MICHAEL PAGE INTERNATIONAL PLC
ANNUAL REPORT 2003
Company
profile
Michael Page is one of the world’s leading professional
recruitment consultancies, specialising in the placement
of candidates in permanent, contract, temporary and
interim positions with clients around the world. The Group
has operations in the UK, Continental Europe, Asia-Pacific
and the Americas and focuses on the areas of Accounting
and Finance, Banking and Financial Markets, Marketing,
Retail, Sales, Legal, Technology, Human Resources,
Engineering & Supply Chain, Taxation, Corporate Treasury,
Consultancy/Strategy/Change and Secretarial.
04 Chairman’s Statement
06 Chief Executive’s Review
09 Finance Director’s Review
12 The Board of Directors
14 Directors’ Report
18 Corporate Governance
23 Remuneration Report
30 Independent Auditors’ Report
32 Consolidated Profit and Loss Account
33 Balance Sheets
34 Consolidated Statement of Total
Recognised Gains and Losses
34 Consolidated Reconciliation of
Movements in Shareholders’ Funds
35 Consolidated Cash Flow Statement
36 Notes to the Accounts
55 Shareholder Information and Advisers
56 Five Year Summary
57 Notice of Meeting
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Michael Page International plc | Annual Report 2003
£372.6m
Group Turnover
£178.5m
Gross Profit
£23.5m
Profit before taxation and exceptional items
Group financial highlights
For the year ended 31 December 2003
Turnover
Gross profit
Profit before taxation
Profit before taxation and exceptional items
Basic and diluted earnings per share
Adjusted earnings per share
2003
£’000
372,616
178,485
22,409
23,510
3.8p
4.1p
2002
£’000
383,470
192,648
32,597
32,597
5.8p
5.8p
Annual Report 2003 | Michael Page International plc
3
Chairman’s Statement
Adrian Montague
Chairman
The Group performed creditably during
the year and exited 2003 in a strong
financial position. This was achieved
despite it being another challenging
year for recruitment specialists.
The slowing down of economic
activity and weakening of business
confidence experienced throughout
2002 continued into the first half of
2003, compounded by the war in Iraq
and the outbreak of SARS. These
conditions impacted directly upon
the professional employment markets
and consequently on the results of
the Group. However, towards the
end of the first half we experienced a
slight improvement in activity which
continued throughout the second half
of the year.
Dividends and share repurchases
Despite the reduction in profits, the Board
Financial highlights
is recommending that the dividend be
As a consequence of these difficult trading
conditions, turnover for the year ended
31 December 2003 was 2.8% lower at
£372.6m (2002: £383.5m). Temporary
placement activity has been more resilient
than permanent and this shift in business
mix contributed to a revenue (gross
profit) reduction of 7.4% to £178.5m
(2002: £192.6m). Given the Group’s high
operational gearing, operating profit before
exceptional items reduced by 28.8% to
maintained at last year’s level. A final dividend
of 2.3p per ordinary share is proposed
which, together with the interim dividend
of 1.1p per ordinary share paid in October,
makes a total dividend for the year of 3.4p
(2002: 3.4p) per ordinary share. The final
dividend will be paid on 4 June 2004 to
those shareholders on the register at 7 May
2004. The total dividend is covered 1.2 times
by earnings per share before exceptional
items of 4.1p.
£22.9m (2002: £32.1m).
In view of the uncertain and weak market
Profit before tax and exceptional items was
£23.5m (2002: £32.6m) and earnings per
share before exceptional items were 4.1p
(2002: 5.8p).
conditions during 2003, we did not make any
share repurchases. However, we anticipate
share repurchases being an ongoing use of
surplus cash and accordingly will be seeking
shareholders’ consent for a renewal of the
Cash flow was again very strong during the
repurchase authority at the Annual General
year with the Group generating £29.2m
Meeting on 27 May 2004.
(2002: £46.7m) from operating activities. At
31 December 2003 the Group had net cash
of £22.4m (2002: £21.4m).
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5
Adrian Montague
Chairman
Employees
I wish to express my thanks to the staff
worldwide for their commitment, loyalty
and efforts throughout this sustained period
of difficult trading conditions when they
have maintained your Company’s position
as the international leader in the specialist
recruitment industry.
Outlook
For the Group as a whole, our current
expectation is that our first quarter revenues
will be of a similar order to the £45.7m in the
fourth quarter of 2003, with pre-bonus costs,
including new investments, running at an
In the UK, our largest geographic market,
average monthly rate of approximately
there is now clear evidence of increasing
£13m over the year as a whole.
activity levels across all disciplines and we
have now begun investing in anticipation of
further growth. The outlook in Asia Pacific
and the Americas is also improving and we
are planning to open a number of new offices
in those markets. However, in Continental
Adrian Montague
Europe, trading conditions remain weak
Chairman
and our expectation is that 2004 will prove
25 February 2004
another difficult year for our businesses there.
In the UK, our
largest geographic
market, there is now
clear evidence of
increasing activity
levels across all
disciplines and
we have now
begun investing in
anticipation of
further growth.
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Chief Executive’s Review
Terry Benson
Chief Executive
Whilst having to review another
challenging year, I do so in the belief
that there are encouraging signs that
the worst is behind us in many of our
markets. During the year we have
continued to invest cautiously and
sensibly in the organic development
of our businesses, while maintaining
our normal tight cost control, and
produced over £23.5m of profits
before exceptional items.
We started the year with 2,390 fee
generating and support staff operating
from 107 offices in 16 countries. During the
course of the year we took the opportunity,
United Kingdom
In the UK, turnover fell by 4.7% to £194.3m
(2002: £203.9m) and revenue (gross
profit) by 8.7% to £90.6m (2002: £99.3m).
Operating profits before exceptional items
were £15.6m (2002: £20.5m). Revenue in
the second half of the year was 7.2% higher
than in the first half reflecting improved
trading conditions. The operational gearing
effect on these increased revenues,
combined with good cost control, resulted
in a 32% increase in second half operating
profits, compared with the first half.
The combined revenues of Michael Page
Marketing, Michael Page Sales and Michael
Page Retail, were 7% lower than in 2002
and represented 23% of the UK total. The
Marketing and Sales businesses, which
had borne the full brunt of the economic
downturn in 2001 and 2002, particularly
in the Technology and Telecoms sectors,
were both beneficiaries of increased levels
of enquiry as the year progressed. Michael
Page Retail produced another sound
performance, with second half revenue 9%
higher than the first. The national coverage of
these businesses increased to eight offices
in January 2004 with the opening of an office
upon the expiration of lease commitments,
The revenues of the finance and accounting
in Bristol.
to consolidate a small number of offices in
the UK and France, and at 31 December
2003 we employed 2,260 fee generating and
support staff operating from 105 offices in
businesses of Michael Page Finance, Michael
Page City and Accountancy Additions, which
generate approximately two thirds of our UK
revenue, were 12% lower than in 2002.
16 countries.
Michael Page Finance, the largest of the
three businesses, recorded its highest
quarterly revenue of the year in the fourth
quarter, which was very encouraging given
that this quarter includes the seasonally
quieter Christmas period. Although the
revenue of Michael Page City for the year
as a whole was 20% lower than in 2002,
the second half improved significantly on
the first, reflecting the improved confidence
In 2003, Michael Page Legal achieved
almost identical levels of revenue to 2002,
the second half being 6% stronger than
the first. The revenue of our Technology
business improved substantially in the
second half enabling us to achieve a break-
even position for the year as a whole. Our
newer businesses, Michael Page Human
Resources and Michael Page Engineering
and Supply Chain Management both
achieved in excess of 30% revenue growth
year on year. We have extended the
geographical coverage of both businesses
and they are now represented in four and five
levels experienced by many large financial
locations respectively.
institutions. The revenue of Accountancy
Additions, which specialises in lower level
finance and accounting positions, proved,
as in 2002, to be the most resilient and least
affected by adverse economic conditions.
In December we started a new business,
Michael Page Secretarial, in the City and
West End of London.
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Continental Europe
Our Continental European businesses
continued to experience extremely
Clearly the depressed economic environment
challenging trading conditions throughout the
in many Continental European markets
year. Turnover was 5.6% lower at £120.4m
severely impacted the Group’s businesses
(2002: £127.6m) and revenue 12.2% lower
over the past three years. Nevertheless we
at £58.2m (2002: £66.3m). The decline in
are committed to these markets in the longer
activity continued throughout the year with
term and accordingly we have continued to
second half revenue 10% lower than in the
invest modestly and sensibly in 2003 with the
first. As a result the region recorded a loss
opening of small offices in Zürich and Berlin,
in the second half, resulting in a full year
and expanded our offices in Rotterdam,
operating loss before exceptional items of
which opened in 2002, and Düsseldorf,
£0.3m (2002: £5.6m profit ).
by starting Michael Page Engineering and
France is our second largest geographic
market after the UK, representing
approximately 20% of the Group’s 2003
Production.
Asia Pacific
revenues, and once again trading conditions
Turnover for the region was 10.0% higher
proved to be very difficult. Revenue from
at £51.4m (2002: £46.7m), revenue was
permanent placements was 22% lower than
9.2% higher at £25.0m (2002: £22.9m) and
in 2002. The temporary and contracting
operating profit before exceptional items
businesses fared better but still experienced
increased to £7.6m (2002: £6.8m).
and Technology sectors was subdued in
Sydney in the first half, but showed signs of
improvement towards the end of the year.
The newer businesses, Michael Page Human
Resources and Michael Page Engineering,
both progressed well during the course of
2003. The lease of our Sydney office expired
in December and we successfully relocated
to new premises with minimum disruption
in what was the beginning of the seasonally
quieter summer period in Australia. Having
carefully evaluated the opportunities in
Queensland, a new office was opened in
Brisbane in January 2004.
Our businesses in Hong Kong and
Singapore, both of which have traditionally
been heavily dependent on the International
Financial Services, Telecoms and IT sectors,
experienced a particularly anxious start to
2003 due to the outbreak of SARS. The
impact proved to be less than we originally
feared and both businesses exceeded
The economy in Australia proved to be the
internal expectations. We are equally pleased
most resilient of all our major markets in 2003
with the progress of our Tokyo office, which
and I am pleased to report another year of
increased revenue year on year by over 50%
achievement. Our businesses in Melbourne
and produced an operating profit in 2003.
and Perth all benefited from strong demand
by domestic clients. As elsewhere in the
Our businesses in The Netherlands,
world, demand from our clients in the
Germany and Switzerland also experienced
International Financial Services, Telecoms
We remain confident that the Asia Pacific
region, in particular Greater China, offers
considerable longer term potential for the
Group.
a 16% decline in revenue year on year. Whilst
continuing to maintain our market leading
position, staff numbers were reduced by
over 25% from the beginning of 2003 and
we successfully consolidated a number of
offices during the year.
difficult trading conditions throughout the
year. Our businesses in Italy, Spain and
Portugal fared better and as a result achieved
similar levels of revenue to 2002.
There are encouraging signs that the worst is
behind us in many of our markets.
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7
The United States offers significant long-term
opportunities for the Group and it remains
our objective to grow our business in the
USA organically.
Chief Executive’s Review
(continued)
The Americas
Turnover for the region was £6.6m (2002:
£5.4m) and revenue increased to £4.6m
(2002: £4.1m). Revenue in the second
half of 2003 was over 40% higher than
in the first half and consequently the first
half losses were largely recovered and the
region only recorded a small operating loss
before exceptional items for the year of
£0.1m (2002: £0.7m loss). The increased
revenue achieved in the second half reflects
both improving overall trading conditions,
particularly in the USA, and the continuing
investment in our own staff and new offices.
opening of a third office in the USA in 2003,
despite the extremely challenging environment
we faced at that time. I am pleased to report
that our office in Stamford, Connecticut was
duly opened in September and we are very
satisfied with its progress to date.
In São Paulo, Brazil, we enjoyed another
successful year and were particularly pleased
with the development of Michael Page
Engineering and Production. We opened
an office in Rio de Janeiro and it is our
intention to expand into Sales and Marketing
recruitment during the course of 2004.
In my review last year I anticipated the
Strategy
New IT system
We have now successfully commenced
the global roll out of our new front office
recruitment system, which is now live in the
UK, France and USA. The worldwide roll out
is currently anticipated to be substantially
complete by the end of 2004.
Since 2001 we have experienced the most
challenging trading conditions for at least
a decade or more. During this period we
have retained a level of resource that has
enabled us to maintain and indeed grow our
presence in some markets and start new
businesses in developing markets. Our staff
around the world should be congratulated for
these achievements and we will continue to
invest in their training and development.
I believe the demand for our services will
The United States offers significant long-
term opportunities for the Group and it
remains our objective to grow our business
in the USA organically, as rapidly as internal
resources will allow. To this end we already
have in place a plan of action which should
allow us to open new offices in Boston and
Chicago within the first half of 2004.
Terry Benson
Chief Executive
increase in the coming years. Our overall
25 February 2004
strategy remains absolutely unchanged.
We intend to stay focused on our core
competency of specialist recruitment and
to grow the business organically by the
expansion of existing businesses in their local
markets, the introduction of new disciplines
into existing locations and by entering new
geographic markets.
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9
Finance Director’s Review
Stephen Puckett
Finance Director
Profit and loss account
Turnover
Turnover for the year was 2.8% lower at
£372.6m (2002: £383.5m). In the second
half of 2003, turnover was 6.5% higher than
in the first half and was 3.5% higher than the
second half of 2002.
