MICHAEL PAGE INTERNATIONAL PLC
ANNUAL REPORT 2004
Michael Page International plc
Sea Island Cotton Top
by John Smedley
Leather Pleated Mini Skirt
by Esprit NY Edition
Suede Kitten Heel Boots
by Hobbs
Hair & Make-up
by Denise Lilley
Styling by Jo Bell
Professional Career
arranged through
Michael Page International
Michael Page International is a world leading recruitment consultancy
110 offi ces in 16 countries worldwide | www.michaelpage.co.uk
Michael Page International plc
A global organisation
An established brand
A market leader
Michael Page is one of the world’s
The Group has established a
The role of a recruitment
leading professional recruitment
leading presence in many of
consultancy is to act as an
consultancies, specialising in
the key markets for professional
intermediary, identifying and
the placement of candidates in
recruitment around the world and
sourcing suitably qualifi ed
permanent, contract, temporary
has positioned itself in certain
candidates on behalf of its clients.
and interim positions with clients
other markets, which offer the
Candidates are recruited either for
£433.7m
Group Turnover
£210.6m
around the world. The Group has
opportunity for future growth.
permanent or contract positions
Gross Profi t
operations in the UK, Continental
Within its current largest markets,
(typically for a fi xed term) or on a
Europe, Asia Pacifi c and The
Michael Page has also built a
temporary basis. Within the overall
Americas and focuses on the
regional presence, including in
recruitment industry, the market for
areas of Accounting, Tax and
the UK, France and Australia.
professional recruitment services
Treasury, Banking and Financial
Consequently the Michael
is a specialist sector which has
£40.0m
Profi t before taxation and
Markets, Marketing, Retail,
Page brand is among the most
developed more recently. Michael
exceptional items
Sales, Legal, IT & Technology,
widely recognised brands in the
Page is widely recognised as
Human Resources, Engineering
professional recruitment industry.
leading the development of this
& Manufacturing, Procurement
& Supply Chain, Consultancy/
Strategy/Change and Secretarial.
market around the world.
Building the brand: Opposite
and on proceeding pages are
advertisements selected from
Michael Page International’s current
‘Fashion’ campaign. They form
part of a communications portfolio
that demonstrates the company’s
commitment to building a brand
that is fresh, contemporary and
industry leading.
04 Chairman’s Statement 06 Chief Executive’s Review 09 Finance Director’s Review 12 Board of Directors 14 Directors’ Report 17 Corporate
Governance 22 Remuneration Report 32 Independent Auditors’ Report 34 Consolidated Profi t and Loss Account 35 Balance Sheets 36 Consolidated
Statement of Total Recognised Gains and Losses 36 Consolidated Reconciliation of Movements in Shareholders’ Funds 37 Consolidated Cash Flow
Statement 38 Notes to the Accounts 57 Shareholder Information and Advisers 58 Five Year Summary 59 Notice of Meeting
3
Michael Page International plc
Chairman’s Statement
The professional employment
Profi t before tax and exceptional
During the year we reinitiated
Outlook
markets are primarily driven by
items was £40.0m (2003: £23.5m)
share repurchases acquiring
the levels of economic activity
and adjusted earnings per share
14.2m shares for £24.1m,
and business confi dence which
before exceptional items were
representing an average cost
move in cycles, the timing and
7.4p (2003: 4.1p).
per share of 170p.
The short term outlook is
encouraging. Market conditions
in the UK, Asia Pacifi c and The
Americas are favourable and
we plan to grow our businesses
by increasing our headcount,
continuing the discipline roll
out and opening new offi ces.
In Continental Europe where
market conditions are improving
but remain uncertain, we will
increase headcount in some of
our businesses but no new offi ce
openings are planned for 2005.
On 6 April 2005 we will make
a statement in respect of our
trading for the fi rst quarter which,
unlike in 2004, includes Easter, an
important holiday period.
Dividends and share
Employees
repurchases
I wish to express my thanks
It is the Board’s intention to pay
to the staff worldwide for their
dividends at a level which is
commitment, loyalty and efforts
sustainable throughout economic
throughout the year. Having
cycles and to continue to use
operated throughout a sustained
share repurchases as an additional
period of diffi cult trading
mechanism for returning surplus
conditions, they have maintained
cash to shareholders. Accordingly
your Company’s position as the
we will be seeking shareholders’
international leader in the specialist
consent for a renewal of the
recruitment industry.
repurchase authority at the Annual
General Meeting on 27 May 2005.
Board of Directors
As the Group’s profi tability has
increased considerably and the
prospects are encouraging, the
Board is proposing an increase in
the dividend for the year of 17.6%,
the fi rst such increase since
fl otation in March 2001. A fi nal
dividend of 2.75p (2003: 2.3p) per
ordinary share is proposed which,
together with the interim dividend
of 1.25p (2003: 1.1p) per ordinary
share paid in October, makes a
total dividend for the year of 4.0p
It is with regret that Rob Lourey
has informed the Board that
he will be resigning as a Non-
Executive Director in April 2005.
Rob will be relocating to Sydney,
Australia and as a result, will
be unable to continue as a
Adrian Montague
Director of the Company. Since
Chairman
his appointment in 2003, Rob
22 February 2005
has been a valued member of
the Board and we wish him
well for the future. A search for
Rob’s replacement is currently
(2003: 3.4p) per ordinary share.
underway.
The fi nal dividend will be paid on 3
June 2005 to those shareholders
on the register at 6 May 2005. The
total dividend is covered 1.9 times
by adjusted earnings per share
before exceptional items of 7.4p.
extent of which vary from region
to region around the world. Our
fundamental strategy is to grow
the Group organically and, during
an economic slowdown, maintain
our infrastructure while continuing
to make sensible investments
for the future. As a result, we are
particularly well positioned to
benefi t from any improvements
in the market. During 2004 the
markets improved in all the
regions in which we operate and
accordingly, I am very pleased to
report a considerably improved set
of results for 2004.
Financial highlights
Turnover for the year ended 31
December 2004 increased 16.4%
to £433.7m (2003: £372.6m). As
expected in an improving market,
permanent placements grew more
rapidly than temporary placement
activity, and this movement in
business mix contributed to
a larger revenue (gross profi t)
increase of 18.0% to £210.6m
(2003: £178.5m). Given the
Group’s high operational gearing,
operating profi t before exceptional
items increased by 75.0% to
£40.0m (2003: £22.9m).
4
Pale Blue Long Sleeve T-Shirt, Zip-Up Cardigan, Denim Jeans, Parka Jacket all by Esprit Styling by Jo Harris
Photography by Bob Komar Professional Career arranged through Michael Page International
Michael Page International is a world leading recruitment consultancy
110 offi ces in 16 countries worldwide | www.michaelpage.co.uk
5
Michael Page International plc
Chief Executive’s Review
My expectation at the start of 2004
Staff and offi ce numbers
United Kingdom
The combined revenues of Michael
We started the year with 2,260
In the UK, turnover increased
fee generating and support staff
by 20.9% to £234.8m (2003:
operating from 105 offi ces in 16
£194.3m) and revenue by 21.4%
countries. During the course of
to £110.0m (2003: £90.6m).
the year we opened fi ve offi ces
Operating profi ts were £23.6m
and extended our existing
(2003: £15.6m before
disciplines into more locations. At
exceptional items).
31 December 2004 we employed
2,551 fee generating and support
staff operating from 110 offi ces in
16 countries.
The revenues of the fi nance
and accounting businesses of
Michael Page Finance, Michael
Page City and Accountancy
Additions, which generated 62%
of UK revenue, were 17% higher
than in 2003. Michael Page
Finance, the largest of the three
businesses, opened an offi ce
in Maidstone and recorded its
highest quarterly revenue of the
year in the fourth quarter, which
is encouraging given that this
quarter included the seasonally
quieter Christmas period. The
Finance business in part benefi ted
from increased demand for
candidates, driven by the needs
of companies to prepare for the
impact of International Accounting
Standards and compliance with
Sarbanes-Oxley. The revenue
of Michael Page City improved
signifi cantly, particularly in the
fi rst half of the year, whilst
Accountancy Additions, which
specialises in lower level fi nance
and accounting positions, grew
revenue at the fastest rate partly
driven by its network expansion
from 27 to 30 locations with new
offi ces in Cambridge, Glasgow
and Nottingham.
Page Marketing, Michael Page
Sales and Michael Page Retail,
were 24% higher than in 2003 and
represented 23% of the UK total.
The national coverage of these
businesses increased to eight
offi ces in January 2004 with the
opening of an offi ce in Bristol. The
Marketing and Sales businesses
produced strong growth from all
industry sectors and continue
to develop a burgeoning temps
business. Retail’s growth rate was
lower refl ecting the tougher market
for retailers in general during 2004.
Michael Page Legal which
performed well throughout the
downturn produced solid growth
in 2004. Our small Technology
business developed further during
the year producing a trading profi t
compared to last year’s breakeven.
Michael Page Human Resources
achieved very strong growth
benefi ting from its increased
geographic coverage. We believe
there is a substantial opportunity
in Michael Page Engineering and
Supply Chain Management having
opened a fi fth offi ce (London). This
business has now been separated
into Michael Page Engineering
and Manufacturing, and Michael
Page Procurement and Supply
Chain. Michael Page Secretarial
which started at the end of 2003
progressed well and continues to
focus on the City and West End
of London.
was that whilst the prospects
for the UK, Asia Pacifi c and The
Americas were improving, our
Continental European businesses
would face another diffi cult year
as trading conditions remained
weak. These assumptions proved
to be correct for the best part of
the year. However, in Continental
Europe, after the summer holiday
period, we experienced improving
activity levels which strengthened
as the year ended.
We continued our strategy of
investing cautiously and sensibly
in the organic development of
our businesses, while maintaining
our normal tight cost control.
This strategy means that we are
operationally geared and while
profi tability suffered during the
downturn, we gain the benefi t
as conditions improve. This is
evidenced by our 18% increase
in revenue (gross profi t) for the
year, yielding a 75% increase in
operating profi ts to £40.0m (2003:
£22.9m before exceptional items).
6
Chief Executive’s Review
These businesses combined
Continental Europe
In France, our second largest
Our newer and smaller businesses
produced revenue growth in
2004 of 40% and represent a
signifi cant opportunity for further
strong growth as they are rolled
out progressively across the UK
network.
Our two largest businesses in
Continental Europe, France and
the Netherlands, continued to
experience challenging trading
conditions during the fi rst half of
the year, recording like for like
In order to capitalise on the
revenue declines. Elsewhere in
opportunity in Scotland, we have
Continental Europe, all our other
created a separate management
businesses increased revenues
structure to maximise revenue
in the fi rst half of the year. During
from our existing offi ces in
the second half, market conditions
Glasgow and Edinburgh, as well
marginally improved, including
as to roll out other disciplines.
in France and the Netherlands,
which both contributed to our
fourth quarter revenue growth in
Continental Europe of 21.8%.
Turnover for the year as a whole
increased by 3.3% to £124.3m
(2003: £120.4m) and revenue
increased by 5.6% to £61.5m
(2003: £58.2m). As a result of
the increased revenue and tight
control over costs, the region
produced an operating profi t
of £4.4m (2003: operating
loss before exceptional items
of £0.3m).
business after the UK and
in Switzerland, Sweden, Belgium
representing nearly 55% of
and Portugal each achieved 30%
the region, revenue was 6%
plus revenue growth in 2004.
As market conditions in
Continental Europe begin to
improve we are starting to
reap the benefi t of our strategy
to maintain and invest in our
businesses during a downturn.
As part of this process, we have
rebranded ‘Page Interim’ as ‘Page
Personnel’ in France, Italy, Spain
and the Netherlands. If revenue
growth is maintained throughout
2005, profi tability should improve
considerably as there remains
spare capacity within a number of
our businesses.
lower than in 2003. Trading
conditions remained very diffi cult
during 2004 with the business
only achieving modest year
on year revenue growth in the
fourth quarter of 2004. The
improved performance during
the second half of the year was
largely driven by permanent
recruitment resulting in revenue
from permanent placements
for the year totalling a similar
level to 2003. The temporary
and contracting businesses
experienced a 15% decline in
revenue year on year. We believe
that the recent increase in our
revenues is largely the result
of our ability to service the market
from our leading position which
we maintained during the
downturn.
Our businesses in the
Netherlands, Italy, Spain and
Germany collectively represent
nearly 40% of the region. While
the Netherlands did not achieve
growth until the second half of
2004, our businesses in the other
countries produced good growth
throughout the year as market
conditions improved. In addition,
we believe we have made
market share gains as conditions
improved due to a number
of competitors downsizing
and closing offi ces during the
downturn.
7
Chief Executive’s Review
Asia Pacifi c
2004 was a very strong year in
New IT system
Our businesses in this region
produced a very strong set of
results for the year. Turnover was
22.2% higher at £62.8m (2003:
£51.4m), revenue was 26.0%
higher at £31.5m (2003: £25.0m)
and operating profi t increased
52.5% to £11.6m (2003: £7.6m
before exceptional items).
In Australia revenue grew 16.7%
driven largely by continued
strong demand from the fi nancial
services, business services, mining
and resources, and manufacturing
sectors. We opened an offi ce
in Brisbane at the beginning of
the year starting with fi nancial
recruitment. We also continued to
progress the roll out of the newer
businesses, starting Engineering
and Supply Chain in Sydney.
