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

Kelvin Stagg Chief Financial Officer LSE: PAGE.L Website: https://www.page.com/investors 7 August 2019

Half Year Results 2019

“Record first half for the Group”

Financial Review

Kelvin Stagg, Chief Financial Officer

Financial Review Capital Allocation Summary

H1 19

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Key financial highlights

Record first half for the Group

£433.5m

£396.0m H1 2018

+9.5%

+14.2% H1 2018

Gross Profit Constant Currency Growth

£75.6m

£67.2m H1 2018

17.4%

17.0% H1 2018

Operating Profit Conversion Rate

16.8p

15.5p H1 2018

£81.7m

£87.0m H1 2018

EPS Net cash

4.30p

4.10p H1 2018

12.73p

12.73p H1 2018

Interim Dividend Per share Special Dividend Per share

Financial Review Capital Allocation Summary

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Focus on productivity and conversion

Conversion rate up to 17.4%

£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 Productivity** (£k) 70.7 69.2 +2.2% +2.2%

• Record Gross and Operating Profit
• Conversion rate increased by 0.4 ppts
• Fee Earner Productivity increased +2.2%

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*Operating Profit as a percentage of Gross Profit ** Gross Profit per Fee Earner

Financial Review Capital Allocation Summary

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Record Gross Profit in three of our four regions

Improvement in productivity in all regions

H1 2019 H1 2018 £m Gross Profit Operating Profit Conversion Rate Productivity increase* Gross Profit Operating Profit Conversion Rate EMEA 213.1 45.6 21.4% +3.0% 194.9 40.9 21.0% Asia Pacific 81.8 8.8 10.8% +0.5% 74.1 9.0 12.1% 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

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*In constant currencies

Financial Review Capital Allocation Summary

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• Employee costs driven by a +6.6% increase in average

headcount and inflationary salary rises

• Completed implementation of Global Finance System (GFS) in

H1 2019

• Resultant temporary increase in support headcount

Fee earner to support staff ratio currently at 78:22

Costs driven by employee headcount

15 18 21 24 27 30 2009 2013 2017

Support staff as % of Group headcount 6 £m H1 2019 H1 2018 Constant % Employee 281.0 257.6 +9.3% Other costs 76.9 71.2 +8.8% Total 357.9 328.8 +9.1%

H1 19

Financial Review Capital Allocation Summary

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Grossing up of Assets and Liabilities by c. £130m

IFRS 16 - balance sheet impact

• 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

£m 2019 H1 2019 Opening Balance Assets Right-of-use assets 129.5 129.3 Liabilities Lease Liability (138.5) (131.4)

Financial Review Capital Allocation Summary

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Slight benefit to EBIT; marginal negative impact on PBT

IFRS 16 – income statement impact

• Straight line rental expense has been replaced by depreciation of right-of-use assets and interest on lease liabilities

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)

Financial Review Capital Allocation Summary

H1 19

Net cash of £81.7m

Strong and robust balance sheet

£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

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Financial Review Capital Allocation Summary

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Depreciation of right-of-use assets of £19.6m

Depreciation increase due to IFRS 16

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

Financial Review Capital Allocation Summary

H1 19

Special dividend to be paid for a fifth successive year

Strong cash flow generation

Cash Increase Decrease

11 97.7 81.7 109.1 (45.8) (20.7) (13.4)

50 90 130 170 210

Dec 18 EBITDA Working Capital Tax and net interest Net capex Lease payment Share options exercised Dividends Paid Exchange Jun 19

£m 1.1 (20.7) 3.5 (29.0)

Capital Allocation

Financial Review Capital Allocation Summary

H1 19 To make supplementary returns to shareholders either by a share buyback

• r special dividend

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A highly cash generative business model

Clear and established capital allocation strategy

To satisfy

• perational and

investment requirements, and to hedge liabilities under the Group’s share plans To maintain the

• rdinary dividend

through downturns and to increase it during more prosperous times 2nd use of cash 3rd use of cash 1st use of cash

