PageGroup plc (PAGE) Earnings Call Transcript & Summary

Good morning. I would like to welcome you all to the PageGroup 2022 Full Year Results. My name is Brika, and I'll be your event specialist operating today's call. [Operator Instructions] I would now like to hand the call over to your host for today, Kelvin Stagg, CFO. So Kelvin, you may begin your conference.

Thank you, Brika. Good morning, everyone, and welcome to the PageGroup 2022 Full Year Results Presentation. I'm Kelvin Stagg, Chief Financial Officer. And on the call with me is Nick Kirk, Chief Executive Officer. Although I will not read it through, I'd just like to make reference to the legal formalities that are covered in the cautionary statement in the appendix to this presentation and which will also be available on our website following the call. The group delivered gross profit of almost GBP 1.1 billion in 2022, a record year for the group. We grew 20.2% in constant currencies against 2021, our previous record year, and we delivered record years in 27 countries. Our operating profit for the year was a new record of GBP 196.1 million, up from GBP 168.5 million in 2021. Our conversion rate was 18.2%, down from 19.2% in 2021 due to the softer trading conditions in H2, particularly the impact of COVID in Greater China. Earnings per share increased to 43.7p. We ended the year in a strong financial position with net cash of GBP 131.5 million compared with GBP 154 million at the end of 2021. This was after returning GBP 133.2 million in cash dividends to shareholders in the year. Today, we are proposing a final dividend of 10.76p per share, an increase of 4.5% on 2021. Together with the interim and special dividends, this gives a total 2022 dividend per share of 42.38p. I will now move on to the financial review. This fee earner headcount and gross profit chart shows the unprecedented scale of the decline in group gross profit in 2020 and the comparison to the global financial crisis in 2008. It shows how the decision to invest in our platform during the pandemic has driven the sharp recovery seen through 2021 and the first half of 2022. However, as growth slowed in H2 2022, our fee earner headcount responded, falling from a high of 7,071 in Q3 to 6,943 at the end of the year. Overall, the group's operating profit increased by 14.3% in constant currencies from GBP 168.5 million in 2021 to GBP 196.1 million. However, the conversion rate decreased from 19.2% to 18.2% for the full year. Looking at each of our regions, starting with our largest, EMEA, representing 50% of the group, gross profit grew 25.5%. Fee earner productivity improved by 3%, which drove an increase of 1.1% in the conversion rate to 22.7%. In Asia Pacific, representing 18% of the group, gross profit grew 4.7%. Fee earner productivity declined 11% and the conversion rate reduced to 18%, down from 21.8% in 2021. This was due primarily to the extensive COVID lockdowns and restrictions in Greater China through the second half of the year. The Americas, representing 18% of the group was our fastest-growing region, with gross profit up 26.7%. Fee earner productivity decreased by 1% as we made significant headcount additions in H1 into our 2 large high potential markets of the U.S. and Latin America. This, combined with the more challenging trading conditions in H2 resulted in a lower conversion rate for the year of 9.2%. In the U.K., representing 14% of the group, gross profit grew 16.6% against 2021. Fee earner productivity increased by 4% with a conversion rate of 14%, up from 13.2% in 2021. Our strong focus on productivity resulted in significant gains in the first half of the year and delivered an H1 conversion rate of 21.4%. In H2, we saw more challenging trading conditions and a softening in candidate and client confidence across the majority of our markets. In addition, our Greater China business was impacted significantly by the COVID locals and restrictions. Combined, this resulted in a lower full year conversion rate of 18.2% in 2022 compared to 19.2% in 2021. EMEA exited in H2 with the group's highest conversion rate of 20.9%. This was driven by resilient performances across a number of mature markets and a strong performance from Germany, a large high-potential market in EMEA. EMEA has the group's highest proportion of non-perm business, and this provided some protection as market conditions became more challenging. Asia Pacific delivered a record first half in terms of gross profit at a conversion rate of 20.5%, with Greater China representing 33% of APAC, the COVID challenges in H2 reduced the overall regional conversion rate to 15.3%. In the Americas, H2 conversion at 4.1% was significantly behind the H1 conversion rate of 14.7%. This was due to significant fee earner headcount investment in H1 combined with more challenging trading conditions as H2 progressed across most of the markets in this region. In the U.K., the second half conversion rate at 7.7% was significantly worse than the 20.1% in H1. Again driven by the deteriorating trading conditions as the year progressed. However, excluding a number of one-off items, such as an increase in lease charge due to consolidating our London office portfolio, the conversion rate was in excess of 10%. We delivered strong growth across all our disciplines in 2022 and further diversified away from accounting and financial services. As a result, all of our other disciplines now represent 68.1% of the group, up from 67.9% in 2021. Technology within our professional services category remains our second largest discipline, representing 14% of the group and grew 35% in 2022. The tax charge for the year was GBP 55.4 million, up from GBP 48.3 million in 2021. This represented an effective tax rate of 28.5%, slightly lower than the 29% in 2021. The effective tax rate is higher than the U.K. rate of 19% due to the impact of higher tax rates in overseas countries and, to a lesser extent, disallowable expenditure. In 2023, the effective tax rate is expected to be around 30%, which is higher than 2022, due principally to the increase in the U.K. corporation tax rate from 19% to 25% from the first of April 2023. Our balance sheet position remains strong. Intangible assets decreased by $9.2 million compared to 