FIRST QUARTER 2011 INTERIM MANAGEMENT STATEMENT

RNS Number : 6116E

Michael Page International PLC

11 April 2011

 



11 April 2011

FIRST QUARTER 2011 INTERIM MANAGEMENT STATEMENT

Financial Summary

·        Group Q1 gross profit of £127.3m up 30.0% (29.3%*) on the £97.9m in Q1 2010

·        EMEA (44% of Group) Q1 gross profit of £56.2m up 26.1% (28.2%*) against the £44.6m in Q1 2010

·        UK (25% of Group) Q1 gross profit of £31.7m up 9.4% against £28.9m in Q1 2010

·        Asia Pacific (17% of Group) Q1 gross profit of £21.4m up 62.6% (+54.0%*) against the £13.2m in Q1 2010

·        Americas (14% of Group) Q1 gross profit of £18.0m up 60.7% (+56.0%*) against the £11.2m in Q1 2010

·        Q1 Permanent gross profit (79% of Group) of £101.1m up 34.9% (+33.9%*) against the £75.0m in Q1 2010

·        Q1 Temporary gross profit (21% of Group) of £26.2m up 14.3% (+14.2%*) against the £22.9m in Q1 2010

·        Group headcount at 31 March 2011 of 4,852 up 354 (7.9%) on 31 December 2010

·        Net cash at 31 March 2011 in the region of £75m (£80.5m at 31 December 2010)

* Denotes where overseas results denominated in foreign currencies have been translated at constant rates of exchange for constant currency illustrative purposes.

Commenting on the first quarter trading, Steve Ingham, Chief Executive said:

"We are pleased with our performance in the first quarter of 2011, with gross profit increasing by 30%. The growth continued to be largely driven by permanent placements, where gross profits were up by 35%, and we also noted a pick-up in gross profits from temporary placements, growing by 14%.

"Gross profit from Latin America grew by 83% and Brazil is now our third largest country business. In Asia, gross profit growth in the first quarter was up 97%, with a particularly strong performance from our business in China.

"As a result of our success and as we continue to invest in developing our business, our cost base is increasing. We have added to our business platform with new discipline rollouts and start ups, as well as opening new businesses in Qatar, Malaysia and India. Group headcount increased by 354 (7.9%) to 4,852 and we would expect this number to increase further during the second quarter. 

"We have now had four quarters of broadly similar gross profit growth, at constant currency and we expect tougher comparative periods to affect growth rates going forward.  However, the outlook in Asia and Latin America remains positive, and Europe continues to improve, all of which gives us confidence that we are well positioned to exceed our 2010 profit performance."

Enquiries:

Michael Page International plc	01932 264144
Steve Ingham, Chief Executive
Stephen Puckett, Group Finance Director
Financial Dynamics	020 7269 7291
Richard Mountain / Nick Hasell / Sophie Moate

The company will host a conference call for analysts and investors at 8.30am today. The live presentation can be viewed by following the link:

http://event.on24.com/r.htm?e=297646&s=1&k=9BB73B018AD29BBC037E151E0F5055C1

The dial-in details for the conference call are as follows:

Dial-In:             [phone]
Conference ID: 890884
Please quote "Michael Page Q1 Trading Update" to gain access to the call.

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

http://investors.michaelpage.co.uk/presentations

The Group will issue its second quarter and half year trading update on 11 July 2011.

FIRST QUARTER 2011 TRADING UPDATE

Michael Page International plc (MPI), the specialist recruitment consultancy, reports first quarter Group gross profit of £127.3m (Q1 2010: £97.9m), a year-on-year increase of 30.0% (+29.3%*). Group headcount increased by 354 (+7.9%) during the quarter to 4,852 at the end of March 2011.

Perm/Temp mix

Group gross profit from permanent recruitment in the first quarter was £101.1m, an increase of 34.9% (+33.9%*) over the £75.0m in the first quarter of 2010.

Group gross profit from temporary recruitment in the first quarter was £26.2m, an increase of 14.3% (+14.2%*) over the £22.9m in the first quarter of 2010.

The perm/temp gross profit ratio in the first quarter was 79:21 (Q1 2010: 77:23).

Discipline analysis

		Gross Profit		Growth rates
	% of Group Q1	Q1 2011	Q1 2010	Reported	Constant
Finance & Accounting	45%	£57.1m	£46.2m	+23.6%	+22.8%
Marketing, Sales & Retail	19%	£23.7m	£18.9m	+25.4%	+24.7%
Legal, Technology, HR, Secretarial, Healthcare	19%	£24.6m	£17.9m	+37.5%	+36.7%
Engineering, Property & Construction, Procurement & Supply Chain	17%	£21.9m	£14.9m	+46.8%	+46.4%

All disciplines achieved strong year-on-year growth in the quarter with the more recently launched disciplines growing at faster rates as they were introduced across the country and office networks.

