Half Year Results for Period Ended 30 June 2011

RNS Number : 3262M

Michael Page International PLC

15 August 2011

 



 

 

15 August 2011

 

MICHAEL PAGE INTERNATIONAL PLC

Half Year Results for the Period Ended 30 June 2011

Michael Page International plc ("Michael Page"), the specialist professional recruitment company, announces its unaudited half year results for the period ended 30 June 2011.

Financial summary (6 months to 30 June 2011)	2011	2010	Change	Change CER*
Revenue	£502.1m	£393.5m	+27.6%	+25.8%
Gross profit	£275.1m	£209.6m	+31.3%	+29.5%
Operating profit before NRI †	£45.4m	£32.5m	+39.6%	+36.5%
Profit before tax before NRI	£45.5m	£33.0m	+37.9%
Basic earnings per share before NRI	10.0p	6.6p	+51.5%
Diluted earnings per share before NRI	9.7p	6.5p	+49.2%
Operating profit	£45.4m	£49.6m	-8.5%
Profit before tax	£45.5m	£61.4m	-26.0%
Basic earnings per share	10.0p	13.1p	-23.7%
Diluted earnings per share	9.7p	12.8p	-24.2%
Interim dividend per share	3.25p	2.88p	+12.8%

*Constant Exchange Rates      † Non-recurring items (related to VAT refund of £17.1m and related interest of £11.3m, both net of fees)

Highlights

·      Group gross profit up 31% (30%*) with growth in every geography

·      50% of the Group growing at over 50% year-on-year in gross profit

·      76% of gross profits generated from outside the UK

·      55% of gross profit generated from non Finance and Accounting disciplines

·      Launched businesses in India, Malaysia and Qatar

·      Additional space in Beijing, Hong Kong and new offices in Houston, Pudong Shanghai and Porto

·      Gross profit from permanent placements growing at 35% (33%*)

·      Gross profit from temporary placements growing at 20% (18%*)

·      Headcount up 623 (13.9%) in first half of 2011

·      Share repurchases of £30.3m during the first half of 2011

·      Strong balance sheet with net cash at 30 June 2011 of £23.6m

·      Interim dividend up 12.8% at 3.25p

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

"We delivered a strong performance in the first half of 2011 with gross profit up 31% to £275.1m. Operating profit before non-recurring items grew by 40% to £45.4m as we continue to make significant investments for the longer-term growth and prosperity of the Group.

"In the first 6 months, our banking business grew strongly. However, following the recently announced hiring freezes in the last few weeks, gross profit growth in this sector, which accounts for approximately 10% of Group gross profit, has slowed. With the exception of banking, trading in July has been broadly consistent with recent trends. While the recent turbulence in the financial markets has added an additional element of uncertainty, we expect market conditions in the UK to remain challenging, but anticipate that our UK business will maintain modest growth and continue to gain market share. In Europe, we expect to continue our progress and our outlook for Asia and Latin America remains strong.

"Over the last 10 years we have diversified significantly and altered radically the composition of the Group, entirely through organic investment and development, with over three quarters of the Group's gross profits now being generated from outside the UK. Our Latin America and Asia businesses combined now represent over 20% of the Group's gross profit, with 31 offices across 9 countries and 1,000 staff.

"We have entered and achieved a market-leading presence in relatively underdeveloped recruitment markets with numerous opportunities for further growth. In these markets, we now have approaching 50% of our fee earners and grew gross profit at over 50% in the first half of 2011. We remain mindful of the macroeconomic risks and uncertainties, however, we are continuing to invest significantly in developing our faster growing markets, as well as exploring opportunities for new openings".

Analyst meeting

The company will be presenting to a meeting of analysts at 9.00am today.  The presentation and a recording of the meeting will be available on the company's website later on today at http://investors.michaelpage.co.uk/presentations

Enquiries:

Michael Page International plc	01932 264144
Steve Ingham, Chief Executive
Stephen Puckett, Finance Director
Financial Dynamics	020 7269 7291
Richard Mountain/Sophie Moate

INTERIM MANAGEMENT REPORT

To the members of Michael Page International plc

Cautionary Statement

This Interim Management Report ("IMR") has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The IMR should not be relied on by any other party or for any other purpose. This IMR contains certain forward-looking statements. These statements are made by the directors in good faith based on the information available to them up to the time of their approval of this report and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

This IMR has been prepared for the Group as a whole and therefore gives greater emphasis to those matters that are significant to Michael Page International plc and its subsidiary undertakings when viewed as a whole.

STRATEGY

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

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

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

GROUP RESULTS

The Group's revenue for the six months ended 30 June 2011 increased by 27.6% to £502.1m (2010: £393.5m) and gross profit increased by 31.3% to £275.1m (2010: £209.6m). At constant exchange rates, the Group's revenue increased by 25.8% and gross profit by 29.5%. In the first half, the mix of the Group's revenue and gross profit between permanent and temporary placements has increased to 45:55 (2010: 43:57) and 80:20 (2010: 78:22), respectively. Typically, as economic conditions improve, permanent grows faster than temporary recruitment. This trend is compounded by the Group's faster growing regions in Latin America and Asia being predominantly permanent rather than temporary recruitment in the specialist sectors. The gross margin on temporary placements in the first half of 2011 was 20.2% (2010: 20.7%). Pricing has been relatively stable throughout the first half of 2011, with a stronger pricing environment in rapidly growing markets being offset by competitive pressures in the weaker UK market.

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 the first half, albeit to differing degrees in our different geographic regions, creating an environment for increased productivity and the generation of more gross profit per fee earner. The Group's strategy of only growing organically using home-grown talent, maintaining market presence and a degree of spare capacity, means that the Group is operationally geared with a significant proportion of gross profits from increased activity levels being converted into operating profit. The extent of the conversion to operating profit is reduced by the amount of investment being made to facilitate and maintain growth. The investment comprises additional headcount, up 32.7% year-on-year, office space and the relocation costs of senior people, together with the start-up losses when we roll-out and start new disciplines, open in new cities and start businesses in new countries, some 16 since 2005.

