Final Results

RNS Number : 0959H
Michael Page International PLC
11 March 2015
 

                                                                                                                                                    11 March 2015

 

 

Full Year Results for the Year Ended 31 December 2014

 

Michael Page International plc ("PageGroup"), the specialist professional recruitment company, announces its full year results for the year ended 31 December 2014.

 

 

Financial summary

2014

2013

Change

Change CER*

Revenue

£1,046.9m

£1,005.5m

4.1%

9.9%

Gross profit

£532.8m

£513.9m

3.7%

10.0%

Operating profit before exceptional items **

£78.5m

£68.2m

15.1%

23.8%

Profit before tax before exceptional items

£78.4m

£67.1m

 

 

Basic earnings per share before

exceptional items

18.4p

15.1p

21.9%

Diluted earnings per share before

exceptional items

18.2p

14.9p

22.1%

 

 

 

 

Operating profit after exceptional items

£80.1m

£65.7m

 

Profit before tax after exceptional items

£80.4m

£64.1m

 

Basic earnings per share

19.3p

13.8p

 

Diluted earnings per share

19.1p

13.7p

 

 

 

 

 

Total dividend per share

11.0p

10.5p

 

 

*Constant Exchange Rates (CER)    

**Exceptional charge in 2013 of £2.5m as a result of a transfer pricing audit in France, resulting in increased payment of profit share to employees. Confirmation was received from the French tax authorities in 2014 that no adjustments were required from 2010,so this part of the provision was released (£1.6m income) (Note 4).

 

HIGHLIGHTS (at CER)

 

·     Gross profit up 10.0% to £532.8m

·     Operating profit increased 23.8%, reflecting business performance and a focus on operational efficiencies

·     Conversion rate* improved to 14.7% (2013: 13.3%)

·     Net increase of 468 fee earners (+12%); total headcount at a record level of 5,578

·     Strong country performances from major economies: gross profit UK +11.5%, Germany +11%, US +19% and Greater China +22%

·     Large, High Potential Markets, a record gross profit up 14.2%,

·     77:23 fee earner: support headcount ratio, a record for the Group

·     New technology operating platform rolled out to one third of fee-earners

·     Total dividend increased 4.8% to 11.0p

*Operating profit as a percentage of gross profit

Commenting on the results and the outlook, Steve Ingham, Chief Executive Officer of PageGroup, said:

 

"PageGroup delivered an increase of 10% year-on-year in gross profit in constant currencies.  We saw solid performances across our regions, including strong results from the major economies of the UK, Germany, US and Greater China. The Group's conversion rate rose to 14.7% from 13.3%, reflecting steadily improving market conditions and the full run-rate of cost savings from our 2013 operational support process review.

 

"The underlying business environment is more positive in some of our key markets, with improving momentum in the second half. However, adverse FX impacted gross profit by £33m and operating profit by £6m in 2014. This has continued into 2015, if the 2014 results were restated at February 2015 exchange rates, gross profit and operating profit would have reduced by a further 4%.

 

"PageGroup has made good progress against its strategic objectives in 2014. With two new countries launched, and additional disciplines rolled out in both the Michael Page and Page Personnel brands, the business continued to grow its market presence in core target areas. Both our temporary and permanent recruitment businesses saw growth, further diversifying our service offering.

"At the end of 2014, fee-earner and total headcounts were at record levels for the Group. This was achieved together with the best fee earner to operational support ratio to date, reflecting operational efficiencies delivered within the business. The roll-out of our next-generation website was successfully completed and the new Page Recruitment System was rolled out to one-third of our consultants.

"With our clear strategic vision, we look forward to capitalising on our strong market positions in the year ahead. Where market conditions are favourable, we will look to grow our business and headcount, while at the same time looking to achieve productivity gains. As a result, we would expect our reported Group conversion rate to improve at a similar rate of growth as that seen over the past couple of years."

 

Analyst meeting

 

The company will be presenting to a meeting of analysts at 8.30am today at

 

FTI Consulting

200 Aldersgate

Aldersgate Street

London EC1A 4HD

 

If you are unable to attend in person, you can also follow the presentation on the following link:

 

 

http://www.axisto-live.com/investis/clients/pagegroup/presentations/54da438f96cead59397c2f21/fy14 

 

Please use the following dial-in numbers to join the conference:

 

United Kingdom (Local)

+44 20 3059 8125

 

All other locations

+44 20 3059 8125

 

           

 

Participant password: PageGroup

 

The presentation and a recording of the meeting will be available on the company's website later today at

 

http://www.pagegroup.co.uk/investors/reports-and-presentations/presentations-and-webcasts/2015.aspx

 

 

Enquiries:

 

Michael Page International plc

01932 264446

Steve Ingham, Chief Executive Officer

 

Kelvin Stagg, Chief Financial Officer

 

Ross Hawley, Director of Investor Relations

 

 

 

FTI Consulting

020 3727 1340

Richard Mountain / Susanne Yule

 

 

 

MANAGEMENT REPORT

 

 

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

At PageGroup we have a clear strategic vision.  We aim to be the leading specialist recruiter in each of the markets in which we operate.  We have sought to achieve this by developing a significant market presence in major global economies, as well as targeting new markets where we see the greatest potential for long-term gross profit growth at attractive conversion rates. 

 

We offer our services across a broad set of disciplines and specialisms, solely within the professional recruitment market.  Our origins are in permanent recruitment, but nearly a quarter of the business is now in temporary placements, where local culture and market conditions make it attractive.  In particular, we focus on opportunities where our industry and market expertise can set us apart from our competition.  This enables us to offer a premium service that is valued by clients and attracts the highest calibre of candidates.

PageGroup is focused on delivering against three key strategic objectives to achieve its strategic vision and sustainable financial returns.  These are: 1) to look for organic and diversified growth; 2) to position the business to be efficiently scalable and highly flexible to reflect market conditions; and 3) as a people-oriented, organically-driven business, to nurture and develop talent and skills which are fundamental to us achieving long-term sustainable growth.

 

We therefore invest significantly in our people, as the recruitment, retention and development of the best talent available is central to our ability to grow the business and to manage our resources through economic cycles.  Investment in the business has been focused on developing the long-term sustainability of the business and is supported by significant balance sheet strength and cash flow generation. 

 

 

Organic, scalable growth

Our strategy is to grow organically, achieved by drawing upon the skill and experience of proven PageGroup management, ensuring we have the best and most experienced, home-grown talent in each key role. Our team-based structure and profit share business model is highly scalable. The small size of our specialist teams means we can increase headcount rapidly to achieve growth when market conditions are favourable.

 

Conversely, when market conditions tighten, these entrepreneurial, profit sharing teams reduce in size through natural attrition. Consequently, our cost base contracts during the lean times. Our strategy for organic growth has served the business well over the thirty eight years since its inception and we believe it will continue to do so. We have grown from a small, single discipline management recruitment company operating in one country to a large multidiscipline, multinational business, operating in 36 countries represented by three key brands of Page Executive, Michael Page and Page Personnel.

