10 January 2018 FOURTH QUARTER AND FULL YEAR 2017 TRADING UPDATE Q4 Highlights* Group gross profit +13.8% (+11.7% in reported rates) up from +8.8% in Q3, a record quarter EMEA +19.3%: France +28%; Germany +14% Asia Pacific +14.9%: Asia +21%; Greater China +15%; Australia +2% UK (18% of the Group) -2.8%; macro environment impacting some clients and senior candidates Americas +18.8%: US +21%; LatAm +19%; Brazil +14% Technical disciplines (23% of the Group) fastest growing at +25.7% Record headcount of 7,029; investment in 220 fee earners in Q4 Strong balance sheet; net cash of c. 91m (Q4 2016: 93m) Full Year Results* Group gross profit +9.9% (+14.6% in reported rates) to 711.6m, a record year FX increased reported gross profit by 29.4m and operating profit by c. 6m 22 countries had record gross profit years Increase of 786 fee earners (+16.7%); fee earner to operational support staff joiners ratio of 85:15, resulting in overall ratio at a record 78:22 Operating profit expected to be ahead of consensus, but within the range of current market forecasts (Company compiled consensus of 115.0m, with a range of 112.0m - 119.0m) * in constant currencies except where stated Q4 GROSS PROFIT ANALYSIS Reported ( m) Constant Year-on-year % of Group Q4 2017 Q4 2016 % % EMEA 50% 90.9 75.9 +19.7% +19.3% Asia Pacific 18% 33.5 30.9 +8.4% +14.9% UK 18% 32.9 33.8-2.8% -2.8% Americas 14% 25.1 22.7 +11.0% +18.8% Total 100% 182.4 163.3 +11.7% +13.8% Permanent 75% 136.1 122.5 +11.1% +13.6% Temporary 25% 46.3 40.8 +13.6% +14.4%
FULL YEAR GROSS PROFIT ANALYSIS Reported ( m) Constant Year-on-year % of Group FY 2017 FY 2016 % % EMEA 47% 332.3 271.9 +22.2% +15.0% UK 20% 140.8 146.3-3.8% -3.8% Asia Pacific 19% 137.2 119.7 +14.6% +10.2% Americas 14% 101.3 83.1 +21.9% +16.4% Total 100% 711.6 621.0 +14.6% +9.9% Permanent 75% 536.4 470.0 +14.1% +9.5% Temporary 25% 175.2 151.0 +16.0% +10.9% Steve Ingham, Chief Executive Officer, said: The Group delivered record gross profit in both the fourth quarter and the full year. Our Q4 gross profit of 182.4m grew 13.8%, up from 8.8% in Q3, and our full year gross profit of 711.6m was up 9.9% on the prior year in constant currencies. In the quarter, Continental Europe, Asia and the Americas delivered strong performances and we saw improvements and a return to growth in Australia, Brazil and Singapore. However, the UK continued to experience challenging market conditions, with the macro environment impacting some clients and senior candidates. Foreign exchange had a negative impact on our fourth quarter results, reducing our reported gross profit by 3.4m and operating profit by c. 1m, mainly due to currency movements in Asia Pacific and the Americas. However, for the full year, foreign exchange benefited our results, increasing our reported gross profit by 29.4m and operating profit by c. 6m. Our strategy of continued investment in our five Large, High Potential Markets of Greater China, Germany, Latin America, South East Asia and the US resulted in combined fourth quarter growth, ahead of the Group average, at +18%. There were some exceptional individual performances in this strategic category, with the US +21% and Greater China +15%, driven by Mainland China +23%. In Germany, where we continue to invest in the temporary and contracting markets, growth improved from the third quarter, from +9% to +14%. Latin America delivered a record quarter, up 19%, with all countries delivering double digit growth, including a return to growth in Brazil, up +14%. South East Asia grew +27% with Singapore up +33%, and our newest country, Thailand, profitable and performing well. Elsewhere, France, our second largest market after the UK and now 17% of the Group, delivered another record performance, +28% in the quarter. Elsewhere in Continental Europe, we saw a
