Half Yearly Report

RNS Number : 8102J

Michael Page International PLC

13 August 2012

 



 

 

13 August 2012

 

MICHAEL PAGE INTERNATIONAL PLC

Half Year Results for the Period Ended 30 June 2012

Michael Page International plc ("Michael Page"), the specialist professional recruitment company, announces its unaudited half year results for the period ended 30 June 2012.

Financial summary (6 months to 30 June 2012)	2012	2011	Change	Change CER*
Revenue	£502.6m	£502.1m	+0.1%	+2.6%
Gross profit	£273.9m	£275.1m	-0.5%	+2.2%
Operating profit before exceptional items †	£36.0m	£45.4m	-20.7%	-19.1%
Profit before tax before exceptional items	£36.1m	£45.5m	-20.6%
Basic earnings per share before exceptional items	7.9p	10.0p	-21.0%
Diluted earnings per share before exceptional items	7.8p	9.7p	-19.6%
Operating profit	£28.2m	£45.4m	-38.0%
Profit before tax	£28.2m	£45.5m	-37.9%
Basic earnings per share	6.1p	10.0p	-39.0%
Diluted earnings per share	6.1p	9.7p	-37.1%
Interim dividend per share	3.25p	3.25p	-

*Constant Exchange Rates      † Exceptional items relate to a regional management restructure

Highlights

·      Group gross profit broadly flat -0.5% (+2.2%*), the business remains profitable in all key markets

·      78% of gross profit generated outside the UK

·      58% of gross profit generated from non Finance and Accounting disciplines

·      Launched a new business in Bogota, Colombia

·      New offices in Casablanca, Cape Town, Macaé (Rio de Janeiro), Suzhou and Taipei

·      Gross profit from permanent placements reduced by 2% (+1%*)

·      Gross profit from temporary placements grew by 4% (+7%*)

·      Headcount up by 35 (+0.7%) in first half of 2012

·      Share repurchases of£9.4m during the first half of 2012

·      Strong balance sheet with net cash at 30 June 2012 of £32.4m

·      Interim dividend held at 3.25p

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

"Despite market conditions deteriorating during the second quarter of 2012, the Group delivered broadly flat gross profit (-0.5%) compared to the first half of 2011 and an increase of 2.2% at constant rates of exchange. The second quarter also saw a 4% increase in gross profit compared to the first quarter, against a tough comparator, with Q2 2011 having been our second highest quarter on record, with a growth rate of 32%.

"Over the last 10 years we have continued to diversify and hence have altered significantly the composition of the Group, entirely through organic investment and development, with over three quarters of the Group's gross profits now generated from outside the UK. Our Latin America and Asia businesses combined now represent over 21% of the Group's gross profit, with 36 offices across 10 countries and almost 1,200 staff.

"We continue to invest in geographic diversification where there is long-term growth potential. We opened offices in Cape Town, in South Africa and a further office in Macaé, Rio de Janeiro, in Brazil, adding to the offices in Taipei, Suzhou, Bogota, and Casablanca opened during the first quarter.

"Our headcount has adjusted to reflect market conditions. It increased in areas where we have growth, principally Asia and our newer businesses and reduced in other areas, largely from natural attrition. This resulted in headcount remaining broadly flat through the first half.

"It is a clear priority that we continue to manage the cost base to reflect market conditions, whilst investing to create a platform for greater growth when markets improve. We believe strongly that we have the balance right.  The business remains profitable throughout all our major markets, apart from new start-ups.

"We anticipate a challenging second half as we enter the seasonally quieter summer period in both Continental Europe and the UK. This is set against tough comparables and an ongoing backdrop of economic uncertainty. The Group is financially strong, with net cash of £32.4m. We remain well-placed to take advantage of any recovery in the markets in which we operate. At this time, we expect our full year operating profit from trading activities to be broadly in line with current market estimates."

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=499517&s=1&k=341B426C56421833ACE1B08E0818A1EB

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

Dial-In:                                    [phone]

PIN Code:                               391875 followed by #

The presentation and recording of the call 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 Officer
Andrew Bracey, Chief Financial Officer
FTI Consulting	020 7269 7291
Richard Mountain/Susanne Yule

INTERIM MANAGEMENT REPORT

To the members of Michael Page International plc

Cautionary Statement

This Interim Management Report ("IMR") 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 IMR should not be relied on by any other party or for any other purpose. This IMR 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 IMR has been prepared for the Group as a whole and therefore gives greater emphasis to those matters that are significant to Michael Page International plc and its subsidiary undertakings when viewed as a whole.

STRATEGY

The Group's strategy is to expand and diversify the Michael Page business by industry sectors, by professional disciplines as well as by geography. This includes the Page Personnel, Michael Page and Michael Page Executive Search disciplines; the clear objective is to be 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. While it is difficult to predict accurately when these slowdowns will occur and how severe they will be, it has been our practice in the past and our intention in the future to maintain our presence in our chosen markets, but with close control over our cost base. Our team-based structure and primarily profit-share business model is scalable and the small team size also means that we can increase rapidly our headcount to achieve and maintain growth.

The focus of our organic growth in the last ten years has been to grow in emerging markets, where the outsourcing of recruitment particularly for specialist roles is underdeveloped and where there is limited competition. In many of these markets, we have achieved a market leading position and intend to embrace fully the opportunity by investing rapidly in headcount and opening in new cities and countries. The investment to take advantage of these opportunities in terms of new headcount, international transfers of management, new office space and start-up losses will limit short-term profitability but should provide a substantial platform for longer-term returns.