2021, due mainly capital expenditure on our global operating system, Customer Connect, being completed during Q2, plus a one-off expense of licenses previously capitalized of GBP 4 million. Tangible assets increased by $11.3 million as we invested to support our increased headcount as well as in several significant office moves. Trade and other receivables have increased by GBP 82 million, driven by the strong levels of trading activity. After returning a total of GBP 133.2 million to shareholders by way of ordinary and special dividends in 2022, net cash at the end of the year was GBP 131.5 million. Overall, net assets have increased from GBP 340.1 million to GBP 352.2 million. This slide shows the key movements in our cash through the year. Our EBITDA inflow was GBP 267.1 million, an increase of GBP 37.9 million from 2021, driven by the record results. Working capital increased by GBP 20.7 million, while tax and net interest paid increased from $37.6 million in 2021 to GBP 61.7 million in 2022. Net capital expenditure was GBP 29.6 million for the year, up from GBP 25.7 million in 2021. We're spending due mainly to office fit-out expenditure and Customer Connect. The heightened spent on office fit outs in 2022 is expected to continue for the next couple of years as we continue to transform our offices in a post-COVID world, often downsizing as our need for interview rooms in a more virtual world has reduced. In addition, we have changed the layout of our office space, creating more of a destination to encourage our people to return with collaborative spaces for them to socialize and ensure we retain our unique culture. Payments made in relation to lease liabilities reduced cash by GBP 35.9 million, with the reduction in the share price from GBP 6.33 at the end of 2021 to GBP 4.61 at the end of 2022, employees exercised only 0.1 million share options during the year, adding GBP 0.4 million to our net cash position. This was a decrease from the GBP 16.4 million in 2021. The group also purchased shares costing GBP 14.8 million in March into the Employee Benefit Trust to hedge our liabilities under the group share plans. The largest outflow of cash totaling GBP 133.2 million related to dividends. I'll expand on this further on the next slide. The overall impact of these cash flows was to decrease the group's net cash position by GBP 22.5 million to GBP 131.5 million at the end of the year. PageGroup operates a highly cash generative business model with very high levels of cash conversion. We have a clear capital allocation strategy with 3 defined and well-established uses of cash. The first and primary use is to satisfy the operational and investment requirements of the group, such as investing in additional headcount and continuing to roll out technology as well as to hedge liabilities under the group share plans. The second use of cash is for the payment of ordinary dividends, where our policy is to maintain these through a downturn, which we have done in all years apart from 2020 and to increase them when trading conditions are more favorable. Finally, any remaining cash surplus is to be distributed to shareholders by way of a supplementary return. Today, the group announced a proposed final ordinary dividend of 10.76 per share, an increase of 4.5% on the 2021 final dividend. Subject to shareholder approval at the AGM, this will be paid on the 19th of June to shareholders on the register as of the 19th of May. When combined with the interim dividend of 4.91p per share, this gives a total ordinary dividend for the year of 15.67p together. With a special dividend of 26.71p per share paid last October, total dividends for 2022 were 42.38p. This chart shows our proven track record of shareholder returns with capital returns made in all years since flotation, except 2020 due to the pandemic. As can be seen on this slide, the GBP 133 million returned in 2022 exceeded our previous record return in 2006 by 31%. Including the 2022 special dividend, we've returned over GBP 360 million by way of special dividends since 2015. Together with share buybacks totaling GBP 276 million and ordinary dividend totaling GBP 550 million, we've returned a total of GBP 1.2 billion to shareholders since flotation. As mentioned at the Q4 trading update, we will be hosting a capital market event in Q2. During this event, we will take the opportunity to demonstrate live the investments we have made in technology and data. How we feel this sets us apart and what benefits we expect to see going forward. We will also present an update on sustainability and DE&I, where we've made significant progress across 2 areas that are fundamental to our business. Full details of the event will follow in due course. I will now provide a brief summary of the full year results. 2022 was a record year for the group for both gross profit and operating profit. Gross profit grew 20.2% in constant currencies versus 2021 at previous record year. 27 of our countries delivered record years, including 4 of our 5 large high potential markets. Our strong focus on productivity resulted in significant gains in H2 2022 and delivered an H1 conversion rate of 21.4%. In H2, the conversion rate was impacted by softening client and candidate confidence, combined with COVID lockdowns in our Greater China business. Overall, for the year, productivity was down 0.6% on 2021, and as such, our conversion rate was 18.2%. Today, the Board has proposed a final dividend of 10.76p per share. reflecting confidence in the long-term strategic progress of the group as well as the strength of our balance sheet. Looking forward, there remains a high level of global macroeconomic and political uncertainty in the majority of our markets. However, against this backdrop, we continue to see candidate shortages and good levels of vacancies. Given our highly diversified and adaptable business model with a cost base that can be adjusted rapidly and a strong balance sheet, we believe we are well positioned to weather the uncertainty and to continue to make strong shareholder returns. We look forward to seeing you at our Capital Markets event in Q2 and that concludes the formal presentation for this morning. Nick and I will now be happy to take any questions you may have.