Turnover from temporary placements
increased marginally by 0.6% to £243.8m
(2002: £242.2m) and represented 65.4%
(2002: 63.2%) of Group turnover. Turnover
from permanent placements was £128.8m
(2002: £141.2m).
Gross profit (revenue)
Revenue for the year decreased by 7.4%
to £178.5m (2002: £192.6m) representing
an overall gross margin of 47.9% (2002:
50.2%). The percentage reduction in revenue
is greater than the reduction in turnover due
to a combination of a higher proportion of
temporary placements in 2003 and a lower
Revenue in the second half of 2003 was
3.4% higher than in the first half. As the chart
below shows, the Group’s quarterly revenue
in the first quarter of 2001 was £69.6m and
it declined sequentially to £49.5m in the first
quarter of 2002. After three relatively stable
quarters of around £50m from the fourth
quarter of 2001 to the second quarter of
2002, it declined sequentially through to
the first quarter of 2003. We have now had
another three stable quarters of around
£45m and in the fourth quarter of 2003
recorded the first year on year quarterly
increase since the first quarter of 2001.
Operating profit
Administrative expenses in the year reduced
to £155.6m (2002: £160.5m) before
exceptional items, principally due to the lower
profit related bonuses payable to staff.
The Group’s largest category of expenditure
is the remuneration of our consultants and
support staff. Headcount of the Group was
2,390 at 1 January 2003 and reduced to
2,279 at 30 June. The Group’s headcount
has remained relatively stable during the
second half of the year and at 31 December
2003 we employed 2,260 consultants and
support staff.
As a result of the revenue decline and the
Group’s high operational gearing, operating
profit before exceptional items was £22.9m
(2002: £32.1m).
gross margin on temps. Revenue from
Revenue
temporary placements was £56.7m (2002:
£59.7m) and represented 31.7% (2002:
31.0%) of Group revenue. The gross margin
achieved on temporary placements was
23.2% (2002: 24.7%).
m
£
69.6
66.9
58.7
49.9
49.5
51.4
47.8
43.9
42.8
45.0
45.0
45.7
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2001
2002
2003
8
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9
Finance Director’s Review
(continued)
Exceptional items
At the end of 2001, the Group committed
to a 20 year lease on 33,000 sq.ft. of offices
in London to provide space for future
Net interest
Earnings per share and dividends
Basic earnings per share were 3.8p (2002:
5.8p) and adjusted earnings per share
before exceptional items were 4.1p (2002:
expansion and to accommodate existing
The net interest receivable in the year was
5.8p). The weighted average number of
businesses whose leases were expiring
£0.6m (2002: £0.5m). During the year £0.4m
shares for the year was 357,955,000 (2002:
in 2002 to 2004. Possession of the new
of interest was earned on surplus cash
366,355,000). The 2003 average number of
offices took place in the first half of 2003
balances which were invested in the short-
shares was lower than 2002 due to the full
and, given the reductions in headcount, a
term money market. In addition interest of
year effect of the shares repurchased and
substantial amount of space is now vacant.
£0.2m was received on a tax related refund.
cancelled during the second half of 2002.
In accordance with FRS 12 the Group has
recorded an exceptional charge for vacant
Taxation
properties of £3.0m.
Taxation on profits before exceptional items
by the Directors which, together with the
A maintained final dividend of 2.3p (2002:
2.3p) per ordinary share has been proposed
On flotation in March 2001, the Group
and goodwill amortisation was £9.0m (2002:
interim dividend of 1.1p (2002: 1.1p) per
incurred an exceptional charge and made a
£11.4m), representing an effective tax rate
ordinary share, makes a total dividend for
provision of £6.0m in respect of employer’s
of 38.1% (2002: 35.0%). The rate is higher
the year of 3.4p (2002: 3.4p) per ordinary
social charges on the Restricted Share
than the UK corporation tax rate of 30% as a
share. The final dividend, which amounts to
Scheme which vests in 2004. This liability,
result of non-deductible business expenses,
£8.2m, will be paid on 4 June 2004 to those
which is dependent upon the price of
profits arising in higher tax rate jurisdictions,
shareholders on the register at 7 May 2004.
Michael Page shares, has been estimated
and losses which are unable to be offset
in these accounts at £4.1m using the share
against profits in the current year and against
price at 31 December 2003 (186p). As a
which no deferred tax asset has been
consequence there is an exceptional credit
recognised. The rate has increased over
Balance sheet
in the year of £1.9m. When this liability
2002 as a direct result of the lower profits in
We have adopted early the new guidance on
crystallises, any material difference from
Continental Europe.
the current provision will be taken as an
exceptional item in the 2004 accounts.
As a result of recent changes in tax
legislation, the Company expects to obtain
a deduction for corporation tax purposes
when the Restricted Share Scheme vests in
2004. Based on the price of Michael Page
shares at 31 December 2003, the deduction
to UK taxable profits would be approximately
£27m which, at the UK corporation tax rate
of 30%, would reduce the tax charge in 2004
by £8.1m.
accounting for own shares and have classed
these as “EBT reserve” deducted from
Shareholders’ Funds rather than being held
as investments on the balance sheet. The
impact of this is to reduce the Group’s net
assets, in both the current and prior year, by
approximately £10m.
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11
The Group had net assets of £53.3m at
31 December 2003 (2002: £48.9m) of which
£22.4m (2002: £21.4m) is represented by
net cash.
While capital expenditure is fundamentally
driven by the Group’s headcount, as
indicated last year, 2003 capital expenditure,
net of disposal proceeds, increased to
£6.3m (2002: £2.5m) due to the fit out
costs of the new building in London and the
implementation of the new IT system.
Trade debtors were £53.2m at 31 December
2003 (2002: £53.2m) representing debtor
days of 46.0 (2002: 47.5 days).
Cash flow
We have had three stable quarters of around
£45m of revenue and in the fourth quarter,
recorded the first year on year quarterly
increase since the first quarter of 2001.
The principal payments have been:
• £6.3m (2002: £2.5m) of capital
expenditure, net of disposal proceeds,
on property, infrastructure, information
systems and motor vehicles for staff;
Cash surpluses are invested in short-
term deposits with any working capital
requirements being provided by local
overdraft facilities.
At the start of the year the Group had net
• taxes on profits of £10.7m (2002: £11.5m);
The main functional currencies of the Group
are Sterling, Euro and Australian Dollar. The
cash of £21.4m.
• dividends of £12.2m (2002: £12.5m).
Group does not have material transactional
During the year the Group generated net
At 31 December 2003 the Group had net
cash from operating activities of £29.2m
cash balances of £22.4m.
(2002: £46.7m) being £29.7m (2002:
£40.5m) of EBITDA, an increase in working
Treasury management and
capital requirements of £0.8m (2002: £6.2m
currency risk
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
although our policy is not to hedge this
reduction) and movements in provisions of
£0.2m (2002: £nil). The increased working
capital is largely due to the greater activity
in December 2003 when compared to
December 2002.
It is the Directors’ intention to finance the
exposure.
activities and development of the Group
principally from retained earnings and
to operate the Group’s business while
maintaining the net debt/cash position within
a relatively narrow band. Cash generated in
excess of these requirements will be used to
Stephen Puckett
buy back the Company’s shares for which
Group Finance Director
renewal of the existing authority is being
25 February 2004
sought at the forthcoming Annual General
Meeting.
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11
Board of Directors
Adrian Montague CBE (56)
Non-Executive Chairman
Adrian Montague is Chairman of British
Energy plc and Deputy Chairman of
Network Rail Limited. From 1997 to 2001
he held senior posts concerned with the
implementation of Government’s policies
for the involvement of the private sector in
the delivery of public services, first as Chief
Executive of the Treasury Taskforce and then
as Deputy Chairman of Partnerships UK plc.
He spent his early career as a solicitor with
Linklaters & Paines before joining Kleinwort
Benson in 1994. Adrian is also a Non-
Executive Director of CellMark AB, the pulp
and paper marketing company based in
Gothenburg. He was appointed Chairman
of Michael Page International plc on 22 May
2002.
Stephen Burke (44)
Managing Director – UK
Stephen Burke joined Michael Page in 1981
and was appointed as a Director of Michael
Page International in 1988 with responsibility
for development of overseas businesses in
the Netherlands and Germany. He returned
to the UK in 1996 as Managing Director
of Accountancy Additions Ltd and was
appointed Managing Director of Michael
Page Finance in 1999. He was appointed to
his current position in January 2001.
Charles-Henri Dumon (45)
Managing Director – Continental Europe
and South America
Charles-Henri Dumon joined Michael Page in
1985 and was appointed a Director in 1987.
Since then he has had full responsibility
for the Group’s operations in France and
has managed the Group’s entry into
Southern Europe and South America. He
was appointed as Managing Director for all
Michael Page’s Continental European and
South American businesses in January 2001.
Terry Benson (52)
Chief Executive
Terry Benson joined Michael Page in 1979
and was appointed to the Board in 1983.
In 1986 he was promoted to Managing
Director of the Group’s marketing recruitment
businesses and in January 1988 to
Managing Director of the Group. In 1993 he
was appointed Chief Executive of the Group.
Stephen Box (53)
Non-Executive Director
Stephen Box qualified as a Chartered
Accountant at Coopers & Lybrand where
he spent more than 25 years, 15 of
these as a partner. From August 1997 to
November 2002 he was Finance Director
of National Grid. He is a member of the
Financial Reporting Review Panel and
a Non-Executive Director of South East
Water plc. Stephen has experience of Audit
Committees as a partner at Coopers &
Lybrand, as an Executive Director of National
Grid attending Audit Committees, and as a
Non-Executive Director chairing the Audit
Committee of South East Water plc.
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Stephen Ingham (41)
Executive Director – UK Operations
Stephen Ingham joined Michael Page in
1987 as a consultant with Michael Page
Marketing and Sales. He was responsible for
setting up the London marketing and sales
businesses and was promoted to Operating
Director in 1990. He was appointed
Managing Director of Michael Page
Stephen Puckett (42)
Group Finance Director
Marketing and Sales in 1994. Subsequently
Stephen Puckett qualified as a Chartered
he has taken additional responsibility for
Accountant with BDO Binder Hamlyn. He
Michael Page’s Retail, Technology, Human
joined Wace Group plc in 1988 as Director
Resources and Engineering businesses. He
of Corporate Finance, subsequently being
was promoted to Executive Director of UK
promoted to Group Finance Director in 1991.
Operations in January 2001.
He was appointed Group Finance Director
Hubert Reid (63)
Non-Executive Director
Hubert Reid is Chairman of Enterprise Inns
plc and the Royal London Group, Deputy
Chairman of Majedie Investments PLC and a
Non-Executive Director of the Taverners Trust
PLC. He was previously Managing Director
and then Chairman of the Boddington
Group plc and Chairman of Ibstock Plc
and Bryant Group plc. He was appointed
a Non-Executive Director of Michael Page
International plc on 25 February 2003.
Hubert has been a member of various Audit
Committees since 1993 including Bryant
of Stat Plus Group plc in 2000. He was
Group Plc, Ibstock Plc, Greenalls Group plc,
appointed Group Finance Director of Michael
Royal London Group, Taverners Trust PLC,
Page in January 2001.
Enterprise Inns plc and Majedie Investments
PLC.
None of the Executive Directors has a Non-
Executive Directorship in another company.
Robert Lourey (46)
Non-Executive Director
Robert Lourey is Group Human Resources
Director of BOC Group plc. He joined BOC
in Australia in 1996 and was appointed
to the Executive Management Board in
June 2000. He has a Bachelor of Business
degree in personnel management. He was
appointed a Non-Executive Director of
Michael Page International plc on 7 October
2003. Rob has experience as a member
of the Executive Management Board of a
FTSE100 Company, including participation in
that company’s management, investments,
capital allocation, and governance. Rob also
has experience as a Non-Executive Director
of two publicly listed companies in the
Republic of South Africa.
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Michael Page International plc | Annual Report 2003
Annual Report 2003 | Michael Page International plc
13
Directors’ Report
Principal activity and review of the
business and future developments
The Group is one of the world’s leading
specialist recruitment consultancies. The
Group’s trading results are set out in the
financial statements on pages 32 to 54.
retire by rotation. All retiring Directors being
2003 of 2.3 pence per ordinary share on 4
eligible will offer themselves for re-election at
June 2004 to shareholders on the register on
the forthcoming Annual General Meeting.
7 May 2004 which, if approved at the Annual
Biographical details for all the current
Directors are shown on pages 12 and 13.
General Meeting, will result in a total dividend
for the year of 3.4 pence per ordinary share
(2002: 3.4 pence).
Details of the Group’s future prospects and
The beneficial interests of Directors in
office at 31 December 2003 in the shares
Share capital
review of operations are described in the
Chairman’s Statement, Chief Executive’s
Review and Finance Director’s Review on
pages 4 to 11.
Directors and interests
of the Company at 31 December 2003
and at 25 February 2004 are set out in the
Remuneration Report on pages 26 and 27.
All of the Executive Directors are deemed
to have an interest in the ordinary shares
The following were Directors during the year
held in the Employee Benefit Trust and its
and held office throughout the year, unless
subsidiaries.
otherwise indicated.
A A Montague‡ CBE (Chairman)
Results and dividends
T W Benson (Chief Executive)
The profit for the year after taxation
The authorised and issued share capital of
the Company are shown in note 18 to the
financial statements.
