Annual Report & Accounts 2008
Highlights
2008
Revenue (£m)
Gross Profit (£m)
Profit before tax (£m)
972.8
2008
831.6
2007
649.1
2006
523.8
2005
433.7
2004
552.7
2008
478.1
2007
348.8
2006
267.6
2005
210.6
2004
Basic earnings
per share (pence)
Dividend per share
(pence)
30.3
31.1
19.6
14.8
9.8
2008
2007
2006
2005
2004
8.0
8.0
6.0
5.0
4.0
2008
2007
2006
2005
2004
140.1
2008
147.4
2007
97.0
66.1
38.9
2006
2005
2004
Headcount at
year end
4,943
2008
5,052
2007
3,758
2006
2,926
2005
2,647
2004
• Record levels of revenue and gross profit
• Gross profit from permanent placements grew 14%
• Gross profit from temporary placements grew 20%
• Temporary placements gross margins maintained at 24.2%
• 68% of gross profit generated from outside the UK
• EMEA, the Group’s largest region, grew gross profit by 32%
• 51% of gross profit generated from non-Finance and Accounting disciplines
• Cash generated from operations up 25% to £185.2m (2007: £148.7m)
• Net cash at the year end of £94.3m (2007: £10.3m)
michael page international
Global Profits
2008
“”
RecoRd GRoSS
pRofitS of £553m,
up 16%.
“looking at 2008 as a whole, Michael page delivered a good set
of results. However, it was a year of two halves with a strong first
half being followed by a progressively weaker second half as the
economic environment deteriorated.
“Given the current uncertainty over the economic outlook, it is
extremely difficult to predict the performance of our business in
the short term. Whilst, as in previous downturns, we will aim to
maintain our market presence, we also recognise the need to
manage our cost base to reflect current trading. our strategy
of diversifying by both specialist discipline and geography has
increased our resilience and our balance sheet has never been
stronger. We believe the Group is well positioned to benefit when
market conditions improve and we remain confident in the longer
term prospects of the Group.”
Steve Ingham, CEO
+16% -6%
Gross Profit (£m)
Operating Profit (£m)
552.7
478.1
2008
2007
140.5
149.4
2008
2007
10 Chairman’s Statement 12 operational Review 18 Financial Review 26 Board of Directors 28 Directors’ Report 34 Corporate Governance
40 Remuneration Report 48 Independent Auditors’ Report to the members of Michael page International plc 51 Consolidated Income
Statement 52 Consolidated Statement of Changes in Equity 53 Statement of Changes in Equity – parent Company 54 Balance Sheets
55 Cash Flow Statements 56 Notes to the Financial Statements 82 Shareholder Information and Advisers 88 Five Year Summary 89 Annual
General Meeting 95 Statement of Directors’ responsibilities in accordance with Disclosure and Transparency Rules
ANNUAl REpoRT 2008
1
At a glance
PERFORMANCE by REgiON iN 2008
The success of our strategy to diversify the business, both geographically
and by discipline, through organic growth has increased our resilience, with
approximately 70% of the Group’s gross profits generated outside the UK.
We have also added three new countries, Turkey, Austria and New Zealand,
to the Group during 2008.
EMEA (ContinentAl euRope, middle eAst & AfRiCA)
+32%
gross profit
Gross Profit
£258.8m
2008
£196.4m
2007
Operating Profit
£66.3m
£63.0m
2008
2007
81 Offices 14 Disciplines 2,155 Employees
+31%
GRoss pRofit
Americas
3
New offices
Americas
AMERICAS
Gross Profit
Operating Profit
+31%
gross profit
£50.5m
£38.4m
2008
2007
£5.3m
£6.2m
2008
2007
18 Offices 12 Disciplines 510 Employees
2
michael page international
UnItED kInGDOM
Gross Profit
Operating Profit
-5%
gross profit
£176.7m
2008
£186.0m
2007
£46.6m
£59.4m
2008
2007
49 Offices 12 Disciplines 1,640 Employees
+1%
ReVeNUe
United Kingdom
9
New offices
EMEA
28th
coUNtRY
New Zealand
ASIA PACIfIC
Gross Profit
Operating Profit
+17%
gross profit
£66.8m
£57.2m
2008
2007
£22.4m
£20.8m
2008
2007
15 Offices 11 Disciplines 638 Employees
ANNUAl REpoRT 2008
3
Strategy
DiVERSiFiCATiON
Since the last downturn, we have accelerated our strategy of
Group gross profi t and the then six-country EMEA region was
diversifi cation, both by geography and by business discipline.
only 36%. Today, the EMEA region, now seventeen-countries,
With recruitment being driven by the economic cycle and
represents 47% of the Group, compared with the UK which
overall business confi dence, our strategy aims to diversify
is 32%. The Americas, just 2% of the Group in 2000, now
the Group’s exposure away from any one geographic area
represents 9% with the number of businesses across Brazil,
or business sector.
Mexico, Argentina, Canada and the US, growing from three
We view each country discipline as an individual business
in its own right. In 2000, before the last downturn, we had
some 55 of these businesses; today there are 202. The graph
on the opposing page shows the gross profi t generated by
the original 55 businesses back in 2000. on the overlay we
show the growth in these original businesses as well as the
growth created from the additional 147 new businesses
opened since 2000.
our aim with these charts is to demonstrate the changing
shape of the Group since entering into the last downturn,
as well as showing the rapid growth we achieve through the
organic growth of new businesses.
to thirty-two.
Similarly from a discipline perspective, in 2000 the Finance
and Accounting discipline represented 66% of the Group.
With the rapid growth of the Engineering, procurement and
Supply Chain and property and Construction disciplines, which
represented only 2% of the Group in 2000, they now represent
15% of the Group and Finance and Accounting 49%.
The chart below represents the profi t performance throughout
the Group’s history. During each economic cycle the Group
organically has created a larger business platform from
which it grows a greater profi t performance. It also illustrates
how our commitment to maintaining these businesses in
In 2000, the UK was the largest region representing 50% of
downturns has maximised the growth in upturns.
“ Strategic and measured
investment and ongoing
commitment to existing
businesses in downturns
has maximised growth
in upturns”
4
14
17
16
77
92
1
1
1
1
1
1
4
28
202
191
michael page international
GROSS PROfIt
By REGIOn
300
Businesses in 2000
2000 Businesses in 2008
All Businesses in 2008
)
m
£
(
t
i
f
o
r
P
s
s
o
r
G
250
200
150
100
50
0
UK
EMEA
Americas
Asia Pacific
By DISCIPLInE
)
m
£
(
t
i
f
o
r
P
s
s
o
r
G
300
250
200
150
100
50
0
Finance &
Accounting
Marketing,
Sales & Retail
Eng, P&C
*
& P&SC
Other
Disciplines
*Engineering, property & Construction, procurement & Supply Chain
ANNUAl REpoRT 2008
5
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 approximately
5,000 people in 163 offices in 28 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.
6
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 into
International to provide creative and innovative solutions to
the Sunday Times 100 Best Companies to Work For since
meet their needs.
2005.
Whether a carefully targeted online campaign, a database
our growing reputation isn’t confined to the UK’s shores.
search, or a desire to source candidates internationally,
overseas, the Boston Business Journal has voted us one
each solution is bespoke to achieve our clients objectives.
of the “Best places to Work in Massachusetts”, the Hartford
This consultative approach has been recognised by the level
Business Journal has voted us one of the “Best places to
of repeat business Michael page receives as well as the ever
Work in Connecticut” and Crain’s has ranked us as the ‘No.1
increasing number of clients served.
Executive Recruiting Firm in New York City’.
Quality underpins everything we do. To deliver solutions
While this external recognition is warmly welcomed, we are
consistently to such a high standard, we are fully committed
also keen to celebrate some of our own internal initiatives.
to the ongoing training of all of our staff and the continued
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
as participating in a number of external initiatives such as the
pASSion: It’s our passion to achieve the very best for our
Employers Forum on Age, Business in The Community, Global
clients and candidates that drives us to outperform and beat
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 2008
7
Strategy
CONSiSTENT THROUgH CyCLES
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
CLEAR On BRAnD
Executive
Search
Qualified Professional
Clerical Professional
Generalist Staffing
28 Countries 108 offices 2,774 fee earners
10 Countries 81 offices 880 fee earners
•
No acquisitions, one IT platform, one culture, one
remuneration strategy
•
Consistent recruitment, training, development to ensure
consistent quality of fee earners
• Consistent brand strategy
•
organic growth, home-grown Directors/MD’s run all
disciplines/countries
•
Strategic and measured investment in downturns
has maximised growth in upturns
8
michael page international
DEEP In ExPERIEnCE
senior operational
management
Executive Board
Regional Managing Directors
Managing Directors
Directors
no.
5
11
37
138
191
Average tenure
in mp
20 years
14 years
12 years
8 years
Ave c.10 years
8 yrs
37
138
Figures in white represent
average term at Michael Page
12 yrs
1985
20 yrs
14 yrs
1990
Average Date Joined
1995
2000
2008
5
11
N o . o f C u r r e n t D i r e c t o r s
•
100% RMDs/Executive Directors joined before 2000
•
Strength of working relationships improves
• 38% RMDs/Executive Directors joined before 1990
communication
•
Directors experienced in managing upturns and
downturns
• Hired and trained in one culture
• >50% remuneration linked to Group profit
• MDs receive lTIp, Directors share options
fLExIBLE wItH HEADCOUnt
•
c900 teams worldwide, typically a Manager and three
•
New consultant hired, costs rise ~20%, consultant lost,
Consultants
costs fall ~20%
•
Manager has full p&l responsibility for team
•
Teams in bull market maximise potential from existing
•
Significant share of profit each quarter allocated to team
members before hiring after Director authority
as bonus
•
Teams in bear market ensure they reward, using bonus,
•
Individual bonuses allocated after performance appraisal,
to retain strongest /lose weakest
based on contribution and value to team
1996
Singapore
1993
Germany
1998
uSA
2001
Switzerland
Japan
2002
Belgium
Sweden
2006
South Africa
Russia
ireland
u.A.e.
mexico
2008
Austria
turkey
new Zealand
1997
Spain
italy
2000
portugal
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
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
ANNUAl REpoRT 2008
9
Chairman’s
STATEMENT
2008 as a whole was a successful year for the Group, despite
encountering increasingly difficult economic conditions.
We have produced a record level of revenue with growth
in every region. This performance was testament to our
strategy of diversifying the Group’s business through organic
expansion. At the beginning of the year, we experienced strong
demand in the majority of our businesses around the world
and continued our expansion and investment in headcount
to deliver growth. Total staff numbers grew from 5,052 at the
beginning of the year to peak at 5,535 by the end of June.
As market conditions deteriorated rapidly in the second half
of the year our businesses reacted quickly, reducing total staff
to 4,943 at the end of the year. During the year we started
businesses in Austria, Turkey and New Zealand and now have
operations in 163 offices across 28 countries.
financial summary
Revenue for the year ended 31 December 2008 increased
17.0% to £972.8m (2007: £831.6m) and gross profit grew by
15.6% to £552.7m (2007: £478.1m). The reported revenue
and gross profit benefited from the weakening of Sterling
during the year, in constant currency the growth rates were
7.9% and 5.8% respectively. As typically happens when market
conditions weaken, temporary placements were more resilient
than permanent. Growth in gross profits from temporary
placements exceeded that from permanent placements
and this slight shift in business mix resulted in a Group gross
margin of 56.8% (2007: 57.5%). The rapid slowdown in activity
we experienced in the second half of the year, combined
with the Group’s high operational gearing produced lower
operating profits of £140.5m (2007: £149.4m). profit before
tax was £140.1m (2007: £147.4m) and basic earnings
per share were 2.6% lower at 30.3p (2007: 31.1p). Cash
“”
2008 AS A whole wAS
A SucceSSful yeAR
foR the GRoup
The success of our strategy to diversify the business, both
geographically and by discipline, through organic growth is
increasingly evident, with the EMEA region the largest in the
Group. This diversification, combined with the weakness of
Sterling, means almost 70% of the Group’s 2008 reported
gross profits were generated outside the UK. With a heritage
in Finance and Accounting recruitment, these disciplines will
continue to represent a significant proportion of the business
for some time. However, other professional disciplines that we
generated from operations increased by 24.6% to £185.2m
have been successfully rolling-out now account for just over
(2007: £148.7m) the increase being largely driven by lower
50% of the Group’s gross profit and we anticipate that the
working capital requirements. The Group’s net cash position
proportion generated from these other disciplines will continue
at 31 December 2008 is £94.3m (2007: £10.3m).
to increase as we diversify further.
10
michael page international
Dividends, share repurchases and cash position
extend the appreciation of the Board and shareholders to the
The Board’s policy on dividends is to seek to grow the level of
staff and to thank them for their commitment to the Group.
annual dividend to a level which we believe can be sustained
Board of Directors
throughout economic cycles. Surplus cash generated in
excess of these dividend levels will be returned to shareholders
through share repurchases whilst maintaining a strong balance
sheet position.
Stephen Box, the Senior Independent Director, has decided
not to seek re-election to the Board at the forthcoming Annual
General Meeting in May. Stephen joined the Board at the time
of flotation in 2001 and has been a valuable member of the
Given the slight reduction in earnings per share but more
Board. We all thank him for his contribution.
importantly the uncertain economic outlook, the Board is
recommending maintaining the total dividend per share for the
Current trading and future prospects
year at 8p. The proposed final dividend is 5.12p (2007: 5.6p)
Market conditions have deteriorated further since the
per share which, together with the interim dividend of 2.88p
beginning of the year, with gross profit decreasing in January
(2007: 2.4p) per share paid in october, makes a total dividend
and February by 30% (down 38% on a constant currency
for the year of 8.0p (2007: 8.0p) per share. The final dividend,
basis). The Group is currently operating around break even
if approved, will be paid on 8 June 2009 to those shareholders
at the operating profit level, although March is historically our
on the register at 8 May 2009. The total dividend is covered
strongest month in the first quarter. In light of these conditions,
3.8 times by basic earnings per share of 30.3p.
we continue to take aggressive action to manage our cost
We repurchased 7.2m shares for £16.8m during 2008.
our year end net cash position of £94.3m is higher than usual,
reflecting the adoption of a more cautious approach to the
Group’s financial position given the deteriorating economic
conditions and volatility in the financial markets.
takeover approach by Adecco
In May 2008, Michael page received an unsolicited offer from
Adecco S.A. (“Adecco”) regarding a possible offer for the
Group. After careful consideration, the Board of Michael page
concluded that the proposed offer materially undervalued
the Group and its prospects and that the interests of the
Group’s shareholders and employees would be better
served by Michael page remaining an independent entity.
base. Group headcount at the end of February was 4,491,
down by 452 in the last two months and 961 down from the
position at the end of September. This is 19% lower than the
peak level of 5,535 in June 2008.
Strategy and Outlook
The specialist recruitment markets benefit from a number
of long-term structural drivers such as: labour market
deregulation; demographic changes; a global shortage of
qualified professionals; increasing job mobility; labour law
compliance and a greater awareness and acceptance for
companies to use specialist recruitment services. These drivers
remain, notwithstanding the impact of the economic climate
on the confidence of both candidates and clients.
on 16 September 2008, Adecco announced it was no longer
In previous economic downturns, while we reduced headcount,
considering making an offer for Michael page, and pursuant
we maintained our market presence and continued to make
to Rule 2.8 of the City Code on Takeovers and Mergers,
selective new investments. These decisions enabled us to
prevented from making an offer for Michael page within the
take market share and enhance the resilience of the Group
six month period following the date of their announcement.
so that we were able to grow more quickly when economic
Employees
conditions improved. While the current economic climate is
challenging, we will, once again, aim to maintain and develop
In response to the deteriorating and increasingly challenging
our market presence while managing our cost base to reflect
economic climate, we have and continue to take the regrettable,
current trading conditions.
but necessary, actions to reduce our staff headcount around
the world. I would like to thank those staff who have left the
business for their contribution to the Group and wish them
well for the future.
The long-term growth strategy of the Group is founded on
the successful development of our staff within a meritocratic
culture. our objective is to provide the environment and
opportunity for talented individuals to develop and progress
their careers with high recognition and reward. I would like to
our next Interim Management Statement covering trading
during the first quarter will be released on 7 April 2009.
Sir Adrian Montague CBE
Chairman
5 March 2009
ANNUAl REpoRT 2008
11
Operational
REVIEW
Strategy
the group’s strategy is to expand the business with the
objective of being the leading specialist recruitment consultancy
in our chosen markets. as recruitment activity is dependent
upon economic cycles, our strategy to counter the impact of
economic downturns is to diversify our business by industry
sectors, professional disciplines and by geographic markets.
By being more diverse the dependency on individual businesses
or markets is reduced, making the overall group more resilient.
this strategy is pursued entirely through the organic growth
of existing and new teams, offices, disciplines and countries
with a consistent team and meritocratic culture.
this growth is achieved by drawing upon the skills and
experiences of proven michael page management ensuring we
have the best, most experienced, home grown talent in each
key role. When we invest in a new business we do so only with
a long term objective and in the knowledge that at some point
there will be periods when economic activity slows. While it is
difficult to predict accurately when these slowdowns will occur
and how severe they will be, it has been our practice in the past
and our intention in the future to maintain our presence in our
chosen markets, but with close control over our cost base.
2008
2000
£552.7m £238.3m
47%
32%
12%
9%
gross profit
% of gross profit by Region
emea
UK
asia pacific
americas
% of gross profit from four largest countries
UK
France
netherlands
australia
top 4
32%
16%
7%
7%
62%
36%
49%
13%
2%
49%
25%
6%
9%
89%
12
michael page international
our team based structure and profit share business model is
Review of 2008
scaleable. The small team size also means that we can rapidly
increase our headcount to achieve growth. When market
conditions tighten these teams then reduce in size largely
through natural attrition. Consequently, our cost base will be
reduced in a slowdown, but having invested years in training
and developing our highly capable management resources
our objective is to retain this expertise within the Group.
By following this course of action we typically gain market
share during downturns and position our businesses for
leading rates of growth when economic conditions improve.
pursuing this approach does mean that in a downturn our
profitability declines as, in addition to the lower productivity
levels that come with a slowdown, we also carry spare
capacity. Adopting this strategy of toughing out economic
slowdowns also drives our funding strategy and balance
sheet position. In slowdowns, the business continues to
At the start of the year the problems within the banking
sector, which had begun with US sub-prime lending in August
2007, were beginning to impact more generally on banking
clients. While this slowed our growth rates in businesses and
locations with a high proportion of banking clients, elsewhere,
we continued to experience strong demand from almost
every other industry sector. To capitalise on this demand and
continuing our investment in new businesses for longer term
growth, we increased our headcount during the first half of
the year by nearly 500 people, 263 of these joining in January
2008. We opened in Austria, Turkey and New Zealand, added
a number of new offices in other countries and continued the
discipline roll out across our office network.
