Final Results
Michael Page International PLC
23 February 2005
23 February 2005
MICHAEL PAGE INTERNATIONAL PLC
Full Year Results for the year ended 31 December 2004
Michael Page International plc ("Michael Page"), the specialist professional
recruitment company, announces its full year results for the year ended 31
December 2004.
£m 2004 2003 Change
Turnover 433.7 372.6 + 16%
Revenue (Gross Profit) 210.6 178.5 + 18%
Operating profit before exceptional items 40.0 22.9 + 75%
Operating profit after exceptional items 40.0 21.8 + 84%
Earnings per share before exceptional items 7.4p 4.1p + 80%
Earnings per share after exceptional items 10.0p 3.8p + 163%
Dividend 4.0p 3.4p + 18%
Key Points
• Considerably improved results as markets strengthened
• Increased activity in the UK, Asia Pacific and the Americas
• Trading conditions in Continental Europe improved
• Operating profit before exceptional items increased 75%, reflecting
high operational gearing
• Higher growth for permanent placements over temporary placements
• Strong balance sheet with £12.2m net cash
Commenting on the results, Terry Benson, Chief Executive of Michael Page, said:
"The investments made in our businesses over the course of the economic cycle
positioned us well to take advantage of the better conditions that prevailed
during 2004, resulting in substantial increases in revenue, profits and
dividends.
"The short term outlook is encouraging. Market conditions in the UK, Asia
Pacific and the Americas are favourable and in Continental Europe market
conditions are improving, although they remain uncertain. Our strategy remains
unchanged and we see numerous opportunities to grow our business in all our
regions."
Enquiries:
Michael Page International plc 020 7269 2205
Terry Benson, Chief Executive
Stephen Puckett, Finance Director
Financial Dynamics 020 7269 7291
David Yates/Richard Mountain
Chairman's Statement
The professional employment markets are primarily driven by the levels of
economic activity and business confidence which move in cycles, the timing and
extent of which vary from region to region around the world. Our fundamental
strategy is to grow the Group organically and, during an economic slowdown,
maintain our infrastructure while continuing to make sensible investments for
the future. As a result, we are particularly well positioned to benefit from any
improvements in the market. During 2004 the markets improved in all the regions
in which we operate and accordingly, I am very pleased to report a considerably
improved set of results for 2004.
Financial highlights
Turnover for the year ended 31 December 2004 increased 16.4% to £433.7m (2003:
£372.6m). As expected in an improving market, permanent placements grew more
rapidly than temporary placement activity, and this movement in business mix
contributed to a larger revenue (gross profit) increase of 18.0% to £210.6m
(2003: £178.5m). Given the Group's high operational gearing, operating profit
before exceptional items increased by 75.0% to £40.0m (2003: £22.9m).
Profit before tax and exceptional items was £40.0m (2003: £23.5m) and adjusted
earnings per share before exceptional items were 7.4p (2003: 4.1p).
Dividends and share repurchases
It is the Board's intention to pay dividends at a level which is sustainable
throughout economic cycles and to continue to use share repurchases as an
additional mechanism for returning surplus cash to shareholders. Accordingly we
will be seeking shareholders' consent for a renewal of the repurchase authority
at the Annual General Meeting on 27 May 2005.
As the Group's profitability has increased considerably and the prospects are
encouraging, the Board is proposing an increase in the dividend for the year of
17.6%, the first such increase since flotation in March 2001. A final dividend
of 2.75p (2003: 2.3p) per ordinary share is proposed which, together with the
interim dividend of 1.25p (2003: 1.1p) per ordinary share paid in October, makes
a total dividend for the year of 4.0p (2003: 3.4p) per ordinary share. The final
dividend will be paid on 3 June 2005 to those shareholders on the register at 6
May 2005. The total dividend is covered 1.9 times by adjusted earnings per share
before exceptional items of 7.4p.
During the year we reinitiated share repurchases acquiring 14.2m shares for
£24.1m, representing an average cost per share of 170p.
Employees
I wish to express my thanks to the staff worldwide for their commitment, loyalty
and efforts throughout the year. Having operated throughout a sustained period
of difficult trading conditions, they have maintained your Company's position as
the international leader in the specialist recruitment industry.