Our businesses in Hong Kong
and Singapore both experienced
substantial revenue growth in
2004 capitalising on our strong
market position. In August we
entered into a strategic alliance
with Shanghai Tian Cai Network
Co. Ltd., through which we can
provide recruitment services to
Tokyo and we substantially grew
revenue and profi ts. We expanded
the range of disciplines by starting
Sales and Marketing, and Human
Resources. Our offi ce is now at
capacity and we intend doubling
the size of our offi ce space early
in 2005.
The Americas
Turnover for the region was 79.2%
higher at £11.8m (2003: £6.6m)
and revenue increased by 65.8%
to £7.6m (2003: £4.6m).
Our new front offi ce recruitment
system has been successfully
rolled out throughout the UK,
Continental Europe and USA.
The Asia Pacifi c region will start
implementing the system in the
fi rst quarter of 2005.
Strategy
Our overall long term strategy
remains absolutely unchanged.
We intend to stay focused on our
core competency of specialist
recruitment and to grow the
During the year we opened new
business organically by the
offi ces in Chicago and Boston
expansion of existing businesses
and continued to add headcount
in their local markets, the
in the existing offi ces in the USA
introduction of new disciplines into
and Brazil. These investments,
existing locations and by entering
while increasing the cost base,
new geographic markets. We have
contributed to the revenue growth
numerous opportunities to grow
resulting in the region making an
our business in all our regions.
operating profi t of £0.5m (2003:
operating loss before exceptional
items of £0.1m).
We are extremely pleased with our
progress in the USA and during
early 2005 we will be investigating
the opportunities for further offi ce
openings in the second half of
As we continue to grow the
business it naturally becomes
broader-based in terms of
disciplines, customers and
geographies, although we cannot
escape the fact that recruitment
is tied to economic cycles. Our
strategy of organically growing,
maintaining and sensibly investing
in our business, even during a
downturn, means that our fi nancial
performance will suffer during
periods of economic slowdown.
However, our track record since
1976 demonstrates the long
term success of this strategy. As
conditions improved throughout
2004 we again saw the benefi ts
of this approach, achieving a 75%
increase in operating profi t on an
18% increase in revenue.
Terry Benson
Chief Executive
22 February 2005
clients in Shanghai.
the year.
In Brazil we enjoyed another
very successful year growing
headcount in both the São Paulo
and Rio de Janeiro offi ces and
starting Sales and Marketing
recruitment.
8
Michael Page International plc
Finance Director’s Review
Profi t and loss account
Operating profi t
Taxation
Earnings per share and
As a result of the Group’s strategy
Tax on profi ts before exceptional
dividends
and the profi t based bonuses, we
items was £13.9m (2003: £9.0m),
Basic earnings per share were
have a cost structure that is very
representing an effective tax rate
10.0p (2003: 3.8p) and adjusted
operationally geared as evidenced
of 34.8% (2003: 38.3%). The rate
earnings per share before
by the 75% increase in operating
is higher than the UK corporation
exceptional items were 7.4p
profi ts before exceptional items
tax rate of 30% as a result of non-
(2003: 4.1p). The weighted
from an 18% increase in revenue.
deductible business expenses,
average number of shares for
Turnover
Turnover for the year was
16.4% higher at £433.7m
(2003: £372.6m). Turnover from
temporary placements increased
by 12.9% to £275.2m (2003:
£243.8m) and represented
63.5% (2003: 65.4%) of Group
turnover. Turnover from permanent
placements was £158.5m (2003:
£128.8m), an increase of 23.0%.
Administrative expenses in the
year increased to £170.6m (2003:
£155.6m before exceptional
items) principally due to increased
numbers of staff and higher profi t
Gross profi t (revenue)
related bonuses.
Revenue for the year increased
by 18.0% to £210.6m (2003:
£178.5m) representing an overall
gross margin of 48.6% (2003:
47.9%). The percentage increase
in revenue is greater than the
increase in turnover due to the
higher proportion of permanent
placements in 2004 countered
by a lower gross margin on
temps. Revenue from temporary
placements was £62.0m (2003:
£56.7m) and represented 29.4%
(2003: 31.7%) of Group revenue.
The gross margin achieved on
The Group’s largest category of
expenditure is the remuneration
of our consultants and support
staff. Headcount of the Group
was 2,260 at 1 January 2004 and
increased to 2,435 at 30 June.
The Group’s headcount increased
further during the second half of
the year refl ecting both increased
current activity and investment for
future growth. At 31 December
2004 we employed 2,551
consultants and support staff.
Net interest
temporary placements was 22.5%
The net interest receivable in the
(2003: 23.2%).
year was negligible (2003: £0.6m).
The Group’s quarterly revenue
has grown sequentially throughout
2004, as shown in Fig.1, with year
on year growth increasing from
12.4% in quarter 1 to 23.9% in
quarter 4, an average for the year
of 18% growth.
While we started the year with
net cash of £22.4m there is a
substantial cash outfl ow in January
each year as quarter four and
annual bonuses are paid. During
2004, surplus cash balances were
invested in the short-term money
market prior to being utilised for
share repurchases.
profi ts arising in higher tax rate
the year was 351,555,000
jurisdictions, and losses which are
(2003: 357,955,000). The 2004
unable to be offset against profi ts in
average number of shares was
the current year and against which
lower than 2003 due to the share
no deferred tax asset has been
repurchases made during 2004.
recognised. The rate is lower than
2003, primarily as a result of the
higher profi ts in Continental Europe.
An increase in the fi nal dividend
to 2.75p (2003: 2.3p) per ordinary
share has been proposed which,
The Company expects to obtain
together with the interim dividend
a deduction for corporation tax
of 1.25p (2003: 1.1p) per ordinary
purposes for the Restricted Share
share, makes a total dividend
Scheme which vested in 2004.
for the year of 4.0p (2003: 3.4p)
This deduction reduces the current
per ordinary share, an increase
year’s tax charge by £9.0m and is
of 17.6%. The fi nal dividend,
treated as an exceptional item in
which amounts to £9.5m, will be
these results.
paid on 3 June 2005 to those
shareholders on the register at
6 May 2005.
£60m
£50m
£40m
£30m
£20m
£10m
m
5
.
9
4
£
Q1
m
4
.
1
5
£
Q2
m
8
.
7
4
£
Q3
m
9
.
3
4
£
Q4
m
8
.
2
4
£
Q1
m
0
.
5
4
£
Q2
m
0
.
5
4
£
Q3
m
7
.
5
4
£
Q4
m
1
.
8
4
£
Q1
m
3
.
2
5
£
Q2
m
5
.
3
5
£
Q3
m
7
.
6
5
£
Q4
2002
2003
2004
Fig.1. Quarterly Revenue
9
Finance Director’s Review
Balance sheet
Cash fl ow
Treasury management and
International Financial
The Group had net assets of
At the start of the year the Group
currency risk
Reporting Standards (IFRS)
£50.7m at 31 December 2004
had net cash of £22.4m.
It is the Directors’ intention
Following the European Union’s
(2003: £53.3m) of which £12.2m
(2003: £22.4m) is represented
by net cash. The reduction in
net assets and net cash is a
direct consequence of the share
repurchases made during 2004.
During the year the Group
generated net cash from operating
activities of £35.7m (2003:
£29.2m) being £47.0m (2003:
£29.7m) of EBITDA, an increase
in working capital requirements
While our capital expenditure
of £6.2m (2003: £0.8m) and
is fundamentally driven by the
movements in provisions of
Group’s headcount, 2004 capital
£5.1m (2003: infl ow £0.2m). The
expenditure, net of disposal
increased working capital is largely
proceeds, decreased to £4.4m
due to the growth in the business,
(2003: £6.3m). This is due to the
particularly in the fourth quarter of
2003 expenditure refl ecting the
2004. The settlement of provisions
fi t out costs of a large building in
largely relates to the payroll taxes
to fi nance the activities and
adoption of Regulation (EC) No
development of the Group
1606/2002, the consolidated
principally from retained earnings,
accounts of EU companies whose
and to operate the Group’s
securities are publicly traded will
business while maintaining the
be required to adopt International
net debt/cash position within
Financial Reporting Standards
a relatively narrow band. Cash
(“IFRS”) together with revised
generated in excess of these
International Accounting Standards
requirements will be used to
(“IAS”), in issue at 31 March 2004,
buy back the Company’s shares
for their fi nancial statements from
for which renewal of the existing
2005. Full year IFRS consolidated
authority is being sought at
fi nancial statements will be
the forthcoming Annual
produced for the fi rst time to 31
General Meeting.
December 2005, with the fi rst
London, and the implementation
and social charges arising on the
Cash surpluses are invested in
of the new IT system. While
vesting of the Restricted Share
short-term deposits with any
headcount did increase in
Scheme in April 2004.
working capital requirements being
2004, there remained surplus
offi ce space and furnishings
to accommodate the majority
of the increase without further
expenditure.
Trade debtors were £69.3m at 31
December 2004 (2003: £53.2m)
representing debtor days of 47
The principal payments have been:
(cid:129) £4.4m (2003: £6.3m) of
capital expenditure, net of
disposal proceeds, on property,
infrastructure, information
systems and motor vehicles
for staff;
provided from Group resources or
by local overdraft facilities.
The main functional currencies
of the Group are Sterling, Euro,
US Dollar and Australian Dollar.
The Group does not have
material transactional currency
exposures nor is there a material
reported results under IFRS being
our interims to 30 June 2005.
This year’s consolidated fi nancial
statements remain in accordance
with UK GAAP.
A signifi cant amount of work
has been performed in 2004 by
members of the Group Finance
team, and this work is still
ongoing. The work performed to
date has been as follows:
(2003: 46 days).
(cid:129) taxes on profi ts of £4.8m (2003:
exposure to foreign-denominated
(cid:129)
identifi cation of key accounting
£10.7m);
(cid:129) dividends of £12.6m (2003:
£12.2m); and
(cid:129) share repurchases of £24.1m
(2003: nil).
At 31 December 2004 the Group
had net cash balances of £12.2m
(2003: £22.4m).
monetary assets and liabilities.
changes and changes
The Group is exposed to foreign
required to the Group’s
currency translation differences
accounting policies;
in accounting for its overseas
operations although our policy is
not to hedge this exposure.
(cid:129)
quantifi cation of these
changes detailing impact on
profi t and net assets;
(cid:129)
continued communication with
the Audit Committee;
10
Michael Page International plc
(cid:129)
identifi cation of matters
a)
Share-based payments
b) Goodwill amortisation
c)
Proposed dividends
requiring additional disclosure,
Under UK GAAP, the cost of
Under UK GAAP, the
Under UK GAAP Accounting
leading to changes in internal
share options is based on the
Group’s policy is to amortise
for Post Balance Sheet
procedures to capture and
intrinsic value of the option
capitalised goodwill on a
Events, proposed dividends
report additional data; and
at the date of grant and as
straight-line basis over its
for the accounting year are
(cid:129)
preparation of a draft IFRS
Annual Report based on
the fi nancial results to
31 December 2003.
As a result of the work performed
during 2004, the Group is
confi dent that it will be able to
fully comply with the accounting
and reporting requirements of
IFRS in 2005.
The following areas that could
have a material impact on the
Group’s fi nancial statements have
been identifi ed. This summary is
not intended to be an exhaustive
list. Further differences may
arise as a result of the Group’s
ongoing detailed assessment and
interpretations of IFRS.
such, grants made under the
estimated useful economic
accrued for and recognised
Group’s share option plans
life of 20 years. On transition
as a liability. Under IAS 10
have not resulted in a charge
to IFRS, IFRS 1 First-time
Events after the Balance
to the profi t and loss account.
Adoption of International
Sheet Date, dividends to
Under IFRS 2 Share-based
Financial Reporting Standards
shareholders declared after
Payment, the Group is
requires the Group to
the balance sheet date but
required to measure the cost
review the carrying value
before the fi nancial statements
of all share options granted
of capitalised goodwill for
are authorised for issue are no
since 7 November 2002 that
potential impairment.
longer recognised as a liability
have not fully vested at the
balance sheet date, using
an option pricing model. If
IFRS 2 had been in effect for
2004 it would have resulted
in a charge of approximately
£0.9m (2003: £0.5m) in the
income statement.
at the balance sheet date but
are disclosed separately in the
notes. Accordingly, the Group
will no longer recognise an
accrual for its fi nal dividend in
its current year IFRS balance
sheet but will report it in the
consolidated IFRS statement
of changes in equity for the
following fi nancial period.
At 31 December 2004 the
accrual for the 2004 fi nal
dividend amounted to £9.5m.
Stephen Puckett
Group Finance Director
22 February 2005
In accordance with IFRS
3 Business Combinations,
from 1 January 2005,
amortisation of goodwill will
no longer be charged in the
Group’s consolidated IFRS
income statement. In 2004
under UK GAAP the Group
recorded a charge for goodwill
amortisation of £0.1m (2003:
£0.1m). Under IAS, instead
of an annual charge to the
profi t and loss, an impairment
review will be carried out at
each balance sheet date, and
this is required irrespective
of there being an indicator
of impairment in existence. If
impairment is identifi ed, the
resulting debit will be charged
to the income statement,
rather than the current
amortisation charge made
under existing UK GAAP.
At 31 December 2004,
the Group holds £1.4m of
goodwill on its balance sheet.
