FULL YEAR AND Q4 2011 TRADING UPDATE

RNS Number : 3404V

Michael Page International PLC

11 January 2012

 



11 January 2012

FULL YEAR AND Q4 2011 TRADING UPDATE

FULL YEAR HIGHLIGHTS

·        Full year 2011 gross profit of £553.7m, an increase of £111.5m or 25.2% (23.1%*) on 2010

·        Full year 2011 pre tax profit from trading activities is expected to be in the region of £85.0m (2010: £72.2m**)

·        Continued organic investment 17 new offices and 3 new country openings during 2011. Now have 160 offices in 32 countries

·        5.7m shares (1.8% of share capital) purchased and cancelled during the year, returning £30.3m to shareholders

·        Strong balance sheet with net cash at 31 December 2011 in the region of £60m (31 December 2010: £80.5m)

Q4 HIGHLIGHTS

·        Q4 gross profit of £135.9m up 13.4% (13.3%*) on Q4 2010

·        EMEA (45% of Group) Q4 gross profit of £60.9m up 15.3% (15.1%*) on Q4 2010

·        UK (23% of Group) Q4 gross profit of £30.9m up 0.6% on Q4 2010

·        Asia Pacific (19% of Group) Q4 gross profit of £25.6m up 23.3% (19.4%*) on Q4 2010

·        Americas (13% of Group) Q4 gross profit of £18.5m up 18.6% (23.6%*) on Q4 2010

·        Permanent (78% of Group) Q4 gross profit of £106.4m up 14.3% (14.4%*) on Q4 2010

·        Temporary (22% of Group) Q4 gross profit of £29.5m up 10.0% (9.2%*) on Q4 2010

·        Headcount reduced in Q4 by 64 to 5,286 at 31 December 2011 (+17.5% on 31 December 2010)

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

** Before non-recurring items in 2010 (VAT refund of £17.1m and related interest of £11.3m)

Commenting, Steve Ingham, Chief Executive said:

"In 2011, we grew our full year gross profits by 25% to a record £553.7m. We expect our pre tax profit from trading activities to be in the region of £85m, approximately 18% up on 2010. We continue to benefit from our geographic and discipline diversification, achieving growth during the year in all reported disciplines and geographic regions. Our financial position is strong, with approximately £60m of cash at the end of the year.

"The uncertainty caused by the concerns surrounding the Eurozone and the lowering of worldwide GDP forecasts during the fourth quarter impacted significantly on our clients' recruitment plans, with many hiring decisions being deferred or cancelled. As a consequence, year-on-year growth in the fourth quarter gross profit slowed to 13%.

"As in previous economic slowdowns, we will react according to the prevailing economic climate in each market in which we operate and manage each business appropriately, adjusting headcount to reflect market conditions, while continuing to invest where we have opportunities for long-term growth. Group headcount increased by over 850 people in the first three quarters of 2011, as we invested in growth opportunities through geographic and discipline expansion. Reflecting the more uncertain outlook, in the fourth quarter, our headcount reduced by 64 people, as a result of not replacing those who left through natural attrition.

"While mindful and cautious of the current macro economic outlook, we are in a position to continue our geographic expansion, as there remain many long-term growth opportunities in our newer territories, particularly Latin America and Asia. During the course of 2012, we currently expect new country openings in Columbia, Morocco and Taiwan, as well as several new office openings in existing countries."

Enquiries:

Michael Page International plc	01932 264144
Steve Ingham, Chief Executive
Stephen Puckett, Group Finance Director
FTI Consulting	020 7269 7291
Richard Mountain / Sue I Ong

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

http://event.on24.com/r.htm?e=390016&s=1&k=BA9A9A1B9FA751171C3164779E99BD11

Dial-In:       [phone]

PIN Code:   305641 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

The Group will issue its preliminary results for 2011 on 6 March 2012.

Group trading and profit update

Michael Page International plc (MPI), the specialist recruitment consultancy, reports fourth quarter Group gross profit of £135.9m, a year-on-year increase of 13.4% (13.3%*) over the £119.9m in the fourth quarter of 2010. Full year gross profit was £553.7m, which was 25.2% (23.1%*) higher than in 2010.

Group gross profit from permanent recruitment in the fourth quarter was £106.4m, an increase of 14.3% (14.4%*) over the £93.1m in the fourth quarter of 2010. Group gross profit from temporary recruitment in the fourth quarter was £29.5m, an increase of 10.0% (9.2%*) over the £26.8m in the fourth quarter of 2010. The perm/temp ratio in the fourth quarter was 78:22 (Q4 2010 78:22).

