Final Results

RNS Number : 1296I

Michael Page International PLC

05 March 2010

 



5 March 2010

 

MICHAEL PAGE INTERNATIONAL PLC

Full Year Results for the Year Ended 31 December 2009

Michael Page International plc ("Michael Page"), the specialist professional recruitment company, announces its full year results for the year ended 31 December 2009.

Financial summary	2009	2008	Change	Change CER*
Revenue	£716.7m	£972.8m	-26%	-32%
Gross profit	£351.7m	£552.7m	-36%	-41%
Operating profit	£20.2m	£140.5m	-86%	-86%
Profit before tax	£21.1m	£140.1m	-85%
Basic earnings per share	3.9p	30.3p	-87%
Diluted earnings per share	3.8p	29.9p	-87%
Dividend per share	8.0p	8.0p

*Constant Exchange Rates     

2009 operating and financial highlights

·      Profit before tax was £21.1m despite very challenging market conditions

·      Group headcount at 31 December 2009 of 3,549, down by 1,394 since start of 2009, largely through natural attrition

·      Targeted geographic and discipline diversification of business continued

·      68% of gross profits generated from outside the UK

·      50% of gross profit generated from non Finance and Accounting disciplines

·      29% of gross profit generated from temporary placements

·      £114.8m† of cash generated from operations (2008: £185.2m)

·      Strong balance sheet with net cash of £137.2m† (2008: £94.3m)

·      Total dividend maintained at 8.0p

† Includes net cash received of £41.0m in respect of VAT claim (see Notes 11 and 12)

Current trading and outlook

·      In general, market conditions have stabilised

·      Some geographies showing signs of improvement

·      Headcount stabilised with selective fee earner hiring in a number of locations

·      Agreement in principle reached with HMRC: £28.5m net of fees will be retained, subject to legal contract

Commenting on the results, Steve Ingham, Chief Executive of Michael Page, said:

"2009 was an extreme test of the Group's strategy and I am delighted that the business responded well to the challenge. We maintained our market presence across our network of offices, disciplines and countries, invested modestly in new businesses and maintained our track record of being profitable in every quarter.

"We are encouraged by the 10% sequential growth in Group gross profits we recorded in the fourth quarter of 2009, with three of our four regions recording quarter on quarter improvement. We are now seeing a recovery in several markets and geographies and whilst the strength of this recovery is uncertain, we believe that, with a strong balance sheet position and spare capacity in the business, we are well positioned to improve significantly our performance in 2010."

Analyst meeting

The company will be presenting to a meeting of analysts at 9.00am 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 7121
Richard Mountain/ Susanne Yule

MANAGEMENT REPORT

To the members of Michael Page International plc

Cautionary Statement

The Management Report 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 Management Report 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.

Group Strategy

The Group's strategy is to expand the business with the objective of being the leading specialist recruitment consultancy in our chosen markets. As recruitment activity is dependent upon economic cycles, our strategy to counter the impact of economic downturns is to diversify our business by industry sectors, professional disciplines and by geographic markets. By being more diverse, the dependency on individual businesses or markets is reduced, making the overall Group more resilient. This strategy is pursued entirely through the organic growth of existing and new teams, offices, disciplines and countries with a consistent team and meritocratic culture.

This growth is achieved by drawing upon the skills and experiences of proven Michael Page management ensuring we have the best, most experienced, home grown talent in each key role. When we invest in a new business, we do so only with a long-term objective and in the knowledge that at some point there will be periods when economic activity slows. While it is difficult to predict accurately when these slowdowns will occur and how severe they will be, it has been our practice in the past and is our intention in the future to maintain our presence in our chosen markets, but with close control over our cost base.

Our team-based structure and profit-share business model is scalable. The small team size also means that we can rapidly increase our headcount to achieve growth. Equally, when market conditions tighten, these teams can rapidly reduce in size largely through natural attrition. Consequently, our cost base will reduce in a slowdown, but having invested years in training and developing our highly capable management resources, our objective is to retain this expertise within the Group. By following this course of action, we typically gain market share during downturns and position our businesses for leading rates of growth when economic conditions improve.

Pursuing this approach does mean that in a downturn our profitability declines as, in addition to the lower productivity levels that come with a slowdown, we carry spare capacity. Adopting this strategy of "toughing out" economic slowdowns also drives our funding strategy and balance sheet position. In slowdowns, the business continues to produce strong cash flows, as working capital requirements reduce. With uncertainty around the length and depth of economic slowdowns, a strong balance sheet is essential to support the businesses through these tougher periods and, when conditions improve and the businesses start growing, to fund the increased working capital requirements.

Review of 2009

2009 has been one of the most challenging years in the Group's 33 year history, with every geographic region, discipline and industry sector in which we operate experiencing difficult trading conditions as a result of the global financial crisis. The objective of our strategy to achieve greater resilience through geographic and discipline diversification has been successful, with the Group remaining profitable throughout the global recession.

Revenue

Reported revenue for the year was 26.3% lower at £716.7m (2008: £972.8m), but benefited from the weakness of Sterling, as using constant rates of exchange, revenue was 31.5% lower. As in previous economic slowdowns, permanent placement activity was affected more than temporary. Revenue from temporary placements decreased by 13% to £456.6m (2008: £524.4m), representing 63.7% (2008: 53.9%) of Group revenue. Revenue from permanent placements was £260.2m (2008: £448.4m), a decrease of 42%.

Gross profit

Gross profit for the year was 36.4% lower at £351.7m (2008: £552.7m). The reported gross profit also benefited from Sterling's weakness, and using constant currencies, gross profit reduced by 41.2%. The Group's gross margin decreased to 49.1% (2008: 56.8%), primarily as a result of the shift in the mix of business between permanent and temporary placements and partly due to pressure on margins. Gross profit from temporary placements reduced by 19.5% to £102.3m (2008: £127.0m) and represented 29.1% (2008: 23.0%) of Group gross profit. The gross margin achieved on temporary placements was 22.4% (2008: 24.2%), reflecting the pricing pressure commonly experienced in an economic downturn. Gross profits from permanent placements were 41.4% lower at £249.4m (2008: £425.7m), with the gross margin increasing slightly to 95.9% (2008: 94.9%) as a result of lower numbers of advertised positions.

