PageGroup Regulatory News (PAGE)

14 October 2014

THIRD QUARTER 2014 TRADING UPDATE

11.6% constant currency growth, cautious on macro-economic outlook

Highlights*

· 11.6% Group gross profit growth, positive contributions from all four regions

· Ongoing FX headwinds lowered reported figures by 7%

· Continued improvement in the UK +14%; Page Personnel up 25%

· Growth in EMEA, largest countries: Germany +15%; France +7%

· Good growth in Asia of 17%; but slowing from 25% in Q2

· North America +22%; launched 3rd Canadian office, Calgary

· Brazil down 10%, restricting Latin America growth to 2%

· Record quarter for our combined Large High Potential Markets(Germany, Greater China, LatAm, SE Asia, US)

· 210 fee earners added in Q3, primarily in Large High Potential Markets

*in constant currencies

Q3 GROSS PROFIT ANALYSIS

Commenting, Steve Ingham, Chief Executive Officer said:

"The 11.6% increase in the Group's gross profit in constant currency for the third quarter reflects steady year-on-year growth in all four regions. EMEA, UK and the Americas all saw improved growth rates compared to Q2 2014, but the growth rate in Asia slowed from 25% in Q2 to 17%. In reported rates, our gross profit was up only 5% to £132.9m. The impact of FX lowered our reported figure by nearly 7 percentage points, equivalent to £9m of gross profit and £1.6m of operating profit compared to last year.

"The EMEA region faced increased political and economic uncertainty, both in Europe and the Middle East. In France and Germany, Page Personnel ('PP') continued to outperform our predominantly permanent Michael Page businesses. UK growth continued to improve, with the strongest performances from our Finance & Accounting, Marketing, Procurement & Supply Chain, Property & Construction, and PP businesses.

"In Asia, growth in the third quarter slowed from 25% to 17%, with growth in our largest business, Greater China, slowing from 37% to 25%. Australasia was positive for the first time in over two years. North and Latin America both delivered record performances in constant currencies, despite Brazil declining 10% in the run up to the October presidential elections.

"The roll-out of our new Page Recruiting System was completed in the US and in Page Personnel UK during the quarter, both of which went well. We expect to complete the roll-out to all UK businesses by the end of the year.

 "Having added 177 in the first half, we accelerated our investment in fee earners during the quarter, in higher growth businesses and our Large High Potential Markets, in anticipation of continued growth in 2015. This, combined with an increased focus on staff retention, led by our new Group HR function, resulted in a net increase of 210 fee earners in Q3.

"Although the macro environment is challenging in many regions, we do believe that our strategic goals for 2015 are best achieved through this targeted headcount investment. However, this does have a short-term impact on productivity, particularly where we seek to grow our temporary businesses in Germany, France and the UK. At the same time, we continue to seek operational efficiencies across the Group, with our operational support ratio moving from 74:26 at the start of the year to 76:24.

"So far this year we have made good progress in a number of markets, notably in the UK, however as we look ahead to the final quarter we are becoming more cautious on the short-term outlook in a number of international markets. In EMEA, confidence levels are increasingly fragile and our Asian business, although still performing well, saw its growth rate slow. Foreign exchange movements also continue to affect our reported results.

"These factors, allied to our strong headcount investment, lead us to now expect operating profit modestly lower than consensus market expectations*, but still showing year-on-year growth of over 20% in constant currencies."

* Operating profit: £82.0m (2013: £68.2m)

Enquiries:

The Company will host a conference call and presentation for analysts and investors at 8.30am today. The live presentation can be viewed by following the link:

http://www.axisto-live.com/investis/clients/pagegroup/presentations/541ae3cc1f7822b57705bed0/q3

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

Please quote "PageGroup" 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 14 October 2014 at:

http://www.pagegroup.co.uk/investors/reports-and-presentations/presentations-and-webcasts/2014.aspx

The Group will issue its Fourth Quarter Trading Update on 13 January 2015 and its Preliminary Results on 13 March 2015.

Group Trading Update

Michael Page International plc ("PageGroup") delivered third quarter gross profit of £132.9m, up 5% in reported rates, but up nearly 12% in constant currencies, with growth in all four regions. The FX impact on the FY14 results remains material, at £34m for gross profit and £6m for operating profit.