number of strong performances, with Belgium, Poland, Portugal and Switzerland all growing in excess of 25%. In Asia, our continued investment in Japan delivered growth of 41%. Australia, 4% of the Group, was up 2%, an improvement on its performance in Q3 (-2%). The UK, however, was down -2.8%, with client and candidate confidence levels continuing to be impacted by the ongoing uncertainty around the macro environment. Our focus on investing in our Large, High Potential Markets, as well as in businesses experiencing strong growth resulted in 220 additional fee earners in the quarter and 786, +16.7%, in the year. Total fee earner headcount is now 5,497, with a total headcount of 7,029, giving a ratio of fee earners to operational support of 78:22; all records for the Group. Cash generation in the quarter was strong, with net cash of c. 91m at the end of the quarter, after payment of the interim and special dividends of 52.3m on 11 October 2017. Looking forward, we remain cautious in several markets as we enter 2018: primarily in the UK, where we will continue to focus on protecting margins whilst investing in structural opportunities; in Australia, where we have invested in headcount and a new office in Canberra; and in Brazil, which remains challenging, despite a stronger performance in the fourth quarter. However, we will continue to invest in our Large High Potential Markets, as well as in markets with favourable trading conditions, both existing and new markets, such as India and the Nikkei market in Japan. We will, as always, continue to focus on driving profitable growth while being able to respond quickly to changes in market conditions. Full year operating profit is expected to be ahead of consensus, but within the range of current market forecasts*. * (Company compiled consensus of 115.0m, with a range of 112.0m - 119.0m)
Group Trading Update PageGroup delivered fourth quarter gross profit of 182.4m, up 13.8% in constant currencies and 11.7% in reported rates. For the full year, Group gross profit was a record 711.6m, up 9.9% in constant currencies and 14.6% in reported rates. Foreign Exchange Foreign exchange impacted the Group negatively in the quarter, reducing our reported gross profit by 2.1 percentage points or 3.4m and operating profit by c. 1m. For the full year, foreign exchange increased our reported gross profit by c. 29.4m and operating profit by c. 6m. Ongoing Investment Having added 276 fee earners in H1 2017 and 290 in Q3, we added a further 220 in Q4, mainly in our Large, High Potential Markets, as well as those where we saw the greatest growth, such as France and Japan. Our operational support headcount increased by 59 in the quarter to leave our fee earner to operational support staff ratio at the record of 78:22. We continue to invest in our digital strategy and have seen this rewarded in the quarter, as we have been recognised by LinkedIn for the second time, winning the global award for the Most Socially Engaged Recruitment Company. Perm/Temp mix Our mix of permanent to temporary recruitment reflects the balance of our business mix, both in terms of brands, where Michael Page, our largest brand, operating at higher salary levels, has a naturally higher level of permanent recruitment, as well as our geographic mix. We are market leaders in regions such as Latin America, Greater China and South East Asia, where for cultural reasons, white collar temporary recruitment has only recently emerged. Gross profit from permanent recruitment grew 11.1% in reported rates and 13.6% in constant currencies, to 136.1m (Q4 2016: 122.5m) and gross profit from temporary recruitment grew 13.6% in reported rates and 14.4% in constant currencies, to 46.3m (Q4 2016: 40.8m). This resulted in a ratio of permanent to temporary recruitment of 75:25.
