Q4 2019 and FY19 Trading Update Kelvin Stagg Chief Financial - - PowerPoint PPT Presentation

Steve Ingham Kelvin Stagg Chief Executive Officer Chief Financial Officer LSE: PAGE.L Website: https://www.page.com/investors 14 January 2020

Q4 2019 and FY19 Trading Update

Headline Numbers

Kelvin Stagg, Chief Financial Officer

Q4 19

Headline Numbers Financial Review Regional Review Summary & Outlook

3

Key financial highlights

Slowdown in growth rate to -0.4%

£205.6m

£211.0m Q4 2018

£856.0m

£814.9m FY 2018

Gross Profit Q4 Gross Profit FY

• 0.4%

+5.0% FY 2019

• 2.6%

+5.0% FY 2019

Growth in Constant Currency Q4 Reported Rates Q4 Michael Page Q4 Page Personnel Q4

78:22

6,027:1,671 FTE

• c. £93m
• c. £98m Q4 2018

Fee earner to

• perational

support staff ratio Net Cash

• 0.1%

+2.1% Q3 2019

• 1.0%

+2.0% Q3 2019

Financial Review

Q4 19

Headline Numbers Financial Review Regional Review Summary & Outlook

74% 26%

Perm Temp

82% 18%

Perm Temp

54% 46%

Perm Temp

5

• Gross Profit decline in

permanent -3.0% to £151.3m

• Temporary +7.5% to £54.3m
• Perm:Temp ratio 74:26 (Q4

2018: 75:25)

• Gross Profit decline in

permanent -1.9% to £116.3m

• Temporary +9.2% to £24.7m
• Gross Profit decline in

permanent -6.2% to £35.0m

• Temporary +6.1% to £29.6m

Perm and Temp ratio

Stronger growth of Temporary in both brands

Q4 19

Headline Numbers Financial Review Regional Review Summary & Outlook

6

Challenging conditions for all disciplines

35% 24% 24% 17% 25% 25% 25% 25%

Finance Professional Services Technical Marketing, Sales and Retail

Gross Profit by Discipline

Q4 2019 £m 2018 £m Reported % Constant % Finance Accounting and Financial Services 72.5 74.5

• 2.7%
• 0.4%

Professional Services Legal, Technology, HR, Secretarial, Healthcare 50.0 52.1

• 4.0%
• 2.0%

Technical Engineering, Property & Construction, Procurement & Supply Chain 48.8 50.1

• 2.7%
• 0.6%

Marketing, Sales and Retail 34.3 34.3 +0.0% +2.2% Group Total 205.6 211.0

• 2.6%
• 0.4%

Marketing, Sales and Retail strongest performing discipline

Q4 19

Headline Numbers Financial Review Regional Review Summary & Outlook

• Decrease in fee earners of 54 (-0.9%)
• Fee earner headcount reduced mainly in Greater

China and the UK

• Flexible business model enables us to react quickly

to changes in market conditions

• Operational support headcount reduced by 37,

following the completion of the global roll out of GFS

7

Total headcount

• 1.2%

Fee earner headcount reduced by 54

Ratio of fee earners to operational support staff maintained at 78:22

• 37
• 54

1,708 1,671 6,081 6,027

1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 Q3 2019 Q4 2019 Headcount

Operational Support Staff Fee Earners

Q4 19

Headline Numbers Financial Review Regional Review Summary & Outlook

8

49.5 51.4 47.8 43.9 42.8 45.0 45.0 45.7 48.1 52.3 53.5 56.7 59.9 68.3 69.2 70.2 79.2 87.4 89.1 93.1 105.5 121.0 123.4 128.2 140.3 152.4 141.3 118.7 95.0 83.8 82.3 90.6 97.9 111.7 112.8 119.9 127.3 147.8 142.6 136.1 135.9 138.0 126.5 126.5 126.8 135.1 126.9 125.1 126.6 137.1 132.9 136.2 135.7 145.3 139.1 135.8 142.2 156.9 158.6 163.3 170.2 181.8 177.2 182.4 187.8 208.2 207.9 211.0 208.9 224.7 216.8 205.6 210.2