As the problems in the financial markets increased, business
confidence eroded and economic growth slowed with
produce strong cash flows as working capital requirements
gradually more and more industries and countries feeling
reduce. With uncertainty around the length and depth of
the effects. This loss of confidence became more marked
economic slowdowns, a strong balance sheet is essential to
and spread rapidly in the fourth quarter to impact virtually
support the businesses through these tougher periods and,
every industry sector and geographic region in which the
when conditions improve and the businesses start growing,
Group operates. our businesses reacted to these weakening
to fund the increased working capital requirements.
market conditions by reducing headcount, most noticeably
% of gross profit by Discipline
Finance and Accounting
Marketing, Sales and Retail
legal, Technology, HR, Secretarial
and other
Engineering, property & Construction,
procurement & Supply Chain
2008
2000
49%
19%
17%
66%
21%
10%
15%
3%
ANNUAl REpoRT 2008
13
during the fourth quarter, with over 500 people leaving the
The region produced an increase of 5.2% (8.2% decrease
Group during that period. As visibility reduces in a downturn
in constant currency) in operating profit to £66.3m
and productivity declines, reductions in headcount inevitably
(2007: £63.0m) and the conversion rate reduced to 25.6%
lag the reductions in activity levels and gross profits.
(2007: 32.1%).
The reduction in headcount was achieved largely through
natural attrition and without incurring significant restructuring
charges. At the end of the year our total headcount was 4,943
(2007: 5,052) operating from 163 offices in 28 countries.
Continental Europe, Middle East and Africa (EMEA)
EMEA, the Group’s largest region, contributing 47% of the
Group’s gross profit, reported strong growth with revenue
increasing 32.8% to £426.4m (2007: £321.1m) and gross
profit increasing by 31.7% to £258.8m (2007: £196.4m).
The reported growth rates benefit from the weakness of
Sterling, revenue and gross profit growth rates in constant
currencies being 14.8% and 13.9% respectively.
In the first quarter of 2008 the businesses grew year–on-
year gross profits by 38% in constant currency. This growth
France (33% of EMEA), which remains our second largest
and most established business after the UK, had a very
successful year growing gross profits by 17% in constant
currency. The business in France recorded year–on-year
growth until the fourth quarter, with page personnel being
more resilient than the Michael page business.
The individual performances of the countries that make
up the rest of the region demonstrate the benefit of
having a diverse geographic spread. In constant currency,
the Netherlands (16% of EMEA) gross profits were the same
as in 2007, Germany (14% of EMEA) grew gross profits by
21%, Switzerland (8% of EMEA) grew gross profits by 21%,
Spain (9% of EMEA) saw a decline in gross profits of 10%,
while Italy (9% of EMEA) grew gross profits by 20%.
rate had slowed to 25% in the second quarter, but with all
United kingdom
countries in the region still achieving year-on-year growth.
In the third quarter the region grew by 13%, but with Spain
and the Netherlands being the first established countries
recording year-on-year declines in gross profit. In the fourth
quarter all countries recorded year-on-year declines in gross
profit, save for poland, Russia and the UAE.
The UK contributed 32% of the Group’s gross profits in 2008.
Revenue increased by 1.4% to £365.6m (2007: £360.4m)
while gross profit was 5.0% lower at £176.7m (2007:
£186.0m). The lower gross profit from an increase in revenue
is almost entirely due to a shift in mix as gross profit from
permanent placements declined while gross profit from
Headcount in the region increased from 2,078 at the start
temporary placements grew. At the beginning of the year the
of the year, peaked at 2,363 in July and ended the year at
crisis in the financial markets was only affecting our banking
2,155. As well as opening in Vienna, Austria and Istanbul,
business, while the other disciplines were experiencing
Turkey we launched new offices in Stuttgart, Seville, Massy,
strong demand and continuing to grow. We opened offices
Breda, Gothenburg, and in the first quarter of 2009 in
in Newcastle and Cardiff with headcount increasing from
Abu Dhabi. The cost base increased during the first half
1,799 at the start of the year, to peak at 1,880 at the end of
of the year to support growth. As growth rates slowed,
April. While headcount has reduced by 13% in the remainder
visibility reduced and productivity declined, with the
of the year to 1,640 at the end of December, it has lagged
combination impacting on profitability and conversion rates.
the reduction in gross profits. Consequently, operating profits
8%
16%
14%
11%
9%
9%
EMEA GROSS PROfIt 2008
+17% Growth
France
33%
+36% Growth
Belgium, South Africa, UAE,
Sweden, poland, portugal,
Russia, Ireland, luxembourg
+20% Growth
-10% Growth
Italy
Spain
+21% Growth
Germany
+0% Growth
Holland
+21% Growth
Switzerland
Growth rates in local currency
14
michael page international
for the year are 21.6% lower at £46.6m (2007: £59.4m),
Asia Pacific
representing a conversion rate of 26.4% (2007: 31.9%).
In the Asia pacific region, revenue was 14.0% higher at
The gross profits of the Finance and Accounting businesses,
£111.4m (2007: £97.8m), gross profit was 16.7% higher at
which generated 50% of UK gross profit, was 11% lower
£66.8m (2007: £57.2m) and operating profit increased 7.3%
than in 2007, with gross profits from permanent placements
to £22.4m (2007: £20.8m), representing a conversion rate
declining as the slowdown, which started in the City, spread
of 33.5% (2007: 36.4%). The reported results benefit from
to impact london more generally and latterly the regions.
Gross profit and margin from temporary placements remained
broadly flat on last year.
The combined gross profits of Michael page Marketing,
Michael page Sales and Michael page Retail, were in
line with 2007 and represented 24% of UK gross profit.
The Marketing and Sales businesses performed well in
an increasingly challenging market achieving considerable
growth in temporary gross profits as permanent activity
slowed. Retail, which had a strong first half has experienced a
sharp slowing from the summer onwards reflecting difficulties
in the sector.
Sterling’s weakness, using constant currency, revenue grew
by 3.1%, gross profit grew by 5.2% and operating profit fell by
3.4%. Headcount in the region grew from 632 at the start of
the year to a peak of 716 at the end of october. As the effects
of the economic slowdown spread rapidly in the fourth quarter,
our businesses responded quickly by reducing headcount in
the last two months by 80 to end the year at 638.
In Australia and New Zealand, (61% of Asia pacific) gross
profit and operating profit grew in constant currency by 11.7%
and 13.7% respectively. We opened an office in Auckland
and with the Australian economy remaining strong we
increased headcount and continued the roll out of disciplines.
The Australian economy started to show signs of slowing
Michael page legal, Michael page Technology, Michael
in the second half, with market conditions then weakening
page Human Resources and Michael page Secretarial,
rapidly in the fourth quarter.
which combined represented 16% of the UK, had a 4%
decline in gross profits. As with the other UK disciplines,
they achieved growth in temporary placements and lower
permanent placement activity. The spreading of the financial
crisis has impacted heavily on the legal recruitment market
while Technology and Human Resources performed well,
growing in the year.
In the Rest of Asia the performance was more mixed. In Tokyo,
which is yet to rollout all disciplines, our business is heavily
dependent on the banking sector and has had a difficult year,
but remained profitable. In China we continued to invest and
grow our business opening offices in Beijing and Shenzhen.
In Hong Kong and Singapore our businesses performed
strongly until the fourth quarter when market confidence
The more recently created Michael page Engineering &
eroded rapidly and activity levels reduced sharply.
Manufacturing, Michael page procurement & Supply Chain
and Michael page property & Construction businesses,
grew at over 30% and together now represent 9% of UK
gross profit. These businesses all grew gross profit in 2008,
with the growth in temporary placements exceeding the
growth in permanent.
9%
17%
24%
Uk GROSS PROfIt 2008
-11% Growth
Finance & Accounting
-1% Growth
Marketing, Sales and Retail
50%
-5% Growth
+30% Growth
legal, HR, Technology,
Secretarial and other
Engineering,
property & Construction,
procurement & Supply Chain
ANNUAl REpoRT 2008
15
the Americas
Revenue for the region was 32.3% higher at £69.3m
(2007: £52.4m) and gross profit increased by 31.3% to
£50.5m (2007: £38.4m). The reported results benefited from
Sterling’s weakness, using constant currency, revenue grew
by 19.2% and gross profit grew by 17.7%. Headcount in the
region increased from 543 at the start of the year and peaked
at 624 in July. As the effects of the downturn in North America
became more severe and with the weakening spreading
to latin America, headcount was reduced substantially in
the second half and ended the year at 510. As a result of
the slowing in activity levels, operating profit was 14.0%
(30.4% in constant currency) lower at £5.3m (2007: £6.2m),
with a conversion rate of 10.5% (2007: 16.1%).
In North America, we opened a second Canadian office in
Montreal at the start of the year and continued our discipline
diversification in our US offices, reducing our dependency on
the financial services sector. In latin America we achieved
strong growth in Mexico and Brazil, where we opened a
fifth office in Belo Horizonte. our business in Argentina,
which opened at the end of 2007, achieved a successful
first year of trading, exceeding our expectations.
placing Marketing, Sales and Retail professionals generates
around 19% of the Group’s gross profit. Revenue
from these disciplines was 18.0% higher at £140.6m
(2007: £119.1m) and gross profit increased by 15.6% to
£103.9m (2007: £89.9m), using constant currency revenue
increased by 9.2% and gross profit increased by 6.5%.
Marketing, the larger of these disciplines, achieved good
growth particularly in the UK from temps and the public sector.
Sales, mainly a permanent business, achieved good growth
particularly in Australia and Brazil where it is a relatively new
discipline focus. Retail, which is the smaller of these disciplines
and predominantly permanent rather than temporary, had a
tough year reflecting the difficulties in the sector.
legal, Technology, Human Resources, Secretarial and other
disciplines are all comparatively small with the largest of
the disciplines accounting for less than 5% of Group gross
profit. Revenue from these disciplines was 24.7% higher at
£168.2m (2007: £134.9m) and gross profit increased by
26.2% to £93.2m (2007: £73.8m), using constant currency
revenue increased by 15.9% and gross profit increased by
16.8%. With the notable exception of legal recruitment
which was severely affected by the financial crisis all the
remaining disciplines grew well off a smaller base, as they
Discipline development
were rolled out.
placing people in Finance and Accounting roles, the large
The most recently established disciplines of Engineering,
majority of which are professionally qualified accountants
property & Construction and procurement & Supply Chain
into industry and commerce, generates around half of
all grew rapidly, with the largest, Engineering accounting
the Group’s gross profits. Revenue from Finance and
for almost 7% of Group gross profit. Revenue from these
Accounting placements was 9.2% higher at £542.0m
disciplines was 50.4% higher at £122.0m (2007: £81.1m) and
(2007: £496.5m) and gross profit increased by 5.5%
gross profit increased by 48.3% to £82.6m (2007: £55.7m),
to £273.0m (2007: £258.7m), using constant currency,
using constant currency revenue increased by 35.2% and
revenue increased by 1.1% and gross profit reduced by
gross profit increased by 32.5%. These higher rates of growth
3.0%. The reduction in gross profit is largely as a result of the
reflect the benefit from rolling out new disciplines across our
financial crisis substantially reducing the number of banking
established network and in more recently launched countries
placements, particularly in permanent roles.
such as the United Arab Emirates.
39%
ASIA PACIfIC GROSS PROfIt 2008
+12% Growth
Australia and New Zealand
61%
-4% Growth
Asia
Growth rates in local currency
16
michael page international
Outlook
We have made significant investments over the past few
years, organically diversifying our business, geographically
and by discipline, where market opportunities exist and
when we have a senior experienced member of the
Michael page management team available to pursue them.
This diversification has undoubtedly benefited the Group’s
performance as economies around the world have slowed.
Given the difficult global outlook, we have limited our own
investment and expansion plans and will aggressively
manage our costs to reflect activity levels, including where
possible consolidating offices and merging teams.
Given the current uncertainty over the economic outlook
it is extremely difficult to predict the performance of our
business in the short term. We have an exceptional pool
of ambitious and talented people in the Group, particularly
at the senior management levels, who have experience of
managing these businesses through periods of economic
slowing and recession. We have a track record in periods
of economic slowdown of maintaining our infrastructure
and market presence, seeking to position the business for
strong growth when economic conditions improve. It has
always been, and will continue to be, our intention to take
decisions and make investments for the longer-term benefit
of our stakeholders.
Steve Ingham
Chief Executive
5 March 2009
“”
it hAS AlwAyS
Been, And will
continue to Be, ouR
intention to tAke
deciSionS And mAke
inveStmentS foR
the lonGeR-teRm
Benefit of ouR
StAkeholdeRS.
52%
tHE AMERICAS GROSS PROfIt 2008
+1% Growth
North America
+40% Growth
latin America
48%
Growth rates in local currency
ANNUAl REpoRT 2008
17
financial
REVIEW
income statement
Revenue
reported revenue for the year increased by 17.0% to
£972.8m (2007: £831.6m). revenue benefited from the
weakening of Sterling during the year, and using constant
currencies, revenue increased by 7.9% to £897.4m.
as in previous economic slowdowns, permanent placement
activity was affected earlier than temporary, with the latter
being more resilient to slowing activity levels. as the
economic slowdown spread during the course of the
year, this trend was reflected in revenue from temporary
placements increasing by 19.4% to £524.4m (2007:
£439.1m), representing 53.9% (2007: 52.8%) of group
revenue. revenue from permanent placements was £448.4m
(2007: £392.6m), an increase of 14.2%.
Gross profit
gross profit for the year increased by 15.6% to £552.7m
(2007: £478.1m). the reported gross margin also benefited
from Sterling’s weakness, and using constant currencies,
gross profit grew by 5.8% to £505.7m. the group’s
gross margin decreased to 56.8% (2007: 57.5%) as
the result of a slight shift in the mix of business between
“”
the Group
Generated net cash
from operatinG
activities of £185.2m
GROup quaRteRly
GROSS pROfit tRend:
q1 2001 tO q4 2008
140
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
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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
.
8
2
1
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.
3
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.
1
2
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.
2
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.
7
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5
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1
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.
9
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.
7
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9
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3
.
8
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.
9
6
2
.
0
7
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
Q2
Q3
2007
Q4
Q1
Q2
Q3
2008
Q4
Q1
Q4
Q2
Q3
2009
18
michael page international
financial
permanent and temporary placements. Gross profit from
is provided by the number of assignments we are working
temporary placements grew faster at 19.7% to £127.0m
on, the number of candidates we have at interview and the
(2007: £106.1m) and represented 23.0% (2007: 22.2%) of
stage they are at in the interview process. The average time
Group gross profit. The gross margin achieved on temporary
to complete a placement from taking on an assignment
placements was maintained at 24.2% (2007: 24.2%). Gross
to successfully placing a candidate tends to lengthen in a
profits from permanent placements grew at a slower rate than
downturn, reducing productivity, and the risk of the candidate
temporary at 14.4% to £425.7m (2007: £372.0m) with the
being rejected or the assignment being cancelled increases,
gross margin increasing slightly to 94.9% (2007: 94.8%).
thereby further reducing our earnings visibility.
Operating profit and conversion rates
In a downturn, activity levels can slow quickly and revenue
can decline even faster due to the contingent nature of a
As a result of the Group’s organic long-term growth strategy,
large proportion of our placements. The main opportunity
tight control on costs and profit-based bonuses, we have a
for reducing our own cost base is headcount, but these
business model which is operationally geared. The majority of
reductions tend to lag the declines in revenue due to the
our cost base, around 75%, relates to our staff with the other
shortening visibility. The majority of the initial reductions
main components being property and information technology
in our headcount occur through natural attrition, without
costs. With a strategy of organic growth, the Group incurs
incurring significant
restructuring charges, however,
start-up costs and operating losses as investments are made
if greater reductions become necessary, such charges may
to grow existing and new businesses, open new offices and
be incurred.
launch new countries. Furthermore, significant increases
in headcount mean that it takes time to train staff before
they become fully productive. These characteristics of our
growth strategy and the levels of investment impact on the
conversion rates in any one reporting period.
In 2008, while we recorded an increase in gross profit of
15.6%, approximately two-thirds of this growth was due
to currency movements. As very few of our transactions
are cross border our costs are therefore impacted in a
similar manner when translated and reported in Sterling.
Generally, in years when economic conditions are benign,
The growth we achieved in gross profits was mostly achieved
revenue and gross profits grow, with operating profits growing
in the first half of the year, with headcount and infrastructure
at a faster rate due to a combination of higher productivity,
being added to support this growth and to develop longer
stronger pricing and greater utilisation of infrastructure.
term opportunities. The increasingly rapid decline in activity
In order to grow we need to increase our headcount and
during the second half, with lower gross profits together with
ensure that we have infrastructure to house and support them.
a lagged reduction in headcount, has resulted in significantly
When economic conditions weaken and recruitment activity
reduced operating profits in the second half of the year of
slows, these factors work in reverse and are compounded
£55.6m, compared to £84.9m generated in the first half of
by a shortening of earnings visibility.
the year.
The majority of our permanent placement activity is undertaken
This gearing effect reduced the Group’s conversion rate
on a contingent basis which means on those assignments
for the year to 25.4% (2007: 31.3%). The movement in the
we only generate revenue when a candidate is successfully
conversion rates of the four regions reflects the different
placed in a role. our short-term visibility on these earnings
timings and degrees of slowing they experienced, with the
COnvERSIOn RAtES
AftER SHARE BASED
CHARGES
emeA
uk
Asia pacific
Americas
Group
2008
25.6
26.4
33.5
10.5
25.4
2007
32.1
31.9
36.4
16.1
31.3
t
fi
o
r
p
s
s
o
r
G
/
t
fi
o
r
p
g
n
i
t
a
r
e
p
o
40%
30%
20%
10%
0%
Conversion Rate (excl all share based charges)
Conversion Rate (incl share based charges)
1991 1992 1993 1994
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
ANNUAl REpoRT 2008
19
conversion rate in the Americas remaining the lowest due
28.5% due to disallowable items of expenditure and profits
to the greater level of recent new investment and business
being generated in countries where the corporate tax rates are
start-ups and with North America being the hardest hit by
higher than the UK’s. The effective rate is lower than in 2007
the crisis.