Operating profit and conversion rates

As a result of the Group's organic long-term growth strategy, tight control on costs and profit-based bonuses, we have a business model that is operationally geared. The majority of our cost base, around 75%, relates to our staff, with the other main components being property and information technology costs. With a strategy of organic growth, the Group incurs start-up costs and operating losses as investments are made to grow existing and new businesses, open new offices and launch new countries. Furthermore, in periods when headcount increases significantly, it takes time to train staff before they become fully productive. These characteristics of our growth strategy and the levels of investment impact on the conversion rates in any one reporting period.

Generally, in years when economic conditions are benign, revenue and gross profits grow, with operating profits growing at a faster rate due to a combination of higher productivity, stronger pricing and greater utilisation of infrastructure. In order to grow, we need to increase our headcount and ensure that we have infrastructure to house and support them. When economic conditions weaken and recruitment activity slows, these factors work in reverse and are compounded by a shortening of earnings visibility.

The majority of our permanent placement activity is undertaken on a contingent basis, which means on those assignments we only generate revenue when a candidate is successfully placed in a role. Our short-term visibility on these earnings is provided by the number of assignments we are working on, the number of candidates we have at interview and the stage they are at in the interview process. The average time to complete a placement from taking on an assignment to successfully placing a candidate tends to lengthen in a downturn, reducing productivity, and the risk of the candidate being rejected or the assignment being cancelled increases, thereby further reducing our earnings visibility. In a downturn activity levels can slow quickly and revenue can decline even faster due to the contingent nature of a large proportion of our placements, jobs being cancelled, companies introducing hiring freezes and candidates becoming more cautious about moving jobs. The main opportunity for lowering our own cost base is to reduce headcount, but these reductions tend to lag the declines in revenue due to the shortening earnings visibility. The majority of the initial reductions in our headcount occur through natural attrition, without incurring significant costs. However, as a greater cost reduction is required, some redundancies may become necessary. The costs associated with increasing and decreasing the headcount capacity in the business are considered to be part of normal trading expenses and are therefore not separately disclosed as restructuring charges.

At the start of 2009, operating conditions were at their most severe. Our quarterly gross profit fell significantly in the first two quarters, stabilised in the third and grew sequentially by around 10% in the fourth. Having reduced our headcount by around 500 people in the fourth quarter of 2008, our headcount reduced by a further 1,241 people during the first half of 2009. In reaction to the stabilising market, our headcount reduced by around 150 people in the third quarter and was level during the fourth quarter.

Operating profit for 2009 was £20.2m (2008: £140.5m).  The rapid decline in activity during the first half, with lower gross profits, together with a significant, but slightly lagging, reduction in headcount, resulted in first half operating profits of £5.6m (H1 2008: £84.9m). As gross profit stabilised during the third quarter and started growing sequentially in the fourth quarter, operating profits in the second half grew to £14.6m (H2 2008: £55.6m).

This gearing effect reduced the Group's conversion rate for the year to 5.7% (2008: 25.4%). The movement in the conversion rates of our regions reflects the different timings and degrees of slowing, stabilisation and then sequential growth. Conversion rates in all regions improved in the second half, save the UK, where quarterly gross profits declined slightly during 2009 and, as a consequence, their conversion rate in the second half was 9.7% compared to 10.6% in the first half. In the Asia Pacific region, the second half conversion rate was over 26%.

Reported administrative expenses in the year reduced by 19.6% to £331.5m (2008: £412.2m), largely as a result of the reduction in headcount and lower profit-related bonus payments. With a strategy of maintaining our market presence and as the Group leases all of its office requirements, the opportunities to reduce property costs are restricted to situations where we have more than one office in a city and leases come to an end, or when break clauses can be exercised. A number of these opportunities were realised during the year hence, despite opening in a small number of new locations, the overall number of offices reduced from 163 to 136.

Administrative expenses included £10.6m of share-based payment charges (2008: £6.9m) in respect of the Group's deferred annual bonus scheme, long-term incentive plans and executive share option schemes. The increase in these share-based payment charges was due to a combination of new awards and higher employers' social charges, as a consequence of the increase in the share price from 214.8p at the end of 2008, to 378.9p at the end of 2009 and amendments to assumptions on the likelihood of awards vesting.

Regional Review of 2009

Continental Europe, Middle East and Africa (EMEA)

EMEA, the Group's largest region, contributing 47% of the Group's gross profit, reported revenue 27.1% lower at £311.1m (2008: £426.4m) and gross profit 36.7% lower at £163.7m (2008: £258.8m). The reported results benefited from Sterling's weakness, as in constant currency, revenue reduced by 35.4% and gross profit by 43.9%.

In Continental Europe, which was generally slightly later into the downturn, quarterly gross profit began to decline in the third quarter of 2008 and continued to decline in the first two quarters of 2009, until early signs of stabilisation became apparent during the third quarter of 2009. While the third quarter is seasonally somewhat slower, it is encouraging that in the fourth quarter, gross profit increased sequentially by 20% in constant currency.

Headcount in the region at the start of the year was 2,155 and reduced to 1,572 by the end of the year, with the majority of the reduction taking place in the first half of 2009. With the benefit of a lower cost base and the sequential improvement in fourth quarter gross profits, the region generated an operating profit for the full year of £1.1m (2008: £66.3m).

In France (38% of EMEA), where we have our second largest and most established business after the UK, we weathered the downturn well and in the fourth quarter of 2009 achieved strong sequential growth, with a noticeable increase in the number of permanent placements. While the general pattern of decline, stabilisation and sequential growth is apparent in the region, the extent of that pattern varies. In the Netherlands (14% of EMEA) and Germany (13% of EMEA), while the rate of decline and signs of stabilisation were similar to other countries in the region, significant sequential growth was not achieved in the fourth quarter of 2009. Italy (8% of EMEA) and Spain (8% of EMEA) both delivered double digit sequential growth in the fourth quarter and traded profitably every month throughout 2009. Despite the difficult conditions, we continue to invest, rolling-out disciplines and started Page Personnel in Germany.

The other 12 countries in the EMEA region, representing 19% of the region, combined to produce 12% sequential growth in the fourth quarter. In certain of these countries, such as Ireland and Dubai, economic conditions were particularly challenging, but our teams reacted well by reducing costs and in the Middle East, further developing revenue streams in Abu Dhabi and Qatar.

United Kingdom

The UK contributed 32% of the Group's gross profits in 2009. Revenue was 24.9% lower at £274.6m (2008: £365.6m) and gross profit was 37.3% lower at £110.8m (2008: £176.7m). The larger reduction in gross profit was primarily due to a shift in mix, as gross profit from permanent placements declined faster than those from temporary placements. While the UK stabilised to a large degree, quarterly gross profit continued to decline throughout 2009, albeit at a much reduced rate, with a sequential decrease of only 2.8% in Q4 over Q3.

