Interim Results - Part 2

Michael Page International PLC 14 August 2001 PART 2 MICHAEL PAGE INTERNATIONAL PLC Notes to the unaudited financial information 1. Basis of accounting The consolidated interim financial statements have been prepared under the historical cost convention and in accordance with applicable United Kingdom accounting and financial reporting standards. The accounting policies are the same as those set out in the financial statements of the Group for the year ended 31 December 2000. The interim financial statements are unaudited but have been reviewed by the auditors and their report is set out on page 13. The comparative figures for the year ended 31 December 2000 have been extracted from the Group's financial statements which have been delivered to the Registrar of Companies. The auditors' report on those statements was unqualified and did not include a statement under Section 237(2) or (3) of the Companies Act 1985. Prior to flotation the Group underwent a reorganisation. On 27 February 2001 Michael Page International Inc and MP International Pte Limited were transferred to the Group by Spherion Corporation, the Group's previous ultimate parent company. On 28 February 2001, Plusbox Limited and its subsidiaries were transferred from the Group to Spherion Corporation. The proforma financial information has been prepared to show the results of the Group that would have arisen had the new structure been in place for the reported periods and are indicative of the business going forward after flotation. 2. Segmental analysis Six months Six months Year ended ended ended December June 2001 June 2000 2000 £'000 £'000 £'000 (a) Turnover by geographic region UK - continuing operations 127,370 107,235 224,469 - discontinued operations 5,753 16,666 39,643 133,123 123,901 264,112 Continental Europe - 84,743 65,204 137,897 continuing operations Asia Pacific - continuing operations - Australia 22,802 23,295 47,999 - continuing operations - Other 3,696 3,553 7,665 - acquisitions - Other 849 - - 27,347 26,848 55,664 Americas - continuing operations 740 - 392 - acquisitions 1,292 - - 2,032 - 392 247,245 215,953 458,065 ========= ========= ========= MICHAEL PAGE INTERNATIONAL PLC Notes to the unaudited financial information (continued) 2. Segmental analysis (continued) Six months Six months Year ended ended ended December June 2001 June 2000 2000 £'000 £'000 £'000 (b) Profit before interest, taxation, exceptional items and Spherion bonus by geographic region UK - continuing operations 20,322 20,059 39,767 - discontinued operations 104 530 1,994 20,426 20,589 41,761 Continental Europe - 17,369 15,425 29,676 continuing operations Asia Pacific - continuing operations - Australia 3,129 4,369 8,363 - continuing operations - Other 571 1,469 3,155 - acquisitions - Other 13 - - 3,713 5,838 11,518 Americas - continuing operations 144 (16) 222 - acquisitions 382 - - 526 (16) 222 __________ __________ __________ Profit before interest, 42,034 41,836 83,177 taxation, exceptional items and Spherion bonus __________ __________ __________ Exceptional items (note 3) 2,417 - - Spherion bonus - (4,380) (9,075) __________ __________ __________ Profit before interest 44,451 37,456 74,102 and taxation Net interest (3,820) (7,888) (15,566) __________ __________ __________ Profit on ordinary 40,631 29,568 58,536 activities before taxation ========= ========= ========= Six months Six months Year ended ended ended December June 2001 June 2000 2000 £'000 £'000 £'000 (c) Net assets / (liabilities) by geographic region UK - continuing operations 10,923 (188,352) (174,926) - discontinued operations - (1,815) (1,009) 10,923 (190,167) (175,935) Continental Europe - 32,425 25,553 26,702 continuing operations Asia Pacific - continuing operations - Australia 7,682 5,159 6,839 - continuing operations - Other 4,260 2,701 3,590 - acquisitions - Other 300 - - 12,242 7,860 10,429 Americas - continuing operations 338 (16) 175 - acquisitions 35 - - 373 (16) 175 55,963 (156,770) (138,629) ========= ========= ========= MICHAEL PAGE INTERNATIONAL PLC Notes to the unaudited financial information (continued) 3. Exceptional items Six months Six months Year ended ended ended December June 2001 June 2000 2000 £'000 £'000 £'000 National Insurance and (6,000) - - Social Security liabilities on Restricted Share Scheme Profit on disposal of 8,417 - - Plusbox Limited (Note 9) __________ __________ __________ 2,417 - - ========= ========= ========= Restricted Share Scheme Spherion bonuses historically formed part of the remuneration of the Group's senior executives. On flotation this arrangement ceased and as compensation Spherion granted Restricted Shares to certain senior executives. The Restricted Shares represent 6% of the issued ordinary shares of the Group owned by Spherion prior to flotation.The grant of Restricted Shares gives rise to National Insurance and Social Security liabilities amounting to £6.0m based on the flotation price of 175p. These liabilities are expected to be payable in March 2004 when the shares vest to those senior executives. 4. Taxation The charge for taxation is based on the expected annual tax rate of 34.9% on profit before taxation and exceptional items. 5. Dividends An interim dividend of 0.275 pence (30 June 2000: Nil pence) per ordinary share will be paid on 19 October 2001 to shareholders on the register at the close of business on 21 September 2001. 