Annual Report & Accounts 2007
In just thIrty years, MIchael Page
InternatIonal has grown to becoMe one
of the world’s best-known and Most
resPected recruItMent consultancIes.
today, we are Proud to set the standard
wIthIn our ProfessIon for sPecIalIst
servIce, wIth a Personal touch.
16 Chairman’s Statement 18 operational review 24 Financial review 30 Board of Directors 32 Directors’ report 38 Corporate Governance
43 remuneration report 50 Independent auditors’ report to the members of Michael page International plc 53 Consolidated Income Statement
54 Consolidated Statement of Changes in equity 55 Statement of Changes in equity – parent Company 56 Balance Sheets 57 Cash Flow
Statements 58 notes to the accounts 84 Shareholder Information and advisers 90 Five Year Summary 91 annual General Meeting
annual report 007
Our office locations
YE AR ENDED 31 DECEMBER 2007
GROWING ENTIRELY ORGANICALLY, RATHER
THAN BY MERGERS OR ACQUISITIONS, WE NOW
HAVE OVER 5,000 PEOPLE IN 149 OFFICES IN 25
COUNTRIES WORLDWIDE.
Highlights
2007
Revenue (£m)
Gross Profit (£m)
Profit before tax (£m)
147.4
2007
97.0
66.1
38.9
22.4
2006
2005
2004
2003*
Headcount at
year end
5,052
2007
3,758
2006
2,926
2005
2,647
2004
2,359 2003
831.6
2007
649.1
2006
523.8
2005
433.7
2004
372.6 2003*
478.1
2007
348.8
2006
267.6
2005
210.6
2004
178.5
2003*
Basic earnings
per share (pence)
Dividend per share
(pence)
31.1
19.6
14.8
9.8
3.8
2007
2006
2005
2004
2003*
8.0
6.0
5.0
4.0
3.4
2007
2006
2005
2004
2003
• Record levels of revenue and profits
• Gross margin increased to 57.5% (2006: 53.7%)
• Conversion rate‡ up to 31.3% (2006: 27.9%)
• Over 60% of gross profits generated outside the UK
• EMEA gross profits up 55% and now largest region
• Americas gross profits up 79%
• Cash generated from operations up 88.6% to £148.7m (2006: £78.8m)
• 15.1m shares repurchased at a cost of £74.9m (includes 3.5m shares repurchased into trust)
• Group headcount increased by 34% to 5,052 employees
*00 amounts stated under uK Ga ap. ‡ the amount of operating profit as a proportion of gross profit.
annual report 007
Global Profits
2007
“”
record oPeratIng
ProfIts of £149m,
uP 54%.
“007 was an outstanding year for Michael page, with record
results in each quarter as we continued our significant organic
expansion, both by geography and discipline. Since the start of
the current year, with the exception of certain sectors related
to the banking market, we continue to experience similar year-
on-year increases in activity levels in all of our regions.
“our consistent organic growth strategy of investment through
cycles, coupled with structural changes are driving our growth
in the specialist recruitment market. We believe this investment
has, in turn, given us greater resilience to the economic cycle
by virtue of our increased diversification. Whilst we are mindful
of the uncertainties surrounding the current global economic
outlook, we shall continue to make strategic and measured
investments to position the business for long-term growth. the
Board remains confident in the prospects for Michael page.”
Steve Ingham, CEO
+37% +54%
Gross Profit £m
Operating Profit £m
478.1
2007
348.8
2006
149.4
97.4
2007
2006
MIChael paGe InternatIonal
changing shape of the business: 1990-2007
GEOGRaPHIC DEvElOPmEnt Of GROSS PROfIt
eMea
united Kingdom
asia pacific
americas
•
Geographic spread by number
of countries increasing and
speeding up: 1990: , 000: 1,
007:
£478.1m
•
eMea the largest region at 1%
)
£
(
t
i
f
o
r
P
s
s
o
r
G
500m
400m
300m
200m
100m
0
•
uK becoming less dominant:
1990: 6%, 000: 0%,
007: 9%
•
americas rising fast: 1990: 0%,
000: %, 007: 8%
•
In 007, gross profit in the
americas greater than total
Group gross profit in 1990
•
In the last seven years, eMea has
grown to over 80% of total Group
gross profit in 000
£238.3m
£31.4m
1990
2000
2007
DISCIPlInE DEvElOPmEnt Of GROSS PROfIt
Finance & accounting
legal, hr, technology, Secretarial & other
Marketing, Sales & retail
engineering, property & Construction,
procurement & Supply Chain
•
Diversification by discipline has
increased rapidly. non-Finance
and accounting gross profit:
1990: 17%, 000: %,
£500m
£400m
)
£
(
t
i
f
o
r
P
s
s
o
r
G
£300m
£200m
£100m
0
£31.4m
1990
£238.3m
£478.1m
007: 6%
•
007 growth in Finance and
accounting gross profit 8%,
growth in non-Finance and
accounting gross profit 0%
•
More consultants now focused
on non-Finance and accounting
recruitment than were employed
by the Group in 000
•
Growth from Finance and
accounting recruitment between
000 and 007: 6%, from non-
Finance and accounting between
2000
2007
000 and 007: 168%
annual report 007
at a glance
performance bY region in 2007
the success of our strategy to diversify the business, both geographically
and by discipline, through organic growth is increasingly evident, with the
eMea region now the largest in the Group. over 60% of the Group’s gross
profits were generated outside the uK. We have also added two new
countries, luxembourg and argentina, to the Group during 007.
EmEa (COntinEntAl EUROpE, MiddlE EAst & AfRiCA)
+55%
gross profit
Gross Profit
£196.4m
2007
£126.6m
2006
Operating Profit
£63.0m
£34.2m
2007
2006
+79%
GRoSS PRoFIt
Americas
72 Offices 14 Disciplines 2,078 Employees
25th
countRY
Argentina
amERICaS
Gross Profit
Operating Profit
+79%
gross profit
£38.4m
£21.5m
2007
2006
£6.2m
£1.9m
2007
2006
15 Offices 10 Disciplines 543 Employees
6
MIChael paGe InternatIonal
4
new oFFIceS
United Kingdom
+27%
GRoSS PRoFIt
Asia Pacific
+45%
Headcount
EMEA
UnItED kInGDOm
Gross Profit
Operating Profit
+19%
gross profit
£186.0m
2007
£155.8m
2006
£59.4m
£44.3m
2007
2006
50 Offices 12 Disciplines 1,799 Employees
4
new oFFIceS
United Kingdom
+27%
GRoSS PRoFIt
Asia Pacific
+45%
Headcount
EMEA
aSIa PaCIfIC
Gross Profit
Operating Profit
+27%
gross profit
£57.2m
£45.0m
2007
2006
£20.8m
£17.1m
2007
2006
12 Offices 10 Disciplines 632 Employees
annual report 007
7
+79%
GRoSS PRoFIt
Americas
25th
countRY
Argentina
Performance
bY region in 2007
EmEa (COntinEntAl EUROpE, MiddlE EAst & AfRiCA)
Gross Profit
Operating Profit
+55%
gross profit
£196.4m
2007
£126.6m
2006
£63.0m
£34.2m
2007
2006
72 Offices 14 Disciplines 2,078 Employees
During 007, the eMea region achieved strong growth and is now the largest region in the Group, both in terms of gross
profit and headcount. revenue in eMea increased by .0% to £1.1m (006: £.0m) and gross profit increased
by .% to £196.m (006: £16.6m). as a result of the increased revenue and high operational gearing, the region
produced an increase of 8.% in operating profit to £6.0m (006: £.m), a conversion rate of .1% (006: 7.0%).
headcount in the region increased by 60 (%) during the year to ,078, with the majority joining existing offices. In a
number of locations we have taken larger office space to accommodate the growth and we continued our longer-term
investment opening in luxembourg and starting new offices in hamburg, Valencia and Bordeaux.
UnItED kInGDOm
Gross Profit
Operating Profit
+19%
gross profit
£186.0m
2007
£155.8m
2006
£59.4m
£44.3m
2007
2006
50 Offices 12 Disciplines 1,799 Employees
In the uK, revenue increased by 1.% to £60.m (006: £1.m) and gross profit by 19.% to £186.0m
(006: £1.8m). operating profits were £9.m (006: £.m), an increase of .% and represent a conversion rate of
1.9% (006: 8.%). We invested heavily during the year, increasing headcount by 17% to 1,799 and opening new
offices in pall Mall and Canary Wharf in london, leicester and aberdeen. During the year we continued to expand the
page personnel office network from to 7, opening in Swindon and Sheffield. I am delighted to report another
outstanding year in Scotland, growing gross profit by 0%. In 007, we opened a new office in aberdeen and moved
into larger offices in edinburgh. Scotland now represents % of uK gross profit.
8
MIChael paGe InternatIonal
aSIa PaCIfIC
Gross Profit
Operating Profit
+27%
gross profit
£57.2m
£45.0m
2007
2006
£20.8m
£17.1m
2007
2006
12 Offices 10 Disciplines 632 Employees
In the asia pacific region, revenue was 17.0% higher at £97.8m (006: £8.6m), gross profit was 7.% higher at £7.m
(006: £.0m) and operating profit increased .1% to £0.8m (006: £17.1m), with a conversion rate of 6.%
(006: 7.9%). We invested in all the existing offices in the region, increasing headcount by % to 6. In australia,
(7% of asia pacific) gross profit and operating profit grew in constant currency by .0% and 7.% respectively.
We have an excellent opportunity to expand our business significantly in China and plan to open in Beijing and Shenzhen
in the first half of 008.
amERICaS
Gross Profit
Operating Profit
+79%
gross profit
£38.4m
£21.5m
2007
2006
£6.2m
£1.9m
2007
2006
15 Offices 10 Disciplines 543 Employees
revenue for the region was 7.1% higher at £.m (006: £0.1m), gross profit increased by 79.0% to £8.m
(006: £1.m), operating profit increased to £6.m (006: £1.9m), with a conversion rate of 16.1% (006: 8.7%).
headcount in the region increased by 9% to and we opened new offices in hartford, atlanta, Curitiba in Brazil and
our first office in argentina in Buenos aires. In north america, we have continued our rapid expansion of existing and new
offices and the discipline roll-out has continued at pace. We now have nine offices and over 80 staff. In latin america, we
now have over 60 staff and in Mexico, which opened in 006, we are well ahead of plan, with a good level of profits.
annual report 007
9
Strategy
consistent through cYcLes
lOnG tERm On InvEStmEnt
1996
singapore
2001
switzerland
japan
2002
belgium
sweden
2006
south africa
russia
Ireland
u.a.e.
Mexico
2008
austria
turkey
new Zealand
1997
spain
Italy
2000
Por tugal
brazil
2005
Poland
2007
luxembourg
canada
argentina
1995
hong kong
2003
china
1976
united kingdom
1985
australia
1993
germany
1998
usa
1987
netherlands
1986
france
flExIBlE wItH HEaDCOUnt
•
86 teams worldwide, typically a Manager and three Consultants
•
Manager has full p&l responsibility for team
•
Significant share of profit each quarter allocated to team as bonus
•
Individual bonuses allocated subjectively, based on contribution and value to team
•
new consultant hired, costs rise ~0%, consultant lost, costs fall ~0%
•
teams in bull market maximise potential from existing members before hiring after Director authority
•
teams in bear market ensure they reward, using bonus, to retain strongest /lose weakest
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
MIChael paGe InternatIonal
6000
5000
4000
3000
2000
1000
0
t
n
u
o
c
d
a
e
H
10
to organicaLLY grow
existing and new teams,
offices, discipLines
and countries with
a consistent te am
and meritocratic cuLture
s
Tea m
C
o
u
Offi
c
e
s
Culture
s
e
ciplin
n
tries
D i s
1976
united kingdom
1985
australia
1993
germany
1998
usa
1996
singapore
2001
switzerland
japan
2002
belgium
sweden
2006
south africa
russia
Ireland
u.a.e.
Mexico
2008
austria
turkey
new Zealand
1987
netherlands
1986
france
1997
spain
Italy
2000
Por tugal
brazil
2005
Poland
canada
2007
luxembourg
argentina
1995
hong kong
2003
china
t
n
u
o
c
d
a
e
H
6000
5000
4000
3000
2000
1000
0
flExIBlE wItH HEaDCOUnt
•
86 teams worldwide, typically a Manager and three Consultants
•
Manager has full p&l responsibility for team
•
Significant share of profit each quarter allocated to team as bonus
•
Individual bonuses allocated subjectively, based on contribution and value to team
•
new consultant hired, costs rise ~0%, consultant lost, costs fall ~0%
•
teams in bull market maximise potential from existing members before hiring after Director authority
•
teams in bear market ensure they reward, using bonus, to retain strongest /lose weakest
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
annual report 007
11
Strategy
consistent through cYcLes
ClEaR On BRanD
Executive
Search
Qualified Professional
Clerical Professional
Generalist Staffing
25 Countries
91 Offices
2,964 fee Earners
8 Countries
79 Offices
873 fee Earners
COnSIStEnt OvER tImE
•
no acquisitions, one It platform, one culture, one
•
organic growth, home grown Directors/MD’s run all
remuneration strategy
disciplines/countries
•
Consistent recruitment, training, development to ensure
•
Strategic and measured investment in downturns has
consistent quality of fee earners
maximised growth in upturns
• Consistent brand strategy
1
MIChael paGe InternatIonal
DEEP In ExPERIEnCE
senior Operational Management no.
tenure in Mp
•
100% rMDs/executive Directors joined before 000
executive Directors
regional Managing Directors
Managing Directors
1
8
1 years
16 years
11 years
• 7% rMDs/executive Directors joined before 1990
•
Directors experienced in managing upturns and
downturns
•
Strength of working relationships improves
communication
Directors
1
8 years
• hired and trained in one culture
177
ave c.11 years
• >0% remuneration linked to Group profit
• MDs receive ltIp, Directors share options
executive Directors
Managing Directors
regional Managing Directors
Directors
A v e r a g e t e r m a t M i c h a e l P a g e
1985
1990
Average Date Joined
1995
2000
2007
N o . o f C u r r e n t D i r e c t o r s
annual report 007
1
Growth
how we achieVed these resuLts
“”
growIng entIrely
organIcally,
rather than
by Mergers or
acquIsItIons...
Creating a world-leading consultancy
Michael page International is a world-leading specialist
recruitment consultancy. Growing entirely organically, rather
than by mergers or acquisitions, we now have over ,000
people in 19 offices in countries worldwide.
our specialist areas are accounting, tax and treasury, Banking
and Financial Services, Consultancy, Strategy and Change,
engineering & Manufacturing, healthcare, human resources,
It & technology, legal, Marketing, oil & Gas, procurement &
Supply Chain, property & Construction, retail & hospitality,
Sales and Secretarial.
Coming from all industry sectors, our clients range from market-
leading multi-nationals to small and medium enterprises.
In each case, we tailor our services to provide a bespoke
offering to meet our clients’ needs whether permanent,
contract, temporary or interim.
focusing on strategies that endure
recruitment is a cyclical business. to counter this, as much as
possible, our strategy is to expand geographically – nationally
and internationally – and broaden the disciplines to reduce
the dependency on individual businesses or markets. We are
always making long-term investment decisions to expand
organically, growing existing and new teams, offices, disciplines
and countries with a consistent team culture.
We underpin this drive by drawing upon the skills and
experiences of proven Michael page management and
ensure we have the best, most experienced, home-grown
talent in each key role. Culturally it is imperative that we
are entrepreneurial, operate within a strict meritocracy and
are team-based, whereby consultants enjoy profit sharing
arrangements rather than individual commissions. to achieve
this, we place great emphasis on training our people and
invest heavily in technology to maximise both performance
and delivery.
1
MIChael paGe InternatIonal
finding solutions that are needed
Being recognised for setting the standard
our clients are competing in an increasingly fierce war
a growing number of initiatives and awards are testament to
for qualified talent. as a result they rely on Michael page
our commitment to delivering quality. We have been voted
International to provide creative and innovative solutions to
one of Britain’s strongest BB Superbrands since 000 and
meet their needs.
voted into the Sunday times 100 Best Companies to Work
Whether a carefully targeted online campaign, a database
For since 00.
search, or a desire to source candidates internationally,
our growing reputation isn’t confined to the uK’s shores.
each solution is bespoke to achieve our clients objectives.
overseas, the Boston Business Journal has voted us one
this consultative approach has been recognised by the level
of the “Best places to Work in Massachusetts”, the hartford
of repeat business Michael page receives as well as the ever
Business Journal has voted us one of the “Best places to
increasing number of clients served.
Work in Connecticut” and Crain’s has ranked us as the no.1
Quality underpins everything we do. to deliver solutions
executive recruiting Firm in new York City.
consistently to such a high standard, we are fully committed
While this external recognition is warmly welcomed, we are
to the ongoing training of all of our staff and the continued
also keen to celebrate some of our own internal initiatives.
roll-out of superior systems and processes.
Putting values that work at the heart of our business
there are five values that we believe contribute to our continued
success. these attributes are not only the essence of our
brand, but also our employees.
PrIde: We take great pride in what we do. We’re proud of the
Company we work for and, most of all, proud of the people
we work with.
Within our business we vigorously promote a culture of diversity.
our clients rely on us to propose candidates that have a
healthy range of attitudes and characteristics that fairly reflects
the society we live in. to that end, we have our own internal
diversity policy that is communicated to all employees.
this ensures we offer our clients the best candidates on
the basis of their relevant aptitudes, skills and abilities and
that those candidates are drawn from diverse backgrounds.
We also provide training and focus-groups on diversity, as well
PassIon: It’s our passion to achieve the very best for our
as participating in a number of external initiatives such as the
clients and candidates that drives us to outperform and beat
employers Forum on age, Business in the Community, Global
Graduates, race for opportunity and the Brokerage (a charity
whose aim is to increase the ambition and employability of
young people in the 11 inner-city boroughs of london).
the competition.
resIlIence: We know that successful consultants are not
fazed by difficulty, but instead, turn it into an opportunity to
demonstrate ability.
teaMwork: By teaming with each other and with clients
we improve the quality of decision-making and increase the
likelihood of success.
fun: though serious about our work, we’re extremely sociable
and enjoy celebrating our success together.
annual report 007
1
Chairman’s
statement
007 has been an outstanding year for the Group, producing
record results quarter after quarter while continuing significant
organic expansion, both geographically and by discipline.
Market conditions have been strong, with favourable economic
activity and positive business confidence driving demand
for talent, combined with a shortage of suitably qualified
candidates.
Highlights
revenue for the year ended 1 December 007 increased
8.1% to £81.6m (006: £69.1m) and gross profit grew
by 7.1% to £78.1m (006: £8.8m). reflecting strong
market conditions, gross profits from permanent placements
grew more rapidly than from temporary placements.
this movement in business mix, together with an increase in
margins on temporary placements, contributed to an increase
in gross margin to 7.% (006: .7%). Given the Group’s
high operational gearing, operating profits increased by .%
to a record £19.m (006: £97.m). the Group’s conversion
rate, which is the proportion of gross profit converted into
operating profit, rose to 1.% (006: 7.9%). profit before
tax was £17.m (006: £97.0m) and basic earnings per share
increased by 8.7% to 1.1p (006: 19.6p). Cash generated
from operations increased by 88.6% to £18.7m (006:
£78.8m) driven by the increase in operating profits and good
working capital management.
the success of our strategy to diversify the business, both
geographically and by discipline, through organic growth is
increasingly evident, with the eMea region now the largest
in the group. over 60% of the Group’s gross profits were
generated outside the uK. With a heritage in Finance and
accounting recruitment, it is likely that these disciplines will
continue to represent a significant proportion of the business
for some time. however, the other professional disciplines, we
are successfully rolling-out, now account for just over % of
the Group’s gross profit and the proportion generated from
Finance and accounting will continue to reduce.
“”
...ProducIng
record results
quarter after
quarter whIle
contInuIng
sIgnIfIcant organIc
exPansIon, both
geograPhIcally
and by dIscIPlIne.
16
MIChael paGe InternatIonal
Dividends and share repurchases
Board of Directors
With a strong growth in earnings, it is the Board’s intention to
on May 007 ruby McGregor-Smith, Chief executive of
continue its policy of reviewing the annual dividend, with a view
MItIe Group plc, joined as a non-executive director. We are
to increasing it by a level which we believe can be sustained
delighted to welcome her to the Board.
throughout economic cycles. Surplus cash generated in
excess of these dividend levels will continue to be returned to
Prospects
shareholders through share repurchases.
With the strong growth in profits, earnings and cash generation,
the Board is recommending an increase in the total dividend
per share for the year of %. a final dividend of .6p (006:
.p) per share is proposed which, together with the interim
dividend of .p (006: 1.8p) per share paid in october, makes
a total dividend for the year of 8.0p (006: 6.0p) per share.
While the economic cycle is the most important short-term factor,
there are a number of long-term structural changes that are
having a positive impact on the specialist recruitment markets.
these key drivers include a deregulation of the labour markets,
demographic changes, an increased global shortage of
qualified professionals, increasing job mobility and a greater
awareness and acceptance for companies to use specialist
the final dividend, if approved, will be paid on 9 June 008
recruitment services.
to those shareholders on the register at 9 May 008.
the total dividend is covered .9 times by basic earnings per
share of 1.1p.
We repurchased shares throughout 007, acquiring 1.1m
shares for £7.9m. We have no intention of changing our
strategy on the Group’s capital structure. Given the fall in
the share price in the latter part of 007, and our intention to
continue to use surplus cash to repurchase the Company’s
shares, in order to not be unduly constrained, we will be
seeking shareholders’ consent for an increase in the
maximum authority to repurchase shares from 10% to 1%
at the annual General Meeting on May 008.
Employees
I wish to express my thanks to the employees worldwide for
their commitment, loyalty and efforts throughout the year which
the latter part of 007 has created significant uncertainty
over the short-term prospects for the global economy and
consequently business confidence, investment and hiring
plans. It is a characteristic of the permanent recruitment
market that earnings visibility is short. Since the start of the
current year, with the exception of certain sectors related to
the banking market, we continue to experience similar year-
on-year increases in activity levels in all of our regions.
our next trading statement covering the first quarter, which
in this year, unlike 007, includes the easter period, will be
released on 7 april 008.
delivered the outstanding performance in 007.
Sir adrian montague CBE
Chairman
March 008
annual report 007
17
Operational
reView
In 007, we have grown gross profits by 7% and delivered
record operating profits of £19m, up %. this time last
year we described 006 as a very strong year for the Group,
growing gross profits 0% and producing £97m of operating
profit. We also said that we would continue with our strategy
of expanding organically, gradually diversifying and reducing
our dependency upon any single geographic market or
individual discipline and that we would accelerate the pace
of implementation.
our results for 007 confirm that we have followed this
through and how successful we have been. having opened
in five countries in 006, our geographic expansion continued
in 007 with openings in luxembourg and argentina.
More significantly, we increased our fee generating and
support staff by nearly 1,00 people, enabling us to expand
existing and open new offices, as well as continuing our
discipline roll-out. at the end of 007, the Group had ,0
(006: ,78) fee generating and support staff, operating
from 19 (006: 1) offices in (006: ) countries.
Branding and market positioning
over the last 0 years, the Group has developed a clear brand
strategy for the middle to senior-management professional
fee
earners offices* countries
,96
91
87
79
8
*In some locations offices are shared.
18
MIChael paGe InternatIonal
market. Michael page International is now a high-profile
Both the Michael page and page personnel businesses are
brand, globally recognised, that enables us to attract
significant in terms of countries, office networks and fee
consultants, candidates and clients in an ever increasing
earners as illustrated in the chart below left.
number of countries.
as a result of the complex variation in legislation relating
to how temporary and permanent recruitment is managed
in different countries, we developed two brands for the
clerical professional market. In the uK, where we were only
focused on clerical accounting professionals, the brand was
accountancy additions. In europe, where in many countries
legislation required us to have a separate business for
temporary recruitment, the brand is page personnel.
Diversification
the objective of our strategy to diversify the business, both
geographically and by discipline, while remaining focused on
the cyclical recruitment market, is to reduce the dependency
upon any one particular market. We believe we have been
very successful in implementing this strategy as illustrated
in the table below which compares the gross profit from the
business today with the position at the end of 000.
With changes in legislation over recent years, page personnel
can now operate, as did accountancy additions, in both
In 000, nearly 0% of Group gross profit was generated in
the uK. In 007, it was less than 0%, with eMea now our
temporary and permanent recruitment. this and our desire to
largest region.
roll-out the brand to other disciplines, as we have successfully
done in europe, has resulted in us clarifying our strategy at
this level with one brand. In november 007, accountancy
additions was rebranded to page personnel Finance and
accounting and during 007 we launched in the uK two
other page personnel disciplines, human resources and
Secretarial.
In 000, nearly 90% of Group gross profit was generated in
four countries. In 007, these same four countries generated
two-thirds of Group gross profit.
In 000, two-thirds of Group gross profit was generated by
Finance and accounting. In 007, it was just over a half.
