PageGroup Regulatory News (PAGE)

10 October 2018

PageGroup plc

THIRD QUARTER 2018 TRADING UPDATE

Q3 Gross profit growth of 19.7%

Q3 Highlights*

· Group gross profit growth of +19.7% (+17.2% in reported rates)

· Large, High Potential markets (36% of Group) +30%

· EMEA +20.9%; France +21%; Germany +34%

· Asia Pacific +27.7%; Greater China +31%; SE Asia +24%; Australia +17%

· UK +0.8%; Michael Page -4%; Page Personnel +17%

· Americas +30.1%; US +26%; Latin America +34%

· Technical disciplines (23% of Group) fastest growing at +23.9%

· Record headcount of 7,718; +242 fee earners in Q3; +561 (+10.2%) year to date

· Strong balance sheet, net cash of c. £122m (Q2 2018: c. £87m, Q3 2017: c. £109m)

· Interim and special dividends paid today, 10 October, of £53.9m or 16.83 pence per share

· 2018 operating profit expected to be marginally ahead of consensus**

* in constant currencies except where stated

** Company compiled consensus of £138.7m

Q3 GROSS PROFIT ANALYSIS

Steve Ingham, Chief Executive Officer, said:

"The Group delivered gross profit growth of 19.7% in constant currencies, its highest quarterly growth rate since Q3 2011, with 22 countries growing over 20% and all of our four regions delivering growth.

"Our Large, High Potential markets grew 30% collectively, with all five delivering record quarters. Germany continued its recent strong performances, with growth of 34%. In Asia Pacific, Greater China improved from its Q2 growth rate of 18%, delivering growth of 31%. We also saw continued improvement in South East Asia, with growth of 24% collectively. The US grew 26%, Latin America was up 34%, including Brazil up 20%, and the other five countries in Latin America up 41% collectively.

"In our six Large, Proven markets, the UK returned to growth, up 0.8%, despite continued Brexit related uncertainty, and notably, Page Personnel, which grew 17%. France grew 21% with strong results from both Michael Page and Page Personnel. Italy and the Netherlands continued to perform well, up 18% and 14%, respectively. Spain, despite the continued challenges in Catalonia, grew 8%, in line with its Q2 growth rate. In Australia, following our investments in fee earner headcount and a new office in Canberra, we continued to see improvement, with growth of 17%.

"Outside these two categories, we saw strong growth in the majority of our other markets. India and Japan had record performances as a result of our continued investment, growing 68% and 38% respectively.

"Demonstrating our continued confidence in many of our markets, the Group added 242 fee earners in the quarter and now has a record total headcount of 7,718. This investment has been mainly into our Large, High Potential markets.

"We will continue to focus on driving profitable growth as we progress towards our Vision of 10,000 headcount, £1bn of gross profit and £200m - £250m of operating profit. We are pleased with the Group's continued strong performance and now expect 2018 operating profit to be marginally ahead of the consensus of current market forecasts*."

*Company compiled consensus operating profit of £138.7m

Group Trading Update

PageGroup delivered third quarter gross profit of £207.7m, up 19.7% in constant currencies and 17.2% in reported rates. Adverse foreign exchange movements decreased our reported gross profit by 2.5 percentage points or c. £4m. Cumulatively to the end of Q3, foreign exchange decreased our reported gross profit by c. £10m. In constant currencies, Michael Page grew 19% with Page Personnel growing slightly faster, up 21%.

Headcount

Having added 786 fee earners in 2017 and 319 in H1 2018, net fee earner additions increased in Q3 by a further 242 mainly in our Large, High Potential markets as well as those where we saw the greatest growth. Our operational support headcount increased by just 19 in the quarter and our fee earner to operational support staff ratio was maintained at 78:22, representing 6,058 fee earners and a total headcount of 7,718.

Perm/Temp mix

Gross profit from permanent recruitment grew 18.7% in reported rates and 21.4% in constant currencies, to £157.9m (Q3 2017: £133.0m). Gross profit from temporary recruitment grew 12.6% in reported rates and 14.8% in constant currencies, to £49.8m (Q3 2017: £44.2m). This resulted in a ratio of permanent to temporary recruitment of 76:24.