In the first half of 2011, we have added 623 (13.9%) new staff,  taken additional space in Beijing and Hong Kong, opened three new offices in Houston, Pudong and Porto, as well as additional offices in Sao Paulo and Rome. We also launched businesses in Qatar, Malaysia and India.

With strong underlying growth and investment for the future, operating profit for the first half of 2011 increased to £45.4m (2010: £32.5m†). The Group's conversion rate of gross profit to operating profit is now 16.5% (2010: 15.5%).

EUROPE, MIDDLE EAST AND AFRICA (EMEA)

Europe, Middle East and Africa (EMEA) is the Group's largest region, contributing 44% of Group gross profit in the first half. Revenue in the region increased by 29.9% to £209.5m (2010: £161.3m) and gross profit increased by 31.7% to £120.3m (2010: £91.3m), due to increased activity, primarily in permanent placements. In constant currency, revenue increased by 28.2% on the first half of 2010 and gross profit increased by 29.9%. The 31.7% increase in gross profit generated a 76.1% increase in operating profit for the first half of 2011 to £17.0m (2010: £9.6m), a conversion rate of 14.1% (2010: 10.5%).

In the majority of countries across the region, market conditions have improved and we are achieving good growth. In the Middle East, we did experience some impact from the recent troubles, but all our businesses in the region showed growth. While there remains some surplus capacity in our more established markets of France, the Netherlands, Italy and Spain, in our more recently established countries, we have increased our level of investment in new headcount, offices and launched in Qatar. Headcount across the region increased by 295 (16%) in the first half of 2011 to 2,126.

UNITED KINGDOM

In the UK, representing 24% of the Group's gross profit in the first half, revenue increased by 14.2% to £163.0m (2010: £142.8m), gross profit increased by 7.9% to £66.0m (2010: £61.2m) and operating profit was up 8.1% at £10.4m (2010: £9.6m).

In the UK, market conditions have been tough, but stable throughout the first half of 2011, with growth in the private sector being held back by a more restrained public sector. Our UK business has performed well, clearly gaining share in a very competitive market, with operating profit increasing in line with gross profit, up 8.1%, with the conversion rate stable at 15.8% (2010: 15.7%). Headcount in the UK has remained largely flat over the first half of 2011 and stands at 1,343 at the end of June 2011 (1,324 at 31 December 2010), with the increase in gross profit being the result of improved productivity.

ASIA PACIFIC

In Asia Pacific, representing 18% of the Group's gross profit in the first half, revenue increased by 43.4% to £76.7m (2010: £53.5m) and gross profit increased by 55.8% to £48.6m (2010: £31.2m). In constant currency, revenue increased by 35.0% and gross profit by 49.2%. Operating profit rose by 28.8% to £12.2m (2010: £9.5m), with the large investments in additional headcount and new country start-ups in Malaysia and India, partially offset by operational gearing and increased productivity, resulting in a net decrease in the conversion rate to 25.2% (2010: 30.5%).

Australia, our largest business in the region, grew gross profits by 23% in constant currency. Market conditions have remained stable throughout the first half of 2011, particularly in Western Australia, which is benefiting from the demand for natural resources.  In Asia, where the business is almost entirely permanent placements, activity is at record levels in many locations. Gross profits from our Asian businesses grew 80% in constant currency. In Japan, where our growth of 30% in constant currency was impacted by the effects of the tsunami in March, we finished the half year with a record ever month for gross profit, demonstrating the resilience and talent in our business there. At the end of June, we had 874 staff in the region, an increase of 183 (26%) since the start of the year and assuming market conditions remain strong, further headcount will be added during the second half of 2011.

THE AMERICAS

In the Americas, representing 14% of the Group's gross profit in the first half, revenue increased by 47.1% to £52.7m (2010: £35.8m) and gross profit increased by 55.4% to £40.3m (2010: £25.9m). In constant currency, revenue increased by 47.5% and gross profit by 54.7%. With the investment in additional headcount and new offices, operating profit increased by 54.0% to £5.8m (2010: £3.8m), with a conversion rate of 14.4% (2010: 14.5%).

In North America, gross profit grew by 28% in constant currency and while there is some evidence of a steady improvement, particularly in Canada, market conditions remain tough.  In Latin America, where gross profits grew in the first half of 2011 by 70% in constant currency, market conditions are strong and we have continued to invest heavily in the region. In the last twelve months, we have added 241 staff, an increase of 80.9%, we have doubled the number of offices in the region to 16 and launched a business in Chile. Brazil, which we established in 2000, is now the Group's third largest country business and we are the clear market leader, growing at exceptionally strong rates. The newer businesses in Mexico, Argentina and Chile are also performing strongly and offer tremendous scope for further profitable growth. We now have 778 staff in the region, an increase of 126 (19%) since the start of the year.

OPERATING PROFIT AND CONVERSION RATES

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

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

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

In a downturn, activity levels can slow quickly and revenue can decline even faster, due to the contingent nature of a large proportion of our placements. The main opportunity for reducing our own cost base is headcount, but these reductions tend to lag the declines in revenue due to the shortening visibility. The majority of the initial reductions in our headcount occur through natural attrition, without incurring significant restructuring charges. However, as greater reductions become necessary, such charges may be incurred, but these are treated as a component of our normal operating expenses.

As economic conditions begin to improve, the confidence levels of both candidates and clients also improves and the churn rate of people moving jobs starts to increase. This increase in activity is serviced from the spare capacity we maintain during a downturn and therefore profits can increase rapidly. As different markets recover and grow at different rates, we invest in infrastructure and additional headcount in some markets to maintain their growth, while carrying some spare capacity in others. Where possible, we redeploy resources to match market conditions. The Group's conversion rate for the period was 16.5% (2010: 15.5%), which reflects the improved market conditions, partially offset by the effects of new investments. The movement in the conversion rates of the four regions and the levels of conversion now being achieved reflects the pace of recovery in those regions, the levels of investment in each region and the levels of spare capacity still available to be utilised.