Headcount was reduced from 1,640 at the start of the year to 1,179 at the end of December, with the majority of the headcount reductions taking place in the first half of 2009. With headcount reductions lagging the reduction in gross profits and productivity generally being lower because of tough market conditions, operating profits reduced to £11.3m (2008: £46.6m), representing a conversion rate of 10.2% (2008: 26.4%).

The global financial crisis of 2008 first affected the banking sector and then spread across the wider economy, affecting all disciplines and locations. While conditions remain difficult in all areas, towards the end of 2009 both our banking and sales businesses started to show signs of improvement.

Asia Pacific

In the Asia Pacific region, revenue was 28.7% lower at £79.4m (2008: £111.4m), gross profit was 36.8% lower at £42.2m (2008: £66.8m) and operating profit reduced to £8.1m (2008: £22.4m), representing a conversion rate of 19.2% (2008: 33.5%). The reported results benefited from Sterling's weakness as, at constant rates of exchange, revenue reduced by 36.5% and gross profit by 44.3%. Headcount in the region reduced from 638 at the start, to 403 at the end of the year.

In the region, market conditions weakened rapidly in the fourth quarter of 2008 and the first quarter of 2009. However, since the first quarter, which is seasonally quieter, the region sequentially grew gross profits each quarter during the remainder of 2009.

In Australia, which flattened in Q2 and returned to sequential growth in Q4, up 6% in local currency, we have launched Page Personnel to develop further our share of the clerical specialist market. In Asia, where we have a greater dependence on the banking sector and our placements are almost all permanent rather than temporary, it has been a difficult year. However, as the financial markets stabilised, confidence returned and activity levels improved. As a result, revenues grew and with the benefit of lower costs, profits in the region started to recover, generating £6m of operating profit in the second half of 2009, compared to £2m in the first half.

The Americas

Revenue for the region was 25.5% lower at £51.6m (2008: £69.3m) and gross profit was 30.7% lower at £35.0m (2008: £50.5m). The reported results benefited from Sterling's weakness as, at constant rates of exchange, revenue reduced by 33.8% and gross profit by 37.1%. Headcount in the region reduced from 510 at the start, to 395 at the end of the year, with 37 additions during the fourth quarter. As a result of the slowing in activity levels and our desire to maintain our platform, the region recorded an operating loss of £0.2m for the year (2008: profit £5.3m). Market conditions also stabilised during 2009 and the region recorded sequential growth in gross profit in quarters three and four which, combined with a lower cost base, produced a second half operating profit of £0.7m.

In North America, while we have diversified, we still have a significant reliance on the financial services sector. While this sector was clearly the most affected in the crisis, there are now signs of conditions improving. In Latin America, we continued to make good progress in developing our businesses in Mexico and Argentina. In Brazil, we have a strong business and Page Personnel, launched in 2008 to develop the clerical specialist market, continued to grow strongly.

Discipline development

Placing people in Finance and Accounting roles, the large majority of which are professionally qualified accountants into industry and commerce, generated around half of the Group's gross profits. Revenue from Finance and Accounting placements was 24.5% lower at £409.0m (2008: £542.0m) and gross profit reduced by 35.6% to £175.7m (2008: £273.0m). Using constant rates of exchange, revenue decreased by 29.7% and gross profit reduced by 40.5%.

Placing Marketing, Sales and Retail professionals generated around 17% of the Group's gross profit. Revenue from these disciplines was 34.7% lower at £91.8m (2008: £140.6m) and gross profit reduced by 40.9% to £61.4m (2008: £103.9m). Using constant rates of exchange, revenue decreased by 38.3% and gross profit decreased by 44.8%.

Legal, Technology, Human Resources, Secretarial and Other disciplines generated around 17% of Group gross profit. Revenue from these disciplines was 25.6% lower at £125.2m (2008: £168.2m) and gross profit reduced by 34.3% to £61.2m (2008: £93.2m). Using constant rates of exchange, revenue decreased by 31.1% and gross profit decreased by 39.6%.

Engineering, Property & Construction and Procurement & Supply Chain accounted for around 15% of Group gross profit. Revenue from these disciplines was 25.6% lower at £90.8m (2008: £122.0m) and gross profit reduced by 35.4% to £53.3m (2008: £82.6m). Using constant rates of exchange, revenue decreased by 31.8% and gross profit decreased by 41.0%.

Net interest

The Group had a net interest income for the year of £0.9m (2008: expense £0.4m). As the financial crisis deepened and the economic outlook deteriorated, we adopted an increasingly cautious approach to the Group's funding position. The net interest income reflects the strengthening of the Group's financial position.

Taxation

Tax on profits was £8.6m (2008: £42.7m), representing an effective tax rate of 41.0% (2008: 30.5%). The rate is higher than the effective UK Corporation Tax rate for the year of 28%, due to disallowable items of expenditure and profits being generated in countries where the corporate tax rates are higher than in the UK. The effective rate was higher than in 2008, due to an increase in the level of overseas losses on which deferred tax is not recognised, which was partially offset by prior year adjustments.

Share repurchases and share options

While it is the Group's intention to continue to use share repurchases to return surplus cash to shareholders, reflecting the more cautious approach to the Group's funding position, adopted since the beginning of the crisis, we did not purchase and cancel any shares during the year (2008: 6.7m shares cancelled). To satisfy awards under the Group's incentive share plan and deferred annual bonus plan, the employee benefit trust purchased approximately 1.0m shares at a cost of £1.9m (2008: £0.9m).

At the beginning of 2009, the Group had 12.2m share options outstanding, of which 4.0m had vested. In March 2009, 7.2m share options were granted, this award was larger than the usual annual grants of share options in order to retain, motivate and reward staff below Board level. During the course of the year, options were exercised over 1.4m shares, generating £2.7m in cash and 1.4m share options lapsed. At the end of 2009, 16.6m share options remained outstanding, of which 4.2m had vested but had not been exercised.

Earnings per share and dividends

In 2009, basic earnings per share were 3.9p (2008: 30.3p) and diluted earnings per share were 3.8p (2008: 29.9p). The weighted average number of shares for the year was 321.6m (2008: 321.5m).

A final dividend of 5.12p (2008: 5.12p) per ordinary share is proposed which, together with the interim dividend of 2.88p (2008: 2.88p) per ordinary share, makes an unchanged total dividend for the year of 8.0p per ordinary share. The proposed final dividend, which amounts to £16.5m, will be paid on 5 June 2010 to those shareholders on the register as at 5 May 2010.

