable; and
targets should not incentivise excessive
risk taking.
Annual Report and Accounts 2019 78
Our approach to recruitment
Remuneration will be subject to the
maximum levels as set out in the
Directors’ Remuneration Policy in force at
the time of appointment. As a result, the
maximum level of variable remuneration
is 375% of base salary under the ESIP
(excluding any “buy out” payments).
Individuals will participate in the ESIP up
to the normal annual limit subject to:
•
•
Award levels in the year of
appointment being pro-rated to
reflect the proportion of the financial
year worked; and
Performance measures and/
or measurement periods may
be adjusted for newly appointed
Executive Directors, taking account
of the timing of appointment and the
individual’s role.
The table below sets out our approach
to the treatment of outstanding awards
of variable remuneration when recruiting
externally or internally.
Element of Remuneration
External Recruits
Internal Recruits
Treatment of outstanding awards
of variable remuneration.
Any variable pay element awarded
in respect of the prior role may be
allowed to pay out according to its
terms on grant.
May offer additional cash and/or share based elements when
considered to be in the best interest of the Company and, therefore
shareholders, in order to ‘buy out’ forfeited remuneration.
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 as follows:
• 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;
•
the Committee may agree that the
Company will meet certain costs
associated with the recruitment (for
example legal fees); and
• Where the Committee may adjust
the respective performance period
for performance metrics such that
company performance already
determined on appointment is not
included within calculation of
ESIP awards.
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 duration of the period
during which time the Company may
require the individual to continue to fulfil
their 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. A payment
may be made in respect of accrued but
untaken holiday.
An Executive Director who resigns or is
dismissed for cause will not be eligible for
an ESIP award and will forfeit any deferred
awards.
In respect of the ESIP, an Executive
Director may be deemed a ‘good leaver’,
for example due to:
•
•
•
•
redundancy, retirement, injury,
disability, ill health or death in service;
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; or
other appropriate circumstances at
the discretion of the Committee.
As a ‘good leaver’ they will be eligible
for an ESIP award for their last year of
employment pro-rated for the portion
of the year worked and subject to
performance. Unvested deferred
ESIP awards may be retained by the
Executive Director and will normally vest
at the established vesting dates and
will continue to be subject to malus and
clawback. They may also be subject
to time pro-rating at the Remuneration
Committee’s discretion.
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
and the plan rules.
In considering the exercise of discretion
as set out above, the Committee will
consider all relevant circumstances.
Factors that the Committee may (but shall
not be obliged to) consider 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;
and
•
adjustment of performance
outcomes to ensure that payout is
fair and reasonable in the context of
the Company’s overall performance.
CORPORATE GOVERNANCEFinancial StatementsAdditional InformationStrategic Report CORPORATE GOVERNANCE 79
DIRECTORS’ REMUNERATION REPORT
Performance scenarios
The chart below gives an indication of the total remuneration which could be received by the Chief Executive Officer and Chief Financial Officer
under the policy. This also includes an additional scenario to show the impact of 50% share price growth on deferred shares as required under the
regulations. The impact of dividends is not shown in the table below.
Fixed Pay
Incentives (Cash)
Incentives (Shares)
4,000
3,500
3,000
2,500
2,000
0
0
0
’
£
1,500
1,000
500
0
£3,894
55%
£3,185
44%
30%
24%
£2,004
35%
24%
£823
100%
41%
26%
21%
£2,012
53%
£1,655
43%
29%
24%
28%
23%
£1,060
34%
22%
44%
£465
100%
Fixed
Target Maximum Maximum +
Fixed
Target Maximum Maximum +
50% share
price growth
50% share
price growth
Chief Executive Officer (£k)
Chief Financial Officer (£k)
Assumptions
Fixed – Shows the
value of fixed pay
using a salary value
of £630k for CEO
and £366k for CFO,
with expected benefit
values based on
our Policy. Pension
contributions are
reflected based on
rates paid in 2019.
Assumes no awards
under variable plans.
Target – Calculation
as per fixed with
awards of 50% of
maximum under the
ESIP
Maximum –
Calculation as per
fixed with full awards
under the ESIP
Maximum plus
share price growth
– As maximum, but
assumes a 50%
share price increase
between award of
shares under ESIP
and subsequent
vesting
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 considered when setting pay
levels for Executive Directors.
Statement of consideration of
shareholder views
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
changes.
Key areas of discretion
Key areas of Committee discretion in the
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 ESIP (as
described in the “Policy on payment for
loss of office” section on page 78
the ability to amend performance
conditions for new appointments such
that corporate performance already
established and complete does not
feed into ESIP calculations
•
certain discretions as set out in the
ESIP plan rules such as:
– the timing of grant of award and/or
payment
– 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 the ESIP, and the resulting
treatment of the award (as described
in the “Policy on payment for loss of
office” section on page 78)
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).
Annual Report and Accounts 2019
80
External Non-Executive
Director position
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 disclosed annually.
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
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 Officer (and by the
Committee in the case of the Chairman) considering
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.
Non-executive Directors also receive reimbursement of
reasonable expenses incurred in connection with Company
business and the Company may settle any tax incurred in
relation to these.
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.
The principles below will also apply to the
recruitment of Non-Executive Directors.
Maximum Opportunity
The maximum aggregate fees for Directors
allowed by the Company’s Articles of
Association is £600,000. Current fee
levels are set out in the Directors’ Annual
Remuneration Report.
Service contracts and letters
of appointments
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 in the
Remuneration Report on page 88 and
copies are available for inspection at the
Company’s registered office during normal
business hours.
Our proposed Policy aligns with Provision 40 of the UK Corporate Governance Code 2018 as explained below:
Clarity
Simplicity
We actively engage with shareholders
and demonstrate how their views and
perspectives are considered in the
development of our Policy.
We look to describe the structure of reward clearly to
both participants and shareholders through effective
disclosures. Target documents are issued to executives
each year to ensure clear understanding of the way reward
will be delivered and assessed.
Alignment to Culture
The Policy aligns to our business model
and reflects alignment to our strategy.
Measures used to determine awards link
to our Strategic Priorities.
Predictability
Proportionality
Risk
Examples of the range of outcomes
under the Policy are shown within the
scenario graphs.
A significant proportion of the total reward opportunity is
performance driven, with clear linkage between business
metrics and variable reward outcomes.
This demonstrates the way that
different performance levels change
reward outcomes for individuals and
the associated impact of changes in the
Company share price.
Metrics for variable awards are key KPI measures for the
business and align to delivery of strategy and performance
against goals set.
A significant proportion of variable awards are delivered
in shares and Executives are required to develop and
maintain a material shareholding in the business to fully
align to the shareholder experience.
The Committee retains ultimate discretion
to vary outcomes from formulaic results if
they do not judge this to accurately reflect
underlying business performance.
Malus and Clawback provisions apply to
all awards and we operate post-cessation
shareholding requirements to further
align executives to long-term business
performance.
CORPORATE GOVERNANCEFinancial StatementsAdditional InformationStrategic Report CORPORATE GOVERNANCE 81
DIRECTORS’ REMUNERATION REPORT
SECTION 4:
ANNUAL REPORT
ON REMUNERATION
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 information on pages
72 to 94 has been audited where required
under the Regulations. The elements of the
Directors’ Annual Remuneration Report
subject to audit are the:
(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 the ESIP award made in
2019; and
(d) Section on outstanding share awards.
During the year under review the members
of the Committee were Angela Seymour-
Jackson, who was Chair of the Committee,
Simon Boddie, Patrick De Smedt, Michelle
Healy and Sylvia Metayer. Details of the
members’ attendance at meetings of the
Committee were as follows:
Director
Angela Seymour-
Jackson
No. of meetings
attended
8 out of 8
Simon Boddie
8 out of 8
Patrick De Smedt
8 out of 8
Michelle Healy
8 out of 8
Sylvia Metayer
71 out of 8
1. Due to unforeseen circumstances
Only members of the Committee are entitled
to attend meetings. Other individuals, such
as the Chairman of the Board, who attends
meetings of the Committee regularly, the
Chief Executive Officer, the Chief Financial
Officer, the Group Human Resources Director
and external advisers, may attend meetings
by invitation when appropriate and necessary.
No Director takes part in discussions
relating to their own remuneration. The
Committee last conducted a review of its
Remuneration Advisers in 2018 and following
a comprehensive tender process appointed
PricewaterhouseCoopers (“PwC”) as the
advisers to the Committee. PwC is one of
the founding members of the Remuneration
Consultants Group and as such adheres to
the code of conduct in relation to executive
remuneration consulting in the UK. PwC’s
appointment commenced in November
2018. The Committee is satisfied the advice
received is objective and independent.
The fees paid to PwC totalled £114,852.
Separate teams within PwC provided
unrelated tax and mobility services during
the year. The Committee is satisfied that
these activities do not compromise the
independence or objectivity of the advice it
has received from PwC.
The Committee met 8 times during 2019 and considered the following matters:
Meeting
Agenda Items
February 2019
March 2019
April 2019
July 2019
• Set long-term targets for 2021 ESIP (EPS and Comparator Group)
• Set Annual targets for operation of 2019 ESIP
•
• Outturn of 2018 ESIP and vesting under 2016 LTIP Award
Impact of revised Corporate Governance Code
• Annual Remuneration Report
• Gender Pay
• Remuneration Policy Review – Initial Discussion
• Remuneration Policy Review – Findings and draft proposals for consultation
• Update on performance against LTIP/ESIP targets
August 2019
• Remuneration Policy Review
October 2019
• Remuneration Policy Review – Initial feedback through consultation
November 2019
December 2019
• Remuneration Policy Review – Further feedback through consultation and amendments to proposals
• Discuss pension contributions for incumbent directors
• Review performance against strategic and individual measures
• Reviewing incentives schemes for senior management below Executive Directors
• Undertaking its annual review and approval of salaries and incentives of the Executive Directors and other senior executives
• Committee effectiveness and terms of reference review
Annual Report and Accounts 2019 82
The Remuneration Committee set out in the 2017 Annual Report and Accounts the PageGroup Remuneration Policy which was approved
by shareholders at the Company’s Annual General Meeting held on 8 June 2017. Full details of the shareholder voting in this respect can be
found on page 94. The Committee continued to operate this Remuneration Policy during 2019.
Directors’ remuneration as a single figure
The tables below report a single figure for total remuneration for each Executive Director for the years ended 31 December 2019 and
31 December 2018.
Salary
and Fees
£’000
Benefits
£’000
Pensions
£’000
ESIP -
Cash
£’000
Note 1
Note 2
Note 3
Note 4
2019
2018
2019
2018
630
616
366
358
237
36
25
25
158
154
73
72
712
810
354
404
ESIP -
Deferred
Shares
£'000
Note 4
1,068
1,215
531
607
Legacy
Long-term
incentives
£’000
Dividends
paid on
unvested
shares
£’000
Note 5
Note 6
1,228
1,328
618
612
72
143
37
70
Total
£’000
4,105
4,302
2,004
2,148
Steve Ingham
Kelvin Stagg
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 comprise a company car or cash equivalent; fuel; permanent health insurance; medical
insurance and life insurance. Following the Chief Executive Officer’s skiing accident, the Company met some of the elements of the cost of private medical care for the
CEO totalling £112.3k plus tax to expedite his recovery and return to work.
3. Pension includes the cash value of Company contributions to defined contribution pension plans and cash payments in lieu of pension contributions.
4. The ESIP payment is determined using a balanced scorecard of short and long-term performance measures. 40% of the ESIP award is delivered in cash and as
shown in the “ESIP – Cash” column. The remaining 60% of the ESIP is delivered in deferred shares which vest over a three-year time period and is shown in the “ESIP
– Deferred Shares” column.
5. The 2019 values relate to shares vesting under the 2017 LTIP, for which the performance period ended in the financial year. Following the assessment of
performance, 265,332 shares will vest to Steve Ingham and 133,523 shares will vest to Kelvin Stagg. The figures shown in the table are based on the average share
price in the three months to 31 December 2019, which is £4.63. The value will be restated next year using the actual share price on the relevant date. The 2018 values
have been restated from that disclosed in the 2018 disclosure to reflect the actual value of those awards at the point of vesting (18 March 2019) with a share price of
£4.85 compared to £4.04 when granted in March 2016.
6. This relates to dividends during the year on shares awarded under the legacy Long-Term Incentive Plan.
Non-Executive Directors’ remuneration as a single figure
The tables below report a single figure for total remuneration for each Non-Executive Director for the years ended 31 December 2019 and
31 December 2018.
Year
Fees £’000s
David Lowden
Simon Boddie
Patrick De Smedt
Michelle Healy
Sylvia Metayer
Angela Seymour-Jackson
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
213.8
208
69.5
68
64.5
61
55.5
54
55.5
54
69.5
62
There were no payments to past directors or any payments for loss of office during 2019.
CORPORATE GOVERNANCEFinancial StatementsAdditional InformationStrategic Report CORPORATE GOVERNANCE
83
DIRECTORS’ REMUNERATION REPORT
2019 ESIP
Linkage of Company performance into ESIP
outcomes.
PBT element: Full disclosure of the PBT
range is below. The Group’s PBT for 2019
was £144.2m, delivering overall 1.4%
growth. This was a notable achievement
given that the majority of the Group’s
regions were impacted by macro-economic
and political uncertainty throughout the year
including Brexit uncertainty in the UK, social
unrest in France, trade tariff disruption in
Mainland China and protests in Hong Kong.
Accordingly, the Group performed robustly
despite these tough trading conditions.
How the PBT targets were set: The
target is designed to incentivise the senior
executive team and reward exceptional
performance through a sliding scale with
target being based on internal budget and
producing an outcome of 31% of maximum.
Targets were set for 2019 taking account of
internal goals, planned investments, broker
forecasts and trading conditions at the time
targets were put in place.
Strategic element: The Committee
formulate strategic targets by focusing
on the key commercial priorities that it
considers will drive the long-term success
of the global business. The Executive
Directors are set clear goals at the beginning
of each performance year and execution
against these objectives is assessed by
the Committee. The areas of delivery
for 2019 centred around progress in
strategic markets and productivity. Detailed
disclosures of each of the CEO’s and CFO’s
performance can be found overleaf.
Personal element: The personal objectives
set for the Executive Directors enable the
Committee to consider each Director’s
individual contribution in relation to
improving organisational capability, talent
development including culture and diversity
considerations, people leadership and
management. The Committee considers
that the reward outcomes for both CEO
and CFO fairly represent the significant
achievements made in both the strategic
and personal elements of the ESIP
award.
Long-term performance element: In
2019, this element was based on targets for
2017 to 2019 EPS and gross profit growth
relative to comparators.
EPS element: Between 2017 and 2019,
PageGroup delivered 2017 EPS of 26.5p,
which represents year-on-year growth of
14.7%. In 2018, we delivered EPS of 32.5p,
representing year-on-year growth of 22.6%.
In 2019, the Group delivered EPS of 32.2p.
Although not a metric used in the ESIP, the
Company also achieved Total Shareholder
Return of 56.1% for the 3-year period 2017-
2019, exceeding the FTSE 250 by 24.4
points.
Relative Gross Profit element:
PageGroup delivered strong gross profit
growth of 5.0% in constant currency in
2019. For the 3 year period 2017-2019,
PageGroup was in the upper quartile of
the peer group and resulted in this element
being paid in full. The performance metrics,
weightings and targets, together with the
determination of the ESIP award, are as set
out in the tables below and overleaf for both
Executive Directors.
Breakdown of 2019 ESIP calculation
Performance Metrics
Weighting
Target
Annual performance Metrics – 2019
Profit Before Tax
30%
Threshold = £142m (25% award)
Non-financial
Strategic
Target = £155m-165m (60% award)
Maximum = £180m (Full award)
15%
See breakdown in table below
Personal Performance
10%
3-year performance metrics (Jan 2017 to Dec 2019)
Achievement
(% of max)
CEO
CFO
Actual PBT = £144.2m
Award Level = 31%
80%
91%
80%
80%
Cumulative EPS
35%
Threshold EPS = 69p (25% vesting) through to Stretch
EPS = 84p (100% vesting)
Actual EPS = 91.2p
Award Level = 100%
Relative Gross Profit Growth
10%
Based on average growth over the 3-year period
compared to peer group.
Median = 25% vesting through to
Upper quartile = Full vesting
Actual = 10.2% growth
This exceeds the upper quartile of the peer
group of 7.1%
Vesting Level = 100%
Overall
Overall award (% of salary)
75.4%
74.3%
Opportunity = 375%
of salary
Final Award = 283%
of salary
Opportunity = 325%
of salary
Final Award = 241% of
salary
Annual Report and Accounts 2019 84
Strategic targets and outcomes within 2019 ESIP award
CEO – Steve Ingham
Theme
Weighting
Target
Key Achievements
Strategic Objectives
Strategic
Market
Development
7.5%
• Achieve growth in identified
Large High Potential Markets
(LHPM).
Productivity
7.5%
• Ensure strategy in place
and activity commenced to
drive significant productivity
improvements.
Personal Performance
Leadership
Development
10%
•
Implement leadership
changes to ensure strategic
prioritisation on productivity.
• Strengthen talent pipeline.
• Deliver initiatives to increase
gender and nationality
diversification in senior roles.
• Champion and embed Page
Purpose and Vision and
actively monitor culture.
•
Increase in proportion of headcount and profit from
these markets from 2018 in line with strategic plan
• Specific progress in key markets against plan – in
particular Germany (20%* gross profit growth) and US
(17%* gross profit growth).
• Strategy session held with the Board.
• Scorecard of KPI metrics established to monitor
productivity and progress against productivity targets.
• Productivity improvements of 1.5% achieved.
• Changes executed to enable focus on routes to
improved productivity, resulting in new technology
to support strategy including new Mobile App, Job
matching software and advertising technology platform.
• Evolution of Training Succession and Development
programme and extension of coaching programmes
within the business.
• Progress of women in senior roles, launch of “Global
Returners” programme, progression of women’s
network and metrics embedded to track progression
with gender diversity.
• Embedding of company purpose and values seen
through “Have your say” survey results.
Achievement
(% of max)
80%
90%
70%
91%
91%
* Constant currency growth rates
CFO – Kelvin Stagg
Theme
Weighting
Target
Key Achievements
Strategic Objectives
Strategic
Market
Development
7.5%
• Achieve growth in
identified Large High
Potential Markets
(LHPM).
•
Increase in proportion of headcount and profit from these
markets from 2018 in line with strategic plan.
• Specific progress in key markets against plan – in particular
Germany (20%* gross profit growth) and US (17%* gross profit
growth).
Achievement
(% of max)
80%
90%
Productivity
7.5%
• Ensure continued
• Global Finance System project formally closed and moved to
70%
rollout of the IT target
operating model
and Global Financial
system, with flow
through to productivity
improvement.
business as usual activities.
•
IT Target Operating Model (TOM) now fully rolled out across the
Group and being optimised.
• Metrics to monitor productivity improvements in place and
favourable tracking reflecting investments and optimisation of
Groupwide systems.
Personal Performance
Leadership
Development
(capability
and talent
development
in Finance)
10%
• Develop strength and
• Robust succession plan in place covering all critical finance
effectiveness of finance
function
roles.
•
•
Implementation of changes of way Board support is provided
from central functions.
