Interim Management Statement

RNS Number : 0701B

Michael Page International PLC

11 April 2012

 



11 April 2012

FIRST QUARTER 2012 INTERIM MANAGEMENT STATEMENT

Financial Summary

·        Group Q1 gross profit of £136.0m up 6.9% (7.7%*) on the £127.3m in Q1 2011

·        EMEA (44% of Group) Q1 gross profit of £60.3m up 7.4% (10.1%*) on the £56.2m in Q1 2011

·        UK (23% of Group) Q1 gross profit of £30.6m down 3.7% on the £31.7m in Q1 2011

·        Asia Pacific (19% of Group) Q1 gross profit of £26.3m up 23.0% (+17.8%*) on the £21.4m in Q1 2011

·        Americas (14% of Group) Q1 gross profit of £18.8m up 4.6% (+8.2%*) on the £18.0m in Q1 2011

·        Q1 Permanent gross profit (79% of Group) of £106.9m up 6.0% (+6.9%*) on the £100.9m in Q1 2011

·        Q1 Temporary gross profit (21% of Group) of £29.1m up 10.3% (+10.9%*) on the £26.4m in Q1 2011

·        Group headcount at 31 March 2012 of 5,309 up 9.4% on the 4,852 at 31 March 2011 and up 23 (+0.4%) on the 5,286 at 31 December 2011

·        Net cash at 31 March 2012 in the region of £63m (£58.2m at 31 December 2011)

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

Commenting on first quarter trading, Steve Ingham, Chief Executive said:

"We are pleased with our first quarter performance, with Group gross profit increasing by 8%* against a backdrop of ongoing macroeconomic uncertainty and, in particular, continued weakness in the banking sector.

"We achieved strong rates of growth in EMEA, especially in Germany and France; Southern Europe remained weak. In the UK, with the exclusion of banking, we continued to achieve modest year-on-year growth in spite of a very challenging and highly competitive market. Across the Americas we grew, most notably in Latin America. As in the UK and North America, the weakness in the banking sector also reduced our growth rates in Asia. In mainland China, where banking is a less significant part of our business, we grew 49%* and have 205 employees. In Australasia, gross profit grew 14%*, benefitting from the strong commodities sector.

"We continue to benefit from our organic discipline diversification, with Engineering, Property & Construction, Procurement & Supply Chain now producing approximately 19% of the Group's gross profit and growing in the first quarter by 19.4%*.

"We remain committed to investing in developing our business, opening offices in Taipei and Suzhou, in Asia, Casablanca, in Morocco and Bogota, in Colombia. In the first quarter, Group headcount increased by 23 to 5,309.

"Markets continue to be weak and visibility remains limited, however, the Group remains financially strong, with net cash in the region of £63m. Operationally, our successful strategy of diversification, both by geography and business discipline, positions us well to benefit from our ongoing investment in those markets which we expect to deliver growth over the long-term and our strong competitive position in more mature markets."

Enquiries:

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

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

http://event.on24.com/r.htm?e=416503&s=1&k=50CCFEB54A749F8E3F2105A656EC006E

The dial-in details for the conference call are as follows:

Dial-In:             [phone]
PIN Code:         462822 followed by #
The presentation and recording of the call will be available on the company's website later today at:

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

The Group will issue its second quarter and half year trading update on 9 July 2012.

FIRST QUARTER 2012 INTERIM MANAGEMENT STATEMENT

Michael Page International plc (MPI), the specialist recruitment consultancy, reports first quarter Group gross profit of £136.0m (Q1 2011: £127.3m), a year-on-year increase of 6.9% (+7.7%*). Group headcount increased by 23 (+0.4%) during the quarter to 5,309 at the end of March 2012, 9.4% higher than at the end of first quarter of 2011.

Perm/Temp mix

Group gross profit from permanent recruitment in the first quarter was £106.9m, an increase of 6.0% (+6.9%*) over the £100.9m in the first quarter of 2011.

Group gross profit from temporary recruitment in the first quarter was £29.1m, an increase of 10.3% (+10.9%*) over the £26.4m in the first quarter of 2011.

