First Quarter 2021 Trading Update

9 April 2021

PAGEGROUP PLC

FIRST QUARTER 2021 TRADING UPDATE

Q1 Highlights*

·    Group gross profit of £184.2m, +2.0% vs. Q1 2020 and -9.9% vs. Q1 2019

·    Monthly sequential improvement through the quarter, exiting March at +31% vs. 2020 and -2% vs. 2019

·    Large, High Potential markets (36% of Group) +10%

·    EMEA +3.6%: France -7%; Germany +15%

·    Asia Pacific +15.3%: Greater China +45%; SE Asia +12%; India +15%

·    Americas -4.3%: US -9%; Latin America +4%

·    UK -11.0%: Michael Page -5%; Page Personnel -27%

·    Strong cash position, net cash of c. £136m (Q4 2020: £166m, Q1 2020: £83m)

·    Increase in fee earner headcount of 122 to 5,267 (Q1 2020: 5,923)

Outlook

·    Full year operating profit expected to be within the range of £90m - £100m

* In constant currencies except where stated otherwise

Q1 Gross Profit Analysis

Given the magnitude of the impact of COVID-19 in 2020, we are also including comparisons against 2019 to ensure the most appropriate representation of current trading.

Steve Ingham, Chief Executive Officer, PageGroup, said:

"Throughout the pandemic we have continued to focus on the protection and wellbeing of our employees, candidates and clients, whilst progressing strategic investments in our platform to take advantage of the recovery.

"I am pleased to report that year-on-year results in each of the three months of the first quarter improved sequentially, continuing the monthly trend since May last year. January and February were down 13% and 10% respectively, compared to 2020, with March growing 31%. Significantly, our performance in March was down just 2% on 2019. This noticeable improvement in March was seen throughout the Group and was achieved despite the backdrop of continued and increasing restrictions or lockdowns in many of our markets. We delivered record months in March in markets such as Germany, Italy, Spain and South East Asia. At this stage of the recovery, it is not easy to determine whether the improved performance is the result of pent-up supply and demand, or the beginning of a sustainable trend. Our fee earner headcount is currently down 12.6% on the pre-pandemic levels in 2019. As visibility develops, our fee earner headcount will react accordingly.

"We remain confident in our strategy of maintaining and investing in our platform by continuing to invest carefully in headcount, exemplified by the 400 experienced hires we added in 2020, plus a further 200 added in Q1 2021, as well as rolling-out new technology and innovation. We are the clear leader in many of our markets, with a highly experienced senior management team, which, we believe, positions us well to take advantage of opportunities to grow and improve our business. We have maintained our focus on driving progress towards our long-term strategic goals.

"Looking ahead, there continues to be a high degree of global macro-economic uncertainty as COVID-19 remains a significant issue and lockdowns have returned in a number of the Group's markets. However, and notwithstanding the early stage in the year, the strength of our performance in Q1, and notably in March, has increased confidence in our outlook for the year. Subject to other unexpected events, we now expect full year operating profit to be within the range of £90m - £100m."

Headcount

We reduced our fee earner headcount by 882 in 2020, primarily those on performance review or those with very limited experience in recruitment. This was net of adding c. 400 experienced fee earners. As conditions continued to improve in Q1, we increased our fee earner headcount by 122. Our operational support headcount rose by 19, and, as such, our ratio of fee earners to operational support staff was maintained at 77:23. Overall, the Group had 5,267 fee earners and a total headcount of 6,835.

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

In Europe, Middle East and Africa, the improvement in trading conditions we experienced at the end of Q4 2020 continued into Q1, which was up 3.6% overall. However, this was partly as a result of the weak comparator in March 2020, when the region started to be impacted by the COVID-19 pandemic. Against Q1 2019, we were down 8.4%. France, currently our largest market declined 7% (-19% vs 2019). March showed an improvement, exiting the quarter up 23% (-15% vs. 2019). With a higher proportion of temporary workers, Page Personnel was impacted more significantly by the lockdown. The Netherlands performed similarly to France. However, Germany, the Group's third largest market, delivered a record quarter, up 15%, with March up 37% (+17% vs. 2019). Belgium, Italy and Spain exited the quarter up 17%, 104% and 74% respectively vs. 2020 and up 11%, 6% and 7% vs. 2019, with Italy and Spain delivering record months in March. 

In Asia Pacific, gross profit for Q1 was up 15.3%. Mainland China was up 66% for the quarter (+16% vs. 2019). We exited the quarter up 26% on 2019. Whilst Hong Kong was up 25%, we remain down 35% on Q1 2019. Overall, Greater China grew 45% for the quarter. South East Asia delivered a record month in March and was up 12% for the quarter, with Singapore flat. Japan was down 2% against a strong comparator of +5% in Q1 2020. India delivered a record quarter, growing 15%, up from -3% in Q4 2020 and exited the quarter up 41% compared to 2019. Australia declined 4%, a significant improvement from a decline of 26% in Q4, with March up 4% on 2019.

In the Americas, one of the worst COVID-19 affected regions, gross profit for Q1 was down 4.3%. However, this was a significant improvement on Q4 2020, which was down 23.2%. The US declined 9%. Having been down 27% in both January and February, the performance in March improved significantly, increasing 22% (+8% vs. 2019). In Latin America, gross profit grew 4% (-2% vs. 2019). Mexico, our largest country in the region, was flat for the quarter (March -12% vs. 2019), and Brazil was up 15% (March +19% vs. 2019). Elsewhere in Latin America, the remaining countries were flat for the quarter, collectively.

In the UK, gross profit declined 11.0% in the quarter, improving from a decline of 34.2% in Q4 2020. Conditions remained challenging, with a nationwide lockdown imposed for the majority of the quarter. Our Michael Page business (-5% in Q1) was more resilient than Page Personnel (-27% in Q1). Having been down 29% in January and February combined vs. 2019, the UK's performance in March improved to a decline of 19% vs. 2019.

Financial Position

Save for the effects of Q1 trading detailed above, the purchase of shares into the Employee Benefit Trust (EBT) of c. £10m and the furlough repayment of £3.4m to the UK Government, 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 2020. Net cash at 31 March 2021 was c. £136m (Q4 2021: £166m; Q1 2020: £83m).

Shares

At 31 March 2021 there were 328,618,774 Ordinary shares in issue, of which 13,993,682 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 12,511,597 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 2021 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 14 July 2021.

This announcement contains inside information for the purposes of article 7 of EU Regulation 596/2014 and Article 7 of Onshored Regulation (EU) 596/2014 as it forms part of domestic law by virtue of the EUWA. The person responsible for making this announcement on behalf of PageGroup is Kelvin Stagg, Chief Financial Officer.

Enquiries:

The Company will host a conference call and presentation for analysts and investors at 9:00am today. The live presentation can be viewed by following the link:

https://www.investis-live.com/pagegroup/6059b7779a138810006bbfe5/mles

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

Please quote participant access code 37 09 38 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 9 April 2021 at:

https://www.page.com/presentations/year/2021