Improvements in quality and depth of management information
and analysis to support effective Board discussions.
80%
80%
* Constant currency growth rates
CORPORATE GOVERNANCEFinancial StatementsAdditional InformationStrategic Report CORPORATE GOVERNANCE 85
DIRECTORS’ REMUNERATION REPORT
Legacy Long-Term Incentive from 2017
The long-term incentive figures reported in the single figure table relate to the legacy awards granted in March 2017 to Steve Ingham and Kelvin
Stagg. These awards were subject to EPS (62.5% of the award), Relative Gross Profit (12.5% of the award) and Strategic targets (25% of the
award), measured over a three-year period. Cumulative EPS over the 3-year period was 91.2p compared to a threshold level of 69p and a stretch
of 84p.
The performance against targets set for each metric is provided below and results in an overall level of vesting for Steve Ingham of 96% (265,332
shares) and for Kelvin Stagg of 94.9% (133,523 shares). The Committee were satisfied that the overall level of vesting was appropriate against the
context of Company performance over the 3-year performance period.
Performance Metrics (3-year
performance: Jan 2017 to Dec 2019)
Weighting
Target
Achievement
(% of max)
CEO
CFO
Cumulative Earnings Per Share
62.5%
Threshold EPS = 69p (25% vesting) through to Stretch EPS
= 84p (100% vesting)
Actual EPS = 91.2p
Vesting Level = 100%
Relative Gross Profit Growth
12.5%
Based on average growth over the 3-year period compared
to peer group.
Median = 5.3% vesting through to
Upper quartile = Full vesting
Actual = 10.2% growth
This exceeds the upper quartile of
the peer group of 7.1
Vesting Level = 100%
Strategic Targets
25%
See breakdown overleaf
verall vesting (% of maximum)
Overall vesting (% of maximum)
Shares Released
84%
96%
79.7%
94.9%
265,332
133,523
Strategic targets and outcomes within LTIP award
CEO – Steve Ingham
Theme
Weighting
Key Achievements
Achievement
(% of max)
Executive Leadership and
Page People Development
7.5%
• Senior level development programme established and now embedded in the
90%
business.
• Annual talent succession and development structure in place to ensure
identification and progression of talent.
• Succession planning discussed with Board including identification of longer-term
talent (5 years+).
Strategy Development
10%
• Refreshed strategic plan implemented for the business, with regular updates of
90%
progress and landscape provided to the Board.
• Key overall progress in identified markets with greater weighting of overall profit
from large, high potential markets in line with agreed strategy.
• Rate of improvement in previously identified markets (e.g. Germany and USA) in
response to plans approved by the Board.
Systems and Innovation
7.5%
• Standardisation of operations and approach across the business: common ways of
70%
working underpinned by consistent technology and process.
• Progress made on use of data analytics and routes to enhance digital marketing
capabilities.
• Significant enhancements in cyber and privacy capabilities with new external
expertise successfully recruited into the business. Regular updates with Board on
actions being taken to protect data.
Total
25%
84%
Annual Report and Accounts 2019 CFO – Kelvin Stagg
Theme
Weighting
Key Achievements
86
Achievement
(% of max)
Executive Leadership
and Page People
Development
Strategy – cost
management,
financial and strategic
management
information
7.5%
• Changes to strengthen global finance team implemented, resulting a number of
70%
internal moves and strengthening of succession plans.
• Quality targeted external recruitment to bring specific expertise into the business to
address identified gaps or opportunities.
• Target Operating Model (TOM) within IT fully rolled out driving standardisation of
approach and synergies.
7.5%
• Enhanced financial policies and procedures across support functions.
85%
• Cost efficiencies and KPI improvements seen from rollout of Shared Service Centre
model, leveraging additional value from investment in global platforms.
•
Improvements in the ratio of Fee earner to Operational Staff.
Systems and Innovation
10%
• Single Global Financial System (GFS) now rolled out across all support regions with
83%
no interruptions to core business processes.
• Global process owners established to support evolution of next stage GFS activity
to drive ongoing benefits.
•
Innovation lab created to identify, evaluate and test technology and provide data
led insight to drive decision making on future technology, including robotic process
automation.
• Significant investment in data security capability, leading to process improvements
and extended monitoring and prevention activity.
• Group-wide GDPR programme established and successfully embedded into
business operations.
Total
25%
79.7%
Shares awarded in 2019
Conditional awards of deferred shares were made in March 2019 in relation to deferred share awards made under the operation of the
2018 ESIP.
Steve Ingham
Kelvin Stagg
Number of shares
Awarded
Face Value at date
of award
265,109
132,264
£1,214,733
£606,035
Shares vest in three tranches on the first, second and third
anniversary of award, subject to continued employment.
Vesting
Awards were made on 12 March 2019. The share price used to make awards was £4.5820 being the mid-market share price on
11 March 2019.
Outstanding share awards
This section sets out the share interests of the Executive Directors as at 31 December 2019 under the Executive Single Incentive Plan,
legacy Executive Share Option Scheme, the 2009 Share Option Scheme and the Long-Term Incentive Plan.
Steve Ingham
ESIP
Number of
shares at
1 January
2019
Granted
during
the
year
77,635
77,636
77,636
–
–
–
–
–
88,369
88,370
88,370
Vested
during
the
year
(77,635)1
–
–
–
–
232,907
265,109
(77,635)1
Lapsed
during
the
year
Number of
shares at 31
December
2019
Vesting
–
–
–
–
–
–
–
–
15 March 2019
77,636
16 March 2020
77,636
15 March 2021
88,369
12 March 2020
88,370
12 March 2021
88,370
14 March 2022
420,381
Grant Date
15 March 2018
15 March 2018
15 March 2018
12 March 2019
12 March 2019
12 March 2019
Total
1. A sufficient number of shares were sold to cover applicable taxes with the balance of 41,055 shares held
CORPORATE GOVERNANCEFinancial StatementsAdditional InformationStrategic Report CORPORATE GOVERNANCE 87
DIRECTORS’ REMUNERATION REPORT
LTIP
Number
of shares
at 1
January
2019
284,865
276,387
561,252
Grant
date
18 March 2016
16 March 2017
TOTAL
Granted
during
the
year
Vested
during
the
year
Lapsed
during
the
year
Number of
shares at 31
December
2019
Vesting
date
–
–
–
(273,755)1
(11,110)
Nil
18 March 2019
–
–
276,387
16 March 2020
(273,755)
(11,110)
276,387
1. A sufficient number of shares were sold to cover applicable taxes with the balance of 144,767 shares held
Kelvin Stagg
ESIP
Grant Date
15 March 2018
15 March 2018
15 March 2018
12 March 2019
12 March 2019
12 March 2019
Number of
shares at
1 January
2019
Granted
during
the
year
40,597
40,597
40,598
–
–
–
–
–
–
44,088
44,088
44,088
Vested
during
the
year
(40,597)1
–
–
–
–
–
Total
121,792
132,264
(40,597)1
Lapsed
during
the
year
Number of
shares at 31
December
2019
Vesting
–
–
–
–
–
–
–
–
15 March 2019
40,597
16 March 2020
40,598
15 March 2021
44,088
12 March 2020
44,088
12 March 2021
44,088
14 March 2022
213,459
1. A sufficient number of shares were sold to cover applicable taxes with the balance of 21,468 shares held
LTIP
Number
of shares
at 1
January
2019
133,298
140,662
273,960
Grant
date
18 March 2016
16 March 2017
TOTAL
Granted
during
the
year
Vested
during
the
year
Lapsed
during
the
year
Number of
shares at 31
December
2019
Vesting
date
–
–
–
(126,233)1
(7,065)
Nil
18 March 2019
–
–
140,662
16 March 2020
(126,233)
(7,065)
140,662
1. A sufficient number of shares were sold to cover applicable taxes with the balance of 66,754 shares held
Executive Share Option Scheme
Details of options granted under The Michael Page International plc Executive Share Option Scheme and The Michael Page 2009 Share Option
Scheme that remain outstanding at 31 December 2019 are as follows:
The Michael Page Executive Share Option Scheme
Grant
date
10 March 2010
TOTAL
Number of
options at
1 January
2019
4,050
4,050
Exercised
during the
year
Lapsed
during the
year
(4,050)1
(4,050)
–
–
Number of
options at
31 December
2019
–
–
Exercise
price (p)
Exercise
period
381.5
2013-2020
1. All shares arising pursuant to the exercise of options were sold to cover the option cost and taxes incurred at exercise, with the balance of 366 shares retained by Kelvin Stagg.
The gain on exercise was £3,317.
Annual Report and Accounts 2019 88
The Michael Page 2009 Share Option Scheme
Executive
Kelvin Stagg
Kelvin Stagg
Total
Grant date
11 March 2011
12 March 2012
Number of
options at
1 January 2019
Exercised
during
the
year
Lapsed
during the
year
Number of
options at
31 December
2019
30,000
30,000
60,000
–
–
–
–
–
–
30,0001
30,0002
60,000
Exercise
price (p)
491.0
477.0
Exercise
period
2014-2021
2015-2022
1. At 31 December 2019, 11,304 of the options granted to Kelvin Stagg on 11 March 2011 had vested and were available for exercise
2. At 31 December 2019, all of the options granted to Kelvin Stagg on 12 March 2012 had vested and were available for exercise
Steve Ingham does not hold any options under The Michael Page 2009 Share Option Scheme.
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 their 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. The Remuneration Committee has the right to exercise mitigation in the event of
termination.
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 giving one month’s written notice or in accordance with the provisions of 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, Directors may be reappointed
for a further term of three years, subject to annual re-election at each year’s Annual General Meeting.
Where any Director’s letter of appointment was renewed during the year they were not entitled to vote on their own appointment.
Copies of the service contracts and letters of appointment are available for inspection during normal business hours at the Company’s
registered office.
Executive Director
Service Contract Date
Unexpired Term
Notice Period
Steve Ingham
Kelvin Stagg
31 December 2010
No specific term
27 July 2014
No specific term
12 months
12 months
Non-Executive Directors
Letter of Appointment Date
Unexpired Term at 31 December 2019
Simon Boddie
Patrick De Smedt
Michelle Healy
David Lowden
Sylvia Metayer
Angela Seymour-Jackson
18 July 2018
18 July 2018
2 October 2019
18 July 2018
22 August 2017
22 August 2017
20 months
19 months
33 months
19 months
8 months
9 months
CORPORATE GOVERNANCEFinancial StatementsAdditional InformationStrategic Report CORPORATE GOVERNANCE 89
DIRECTORS’ REMUNERATION REPORT
Statement of Directors’ Shareholdings
Directors’ Shareholdings
It is the Company’s policy that Executive Directors are required to build and hold a direct beneficial holding in the Company’s Ordinary shares of
an amount equal to two times their base salary. The beneficial interests of the Directors who served during 2019, and their connected persons,
in the Ordinary shares of the Company are shown in the table below. The table does not include interests in shares which are subject to ongoing
company performance conditions but does include shares awarded but not yet vested under the ESIP.
Ordinary
shares held
as at
31 Dec 2019
Unvested
Share Award
(ESIP) as at
31 Dec 2019
% of salary
held 1
Shareholding
guideline
Ordinary shares held
as at 31 Dec 2018
937,447
420,381
178,637
213,459
963%
417%
200%
200%
–
–
–
10,000
–
915
n/a
n/a
n/a
n/a
n/a
n/a
751,625
90,049
–
–
–
10,000
–
915
Executives
Steve Ingham
Kelvin Stagg
Non-Executives
Simon Boddie
Patrick De Smedt
Michelle Healy
David Lowden
Sylvia Metayer
Angela Seymour-Jackson
Notes:
1. This uses the closing share price on 31 December 2019 of £5.23 per share and includes unvested shares awarded under the ESIP calculated on a post-tax basis.
The highest and lowest share prices during the year were £5.49 and £3.55 respectively
The resulting percentage of salary is highly linked to changes in share price. As an example, a 50p increase in the share price would increase the
percentage of salary held by the CEO to over 1050%.
There were no changes in the Directors’ interests between 31 December 2019 and the date of this report.
Relative importance of spend on pay
The graph below shows details of the Company’s retained profit after tax, distributions by way of dividend, shares purchased by the Michael Page
Employee Benefit Trust, overall spend on pay to all employees (see Note 4) in the financial statements on page 115, overall spend on Directors’
pay as included in the single figure table on page 82 and the tax paid in the financial year. The percentage change to the prior year is also shown.
£m
600
500
400
300
200
100
0
+5%
545.9
520.9
2019
2018
–
103.4
103.7
+3%
81.3
83.5
-14%
Profit after
tax (£m)
Dividends
paid (£m)
11.6
10.0
Shares
purchased by
the EBT (£m)
Overall spend
on pay (£m)
-5%
7.0
6.6
Overall spend
on Directors’
pay (£m)
-10%
41.0
37.0
Tax paid
(£m)
Annual Report and Accounts 2019 Change in CEO pay compared to workforce
The following table provides a summary of the 2019 increase in base salary for the Chief Executive Officer compared to the average
increase for the UK employee population in the same period. Also included is the proposed 2020 salary increase for the purpose of
comparison.
90
Salary
CEO
UK Employee Population1
Benefits
CEO
UK Employee Population1
Annual Cash Incentive
CEO
UK Employee Population1
2020
increase %
2019
increase %
2018
increase %
0
0
n/a
0
n/a
0
2.3
2.3
0
0
0
0
2.6
2.3
(2.7)
0
(1.3)
0
1.Represents average UK increase.
The UK employee population was chosen as the most relevant population comparison as the Chief Executive Officer is based in the UK.
Remuneration for employees below the Board
Our remuneration philosophy is cascaded through the organisation and we focus on rewarding collective achievement and team-based
success. At senior levels we use a combination of shares and cash to achieve this and drive alignment with the business. At more junior
levels variable reward is delivered through cash only.
Overall reward is benchmarked on a regular basis to the respective local market and is linked to skill and experience in role. We offer a
wider range of benefits that evolves over time. This includes Company provided benefits, but also extends to a range of policies to support
work-life balance and wellbeing.
The Company does not formally consult with employees on remuneration matters to consider executive pay or Remuneration Policy design
but does review information on employee satisfaction with reward throughout the organisation, including results to reward questions from
the “Have Your Say” employee engagement questionnaire which is now run on an annual basis.
Reward across the PageGroup business
We operate within a broad reward framework across our organisation, designed to enable effective progression of talent and grow our own
pipeline of talent for the future. We focus on how we drive team based behaviours to create better customer relationships to support our
strategy of organic growth.
Employees typically receive salary and a range of benefits driven my local market norms and practice. Most of our employees also have
access to variable pay schemes linked to the success they help create.
Our regular activities to engage with our staff (see page 30) give us valuable insight of our reward offer and areas of reward that are working
and opportunities for change. We discuss our overall approach as a Board and the way that reward may be expected to change as
someone progresses through the organisation.
Base Salary
Salaries are set with reference to the skills and experience of the individual and reflect the local market ranges. The career
journey of the fee earning population enables regular pay reviews on achievement of performance based targets which
will contribute to the success of the team. For others, salaries are usually reviewed annually and adjusted in consideration
of business affordability, individual performance and local market rates of pay.
Benefits
We operate across a range of countries where we see very different practices in terms of benefit provision. Our
benefits typically include items such as pension provision, life insurance and medical cover. The levels of contribution or
investment in benefits will be driven by local market factors rather than a single global approach.
Variable Pay
The variable pay of the consultant population broadly takes two approaches. Some work on an individual commission
basis which promotes individual performance that contributes to the success of the wider team. Others participate
in bonus structures which deliver cash awards based on the success of their respective team. Amounts of bonuses
awarded will be influenced by the performance of the team as well as the performance of the individual.
At a leadership level we also offer deferred cash incentives to drive retention of talent, in addition to the bonus structures
available. At senior leadership levels we provide access to share based incentives, designed to enable individuals to build
up a holding in Company shares and fully align them to the shareholder experience.
CORPORATE GOVERNANCEFinancial StatementsAdditional InformationStrategic Report CORPORATE GOVERNANCE 91
DIRECTORS’ REMUNERATION REPORT
CEO pay ratio
Following the introduction of Government legislation, this is the first year that we have been required to disclose the ratio of our CEO pay to that of
the median, 25th percentile and 75th percentile total remuneration of full-time equivalent employees. Our position is as shown in the table below.
Calculation Method 25th Percentile
Median
75th Percentile
2019
Option A
160:1
105:1
64:1
CEO Pay Ratio
Commentary on the ratio:
As an organisation, we are committed to competitive salaries for employees coupled with incentives that drive collective success.
We will publish the ratio in each successive year and provide commentary on any changes to the ratio disclosed. The reward structure for our
CEO is weighted far more towards variable reward than most of our employees within the UK. Therefore, we expect future changes to this ratio to
be linked to changes in variable award levels under the ESIP and future share price movement.
The single figure value for 2019 for the CEO is as required for us to report under the legislation. In particular, this requires us to state values
for share awards at the point where they are no longer subject to Company performance conditions. As outlined within this report, 2019
represents the final year of the transitionary period following the introduction of the ESIP in 2017 and therefore includes values for both the LTIP
awarded in March 2017 (which will vest in March 2020) and the share award that will be made linked to the ESIP outturn for the period ending
31 December 2019.
We also recognise that the earnings profile across our UK employees and that both the mean and median can be useful measures of dispersion.
We have provided three supplementary ratios for illustration as follows:
Scenario
Resulting CEO
Single Figure
Resulting CEO Pay
to Median Ratio
CEO Single Figure for 2019 excluding value of the
2017 LTIP award
CEO “On-Target” Remuneration compared to 2019
UK Median FTE Reward
£2,877k
£2,040k
CEO single figure compared to UK mean FTE
earnings
£4,105k
(As disclosed)
74:1
52:1
76:1
Notes to the table
1. We have elected to use Option A to calculate the ratio as we believe this gives the most accurate insight into employee pay and benefits and closest comparison to the CEO
single figure value.
2. The calculation was based on employee data as at 31 December 2019.
The employee figures for our UK workforce to calculate the ratios are as follows:
25th Percentile
Median
75th Percentile
Total pay and benefits – 2019
£25,614
Total salary
£24,500
£39,093
£30,600
£64,281
£44,300
This value is calculated on a full-time equivalent basis as required under the regulations.
What the Executive Directors can earn in 2020
The structure of remuneration for 2020 is as outlined in our Remuneration Policy being tabled for approval at our forthcoming AGM. Subject to
shareholder approval this will consist of the following elements:
Salary – Base salaries were reviewed with reference to the general salaries across the UK population and in light of overall current trading
performance. The Committee has agreed to leave salaries unchanged for 2020. Annual salary levels will therefore remain at £629,800 for the CEO
and £366,300 for the CFO.
Benefits – No changes to benefits provision compared to 2019. Following the CEO’s skiing accident he is no longer able to play golf and as such
no longer receives this membership benefit. Also, no further medical expenses are anticipated to be paid in 2020.
Pensions – Pensions will be fixed at the absolute level paid to executives in 2019 and paid monthly alongside salaries. For the CEO this will
equate to an annual value of £157,450 and for the CFO £73,260. This approach will apply in 2021 and 2022 with allowances aligned to our UK
workforce from 1 January 2023.