Board of Directors
It is with regret that Rob Lourey has informed the Board that he will be
resigning as a Non-Executive Director in April 2005. Rob will be relocating to
Sydney, Australia and as a result, will be unable to continue as a Director of
the Company. Since his appointment in 2003, Rob has been a valued member of the
Board and we wish him well for the future. A search for Rob's replacement is
currently underway.
Outlook
The short term outlook is encouraging. Market conditions in the UK, Asia Pacific
and The Americas are favourable and we plan to grow our businesses by increasing
our headcount, continuing the discipline roll out and opening new offices. In
Continental Europe where market conditions are improving but remain uncertain,
we will increase headcount in some of our businesses but no new office openings
are planned for 2005.
On 6 April 2005 we will make a statement in respect of our trading for the first
quarter which, unlike in 2004, includes Easter, an important holiday period.
Adrian Montague
Chairman
22 February 2005
Chief Executive's Review
My expectation at the start of 2004 was that whilst the prospects for the UK,
Asia Pacific and The Americas were improving, our Continental European
businesses would face another difficult year as trading conditions remained
weak. These assumptions proved to be correct for the best part of the year.
However, in Continental Europe, after the summer holiday period, we experienced
improving activity levels which strengthened as the year ended.
We continued our strategy of investing cautiously and sensibly in the organic
development of our businesses, while maintaining our normal tight cost control.
This strategy means that we are operationally geared and while profitability
suffered during the downturn, we gain the benefit as conditions improve. This is
evidenced by our 18% increase in revenue (gross profit) for the year, yielding a
75% increase in operating profits to £40.0m (2003: £22.9m before exceptional
items).
Staff and office numbers
We started the year with 2,260 fee generating and support staff operating from
105 offices in 16 countries. During the course of the year we opened five
offices and extended our existing disciplines into more locations. At 31
December 2004 we employed 2,551 fee generating and support staff operating from
110 offices in 16 countries.
United Kingdom
In the UK, turnover increased by 20.9% to £234.8m (2003: £194.3m) and revenue by
21.4% to £110.0m (2003: £90.6m). Operating profits were £23.6m (2003: £15.6m
before exceptional items).
The revenues of the finance and accounting businesses of Michael Page Finance,
Michael Page City and Accountancy Additions, which generated 62% of UK revenue,
were 17% higher than in 2003. Michael Page Finance, the largest of the three
businesses, opened an office in Maidstone and recorded its highest quarterly
revenue of the year in the fourth quarter, which is encouraging given that this
quarter included the seasonally quieter Christmas period. The Finance business
in part benefited from increased demand for candidates, driven by the needs of
companies to prepare for the impact of International Accounting Standards and
compliance with Sarbanes-Oxley. The revenue of Michael Page City improved
significantly, particularly in the first half of the year, whilst Accountancy
Additions, which specialises in lower level finance and accounting positions,
grew revenue at the fastest rate partly driven by its network expansion from 27
to 30 locations with new offices in Cambridge, Glasgow and Nottingham.
The combined revenues of Michael Page Marketing, Michael Page Sales and Michael
Page Retail, were 24% higher than in 2003 and represented 23% of the UK total.
The national coverage of these businesses increased to eight offices in January
2004 with the opening of an office in Bristol. The Marketing and Sales
businesses produced strong growth from all industry sectors and continue to
develop a burgeoning temps business. Retail's growth rate was lower reflecting
the tougher market for retailers in general during 2004.
Michael Page Legal which performed well throughout the downturn produced solid
growth in 2004. Our small Technology business developed further during the year
producing a trading profit compared to last year's breakeven. Michael Page Human
Resources achieved very strong growth benefiting from its increased geographic
coverage. We believe there is substantial opportunity in Michael Page
Engineering and Supply Chain Management having opened a fifth office (London).
This business has now been separated into Michael Page Engineering and
Manufacturing, and Michael Page Procurement and Supply Chain. Michael Page
Secretarial which started at the end of 2003 progressed well and continues to
focus on the City and West End of London. These businesses combined produced
revenue growth in 2004 of 40% and represent a significant opportunity for
further strong growth as they are rolled out progressively across the UK
network.
In order to capitalise on the opportunity in Scotland, we have created a
separate management structure to maximise revenue from our existing offices in
Glasgow and Edinburgh, as well as to roll out other disciplines.