At the Annual General Meeting held on
22 May 2003 the Company renewed its
authority to make market purchases of
its own ordinary shares up to a maximum
of 10% of the issued shared capital. No
purchases were made during the year.
S J Box‡*
S P Burke
C-H Dumon
S J Ingham
amounted to £13.7m (2002: £21.2m).
Substantial shareholdings
An interim dividend of 1.1 pence per ordinary
As at 25 February 2004, the Company has
share was paid on 17 October 2003. The
been notified of the following interests held in
Directors recommend the payment of a final
more than 3% of the issued share capital of
R Lourey‡ (appointed 7 October 2003)
dividend for the year ended 31 December
the Company:
S R Puckett
Holder
Number of ordinary shares % of issued share capital
H V Reid‡ (appointed 25 February 2003)
Harris Associates
47,085,000
M Stewart‡ (resigned 7 October 2003)
AXA Investment Managers UK Limited
43,581,270
‡ Non-Executive Directors
* Senior Independent Director
R Lourey was appointed on 7 October 2003.
In accordance with the Company’s Articles of
Silchester International Investors
34,905,755
Barclays plc
22,556,117
Fidelity Investment Management Limited
20,709,642
College Retirement Equities Fund
14,536,294
Association he will retire and in addition
Legal & General
12,780,166
S J Box, S P Burke and C-H Dumon will
Capital International Limited
10,896,097
12.95
11.98
9.60
6.20
5.69
4.00
3.51
3.00
14
Michael Page International plc | Annual Report 2003
Annual Report 2003 | Michael Page International plc
15
Corporate social responsibility
The Board recognises its responsibilities in
respect of social, environmental and ethical
(SEE) matters. The Directors continually
monitor all risks to its businesses, including
The review was carried out in accordance
with the guidance as laid down by the
Department for Environment, Food and Rural
Affairs (DEFRA), and the Global Reporting
Initiatives (GRI), a new independent,
international institution established to create
a common framework for sustainability
SEE risks, which may impact the Group’s
reporting worldwide.
short and long term value. During 2003 no
significant SEE risks were identified.
(a) Environmental policy
The Group does not operate in a business
sector which causes significant pollution
The first environmental report, which covers
our UK businesses only, is expected to be
available during 2004 and will be published
on the Michael Page website. A summary of
its findings during 2003 are shown below.
As this is the first report, comparatives are
but the Board recognises that the business
not available.
does have an impact on the environment.
The Board is committed to managing and
Waste
improving the way in which our activities
affect the environment by:
• optimising the use of energy;
• ensuring the efficient use of materials;
• 250 tonnes of waste was generated by UK
offices. Our current national recycling rate is
26% from recycling confidential paper and
toner cartridges.
Cardboard
Annual
weight
generated
(tonnes)
% of total
waste
64
1
26%
1%
115
45%
38
15%
9
6
10
7
4%
2%
4%
3%
Confidential
waste
Toners
Mixed office
paper
Food waste and
packaging
Aluminium cans
Glass bottles
Plastic bottles
and plastic cups
• encouraging re-use and recycling; and
• Through recycling, Michael Page in the UK
• incorporating the principle of sustainable
has saved 1,087 trees and saved a total of
development.
322m3 landfill space.
TOTAL
250
100%
During the year the Group has allocated a
significant amount of time and resource to
identify where its activities have an impact on
the environment. An environmental review
was undertaken jointly by Michael Page
International plc, and 3Re, an external firm of
environmental consultants.
Confidential waste
Toners
Mixed office paper
Food waste and packaging
Aluminium Cans
Glass bottles
Plastic bottles and plastic cups
Cardboard
14
Michael Page International plc | Annual Report 2003
Annual Report 2003 | Michael Page International plc
15
Directors’ Report
(continued)
Energy
• 2,873,018 kWh of electricity was
consumed in the UK, which converts to
1,235,398 kgCO2
• 614,896 kWh of gas was consumed in the
UK, which converts to 116,830 kgCO2
Water
(c) Employee involvement
(e) Health and safety
It is the policy of the Group to take all
reasonable and practicable steps to
safeguard the health, safety and welfare of its
employees, visitors and other persons who
may be affected by its activities. In order to
• In the UK, Michael Page consumed 43,033
Communication with employees is effected
meet these responsibilities the Group will:
m3 of water.
Transport
through the Company’s Intranet, information
bulletins, briefing meetings conducted by
• assess the risks to health and safety;
senior management and formal and informal
• implement safe systems at work;
In total, UK employees travelling to and from
work converts to 373,164 kgCO2.
(b) Charitable donations
discussions. Interim and Annual Reports are
available to all staff. Informal communication
is further facilitated by the Group’s divisional
organisation structure.
(d) Equal opportunity
• provide information, instruction and
training;
• establish and maintain emergency
procedures; and
The Group made charitable donations of
£25,567 during the year (2002: £42,377)
principally to local charities serving the
communities in which the Group operates.
Subject to certain restrictions, the Group
matches charitable donations made by
employees. It is the Group’s policy not to
make political donations either in the UK or
overseas.
The Group endorses and supports the
principles of equal employment opportunity.
• regularly review health and safety policies
and procedures.
It is the policy of the Group to provide
We are being proactive in our approach to
equal employment opportunity to all
health and safety by monitoring proposed
qualified individuals which ensures that all
changes in legislation and implementing
employment decisions are made, subject to
policies accordingly, and as such we comply
its legal obligations, on a non-discriminatory
with all statutory and regulatory requirements.
basis. Due consideration is given to the
recruitment, promotion, training and
working environment of all staff including
those with disabilities. It is the Group’s
policy to encourage the training and further
development of all its employees where
this is of benefit to the individual and to
the Group.
16
Michael Page International plc | Annual Report 2003
Annual Report 2003 | Michael Page International plc
17
(f) Supplier payment policy
It is the policy of the Group to agree
appropriate terms and conditions for
transactions with suppliers (by means
ranging from standard written terms to
individually negotiated contracts) and that
payment should be made in accordance with
those terms and conditions, provided that
the supplier has also complied with them.
The Company acts as a holding company for
the Group. Creditor days for the Company
were nil (2002: nil) as the Company does not
undertake any transactions with suppliers.
The Group’s creditor days for the year ended
31 December 2003 were 28 (2002: 29 days).
Statement of Directors’ responsibilities
Auditors
On 1 August 2003, Deloitte & Touche,
the Company’s auditors transferred their
business to Deloitte & Touche LLP, a limited
liability partnership incorporated under the
Limited Liability Partnerships Act 2000.
The Company’s consent has been given to
treating the appointment of Deloitte & Touche
as extending to Deloitte & Touche LLP
under the provisions of Section 26(5) of the
Companies Act 1989.
Deloitte & Touche LLP are willing to continue
in office and accordingly resolutions to
re-appoint them as auditors and authorising
the Directors to set their remuneration will be
• select suitable accounting policies and
then apply them consistently;
• make judgements and estimates that are
reasonable and prudent;
• state whether applicable accounting
standards have been followed; and
• prepare the financial statements on
the going concern basis unless it is
United Kingdom Company law requires the
inappropriate to presume that the Group
proposed at the forthcoming Annual General
Directors to prepare financial statements
for each financial period which give a true
and fair view of the state of affairs of the
Group and the Company as at the end of
the financial period and of the profit or loss
of the Group for that period. In preparing
those financial statements, the Directors are
required to:
will continue in business.
Meeting.
The Directors are responsible for keeping
Annual General Meeting
proper accounting records which disclose
with reasonable accuracy at any time the
financial position of the Group and the
Company and to enable them to ensure
that the financial statements comply with
the Companies Act 1985. They are also
responsible for safeguarding the assets of
the Group and the Company and hence for
taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The resolutions to be proposed at the Annual
General Meeting to be held on 27 May 2004,
together with explanatory notes, appear in
the Notice of Meeting set out on pages 57
to 59.
By order of the Board
R A McBride
Company Secretary
25 February 2004
16
Michael Page International plc | Annual Report 2003
Annual Report 2003 | Michael Page International plc
17
Corporate Governance
The Board of Directors is committed
to high standards of corporate
governance and has applied the
The main Board comprises the Chairman,
principles of corporate governance
who has no executive responsibilities, five
recommended in Section 1 of the
Executive Directors and three independent
Combined Code for the year ended
Non-Executive Directors. The relatively large
31 December 2003.
This statement also reflects best practice
governance matters as defined by the recent
Higgs review of the role and effectiveness
of non-executive directors. The Board has
continued to adopt the ‘comply or explain’
approach reinforced by Higgs confirming
that either the company complies with the
recommendations or provides an explanation
for non-compliance. However the formal
compliance statement made below refers
to the current Combined Code dated June
1998 applicable to this year end.
Compliance with the Combined
Code
The Directors consider that the Company has
complied with the Code provisions set out in
Section 1 of the Combined Code throughout
the year ended 31 December 2003.
The Board and its operation
number of Executive Directors reflects the
Group’s team approach to management.
The number of independent Non-Executive
Directors does not equal that of the
executives as the Board considers that
the collective know-how and experience
of the Non-Executive Directors provides a
balanced mix of skills which is sufficient to
ensure proper governance of the Group
which consists of an organically grown,
All Directors have access to the advice
and services of the Company Secretary,
who is responsible for ensuring that
Board procedures and applicable rules
and regulations are observed. There is an
agreed procedure for Directors to obtain
independent professional advice,
if necessary, at the Company’s expense.
The Board meets regularly throughout the
year. It has a formal schedule of matters
reserved to it and delegates specific
responsibilities to Committees. During the
meetings, the Board formally considers
single business, producing clear, transparent
how and to whom matters covered at each
results. With this high level of visibility there
is considered to be no value in appointing
additional Non-Executive Directors and
therefore there is currently no intention to
increase the number of independent Non-
Executive Directors on the main Board.
All Directors are subject to retirement by
rotation and re-election by the shareholders
in accordance with the Articles of
Association, whereby one third of the
Directors retire by rotation each year. All
Directors are subject to election by the
meeting should be communicated and
actioned beyond the Board. Decision making
concerning matters of a more routine nature
are dealt with by management below Board
level. The structure of the Group facilitates
the day to day running of the business and
enables efficient and effective communication
of issues to the Board when required.
Each of the Committees has formal written
terms of reference which were reviewed and
amended in 2003 in accordance with the
Higgs recommendations. Their composition
The Board of Michael Page International
shareholders at the first Annual General
and manner in which they discharge their
plc is the body responsible for corporate
Meeting following their appointment. All
responsibilities are described below.
governance, establishing policies and
Directors are subject to re-election every
objectives, and the management of the
three years in accordance with the Higgs
Group’s resources. It is the Group’s policy
recommendations.
that the roles of Chairman and Chief
Executive are separate.
18
Michael Page International plc | Annual Report 2003
Audit Committee
The Audit Committee comprises the
independent Non-Executive Directors and
is chaired by Stephen Box. Their relevant
qualifications and experience are shown in
their biographies on pages 12 and 13.
The Committee met four times this year to
fulfil its duties and included attendance by
the external auditors where required. Its
principal tasks are to review the Group’s
internal controls, review the scope of the
external audit, consider issues raised by
the external auditors, and review the half-
yearly and annual accounts before they are
presented to the Board, focusing in particular
(b) enforcing a policy concerning the
provision of non-audit services by the
auditor which governs the types of work:
Remuneration Committee
The Remuneration Committee comprises
the Non-Executive Directors and is chaired
by Adrian Montague. It is recognised that
the membership of the Committee does not
(i) from which the external auditor is
comply with the current recommendations
excluded;
of the Higgs review, in as much as the
(ii) for which the external auditor can be
engaged without referral to the audit
committee;
(iii) for which a case-by-case decision
is required, which includes all
engagements over certain fee limits.
Chairman is a member of the Committee.
However, it is the current belief of the Board
that the Chairman is best placed to manage
discussions concerning remuneration
and to address any concerns raised by
shareholders.
on accounting policies and compliance,
(c) enforcing a policy of reviewing all cases
The Committee reviews the Group’s policy
and areas of management judgement and
estimates.
Objectivity and independence of
external auditors
where it is proposed that a former
employee of the external auditors be
employed by the Group; and
(d) monitoring the external auditors’
compliance with applicable UK ethical
The objectivity and independence of the
guidance on the rotation of audit
external auditor is safeguarded by:
partners.
(a) obtaining assurances from the external
auditor that adequate policies and
Nomination Committee
procedures exist within its firm to ensure
The Nomination Committee comprises the
on the Executive Directors’ and senior
executives’ remuneration and terms of
employment, makes recommendations upon
this to the Board, and also approves the
provision of policies for the incentivisation
of employees including share schemes.
The Committee meets at least twice a year
and is also attended by the Chief Executive
except when his own remuneration is
under consideration. The Remuneration
Report is shown on pages 23 to 29 and
the firm and its staff are independent of
Non-Executive Directors and is chaired
includes information on the Directors’ service
the Group by reason of family, finance,
by Adrian Montague. It is responsible for
contracts.
employment, investment and business
making recommendations to the Board
relationships (other than in the normal
on new appointments, as well as making
course of business);
recommendations as to the composition
of the Board generally and the balance
between Executive and Non-Executive
Directors appointed to the Board.
Annual Report 2003 | Michael Page International plc
19
Corporate Governance
continued
Transparency of Board appointments
Performance evaluation
The Board follows formal and transparent
procedures when appointing directors.