Our intention is always to maintain a strong balance sheet. As the business grows, there is a need for additional working capital, which is funded from operating cash flow, with surplus cash being returned to shareholders through dividends and share repurchases. 

GROUP RESULTS

The Group's revenue for the six months ended 30 June 2012 increased by 0.1% to £502.6m (2011: £502.1m) and gross profit decreased by 0.5% to £273.9m (2011: £275.1m). At constant exchange rates, the Group's revenue increased by 2.6% and gross profit by 2.2%. In the first half, the mix of the Group's revenue and gross profit between permanent and temporary placements decreased slightly to 44:56 (2011: 45:55) and 79:21 (2011: 80:20), respectively. Typically, as economic conditions become more uncertain, permanent recruitment activity slows compared to temporary recruitment. This trend is also affected by the geographical performances across the Group, as our businesses in both Latin America and Asia are predominantly permanent rather than temporary recruitment in the specialist sectors. The gross margin on temporary placements in the first half of 2012 improved slightly to 20.8% (2011: 20.2%). Pricing has remained relatively stable throughout the first half of 2012, with a stronger pricing environment in rapidly growing markets, being offset by competitive pressures in the weaker UK and Southern European markets.

As the demand for recruitment services increases, the number of positions to be filled rises, candidate shortages begin to emerge, the time-to-hire period starts to reduce and there is less pressure on pricing. With the increased uncertainty and resultant reduction in market confidence that impacted parts of the Group during the first half of 2012, many of these factors trended negatively, albeit to differing degrees in our different geographic regions, creating an environment where productivity fell with less gross profit per fee earner able to be generated. The Group's strategy of growing organically, as well as maintaining market presence and a degree of spare capacity, means that the Group is operationally geared, which resulted in a proportionally larger decrease in operating profit than in gross profit. This conversion of gross profit to operating profit was also reduced by the amount of investment being made to facilitate and maintain growth in our newer markets and in markets where we see longer term potential.

In the first half of 2012, headcount was broadly flat, up by 35 (0.7%). We launched a new business in one new country in Bogota in Colombia, we also opened five new offices in Casablanca, Cape Town, Macaé (Brazil), Suzhou and Taipei.

With a small increase in gross profit adversely affected by the effects of exchange rates, a weaker economic environment in most of the Group's markets and investment for the future, operating profit from trading activities for the first half of 2012 decreased to £36.0m before exceptional items (2011: £45.4m). The Group's conversion rate of gross profit to operating profit from trading activities is now 13.1% before exceptional items (2011: 16.5%).

During the first half of 2012, we restructured the Group's regional management structure, which resulted in the removal of the Continental Europe and Americas regional management team, including one Executive Director. Severance packages for this team, who had been employed by the Group for many years and were largely based in France, with accompanying high employment protection and social charges, totalled £7.8m within which are £1.5m of accelerated share plan related charges. These have been presented as an exceptional charge in the first half income statement. The payback period for this investment is around two years.

EUROPE, MIDDLE EAST AND AFRICA (EMEA)

Europe, Middle East and Africa (EMEA) is the Group's largest region, contributing 43% of Group gross profit in the first half. Revenue in the region increased by 0.9% to £211.5m (2011: £209.5m) and gross profit decreased by 1.9% to £117.9m (2011: £120.3m). In constant currency, revenue increased by 6.5% on the first half of 2011 and gross profit increased by 3.4%. The 1.9% decrease in gross profit resulted in a 21.1% decrease in operating profit before exceptional items for the first half of 2012 to £13.4m (2011: £17.0m), a conversion rate of 11.3% (2011: 14.1%).

Market conditions remained challenging across the region; with economic uncertainty, increasing austerity measures and levels of unemployment across Southern Europe further impacting market confidence. The weakening of the Euro relative to sterling during the second quarter, has impacted the results of the Eurozone countries, with year-on-year growth rates at constant rates of exchange some 5% higher than in reported.

Our business in Germany, now represents 16% of the region, and grew 25% year-on-year in constant currency against a strong prior year comparator. In France we grew 3% despite the uncertainties surrounding the French elections and the wider Eurozone issues. Headcount across the region decreased by 25 (1%) in the first half of 2012 to 2,185, but was still up 59 or 3% on June 2011. During the first half we opened new offices in Casablanca, Morocco, and in Cape Town, South Africa.

UNITED KINGDOM

In the UK, representing 22% of the Group's gross profit in the first half, revenue decreased by 10.4% to £146.0m (2011: £163.0m), gross profit decreased by 6.5% to £61.7m (2011: £66.0m) and operating profit before exceptional items was down 17.2% at £8.6m (2011: £10.4m).

Market conditions have remained tough, but broadly stable throughout the first half of 2012. Our Banking business continued to be affected strongly by conditions in the banking sector and was down over 50% year-on-year. However, several other businesses, particularly the more technical disciplines, continued to grow. Overall, operating profit decreased by 17%, with the conversion rate slightly down at 14.0% (2011: 15.8%). Headcount in the UK was down 3.8% during the first half of 2012 to 1,243 at the end of June 2012 (1,292 at 31 December 2011), but down some 171 on the previous peak of 1,414 at Q3 2011.

ASIA PACIFIC

In Asia Pacific, representing 21% of the Group's gross profit in the first half, revenue increased by 23.3% to a record £94.6m (2011: £76.7m) and gross profit increased by 17.1% to £56.9m (2011: £48.6m). In constant currency, revenue increased by 20.4% and gross profit by 14.1%. Operating profit rose by 12.8% to £13.8m (2011: £12.2m), with the large investments in additional headcount and new offices in Taipei and Suzhou, partially offset by operational gearing and increased productivity, resulting in a small net decrease in the conversion rate to 24.3% (2011: 25.2%).