2007
2000
£78.1m £8.m
1%
9%
1%
8%
Gross profit
% of gross profit by Region
eMea
uK
asia pacific
americas
% of gross profit from four largest countries
uK
France
netherlands
australia
top
9%
1%
7%
7%
66%
6%
9%
1%
%
9%
%
6%
9%
89%
% of gross profit by Discipline
Finance and accounting
Marketing, Sales and retail
legal, technology, hr, Secretarial
and other
engineering, property & Construction,
procurement & Supply Chain
2007
2000
%
19%
1%
66%
1%
10%
1%
%
annual report 007
19
Continental Europe, middle East and africa (EmEa)
During 007, the eMea region achieved strong growth and
is now the largest region in the Group, both in terms of gross
profit and headcount. revenue in eMea increased by .0%
to £1.1m (006: £.0m) and gross profit increased
by .% to £196.m (006: £16.6m). as a result of the
increased revenue and high operational gearing, the region
produced an increase of 8.% in operating profit to £6.0m
(006: £.m), a conversion rate of .1% (006: 7.0%).
headcount in the region increased by 60 (%) during the
year to ,078, with the majority joining existing offices. In a
number of locations we have taken larger office space to
accommodate the growth and we continued our longer-term
investment opening in luxembourg and starting new offices
in hamburg, Valencia and Bordeaux.
France (% of eMea), which remains our second largest and
most established business after the uK, had a very successful
year growing gross profits by % in constant currency.
the restructuring of the Michael page and page personnel
businesses, following the introduction of the “Borloo” law, is
now starting to deliver significant growth with the back drop
of stable economic conditions. While the growth in France
has been impressive, there remains significant scope for
further growth, particularly when recognising that the 007
gross profits of our French business are still approximately
10% below the gross profits produced in 000 and 001.
elsewhere in the region, collectively, our businesses during
007 maintained the gross profit growth rate of 006 at
68%. all countries contributed to this strong growth as
we continue our discipline and geographic expansion.
In constant currency, the netherlands (18% of eMea) grew
gross profits by 7%, Germany (1% of eMea) grew gross
profits by 7%, Spain (11% of eMea) grew gross profits by
9%, Italy (8% of eMea) grew gross profits by 61% and
Switzerland (8% of eMea) grew gross profits by 116%.
“”
durIng 2007, eMea
achIeved strong
growth and Is now
the largest regIon
In the grouP,
both In terMs of
gross ProfIt and
headcount.
8%
18%
13%
9%
11%
8%
EmEa GROSS PROfIt 2007
+% Growth
France
33%
+99% Growth
Belgium, South africa, uae,
Sweden, poland, portugal,
russia, Ireland, luxembourg
+61% Growth
+9% Growth
Italy
Spain
+7% Growth
Germany
+7% Growth
holland
+116% Growth
Switzerland
Growth rates in local currency
0
MIChael paGe InternatIonal
the new businesses which opened in 006 in Moscow,
the combined gross profits of Michael page Marketing,
Johannesburg, Dubai and Dublin, together with luxembourg
Michael page Sales and Michael page retail, were %
in 007, are ahead of plan. they continue to grow rapidly
higher than in 006 and, combined, represented %
and collectively had 6 staff at the end of 007.
of uK gross profit. the Marketing and Sales businesses
With operating profits increasing by 8% from an increase
in gross profit of % and the conversion rate now at %,
there is little spare capacity within these businesses and
performed strongly and now operate from 10 and 9 locations
respectively. retail, the smallest of the three businesses, had
a tremendous year growing in excess of 0%.
future growth in profits will largely be driven by investment in
Michael page legal, Michael page technology, Michael page
new staff and office space to accommodate them.
human resources and Michael page Secretarial achieved
United kingdom
In the uK, revenue increased by 1.% to £60.m (006:
£1.m) and gross profit by 19.% to £186.0m (006:
£1.8m). operating profits were £9.m (006: £.m),
an increase of .% and represent a conversion rate of
1.9% (006: 8.%). We invested heavily during the year,
increasing headcount by 17% to 1,799 and opening new
offices in pall Mall and Canary Wharf in london, leicester
and aberdeen.
the gross profits of the Finance and accounting businesses,
which generated 1% of uK gross profit, were 11% higher
than in 006. Michael page Finance, the largest of the three
businesses, produced a mixed performance, with good
growth in the regions, being held back by below expectation
growth in london and the South east. a number of changes
have been made to the management structure of these
growth of 6% and, combined, represented 16% of uK gross
profit. From the legal business, we created a new business,
Michael page offshore, which focuses on placing legal, tax
and accounting candidates in some of the many offshore tax
havens around the world.
the more recently created Michael page engineering &
Manufacturing, Michael page procurement & Supply Chain
and Michael page property & Construction businesses,
grew at over 0% and now represent 7% of uK gross profit.
these businesses all grew significantly in 007 and given
the enormous scope for growth in these disciplines, we will
continue to invest heavily in them.
I am delighted to report another outstanding year in Scotland,
growing gross profit by 0%. In 007, we opened a new
office in aberdeen and moved into larger offices in edinburgh.
Scotland now represents % of uK gross profit.
businesses, which should produce an improved performance
asia Pacific
in 008. Michael page Financial Services had a very strong
first half of the year with good growth. the “credit crunch”
in the latter half of 007 has impacted certain parts of the
banking market and consequently our growth rate slowed,
being flat year-on-year in the fourth quarter. During the year
we continued to expand the page personnel office network
from to 7, opening in Swindon and Sheffield.
In the asia pacific region, revenue was 17.0% higher at
£97.8m (006: £8.6m), gross profit was 7.% higher at
£7.m (006: £.0m) and operating profit increased .1%
to £0.8m (006: £17.1m), with a conversion rate of 6.%
(006: 7.9%). We invested in all the existing offices in the
region, increasing headcount by % to 6.
7%
16%
5%
22%
Uk GROSS PROfIt 2007
+11% Growth
Finance & accounting
+% Growth
Marketing, Sales and retail
+0% Growth
Scotland
50%
+6% Growth
+% Growth
legal, hr, technology,
Secretarial and other
engineering,
property & Construction,
procurement & Supply Chain
annual report 007
1
In australia, (7% of asia pacific) gross profit and operating
With very limited competition in latin america, the americas
profit grew in constant currency by .0% and 7.%
represents a tremendous long-term opportunity for the Group
respectively, as anticipated, benefiting from the management
to expand and we will continue to invest heavily to grow the
and structural changes made in the second half of 006.
businesses rapidly. this degree of investment results in the
We continue to see numerous growth opportunities and
conversion rate in the region being below that of the other
with a strong australian economy, we have increased our
regions. however, we anticipate that operating profits will
headcount in australia by 6%, a large proportion of which
grow at a faster rate than gross profits and the conversion
joined during the second half of the year.
margin will improve over time.
In hong Kong, Sha tin, Shanghai, tokyo and Singapore,
we achieved another year of substantial gross profit growth,
with all locations having a record year. While we continue our
discipline roll-out, some less mature offices derive a significant
proportion of gross profit from one discipline. this is the case
with our tokyo office, where in the fourth quarter of 007 our
business slowed as the credit crunch impacted on demand
in the banking sector. We have an excellent opportunity to
expand our business significantly in China and plan to open
in Beijing and Shenzhen in the first half of 008.
the americas
Investment in 2008 and outlook
We made significant investment in 007, ahead of what
was planned at the start of the year, as market conditions
remained favourable. We plan further expansion in 008,
with new offices already opened in Montreal, newcastle,
Gothenburg and Seville and new country openings planned
in austria, turkey and new Zealand. assuming market
conditions remain favourable in the majority of countries
in which we operate, these investments, together with our
continued expansion of our existing businesses, should see
our headcount reach 6,000 by the end of 008.
revenue for the region was 7.1% higher at £.m
an important factor in the success as a business has been
(006: £0.1m), gross profit increased by 79.0% to £8.m
our use of technology. our current recruitment system has
(006: £1.m), operating profit increased to £6.m (006:
supported our growth over the past five years, however,
£1.9m), with a conversion rate of 16.1% (006: 8.7%).
these systems continually develop and the next generation
headcount in the region increased by 9% to and we
of systems are now available that will facilitate our continued
opened new offices in hartford, atlanta, Curitiba, Brazil and
growth. a project is underway throughout the Group to
our first office in argentina in Buenos aires.
replace the current recruitment system, with a view to the
In north america, we have continued our rapid expansion
first full implementation taking place early in 009.
of existing and new offices and the discipline roll-out has
the planned headcount levels, new countries and office
continued at pace. We now have nine offices and over 80
openings, will result in an estimated 008 pre-bonus cost
staff. In latin america, we now have over 60 staff and in
base of approximately £0m, including all share-based
Mexico, which opened in 006, we are well ahead of plan,
charges. Bonuses will continue to be approximately % of
with a good level of profits.
pre-bonus operating profit.
43%
aSIa PaCIfIC GROSS PROfIt 2007
+% Growth
australia
+9% Growth
asia
57%
Growth rates in local currency
MIChael paGe InternatIonal
While we have identified numerous opportunities to continue
It has always been, and will continue to be, our intention to
our growth, we are mindful of the current and now widely-
take decisions and make investments for the longer-term
predicted weakening of global economic activity. all our
benefit of our stakeholders. If there is a slowdown, we believe
businesses are formally reviewed and forecasts revised on
that the greater geographic and discipline diversification of
a quarterly basis. at present there is considerable uncertainty
the business that we have created since 000 will make
over the extent of any economic slowdown and which
the Group earnings more resilient to a slowing in economic
region’s economies will be most affected. the severity of any
activity when compared to previous slowdowns. I look
slowdown is unlikely to impact significantly on our investment
forward to reporting our progress each quarter as we
plans for new country and office openings as we believe
progress through 008.
they represent excellent strategic long-term opportunities.
however, a slowdown would impact the headcount growth
plans of our more established businesses and in the event
of a sustained global economic slowdown, our headcount
would not reach 6,000 staff by the end of 008.
We have an exceptional pool of ambitious and talented
people in the Group, in particular at the senior management
level, with proven expertise and skills required to launch new
or grow existing businesses successfully. this team also
has a track record of managing these businesses during
recessions and economic slowdowns, while continuing to
generate profits and cash. Furthermore, we have a track
record in periods of economic slowdown of maintaining our
infrastructure and market presence, while continuing to make
strategic and measured investments for the longer-term,
positioning the business for strong growth when economic
conditions improve.
Steve Ingham
Chief executive
March 008
“”
we have an
excePtIonal Pool
of aMbItIous and
talented PeoPle
In the grouP.
43%
tHE amERICaS GROSS PROfIt 2007
+8% Growth
north america
+89% Growth
latin america
57%
Growth rates in local currency
annual report 007
financial
reView
Income statement
Revenue
007 was a record year for the Group with all regions delivering
strong growth. reported revenue for the year increased
by 8.1% to £81.6m (006: £69.1m). using constant
currencies, revenue increased by 8.% to £8.m. revenue
from temporary placements increased by 17.8% to £9.1m
(006: £7.7m) and represented .8% (006: 7.%) of
Group revenue. revenue from permanent placements was
£9.6m (006: £76.m), an increase of .1%.
Gross profit
Gross profit for the year increased by 7.1% to £78.1m
(006: £8.8m) and in constant currencies by 7.6% to
£80.0m. the Group’s gross margin increased to 7.%
(006: .7%). the growth in gross profit is greater than
growth in revenue, due to the higher proportion of gross
profit derived from permanent placements in 007, together
with a higher volume of temporary placements at a higher
gross margin reflecting strong market conditions. Gross profit
from temporary placements was £106.1m (006: £87.8m)
and represented .% (006: .%) of Group gross profit.
the gross margin achieved on temporary placements was
.% (006: .6%).
“”
2007 was a record
year for the grouP
wIth all regIons
delIverIng strong
growth.
GROUP qUaRtERly
GROSS PROfIt tREnD:
q1 2001 tO q4 2007
120
100
)
m
£
(
t
i
f
o
r
P
s
s
o
r
G
80
60
40
6
.
9
6
9
.
6
6
7
.
8
5
9
.
9
4
4
.
1
5
5
.
9
4
8
.
7
4
9
.
3
4
0
.
5
4
0
.
5
4
7
.
5
4
8
.
2
4
9
.
9
5
7
.
6
5
5
.
3
5
3
.
2
5
1
.
8
4
2
.
9
7
3
.
8
6
2
.
9
6
2
.
0
7
2
.
8
2
1
4
.
3
2
1
0
.
1
2
1
5
.
5
0
1
1
.
3
9
1
.
9
8
4
.
7
8
20
Q1 Q2 Q3
2001
Q4
Q1 Q2 Q3
2002
Q4
Q1 Q2 Q3
2003
Q4
Q1 Q2 Q3
2004
Q4
Q1 Q2 Q3
2005
Q4
Q1 Q2
Q3
2006
Q4
Q1
Q4
Q2
Q3
2007
MIChael paGe InternatIonal
financial
Operating profit and conversion rates
,78 at 1 January 007 and increased during the year
as a result of the Group’s organic long-term growth strategy,
tight control on costs and profit-based bonuses, we have a
business model which is operationally geared, as evidenced
by the % increase in operating profits to £19.m from a
by % to ,0. the ratio of directors and fee earners to
support staff in 007 was 76: (006: 7:6).
net interest
7% increase in gross profit. In constant currencies operating
our intention is to manage the balance sheet with a broadly
profits increased by .% to £10.m.
With a strategy of organic growth, the Group incurs start-up
costs and operating losses as investments are made to grow
existing and new businesses, open new offices and launch new
countries. Furthermore, significant increases in headcount take
time to train and become productive. these characteristics of
our growth strategy and the levels of investment impact on the
conversion rates in any one reporting period.
neutral net cash/debt position throughout the year, using
surplus cash to repurchase shares and, as necessary, drawing
on borrowing facilities. our net cash/debt position at the end
of December each year is usually one of the strongest, due
to the need to fund fourth quarter and annual profit-based
bonus payments in January. We started 007 with net debt
of £.6m and, after funding £7.9m of share repurchases
throughout the year, we operated for a large period of 007
with net debt. at 1 December 007, the Group had net cash
the Group’s conversion rate in 007 has increased to 1.%
of £10.m. as a consequence, the Group has a net interest
(006: 7.9%). the conversion rate in three of the Group’s
charge for the year of £.0m (006: £0.m).
four regions exceeds this rate, with the conversion rate in the
americas being lower as a result of the greater level of new
taxation
investment and start-ups.
as a result of the increased numbers of staff and offices, start-
tax on profits was £.7m (006: £1.m), representing an
effective tax rate of 1% (006: .%). the rate is higher than
up costs and higher bonuses due to the increased profits,
the uK Corporation tax rate of 0% due to disallowable items
administrative expenses in the year increased by 0.7% to
of expenditure and profits being generated in countries where
£8.7m (006: £1.m). administrative expenses also
the corporate tax rates are higher than 0%. the effective
included £7.m of share-based charges (006: £8.m) in
rate is lower than in 006 primarily as a result of reductions
respect of the Group’s deferred annual bonus scheme, long-
to tax charges in prior periods. With uK corporation tax rates
term incentive plans and executive share option schemes.
reducing from 0% to 8% in april 008, the Group’s effective
the reduction in these share-based charges, compared
tax rate in 008 is estimated to be in the region of 0.%.
to 006, is due to lower employers’ social charges as a
consequence of the reduction in the share price from .p
at the end of 006, to 88.0p at the end of 007.
approximately 7% of the Group’s operating expenses
are staff-related, including the profit-related bonus, of our
consultants and support staff. headcount of the Group was
Share repurchases and share options
It is the Group’s intention to continue to use share repurchases
to return surplus cash to shareholders and to satisfy awards
under the Group’s incentive share plan and deferred annual
bonus plan. During the year, 1.1m shares were repurchased
SCOPE fOR GROwtH: HEaDCOUnt
Ratio fee earners : non fee earners
Fee earners
non Fee earners
4000
3500
3000
2500
2000
1500
1000
500
H1
1999
H2
1999
H1
2000
H2
2000
H1
2001
H2
2001
H1
2002
H2
2002
H1
2003
H2
2003
H1
2004
H2
2004
H1
2005
H2
2005
H1
2006
H2
2006
H1
2007
H2
2007
1999
000
001
00
00
00
00
006
007
9:1
8:
7:
8:
60:0
6:6
71:9
7:6
76:
annual report 007
at a cost of £7.9m. 11.m of these shares were cancelled,
Balance sheet
with the remaining shares purchased by the Company’s
employee benefit trust to satisfy future share plan awards.
the Group had net assets of £107.9m at 1 December 007
(006: £80.m). the increase in net assets principally relates
We have no intention of changing our strategy on the
to the profit for the year of £101.7m, the credits relating to
Group’s capital structure. Given the Group’s strong cash
share schemes of £.m, currency movements of £8.1m
generation, the intention to continue repurchasing shares
and the exercise of share options of £8.7m, offset by share
and the reduction in the Group’s share price in the latter
repurchases of £7.9m and dividends paid of £1.8m.
part of 007, in order to not be unduly constrained, we will,
at the annual General Meeting on May 008, be seeking
shareholder approval for an increase in the authority to make
share repurchases up to a maximum of 1%, from 10%,
of the issued share capital.
at the beginning of 007, the Group had 1.m share options
our capital expenditure is driven primarily by two main factors:
headcount, in terms of office accommodation and infrastructure
and the maintenance and enhancement of our It systems.
Capital expenditure, net of disposal proceeds, increased to
£1.8m (006: £8.7m) reflecting the % increase in headcount
and the opening and expansion of a number of offices.
outstanding of which .m had vested. In March 007, .8m
the most significant item in the balance sheet is trade
share options were granted. During the course of the year
receivables, which were £160.9m at 1 December 007 (006:
options were exercised over .7m shares, generating £8.7m
£118.m) representing debtor days of 8 (006: days).
in cash and 0.m share options lapsed. at the end of 007,
11.1m share options remained outstanding of which .1m
Cash flow
had vested.
at the start of the year, the Group had net debt of £.6m.
Earnings per share and dividends
During the year, the Group generated net cash from
operating activities of £18.7m (006: £78.8m), being £17.m
In 007, basic earnings per share were 1.1p (006: 19.6p)
(006: £10.8m) of eBItDa, an increase in working capital
and diluted earnings per share were 0.6p (006: 19.0p).
requirements of £1.1m (006: £8.7m) and movements in
the weighted average number of shares for the year was
provisions of £0.m (006: £0.m).
7.m (006: .7m) reflecting the shares repurchased
during the year and the new shares issued to satisfy
option exercises.
the principal payments have been:
• £1.8m (006: £8.7m) of capital expenditure, net of
disposal proceeds, on property, infrastructure, information
a % increase in the final dividend to .6p (006: .p) per
systems and motor vehicles for staff;
ordinary share is proposed which, together with the interim
• taxes on profits of £6.m (006: £1.7m);
dividend of .p (006: 1.8p) per ordinary share, makes a
• dividends of £1.8m (006: £18.1m); and
total dividend for the year of 8.0p (006: 6.0p) per ordinary
share, an increase of %. the proposed final dividend,
which amounts to £18.0m, will be paid on 9 June 008 to
those shareholders on the register as at 9 May 008.
• share repurchases of £7.9m (006: £8.m).
£8.7m (006: £8.m) was received in the year from the issue
of new shares to satisfy share option exercises.
at 1 December 007, the Group had net cash of £10.m.
CaSH REtURnED tO
SHaREHOlDERS
Interim Dividend
Final Dividend
net Shares Cancelled *
Shares Bought into eBt **
* this represents the cash returned to shareholders by way of share buy backs,
less cash received by the exercise of share options.
** this represents the cash used by the employee Benefit trust to purchase
shares that were not allocated to share awards during the year.
100
80
60
40
20
0
2006
2007
6
MIChael paGe InternatIonal
key Performance Indicators (“kPIs”)
Financial and non-financial key performance indicators (KpIs) used by the Board to monitor progress are listed in the table below.
the source of data and calculation methods year-on-year are on a consistent basis.
kPI
2007
2006
definition, method of calculation and analysis
Gross margin
7.%
.7% Gross profit as a percentage of revenue. Gross margin has slightly improved
on last year as a result of the mix of permanent and temporary placements,
and improvements in the gross margins on temporary placements. Source:
Consolidated income statement in the financial statements.
Conversion
1.%
7.9% operating profit as a percentage of gross profit showing how effective the Group
is at controlling the costs and expenses associated with its normal business
operations and the level of investment for the future. Conversion has improved
over last year as a result of better utilisation of existing capacity, and improved
pricing. Source: Consolidated income statement in the financial statements.
productivity
£1.k
£16.k represents how productive fee earners are in the business and is calculated by
(gross profit per
fee earner)
dividing the gross profit for the year by the average number of fee earners and
directors. the higher the number, the higher their productivity. productivity is a
function of the rate of investment in new fee earners, the impact of pricing and
the general conditions of the recruitment market. Source: Consolidated financial
statements.
Fee earner:
76:
7:6
represents the balance between operational and non-operational staff.
support staff
ratio
the movement this year demonstrates faster growth in fee earners in relation to
support staff. Source: Internal data.
Debtor days
8
represents the length of time the company receives payments from its debtors.
Calculated by comparing how many days billings it takes to cover the debtor
balance. Source: Internal data.
We achieved a higher level of operating profit growth than gross profit growth as a result of our high operational gearing.
the decrease in productivity is as a result of the large increase in headcount particularly in the second half of the year, as new
fee earners can take a number of months to become fully productive. Debtor days have increased largely as a result of a greater
proportion of receivables being in Continental europe where our debtor days are generally higher than in the uK. the ratio of
fee earners to support staff has increased as a result of continued efficiencies arising from our effective use of technology and
economies of scale.
nEw COUntRIES 2007/2008
luxembourg
argentina
turkey
austria
new Zealand
ExIStInG COUntRIES
annual report 007
7
treasury management and currency risk
Principal risks and uncertainties
It is the Directors’ intention to continue to finance the activities
the management of the business and the execution of
and development of the Group from retained earnings,
the Company’s strategy are subject to a number of risks.
and to operate the Group’s business while maintaining
the following section comprises a summary of what
the net cash/debt position within a relatively narrow band.
Michael page International plc believes are the main risks
Cash generated in excess of these requirements will be used
that could potentially impact the Group’s operating and
to buy back the Company’s shares.
financial performance.
Cash surpluses are invested in short-term deposits,
people
with any working capital requirements being provided from
Group cash resources, Group facilities, or by local overdraft
facilities. the Group has set up a multi-currency notional
cash pool in 007. Currently the main eurozone subsidiaries
and the uK-based Group treasury subsidiary participate in
this cash pool, although it is the intention to extend the scope
of the participation to other Group companies. the structure
facilitates interest and balance compensation of cash and
bank overdrafts.
the resignation of key individuals and the inability to recruit
talented people with the right skill-sets could adversely
affect the Group’s results. this is further compounded by
the Group’s organic growth strategy and its policy of not
externally hiring senior operational positions. Mitigation of
this risk is achieved by succession planning, training of staff,
competitive pay structures linked to the Group’s results and
career progression.
the main functional currencies of the Group are Sterling,
Macro economic environment
euro and australian Dollar. the Group does not have material
transactional currency exposures, nor is there a material
exposure to foreign denominated monetary assets and
liabilities. the Group is exposed to foreign currency translation
differences in accounting for its overseas operations.
our policy is not to hedge this exposure.
In certain cases, where the Group gives or receives short-
term loans to and from other Group companies with different
reporting currencies, it may use foreign exchange swap
derivative financial instruments to manage the currency and
interest rate exposure that arises on these loans. It is the
Group’s policy not to seek to designate these derivatives
as hedges.
recruitment activity is largely driven by economic cycles
and the levels of business confidence. the Board look to
reduce the Group’s cyclical risk by expanding geographically,
by increasing the number of disciplines, by building part-
qualified and clerical businesses and by continuing to build
the temporary business.
a substantial portion of the Group’s gross profit arises from
fees which are contingent upon the successful placement of
a candidate in a position. If a client cancels the assignment at
any stage in the process the Group receives no remuneration.
as a consequence the Group’s visibility of gross profits is
generally quite short and tends to reduce further during
periods of economic downturn.
OffICES In
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MIChael paGe InternatIonal
Competition
the degree of competition varies in each of the Group’s
regular reviews of the Group’s technology strategy to ensure
that it supports the overall Group strategy.
main regions. In the uK, australia and north america, the
legal
recruitment market is well developed, highly competitive
and fragmented. the characteristics of a developed market
are greater competition for clients and candidates, as well
as pricing pressure. In eMea, latin america and asia, the
recruitment market is generally less developed with a large
proportion of all recruitment being carried out by companies’
internal resources rather than through recruitment specialists.
this is changing rapidly due to changes in legislation,
increasing job mobility and the difficulty internal resources
face in sourcing suitably qualified candidates.
