PageGroup plc Half-year Report (5886N)

Share Name	Share Symbol	Market	Type	Share ISIN	Share Description
Pagegroup Plc	LSE:PAGE	London	Ordinary Share	GB0030232317	ORD 1P

	Price Change	% Change	Share Price	Bid Price	Offer Price	High Price	Low Price	Open Price	Shares Traded	Last Trade
	0.40	0.09%	441.40	441.00	441.60	446.60	440.40	445.00	111,588	13:17:03

Industry Sector	Turnover	Profit	EPS - Basic	PE Ratio	Market Cap
Employment Agencies	2.01B	77.07M	0.2436	18.14	1.4B

Pagegroup (LSE:PAGE)
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TIDMPAGE

RNS Number : 5886N

PageGroup plc

10 August 2017

PageGroup plc

Half Year Results for the Period Ended 30 June 2017

PageGroup plc ("PageGroup"), the specialist professional recruitment company, announces its unaudited half year results for the period ended 30 June 2017.

 
 Financial summary 
  (6 months to 30 June                                     Change 
  2017)                     2017        2016      Change     CC* 
-----------------------  ----------  ----------  -------  ------- 
 Revenue                  GBP673.1m   GBP575.9m   +16.9%    +7.7% 
-----------------------  ----------  ----------  -------  ------- 
 Gross profit             GBP352.0m   GBP299.2m   +17.7%    +8.3% 
-----------------------  ----------  ----------  -------  ------- 
 Operating profit          GBP56.9m    GBP47.1m   +20.9%    +9.2% 
-----------------------  ----------  ----------  -------  ------- 
 Profit before tax         GBP56.9m    GBP46.9m   +21.4% 
-----------------------  ----------  ----------  ------- 
 Basic earnings per 
  share                       13.1p       10.8p   +21.3% 
-----------------------  ----------  ----------  ------- 
 Diluted earnings per 
  share                       13.1p       10.8p   +21.3% 
-----------------------  ----------  ----------  ------- 
 Interim dividend per 
  share                       3.90p       3.75p    +4.0% 
-----------------------  ----------  ----------  ------- 
 Special dividend per 
  share                      12.73p 
-----------------------  ----------

*in constant currency at prior year rates

HIGHLIGHTS

   --       Group operating profit increased 9.2%* to GBP56.9m, +20.9% in reported rates

-- Favourable FX movements increased reported gross profit by c. GBP28m and operating profit by c. GBP6m

   --       Conversion rate of gross profit to operating profit increased to 16.2% (H1 2016: 15.7%) 
   --       Interim dividend up 4.0% to 3.90 pence per share, totalling GBP12.3m 
   --       Special dividend of 12.73 pence per share, totalling GBP40.0m

Commenting, Steve Ingham, Chief Executive Officer, said:

"PageGroup delivered an increase of 8.3%* in gross profit and 9.2%* in operating profit in the first half of 2017, with the Group's conversion rate rising to 16.2% from 15.7%, reflecting an improved business performance and operational efficiencies.

"Movements in foreign exchange rates as a result of a weaker Sterling have benefited our first half results by

c. GBP28m of gross profit and c. GBP6m of operating profit. At June exchange rates, we anticipate the benefit in the second half to be greatly reduced, at c. GBP2m of gross profit, with a marginal benefit to operating profit.

"We experienced some improved macro-economic conditions, particularly in Asia (ex-Singapore), Continental Europe, and Latin America (ex-Brazil), which helped drive growth in the first half. However, challenging market conditions continued in some of our larger markets, including Brazil, Singapore and the UK.

"We made significant investments in our fee earner headcount over the last 12 months, particularly in France, the US and Latin America, ex. Brazil, up 19%, 28% and 22%, respectively. These investments delivered a strong return, with gross profit growth of 24%, 16% and 24%. We will continue to make headcount investments into our Large, High Potential markets, which represented only 22% of the Group in 2010. These markets now represent 31% of the Group and grew 12% in the first half. We will also continue to make headcount investments into those other markets with favourable trading conditions.

"Fee earner headcount grew 276 (+5.9%) to end the half year at a record level for the Group of 4,987. With our continued focus on operational efficiencies, we maintained our record fee earner to operational support staff ratio of 77:23. Total headcount at the end of the first half was 6,448.

"The Board has announced an interim dividend of 3.90 pence per share, an increase of 4.0% over last year as a result of our improved trading performance and strong balance sheet. In addition, the Group is pleased to announce today a special dividend of GBP40m (12.73 pence per share), making a third consecutive year of special dividends, in line with its intention to return surplus capital to shareholders. Taking both dividend payments together, this amounts to a cash return to shareholders of GBP52.3m payable on 11 October 2017.