Australia, our largest business in the region, grew gross profits by 9% in constant currency. Market conditions were particularly strong in Western Australia and Queensland, benefiting from the strength of the mining and commodities sector. In Asia, despite the ongoing weakness in the Financial Services sector continuing to impact our growth in Tokyo, Hong Kong and Singapore, gross profits grew 19% in constant currency. Our newer businesses in Malaysia and India are progressing well. At the end of June, we had 1,050 staff in the region, an increase of 79 (8%) since the start of the year and assuming market conditions remain strong, further headcount will be added during the second half of 2012.

THE AMERICAS

In the Americas, representing 14% of the Group's gross profit in the first half, revenue decreased by 4.1% to £50.6m (2011: £52.7m) and gross profit decreased by 7.2% to £37.4m (2011: £40.3m). In constant currency, revenue increased by 1.1% and gross profit decreased by 1.3%. We continued to make significant investment in new countries and offices to build on our dominant market-leading position in Latin America. This, along with the one-off expense of a senior management charge taken in the normal course of business, decreased operating profit by 96.6% to £0.2m (2011: £5.8m), with a conversion rate of 0.5% (2011: 14.4%).

In North America we were impacted by the difficulties in the financial services sector and year-on-year gross profit was down by 3% in constant currency. However, our newer offices in Houston and San Francisco performed well. We have strengthened the management team in the region and expect to benefit from this in the future.

In Latin America, gross profit was down 1% year-on-year in constant currency. In Brazil, where we are the clear market leader with approaching 400 employees and where the economy has slowed compared to H1 2011, our activity levels were stable. Our other businesses in Latin America are growing strongly and accordingly we have invested in additional headcount in Mexico, Argentina and Chile to further enhance our market leading positions. Colombia our newest country in Latin America which opened at the start of 2012 has already recorded a small monthly profit. We also opened in Q2 an additional office in Macaé, Rio de Janeiro, to invest further in our growing global Oil and Gas business. The Brazilian Real has weakened against Sterling compared to H1 2011, with year-on-year growth rates at constant rates of exchange some 10% higher than in reported. We now have 843 staff in the region, an increase of 30 (4%) since the start of the year.

OPERATING PROFIT AND CONVERSION RATES

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

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

The majority of our permanent placement activity is undertaken on a contingent basis, which means that on those assignments we only generate revenue when a candidate is successfully placed in a role. Our short-term visibility on these earnings is provided by the number of assignments we are working on, the number of candidates we have at interview and the stage they are at in the interview process. The average time to complete a placement, from taking on an assignment to successfully placing a candidate, tends to lengthen in a downturn, reducing productivity and the risk of the candidate being rejected or the assignment being cancelled increases, thereby further reducing our earnings visibility.

In a downturn, activity levels can slow quickly, causing revenue to decline quickly due to the contingent nature of a large proportion of our placements. The main opportunity for reducing our own cost base is headcount, but these reductions tend to lag the declines in revenue due to the shortening visibility. The majority of the initial reductions in our headcount occur through natural attrition, but these are treated as a component of our normal operating expenses and do not incur significant restructuring charges. However, as greater reductions become necessary, such charges may be incurred.

As economic conditions begin to improve, the confidence levels of both candidates and clients also improves and the rate at which people change jobs starts to increase. This increase in activity is serviced from the spare capacity we maintain during a downturn and therefore profits have the potential to increase rapidly. As different markets recover and grow at different rates, we invest in infrastructure and additional headcount in some markets to maintain their growth, while carrying some spare capacity in others. Where possible, we redeploy resources to match market conditions. The Group's conversion rate for the period was 13.1% (2011: 16.5%), which reflects the deterioration in market conditions seen through the first half of 2012. The movement in the conversion rates of the four regions and the levels of conversion now being achieved reflects the market conditions in those regions, the levels of investment in each region and the levels of spare capacity still available to be utilised.

TAXATION AND EARNINGS PER SHARE

The charge for taxation is based on the expected effective annual tax rate of 33.5% (2011: 33.0%) on profit before taxation.

Basic and diluted earnings per share for the six months ended 30 June 2012 were 6.1p (2011: 10.0p) and 6.1p (2011: 9.7p) respectively. Before exceptional charges, basic and diluted earnings per share for the six months ended 30 June 2012 were 7.9p and 7.8p respectively.

CASH FLOW

The Group started the year with net cash of £58.2m. In the first half we generated £27.5m from operations after funding an increase in working capital of £14.0m. Tax paid was £17.5m and net capital expenditure was £9.6m, with net interest received of £0.1m. During the first half, £9.4m was spent repurchasing shares into the employee benefit trust to hedge exposures under share plan awards, £5.5m was received from the exercise of share options and dividends of £20.8m were paid. After adverse currency movements of £1.5m, the Group had net cash of £32.4m at 30 June 2012.

DIVIDENDS AND SHARE REPURCHASES

It is the Board's intention to pay dividends at a level that it believes is sustainable throughout economic cycles and to continue to use share repurchases to return surplus cash to shareholders. The Board remains confident of the longer term prospects and has therefore decided to maintain the interim dividend at 3.25p (2011: 3.25p) per share. The interim dividend will be paid on 5 October 2012 to shareholders on the register at 7 September 2012.

In the first half, the Group's employee benefit trust purchased approximately 2.6m shares for £9.4m at an average price of £3.63 to satisfy employee share plan awards. No shares were repurchased and cancelled during the first half.