Group headcount reduced by 64 or 1.2% during the quarter to 5,286 at the end of December, which is 17.5% higher than the 4,498 at the end of December 2010.

In the first half of 2011, the Group was growing strongly with gross profits increasing year-on-year by 29.5%*. With a favourable economic outlook, particularly in Asia and Latin America, we continued our strategy of organic development, investing significantly adding 623 to our headcount in the first half and opening a number of new offices and countries. In the second half of the year market conditions weakened, becoming more uncertain and volatile, particularly in the Eurozone. In such an environment, general business confidence levels dropped, causing many clients to defer or reduce their hiring intentions and candidates to become more cautious about changing jobs. As a consequence, our year-on-year growth rates slowed to 21.8%* in the third quarter and 13.3%* in the fourth quarter. Reflecting the rapidly changing economic environments, our own headcount, which grew by a further 229 in the third quarter, reduced by 64 during the fourth quarter. As a result of the investment in headcount, 17 new offices and 3 new country openings during the year, together with year-on-year gross profit growth rates slowing in the second half, Group pre tax profit from trading activities for the year is expected to be in the region of £85.0m (2010: £72.2m**).

** Before non-recurring items in 2010 (VAT refund of £17.1m and related interest of £11.3m)

Discipline analysis

		Gross Profit		Growth rates
	% of Group Q4	Q4 2011	Q4 2010	Reported	Constant
Finance & Accounting	44%	£60.1m	£55.7m	+8.0%	+7.9%
Legal, Technology, HR, Secretarial, Healthcare	20%	£26.4m	£22.6m	+16.8%	+16.5%
Engineering, Property & Construction, Procurement & Supply Chain	19%	£26.4m	£19.4m	+35.6%	+35.3%
Marketing, Sales & Retail	17%	£23.0m	£22.2m	+4.0%	+4.0%
Group Total	100%	£135.9m	£119.9m	+13.4%	+13.3%

All disciplines achieved year-on-year growth in the quarter. Finance and Accounting, which includes financial services, saw growth of 8.0%, despite the continuing challenges faced by the banking sector. The strongest growth rates were in Engineering, Property & Construction, and Procurement & Supply Chain, reflecting that these disciplines are newer to Michael Page and are being rolled out across the country and office networks as well as benefitting from the strength of growth in Asia and Latin America.

Geographical analysis

EMEA (45% of Group in Q4 2011)			Growth rates
	Gross Profit	Gross Profit	Reported	Constant currency
Q4 2011 vs. Q4 2010	£60.9m	£52.8m	+15.3%	+15.1%
2011 vs. 2010	£239.5m	£188.7m	+26.9%	+24.2%
Headcount increased by 20 (+0.9%) in Q4 to 2,210 at 31 December 2011 (+20.7% on 31 December 2010: 1,831) ·    France (17% of the Group) was higher by 12% against Q4 2010 ·    Germany (7% of the Group) was higher by 41% against Q4 2010 ·    Netherlands (4% of the Group) was higher by 15% against Q4 2010 ·    Italy (4% of the Group) was higher by 7% against Q4 2010 ·    Spain (3% of the Group) was higher by 6% against Q4 2010 ·    Austria, Belgium, Ireland, Luxembourg, Poland, Portugal, Qatar, Russia, South Africa, Sweden, Switzerland, Turkey, U.A.E. (10% of the Group) was higher by 13% against Q4 2010

In our largest region, Europe, Middle East and Africa (EMEA), representing 45% of Group gross profit, fourth quarter gross profit was £60.9m, an increase of 15.3% (15.1%*) over the £52.8m recorded in the fourth quarter of 2010. During the quarter we opened new offices in Cologne, a second in Barcelona and our eighth in Paris.

Despite the outlook for the Eurozone becoming increasingly concerning as the fourth quarter evolved, our activity levels remained strong. However, the progress of this activity through to offers, acceptances and fees slowed as clients and candidates became more cautious. As a consequence, the year-on-year growth rates slowed from those in the third quarter, particularly in Southern Europe. The significant exception was Germany (7% of the Group), which continued to record year-on-year growth in excess of 40%. Headcount in the EMEA region increased by 20 in the quarter, with investment continuing in the stronger growth areas and new start-ups, moderated by reductions through natural attrition in countries where year-on-year growth rates have slowed.

UK (23% of Group in Q4 2011)	Gross Profit	Gross Profit	Growth rates
Q4 2011 vs. Q4 2010	£30.9m	£30.7m	+0.6%
2011 vs. 2010	£130.0m	£124.9m	+4.1%
Headcount reduced in Q4 by 122 (-8.6%) to 1,292 at 31 December 2011 (-2.4% on 31 December 2010: 1,324)

In the UK, representing 23% of Group gross profit, fourth quarter gross profit was £30.9m, 0.6% higher than the £30.7m recorded in the fourth quarter of 2010. 