 

Diversification by region and discipline

Our strategy is to expand and diversify the Group by industry sectors, professional disciplines, geography and level of focus, be it Page Executive, Michael Page or Page Personnel, with the objective of being the leading specialist recruitment consultancy in each of our chosen markets.

 

As recruitment is a cyclical business, impacted significantly by the strength of economies, diversification is an important element of our strategy in order to reduce our dependency on individual businesses or markets, increasing the resilience of the Group. This strategy is pursued entirely through the organic growth of existing and new teams, offices, disciplines and countries, maintaining a consistent team and meritocratic culture as we grow.

 

Talent and skills development

We recognise that it is our people who are at the heart of everything we do, particularly as an organically grown business where ensuring we have a talent pool with experience through economic cycles and across both geographies and disciplines is critical. Investing in our people is, therefore, a vital element of our strategy. We seek to find the highest calibre staff from a wide range of backgrounds and then do our very best to retain them through offering a fulfilling career and an attractive working environment. 

 

This includes a team-based structure, a profit share business model and continuous training and career development, often internationally. Our strong track record of internal career moves and promotion from within means that people who join us know that they could be our future senior managers and main Board directors.

 

Sustainable Growth

When we invest in a new business, be it a new country, a new office or a new discipline, we do so for the long-term. Downturns in the general economy of a country or in specific industries will inevitably have a knock-on effect on the recruitment market. However, it has been our practice in the past, and remains our intention, to maintain our presence in our chosen markets through these downturns, while closely controlling our cost base. In this way, we are able to retain our highly capable management teams in whom we have invested and, normally, we find that we gain market share during downturns which positions our business for market-leading rates of growth when the economy improves. Pursuing this approach means that we carry spare capacity during downturns, which can have a negative effect on profitability in the short-term. A strong balance sheet is, therefore, essential to support the business at these times.

 

Our strategic priorities comprise the following:

 

• increase the scale and diversification of PageGroup by growing organically existing and new teams,       offices, disciplines and countries;

 

• manage the business with a team and meritocratic culture, whilst delivering a consistent and high quality client and candidate experience;

 

• invest through cycles in our Large, High Potential Markets of Germany, Greater China, Latin America, South East Asia and the US to achieve scale and market position;

• manage our fee earner headcount in all other markets to reflect prevailing market conditions, by selectively adding to geographies and disciplines where there is positive growth momentum, while reducing headcount where the outlook for growth or fee earner productivity is poor;

 

• focus on operational support consistency and efficiency including the roll-out of our new technology operating platform, 'Page Recruitment System' (PRS); and

 

• focus on succession planning and international career paths to encourage retention and development of key staff.

 

The main factors that could affect the business and the financial results are described in the 'Risk Factors' section in the current Michael Page International plc's Annual Report and Accounts 2014.

 

GROUP RESULTS

 

GROSS PROFIT

 

Reported

CER

Year-on-year

% of Group

2014 (£m)

2013 (£m)

%

%

EMEA

40%

212.0

207.8

2.1%

8.6%

UK

26%

138.4

124.1

11.5%

11.5%

Asia Pacific

20%

105.5

105.8

(0.3)%

9.4%

Americas

14%

76.9

76.2

0.8%

13.2%

Total

100%

532.8

513.9

3.7%

10.0%

 

 

 

 

 

 

Permanent

 

76%

76%

 

 

Temporary

 

24%

24%

 

 

 

The Group's revenue for the twelve months ended 31 December 2014 increased 4.1% to £1,046.9m (2013: £1,005.5m) and gross profit increased 3.7% to £532.8m (2013: £513.9m). At constant exchange rates, the Group's revenue increased 9.9% and gross profit by 10.0%. 

 

The Group's revenue mix between permanent and temporary placements was 40:60 (2013: 40:60) and for gross profit was 76:24 (2013: 76:24). Revenue from temporary placements comprises the salaries of those placed, together with the margin charged. This margin on temporary placements decreased slightly to 20.1% (2013: 20.2%) in 2014. Overall, pricing has remained relatively stable across all regions, although a stronger pricing environment has been experienced in markets and disciplines where there have been increased instances of candidate shortages.

 

We have seen strong growth from our Large, High Potential Markets category, with gross profit up 14.2% in constant currency, a record performance from the category as a whole.  Four of the five markets had individual gross profit records, while Germany delivered record gross profit from temporary recruitment and headcount, in line with the nature of our investment.

 

35% of new fee-earner headcount was invested in these markets, bringing them to a record level of 1,423 for the category. Total Group headcount increased by 448 in the year, up 8.7% to 5,578.  This comprised a net increase of 468 fee earners (+12.3%) and a reduction of 20 operational support staff, reflecting the continued strong focus on operational efficiency.

 

As a result, our fee earner: support ratio was 77:23, also a record for the Group. In total, administrative expenses increased 1.9% to £454.4m (2013: £445.7m).  The Group's operating profit from trading activities totalled £78.5m (2013: £68.2m), an increase of 23.8% at constant rates, although the growth was lower at 15.1% in reported rates. 

 

The Group's conversion rate of gross profit to operating profit from trading activities improved 1.4 percentage points to 14.7% (2013: 13.3%).  This reflected a combination of steadily improving conditions in a number of markets, offset in part by more challenging conditions in some of the Group's larger individual markets such as Brazil and Australia.

 

OPERATING PROFIT AND CONVERSION RATES

 

The Group's organic growth model and profit-based team bonus structure ensures cost control remains tight. Approximately 75% of costs were employee related, including wages, bonuses, share-based long-term incentives, cars and other benefits, training and relocation costs. These costs totalled £340.0m (2013: £335.9m), and included the annual inflationary salary increase which averaged 3% across the Group, and £5.8m of share-based payment charges (2013: £6.8m). 

 

Other costs comprised principally information technology and property costs, which together totalled £114.4m (2013: £109.8m), up 11% in constant currency. Within this, property costs were flat in constant currency, with other costs, being technology and office expenditure, up 19% to £67m. This was driven by the increase in headcount, as well as the first full year charge for our technology programme, which increased amortisation by £3.5m. Total amortisation, which is almost entirely software-related was £10m, and depreciation was £7.9m. Together our depreciation and amortisation was flat on last year. 

 

The Group is currently undertaking a significant technology upgrade including the development and roll-out of its new PRS, new responsive websites and related infrastructure improvements. This roll-out accelerated through the year and achieved its target of one third of the Group's consultant network fully migrated onto PRS by the end of the year, principally being the businesses in the UK and the US.

 

In total, administrative expenses increased 1.9% to £454.4m (2013: £445.7m) reflecting the increase in costs as detailed above, offset by cost benefits of £6.6m from the consistency and efficiency exercise undertaken in 2013. The combination of slowly improving market conditions and the ongoing focus on cost control resulted in operating profit before exceptional items of £78.5m (2013: £68.2m) an increase of 15.1% in reported rates and 23.8% in constant currencies.

 

Depreciation and amortisation for the year totalled £17.9m (2013: £17.5m). This included amortisation relating to PRS of £8.8m (2013: £5.4m), an increase of £3.5m on 2013, due principally to a full year charge compared to eight months in 2013.