[Operator Instructions] Our first question comes from Hans Pluijgers of Kepler Cheuvreux.

A few questions from my side. First of all, on let's say, the current trends since the start of the year, could you give maybe some feeling how, let's say, especially forward-looking KPIs have developed? At the end of last year, you saw KPIs in general, still holding up, at only, let's say, decision making process was somewhat delayed. Can you give us some feeling how that is developing also? And looking at your conversion ratio in the Americas especially, could you give maybe some more clarification why that is so low? And how do you, let's say, see that developing? Are you, let's say, becoming more cautious also in investment? Could you give maybe some feeling on that? And more in general, on fee earners, your additions for Q1 and maybe also your ideas for Q2 on that.

Okay. Thank you. I'll take perhaps the first and third question because they're linked. Sorry to disappoint, but we're not here today to make any comments on January or February. So I'm not going to be drawn on trading in the first couple of months of the year. And even if I was to be quite frank with you. They are 2 of the smallest months of the year. March is the big read for the rest of the year. So we'll hold off in terms of any commentary around 2023 until we have the update on the 17th of April. Kelvin, do you want to touch on the conversion rates?

Yes, the conversion rates in the Americas, particularly in North America, we don't have any temp in that business. So it is all perm and therefore, it tends to be more volatile than somewhere such as EMEA, for example. It had a very strong performance actually in the first half. productivity in the U.S. would have been at record levels. However, the level of headcount investment meant that conversion even in the first half was somewhat suppressed. In the second half, we actually let the head count drift slightly. But as I say, when you've only got a permanent business and the trading conditions become particularly tough as they did across the whole region, it ate fairly heavily into that productivity. However, we have held behind the more senior head count and we will continue to do so across the Americas on the basis that we want to be able to build back strongly once the market turns.

