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PageGroup Q2 & H1 Trading

Update Q&A

Wednesday, 13th July 2022

PageGroup Q2 & H1 Trading Update Q&A

Wednesday, 13th July 2022

Introduction

Kelvin Stagg

CFO, PageGroup

Welcome

Good morning, everyone, and welcome to the PageGroup's Second Quarter and First Half Trading Update. I am Kelvin Stagg, Chief Financial Officer, and on the call with me is Steve Ingham, Chief Executive Officer.

Disclaimer

Although I will not read it through, I would just like to make reference to 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.

Record quarter and record month in June

Key financial highlights

The strong trading conditions we experienced in Q1 2022 continued into the second quarter. Consequently, the Group delivered gross profit of £280.9 million, a record quarter for the Group. We grew 25.5% in constant currencies against Q2 2021, which whilst lower than our Q1 growth rate of 43%, was against a 12% tougher comparator. Against the pre-pandemic levels in 2019, we were up 28% in both Q1 and Q2.

For the first half, we delivered gross profit of £539 million, a record, up 33.3% on H1 2021. Reflecting the continued strong trading conditions, in Q2 we increased our fee earner headcount by 307. The majority of these were non-experienced hires, as the availability of experienced hires has become increasingly limited.

This was broadly in line with the level of quarterly investments that we have made since Q3 last year. To support this growth, our operational support headcount rose by 73, and as such, our ratio of fee earners to non-operational staff remained at 78:22. Overall, the Group had 6,734 fee earners and a total headcount of 8,668.

We have a strong balance sheet, with net cash at the end of June of around £135 million. This compares to £122 million at the end of Q1 and is after payment of the final dividend for 2021 in June of £33 million.

Q2 Perm and Temp Ratio

Broadly similar growth in both permanent and temporary recruitment

I will now give a brief financial review. There was broadly similar growth in both permanent and temporary recruitment. Overall, permanent recruitment grew 25.7% against Q2 2021, with temporary up 24.5%. Reflecting this, our ratio of Permanent to Temporary gross profit was 78:22, in line with Q1 2022.

In Michael Page, permanent recruitment represented 85% of gross profit, while in Page Personnel it was less, at 59%. Michael Page continued to be more resilient across temporary recruitment, although performance in Page Personnel improved significantly, and the permanent business delivered consistent growth across both brands.

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PageGroup Q2 & H1 Trading Update Q&A

Wednesday, 13th July 2022

In our temporary business, Michael Page delivered particularly strong growth, up 31%, driven by our contracting business in Germany. Page Personnel temporary growth was behind this at 18%, due to slower growth in France and the impact of the Queen's Jubilee in the UK.

Strategic Priorities

Strong performance across our strategic focus areas, lockdowns impacting Greater China

We continued to focus on our five large, high potential geographic markets of Germany, Greater China, Latin America, South East Asia and the US. Collectively, they represented 39% of the Group in Q2, marginally below the peak of 40% in Q3 2021. We now have 2,715 fee earners in these five markets, which compares to around 800 in 2010 as we recovered from the Global Financial Crisis.

Together, they delivered a record gross profit in Q2 with record performances in all markets outside of Greater China, which was impacted by COVID-19 lockdowns and restrictions. In Q2 our large, high potential markets grew 23%, and excluding Greater China, growth was 33%.

Our high potential disciplines of Technology, and Healthcare & Life sciences continue to be amongst the strongest performing, and Technology remains our second largest discipline, representing around 14% of the Group.

We have successfully established the infrastructure and are building revenue in our newest brand, Page Outsourcing, which continues to exceed our plan.

Investing in our Platform

Investment in 307 fee earners in the Quarter

Reflecting the continued improvement in trading conditions, in Q2 we increased our fee earner headcount by 307. The majority of these were non-experienced hires, as the availability of experienced hires has become increasingly limited. To support this growth, our operational support headcount rose by 73, and as such, our ratio of fee earners to non- operational staff remained at 78:22.

Our attrition rate currently remains relatively low, with no indication of a slowdown in any of our forward looking KPIs. We remain confident in our ability to adjust our headcount down, if needed, with our flexible business model and natural staff attrition.

Strong gross profit growth

Further investment made in 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 platform, which has driven the sharp recovery seen throughout 2021 and the first half of 2022.

I will now hand you over to Steve for a regional review and a summary.

