RNS Number:7536O
Michael Page International PLC
18 August 2003
18 August 2003
MICHAEL PAGE INTERNATIONAL PLC
Half Year Results for the period ended 30 June 2003
Michael Page International plc ("Michael Page"), the specialist professional
recruitment company, announces its half year results for the period ended 30
June 2003.
Key Points
* First half revenue (gross profit) of #87.8m
* 5% revenue increase in Q2 2003 over Q1 2003, despite difficult trading
conditions
* Operating profit of #11.1m, including a net exceptional gain of #0.5m
* Earnings per share of 2.0p
* #7.7m cash generated from operating activities
* Interim dividend maintained at 1.1p per share
Commenting on the results, Terry Benson, Chief Executive of Michael Page, said:
"I am pleased to report a slightly better than anticipated end to the second
quarter and accordingly the results for the six months ended 30 June 2003 are
ahead of expectations. We are continuing to manage the business on the basis
that market conditions will remain challenging but stable for the remainder of
this year. As a consequence we will maintain our tight control over costs,
whilst at the same time ensuring that the longer-term prospects of the business
are protected. We are encouraged by our second quarter revenues but, as we have
now entered our seasonally quieter third quarter, it is too early to say whether
this is the start of a sustainable improvement and we remain cautious about the
short-term outlook."
Enquiries:
Michael Page International plc 020 7269 2205
Terry Benson, Chief Executive
Stephen Puckett, Finance Director
Financial Dynamics 020 7269 7291
Richard Mountain/David Yates
CHAIRMAN'S STATEMENT
The first six months of 2003 presented difficult trading conditions with weak
economic activity in most of our markets, war in Iraq and the outbreak of SARS .
Nevertheless I am pleased to report a slightly better than anticipated end to
the second quarter and accordingly the results for the six months ended 30 June
2003 are ahead of expectations.
Turnover for the six months ended 30 June 2003 was #180.4m (2002: #197.8m) and
revenue (gross profit) was #87.8m (2002: #100.9m). Operating profit was #11.1m
(2002: #17.8m), including a net exceptional gain of #0.5m (2002: nil). Profit
before tax was #11.6m (2002: #18.0m) and earnings per share were 2.0p (2002:
3.2p).
In the first half of 2003 we continued our strategy of maintaining our market
presence whilst at the same time exercising our normal tight control on costs.
We started the year with 2,390 staff operating from 107 offices in 16 countries.
At 30 June 2003, staff numbers have reduced to 2,279 (2002: 2,440) still
operating from the same number of offices and countries.
These challenging market conditions, whilst impacting virtually all elements of
the Group's businesses, continue to have a greater effect on permanent rather
than temporary recruitment. In the first half of 2003 the mix of the Group's
turnover and revenue between permanent and temporary placements was 35:65 (2002:
39:61) and 68:32 respectively (2002: 70:30).
UNITED KINGDOM
Turnover of the UK operations was #92.1m (2002: #105.8m), revenue was #43.7m
(2002: #51.9m) and operating profit before exceptional items was #6.7m (2002:
#10.3m). Revenue from Finance and Accounting was 19% lower than the first half
of 2002; Marketing and Sales was 14% lower whilst the other disciplines
increased by 2%. The lower finance revenues are a result of reduced activity in
more senior finance appointments and continuing weakness in banking and
financial services. In our other disciplines, the newer businesses of Human
Resources and Engineering continue to develop well, both achieving strong
revenue growth. Legal was similar to the first half of 2002 but Technology was
lower.
CONTINENTAL EUROPE
Turnover of the Continental European operations was #62.1m (2002: #66.3m),
revenue was #30.6m (2002: #35.2m) and operating profit was #0.9m (2002: #4.4m).
All of our larger Continental European operations continue to experience
extremely difficult market conditions, particularly in France, Holland and
Germany. Our businesses in Italy, Spain, Switzerland and Portugal have fared
better, achieving revenue levels broadly similar to the first half of 2002. The
new businesses in Belgium and Sweden, both incurred small trading losses in the
first half of the year.
ASIA PACIFIC
Turnover of the Asia Pacific operations increased to #23.7m (2002: #22.6m),
revenue was also higher at #11.5m (2002: #11.3m) and operating profit was #3.2m
(2002: #3.5m). Our businesses in Australia continue to develop well and gain
market share despite tough market conditions. The outbreak of SARS adversely
affected our businesses in Hong Kong and Singapore, although not as severely as
was first feared. The Tokyo office, which opened two years ago, has progressed
well and we intend to further increase our headcount in the second half of this
year.