I mean maybe I can just add a little bit to that in that -- I mean, it really was your classic game of 2 halves in the U.S. last year. To give you an idea, I mean, to give you a sense of the record levels of productivity pre-COVID, if we were delivering $19,000 per head per month, that would have been considered to be a really strong productivity. We were north of 30 in March -- in the month of March last year. That's how extreme the market was. So, clearly, we were concerned that we were missing market opportunity by not having enough headcount. We added headcount aggressively. And then the market fell away during the second half of the year, as we've already indicated. But as Kelvin pointed out, we want to hang on to the base, make sure that we have those consultants in place because perm recovery happens quickly. And we need to make sure, therefore, that we've got our best people ready for when that recovery comes, which ultimately it will in a market like the U.S., but it is probably one of our most cyclical markets for the reason that Kelvin said.

Okay. Maybe coming back on the fee earner trends. You reduced somewhat in Q4. Is it logical to assume that we, let's say, see a slight further decline in Q1, at least respect to fee earners, especially looking at specific markets? Or are you, let's say, more optimistic on that?

I think that's a question again, relates really to how trading is progressing during Q1 and for all the reasons that Nick said, I'm not going to get drawn on that either. I think March is such a big part that in all honestly, what we say now may turn out to be contradictory to what we tell you again in 4 weeks' time. So I'll hold that back until we get to Q1.

We now have Anvesh Agrawal of Morgan Stanley.

I've got 3 questions. First, if you can give some more color on China really I mean, obviously, there is an expectation of the reopening and the trading. But any sort of comment around the time line would be useful. Any sort of signs of pickup in that market? Second is a bit more commentary around the technology movement, especially in the U.S. Has that just completely fallen away, which are the other strong markets that you're seeing given the investment that has gone into that market? And finally, I mean, the cost base is really flexible. So what's sort of stopping you to take further cost action in this market? Or given the lengthening sort of sales cycle, there is actually limited scope to cut the cost base this time around?

Okay. I'll try the first 2 and then pass you on to Kelvin. So China, we had a session actually on Monday this week with our leadership team from China. So I can give you a sense of what life is like there at the moment. I think Monday was the first day in something like, well, it was over 1,000 days that they were allowed to be mask-free in Mainland China. So it gives you a sense as to how difficult it's been for everyone in that country and specifically in our organization, I would just like to go on record to thank our employees for the resilience they've shown through a very, very difficult period. But we hope and we sense that with the extreme lockdown that they've had ending, the removal of things like masks, the journey towards maybe more normal life that business will get back to normal. But it's going to take a little while for that to build back. And I don't think it will be something that happens immediately. We'd hope perhaps that Q2 may be better than Q1. We hope perhaps H2 might be better than H1. But again, that's just more of a hope than a prediction or forecast. But certainly, Conditions are easing. I think there's a sense of pragmatism, I think a sense of getting back to normal life. And we're confident in the market-leading position that we have. The base that we have there because 1/3 of our consultants, they have 6 years' experience or more. So we've got a really experienced team and leadership team and fee earners to really build out should that market accelerate. That's pretty exciting for us when the market does return. As regards to tech recruitment in the U.S., did it completely fall away? No, I didn't completely fall away, but I think the U.S. was probably more impacted by the job cuts on the West Coast than probably other parts of the world. Now that's not to say that we recruit directly for those organizations that have been in the headlines, but it does create a shadow a sense of concern that if organizations like that are laying off big numbers of people then it starts to affect confidence both the clients and candidates. Secondly, I think there's a sense with clients that if there are large layoffs within these big tech firms, there's talent out on the market that they can go and get for themselves and therefore, perhaps don't need to use a recruiter to find the talent. So those are probably the 2 factors that impacted things. But I think we know that technology is the biggest recruitment market in the world. And within that, we know that the U.S. is the biggest part of that technology market. So again, you just have to hold your nerve and know that the market is a good one to be in and one that we will continue to develop. As we said in the statement, we grew technology 35% during last year. It's our second largest discipline, 14% of the group and we have high expectations as to where it can go. Over to you, Kelvin.