If the Group does not continue to compete in its markets
effectively, by hiring new staff, opening and expanding offices
and continuing the discipline roll-outs, there is a risk that
competitors may beat us to key strategic opportunities,
which may result in lost business and a reduction in market
share. this risk is mitigated by meetings of the Main Board,
executive Board and regional and Country Management
Boards where Group strategy is continually reviewed and
decisions made over the allocation of the Group’s resources,
principally people.
technology
the Group is reliant on a number of technology systems to
provide services to clients and candidates. these systems are
dependent on a number of important suppliers that provide the
technology infrastructure and disaster recovery solutions. the
performance of these suppliers are continually monitored to
ensure business critical services are available and maintained
as far as practically possible. Due to the rapid advancement
of technology, there is a risk that systems could become
outdated with the potential to affect efficiency and have an
impact on revenue and client service. this risk is mitigated by
the Group operates in a large number of jurisdictions which
have varying legal and compliance regulations. the Group
takes its responsibilities seriously and ensures that its policies,
systems and procedures are continually updated to reflect
best practice and to comply with the legal requirements in
all the markets in which it operates. In order to reduce the
legal and compliance risks, fee earners and support staff
receive regular training and updates of changes in legal and
compliance requirements.
Stephen Puckett
Group Finance Director
March 008
“”
durIng the
year, the grouP
generated net cash
froM oPeratIng
actIvItIes of
£148.7M, uP 89%.
DISCIPlInES In
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annual report 007
9
Board
of directors
Sir adrian montague CBE (60)
non-Executive Chairman
Sir adrian Montague is non-executive Chairman of British
energy plc, Friends provident plc and Infrastructure Investors
limited. From 1997 to 001 he held senior posts concerned
with the implementation of the Government’s policies for the
involvement of the private sector in the delivery of public
services, first as Chief executive of the treasury taskforce
and then as Deputy Chairman of partnerships uK plc.
he was Deputy Chairman of network rail from 001 to 00
and non-executive Chairman of Cross london rail links
limited from 00 to 00. he spent his early career as
a solicitor with linklaters & paines before joining Kleinwort
Benson in 199. Sir adrian is also a non-executive Director
of london First, CellMark aB, the pulp and paper marketing
company based in Gothenburg, a Director of Skanska aB,
the Swedish international construction group, and a trustee
of the historic royal palaces. he was awarded a CBe in
001 and a knighthood in 006. he is also Chairman of the
nomination Committee.
Steve Ingham (45)
Chief Executive
Steve Ingham joined Michael page in 1987 as a consultant
with Michael page Marketing and Sales. he was responsible
for setting up the london marketing and sales businesses
and was promoted to operating Director in 1990. he was
appointed Managing Director of Michael page Marketing and
Sales in 199. Subsequently he took additional responsibility
for Michael page’s retail, technology, human resources and
engineering businesses. he was promoted to the Board as
executive Director of uK operations in January 001, and
subsequently to Managing Director of uK operations in May
00. he was appointed Chief executive on 6 april 006.
Stephen Box (57)
independent non-Executive director,
senior independent director
Stephen Box is a Chartered accountant who spent more
than years at Coopers & lybrand, 1 of these as a partner.
From august 1997 to november 00 he was Finance
Director of national Grid. he is a member of the Financial
reporting review panel and a non-executive Director of
partyGaming plc (pG), thames Water utilities ltd (tWul) and
Wales & West utilities ltd (WWu). Stephen has experience
of audit Committees as a partner at Coopers & lybrand,
as an executive Director of national Grid attending audit
Committees, and as a non-executive Director chairing the
audit Committees of pG, tWul and WWu, and formerly of
South east Water limited. he was appointed a non-executive
Director of Michael page International plc on 7 February
001. he is chairman of the audit Committee and is a member
of the remuneration and nomination Committees.
Charles-Henri Dumon (49)
Managing director – Continental Europe and
the Americas
Charles-henri Dumon joined Michael page in 198 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 Managing Director for all
Michael page’s european and South american businesses in
January 001. his responsibilities were increased to include
north america in January 006.
0
MIChael paGe InternatIonal
Ruby mcGregor-Smith (45)
independent non-Executive director
ruby McGregor-Smith qualified as a Chartered accountant
with BDo Stoy hayward and was appointed to the Board of
Michael page International plc on May 007. She is Chief
executive of MItIe Group plC, a position she has held since
March 007. previously to being appointed Chief executive,
she held the positions of Group Finance Director and then
Chief operating officer. prior to joining MItIe Group plC,
she held a range of senior roles within the support services
sector, primarily at Serco Group plc. She is a member of the
audit, remuneration and nomination Committees.
Dr tim miller (50)
independent non-Executive director
Dr tim Miller was appointed to the Board on 1 august
00 and became Chairman of the remuneration Committee
on 16 September 00. he is also a member of the audit
and nomination Committees. tim has wide experience
in human resources and has held a number of senior hr
and business roles in the information technology, retail
and pharmaceutical sectors. he is currently a Director of
Standard Chartered Bank, responsible for hr, Corporate
real estate, Corporate Secretariat, legal, Compliance
& regulatory risk, Internal audit, Global research and
operational excellence functions.
Stephen Puckett (46)
Group finance director
Stephen puckett qualified as a Chartered accountant with
BDo Binder hamlyn. he joined Wace Group plc in 1988 as
Director of Corporate Finance, subsequently being promoted
to Group Finance Director in 1991. he was Group Finance
Director of Stat plus Group plc in 000, and appointed Group
Finance Director of Michael page International plc in January
001. he was a non-executive Director of Shl Group plc
from 00 to 006.
Hubert Reid (67)
independent non-Executive director
hubert reid is Chairman of enterprise Inns plc and of the
Midas Income and Growth trust plC and Deputy Chairman
of Majedie Investments plC. he was previously Managing
Director and then Chairman of the Boddington Group
plc, and a non-executive Director and then Chairman of
Ibstock plc, Bryant Group plc and the royal london Group.
he was appointed a non-executive Director of Michael page
International plc on February 00. he is a member of the
audit, remuneration and nomination Committees.
ExECUtIvE BOaRD
In addition to the executive Directors, the executive Board
comprises alexis de Bretteville (regional Managing Director
- the americas), Christophe Duchatellier (regional Managing
Director - europe (excluding France)), Gary James (regional
Managing Director - asia pacific) and andrew Wayland (Chief
Information officer).
alexis de Bretteville (45)
Regional Managing director – the Americas
alexis de Bretteville joined Michael page in 199 as a
Consultant in paris, France. In 1997 he was appointed
Managing Director of Michael page Spain, launching Spain,
portugal and later, Brazil. In 00 he moved to Germany,
taking on responsibility for Germany, Belgium and Sweden.
In 00 he moved to Belgium when his responsibilities also
included holland and the launch of poland in 00. In 006
he became regional Managing Director for the the americas,
based in new York, having responsibility for Michael page in
uSa, Canada, Brazil, Mexico and most recently argentina.
Christophe Duchatellier (45)
Regional Managing director – Continental Europe
(excluding france)
Christophe Duchatellier joined Michael page in 199 as
a Consultant in paris. he progressed to Director having
launched the Mp Secretarial business in France. In 1997
he moved to Milan, Italy and launched Michael page Italy
and in 001 Michael page Switzerland. In 00 he assumed
responsibility as regional Managing Director for Spain and
portugal. In 006 he moved to Geneva and assumed
additional responsibility for northern, Central and eastern
europe, also assisting with the launch of Mp russia, 006
and Mp luxembourg, 007.
Gary James (46)
Regional Managing director – Asia pacific
Gary James joined Michael page Finance in london in
198. he was appointed Director of Michael page Sales
& Marketing in 199, Managing Director of Michael page
Marketing in 1997 and transferred to america in 00 as
Managing Director of north america. he moved to australia
and was appointed Managing Director of the asia pacific
region in august 006.
andrew wayland (41)
Chief information Officer
andrew Wayland was the uK It Business Management
Director of pricewaterhouseCoopers where he worked for
over 10 years in the internal It functions. he brings extensive
experience in establishing It strategy and innovation
to support the wider business strategy, and integrating
technology teams. he was appointed Chief Information
officer of Michael page in December 00.
annual report 007
1
Directors’
report
Principal activity and review of the business and
• Sir adrian Montague CBe‡ (Chairman)
future developments
the Group is one of the world’s leading specialist recruitment
consultancies. the Group’s trading results are set out in the
financial statements on pages to 8. Details of the Group’s
strategy, outlook and review of operations are described in
the Chairman’s Statement, operational review and Financial
review on pages 16 to 9.
Enhanced Business Review
• Steve Ingham (Chief executive)
• Stephen Box‡*
• Charles-henri Dumon
• ruby McGregor-Smith‡ (appointed May 007)
• Dr tim Miller‡
• Stephen puckett
• hubert reid‡
the Company is required to set out in this report a fair review
‡ non-executive Directors
of the business of the Group during the financial year ended
* Senior Independent Director
1 December 007 and of the position of the Group at the
end of that financial year, together with a description of the
principal risks and uncertainties facing the Group (known as
an enhanced Business review).
the information that fulfils the requirements of this review can
be found in the following sections of the annual report:
review of operations
Strategy
Key performance indicators
page 18 to
page 10 to 1
page 7
Future outlook
pages 17, and
risks and uncertainties
pages 8 and 9
Financial review
Corporate responsibility
Significant agreements
page to 9
page to 6
there are no significant agreements that take effect, alter or
terminate upon a change of control of the Company following
a takeover bid.
Directors and interests
In accordance with the Company’s articles of association,
Steve Ingham, Dr tim Miller and ruby McGregor-Smith will
retire by rotation at the annual General Meeting and, being
eligible, offer themselves for re-election.
Biographical details for all the current Directors are shown
on pages 0 and 1.
the beneficial interests of Directors in office at 1 December
007 in the shares of the Company at 1 December 007
and at March 008 are set out in the remuneration report
on pages to 9.
all of the executive Directors are deemed to have an interest
in the ordinary shares held in the employee Benefit trust and
its subsidiaries.
the Company has purchased and maintained throughout the
year directors’ and officers’ liability insurance in respect of
itself and its directors. the directors also have the benefit of
the indemnity provision contained in the Company’s articles
of association. these provisions, which are qualifying third
party indemnity provisions as defined by Section of
the Companies act 006 (previously Section 09B of the
Companies act 198), were in force throughout the year
the following were Directors during the year and held office
and are currently in force.
throughout the year other than as shown below.
MIChael paGe InternatIonal
“”
the grouP Is one
of the world’s
leadIng sPecIalIst
recruItMent
consultancIes.
Results and dividends
the profit for the year after taxation amounted to £101.7m
(006: £6.m).
a final dividend for 006 of . pence per ordinary share was
paid on June 007. an interim dividend of . pence per
ordinary share was paid on 1 october 007. the Directors
recommend the payment of a final dividend for the year
ended 1 December 007 of .6 pence per ordinary share
on 9 June 008 to shareholders on the register on 9 May
008 which, if approved at the annual General Meeting, will
result in a total dividend for the year of 8.0 pence per ordinary
share (006: 6.0 pence).
Share capital
the authorised and issued share capital of the Company are
shown in note 18 to the financial statements.
at the annual General Meeting held on May 007,
the Company renewed its authority to make market purchases
of its own ordinary shares up to a maximum of 10% of the
issued share capital.
During the year, the Company purchased 11.m shares
which were immediately cancelled. a further .m shares
were also purchased by the employee benefit trust and held
to fund share scheme awards. the total nominal value of all
shares repurchased was £0.m and represented .% of
the issued share capital. the shares were purchased for a
consideration of £7.9m including expenses. .7m shares
were also issued to satisfy share options exercised during
the year.
annual report 007
Substantial shareholdings
(a) Environmental policy
as at February 008, the Company has been notified of
the Group does not operate in a business sector which
the interests held in more than % of the issued share capital
causes significant pollution, but the Board recognises that
of the Company as shown in Fig.1. below.
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:
Fig.1. Substantial Shareholdings
• optimising the use of energy;
Holder
Number of
ordinary
shares
% of issued
share capital
•
ensuring the efficient use of materials;
•
encouraging re-use and recycling; and
Capital International Limited
33,990,190
10.38
•
incorporating the principle of sustainable development.
Standard Life Investments
30,084,802
AXA Investment Managers UK Limited
16,305,201
Barclays plc
JP Morgan
Legal & General
16,223,821
15,993,951
13,368,196
9.19
4.98
4.96
4.88
4.08
During the year, the Group has continued to allocate a
significant amount of time and resource to further identify
where its activities have an impact on the environment.
a review is carried out annually 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
Corporate responsibility (CR)
reporting worldwide.
the Board recognises its responsibilities in respect of social,
environmental and ethical (See) matters, with the Chief
executive having Board responsibility for Group environmental
Management. the Directors continually monitor all risks to
the Group’s businesses, including See risks, which may
impact the Group’s short and long-term value. During 007
no significant See risks were identified. the Company is
also a member of the FtSeGood Index Series designed
to measure the performance of, and facilitate investment in,
the current environmental report, which covers our uK
businesses only, will shortly be available on the Michael page
website. a summary of its findings during 007 is shown
below.
Waste
• 1 tonnes of waste was generated by uK offices.
our current national recycling rate is .0% from recycling
confidential paper and toner cartridges.
those companies meeting globally recognised standards of
• through recycling, Michael page in the uK has saved
corporate responsibility.
,77 trees and saved a total of 78m landfill space.
the Group’s policies on Cr matters are described in the
a summary is shown in Fig.. below.
following paragraphs.
Fig.2. UK Waste Generation
Confidential waste
Toners
Mixed office paper
Food waste and packaging
Aluminium cans
Glass bottles
Plastic bottles & plastic cups
Cardboard
Miscellaneous
Total
Annual weight
generated (tonnes)
% of total
waste
61
3
80
13
20
8
20
8
8
28%
1%
35%
6%
9%
4%
9%
4%
4%
221
100%
MIChael paGe InternatIonal
Energy
•
6,166, kWh of electricity was consumed in the uK,
which converts to 1,97 tonnes Co.
•
,17,10 kWh of gas was consumed in the uK, which
converts to tonnes Co.
• through recycling Michael page in the uK has saved
9,19 kWh of energy.
Water
•
In the uK, Michael page consumed 9,61 m of water.
transport
•
In total, uK employees travelling to and from work converts
to 1,100 tonnes Co.
“More Green”
as a company committed to green issues, we are actively
involved in finding work practices that can help reduce our
with disabilities through “hanploi.com”, as well as various other
charities involved in issues such as anti-discrimination and
cancer. In holland, a team redecorated rooms for parents to
stay when they visit their sick children. they also participated
in various cancer related charity events.
In the uK, subject to certain restrictions, the Group matches
charitable donations made by employees. In 007, we
nominated Cancer research uK as our charity of the year.
We have sponsored a number of different initiatives and have
so far raised approximately £100,000 for the charity.
In the americas, Michael page Brazil engaged in a number
of charity events, sponsoring a charity auction in aid of ‘Boys
and Girls hope worldwide’, sponsorship of a new location in
Sao paulo for the ‘projeto Guri’ bringing music and culture
to poor areas of the city, and ongoing help and support
for ‘Gotas de Flor com amor’, an institution focusing on
childrens’ education.
carbon footprint. ‘More Green’ was launched in the uK in
In asia pacific, Michael page australia provided sponsorship
007 to focus employees more actively on green issues and
to children via the World Vision charity and held numerous
to advertise internally the environmental matters in which
charitable events, supporting a range of charities including
Michael page is engaged.
Michael page are proud consumers of Green Choice energy
which is the most environmentally sound electricity option
available in the uK. Green Choice energy supplies electricity
from environmental sources coming from a mixture of
the Breast Cancer Foundation, Juvenile Diabetes Foundation
and ronald McDonald house Children’s Charity. In hong
Kong, Michael page hong Kong supported children’s cancer
charities with a range of events including rickshaw and sedan
chair style races.
renewable sources. these sources do not involve the burning
(c) Employee involvement
of fossil fuels, which produce Co emissions.
employees are involved in all aspects of the business.
together, Michael page and page personnel in the uK
Michael page International is featured in the Sunday
earned a SIta Certificate of recycling. In 008 we will be
times 100 Best Companies to Work For. the Group has
working hard to make an even greater effort to reduce our
been placed in the top 100 consistently every year and
environmental impact.
(b) Charitable donations
has recently moved from a 1 star to a star accreditation
receiving particular commendations for culture, team sprit,
people development and leadership. In addition, the Group
the Group made charitable donations of £89,800 during the
has engaged an external organisation to implement on-line
year (006: £9,16). Included in donations are amounts
exit interviews with a view to enhancing its knowledge of
made to various local charities serving the communities in
employee engagement and satisfaction issues.
which the Group operates. It is the Group’s policy not to
make political donations.
Communication with employees is effected through Group
newsletters, the Company’s Intranet, information bulletins,
In eMea, Michael page Switzerland participated in the
briefing meetings conducted by senior management and
Course de l’escalade in support of the red Cross, while
formal and informal discussions. Interim and annual reports
in Michael page Germany, a candidate charitable donation
are available to all staff. Informal communication is further
programme was introduced in aid of aktion Mensch,
facilitated by the Group’s divisional organisation structure.
a disability charity. Michael page France has been working with
several charities for a number of years. they have helped young
people develop social skills and confidence through “Sport
Dans la Ville”, the provision of employment opportunities for
older people through “la Fondation de la éme Chance” and
“Cadraxion 78”, the encouragement of employment of people
In the americas, Michael page uSa was ranked number 1
executive recruitment firm in new York by Crains in both
006 and 007, voted ‘one of the best places to work in
Connecticut’ by the hartford Business Journal and voted
‘one of the best places to work in Massachusetts’ by the
Boston Business Journal.
annual report 007
(d) Equal opportunity and diversity
Working party was formed to review the policies, procedures
the Group endorses and supports the principles of equal
employment opportunity. It is the policy of the Group to
and systems of the Company to ensure compliance with the
legislation once introduced.
provide equal employment opportunity to all, which ensures
the recommendations made are fully implemented by
that all employment decisions are made, subject to its legal
the Company. additionally, we participate in a number of
obligations, on a non-discriminatory basis. Due consideration
external initiatives such as the Global Graduates and the
is given to the recruitment, promotion, training and working
Brokerage, a charity whose aim is to increase the ambition
environment of all staff including those with disabilities.
and employability of young people in the 11 inner-city
It is the Group’s policy to encourage the training and further
london boroughs.
development of all its employees where this is of benefit to
the individual and to the Group.
(e) Health and safety
throughout 007, the Group monitored the diversity of its
uK employees, 87% of whom to date have completed the
voluntary request for information. the analysis indicates
a split of % female, 6% male, and regarding origin,
88% white, 11% ethnic origin and 1% declining to answer.
It is the policy of the Group to take all reasonable and
practicable steps to safeguard the health, safety and welfare
of its employees, visitors and other persons who may be
affected by its activities. In order to meet these responsibilities,
the Group will:
the uK 001 Census showed a total ethnic population of
• assess the risks to health and safety;
7.9%. Similar monitoring will be carried out during 008.
the Group recognises the importance of diversity in the
workplace for both our own and our clients’ businesses.
We are committed to increasing the recognition of our
•
implement safe systems at work;
• provide information, instruction and training;
• establish and maintain emergency procedures; and
brand amongst a more diverse audience, and to encourage
•
regularly review health and safety policies and
development of an increasingly diverse candidate database
procedures.
together with our workforce. our monitoring of our candidate
databases confirms that the brand attracts candidates from a
wide range of backgrounds. We participate in the Interbank
Diversity Forum and work with organisations like Global
Graduates where we strive to ensure that we offer our clients
the most qualified candidates on the basis of their relevant
aptitudes, skills and abilities and that such candidates are
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. our medical
insurers also provide a hr counselling helpline covering
stress, legal issues and consumer rights.
drawn from diverse backgrounds.
(f) supplier payment policy
the Group continues to participate in the race for
It is the policy of the Group to agree appropriate terms
opportunity, part of Business in the Community, a uK
and conditions for transactions with suppliers (by means
movement of over 700 member companies whose purpose
ranging from standard written terms to individually negotiated
is to inspire, challenge and support business in improving its
contracts) and that payment should be made in accordance
impact on society. as a result, the Group has taken a number
with those terms and conditions, provided that the supplier
of proactive steps to enhance its position on diversity and
has also complied with them.
works closely with a number of clients to share ideas/best
practice, and to offer expertise to minority groups.
the Company acts as a holding Company for the Group.
Creditor days for the Company were nil (006: nil) as the
Michael page is also a member of the employers Forum on
Company does not undertake any transactions with suppliers.
age (eFa), an independent network of leading employers
the Group’s creditor days at the year end were 7 (006:
which sets the agenda for age and employment issues in
days).
the uK. the membership of eFa lists over 00 organisations,
from central and local government to major multinational
corporations. upon introduction of the employer equality
(age) regulations in october 006, Michael page was
nominated for an award by the eFa for best implementation
of the legislation in its sector. Following the release of the
legislation on age discrimination, an age Discrimination
Statement of Directors’ responsibilities
the Directors are responsible for preparing the annual report
and the financial statements. the Directors are required to
prepare financial statements for the Group in accordance with
International Financial reporting Standards (IFrS) and have
also elected to prepare financial statements for the Company
6
MIChael paGe InternatIonal
in accordance with IFrS. Company law requires the Directors
• Corporate Governance (the Board and its operation)
to prepare such financial statements in accordance with
IFrS, the Companies act 198 and article of the IaS
regulation.
International accounting Standard 1 requires that financial
statements present fairly for each year the company’s financial
position, financial performance and cash flows. this requires
the faithful representation of the effects of transactions, other
events and conditions in accordance with the definitions and
recognition criteria for assets, liabilities, income and expenses
• Corporate Governance (nomination Committee)
• Corporate Governance (Board appointments)
• remuneration report (annual bonus plan)
• remuneration report (Directors’ interests and share
ownership requirements)
• notes to the accounts (note 18: Called up Share
Capital)
set out in the International accounting Standards Board’s
•
Shareholder Information and advisers (Memorandum and
‘Framework for the preparation and presentation of Financial
articles of association)
Statements’. In virtually all circumstances, a fair presentation
will be achieved by compliance with all applicable International
Financial reporting Standards.
Directors are also required to:
each of the above sections is incorporated by reference into,
and forms part of, this Directors’ report.
Information to auditors
• properly select and apply accounting policies;
each of the Directors at the date of approval of this report
• present information, including accounting policies, in a
confirms that:
manner that provides relevant, reliable, comparable and
1. so far as the Director is aware, there is no relevant audit
understandable information; and
information of which the company’s auditors are unaware;
•
provide additional disclosures when compliance with the
and
specific requirements in IFrS is insufficient to enable users
. the Director has taken all the steps that he ought to have
to understand the impact of particular transactions, other
taken as a Director to make himself aware of any relevant
events and conditions on the entity’s financial position and
audit information and to establish that the Company’s
financial performance.
the Directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any
auditors are aware of that information. this confirmation
is given and should be interpreted in accordance with the
provisions of sZa of the Companies act 198.
time the financial position of the Company, for safeguarding
the assets, for taking reasonable steps for the prevention
auditors
and detection of fraud and other irregularities and for the
preparation of a Directors’ report and Directors’ remuneration
report and operating and financial review which comply with
the requirements of the Companies act 198.
Deloitte & touche llp are willing to continue in office and
accordingly resolutions to re-appoint them as auditors and
authorising the Directors to set their remuneration will be
proposed at the forthcoming annual General Meeting.
the directors are responsible for the maintenance and
annual General meeting
integrity of the company’s website.
legislation in the united Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
Share capital, restrictions on transfer of shares and
other additional information
the resolutions to be proposed at the annual General Meeting
to be held on May 008, together with explanatory notes,
appear in the notice of Meeting set out on pages 91 to 9.
By order of the Board
to the extent not discussed in this Directors’ report,
information relating to the Company’s share capital structure,
kelvin Stagg
restrictions on the holding or transfer of its shares or on the
exercise of voting rights attached to such securities required
by Section 99 of the Companies act 006 is set out in the
following sections of the annual report:
Company Secretary
March 008
annual report 007
7
Corporate
goVernance
the Board of Directors has a strong commitment to high
all Directors have access to the advice and services of the
standards of corporate governance and has made significant
Company Secretary, who is responsible for ensuring that
progress in applying the main and supporting principles of
Board procedures and applicable rules and regulations are
corporate governance as recommended in Section 1 of the
observed. there is an agreed procedure for Directors to
Combined Code on Corporate Governance, (the “006 FrC
obtain independent professional advice, if necessary, at the
Code”), for the year ended 1 December 007.
Company’s expense.
