THIRD QUARTER 2011 INTERIM MANAGEMENT STATEMENT

RNS Number : 8213P

Michael Page International PLC

10 October 2011

 



10 October 2011

THIRD QUARTER 2011 INTERIM MANAGEMENT STATEMENT

Financial Summary

·        Group Q3 gross profit of £142.7m up 26.5% (21.8%*) on the £112.8m in Q3 2010

·        EMEA (41% of Group) Q3 gross profit of £58.3m up 30.8% (23.2%*) against the £44.6m in Q3 2010

·        UK (23% of Group) Q3 gross profit of £33.1m up 0.3% against £33.0m in Q3 2010

·        Asia Pacific (21% of Group) Q3 gross profit of £29.2m up 44.0% (+35.2%*) against the £20.3m in Q3 2010

·        Americas (15% of Group) Q3 gross profit of £22.1m up 48.3% (+46.9%*) against the £14.9m in Q3 2010

·        Q3 Permanent gross profit (79% of Group) of £112.6m up 28.4% (+23.7%*) against the £87.7m in Q3 2010

·        Q3 Temporary gross profit (21% of Group) of £30.1m up 20.0% (+15.0%*) against the £25.1m in Q3 2010

·        Group headcount at 30 September 2011 of 5,350 up 229 (+4.5%) on 30 June 2011

·        Net cash at 30 September 2011 in the region of £45m (£23.6m at 30 June 2011)

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

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

"We are pleased with our third quarter performance, with gross profit increasing by 26.5% against a backdrop of increasing levels of macroeconomic uncertainty. As expected, our gross profit growth rates, whilst strong, have slowed as markets have become more challenging.

"In Continental Europe, whilst gross profit growth rates were strong, they weakened in the third quarter. In the UK, with challenging market conditions and a restrained public sector, gross profits were flat.  Gross profit from Latin America grew 60%* and in North America gross profit grew 24%*.  Gross profit grew 42%* in Asia, with a particularly strong performance from our business in China. In Australasia gross profit grew 28%* with strength in the commodities sector.

"Finance and Accounting grew 17.5%* in the third quarter, within which are our Banking businesses that account for approximately 10% of the Group's gross profit, and operate primarily in London, New York, Tokyo, Hong Kong and Singapore, and which grew 10%*, against a growth rate of 28%* achieved in Q2.

"We continued to invest selectively in developing our business, opening an office in San Francisco, a third office in India in Bandra, Mumbai and three Page Personnel offices in Geneva, Mexico City and Campinas, Brazil. Group headcount increased by 229 (4.5%) to 5,350, with the additions mainly into Asia and our graduate intake in the UK. This takes our investment in new countries and offices this year to 3 and 15, respectively.

"The Group is in a strong position, both financially and as a result of our successful strategy of diversification, both by geography and business discipline. Markets have weakened and become more uncertain reducing our short term visibility. However, while mindful of the uncertainty in so many of the world's economies, we continue to invest where there are opportunities for longer term growth."

Enquiries:

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

The company will host a conference call for analysts and investors at 9.00am today. The live presentation can be viewed by following the link: http://event.on24.com/r.htm?e=358635&s=1&k=962B599B05583F0834C4C333AAF85389

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

Dial-In:             [phone]
PIN Code:        582910
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 fourth quarter and full year trading update on 11 January 2012.

THIRD QUARTER 2011 INTERIM MANAGEMENT STATEMENT

Michael Page International plc (MPI), the specialist recruitment consultancy, reports third quarter Group gross profit of £142.7m (Q3 2010: £112.8m), a year-on-year increase of 26.5% (+21.8%*). Group headcount increased by 229 (+4.5%) during the quarter to 5,350 at the end of September 2011.

Perm/Temp mix

Group gross profit from permanent recruitment in the third quarter was £112.6m, an increase of 28.4% (+23.7%*) over the £87.7m in the third quarter of 2010.

Group gross profit from temporary recruitment in the third quarter was £30.1m, an increase of 20.0% (+15.0%*) over the £25.1m in the third quarter of 2010.

The perm/temp gross profit ratio in the third quarter was 79:21 (Q3 2010: 78:22).