"We are pleased with our first half performance, but remain mindful that a number of political and macro-economic uncertainties will continue through 2017. We will continue to focus on driving profitable growth, as we did in the first half, whilst remaining able to respond quickly to any changes in market conditions."

PageGroup will host a conference call, with on-line slide presentation, for analysts and investors at 8.30am on 10 August 2017, the details of which are below.

Link:

http://www.investis-live.com/pagegroup/596c7361c6702b0a0049d15d/gwag

Please use the following dial-in number to join the conference:

+ 44 (0)20 3059 8125

Please quote "PageGroup" to gain access to the call

A presentation and recording to accompany the call will be posted on the PageGroup website during the course of the morning of 10 August 2017 at:

http://www.page.com/investors/investor-library/2017.aspx

Enquiries:

 
 
   PageGroup                        +44 (0)20 3077 8425 
 Steve Ingham, Chief Executive 
  Officer 
  Kelvin Stagg, Chief Financial 
  Officer 
 
 
 
   FTI Consulting                   +44 (0)20 3727 1340 
 Richard Mountain / Susanne 
  Yule

INTERIM MANAGEMENT REPORT

To the members of PageGroup plc

GROUP STRATEGY

At PageGroup we have a clear strategic vision. We aim to be the leading specialist recruiter in each of the markets in which we operate. We have sought to achieve this by developing a significant market presence in major global economies, as well as targeting new markets where we see the greatest potential for long-term gross profit growth at attractive conversion rates.

We offer our services across a broad range of disciplines and specialisms, solely within the professional recruitment market. Our origins are in permanent recruitment, but nearly a quarter of the gross profit of the business is now in temporary placements, where local culture and market conditions allow. In particular, we focus on opportunities where our industry and market expertise can set us apart from our competition. This enables us to offer a premium service that is valued by clients and attracts the highest calibre of candidates.

PageGroup is focused on delivering against three key strategic objectives to achieve its strategic vision and sustainable financial returns. These are: 1) to look for organic and diversified growth; 2) to position the business to be efficiently scalable and highly flexible to reflect market conditions; and 3) as a people-oriented, organically-driven business, to nurture and develop talent and skills which are fundamental to us achieving long-term sustainable growth.

We therefore invest significantly in our people, as the recruitment, retention and development of the best talent available is central to our ability to grow the business and to manage our resources through economic cycles. Investment in the business has been focused on developing the long-term sustainability of the business and is supported by significant balance sheet strength and cash flow generation.

Organic growth

Our strategy is to grow organically, achieved by drawing upon the skills and experience of proven PageGroup management, ensuring we have the best and most experienced, home-grown talent in each key role. Our team-based structure and profit share business model is highly scalable. The small size of our specialist teams means we can increase headcount rapidly to achieve growth when market conditions are favourable.

Conversely, when market conditions tighten, these entrepreneurial, profit sharing teams reduce in size largely through natural attrition. Consequently, our cost base contracts during the lean times. Our strategy for organic growth has served the business well over the 40 years since its inception and we believe it will continue to do so. We have grown from a small, single discipline management recruitment company operating in one country to a large multidiscipline, multinational business, operating in 36 countries represented by our three key brands of Page Executive, Michael Page and Page Personnel.

Diversification by region and discipline

Our strategy is to expand and diversify the Group by industry sectors, professional disciplines, geography and level of focus, be it Page Executive, Michael Page or Page Personnel, with the objective of being the leading specialist recruitment consultancy in each of our chosen markets.

As recruitment is a cyclical business, impacted significantly by the strength of economies, diversification is an important element of our strategy in order to reduce our dependency on individual businesses or markets, thereby increasing the resilience of the Group. This strategy is pursued entirely through the organic growth of existing and new teams, offices, disciplines and countries, maintaining a consistent team and meritocratic culture as we grow.

Talent and skills development

We recognise that it is our people who are at the heart of everything we do, particularly as an organically grown business where ensuring we have a talent pool with experience through economic cycles and across both geographies and disciplines is critical. Investing in our people is, therefore, a vital element of our strategy. We seek to find the highest calibre staff from a wide range of backgrounds and then do our very best to retain them through offering a fulfilling career and an attractive working environment.

This includes a team-based structure, a profit share business model and continuous training and career development, often internationally. Our strong track record of internal career moves and promotion from within means that people who join us know that they could be our future senior managers and Main Board Directors.