As a result of the number of staff and office start-up costs
added in the first half of the year, reported administrative
expenses in the year increased by 25.4% to £412.2m
primarily as a result of the UK corporation tax rate reducing
from 30% to 28% in April 2008.
Share repurchases and share options
(2007: £328.7m). This increase is also partly due to the
It is the Group’s intention to continue to use share repurchases
movements in currencies, using constant currencies they
to return surplus cash to shareholders and to satisfy awards
increased by 14.8% to £377.2m. While no significant
under the Group’s incentive share plan and deferred annual
restructuring charges were incurred in reducing headcount
bonus plan. Reflecting the more cautious approach to the
by over 10% in the second half of the year, they have been
Group’s funding position, 7.2m shares were repurchased
more than offset by £4.8m of foreign exchange gains.
at a cost of £16.8m. 6.7m of these shares were cancelled,
Administrative expenses also included £6.9m of share-
with the remaining shares purchased by the Group’s
based charges (2007: £7.2m) in respect of the Group’s
employee benefit trust to satisfy future share plans awards.
deferred annual bonus scheme, long-term incentive plans
and executive share option schemes. The slight reduction
in these share-based charges, is due to a combination
of lower employers’ social charges as a consequence of
the reduction in the share price from 288.0p at the end of
2007, to 214.75p at the end of 2008 and amendments to
assumptions on the likelihood of awards vesting.
net interest
The Group has a net interest charge for the year of
£0.4m (2007: £2.0m). As the financial crisis deepened and
the economic outlook deteriorated, we adopted an
increasingly cautious approach to the Group’s funding
position. The reduction in the net interest charge for the
year reflects the strengthening of the Group’s financial
At the beginning of 2008, the Group had 11.1m share options
outstanding of which 3.1m had vested. In March 2008, 3.1m
share options were granted. During the course of the year
options were exercised over 1.3m shares, generating £2.2m
in cash and 0.8m share options lapsed. At the end of 2008,
12.2m share options remained outstanding of which 4.0m
had vested.
Earnings per share and dividends
In 2008, basic earnings per share were 30.3p (2007: 31.1p)
and diluted earnings per share were 29.9p (2007: 30.6p). The
weighted average number of shares for the year was 321.5m
(2007: 327.5m) reflecting the shares repurchased during the
year and the new shares issued to satisfy option exercises.
position partly offset by lower returns on cash as interest
A final dividend of 5.12p (2007: 5.6p) per ordinary share is
rates reduced.
taxation
proposed which, together with the interim dividend of 2.88p
(2007: 2.4p) per ordinary share, makes an unchanged total
dividend for the year of 8.0p (2007: 8.0p) per ordinary share.
Tax on profits was £42.7m (2007: £45.7m), representing an
The proposed final dividend, which amounts to £16.3m,
effective tax rate of 30.5% (2007: 31.0%). The rate is higher
will be paid on 8 June 2009 to those shareholders on the
than the effective UK Corporation Tax rate for the year of
register as at 8 May 2009.
fee
earners offices* countries
2,774
108
28
880
81
10
*In some locations offices are shared.
20
michael page international
Balance sheet
Cash flow
The Group had net assets of £210.7m at 31 December 2008
At the start of the year, the Group had net cash being cash and
(2007: £107.9m). The increase in net assets principally relates
cash equivalents less bank overdrafts and loans of £10.3m.
to the profit for the year of £97.3m, currency movements of
£40.1m, the credits relating to share schemes of £7.3m and
cash received from the exercise of share options of £2.2m,
offset by share repurchases of £16.8m and dividends paid
of £27.3m.
our capital expenditure is driven primarily by two main factors
being headcount, in terms of office accommodation and
infrastructure and the development and maintenance of our
IT systems. The project to replace our current recruitment IT
During the year, the Group generated net cash from operating
activities of £185.2m (2007: £148.7m), being £151.4m
(2007: £157.2m) of EBITDA, £6.7m (2007: £6.8m) of share
scheme non cash charges and a reduction in working capital
requirements of £27.1m (2007: increase of £15.1m).
The principal payments were:
• £26.4m (2007: £12.8m) of capital expenditure, net of
disposal proceeds, on property, infrastructure, information
system with the next generation is progressing well and we
systems and motor vehicles;
anticipate that the first full implementations will take place
• taxes on profits of £53.4m (2007: £36.5m);
later this year with the roll out continuing throughout 2010
in order to mitigate the implementation risks. Capital
expenditure, net of disposal proceeds, increased to £26.4m
• dividends of £27.3m (2007: £21.8m); and
• share repurchases of £16.8m (2007: £74.9m).
(2007: £12.8m) reflecting the increase in headcount, the
£2.2m (2007: £8.7m) was received in the year from the issue
opening and expansion of a number of offices and the
of new shares to satisfy share option exercises.
investment in new systems.
With cash being generated outside the UK and the weakness
The most significant items in the balance sheet is trade
of Sterling, particularly at the end of 2008, £21.4m (2007:
receivables, which were £168.4m at 31 December 2008
£4.0m) of exchange gains were recorded in the year.
(2007: £160.9m). While the reported trade receivables has
increased from the amount reported at the end of 2007 this
increase is due to the movement in exchange rates during
the year. Restating the trade receivables at the end of 2007
using exchange rates at the end of 2008 results in £192.5m
of trade receivables. The reduction in trade receivables
on a constant currency basis reflects the reduced activity,
particularly in the fourth quarter of 2008, and an improvement
At 31 December 2008, the Group had net cash of £94.3m.
net cash and Group borrowing facilities
At 31 December 2008, the Group had net cash of £94.3m
(2007: £10.3m). The net cash position comprised gross cash
deposits of £157.0m with 12 separate banks. £62.7m was
legally offset directly against borrowings in the ABN Amro
in debtor days. Despite a higher proportion of Revenue being
cash pool.
generated outside the UK, where our debtor days tend to
be higher than in the UK, Group debtor days reduced to 56
(2007: 58 days).
The Group has a 364 day £50m multi-currency committed
borrowing facility that expires at the end of May 2009.
This facility has an option that would allow the Group to draw
down all or part of the facility during May 2009 for a term
expiring in May 2011.
nEw COUntRIES 2008
Turkey
Austria
New Zealand
ExIStInG COUntRIES
ANNUAl REpoRT 2008
21
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
2008
2007
definition, method of calculation and analysis
Gross margin
56.8%
57.5% Gross profit as a percentage of revenue. Gross margin reduced slightly from
last year as a result of the mix of permanent and temporary placements.
Source: Consolidated income statement in the financial statements.
Conversion
25.4%
31.3% operating profit as a percentage of gross profit showing the Group’s effectiveness
at controlling the costs and expenses associated with its normal business
operations and the level of investment for the future. Conversion declined
compared to last year reflecting the impact of the economic slowdown on
demand for the Group’s services, lower productivity and the lag in headcount
reductions. Source: Consolidated income statement in the financial statements.
productivity
£136.2k
£144.2k 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. The reduction in productivity
this year is as a result of the general deterioration in market conditions.
Source: Consolidated financial statements.
Fee earner:
74:26
76:24
Represents the balance between operational and non-operational staff.
support staff
ratio
The movement this year demonstrates a larger reduction in fee earners in
relation to support staff. Source: Internal data.
Debtor days
56
58
Represents the length of time the company receive payments from its debtors.
Calculated by comparing how many days’ billings it takes to cover the debtor
balance. Source: Internal data.
The movement in KpI’s are in line with expectations set out in the discussion on operating profit and conversion rates in the
financial review. The ratio of fee earners to support staff at the end of 2008 has reduced from the level at the end of 2007. This ratio
improves when Group grows and headcount increases but tends to decline when Group headcount reduces as the infrastructure
staff to support a higher number of teams, offices and countries cannot be flexed as quickly as fee generating staff.
HEADCOUnt tREnD
Fee Earners
Non Fee Earners
4500
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
H1
2008
H2
2008
Ratio
fee earners : non fee earners
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
59:41
58:42
57:43
58:42
60:40
64:36
71:29
74:26
76:24
74:26
22
michael page international
Going concern
The Board has undertaken a recent and thorough review of the Group’s budget, forecasts and associated risks and sensitivities.
Despite the significant uncertainty in the economy and its inherent risk and impact on the business, the Board has concluded,
given the level of cash in the business, the geographical and discipline diversification, limited concentration risk, as well as the
ability to manage the cost base, 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. As a result, the going concern basis
continues to be appropriate in preparing the financial statements. For further details on going concern refer to page 39.
foreign exchange
The Group operates in 28 countries around the world and carries out transactions that are recorded in seventeen local currencies.
The Group reports its Income Statement and Cash Flow Statement results in pounds Sterling using the average exchange rate
for each month to translate the local currency amounts into Sterling. The Balance Sheet is translated using the exchange rates
at the Balance Sheet date.
As a service company, most of the Group’s transactions are within the territory in which the local business operates and
consequently there are few cross-border transactions between Group companies. However, royalties are charged for the use
of the Group’s trademarks and management fees are charged for Group and regional functions that provide services to other
Group subsidiary companies. Foreign exchange gains and losses are recognised in accordance with IFRS on the settlement of
these transactions where the cash received when converted into Sterling differs from the amounts previously recorded in the
Income Statement. These exchange gains and losses are included within operating profit.
The table below shows the relative movements of the Group’s main trading currencies against pounds Sterling during 2008,
when compared to those prevalent during 2007. In all cases, Sterling has weakened against these main trading currencies.
currency
Euro
Swiss Franc
Brazilian Real
US Dollar
Australian Dollar
Japanese Yen
movement in the average exchange
movement in the year end exchange
rate used for income Statement
rate used for Balance Sheet translation
translation between 2007 and 2008
between 2007 and 2008
-14%
-18%
-14%
-8%
-9%
-19%
-24%
-32%
-5%
-28%
-9%
-41%
HEADCOUnt: REACtInG tO MARkEt COnDItIOnS
t
n
u
o
c
d
a
e
H
n
i
e
g
n
a
h
C
200
150
100
50
0
(50)
(100)
(150)
(200)
(250)
EMEA
UK
Asia Pacific
Americas
ANNUAl REpoRT 2008
Q1
Q2
Q3
Q4
Jan/Feb 2009
23
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, and
the Group’s strategy are subject to a number of risks.
to operate the Group’s business while maintaining a strong
The following section comprises a summary of the main
balance sheet position. In a generally benign economic
risks Michael page International plc believes could potentially
environment this equates to maintaining the Group’s net
impact the Group’s operating and financial performance.
cash/debt position within a relatively narrow band, with cash
generated in excess of these requirements being used to buy
people
back the Group’s shares. In an economic downturn a more
The resignation of key individuals and the inability to recruit
cautious funding position is adopted with the Group being
talented people with the right skill-sets could adversely
managed in a net cash position.
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. The Group has a multi-currency notional cash pool
between the Euro zone subsidiaries and the UK-based
Group Treasury subsidiary. The structure facilitates interest
and balance compensation of cash and bank overdrafts.
It is the intention to extend the scope of the participation to
other Group companies.
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.
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.
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 and share plans linked to the
Group’s results and career progression.
macro economic environment
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 reduces further during periods of
economic downturn as currently being experienced.
24
michael page international
Competition
technology
The degree of competition varies in each of the Group’s
The Group is reliant on a number of technology systems to
main regions. In the UK, Australia and North America, the
provide services to clients and candidates. These systems are
recruitment market is well developed, highly competitive
dependent on a number of important suppliers that provide
and fragmented. The characteristics of a developed market
the technology infrastructure and disaster recovery solutions.
are greater competition for clients and candidates, as well
The performance of these suppliers are continually monitored
as pricing pressure. In EMEA, latin America and Asia, the
to ensure business critical services are available and maintained
recruitment market is generally less developed with a large
as far as practically possible. Due to the rapid advancement
proportion of all recruitment being carried out by companies’
of technology, there is a risk that systems could become
internal resources rather than through recruitment specialists.
outdated with the potential to affect efficiency and have an
This is changing due to changes in legislation, increasing job
impact on revenue and client service. This risk is mitigated by
mobility and the difficulty internal resources face in sourcing
regular reviews of the Group’s technology strategy to ensure
suitably qualified candidates and managing compliance.
that it supports the overall Group strategy.
If the Group does not continue to compete in its markets
legal
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.
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
5 March 2009
ANNUAl REpoRT 2008
25
Board
OF DiRECTORS
Sir Adrian Montague CBE (61)
non-executive Chairman
Sir Adrian Montague is Non-Executive Chairman of Friends
provident plc and of CellMark AB, the international
forest products marketing group based in Gothenburg.
From 1997 to 2001, 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 2001 to
2004, Non-Executive Chairman of Cross london Rail links
limited from 2004 to 2005 and Chairman of British Energy
from 2002 to 2009. He spent his early career as a solicitor
with linklaters & paines before joining Kleinwort Benson in
1994. Sir Adrian is also a Non-Executive Director of london
First, a Director of Skanska AB, the Swedish international
construction group, and a Trustee of The Historic Royal
palaces. He was awarded a CBE in 2001 and a knighthood in
2006. He is also Chairman of the Nomination Committee.
Steve Ingham (46)
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 1994. 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 2001,
and subsequently to Managing Director of UK operations
in May 2005. He was appointed Chief Executive on 6 April
2006. Steve is also a member of the Great ormond Street
Hospital’s Corporate partnership Board.
Stephen Box (58)
independent non-executive director,
senior independent director
Stephen Box is a Chartered Accountant who spent more
than 25 years at Coopers & lybrand, 15 of these as a
partner. From August 1997 to November 2002 he was
Finance Director of National Grid. He is a Non-Executive
Director of partyGaming plc (pG), Thames Water Utilities
ltd (TWUl) and Wales & West Utilities ltd (WWU). He
was appointed a Non-Executive Director of Michael page
International plc on 27 February 2001. He is a member of
the Audit, Remuneration and Nomination Committees.
Charles-Henri Dumon (50)
managing director – Continental europe and
the Americas
Charles-Henri Dumon joined Michael page in 1985 and
was appointed a Director in 1987. Since then he has had
full responsibility for the Group’s operations in France and
has managed the Group’s entry into Southern Europe and
South America. He was appointed Managing Director for all
Michael page’s European and South American businesses in
January 2001. His responsibilities were increased to include
North America in January 2006.
Ruby McGregor-Smith (46)
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 23 May 2007. She is Chief
Executive of MITIE Group plC, a position she has held since
March 2007. 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 Chairman of the
Audit Committee and a member of the Remuneration and
Nomination Committees.
26
michael page international
Dr tim Miller (51)
independent non-executive director
Dr Tim Miller was appointed to the Board on 15 August 2005
and became Chairman of the Remuneration Committee
on 16 September 2005. 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 (“Bank”), joining in May 2000 as
Group Head of Human Resources (HR) and was appointed
a Director of the Bank in December 2004. In addition to
his responsibilities at the Bank, Tim is a member of the
ifs Board of Governors and Vice president, organisation
and Resourcing at the Chartered Institute of personnel and
Development (CIpD). Tim was appointed Non-Executive
Chairman of SC First Bank (Korea) limited in September
2007 with responsibility for governance in Korea.
Stephen Puckett (47)
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 2000, and appointed
Group Finance Director of Michael page International plc
in January 2001. He was a Non-Executive Director of SHl
Group plc from 2004 to 2006.
Hubert Reid (68)
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 25 February 2003. 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 (46)
Regional managing director – the Americas
Alexis de Bretteville joined Michael page in 1993 as a
Consultant in paris, France. In 1997 he was appointed
Managing Director of Michael page Spain, launching Spain,
portugal and later, Brazil. In 2002 he moved to Germany,
taking on responsibility for Germany, Belgium and Sweden.
In 2004 he moved to Belgium when his responsibilities also
included Holland and the launch of poland in 2005. In 2006
he became Regional Managing Director for the Americas,
based in New York, having responsibility for Michael page in
USA, Canada, Brazil, Mexico and most recently Argentina.
Christophe Duchatellier (46)
Regional managing director – Continental europe
(excluding france)
Christophe Duchatellier joined Michael page in 1992 as
a Consultant in paris. He progressed to Director having
launched the Michael page Secretarial business in France.
In 1997 he moved to Milan, Italy and launched Michael
page Italy and in 2001 Michael page Switzerland. In 2002
he assumed responsibility as Regional Managing Director
for Spain and portugal. In 2006 he moved to Geneva and
assumed additional responsibility for Northern, Central and
Eastern Europe, also assisting with the launch of Michael
page Russia, 2006 and Michael page luxembourg, 2007.
Gary James (47)
Regional managing director – Asia pacific
Gary James joined Michael page Finance in london in
1984. He was appointed Director of Michael page Sales
& Marketing in 1994, Managing Director of Michael page
Marketing in 1997 and transferred to America in 2002 as
Managing Director of North America. He moved to Australia
and was appointed Managing Director of the Asia pacific
region in August 2006.
Andrew wayland (42)
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 2005.
ANNUAl REpoRT 2008
27
Directors’
REPORT
Principal activity and review of the business and
provisions of the Company’s share schemes and plans may
future developments
cause options and awards granted to employees under such
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 50 to 81. Details of the Group’s
strategy, outlook and review of operations are described in
the Chairman’s Statement, operational Review and Financial
schemes and plans to vest on a takeover.
Directors and interests
The following were Directors during the year and held office
throughout the year other than as shown below.
Review on pages 10 to 25.
Enhanced Business Review
• Sir Adrian Montague CBE‡ (Chairman)
• Steve Ingham (Chief Executive)
• Stephen Box‡*
The Company is required to set out in this report a fair review
• Charles-Henri Dumon
of the business of the Group during the financial year ended
• Ruby McGregor-Smith‡
31 December 2008 and of the position of the Group at the
• Dr Tim Miller‡
end of that financial year, together with a description of the
• Stephen puckett
principal risks and uncertainties facing the Group (known as
• Hubert Reid‡
an Enhanced Business Review).
‡ Non-Executive Directors
The information that fulfils the requirements of this Review can
* Senior Independent Director
be found in the following sections of the Annual Report:
In accordance with the Company’s Articles of Association,
operational review
Strategy
pages 12 to 17
Stephen puckett and Hubert Reid will retire by rotation at the
pages 4 to 9
Annual General Meeting and, being eligible, offer themselves
Key performance indicators
page 22
for re-election. The Senior Non-Executive Director, Stephen
pages 11 and 17
Box will retire during 2009.
Future outlook
Risks and uncertainties
Financial review
Corporate responsibility
Significant agreements
pages 24 and 25
pages 18 to 25
pages 29 to 33
There are certain agreements to which the Company is party
that take effect, alter or terminate upon a change of control
of the Company following a takeover bid.
