Full Year Results

RNS Number : 4041C

Michael Page International PLC

07 March 2011

 



7 March 2011

 

MICHAEL PAGE INTERNATIONAL PLC

Full Year Results for the Year Ended 31 December 2010

Michael Page International plc ("Michael Page"), the specialist professional recruitment company, announces its full year results for the year ended 31 December 2010.

Financial summary	2010	2009	Change	Change CER*
Revenue	£832.3m	£716.7m	+16.1%	+14.8%
Gross profit	£442.2m	£351.7m	+25.7%	+23.8%
Operating profit before NRI †	£71.5m	£20.2m	+254.0%	+239.0%
Profit before tax before NRI	£72.2m	£21.1m	+242.7%
Basic earnings per share before NRI	15.1p	3.9p	+287.2%
Diluted earnings per share before NRI	14.7p	3.8p	+286.8%
Operating profit	£88.7m	£20.2m	+338.8%
Profit before tax	£100.7m	£21.1m	+377.8%
Basic earnings per share	21.6p	3.9p	+453.8%
Diluted earnings per share	21.1p	3.8p	+455.3%
Dividend per share	9.0p	8.0p	+12.5%

*Constant Exchange Rates     † Non-recurring Items (see note 4)

2010 operating and financial highlights

·      Strong results benefiting from geographic and discipline diversification

·      Improved productivity and utilisation of spare capacity driving profit growth

·      All regions growing sequentially in 2010

·      72% of gross profits generated from outside the UK

·      53% of gross profit generated from non Finance and Accounting disciplines

·      Gross profit from permanent placements growing at 38% (35%*)

·      Share repurchases of £76.8m during 2010

·      Strong balance sheet with net cash of £80.5m (2009: £137.2m)

·      Total dividend increased to 9.0p

Commenting, Steve Ingham, Chief Executive of Michael Page, said:

"The Group was well positioned to benefit from the economic recovery during 2010 and our profitability has improved significantly. We have maintained a strong balance sheet and, while increasing the returns to shareholders, we have also continued to take a long-term approach by making significant investments in the future of the business, opening in Chile, India, Malaysia and Qatar. 

"Since the start of 2011 we have seen strong growth in our EMEA region, Australia and North America and steady growth in our UK business where market conditions remain tough but stable. We continue to achieve our highest rates of growth in our Asian and Latin American regions where we have market leading positions.

"We are well positioned to continue our growth in 2011 and to pursue opportunities to invest in the development of our business over the long-term".

Analyst meeting

The company will be presenting to a meeting of analysts at 10.00am today.  The presentation and a recording of the meeting 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
Stephen Puckett, Group Finance Director
Financial Dynamics	020 7269 7291
Richard Mountain / Nick Hasell / Sophie Moate

MANAGEMENT REPORT

To the members of Michael Page International plc

Cautionary Statement

The Management Report 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 Management Report 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.

GROUP STRATEGY

The Group's strategy is to expand and diversify the business by industry sectors, professional disciplines, geography and level of focus, be it Page Personnel, Michael Page or Michael Page Executive Search, with the objective of being 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. Whilst 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, while keeping close control over our cost base.

Our team-based structure and profit share business model is scalable. The small team size also means that we can increase our headcount rapidly to achieve growth. When market conditions tighten, these teams then reduce in size largely through natural attrition. Consequently, our cost base will be reduced in a slowdown, but having invested years in training and developing our highly capable management resources, our objective is to retain this expertise within the Group. By following this course of action, we typically gain market share during downturns and position our businesses for leading rates of growth when economic conditions improve.

Pursuing this approach does mean that in an economic downturn our profitability declines as, in addition to the lower productivity levels that come with a slowdown, we also carry spare capacity. However, when market conditions improve, the Group's profitability recovers quickly as spare capacity is utilised. Adopting this strategy in times of economic slowdown also drives our financing strategy and balance sheet position. In slowdowns, the business continues to produce strong cash flows, as working capital requirements reduce. With uncertainty around the length and depth of economic slowdowns, a strong balance sheet is essential to support the businesses through tougher periods and, when conditions improve and the businesses start growing, to fund increased working capital requirements.

REVIEW OF 2010

The economic recovery from the global financial crisis, which started in the second half of 2009, continued throughout 2010. The pace of recovery has been strongest in some of the lesser-developed recruitment markets where over the past decade we have established, organically, a market leading position. During the course of 2010, we continued our investment in developing and diversifying our business, with a new country opening in Chile and the launch of Page Personnel in Hong Kong, Mexico, Russia, Singapore and the USA. The roll-out of disciplines under the Michael Page and Page Personnel brands continued and we opened a number of new offices. At the start of 2011, we also launched new businesses in Qatar, India and Malaysia.

Revenue

Reported revenue for the year was 16.1% (14.8%*) higher at £832.3m (2009: £716.7m). Revenue from permanent placements in 2010 grew by 36.8% (34.3%*) to £356.0m (2009: £260.2m), representing 42.8% (2009: 36.3%) of Group revenue. Revenue from temporary placements for the year grew by 4.3% to £476.3m (2009: £456.6m), having recovered later than permanent, declining in Q1, stabilising in Q2 and growing in Q3 and Q4. It is typical during a period of economic recovery that permanent placements grow at a faster rate than temporary placements. This trend has been accentuated due to our faster growing regions of Asia and Latin America being in predominantly permanent rather than temporary placement markets.

Gross profit

Gross profit for the year grew by 25.7% (23.8%*) to £442.2m (2009: £351.7m). The Group's gross margin increased to 53.1% (2009: 49.1%), largely as a result of the shift in the mix of business due to the stronger rate of growth of permanent compared to temporary placements. Gross profits from permanent placements grew by 37.9% (35.2%*) to £343.8m (2009: £249.4m), representing 77.7% (2009: 70.9%) of Group gross profit. The gross margin from permanent placements increased to 96.6% (2009: 95.9%), reflecting higher growth in higher margin online advertised positions compared to offline. Gross profit from temporary placements reduced by 3.8% to £98.4m (2009: £102.3m), representing 22.3% (2009: 29.1%) of Group gross profit. The gross margin achieved on temporary placements was 20.7% (2009: 22.4%), reflecting pricing pressure experienced during the downturn. However, as the recovery strengthened, the gross margin on temporary

placements levelled off during 2010.

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 highly 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 new countries. Furthermore, in periods when headcount increases significantly, it takes time to train staff before they become fully productive. These characteristics of our growth strategy and the levels of investment impact on the conversion rates (being operating profit as a percentage of gross profit) in any one reporting period.

Generally, in years when economic conditions are benign, revenue and gross profits grow, with operating profits growing at a faster rate due to a combination of higher productivity, stronger pricing and greater utilisation of infrastructure. In order to continue 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.

In a recovery, activity levels improve, as fewer jobs are cancelled, companies withdraw hiring freezes and candidates become more confident about moving jobs. The business will react to this activity by increasing headcount. The costs associated with increasing and decreasing the headcount capacity in the business are considered to be part of normal trading expenses and are therefore not separately disclosed as restructuring charges.

