Final Results

RNS Number : 7348Y

Michael Page International PLC

06 March 2012

 



6 March 2012

 

MICHAEL PAGE INTERNATIONAL PLC

Full Year Results for the Year Ended 31 December 2011

Michael Page International plc ("Michael Page"), the specialist professional recruitment company, announces its full year results for the year ended 31 December 2011.

Financial summary	2011	2010	Change	Change CER*
Revenue	£1,019.1m	£832.3m	+22.4%	+20.3%
Gross profit	£553.8m	£442.2m	+25.2%	+23.1%
Operating profit before NRI †	£86.0m	£71.5m	+20.3%	+17.1%
Profit before tax before NRI †	£86.1m	£72.2m	+19.3%
Basic earnings per share before NRI †	18.7p	15.1p	+23.8%
Diluted earnings per share before NRI †	18.2p	14.7p	+23.8%
Operating profit	£86.0m	£88.7m	-3.0%
Profit before tax	£86.1m	£100.7m	-14.4%
Basic earnings per share	18.7p	21.6p	-13.4%
Diluted earnings per share	18.2p	21.1p	-13.7%
Total dividend per share	10.0p	9.0p	+11.1%

*Constant Exchange Rates     † Non-recurring Items (see note 4)

2011 operating and financial highlights

·      Strong results despite challenging macro economic backdrop

·      25% (23%*) growth in gross profit to a record level of £553.8m

·      Benefiting from geographic diversification with growth in all regions

·      Continued organic investment with 17 new offices and 3 new country openings in 2011

·      Gross profit from permanent placements growing at 28% (25%*)

·      Share repurchases of £30.3m during 2011

·      Strong balance sheet with net cash at year end of £58.2m  

·      Total dividend increased 11% to 10.0p (2010: 9.0p)

·      Headcount at year end of 5,286, up 17.5% on 2010

Commenting, Steve Ingham, Chief Executive of Michael Page, said:

"We are delighted with our performance in 2011, with improved profits being generated from a broad and diverse set of geographies and business streams. The strength of our results reflects our ability to launch organically and grow businesses around the world, whilst maintaining a strong balance sheet. This ensures we are consistent in our strategy of always maintaining our business platform during economic downturns and retaining our most experienced and talented people.

"While increasing returns to shareholders, we continued to have a long-term vision for the business and, therefore, made significant investments. During 2011 and the start of this year, we have opened 22 new offices including Pudong, Suzhou, Houston, San Francisco, and Cologne as well as new country operations such as Malaysia, India, Qatar and Colombia, all of which have had a successful start.

"While mindful of the current macroeconomic outlook, we are in a good position to continue this investment. We now have 1,020 consultants, 42 offices, across 11 countries, in the territories of Asia, Latin America and Germany, which generated 26% of our gross profit and grew by 52% in 2011. These, amongst others, provide us with numerous long-term growth opportunities.

"As the second half of last year progressed, trading became more challenging as general business confidence fell. All regions in which we operate were impacted, with growth rates slowing, but remaining positive. In the first two months of 2012, with the exception of financial services, we have seen no significant further slowing, and in a number of geographies activity levels have remained strong, increasing Group gross profits by approximately 10%."

Analyst meeting

The company will be presenting to a meeting of analysis at 9.00am today. The presentation and a recording of the meeting will be available on the company's website later today at http://investors.michaelpage.co.uk/presentations.

Enquiries:

Michael Page International plc	01932 264144
Steve Ingham, Chief Executive
Stephen Puckett, Group Finance Director
FTI Consulting	020 7269 7291
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 and diversify the business by industry sectors, by professional disciplines, by geography and by level of focus, be it Page Personnel, Michael Page or in Executive Search, with the objective of being the leading specialist recruitment consultancy in each of our chosen markets.

As recruitment activity is dependent upon economic cycles, 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.

Our organic growth is achieved by drawing upon the skills and experiences of proven Michael Page management, ensuring we have the best and 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. Whilst 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 remains our intention in the future to maintain our presence in our chosen markets, while keeping close control over our cost base.

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

Pursuing this approach does mean that in an economic downturn our profitability declines as, in addition to the lower productivity levels that come with a slowdown, we also carry spare capacity. However, when market conditions improve, the Group's profitability recovers quickly as spare capacity is utilised. Adopting this strategy in times of economic slowdown also drives our financing strategy and the management of our balance sheet position. In periods of economic slowdowns, the business has continued to produce strong cash flows, as working capital requirements reduce. However, with uncertainty around the length and depth of any economic slowdown, a strong balance sheet is essential in order to support the businesses through tougher periods and as economic conditions improve and the businesses start growing, to fund increased working capital requirements.

REVIEW OF 2011

The economic recovery continued during the first half of 2011. However, in July 2011, our financial services business started to weaken as concerns over the Eurozone began to emerge and economic growth expectations in Asia and the Americas were revised downwards.  As the crisis around the Eurozone and sovereign debt deepened, business confidence levels began to fall with clients becoming more cautious about their investment in headcount and candidates becoming more cautious about changing roles.

The slowing in activity levels impacted initially the more developed recruitment markets in the UK and Europe, but as concerns across the globe deepened, growth rates in emerging markets were also affected, particularly in markets where we have a greater reliance on international clients.

During the first half of 2011, as Continental European markets were continuing to show signs of recovery and we were experiencing rapid growth in Asia Pacific and Latin America, we increased our headcount by 354 in the first quarter and by 269 in the second quarter. During the third quarter we added a further 229 heads, as we continued our investment in Asia and Latin America. However, it is the nature of our business model and managerial control that we quickly react to a changing market and consequently, in the fourth quarter as economic news flow became increasingly negative and business confidence began to deteriorate, we reduced our headcount by 64.

During the course of 2011, we maintained our strategy of organic investment in developing and diversifying our business, with new country openings in Qatar, India and Malaysia. The rollout of disciplines under the Michael Page and Page Personnel brands continued and we opened a number of new offices. At the start of 2012, we also launched new businesses in Colombia and Morocco.