Sustainable Growth

When we invest in a new business, be it a new country, a new office or a new discipline, we do so for the long term. Downturns in the general economy of a country or in specific industries will inevitably have a knock-on effect on the recruitment market. However, it has been our practice in the past, and remains our intention, to maintain our presence in our chosen markets through these downturns, while closely controlling our cost base. In this way, we are able to retain our highly capable management teams in whom we have invested and, normally, we find that we gain market share during downturns, which positions our business for market-leading rates of growth when the economy improves. Pursuing this approach means that we carry spare capacity during downturns, which can have a negative effect on profitability in the short term. A strong balance sheet is, therefore, essential to support the business at these times.

Strategic Priorities

-- increase the scale and diversification of PageGroup by growing, organically, existing and new teams,

offices, disciplines and countries;

-- manage the business with a team and meritocratic culture, whilst delivering a consistent and high quality client and candidate experience;

-- invest through cycles in our Large, High Potential Markets of Germany, Greater China, Latin America, South East Asia and the US to achieve scale and market position;

-- manage our fee earner headcount in all other markets to reflect prevailing market conditions, by selectively adding to geographies and disciplines where there is positive growth momentum, while reducing headcount where the outlook for growth or fee earner productivity is poor;

   --     focus on operational support consistency;

-- focus on succession planning and international career paths to encourage retention and development of key staff; and

-- utilise innovation, particularly in new technologies, with the aim of improving efficiency, attrition and productivity.

GROUP RESULTS

 
 GROSS PROFIT                      Reported (GBPm)           CC 
--------------  -----------  ---------------------------  ------- 
                 % of Group   H1 2017   H1 2016     %        % 
--------------  -----------  --------  --------  -------  ------- 
 EMEA                   46%     162.1     129.1   +25.5%   +13.8% 
--------------  -----------  --------  --------  -------  ------- 
 UK                     21%      73.0      74.8    -2.3%    -2.3% 
--------------  -----------  --------  --------  -------  ------- 
 Asia Pacific           19%      66.7      56.5   +17.9%    +5.5% 
--------------  -----------  --------  --------  -------  ------- 
 Americas               14%      50.2      38.8   +29.6%   +14.1% 
--------------  -----------  --------  --------  -------  ------- 
 Total                 100%     352.0     299.2   +17.7%    +8.3% 
--------------  -----------  --------  --------  -------  ------- 
 
 Permanent              76%     267.3     228.2   +17.2%    +7.7% 
--------------  -----------  --------  --------  -------  ------- 
 Temporary              24%      84.7      71.0   +19.3%   +10.2% 
--------------  -----------  --------  --------  -------  -------

The Group's revenue for the six months ended 30 June 2017 increased 16.9% to GBP673.1m (2016: GBP575.9m) and gross profit increased 17.7% to GBP352.0m (2016: GBP299.2m). At constant currency, the Group's revenue increased by 7.7% and gross profit by 8.3%. The Group's revenue mix between permanent and temporary placements was 40:60 (2016: 40:60) and for gross profit was 76:24 (2016: 76:24).

Revenue from temporary placements comprises the salaries of those placed, together with the margin charged. This margin on temporary placements improved slightly to 21.1% (2016: 20.7%) in the first half of 2017. Overall, pricing has remained relatively stable across all regions, although pricing has improved in markets and disciplines where there have been increasing instances of candidate shortages.

Total headcount increased by 349 while fee earner headcount grew by 276 (+5.9%) to a record level for the Group of 4,987. Our fee earner to operational support staff ratio has remained at its record level of 77.23. We will continue to invest in our headcount in the second half to react to trading conditions.

The Group's organic growth model and profit-based team bonus ensures cost control remains tight. Approximately 75% of first half costs were employee related, including salaries, bonuses, share-based long-term incentives, and training and relocation costs.

In addition to focusing on the operational performance of the business, we continue to progress our strategic projects, with our new Global Finance System ("GFS") in the UK Shared Service Centre going live earlier this week.

In total, administrative expenses in the first half increased 17.1% to GBP295.1m (2016: GBP252.1m), driven by increases in headcount and foreign exchange movements. In constant currency administrative expenses were up 8.1% and operating profit increased 9.2% to GBP56.9m (2016: GBP47.1m), an increase of 20.9% at reported rates.

The Group views its conversion rate, which represents the ratio of operating profit to gross profit, as a key metric for the business. This conversion rate is affected by macro-economic conditions, the level of investment, particularly in fee earners and the degree of spare capacity within the business. The Group's conversion rate of 16.2% (2016: 15.7%) was an improvement on H1 2016, driven by a strong EMEA performance and a noticeable improvement in the Americas, which offset a significant increase in share plan charges of c. GBP3m.