The majority of our permanent placement activity is undertaken on a contingent basis, which means 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 shorten in a recovery, increasing productivity, and the risk of the candidate being rejected or the assignment being cancelled decreases, thereby further increasing our earnings visibility.

In 2010, as market conditions in each of the geographic regions in which we operate first stabilised and then started to improve, the increased activity levels were first serviced by utilising the spare capacity created by maintaining our market presence during the downturn. 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. All of these factors trended positively in 2010, creating an environment for increased productivity and the generation of more gross profit per fee earner. As the spare capacity, which is not easily moved between disciplines or locations, is used up, additional headcount is added and new investments made for future growth. In the first half of 2010, an additional 311 staff were added and, as the recovery strengthened, so did our pace of investment, with a further 638 added in the second half. Headcount at 31 December 2010 was 4,498, an increase of 949 (26.7%) during the year.

The Group's strategy of growing organically using home-grown talent, maintaining market presence and maintaining spare capacity, means that the Group is highly operationally geared to an increase in gross profit as economies recover, tempered only by the rate of investment for future growth. This is reflected in the 254% increase in operating profit, before non-recurring items, from £20.2m in 2009 to £71.5m in 2010 and the Group's conversion rate of operating profit from gross profit increasing to 16.2% (2009: 5.7%). The levels and the increases in the conversion rates of our regions reflects their different timings and degrees of stabilisation and growth.

Administrative expenses in the year increased by 11.8% to £370.7m (2009: £331.5m), largely as a result of the increase in headcount, higher profit-related bonus payments and investments in new office and country start-ups. Administrative expenses included £12.4m of share-based payment charges (2009: £10.6m) in respect of the Group's deferred annual bonus scheme, long-term incentive plans and executive share option schemes. The increase in these share-based payment charges was due to a combination of new awards and higher employers' social charges, as a consequence of the increase in the share price from 378.9p at the end of 2009, to 555p at the end of 2010.

REGIONAL REVIEW OF 2010

Continental Europe, Middle East and Africa (EMEA)

EMEA, the Group's largest region, contributing 43% of the Group's gross profit for the year, grew revenue by 6.8% (10.1%*) to £332.2m (2009: £311.1m) and gross profit by 15.3% to £188.7m (2009: £163.7m).

In all countries in the region, market conditions gradually improved as the year progressed. While headcount was reduced across the region in 2009, we ensured we maintained the platform of businesses, holding spare capacity in the larger more established countries and, as activity levels increased during 2010, some of this spare capacity was utilised. In the newer and smaller countries, we have continued to invest for growth. Headcount in the region was 1,572 at the start of the year and increased to 1,831 by the end of December, with the majority of the hiring taking place in the second half of the year. Headcount levels are still well below the 2,155 at the start of 2009 and, with the benefit of a lower cost base and the increased level of gross profit, the region recorded a strong recovery in operating profits to £22.3m (2009: £1.0m), a conversion rate of 11.8% (2009: 0.6%).

While the general pattern of stabilisation followed by growth is apparent in virtually all countries across the region, the extent and timing of that pattern varied. The Netherlands was our most challenging market, with year-on-year gross profit comparisons only beginning to stabilise in the fourth quarter. In all other countries in the region, we achieved strong gross profit growth: in France (38% of EMEA up 21%*); Germany (13% of EMEA up 17%*); Spain (8% of EMEA up 20%*); and Italy (9% of EMEA up 29%*). The other 13 countries, representing 32% the EMEA region, achieved gross profit growth of 13%*, with particularly strong performances in Switzerland and the UAE. During the year we opened offices in Bilbao, Padova, and at the beginning of 2011, we opened our third office in the Middle East in Doha, Qatar.

United Kingdom

The UK contributed 28% (2009: 32%) of the Group's gross profits in 2010. Revenue grew by 10.2% to £302.6m (2009: £274.6m) and gross profit grew by 12.7% to £124.9m (2009: £110.8m). The gross margin in the UK has remained flat at 41%, with the positive mix effect of a greater proportion of faster-growing permanent gross profit, being negated by slower-growing temporary gross profit, at lower margins due to pricing pressure.

The UK business, which stabilised in the fourth quarter of 2009, achieved year-on-year growth in every quarter of 2010. While confidence levels have improved, market conditions remain tough, with clients and candidates remaining cautious over the impact of the government's austerity measures. The UK business is well diversified in terms of geography, disciplines and the mix of permanent and temporary revenues and has limited exposure to the public sector and construction industry.

Headcount was 1,179 at the start of the year and increased to 1,324 by the end of December, with the majority of the investment in new headcount being added in the second half of 2010, with the objective of continuing the growth and gaining market share in 2011. Benefiting from the reductions in the cost base achieved during 2009 and the increase in productivity, operating profits for the year increased to £19.6m (2009: £11.3m), representing a conversion rate of 15.7% (2009: 10.2%).

Asia Pacific

The Asia Pacific region contributed 16% of the Group's gross profit in 2010. Revenue was 51.5% (33.9%*) higher at £120.3m (2009: £79.4m) and gross profit was 71.1% (53.9%*) higher at £72.2m (2009: £42.2m). Operating profit increased to £22.3m (2009: £8.1m), representing a conversion rate of 30.9% (2009: 19.2%). The gross margin in the region increased from 53% to 60%, reflecting both the faster growth in permanent gross profits and strong growth in Asia, where we have predominantly permanent placement businesses. Headcount across the Asia Pacific region increased from 403 at the start of the year, to 691 at the end of the year, an increase of 71%, reflecting both the increased activity levels and our intention for building a substantial business in Asia.

In Australia and New Zealand, gross profits grew 34%*, with strong growth throughout the year. In Asia, confidence levels recovered quickly from the global financial crisis and we grew our gross profit by 79%*. We more than doubled our headcount in Asia during the year, opened our seventh office in China, in Guangzhou and our second office in Singapore, in Jurong. At the start of 2011 we opened offices in Kuala Lumpur, Malaysia and two offices in India, in Gurgaon, New Delhi and Mumbai.

The Americas

Revenue for the region grew by 49.5% (38.9%*) to £77.2m (2009: £51.6m) and gross profit grew by 61.4% (48.1%*) to £56.4m (2009: £35.0m). With strong growth in revenue and gross profit, the region produced operating profit of £7.3m (2009: loss £0.2m), representing a conversion rate of 13%. Headcount in the region increased from 395 at the start, to 652 at the end of the year, with a greater proportion being added in the second half.

Approximately two thirds of the Americas region is in Latin America, of which our largest business is in Brazil. During the course of 2010, we invested to continue our growth and maintain our market-leading position. In Brazil, we opened offices in Alphaville (São Paulo), Barra da Tijuca (Rio de Janeiro), São José dos Campos and Recife. Our businesses in Mexico and Argentina continue to develop well and in the second half of 2010 we opened an office in our fourth Latin American country, in Santiago, Chile. In North America, market conditions have been slower to recover from the downturn, but we are now benefiting from maintaining our platform, recording 42% year-on-year growth in gross profit in the fourth quarter of 2010.