CURRENT TRADING AND OUTLOOK

Despite market conditions deteriorating during the second quarter of 2012, the Group delivered broadly flat gross profit (-0.5%) compared to the first half of 2011 and an increase of 2.2% at constant rates of exchange. The second quarter also saw a 4% increase in gross profit compared to the first quarter, against a tough comparator, with Q2 2011 having been our second highest quarter on record, with a growth rate of 32%.

Over the last 10 years we have continued to diversify and hence have altered significantly the composition of the Group, entirely through organic investment and development, with over three quarters of the Group's gross profits now generated from outside the UK. Our Latin America and Asia businesses combined now represent over 21% of the Group's gross profit, with 36 offices across 10 countries and almost 1,200 staff.

We continue to invest in geographic diversification where there is long-term growth potential. We opened offices in Cape Town, in South Africa and a further office in Macaé, Rio de Janeiro, in Brazil, adding to the offices in Taipei, Suzhou, Bogota, and Casablanca opened during the first quarter.

Our headcount has adjusted to reflect market conditions. It increased in areas where we have growth, principally Asia and our newer businesses and reduced in other areas, largely from natural attrition. This resulted in headcount remaining broadly flat through the first half.

It is a clear priority that we continue to manage the cost base to reflect market conditions, whilst investing to create a platform for greater growth when markets improve. We believe strongly that we have the balance right.  The business remains profitable throughout all our major markets, apart from new start-ups.

We anticipate a challenging second half as we enter the seasonally quieter summer period in both Continental Europe and the UK. This is set against tough comparables and an ongoing backdrop of economic uncertainty. The Group is financially strong, with net cash of £32.4m. We remain well-placed to take advantage of any recovery in the markets in which we operate. At this time, we expect our full year operating profit from trading activities to be broadly in line with current market estimates.

KEY PERFORMANCE INDICATORS

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	H1 2012	H1 2011	Definition, method of calculation and analysis
Gross margin	54.5%	54.8%	Gross profit as a percentage of revenue. Gross margin has remained broadly flat, with any reduction due largely as a result of the mix of permanent and temporary placements. In tougher trading conditions, there tends to be a swing to lower margin temporary placements. Source: Condensed consolidated income statement in the financial statements.
Fee earner : support staff ratio	71:29	72:28	Represents the balance between operational and non-operational staff. The balance in the period reflects the relative increase in support staff in new infrastructure over the increase in the number of fee earners. Source: Internal data.
Productivity (gross profit per fee earner)	£72.5k	£76.9k	Represents productivity of fee earners and is calculated by dividing the gross profit for the period by the average number of fee earners and directors. The higher the number, the higher their productivity. Productivity is a function of the numbers and experience of fee earners, the impact of pricing and the general conditions of the recruitment market. The decrease in productivity this period is as a result of the increase in fee earners compared to this time last year and a general worsening of market conditions. Source: Internal data.
Conversion (before exceptional items)	13.1%	16.5%	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 future growth. Conversion has declined compared to last year, reflecting the impact of the economic uncertainty on demand for the Group's services, lower productivity and the investment in maintaining market presence and carrying spare capacity. Source: Condensed consolidated income statement in the financial statements.
Debtor days (30 June)	49	52	Represents the length of time before the Group receives payments from its debtors. Calculated by comparing how many days' billings it takes to cover the debtor balance. The decrease in the period reflects an increased focus on cash collections and a greater proportion of temporary business, with the average debtor days being lower for the temporary business compared to the permanent business. Source: Internal data.

The movements in KPIs are in line with expectations.

PRINCIPAL RISKS AND UNCERTAINTIES

The management of the business and the execution of the Company's strategy are subject to a number of risks. The following section comprises a summary of what the Group believes are the main risks that 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 affect adversely 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 aims 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 an 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 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 is 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 updated continually 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.

Financial

The Group has a risk management process to assess risks and places significant emphasis on maintaining adequate financial and management controls. The risk management process is viewed as a dynamic part of operations and is assessed globally on an annual basis.  The Group has developed a framework to manage risk and respond to the global financial crisis, with emphasis upon liquidity as well as credit exposure, management of currency risk and business and operational continuity.

TREASURY MANAGEMENT, BANK FACILITIES 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 operational and investment requirements being returned to shareholders. In a period of economic uncertainty, a more cautious funding position will be 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.

In June 2012, the Group extended its £50m three-year multi-currency committed revolving credit facility with Deutsche Bank for a further three months to facilitate a smooth transition of funding arrangements. In July 2012 the Group entered into an Invoice Financing arrangement with HSBC Bank, the availability of which is limited to the level of UK trade receivables available for refinancing. These new bank facilities are provided subject to conventional banking covenants.

The main operational currencies of the Group are Sterling, Euro, Australian Dollar and Brazilian Real. 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 short-dated 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.

GOING CONCERN

The Board has undertaken a recent and thorough review of the Group's forecasts and associated risks and sensitivities. Despite the significant uncertainty in the economy and its inherent risk and impact on the business, the Board has concluded, given the level of cash in the business and Group borrowing facilities, 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 12 months.

Page House

The Bourne Business Park

1 Dashwood Lang Road

Addlestone

Weybridge

Surrey

KT15 2QW

By order of the Board,

Steve Ingham                                                Andrew Bracey

Chief Executive Officer                                Chief Financial Officer

13 August 2012                                            13 August 2012

INDEPENDENT REVIEW REPORT TO MICHAEL PAGE INTERNATIONAL PLC

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2012 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated balance sheet, the condensed consolidated statement of changes in equity, the condensed consolidated statement of cash flows and related notes 1 to 14. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.