11
Michael Page International plc
Board of Directors
Adrian Montague CBE (56)
Stephen Box (54)
Stephen Burke (45)
Stephen Ingham (42)
Non-Executive Chairman
Independent Non-Executive
Managing Director – UK
Executive Director – UK
Adrian Montague is Non-Executive
Chairman of British Energy plc,
Director, Senior Independent
Director
Stephen Burke joined Michael
Operations
Page in 1981 and was appointed
Stephen Ingham joined Michael
Cross-London Rail Links Limited
Stephen Box qualifi ed as
as a Director of Michael Page
Page in 1987 as a consultant
and Infrastructure Investors
a Chartered Accountant at
International in 1988 with
with Michael Page Marketing and
Limited and a Non-Executive
Coopers & Lybrand where he
responsibility for development
Sales. He was responsible for
Director of Friends Provident
spent more than 25 years, 15 of
of overseas businesses in the
setting up the London marketing
plc. From 1997 to 2001 he
these as a partner. From August
Netherlands and Germany. He
and sales businesses and was
held senior posts concerned
1997 to November 2002 he
returned to the UK in 1996 as
promoted to Operating Director
with the implementation of the
was Finance Director of National
Managing Director of Accountancy
in 1990. He was appointed
Government’s policies for the
Grid. He is a member of the
Additions Ltd and was appointed
Managing Director of Michael
involvement of the private sector in
Financial Reporting Review Panel
Managing Director of Michael
Page Marketing and Sales in
the delivery of public services, fi rst
and a Non-Executive Director
Page Finance in 1999. He was
1994. Subsequently he has taken
as Chief Executive of the Treasury
of South East Water Limited.
appointed to his current position
additional responsibility for Michael
Taskforce and then as Deputy
Stephen has experience of
in January 2001.
Page’s Retail, Technology, Human
Resources and Engineering
businesses. He was promoted
to Executive Director of UK
Operations in January 2001.
Charles-Henri Dumon (46)
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.
Chairman of Partnerships UK
Audit Committees as a partner
plc. He was Deputy Chairman of
at Coopers & Lybrand, as an
Network Rail from 2001 to 2004.
Executive Director of National
He spent his early career as a
Grid attending Audit Committees,
solicitor with Linklaters & Paines
and as a Non-Executive Director
before joining Kleinwort Benson
chairing the Audit Committee of
in 1994. Adrian is also a Non-
South East Water plc. Stephen
Executive Director of CellMark
was appointed a Non-Executive
AB, the pulp and paper marketing
Director and Chairman of the
company based in Gothenburg.
Audit Committee of MGN Gas
He was appointed Chairman of
Networks Limited on 13 October
Michael Page International plc on
2004. He was appointed a Non-
Executive Director of Michael
Page International plc on 27
February 2001.
22 May 2002.
Terry Benson (53)
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.
12
Board of Directors
Rob Lourey (47)
Stephen Puckett (43)
Hubert Reid (64)
Independent Non-Executive
Group Finance Director
Independent Non-Executive
Director
Stephen Puckett qualifi ed as a
Director
Rob Lourey is Group Human
Chartered Accountant with BDO
Hubert Reid is Chairman of
Resources Director of BOC Group
Binder Hamlyn. He joined Wace
Enterprise Inns plc, the Royal
plc. He joined BOC in Australia in
Group plc in 1988 as Director of
London Group and of the
1996 and was appointed to the
Corporate Finance, subsequently
Taverners Trust PLC and Deputy
Executive Management Board in
being promoted to Group
Chairman of Majedie Investments
June 2000. He has a Bachelor
Finance Director in 1991. He was
PLC. He was previously Managing
of Business degree in personnel
appointed Group Finance Director
Director and then Chairman
management. He was appointed
of Stat Plus Group plc in 2000.
of the Boddington Group plc
a Non-Executive Director of
He was appointed Group Finance
and Chairman of Ibstock Plc
Michael Page International plc
Director of Michael Page in
and Bryant Group plc. He was
on 7 October 2003. Rob has
January 2001. He was appointed
appointed a Non-Executive
experience as a member of the
a Non-Executive Director of SHL
Director of Michael Page
Executive Management Board
Group plc on 3 March 2004,
International plc on 25 February
of BOC Group plc, including
and chairs its company’s Audit
2003. Hubert has been a member
participation in its management,
Committee.
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.
of various Audit Committees since
1993 including Bryant Group plc,
Ibstock Plc, Greenalls Group plc,
Royal London Group, Taverners
Trust PLC, Enterprise Inns plc and
Majedie Investments PLC.
13
Michael Page International plc
Directors’ Report
Principal activity and review
Biographical details for all the
Share capital
Substantial shareholdings
of the business and future
current Directors are shown on
developments
pages 12 and 13.
The authorised and issued share
As at 22 February 2005, the
capital of the Company are
Company has been notifi ed of
The Group is one of the world’s
The benefi cial interests of Directors
shown in note 17 to the fi nancial
the interests held in more than
leading specialist recruitment
in offi ce at 31 December 2004
statements.
consultancies. The Group’s trading
in the shares of the Company at
results are set out in the fi nancial
31 December 2004 and at 22
statements on pages 34 to 56.
February 2005 are set out in the
Details of the Group’s strategy,
Remuneration Report on page 26.
At the Annual General Meeting
held on 27 May 2004 the
Company renewed its authority to
make market purchases of its own
3% of the issued share capital
of the Company as shown in
Fig.2. below.
Corporate social
responsibility (CSR)
The Board recognises its
responsibilities in respect of
social, environmental and
ethical (SEE) matters, with the
UK Managing Director having
Board responsibility for Group
Environmental Management.
The Directors continually monitor
all risks to its businesses,
All of the Executive Directors are
ordinary shares up to a maximum
deemed to have an interest in
of 10% of the issued share capital.
the ordinary shares held in the
Employee Benefi t Trust and its
subsidiaries.
Results and dividends
The profi t for the year after taxation
During the year the Company
purchased 6,460,000 shares for
cancellation with a nominal value
of £64,600, representing 1.8%
of the issued share capital for a
consideration of £10,998,686
amounted to £35.1m (2003:
including expenses.
£13.7m).
An interim dividend of 1.25 pence
per ordinary share was paid on
15 October 2004. The Directors
recommend the payment of a fi nal
dividend for the year ended 31
December 2004 of 2.75 pence
per ordinary share on 3 June 2005
to shareholders on the register on
6 May 2005 which, if approved at
the Annual General Meeting, will
result in a total dividend for the
year of 4.0 pence per ordinary
share (2003: 3.4 pence).
Following the authority granted by
including SEE risks, which may
shareholders at the Company’s
impact the Group’s short and
Annual General Meeting on 27
long term value. During 2004
May 2004, the Company also
no signifi cant SEE risks were
purchased 7,765,000 shares
identifi ed. The Company is also
during the year which are held
a member of the FTSE4Good
in treasury. The nominal value
Index Series designed to measure
of these shares is £77,600 and
the performance of, and facilitate
represents 2.2% of the issued
investment in, those companies
share capital. The shares were
meeting globally recognised
purchased for a consideration of
standards of corporate
£13,121,790 including expenses.
responsibility.
The Group’s policies on CSR
matters are described in the
following paragraphs.
outlook and 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
The following were Directors
during the year and held offi ce
throughout the year.
A A Montague‡ CBE (Chairman)
T W Benson (Chief Executive)
S J Box‡*
S P Burke
C-H Dumon
S J Ingham
R Lourey‡
S R Puckett
H V Reid‡
‡ Non-Executive Directors
* Senior Independent Director
In accordance with the
Company’s Articles of
Association, A A Montague, T W
Holder
Benson and S J Ingham will retire
Harris Associates
by rotation. All retiring Directors
Barclays plc
Fig.2. Substantial Shareholdings
Number of % of issued
ordinary shares share capital
50,006,800
42,227,497
being eligible will offer themselves
AXA Investment Managers UK Limited 34,582,879
for re-election at the forthcoming
Silchester International Investors
34,569,705
Annual General Meeting.
Fidelity Investment Management Limited
19,391,433
Legal & General
Capital International Limited
12,780,166
10,656,792
14
14.31
12.08
9.90
9.89
5.55
3.66
3.05
Directors’ Report
(a) Environmental policy
This review is carried out annually
Energy
(c) Employee involvement
The Group does not operate
in a business sector which
causes signifi cant pollution but
the Board recognises that the
business does have an impact
on the environment. The Board
is committed to managing and
improving the way in which our
activities affect the environment by:
(cid:129) optimising the use of energy;
(cid:129) ensuring the effi cient use of
materials;
(cid:129) encouraging re-use and
recycling; and
(cid:129) incorporating the principle of
sustainable development.
During the year, the Group
has continued to allocate a
signifi cant amount of time and
resource to further identify
where its activities have an
in accordance with the guidance
as laid down by the Department
for Environment, Food and
Rural Affairs (DEFRA), and the
Global Reporting Initiative (GRI),
an independent, international
institution established to create
a common framework for
sustainability reporting worldwide.
The current environmental report,
which covers our UK businesses
only, can be found on the Michael
(cid:129) 3,522,389 kWh of electricity
Communication with employees
was consumed in the UK, which
is effected through the Company’s
converts to 1,514,630 kgCO2
Intranet, information bulletins,
(cid:129) 1,289,390 kWh of gas was
consumed in the UK, which
converts to 244,980 kgCO2
Water
(cid:129) In the UK, Michael Page
briefi ng meetings conducted by
senior management and formal
and informal discussions. Interim
and Annual Reports are available
to all staff. Informal communication
is further facilitated by the Group’s
consumed 32,300 m3 of water.
divisional organisation structure.
Transport
(d) Equal opportunity and
Page website. A summary of its
In total, UK employees travelling
diversity
fi ndings during 2004 are shown in
to and from work converts to
The Group endorses and
Fig.3. below.
Waste
814,392 kgCO2.
(b) Charitable donations
(cid:129) 240 tonnes of waste was
The Group made charitable
generated by UK offi ces. Our
donations of £44,037 during the
current national recycling rate is
year (2003: £25,567) principally
41% from recycling confi dential
to local charities serving the
paper and toner cartridges.
communities in which the Group
operates. Subject to certain
restrictions, the Group matches
charitable donations made by
supports the principles of equal
employment opportunity. It is the
policy of the Group to provide
equal employment opportunity
to all qualifi ed individuals which
ensures that all employment
decisions are made, subject
to its legal obligations, on a
non-discriminatory basis. Due
consideration is given to the
recruitment, promotion, training
impact on the environment. An
environmental review was again
undertaken jointly by Michael Page
(cid:129) Through recycling, Michael Page
in the UK has saved 1,371 trees
and saved a total of 407m3
International plc, and Green-Works
landfi ll space.
Consulting, an external fi rm of
environmental consultants.
Fig.3. UK Waste Generation
employees. It is the Group’s policy
and working environment of all staff
not to make political donations
either in the UK or overseas.
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 benefi t to the
individual and to the Group.
Annual weight generated (tonnes)
% of total waste
Confi dential waste
Toners
Mixed offi ce paper
Food waste and packaging
Aluminium cans
Glass bottles
Plastic bottles & plastic cups
Cardboard
Total
80
2
98
31
3
2
7
17
240
33%
1%
41%
13%
1%
1%
3%
7%
100%
15
Directors’ Report
Throughout 2004, the Group
The Group is currently working
individually negotiated contracts)
The Directors are responsible
monitored the diversity of its
with RfO on a benchmarking
and that payment should be
for keeping proper accounting
UK employees, 73% of whom
exercise, the results of which
made in accordance with those
records which disclose with
to date have completed the
will be reviewed by the Diversity
terms and conditions, provided
reasonable accuracy at any time
voluntary request for information.
Steering Group, which is chaired
that the supplier has also
the fi nancial position of the Group
The analysis indicates a split of
by an Executive Director, and its
complied with them.
and the Company and to enable
persons who may be affected by
Statement of Directors’
its activities. In order to meet these
responsibilities
responsibilities the Group will:
57% female, 42% male, with 1%
recommendations presented to
declining to answer and regarding
the Board for consideration in all
origin, 89% white, 10% ethnic
territories.
origin and 1% declining to answer.
The UK 2001 Census showed a
total ethnic population of 7.9%.
Similar monitoring will be carried
out during 2005.
The Group recognises the
importance of diversity in the
workplace for both our own and
our clients’ businesses. We are
committed to increasing the
(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
recognition of our brand amongst
(cid:129) assess the risks to health and
a more diverse audience, and to
safety;
encourage development of an
(cid:129) implement safe systems at work;
increasingly diverse candidate
(cid:129) provide information, instruction
database. Our monitoring of our
and training;
candidate databases confi rms that
(cid:129) establish and maintain
the brand attracts candidates from
emergency procedures; and
(cid:129) regularly review health and safety
policies and procedures.
The Group is being proactive in
our approach to health and safety
by monitoring proposed changes
in legislation and implementing
policies accordingly, and as such
we comply with all statutory and
regulatory requirements.
The Company acts as a holding
company for the Group. Creditor
days for the Company were nil
(2003: nil) as the Company does
not undertake any transactions
with suppliers. The Group’s
creditor days for the year ended
31 December 2004 were 38
(2003: 28 days).
United Kingdom Company law
requires the Directors to prepare
fi nancial statements for each
fi nancial 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 fi nancial period
and of the profi t or loss of the
Group for that period. In preparing
those fi nancial statements, the
Directors are required to:
(cid:129) select suitable accounting
policies and then apply them
consistently;
(cid:129) make judgements and
estimates that are reasonable
and prudent;
(cid:129) state whether applicable
them to ensure that the fi nancial
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.
Auditors
Deloitte & Touche LLP are
willing to continue in offi ce and
accordingly resolutions to
re-appoint them as auditors
and authorising the Directors
to set their remuneration will be
proposed at the forthcoming
Annual General Meeting.