TAXATION AND EARNINGS PER SHARE

The charge for taxation is based on the expected effective annual tax rate of 33.0% (2010: 36.4%†) on profit before taxation and non recurring items.

Basic and diluted earnings per share for the six months ended 30 June 2011 were 10.0p (2010: 13.1p) and 9.7p (2010: 12.8p) respectively. Before 2010's non-recurring income, basic and diluted earnings per share for the six months ended 30 June 2010 were 6.6p and 6.5p respectively.

CASH FLOW

The Group started the year with net cash of £80.5m. In the first half we generated £21.8m from operations after funding an increase in working capital of £35.1m, reflecting the increased level of activity throughout the Group. Tax paid was £19.1m and net capital expenditure was £13.0m, with net interest received of £0.1m. During the first half, £30.3m was spent repurchasing shares for cancellation, £1.0m was received from the exercise of share options and dividends of £18.8m were paid. After favourable currency movements of £1.3m, the Group had net cash of £23.6m at 30 June 2011.

DIVIDENDS AND SHARE REPURCHASES

It is the Board's intention to pay dividends at a level that it believes is sustainable throughout economic cycles and to continue to use share repurchases to return surplus cash to shareholders. Reflecting the Group's first half performance and the Board's confidence in the longer-term prospects for the Group, it has decided to increase the interim dividend by 12.8% to 3.25p (2010: 2.88p) per share. The interim dividend will be paid on 7 October 2011 to shareholders on the register at 9 September 2011.

In the first half, the Group purchased and cancelled 5.7m shares for £30.3m, at an average price of £5.28.

NON-RECURRING ITEMS: VAT CLAIM

On 30 April 2010, a formal agreement was signed between MPI and HMRC for a refund of £17.1m of overpaid VAT plus £11.3m of statutory interest, both net of fees.

In respect of the amended claims for a refund of overpaid VAT, we continue to correspond and discuss our claim with HMRC, but the eventual outcome remains uncertain. For further information, see Note 4.

CURRENT TRADING AND FUTURE PROSPECTS

We delivered a strong performance in the first half of 2011 with gross profit up 31% to £275.1m. Operating profit before non-recurring items grew by 40% to £45.4m as we continue to make significant investments for the longer-term growth and prosperity of the Group.

In the first 6 months, our banking business grew strongly. However, following the recently announced hiring freezes in the last few weeks, gross profit growth in this sector, which accounts for approximately 10% of Group gross profit, has slowed. With the exception of banking, trading in July has been broadly consistent with recent trends. In the short-term, market conditions in the UK will remain challenging, but we anticipate that our UK business will maintain modest growth and continue to gain market share. In Europe, we expect to continue our progress and our outlook for Asia and Latin America remains strong.

Over the last 10 years we have diversified significantly and altered radically the composition of the Group, entirely through organic investment and development, with over three quarters of the Group's gross profits now being generated from outside the UK. Our Latin America and Asia businesses combined now represent over 20% of the Group's gross profit, with 31 offices across 9 countries and over 1,000 staff.

We have entered and achieved a market-leading presence in relatively underdeveloped recruitment markets with numerous opportunities for further growth. In these markets, we now have over 50% of our staff and grew gross profit at over 50% in the first half of 2011. We remain mindful of the macroeconomic risks and uncertainties, however, we are continuing to invest significantly in developing our faster growing markets, as well as exploring opportunities for new openings.

KEY PERFORMANCE INDICATORS

Financial and non-financial key performance indicators (KPIs) used by the Board to monitor progress are listed in the table below. The source of data and calculation methods year-on-year are on a consistent basis.

KPI	H1 2011	H1 2010	Definition, method of calculation and analysis
Gross margin	54.8%	53.3%	Gross profit as a percentage of revenue. Gross margin has increased largely as a result of the mix of permanent and temporary placements. In improving trading conditions, there tends to be a swing to higher margin permanent placements. Additionally the Group's fastest growing geographic regions are predominantly permanent recruitment markets. Source: Condensed consolidated income statement in the financial statements.
Fee earner : support staff ratio	72:28	71:29	Represents the balance between operational and non-operational staff. The balance in the period reflects the faster growth in new fee earners into the existing infrastructure as market conditions improve. Source: Internal data.
Productivity (gross profit per fee earner)	£76.9k	£79.8k	Represents productivity of fee earners and is calculated by dividing the gross profit for the period by the average number of fee earners and directors. The higher the number, the higher their productivity. Productivity is a function of the numbers and experience of fee earners, the impact of pricing and the general conditions of the recruitment market. The decrease in productivity this period is as a result of the substantial increase in new fee earners (32.7% or 1,261 in the last 12 months) and increased competition in some markets, partially offset by a general improvement in market conditions. Source: Internal data.
Conversion before NRI	16.5%	15.5%	Operating profit as a percentage of gross profit showing the Group's effectiveness at controlling the costs and expenses associated with its normal business operations and the level of investment for future growth. Conversion has increased compared to last year, reflecting the utilisation of a proportion of the spare capacity created during the downturn, partially offset by a reduction in productivity. Source: Condensed consolidated income statement in the financial statements.
Debtor days (30 June)	52	47	Represents the length of time before the Group receives payments from its debtors. Calculated by comparing how many days' billings it takes to cover the debtor balance. The increase in the period reflects the growth of permanent activity, with the average debtor days being higher for the permanent business compared to the temporary business and also a temporary impact related to the implementation of a new temp billing system in the UK. Source: Internal data.

The movements in KPIs are in line with expectations.

PRINCIPAL RISKS AND UNCERTAINTIES

The management of the business and the execution of the Company's strategy are subject to a number of risks. The following section comprises a summary of what the Group believes are the main risks that could potentially impact the Group's operating and financial performance.