 

The Group's conversion rate for the period of 14.7% (2013: 13.3%) was a good improvement on 2013, as it was achieved alongside the Group's investment programme, focused in particular on its identified Large, High Potential Markets, despite the tough market conditions faced in a number of the Group's core markets.

 

The conversion rate for the Large, High Potential Markets category was 12.7%, which was 2 percentage points lower than the rest of the Group of 14.7%.  This was due to a combination of the headcount investment, which meant that a greater proportion of fee earners were new to the business, and these markets being less penetrated, requiring greater business development efforts than in more mature markets. 

 

Conversion rates improved in our more established regions: EMEA performed well, increasing from 12.5% to 14.2% and UK was up strongly from 14.8% to 17.4%.  Within our two less developed regions, Asia Pacific increased from 18.2% to 18.9%, while the Americas fell slightly, from 6.1% to 5.6%, impacted by difficult trading conditions in Brazil and headcount investment into the US. 

 

The Group was affected by the impact of movements in foreign exchange rates, as Sterling strengthened against almost all currencies in which the Group operates. This reduced the Group's revenue, gross profit and operating profit when expressed in Sterling by £58m, £33m and £6m, respectively.

 

A net interest income of £0.3m reflects the continuing low interest rate environment, with £0.5m of interest income on cash balances held through the year, offset by financial charges related to the Group's Invoice Discounting Facility and overdrafts used to support local operations and £0.3m of exceptional interest income.

 

Earnings per share and dividends

In 2014, basic earnings per share before exceptional items increased 21.9% to 18.4p (2013: 15.1p), reflecting the improved business performance and a lower effective tax rate as a result of a number of one-off items as described in the taxation section below. Diluted earnings per share, before exceptional items, which takes into account the dilutive effect of share options, was 18.2p (2013: 14.9p). After exceptional items, basic earnings per share rose 39.9% to 19.3p (2013: 13.8p) and diluted earnings per share was 19.1p (2013: 13.7p).

 

The Group's strategy is to pay dividends to shareholders at a level that the Board believes is sustainable through economic cycles, while maintaining a strong balance sheet to support the required investment in the growth and development of the Group. In line with the improved growth rates and increase in operating profits, a final dividend of 7.58p (2013: 7.25p) per ordinary share is proposed.  When taken together with the interim dividend of 3.42p (2013: 3.25p) per ordinary share, this would imply an increase in the total dividend for the year by 4.8% over 2013 to 11p per ordinary share.

 

The proposed final dividend, which amounts to £23.2m, will be paid on 22 June 2015 to shareholders on the register as at 22 May 2015, subject to shareholder approval at the Annual General Meeting on 4 June.

 

 

Cash Flow and Balance Sheet

 

Cash flow in the year was strong, with £88.1m (2013: £78.5m) generated from underlying operations. The closing net cash balance was £90.0m at 31 December 2014, an increase of £4.6m on the prior year. The movements in the Group's cash flow in 2014 reflected increased activity in a number of the Group's markets as the year progressed. The increase of 4.1% in the Group's revenue drove a £15.4m increase in working capital, principally in the temporary placement business. This comprised an increase of £22.2m in receivables (2013: £8.5m increase), as well as an increase in payables of £6.8m (2013: £4.8m decrease), reflecting stronger growth in the last months of the year where invoices have yet to be submitted or are pending payment.

 

The Group has a £50m invoice financing arrangement and a £10m committed overdraft facility to facilitate cash flows across its operations and ensure rapid access to funds should they be required, but neither of these were in use at the year end.

 

Income tax paid in the year was £15.4m (2013: £24.4m) reflecting the lower effective rate of tax in the prior year, with capital expenditure £0.6m lower in 2014 at £12.7m (2013: £13.3m). Our capital expenditure is split broadly equally between headcount related expenditure, such as office accommodation and infrastructure, and the development and maintenance of our IT systems. Spending on software development increased to £6.5m (2013: £4.8m) as the Group's new operating system moved into roll-out phase during the year, offset by a reduction in leasehold improvements expenditure.

 

Dividend payments were up on the prior year at £32.7m (2013: £30.8m) as a result of the 5.2% increase in the interim dividend to 3.42p. However, the main differences in cash flow arose from the purchase and issuance of shares related to share awards. In 2014, only £4.0m was received by the Group from the exercise of options compared to £14.4m received in 2013, reflecting a significantly lower number of options exercised in the year. In addition, in 2014, £25.4m of cash (2013: £nil) was used to purchase shares to satisfy future employee share awards, as the business moved fully to a market-purchase share scheme.

 

The most significant item in our balance sheet was trade receivables which amounted to £156.1m at 31 December 2014 (2013: £146.7m), comprising permanent fees invoiced in the final quarter of the year, and salaries and fees invoiced in the temporary placement business, but not yet paid. Days sales in debtors at 31 December 2014 were 45 days (2013: 47 days), reflecting continued strong credit control.

 

 

EUROPE, MIDDLE EAST AND AFRICA (EMEA)

 

EMEA is the Group's largest region, contributing 40% of the Group's gross profit in the year. With operations in 19 countries, PageGroup has a strong presence in the majority of EMEA markets, and is the clear leader in specialist permanent recruitment in the two largest, France and Germany.  Across the region, permanent placements accounted for 71% and temporary placements 29% of gross profit.

 

The region comprises a number of large, proven markets, such as France, Spain, Italy and the Netherlands, across which there is a broad range of competition.  EMEA also includes one of the Group's Large, High Potential Markets, Germany, which has low penetration rates and significant growth potential, particularly in temporary recruitment. In addition, there are a number of markets such as Poland, Turkey and Africa that are less developed, with limited competition, but are increasingly looking for professional recruitment services. The Middle East, where PageGroup is the largest international recruiter, has some of the Group's highest conversion rates.  

 

 

 

EMEA

Gross Profit (£m)

Growth rates

(40% of Group in 2014)

FY 2014

FY 2013

Reported

CER

 

212.0

207.8

2.1%

8.6%

 

In 2014, the EMEA region experienced mixed market conditions, but saw improved momentum in the second half. Revenue in the region increased 3% to £420m (2013: £407m) and gross profit increased 2% to £212m (2013: £208m). The region suffered from adverse foreign exchange movements that reduced revenue and gross profit by £25m and £13m respectively. In constant currency, revenue increased 9% on 2013 and gross profit increased by 9%.

 

Our largest businesses in France and Germany, together representing 49% of the region by gross profit, grew 6% and 11% respectively for the full year in constant currency. Each saw strong growth in their Page Personnel businesses, offset by more challenging trading conditions in Michael Page, which focuses on higher salary and predominantly permanent placements. Overall, 14 countries, representing over 85% of the region, grew in constant currency compared to 2013.

 

The 16% increase in operating profit for 2014 to £30.1m (2013: £25.9m), and improvement in the conversion rate to 14.2% (2013: 12.5%) were due to a full year impact of the cost savings achieved in 2013.

