Record first half for the Group LSE: PAGE.L Website: - PowerPoint PPT Presentation

Kelvin Stagg Chief Financial Officer 7 August 2019 Half Year Results 2019 “ Record first half for the Group ” LSE: PAGE.L Website: https://www.page.com/investors

Financial Review Kelvin Stagg, Chief Financial Officer

Financial Review Capital Allocation Summary H1 19 Record first half for the Group Key financial highlights Gross Profit Operating £433.5m £75.6m Profit £396.0m H1 2018 £67.2m H1 2018 Constant +9.5% Conversion 17.4% Currency Rate +14.2% H1 2018 Growth 17.0% H1 2018 EPS Interim 16.8p 4.30p Dividend 15.5p H1 2018 4.10p H1 2018 Per share Special 12.73p £81.7m Net cash Dividend 12.73p H1 2018 Per share £87.0m H1 2018 3

Financial Review Capital Allocation Summary H1 19 Conversion rate up to 17.4% Focus on productivity and conversion £m H1 2019 H1 2018 Reported % Constant % Gross Profit 433.5 396.0 +9.5% +9.5% Operating Profit 75.6 67.2 +12.5% +11.4% Conversion Rate* 17.4% 17.0% Fee Earner 70.7 69.2 +2.2% +2.2% Productivity** (£k) • Record Gross and Operating Profit • Conversion rate increased by 0.4 ppts • Fee Earner Productivity increased +2.2% *Operating Profit as a percentage of Gross Profit 4 ** Gross Profit per Fee Earner

Financial Review Capital Allocation Summary H1 19 Improvement in productivity in all regions Record Gross Profit in three of our four regions H1 2019 H1 2018 Operating Conversion Productivity Gross Operating Conversion £m Gross Profit Profit Rate increase* Profit Profit Rate EMEA 213.1 45.6 21.4% +3.0% 194.9 40.9 21.0% Asia 81.8 8.8 10.8% +0.5% 74.1 9.0 12.1% Pacific UK 69.4 12.5 18.0% +2.1% 69.7 10.5 15.0% Americas 69.2 8.7 12.5% +3.1% 57.3 6.8 11.9% • Strong conversion rate performance in EMEA • Asia Pacific conversion rate impacted by trade tariff uncertainty and client confidence • UK increase due to focus on productivity and conversion • Increased growth throughout the Americas *In constant currencies 5

Financial Review Capital Allocation Summary H1 19 Costs driven by employee headcount Fee earner to support staff ratio currently at 78:22 • Employee costs driven by a +6.6% increase in average 30 headcount and inflationary salary rises Support staff as % of Group headcount • Completed implementation of Global Finance System (GFS) in 27 H1 2019 • Resultant temporary increase in support headcount 24 21 £m H1 2019 H1 2018 Constant % Employee 281.0 257.6 +9.3% 18 Other costs 76.9 71.2 +8.8% 15 2009 2013 2017 H1 19 Total 357.9 328.8 +9.1% 6

Financial Review Capital Allocation Summary H1 19 IFRS 16 - balance sheet impact Grossing up of Assets and Liabilities by c. £130m £m 2019 H1 2019 Opening Balance Assets Right-of-use assets 129.5 129.3 Liabilities Lease Liability (138.5) (131.4) • IFRS 16 adopted using the modified retrospective method on 1 January 2019 • Right-of-use assets and lease liabilities recognised, were previously classified as operating leases • Reduction in equity of £2.1m recognised on transition • Right-of-use assets of £129.5m and Lease Liabilities of £138.5m as at 30 June 2019 7

Financial Review Capital Allocation Summary H1 19 IFRS 16 – income statement impact Slight benefit to EBIT; marginal negative impact on PBT H1 2019 £m Lease charge 20.4 Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA ) 20.4 Depreciation expense (19.6) Earnings Before Interest & Tax (EBIT) 0.8 Finance Costs (1.1) Profit Before Tax (PBT) (0.3) • Straight line rental expense has been replaced by depreciation of right-of-use assets and interest on lease liabilities 8

Financial Review Capital Allocation Summary H1 19 Strong and robust balance sheet Net cash of £81.7m £m H1 2019 H1 2018 Intangible assets 36.5 33.4 Tangible assets 35.5 31.9 Right-of-use assets 129.5 - Trade and other receivables 393.2 346.7 Trade, other payables, current and deferred taxes (186.8) (194.6) Lease Liabilities (138.5) - Net cash 81.7 87.0 Net assets 351.1 304.4 9