People

The resignation of key individuals and the inability to recruit talented people with the right skill-sets could 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 linked to the Group's results and career progression.

Macroeconomic environment

Recruitment activity is largely driven by economic cycles and the levels of business confidence. The Board looks to reduce the Group's cyclical risk by expanding geographically, by increasing the number of disciplines, by building part-qualified and clerical businesses and by continuing to build the temporary business.

A substantial portion of the Group's gross profit arises from fees which 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 tends to reduce 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 rapidly 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 Main 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. The Group has invested in a new generation of technology systems, which will begin to be implemented in our operating businesses from later this year. The systems implementation risks are being managed by staged roll-outs, generally increasing the size and complexity of the businesses transitioning to the new systems.

Legal

The Group operates in a large number of jurisdictions which have varying regulatory environments. As the employment laws are changed and harmonised in certain geographies, they bring with them new risks and opportunities. The temporary market is heavily regulated, and changes in legislation, which have the effect of increasing the cost or restricting the flexibility of movement of temporary workers, could, other things being equal, have a detrimental effect on the Group's financial performance. The Group takes its obligations and responsibilities seriously and ensures that its policies, systems and procedures are continually upgraded to reflect best practice and to comply with the legal requirements in all of the markets in which it operates. In order to reduce the legal and compliance risks, fee earners and support staff receive regular training and updates of changes in legal and compliance requirements.

Financial

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

TREASURY MANAGEMENT, BANK FACILITIES AND CURRENCY RISK

It is the Directors' intention to continue to finance the activities and development of the Group from retained earnings and to operate the Group's business while maintaining a strong balance sheet position. When there is a generally benign economic outlook, 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 an economic downturn, a more cautious funding position is adopted, with the Group being managed in a net cash position. The £56.9m reduction, from £80.5m to £23.6m, in the amount of net cash held during the period is in line with the relative improvement in economic conditions and the Group's outlook across the various regions in which it operates.

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.

The Group has a £50m, three-year multi-currency, committed revolving credit facility with Deutsche Bank that expires in June 2012.

The main operational currencies of the Group are Sterling, Euro, Australian Dollar and Brazilian Real. The Group does not have material transactional currency exposures, nor is there a material exposure to foreign denominated monetary assets and liabilities. The Group is exposed to foreign currency translation differences in accounting for its overseas operations. Our policy is not to hedge this exposure.

In certain cases, where the Group gives or receives short-term loans to and from other Group companies with different reporting currencies, it may use foreign exchange swap derivative financial instruments to manage the currency and interest rate exposure that arises on these loans. It is the Group's policy not to seek to designate these derivatives as hedges.

GOING CONCERN

The Board has undertaken a recent and thorough review of the Group's forecasts and associated risks and sensitivities. Despite the significant uncertainty in the economy and its inherent risk and impact on the business, the Board has concluded, given the level of cash in the business and Group borrowing facilities, the geographical and discipline diversification, limited concentration risk, as well as the ability to manage the cost base, that the Group has adequate resources to continue in operational existence for the foreseeable future being a period of at least 12 months.

Page House

The Bourne Business Park

1 Dashwood Lang Road

Addlestone

Weybridge

Surrey

KT15 2QW

By order of the Board,

Steve Ingham                           Stephen Puckett

Chief Executive                       Group Finance Director

15 August 2011                      15 August 2011

INDEPENDENT REVIEW REPORT TO MICHAEL PAGE INTERNATIONAL PLC

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2011 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated balance sheet, the condensed consolidated statement of changes in equity, the condensed consolidated statement of cash flows and related notes 1 to 14. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

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

Directors' Responsibilities

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

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

Our Responsibility

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

Scope of Review

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

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2011 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

Ernst & Young LLP

London

15 August 2011

Condensed Consolidated Income Statement

Six months ended 30 June 2011

                                                                                                                                Six months ended                                Year ended

				30 June		30 June		31 December
				2011		2010		2010
				Unaudited		Unaudited		Audited
		Note		£'000		£'000		£'000
Revenue		3		502,077		393,515		832,296
Cost of sales				(226,983)		(183,961)		(390,089)
Gross profit		3		275,094		209,554		442,207
Administrative expenses				(229,692)		(177,034)		(370,680)
Operating profit before non-recurring items		3		45,402		32,520		71,527
Other income - non-recurring items		4		-		17,125		17,125
Operating profit		3		45,402		49,645		88,652
Financial income		5		398		744		1,107
Financial income - non-recurring items		5		-		11,335		11,335
Financial expenses		5		(335)		(290)		(438)
Profit before tax		3		45,465		61,434		100,656
Income tax expense		6		(15,006)		(11,997)		(25,203)
Income tax expense - non-recurring items		4		-		(7,969)		(7,969)
Profit for the period				30,459		41,468		67,484
Attributable to: Owners of the parent				30,459		41,468		67,484
Earnings per share
Basic earnings per share (pence)		9		10.0		13.1		21.6
Diluted earnings per share (pence)		9		9.7		12.8		21.1

The above results all relate to continuing operations.