FOREIGN EXCHANGE

The Group benefited in the period from the impact of movements in foreign exchange rates, as Sterling weakened against almost all of the currencies relevant to the Group's operations. In the first half, this increased the Group's revenue, gross profit and operating profit when expressed in Sterling by c. GBP53m, c. GBP28m and

c. GBP6m, respectively. At June closing exchange rates, the impact in the second half will be greatly reduced, with only a c. GBP2m benefit to gross profit and a marginal benefit to operating profit.

OTHER ITEMS

A net interest income of GBPnil (2016: GBP0.2m charge) reflected the higher level of cash held this year compared to 2016 and the continuing low interest rate environment. Interest income of GBP0.2m on cash balances held through the period was offset by financial charges related to the Group's Invoice Discounting Facility and overdrafts used to support local operations.

The charge for taxation is based on the expected effective annual tax rate of 28% (2016: 28%) on profit before taxation. The principal drivers of the tax charge, as in previous years, are share based remuneration, permanent differences between profits for accounting and tax purposes and the geographical mix of profits being taxed at different tax rates.

Basic earnings per share for the six months ended 30 June 2017 was 13.1p, an increase of 21.3% and diluted earnings per share was also 13.1p, an increase of 21.3% (2016: basic earnings per share 10.8p; diluted earnings per share 10.8p).

CASH FLOW

The Group started the year with net cash of GBP92.8m. In the first half, GBP52.5m was generated from operations after funding an increase in working capital of GBP17.5m, primarily due to an increase in trade receivables, largely due to foreign exchange. Tax paid was GBP24.6m and net capital expenditure was GBP8.6m. Net interest paid of GBP1.4m related to settlement of an GBP8m tax liability to HMRC in respect of a refund of VAT dating back to 2010, when GBP28.4m was recognised as non-recurring income. Recent case law has now concluded such VAT refunds in the relevant circumstances are taxable, and as a consequence, the outstanding balance was settled in H1 2017. The outstanding tax and associated interest were accrued in prior years. During the first half, GBP5.7m was received from exercises of share options and dividends of GBP25.9m were paid to shareholders. As a result, the Group had net cash of GBP88.9m at 30 June 2017.

DIVIDS AND SHARE REPURCHASES

It is the Directors' intention to continue to finance the activities and development of the Group from retained earnings and to operate while maintaining a strong balance sheet position.

The Group's first use of cash is to satisfy operational and investment requirements, as well as hedging its liabilities under the Group's share plans. The level of cash required for this purpose will vary depending upon the revenue mix of geographies, permanent and temporary recruitment, and point in the economic cycle.

Our second use of cash is to make returns to shareholders by way of an ordinary dividend. Our policy is to grow the ordinary dividend over the course of the economic cycle in a way that we believe we can sustain the level of ordinary dividend payment during downturns, as well as increasing it during more prosperous times.

Cash generated in excess of these first two priorities will be returned to shareholders through supplementary returns, using special dividends and/or share buybacks. Over the 16 years since flotation, the Group has returned over GBP275m by share buybacks and cancelled around 25% of its issued share capital. This is on top of approaching GBP500m of dividend payments during the same period.

The Board has announced an interim dividend of 3.90 pence per share, an increase of 4.0% over last year. In addition, the Group is pleased to announce today a special dividend of GBP40m (12.73 pence per share), making a third consecutive year of special dividends, in line with its policy of returning surplus capital to shareholders. Taking both dividend payments together, this amounts to a cash return to shareholders of GBP52.3m. Together with the 2016 final dividend paid in June of GBP25.9m, this represents a total of GBP78.2m returned to shareholders in 2017.

This special dividend will be paid, as in previous years, at the same time as the interim dividend on 11 October 2017 to shareholders on the register as at 8 September 2017.

During the first half, no shares were required to be purchased by the employee benefit trust (2016: GBP15.1m).

All growth rates given below are in constant currency unless otherwise stated.

EUROPE, MIDDLE EAST AND AFRICA (EMEA)

 
 EMEA                       GBPm           Growth rates 
------------------  ------------------  ------------------ 
 (46% of Group in 
  H1 2017)           H1 2017   H1 2016   Reported     CC 
------------------  --------  --------  ---------  ------- 
 Gross Profit          162.1     129.1     +25.5%   +13.8% 
------------------  --------  --------  ---------  ------- 
 Operating Profit       31.4      23.8     +31.7%   +17.3% 
------------------  --------  --------  ---------  ------- 
 Conversion Rate 
  (%)                  19.4%     18.5% 
------------------  --------  --------  ---------  -------

EMEA is the Group's largest region, contributing 46% of Group first half gross profit. In reported rates, revenue in the region increased by 27.0% to GBP323.1m (2016: GBP254.3m) and gross profit increased 25.5% to GBP162.1m (2016: GBP129.1m). In constant currency, revenue increased 15.2% on the first half of 2016 and gross profit increased by 13.8%.