Following the issue of the Revised Combined
Code on Corporate Governance in July
2003, the nomination committee engages
external consultants to identify a shortlist
of suitable candidates for Non-Executive
appointments. All the candidates are
interviewed by the Chairman and the
Chief Executive and evaluations of all
candidates are discussed with all members
of the nomination committee and the
recommendation is subsequently made to
the Board.
Induction and training programme
On appointment to the Board, each director
discusses with the Company Secretary the
extent of training required and a tailored
induction programme to cover their individual
requirements is then compiled. Elements of
the programme typically consists of meeting
senior management, site visits and attending
internal conferences. In addition, information
In the year under review, evaluation of the
performance of the Board was undertaken
in respect of the achievement of financial
targets which directly impacted the level of
bonus awarded. Financial and non-financial
goals have been agreed for 2004 as part
of the budget process and these will be
evaluated at the end of the year.
is provided on the company’s services, group
Attendance at meetings
structure, Board arrangements, financial
information, major competitors and major
risks. After an initial induction phase, updates
are provided on a periodic basis.
The number of meetings of the board and
commitees and individual attendance by the
directors are shown below:
Total meetings
Meetings attended
Executive
T W Benson
S P Burke
C-H Dumon
S J Ingham
S R Puckett
Total meetings
Non-Executive
A A Montague*
S J Box
R Lourey (appointed 7 October 2003)
H V Reid (appointed 25 February 2003)
M Stewart (resigned 7 October 2003)
Main Board
12
11
11
9
10
12
Main Board
Audit Committee
Remuneration
Committee
Nomination
Committee
12
12
12
2
11
5
4
2
4
1
3
2
6
6
6
1
3
4
2
2
2
-
1
1
* Resigned as a member of the Audit Committee on 22 May 2003 in line with the recommendation made in the Smith Report “Audit
Committees – Combined Code Guidance”.
20
Michael Page International plc | Annual Report 2003
Internal control
The responsibilities of the Directors in respect
of internal control are defined by the Financial
Services Authority’s Listing Rules which
incorporate a Code of Practice known as
the Combined Code, which requires that
Directors review the effectiveness of the
Group’s system of internal controls. This
requirement stipulates that the review shall
cover all controls including operational,
compliance and risk management, as well
as financial. Internal Control Guidance
for Directors on the Combined Code
• financial and operational controls.
Controls and procedures are documented
in policies and procedures manuals.
Individual operations complete an
• group organisation. The Board of
annual Self-Certification Statement.
Directors meets at least ten times a year,
Each operational manager, in addition to
focusing mainly on strategic issues,
the finance function for that operation,
operational and financial performance. There
confirms the adequacy of their systems
is also a defined policy on matters strictly
of internal control and their compliance
reserved for the Board. The Managing
with Group policies. The Statement also
Director of each operating company is
requires the reporting of any significant
accountable for establishing and monitoring
control issues that have emerged so that
internal controls within that division;
areas of Group concern can be identified
(“the Turnbull Report”) was published in
• financial reporting. The Group has a
and experience can be shared;
September 1999.
comprehensive budgeting system with an
• risk management. Identification of major
The Board has assessed existing risk
management and internal control processes
during the year ended 31 December 2003 in
accordance with the Turnbull guidance. The
Board believes it has the procedures in place
such that the Group has fully complied for
the financial year ended 31 December 2003.
The Directors are responsible for the
Group’s system of internal financial and
operational controls which are designed to
meet the Group’s particular needs and aim
to safeguard Group assets, ensure proper
accounting records are maintained and that
the financial information used within the
business and for publication is reliable.
Any system of internal control can only
provide reasonable, but not absolute,
assurance against material misstatement and
loss. Key elements of the system of internal
control are as follows:
annual budget approved by the Board.
business risks is carried out at Group
Detailed monthly reports are produced
level in conjunction with operational
showing comparisons of results against
management and appropriate steps taken
budget, forecast and the prior year, with
to monitor and mitigate risk;
performance monitoring and explanations
provided for significant variances. The
Group reports to shareholders on a half-
yearly basis;
• public interest disclosure policy. A
procedure is in place where staff may, in
confidence, raise concerns about possible
improprieties relating to financial reporting
• quarterly reforecasting. The Group
or other matters; and
prepares a full year reforecast on a
quarterly basis showing, by individual
businesses, the results to date and a
reforecast against budget for the remaining
period up to the end of the year;
• Audit Committee. There is an established
Audit Committee whose activities are
previously described;
Annual Report 2003 | Michael Page International plc
21
Corporate Governance
continued
• internal audit activities. These are
performed by members of the head office
finance function, who are independent
of the operations, throughout the year.
Businesses are visited on a rotational basis
and their controls are assessed in their
effectiveness to mitigate specific risks.
In addition, there is a regular review of
these risks and changes are made to the
risk profile where necessary. All internal
audit activities are reported to the Audit
Committee. During the year, the Board
reviewed internal audit arrangements and
concluded that there is currently no need
for a separate and distinct internal audit
department.
The Board confirms that there is an ongoing
process for identifying, evaluating and
managing the significant risks faced by the
Group and that the processes have been
in place for the year under review and up to
the date of approval of the annual report and
accounts.
Annual Report
The Annual Report is designed to present
Board contact with shareholders
a balanced and understandable view of
Communications with shareholders are given
a high priority. The main contact between the
Board and shareholders is through the Chief
Executive and the Finance Director. They
undertake two major investor “roadshows”
each year in February/March and August/
September, in which numerous one-to-one
the Group’s activities and prospects. The
Chairman’s Statement, Chief Executive’s
Review and Finance Director’s Review on
pages 4 to 11 provide an assessment of
the Group’s affairs and position. The Annual
Report and Interim Report are sent to all
shareholders.
meetings with shareholders take place. The
The Directors acknowledge their
outcome of these meetings and the views of
responsibility for the preparation of the
shareholders are relayed back to the Board
Annual Report. The Statement of Directors’
by the corporate brokers, at the end of each
Responsibilities is shown on page 17.
roadshow. The Group’s corporate brokers
A statement by the auditors about their
also report monthly to the Board on broking
reporting responsibilities is shown on pages
activity during the month and any issues that
30 to 31.
may have been raised with them.
Where appropriate, individual matters (e.g.
Going concern
the introduction of a share incentive plan)
The Directors have a reasonable expectation
are discussed by the Chairman or Senior
that the Group has adequate resources to
Independent Director directly with major
continue in operational existence for the
shareholders.
The Group also has a website
(www.michaelpage.co.uk) with an
investor section that contains Company
announcements and other shareholder
information.
foreseeable future being a period of at least
twelve months from the date of approval of
accounts and therefore continue to adopt
the going concern basis in preparing the
accounts. In forming this view, the Directors
have reviewed the Group’s budget and
forecasts for 2004 based on normal business
planning and control procedures.
22
Michael Page International plc | Annual Report 2003
Remuneration Report
Scope and membership of
Remuneration Committee
The Remuneration Committee meets not
less than twice a year and comprises the
Chairman and Non-Executive Directors. It
is chaired by Adrian Montague. The Chief
Executive attends the meetings except when
his own remuneration is under consideration.
The purpose of the Remuneration Committee
Remuneration policy
The objective of the Group’s remuneration
policy is to attract and retain management
with the appropriate professional, managerial
and operational expertise necessary to realise
The following sections provide an outline of
the Company’s policy during 2003 and for
the forthcoming and subsequent years with
regard to each component.
Base salary and benefits
the Group’s objectives as well as to establish a
The Committee establishes salaries and
framework for remunerating all employees.
is to review, on behalf of the Board, the
It is the Company’s policy that none of the
remuneration policy for the Executive
Executive Directors has a service contract
Directors and other senior executives and
which can be determined by more than
to determine the level of remuneration,
12 months’ notice. The Non-Executive
incentives and other benefits, compensation
Directors do not have service contracts
payments and the terms of employment
with the Company. They are appointed for
of the Executive Directors and other senior
an initial term of three years and thereafter
executives. It seeks to provide a remuneration
may be reappointed for one further term of
benefits by reference to those prevailing
in the employment market generally for
Executive Directors of comparable status
and market value, taking into account the
range of incentives described elsewhere in
this report, including a performance bonus.
Reviews of such base salary and benefits are
conducted annually by the Committee having
regard to wage inflation in the economy.
package that aligns the interests of Executive
three years subject to re-election at Annual
Annual bonus plan
Directors with the shareholders. The
General Meetings. Additional details of
Committee has continued to review the
service contracts are shown on page 29.
Annual bonuses for the Executive Directors
are based on the division of a pool of Profits
remuneration of the Executive Directors with
regard to the need to maintain a balance
between the constituent elements of salary,
incentive and other benefits. It has appointed
and receives advice from independent
remuneration consultants, New Bridge Street
Consultants, and makes comparisons with
similar organisations. New Bridge Street
The remuneration of the Non-Executive
earned during the financial year. 6% of Profits
Directors is determined by the Board. The
earned above a threshold equal to half of
Non-Executive Directors do not receive any
targeted Profits for the year will be reserved
pension or other benefits, other than out-of-
for bonuses (i.e. approximately 3% of total
pocket expenses, from the Group, nor do
Profits). In addition, if Profits exceed 1.2
they participate in any of the bonus or share
times the targeted level, then an additional
option schemes.
Consultants provides no other material
The remuneration agreed by the Committee for
services to the Company, nor do they have
the Executive Directors contains the following
any other connection with the Company.
elements: a base salary and benefits, an
No Directors other than the members of the
Remuneration Committee provided material
advice to the Committee on Directors’
remuneration.
annual bonus reflecting Group performance,
share options conditional upon achieving
performance criteria, incentive share plan
award and pension benefits.
2% of Profits earned above the targeted
level will be added to the bonus pool. Profits
are defined as group profit before taxation,
exceptional and extraordinary items and
before the Executive Directors’ annual bonus
charges and charges or credits resulting from
the Incentive Share Plan described below or
other share option grants.
Annual Report 2003 | Michael Page International plc
23
Remuneration Report
continued
The targeted level of Profits for 2003 was
£16m and was set at the beginning of
2003 by reference to market expectations
and internal forecasts at that time. The
Committee retains the discretion to review
this arrangement and set different rates and
thresholds as it deems appropriate for the
business.
Incentive Share Plan for Executive
Directors and Senior Employees
In December 2003, shareholders approved
a new Incentive Share Plan for Executive
Directors and senior employees. Initially,
5% of Group Profits of the preceeding year
will be paid into an employee benefit trust
and invested in the Company’s shares. Not
more than 60% of this figure will be available
for awards to the Executive Directors.
The balance will be for awards to senior
over the three year period. Finally, to the
extent that the performance share award is
greater than 75% of an executive’s salary,
the hurdle will be 10% over the growth in UK
RPI per annum over the three year period.
If awards do not vest after three years, then
they will lapse.
Senior executives of the Group who benefit
from these arrangements will, in the future,
receive only modest share option grants as
The target for 2004 has been set and will be
employees. Group Profits are defined as
described below.
disclosed in next year’s report. The threshold
group profit before taxation and before
in 2004 for awarding the additional 2% of
exceptional and extraordinary items and
profits has been increased to 1.25 from
charges or credits resulting from the Plan
1.2 times the targeted level.
or other share option grants, as described
In the event that this mechanism creates an
below.
The Committee retains the discretion to
review the proportion of profits dedicated
to the Incentive Share Plan in the light of
the growth in the size of the Company, its
profitability and the number of Executive
annual bonus greater than 100% of salary for
Two thirds of these shares (“Deferred Share
Directors.
any executive, only an amount equal to the
Awards”) are subject to a three year deferral
executive’s salary will be paid in cash. The
period during which they will be forfeited
excess above the individual’s salary level will
if the relevant director or senior employee
be paid into an employee benefit trust and
leaves, other than in “compassionate
Based on the 2003 results, awards totalling
£1.175m will be made in 2004 of which
£0.675m (57.4%) is for the Executive
invested in the Company’s shares with no
circumstances”. The remaining third
Directors.
matching investment by the Company. These
(“Performance Share Awards”) are also to
shares will be reserved for the executive and
be deferred for three years but are subject
Restricted Share Scheme
will vest in equal tranches 1, 2 and 3 years
to earnings per share (“EPS”) growth targets
later, normally so long as the executive is still
over the three year period. Awards up to
in employment at that time.
50% of a director’s or senior employee’s
On flotation in 2001, 6% of the issued
shares of the Group owned by Spherion
Corporation, the Group’s previous ultimate
parent company, were allocated to the
Executive Directors and certain senior
The bonus pool will be capable of variation
by the Committee both up and down by,
initially, 10%, to reflect the Committee’s view
on the performance of the Company relative
to its directly comparable peers. There has
been no variation made to the 2003 bonus
pool.
24
salary will only vest if EPS grows by an
average of 5% over the growth in UK RPI
per annum over the three year period. Any
executives in a Restricted Share Scheme.
excess between 50% and 75% of salary will
Benefits received under the Restricted Share
only vest to the extent that EPS grows by
Scheme are not pensionable and the shares
7.5% over the growth in UK RPI per annum
will be delivered in 2004.
Michael Page International plc | Annual Report 2003
Executive Share Option Scheme
The Executive Directors and senior
employees are eligible to participate in
the Executive Share Option Scheme.
No payment is required on the grant of an
option and no share options are granted
at a discount. Benefits received under
the Executive Share Option Scheme will
not be pensionable. Share options can
only be exercised on the achievement of
performance criteria which are disclosed in
note 18 of the Financial Statements. For
future share option awards retesting after
the initial vesting period will not be permitted.