Revenue

Reported revenue for the year was 22.4% (20.3%*) higher at £1,019.1m (2010: £832.3m). Revenue from permanent placements in 2011 grew by 27.3% (25.2%*) to £453.1m (2010: £356.0m), representing 44.5% (2010: 42.8%) of Group revenue. Revenue from temporary placements for the year grew by 18.8% to £566.0m (2010: £476.3m). It is generally typical during a period of economic recovery that permanent placements grow at a faster rate than temporary placements. This trend has been accentuated due to our faster growing regions of Asia and Latin America being predominantly permanent rather than temporary placement markets.

Gross profit

Gross profit for the year grew by 25.2% (23.1%*) to £553.8m (2010: £442.2m). The year-on-year growth rate in our gross profit was around 30%* in the first half, but as the Eurozone crisis began to unfold, the year-on-year growth rate slowed to 22%* in the third quarter and 13%* in the fourth quarter.

The Group's gross margin increased to 54.3% (2010: 53.1%), largely as a result of the shift in the mix of business due to the stronger rate of growth of permanent compared to temporary placements. Gross profit from permanent placements grew by 27.5% (25.4%*) to £438.4m (2010: £343.8m), representing 79.2% (2010: 77.7%) of Group gross profit. The gross margin from permanent placements remained broadly flat at 96.8% (2010: 96.6%). Gross profit from temporary placements increased by 17.3% (15.0%*) to £115.4m (2010: £98.4m), representing 20.8% (2010: 22.3%) of Group gross profit. The gross margin achieved on temporary placements was 20.4% (2010: 20.7%) and was relatively stable throughout 2011.

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 highly 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, start new disciplines and launch in new countries. Furthermore, in periods when headcount is increasing significantly, it takes time to train and develop 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.

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 shorten in a recovery, increasing productivity, and the risk of the candidate being rejected or the assignment being cancelled decreases, thereby further increasing our earnings visibility. When economic conditions weaken and recruitment activity slows, these factors work in reverse and result in a rapid shortening of earnings visibility.

We experienced strong growth in the first half of 2011 in all our regions, with the exception of the UK and North America.  To support and achieve this growth and our continuing investments into new markets, we increased the group headcount in the first three quarters of 2011 by 852 people. As a result of the increasing macroeconomic concerns and the slowing in our growth rates, headcount reduced by 64 in the fourth quarter. Our headcount at the end of 2011 was 5,286, which is 17.5% higher than at the end of 2010.

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.

The Group's strategy of growing organically using home-grown talent, maintaining market presence and maintaining spare capacity, means that the Group is highly operationally geared to an increase in gross profit as economies recover, tempered only by the rate of investment for future growth. This is reflected in the 20.3% increase in operating profit from £71.5m, before non-recurring items, in 2010, to £86.0m in 2011. However, with the slowing in gross profit growth rates in the second half of 2011 and the ongoing investments in new countries and new markets, the Group's conversion rate of operating profit from gross profit fell slightly to 15.5% (2010: 16.2%).

Administrative expenses in the year increased by 26.2% to £467.7m (2010: £370.7m), largely as a result of the increase in headcount, higher profit-related bonus payments and investments in new office and country start-ups. Administrative expenses included £13.0m of share-based payment charges (2010: £12.4m) in respect of the Group's deferred annual bonus scheme, long-term incentive plan and share option schemes.

REGIONAL REVIEW OF 2011

Continental Europe, Middle East and Africa (EMEA)

EMEA, the Group's largest region, contributing 43% of the Group's gross profit for the year, grew revenue by 26.8% (24.1%*) to £421.2m (2010: £332.2m) and gross profit by 27.0% to £239.6m (2010: £188.7m).

Continental Europe experienced a strong recovery during the first half of the year as market conditions gradually improved and, with the exception of Southern Europe, this growth continued through the third quarter. However, the uncertainty and deterioration in confidence that started towards the middle of the third quarter in Southern Europe, driven by the sovereign debt issues in Greece and Italy, quickly spread across Continental Europe.

In the fourth quarter, while activity levels remained high, the decision-making process of both clients and candidates extended with the increasing macro uncertainty, with many decisions being deferred. As a consequence, the growth rates of most businesses in EMEA slowed with the notable exception of Germany.

Having ensured we maintained our platform of businesses during the downturn, as activity levels increased during 2011 the spare capacity which we were holding in the larger more established countries was utilised in line with trading conditions, following which headcount increased throughout the year. Headcount in the region was 1,831 at the start of the year and increased by 20.7% to 2,210 by the end of December, with the majority of the hiring taking place in the first half of the year. With the increased level of gross profit and the benefit from the utilisation of spare operational capacity, despite growth in gross profits decreasing to 15.1% in the fourth quarter, the region recorded a further strong recovery in operating profit to £31.7m (2010: £22.3m), a conversion rate of 13.2% (2010: 11.8%).

Virtually all countries across the region performed well during 2011. The Netherlands, while probably our most challenging market, recorded year-on-year gross profit growth of 21%*. Other notable performances were in France (37% of EMEA up 21%*); Germany (15% of EMEA up 39%*); Italy (9% of EMEA up 23%*); and Spain (7% of EMEA up 15%*). The other 14 countries, representing 32% of the EMEA region, achieved gross profit growth of 25%*. During the year, we opened our third office in the Middle East in Doha, Qatar, a second Portuguese office, in Porto, a Page Personnel office in Geneva, Switzerland, and further offices in Cologne, Barcelona and Paris.

United Kingdom

The UK contributed 24% (2010: 28%) of the Group's gross profit in 2011. Revenue grew by 7.4% to £324.9m (2010: £302.6m) and gross profit grew by 4.1% to £130.0m (2010: £124.9m). The gross margin in the UK has remained flat at broadly 40%, with both the mix of permanent and temporary gross profit and their respective gross profit margins remaining largely the same as in 2010.