Details of the significant agreements of this kind are as
follows:
Biographical details for all the current Directors are shown
on pages 26 and 27.
The beneficial interests of Directors in office at 31 December
2008 in the shares of the Company at 31 December 2008
and at 5 March 2009 are set out in the Remuneration Report
on pages 40 to 47.
All of the Executive Directors are deemed to have an interest
in the ordinary shares held in the Employee Benefit Trust and
its subsidiaries.
A £50m revolving credit facility that terminates on a change
The Company has maintained throughout the year directors’
of control, with outstanding amounts becoming payable
and officers’ liability insurance in respect of itself and its
with interest.
28
directors. The directors also have the benefit of the indemnity
provision contained in the Company’s Articles of Association.
michael page international
These provisions, which are qualifying third party indemnity
Substantial shareholdings
provisions as defined by Section 234 of the Companies Act
2006, were in force throughout the year and are currently
in force.
Results and dividends
The profit for the year after taxation amounted to £97.3m
(2007: £101.7m).
A final dividend for 2007 of 5.6 pence per ordinary share was
paid on 9 June 2008. An interim dividend of 2.88 pence per
As at 20 February 2009, the Company has been notified of
the interests held in more than 3% of the issued share capital
of the Company as shown in Fig.1. below.
Fig.1. Substantial Shareholdings
Holder
Number of
ordinary
shares
% of issued
share capital
Capital International Limited
42,018,829
13.05%
ordinary share was paid on 10 october 2008. The Directors
Standard Life Investments
recommend the payment of a final dividend for the year
Lone Pine Capital
ended 31 December 2008 of 5.12 pence per ordinary share
on 8 June 2009 to shareholders on the register on 8 May
2009 which, if approved at the Annual General Meeting, will
result in a total dividend for the year of 8.0 pence per ordinary
share (2007: 8.0 pence).
Share capital
Fidelity
JP Morgan
Wellington Management
Legal & General
Baillie Gifford
Nomad Investments
27,805,473
17,340,086
16,322,485
15,993,951
15,047,409
12,731,958
9,743,561
9,713,547
8.63%
5.38%
5.07%
4.97%
4.67%
3.95%
3.03%
3.02%
The authorised and issued share capital of the Company are
shown in Note 18 to the financial statements.
Corporate responsibility (CR)
At the Annual General Meeting held on 23 May 2008,
The Board recognises its responsibilities in respect of social,
the Company renewed its authority to make market purchases
environmental and ethical (SEE) matters, with the Chief
of its own ordinary shares up to a maximum of 15% of the
Executive having Board responsibility for Group Environmental
issued share capital.
During the year, the Company purchased 6.7m shares which
were immediately cancelled. A further 0.5m 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 £0.1m and represented 2.2% of the issued
share capital. The shares were purchased for a consideration
of £16.8m including expenses. 1.3m shares were also issued
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 2008
no significant SEE risks were identified. The Company is
also a member of the FTSE4Good Index Series designed
to measure the performance of, and facilitate investment in,
those companies meeting globally recognised standards of
corporate responsibility.
to satisfy share options exercised during the year.
The Group’s policies on CR matters are described in the
following paragraphs.
ANNUAl REpoRT 2008
29
(a) environmental policy
Water
The Group does not operate in a business sector which
causes signifi cant pollution, but the Board recognises that
the business does have an impact on the environment.
In the UK, Michael page has consumed 33,514 m3 of water.
This is an increase of 13% from last year’s fi gures due to new
offi ces and an increase in staff.
The Board is committed to managing and improving the way
electricity
in which our activities affect the environment by:
• optimising the use of energy;
•
ensuring the effi cient use of materials;
•
encouraging re-use and recycling; and
our UK offi ces consumed approximately 5,288,020 kWh of
electricity which converts to 1,691 tonnes of Co². our average
electricity consumption is 154 kWh of electricity per m² of offi ce
space. This sits well within benchmarks, which state for an air
conditioned offi ce medium electricity consumption should fall
•
incorporating the principle of sustainable development.
between 128kWh/m² and 226kWh/m².
During the year, the Group has continued to allocate a
our energy supplier provides ‘greener’ energy having less of an
signifi cant amount of time and resource to further identify
impact on the environment. Electricity is taken from renewable
where its activities have an impact on the environment.
sources which reduces the carbon emissions.
A review is carried out annually in accordance with the
Gas
guidance as laid down by the Department for Environment,
Food and Rural Affairs (DEFRA), and the Global Reporting
Initiative (GRI), an independent international institution
The estimated total carbon emissions generated by the
consumption of gas at our UK offi ces is 400 tonnes of carbon
dioxide. The tonnage of gas is based on UK offi ces consuming
established to create a common framework for sustainability
1,997,201 kWh of gas during the year.
reporting worldwide.
transport
The current environmental report, which covers our UK
businesses only, will shortly be available on the Michael page
website. A summary of its fi ndings during 2008 is shown
our largest environmental impact is transport related pollution.
This is from business travel and getting to and from work which
generated an estimated 1,075 tonnes of Co².
below.
Waste
“more Green”
As a company committed to green issues, we are actively
•
235 tonnes of waste was generated by UK offi ces.
involved in fi nding work practices that can help reduce our
• Through recycling, Michael page in the UK has saved
3,248 trees and saved a total of 955m3 landfi ll space.
A summary is shown in Fig.2. below.
energy
carbon footprint. ‘More Green’ was launched in the UK in
2007 to focus employees more actively on green issues and
to advertise internally the environmental matters in which
Michael page is engaged.
Michael page are proud consumers of Green Choice energy
The total Co² emissions generated as a result of the use of
which is the most environmentally sound electricity option
electricity and gas at Michael page, offi ces in 2007/2008 is
available in the UK. Green Choice energy supplies electricity
estimated at 2,091 tonnes.
Fig.2. UK Waste Generation
from environmental sources coming from a mixture of
Confi dential waste
Toners
Mixed offi ce paper
Food waste and packaging
Other
Total
Annual weight
generated (tonnes)
% of total
waste
80
3
75
61
16
34%
1%
32%
27%
6%
235
100%
30
michael page international
renewable sources. These sources do not involve the burning
city youth with opportunities to join a team, coach a group
of fossil fuels, which produce Co2 emissions.
and inspire youths to recognize their potential and realize
Together, Michael page and page personnel in the UK
earned a SITA Certificate of Recycling. In 2009 we will be
working hard to make an even greater effort to reduce our
environmental impact.
In respect of managing waste and reducing the amount of
waste that would typically go to landfill, we are phasing out
the use of plastic cups and replacing them with glasses.
This saves approximately 380,000 cups from landfill. In 2009
we will be launching a review of our stationery products to
ensure that we not only leverage best price, but also ensure
that products we purchase are environmentally friendly and
come from sustainable sources. This is a global programme
that will operate in the majority of countries.
(b) Charitable donations
The Group made charitable donations of £153,366 during
their dreams, Sport Dans la Ville (Sport dans la Ville creates
sport-activities to help underprivileged children who live in
difficult neighbourhoods) and Norwalk Child Safety Group,
which was created by the City of Norwalk police Benevolent
Association to find effective solutions to neighbourhood
concerns. Here we contributed to their annual recruitment
drive and sponsored their annual Community Guidebook.
We also assisted the Juvenile Diabetes Research Foundation
(the JDRF is dedicated to helping children who have diabetes
live a normal, healthy life) where we contributed to their annual
fund raiser and Michael page consultants volunteered at a
summer event to help raise awareness.
In latin America, we sponsor three big social projects, all
of them involving cultural awareness for children in need.
These were projeto Vida Jovem, projeto Guri, and Ação
Comunitária, which aim to keep children off the streets and
the year (2007: £89,800). Included in donations are amounts
in school, preparing them for a better future.
made to various local charities serving the communities in
which the Group operates. It is the Group’s policy not to
make political donations.
In Asia pacific, Michael page Australia held numerous
charitable events, supporting a range of charities including the
Breast Cancer Foundation, Juvenile Diabetes Foundation and
In EMEA, Michael page portugal supported the legião da
Ronald McDonald House Children’s Charity. The Melbourne
Boa Vontade and liga portuguesa Contra o Cancro. legião
team has also personally contributed to the sponsorship of
da Boa Vontade, is an educational, cultural and charity
two children through World Vision for the past three years.
association, which promotes food distribution, education,
In Hong Kong, Michael page supported children’s cancer
culture and employment. liga portuguesa Contra o Cancro
charities with a range of events, including rickshaw and sedan
is a cultural and social private association, which promotes
chair style races. In China, we raised money for operation
cancer prevention, social support for cancer patients and
Smile’, a charity which supports operations on children
training and investigation to cure the disease. In Spain, we
in China with severe cleft palates and facial deformities,
collaborate with the Theodora Foundation, with donations
in order to give them a chance of normal life and social
enabling the “Doctores Sonrisa” (Clown Doctors) to visit sick
acceptance.
children in hospital, whilst in Italy, recruitment services are
provided free of charge to Save the Children.
(c) employee involvement
Since arriving in South Africa, we have supported a charity
called Children of the Dawn. This charity focuses on
supporting aids orphans throughout the country. The focus
of their work is to support families around the children to
allow them to stay within their community, rather than seeing
them sent to orphanages where they lose contact with
their family.
The unique culture of the organisation ensures active
involvement at all levels throughout the business. We promote
a meritocratic environment where the views and ideas of our
employees have a definite impact on the decisions we make.
our ranking amongst The Sunday Times 100 Best Companies
to Work for since 2005 is the main focus of our formal
employee engagement activities. Indeed, in 2008, Michael
page International rose 21 places to 39 in the survey which is
In the UK, subject to certain restrictions, the Group matches
a testament to the efforts we have made in recent years.
charitable donations made by employees. In 2008, we
nominated The British Heart Foundation as our charity of the
year. We have sponsored a number of different initiatives and
have so far raised approximately £70,000 for the charity.
In 2008, our highest ranking factor was My Team (ranking
12th in the entire survey of 837 companies). My Team includes
encouraging team spirit, feeling part of the company, having
fun and belonging. our two highest ranking questions were:
In the Americas, the USA worked with different charitable and
Working in this Team gives me a buzz & My Team is fun to
community groups such as the Harlem RBI who provide inner-
work with.
ANNUAl REpoRT 2008
31
our most improved category was ‘Giving Something Back’
development of all its employees where this is of benefit to
which measures our involvement in community, charity and
the individual and to the Group.
environmental projects. In 2008 we launched ‘More Giving’
an initiative which allowed each UK employee 1 day per year
to undertake team based projects to benefit a local charity,
community or environmental project of their choice. Some
examples of the activities so far have included gardening,
painting and decorating, staffing at youth centres, farming
etc. To date we have given well over 300 days of service to
organisations around the UK including Macmillan Cancer
Support, Chelmsford Cats protection league, Warner’s End
Neighbourhood Community Centre, Hainault Youth Centre,
Waterways Trust to mention a only a few.
Throughout 2008, the Group monitored the diversity of its
UK employees, 88% of whom to date have completed the
voluntary request for information. The analysis indicates
a split of 52% female, 48% male, and regarding origin,
88% white, 11% ethnic origin and 1% declining to answer.
The UK 2001 Census showed a total ethnic population of
7.9%. Similar monitoring will be carried out during 2009.
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
brand amongst a more diverse audience, and to encourage
Communication with employees has always been a strength
development of an increasingly diverse candidate database
given the non-hierarchical management structure and the
together with our workforce. our monitoring of our candidate
genuine involvement of senior management with all levels
databases confirms that the brand attracts candidates from a
of employee. This was further enhanced during 2008 with
wide range of backgrounds. We participate in the Interbank
the implementation of Maximising potential as the vision for
Diversity Forum and work with organisations like Global
the organisation. one of the many initiatives resulting from
Graduates where we strive to ensure that we offer our clients
this was the ‘Maximising leadership’ calls which involved all
the most qualified candidates on the basis of their relevant
UK employees being given the opportunity to dial into a call
aptitudes, skills and abilities and that such candidates are
made by our CEo answering questions posed by employees
drawn from diverse backgrounds.
and updating them on the company’s plans for the future.
This has been particularly popular in uncertain economic
times in allowing employees to hear first hand the many
success stories around the business and also to share in
the strong leadership and employee participation required
to succeed.
The Group continues to participate in the Race for
opportunity, part of Business in the Community, a UK
movement of over 700 member companies whose purpose
is to inspire, challenge and support business in improving
its impact on society. As a result, the group has taken a
range of proactive steps to increase awareness of diversity,
Communication with employees is also effected through Group
including training for all new employees within their first month
newsletters, the Company’s Intranet, information bulletins,
with the business and implementing a competency -based
briefing meetings conducted by senior management and
management development programme to ensure employees
formal and informal discussions. Interim and Annual Reports
are promoted on their merit and ability. As making judgements
are available to all staff. Informal communication is further
based on a candidate’s individual merits is at the heart of
facilitated by the Group’s divisional organisation structure.
our diversity policy, we have introduced more competency-
In the Americas, Michael page USA was ranked ‘Number 1
Executive Recruitment firm in New York’ by Crains for the
third year in a row and again 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.
(d) equal opportunity and diversity
based interviewing procedures into our selection processes
particularly when recruiting people to join Michael page.
We continue to work closely with a range of clients to discuss
and share diversity ideas/best practice and to offer expertise
to minority groups.
Michael page is also a member of the Employers Forum on
Age (EFA), an independent network of leading employers
which sets the agenda for age and employment issues in
The Group endorses and supports the principles of equal
the UK. The membership of EFA lists over 200 organisations,
employment opportunity. It is the policy of the Group to
from central and local government to major multinational
provide equal employment opportunity to all, which ensures
corporations. Upon introduction of the Employer Equality
that all employment decisions are made, subject to its legal
(Age) Regulations in october 2006, Michael page was
obligations, on a non-discriminatory basis. Due consideration
nominated for an award by the EFA for best implementation
is given to the recruitment, promotion, training and working
of the legislation in its sector. Following the release of the
environment of all staff including those with disabilities.
legislation on age discrimination, an Age Discrimination
It is the Group’s policy to encourage the training and further
Working party was formed to review the policies, procedures
32
michael page international
and systems of the Company to ensure compliance with the
following sections of the Annual Report:
legislation once introduced.
The recommendations made are fully implemented by
the Company. Additionally, we participate in a number of
external initiatives such as the Global Graduates and The
Brokerage, a charity whose aim is to increase the ambition
and employability of young people in the 11 inner-city
london boroughs.
(e) Health and safety
• Corporate Governance (The Board and its operation)
• 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)
•
Shareholder Information and Advisers (Memorandum and
It is the policy of the Group to take all reasonable and
Articles of Association)
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:
• assess the risks to health and safety;
•
implement safe systems at work;
• provide information, instruction and training;
• establish and maintain emergency procedures; and
•
regularly review health and safety policies and
procedures.
The Group is being proactive in our approach to health and
safety by monitoring proposed changes in legislation and
implementing policies accordingly, and as such we comply
with all statutory and regulatory requirements. our medical
insurers also provide a 24hr counselling helpline covering
stress, legal issues and consumer rights.
Each of the above sections is incorporated by reference into,
and forms part of, this Directors’ Report.
Information to Auditors
Each of the Directors at the date of approval of this report
confirms that:
1. so far as the Director is aware, there is no relevant audit
information of which the company’s auditors are unaware;
and
2. the Director has taken all the steps that he ought to have
taken as a Director to make himself aware of any relevant
audit information and to establish that the Company’s
auditors are aware of that information.
3. This confirmation is given and should be interpreted
in accordance with the provisions of s234ZA of the
Companies Act 1985.
(f) supplier payment policy
Auditors
It is the policy of the Group to agree appropriate terms
and conditions for transactions with suppliers (by means
ranging from standard written terms to individually negotiated
contracts) and that payment should be made in accordance
with those terms and conditions, provided that the supplier
has also complied with them.
The Company acts as a holding Company for the Group.
Creditor days for the Company were nil (2007: nil) as
the Company does not undertake any transactions with
Deloitte 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.
Annual General Meeting
The resolutions to be proposed at the Annual General Meeting
to be held on 22 May 2009, together with explanatory notes,
appear in the Notice of Meeting set out on pages 89 to 94.
suppliers. The Group’s creditor days at the year end were 38
By order of the Board
(2007: 27 days).
Share capital, restrictions on transfer of shares and
other additional information
To the extent not discussed in this Directors’ Report,
information relating to the Company’s share capital structure,
restrictions on the holding or transfer of its shares or on the
exercise of voting rights attached to such securities required
by Section 992 of the Companies Act 2006 is set out in the
kelvin Stagg
Company Secretary
5 March 2009
ANNUAl REpoRT 2008
33
Corporate
gOVERNANCE
The Board of Directors has a strong commitment to high
Stephen Box will retire from the Board in 2009. The Group would
standards of corporate governance and has applied the
like to extend their thanks to Stephen for his contribution.
main and supporting principles of corporate governance
as recommended in Section 1 of the Combined Code on
Corporate Governance, (the “2006 FRC Code”), for the year
ended 31 December 2008.
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 2006 FRC
Code throughout the year ended 31 December 2008.
the Board and its operation
The Board of Michael page International plc is the body
responsible for corporate governance, establishing policies
and objectives, and the management of the Group’s
resources. It is the Group’s policy that the roles of Chairman
and Chief Executive are separate.
The main Board currently comprises the Chairman, who
is deemed to be independent and 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
All Directors have access to the advice and services of the
Company Secretary, who is responsible for ensuring that
Board procedures and applicable rules and regulations are
observed. There is an agreed procedure for Directors to
obtain independent professional advice, if necessary, at the
Company’s expense.
The Board meets regularly throughout the year. It has a
formal schedule of matters reserved to it and delegates
specific responsibilities to Committees. During the meetings,
the Board formally considers how and to whom matters
covered at each meeting should be communicated and
actioned beyond the Board. Decisions concerning matters
of a more routine nature are dealt with by management below
Board level. The structure of the Group facilitates the day to
day running of the business and enables efficient and effective
communication of issues to the Board when required.
The Chairman and Non-Executive Directors also met during
the year without the Executive Directors being present.
Each of the Committees has formal written terms of reference
which were reviewed in 2008.
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.
every three years in accordance with the 2006 FRC Code.
The Executive Board, a Committee of the Main Board, meets
Stephen puckett and Hubert Reid 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,
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.
with each director demonstrating commitment to their role.
