18th Aug 2008 07:00
18 August 2008
MICHAEL PAGE INTERNATIONAL PLC
Half Year Results for the Period Ended 30 June 2008
Michael Page International plc ("Michael Page"), the specialist professional recruitment company, announces its half year results for the period ended 30 June 2008.
|
Financial Highlights (6 months to 30 June 2008 ) |
2008 |
2007 |
Growth |
Constant currency growth |
|
Revenue |
£500.0m |
£395.8m |
26% |
17% |
|
Gross profit |
£292.7m |
£226.5m |
29% |
19% |
|
Operating profit |
£84.9m |
£69.8m |
22% |
11% |
|
Profit before tax |
£84.1m |
£69.2m |
22% |
|
|
Basic earnings per share |
18.3p |
14.3p |
28% |
|
|
Interim dividend per share |
2.88p |
2.40p |
20% |
Key Highlights
Commenting on the results, Steve Ingham, Chief Executive of Michael Page, said:
"Our performance in the first half, with underlying growth of nearly 20% in gross profit against a backdrop of weakening conditions in some of our markets is testament to the increased diversification of the Group. Our organic growth strategy of diversifying by both specialist discipline and geography has enabled us to achieve these record results and be more robust and resilient, with an increasingly difficult economic environment in some markets being balanced by others that remain strong. We have achieved growth in all our regions, including those where conditions would be considered tough and despite the reduction in activity in the financial services sector.
With 50% of the Group's gross profit being generated from non Finance and Accounting professional disciplines and 21% of Group gross profit being generated from temporary placements it is clear that the composition of the Group is significantly more diverse and robust than when market conditions were difficult in the early 1990's and 2000's.
Since the last downturn, we have successfully launched 12 new countries, opened 61 offices and rolled out 178 existing and new disciplines to existing and new countries. As at the end of June 2008, a third of our gross profit comes from businesses created since the last downturn. This significant increase in the diversity of the business means the business is far broader based and so we remain very optimistic about the growth prospects for Michael Page."
Analyst Meeting
The company will be presenting to a meeting of analysts at 9.30am today. The presentation and a recording of the meeting will be available on the company's website later on today at http://investors.michaelpage.co.uk/presentations
Enquiries:
|
Michael Page International plc |
01932 264144 |
|
Steve Ingham, Chief Executive |
|
|
Stephen Puckett, Finance Director |
|
|
Financial Dynamics |
020 7269 7186 |
|
Richard Mountain/David Yates |
GROUP RESULTS
The Group produced a very strong performance during the first half of 2008 despite weakening market conditions in certain markets, particularly in the USA, UK, Netherlands and Spain. The Group's revenue for the six months ended 30 June 2008 increased by 26.3% to £500.0m (2007: £395.8m) and gross profit increased by 29.2% to £292.7m (2007: £226.5m). At constant exchange rates, the Group's revenue grew by 17.3% and gross profit by 19.3%. The Group continued to invest throughout the first half of 2008, opening 3 new countries, 17 new offices and continuing the roll out of disciplines in the existing office network. As a result of these investments and to support the growth in established businesses, Group headcount at 30 June 2008 has increased to 5,535 (31 December 2007: 5,052), with 263 of these joining in January. The weaker market conditions slowed the growth rate of gross profit, which, combined with the increased headcount, is reflected in the operating profit growing by 21.6% (11.4% in constant currency) to £84.9m (2007: £69.8m) and the Group's conversion rate of operating profit from gross profit of 29.0% (2007: 30.8%). Profit before tax increased by 21.5% to £84.1m (2007: £69.2m).
In the first half of 2008 the mix of the Group's revenue and gross profit between permanent and temporary placements was 48:52 (2007: 47:53) and 79:21 (2007: 78:22) respectively with higher growth in gross profit from permanent placements (+30.5%) than from temporary placements (+24.6%). The gross margin on temporary placements increased to 24.4% (2007: 24.1%).
EUROPE, MIDDLE EAST AND AFRICA (EMEA)
Europe, Middle East and Africa (EMEA) is the Group's largest region, contributing 46% of Group gross profit. Revenue in the region increased by 45.9% to £217.8m (2007: £149.2m), gross profit increased by 49.7% to £135.4m (2007: £90.4m) and operating profit increased by 40.8% to £40.0m (2007: £28.5m). In constant currency, revenue grew by 27.5%, gross profit by 30.9% and operating profit by 21.6%.
Our largest business in this region is France, which currently contributes approximately 33% of the region's gross profit. Gross profit in France increased by 48.6% (29.7% in constant currency) in the first half of 2008. Elsewhere in the region all our businesses performed well and together grew gross profits by 50.3%, despite the weaker market conditions of Spain and the more mature Dutch recruitment market, where we have an established market leading presence. In the first half of 2008, we launched in two new countries, Austria (Vienna) and Turkey (Istanbul), and opened new offices in Stuttgart, Seville, Massy, Breda and Gothenburg.
Since the beginning of the year we have added 272 staff taking the region's headcount to 2,350 at the end of June 2008.