Financial Review Capital Allocation Summary H1 19 Depreciation increase due to IFRS 16 Depreciation of right-of-use assets of £19.6m H1 2019 H1 2018 £m £m Depreciation 24.9 4.4 Amortisation 5.0 5.1 Total 29.9 9.5 Net Capital Expenditure Tangible assets 5.0 6.8 Intangible assets 8.4 4.0 Total 13.4 10.8 • Amortisation charge is primarily for GFS and PRS • Intangible Capital Expenditure due to system investments 10

Financial Review Capital Allocation Summary H1 19 Strong cash flow generation Special dividend to be paid for a fifth successive year 210 (45.8) 170 109.1 (20.7) (13.4) £m 130 (20.7) 3.5 (29.0) 90 1.1 97.7 81.7 50 Dec 18 EBITDA Working Tax and net Net capex Lease Share options Dividends Exchange Jun 19 Capital interest payment exercised Paid Cash Increase Decrease 11

Capital Allocation

Financial Review Capital Allocation Summary H1 19 Clear and established capital allocation strategy A highly cash generative business model 1 st use of cash 2 nd use of cash 3 rd use of cash To satisfy To maintain the To make operational and ordinary dividend supplementary investment through downturns returns to requirements, and to and to increase it shareholders either hedge liabilities during more by a share buyback under the Group’s prosperous times or special dividend share plans 13

Financial Review Capital Allocation Summary H1 19 Track record of shareholder returns c. £875m returned via share buybacks and dividends 120 100 80 £m 40 60 50 83 40 60 20 30 40 16 15 34 24 41 20 14 38 36 35 31 31 31 29 27 26 25 22 18 14 13 13 12 1 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Ordinary Dividend Share Buyback Special Dividend 14

Financial Review Capital Allocation Summary H1 19 A growing dividend through the cycle Committed to returning cash to shareholders • 2019 interim dividend proposed of 4.30p per share or £13.9m, increase of 4.9% on 2018 +1.8% 60 • 2019 special dividend proposed of 12.73 pence per share 50 (£41.0m) • Both payable 9 October 2019 40 41.0 • Together with the £29.0m 2018 final dividend paid in June, 40.8 30 represents a total of £83.9m returned to shareholders in 2019 £m 20 10 2019 Pence per Share 13.9 13.1 Interim 4.30 0 2018 2019 Special 12.73 Interim Special Total excl. Final 17.03 15

Summary

Financial Review Capital Allocation Summary H1 19 Another record half year for the Group Mindful of challenging macro-economic conditions in a number of our regions Gross Profit +9.5% in constant currencies Productivity +2.2% following COO appointment and focus Operating profit +11.4% in constant currencies Conversion rate increased to 17.4% Interim dividend up 4.9% to 4.30 pence per share Special dividend of 12.73 pence per share, fifth successive year of special dividends 17

Appendix

Financial Review Capital Allocation Summary Our business model H1 19 19

Financial Review Capital Allocation Summary H1 19 A growing international business Delivering on our global diversification strategy Gross Profit 16% 24% 39% 61% 76% 84% FY 2007 FY 2013 H1 2019 UK International 20

Financial Review Capital Allocation Summary H1 19 Significant variations in recruitment mix Geography Brands 10% 13% 15% 30% 30% 42% 90% 87% 85% 70% 70% 58% EMEA Asia Pacific UK Americas Michael Page Page Personnel Temp Perm 21

Financial Review Capital Allocation Summary H1 19 Long-term international growth ASIA 7,000 EMEA UK AMERICAS PACIFIC 6,116 6,035 Fee Earner Headcount 6,000 5,497 4,711 5,000 4,484 4,278 3,837 3,797 3,810 4,000 3,654 3,624 3,273 2,763 3,000 2,515 EMEA 2,075 1,708 1,657 1,657 2,000 1,466 1,444 APAC 1,174 Americas 1,000 UK - 1985-1990 1990-1999 2000 2001 2002 2003 2004 2005 2006 2008 2009 2010 2013 2014 2015 2007 2011 2012 2016 2017 2018 H1 2019 1990-99 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 France Germany Portugal Poland S Africa Austria Morocco (1993) (2000) (1986) Ireland Turkey INTERNATIONAL GROWTH Spain Switzerland Netherlands UAE (1997) (2001) EMEA (1987) Italy Belgium (1997) (2002) Luxembourg Sweden (2002) Hong Kong Japan India Vietnam New Indonesia (2001) (1995) ASIA Australia Malaysia Zealand (1985) China Thailand Singapore PACIFIC (2003) (1996) Taiwan Brazil (2000) Canada Mexico Colombia Peru USA (1998) Argentina Chile AMERICAS 22

Financial Review Capital Allocation Summary H1 19 Fee earner investment and support staff 7000 6000 5000 Headcount 4000 3000 2000 1000 0 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Fee Earner Support Staff 23