6. Earnings per share Earnings per share have been calculated on the following: Basic Exceptional Adjusted EPS Items EPS £'000 £'000 £'000 Six months ended 30 June 2001 Profit after taxation 29,084 (4,217) 24,867 __________ __________ __________ Average shares (number '000) 372,127 - 372,127 __________ __________ __________ Six months ended 30 June 2000 Profit after taxation and equity 18,977 - 18,977 minority interests __________ __________ __________ Average shares (number '000) 375,000 - 375,000 __________ __________ __________ Year ended 31 December 2000 Profit after taxation and equity 37,008 - 37,008 minority interests __________ __________ __________ Average shares (number '000) 375,000 - 375,000 __________ __________ __________ There is no dilutive effect of unexercised share options. MICHAEL PAGE INTERNATIONAL PLC Notes to the unaudited financial information (continued) 7. Investments in own shares 5,714,286 ordinary shares were acquired by the Employee Benefit Trust on flotation at a cost of £10.0m as a hedge against National Insurance and social security liabilities payable in respect of the Restricted Share Scheme and the Executive Share Option Scheme. 8. Purchase of subsidiary undertakings As a result of the reorganisation prior to flotation, on 27 February 2001 the Group acquired the entire issued share capital of Michael Page International Inc and MP International Pte Limited from fellow subsidiaries of Spherion Corporation. The goodwill arising of £307,000 is being amortised over 20 years. 9. Disposal of subsidiary undertakings As a result of the restructuring prior to flotation, on 28 February 2001 the Group disposed of its 100% investment in Plusbox Ltd and its subsidiaries, including Spherion UK plc (formerly Crone Corkill Group plc), for a net consideration of £7.4m to a fellow subsidiary of Spherion Corporation resulting in a profit on disposal of £8.4m. Included in the net assets disposed of was £20.4m of goodwill associated with the original acquistion of the Crone Corkill Group. 10. Provisions for liabilities and charges 30 June 30 June 31 December 2001 2000 2000 £'000 £'000 £'000 National Insurance and social 6,000 - - security liabilities on Restricted Share Scheme (note 3) Deferred taxation 56 - 1,757 __________ __________ __________ 6,056 - 1,757 ========= ========= ========= 11. Reconciliation of movements in shareholders funds Six months Six months Year ended ended ended December June 2001 June 2000 2000 £'000 £'000 £'000 Profit for the financial 29,084 18,977 37,008 period Dividends (1,016) - - __________ __________ __________ Retained profit for the 28,068 18,977 37,008 financial period Foreign currency (1,476) 319 429 translation differences __________ __________ __________ 26,592 19,296 37,437 Capital contribution 168,000 - - Opening shareholders' (138,629) (176,066) (176,066) funds __________ __________ __________ Closing shareholders' 55,963 (156,770) (138,629) funds ========= ========= ========= MICHAEL PAGE INTERNATIONAL PLC Notes to the unaudited financial information (continued) 12. Reconciliation of operating profit to net cash inflow from operating activities Six months Six months Year ended ended ended December June 2001 June 2000 2000 £'000 £'000 £'000 Operating profit 36,034 37,456 74,102 Depreciation and 3,566 3,141 6,914 amortisation charges Profit on sale of fixed (5) (29) (27) assets Increase in debtors (3,427) (25,167) (35,536) Increase in creditors 4,775 18,667 32,125 __________ __________ __________ Net cash inflow from 40,943 34,068 77,578 operating activities ========= ========= ========= 13. Reconciliation of net cash flow to movement in net debt Six months Six months Year ended ended ended December June 2001 June 2000 2000 £'000 £'000 £'000 (Decrease) / increase in (2,362) 8,728 7,629 cash in the period Decrease in debt 124,464 3,000 20,039 financing Foreign exchange (778) 218 257 movements __________ __________ __________ Movements in net cash in 121,324 11,946 27,925 period Opening net debt (133,998) (161,923) (161,923) __________ __________ __________ Closing net debt (12,674) (149,977) (133,998) ========= ========= ========= 14. Analysis of net debt for the period ended 30 June 2001 At Cash Foreign At 31 December Flow Exchange 30 June 2000 £'000 Movements 2001 £'000 £'000 £'000 Cash at bank and in 17,035 (5,028) (778) 11,229 hand Bank overdrafts (2,666) 2,666 - - __________ __________ __________ __________ 14,369 (2,362) (778) 11,229 Loan notes due within (6,367) 464 - (5,903) one year Bank loans due after (142,000) 124,000 - (18,000) more than one year __________ __________ __________ __________ Total net debt (133,998) 122,102 (778) (12,674) ========= ========= ========= ========= 15. Nature of financial information The interim financial statements were approved by a committee of the Board of Directors on 14 August 2001. Copies of this statement of interim results are available from the Company's Registrar - Capita IRG plc, Balfour House, 390/398 High Road, Ilford, Essex IG1 1NQ, at the Company's registered office - Page House, 39 - 41 Parker Street, London WC2B 5LN, and on the Company's website - www.michaelpage.com. Independent review report to Michael Page International Plc Introduction We have been instructed by the company to review the financial information for the six months ended 30 June 2001 which comprises the proforma profit and loss account, the statutory profit and loss account, the proforma statement of total recognised gains and losses, the related notes to the proforma financial information 1 to 6, and the related notes to the statutory financial information 1 to 15. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2001. Deloitte & Touche Chartered Accountants 14 August 2001 Notes: A review does not provide assurance on the maintenance and integrity of the website, including controls used to achieve this, and in particular on whether any changes may have occurred to the financial statements since first published. These matters are the responsibility of the directors but no control procedures can provide absolute assurance in this area. Legislation in the United Kingdom governing the preparation and dissemination of financial information differs from legislation in other jurisdictions.

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