AMERICAS
Turnover was #2.6m (2002: #3.1m), revenue was #1.9m (2002: #2.5m) and we
recorded an operating loss of #0.2m (2002: #0.3m). Market conditions in the USA
continue to be difficult. However our business is operating to plan and it is
our current intention to open a third office in the second half of this year.
In Brazil the business has grown significantly. We now employ 40 people and have
opened a second office in Rio de Janeiro.
EXCEPTIONAL ITEMS
In the first six months of 2003 the Group has two exceptional items which give
rise to a net exceptional gain of #0.5m.
At the end of 2001, the Group committed to a 20 year lease on 33,000 sq.ft. of
offices in London to provide space for future expansion and to accommodate
existing businesses whose leases were expiring in 2002 to 2004. Possession of
the new offices took place in the first half of 2003 and, given the reductions
in headcount, a substantial amount of space is now vacant. In accordance with
FRS 12 the Group is making an exceptional charge for vacant property of #3.0m.
On flotation in March 2001, the Group recorded an exceptional charge of #6.0m in
respect of employer's social charges on the Restricted Share Scheme. These
liabilities, which are dependent upon the price of Michael Page shares,
crystallise in March 2004. In these interim results, this liability has been
estimated at #2.5m using the share price at 30 June 2003 (110.5p). As a
consequence there is an exceptional credit in the first six months of #3.5m.
This provision will be recalculated at the year end using the share price at 31
December 2003 and at the end of March 2004 when the shares are distributed.
TAXATION
The charge for taxation is based on the expected effective annual tax rate of
38.0% on profit before taxation, exceptional items and amortisation of goodwill
(2002: 34.1%). The effective rate has increased principally due to unrelieved
tax losses in a number of separate jurisdictions.
As a result of recent changes in UK tax legislation, the Company expects to
obtain a deduction for corporation tax purposes when the Restricted Share Scheme
vests. Based on the price of Michael Page shares at 30 June 2003, the deduction
to UK taxable profits would be approximately #16m which, at the UK corporation
tax rate of 30%, would reduce the tax charge in 2004 by #4.8m.
CASH FLOW
The Group started the year with net cash of #21.4m. In the first half we
generated #7.7m from operations. After tax payments of #4.7m, net capital
expenditure of #3.5m and dividends of #8.2m, we ended the period with #13.6m of
net cash. Interest income in the first six months was #0.4m (2002: #0.1m) and
includes #0.2m of interest on a tax refund.
DIVIDENDS
Whilst the Group's profits have declined, our cash position remains strong and
the Board has decided to maintain the interim dividend at 1.1p (2002: 1.1p) per
share. The interim dividend will be paid on 17 October 2003 to shareholders on
the register at 19 September 2003.
CURRENT TRADING AND FUTURE PROSPECTS
We are continuing to manage the business on the basis that market conditions
will remain challenging but stable for the remainder of this year. As a
consequence we will maintain our tight control over costs, whilst at the same
time, ensuring that the longer-term prospects of the business are protected. We
are encouraged by our second quarter revenues but, as we have now entered our
seasonally quieter third quarter, it is too early to say whether this is the
start of a sustainable improvement and we remain cautious about the short-term
outlook.