Discipline development

Our strategy of diversifying the Group by professional disciplines has continued, by investing in the roll-out of existing and new disciplines throughout our country and office network. The heritage of the business is in placing people in Finance and Accounting roles, the large majority of which are professionally qualified accountants into industry and commerce. While this remains our largest area of business, it was less than half, at 47%, of the Group's 2010 gross profit. Revenue from Finance and Accounting placements grew by 10.2% (8.9%*) to £450.6m (2009: £409.0m) and gross profit grew by 19.0% (16.7%*) to £209.2m (2009: £175.7m).

Placements of Marketing, Sales and Retail professionals generated around 19% of the Group's gross profit. Revenue from these disciplines grew by 21.6% (19.7%*) to £111.7m (2009: £91.8m) and gross profit grew by 34.9% (32.8%*) to £82.8m (2009: £61.4m).

Legal, Technology, Human Resources, Secretarial and Other disciplines generated around 18% of Group gross profit. Revenue from these disciplines grew by 25.4% (23.9%*) to £157.0m (2009: £125.2m) and gross profit grew by 33.3% (31.5%*) to £81.6m (2009: £61.2m).

Engineering, Property & Construction and Procurement & Supply Chain accounted for around 16% of Group gross profit. Revenue from these disciplines grew by 24.6% (24.1%*) to £113.1m (2009: £90.8m) and gross profit grew by 28.6% (27.7%*) to £68.6m (2009: £53.3m).

Non-recurring items (NRI) - VAT

In 2003, the Group submitted an initial claim to Her Majesty's Revenue and Customs (HMRC) for overpaid VAT which was rejected. The Group appealed and subsequently filed amended claims for £26.5m, net of fees, covering the period from 1980 to 2004. In March 2009, the Group filed amended claims for a further refund of an additional £80m, net of fees, of overpaid VAT covering the same period.

In June 2009, the Group received a payment from HMRC of £26.5m, net of fees, as part settlement of these claims and in July 2009 received £10.5m, net of fees, of statutory interest. As a result, the principal and interest amounts were recognised in the half year to June 2009 results, with the interest receivable being recorded within working capital in the cash flow statement.

On 25 September 2009, the Group received a letter from HMRC which stated that, 'HMRC have reviewed the recent payment and are now of the view that the claim in whole or in part should not have been paid'.

A number of discussions and meetings with HMRC followed and on 5 March 2010, the Group announced that an agreement had been reached in principle, subject to legal contract, for the Group to retain £28.4m (net of fees). However, given the background to the initial receipt, the subsequent review and reversal of HMRC's position, together with the remaining uncertainty pending formal contractual agreement, the Group reversed out the amounts originally recognised in the 2009 half year results and as such did not recognise any amount in the Income Statement in the 2009 full year.

On 30 April 2010, a formal agreement was signed with HMRC. As a result, of the £50m originally received from HMRC, the Group retained £38.1m and returned £11.9m in May 2010. Accordingly, after fees, the Group has recognised £28.4m as non-recurring income in its 2010 Income Statement, of which £17.1m is in respect of refunded VAT and is included in operating profit and £11.3m is in respect of interest and is included in financial income.

In respect of the amended claims for a further refund of an additional £80m, net of fees, of overpaid VAT, the Group is continuing to pursue the claim. 

Financial Income

The Group had financial income for the year of £1.1m (2009: £2.0m). As trading conditions and the economic outlook improved during 2010, we were able to return surplus cash to shareholders by way of share repurchases. As a result, the Group held less net cash and in consequence, received less financial income. Thus, the lower level of financial income compared to 2009 reflected the strengthening of the Group's trading conditions. In addition, the Group received financial income from non-recurring activities of £11.3m that related to the VAT refund.

Taxation

Tax on profits was £33.2m (2009: £8.6m), representing an effective tax rate of 33.0% (2009: 41.0%). The rate is higher than the effective UK Corporation Tax rate for the year of 28%, due to disallowable items of expenditure and profits being generated in countries where the corporate tax rates are higher than in the UK. The effective rate was lower than in 2009, due to a large VAT reclaim taxed at 28% in the UK and higher overall profits diluting the effect of the share plan non-deductible charges, partially offset by an increase in European profits at generally higher rates than the Group average.

Share repurchases and share options

It is the Group's intention to continue to use share repurchases to return surplus cash to shareholders and to satisfy awards under the Group's incentive share plan, deferred annual bonus plan and share option scheme. During the year, 18.7m shares were repurchased at a cost of £76.8m. 3.7m of these shares were cancelled, with the remaining shares purchased by the Company's employee benefit trust to satisfy future

share plan awards.

At the beginning of 2010, the Group had 16.6m share options outstanding, of which 4.2m had vested. In March 2011, 11.5m share options were granted under the Group's Executive Share Option Scheme. This award was larger than previous grants of share options, as no awards were made under the Incentive Share Plan. During the course of the year, options were exercised over 1.9m shares, generating £4.0m in cash and 3.1m share options lapsed. At the end of 2010, 23.1m share options remained outstanding, of which 2.1m had vested but had not been exercised. It is anticipated that 3.1m of these unvested options will lapse in March 2011.

Earnings per share and dividends

In 2010, basic earnings per share were 21.6p (2009: 3.9p) and diluted earnings per share were 21.1p (2009: 3.8p). The weighted average number of shares for the year was 311.8m (2009: 321.6m).

A final dividend of 6.12p, up 19.5%, (2009: 5.12p) per ordinary share is proposed which, together with the interim dividend of 2.88p (2009: 2.88p) per ordinary share, makes a 12.5% increase in the total dividend for the year to 9.0p per ordinary share. The proposed final dividend, which amounts to £18.8m, will be paid on 6 June 2011 to those shareholders on the register as at 6 May 2011.

BALANCE SHEET

The Group had net assets of £177.4m at 31 December 2010 (2009: £197.0m). The decrease in net assets comprises profit for the year of £67.5m, currency movements of £0.3m, credits relating to share schemes of £10.3m and cash received from the exercise of share options of £4.0m, offset by share repurchases for cancellation of £15.1m, shares bought and held in the employee benefit trust of £61.8m and dividends

paid of £24.9m.

Our capital expenditure is driven primarily by two main factors being headcount, in terms of office accommodation and infrastructure, and the development and maintenance of our IT systems. The project to replace our current IT recruitment system with the next generation continues to progress and we anticipate that the first full implementations will take place later this year, with the roll-out continuing throughout 2012 in order to mitigate the implementation risks. Capital expenditure, net of disposal proceeds, increased to £14.8m (2009: £11.3m), reflecting the investment in new systems and expenditure, where there is no longer spare capacity, due to headcount increasing in the year.