Directors' Responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our Responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2012 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

Ernst & Young LLP

London

13 August 2012

 

 

Condensed Consolidated Income Statement

Six months ended 30 June 2012

			Six months ended 30 June
			Before exceptional	Exceptional items	After exceptional				Year ended
			items	(note 4)	Items				31 December
			2012	2012	2012		2011		2011
			Unaudited	Unaudited	Unaudited		Unaudited		Audited
	Note		£'000	£'000	£'000		£'000		£'000
Revenue	3		502,629	-	502,629		502,077		1,019,087
Cost of sales			(228,774)	-	(228,774)		(226,983)		(465,306)
Gross profit	3		273,855	-	273,855		275,094		553,781
Administrative expenses			(237,848)	(7,845)	(245,693)		(229,692)		(467,746)
Operating profit	3		36,007	(7,845)	28,162		45,402		86,035
Financial income	5		423	-	423		398		953
Financial expenses	5		(342)	-	(342)		(335)		(841)
Profit before tax	3		36,088	(7,845)	28,243		45,465		86,147
Income tax (expense)/income	6		(12,005)	2,530	(9,475)		(15,006)		(29,290)
Profit for the period			24,083	(5,315)	18,768		30,459		56,857
Attributable to: Owners of the parent					18,768		30,459		56,857
Earnings per share
Basic earnings per share (pence)	9				6.1		10.0		18.7
Diluted earnings per share (pence)	9				6.1		9.7		18.2

The above results all relate to continuing operations.

Condensed Consolidated Statement of Comprehensive Income

Six months ended 30 June 2012

			Six months ended				Year ended
				30 June		30 June		31 December
				2012		2011		2011
				Unaudited		Unaudited		Audited
				£'000		£'000		£'000
Profit for the period				18,768		30,459		56,857
Other comprehensive (loss)/ income for the period
Currency translation differences				(3,815)		3,812		(3,405)
Total comprehensive income for the period				14,953		34,271		53,452
Attributable to:
Owners of the parent				14,953		34,271		53,452

Condensed Consolidated Balance Sheet

At 30 June 2012

		Note		30 June 2012 Unaudited £'000		30 June 2011 Unaudited £'000			31 December 2011 Audited £'000
Non-current assets
Property, plant and equipment		10		31,685		32,019			33,210
Intangible assets  - Goodwill and other intangible				1,950		2,087			2,005
- Computer software				42,198		30,206			37,739
Deferred tax assets				8,548		11,098			8,351
Other receivables		11		5,209		1,916			2,612
				89,590		77,326			83,917
Current assets
Trade and other receivables		11		201,558		224,984			196,455
Current tax receivable				3,981		2,810			3,980
Cash and cash equivalents		14		57,443		62,724			64,417
				262,982		290,518			264,852
Total assets		3		352,572		367,844			348,769
Current liabilities
Trade and other payables		12		(142,673)		(144,743)			(147,413)
Bank overdrafts		14		(25,031)		(39,142)			(6,249)
Current tax payable				(2,581)		(11,772)			(11,591)
				(170,285)		(195,657)			(165,253)
Net current assets				92,697		94,861			99,599
Non-current liabilities
Other payables		12		(2,622)		(2,709)			(2,685)
Deferred tax liabilities				(233)		(364)			(233)
				(2,855)		(3,073)			(2,918)
Total liabilities		3		(173,140)		(198,730)			(168,171)
Net assets				179,432		169,114			180,598
Capital and reserves
Called-up share capital				3,173		3,164			3,167
Share premium				58,470		56,638			57,215
Capital redemption reserve				932		932			932
Reserve for shares held in the employee benefit trust				(57,277)		(66,186)			(65,652)
Currency translation reserve				26,471		37,503			30,286
Retained earnings				147,663		137,063			154,650
Total equity				179,432		169,114			180,598

Condensed Consolidated Statement of Changes in Equity

Six months ended 30 June 2012

	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 2011	3,216	55,607	875	(75,361)	33,691	159,406	177,434
Currency translation differences	-	-	-	-	3,812	-	3,812
Net income recognised directly in equity	-	-	-	-	3,812	-	3,812
Profit for the period	-	-	-	-	-	30,459	30,459
Total comprehensive income for the period	-	-	-	-	3,812	30,459	34,271
Purchase of own shares for cancellation	(57)	-	57	-	-	(30,322)		(30,322)
Exercise of share plans	5	1,031	-	-	-	-	1,036
Reserve transfer when shares held in the employee benefit trust vest	-	-	-	9,175	-	(9,175)	-
Credit in respect of share schemes	-	-	-	-	-	5,991	5,991
Debit in respect of tax on share schemes	-	-	-	-	-	(473)	(473)
Dividends	-	-	-	-	-	(18,823)	(18,823)
	(52)	1,031	57	9,175	-	(52,802)	(42,591)
Balance at 30 June 2011	3,164	56,638	932	(66,186)	37,503	137,063	169,114
Currency translation differences	-	-	-	-	(7,217)	-	(7,217)
Net loss recognised directly in equity	-	-	-	-	(7,217)	-	(7,217)
Profit for the six months ended 31 December 2011	-	-	-	-	-	26,398	26,398
Total (loss)/income for the period	-	-	-	-	(7,217)	26,398	19,181
Exercise of share plans	3	577	-	-	-	-	580
Reserve transfer when shares held in the employee benefit trust vest	-	-	-	534	-	(534)	-
Credit in respect of share schemes	-	-	-	-	-	6,712	6,712
Debit in respect of deferred tax on share schemes	-	-	-	-	-	(5,301)	(5,301)
Dividends	-	-	-	-	-	(9,688)	(9,688)
	3	577	-	534	-	(8,811)	(7,697)
Balance at 31 December 2011 and 1 January 2012	3,167	57,215	932	(65,652)	30,286	154,650	180,598
Currency translation differences	-	-	-	-	(3,815)	-	(3,815)
Net loss recognised directly in equity	-	-	-	-	(3,815)	-	(3,815)
Profit for the six months ended 30 June 2012	-	-	-	-	-	18,768	18,768
Total comprehensive (loss)/income for the period	-	-	-	-	(3,815)	18,768	14,953
Purchase of shares held in employee benefit trust	-	-	-	(9,388)	-	-	(9,388)
Exercise of share plans	6	1,255	-	-	-	4,271	5,532
Reserve transfer when shares held in the employee benefit trust vest	-	-	-	17,763	-	(17,763)	-
Credit in respect of share schemes	-	-	-	-	-	7,461	7,461
Credit in respect of tax on share schemes	-	-	-	-	-	1,054	1,054
Dividends	-	-	-	-	-	(20,778)	(20,778)
	6	1,255	-	8,375	-	(25,755)	(16,119)
Balance at 30 June 2012	3,173	58,470	932	(57,277)	26,471	147,663	179,432