Adrian Montague
18 August 2003
Unaudited Consolidated Profit and Loss Account for the six months ended 30 June
2003
Six months ended 30 June
Before Exceptional After Six months Year
exceptional items exceptional ended ended
items (note 3) items 30 June 31 December
Note 2003 2003 2003 2002 2002
#'000 #'000 #'000 #'000 #'000
Turnover 2 180,437 - 180,437 197,822 383,470
Cost of sales (92,665) - (92,665) (96,971) (190,822)
__________ ___________ ___________ ___________ ___________
Gross profit 2 87,772 - 87,772 100,851 192,648
Administrative expenses (77,149) 497 (76,652) (83,037) (160,512)
___________ ___________ ___________ ___________ ___________
Operating profit 10,623 497 11,120 17,814 32,136
Net interest 442 - 442 137 461
___________ ___________ --___________ ___________ ___________
Profit on ordinary 2 11,065 497 11,562 17,951 32,597
activities before taxation
Taxation on profit on
ordinary activities 4 (4,223) (149) (4,372) (6,137) (11,443)
___________ ___________ ___________ --___________ ___________
Profit on ordinary
activities after taxation
being profit for the 6,842 348 7,190 11,814 21,154
financial period
Equity dividends 5 (3,938) - (3,938) (4,062) (12,263)
___________ ___________ ___________ ___________ ___________
Retained profit for the 2,904 348 3,252 7,752 8,891
financial period
___________ ___________ ___________ ___________ ___________
Basic earnings per share 6 2.0 3.2 5.8
(pence)
Diluted earnings per share 6 2.0 3.2 5.8
(pence)
Adjusted earnings per share 6 1.9 3.2 5.8
(pence)
___________ ___________ ___________
Unaudited Consolidated Statement of Total Recognised Gains and Losses
Year
Six months ended ended
30 June 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
Profit for the financial period 7,190 11,814 21,154
Foreign currency translation 2,346 1,939 1,256
differences
___________ ___________ ___________
Total recognised gains and losses for 9,536 13,753 22,410
the period
___________ ___________ ___________
Unaudited Consolidated Balance Sheet at 30 June 2003
30 June 30 June 31 December
2003 2002 2002
Note #'000 #'000 #'000
Fixed assets
Intangible assets 1,587 1,683 1,635
Tangible assets 24,526 26,762 23,505
Investments in own shares 10,000 10,000 10,000
___________ ___________ ___________
36,113 38,445 35,140
___________ ___________ ___________
Current assets
Debtors 75,237 84,762 70,743
Cash at bank and in hand 14,680 21,615 22,040
___________ ___________ ___________
89,917 106,377 92,783
___________ ___________ ___________
Creditors
Amounts falling due within one year (56,075) (66,698) (63,069)
_________ ___________ ___________
Net current assets 33,842 39,679 29,714
___________ ___________ ___________
Total assets less current liabilities 69,955 78,124 64,854
___________ ___________ ___________
Provisions for liabilities and charges 7 (5,503) (6,000) (6,000)
___________ ___________ ___________
Net assets 2 64,452 72,124 58,854
___________ ___________ ___________
Capital and reserves
Called up share capital 3,637 3,750 3,637
Capital contribution reserve - 306,487 -
Capital redemption reserve 113 - 113
Profit and loss account 60,702 (238,113) 55,104
___________ ___________ ___________
Equity shareholders' funds 8 64,452 72,124 58,854
___________ ___________ ___________
Unaudited Consolidated Cash Flow Statement for the six months ended 30 June 2003
Six months ended Year ended
30 June 30 June 31 December
2003 2002 2002
Note #'000 #'000 #'000
Net cash inflow from operating activities 9 7,730 17,514 46,657
Returns on investments and servicing of 442 137 467
finance
Taxation paid (4,686) (8,440) (11,537)
Capital expenditure and financial (3,450) (1,251) (2,536)
investment
Equity dividends paid (8,233) (8,494) (12,524)
___________ ___________ ___________
Net cash (outflow)/inflow before (8,197) (534) 20,527
financing
___________ ___________ ___________
Financing
Repayment of loan notes - - (5,452)
Purchase of own shares for cancellation - - (13,726)
___________ ___________ ___________
Net cash outflow from financing - - (19,178)
___________ ___________ ___________
(Decrease)/increase in net cash in the 10 (8,197) (534) 1,349
period
___________ ___________ ___________
Notes to the unaudited financial information
1. Basis of accounting
The consolidated interim financial statements have been prepared under the
historical cost convention and in accordance with applicable United Kingdom
accounting and financial reporting standards. The accounting policies are the
same as those set out in the financial statements of the Group for the year
ended 31 December 2002.
The interim financial statements are unaudited but have been reviewed by the
auditors and their report is set out at the end of this statement. The
comparative figures for the year ended 31 December 2002 have been extracted from
the Group's financial statements, a copy of which has been delivered to the
Registrar of Companies. The auditors' report on those statements was
unqualified and did not include a statement under Section 237 (2) or (3) of the
Companies Act 1985. The interim financial information does not constitute
statutory accounts as defined under Section 240 of the Companies Act 1985.