1500 3000 4500 6000 50 100 150 200 250

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4

Fee Earners Gross Profit (£m) as reported

Fee Earners

Gross profit growth stalled

Fee earner headcount reacts to trading conditions

Q4 19 Constant Currency

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Regional Review

Steve Ingham, Chief Executive Officer

Q4 19

Headline Numbers Financial Review Regional Review Summary & Outlook

25% 25% 25% 25%

EMEA Asia Pacific Americas UK

Group growth rate declined to -0.4%

Gross Profit by Geography

Q4 2019 £m 2018 £m Reported % Constant % EMEA 103.6 104.5

• 0.8%

+2.3% Asia Pacific 37.5 41.1

• 8.8%
• 7.9%

Americas 32.6 31.9 +2.2% +5.0% UK 31.9 33.5

• 4.8%
• 4.8%

Group Total 205.6 211.0

• 2.6%
• 0.4%

Regions were impacted by macro-economic and political uncertainty in Q4

10

• Large, High Potential markets* (34% of Group) +4%
• Macro-economic and political uncertainty in EMEA
• APAC impacted by trade tariffs and social unrest
• Americas continued to be our fastest growing region
• UK affected by Brexit

*Germany, Greater China, Latin America, South East Asia and the US

50% 18% 16% 16%

Q4 19

Headline Numbers Financial Review Regional Review Summary & Outlook

France 33% Germany 18% S.Europe 20% Benelux 16% Other 13%

• Michael Page (55% of EMEA) +4%, Page Personnel (45%) flat
• France, representing 17% of the Group, +1%
• Germany +16%, with Michael Page Interim +50%
• Benelux +6%
• Southern Europe +2%; Italy +3%, Spain +2%
• Middle East & Africa -3%

11

50% of Group

Gross Profit by Geography

EMEA growth continued to slow

Macro-economic uncertainty continued to impact market confidence

£m Period 2019 2018 Reported % Constant % Gross Profit Q4 103.6 104.5

• 0.8%

+2.3% FY 418.5 394.3 +6.1% +7.0% No. 2019 Q4 2018 Q4 % 2019 Q3 % Headcount 3,317 3,299 +0.5% 3,344

• 0.8%

Q4 19

Headline Numbers Financial Review Regional Review Summary & Outlook

Greater China 37% Australasia 24% SE Asia 17% Japan & India 22%

• Greater China, -14%, Mainland China -7%, Hong Kong -27%
• South East Asia -4%
• Japan -1%
• India +13%, against a particularly tough comparator of +79%
• Australia -7%, against a tough comparator of +25%

18% of Group

Gross Profit by Geography

Asia Pacific impacted by uncertainty

Social unrest in Hong Kong throughout quarter

12 £m Period 2019 2018 Reported % Constant % Gross Profit Q4 37.5 41.1

• 8.8%
• 7.9%

FY 163.3 161.2 +1.4%

• 0.2%

No. 2019 Q4 2018 Q4 % 2019 Q3 % Headcount 1,679 1,709

• 1.8%

1,711

• 1.9%

Q4 19

Headline Numbers Financial Review Regional Review Summary & Outlook

USA 57% Mexico 15% Brazil 12%

Rest of Latam 13%

• US +10%, driven by strong performances from Boston, Chicago

and Los Angeles

• Slowdown in New York Financial Services
• Latin America +5%; Mexico +9%, Brazil +4%
• Collectively our other four countries in Latin America +4%

13

16% of Group

Gross Profit by Geography

Americas again our fastest growing region

Despite weaker Financial Services market in New York

£m Period 2019 2018 Reported % Constant % Gross Profit Q4 32.6 31.9 +2.2% +5.0% FY 139.1 121.0 +14.9% +14.0% No. 2019 Q4 2018 Q4 % 2019 Q3 % Headcount 1,376 1,328 +3.6% 1,366 +0.7%

Canada 3%

Q4 19

Headline Numbers Financial Review Regional Review Summary & Outlook

London 36% North 22% South 25% Midlands 17%

• Page Personnel suffered from low client confidence, -4%
• Michael Page continued to be impacted by lower senior

candidate confidence, -5%

16% of Group

Gross Profit by Geography

UK impacted by uncertainty

Disruption from Brexit increased uncertainty

14 £m Period 2019 2018 Reported % Gross Profit Q4 31.9 33.5

• 4.8%

FY 135.1 138.4

• 2.4%

No. 2019 Q4 2018 Q4 % 2019 Q3 % Headcount 1,326 1,436

• 7.7%

1,368

• 3.1%

Summary & Outlook

Q4 19

Headline Numbers Financial Review Regional Review Summary & Outlook

Expect FY 2019 operating profit to be in line with

• ur previous guidance of £140m to £150m

Strong net cash position of c. £93m Fee Earners down by 54, Operational Support down by 37 Decrease in Group Gross Profit growth rate to -0.4% Increased macro-economic and political uncertainty