These activities are performed at a regional level by four
The Board is therefore pleased to support their re-election
Regional Boards, Committees of the Main Board, for the UK,
at the forthcoming Annual General Meeting.
EMEA, Asia pacific and the Americas. Each Regional Board
34
michael page international
meets at least four times a year.
Objectivity and independence of external auditors
The Company amended its articles of association in May
Deloitte are employed to perform work in addition to their
2008 to deal with, amongst other things, the provisions on
statutory duties where it is felt that they are best placed
conflicts of interest in the Companies Act 2006 which came
to carry out the engagement as a result of their being the
into force in october 2008. Following this, the Company
Group’s auditors. All other work is awarded on the basis of
has put in place procedures for the disclosure and review
competitive tender.
of any conflicts, or potential conflicts, of interest which the
Directors may have and for the authorisation of such conflict
matters by the Board. In deciding whether to authorise a
The objectivity and independence of the external auditor is
safeguarded by:
conflict or potential conflict, the Directors must have regard
a. obtaining assurances from the external auditor that
to their general duties under the Companies Act 2006.
The authorisation of any conflict matter, and the terms of
authorisation, may be reviewed at any time and will be
reviewed formally by the Board on an annual basis.
Audit Committee
The Audit Committee comprises the independent Non-
Executive Directors and, since May 2008, is chaired by Ruby
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:
McGregor-Smith. Their relevant qualifications and experience
i.
from which the external auditor is excluded;
are shown in their biographies on the Board of Directors
ii. for which the external auditor can be engaged without
page 26 and 27.
referral to the Audit Committee; and
The Committee met seven times in 2008 to fulfil its duties
iii. for which a case-by-case decision is required, which
and included attendance by the external auditors where
required. The number of meetings increased from four
last year to review interim management statements before
submission to the Main Board. The Committee also met with
includes all engagements over certain fee limits.
The following areas are considered to be unacceptable
for the external auditors to undertake:
the external auditors during the year without the presence
•
selection, design or implementation of key financial
of management.
systems;
In 2008 the Audit Committee discharged its responsibilities
•
maintaining or preparing the accounting books and
as set out in the terms of reference which can be found on
records or the preparation of financial accounts or
our website. Its principal tasks are to review the Group’s
other key financial data;
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
• 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;
ANNUAl REpoRT 2008
35
• provision of internal audit services;
to the Board. The terms of reference of the Nomination
• valuation services or fairness opinions; and
Committee can be found on our website.
•
any services specifically prohibited to be provided
by a listed company’s external auditors under UK
Succession planning
regulations.
The following criteria also need to be met before the external
auditors are contracted to provide such services:
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
•
the firm has the necessary skills and experience to
we require good people. It is therefore one of the fundamental
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
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.
normal tendering processes; and
Due to this philosophy of nurturing our own talent, succession
•
in addition to the normal authorisation procedures and
planning is inherently a key part of the process. We do not
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.
c. enforcing a policy of reviewing all cases where it is
proposed that a former employee of the external auditors
be employed by the Group; and
d. monitoring the external auditors’ compliance with
applicable UK ethical guidance on the rotation of audit
partners.
Remuneration Committee
make promotions or move people within the business unless
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
The Remuneration Committee comprises the independent
recent appointment, all candidates in the final shortlist were
Non-Executive Directors and is chaired by Dr Tim Miller.
interviewed by the Nomination Committee. Evaluations of all
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
candidates are discussed with all members of the Nomination
Committee and the recommendation is subsequently made
to the Board.
Induction and training programme
incentivisation of senior employees including share schemes.
on appointment to the Board, each Director discusses with
The Committee meets at least twice a year and is also attended
the Company Secretary the extent of training required and
by the Chief Executive, except when his own remuneration
a tailored induction programme to cover their individual
is under consideration. The Remuneration Report includes
requirements is then compiled. Elements of the programme
information on the Directors’ service contracts. The terms
typically consist of meeting senior management, site visits
of reference of the Remuneration Committee can be found
and attending internal conferences. In addition, information
on our website.
nomination Committee
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
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
provided on a periodic basis.
Performance evaluation
new appointments, as well as making recommendations as
The Board, as part of its commitment to ensuring
to the composition of the Board generally, and the balance
effectiveness and evaluating its performance together with
between Executive and Non-Executive Directors appointed
that of its Directors and Committees, conducted an internal
36
michael page international
review comprising a questionnaire concerning all aspects of
the Combined Code (“the Turnbull Report”) was published in
procedure and effectiveness.
September 1999, updated october 2005.
Following completion of the questionnaires, the Chairman
The Board has assessed existing risk management and
met with the individual Directors to discuss their views and
internal control processes during the year ended 31
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 be provided where required.
Stephen Box, as the Senior Independent Director, led
a meeting of the Non-Executive Directors to appraise
the performance of the Chairman. The meeting took into
account any comments made by the Executive Directors.
This evaluation is carried out annually.
Attendance at meetings
The number of meetings of the Board and Committees and
individual attendance by the members of the Committees
only are shown in Fig.3.
Internal control
The responsibilities of the Directors in respect of internal
control are defined by the Financial Services Authority’s
listing Rules which incorporate a Code of practice known
as the Combined Code, which requires that Directors review
the effectiveness of the Group’s system of internal controls.
This requirement stipulates that the review shall cover all controls
including operational, compliance and risk management,
December 2008 in accordance with the Turnbull guidance.
The Board believes it has the procedures in place such that
the Group has fully complied for the financial year ended
31 December 2008 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’s particular needs and aim to safeguard Group
assets, ensure proper accounting records are maintained
and that the financial information used within the business
and for publication is reliable.
Any system of internal control can only provide reasonable,
but not absolute, assurance against material misstatement
and loss. Key elements of the system of internal control are
as follows:
• Group organisation.
The Board of Directors meets at least ten times a year,
focusing mainly on strategic issues, operational and
financial performance. There is also a defined policy on
matters strictly reserved for the Board. The Managing
Director of each operating division is accountable for
establishing and monitoring internal controls within
as well as financial. Internal Control Guidance for Directors on
that division;
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
Meetings attended
Non-Executive
Sir Adrian Montague CBE
Stephen Box
Ruby McGregor-Smith
Dr Tim Miller
Hubert Reid
ANNUAl REpoRT 2008
Main Board
11
11
11
11
Main Board
Audit
Committee
Remuneration
Committee
Nomination
Committee
11
11
11
11
9
10
7
7
7
7
6
3
3
3
3
3
1
1
1
1
1
1
37
• annual business plan.
the effectiveness of controls in mitigating specific risks.
The Group has a comprehensive budgeting system with
an annual budget approved by the Board;
• quarterly reforecasting.
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;
• financial reporting.
Detailed monthly reports are produced showing
comparisons of results against budget, forecast and the
In addition, risks are regularly reviewed 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 monitored and reviewed the effectiveness
of the internal audit activities.
The Board confirms that there is an ongoing process for
identifying, evaluating and managing the significant risks
faced by the Group and that the processes have been in
place for the year under review and up to the date of approval
of the annual report and accounts.
prior year, with performance monitoring and explanations
Board contact with shareholders
provided for significant variances. The Group reports to
shareholders on a quarterly basis;
• Audit Committee.
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.
There is an established Audit Committee whose activities
They undertake two major investor “roadshows” each
are previously described;
• financial and operational controls.
Individual operations complete an annual controls self
assessment and certification statement. Each operational
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
manager, in addition to the finance function for that
end of each roadshow. The Group’s corporate brokers also
operation, confirms the adequacy of their systems of
report monthly to the Board on broking activity during the
internal control and compliance with Group policies. The
month and any issues that may have been raised with them.
statement also requires the reporting of any significant
control issues, including suspected or reported fraud, that
have emerged so that areas of Group concern can be
identified and investigated as required;
• risk management.
Identification of major business risks is carried out at Group
level in conjunction with operational management and
Shareholders are invited to attend the Annual General
Meeting where they are able to discuss any concerns with
the Non-Executive Directors.
When requested by shareholders, individual matters can be
discussed with the Chairman or Senior Independent Director.
The Group also has a website with an investor section
appropriate steps taken to monitor and mitigate risk;
(www.michaelpageinternational.com) that contains Company
• public interest disclosure policy (whistleblowing).
announcements and other shareholder information.
The audit committee has reviewed arrangements by which
Annual Report
staff of the company may, in confidence, raise concerns
about possible improprieties in matters of financial
reporting or other matters. Arrangements are in place for
the proportionate and independent investigation of such
matters and for appropriate follow-up action; and
•
internal audit activities.
As the number of territories in which the Group operates
has increased, the internal audit function has been
strengthened. An independent, dedicated Internal
Audit team has been established, comprising the Head
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
preparation of the Annual Report. The Statement of Directors’
Responsibilities is shown on page 95. A statement by the
of Internal Audit and Internal Auditor. Businesses are
auditors about their reporting responsibilities is shown in the
visited on a risk based and rotational basis to assess
Independent Auditors’ Report on pages 48 and 49.
38
michael page international
Going concern
The Board have undertaken a recent and thorough review
of the Group’s budget, forecasts and associated risks
and sensitivities. The review performed was extensive and
rigorous to reflect the uncertain economic outlook for the
global economy taken as a whole. Despite the significant
uncertainty in the economy and its inherent risk and impact on
the business, the Board has concluded, given the level of cash
in the business, the geographical and discipline diversification,
limited concentration risk, as well as the ability to manage
the cost base, 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 these accounts. For this reason, the going concern
basis continues to be appropriate in preparing the financial
statements.
The Group’s business activities, together with factors likely
to affect its future development, performance and financial
position and commentary on the Group’s financial results,
its cash flows, liquidity requirements, principal risks and
uncertainties and undrawn borrowing facilities are set out in
the operational and Financial Review on pages 12 to 25 within
the financial statements. In addition, note 22 to the financial
statements includes the Group’s financial risk management
objectives, details of its financial instruments and hedging
activities, and its exposures to liquidity risk and credit risk.
In the year to 31 December 2008, the Group generated a
profit of £97.3m, with cash generated from operating activities
of £131.8m. As at 31 December 2008, the Group balance
sheet was in a net asset position of £210.7m with net cash
of £94.3m.
ANNUAl REpoRT 2008
39
Remuneration
REPORT
Scope and membership of Remuneration Committee
General Meetings. Additional details of service contracts are
The Remuneration Committee, which meets not less
shown on pages 46 and 47.
than three times a year, comprises the independent Non-
The remuneration of the Non-Executive Directors is
Executive Directors. The Chief Executive attends the
determined by the Board. The Non-Executive Directors
meetings as required, except when his own remuneration
do not receive any other benefits, other than out-of pocket
is under consideration. The purpose of the Remuneration
expenses, from the Group, nor do they participate in any of
Committee is to review, on behalf of the Board, the
the bonus or share schemes.
remuneration policy 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
The remuneration agreed by the Committee for the Executive
Directors contains the following elements: a base salary
and benefits, an annual bonus, share plan awards and
pension benefits.
remuneration package that aligns strongly the interests of
The following sections provide details of the Company’s
Executive Directors with that of the shareholders.
remuneration policy during 2008 and key changes to the
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,
policy for 2009.
Base salary and benefits
annual bonus and long-term incentives and other benefits.
The Committee establishes salaries and benefits by reference
It
receives advice
from
independent
remuneration
to those prevailing in the employment market generally for
consultants, Hewitt New Bridge Street, and makes
Executive Directors of companies of comparable status and
comparisons with similar organisations. No Directors,
market value, taking into account the range of incentives
other than the members of the Remuneration Committee,
provided material advice to the Committee on Directors’
remuneration.
Remuneration policy
described elsewhere in this report, including a performance
bonus. Reviews of such base salary and benefits are
conducted annually by the Committee. No increases to base
salary and benefits have been awarded for 2009.
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 strategic objectives as well as to establish a
framework for remunerating all employees.
Annual bonuses for the Executive Directors are based on
the division of a pool of profits earned during the financial
year. In 2008, the bonus pool for Executive Directors was
equal to 3.85% (2007: 3.85%) of profits earned above
It is the Company’s policy that all Executive Directors’
a threshold equal to half of targeted profits for the year.
service contracts contain a 12 month notice period.
If profits exceed 1.1 times (2007: 1.1 times) the targeted
The Non-Executive Directors do not have service contracts
level, then an additional 1.3% (2007:1.3%) of profits earned
with the Company. They are appointed for an initial three
above the targeted level is added to the bonus pool. As profit
year term and thereafter may be reappointed for a further
in 2008 was below the targeted profits, no addition was
two terms of three years, subject to re-election at Annual
made to the bonus pool. The structure of the Annual Bonus
40
michael page international
plan, together with the level of targeted profits for 2008,
executive’s salary is paid in cash. To reward service over a
has resulted in a 41% reduction in the annual bonus pool for
longer period, any excess bonus pool above 100% of the
Executive Directors, compared to a 5% reduction in profit
individual’s salary level is deferred, paid into an employee
before tax.
profits are defined as Group profit before taxation, exceptional
items and before the Executive Directors’ annual bonus
charges and charges or credits resulting from the Incentive
benefit trust and invested in the Company’s shares with
no matching investment by the Company. Based on the
2008 results, the aggregate amount deferred for the three
Executive Directors is £1.4m (2007: £3.0m).
Share plan described below or other share option grants.
Such shares are reserved for the executive and vest in equal
The bonus pool calculation is not entirely formulaic as the
Committee has the ability to vary the pool both up and down,
annual tranches over two years, normally so long as the
executive is still in employment at that time.
by up to 10%, to reflect its view of the performance of the
The Income Statement for the year carries a charge for
Company relative to its directly comparable peers. Reflecting
the Directors’ annual bonus paid in cash while the deferred
the strong performance of the business, principally compared
amount is charged in subsequent years until the shares
to the peer group, in the year, the Committee increased the
vest.
2008 bonus pool by 10%.
In reviewing the remuneration of Executive Directors,
The targeted level of profits for 2008 was £186.0m
the Remuneration Committee concluded that while total
(2007: £137.7m) and was set at the beginning of 2008 by
remuneration, being heavily geared to performance, was
reference to market expectations and internal forecasts at
appropriate, the balance between the cash and equity
that time. The Committee retains the discretion to review
components needed to be adjusted. Accordingly, in the
this arrangement and set different rates and thresholds as
future the maximum cash element of the annual bonus pool
it deems appropriate for the business.
will be 1.5 times salary.
Due to the highly uncertain economic environment, limited
Incentive Share Plan for Executive Directors and
earnings visibility and the wide range of market estimates
Senior Employees
of earnings, the Committee agreed that setting a target
for 2009 would have risked over or under rewarding
management for the performance of the business in the year.
Instead, the Remuneration Committee intends to review
the Group’s performance throughout 2009 and determine
the level of bonus, applying principles consistent with
prior years’ bonuses, by reference to internal and external
expectations and the performance of peer group comparator
companies.
In December 2003, shareholders approved a new Incentive
Share plan for Executive Directors and senior employees.
The current level of award is 6% (2007: 6%) of Group profits.
Not more than 30% 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. These awards are satisfied in shares
Unlike all other employees who receive their annual bonuses
of the Company which are purchased and held by the
in cash, the Executive Directors’ annual bonus entitlement is
employee benefit trust.
restricted to 1 times (2007: 1 times) salary. In the event that
the Executive Director’s annual bonus entitlement is greater
than 100% of salary, only an amount equal to 100% of the
ANNUAl REpoRT 2008
41
The Committee retains the discretion to review the proportion
While the Remuneration Committee believes these are the
of profits dedicated to the Incentive Share plan in the light of
most appropriate measures of the underlying performance of
the growth in the size of the Company, its profitability and
the Group, recognising that recruitment is a cyclical industry,
the number of Executive Directors.
the Remuneration Committee has reviewed the Incentive
Two thirds of these shares (“Deferred Share Awards”) are
subject to a three-year deferral period during which they will
be forfeited if the relevant director or senior employee leaves,
other than in “compassionate circumstances”. The remaining
third (“performance Share Awards”) has also been deferred
for three years but is subject to earnings per share (“EpS”)
growth targets over the three year period.
Share plan with regards to the Company’s current operations
and prospects. Given the highly uncertain outlook, the
Remuneration Committee concluded that performance
shares awarded in March 2009 would continue to be subject
to existing EpS growth targets, except they would be four
year awards and use EpS in 2009 as the base from which
growth will be measured.
Based on the 2008 results, the total award available was
Executive Share Option Scheme
£8,651,820. of this, £2,595,546 (30%) was allocated to
The Executive Directors and senior employees are eligible
the Executive Directors. Awards totalling £5,855,000 will
to participate in the Executive Share option Scheme.
be made to senior employees. Details of the awards made
No payment is required on the grant of an option and no share
in 2008 to the Executive Directors are disclosed on pages
options are granted at a discount. Benefits received under
44 and 45.
performance share awards of up to 50% of a Director’s
or senior employee’s salary only vest if EpS grows by an
average of 5% over the growth in UK RpI per annum over
the three year period. Any excess between 50% and 75%
of salary only vests to the extent that EpS grows by 7.5%
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 2004 and
subsequent years. No options were granted to Executive
over the growth in UK RpI per annum over the three year
Directors in the year.
period. Finally, to the extent that the performance share
award is greater than 75% of an executive’s salary, the hurdle
is 10% over the growth in UK RpI per annum over the three-
year period. If awards do not vest after three years, they
automatically lapse.
42
michael page international
Emoluments
The aggregate emoluments, excluding pensions, of the Directors of the Company who served during the year were as follows:
2008
Executive
Steve Ingham (Note 1)
Charles-Henri Dumon
Stephen Puckett
Non-Executive
Sir Adrian Montague CBE
Stephen Box
Ruby McGregor-Smith
Dr Tim Miller
Hubert Reid
Total
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
notes to the emoluments:
1. Steve Ingham is the highest paid director.
Salary
and fees
£’000
Benefits
(Note 2)
£’000
Annual Bonus
£’000
Deferred Annual
Bonus
£’000
Incentive Share
Plan (Note 4)
£’000
Total
£’000
1,983
1,714
1,696
110
45
45
43
43
23
40
22
–
–
–
–
–
85
371
283
283
–
–
–
–
–
537
427
427
–
–
–
–
–
681
681
681
–
–
–
–
–
937
1,391
2,043
5,679
Benefits
(Note 2)
£’000
Annual Bonus
£’000
Deferred Annual
Bonus
£’000
Incentive Share
Plan (Note 3)
£’000
22
139
22
–
–
–
–
–
360
275
275
–
–
–
–
–
1,173
924
924
–
–
–
–
–
673
673
673
–
–
–
–
–
Total
£’000
2,588
2,286
2,169
101
45
26
41
40
371
283
283
110
45
45
43
43
1,223
Salary
and fees
£’000
360
275
275
101
45
26
41
40
1,163
183
910
3,021
2,019
7,296
2. Benefits include, inter alia, items such as company car or cash alternative, fuel, cash in lieu of pension contributions,
and medical insurance. In 2007, an element of Charles-Henri Dumon’s benefits also included housing and relocation costs.