Annual General Meeting
The resolutions to be proposed
at the Annual General Meeting to
be held on 27 May 2005, together
with explanatory notes, appear in
the Notice of Meeting set out on
pages 59 to 62.
By order of the Board
(f) Supplier payment policy
accounting standards have
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
been followed; and
(cid:129) prepare the fi nancial statements
on the going concern basis
unless it is inappropriate to
presume that the Group will
continue in business.
R A McBride
Company Secretary
22 February 2005
a wide range of backgrounds.
We strive to ensure that we offer
our clients the most qualifi ed
candidates on the basis of their
relevant aptitudes, skills and abilities
and that such candidates are
drawn from diverse backgrounds.
During 2004, the Group joined
Race for Opportunity (RfO), part of
Business in the Community, a UK
movement of over 700 member
companies whose purpose is to
inspire, challenge and support
business in improving its impact
on society.
16
Michael Page International plc
Corporate Governance
The Board of Directors has
(cid:129) Board balance (code
(cid:129) Meetings with shareholders
All Directors are subject to
a strong commitment to
provision A3.2) - The number
(code provision D1.1)
retirement by rotation and re-
high standards of corporate
of independent Non-Executive
– The Senior Independent
election by the shareholders in
governance and has made
Directors does not equal that
Director has not met directly
accordance with the Articles of
signifi cant progress in applying the
of the executives. The Board
with shareholders. However,
Association, whereby one third
main and supporting principles
considers that the collective
other members of the
of the Directors retire by rotation
of corporate governance as
know-how and experience of
Board and the Chairman
each year. All Directors are subject
recommended in Section 1 of the
the Non-Executive Directors
have met face-to-face with
to election by the shareholders at
Combined Code on Corporate
provides a balanced mix of skills
shareholders during the year
the fi rst Annual General Meeting
Governance, (the “2003 FRC
which matches the needs of
and the issues discussed are
following their appointment. All
Code”), for the year ended 31
the business and is suffi cient
shared collectively with all
Directors are subject to re-election
December 2004.
to ensure proper governance
Board members. Additional
every three years in accordance
Compliance with the 2003
FRC Code
The Directors consider that the
Company has complied with
the Code provisions set out
in Section 1 of the 2003 FRC
Code throughout the year ended
31 December 2004, except as
stated below:
of the Group which consists
understanding of shareholders
with the 2003 FRC Code.
of an organically grown, single
opinions is also gained from
business, producing clear,
monthly brokers’ reports.
transparent results. It is for these
As a result of this information
reasons that there is currently no
and extensive feedback from
intention to increase the number
shareholder meetings, the
of Non-Executive Directors on
Senior Independent Director
the main Board to more than
and the other Non-Executive
four, including the Chairman.
Directors believe they are
(cid:129) Composition of the
aware of shareholders’ views.
remuneration committee
(code provision B2.1)
– During the year, Adrian
Montague was a member of
the remuneration committee
which does not comply with
the recommendations made
in the 2003 FRC Code. On
18 September 2004 Adrian
resigned from the committee,
and the Group now complies
with the 2003 FRC Code in
this respect.
The Board and its operation
The Board of Michael Page
International plc is the body
responsible for corporate
governance, establishing
policies and objectives, and the
management of the Group’s
resources. It is the Group’s policy
that the roles of Chairman and
Chief Executive are separate.
The main Board comprises the
Chairman, who has no executive
responsibilities, fi ve Executive
Directors and three independent
Non-Executive Directors.
Adrian Montague, Terry Benson
and Steve Ingham will retire by
rotation and offer themselves for
re-election. As a result of their
annual performance evaluation,
the Board considers that their
individual performances continue
to be effective with each
director demonstrating suffi cient
commitment to their role.
The Board is therefore pleased
to support their re-election at
the forthcoming Annual General
Meeting.
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.
17
Michael Page International plc
The Board meets regularly
Audit Committee
Objectivity and
The following areas are considered
day running of the business and
management.
(a) obtaining assurances from the
The Audit Committee comprises
the independent Non-Executive
independence of external
to be unacceptable for the external
auditors
auditors to undertake:
Directors and is chaired by
Deloitte & Touche LLP are
(cid:129) Selection, design or
Stephen Box. Their relevant
employed to perform work in
implementation of key fi nancial
qualifi cations and experience are
addition to their statutory duties
systems;
shown in their biographies on
where it is felt that they are
pages 12 and 13.
best placed to carry out the
The Committee met fi ve times
in 2004 to fulfi l its duties and
included attendance by the
external auditors where required.
engagement as a result of their
being the Group’s auditors. All
other work is awarded on the
basis of competitive tender.
The Committee also met with
The objectivity and independence
the external auditors during the
of the external auditor is
year without the presence of
safeguarded by:
(cid:129) Maintaining or preparing the
accounting books and records
or the preparation of fi nancial
accounts or other key fi nancial
data;
(cid:129) Provision of outsource fi nancial
systems;
(cid:129) Provision of outsource
operational management
functions;
In 2004 the Audit Committee
external auditor that adequate
discharged its responsibilities as
policies and procedures exist
(cid:129) Recruitment of senior fi nance or
set out in the terms of reference
within its fi rm to ensure the fi rm
other executives;
which can be found on our
and its staff are independent
website. Its principal tasks are
of the Group by reason of
to review the Group’s internal
family, fi nance, employment,
controls, review the scope of the
investment and business
external audit, consider issues
relationships (other than in the
(cid:129) Secondment of senior fi nance
or other executives;
(cid:129) Provision of internal audit
services;
raised by the external auditors,
normal course of business);
(cid:129) Valuation services or fairness
and review the half-yearly and
annual accounts before they are
presented to the Board, focusing
in particular on accounting policies
and compliance, and areas of
management judgement and
estimates.
(b) enforcing a policy concerning
opinions; and
the provision of non-audit
(cid:129) Any services specifi cally
services by the auditor which
prohibited to be provided by
governs the types of work:
a listed company’s external
auditors under UK regulations.
(i) from which the external
auditor is excluded;
(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.
throughout the year. It has a
formal schedule of matters
reserved to it and delegates
specifi c responsibilities to
Committees. During the
meetings, the Board formally
considers how and to whom
matters covered at each meeting
should be communicated and
actioned beyond the Board.
Decisions concerning matters of
a more routine nature are dealt
with by management below
Board level. The structure of
the Group facilitates the day to
enables effi cient and effective
communication of issues to the
Board when required.
The Chairman and Non-Executive
Directors also met during the year
without the Executive Directors
being present.
Each of the Committees has
formal written terms of reference
which were reviewed and
amended in 2004 in accordance
with the 2003 FRC Code.
The terms of reference for
each committee are available
on request and are available
on the Group’s website. Their
composition and manner in
which they discharge their
responsibilities are
described below.
18
Corporate Governance
The following criteria also need
The Committee reviews the
Succession planning
Transparency of Board
to be met before the external
Group’s policy on the Chairman’s,
auditors are contracted to provide
Executive Directors’ and senior
such services:
(cid:129) The fi rm has the necessary
skills and experience to
undertake the work;
(cid:129) There are no potential confl icts
that may arise as a result of
carrying out this activity;
(cid:129) The external audit fi rm is subject
to the company’s normal
tendering processes; and
(cid:129) In addition to the normal
authorisation procedures and
prior to inclusion in a tender,
approval has been given by the
Group Finance Director (and the
Audit Committee if the fee is to
exceed £25,000).
executives’ remuneration and
terms of employment, makes
recommendations upon this
along with the specifi c level of
remuneration 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 22 to
30 and includes information on
the Directors’ service contracts.
The terms of reference of the
Remuneration Committee can be
(c) enforcing a policy of reviewing
found on our website.
One of the basic premises behind
appointments
the strategic development of the
The Board follows formal
Michael Page business is that
and transparent procedures
growth is organic rather than
when appointing directors.
through acquisitions of companies
The nomination committee
or senior people.
In order to achieve this organic
growth we require good people.
It is therefore one of the
fundamental principles and
a major part of the philosophy
of the company that we train
and develop our own people.
This approach creates
opportunities for career
progression and helps us attract
and retain high calibre people.
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
Due to this philosophy of
programme
all cases 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 guidance
on the rotation of audit
partners.
nurturing our own talent,
succession planning is inherently
a key part of the process. We do
not make promotions or move
people within the business unless
Nomination Committee
The Nomination Committee
there is a clear successor for the
comprises the Non-Executive
vacant position. It is therefore one
Directors and is chaired by Adrian
of the key responsibilities of all
Montague. It is responsible for
levels of management, and not
making recommendations to the
just the Board, to have a clear
Board on new appointments, as
plan of development for their
well as making recommendations
direct reports.
as to the composition of the
Remuneration Committee
Board generally, and the balance
The Remuneration Committee
comprises the independent Non-
Executive Directors and is chaired
by Rob Lourey.
between Executive and Non-
Executive Directors appointed to
the Board. The terms of reference
of the Nomination Committee can
be found on our website.
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 is provided on the
company’s services, group
structure, Board arrangements,
fi nancial information, major
competitors and major risks. After
an initial induction phase, updates
are provided on a periodic basis.
19
Michael Page International plc
Performance evaluation
Internal control
The Board has assessed existing
Any system of internal control
The Board, as part of its
The responsibilities of the Directors
commitment to ensuring
in respect of internal control are
effectiveness and evaluating its
defi ned by the Financial Services
performance together with that
Authority’s Listing Rules which
of its Directors and Committees,
incorporate a Code of Practice
conducted an internal review
known as the Combined Code,
comprising initially a questionnaire
which requires that Directors
concerning all aspects of
review the effectiveness of the
procedure and effectiveness.
Group’s system of internal controls.
risk management and internal
can only provide reasonable, but
control processes during the
not absolute, assurance against
year ended 31 December 2004
material misstatement and loss.
in accordance with the Turnbull
Key elements of the system of
guidance. The Board believes it
internal control are as follows:
has the procedures in place such
that the Group has fully complied
for the fi nancial year ended
31 December 2004.
(cid:129) group organisation. The
Board of Directors meets at
least ten times a year, focusing
mainly on strategic issues,
Following completion of the
questionnaires, the Chief
Executive met with the individual
Executive Directors, and the
Chairman met with the individual
Non-Executive Directors, to
discuss their views and to give
feedback on their performance.
The results of the valuation were
reported to the Board and where
areas of improvement have been
This requirement stipulates that
the review shall cover all controls
including operational, compliance
and risk management, as well as
The Directors are responsible for
operational and fi nancial
the Group’s system of internal
performance. There is also
fi nancial and operational controls
a defi ned policy on matters
which are designed to meet
strictly reserved for the Board.
fi nancial. Internal Control Guidance
the Group’s particular needs
The Managing Director of
for Directors on the Combined
Code (“the Turnbull Report”) was
published in September 1999.
and aim to safeguard Group
each operating division is
assets, ensure proper accounting
accountable for establishing
records are maintained and that
and monitoring internal controls
the fi nancial information used
within that division;
within the business and for
publication is reliable.
identifi ed, actions have been
Fig.4. Attendance at Board Meetings (committee attendance shown for committee members only)
agreed upon and training will be
provided where required.
Stephen Box, as the senior
independent director, led a
meeting of the non-executive
directors to appraise the
performance of the Chairman.
The meeting took into account
any comments made by the
Executive Directors.
This evaluation will be carried out
annually.
Attendance at meetings
The number of meetings of the
board and committees and
individual attendance by the
directors are shown in Fig.4:
20
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
H V Reid
Main Board
10
10
9
10
10
10
Main Board
Committee
Committee
Audit
Remuneration
Nomination
Committee
10
10
10
9
10
5
-
5
5
5
3
3
3
3
3
2
2
2
2
2
* Resigned as a member of the Remuneration Committee on 18 September 2004 in line with the
recommendation made in the 2003 FRC Code.
Corporate Governance
(cid:129) fi nancial reporting. The Group
(cid:129) risk management. Identifi cation
Board contact with
Annual Report
has a comprehensive budgeting
of major business risks is carried
shareholders
system with an annual budget
out at Group level in conjunction
approved by the Board. Detailed
with operational management
monthly reports are produced
and appropriate steps taken to
showing comparisons of results
monitor and mitigate risk;
The Annual Report is designed
Communications with
to present a balanced and
shareholders are given a high
understandable view of the
priority. The main contact
Group’s activities and prospects.
between the Board and
The Chairman’s Statement, Chief
(cid:129) public interest disclosure
shareholders is through the
Executive’s Review and Finance
policy. A procedure is in place
Chief Executive and the Finance
Director’s Review on pages 4 to
where staff may, in confi dence,
Director. They undertake two
11 provide an assessment of the
raise concerns about possible
major investor “roadshows”
Group’s affairs and position. The
improprieties relating to fi nancial
each year in February/March
Annual Report and Interim Report
reporting or other matters; and
and August/September, in which
are sent to all shareholders.
against budget, forecast and
the prior year, with performance
monitoring and explanations
provided for signifi cant variances.
The Group reports to shareholders
on a half-yearly basis;
(cid:129) quarterly reforecasting.
The Group 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;
(cid:129) internal audit activities. These
are performed throughout the
year by members of the head
offi ce fi nance function, who are
independent of the operations
and by operational fi nance staff
on operations outside their own
regions. Businesses are visited
numerous one-to-one meetings
with shareholders take place.
The outcome of these meetings
and the views of shareholders
are relayed back to the Board by
the corporate brokers, at the end
of each roadshow. The Group’s
corporate brokers also report
monthly to the Board on broking
activity during the month and any
issues that may have been raised
with them.