The EMEA region continued to experience strong trading conditions throughout the first half. Page Personnel performed well across the region, with growth of 18%. Our largest businesses in France, Germany and Spain, together representing 59% of the region by gross profit, grew 24%, 12% and 19% respectively. In France, Page Personnel, which represents 64% of the business, had a record first half performance, growing 27%. Overall, 9 countries, representing 75% of the region, delivered double-digit growth during the first half of the year. Our business in the Middle East & Africa grew 4%, driven by South Africa and a slight improvement in trading conditions in the UAE.

The 31.7% increase in operating profit for the first half of 2017 to GBP31.4m (2016: GBP23.8m), and improvement in the conversion rate to 19.4% (2016: 18.5%) was due principally to both favourable trading conditions and foreign exchange movements in 2017. Headcount across the region increased 165 (6%) in the first half to 2,718 at the end of June 2017 (2,553 at 31 December 2016).

UNITED KINGDOM

 
 UK                            GBPm         Growth rates 
---------------------  ------------------  ------------- 
 (21% of Group in 
  H1 2017)              H1 2017   H1 2016 
---------------------  --------  --------  ------------- 
 Gross Profit              73.0      74.8          -2.3% 
---------------------  --------  --------  ------------- 
 Operating Profit           8.7      11.6         -25.1% 
---------------------  --------  --------  ------------- 
 Conversion Rate (%)      11.9%     15.6% 
---------------------  --------  --------  -------------

In the UK, representing 21% of Group first half gross profit, revenue declined 3.6% to GBP160.7m (2016: GBP166.7m), and gross profit declined 2.3% to GBP73.0m (2016: GBP74.8m), with Brexit related uncertainty impacting clients' decision-making.

Technical disciplines such as Engineering (+13%) and Property & Construction (+12%) performed well. However, market conditions in our Accounting & Financial Services discipline (-4%) and Marketing, Sales and Retail (-9%) disciplines were more challenging.

These difficult trading conditions reduced conversion by just under 1% on 2016. However, with both Executive Directors and most of our Group functions located in the UK, the region suffered a disproportionate impact from the significant increase in the share plan charges, and as a result operating profit fell 25.1% to GBP8.7m (2016: GBP11.6m) and the conversion rate fell to 11.9% (2016: 15.6%).

Headcount increased by 13 (1%) during the first half of 2017 to 1,424 at the end of June 2017 (1,411 at 31 December 2016).

ASIA PACIFIC

 
 Asia Pacific               GBPm           Growth rates 
------------------  ------------------  ----------------- 
 (19% of Group in 
  H1 2017)           H1 2017   H1 2016   Reported    CC 
------------------  --------  --------  ---------  ------ 
 Gross Profit           66.7      56.5     +17.9%   +5.5% 
------------------  --------  --------  ---------  ------ 
 Operating Profit       11.3       9.4     +20.4%   +5.6% 
------------------  --------  --------  ---------  ------ 
 Conversion Rate 
  (%)                  17.0%     16.6% 
------------------  --------  --------  ---------  ------

In Asia Pacific, representing 19% of Group first half gross profit, revenue increased 19.8% in reported rates to GBP116.9m (2016: GBP97.6m), and gross profit increased 17.9% to GBP66.7m (2016: GBP56.5m). In constant currency, revenue increased 5.9% in the first half and gross profit increased by 5.5%.

Asia, comprising 14% of the Group and 71% of Asia Pacific, grew 7%. We continued to see improvements in Greater China which grew 9%. We saw strong performances from our businesses in Mainland China, where we have a higher proportion of domestic clients. Elsewhere in Asia, India, Indonesia and Malaysia combined grew 19%. However in Singapore, where market conditions remained challenging, gross profit fell 18%.

In Australasia, where Australia grew 2%, Western Australia returned to growth, up 16%, with New South Wales delivering 5% growth. Queensland and Victoria both had single-digit declines.

Operating profit increased 20.4% to GBP11.3m (2016: GBP9.4m), resulting in an increase in the conversion rate to 17.0% (2016: 16.6%). Headcount across the region increased by 93 (8%) through the first half to 1,298 at the end of June 2017 (1,205 at 31 December 2016).