Condensed Consolidated Statement of Comprehensive Income

Six months ended 30 June 2011

			Six months ended				Year ended
				30 June		30 June		31 December
				2011		2010		2010
				Unaudited		Unaudited		Audited
				£'000		£'000		£'000
Profit for the period				30,459		41,468		67,484
Other comprehensive income for the period
Currency translation differences				3,812		(747)		290
Total comprehensive income for the period				34,271		40,721		67,774
Attributable to:
Owners of the parent				34,271		40,721		67,774

Condensed Consolidated Balance Sheet

At 30 June 2011

		Note		30 June 2011 Unaudited £'000		30 June 2010 Unaudited £'000		31 December 2010 Audited £'000
Non-current assets
Property, plant and equipment		10		32,019		27,795		28,526
Intangible assets  - Goodwill and other intangible				2,087		1,539		1,539
- Computer software				30,206		21,125		26,035
Deferred tax assets				11,098		11,136		12,441
Other receivables		11		1,916		2,745		1,145
				77,326		64,340		69,686
Current assets
Trade and other receivables		11		224,984		152,301		168,305
Current tax receivable				2,810		14,143		2,810
Cash and cash equivalents		14		62,724		67,177		80,531
				290,518		233,621		251,646
Total assets		3		367,844		297,961		321,332
Current liabilities
Trade and other payables		12		(144,743)		(106,325)		(122,795)
Bank overdrafts		14		(39,142)		(1,503)		-
Current tax payable				(11,772)		(18,695)		(16,583)
				(195,657)		(126,523)		(139,378)
Net current assets				94,861		107,098		112,268
Non-current liabilities
Other payables		12		(2,709)		(2,267)		(4,156)
Deferred tax liabilities				(364)		(324)		(364)
				(3,073)		(2,591)		(4,520)
Total liabilities		3		(198,730)		(129,114)		(143,898)
Net assets				169,114		168,847		177,434
Capital and reserves
Called-up share capital				3,164		3,240		3,216
Share premium				56,638		52,986		55,607
Capital redemption reserve				932		838		875
Reserve for shares held in the employee benefit trust				(66,186)		(75,952)		(75,361)
Currency translation reserve				37,503		32,654		33,691
Retained earnings				137,063		155,081		159,406
Total equity				169,114		168,847		177,434

Condensed Consolidated Statement of Changes in Equity

Six months ended 30 June 2011

	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 2010	3,234	51,589	838	(19,409)	33,401	127,363	197,016
Currency translation differences	-	-	-	-	(747)	-	(747)
Net loss recognised directly in equity	-	-	-	-	(747)	-	(747)
Profit for the six months ended 30 June 2010	-	-	-	-	-	41,468	41,468
Total comprehensive (loss)/income for the period	-	-	-	-	(747)	41,468	40,721
Purchase of shares held in employee benefit trust	-	-	-	(61,757)	-	-	(61,757)
Issue of share capital	6	1,397	-	-	-	-	1,403
Reserve transfer when shares held in the employee benefit trust vest	-	-	-	5,214	-	(5,214)	-
Credit in respect of share schemes	-	-	-	-	-	5,216	5,216
Credit in respect of tax on share schemes	-	-	-	-	-	2,314	2,314
Dividends	-	-	-	-	-	(16,066)	(16,066)
	6	1,397	-	(56,543)	-	(13,750)	(68,890)
Balance at 30 June 2010	3,240	52,986	838	(75,952)	32,654	155,081	168,847
Currency translation differences	-	-	-	-	1,037	-	1,037
Net income recognised directly in equity	-	-	-	-	1,037	-	1,037
Profit for the six months ended 31 December 2010	-	-	-	-	-	26,016	26,016
Total comprehensive income for the period	-	-	-	-	1,037	26,016	27,053
Purchase of own shares for cancellation	(37)	-	37	-	-	(15,086)	(15,086)
Issue of share capital	13	2,621	-	-	-	-	2,634
Reserve transfer when shares held in the employee benefit trust vest	-	-	-	591	-	(591)	-
Credit in respect of share schemes	-	-	-	-	-	4,833	4,833
Debit in respect of deferred tax on share schemes	-	-	-	-	-	(2,034)	(2,034)
Dividends	-	-	-	-	-	(8,813)	(8,813)
	(24)	2,621	37	591	-	(21,691)	(18,466)
Balance at 31 December 2010 and 1 January 2011	3,216	55,607	875	(75,361)	33,691	159,406	177,434
Currency translation differences	-	-	-	-	3,812	-	3,812
Net income recognised directly in equity	-	-	-	-	3,812	-	3,812
Profit for the six months ended 30 June 2011	-	-	-	-	-	30,459	30,459
Total comprehensive income for the period	-	-	-	-	3,812	30,459	34,271
Purchase of own shares for cancellation	(57)	-	57	-	-	(30,322)	(30,322)
Issue of share capital	5	1,031	-	-	-	-	1,036
Reserve transfer when shares held in the employee benefit trust vest	-	-	-	9,175	-	(9,175)	-
Credit in respect of share schemes	-	-	-	-	-	5,991	5,991
Debit in respect of tax on share schemes	-	-	-	-	-	(473)	(473)
Dividends	-	-	-	-	-	(18,823)	(18,823)
	(52)	1,031	57	9,175	-	(52,802)	(42,591)
Balance at 30 June 2011	3,164	56,638	932	(66,186)	37,503	137,063	169,114

Condensed Consolidated Statement of Cash Flows

Six months ended 30 June 2011

			Six months ended				Year ended
	Note		30 June  2011 Unaudited £'000		30 June  2010 Unaudited £'000		31 December 2010 Audited £'000
Cash generated from underlying operations	13		21,789		27,073		81,650
Net cash paid in respect of VAT claim			-		(12,558)		(12,558)
Cash generated from operations	13		21,789		14,515		69,092
Income tax paid			(19,052)		(5,326)		(12,408)
Net cash from operating activities			2,737		9,189		56,684
Cash flows from investing activities
Purchases of property, plant and equipment			(7,980)		(2,556)		(7,371)
Purchases of computer software			(5,156)		(3,297)		(8,774)
Proceeds from the sale of property, plant and equipment, and computer software			173		1,338		1,392
Interest received			398		744		1,107
Net cash used in investing activities			(12,565)		(3,771)		(13,646)
Cash flows from financing activities
Dividends paid			(18,823)		(16,066)		(24,879)
Interest paid			(281)		(290)		(439)
Issue of own shares for the exercise of options			1,036		1,403		4,037
Purchase of own shares for cancellation			(30,322)		-		(15,086)
Purchase of shares into the employee benefit trust			-		(61,757)		(61,757)
Net cash used in financing activities			(48,390)		(76,710)		(98,124)
Net decrease in cash and cash equivalents			(58,218)		(71,292)		(55,086)
Cash and cash equivalents at the beginning of the period			80,531		137,185		137,185
Exchange gain/(loss) on cash and cash equivalents			1,269		(219)		(1,568)
Cash and cash equivalents at the end of the period	14		23,582		65,674		80,531

Notes to the condensed set of interim financial statements

Six months ended 30 June 2011

1.             General information

The information for the year ended 31 December 2010 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors' reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

2.             Accounting policies

Basis of preparation

The unaudited interim condensed consolidated financial statements for the six months ended 30 June 2011 have been prepared in accordance with IAS 34 'Interim financial reporting' and with the Disclosure and Transparency Rules of the Financial Services Authority.