The most significant item in the balance sheet is trade receivables, which were £134.7m at 31 December 2010 (2009: £100.2m). The increase in trade receivables reflects both the increased activity and a small increase in debtor days to 47 (2009: 45 days). The movement in debtor days is due largely to the increased proportion of revenue being derived from permanent placements where our debtor days are higher than from temporary revenues.

CASH FLOW

The Group started the year with net cash of £137.2m. In 2010, we generated £69.1m from operations after NRI, after an increase in working capital of £10.7m, reflecting increased activity and cash outflows relating to the VAT claim of £12.6m. Tax paid was £12.4m and net capital expenditure was £14.8m, with net interest received of £0.7m. During the year, £61.8m was spent repurchasing shares into the employee benefit trust to satisfy employee share schemes, £15.1m was spent on the repurchase and cancellation of shares, £4.0m was received from the exercise of share options and dividends of £24.9m were paid. The Group had net cash of £80.5m at 31 December 2010.

NET CASH AND GROUP BORROWING FACILITIES

At 31 December 2010, the Group had net cash of £80.5m (2009: £137.2m). The net cash position comprised gross cash deposits of £80.5m with 19 separate banks.

The Group has a three year £50m multi-currency committed borrowing facility, which is currently undrawn, that expires in July 2012.

KEY PERFORMANCE INDICATORS ("KPIs")

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	2010	2009	Definition, method of calculation and analysis
Gross margin	53.1%	49.1%	Gross profit as a percentage of revenue. Gross margin increased from last year largely as a result of the higher gross margin permanent placements growing at a faster rate than temporary placements. Source: Consolidated income statement in the financial statements.
Conversion	16.2%	5.7%	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 the future. Conversion increased compared to last year, reflecting the improvement in economic conditions on demand for the Group's services, higher productivity and lower levels of spare capacity in the business. Source: Consolidated income statement in the financial statements.
Productivity (gross profit per fee earner)	£155.3k	£124.0k	Represents how productive fee earners are in the business and is calculated by dividing the gross profit for the year by the average number of fee earners and directors. The higher the number, the higher their productivity. Productivity is a function of the rate of investment in new fee earners, the impact of pricing and the general conditions of the recruitment market. The increase in productivity this year is as a result of the general improvement in market conditions, but would be higher without the investment in an additional 949 headcount.
Fee earner : support staff ratio	73:27	71:29	Represents the balance between operational and non-operational staff. The ratio of fee earners to support staff at the end of 2010 has increased from the level at the end of 2009. This ratio improves when the Group grows and headcount increases, but tends to decline when Group headcount reduces as the infrastructure staff to support a higher number of teams, offices and countries cannot be flexed as quickly as fee generating staff. Source: Internal data.
Debtor days	47	45	Represents the length of time taken for the Group to receive payments from its debtors. Calculated by comparing how many days' billings it takes to cover the debtor balance. The increase compared to last year relates to the shift towards permanent recruitment activity from temporary in a recovery. Permanent recruitment activity tends to have higher debtor days. Source: Internal data.

The movements in KPIs are in line with the expectations as set out in the discussion in the Management Report.

GOING CONCERN

The Board has undertaken a recent and thorough review of the Group's budget, forecasts and associated risks and sensitivities and has concluded, given the level of cash in the business, the level of borrowing facilities available, 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 twelve months from the date of approval of these accounts. As a result, the going concern basis continues to be appropriate in preparing the financial statements.

FOREIGN EXCHANGE

The Group now operates in 32 countries around the world and carries out transactions that are recorded in twenty-two local currencies. The Group reports its Income Statement and Cash Flow Statement results in Pounds Sterling, using the average exchange rate for each month to translate the local currency amounts into Sterling. The Balance Sheet is translated using the exchange rates at the Balance Sheet date.

As a service company, most of the Group's transactions are within the territory in which the local business operates and consequently there are few cross-border transactions between Group companies. However, royalties are charged for the use of the Group's trademarks and management fees are charged for Group and regional functions that provide services to other Group subsidiary companies. Foreign exchange gains and losses are recognised in accordance with IFRS on the settlement of these transactions where the cash received, when converted into Sterling, differs from the amounts previously recorded in the Income Statement. These exchange gains and losses are included within operating profit.

The table below shows the relative movements of the Group's main trading currencies against Pounds Sterling during 2010, when compared to those prevalent during 2009. Negative percentages indicate that Sterling has weakened against the foreign currency during the period. With the exception of the Euro, Sterling has weakened against these main trading currencies.

Currency	Movement in the average exchange rate used for Income Statement translation between 2009 and 2010	Movement in the year end exchange rate used for Balance Sheet translation between 2009 and 2010
Euro	4%	4%
Swiss Franc	-5%	-13%
Brazilian Real	-13%	-8%
US Dollar	-1%	-3%
Australian Dollar	-15%	-15%
Hong Kong Dollar	-1%	-3%
Singapore Dollar	-7%	-12%
Japanese Yen	-7%	-16%

TREASURY MANAGEMENT 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 these requirements being used to buy back the Group's shares. In a period of economic uncertainty, a more cautious funding position is 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 Euro zone subsidiaries and the UK-based Group Treasury subsidiary. The structure facilitates interest and balance compensation of cash and bank overdrafts. It is the intention to extend the scope of the participation to other Group companies.

The main functional currencies of the Group are Sterling, Euro 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. 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 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.

PRINCIPAL RISKS AND UNCERTAINTIES

The management of the business and the execution of the Group's strategy are subject to a number of risks. The following section comprises a summary of the main risks Michael Page International plc believes 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 adversely affect 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.

Macro economic environment

Recruitment activity is largely driven by economic cycles and the levels of business confidence. The Board look to reduce the Group's cyclical risk 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 the 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 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 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 a number of 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 are continually 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 continually updated 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.

Update on VAT reclaims

We have had correspondence and discussions with HMRC concerning the amended claims for a further refund of VAT and related interest, but the eventual outcome and timing of any decision remains uncertain.

SUMMARY AND OUTLOOK

Having maintained our business platform during the economic downturn and retained our experienced and talented people, the Group was well positioned to benefit from the economic recovery during 2010. The diversification of the Group, both geographically and by discipline, has proved advantageous as the recovery has developed. Through the utilisation of spare capacity, the Group's profitability has improved significantly. We have maintained a strong balance sheet and, while increasing the returns to shareholders, we have also continued to take a long-term approach by making significant investments in the future of the business, both during 2010 and at the start of 2011. 

Following the launch of new businesses in Chile, Qatar, Malaysia and India, we now operate in 32 countries. With the increase in headcount of 949 during 2010 and a further 258 in the first 2 months of 2011, achievable because of the strength and depth of our management, we are well positioned to continue our growth.

Since the start of 2011 we have seen strong growth in our EMEA region, Australia and North America and steady growth in our UK business where market conditions remain tough but stable. We continue to achieve our highest rates of growth in our Asian and Latin American regions where we have market leading positions.