UNITED KINGDOM
UK operations, representing 33% of the Group's gross profit, increased revenue by 7.0% to £188.8m (2007: £176.6m), gross profit increased by 3.8% to £95.6m (2007: £92.0m) and operating profit decreased by 0.7% to £28.4m (2007: £28.6m). While there continues to be weakness in banking and related sectors, outside of these areas, we continue to experience good job and candidate flow. However, there is increasing cautionary behaviour being shown, both by candidates and clients. This impacts productivity and is reflected in the slower rate of gross profit growth, which, when combined with the investment in headcount, has reduced the conversion rate to 29.7% (2007: 31.1%). Despite this more difficult climate, 8 out of 12 disciplines in the UK have produced record first half performances, confirming the benefits from our strategy of discipline diversification. As an example, our combined Engineering & Manufacturing, Procurement & Supply Chain and Property & Construction businesses now have nearly twice as many fee earners as our London Financial Services business and grew gross profit at 39%. In the first half of 2008, we opened offices in Newcastle, Canterbury and Cardiff. During the first half, staff numbers increased by 64, largely in the non Finance and Accounting disciplines, to 1,863 at the end of June. To align the business with the slowing market conditions, the staff numbers fell by 44 during July.
ASIA PACIFIC
Asia Pacific operations, representing 12% of the Group's gross profit, increased revenue by 25.7% to £58.9m (2007: £46.9m), gross profit increased by 33.5% to £36.0m (2007: £27.0m) and operating profit increased by 30.6% to £12.9m (2007: £9.8m). In constant currency, revenue grew by 12.6%, gross profit by 20.8% and operating profit by 18.3%. Our largest business in the region, Australia, continued its progress, with first half gross profits increasing by 44.8% (27.0% in constant currency). With the exception of our office in Tokyo, where we have a greater exposure to financial services, our offices in the Rest of the Asia Pacific region have had a strong first half growing gross profits collectively by 18.6% (12.7% in constant currency). During the first half we opened in a new country, New Zealand (Auckland) and established new offices in Beijing and Shenzhen. At the end of June we had 702 staff in the region, an increase of 70 since the start of the year.
THE AMERICAS
The Americas operations, representing 9% of the Group's gross profit, increased revenue by 49.4% to £34.5m (2007: £23.1m), gross profit increased by 50.1% to £25.7m (2007: £17.1m), and operating profit increased by 24.1% to £3.6m (2007: £2.9m). In constant currency, revenue grew by 40.3%, gross profit by 38.4% and operating profit grew by 4.4%. In North America, despite the weak market conditions, due to our small market presence we have continued to grow, albeit at a slower rate. In Latin America, where there has been little impact from the credit crunch, we have maintained our high rates of growth. In the first half we opened our second office in Canada, in Montreal and a second office in New Jersey. We have also invested heavily in new staff into the existing offices. In Brazil, we achieved strong growth benefiting from further investment in new staff. In the region we now have 620 staff, an increase of 77 since the start of the year.
TAXATION AND EARNINGS PER SHARE
The charge for taxation is based on the expected effective annual tax rate of 30.0% (2007: 31.5%) on profit before taxation. Basic earnings er share for the six months ended 30 June 2008 was 18.3p (2007: 14.3p) and diluted earnings per share was 18.0p (2007: 14.0p).
CASH FLOW
The Group started the year with net cash of £10.3m. In the first half, we generated £70.5m from operations after funding a £24.4m increase in working capital reflecting the increased activity. Tax paid was £22.3m and net capital expenditure was £11.6m. During the first half, £10.1m was spent repurchasing shares and dividends of £17.9m were paid. Options were exercised over 0.4m shares during the first half generating £0.7m. The Group had net cash of £22.3m at 30 June 2008, which is £37.8m higher than the £15.5m of net debt at 30 June 2007.
DIVIDENDS AND SHARE REPURCHASES
It is the Board's intention to pay dividends at a level which it believes is sustainable throughout economic cycles and to continue to use share repurchases to return surplus cash to shareholders. Reflecting the Group's first half performance and the Board's confidence in the future prospects for the Group, it has decided to increase the interim dividend by 20% to 2.88p (2007: 2.40p) per share. The interim dividend will be paid on 10 October 2008 to shareholders on the register at 12 September 2008. In the first half, £10.1m of cash was returned to shareholders through the purchase of 3.5m shares, the last purchase being made on 1 May 2008. The programme of share repurchases had to be suspended in early May following the initial approach by Adecco S.A.
KEY PERFORMANCE INDICATORS
Financial and non-financial key performance indicators (KPIs) used by the Board to monitor progress are listed in the table below. The source of data and calculation methods year-on-year are on a consistent basis.
|
KPI |
2008 |
2007 |
Definition, method of calculation and analysis |
|
Gross margin |
58.5% |
57.2% |
Gross profit as a percentage of revenue. Gross margin has slightly improved on last year as a result of the mix of permanent and temporary placements, and improvements in the gross margins on temporary placements. Source: Condensed consolidated income statement in the financial statements. |
|
Conversion |
29.0% |
30.8% |
Operating profit as a percentage of gross profit reflects productivity and how effective the Group is at controlling the costs and expenses associated with its normal business operations and the level of investment for the future. Conversion has decreased slightly over last year as a result of lower productivity and increased headcount. Source: Condensed consolidated income statement in the financial statements. |
|
Productivity (gross profit per fee earner) |
£71.2k |
£74.6k |
Represents how productive fee earners are in the business and is calculated by dividing the gross profit for the period by the average number of fee earners and directors. The higher the number, the higher their productivity. Productivity is a function of the rate of investment in new fee earners, the impact of pricing and the general conditions of the recruitment market. Productivity has fallen compared with last year as a result of weaker market conditions reducing demand and more cautionary behaviour which increases the time to hire process. Source: Internal data. |
|
Fee earner : support staff ratio |
76:24 |
75:25 |
Represents the balance between operational and non-operational staff. The movement in the period reflects the benefit of increased investment in technology and economies of scale. Source: Internal data. |
|
Debtor days |
56 |
51 |
Represents the length of time before the Group receives payments from its debtors. Calculated by comparing how many days' billings it takes to cover the debtor balance. The increase in the period relates mainly to increased billings in Continental Europe, where payment terms are generally longer than elsewhere. Source: Internal data. |
TREASURY MANAGEMENT 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 the Group's business while maintaining the net cash/debt position within a relatively narrow band. Cash generated in excess of these requirements will be used to buy back the Company's shares.