Following shareholder approval of the
Incentive Share Plan, the maximum annual
pension entitlement exceeds the Inland
awards are as follows: for the Chief Executive
Revenue’s cap, a cash alternative is
Officer, 150,000; for all other Executive Board
payable. No changes were made to pension
Directors, 100,000; and for any other senior
arrangements during 2003 and no changes
executive participating in the Incentive Share
are anticipated in 2004.
Plan, the maximum award is 50,000.
Pension benefits
Directors’ remuneration
Executive Directors are eligible to participate
Emoluments
in a Company pension plan which is a
The aggregate emoluments, excluding
defined contribution scheme. Where the
pensions, of the Directors of the Company
who served during the year were as follows:
Executive
T W Benson (note 1)
S P Burke
C-H Dumon
S J Ingham
S R Puckett
Non-Executive
A A Montague
S J Box
R Lourey (appointed 7 October 2003)
H V Reid (appointed 25 February 2003)
M Stewart (resigned 7 October 2003)
2003
Salary
and fees
£’000
2003
Benefits
(note 2)
£’000
334
223
223
202
207
50
30
6
21
19
28
20
125
42
43
-
-
-
-
-
2003
Bonus
£’000
333
222
222
201
206
-
-
-
-
-
2003
Total
£’000
695
465
570
445
456
50
30
6
21
19
2002
Total
£’000
607
408
406
393
402
40
30
-
-
25
The base salaries of the Executive Directors were reviewed in January 2004 and were increased by 2.8% effective from 1 January 2004.
Notes:
1. Mr Benson is the highest paid director.
2. Benefits include, inter alia, items such as company car or cash alternative, fuel, relocation costs, cash in lieu of pension contributions, and
medical insurance.
Annual Report 2003 | Michael Page International plc
25
Remuneration Report
continued
Directors’ remuneration (continued)
Pension contributions
T W Benson
S P Burke
C-H Dumon
S J Ingham
S R Puckett
2003
£’000
100
45
5
20
20
2002
£’000
97
43
2
19
19
Directors’ interests and share ownership requirements
Executive Directors are required to build and hold, as a minimum, a direct beneficial interest in the Company’s ordinary shares equal to their
respective base salary.
The beneficial interests of the Directors and their families in shares of the Company are shown below. There has been no change in these
interests from 31 December 2003 to 25 February 2004.
Direct Holding
Ordinary shares of 1p
31 December
2003
31 December
2002
Restricted Shares
Ordinary shares of 1p
31 December
2003
31 December
2002
T W Benson
S P Burke
C-H Dumon
S J Ingham
S R Puckett
A A Montague‡
S J Box‡
R Lourey‡ (appointed 7 October 2003)
H V Reid‡ (appointed 25 February 2003)
‡ Non-Executive Directors
-
28,571
14,285
28,571
-
28,571
14,285
28,571
114,285
114,285
-
-
15,000
15,000
-
-
-
-
5,673,583
3,130,254
3,130,254
1,662,947
146,731
-
-
-
-
5,552,673
3,063,544
3,063,544
1,627,507
143,604
-
-
-
-
26
Michael Page International plc | Annual Report 2003
Directors’ interests and share ownership requirements (continued)
The beneficial interests of the Executive Directors and their families in share options of the Michael Page International plc Executive Share Option
Scheme at 31 December 2003 were as follows:
T W Benson
S P Burke
C-H Dumon
S J Ingham
S R Puckett
At 1 January
Date of Grant
2003
Granted in year
At 31 December
2003
Exercise price
(pence)
2001
2002
2002
2003
2001
2002
2002
2003
2001
2002
2003
2001
2002
2002
2003
2001
2002
2002
2003
3,750,000
150,000
150,000
-
-
-
-
200,000
1,125,000
150,000
150,000
-
-
-
-
200,000
1,125,000
300,000
-
-
-
200,000
750,000
150,000
150,000
-
-
-
-
200,000
750,000
150,000
150,000
-
-
-
-
200,000
3,750,000
150,000
150,000
200,000
1,125,000
150,000
150,000
200,000
1,125,000
300,000
200,000
750,000
150,000
150,000
200,000
750,000
150,000
150,000
200,000
175
186
186
81.5
175
186
186
81.5
175
186
83.4
175
186
186
81.5
175
186
186
81.5
Period of
exercise
2004-2011
2005-2012
2006-2012
2006-2013
2004-2011
2005-2012
2006-2012
2006-2013
2004-2011
2006-2012
2007-2013
2004-2011
2005-2012
2006-2012
2006-2013
2004-2011
2005-2012
2006-2012
2006-2013
1. The market price of the shares at 31 December 2003 was 186.0p with a range during the year of 78.5p to 202.0p.
2. No options held by Directors lapsed unexercised or were exercised during the period. The options are normally exercisable subject to
achieving performance criteria at any time on or after the third, but not later than the tenth anniversary of the date on which the option was
granted. The performance criteria are set out in note 18 to the financial statements.
Annual Report 2003 | Michael Page International plc
27
Remuneration Report
continued
Total Shareholder Return (TSR)
Versus FTSE Support Services
The graphs opposite show Total Shareholder
Return (TSR) for the Group and the FTSE
Support Services index which, as it is the
sector in which the Company operates,
is considered the most appropriate
comparator index in the absence of a more
directly representative recognised index.
A comparison with the FTSE 250 index is
also given. The graphs illustrate TSR for the
financial periods since the date of flotation in
2001.
120
110
100
90
80
70
60
50
31 December 2001
31 December 2002
31 December 2003
96.9
89.4
64.2
59.4
112.8
69.9
Mar 01
Sept 01
Feb 02
Aug 02
Jan 03
Jul 03
Dec 03
Michael Page
FTSE Support Services
31 December 2001
31 December 2002
31 December 2003
Versus FTSE 250
112.8
104.6
100.4
89.4
75.3
64.2
120
110
100
90
80
70
60
50
Mar 01
Sept 01
Feb 02
Aug 02
Jan 03
Jul 03
Dec 03
Michael Page
FTSE 250
28
Michael Page International plc | Annual Report 2003
Service contracts
All Executive Directors’ service contracts contain a 12 month notice period. The service contracts also contain restrictive covenants preventing
the Directors from competing with the Group for six months following the termination of employment and preventing the Directors from soliciting
key employees, clients and candidates of the employing company and Group companies for 12 months following termination of employment.
Contract
date
Unexpired
term
Notice
period
Provision for compensation
on early termination
Other
termination
provisions
05/03/01
05/03/01
13/06/03
05/03/01
05/03/01
no specific
term
no specific
term
no specific
term
no specific
term
no specific
term
26/01/04
35 months
26/01/04
35 months
07/10/03
32 months
25/02/03
24 months
12 months
12 months
12 months
12 months
12 months
None
None
None
None
12 months salary plus
other contractual benefits
12 months salary plus
other contractual benefits
12 months salary plus
other contractual benefits
12 months salary plus
other contractual benefits
12 months salary plus
other contractual benefits
None
None
None
None
None
None
None
None
None
None
None
None
None
Executive
T W Benson
S P Burke
C-H Dumon
S J Ingham
S R Puckett
Non-Executive
A A Montague
S J Box
R Lourey
H V Reid
Annual resolution
Shareholders will be given the opportunity to approve the Remuneration Report at the Annual General Meeting (resolution 7) on 27 May 2004.
Audit requirement
Within the Remuneration Report, the sections on Directors’ remuneration, shareholdings, and pension benefits, on pages 25 to 27 inclusive, are
audited. All other sections of the Remuneration Report are unaudited.
On behalf of the Board of Directors
Adrian Montague
Chairman
Remuneration Committee
25 February 2004
Annual Report 2003 | Michael Page International plc
29
Independent Auditors’ Report to the Members
of Michael Page International plc
We have audited the financial
Respective responsibilities of
We review whether the corporate
statements of Michael Page
directors and auditors
International plc for the year ended 31
December 2003 which comprise the
consolidated profit and loss account,
the balance sheets, the consolidated
statement of total recognised
gains and losses, the consolidated
reconciliation of movements in
shareholders’ funds, the consolidated
cash flow statement, and the
related notes 1 to 25. These financial
statements have been prepared
under the accounting policies set out
therein. We have also audited the
information in the part of the directors’
remuneration report that is described
as having been audited.
This report is made solely to the company’s
members, as a body, in accordance with
section 235 of the Companies Act 1985.
Our audit work has been undertaken so that
we might state to the company’s members
those matters we are required to state to
them in an auditors’ report and for no other
purpose. To the fullest extent permitted
by law, we do not accept or assume
responsibility to anyone other than the
company and the company’s members as a
body, for our audit work, for this report, or for
the opinions we have formed.
As described in the statement of directors’
responsibilities, the company’s directors
are responsible for the preparation of
the financial statements in accordance
with applicable United Kingdom law and
accounting standards. They are also
responsible for the preparation of the other
information contained in the annual report
including the directors’ remuneration report.
Our responsibility is to audit the financial
governance statement reflects the
company’s compliance with the seven
provisions of the Combined Code specified
for our review by the Listing Rules of the
Financial Services Authority, and we report if
it does not. We are not required to consider
whether the board’s statements on internal
control cover all risks and controls, or form
an opinion on the effectiveness of the group’s
corporate governance procedures or its risk
and control procedures.
statements and the part of the directors’
We read the directors’ report and the other
remuneration report described as having
information contained in the annual report for
been audited in accordance with relevant
the above year as described in the contents
section including the unaudited part of the
directors’ remuneration report and consider
the implications for our report if we become
aware of any apparent misstatements or
material inconsistencies with the financial
statements.
United Kingdom legal and regulatory
requirements and auditing standards.
We report to you our opinion as to whether
the financial statements give a true and fair
view and whether the financial statements
and the part of the directors’ remuneration
report described as having been audited
have been properly prepared in accordance
with the Companies Act 1985. We also
report to you if, in our opinion, the directors’
report is not consistent with the financial
statements, if the company has not kept
proper accounting records, if we have not
received all the information and explanations
we require for our audit, or if information
specified by law regarding directors’
remuneration and transactions with the
company and other members of the group is
not disclosed.
30
Michael Page International plc | Annual Report 2003
Basis of audit opinion
Opinion
We conducted our audit in accordance
In our opinion:
with United Kingdom auditing standards
issued by the Auditing Practices Board. An
audit includes examination, on a test basis,
of evidence relevant to the amounts and
disclosures in the financial statements and
the part of the directors’ remuneration report
• the financial statements give a true and fair
view of the state of affairs of the company
and the group as at 31 December 2003
and of the profit of the group for the year
then ended; and
described as having been audited. It also
• the financial statements and part of the
includes an assessment of the significant
directors’ remuneration report described
estimates and judgements made by the
as having been audited have been
directors in the preparation of the financial
properly prepared in accordance with
statements and of whether the accounting
the Companies Act 1985.
policies are appropriate to the circumstances
of the company and the group, consistently
applied and adequately disclosed.
We planned and performed our audit so as
to obtain all the information and explanations
which we considered necessary in order
to provide us with sufficient evidence
to give reasonable assurance that the
financial statements and the part of the
directors’ remuneration report described as
having been audited are free from material
misstatement, whether caused by fraud
or other irregularity or error. In forming
our opinion, we also evaluated the overall
adequacy of the presentation of information
in the financial statements and the part of the
directors’ remuneration report described as
having been audited.
Deloitte & Touche LLP
Chartered Accountants and Registered
Auditors
London
25 February 2004
Annual Report 2003 | Michael Page International plc
31
Consolidated Profit and Loss Account
Year ended 31 December 2003
Before
exceptional
items
2003
£’000
Exceptional
items
(note 3)
2003
£’000
After
exceptional
items
2003
£’000
Note
2002
£’000
Turnover
Cost of sales
Gross profit
Administrative expenses
Operating profit
Net interest
Profit on ordinary activities before taxation
Taxation on profit on ordinary activities
Profit on ordinary activities after taxation being
profit for the financial year
Equity dividends
Retained profit for the financial year
Basic earnings per share (pence)
Diluted earnings per share (pence)
Adjusted earnings per share (pence)
The above results relate to continuing operations.
2
2
4
6
2
7
8
19
9
9
9
372,616
(194,131)
178,485
(155,601)
22,884
626
23,510
(8,994)
14,516
(12,171)
2,345
-
-
-
(1,101)
(1,101)
-
(1,101)
330
(771)
-
(771)
372,616
383,470
(194,131)
(190,822)
178,485
192,648
(156,702)
(160,512)
21,783
626
22,409
(8,664)
13,745
(12,171)
1,574
3.8
3.8
4.1
32,136
461
32,597
(11,443)
21,154
(12,263)
8,891
5.8
5.8
5.8
32
Michael Page International plc | Annual Report 2003
Annual Report 2003 | Michael Page International plc
33
Balance Sheets
31 December 2003
Group
Company
As restated
(note 10)
2002
£’000
1,635
23,505
-
2003
£’000
1,539
23,101
-
24,640
25,140
71,530
23,211
94,741
70,743
22,040
92,783
As restated
(note 10)
2002
£’000
-
-
421,545
421,545
3,314
-
3,314
2003
£’000
-
-
421,545
421,545
1,414
131
1,545
(59,355)
(63,069)
(122,657)
(124,525)
35,386
60,026
(444)
(6,239)
53,343
3,637
113
(9,871)
59,464
53,343
29,714
54,854
-
(6,000)
48,854
3,637
113
(10,000)
55,104
48,854
(121,112)
(121,211)
300,433
300,334
-
(4,114)
296,319
3,637
113
(9,871)
302,440
296,319
-
(6,000)
294,334
3,637
113
(10,000)
300,584
294,334
Note
11
12
13
14
22
15
15
16
2
18
19
19
19
Fixed Assets
Intangible assets
Tangible assets
Investments
Current assets
Debtors
Cash at bank and in hand
Creditors: Amounts falling due within one year
Net current assets/(liabilities)
Total assets less current liabilities
Creditors: Amounts falling due after more than one year
Provisions for liabilities and charges
Net assets
Capital and reserves
Called up share capital
Capital redemption reserve
EBT reserve
Profit and loss account
Equity shareholders’ funds
These financial statements were approved by the Board of Directors on 25 February 2004.
