PageGroup Regulatory News (PAGE)

13 July 2022

PAGEGROUP PLC

SECOND QUARTER 2022 TRADING UPDATE

RECORD QUARTERLY PERFORMANCE

Q2 Highlights*

· Group gross profit of £280.9m, +25.5% vs. Q2 2021

· Record performance in June, second month with gross profit in excess of £100m

· EMEA +29.4%: France +21%; Germany +32%

· Asia Pacific +11.7%: Greater China -11%; SE Asia +33%; Japan +15%; India +47%

· Americas +34.1%: US +30%; Latin America +40%

· UK +22.6%: Michael Page +13%; Page Personnel +56%

· Large, High Potential markets (39% of Group) +23%, +33% excluding Greater China

· Increase in fee earner headcount of 307 in Q2 to 6,734 (Q1 2022: 6,427)

· Strong cash position, net cash of c. £135m (Q1 2022: c. £122m, Q2 2021: c. £164m)

* In constant currencies vs. 2021 except where stated otherwise

Q2 Gross Profit Analysis

H1 Gross Profit Analysis

Steve Ingham, Chief Executive Officer, PageGroup, said:

"We continued to see strong growth in Q2; Group gross profit was up 25.5% against 2021, with another good broad-based performance across our geographies, disciplines and brands. We delivered a record quarter for the Group, with record performances in 25 countries. We exited the quarter strongly, delivering a record month in June, our second month of gross profit in excess of £100m.

"This performance was achieved despite the backdrop of macro-economic and geo-political uncertainty as well as continued COVID-19 restrictions in certain markets. We believe that our strategy of maintaining and investing in our platform throughout the pandemic; by investing in experienced hires; and focusing on technology and innovation, has been key to us achieving these outstanding results.

"We delivered increased levels of productivity, with the Group continuing to benefit from favourable trading conditions, including wage inflation and increased fee rates resulting from the high demand and short supply of candidates, as well as a shorter time to hire facilitated by video interviewing, and investments in new systems.

"We continued to invest in headcount to enable us to capitalise on future growth opportunities. We added 307 fee earners in Q2, broadly in line with recent quarters, with the most significant increases in the markets where we saw the strongest performances and highest potential for future growth. The implementation of our global operating system, Customer Connect, was completed in May, following successful roll-outs in the remaining countries of Brazil, Mexico and Panama.

"Looking forward, we are clearly aware of the heightened degree of macro-economic and political uncertainty that exists globally, particularly with regards to increasing inflation in the majority of the markets in which we operate. We are monitoring all KPIs in the business regularly, but to date we have seen no significant changes apart from the usual seasonal movements. Given our highly diversified and adaptable business model, with a cost base that can be adjusted rapidly, we will look to progress towards our strategic goals while remaining vigilant. We are pleased with the Group's performance in the first half of the year and currently expect 2022 full year operating profit to be in line with company compiled consensus of £205m."

Geographical Analysis (unless stated otherwise all growth rates are vs. 2021 and in constant currency)

Large, High Potential Markets

Our 5 Large, High Potential geographic markets of Germany, Greater China, Latin America, South East Asia and the US represented 39% of the Group collectively, and grew 23% in Q2. Excluding Greater China, which was impacted by COVID-19 lockdowns and restrictions, growth was 33%, with record quarters in the other four markets.

In Europe, Middle East and Africa, strong trading conditions continued into Q2. We delivered a record quarter, with gross profit of £137.1m, up 29.4% against Q2 2021. France delivered a record quarter, up 21%, with Michael Page up 26% and Page Personnel up 17%. Germany, the Group's third largest market, delivered another record quarter, up 32%, with strong growth across all brands. Our Technology focused Michael Page Interim business delivered a standout result, growing 40%. Benelux was up 37%, with both Belgium and the Netherlands delivering record quarters, up 33% and 41%, respectively. Southern Europe also had a record quarter, up 37%, with Italy up 27%, and Spain up 38%. The Middle East and Africa was up 19%. In line with the improved trading conditions, our fee earner headcount increased by 137 in the quarter, mainly in the higher growth markets of Germany, Italy and Spain.

