14 January 2019 FOURTH QUARTER AND FULL YEAR 2018 TRADING UPDATE A record Quarter and Year for the Group Q4 Highlights* Group gross profit growth of +15.4% (+15.8% in reported rates), against a tough comparator All four regions delivered growth, 20 countries grew over 20% Large, High Potential markets (33% of Group) +25% EMEA +13.9%; France +10%; Germany +28% Asia Pacific +22.0%; Greater China +12%; SE Asia +30%; Australia +25% UK +2.1%; Page Personnel +12%; Michael Page -1% Americas +29.2%; US +32%; Latin America +28% Professional services disciplines (25% of Group) fastest growing at +24.5% Record headcount of 7,772; new record fee earner to operational support staff ratio of 79:21 (Q3 2018: 78:22) Strong balance sheet, net cash of c. 96m (Q3 2018: c. 122m, Q4 2017: c. 96m) Q4 GROSS PROFIT ANALYSIS Reported ( m) Constant Year-on-year % of Group Q4 2018 Q4 2017 % % EMEA 49% 104.4 90.9 +14.9% +13.9% Asia Pacific 20% 41.2 33.5 +23.1% +22.0% UK 16% 33.5 32.8 +2.1% +2.1% Americas 15% 32.0 25.2 +27.0% +29.2% Total 100% 211.1 182.4 +15.8% +15.4% Permanent 76% 159.9 135.7 17.8% 17.6% Temporary 24% 51.2 46.7 9.8% 9.0% Full Year Results* Group gross profit +15.9% (+14.5% in reported rates) to 815.0m, a record year FX decreased reported gross profit by c. 10m and operating profit by c. 2m 23 countries delivered record gross profit Increase of 619 fee earners (+11.3%) Operating profit expected to be in line with consensus** * in constant currencies except where stated ** Company compiled consensus of 141.8m
FULL YEAR GROSS PROFIT ANALYSIS Reported ( m) Constant Year-on-year % of Group FY 2018 FY 2017 % % EMEA 48% 394.2 332.3 +18.6% +17.9% Asia Pacific 20% 161.3 137.2 +17.5% +20.7% UK 17% 138.4 140.8-1.7% -1.7% Americas 15% 121.1 101.3 +19.5% +27.3% Total 100% 815.0 711.6 +14.5% +15.9% Permanent 76% 622.5 536.0 16.1% 17.9% Temporary 24% 192.5 175.6 9.6% 9.9% Steve Ingham, Chief Executive Officer, said: The Group delivered Q4 gross profit growth of 15.4%, against a tough comparator, where growth improved from c. 9% in the first three quarters of 2017 to c. 14% in Q4. 2018 was a record year for the Group, and Q4 was a record quarter, with all of our four regions delivering growth and 20 countries growing at over 20%. Our five Large, High Potential markets of Germany, Greater China, Latin America, South East Asia and the US continued to perform strongly, growing 25% collectively, with all five delivering a record year. Germany grew 28%, with our Interim business up 44%. In Asia Pacific, Greater China s growth slowed to 12% in Q4 from 31% in Q3, due to confidence in Mainland China being affected by trade tariff uncertainty. South East Asia was up 30%, with Singapore the standout performer, up 37%. The US grew 32%, with strong growth in all offices. Latin America was up 28%, with Brazil up 25%, and the other five countries in Latin America all up over 20%. In our six Large, Proven markets, the UK delivered a second consecutive quarter of marginal growth, up 2.1%, despite continued Brexit related uncertainty. France grew 10% despite a tough comparator and the impact of the disruption from the gilet jaunes protests. Italy and the Netherlands continued to perform well, up 23% and 15%, respectively. Spain, despite the continued challenges in Catalonia, grew 10%, slightly above its Q3 growth rate. Australia, following our investments in fee earner headcount and a new office in Canberra, performed strongly, with growth of 25%, up from 17% growth in Q3. Outside these two categories, we saw good growth in the majority of our other markets, particularly in India and Japan, which grew 79% and 28%, respectively. Having added 561 fee earners in the first three quarters, additions in Q4 slowed to 58. Whilst additions in Q4 are normally lower, we are also mindful of the heightened geopolitical and macroeconomic uncertainty, which has the potential to impact client and candidate confidence.