Continental Europe
Our two largest businesses in Continental Europe, France and the Netherlands,
continued to experience challenging trading conditions during the first half of
the year, recording like for like revenue declines. Elsewhere in Continental
Europe, all our other businesses increased revenues in the first half of the
year. During the second half, market conditions marginally improved, including
in France and the Netherlands, which both contributed to our fourth quarter
revenue growth in Continental Europe of 21.8%.
Turnover for the year as a whole increased by 3.3% to £124.3m (2003: £120.4m)
and revenue increased by 5.6% to £61.5m (2003: £58.2m). As a result of the
increased revenue and tight control over costs, the region produced an operating
profit of £4.4m (2003: operating loss before exceptional items of £0.3m).
In France, our second largest business after the UK and representing nearly 55%
of the region, revenue was 6% lower than in 2003. Trading conditions remained
very difficult during 2004 with the business only achieving modest year on year
revenue growth in the fourth quarter of 2004. The improved performance during
the second half of the year was largely driven by permanent recruitment
resulting in revenue from permanent placements for the year totalling a similar
level to 2003. The temporary and contracting businesses experienced a 15%
decline in revenue year on year. We believe that the recent increase in our
revenues is largely the result of our ability to service the market from our
leading position which we maintained during the downturn.
Our businesses in the Netherlands, Italy, Spain and Germany collectively
represent nearly 40% of the region. While the Netherlands did not achieve growth
until the second half of 2004, our businesses in the other countries produced
good growth throughout the year as market conditions improved. In addition, we
believe we have made market share gains as conditions improved due to a number
of competitors downsizing and closing offices during the downturn.
Our newer and smaller businesses in Switzerland, Sweden, Belgium and Portugal
each achieved 30% plus revenue growth in 2004.
As market conditions in Continental Europe begin to improve we are starting to
reap the benefit of our strategy to maintain and invest in our businesses during
a downturn. As part of this process, we have rebranded 'Page Interim' as 'Page
Personnel' in France, Italy, Spain and the Netherlands. If revenue growth is
maintained throughout 2005, profitability should improve considerably as there
remains spare capacity within a number of our businesses.
Asia Pacific
Our businesses in this region produced a very strong set of results for the
year. Turnover was 22.2% higher at £62.8m (2003: £51.4m), revenue was 26.0%
higher at £31.5m (2003: £25.0m) and operating profit increased 52.5% to £11.6m
(2003: £7.6m before exceptional items).
In Australia revenue grew 16.7% driven largely by continued strong demand from
the financial services, business services, mining and resources, and
manufacturing sectors. We opened an office in Brisbane at the beginning of the
year starting with financial recruitment. We also continued to progress the roll
out of the newer businesses, starting Engineering and Supply Chain in Sydney.
Our businesses in Hong Kong and Singapore both experienced substantial revenue
growth in 2004 capitalising on our strong market position. In August we entered
into a strategic alliance with Shanghai Tian Cai Network Co. Ltd., through which
we can provide recruitment services to clients in Shanghai.
2004 was a very strong year in Tokyo and we substantially grew revenue and
profits. We expanded the range of disciplines by starting Sales and Marketing,
and Human Resources. Our office is now at capacity and we intend doubling the
size of our office space early in 2005.
The Americas
Turnover for the region was 79.2% higher at £11.8m (2003: £6.6m) and revenue
increased by 65.8% to £7.6m (2003: £4.6m).
During the year we opened new offices in Chicago and Boston and continued to add
headcount in the existing offices in the USA and Brazil. These investments,
while increasing the cost base, contributed to the revenue growth resulting in
the region making an operating profit of £0.5m (2003: operating loss before
exceptional items of £0.1m).
We are extremely pleased with our progress in the USA and during early 2005 we
will be investigating the opportunities for further office openings in the
second half of the year.
In Brazil we enjoyed another very successful year growing headcount in both the
Sao Paulo and Rio de Janeiro offices and starting Sales and Marketing
recruitment.
New IT system
Our new front office recruitment system has been successfully rolled out
throughout the UK, Continental Europe and USA. The Asia Pacific region will
start implementing the system in the first quarter of 2005.
Strategy
Our overall long term strategy remains absolutely unchanged. We intend to stay
focused on our core competency of specialist recruitment and to grow the
business organically by the expansion of existing businesses in their local
markets, the introduction of new disciplines into existing locations and by
entering new geographic markets. We have numerous opportunities to grow our
business in all our regions.