Compliance with the 2006 fRC Code
the Directors consider that the Company has complied with
all the Code provisions set out in Section 1 of the 006 FrC
Code throughout the year ended 1 December 007.
the Board and its operation
the Board meets regularly throughout the year. It has a
formal schedule of matters reserved to it and delegates
specific responsibilities to Committees. During the meetings,
the Board formally considers 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
the Board of Michael page International plc is the body
Board level. the structure of the Group facilitates the day to
responsible for corporate governance, establishing policies
day running of the business and enables efficient and effective
and objectives, and the management of the Group’s
communication of issues to the Board when required.
resources. It is the Group’s policy that the roles of Chairman
and Chief executive are separate.
the main Board currently comprises the Chairman, who has
no operational responsibilities, three executive Directors and
four independent non-executive Directors.
all Directors are subject to retirement by rotation and
re-election by the shareholders in accordance with the articles
of association, whereby one third of the Directors retire by
rotation each year. all Directors are subject to election by the
shareholders at the first annual General Meeting following
their appointment. all Directors are subject to re-election
every three years in accordance with the 006 FrC Code.
ruby McGregor-Smith will retire and offer herself for
election. Steve Ingham and Dr tim Miller 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 commitment to their role.
the Board is therefore pleased to support their re-election
at the forthcoming annual General Meeting.
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 in 007.
the terms of reference for the audit, remuneration and
nomination Committees are available on request and can
be found on the Group’s website. their composition and
the manner in which they discharge their responsibilities are
described below.
the executive Board, a Committee of the Main Board, meets
formally at least four times a year, and is responsible for
assisting the Chief executive in the performance of his duties,
including development and implementation of strategy,
operational plans, policies, procedures and budgets.
During the year, four regional Boards were established as
Committees of the Main Board, for the uK, eMea, asia
pacific and the americas. each regional Board meets at
least four times a year.
8
MIChael paGe InternatIonal
audit Committee
i.
from which the external auditor is excluded;
the audit Committee comprises the independent non-
executive Directors and is chaired by Stephen Box.
ii. for which the external auditor can be engaged without
referral to the audit Committee; and
their relevant qualifications and experience are shown in their
iii. for which a case-by-case decision is required, which
biographies on the Board of Directors page 0 and 1.
includes all engagements over certain fee limits.
the Committee met four times in 007 to fulfil its duties and
the following areas are considered to be unacceptable
included attendance by the external auditors where required.
for the external auditors to undertake:
the Committee also met with the external auditors during
the year without the presence of management.
In 007 the audit Committee discharged its responsibilities
as set out in the terms of reference which can be found on
our website. Its principal tasks are to review the Group’s
internal controls and internal audit reports, review the scope
of the external audit, consider issues raised by the external
auditors, and review the half-yearly and annual accounts
before they are presented to the Board, focusing in particular
on accounting policies and compliance, and areas of
•
selection, design or implementation of key financial
systems;
•
maintaining or preparing the accounting books and
records or the preparation of financial accounts or
other key financial data;
• provision of outsource financial systems;
•
provision of outsource operational management
functions;
• recruitment of senior finance or other executives;
management judgement and estimates.
• secondment of senior finance or other executives;
Objectivity and independence of external auditors
Deloitte & touche llp are employed to perform work in
addition to their statutory duties where it is felt that they are
best placed to carry out the engagement as a result of their
being the Group’s auditors. all other work is awarded on the
basis of competitive tender.
the objectivity and independence of the external auditor is
safeguarded by:
a. obtaining assurances from the external auditor that
adequate policies and procedures exist within its firm to
ensure the firm and its staff are independent of the Group
by reason of family, finance, employment, investment and
business relationships (other than in the normal course
of business);
b. enforcing a policy concerning the provision of non-audit
services by the auditor which governs the types of work:
• provision of internal audit services;
• valuation services or fairness opinions; and
•
any services specifically prohibited to be provided
by a listed company’s external auditors under uK
regulations.
the following criteria also need to be met before the external
auditors are contracted to provide such services:
•
the firm has the necessary skills and experience to
undertake the work;
•
there are no potential conflicts that may arise as a
result of carrying out this activity;
•
the external audit firm is subject to the company’s
normal tendering processes; and
•
in addition to the normal authorisation procedures and
prior to inclusion in a tender, approval has to be given
by the Group Finance Director and, if the fee exceeds
a certain level, the audit Committee.
annual report 007
9
c. enforcing a policy of reviewing all cases where it is
Due to this philosophy of nurturing our own talent, succession
proposed that a former employee of the external auditors
planning is inherently a key part of the process. We do not
be employed by the Group; and
make promotions or move people within the business unless
d. monitoring the external auditors’ compliance with
applicable uK ethical guidance on the rotation of audit
partners.
Remuneration Committee
the remuneration Committee comprises the independent
non-executive Directors and is chaired by Dr tim Miller.
the Committee reviews the Group’s policy on the Chairman’s,
executive Directors’ and senior executives’ remuneration and
terms of employment, makes recommendations upon this
along with the specific level of remuneration to the Board,
and also approves the provision of policies for the
incentivisation of senior employees including share schemes.
the Committee meets at least twice a year and is also attended
there is a clear successor for the vacant position. It is therefore
one of the key responsibilities of all levels of management,
and not just the Board, to have a clear plan of development
for their direct reports.
Board appointments
the Board follows formal and transparent procedures
when appointing directors. the nomination Committee
identifies a shortlist of suitable candidates for non-executive
appointments. all the candidates are interviewed by the
Chairman and the Chief executive, and in the case of the most
recent appointment, all candidates in the final shortlist were
interviewed by the nomination Committee. evaluations of all
candidates are discussed with all members of the nomination
Committee and the recommendation is subsequently made
by the Chief executive, except when his own remuneration
to the Board.
is under consideration. the remuneration report includes
information on the Directors’ service contracts. the terms
Induction and training programme
of reference of the remuneration Committee can be found
on our website.
nomination Committee
the nomination Committee comprises the non-executive
Directors and is chaired by Sir adrian Montague. It is
responsible for making recommendations to the Board on
new appointments, as well as making recommendations as
to the composition of the Board generally, and the balance
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 consist of meeting senior management, site visits
and attending internal conferences. In addition, information
is provided on the Company’s services, Group structure,
Board arrangements, financial information, major competitors
and major risks. after an initial induction phase, updates are
between executive and non-executive Directors appointed
provided on a periodic basis.
to the Board. the terms of reference of the nomination
Committee can be found on our website.
Performance evaluation
During the year, the Committee recommended the
the Board, as part of its commitment to ensuring
appointment of a non-executive Director. Detailed role
effectiveness and evaluating its performance together with
profiles were agreed by the Committee before a shortlist of
that of its Directors and Committees, conducted an internal
potentially suitable candidates was prepared to go forward
review comprising a questionnaire concerning all aspects of
to an interview process. this resulted in the recommendation
procedure and effectiveness.
of the appointment of ruby McGregor-Smith.
Succession planning
one of the basic premises behind the strategic development
of the Michael page business is that growth is organic rather
than through acquisitions of companies or hiring senior people
in non-support roles. In order to achieve this organic growth
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 evaluation were reported
to the Board and where areas of improvement have been
identified, actions have been agreed upon and training will
we require good people. It is therefore one of the fundamental
be provided where required.
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 individuals.
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
0
MIChael paGe InternatIonal
account any comments made by the executive Directors.
the Group’s particular needs and aim to safeguard Group
this evaluation is carried out annually.
assets, ensure proper accounting records are maintained
and that the financial information used within the business
attendance at meetings
and for publication is reliable.
the number of meetings of the Board and Committees and
individual attendance by the members of the Committees
only are shown in Fig..
Internal control
the responsibilities of the Directors in respect of internal
any system of internal control can only provide reasonable,
but not absolute, assurance against material misstatement
and loss. Key elements of the system of internal control are
as follows:
• Group organisation.
control are defined by the Financial Services authority’s listing
the Board of Directors meets at least ten times a year,
rules which incorporate a Code of practice known as the
focusing mainly on strategic issues, operational and
Combined Code, which requires that Directors review the
financial performance. there is also a defined policy on
effectiveness of the Group’s system of internal controls. this
matters strictly reserved for the Board. the Managing
requirement stipulates that the review shall cover all controls
Director of each operating division is accountable for
including operational, compliance and risk management,
establishing and monitoring internal controls within
as well as financial. Internal Control Guidance for Directors on
that division;
the Combined Code (“the turnbull report”) was published in
September 1999, updated october 00.
• annual business plan.
the Board has assessed existing risk management and
internal control processes during the year ended 1
December 007 in accordance with the turnbull guidance.
the Board believes it has the procedures in place such that
the Group has fully complied for the financial year ended
1 December 007 and at the date of this report.
the Directors are responsible for the Group’s system of internal
financial and operational controls which are designed to meet
the Group has a comprehensive budgeting system with
an annual budget approved by the Board;
• financial reporting.
Detailed monthly reports are produced showing
comparisons of results against budget, forecast and the
prior year, with performance monitoring and explanations
provided for significant variances. the Group reports to
shareholders on a quarterly basis;
Fig.3. Attendance at Board Meetings (Committee attendance shown for Committee members only)
Total meetings
Meetings attended
Executive
Steve Ingham
Charles-Henri Dumon
Stephen Puckett
Total meetings
Non-Executive
Sir Adrian Montague CBE
Stephen Box
Ruby McGregor-Smith
(appointed 23 May 2007)
Dr Tim Miller
Hubert Reid
annual report 007
Main Board
11
11
11
11
Main Board
Audit
Committee
Remuneration
Committee
Nomination
Committee
11
11
11
5
11
11
4
4
2
4
4
2
2
–
2
2
2
2
2
–
2
2
1
• quarterly reforecasting.
place for the year under review and up to the date of approval
the Group prepares a full-year reforecast on a quarterly
basis showing, by individual businesses/disciplines, the
results to date and a reforecast against budget for the
remaining period up to the end of the year;
• Audit Committee.
there is an established audit Committee whose activities
are previously described;
• financial and operational controls.
Controls and procedures are documented in policies and
procedures manuals. Individual operations complete an
annual Self-Certification Statement. each operational
manager, in addition to the finance function for that
operation, confirms the adequacy of their systems
of internal control and their compliance with Group
policies. the Statement also requires the reporting of any
of the annual report and accounts.
Board contact with shareholders
Communications with shareholders are given a high priority.
the main contact between the Board and shareholders is
through the Chief executive and the Group Finance Director.
they undertake two major investor “roadshows” each
year in February/March and august/September, in which
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.
Shareholders are invited to attend the annual General
Meeting where they are able to discuss any concerns with
significant control issues that have emerged so that areas
the non-executive Directors.
of Group concern can be identified and experience can
be shared;
• risk management.
Identification of major business risks is carried out at
Group level in conjunction with operational management
and appropriate steps taken to monitor and mitigate
risk;
• public interest disclosure policy (whistleblowing).
a procedure is in place where staff may, in confidence,
raise concerns about possible improprieties relating to
financial reporting or other matters; and
•
internal audit activities.
When requested by shareholders, individual matters can be
discussed with the Chairman or Senior Independent Director.
the Group also has a website (www.michaelpage.co.uk) with
an investor section that contains Company announcements
and other shareholder information.
annual Report
the annual report is designed to present a balanced and
understandable view of the Group’s activities and prospects.
the Chairman’s Statement, operational review and Financial
review provide an assessment of the Group’s affairs and
position. the annual report and Interim report are sent to
all shareholders on the register.
the Directors acknowledge their responsibility for the
these are performed throughout the year by a dedicated
preparation of the annual report. the Statement of Directors’
Internal audit Manager supported by members of the
responsibilities is shown in the Directors’ report. a statement
head office finance function, who are independent of the
by the auditors about their reporting responsibilities is shown
operations and by operational finance staff on operations
in the Independent auditors’ report on pages 0 and 1.
outside their own regions. Businesses are visited on a
rotational basis and their controls are assessed in their
Going concern
effectiveness to mitigate specific risks. In addition, there is
a regular review of these risks and changes are made to
the risk profile where necessary. all internal audit activities
are reported to the audit Committee. During the year,
the Board reviewed internal audit arrangements and
concluded that there is currently no need for a separate
and distinct internal audit department.
the 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
the Board confirms that there is an ongoing process for
months based on normal business planning and control
identifying, evaluating and managing the significant risks
procedures.
faced by the Group and that the processes have been in
MIChael paGe InternatIonal
Remuneration
report
Scope and membership of Remuneration Committee
General Meetings. additional details of service contracts are
the remuneration Committee, which meets not less than
shown on pages 8 and 9.
twice a year, comprises the independent non-executive
the remuneration of the non-executive Directors is
Directors. the Chief executive attends the meetings as
determined by the Board. the non-executive Directors do
required, except when his own remuneration is under
not receive any pension or other benefits, other than out-of-
consideration. the purpose of the remuneration Committee
pocket expenses, from the Group, nor do they participate
is to review, on behalf of the Board, the remuneration policy
in any of the bonus or share option schemes.
for the Chairman, executive Directors and other senior
executives and to determine the level of remuneration,
incentives and other benefits, 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 that of
the shareholders.
the Committee has continued to review the remuneration of
the executive Directors with regard to the need to maintain a
balance between the constituent elements of salary, incentive
and other benefits. It receives advice from independent
remuneration consultants, new Bridge Street Consultants
llp, and makes comparisons with similar organisations.
no Directors, other than the members of the remuneration
Committee, provided material advice to the Committee on
Directors’ remuneration.
Remuneration policy
the remuneration agreed by the Committee for the executive
Directors contains the following elements: a base salary and
benefits, an annual bonus reflecting Group performance,
incentive share plan award and pension benefits.
the following sections provide an outline of the Company’s
remuneration policy during 007. Shareholders were
consulted on the policy at the time of approval of the Incentive
Share plan in December 00.
Base salary and benefits
the Committee establishes salaries and benefits by reference
to those prevailing in the employment market generally
for executive Directors of comparable status and market
value, taking into account the range of incentives described
elsewhere in this report, including a performance bonus.
reviews of such base salary and benefits are conducted
annually by the Committee.
the objective of the Group’s remuneration policy is to attract
annual bonus plan
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.
It is the Company’s policy that all executive Directors’
service contracts contain a 1-month notice period.
the non-executive Directors do not have service contracts
with the Company. they are appointed for an initial term of
three years and thereafter may be reappointed for a further
annual bonuses for the executive Directors are based on
the division of a pool of profits earned during the financial
year. this approach is similar to the bonus arrangements
for other employees. In 007, the bonus pool for executive
Directors was equal to .8% (006: .8%) of profits
earned above a threshold equal to half of targeted profits for
the year. In addition, if profits exceed 1.1 times (006: 1.
times) the targeted level, then an additional 1.% (006:
1.%) of profits earned above the targeted level is added
two terms of three years, subject to re-election at annual
to the bonus pool.
annual report 007
profits are defined as Group profit before taxation, exceptional
these awards are satisfied in shares of the company which
items and before the executive Directors’ annual bonus
are purchased and held by the employee Benefit trust.
charges and charges or credits resulting from the Incentive
Share plan described below or other share option grants.
two thirds of these shares (“Deferred Share awards”) are
subject to a three-year deferral period during which they will
the bonus pool as described above is capable of variation by
be forfeited if the relevant director or senior employee leaves,
the Committee both up and down, by up to 10%, to reflect
other than in “compassionate circumstances”. the remaining
the Committee’s view on the performance of the Company
third (“performance Share awards”) are also to be deferred
relative to its directly comparable peers. the Committee
for three years but are subject to earnings per share (“epS”)
increased the 007 bonus pool by 10% in recognition of
growth targets over the three year period.
both absolute and peer group comparator performance.
performance share awards of up to 0% of a Director’s or
the targeted level of profits for 007 was £17.7m (006:
senior employee’s salary only vest if epS grows by an average
£91.0m) and was set at the beginning of 007 by reference
of % over the growth in uK rpI per annum over the three
to market expectations and internal forecasts at that time.
year period. any excess between 0% and 7% of salary only
the Committee retains the discretion to review this
vest to the extent that epS grows by 7.% over the growth
arrangement and set different rates and thresholds as it
in uK rpI per annum over the three year period. Finally, to
deems appropriate for the business.
the extent that the performance share award is greater than
the target for 008 has been set and will be disclosed in
next year’s report. the threshold in 008 for awarding the
higher level of bonus is set at 1.1 times the targeted level
of profits.
unlike all other employees who receive their annual bonuses
in cash, in the event that the executive Director’s annual
bonus entitlement is greater than 100% of salary, only an
amount equal to the executive’s salary is paid in cash.
to reward service over a longer period, any excess above
7% of an executive’s salary, the hurdle is 10% over the
growth in uK rpI per annum over the three-year period.
the Committee believes these are the most appropriate
measures of the underlying performance of the Group.
If awards do not vest after three years, then they lapse.
the Committee retains the discretion to review the proportion
of profits dedicated to the Incentive Share plan in the light
of the growth in the size of the Company, its profitability and
the number of executive Directors.
the individual’s salary level is deferred, paid into an employee
the Committee reviewed the Incentive Share plan with regards
benefit trust and invested in the Company’s shares with no
to the Company’s current operations and prospects.
matching investment by the Company. Based on the 007
results, the amount deferred for the three executive Directors
is £.0m (006: £1.7m).
Based on the 007 results, the total award available was
£9,196,00. of this, £,78,90 (0%) is for the executive
Directors. awards totalling £6,1,000 will be made to
Such shares are reserved for the executive and vest in equal
senior employees. Details of the awards made in 007 to
annual tranches over two years, normally so long as the
the executive Directors are disclosed on pages 6 and 7.
executive is still in employment at that time.
the profit and loss account for the year carries a charge for the
Directors annual bonus paid in cash while the deferred amount
is charged in subsequent years when the shares vest.
Executive Share Option Scheme
the executive Directors and senior employees are eligible
to participate in the executive Share option Scheme.
no payment is required on the grant of an option and no share
Incentive Share Plan for Executive Directors and
options are granted at a discount. Benefits received under
Senior Employees
In December 00, shareholders approved a new Incentive
Share plan for executive Directors and senior employees.
the current level of award is 6% (006: 6%) of Group
profits of the preceding year. not more than 0% of this
figure is available for awards to the executive Directors,
with the balance available for awards to senior employees.
Group profits are defined as Group profit before taxation and
before exceptional items and charges or credits resulting from
the plan or other share option grants, as described below.
the executive Share option Scheme are not pensionable.
Share options can only be exercised on the achievement
of performance criteria which are disclosed in note 18 of
the Financial Statements. retesting after the initial vesting
period is not permitted for any grants awarded in 00 and
subsequent years.
MIChael paGe InternatIonal
Emoluments
the aggregate emoluments, excluding pensions, of the Directors of the Company who served during the year were as
follows:
2007
Executive
Steve Ingham (Note 1)
Charles-Henri Dumon
Stephen Puckett
Non-Executive
Sir Adrian Montague CBE
Stephen Box
Ruby McGregor-Smith (appointed 23 May 2007)
Dr Tim Miller
Hubert Reid
Total
2006
Executive
Steve Ingham (Note 1)
Terry Benson (resigned 6 April 2006) (Note 6)
Charles-Henri Dumon
Stephen Puckett
Non-Executive
Sir Adrian Montague CBE
Stephen Box
Dr Tim Miller
Hubert Reid
Total
Salary
and fees
£’000
Benefits
(Note 2)
£’000
Annual Bonus
(Note 3)
£’000
Deferred Annual
Bonus (Note 3)
£’000
Incentive Share
Plan (Note 5)
£’000
360
275
275
101
45
26
41
40
22
139
22
–
–
–
–
–
360
275
275
–
–
–
–
–
1,173
924
924
–
–
–
–
–
718
718
718
–
–
–
–
–
Total
£’000
2,633
2,331
2,214
101
45
26
41
40
1,163
183
910
3,021
2,154
7,431
Salary
and fees
£’000
Benefits
(Note 2)
£’000
Annual Bonus
(Note 3)
£’000
Deferred Annual
Bonus (Note 3)
£’000
Incentive Share
Plan (Note 4)
£’000
325
124
260
260
75
38
35
32
33
12
191
26
–
–
–
–
325
–
260
260
–
–
–
–
653
–
538
538
–
–
–
–
417
–
417
417
–
–
–
–
Total
£’000
1,753
136
1,666
1,501
75
38
35
32
1,149
262
845
1,729
1,251
5,236
notes to the emoluments:
1. Steve Ingham is the highest paid director.
. Benefits include, inter alia, items such as company car or cash alternative, fuel, cash in lieu of pension contributions,
and medical insurance. Charles-henri Dumon’s benefits also include housing and relocation costs, now ceased.
. 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 two years. the amount of the annual bonus earned
by the remaining executive Directors in 007, but deferred to future periods, was £.0m (006: £1.7m).
. represents the non-performance proportion of the Incentive Share plan awarded in March 007.
. represents the non-performance proportion of the Incentive Share plan to be awarded in March 008 and the performance
vesting proportion of the March 00 award.
6. under the terms of his contract, terry Benson gave notice of his intention to retire from the Company in December 00.
he resigned as a Director of the Company on 6 april 006 but remained employed by the Company as part of his notice
period during which he was paid a further £0.m.
annual report 007
Pension benefits
executive Directors are eligible to participate in the Group pension plan which is a defined contribution scheme. each executive
Director receives 0% of their base salary or a cash alternative.
Pension contributions
Steve Ingham
Terry Benson (resigned 6 April 2006)
Charles-Henri Dumon
Stephen Puckett
2007
£’000
2006
£’000
72
–
38
55
54
27
39
48
Directors’ interests and share ownership requirements
executive Directors are required to build and hold, as a minimum, a direct beneficial interest in the Company’s ordinary shares
equal to their respective base salary. as at 1 December 007 all executive Directors comply with this requirement.
the beneficial interests of the Directors who served during the year and their families in the ordinary shares of the Company of
1p each are shown below. For the Directors in office at the balance sheet date there has been no change in these interests from
1 December 007 to March 008.
Ordinary shares
of 1p
Direct Holding
Direct Holding
Direct Holding
Direct Holding
At 1 January 2007
Acquired in year
Vesting of plans
Disposal in year
1,010,884
1,332,997
214,696
15,000
170,000
170,000
170,000
–
85,630
115,845
86,396
–
(96,514)
(415,845)
(97,566)
–
At 31 December
2007
1,170,000
1,202,997
373,526
15,000
Steve Ingham
Charles-Henri Dumon
Stephen Puckett
Stephen Box ‡
‡ Non-Executive Director
1. Steve Ingham transferred 78,96 shares from the Incentive Share plan and 9,117 from the Deferred annual Bonus to his
Direct holding in the year.
. Stephen puckett transferred 78,96 shares from the Incentive Share plan and 9,88 from the Deferred annual Bonus to
his Direct holding in the year.
no other Director has a holding in the Company.
incentive share plan
Details of awards made under the Incentive Share plan that remain outstanding at 1 December 007 are as follows:
Total award at 1 January 2007
Awarded during the year
Performance
shares
Non-
performance
shares
Total
shares
Performance
shares
Non-
performance
shares
Total
shares
Vested
in year
Total award at 31 December 2007
Performance
shares
Non-
performance
shares
Total
shares
Steve Ingham
91,297
182,595 273,892
Charles-Henri Dumon (Note 4)
91,297
182,595 273,892
Stephen Puckett
91,297
182,595 273,892
44,851
44,851
44,851
89,702 134,553 (78,946)
109,833
219,666
329,499
89,702 134,553 (78,946)
109,833
219,666
329,499
89,702 134,553 (78,946)
109,833
219,666
329,499
1. the value of the award made under the Michael page Incentive Share plan in 007 is £6,000 for each individual Director
and is based on the purchase price of the Company’s ordinary shares on March 007 of 6.p. the market value of the
shares vested in the year at the date of award was 1.0p.
. the total value of awards at 1 December 007 for each individual Director in office at the balance sheet date is £98,97
and is calculated using the closing market price of the Company’s ordinary shares at 1 December 007 of 88.0p.
6
MIChael paGe InternatIonal
. For awards made in 007, the base epS for the performance criteria is 1.p (006: 1.p).
. Charles-henri Dumon was granted deferred share options to acquire 89,70 ordinary shares and performance share options
to acquire ,81 ordinary shares under the Michael page Incentive Share plan 007. these options have a nil exercise price
and do not accrue dividends.
. the non-performance shares to be awarded in 008 have been included in the table of emoluments on page .
deferred Annual Bonus
as described on page , 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 two equal tranches
on the first two anniversaries of the grant. In 008, a total of £.0m will be awarded to the executive Directors, representing this
excess, and has been included in the emoluments table for the year as shown on page . there has been no charge made to
the income statement 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 pages 8 to 6. For full descriptions of the performance and
vesting conditions, see “annual Bonus plan” on pages and .
Details of awards made under the Deferred annual Bonus plan that remain outstanding at 1 December 007 are as follows:
Steve Ingham
Charles-Henri Dumon
Stephen Puckett
Total award at
1 January 2007
(shares)
180,709
181,547
184,122
Awarded
during the year
(shares)
140,501
115,758
115,758
Vested in year
(shares)
(66,394)
(67,321)
(67,694)
Total award at
31 December 2007
(shares)
254,816
229,984
232,186
the average market value of the shares vested in the year at the date of award was 0.8p.