Balance sheet

The Group had net assets of £197.0m at 31 December 2009 (2008: £210.7m). The decrease in net assets comprises profit for the year of £12.4m, credits relating to share schemes of £10.9m and cash received from the exercise of share options of £2.7m, offset by share repurchases of £1.9m, currency movements of £12.0m and dividends paid of £25.9m.

Our capital expenditure is driven primarily by two main factors being headcount, in terms of office accommodation and infrastructure, and the development and maintenance of our IT systems. The project to replace our current IT recruitment system with the next generation continues to progress and we anticipate that the first full implementations will take place later this year, with the roll-out continuing throughout 2011 in order to mitigate the implementation risks. Capital expenditure, net of disposal proceeds, reduced to £11.3m (2008: £26.4m) reflecting the investment in new systems and the absence of expenditure due to headcount reducing in the year.

The most significant item in the balance sheet is trade receivables, which were £100.2m at 31 December 2009 (2008: £168.4m). The reduction in trade receivables reflects both the reduced activity and an improvement in debtor days to 45 (2008: 56 days).

Cash flow

At the start of the year, the Group had net cash, being cash and cash equivalents less bank overdrafts and loans, of £94.3m. During the year, the Group generated net cash from operating activities of £114.8m (including net cash received in respect of the VAT claim) (2008: £185.2m), being £31.9m (2008: £151.4m) of EBITDA, £8.5m (2008: £6.7m) of share scheme non-cash charges and a reduction in working capital requirements of £74.4m (2008: increase of £27.1m). The movement in working capital includes a cash inflow of £41.0m net in respect of monies received from HMRC in respect of a claim for over-paid VAT and interest. Without the VAT claim, underlying net cash received from operating activities was £73.8m.

The principal payments were:

• £11.3m (2008: £26.4m) of capital expenditure, net of disposal proceeds, on property, infrastructure, information systems and motor vehicles;

• taxes on profits of £28.2m (2008: £53.4m);

• dividends of £25.9m (2008: £27.3m); and

• share repurchases of £1.9m (2008: £16.8m).

Other movements included £2.7m (2008: £2.2m) received in the year from the issue of new shares to satisfy share option exercises and an exchange loss of £8.2m (2008: exchange gain £21.4m).

Net cash and Group borrowing facilities

At 31 December 2009, the Group had net cash of £137.2m (2008: £94.3m) including £41.0m relating to the VAT refund. The net cash position comprised gross cash deposits of £137.2m with 12 separate banks.

The Group has a three year £50m multi-currency committed borrowing facility that expires in July 2012.

Key Performance Indicators ("KPIs")

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	2009	2008	Definition, method of calculation and analysis
Gross margin	49.1%	56.8%	Gross profit as a percentage of revenue. Gross margin reduced from last year as a result of the mix of permanent and temporary placements. Source: Consolidated income statement in the financial statements.
Conversion	5.7%	25.4%	Operating profit as a percentage of gross profit showing the Group's effectiveness at controlling the costs and expenses associated with its normal business operations and the level of investment for the future. Conversion declined compared to last year reflecting the impact of the economic slowdown on demand for the Group's services, lower productivity and the lag in headcount reductions. Source: Consolidated income statement in the financial statements.
Productivity (gross profit per fee earner)	£124.0k	£136.2k	Represents how productive fee earners are in the business and is calculated by dividing the gross profit for the year 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. The reduction in productivity this year is as a result of the general deterioration in market conditions. Source: Consolidated financial statements.
Fee earner : support staff ratio	71:29	74:26	Represents the balance between operational and non-operational staff. The ratio of fee earners to support staff at the end of 2009 has reduced from the level at the end of 2008. This ratio improves when the Group grows and headcount increases, but tends to decline when Group headcount reduces as the infrastructure staff to support a higher number of teams, offices and countries cannot be flexed as quickly as fee generating staff. Source: Internal data.
Debtor days	45	56	Represents the length of time taken for the Group to receive payments from its debtors. Calculated by comparing how many days' billings it takes to cover the debtor balance. The decrease compared to last year relates to the shift towards temporary recruitment activity from permanent in a downturn. Temporary recruitment activity tends to have lower debtor days. Source: Internal data.

The movements in KPIs are in line with expectations set out in the discussion in the Management Report.

Going concern

The Board has undertaken a recent and thorough review of the Group's budget, forecasts and associated risks and sensitivities. Despite the significant 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, the level of borrowing facilities available, 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 twelve months from the date of approval of accounts. As a result, the going concern basis continues to be appropriate in preparing the financial statements.

Foreign exchange

The Group operates in 28 countries around the world and carries out transactions that are recorded in seventeen local currencies. The Group reports its Income Statement and Cash Flow Statement results in Pounds Sterling, using the average exchange rate for each month to translate the local currency amounts into Sterling. The Balance Sheet is translated using the exchange rates at the Balance Sheet date.

As a service company, most of the Group's transactions are within the territory in which the local business operates and consequently there are few cross-border transactions between Group companies. However, royalties are charged for the use of the Group's trademarks and management fees are charged for Group and regional functions that provide services to other Group subsidiary companies. Foreign exchange gains and losses are recognised in accordance with IFRS on the settlement of these transactions where the cash received, when converted into Sterling, differs from the amounts previously recorded in the Income Statement. These exchange gains and losses are included within operating profit.

The table below shows the relative movements of the Group's main trading currencies against Pounds Sterling during 2009, when compared to those prevalent during 2008. In all cases, for profit and loss retranslation, Sterling has weakened against these main trading currencies.

Currency	Movement in the average exchange rate used for Income Statement translation between 2008 and 2009	Movement in the year and exchange rate used for Balance Sheet translation between 2008 and 2009
Euro	-11%	9%
Swiss Franc	-16%	9%
Brazilian Real	-6%	-16%
US Dollar	-16%	12%
Australian Dollar	-9%	-13%
Hong Kong Dollar	-17%	12%
Singapore Dollar	-13%	9%
Japanese Yen	-25%	15%

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 a strong balance sheet position. In a generally benign economic environment, this equates to maintaining the Group's net cash/debt position within a relatively narrow band, with cash generated in excess of these requirements being used to buy back the Group's shares. In an economic downturn a more cautious funding position is adopted, with the Group being managed in a net cash position.

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 Euro zone subsidiaries and the UK-based Group Treasury subsidiary. The structure facilitates interest and balance compensation of cash and bank overdrafts. It is the intention to extend the scope of the participation to other Group companies.