 

Headcount across the region increased by 227 (12%) to 2,113 at the end of December 2014 (1,886 at 31 December 2013). The majority of the increase was fee earners as the business added headcount, particularly in Page Personnel in France and Germany, primarily focused on temporary recruitment.

 

 

 

UNITED KINGDOM

 

The UK represented 26% of the Group's gross profit in 2014 and is the Group's largest single market, operating from 28 offices in all major cities.  It is a mature, highly competitive and sophisticated market with the majority of vacant positions being outsourced to recruitment firms.  PageGroup has a leading market presence in permanent recruitment across the UK, and a growing presence in temporary recruitment.  In the UK, permanent placements accounted for 70% and temporary placements 30% of gross profit.

 

In the UK, the Group operates under the 3 brands of Michael Page, Page Personnel and Page Executive with representation in 13 specialist disciplines via the Michael Page brand. There is significant opportunity to roll out new discipline businesses under the lower-level Page Personnel brand, which now represents 19% of UK gross profit. The Michael Page business has limited competition of any scale, particularly in regional centres, and is growing its market share, particularly in technical disciplines. 

 

  UK 

Gross Profit (£m)

Growth rate

(26% of Group in FY 2014)

FY 2014

FY 2013

 

 

138.4

124.1

11.5%

 

The UK business enjoyed steady growth through the year and saw signs of greater client confidence both in London and the regions.  Instances of candidate shortages particularly in certain technical disciplines increased, but are still principally at the lower salary levels. Revenue of £326m (2013: £299m), and gross profit of £138m (2013: £124m) were up 9% and 12% respectively, reflecting continued progress in the business as the UK recovery maintained its steady momentum. 

 

UK disciplines such as Property & Construction (+40%), HR (+35%) and Finance & Accounting (+14%) performed strongly. Other disciplines, whilst positive, grew less strongly, with Retail up 3% and Sales up 5%. Michael Page was up 9% while Page Personnel was up 22% for the full year, reflecting stronger activity in temporary and permanent recruitment at the professional clerical level, as well as the roll-out of new disciplines. These improvements in market conditions enabled operating profit in the UK to increase 31% to £24.1m (2013: £18.4m) and the conversion rate increased to 17.4% (2013: 14.8%).

 

Headcount rose 9% during the year to 1,441 at the end of December 2014 (2013: 1,319).  Headcount was added selectively to strongly performing disciplines and newly launched Page Personnel disciplines such as HR and Property & Construction, while other discipline businesses were also able to achieve consultant productivity gains.

 

 

ASIA PACIFIC

 

Asia Pacific represented 20% of the Group's gross profit in 2014, with 67% of the region being Asia and 33% Australasia.  Other than in the financial centres of Tokyo, Singapore and Hong Kong, the Asian market is generally very under-developed, but offers highly attractive opportunities in both international and domestic marketplaces at good conversion rates.  Two of our Large, High Potential Markets, South East Asia and Greater China, are in this region.  With a highly experienced management team, a network of 16 offices, approaching 750 staff and limited competition, the size of the Asian opportunity is huge.  

 

Australasia is a mature, well-developed and highly competitive recruitment market. PageGroup has a meaningful presence in permanent recruitment in the majority of the professional disciplines and major cities in Australia, and New Zealand. Page Personnel has a growing presence and significant potential to expand this business and grow market share. Across the Asia Pacific region, permanent placements accounted for 86% and temporary placements 14% of gross profit.

 

  

Asia Pacific 

Gross Profit (£m)

Growth rates

(20% of Group in FY 2014)

FY 2014

FY 2013

Reported

CER

 

105.5

105.8

(0.3%)

9.4%

 

 

In Asia Pacific, revenues rose 2% to £193m (2013: £189m) while gross profit was constant at £106m (2013: £106m).  With the region being impacted significantly by foreign exchange translation that reduced revenue and gross profit by £21m and £10m respectively, in constant currency, revenue increased 13% and gross profit increased by 9%.

 

Asia enjoyed stronger trading conditions than Australasia and also benefited from the increasing experience and maturity of our local consultants. This helped Greater China to achieve Gross Profit growth of 22% in constant currency, despite growth slowing in the second half of the year. This was most notable in Hong Kong which was impacted by protestors over a 10 week period late in the year. All markets in South East Asia achieved gross profit growth in constant currency with the exception of Singapore which declined by 3%.  In Australia, gross profit was down 3% in constant currency. However, the Australian market stabilised progressively as the rate of decline slowed during the year, albeit against softer comparators, and turned positive in Q4.

 

Operating profit rose 4% to £20.0m (2013: £19.2m), and was up 16% in constant currency resulting in an increase in the conversion rate to 18.9% (2013: 18.2%). Headcount across the region rose by 30 (3%) in the year, ending at 1,141 at the 31 December 2014 (1,111 at 31 December 2013), with an increase in Asia partially offset by a modest reduction in Australia.

  

 

THE AMERICAS

 

The Americas represented 14% of the Group's gross profit in 2014, being North America and Canada (44% of region) and Latin America (56% of region).  Both the US and Latin America are considered to be Large, High Potential Markets in our growth strategy.  The US, where we have 9 offices, has a well-developed recruitment industry, but in many disciplines, especially technical, there is limited national competition of any scale.  PageGroup's breadth of professional specialisms and geographic reach is uncommon and provides a competitive advantage.  Latin America is a very under-developed region, where PageGroup enjoys the leading market position with around 550 employees in 6 countries and 20 offices. There are few international competitors and none with any regional scale.  Across the region, permanent placements accounted for 87% and temporary placements 13% of gross profit.

 

  

Americas

Gross Profit (£m)

Growth rates

(14% of Group in FY 2014)

FY 2014

FY 2013

Reported

CER

 

76.9

76.2

0.8%

13.2%

 

 

Americas' revenue decreased 2% to £108m (2013: £111m) while gross profit improved 1% to £77m (2013: £76m), as the region suffered from significant adverse foreign exchange movements that reduced revenue and gross profit by £12m and £10m respectively. In constant currency, revenue increased 9% and gross profit increased by 13%.

 

In North America, our businesses performed well, with gross profit up 22% in constant currency. This reflected continued strong market conditions and high levels of activity, particularly in the New York-focused financial services disciplines. Our Canadian business performed strongly and we opened a third Canadian office in Calgary in July.

 

In Latin America, gross profit was up 8% year-on-year in constant currency. Brazil experienced mixed market conditions, starting the year positively, before being impacted by the World Cup in June and elections in October, both of which disrupted business activity and delayed decision making. As a consequence, gross profit in Brazil declined in constant currency, albeit by only by 1%. Excluding Brazil, the other countries in the region (41% of Latin America) performed very strongly, up 22%, with record performances from Mexico, Argentina, Chile and Colombia. A new business was launched in Lima, making Peru our sixth country in the Latin American region.

 

Operating profit fell to £4.3m (2013: £4.6m), with a conversion rate of 5.6% (2013: 6.1%). Headcount increased modestly by 69 (8%) in 2014 to 883 at the end of December 2014 (814 at 31 December 2013) split equally between the US and Latin America, outside of Brazil.