(cid:129) Audit Committee. There is an
on a rotational basis and their
established Audit Committee
controls are assessed in their
whose activities are previously
effectiveness to mitigate specifi c
described;
risks. In addition, there is a regular
(cid:129) fi nancial and operational
controls. Controls and
procedures are documented
in policies and procedures
manuals. Individual operations
complete an annual Self-
Certifi cation Statement. Each
operational manager, in addition
to the fi nance function for that
operation, confi rms the adequacy
review of these risks and changes
When requested by shareholders,
are made to the risk profi le where
individual matters can be
necessary. All internal audit
discussed with the Chairman or
activities are reported to the Audit
Senior Independent Director.
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 Group also has a website
(www.michaelpage.co.uk) with
an investor section that contains
Company announcements and
other shareholder information.
of their systems of internal control
The Board confi rms that there is
and their compliance with Group
an ongoing process for identifying,
policies. The Statement also
evaluating and managing the
requires the reporting of any
signifi cant risks faced by the Group
signifi cant control issues that
and that the processes have been
have emerged so that areas of
in place for the year under review
Group concern can be identifi ed
and up to the date of approval of
and experience can be shared;
the annual report and accounts.
The Directors acknowledge their
responsibility for the preparation of
the Annual Report. The Statement
of Directors’ Responsibilities is
shown on page 16. A statement
by the auditors about their
reporting responsibilities is shown
on pages 32 to 33.
Going concern
The Directors have a reasonable
expectation that the Group has
adequate resources to continue
in operational existence for the
foreseeable future being a period
of at least twelve months from the
date of approval of 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
the next twelve months based
on normal business planning and
control procedures.
21
Michael Page International plc
Remuneration Report
Scope and membership of
The Committee has continued
It is the Company’s policy that
Base salary and benefi ts
Remuneration Committee
to review the remuneration of
all Executive Directors service
The Remuneration Committee,
which meets not less than
twice a year, comprises the
independent Non-Executive
Directors. In order to comply
with the 2003 FRC Code, Adrian
Montague resigned from the
Committee on 18 September
2004 and Rob Lourey was
appointed Chairman on the same
the Executive Directors with
contracts contain a 12 months’
regard to the need to maintain a
notice period. The Non-Executive
balance between the constituent
Directors do not have service
elements of salary, incentive
contracts with the Company. They
and other benefi ts. It receives
are appointed for an initial term of
advice from independent
three years and thereafter may be
remuneration consultants, New
reappointed for a further term of
Bridge Street Consultants, and
three years subject to re-election
makes comparisons with similar
at Annual General Meetings.
organisations.
Additional details of service
day. The Chief Executive attends
No Directors other than the
contracts are shown on page 30.
The Committee establishes
salaries and benefi ts 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 benefi ts
are conducted annually by the
the meetings except when his
members of the Remuneration
The remuneration of the Non-
Committee having regard to wage
own remuneration is under
Committee provided material
Executive Directors is determined
infl ation in the economy.
consideration. The purpose of
advice to the Committee on
by the Board. The Non-Executive
the Remuneration Committee is
Directors’ remuneration.
Directors do not receive any
Annual bonus plan
to review, on behalf of the Board,
the remuneration policy for the
Chairman, Executive Directors
and other senior executives
and to determine the level of
remuneration, incentives and
other benefi ts, compensation
payments and the terms of
employment of the Executive
Directors and other senior
executives. It seeks to provide
a remuneration package that
aligns the interests of Executive
Directors with the shareholders.
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 Group’s objectives as well
as to establish a framework for
remunerating all employees.
pension or other benefi ts, other
than out-of-pocket expenses,
from the Group, nor do they
Annual bonuses for the Executive
Directors are based on the
division of a pool of Profi ts
participate in any of the bonus or
earned during the fi nancial year.
share option schemes.
The remuneration agreed by the
Committee for the Executive
Directors contains the following
elements: a base salary and
benefi ts, an annual bonus
refl ecting Group performance,
share options conditional upon
achieving performance criteria,
incentive share plan award and
pension benefi ts.
This approach is similar to the
bonus arrangements for other
employees. The bonus pool
for Executive Directors is equal
to 6% of Profi ts earned above
a threshold equal to half of
targeted Profi ts for the year (i.e.
approximately 3% of total Profi ts).
In addition, if Profi ts exceed
1.25 times (2003: 1.2 times) the
targeted level, then an additional
2% of Profi ts earned above the
The following sections provide
targeted level will be added to the
an outline of the Company’s
bonus pool. Profi ts are defi ned
remuneration policy during 2004.
as group profi t before taxation,
Shareholders were consulted on
exceptional items and before the
the policy at the time of approval
Executive Directors’ annual bonus
of the Incentive Share Plan in
charges and charges or credits
December 2003. This policy
resulting from the Incentive Share
has been applied in 2004 and
Plan described below or other
will continue to be applied in
share option grants.
forthcoming years.
22
Remuneration Report
The bonus pool will be capable of
Such shares will be reserved for
Two thirds of these shares
Senior executives of the
variation by the Committee both
the executive and will vest in equal
(“Deferred Share Awards”) are
Group who benefi t from these
up and down by, initially, 10%, to
tranches 1, 2 and 3 years later,
subject to a three year deferral
arrangements receive only
refl ect the Committee’s view on
normally so long as the executive
period during which they will be
modest share option grants as
the performance of the Company
is still in employment at that time.
forfeited if the relevant director
described below.
relative to its directly comparable
peers. There has been no variation
made to the 2004 bonus pool.
The profi t and loss account for
the year carries a charge for the
directors annual bonus paid in
The targeted level of Profi ts for
cash while the deferred amount
2004 was £29.8m (2003: £16.0m)
will be charged in subsequent
and was set at the beginning
years when the shares vest.
of 2004 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.
The target for 2005 has been set
and will be disclosed in next year’s
report. The threshold in 2005 for
awarding the additional 2% of
profi ts remains at 1.25 times the
targeted level.
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.The maximum
award is capped at 5% of
Group Profi ts of the preceding
year. Initially these awards are
being satisfi ed by shares in the
Employee Benefi t Trust. Not more
than 60% of this fi gure is available
Unlike all other employees who
for awards to the Executive
receive their annual bonuses
Directors. The balance is available
in cash, in the event that the
for awards to senior employees.
executive directors annual bonus
Group Profi ts are defi ned as
entitlement is greater than 100%
group profi t before taxation and
of salary, only an amount equal
before exceptional items and
to the executive’s salary will be
charges or credits resulting from
paid in cash. To reward service
the Plan or other share option
over a longer period, any excess
grants, as described below.
or senior employee leaves,
other than in “compassionate
circumstances”. The remaining
third (“Performance Share
Awards”) are also to be deferred
for three years but are subject to
earnings per share (“EPS”) growth
targets over the three year period.
Performance share awards of up
to 50% of a director’s or senior
employee’s 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 excess between 50%
and 75% of salary will only vest
to the extent that EPS grows by
7.5% over the growth in UK RPI
per annum 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.
above the individual’s salary
level will be deferred, paid into
an employee benefi t trust and
invested in the Company’s shares
with no matching investment by
the Company. Based on the 2004
results, the amount deferred is
£0.630m (2003: nil).
The Committee retains the
discretion to review the proportion
of profi ts dedicated to the
Incentive Share Plan in the light
of the growth in the size of the
Company, its profi tability and the
number of Executive Directors.
Based on the 2004 results,
awards totalling £2.0m (2003:
£1.2m) will be made in 2005 of
which £0.895m (2003: £0.675m)
44.75% (2003: 57.4%) will be for
the Executive Directors. Details
of those awarded in 2004 are
disclosed on page 27.
Restricted Share Scheme
On fl otation 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 executives in a
Restricted Share Scheme.
The scheme vested in April
2004. The shares delivered to the
Executive Directors are disclosed
along with their other interests on
page 26. Benefi ts received under
the Restricted Share Scheme
were not pensionable.
23
Michael Page International plc
Executive Share Option Scheme
Directors’ remuneration
The Executive Directors and
Emoluments
The aggregate emoluments, excluding pensions, of the Directors of the Company who served during the year
were as follows:
Salary
and fees
£’000
Benefi ts
(note 2)
£’000
Annual
Bonus
(note 4)
£’000
Deferred
Annual
Bonus
(note 4)
£’000
Incentive
Share Plan
(note 5)
£’000
344
229
229
207
213
50
30
25
25
29
20
207
42
35
-
-
-
-
344
229
229
207
213
-
-
-
-
177
118
118
107
110
-
-
-
-
119
119
119
119
119
-
-
-
-
Total
£’000
1,013
715
902
682
690
50
30
25
25
1,352
333
1,222
630
595
4,132
Salary
and fees
£’000
Benefi ts
£’000
Annual
Bonus
£’000
Deferred
Annual
Bonus
£’000
Incentive
Share Plan
£’000
334
223
223
202
207
50
30
6
21
28
20
125
42
43
-
-
-
-
333
222
222
201
206
-
-
-
-
1,296
258
1,184
-
-
-
-
-
-
-
-
-
-
Total
£’000
785
555
660
535
546
50
30
6
21
90
90
90
90
90
-
-
-
-
450
3,188
2004
Executive
T W Benson (note 1)
S P Burke
C-H Dumon
S J Ingham
S R Puckett (note 3)
Non-Executive
A A Montague
S J Box
R Lourey
H V Reid
Total
2003
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
Total
The base salaries of the Executive Directors were reviewed in January 2005 and were increased by 3.0%
effective from 1 January 2005.
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. Benefi ts 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 17 of the
Financial Statements. Retesting
after the initial vesting period is not
permitted for any grants awarded
in 2004 or subsequent years.
For participants of the Incentive
Share Plan, the maximum annual
awards are as follows: for the Chief
Executive Offi cer, 150,000; for all
other Executive Board Directors,
100,000; and 50,000 for any other
senior executive participating in the
Incentive Share Plan.
Pension benefi ts
Executive Directors are eligible
to participate in a Company
pension plan which is a defi ned
contribution scheme. Where the
pension entitlement exceeds the
Inland Revenue’s cap, a cash
alternative is payable.
24
Remuneration Report
Emoluments (continued)
Notes to the emoluments:
1. T W Benson is the highest paid director.
2. Benefi ts include, inter alia, items such as company car or cash alternative, fuel, cash in lieu of pension contributions, and medical insurance.
C-H Dumon’s benefi ts also include housing and relocation costs.
3. S R Puckett also receives £25,000 per annum (£20,833 for the year to 31 December 2004) as a Non-Executive Director of SHL Group plc. He was
appointed Non-Executive Director on 3 March 2004, and as such his director’s fee is pro-rated for this year. All such amounts are excluded from the
table on Page 24.
4. The annual cash bonus for Board members is capped at 100% of salary. Any excess over this amount is deferred and invested in the Company’s
shares which vest in equal tranches over three years. The amount of the annual bonus earned in 2004 but deferred to future periods was £630,000
(2003: nil).
5. Represents the non-performance proportion of the Incentive Share Plan.
Pension contributions
T W Benson
S P Burke
C-H Dumon*
S J Ingham
S R Puckett
2004
£’000
103
46
40
20
29
2003
£’000
100
45
5
20
20
* The change in pension contributions has arisen as a result of a relocation. In 2003 contributions were generally state funded. In 2004 contributions
were made to a private fund as required by local legislation.
25
Michael Page International plc
Directors’ interests and share ownership requirements
Executive Directors are required to build and hold, as a minimum, a direct benefi cial interest in the Company’s ordinary shares equal to their respective
base salary. As at 31 December 2004 all Executive Directors comply with this requirement.
The benefi cial 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 2004 to 22 February 2005.
Ordinary
At 1 January
lapsed awards
Redistribution of
T W Benson
shares of 1p
Direct Holding
2004
-
(note 1)
Vested
in year
(note 2)
Disposal
At 31 December
in year
2004
-
5,848,540
(2,848,540)
3,000,000
Restricted Shares
5,673,583
174,957
(5,848,540)
-
-
S P Burke
Direct Holding
28,571
-
3,226,781
(2,179,680)
1,075,672
Restricted Shares
3,130,254
96,527
(3,226,781)
-
-
C-H Dumon
Direct Holding
14,285
-
3,226,781
(1,868,069)
1,372,997
Restricted Shares
3,130,254
96,527
(3,226,781)
-
-
S J Ingham
Direct Holding
28,571
Restricted Shares
1,662,947
S R Puckett
S J Box ‡
Direct Holding
Restricted Shares
Direct Holding
Restricted Shares
114,285
146,731
15,000
-
-
51,280
-
4,525
-
-
1,714,227
(1,714,227)
(742,798)
1,000,000
-
-
151,256
(151,256)
-
-
(62,015)
203,526
-
-
-
-
15,000
-
‡ Non-Executive Director
1. Represents shares resulting from the lapse of awards to former participants in the Restricted Share Scheme which were redistributed amongst the
remaining participants.
2. Represents the vesting of the Restricted Share Scheme in April 2004. The market price at the date of vesting was 175.0p.
No other director has a holding in the Company.