Consolidated Statement of Cash Flows

Six months ended 30 June 2012

			Six months ended				Year ended
	Note		30 June  2012 Unaudited £'000		30 June  2011 Unaudited £'000		31 December 2011 Audited £'000
Cash generated from underlying operations	13		35,320		21,789		103,325
Exceptional items (note 4)			(7,845)		-		-
Cash generated from operations			27,475		21,789		103,325
Income tax paid			(17,532)		(19,052)		(37,109)
Net cash from operating activities			9,943		2,737		66,216
Cash flows from investing activities
Purchases of property, plant and equipment			(4,627)		(7,980)		(16,319)
Purchases of intangible assets			(5,013)		(5,156)		(13,325)
Proceeds from the sale of property, plant and equipment, and computer software			35		173		237
Interest received			423		398		953
Net cash used in investing activities			(9,182)		(12,565)		(28,454)
Cash flows from financing activities
Dividends paid			(20,778)		(18,823)		(28,511)
Interest paid			(344)		(281)		(807)
Issue of own shares for the exercise of options			5,532		1,036		1,616
Purchase of own shares for cancellation			-		(30,322)		(30,322)
Purchase of shares into the employee benefit trust			(9,388)		-		-
Net cash used in financing activities			(24,978)		(48,390)		(58,024)
Net decrease in cash and cash equivalents			(24,217)		(58,218)		(20,262)
Cash and cash equivalents at the beginning of the period			58,168		80,531		80,531
Exchange (loss)/gain on cash and cash equivalents			(1,539)		1,269		(2,101)
Cash and cash equivalents at the end of the period	14		32,412		23,582		58,168

Notes to the condensed set of interim financial statements

Six months ended 30 June 2012

1.             General information

The information for the year ended 31 December 2011 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

2.             Accounting policies

Basis of preparation

The unaudited interim condensed consolidated financial statements for the six months ended 30 June 2012 have been prepared in accordance with IAS 34 'Interim financial reporting' and with the Disclosure and Transparency Rules of the Financial Services Authority.

The unaudited interim condensed consolidated financial statements do not constitute the Group's statutory financial statements. The Group's most recent statutory financial statements, which comprise the annual report and audited financial statements for the year ended 31 December 2011, were approved by the directors on 6 March 2012. The interim condensed consolidated financial statements should be read in conjunction with the Annual Report and Accounts for the year ended 31 December 2011, which have been prepared in accordance with International Financial Reporting Standards ('IFRSs') as adopted by the European Union.

Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the interim management report. The interim 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, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the half-yearly financial report.

New accounting standards, interpretations and amendments

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2011. The Group has applied the following policy in respect of exceptional items where the Group considers exceptional items to be one-off or material in nature that should be brought to the reader's attention in understanding the Group's financial performance. The following amendments to IFRSs did not have any impact on the accounting policies, financial position or performance of the Group:
IAS 12 - Deferred Tax: Recovery of Underlying Assets (Amendment) This amendment to IAS 12 includes a rebuttable presumption that the carrying amount of investment property measured using the fair value model in IAS 40 will be recovered through sale and, accordingly, that any related deferred tax should be measured on a sale basis. The presumption is rebutted if the investment property is depreciable and it is held within a business model whose objective is to consume substantially all of the economic benefits in the investment property over time, rather than through sale. Specifically, IAS 12 will require that deferred tax arising from a non-depreciable asset measured using the revaluation model in IAS 16 should always reflect the tax consequences of recovering the carrying amount of the underlying asset through sale. Effective implementation date is for annual periods beginning on or after 1 January 2012.
IFRS 7 - Disclosures - Transfers of financial assets (Amendment) The IASB issued an amendment to IFRS 7 that enhances disclosures for financial assets. These disclosures relate to assets transferred (as defined under IAS 39). If the assets transferred are not derecognised entirely in the financial statements, an entity has to disclose information that enables users of financial statements to understand the relationship between those assets which are not derecognised and their associated liabilities. If those assets are derecognised entirely, but the entity retains a continuing involvement, disclosures have to be provided that enable users of financial statements to evaluate the nature of, and risks associated with, the entity's continuing involvement in those derecognised assets. Effective implementation date is for annual periods beginning on or after 1 July 2011 with no comparative requirements.
IFRS 1 - Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters (Amendment) When an entity's date of transition to IFRS is on or after the functional currency normalisation date, the entity may elect to measure all assets and liabilities held before the functional currency normalisation date, at fair value on the date of transition to IFRS. This fair value may be used as the deemed cost of those assets and liabilities in the opening IFRS statement of financial position. However, this exemption may only be applied to assets and liabilities that were subject to severe hyperinflation. Effective implementation date is for annual periods beginning on or after 1 July 2011 with early adoption permitted.
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 cost. This is the measure reported to the Group's Chief Executive for the purpose of resource allocation and assessment of segment performance.