The unaudited interim condensed consolidated financial statements do not constitute the Group's statutory financial statements. The Group's most recent statutory financial statements, which comprise the annual report and audited financial statements for the year ended 31 December 2010, were approved by the directors on 4 March 2011. The interim condensed consolidated financial statements should be read in conjunction with the Annual Report and Accounts for the year ended 31 December 2010, which have been prepared in accordance with International Financial Reporting Standards ('IFRSs') as adopted by the European Union.

Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the interim management report. The interim management report also includes a summary of the Group's financial position, its cash flows and its borrowing facilities. 

The directors believe the Group is well placed to manage its business risks successfully, despite the current uncertain economic outlook. The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its current committed facilities.

After making enquiries, the directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the half-yearly financial report.

New accounting standards, interpretations and amendments

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2010, except for the adoption of new standards and interpretations as of 1 January 2011, noted below:
IAS 24 Related Party Transactions (Amendment) The IASB has issued an amendment to IAS 24 that clarifies the definitions of a related party. The new definitions emphasise a symmetrical view of related party relationships, as well as clarifying in which circumstances persons and key management personnel affect related party relationships of an entity. Secondly, the amendment introduces an exemption from the general related party disclosure requirements for transactions with a government and entities that are controlled, jointly controlled or significantly influenced by the same government as the reporting entity. The adoption of the amendment did not have any impact on the financial position or performance of the Group.
IAS 32 Financial Instruments: Presentation (Amendment) The amendment alters the definition of a financial liability in IAS 32 to enable entities to classify rights issues and certain options or warrants as equity instruments. The amendment is applicable if the rights are given pro rata to all of the existing owners of the same class of an entity's non-derivative equity instruments, to acquire a fixed number of the entity's own equity instruments for a fixed amount in any currency. The amendment has had no effect on the financial position or performance of the Group.
IFRIC 14 Prepayments of a Minimum Funding Requirement (Amendment) The amendment removes an unintended consequence when an entity is subject to minimum funding requirements and makes an early payment of contributions to cover such requirements. The amendment permits a prepayment of future service cost by the entity to be recognised as a pension asset. The amendment to the interpretation had no effect on the financial position or performance of the Group.
Improvements to IFRSs (issued May 2010) In May 2010, the IASB issued its third omnibus of amendments to its standards, primarily with a view to removing inconsistencies and clarifying wording. There are separate transitional provisions for each standard. The adoption of the following amendments did not have any impact on the financial position or performance of the Group.
IFRS 3 Business Combinations: The measurement options available for non-controlling interest (NCI) have been amended. Only components of NCI that constitute a present ownership interest that entitles their holder to a proportionate share of the entity's net assets in the event of liquidation shall be measured at either fair value or at the present ownership instruments' proportionate share of the acquiree's identifiable net assets. All other components are to be measured at their acquisition date fair value.
IFRS 7 Financial Instruments - Disclosures: The amendment was intended to simplify the disclosures provided by reducing the volume of disclosures around collateral held and improving disclosures by requiring qualitative information to put the quantitative information in context.
IAS 1 Presentation of Financial Statements: The amendment clarifies that an option to present an analysis of each component of other comprehensive income may be included either in the statement of changes in equity or in the notes to the financial statements. The Group has opted not to present further analysis.
IAS 34 Interim Financial Statements: The amendment requires additional disclosures for fair values and changes in classification of financial assets, as well as changes to contingent assets and liabilities in interim condensed financial statements.
Other amendments resulting from Improvements to IFRSs to the following standards did not have any impact on the accounting policies, financial position or performance of the Group:
IFRS 3 Business Combinations: Clarification that contingent consideration arising from business combination prior to adoption of IFRS 3 (as revised in 2008) are accounted for in accordance with IFRS 3 (2005). IAS 27 Consolidated and Separate Financial Statements: applying the IAS 27 (as revised in 2008) transition requirements to consequentially amended standards. IFRS 3 Business Combinations: Unreplaced and voluntarily replaced share-based payment awards and its accounting treatment within a business combination. IFRIC 13 Customer Loyalty Programmes: in determining the fair value of award credits, an entity shall consider discounts and incentives that would otherwise be offered to customers not participating in the loyalty programme.
The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

3.             Segment reporting

All revenues disclosed are derived from external customers.

The accounting policies of the reportable segments are the same as the Group's accounting policies. Segment operating profit represents the profit earned by each segment 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
		Six months ended					Year ended 31 December 2010 £'000		Six months ended				Year ended 31 December 2010 £'000
			30 June 2011 £'000		30 June 2010 £'000				30 June      2011 £'000		30 June 2010 £'000
EMEA			209,548		161,343		332,202		120,268		91,314		188,706
United Kingdom			163,047		142,807		302,567		66,010		61,168		124,858
Asia Pacific	Australia and New Zealand		49,120		37,979		81,676		23,806		17,316		37,645
	Other		27,620		15,540		38,630		24,747		13,850		34,569
	Total		76,740		53,519		120,306		48,553		31,166		72,214
Americas			52,742		35,846		77,221		40,263		25,906		56,429
			502,077		393,515		832,296		275,094		209,554		442,207

			Operating Profit
			Six months ended				Year ended 31 December 2010 £'000
			30 June 2011 £'000		30 June 2010 £'000
EMEA			16,958		9,628		22,272
United Kingdom			10,407		9,623		19,630
Asia Pacific	Australia and New Zealand		5,026		4,787		9,754
	Other		7,213		4,716		12,562
	Total		12,239		9,503		22,316
Americas			5,798		3,766		7,309
Operating profit before non-recurring items			45,402		32,520		71,527
Non-recurring items (NRI) (note 4)			-		17,125		17,125
Operating profit after non-recurring items			45,402		49,645		88,652
Financial income			63		11,789		12,004
Profit before tax			45,465		61,434		100,656

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

The analysis below is of the carrying amount of reportable segment assets and liabilities and non-current assets. Segment assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. The individual reportable segments exclude income tax assets and liabilities. Non-current assets include property, plant and equipment, computer software, goodwill and other intangible.