We will next update the market on our first quarter trading in an announcement on 11 April 2011.

Steve Ingham                           Stephen Puckett

Chief Executive                       Group Finance Director

4 March 2011                         4 March 2011

Consolidated Income Statement

For the year ended 31 December 2010

				2010		2009
		Note		£'000		£'000
Revenue		3		832,296		716,722
Cost of sales				(390,089)		(365,028)
Gross profit		3		442,207		351,694
Administrative expenses				(370,680)		(331,491)
Operating profit before non-recurring items		3		71,527		20,203
Other income - non-recurring items		4		17,125		-
Operating profit		3		88,652		20,203
Financial income		5		1,107		2,027
Financial income - non-recurring items		5		11,335		-
Financial expenses		5		(438)		(1,162)
Profit before tax				100,656		21,068
Income tax expense		6		(25,203)		(8,638)
Income tax expense - non-recurring items		4,6		(7,969)		-
Profit for the year				67,484		12,430
Attributable to: Owners of the parent				67,484		12,430
Earnings per share
Basic earnings per share (pence)		9		21.6		3.9
Diluted earnings per share (pence)		9		21.1		3.8

The above results all relate to continuing operations.

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2010

				2010		2009
				£'000		£'000
Profit for the year				67,484		12,430
Other comprehensive income for the year
Currency translation differences				290		(11,978)
Total comprehensive income for the year				67,774		452
Attributable to:
Owners of the parent				67,774		452

Consolidated Balance Sheet

As at 31 December 2010

		Note		2010 £'000		2009 £'000
Non-current assets
Property, plant and equipment		3		28,526		31,432
Intangible assets - Goodwill				1,539		1,539
- Computer software				26,035		18,512
Deferred tax assets				12,441		10,179
Other receivables		11		1,145		2,021
				69,686		63,683
Current assets
Trade and other receivables		11		168,305		133,402
Current tax receivable				2,810		14,174
Cash and cash equivalents		14		80,531		137,228
				251,646		284,804
Total assets		3		321,332		348,487
Current liabilities
Trade and other payables		12		(122,795)		(142,750)
Bank overdrafts		14		-		(43)
Current tax payable				(16,583)		(5,470)
				(139,378)		(148,263)
Net  current assets				112,268		136,541
Non-current liabilities
Other payables		12		(4,156)		(2,881)
Deferred tax liabilities				(364)		(327)
				(4,520)		(3,208)
Total liabilities		3		(143,898)		(151,471)
Net assets				177,434		197,016
Capital and reserves
Called-up share capital				3,216		3,234
Share premium				55,607		51,589
Capital redemption reserve				875		838
Reserve for shares held in the employee benefit trust				(75,361)		(19,409)
Currency translation reserve				33,691		33,401
Retained earnings				159,406		127,363
Total equity				177,434		197,016

Consolidated Statement of Changes in Equity

For the year ended 31 December 2010

	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 2009	3,220	48,856	838	(21,078)	45,379	133,449	210,664
Currency translation differences	-	-	-	-	(11,978)	-	(11,978)
Net expense recognised directly in equity	-	-	-	-	(11,978)	-	(11,978)
Profit for the year ended 31 December 2009	-	-	-	-	-	12,430	12,430
Total comprehensive (loss)/income for the year	-	-	-	-	(11,978)	12,430	452
Purchase of shares held in the employee benefit trust	-	-	-	(1,903)	-	-	(1,903)
Issue of share capital	14	2,733	-	-	-	-	2,747
Transfer to reserve for shares held in the employee benefit trust	-	-	-	3,572	-	(3,572)	-
Credit in respect of share schemes	-	-	-	-	-	8,491	8,491
Credit in respect of tax on share schemes	-	-	-	-	-	2,418	2,418
Dividends	-	-	-	-	-	(25,853)	(25,853)
	14	2,733	-	1,669	-	(18,516)	(14,100)
Balance at 31 December 2009 and 1 January 2010	3,234	51,589	838	(19,409)	33,401	127,363	197,016
Currency translation differences	-	-	-	-	290	-	290
Net income recognised directly in equity	-	-	-	-	290	-	290
Profit for the year ended 31 December 2010	-	-	-	-	-	67,484	67,484
Total comprehensive income for the year	-	-	-	-	290	67,484	67,774
Purchase of own shares for cancellation	(37)	-	37	-	-	(15,086)	(15,086)
Purchase of shares held in the employee benefit trust	-	-	-	(61,757)	-	-	(61,757)
Issue of share capital	19	4,018	-	-	-	-	4,037
Transfer to reserve for shares held in the employee benefit trust	-	-	-	5,805	-	(5,805)	-
Credit in respect of share schemes	-	-	-	-	-	10,049	10,049
Credit in respect of tax on share schemes	-	-	-	-	-	280	280
Dividends	-	-	-	-	-	(24,879)	(24,879)
	(18)	4,018	37	(55,952)	-	(35,441)	(87,356)
Balance at 31 December 2010	3,216	55,607	875	(75,361)	33,691	159,406	177,434

Consolidated Statement of Cash Flows

For the year ended 31 December 2010

		Note		2010 £'000		2009 £'000
Cash generated from underlying operations		13		81,650		73,759
Net cash (paid) / received in respect of VAT claim				(12,558)		41,018
Cash generated from operations		13		69,092		114,777
Income tax paid				(12,408)		(28,196)
Net cash from operating activities				56,684		86,581
Cash flows from investing activities
Purchases of property, plant and equipment				(7,371)		(5,757)
Purchases of computer software				(8,774)		(7,645)
Proceeds from the sale of property, plant and equipment, and computer software				1,392		2,061
Interest received				1,107		2,027
Net cash used in investing activities				(13,646)		(9,314)
Cash flows from financing activities
Dividends paid				(24,879)		(25,853)
Interest paid				(439)		(1,160)
Issue of own shares for the exercise of options				4,037		2,747
Purchase of own shares for cancellation				(15,086)		-
Purchase of shares into the employee benefit trust				(61,757)		(1,903)
Net cash used in financing activities				(98,124)		(26,169)
Net (decrease)/increase in cash and cash equivalents				(55,086)		51,098
Cash and cash equivalents at the beginning of the year				137,185		94,283
Exchange loss on cash and cash equivalents				(1,568)		(8,196)
Cash and cash equivalents at the end of the year		14		80,531		137,185

Notes to the consolidated preliminary results

For the year ended 31 December 2010

1.     Corporate information

Michael Page International plc (the "Company") is a limited liability company incorporated in Great Britain and domiciled within the United Kingdom whose shares are publicly traded. The consolidated preliminary results of the Company as at and for the year ended 31 December 2010 comprise the Company and its subsidiaries (together referred to as the "Group").