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 set up a multi-currency notional cash pool in 2007. Currently the main Eurozone subsidiaries and the UK-based Group Treasury subsidiary participate in this cash pool, although it is the intention to extend the scope of the participation to other Group companies. The structure facilitates interest and balance compensation of cash and bank overdrafts.
The main functional currencies of the Group are Sterling, Euro and Australian Dollar. The Group does not have material transactional currency exposures, nor is there a material exposure to foreign denominated monetary assets and liabilities. The Group is exposed to foreign currency translation differences in accounting for its overseas operations. Our policy is not to hedge this exposure.
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 foreign exchange swap derivative financial instruments to manage the currency and interest rate exposure that arises on these loans. It is the Group's policy not to seek to designate these derivatives as hedges.
PRINCIPAL RISKS AND UNCERTAINTIES
The management of the business and the execution of the Company's strategy are subject to a number of risks. The following section comprises a summary of what the Group believes are the main risks that could potentially impact the Group's operating and financial performance.
People
The resignation of key individuals and the inability to recruit talented people with the right skill-sets could adversely affect the Group's results. This is further compounded by the Group's organic growth strategy and its policy of not externally hiring senior operational positions. Mitigation of this risk is achieved by succession planning, training of staff, competitive pay structures linked to the Group's results and career progression.
Macro economic environment
Recruitment activity is largely driven by economic cycles and the levels of business confidence. The Board looks to reduce the Group's cyclical risk by expanding geographically, by increasing the number of disciplines, by building part-qualified and clerical businesses and by continuing to build the temporary business.
A substantial portion of the Group's gross profit arises from fees which are contingent upon the successful placement of a candidate in a position. If a client cancels the assignment at any stage in the process the Group receives no remuneration. As a consequence, the Group's visibility of gross profits is generally quite short and tends to reduce further during periods of economic downturn.
Competition
The degree of competition varies in each of the Group's main regions. In the UK, Australia and North America, the recruitment market is well developed, highly competitive and fragmented. The characteristics of a developed market are greater competition for clients and candidates, as well as pricing pressure. In EMEA, Latin America and Asia, the recruitment market is generally less developed with a large proportion of all recruitment being carried out by companies' internal resources rather than through recruitment specialists. This is changing rapidly due to changes in legislation, increasing job mobility and the difficulty internal resources face in sourcing suitably qualified candidates.
If the Group does not continue to compete in its markets effectively, by hiring new staff, opening and expanding offices and continuing the discipline roll-outs, there is a risk that competitors may beat us to key strategic opportunities, which may result in lost business and a reduction in market share. This risk is mitigated by meetings of the Main Board, Executive Board and Regional and Country Management Boards where Group strategy is continually reviewed and decisions made over the allocation of the Group's resources, principally people.
Technology
The Group is reliant on a number of technology systems to provide services to clients and candidates. These systems are dependent on a number of important suppliers that provide the technology infrastructure and disaster recovery solutions. The performance of these suppliers are continually monitored to ensure business critical services are available and maintained as far as practically possible. Due to the rapid advancement of technology, there is a risk that systems could become outdated with the potential to affect efficiency and have an impact on revenue and client service. This risk is mitigated by regular reviews of the Group's technology strategy to ensure that it supports the overall Group strategy.
Legal
The Group operates in a large number of jurisdictions which have varying legal and compliance regulations. The Group takes its responsibilities seriously and ensures that its policies, systems and procedures are continually updated to reflect best practice and to comply with the legal requirements in all the markets in which it operates. In order to reduce the legal and compliance risks, fee earners and support staff receive regular training and updates of changes in legal and compliance requirements.
LONG-TERM STRATEGY AND BUSINESS OBJECTIVES
In successfully implementing our strategy of organically diversifying the Group, both geographically and by discipline, we believe that we will continue to develop a more balanced revenue platform. As a consequence, Michael Page has moved significantly away from its origins of permanent accounting recruitment in the UK. We now operate in 28 countries across 166 offices, with approaching 70% of Group gross profit now being generated outside of the UK. With 50% of the Group's gross profit being generated from non Finance and Accounting professional disciplines and 21% of Group gross profit being generated from temporary placements, it is clear that the composition of the Group is significantly more diverse and robust than when market conditions were difficult in the early 1990's and 2000's.
Since the last downturn, we have successfully launched 12 new countries, opened 61 offices and rolled out 178 existing and new disciplines to existing and new countries. As at the end of June 2008, a third of our gross profit comes from businesses created since the last downturn.