2. Segmental analysis
Six months ended Year ended
30 June 30 June 31 December
2003 2002 2002
(a) Turnover by geographic region #'000 #'000 #'000
United Kingdom 92,084 105,790 203,868
Continental Europe 62,099 66,348 127,551
Asia Pacific Australia 20,247 18,803 39,187
Other 3,414 3,828 7,503
___________ ___________ ___________
Total 23,661 22,631 46,690
Americas 2,593 3,053 5,361
___________ ___________ ___________
180,437 197,822 383,470
___________ ___________ ___________
Six months ended Year ended
30 June 30 June 31 December
2003 2002 2002
(b) Turnover by discipline #'000 #'000 #'000
Finance and accounting 125,119 144,288 277,818
Marketing and sales 29,692 28,251 54,590
Other 25,626 25,283 51,062
___________ ___________ ___________
180,437 197,822 383,470
___________ ___________ ___________
Six months ended Year ended
30 June 30 June 31 December
2003 2002 2002
(c) Gross profit by geographic region #'000 #'000 #'000
United Kingdom 43,737 51,946 99,274
Continental Europe 30,617 35,151 66,334
Asia Pacific Australia 8,418 8,010 16,380
Other 3,103 3,286 6,536
___________ ___________ ___________
Total 11,521 11,296 22,916
Americas 1,897 2,458 4,124
___________ ___________ ___________
87,772 100,851 192,648
___________ ___________ ___________
Six months ended Year ended
30 June 30 June 31 December
2003 2002 2002
(d) Gross profit by discipline #'000 #'000 #'000
Finance and accounting 55,841 66,108 126,477
Marketing and sales 18,738 20,847 38,740
Other 13,193 13,896 27,431
___________ ___________ ___________
87,772 100,851 192,648
___________ ___________ ___________
Six months ended Year ended
30 June 30 June 31 December
(e) Profit before interest, taxation and 2003 2002 2002
exceptional items by geographic region #'000 #'000 #'000
United Kingdom 6,727 10,316 20,487
Continental Europe 943 4,370 5,567
Asia Pacific Australia 2,902 2,873 5,796
Other 281 598 1,033
___________ ___________ ___________
Total 3,183 3,471 6,829
Americas (230) (343) (747)
___________ ___________ ___________
Profit before taxation, interest and 10,623 17,814 32,136
exceptional items
Exceptional items 497 - -
___________ ___________ ___________
Profit before interest and taxation 11,120 17,814 32,136
Net interest 442 137 461
___________ ___________ ___________
Profit on ordinary activities before taxation 11,562 17,951 32,597
___________ ___________ ___________
Six months ended Year ended
30 June 30 June 31 December
2003 2002 2002
(f) Net assets/(liabilities) by geographic #'000 #'000 #'000
region
United Kingdom 43,363 40,351 40,264
Continental Europe 17,132 28,716 17,166
Asia Pacific Australia 6,364 3,894 3,825
Other 495 874 340
___________ ___________ ___________
Total 6,859 4,768 4,165
Americas (2,902) (1,711) (2,741)
___________ ___________ ___________
64,452 72,124 58,854
___________ ___________ ___________
3. Exceptional items
Six months ended Year ended
30 June 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
Release of payroll tax provision on Restricted Share 3,483 - -
Scheme (a)
Property costs (b) (2,986) - -
___________ ___________ ___________
497 - -
Taxation on exceptional items (149) - -
___________ ___________ ___________
348 - -
___________ ___________ ___________
(a) Release of payroll tax provision on Restricted Share Scheme
The grant of Restricted Shares on flotation in 2001 gave rise to potential
National Insurance and social security liabilities. These liabilities were
estimated at #6.0m and were charged as an exceptional item in 2001. As these
liabilities crystallise in March 2004 when the Restricted Shares vest, these
liabilities are now being estimated using the share price at each period end.
Using the share price at 30 June 2003 of 110.5p, the required provision is #2.5m
and as a consequence, #3.5m has been released from the provision.
(b) Property costs
The property cost provision represents rentals and other unavoidable costs on
onerous lease agreements on vacant properties.
4. Taxation
The charge for taxation is based on the expected annual tax rate of 38.0% on
profit before taxation, exceptional items, and amortisation of goodwill (2002:
34.1% before amortisation of goodwill).
5. Dividends
An interim dividend of 1.1 pence (2002: 1.1 pence) per ordinary share will be
paid on 17 October 2003 to shareholders on the register at the close of business
on 19 September 2003.