ESIP – We are making some changes to the structure for 2020, which is explained within the Policy section of the Report. The amended
structure is shown in the diagram overleaf.
Annual Report and Accounts 2019 92
Proposed operation of ESIP from 2020
ESIP 2020 - single plan
Assessment
2018
2020
Proposed Measures, Weightings
and Time Period
PBT (30%)
Strategic (15%)
EPS (35%)
Relative Gross Profit growth (20%)
40% of
award in
cash
60% of
award in
deferred
shares
Opportunity CEO = 375%, CFO = 325%
Delivery
2021
2022
2023
2024
2025
Cash
paid
Dividends
Under the single plan dividend equivalents will accrue
in respect of any shares deferred but not yet released.
Dividend equivalents are paid, in accordance with the
rules, at the time of vesting.
deferred
Half of
shares vest
holding period*
deferred
Half of
shares vest
holding period*
* Holding Period
Vested shares have to be held for two years if the shareholding
guidelines have not been met at point of release (except for sales to
meet a resulting tax liability).
EPS targets – approach and application
We set EPS targets at the start of the respective 3-year performance period. In response to recent feedback from our shareholder
consultation exercise we have outlined below all EPS targets that have been set by the Committee for the ongoing operation of the ESIP.
ESIP Scheme
ESIP 2020
ESIP 2021
ESIP 2022
EPS Period
Agreed Cumulative EPS
Range (p)
Equivalent Annual Growth %
January 2018 - December 2020
88.3p - 106.1p
5.4% to 15.1%
January 2019 - December 2021
109.7p - 132.2p
January 2020 - December 2022
106.6p to 128.6p
6% to 16%
5% to 15%
For the operation of the ESIP for 2022 and beyond we will move to calculate EPS growth on a constant currency basis.
Relative Gross Profit Growth
Assessed against comparator group: Current list of companies: SThree, Robert Half, Randstad, Robert Walters,
Adecco, Hays, Manpower
Performance range: Below median = no award. Median = 25% of award through to 100% of award for upper quartile
performance or above.
In the event of material change of one of the companies within the comparator group (e.g. due to M&A activity) the
Committee retains flexibility to adjust the peer group with a stated desire to capture organic growth only.
Implementation of the Remuneration Policy for the Chairman and Non-Executive Directors in 2019
The fees per annum for the Board Chairman and the Non-Executive Directors have been agreed as follows:
Chairman
Non-Executive basic fee
Additional fees payable
Senior Independent Director
Chair of the Audit Committee
Chair of the Remuneration Committee
Year ending 31 December 2019
From 1 January 2020
£213,800
£55,500
£9,000
£14,000
£14,000
£213,800
£55,500
£9,000
£14,000
£14,000
CORPORATE GOVERNANCEFinancial StatementsAdditional InformationStrategic Report CORPORATE GOVERNANCE 93
DIRECTORS’ REMUNERATION REPORT
Total Shareholder Return
The performance graph below shows the movement in the value of £100 invested in the shares of the Company compared to an investment in
the FTSE 250 index and the FTSE Support Services index over the period 31 December 2010 to 31 December 2019. The graph shows the Total
Shareholder Return generated by the movement in the share price and the reinvestment of dividends.
The FTSE 250 index and the FTSE Support Services index have been selected as the Company was a member of each index throughout the
period. The table below shows the total remuneration of the Chief Executive Officer over the same ten-year period.
CEO
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Single remuneration total
£2,184k
£1,647k
£2,723k
£1,318k
£1,494k
£2,074k
£2,089k
£3,660k
£4,340k
£4,105k
Short-term incentives
(% of maximum) (note 1)
Long-term incentives
(% of maximum)
Executive Single Incentive Plan (%
of maximum)
Notes:
N/A
N/A
N/A
58%
71%
68%
60%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
60% 55.35%
96.1%
96%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
91%
87.7%
75.4%
1. Prior to 2012 the Company 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 is possible to provide this information for the years 2013, 2014, 2015 and 2016
31 Dec 2009 31 Dec 2010 31 Dec 2011
31 Dec 2012
31 Dec 2013 31 Dec 2014 31 Dec 2015
31 Dec 2016
31 Dec 2017
31 Dec 2018
31 Dec 2019
330
300
270
240
210
180
150
120
276.69
266.99
245.44
234.92
240.02
220.25
230.34
215.93
198.96
200.20
198.11
191.12
323.15
22
309.35
199.28
149.31
152.32
144.49
140.80
127.40
123.20
122.71
150.93
160.76
162.04
121.72
127.69
100.0
90
111.26
114.58
95.77
PageGroup
FTSE 250
FTSE SS
Annual Report and Accounts 2019 94
Statement of voting at the Annual General Meeting
At the Company’s Annual General Meeting held on 8 June 2017, shareholders approved the existing Remuneration Policy. The
Remuneration Policy was not varied or amended and as such was not presented to shareholders for consideration at the Annual General
Meetings held in 2018 or 2019. The table below shows the results of the voting on the Remuneration Policy at the 2017 Annual General
Meeting and the Directors’ Remuneration Report put to shareholders at the 2019 Annual General Meeting. Each resolution required a
simple majority of the votes cast to be in favour in order for each of the resolutions to be passed.
Resolutions
AGM
Votes For
%
Votes
Against
%
Votes Withheld
Remuneration Policy Report
8 June 2017
163,167,784
66.2
83,370,082
33.8
134,123
Directors’ Remuneration Report
24 May 2019
256,510,247
95.9
10,839,615
4.1
Nil
A full schedule in respect of shareholder voting on all the resolutions put to shareholders at the 2018 Annual General Meeting is available on
the Company’s website at www.page.com.
External directorships
During the year Steve Ingham, Chief Executive Officer, earned and retained £11,606 (2019: £42,500) in respect of fees from his role as a
Non-Executive Director of Debenhams plc. He ceased to be a Non-Executive Director of Debenhams on 9 April 2019. No other Executive
Director earned any fees from external directorships.
The Directors’ Remuneration Report has been approved by the Board of Directors.
Signed on behalf of the Board of Directors
Angela Seymour-Jackson
Chair of the Remuneration Committee
4 March 2020
CORPORATE GOVERNANCEFinancial StatementsAdditional InformationStrategic Report CORPORATE GOVERNANCE 95
DIRECTORS’ REPORT
The Directors present their Report together with the consolidated financial statements for the year
ended 31 December 2019.
Certain information that fulfils the requirements of the Directors’ Report can be found elsewhere
in this document as noted in the table below. This information is incorporated into this Directors’
Report by reference. Pages 58 to 69, 95 to 97 and 135 to 138 also comprise the Directors’ Report
for the year ended 31 December 2019.
Kaye Maguire, General Counsel & Company Secretary
Likely future developments
Policy on disability
Employee engagement
Greenhouse gas emissions
Directors’ interests
Share capital and acquisition of own shares
2
96
25-34
21-22
86-89
95-96
Directors’ disclosure of information to the auditor in respect of the audit 97
Directors’ Responsibility Statement
Going concern
Viability Statement
Appointment and replacement of Directors
Articles of Association
Powers of Directors
Stakeholder considerations
Share capital and shareholder rights
– Restriction on transfer of shares
– Rights attaching to shares
97
43
43
60
136-138
137-138
44-45
137
136
– Restrictions on voting 136
– Details of employee share schemes
Subsidiary and associated undertakings and branches
Related party transactions
127-129
120-125
134
Directors
There have been no changes to the Board
in the year under review. The Directors who
served throughout the year under review
were David Lowden, Simon Boddie, Patrick
De Smedt, Steve Ingham, Michelle Healy,
Kelvin Stagg, Sylvia Metayer and Angela
Seymour-Jackson.
Results and Dividends
The results for the year are set out in the
Consolidated Income Statement on page
103. An analysis of revenue, profit and net
assets by region is shown in Note 2 on
pages 113 to 114. A final dividend for 2018
of 9.00p per Ordinary share was paid on
17 June 2019; an interim dividend for 2019
of 4.30p per Ordinary share was paid on
9 October 2019; and a special dividend
of 12.73p per share was also paid on 9
October 2019.
The Directors recommend the payment of a
final dividend for the year ended
31 December 2019 of 9.40p per Ordinary
share on 19 June 2020 to shareholders on
the register of members on 22 May 2020.
If approved by shareholders at the Annual
General Meeting, this will result in a total
ordinary dividend for the year of 13.70p
per Ordinary share (2018: 13.10p). This,
together with the payment of the special
dividend, gives a total dividend for the year
of 26.43p (2018: 25.83p).
Share Capital
As at 31 December 2019 the Company’s
issued capital comprised a single class
of 328,603,774 Ordinary shares of 1p
each, totalling £3,286,037.74. At the
Annual General Meeting held on 24 May
2019 the shareholders authorised the
Company to purchase up to a maximum
of 10% of the issued share capital in the
market. No shares were repurchased
Annual Report and Accounts 2019
96
during the year. Shareholders also
authorised the Directors to allot shares
up to an aggregate nominal value of
£1,094,482.41. Further resolutions in
respect of these matters will be put to
shareholders at the forthcoming Annual
General Meeting.
During the year 264,050 shares were
issued to satisfy share options exercised.
The Company reviews the award 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
Investment Association.
Stakeholders and
employment policy and
employee involvement
Pages 44 to 45 of the strategic report
and the pages to which it refers,
comprises the Company’s section 172(1)
statement together with the statements
as to how the Directors have engaged
with employees and had regard to their
interests and how the Directors have
had regard to the Company’s business
relationships with customers, suppliers
and other external stakeholders.
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 Group’s employment
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 Directors have also engaged with
employees and taken their interests into
account in respect of decision making.
The Group is 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, townhalls, Yammer (the Group’s
internal social collaboration site), emails
and other communications from the
Chief Executive Officer and members
of the Executive Board. Further details
of employment policies and employee
involvement can be found in the Strategic
Report on pages 25 to 34.
Directors’ indemnities
The Company has not granted separate
indemnities to the Directors. The
Company purchased and maintained
Directors’ and Officers’ Liability Insurance
throughout the period under review, which
gives appropriate cover for legal actions
brought against the Directors.
Financial instruments and
financial risk management
Details of the Group’s use of financial
instruments, including financial risk
management objectives and policies of
the Group, and exposure of the Group to
certain financial risks can be found in Note
20 on pages 129-133.
Significant agreements
containing change of
control provisions
The Company has an invoice discounting
facility that terminates on a change of
control, with prepaid amounts being
repayable.
Directors’ and employees’ contracts do
not normally provide for payment for loss
of office or employment as a result of a
change of control. However, the Company
operates several share and share option
schemes for the benefit of its Executive
Directors and employees, the rules of
which contain provisions which may
cause options and share awards granted
to vest on a change of control.
Substantial shareholders
At 31 December 2019 the Company had been notified, in accordance with the FCA Disclosure Guidance and Transparency Rules,
of the undermentioned noted interests in its Ordinary share capital. The percentage of voting rights shown below are as at the date of
notification.
Shareholder
No. of Ordinary shares
% of voting rights
Liontrust Investment Partners LLP
The Capital Group Companies, Inc
Heronbridge Investment Management LLP
Franklin Templeton Institutional LLC
Sanne Fiduciary Services Ltd as Trustee of the Michael Page Employees’ Benefit Trust
Since the date of disclosure, the above shareholdings may have changed.
16,626,702
16,455,148
16,301,242
16,104,930
10,666,343
5.07%
5.01%
4.98%
4.93%
3.25%
CORPORATE GOVERNANCEFinancial StatementsAdditional InformationStrategic Report CORPORATE GOVERNANCE (i) the Group and parent company financial
statements, prepared in accordance
with IFRS as adopted by the EU, give a
true and fair view of the assets, liabilities,
financial position and profit of the Group
and parent company; and
(ii) 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.
3. Disclosure of information to
the Auditor
Having made the requisite enquiries, so
far as the Directors are aware as at the
date of this Statement, there is no relevant
audit information (as defined by section
418(3) of the Companies Act 2006) of
which the Company’s auditor is unaware
and the Directors have taken all the steps
they ought to have taken as a Director to
make themselves aware of any relevant
audit information and to establish that
the Company’s auditor is aware of that
information.
Kelvin Stagg
Chief Financial Officer
4 March 2020
97
DIRECTORS’ REPORT
Political contributions
No political contributions were made during
the year. The Company has a policy of
not making political donations to political
organisations or independent election
candidates anywhere in the world as
defined by the Political Parties, Election
and Referendums Act 2000.
Post Balance Sheet Events
There have been no significant post
balance sheet events since 31 December
2019.
Listing Rule 9.8.4
There is no information required to be
disclosed under Listing Rule 9.8.4.
Annual General Meeting
The Annual General Meeting of the
Company will be held on 4 June 2020.The
notice of meeting will be made available on
the Company’s website www.page.com
and posted separately to shareholders that
have requested this.
By order of the Board
Kaye Maguire
General Counsel & Company Secretary
4 March 2020
Directors’ Statements
of Responsibility
The Directors are responsible for preparing
the Annual Report and Accounts in
accordance with applicable law and
regulations and keeping proper accounting
records. Detailed below are statements
made by the Directors in relation to their
responsibilities, disclosure of information to
the Company’s auditor and going concern.
1. Financial Statements and
accounting records
Company law of England and Wales
requires the Directors to prepare for each
financial year financial statements which
give a true and fair view of the state of
affairs of the Company and of the Group
at the end of the financial year and of the
profit or loss of the Group for that period.
In preparing those financial statements the
Directors are required to:
(i)
state whether the Group financial
statements have been prepared in
accordance with International Financial
Reporting Standards (“IFRS”) as
adopted for use in the EU and Article 4
of the EU IAS Regulations;
(ii) state whether the parent company
financial statements have been
prepared in accordance with IFRS as
adopted for use in the EU;
(iii) select suitable accounting policies and
apply them consistently;
(iv) make judgements and estimates that
are reasonable and prudent;
(v) present information, including
accounting policies, in a manner that
provides relevant, reliable, comparable
and understandable information; and
(vi) prepare the financial statements on
a going concern basis unless it is
inappropriate to presume that the
Company and the Group will continue
in business.
The Directors are responsible for keeping
proper accounting records which disclose
with reasonable accuracy at any time
the financial position of the Company
and of the Group and to enable them to
ensure that the financial statements and
Directors’ Remuneration Report comply
with the Companies Act 2006 and, for
the consolidated financial statements,
Article 4 of the EU IAS Regulation. They
are also responsible for the system of
internal control, 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.
2. Directors’ Responsibility
Statement
The Board confirms to the best of its
knowledge that:
Annual Report and Accounts 2019 98
Independent Auditor’s Report to the Members of PageGroup plc
Opinion
In our opinion:
• PageGroup plc’s Group financial statements and Parent company financial statements (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 2019 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 as
applied in accordance with the provisions of the Companies Act 2006; and
• 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.
We have audited the financial statements of PageGroup plc which comprise:
Group
Consolidated income statement
Consolidated statement of comprehensive income
Parent company
Consolidated balance sheet
Balance sheet
Consolidated statement of changes in equity
Statement of changes in equity
Consolidated statement of cash flows
Statement of cash flows
Related notes 1 to 24 to the financial statements, including a summary of
significant accounting policies
Related notes 1 to 24 to the financial statements including a summary of
significant accounting policies
The financial reporting framework that has
been applied in the preparation of both
the group financial statements and the
parent company financial statements 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.
Basis for opinion
We conducted our audit in accordance
with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards
are further described in the Auditor’s
responsibilities for the audit of the financial
statements section of our report below.
We are independent of the Group and
Parent Company in accordance with the
ethical requirements that are relevant to
our audit of the financial statements in the
UK, including the FRC’s Ethical Standard
as applied to listed public interest entities,
and we have fulfilled our other ethical
responsibilities in accordance with these
requirements.
We believe that the audit evidence
Overview of our audit approach
we have obtained is sufficient and
appropriate to provide a basis for
our opinion.
Conclusions relating to principal
risks, going concern and viability
statement
We have nothing to report in respect of
the following information in the annual
report, in relation to which the ISAs(UK)
require us to report to you whether we
have anything material to add or draw
attention to:
• the disclosures in the annual report set
out on page 37-42 that describe the
principal risks and explain how they
are being managed or mitigated;
• the directors’ confirmation set out on
page 43 in the annual report that they
have carried out a robust assessment
of the principal risks facing the entity,
including those that would threaten its
business model, future performance,
solvency or liquidity;
• the directors’ statement set out on
page 97 in the financial statements
about whether they considered
it appropriate to adopt the going
concern basis of accounting in
preparing them, and their identification
of any material uncertainties to the
entity’s ability to continue to do so over
a period of at least twelve months from
the date of approval of the financial
statements;
• whether the directors’ statement in
relation to going concern required
under the Listing Rules in accordance
with Listing Rule 9.8.6R(3) is materially
inconsistent with our knowledge
obtained in the audit; or
• the directors’ explanation set out on
page 43 in the annual report as to how
they have assessed the prospects of
the entity, over what period they have
done so and why they consider that
period to be appropriate, and their
statement as to whether they have a
reasonable expectation that the entity
will be able to continue in operation
and meet its liabilities as they fall due
over the period of their assessment,
including any related disclosures
drawing attention to any necessary
qualifications or assumptions.
Key audit matters
• Revenue recognition for permanent and temporary placements.
Audit scope
• We performed a full scope audit of 6 components of the Group and audit procedures on specific balances for a further 5
components.
• The components where we performed full or specific audit procedures accounted for 85% of profit before tax, 82% of
revenue and 72% of total assets.
Materiality
• Overall Group materiality of £7.1m which is based on 5% of profit before tax.
CORPORATE GOVERNANCEFinancial StatementsAdditional InformationStrategic Report CORPORATE GOVERNANCE 99
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the
current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These
matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts
of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in our opinion
thereon, and we do not provide a separate opinion on these matters.
Key observations
communicated to the
Audit Committee
We concluded that
revenue recognised for
permanent and temporary
placements is correctly
recorded in accordance
with the Group’s revenue
recognition criteria
and IFRS, and that the
provision for expected
revenue reversals was
appropriate.
Risk
Our response to the risk
Revenue recognition for permanent and
temporary placements
Refer to the Audit Committee Report (page 67);
Accounting policies (page 108); and Note 2 of the
Consolidated Financial Statements (page 113).
The Group has reported permanent placement
revenue of £649.9million (2018: £629.1million) and
temporary placement revenue of £1,004million (2018:
£920.8million).
For permanent placements there is a risk around
the timing of revenue recognition as revenue is
recognised when customer and candidate agreement
is achieved, which may be several months in advance
of the start of employment. Consequently, there is a
risk that:
• recognition occurs before revenue recognition
criteria have been met;
• period end cut-off is performed incorrectly; or
• management judgement is incorrectly applied
in estimating the level of provision required for
potential revenue reversals when placements are
not taken up as agreed.
Temporary placement revenue is recognised when the
customer has approved the timesheet. Consequently
there is a risk that
• revenue is recognised before an approved
timesheet has been submitted; or
• that period end cut-off is performed incorrectly.
For both permanent and temporary placements we
have identified the following risk:
• Management override by manipulation of revenue
through manual or top-side journals.