Beneficial interests
the beneficial interests of the executive Directors who served during the year and their families in share options of the
Michael page International plc executive Share option Scheme at 1 December 007 were as follows:
Steve Ingham
Charles-Henri Dumon
Stephen Puckett
At
1 January
2007
(shares)
Exercised
in year
(shares)
At 31
December
2007
(shares)
Market price
at date of
exercise
(pence)
Date of Grant
2001
2004
2005
2001
2003
2004
2005
2001
2004
2005
234,441
(140,970)
93,471
50,000
50,000
291,016
200,000
50,000
50,000
(50,000)
–
–
50,000
(150,807)
(200,000)
(50,000)
140,209
–
–
–
50,000
234,441
(140,970)
93,471
50,000
50,000
(50,000)
–
–
50,000
560
560
–
560
560
560
–
560
560
–
Gains
made on
exercise
(pounds)
542,735
194,500
Exercise price
(pence)
Period of
exercise
175
171
2004-2011
2007-2014
–
190.75
2008-2015
580,607
953,200
194,500
175
83.4
171
2004-2011
2007-2013
2007-2014
–
190.75
2008-2015
542,735
194,500
175
171
2004-2011
2007-2014
–
190.75
2008-2015
1. the market price of the shares at 1 December 007 was 88.0p with a range during the year of 9.7p to 9.0p.
. no options were granted under the executive Share option Scheme to the executive Directors in 008.
annual report 007
7
total Shareholder Return (tSR)
the graph below shows total Shareholder return (tSr) for the Group and the FtSe Support Services index which, as it is the
sector in which the Company operates, is considered the most appropriate comparator index in the absence of a more directly
representative recognised index. a comparison with the FtSe 0 index is also given. the graph illustrates tSr for the financial
periods since flotation.
Versus FTSE250 and FTSE Support Services
31 December 2002
31 December 2003
31 December 2004
31 December 2005
31 December 2006
31 December 2007
330
310
290
270
250
230
210
190
170
150
130
110
90
70
50
324.1
216.9
211.6
209.0
111.6
100.6
190.8
166.6
90.0
126.2
104.1
72.2
129.5
127.9
74.1
75.0
71.8
61.4
FTSE250
FTSE Support Services
Michael Page International
Outside appointments
the remuneration Committee recognises that non-executive Directorships are a significant benefit in broadening executives’
experience. Subject to review in each case, the remuneration Committee’s general policy is that executive Directors may
accept non-executive Directorships with other companies, so long as there is no conflict of interest and their effectiveness is
not impaired. the executive is permitted to retain any fees for their service.
Service contracts
all executive Directors’ service contracts contain a twelve 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 twelve 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.
8
MIChael paGe InternatIonal
Contract date
Unexpired term at
31 December 2007
Notice period
Provision for
compensation
on early termination
Other termination
provisions
Executive
Steve Ingham
05/03/01
no specific term
12 months
Charles-Henri Dumon
13/06/03
no specific term
12 months
Stephen Puckett
Non-Executive
Sir Adrian Montague CBE
Stephen Box
Ruby McGregor-Smith
Dr Tim Miller
Hubert Reid
annual resolution
05/03/01
no specific term
12 months
27/02/07
27/02/07
23/05/07
15/08/05
25/02/06
26 months
26 months
29 months
7 months
14 months
None
None
None
None
None
12 months salary plus
other contractual benefits
12 months salary plus
other contractual benefits
12 months salary plus
other contractual benefits
None
None
None
None
None
None
None
None
None
None
None
None
None
Shareholders will be given the opportunity to approve the remuneration report at the annual General Meeting (resolution 6)
on May 008.
audit requirement
Within the remuneration report, the sections on emoluments, and Directors’ interests and share ownership requirements,
on pages to 7 inclusive, are audited. all other sections of the remuneration report are unaudited.
Dr tim miller
Chairman – remuneration Committee
March 008
annual report 007
9
audit
report
Independent auditors’ Report to the members of
our responsibility is to audit the financial statements and the
michael Page International plc
part of the Directors’ remuneration report to be audited in
We have audited the group and parent company financial
statements (the ‘‘financial statements’’) of Michael page
accordance with relevant legal and regulatory requirements
and International Standards on auditing (uK and Ireland).
International plc for the year ended 1 December 007 which
We report to you our opinion as to whether the financial
comprise Consolidated Income Statement, the Consolidated
statements give a true and fair view and whether the financial
and parent Company Statements of Changes in equity, the
statements and the part of the Directors’ remuneration
Consolidated and parent Company Balance Sheets, the
report to be audited have been properly prepared in
Consolidated and parent Company Cash Flow Statements
accordance with the Companies act 198 and, as regards
and the related notes 1 to 6. these financial statements
the Group financial statements, article of the IaS regulation.
have been prepared under the accounting policies set out
We also report to you whether in our opinion the information
therein. We have also audited the information in the Directors’
given in the Directors’ report is consistent with the financial
remuneration report that is described as having been
statements.
audited.
In addition we report to you if, in our opinion, the company
this report is made solely to the company’s members,
has not kept proper accounting records, if we have not
as a body, in accordance with section of the Companies
received all the information and explanations we require for
act 198. our audit work has been undertaken so that we
our audit, or if information specified by law regarding directors’
might state to the company’s members those matters we
remuneration and other transactions is not disclosed.
are required to state to them in an auditors’ report and for
no other purpose. to the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other
than the company and the company’s members as a body,
for our audit work, for this report, or for the opinions we
have formed.
Respective responsibilities of directors and auditors
We review whether the Corporate Governance Statement
reflects the company’s compliance with the nine provisions
of the 006 Combined Code specified for our review by
the listing rules of the Financial Services authority, and
we report if it does not. We are not required to consider
whether the board’s statements on internal control cover all
risks and controls, or form an opinion on the effectiveness
of the Group’s corporate governance procedures or its risk
the directors’ responsibilities for preparing the annual
and control procedures.
report, the Directors’ remuneration report and the
financial statements in accordance with applicable law
and International Financial reporting Standards (IFrSs) as
adopted by the european union are set out in the Statement
of Directors’ responsibilities.
We read the other information contained in the annual report
as described in the contents section and consider whether it is
consistent with the audited financial statements. We consider
the implications for our report if we become aware of any
apparent misstatements or material inconsistencies with the
financial statements. our responsibilities do not extend to any
further information outside the annual report.
0
MIChael paGe InternatIonal
Basis of audit opinion
Opinion
We conducted our audit in accordance with International
In our opinion:
Standards on auditing (uK and Ireland) issued by the auditing
practices Board. an audit includes examination, on a test
basis, of evidence relevant to the amounts and disclosures
in the financial statements and the part of the Directors’
remuneration report to be audited. It also includes an
assessment of the significant estimates and judgments made
by the directors in the preparation of the financial statements,
and of whether the accounting policies are appropriate to the
group’s and company’s circumstances, consistently applied
and adequately disclosed.
•
the Group financial statements give a true and fair view,
in accordance with IFrSs as adopted by the european
union, of the state of the Group’s affairs as at 1 December
007 and of its profit for the year then ended;
• the parent company financial statements give a true
and fair view, in accordance with IFrSs as adopted by
the european union as applied in accordance with the
provisions of the Companies act 198, of the state of the
parent company’s affairs as at 1 December 007;
We planned and performed our audit so as to obtain all
the information and explanations which we considered
necessary in order to provide us with sufficient evidence
to give reasonable assurance that the financial statements
• the financial statements and the part of the Directors’
remuneration report to be audited have been properly
prepared in accordance with the Companies act 198
and, as regards the Group financial statements, article
and the part of the Directors’ remuneration report to be
of the IaS regulation; and
audited are free from material misstatement, whether caused
by fraud or other irregularity or error. In forming our opinion
we also evaluated the overall adequacy of the presentation
of information in the financial statements and the part of the
Directors’ remuneration report to be audited.
•
the information given in the Directors’ report is consistent
with the financial statements.
Deloitte & touche llP
Chartered accountants and
registered auditors – london
March 008
annual report 007
1
financial
statements
Consolidated income statement ................................... 53
Consolidated statement of Changes in Equity ............. 54
statement of Changes in Equity – parent Company .... 55
Balance sheets .............................................................. 56
Cash flow statements ................................................... 57
notes to the Accounts ................................................... 58
1.
.
.
.
.
6.
7.
8.
9.
Significant accounting policies..........................8
Segment reporting ...........................................6
profit for the year ..............................................6
employee information .......................................6
Financial income/(expenses) .............................66
taxation on profits on ordinary activities ...........66
Current tax assets and liabilities .......................67
Dividends .........................................................67
earnings per ordinary share ..............................67
10. property, plant and equipment .........................68
11.
Intangible assets ..............................................69
1.
Investments......................................................69
1. trade and other receivables .............................71
1. trade and other payables .................................71
1. Bank overdrafts and loans ................................7
16. provisions for liabilities ......................................7
17. Deferred tax .....................................................7
18. Called-up share capital .....................................7
19. reserves ..........................................................76
0. Cash flows from operating activities .................77
1. Cash and cash equivalents ..............................77
. Financial risk management ...............................77
. Commitments ..................................................8
. Contingent liabilities ..........................................8
. events after the balance sheet date .................8
6. related party transactions ................................8
MIChael paGe InternatIonal
Consolidated Income Statement
Year ended 31 december 2007
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
Financial income
Financial expenses
Profit before tax
Income tax expense
Profit for the year
Attributable to:
Equity holders of the parent
Earnings per share
Basic earnings per share (pence)
Diluted earnings per share (pence)
The above results relate to continuing operations.
Note
2
2
2
5
5
6
3
9
9
2007
£’000
831,640
(353,546)
478,094
(328,662)
149,432
1,189
(3,180)
147,441
(45,707)
101,734
2006
£’000
649,060
(300,243)
348,817
(251,450)
97,367
821
(1,229)
96,959
(31,512)
65,447
101,734
65,447
31.1
30.6
19.6
19.0
annual report 007
Consolidated Statement of Changes in Equity
at 31 december 2007
Called-up
share
capital
£’000
3,326
Note
Share
premium
£’000
Capital
redemption
reserve
£’000
Reserve
for shares
held in the
employee
benefit trust
£’000
Currency
translation
reserve
£’000
Retained
earnings
£’000
Total
equity
£’000
–
–
–
–
–
–
37,952
–
–
–
37,952
37,952
424
(9,871)
304
74,713
68,896
–
–
–
–
232
–
–
–
–
232
656
–
–
–
–
–
–
970
–
–
970
(3,116)
(3,116)
–
–
(3,116)
(3,116)
–
65,447
65,447
(3,116)
65,447
62,331
–
(83,363)
(83,363)
–
–
–
–
–
–
38,190
(970)
–
12,425
12,425
(18,088)
(18,088)
(89,996)
(50,836)
(8,901)
(2,812)
50,164
80,391
–
–
–
–
(232)
238
–
–
–
6
3,332
3,332
37,952
656
(8,901)
(2,812)
50,164
80,391
–
–
–
–
(115)
–
57
–
–
–
–
–
–
–
–
–
8,683
–
–
–
(58)
8,683
3,274
46,635
–
–
–
–
115
–
–
–
–
–
115
771
–
–
–
–
–
(15,000)
–
1,161
–
–
(13,839)
8,127
8,127
–
–
8,127
8,127
–
101,734
101,734
8,127
101,734
109,861
–
–
–
–
–
–
–
(59,885)
(59,885)
–
–
(15,000)
8,740
(1,161)
–
5,528
5,528
(21,785)
(21,785)
(77,303)
(82,402)
(22,740)
5,315
74,595
107,850
Group
Balance at 1 January 2006
Currency translation differences
Net expense recognised directly in equity
Profit for the year
Total recognised (expense)/income for the year
Purchase of own shares for cancellation
Issue of share capital
Transfer to reserve for shares held in the employee
benefit trust
Credit in respect of share schemes
Dividends
Balance at 31 December 2006
Balance at 1 January 2007
Currency translation differences
Net income recognised directly in equity
Profit for the year
Total recognised income for the year
Purchase of own shares for cancellation
Purchase of shares held in the employee benefit trust
Issue of share capital
Transfer to reserve for shares held in the employee
benefit trust
Credit in respect of share schemes
Dividends
Balance at 31 December 2007
8
8
MIChael paGe InternatIonal
Statement of Changes in Equity – Parent Company
at 31 december 2007
Company
Balance at 1 January 2006
Profit for the year
Total recognised income for the year
Purchase of own shares for cancellation
Issue of share capital
Dividends
Balance at 31 December 2006
Balance at 1 January 2007
Profit for the year
Total recognised income for the year
Purchase of own shares for cancellation
Issue of share capital
Dividends
Balance at 31 December 2007
Note
8
8
Share
capital
£’000
3,326
–
–
(232)
238
–
6
3,332
Share
premium
£’000
Capital
redemption
reserve
£’000
Retained
earnings
£’000
Total
equity
£’000
–
–
–
–
37,952
–
37,952
37,952
424
246,988
250,738
–
–
9,376
9,376
9,376
9,376
232
(83,363)
(83,363)
–
–
232
656
–
(18,088)
(101,451)
38,190
(18,088)
(63,261)
154,913
196,853
3,332
37,952
656
154,913
196,853
–
–
(115)
57
–
(58)
3,274
–
–
–
8,683
–
8,683
46,635
–
–
1,565
1,565
1, 565
1, 565
115
(59,885)
(59,885)
–
–
115
771
–
(21,785)
(81,670)
8,740
(21,785)
(72,930)
74,808
125,488
annual report 007
Balance Sheets
at 31 december 2007
Non-current assets
Property, plant and equipment
Intangible assets
Investments
Deferred tax assets
Other receivables
Current assets
Trade and other receivables
Current tax receivable
Cash and cash equivalents
Total assets
Non-current liabilities
Other payables
Deferred tax liabilities
Current liabilities
Trade and other payables
Bank overdrafts
Bank loans
Current tax payable
Provisions for liabilities
Total liabilities
Net assets
Capital and reserves
Called-up share capital
Share premium
Capital redemption reserve
Reserve for shares held in the employee benefit trust
Currency translation reserve
Retained earnings
Total equity
Group
Company
Note
2007
£’000
2006
£’000
2007
£’000
2006
£’000
10
11
12
17
13
13
7
21
2
14
17
14
15
15
7
16
2
18
19
19
19
19
27,149
4,296
–
4,998
2,301
21,550
3,598
–
9,447
1,927
–
–
–
–
426,028
426,777
–
–
–
–
38,744
36,522
426,028
426,777
192,810
143,813
–
82,990
275,800
213
35,587
179,613
73,562
1,333
–
74,895
332
489
–
821
314,544
216,135
500,923
427,598
(680)
(17)
(697)
(1,130)
–
(1,130)
–
–
–
–
–
–
(115,405)
(83,525)
(302,702)
(191,595)
(47,433)
(25,300)
(17,859)
–
(43)
(39,150)
(11,704)
(192)
(47,433)
(25,300)
–
–
–
(39,150)
–
–
(205,997)
(134,614)
(375,435)
(230,745)
(206,694)
(135,744)
(375,435)
(230,745)
107,850
80,391
125,488
196,853
3,274
46,635
771
(22,740)
5,315
74,595
107,850
3,332
37,952
656
(8,901)
(2,812)
50,164
80,391
3,274
46,635
771
–
–
74,808
125,488
3,332
37,952
656
–
–
154,913
196,853
these financial statements were approved by the Board of Directors and authorised for issue on March 008.
on behalf of the Board of Directors.
s Ingham
Chief executive
6
s r Puckett
Group Finance Director
MIChael paGe InternatIonal
Cash Flow Statements
for the Year ended 31 december 2007
Cash generated from operations
Income tax (paid)/received
Net cash from operating activities
Cash flows from investing activities
Purchases of property, plant and equipment
Purchases of computer software
Proceeds from the sale of property, plant and equipment, and computer software
Interest received
Net cash used in investing activities
Note
20
Group
Company
2007
£’000
148,663
(36,519)
112,144
(11,927)
(1,579)
743
1,189
2006
£’000
78,827
(21,705)
57,122
(9,167)
(737)
1,210
821
(11,574)
(7,873)
2007
£’000
41,744
–
41,744
2006
£’000
29,234
2,446
31,680
–
–
–
–
–
–
–
–
–
–
Cash flows from financing activities
Dividends paid
Interest paid
Proceeds from bank loan
Repayment of bank loan
Issue of own shares for the exercise of options
Purchase of own shares for cancellation
Purchase of shares held in the employee benefit trust
(21,785)
(18,088)
(21,785)
(18,088)
(2,741)
25,300
(39,150)
8,740
(59,885)
(15,000)
(1,209)
39,150
(6,700)
38,190
(2,397)
25,300
(39,150)
8,740
(869)
39,150
(6,700)
38,190
(83,363)
(59,885)
(83,363)
–
–
–
Net cash used in financing activities
(104,521)
(32,020)
(89,177)
(31,680)
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Exchange gains/(losses) on cash and cash equivalents
Cash and cash equivalents at the end of the year
21
(3,951)
35,544
3,964
35,557
17,229
19,779
(1,464)
35,544
(47,433)
–
–
(47,433)
–
–
–
–
annual report 007
7
Notes to the Accounts
for the Year ended 31 december 2007
1. Significant accounting policies
Statement of compliance
the financial statements have been prepared under the historical cost convention and in accordance with current International
Financial reporting Standards (IFrS). the financial statements have been prepared in accordance with IFrS adopted for use in
the european union and therefore comply with article of the eu IaS regulation.
Basis of preparation
the financial statements of Michael page International plc consolidate the results of the Company and all its subsidiary undertakings.
as permitted by Section 0 of the Companies act 198, the profit and loss account of the Company has not been included as
part of these accounts. the Company’s profit for the financial year amounted to £0.7m (006: £6.7m).
Basis of consolidation
(i)
Subsidiaries
Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly,
to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential
voting rights that presently are exercisable or convertible are taken into account. the financial statements of subsidiaries are
included in the consolidated financial statements from the date that control commences until the date that control ceases.
(ii) transactions eliminated on consolidation
Intragroup balances and any unrealised gains and losses or income and expenses arising from intragroup transactions,
are eliminated in preparing the consolidated financial statements. unrealised gains arising from transactions with associates
and jointly controlled entities are eliminated to the extent of the Group’s interest in the entity. unrealised losses are eliminated
in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
(iii) employee Benefit trust
In accordance with uItF 8, accounting for employee Share ownership plan (eSop) trusts, shares in Michael page International
plc held by the trust are shown as a reduction in shareholder’s funds. other assets and liabilities held by the trust are consolidated
with the assets of the Group.
the policies, set out below, have been consistently applied to all the periods presented.
new standards and interpretations
In the current year, the Group has adopted IFrS 7 Financial Instruments: Disclosures which is effective for annual reporting periods
beginning on or after 1 January 007, and the related amendment to IaS 1 presentation of Financial Statements. the impact
of the adoption of IFrS 7 and the changes to IaS 1 has been to expand the disclosures provided in these financial statements
regarding the Group’s financial instruments and management of capital (see note ). Four Interpretations issued by the International
Financial reporting Interpretations Committee are effective for the current period. these are: IFrIC 7 applying the restatement
approach under IaS 9, Financial reporting in hyperinflationary economies; IFrIC 8 Scope of IFrS ; IFrIC 9 reassessment
of embedded Derivates; and IFrIC 10 Interim Financial reporting and Impairment. the adoption of these interpretations has not
led to any changes in the Group’s accounting policies.
at the date of authorisation of these financial statements, the following Standards and Interpretations impacting the Group which
have not been applied in these financial statements were in issue but not yet effective:
IFrS 8
IaS revised
IFrIC 11 IFrS
IFrIC 1
IFrIC 1
operating Segments
Borrowing Costs
Group and treasury Share transactions
Service Concession arrangements
Customer loyalty programmes
IFrIC 1 IaS 19
the limit of a Defined Benefit asset, Minimum Funding requirements and their Interaction
8
MIChael paGe InternatIonal
1. Significant accounting policies (continued)
new standards and interpretations (continued)
the Directors anticipate that the adoption of the above Standards and Interpretations in future periods will have little or no impact
on the financial statements of the Group when the relevant Standards come into effect for periods commencing on or after 1
January 008.
a) Revenue and income recognition
revenue, 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:
•
•
revenue 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;
revenue from permanent placements, which is based on a percentage of the candidate’s remuneration package, and is
derived from both retained assignments (income recognised on completion of defined stages of work) and non-retained
assignments (income recognised at the date an offer is accepted by a candidate and where a start date has been determined).
the latter includes revenue 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
•
revenue from amounts billed to clients for expenses incurred on their behalf (principally advertisements) is recognised when
the expense is incurred.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.
b) Cost of sales
Cost of sales consists of the salary cost of temporary staff and costs incurred on behalf of clients, principally advertising costs.
c) Gross profit
Gross profit represents revenue less cost of sales and consists of the total placement fees of permanent candidates, the margin
earned on the placement of temporary candidates and the margin on advertising income.
d) foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (“the functional currency”). the consolidated financial statements are presented in sterling,
which is the Company’s functional and presentation currency.
(ii) transactions and balances
Foreign currency transactions are translated into the respective functional currency using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from
the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in
the income statement.
(iii) Group companies
the results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have
a functional currency different from the presentation currency are translated into the presentation currency as follows:
• assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
• income and expenses for each income statement are translated at average exchange rates; and
• all resulting exchange differences are recognised as a separate component of equity.
annual report 007
9
1. Significant accounting policies (continued)
e)
Intangible assets
(i) goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets
of the acquired subsidiary at the date of acquisition. Goodwill on the acquisition of subsidiaries is included in intangible assets.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is not
amortised but is tested annually for impairment (see accounting policy h). Gains and losses on the disposal of an entity include
the carrying amount of goodwill relating to the entity sold.
(ii) computer software
Computer software acquired by the Group is stated at cost less accumulated amortisation (see below).
(iii) amortisation
amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets unless
such lives are indefinite. Goodwill has an indefinite useful life. Computer software is amortised at 0% per annum.
the cumulative amount of goodwill written off directly to retained earnings in respect of acquisitions prior to 1 December 1997
is £11.7m (006: £11.7m).
f) Property, plant and equipment
property, plant and equipment are stated at original cost less accumulated depreciation. Depreciation is calculated to write off the
cost less estimated residual value of each asset evenly over its expected useful life at the following rates:
• leasehold improvements
10% per annum or period of lease if shorter
• Furniture, fixtures and equipment
10-0% per annum
• Motor vehicles
% per annum
g)
Investments
Fixed asset investments are stated at cost less provision for impairment.
h)
Impairment of assets
assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. an impairment loss
is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. the recoverable amount is
the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable cash flows (cash-generating units).
a financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired.
a financial asset is considered to be impaired if objective evidence indicates that one or more events has had a negative effect
on the estimated future cash flows of that asset. For certain categories of financial asset, such as trade receivables, assets that
are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis. objective evidence
of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the
number of delayed payments in the portfolio, as well as observable changes in national or local economic conditions that correlate
with default on receivables.
the carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade
receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered
uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited
against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.
60
MIChael paGe InternatIonal
1. Significant accounting policies (continued)
i) taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
the tax currently payable is based on taxable profit for the year. taxable profit differs from profit as reported in the income statement
because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are
never taxable or deductible. the Group’s liability for current tax is calculated using tax rates that have been enacted or substantively
enacted by the balance sheet date.
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the
corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to
the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.
Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition
(other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the
accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the
Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse
in the foreseeable future.
the carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised.
Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to equity, in which
case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current
tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current
tax assets and liabilities on a net basis.
j) Pension costs
the Group operates defined contribution pension schemes. the assets of the schemes are held separately from those of the
Group in independently administered funds. the pension costs charged to the income statement represent the contributions
payable by the Group to the funds during each period.
k) leased assets
leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership
to the lessee. all other leases are classified as operating leases.
assets held under finance leases are recognised as assets of the Group at their fair value at the inception of the lease or, if lower,
at the present value of the minimum lease payments. the corresponding liability to the lessor is included in the balance sheet as
a finance lease obligation. lease payments are apportioned between finance charges and reduction of the lease obligation so as
to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss.
leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classed as operating leases.
rentals under operating leases are charged to the income statement on a straight-line basis over the term of the lease. Benefits
received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term.
l) Segment reporting
the consolidated entity operates in one business segment being that of recruitment services (primary segment). as a result no
additional business segment information is required to be provided. the consolidated entity operates in four geographic segments
(secondary segment), eMea, the united Kingdom, asia pacific and the americas.
annual report 007
61
1. Significant accounting policies (continued)
m) Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial statements in the period
in which the dividends are approved by the Company’s shareholders.
n) Share-based compensation
the Group operates a number of equity-settled, share-based compensation plans. their accounting treatments are described below:
(i) share option schemes
the fair value of the employee services received in exchange for the grant of the options is recognised as an expense. the total
amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the
impact of any non-market vesting conditions (for example, earnings per share). non-market vesting conditions are included in
assumptions about the number of options that are expected to become exercisable. at each balance sheet date, the estimate of the
number of options that are expected to become exercisable is revised. the Group recognises the impact of the revision of original
estimates, if any, in the income statement, and the corresponding adjustment to equity over the remaining vesting period.