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

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

		Total Assets							Total Liabilities
							31 December 2010 £'000						31 December 2010 £'000
			30 June 2011 £'000		30 June 2010 £'000				30 June      2011 £'000		30 June 2010 £'000
EMEA			149,074		125,655		136,159		69,902		52,016		60,744
United Kingdom			116,813		88,770		96,563		88,859		41,692		41,359
Asia Pacific	Australia and New Zealand		26,618		22,669		28,292		11,818		7,853		10,410
	Other		28,810		18,904		24,471		6,054		3,124		5,352
	Total		55,428		41,573		52,763		17,872		10,977		15,762
Americas			43,719		27,820		33,037		10,325		5,734		9,450
Segment assets/liabilities			365,034		283,818		318,522		186,958		110,419		127,315
Income tax			2,810		14,143		2,810		11,772		18,695		16,583
			367,844		297,961		321,332		198,730		129,114		143,898

		Property, Plant & Equipment						Intangible Assets
						31 December 2010 £'000						31 December 2010 £'000
		30 June 2011 £'000		30 June 2010 £'000				30 June      2011 £'000		30 June 2010 £'000
EMEA		10,762		10,755		10,104		665		899		776
United Kingdom		9,835		8,919		9,090		30,652		20,791		25,810
Asia Pacific	Australia and New Zealand	1,696		2,042		2,104		160		204		148
	Other	1,794		622		996		246		346		369
	Total	3,490		2,664		3,100		406		550		517
Americas		7,932		5,457		6,232		570		424		471
		32,019		27,795		28,526		32,293		22,664		27,574

The below analysis in notes (c) revenue and gross profit by discipline (being the professions of candidates placed) and (d) revenue and gross profit generated from permanent and temporary placements, have been included as additional disclosure over and above the requirements of IFRS 8 "Operating Segments".

c)             Revenue and gross profit by discipline

	Revenue							Gross Profit
	Six months ended					Year ended 31 December 2010 £'000		Six months ended				Year ended 31 December 2010 £'000
		30 June 2011 £'000		30 June 2010 £'000				30 June      2011 £'000		30 June 2010 £'000
Finance and Accounting		261,023		214,440		450,573		123,824		99,167		209,176
Marketing, Sales and Retail		65,381		53,252		111,661		50,809		39,696		82,834
Legal, Technology, HR, Secretarial and Other		98,560		73,391		156,993		51,794		38,527		81,597
Engineering, Property & Construction, Procurement & Supply Chain		77,113		52,432		113,069		48,667		32,164		68,600
		502,077		393,515		832,296		275,094		209,554		442,207

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

	Revenue							Gross Profit
	Six months ended					Year ended 31 December 2010 £'000		Six months ended				Year ended 31 December 2010 £'000
		30 June 2011 £'000		30 June 2010 £'000				30 June      2011 £'000		30 June 2010 £'000
Permanent		227,160		169,127		355,979		219,429		163,006		343,787
Temporary		274,917		224,388		476,317		55,665		46,548		98,420
		502,077		393,515		832,296		275,094		209,554		442,207

4.             Non-recurring items (NRI)

In 2003, Michael Page submitted an initial claim to Her Majesty's Revenue and Customs (HMRC) for overpaid VAT which was rejected. Michael Page appealed and subsequently filed amended claims for £26.5m, net of fees, covering the period from 1980 to 2004. In March 2009, Michael Page filed amended claims for a further refund of an additional £80m, net of fees, of overpaid VAT covering the same period.                                                                                                                                                                                                                                                                                                                                                                                               In June 2009, Michael Page 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 June 2009 half year results.
On 25 September 2009, Michael Page 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 then took place and on 5 March 2010, Michael Page International plc (MPI) announced that an agreement had been reached in principle, subject to legal contract, between MPI and HMRC in respect of the initial claim for a refund of overpaid VAT plus statutory interest to retain £28.4m (net of fees) of the £37.4m it received. However, given the background to the initial receipt and the subsequent review and reversal of its decision by HMRC, the Group reversed out the balances originally recognised in the 2009 half year results and as such did not recognise any amount in the Income Statement at the 2009 full year, due to the remaining uncertainty pending formal contractual agreement.
On 30 April 2010, a formal agreement was signed with HMRC. As a result, of the £50m originally received from HMRC, MPI retained £38m and returned £11.9m in May 2010. Accordingly, after fees, MPI recognised £28.4m as non-recurring income in the prior year 2010 Income Statement. Taxation of £8.0m on non-recurring items, net of expenses, was also provided in 2010, representing an effective tax rate of 28.0%.
During the period, we had correspondence and discussions with HMRC concerning the amended claims for a further refund of VAT and related interest, but the eventual outcome still remains uncertain.

5.             Financial income/(expenses)

		Six months ended				Year ended 31 December 2010 £'000
		30 June 2011 £'000		30 June 2010 £'000
Financial income
Bank interest receivable		398		744		1,107
Interest on non-recurring items (note 4)		-		11,335		11,335
		398		12,079		12,442
Financial expenses
Bank interest payable		(335)		(290)		(438)

6.             Taxation

Taxation for the six month period is charged at 33.0% (six months ended 30 June 2010: 32.5%; year ended 31 December 2010: 33.0%), representing the best estimate of the average annual effective tax rate expected for the full year, applied to the pre-tax income of the six month period.