We performed the following full and specific scope audit procedures
over this risk area at 11 components, which covered 82% of the
revenue balance:
• For permanent and temporary revenue streams, we identified
and assessed the design of key controls to validate that revenue
recognition was appropriate and applied in accordance with the
Group’s accounting policies.
• For all 11 components, we used data analytics covering all revenue
transactions in the year to test the correlation between revenue,
accounts receivable and cash.
• Performed period-end cut off testing for a sample of revenue
transactions to check all revenue recognition criteria for the
permanent and temporary placements had been met and that
revenue had been recognised in the correct period.
• Compared the level of permanent placement revenue reversals
over the last 12 months, which occur as a result of non-
completion of contractual placements, to the provision recorded
against accrued income and trade receivables to determine if the
assumptions used to calculate the provision were appropriate. We
also re-performed the provision calculation to confirm its accuracy.
• Performed testing of cash collections made post year-end for a
sample of balances to validate the existence of accrued revenue
and trade receivable balances. For those transactions not collected
in cash we verified documents to check all revenue recognition
criteria had been met.
• To address the risk of management override, we performed journal
entry testing over revenue, focusing on manual entries and top-
side adjustments specifically around year end.
For all other components which represent 18% of the revenue
balance:
• For four components representing greater than 2% each of
the Group’s revenue we performed period-end cut off testing
for a sample of revenue transactions to check that all revenue
recognition criteria for the permanent and temporary placements
had been met and that revenue had been recognised in the
correct period.
• We performed audit procedures centrally on a country-by-country
basis to address the risk of an undetected material error occurring
in all other components representing 18% of the Group’s revenue.
These comprised analytical review of revenue and gross profit, and
ratio analysis of key performance indicators including revenue and
gross profit per fee earner.
An overview of the scope of
our audit
Tailoring the scope
Our assessment of audit risk, our
evaluation of materiality and our allocation
of performance materiality determine our
audit scope for each entity within the Group.
Taken together, this enables us to form
an opinion on the consolidated financial
statements. We take into account size,
risk profile, the organisation of the group
and effectiveness of group-wide controls,
changes in the business environment and
other factors such as recent Internal Audit
results when assessing the level of work to
be performed at each entity.
In assessing the risk of material
misstatement to the Group financial
statements, and to ensure we had adequate
quantitative coverage of significant accounts
in the financial statements, we selected
11 of the 36 reporting components that
represent the principal business units within
the Group within the following full scope
components: United Kingdom, France,
United States, Germany, China, Hong Kong;
and specific scope components: Australia,
Italy, Spain, Netherlands and Belgium.
Annual Report and Accounts 2019 100
Of the 11 components selected, we
performed an audit of the complete
financial information of 6 components (“full
scope components”) which were selected
based on their size or risk characteristics.
For the remaining 5 components (“specific
scope components”), we performed audit
procedures on specific accounts within
that component that we considered had
the potential for the greatest impact on
the significant accounts in the financial
statements either because of the size of
these accounts or their risk profile. The
audit scope of these components may
not have included testing of all significant
accounts of the component but will have
contributed to the coverage of significant
balances tested for the Group.
The reporting components where we
performed audit procedures accounted
for:
The charts below illustrate the coverage
obtained from the work performed by our
audit teams.
18%
59%
23%
Revenue
15%
64%
Profit
before
tax
21%
Revenue
Full scope
components
Specific scope
components
2019 2018
59%
59%
28%
54%
Total assets
23%
24%
18%
Total
82% 83%
Profit
before tax
Full scope
components
Specific scope
components
64%
59%
21%
21%
Full Scope components
Specific Scope components
Total
85% 80%
Other procedures
Senior Statutory Auditor to the UK
Shared Service Centre (SSC) which
accounts for the UK and US businesses.
A visit to the Germany, France, and the
Group’s EMEA SSC based in Spain was
undertaken by the Group audit senior
manager. These visits involved discussing
the audit approach with the component
teams and any issues arising from their
work, reviewing key audit working papers
on risk areas and attending the audit
closing meeting for the UK and Germany
components with local management. The
purpose of the visit to the EMEA SSC
was to obtain an understanding of the
SSC operations, perform walkthrough
procedures for all significant processes in
relation to the countries now supported
by the SSC. The Group audit team led
all 3 regional audit closing meetings or
calls with regional management and
the Group CFO, at which key areas of
local judgement and audit findings were
discussed.
The Group audit team interacted regularly
with the component teams where
appropriate during various stages of
the audit, reviewed key working papers
and were responsible for the scope
and direction of the audit process. This,
together with the additional procedures
performed at Group level, gave us
appropriate evidence for our opinion on
the Group financial statements.
Total
assets
Full scope
components
Specific scope
components
54%
56%
18%
19%
Total
72% 75%
Of the remaining 25 components that
together represent 15% of the Group’s
profit before tax, none are individually
greater than 4% of the Group’s profit
before tax. For these components,
we performed other audit procedures,
including analytical review procedures
on a country-by-country basis, obtaining
an understanding of the Group wide
entity level controls over all components
and assessing the results of the Internal
Audit reviews to identify any potential
risks of material misstatement to the
Group financial statements. We have also
verified bank reconciliations to test cash
balances and performed revenue cut-off
procedures around year-end at some of
the larger locations within these remaining
25 components.
Involvement with component teams
Our application of materiality
In establishing our overall approach to
the Group audit, we determined the type
of work that needed to be undertaken
at each of the components by us, as
the primary audit engagement team, or
by component auditors from other EY
global network firms operating under
our instruction. For the 6 full scope
and 5 specific scope components,
audit procedures were performed by
component audit teams. Procedures on
the Group’s Head Office were performed
directly by the primary audit team. For
all full and specific scope components,
where the work was performed by
component auditors, we determined
the appropriate level of Group team
involvement as described below to enable
us to determine that sufficient audit
evidence had been obtained as a basis
for our opinion on the Group as a whole.
The Group audit team continued to
follow a programme of planned visits
that has been designed to ensure that
the Senior Statutory Auditor visits all
full scope locations at least once every
3 years. During the current year’s audit
cycle, a visit was undertaken by the
We apply the concept of materiality
in planning and performing the audit,
in evaluating the effect of identified
misstatements on the audit and in forming
our audit opinion.
Materiality
The magnitude of an omission or
misstatement that, individually or in
the aggregate, could reasonably be
expected to influence the economic
decisions of the users of the financial
statements. Materiality provides a basis
for determining the nature and extent of
our audit procedures.
We determined materiality for the Group
to be £7.1 million (2018: £6.7 million),
which is 5% (2018: 5%) of profit before
tax. We believe that profit before tax is the
principal consideration for stakeholders
in assessing the financial performance of
the Group.
We determined materiality for the Parent
Company to be £5.7 million (2018: £5.9
million), which is 0.5% (2018: 0.5%) of
total assets.
CORPORATE GOVERNANCEFinancial StatementsAdditional InformationStrategic Report CORPORATE GOVERNANCE 101
Performance materiality
The application of materiality at the individual
account or balance level. It is set at an
amount to reduce to an appropriately low
level the probability that the aggregate of
uncorrected and undetected misstatements
exceeds materiality.
On the basis of our risk assessments,
together with our assessment of the Group’s
overall control environment, our judgement
was that performance materiality should
be £5.3m (2018: £5.0m) being 75% (2018:
75%) of our planning materiality.
Audit work at component locations for the
purpose of obtaining audit coverage over
significant financial statement accounts is
undertaken based on a percentage of total
performance materiality. The performance
materiality set for each component is
based on the relative scale and risk of the
component to the Group as a whole and
our assessment of the risk of misstatement
at that component. In the current year, the
range of performance materiality allocated
to components was £1.1m to £2.9m (2018:
£1m to £2.3m).
Reporting threshold
An amount below which identified
misstatements are considered as being
clearly trivial.
We agreed with the Audit Committee that
we would report to them all uncorrected
audit differences in excess of £0.36m (2018:
£0.34m), which is set at 5% of planning
materiality, as well as differences below
that threshold that, in our view, warranted
reporting on qualitative grounds.
We evaluate any uncorrected misstatements
against both the quantitative measures of
materiality discussed above and in light of
other relevant qualitative considerations in
forming our opinion.
Other information
The other information comprises the
information included in the Annual Report
other than the financial statements and our
auditor’s report thereon. The directors are
responsible for the other information.
Our opinion on the financial statements does
not cover the other information and, except
to the extent otherwise explicitly stated in
this report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial
statements, our responsibility is to read
the other information and, in doing so,
consider whether the other information is
materially inconsistent with the financial
statements or our knowledge obtained
in the audit or otherwise appears to be
materially misstated. If we identify such
material inconsistencies or apparent material
misstatements, we are required to determine
whether there is a material misstatement
in the financial statements or a material
misstatement of the other information. If,
based on the work we have performed,
we conclude that there is a material
misstatement of the other information, we
are required to report that fact.
We have nothing to report in this regard.
In this context, we also have nothing to
report in regard to our responsibility to
specifically address the following items
in the other information and to report as
uncorrected material misstatements of the
other information where we conclude that
those items meet the following conditions:
• Fair, balanced and understandable
(set out on page 97) – the statement
given by the directors that they consider
the Annual Report and financial
statements taken as a whole is fair,
balanced and understandable and
provides the information necessary
for shareholders to assess the group’s
performance, business model and
strategy, is materially inconsistent with
our knowledge obtained in the audit; or
• Audit committee reporting (set out
on page 65) – the section describing
the work of the Audit Committee does
not appropriately address matters
communicated by us to the Audit
Committee; or
• Directors’ statement of compliance
with the UK Corporate Governance
Code (set out on page 59) – the parts
of the directors’ statement required
under the Listing Rules relating to the
company’s compliance with the UK
Corporate Governance Code containing
provisions specified for review by the
auditor in accordance with Listing Rule
9.8.10R(2) do not properly disclose a
departure from a relevant provision of the
UK Corporate Governance Code
Opinions on other matters
prescribed by the Companies
Act 2006
In our opinion, the part of the directors’
remuneration report to be audited has been
properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work
undertaken in the course of the audit:
•
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; and
•
the strategic report and the directors’
report have been prepared in
accordance with applicable legal
requirements.
Matters on which we are required
to report by exception
In the light of the knowledge and
understanding of the Group and the Parent
Company and its environment obtained
in the course of the audit, we have not
identified material misstatements in the
strategic report or the directors’ report.
We have nothing to report in respect of the
following matters in relation to which the
Companies Act 2006 requires us 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; or
• 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; or
• certain disclosures of directors’
remuneration specified by law are not
made; or
• we have not received all the information
and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’
responsibilities statement set out on page
97, the directors are responsible for the
preparation of the financial statements and
for being satisfied that they give a true and
fair view, and for such internal control as the
directors determine is necessary to enable
the preparation of financial statements that
are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the
directors are responsible for assessing the
Group and Parent Company’s ability to
continue as a going concern, disclosing,
as applicable, matters related to going
concern and using the going concern basis
of accounting unless the directors either
intend to liquidate the Group or the Parent
Company or to cease operations, or have
no realistic alternative but to do so.
Auditor’s responsibilities for the
audit of the financial statements
Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from material
misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes
Annual Report and Accounts 2019 102
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.
Bob Forsyth (Senior Statutory
Auditor)
for and on behalf of Ernst & Young LLP,
Statutory Auditor
London
4 March 2020
Notes:
1. The maintenance and integrity of the PageGroup
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.
our opinion. Reasonable assurance is
a high level of assurance, but is not a
guarantee that an audit conducted in
accordance with ISAs (UK) will always
detect a material misstatement when it
exists. Misstatements can arise from fraud
or error and are considered material if,
individually or in the aggregate, they could
reasonably be expected to influence the
economic decisions of users taken on the
basis of these financial statements.
Explanation as to what extent the
audit was considered capable of
detecting irregularities, including
fraud
The objectives of our audit, in respect to
fraud, are; to identify and assess the risks
of material misstatement of the financial
statements due to fraud; to obtain
sufficient appropriate audit evidence
regarding the assessed risks of material
misstatement due to fraud, through
designing and implementing appropriate
responses; and to respond appropriately
to fraud or suspected fraud identified
during the audit. However, the primary
responsibility for the prevention and
detection of fraud rests with both those
charged with governance of the entity and
management.
Our approach was as follows:
• We obtained an understanding of
the legal and regulatory frameworks
that are applicable to the Group and
determined that the most significant
are those that relate to the reporting
framework (IFRS, the Companies Act
2006 and UK Corporate Governance
Code) and the relevant tax compliance
regulations in the jurisdictions in
which the Group operates. There are
no significant, industry specific laws
or regulations that we considered in
determining our approach.
• We understood how PageGroup plc
is complying with those frameworks
by making enquiries of management,
internal audit, those responsible for
legal and compliance procedures
and the company secretary. We
corroborated our enquiries through our
review of board minutes and papers
provided to the Audit Committee. Our
assessment included the tone from the
top and the emphasis on a culture of
honest and ethical behaviour.
• We assessed the susceptibility of
the Group’s financial statements to
material misstatement, including
how fraud might occur by meeting
with management from various
parts of the business to understand
where it considered there was
susceptibility to fraud. We also
considered performance targets
and their propensity to influence on
efforts made by management to
manage earnings. We considered the
programmes and controls that the
Group has established to address risks
identified, or that otherwise prevent,
deter and detect fraud; and how
senior management monitors those
programmes and controls.
• Based on this understanding we
designed our audit procedures to
identify non-compliance with such laws
and regulations. Our procedures were
focused on revenue recognition, which
is described in more detail in our Key
audit matters and journal entry testing,
with a focus on manual or top-side
adjustments.
• Our audit procedures were
communicated to and performed by
our component teams.
A further description of our responsibilities
for the audit of the financial statements
is located on the Financial Reporting
Council’s website at https://www.frc.
org.uk/auditorsresponsibilities. This
description forms part of our auditor’s
report.
Other matters we are required to
address
• We were appointed by the company
in June 2011 to audit the financial
statements for the year ended 31
December 2011 and subsequent
financial periods.
• The period of total uninterrupted
engagement including previous
renewals and reappointments is 9
years, covering the years ending 31
December 2011 to 2019.
• The non-audit services prohibited by
the FRC’s Ethical Standard were not
provided to the Group or the Parent
Company and we remain independent
of the Group and the Parent Company
in conducting the audit.
• The audit opinion is consistent with
the additional report to the Audit
Committee.
Use of our report
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
CORPORATE GOVERNANCEFinancial StatementsAdditional InformationStrategic Report CORPORATE GOVERNANCE 103
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2019
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
Financial income
Financial expenses
Profit before tax
Income tax expense
Profit for the year
Attributable to:
Owners of the parent
Earnings per share
Basic earnings per share (pence)
Diluted earnings per share (pence)
Note
2
2
2
5
5
2
6
3
9
9
The above results relate to continuing operations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2019
Profit for the year
Other comprehensive income/(loss) for the year
Items that may subsequently be reclassified to profit and loss:
Currency translation differences
Loss on hedging instruments
Total comprehensive income for the year
Attributed to:
Owners of the parent
2019
£’000
1,653,948
(798,498)
855,450
(708,781)
146,669
494
(2,918)
144,245
(40,800)
103,445
2018
£’000
1,549,941
(735,039)
814,902
(672,439)
142,463
631
(819)
142,275
(38,572)
103,703
103,445
103,703
32.2
32.2
32.5
32.4
2019
£’000
103,445
(14,842)
(939)
87,664
2018
£’000
103,703
4,359
(988)
107,074
87,664
107,074
Annual Report and Accounts 2019
CONSOLIDATED AND PARENT COMPANY BALANCE SHEETS
As at 31 December 2019
Note
Group
2019
£’000
Company
2018
£’000
2019
£’000
2018
£’000
104
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
- Goodwill and other intangibles
- 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
Lease liabilities
Current tax payable
Net current assets/(liabilities)
Non-current liabilities
Other payables
Lease liabilities
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
10
1
11
11
12
16
13
13
7
19
2
14
1
7
14
1
16
2
17
18
18
18
18
31,925
35,564
120,246
–
2,087
2,019
36,967
31,377
–
–
–
–
–
–
–
–
–
18,915
15,036
225,176
–
529,520
523,729
17,487
12,746
99,193
–
–
–
–
529,520
523,729
365,555
349,111
607,159
642,855
13,008
97,832
17,206
97,673
–
–
–
–
476,395
463,990
607,159
642,855
701,571
563,183
1,136,679
1,166,584
(215,811)
(204,353)
(962,363)
(913,232)
(29,139)
–
(19,110)
(20,145)
–
–
–
–
(264,060)
(224,498)
(962,363)
(913,232)
212,335
239,492
(355,204)
(270,377)
(11,613)
(99,473)
(2,038)
(19,474)
–
(630)
(113,124)
(20,104)
–
–
–
–
–
–
–
–
(377,184)
(244,602)
(962,363)
(913,232)
324,387
318,581
174,316
253,352
3,286
99,507
932
3,284
98,502
932
(47,662)
(50,673)
34,217
19,375
248,949
324,387
3,286
99,507
932
–
–
3,284
98,502
932
–
–
232,319
70,591
318,581
174,316
150,634
253,352
The financial statements of PageGroup plc (Company Number 3310225) set out on pages 103 to 134 were approved by the Board of
Directors and authorised for issue on 4 March 2020. The Company’s loss for the financial year amounted to £2.4m (2018: £6.0m profit).
