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ANNUAL REPORT AND ACCOUNTS 2017 STRATEGIC STRATEGIC Contents REPORT Strategic Report Chairman’s Introduction 1 Overview 4 Business Model 5 Strategic Review 8 South East Asia and Greater China 17 KPIs 21 CORPORATE Q&A with Steve Ingham, CEO 24 Corporate Social Responsibility 25 Regional Perspectives 31 Risk Management 33 Principal Risks and Uncertainties 35 GOVERNANCE Review of the Year 40 Corporate Governance Chairman’s Introduction to Corporate Governance 45 Our Board of Directors 46 The Executive Board 51 Corporate Governance Report 52 Nomination Committee Report 56 FINANCIAL Audit Committee Report 58 Directors’ Remuneration Report – Annual Statement 63 Directors’ Remuneration Report 64 Directors’ Report 82 STATEMENTS Directors’ Statements of Responsibility 84 Financial Statements Independent Auditor’s Report 85 Consolidated Income Statement 91 Consolidated Statement of Comprehensive Income 91 Consolidated and Parent Company Balance Sheets 92 Consolidated Statement of Changes in Equity 93 ADDITIONAL Statement of Changes in Equity – Parent Company 94 Consolidated and Parent Company Cash Flow Statements 95 Notes to the Financial Statements 96 Additional Information INFORMATION Shareholder information and advisers 123 We are one of the world’s best Business model known and most respected PageGroup’s business model has proved itself both through economic cycles and as the specialist recruitment consultancies. business has expanded into a global enterprise. At its core is a focus on organic growth. We deliver recruitment services to clients through a network of 139 Agile and Career responsive development offices across 36 countries. structure Our vision is to increase the scale Team and diversification of PageGroup by profit-led Organic compensation organically growing existing and Global management Growth new teams, offices, disciplines mobility and markets. Productivity-led Experienced expansion management pool Highlights Revenue 2016: £1,196.1m * Our strategy £1,371.5m +9.8% We have established three categories into which we have grouped each of our geographical markets based on criteria including the size of the opportunity and the potential for future growth. Gross Profit 2016: £621.0m +9.8%* Large, Small £711.6m Large, High and Medium, Proven Potential High Margin Operating Profit 2016: £101.0m Typically under- These are large Markets which are, or £118.3m +11.3%* developed markets, markets where we could be, significant but where we have are already proven profit contributors with a successful track with a strong attractive conversion Basic Earnings Per Share 2016: 23.1p record and confidence track record and a margins, but each in our ability to significant presence. are unlikely (or not scale our operations yet proven) to be able 26.5p +14.7% substantially. to grow to more than 300 fee earners. * In constant currency at prior year rates Ordinary and Special Dividend Our competitive advantage 25.23p 2016: 18.44p Our true competitive advantage is the combination of these three factors and the Shift in business model balance we have achieved in the business over the past 40 years. Transformation and change % Non-UK Gross Profit PageGroup brands Brand Scale Culture and reputation 80.2% 2016: 76.4% % Non-Accounting and Financial Services Gross Profit Gross profit by discipline 63.3% 2016: 61.6% Accounting and Financial Services £261.1m Legal, Technology, HR etc £161.4m Conversion rate* £711.6m Engineering, Property & Construction, Total Procurement & Supply Chain £158.7m 16.6% 2016: 16.3% Marketing, Sales & Retail £130.4m * Operating profit as a percentage of gross profit STRATEGIC STRATEGIC Where we operate Headcount EMEA (47% of Group) Countries across the world £332m 36 7,029 Gross Profit REPORT Page 31 for EMEA Performance Review UK (20% of Group) Asia Pacific (19% of Group) The Americas (14% of Group) £141m £137m £101m Gross Profit Gross Profit Gross Profit Page 31 for the UK Performance Review Page 32 for Asia Pacific Performance Review Page 32 for The Americas Performance Review CORPORATE CORPORATE EMEA North America 62 offices 10 offices 2,996 employees 478 employees GOVERNANCE Asia 17 offices 1,135 employees Latin America 14 offices 615 employees UK Australasia FINANCIAL 27 offices 1,407 employees 9 offices 398 employees STATEMENTS Principal risks Sustainability Being a responsible corporate citizen is not only the right thing to do, it is good for the long-term health of our business. Shift in business model People attraction, Transformation development and retention and change Strategic People PageGroup brands 54% and reputation ADDITIONAL Risk Working population is female Categories Information systems Cyber security 83% Fiscal and Macro-economic Operational Financial legal compliance Positive score to Employee Engagement Survey INFORMATION exposure Financial management Foreign exchange – and control translation risk Data protection regulation 10% Reduction in energy derived emissions Chairman’s Introduction David Lowden Chairman 2017 Performance