As we continue to grow the business it naturally becomes broader-based in terms
of disciplines, customers and geographies, although we cannot escape the fact
that recruitment is tied to economic cycles. Our strategy of organically
growing, maintaining and sensibly investing in our business, even during a
downturn, means that our financial performance will suffer during periods of
economic slowdown. However, our track record since 1976 demonstrates the long
term success of this strategy. As conditions improved throughout 2004 we again
saw the benefits of this approach, achieving a 75% increase in operating profit
on an 18% increase in revenue.
Terry Benson
Chief Executive
22 February 2005
Finance Director's Review
Profit and loss account
Turnover
Turnover for the year was 16.4% higher at £433.7m (2003: £372.6m). Turnover from
temporary placements increased by 12.9% to £275.2m (2003: £243.8m) and
represented 63.5% (2003: 65.4%) of Group turnover. Turnover from permanent
placements was £158.5m (2003: £128.8m), an increase of 23.0%.
Gross profit (revenue)
Revenue for the year increased by 18.0% to £210.6m (2003: £178.5m) representing
an overall gross margin of 48.6% (2003: 47.9%). The percentage increase in
revenue is greater than the increase in turnover due to the higher proportion of
permanent placements in 2004 countered by a lower gross margin on temps. Revenue
from temporary placements was £62.0m (2003: £56.7m) and represented 29.4% (2003:
31.7%) of Group revenue. The gross margin achieved on temporary placements was
22.5% (2003: 23.2%).
The Group's quarterly revenue has grown sequentially throughout 2004, with year
on year growth increasing from 12.4% in quarter 1 to 23.9% in quarter 4, an
average for the year of 18% growth.
Operating profit
As a result of the Group's strategy and the profit based bonuses, we have a cost
structure that is very operationally geared as evidenced by the 75% increase in
operating profits before exceptional items from an 18% increase in revenue.
Administrative expenses in the year increased to £170.6m (2003: £155.6m before
exceptional items) principally due to increased numbers of staff and higher
profit related bonuses.
The Group's largest category of expenditure is the remuneration of our
consultants and support staff. Headcount of the Group was 2,260 at 1 January
2004 and increased to 2,435 at 30 June. The Group's headcount increased further
during the second half of the year reflecting both increased current activity
and investment for future growth. At 31 December 2004 we employed 2,551
consultants and support staff.
Net interest
The net interest receivable in the year was negligible (2003: £0.6m). While we
started the year with net cash of £22.4m there is a substantial cash outflow in
January each year as quarter four and annual bonuses are paid. During 2004,
surplus cash balances were invested in the short-term money market prior to
being utilised for share repurchases.
Taxation
Tax on profits before exceptional items was £13.9m (2003: £9.0m), representing
an effective tax rate of 34.8% (2003: 38.3%). The rate is higher than the UK
corporation tax rate of 30% as a result of non-deductible business expenses,
profits arising in higher tax rate jurisdictions, and losses which are unable to
be offset against profits in the current year and against which no deferred tax
asset has been recognised. The rate is lower than 2003, primarily as a result of
the higher profits in Continental Europe.
The Company expects to obtain a deduction for corporation tax purposes for the
Restricted Share Scheme which vested in 2004. This deduction reduces the current
year's tax charge by £9.0m and is treated as an exceptional item in these
results.
Earnings per share and dividends
Basic earnings per share were 10.0p (2003: 3.8p) and adjusted earnings per share
before exceptional items were 7.4p (2003: 4.1p). The weighted average number of
shares for the year was 351,555,000 (2003: 357,955,000). The 2004 average number
of shares was lower than 2003 due to the share repurchases made during 2004.
An increase in the final dividend to 2.75p (2003: 2.3p) per ordinary share has
been proposed which, together with the interim dividend of 1.25p (2003: 1.1p)
per ordinary share, makes a total dividend for the year of 4.0p (2003: 3.4p) per
ordinary share, an increase of 17.6%. The final dividend, which amounts to
£9.5m, will be paid on 3 June 2005 to those shareholders on the register at 6
May 2005.
Balance sheet
The Group had net assets of £50.7m at 31 December 2004 (2003: £53.3m) of which
£12.2m (2003: £22.4m) is represented by net cash. The reduction in net assets
and net cash is a direct consequence of the share repurchases made during 2004.