The consolidated preliminary results of the Group for the year ended 31 December 2010 were approved by the directors on 4 March 2011. The Annual General Meeting of Michael Page International plc will be held at Page House, The Bourne Business Park, 1 Dashwood Lang Road, Addlestone, Surrey, KT15 2QW on 20 May 2011 at 12.00 noon.

2.     Basis of preparation and accounting policies

Basis of preparation

These consolidated preliminary results have been prepared in accordance with the recognition and measurement criteria of IFRS. They do not include all the information required for full annual financial statements to comply with IFRS, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December 2009.

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Management Report. The 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. Accordingly, they continue to adopt the going concern basis in preparing the Annual Report and Accounts.

Nature of financial information

The financial information for the year ended 31 December 2010 does not constitute statutory accounts as defined in sections 435 (1) and (2) of the Companies Act 2006. Statutory accounts for the year ended 31 December 2009 have been delivered to the Registrar of Companies and those for 2010 will be delivered following the Company's annual general meeting convened for 20 May 2011. The auditor has reported on these accounts; their report was unqualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis of matter and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

Significant accounting policies

The accounting policies applied by the Group in these consolidated preliminary results are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2009 except as described below.

a)                New and amended standards adopted by the Group

The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 January 2010. There are no new standards or amendments to standards that are mandatory for the first time for the financial year beginning 1 January 2010 that have had a significant impact on the Group.

IAS 27 (revised) requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transaction will no longer result in goodwill or gains and losses. The standard also specifies the accounting when control is lost. Any remaining interest in the entity is re-measured to fair value, and a gain or loss is recognised in profit or loss. IAS 27 (revised) has had no impact on the current period, as all subsidiaries in the Group are 100% owned; there have been no transactions whereby an interest in an entity is retained after the loss of control of that entity, and there have been no transactions with non-controlling interests.

IFRS 2 (amendments), 'Group cash-settled share-based payment transactions', effective from 1 January 2010. In addition to incorporating IFRIC 8, 'Scope of IFRS 2', and IFRIC 11, 'IFRS 2 - Group and treasury share transactions', the amendments expand on the guidance in IFRIC 11 to address the classification of group arrangements that were not covered by that interpretation. 

b)                New and amended standards, and interpretations mandatory for the first time for the financial year beginning 1 January 2010 but not currently relevant to the Group (although they may affect the accounting for future transactions and events). The following standards and amendments to existing standards have been published and are mandatory for the Group's accounting periods beginning on or after 1 January 2010 or later periods, but the Group has not early adopted them.

IAS 1 (amendment 2009), 'Presentation of financial statements'. The amendment clarifies that the potential settlement of a liability by the issue of equity is not relevant to its classification as current or non-current. By amending the definition of current liability, the amendment permits a liability to be classified as non-current (provided that the entity has an unconditional right to defer settlement by transfer of cash or other assets for at least 12 months after the accounting period) notwithstanding the fact that the entity could be required by the counterparty to settle in shares at any time.

IAS 36 (amendment), 'Impairment of assets', effective 1 January 2010. The amendment clarifies that the largest cash generating unit (or group of units) to which goodwill should be allocated for the purpose of impairment testing is an operating segment, as defined by paragraph 5 of IFRS 8, 'Operating segments' (that is, before the aggregation of segments with similar economic characteristics).

IFRS 3 (revised), 'Business combinations', and consequential amendments to IAS 27, 'Consolidated and separate financial statements', IAS 28 'Investments in associates', and IAS 31, 'Interests in joint ventures', are effective prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 July 2009. The revised standard continues to apply the acquisition method to business combinations but with some significant changes compared with IFRS 3. For example all payments to purchase a business are recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently remeasured through the statement of comprehensive income. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair value or at the non-controlling interest's proportionate share of the acquirees's net assets. All acquisition-related costs are expensed. IFRS 3 (revised) has had no impact on the Group, as the Group is organically grown and does not follow a strategy of acquisitions.

IFRS 5 (amendment), 'Non-current assets held for sale and discontinued operations'. The amendment clarifies that IFRS 5 specifies the disclosures required in respect of non-current assets (or disposal groups) classified as held for sale or discontinued operations. It also clarifies that the general requirements of IAS 1 still apply, in particular paragraph 15 (to achieve a fair presentation) and paragraph 125 (sources of estimation uncertainty) of IAS 1.

IFRIC 17, 'Distribution of non-cash assets to owners' (effective on or after 1 July 2009). The interpretation was published in November 2008. This interpretation provides guidance on accounting for arrangements whereby an entity distributes non-cash assets to shareholders either as a distribution of reserves or as dividends. IFRS 5 has also been amended to require that assets are classified as held for distribution only when they are available for distribution in their present condition and the distribution is highly probable.

c)                New standards, amendments and interpretations issued but not effective for the financial year beginning 1 January 2010 and not early adopted. The Group's and parent entity's assessment of the impact of these new standards and interpretations is set out below.

IAS 24 (revised), 'Related party disclosures', issued in November 2009. It supersedes IAS 24, 'Related party disclosures', issued in 2003. IAS 24 (revised) is mandatory for periods beginning on or after 1 January 2011. Earlier application, in whole or in part, is permitted. However, the standard has not yet been endorsed by the EU. The revised standard clarifies and simplifies the definition of a related party and removes the requirement for government related entities to disclose details of all transactions with the government and other government-related entities. The Group will apply the revised standard from 1 January 2011. When the revised standard is applied, the Group and the parent will need to disclose any transactions between its subsidiaries and its associates. The Group is currently putting systems in place to capture the necessary information. It is, therefore, not possible at this stage to disclose the impact, if any, of the revised standard on the related party disclosures.

'Classification of rights issues' (amendment to IAS 32), issued in October 2009. The amendment applies to annual periods beginning on or after 1 February 2010. Earlier application is permitted. The amendment addresses the accounting for rights issues that are denominated in a currency other than the functional currency of the issuer. Provided certain conditions are met, such rights issues are now classified as equity regardless of the currency in which the exercise price is denominated. Previously, these issues had to be accounted for as derivative liabilities. The amendment applies retrospectively in accordance with IAS 8 'Accounting policies, changes in accounting estimates and errors'. The Group will apply the amended standard from 1 January 2011.

IFRS 9, 'Financial instruments', issued in November 2009. This standard is the first step in the process to replace IAS 39, 'Financial instruments: recognition and measurement'. IFRS 9 introduces new requirements for classifying and measuring financial assets. While the Group is yet to assess IFRS 9's full impact, it is unlikely to significantly affect the Group's accounting for financial assets. The standard is not applicable until 1 January 2013 but is available for early adoption. However, the standard has not yet been endorsed by the EU.

'Prepayments of a minimum funding requirement' (amendments to IFRIC 14). The amendments correct an unintended consequence of IFRIC 14, 'IAS 19 - The limit on a defined benefit asset, minimum funding requirements and their interaction'. Without the amendments, entities are not permitted to recognise as an asset some voluntary prepayments for minimum funding contributions. This was not intended when IFRIC 14 was issued, and the amendments correct this. The amendments are effective for annual periods beginning 1 January 2011. Earlier application is permitted. The amendments should be applied retrospectively to the earliest comparative period presented. The Group will apply these amendments for the financial reporting period commencing on 1 January 2011.