Signed on behalf of the Board of Directors
Steve Ingham,
Chief Executive Officer
Kelvin Stagg,
Chief Financial Officer
Corporate GovernanceFINANCIAL STATEMENTSAdditional InformationStrategic Report FINANCIAL STATEMENTS
105
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2019
2018
Called-up
share capital
£’000
Note
Share
premium
£’000
Reserve
for shares
held in the
employee
benefit trust
£’000
Capital
redemption
reserve
£’000
Currency
translation
reserve
£’000
Retained
earnings
£’000
Total
equity
£’000
Balance at 1 January 2018
3,268
92,677
932
(58,931)
29,858
202,253
270,057
Currency translation differences
Net income recognised
directly in equity
Loss on hedging instruments
Profit for the year
Total comprehensive
income for the year
Purchase of shares held in the employees
benefits
–
–
–
–
–
-
–
–
–
–
–
-
Exercise of Share Plans
16
5,825
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
8
Balance at 31 December 2018 and
1 January 2019
2019
–
–
–
–
–
–
–
–
16
5,825
–
–
–
–
–
–
-
–
–
–
–
–
–
–
–
–
–
4,359
4,359
–
–
–
–
(988)
4,359
4,359
(988)
103,703
103,703
4,359
102,715
107,074
(11,567)
-
19,825
–
–
–
8,258
–
-
–
–
–
–
–
-
(11,567)
21,072
26,913
(19,825)
–
7,048
7,048
368
368
(81,312)
(81,312)
(72,649)
(58,550)
3,284
98,502
932
(50,673)
34,217
232,319
318,581
Loss on adoption of IFRS 16 (note 1b)
–
–
–
–
–
(1,450)
(1,450)
Balance at 1 January 2019 (restated)
3,284
98,502
932
(50,673)
34,217
230,869
317,131
Currency translation differences
Net loss recognised
directly in equity
Loss on hedging instruments
Profit for the year
Total comprehensive
(expense)/income for the year
Purchase of shares held in the employees
benefits
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
8
–
–
–
–
–
–
2
–
–
–
–
2
Balance at 31 December 2019
3,286
–
–
–
–
–
–
1,005
–
–
–
–
1,005
99,507
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(14,842)
(14,842)
–
–
(14,842)
(14,842)
–
–
(939)
(939)
103,445
103,445
(14,842)
102,506
87,664
(10,000)
–
13,011
–
–
–
3,011
–
–
–
–
–
–
–
–
(10,000)
6,236
7,243
(13,011)
–
5,790
5,790
28
28
(83,469)
(83,469)
(84,426)
(80,408)
932
(47,662)
19,375
248,949
324,387
Annual Report and Accounts 2019 106
Retained
earnings
£’000
218,935
Total equity
£’000
315,812
5,963
5,963
5,963
–
7,048
(81,312)
(74,264)
5,963
5,841
7,048
(81,312)
(68,423)
STATEMENT OF CHANGES IN EQUITY – PARENT COMPANY
For the year ended 31 December 2019
Note
Called-up
share capital
£’000
3,268
Share
premium
£’000
92,677
Capital
redemption
reserve
£’000
932
–
–
16
–
–
16
–
–
5,825
–
–
5,825
–
–
–
–
–
–
Company
Balance at 1 January 2018
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 2018
and 1 January 2019
2019
Loss for the year
Total comprehensive income for
the year
Exercise of share plans
Credit in respect of share schemes
Dividends
8
8
Balance at 31 December 2019
3,286
3,284
98,502
932
150,634
253,352
–
–
2
–
–
2
–
–
1,005
–
–
1,005
99,507
–
–
–
–
–
–
932
(2,364)
(2,364)
(2,364)
–
5,790
(83,469)
(77,679)
70,591
(2,364)
1,007
5,790
(83,469)
(76,672)
174,316
Corporate GovernanceFINANCIAL STATEMENTSAdditional InformationStrategic Report FINANCIAL STATEMENTS 107
CONSOLIDATED AND PARENT COMPANY CASH FLOW STATEMENTS
For the year ended 31 December 2019
Group
Company
Profit/(loss) before tax
Note
2
Depreciation and amortisation charges
1b/10/11
Loss on sale of property, plant and
equipment, and computer software
Share scheme charges
Net finance cost
Operating cash flow before changes in working
capital
(Increase)/Decrease in receivables
Increase in payables
Cash generated from operations
Income tax paid
Net cash from operating activities
Cash flows from investing activities
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
Lease liability principal repayment
2019
£’000
144,245
57,500
21
5,790
2,424
209,980
(37,934)
22,036
194,082
(36,960)
157,122
2018
£’000
142,275
19,661
281
7,043
181
169,441
(49,278)
11,534
131,697
(41,001)
90,696
10
11
(9,615)
(16,735)
(15,668)
(9,944)
1,740
494
1,204
631
(24,116)
(23,777)
2019
£’000
(2,364)
2018
£’000
5,963
–
–
–
–
(2,364)
35,696
49,130
82,462
–
–
–
–
–
5,963
4,752
64,756
75,471
–
82,462
75,471
–
–
–
–
–
–
–
–
–
–
(83,469)
(81,312)
(83,469)
(81,312)
(953)
(38,215)
(818)
–
–
–
–
–
Issue of own shares for the exercise of options
7,243
26,913
1,007
5,841
Purchase of shares held in the employee
benefit trust
Net cash used in financing activities
(10,000)
(125,394)
(11,567)
(66,784)
–
–
(82,462)
(75,471)
Net increase in cash and cash equivalents
7,612
135
Cash and cash equivalents at the beginning
of the year
Exchange (loss)/gain on cash and cash equivalents
Cash and cash equivalents at the end of the year
19
97,673
(7,453)
97,832
95,605
1,933
97,673
–
–
–
–
–
–
–
–
Annual Report and Accounts 2019 108
Notes to the Financial
Statements
For the year ended 31 December 2019
1. Significant accounting
policies
Statement of compliance
PageGroup plc is a company
incorporated in the United Kingdom under
the Companies Act.
The consolidated financial statements
have been prepared under the historical
cost convention modified by the
revaluation of financial assets and
liabilities (including derivative instruments)
at fair value through profit and loss. This
is in accordance with current International
Financial Reporting Standards (IFRS)
as adopted by the European Union and
therefore complies with Article 4 of the EU
IAS Regulation.
The Company financial statements have
been prepared under the historical cost
convention and in accordance with
current IFRS as adopted by the European
Union.
Basis of preparation
The financial statements of PageGroup
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
loss for the financial year amounted to
£2.4m (2018: £6.0m). The decrease
in the Company’s profit this year is as
a result of increased dividend income
being offset by an impairment of £52.3m
of an intercompany receivable from the
employee benefit trust. This is to impair
the receivable to the market value of the
PageGroup Plc shares the employee
benefit trust holds as at the 31 December
2019.
Basis of consolidation
(i) Subsidiaries
The consolidated financial statements
comprise the financial statements of
the Group and its subsidiaries as at 31
December 2019. Control is achieved
when the Group is exposed, or has rights,
to variable returns from its involvement
with the investee and has the ability to
affect those returns through its power
over the investee.
(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 PageGroup plc held by the trust
are shown as a reduction in shareholders’
funds.
Changes in accounting policy – new
accounting standards, interpretations
and amendments
The accounting policies adopted are
consistent with those of the previous
financial years except for the following
amendments to IFRS effective as of
1 January 2019:
•
•
•
IFRS 16 Leases
IFRIC Interpretation 23 Uncertainty
over Income Tax Treatment;
IAS 28 Investments in Associates
and Joint Ventures
The adoption of IFRIC 23 did not have
any impact on the assessment of the
provision for uncertain tax positions.
IFRS 16 was adopted by the Group
from 1 January 2019 on a modified
retrospective method. Please see note 2
on page 112 for the impact on transition
and accounting policy k)
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.
•
•
Amendments to IFRS 3: Definition of
a Business; effective date 1 January
2020
Amendments to IAS 1 and IAS 8:
Definition of Material; effective date 1
January 2020
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 Strategic Report on
page 43.
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
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
Corporate GovernanceFINANCIAL STATEMENTSAdditional InformationStrategic Report FINANCIAL STATEMENTS 109
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
all resulting exchange differences are
recognised in other comprehensive
income.
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.
(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. 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 (2018: £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
Non-financial assets
Assets that have an indefinite useful life are
not subject to amortisation and are tested
annually for impairment. An impairment
loss is recognised for the amount by which
the asset’s carrying amount exceeds its
recoverable amount. 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).
Financial assets
The Group recognises an allowance
for expected credit losses (ECLs) for all
debt instruments not held at fair value
through profit or loss. ECLs are based on
the difference between the contractual
cash flows due in accordance with the
contract and all the cash flows that the
Group expects to receive, discounted at
an approximation of the original effective
interest rate.
ECLs are recognised in two stages. For
credit exposures for which there has not
been a significant increase in credit risk
since initial recognition, ECLs are provided
for credit losses that result from default
events that are possible within the next
12-months (a 12 month ECL). For those
credit exposures for which there has been a
significant increase in credit risk since initial
recognition, a loss allowance is required for
credit losses expected over the remaining
life of the exposure, irrespective of the timing
of the default (a lifetime ECL).
For trade receivables and contract assets,
the Group applies a simplified approach
in calculating ECLs. Therefore, the Group
does not track changes in credit risk, but
instead recognises a loss allowance based
on lifetime ECLs at each reporting date. The
Group has established a provision matrix
that is based on its historical credit loss
experience, adjusted for forward-looking
factors specific to the debtors and the
economic environment.
i) Taxation
Income tax expense represents the sum of
the current 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 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.
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.
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
Annual Report and Accounts 2019 110
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) Leases
i) Right-of-use assets
The Group recognises right-of-use assets
at the commencement date of the lease
(i.e., the date the underlying asset is
available for use). Right-of-use assets are
measured at cost, less any accumulated
depreciation and impairment losses, and
adjusted for any remeasurement of lease
liabilities. The cost of right-of-use assets
includes the amount of lease liabilities
recognised, initial direct costs incurred,
and lease payments made at or before
the commencement date less any lease
incentives received. Unless the Group is
reasonably certain to obtain ownership of
the leased asset at the end of the lease
term, the recognised right-of-use assets
are depreciated on a straight-line basis
over the shorter of its estimated useful life
and the lease term. Right-of-use assets
are subject to impairment.
ii) Lease liabilities
At the commencement date of the lease,
the Group recognises lease liabilities
measured at the present value of lease
payments to be made over the lease
term. The lease payments include fixed
payments (including in-substance fixed
payments) less any lease incentives
receivable, variable lease payments
that depend on an index or a rate, and
amounts expected to be paid under
residual value guarantees. The lease
payments also include the exercise price
of a purchase option reasonably certain to
be exercised by the Group and payments
of penalties for terminating a lease, if the
lease term reflects the Group exercising
the option to terminate. The variable lease
payments that do not depend on an index
or a rate are recognised as expense in the
period on which the event or condition
that triggers the payment occurs.
In calculating the present value of
lease payments, the Group uses the
incremental borrowing rate at the lease
commencement date if the interest
rate implicit in the lease is not readily
determinable. After the commencement
date, the amount of lease liabilities
is increased to reflect the accretion
of interest and reduced for the lease
payments made. In addition, the carrying
amount of lease liabilities is remeasured
if there is a modification, a change in the
lease term, a change in the in-substance
fixed lease payments or a change in the
assessment to purchase the underlying
asset.
iii) Short-term leases and leases of low-
value assets
The Group applies the short-term lease
recognition exemption to its short-term
leases of machinery and equipment (i.e.,
those leases that have a lease term of 12
months or less from the commencement
date and do not contain a purchase
option). It also applies the lease of
low-value assets recognition exemption
to leases of office equipment that are
considered of low value (i.e., below
$5,000). Lease payments on short-term
leases and leases of low-value assets are
recognised as expense on a straight-line
basis over the lease term.
iv) Judgement in determining the lease
term of contracts with renewal options
The Group determines the lease term as
the non-cancellable term of the lease,
together with any periods covered by
an option to extend the lease if it is
reasonably certain to be exercised, or any
periods covered by an option to terminate
the lease, if it is reasonably certain not to
be exercised.
The Group has the option, under some of
its leases to lease the assets for additional
terms of three to ten years. The Group
applies judgement in evaluating whether
it is reasonably certain to exercise the
option to renew. That is, it considers all
relevant factors that create an economic
incentive for it to exercise the renewal.
After the commencement date, the
Group reassesses the lease term if
there is a significant event or change in
circumstances that is within its control
and affects its ability to exercise (or not
to exercise) the option to renew (e.g., a
change in business strategy).
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 Board to
allocate resources to the segments and
to assess their performance. Information
provided to the Board is focused on
regions and as a result, reportable
segments are on a regional basis.
Transactions between segments are
recorded and allocated on an arms-length
basis.
m) Dividend distribution
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.
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 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 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.
(ii) Management Incentive Plan and
Long-Term Incentive Plan
Where deferred awards are made to
Directors and senior executives under
either the Management Incentive Plan
or the Long-Term Incentive Plan, 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 in the
subsidiary that is receiving the employee
service, with a corresponding adjustment
to equity.
(iii) Employee Single Incentive Plan (ESIP)
Awards under the ESIP are paid in cash
(40%) and Shares (60%), which vest in 3
tranches over a 3 year period. The value
of expected award is charged to the
income statement of the Group relative to
these vesting periods.
iv) Tax on share schemes
Where options or shares are net settled
Corporate GovernanceFINANCIAL STATEMENTSAdditional InformationStrategic Report FINANCIAL STATEMENTS 111
in respect of withholding tax obligations,
these are accounted for as equity
settled transactions. Payments to local
tax authorities are accounted for as a
deduction from equity for the shares
withheld.
o) Deferred cash bonus
The Group operates a bonus scheme for
some members of staff whereby bonuses
are deferred for three years from date of
award. The bonuses are paid in full if the
employee remains employed for the entire
three-year period.
p) 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.
q) Provisions
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.
r) Financial assets and liabilities
Financial assets are classified, at initial
recognition, as subsequently measured at
amortised cost, fair value through other
comprehensive income (OCI), and fair
value through profit or loss.
The classification of financial assets
at initial recognition depends on the
financial assets contractual cash flow
characteristics and the Group’s business
model for managing them. With the
exception of trade receivables that do not
contain a significant financing component
or for which the Group has applied the
practical expedient, the Group initially
measures a financial asset at its fair value
plus, in the case of a financial asset not at
fair value through profit or loss, transaction
costs. Trade receivables that do not
contain a significant financing component
or for which the Group has applied the
practical expedient are measured at
the transaction price determined under
IFRS 15. The Group’s financial assets at
amortised cost includes trade and other
receivables.
In order for a financial asset to be
classified and measured at amortised
cost or fair value through OCI, it needs
to give rise to cash flows that are ‘solely
payments of principal and interest (SPPI)’
on the principal amount outstanding. This
assessment is referred to as the SPPI test
and is performed at an instrument level.
The Group’s business model for
managing financial assets refers to how
it manages its financial assets in order to
generate cash flows. The business model
determines whether cash flows will result
from collecting contractual cash flows,
selling the financial assets, or both.
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. Prepayments
and Accrued Income are held at amortised
cost.
All financial liabilities are recognised initially
at fair value and, in the case of loans and
borrowings and payables, net of directly
attributable transaction costs.
The Group’s financial liabilities include
trade and other payables and derivative
financial instruments.
Financial liabilities are classified, at initial
recognition, as financial liabilities through
profit or loss, loans and borrowings,
payables, or as derivatives designated as
hedging instruments in an effective hedge,
as appropriate.
The Group has derivative contracts at the
balance sheet date that have been valued
at fair value through the income statement.
s) Hedge accounting
Hedges of a net investment in a foreign
operation, including a hedge of a monetary
item that is accounted for as part of the
net investment, are accounted for in a
way similar to cash flow hedges. Gains or
losses on the hedging instrument relating
to the effective portion of the hedge are
recognised as Other Comprehensive
Income while any gains or losses relating
to the ineffective portion are recognised in
the statement of profit or loss. On disposal
of the foreign operation, the cumulative
value of any such gains or losses recorded
in equity is transferred to the statement of
profit or loss.
experience and other factors, including
expectations of future events that are
believed to be reasonable under the
circumstances.
There are no accounting areas which
require significant judgements. Information
about significant areas of estimation
uncertainty in applying accounting policies
that have the most significant effect on
the amount recognised in the financial
statements are described in the following
notes:
Note 13 – Trade and other receivables
There is uncertainty regarding customers
who may not be able to pay as their
invoices fall due as at 31 December 2019.
In total the Group holds £281.2m of Gross
Trade Receivables. A provision for £10.1m
has been recognised based on the
expected credit losses, revenue reversals
or balances which are in litigation.
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.
Whilst no debtor constitutes more than 3%
of the total balance there is a risk that if
the economic climate were to deteriorate
across a number of countries the portfolio
could be impaired by an amount greater
than materiality. This scenario is however
considered sufficiently remote such
that no reasonably possible changes in
assumptions are likely to cause material
further impairment next year. Please see
note 20 for an analysis of expected credit
losses and revenue reversals.
u) 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.
v) Employee Benefit Trust
The Employee Benefit Trust is considered
a separate legal entity and not an
extension of the parent company. It is
included in the consolidated results of the
Group as it is deemed to have control of
the entity.
t) Critical accounting estimates and
judgements
Note 1b)
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
a) Adoption of IFRS 16 Leases
IFRS 16 was issued in January 2016
and it replaces IAS 17 Leases, IFRIC 4
Determining whether an Arrangement
contains a Lease, SIC-15 Operating
Leases-Incentives and SIC-27 Evaluating
the Substance of Transactions Involving
the Legal Form of a Lease. IFRS 16 sets
out the principles for the recognition,
Annual Report and Accounts 2019 112
measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model
similar to the accounting for finance leases under IAS 17. A lessee can choose to apply the standard using either a full retrospective approach
or a modified retrospective approach.
The Group adopted IFRS 16 using the modified retrospective method of adoption, with the date of initial application of 1 January 2019. Under
this method, the standard is applied retrospectively, with the cumulative effect of initially applying the standard recognised at the date of initial
application. The Group elected to use the practical expedient on transition allowing the standard to be applied only to contracts that were
previously identified as leases applying IAS 17 and IFRIC 4 at the date of initial application. The Group also elected to use the recognition
exemptions for lease contracts that, at the commencement date, have a lease term of 12 months or less and do not contain a purchase
option (‘short-term leases’), lease contracts for which the underlying asset is of low value (‘low-value assets’) and to exclude initial direct costs
from the measurement of the right-of-use asset at the date of initial application. Hindsight was used in determining the lease term for those
contracts where an option exists to extend or terminate the lease.
The adoption under the Modified Retrospective approach is a combination of both the Modified (a) and Modified (b) method, depending on
the specific lease. In both cases a full restatement of comparatives is not necessary. Under both methods the lease liability is equal to the
discounted future lease payments. Under Modified (a) method the right-of-use asset is calculated on a retrospective basis and a discount rate
at the date of initial application has to be used, an adjustment to reserves is made on transition. Under Modified (b) method the right-of-use
asset is equal to the lease liability with no reserve adjustment required.
Impact on the Consolidated Balance Sheet (increase/(decrease)) as at 1 January 2019
Rights-of-use assets
Prepayments
Total Assets
Liabilities
Lease liabilities
Deferred income
Total Liabilities
Equity
£’000
126,189
(2,214)
123,975
(134,479)
9,054
(125,425)
1,450
The opening reserve adjustment of £1.45m was originally disclosed as £2.1m in the 2019 Interim announcement. The change in value was
due to further analysis over the lease portfolio.
b) Nature of the effect of adoption of IFRS 16
The Group recognised right-of-use assets and lease liabilities for those leases previously classified as operating leases, except for short-term
leases and leases of low-value assets. The £126.2m right of use asset recognised on transition related to Property leases for offices rented
(£110.6m), Motor Vehicles of (£15.2m) and Other Assets of (£0.4m). The right-of-use assets for 21 of our most significant property leases
were recognised based on the carrying amount as if the standard had always been applied, apart from the use of the incremental borrowing
rate at the date of initial application. The right-of-use assets for the remaining leases were recognised based on the amount equal to the lease
liabilities, adjusted for any related prepaid and accrued lease payments previously recognised. Lease liabilities were recognised based on the
present value of the remaining lease payments, discounted using the incremental borrowing rate at the date of initial application.
c) Amounts recognised in the Condensed Consolidated Statement of Financial Position and Condensed Consolidated Income
Statement
Set out below, are the carrying amounts of the Group’s right-of-use assets and lease liabilities and the movements during the period:
Condensed Consolidated Income Statement
Depreciation expense (included in Administrative expenses)
Rental expenses (included in Administrative expenses)
Operating profit
Finance costs
Profit before tax
£’000
(36,600)
38,496
1,896
(1,965)
(69)
Condensed Consolidated Statement of Financial Position
Right-of-use Assets
Lease Liabilities
As at 1 January 2019
Additions
Disposals
Depreciation expense
Interest expense
Payments
Foreign Exchange
As at 31st December 2019
Property
£’000
110,558
27,866
(577)
(27,639)
–
–
(4,440)
105,768
Motor Vehicles
£’000
Other Assets
£’000
15,192
7,034
–
(8,545)
–
–
–
13,681
439
774
–
(416)
–
–
–
797
Total
£’000
126,189
35,674
(577)
(36,600)
–
–
(4,440)
120,246
Total
£’000
(134,479)
(35,768)
667
–
(1,965)
38,215
4,718
(128,612)
Corporate GovernanceFINANCIAL STATEMENTSAdditional InformationStrategic Report FINANCIAL STATEMENTS 113
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 costs. This is the measure reported to the
Group’s Board, the chief operating decision maker, for the purpose of resource allocation and assessment of segment performance. Segments are
aggregated in accordance with management ownership, determined by the possession of similar characteristics such geography, market maturity
and economic environment. No judgements were applied to identify the reportable segments.