Sure. Yes. So on the cost base, that really, I guess, is a question about having delivered 21.4% conversion in the first half of last year. were we happy with the drop in conversion rate to 15% in the second half. And clearly, we're not happy when the conversion rate drops. However, it is then a balance between to what extent we want to eat into the platform that we've got and to what extent for short-term profit support against where we feel that we should be when we're coming out the other end. And some of that's a measure of how deep we think it's going to be, but also obviously, how long it's going to last. I think what we said at the end of last year in Q4 was that we actually had seen activity holding up pretty well. Certainly, our number of jobs that we were working was fairly similar to what had been in previous times, number of first into view second interviews. But really what had dropped off was the conversion of that activity into placements and therefore, revenue. And therefore, we needed almost more people to actually make the same amount of revenue or the same people to make slightly less, and that's really how we progressed through the last quarter of last year. We have, in certain places, China is a very good example, cut back the number of people that we've got there. At peak in Mainland China, I believe we would have been somewhere around 500. I think we're probably just above half that at the moment. But about 30% of that headcount is management. And we're probably at a level now where we really don't want to cut any further. We certainly don't want to lose any of the people that we've invested 5, 10 years in getting that position for what could be 12 months or possibly even less in a market that is almost certainly going to recover and that we have a market-leading position. So we will try and take that decision in each of the markets, brands, geographies that we operate in and keep mindful of when things turn and Nick mentioned it earlier, particularly in perm recruitment, they turned fast such that we can be on the front foot and accelerate out. So we have levers to change the cost base broadly 60% of that is salary related. 80% of it is directly employee related. And we will have some savings coming through in property. The change in the London property we mentioned earlier in terms of merging our what was 3 offices in London into 1 will deliver about GBP 2 million of savings every year going forward from 2024. So there are some more sort of longer-term levers that we're going to play with. But in the short term, it's about headcount, and we'll balance that in each market we're in.

We now have Kean Marden of Jefferies.

Just a few from me as well. Coming back on that lease -- so office lease that you just made, Kelvin. Forgive me if you mentioned in the prepared text, but did you say that was a GBP 4 million headwind to U.K. EBIT in the second half? Then another one for you, just on debt aging and write-offs. So just what trends that you're seeing there. I think most of your peers have seen that tick up in the second half. Wondering if you're similar. And then just touching on Japan, which is quite interesting at the moment sort of evolving from a low inflation environment to high inflation and some quite eye-opening wage increases coming through there. I'm just wondering how you see the next sort of 2 to 3 years for your business in Japan.

No. On the property in the U.K., the hit to 2020 is about GBP 1.5 million. It was primarily the write-off, if you like, of the remaining lease on the building. I'm sitting at the moment in Aldwych because this lease runs for about another year. So we provisioned the remaining amount of this linked into last year. In the current year, we'll have a slight double running as we fit out the new office, which hopefully will move in right at the end of this year. And then from next year, we've got just the one office that's running and that compared to running the 3, we'll essentially have a saving of about GBP 2 million a year. We are actually downsizing quite substantially. We currently have 60,000 square foot in London. We'll move into 1 floor plate that's about 40,000 square foot. It really reflects flexible working. It reflects a need not to have as many interview rooms anymore. And in the farther a lot of our candidate interviewing is done virtually, particularly the screening interview. So that will progress the fit out through this year. And as I say, I think it will be quite a change for all of the people to have our operational and nonoperational teams together on one floor plate going forward. So -- but there were a couple of other much smaller one-offs in the U.K. And what we were trying to help people to understand was that dropped to 7.7% conversion in the second half from 20% in the first half wasn't quite as bad as that if you strip those one-off effects out, and it was in excess of 10% in the second half. The question on DSO, no, we've not seen a drop in our DSO anywhere actually. I mean some of that possibly is the -- we're -- whatever, 75% roughly permanent recruitment, people tend not to do permanent recruitment if you're in financial difficulty. So maybe that assists in our favor, but we've not seen any deterioration in credit or DSO through the year.

