Q1 Trading Statement

17 April 2023

RECORD RESULT IN EMEA; ONGOING CHALLENGING MARKET CONDITIONS

Q1 Highlights*

·    Group gross profit of £262.7m, -2.4% vs. 2022 (+1.8% in reported rates)

·    EMEA +6.8%: France +3%; Germany +11%

·    Americas -7.6%: US -15%; Latin America +4%

·    Asia Pacific -17.0%: Greater China -42%; SE Asia -12%; Japan +5%; India flat

·    UK -9.4%: Michael Page -14%; Page Personnel +4%

·    Large, High Potential markets (36% of Group) -9%; excluding Greater China -1%

·    Decrease in fee earner headcount of 304 to 6,639 (Q4 2022: 6,943)

·    Productivity down 8% on Q1 2022

·    Strong cash position, net cash of c. £105m (Q4 2022: c. £131m, Q1 2022: c. £122m)

·    Full Year operating profit expected to be in line with company compiled consensus of £140m

* In constant currencies vs 2022 except where stated otherwise

Q1 Gross Profit Analysis

Nicholas Kirk, Chief Executive Officer, PageGroup, said:

"The Group delivered strong results in the quarter, with a record performance from EMEA, where the standout result was Germany. However, tough market conditions continued in Asia, the US and the UK. Overall, Group gross profit declined 2.4% in constant currencies against Q1 2022. The Group benefited from positive foreign exchange movements, increasing our reported gross profit by £10.8m. As a result, we grew 1.8% in reported rates.

"The challenging conditions we saw towards the end of 2022 continued into 2023, with lower levels of both candidate and client confidence resulting in delays in decision making and candidates being more reluctant to accept offers. Reflecting the uncertainty, temporary recruitment outperformed permanent, as clients sought more flexible options. Our fee earner headcount reduced by 304 (-4.4%) in Q1, with reductions in all regions. However, due to the level of investment made in 2022, our total headcount remains 510 (+6.2%) higher than at the end of Q1 2022. Consequently, gross profit per fee earner, our measure of productivity, declined 8% compared to Q1 2022.

"Looking forward, there remains a high level of global macro-economic and political uncertainty in the majority of our markets. However, against this backdrop, we continue to see candidate shortages and good levels of vacancies. Given our highly diversified and adaptable business model, with a cost base that can be adjusted rapidly and a strong balance sheet, we believe we will continue to perform well despite the uncertainty and, at this early stage of the year, expect 2023 operating profit to be in line with company compiled consensus of £140m."

Geographical Analysis (unless stated otherwise all growth rates are vs. 2022 and in constant currency)

In Europe, Middle East and Africa, gross profit grew 6.8% to £145.4m. EMEA was our strongest performing region, and notably this performance was achieved despite Q1 2022 being a particularly tough comparator across the region. France delivered growth of 3% for the quarter, with similar performances in both Michael Page and Page Personnel. We also saw consistent performances across both permanent and temporary recruitment. Germany delivered another record quarter, up 11%, with the standout performances from Page Personnel and our Technology focused Interim business. Elsewhere in the region, we delivered strong results against a tough Q1 2022, with Belgium, Spain and Turkey delivering record quarters. Having added 534 fee earners in 2022, we reduced our fee earner headcount in Q1 2023, down 37 for the region overall.

In the Americas, we delivered gross profit of £42.7m, down 7.6% against Q1 2022. In the US, we declined 15%, compared to growth of 2% in Q4 2022. The conditions we saw at the end of 2022 continued into Q1, with uncertainty around market conditions affecting both candidate and client confidence, particularly within our Technology and Banking disciplines. In Latin America, gross profit grew 4%, despite macro-economic uncertainty across the region. Mexico, our largest country in the region, was down 4%, compared to growth of 1% in Q4, driven by increased delays in decision making. Brazil was down 13%, however elsewhere in Latin America, our remaining countries grew 23%, collectively. In line with the more challenging conditions, overall fee earner headcount decreased by 134, mainly in the US, Brazil and Mexico.