Regional Review

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PageGroup Q2 & H1 Trading Update Q&A

Wednesday, 13th July 2022

Steve Ingham

CEO, PageGroup

Q2 Gross Profit +25.5% vs 2021

Record quarters delivered in 25 countries

Thank you, Kelvin. The strong growth we saw in Q1 2022 continued into Q2. Overall, for the quarter, we grew 25.5% against 2021 and delivered a new record quarter for the Group. We saw strong double-digit growth in all four regions, with the Americas being our fastest growing.

25 individual countries delivered record quarters, and 14 countries exited with a record month in June. June was also a record month for the Group, and our second month with gross profit in excess of £100 million.

The recent weakening of Sterling has had a favourable impact on the quarter's growth rate compared to the prior year, increasing the reported gross profit growth rate by 2.3 percentage points, or £5.1 million. Compared to the Q2 2019 pre-pandemic gross profit, the Group delivered growth of 28%, in line with our growth rate in Q1.

EMEA

Record quarter and record month in June for 6 countries

In our largest region, Europe, Middle East and Africa, which represented 49% of the Group, we grew 29.4% on Q2 2021. Overall, conditions continued to be more favourable in Michael Page, which is focussed on higher income permanent recruitment and was up 34% 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 22% overall.

France grew 21%, delivering a record quarter. Page Personnel, representing approximately 60% of France was up 17%. Michael Page, which had been more resilient throughout the pandemic, grew 26%.

Germany, the Group's third largest market, representing 11% of the Group, delivered another record quarter, up 32%, with strong growth in all three brands. Our primarily technology focussed Michael Page Interim business was the best performing, up 40%. We now have around 650 fee earners in Germany, having added over 100 in the past 12 months. We believe this positions us well for ongoing growth in this large, high potential market.

Belgium, the Netherlands, Italy and Spain all delivered strong growth and 11 countries in the region delivered record quarters.

Asia Pacific

Record quarter despite impact of Greater China

In Asia Pacific, representing 19% of the Group, Q2 gross profit grew 11.7% on 2021. In Asia, 15% of the Group, we grew 9%, with strong double-digit growth in all markets outside of Greater China.

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PageGroup Q2 & H1 Trading Update Q&A

Wednesday, 13th July 2022

In Greater China, 6% of the Group, we declined 11%. Mainland China was down 13%, driven by the recent COVID-19 lockdowns and restrictions. Hong Kong was also impacted by these restrictions and declined 8% in the quarter.

South East Asia, our other large, high potential market in the region, delivered strong growth of 33%, with record performances in five markets, including our largest, Singapore.

India, which represents 11% of Asia, delivered another record quarter, up 47%. We now have over 220 fee earners in this highly profitable market.

Japan also delivered a record quarter, growing 15% on a tough comparator, driven by a strong performance in Contracting. Australia grew 24%.

The Americas

Our fastest growing region; a record quarter

The Americas, representing 18% of the Group, was our fastest growing region and delivered a record quarter in Q2, with growth of 34.1%. North America grew 31%, where in the US, the consistently strong trading conditions seen since early 2021 continued into Q2 and we delivered growth of 30%. This represented a record quarter, with strong results in all offices, though most significantly in Boston, Chicago and Houston.

Growth was strong across all disciplines, with good performances from Property & Construction, our largest discipline in the US, as well as Technology and Engineering.

In Latin America, gross profit grew 40%, delivering a record quarter. Mexico, our largest country in the region, delivered a record quarter, up 43%, and Brazil grew 28%. The remaining countries in the region were up 45%, collectively, with record quarters for Argentina, Colombia and Panama.

Our Global operating system, Customer Connect, went live in the remaining markets of Brazil, Mexico and Panama during Q2, completing our global roll out.

UK

Record quarter for Page Personnel

In the UK, which represented 14% of the Group, gross profit grew 22.6%. Page Personnel, which operates at lower salary levels and had been slower to recover from the pandemic, was up 56%, delivering a record quarter. Michael Page grew 13%. The UK has seen good results across all regions, with particularly strong performances from our Finance and Technology disciplines.

Summary

Strong performance and continued investment

I will now provide a summary of our results. The strong growth we saw in Q1 2022 continued into Q2. Group gross profit in constant currencies was up 25.5% against 2021, with a good broad-based performance across all our geographies, disciplines and brands. We delivered a record quarter for the Group, with record performances in 25 countries. We exited the quarter strongly, delivering a record month in June, and our second month of gross profit in excess of £100 million.

This performance was achieved despite the backdrop of macroeconomic and geo-political uncertainty as well as continued COVID-19 restrictions in Greater China. We believe that our

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