While our capital expenditure is fundamentally driven by the Group's headcount,
2004 capital expenditure, net of disposal proceeds, decreased to £4.4m (2003:
£6.3m). This is due to the 2003 expenditure reflecting the fit out costs of a
large building in London, and the implementation of the new IT system. While
headcount did increase in 2004, there remained surplus office space and
furnishings to accommodate the majority of the increase without further
expenditure.
Trade debtors were £69.3m at 31 December 2004 (2003: £53.2m) representing debtor
days of 47 (2003: 46 days).
Cash flow
At the start of the year the Group had net cash of £22.4m.
During the year the Group generated net cash from operating activities of £35.7m
(2003: £29.2m) being £47.0m (2003: £29.7m) of EBITDA, an increase in working
capital requirements of £6.2m (2003: £0.8m) and movements in provisions of £5.1m
(2003: inflow £0.2m). The increased working capital is largely due to the growth
in the business, particularly in the fourth quarter of 2004. The settlement of
provisions largely relates to the payroll taxes and social charges arising on
the vesting of the Restricted Share Scheme in April 2004.
The principal payments have been:
• £4.4m (2003: £6.3m) of capital expenditure, net of disposal proceeds, on
property, infrastructure, information systems and motor vehicles for staff;
• taxes on profits of £4.8m (2003: £10.7m);
• dividends of £12.6m (2003: £12.2m); and
• share repurchases of £24.1m (2003: nil).
At 31 December 2004 the Group had net cash balances of £12.2m (2003: £22.4m).
Treasury management and currency risk
It is the Directors' intention to finance the activities and development of the
Group principally from retained earnings, and to operate the Group's business
while maintaining the net debt/cash position within a relatively narrow band.
Cash generated in excess of these requirements will be used to buy back the
Company's shares for which renewal of the existing authority is being sought at
the forthcoming Annual General Meeting.
Cash surpluses are invested in short-term deposits with any working capital
requirements being provided from Group resources or by local overdraft
facilities.
The main functional currencies of the Group are Sterling, Euro, US Dollar and
Australian Dollar. 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 although our policy is not
to hedge this exposure.
International Financial Reporting Standards (IFRS)
Following the European Union's adoption of Regulation (EC) No 1606/2002, the
consolidated accounts of EU companies whose securities are publicly traded will
be required to adopt International Financial Reporting Standards ("IFRS")
together with revised International Accounting Standards ("IAS"), in issue at 31
March 2004, for their financial statements from 2005. Full year IFRS
consolidated financial statements will be produced for the first time to 31
December 2005, with the first reported results under IFRS being our interims at
30 June 2005. This year's consolidated financial statements remain in accordance
with UK GAAP.
A significant amount of work has been performed in 2004 by members of the Group
Finance team, and this work is still ongoing. The work performed to date has
been as follows:
• identification of key accounting changes and changes required to the Group's
accounting policies;
• quantification of these changes detailing impact on profit and net assets;
• continued communication with the Audit Committee;
• identification of matters requiring additional disclosure, leading to changes
in internal procedures to capture and report additional data; and
• preparation of a draft IFRS Annual Report based on the financial results to 31
December 2003.
As a result of the work performed during 2004, the Group is confident that it
will be able to fully comply with the accounting and reporting requirements of
IFRS in 2005.
The following areas that could have a material impact on the Group's financial
statements have been identified. This summary is not intended to be an
exhaustive list. Further differences may arise as a result of the Group's
ongoing detailed assessment and interpretations of IFRS.
a) Share-based payments - Under UK GAAP, the cost of share options is based on
the intrinsic value of the option at the date of grant and as such, grants made
under the Group's share option plans have not resulted in a charge to the profit
and loss account. Under IFRS 2 Share-based Payment, the Group is required to
measure the cost of all share options granted since 7 November 2002 that have
not fully vested at the balance sheet date, using an option pricing model. If
IFRS 2 had been in effect for 2004 it would have resulted in a charge of
approximately £0.9m (2003: £0.5m) in the income statement.
b) Goodwill amortisation - Under UK GAAP, the Group's policy is to amortise
capitalised goodwill on a straight-line basis over its estimated useful economic
life of 20 years. On transition to IFRS, IFRS 1 First-time Adoption of
International Financial Reporting Standards requires the Group to review the
carrying value of capitalised goodwill for potential impairment.