While market conditions remained tough in the UK, we believe we continued to gain market share in the fourth quarter and with the exception of the financial services and the public sectors, in the broader private sector we achieved modest growth. Reflecting the challenging market conditions and an uncertain outlook for the UK economy in 2012, there was a reduction in headcount, through natural attrition, during the fourth quarter, by 122 to 1,292, 2.4% lower than at the end of 2010.

Asia Pacific (19% of Group in Q4 2011)	Gross Profit	Gross Profit	Growth rates
			Reported	Constant currency
Q4 2011 vs. Q4 2010	£25.6m	£20.8m	+23.3%	+19.4%
2011 vs. 2010	£103.4m	£72.2m	+43.1%	+36.7%
Headcount increased by 15 (+1.6%) in Q4 to 971 at 31 December 2011 (+40.5% on 31 December 2010: 691) At constant rates of exchange: ·    Asia (10% of Group) was higher by 28% against Q4 2010 ·    Australia and New Zealand (9% of the Group) was higher by 10% against Q4 2010

In Asia Pacific, representing 19% of Group gross profit, fourth quarter gross profit was £25.6m, an increase of 23.3% (19.4%*) over the £20.8m recorded in the fourth quarter of 2010. Headcount across the region increased by 15 during the quarter, with continued headcount investment in China and India, offset by modest reductions in Australia and New Zealand.  

In Asia, representing 10% of Group gross profit, while market conditions continued to be strong and activity levels remain high, year-on-year growth rates slowed towards the end of the quarter, as international clients in particular became more cautious, deferring or reducing their recruitment needs. The Asia businesses grew in the fourth quarter by 28%* and we will continue to invest in the long-term opportunities in the region.

In Australia and New Zealand, which represents 9% of the Group, fourth quarter gross profit grew by 10%*, with Western Australia and Queensland continuing to deliver stronger growth, driven by the buoyant natural resources industry, than New South Wales and Victoria.

Americas (13% of Group in Q4 2011)	Gross Profit	Gross Profit	Growth rates
			Reported	Constant currency
Q4 2011 vs. Q4 2010	£18.5m	£15.6m	+18.6%	+23.6%
2011 vs. 2010	£80.8m	£56.4m	+43.2%	+43.9%
Headcount increased by 23 (+2.9%) in Q4 to 813 at 31 December 2011 (+24.7% on 31 December 2010: 652) At constant rates of exchange: ·    Brazil, Mexico, Argentina & Chile (9% of the Group) was higher by 32%, against Q4 2010 ·    USA & Canada (4% of the Group) was higher by 6%, against Q4 2010

In the Americas, representing 13% of Group gross profit, fourth quarter gross profit was £18.5m, an increase of 18.6% (23.6%*) over the £15.6m recorded in the fourth quarter of 2010. Headcount in the region increased by 23 (+2.9%), as we continued to invest in long-term growth opportunities, particularly in Latin America.

In Latin America, which is now 9% of Group gross profit, while market conditions remained strong, there was a slowing as the quarter ended, particularly in Brazil, where larger clients became more cautious with hiring decisions. In Argentina and Chile, we continued to establish ourselves and achieved strong rates of growth.

In North America, the year-on-year growth rate slowed to 6% as market conditions remained tough, particularly in financial services which is a significant part of our North American business. Our new offices in Houston and San Francisco are progressing well.

Share repurchases

No share repurchases were made during the fourth quarter. During the year, the Group purchased and cancelled 5.7m shares (1.8% of share capital) at a cost of £30.3m.

Financial Position and VAT reclaim

Save for the effects of trading in the third and fourth quarters and the payment in October of the £9.8m interim dividend for 2011, there have been no other significant changes in the financial position of the Group since the publication of the half year results for the six months ended 30 June 2011.

Net cash at 31 December 2011 is in the region of £60m (31 December 2010: £80.5m).

During the fourth quarter we have had a number of meetings, correspondence and discussions with HMRC concerning the amended claims for a further refund of VAT and related interest, but the eventual outcome remains uncertain.

At 31 December 2011, there were approximately 316.7m shares in issue, of which 13.4m are held by the Employee Benefit Trust upon which dividends and voting rights are waived. Accordingly, 303.3m shares receive dividends and hold voting rights.

The Group will issue its preliminary results for 2011 on 6 March 2012.  

Cautionary statement

This Full Year and Q4 2011 Trading Update ("TU") 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 TU should not be relied on by any other party or for any other purpose. This TU 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 TU 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.

 

END

 

 

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