THE AMERICAS

 
 Americas                      GBPm            Growth rates 
---------------------  ------------------  ------------------- 
 (14% of Group in H1 
  2017)                 H1 2017   H1 2016   Reported     CC 
---------------------  --------  --------  ---------  -------- 
 Gross Profit              50.2      38.8     +29.6%    +14.1% 
---------------------  --------  --------  ---------  -------- 
 Operating Profit           5.5       2.3    +144.8%   +116.6% 
---------------------  --------  --------  ---------  -------- 
 Conversion Rate (%)      11.0%      5.8% 
---------------------  --------  --------  ---------  --------

In the Americas, representing 14% of Group first half gross profit, revenue increased 26.5% in reported rates to GBP72.5m (2016: GBP57.3m) while gross profit increased 29.6% to GBP50.2m (2016: GBP38.8m). In constant currency, revenue increased by 10.8% and gross profit increased by 14.1%.

North America saw growth of 13%, though conditions remained challenging in the now smaller New York Financial Services market, which was down 16%. This market now represents 27% of our US business, compared to 37% in H1 2016. We saw good growth elsewhere in the US of 35%, as we continued to diversify our market presence in the other cities and disciplines in which we operate.

Latin America was up 15%. Brazil (34% of Latin America) was flat overall and remained profitable; it also returned to growth in the second quarter.

Elsewhere, our other countries, which now represent 66% of gross profit in Latin America, had another strong half, growing at 24%. Our performances in Argentina, Mexico and Peru were particularly strong. Mexico, which is our largest country in Latin America by headcount, achieved growth of 20% in the half.

Headcount was up 79 (8%) in the first half, to 1,009 at the end of June 2017 (930 at 31 December 2016). Operating profit increased by 144.8% to GBP5.5m (2016: GBP2.3m), with an increase in the conversion rate to 11.0% (2016: 5.8%). This was largely a result of our smaller offices in the US reaching sufficient scale such that they remain consistently profitable even with significant headcount investment.

OUTLOOK

As we stated in our second quarter trading update, we are pleased with our first half performance, but remain mindful that a number of political and macro-economic uncertainties will continue through 2017. We will continue to focus on driving profitable growth, as we did in the first half, whilst remaining able to respond quickly to any changes in market conditions.

KEY PERFORMANCE INDICATORS ("KPIs")

We measure our progress against our strategic objectives using the following key performance indicators:

 
 KPI                   Definition, method of calculation and 
                        analysis 
--------------------  -------------------------------------------------------- 
 
 Gross profit          How measured: Gross profit represents 
  growth                revenue less cost of sales and consists 
                        of the total placement fees of permanent 
                        candidates, the margin earned on the 
                        placement of temporary candidates and 
                        the margin on advertising income, i.e. 
                        it represents net fee income. The measure 
                        used is the increase or decrease in gross 
                        profit as a percentage of the prior year 
                        gross profit. 
                        Why it's important: The growth of gross 
                        profit relative to the previous year 
                        is an indicator of the growth of the