Discipline analysis

		Gross Profit		Growth rates
	% of Group Q3	Q3 2011	Q3 2010	Reported	Constant
Finance & Accounting	46%	£66.2m	£54.2m	+22.2%	+17.5%
Marketing, Sales & Retail	17%	£24.0m	£21.1m	+13.8%	+9.4%
Legal, Technology, HR, Secretarial, Healthcare	19%	£27.0m	£20.5m	+32.1%	+26.9%
Engineering, Property & Construction, Procurement & Supply Chain	18%	£25.5m	£17.0m	+49.4%	+43.1%

All disciplines achieved 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 (41% of Group in Q3 2011)			Growth rates
			Reported	Constant
Q3 2011 vs. Q3 2010	£58.3m	£44.6m	+30.8%	+23.2%
Headcount at 30 September 2011: 2,190 (30 June 2011: 2,126) In local currency, against Q3 2010: ·    France (14% of the Group) was higher by 19% ·    Germany (6% of the Group) was higher by 43% ·    Netherlands (4% of the Group) was higher by 21% ·    Italy (4% of the Group) was higher by 22% ·    Spain (3% of the Group) was higher by 10% ·    Rest of EMEA: Austria, Belgium, Ireland, Luxembourg, Poland, Portugal, Qatar, Russia, South Africa, Sweden, Switzerland, Turkey, U.A.E. (10% of the Group) was higher by 24%

In our largest region, Europe, Middle East and Africa (EMEA), representing 41% of Group gross profit, third quarter gross profit was £58.3m, an increase of 30.8% (+23.2%*) over the £44.6m recorded in the third quarter of 2010.

While market conditions remained difficult throughout the seasonally quieter third quarter, we still recorded strong year-on-year growth. We performed well across the region, with notable performances in France, Germany, Italy and the Netherlands. The thirteen countries that comprise the Rest of EMEA and represent 10% of the Group's gross profit, grew by 24%*. We opened a second office in Geneva, Switzerland, during the quarter, continuing the roll-out of Page Personnel. Headcount in the region increased by 64 (+3.0%) to 2,190, with the majority of the investment in France and Germany.

UK Gross Profit (23% of Group in Q3 2011)			Growth rates
Q3 2011 vs. Q3 2010	£33.1m	£33.0m	+0.3%
Headcount at 30 September 2011: 1,414 (30 June 2011: 1,343)

In the UK, representing 23% of Group gross profit, third quarter gross profit was £33.1m, flat on the third quarter of 2010. Market conditions remained tough, with modest growth in the private sector and a restrained public sector. We continue to invest, with 82 graduates joining during the third quarter and this accounts for the increase in the headcount, which grew by 71 (+5.3%) to 1,414.

Asia Pacific Gross Profit (21% of Group in Q3 2011)			Growth rates
			Reported	Constant
Q3 2011 vs. Q3 2010	£29.2m	£20.3m	+44.0%	+35.2%
Headcount at 30 September 2011: 956 (30 June 2011: 874) In local currency, against Q3 2010: ·    Australia and New Zealand (10% of the Group) were higher by 28% ·    Asia (11% of Group) was higher by 42%

In Asia Pacific, third quarter gross profit was £29.2m, an increase of 44.0% (+35.2%*) over the £20.3m recorded in the third quarter of 2010. In Australia and New Zealand, the third quarter gross profit was 28%* higher year-on-year, with a particularly strong performance in Western Australia driven by the mining and commodities sector. In Asia, where we continue to achieve strong levels of growth in China, third quarter gross profit was 42%* higher year-on-year. The new start-ups in Malaysia and India, where we opened our third office in Bandra, Mumbai, are progressing well. Headcount across the region grew by 82 (+9.4%) to 956, with the majority of the additions in Asia.

Americas Gross Profit (15% of Group in Q3 2011)			Growth rates
			Reported	Constant
Q3 2011 vs Q3 2010	£22.1m	£14.9m	+48.3%	+46.9%
Headcount at 30 September 2011: 790 (30 June 2011: 778) In local currency, against Q3 2010: ·    Latin America (11% of the Group) was higher by 60% ·    North America (4% of the Group) was higher by 24%

In the Americas, third quarter gross profit was £22.1m, an increase of 48.3% (+46.9%*) over the £14.9m recorded in the third quarter of 2010.  In Latin America, gross profit was up 60%* year-on-year. We continued to invest in the region, opening Page Personnel offices in Mexico City, Mexico, and Campinas, Brazil. In Chile, our new business which started in the first quarter of 2011 is continuing to make good progress and is trading profitably. In North America, while market conditions remained tough, we continued to achieve good growth with gross profit growing 24%* over the third quarter of 2010 and we opened an office on the West Coast of the USA, in San Francisco, California. Headcount across the region grew by 12 (+1.5%) to 790.

Update on VAT reclaims

During the quarter we had further correspondence and discussions with HMRC concerning the amended claims for an additional refund of VAT and related interest, but the eventual outcome still remains uncertain.

Financial Position

Save for the effects of trading in the third 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 half year ended 30 June 2011.

Net cash at the end of September 2011 was in the region of £45m (£23.6m at 30 June 2011).

The interim dividend for 2011 of 3.25p (+12.8%) per share was paid on 7 October 2011.

At 30 September 2011, there were 316,492,715 shares in issue, of which 16,840,170 were held in the employee benefit trust. 303,058,050 shares received dividends and held voting rights and an additional 23,298,032 options were outstanding.

The Group will issue its fourth quarter and full year trading update on 11 January 2012.

Cautionary statement

This Third 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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