Q4 Gross Profit Discipline analysis Year-on-year Accounting and Financial Services Engineering, Property & Construction, Procurement & Supply Chain Legal, Technology, HR, Secretarial, Healthcare Marketing, Sales and Retail Total Reported ( m) Constant % of Group Q4 2017 Q4 2016 % % 37% 67.6 61.9 +9.2% +11.1% 23% 41.9 33.8 +23.9% +25.7% 23% 41.2 36.7 +12.4% +15.1% 17% 31.7 30.9 +2.6% +4.8% 100% 182.4 163.3 +11.7% +13.8% Geographical analysis (unless otherwise stated all growth rates are in constant currencies) EMEA Gross Profit ( m) Growth Rates (50% of Group) Reported Constant Q4 2017 vs. Q4 2016 90.9 75.9 +19.7% +19.3% 2017 vs. 2016 332.3 271.9 +22.2% +15.0% Headcount at 31 December 2017: 2,996 (30 September 2017: 2,854) France (17% of Group) +28% on Q4 2016 Germany (7% of Group) +14% on Q4 2016 In EMEA, gross profit grew 19.3% (Q3 2017: +12.6%) to 90.9m, a record quarter. Both Michael Page and Page Personnel delivered strong performances, with growth of 20% and 19%, respectively. Following an investment in fee earner headcount of 124 (+23%) in the year, our largest country in the region, France, representing 17% of the Group, grew 28%, a record quarter, with strong performances across all brands. Germany delivered growth of 14%, a record quarter, and an improvement on Q3 (+9%). Spain delivered double-digit growth, despite the political uncertainly in Catalonia. Benelux continued to perform well, with Belgium the stand out result, and there were strong performances in Poland, Portugal and Switzerland, all growing in excess of 25%. Overall, Continental Europe grew 20%. Asia Pacific Gross Profit ( m) Growth Rates (18% of Group) Reported Constant Q4 2017 vs. Q4 2016 33.5 30.9 +8.4% +14.9% 2017 vs. 2016 137.2 119.7 +14.6% +10.2%
Headcount at 31 December 2017: 1,532 (30 September 2017: 1,438) Asia (14% of Group) +21% on Q4 2016 Greater China (8% of Group and 58% of Asia) +15% on Q4 2016 Australasia (4% of Group) +1% on Q4 2016 In Asia Pacific, gross profit increased 14.9%, up from 13.9% in Q3. In Asia, which is three quarters of the region, we grew 21%, with Greater China up 15%. In Mainland China, where we now have 7 offices and c. 350 fee earners, we grew by 23%. In South East Asia, we grew 27%, with particularly strong performances from Indonesia and Singapore, which both grew over 30%. Our investment in Japan, with fee earner headcount up 51% in the last year, delivered a record quarter with growth of 41%, up from 31% in Q3. In Australia, following recent fee earner investment, up 25% in the year, and a new office in Canberra, there was a return to growth, up 2% in Q4. UK Gross Profit ( m) Growth Rate (18% of Group) Q4 2017 vs. Q4 2016 32.9 33.8-2.8% 2017 vs. 2016 140.8 146.3-3.8% Headcount at 31 December 2017: 1,407 (30 September 2017: 1,407) In the UK, the decline in gross profit slowed to -2.8% in the quarter, from -7.6% in Q3. The macro environment continued to impact confidence, particularly among some of our multinational clients and more senior permanent candidates. Both temporary and permanent recruitment were affected equally. Page Personnel, which represented 23% of the UK, declined -2% compared to -3% in Michael Page. Within the disciplines, Financial Services, 5% of the UK, grew 4%. The Private Sector (87% of the UK) was down 2% and the Public Sector (13% of the UK) declined by 10%. Americas Gross Profit ( m) Growth Rates (14% of Group) Reported Constant Q4 2017 vs. Q4 2016 25.1 22.7 +11.0% +18.8% 2017 vs. 2016 101.3 83.1 +21.9% +16.4% Headcount at 31 December 2017: 1,094 (30 September 2017: 1,051) North America (8% of Group) +19% on Q4 2016 Latin America (6% of Group) +19% on Q4 2016 In the Americas, we grew 18.8% in the quarter, up marginally from 18.4% growth in Q3. North America grew 19%, with the US up 21%, where our strategy of diversification continued, with strong performances from our regional offices (+32%), particularly from our offices in Chicago, Houston and Los Angeles. Latin America grew 19%, with Brazil, which represented a third of Latin America,
returning to growth, up 14%. All countries in Latin America delivered double digit growth, with record performances from Argentina, Mexico and Peru. Financial Position Save for the effects of trading in the fourth quarter described and the payments of the 2017 interim and special dividends amounting to 52.3m on 11 October 2017, there have been no other significant changes in the financial position of the Group since the publication of the results for the Third Quarter Trading Update ended 30 September 2017. Net cash at 31 December 2017 was in the region of 91m (31 December 2016: 93m). Shares At 31 December 2017 there were 326,808,701 Ordinary shares in issue, of which 14,311,816 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 11,181,237 shares and consequently these shares should be excluded when calculating earnings per share. The total number of voting rights in the Company is 326,808,701 Cautionary Statement This Fourth Quarter and Full Year 2017 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: http://www.investis-live.com/pagegroup/5a2522ac1563731100bba23b/tjss 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 the access code 08 55 15 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 January 2018 at: http://www.page.com/investors/investor-library The Group will issue its Full Year Results on 7 March 2018 and its First Quarter 2018 Trading Update on 11 April 2018.