(ii) deferred annual bonus and long term Incentive Plans
Where deferred awards are made to Directors and senior executives under either the Incentive Share plan or the annual Bonus
Scheme, to reflect that the awards are for services over a longer period, the value of the expected award is charged to the income
statement on a straight-line basis over the vesting period to which the award relates.
o) Repurchase of share capital
When share capital recognised as equity is repurchased, the amount of the consideration paid, including any directly attributable
costs, is recognised as a change in equity.
p) Provisions
a provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past
event, and it is probable that an outflow of economic benefits will be required to settle the obligation. provisions are measured at
the Directors’ best estimate of the expenditure required to settle the obligation at the balance sheet date, and are discounted to
present value where the effect is material.
q) Borrowing costs
all borrowing costs are accrued in the income statement on a time basis.
r) financial assets and liabilities
Financial assets and liabilities are recognised in the Group’s balance sheet when the Group becomes a party to the contractual
provisions of the instrument. non-derivative financial instruments comprise trade and other receivables, cash and cash
equivalents, loans and borrowings, and trade and other payables.
trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market
are classified as loans and receivables. loans and receivables are measured at amortised cost using the effective interest method,
less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when
the recognition of interest would be immaterial.
Cash and cash equivalents includes cash-in-hand, deposits held at call with banks, and other short-term highly liquid investments
with original maturities of three months or less. Bank overdrafts that are repayable on demand and form an integral part of the Group’s
cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.
trade and other payables are stated at cost. other financial liabilities, including borrowings, are initially measured at fair value,
net of transaction costs.
the Group has no financial assets ‘at fair value through profit or loss’, ‘held-to-maturity’ investments or ‘available for sale’ financial
assets under IFrS 7. additionally, as the Group has no derivative contracts at the balance sheet date, the requirements of the
recognition criteria under IaS 9 are also not relevant to the Group.
6
MIChael paGe InternatIonal
1. Significant accounting policies (continued)
s) Critical accounting estimates and judgements
the preparation of financial statements in conformity with IFrS requires the use of certain critical accounting estimates and
judgements. It also requires management to exercise judgement in the process of applying the Company’s accounting policies.
estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the circumstances. Management anticipate that any estimates and
judgements made do not have a material effect on the results.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies
that have the most significant effect on the amount recognised in the financial statements are described in the following notes:
• note 1 – revenue recognition
• note 17 – utilisation of tax losses
• note 18 – measurement of share-based payments
2. Segment reporting
the consolidated entity operates in one business segment, being that of recruitment services, and this is the Group’s primary
segment. as a result, no additional business segment information is required to be provided. the Group’s secondary segment is
geography. the segment results by geography are shown below:
(a) Revenue, gross profit and operating profit by geographic region
EMEA
United Kingdom
Asia Pacific Australia
Other
Total
Americas
Revenue
Gross Profit
Operating Profit
2007
£’000
2006
£’000
2007
£’000
2006
£’000
2007
£’000
2006
£’000
321,102
222,993
196,421
126,577
63,013
34,171
360,395
312,408
186,024
155,811
72,020
25,741
97,761
52,382
63,208
20,370
83,578
30,081
32,855
24,366
57,221
38,428
26,017
18,944
44,961
21,468
59,412
9,899
10,922
20,821
6,186
44,270
8,982
8,077
17,059
1,867
831,640
649,060
478,094
348,817
149,432
97,367
the above analysis by destination is not materially different to analysis by origin.
the analysis below is of the carrying amount of segment assets, liabilities and capital expenditure. Segment assets and liabilities
include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. the individual
geographic segments exclude income tax assets and liabilities. Capital expenditure comprises additions to property, plant and
equipment, motor vehicles and computer hardware/software.
annual report 007
6
2. Segment reporting (continued)
(b) Segment assets, liabilities and capital expenditure by geographic region
Total Assets
Total Liabilities
Capital Expenditure
EMEA
United Kingdom
Asia Pacific Australia
Other
Total
Americas
2007
£’000
2006
£’000
2007
£’000
2006
£’000
165,719
91,281
58,325
39,734
89,679
22,899
15,672
38,571
20,575
88,364
114,622
73,228
14,592
10,165
24,757
11,520
7,103
2,738
9,841
6,047
5,457
2,251
7,708
3,370
2007
£’000
5,934
5,043
436
303
739
1,790
Segment assets/liabilities/capital expenditure
314,544
215,922
188,835
124,040
13,506
Income tax
–
213
17,859
11,704
314,544
216,135
206,694
135,744
2006
£’000
3,899
3,113
958
386
1,344
1,548
9,904
the above table is shown gross of the effect of the multi-currency notional cash pool. Were the cash pool to be shown on a net
basis, this would reduce both the total liabilities in the uK and the total assets in eMea by £9.m each. Further information on
the notional cash pool is provided in note 1 on page 77.
(c) Revenue and gross profit by discipline
Finance and Accounting
Marketing, Sales and Retail
Legal, Technology, HR, Secretarial and Other
Engineering, Property & Construction, Procurement & Supply Chain
Revenue
Gross Profit
2007
£’000
496,506
119,103
134,908
81,123
2006
£’000
408,250
100,153
96,595
44,062
2007
£’000
2006
£’000
258,667
202,542
89,910
73,835
55,682
67,863
46,655
31,757
831,640
649,060
478,094
348,817
(d) Revenue and gross profit generated from permanent and temporary placements
Permanent
Temporary
Revenue
Gross Profit
2007
£’000
392,583
439,057
831,640
2006
£’000
276,346
372,714
649,060
2007
£’000
371,998
106,096
478,094
2006
£’000
261,000
87,817
348,817
the above analyses in notes (a) operating profit by geographic region, (b) segment liabilities by geographic region, (c) revenue and
gross profit by discipline (being the professions of candidates placed) and (d) revenue and gross profit generated from permanent
and temporary placements have been included as additional disclosure over and above the requirements of IaS1 “Segment
reporting”.
6
MIChael paGe InternatIonal
3. Profit for the year
Profit for the year is stated after charging/(crediting):
Employment costs (Note 4)
Exchange (gain)/loss*
Depreciation of property, plant and equipment - owned
Amortisation of computer software
Fees payable to the company’s auditors for the audit of the company’s annual accounts
Fees payable to the company’s auditors and their associates for other services to the group:
- The audit of the company’s subsidiaries pursuant to legislation
Total audit fees
- Other services pursuant to legislation
- Tax services
- Other services
Total non-audit fees
Loss/(profit) on disposal of property, plant and equipment, and computer software
Operating lease rentals - land and buildings
- plant and machinery
2007
£’000
2006
£’000
224,743
168,792
(240)
6,726
934
69
477
546
26
162
10
198
91
124
5,630
815
63
362
425
27
245
46
318
(48)
16,416
3,774
13,543
2,505
*In 007, this includes £0k of gains on foreign exchange swaps that economically hedge the fair value of loans with subsidiaries,
but for which hedge accounting was not applied. this comprises a gain of £78k which is directly offset by foreign exchange losses
on the underlying euro intercompany loans, with an offsetting £6k charge relating to the euro to Sterling interest differential.
4. Employee information
the average number of employees (including executive Directors) during the year and total number of employees (including
executive Directors) at 1 December 007 were as follows:
Management
Client services
Administration
employment costs (including Directors’ emoluments) comprised:
2007
Average No.
2006
Average No.
2007
Total No.
2006
Total No.
163
3,153
1,089
4,405
123
2,261
921
3,305
179
3,658
1,215
5,052
141
2,623
994
3,758
Wages and salaries
Social security costs
Pension costs - defined contribution plans
Equity settled transactions
2007
£’000
2006
£’000
186,873
140,806
24,096
18,366
7,017
6,757
5,141
4,479
224,743
168,792
Details of Directors’ remuneration for the year are provided in the Directors’ remuneration report on pages to 9.
no staff are employed by the parent company (006: nil) hence no remuneration has been disclosed.
annual report 007
6
5. Financial income/(expenses)
Financial income
Bank interest receivable
Financial expenses
Bank interest payable
6. Taxation on profits on ordinary activities
the charge for taxation is based on the annual tax rate of 1.0% on profit before tax (006: .%).
analysis of charge in year
UK income tax at 30% for year
Adjustments in respect of prior periods
Overseas income tax
Deferred tax expense
Origination and reversal of temporary differences
Reduction in tax rate
Charge/(benefit) of tax losses recognised
Deferred tax expense
Total income tax expense in the income statement
Reconciliation of effective tax rate
Profit before taxation
Profit on ordinary activities before tax multiplied by the standard rate of corporation tax in the UK
Effects of:
Disallowable items and other permanent timing differences
Unrelieved overseas losses
Utilisation of losses not previously recognised
Recognition of further losses not previously recognised
Higher tax rates on overseas earnings
Adjustment to tax charge in respect of prior periods
Tax expense and effective rate for the year
Tax recognised directly in equity
Relating to equity settled transactions
2007
£’000
147,441
44,232
715
416
–
–
1,485
(1,141)
45,707
%
30.0
0.5
0.3
–
–
1.0
(0.8)
31.0
2007
£’000
2006
£’000
1,189
821
(3,180)
(1,229)
2007
£’000
22,518
(1,141)
23,866
45,243
2006
£’000
17,694
1,228
14,515
33,437
(1,228)
(1,168)
(16)
1,708
464
45,707
2006
£’000
96,959
29,088
594
361
(191)
(948)
1,637
971
31,512
2007
£’000
833
31
(788)
(1,925)
31,512
%
30.0
0.6
0.4
(0.2)
(1.0)
1.7
1.0
32.5
2006
£’000
(8,302)
66
MIChael paGe InternatIonal
7. Current tax assets and liabilities
the current tax asset of £nil (006: £0.m), and current tax liability of £17.9m (006: £11.7m) for the Group, and current tax asset
of £1.m (006: £0.m) for the parent, represent the amount of income taxes recoverable and payable in respect of current and
prior periods.
8. Dividends
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 December 2006 of 4.2p per ordinary share (2005: 3.5p)
Interim dividend for the year ended 31 December 2007 of 2.4p per ordinary share (2006: 1.8p)
2007
£’000
13,979
7,806
21,785
2006
£’000
12,100
5,988
18,088
Amounts proposed as distributions to equity holders in the year:
Proposed final dividend for the year ended 31 December 2007 of 5.6p per ordinary share (2006: 4.2p)
17,984
13,859
the proposed final dividend had not been approved by shareholders at 1 December 007 and therefore has not been included
as a liability. the comparative final dividend at 1 December 006 was also not recognised as a liability in the prior year.
the proposed final dividend of .6p (006: .p) per ordinary share will be paid on 9 June 008 to shareholders on the register
at the close of business on 9 May 008, subject to approval by shareholders.
When the Company pays a dividend to shareholders, there may be income tax consequences. the impact will depend upon the
individual circumstances of the shareholder.
9. Earnings per ordinary share
the calculation of the basic and diluted earnings per share is based on the following data:
Earnings
Earnings for basic and diluted earnings per share (£‘000)
Number of shares
Weighted average number of shares used for basic 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)
the above results relate to continuing operations.
Basic
2007
101,734
2006
65,447
327,528
334,744
5,353
8,888
332,881
343,632
31.1
30.6
19.6
19.0
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted
average number of ordinary shares in issue during the year, excluding ordinary shares purchased by the employee Benefit trust
and held in the reserve.
annual report 007
67
9. Earnings per ordinary share (continued)
Diluted
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. this calculation determines the number of shares that could have been acquired
at fair value (determined as the average market price of the Company’s shares) based on the monetary value of the subscription
rights attached to the outstanding share options. the number of shares calculated in the basic earnings per share is then
adjusted to reflect the number of shares deemed to be issued for nil consideration as a result of the potential exercise of existing
share options.
the remaining share options that are currently not dilutive and hence excluded from the dilutive earnings per share calculation
remain potentially dilutive until they are either exercised or they lapse.
Potential future ordinary share transactions
It remains the Company’s intention to use surplus cash to repurchase and cancel its shares.
10. Property, plant and equipment
2007
Leasehold
improvements
£’000
Furniture,
fixtures and
equipment
£’000
Motor
vehicles
£’000
Leasehold
improvements
£’000
Total
£’000
2006
Furniture,
fixtures and
equipment
£’000
Motor
vehicles
£’000
Total
£’000
Group
Cost
At 1 January
Additions
Disposals
17,085
30,442
4,519
6,206
(1,520)
(3,445)
2,241
1,202
(919)
49,768
11,927
(5,884)
3,217
4,953
(1,763)
(1,453)
15,953
27,639
2,125
45,717
997
(855)
(26)
9,167
(4,071)
(1,045)
Effect of movements in foreign exchange
793
1,628
57
2,478
(322)
(697)
At 31 December
Depreciation
At 1 January
Charge for the year
Disposals
Effect of movements in foreign exchange
At 31 December
Net book value
At 31 December
20,877
34,831
2,581
58,289
17,085
30,442
2,241
49,768
8,614
2,299
18,817
3,792
787
635
28,218
6,726
7,824
2,016
17,505
3,062
722
552
26,051
5,630
(1,329)
(3,244)
(525)
(5,098)
(1,069)
(1,353)
(483)
(2,905)
360
9,944
907
20,272
27
924
1,294
31,140
(157)
8,614
(397)
18,817
(4)
787
(558)
28,218
10,933
14,559
1,657
27,149
8,471
11,625
1,454
21,550
68
MIChael paGe InternatIonal
11. Intangible assets
Group
Cost
At 1 January
Additions
Disposals
Effect of movements in foreign exchange
At 31 December
Amortisation
At 1 January
Charge for the year
Disposals
Effect of movements in foreign exchange
At 31 December
Net book value
At 31 December
Impairment tests for goodwill
2007
2006
Computer
software
£’000
Goodwill
£’000
Total
£’000
Computer
software
£’000
Goodwill
£’000
Total
£’000
5,931
1,579
(517)
347
7,340
3,872
934
(470)
247
4,583
1,539
–
–
–
1,539
–
–
–
–
–
7,470
1,579
(517)
347
8,879
3,872
934
(470)
247
4,583
5,347
737
(3)
(150)
5,931
3,135
815
(2)
(76)
3,872
1,539
–
–
–
1,539
–
–
–
–
–
6,886
737
(3)
(150)
7,470
3,135
815
(2)
(76)
3,872
2,757
1,539
4,296
2,059
1,539
3,598
Goodwill is allocated to the Group’s cash-generating units (CGus) identified according to the country of operation.
a summary of the goodwill allocation is presented below.
UK
USA
Singapore
2007
£’000
1,274
214
51
1,539
2006
£’000
1,274
214
51
1,539
In assessing value in use, the estimated future cash flows are calculated by preparing cash flow forecasts derived from the most
recent financial budget and an assumed growth rate of %, which does not exceed the long-term average growth rate of the
relevant markets. the terminal value of the cash flow is then calculated by discounting using the Group’s weighted average cost
of capital (8%). If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the
asset is reduced to its recoverable amount. an impairment loss is recognised as an expense.
the Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired.
It is the opinion of the Directors that at 1 December 007 there was no impairment of intangible assets.
12. Investments
Company
Cost
At 1 January 2007
Derecognised on vesting of LTIP’s and deferred bonus shares
At 31 December 2007
Subsidiary
undertakings
£’000
Total
£’000
426,777
426,777
(749)
(749)
426,028
426,028
the derecognition of assets represents the decrease of the parent company’s holding of own shares which have vested and
transferred to beneficial holders.
annual report 007
69
12. Investments (continued)
the Company’s principal subsidiary undertakings at 1 December 007, their principal activities and countries of incorporation
are set out below:
Name of undertaking
Michael Page Recruitment Group Limited
Michael Page Holdings Limited
Michael Page International Recruitment Limited*
Michael Page UK Limited
Michael Page Limited
Page Personnel (UK) Limited
Michael Page International (Belgium) NV/SA
Page Interim (Belgium) NV/SA
Michael Page International (France) SAS
Page Personnel SAS
Michael Page International (Deutschland) GmbH
Michael Page International (Ireland) Limited
Michael Page International Italia Srl
Page Personnel Italia SpA
Michael Page International (Luxembourg)
Michael Page International (Nederland) BV
Page Interim BV
Michael Page International (Poland) Sp.Z.O.O
Michael Page International Empressa de Trabalho Temporário e Serviços de Consultadoria Lda
LLC Michael Page International RU
Michael Page International (SA) (Pty) Limited
Michael Page International (Espana) SA
Page Personnel (Espana) SA
Michael Page International (Sweden) AB
Michael Page International (Switzerland) SA
Michael Page International (UAE) Limited
Michael Page International (Australia) Pty Limited
Michael Page International (Hong Kong) Limited
Michael Page International (Japan) K.K.
Michael Page International Pte Limited*
Michael Page International Argentina SA
Michael Page International (Brasil) SC Ltda
Michael Page International Canada Limited
Michael Page International Mexico Reclutamiento Especializado, S.A. de C.V.
Michael Page International Inc*
Country of incorporation
Principal activity
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Belgium
Belgium
France
France
Germany
Ireland
Italy
Italy
Luxembourg
Netherlands
Netherlands
Poland
Portugal
Russia
South Africa
Spain
Spain
Sweden
Switzerland
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
Recruitment consultancy
United Arab Emirates
Recruitment consultancy
Australia
Hong Kong
Japan
Singapore
Argentina
Brazil
Canada
Mexico
United States
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 operate 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 1,,6 preference shares.
70
MIChael paGe InternatIonal
13. Trade and other receivables
Current
Trade receivables
Less provision for impairment of receivables
Net trade receivables
Amounts due from Group companies
Other receivables
Prepayments and accrued income
Non-current
Prepayments and accrued income
Group
Company
2007
£’000
2006
£’000
2007
£’000
2006
£’000
164,605
121,515
(3,733)
(3,270)
160,872
118,245
–
–
–
–
4,632
27,306
–
73,516
4,497
21,071
–
46
192,810
143,813
73,562
2,301
1,927
–
–
–
–
–
307
25
332
–
all non-current receivables are due within five years from the balance sheet date.
the Group’s exposure to credit and currency risks and impairment losses related to trade and other receivables is disclosed in
note .
14. Trade and other payables
Current
Trade payables
Amounts owed to Group companies
Other tax and social security
Other payables
Accruals
Deferred income
Non-current
Deferred income
Other tax and social security
Group
Company
2007
£’000
2006
£’000
2007
£’000
2006
£’000
7,217
–
37,122
13,200
57,209
657
5,630
–
–
–
302,242
191,574
28,690
10,070
38,556
579
–
–
460
–
–
–
21
–
115,405
83,525
302,702
191,595
475
205
680
495
635
1,130
–
–
–
–
–
–
the fair values of trade and other payables are not materially different to those disclosed above.
the total liability relating to other tax and social security includes a balance of £1.1m (006: £.m) relating to social charges on
share based payments.
the Group’s exposure to currency and liquidity risk related to trade and other payables is disclosed in note .
annual report 007
71
2006
£’000
–
39,150
39,150
Total
£’000
47,433
25,300
72,733
43
39,150
39,193
15. Bank overdrafts and loans
Bank overdrafts
Bank loans
Group
Company
2007
£’000
47,433
25,300
72,733
2006
£’000
43
39,150
39,193
2007
£’000
47,433
25,300
72,733
the borrowings stated above are repayable on demand or otherwise within one year.
the carrying amounts of the Group’s borrowings are denominated in the following currencies:
31 December 2007
Bank overdrafts
Bank loans
31 December 2006
Bank overdrafts
Bank loans
Sterling
£’000
47,433
25,300
72,733
–
39,150
39,150
US Dollar
£’000
–
–
–
43
–
43
Bank overdrafts are repayable on demand.
at 1 December 007, the Group had available £1.7m (006: £10.m) of undrawn committed borrowing facilities in respect of
which all conditions precedent had been met.
the Group’s exposure to interest rate, foreign currency and liquidity risk for financial assets and liabilities is disclosed in note .
16. Provisions for liabilities
At 1 January
Utilised in year
At 31 December
Group
Company
2007
£’000
192
(192)
–
2006
£’000
576
(384)
192
2007
£’000
2006
£’000
–
–
–
–
–
–
7
MIChael paGe InternatIonal
17. Deferred tax
the following are the major deferred tax liabilities and assets recognised by the Group, and the movements thereon, during the
current and prior reporting periods.
At 1 January 2006
Recognised in equity for the year
Recognised in profit or loss for the year
Changes in rate
Exchange differences
At 1 January 2007
Recognised in equity for the year
Recognised in profit or loss for the year
Exchange differences
At 31 December 2007
Accelerated tax
depreciation
£’000
Share-based
payments
£’000
Tax losses
£’000
275
(6,260)
(2,621)
1,318
(742)
–
(2)
(5,686)
3,652
87
–
–
(788)
31
264
(3,114)
–
1,708
384
–
13
–
–
288
–
(104)
–
184
Other
£’000
(502)
–
(439)
–
6
(935)
–
(1,227)
–
Total
£’000
(9,108)
1,318
(1,956)
31
268
(9,447)
3,652
464
384
(1,947)
(1,022)
(2,162)
(4,947)
Certain deferred tax assets and liabilities have been offset in accordance with the Group’s accounting policy. the following is the
analysis of the deferred tax balances (after offset) for balance sheet purposes:
Deferred tax assets
Deferred tax liabilities
2007
£’000
(4,998)
17
2006
£’000
(9,447)
–
(4,981)
(9,447)
at 1 December 007, unremitted earnings of overseas Group companies amounted to £78.6m (006: £0.m). unremitted
earnings may be liable to some overseas and uK tax (after allowing for double taxation relief) if they were to be distributed as
dividends. however, no tax is expected to be payable due to the split of unremitted earnings between lower taxed jurisdictions
and higher taxed jurisdictions.
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 £1.m (006: £0.8m) in respect of tax losses of overseas
companies. these tax losses are available to offset future taxable profits in the respective jurisdictions.
all of the deferred tax asset for losses of £1.0m is dependent on generating future taxable profits. of the recognised deferred tax
asset, £nil is recognised within territories that were loss making in the current year.
annual report 007
7
18. Called-up share capital
Authorised
Ordinary shares of 1p each
Allotted, called-up and fully paid
At 1 January
Shares issued
Cancellation of own shares
At 31 December
2007
2006
£’000
Number of
shares
£’000
Number of
shares
5,713
571,250,000
5,713
571,250,000
3,332
333,242,076
3,326
332,637,799
57
5,676,073
238
23,874,277
(115)
(11,524,415)
(232)
(23,270,000)
3,274
327,393,734
3,332
333,242,076
Executive Share Option Scheme (ESOS)
the Group has an executive Share option Scheme (eSoS) that entitles key management personnel and senior employees to
receive shares in the entity. In accordance with these programmes, options are exercisable at the market price of the shares at
the date of the grant.
two grants under the eSoS were made before 7 november 00. the recognition and measurement principles in IFrS have
been applied to all grants after 7 november 00. they have not been applied to the two grants made prior to 7 november 00
in accordance with the transitional provisions in IFrS 1 “First-time adoption of International Financial reporting Standards” and
IFrS “Share-based payment”.
at 1 December 007 the following options had been granted and remained outstanding in respect of the Company’s ordinary
shares of 1p under the Michael page executive Share option Scheme. all options granted are settled by the physical delivery of
shares. the Group has no legal or constructive obligation to repurchase or settle the options in cash.
Executive Share Option Scheme (ESOS)
Year of grant
2001 (Note 1)
2002 (Note 2)*
2002 (Note 2)*
2003 (Note 2)*
2004 (Note 2)
2005 (Note 2)
2006 (Note 2)
2007 (Note 2)
Total 2007
Balance at
1 January
2007
5,552,900
197,500
410,000
1,817,300
2,173,775
2,305,800
2,023,184
–
–
–
–
–
–
–
Granted
in year
Exercised
in year
No. of shares
outstanding at 31
December 2007
Lapsed
in year
Base
EPS
Exercise price
per share
Exercise period
(2,578,787)
(191,415)
2,782,698
9.9
175p March 2004 - March 2011
(105,000)
(185,000)
(1,355,000)
–
–
–
92,500
10.6
186p March 2005 - March 2012
225,000
462,300
5.8
5.8
4.1
186p March 2006 - March 2012
81.5p-86.1p
April 2006 - April 2013
171p-190.3p March 2007 - March 2014
(1,349,803)
(25,619)
798,353
(60,800)
(138,111)
2,106,889
7.5
190.75p-191.5p March 2008 - March 2015
(41,684)
(116,688)
1,864,812
15.5
309.9p March 2009 - March 2016
–
2,818,000
–
(59,611)
2,758,389
21.3
464.5p-494.1p March 2010 - March 2017
14,480,459
2,818,000
(5,676,074)
(531,444)
11,090,941
Weighted average exercise price
2007 (£)
1.84
4.66
1.53
2.41
2.69
Total 2006
38,066,555
2,123,500 (23,447,721)
(2,261,875)
14,480,459
Weighted average exercise price
2006 (£)
*these options have fully vested
1.63
3.10
1.60
1.80
1.84
,090,61 options were exercisable at the end of 007 at a weighted average exercise price of £1.61 (006: £1.1).