 

 

OTHER FINANCIAL ITEMS

 

Foreign Exchange

 

 

Foreign exchange had a substantial impact on results for the year, causing a decrease in gross profit of £33m, in administrative expenses of £27m and therefore in operating profit of £6m. This impact was felt globally, with the largest being in EMEA, where gross profit was reduced by £13m. The impact has continued in 2015. If the 2014 results were restated at February 2015 exchange rates this would reduce gross profit by a further £21m and operating profit by a further £4m.  

 

 

Exceptional items

 

In October 2013, Page Personnel France (PPF) received notice from the Competent Authorities of the UK and France of their decision regarding a transfer pricing case that had arisen as a result of a tax audit in March 2008. The decision, which was unexpected, increased the profit generated by PPF, which, as per the mandatory profit share or "participation aux résultats de l'entreprise" that is particular to France, drove a requirement to pay increased employee profit share, both to employees of PPF and also to the temporary workers placed by that company. As a result, the Group took in 2013 an exceptional charge of £2.5m relating to prior periods, and £0.6m that was included within operating profits from trading activities.

 

In December 2014, PPF received notice from the French tax authorities that they would not be seeking to make any further transfer pricing adjustments as a result of their audit of the tax years 2011 and 2012. In addition, as no assessment was raised within the statutory timeframe, there will be no adjustment for the 2010 tax year. Accordingly, in 2014, the Group has recorded exceptional income of £1.6m relating to the reversal of amounts that were previously provided as an exceptional charge and a further £0.6m that is included within operating profit. There is also £0.3m of exceptional interest, being the reversal of the provision, in the current year as well as £0.8m of income tax income relating to this exceptional item.

 

 

Taxation

 

 

Tax on profit was £21.0m (2013: £21.5m). This represented an effective tax rate of 26.2% after exceptional items (2013: 33.5%). Before exceptional items the Group's effective tax rate was 27.9% (2013: 30.9%). The rate is higher than the effective UK Corporation Tax rate for the year of 21.5% (2013: 23.25%) due to profits and disallowable items of expenditure being generated in countries where corporation tax rates are higher than in the UK.

 

For 2014, the underlying tax rate, excluding one off items but including the effects of share options, was 33.2% (2013: 35.0%).  The reduction of 1.8% over 2013 was predominantly due to greater profits from territories with lower tax rates, such as the UK where the corporation tax rate has fallen from 23.25% to 21.5%.  In addition to the movement in the underlying rate, the effective tax rate in 2014 was affected by a number of one off factors which resulted in the effective tax rate being 7% lower than the underlying rate. These were: recognition of US tax losses and deferred tax on US share plans of 3.1%; a deduction in China of 2.2% for costs incurred in previous periods and utilisation of unrecognised losses; and part reversal of last year's exceptional item of 1.7%.

 

 

Share Options and Share Repurchases

 

At the beginning of 2014, the Group had 21.8m share options outstanding, of which 7.9m had vested, but had not been exercised. During the year, options were granted over 4.9m shares under the Group's share option plans. Options were exercised over 1.2m shares, generating £4.0m in cash, and options lapsed over 1.4m shares. At the end of 2014, options remained outstanding over 24.1m shares, of which 7.7m had vested, but had not been exercised. During 2014, the Group's Employee Benefit Trust purchased 5.5m shares at a cost of £25.4m to satisfy future employee share plan awards (2013: £nil). No shares were repurchased by the Company or cancelled during the year (2013: nil).

 

KEY PERFORMANCE INDICATORS ("KPIs")

 

KPI

Definition, method of calculation and analysis

Financial

 

Gross profit growth

Gross profit diversification

Ratio of gross profit generated from permanent and temporary placements

Basic earnings per share (EPS)

Net cash

How measured: Cash and short-term deposits less bank overdrafts and loans.

 

Why it's important: The level of net cash reflects our cash generation and conversion capabilities and our success in managing our working capital.  It determines our ability to reinvest in the business, to return cash to shareholders and ensure we remain financially robust through cycles.

 

How we performed in 2014: After an increase in cash paid on dividends of 6% and £25.4m of shares purchased by the Group's Employee Benefit Trust, net cash rose to £90.0m from £85.4m.

 

Relevant strategic objective: Sustainable growth

 

Strategic

Fee earner headcount growth

Gross profit per fee earner

Fee earner: support staff headcount ratio

Conversion rate before exceptional items

People

Employee Index

Management experience

 

The source of data and calculation methods year-on-year are on a consistent basis. Two new strategic and two new employee-related KPIs were included. The movements in KPIs are in line with expectations.  

 

 

Steve Ingham

Kelvin Stagg

Chief Executive Officer

Chief Financial Officer

10 March 2015     

 

 

Consolidated Income Statement

For the year ended 31 December 2014

 

 

 

 

Before

 

After

 

Before

 

After

 

 

 

Exceptional

Exceptional

Exceptional

 

Exceptional

Exceptional

Exceptional

 

 

 

Items

Items (note 4)

Items

 

Items

Items (note 4)

Items

 

 

 

2014

2014

2014

 

2013

2013

2013

 

Note

 

£'000

£'000

£'000

 

£'000

£'000

£'000

 

 

 

 

 

 

 

 

 

 

Revenue

3

 

1,046,887

-

1,046,887

 

1,005,502

-

1,005,502

Cost of sales

 

 

(514,070)

-

(514,070)

 

(491,621)

-

(491,621)

Gross profit

3

 

532,817

-

532,817

 

513,881

-

513,881

Administrative expenses

 

 

(454,356)

1,631

(452,725)

 

(445,703)

(2,453)

(448,156)

Operating profit

3

 

78,461

1,631

80,092

 

68,178

(2,453)

65,725

Financial income

5

 

488

-

488

 

531

-

531

Financial expenses

5

 

(517)

298

(219)

 

(1,625)

(574)

(2,199)

Profit before tax

3

 

78,432

1,929

80,361

 

67,084

(3,027)

64,057

Income tax expense

6

 

(21,863)

833

(21,030)

 

(20,733)

(720)

(21,453)

 

 

 

56,569

2,762

59,331

 

46,351

(3,747)

42,604

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

 

 

Owners of the parent

 

 

 

 

59,331

 

 

 

42,604

 

 

 

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

 

 

 

 

Basic earnings per share (pence)

9

 

 

 

19.3

 

 

 

13.8

Diluted earnings per share (pence)

9

 

 

 

19.1

 

 

 

13.7

 

The above results all relate to continuing operations.