Our EMEA business has grown rapidly in recent years to become our largest region. Although many of the markets in this broad region are mature economies, the strong growth rates we have achieved underline our ability to grow market share and reinforce our belief that the structural changes occurring across European labour markets will form a key component of the future growth of the Group.
Our growth strategy is also focused on emerging and high growth markets. We have now been present in Brazil since 2000, mainland China since 2003, Russia and the UAE since 2006, and plan to open in India in 2009. We believe these markets offer excellent additional opportunities for near-term growth, given their rapid pace of economic development coupled with the underdeveloped nature of the specialist recruitment industry in these countries.
Despite the wider concerns about the current economic outlook, we are confident that the underlying trends that are driving growth in the specialist recruitment sector will continue to benefit the Group going forward. Social and demographic change, increasing deregulation of labour markets, as well as increasing job and geographic mobility of candidates, offer exciting opportunities to expand the business. Given our significant investment in creating a global brand with a network of highly talented recruitment specialists, we are certain that the Group will be at the forefront of our sector in taking advantage of these developments.
CURRENT TRADING AND FUTURE PROSPECTS
The first half of the year produced record results for the Group and a number of excellent performances around the world, which is testament to our strategy of diversification and consistent organic growth. As conditions in some of our markets deteriorated during the first half of 2008, our growth rates have slowed. While our forward visibility remains short, we have a very experienced senior team of directors who have successfully managed the business through the economic downturns in the early 1990's and 2000's. Reflecting the more challenging outlook, we now anticipate that our year end headcount will remain around the current level of approximately 5,500. We now expect the reported pre-bonus cost base of the Group to be in the region of £370m for the full year from our previous guidance of £350m. The reduction in anticipated headcount at the end of the year means that in absolute terms overall costs will be lower, however the impact of foreign exchange movements since the £350m guidance was given, principally the weakness of Sterling, means that reported costs are now expected to be higher. We have made strong progress against our 2008 strategic objectives, launching three new countries and opening seventeen new offices and there remain tremendous opportunities for continuing our organic growth strategy of diversifying the business.
Page House
The Bourne Business Park
1 Dashwood Lang Road
Addlestone
Weybridge
Surrey
KT15 2QW
By order of the Board,
Steve Ingham Stephen Puckett
Chief Executive Group Finance Director
18 August 2008 18 August 2008
INDEPENDENT REVIEW REPORT TO MICHAEL PAGE INTERNATIONAL PLC
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 2008 which comprises the condensed consolidated income statement, the condensed consolidated statement of changes in equity, the condensed consolidated balance sheet, the condensed consolidated cash flow statement and related notes 1 to 10. 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 International Standard on Review Engagements 2410 issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review 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 Services 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 inquiries, 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 2008 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 Services Authority.
Deloitte & Touche LLP
Chartered Accountants and Registered Auditor
18 August 2008
London, UK
Condensed consolidated income statement
Six months ended 30 June 2008
|
Six months ended |
Year ended |
|||||||
|
30 June |
30 June |
31 December |
||||||
|
2008 |
2007 |
2007 |
||||||
|
Note |
£'000 |
£'000 |
£'000 |
|||||
|
Revenue |
3 |
500,043 |
395,782 |
831,640 |
||||
|
Cost of sales |
(207,383) |
(169,238) |
(353,546) |
|||||
|
Gross profit |
3 |
292,660 |
226,544 |
478,094 |
||||
|
Administrative expenses |
(207,723) |
(156,713) |
(328,662) |
|||||
|
Operating profit |
3 |
84,937 |
69,831 |
149,432 |
||||
|
Financial income |
1,356 |
466 |
1,189 |
|||||
|
Financial expenses |
(2,216) |
(1,108) |
(3,180) |
|||||
|
Profit before tax |
84,077 |
69,189 |
147,441 |
|||||
|
Income tax expense |
4 |
(25,224) |
(21,795) |
(45,707) |
||||
|
Profit for the period |
58,853 |
47,394 |
101,734 |
|||||
|
Attributable to: Equity holders of the parent |
58,853 |
47,394 |
101,734 |
|||||
|
Earnings per share |
||||||||
|
Basic earnings per share (pence) |
7 |
18.3 |
14.3 |
31.1 |
||||
|
Diluted earnings per share (pence) |
7 |
18.0 |
14.0 |
30.6 |
||||
The above results relate to continuing operations.