On behalf of the Board of Directors.
T W Benson
Chief Executive
S R Puckett
Group Finance Director
32
Michael Page International plc | Annual Report 2003
Annual Report 2003 | Michael Page International plc
33
Consolidated Statement of Total Recognised
Gains and Losses
Year ended 31 December 2003
Profit for the financial year
Foreign currency translation differences
Total recognised gains and losses for the year
2003
£’000
13,745
2,786
16,531
2002
£’000
21,154
1,256
22,410
Consolidated Reconciliation of Movements
in Shareholders’ Funds
Year ended 31 December 2003
Profit for the financial year
Dividends
Retained profit for the financial year
Foreign currency translation differences
Purchase own shares for cancellation
Sale of shares held by the Employee Benefit Trust
Net addition to/(reduction in) shareholders’ funds
Opening shareholders’ funds as previously stated
Prior year adjustment (note 10)
Opening shareholders’ funds as restated
Closing shareholders’ funds
2003
£’000
13,745
2002
£’000
21,154
(12,171)
(12,263)
1,574
2,786
4,360
-
129
4,489
48,854
8,891
1,256
10,147
(13,726)
-
(3,579)
62,433
-
(10,000)
48,854
53,343
52,433
48,854
34
Michael Page International plc | Annual Report 2003
Annual Report 2003 | Michael Page International plc
35
Consolidated Cash Flow Statement
Year ended 31 December 2003
Net cash inflow from operating activities
Returns on investments and servicing of finance
Note
20
Interest received
Interest paid
Net cash inflow from returns on investments and
servicing of finance
Taxation
Capital expenditure and financial investment
Purchase of tangible fixed assets
Receipts from sales of tangible fixed assets
Net cash outflow from capital expenditure and
financial investment
Equity dividends paid
Net cash inflow before financing
Financing
Sale of shares held by the Employee Benefit Trust
Repayment of loan notes
Purchase of own shares for cancellation
Net cash inflow/(outflow) from financing
Increase in net cash in the year
22
2003
£’000
29,179
702
(77)
625
2002
£’000
46,657
825
(358)
467
(10,657)
(11,537)
(8,311)
1,962
(6,349)
(12,170)
628
129
-
-
129
757
(4,958)
2,422
(2,536)
(12,524)
20,527
-
(5,452)
(13,726)
(19,178)
1,349
34
Michael Page International plc | Annual Report 2003
Annual Report 2003 | Michael Page International plc
35
Notes to the Accounts
Year ended 31 December 2003
1. Accounting policies
The financial statements are prepared in accordance with applicable United Kingdom accounting standards. The particular accounting policies
adopted by the Directors are described below and have been applied consistently throughout the current and prior year with the exception of
the change in accounting policy resulting from the adoption of UITF 38 as described in note 10.
Accounting convention
The accounts have been prepared under the historical cost convention.
Basis of consolidation
The financial statements of Michael Page International plc consolidate the results of the Company and all its subsidiary undertakings. As
permitted by Section 230 of the Companies Act 1985, the profit and loss account of the Company has not been included as part of these
accounts. The Company’s profit for the financial year amounted to £14.0m (2002: £17.8m).
In preparing the financial statements for the current year, the Group has adopted UITF Abstract 38 “Accounting for ESOP Trusts” early. The early
adoption of this UITF has resulted in a prior year adjustment as disclosed in note 10.
Turnover and income recognition
Turnover, which excludes value added tax (“VAT”), constitutes the value of services undertaken by the Group as its principal activities, which are
recruitment consultancy and other ancillary services. These consist of:
• Turnover from temporary placements, which represents amounts billed for the services of temporary staff including the salary cost of these
staff. This is recognised when the service has been provided;
• Turnover from permanent placements, which is based on a percentage of the candidate’s remuneration package, and is derived from both
retained assignments (income recognised on completion of defined stages of work) and non-retained assignments (income recognised at
the date an offer is accepted by a candidate, and where a start date has been determined). The latter includes turnover anticipated, but not
invoiced, at the balance sheet date, which is correspondingly accrued on the balance sheet within “Prepayments and accrued income”.
A provision is made against accrued income for possible cancellations of placements prior to, or shortly after, the commencement of
employment; and
• Turnover from amounts billed to clients for expenses incurred on their behalf (principally advertisements) and is recognised when the expense
is incurred.
Cost of sales
Cost of sales consists of the salary cost of temporary staff and costs incurred on behalf of clients, principally advertising costs.
Gross profit
Gross profit is represented by turnover less cost of sales and consists of the total of placement fees of permanent candidates, the margin
earned on the placement of temporary candidates and advertising income. It is referred to by management as revenue.
Goodwill
Since 31 December 1997, goodwill arising on acquisitions (representing the excess of the fair value of the consideration given over the fair
value of the separable net assets acquired) has been capitalised and classified as an asset at cost on the balance sheet and amortised over its
estimated useful economic life of 20 years. Goodwill arising on acquisitions prior to 31 December 1997 has been written off against reserves
and will be charged or credited in the profit and loss account on subsequent disposal of the business to which it related.
36
Michael Page International plc | Annual Report 2003
Annual Report 2003 | Michael Page International plc
37
1. Accounting policies (continued)
Foreign exchange
Transactions in foreign currencies are translated into sterling at the rates of exchange prevailing at the dates the transactions were made.
Exchange differences on these items are dealt with in the profit and loss account. Monetary assets and liabilities denominated in foreign
currencies at the balance sheet date are translated at rates ruling at that date. Translation differences are dealt with in the statement of total
recognised gains and losses.
Accounts of overseas operations are translated using the closing rate method. Profits, losses and cash flows of overseas operations are
translated at the average exchange rate applicable to the period, whereas assets and liabilities of overseas subsidiaries are translated at the
rates ruling at the period end. Unrealised gains and losses arising on these transactions are dealt with in the statement of total recognised gains
and losses.
Tangible fixed assets
Tangible fixed assets are stated at original cost less accumulated depreciation. Depreciation is calculated to write off the cost less estimated
residual value of each asset evenly over its expected useful life at the following rates:
Leasehold improvements
10% per annum or period of lease if shorter
Furniture, fixtures and equipment
10% - 20% per annum
Motor vehicles
Investments
25% per annum
Fixed asset investments are stated at cost less provision for impairment.
Taxation
The charge for taxation is provided at rates of corporation tax ruling during the accounting period.
Deferred tax is provided in full on timing differences which result in an obligation at the balance sheet date to pay more tax, or a right to pay
less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law. Timing differences arise from the
inclusion of income and expenditure in taxation computations in periods different from those in which they are included in financial statements.
Deferred tax is not provided on unremitted earnings. Deferred tax assets are recognised to the extent that it is regarded as more likely than not
that they will be recovered. Deferred tax assets and liabilities are not discounted.
Pension costs
The Group operates defined contribution pension schemes. The assets of the schemes are held separately from those of the Group in
independently administered funds. The pension costs charged to the profit and loss account represent the contributions payable by the
Group to the funds during each period.
Leased assets
Rentals under operating leases are charged to the profit and loss account on a straight line basis over the term of the lease.
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Notes to the Accounts
continued
2. Segmental analysis
(a) Turnover and gross profit by geographic region
United Kingdom
Continental Europe
Asia Pacific Australia
Other
Total
Americas
Turnover
Gross Profit
2003
£’000
2002
£’000
194,262
203,868
120,363
127,551
43,708
7,673
51,381
39,187
7,503
46,690
2003
£’000
90,630
58,227
18,082
6,951
25,033
2002
£’000
99,274
66,334
16,380
6,536
22,916
6,610
5,361
4,595
4,124
372,616
383,470
178,485
192,648
The above analysis by destination is not materially different to analysis by origin. The amounts stated above derive from the Group’s single
activity of recruitment consultancy.
(b) Turnover and gross profit by discipline
Finance and accounting
Marketing and sales
Other
Turnover
Gross Profit
2003
£’000
2002
£’000
2003
£’000
2002
£’000
256,731
277,818
113,599
126,477
61,832
54,053
54,590
51,062
37,704
27,182
38,740
27,431
372,616
383,470
178,485
192,648
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2. Segmental analysis (continued)
(c) Profit before interest, taxation and exceptional items by geographic region
United Kingdom
Continental Europe
Asia Pacific Australia
Other
Total
Americas
Profit before interest, taxation and exceptional items
Exceptional items
Profit before interest and taxation
Net interest
Profit on ordinary activities before taxation
Net interest has not been allocated, recognising the head office’s role and responsibility in allocating financial resources.
(d) Net assets/(liabilities) by geographic region
United Kingdom
Continental Europe
Asia Pacific Australia
Other
Total
Americas
2003
£’000
2002
£’000
15,638
20,487
(280)
5,567
6,303
1,285
7,588
5,796
1,033
6,829
(62)
(747)
22,884
32,136
(1,101)
-
21,783
32,136
626
461
22,409
32,597
As restated
(note 10)
2002
£’000
2003
£’000
41,115
30,264
9,791
17,166
4,741
811
5,552
3,825
340
4,165
(3,115)
(2,741)
53,343
48,854
38
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Notes to the Accounts
continued
3. Exceptional items
Release of payroll tax provision on Restricted Share Scheme (a)
Property costs (b)
Taxation on exceptional items
2003
£’000
1,886
(2,987)
(1,101)
330
(771)
2002
£’000
-
-
-
-
-
(a) Release of payroll tax provision on Restricted Share Scheme
The grant of Restricted Shares on flotation in 2001 gave rise to potential National Insurance and social security liabilities for which a provision of
£6.0m was established in 2001. As these liabilities crystallise in 2004 when the Restricted Shares vest, these liabilities have now been estimated
using the share price at 31 December 2003 of 186.0p. The required provision is £4.1m and as a consequence, £1.9m has been released from
the provision.
(b) Property costs
The property cost provision represents rentals and other unavoidable costs on onerous lease agreements on vacant properties.
4. Operating profit
Operating profit is stated after charging:
Staff costs (note 5)
Depreciation of tangible fixed assets - owned
Amortisation of goodwill
Audit services - statutory audit
Other services provided by the auditors - tax compliance services
- tax advisory services
Loss on disposal of tangible fixed assets
Operating lease rentals: - land and buildings
- plant and machinery
2003
£’000
2002
£’000
100,070
98,527
7,592
7,971
96
312
71
135
241
96
287
67
169
262
12,558
10,684
634
332
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5. Employee information
The average number of employees (including Executive Directors) during the year and total number of employees (including Executive Directors)
at 31 December 2003 were as follows:
Management
Client services
Administration
Consultants for contract hire
Employment costs (including Directors’ emoluments) comprised:
Wages and salaries
Social security costs
Other pension costs
2003
Average No.
2002
Average No.
2003
Total No.
2002
Total No.
92
1,345
852
2,289
107
2,396
127
1,407
937
2,471
53
93
1,351
816
2,260
99
2,524
2,359
114
1,361
915
2,390
105
2,495
2003
£’000
2002
£’000
83,530
82,477
12,673
12,480
3,867
3,570
100,070
98,527
Details of Directors’ remuneration for the year are provided in the audited part of the Directors’ Remuneration Report on pages 25 to 27.
6. Net interest
Bank interest receivable
Bank interest payable
Loan note interest payable
Net interest receivable
2003
£’000
704
(78)
-
(78)
626
2002
£’000
825
(283)
(81)
(364)
461
40
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Notes to the Accounts
continued
7. Taxation on profits on ordinary activities
(a) Analysis of charge in period
UK Corporation tax at 30% for year
Adjustments in respect of prior periods
Overseas corporation tax
Total current tax charge (note 7(b))
Deferred taxation
Origination and reversal of timing differences
Taxation on profit on ordinary activities
2003
£’000
6,236
(543)
2,013
7,706
2002
£’000
9,964
(296)
3,516
13,184
958
(1,741)
8,664
11,443
The tax assessed for the period differs from the standard rate of corporation tax in the UK (30%). The differences are explained below.
(b) Factors affecting the taxation charge for the period
Profit on ordinary activities before taxation
2003
£’000
2002
£’000
22,409
32,597
Profit on ordinary activities before tax multiplied by the standard rate of corporation tax in the UK of 30%
6,723
9,779
Effects of:
Disallowable items and other permanent timing differences
Capital allowances in excess of depreciation
Unrelieved overseas losses
Other timing differences
Release of payroll tax liabilities on Restricted Share Scheme
Higher tax rates on overseas earnings
Adjustment to tax charge in respect of prior periods
Current tax charge for the period (note 7(a))
459
446
1,466
(354)
(566)
75
(543)
7,706
676
13
1,178
1,481
-
353
(296)
13,184
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7. Taxation on profits on ordinary activities (continued)
(c) Factors affecting future taxation charges
Provision has not been made for taxation on unremitted earnings of Group companies overseas as the earnings are continually reinvested and,
accordingly, no taxation is expected to be payable on them in the foreseeable future. Unremitted earnings may be liable to overseas taxes and
UK taxation (after allowing for double taxation relief) if they were to be distributed as dividends.