As regards to Japan, as we reported in January, we've seen a decline in Japan in Q4 around about 5%, which was similar to Q3, however, probably unlike some of the other markets, we saw a stiffening in the performance through the quarter rather than a softening. So we remain positive about Japan, and probably would fall in line with some of your comments there. I mean, it's a very high-margin market, high fees very talented, sure. There's a huge opportunity there for technology. We have over 200 fee earners in the market. So it's one of the countries that we're very positive about going forward.

We now have Karl Green of RBC.

A couple of questions from me. The first one is just if I could get your latest thoughts on how your determining whether to continue with special dividends versus share buybacks? Any kind of framework you're thinking about there about how you're valuing your own stock in terms of the opportunity cost? And then the second one, I'm not fishing here the numbers about Q1 performance. But just in terms of the uncertainties around March, I mean, we're 1/3 of the way through the months already. I mean would you characterize the uncertainties more about a shortening of the time to hire. So more when the existing pipeline converts? Or do you think it's going to boil down to decisions not to proceed either from the client or the candidate?

Yes, I'll take the first one. We tend to start considering whether or not we're going to return surplus capital by way of a special dividend or whether we think it's appropriate to get into the market and make buybacks around June time. The decision itself needs to be made at the end of July, such that we can announce it with the interim results in early August. Last year, the share price was actually a little bit higher than it was today. And -- but we spoke to our top 10 shareholders and asked them what they felt at the time, 7 of them requested a special dividend. Two of them were fairly ambivalent and one of them wanted to buy back. I think there is a simplicity and about being fairly consistent in the way that we return. There's clearly a share price where it is very easy to make a decision about a special dividend. I would say that's probably ahead of where we are now. And there's probably a share price where really, it makes absolute sense to be buying back stock, and that's probably below where we are now. And we're in a relatively gray zone in the middle. I think at this point, we'd probably repeat the exercise of last year and talk to some of our shareholders and see how they wish to see that capital returned. But it's probably too early in the year to worry too much about how we might do that. The only other thing I would add is you did see us last year in the market. I think with GBP 14.2 million to buy shares into the trust. We obviously issue stock to employees around this time every year. And therefore, it wouldn't be unlikely that you'll see us back in the market at some point buying some stock into the trust to do exactly the same. But that will be for share plan hedging purposes rather than cancellation. Nick?

I appreciate that you're not fishing around March, but I will answer your question based on a commentary from Q4, which is what we were seeing then. So the types of things we're seeing client side, candidate side in terms of confidence would be clients becoming just more choosy. So I would say in the first half of last year, we would have been in a situation where in many cases, if we have 2 candidates of final interview, there was a reasonable chance that the client would call you and say we'll take them both. Now you're probably in a situation in Q4 where you get to a phone call where they call you back and say, yes, they're both close, but they're not quite there. So that's typical of clients when they start to have a bit more of a doubt, less confidence in hiring, and that then feeds into the process from a candidate side, again, what we saw in Q4 was that at the start of the year, there were probably being offered salary increases that were potentially 20% plus in many cases. And then as we move to the back end of the year, that had probably reduced to maybe, say, 10%. And what happens is that you've got to wait for the market to adjust because candidates will be talking to colleagues that moved 6 months earlier and saying, "I've just got an offer. It's coming at 10% above what I'm on. Should I take it?" And their colleagues who they spoke to, who moved 6 months earlier says, no, no, no, you should hang on for 20%, but the market is adjusted. So those are the types of examples of how it plays out in reality when confidence starts to slip a little. And that's all to do with the macro headwinds and the headlines that people read but it doesn't take a huge shift for people to read slightly different headlines to feel differently, and then the market moves again. So we'll see as March progresses and then we can update you on the 17.