3. Represents the non-performance proportion of the Incentive Share plan awarded in March 2008 and the performance vesting proportion
of the March 2004 award.
4. Represents the non-performance proportion of the Incentive Share plan to be awarded in March 2009 and the performance vesting
proportion of the March 2005 award.
ANNUAl REpoRT 2008
43
Pension benefits
Executive Directors are eligible to participate in the Group pension plan which is a defined contribution scheme. Each Executive
Director receives 20% of their base salary or a cash alternative.
Pension contributions
Steve Ingham
Charles-Henri Dumon (note 1)
Stephen Puckett
2008
£’000
2007
£’000
74
77
57
72
38
55
1. Charles-Henri Dumon’s pension benefits are distorted across 2007 and 2008 due to a transition of local pension plan
arrangements in early 2008 and local currency movements.
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 31 December 2008, all Executive Directors complied 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
31 December 2008 to 4 March 2009.
Ordinary shares
of 1p
Direct Holding
Direct Holding
Direct Holding
Direct Holding
At 1 January 2008
Acquired in year
Transferred in year
Disposal in year
1,170,000
1,202,997
373,526
15,000
–
–
–
–
135,199
–
128,674
–
–
–
–
–
At 31 December
2008
1,305,199
1,202,997
502,200
15,000
Steve Ingham
Charles-Henri Dumon
Stephen Puckett
Stephen Box ‡
‡ Non-Executive Director
1. Steve Ingham transferred 54,663 shares from the Incentive Share plan and 80,536 from the Deferred Annual Bonus to his
Direct Holding in the year.
2. Stephen puckett transferred 54,663 shares from the Incentive Share plan and 74,011 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 31 December 2008 are as follows:
Total award at 1 January 2008
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 2008
Performance
shares
Non-
performance
shares
Total
shares
Steve Ingham
109,833
219,666 329,499
107,562
215,122 322,684 (92,746)
186,480
372,957
559,437
Charles-Henri Dumon (Note 4)
109,833
219,666 329,499
107,562
215,122 322,684 (92,746)
186,480
372,957
559,437
Stephen Puckett
109,833
219,666 329,499
107,562
215,122 322,684 (92,746)
186,480
372,957
559,437
1. The value of the award made under the Michael page Incentive Share plan in 2008 is £919,650 for each individual Director
and is based on the purchase price of the Company’s ordinary shares on 6 March 2008 of 285.0p. The market value of the
shares vested in the year at the date of award was 309.9p.
44
michael page international
2. The total value of awards at 31 December 2008 for each individual Director in office at the balance sheet date is £1,201,391
and is calculated using the closing market price of the Company’s ordinary shares at 31 December 2008 of 214.75p.
3. For awards made in 2008, the base EpS for the performance criteria is 30.4p (2007: 21.3p).
4. Charles-Henri Dumon was granted deferred share options to acquire 215,122 ordinary shares and performance share options
to acquire 107,562 ordinary shares under the Michael page Incentive Share plan. These options have a nil exercise price and
do not accrue dividends. These are granted in lieu of deferred shares.
5. The non-performance shares to be awarded in 2009 have been included in the Table of Emoluments on page 43.
deferred Annual Bonus
As described on page 41, 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 2008, a total of £1.4m 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 43. 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 page 60. For full descriptions of the performance and
vesting conditions, see “Annual Bonus plan” on pages 40 and 41.
Details of awards made under the deferred Annual Bonus plan that remain outstanding at 31 December 2008 are as follows:
Steve Ingham
Charles-Henri Dumon
Stephen Puckett
Total award at
1 January 2008
(shares)
254,816
229,984
232,186
Awarded
during the year
(shares)
411,694
324,360
324,360
Vested in year
(shares)
(136,645)
(125,201)
(125,573)
Total award at
31 December 2008
(shares)
529,865
429,143
430,973
The average market value of the shares vested in the year at the date of award was 277.0p.
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 31 December 2008 were as follows:
Steve Ingham
Charles-Henri Dumon
Stephen Puckett
Date of Grant
2001
2005
2001
2005
2001
2005
At
1 January
2008
(shares)
93,471
50,000
140,209
50,000
93,471
50,000
Exercised
in year
(shares)
At 31
December
2008
(shares)
Market price
at date of
exercise
(pence)
Gains
made on
exercise
(pounds)
–
–
–
–
–
–
93,471
50,000
140,209
50,000
93,471
50,000
–
–
–
–
–
–
–
–
–
–
–
–
Exercise price
(pence)
Period of
exercise
175
2004-2011
190.75
2008-2015
175
2004-2011
190.75
2008-2015
175
2004-2011
190.75
2008-2015
The market price of the shares at 31 December 2008 was 214.8p with a range during the year of 165.5p to 373.5p
ANNUAl REpoRT 2008
45
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 250 index is also given.
Versus FTSE 250 and FTSE Support Services
31 Dec 2003
31 Dec 2004
31 Dec 2005
31 Dec 2006
31 Dec 2007
31 Dec 2008
270
250
230
210
190
170
150
130
110
90
70
256.72
208.37
154.63
203.25
165.57
139.34
125.70
126.88
101.58
160.02
151.11
124.75
122.88
102.65
102.55
FTSE250
FTSE Support Services
Michael Page International
Outside appointments
The Remuneration Committee recognises that Non-Executive Directorships have 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 executives are 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, including mitigation, as appropriate.
46
michael page international
Contract date
Unexpired term at
31 December 2008
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
13/08/08
25/02/06
14 months
14 months
17 months
32 months
2 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 5)
on 22 May 2009.
Audit requirement
Within the Remuneration Report, the sections on Emoluments, and Directors’ interests and share ownership requirements,
on pages 43 to 45 inclusive, are audited. All other sections of the Remuneration Report are unaudited.
Dr tim Miller
Chairman – Remuneration Committee
5 March 2009
ANNUAl REpoRT 2008
47
Auditors’
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 31 December 2008 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,
statements and the part of the Directors’ Remuneration
the Consolidated and parent Company Balance Sheets,
Report to be audited have been properly prepared in
the Consolidated and parent Company Cash Flow Statements
accordance with the Companies Act 1985 and, as regards
and the related notes 1 to 26. These financial statements
the Group financial statements, Article 4 of the IAS Regulation.
have been prepared under the accounting policies set
We also report to you whether in our opinion the information
out therein. We have also audited the information in the
given in the Directors’ Report is consistent with the financial
Directors’ Remuneration Report that is described as having
statements.
been 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 235 of the Companies
received all the information and explanations we require for
Act 1985. 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 2006 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.
48
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 31 December
2008 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 1985, of the state of the
parent company’s affairs as at 31 December 2008;
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 1985
and, as regards the Group financial statements, Article 4
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 LLP
Chartered Accountants and
Registered Auditors, london, United Kingdom
5 March 2009
ANNUAl REpoRT 2008
49
financial
STATEMENTS
Consolidated income statement ................................... 51
Consolidated statement of Changes in equity ............. 52
statement of Changes in equity – parent Company .... 53
Balance sheets .............................................................. 54
Cash Flow Statements ................................................... 55
notes to the financial statements ................................ 56
1.
2.
3.
4.
5.
6.
7.
8.
9.
Significant accounting policies..........................56
Segment reporting ...........................................61
profit for the year ..............................................63
Employee information .......................................63
Financial income/(expenses) .............................64
Taxation on profits on ordinary activities ...........64
Current tax assets and liabilities .......................65
Dividends .........................................................65
Earnings per ordinary share ..............................65
10. property, plant and equipment .........................66
11.
Intangible assets ..............................................67
12.
Investments......................................................67
13. Trade and other receivables .............................69
14. Trade and other payables .................................69
15. Bank overdrafts and loans ................................70
16. provisions for liabilities ......................................70
17. Deferred tax .....................................................71
18. Called-up share capital .....................................72
19. Reserves ..........................................................74
20. Cash flows from operating activities .................75
21. Cash and cash equivalents ..............................75
22. Financial risk management ...............................75
23. Commitments ..................................................80
24. Contingent liabilities ..........................................81
25. Events after the balance sheet date .................81
26. Related party transactions ................................81
50
michael page international
Consolidated Income Statement
yEAR ENDED 31 DECEMbER 2008
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
2008
£’000
972,782
(420,080)
552,702
(412,201)
140,501
3,878
(4,323)
140,056
(42,717)
97,339
2007
£’000
831,640
(353,546)
478,094
(328,662)
149,432
1,189
(3,180)
147,441
(45,707)
101,734
97,339
101,734
30.3
29.9
31.1
30.6
ANNUAl REpoRT 2008
51
Consolidated Statement of Changes in Equity
AT 31 DECEMbER 2008
Called-up
share
capital
£’000
Share
premium
£’000
Capital
redemption
reserve
£’000
Note
Reserve
for shares
held in the
employee
benefit trust
£’000
Currency
translation
reserve
£’000
Retained
earnings
£’000
Total
equity
£’000
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
3,274
46,635
771
(22,740)
5,315
74,595
107,850
–
–
–
–
(67)
–
13
–
–
–
–
–
–
–
–
–
2,221
–
–
–
(54)
2,221
3,220
48,856
–
–
–
–
67
–
–
–
–
–
67
838
–
–
–
–
–
(854)
–
2,516
–
–
1,662
40,064
40,064
–
–
40,064
40,064
–
97,339
97,339
40,064
97,339
137,403
–
–
–
–
–
–
–
(15,985)
(15,985)
–
–
(854)
2,234
(2,516)
–
7,279
7,279
(27,263)
(27,263)
(38,485)
(34,589)
(21,078)
45,379
133,449
210,664
8
8
Group
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
Balance at 1 January 2008
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 2008
52
michael page international
Statement of Changes in Equity – Parent Company
AT 31 DECEMbER 2008
Company
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
Balance at 1 January 2008
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 2008
Note
Called-up
share capital
£’000
Share
premium
£’000
3,332
37,952
–
–
(115)
57
–
(58)
3,274
–
–
–
8,683
–
8,683
46,635
Capital
redemption
reserve
£’000
656
–
–
Retained
earnings
£’000
154,913
1,565
1,565
Total
equity
£’000
196,853
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
3,274
46,635
771
–
-
(67)
13
-
(54)
3,220
-
-
–
2,221
–
2,221
48,856
-
-
67
–
–
67
838
74,808
320,091
320,091
(15,985)
–
(27,263)
(43,248)
125,488
320,091
320,091
(15,985)
2,234
(27,263)
(41,014)
351,651
404,565
8
8
ANNUAl REpoRT 2008
53
Balance Sheets
AT 31 DECEMbER 2008
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
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
2008
£’000
2007
£’000
2008
£’000
2007
£’000
10
11
12
17
13
13
7
21
2
14
17
14
15
15
7
39,097
13,855
–
6,496
1,955
27,149
4,296
–
4,998
2,301
–
–
–
–
424,649
426,028
–
–
–
–
61,403
38,744
424,649
426,028
192,810
381,812
203,813
5,358
156,980
366,151
–
82,990
275,800
1,306
–
73,562
1,333
–
383,118
74,895
427,554
314,544
807,767
500,923
(1,337)
(897)
(2,234)
(680)
(17)
(697)
–
–
–
–
–
–
(137,021)
(115,405)
(340,505)
(302,702)
(62,697)
–
(14,938)
(47,433)
(25,300)
(17,859)
(62,697)
–
–
(47,433)
(25,300)
–
(214,656)
(205,997)
(403,202)
(375,435)
2
(216,890)
(206,694)
(403,202)
(375,435)
210,664
107,850
404,565
125,488
18
19
19
19
19
3,220
48,856
838
(21,078)
45,379
133,449
210,664
3,274
46,635
771
(22,740)
5,315
74,595
107,850
3,220
48,856
838
–
–
351,651
404,565
3,274
46,635
771
–
–
74,808
125,488
These financial statements were approved by the Board of Directors and authorised for issue on 5 March 2009.
on behalf of the Board of Directors.
S ingham
Chief Executive
54
S R puckett
Group Finance Director
michael page international
Cash Flow Statements
FOR THE yEAR ENDED 31 DECEMbER 2008
Group
Company
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
Note
20
2008
£’000
185,206
(53,409)
131,797
(17,173)
(10,260)
1,009
3,878
2007
£’000
148,663
(36,519)
112,144
(11,927)
(1,579)
743
1,189
Net cash (used in)/received from investing activities
(22,546)
(11,574)
2008
£’000
55,281
28
2007
£’000
41,744
–
55,309
41,744
–
–
–
297
297
–
–
–
–
–
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
(27,263)
(21,785)
(27,263)
(21,785)
(4,782)
–
(2,741)
25,300
(4,556)
–
(2,397)
25,300
(25,300)
(39,150)
(25,300)
(39,150)
2,234
(15,985)
(854)
8,740
(59,885)
(15,000)
2,234
8,740
(15,985)
(59,885)
–
–
Net cash used in financing activities
(71,950)
(104,521)
(70,870)
(89,177)
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Exchange gains on cash and cash equivalents
Cash and cash equivalents at the end of the year
21
37,301
35,557
21,425
94,283
(3,951)
35,544
3,964
35,557
(15,264)
(47,433)
–
(47,433)
–
–
(62,697)
(47,433)
ANNUAl REpoRT 2008
55
Notes to the Financial Statements
FOR THE yEAR ENDED 31 DECEMbER 2008
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 4 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 230 of the Companies Act 1985, the profit and loss account of the Company has not been included as
part of these financial statements. The Company’s profit for the financial year amounted to £320.1m (2007: £1.6m). The increase
in the Company’s profit this year is as a result of increased dividend income. The financial statements have been prepared on a
going concern basis. Refer to page 39 for further details.
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 38, 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
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 2 Revised
IFRS 5 Revised
IFRS 8
IAS 1 Revised
IAS 16 Revised
IAS 19 Revised
IAS 27 Revised
IAS 32 Revised
IAS 36 Revised
IFRIC 16
Share Based payments
Non Current Assets Held for sale and Discontinued operations
operating Segments
presentation of Financial Statements
property, plant and Equipment
Employee Benefits
Consolidated and Separate Financial Statements
Financial Instruments: presentation
Impairment of Assets
Hedges of a Net Investment in a Foreign operation
56
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 2009.
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 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 2008
57
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 20% per annum.
The cumulative amount of goodwill written off directly to retained earnings in respect of acquisitions prior to 31 December 1997
is £311.7m (2007: £311.7m).
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
10-20% per annum
• Motor vehicles
25% 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 the income statement.
58
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 the income statement, 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 the income
statement.
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 2008
59
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 have derivative contracts at the balance sheet date that have been valued at fair value through the income statement
60
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 and New Zealand
Other
Total
Americas
Revenue
Gross Profit
Operating Profit
2008
£’000
2007
£’000
2008
£’000
2007
£’000
2008
£’000
2007
£’000
426,436
321,102
258,772
196,421
66,271
63,013
365,602
360,395
176,685
186,024
83,643
27,800
111,443
69,301
72,020
25,741
97,761
52,382
40,521
26,254
66,775
50,470
32,855
24,366
57,221
38,428
46,557
12,760
9,591
22,351
5,322
59,412
9,899
10,922
20,821
6,186
972,782
831,640
552,702
478,094
140,501
149,432
The above analysis by destination is not materially different to the 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 2008
61
2. Segment reporting (continued)
(b) Segment assets, liabilities and capital expenditure by geographic region
EMEA
United Kingdom
Asia Pacific Australia and New Zealand
Other
Total
Americas
Total Assets
Total Liabilities
Capital Expenditure
2008
£’000
2007
£’000
2008
£’000
2007
£’000
212,004
165,719
79,517
58,325
2008
£’000
7,114
128,338
89,679
104,697
114,622
15,284
28,129
24,473
52,602
29,252
22,899
15,672
38,571
20,575
6,943
2,680
9,623
8,115
7,103
2,738
9,841
6,047
1,640
717
2,357
2,678
2007
£’000
5,934
5,043
436
303
739
1,790
Segment assets/liabilities/capital expenditure
422,196
314,544
201,952
188,835
27,433
13,506
Income tax
5,358
–
14,938
17,859
427,554
314,544
216,890
206,694
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 £62.7m each. Further information on
the notional cash pool is provided in Note 21 on page 75.
(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
2008
£’000
541,984
140,599
168,167
122,032
972,782
2007
£’000
496,506
119,103
134,908
81,123
2008
£’000
273,017
103,907
93,193
82,585
2007
£’000
258,667
89,910
73,835
55,682
831,640
552,702
478,094
(d) Revenue and gross profit generated from permanent and temporary placements
Permanent
Temporary
Revenue
Gross Profit
2008
£’000
448,403
524,379
972,782
2007
£’000
392,583
439,057
831,640
2008
£’000
425,655
127,047
552,702
2007
£’000
371,998
106,096
478,094
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 IAS14 “Segment
Reporting”.
62
michael page international
3. Profit for the year
Profit for the year is stated after charging/(crediting):
Employment costs (Note 4)
Exchange gains*
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
Total fees
Loss on disposal of property, plant and equipment, and computer software
Operating lease rentals - land and buildings
- plant and machinery
2008
£’000
2007
£’000
308,421
224,743
(4,766)
9,144
1,173
65
459
524
32
110
20
162
686
596
(240)
6,726
934
69
477
546
26
162
10
198
744
91
20,198
4,294
16,416
3,774
*This includes £987k (2007: £502k) 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 £1,040k (2007: £738k), which is directly
offset by foreign exchange losses on the underlying intercompany loans, with an offsetting £53k (2007: £236k) charge relating
to interest differentials.
4. Employee information
The average number of employees (including Executive Directors) during the year and total number of employees (including
Executive Directors) at 31 December 2008 were as follows:
Management
Client services
Administration
Employment costs (including Directors’ emoluments) comprised:
2008
Average No.
2007
Average No.
2008
Total No.
2007
Total No.
182
3,877
1,303
5,362
163
3,153
1,089
4,405
183
3,471
1,289
4,943
179
3,658
1,215
5,052
Wages and salaries
Social security costs
Pension costs - defined contribution plans
Equity settled transactions
2008
£’000
2007
£’000
259,734
186,873
33,332
24,096
8,688
6,667
7,017
6,757
308,421
224,743
Details of Directors’ remuneration for the year are provided in the Directors’ Remuneration Report on pages 40 to 47.