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 Group's strategy are subject to a number of risks. The following section comprises a summary of the main risks Michael Page International plc believes 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 and share plans 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 look 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 that 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 reduces further during periods of economic downturn as is being currently experienced.

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 due to changes in legislation, increasing job mobility and the difficulty internal resources face in sourcing suitably qualified candidates and managing compliance.

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 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 that 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.

Update on VAT reclaims

In 2003 Michael Page submitted an initial claim to HMRC for overpaid VAT which was rejected. Michael Page appealed and subsequently filed amended claims for £26.5m, net of fees, covering the period from 1980 to 2004. In March 2009, Michael Page filed amended claims for a further refund of an additional £80m, net of fees, of overpaid VAT covering the same period.

In June 2009 Michael Page received a payment from HMRC of £26.5m, net of fees, as part settlement of these claims and in July 2009 received £10.9m, net of fees, of statutory interest.

On 25 September 2009, Michael Page received a letter from HMRC which stated that, 'HMRC have reviewed the recent payment and are now of the view that the claim in whole or in part should not have been paid'.

A number of discussions and meetings with HMRC have since taken place and in respect of the initial claim, subject to legal contract, an agreement has now been reached in principle for MPI to retain £28.5 million (net of fees) of the £37.4 million it received. However, given the background to the initial receipt and the subsequent review and reversal of its decision by HMRC, the Group has not recognised any amount in the Income Statement due to the remaining uncertainty pending formal contractual agreement. 

In respect of the amended claims for a further refund of an additional £80m, net of fees, of overpaid VAT there have been no discussions or meetings with HMRC and Michael Page will continue to pursue the claim.

Summary and Outlook

Having made significant investments since the previous downturn, organically diversifying our business, geographically and by discipline, this diversification has undoubtedly benefited the Group's performance as every economy around the world suffered as a result of the global financial crisis.

The vast majority of those people who left the business during 2009 were our least experienced people. In line with our long-term strategy and despite the large headcount reductions, we maintained our market presence across our network of offices and countries. Furthermore, we invested by continuing the roll-out of disciplines, opening offices in Bologna, Abu Dhabi and Monaco and launching Page Personnel in Germany, Australia and, at the start of 2010, in the USA. We believe these actions mean that we have increased our market share and are well positioned for profitable growth as markets recover.

This longer-term approach, however, meant that our profits reduced at a faster rate than the reduction in gross profit, as we retained our more experienced and therefore more expensive people, maintained our office network and market presence, as well as continuing to invest. The Group experienced similar large reductions in profits during the downturns of the early 1990s and in 2002/03. Following these downturns, the Group grew strongly as markets recovered and produced record levels of profit. It is our expectation that having maintained our business platform during this economic downturn, we will be able to deliver strong growth in profits again when markets recover. We have an exceptional pool of ambitious and talented people in the Group, particularly at the senior management levels, who have experience of managing these businesses through periods of economic slowdown and recession, while preparing them for strong growth when economic conditions improve. It has always been, and will continue to be, our intention to take decisions and make investments for the longer-term benefit of our stakeholders.

We are encouraged by the 10% sequential growth in Group gross profits we recorded in the fourth quarter of 2009, with three of our four regions recording quarter on quarter improvement. We are now seeing a recovery in several markets and geographies and whilst the strength of this recovery is uncertain, we believe that, with a strong balance sheet and spare capacity in the business, we are well positioned to improve significantly our performance in 2010.  We will next update the market on our first quarter trading in an announcement on 9 April 2010.

Steve Ingham                           Stephen Puckett

Chief Executive                       Group Finance Director

5 March 2010                         5 March 2010

Consolidated Income Statement

Year ended 31 December 2009

						2009		2008
				Note		£'000		£'000
Revenue				3		716,722		972,782
Cost of sales						(365,028)		(420,080)
Gross profit				3		351,694		552,702
Administrative expenses						(331,491)		(412,201)
Operating profit				3		20,203		140,501
Financial income				4		2,027		3,878
Financial expenses				4		(1,162)		(4,323)
Profit before tax						21,068		140,056
Income tax expense				5		(8,638)		(42,717)
Profit for the year						12,430		97,339
Attributable to: Owners of the parent						12,430		97,339
Earnings per share
Basic earnings per share (pence)				8		3.9		30.3
Diluted earnings per share (pence)				8		3.8		29.9

The above results all relate to continuing operations.

Consolidated Statement of Comprehensive Income

Year ended 31 December 2009

					2009		2008
					£'000		£'000
Profit for the year					12,430		97,339
Currency translation differences					(11,978)		40,064
Other comprehensive income for the year					(11,978)		40,064
Total comprehensive income for the year					452		137,403
Attributable to:
Owners of the parent					452		137,403

Consolidated Balance Sheet

As at 31 December 2009

				Note		2009 £'000		2008 £'000
Non-current assets
Property, plant and equipment				3		31,432		39,097
Intangible assets - Goodwill				3		1,539		1,539
- Computer software				3		18,512		12,316
Deferred tax assets						10,179		6,496
Other receivables				10		2,021		1,955
						63,683		61,403
Current assets
Trade and other receivables				10		133,402		203,813
Current tax receivable						14,174		5,358
Cash and cash equivalents				13		137,228		156,980
						284,804		366,151
Total assets				3		348,487		427,554
Current liabilities
Trade and other payables				11		(142,750)		(137,021)
Bank overdrafts				13		(43)		(62,697)
Current tax payable						(5,470)		(14,938)
						(148,263)		(214,656)
Net current assets						136,541		151,495
Non-current liabilities
Other payables				11		(2,881)		(1,337)
Deferred tax liabilities						(327)		(897)
						(3,208)		(2,234)
Total liabilities				3		(151,471)		(216,890)
Net assets						197,016		210,664
Capital and reserves
Called-up share capital						3,234		3,220
Share premium						51,589		48,856
Capital redemption reserve						838		838
Reserve for shares held in the employee benefit trust						(19,409)		(21,078)
Currency translation reserve						33,401		45,379
Retained earnings						127,363		133,449
Total equity						197,016		210,664