The perm/temp gross profit ratio in the first quarter was unchanged at 79:21 (Q1 2011: 79:21).

Discipline analysis

		Gross Profit		Growth rates
	% of Group Q1	Q1 2012	Q1 2011	Reported	Constant
Finance & Accounting	43%	£58.2m	£56.7m	+2.7%	+3.4%
Legal, Technology, HR, Secretarial, Healthcare	20%	£27.6m	£24.5m	+12.4%	+13.3%
Engineering, Property & Construction, Procurement & Supply Chain	19%	£26.1m	£22.1m	+18.1%	+19.4%
Marketing, Sales & Retail	18%	£24.1m	£24.0m	+0.5%	+1.2%

All disciplines achieved year-on-year growth in the quarter, despite weakness in the banking sector. Finance and Accounting grew 3.4%* in the first quarter, within which our Banking businesses that now accounts for approximately 8%*of the Group's gross profit, and operates primarily in London, New York, Tokyo, Hong Kong and Singapore, declined by 12%*. As anticipated, the more recently launched disciplines continue to grow at faster rates as they are introduced across the country and office networks, thereby increasing the Group's organic diversification of its revenue streams.

Geographical analysis

EMEA Gross Profit (44% of Group in Q1 2012)			Growth rates
			Reported	Constant
Q1 2012 vs. Q1 2011	£60.3m	£56.2m	+7.4%	+10.1%
Headcount at 31 March 2012: 2,193 (31 December 2011: 2,210) In local currency, against Q1 2011, gross profit in: ·    France (16% of the Group) was higher by 10% ·    Germany (7% of the Group) was higher by 36% ·    Netherlands (4% of the Group) was higher by 7% ·    Italy (3% of the Group) was lower by 5% ·    Spain (3% of the Group) was lower by 11% ·    Rest of EMEA: Austria, Belgium, Ireland, Luxembourg, Morocco, Poland, Portugal, Qatar, Russia, South Africa, Sweden, Switzerland, Turkey, U.A.E. (11% of the Group) was higher by 10%

In our largest region, Europe, Middle East and Africa (EMEA), representing 44% of Group gross profit, first quarter gross profit was £60.3m, an increase of 7.4% (+10.1%*) over the £56.2m recorded in the first quarter of 2011.

While market conditions remained challenging, particularly in Southern Europe, the EMEA region grew by 10%* benefitting from its diversification. Good growth was achieved in the majority of countries in the region, most notably from Germany (7% of the Group) recording growth of 36%* and France (16% of the Group) growing by 10%*. The fourteen countries that comprise the Rest of EMEA now represent 11% of the Group's gross profit, and collectively they grew by 10%*. While year-on-year gross profits were lower in Italy, Spain and Portugal, they all continued to perform well in difficult market conditions and generated profit.

Overall during the first quarter, headcount reduced in the region by 17 (-0.8%) to 2,193, with the reductions being primarily in Southern Europe and the Netherlands. During the first quarter, we opened a new office in Casablanca, Morocco

UK Gross Profit (23% of Group in Q1 2012)			Growth rates
Q1 2012 vs. Q1 2011	£30.6m	£31.7m	-3.7%
Headcount at 31 March 2012: 1,259 (31 December 2011: 1,292)

In the UK, representing 23% of Group gross profit, first quarter gross profit was £30.6m, down 3.7% on the first quarter of 2011. Market conditions generally remained tough, with the banking sector being particularly depressed. Year-on-year gross profit from banking in the first quarter was 50% lower and now represents 5% of UK gross profit. Excluding banking, UK gross profit was marginally ahead of the first quarter of 2011, benefitting from our strategy of discipline diversification. Headcount in the UK reduced by 33 (-2.6%) to 1,259 from 31 December 2011 and is now 99 (7.3%) lower than at the end of the first quarter of 2011.