In accordance with IFRS 3 Business Combinations, from 1 January 2005,
amortisation of goodwill will no longer be charged in the Group's consolidated
IFRS income statement. In 2004 under UK GAAP the Group recorded a charge for
goodwill amortisation of £0.1m (2003: £0.1m). Under IAS, instead of an annual
charge to the profit and loss, an impairment review will be carried out at each
balance sheet date, and this is required irrespective of there being an
indicator of impairment in existence. If impairment is identified, the resulting
debit will be charged to the income statement, rather than the current
amortisation charge made under existing UK GAAP.
At 31 December 2004, the Group holds £1.4m of goodwill on its balance sheet.
c) Proposed dividends - Under UK GAAP Accounting for Post Balance Sheet Events,
proposed dividends for the accounting year are accrued for and recognised as a
liability. Under IAS 10 Events after the Balance Sheet Date, dividends to
shareholders declared after the balance sheet date but before the financial
statements are authorised for issue are no longer recognised as a liability at
the balance sheet date but are disclosed separately in the notes. Accordingly,
the Group will no longer recognise an accrual for its final dividend in its
current year IFRS balance sheet but will report it in the consolidated IFRS
statement of changes in equity for the following financial period. At 31
December 2004 the accrual for the 2004 final dividend amounted to £9.5m.
Stephen Puckett
Group Finance Director
22 February 2005
Consolidated Profit and Loss Account for the year ended 31 December 2004
2004 2003
Note £'000 £'000
Turnover 2 433,731 372,616
Cost of sales (223,090) (194,131)
________ ________
Gross profit 2 210,641 178,485
Administrative expenses (170,604) (156,702)
________ ________
Operating profit 40,037 21,783
Net interest 1 626
________ ________
Profit on ordinary activities before taxation 2 40,038 22,409
Taxation on profit on ordinary activities 4 (4,933) (8,664)
________ ________
Profit on ordinary activities after taxation 35,105 13,745
being profit for the financial year
Equity dividends 5 (13,830) (12,171)
________ ________
Retained profit for the financial year 8 21,275 1,574
======== ========
Basic earnings per share (pence) 6 10.0 3.8
Diluted earnings per share (pence) 6 9.9 3.8
Adjusted earnings per share (pence) 6 7.4 4.1
======== ========
The above results relate to continuing operations
Consolidated Statement of Total Recognised Gains and Losses for the year ended
31 December 2004
2004 2003
£'000 £'000
Profit for the financial year 35,105 13,745
Foreign currency translation differences (188) 2,786
________ ________
Total recognised gains and losses for the year 34,917 16,531
======== ========
Consolidated Balance Sheet at 31 December 2004
2004 2003
Note £'000 £'000
Fixed assets
Intangible assets 1,443 1,539
Tangible assets 20,933 23,101
________ ________
22,376 24,640
________ ________
Current assets
Debtors 88,160 71,530
Cash at bank and in hand 12,532 23,211
________ ________
100,692 94,741
Creditors:
Amounts falling due within one year (70,748) (59,355)
________ ________
Net current assets 29,944 35,386
________ ________
Total assets less current liabilities 52,320 60,026
________ ________
Creditors:
Amounts falling due after more than one year (461) (444)
Provisions for liabilities and charges 7 (1,188) (6,239)
________ ________
Net assets 2 50,671 53,343
======== ========
Capital and reserves
Called up share capital 3,572 3,637
Capital redemption reserve 178 113
EBT reserve (9,871) (9,871)
Treasury shares (13,122) -
Profit and loss account 69,914 59,464
________ ________
Equity shareholders' funds 8 50,671 53,343
======== ========
Consolidated Cash Flow Statement for the year ended 31 December 2004
2004 2003
Note £'000 £'000
Net cash inflow from operating activities 9 35,690 29,179
Returns on investments and servicing of finance 2 625
Taxation paid (4,825) (10,657)
Capital expenditure and financial investment (4,408) (6,349)
Equity dividends paid (12,593) (12,170)
________ ________
Net cash inflow before financing 13,866 628
Financing
Sale of shares held by the Employee Benefit Trust - 129
Purchase of own shares (24,120) -
________ ________
Net cash (outflow)/inflow from financing (24,120) 129
________ ________
(Decrease)/increase in net cash in the year 10 (10,254) 757
======== ========
Notes to the statutory accounts
1. Basis of accounting
The preliminary results 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 2003.
