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PageGroup Q1 Trading

Update 2022

Tuesday, 12th April 2022

Headline Numbers

Kelvin Stagg

Chief Financial Officer, PageGroup

Welcome

Good morning everyone. Thank you for joining us at short notice this morning. We would like to welcome you to the PageGroup First Quarter Trading Update. I am Kelvin Stagg, Chief Financial Officer and on the call with me is Steve Ingham, Chief Executive Officer. Although I will not read it through, I would just like to make reference the legal formalities that are covered in the Cautionary Statement in the appendix to this presentation and which will also be available on our website following the call.

Another record quarter for the Group

Key financial highlights

The improvement in trading conditions we experienced in 2021 continued into the first quarter of 2022. Consequently the Group delivered gross profits of £258.2 million, another record quarter for the Group. Against 2021 we grew 42.6% in constant currencies. To remind you, the impact of COVID-19 remained significant in Q1 2021 when we were down 10% compared to 2019, albeit exiting down only 2% in March. Despite this, in Q1 2022 even against 2019 pre-pandemic levels we still grew 28.3%. We delivered a record performance in March, our first month with over £100 million of gross profit. This helped to deliver an improvement in productivity of 18% on Q1 2021.

Reflecting the continued improvement in trading conditions in Q1 we increased our fee earner headcount by 345. This was marginally above the level of fee earner headcount investment we made in Q3 and Q4 of 2021. To support this growth and our non-operational headcount rose by 105 and as such our ratio of fee earners to non-operational staff remained at 78:22. Overall the Group had 6,427 fee earners and a total headcount of 8,288. We have a strong balance sheet with net cash at the end of March of around £122 million. This compares to £154 million at the end of 2021 having paid out annual and quarterly bonuses in January, as well as having purchased £15 million worth of shares for the Employee Benefit Trust in Q1.

Financial Review

Kelvin Stagg

Chief Financial Officer, PageGroup

Q1 Perm and Temp Ratio

Stronger trading continues in permanent recruitment

I will now give a brief financial review. In line with previous quarters trading was stronger in permanent recruitment compared to temporary. Overall permanent recruitment grew 46.3% against 2021 with temporary up 31%. Reflecting this, our ratio of permanent to temporary gross profit was 78:22, broadly in line with Q4 2021. In Michael Page permanent recruitment represented 85% of gross profit while in Page Personnel it was less at 60%. Michael Page continued to be more resilient across both permanent and temporary recruitment reflecting the more favourable conditions and the stronger trading in higher income roles. However, itwas encouraging to see an improvement in Page Personnel towards the end of the quarter as offices reopened in many of our markets.

Strategic Priorities

Strong performance across high potential geographies and disciplines

Our five Large, High Potential geographic markets of Germany, Greater China, Latin America, South East Asia and the US continued to deliver standout results. Collectively they represented 38% of the Group and grew 49%. Germany, Latin America and the US all delivered record quarters with South East Asia and Greater China delivering strong results despite the recent COVID lockdowns in Mainland China impacting growth in March. We now have over 2,500 fee earners in these five markets which compares to around 800 in 2010 as we recovered from the Global Financial Crisis. Our high potential disciplines of technology and healthcare & life sciences continue to be amongst the strongest-performing and technology remains our second-largest discipline.

Investing in our platform

Investment in 345 fee earners in the quarter

Reflecting the improvement in trading conditions we continued to invest in our platform. In Q1 we added 345 fee earners. This investment was in the markets where we saw the strongest growth as well as the highest potential for the future. Our fee earners headcount of 6,427 at the end of Q1 was a record for the Group. To support growth our non-operations headcount rose by 105 in Q1 and as such our ratio of fee earners to non-operational headcount remained at 78:22. Despite this investment in headcount we still delivered an improvement in productivity of 18% on Q1 2021.

Strong gross profit growth

Further investment made in our headcount

This fee earner headcount and gross profit chart shows the unprecedented scale of the decline in Group gross profit in 2020 due to COVID-19 and the comparison to the Global Financial Crisis in 2008. It also shows how we chose strategically to maintain and invest in our headcount which has driven the sharp recovery seen in 2021 and now into Q1 2022. In 2009 our fee earner headcount reduced by 1,139 or 31% from a lower base of 3,654 at the end of 2000. During 2020 our fee earner headcount reduced significantly less, down 882 or 15%. I will now hand you over to Steve for a regional review and a summary.

Regional Review

Steven Ingham

Chief Executive Officer, PageGroup

Q1 Gross Profit +42.6% vs 2021

Record quarters delivered in 19 countries

Thank you Kelvin. The improvement in trading conditions we saw in 2021 continued into 2022. Overall for the quarter we grew 42.6% against 2021, a new record quarter for the Group. We saw strong double-digit growth in all four regions with the Americas being our fastest-growing. 19 individual countries delivered record quarters. We delivered a new record for the Group in March which was the first month with gross profit in excess of £100

million. Our five Large, High Potential geographies of Germany, Greater China, Latin America, South East Asia and the US delivered standout results, growing 49% collectively. Compared to the Q1 2019 pre-pandemic gross profit the Group delivered growth of 28.3% progressing from the 24.2% we saw in Q4.