The UK business achieved modest year-on-year growth in every quarter of 2011, although the quarterly growth rates declined throughout the year. Trading was characterised by growth in the private sector, held back by a more restrained public sector, and this trend persisted throughout 2011. As confidence levels deteriorated, the relatively stronger growth in gross profits seen during the first half, slowed markedly in July, with the third and fourth quarters remaining only marginally in positive territory. Market conditions remained tough throughout 2011, with clients and candidates remaining cautious over the impact of the government's austerity measures and sovereign debt issues in the Eurozone. However, the UK business is well diversified in terms of geography, disciplines and the mix of permanent and temporary revenues, and now has only limited exposure to the public sector (less than 2% of Group gross profit).

Headcount was 1,324 at the start of the year and decreased to 1,292 by the end of December, a reduction of 2.4%. The headcount trend followed the performance of the business, with headcount being added during the first two quarters of the year, with the objective of continuing the growth and gaining market share. As market conditions toughened, hiring slowed and the business reduced its headcount by natural attrition during the final quarter. Due to the slowing growth in the second half of the year, operating profit for the full year was 6.7% lower at £18.3m (2010: £19.6m), representing a conversion rate of 14.1% (2010: 15.7%).

Asia Pacific

The Asia Pacific region contributed 19% of the Group's gross profit in 2011. Revenue was 38.0% (29.9%*) higher at £166.1m (2010: £120.3m) and gross profit was 43.1% (36.7%*) higher at £103.4m (2010: £72.2m). Operating profit increased to £26.2m (2010: £22.3m), representing a conversion rate of 25.3% (2010: 30.9%), down on 2010 due to the high levels of headcount growth and new business investment in the region, including two new countries. The gross margin increased from 60% to 62%, reflecting the strong growth in Asia, where we have predominantly permanent placement businesses.

Headcount across the Asia Pacific region increased from 691 at the start of the year, to 971 at the end of the year, an increase of 41%, reflecting both increased activity levels and our intentions for building a substantial business in Asia over the medium to long term.

In Australia and New Zealand, gross profit grew 22%*, notably due to growth in Western Australia, driven by the mining and commodities sector. In Asia, the earthquake and tsunami in Japan impacted our Japanese business in the first quarter, but the resilience and recovery seen in the second quarter and beyond was remarkable. Our business across China grew very strongly, with gross profit in Mainland China, where we opened a new office in Pudong, Shanghai and doubled our Beijing office space during the second quarter, up over 100% in the year.  The new business start-ups in Malaysia, which is already trading profitably, and India, progressed very well through the year. In India, in the third quarter, we opened our third office in Bandra, Mumbai, and closed the year with a headcount of around 50.

The Americas

Revenue for the region grew by 38.5% (39.7%*) to £106.9m (2010: £77.2m) and gross profit grew by 43.3% (44.0%*) to £80.9m (2010: £56.4m). With strong growth in revenue and gross profit, the region produced operating profit of £9.9m (2010: £7.3), representing a conversion rate of 12.2% (2010: 13.0%). Headcount in the region increased by 24.7% from 652 at the start, to 813 at the end of the year, with the majority being added in the first half.

Approximately two thirds of the Americas region is in Latin America, of which our largest business is in Brazil, which, by the second quarter, had become our third largest country in gross profit terms. During the course of 2011, we invested to continue our growth and increase our market-leading position in Latin America. We opened new offices in Porto Alegre, Brazil, and Page Personnel offices in Campinas, Brazil and Mexico City, Mexico. We also launched Page Personnel in Argentina. Our new business in Santiago, Chile, launched at the end of 2010 is performing well and, at the start of 2012, we also launched a new business in Bogota, in Colombia.

In North America, market conditions remained challenging, but we performed well with growth during the first three quarters. The deterioration in confidence impacted growth in our North American businesses during the fourth quarter, especially with international clients and the banking sector. In the second quarter we opened an office in Houston to capitalise on the growing strength of our worldwide Oil and Gas business and in the third quarter we opened our first office on the West Coast in San Francisco.

Discipline development

Our strategy of diversifying the Group by professional disciplines has continued, by investing in the roll-out of existing and new disciplines throughout our country and office network. The heritage of the business is in placing people in Finance and Accounting roles, the large majority of which are professionally qualified accountants into industry and commerce. It is also the discipline where the brand is strongest and therefore tends to be the discipline we start with when we enter a new geographic market, following which we then roll out other disciplines. While this remains our largest area of business, it now represents less than half, at 45%, of the Group's 2011 gross profit. Revenue from Finance and Accounting placements grew by 15.7% (13.9%*) to £521.4m (2010: £450.6m) and gross profit grew by 18.6% (16.6%*) to £248.0m (2010: £209.2m).

Placements of candidates in Engineering, Property & Construction and Procurement & Supply Chain roles accounted for around 18% of Group gross profit. Revenue from these disciplines grew by 45.6% (42.6%*) to £164.7m (2010: £113.1m) and gross profit grew by 47.7% (45.0%*) to £101.3m (2010: £68.6m).

Placements of Marketing, Sales and Retail professionals generated around 18% of the Group's gross profit. Revenue from these disciplines grew by 14.5% (12.8%*) to £127.9m (2010: £111.7m) and gross profit grew by 19.4% (17.5%*) to £98.9m (2010: £82.8m).

Legal, Technology, Human Resources, Secretarial and Other disciplines generated around 19% of Group gross profit. Revenue from these disciplines grew by 30.7% (27.9%*) to £205.2m (2010: £157.0m) and gross profit grew by 29.4% (27.1%*) to £105.6m (2010: £81.6m).

FINANCIAL REVIEW OF 2011

2010 Non-recurring items (NRI) - VAT refund

Full details of the refund of VAT and related interest recorded as non-recurring items in 2010 are included in Note 4.