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

		Revenue							Gross Profit
		Six months ended					Year ended 31 December 2011 £'000		Six months ended				Year ended 31 December 2011 £'000
			30 June 2012 £'000		30 June 2011 £'000				30 June      2012 £'000		30 June 2011 £'000
EMEA			211,458		209,548		421,240		117,934		120,268		239,581
United Kingdom			146,012		163,047		324,863		61,687		66,010		129,991
Asia Pacific	Australia and New Zealand		59,711		49,120		106,196		26,343		23,806		50,172
	Other		34,888		27,620		59,862		30,508		24,747		53,179
	Total		94,599		76,740		166,058		56,851		48,553		103,351
Americas			50,560		52,742		106,926		37,383		40,263		80,858
			502,629		502,077		1,019,087		273,855		275,094		553,781

			Operating Profit
			Six months ended						Year ended 31 December 2011 £'000
			Before exceptional items 2012 £'000	Exceptional items (note 4) 2012 £'000	After exceptional items 2012 £'000		30 June 2011 £'000
EMEA			13,385	(7,333)	6,052		16,958		31,676
United Kingdom			8,614	(512)	8,102		10,407		18,317
Asia Pacific	Australia and New Zealand		7,679	-	7,679		5,026		11,453
	Other		6,131	-	6,131		7,213		14,702
	Total		13,810	-	13,810		12,239		26,155
Americas			198	-	198		5,798		9,887
Operating profit			36,007	(7,845)	28,162		45,402		86,035
Financial income			81	-	81		63		112
Profit before tax			36,088	(7,845)	28,243		45,465		86,147

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 and 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 intangible.

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

		Total Assets							Total Liabilities
		Six months ended					Year ended 31 December 2011 £'000		Six months ended				Year ended 31 December 2011 £'000
			30 June 2012 £'000		30 June 2011 £'000				30 June      2012 £'000		30 June 2011 £'000
EMEA			128,955		149,074		131,772		71,666		69,902		71,687
United Kingdom			109,454		116,813		106,455		64,518		88,859		51,100
Asia Pacific	Australia and New Zealand		29,313		26,618		28,323		14,768		11,818		11,855
	Other		38,572		28,810		37,299		8,660		6,054		9,411
	Total		67,885		55,428		65,622		23,428		17,872		21,266
Americas			42,297		43,719		40,940		10,947		10,325		12,527
Segment assets/liabilities			348,591		365,034		344,789		170,559		186,958		156,580
Income tax			3,981		2,810		3,980		2,581		11,772		11,591
			352,572		367,844		348,769		173,140		198,730		168,171

		Property, Plant & Equipment						Intangible Assets
	Six months ended					Year ended 31 December 2011 £'000		Six months ended				Year ended 31 December 2011 £'000
		30 June 2012 £'000		30 June 2011 £'000				30 June      2012 £'000		30 June 2011 £'000
EMEA		9,678		10,762		10,396		600		665		669
United Kingdom		8,904		9,835		9,680		42,760		30,652		38,187
Asia Pacific	Australia and New Zealand	1,639		1,696		1,594		129		160		168
	Other	2,814		1,794		2,648		66		246		105
	Total	4,453		3,490		4,242		195		406		273
Americas		8,650		7,932		8,892		593		570		615
		31,685		32,019		33,210		44,148		32,293		39,744

The below analysis 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
	Six months ended					Year ended 31 December 2011 £'000		Six months ended				Year ended 31 December 2011 £'000
		30 June 2012 £'000		30 June 2011 £'000				30 June      2012 £'000		30 June 2011 £'000
Finance and Accounting		237,895		261,023		521,380		114,661		123,824		248,028
Legal, Technology, HR, Secretarial and Other		109,551		98,560		205,184		55,076		51,794		105,575
Engineering, Property & Construction, Procurement & Supply Chain		90,703		77,113		164,656		53,905		48,667		101,291
Marketing, Sales and Retail		64,480		65,381		127,867		50,213		50,809		98,887
		502,629		502,077		1,019,087		273,855		275,094		553,781

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

	Revenue							Gross Profit
	Six months ended					Year ended 31 December 2011 £'000		Six months ended				Year ended 31 December 2011 £'000
		30 June 2012 £'000		30 June 2011 £'000				30 June      2012 £'000		30 June 2011 £'000
Permanent		222,601		227,160		453,105		215,687		219,429		438,382
Temporary		280,028		274,917		565,982		58,168		55,665		115,399
		502,629		502,077		1,019,087		273,855		275,094		553,781

4.             Exceptional items

The Group has taken a restructuring cost in the first half of 2012, relating to changes in management structure where an entire layer of management has been removed. The costs represent direct expenditure necessarily incurred by the restructuring. The expenditure does not include any ongoing costs of the Group.

5.             Financial income/(expenses)

		Six months ended				Year ended 31 December 2011 £'000
		30 June 2012 £'000		30 June 2011 £'000
Financial income
Bank interest receivable		423		398		953
Financial expenses
Bank interest payable		(342)		(335)		(841)

6.             Taxation

Taxation for the six month period is charged at 33.5% (six months ended 30 June 2011: 33.0%; year ended 31 December 2011: 34.0%), representing the best estimate of the average annual effective tax rate expected for the full year, applied to the pre-tax income of the six month period.