7.             Dividends

	Six months ended				Year ended 31 December 2010 £'000
	30 June 2011 £'000		30 June 2010 £'000
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year 31 December 2010 of 6.12p per ordinary share (2009: 5.12p)	18,823		16,066		16,066
Interim dividend for the period ended 30 June 2010 of 2.88p per ordinary share	-		-		8,813
	18,823		16,066		24,879
Amounts proposed as distributions to equity holders in the period:
Proposed interim dividend for period ended 30 June 2011 of 3.25p per ordinary share (2010: 2.88p)	9,846		8,900		-
Proposed final dividend for the year ended 31 December 2010 of 6.12p per ordinary share (2009: 5.12p)	-		-		18,755

The proposed interim dividend had not been approved by the Board at 30 June 2011 and therefore has not been included as a liability. The comparative interim dividend at 30 June 2010 was also not recognised as a liability in the prior period.

The proposed interim dividend of 3.25 pence (2010: 2.88 pence) per ordinary share will be paid on 7 October 2011 to shareholders on the register at the close of business on 9 September 2011.

8.             Share-based payments

In accordance with IFRS 2 "Share-based Payment", a charge of £3.9m has been recognised for share options (including social charges) (30 June 2010: £2.0m, 31 December 2010: £5.6m), and £3.1m has been recognised for other share-based payment arrangements (including social charges) (30 June 2010: £3.3m, 31 December 2010: £6.9m).

During the period, options over 4.1m shares were granted at an average exercise price of £4.91p and 0.5m share options were exercised, which has led to an increase in share capital of £5k and an increase in share premium of £1,031k.

9.             Earnings per ordinary share

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

	Six months ended				Year ended 31 December 2010
Earnings	30 June 2011		30 June 2010
Earnings for basic and diluted earnings per share (£'000)	30,459		41,468		67,484
Non-recurring items (NRI) (£'000) (note 4)	-		(20,491)		(20,491)
Earnings for basic and diluted earnings per share before NRI (£'000)	30,459		20,977		46,993
Number of shares
Weighted average number of shares used for basic earnings per share ('000)	305,807		316,596		311,821
Dilution effect of share plans ('000)	9,653		7,490		7,653
Diluted weighted average number of shares used for diluted earnings per share ('000)	315,460		324,086		319,474
Basic earnings per share (pence)	10.0		13.1		21.6
Diluted earnings per share (pence)	9.7		12.8		21.1
Basic earnings per share before NRI (pence)	10.0		6.6		15.1
Diluted earnings per share before NRI (pence)	9.7		6.5		14.7

The above results all relate to continuing operations.

10.           Property, plant and equipment

Acquisitions and disposals

During the six months ended 30 June 2011 the Group acquired property, plant and equipment with a cost of £8.0m (30 June 2010: £2.6m, 31 December 2010: £7.4m).

Property, plant and equipment with a carrying amount of £0.2m were disposed of during the six months ended 30 June 2011 (30 June 2010: £1.4m, 31 December 2010: £1.5m), resulting in a profit on disposal of £7k (30 June 2010: loss of £42k, 31 December 2010: loss of £151k).

11.           Trade and other receivables

	30 June 2011          £'000		30 June 2010 £'000		31 December 2010 £'000
Current
Trade receivables	180,736		122,737		134,723
Other receivables	5,894		3,552		5,035
Prepayments and accrued income	38,354		26,012		28,547
	224,984		152,301		168,305
Non-current
Prepayments and accrued income	1,916		2,745		1,145

12.           Trade and other payables

		30 June 2011          £'000		30 June 2010 £'000		31 December 2010 £'000
Current
Trade payables		6,319		3,505		9,091
Other tax and social security		50,508		32,670		33,900
Other payables		23,238		19,355		20,340
Accruals		62,363		49,476		58,248
Deferred income		2,315		1,319		1,216
		144,743		106,325		122,795
Non-current
Deferred income		2,091		1,972		1,830
Other tax and social security		618		295		2,326
		2,709		2,267		4,156

13.           Cash flows from operating activities

		Six months ended				Year ended 31 December 2010 £'000
		30 June 2011 £'000		30 June 2010 £'000
Profit before tax		45,465		61,434		100,656
Non-recurring income		-		(17,125)		(17,125)
Profit before tax and non-recurring income		45,465		44,309		83,531
Depreciation and amortisation charges		5,522		5,212		10,579
(Profit)/loss on sale of property, plant and equipment, and computer software		(7)		42		151
Share scheme charges		5,991		5,216		10,049
Net financial income - including NRI		(63)		(11,787)		(12,004)
Operating cash flow before changes in working capital and NRI		56,908		42,992		92,306
Increase in receivables		(51,718)		(32,175)		(41,107)
Increase in payables		16,599		16,256		30,451
Cash generated from underlying operations		21,789		27,073		81,650
Decrease in HMRC related receivables		-		8,972		8,972
Decrease in HMRC related payables		-		(49,990)		(49,990)
Non-recurring income		-		28,460		28,460
Cash generated from operations		21,789		14,515		69,092

14.           Cash and cash equivalents

		30 June 2011 £'000		30 June 2010 £'000		31 December 2010 £'000
Cash at bank and in hand		56,156		57,562		73,178
Short-term deposits		6,568		9,615		7,353
Cash and cash equivalents		62,724		67,177		80,531
Bank overdrafts		(39,142)		(1,503)		-
Cash and cash equivalents in the statement of cash flows		23,582		65,674		80,531

Responsibility statement:

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

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

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

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

On behalf of the Board

S Ingham                                                                                                 S Puckett

Chief Executive                                                                                       Group Finance Director

15 August 2011

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

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

 

END

 

 

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