26
Remuneration Report
Deferred share awards
Incentive Share Plan
Details of awards made in 2004 under the Incentive Share Plan that remain outstanding at 31 December 2004 are as follows:
Awarded during the year under the
Incentive Share Plan
Total award
at 1 January
2004
Performance
Non-
performance
(note 5)
T W Benson
S P Burke
C-H Dumon (note 4)
S J Ingham
S R Puckett
-
-
-
-
-
26,315
26,315
26,315
26,315
26,315
52,631
52,631
52,631
52,631
52,631
Value at date
of award
(note 1)
£’000
Total award at
31 December
2004
Value at
31 December
2004 (note 3)
£’000
135
135
135
135
135
78,946
78,946
78,946
78,946
78,946
148
148
148
148
148
Total
78,946
78,946
78,946
78,946
78,946
1. The value of the awards under the Michael Page Incentive Share Plan 2004 are based on the purchase price of the Company’s ordinary shares on
1 March 2004 of 171.0p.
2. The base EPS for the performance criteria is 4.1p.
3. The value at 31 December 2004 is calculated using the closing market price of the Company’s ordinary shares at 31 December 2004 of 187.0p.
4. C-H Dumon was granted deferred share options to acquire 52,631 ordinary shares and performance share options to acquire 26,315 ordinary shares
under the Michael Page Incentive Share Plan 2004. These options have a nil exercise price and do not accrue dividends.
5. The non performance shares have been included in the table of emoluments on page 24.
The value of the awards accrued during the period was £187,500 in respect of awards made to the Executive Directors in the year and charged to the
profi t and loss account under the Incentive Share Plan.
For full descriptions of the performance and vesting conditions, see “Incentive Share Plan for Executive Directors and Senior Employees” on pages 23.
Deferred Annual Bonus
As described on page 23, in the event that the Executive Directors’ bonus entitlement is greater than 100% of salary, the excess above the individual’s
salary is deferred, invested in the Company’s shares and delivered to the individual in three equal tranches at the end of each of the following three years.
In 2005 a total of £630,000 will be awarded to the Executive Directors representing this excess. The individual entitlement of the Executive Directors to
this deferred annual bonus has been included in the emoluments table for the year as shown on page 24.
There has been no charge made to the profi t and loss account in the year for the deferred element of the Annual Bonus Plan. The charge for the year will
be spread over future periods as described in the accounting policies in Note 1 on page 39.
For full descriptions of the performance and vesting conditions, see “Annual Bonus Plan” on pages 22 to 23.
27
Michael Page International plc
Directors’ interests and share ownership requirements (continued)
The benefi cial interests of the Executive Directors and their families in share options of the Michael Page International plc Executive Share Option
Scheme at 31 December 2004 were as follows:
At 31 December
Exercise price
T W Benson
S P Burke
C-H Dumon
S J Ingham
S R Puckett
Date of Grant At 1 January 2004
Granted in year
2001
2002
2002
2003
2004
2001
2002
2002
2003
2004
2001
2002
2003
2004
2001
2002
2002
2003
2004
2001
2002
2002
2003
2004
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
-
-
-
-
50,000
-
-
-
-
50,000
-
-
-
-
50,000
750,000
150,000
150,000
200,000
-
750,000
150,000
150,000
200,000
-
-
-
-
-
50,000
-
-
-
-
50,000
2004
3,750,000
150,000
150,000
200,000
50,000
1,125,000
150,000
150,000
200,000
50,000
1,125,000
300,000
200,000
50,000
750,000
150,000
150,000
200,000
50,000
750,000
150,000
150,000
200,000
50,000
(pence)
175
186
186
81.5
171
175
186
186
81.5
171
175
186
83.4
171
175
186
186
81.5
171
175
186
186
81.5
171
Period of
exercise
2004-2011
2005-2012
2006-2012
2006-2013
2007-2014
2004-2011
2005-2012
2006-2012
2006-2013
2007-2014
2004-2011
2006-2012
2007-2013
2007-2014
2004-2011
2005-2012
2006-2012
2006-2013
2007-2014
2004-2011
2005-2012
2006-2012
2006-2013
2007-2014
1. The market price of the shares at 31 December 2004 was 187.0p with a range during the year of 158.0p to 201.75p.
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, except for
grants made in 2004 which are subject to one performance test only on the third anniversary of the grant. The performance criteria are set out in
note 17 to the fi nancial statements.
28
Remuneration Report
Total Shareholder Return
(TSR)
The graphs opposite show Total
Shareholder Return (TSR) for the
Group and the FTSE Support
120
110
Services index which, as it is the
100
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 fi nancial
periods since the date of fl otation
in 2001.
90
80
70
60
50
130
120
110
100
90
80
70
60
50
Versus FTSE Support Services
31 December 2001
31 December 2002
31 December 2003
31 December 2004
112.8
115.7
96.9
89.4
71.7
69.9
64.2
59.4
Michael Page
FTSE Support Services
31 December 2001
31 December 2002
31 December 2003
31 December 2004
Versus FTSE 250
128.5
115.7
112.8
104.6
100.4
89.4
75.3
64.2
Michael Page
FTSE 250
29
Remuneration Report
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.
On termination, any compensation payments due to a Director are calculated in accordance with normal legal principles. Mitigation of these payments
would be applied, depending on the individual circumstances of each case.
Unexpired
term at
31 December
2004 Notice period
Provision for compensation
on early termination
Other
termination
provisions
Contract
date
05/03/01
05/03/01
13/06/03
05/03/01
05/03/01
no specifi c
term
no specifi c
term
no specifi c
term
no specifi c
term
no specifi c
term
26/01/04
25 months
26/01/04
25 months
07/10/03
22 months
25/02/03
14 months
12 months
12 months
12 months
12 months
12 months
None
None
None
None
12 months salary plus
other contractual benefi ts
12 months salary plus
other contractual benefi ts
12 months salary plus
other contractual benefi ts
12 months salary plus
other contractual benefi ts
12 months salary plus
other contractual benefi ts
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 6) on 27 May 2005.
Audit requirement
Within the Remuneration Report, the sections on Directors’ remuneration and Directors’ interests and share ownership requirements, on pages 24 to 28
inclusive, are audited. All other sections of the Remuneration Report are unaudited.
On behalf of the Board of Directors
Rob Lourey
Chairman - Remuneration Committee
22 February 2005
30
Michael Page International plc
Leather Handbag,
Satin Trenchcoat
by Esprit
Leather Gloves,
Silk Scarf
by TopShop
Personal Organiser
by Filofax
Micromesh Tights
by Falke
Professional Career
arranged through
Michael Page International
Michael Page International is a world leading recruitment consultancy
110 offi ces in 16 countries worldwide | www.michaelpage.co.uk
31
Michael Page International plc
Independent Auditors’ Report
to the Members of Michael Page
International plc
We have audited the fi nancial
This report is made solely to the
We report to you our opinion as to
We read the directors’ report and
statements of Michael Page
company’s members, as a body,
whether the fi nancial statements
the other information contained
International plc for the
in accordance with section 235
give a true and fair view and
in the annual report for the
year ended 31 December
of the Companies Act 1985. Our
whether the fi nancial statements
above year as described in the
2004 which comprise the
audit work has been undertaken
and the part of the directors’
contents section including the
consolidated profi t and loss
so that we might state to the
remuneration report described as
unaudited part of the directors’
account, the balance sheets,
company’s members those
having been audited have been
remuneration report and consider
the consolidated statement
matters we are required to state
properly prepared in accordance
the implications for our report
of total recognised gains
to them in an auditors’ report and
with the Companies Act 1985.
if we become aware of any
and losses, the consolidated
for no other purpose. To the fullest
We also report to you if, in our
apparent misstatements or
reconciliation of movements
extent permitted by law, we do not
opinion, the directors’ report is
material inconsistencies with
in shareholders’ funds, the
accept or assume responsibility
not consistent with the fi nancial
the fi nancial statements.
consolidated cash fl ow
to anyone other than the company
statements, if the company has
statement, and the related
and the company’s members as
not kept proper accounting
notes 1 to 24. These fi nancial
a body, for our audit work, for this
records, if we have not received all
statements have been
report, or for the opinions we
the information and explanations
prepared under the accounting
have formed.
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.
Respective responsibilities
of directors and auditors
As described in the statement
of directors’ responsibilities,
the company’s directors are
responsible for the preparation
of the fi nancial 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
fi nancial statements and the part
of the directors’ remuneration
report described as having been
audited in accordance with
relevant United Kingdom legal
and regulatory requirements and
auditing standards.
we require for our audit, or if
information specifi ed by law
regarding directors’ remuneration
and transactions with the
company and other members of
the group is not disclosed.
We review whether the corporate
governance statement refl ects the
company’s compliance with the
nine provisions of the July 2003
FRC Combined Code specifi ed
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.
Basis of audit opinion
We conducted our audit in
accordance 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
fi nancial statements and the part
of the directors’ remuneration
report described as having
been audited. It also includes
an assessment of the signifi cant
estimates and judgements made
by the directors in the preparation
of the fi nancial statements and
of whether the accounting
policies are appropriate to the
circumstances of the company
and the group, consistently
applied and adequately disclosed.
32
We planned and performed
Opinion
our audit so as to obtain all the
information and explanations
which we considered necessary
in order to provide us with
suffi cient evidence to give
reasonable assurance that the
fi nancial 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 fi nancial statements and the
part of the directors’ remuneration
report described as having
been audited.
In our opinion:
(cid:129) the fi nancial statements give a
true and fair view of the state of
affairs of the company and the
group as at 31 December 2004
and of the profi t of the group for
the year then ended; and
(cid:129) the fi nancial statements
and part of the directors’
remuneration report described
as having been audited have
been properly prepared
in accordance with the
Companies Act 1985.
Deloitte & Touche LLP
Chartered Accountants and
Registered Auditors
London
22 February 2005
33
Michael Page International plc
Consolidated Profi t and Loss
Account
Year ended 31 December 2004
Turnover
Cost of sales
Gross profi t
Administrative expenses
Operating profi t
Net interest
Profi t on ordinary activities before taxation
Taxation on profi t on ordinary activities
Profi t on ordinary activities after taxation being profi t
for the fi nancial year
Equity dividends
Retained profi t for the fi nancial year
Basic earnings per share (pence)
Diluted earnings per share (pence)
Adjusted earnings per share (pence)
The above results relate to continuing operations.
Note
2
2
4
6
2
7
8
18
9
9
9
2004
£’000
2003
£’000
433,731
372,616
(223,090)
(194,131)
210,641
178,485
(170,604)
(156,702)
40,037
1
40,038
(4,933)
35,105
(13,830)
21,275
10.0
9.9
7.4
21,783
626
22,409
(8,664)
13,745
(12,171)
1,574
3.8
3.8
4.1
34
Michael Page International plc
Balance Sheets
31 December 2004
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
Treasury shares
Profi t and loss account
Equity shareholders’ funds
Group
Company
Note
10
11
12
13
21
14
14
15
2
17
18
18
18
18
2004
£’000
1,443
20,933
-
2003
£’000
1,539
23,101
-
22,376
24,640
88,160
12,532
100,692
(70,748)
29,944
52,320
(461)
(1,188)
50,671
3,572
178
(9,871)
(13,122)
69,914
50,671
71,530
23,211
94,741
(59,355)
35,386
60,026
(444)
(6,239)
53,343
3,637
113
(9,871)
-
59,464
53,343
2004
£’000
-
-
421,545
421,545
292
156
448
2003
£’000
-
-
421,545
421,545
1,414
131
1,545
(151,018)
(122,657)
(150,570)
(121,112)
270,975
300,433
-
-
270,975
3,572
178
(9,871)
(13,122)
290,218
270,975
-
(4,114)
296,319
3,637
113
(9,871)
-
302,440
296,319
These fi nancial statements were approved by the Board of Directors on 22 February 2005.
On behalf of the Board of Directors.
T W Benson
Chief Executive
S R Puckett
Group Finance Director
35
Michael Page International plc
Consolidated Statement of Total
Recognised Gains and Losses
Year ended 31 December 2004
Profi t for the fi nancial year
Foreign currency translation differences
Total recognised gains and losses for the year
2004
£’000
35,105
(188)
34,917
2003
£’000
13,745
2,786
16,531
Consolidated Reconciliation of
Movements in Shareholders’ Funds
Year ended 31 December 2004
Profi t for the fi nancial year
Dividends
Retained profi t for the fi nancial year
Foreign currency translation differences
Purchase of own shares
Sale of shares held by the Employee Benefi t Trust
Credit in respect of share schemes
Net (reduction in)/addition to shareholders’ funds
Opening shareholders’ funds
Closing shareholders’ funds
36
2004
£’000
35,105
2003
£’000
13,745
(13,830)
(12,171)
21,275
(188)
21,087
(24,120)
-
361
(2,672)
53,343
50,671
1,574
2,786
4,360
-
129
-
4,489
48,854
53,343
Michael Page International plc
Consolidated Cash Flow Statement
Year ended 31 December 2004
Note
19
Net cash infl ow from operating activities
Returns on investments and servicing of fi nance
Interest received
Interest paid
Net cash infl ow from returns on investments and
servicing of fi nance
Taxation
Capital expenditure and fi nancial investment
Purchase of tangible fi xed assets
Receipts from sales of tangible fi xed assets
Net cash outfl ow from capital expenditure and
fi nancial investment
Equity dividends paid
Net cash infl ow before fi nancing
Financing
Sale of shares held by the Employee Benefi t Trust
Purchase of own shares
Net cash (outfl ow)/infl ow from fi nancing
(Decrease)/increase in net cash in the year
20
2004
£’000
35,690
2
-
2
2003
£’000
29,179
702
(77)
625
(4,825)
(10,657)
(5,824)
1,416
(4,408)
(12,593)
13,866
-
(24,120)
(24,120)
(10,254)
(8,311)
1,962
(6,349)
(12,170)
628
129
-
129
757
37
Michael Page International plc
Notes to the Accounts
Year ended 31 December 2004
1. Accounting policies
The fi nancial statements are prepared in accordance with applicable United Kingdom law and accounting standards. The particular accounting policies
adopted by the Directors are described below and have been applied consistently throughout the current and prior year.