[Operator Instructions] We now have James Rose of Barclays.

The first one is, how do you decide how much headcount to remove and add given your view on activity levels and sort of what metrics do you basin internally? Is it a certain gross profit per fee and a range you try to stay within, for example? And then the second one is on gross profit per fee earners. For the last 10 years, pre-pandemic so the average was about 135,000, 140,000 per fee earner. When you think of the cumulative wage inflation we've had since the pandemic, changes in business mix, changes in your own productivity, what would you say is a sustainable level to achieve in the longer term?

So I'll take the first question. It's kind of a 2-way processing page, Clearly, there's some central dictate in terms of where we want the head count to be. And what we're typically looking at is a number of data points. So we'll be looking at top of the funnel. So we're looking at activity levels, how many jobs do we have coming in? How many of those are turning into interviews, therefore, how many people do we need at desk to service our customers to deliver the level of service that we want. We're also then looking further down the pipe, obviously, to conversion, how much of that is turning into revenue and therefore, productivity per head. That's the next indicator. And then as an Executive Board, we're crunching all of those data points and making decisions around what the right level of headcount is -- but there's also a bottom-up activity in Page Group as well because as you probably know, we run a local profit model. So if you're a manager of a team with 3 people working for you, and there isn't enough of a volume of work coming in. to reward everybody, to feed everybody, then typically, the manager locally will look at the lowest performer in the team, and that person will then leave and they will share the work between 3 of them rather than 4, so that there's more activity, more revenue available and therefore, more profit available and therefore, bonus available to them locally. So there's that top-down and bottom-up methodology that we use to hopefully arrive at the right headcount.

Yes. The answer to your second question is a somewhat complex one because the productivity of a consultant is really a factor of 3 different things. So you've got volume, you've got value and you've got price. The element that you're talking to is really the value. So the salary against which we're going to build. And it would be fair to say that, that value has increased over a period of time. And certainly, during the first half of last year, we saw that coming through into our productivity. The price, the fee rate that we charge actually tends not to move that much through different cycles. And so at the moment, talking to December, we were at record fee rates. So our group average fee rate was just shy of 22%. That reflects 2 things probably. One that actually our fastest-growing markets, the likes of Germany. The U.S. in the first half of last year, places like Greater China in the first half of last year, all have fee rates that are above the group average. And so part of it is the mix difference that we've seen over the last 10 years, but part of it is also a shortage of candidates that supporting very strong fee rates. But the last part of that volume value price is the volume, and it's the number of placements you can make in any 1 month. And that's the piece that in the second half of last year was clearly trending against us. And so for all of the reasons that both I and Nick outlined earlier in terms of activity, activity doesn't make money. Activity hopefully brings you to an offer. And the question is whether or not a candidate accepts the offer and how big the offer is that's put on the table by the clients. And what we saw again in the second half of last year was that our conversion of offers into revenue had reduced. And therefore, it was that element that was then pulling back against the productivity in the second half. There are elements that I would point to that I think help productivity over the longer term. The most obvious 1 is video interviewing. And so the prevalence of video interviewing the ease by which you can entice candidates into a process through video interviewing is something that I think structurally has and will help productivity going forward. The other piece around that, hopefully, as you'll see, if you join us for our Q2 capital markets event will be the technology and investments that we've made over the years in bringing warm qualified leads to our consultants. So they're not chasing cold calls in terms of clients, in terms of accessing candidate pools that they possibly couldn't do previously in terms of matching the right candidate against the right clients. And therefore, having a higher possibility to convert into revenue. So there are a number of elements that we think should increase it. But in terms of giving you an absolute number, we stick to going forward, I'd have to pin that against the macro conditions that we've given. And therefore, that's somewhat challenging to do.

We have no further questions on the line. So I'd like to hand it back to the management team.

Well, thank you all. If there are no further questions, I'd like to thank you for joining us this morning. Our next update is our first quarter 2023 trading update on the 17th of April.

Thank you. This does now conclude today's call. You may now disconnect your lines, and have a lovely day.