(a) Revenue, gross profit and operating profit by reportable segment
2019
EMEA
Asia Pacific
Americas
United Kingdom
Operating profit
Financial expense
Revenue
2019
£’000
861,827
273,437
205,074
313,610
–
–
Gross
profit
2019
£’000
418,328
163,255
138,791
135,076
–
–
Revenue/gross profit/profit before tax
1,653,948
855,450
2018
EMEA
Asia Pacific
Americas
United Kingdom
Operating profit
Financial expense
Revenue
2018
£’000
797,427
266,724
172,265
313,525
–
–
Gross
profit
2018
£’000
394,337
161,158
121,015
138,392
–
–
Operating
profit
2019
£’000
90,333
19,810
19,268
17,258
146,669
(2,424)
144,245
Operating
profit
2018
£’000
85,586
26,765
16,720
13,392
142,463
(188)
Revenue/gross profit/profit before tax
1,549,941
814,902
142,275
The above analysis by destination is not materially different to the analysis by origin.
The analysis over the page 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.
(b) Segment assets, liabilities, non-current assets and capital expenditure by reportable segment
EMEA
Asia Pacific
Americas
United Kingdom
Segment assets/liabilities
Income tax
Total assets
Total liabilities
2019
£’000
294,597
119,110
111,649
163,207
688,563
13,008
701,571
2018
£’000
246,687
115,220
63,012
121,058
545,977
17,206
563,183
2019
£’000
2018
£’000
196,473
131,948
45,832
53,288
62,481
358,074
19,110
377,184
29,803
22,308
40,398
224,457
20,145
244,602
Annual Report and Accounts 2019 EMEA
Asia Pacific
Americas
United Kingdom
Capital expenditure
EMEA
Asia Pacific
Americas
United Kingdom
114
Property, plant and
equipment
Intangible assets
2019
£’000
12,732
5,560
7,471
6,162
2018
£’000
13,654
7,161
8,495
6,254
31,925
35,564
Property, plant and
equipment
2019
£’000
2018
£’000
3,760
1,270
2,500
2,085
9,615
5,152
4,689
4,244
1,583
15,668
2019
£’000
2,818
495
162
35,579
39,054
2018
£’000
3,171
481
190
29,554
33,396
Intangible assets
2019
£’000
458
166
91
16,020
16,735
2018
£’000
1,061
503
9
8,371
9,944
The below analysis in note (c) relates to the requirement of IFRS 15 to disclose disaggregated revenue streams.
(c) Revenue and gross profit generated from permanent and temporary placements
Permanent
Temporary
Revenue
Gross profit
2019
£’000
649,948
1,004,000
2018
£’000
629,136
920,805
1,653,948
1,549,941
2019
£’000
643,787
211,663
855,450
2018
£’000
621,746
193,156
814,902
The analyses in notes d) revenue and gross profit by discipline (being the professions of candidates placed) and (e) revenue and gross profit
by strategic market have been included as additional disclosure over and above the requirements of IFRS 8 “Operating Segments”. Strategic
markets are defined in the Strategic Review on pages 9 and 10.
(d) Revenue and gross profit by discipline
Accounting and Financial Services
Legal, Technology, HR, Secretarial and other
Engineering, Property & Construction, Procurement & Supply Chain
Marketing, Sales and Retail
(e) Revenue and gross profit by strategic market
Large, Proven markets
Large, High Potential markets
Medium and Small, High Margin markets
Revenue
2019
£’000
662,458
442,648
359,216
189,626
2018
£’000
610,219
402,321
345,654
191,747
1,653,948
1,549,941
Revenue
2019
£’000
962,424
478,950
212,574
2018
£’000
935,800
414,245
199,896
1,653,948
1,549,941
Gross profit
2019
£’000
2018
£’000
298,648
283,721
212,244
203,275
141,284
855,450
Gross profit
2019
£’000
426,178
298,139
131,133
855,450
196,774
194,562
139,845
814,902
2018
£’000
419,102
270,311
125,489
814,902
Corporate GovernanceFINANCIAL STATEMENTSAdditional InformationStrategic Report FINANCIAL STATEMENTS 115
3. Profit for the year
Profit for the year is stated after charging:
Employment costs (Note 4)
Net exchange losses
Depreciation of property, plant and equipment – owned (Note 10)
Amortisation of intangibles (Note 11)
Impairment of trade receivables (Note 20)
Loss on sale of property, plant and equipment and computer software
Depreciation of right-of-use assets (Note 1)*
Operating lease rentals*
– Land and buildings
– Plant and machinery
Fees payable to the Company’s auditor:
2019
£’000
2018
£’000
545,872
520,907
1,764
10,316
1,625
9,251
10,594
10,410
24,068
22,348
21
36,600
281
-
-
-
32,810
7,258
Fees payable to the Company’s auditor for the audit of the Company’s annual accounts
226
226
Fees payable to the Company’s auditor and associates for other services:
– The audit of the Company’s subsidiaries pursuant to legislation
Total audit fees
– Audit related assurance services
– Other non-audit services
Total non-audit fees
Total fees
558
784
52
7
59
532
758
52
2
54
843
812
*On adoption of IFRS 16 operating lease rental payments have been replaced with a depreciation charge in relation to the right-of-use
asset recognised and an interest charge on the lease liability. Please refer to note 2 for further details.
4. Employee information
The average number of employees (including Executive Directors) during the year and total number of employees (including Executive
Directors) at 31 December 2019 were as follows:
Management
Client services
Administration
Employment costs (including Directors’ emoluments) comprised:
Wages and salaries
Social security costs
Pension costs – defined contribution plans
Share-based payments and deferred cash plan
2019
Average
No.
2018
Average
No.
At 31 Dec
2019
No.
At 31 Dec
2018
No.
332
5,764
1,699
7,795
319
5,572
1,641
7,532
334
5,693
1,671
7,698
325
5,791
1,656
7,772
2019
£’000
2018
£’000
464,880
442,196
52,828
48,390
17,312
18,159
10,852
12,162
545,872
520,907
No staff are employed by the parent company (2018: 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 Directors’ Remuneration Report on pages 72 to 94.
Annual Report and Accounts 2019
5. Financial income/(expenses)
Financial income
Interest receivable
Financial expenses
Interest payable
Interest on discounting of French construction participation tax
Interest on lease liabilities
6. Income tax expense
The charge for taxation is based on the effective annual tax rate of 28.3% on profit before tax (2018: 27.1%).
Analysis of charge in the year
UK income tax at 19.00% (2018: 19.00%) for year
Overseas income tax
Adjustments in respect of prior years
Deferred tax
Adjustment in respect of prior years
Origination and reversal of temporary differences
Recognition of previously unrecognised losses and other tax attributes
Impact of tax rate changes
Charge for tax losses recognised
Deferred tax income
116
2019
£’000
494
494
(953)
-
(1,965)
(2,918)
2019
£’000
9,064
35,382
(2,808)
41,638
1,402
(1,646)
(36)
(265)
(293)
(838)
2018
£’000
631
631
(598)
(221)
-
(819)
2018
£’000
10,270
32,267
(3,048)
39,489
1,319
(1,578)
36
211
(905)
(917)
Total tax expense in the income statement
40,800
38,572
The amounts disclosed in 2018 for the analysis of the tax charge have been represented to align with the presentation followed in the
current year. A similar change in the presentation was made in respect of the deferred tax reconciliation.
Reconciliation of effective tax rate
Profit before taxation
2019
£’000
144,245
%
2018
£’000
142,275
Profit before tax multiplied by the standard rate of corporation tax in the UK
27,406
19.0
27,032
Effects of:
Disallowable items and other permanent differences
Unrelieved overseas losses
Utilisation of losses not previously recognised
Derecognition/(recognition) of overseas losses and other tax attributes
Other tax movements
Higher tax rates on overseas earnings
Other tax overseas
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 settled transactions
2,094
2,292
-
(35)
(26)
4,239
6,501
(265)
(1,406)
40,800
1.5
1.6
-
-
-
2.9
4.5
(0.2)
(1.0)
28.3
540
213
-
36
(209)
5,275
7,203
211
(1,729)
38,572
2019
£’000
28
%
19.0
0.4
0.1
-
-
(0.1)
3.7
5.1
0.1
(1.2)
27.1
2018
£’000
(368)
Other taxes overseas are secondary taxes on income, in addition to national corporate income tax, which are included in income tax
expense under IFRS. These taxes are primarily in France (CVAE), Germany (trade taxes), Italy (IRAP) and the US (state taxes).
Corporate GovernanceFINANCIAL STATEMENTSAdditional InformationStrategic Report FINANCIAL STATEMENTS 117
7. Current tax assets and liabilities
The current tax asset of £13.0m (2018: £17.2m), and current tax liability of £19.1m (2018: £20.1m) for the Group, and current tax asset
and liability of £nil (2018: £nil) for the parent company, represent the amount of income taxes recoverable and payable in respect of current
and prior periods. The Group maintains a provision in relation to disputes and uncertain tax positions, including transfer pricing, which is
included in the current tax liability.
8. Dividends
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 December 2018 of 9.00p per Ordinary share (2017: 8.60p)
Interim dividend for the year ended 31 December 2019 of 4.30p per Ordinary share (2018: 4.10p)
Special dividend for the year ended 31 December 2019 of 12.73p per Ordinary share (2018: 12.73p)
2019
£’000
2018
£’000
28,978
13,759
40,732
83,469
27,433
13,117
40,762
81,312
Amounts proposed as distributions to equity holders in the year:
Proposed final dividend for the year ended 31 December 2019 of 9.40p per Ordinary share (2018: 9.00p)
30,154
29,171
The proposed final dividend had not been approved by shareholders at 31 December 2019 and therefore has not been included as a
liability. The comparative final dividend at 31 December 2018 was also not recognised as a liability in the prior year.
The proposed final dividend of 9.40p (2018: 9.00p) per Ordinary share will be paid on 19 June 2020 to shareholders on the register at the
close of business on 22 May 2020, 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.
9. 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)
Number of shares
Weighted average number of shares used for basic earnings per share (‘000)
Dilutive effect of share plans (‘000)
Diluted weighted average number of shares used for diluted earnings per share (‘000)
Basic earnings per share
Diluted earnings per share
The above results relate to continuing operations.
Basic
2019
£’000
2018
£’000
103,445
103,703
number
number
320,789
318,877
375
1,627
321,164
320,504
pence
pence
32.2
32.2
32.5
32.4
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 unallocated 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.
Annual Report and Accounts 2019
10. Property, plant and equipment
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
118
2019
Leasehold
improve-
ments
£’000
Furniture,
fixtures and
equipment
£’000
Motor
vehicles
£’000
45,020
5,474
(1,817)
(1,724)
46,953
26,682
4,896
(1,657)
(989)
28,932
49,441
3,701
(2,918)
(2,033)
48,191
33,230
4,941
(2,142)
(1,387)
34,642
2,102
440
(967)
(147)
1,428
1,087
479
(416)
(77)
1,073
Total
£’000
96,563
9,615
(5,702)
(3,904)
96,572
60,999
10,316
(4,215)
(2,453)
64,647
18,021
13,549
355
31,925
2018
Leasehold
improve-
ments
£’000
Furniture,
fixtures and
equipment
£’000
40,500
7,814
(3,454)
160
43,481
7,327
(1,614)
247
Motor
vehicles
£’000
2,556
527
(837)
(144)
Total
£’000
86,537
15,668
(5,905)
263
45,020
49,441
2,102
96,563
25,351
4,185
(2,825)
(29)
29,830
4,572
(1,367)
195
1,198
494
(541)
(64)
56,379
9,251
(4,733)
102
26,682
33,230
1,087
60,999
18,338
16,211
1,015
35,564
Corporate GovernanceFINANCIAL STATEMENTSAdditional InformationStrategic Report FINANCIAL STATEMENTS 119
11. Intangible assets
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
Effect of movements in
foreign exchange
At 31 December
Net book value
At 31 December
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
Effect of movements in
foreign exchange
At 31 December
Net book value
At 31 December
2019
Computer
software,
assets under
construction
£’000
Computer
software
£’000
Subtotal
£’000
Goodwill
£’000
Trademark
£’000
Subtotal
£’000
Total
£’000
89,105
16,463
(2,137)
3,616
98
–
3,183
(3,183)
(585)
106,029
(33)
498
92,721
16,561
(2,137)
–
(618)
1,539
–
–
–
–
1,139
174
2,678
95,399
174
16,735
–
–
–
–
–
–
(2,137)
–
(618)
106,527
1,539
1,313
2,852
109,379
61,344
10,488
(1,862)
(410)
69,560
–
–
–
–
–
61,344
10,488
(1,862)
(410)
69,560
–
–
–
–
–
659
106
–
–
659
106
–
–
62,003
10,594
(1,862)
(410)
765
765
70,325
36,469
498
36,967
1,539
548
2,087
39,054
2018
Computer
software,
assets under
construction
£’000
Computer
software
£’000
Subtotal
£’000
Goodwill
£’000
Trademark
£’000
Subtotal
£’000
Total
£000
81,453
2,430
(436)
5,669
(11)
2,164
7,121
–
(5,669)
–
76,617
1,539
9,551
(436)
–
(11)
–
–
–
–
746
393
–
–
–
2,285
85,902
393
–
–
–
9,944
(436)
–
(11)
89,105
3,616
92,721
1,539
1,139
2,678
95,399
51,144
10,351
(123)
(28)
61,344
–
–
–
–
–
51,144
10,351
(123)
(28)
61,344
–
–
–
–
–
600
59
–
–
600
59
–
–
51,744
10,410
(123)
(28)
659
659
62,003
27,761
3,616
31,377
1,539
480
2,019
33,396
Annual Report and Accounts 2019 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:
120
UK
USA
Singapore
2019
£’000
1,274
214
51
1,539
2018
£’000
1,274
214
51
1,539
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 0%, 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
8%, 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 2019 there was no impairment of goodwill.
12. Investments
Company
Cost at 1 January 2019
Transactions relating to share plans for subsidiaries’ employees
Cost at 31 December 2019
Subsidiary undertakings
£’000
523,729
5,791
529,520
The Company’s subsidiary undertakings at 31 December 2019, their principal activities and countries of incorporation are set
out below:
Name of undertaking
Michael Page International
Argentina SA
Page Personnel Argentina Servicios
Eventuales SA
Michael Page International (Australia)
Pty Limited
Country of
incorporation
Principal
activity
Argentina
Recruitment Consultancy
Argentina
Recruitment Consultancy
Registered office
Carlos Pellegrini 1265, Piso 12, Ciudad de
Buenos Aires, C1009ABY, Argentina
Carlos Pellegrini 1265, Piso 12, Ciudad de
Buenos Aires, C1009ABY, Argentina
Australia
Recruitment Consultancy
Level 32, 225 George Street, Sydney, NSW
2000, Australia
Michael Page International (Austria) GmbH
Austria
Recruitment Consultancy
Michael Page International (Belgium) NV/SA
Belgium
Recruitment Consultancy
Page Interim (Belgium) NV/SA
Belgium
Recruitment Consultancy
Second floor, Gumpendorfer Strauße 72,
Wien, Austria
Place du Champ de Mars 5 , 1050 Brussels,
Belgium
Place du Champ de Mars 5 , 1050 Brussels,
Belgium
Michael Page International Do Brasil -
Recrutamento Especializado Ltda
Brazil
Recruitment Consultancy
Rua Funchal 375, 7th Floor Vila Olimpia, CEP
04551-060, Sao Paulo, Brazil
Page Interim Do Brasil - Recrutamento
Especializado Ltda
Brazil
Recruitment Consultancy
Page Personnel Do Brasil - Recrutamento
Especializado e servicos corporativos Ltda
Brazil
Recruitment Consultancy
Michael Page International Canada Limited
Canada
Recruitment Consultancy
Michael Page International Chile Ltda
Chile
Recruitment Consultancy
Av. das Nações Unidas, 10.989 - 4º Andar ,
Conjunto 41 - Edifício Mendes Caldeira, CEP
04578-900, São Paulo - SP, Brazil
Av. Engenheiro Luis Carlos Berrini, 716, 1º
andar - CJ.12 - Cidade Monções, CEP 04571-
000, São Paulo - SP, Brazil
130 Adelaide Street West, 21st Floor, Toronto,
Ontario, M5H 1J8, Canada
Magdelan 181, Piso 16, Las Condes, Santiago
7550055, Chile
Corporate GovernanceFINANCIAL STATEMENTSAdditional InformationStrategic Report FINANCIAL STATEMENTS 121
Name of undertaking
Page Personnel International
Chile Ltda
Country of
incorporation
Principal
activity
Chile
Recruitment Consultancy
Page Consulting Chile Ltda
Chile
Recruitment Consultancy
Registered office
Magdalena 181, Piso 1, Las Condes, Santiago 7550055,
Chile
Magdalena 181, Piso 16, Las Condes, Santiago 7550055,
Chile
Empresa de Servicios Transitorios
Page Interim Chile Limitada
Chile
Recruitment Consultancy
Magdalena 181, Piso 1, Las Condes, Santiago 7550055,
Chile
Michael Page (Beijing)
Recruitment Co., Ltd
Michael Page (Shanghai)
Recruitment Co., Ltd
China
Recruitment Consultancy
China
Recruitment Consultancy
Room 1009 1012, 10/F, West Tower, World Financial Centre,
No.1 East 3rd Ring Middle Road, Chaoyang District, Beijing,
China 100020
Level 18, HKRI Taikoo Hui Tower2, 288 Shimen Yi Road,
JingAn District, Shanghai 200041, China
Michael Page International
(Shanghai) Consulting Limited
China
Non-Trading
Suite 1010, Shanghai Kerry Centre, 1515 Nanjing West
Road, Shanghai, China
Page Contracting (Shanghai) Co.