Accounting convention
The accounts have been prepared under the historical cost convention.
Basis of consolidation
The fi nancial 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 profi t and loss account of the Company has not been included as part of these accounts. The Company’s
profi t for the fi nancial year amounted to £12.6m (2003: £14.0m).
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:
(cid:129) 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;
(cid:129) 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 defi ned 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
(cid:129) 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 profi t (revenue)
Gross profi t 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 classifi ed 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 profi t and loss account on subsequent disposal of the business to which it related.
38
Notes to the Accounts
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 profi t 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. Profi ts, losses and cash fl ows 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 fi xed assets
Tangible fi xed 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, fi xtures and equipment
10% - 20% per annum
Motor vehicles
Investments
25% per annum
Fixed asset investments are stated at cost less provision for impairment.
Investments in own shares, including those held by the Employee Benefi t Trust and treasury shares, are shown as a deduction to shareholders’ funds in
accordance with UITF 38.
Deferred Share Schemes
Where deferred awards are made to directors and senior executives under either the Incentive Share Plan or the Annual Bonus Scheme, to refl ect that
the awards are for services over a longer period, the value of the expected award is charged to the profi t and loss account on a straight line basis over
the vesting period to which the award relates, in accordance with UITF 17 (revised 2003).
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 fi nancial 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 defi ned 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 profi t 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 profi t and loss account on a straight line basis over the term of the lease.
39
Michael Page International plc
2. Segmental analysis
(a) Turnover and gross profi t by geographic region
United Kingdom
Continental Europe
Asia Pacifi c Australia
Other
Total
Americas
Turnover
Gross Profi t
2004
£’000
2003
£’000
2004
£’000
2003
£’000
234,822
194,262
109,984
90,630
124,293
120,363
61,503
58,227
51,286
43,708
21,105
18,082
11,484
7,673
10,429
6,951
62,770
51,381
31,534
25,033
11,846
6,610
7,620
4,595
433,731
372,616
210,641
178,485
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 profi t by discipline
Finance and accounting
Marketing and sales
Other
Turnover
Gross Profi t
2004
£’000
2003
£’000
2004
£’000
2003
£’000
290,151
256,731
129,687
113,599
73,985
61,832
44,894
37,704
69,595
54,053
36,060
27,182
433,731
372,616
210,641
178,485
The Group operates in only one business segment, that of recruitment. The above analysis by discipline (being the professions of candidates placed) is
included as additional disclosure over and above the requirements of SSAP25 “Segmental Reporting”.
40
Notes to the Accounts
2. Segmental analysis (continued)
(c) Profi t before interest, taxation and exceptional items by geographic region
United Kingdom
Continental Europe
Asia Pacifi c Australia
Other
Total
Americas
Profi t before interest, taxation and exceptional items
Exceptional items (note 3) Release of payroll tax provision on Restricted Share Scheme (see below)
United Kingdom property costs
Profi t before interest and taxation
Net interest
Profi t on ordinary activities before taxation
2004
£’000
2003
£’000
23,607
15,638
4,401
(280)
7,649
3,926
11,575
6,303
1,285
7,588
454
(62)
40,037
22,884
-
-
1,886
(2,987)
40,037
21,783
1
626
40,038
22,409
Net interest has not been allocated, recognising the head offi ce’s role and responsibility in allocating fi nancial resources. Due to the non operational
nature of the Restricted Share Scheme, the release of the provision for payroll costs is considered to be a central cost item and as such has not been
allocated to geographical regions.
41
Michael Page International plc
2. Segmental analysis (continued)
(d) Net assets/(liabilities) by geographic region
United Kingdom
Continental Europe
Asia Pacifi c Australia
Other
Total
Americas
3. Exceptional items
2004
£’000
2003
£’000
38,255
41,115
7,331
9,791
5,537
2,965
8,502
4,741
811
5,552
(3,417)
(3,115)
50,671
53,343
As a result of the vesting of the Restricted Share Scheme in April 2004, the Company is able to obtain deductions for corporation tax purposes in
various tax jurisdictions, resulting in a non-operating exceptional credit of £9.0m to the corporation tax charge.
The exceptional items in the comparative period included in operating profi t comprise a release of the payroll tax provision on the Restricted Share
Scheme of £1.9m, and rentals and other unavoidable costs on onerous lease agreements on vacant properties in the UK of £3.0m. The net effect of
these two items of £1.1m was included within administrative expenses. An exceptional tax credit on these items of £0.3m resulted in a net post tax
exceptional item of £0.8m.
4. Operating profi t
Operating profi t is stated after charging:
Staff costs (note 5)
Depreciation of tangible fi xed 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 fi xed assets
Operating lease rentals - land and buildings
- plant and machinery
42
2004
£’000
2003
£’000
114,039
100,070
6,404
7,592
96
334
81
195
53
96
312
71
135
241
11,578
12,558
1,081
634
Notes to the Accounts
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 2004 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
2004
Average No.
2003
Average No.
2004
Total No.
2003
Total No.
92
1,512
838
2,442
95
2,537
92
1,345
852
2,289
107
2,396
92
1,616
843
2,551
96
93
1,351
816
2,260
99
2,647
2,359
2004
£’000
2003
£’000
96,607
83,530
13,432
12,673
4,000
3,867
114,039
100,070
Details of Directors’ remuneration for the year are provided in the audited part of the Directors’ Remuneration Report on pages 24 to 28.
6. Net interest
Bank interest receivable
Bank interest payable
Net interest receivable
2004
£’000
369
(368)
1
2003
£’000
704
(78)
626
43
Michael Page International plc
7. Taxation on profi ts on ordinary activities
(a) Analysis of charge in year
UK Corporation tax at 30% for year before exceptional tax credits
UK exceptional tax credit
UK Corporation tax at 30% for year after exceptional tax credits
Adjustments in respect of prior periods
Overseas corporation tax before exceptional tax credits
Overseas exceptional tax credit
Overseas corporation tax after exceptional tax credits
Total current tax charge (note 7(b))
Deferred taxation
Origination and reversal of timing differences (note 16)
Taxation on profi t on ordinary activities
2004
£’000
9,081
(7,935)
1,146
2003
£’000
6,566
(330)
6,236
90
(543)
3,644
(1,065)
2,579
3,815
1,118
4,933
2,013
-
2,013
7,706
958
8,664
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 year
Profi t on ordinary activities before taxation
2004
£’000
2003
£’000
40,038
22,409
Profi t on ordinary activities before tax multiplied by the standard rate of corporation tax in the UK of 30%
12,011
6,723
Effects of:
Disallowable items and other permanent timing differences
Capital allowances in excess of depreciation
Unrelieved overseas losses
Other timing differences
Tax deduction for Restricted Share Scheme
Reversal of deferred tax asset on provision for payroll taxes 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))
44
1,151
(289)
453
405
(9,000)
(1,235)
229
90
3,815
459
446
1,466
(354)
-
(565)
74
(543)
7,706
Notes to the Accounts
7. Taxation on profi ts on ordinary activities (continued)
(c) Factors affecting future taxation charges
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 £5.3m (2003: £3.9m) in respect of tax losses of overseas companies. These tax losses are available to offset
future taxable profi ts in the respective jurisdictions.
8. Dividends
Interim dividend of 1.25p per ordinary share (2003: 1.1p)
Proposed fi nal dividend of 2.75p per ordinary share (2003: 2.3p)
Total dividend of 4.0p per ordinary share (2003: 3.4p)
9. Earnings per ordinary share
Earnings per share have been calculated on the following bases:
Earnings after exceptional items for basic earnings per share (£‘000)
Post tax exceptional items (net) ( £’000)
Earnings before exceptional items for adjusted earnings per share (£‘000)
Weighted average number of shares used for basic and adjusted earnings per share (‘000)
Dilution effect of share plans (‘000)
Diluted weighted average number of shares used for diluted earnings per share (‘000)
Basic earnings per share (pence)
Diluted earnings per share (pence)
Adjusted earnings per share (pence)
2004
£’000
4,360
9,470
2003
£’000
3,937
8,234
13,830
12,171
2004
35,105
(9,000)
26,105
2003
13,745
771
14,516
351,555
357,955
3,744
-
355,299
357,955
10.0
9.9
7.4
3.8
3.8
4.1
45
Michael Page International plc
10. Intangible assets
Group
Cost
At 1 January 2004 and 31 December 2004
Amortisation
At 1 January 2004
Charge for the year
At 31 December 2004
Net book value
At 31 December 2004
At 31 December 2003
11. Tangible fi xed assets
Group
Cost
At 1 January 2004
Additions
Disposals
Foreign currency translation
At 31 December 2004
Depreciation
At 1 January 2004
Charge for the year
Disposals
Foreign currency translation
At 31 December 2004
Net book value
At 31 December 2004
At 31 December 2003
46
Goodwill
£’000
1,876
337
96
433
1,443
1,539
Total
£’000
50,582
5,824
(8,116)
(230)
48,060
27,481
6,404
(6,647)
(111)
27,127
20,933
23,101
Leasehold
improvements
£’000
Furniture,
fi xtures and
equipment
£’000
Motor
vehicles
£’000
14,782
817
(1,130)
(43)
30,373
4,092
(4,143)
(142)
14,426
30,180
6,028
1,521
(973)
(27)
19,080
3,957
(4,016)
(68)
6,549
18,953
7,877
8,754
11,227
11,293
5,427
915
(2,843)
(45)
3,454
2,373
926
(1,658)
(16)
1,625
1,829
3,054
Notes to the Accounts
12. Investments
Company
Cost
Subsidiary
undertakings
£’000
Total
£’000
At 1 January 2004 and 31 December 2004
421,545
421,545
The Company’s principal subsidiary undertakings at 31 December 2004, 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 Personnel SAS
Michael Page International (Espana) SA
Page Personnel (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
Michael Page International Serviços de Consultadoria Lda
Michael Page International (Japan) K.K.
Michael Page International (Switzerland) SA
Michael Page International Inc*
Michael Page International Pte Limited*
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
Portugal
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.
47
Michael Page International plc
13. 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 (note 16)
Prepayments and accrued income
14. 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
2004
£’000
2003
£’000
2004
£’000
2003
£’000
69,286
53,154
3,635
13,293
86,214
254
1,692
3,467
11,994
68,615
1,345
1,570
-
277
15
292
-
-
-
169
10
179
1,235
-
88,160
71,530
292
1,414
Group
Company
2004
£’000
317
5,280
-
267
2003
£’000
777
3,815
2004
£’000
2003
£’000
-
-
-
-
-
141,544
114,420
1,222
22,530
18,048
7,157
7,003
25,727
20,256
-
1
3
-
-
-
3
-
9,470
8,234
9,470
8,234
70,748
59,355
151,018
122,657
Amounts falling due after more than one year
Accruals and deferred income
461
444
-
-
48
Notes to the Accounts
15. Provisions for liabilities and charges
At 1 January 2004
Utilised in year
At 31 December 2004
Payroll tax
liability on
Restricted
Share Scheme
£’000
Group
Vacant
property
provision
£’000
4,114
2,125
Total
£’000
6,239
(4,114)
(937)
(5,051)
-
1,188
1,188
Company
Payroll tax
liability on
Restricted
Share Scheme
£’000
4,114
(4,114)
-
Payroll tax provision on Restricted Share Scheme
The grant of Restricted Shares on fl otation in 2001 gave rise to National Insurance and social security liabilities. These liabilities crystallised in April 2004
when the Restricted Shares vested.
Vacant property provision
The property cost provision represents rentals and other unavoidable costs on onerous lease agreements on vacant properties in the UK.
16. Deferred taxation
Deferred taxation (asset)/provision is as follows:
Capital allowances in excess of depreciation
Other timing differences
At 1 January
Deferred tax charge in profi t and loss account for period
Foreign currency translation
At 31 December (note 13)
Group
Company
2004
£’000
282
(536)
(254)
(1,345)
1,118
(27)
(254)
2003
£’000
(7)
(1,338)
(1,345)
(2,198)
958
(105)
(1,345)
2004
£’000
-
-
-
(1,235)
1,235
-
-
2003
£’000
-
(1,235)
(1,235)
(1,800)
565
-
(1,235)
49
Michael Page International plc
17. Called-up share capital
Authorised
571,250,000 ordinary shares of 1p each
Allotted, called-up and fully paid
357,202,799 ordinary shares of 1p each (2003: 363,662,799 ordinary shares of 1p each)
At 1 January
Cancellation of own shares
At 31 December
Share options
2004
£’000
2003
£’000
5,713
5,713
3,572
3,637
(65)
3,572
3,637
3,637
-
3,637
At 31 December 2004 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 2004
Granted
in year
Exercised
in year
Lapsed
in year
No. of shares
oustanding
Exercise price
per share
Exercise period
2001 (Note 1)
27,425,873
2002 (Note 2)
2,855,431
2002 (Note 2)
4,130,431
2003 (Note 3)
7,090,000
-
-
-
-
2004 (Note 4)
-
2,711,000
Note 1 Pre fl otation options
267,858
3,080,356
24,077,659
175p March 2004 - March 2011
-
-
-
-
216,681
2,638,750
186p March 2005 - March 2012
391,681
3,738,750
186p March 2006 - March 2012
410,000
6,680,000
81.5p-86.1p
April 2006 - April 2013
64,000
2,647,000
171p-190.3p March 2007 - March 2014
On fl otation, 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 satisfi ed
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. At 31 December 2004, the performance conditions had not been met.