Condensed consolidated statement of changes in equity
30 June 2008
|
Called -up share capital £'000 |
Share premium £'000 |
Capital redemption reserve £'000 |
Reserve for shares held in the employee benefit trust £'000 |
Currency translation reserve £'000 |
Retained earnings £'000 |
Total equity £'000 |
|
|
Balance at 1 January 2007 |
3,332 |
37,952 |
656 |
(8,901) |
(2,812) |
50,164 |
80,391 |
|
Currency translation differences |
- |
- |
- |
- |
13 |
- |
13 |
|
Net expense recognised directly in equity |
- |
- |
- |
- |
13 |
- |
13 |
|
Profit for the six months ended 30 June 2007 |
- |
- |
- |
- |
- |
47,394 |
47,394 |
|
Total recognised income for the period |
- |
- |
- |
- |
13 |
47,394 |
47,407 |
|
Purchase of own shares for cancellation |
(84) |
- |
84 |
- |
- |
(44,985) |
(44,985) |
|
Issue of share capital |
50 |
7,611 |
- |
- |
- |
- |
7,661 |
|
Transfer to reserve for shares held in the employee benefit trust |
- |
- |
- |
1,048 |
- |
(1,048) |
- |
|
Credit in respect of share schemes |
- |
- |
- |
- |
- |
5,557 |
5,557 |
|
Dividends |
- |
- |
- |
- |
- |
(13,979) |
(13,979) |
|
(34) |
7,611 |
84 |
1,048 |
- |
(54,455) |
(45,746) |
|
|
Balance at 30 June 2007 |
3,298 |
45,563 |
740 |
(7,853) |
(2,799) |
43,103 |
82,052 |
|
Balance at 1 July 2007 |
3,298 |
45,563 |
740 |
(7,853) |
(2,799) |
43,103 |
82,052 |
|
Currency translation differences |
- |
- |
- |
- |
8,114 |
- |
8,114 |
|
Net expense recognised directly in equity |
- |
- |
- |
- |
8,114 |
- |
8,114 |
|
Profit for the six months ended 31 December 2007 |
- |
- |
- |
- |
- |
54,340 |
54,340 |
|
Total recognised income for the period |
- |
- |
- |
- |
8,114 |
54,340 |
62,454 |
|
Purchase of own shares for cancellation |
( 31) |
- |
31 |
- |
- |
(14,900) |
(14,900) |
|
Purchase of shares held in the employee benefit trust |
- |
- |
- |
(15,000) |
- |
- |
(15,000) |
|
Issue of share capital |
7 |
1,072 |
- |
- |
- |
- |
1,079 |
|
Transfer to reserve for shares held in the employee benefit trust |
- |
- |
- |
113 |
- |
(113) |
- |
|
Debit in respect of share schemes |
- |
- |
- |
- |
- |
(29) |
(29) |
|
Dividends |
- |
- |
- |
- |
- |
(7,806) |
(7,806) |
|
(24) |
1,072 |
31 |
(14,887) |
- |
(22,848) |
(36,656) |
|
|
Balance at 31 December 2007 |
3,274 |
46,635 |
771 |
(22,740) |
5,315 |
74,595 |
107,850 |
|
Balance at 1 January 2008 |
3,274 |
46,635 |
771 |
(22,740) |
5,315 |
74,595 |
107,850 |
|
Currency translation differences |
- |
- |
- |
- |
8,425 |
- |
8,425 |
|
Net income recognised directly in equity |
- |
- |
- |
- |
8,425 |
- |
8,425 |
|
Profit for the six months ended 30 June 2008 |
- |
- |
- |
- |
- |
58,853 |
58,853 |
|
Total recognised income for the period |
- |
- |
- |
- |
8,425 |
58,853 |
67,278 |
|
Purchase of own shares for cancellation |
(35) |
- |
35 |
- |
- |
(10,108) |
(10,108) |
|
Issue of share capital |
4 |
745 |
- |
- |
- |
- |
749 |
|
Transfer to reserve for shares held in the employee benefit trust |
- |
- |
- |
1,575 |
- |
(1,575) |
- |
|
Credit in respect of share schemes |
- |
- |
- |
- |
- |
5,104 |
5,104 |
|
Dividends |
- |
- |
- |
- |
- |
(17,934) |
(17,934) |
|
(31) |
745 |
35 |
1,575 |
- |
(24,513) |
(22,189) |
|
|
Balance at 30 June 2008 |
3,243 |
47,380 |
806 |
(21,165) |
13,740 |
108,935 |
152,939 |
Condensed consolidated balance sheet
30 June 2008
|
Note |
30 June 2008 £'000 |
30 June 2007 £'000 |
31 December 2007 £'000 |
|||||
|
Non-current assets |
||||||||
|
Property, plant and equipment |
31,880 |
23,597 |
27,149 |
|||||
|
Intangible assets - Goodwill |
1,539 |
1,539 |
1,539 |
|||||
|
- Computer software |
6,209 |
1,983 |
2,757 |
|||||
|
Deferred tax assets |
5,665 |
10,306 |
4,998 |
|||||
|
Other receivables |
2,448 |
1,931 |
2,301 |
|||||
|
47,741 |
39,356 |
38,744 |
||||||
|
Current assets |
||||||||
|
Trade and other receivables |
227,632 |
174,581 |
192,810 |
|||||
|
Cash and cash equivalents |
10 |
94,587 |
47,111 |
82,990 |
||||
|
322,219 |
221,692 |
275,800 |
||||||
|
Total assets |
3 |
369,960 |
261,048 |
314,544 |
||||
|
Non-current liabilities |
||||||||
|
Other payables |
(1,263) |
(1,397) |
(680) |
|||||
|
Deferred tax liabilities |
(11) |
- |
(17) |
|||||
|
(1,274) |
(1,397) |
(697) |
||||||
|
Current liabilities |
||||||||
|
Trade and other payables |
(121,208) |
(96,467) |
(115,405) |
|||||
|
Bank overdrafts |
10 |
(72,298) |
- |
(47,433) |
||||
|
Bank loans |
10 |
- |
(62,634) |
(25,300) |
||||
|
Current tax payable |
(22,241) |
(18,402) |
(17,859) |
|||||
|
Provisions for liabilities |
- |
(96) |
- |
|||||
|
(215,747) |
(177,599) |
(205,997) |
||||||
|
Total liabilities |
3 |
(217,021) |
(178,996) |
(206,694) |
||||
|
Net assets |
152,939 |
82,052 |
107,850 |
|||||
|