 

 

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2014

 

 

2014

 

 

 

2013

 

£'000

 

 

 

£'000

 

 

 

 

 

 

Profit for the year

59,331

 

 

 

42,604

 

 

 

 

 

 

Other comprehensive loss for the year

 

 

 

 

 

Items that may subsequently be reclassified to profit and loss:

 

 

 

 

 

Currency translation differences

(3,949)

 

 

 

(4,700)

 

 

 

 

 

 

Total comprehensive income for the year

55,382

 

 

 

37,904

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

Owners of the parent

55,382

 

 

 

37,904

 

 

Consolidated Balance Sheet

As at 31 December 2014

 

 

 

 

2014

 

2013

 

Note

 

£'000

 

£'000

Non-current assets

 

 

 

 

 

Property, plant and equipment

10

 

21,808

 

25,238

Intangible assets - Goodwill and other intangibles

 

 

1,853

 

1,971

- Computer software

 

 

36,693

 

40,126

Deferred tax assets

 

 

11,644

 

10,377

Other receivables

11

 

1,842

 

2,865

 

 

 

73,840

 

80,577

Current assets

 

 

 

 

 

Trade and other receivables

11

 

203,042

 

186,488

Current tax receivable

 

 

7,479

 

7,060

Cash and cash equivalents

14

 

90,012

 

87,070

 

 

 

300,533

 

280,618

 

 

 

 

 

 

Total assets

3

 

374,373

 

361,195

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

12

 

(135,888)

 

(133,664)

Bank overdrafts

14

 

-

 

(1,676)

Current tax payable

 

 

(14,910)

 

(11,780)

 

 

 

(150,798)

 

(147,120)

 

 

 

 

 

 

Net current assets

 

 

149,735

 

133,498

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

Other payables

12

 

(4,743)

 

(4,697)

Deferred tax liabilities

 

 

(2,609)

 

(891)

 

 

 

(7,352)

 

(5,588)

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

3

 

(158,150)

 

(152,708)

 

 

 

 

 

 

Net assets

 

 

216,223

 

208,487

 

 

 

 

 

 

Capital and reserves

 

 

 

 

 

Called-up share capital

 

 

3,219

 

3,208

Share premium

 

 

75,215

 

71,739

Capital redemption reserve

 

 

932

 

932

Reserve for shares held in the employee benefit trust

 

 

(72,407)

 

(50,022)

Currency translation reserve

 

 

16,466

 

20,415

Retained earnings

 

 

192,798

 

162,215

 

 

 

 

 

 

Total equity

 

 

216,223

 

208,487

 

 

 

Consolidated Statement of Changes in Equity

For the year ended 31 December 2014

 

 

 

 

 

 

 

 

Reserve

 

 

 

 

 

 

 

 

 

 

 

 

 

for shares

 

 

 

 

 

 

 

Called-up

 

 

 

Capital

 

held in the

 

Currency

 

 

 

 

 

share

 

Share

 

redemption

 

employee

 

translation

 

Retained

Total

 

capital

 

premium

 

reserve

 

benefit trust

 

reserve

 

earnings

equity

 

£'000

 

£'000

 

£'000

 

£'000

 

£'000

 

£'000

£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 January 2013

3,178

 

60,221

 

932

 

(62,071)

 

25,115

 

154,013

181,388

Currency translation differences

-

 

-

 

-

 

-

 

(4,700)

 

-

(4,700)

Net expense recognised directly in equity

-

 

-

 

-

 

-

 

(4,700)

 

-

(4,700)

Profit for the year ended 31 December 2013

-

 

-

 

-

 

-

 

-

 

42,604

42,604

Total comprehensive (loss)/income for the year

-

 

-

 

-

 

-

 

(4,700)

 

42,604

37,904

Exercise of share plans

30

 

11,518

 

-

 

-

 

-

 

2,881

14,429

Reserve transfer when shares held in the employee benefit trust vest

-

 

-

 

-

 

12,049

 

-

 

(12,049)

-

Credit in respect of share schemes

-

 

-

 

-

 

-

 

-

 

5,602

5,602

Credit in respect of tax on share schemes

-

 

-

 

-

 

-

 

-

 

13

13

Dividends

-

 

-

 

-

 

-

 

-

 

(30,849)

(30,849)

 

30

 

11,518

 

-

 

12,049

 

-

 

(34,402)

(10,805)

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 31 December 2013 and 1 January 2014

3,208

 

71,739

 

932

 

(50,022)

 

20,415

 

162,215

208,487

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 January 2014

3,208

 

71,739

 

932

 

(50,022)

 

20,415

 

162,215

208,487

Currency translation differences

-

 

-

 

-

 

-

 

(3,949)

 

-

(3,949)

Net expense recognised directly in equity

-

 

-

 

-

 

-

 

(3,949)

 

-

(3,949)

Profit for the year ended 31 December 2014

-

 

-

 

-

 

-

 

-

 

59,331

59,331

Total comprehensive (loss)/income for the year

-

 

-

 

-

 

-

 

(3,949)

 

59,331

55,382

Purchase of shares held in employee benefit trust

-

 

-

 

-

 

(25,445)

 

-

 

-

(25,445)

Exercise of share plans

11

 

3,476

 

-

 

-

 

-

 

467

3,954

Reserve transfer when shares held in the employee benefit trust vest

-

 

-

 

-

 

3,060

 

-

 

(3,060)

-

Credit in respect of share schemes

-

 

-

 

-

 

-

 

-

 

7,069

7,069

Debit in respect of tax on share schemes

-

 

-

 

-

 

-

 

-

 

(518)

(518)

Dividends

-

 

-

 

-

 

-

 

-

 

(32,706)

(32,706)

 

11

 

3,476

 

-

 

(22,385)

 

-

 

(28,748)

(47,646)

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 31 December 2014

3,219

 

75,215

 

932

 

(72,407)

 

16,466

 

192,798

216,223

 

 

 

Consolidated Statement of Cash Flows

For the year ended 31 December 2014

 

 

 

2014

 

2013

 

Note

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

Cash generated from underlying operations

13

88,092

 

78,506

Cash flow on exceptional items (note 4)

 

(1,098)

 

-

Cash generated from operations

 

86,994

 

78,506

Income tax paid

 

(15,357)

 

(24,367)

Net cash from operating activities

 

71,637

 

54,139

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Purchases of property, plant and equipment

 

(6,231)

 

(8,480)

Purchases of intangible assets

 

(6,468)

 

(4,815)

Proceeds from the sale of property, plant and equipment, and computer software

 

824

 

565

Interest received

 

505

 

531

Net cash used in investing activities

 

(11,370)

 

(12,199)

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Dividends paid

 

(32,706)

 

(30,849)

Interest paid

 

-

 

(1,475)

Issue of own shares for the exercise of options

 

3,954

 

14,429

Purchase of shares into the employee benefit trust

 

(25,445)

 

-

Net cash used in financing activities

 

(54,197)

 

(17,895)

 

 

 

 

 

Net increase in cash and cash equivalents

 

6,070

 

24,045

Cash and cash equivalents at the beginning of the year

 

85,394

 

61,373

Exchange loss on cash and cash equivalents

 

(1,452)

 

(24)

Cash and cash equivalents at the end of the year

14

90,012

 

85,394

 

 

Notes to the consolidated preliminary results

For the year ended 31 December 2014

 

 

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 2014 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 2014 were approved by the directors on 10 March 2015. 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 4 June 2015 at 9.30am.