16

Summary

Slowdown in growth in all regions

Q4 19

Headline Numbers Financial Review Regional Review Summary & Outlook

Continue to progress towards our Vision Well positioned to take advantage of all opportunities during 2020 Business model enables us to react quickly to market conditions Likely that foreign exchange headwinds will persist Tough trading conditions experienced across the majority

• f our regions are anticipated to continue

17

Outlook

Challenging trading conditions and foreign exchange headwinds

Appendix

Q4 19

Headline Numbers Financial Review Regional Review Summary & Outlook

19

Our business model

Q4 19

Headline Numbers Financial Review Regional Review Summary & Outlook

20

Delivering on our global diversification strategy

A growing international business

61% 39% 76% 24% 84% 16% FY 2007 FY 2013 Q4 2019 Gross Profit

International UK

Q4 19

Headline Numbers Financial Review Regional Review Summary & Outlook

21

67% 86% 87% 67% 33% 14% 13% 33% EMEA Asia Pacific Americas UK Temp Perm 82% 54% 18% 46% Michael Page Page Personnel Geography Brands

Significant variations in recruitment mix

Q4 19

Headline Numbers Financial Review Regional Review Summary & Outlook EMEA

918 2,610 1,352 1,147

• 1,000

2,000 3,000 4,000 5,000 6,000 7,000

1990-99 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Fee Earner Headcount

AMERICAS ASIA PACIFIC

22

1985-1990 1990-1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2017 2018

Portugal (2000) Switzerland (2001) Belgium (2002) Sweden (2002) Poland S Africa Ireland UAE Austria Turkey Luxembourg Morocco Thailand Indonesia Taiwan India Malaysia New Zealand Japan (2001) China (2003) Australia (1985) USA (1998) Brazil (2000) Canada Mexico Chile Colombia Peru

INTERNATIONAL GROWTH

France (1986) Netherlands (1987) Germany (1993) Spain (1997) Italy (1997) Hong Kong (1995) Singapore (1996) Argentina

UK ASIA PACIFIC EMEA AMERICAS

Long term fee earner and international growth

2019

Vietnam

2016

Q4 19

Headline Numbers Financial Review Regional Review Summary & Outlook

23

1000 2000 3000 4000 5000 6000 7000 H1H2H1H2H1H2H1H2H1H2H1H2H1H2H1H2H1H2H1H2H1H2H1H2H1H2H1H2H1H2H1H2H1H2 Headcount Fee Earner Support Staff 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Fee earner investment and support staff

Q4 19

Headline Numbers Financial Review Regional Review Summary & Outlook

24

Year-on-Year Gross Profit Rates

2017 2018 2019

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

EMEA +14.8% +13.2% +12.6% +19.3% +18.2% +18.6% +20.9% +13.9% +11.4% +9.0% +5.6% +2.3% Asia Pacific +3.9% +6.8% +13.9% +14.9% +13.8% +18.4% +27.7% +22.0% +14.9% +4.7%

• 8.1%
• 7.9%

– Asia +3.6% +10.2% +21.9% +20.8% +17.8% +21.2% +32.2% +21.2% +15.6% +5.8%

• 10.6%
• 7.6%

– Australasia +4.7%

• 1.5%
• 4.4%

+0.7% +4.3% +10.6% +15.7% +25.0% +13.0% +0.9% +1.1%

• 9.6%

Americas +15.2% +13.8% +18.4% +18.8% +20.4% +29.2% +30.1% +29.2% +21.4% +17.4% +13.0% +5.0% – North America +12.5% +14.6% +26.5% +18.7% +16.4% +27.0% +27.2% +30.3% +20.9% +18.9% +10.3% +4.6% – Latin America +19.2% +12.8% +9.1% +19.0% +25.7% +32.2% +33.9% +27.7% +21.6% +15.3% +16.9% +5.5% UK

• 0.1%
• 4.5%
• 7.6%
• 2.8%
• 7.1%
• 1.9%

+0.8% +2.1% +1.7%

• 2.4%
• 4.1%
• 4.8%

Group Total +9.1% +7.7% +8.8% +13.8% +12.3% +16.0% +19.7% +15.4% +11.7% +7.4% +2.1%

• 0.4%

Q4 19

Headline Numbers Financial Review Regional Review Summary & Outlook

25

Contacts Jeremy Tatham – Group Financial Controller Tel: +44 (0) 1932 264 143 Email: investorrelations@michaelpage.com Web: https://www.page.com/investors Date Event 5 March 2020 FY 2019 Results 15 April 2020 Q1 2020 Trading Update

Contacts and Calendar

Q4 19

Headline Numbers Financial Review Regional Review Summary & Outlook

26

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