Market expectations continued to out, with measurable outcomes being increase significantly as the year seen. Full details of how this strong It gives me great pleasure to report that progressed as a result of this strong performance has been measured and the Group delivered a strong trading performance as we delivered against reflected in the remuneration of the performance for the year ended our strategy. Even with these upgrades management team, is shown in the 31 December 2017. taking place throughout the year, our Remuneration Report on pages 63 As we entered 2017, there were performance still finished towards the to 76. top end of market expectations, with challenging trading conditions in many The Group again achieved a record yet another year of continued profitable of our core markets, including in the UK, level of gross profit in 2017 of £711.6m, growth. Brazil, Singapore, Australia and Financial an increase of 14.6% over the prior Services in New York. Upcoming The management team has continued year in reported rates and 9.8% in elections across Europe were also to make strong progress in delivering constant currency. We delivered strong adding to the uncertainty. our long-term strategy, with 2017 performances in Continental Europe, Whilst some of these uncertainties total shareholder return being ranked Asia and the Americas and were proved to be less severe than originally amongst the highest in our peer encouraged by improvements and anticipated, our continued focus on the group, and higher than our FTSE a return to growth in Australia, Brazil strategy and strong performances in key 250 index comparators. Strategic and Singapore as 2017 progressed. markets, helped us to deliver well ahead initiatives regarding people, efficiency, Overall, 22 of our 36 countries of the market expectations in existence risk management and diversity have delivered their best recorded level of at the start of the year. continued to be successfully rolled gross profit. However, our growth was 1 | Strategic Report STRATEGIC STRATEGIC impacted in the UK where we continued Large High Potential Markets, namely during downturns, as well as increasing to experience challenging market the US, Germany, South East Asia, it during more prosperous times. REPORT conditions, with the macro environment Greater China and Latin America. Gross impacting some clients and senior profit growth in this market was above In 2017, we generated cash from candidates. the Group average at 14.6%. These operations of £130.0m and ended the strategic investments will continue in year with cash balances of £95.6m We continued to invest in new markets 2018, as well as in those businesses and a level of distributable reserves and disciplines and finished the year where we are seeing strong growth. that support more than three times with an increase of 786 fee earners to this annual dividend. Given this cash 5,497, another record for the Group. To enable us to grow our market position, levels of distributable reserves During the year, new headcount was presence, we have continued to expand and our results for the year, we propose added at a ratio of 85 fee earners for our disciplines into new countries, such to increase the final dividend to 8.60p. every 15 operational support staff as as oil, gas and mining in Chile. We have When taken together with the interim CORPORATE we continued to move towards our also made further investments into dividend paid in October of 3.90p, this target ratio of 82:18. At the same time markets such as the Nikkei market in implies a total dividend of 12.50p, an we continued to deliver efficiencies in Japan, regional and domestic markets in increase of 4.3% on 2016. our back office activities and finished Mainland China, as well as investments the year with a fee earner to operational in US markets outside Financial Services support staff ratio of 78:22. in New York. These investments have Dividend Per Share (p) helped us achieve record levels of Our largest region, Europe, Middle East 30 GOVERNANCE growth in these businesses. and Africa, which now represents just 27.5 Special dividend under 50 percent of the Group, grew We have also benefited from the 25.23 16.0 gross profit 22.2% in reported rates over transition into our European Shared 24 the prior year and 15.0% in constant Service Centre in Barcelona, which 12.73 currency, an outstanding result. In terms completed in 2016. In this region, of gross profit, France and Germany, the operational support cost per fee earner 18.44 two largest countries in the region, grew has fallen by around 20% since 2014, 18 25% and 12% percent respectively, with attributed to process alignment across 6.46 The Netherlands up 14% and Spain up all 14 European countries, wage 16%. The UK was the only region not arbitrage and other efficiencies. 12 to improve on the prior year but was 11.98 12.50 These efficiencies are demonstrated 11.5 FINANCIAL broadly in line, down 3.8% compared to further with fee earner headcount 10.5 11.0 down 3.5% in 2016.

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