Consolidated Statement of Changes in Equity

Year ended 31 December 2009

	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 2008	3,274	46,635	771	(22,740)	5,315	74,595	107,850
Currency translation differences	-	-	-	-	40,064	-	40,064
Net income recognised directly in equity	-	-	-	-	40,064	-	40,064
Profit for the year ended 31 December 2008	-	-	-	-	-	97,339	97,339
Total comprehensive income for the year	-	-	-	-	40,064	97,339	137,403
Purchase of own shares for cancellation	(67)	-	67	-	-	(15,985)	(15,985)
Purchase of shares held in employee benefit trust	-	-	-	(854)	-	-	(854)
Issue of share capital	13	2,221	-	-	-	-	2,234
Transfer to reserve for shares held in the employee benefit trust	-	-	-	2,516	-	(2,516)	-
Credit in respect of share schemes	-	-	-	-	-	6,667	6,667
Credit in respect of tax on share schemes	-	-	-	-	-	612	612
Dividends	-	-	-	-	-	(27,263)	(27,263)
	(54)	2,221	67	1,662	-	(38,485)	(34,589)
Balance at 31 December 2008	3,220	48,856	838	(21,078)	45,379	133,449	210,664
Currency translation differences	-	-	-	-	(11,978)	-	(11,978)
Net expense recognised directly in equity	-	-	-	-	(11,978)	-	(11,978)
Profit for the year ended 31 December 2009	-	-	-	-	-	12,430	12,430
Total comprehensive (loss)/income for the year	-	-	-	-	(11,978)	12,430	452
Purchase of shares held in employee benefit trust	-	-	-	(1,903)	-	-	(1,903)
Issue of share capital	14	2,733	-	-	-	-	2,747
Transfer to reserve for shares held in the employee benefit trust	-	-	-	3,572	-	(3,572)	-
Credit in respect of share schemes	-	-	-	-	-	8,491	8,491
Credit in respect of tax on share schemes	-	-	-	-	-	2,418	2,418
Dividends	-	-	-	-	-	(25,853)	(25,853)
	14	2,733	-	1,669	-	(18,516)	(14,100)
Balance at 31 December 2009	3,234	51,589	838	(19,409)	33,401	127,363	197,016

Consolidated Statement of Cash Flows

Year ended 31 December 2009

			Note		2009 £'000		2008 £'000
Cash generated from underlying operations			12		73,759		185,206
Net cash received in respect of VAT claim					41,018		-
Cash generated from operations			12		114,777		185,206
Income tax paid					(28,196)		(53,409)
Net cash from operating activities					86,581		131,797
Cash flows from investing activities
Purchases of property, plant and equipment					(5,757)		(17,173)
Purchases of computer software					(7,645)		(10,260)
Proceeds from the sale of property, plant and equipment, and computer software					2,061		1,009
Interest received					2,027		3,878
Net cash used in investing activities					(9,314)		(22,546)
Cash flows from financing activities
Dividends paid					(25,853)		(27,263)
Interest paid					(1,160)		(4,782)
Repayment of bank loan					-		(25,300)
Issue of own shares for the exercise of options					2,747		2,234
Purchase of own shares for cancellation					-		(15,985)
Purchase of shares held in the employee benefit trust					(1,903)		(854)
Net cash used in financing activities					(26,169)		(71,950)
Net increase in cash and cash equivalents					51,098		37,301
Cash and cash equivalents at the beginning of the year					94,283		35,557
Exchange (losses)/gains on cash and cash equivalents					(8,196)		21,425
Cash and cash equivalents at the end of the year			13		137,185		94,283

Notes to the consolidated preliminary results

Year ended 31 December 2009

1.             Corporate information

Michael Page International plc (the 'Company') is a limited liability company incorporated in Great Britain and domiciled within the United Kingdom whose shares are publicly traded.  The consolidated preliminary results of the Company as at and for the year ended 31 December 2009 comprise the Company and its subsidiaries (together referred to as the "Group").

The consolidated preliminary results of the Group for the year ended 31 December 2009 were approved by the directors on 5 March 2010. The Annual General Meeting of Michael Page International plc will be held at Page House, The Bourne Business Park, 1 Dashwood Lang Road, Addlestone, Surrey, KT15 2QW on 21 May 2010 at 12.00 noon.

2.             Basis of preparation and accounting policies

Basis of preparation

These consolidated preliminary results have been prepared in accordance with the recognition and measurement criteria of IFRS. They do not include all the information required for full annual financial statements to comply with IFRS, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December 2008.

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Management Report. The Management Report also includes a summary of the Group's financial position, its cash flows and its borrowing facilities.

The Directors believe the Group is well placed to manage its business risks successfully, despite the current uncertain economic outlook. The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its current committed facilities.

After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Annual Report and Accounts.

Nature of financial information

The financial information for the year ended 31 December 2009 does not constitute statutory accounts as defined in sections 435 (1) and (2) of the Companies Act 2006. Statutory accounts for the year ended 31 December 2008 have been delivered to the Registrar of Companies and those for 2009 will be delivered following the Company's annual general meeting convened for 21 May 2010. The auditors have reported on these accounts; their reports were unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis of matter and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006 or equivalent preceding legislation.

Significant accounting policies

The accounting policies applied by the Group in these consolidated preliminary results are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2008 except as described below.

In the current financial year, the Group has adopted International Accounting Standard 1 "Presentation of Financial Statements" (revised 2007) (IAS 1) and International Financial Reporting Standard 8 "Operating Segments" (IFRS 8).

The implementation of IAS 1 (revised 2007) resulted in changes to disclosure, with the inclusion of a Consolidated Statement of Comprehensive Income.

IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Executive to allocate resources to the segments and to assess their performance. In contrast, the predecessor Standard (IAS 14 "Segment Reporting") required the Group to identify two sets of segments (business and geographical), using a risks and rewards approach, with the Group's system of internal financial reporting to key management personnel serving only as the starting point for the identification of such segments. Information reported to the Group's Chief Executive for the purposes of resource allocation and assessment of segment performance is focussed on regions and, as such, the implementation of IFRS 8 resulted in no significant changes, as disclosures over and above those required by IAS 14 were previously made.

The amendments to IFRS 7 expand the disclosures required in respect of fair value measurements and liquidity risk. The Group has elected not to provide comparative information for these expanded disclosures in the current year, in accordance with the transitional reliefs offered in these amendments.

IFRS 2 Share-based Payment - Vesting Conditions and Cancellations has been amended to clarify the definition of vesting conditions. The concept of 'non-vesting' conditions has been introduced and the accounting treatment for cancellations was clarified. These amendments have not resulted in significant changes.

Below is a summary of other new and revised Standards and Interpretations that have been adopted in the current year, where their adoption has not had any significant impact on the amounts reported in these financial statements, but may impact the accounting for future transactions and arrangements.