Capital and reserves |
||||||||
|
Called-up share capital |
3,243 |
3,298 |
3,274 |
|||||
|
Share premium |
47,380 |
45,563 |
46,635 |
|||||
|
Capital redemption reserve |
806 |
740 |
771 |
|||||
|
Reserve for shares held in the employee benefit trust |
(21,165) |
(7,853) |
(22,740) |
|||||
|
Currency translation reserve |
13,740 |
(2,799) |
5,315 |
|||||
|
Retained earnings |
108,935 |
43,103 |
74,595 |
|||||
|
Total equity |
152,939 |
82,052 |
107,850 |
Condensed consolidated cash flow statement
Six months ended 30 June 2008
|
Six months ended |
Year ended |
||||||
|
Note |
30 June 2008 £'000 |
30 June 2007 £'000 |
31 December 2007 £'000 |
||||
|
Cash generated from operations |
9 |
70,453 |
58,785 |
148,663 |
|||
|
Income tax paid |
(22,336) |
(13,168) |
(36,519) |
||||
|
Net cash from operating activities |
48,117 |
45,617 |
112,144 |
||||
|
Cash flows from investing activities |
|||||||
|
Purchases of property, plant and equipment |
(7,990) |
(5,421) |
(11,927) |
||||
|
Purchases of computer software |
(3,833) |
(367) |
(1,579) |
||||
|
Proceeds from the sale of property, plant and equipment |
255 |
342 |
743 |
||||
|
Interest received |
1,355 |
466 |
1,189 |
||||
|
Net cash used in investing activities |
(10,213) |
(4,980) |
(11,574) |
||||
|
Cash flows from financing activities |
|||||||
|
Dividends paid |
(17,934) |
(13,979) |
(21,785) |
||||
|
Interest paid |
(2,317) |
(1,058) |
(2,741) |
||||
|
Proceeds from bank loan |
- |
62,634 |
25,300 |
||||
|
Repayment of bank loan |
(25,300) |
(39,150) |
(39,150) |
||||
|
Issue of own shares for the exercise of options |
749 |
7,661 |
8,740 |
||||
|
Purchase of own shares for cancellation |
(10,108) |
(44,985) |
(59,885) |
||||
|
Purchase of shares held in the employee benefit trust |
- |
- |
(15,000) |
||||
|
Net cash used in financing activities |
(54,910) |
(28,877) |
(104,521) |
||||
|
Net (decrease)/increase in cash and cash equivalents |
(17,006) |
11,760 |
(3,951) |
||||
|
Cash and cash equivalents at the beginning of the period |
35,557 |
35,544 |
35,544 |
||||
|
Exchange gains/(losses) on cash and cash equivalents |
3,738 |
(193) |
3,964 |
||||
|
Cash and cash equivalents at the end of the period |
10 |
22,289 |
47,111 |
35,557 |
|||
Notes to the condensed set of financial statements
Six months ended 30 June 2008
1. General information
The information for the year ended 31 December 2007 does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors' report on those accounts was not qualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985.
2. Accounting policies
The annual financial statements of Michael Page International plc 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 Standards 34 'Interim Financial Reporting', as adopted by the European Union.
The same accounting policies, presentation methods of computation are followed in the condensed set of financial statements as applied in the Group's latest annual audited financial statements.
3. Segment reporting
The consolidated entity operates in one business segment, being that of recruitment services, and this is the Group's primary segment. As a result, no additional business segment information is required to be provided. The Group's secondary segment is geography. The segment results by geography are shown below:
a) Revenue, gross profit and operating profit by geographic region
|
Revenue |
Gross Profit |
|||||||||||||
|
Six months ended |
Year ended 31 December 2007 £'000 |
Six months ended |
Year ended 31 December 2007 £'000 |
|||||||||||
|
30 June 2008 £'000 |
30 June 2007 £'000 |
30 June 2008 £'000 |
30 June 2007 £'000 |
|||||||||||
|
EMEA |
217,769 |
149,244 |
321,102 |
135,434 |
90,446 |
196,421 |
||||||||
|
United Kingdom |
188,830 |
176,556 |
360,395 |
95,558 |
92,023 |
186,024 |
||||||||
|
Asia Pacific |
Australia |
44,322 |
34,449 |
72,020 |
22,137 |
15,286 |
32,855 |
|||||||
|
Other |
14,617 |
12,440 |
25,741 |
13,874 |
11,696 |
24,366 |
||||||||
|
Total |
58,939 |
46,889 |
97,761 |
36,011 |
26,982 |
57,221 |
||||||||
|
Americas |
34,505 |
23,093 |
52,382 |
25,657 |
17,093 |
38,428 |
||||||||
|
500,043 |
395,782 |
831,640 |
292,660 |
226,544 |
478,094 |
|||||||||
|
Operating Profit |
||||||
|
Six months ended |
Year ended 31 December 2007 £'000 |
|||||
|
30 June 2008 £'000 |
30 June 2007 £'000 |
|||||
|
EMEA |
40,046 |
28,450 |
63,013 |
|||
|
United Kingdom |
28,395 |
28,607 |
59,412 |
|||
|
Asia Pacific |
Australia |
7,024 |
5,087 |
9,899 |
||
|
Other |
5,841 |
4,761 |
10,922 |
|||
|
Total |
12,865 |
9,848 |
20,821 |
|||
|
Americas |
3,631 |
2,926 |
6,186 |
|||
|
84,937 |
69,831 |
149,432 |
||||
The above analysis by destination is not materially different to analysis by origin.