 

 

2.         Basis of preparation and accounting policies

 

 

Basis of preparation

 

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 2014 and are presented in UK Sterling and all values are rounded to the nearest thousand (UK £'000), except where 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, as described in the Group's Annual Report and Accounts, 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 2014 and 12 months to 31 December 2013 does not comprise statutory financial statements for the purpose of the Companies Act 2006, but is derived from those statements. The statutory accounts for Michael Page International plc for the 12 months to 31 December 2013 have been filed with the Registrar of Companies and those for the 12 months to 31 December 2014 will be filed following the Company's Annual General Meeting.

 

The auditor's reports on the accounts for both the 12 months to 31 December 2014 and 12 months to 31 December 2013 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 2015.

 

 

Significant accounting policies

 

The accounting policies applied by the Group in these consolidated preliminary results are the same as those followed in the preparation of the Group's annual consolidated financial statements for the year ending 31 December 2013, except for the adoption of new standards and interpretations effective as of 1 January 2014 for which no material impact on the Group or Company has been identified:

 

·      IAS 32 Offsetting financial assets and liabilities - Amendments to IAS32.

·      IAS 36 Recoverable amount disclosures for Non-Financial Assets

·      IFRS 10 Consolidated Financial Statements

·      IFRS 12 Disclosure of Interests in Other Entities

 

The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

 

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 Board, 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

 

2014

 

2013

 

2014

 

2013

 

£'000

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

EMEA

419,667

 

407,013

 

212,042

 

207,771

 

 

 

 

 

 

 

 

United Kingdom

325,708

 

298,579

 

138,361

 

124,060

 

 

 

 

 

 

 

 

Asia Pacific

Australia and New Zealand

110,025

 

110,642

 

34,400

 

39,730

 

Asia

83,454

 

78,754

 

71,139

 

66,076

 

Total

193,479

 

189,396

 

105,539

 

105,806

 

 

 

 

 

 

 

 

 

Americas

108,033

 

110,514

 

76,875

 

76,244

 

 

 

 

 

 

 

 

 

1,046,887

 

1,005,502

 

532,817

 

513,881

 

 

 

Operating Profit

 

Before

 

 

 

After

 

Before

 

 

 

After

 

Exceptional

 

Exceptional

 

Exceptional

 

Exceptional

 

Exceptional

 

Exceptional

 

Items

 

Items

 

Items

 

Items

 

Items

 

Items

 

2014

 

2014

 

2014

 

2013

 

2013

 

2013

 

£'000

 

£'000

 

£'000

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

EMEA

30,120

 

1,631

 

31,751

 

25,925

 

(2,453)

 

23,472

 

 

 

 

 

 

 

 

 

 

 

 

United Kingdom

24,066

 

-

 

24,066

 

18,387

 

-

 

18,387

 

 

 

 

 

 

 

 

 

 

 

 

Asia Pacific

 

Australia and New Zealand

4,675

 

-

 

4,675

 

6,700

 

-

 

6,700

 

Asia

15,301

 

-

 

15,301

 

12,543

 

-

 

12,543

 

Total

19,976

 

-

 

19,976

 

19,243

 

-

 

19,243

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

4,299

 

-

 

4,299

 

4,623

 

-

 

4,623

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit

78,461

 

1,631

 

80,092

 

68,178

 

(2,453)

 

65,725

Financial (expense)/income

(29)

 

298

 

269

 

(1,094)

 

(574)

 

(1,668)

Profit before tax

78,432

 

1,929

 

80,361

 

67,084

 

(3,027)

 

64,057

 

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.

 

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

 

 

Total Assets

 

Total Liabilities

 

2014

 

2013

 

2014

 

2013

 

£'000

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

EMEA

135,374

 

124,070

 

68,947

 

68,912

 

 

 

 

 

 

 

 

United Kingdom

118,042

 

130,280

 

40,608

 

42,733

 

 

 

 

 

 

 

 

Asia Pacific

Australia and New Zealand

27,265

 

21,492

 

9,079

 

8,310

 

Asia

43,457

 

40,926

 

11,301

 

8,785

 

Total

70,722

 

62,418

 

20,380

 

17,095

 

 

 

 

 

 

 

 

 

Americas

42,756

 

37,367

 

13,305

 

12,188

Segment assets/liabilities

366,894

 

354,135

 

143,240

 

140,928

 

 

 

 

 

 

 

 

Income tax

7,479

 

7,060

 

14,910

 

11,780

 

 

 

 

 

 

 

 

 

374,373

 

361,195

 

158,150

 

152,708

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property, Plant & Equipment

 

Intangible Assets

 

2014

 

2013

 

2014

 

2013

 

£'000

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

EMEA

6,142

 

7,668

 

457

 

441

 

 

 

 

 

 

 

 

United Kingdom

7,175

 

7,307

 

37,134

 

41,078

 

 

 

 

 

 

 

 

Asia Pacific

Australia and New Zealand

1,643

 

1,799

 

134

 

78

 

Asia

1,643

 

2,100

 

60

 

49

 

Total

3,286

 

3,899

 

194

 

127

 

 

 

 

 

 

 

 

 

Americas

 

5,205

 

6,364

 

761

 

451

 

21,808

 

25,238

 

38,546

 

42,097

 

 

(c)        Revenue and gross profit by discipline

 

 

Revenue

 

Gross Profit

 

2014

 

2013

 

2014

 

2013

 

£'000

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

Finance and Accounting

465,250

 

464,763

 

211,366

 

211,658

 

 

 

 

 

 

 

 

Legal, Technology, HR, Secretarial and Other

240,105

 

230,490

 

107,210

 

105,275

 

 

 

 

 

 

 

 

Engineering, Property & Construction, Procurement & Supply Chain

193,922

 

181,343

 

107,729

 

100,977

 

 

 

 

 

 

 

 

Marketing, Sales and Retail

147,610

 

128,906

 

106,512

 

95,971

 

 

 

 

 

 

 

 

 

1,046,887

 

1,005,502

 

532,817

 

513,881

 

 

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

 

 

Revenue

 

Gross Profit

 

2014

 

2013

 

2014

 

2013

 

£'000

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

Permanent

416,275

 

403,051

 

406,086

 

392,213

 

 

 

 

 

 

 

 

Temporary

630,612

 

602,451

 

126,731

 

121,668

 

 

 

 

 

 

 

 

 

1,046,887

 

1,005,502

 

532,817

 

513,881

 

  

4.         Exceptional items

 

In October 2013, Page Personnel France (PPF) received notice from the Competent Authorities of the UK and France of their decision regarding a transfer pricing case that had arisen as a result of a tax audit in March 2008. The decision, which was unexpected, increased the profit generated by PPF, which, as per the mandatory profit share or "participation aux résultats de l'entreprise" that is particular to France, drove a requirement to pay increased employee profit share, both to employees of PPF and also to the temporary workers placed by that company. As a result, the Group took in 2013 an exceptional charge of £2.5m relating to prior periods, and £0.6m that was included within operating profits from trading activities.