In Asia Pacific, gross profit for Q1 was down 17.0% against 2022 to £41.2m. Permanent recruitment across the region declined 21%, whilst temporary recruitment grew 12%, reflecting the continued uncertain market conditions. Greater China declined 42%, with Mainland China down 46% on Q1 2022, as this region only started to be impacted by the COVID lockdowns in March 2022. Whilst COVID restrictions have been lifted, trading remains challenging with fluctuating levels of COVID infections during the quarter. Hong Kong declined 36% for the quarter. Our other Large, High Potential geographic market in the region, South East Asia, declined 12%. India was flat on Q1 2022, which was a particularly tough comparator of +79%. Japan delivered growth of 5%, a new record quarter. Australia grew 1%, broadly in line with Q4. Our fee earner headcount in the region decreased by 67.

In the UK, gross profit for Q1 declined 9.4% against 2022 to £33.4m, following the decline of 1.9% in Q4 2022. We continued to see clients deferring hiring decisions and candidates cautious about accepting offers. Reflecting the uncertain market conditions, clients sought more flexible options, and as such, temporary recruitment was more resilient than permanent recruitment. In line with the more challenging trading conditions, our fee earner headcount reduced by 66 in Q1.

Large, High Potential Markets

Our 5 Large, High Potential geographic markets of Germany, Greater China, Latin America, South East Asia and the US, which represented 36% of the Group collectively, declined 9% in Q1. Excluding Greater China, which was impacted by the ongoing disruption following the COVID lockdowns and restrictions, as well as a tough comparator in Q1 2022, these markets declined 1%.

Perm/Temp mix

Gross profit from permanent recruitment decreased 3.1% in reported rates and declined 7.2% in constant currencies to £195.7m (Q1 2022: £202.0m). Gross profit from temporary recruitment increased 19.5% in reported rates and 14.9% in constant currencies to £67.0m (Q1 2022: £56.0m). This resulted in a ratio of permanent to temporary recruitment of 74:26 (Q1 2022: 78:22).

Headcount

Our fee earner headcount reduced by 304 (-4.4%) during Q1, with reductions made across all regions albeit more significantly in markets where we saw the most challenging market conditions. Our non-operations headcount rose by 82 in Q1, as we continued to invest in Page Outsourcing and moved our candidate acquisition teams into our delivery centres. Overall, the Group had 6,639 fee earners and a total headcount of 8,798. Our total headcount at the end of Q1 remains 510 (+6.2%) higher than at the end of Q1 2022.

Productivity

Overall, gross profit per fee earner, our measure of productivity, decreased 8% compared to Q1 2022. We continued to see the benefits of video interviewing, the investments made in experienced hires, continued high fee rates as well as wage inflation. However, reduced candidate and client confidence caused an increase in time to hire as well as some reluctance to accept offers, limiting the number of placements per fee earner.

Sustainability

We have just released our 2022 Sustainability report to highlight the progress we've made towards our four Sustainability goals over the past 12 months.

This includes:
- changing 135,871 lives
- increasing our proportion of women in leadership roles to 43%
- decreasing our scope 1 & 2 emissions by 30%
- growing our sustainability business by 120%

We are now well on our way to reaching our sustainability goals, as we strive to support the transition to a more equitable and greener society.

Read our full report here: https://www.page.com/sustainability

Foreign Exchange

The Group benefited from positive foreign exchange movements during Q1, increasing our Q1 reported gross profit by 4.2 percentage points, or £10.8m.

Financial Position

Save for the effects of Q1 trading detailed above and the purchase of shares into the Employee Benefit Trust (EBT) of c. £6m, there have been no other significant changes in the financial position of the Group since the publication of the results for the year ended 31 December 2022. Net cash at 31 March 2023 was c. £105m (Q4 2022: c. £131m, Q1 2022: c. £122m).

Shares

At 31 March 2023 there were 328,618,774 Ordinary shares in issue, of which 14,457,299 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 12,810,128 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 First Quarter 2023 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 Q2 Results on 12 July 2023.

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:

https://www.investis-live.com/pagegroup/641b179e33aa1a1200649ef4/dsfarr

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

Please quote participant access code 24 46 48 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 17 April 2023 at:

https://www.page.com/presentations/year/2023