The analysis below is of the carrying amount of geographic segment assets, liabilities and capital expenditure. Segment assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. The individual geographic segments exclude income tax assets and liabilities. Capital expenditure comprises additions to property, plant and equipment, motor vehicles and computer hardware/software.
b) Segment assets, liabilities and capital expenditure by geographic region
|
Total Assets |
Total Liabilities |
|||||||||||||
|
Six months ended |
Year ended 31 December 2007 £'000 |
Six months ended |
Year ended 31 December 2007 £'000 |
|||||||||||
|
30 June 2008 £'000 |
30 June 2007 £'000 |
30 June 2008 £'000 |
30 June 2007 £'000 |
|||||||||||
|
EMEA |
178,089 |
114,770 |
165,719 |
64,385 |
46,647 |
58,325 |
||||||||
|
United Kingdom |
114,760 |
95,132 |
89,679 |
114,093 |
101,972 |
114,622 |
||||||||
|
Asia Pacific |
Australia |
31,481 |
19,510 |
22,899 |
8,655 |
6,547 |
7,103 |
|||||||
|
Other |
20,256 |
13,293 |
15,672 |
2,135 |
1,955 |
2,738 |
||||||||
|
Total |
51,737 |
32,803 |
38,571 |
10,790 |
8,502 |
9,841 |
||||||||
|
Americas |
25,374 |
18,343 |
20,575 |
5,512 |
3,473 |
6,047 |
||||||||
|
Segment assets/liabilities |
369,960 |
261,048 |
314,544 |
194,780 |
160,594 |
188,835 |
||||||||
|
Income tax |
- |
- |
- |
22,241 |
18,402 |
17,859 |
||||||||
|
369,960 |
261,048 |
314,544 |
217,021 |
178,996 |
206,694 |
|||||||||
|
Capital Expenditure |
|||||||
|
Six months ended |
Year ended |
||||||
|
30 June 2008 £'000 |
30 June 2007 £'000 |
31 December 2007 £'000 |
|||||
|
EMEA |
3,327 |
2,790 |
5,934 |
||||
|
United Kingdom |
5,577 |
2,023 |
5,043 |
||||
|
Asia Pacific |
Australia |
1,279 |
120 |
436 |
|||
|
Other |
282 |
125 |
303 |
||||
|
Total |
1,561 |
245 |
739 |
||||
|
Americas |
1,358 |
730 |
1,790 |
||||
|
11,823 |
5,788 |
13,506 |
|||||
c) Revenue and gross profit by discipline
|
Revenue |
Gross Profit |
|||||||||||
|
Six months ended |
Year ended 31 December 2007 £'000 |
Six months ended |
Year ended 31 December 2007 £'000 |
|||||||||
|
30 June 2008 £'000 |
30 June 2007 £'000 |
30 June 2008 £'000 |
30 June 2007 £'000 |
|||||||||
|
Finance and Accounting |
279,476 |
240,760 |
496,506 |
146,419 |
125,336 |
258,667 |
||||||
|
Marketing, Sales and Retail |
73,770 |
56,413 |
119,103 |
55,714 |
42,377 |
89,910 |
||||||
|
Legal, Technology, HR, Secretarial and Other |
85,969 |
62,015 |
134,908 |
48,751 |
33,604 |
73,835 |
||||||
|
Engineering, Property & Construction, Procurement & Supply Chain |
60,828 |
36,594 |
81,123 |
41,776 |
25,227 |
55,682 |
||||||
|
500,043 |
395,782 |
831,640 |
292,660 |
226,544 |
478,094 |
|||||||
d) Revenue and gross profit generated from permanent and temporary placements
|
Revenue |
Gross Profit |
|||||||||||
|
Six months ended |
Year ended 31 December 2007 £'000 |
Six months ended |
Year ended 31 December 2007 £'000 |
|||||||||
|
30 June 2008 £'000 |
30 June 2007 £'000 |
30 June 2008 £'000 |
30 June 2007 £'000 |
|||||||||
|
Permanent |
242,554 |
186,218 |
392,583 |
229,843 |
176,131 |
371,998 |
||||||
|
Temporary |
257,489 |
209,564 |
439,057 |
62,817 |
50,413 |
106,096 |
||||||
|
500,043 |
395,782 |
831,640 |
292,660 |
226,544 |
478,094 |
|||||||
The above analyses in notes (a) operating profit by geographic region, (b) segment liabilities by geographic region, (c) revenue and gross profit by discipline (being the professions of candidates placed) and (d) revenue and gross profit generated from permanent and temporary placements have been included as additional disclosure over and above the requirements of IAS 14 "Segment Reporting".