Ongoing Investment

Having added 177 in the first half, we accelerated our investment in fee earners during the quarter, in higher growth businesses and our Large High Potential Markets, in anticipation of continued growth in 2015. This, combined with an increased focus on staff retention, led by our new Group HR function, resulted in a net increase of 210 fee earners and a reduction of 45 operational support staff. Total headcount increased by 165 in the quarter to 5,502.

The roll-out of the new Page Recruiting System was completed in the US and in Page Personnel UK during the quarter, both of which went well. We expect to complete the roll-out to all UK businesses by the end of the year, which together with the US would imply a third of the Group by gross profit will be on the new system.

Perm/Temp mix

The ratio of permanent to temporary recruitment of 76:24 was similar to the first half of 2014 (77:23). Group gross profit from permanent recruitment grew 6% to £101.4m (£96.1m: Q3 2013); temporary recruitment grew 2% to £31.5m (£30.8m: Q3 2013). In constant currencies, permanent recruitment was up 13%, ahead of temporary recruitment which was up 8%.

Discipline analysis

Geographical analysis

Country highlights*:

· Germany up 15%; France up 7%

· Southern Europe up 27%, but Russia & Middle East impacted by regional conflict

· UK up 14%, including Page Personnel up 25%

· China growth slowed from 37% in Q2 to 25%

· Australia & New Zealand up 2%

· North America up 22% producing a record quarter

· Brazil down 10%, restricting Latin America growth to 2%

* in constant currencies vs Q3 2013

Compared to the prior year, EMEA was up 11% in constant currencies, however the region experienced a reduction in market sentiment during the third quarter. This amplified the seasonal effect with the region down 7% sequentially. Page Personnel France was up 15%, more than offsetting a negative performance from our Michael Page business. In Germany, gross profit rose 15%, with Page Personnel up over 25%. Holland and Southern Europe grew strongly, but Russia and the Middle East suffered from concerns over regional conflicts. Fee earner headcount grew by around 50 people across the region, principally in our temporary business in Germany.

The UK gross profit growth rate continued to increase, to 14% in Q3. Page Personnel performed strongly, up 25%, with notable performances in the regions, as well as the Public Sector. Within Michael Page, our Marketing, Finance & Accounting, Procurement & Supply Chain and Property & Construction, businesses all performed well. Candidate shortages were experienced in niche markets, such as digital, but overall wage inflation was subdued. Fee earner headcount grew strongly, up 63 in the quarter, as the business continued to invest selectively to take advantage of the steadily improving market.

Asia Pacific grew 11% in constant currencies, but only 3% in reported, reflecting the ongoing FX headwinds. Asia grew by 17%, down from 25% in Q2. With the macro-economic outlook more subdued, our Greater China growth slowed from 37% to 25%. Our businesses in Southern & Eastern China and in Hong Kong performed well. In Australasia, easier comparators helped the business achieve 2% growth, with Australia positive for the first time in over two years. Headcount in the region remained broadly constant.

The Americas grew by 10% in constant currencies, but was slightly negative in reported rates. North America enjoyed strong growth, up 22%, helped by an excellent result in Canada where we opened a new office in Calgary. Latin America was up 2%, despite Brazil declining 10% due to uncertainty in the run up to the Presidential elections. Latin America, excluding Brazil, grew 22%, with both Mexico and Colombia performing well. Headcount grew 54, as Mexico and the US, in particular, added fee earners.

Financial Position

Save for the effects of trading in the third quarter described above and the payment of the 2014 interim dividend of £10.5m on 3 October 2014, there have been no other significant changes in the financial position of the Group since the publication of the results for the half year ended 30 June 2014.

Net cash at 30 September 2014, before the payment of the interim dividend, was in the region of £70m (30 June 2014: £42.9m).

The Group will issue its Fourth Quarter Trading Update on 13 January 2015 and its Full Year Results on 13 March 2015.

Shares

At 30 September 2014 there were 321,726,190 Ordinary shares in issue, of which 17,477,474 were held by the EBT. The rights to receive dividends and to exercise voting rights have been waived by the EBT over 15,368,920 shares and consequently these shares should be excluded when calculating earnings per share. The total number of voting rights in the Company is 321,726,190.

Cautionary statement

This Third Quarter 2014 Interim Management Statement ("IMS") 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 IMS should not be relied on by any other party or for any other purpose. This IMS contains certain forward-looking statements. These statements are made by the Directors in good faith based on the information available to them up to the time of their approval of this report and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

This IMS 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.