In 007, options were granted on March with the estimated fair values of the options granted on that day of £.6. In 006,
options were granted on 7 March. the estimated fair values of the options granted on that date was £.10.
7
MIChael paGe InternatIonal
18. Called-up share capital (continued)
Share options are granted under service and non-market performance conditions. these conditions are not taken into account
in the fair value measurement at grant date. there are no market conditions associated with the share option grants other than
those on the initial grant in 001.
the options outstanding at 1 December 007 have an exercise price in the range of 81. pence to 9.1 pence and a weighted
average contractual life of 6.6 years. the fair values of options granted during the year were calculated using the Black-Scholes
option pricing model. the inputs into the model were as follows:
Share price (£)
Average exercise price (£)
Weighted average fair value (£)
Expected volatility
Expected life
Risk free rate
Expected dividend yield
Share Option Scheme
Incentive Share Scheme
Deferred Bonus Shares
2007
4.65
4.65
4.65
30%
5 years
5.00%
1.25%
2006
3.10
3.10
3.10
35%
5 years
4.75%
1.5%
2007
4.65
Nil
4.65
30%
3 years
5.00%
Nil
2006
3.10
Nil
3.10
35%
3 years
4.75%
Nil
2007
4.65
Nil
4.65
30%
2 years
5.00%
Nil
2006
3.10
Nil
3.10
35%
3 years
4.75%
Nil
expected volatility was determined by reference to historical volatility of the Company’s share price since flotation.
the expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations. expectations of early exercise are incorporated into the Black-Scholes
option pricing model.
the Group recognised total expenses of £6.8m (006: £.m) related to equity-settled share-based payment transactions
during the year.
Option plan details
note 1 pre flotation options
on flotation, options over ,70,000 (9%) ordinary shares were granted to the executive Directors and 7 employees.
these options are subject to the following:
(a)
.6% of an individual’s option entitlement will normally only be exercisable to the extent that earnings per Share (epS) targets
have been satisfied over a period of 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 % per annum. at that point one third 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. the results for the year
ended 1 December 00 met the epS performance conditions for 8% of the outstanding options. the result for the year
ended 1 December 006 met the epS performance conditions for the remaining 1% of the outstanding options, these
vested on 1 March 007.
(b) .% of an individual’s option entitlement will normally only be exercisable to the extent that share price growth targets
have been satisfied over a period of at least years. none of these options will vest unless the Company’s share price has
achieved 0% growth after years and not later than years. at that point one third of this portion of the options vest.
Vesting then increases progressively for further share price growth until full vesting occurs where there is 00% growth
after years and not later than years. these hurdles rise from the fifth anniversary of the date of grant at compound rates
of growth of 8.% and .7% respectively. at 1 December 007, the performance conditions were met for 81.8%
(006: 6.%) of the outstanding share price dependent options.
annual report 007
7
18. Called-up share capital (continued)
note 2 Grants post flotation
the respective base earnings per share for each grant are shown in the table on page 7. For grants since 00, the performance
condition is tested on the third anniversary and no retesting will occur thereafter. 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 of at least % per annum above the growth in the uK retail price Index.
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.
Other share-based payment plans
the Company also operates an Incentive Share plan for the executive Directors and senior employees and an annual Bonus
plan for the executive Directors. Details of these schemes are disclosed on pages and , and are settled by the physical
delivery of shares, currently satisfied by shares held in the employee Benefit trust, to the extent that service and performance
conditions are met.
19. Reserves
Share premium
the share premium account has been established to represent the excess of the exercise share price over the nominal value of
the shares on the exercise of share options.
Capital redemption reserve
the capital redemption reserve relates to the cancellation of the Company’s own shares. the increase in the year represents the
nominal value of the 11,,1 shares cancelled during the year as shown in note 18.
Reserve for shares held in the employee benefit trust
at 1 December 007, the reserve for shares held in the employee benefit trust consisted of 7,90,0 ordinary shares (006: ,
,7 ordinary shares) held for the purpose of satisfying awards made under the Incentive Share plan and deferred shares under
the annual Bonus plan, representing .% of the called-up share capital with a market value of £.9m (006: £1.7m).
a total of 1,8,091 shares have been allocated to satisfy share awards made under the Incentive Share plan, and 87,001
deferred shares have been allocated under the annual Bonus plan. Dividends are paid on these shares and they are included in
the epS calculation.
a total of 1,1,0 shares have been allocated to satisfy share option awards made under the Incentive Share plan, and 9,98
deferred share option have been allocated under the annual Bonus plan. Dividends on these shares are waived and are treated
as non dilutive.
Following the allocation of awards made under the above mentioned plans, to date ,066,91 ordinary shares remain unallocated
in the reserve. Dividends on these shares are also waived and are treated as non dilutive.
Currency translation reserve
the translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign
operations that are integral to the operations of the Company.
76
MIChael paGe InternatIonal
20. Cash flows from operating activities
Profit before tax
Depreciation and amortisation charges
Loss/(profit) on sale of property, plant and equipment, and computer software
Share scheme charges
Net finance cost
Operating cashflow before changes in working capital and provisions
Increase in receivables
Increase in payables
Decrease in provisions
Cash generated from operations
21. Cash and cash equivalents
Cash at bank and in hand
Short-term deposits
Cash and cash equivalents
Bank overdrafts
Cash and cash equivalents in the statement of cash flows
Bank loans
Net funds/(debt)
Group
Company
2007
£’000
2006
£’000
147,441
96,959
7,660
91
6,757
1,991
163,940
(40,863)
25,778
(192)
148,663
6,445
(48)
4,168
408
107,932
(42,376)
13,655
(384)
78,827
2007
£’000
721
749
–
–
2,837
4,307
(73,230)
110,667
–
2006
£’000
6,665
568
–
–
891
8,124
(318)
21,428
–
41,744
29,234
Group
Company
2007
£’000
75,647
7,343
82,990
(47,433)
35,557
2006
£’000
23,355
12,232
35,587
(43)
35,544
(25,300)
(39,150)
10,257
(3,606)
2007
£’000
2006
£’000
–
–
–
(47,433)
(47,433)
(25,300)
(72,733)
–
–
–
–
–
(39,150)
(39,150)
the Group has set up a multi-currency notional cash pool in 007. Currently the main eurozone subsidiaries and the uK-based
Group treasury subsidiary participate in this cash pool, although it is the Group’s intention to extend the scope of the participation
to other Group companies going forward. the structure facilitates interest and balance compensation of cash and bank overdrafts.
this notional pooling does not meet the strict set-off rules under IFrS and as a result the cash and bank overdraft balances must
be reported ‘gross’ on the balance sheet. on a ‘netted’ pro forma basis, cash and cash equivalents and overdraft balances would
have been £9.m lower, resulting in £.m cash and cash equivalents and £18.0m bank overdraft balances.
22. Financial risk management
the Group has exposure to the following risks from its use of financial instruments:
(i) credit risk
(ii)
liquidity risk
(iii) market risk
this note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and
processes for measuring and managing risk, and the Group’s management of capital. Further quantitative disclosures are included
throughout these consolidated financial statements.
annual report 007
77
22. Financial risk management (continued)
the Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework.
the Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk
limits and controls, and to monitor risks and adherence to limits. risk management policies and systems are reviewed regularly
to reflect changes in market conditions and the Group’s activities. the Group, through its training and management standards
and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their
roles and obligations.
the Group audit Committee oversees how management monitors compliance with the Group’s risk management policies and
procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. the Group
audit Committee is assisted in its oversight role by Internal audit. Internal audit undertakes both regular and ad hoc reviews of
risk management controls and procedures, the results of which are reported to the audit Committee.
(i) Credit risk
Credit risk is the risk of financial loss to the Group if a client or counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group’s receivables from clients and investment securities. Management has a credit
policy in place and the exposure to credit risk is monitored on an ongoing basis.
at the balance sheet date there were no significant concentrations of credit risk. the maximum exposure to credit risk is represented
by the carrying amount of each financial asset in the balance sheet.
trade and other receivables
total trade receivables (net of allowances) held by the Group at 1 December 007 amounted to £160.9m (006: £118.m).
an initial credit period is made available on invoices. no interest is charged on trade receivables from the date of the invoice during
this credit period. thereafter, interest is charged on the outstanding balance. the Group has provided fully for all receivables
over 10 days because historical experience is such that receivables past due beyond 10 days are generally not recoverable.
trade receivables below 10 days are provided for based on estimated irrecoverable amounts from the provision of our services,
determined by reference to past default experience.
Included in the Group’s trade receivable balance are debtors with a carrying amount of £77.7m (006: £.9m) that are past
due at the reporting date for which the Group has not provided as the amounts are still considered recoverable. the Group does
not hold any collateral over these balances. the average age of these receivables is days in excess of the initial credit period
(006: 1 days).
the aging of trade receivables at the reporting date was:
Not past due
Past due 0-30 days
Past due 31-150 days
More than 150 days
Gross
receivables
2007
£’000
Provision
2007
£’000
Gross
receivables
2006
£’000
83,486
46,554
32,261
2,304
164,605
178
467
784
2,304
3,733
62,360
37,681
19,514
1,960
121,515
Provision
2006
£’000
41
460
809
1,960
3,270
the Group’s exposure to credit risk is influenced mainly by the individual characteristics of each client. the demographics of
the Group’s client base, including the country in which clients operate, also has an influence on credit risk. less than % of the
Group’s revenue is attributable to sales transactions with a single client. the geographic diversification of the Group’s revenue
also reduces the concentration of credit risk.
the majority of the Group’s clients have been transacting with the Group for several years, with losses rarely occurring. In monitoring
client credit risk, clients are grouped according to their credit characteristics, including geographic location, industry, aging profile,
maturity and existence of previous financial difficulties.
78
MIChael paGe InternatIonal
22. Financial risk management (continued)
movement in the allowance for doubtful debts
Balance at beginning of the year
Impairment losses recognised on receivables
Amounts written off as uncollectable
Amounts recovered during the year
Impairment losses reversed
Balance at end of the year
2007
£’000
3,270
5,682
(1,244)
(1,638)
(2,337)
3,733
2006
£’000
2,328
3,923
(431)
(1,177)
(1,373)
3,270
the majority of the allowance for doubtful debts are individually impaired trade receivables with a balance of £1.1m (006: £0.8m)
which have been placed in litigation, as well as a further provision for debts of 10 days and over.
the impairment recognised represents the difference between the carrying amount of these trade receivables and the present
value of the expected liquidation proceeds. the Group does not hold any collateral over these balances.
Exposure to credit risk
the maximum exposure to credit risk for trade receivables at the reporting date by geographic region was:
EMEA
United Kingdom
Asia Pacific
Americas
Carrying amount
2007
£’000
84,324
55,097
12,978
8,473
2006
£’000
53,964
50,270
9,234
4,777
160,872
118,245
annual report 007
79
22. Financial risk management (continued)
the maximum exposure to credit risk for accrued income at the reporting date by geographic region was:
EMEA
United Kingdom
Asia Pacific
Americas
Carrying amount
2007
£’000
456
2006
£’000
150
14,195
12,108
4,729
1,963
3,387
852
21,343
16,497
the entire accrued income balance is not past due. the fair values of trade and other receivables are not materially different to
those disclosed above.
(ii) liquidity risk management
ultimate responsibility for liquidity risk management rests with the Board, which has built an appropriate liquidity risk management
framework that aims to ensure that the Group has sufficient cash or credit facilities at all times to meet all current and forecast
liabilities as they fall due. It is the Directors’ intention to continue to finance the activities and development of the Group from retained
earnings and to operate the Group’s business while maintaining the net cash/debt position within a relatively narrow band.
Cash surpluses are invested in short-term deposits, with any working capital requirements being provided from Group cash
resources, Group facilities, or by local overdraft facilities. Cash generated in excess of these requirements will be used to buy
back the Company’s shares. the Group also operates a multi-currency notional cash pool to facilitate interest and balance
compensation of cash and bank overdrafts.
the following are the contractual maturities of financial liabilities.
2007
Trade payables
Accruals and other payables
Bank overdraft
2006
Trade payables
Accruals and other payables
Bank overdraft
Less than
1 month
£’000
5,030
51,725
47,433
Less than
1 month
£’000
4,800
40,065
43
Carrying amount
1-3 months
£’000
3-12 months
£’000
970
24,257
–
1,067
19,061
–
Carrying amount
1-3 months
£’000
3-12 months
£’000
318
7,118
–
157
21,177
–
More than
12 months
£’000
150
4,023
–
More than
12 months
£’000
355
2,815
–
(iii) market risk and sensitivity analysis
the Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates,
but these risks are not deemed to be material. however, a sensitivity analysis showing hypothetical fluctuations in pounds Sterling
against the Group’s main exposure currencies is shown on pages 81 and 8. there has been no material change in the Group’s
exposure to market risks or the manner in which it manages and measures the risk.
For additional information on market risk, refer to ‘treasury management and currency risk’ in the Financial review.
80
MIChael paGe InternatIonal
22. Financial risk management (continued)
Interest rate risk management
Borrowings are arranged at floating rates, thus exposing the Group to cash flow interest rate risk. the Group does not consider this
risk as significant. the benchmark rates for determining floating rate liabilities are based on relevant national lIBor equivalents.
the average interest rates paid were as follows:
Bank overdrafts
Bank loans
Currency rate risk
2007
6.40%
6.22%
2006
4.26%
5.40%
We publish our results in pounds Sterling and conduct our business in many foreign currencies. as a result, we are subject to
foreign currency exchange risk due to exchange rate movements. We are exposed to foreign currency exchange risk as a result
of transactions in currencies other than the functional currencies of some of our subsidiaries and the translation of the results and
underlying net assets of our foreign subsidiaries.
the main functional currencies of the Group are Sterling, euro and australian Dollar. the Group does not have material transactional
currency exposures, nor is there a material exposure to foreign denominated monetary assets and liabilities. the Group is
exposed to foreign currency translation differences in accounting for its overseas operations although our policy is not to hedge
this exposure.
In certain cases, where the Group gives or receives short-term loans to and from other Group companies with different reporting
currencies, it may use foreign exchange swap derivative financial instruments to manage the currency and interest rate exposure
that arises on these loans. It is the Group’s policy not to seek to designate these derivatives as hedges.
Sensitivity analysis - currency risk
a 10 percent strengthening of sterling against the following currencies at 1 December would have increased/(decreased) equity
and profit or loss by the amounts shown on page 8. this analysis is applied currency by currency in isolation, i.e. ignoring the
impact of currency correlation, and assumes that all other variables, in particular interest rates, remain constant. the analysis is
performed on the same basis for 006.
the amounts generated from the sensitivity analysis are forward-looking estimates of market risk assuming certain adverse market
conditions occur. actual results in the future may differ materially from those projected, due to developments in the global financial
markets which may cause fluctuations in interest and exchange rates to vary from the hypothetical amounts disclosed in the table
below, which therefore should not be considered a projection of likely future events and losses.
annual report 007
81
22. Financial risk management (continued)
Sensitivity analysis - currency risk (continued)
Euro
Australian Dollar
Swiss Franc
Hong Kong Dollar
Brazilian Real
United States Dollar
Other
Euro
Australian Dollar
Swiss Franc
Hong Kong Dollar
Brazilian Real
United States Dollar
Other
2007 Equity
£’000
(7,060)
(1,530)
(572)
(523)
(509)
(330)
(945)
2006 Equity
£’000
(3,049)
(756)
(174)
(267)
(175)
116
(439)
PBT
£’000
(4,617)
(796)
(257)
(324)
(442)
3
(245)
PBT
£’000
(2,168)
(424)
(107)
(160)
(247)
64
(181)
a 10 percent weakening of sterling against the above currencies at 1 December would have had the equal but opposite effect
on the above currencies to the amounts shown above, on the basis that all other variables remain constant.
23. Commitments
Operating lease commitments
at 1 December 007 the Group was committed to make the following payments in respect of non-cancellable operating
leases:
Leases which expire:
Within one year
Within two to five years
After five years
Land and buildings
Other
2007
£’000
2006
£’000
2,562
29,411
57,980
89,953
1,034
25,280
53,088
79,402
2007
£’000
449
7,526
–
7,975
2006
£’000
284
4,645
–
4,929
the Group leases various offices under non-cancellable operating lease agreements. the leases have varying terms, escalation
clauses and renewal rights.
the Group also leases various plant and machinery under operating lease agreements. the Group is required to give a varying
notice for the termination of these agreements.
8
MIChael paGe InternatIonal
23. Commitments (continued)
Capital commitments
the Group had contractual capital commitments of £1.m as at 1 December 007 (006: £0.6m) relating to property, plant
and equipment. the Group had contractual capital commitments of £.m as at 1 December 007 (006: £0.m) relating to
computer software.
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 1 December 007 amounted to £7.6m (006: £6.m).
24. Contingent liabilities
the Company has provided guarantees to other Group undertakings amounting to £9.7m (006: £8.9m) in the ordinary course
of business. It is not anticipated that any material liabilities will arise from the contingent liabilities.
25. Events after the balance sheet date
Between 1 December 007 and March 008 79,78 options were exercised, which has led to an increase of share capital
of £797 and an increase in share premium of £188,86.
26. Related party transactions
Identity of related parties
the Group has a related party relationship with its Directors and members of the executive Board, and subsidiaries (note 1).
transactions with key management personnel
Key management personnel are deemed to be the Directors and members of the executive Board. the remuneration of Directors
and members of the executive Board is determined by the remuneration Committee having regard to the performance of
individuals and market trends. For transactions with Directors see the remuneration report on pages to 9. over and above
these transactions, equity settled transactions for the year were £.m (006: £1.m). transactions with the remaining members
of the executive Board are disclosed below:
Short-term employee benefits
Pension costs - defined contribution plans
Equity settled transactions
Termination benefits
2007
£’000
746
40
340
–
2006
£’000
468
33
–
63
the increase in emoluments in the current year represents members being on the executive Board for a full year and an increase
in the bonus award, as well as awards made under the Michael page executive Share option Scheme.
In addition to their salaries, the Group also provides non-cash benefits to members of the executive Board, and contributes to a
post-employment defined contribution pension plan on their behalf, details of which are given in note 1.
transactions between the Group and its subsidiaries, which are related parties of the Company, have been eliminated on
consolidation. Details of transactions between the parent company and subsidiary undertakings are shown below.
Dividends received
Amounts owed by
related parties
Amounts owed to
related parties
2007
£’000
4,283
2006
£’000
8,140
2007
£’000
2006
£’000
2007
£’000
2006
£’000
73,516
38,067
302,241
229,641
annual report 007
8
Shareholder
information and adVisers
Annual General Meeting
to be held on May 008 at 1.00 noon at page house, the Bourne Business park, 1 Dashwood lang road, addlestone,
Weybridge, Surrey, Kt1 QW. every shareholder is entitled to attend and vote at the meeting.
Final dividend for the year ended 31 December 2007
to be paid (if approved) on 9 June 008 to shareholders on the register on 9 May 008.
Company secretary
Kelvin Stagg
Company number
10
Registered office, domicile and legal form
the Company is a limited liability company incorporated and domiciled within the united Kingdom.
the address of its registered office is:
page house, the Bourne Business park, 1 Dashwood lang road
addlestone, Weybridge, Surrey Kt1 QW
tel: 019 61
Fax: 019 697
Auditors
Solicitors
Registrars
Deloitte & touche llp
Chartered accountants
Stonecutter Court
1 Stonecutter Street
london eCa tr
herbert Smith
exchange house
primrose Street
london eCa tr
Capita registrars ltd
northern house
Woodstone park
Fenay Bridge
huddersfield
West Yorkshire hD8 0la
Joint Corporate Brokers
Bankers
Citigroup
Canada Square
Canary Wharf
london e1 lB
Deutsche Bank
Winchester house
1 Great Winchester Street
london eCn DB
hSBC Bank plc
West end Business
Banking Centre
70 pall Mall
london SW1Y GZ
aBn aMro Bank n.V.
Corporate Clients
De entree 99
1101 he amsterdam
the netherlands
Key dates
ex-Dividend date
record date
annual General Meeting
payment of proposed final ordinary dividend
Interim results announcement
7 May 008
9 May 008
May 008
9 June 008
18 august 008
8
MIChael paGe InternatIonal
Memorandum and Articles of Association
the following summarises certain provisions of the Company’s Memorandum and articles of association and applicable english
law. the summary is qualified in its entirety by reference to the Companies act 198 of Great Britain (“the act”), as amended,
and the Company’s articles of association.
Objects and purposes
the Company is incorporated under the name Michael page International plc and is registered in england and Wales with registered
number 10. the Memorandum of association of the Company provides that the Company’s principal object is to carry on
business as a general commercial company and to carry out the other objects more particularly set out in the Memorandum of
association of the Company.
Share capital
the authorised share capital of the Company currently consists of 71,0,000 ordinary shares of 1p each. as at 1 December
007, 7,9,7 ordinary shares have been allotted, called-up and fully paid (see note 18, notes to the accounts).
alteration of capital
the Company may from time to time by ordinary resolution:
(a)
increase its share capital by new shares of such amount as the resolution prescribes;
(b) consolidate and divide all or any of its share capital into shares of larger amount than its existing shares;
(c)
subject to the provisions of the act, sub-divide its shares, or any of them, into shares of a smaller amount than is fixed by the
memorandum;
(d) determine that, as between the shares resulting from such a sub-division, any of them may have any preference or advantage
as compared with the others; and
(e)
cancel shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person,
and diminish the amount of its share capital by the amount of the shares so cancelled.
Subject to the provisions of the act, the Company may by special resolution reduce its share capital, any capital redemption
reserve and any share premium account, in any way.
Purchase of own shares
Subject to the provisions of the act, the Company may purchase its own shares, including redeemable shares. the Company
proposes to renew its authority to purchase its own shares for another year in item 11 of the annual General Meeting notice.
General meetings and voting rights
the Directors may call general meetings whenever and at whatever time and location they so determine. Subject to the provisions
of the act, an annual general meeting and an extraordinary general meeting called to pass a special resolution shall be called by
at least 1 clear days’ notice, and all other extraordinary general meetings shall be called by at least 1 days’ notice. two persons
entitled to vote upon the business to be transacted shall be a quorum.
the articles of association provide that subject to any rights or restrictions attached to any shares, on a show of hands every
member shall have one vote, and on a poll every member shall have one vote for every share of which he is a holder. on a poll,
annual report 007
8
votes may be given either personally or by proxy or (in the case of a corporate member) by a duly authorised representative.
no member shall be entitled to vote in respect of any share held by him if any call or other sum payable by him to the Company
remains unpaid.
If a member or any person appearing to be interested in shares held by a member has been duly served with a notice under Section
79 of the Companies act 006 (previously Section 1 of the act) and is in default for the prescribed period in supplying to the
Company information thereby required, unless the Directors otherwise determine, the member shall not be entitled in respect of the
default shares to be present or to vote (either in person or by representative or proxy) at any general or class meeting of the Company
or on any poll or to exercise any other right confirmed by membership in relation to such meeting or poll. In certain circumstances,
any dividend due in respect of the default shares shall be withheld and certain certificated transfers may be refused.
a member entitled to more than one vote need not, if he votes, use all his votes or cast all the votes he uses in the same way.
a proxy need not be a member. a member may appoint more than one proxy to attend on the same occasion. this does not
preclude the member from attending and voting at the meeting or at any adjournment of it.
limitations and non-resident or foreign shareholders
english law treats those persons who hold the shares and are neither uK residents nor nationals in the same way as uK residents
or nationals. they are free to own, vote on and transfer any shares they hold.
variation of rights
Subject to the act, if at any time the capital of the Company is divided into different classes of shares, the rights attached to any
class of may be varied either:
(a)
in such manner (if any) as may be provided by those rights; or
(b) in the absence of any such provision, with the consent in writing of the holders of three-quarters in nominal value of the issued
shares of the class or with the sanction of an extraordinary resolution passed at a separate general meeting of the holders of
the shares of the class
but not otherwise, and may be so varied either whilst the Company is a going concern or during, or in contemplation of, a winding-
up. at every such separate general meeting the necessary quorum shall be at least two persons together holding or representing
by proxy at least one-third in nominal value of the issued shares of the class (but at any adjourned meeting any holder of shares
of the class present in or by proxy shall be a quorum). unless otherwise expressly provided by the rights attached to any class of
shares, those rights shall be deemed not to be varied by the purchase by the Company of any of its own shares.