Amendment to IAS 20 Accounting for Government Grants and Disclosure of Government Assistance	IAS 20 has been amended to require that the benefit of a government loan at a below-market rate of interest to be treated as a government grant. This accounting treatment was not permitted prior to this amendment.
IAS 23 (revised 2007) Borrowing Costs	The principal change to the Standard was to eliminate the option to expense all borrowing costs when incurred.
Amendments to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements - Puttable Financial Instruments and Obligations Arising on Liquidation	The revisions to IAS 32 amend the criteria for debt/equity classification by permitting certain puttable financial instruments and instruments (or components of instruments) that impose on an entity an obligation to deliver to another party a pro-rate share of the net assets of the entity only on liquidation, to be classified as equity, subject to specified criteria being met.
Amendments to IAS 39 Financial Instruments: Recognition and Measurement - Eligible Hedged Items	The amendments provide clarification on two aspects of hedge accounting: identifying inflation as a hedged risk or portion, and hedging with options.
Embedded Derivatives (Amendments to IFRIC 9 Reassessment of Embedded Derivatives and IAS 39 Financial Instruments: Recognition and Measurement	The amendments clarify the accounting for embedded derivatives in the case of a reclassification of a financial asset out of the 'fair value through profit or loss' (FVTPL) category as permitted by the October 2008 amendments to IAS 39 Financial Instruments: Recognition and Measurement (see above).
IFRIC 16 Hedges of a Net Investment in a Foreign Operation	The Interpretation provides guidance on the detailed requirements for net investment hedging for certain hedge accounting designations.
IFRIC 18 Transfers of Assets from Customers (adopted for transfers of assets from customers received on or after 1 July 2009)	The Interpretation addresses the accounting by recipients for transfers of property, plant and equipment from 'customers' and concludes what item of property, plant and equipment transferred meets the definition of an asset from the perspective of the recipient. The recipient should recognise the asset at its fair value on the date of transfer, with the credit recognised in accordance with IAS 18 Revenue.

3.             Segment reporting

All revenues disclosed are derived from external customers

The accounting policies of the reportable segments are the same as the Group's accounting policies. Segment operating profit represents the profit earned by each segment without allocation of central administration costs and certain recharges. This is the measure reported to the Group's Chief Executive for the purpose of resource allocation and assessment of segment performance.

a)             Revenue, gross profit and operating profit by reportable segment

		Revenue					Gross Profit
			2009 £'000		2008 £'000		2009 £'000		2008 £'000
EMEA			311,070		426,436		163,729		258,772
United Kingdom			274,599		365,602		110,784		176,685
Asia Pacific	Australia and New Zealand		59,108		83,643		23,881		40,521
	Other		20,301		27,800		18,329		26,254
	Total		79,409		111,443		42,210		66,775
Americas			51,644		69,301		34,971		50,470
			716,722		972,782		351,694		552,702

			Operating Profit
			2009 £'000		2008 £'000
EMEA			1,055		66,271
United Kingdom			11,275		46,557
Asia Pacific	Australia and New Zealand		4,287		12,760
	Other		3,798		9,591
	Total		8,085		22,351
Americas			(212)		5,322
			20,203		140,501

The above analysis by destination is not materially different to analysis by origin.

The analysis below is of the carrying amount of reportable segment assets, liabilities and non-current assets. 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 reportable segments exclude income tax assets and liabilities. Non-current assets include property, plant and equipment, computer software and goodwill.

b)             Segment assets, liabilities and non current assets by reportable segment

			Total Assets				Total Liabilities
			2009 £'000		2008 £'000		2009 £'000		2008 £'000
EMEA			117,863		212,004		49,504		79,517
United Kingdom			161,653		128,338		83,341		104,697
Asia Pacific	Australia and New Zealand		18,025		28,129		6,622		6,943
	Other		13,025		24,473		2,322		2,680
	Total		31,050		52,602		8,944		9,623
Americas			23,747		29,252		4,212		8,115
Segment assets/liabilities			334,313		422,196		146,001		201,952
Income tax			14,174		5,358		5,470		14,938
			348,487		427,554		151,471		216,890

			Property, Plant & Equipment				Intangible Assets
			2009 £'000		2008 £'000		2009 £'000		2008 £'000
EMEA			13,016		16,778		1,166		1,321
United Kingdom			9,985		12,472		17,933		11,614
Asia Pacific	Australia and New Zealand		2,411		2,546		258		379
	Other		708		1,291		310		66
	Total		3,119		3,837		568		445
Americas			5,312		6,010		384		475
			31,432		39,097		20,051		13,855

The below analyses in notes (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 IFRS 8 "Operating Segments".

c)             Revenue and gross profit by discipline

		Revenue				Gross Profit
		2009 £'000		2008 £'000		2009 £'000		2008 £'000
Finance and Accounting		408,951		541,984		175,743		273,017
Marketing, Sales and Retail		91,811		140,599		61,404		103,907
Legal, Technology, HR, Secretarial and Other		125,199		168,167		61,217		93,193
Engineering, Property & Construction, Procurement & Supply Chain		90,761		122,032		53,330		82,585
		716,722		972,782		351,694		552,702

d)             Revenue and gross profit generated from permanent and temporary placements

			Revenue				Gross Profit
			2009 £'000		2008 £'000		2009 £'000		2008 £'000
Permanent			260,161		448,403		249,387		425,655
Temporary			456,561		524,379		102,307		127,047
			716,722		972,782		351,694		552,702

 4.            Finance income/(expenses)

			2009 £'000		2008 £'000
Finance income
Bank interest receivable			2,027		3,878
Finance expenses
Bank interest payable			(1,162)		(4,323)

5.             Tax

The Group's consolidated effective tax rate in respect of continuing operations for the year ended 31 December 2009 was 41.0% (2008: 30.5%).

Analysis of charge in the year	2009 £'000		2008 £'000
UK income tax at 28% (2008: 28.5%) for year	8,556		19,636
Adjustments in respect of prior periods	(2,536)		(364)
Overseas income tax	4,589		24,073
	10,609		43,345
Deferred tax expense
Origination and reversal of temporary differences	(1,639)		946
Benefit of tax losses recognised	(332)		(1,574)
Deferred tax benefit	(1,971)		(628)
Income tax expense reported in the consolidated income statement	8,638		42,717

6.             Dividends

	2009 £'000		2008 £'000
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 December 2008 of 5.12p per ordinary share (2007: 5.6p)	16,487		17,934
Interim dividend for the year ended 31 December 2009 of 2.88p per ordinary share (2008: 2.88p)	9,366		9,329
	25,853		27,263
Amounts proposed as distributions to equity holders in the year:
Proposed final dividend for the year ended 31 December 2009 of 5.12p per ordinary share (2008: 5.12p)	16,535		16,316
The proposed final dividend had not been approved by shareholders at 31 December 2009 and therefore has not been included as a liability. The comparative final dividend at 31 December 2008 was also not recognised as a liability in the prior year.
The proposed final dividend of 5.12p per ordinary share will be paid on 5 June 2010 to shareholders on the register at the close of business on 5 May 2010, subject to approval by shareholders.