6. Earnings per share
Basic and diluted Exceptional Adjusted
EPS items EPS
30 June 2003
Profit after taxation (#'000) 7,190 (348) 6,842
___________ ___________ ___________
Average shares ( '000) 357,949 - 357,949
___________ ___________ ___________
Earnings per share (pence) 2.0 - 1.9
___________ ___________ ___________
30 June 2002
Profit after taxation (#'000) 11,814 - 11,814
___________ ___________ ___________
Average shares ( '000) 369,286 - 369,286
___________ ___________ ___________
Earnings per share (pence) 3.2 - 3.2
___________ ___________ ___________
31 December 2002
Profit after taxation (#'000) 21,154 - 21,154
___________ ___________ ___________
Average share ( '000) 366,355 - 366,355
___________ ___________ ___________
Earnings per share (pence) 5.8 - 5.8
___________ ___________ ___________
7. Provisions for liabilities and charges
Six months ended Year ended
30 June 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
Payroll tax liability on the Restricted Share Scheme 2,517 6,000 6,000
(note 3)
Vacant property provision (note 3) 2,986 - -
___________ ___________ ___________
5,503 6,000 6,000
___________ ___________ ___________
8. Reconciliation of movements in shareholders' funds
Six months ended Year ended
30 June 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
Profit for the financial period 7,190 11,814 21,154
Dividends (3,938) (4,062) (12,263)
___________ ___________ ___________
Retained profit for the financial period 3,252 7,752 8,891
Foreign currency translation differences 2,346 1,939 1,256
___________ ___________ ___________
5,598 9,691 10,147
Share buybacks - - (13,726)
Opening shareholders' funds 58,854 62,433 62,433
___________ ___________ ___________
Closing shareholders' funds 64,452 72,124 58,854
___________ ___________ ___________
9. Reconciliation of operating profit to net cash
inflow from operating activities
Six months ended Year ended
30 June 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
Operating profit 11,120 17,814 32,136
Depreciation and amortisation charges 3,578 3,867 8,067
(Profit)/loss on sale of fixed assets (77) 14 262
(Increase)/decrease in debtors (4,056) (3,480) 10,349
Decrease in creditors (2,835) (701) (4,157)
Net cash inflow from operating activities 7,730 17,514 46,657
10. Reconciliation of net cash flow to movement in net
funds
Six months ended Year ended
30 June 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
(Decrease)/increase in cash in the period (8,197) (534) 1,349
Change in net funds resulting from cash flows (8,197) (534) 1,349
Decrease in debt financing - - 5,452
Foreign exchange movements 418 424 224
Movements in net funds in period (7,779) (110) 7,025
Opening net funds 21,372 14,347 14,347
Closing net funds 13,593 14,237 21,372
11. Analysis of net funds Foreign
At Cash exchange At
31 December 2002 flow movements 30 June 2003
#'000 #'000 #'000 #'000
Cash at bank and in hand 22,040 (7,748) 388 14,680
Bank overdrafts (668) (449) 30 (1,087)
Total net funds 21,372 (8,197) 418 13,593
12. Nature of financial information
The interim financial statements were approved by a committee of the Board of
Directors on 18 August 2003.
Copies of this statement of interim results are available from the Company's
Registrar - Capita IRG plc, The Registry,
34 Beckenham Road, Beckenham, Kent, BR3 4TU, at the Company's registered office
- Page House, 39-41 Parker Street, London WC2B 5LN, and on the Company's website
- www.michaelpage.co.uk.
Independent review report to Michael Page International plc
Introduction
We have been instructed by the company to review the financial information for
the six months ended 30 June 2003 which comprises the consolidated profit and
loss account, the consolidated statement of total recognised gains and losses,
the consolidated balance sheet, the consolidated cash flow statement and related
notes 1 to 12. We have read the other information contained in the interim
report and considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.
This report is made solely to the company in accordance with Bulletin 1999/4
issued by the Auditing Practices Board. Our work has been undertaken so that we
might state to the company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the company, for our review work, for this report, or for the conclusions we
have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
polices and presentation applied to the interim figures are consistent with
those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom auditing standards and therefore
provides a lower level of assurance than an audit. Accordingly, we do not
express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2003.
Deloitte & Touche LLP
Chartered Accountants
18 August 2003
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR NKPKPABKDBFD