                        net fees from the business as a whole. 
                        It demonstrates whether we are in line 
                        with our strategy to grow the business. 
                        How we performed in H1 2017: With strong 
                        growth in many of our markets, gross 
                        profit income in H1 2017 increased by 
                        8.3% in constant currency, although this 
                        increased to 17.7% at reported rates 
                        after the impact of foreign exchange 
                        (H1 2016: 6.5% in reported rates, 3.6% 
                        in constant currency). 
                        Relevant strategic objective: Organic 
                        growth 
--------------------  -------------------------------------------------------- 
 Gross profit          How measured: Total gross profit from 
  diversification       a) geographic regions outside the UK; 
                        and b) disciplines outside of accounting 
                        and financial services, each expressed 
                        as a percentage of total gross profit. 
                        Why it's important: These percentages 
                        give an indication of how the business 
                        has diversified its revenue streams away 
                        from its historic concentrations in the 
                        UK and from the accounting and financial 
                        services discipline. 
                        How we performed in H1 2017: Geographies: 
                        the percentage increased to 79.3% from 
                        75.0% in 2016, demonstrating further 
                        diversification. This increase reflected 
                        the economic recovery felt in Continental 
                        Europe, along with the weakness of Sterling. 
                        Disciplines: the percentage increased 
                        to 63.1% (2016: 61.3%), with growth of 
                        4% within accounting and financial services, 
                        compared to 11% elsewhere, with a particularly 
                        strong result from our Technical disciplines, 
                        up 20%. 
                        Relevant strategic objective: Diversification 
--------------------  -------------------------------------------------------- 
 Ratio of              How measured: Gross profit from each 
  gross profits         type of placement expressed as a percentage 
  generated             of total gross profit. 
  from permanent        Why it's important: This ratio helps 
  and temporary         us to understand where we are in the 
  placements            economic cycle since the temporary market 
                        tends to be more resilient when the economy 
                        is weak, although in several of our core 
                        strategic markets, working in a temporary 
                        role, or as a contractor or interim employee, 
                        is not currently normal practice, for 
                        example mainland China. 
                        How we performed in H1 2017: 76% of our 
                        gross profit was generated from permanent 
                        placements, in line with 2016, and 24% 
                        from temporary. 
                        Relevant strategic objective: Organic 
                        growth 
--------------------  -------------------------------------------------------- 
 Gross profit          How measured: Gross profit for the year 
  per fee earner        divided by the average number of fee 
                        earners in the year. 
                        Why it's important: This is a key indicator 
                        of productivity. 
                        How we performed in H1 2017: Gross profit 
                        per fee earner was GBP72.3k in H1 2017 
                        compared to GBP66.3k in H1 2016. There 
                        has been an increase in productivity 
                        compared to 2016 as a result of the impact 
                        of favourable currency movements. If 
                        stated in constant currency, productivity 
                        is broadly flat year-on-year. 
                        Relevant strategic objective: Organic 
                        growth 
--------------------  -------------------------------------------------------- 
 Conversion            How measured: Operating profit before 
  before exceptional    interest and taxation (EBIT) before exceptional 
  items                 items as a percentage of gross profit. 
                        Why it's important: This demonstrates 
                        the Group's effectiveness at controlling 
                        the costs and expenses associated with 
                        its normal business operations. It will 
                        be impacted by the level of productivity 
                        and the level of investment for future 
                        growth. 
                        How we performed in H1 2017: Operating 
                        profit as a percentage of gross profit 
                        increased to 16.2% in 2017, up from 15.7% 
                        in the prior year, driven by the work 
                        done in 2016 to achieve consistency and 
                        efficiency across the Group, as well 
                        as an improvement in trading conditions 
                        in Continental Europe. 
                        Relevant strategic objective: Build for 
                        the long-term 
--------------------  -------------------------------------------------------- 
 Basic earnings        How measured: Profit for the year attributable 
  per share             to the Group's equity shareholders, divided 
  before exceptional    by the weighted average number of shares 
  items                 in issue during the year. 
                        Why it's important: This measures the 
                        overall profitability of the Group. 
                        How we performed in H1 2017: Earnings 
                        per share (EPS) in H1 2017 was 13.1p, 
                        a 21.3% improvement on the EPS in 2016 
                        of 10.8p. 
                        Relevant strategic objective: Build for 
                        the long-term, Organic growth 
--------------------  -------------------------------------------------------- 
 Fee-earner:           How measured: The percentage of fee-earners 
  operational           compared to operational support staff 
  support staff         at the period-end, expressed as a ratio. 
  headcount             Why it's important: This reflects the 
  ratio                 operational efficiency in the business 
                        in terms of our ability to grow the revenue-generating 
                        platform at a faster rate than the staff 
                        needed to support this growth. 
                        How we performed in H1 2017: The ratio 
                        continued at a record 77:23 despite the 
                        increase in our support headcount of 
                        73 since year end. We have added 276 
                        fee earners in that same period. (H1 
                        2016: 77:23). 
                        Relevant strategic objective: Sustainable 
                        growth 
--------------------  -------------------------------------------------------- 
 Fee-earner            How measured: Number of fee-earners and 
  headcount             directors involved in revenue-generating 
  growth                activities at the period end, expressed 
                        as the percentage change compared to 
                        the prior year. 
                        Why it's important: Growth in fee-earners 
                        is a guide to our confidence in the business 
                        and macro-economic outlook, as it reflects 
                        expectations as to the level of future 
                        demand above the existing capacity within 
                        the business. 
                        How we performed in H1 2017: Fee earner 
                        headcount grew at 5.9% (2016: 1%), resulting 
                        in 4,987 fee-earners at the period end, 
                        as we invested in our large, high potential 
                        markets as well as those markets experiencing 
                        strong growth. 
                        Relevant strategic objective: Sustainable 
                        growth 
--------------------  -------------------------------------------------------- 
 Net cash              How measured: Cash and short-term deposits 
                        less bank overdrafts and loans. 
                        Why it's important: The level of net 
                        cash is a key measure of our success 
                        in managing our working capital and determines 
                        our ability to reinvest in the business 
                        and to return cash to shareholders. 
                        How we performed in H1 2017: Net cash 
                        at 30 June 2017 was GBP88.9m (2016: GBP73.6m). 
                        This was as a result of share purchases 
                        into the Employee Benefit Trust of GBP15.1m 
                        in 2016 that was not incurred in 2017, 
                        as well as GBP5.7m received in 2017 as 
                        a result of the exercise of share options, 
                        which was not received in 2016. 
                        Relevant strategic objective: Build for 
                        the long-term 
--------------------  --------------------------------------------------------

The source of data and calculation methods year-on-year are on a consistent basis. The movements in KPIs are in line with expectations. Disclosure for GHG emissions and People KPIs is provided annually.