Geographical analysis

EMEA Gross Profit (44% of Group in Q1 2011)			Growth rates
			Reported	Constant
Q1 2011 vs. Q1 2010	£56.2m	£44.6m	+26.1%	+28.2%
Headcount at 31 March 2011: 1,982 (31 December 2010: 1,831) In local currency, against Q1 2010: ·    France (16% of the Group) was higher by 23% ·    Germany (6% of the Group) was higher by 31% ·    Netherlands (4% of the Group) was higher by 18% ·    Italy (4% of the Group) was higher by 34% ·    Spain (3% of the Group) was higher by 26% ·    Rest of EMEA: Austria, Belgium, Ireland, Luxembourg, Poland, Portugal, Qatar, Russia, South Africa, Sweden, Switzerland, Turkey, U.A.E. (11% of the Group) was higher by 41%

In our largest region, Europe, Middle East and Africa (EMEA), representing 44% of Group gross profit, first quarter gross profit was £56.2m, an increase of 26.1% (+28.2%*) over the £44.6m recorded in the first quarter of 2010.

Market conditions continued to show further improvement, resulting in strong year-on-year growth. We performed well in France, Germany, Italy, Spain, and, for the first time, since the start of the recovery, our business in the Netherlands achieved good growth, up 18% in the quarter. The thirteen countries that comprise the Rest of EMEA represent 11% of the Group's gross profit and grew by 41%*. The new opening in Qatar has progressed well and we opened a second Portuguese office in Porto. Headcount across the region increased by 151 (+8.2%) to 1,982, with the majority of the investment being in Germany, +33 and France, +41 and Rest of EMEA +55.

UK Gross Profit (25% of Group in Q1 2011)			Growth rates
Q1 2011 vs. Q1 2010	£31.7m	£28.9m	+9.4%
Headcount at 31 March 2011: 1,358 (31 December 2010: 1,324)

In the UK, representing 25% of Group gross profit, first quarter gross profit was £31.7m, up 9.4% on the first quarter of 2010.  Market conditions remained tough, with a slow but steady improvement in the private sector, held back by a difficult public sector. The Sales, Engineering, Procurement, Supply Chain and Technology disciplines grew strongest and this is reflected in the headcount, which grew by 34 (+2.6%) to 1,358.

Asia Pacific Gross Profit (17% of Group in Q1 2011)			Growth rates
			Reported	Constant
Q1 2011 vs. Q1 2010	£21.4m	£13.2m	+62.6%	+54.0%
Headcount at 31 March 2011: 789 (31 December 2010: 691) In local currency, against Q1 2010: ·    Australia and New Zealand (8% of the Group) were higher by 26% ·    Asia (9% of Group) was higher by 92%

In Asia Pacific, first quarter gross profit was £21.4m, an increase of 62.6% (+54.0%*) over the £13.2m recorded in the first quarter of 2010. In Australia and New Zealand, the first quarter gross profit was 26%* higher year-on-year, with a particularly strong performance in Western Australia. In Asia, where we are achieving rapid levels of growth in China, first quarter gross profit was 92%* higher year-on-year. The earthquake and tsunami in Japan have understandably had an impact on our business in Tokyo (2% of Group) and we anticipate it will take a number of quarters to assess the longer term impact. Our new start ups in Malaysia and India are progressing well. Headcount across the region grew by 98 (+14.2%) to 789, with the majority of the additions in Asia.

Americas Gross Profit (14% of Group in Q1 2011)			Growth rates
			Reported	Constant
Q1 2011 vs Q1 2010	£18.0m	£11.2m	+60.7%	+56.0%
Headcount at 31 March 2011: 723 (31 December 2010: 652) In local currency, against Q1 2010: ·    Latin America (10% of the Group) was higher by 73% ·    North America (4% of the Group) was higher by 28%

In the Americas, first quarter gross profit was £18.0m, an increase of 60.7% (+56.0%*) over the £11.2m recorded in the first quarter of 2010.  In Latin America, gross profit was up 73%* year-on-year. Brazil has now become our third largest country in gross profit terms and we continued our investment here by opening a new office in Porto Alegre and increasing the headcount by 41 (+13.8%). In Chile our new business started well, recording a trading profit in the first quarter, and in Argentina we started Page Personnel. In North America, market conditions remained tough, but were showing signs of improvement. Gross profits grew 7% over the fourth quarter of 2010 and by 28%* year-on-year. Headcount across the region grew by 71 (+10.9%) to 723, with the majority of the additions in Latin America.

Update on VAT reclaims

During the quarter 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.

Financial Position

Save for the effects of trading in the first quarter described above, there have been no other significant changes in the financial position of the Group since the publication of the results for the year ended 31 December 2010.

Net cash at the end of March 2011 was in the region of £75m (£80.5m at 31 December 2010).

The proposed final dividend for 2010 of 6.12p (+19.5%) per share is due to be paid on 6 June 2011.

Given the strong cash position, the company will resume repurchasing shares for cancellation in the second quarter.

During the first quarter, the Group granted 4.1m new share options, 0.4m options were exercised and 3.1m options lapsed. At 31 March 2011, there were 321,982,816 shares in issue and 23,801,887 options were outstanding.

The Group will issue its second quarter and half year trading update on 11 July 2011.

Cautionary statement

This First Quarter 2011 Interim Management Statement ("IMS") 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 IMS should not be relied on by any other party or for any other purpose. This IMS 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.

This IMS has been prepared for the Group as a whole and therefore gives greater emphasis to those matters which are significant to Michael Page International plc and its subsidiary undertakings when viewed as a whole.

 

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