2. Segmental analysis
Turnover Gross Profit
2004 2003 2004 2003
(a) Turnover and gross profit by geographic region £'000 £'000 £'000 £'000
United Kingdom 234,822 194,262 109,984 90,630
Continental Europe 124,293 120,363 61,503 58,227
Asia Pacific
Australia 51,286 43,708 21,105 18,082
Other 11,484 7,673 10,429 6,951
________ ________ _______ _______
Total 62,770 51,381 31,534 25,033
Americas 11,846 6,610 7,620 4,595
_______ _______ _______ _______
433,731 372,616 210,641 178,485
======= ======= ====== ======
Turnover Gross Profit
2004 2003 2004 2003
(b) Turnover and gross profit by discipline £'000 £'000 £'000 £'000
Finance and accounting 290,151 256,731 129,687 113,599
Marketing and sales 73,985 61,832 44,894 37,704
Other 69,595 54,053 36,060 27,182
_______ _______ _______ _______
433,731 372,616 210,641 178,485
======= ======= ====== ======
2004 2003
(c) Profit before interest, taxation and exceptional items by geographic region £'000 £'000
United Kingdom 23,607 15,638
Continental Europe 4,401 (280)
Asia Pacific
Australia 7,649 6,303
Other 3,926 1,285
_______ _______
Total 11,575 7,588
Americas 454 (62)
________ ________
Profit before interest, taxation and exceptional items 40,037 22,884
Exceptional items - (1,101)
_______ _______
Profit before interest and taxation 40,037 21,783
Net interest 1 626
_______ _______
Profit on ordinary activities before taxation 40,038 22,409
======= =======
(d) Net assets/(liabilities) by geographic region
2004 2003
£'000 £'000
United Kingdom 38,255 41,115
Continental Europe 7,331 9,791
Asia Pacific
Australia 5,537 4,741
Other 2,965 811
_______ _______
Total 8,502 5,552
Americas (3,417) (3,115)
_______ _______
50,671 53,343
======= =======
3. Exceptional items
As a result of the vesting of the Restricted Share Scheme in April 2004, the
Company is able to obtain deductions for corporation tax purposes in various tax
jurisdictions, resulting in a non-operating exceptional credit of £9.0m to the
corporation tax charge.
The exceptional items in the comparative period included in operating profit
comprise a release of the payroll tax provision on the Restricted Share Scheme
of £1.9m, and rentals and other unavoidable costs on onerous lease agreements on
vacant properties of £3.0m. The net effect of these two items of £1.1m was
included within administrative expenses. An exceptional tax credit on these
items of £0.3m resulted in a net post tax exceptional item of £0.8m.
4. Taxation
The taxation charge for the year is made up as follows:
2004 2003
Taxation relating to current year £'000 £'000
UK Corporation tax at 30% for year before exceptional tax credits 9,081 6,566
UK exceptional tax credit (7,935) (330)
_______ _______
UK Corporation tax at 30% for year after exceptional tax credits 1,146 6,236
Adjustment in respect of prior periods 90 (543)
Overseas corporation tax before exceptional tax credits 3,644 2,013
Overseas exceptional tax credits (1,065) -
_______ _______
Overseas corporation tax after exceptional tax credits 2,579 2,013
Total current tax charge 3,815 7,706
Deferred taxation
Origination and reversal of timing differences 1,118 958
_______ _______
Taxation on profit on ordinary activities 4,933 8,664
======= =======
5. Dividends
2004 2003
£'000 £'000
Interim dividend of 1.25p per ordinary share (2003: 1.1p) 4,360 3,937
Proposed final dividend of 2.75p per ordinary share (2003: 2.3p) 9,470 8,234
_______ _______
Total dividend of 4.0p per ordinary share (2003: 3.4p) 13,830 12,171
====== ======
The record date for the final dividend is 6 May 2005 and payment date is 3 June
2005.