PRINCIPAL RISKS AND UNCERTAINTIES

The management of the business and the execution of the Group's strategy are subject to a number of risks. The main risks that PageGroup believes could potentially impact the Group's operating and financial performance for the remainder of the financial year remain those as set out in the Annual Report and Accounts for the year ending 31 December 2016 on pages 27 to 31.

There have been no changes to these risk categories in the first half to 30 June 2017. However, there remains an increased degree of uncertainty in the UK as a result of Brexit, as well as the recent General Election result where no single party managed to win an overall majority. This General Election result injected further uncertainty and instability into the Brexit process. It is too early to say how this will impact our business going forward, although following the EU Referendum in June 2016, Sterling weakened significantly, which has benefited our results.

We have a proven track record of being able to manage our headcount and costs effectively throughout the economic cycle and it should be noted that the UK is a more resilient market due to its size and maturity. We also expect Continental Europe, the US, Latin America outside of Brazil and Asia outside of Singapore to continue to remain positive. In light of these mixed trading conditions, we will continue to focus on activity levels, adjusting headcount during the second half to react to market conditions. As always, we remain focused on driving profitable growth, whilst remaining able to respond quickly and effectively to any changes in market conditions.

TREASURY MANAGEMENT, BANK FACILITIES AND CURRENCY RISK

It is the Directors' intention to continue to finance the activities and development of the Group from retained earnings and to operate while maintaining a strong balance sheet position.

Cash generated in excess of these first two priorities will be returned to shareholders through supplementary returns, using special dividends and/or share buybacks.

Cash surpluses are invested in short-term deposits, with any working capital requirements being provided from Group cash resources, Group facilities, or by local overdraft facilities. The Group has a multi-currency notional cash pool between the Eurozone subsidiaries and the UK-based Group Treasury subsidiary. The structure facilitates interest and balance compensation of cash and bank overdrafts. The Group has an Invoice Financing facility with HSBC Bank, the availability of which is limited to the level of UK trade receivable available for financing. This facility is subject to conventional banking covenants.

The main functional currencies of the Group are Sterling, Euro, Chinese Renminbi, US Dollar and Australian Dollar. The Group does not have material exposure to foreign denominated monetary assets and liabilities. The Group does not hedge its exposure to translation risk.

In certain cases, where the Group gives or receives short-term loans to and from other Group companies with different reporting currencies, it may use short-dated foreign exchange swap derivative financial instruments to manage the currency and interest rate exposure that arises on these loans. The Group has entered into hedges to cover its investment in foreign entities in the US and Canada.

GOING CONCERN

The Board has undertaken a recent and thorough review of the Group's forecasts and associated risks and sensitivities. Despite the uncertainty in the economy and its inherent risk and impact on the business, the Board has concluded, given the level of cash in the business and Group borrowing facilities, the geographical and discipline diversification, limited concentration risk, as well as the ability to manage the cost base, that the Group has adequate resources to continue in operational existence for the foreseeable future, being a period of at least 12 months from the date of this announcement.

CAUTIONARY STATEMENT

This Interim Management Report ("IMR") has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The IMR should not be relied on by any other party or for any other purpose. This IMR contains certain forward-looking statements. These statements are made by the directors in good faith based on the information available to them up to the time of their approval of this report and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

This IMR has been prepared for the Group as a whole and therefore gives greater emphasis to those matters that are significant to PageGroup plc and its subsidiary undertakings when viewed as a whole.

Page House

The Bourne Business Park

1 Dashwood Lang Road

Addlestone

Weybridge

Surrey

KT15 2QW

By order of the Board,

 
 Steve Ingham              Kelvin Stagg 
 Chief Executive Officer   Chief Financial Officer 
 
 9 August 2017             9 August 2017

INDEPENT REVIEW REPORT TO PAGEGROUP PLC

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2017 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated balance sheet, the condensed consolidated statement of changes in equity, the condensed consolidated statement of cash flows and related notes 1 to 13. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.

Directors' Responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2017 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Ernst & Young LLP

London

9 August 2017

Condensed Consolidated Income Statement