No staff are employed by the parent company (2007: nil) hence no remuneration has been disclosed.
ANNUAl REpoRT 2008
63
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 30.5% on profit before tax (2007: 31.0%).
Analysis of charge in the year
UK income tax at 28.5% (2007: 30.0%) for year
Adjustments in respect of prior periods
Overseas income tax
Deferred tax expense
Origination and reversal of temporary differences
Reduction in tax rate
(Benefit)/charge of tax losses recognised
Deferred tax (benefit)/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
2008
£’000
140,056
39,916
893
716
(146)
730
972
(364)
42,717
%
28.5
0.5
0.5
(0.1)
0.5
0.8
(0.2)
30.5
2008
£’000
2007
£’000
3,878
1,189
(4,323)
(3,180)
2008
£’000
19,636
(364)
24,073
43,345
946
–
(1,574)
(628)
42,717
2007
£’000
147,441
44,232
715
416
–
–
1,485
(1,141)
45,707
2008
£’000
(611)
2007
£’000
22,518
(1,141)
23,866
45,243
(1,228)
(16)
1,708
464
45,707
%
30.0
0.5
0.3
–
–
1.0
(0.8)
31.0
2007
£’000
833
64
michael page international
7. Current tax assets and liabilities
The current tax asset of £5.4m (2007: £nil), and current tax liability of £14.9m (2007: £17.9m) for the Group, and current tax asset
of £1.3m (2007: £1.3m) for the parent company, 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 2007 of 5.6p per ordinary share (2006: 4.2p)
Interim dividend for the year ended 31 December 2008 of 2.88p per ordinary share (2007: 2.4p)
2008
£’000
17,934
9,329
27,263
2007
£’000
13,979
7,806
21,785
Amounts proposed as distributions to equity holders:
Proposed final dividend for the year ended 31 December 2008 of 5.12p per ordinary share (2007: 5.6p)
16,316
17,984
The proposed final dividend had not been approved by shareholders at 31 December 2008 and therefore has not been included
as a liability. The comparative final dividend at 31 December 2007 was also not recognised as a liability in the prior year.
The proposed final dividend of 5.12p (2007: 5.6p) per ordinary share will be paid on 8 June 2009 to shareholders on the register
at the close of business on 8 May 2009, 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
2008
97,339
2007
101,734
321,475
327,528
4,178
5,353
325,653
332,881
30.3
29.9
31.1
30.6
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 2008
65
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
2008
Leasehold
improvements
£’000
Furniture,
fixtures and
equipment
£’000
Motor
vehicles
£’000
Leasehold
improvements
£’000
Total
£’000
2007
Furniture,
fixtures and
equipment
£’000
20,877
34,831
7,068
8,693
2,581
1,412
58,289
17,173
17,085
30,442
4,519
6,206
(2,890)
(4,415)
(1,037)
(8,342)
(1,520)
(3,445)
Motor
vehicles
£’000
2,241
1,202
(919)
Total
£’000
49,768
11,927
(5,884)
Group
Cost
At 1 January
Additions
Disposals
Effect of movements in foreign exchange
4,129
6,786
152
11,067
793
1,628
57
2,478
At 31 December
Depreciation
At 1 January
Charge for the year
Disposals
29,184
45,895
3,108
78,187
20,877
34,831
2,581
58,289
9,944
3,235
20,272
5,163
924
746
31,140
9,144
8,614
2,299
18,817
3,792
787
635
28,218
6,726
(2,052)
(4,147)
(589)
(6,788)
(1,329)
(3,244)
(525)
(5,098)
Effect of movements in foreign exchange
1,972
3,535
87
5,594
13,099
24,823
1,168
39,090
360
9,944
907
20,272
27
924
1,294
31,140
16,085
21,072
1,940
39,097
10,933
14,559
1,657
27,149
At 31 December
Net book value
At 31 December
66
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
2008
2007
Computer
software
£’000
Goodwill
£’000
Total
£’000
Computer
software
£’000
Goodwill
£’000
Total
£’000
7,340
10,260
(381)
1,430
18,649
4,583
1,173
(330)
907
6,333
1,539
–
–
–
1,539
–
–
–
–
–
8,879
10,260
(381)
1,430
20,188
4,583
1,173
(330)
907
6,333
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
12,316
1,539
13,855
2,757
1,539
4,296
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
2008
£’000
1,274
214
51
1,539
2007
£’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 5%, which does not exceed the long-term average growth rate of the
relevant markets. Management applied a discount rate of 11.1% to the estimated future cash flows to calculate the terminal value
of those cash flows. 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 31 December 2008 there was no impairment of intangible assets.
12. Investments
Company
Cost
At 1 January 2008
Derecognised on vesting of LTIP’s and deferred bonus shares
At 31 December 2008
Subsidiary
undertakings
£’000
426,028
(1,379)
424,649
Total
£’000
426,028
(1,379)
424,649
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 2008
67
12. Investments (continued)
The Company’s principal subsidiary undertakings at 31 December 2008, 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 GmbH
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
Michael Page International RU LLC
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 NEM Istihdam Danismanligi Limited Sirketi
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 (New Zealand) Limited.
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
Austria
Belgium
Belgium
France
France
Germany
Ireland
Italy
Italy
Luxembourg
Netherlands
Netherlands
Poland
Portugal
Russia
South Africa
Spain
Spain
Sweden
Switzerland
Turkey
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
Recruitment consultancy
Recruitment consultancy
United Arab Emirates
Recruitment consultancy
Australia
Hong Kong
Japan
New Zealand
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
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 421,544,426 preference shares.
68
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
2008
£’000
2007
£’000
2008
£’000
2007
£’000
176,077
164,605
(7,708)
(3,733)
168,369
160,872
–
–
–
–
–
–
–
6,888
28,556
–
381,457
73,516
4,632
27,306
–
355
–
46
203,813
192,810
381,812
73,562
1,955
2,301
–
–
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 22.
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
2008
£’000
2007
£’000
2008
£’000
2007
£’000
9,780
–
40,332
18,742
67,872
295
7,217
–
–
–
340,505
302,242
37,122
13,200
57,209
657
–
–
–
–
–
–
460
–
137,021
115,405
340,505
302,702
1,192
145
1,337
475
205
680
–
–
–
–
–
–
The fair values of trade and other payables are not materially different to those disclosed above. There is no material effect on
pre-tax profit if the instruments are accounted for at fair value or amortised cost.
The total liability relating to other tax and social security includes a balance of £0.8m (2007: £1.1m) 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 22.
ANNUAl REpoRT 2008
69
15. Bank overdrafts and loans
Bank overdrafts
Bank loans
Group
Company
2008
£’000
62,697
–
62,697
2007
£’000
47,433
25,300
72,733
2008
£’000
62,697
–
62,697
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 all denominated in sterling.
Bank overdrafts are repayable on demand.
At 31 December 2008, the Group had available £50.0m (2007: £31.7m) of undrawn committed borrowing facilities in respect of
which all conditions precedent had been met.
The bank overdraft of £62.7m arises as a result of disclosing our notional pooling on a “gross” basis. on a net basis the bank
overdraft balance is £nil as disclosed in note 21.
The Group’s exposure to interest rate, foreign currency and liquidity risk for financial assets and liabilities is disclosed in Note 22.
16. Provisions for liabilities
At 1 January
Utilised in year
At 31 December
Group
Company
2008
£’000
–
–
–
2007
£’000
192
(192)
–
2008
£’000
2007
£’000
–
–
–
–
–
–
70
michael page international
17. Deferred tax
The following are the major deferred tax assets and liabilities recognised by the Group, and the movements thereon, during the
current and prior reporting periods.
At 1 January 2007
Recognised in equity for the year
Recognised in profit or loss for the year
Exchange differences
At 1 January 2008
Recognised in equity for the year
Recognised in profit or loss for the year
Exchange differences
At 31 December 2008
Accelerated tax
depreciation
£’000
Share-based
payments
£’000
Tax losses
£’000
(5,686)
3,652
87
–
(3,114)
–
1,708
384
Other
£’000
(935)
–
(1,261)
–
Total
£’000
(9,447)
3,652
430
384
(1,947)
(1,022)
(2,196)
(4,981)
24
508
–
–
(1,624)
–
–
474
–
24
(642)
–
184
(1,415)
(2,646)
(1,722)
(5,599)
288
–
(104)
–
184
–
–
–
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
2008
£’000
(6,496)
897
5,599
2007
£’000
(4,998)
17
(4,981)
At 31 December 2008, unremitted earnings of overseas Group companies amounted to £104.6m (2007: £78.6m). 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 £1.4m (2007: £1.3m) 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 £2.6m is dependent on generating future taxable profits. of the recognised deferred tax
asset, £1.5m is recognised within territories that were loss making in the current year.
ANNUAl REpoRT 2008
71
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
2008
2007
£’000
Number of
shares
£’000
Number of
shares
5,713
571,250,000
5,713
571,250,000
3,274
327,393,734
3,332
333,242,076
13
(67)
1,276,768
57
5,676,073
(6,680,435)
(115)
(11,524,415)
3,220
321,990,067
3,274
327,393,734
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 2002. The recognition and measurement principles in IFRS 2 have
been applied to all grants after 7 November 2002. They have not been applied to the two grants made prior to 7 November 2002
in accordance with the transitional provisions in IFRS 1 “First-time Adoption of International Financial Reporting Standards” and
IFRS 2 “Share-based payment”.
At 31 December 2008 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.
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)
2008 (Note 2)
Total 2008
Balance at
1 January
2008
2,782,698
157,500
160,000
462,300
798,353
2,106,889
1,864,812
2,758,389
Granted
in year
Exercised
in year
No. of options
outstanding at 31
December 2008
Lapsed
in year
Base
EPS
Exercise price
per share
Exercise period
–
–
–
–
–
–
–
–
(384,748)
(173,898)
2,224,052
n/a
175p March 2004 - March 2011
(7,500)
–
150,000
10.6
186p March 2005 - March 2012
(7,500)
(10,000)
142,500
(100,000)
(226,353)
–
–
362,300
572,000
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
(542,000)
(20,000)
1,544,889
7.5
190.75p-191.5p March 2008 - March 2015
(8,667)
(160,833)
1,695,312
15.5
309.9p March 2009 - March 2016
–
–
(228,000)
2,530,389
21.3
464.5p-494.1p March 2010 - March 2017
(161,500)
2,979,500
30.4
255.94-285p March 2011 - March 2018
–
3,141,000
11,090,941
3,141,000
(1,276,768)
(754,231)
12,200,942
Weighted average exercise price
2008 (£)
2.69
2.80
1.75
3.15
2.79
Total 2007
14,480,459
2,818,000
(5,676,074)
(531,444)
11,090,941
Weighted average exercise price
2007 (£)
*These options have fully vested
1.84
4.66
1.53
2.41
2.69
3,953,863 options were exercisable at the end of 2008 at a weighted average exercise price of £1.74 (2007: £1.61).
72
michael page international
18. Called-up share capital (continued)
In 2008, options were granted on 6 March with the estimated fair values of the options granted on that day of £1.17. In 2007,
options were granted on 2 March. The estimated fair values of the options granted on that date was £1.45.
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 2001.
The options outstanding at 31 December 2008 have an exercise price in the range of 81.5 pence to 494.1 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
2008
2.85
2.85
1.17
52%
5 years
5.25%
2.81%
2007
4.65
4.65
1.45
30%
5 years
5.00%
1.25%
2008
2.85
Nil
2.80
52%
3 years
5.25%
Nil
2007
4.65
Nil
4.65
30%
3 years
5.00%
Nil
2008
2.85
Nil
2.80
52%
2 years
5.25%
Nil
2007
4.65
Nil
4.65
30%
2 years
5.00%
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 £6.7m (2007: £6.8m) related to equity-settled share-based payment transactions
during the year.
Option plan details
note 1 pre flotation options
on flotation, options over 33,750,000 (9%) ordinary shares were granted to the Executive Directors and 427 employees.
The remaining options are subject to the following:
An individual’s option entitlement will normally only be exercisable to the extent that share price growth targets have
been satisfied over a period of at least 3 years. None of these options will vest unless the Company’s share price has
achieved 50% growth after 3 years and not later than 5 years. At that point 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 200% growth after
3 years and not later than 5 years. These hurdles rise from the fifth anniversary of the date of grant at compound rates of
growth of 8.45% and 24.57% respectively. At 31 December 2008, the performance conditions were met for 81.8%
(2007: 81.8%) of the outstanding share price dependent options.
At 31 December 2008, 18.2% of the options remained unvested (2007: 18.2%). At this stage it is not expected that the remaining
18.2% of options will vest. In order for these remaining options to have vested by 31 December 2008 a share price of £9.64
(2007: £7.74) would have been required.
ANNUAl REpoRT 2008
73
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 72. For grants since 2004, 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 3% 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 40 to 42, 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 6,680,435 shares cancelled during the year as shown in Note 18.
Reserve for shares held in the employee benefit trust
At 31 December 2008, the reserve for shares held in the employee benefit trust consisted of 7,010,335 ordinary shares
(2007: 7,950,330 ordinary shares) held for the purpose of satisfying awards made under the Incentive Share plan and
deferred shares under the Annual Bonus plan, representing 2.2% of the called-up share capital with a market value of £15.1m
(2007: £22.9m).
A total of 3,029,213 shares have been allocated to satisfy share awards made under the Incentive Share plan, and 960,838
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 2,146,390 shares have been allocated to satisfy share option awards made under the Incentive Share plan, and 554,344
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 319,550 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.
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michael page international
20. Cash flows from operating activities
Profit before tax
Depreciation and amortisation charges
Loss on sale of property, plant and equipment, and computer software
Share scheme charges
Net finance cost
Operating cash flow before changes in working capital and provisions
Decrease/(increase) in receivables
Increase/(decrease) 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
2008
£’000
2007
£’000
2008
£’000
140,056
147,441
320,091
10,317
596
6,667
445
158,081
24,963
2,162
7,660
91
6,757
1,991
163,940
(40,863)
–
–
–
3,800
323,891
(263)
25,778
(268,347)
–
(192)
–
2007
£’000
721
749
–
–
2,837
4,307
(73,230)
110,667
–
185,206
148,663
55,281
41,744
Group
Company
2008
£’000
133,467
23,513
156,980
(62,697)
94,283
2007
£’000
75,647
7,343
82,990
(47,433)
35,557
–
(25,300)
2008
£’000
2007
£’000
–
–
–
(62,697)
(62,697)
–
–
–
–
(47,433)
(47,433)
(25,300)
(72,733)
94,283
10,257
(62,697)
The Group operates a multi-currency notional cash pool. 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 have
been reported ‘gross’ on the balance sheet. on a ‘netted’ pro forma basis, cash and cash equivalents and overdraft balances
would have been £62.7m lower, resulting in £94.3m cash and cash equivalents and £nil 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 2008
75
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 31 December 2008 amounted to £168.4m (2007: £160.9m).
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 150 days because historical experience is such that receivables past due beyond 150 days are generally not recoverable.
Trade receivables below 150 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 receivables balance are debtors with a carrying amount of £77.0m (2007: £77.7m) 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 56 days in excess of the initial credit period
(2007: 54 days).
The ageing 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 trade
receivables
2008
£’000
Provision
2008
£’000
Gross trade
receivables
2007
£’000
91,600
48,883
30,414
5,180
176,077
272
233
2,023
5,180
7,708
83,486
46,554
32,261
2,304
164,605
Provision
2007
£’000
178
467
784
2,304
3,733
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 1% 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.
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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
2008
£’000
3,733
13,017
(602)
(2,738)
(5,702)
7,708
2007
£’000
3,270
5,682
(1,244)
(1,638)
(2,337)
3,733
The majority of the allowance for doubtful debts are individually impaired trade receivables with a balance of £2.6m (2007: £1.1m)
which have been placed in litigation, as well as a further provision for debts of 150 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
2008
£’000
97,445
49,619
11,860
9,445
2007
£’000
84,324
55,097
12,978
8,473
168,369
160,872
ANNUAl REpoRT 2008
77
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
2008
£’000
778
9,321
4,354
2,106
2007
£’000
456
14,195
4,729
1,963
16,559
21,343
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. There is no material effect on pre-tax profit if the instruments are accounted for at fair value or amortised cost.
(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.
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.
2008
Trade payables
Accruals and other payables
Bank overdraft
2007
Trade payables
Accruals and other payables
Bank overdraft
Less than
1 month
£’000
7,920
45,540
62,697
Less than
1 month
£’000
5,030
51,725
47,433
Carrying amount
1-3 months
£’000
3-12 months
£’000
501
34,350
–
1,359
24,923
–
Carrying amount
1-3 months
£’000
3-12 months
£’000
970
24,257
–
1,067
19,061
–
More than
12 months
£’000
–
1,337
–
More than
12 months
£’000
150
4,023
–
(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 page 80. 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.
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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
2008
6.0%
–
2007
6.4%
6.2%
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.
All derivative financial instruments not in a hedge relationship are classified as derivatives at fair value through the income statement.
The group does not use derivatives for speculative purposes. All transactions in derivative financial instruments are undertaken to
manage the risks arising from underlying business activities.
Information on the fair value of derivative financial instruments held at the balance sheet date is shown in the table below.
Derivatives Financial Instruments
Derivative Assets
Derivative Liabilities
Sensitivity analysis - currency risk
Contract amounts
Derivatives at fair value
2008
15.1
(15.1)
2007
–
–
2008
16.1
(15.6)
2007
–
–
A 10 percent strengthening of sterling against the following currencies at 31 December would have increased/(decreased) equity
and profit or loss by the amounts shown on page 80. 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 2007.
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 2008
79
22. Financial risk management (continued)
Sensitivity analysis - currency risk (continued)
Euro
Australian Dollar
Hong Kong Dollar
Swiss Franc
Brazilian Real
United States Dollar
Other
Euro
Australian Dollar
Swiss Franc
Hong Kong Dollar
Brazilian Real
United States Dollar
Other
2008 Equity
£’000
(9,811)
(2,892)
(1,520)
(1,317)
(838)
(299)
(1,913)
2007 Equity
£’000
(7,060)
(1,530)
(572)
(523)
(509)
(330)
(945)
PBT
£’000
(1,798)
(1,465)
(694)
(490)
(568)
320
(415)
PBT
£’000
(4,617)
(796)
(257)
(324)
(442)
3
(245)
A 10 percent weakening of sterling against the above currencies at 31 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 31 December 2008 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
2008
£’000
2007
£’000
2008
£’000
4,681
41,749
65,034
111,464
2,562
29,411
57,980
89,953
2,412
9,354
–
11,766
2007
£’000
449
7,526
–
7,975
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.