With regard to the amended claims for a further refund of VAT and related interest, while we have had continued correspondence and discussions with HMRC, the eventual outcome and timing of any decision remains uncertain.

Taxation

Tax on profit was £29.3m (2010: £33.2m), representing an effective tax rate of 34.0% (2010: 33.0%). The rate is higher than the effective UK Corporation Tax rate for the year of 26.5%, 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 2010, due to an increase in the proportion of overseas profit at generally higher rates than the Group average, higher professional tax due to growth in the French business and the large VAT reclaim taxed at 28% in the UK in 2010, partially offset by higher overall profit diluting the effect of the share plan non-deductible charges.

Share repurchases and share options

It is the Group's intention over the medium/long term to continue to use share repurchases to return surplus cash to shareholders. The company returned £30.3m to shareholders in 2011, purchasing and cancelling 5.7m shares.

At the beginning of 2011, the Group had 23.1m share options outstanding, of which 2.1m had vested but had not been exercised. In March 2011, 4.1m share options were granted under the Group's Share Option Scheme. During the course of the year, options were exercised over 0.9m shares, generating £1.6m in cash and 3.5m share options lapsed. At the end of 2011, 22.9m share options remained outstanding, of which 1.3m had vested but had not been exercised.

Earnings per share and dividends

In 2011, basic earnings per share were 18.7p (up 23.8%) (2010: 15.1p before NRI) and diluted earnings per share were 18.2p (2010: 14.7p before NRI). The weighted average number of shares for the year was 304.5m (2010: 311.8m).

In line with the Group strategy for returns to shareholders, the dividend is being increased to a level that the Board believes is sustainable. A final dividend of 6.75p, up 10.3%, (2010: 6.12p) per ordinary share is proposed, which, together with the interim dividend of 3.25p (2010: 2.88p) per ordinary share, makes an 11.1% increase in the total dividend for the year to 10.0p per ordinary share. The proposed final dividend, which amounts to £20.5m, will be paid on 6 June 2012 to those shareholders on the register as at 4 May 2012.

BALANCE SHEET

The Group had net assets of £180.6m at 31 December 2011 (2010: £177.4m). The increase in net assets comprises profit after tax for the year of £56.9m, credits relating to share schemes of £12.7m, cash received from the exercise of share options of £1.6m, offset by tax on share schemes of £5.8m, adverse currency movements of £3.4m, share repurchases for cancellation of £30.3m and dividends paid of £28.5m.

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. Capital expenditure, net of disposal proceeds, increased to £29.4m (2010: £14.8m), reflecting the investment in the development of our new systems. Investments in property and equipment increased by some £10.1m on the levels seen during 2010, reflecting the investments made in new and existing countries and offices as well as expansion and improvements to existing offices, especially in Asia and Latin America.

The most significant item in the Group balance sheet is trade receivables, which were £157.0m at 31 December 2011 (2010: £134.7m). The increase in trade receivables reflects both the increased activity and a small increase in debtor days to 50 (2010: 47 days). The movement in debtor days is due largely to the increased proportion of revenue being derived from permanent revenues where our debtor days are higher than from temporary revenues.

CASH FLOW

The Group started the year with net cash of £80.5m. In 2011, we generated £66.2m from operations, after an increase in working capital of £7.1m, reflecting increased activity. Tax paid was £37.1m and net capital expenditure was £29.4m, with net interest received of £0.1m. During the year, £30.3m was spent on the repurchase and cancellation of shares, £1.6m was received from the exercise of share options and dividends of £28.5m were paid. The Group had net cash of £58.2m at 31 December 2011.

NET CASH AND GROUP BORROWING FACILITIES

At 31 December 2011, the Group had net cash of £58.2m (2010: £80.5m). The net cash position comprised gross cash deposits of £64.4m with 18 separate banks.

The Group has a three year £50m multi-currency committed borrowing facility, under which £6.2m is currently drawn. This facility expires in May 2012 and the Group is currently in the process of arranging borrowing facilities with a variety of potential lenders.

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	2011	2010	Definition, method of calculation and analysis
Gross margin	54.3%	53.1%	Gross profit as a percentage of revenue. Gross margin increased from last year largely as a result of the higher gross margin permanent placements growing at a faster rate than temporary placements and the development of the Group's business in Asia and Latin America which are permanent only businesses. Source: Consolidated income statement in the financial statements
Conversion before NRI	15.5%	16.2%	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 decreased compared to last year, reflecting lower productivity (see below), the slowing towards the end of the year of economic conditions impacting demand for the Group's services, and the lag in headcount reductions. Source: Consolidated income statement in the financial statements.
Productivity (gross profit per fee earner)	£149.5k	£155.3k	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 decrease in productivity this year is as a result of the increase in headcount during first three quarters of the year to support growth and the rapid general deterioration in market conditions during the fourth quarter. It is also due to the increased level of investments and start up losses of new businesses. Source: Internal data.
Fee earner : support staff ratio	72:28	73:27	Represents the balance between operational and non-operational staff. The ratio of fee earners to support staff at the end of 2011 has decreased slightly from the level at the end of 2010. This ratio generally 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. With the investment in new countries and businesses, the support staff have increased to provide the appropriate infrastructure. Source: Internal data.
Debtor days	50	47	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 increase compared to last year relates to the shift towards permanent recruitment activity from temporary in a recovery. Permanent recruitment activity tends to have higher debtor days. Source: Internal data.

The movements in KPIs are consistent with the business performance as discussed in the Business Review.

GOING CONCERN

The Board has undertaken a recent and thorough review of the Group's budget, forecasts and associated risks and sensitivities and 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 these accounts. As a result, the going concern basis continues to be appropriate in preparing the financial statements.

FOREIGN EXCHANGE

At the end of 2011, the Group was operating in 32 countries around the world and carried out transactions recorded in twenty-five 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 respective 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 2011, when compared to those prevalent during 2010. Negative percentages indicate that Sterling has weakened against the foreign currency during the period.