Financial Review Capital Allocation Summary

H1 19 £m

Track record of shareholder returns

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13 12 13 14 18 22 27 26 25 29 31 31 31 35 36 38 41 14 24 34 83 60 16 15 30 50 20 40 40 20 40 60 80 100 120 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Ordinary Dividend Share Buyback Special Dividend

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• c. £875m returned via share buybacks and dividends

Financial Review Capital Allocation Summary

H1 19 13.1 13.9 40.8 41.0 10 20 30 40 50 60 2018 2019

£m

Interim Special

Committed to returning cash to shareholders

A growing dividend through the cycle

• 2019 interim dividend proposed of 4.30p per share or £13.9m,

increase of 4.9% on 2018

• 2019 special dividend proposed of 12.73 pence per share

(£41.0m)

• Both payable 9 October 2019
• Together with the £29.0m 2018 final dividend paid in June,

represents a total of £83.9m returned to shareholders in 2019

2019 Pence per Share Interim 4.30 Special 12.73 Total excl. Final 17.03

+1.8%

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Summary

Financial Review Capital Allocation Summary

H1 19

Mindful of challenging macro-economic conditions in a number of our regions

Another record half year for the Group

Special dividend of 12.73 pence per share, fifth successive year of special dividends Interim dividend up 4.9% to 4.30 pence per share Conversion rate increased to 17.4% Operating profit +11.4% in constant currencies Productivity +2.2% following COO appointment and focus Gross Profit +9.5% in constant currencies

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Appendix

Financial Review Capital Allocation Summary

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Our business model

Financial Review Capital Allocation Summary

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Delivering on our global diversification strategy

A growing international business

61% 39% 76% 24% 84% 16% FY 2007 FY 2013 H1 2019 Gross Profit

International UK

Financial Review Capital Allocation Summary

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70% 87% 70% 90% 30% 13% 30% 10% EMEA Asia Pacific UK Americas Temp Perm 85% 58% 15% 42% Michael Page Page Personnel Geography Brands

Significant variations in recruitment mix

Financial Review Capital Allocation Summary

H1 19

1,174 1,657 1,657 1,466 1,444 1,708 2,075 2,763 3,837 3,654 2,515 3,273 3,797 3,624 3,810 4,278 4,484 4,711 5,497 6,116 6,035

• 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 EMEA

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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)

EMEA APAC UK Americas

Argentina

UK ASIA PACIFIC EMEA AMERICAS

Long-term international growth

H1 2019

Vietnam

2016

Financial Review Capital Allocation Summary

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Fee earner investment and support staff

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

Financial Review Capital Allocation Summary

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2017 2018 2019

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

EMEA +14.8% +13.2% +12.6% +19.3% +18.2% +18.6% +20.9% +13.9% +11.4% +9.0% Asia Pacific +3.9% +6.8% +13.9% +14.9% +13.8% +18.4% +27.7% +22.0% +14.9% +4.7% – Asia +3.6% +10.2% +21.9% +20.8% +17.8% +21.2% +32.2% +21.2% +15.6% +5.8% – Australasia +4.7%

• 1.5%
• 4.4%

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

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

+0.8% +2.1% +1.7%

• 2.4%

Americas +15.2% +13.8% +18.4% +18.8% +20.4% +29.2% +30.1% +29.2% +21.4% +17.4% – North America +12.5% +14.6% +26.5% +18.7% +16.4% +27.0% +27.2% +30.3% +20.9% +18.9% – Latin America +19.2% +12.8% +9.1% +19.0% +25.7% +32.2% +33.9% +27.7% +21.6% +15.3% Group Total +9.1% +7.7% +8.8% +13.8% +12.3% +16.0% +19.7% +15.4% +11.7% +7.4%

Year-on-Year Gross Profit Rates

Financial Review Capital Allocation Summary

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Contacts Jeremy Tatham – Group Financial Controller Tel: +44 (0) 1932 264 143 Email: investorrelations@michaelpage.com Web: http://www.page.com/investors Date Event 9 October 2019 Q3 2019 Trading Update

Contacts and Calendar

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