Ltd
China
Recruitment Consultancy
Room 20108, 20/F, No.288 Shimen Yi Road, Shanghai,
200041, China
Michael Page International
Colombia SAS
Colombia
Recruitment Consultancy
Av. Calle 82 No. 10-33 - Oficina 801, Colombia
Page Interim Colombia SAS
Colombia
Non-Trading
Av. Calle 82 No. 10-33 - Oficina 801, Colombia
Michael Page Czech Republic s.r.o Czech Republic
Recruitment Consultancy
Pobřežní 249/46, Karlín, Praha 8, Czech Republic
Michael Page Partnership Limited England and Wales Non-Trading
Page House, 1 Dashwood Lang Road, Bourne Business
Park, Weybridge, Surrey KT15 2QW, UK
Michael Page Employment
Services Limited
England and Wales Recruitment Consultancy
Page House, 1 Dashwood Lang Road, Bourne Business
Park, Weybridge, Surrey KT15 2QW, UK
LPM (Professional Recruitment)
Limited
England and Wales Holding company
Page House, 1 Dashwood Lang Road, Bourne Business
Park, Weybridge, Surrey KT15 2QW, UK
Accountancy Additions Limited
England and Wales Non-trading
Slamway Limited
England and Wales Non-trading
(The) Assessment Centre Limited
England and Wales Non-trading
LPM (Group Services) Limited
England and Wales Non-trading
(The) Page Partnership Limited
England and Wales Non-trading
Page House, 1 Dashwood Lang Road, Bourne Business
Park, Weybridge, Surrey KT15 2QW, UK
Page House, 1 Dashwood Lang Road, Bourne Business
Park, Weybridge, Surrey KT15 2QW, UK
Page House, 1 Dashwood Lang Road, Bourne Business
Park, Weybridge, Surrey KT15 2QW, UK
Page House, 1 Dashwood Lang Road, Bourne Business
Park, Weybridge, Surrey KT15 2QW, UK
Page House, 1 Dashwood Lang Road, Bourne Business
Park, Weybridge, Surrey KT15 2QW, UK
Sales Recruitment Specialists
Limited
England and Wales Non-trading
Page House, 1 Dashwood Lang Road, Bourne Business
Park, Weybridge, Surrey KT15 2QW, UK
Michael Page International Limited England and Wales Non-trading
Page House, 1 Dashwood Lang Road, Bourne Business
Park, Weybridge, Surrey KT15 2QW, UK
Michael Page International
1982 Limited
Michael Page International
Investment Limited
Michael Page International
Finance Limited
England and Wales Non-trading
Page House, 1 Dashwood Lang Road, Bourne Business
Park, Weybridge, Surrey KT15 2QW, UK
England and Wales Non-trading
Page House, 1 Dashwood Lang Road, Bourne Business
Park, Weybridge, Surrey KT15 2QW, UK
England and Wales Non-trading
Page House, 1 Dashwood Lang Road, Bourne Business
Park, Weybridge, Surrey KT15 2QW, UK
Annual Report and Accounts 2019 122
Name of undertaking
Country of
incorporation
Principal
activity
Registered office
Page Personnel (UK) Limited
England and Wales
Non-trading
Michael Page Holdings Limited
England and Wales
Support services
Page House, 1 Dashwood Lang Road, Bourne
Business Park, Weybridge, Surrey KT15 2QW, UK
Page House, 1 Dashwood Lang Road, Bourne
Business Park, Weybridge, Surrey KT15 2QW, UK
Michael Page International
Holdings Limited
Michael Page International
Recruitment Limited*
England and Wales
Holding company
Page House, 1 Dashwood Lang Road, Bourne
Business Park, Weybridge, Surrey KT15 2QW, UK
England and Wales
Recruitment Consultancy
Page House, 1 Dashwood Lang Road, Bourne
Business Park, Weybridge, Surrey KT15 2QW, UK
Michael Page Limited
England and Wales
Non-trading
Page House, 1 Dashwood Lang Road, Bourne
Business Park, Weybridge, Surrey KT15 2QW, UK
Michael Page International
Southern Europe Limited*
England and Wales
Holding company
Page House, 1 Dashwood Lang Road, Bourne
Business Park, Weybridge, Surrey KT15 2QW, UK
Michael Page UK Limited
England and Wales
Non-trading
Page House, 1 Dashwood Lang Road, Bourne
Business Park, Weybridge, Surrey KT15 2QW, UK
Michael Page Recruitment
Group Limited
Michael Page International
(France) SAS
England and Wales
Holding company
Page House, 1 Dashwood Lang Road, Bourne
Business Park, Weybridge, Surrey KT15 2QW, UK
France
Recruitment Consultancy
164 Avenue Achille Peretti, 92522 Neuilly-sur-
Seine, Paris, France
MP Financial Services France SAS
France
Support services
Page Personnel SAS
France
Recruitment Consultancy
164 Avenue Achille Peretti, 92522 Neuilly-sur-
Seine, Paris, France
164 Avenue Achille Peretti, 92522 Neuilly-sur-
Seine, Paris, France
Michael Page Business
Services SARL
France
Recruitment Consultancy
164 Avenue Achille Peretti, 92522 Neuilly-sur-
Seine, Paris, France
Michael Page Ingenieurs et Informatique
SARL
France
Recruitment Consultancy
164 Avenue Achille Peretti, 92522 Neuilly-sur-
Seine, Paris, France
Page Formation SARL
France
Support Services
Michael Page Tertiaire EURL
France
Recruitment Consultancy
164 Avenue Achille Peretti, 92522 Neuilly-sur-
Seine, Paris, France
164 Avenue Achille Peretti, 92522 Neuilly-sur-
Seine, Paris, France
Michael Page Nord SARL
Michael Page Sud SARL
MP Advertising SAS
France
France
France
Recruitment Consultancy
1, Rue Esquermoise, 59800 Lille, France
Recruitment Consultancy
48, Rue de la République, 69002 Lyon, France
Support Services
164 Avenue Achille Peretti, 92522 Neuilly-sur-
Seine, Paris, France
Page Consulting SARL
France
Recruitment Consultancy
Michael Page EDP SARL
France
Support Services
164 Avenue Achille Peretti, 92522 Neuilly-sur-
Seine, Paris, France
164 Avenue Achille Peretti, 92522 Neuilly-sur-
Seine, Paris, France
Michael Page Monaco SARL
France
Recruitment Consultancy
7 Rue de l’Industrie, 98000 Monaco
Michael Page International
(Deutschland) GmbH
Germany
Recruitment Consultancy
Page Personnel Services GmbH
Germany
Recruitment Consultancy
Page Personnel (Deutschland) GmbH
Germany
Recruitment Consultancy
Carl Theodor Strasse 1, 40213 Dusseldorf,
Germany
Carl Theodor Strasse 1, 40213 Dusseldorf,
Germany
Carl Theodor Strasse 1, 40213 Dusseldorf,
Germany
Corporate GovernanceFINANCIAL STATEMENTSAdditional InformationStrategic Report FINANCIAL STATEMENTS 123
Name of undertaking
Country of
incorporation
Principal
activity
Registered office
Michael Page Interim GmbH
Germany
Recruitment Consultancy
Carl Theodor Strasse 1, 40213 Dusseldorf, Germany
Michael Page International (Hong
Kong) Limited
Hong Kong
Recruitment Consultancy
Suite 1701, 17F Central Tower, 28 Queen’s Road Central, Central
Hong Kong
Michael Page International
Recruitment Pvt Ltd
PT Michael Page Internasional
Indonesia
Michael Page International
(Ireland) Limited
India
Recruitment Consultancy
5th Floor, 2 North Avenue, Maker Maxity, Bandra-Kurla Complex,
Bandra (E), Mumbai 400051, India
Indonesia
Recruitment Consultancy
One Pacific Place, Suites B-F, Level 12, Sudirman Central Business
District, Jl. Jend. Sudirman Kav 52-53, Jakarta 12190, Indonesia
Ireland
Recruitment Consultancy
c/o Mason Hayes & Curran, Southbank House, Barrow Street,
Dublin 4, Ireland
Michael Page International
Italia Srl
Page Personnel Italia SpA
Italy
Italy
Recruitment Consultancy
Via Spadari 1, 20123 Milan, Italy
Recruitment Consultancy
Via Spadari 1, 20123 Milan, Italy
Michael Page International
(Japan) K.K.
Japan
Recruitment Consultancy
6F Hulic Kamiyacho Building, 4-3-13 Toranomon, Minato-ku,
Tokyo 105-0001, Japan
Agensi Pekerjaan Michael Page
International (Malaysia) SDN BHD
Malaysia
Recruitment Consultancy
10th Floor, Wisma Hamjah-Kwong Hing, No.1 Leboh Ampang,
50100 Kuala Lumpur
Michael Page (Mauritius) Limited Mauritius
Recruitment Consultancy
La Chaussee Office 530 & 531, Medine Mews,
Port-Louis, Mauritius
Michael Page International
(Mauritius) Limited
Michael Page International
Mexico Reclutamiento
Especializado, S.A. de C.V.
Mauritius
Recruitment Consultancy
Corner of Suffren and Eugene Laurent Streets, 5th Floor, Atchia
Building, Port-Louis, Mauritius
Mexico
Recruitment Consultancy
Av. Paseo de la Reforma, No. 115, Piso 10, Col. Lomas de
Chapultepec, Z.C. 11000, CDMX, Mexico
Michael Page International Mexico
Servicios Corporativos SA de CV
Mexico
Recruitment Consultancy
Av. Paseo de la Reforma, No. 115, Piso 10, Col. Lomas de
Chapultepec, Z.C. 11000, CDMX, Mexico
Page Interim Mexico Servicios
SA de CV
Mexico
Recruitment Consultancy
Av. Paseo de la Reforma, No. 115, Piso 10, Col. Lomas de
Chapultepec, Z.C. 11000, CDMX, Mexico
Michael Page International (Maroc)
SARL AU
Morocco
Recruitment Consultancy
Residence Plein Ciel 9, Angle rue Mahassine Arrouyani et Ali
Abderrazak, Quartier Racine-20, 100 Casablanca, Morroco
Michael Page International
(Nederland) B.V.
Netherlands
Recruitment Consultancy
World Trade Center, Strawinskylaan 421, 107XX, Amsterdam,
Netherlands
Page Interim B.V.
Netherlands
Recruitment Consultancy
World Trade Center, Strawinskylaan 421, 107XX, Amsterdam,
Netherlands
Michael Page International (NZ)
Limited
New Zealand
Recruitment Consultancy
Part Level 6, 41 Shortland Street, Auckland, New Zealand 1010
Michael Page International Panama
S.A.
Panama
Recruitment Consultancy
Punta Pacifica, Blvrd Pacifica Oceania Business Plaza, Torre 2000,
Piso 43, Panama
Michael Page International
Peru SRL
Page Personnel Services
Temporales Peru S.R.L.
Michael Page International
Recruitment (Philippines) Inc.
Michael Page International
(Poland) Sp.z.o.o
Peru
Peru
Recruitment Consultancy
Calle Las Orquídeas 665 esq. Andrés Reyes - Piso 2, Oficina 201
San Isidro, Peru
Recruitment Consultancy
Calle Las Orquídeas 665 esq. Andrés Reyes - Piso 2, Oficina 201
San Isidro, Peru
Philippines
Recruitment Consultancy
20th Floor, Citibank Center Building, 8741 Paseo de Roxas, Bel-Air,
City of Makati, NCR, Fourth District, Philippines
Poland
Recruitment Consultancy
ul. Zlota 59, 00-120 Warsaw, Poland
Annual Report and Accounts 2019 124
Name of undertaking
Michael Page International Empressa
de Trabalho Temporário e Serviços de
Consultadoria Lda
Country of
incorporation
Principal
activity
Registered office
Portugal
Recruitment Consultancy
Avenida da Liberdade n 180A, 1250-146 Lisboa,
Portugal
MICPAGE Services Lda
Portugal
Recruitment Consultancy
Michael Page International
(UAE) Limited – QFC Branch
UAE
Recruitment Consultancy
Michael Page International Pte Limited*
Singapore
Recruitment Consultancy
Page Personnel Recruitment Pte Ltd
Singapore
Recruitment Consultancy
Avenida da Liberdade n 180A, 1250-146 Lisboa,
Portugal
Qatar Financial Centre, Office 2, Ground Floor,
Tornado Tower, West Bay, PO Box 23153, Doha,
Qatar
One Raffles Place, #09-61 Office Tower Two,
Singapore 048616
One Raffles Place, #09-61 Office Tower Two,
Singapore 048616
Michael Page International (SA)
(Pty) Limited
South Africa
Recruitment Consultancy
PO Box 653555, Benmore 2010, South Africa
Michael Page Africa (SA) (Pty) Limited
South Africa
Non-trading
PO Box 653555, Benmore 2010, South Africa
Michael Page Holding (España) SL
Spain
Holding company
Paseo de la Castellana 28 -3ª, 28046 Madrid,
Spain
Michael Page AD SL
Page Group Europe SL
Page Group Spain Recursos Humanos
ETT SA
Michael Page International
(Sweden) AB
Michael Page International
(Switzerland) SA
Spain
Spain
Spain
Recruitment Consultancy
Paseo de la Castellana 28 -3ª, 28046 Madrid,
Spain
Support Services
Plaza Europa 21-23 5ª, 08908 Hospitalet de
Llobregat (Barcelona), Spain
Recruitment Consultancy
Calle Julian Camarillo 42-4, 28037 Madrid, Spain
Sweden
Recruitment Consultancy
Master Samuelsgatan 42, l4tr 111 57 Stockholm,
Sweden
Switzerland
Recruitment Consultancy
Taiwan Michael Page International
Co Ltd
Taiwan
Recruitment Consultancy
Michael Page Limited
Thailand
Holding company
Michael Page International Recruitment
(Thailand) Limited
Thailand
Recruitment Consultancy
Quai de la Poste 12, CH-1204 Geneva,
Switzerland
8F-1 Shin Kong Xin Yi Financial Building,
36-1 Songren Road Xin-Yi District, Taipei City,
Taiwan 110
17th Floor, ITF Tower, No 140/36-37 Silom Road,
Kwaeng Suriawong, Khet Banrak, Bangkok,
Thailand
Unit 3076, 30th Floor Bhiraji Tower, EmQuartier,
689 Sukhumvit Road, Klongton Nuea, Vadhanna,
Bangkok 10110, Thailand
Michael Page International NEM İst. Dan.
Ltd. Şti
Turkey
Recruitment Consultancy
Buyukdere Caddesi, Kanyon Ofis, Binasi No.
185, Kat 5 34394 Levent, Istanbul, Turkey
MPI Yönetim Servisleri ve Dan. Ltd. Şti.
Turkey
Recruitment Consultancy
Michael Page International (Vietnam)
Co. Limited
Vietnam
Recruitment Consultancy
Michael Page International (UAE) Limited United Arab Emirates Recruitment Consultancy
Michael Page International Inc.*
United States
Recruitment Consultancy
Buyukdere Caddesi, Kanyon Ofis, Binasi No.
185, Kat 5 34394 Levent, Istanbul, Turkey
Level 9, Saigon Centre, Tower 2, 67 Le Loi
Street, Ben Nhge Ward, District 1, Ho Chi Minh
City, Vietnam
No. 202, Al Fattan Currency House, Tower 1,
Dubai International Finance Centre (DIFC), PO
Box 506702, Dubai, United Arab Emirates
622 Third Avenue, 29th Floor, New York,
NY10017, USA
*The equity of these subsidiary undertakings is held directly by PageGroup plc. All companies have been included in the consolidation and
operate principally in their country of incorporation.
Corporate GovernanceFINANCIAL STATEMENTSAdditional InformationStrategic Report FINANCIAL STATEMENTS 125
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.
The following subsidiaries are exempt from the requirements of the Companies Act 2006 relating to the audit of accounts under section 479A of
the Act:
• Michael Page International Southern Europe Limited
• Michael Page Partnership Limited
• Michael Page International Holdings Limited
• Michael Page Employment Services Limited
• LPM (Professional Recruitment) Limited
13. Trade and other receivables
Current
Trade receivables
Less allowance for expected credit losses and revenue reversals
Net trade receivables
Amounts due from Group companies
Other receivables
Accrued Income (net of revenue reversals)
Prepayments
Non-current
Other receivables
Group
2019
£’000
2018
£’000
Company
2019
£’000
2018
£’000
281,176
297,380
(10,081)
(9,174)
271,095
288,206
–
–
–
–
–
–
–
10,643
70,421
13,396
–
607,159
642,855
3,814
44,430
12,661
–
–
–
–
–
–
365,555
349,111
607,159
642,855
15,036
12,746
–
–
The fair values of trade and other receivables are not materially different to those disclosed above.
The Group’s exposure to credit and currency risks and impairment losses related to trade and other receivables is disclosed in Note 20.
All amounts due from Group undertakings are unsecured, interest-free and repayable on demand.
14. Trade and other payables
Current
Trade payables
Amounts owed to Group companies
Other tax and social security
Other payables
Accruals
Deferred income
Non-current
Accruals
Other tax and social security
Group
2019
£’000
Company
2018
£’000
2019
£’000
2018
£’000
6,702
6,594
–
–
–
962,221
913,094
–
51,687
31,216
58,186
26,870
126,206
111,040
–
1,663
–
–
142
–
–
–
138
–
215,811
204,353
962,363
913,232
10,330
1,283
11,613
18,453
1,021
19,474
–
–
–
–
–
–
The fair values of trade and other payables are not materially different to those disclosed above.
All amounts due to Group undertakings are unsecured, interest-free and repayable on demand.
The total liability relating to other tax and social security includes a balance of £1.3m (2018: £1.1m) relating to social charges on
share-based payments.
The Group’s exposure to currency and liquidity risk related to trade and other payables is disclosed in Note 20.
Annual Report and Accounts 2019 126
15. Bank overdrafts
No bank overdrafts were utilised in respect of the year ended 31 December 2019 (2018: £Nil).
At 31 December 2019, the Group had available £20m (2018: £20m) of undrawn uncommitted overdraft facility with HSBC, £1m elsewhere
in the Group and £30m of committed RCF facility with BBVA. There is also £14.1m of undrawn borrowing facilities under the Invoice
Discounting arrangement with HSBC. Under the terms of the Invoice Discount Facility we are able to borrow up to £50m depending on
the level of UK trade receivables held at any one time. Based on the carrying amount of trade receivables at the year-end we were able to
borrow £14.1m of the £50m and hence no actual amount was drawn down on the facility at the year end. The Group utilised the facilities
during the year on an ad-hoc basis.
All other bank overdrafts and facilities are repayable on demand. The Group’s exposure to interest rate, foreign currency and liquidity risk
for financial assets and liabilities is disclosed in Note 20.
16. 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.
At 1 January 2019
Recognised in equity for the year
Recognised in profit or loss for the year
Exchange differences
At 31 December 2019
At 1 January 2018
Recognised in equity for the year
Recognised in profit or loss for the year
Exchange differences
At 31 December 2018
Share-based
payments
£’000
Tax losses
£’000
2,258
(240)
(869)
1
1,150
1,828
300
130
–
2,794
–
(657)
(197)
1,940
2,567
–
242
(15)
2,258
2,794
Other
£’000
11,805
264
2,375
(657)
13,787
9,872
–
1,980
(47)
11,805
Total
£’000
16,857
24
849
(853)
16,877
14,267
300
2,352
(62)
16,857
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:
Deferred tax assets
Deferred tax liabilities
2019
£’000
18,915
(2,038)
16,877
2018
£’000
17,487
(630)
16,857
No deferred tax liability has been recognised in respect of £186.3m (2018: £144.1m) of unremitted earnings of subsidiaries because
the Group is in a position to control the timing of the reversal of the temporary difference and it is not probable that such differences will
reverse in the foreseeable future.