We will continue to focus on driving profitable growth, while continuing our strategic investments towards our Vision of 10,000 headcount, 1bn of gross profit and 200m 250m of operating profit. Our flexible and diversified business model ensures that we are able to respond quickly to changes in market conditions. We are pleased with the Group s performance and expect 2018 operating profit to be in line with consensus**. **Company compiled consensus operating profit of 141.8m Group Trading Update PageGroup delivered fourth quarter gross profit of 211.1m, a record quarter, up 15.4% in constant currencies and 15.8% in reported rates. For the full year, foreign exchange decreased our reported gross profit by c. 10m and operating profit by c. 2m. In constant currencies, Michael Page grew 14%, with Page Personnel growing faster, up 18% in the quarter. Headcount Having added 561 fee earners in the first three quarters, additions in Q4 slowed to 58. These additions were mainly into our Large, High Potential markets, as well as those markets where we saw the greatest opportunities for growth, such as India. Our operational support headcount decreased by 4 in the quarter, and therefore our fee earner to operational support staff ratio reached a new record for the Group at 79:21. This represented 6,116 fee earners and a total headcount of 7,772. Perm/Temp mix Gross profit from permanent recruitment grew 17.8% in reported rates and 17.6% in constant currencies, to 159.9m (Q4 2017: 135.7m). Gross profit from temporary recruitment grew 9.8% in reported rates and 9.0% in constant currencies, to 51.2m (Q4 2017: 46.7m). This resulted in a ratio of permanent to temporary recruitment of 76:24. Q4 Gross Profit Discipline analysis Year-on-year Finance Accounting and Financial Services Professional Services Legal, Technology, HR, Secretarial, Healthcare Technical Engineering, Property & Construction, Procurement & Supply Chain Reported ( m) Constant % of Group Q4 2018 Q4 2017 % % 35% 74.6 66.7 +11.8% +11.7% 25% 51.8 41.4 +25.0% +24.5% 24% 50.2 42.4 +18.5% +17.5% Marketing, Sales and Retail 16% 34.5 31.9 +8.4% +8.4%
Total 100% 211.1 182.4 +15.8% +15.4% Geographical analysis (unless otherwise stated all growth rates are in constant currency) EMEA Gross Profit ( m) Growth Rates (49% of Group) Reported Constant Q4 2018 vs. Q4 2017 104.4 90.9 +14.9% +13.9% 2018 vs 2017 394.2 332.3 +18.6% +17.9% Headcount at 31 December 2018: 3,299 (30 September 2018: 3,290) France (17% of Group) +10% Germany (8% of Group) +28% EMEA Q4 gross profit grew 13.9%, against a tough comparator of 19.3% in Q4 2017, to 104.4m. Both Michael Page and Page Personnel continued to deliver strong performances, with growth of 13% and 15%, respectively. France, representing 17% of the Group, grew 10%, despite a particularly tough comparator in Q4 2017 of 28%. This was a record quarter, despite the impact caused by the disruption from the gilet jaunes protests. Germany, where we added over 100 fee earners during the year, grew 28%, with our Interim business growing 44%. Italy grew 23% and Spain was up 10%, slightly above its Q3 growth rate, with a marginal decline in Catalonia offset by strong growth elsewhere. Benelux grew 13%, with the Netherlands up 15%. The Middle East and Africa grew 19%, with continued strong growth in the UAE, up 46%. Fee earner headcount across the region increased by 17 in the quarter, mainly into Germany. Asia Pacific Gross Profit ( m) Growth Rates (20% of Group) Reported Constant Q4 2018 vs. Q4 2017 41.2 33.5 +23.1% +22.0% 2018 vs 2017 161.3 137.2 +17.5% +20.7% Headcount at 31 December 2018: 1,709 (30 September 2018: 1,719) Asia (15% of Group) +21% Greater China (8% of Group and 54% of Asia) +12% Australasia (5% of Group) +25% In Asia Pacific, our second largest