Dividend rights
holders of the Company’s ordinary shares may by ordinary resolution declare dividends but no such dividend shall exceed the
amount recommended by the Directors. If, in the opinion of the Directors, the profits of the Company available for distribution
justify such payments, the Directors may, from time to time, pay interim dividends on the shares of such amounts and on such
dates and in respect of such periods as they think fit. the profits of the Company available for distribution and resolved to be
distributed shall be apportioned and paid proportionately to the amounts paid up on the shares during any portion of the period
in respect of which the dividend is paid. the members may, at a general meeting declaring a dividend upon the recommendation
of the Directors, direct that it shall be satisfied wholly or fully by the distribution of assets.
no dividend shall be paid otherwise than out of profits available for distribution as specified under the provisions of the act.
any dividend unclaimed after a period of twelve years from the date of declaration of such dividend shall, if the Directors so resolve,
be forfeited and shall revert to the Company.
Calls on shares
Subject to the terms of allotment, the Directors may make calls upon members in respect of any amounts unpaid on their shares
(whether in respect of nominal value or premium) and each member shall pay to the Company as required by the notice the
amount called on his shares.
transfer of shares
any member may transfer all or any of his shares in certificated form by instrument of transfer in the usual common form or in any
other form which the Directors may approve. the transfer instrument shall be signed by or on behalf of the transferor and, except
in the case of fully-paid shares, by or on behalf of the transferee.
Where any class of share is for the time being a participating security, title to shares of that class which are recorded as being held
in uncertificated form, may be transferred by the relevant system concerned.
86
MIChael paGe InternatIonal
the Directors may in their absolute discretion and without giving any reason refuse to register any transfer of shares (being shares
which are not fully paid or on which the Company has a lien), provided that if the share is listed on the official list of the uK listing
authority such refusal does not prevent dealings in the shares from taking place on an open and proper basis.
the Directors may also refuse to register a transfer of shares unless the transfer instrument:
(a)
is lodged at the registered office, or such other place as the Directors may appoint, accompanied by the relevant share
certificate(s);
(b) is in respect of only one class of share; and
(c)
is in favour of not more than four persons jointly.
the Directors of the Company may refuse to register the transfer of a share in uncertificated form to a person who is to hold it
thereafter in certificated form in any case where the Company is entitled to refuse (or is excepted from the requirements) under
the uncertificated Securities regulations 001 to register the transfer; and they may refuse to register any such transfer in favour
of more than four transferees.
Subject to the uncertificated Securities regulations, the registration of transfers of shares or of any class of shares may be
suspended at such times and for such periods (not exceeding thirty days in any year) as the Directors may determine.
Directors
the Company’s articles of association provide for a Board of Directors, consisting of (unless otherwise determined by the Company
by ordinary resolution) not fewer than two Directors, who shall manage the business of the Company. the Directors may exercise
all the powers of the Company, subject to the provisions of the act, the Memorandum of association, the articles of association
and any directions given by special resolution. the quorum for meetings of the Directors is currently two Directors.
the Directors may delegate any of their powers to:
(a)
any managing director, any director holding any other executive office, or any other director;
(b) any committee consisting of one or more directors and (if thought fit) one or more other persons, but a majority of members
of the committee shall be directors and no resolution of the committee shall be effective unless a majority of those present
when it is passed are directors; and
(c)
to any local board or agency for managing any of the affairs of the Company either in the united Kingdom or elsewhere,
and such delegation may include authority to sub-delegate all or any of the powers delegated, may be subject to conditions and
may be revoked or varied.
the Directors may also, by power of attorney or otherwise, appoint any person, whether nominated directly or indirectly by the
Directors, to be the agent of the Company for such purposes and subject to such conditions as they think fit, and may delegate
any of their powers to such an agent.
the articles of association place a general prohibition on a Director voting on any resolution concerning a matter in which he has,
directly or indirectly, a material interest (other than an interest in shares, debentures or other securities of, or otherwise in or through
the Company), unless his interest arises only because the case falls within one or more of the following:
(a)
the giving to him of a guarantee, security, or indemnity in respect of money lent to, or an obligation incurred by him for the
benefit of, the Company or any of its subsidiary undertakings;
(b) the giving to a third party of a guarantee, security, or indemnity in respect of an obligation of the Company or any of its
subsidiary undertakings for which the Director has assumed responsibility in whole or in part and whether alone or jointly with
others under a guarantee or indemnity or by the giving of security;
(c)
his interest arises by virtue of his being, or intending to become a participant in the underwriting or sub-underwriting of an
offer of any shares in or debentures or other securities of the Company for subscription, purchase or exchange;
(d) the resolution relates to a retirement benefits scheme which has been approved, or is conditional upon approval, by the Board
of Inland revenue for taxation purposes;
(e)
(f)
any arrangement for the benefit of the employees of the Company or any of its subsidiaries, including but without being
limited to an employees’ share scheme, which does not accord to him any privilege or advantage not generally accorded to
employees to whom the arrangement relates;
any transaction or arrangement with any other company in which he is interested, directly or indirectly, provided that he is not
the holder of or beneficially interested in at least one per cent of any class of shares of that company (or of any other company
through which his interest is derived), and is not entitled to exercise at least one per cent of the voting rights available to
members of the relevant company; and
annual report 007
87
(g) the purchase or maintenance for any Director or Directors of insurance against liability.
If a question arises at a Directors’ meeting as to the right of a Director to vote, the question may be referred to the Chairman of the
meeting (or if the Director concerned is the Chairman, to the other Directors at the meeting), and his ruling in relation to any Director
(or, as the case may be, the ruling of the majority of the other Directors in relation to the Chairman) shall be final and conclusive.
the act requires a Director of a company who is in any way interested in a contract or a proposed contract with the company to
declare the nature of his interest at a meeting of the Directors of the company. the definition of “interest” now includes the interests
of spouses, children, companies and trusts. Further requirements regarding the Directors’ duty to declare any interests relevant
to the Company and its activities are the subject of item 1 at the annual General Meeting, a description of which is provided in
the section of the annual report entitled “aGM notice of Meeting”.
Borrowing powers of the Directors
the Directors shall restrict the borrowings of the Company and exercise all powers of control exercisable by the Company in relation
to its subsidiary undertakings so as to secure (as regards subsidiary undertakings so far as by such exercise they can secure) that
the aggregate principal amount (including any premium payable on final repayment) outstanding of all money borrowed by the
Group (excluding amounts borrowed by any member of the Group from any other member of the Group), shall not at any time, save
with the previous sanction of an ordinary resolution of the Company, exceed an amount equal to three times the aggregate of:
(a)
the amount paid up on the share capital of the Company; and
(b) the total of the capital and revenue reserves of the Group, including any share premium account, capital redemption reserve,
capital contribution reserve and credit balance on the profit and loss account, but excluding sums set aside for taxation and
amounts attributable to outside shareholders in subsidiary undertakings of the Company and deducting any debit balance on
the profit and loss account, all as shown in the latest audited consolidated balance sheet and profit and loss account of the
Group, but adjusted as may be necessary in respect of any variation in the paid up share capital or share premium account
of the Company since the date of that balance sheet and further adjusted as may be necessary to reflect any change since
that date in the companies comprising the Group.
Director’s appointment and removal
at each aGM, there shall retire from office by rotation:
(a)
all Directors of the Company who held office at the time of the two preceding aGMs and who did not retire by rotation at
either of them; and
(b) such additional number of Directors as shall, when aggregated with the number of Directors retiring under paragraph (a) above,
equal either one third of the number of Directors, in circumstances where the number of Directors is three or a multiple of
three, or in all other circumstances, the whole number which is nearest to but does not exceed one-third of the number of
Directors (the “relevant proportion”) provided that:
(i)
the provisions of this paragraph (b) shall only apply if the number of Directors retiring under paragraph (a) above is less
than the relevant proportion; and
(ii) subject to the provisions of the act and to the relevant provisions of these articles of association, the Directors to retire
under this paragraph (b) shall be those who have been longest in office since their last appointment or reappointment,
but as between persons who became or were last reappointed Directors on the same day those to retire shall (unless
they otherwise agree among themselves) be determined by lot.
If the Company, at the meeting at which a director retires by rotation, does not fill the vacancy the retiring Director shall, if willing to
act, be deemed to have been reappointed unless a resolution not to fill the vacancy or not to reappoint that Director is passed.
Subject to the act, the Company may, by extraordinary resolution, remove a director before the expiration of his period of office
(without prejudice to any claim for damages for breach of any contract of service between the director and the Company) and,
subject to the articles of association, may by ordinary resolution, appoint another person instead of him. the newly appointed
person shall be subject to retirement at the same time as if he had become a director on the day on which the director in whose
place he is appointed was last appointed or reappointed as a Director.
a Director shall be disqualified from holding office if:
(a) he ceases to be a director under the provisions of the act or he becomes prohibited by law from being a Director;
(b) he becomes bankrupt or makes an arrangement or composition with his creditors generally;
(c) he is, or may be suffering from mental disorder in certain circumstance;
(d) he resigns his office by notice in writing to the Company;
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MIChael paGe InternatIonal
(e)
(f)
in the case of an executive Director, his appointment as such is terminated or expires and the Directors resolve that his office
be vacated;
he is absent from Directors’ meetings for more than six consecutive months and the Directors resolve that his office be
vacated; or
(g) he is requested in writing by all the other Directors to resign.
no person shall be disqualified from being appointed or re-appointed as a Director and no Director shall be requested to vacate
that office by reason of his attaining the age of seventy or any other age.
there is no requirement of share ownership for a Director’s qualification.
amendments to the articles of association
Subject to the act and the Memorandum of association, the articles of association of the Company can be altered by special
resolution of the members.
winding-up
If the Company is wound up, the liquidator may, with the sanction of an extraordinary resolution of the Company and any other
sanction required by law:
(a)
divide among the members in kind the whole or any part of the assets of the Company and, for that purpose, set such values
as he deems fair upon any property to be divided and determine how the division shall be carried out between the members;
and
(b) vest the whole or any part of the assets in trustees upon such trusts for the benefit of members as the liquidator shall think fit,
but no member shall be compelled to accept any assets upon which there is a liability.
annual report 007
89
Summary
5 Year summarY income statement
Revenue
Gross profit
Operating profit
Profit before tax
Profit attributable to equity holders
Conversion
UK GAAP
2003
£’000
372,616
178,485
21,783
22,409
13,745
12.2%
2004
£’000
433,731
210,641
38,858
38,859
34,336
18.4%
IFRS
2005
£’000
523,810
267,581
66,519
66,136
49,630
24.9%
2006
£’000
649,060
348,817
97,367
96,959
65,447
27.9%
2007
£’000
831,640
478,094
149,432
147,441
101,734
31.3%
Basic earnings per share (pence)
3.8
9.8
14.8
19.6
31.1
the amounts disclosed for 00 are stated on the basis of uK Gaap because it is not practicable to restate amounts for periods
prior to the date of transition to IFrS.
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MIChael paGe InternatIonal
aGm
notice of mee ting
this notice of annual General Meeting is important and requires your immediate attention. If you have any doubts as to the
action you should take, you are recommended to seek your own financial advice from your stockbroker, bank manager, solicitor,
accountant or other financial adviser authorised under the Financial Services and Markets act 000. If you have sold or otherwise
transferred all your ordinary shares in Michael page International plc, please send this document, together with the accompanying
documents to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was
effected for transmission to the purchaser or transferee.
notice is hereby given that the annual General Meeting of the Company will be held at page house, the Bourne Business park,
1 Dashwood lang road, addlestone, Weybridge, Surrey Kt1 QW on May 008 at 1.00 noon for the following purposes:
1.
to receive and adopt the reports of the Directors and auditors and accounts for the year ended 1 December 007.
.
to declare a final dividend on the ordinary share capital of the Company for the year ended 1 December 007 of .6p
per share.
.
to re-elect Steve Ingham as a director of the Company (note 6)
.
to re-elect Dr tim Miller as a director of the Company (note 6)
.
to elect ruby McGregor-Smith as a director of the Company (note 6)
6. to propose the following ordinary resolution:
that the Directors’ remuneration report for the year ended 1 December 007 be received and approved.
7.
8.
a.
b.
to re-appoint Deloitte & touche llp as auditors of the Company to hold office until the conclusion of the next annual General
Meeting at a remuneration to be fixed by the Directors.
to propose the following ordinary resolution: that in accordance with section 66 and 67 of the Companies act 006 (the
‘006 act’) the Company, and all companies that are subsidiaries of the Company at the date on which this resolution 8 is
passed or during the period when this resolution 8 has effect, are authorised to:
make political donations to political parties (or independent election candidates), as defined in the 006 act, not exceeding
£,000 in total;
make political donations to political organisations other than political parties, as defined in the 006 act, not exceeding £,000
in total; and
c.
incur political expenditure, as defined in the 006 act, not exceeding £,000 in total;
during the period commencing on the date of this resolution and ending on the date of the aGM of the Company in 009
provided that the authorised sum referred to in paragraphs (a), (b) and (c) above, may be comprised of one or more amounts
in different currencies which, for the purposes of calculating the said sum, shall be converted into pounds sterling at the
exchange rate published in the london edition of the Financial times on the date on which the relevant donation is made
or expenditure incurred (or the first business day thereafter) or, if earlier, on the day in which the Company enters into any
contract or undertaking in relation to the same.
9. to propose the following ordinary resolution:
that the Directors be and are hereby generally and unconditionally authorised for the purposes of Section 80 of the Companies
act 198 (the “act”) to exercise all powers of the Company to allot relevant securities (as defined in Section 80 () of the act)
up to an aggregate nominal amount of £1,080,99 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
annual report 007
91
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 8).
10. to propose the following special resolution:
that the Directors be and are hereby empowered pursuant to Section 9 of the Companies act 198 (the “act”) to allot equity
securities (as defined in Section 9 of the act) for cash pursuant to the authority conferred by resolution 9 above as if Section
89 (1) of the act did not apply to such allotment provided that this power shall be limited to:
(a) the allotment of equity securities in connection with a rights issue and so that for this purpose “rights issue” means an offer
of equity securities open for acceptance for a period fixed by the Directors to holders of equity securities on the register on
a fixed record date in proportion to their respective holdings of such securities or in accordance with the rights attached
thereto but subject to such exclusions or other arrangements as the Directors may deem necessary or expedient to deal
with fractional entitlements or legal or practical problems under the laws of any overseas territory or requirements of any
recognised regulatory authority or stock exchange in any country or any matter whatever, and
(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 £16,697,
and shall expire at the conclusion of the next annual General Meeting of the Company when the general authority under
resolution 9 shall expire, save that the Company may before such expiry make an offer or agreement which would or might
require equity securities to be allotted in pursuance of such an offer or agreement as if the authority conferred hereby had not
expired (note 9).
11. to propose the following special resolution:
that pursuant to the Company’s articles of association and Section 166 of the Companies act 198 (the ”act”), the Company
be and is hereby generally and unconditionally authorised to make market purchases (within the meaning of section 16()
of the act) 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 9,076,1;
(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 10% of the average of the mid-market quotations for an ordinary share of the company
as derived from the london Stock exchange Daily official list for the five business days immediately preceding the day
on which the ordinary share is contracted to be purchased;
(d) the authority hereby conferred shall expire at the conclusion of the next annual General Meeting of the Company after the
date of passing this resolution, unless such authority is renewed prior to such time; and
(e) the Company may conclude a contract to purchase ordinary shares under the authority hereby conferred prior to the expiry
of such authority which will or may be exercised wholly or partly after the expiry of such authority and may make a purchase
of ordinary shares in pursuance of any such contract as if the authority hereby conferred had not expired (note 10).
1. to propose the following special resolution:
that the articles of association, contained in the document produced at the meeting and signed by the Chairman for the
purposes of identification, be approved and adopted as the new articles of association of the Company in substitution for, and
to the exclusion of, the existing articles of association, with effect from the conclusion of the 008 annual General Meeting
(note 1).
the directors of the Company consider that all the proposals to be considered at the annual General Meeting are in the best
interests of it’s shareholders as a whole and they recommend that you vote in favour of them.
By order of the Board
kelvin Stagg
Company Secretary
page house, 1 Dashwood lang road
addlestone, Weybridge, Surrey, Kt1 QW
registered in england no. 10
March 008
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MIChael paGe InternatIonal
Notes
1.
.
.
.
.
a member entitled to attend and vote at the meeting may appoint another person(s) (who need not be a member of the
Company) to exercise all or any of his rights to attend, speak and vote at the meeting. a member can appoint more than one
proxy in relation to the meeting, provided that each proxy is appointed to exercise the rights attaching to different shares held
by him.
a proxy does not need to be a member of the Company but must attend the Meeting to represent you. Your proxy will vote
as you instruct and must attend the meeting for your vote to be counted. Details of how to appoint the Chairman or another
person as your proxy using the proxy form are set out in the notes to the proxy form. appointing a proxy does not preclude you
from attending the Meeting and voting in person. If you attend the Meeting in person, your proxy appointment will automatically
be terminated.
a copy of this notice has been sent for information only to persons who have been nominated by a member to enjoy
information rights under section 16 of the Companies act 006 (a “nominated person”). the rights to appoint a proxy can
not be exercised by a nominated person: they can only be exercised by the member. however, a nominated person may
have a right under an agreement between him and the member by whom he was nominated to be appointed as a proxy
for the meeting or to have someone else so appointed. If a nominated person does not have such a right or does not wish
to exercise it, he may have a right under such an agreement to give instructions to the member as to the exercise of voting
rights.
In order to be valid an appointment of proxy must be returned (together with any authority under which it is executed) to the
Company’s registrars not less than 8 hours before the time of the meeting.
CreSt members who wish to appoint a proxy or proxies by utilising the CreSt electronic proxy appointment service may do so
by utilising the procedures described in the CreSt Manual. CreSt personal Members or other CreSt sponsored members,
and those CreSt members who have appointed a voting service provider(s), should refer to their CreSt sponsor or voting
service provider(s), who will be able to take the appropriate action on their behalf. In order for a proxy appointment made by
means of CreSt to be valid, the appropriate CreSt message (a “CreSt proxy Instruction”) must be properly authenticated
in accordance with euroclear uK & Ireland limited’s (euI) specifications and must contain the information required for such
instructions, as described in the CreSt Manual. the message regardless of whether it constitutes the appointment of a
proxy or an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so
as to be received by the issuer’s agent (ID number – r1710) by the latest time(s) for receipt of proxy appointments specified
in the notice of meeting. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp
applied to the message by the CreSt applications host) from which the issuer’s agent is able to retrieve the message by
enquiry to CreSt in the manner prescribed by CreSt. the Company may treat as invalid a CreSt proxy Instruction in the
circumstances set out in regulation ()(a) of the uncertificated Securities regulations 001.
6.
Steve Ingham and Dr tim Miller will retire by rotation and are seeking reappointment at the annual General Meeting. as ruby
McGregor-Smith was first appointed to the Board by the Directors, in accordance with regulation 9a of the Company’s
articles of association, she is retiring and seeking re-appointment at the annual General Meeting. Biographical information
on each of the Directors is contained on pages 0 and 1 of the annual report and accounts.
7.
For the purpose of this resolution, ‘political donations’, ‘political organisations’ and ‘political expenditure’ have the meanings
given to them in Section 6-6 of the 006 act.
In accordance with its Business principles, it is the Company’s policy not to make contributions to political parties. there
is no intention to change it. however, what constitutes a ‘political party’, a ‘political organisation’, ‘political donations’ or
‘political expenditure’ under the Companies act 006 is not easy to decide as the legislation is capable of wide interpretation.
Sponsorship, subscriptions, payment of expenses, paid leave for employees fulfilling public duties, and support for bodies
representing the business community in policy review or reform, among other things, may fall within this.
therefore, notwithstanding that the Company has no intention of making any political donation or incurring any political
expenditure in respect of any political party, political organisation or independent election candidate, the Board has decided
to put forward resolution 8 to grant the authority. this will allow the Company to continue to support the community and
put forward its views to wider business and Government interests without running the risk of being in breach of the law.
as permitted under the 006 act, resolution 8 has also been extended to cover any of these activities by the Company’s
subsidiaries.
8.
this authority is in respect of % 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. there are currently no shares held as treasury Shares.
annual report 007
9
9.
this authority is in respect of % 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.
10. this authority is in respect of 1.99% of the issued share capital of the Company and the power given by this resolution will
only be exercised if the Directors are satisfied that any purchase will increase the earnings per Share of the ordinary Share
Capital in issue after the purchase and accordingly, that the purchase is in the interests of shareholders. It is the intention that
shares purchased under this authority be cancelled, but in order to respond properly to the Company’s capital requirements
and prevailing market conditions, the directors will need to reassess at the time of any and each actual purchase whether to
hold the shares in treasury or cancel them, provided it is permitted to do so.
11. to have the right to attend and vote at the meeting or adjourned 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 6.00pm
on 1 May 008 (or if the meeting is adjourned, at 6.00pm on the date which is two days prior to the adjourned 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.
1. the Company proposes to adopt new articles of association. these incorporate amendments to the current articles of
association to reflect the provisions of the Companies act 006 (“the 006 act”) which relate to directors’ conflicts of interest
which will come into effect in october 008. as the 006 act will not be fully in force until october 009, and so it is not yet
possible to fully reflect the 006 act changes, it is anticipated that shareholders will be asked to approve further changes to
our articles of association at the 009 aGM.
the 006 act sets out directors’ general duties which largely codify the existing law but with some changes. under the 006
act, from 1 october 008 a director has a statutory duty to avoid a situation where he has, or can have, a direct or indirect
interest that conflicts, or possibly may conflict, with the company’s interests. the requirement is very broad and could apply,
for example, if a director becomes a director of another company or a trustee of another organisation. the 006 act allows
directors of public companies to authorise conflicts and potential conflicts where appropriate, if the articles of association
contain a provision to this effect. the 006 act also allows the articles to contain other provisions for dealing with directors’
conflicts of interest to avoid a breach of duty.
article 100, which is the provision for dealing with conflicts in our current articles, allowing directors to be interested in
transactions and to be an officer of or employed by or interested in a body corporate in which the company is interested, has
been amended so that it confirms that such interests, offices or employment will not infringe the conflicts duty as codified in
the 006 act.
new article 101 gives the directors authority to approve conflict situations including other directorships held by the company’s
directors and include other provisions to allow conflicts of interest to be dealt with in a similar way to the current position.
there are safeguards that will apply when directors decide whether to authorise a conflict or potential conflict. First, only
directors who have no interest in the matter being considered will be able to take the relevant decision, and secondly, in
taking the decision the directors must act in a way they consider, in good faith, will be most likely to promote the company’s
success. the directors will be able to impose limits or conditions when giving authorisation if they think this is appropriate.
the proposed new article 101 also contains provisions relating to confidential information, attendance at board meetings and
availability of board papers to protect a director from being in breach of duty if a conflict of interest or potential conflict of interest
arises. these provisions will only apply where the position giving rise to the potential conflict has previously been authorised by
the directors.
It is the board’s intention to report annually on the Company’s procedures for ensuring that the board’s powers of authorisation
of conflicts are operated effectively and that the procedures have been followed.
9
MIChael paGe InternatIonal
1. In order to facilitate voting by corporate representatives at the meeting, arrangements will be put in place at the meeting so
that (i) if a corporate shareholder has appointed the Chairman of the meeting as its corporate representative with instructions
to vote on a poll in accordance with the directions of all of the other corporate representatives for that shareholder at the
meeting, then on a poll those corporate representatives will give voting directions to the Chairman and the Chairman will
vote (or withhold a vote) as corporate representative in accordance with those directions; and (ii) if more than one corporate
representative for the same corporate shareholder attends the meeting but the corporate shareholder has not appointed
the Chairman of the meeting as its corporate representative, a designated corporate representative will be nominated, from
those corporate representatives who attend, who will vote on a poll and the other corporate representatives will give voting
directions to that designated corporate representative. Corporate shareholders are referred to the guidance issued by the
Institute of Chartered Secretaries and administrators on proxies and corporate representatives (www.icsa.org.uk) for further
details of this procedure. the guidance includes a sample form of representation letter if the Chairman is being appointed as
described in (i) above.
1. as at March 008 (being the latest business day prior to the publication of this notice), the Company’s issued share capital
consists of 7,7,8 ordinary shares. the employee Benefit trust holds ,618,8 ordinary shares of the Company
carrying no voting rights. no shares are held in treasury. therefore the total voting rights in the Company are 1,8,.
1. Members satisfying the thresholds in section 7 of the Companies act 006 can require the Company to publish a statement
on its website setting out any matter relating to (a) the audit of the Company’s accounts (including the auditor’s report and
the conduct of the audit) that are to be laid before the meeting; or (b) any circumstances connected with an auditor of the
Company ceasing to hold office since the last annual General Meeting, that the members propose to raise at the meeting.
the Company cannot require the members requesting the publication to pay its expenses. any statement placed on the
website must also be sent to the Company’s auditors no later than the time it makes its statement available on the website.
the business which may be dealt with at the meeting includes any statement that the Company has been required to publish
on its website.
16. Copies of the directors’ service contracts with the Company, and the terms and conditions of the non-executive directors are
available for inspection at the registered office of the Company during usual business hours (Saturdays, Sundays and public
holidays excepted) and will be available at the place of the meeting from 9.00am until its conclusion.
annual report 007
9
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