(b) 44.4% of an individual’s option entitlement will normally only be exercisable to the extent that share price growth targets have been satisfi ed 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 fi fth anniversary of the date of grant at
compound rates of growth of 8.45% and 24.57% respectively. At 31 December 2004, the performance conditions had not been met.
50
Notes to the Accounts
17. 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 fi rst tranche of options is exercisable, under normal circumstances, between 3 and 10 years from the date of grant. The second
tranche is exercisable, under normal circumstances, between 4 and 10 years from 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 defi ned) 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 fi rst tranche of options. The 2002
earnings per share of 5.8p is the base for the second tranche of options. At 31 December 2004, the performance conditions had not been met.
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
defi ned) 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.
Note 4 2004 Grant
On 1 March 2004, options over 2,711,000 were granted to the Executive Directors and 99 employees at an exercise price of between 171p-190.3p.
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
defi ned) of at least 3% per annum above the growth in the retail price index. The performance condition is tested on the third anniversary only and no
retesting will occur thereafter. The base earnings per share is 4.1p.
18. Reserves
Group
Company
Capital
redemption
reserve
£’000
EBT
reserve
£’000
Treasury
shares
£’000
Capital
redemption
reserve
£’000
EBT
reserve
£’000
Treasury
shares
£’000
Profi t
and loss
account
£’000
59,464
21,275
(188)
-
-
-
(13,122)
(10,998)
-
361
Profi t
and loss
account
£’000
302,440
(1,224)
-
-
-
-
(13,122)
(10,998)
-
-
113
(9,871)
-
-
65
-
-
-
-
-
At 1 January 2004
113
(9,871)
Retained profi t/(loss) for the year
Foreign currency translation differences
Purchases of own shares
Credit in respect of share schemes
-
-
65
-
-
-
-
-
At 31 December 2004
178
(9,871)
(13,122)
69,914
178
(9,871)
(13,122)
290,218
At 31 December 2004, the EBT reserve consisted of 5,640,715 (2003: 5,640,715) ordinary shares held by the Employee Benefi t Trust representing
1.58% of the called-up share capital with a market value of £10.5m (2003: £10.5m).
During 2004, 561,386 shares were allocated to satisfy awards made under the 2004 Incentive Share Plan. Dividends are paid on these shares and they
are included in the EPS calculation. Dividend income on the remaining 5,079,329 ordinary shares has been waived, and they are excluded from the EPS
calculation. 7,765,000 shares representing 2.17% of the called-up share capital are held in treasury. Dividends are not paid on these shares and they are
excluded from the EPS calculation.
The cumulative amount of goodwill written off directly to reserves in respect of acquisitions prior to 31 December 1997 is £311.7m (2003: £311.7m).
51
Michael Page International plc
19. Reconciliation of operating profi t to net cash infl ow from operating activities
Operating profi t before exceptional items
Exceptional items (note 3)
Operating profi t after exceptional items
Depreciation and amortisation charges
Loss on sale of fi xed assets
Share scheme charges
Increase in debtors
Incease/(decrease) in creditors
(Decrease)/increase in provisions (note 15)
Net cash infl ow from operating activities
20. Reconciliation of net cash fl ow to movement in net cash
(Decrease)/increase in net cash in the year
Foreign exchange movements
Movements in net cash in year
Opening net cash
Closing net cash
21. Analysis of net cash
Cash at bank and in hand
Bank overdrafts
Total net cash
52
2004
£’000
40,037
-
40,037
6,500
53
361
(17,739)
11,529
(5,051)
35,690
2004
£’000
(10,254)
35
(10,219)
22,434
12,215
2003
£’000
22,884
(1,101)
21,783
7,688
241
-
(313)
(459)
239
29,179
2003
£’000
757
305
1,062
21,372
22,434
At
1 January
2004
£’000
Foreign
exchange
movements
£’000
At
31 December
2004
£’000
Cash fl ow
£’000
23,211
(10,720)
(777)
466
22,434
(10,254)
41
(6)
35
12,532
(317)
12,215
Notes to the Accounts
22. Financial instruments
The Group’s fi nancial 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 fi nancial instruments is to provide fi nance for the Group’s operations.
The Group has opted to exclude all fi nancial risk disclosures relating to short term debtors and creditors with the exception of currency risk.
The main exposure arising from the Group’s fi nancial instruments is currency risk.
An explanation of the Group’s treasury policy is included in the Finance Director’s review on page 10.
(a) Currency exposures of fi nancial 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 2004
Net foreign currency monetary assets/(liabilities)
Functional currency of Group operation
Sterling
US dollar
EU currencies
Other currencies
Total
Sterling
£’000
-
-
-
-
-
US$
£’000
29
-
-
-
29
EU
currencies
£’000
Other
currencies
£’000
-
-
-
-
-
-
-
-
32
32
Total
2004
£’000
29
-
-
32
61
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
53
Michael Page International plc
22. Financial instruments (continued)
(b) Maturity of fi nancial liabilities
The maturity profi le of the carrying value of the Group’s and Company’s fi nancial liabilities, other than short term creditors and accruals, as at
31 December was as follows:
Less than one year
(c) Borrowing facilities
Group
Company
2004
£’000
317
2003
£’000
777
2004
£’000
-
2003
£’000
-
The Group and Company has the following undrawn committed borrowing facilities available at 31 December:
Less than one year
(d) Financial assets and liabilities
(i) Assets excluding short-term debtors:
Cash
Group
Company
2004
£’000
2003
£’000
2004
£’000
2003
£’000
34,877
23,786
30,646
20,632
Group
2004
£’000
Group
2003
£’000
12,532
23,211
54
Notes to the Accounts
22. Financial instruments (continued)
(d) Financial assets and liabilities
(ii) Liabilities including interest rate risk profi le
The Group does not consider the interest rate risk as signifi cant. The interest rate profi le of the Group’s fi nancial liabilities, excluding short term
creditors at 31 December was as follows:
Currencies other than Sterling
Floating rate liabilities
2004
£’000
317
2003
£’000
777
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 defi nition of a fi nancial
liability, such as balances relating to taxation.
The benchmark rates for determining fl oating rate liabilities are based on relevant national LIBOR equivalents.
(e) Fair value of fi nancial assets and liabilities
The fair value of fi nancial assets and liabilities is not materially different to the book value.
23. Commitments and contingent liabilities
Operating lease commitments
At 31 December 2004 the Group was committed to make the following payments in the next fi nancial year in respect of operating leases:
Leases which expire:
Within one year
Within two to fi ve years
After fi ve years
Land and buildings
Other
2004
£’000
536
6,954
4,314
2003
£’000
705
6,232
4,094
11,804
11,031
2004
£’000
2003
£’000
103
590
-
693
90
238
-
328
55
Notes to the Accounts
23. Commitments and contingent liabilities (continued)
Capital commitments
The Group had capital commitments of £853,000 as at 31 December 2004 (2003: £613,000)
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 2004 amounted to £5,661,000 (2003: £3,770,814).
Other commitments
The Company has provided guarantees to other Group undertakings amounting to £533,000 (2003: £368,000).
24. Related party transactions
Details of Directors’ shareholdings and share options are shown on pages 26 to 28.
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.
56
Michael Page International plc
Shareholder Information
and Advisers
Annual General Meeting
To be held on 27 May 2005 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 2004
To be paid (if approved) on 3 June 2005 to shareholders on the register on 6 May 2005.
Company secretary
R A McBride
Company number
3310225
Registered offi ce
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
Chartered Accountants
Exchange House
Capita IRG
The Registry
Citigroup
HSBC Bank plc
33 Canada Square
West End Business Banking Centre
London
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 fi nal ordinary dividend
Interim results announcement
4 May 2005
6 May 2005
27 May 2005
3 June 2005
15 August 2005
57
Michael Page International plc
Five Year Summary
Profi t and Loss Account
Turnover
Gross profi t
Operating profi t
2000
£’000
2001
£’000
2002
£’000
2003
£’000
2004
£’000
458,065
459,547
383,470
372,616
433,731
246,329
245,080
192,648
178,485
210,641
74,102
58,019
32,136
21,783
40,037
Profi t on ordinary activities before taxation
58,536
62,326
32,597
22,409
40,038
Profi t for the fi nancial year
37,008
43,653
21,154
13,745
35,105
Basic earnings per share (pence)
Adjusted earnings per share (pence)
9.9
9.9
11.8
10.6
5.8
5.8
3.8
4.1
10.0
7.4
58
Michael Page International plc
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 Friday 27 May 2005
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 2004.
2. To declare a fi nal dividend on the ordinary share capital of the Company for the year ended 31 December 2004 of 2.75p per share.
3. To re-elect A.A. Montague as a director of the Company (note 2)
4. To re-elect T.W. Benson as a director of the Company (note 2)
5. To re-elect S.J. Ingham as a director of the Company (note 2)
6. To propose the following ordinary resolution:
That the directors’ remuneration report for the year ended 31 December 2004 be received and approved.
7.
To re-appoint Deloitte & Touche LLP as auditors of the Company to hold offi ce until the conclusion of the next Annual General Meeting
at a remuneration to be fi xed by the directors.
8. 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 defi ned in Section 80 (2) of the Act) up to an aggregate nominal amount of
£1,190,675 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).
9. 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 defi ned
in Section 94 of the Act) for cash pursuant to the authority conferred by resolution 8 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 fi xed by the directors to holders of equity securities on the register on a fi xed 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
(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 £178,601,
and shall expire at the conclusion of the next Annual General Meeting of the Company when the general authority under Resolution 8 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).
59
Michael Page International plc
10. 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 35,720,280;
(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 Offi cial List for the fi ve 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).
11. To propose the following special resolution:
That the existing Article 139 of the Company’s Articles of Association be deleted and replaced with the new Article 139 set out below:
139. Subject to the provisions of the Act, the Company may:
(a) indemnify any person who is or was a director, directly or indirectly (including by funding any expenditure incurred or to be incurred by him),
against any loss or liability whether in connection with any proven or alleged negligence, default, breach of duty or breach of trust by him or
otherwise, in relation to the Company or any associated Company; and/or
(b) purchase and maintain insurance for any person who is or was a director against any loss or liability or any expenditure he may incur,
whether in connection with any proven or alleged negligence, default, breach of duty or breach of trust by him or otherwise, in relation to the
Company or any associated Company.
For the purposes of this article, “associated Company” has the same meaning as in section 309A of the Act (note 8 and 3(ii)).
12. To propose the following ordinary resolution:
That the amendments to the rules of the Michael Page Incentive Share Plan 2004 (“the ISP”) set out in Note 9 below and contained in the rules
of the ISP in the form produced to the Meeting and initialled by the Chairman for the purposes of identifi cation be and are hereby approved and
that the remuneration committee of the Board be and are hereby authorised to take such actions as may be necessary or desirable to make the
amendments to the ISP (note 9 and 3(iii)).
By order of the Board
R. A. McBride
Secretary
39-41 Parker Street
London WC2B 5LN
Registered in England No. 3310225
22 February 2005
60
Annual General Meeting
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 Montague, Benson and Ingham retire by rotation and are seeking reappointment at the 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 (i) register of directors’ interests required to be kept under section 325 of the Act together with copies of the directors’ service contracts; (ii) a
copy of the proposed amended Articles of Association that refl ect the proposed changes under paragraph 11 of this notice; and (iii) copies of the
current rules of the ISP and copies of the amended rules of the ISP marked to show the proposed changes under paragraph 12 of this notice, will
all be available for inspection by members at the registered offi ce 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 satisfi ed 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.
8.
The Companies (Audit, Investigations and Community Enterprise) Act 2004 (“Companies (Audit) Act”) has come into force in April 2005. Amongst
other things, the Companies (Audit) Act relaxes the previous prohibition in section 310 of the Act on companies indemnifying their directors against
costs and liabilities.
The changes to the Act mean that (i) the restrictions only apply to the Company’s directors and auditors and not to the Company’s Secretary and
other offi cers; (ii) where liabilities arise from actions brought by third parties both the costs (of the director and the third party) and any damages
may, subject to certain exclusions, be paid by the Company, even if the judgement goes against the director; and (iii) where liabilities are owing
to the Company, the Company is not able to indemnify the director against damages awarded to the Company itself but, may pay the director’s
defence costs as they are incurred.
61
Annual General Meeting
Notes (continued)
9.
Shareholders have already given approval for the Company to buy, hold and re-sell its own shares as treasury shares (see Resolution 9 and Note
5 to this Notice). The Directors are now seeking shareholder approval to use treasury shares to satisfy options and awards granted to participants
under the Michael Page Incentive Share Scheme 2004 (“the ISP”). The ability to use treasury shares under the ISP is required because advice has
been received that tax and legal problems may arise in certain overseas jurisdictions if existing shares are delivered to participants in the ISP by the
trustees of the Michael Page Employees’ Benefi t Trust (“the Trustees”). Consequently, it is anticipated that treasury shares will only be used under
the ISP in those jurisdictions where tax or legal problems arise in connection with the delivery of existing shares by the Trustees.
62
Suit, Shoes, Bag and Scarf by House of Fraser, City Hair by Amanda Steele Make-Up by Bobbi Brown
Styling by Deborah Miller Professional Career arranged through Michael Page International
Michael Page International is a world leading recruitment consultancy
110 offi ces in 16 countries worldwide | www.michaelpage.co.uk
Michael Page International plc
39-41 Parker Street, London WC2B 5LN
Tel: 020 7831 2000 Fax: 020 7269 2280
www.michaelpage.co.uk