7.             Share-based payments

In accordance with IFRS 2 "Share-based Payment", a charge of £1.9m has been recognised for share options (including social charges) (31 December 2008: credit £0.6m), and £8.7m has been recognised for other share-based payment arrangements (including social charges) (31 December 2008: £7.5m).

8.             Earnings per ordinary share

The calculation of the basic and diluted earnings per share is based on the following data:

Earnings	2009		2008
Earnings for basic and diluted earnings per share (£'000)	12,430		97,339
Number of shares
Weighted average number of shares used for basic earnings per share ('000)	321,643		321,475
Dilution effect of share plans ('000)	7,412		4,178
Diluted weighted average number of shares used for diluted earnings per share ('000)	329,055		325,653
Basic earnings per share (pence)	3.9		30.3
Diluted earnings per share (pence)	3.8		29.9

The above results all relate to continuing operations.

9.             Property, plant and equipment

Acquisitions and disposals

During the year ended 31 December 2009, the Group acquired property, plant and equipment with a cost of £5.8m (2008: £17.2m).

Property, plant and equipment with a carrying amount of £2.4m were disposed of during the year ended 31 December 2009 (2008: £1.6m), resulting in a loss on disposal of £0.4m (2008: loss of £0.6m).

Capital commitments

The Group had contractual capital commitments of £0.1m as at 31 December 2009 (2008: £0.2m) relating to property, plant and equipment.

10.           Trade and other receivables

					2009 £'000			2008 £'000
Current
Trade receivables				100,197					168,369
Other receivables				13,102					6,888
Prepayments and accrued income				20,103					28,556
				133,402					203,813
Non-current
Prepayments and accrued income				2,021					1,955

Within other receivables is a balance of £9.0m for fees paid in respect of the VAT refund by HMRC.

11.           Trade and other payables

	2009 £'000		2008 £'000
Current
Trade payables	7,304		9,780
Other tax and social security	75,262		40,332
Other payables	18,583		18,742
Accruals	40,223		67,872
Deferred income	1,378		295
	142,750		137,021
Non-current
Deferred income	2,334		1,192
Other tax and social security	547		145
	2,881		1,337

Within other tax and social security is a balance of £50.0m relating to VAT repaid by HMRC.

In 2003 Michael Page submitted an initial claim to HMRC for overpaid VAT which was rejected. Michael Page appealed and subsequently filed amended claims for £26.5m, net of fees, covering the period from 1980 to 2004. In March 2009, Michael Page filed amended claims for a further refund of an additional £80m, net of fees, of overpaid VAT covering the same period.

In June 2009 Michael Page received a payment from HMRC of £26.5m, net of fees, as part settlement of these claims and in July 2009 received £10.9m, net of fees, of statutory interest.

On 25 September, Michael Page received a letter from HMRC which stated that, 'HMRC have reviewed the recent payment and are now of the view that the claim in whole or in part should not have been paid'.

A number of discussions and meetings with HMRC have since taken place and in respect of the initial claim, subject to legal contract, an agreement has now been reached in principle for MPI to retain £28.5 million (net of fees) of the £37.4 million it received.   However, given the background to the initial receipt and the subsequent review and reversal of its decision by HMRC, the Group has not recognised any amount in the Income Statement due to the remaining uncertainty pending formal contractual agreement.   

In respect of the amended claims for a further refund of an additional £80m, net of fees, of overpaid VAT there have been no discussions or meetings and Michael Page will continue to pursue the claim.

12.           Cash flows from operating activities

	2009 £'000		2008 £'000
Profit before tax	21,068		140,056
Depreciation and amortisation charges	11,268		10,317
Loss on sale of property, plant and equipment, and computer software	383		596
Share scheme charges	8,491		6,667
Net finance (income)/expense	(865)		445
Operating cash flow before changes in working capital	40,345		158,081
Decrease in receivables	70,911		24,963
(Decrease)/increase in payables	(37,497)		2,162
Cash generated from underlying operations	73,759		185,206
Increase in VAT claim related receivables	(8,972)		-
Increase in VAT claim related payables	49,990		-
Cash generated from operations	114,777		185,206

13.           Cash and cash equivalents

	2009 £'000		2008 £'000
Cash at bank and in hand	127,293		133,467
Short-term deposits	9,935		23,513
Cash and cash equivalents	137,228		156,980
Bank overdrafts	(43)		(62,697)
Cash and cash equivalents in the statement of cash flows	137,185		94,283

14.           Events after the balance sheet date

·      Between 31 December 2009 and 4 March 2010, 174,012 options were exercised, leading to an increase in share capital of £1,740 and an increase in share premium of £375,770.

·      A number of discussions and meetings with HMRC have taken place since the year end in relation to the VAT claim, see Note 11.

15.           Publication of Annual Report and Accounts

This preliminary statement is not being posted to shareholders. The Annual Report and Accounts will be posted to shareholders in due course and will be delivered to the Registrar of Companies following the Annual General Meeting of the Company. Copies of the Annual Report and Accounts can be downloaded from the Company's website http://investors.michaelpage.co.uk/annual_reports.

16.           Annual General Meeting

The Annual General Meeting of Michael Page International plc will be held at Page House, The Bourne Business Park, 1 Dashwood Lang Road, Addlestone, Weybridge, Surrey, KT15 2QW on 21 May 2010 at 12.00 noon.

Responsibility statement:

The responsibility statement below has been prepared in connection with the company's full annual report for the year ending 31 December 2009.  Certain parts of the annual report are not included within this announcement.

We confirm that, to the best of our knowledge:-

a)     the financial statements, prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the company and the undertakings included in the consolidation taken as a whole; and

b)     the management report, which is incorporated into the directors' report, includes a fair review of the development and performance of the business and the position of the company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties they face.

On behalf of the Board

S Ingham                                                                                                 S Puckett

Chief Executive                                                                                       Group Finance Director

5 March 2010

 

END

 

 

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