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michael page international
23. Commitments (continued)
Capital commitments
The Group had contractual capital commitments of £0.2m as at 31 December 2008 (2007: £1.2m) relating to property, plant
and equipment. The Group had contractual capital commitments of £0.1m as at 31 December 2008 (2007: £3.4m) relating to
computer software.
24. Contingent liabilities
The Company has provided guarantees to other Group undertakings amounting to £13.4m (2007: £9.7m) in the ordinary course
of business. It is not anticipated that any material liabilities will arise from the contingent liabilities.
vAt group registration
As a result of group registration for VAT purposes, the Company is contingently liable for VAT liabilities arising in other companies
within the VAT group which at 31 December 2008 amounted to £5.0m (2007: £7.6m).
25. Events after the balance sheet date
Between 31 December 2008 and 27 February 2009, 44,853 options were exercised, which has led to an increase of share capital
of £449 and an increase in share premium of £62,874.
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 12).
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 40 to 47. over and above
these transactions, equity settled transactions for the year were £0.9m (2007: £2.2m). Transactions with the remaining members
of the Executive Board are disclosed below:
Short-term employee benefits
Pension costs - defined contribution plans
2008
£’000
2,232
142
2007
£’000
746
40
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
2008
£’000
325,264
2007
£’000
4,283
Amounts owed by
related parties
Amounts owed to
related parties
2008
£’000
2007
£’000
2008
£’000
2007
£’000
381,457
73,516
340,505
302,242
ANNUAl REpoRT 2008
81
Shareholder
iNFORMATiON AND ADViSERS
Annual General Meeting
To be held on 22 May 2009 at 12.00 noon at page House, The Bourne Business park, 1 Dashwood lang Road, Addlestone,
Weybridge, Surrey, KT15 2QW. Every shareholder is entitled to attend and vote at the meeting.
Final dividend for the year ended 31 December 2008
To be paid (if approved) on 8 June 2009 to shareholders on the register on 8 May 2009.
Company secretary
Kelvin Stagg
Company number
3310225
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 KT15 2QW
Tel: 01932 264144
Fax: 01932 264297
Auditors
Solicitors
Registrars
Deloitte llp
Chartered Accountants
2 New Street Square
london EC4A 3BZ
Herbert Smith llp
Exchange House
primrose Street
london EC2A 2HS
Capita Registrars ltd
Northern House
Woodsome park
Fenay Bridge
Huddersfield
West Yorkshire HD8 0lA
Joint Corporate Brokers
Bankers
Citigroup
33 Canada Square
Canary Wharf
london E14 5lB
Deutsche Bank
Winchester House
1 Great Winchester Street
london EC2N 2DB
HSBC Bank plc
West End Business
Banking Centre
70 pall Mall
london SW1Y 5GZ
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
6 May 2009
8 May 2009
22 May 2009
8 June 2009
17 August 2009
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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 1985 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 3310225. 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 571,250,000 ordinary shares of 1p each. As at 31 December
2008, 321,990,067 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 10 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 21 clear days’ notice, and all other extraordinary general meetings shall be called by at least 14 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 2008
83
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
793 of the Companies Act 2006 (previously Section 212 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.
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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 2001 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. If the quorum is not fixed by the Directors, the quorum shall be two.
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) any arrangement for the benefit of the employees and directors and/or former employees and directors of the Company or any
of its subsidiaries and/or the members of their families or any person who is or was dependent on such persons, including but
without being limited to a retirement benefits scheme and an employees’ share scheme, which does not accord to him any
privilege or advantage not generally accorded to employees and/or former employees to whom the arrangement relates;
(e)
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 2008
85
(f)
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.
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.
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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;
(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 2008
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Summary
5 yEAR SUMMARy iNCOME STATEMENT
Revenue
Gross profit
Operating profit
Profit before tax
Profit attributable to equity holders
Conversion
2004
£’000
433,731
210,641
38,858
38,859
34,336
18.4%
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%
2008
£’000
972,782
552,702
140,501
140,056
97,339
25.4%
Basic earnings per share (pence)
9.8
14.8
19.6
31.1
30.3
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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 2000. 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 KT15 2QW on 22 May 2009 at 12.00 noon for the following purposes:
1.
To receive and adopt the reports of the Directors and auditors and accounts for the year ended 31 December 2008.
2.
To declare a final dividend on the ordinary share capital of the Company for the year ended 31 December 2008 of 5.12p
per share.
3.
To re-elect Stephen puckett as a director of the Company (Note 6)
4.
To re-elect Hubert Reid as a director of the Company (Note 6)
5.
To propose the following ordinary resolution:
That the Directors’ Remuneration Report for the year ended 31 December 2008 be received and approved.
6.
To re-appoint Deloitte 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.
7.
To propose the following ordinary resolution: That in accordance with section 366 and 367 of the Companies Act 2006 (the
‘2006 Act’) the Company, and all companies that are subsidiaries of the Company at the date on which this resolution 7 is
passed or during the period when this resolution 7 has effect, be generally and unconditionally authorised to:
(a) make political donations to political parties (or independent election candidates), as defined in the 2006 Act, not exceeding
£25,000 in total;
(b) make political donations to political organisations other than political parties, as defined in the 2006 Act, not exceeding
£25,000 in total; and
(c) incur political expenditure, as defined in the 2006 Act, not exceeding £25,000 in total;
during the period commencing on the date of passing this resolution and ending on the date of the AGM of the Company
in 2010 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 (Note 7).
8. To propose the following special resolution:
That the directors be and they are hereby generally and unconditionally authorised in accordance with section 80 of the
Companies Act 1985 to exercise all the powers of the Company to allot:
(a) relevant securities (within the meaning of section 80(2) of that Act) up to an aggregate nominal amount of £1,062,637;
and
ANNUAl REpoRT 2008
89
(b) relevant securities comprising equity securities (within the meaning of section 94 of that Act) up to a further aggregate
nominal amount of £1,062,637 provided that they are offered by way of a rights issue to holders of ordinary shares on the
register of members at such record date as the directors may determine where the equity securities respectively attributable
to the interests of the ordinary shareholders are proportionate (as nearly as may be practicable) to the respective numbers
of ordinary shares held, or deemed to be held, by them on any such record date and to other holders of equity securities
entitled to participate therein, subject to such exclusions or other arrangements as the directors may deem necessary or
expedient to deal with treasury shares, fractional entitlements or legal or practical problems arising under the laws of any
overseas territory or the requirements of any regulatory body or stock exchange or by virtue of shares being represented
by depositary receipts or any other matter,
provided that this authority shall expire at the conclusion of the next Annual General Meeting of the Company or, if earlier, on
21 August 2010, save that the Company shall be entitled to make offers or agreements before the expiry of such authority
which would or might require relevant securities to be allotted after such expiry and the directors shall be entitled to allot
relevant securities pursuant to any such offer or agreement as if this authority had not expired; and all unexercised authorities
previously granted to the directors to allot relevant securities be and are hereby revoked.
9. To propose the following special resolution:
That the directors be and they are hereby empowered pursuant to section 95 of the Companies Act 1985 to allot equity
securities (within the meaning of section 94 of that Act) for cash pursuant to the authority conferred by Resolution 8 above
as if section 89(1) of that Act did not apply to any such allotment provided that this power shall be limited to:
(a) the allotment of equity securities in connection with an offer of securities (but in the case of the authority granted under
paragraph (b) of Resolution 8 by way of rights issue only) in favour of the holders of ordinary shares on the register of
members at such record date as the directors may determine where the equity securities respectively attributable to
the interests of the ordinary shareholders are proportionate (as nearly as may be practicable) to the respective numbers
of ordinary shares held or deemed to be held by them on any such record date, subject to such exclusions or other
arrangements as the directors may deem necessary or expedient to deal with treasury shares, fractional entitlements or
legal or practical problems arising under the laws of any overseas territory or the requirements of any regulatory body or
stock exchange or by virtue of shares being represented by depositary receipts or any other matter; and
(b) the allotment (otherwise than pursuant to sub-paragraph (a) above) to any person or persons of equity securities up to
an aggregate nominal amount of £161,006,
and shall expire upon the expiry of the general authority conferred by Resolution 8 above, save that the Company shall be
entitled to make offers or agreements before the expiry of such power which would or might require equity securities to be
allotted after such expiry and the directors shall be entitled to allot equity securities pursuant to any such offer or agreement
as if the power conferred hereby had not expired.
10. To propose the following special resolution:
That pursuant to the Company’s Articles of Association and Section 166 of the Companies Act 1985 (the ”Act”), the Company
be and is hereby generally and unconditionally authorised to make market purchases (within the meaning of section 163(3)
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 48,269,495 representing approximately
14.99% of the issued ordinary share capital of the Company as at 28 February 2009;
(b) the minimum price which may be paid for each ordinary share is 1 pence;
(c) the maximum price which may be paid for each ordinary share is in respect of an ordinary share contracted to be purchased
on any day, an amount equal to 105% of the average of the mid-market quotations for an ordinary share of the company
as derived from The london Stock Exchange Daily official list for the five business days immediately preceding the day
on which the ordinary share is contracted to be purchased;
(d) the authority hereby conferred shall expire at the conclusion of the next Annual General Meeting of the Company after the
date of passing this resolution, unless such authority is renewed, varied or revoked 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).
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11. Resolution 11 is proposed as a special resolution. It is proposed that Article 48 of the Articles of Association of the Company
be amended by replacing Article 48 in its entirety with the following:
“Subject to the provisions of the Acts, an annual general meeting and all other general meetings of the Company shall be
called by at least such minimum period of notice as is prescribed under the Acts. The notice shall specify the place, the date
and the time of meeting and the general nature of the business to be transacted, and in the case of an annual general meeting
shall specify the meeting as such. Subject to the provisions of these articles and to any rights or restrictions attached to any
shares, notices shall be given to all members, to all persons entitled to a share in consequence of the death or bankruptcy
of a member and to the directors and auditors of the Company.”
12. Resolution 12 is proposed as a special resolution that a general meeting other than an annual general meeting, may be called
on not less than 14 clear days notice.
The Board consider that all the proposals to be considered at the Annual General Meeting are likely to promote the success of the
Company and are in the best interests of the Company and it’s shareholders as a whole. The Directors unanimously recommend
that you vote in favour of the resolutions as they intend to do in respect of their own beneficial holdings.
By order of the Board
kelvin Stagg
Company Secretary
page House, 1 Dashwood lang Road
Addlestone, Weybridge, Surrey, KT15 2QW
Registered in England No. 3310225
5 March 2009
ANNUAl REpoRT 2008
91
Notes
1.
2.
3.
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 146 of the Companies Act 2006 (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.
4.
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 48 hours before the time of the meeting.
(a) pursuant to regulation 41 of the Uncertificated Securities Regulations 2001, only persons entered on the register of
members of the Company at 6.00 p.m. on 20 May 2009 (or, if the meeting is adjourned, at 6.00 p.m. on the date which
is two days prior to the adjourned meeting) shall be entitled to attend and vote at the meeting or adjourned meeting.
Changes to entries on the register after this time shall be disregarded in determining the rights of persons to attend or
vote (and the number of votes they may cast) at the meeting or adjourned meeting.
5.
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 – RA10) 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 35(5)(a) of the Uncertificated Securities Regulations 2001.
6.
Stephen puckett and Hubert Reid will retire by rotation and are seeking re-appointment at the Annual General Meeting.
Biographical information on each of the Directors is contained on page 27 of the annual report and accounts. In accordance
with A.7.2 of the Combined Code, the Chairman confirms that, following formal performance evaluation, the above named
individuals’ performances remain to be effective and demonstrate commitment to the role.
7.
For the purpose of this resolution, ‘political donations’, ‘political organisations’ and ‘political expenditure’ have the meanings
given to them in Section 363-365 of the 2006 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 2006 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.
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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 7 to renew the authority granted by shareholders at the last AGM of the Company. 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 2006 Act, Resolution 7 has also been extended
to cover any of these activities by the Company’s subsidiaries.
8.
In December 2008, the Association of British Insurers (“ABI”) revised its guidelines on directors’ authority to allot shares (in line
with the recommendations of the report issued in November 2008 by the Rights Issue Review Group). The ABI’s guidelines
previously stated that the directors’ general authority to allot shares should be limited to an amount equal to one-third of the
Company’s issued share capital. The new guidelines state that ABI members will permit, and treat as routine, resolutions
seeking authority to allot shares representing up to two-thirds of the Company’s issued share capital. The guidelines provide
that the extra routine authority (that is the authority to allot shares representing the additional one-third of the Company’s
issued share capital) can only be used to allot shares pursuant to a fully pre-emptive rights issue.
In light of these revised guidelines, the Board considers it appropriate that directors be granted authority to allot shares in the
capital of the Company up to a maximum nominal amount of 2,125,275 representing the new guideline limit of approximately
66% of the Company’s issued ordinary share capital as at 28 February 2009 (the latest practicable date prior to publication
of this letter). of this amount 106,263,732 shares (representing approximately 33% of the Company’s issued ordinary share
capital) can only be allotted pursuant to a rights issue. The power will last until the conclusion of the next AGM in 2010.
The directors have no present intention of exercising this authority.
As at the date of this letter the Company does not hold any ordinary shares in the capital of the Company in treasury.
9.
Resolution 9 will give the directors authority to allot shares in the capital of the Company pursuant to the authority granted
under Resolution 8 above for cash without complying with the pre-emption rights in the Companies Act 1985 in certain
circumstances. In the light of the new ABI guidelines described in relation to Resolution 8 above, this authority will permit the
directors to allot:
(a) shares up to a nominal amount of £2,125,275 (representing two-thirds of the company’s issued share capital) on an offer
to existing shareholders on a pre-emptive basis. However unless the shares are allotted pursuant to a rights issue (rather
than an open offer), the directors may only allot shares up to a nominal amount of £1,062,637 (representing one-third
of the company’s issued share capital) (in each case subject to adjustments for fractional entitlements and overseas
shareholders); and
(b) shares up to a maximum nominal value of £161,006, representing approximately 5% of the issued ordinary share capital
of the Company as at 28 February 2009 (the latest practicable date prior to publication of this letter) otherwise than in
connection with an offer to existing shareholders.
The directors have no present intention of exercising this authority.
The directors confirm their intention to follow the provisions of the pre-emption Group’s Statement of principles regarding
cumulative usage of authorities within a rolling three-year period. The principles provide that companies should not issue for
cash shares representing in excess of 7.5% of the Company’s issued share capital in any rolling three-year period, other than
to existing shareholders, without prior consultation with shareholders.
10. This authority is in respect of 14.99% 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 20 May 2009 (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.
ANNUAl REpoRT 2008
93
12. Resolution 11 deals with the convening of general meetings and the length of notice required to convene general meetings
and is in line with the relevant provisions of the Companies Act 2006. In particular, a general meeting (other than the annual
general meeting) to consider a special resolution can be convened on 14 days’ notice whereas previously 21 days’ notice
was required.
13. Resolution 12 is a resolution to allow the Company to hold general meetings (other than AGMs) on 14 days notice.
For general meetings other than AGMs the minimum notice period permitted by the Companies Act 2006 is currently 14 days
(rather than the 21 days notice previously required by the old articles and the Companies Act 1985). The 2006 Act provisions
relating to meetings are due to be amended with effect from August 2009, as a result of the UK implementation of the EU
Shareholder Rights Directive. one of the amendments to be made will, in accordance with the Directive, increase the minimum
notice period for listed company general meetings to 21 days, but with an ability for companies to reduce this period back to
14 days (other than for AGMs) provided that two conditions are met. The first condition is that the company offers facilities
for shareholders to vote by electronic means. It is not yet clear what this will require and the details will be set out in the final
regulations when published. The second condition is that there is an annual resolution of shareholders approving the reduction
in the minimum notice period from 21 days to 14 days. The board is therefore proposing Resolution 12 as a special resolution
to approve 14 days as the minimum period of notice for all general meetings of the Company other than AGMs. The approval
will be effective until the Company’s next AGM, when it is intended that the approval be renewed.
14. 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.
15. As at 4 March 2009 (being the latest business day prior to the publication of this Notice), the Company’s issued share capital
consists of 322,034,920 ordinary shares. The Employee Benefit Trust holds 3,020,284 ordinary shares of the Company
carrying no voting rights. No shares are held in treasury. Therefore the total voting rights in the Company are 319,014,636.
16. Members satisfying the thresholds in section 527 of the Companies Act 2006 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.
17. 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.
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michael page international
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 in accordance with IFRS. Company law requires the Directors to prepare such
financial statements in accordance with IFRS, the Companies Act 1985 and Article 4 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 set out in
the International Accounting Standards Board’s ‘Framework for the preparation and presentation of Financial 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:
• properly select and apply accounting policies;
•
present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable
information; and
•
provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users to understand
the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance.
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the
financial position of the Company, for safeguarding the assets, for taking reasonable steps for the prevention 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 1985.
The directors are responsible for the maintenance and 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.
Cautionary statement
This Annual Report and Accounts has been prepared solely to provide additional information to shareholders to assess the
Group’s strategies and the potential for those strategies to succeed. The Annual Report and Accounts should not be relied on
by any other party or any other purpose.
This Annual Report and Accounts contains certain forward-looking statements. These statements are made by the directors in
good faith based on the information available to them up to the time of their approval of this report and such statements should
be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such
forward-looking information.
Statement of Directors’ responsibilities in accordance with the Disclosure and transparency Rules
The Directors confirm that, to the best of their knowledge:
a) the Group financial statements, which have been prepared in accordance with IFRS as adopted by the EU and IFRS as issued
by the IASB, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and
b) the Business review section contained in the Annual Report includes a fair review of the development and performance of the
business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.
on behalf of the Board
S ingham
Chief Executive
5 March 2009
ANNUAl REpoRT 2008
S puckett
Group Finance Director
5 March 2009
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Our office locations
yE AR ENDED 31 DECEMbER 2008
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michael page international
GRowinG entiRely oRGAnicAlly, RAtheR
thAn By meRGeRS oR AcquiSitionS, we now
hAve oveR 4,900 people in 163 officeS in 28
countRieS woRldwide.
ANNUAl REpoRT 2008
97
Specialists in Global Recruitment
163 offices in 28 countries | www.michaelpage.co.uk