EMEA

A record quarter for the region, Germany standout performance

In our largest region, Europe, Middle East and Africa, which represented 50% of the Group, we grew 41.1% on Q1 2021. Overall conditions continued to be more favourable in Michael Page which is focused on higher income permanent recruitment and was up 45% for the quarter. Conditions were more challenging in Page Personnel which is focused on lower-level recruitment with a higher proportion of temporary and was up 36% overall. However they improved throughout the quarter.

France, which represented 13% of the Group, grew 30% delivering a record quarter. Page Personnel representing around 60% of France was up 28%. Michael Page which has been more resilient through the pandemic grew 33%. Germany, the Group's third-largest market now representing 11% of the Group delivered another record quarter, up 56% with strong growth in all three brands. Our primarily technology-focused Michael Page Interim business was the best-performing up 65%. We now have over 600 fee earners in Germany having added over 100 in the past 12 months, which positions us well for ongoing growth in this Large, High Potential market. Belgium, the Netherlands, Italy and Spain all delivered strong growth and ten countries in the region delivered record quarters.

Asia Pacific

Best ever Q1 for APAC, another record quarter for India

In Asia Pacific, representing 19% of the group, Q1 gross profit grew 35.8% on 2021. In Asia, 15% of the Group, we grew 40% with strong double-digit growth across all countries. In Greater China, 7% of the Group, we grew 23%. Mainland China was up 18% despite the impact of the recent lockdowns. Hong Kong, which has been slower to recover than other markets in the region, was up 37%. South East Asia, our other Large, High Potential market in the region, delivered strong growth of 56% with record performances in Malaysia, Vietnam and the Philippines. India, which represents 11% of Asia, delivered another record quarter, up 79%, and we now have around 200 fee earners in this market. Japan with a similar number of fee earners grew 47%. Australia, also with a similar number of fee earners, grew 22% in Q1 with March being the best month in ten years. Performance during the quarter was particularly strong in Melbourne and Canberra.

The Americas

Our fastest growing region

The Americas, representing 17% of the Group, was our fastest-growing region in Q1 with growth of 56.6%. In the US the improvement in trading conditions seen in the second half of 2021 continued into Q1 which was up 60%. This represented a strong quarter with strong results in all offices and most significantly in Boston and Houston. There was good growth across all disciplines with strong performances from property & construction, our largest discipline in the US, as well as technology. In Latin America gross profit grew 51% delivering a record quarter. Mexico our largest country in the region had a record quarter, up 52% andBrazil grew 47%. The remaining countries in the region were up 53% collectively with record quarters for Colombia, Argentina and Panama.

UK

Trading improved as the quarter progressed, Page Personnel recovering

In the UK which represented 14% of the Group gross profit grew 43.4%. Page Personnel which operates at lower salary levels and was more impacted by the pandemic, grew 70% whilst Michael Page grew 36%.

Summary

Steve Ingham

Chief Executive Officer, PageGroup

Summary

Strong performance and continued investment

I will now provide a summary of our results. The growth we saw in 2021 continued into 2022. Group gross profit was up 42.6% against 2021 with a strong broad-based performance across all of our geographies, disciplines and brands. We delivered another record quarter for the Group with record performances in 19 countries. We exited the quarter strongly in March which was a record month and the first time the Group has delivered gross profit in excess of £100 million. This ongoing improvement in Q1 was seen throughout the Group and was achieved despite the backdrop of macroeconomic and geopolitical uncertainty, as well as continued COVID-19 restrictions in certain markets. We believe that our strategy of maintaining and investing in our platform throughout the pandemic by investing in experienced hires and focusing on technology and innovation have been key to us achieving these outstanding results.

We delivered strong levels of productivity which is up 18% on Q1 2021. This was driven by our investment strategy as well as favourable trading conditions. These include wage inflation and increased fee rates due to high demand for and short supply of candidates, as well as the shorter time to hire facilitated by video interviewing and investments in new systems. We continue to invest in headcount to ensure we are able to able to capitalise on future growth opportunities in Q1. In Q1 we added 345 fee earners with the most significant increases in the markets where we saw the highest growth. We focused on productivity and during the quarter we successfully implemented Customer Connect, our global operating system, in France as well as four of our countries in Latin America. We will complete the rollout of this system with the go lives in Brazil, Mexico and Panama in Q2.

We remain highly cash generative and ended the quarter with net cash of around £122 million. PageGroup has minimal exposure to either Russia or Ukraine. However we are acutely aware of the human suffering this war has brough and are committed to supporting refugees, particularly into suitable employment where we can. We are already working with RefuAid in providing sustainable solutions to employment for refugees in the UK.

Looking ahead there continues to be a high degree of global macroeconomic and geopolitical uncertainty. However we maintain our focus on being the leading specialist recruiter in each of the markets in which we operate. We are pleased with the Group's performance in Q1 and