Currency	Movement in the average exchange rate used for Income Statement translation between 2010 and 2011	Movement in the year end exchange rate used for Balance Sheet translation between 2010 and 2011
Euro	-1%	3%
Swiss Franc	-11%	0%
Brazilian Real	-1%	12%
US Dollar	4%	-1%
Australian Dollar	-9%	-1%
Hong Kong Dollar	4%	-1%
Singapore Dollar	-4%	0%
Japanese Yen	-6%	-6%

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 a period of economic uncertainty, 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 Eurozone subsidiaries and the UK-based Group Treasury subsidiary. 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.

PRINCIPLE 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.

Macroeconomic 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 diversifying the business by expanding geographically, increasing the number of disciplines, building part qualified and clerical businesses and 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.

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 the majority of 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 increasing levels of 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.

BOARD CHANGES

The Board is undergoing considerable change.  In July 2011, it was announced that Stephen Puckett, the Group Finance Director, was leaving but would stay until his successor had been found.  In January 2012, Andrew Bracey agreed to join the Board as Chief Financial Officer and he starts in April. Stephen continues his responsibilities and will ensure a smooth transition to Andrew is completed.

On 31^st December 2011, the Chairman for ten years, Sir Adrian Montague, retired from the Board and Robin Buchanan, who joined the Board as a non-executive director in October, succeeded him in the role.

In February 2012, it was announced that Charles-Henri Dumon left the Board. His responsibilities have been assumed by the Regional Managing Directors responsible for Continental Europe and the Americas, reporting directly to Steve Ingham, our CEO.

Hubert Reid, our Senior Independent Director, is stepping down at the forthcoming AGM after nine years on the Board. Ruby McGregor-Smith, Chairman of the Audit Committee, will succeed him in the role.  A search for a new Non-Executive Director is underway.

SUMMARY AND CURRENT TRADING

Having maintained our business platform during the economic downturn and retained our experienced and talented people, the Group was well positioned to benefit from the economic recovery during the first half of 2011. However, the uncertainty caused by the concerns surrounding the Eurozone and the lowering of worldwide GDP forecasts during the fourth quarter impacted significantly on our clients' recruitment plans, with many hiring decisions being deferred or cancelled. As a consequence, year-on-year growth in the fourth quarter gross profit slowed.

As in previous economic slowdowns, we will react according to the prevailing economic climate in each market in which we operate and manage each business appropriately, adjusting headcount to reflect market conditions, while continuing to invest where we have opportunities for long-term growth. Group headcount increased by over 850 people in the first three quarters of 2011, as we invested in growth opportunities through geographic and discipline expansion. Reflecting the more uncertain outlook, in the fourth quarter, our headcount reduced by 64 people, as a result of not replacing those who left through natural attrition.

We have maintained a strong balance sheet and, while increasing cash returns to shareholders, we have also continued to take a long-term approach to delivering shareholder value by making significant investments in the future of the business, both during 2011 and at the start of 2012. While mindful and cautious of the current macro economic outlook, we are in a position to continue our geographic expansion, as there remain many long-term growth opportunities in our newer territories, particularly Latin America and Asia.

As the fourth quarter of 2011 progressed, trading became increasingly more challenging as business confidence fell, with all regions in which we operate recording a reduction in their year-on-year growth rates. In the first two months of 2012, with the exception of financial services, we have seen no significant further slowing and in a number of geographies activity levels have remained strong, increasing Group gross profit by approximately 10%. We continue to invest and we have already completed new country openings in Colombia and Morocco, opened an office in Suzhou, China and at the end of this quarter we will open an office in Taipei, Taiwan.

In EMEA, while Southern Europe remains the weakest area, we continue to achieve good year-on-year growth elsewhere, including in France and particularly strong growth in Germany. In the UK, with the exception of banking, activity levels have stabilised and year-on-year gross profits are broadly flat. In Asia Pacific, Australia has performed well in the first two months, while in Asia we continue to see good levels of activity, again with the exception of banking. In the Americas, North America remains challenging and Latin America is progressing well, where we are pleased with the progress of our newer countries Argentina, Chile and now Colombia.

We will next update the market on our first quarter trading in an announcement on 11 April 2012.

Steve Ingham                                                    Stephen Puckett

Chief Executive                                                 Group Finance Director

6 March 2012                                                     6 March 2012

 

Consolidated Income Statement

For the year ended 31 December 2011

				2011			2010
		Note		£'000			£'000
Revenue		3		1,019,087			832,296
Cost of sales				(465,306)			(390,089)
Gross profit		3		553,781			442,207
Administrative expenses				(467,746)			(370,680)
Operating profit before non-recurring items		3		86,035			71,527
Other income - non-recurring items		4		-			17,125
Operating profit		3		86,035			88,652
Financial income		5		953			1,107
Financial income - non-recurring items		5		-			11,335
Financial expenses		5		(841)			(438)
Profit before tax		3		86,147			100,656
Income tax expense		6		(29,290)			(25,203)
Income tax expense - non-recurring items		4		-			(7,969)
Profit for the year				56,857			67,484
Attributable to: Owners of the parent				56,857			67,484
Earnings per share
Basic earnings per share (pence)		9		18.7			21.6
Diluted earnings per share (pence)		9		18.2			21.1

The above results all relate to continuing operations.

