Business Strengths

When I became Chairman, I shared with you my assessment of the strengths of the business:

• A focused strategy of organic growth - rolling out our brands into country after country, city after city, discipline after discipline
• An expanding presence in the world's growth markets
• Powerful brands recognised around the globe
• One of the strongest "make it happen" cultures I have come across in forty years
• A work hard/play hard/go anywhere management team; and
• A small and effective Board

Those strengths have been reinforced during 2012. Your Board has reviewed and embraced the strategy of worldwide organic growth in multiple disciplines and geographies. We have continued to open offices in growth markets. We have established the PageGroup brand for our corporate activities so as not to dilute the power of our three operating brands, Michael Page, Page Personnel and Page Executive. We have redesigned the executive leadership team to create one global company, organisation and culture. In doing so, we have also reduced the cost of this team. We have further strengthened our Board.

We remain free of the constraints that hold back so many businesses in this difficult environment. We still have: no debt; no unfunded pension scheme; no acquisition integration issues; no layers of bureaucracy; and no burdensome fixed costs.

Performance

There is one constraint we do have. Our industry and our company are more exposed to global economic troubles than some. 2012 was a difficult year for the macro- economy in most countries. Despite this, PageGroup delivered a creditable performance with gross profit down 4.9% compared to 2011, a decrease of only 1.5% at constant rates of exchange.

In these tough times the company is looking to get the maximum effectiveness and efficiency out of its investments in operations and infrastructure. Some progress has been made on this already. More will follow in the months to come. Further details of our performance and our plans are in our Annual Report in the Business Review on page 12.

Dividend

We are committed to increasing the dividend over the course of the economic cycle in line with our long-term growth rate. That way, we can maintain a sustainable level of dividend payment during downturns, as well as during more prosperous times. Given our results, we intend to maintain our dividend at the same level as 2011, i.e. pay a final dividend of 6.75p for the 2012 financial year, bringing the full year dividend to 10p (2011: 10p).

The Board

In the last Annual Report I explained that the Board was undergoing considerable change.

Andrew Bracey, our new Chief Financial Officer, started in April 2012 and has already made valuable contributions. In May 2012, following Hubert Reid's retirement from the Board, Ruby McGregor-Smith, our Audit Committee Chairman, became our Senior Independent Director. I mentioned last March that we were looking for another non-executive. We are delighted that Simon Boddie has joined the Board. Following the announcement of our 2012 Preliminary results, in April he will succeed Ruby as Chairman of the Audit Committee.

Our Remuneration Committee Chairman, Reg Sindall, who had begun making important improvements to our compensation system, had, for personal reasons, to leave the Board. We were sorry to lose him. However, we are very fortunate to have appointed David Lowden to take over the Chairmanship of the Committee. The outcome of the Remuneration Committee's work can be seen in the Remuneration Report.

Governance

Two topics have dominated the UK discussion on Corporate Governance. Senior executive pay and boardroom diversity. On executive director pay, we have made five particularly important changes. We have capped previously uncapped pay, we have made executive director incentives both more strategic and longer term, we have set performance criteria for all incentive payments, we have introduced claw-back provisions, and we have increased shareholding guidelines. I should emphasise that PageGroup will continue to pay the market rate to attract and keep executives of the highest calibre and we will reward performance for shareholders.

On diversity, the Board had two goals this year. As a global group we need extensive international experience and are keen to see a higher proportion of women on the Board. Our three new directors have worked in multiple countries in all regions of the world. A higher proportion of women on our board would not only bring different skills and perspectives but also support our gender diversity objectives across the Group. We continue to look for outstanding individuals who can bring such diversity to our Board.

There are three elements of our governance that are particularly important. The Board debates and decides on strategy, holding the Executive team accountable for its execution. We ensure that we have and will have the most talented leadership, both within the Executive team and on the Board. We always ask, "What is the right thing to do?" so that everyone involved with PageGroup can continue to be proud of us. My job is to make sure these three things happen. Further details of how the company is governed and how the Board is run are given elsewhere in this report.

Looking Ahead

Our priorities for 2013 are clear. We will continue to execute our organic growth strategy. We will develop our worldwide leadership team. We will push for greater returns from our investments in support systems and processes. We will build on the improvements we have made in designing a global company. The Board will concentrate on supporting and challenging our management to ensure this happens. The macro-economy is tough. PageGroup will continue to go through considerable change. Our people navigate the economic ups and downs. They make the changes happen. We are very grateful to them.

Robin Buchanan
Chairman
March 2013