Asia Pacific Gross Profit (19% of Group in Q1 2012)			Growth rates
			Reported	Constant
Q1 2012 vs. Q1 2011	£26.3m	£21.4m	+23.0%	+17.8%
Headcount at 31 March 2012: 1,007 (31 December 2011: 971) In local currency, against Q1 2011: ·    Asia (10% of Group) was higher by 22% ·    Australia and New Zealand (9% of the Group) were higher by 14%

In Asia Pacific, first quarter gross profit was £26.3m, an increase of 23.0% (+17.8%*) over the £21.4m recorded in the first quarter of 2011. While seasonally the first quarter is typically the weakest of the year, it was still the third highest quarter on record in reported gross profit.

In Australia and New Zealand, the first quarter gross profit was 14%* higher year-on-year, with continuing strong performance in Western Australia and Queensland driven by the mining and commodities sector and good growth in Page Personnel. In Asia, with the notable exception of banking, we continued to achieve strong levels of growth with first quarter gross profit 22%* higher year-on-year. The weakness in Banking has particularly impacted the growth rates of our offices in Tokyo, Hong Kong and Singapore. All other disciplines continued to achieve strong growth, particularly in mainland China. Malaysia and India, which opened at the start of 2011, are progressing well and we have continued our investment in Asia by opening new offices in Taipei and Suzhou. We now have over a thousand people in the region, with headcount growing by 36 (+3.7%) to 1,007, and with the majority of the additions in Asia. Headcount across the region is 28% higher than at the end of the first quarter of 2011.

Americas Gross Profit (14% of Group in Q1 2012)			Growth rates
			Reported	Constant
Q1 2012 vs. Q1 2011	£18.8m	£18.0m	+4.6%	+8.2%
Headcount at 31 March 2012: 850 (31 December 2011: 813) In local currency, against Q1 2011: ·    Latin America (10% of the Group) was higher by 11% ·    North America (4% of the Group) was higher by 2%

In the Americas, first quarter gross profit was £18.8m, an increase of 4.6% (+8.2%*) over the £18.0m recorded in the first quarter of 2011.  In Latin America, gross profit was up 11%* year-on-year. In Brazil, lower than anticipated GDP growth rates impacted confidence levels resulting in flat gross profit for the quarter. We continued to achieve strong growth in Mexico, Argentina and in Chile, which opened just over a year ago and is ahead of plan and profitable. We are maintaining our longer term ambitions in the region and continued to invest, opening a new business at the start of the year in Bogota, Colombia. In North America, with the notable exception of Banking, we are making good progress, growing overall gross profit 2%* over the first quarter of 2011. The newly opened offices in Houston and San Francisco are performing well. Headcount across the Americas region grew in the first quarter by 37 (+4.6%) to 850, which is 18% higher than at the end of the first quarter of 2011.

Update on VAT reclaims

During the quarter we had further correspondence and discussions with HMRC concerning the amended claims for an additional refund of VAT and related interest, which concluded with HMRC rejecting our amended claim in full. During discussions, the Group's claim for the overpaid VAT element of the claim was reduced from £107.1m to £82.7m. We have written to HMRC requesting a reconsideration of the decision to reject our amended claims and the eventual outcome still remains uncertain.

Financial Position

Save for the effects of trading in the first quarter described above, there have been no other significant changes in the financial position of the Group since the publication of the results for the year ended 31 December 2011.

Net cash at the end of March 2012 was in the region of £63m (£58.2m at 31 December 2011).

The proposed final dividend for 2011 of 6.75p (+10.3%) per share is due to be paid on 6 June 2012.

During the first quarter, the Group granted 3.3m share options, 0.5m options were exercised and satisfied through newly issued shares. At 31 March 2012, there were approximately 317.2m shares in issue, of which 10.6m are held by the Employee Benefit Trust upon which dividends and voting rights are waived. Accordingly, 306.6m shares receive dividends and hold voting rights.

The Group will issue its second quarter and half year trading update on 9 July 2012.

Cautionary statement

This First Quarter 2012 Interim Management Statement ("IMS") 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 IMS should not be relied on by any other party or for any other purpose. This IMS 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 IMS 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.

 

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