region, gross profit grew 22.0% to 41.2m. Greater China, one of our Large, High Potential markets grew 12%, below its Q3 growth rate of 31%, due to confidence in Mainland China being affected by trade tariff uncertainty. While Hong Kong remained strong, Mainland China experienced slowing activity in the quarter. South East Asia, another of our Large, High Potential markets grew 30%, with a strong performance from Singapore, up 37%, in line with its Q3 growth rate. Japan, where we continue to focus on both the Gaishikei and Nikkei markets, grew 28%, a third consecutive record quarter. India, where we now have over 120 fee earners, grew
79% up from 68% in Q3. Australia, following our investment in fee earners and a new office in Canberra, grew 25%, with strong growth in all offices. Overall fee earner headcount in the region grew 6 in the quarter. UK Gross Profit ( m) Growth Rate (16% of Group) Q4 2018 vs. Q4 2017 33.5 32.8 +2.1% 2018 vs 2017 138.4 140.8-1.7% Headcount at 31 December 2018: 1,436 (30 September 2018: 1,418) The UK grew 2.1%, its second consecutive quarter of marginal growth, despite continued Brexit uncertainty impacting candidate and client confidence. Page Personnel, which represents a quarter of the UK, grew 12%. Michael Page, which is focused on more senior opportunities and was impacted by the uncertainty to a greater extent, declined -1%. Fee earner headcount increased by 15 in the quarter, wholly into Page Personnel. Americas Gross Profit ( m) Growth Rates (15% of Group) Reported Constant Q4 2018 vs. Q4 2017 32.0 25.2 +27.0% +29.2% 2018 vs 2017 121.1 101.3 +19.5% +27.3% Headcount at 31 December 2018: 1,328 (30 September 2018: 1,291) North America (9% of Group) +30% Latin America (6% of Group) +28% The Americas continues to be our fastest growing region and grew 29.2% to 32.0m. North America grew 30%, with the US up 32% and Canada up 20%. In the US, growth was strong in all offices, with notable performances from Boston, Houston and Los Angeles. Latin America grew 28%, a record quarter for the region. The Brazilian market continued to perform well, growing 25%, its fifth consecutive quarter of double digit growth. Mexico, the largest country in the region, grew 30%. Elsewhere, the other four countries in the region all grew in excess of 20%, with a record performance from Colombia. We added 20 fee earners across the Americas in the quarter. Financial Position Save for the effects of trading in the fourth quarter described above and the payments of the 2018 interim and special dividends totalling 53.9m on 10 October 2018, there have been no other significant changes in the financial position of the Group since the publication of the results for the quarter ended 30 September 2018. Net cash at 31 December 2018, was in the region of 96m (31 December 2017: c. 96m, Q3 2018: c. 122m).
Shares At 31 December 2018 there were 328,339,724 Ordinary shares in issue, of which 11,024,316 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 328,339,724. Cautionary Statement This Fourth Quarter and Full Year 2018 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: PageGroup +44 (0)20 3077 8425 Steve Ingham, Chief Executive Officer Kelvin Stagg, Chief Financial Officer FTI Consulting +44 (0)20 3727 1340 Richard Mountain / Susanne Yule 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/5c2c9ce6cad1ac0c00e7dacc/q4fy Please use the following dial-in numbers to join the conference: United Kingdom (Local) 020 3936 2999 All other locations +44 20 3936 2999 Please quote participant access code 88 31 93 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 January 2019 at: https://www.page.com/investors/investor-library.aspx The Group will issue its Full Year Results on 6 March 2019 and its First Quarter Trading Update on 10 April 2019.