IFRIC 19, 'Extinguishing financial liabilities with equity instruments', effective 1 July 2010. The interpretation clarifies the accounting by an entity when the terms of a financial liability are renegotiated and result in the entity issuing equity instruments to a creditor of the entity to extinguish all or part of the financial liability (debt for equity swap). It requires a gain or loss to be recognised in profit or loss, which is measured as the difference between the carrying amount of the financial liability and the fair value of the equity instruments issued. If the fair value of the equity instruments issued cannot be reliably measured, the equity instruments should be measured to reflect the fair value of the financial liability extinguished. The Group will apply the interpretation from 1 January 2011, subject to endorsement by the EU. It is not expected to have any impact on the Group or the parent entity's financial statements.

The Directors anticipate that the adoption of the above Standards and Interpretations in future periods will have little or no impact on the financial statements of the Group when the relevant Standards come into effect for periods commencing on or after 1 January 2011.

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 without allocation of central administration costs including certain recharges. 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
				2010 £'000		2009 £'000		2010 £'000		2009 £'000
EMEA				332,202		311,070		188,706		163,729
United Kingdom				302,567		274,599		124,858		110,784
Asia Pacific	Australia and New Zealand			81,676		59,108		37,645		23,881
	Other			38,630		20,301		34,569		18,329
	Total			120,306		79,409		72,214		42,210
Americas				77,221		51,644		56,429		34,971
				832,296		716,722		442,207		351,694

				Operating Profit
				2010 £'000		2009 £'000
EMEA				22,272		1,055
United Kingdom				19,630		11,275
Asia Pacific	Australia and New Zealand			9,754		4,287
	Other			12,562		3,798
	Total			22,316		8,085
Americas				7,309		(212)
Operating profit before non-recurring items				71,527		20,203
Non-recurring items (NRI) (note 4)				17,125		-
Operating profit after non-recurring items				88,652		20,203

The above analysis by destination is not materially different to analysis by origin.

Non-recurring items (NRI) relate wholly to the United Kingdom.

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 and goodwill.

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

				Total Assets				Total Liabilities
				2010 £'000		2009 £'000		2010 £'000		2009 £'000
EMEA				136,159		117,863		60,744		49,504
United Kingdom				96,563		161,653		41,359		83,341
Asia Pacific	Australia and New Zealand			28,292		18,025		10,410		6,622
	Other			24,471		13,025		5,352		2,322
	Total			52,763		31,050		15,762		8,944
Americas				33,037		23,747		9,450		4,212
Segment assets/Liabilities				318,522		334,313		127,315		146,001
Income tax				2,810		14,174		16,583		5,470
				321,332		348,487		143,898		151,471

				Property, Plant & Equipment				Intangible Assets
				2010 £'000		2009 £'000		2010 £'000		2009 £'000
EMEA				10,104		13,016		776		1,166
United Kingdom				9,090		9,985		25,810		17,933
Asia Pacific	Australia and New Zealand			2,104		2,411		148		258
	Other			996		708		369		310
	Total			3,100		3,119		517		568
Americas				6,232		5,312		471		384
				28,526		31,432		27,574		20,051

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
		2010 £'000		2009 £'000		2010 £'000		2009 £'000
Finance and Accounting		450,573		408,951		209,176		175,743
Marketing, Sales and Retail		111,661		91,811		82,834		61,404
Legal, Technology, HR, Secretarial and Other		156,993		125,199		81,597		61,217
Engineering, Property & Construction, Procurement & Supply Chain		113,069		90,761		68,600		53,330
		832,296		716,722		442,207		351,694

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

		Revenue				Gross Profit
		2010 £'000		2009 £'000		2010 £'000		2009 £'000
Permanent		355,979		260,161		343,787		249,387
Temporary		476,317		456,561		98,420		102,307
		832,296		716,722		442,207		351,694

4.    Non-recurring items (NRI) - VAT

In 2003, the Group submitted an initial claim to Her Majesty's Revenue and Customs (HMRC) for overpaid VAT which was rejected. The Group appealed and subsequently filed amended claims for £26.5m, net of fees, covering the period from 1980 to 2004. In March 2009, the Group filed amended claims for a further refund of an additional £80m, net of fees, of overpaid VAT covering the same period.

                                                                                                                                                                                                                                                                                                                                                                                      In June 2009, the Group received a payment from HMRC of £26.5m, net of fees, as part settlement of these claims and in July 2009 received £10.5m, net of fees, of statutory interest. As a result, the principal and interest amounts were recognised in the half year to June 2009 results, with the interest receivable being recorded within working capital in the cash flow statement.

On 25 September 2009, the Group received a letter from HMRC which stated that, 'HMRC have reviewed the recent payment and are now of the view that the claim in whole or in part should not have been paid'.                 

A number of discussions and meetings with HMRC followed and on 5 March 2010, the Group announced that an agreement had been reached in principle, subject to legal contract, for the Group to retain £28.4m (net of fees). However, given the background to the initial receipt, the subsequent review and reversal of HMRC's position, together with the remaining uncertainty pending formal contractual agreement, the Group reversed out the amounts originally recognised in the 2009 half year results and as such did not recognise any amount in the Income Statement in the 2009 full year.

On 30 April 2010, a formal agreement was signed with HMRC. As a result, of the £50m originally received from HMRC, the Group retained £38.1m and returned £11.9m in May 2010. Accordingly, after fees, the Group has recognised £28.4m as non-recurring income in its 2010 Income Statement, of which £17.1m is in respect of refunded VAT and is included in operating profit and £11.3m is in respect of interest and is included in financial income.

In respect of the amended claims for a further refund of an additional £80m, net of fees, of overpaid VAT, the Group is continuing to pursue the claim. 

Taxation of £8.0m on non-recurring items, net of expenses, has been provided representing an effective tax rate of 28.0%.

A summary of the effects of the non-recurring item (NRI) is shown in the tables below:

Effect on profit after tax:

	Underlying 2010                  £'000		NRI 2010 £'000		Total 2010 £'000
Operating profit	71,527		17,125		88,652
Net interest	669		11,335		12,004
Profit before tax	72,196		28,460		100,656
Taxation	(25,203)		(7,969)		(33,172)
Profit after tax	46,993		20,491		67,484

There was no effect on profit before tax on the 2009 comparatives.