7.             Dividends

	Six months ended				Year ended 31 December 2011 £'000
	30 June 2012 £'000		30 June 2011 £'000
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year 31 December 2011 of 6.75p per ordinary share (2010: 6.12p)	20,778		18,823		18,739
Interim dividend for the period ended 30 June 2011 of 3.25p per ordinary share (2010: 2.88p)	-		-		9,772
	20,778		18,823		28,511
Amounts proposed as distributions to equity holders in the period:
Proposed interim dividend for period ended 30 June 2012 of 3.25p per ordinary share (2011: 3.25p)	9,924		9,846		-
Proposed final dividend for the year ended 31 December 2011 of 6.75p per ordinary share (2010: 6.12p)	-		-		20,458

The proposed interim dividend had not been approved by the Board at 30 June 2012 and therefore has not been included as a liability. The comparative interim dividend at 30 June 2011 was also not recognised as a liability in the prior period.

The proposed interim dividend of 3.25 pence (2011: 3.25 pence) per ordinary share will be paid on 5 October 2012 to shareholders on the register at the close of business on 7 September 2012.

8.             Share-based payments

In accordance with IFRS 2 "Share-based Payment", a charge of £8.4m has been recognised for share options and other share-based payment arrangements (including social charges) (30 June 2011: £7.0m, 31 December 2011: £13.0m).

Six months ended 30 June 2012

9.             Earnings per ordinary share

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

	Six months ended				Year ended 31 December 2011
Earnings	30 June 2012		30 June 2011
Earnings for basic and diluted earnings per share (£'000)	18,768		30,459		56,857
Exceptional items (£'000) (note 4)	5,315		-		-
Earnings for basic and diluted earnings per share before exceptional items (£'000)	24,083		30,459		56,857
Number of shares
Weighted average number of shares used for basic earnings per share ('000)	305,602		305,807		304,458
Dilution effect of share plans ('000)	4,271		9,653		7,941
Diluted weighted average number of shares used for diluted earnings per share ('000)	309,873		315,460		312,399
Basic earnings per share (pence)	6.1		10.0		18.7
Diluted earnings per share (pence)	6.1		9.7		18.2
Basic earnings per share before exceptional items (pence)	7.9		10.0		18.7
Diluted earnings per share before exceptional items (pence)	7.8		9.7		18.2

The above results all relate to continuing operations.

10.           Property, plant and equipment

Acquisitions and disposals

During the period ended 30 June 2012 the Group acquired property, plant and equipment with a cost of £4.6m (30 June 2011: £8.0m, 31 December 2011: £16.3m).

Property, plant and equipment with a carrying amount of £0.1m were disposed of during the period ended 30 June 2012 (30 June 2011: £0.2m, 31 December 2011: £0.2m), resulting in a loss on disposal of £5k (30 June 2011: profit of £7k, 31 December 2011: profit of £22k).

11.           Trade and other receivables

	30 June 2012          £'000		30 June 2011 £'000		31 December 2011 £'000
Current
Trade receivables	159,161		180,736		156,979
Other receivables	5,112		5,894		4,566
Prepayments and accrued income	37,285		38,354		34,910
	201,558		224,984		196,455
Non-current
Prepayments	5,209		1,916		2,612

12.           Trade and other payables

                                                                                                                                                           Six months ended                  Year ended                                  

		30 June 2012          £'000		30 June 2011 £'000		31 December 2011 £'000
Current
Trade payables		5,536		6,319		8,664
Other tax and social security		42,299		50,508		44,415
Other payables		22,777		23,238		22,612
Accruals		71,179		62,363		71,115
Deferred income		882		2,315		607
		142,673		144,743		147,413
Non-current
Deferred income		2,569		2,091		2,515
Other tax and social security		53		618		170
		2,622		2,709		2,685

13.           Cash flows from operating activities

		Six months ended				Year ended 31 December 2011 £'000
		30 June 2012 £'000		30 June 2011 £'000
Profit before tax		28,243		45,465		86,147
Exceptional items (note 4)		7,845		-		-
Profit before tax and exceptional items		36,088		45,465		86,147
Depreciation and amortisation charges		5,830		5,522		11,657
Loss/(profit) on sale of property, plant and equipment, and computer software		5		(7)		(22)
Share scheme charges		7,461		5,991		12,732
Net finance income		(81)		(63)		(112)
Operating cash flow before changes in working capital and exceptional items		49,303		56,908		110,402
Increase in receivables		(11,750)		(51,718)		(32,688)
(Decrease)/Increase in payables		(2,233)		16,599		25,611
Cash generated from underlying operations		35,320		21,789		103,325

14.           Cash and cash equivalents

                                                                                                                                                        Six months ended                   Year ended

		30 June 2012 £'000		30 June 2011 £'000		31 December 2011 £'000
Cash at bank and in hand		47,907		56,156		57,758
Short-term deposits		9,536		6,568		6,659
Cash and cash equivalents		57,443		62,724		64,417
Bank overdrafts		(25,031)		(39,142)		(6,249)
Cash and cash equivalents in the statement of cash flows		32,412		23,582		58,168

                Responsibility statement:

                The Directors confirm that, to the best of their knowledge:-

a)     the condensed set of interim financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';

b)     the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

c)     the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).

On behalf of the Board

S Ingham                                                                                                 A Bracey

Chief Executive                                                                                       Chief Financial Officer

                13 August 2012

                Copies of the Interim Financial Statements are now available and can be downloaded from the Company's website

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

 

END

 

 

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