4. Taxation
The Group's consolidated effective tax rate in respect of continuing operations for the six months ended 30 June 2008 was 30.0% (30 June 2007: 31.5% , 31 December 2007: 31.0%)
|
Six months ended |
Year ended 31 December 2007 £'000 |
|||||
|
30 June 2008 £'000 |
30 June 2007 £'000 |
|||||
|
Tax charge |
||||||
|
United Kingdom |
14,234 |
10,357 |
24,350 |
|||
|
Overseas |
10,990 |
11,438 |
21,357 |
|||
|
Income tax expense reported in the condensed consolidated income statement |
25,224 |
21,795 |
45,707 |
|||
5. Dividends
|
Six months ended |
Year ended 31 December 2007 £'000 |
||||
|
30 June 2008 £'000 |
30 June 2007 £'000 |
||||
|
Amounts recognised as distributions to equity holders in the period: |
|||||
|
Final dividend for the year ended 31 December 2007 of 5.6p per ordinary share (2006: 4.2p) |
17,934 |
13,979 |
13,979 |
||
|
Interim dividend for the period ended 30 June 2007 of 2.4p per ordinary share |
7,806 |
||||
|
21,785 |
|||||
|
Amounts proposed as distributions to equity holders in the period: |
|||||
|
Proposed interim dividend for the six months ended 30 June 2008 of 2.88p per ordinary share (2007: 2.4p) |
9,259 |
7,864 |
|||
|
Proposed final dividend for the year ended 31 December 2007 of 5.6p per ordinary share (2006: 4.2p) |
17,984 |
||||
The proposed interim dividend had not been approved by the Board at 30 June 2008 and therefore has not been included as a liability. The comparative interim dividend at 30 June 2007 was also not recognised as a liability in the prior period.
The proposed interim dividend of 2.88 pence (2007: 2.4 pence) per ordinary share will be paid on 10 October 2008 to shareholders on the register at the close of business on 12 September 2008.
6. Share-based payments
In accordance with IFRS 2 "Share-based Payment", a charge of £1.2m has been recognised for share options (including social charges) (30 June 2007: £2.0m, 31 December 2007: £2.4m), and £3.9m has been recognised for other share-based payment arrangements (including social charges) (30 June 2007: £2.3m, 31 December 2007: £4.8m).
7. Earnings per ordinary share
The calculation of the basic and diluted earnings per share is based on the following data:
|
Six months ended |
Year ended 31 December 2007 |
||||
|
30 June 2008 |
30 June 2007 |
||||
|
Earnings |
|||||
|
Earnings for basic and diluted earnings per share (£'000) |
58,853 |
47,394 |
101,734 |
||
|
Number of shares |
|||||
|
Weighted average number of shares used for basic earnings per share ('000) |
322,362 |
330,317 |
327,528 |
||
|
Dilution effect of share plans ('000) |
3,916 |
7,044 |
5,353 |
||
|
Diluted weighted average number of shares used for diluted earnings per share ('000) |
326,278 |
337,361 |
332,881 |
||
|
Basic earnings per share (pence) |
18.3 |
14.3 |
31.1 |
||
|
Diluted earnings per share (pence) |
18.0 |
14.0 |
30.6 |
||
The above results relate to continuing operations.
8. Property, plant and equipment
Acquisitions and disposals
During the six months ended 30 June 2008 the Group acquired property, plant and equipment with a cost of £8.0m (30 June 2007: £5.4m, 31 December 2007: £11.9m).
Property, plant and equipment with a carrying amount of £0.4m were disposed of during the six months ended 30 June 2008 (30 June 2007: £0.3m, 31 December 2007: £0.8m), resulting in a loss on disposal of £0.1m (30 June 2007: gain of £0.1m, 31 December 2007: loss of £0.1m).
Capital commitments
The Group had contractual capital commitments of £0.8m as at 30 June 2008 (30 June 2007: £1.1m, 31 December 2007: £1.2m) relating to property, plant and equipment.
9. Cash flows from operating activities
|
Six months ended |
Year ended 31 December 2007 £'000 |
|||||
|
30 June 2008 £'000 |
30 June 2007 £'000 |
|||||
|
Profit before tax |
84,077 |
69,189 |
147,441 |
|||
|
Depreciation and amortisation charges |
4,721 |
3,646 |
7,660 |
|||
|
Loss / (profit) on sale of property, plant and equipment, and computer software |
76 |
(76) |
91 |
|||
|
Share scheme charges |
5,104 |
3,048 |
6,757 |
|||
|
Net finance cost |
861 |
642 |
1,991 |
|||
|
Operating cashflow before changes in working capital and provisions |
94,839 |
76,449 |
163,940 |
|||
|
Increase in receivables |
(25,496) |
(30,642) |
(40,863) |
|||
|
Increase in payables |
1,110 |
13,074 |
25,778 |
|||
|
Decrease in provisions |
- |
(96) |
(192) |
|||
|
Cash generated from operations |
70,453 |
58,785 |
148,663 |
|||
10. Cash and cash equivalents
|
Six months ended |
Year ended 31 December 2007 £'000 |
|||||
|
30 June 2008 £'000 |
30 June 2007 £'000 |
|||||
|
Cash at bank and in hand |
83,626 |
38,365 |
75,647 |
|||
|
Short term deposits |
10,961 |
8,746 |
7,343 |
|||
|
Cash and cash equivalents |
94,587 |
47,111 |
82,990 |
|||
|
Bank overdrafts |
(72,298) |
- |
(47,433) |
|||
|
Cash and cash equivalents in the statement of cash flows |
22,289 |
47,111 |
35,557 |
|||
|
Bank loans |
- |
(62,634) |
(25,300) |
|||
|
Net funds / (debt) |
22,289 |
(15,523) |
10,257 |
|||
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