6. Earnings per ordinary share
2004 2003
Earnings after exceptional items for basic earnings per share (£'000) 35,105 13,745
Post tax exceptional items (net) (£'000) (9,000) 771
_______ _______
Earnings before exceptional items for adjusted earnings per share 26,105 14,516
(£'000)
_______ _______
Weighted average number of shares used for basic and adjusted earnings
per share ('000)
351,555 357,955
Dilution effect of share plans ('000) 3,744 -
________ _______
Diluted weighted average number of shares used for diluted earnings per
share ('000)
355,299 357,955
________ _______
Basic earnings per share (pence) 10.0 3.8
Diluted earnings per share (pence) 9.9 3.8
Adjusted earnings per share (pence) 7.4 4.1
________ _________
7. Provisions for liabilities and charges
2004 2003
£'000 £'000
Payroll tax liability on the Restricted Share Scheme (a) - 4,114
Vacant property provision (b) 1,188 2,125
______ ______
1,188 6,239
====== ======
(a) Payroll tax provision on Restricted Share Scheme
The grant of Restricted Shares on flotation in 2001 gave rise to National
Insurance and social security liabilities. These liabilities crystallised in
April 2004 when the Restricted Shares vested.
(b) Vacant property provision
The property cost provision represents rentals and other unavoidable costs on
onerous lease agreements on vacant properties.
8. Consolidated Reconciliation of Movements in Shareholders' Funds for the
year ended 31 December 2004
2004 2003
£'000 £'000
Profit for the financial year 35,105 13,745
Dividends (13,830) (12,171)
_______ _______
Retained profit for the financial year 21,275 1,574
Foreign currency translation differences (188) 2,786
_______ _______
21,087 4,360
Purchase of own shares (24,120) -
Sale of shares held by the Employee Benefit Trust - 129
Credit in respect of share schemes 361 -
_______ _______
Net (reduction in)/addition to shareholders' funds (2,672) 4,489
_______ _______
Opening shareholders' funds 53,343 48,854
_______ _______
Closing shareholders' funds 50,671 53,343
======= =======
9. Reconciliation of operating profit to net cash inflow from operating
activities
2004 2003
£'000 £'000
Operating profit before exceptional items 40,037 22,884
Exceptional items (note 3) - (1,101)
_______ _______
Operating profit after exceptional items 40,037 21,783
Depreciation and amortisation charges 6,500 7,688
Loss on sale of fixed assets 53 241
Share scheme charges 361 -
Increase in debtors (17,739) (313)
Increase/(decrease) in creditors 11,529 (459)
(Decrease)/increase in provisions (note 7) (5,051) 239
_______ _______
Net cash inflow from operating activities 35,690 29,179
======= =======
10. Reconciliation of net cash flow to movement in net cash
2004 2003
£'000 £'000
(Decrease)/increase in net cash in the year (10,254) 757
Foreign exchange movements 35 305
_______ _______
Movements in net cash in year (10,219) 1,062
Opening net cash 22,434 21,372
_______ _______
Closing net cash 12,215 22,434
======= =======
11. Analysis of net cash
Foreign
At Cash exchange At
1 January 2004 flow movements 31 December 2004
£'000 £'000 £'000 £'000
Cash at bank and in hand 23,211 (10,720) 41 12,532
Bank overdrafts (777) 466 (6) (317)
_______ _______ _______ _______
Total net cash 22,434 (10,254) 35 12,215
======= ======= ======= =======
12. Nature of financial information
The financial information set out above does not constitute the Group's
audited statutory accounts within the meaning of Section 240 of the Companies
Act 1985. The financial information for the year ended 31 December 2003 has
been extracted from the statutory accounts for that year which have been
delivered to the Registrar of Companies. The report of the auditors on those
accounts was unqualified and did not contain a statement under section 237 (2)
or (3) of the Companies Act 1985. The Group accounts for the year ended 31
December 2004 will be finalised on the basis of the financial information
presented by the Directors in the preliminary announcement.
13. Issue of Annual Report and Accounts
The 2004 Annual Report and Accounts will be posted to shareholders by
12 April 2005. Copies may be obtained after this date from the Company
Secretary, 39-41 Parker Street, London WC2B 5LN. Telephone No. 020 7831 2000.
14. Annual General Meeting
The Annual General Meeting of Michael Page International plc will be
held at 39-41 Parker Street, London, WC2B 5LN on 27 May 2005 at 12.00 noon.
This information is provided by RNS
The company news service from the London Stock Exchange
Monday, 20th May 2024
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