Pagegroup Plc

Good morning, everyone, and welcome to the Page Group 2025 third quarter trading update. I'm Kelvin Stagg, Chief Financial Officer, and on the call with me is Nick Kirk, Chief Executive Officer. Although I will not read it through, I'd just like to make reference to the legal formalities that are covered in the cautionary statement in the appendix to this presentation, and which will also be available on our website following the call. The group delivered gross profit of £187.8 million in the quarter, a decline of 6.7% in constant currencies. In line with Q2, we saw variable market conditions across the group. We continue to experience subdued levels of sentiment and confidence in Europe, particularly in our two largest markets, France and Germany, as well as in the UK. However, we delivered a fourth consecutive quarter of growth in the US, our fourth largest market, and a second consecutive quarter of growth in Asia. Collectively, these two markets represent a quarter of the group. We reduced our fee-earner headcount by 120, or 2.3%, during the quarter, mainly in Europe. Productivity measured as gross profit per fee-earner grew 1% versus Q3 2024, despite the tough macroeconomic conditions. Net cash at the end of September was around £38 million. This compares to 11 at the end of Q2 and is before the recent interim dividend payment paid on the 10th of October, totaling 16.7 million pounds. I will now give a brief financial review. We reduced Southiana headcount by 120 or 2.3 percent during Q3, with reductions mainly in Europe. And non-operations headcount decreased by 11 in the quarter. Overall, the group had 5,043 fee earners and a total headcount of 6,903. We remain committed to our strategy and continue to reallocate resources into the areas of the business where we see the most significant long-term structural opportunities. Concurrently, we continue to ensure headcount in all our markets is aligned to activity levels. Overall, our focus remains to balance near-term productivity with ensuring we are well-placed to take advantage of opportunities when market conditions improve. Despite the tough macroeconomic conditions, gross profit per fee earner increased 1% compared to Q3 2024 as we continue to carefully balance customer demand with fee earner resource. Where we experienced improved trading in Asia and the U.S., This was driven by higher levels of conversion of offers to placements. In our other countries, where trading remains challenging, we are yet to see any improvement in this metric. However, our fee rates remain at record levels. I will now present a regional review. Group gross profit declined 6.7% in constant currencies against Q3 2024. In line with Q2, we saw variable market conditions across the group, with ongoing challenging conditions in continental Europe and the UK. However, we saw growth continue in Asia and the US. In our largest region, Europe, Middle East and Africa, which represented 52% of the group, we declined 10.2%. We continue to see tough trading conditions with low levels of candidate and client confidence. Germany, the group's largest market in Q3, represented 13% of the group, declined by 11%, an improvement on the decline of 21% in Q2. The market remains challenging but stable, with companies continuing to limit and delay hiring decisions due to macroeconomic uncertainty. Our contracting business was the most resilient, down 5%. However, tough conditions continued in our temp and perm businesses, which were down 13% and 9% respectively. France, the group's second-largest market, declined 16%. Temporary recruitment, down 4%. Outperformed permanent, down 26%, indicative of the ongoing uncertainty in the market. Spain grew 3%, with particularly strong results in Page Executive. Elsewhere in Europe, we saw challenging market conditions in all countries. In response, we reduced our theater headcount by 79%, mainly in Germany and France. Excluding the impact of hyperinflation in Argentina, the Americas, which represented 19 percent of the group, grew 3.5 percent against Q3 2024. North America grew 10 percent, with the U.S. up 10, its fourth consecutive quarter of growth. We saw good levels of activity in trading, which continued strong results, particularly in manufacturing and construction. In Latin America, excluding Argentina, gross profit was down 4%. Mexico, our largest country in the region, was down 12% due to ongoing tariff uncertainty. Brazil was flat, with challenging conditions in permanent recruitment, but a strong performance in temporary. Our remaining countries in Latin America grew 1% collectively. Overall, Fiona headcount decreased by 16% in the quarter, mainly in Brazil, partially offset by additions in the U.S., In Asia Pacific, which represented 17% of the group, Q3 gross profit declined 1.2%. We continue to see improved trading conditions and a second quarter of growth in Asia, up 1%. Southeast Asia grew 5% against Q3 2024, with improved conditions across most of our markets in this region. Conditions remain tough in Greater China, down 7% on Q3. Mainland China declined 20%, Hong Kong grew eight, driven by another particularly strong performance in Page Executive. Japan declined 2%. India, where we now have almost 250 fee earners, grew 11%, with continued strong trading conditions. Australia declined 12%, with the market particularly challenging in New South Wales. Our fee earner headcount in the region decreased by nine in the quarter. In the UK, which represented 12% of the group, gross profit declined 14.3% in line with Q2. We continue to see clients deferring hiring decisions and candidates cautious about accepting offers. Permanent recruitment declined 12% against 2024. We're temporary down 19 due to the closure and reallocation of resources from our UK page personnel business to Michael Page this year. Fiona headcount reduced by 16%. in Q3. I will now provide a summary of our results. In line with the previous quarter, in Q3, we saw variable market conditions across the group. The conversion of offers to placements remained the most significant area of challenge, as ongoing macroeconomic uncertainty continued to impact confidence, which extended time to hire. We remain committed to our strategy and continue to reallocate resources into the areas of the business where we see the most significant long-term structural opportunities. Concurrently, we continue to ensure headcount in all our markets is aligned to activity levels. Overall, our focus remains to balance near-term productivity with ensuring we are well-placed to take advantage of opportunities when market conditions improve. We have made good progress on our cost optimization program during the year, which is on track to deliver annualized savings of around 15 million pounds from 2026. Despite the uncertain outlook due to the unpredictable economic environment, we remain confident in the execution of our strategy, given our highly diversified and adaptable business model, strong balance sheet and our cost base that is under continuous review. The Board expects full-year operating profit to be broadly in line with current consensus of £21.5 million. Nick and I are now happy to take any questions you may have.

Thank you. As a reminder, please press star one if you would like to ask a question or press star two if you would like to withdraw. The first question is from Andy Grubler at BNP Paribas. Please go ahead.

Hi, good morning. Just a couple from me, if I may. Firstly, on cash, net cash in the period, sort of relatively low at this point. Can you just talk through some of the drivers, working capital and so forth, and also what that means for the dividend? And then secondly, just in terms of run rates through September and into October, what are your thoughts on headcount for the remainder of the year? Thank you.