Consolidated Statement of Comprehensive Income
For the year ended 31 December 2011

				2011			2010
				£'000			£'000
Profit for the year				56,857			67,484
Other comprehensive income for the year
Currency translation differences				(3,405)			290
Total comprehensive income for the year				53,452			67,774
Attributable to:
Owners of the parent				53,452			67,774

Consolidated Balance Sheet

As at 31 December 2011

		Note		2011 £'000			2010 £'000
Non-current assets
Property, plant and equipment		10		33,210			28,526
Intangible assets  - Goodwill and other intangible				2,005			1,539
- Computer software				37,739			26,035
Deferred tax assets				8,351			12,441
Other receivables		11		2,612			1,145
				83,917			69,686
Current assets
Trade and other receivables		11		196,455			168,305
Current tax receivable				3,980			2,810
Cash and cash equivalents		14		64,417			80,531
				264,852			251,646
Total assets		3		348,769			321,332
Current liabilities
Trade and other payables		12		(147,413)			(122,795)
Bank overdrafts		14		(6,249)			-
Current tax payable				(11,591)			(16,583)
				(165,253)			(139,378)
Net current assets				99,599			112,268
Non-current liabilities
Other payables		12		(2,685)			(4,156)
Deferred tax liabilities				(233)			(364)
				(2,918)			(4,520)
Total liabilities		3		(168,171)			(143,898)
Net assets				180,598			177,434
Capital and reserves
Called-up share capital				3,167			3,216
Share premium				57,215			55,607
Capital redemption reserve				932			875
Reserve for shares held in the employee benefit trust				(65,652)			(75,361)
Currency translation reserve				30,286			33,691
Retained earnings				154,650			159,406
Total equity				180,598			177,434

Consolidated Statement of Changes in Equity

For the year ended 31 December 2011

	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 2010	3,234	51,589	838	(19,409)	33,401	127,363	197,016
Currency translation differences	-	-	-	-	290	-	290
Net income recognised directly in equity	-	-	-	-	290	-	290
Profit for the year ended 31 December 2010	-	-	-	-	-	67,484	67,484
Total comprehensive income for the  year	-	-	-	-	290	67,484	67,774
Purchase of own shares for cancellation	(37)	-	37	-	-	(15,086)	(15,086)
Purchase of shares held in employee benefit trust	-	-	-	(61,757)	-	-	(61,757)
Issue of share capital	19	4,018	-	-	-	-	4,037
Reserve transfer when shares held in the employee benefit trust vest	-	-	-	5,805	-	(5,805)	-
Credit in respect of share schemes	-	-	-	-	-	10,049	10,049
Credit in respect of tax on share schemes						280	280
Dividends              (Note 7)	-	-	-	-	-	(24,879)	(24,879)
	(18)	4,018	37	(55,952)	-	(35,441)	(87,356)
Balance at 31 December 2010 and 1 January 2011	3,216	55,607	875	(75,361)	33,691	159,406	177,434
Currency translation differences	-	-	-	-	(3,405)	-	(3,405)
Net income recognised directly in equity	-	-	-	-	(3,405)	-	(3,405)
Profit for year ended 31 December 2011	-	-	-	-	-	56,857	56,857
Total comprehensive income for the year	-	-	-	-	(3,405)	56,857	53,452
Purchase of own shares for cancellation	(57)	-	57	-	-	(30,322)	(30,322)
Issue of share capital	8	1,608	-	-	-	-	1,616
Reserve transfer when shares held in the employee benefit trust vest	-	-	-	9,709	-	(9,709)	-
Credit in respect of share schemes	-	-	-	-	-	12,703	12,703
Debit in respect of tax on share schemes	-	-	-	-	-	(5,774)	(5,774)
Dividends              (Note 7)	-	-	-	-	-	(28,511)	(28,511)
	(49)	1,608	57	9,709	-	(61,613)	(50,288)
Balance at 31 December 2011	3,167	57,215	932	(65,652)	30,286	154,650	180,598

Condensed Consolidated Statement of Cash Flows

For the year ended 31 December 2011

	Note		2011 £'000			2010 £'000
Cash generated from underlying operations	13		103,325			81,650
Net cash paid in respect of VAT claim	4		-			(12,558)
Cash generated from operations	13		103,325			69,092
Income tax paid			(37,109)			(12,408)
Net cash from operating activities			66,216			56,684
Cash flows from investing activities
Purchases of property, plant and equipment			(16,319)			(7,371)
Purchases of intangible assets			(13,325)			(8,774)
Proceeds from the sale of property, plant and equipment, and computer software			237			1,392
Interest received			953			1,107
Net cash used in investing activities			(28,454)			(13,646)
Cash flows from financing activities
Dividends paid			(28,511)			(24,879)
Interest paid			(807)			(439)
Issue of own shares for the exercise of options			1,616			4,037
Purchase of own shares for cancellation			(30,322)			(15,086)
Purchase of shares into the employee benefit trust			-			(61,757)
Net cash used in financing activities			(58,024)			(98,124)
Net decrease in cash and cash equivalents			(20,262)			(55,086)
Cash and cash equivalents at the beginning of the year			80,531			137,185
Exchange loss on cash and cash equivalents			(2,101)			(1,568)
Cash and cash equivalents at the end of the year	14		58,168			80,531

Notes to the consolidated preliminary results

For the year 31 December 2011

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 2011 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 2011 were approved by the directors on 6 March 2012. The Annual General Meeting of Michael Page International plc will be held at the registered office, Page House, The Bourne Business Park, 1 Dashwood Lang Road, Addlestone, Surrey, KT15 2QW on 18 May 2012 at 12.00 noon.
2.	Basis of preparation and accounting policies
Basis of preparation
Whilst the information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards ("IFRSs") as adopted for use in the European Union and as issued by the International Accounting Standards Board, this announcement does not itself contain sufficient information to comply with IFRSs.
The consolidated financial statements comprise the financial statements of the Group as at 31 December 2011 and are presented in UK sterling except when otherwise indicated.
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 contained within this preliminary announcement for the 12 months to 31 December 2011 and 12 months to 31 December 2010 do not comprise statutory financial statements for the purpose of the Companies Act 2006, but are derived from those statements. The statutory accounts for Michael Page International plc for the 12 months to 31 December 2010 have been filed with the Registrar of Companies and those for the 12 months to 31 December 2011 will be filed following the Company's annual general meeting. The auditors' reports on the accounts for both the 12 months to 31 December 2011 and 12 months to 31 December 2010 were unqualified and did not include a statement under Section 498 (2) or (3) of the Companies Act 2006. The Annual Report and Accounts will be available for shareholders in April 2012.
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 2010 except as described below. None have had a material impact on the Group's financial statements.
IAS 32 (Revised)            Classifications of Rights issues IAS 39 (Revised)            Financial Instruments: Recognition and Measurement IFRIC 17                        Distributions of Non-cash Assets to Owners IFRIC 18                        Transfer of Assets from Customers IFRIC 19                        Extinguishing Financial Liabilities with Equity Instruments Amendments to IFRS 2  Group cash-settled share-based payment transactions Annual Improvements to IFRS (issued April 2009) Annual Improvements to IFRS (issued May 2010)