In the overseas jurisdictions where the Group currently operates, tax rates are generally higher than those in the UK.
Certain of the Group’s overseas operations have current and prior year tax losses, the future utilisation of which is uncertain. Accordingly the
Group has not recognised a deferred tax asset of £3.9m (2002: £2.8m) in respect of tax losses of overseas companies. These tax losses are
available to offset future taxable profits in the respective jurisdictions.
As a result of recent changes in tax legislation, the Company expects to obtain a deduction for corporation tax purposes when the Restricted
Share Scheme vests in 2004. Based on the price of Michael Page shares at 31 December 2003, the deduction to UK taxable profits would
be approximately £27m which, at the UK corporation tax rate of 30%, would reduce the tax charge in 2004 by £8.1m.
8. Dividends
Interim dividend of 1.1p per ordinary share (2002: 1.1p)
Proposed final dividend of 2.3p per ordinary share (2002: 2.3p)
Total dividend of 3.4p per ordinary share (2002: 3.4p)
9. Earnings per ordinary share
Earnings per share have been calculated on the following bases:
Year ended 31 December 2003
Profit after taxation (£’000)
Weighted average number of shares (‘000)
Earnings per share (pence)
Year ended 31 December 2002
Profit after taxation (£’000)
Weighted average number of shares (‘000)
Earnings per share (pence)
10. Prior year adjustment
2003
£’000
3,937
8,234
2002
£’000
4,030
8,233
12,171
12,263
Basic and
diluted EPS
Exceptional
items
Adjusted
EPS
13,745
771
14,516
357,955
3.8
21,154
366,355
5.8
-
-
-
-
-
357,955
4.1
21,154
366,355
5.8
The Group has adopted UITF Abstract 38 “Accounting for ESOP Trusts” early. The early adoption of this UITF has resulted in “Investments in
own shares” being classed as “EBT reserve” on the balance sheet and deducted from shareholders’ funds rather than being held as an asset.
Prior year net assets have reduced by £10.0m as a result of this restatement. There is no effect on profit in either the current or preceding
financial year.
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Notes to the Accounts
continued
11. Intangible assets
Group
Cost
At 1 January 2003 and 31 December 2003
Amortisation
At 1 January 2003
Charge for the year
At 31 December 2003
Net book value
At 31 December 2003
At 31 December 2002
12. Tangible fixed assets
Group
Cost
At 1 January 2003
Additions
Disposals
Foreign currency translation
At 31 December 2003
Depreciation
At 1 January 2003
Charge for the year
Disposals
Foreign currency translation
At 31 December 2003
Net book value
At 31 December 2003
At 31 December 2002
Goodwill
£’000
1,876
241
96
337
1,539
1,635
Total
£’000
46,812
8,311
(6,636)
2,095
50,582
23,307
7,592
(4,433)
1,015
27,481
23,101
23,505
Leasehold
improvements
£’000
Furniture,
fixtures and
equipment
£’000
Motor
vehicles
£’000
11,948
2,968
(676)
542
27,296
3,958
(2,111)
1,230
14,782
30,373
4,914
1,538
(595)
171
15,551
4,553
(1,758)
734
6,028
19,080
8,754
7,034
11,293
11,745
7,568
1,385
(3,849)
323
5,427
2,842
1,501
(2,080)
110
2,373
3,054
4,726
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13. Investments
Company
Cost
Subsidiary
undertakings
£’000
Total (as
restated)
£’000
At 1 January 2003 and 31 December 2003
421,545
421,545
The Company’s principal subsidiary undertakings at 31 December 2003, their principal activities and countries of incorporation are set out below:
Name of undertaking
Country of incorporation
Principal activity
Michael Page Recruitment Group Limited
Michael Page Holdings Limited
Michael Page International Recruitment Limited*
Michael Page UK Limited
Michael Page Limited
Accountancy Additions Limited
Michael Page International (France) SAS
Page Interim SAS
Michael Page International (Espana) SA
Page Interim (Espana) SA
Michael Page International Italia Srl
Page Personnel Italia SpA
Michael Page International (Deutschland) GmbH
Michael Page International (Nederland) BV
Michael Page International (Belgium) NV/SA
Michael Page International (Sweden) AB
Michael Page International (Australia) Pty Limited
Michael Page International (Hong Kong) Limited
Michael Page International (Brasil) SC Ltda
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
France
France
Spain
Spain
Italy
Italy
Germany
Netherlands
Belgium
Sweden
Australia
Hong Kong
Brazil
Michael Page International Serviçod de Consultadoria Lda
Portugal
Michael Page International (Japan) K.K.
Michael Page International (Switzerland) SA
Michael Page International Inc*
Michael Page International Pte Limited*
Japan
Switzerland
United States
Singapore
Holding company
Support services
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
*The equity of these subsidiary undertakings is held directly by Michael Page International plc. All companies have been included in the
consolidation and operated principally in their country of incorporation.
The percentage of the issued share capital held is equivalent to the percentage of voting rights held. The Group holds 100% of all classes
of issued share capital. The share capital of all the subsidiary undertakings comprise ordinary shares, with the exception of Michael Page
International Recruitment Limited which comprises 1 ordinary share and 421,544,426 preference shares.
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45
Notes to the Accounts
continued
14. Debtors
Amounts falling due within one year
Trade debtors
Other debtors
Prepayments and accrued income
Amounts falling due after more than one year
Deferred taxation (see note 17)
Prepayments and accrued income
15. Creditors
Amounts falling due within one year
Bank overdrafts
Trade creditors
Amounts owed to Group companies
Corporation tax
Other tax and social security
Other creditors
Accruals and deferred income
Dividends payable
Group
Company
2003
£’000
2002
£’000
2003
£’000
2002
£’000
-
1,494
20
1,514
-
169
10
179
1,235
1,800
-
-
53,154
53,244
3,467
11,994
68,615
1,345
1,570
2,684
11,289
67,217
2,198
1,328
71,530
70,743
1,414
3,314
Group
Company
2003
£’000
777
3,815
-
2002
£’000
668
4,296
2003
£’000
-
-
2002
£’000
1,775
-
-
114,420
114,268
1,222
3,215
18,048
18,298
7,003
6,949
20,256
21,410
-
-
3
-
-
-
187
62
8,234
8,233
8,234
8,233
59,355
63,069
122,657
124,525
Amounts falling due after more than one year
Accruals and deferred income
444
-
-
-
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16. Provisions for liabilities and charges
At 1 January 2003
Provided in year (note 3)
Utilised in year
Released in year (note 3)
At 31 December 2003
17. Deferred taxation
Deferred taxation (asset)/provision is as follows:
Capital allowances in excess of depreciation
Other timing differences
At 1 January
Deferred tax charge/(credit) in profit and loss account for period
Foreign currency translation
At 31 December
Payroll tax
liability on
Restricted
Share Scheme
£’000
6,000
-
-
Group
Vacant
property
provision
£’000
-
2,987
(862)
Total
£’000
6,000
2,987
(862)
(1,886)
-
(1,886)
4,114
2,125
6,239
Company
Payroll tax
liability on
Restricted
Share Scheme
£’000
6,000
-
-
(1,886)
4,114
Group
Company
2003
£’000
2002
£’000
2003
£’000
2002
£’000
(7)
(1,338)
(1,345)
(2,198)
958
(105)
439
(2,637)
(2,198)
(461)
(1,741)
4
-
(1,235)
(1,235)
(1,800)
565
-
-
(1,800)
(1,800)
(1,800)
-
-
(1,345)
(2,198)
(1,235)
(1,800)
46
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47
Notes to the Accounts
continued
18. Called-up share capital
Authorised
571,250,000 ordinary shares of 1p each
Allotted, called-up and fully paid
363,662,799 ordinary shares of 1p each (2002: 363,662,799 ordinary shares of 1p each)
At 1 January
Cancellation of own shares
At 31 December
Share options
2003
£’000
2002
£’000
5,713
5,713
3,637
3,637
-
3,637
3,637
3,750
(113)
3,637
At 31 December 2003 the following options had been granted and remained outstanding in respect of the Company’s ordinary shares of 1p
under the Michael Page International plc Executive Share Option Scheme:
Year of grant
Balance at
1 January 2003
Granted
in year
Exercised
in year
Lapsed
in year
No. of shares
oustanding
Exercise price
per share
Exercise period
2001 (Note 1)
29,276,764
2002 (Note 2)
2,926,250
2002 (Note 2)
4,281,250
-
-
-
2003 (Note 3)
-
7,140,000
Note 1 Pre flotation options
53,571
1,797,320
27,425,873
175p March 2004 - March 2011
20,000
50,819
2,855,431
186p March 2005 - March 2012
-
-
150,819
4,130,431
186p March 2006 - March 2012
50,000
7,090,000
81.5p-86.1p
April 2007 - April 2013
On flotation, options over 33,750,000 (9%) ordinary shares were granted to the Executive Directors and employees. These options are subject
to the following:
(a) 55.6% of an individual’s option entitlement will normally only be exercisable to the extent that Earnings Per Share (EPS) targets have been
satisfied over a period of 3 to 10 years. None of these options will vest unless EPS has grown in line with the UK Retail Prices Index (RPI) plus
an average of 5% per annum. At that point 33.3% of this portion of the options vest. If EPS growth is higher than this level, vesting increases
on a sliding scale basis until 100% of this portion of the options vest where EPS growth matches RPI plus an average of 10% per annum;
The base earnings per share is 9.9p.
(b) 44.4% of an individual’s option entitlement will normally only be exercisable to the extent that share price growth targets have been satisfied
over a period of at least 3 years. None of these options will vest unless the Company’s share price has achieved 50% growth after 3 years
and not later than 5 years. At that point 33.3% of this portion of the options vest. Vesting then increases progressively for further share
price growth until full vesting occurs where there is 200% growth after 3 years and not later than 5 years. These hurdles rise from the fifth
anniversary of the date of grant at compound rates of growth of 8.45% and 24.57% respectively.
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18. Called-up share capital (continued)
Note 2 2002 Grant
On 14 March 2002, options over 7,500,000 ordinary shares were granted in two tranches to the Executive Directors and 203 employees at an
exercise price of 186p. The first tranche of options is exercisable, under normal circumstrances, between 3 and 10 years from the date of grant.
The second tranche is exercisable, under normal circumstances, between 4 and 10 years fom the date of grant. These options were granted
subject to a performance condition requiring that an option may only be exercised, in normal circumstances, if there has been an increase in
base earnings per share (as defined) of at least 3% per annum above the growth in the retail price index. The 2001 earnings per share of 10.6p
is the base for the first tranche of options. The 2002 earnings per share of 5.8p is the base for the second tranche of options.
Note 3 2003 Grant
On 8 April 2003, options over 7,140,000 were granted to the Executive Directors and 110 employees at exercise prices of between 81.5p
and 86.1p. These are exercisable, under normal circumstances, between 3 and 10 years from the date of grant. These grants are subject to
a performance condition requiring that an option may only be exercised, under normal circumstances, if there has been an increase in base
earnings per share (as defined) of at least 3% per annum above the growth in the retail price index. The base earnings per share is 5.8p.
All future grants of options under this scheme will be subject to similar EPS performance conditions which is considered the best measure of the
Group’s performance and is designed to provide a direct link between the rewards for executives and the returns to shareholders, whilst at the
same time ensuring that senior executives can measure the results of their efforts through the Company’s share price.
19. Reserves
Group (as restated)
Company (as restated)
Capital
redemption
reserve
£’000
EBT
reserve
£’000
Profit and
loss account
£’000
Capital
redemption
reserve
£’000
EBT
reserve
£’000
Profit and
loss account
£’000
At 1 January 2003
113
(10,000)
55,104
113
(10,000)
300,584
Retained profit for the year
Foreign currency
translation differences
Sale of shares
Reserve transfer
-
-
-
-
-
-
129
-
1,574
2,786
-
-
-
-
-
-
-
-
129
-
1,856
-
-
-
At 31 December 2003
113
(9,871)
59,464
113
(9,871)
302,440
The EBT reserve consists of 5,640,715 ordinary shares held by the Employee Benefit Trust representing 1.55% of the called up share capital and
at 31 December 2003 had a market value of £10.5m (2002: £6.3m). Dividend income on shares held by the Employee Benefit Trust has been
waived. The EBT reserve is now shown as a deduction from shareholders’ funds following the early adoption of UITF 38 as described in note 10.