“Other” deferred tax relates to two types of timing difference. The first comprises differences between the Group GAAP, IFRS, and the
local GAAP of each country in which PageGroup operates. The second comprises timing differences between recognition of income
and expense for accounting and tax purposes. This latter category includes deferrals of deductions for internal Group charges until
paid in some countries (£4.7m) and bonus accruals (£3.8m). This can vary from year to year and in 2019 resulted in an decrease in the
deferred tax asset of £0.3m (2018: £1.9m increase). The amount recognised in profit or loss for the year of £0.7m in relation to losses is a
combination of the elements disclosed in Note 6.
The realisation of the deferred tax asset is dependent upon generating future taxable profits in the overseas territories in which the deferred
tax asset has arisen. There are carried forward losses of £18.0m (2018: £13.8m) arising in overseas territories for which no deferred tax
is recognised given the future utilisation of the tax losses is uncertain. The uncertainty relates to assessing the probability of being able
to use losses in the foreseeable future which relies on forecasting future profitability. It is well known that we have limited visibility of this
in the recruitment and staffing sector and this, together with restrictions in some countries on the quantum of losses that may be used in
each year, leads to the conclusion that a deferred tax asset should not be recognised in respect of certain tax attributes, principally losses.
These tax losses and other tax attributes remain available to offset future taxable profits in the respective territories where they have arisen.
The Group has not recognised a deferred tax asset in respect of any losses that we would expect to be impacted by expiry.
Corporate GovernanceFINANCIAL STATEMENTSAdditional InformationStrategic Report FINANCIAL STATEMENTS 127
17. Called-up share capital
Allotted, called-up and fully paid Ordinary shares of 1p each
At 1 January
Shares issued
At 31 December
Shares issued in the year related to the Executive Share Option Scheme.
Share option plans
2019
2018
£’000
Number of
shares
£’000
Number of
shares
3,284
328,339,724
3,268
326,808,701
2
264,050
16
1,531,023
3,286
328,603,774
3,284
328,339,724
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 below.
At 31 December 2019 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. The Group has no legal or constructive obligation to
repurchase or settle the options in cash.
Year of grant
Balance at 1
January 2019
Granted
in year
Exercised
in year
Lapsed
in year
No. of
options
outstand-
ing at 31
December
2019
Base EPS/
OP range†
Exercise price
per share
Exercise period
2009 (Note 2)*
73,800
2010 (Note 1)*
284,477
2011 (Note 2)
1,664,921
2012 (Note 2)*
2013 (Note 2)*
628,373
698,982
2014 (Note 2)*
1,303,333
2015 (Note 2)*
1,095,000
2016 (Note 2)*
1,537,611
2017 (Note 2)*
1,605,000
2018 (Note 2)
1,705,000
–
–
–
–
–
–
–
–
–
–
2019 (Note 2)
–
1,900,000
(45,300)
(28,500)
–
OP range
187.5p-211.84p
March 2012 – March 2019
(264,050)
(5,000)
15,427
6.6
381.5p-383.0p
March 2013 – March 2020
(128,969)
–
1,535,952
OP range
491.0p-492.9p
March 2014 – March 2021
(79,360)
(45,000)
504,013
OP range
477.0p
March 2015 – March 2022
(75,833)
(60,000)
563,149
OP range
442.0p
March 2016 – March 2023
(275,000)
(95,000)
933,333
OP range
484.0p
March 2017 – March 2024
–
(55,000)
1,040,000
OP range
526.0p-534.0p
March 2018 – March 2025
(842,085)
(7,611)
687,915
OP range
406.0p-427.0p
March 2019 – March 2026
–
–
–
(25,000)
1,580,000
OP range
435.44p
March 2020 – March 2027
(90,000)
1,615,000
OP range
529.0p
March 2021 – March 2028
(65,000)
1,835,000
OP range
458.2-473.8p
March 2022 – March 2029
Total 2019
10,596,497
1,900,000
(1,710,597)
(476,111)
10,309,789
Weighted
average
exercise price
2019 (£)
4.70
4.60
4.21
4.52
4.77
Total 2018
15,527,905
1,740,000
(6,137,873)
(533,535)
10,596,497
Weighted
average
exercise price
2018 (£)
* These options have fully vested
4.51
5.29
4.38
4.71
4.70
† The Operating Profit ranges for each award are fully disclosed in Note 2 of this Note. 4,161,496 options were exercisable at the end of 2019 at a weighted average exercise price of £4.76 (2018:
£4.75). The weighted average share price at the date of exercise was £4.86.
Note 1
Executive Share Option Scheme
Using the ESOS, awards of share options can be made to key management personnel and senior employees to receive shares in the Company.
No awards have been made under the ESOS since 2010 and this award has fully vested.
For grants under the ESOS, 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.
Annual Report and Accounts 2019
128
Note 2
Share Option Scheme
Executive Directors of the Company are not eligible to participate in this plan. Any exercises of awards made under this plan are settled by
shares held in the Employee Benefit Trust.
This share option scheme was created in 2009 to provide an effective plan under which to grant awards from 2009 onwards. It was the
Board’s view that grants made under the existing ESOS, 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. Further grants under the SOS have been made
in each year from 2011. 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. Following 2019’s operating profit, 46% of this award will have
vested.
For grants between 2012 and 2015, 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. As Operating Profit of £118.3m was
achieved in 2017, the performance criteria have been fully achieved and these awards have fully vested.
For the 2016 grant, if Operating Profit is in excess of £75m, 2% of the award will vest for every additional £1m of Operating Profit achieved,
up to a maximum of 100% at Operating Profit of £125m or more. As Operating Profit of £142.5m was achieved in 2018, the performance
criteria have been fully achieved and these awards have fully vested.
For the 2017 grant, if Operating Profit is in excess of £50m, 25% of the award will vest, 1% of the award will vest for every additional
£1m of Operating Profit achieved, up to a maximum of 100% at Operating Profit of £125m or more. As Operating Profit of £146.7m was
achieved in 2019, the performance criteria have been fully achieved and these awards have fully vested.
For the 2018 grant, if Operating Profit is in excess of £75m, 25% of the award will vest. 1% of the award will vest for every additional £1m
of Operating Profit achieved, up to a maximum of 100% at Operating Profit of £150m or more.
For the 2019 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.
Other share-based payment plans
The Company also operates a Management Incentive Plan for the Executive Directors and senior employees and a Long-Term Incentive
Plan for the Chief Executive Officer and Chief Financial Officer. Details of these plans 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. Movements on these plans are shown below:
As at 1 January 2019
Granted
Lapsed
Exercised
As at 31 December 2019
LTIP
MIP
1,189,911
2,170,413
397,373
(18,175)
(518,221)
1,050,888
816,477
(291,976)
(768,424)
1,926,490
Share option valuation and measurement
In 2019, options were granted on 12 March with the estimated fair value of the options granted on that day of £0.68. In 2018, options
were granted on 16 March with the estimated fair value of the options granted on that day of £0.96.
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.
The options outstanding at 31 December 2019 have an exercise price in the range of 381.5p to 534.0p and a weighted average
contractual life of 5.8 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 Option Plans
Long-Term Incentive Plan
Management Incentive Plan
Share price (£)
Average exercise price (£)
Weighted average fair value (£)
Expected volatility
Expected life
Risk free rate
2019
4.58
4.58
0.68
23.20%
5 years
1.16%
2018
5.29
5.29
0.96
25.76%
5 years
1.19%
2019
4.55
Nil
4.18
23.20%
3 years
1.16%
Expected dividend yield
2.86%
2.36%
Nil
2018
5.29
Nil
5.05
25.76%
3 years
1.19%
Nil
2019
4.55
Nil
4.55
23.20%
3 years
1.16%
2.86%
2018
5.29
Nil
5.29
25.76%
3 years
1.19%
2.36%
Corporate GovernanceFINANCIAL STATEMENTSAdditional InformationStrategic Report FINANCIAL STATEMENTS 129
Expected volatility was determined by reference to historical volatility of the Company’s share price in the last 12 months. 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, (2018: £8.4m) related to share-based payment transactions during the
year.
18. 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 2019, the reserve for shares held in the employee benefit trust consisted of 10,433,864 Ordinary shares (2018: 11,024,316
Ordinary shares) held for the purpose of satisfying awards made under the Management Incentive Share Plan, the Long-Term Incentive Plan and
the SOS, representing 3.2% of the called-up share capital with a market value of £54.6m (2018: £49.7m).
There are 7,960,864 (2018: 7,775,732) 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.
19. Cash and cash equivalents
Cash at bank and in hand
Short-term deposits
Cash and cash equivalents
Cash and cash equivalents in the statement of cash flows
Net funds
Group
2019
£’000
90,856
6,976
97,832
97,832
97,832
2018
£’000
97,626
47
97,673
97,673
97,673
Company
2019
£’000
2018
£’000
–
–
–
–
–
–
–
–
–
–
The Group operates multi-currency cash concentration and notional cash pools, and an interest enhancement facility. The Eurozone subsidiaries
and the UK-based Group Treasury subsidiary participate in the cash concentration arrangement, the Group Treasury subsidiary retains the notional
cash pool and the Asia Pacific subsidiaries operate the interest enhancement facility. The structures facilitate interest compensation of cash whilst
supporting working capital requirements.
20. 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 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 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.
Annual Report and Accounts 2019 130
(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 2019 amounted to £271.1m (2018: £288.2m).
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. An impairment analysis is performed at each reporting date using a provision matrix to measure the expected credit losses.
The Group has established a provision matrix that is based on its historical credit loss experience adjusted for forward- looking factors
specific to the debtors and the economic environment. If there has been a significant increase in credit risk in a customer or group of
customers the loss is recognised immediately based on the future credit losses over the life of the contract.
Included in the Group’s trade receivables balance are debtors with a carrying amount of £138.1m (2018: £146.5m) 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 days sales of these receivables at the year end is 52 days in excess of the initial credit period (2018: 54
days).
In the table below, the provision includes expected credit losses and provision for revenue reversals.
The ageing of trade receivables at the reporting date was:
Not past due
Past due 0-30 days
Past due 31-150 days
More than 150 days
Gross trade
receivables
2019
£’000
133,281
76,682
56,546
14,667
Provision
2019
£’000
(259)
(152)
(112)
(9,558)
Net trade
receivables
2019
£’000
Gross trade
receivables
2018
£’000
133,022
141,788
76,530
56,434
5,109
87,197
57,794
10,601
281,176
(10,081)
271,095
297,380
Provision
2018
£’000
(80)
(50)
(33)
(9,011)
(9,174)
Net trade
receivables
2018
£’000
141,708
87,147
57,761
1,590
288,206
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 expected credit losses and revenue reversals:
Balance at beginning of the year
Expected credit losses and provision for revenue reversals recognised on receivables
Amounts written off as uncollectable
Amounts recovered/reversed during the year
Balance at end of the year
2019
£’000
9,174
24,068
(923)
(22,238)
10,081
2018
£’000
8,161
22,348
(786)
(20,549)
9,174
The allowance for expected credit losses represents a provision for debts which the Group estimate may be irrecoverable, including £4.7m
(2018: £4.2m) of debts in litigation.
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.
Corporate GovernanceFINANCIAL STATEMENTSAdditional InformationStrategic Report FINANCIAL STATEMENTS 131
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 net accrued income at the reporting date by geographic region was:
EMEA
United Kingdom
Asia Pacific
Americas
Carrying amount
2019
£’000
2018
£’000
165,081
178,482
37,426
33,333
35,255
38,237
45,767
25,720
271,095
288,206
Carrying amount
2019
£’000
15,789
11,034
17,081
26,517
70,421
2018
£’000
1,573
12,316
18,925
11,616
44,430
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 13. 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 were 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 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:
2019
Lease liabilities*
Trade payables
Less than
1 month
£’000
2,262
6,037
1-3 months
£’000
3-12 months
£’000
More than
12 months
£’000
5,173
602
23,390
102,950
63
Accruals and other payables
102,344
20,254
34,824
*The above lease liabilities are the contractual undiscounted cashflows before discounting at the incremental borrowing rate.
2018
Trade payables
Accruals and other payables
Less than
1 month
£’000
6,293
92,039
1-3 months
£’000
3-12 months
£’000
209
92
18,282
27,589
More than
12 months
£’000
–
–
–
–
Annual Report and Accounts 2019 132
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 2019 and 31 December 2018.
(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 the next page. 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.
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 2019 relate to cash and bank overdrafts. The average interest rate
payable on bank overdrafts was 3.00% (2018: 2.85%).
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, Swiss Franc, Singapore Dollar, Hong Kong Dollar and
Australian Dollar. The Group does not have material transactional currency exposures. The Group is exposed to foreign currency translation
differences in accounting for its overseas operations. The Group policy is not to hedge translation exposure.
The Group entered into hedges to cover its investments in foreign entities in the US and Canada designating them as net investment
hedges. During the year the Group ceased the net investment hedge of these subsidiaries and part disposed of the investment by a share
capital reduction. This resulted in transferring a proportion of the losses deferred within other comprehensive income to the statement of
profit or loss in the year. This resulted in an overall loss of £1.0m (2018: £1.0m loss).
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 rate derivatives to manage the currency 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.
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. All
derivative instruments are classified as level 2 instruments.
Derivative financial instruments
Derivative assets
Derivative liabilities
Net derivative assets/(liabilities)
Sensitivity analysis – currency risk
Derivatives at fair value
2019
£m
2.3
(4.3)
(2.0)
2018
£m
1.0
(1.0)
-
A 10% strengthening of Sterling against the following currencies at 31 December 2019 would have increased/(decreased) equity and profit
or loss by the amounts shown over the page. This is reflective of the exchange rates movements experienced by the Group over the last 3
years. 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 2018. 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 over the page, which therefore should not be
considered a projection of likely future events and losses.
Corporate GovernanceFINANCIAL STATEMENTSAdditional InformationStrategic Report FINANCIAL STATEMENTS 133
Euro
Australian Dollar
Swiss Franc
Chinese Renminbi
Hong Kong Dollar
Singapore Dollar
Other
Euro
Australian Dollar
Swiss Franc
Chinese Renminbi
Hong Kong Dollar
Singapore Dollar
Other
2019 equity
£’000
(12,399)
(1,514)
(1,825)
(927)
(930)
(1,496)
(4,342)
2019 PBT
£’000
(1,451)
(118)
75
12
403
(14)
(284)
2018 equity
£’000
(11,426)
2018 PBT
£’000
(2,048)
(1,363)
(1,956)
(943)
(1,949)
(1,458)
(4,416)
(159)
(157)
73
(524)
(41)
(671)
A 10% 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.
21. Commitments
Operating lease commitments
At 31 December 2019 the Group was committed to make the following payments in respect of non-cancellable operating leases:
Within one year
Within two to five years
After five years
Total
Land and buildings
2019
£’000
–
–
–
–
2018
£’000
30,916
81,096
21,451
133,463
Other
2019
£’000
–
–
–
–
2018
£’000
7,121
7,871
–
14,992
*On adoption of IFRS 16 operating lease commitments were recognised on balance sheet as a right-of-use asset and lease liability.
The lease liabilities as at 1 January 2019 can be reconciled to the operating lease commitments as of 31 December 2018, as follows:
Operating lease commitments as at 31 December 2018
Effect of discounting at average Incremental Borrowing Rate of 1.9%
Discounted operating lease commitments as at 1 January 2019
Less commitments relating to short-term leases
Less service & maintenance elements and other
Total
Capital commitments
Land and
Buildings
133,463
(5,411)
128,052
(2,183)
(7,021)
118,848
Other
14,992
–
14,992
–
639
15,631
Total
148,455
(5,411)
143,044
(2,183)
(6,382)
134,479
The Group had nil contractual capital commitments as at 31 December 2019 relating to property, plant and equipment (2018: £0.2m). The Group
had contractual capital commitments of nil as at 31 December 2019 relating to computer software (2018 £nil).
Annual Report and Accounts 2019 134
22. Contingent liabilities
Guarantees
The Company has provided guarantees to other Group undertakings amounting to £1.0m (2018: £1.0m) 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 2019 amounted to £4.3m (2018: £5.9m).
23. Events after the balance sheet date
Between 31 December 2019 and 5 March 2020, 15,000 options were exercised, leading to an increase in share capital of £150 and an
increase in share premium of £61,923.
24. 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 12).
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
pages 53 to 57. 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. The transactions for the year were:
Related party transactions
Wages and salaries
Social security costs
Short-term benefits
Pension costs – defined contribution plans
Share-based payments and deferred cash plan
Company
2019
£’000
5,448
467
682
231
4,225
11,053
2018
£’000
5,838
440
574
226
3,981
11,059
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.
Transactions
FIVE YEAR SUMMARY
Revenue
Gross profit
Operating profit
Profit before tax
Profit attributable to equity holders
Conversion†
Basic earnings per share (pence)
* Includes exceptional items.
Dividends received
2019
£’000
49,927
2018
£’000
5,963
Amounts owed
by related parties
Amounts owed
to related parties
2019
£’000
2018
£’000
2019
£’000
2018
£’000
607,159
642,855
962,221
913,094
2015
£’000
2016
£’000
2017
£’000
2018
£’000
2019
£’000
1,064,945
1,196,125
1,371,534
1,549,941 1,653,948
556,105
90,071
90,697
66,208
16.2%
21.3
621,034
100,952
99,996
72,096
16.3%
23.1
711,568
118,322
118,162
83,080
16.6%
26.5
814,902
855,450
142,463
146,669
142,275
144,245
103,703
103,445
17.5%
17.1%
32.5
32.2
† Operating profit before exceptional items as a percentage of gross profit.
Corporate GovernanceFINANCIAL STATEMENTSAdditional InformationStrategic Report FINANCIAL STATEMENTS 135
Shareholder information and advisers
Annual General Meeting
To be held on 4 June at 9.30am at Page House, 1 Dashwood Lang Road, The Bourne Business Park, Addlestone, Surrey, KT15 2QW. Every
shareholder is entitled to attend and vote at the Meeting.
Final dividend for the year ended 31 December 2018
To be paid (if approved) on 19 June 2020 to shareholders on the register of members on 22 May 2020.
General Counsel & Company Secretary
Kaye Maguire
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,
1 Dashwood Lang Road,
The Bourne Business Park,
Addlestone,
Surrey, KT15 2QW.
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
Joint corporate brokers
Citigroup
33 Canada Square
Canary Wharf
London E14 5LB
HSBC Bank plc
8 Canada Square
Canary Wharf
London E14 5HQ
Registrars
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Financial PR
FTI Consultancy
200 Aldersgate
Aldersgate Street
London EC1A 4HD
Annual Report and Accounts 2019 136
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 PageGroup 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 smaller amount than
its existing shares; and
(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.
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 17 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 18 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.
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.
Variation of rights
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:
(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
Corporate GovernanceFinancial StatementsADDITIONAL INFORMATIONStrategic Report ADDITIONAL INFORMATION 137
is paid. The members may, at a general
meeting declaring a dividend upon the
recommendation of the Directors, direct that
it shall be satisfied wholly or partly by the
distribution of specific assets.
under the Uncertificated Securities
Regulations 2001 to register
the transfer.
Directors
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)
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
(f)
(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
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
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
Annual Report and Accounts 2019 138
(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
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
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ADDITIONAL INFORMATION