Q3 Gross Profit - Discipline analysis

Geographical analysis (unless otherwise stated all growth rates are in constant currency)

EMEA Q3 gross profit grew 20.9%, up from 18.6% in Q2 2018 to £94.6m. Both Michael Page and Page Personnel continued to deliver strong performances, with growth of 21% and 20%, respectively. Following an investment in fee earner headcount of 98 (+16%) over the last year, France, representing 15% of the Group, grew 21%. Germany grew 34%, a seventh consecutive record quarter, with our interim business growing by over 50%. Benelux grew 20% and Southern Europe grew 13%, with Italy up 18% and Spain up 8%, despite continued challenges in Catalonia. The Middle East and Africa grew 19% with particularly strong growth in the UAE. Given these continued favourable trading conditions, we invested further in our fee earner headcount, up 108 in the quarter.

In Asia Pacific, our second largest region, gross profit increased 27.7%, up from 18.4% in Q2, with five countries achieving record quarters. Greater China, one of our Large, High Potential markets grew 31%, a second consecutive record quarter, up significantly from 18% in Q2, with both Hong Kong and Mainland China performing at similar levels. South East Asia, another of our Large, High Potential markets grew 24%, with continued strong growth in Singapore, up 35%. In Japan, where we have increased fee earner headcount by 27% over the last year, our focus on both the Gaishikei and Nikkei markets continued to bring success, with growth of 38%, a record quarter. India, where we have over 100 fee earners, delivered its second consecutive record quarter, up 68%, more than double its Q2 growth rate. In Australia, growth continued to accelerate, up from 10% in Q2 to 17% in Q3, following our strategic investment in fee earners in 2017 and the opening of our Canberra office last year. Overall fee earner headcount in the region grew 33 for the quarter.

The UK saw marginal growth of 0.8% in the quarter, despite Brexit and political uncertainty continuing to impact confidence. Page Personnel, which represents 26% of the UK, achieved a record quarter, growing 17%. Michael Page, which is more senior candidate focused and therefore more impacted by uncertainty, declined -4%. Fee earner headcount increased by 24 in the quarter into the businesses where we saw the greatest opportunities for growth.

The Americas was our fastest growing region and grew 30.1% to £31.9m. North America grew 27%, with the US +26% and Canada +35%, both achieving record quarters. In the US, our strategy of diversification continued, with strong performances from our regional offices, in particular Boston, Houston and Los Angeles, as well as disciplines outside of Financial Services. Latin America, where we now have a headcount of over 700, grew 34%. The Brazilian market continued to recover, growing 20%, broadly in line with our Q2 growth rate. In Mexico, where we have invested significantly in our fee earner headcount, up 29% over the last year, we grew by 50%, albeit with a particularly soft comparator due to the impact of the earthquake last year. Elsewhere, Argentina, Chile, Colombia and Peru grew 34%, collectively. In line with our strategy of investing in our Large, High Potential markets, we have added 77 fee earners across the region in the quarter.

Financial Position

Save for the effects of trading in the third quarter described above and the forthcoming payments of the 2018 interim and special dividends amounting to £53.9m which are being paid today, 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 2018.

Net cash at 30 September 2018, before the payment of the dividends, was in the region of £122m (30 June 2018: c. £87m).

Shares

At 30 September 2018 there were 327,919,627 Ordinary shares in issue, of which 11,074,745 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 7,775,732 shares and consequently these shares should be excluded when calculating earnings per share. The total number of voting rights in the Company is 327,919,627.

Cautionary Statement

This Third Quarter 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.

Enquiries:

The Company will host a conference call and presentation for analysts and investors at 8:30 am today. The live presentation can be viewed by following the link:

https://www.investis-live.com/pagegroup/5b991ae95bdb551000dfedd7/pggp

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

Please quote participant access code 36 66 75 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 10 October 2018 at:

https://www.page.com/investors/investor-library/2018.aspx

The Group will issue its Fourth Quarter Trading Update on 14 January 2019 and its Full Year Results on 6 March 2019.