 

In December 2014, PPF received notice from the French tax authorities that they would not be seeking to make any further transfer pricing adjustments as a result of their audit of the tax years 2011 and 2012. In addition, as no assessment was raised within the statutory timeframe, there will be no adjustment for the 2010 tax year. Accordingly, in 2014, the Group has recorded exceptional income of £1.6m relating to the reversal of amounts that were previously provided as an exceptional charge and a further £0.6m that is included within operating profit. There is also £0.3m of exceptional interest, being the reversal of the provision, in the current year as well as £0.8m of income tax income relating to this exceptional item.

 

 

5.         Financial income / (expenses)

 

 

2014

 

2013

 

£'000

 

£'000

Financial income

 

 

 

Bank interest receivable

488

 

531

 

488

 

531

 

 

 

 

Financial expenses

 

 

 

Bank interest payable

(517)

 

(1,625)

Exceptional interest

298

 

(574)

 

(219)

 

(2,199)

 

 

6.         Taxation

 

The Group's consolidated effective tax rate after one off and exceptional items for the year ended 31 December 2014 was 26.2% (2013:33.5).  For 2014, the underlying tax rate, excluding one off items but including the effects of share options, was 33.2% (2013: 35.0%).  The reduction of 1.8% over 2013 was predominantly due to greater profits from territories with lower tax rates, such as the UK where the corporation tax rate has fallen from 23.25% to 21.5%.  In addition to the movement in the underlying rate, the effective tax rate in 2014 was impacted by a number of one off factors which resulted in the effective tax rate being 7% lower than the underlying rate. These were: recognition of US tax losses and deferred tax on US share plans of 3.1%; a deduction in China of 2.2% for costs incurred in previous periods and utilisation of unrecognised losses; and part reversal of last year's exceptional item of 1.7%.

 

7.         Dividends

 

 

2014

 

2013

 

£'000

 

£'000

Amounts recognised as distributions to equity holders in the year:

 

 

 

Final dividend for the year ended 31 December 2013 of 7.25p per ordinary share (2012: 6.75p)

22,220

 

20,798

Interim dividend for the year ended 31 December 2014 of 3.42p per ordinary share (2013: 3.25p)

10,486

 

10,051

 

32,706

 

30,849

 

 

 

 

Amounts proposed as distributions to equity holders in the year:

 

 

 

Proposed final dividend for the year ended 31 December 2014 of 7.58p per ordinary share (2013: 7.25p)

23,232

 

22,192

 

  

The proposed final dividend had not been approved by the Board at 31 December 2014 and therefore has not been included as a liability. The comparative final dividend at 31 December 2013 was also not recognised as a liability in the prior year.

 

The proposed final dividend of 7.58p (2013: 7.25p) per ordinary share will be paid on 22 June 2015 to shareholders on the register at the close of business on 22 May 2015 subject to approval by shareholders.

 

 

8.         Share-based payments

 

In accordance with IFRS 2 "Share-based Payment", a charge of £5.8m has been recognised for share options and other share-based payment arrangements (including social charges) (2013: £6.8m).

 

 

9.         Earnings per ordinary share

 

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

 

 

2014

 

2013

 

 

 

 

Earnings

Earnings for basic and diluted earnings per share (£'000)

59,331

 

42,604

Exceptional items (£'000) (note 4)

(2,762)

 

3,747

Earnings for basic and diluted earnings per share before exceptional items (£'000)

56,569

 

46,351

 

 

 

 

 

Number of shares

 

 

 

Weighted average number of shares used for basic earnings per share ('000)

308,020

 

307,858

Dilutive effect of share plans ('000)

2,303

 

2,561

Diluted weighted average number of shares used for diluted earnings per share ('000)

310,323

 

310,419

 

 

 

 

 

Basic earnings per share (pence)

19.3

 

13.8

Diluted earnings per share (pence)

19.1

 

13.7

Basic earnings per share before exceptional items (pence)

18.4

 

15.1

Diluted earnings per share before exceptional items (pence)

18.2

 

14.9

 

The above results all relate to continuing operations.

 

 

10.        Property, plant and equipment

 

Acquisitions and disposals

During the year ended 31 December 2014 the Group acquired property, plant and equipment with a cost of £6.2m (2013: £8.5m).

 

Property, plant and equipment with a carrying amount of £1.1m were disposed of during the year ended 31 December 2014 (2013: £0.6m), resulting in a loss on disposal of £0.3m (2013: loss of £10k).

 

 

11.        Trade and other receivables

 

 

2014

 

2013

 

£'000

 

£'000

Current

 

 

 

Trade receivables

161,878

 

153,339

Less provision for impairment of receivables

(5,818)

 

(6,658)

Net trade receivables

156,060

 

146,681

Other receivables

6,572

 

4,663

Prepayments and accrued income

40,410

 

35,144

 

203,042

 

186,488

Non-current

 

 

 

Other receivables

1,842

 

2,865

 

12.        Trade and other payables

 

 

2014

 

2013

 

£'000

 

£'000

Current

 

 

 

Trade payables

10,007

 

10,709

Other tax and social security

42,183

 

42,098

Other payables

9,341

 

8,996

Accruals

73,666

 

70,643

Deferred income

691

 

1,218

 

135,888

 

133,664

Non-current

 

 

 

Deferred income

4,456

 

4,455

Other tax and social security

287

 

242

 

4,743

 

4,697

 

 

13.        Cash flows from operating activities

 

 

2014

 

2013

 

£'000

 

£'000

 

 

 

 

 

Profit before tax

80,361

 

64,057

Exceptional items (note 4)

(1,929)

 

3,027

Profit before tax and exceptional items

78,432

 

67,084

Depreciation and amortisation charges

17,896

 

17,461

Loss on sale of property, plant and equipment, and computer software

294

 

10

Share scheme charges

7,120

 

5,611

Net finance (income) / costs

(269)

 

1,668

Operating cash flow before changes in working capital and exceptional items

103,473

 

91,834

Increase in receivables

(22,212)

 

(8,506)

Increase / (decrease) in payables

6,831

 

(4,822)

Cash generated from underlying operations

88,092

 

78,506

 

 

14.        Cash and cash equivalents

 

 

2014

 

2013

 

£'000

 

£'000

 

 

 

 

 

Cash at bank and in hand

84,941

 

79,777

Short-term deposits

5,071

 

7,293

Cash and cash equivalents

90,012

 

87,070

Bank overdrafts

-

 

(1,676)

Cash and cash equivalents in the statement of cash flows

90,012

 

85,394

 

 

The Group operates a multi-currency notional cash pool. Currently the main Eurozone subsidiaries and the UK-based Group Treasury subsidiary participate in this cash pool, although it is the Group's intention to extend the scope of the participation to other Group companies going forward. The structure facilitates interest and balance compensation of cash and bank overdrafts.

 

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://www.pagegroup.co.uk/investors/reports-and-presentations/annual-and-interim-reports/2014.aspx

 

 

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 4 June 2015 at 9.30am.

 

  

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 2014. 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 Strategic 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

K Stagg

Chief Executive Officer

Chief Financial Officer

 

10 March 2015

 


This information is provided by RNS
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