Effect on the Balance Sheet		Total 2010 £'000		Total 2009 £'000
Other debtors - balance due from advisor		-		8,972
Other tax and social security - balance due to HMRC		-		(49,990)
		-		(41,018)

Effect on Cash Flows		Total 2010 £'000		Total 2009 £'000
Decrease/(increase) in VAT related receivables		8,972		(8,972)
(Decrease)/increase in VAT related payables		(49,990)		49,990
Non-recurring income recognised in the profit and loss account		28,460		-
		(12,558)		41,018

5.    Finance income/(expense)

		2010 £'000		2009 £'000
Finance income
Bank interest receivable		1,107		2,027
Interest on non-recurring items (note 4)		11,335		-
Bank interest receivable		12,442		2,027
Finance expense
Bank interest payable		(438)		(1,162)

6.    Taxation

The Group's consolidated effective tax rate in respect of continuing operations for the year ended 31 December 2010 was 33.0% (2009: 41.0%).

		2010 £'000		2009 £'000
Analysis of charge in the year
UK income tax at 28.0% (2009: 28.0%) for the year		17,379		8,556
Adjustments in respect of prior years		1,126		(2,536)
Overseas		13,790		4,589
		32,295		10,609
Deferred tax expense
Origination and reversal of temporary differences		(1,184)		(1,639)
Charge/(benefit) of tax losses recognised		2,061		(332)
Deferred tax expense/(benefit)		877		(1,971)
Income tax expense reported in the consolidated income statement		33,172		8,638

7.    Dividends

	2010 £'000		2009 £'000
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year 31 December 2009 of 5.12p per ordinary share (2008: 5.12p)	16,066		16,487
Interim dividend for the year ended 31 December 2010 of 2.88p per ordinary share (2009: 2.88p)	8,813		9,366
	24,879		25,853
Amounts proposed as distributions to equity holders in the year:
Proposed final dividend for year ended 31 December 2010 of 6.12p per ordinary share (2009: 5.12p)	18,755		16,535

The proposed final dividend had not been approved by shareholders at 31 December 2010 and therefore has not been included as a liability. The comparative final dividend at 31 December 2009 was also not recognised as a liability in the prior year.

The proposed final dividend of 6.12 pence (2009: 5.12 pence) per ordinary share will be paid on 6 June 2011 to shareholders on the register at the close of business on 6 May 2011, subject to approval by shareholders.

8.    Share-based payments

In accordance with IFRS 2 "Share-based Payment", a charge of £5.5m has been recognised for share options (including social charges) (2009: £1.9m), and £6.9m has been recognised for other share-based payment arrangements (including social charges) (2009: £8.7m).

During the period, options over 11.5m shares were granted at an average exercise price of £3.82p and 1.9m share options were exercised, which has led to an increase in share capital of £19k and an increase in share premium of £4.0m.

9.    Earnings per ordinary share

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

Earnings	2010		2009
Earnings for basic and diluted earnings per share (£'000)	67,484		12,430
Non-recurring items (NRI) (£'000) (note 4)	(20,491)		-
Earnings for basic and diluted earnings per share before NRI (£'000)	46,993		12,430
Number of shares
Weighted average number of shares used for basic earnings per share ('000)	311,821		321,643
Dilution effect of share plans ('000)	7,653		7,412
Diluted weighted average number of shares used for diluted earnings per share ('000)	319,474		329,055
Basic earnings per share (pence)	21.6		3.9
Diluted earnings per share (pence)	21.1		3.8
Basic earnings per share before NRI (pence)	15.1		3.9
Diluted earnings per share before NRI (pence)	14.7		3.8

The above results all relate to continuing operations.

10.  Property, plant and equipment

Acquisitions and disposals

During the year ended 31 December 2010 the Group acquired property, plant and equipment with a cost of £7.4m (2009: £5.8m).

Property, plant and equipment with a carrying amount of £1.6m were disposed of during the year ended 31 December 2010 (2009: £2.4m), resulting in a loss on disposal of £0.2m (2009: loss of £0.4m).

Capital commitments

The Group had contractual capital commitments of £1.2m as at 31 December 2010 relating to property, plant and equipment (2009: £0.1m). The Group had contractual capital commitments of £2.0m as at 31 December 2010 relating to computer software (2009: £1.6m).

11.      Trade and other receivables

		2010 £'000		2009 £'000
Current
Trade receivables		134,723		100,197
Other receivables		5,035		13,102
Prepayments and accrued income		28,547		20,103
		168,305		133,402
Non-current
Prepayments and accrued income		1,145		2,021

12.      Trade and other payables

		2010          £'000		2009 £'000
Current
Trade payables		9,091		7,304
Other tax and social security		33,900		75,262
Other payables		20,340		18,583
Accruals		58,248		40,223
Deferred income		1,216		1,378
		122,795		142,750
Non-current
Deferred income		1,830		2,334
Other tax and social security		2,326		547
		4,156		2,881

13.      Cash flows from operating activities

		2010 £'000		2009 £'000
Profit before tax		100,656		21,068
Non-recurring income		(17,125)		-
Profit before tax and non-recurring income		83,531		21,068
Depreciation and amortisation charges		10,579		11,268
Loss on sale of property, plant and equipment, and computer software		151		383
Share scheme charges		10,049		8,491
Net finance income - including NRI		(12,004)		(865)
Operating cash flow before changes in working capital and NRI		92,306		40,345
(Increase)/decrease in receivables		(41,107)		70,911
Increase/(decrease) in payables		30,451		(37,497)
Cash generated from underlying operations		81,650		73,759
Decrease/(increase) in HMRC related receivables		8,972		(8,972)
(Decrease)/increase in payables		(49,990)		49,990
Non-recurring income		28,460		-
Cash generated from operations		69,092		114,777

14.      Cash and cash equivalents

		2010 £'000		2009 £'000
Cash at bank and in hand		73,178		127,293
Short-term deposits		7,353		9,935
Cash and cash equivalents		80,531		137,228
Bank overdrafts		-		(43)
Cash and cash equivalents in the statement of cash flows		80,531		137,185

15.      Events after the balance sheet date

Between 31 December 2010 and 4 March 2011, 114,007 options were exercised, leading to an increase in share capital of £1,140 and an increase in share premium of £234,422.

16.      Publication of Annual Report and Accounts

This preliminary statement is not being posted to shareholders. The Annual Report and Accounts will be posted to shareholders in due course and will be delivered to the Registrar of Companies following the Annual General Meeting of the Company.

17.  Annual General Meeting

The Annual General Meeting of Michael Page International plc will be held at Page House, The Bourne Business Park, 1 Dashwood Lang Road, Addlestone, Weybridge, Surrey, KT15 2QW on 20 May 2011 at 12.00 noon.

Responsibility statement of the directors on the annual report

The responsibility statement below has been prepared in connection with the company's full annual report for the year ending 31 December 2010. Certain parts of the annual report are not included within this announcement.

We confirm that, to the best of our knowledge:

a)    the financial statements, prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation taken as a whole; and

b)    the management report, which is incorporated into the directors' report, includes a fair review of the development and performance of the business and the position of the company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties they face.

On behalf of the Board

S Ingham                                                                                         S Puckett

Chief Executive                                                                               Group Finance Director

4 March 2011

 

END

 

 

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