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 including allocation of central administration costs. This is the measure reported to the Group's Chief Executive, the chief operating decision maker, for the purpose of resource allocation and assessment of segment performance.
(a)	Revenue, gross profit and operating profit by reportable segment
											Revenue					Gross Profit
											2011		2010			2011		2010
											£'000		£'000			£'000		£'000
EMEA											421,240		332,202			239,581		188,706
United Kingdom											324,863		302,567			129,991		124,858
Asia Pacific				Australia and New Zealand							106,196		81,676			50,172		37,645
				Other							59,862		38,630			53,179		34,569
				Total							166,058		120,306			103,351		72,214
Americas											106,926		77,221			80,858		56,429
											1,019,087		832,296			553,781		442,207
																Operating Profit
																2011		2010
																£'000		£'000
EMEA																31,676		22,272
United Kingdom																18,317		19,630
Asia Pacific				Australia and New Zealand												11,453		9,754
				Other												14,702		12,562
				Total												26,155		22,316
Americas																9,887		7,309
Operating profit before non-recurring items																86,035		71,527
Non-recurring items (NRI) (note 4)																-		17,125
Operating profit after non-recurring items																86,035		88,652
Financial income																112		12,004
Profit before tax																86,147		100,656
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, goodwill and other intangibles. Non-recurring items (NRI) in the prior year comparative relate wholly to the United Kingdom.
(b)	Segment assets, liabilities and non current assets by reportable segment
									Total Assets							Total Liabilities
									2011				2010			2011		2010
									£'000				£'000			£'000		£'000
EMEA									131,772				136,159			71,687		60,744
United Kingdom									106,455				96,563			51,100		41,359
Asia Pacific				Australia and New Zealand					28,323				28,292			11,855		10,410
				Other					37,299				24,471			9,411		5,352
				Total					65,622				52,763			21,266		15,762
Americas									40,940				33,037			12,527		9,450
Segment assets/liabilities									344,789				318,522			156,580		127,315
Income tax									3,980				2,810			11,591		16,583
									348,769				321,332			168,171		143,898
									Property, Plant & Equipment							Intangible Assets
									2011				2010			2011		2010
									£'000				£'000			£'000		£'000
EMEA									10,396				10,104			669		776
United Kingdom									9,680				9,090			38,187		25,810
Asia Pacific			Australia and New Zealand						1,594				2,104			168		148
			Other						2,648				996			105		369
									4,242				3,100			273		517
Americas									8,892				6,232			615		471
									33,210				28,526			39,744		27,574
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
										2011			2010			2011		2010
										£'000			£'000			£'000		£'000
Finance and Accounting										521,380			450,573			248,028		209,176
Legal, Technology, HR, Secretarial and Other										205,184			156,993			105,575		81,597
Engineering, Property & Construction, Procurement & Supply Chain										164,656			113,069			101,291		68,600
Marketing, Sales and Retail										127,867			111,661			98,887		82,834
										1,019,087			832,296			553,781		442,207
(d)	Revenue and gross profit generated from permanent and temporary placements
									Revenue							Gross Profit
									2011				2010			2011		2010
									£'000				£'000			£'000		£'000
Permanent									453,105				355,979			438,382		343,787
Temporary									565,982				476,317			115,399		98,420
									1,019,087				832,296			553,781		442,207

4.             Non-recurring items (NRI)

In 2003, Michael Page submitted an initial claim to Her Majesty's Revenue and Customs (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 £10.5m, net of fees, of statutory interest. As a result, the principal and interest amounts were recognised in the June 2009 half year results.
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 then took place and on 5 March 2010, Michael Page International plc (MPI) announced that an agreement had been reached in principle, subject to legal contract, between MPI and HMRC in respect of the initial claim for a refund of overpaid VAT plus statutory interest to retain £28.4m (net of fees) of the £37.4m it received. However, given the background to the initial receipt and the subsequent review and reversal of its decision by HMRC, the Group reversed out the balances originally recognised in the 2009 half year results and as such did not recognise any amount in the Income Statement at the 2009 full year, due to the remaining uncertainty pending formal contractual agreement.
On 30 April 2010, a formal agreement was signed with HMRC. As a result, of the £50m originally received from HMRC, MPI retained £38m and returned £11.9m in May 2010. Accordingly, after fees, MPI recognised £28.4m as non-recurring income in the prior year 2010 Income Statement. Taxation of £8.0m on non-recurring items, net of expenses, was also provided in 2010, representing an effective tax rate of 28.0%.
During the year, we had correspondence and discussions with HMRC concerning the amended claims for a further refund of VAT and related interest, but the eventual outcome still remains uncertain.