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Notes to the Accounts
continued
20. Reconciliation of operating profit to net cash inflow from operating activities
Operating profit before exceptional items
Exceptional items (note 3)
Operating profit after exceptional items
Depreciation and amortisation charges
Loss on sale of fixed assets
(Increase)/decrease in debtors
Decrease in creditors
Increase in provisions (note 16)
2003
£’000
22,884
(1,101)
21,783
7,688
241
(313)
(459)
239
2002
£’000
32,136
-
32,136
8,067
262
10,349
(4,157)
-
Net cash inflow from operating activities
29,179
46,657
21. Reconciliation of net cash flow to movement in net cash
Increase in net cash in the year
Decrease in debt financing
Foreign exchange movements
Movements in net cash in year
Opening net cash
Closing net cash
22. Analysis of net cash
Cash at bank and in hand
Bank overdrafts
Total net cash
2003
£’000
757
-
305
1,062
21,372
22,434
2002
£’000
1,349
5,452
224
7,025
14,347
21,372
At
1 January
2003
£’000
22,040
(668)
21,372
Foreign
exchange
movements
£’000
At
31 December
2003
£’000
Cash flow
£’000
852
(95)
757
319
(14)
305
23,211
(777)
22,434
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23. Financial instruments
The Group’s financial instruments comprise borrowings, cash and liquid resources plus various items such as trade debtors and trade creditors
which arise directly from its operations. The main purpose of these financial instruments is to provide finance for the Group’s operations.
The Group has opted to exclude all financial risk disclosures relating to short term debtors and creditors with the exception of currency risk.
The main exposure arising from the Group’s financial instruments is currency risk.
An explanation of the Group’s treasury policy is included in the Finance Director’s review on page 11.
(a) Currency exposures of financial assets and liabilities
The extent to which Group companies have monetary assets and liabilities, excluding intercompany balances, in currencies other than their local
currency is shown in the tables below.
As at 31 December 2003
Net foreign currency monetary assets/(liabilities)
Functional currency of Group operation
Sterling
US dollar
EU currencies
Other currencies
Total
Sterling
£’000
US$
£’000
EU
currencies
£’000
Other
currencies
£’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
163
163
Total
2003
£’000
-
-
-
163
163
As at 31 December 2002
Net foreign currency monetary assets/(liabilities)
Functional currency of Group operation
Sterling
US dollar
EU currencies
Other currencies
Total
Sterling
£’000
US$
£’000
EU
currencies
£’000
Other
currencies
£’000
-
-
-
-
-
-
-
-
-
-
459
-
-
(46)
413
-
-
-
47
47
Total
2002
£’000
459
-
-
1
460
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Notes to the Accounts
continued
23. Financial instruments (continued)
(b) Maturity of financial liabilities
The maturity profile of the carrying value of the Group’s and Company’s financial liabilities, other than short term creditors and accruals, as at
31 December was as follows:
Less than one year
(c) Borrowing facilities
Group
Company
2003
£’000
777
2002
£’000
668
2003
£’000
-
2002
£’000
1,775
The Group and Company has the following undrawn committed borrowing facilities available at 31 December 2003:
Less than one year
Between one and two years
Total
(d) Financial assets and liabilities
(i) Assets excluding short-term debtors:
Cash
Group
Company
2003
£’000
23,786
2002
£’000
2,956
2003
£’000
20,632
2002
£’000
-
-
40,659
-
40,659
23,786
43,615
20,632
40,659
Group
2003
£’000
23,211
Group
2002
£’000
22,040
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23. Financial instruments (continued)
(d) Financial assets and liabilities
(ii) Liabilities including interest rate risk profile
The Group does not consider the interest rate risk as significant. The interest rate profile of the Group’s financial liabilities, excluding short
term creditors at 31 December was as follows:
Sterling
Others
Total
Floating rate
liabilities
2003
£’000
Floating rate
liabilities
2002
£’000
-
777
777
-
668
668
All the Group’s creditors falling due within one year (other than bank and other borrowings) have been excluded from the above table by
either applying the exemption granted by Financial Reporting Standard 13 relating to other short term items, or because they do not meet the
definition of a financial liability, such as balances relating to taxation.
The benchmark rates for determining floating rate liabilities are based on relevant national LIBOR equivalents.
(e) Fair value of financial assets and liabilities
The fair value of financial assets and liabilities is not materially different to the book value.
24. Commitments and contingent liabilities
Operating lease commitments
At 31 December 2003 the Group was committed to make the following payments in the next financial year in respect of operating leases:
Leases which expire:
Within one year
Within two to five years
After five years
Land and buildings
Other
2003
£’000
705
6,232
4,094
2002
£’000
2,343
3,724
4,532
11,031
10,599
2003
£’000
2002
£’000
90
238
-
328
273
97
-
370
At 31 December 2003, the Company had no annual commitments under operating leases (2002: £nil).
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Notes to the Accounts
continued
24. Commitments and contingent liabilities (continued)
Capital commitments
The Group had capital commitments of £613,000 as at 31 December 2003 (2002 - £2,531,000)
VAT group registration
As a result of group registration for VAT purposes, the Company is contingently liable for VAT liabilities arising in other companies within the VAT
group which at 31 December 2003 amounted to £3,770,814 (2002 - £3,439,929).
Other commitments
The Company has provided guarantees to other Group undertakings amounting to £368,000.
25. Related party transactions
Details of Directors’ shareholdings and share options are shown on pages 26 and 27.
The Group is taking advantage of the exemption granted by paragraph 3(c) of Financial Reporting Standard No. 8 “Related Party Disclosures”
not to disclose transactions with group companies which are related parties.
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Shareholder Information and Advisers
Annual General Meeting
To be held on 27 May 2004 at 12.00 noon at 39-41 Parker Street, London, WC2B 5LN. Every shareholder is entitled to attend and vote at the
meeting.
Final dividend for the year ended 31 December 2003
To be paid (if approved) on 4 June 2004 to shareholders on the register on 7 May 2004.
Company secretary
R A McBride
Company number
3310225
Registered office
39-41 Parker Street
London
WC2B 5LN
Tel: 020 7831 2000
Fax: 020 7269 2280
Auditors
Solicitors
Registrars
Brokers
Bankers
Deloitte & Touche LLP
Herbert Smith
Capita IRG
Citigroup
HSBC Bank plc
London
Exchange House
The Registry
33 Canada Square West End Business Banking Centre
Primrose Street
34 Beckenham Road
Canary Wharf
70 Pall Mall
London EC2A 3TR
Beckenham, Kent BR3 4TU
London E14 5LB
London SW1Y 5GZ
Key dates
Ex-Dividend date
Record date
Annual General Meeting
Payment of final ordinary dividend
Interim results announcement
5 May 2004
7 May 2004
27 May 2004
4 June 2004
16 August 2004
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Five Year Summary
Profit and Loss Account
Turnover
Gross profit
Operating profit
1999
£’000
2000
£’000
2001
£’000
2002
£’000
356,252
458,065
459,547
383,470
181,670
246,329
245,080
192,648
56,217
74,102
58,019
32,136
Profit on ordinary activities before taxation
42,211
58,536
62,326
32,597
Profit for the financial period
27,258
37,008
43,653
21,154
2003
£’000
372,616
178,485
21,783
22,409
13,745
Basic and diluted earnings per share (pence)
Adjusted earnings per share (pence)
7.3
7.3
9.9
9.9
11.8
10.6
5.8
5.8
3.8
4.1
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Annual General Meeting
Notice of Meeting
Notice is hereby given that the Annual General Meeting of the Company will be held at 39-41 Parker Street, London WC2B 5LN on Thursday
27 May 2004 at 12 noon for the following purposes:
1. To receive and approve the reports of the directors and auditors and accounts for the year ended 31 December 2003.
2. To declare a final dividend on the ordinary share capital of the Company for the year ended 31 December 2003 of 2.3p per share.
3. To re-elect R. Lourey as a director of the Company (note 2)
4. To re-elect S.J. Box as a director of the Company (note 2)
5. To re-elect S.P. Burke as a director of the Company (note 2)
6. To re-elect C-H Dumon as a director of the Company (note 2)
7. To propose the following ordinary resolution:
That the directors’ remuneration report for the year ended 31 December 2003 be received and approved.
8.
To re-appoint Deloitte & Touche LLP as auditors of the Company to hold office until the conclusion of the next Annual General Meeting
at a remuneration to be fixed by the directors.
9. To propose the following ordinary resolution:
That the directors be and are hereby generally and unconditionally authorised for the purposes of Section 80 of the Companies Act 1985
(the “Act”) to exercise all powers of the Company to allot relevant securities (as defined in Section 80 (2) of the Act) up to an aggregate
nominal amount of £1,212,209 to such persons upon such conditions as the directors may determine, such authority to expire at
the conclusion of the next Annual General Meeting of the Company save that the Company may before such expiry make an offer or
agreement which would or might require relevant securities to be allotted in pursuance of such an offer or agreement as if the authority
conferred hereby had not expired (note 4).
10. To propose the following special resolution:
That the directors be and are hereby empowered pursuant to Section 95 of the Companies Act 1985 (the “Act”) to allot equity securities
(as defined in Section 94 of the Act) for cash pursuant to the authority conferred by resolution 9 above as if Section 89 (1) of the Act did not
apply to such allotment provided that this power shall be limited to:
(a) the allotment of equity securities in connection with a rights issue and so that for this purpose “rights issue” means an offer of equity
securities open for acceptance for a period fixed by the directors to holders of equity securities on the register on a fixed record date in
proportion to their respective holdings of such securities or in accordance with the rights attached thereto but subject to such exclusions
or other arrangements as the directors may deem necessary or expedient to deal with fractional entitlements or legal or practical
problems under the laws of any overseas territory or requirements of any recognised regulatory authority or stock exchange in any
country or any matter whatever, and
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Annual General Meeting
continued
(b) the allotment (other than within the authority conferred in sub paragraph (a) above) of equity securities for cash up to an aggregate
nominal amount of £181,831:
and shall expire at the conclusion of the next Annual General Meeting of the Company when the general authority under Resolution 9 shall
expire, save that the Company may before such expiry make an offer or agreement which would or might require equity securities to be
allotted in pursuance of such an offer or agreement as if the authority conferred hereby had not expired (note 5).
11. To propose as special business the following special resolution:
That pursuant to the Company’s Articles of Association and Section 166 of the Companies Act 1985 (the ”Act”), the Company be and is
hereby generally and unconditionally authorised to make market purchases of ordinary shares of 1p each in the capital of the Company
provided that:
(a) the maximum number of ordinary shares hereby authorised to be purchased is 36,366,280;
(b) the minimum price which may be paid for each ordinary share is 1 pence;
(c) the maximum price which may be paid for each ordinary share is in respect of an ordinary share contracted to be purchased on any
day, an amount equal to 105% of the average of the mid-market quotations for an ordinary share of the company as derived from
The London Stock Exchange Daily Official List for the five business days immediately preceding the day on which the ordinary share is
contracted to be purchased;
(d) the authority hereby conferred shall expire at the conclusion of the next Annual General Meeting of the Company after the date of
passing this resolution, unless such authority is renewed prior to such time; and
(e) the Company may conclude a contract to purchase ordinary shares under the authority hereby conferred prior to the expiry of such
authority which will or may be exercised wholly or partly after the expiry of such authority and may make a purchase of ordinary shares
in pursuance of any such contract as if the authority hereby conferred had not expired (note 6).
By order of the Board
R. A. McBride
Secretary
39-41 Parker Street
London WC2B 5LN
Registered in England No. 3310225
25th February 2004
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Notes
1.
Any member entitled to attend and vote at the meeting may appoint another person, whether a member or not, as his proxy to attend and
on a poll, to vote instead of him. A form of proxy is enclosed for this purpose and must be deposited with the Company’s registrars together
with any power of attorney or other authority under which it is signed, not less than 48 hours before the time appointed for the meeting.
Completion and return of the form of proxy will not preclude a member from attending and voting at the meeting.
2.
Messrs Box, Burke and Dumon retire by rotation and are seeking reappointment at the Annual General Meeting. R. Lourey was appointed
after the last Annual General Meeting and must therefore retire and seek re-appointment at this Annual General Meeting. Biographical
information on each of the directors is contained on pages 12 and 13 of the annual report and accounts.
3.
The register of directors’ interests required to be kept under section 325 of the Act together with copies of the directors’ service contracts
will be available for inspection by members at the registered office of the Company on any weekday during normal business hours from the
date of this announcement until the day of the Annual General Meeting and at the place of the meeting not less than 15 minutes before the
meeting commences and after the meeting concludes.
4.
This authority is in respect of 33% of the issued share capital of the Company and is in accordance with the recommendations of the
Association of British Insurers (“ABI”). It is the directors’ intention to seek renewal of this authority annually. The directors have no present
intention of exercising this authority.
5.
This authority is in respect of 5% of the issued share capital of the Company and is in accordance with the recommendations of the ABI.
It applies to both the issue of new shares and sales of shares out of treasury. It is the directors’ intention to seek renewal of this authority
annually. The directors have no present intention of exercising this authority.
6.
This authority is in respect of 10% of the issued share capital of the Company and the power given by this resolution will only be exercised
if the directors are satisfied that any purchase will increase the Earnings per Share of the Ordinary Share Capital in issue after the purchase
and accordingly, that the purchase is in the interests of shareholders. Shares purchased under this authority may be cancelled or held
in treasury. Any shares held in treasury will have no voting rights, no rights to receive dividends, and will be treated as cancelled whilst in
treasury.
7.
To have the right to attend and vote at the meeting (and also for the purpose of calculating how many votes a person may cast), a person
must have his/her name entered on the register of members by no later than 48 hours before the time of the meeting. Changes to entries
on the register after this time shall be disregarded in determining the rights of any person to attend or vote (and the number of votes they
may cast) at the meeting or adjourned meeting.
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Michael Page International plc
39-41 Parker Street, London WC2B 5LN
Tel: 020 7831 2000 Fax: 020 7269 2280
www.michaelpage.co.uk