In Asia Pacific, gross profit for Q2 was up 11.7% against 2021 to £53.6m, a record quarter. Greater China declined 11%, with Mainland China down 13%, driven by the recent COVID-19 lockdowns and restrictions. Hong Kong was also impacted and declined 8% for the quarter. However, our other Large, High Potential geographic market in the region, South East Asia, delivered a record quarter with growth of 33%. Both India and Japan also delivered record quarters, growing 47% and 15%, respectively. Australia grew 24% for the quarter. Our fee earner headcount in the region increased by 37, mostly in South East Asia and India.

In the Americas, gross profit for Q2 was up 34.1% against 2021, with both North America and Latin America achieving record quarters. In the US, where the improvements in trading conditions we saw in the second half of 2021 continued, we grew 30%, producing a record quarter. There was strong growth in all offices, though most significantly in Boston, Chicago and Houston. In Latin America, gross profit grew 40%. Mexico, our largest country in the region, was up 43%, delivering a record quarter. Brazil was up 28% and elsewhere in Latin America, the remaining countries grew 45%, collectively, with record results in Argentina, Colombia and Panama. We increased our fee earner headcount by 104 across the region in Q2, mainly in the US and Mexico.

In the UK, gross profit grew 22.6% in the quarter. Page Personnel, which operates at lower salary levels and had been slower to recover from the pandemic, was up 56%, delivering a record quarter. Michael Page grew 13%. Our fee earner headcount increased by 29 in Q2.

Perm/Temp mix

Gross profit from permanent recruitment increased 28.7% in reported rates and 25.7% in constant currencies to £220.1m (Q2 2021: £171.0m). Gross profit from temporary recruitment increased 24.6% in reported rates and 24.5% in constant currencies to £60.8m (Q2 2021: £48.8m). This resulted in a ratio of permanent to temporary recruitment of 78:22 (Q2 2021: 78:22).

Headcount

As trading conditions continued to be strong, we added 307 fee earners in Q2. The majority of these were non-experienced hires, as the availability of experienced hires has become increasingly limited. Our non-operations headcount rose by 73 in Q2, and, as such, our ratio of fee earners to non-operations staff was maintained at 78:22. Overall, the Group had 6,734 fee earners and a total headcount of 8,668.

Productivity

Productivity, measured as gross profit per fee earner, increased due to the continued favourable trading conditions, including wage inflation and increased fee rates resulting from the high demand and short supply of candidates, as well as a shorter time to hire facilitated by video interviewing, and investments in new systems. We completed the roll-out of Customer Connect, our new global operating system, during the quarter. This allows us to integrate sales and marketing activities and leverage our investments across our live platforms.

Financial Position

Save for the effects of Q2 trading detailed above and the payment of the 2021 final dividend of £32.7m, there have been no other significant changes in the financial position of the Group since the publication of the results for the quarter ended 31 March 2022. Net cash at 30 June 2022 was c. £135m (Q1 2022: c. £122m, Q2 2021: c. £164m).

Shares

At 30 June 2022 there were 328,618,774 Ordinary shares in issue, of which 12,405,613 were held by the Employee Benefit Trust (EBT). The rights to receive dividends and to exercise voting rights have been waived by the EBT over 10,759,117 shares and consequently these shares should be excluded when calculating earnings per share. The total number of voting rights in the Company is 328,618,774.

Cautionary Statement

This Second Quarter 2022 Trading Update has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The Trading Update should not be relied on by any other party or for any other purpose. This Trading Update contains certain forward-looking statements. These statements are made by the Directors in good faith based on the information available to them up to the time of their approval of this Trading Update and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information. This Trading Update has been prepared for the Group as a whole and therefore gives greater emphasis to those matters that are significant to PageGroup and its subsidiary undertakings when viewed as a whole.

The Group will issue its H1 results on 8 August 2022.

Enquiries:

The Company will host a conference call and presentation for analysts and investors at 9:00am today. The live presentation can be viewed by following the link:

https://www.investis-live.com/pagegroup/62b9ce7c478a650e0006c5d7/pagq

Please use the following dial-in numbers to join the conference:

Please quote participant access code 36 51 71 to gain access to the call.

A presentation and recording to accompany the call will be posted on the Company's website during the course of the morning of 13 July 2022 at:

https://www.page.com/presentations/year/2022