5.	Financial income / (expenses)						2011		2010
							£'000		£'000
	Bank interest receivable						953		1,107
	Interest on non recurring items (note 4)						-		11,335
	Interest receivable						953		12,442
	Financial expenses
	Bank interest payable						(841)		(438)
6.	Taxation
	The Group's consolidated effective tax rate in respect of continuing operations for the year ended 31 December 2011 was 34.0% (2010: 33.0%).
							2011		2010
	Analysis of charge in the year						£'000		£'000
	UK income tax at 26.5% (2010: 28.0%) for year						9,383		17,379
	Adjustments in respect of prior years						(1,840)		1,126
	Overseas						21,682		13,790
							29,225		32,295
	Deferred tax expense
	Adjustments in respect of prior years						311		-
	Origination and reversal of temporary differences						(393)		(1,184)
	Charge of tax losses recognised						147		2,061
	Deferred tax (benefit)/expense						65		877
	Income tax expense reported in the consolidated income statement						29,290		33,172
7.	Dividends						2011		2010
							£'000		£'000
	Amounts recognised as distributions to equity holders in the year:
	Final dividend for the year ended 31 December 2010 of 6.12p per ordinary share (2009: 5.12p)						18,739		16,066
	Interim dividend for the year ended 31 December 2011 of 3.25p per ordinary share (2010: 2.88p)						9,772		8,813
							28,511		24,879
	Amounts proposed as distributions to equity holders in the year:
	Proposed final dividend for the year ended 31 December 2011 of 6.75p per ordinary share (2010: 6.12p)						20,458		18,755
	The proposed final dividend had not been approved by shareholders at 31 December 2011 and therefore has not been included as a liability. The comparative final dividend at 31 December 2010 was also not recognised as a liability in the prior year.
	The proposed final dividend of 6.75 pence (2010: 6.12 pence) per ordinary share will be paid on 6 June 2012 to shareholders on the register at the close of business on 4 May 2012, subject to approval by shareholders.

8.	Share-based payments
	In accordance with IFRS 2 "Share-based Payment", a charge of £6.2m has been recognised for share options (including social charges) (2010: £5.6m), and £6.8m has been recognised for other share-based payment arrangements (including social charges) (2010: £6.9m).
	During the year, options over 4.1m shares were granted at an average exercise price of £4.91p and 0.9m share options were exercised, which has led to an increase in share capital of £8k and an increase in share premium of £1,608k.

9.	Earnings per ordinary share
	The calculation of the basic and diluted earnings per share is based on the following data:
	Earnings	2011		2010
	Earnings for basic and diluted earnings per share (£'000)	56,857		67,484
	Non recurring items (NRI) (£'000) (note 4)	-		(20,491)
	Earnings for basic and diluted earnings per share before NRI (£'000)	56,857		46,993
	Number of shares
	Weighted average number of shares used for basic earnings per share ('000)	304,458		311,821
	Dilution effect of share plans ('000)	7,941		7,653
	Diluted weighted average number of shares used for diluted earnings per share ('000)	312,399		319,474
	Basic earnings per share (pence)	18.7		21.6
	Diluted earnings per share (pence)	18.2		21.1
	Basic earnings per share before NRI (pence)	18.7		15.1
	Diluted earnings per share before NRI (pence)	18.2		14.7
	The above results all relate to continuing operations.
10.	Property, plant and equipment
	Acquisitions and disposals
	During the year ended 31 December 2011 the Group acquired property, plant and equipment with a cost of £16.3m (2010: £7.4m).
	Property, plant and equipment with a carrying amount of £0.2m were disposed of during the year ended 31 December 2011 (2010: £1.6m), resulting in a profit on disposal of £22k (2010: loss of £0.2m).
	Capital commitments
	The Group had contractual capital commitments of £1.1m as at 31 December 2011 relating to property, plant and equipment (2010: £1.2m). The Group had contractual capital commitments of £5.3m as at 31 December 2011 relating to computer software (2010: £2.0m).

11.	Trade and other receivables	2011		2010
		£'000		£'000
	Current
	Trade receivables	156,979		134,723
	Other receivables	4,566		5,035
	Prepayments and accrued income	34,910		28,547
		196,455		168,305
	Non-current
	Prepayments	2,612		1,145
12.	Trade and other payables	2011		2010
		£'000		£'000
	Current
	Trade payables	8,664		9,091
	Other tax and social security	44,415		33,900
	Other payables	22,612		20,340
	Accruals	71,115		58,248
	Deferred income	607		1,216
		147,413		122,795
	Non-current
	Deferred income	2,515		1,830
	Other tax and social security	170		2,326
		2,685		4,156

13.	Cash flows from operating activities
							2011		2010
							£'000		£'000
	Profit before tax						86,147		100,656
	Non-recurring income						-		(17,125)
	Profit before tax and non-recurring income						86,147		83,531
	Depreciation and amortisation charges						11,657		10,579
	(Profit)/loss on sale of property, plant and equipment, and computer software						(22)		151
	Share scheme charges						12,732		10,049
	Net finance income - including NRI						(112)		(12,004)
	Operating cash flow before changes in working capital and NRI						110,402		92,306
	Increase in receivables						(32,688)		(41,107)
	Increase in payables						25,611		30,451
	Cash generated from underlying operations						103,325		81,650
	Decrease in HMRC receivables						-		8,972
	Decrease in HMRC payables						-		(49,990)
	Non recurring income						-		28,460
	Cash generated from operations						103,325		69,092

14.	Cash and cash equivalents
							2011		2010
							£'000		£'000
	Cash at bank and in hand						57,758		73,178
	Short-term deposits						6,659		7,353
	Cash and cash equivalents						64,417		80,531
	Bank overdrafts						(6,249)		-
	Cash and cash equivalents in the statement of cash flows						58,168		80,531

15.      Events after the balance sheet date

Between 31 December 2011 and 1 March 2012, 154,950 options were exercised, leading to an increase in share capital of £1,550 and an increase in share premium of £635,114.                                                                                                                                                           

16.     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.                                                                                                                                     

17.     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 18 May 2012 at 12.00 noon                                                                                                                                    

Responsibility statement of the directors on the annual report
The responsibility statement below has been prepared in connection with the company's full annual report for the year ending 31 December 2011.
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 or loss 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

6 March 2012                                                                                                                             6 March 2012

 

END

 

 

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